UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934.

For the quarterly period ended ~~September 30, 2017~~March 31, 2018

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934.

For the transition period from to .

Commission file number 001-33099

BlackRock, Inc.

(Exact name of registrant as specified in its charter)

Delaware

32-0174431

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer Identification No.)

55 East 52nd Street, New York, NY 10055

(Address of Principal Executive Offices)

(Zip Code)

(212) 810-5300

(Registrant’s Telephone Number, Including Area Code)

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes

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

Large accelerated filer ☒ Accelerated filer ☐

Non-accelerated filer (Do not check if a smaller reporting company)☐

Smaller reporting company☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes

As of ~~October 31, 2017,~~April 30, 2018, there were ~~160,332,161~~160,169,656 shares of the registrant’s common stock outstanding.

BlackRock, Inc.

Index to Form 10-Q

PART I

FINANCIAL INFORMATION

		Page

Item 1.	Financial Statements (unaudited)

	Condensed Consolidated Statements of Financial Condition	1

	Condensed Consolidated Statements of Income	2

	Condensed Consolidated Statements of Comprehensive Income	3

	Condensed Consolidated Statements of Changes in Equity	4

	Condensed Consolidated Statements of Cash Flows	6

	Notes to Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3439

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	6568

Item 4.	Controls and Procedures	6669

PART II

OTHER INFORMATION

Item 1.	Legal Proceedings	6770

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6972

Item 6.	Exhibits	7073

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

BlackRock, Inc.

Condensed Consolidated Statements of Financial Condition

(unaudited)

	September 30,			December 31,			March 31,			December 31,
(in millions, except shares and per share data)	2017			2016			2018			2017
Assets
Cash and cash equivalents	$	6,165		$	6,091		$	5,978		$	6,894
Accounts receivable		3,183			2,350			2,677			2,699
Investments		1,928			1,595			2,050			1,981
Assets of consolidated variable interest entities:
Cash and cash equivalents		82			84			103			144
Investments		1,286			1,008			1,637			1,493
Other assets		46			63			113			66
Separate account assets		147,938			149,089			142,871			149,937
Separate account collateral held under securities lending agreements		27,431			27,792			27,247			24,190
Property and equipment (net of accumulated depreciation of $708 and $601 at September 30, 2017 and December 31, 2016, respectively)		571			559
Intangible assets (net of accumulated amortization of $909 and $832 at September 30, 2017 and December 31, 2016, respectively)		17,400			17,363
Property and equipment (net of accumulated depreciation of $698 and $658 at March 31, 2018 and December 31, 2017, respectively)								589			592
Intangible assets (net of accumulated amortization of $210 and $219 at March 31, 2018 and December 31, 2017, respectively)								17,378			17,389
Goodwill		13,226			13,118			13,217			13,220
Other assets		1,311			1,065			2,157			1,636
Total assets	$	220,567		$	220,177		$	216,017		$	220,241
Liabilities
Accrued compensation and benefits	$	1,614		$	1,880		$	788		$	2,153
Accounts payable and accrued liabilities		1,652			1,094			1,421			1,161
Liabilities of consolidated variable interest entities		319			216			425			369
Borrowings		5,000			4,915			5,036			5,014
Separate account liabilities		147,938			149,089			142,871			149,937
Separate account collateral liabilities under securities lending agreements		27,431			27,792			27,247			24,190
Deferred income tax liabilities		4,966			4,840			3,516			3,527
Other liabilities		1,230			1,007			2,130			1,626
Total liabilities		190,150			190,833			183,434			187,977
Commitments and contingencies (Note 11)
Commitments and contingencies (Note 12)
Temporary equity
Redeemable noncontrolling interests		320			194			561			416
Permanent Equity
BlackRock, Inc. stockholders’ equity
Common stock, $0.01 par value;		2			2			2			2
Shares authorized: 500,000,000 at September 30, 2017 and December 31, 2016; Shares issued: 171,252,185 at September 30, 2017 and December 31, 2016; Shares outstanding: 160,528,060 and 161,534,443 at September 30, 2017 and December 31, 2016, respectively
Preferred stock (Note 15)		—			—
Shares authorized: 500,000,000 at March 31, 2018 and December 31, 2017; Shares issued: 171,252,185 at March 31, 2018 and December 31, 2017; Shares outstanding: 160,308,362 and 159,977,115 at March 31, 2018 and December 31, 2017, respectively
Preferred stock (Note 17)								—			—
Additional paid-in capital		19,145			19,337			18,856			19,256
Retained earnings		15,065			13,660			17,529			16,939
Accumulated other comprehensive loss		(473	)		(716	)		(301	)		(432	)
Treasury stock, common, at cost (10,724,125 and 9,717,742 shares held at September 30, 2017 and December 31, 2016, respectively)		(3,697	)		(3,185	)
Treasury stock, common, at cost (10,943,823 and 11,275,070 shares held at March 31, 2018 and December 31, 2017, respectively)								(4,108	)		(3,967	)
Total BlackRock, Inc. stockholders’ equity		30,042			29,098			31,978			31,798
Nonredeemable noncontrolling interests		55			52			44			50
Total permanent equity		30,097			29,150			32,022			31,848
Total liabilities, temporary equity and permanent equity	$	220,567		$	220,177		$	216,017		$	220,241

See accompanying notes to condensed consolidated financial statements.

BlackRock, Inc.

Condensed Consolidated Statements of Income

(unaudited)

	Three Months Ended						Nine Months Ended						Three Months Ended
(in millions, except shares and per share data)	September 30,						September 30,						March 31,
	2017			2016			2017			2016			2018			2017
Revenue
Investment advisory, administration fees and securities lending revenue
Related parties	$	1,995		$	1,768		$	5,662		$	5,098		$	2,112		$	1,768
Other third parties		797			778			2,335			2,296			835			755
Total investment advisory, administration fees and securities lending revenue		2,792			2,546			7,997			7,394			2,947			2,523
Investment advisory performance fees		191			58			309			166			70			70
Technology and risk management revenue		175			152			497			439			184			154
Distribution fees		5			10			17			32			311			287
Advisory and other revenue		70			71			202			234			71			58
Total revenue		3,233			2,837			9,022			8,265			3,583			3,092
Expense
Employee compensation and benefits		1,088			969			3,108			2,893			1,121			1,021
Distribution and servicing costs		123			114			361			320			432			401
Amortization of deferred sales commissions		4			8			13			27
Direct fund expense		234			200			666			583			261			206
General and administration		363			312			1,014			946			383			296
Restructuring charge		—			—			—			76
Amortization of intangible assets		27			25			77			75			11			25
Total expense		1,839			1,628			5,239			4,920			2,208			1,949
Operating income		1,394			1,209			3,783			3,345			1,375			1,143
Nonoperating income (expense)
Net gain (loss) on investments		41			31			128			49			15			51
Interest and dividend income		15			22			35			33			15			7
Interest expense		(46	)		(52	)		(159	)		(154	)		(46	)		(65	)
Total nonoperating income (expense)		10			1			4			(72	)		(16	)		(7	)
Income before income taxes		1,404			1,210			3,787			3,273			1,359			1,136
Income tax expense		445			333			1,090			954			265			268
Net income		959			877			2,697			2,319			1,094			868
Less:
Net income (loss) attributable to noncontrolling interests		12			2			31			(2	)		5			9
Net income attributable to BlackRock, Inc.	$	947		$	875		$	2,666		$	2,321		$	1,089		$	859
Earnings per share attributable to BlackRock, Inc. common stockholders:
Basic	$	5.85		$	5.33		$	16.41		$	14.09		$	6.75		$	5.27
Diluted	$	5.78		$	5.26		$	16.23		$	13.92		$	6.68		$	5.21
Cash dividends declared and paid per share	$	2.50		$	2.29		$	7.50		$	6.87		$	2.88		$	2.50
Weighted-average common shares outstanding:
Basic		161,872,716			164,129,214			162,459,737			164,756,355			161,250,018			163,016,599
Diluted		163,773,546			166,256,598			164,289,042			166,760,912			162,918,961			164,856,183

See accompanying notes to condensed consolidated financial statements.

BlackRock, Inc.

Condensed Consolidated Statements of Comprehensive Income

(unaudited)

	Three Months Ended					Nine Months Ended						Three Months Ended
(in millions)	September 30,					September 30,						March 31,
	2017		2016			2017			2016			2018		2017
Net income	$	959	$	877		$	2,697		$	2,319		$	1,094	$	868
Other comprehensive income:
Foreign currency translation adjustments⁽¹⁾		102		(38	)		244			(151	)		137		40
Other		—		—			(1	)		1			—		(1	)
Other comprehensive income (loss)		102		(38	)		243			(150	)		137		39
Comprehensive income		1,061		839			2,940			2,169			1,231		907
Less: Comprehensive income (loss) attributable to noncontrolling interests		12		2			31			(2	)		5		9
Comprehensive income attributable to BlackRock, Inc.	$	1,049	$	837		$	2,909		$	2,171		$	1,226	$	898

⁽¹⁾

Amounts for the three months ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~ include a loss from a net investment hedge of ~~$18~~$16 million (net of a tax benefit of ~~$11~~$5 million) and $5$7 million (net of a tax benefit of $4 million), respectively. Amounts for the nine months ended September 30, 2017 and 2016 include a loss from a net investment hedge of $56 million (net of a tax benefit of $33 million) and $16 million (net of a tax benefit of $10 million), respectively.

See accompanying notes to condensed consolidated financial statements.

BlackRock, Inc.

Condensed Consolidated Statements of Changes in Equity

(unaudited)

(in millions)

Additional
Paid-in
Capital⁽¹⁾

Retained
Earnings

Accumulated
Other
Comprehensive
Income (Loss)

Treasury
Stock
Common

Total
BlackRock
Stockholders’
Equity

Nonredeemable
Noncontrolling
Interests

Total
Permanent
Equity

Redeemable
Noncontrolling
Interests /
Temporary
Equity

December 31, 2016

$
19,339

$
13,660

$
(716
)

$
(3,185
)

$
29,098

$
52

$
29,150

$
194

Net income

—

2,666

—

—

2,666

3

2,669

28

Dividends paid

—

(1,259
)

—

—

(1,259
)

—

(1,259
)

—

Stock-based compensation

417

—

—

—

417

—

417

—

PNC preferred stock capital
    contribution

193

—

—

—

193

—

193

—

Retirement of preferred stock

(193
)

—

—

—

(193
)

—

(193
)

—

Issuance of common shares
   related to employee stock
   transactions

(612
)

—

—

621

9

—

9

—

Employee tax withholdings
   related to employee stock
   transactions

—

—

—

(308
)

(308
)

—

(308
)

—

Shares repurchased

—

—

—

(825
)

(825
)

—

(825
)

—

Subscriptions (redemptions/
   distributions) —
   noncontrolling interest
   holders

—

—

—

—

—

(14
)

(14
)

338

Net consolidations
  (deconsolidations) of
   sponsored
   investment funds

—

—

—

—

—

14

14

(240
)
Other comprehensive
   income (loss)

—

—

243

—

243

—

243

—

Adoption of new accounting
   pronouncement

3

(2
)

—

—

1

—

1

—

September 30, 2017

$
19,147

$
15,065

$
(473
)

$
(3,697
)

$
30,042

$
55

$
30,097

$
320

(in millions)	Additional Paid-in Capital⁽¹⁾			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock Common			Total BlackRock Stockholders’ Equity			Nonredeemable Noncontrolling Interests			Total Permanent Equity			Redeemable Noncontrolling Interests / Temporary Equity
December 31, 2017	$	19,258		$	16,939		$	(432	)	$	(3,967	)	$	31,798		$	50		$	31,848		$	416
Net income		—			1,089			—			—			1,089			(1	)		1,088			6
Dividends paid		—			(505	)		—			—			(505	)		—			(505	)		—
Stock-based compensation		175			—			—			—			175			—			175			—
PNC preferred stock capital contribution		58			—			—			—			58			—			58			—
Retirement of preferred stock		(58	)		—			—			—			(58	)		—			(58	)		—
Issuance of common shares related to employee stock transactions		(575	)		—			—			578			3			—			3			—
Employee tax withholdings related to employee stock transactions		—			—			—			(384	)		(384	)		—			(384	)		—
Shares repurchased		—			—			—			(335	)		(335	)		—			(335	)		—
Subscriptions (redemptions/distributions) — noncontrolling interest holders		—			—			—			—			—			(5	)		(5	)		352
Net consolidations (deconsolidations) of sponsored investment funds		—			—			—			—			—			—			—			(213	)
Other comprehensive income (loss)		—			—			137			—			137			—			137			—
Adoption of new accounting pronouncements		—			6			(6	)		—			—			—			—			—
March 31, 2018	$	18,858		$	17,529		$	(301	)	$	(4,108	)	$	31,978		$	44		$	32,022		$	561

⁽¹⁾	Amounts include $2 million of common stock at both ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016.~~2017.

See accompanying notes to condensed consolidated financial statements.

BlackRock, Inc.

Condensed Consolidated Statements of Changes in Equity

(unaudited)

(in millions)

Additional
Paid-in
Capital⁽¹⁾

Retained
Earnings

Accumulated
Other
Comprehensive
Income (Loss)

Treasury
Stock
Common

Total
BlackRock
Stockholders’
Equity

Nonredeemable
Noncontrolling
Interests

Total
Permanent
Equity

Redeemable
Noncontrolling
Interests /
Temporary
Equity

December 31, 2015

$
19,407

$
12,033

$
(448
)

$
(2,489
)

$
28,503

$
77

$
28,580

$
464

Net income

—

2,321

—

—

2,321

(2
)

2,319

—

Dividends paid

—

(1,171
)

—

—

(1,171
)

—

(1,171
)

—

Stock-based compensation

408

—

—

—

408

—

408

—

PNC preferred stock capital
    contribution

172

—

—

—

172

—

172

—

Retirement of preferred stock

(172
)

—

—

—

(172
)

—

(172
)

—

Issuance of common shares
    related to employee stock
    transactions

(654
)

—

—

688

34

—

34

—

Employee tax withholdings
    related to employee stock
    transactions

—

—

—

(268
)

(268
)

—

(268
)

—

Shares repurchased

—

—

—

(850
)

(850
)

—

(850
)

—

Net tax benefit (shortfall) from
   stock-based compensation

77

—

—

—

77

—

77

—

Subscriptions (redemptions/
    distributions) —
    noncontrolling interest
    holders

—

—

—

—

—

(18
)

(18
)

1,017

Net consolidations
    (deconsolidations) of
     sponsored
     investment funds

—

—

—

—

—

—

—

(881
)
Other comprehensive
    income (loss)

—

—

(150
)

—

(150
)

—

(150
)

—

September 30, 2016

$
19,238

$
13,183

$
(598
)

$
(2,919
)

$
28,904

$
57

$
28,961

$
600

(in millions)	Additional Paid-in Capital⁽¹⁾			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock Common			Total BlackRock Stockholders’ Equity			Nonredeemable Noncontrolling Interests			Total Permanent Equity			Redeemable Noncontrolling Interests / Temporary Equity
December 31, 2016	$	19,339		$	13,650		$	(716	)	$	(3,185	)	$	29,088		$	52		$	29,140		$	194
Net income		—			859			—			—			859			1			860			8
Dividends paid		—			(447	)		—			—	��		(447	)		—			(447	)		—
Stock-based compensation		162			—			—			—			162			—			162			—
PNC preferred stock capital contribution		193			—			—			—			193			—			193			—
Retirement of preferred stock		(193	)		—			—			—			(193	)		—			(193	)		—
Issuance of common shares related to employee stock transactions		(573	)		—			—			576			3			—			3			—
Employee tax withholdings related to employee stock transactions		—			—			—			(287	)		(287	)		—			(287	)		—
Shares repurchased		—			—			—			(275	)		(275	)		—			(275	)		—
Subscriptions (redemptions/distributions) — noncontrolling interest holders		—			—			—			—			—			(3	)		(3	)		135
Net consolidations (deconsolidations) of sponsored investment funds		—			—			—			—			—			—			—			(28	)
Other comprehensive income (loss)		—			—			39			—			39			—			39			—
Adoption of new accounting pronouncement		3			(2	)		—			—			1			—			1			—
March 31, 2017	$	18,931		$	14,060		$	(677	)	$	(3,171	)	$	29,143		$	50		$	29,193		$	309

⁽¹⁾	Amounts include $2 million of common stock at both ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015.~~2016.

See accompanying notes to condensed consolidated financial statements.

BlackRock, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)

	Nine Months Ended						Three Months Ended
(in millions)	September 30,						March 31,
	2017			2016			2018			2017
Cash flows from operating activities
Net income	$	2,697		$	2,319		$	1,094		$	868
Adjustments to reconcile net income to cash flows from operating activities:
Depreciation and amortization		190			198			53			63
Stock-based compensation		417			408			175			162
Deferred income tax expense (benefit)		175			(6	)		10			198
Assets and liabilities of consolidated VIEs:
Change in cash and cash equivalents		(19	)		(127	)
Net (gains) losses within consolidated VIEs		(95	)		(34	)		(2	)		(33	)
Net (purchases) proceeds within consolidated VIEs		(148	)		(855	)		(342	)		(96	)
(Earnings) losses from equity method investees		(92	)		(71	)		(33	)		(32	)
Distributions of earnings from equity method investees		24			16			10			5
Changes in operating assets and liabilities:
Accounts receivable		(776	)		(336	)		35			5
Investments, trading		(145	)		(278	)		(21	)		(188	)
Other assets		(190	)		(114	)		(474	)		(975	)
Accrued compensation and benefits		(267	)		(484	)		(1,362	)		(1,110	)
Accounts payable and accrued liabilities		595			309			268			59
Other liabilities		120			17			448			910
Cash flows from operating activities		2,486			962			(141	)		(164	)
Cash flows from investing activities
Purchases of investments		(400	)		(292	)		(94	)		(61	)
Proceeds from sales and maturities of investments		121			215			122			21
Distributions of capital from equity method investees		26			26			5			10
Net consolidations (deconsolidations) of sponsored investment funds		(35	)		(74	)
Acquisitions		(102	)		(30	)
Net consolidations (deconsolidations) of sponsored investment funds (VIEs/VREs)								(53	)		—
Purchases of property and equipment		(100	)		(88	)		(33	)		(19	)
Cash flows from investing activities		(490	)		(243	)		(53	)		(49	)
Cash flows from financing activities
Proceeds from long-term borrowings		697			—			—			697
Repayments of long-term borrowings		(700	)		—
Cash dividends paid		(1,259	)		(1,171	)		(505	)		(447	)
Proceeds from stock options exercised		—			26
Repurchases of common stock		(1,133	)		(1,118	)		(719	)		(562	)
Net (redemptions/distributions paid)/subscriptions received from noncontrolling interest holders		324			999			347			132
Excess tax benefit from stock-based compensation		—			81
Other financing activities		(12	)		3			3			—
Cash flows from financing activities		(2,083	)		(1,180	)		(874	)		(180	)
Effect of exchange rate changes on cash and cash equivalents		161			(168	)
Net increase (decrease) in cash and cash equivalents		74			(629	)
Cash and cash equivalents, beginning of period		6,091			6,083
Cash and cash equivalents, end of period	$	6,165		$	5,454
Effect of exchange rate changes on cash, cash equivalents and restricted cash								115			32
Net increase (decrease) in cash, cash equivalents and restricted cash								(953	)		(361	)
Cash, cash equivalents and restricted cash, beginning of period								7,096			6,192
Cash, cash equivalents and restricted cash, end of period							$	6,143		$	5,831
Supplemental disclosure of cash flow information:
Cash paid for:
Interest	$	150		$	144		$	29		$	40
Income taxes (net of refunds)	$	916		$	910		$	74		$	82
Supplemental schedule of noncash investing and financing transactions:
Issuance of common stock	$	612		$	654		$	575		$	573
PNC preferred stock capital contribution	$	193		$	172		$	58		$	193
Increase (decrease) in noncontrolling interests due to net consolidation (deconsolidation) of sponsored investment funds	$	(226	)	$	(881	)	$	(213	)	$	(28	)

See accompanying notes to condensed consolidated financial statements.

BlackRock, Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

1. Business Overview

BlackRock’s diverse platform of alpha-seeking active, ~~(alpha)~~index and ~~index (beta)~~cash management investment strategies across asset classes enables the Company to tailor investment outcomes and asset allocation solutions for clients. Product offerings include single- and multi-asset portfolios investing in equities, fixed income, alternatives and money market instruments. Products are offered directly and through intermediaries in a variety of vehicles, including open-end and closed-end mutual funds, iShares^® exchange-traded funds (“ETFs”), separate accounts, collective investment ~~funds~~trusts and other pooled investment vehicles. BlackRock also offers anthe investment and risk management technology platform, Aladdin^®, risk analytics, advisory and technology services and solutions to a broad base of institutional and wealth management ~~investors.~~clients.

At ~~September 30, 2017,~~March 31, 2018, The PNC Financial Services Group, Inc. (“PNC”) held ~~21.4%~~21.2% of the Company’s voting common stock and ~~21.9%~~21.7% of the Company’s capital stock, which includes outstanding common and nonvoting preferred stock.

2. Significant Accounting Policies

Basis of Presentation. These condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and include the accounts of the Company and its controlled subsidiaries. Noncontrolling interests on the condensed consolidated statements of financial condition represents the portion of consolidated sponsored investment funds in which the Company does not have direct equity ownership. Accounts and transactions between consolidated entities have been eliminated.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting periods. Actual results could differ from those estimates.

Certain financial information that normally is included in annual financial statements, including certain financial statement footnotes, is not required for interim reporting purposes and has been condensed or omitted herein. These condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes related thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2017, which was filed with the Securities and Exchange Commission (“SEC”) on February 28, 2018 (“2017 ~~(“2016~~ Form 10-K”).

The interim financial information at ~~September 30, 2017~~March 31, 2018 and for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~ is unaudited. However, in the opinion of management, the interim information includes all normal recurring adjustments necessary for the fair presentation of the Company’s results for the periods presented. The results of operations for interim periods are not necessarily indicative of results to be expected for the full year.

Certain ~~items previously reported have been~~prior period presentations and disclosures, while not required to be recast, were reclassified to ~~conform to the~~ensure comparability with current ~~year presentation. Beginning with the first quarter of 2017,~~ ~~Aladdin~~ ~~revenue previously reported within “BlackRock Solutions~~^® ~~and advisory” has been presented within “Technology and risk management revenue” on the condensed consolidated statements of income. The remaining previously reported “BlackRock Solutions~~ ~~and advisory” revenue is currently reported as part of “Advisory and other revenue.” The prior~~ period ~~amounts reported for~~ ~~BlackRock Solutions~~ ~~and advisory for the three and nine months ended September 30, 2016 have been reclassified to conform to the current presentation.~~classifications.

Accounting Pronouncements Adopted in the ~~Nine~~Three Months Ended ~~September 30, 2017.~~March 31, 2018.

~~Accounting for Share-Based Payments.~~Revenue from Contracts with Customers. ~~In March 2016, the~~ The Financial Accounting Standards Board (“FASB”) issued ~~ASU 2016-09,~~ ~~Improvements to Employee Share-Based Payment~~ Accounting Standards Update (“ASU”) 2~~(“ASU 2016-09”~~014-09, Revenue from Contracts with Customers, and several amendments (collectively, “ASU 2014-09”). ASU ~~2016-09 simplifies~~2014-09 outlines a single comprehensive model for entities to use in accounting for ~~employee share-based payment transactions,~~revenue arising from contracts with customers and supersedes most previous revenue recognition guidance, including industry-specific guidance. The guidance also changes the accounting for ~~income taxes, forfeitures,~~certain contract costs and ~~statutory tax withholding requirements,~~revises the criteria for determining if an entity is acting as a principal or agent in certain arrangements.

The Company adopted ASU 2014-09 effective January 1, 2018 on a full retrospective basis, which required the Company to recast 2016 and 2017 previously reported amounts. The key impact of the standard relates to the Company’s presentation of certain revenue contracts and associated contract costs. The most significant of these changes relates to the presentation of certain distribution costs, which were previously presented net against revenue (contra-revenue) and are now presented as an expense on a gross basis. Revenue recognition related to investment advisory, administration fees and securities lending revenue as well as performance fees remained unchanged, which represents a substantial portion of the Company’s revenue. However, under ASU 2014-09, the Company may recognize certain performance fees, including carried interest, earlier than under the prior revenue recognition guidance. The impact to the condensed consolidated statement of financial condition upon adoption was related to a change in timing of recognition for certain technology and risk management revenue and related costs that resulted in an increase to other assets and other liabilities of $19 million and $25 million, respectively. The cumulative adjustment to retained earnings as of January 1, 2016 was a net decrease of $6 million.

The following table presents the impact of the adoption to the condensed consolidated statement of income for the three months ended March 31, 2017.

	Three Months Ended
	March 31, 2017
(in millions, except shares and per share data)	Previously Reported		Adoption of the New Revenue Standard Adjustment			Recast
Total revenue	$	2,824	$	268		$	3,092
Total expense		1,677		272			1,949
Operating income	$	1,147	$	(4	)	$	1,143
Income tax expense	$	269	$	(1	)	$	268
Net income	$	871	$	(3	)	$	868
Net income attributable to BlackRock, Inc.	$	862	$	(3	)	$	859
Earnings per share attributable to BlackRock, Inc. common stockholders:
Basic	$	5.29	$	(0.02	)	$	5.27
Diluted	$	5.23	$	(0.02	)	$	5.21

Recognition and Measurement of Financial Instruments.In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). ASU 2016-01 amends guidance on the classification and measurement of financial instruments, including requiring an entity to measure substantially all equity securities (other than those accounted for under the equity method of accounting) at fair value through earnings. ASU 2016-01 also amends certain disclosure requirements associated with the fair value of financial instruments. The Company adopted ASU 2016-01 using a modified retrospective approach on January 1, 2018. The reclassification of unrealized gains (losses) on equity securities within accumulated other comprehensive income to retained earnings was not material upon adoption.

Cash Flow Classification. In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”), which amends and clarifies the current guidance to reduce diversity in practice of the classification of certain cash receipts and payments in the ~~condensed~~ consolidated

~~statements~~ statement of cash flows. The Company adopted ASU ~~2016-09 as of~~2016-15 on January 1, ~~2017.~~2018 retrospectively to all periods presented. The adoption of ASU 2016-09 requires all excess tax benefits and deficiencies to be recognized in income tax expense on the condensed consolidated statements of income. Accordingly, the Company recorded a discrete income tax benefit of $81 million during the three months ended March 31, 2017 for vested restricted stock units where the grant date stock price was lower than the vesting date stock price. The new guidance will increase the volatility of income tax expense as a result of fluctuations in the Company’s stock price. Upon adoption, the Company elected to account for forfeitures as they occur, which2016-15 did not have a material impact on the condensed consolidated statement of cash flows.

Restricted Cash. In November 2016, the FASB issued 2016-18, Restricted Cash, which clarifies the classification and presentation of restricted cash in the statement of cash flows (“ASU 2016-18”). The Company adopted ASU 2016-18 on January 1, 2018 retrospectively to all periods presented. The adoption of ASU 2016-18 did not have a material impact on the condensed consolidated statement of cash flows. See Note 3, Cash, Cash Equivalents and Restricted Cash, for additional disclosure requirements related to restricted cash.

Reclassifications from Accumulated Other Comprehensive Income.In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“ASU 2018-02”). ASU 2018-02 allows reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. The Company adopted ASU 2018-02 prospectively on January 1, 2018. The adoption of ASU 2018-02 did not have a material impact on the condensed consolidated statement of financial ~~statements.~~condition.

Revenue Recognition.

Revenue is recognized upon transfer of control of promised services to customers in an amount that reflects consideration to which the Company expects to be entitled in exchange for those services (the “transaction price”). The Company enters into contracts that can include multiple services, which are accounted for separately if they are determined to be distinct. Consideration for the Company’s services is generally in the form of variable consideration because the amount of fees is subject to market conditions that are outside of the Company’s influence. The Company includes variable consideration as part of its transaction price when it is no longer probable of significant reversal, i.e. when the associated uncertainty is resolved. For some contracts with customers, the Company has discretion to involve a third party in providing services to the customer. Generally, the Company is deemed to be the principal in these arrangements because the Company controls the promised services before they are transferred to customers, and accordingly presents the revenue gross of related costs.

Investment Advisory, Administration Fees and Securities Lending Revenue. Investment advisory and administration fees are recognized as the services are performed over time. Such fees are primarily based on agreed-upon percentages of net asset value, assets under management (“AUM”) or committed capital. These fees are affected by changes in AUM, including market appreciation or depreciation, foreign exchange translation and net inflows or outflows. Investment advisory and administration fees for investment funds are shown net of fees waived pursuant to contractual expense limitations of the funds or voluntary waivers. In addition, the Company ~~elected~~may contract with third parties to ~~present excess tax benefits~~provide sub-advisory services on its behalf. The Company presents the investment advisory fees and ~~deficiencies prospectively~~associated costs to such advisors on a gross basis in ~~operating activities~~the condensed consolidated statements of income where it is deemed to be the principal.

The Company earns revenue by lending securities on behalf of clients, primarily to highly rated banks and broker-dealers. Revenue is recognized over time as services are performed. Generally, the securities lending fees are shared between the Company and the funds or other third-party accounts managed by the Company from which the securities are borrowed.

Investment Advisory Performance Fees / Carried Interest. The Company receives investment advisory performance fees, including incentive allocations (carried interest) from certain actively managed investment funds and certain separately managed accounts. These performance fees are dependent upon exceeding specified relative or absolute investment return thresholds, which may vary by product or account, and include monthly, quarterly, annually or longer measurement periods. A portion of the fees the Company recognizes may be partially related to the services performed in prior periods that meet the recognition criteria in the current period.

The Company is allocated carried interest from certain alternative investment products upon exceeding performance thresholds. BlackRock may be required to reverse/return all, or part, of such carried interest allocations depending upon future performance of these funds. Therefore, carried interest subject to such clawback provisions is recorded in investments/investments of consolidated VIEs or cash/cash of consolidated VIEs to the extent that it is distributed, on its condensed consolidated statements of financial condition.

Performance fees, including carried interest, are recognized when it is determined that they are no longer probable of significant reversal (such as upon the sale of a fund’s investment or when the amount of AUM becomes known as of the end of a specified measurement period). Significant judgement is involved in making such determination. At each reporting date, the Company considers various factors in estimating performance fees to be recognized, including carried interest. These factors include but are not limited to whether: (1) the fees are dependent on the market and thus are highly susceptible to factors outside the Company’s influence; (2) the fees have a large number and a broad range of possible amounts; and (3) the funds or separately managed accounts have the ability to invest or reinvest its sales proceeds.

The Company records a contract liability for deferred carried interest to the extent it receives cash or capital allocations related to carried interest prior to meeting the revenue recognition criteria. At March 31, 2018 and December 31, 2017, the Company had $224 million and $219 million, respectively, of deferred carried interest recorded in other liabilities/other liabilities of consolidated VIEs on the condensed consolidated statements of financial condition. A

portion of the deferred carried interest may also be paid to certain employees. The ultimate timing of the recognition of performance fee revenue and related compensation expense, if any, for these products is unknown.

Technology and risk management revenue. BlackRock offers investment management technology systems, risk management services, wealth management and digital distribution tools on a fee basis. Clients include banks, insurance companies, official institutions, pension funds, asset managers, retail distributors and other investors. Fees earned for technology and risk management revenue are recorded as services are performed and are generally determined using the value of positions on the Aladdin platform or on a fixed-rate basis.

Distribution Fees. The Company accounts for fund distribution services and shareholder servicing as distinct services, separate from fund management services, because customers can benefit from each of the services on their own and because the services are separately identifiable (that is, the nature of the promised services is to transfer each service individually). The Company records upfront and ongoing sales commissions as distribution fee revenue for serving as the principal underwriter and/or distributor for certain mutual funds that it manages. The Company recognizes the upfront fees for front-end load funds on a trade date basis when the services are performed and the amount the Company is entitled to is known. The on-going distribution fees are generally based on net asset values and are recognized when the amount is known. Distribution services are satisfied at a point in time. Consequently, a portion of the on-going distribution fees the Company recognized may be related to the services performed in prior periods that met the recognition criteria in the current period. The Company recognizes ongoing shareholder servicing fee revenue when and as shareholder services are performed over time. The Company contracts with third parties for various fund distribution services and shareholder servicing of certain funds to be performed on its behalf. These arrangements are generally priced as a portion of the fee paid to the Company by the fund or as an agreed-upon percentage of net asset value. The Company presents its distribution fees and distribution and servicing costs incurred on a gross basis in the condensed consolidated statements of income as it is deemed to be the principal in such transactions.

Advisory and other revenue. Advisory and other revenue primarily includes fees earned for advisory services, fees earned for transition management services primarily comprised of commissions recognized in connection with buying and selling securities on behalf of customers, and equity method investment earnings related to certain strategic investments.

Advisory services fees are determined using fixed-rate fees and are recognized over time as the related services are performed.

Commissions related to transition management services are recorded on a trade-date basis as securities transactions occur.

Investments.

Investments in Debt Securities. BlackRock classifies debt investments as available-for-sale, held-to-maturity or trading based on the Company’s intent to sell the security or, its intent and ability to hold the debt security to maturity.

Available-for-sale debt securities are those securities that are not classified as trading or held-to-maturity. Available-for-sale debt securities include certain investments in collateralized loan obligations (“CLOs”) and are carried at fair value on the condensed consolidated statements of financial condition with changes in fair value recorded in the accumulated other comprehensive income (loss) component of stockholders’ equity in the period of the change. Upon the disposition of an available-for-sale security, the Company reclassifies the gain or loss on the security from accumulated other comprehensive income (loss) to nonoperating income (expense) on the condensed consolidated statements of income.

Held-to-maturity debt securities are purchased with the positive intent and ability to be held to maturity and are recorded at amortized cost on the condensed consolidated statements of financial condition.

Trading securities are those investments that are purchased principally for the purpose of selling them in the near term. Trading securities are carried at fair value on the condensed consolidated statements of financial condition with changes in fair value recorded in nonoperating income (expense) on the condensed consolidated statements of income in the period of the change. Trading securities include certain investments in CLOs for which the fair value option is elected in order to reduce operational complexity of bifurcating embedded derivatives.

Investments in Equity Securities. Equity securities are generally carried at fair value on the condensed consolidated statements of financial condition with changes in the fair value recorded through net income (“FVTNI”) within nonoperating income (expense) in the period of change. For nonmarketable equity securities, the Company generally elected to apply the practicality exception to apply fair value measurement, under which such securities will be measured at cost, less impairment, plus or minus observable price changes for identical or similar securities of the

same issuer with such changes recorded in the condensed consolidated statements of income in the period of the change. Dividends received from the investment are recorded as dividend income within nonoperating income (expense).

Equity Method. For equity investments where BlackRock does not control the investee, and where it is not the primary beneficiary (“PB”) of a VIE, but can exert significant influence over the financial and operating policies of the investee, the Company follows the equity method of accounting. BlackRock’s share of the investee’s underlying net income or loss is recorded as net gain (loss) on investments within nonoperating income (expense) and as other revenue for certain strategic investments since such companies are considered to be an extension of BlackRock’s core business. BlackRock’s share of net income of the investee is recorded based upon the most current information available at the time, which may precede the date of the condensed consolidated statement of financial condition. Distributions received from the investment reduce the Company’s carrying value of the investee and the cost basis if deemed to be a return of capital.

Impairments of Investments. Management periodically assesses equity method, available-for-sale and held-to-maturity investments for other-than-temporary impairment (“OTTI”). If an OTTI exists, an impairment charge would be recorded in the condensed consolidated statements of income.

For equity method investments and held-to-maturity investments, if circumstances indicate that an OTTI may exist, the investments are evaluated using market values, where available, or the expected future cash ~~flows.~~flows of the investment. If the Company determines an OTTI exists, an impairment charge is recognized for the excess of the carrying amount of the investment over its estimated fair value.

For the Company’s investments in CLOs, the Company reviews cash flow estimates over the life of each CLO investment. On a quarterly basis, if the present value of the estimated future cash flows is lower than the carrying value of the investment and there is an adverse change in estimated cash flows, an impairment is considered to be other-than-temporary. An impairment charge is recognized for the excess of the carrying amount of the investment over its estimated fair value.

In addition, for nonmarketable equity securities that are accounted for under the measurement alternative to fair value, the Company applies the simplified impairment model that does not require the Company to consider whether the impairment is other than temporary.

Fair Value Measurements.

Hierarchy of Fair Value Inputs. The Company uses a fair value hierarchy that prioritizes inputs to valuation approaches used to measure fair value. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. Assets and liabilities measured and reported at fair value are classified and disclosed in one of the following categories:

Level 1 Inputs:

Quoted prices (unadjusted) in active markets for identical assets or liabilities at the reporting date.

Level 1 assets may include listed mutual funds, ETFs, listed equities and certain exchange-traded derivatives.

Level 2 Inputs:

Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities that are not active; quotes from pricing services or brokers for which the Company can determine that orderly transactions took place at the quoted price or that the inputs used to arrive at the price are observable; and inputs other than quoted prices that are observable, such as models or other valuation methodologies.

Level 2 assets may include debt securities, investments in CLOs, short-term floating-rate notes, asset-backed securities, securities held within consolidated hedge funds, restricted public securities valued at a discount, as well as over-the-counter derivatives, including interest and inflation rate swaps and foreign currency exchange contracts that have inputs to the valuations that generally can be corroborated by observable market data.

Level 3 Inputs:

Unobservable inputs for the valuation of the asset or liability, which may include nonbinding broker quotes. Level 3 assets include investments for which there is little, if any, market activity. These inputs require significant management judgment or estimation.

Level 3 assets may include direct private equity investments held within consolidated funds and investments in CLOs.

Level 3 liabilities include contingent liabilities related to acquisitions valued based upon discounted cash flow analyses using unobservable market data.

Significance of Inputs. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument.

Valuation Approaches. The fair values of certain Level 3 assets and liabilities were determined using various valuation approaches as appropriate, including third-party pricing vendors, broker quotes and market and income approaches. Such quotes and modeled prices are evaluated for reasonableness through various procedures, including due diligence reviews of third-party pricing vendors, variance analyses, consideration of the current market environment and other analytical procedures.

A significant number of inputs used to value equity, debt securities and investments in CLOs is sourced from third-party pricing vendors. Generally, prices obtained from pricing vendors are categorized as Level 1 inputs for identical securities traded in active markets and as Level 2 for other similar securities if the vendor uses observable inputs in determining the price. Annually, BlackRock’s internal valuation committee or other designated groups review both the valuation approaches, including the general assumptions and methods used to value various asset classes, and

operational processes with these vendors. On a quarterly basis, meetings are held with key vendors to identify any significant changes to the vendors’ processes.

In addition, quotes obtained from brokers generally are nonbinding and categorized as Level 3 inputs. However, if the Company is able to determine that market participants have transacted for the asset in an orderly manner near the quoted price or if the Company can determine that the inputs used by the broker are observable, the quote is classified as a Level 2 input.

Investments Measured at Net Asset Values. As a practical expedient, the Company uses net asset value (“NAV”) as the fair value for certain investments. The inputs to value these investments may include BlackRock capital accounts for its partnership interests in various alternative investments, including hedge funds, real assets and private equity funds, which may be adjusted by using the returns of certain market indices. The various partnerships generally are investment companies, which record their underlying investments at fair value based on fair value policies established by management of the underlying fund. Fair value policies at the underlying fund generally require the fund to utilize pricing/valuation information from third-party sources, including independent appraisals. However, in some instances, current valuation information for illiquid securities or securities in markets that are not active may not be available from any third-party source or fund management may conclude that the valuations that are available from third-party sources are not reliable. In these instances, fund management may perform model-based analytical valuations that could be used as an input to value these investments.

Derivative Instruments and Hedging Activities. The Company does not use derivative financial instruments for trading or speculative purposes. The Company uses derivative financial instruments primarily for purposes of hedging exposures to fluctuations in foreign currency exchange rates of certain assets and liabilities, and market exposures for certain seed investments. However, certain consolidated sponsored investment funds may also utilize derivatives as a part of their investment strategy.

Changes in the fair value of the Company’s derivative financial instruments are recognized in earnings and, where applicable, are offset by the corresponding gain or loss on the related foreign-denominated assets or liabilities or hedged investments, on the condensed consolidated statements of income.

The Company may also use financial instruments designated as net investment hedges for accounting purposes to hedge net investments in international subsidiaries whose functional currency is not U.S. dollars. The gain or loss from revaluing accounting hedges of net investments in foreign operations at the spot rate is deferred and reported within accumulated other comprehensive income on the condensed consolidated statements of financial condition. The Company reassesses the effectiveness of its net investment hedge on a quarterly basis.

Money Market Fee Waivers. The Company ~~is currently~~may voluntarily ~~waiving~~waive a portion of its management fees on certain money market funds to ensure that they maintain a targeted level of daily net investment income (the “Yield Support waivers”). During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017, ~~these~~ waivers that resulted in a reduction of management fees ~~of approximately $0million and $6 million, respectively. During the three and nine months ended September 30, 2016, these waivers resulted in a reduction of management fees of approximately $17million and $42 million, respectively. Approximately 0% and 45% of Yield Support waivers for the nine months ended September 30, 2017 and 2016, respectively,~~ were ~~offset by a reduction of BlackRock’s distribution and servicing costs paid to a financial intermediary.~~immaterial. BlackRock may increase or decrease the level of Yield Support waivers in future periods.

Separate Account Assets and Liabilities. Separate account assets are maintained by BlackRock Life Limited, a wholly owned subsidiary of the Company, which is a registered life insurance company in the United Kingdom, and represent segregated assets held for purposes of funding individual and group pension contracts. The life insurance company does not underwrite any insurance contracts that involve any insurance risk transfer from the insured to the life insurance company. The separate account assets primarily include equity securities, debt securities, money market funds and derivatives. The separate account assets are not subject to general claims of the creditors of BlackRock. These separate account assets and the related equal and offsetting liabilities are recorded as separate account assets and separate account liabilities on the condensed consolidated statements of financial condition.

The net investment income attributable to separate account assets supporting individual and group pension contracts accrues directly to the contract owner and is not reported on the condensed consolidated statements of income. While BlackRock has no economic interest in these separate account assets and liabilities, BlackRock earns policy administration and management fees associated with these products, which are included in investment advisory, administration fees and securities lending revenue on the condensed consolidated statements of income.

Separate Account Collateral Assets Held and Liabilities Under Securities Lending Agreements. The Company facilitates securities lending arrangements whereby securities held by separate accounts maintained by BlackRock Life Limited are lent to third parties under global master securities lending agreements. In exchange, the Company receives legal title to the collateral with minimum values generally ranging from approximately 102% to 112% of the value of the securities lent in order to reduce counterparty risk. The required collateral value is calculated on a daily basis. The global master securities lending agreements provide the Company the right to request additional collateral or, in the event of borrower default, the right to liquidate collateral. The securities lending transactions entered into by the Company are accompanied by an agreement that entitles the Company to request the borrower to return the securities at any time; therefore, these transactions are not reported as sales.

The Company records on the condensed consolidated statements of financial condition the cash and noncash collateral received under these BlackRock Life Limited securities lending arrangements as its own asset in addition to an equal and offsetting collateral liability for the obligation to return the collateral. The securities lending revenue earned from lending securities held by the separate accounts is included in investment advisory, administration fees and securities lending revenue on the condensed consolidated statements of income. During the ~~nine~~three months ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016,~~ the Company had not resold or repledged any of the collateral received under these arrangements. At ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, the fair value of loaned securities held by separate accounts was approximately ~~$24.7~~$24.8 billion and ~~$25.7~~$22.3 billion, respectively, and the fair value of the collateral held under these securities lending agreements was approximately ~~$27.4~~$27.2 billion and ~~$27.8~~$24.2 billion, respectively.

Recent Accounting Pronouncements Not Yet Adopted.

~~Revenue from Contracts with Customers.~~ ~~In May 2014, the FASB issued ASU 2014-09,~~ ~~Revenue from Contracts with Customers~~ (“ASU 2014-09”). ASU 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The guidance also changes the accounting for certain contract costs and revises the criteria for determining if an entity is acting as a principal or agent in certain arrangements. The Company continues to evaluate the impact of ASU 2014-09 on the presentation and recognition of its revenue contracts and certain contract costs. The most significant change identified to date relates to the presentation of certain distribution costs, which are currently presented net against revenues (contra-revenue) and will likely be presented as an expense on a gross basis. The Company currently expects such net gross up to annual revenue to be approximately $1 billion with a corresponding gross up to annual expense. The Company is currently evaluating which transition method it will apply when it adopts the new revenue recognition guidance in the first quarter of 2018.

~~Recognition and Measurement of Financial Instruments~~.~~In January 2016, the FASB issued ASU 2016-01,~~ ~~Recognition and Measurement of Financial Assets and Financial Liabilities~~ (“ASU 2016-01”). ASU 2016-01 amends guidance on the classification and measurement of financial instruments, including significant revisions in accounting related to the classification and measurement of investments in equity securities and presentation of certain fair value changes for financial liabilities when the fair value option is elected. ASU 2016-01 also amends certain disclosure requirements associated with the fair value of financial instruments. The Company does not currently expect the reclassification of unrealized gains(losses) on equity securities within accumulated other comprehensive income to retained earnings to be material upon adoption effective January 1, 2018.

Leases. In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”), which requires lessees to recognize assets and liabilities arising from most operating leases on the condensed consolidated statements of financial condition. The Company expects to record assets and liabilities for its current operating leases upon adoption of ASU 2016-02 and does not expect the adoption to have a material impact on its results of operations or cash flows. ASU 2016-02 is effective for the Company on January 1, 2019, and the Company intends to apply the practical expedients allowed by the standard upon transition. See Note 13 of the ~~2016~~2017 Form 10-K for information on the Company’s operating lease commitments.

3. Cash, ~~Flow Classification.~~ ~~In August 2016,~~Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash and cash equivalents reported within the ~~FASB issued ASU 2016-15,~~ ~~Classification~~condensed consolidated statements of ~~Certain Cash Receipts~~financial condition to the cash, cash equivalents, and ~~Cash Payments~~ ~~(“ASU 2016-15”), which amends and clarifies the current guidance to reduce diversity in practice of the classification of certain~~restricted cash ~~receipts and payments in~~reported within the condensed consolidated statements of cash flows. The Company is currently evaluating the impact of adopting ASU 2016-15, which is effective for the Company on January 1, 2018 with early adoption permitted. The Company must apply the guidance retrospectively to all periods presented.

	March 31,		December 31,
(in millions)	2018		2017

Cash and cash equivalents	$	5,978	$	6,894
Cash and cash equivalents of consolidated VIEs		103		144
Restricted cash included in Other assets		62		58
Total cash, cash equivalents and restricted cash	$	6,143	$	7,096

3.4. Investments

A summary of the carrying value of total investments is as follows:

					March 31,
(in millions)					2018⁽¹⁾
Debt securities:
Available-for-sale investments					$	151
Held-to-maturity investments						132
Trading securities ($266 debt securities of consolidated sponsored investment funds)						293
Total debt securities						576
Equity securities at FVTNI ($284 equity securities of consolidated sponsored investment funds)						648
Equity method investments⁽²⁾						703
Federal Reserve Bank stock⁽³⁾						91
Carried interest⁽⁴⁾						32
Total investments					$	2,050
	September 30,		December 31,
(in millions)	2017		2016		December 31, 2017⁽¹⁾
Available-for-sale investments	$	104	$	80	$	103
Held-to-maturity investments		76		51		102
Trading investments:
Consolidated sponsored investment funds		507		465
Consolidated sponsored investment funds:
Debt securities						267
Equity securities						245
Other equity and debt securities		131		101		267
Deferred compensation plan mutual funds		54		59		56
Total trading investments		692		625		835
Other investments:
Equity method investments⁽¹⁾		944		730
Cost method investments⁽²⁾		92		91
Carried interest⁽³⁾		20		18
Total other investments		1,056		839
Equity method investments⁽²⁾						816
Cost method investments⁽³⁾						93
Carried interest⁽⁴⁾						32
Total investments	$	1,928	$	1,595	$	1,981

⁽¹⁾	Amounts at March 31, 2018 reflect the adoption of ASU 2016-01. See Note 2, Significant Accounting Policies, for further information. Amounts at December 31, 2017 reflect accounting guidance prior to ASU 2016-01.

⁽²⁾	Equity method investments primarily include BlackRock’s direct investments in certain BlackRock sponsored investment funds.

⁽²⁾⁽³⁾

Amounts include ~~nonmarketable securities, primarily~~ Federal Reserve Bank stock, which is held for regulatory purposes and is restricted from sale. At ~~September 30,~~December 31, 2017, amount also includes other nonmarketable securities, which were immaterial. At March 31, 2018 and December 31, ~~2016,~~2017, there were no indicators of impairment on these investments.

⁽³⁾⁽⁴⁾

Carried interest of consolidated sponsor investment funds accounted for as voting rights entities (“VREs”) represents allocations to BlackRock’s general partner capital accounts from certain funds. These balances are subject to change upon cash distributions, additional allocations or reallocations back to limited partners within the respective funds.

Available-for-Sale Investments

At both ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, available-for-sale investments primarily included certain investments in ~~CLOs and seed investments in BlackRock sponsored mutual funds.~~CLOs. The cost of these investments approximated carrying value.

Held-to-Maturity Investments

The carrying value of held-to-maturity investments was ~~$76~~$132 million and ~~$51~~$102 million at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively. Held-to-maturity investments included foreign government debt held primarily for regulatory purposes and certain investments in CLOs. The amortized cost (carrying value) of these investments approximated fair value. At ~~September 30, 2017, $11~~March 31, 2018, $12 million of these investments mature between five to ten years and ~~$65~~$120 million mature after ten years.

Equity and Trading ~~Investments~~Debt Securities

A summary of the cost and carrying value of equity and trading ~~investments~~debt securities is as follows:


	September 30,				December 31,				March 31, 2018⁽¹⁾
(in millions)	2017				2016				Cost		Carrying Value
Trading debt securities:
Corporate debt									$	166	$	169
Government debt										62		62
Asset/mortgage-backed debt										62		62
Equity securities at FVTNI:
Equity securities/multi-asset mutual funds										577		614
Deferred compensation plan mutual funds										21		34
Total equity and trading debt securities									$	888	$	941
	Cost		Carrying Value		Cost		Carrying Value

									December 31, 2017⁽¹⁾
(in millions)									Cost		Carrying Value
Trading investments:
Deferred compensation plan mutual funds	$	34	$	54	$	41	$	59	$	34	$	56
Equity securities/multi-asset mutual funds		323		353		290		308		446		493
Debt securities/fixed income mutual funds:
Debt securities
Corporate debt		160		162		128		128		152		157
Government debt		59		60		60		60		72		73
Asset/mortgage backed debt		62		63		70		70		56		56
Total trading investments	$	638	$	692	$	589	$	625	$	760	$	835

⁽¹⁾	Amounts at March 31, 2018 reflect the adoption of ASU 2016-01. See Note 2, Significant Accounting Policies, for further information. Amounts at December 31, 2017 reflect accounting guidance prior to ASU 2016-01.

At September 30, 2017, trading investments included $268 million of debt securities and $239 million of equity securities held by consolidated sponsored investment funds accounted for as VREs, $54 million of certain deferred compensation plan mutual fund investments and $131 million of other equity and debt securities.

1115

At December 31, 2016, trading investments included $246 million of debt securities and $219 million of equity securities held by consolidated sponsored investment funds accounted for as VREs, $59 million of certain deferred compensation plan mutual fund investments and $101 million of other equity and debt securities.Other

~~Other~~

In addition, the Company accounts for its interest in PennyMac Financial Services, Inc. (“PennyMac”) as an equity method investment. At ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 the Company’s investment in PennyMac was excluded from investments in the table above and included in other assets on the condensed consolidated statements of financial condition. The carrying value and fair value of the Company’s interest (approximately 20% or 16 million shares and units) was approximately ~~$333~~$363 million and ~~$277~~$352 million, respectively, at ~~September 30, 2017~~March 31, 2018 and approximately ~~$301~~$342 million and ~~$259~~$348 million, respectively, at December 31, ~~2016.~~2017. The fair value of the Company’s interest reflected the PennyMac stock price at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively (a Level 1 input). The ~~Company performed an other-than-temporary impairment analysis as of September 30, 2017 and determined the difference in~~ fair value ~~below~~of the ~~carrying value to be temporary.~~Company’s interest in the non-public units held of PennyMac is based on the stock price of the PennyMac public securities at March 31, 2018 and December 31, 2017.

5. Consolidated Voting Rights Entities

The Company consolidates certain sponsored investment funds accounted for as VREs because it is deemed to control such funds. ~~The investments owned by these consolidated VREs are classified as trading investments.~~ The following table presents the balances related to these consolidated VREs that were recorded on the condensed consolidated statements of financial condition, including BlackRock’s net interest in these funds:

	September 30,			December 31,			March 31,			December 31,
(in millions)	2017			2016			2018			2017
Cash and cash equivalents	$	73		$	53		$	44		$	63
Trading investments		507			465
Investments:
Trading debt securities								266			267
Equity securities at FVTNI								284			245
Total investments								550			512
Other assets		28			15			15			13
Other liabilities		(61	)		(50	)		(42	)		(37	)
Noncontrolling interests ("NCI")		(68	)		(39	)		(87	)		(91	)
BlackRock’s net interests in consolidated VREs	$	479		$	444		$	480		$	460

BlackRock’s total exposure to consolidated VREs represents the value of its economic ownership interest in these sponsored investment funds. Valuation changes associated with investments held at fair value by these consolidated VREs are reflected in nonoperating income (expense) and partially offset in net income (loss) attributable to noncontrolling interests for the portion not attributable to BlackRock.

The Company cannot readily access cash and cash equivalents held by consolidated VREs to use in its operating activities.

5.6. Variable Interest Entities

In the normal course of business, the Company is the manager of various types of sponsored investment vehicles, which may be considered variable interest entities (“VIEs”). The Company may from time to time own equity or debt securities or enter into derivatives with the vehicles, each of which are considered variable interests. The Company’s involvement in financing the operations of the VIEs is generally limited to its investments in the entity. The Company consolidates entities when it is determined to be the ~~primary beneficiary (“PB”).~~PB.

Consolidated VIEs. The Company’s consolidated VIEs include certain sponsored investment funds in which BlackRock has an investment and as the investment manager is deemed to have both the power to direct the most significant activities of the funds and the right to receive benefits (or the obligation to absorb losses) that could potentially be significant to these sponsored investment funds. The assets of these VIEs are not available to creditors of the Company. In addition, the investors in these VIEs have no recourse to the credit of the Company.

Consolidated VIE assets and liabilities are presented after intercompany eliminations in the following table:

	September 30,			December 31,			March 31,			December 31,
(in millions)	2017			2016			2018			2017
Assets of consolidated VIEs:
Cash and cash equivalents	$	82		$	84		$	103		$	144
Investments		1,286			1,008
Investments:
Trading debt securities								769			475
Equity securities at FVTNI								295			440
Other investments								300			312
Carried interest								273			266
Other assets		46			63			113			66
Total investments and other assets		1,332			1,071			1,750			1,559
Liabilities of consolidated VIEs		(319	)		(216	)		(425	)		(369	)
Noncontrolling interests		(307	)		(207	)		(518	)		(375	)
BlackRock's net interests in consolidated VIEs	$	788		$	732		$	910		$	959

Net gain (loss) related to consolidated VIEs is presented in the following table:

	Three Months Ended				Nine Months Ended					Three Months Ended
	September 30,				September 30,					March 31,
(in millions)	2017		2016		2017		2016			2018		2017

Nonoperating net gain (loss) on consolidated VIEs	$	29	$	19	$	95	$	34		$	2	$	33

Net gain (loss) attributable to NCI on consolidated VIEs	$	10	$	1	$	28	$	(2	)
Net income (loss) attributable to NCI on consolidated VIEs										$	5	$	8

Non-Consolidated VIEs. At ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, the Company’s carrying value of assets and liabilities included on the condensed consolidated statements of financial condition pertaining to nonconsolidated VIEs and its maximum risk of loss related to VIEs for which it held a variable interest, but for which it was not the PB, was as follows:

(in millions)
At September 30, 2017	Investments		Advisory Fee Receivables		Other Net Assets (Liabilities)			Maximum Risk of Loss⁽¹⁾
At March 31, 2018										Investments		Advisory Fee Receivables		Other Net Assets (Liabilities)			Maximum Risk of Loss⁽¹⁾
Sponsored investment products	$	227	$	15	$	(7	)	$	259	$	342	$	30	$	(7	)	$	389
At December 31, 2016
At December 31, 2017
Sponsored investment products	$	171	$	9	$	(8	)	$	197	$	263	$	15	$	(7	)	$	295

⁽¹⁾	At both ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, BlackRock’s maximum risk of loss associated with these VIEs primarily related to BlackRock’s investments and the collection of advisory fee receivables.

The net assets of sponsored investment products that are nonconsolidated VIEs approximated $6 billion and $5 billion ~~and $4 billion~~ at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively.

1317

6.7. Fair Value Disclosures

Fair Value Hierarchy

Assets and liabilities measured at fair value on a recurring basis and other assets not held at fair value

September 30, 2017	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Investments Measured at		Other Assets Not Held at		September 30,
(in millions)	(Level 1)		(Level 2)		(Level 3)		NAV⁽¹⁾		Fair Value⁽²⁾		2017
March 31, 2018⁽¹⁾ (in millions)													Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Investments Measured at NAV⁽²⁾		Other Assets Not Held at Fair Value⁽³⁾		March 31, 2018
Assets:
Investments
Available-for-sale	$	8	$	73	$	23	$	—	$	—	$	104
Held-to-maturity securities		—		—		—		—		76		76
Trading:										—
Investments:
Equity securities at FVTNI:
Deferred compensation plan mutual funds		54		—		—		—		—		54	$	34	$	—	$	—	$	—	$	—	$	34
Equity securities/Multi-asset mutual funds		353		—		—		—		—		353		614		—		—		—		—		614
Debt securities / fixed income mutual funds		1		282		2		—		—		285
Total trading		408		282		2		—		—		692
Other investments:
Total equity securities														648		—		—		—		—		648
Debt securities:
Available-for-sale														—		125		26		—		—		151
Trading securities														—		288		5		—		—		293
Held-to-maturity securities														—		—		—		—		132		132
Total debt securities														—		413		31		—		132		576
Equity method:
Equity and fixed income mutual funds		314		—		—		10		—		324		116		—		—		15		—		131
Other		—		—		—		608		12		620		—		—		—		569		3		572
Total equity method		314		—		—		618		12		944		116		—		—		584		3		703
Cost method investments		—		—		—		—		92		92
Federal Reserve Bank Stock														—		—		—		—		91		91
Carried interest		—		—		—		—		20		20		—		—		—		—		32		32
Total investments		730		355		25		618		200		1,928		764		413		31		584		258		2,050
Investments of consolidated VIEs:
Equity securities														295		—		—		—		—		295
Trading debt securities														—		769		—		—		—		769
Private / public equity⁽⁴⁾														3		3		116		56		72		250
Other														—		—		—		50		—		50
Carried interest														—		—		—		—		273		273
Total investments of consolidated VIEs														298		772		116		106		345		1,637
Other assets⁽⁵⁾														—		35		—		—		—		35
Separate account assets		112,957		34,268		—		—		713		147,938		107,095		35,063		—		—		712		142,871
Separate account collateral held under securities lending agreements:
Equity securities		19,093		—		—		—		—		19,093		18,543		—		—		—		—		18,543
Debt securities		—		8,338		—		—		—		8,338		—		8,704		—		—		—		8,704
Total separate account collateral held under securities lending agreements		19,093		8,338		—		—		—		27,431		18,543		8,704		—		—		—		27,247
Investments of consolidated VIEs:
Private / public equity⁽³⁾		5		3		114		69		83		274
Equity securities		338		—		—		—		—		338
Debt securities		—		350		—		—		—		350
Other		—		—		—		64		—		64
Carried interest		—		—		—		—		260		260
Total investments of consolidated VIEs		343		353		114		133		343		1,286
Total	$	133,123	$	43,314	$	139	$	751	$	1,256	$	178,583	$	126,700	$	44,987	$	147	$	690	$	1,315	$	173,840
Liabilities:
Separate account collateral liabilities under securities lending agreements	$	19,093	$	8,338	$	—	$	—	$	—	$	27,431	$	18,543	$	8,704	$	—	$	—	$	—	$	27,247
Other liabilities⁽⁴⁾		—		7		228		—		—		235
Other liabilities⁽⁶⁾														—		7		242		—		—		249
Total	$	19,093	$	8,345	$	228	$	—	$	—	$	27,666	$	18,543	$	8,711	$	242	$	—	$	—	$	27,496

⁽¹⁾	Amounts at March 31, 2018 reflect the adoption of ASU 2016-01. See Note 2, Significant Accounting Policies, for further information.

⁽²⁾	Amounts are comprised of certain investments measured at fair value using NAV (or its equivalent) as a practical expedient.

⁽²⁾⁽³⁾

Amounts are comprised of investments held at cost or amortized cost, carried interest and certain equity method investments, which include sponsored investment funds and other assets, which are not accounted for under a fair value measure. In accordance with GAAP, certain equity method investees do not account for both their financial assets and liabilities under fair value measures; therefore, the Company’s investment in such equity method investees may not represent fair value.

⁽³⁾⁽⁴⁾

Level 3 amounts primarily include direct investments in private equity companies held by private equity funds.

⁽⁴⁾⁽⁵⁾

Amounts include fair value of forward foreign currency exchange contracts (see Note 8, Derivatives and Hedging, for more information).

⁽⁶⁾	Amounts primarily include contingent liabilities related to certain acquisitions (see Note ~~11,~~12, Commitments and Contingencies, for more information).

1418

Assets and liabilities measured at fair value on a recurring basis and other assets not held at fair value

December 31, 2016 (in millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Investments Measured at NAV⁽¹⁾		Other Assets Not Held at Fair Value⁽²⁾		December 31, 2016
December 31, 2017⁽¹⁾ (in millions)													Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Investments Measured at NAV⁽²⁾		Other Assets Not Held at Fair Value⁽³⁾		December 31, 2017
Assets:
Investments
Available-for-sale	$	7	$	49	$	24	$	—	$	—	$	80	$	7	$	96	$	—	$	—	$	—	$	103
Held-to-maturity securities		—		—		—		—		51		51
Held-to-maturity debt securities														—		—		—		—		102		102
Trading:
Deferred compensation plan mutual funds		59		—		—		—		—		59		56		—		—		—		—		56
Equity/Multi-asset mutual funds		308		—		—		—		—		308		493		—		—		—		—		493
Debt securities / fixed income mutual funds		1		250		7		—		—		258		2		284		—		—		—		286
Total trading		368		250		7		—		—		625		551		284		—		—		—		835
Other investments:
Equity method:
Equity and fixed income mutual funds		323		—		—		5		—		328		183		—		—		12		—		195
Other		—		—		—		394		8		402		—		—		—		609		12		621
Total equity method		323		—		—		399		8		730		183		—		—		621		12		816
Cost method investments		—		—		—		—		91		91		—		—		—		—		93		93
Carried interest		—		—		—		—		18		18		—		—		—		—		32		32
Total investments		698		299		31		399		168		1,595		741		380		—		621		239		1,981
Separate account assets		109,663		38,542		—		—		884		149,089		114,422		34,582		—		—		933		149,937
Separate account collateral held under securities lending agreements:
Equity securities		22,173		—		—		—		—		22,173		18,778		—		—		—		—		18,778
Debt securities		—		5,619		—		—		—		5,619		—		5,412		—		—		—		5,412
Total separate account collateral held under securities lending agreements		22,173		5,619		—		—		—		27,792		18,778		5,412		—		—		—		24,190
Investments of consolidated VIEs:
Private / public equity⁽³⁾		3		2		112		89		79		285
Trading:
Equity securities		278		—		—		—		—		278		440		—		—		—		—		440
Debt securities		—		274		—		—		—		274		—		475		—		—		—		475
Private / public equity⁽⁴⁾														6		2		116		59		76		259
Other		—		—		—		63		—		63		—		—		—		53		—		53
Carried interest		—		—		—		—		108		108		—		—		—		—		266		266
Total investments of consolidated VIEs		281		276		112		152		187		1,008		446		477		116		112		342		1,493
Total	$	132,815	$	44,736	$	143	$	551	$	1,239	$	179,484	$	134,387	$	40,851	$	116	$	733	$	1,514	$	177,601
Liabilities:
Separate account collateral liabilities under securities lending agreements	$	22,173	$	5,619	$	—	$	—	$	—	$	27,792	$	18,778	$	5,412	$	—	$	—	$	—	$	24,190
Other liabilities⁽⁴⁾⁽⁵⁾		—		7		115		—		—		122		—		7		236		—		—		243
Total	$	22,173	$	5,626	$	115	$	—	$	—	$	27,914	$	18,778	$	5,419	$	236	$	—	$	—	$	24,433

⁽¹⁾	Amounts at December 31, 2017 reflect accounting guidance prior to ASU 2016-01.

⁽²⁾	Amounts are comprised of certain investments measured at fair value using NAV (or its equivalent) as a practical expedient.

⁽²⁾⁽³⁾

⁽³⁾⁽⁴⁾

Level 3 amounts include direct investments in private equity companies held by private equity funds.

⁽⁴⁾⁽⁵⁾

Amounts primarily include contingent liabilities related to certain acquisitions (see Note ~~11,~~12, Commitments and Contingencies, for more information).

1519

Level 3 Assets. Level 3 investments of consolidated VIEs of ~~$114 million and $112~~$116 million at ~~September 30, 2017~~both March 31, 2018 and December 31, ~~2016, respectively,~~2017, related to direct investments in private equity companies held by consolidated private equity funds.

Direct investments in private equity companies may be valued using the market approach or the income approach, or a combination thereof, and were valued based on an assessment of each underlying investment, incorporating evaluation of additional significant third-party financing, changes in valuations of comparable peer companies, the business environment of the companies, market indices, assumptions relating to appropriate risk adjustments for nonperformance and legal restrictions on disposition, among other factors. The fair value derived from the methods used is evaluated and weighted, as appropriate, considering the reasonableness of the range of values indicated. Under the market approach, fair value may be determined by reference to multiples of market-comparable companies or transactions, including earnings before interest, taxes, depreciation and amortization (“EBITDA”) multiples. Under the income approach, fair value may be determined by discounting the expected cash flows to a single present value amount using current expectations about those future amounts. Unobservable inputs used in a discounted cash flow model may include projections of operating performance generally covering a five-year period and a terminal value of the private equity direct investment. For investments utilizing the discounted cash flow valuation technique, a significant increase (decrease) in the discount rate, risk premium or discount for lack of marketability in isolation could result in a significantly lower (higher) fair value measurement. For investments utilizing the market-comparable valuation technique, a significant increase (decrease) in the EBITDA multiple in isolation could result in a significantly higher (lower) fair value measurement.

Level 3 assets may include investments in CLOs valued based on single-broker nonbinding quotes and direct private equity investments valued using the market approach or the income approach as described above.

Level 3 Liabilities. Level 3 other liabilities primarily include recorded contingent liabilities related to certain acquisitions, which were valued based upon discounted cash flow analyses using unobservable market data inputs.

Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis for the Three Months Ended ~~September 30, 2017~~March 31, 2018

(in millions)	June 30, 2017		Realized and Unrealized Gains (Losses) in Earnings and OCI			Purchases		Sales and Maturities		Issuances and other Settlements⁽¹⁾		Transfers into Level 3		Transfers out of Level 3			September 30, 2017		Total Net Unrealized Gains (Losses) Included in Earnings⁽²⁾			December 31, 2017		Realized and Unrealized Gains (Losses) in Earnings and OCI			Purchases		Sales and Maturities		Issuances and other Settlements		Transfers into Level 3		Transfers out of Level 3		March 31, 2018 ⁽¹⁾		Total Net Unrealized Gains (Losses) Included in Earnings⁽²⁾
Assets:
Investments:
Debt securities:
Available-for-sale securities⁽³⁾	$	23	$	—		$	—	$	—	$	—	$	—	$	—		$	23				$	—	$	—		$	26	$	—	$	—	$	—	$	—	$	26
Trading		4		—			—		—		—		—		(2	)		2
Trading securities																							—		—			5		—		—		—		—		5
Total investments		27		—			—		—		—		—		(2	)		25					—		—			31		—		—		—		—		31
Assets of consolidated VIEs - Private equity		113		1			—		—		—		—		—			114	$	1			116		—			—		—		—		—		—		116
Total Level 3 assets	$	140	$	1		$	—	$	—	$	—	$	—	$	(2	)	$	139				$	116	$	—		$	31	$	—	$	—	$	—	$	—	$	147
Liabilities:
Other liabilities⁽⁴⁾	$	218	$	(7	)	$	—	$	—	$	3	$	—	$	—		$	228	$	(7	)	$	236		(6	)	$	—	$	—	$	—	$	—	$	—	$	242	$	(6	)

⁽¹⁾ Issuance and other settlements amount includes a contingent liability of $9 million in connection with the acquisition of Cachematrix in July 2017 (“Cachematrix Transaction”) and a contingent liability payment in connection with a prior acquisition.

⁽²⁾ ~~Earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities still held at the reporting date.~~(1)

Amounts at March 31, 2018 reflect the adoption of ASU 2016-01. See Note 2, Significant Accounting Policies, for further information.

⁽³⁾	~~Amounts include investments in CLOs.~~

⁽⁴⁾	~~Other liabilities amount includes contingent liabilities in connection with certain acquisitions.~~

~~Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis for the Nine Months Ended September 30, 2017~~

(in millions)

December 31, 2016

Realized
and
Unrealized
Gains
(Losses) in
Earnings
and OCI

Purchases

Sales and
Maturities

Issuances and
other
Settlements⁽¹⁾

Transfers
into
Level 3

Transfers
out of
Level 3⁽²⁾

September 30, 2017

Total Net
Unrealized
Gains (Losses)
Included in
Earnings⁽³⁾

Assets:

Investments:

Available-for-sale securities⁽⁴⁾

$
24

$
—

$
23

$
—

$
—

$
—

$
(24
)

$
23

Trading

7

—

4

—

—

—

(9
)

2

Total investments

31

—

27

—

—

—

(33
)

25

Assets of consolidated VIEs - Private equity

112

2

—

—

—

—

114

$
2

Total Level 3 assets

$
143

$
2

$
27

$
—

$
—

$
—

$
(33
)

$
139

Liabilities:

Other liabilities⁽⁵⁾

$
115

$
(2
)

$
—

$
—

$
111

$
—

$
—

$
228

$
(2
)

⁽¹⁾ Issuance and other settlements amount includes $120 million and $9 million of contingent liabilities in connection with the acquisition of the equity infrastructure franchise of First Reserve in June 2017 (“First Reserve Transaction”) and the Cachematrix Transaction, respectively, and contingent liability payments in connection with certain prior acquisitions.

⁽²⁾ ~~Amounts include transfers out of Level 3 due to availability of observable market inputs from pricing vendors.~~

⁽³⁾ ~~Earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities still held at the reporting date.~~

⁽⁴⁾	~~Amounts include investments in CLOs.~~

⁽⁵⁾	~~Other liabilities amount includes contingent liabilities in connection with certain acquisitions.~~

~~Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis for the Three Months Ended September 30, 2016~~

(in millions)

June 30,
2016

Realized
and
Unrealized
Gains
(Losses) in
Earnings
and OCI

Purchases

Sales and
Maturities

Issuances and
other
Settlements

Transfers
into
Level 3

Transfers
out of
Level 3

September 30, 2016

Total Net
Unrealized
Gains (Losses)
Included in
Earnings⁽¹⁾

Assets:

Investments:

Available-for-sale securities⁽²⁾

$
—

$
—

$
24

$
—

$
—

$
—

$
—

$
24

Trading

3

—

2

—

—

—

—

5

Total investments

3

—

26

—

—

—

—

29

Assets of consolidated VIEs - Private equity

189

11

—

(6
)

—

—

—

194

$
11

Total Level 3 assets

$
192

$
11

$
26

$
(6
)

$
—

$
—

$
—

$
223

Liabilities:

Other liabilities⁽³⁾

$
121

$
(2
)

$
—

$
—

$
(5
)

$
—

$
—

$
118

$
(2
)

⁽¹⁾(2)

Earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities still held at the reporting date.

⁽²⁾(3)

Amounts include investments in CLOs.

⁽³⁾(4)

Other liabilities amount includes contingent liabilities in connection with certain acquisitions.

Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis for the ~~Nine~~Three Months Ended ~~September 30, 2016~~March 31, 2017⁽¹⁾

	December 31,		Realized and Unrealized Gains (Losses) in Earnings				Sales and			Issuances and other		Transfers into		Transfers out of			September 30,		Total Net Unrealized Gains (Losses) Included in
(in millions)	2015		and OCI		Purchases		Maturities			Settlements⁽¹⁾		Level 3		Level 3			2016		Earnings⁽²⁾		December 31, 2016		Realized and Unrealized Gains (Losses) in Earnings and OCI		Purchases		Sales and Maturities		Issuances and other Settlements		Transfers into Level 3		Transfers out of Level 3⁽²⁾			March 31, 2017		Total Net Unrealized Gains (Losses) Included in Earnings⁽³⁾
Assets:
Investments
Available-for-sale securities⁽³⁾	$	23	$	—	$	47	$	—		$	—	$	—	$	(46	)	$	24
Investments:
Available-for-sale securities⁽⁴⁾																					$	24	$	—	$	—	$	—	$	—	$	—	$	(24	)	$	—
Trading		2		—		6		—			—		—		(3	)		5				7		—		—		—		—		—		(7	)		—
Total investments		25		—		53		—			—		—		(49	)		29				31		—		—		—		—		—		(31	)		—
Assets of consolidated VIEs - Private equity		196		13		—		(15	)		—		—		—			194	$	13		112		1		—		—		—		—		—			113	$	1
Total Level 3 assets	$	221	$	13	$	53	$	(15	)	$	—	$	—	$	(49	)	$	223			$	143	$	1	$	—	$	—	$	—	$	—	$	(31	)	$	113
Liabilities:
Other liabilities⁽⁴⁾	$	48	$	—	$	—	$	—		$	70	$	—	$	—		$	118	$	—
Other liabilities⁽⁵⁾																					$	115	$	2	$	—	$	—	$	—	$	—	$	—		$	113	$	2

⁽¹⁾ ~~Issuances and other settlements amount includes a contingent liability related to the BofA~~^® ~~Global Capital Management transaction in April 2016.~~

⁽¹⁾	Amounts at March 31, 2017 reflect accounting guidance prior to ASU 2016-01.

(2)	Amounts include transfers out of Level 3 due to availability of observable market inputs from pricing vendors.

(3)	Earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities still held at the reporting date.

⁽³⁾(4)

Amounts include investments in CLOs.

⁽⁴⁾(5)

Other liabilities amount includes contingent liabilities in connection with certain acquisitions.

Realized and Unrealized Gains (Losses) for Level 3 Assets and Liabilities. Realized and unrealized gains (losses) recorded for Level 3 assets and liabilities are reported in nonoperating income (expense) on the condensed consolidated statements of income. A portion of net income (loss) for consolidated sponsored investment funds ~~are~~is allocated to noncontrolling interests to reflect net income (loss) not attributable to the Company.

Transfers in and/or out of Levels. Transfers in and/or out of levels are reflected when significant inputs, including market inputs or performance attributes, used for the fair value measurement become observable/unobservable, or when the carrying value of certain equity method investments no longer represents fair value as determined under valuation methodologies.

Disclosures of Fair Value for Financial Instruments Not Held at Fair Value. At ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, the fair value of the Company’s financial instruments not held at fair value are categorized in the table below:

	September 30, 2017				December 31, 2016						March 31, 2018				December 31, 2017
(in millions)	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value		Fair Value Hierarchy		Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value		Fair Value Hierarchy
Financial Assets:
Cash and cash equivalents	$	6,165	$	6,165	$	6,091	$	6,091	Level 1	^{(1) (2)}	$	5,978	$	5,978	$	6,894	$	6,894	Level 1	^{(1) (2)}
Accounts receivable		3,183		3,183		2,350		2,350	Level 1	⁽³⁾
Cash and cash equivalents of consolidated VIEs		82		82		84		84	Level 1	^{(1) (2)}		103		103		144		144	Level 1	^{(1) (2)}
Other assets		62		62		25		25	Level 1	^{(1) (4)}		62		62		70		70	Level 1	^{(1) (3)}

Financial Liabilities:
Accounts payable and accrued liabilities		1,652		1,652		1,094		1,094	Level 1	⁽³⁾
Financial Liability:
Long-term borrowings		5,000		5,248		4,915		5,165	Level 2	⁽⁵⁾		5,036		5,134		5,014		5,225	Level 2	⁽⁴⁾

⁽¹⁾	Cash and cash equivalents are carried at either cost or amortized cost, which approximates fair value due to their short-term maturities.

⁽²⁾

At ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, approximately ~~$137~~$204 million and ~~$132~~$163 million, respectively, of money market funds were recorded within cash and cash equivalents on the condensed consolidated statements of financial condition. In addition, at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, approximately ~~$14~~$13 million and ~~$13~~$14 million, respectively, of money market funds were recorded within cash and cash equivalents of consolidated VIEs. Money market funds are valued based on quoted market prices, or $1.00 per share, which generally is the NAV of the fund.

⁽³⁾	~~The carrying amounts of accounts receivable, accounts payable and accrued liabilities approximate fair value due to their short-term nature.~~

⁽⁴⁾	Other assets primarily include restricted cash.

⁽⁵⁾⁽⁴⁾

Long-term borrowings are recorded at amortized cost net of debt issuance costs. The fair value of the long-term borrowings, including the current portion of long-term borrowings, is estimated using market prices at the end of ~~September 2017~~March 2018 and December ~~2016,~~2017, respectively. See Note ~~10,~~11, Borrowings, for the fair value of each of the Company’s long-term borrowings.

2123

Investments in Certain Entities that Calculate Net Asset Value Per ~~Share.~~Share

As a practical expedient to value certain investments that do not have a readily determinable fair value and have attributes of an investment company, the Company uses NAV as the fair value. The following tables list information regarding all investments that use a fair value measurement to account for both their financial assets and financial liabilities in their calculation of a NAV per share (or equivalent).

September 30, 2017

March 31, 2018

(in millions)

Ref

Fair Value

Total

Unfunded

Commitments

Redemption

Frequency

Redemption

Notice Period

Ref

Fair Value

Total

Unfunded

Commitments

Redemption

Frequency

Redemption

Notice Period

Equity method:⁽¹⁾

Hedge funds/funds of hedge funds

(a)

249

Daily/Monthly (19%)

Quarterly (55%)

N/R (26%)

1 – 90 days

(a)

168

Daily/Monthly (30%)

Quarterly (29%)

N/R (41%)

1 – 90 days

Private equity funds

(b)

N/R

(b)

N/R

Real assets funds

(c)

265

111

Quarterly (85%)

N/R (15%)

60 days

(c)

302

Quarterly (78%)

N/R (22%)

60 days

Other

Daily/Monthly (66%)

N/R (34%)

3 – 5 days

Daily/Monthly (79%)

N/R (21%)

3 – 5 days

Consolidated VIEs:

Private equity funds of funds

(d)

N/R

(d)

N/R

Hedge fund

(a)

—

Quarterly

90 days

(a)

—

Quarterly

90 days

Real assets funds

(c)

N/R

(c)

N/R

Total

751

332

690

309

December 31, 2016

December 31, 2017

(in millions)

Ref

Fair Value

Total

Unfunded

Commitments

Redemption

Frequency

Redemption

Notice Period

Ref

Fair Value

Total

Unfunded

Commitments

Redemption

Frequency

Redemption

Notice Period

Equity method:⁽¹⁾

Hedge funds/funds of hedge funds

(a)

237

Daily/Monthly (21%)

Quarterly (51%)

N/R (28%)

1 – 90 days

(a)

230

Daily/Monthly (21%)

Quarterly (49%)

N/R (30%)

1 – 90 days

Private equity funds

(b)

N/R

(b)

N/R

Real assets funds

(c)

Quarterly (41%)

N/R (59%)

60 days

(c)

282

Quarterly (83%)

N/R (17%)

60 days

Other

Daily/Monthly (42%)

N/R (58%)

3 – 5 days

Daily (80%)

N/R (20%)

5 days

Consolidated VIEs:

Private equity funds of funds

(d)

N/R

(d)

N/R

Hedge fund

(a)

—

Quarterly

90 days

(a)

—

Quarterly

90 days

Real assets funds

(c)

N/R

(c)

N/R

Total

551

157

733

286

N/R – not redeemable

⁽¹⁾	Comprised of equity method investments, which include ~~investments in~~ investment companies, which account for their financial assets and most financial liabilities under fair value measures; therefore, the Company’s investment in such equity method investees approximates fair value.

^(a)

This category includes hedge funds and funds of hedge funds that invest primarily in equities, fixed income securities, distressed credit, opportunistic and mortgage instruments and other third-party hedge funds. The fair values of the investments have been estimated using the NAV of the Company’s ownership interest in partners’ capital. It was estimated that the investments in the funds that are not subject to redemption will be liquidated over a weighted-average period of seven years at ~~September 30, 2017~~both March 31, 2018 and ~~approximately one year at~~ December 31, ~~2016.~~2017.

^(b)

This category includes several private equity funds that initially invest in nonmarketable securities of private companies, which ultimately may become public in the future. The fair values of these investments have been estimated using capital accounts representing the Company’s ownership interest in the funds as well as other performance inputs. The Company’s investment in each fund is not subject to redemption and is normally returned through distributions as a result of the liquidation of the underlying assets of the private equity funds. It was estimated that the investments in these funds will be liquidated over a weighted-average period of approximately ~~five~~six years at both ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016.~~2017.

^(c)

This category includes several real assets funds that invest directly and indirectly in real estate ~~real estate related assets~~ and infrastructure. The fair values of the investments have been estimated using capital accounts representing the Company’s ownership interest in the funds. The Company’s investments that are not subject to redemption or are not currently redeemable are normally returned through distributions ~~as a result of the liquidation~~and realizations of the underlying assets of the funds. It is estimated that the investments in these funds not subject to redemptions will be liquidated over a weighted-average period of approximately eight years at ~~September 30, 2017~~both March 31, 2018 and ~~six years at~~ December 31, ~~2016.~~2017. The total remaining unfunded commitments to ~~other third-party~~real assets funds were ~~$165~~$128 million and ~~$56~~$117 million at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively. The Company had contractual obligations to the ~~consolidated~~real assets funds of ~~$136~~$108 million at ~~September 30, 2017~~March 31, 2018 and ~~$56~~$98 million at December 31, ~~2016.~~2017.

^(d) This category includes the underlying third-party private equity funds within consolidated BlackRock sponsored private equity funds of funds. The fair values of the investments in the third-party funds have been estimated using capital accounts representing the Company’s ownership interest in each fund in the portfolio as well as other performance inputs. These investments are not subject to redemption; however, for certain funds, the Company may sell or transfer its interest, which may need approval by the general partner of the underlying funds. Due to the nature of the investments in this category, the Company reduces its investment by distributions that are received through the realization of the underlying assets of the funds. It is estimated that the underlying assets of these funds will be liquidated over a weighted-average period of approximately five years at both ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016.~~2017. The total remaining unfunded commitments to other third-party funds were $18 million and $20 million ~~and $16 million~~ at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively. The Company had contractual obligations to the consolidated funds of ~~$24~~$23 million at both ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016.~~2017.

7.8. Derivatives and Hedging

The Company maintains a program to enter into swaps to hedge against market price and interest rate exposures with respect to certain seed investments in sponsored investment products. At ~~September 30,~~March 31, 2018, the Company had outstanding total return swaps with an aggregate notional value of approximately $546 million. At December 31, 2017, the Company had outstanding total return swaps with an aggregate notional ~~values~~value of approximately ~~$538~~$587 million. ~~At December 31, 2016, the Company had outstanding total return swaps and interest rate swaps with aggregate notional values of approximately $572 million and $42 million, respectively.~~

Gains (losses) on ~~the~~ total return swaps ~~are~~ recorded in nonoperating income (expense) were not material for the three months ended March 31, 2018 and were $(~~26) million and $~~(~~90)~~$(35) million for the three ~~and nine~~ months ended ~~September 30, 2017, respectively, and $~~(~~25) million and $~~(~~33) million for the three and nine months ended September 30, 2016, respectively.~~March 31, 2017.

Gains (losses) on ~~the~~ interest rate swaps are recorded in nonoperating income (expense) and were not material for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017.

At both March 31, 2018 and December 31, 2017, ~~and 2016.~~

~~The~~the Company ~~has entered into~~had a derivative providing credit protection ~~to a counterparty~~ of approximately $17 million to a counterparty, representing the Company’s maximum risk of loss with respect to the provision of credit protection. The Company carries the derivative at fair value based on the expected discounted future cash outflows under the arrangement.

The Company executes forward foreign currency exchange contracts to mitigate the risk of certain foreign exchange movements. At ~~September 30, 2017~~both March 31, 2018 and December 31, ~~2016,~~2017, the Company had outstanding forward foreign currency exchange contracts with aggregate notional values of approximately ~~$1.3 billion~~$1.5 billion. The fair value of the outstanding forward foreign currency exchange contracts was $35 million at March 31, 2018 and ~~$107 million, respectively.~~was not material at December 31, 2017.

Gains (losses) on the forward foreign currency exchange contracts are recorded in other general and administration expense and were ~~$29 million and $58~~$30 million for the three ~~and nine~~ months ended ~~September 30, 2017, respectively.~~March 31, 2018. Gains (losses) on the forward foreign currency exchange contracts were not material for the three ~~and nine~~ months ended ~~September 30, 2016.~~March 31, 2017.

The Company consolidates certain sponsored investment funds, which may utilize derivative instruments as a part of the funds’ investment strategies. The change in fair value of such derivatives, which is recorded in nonoperating income (expense), was not material for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2018 and ~~2016.~~2017.

The fair values of the outstanding total return swaps and the credit default swap were not material to the condensed consolidated statement of financial condition at March 31, 2018. The fair value of the outstanding derivatives mentioned above ~~were~~was not material to the condensed consolidated statement of financial condition at ~~September 30, 2017 and~~ December 31, ~~2016.~~2017.

See Note 12, Borrowings, in the ~~2016~~2017 Form 10-K for more information on the Company’s net investment hedge.

2325

8.9. Goodwill

Goodwill activity during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018 was as follows:

(in millions)

December 31, 2016

$
13,118

Acquisitions⁽¹⁾

123

Goodwill adjustments related to Quellos⁽²⁾

(15
)
September 30, 2017

$
13,226

(in millions)
December 31, 2017	$	13,220
Goodwill adjustments related to Quellos⁽¹⁾		(3	)
March 31, 2018	$	13,217

⁽¹⁾

Amount includes $91 million of goodwill related to the First Reserve Transaction, which expanded the Company’s energy and power infrastructure platform and $32 million of goodwill related to the Cachematrix Transaction, which enhanced the Company’s technology and cash management capabilities. The total consideration paid for these acquisitions was approximately $231 million, including $129 million of contingent consideration at fair value at time of close.

⁽²⁾

The decrease in goodwill during the ~~nine~~three months ended ~~September 30, 2017 primarily~~March 31, 2018 resulted from a decline related to tax benefits realized from tax-deductible goodwill in excess of book goodwill from the acquisition of the fund-of-funds business of Quellos Group, LLC in October 2007 (the “Quellos Transaction”). Goodwill related to the Quellos Transaction will continue to be reduced in future periods by the amount of tax benefits realized from tax-deductible goodwill in excess of book goodwill from the Quellos Transaction. The balance of the Quellos tax-deductible goodwill in excess of book goodwill was approximately ~~$176~~$161 million and ~~$200~~$168 million at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively.

9.10. Intangible Assets

The carrying amounts of identifiable intangible assets are summarized as follows:

(in millions)

Indefinite-lived

Finite-lived

Total

December 31, 2016

$
17,178

$
185

$
17,363

Amortization expense

—

(77
)

(77
)
Acquisitions⁽¹⁾

—

114

114

September 30, 2017

$
17,178

$
222

$
17,400

(in millions)	Indefinite-lived		Finite-lived			Total
December 31, 2017	$	17,178	$	211		$	17,389
Amortization expense		—		(11	)		(11	)
March 31, 2018	$	17,178	$	200		$	17,378

⁽¹⁾ The amount represents $110 million of finite-lived assets related to the First Reserve Transaction and $4 million of finite-lived assets related to the Cachematrix Transaction with a weighted average estimated life of approximately nine and 10 years, respectively.

~~10.~~11. Borrowings

Short-Term Borrowings

~~2017~~2018 Revolving Credit Facility. The Company’s credit facility has an aggregate commitment amount of $4.0 billion and was amended in April ~~2017~~2018 to extend the maturity date to ~~April 2022~~March 2023 (the ~~“2017~~“2018 credit facility”). The ~~2017~~2018 credit facility permits the Company to request up to an additional $1.0 billion of borrowing capacity, subject to lender credit approval, increasing the overall size of the ~~2017~~2018 credit facility to an aggregate principal amount not to exceed $5.0 billion. Interest on borrowings outstanding accrues at a rate based on the applicable London Interbank Offered Rate plus a spread. The ~~2017~~2018 credit facility requires the Company not to exceed a maximum leverage ratio (ratio of net debt to earnings before interest, taxes, depreciation and amortization, where net debt equals total debt less unrestricted cash) of 3 to 1, which was satisfied with a ratio of less than 1 to 1 at ~~September 30, 2017.~~March 31, 2018. The ~~2017~~2018 credit facility provides back-up liquidity to fund ongoing working capital for general corporate purposes and various investment opportunities. At ~~September 30, 2017,~~March 31, 2018, the Company had no amount outstanding under the ~~2017~~ credit facility.

Commercial Paper Program. The Company can issue unsecured commercial paper notes (the “CP Notes”) on a private-placement basis up to a maximum aggregate amount outstanding at any time of $4.0 billion. The commercial paper program is currently supported by the ~~2017~~2018 credit facility. At ~~September 30, 2017,~~March 31, 2018, BlackRock had no CP Notes outstanding.

2426

Long-Term Borrowings

The carrying value and fair value of long-term borrowings estimated using market prices and foreign exchange rates at ~~September 30, 2017~~March 31, 2018 included the following:

(in millions)	Maturity Amount		Unamortized Discount and Debt Issuance Costs			Carrying Value		Fair Value		Maturity Amount		Unamortized Discount and Debt Issuance Costs			Carrying Value		Fair Value
5.00% Notes due 2019	$	1,000	$	(1	)	$	999	$	1,067	$	1,000	$	—		$	1,000	$	1,039
4.25% Notes due 2021		750		(4	)		746		802		750		(2	)		748		774
3.375% Notes due 2022		750		(4	)		746		781		750		(4	)		746		759
3.50% Notes due 2024		1,000		(6	)		994		1,044		1,000		(6	)		994		1,006
1.25% Notes due 2025		828		(6	)		822		846		861		(6	)		855		877
3.20% Notes due 2027		700		(7	)		693		708		700		(7	)		693		679
Total Long-term Borrowings	$	5,028	$	(28	)	$	5,000	$	5,248	$	5,061	$	(25	)	$	5,036	$	5,134

~~Long-term borrowings at December 31, 2016 had a carrying value of $4.9 billion and a fair value of $5.2 billion determined using market prices at the end of December 2016.~~

~~2027 Notes~~. In March 2017, the Company issued $700 million in aggregate principal amount of 3.20% senior unsecured and unsubordinated notes maturing on March 15, 2027 (the “2027 Notes”). Interest is payable semi-annually on March 15 and September 15 of each year, commencing September 15, 2017, and is approximately $22 million per year. The 2027 Notes may be redeemed prior to maturity at any time in whole or in part at the option of the Company at a “make-whole” redemption price. The unamortized discount and debt issuance costs are being amortized over the remaining term of the 2027 Notes.

~~In April 2017, the net proceeds of the 2027 Notes were used to fully repay $700 million in aggregate principal amount outstanding of 6.25% notes prior to their maturity in September 2017.~~

See Note 12, Borrowings, in the ~~2016~~2017 Form 10-K for more information regarding the Company’s borrowings.

~~11.~~12. Commitments and Contingencies

Investment Commitments. At ~~September 30, 2017,~~March 31, 2018, the Company had ~~$328~~$304 million of various capital commitments to fund sponsored investment funds, including consolidated VIEs. These funds include private equity funds, real assets funds and opportunistic funds. This amount excludes additional commitments made by consolidated funds of funds to underlying third-party funds as third-party noncontrolling interest holders have the legal obligation to fund the respective commitments of such funds of funds. Generally, the timing of the funding of these commitments is unknown and the commitments are callable on demand at any time prior to the expiration of the commitment. These unfunded commitments are not recorded on the condensed consolidated statements of financial condition. These commitments do not include potential future commitments approved by the Company that are not yet legally binding. The Company intends to make additional capital commitments from time to time to fund additional investment products for, and with, its clients.

Lease Commitment. In May 2017, the Company entered into an agreement with 50 HYMC Owner LLC, for the lease of approximately 847,000 square feet of office space located at 50 Hudson Yards, New York, New York. The term of the lease is twenty years from the date that rental payments begin, expected to occur in May 2023, with the option to renew for a specified term.

~~Future minimum commitments of~~ The lease requires annual base rental payments ~~under this operating~~of approximately $51 million per year during the first five years of the lease ~~are as follows:~~term, increasing every five years to $58 million, $66 million and $74 million per year (or approximately $1.2 billion in base rent over its twenty-year term).

(in millions)

Year
Amount

2023
$
34

2024

51

2025

51

2026

51

2027

51

Thereafter

1,007

Total
$
1,245

Contingencies

Contingent Payments Related to Business Acquisitions. In connection with certain acquisitions, BlackRock is required to make contingent payments, subject to achieving specified performance targets, which may include revenue related to acquired contracts or new capital commitments for certain products. The fair value of the remaining aggregate contingent payments at ~~September 30, 2017~~March 31, 2018 totaled ~~$228~~$242 million, ~~including $125 million related to the First Reserve Transaction,~~ and is included in other liabilities on the condensed consolidated statements of financial condition.

Other Contingent Payments.The Company acts as the portfolio manager in a ~~series of~~ derivative ~~transactions~~transaction and has a maximum potential exposure of $17 million between the Company and counterparty. See Note 7,8, Derivatives and Hedging, for further discussion.

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

for the District of New Jersey against BlackRock Advisors, LLC, BlackRock Investment Management, LLC and BlackRock International Limited under the caption In re BlackRock Mutual Funds Advisory Fee Litigation. The Consolidated Complaint, which purports to be brought derivatively on behalf of the Funds, alleges that the defendants violated Section 36(b) of the Investment Company Act by receiving allegedly excessive investment advisory fees from the Funds. On February 24, 2015, the same plaintiffs filed another complaint in the same court against BlackRock Investment Management, LLC and BlackRock Advisors, LLC. The allegations and legal claims in both complaints are substantially similar, with the new complaint purporting to challenge fees received by defendants after the plaintiffs filed their prior complaint. Both complaints seek, among other things, to recover on behalf of the Funds all allegedly excessive advisory fees received by defendants in the twelve month period preceding the start of each lawsuit, along with purported lost investment returns on those amounts, plus interest. The defendants believe the claims in both lawsuits are without merit and ~~intend to~~are vigorously ~~defend~~defending the actions. On September 25, 2017, the defendants filed a motion for summary judgment to dismiss the ~~lawsuit.~~lawsuit, which is pending.

~~Between~~

16, 2015 collapse of a balcony at the Library Gardens apartment complex in Berkeley, California (the “Property”). The Property is indirectly owned by the Granite Fund, which is managed by BRA. The plaintiffs also named as defendants in the lawsuits Greystar, which manages the Property, and certain other non-BlackRock related entities, including the developer of the Property, building contractors and building materials suppliers. The plaintiffs ~~allege,~~alleged, among other things, that the BlackRock Parties were negligent in their ownership, control and maintenance of the Property’s balcony, and ~~seek~~sought monetary, including punitive, damages. Additionally, on March 16, 2016, three former tenants of the Library Gardens apartment unit ~~that~~who were not physically injured but experienced the balcony collapse sued the BlackRock Parties. The former tenants, who witnessed (but were not physically injured in) the accident make allegations virtually identical to those in the other previously filed actions and claim that, as a result of the collapse, they suffered unspecifiedParties for emotional ~~damage. Several defendants also filed cross-complaints alleging a variety of claims, including claims against~~damages. In November 2017, the BlackRock Parties ~~for contribution, negligence,~~settled all of the lawsuits relating to Library Gardens and ~~declaratory relief. BlackRock, Inc. believes~~ the ~~claims against it are without merit~~cases were formally dismissed in March and ~~intends to vigorously defend the actions. A trial on all claims is scheduled to begin on February 5,~~April 2018.

On June 16, 2016, iShares Trust, BlackRock, Inc. and certain of its advisory affiliates, and the directors and certain officers of the iShares ETFs were named as defendants in a purported class action lawsuit filed in California state court. The lawsuit was filed by investors in certain iShares ETFs (the "ETFs"), and alleges the defendants violated the federal securities laws, purportedly by failing to adequately disclose in prospectuses issued by the ETFs the risks to the ETFs’ shareholders in the event of a "flash crash." Plaintiffs seek unspecified monetary damages. The ~~Plaintiffs’~~plaintiffs’ complaint was dismissed in December 2016 and on January 6, 2017, plaintiffs filed an amended complaint. The defendants filed a motion for judgment on the pleadings dismissing that complaint. On September 18, 2017, the court dismissed the lawsuit. On December 1, 2017, the plaintiffs appealed the dismissal of their lawsuit.

On April 5, 2017, BlackRock, Inc., BlackRock Institutional Trust Company, N.A. (“BTC”), the BlackRock, Inc. Retirement Committee and various sub-committees, and a BlackRock employee were named as defendants in a purported class action lawsuit brought in the U.S. District Court for the Northern District of California by a former employee on behalf of all BlackRock employee 401(k) Plan (the “Plan”) participants and beneficiaries in the Plan from April 5, 2011, to the present. The lawsuit generally alleges that the defendants breached their duties towards Plan participants in violation of the Employee Retirement Income Security Act of 1974 by, among other things, offering investment options that were overly expensive, underperformed peer funds, focused disproportionately on active versus passive strategies, and were unduly concentrated with investment options managed by BlackRock. While the complaint does not contain any specific amount in alleged damages, it claims that the purported underperformance and hidden fees cost Plan participants more than $60 million. On October 10, 2017, the plaintiffs filed an Amended Complaint, which, among other things, adds as defendants certain current and former members of the BlackRock Retirement and Investment Committees. The Amended Complaint also includes a new purported class claim on behalf of investors in certain Collective Trust Funds (“CTFs”) managed by BTC. Specifically, the plaintiffs allege that BTC, ~~exercised~~as fiduciary ~~authority over its compensation for securities lending services~~ to the ~~CTFs.~~CTFs, engaged in self-dealing by, most significantly, selecting itself as the lending agent on terms that plaintiffs claim were excessive. The defendants believe the claims in this lawsuit are without merit and ~~intend~~are vigorously defending the action. BlackRock moved to ~~vigorously defend~~dismiss the ~~action.~~Amended Complaint on November 8, 2017.

Management, after consultation with legal counsel, currently does not anticipate that the aggregate liability arising out of regulatory matters or lawsuits will have a material effect on BlackRock’s results of operations, financial position, or cash flows. However, there is no assurance as to whether any such pending or threatened matters will have a material effect on BlackRock’s results of operations, financial position or cash flows in any future reporting period. Due to uncertainties surrounding the outcome of these matters, management cannot reasonably estimate the possible loss or range of loss that may arise from these matters.

Indemnifications. In the ordinary course of business or in connection with certain acquisition agreements, BlackRock enters into contracts pursuant to which it may agree to indemnify third parties in certain circumstances. The terms of these indemnities vary from contract to contract and the amount of indemnification liability, if any, cannot be determined or the likelihood of any liability is considered remote. Consequently, no liability has been recorded on the condensed consolidated statements of financial condition.

In connection with securities lending transactions, BlackRock has issued certain indemnifications to certain securities lending clients against potential loss resulting from a borrower’s failure to fulfill its obligations under the securities lending agreement should the value of the collateral pledged by the borrower at the time of default be insufficient to cover the borrower’s obligation under the securities lending agreement. At ~~September 30, 2017,~~March 31, 2018, the Company indemnified certain of its clients for their securities lending loan balances of approximately ~~$197.6~~$219 billion. The Company held, as agent, cash and securities totaling ~~$210.6~~$232 billion as collateral for indemnified securities on loan at ~~September 30, 2017.~~March 31, 2018. The fair value of these indemnifications was not material at ~~September 30, 2017.~~March 31, 2018.

~~12.~~29

13. Revenue

The table below presents the Company’s revenue for the three months ended March 31, 2018 and 2017, respectively, and disaggregates investment advisory, administration fees and securities lending revenue and performance fees by product type and investment style. See Note 2, Significant Accounting Policies, for further information on the Company’s revenue recognition and the adoption of ASU 2014-09.

	Three Months Ended
	March 31,
(in millions)	2018		2017
Investment advisory, administration fees and securities lending revenue:
Equity:
Active	$	438	$	400
iShares ETFs		926		721
Non-ETF index		176		160
Equity subtotal		1,540		1,281
Fixed income:
Active		456		407
iShares ETFs		208		185
Non-ETF index		93		85
Fixed income subtotal		757		677
Multi-asset		296		272
Alternatives:
Core		178		144
Currency and commodities		25		22
Alternatives subtotal		203		166
Long-term		2,796		2,396
Cash management		151		127
Total base fees		2,947		2,523
Investment advisory performance fees:
Equity		18		15
Fixed income		3		10
Multi-asset		5		5
Alternatives		44		40
Total performance fees		70		70
Technology and risk management revenue		184		154
Distribution fees:
Retrocessions		192		155
12b-1 fees (U.S. mutual funds distribution fees)		108		122
Other		11		10
Total distribution fees		311		287
Advisory and other revenue
Advisory		21		24
Other		50		34
Advisory and other revenue		71		58
Total revenue	$	3,583	$	3,092

The table below presents the investment advisory, administration fees and securities lending revenue by client type, investment style and product type, respectively:

	For the Three Months Ended
	March 31,
(in millions)	2018		2017

Investment advisory, administration fees and securities lending revenue by client type:
Retail	$	855	$	776
iShares ETFs		1,158		925
Institutional:
Active		527		458
Index		256		237
Total institutional		783		695
Long-term		2,796		2,396
Cash management		151		127
Total	$	2,947	$	2,523

Investment advisory, administration fees and securities lending revenue by investment style:
Active	$	1,365	$	1,220
Index and iShares ETFs		1,431		1,176
Long-term		2,796		2,396
Cash management		151		127
Total	$	2,947	$	2,523

Investment advisory, administration fees and securities lending revenue by product type:
Equity	$	1,540	$	1,281
Fixed income		757		677
Multi-asset		296		272
Alternatives		203		166
Long-term		2,796		2,396
Cash management		151		127
Total	$	2,947	$	2,523

Investment advisory and administration fees

The table below presents estimated investment advisory and administration fees expected to be recognized in the future related to the unsatisfied portion of the performance obligations at March 31, 2018:

	Remainder of
(in millions)	2018			2019		2020		2021	Thereafter		Total
Investment advisory and administration fees:
Alternatives⁽¹⁾⁽²⁾	$	61	$	70	$	58	$	48	$	48	$	285

⁽¹⁾

Investment advisory and administration fees include management fees related to certain alternative products, which are based on contractual committed capital outstanding at March 31, 2018. Actual management fees could be higher to the extent additional committed capital is raised. These fees are generally billed on a quarterly basis in arrears. The Company excludes fees that are probable of significant reversal in future periods.

⁽²⁾	The Company elected the following practical expedients and does not include amounts related to (1) performance obligations with an original duration of one year or less, (2) variable consideration related to future service periods, and (3) the comparative prior period as of March 31, 2017.

Investment advisory performance fees / Carried interest

The table below presents changes in the deferred carried interest liability (including the portion related to consolidated VIEs) for the three months ended March 31, 2018 and 2017:

	Three Months Ended
	March 31,
(in millions)	2018		2017
Beginning balance	$	219	$	152
Net increase (decrease) in unrealized allocations		5		9
Performance fee revenue recognized that was included in the deferred carried interest liability balance at the beginning of the period		—		(10	)
Ending balance	$	224	$	151

Technology and risk management revenue

The table below presents estimated technology and risk management revenue expected to be recognized in the future related to the unsatisfied portion of the performance obligations at March 31, 2018:

	Remainder of
(in millions)	2018			2019		2020		2021	Thereafter		Total
Technology and risk management revenue⁽¹⁾⁽²⁾	$	25	$	24	$	20	$	15	$	10	$	94

⁽¹⁾	Technology and risk management revenue primarily includes upfront payments from customers, which the Company generally recognizes as services are performed. The Company excludes fees that are probable of significant reversal in future periods.

⁽²⁾	The Company elected the following practical expedients and does not include amounts related to (1) performance obligations with an original duration of one year or less, (2) variable consideration related to future service periods, and (3) the comparative prior period as of March 31, 2017.

In addition to amounts disclosed in the table above, certain technology and risk management contracts require fixed minimum fees, which are billed on a monthly or quarterly basis in arrears. The Company recognizes such revenue as services are performed. As of March 31, 2018, the estimated fixed minimum fees for the remainder of 2018 for currently outstanding contracts approximated $348 million. The term for these contracts, which are either in their initial or renewal period, ranges from one to five years.

The table below presents changes in the technology and risk management deferred revenue liability for the three months ended March 31, 2018 and 2017, which is included in other liabilities on the condensed consolidated statements of financial condition:

	Three Months Ended
	March 31,
(in millions)	2018			2017
Beginning balance	$	62		$	42
Additions		12			8
Amount recognized included in the deferred revenue liability beginning balance		(8	)		(4	)
Ending balance	$	66		$	46

14. Stock-Based Compensation

Restricted Stock and RSUs.

Restricted stock and restricted stock units (“RSUs”) activity for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018 is summarized below.

Outstanding at	Restricted Stock and RSUs			Weighted- Average Grant Date Fair Value		Restricted Stock and RSUs			Weighted- Average Grant Date Fair Value
December 31, 2016		2,987,588		$	318.04
December 31, 2017							2,608,668		$	342.79
Granted		1,061,915		$	377.36		753,901		$	565.83
Converted		(1,363,701	)	$	320.27		(1,071,338	)	$	336.95
Forfeited		(39,164	)	$	338.57		(6,721	)	$	408.89
September 30, 2017⁽¹⁾		2,646,638		$	340.39
March 31, 2018⁽¹⁾							2,284,510		$	418.94

⁽¹⁾	At ~~September 30, 2017,~~March 31, 2018, approximately ~~2.3~~2.1 million awards are expected to vest and ~~0.3~~0.2 million awards have vested but have not been converted.

In January ~~2017,~~2018, the Company granted ~~699,991~~527,337 RSUs or shares of restricted stock to employees as part of ~~2016~~2017 annual incentive compensation that vest ratably over three years from the date of grant and ~~277,313~~209,201 RSUs or shares of restricted stock to employees that cliff vest 100% on January 31, ~~2020.~~2021. The Company values restricted stock and RSUs at their grant-date fair value as measured by BlackRock’s common stock price. The total fair market value of RSUs/restricted stock granted to employees during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018 was ~~$401~~$427 million.

At ~~September 30, 2017,~~March 31, 2018, the intrinsic value of outstanding RSUs was $1.2 billion, reflecting a closing stock price of ~~$447.09.~~$541.72.

At ~~September 30, 2017,~~March 31, 2018, total unrecognized stock-based compensation expense related to unvested RSUs was ~~$351~~$575 million. The unrecognized compensation cost is expected to be recognized over the remaining weighted-average period of ~~1.1~~1.5 years.

Performance-Based RSUs.

Performance-based RSU activity for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018 is summarized below.

Outstanding at

Performance-
Based RSUs

Weighted-
Average
Grant Date
Fair Value

December 31, 2016

610,371

$
315.65

Granted

294,584

$
375.27

Forfeited

(1,430
)

$
296.12

September 30, 2017

903,525

$
335.12

Outstanding at	Performance- Based RSUs			Weighted- Average Grant Date Fair Value
December 31, 2017		903,525		$	335.12
Granted		199,068		$	566.44
Additional shares granted due to attainment of performance measures		23,376		$	343.86
Converted		(269,648	)	$	343.86
March 31, 2018		856,321		$	386.38

In January ~~2017,~~2018, the Company granted ~~293,385~~199,068 performance-based RSUs to certain employees that cliff vest 100% on January 31, ~~2020.~~2021. These awards are amortized over a service period of three years. The number of shares distributed at vesting could be higher or lower than the original grant based on the level of attainment of predetermined Company performance measures. In January 2018, the Company granted 23,376 performance-based RSUs to certain employees based on the attainment of Company performance measures during the performance period.

The Company initially values performance-based RSUs at their grant-date fair value as measured by BlackRock’s common stock price. The total grant-date fair market value of performance-based RSUs granted to employees during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018 was ~~$111~~$121 million.

At ~~September 30, 2017,~~March 31, 2018, the intrinsic value of outstanding performance-based RSUs was ~~$404~~$464 million, reflecting a closing stock price of ~~$447.09.~~$541.72.

At ~~September 30, 2017,~~March 31, 2018, total unrecognized stock-based compensation expense related to unvested performance-based awards was ~~$137~~$203 million. The unrecognized compensation cost is expected to be recognized over the remaining weighted-average period of ~~1.4~~1.7 years.

See Note 14, Stock-Based Compensation, in the 2017 Form 10-K for more information on performance-based RSUs.

Market Performance-based RSUs.

Market performance-based RSUs activity for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018 is summarized below.

Outstanding at	Market Performance- Based RSUs			Weighted- Average Grant Date Fair Value		Market Performance- Based RSUs			Weighted- Average Grant Date Fair Value
December 31, 2016		803,474		$	151.20
December 31, 2017							286,336		$	195.33
Converted		(517,138	)	$	126.76		(286,336	)	$	195.33
September 30, 2017⁽¹⁾		286,336		$	195.33
March 31, 2018							—		$	—

⁽¹⁾ The market performance-based RSUs require that separate 15%, 25% and 35% share price appreciation targets be achieved during the six-year term of the awards. The awards are split into three tranches and each tranche may vest if the specified target increase in share price is met. At September 30, 2017, approximately 0.3 million awards are expected to vest.

See Note 14, Stock-Based Compensation, in the ~~2016~~2017 Form 10-K for more information on market performance-based RSUs.

~~At September 30, 2017, the intrinsic value of outstanding market performance-based RSUs was $128 million reflecting a closing stock price of $447.09.~~34

At September 30, 2017, total unrecognized stock-based compensation expense related to unvested market performance-based awards was $4 million. The unrecognized compensation cost is expected to be recognized over the remaining weighted-average period of less than one year.

Long-Term Incentive Plans Funded by PNC. Under a share surrender agreement, PNC committed to provide up to 4 million shares of BlackRock stock, held by PNC, to fund certain BlackRock long-term incentive plans (“LTIP”), including performance-based and market performance-based RSUs. The current share surrender agreement commits PNC to provide BlackRock Series C nonvoting participating preferred stock to fund the remaining committed shares. As of ~~September 30, 2017, 3.8~~March 31, 2018, 3.9 million shares had been surrendered by ~~PNC.~~

~~517,138~~PNC, including 103,064 shares ~~were surrendered by PNC in~~during the ~~first quarter of 2017.~~three months ended March 31, 2018.

At ~~September 30, 2017,~~March 31, 2018, the remaining shares committed by PNC of ~~0.2~~0.1 million were available to fund certain future long-term incentive awards.

Performance-based Stock Options.

~~13.~~Stock option activity for the three months ended March 31, 2018 is summarized below.

Outstanding at	Shares Under Option		Weighted Average Exercise Price
December 31, 2017		2,147,562	$	513.50
Granted		—	$	—
March 31, 2018		2,147,562	$	513.50

At March 31, 2018, total unrecognized stock-based compensation expense related to unvested performance-based stock options was $191 million. The unrecognized compensation cost is expected to be recognized over the remaining weighted-average period of 5.7 years.

See Note 14, Stock-Based Compensation, in the 2017 Form 10-K for more information on performance-based stock options.

15. Net Capital Requirements

The Company is required to maintain net capital in certain regulated subsidiaries within a number of jurisdictions, which is partially maintained by retaining cash and cash equivalent investments in those subsidiaries or jurisdictions. As a result, such subsidiaries of the Company may be restricted in their ability to transfer cash between different jurisdictions and to their parents. Additionally, transfers of cash between international jurisdictions ~~including repatriation to the United States,~~ may have adverse tax consequences that could discourage such transfers.

At ~~September 30, 2017,~~March 31, 2018, the Company was required to maintain approximately ~~$1.7~~$2.1 billion in net capital in certain regulated subsidiaries, including BlackRock Institutional Trust Company, N.A. (a wholly owned subsidiary of the Company that is chartered as a national bank whose powers are limited to trust and other fiduciary activities and which is subject to regulatory capital requirements administered by the Office of the Comptroller of the Currency), entities regulated by the Financial Conduct Authority and Prudential Regulation Authority in the United Kingdom, and the Company’s broker-dealers. The Company was in compliance with all applicable regulatory net capital requirements.

~~14.~~16. Accumulated Other Comprehensive Income (Loss)

The following tables present changes in accumulated other comprehensive income (loss) (“AOCI”) by component for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2018 and ~~2016:~~2017:

(in millions)

Foreign
currency
translation
adjustments⁽¹⁾

Other⁽²⁾

Total

For the Three Months Ended September 30, 2017

June 30, 2017

$
(579
)

$
4

$
(575
)
Net other comprehensive income (loss) for
the three months ended September 30, 2017

102

—

102

September 30, 2017

$
(477
)

$
4

$
(473
)
For the Nine Months Ended September 30, 2017

December 31, 2016

$
(721
)

$
5

$
(716
)
Net other comprehensive income (loss) for
the nine months ended September 30, 2017

244

(1
)

243

September 30, 2017

$
(477
)

$
4

$
(473
)

(in millions)	Foreign currency translation adjustments⁽¹⁾			Other⁽²⁾		Total
For the Three Months Ended March 31, 2018
December 31, 2017	$	(436	)	$	4	$	(432	)
Net other comprehensive income (loss) for the three months ended March 31, 2018		137			—		137
Reclassification as a result of adoption of ASU 2018-02		(6	)		—		(6	)
March 31, 2018	$	(305	)	$	4	$	(301	)

⁽¹⁾

Amount for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2018 includes a loss from a net investment hedge of ~~$18~~$16 million (net of a tax benefit of ~~$11~~$5 million) and ~~$56 million (net~~reclassification as a result of ~~a tax benefit~~adoption of ~~$33 million), respectively.~~ASU 2018-02.

⁽²⁾ Other includes amounts related to benefit plans, available-for-sale investments and ~~available-for-sale investments.~~are presented net of tax. Amounts reclassified from AOCI to net income were not material for the three months ended March 31, 2018.

(in millions)

Foreign
currency
translation
adjustments⁽¹⁾

Other⁽²⁾

Total

For the Three Months Ended September 30, 2016

June 30, 2016

$
(565
)

$
5

$
(560
)

Net other comprehensive income (loss) for
the three months ended September 30, 2016

(38
)

—

(38
)

September 30, 2016

$
(603
)

$
5

$
(598
)

For the Nine Months Ended September 30, 2016

December 31, 2015

$
(452
)

$
4

$
(448
)

Net other comprehensive income (loss) for
the nine months ended September 30, 2016

(151
)

1

(150
)

September 30, 2016

$
(603
)

$
5

$
(598
)

(in millions)	Foreign currency translation adjustments⁽¹⁾			Other⁽²⁾			Total
For the Three Months Ended March 31, 2017
December 31, 2016	$	(721	)	$	5		$	(716	)
Net other comprehensive income (loss) for the three months ended March 31, 2017		40			(1	)		39
March 31, 2017	$	(681	)	$	4		$	(677	)

⁽¹⁾Amount for the three ~~and nine~~ months ended ~~September 30, 2016~~March 31, 2017 includes a loss from a net investment hedge of $5$7 million (net of a tax benefit of $4 million) ~~and $16 million (net of a tax benefit of $10 million), respectively.~~.

⁽²⁾ Other includes amounts related to benefit plans and available-for-sale ~~investments.~~investments and are presented net of tax. Amounts reclassified from AOCI to net income were not material for the three months ended March 31, 2017.

~~15.~~17. Capital Stock

Nonvoting Participating Preferred Stock. The Company’s preferred shares authorized, issued and outstanding consisted of the following:

	September 30,		December 31,		March 31,		December 31,
	2017		2016		2018		2017
Series A
Shares authorized, $0.01 par value		20,000,000		20,000,000		20,000,000		20,000,000
Shares issued and outstanding		—		—		—		—
Series B
Shares authorized, $0.01 par value		150,000,000		150,000,000		150,000,000		150,000,000
Shares issued and outstanding⁽¹⁾		823,188		823,188		823,188		823,188
Series C
Shares authorized, $0.01 par value		6,000,000		6,000,000		6,000,000		6,000,000
Shares issued and outstanding⁽¹⁾		246,522		763,660		143,458		246,522
Series D
Shares authorized, $0.01 par value		20,000,000		20,000,000		20,000,000		20,000,000
Shares issued and outstanding		—		—		—		—

⁽¹⁾	Shares held by PNC.

Share Repurchases. The Company repurchased ~~2.1~~0.6 million common shares in open market transactions under the share repurchase program for approximately ~~$825~~$335 million during the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2018. At ~~September 30, 2017,~~March 31, 2018, there were ~~6.9~~5.8 million shares still authorized to be repurchased.

PNC Capital Contribution. During the three months ended March 31, ~~2017,~~2018, PNC surrendered to BlackRock ~~517,138~~103,064 shares of BlackRock Series C Preferred to fund certain LTIP awards.

~~16. Restructuring Charge~~18. Income Taxes

~~A restructuring charge~~On December 22, 2017, The Tax Cuts and Jobs Act (the “2017 Tax Act”) was enacted. The 2017 Tax Act significantly revises the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal corporate tax rate from 35 percent to 21 percent, (2) requiring companies to pay a one-time tax on certain unrepatriated earnings of ~~$76 million ($53 million after-tax), comprised~~foreign subsidiaries, (3) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries, (4) creating new taxes on certain earnings of ~~$44 million of severance~~controlled foreign corporations, and ~~$32 million of expense~~(5) creating a new limitation on deductible net interest expense. BlackRock’s results in 2017 included a $1.2 billion net tax benefit related to the ~~accelerated amortization~~2017 Tax Act. The Company has not made any additional measurement-period adjustments during the three months ended March 31, 2018. The Company may record adjustments to the provisional amounts during the measurement period as additional guidance from the U.S. Department of ~~previously granted deferred cash~~the Treasury is provided, as changes in the Company’s assumptions occur, and ~~equity~~as further information and interpretations become available. For further information on the 2017 Tax Act, see Note 21, Income Taxes, in the consolidated financial statements included in the 2017 Form 10-K.

The first quarter 2018 income tax expense reflected a reduced tax rate associated with the 2017 Tax Act and included a $56 million discrete tax benefit related to stock-based compensation awards ~~was recorded~~that vested in the first quarter of ~~2016~~2018.

The first quarter 2017 income tax expense included an $81 million discrete tax benefit related to stock-based compensation awards that vested in ~~connection with a project to streamline and simplify~~ the ~~organization. There was no restructuring liability outstanding at September 30,~~first quarter of 2017.

~~17.~~19. Earnings Per Share

Due to the similarities in terms between BlackRock nonvoting participating preferred stock and the Company’s common stock, the Company considers its participating preferred stock to be a common stock equivalent for purposes of earnings per share (“EPS”) calculations. As such, the Company has included the outstanding nonvoting participating preferred stock in the calculation of average basic and diluted shares outstanding.

The following table sets forth the computation of basic and diluted EPS for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~ under the treasury stock method:

	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30,				September 30,				March 31,
(in millions, except shares and per share data)	2017		2016		2017		2016		2018		2017
Net income attributable to BlackRock	$	947	$	875	$	2,666	$	2,321	$	1,089	$	859
Basic weighted-average shares outstanding		161,872,716		164,129,214		162,459,737		164,756,355		161,250,018		163,016,599
Dilutive effect of nonparticipating RSUs and stock options		1,900,830		2,127,384		1,829,305		2,004,557		1,668,943		1,839,584
Total diluted weighted-average shares outstanding		163,773,546		166,256,598		164,289,042		166,760,912		162,918,961		164,856,183
Basic earnings per share	$	5.85	$	5.33	$	16.41	$	14.09	$	6.75	$	5.27
Diluted earnings per share	$	5.78	$	5.26	$	16.23	$	13.92	$	6.68	$	5.21

~~18.~~20. Segment Information

The Company’s management directs BlackRock’s operations as one business, the asset management business. The Company utilizes a consolidated approach to assess performance and allocate resources. As such, the Company operates in one business segment as defined in ASC 280-10.

The following table illustrates investment advisory, administration fees, securities lending revenue and performance fees by product type, technology and risk management revenue, distribution fees, and advisory and other revenue for the three and nine months ended September 30, 2017 and 2016.

Three Months Ended

Nine Months Ended

September 30,

September 30,

(in millions)

2017

2016

2017

2016

Equity

$
1,457

$
1,284

$
4,134

$
3,746

Fixed income

749

695

2,153

1,975

Multi-asset

291

286

857

866

Alternatives

342

221

754

633

Cash management

144

118

408

340

Total investment advisory, administration fees,
securities lending revenue and performance fees

2,983

2,604

8,306

7,560

Technology and risk management revenue

175

152

497

439

Distribution fees

5

10

17

32

Advisory and other revenue

70

71

202

234

Total revenue

$
3,233

$
2,837

$
9,022

$
8,265

The following table illustrates total revenue for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~ by geographic region. These amounts are aggregated on a legal entity basis and do not necessarily reflect where the customer resides or affiliated services are provided.

	Three Months Ended				Nine Months Ended				Three Months Ended
(in millions)	September 30,				September 30,				March 31,
Revenue	2017		2016		2017		2016		2018		2017
Americas	$	2,126	$	1,934	$	6,077	$	5,580	$	2,324	$	2,043
Europe		946		773		2,496		2,287		1,093		906
Asia-Pacific		161		130		449		398		166		143
Total revenue	$	3,233	$	2,837	$	9,022	$	8,265	$	3,583	$	3,092

The following table illustrates long-lived assets that consist of goodwill and property and equipment at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 by geographic region. These amounts are aggregated on a legal entity basis and do not necessarily reflect where the asset is physically located.

See Note 13, Revenue, for further information on the Company’s sources of revenue.

(in millions)	September 30,		December 31,		March 31,		December 31,
Long-lived Assets	2017		2016		2018		2017
Americas	$	13,546	$	13,424	$	13,551	$	13,560
Europe		166		163		172		168
Asia-Pacific		85		90		83		84
Total long-lived assets	$	13,797	$	13,677	$	13,806	$	13,812

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

~~19.~~21. Subsequent Events

In ~~June 2017,~~April 2018, the Company announced that it entered into an agreement ~~for~~to acquire Tennenbaum Capital Partners, LLC, a ~~minority investment in Scalable Capital, a digital investment~~leading manager ~~in Europe.~~focused on middle market performing credit and special situation credit opportunities. The transaction is expected to be completed in the ~~fourth~~third quarter of ~~2017,~~2018, subject to customary regulatory approvals and closing conditions. This transaction is not expected to be material to the Company’s condensed consolidated statements of financial condition or results of operations.

In May 2018, the Company announced that it entered into an agreement to sell its minority interest in DSP BlackRock Investment Managers Pvt. Ltd. to The DSP Group. The Company currently has a 40% stake in the joint venture, which manages and markets a range of co-branded mutual funds in India. This transaction is expected to complete, subject to regulatory approval, once naming transfers and investment scheme unitholder communications are finalized. This transaction is not expected to be material to the Company’s condensed consolidated statements of financial condition or results of operations.

The Company conducted a review for additional subsequent events and determined that no subsequent events had occurred that would require accrual or additional disclosures.

3338

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENTS

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

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

BlackRock has previously disclosed risk factors in its Securities and Exchange Commission (“SEC”) reports. These risk factors and those identified elsewhere in this report, among others, could cause actual results to differ materially from forward-looking statements or historical performance and include: (1) the introduction, withdrawal, success and timing of business initiatives and strategies; (2) changes and volatility in political, economic or industry conditions, the interest rate environment, foreign exchange rates or financial and capital markets, which could result in changes in demand for products or services or in the value of assets under management (“AUM”); (3) the relative and absolute investment performance of BlackRock’s investment products; (4) the impact of increased competition; (5) the impact of future acquisitions or divestitures; (6) the unfavorable resolution of legal proceedings; (7) the extent and timing of any share repurchases; (8) the impact, extent and timing of technological changes and the adequacy of intellectual property, information and cyber security protection; (9) the potential for human error in connection with BlackRock’s operational systems; (10) the impact of legislative and regulatory actions and reforms and regulatory, supervisory or enforcement actions of government agencies relating to BlackRock or The PNC Financial Services Group, Inc. (“PNC”); (11) changes in law and policy and uncertainty pending any such changes; (12) terrorist activities, international hostilities and natural disasters, which may adversely affect the general economy, domestic and local financial and capital markets, specific industries or BlackRock; (13) the ability to attract and retain highly talented professionals; (14) fluctuations in the carrying value of BlackRock’s economic investments; (15) the impact of changes to tax legislation, including income, payroll and transaction taxes, and taxation on products or transactions, which could affect the value proposition to clients and, generally, the tax position of the Company; (16) BlackRock’s success in negotiating distribution arrangements and maintaining distribution channels for its products; (17) the failure by a key vendor of BlackRock to fulfill its obligations to the Company; (18) any disruption to the operations of third parties whose functions are integral to BlackRock’s exchange-traded funds (“ETF”) platform; (19) the impact of BlackRock electing to provide support to its products from time to time and any potential liabilities related to securities lending or other indemnification obligations; and (20) the impact of problems at other financial institutions or the failure or negative performance of products at other financial institutions.

3439

OVERVIEW

BlackRock, Inc. (together, with its subsidiaries, unless the context otherwise indicates, “BlackRock” or the “Company”) is a leading publicly traded investment management firm with ~~$5.977~~$6.317 trillion of AUM at ~~September 30, 2017.~~March 31, 2018. With approximately ~~13,700~~14,000 employees in more than 30 countries, BlackRock provides a broad range of investment, ~~and~~ risk management and technology services to institutional and retail clients worldwide.

BlackRock’s diverse platform of alpha-seeking active, ~~(alpha)~~index and ~~index (beta)~~cash management investment strategies across asset classes enables the Company to tailor investment outcomes and asset allocation solutions for clients. Product offerings include single- and multi-asset ~~class~~ portfolios investing in equities, fixed income, alternatives and money market instruments. Products are offered directly and through intermediaries in a variety of vehicles, including open-end and closed-end mutual funds, iShares^® ETFs, separate accounts, collective investment ~~funds~~trusts and other pooled investment vehicles. BlackRock also offers the investment and risk management ~~technology~~ platform, Aladdin^®, risk analytics, advisory and technology services and solutions to a broad base of institutional and wealth management ~~investors.~~clients.

BlackRock serves a diverse mix of institutional and retail clients across the globe. Clients include tax-exempt institutions, such as defined benefit and defined contribution pension plans, charities, foundations and endowments; official institutions, such as central banks, sovereign wealth funds, supranationals and other government entities; taxable institutions, including insurance companies, financial institutions, corporations and third-party fund sponsors, and retail investors.

BlackRock maintains a significant global sales and marketing presence that is focused on establishing and maintaining retail and institutional investment management and technology service relationships by marketing its services to investors directly and through third-party distribution relationships, including financial professionals and pension ~~consultants, and establishing third-party distribution relationships.~~consultants.

At ~~September 30, 2017,~~March 31, 2018, PNC held ~~21.4%~~21.2% of the Company’s voting common stock and ~~21.9%~~21.7% of the Company’s capital stock, which includes outstanding common and nonvoting preferred stock.

The Company adopted Accounting Standards Update 2014-09, Revenue from Contracts with Customers effective January 1, 2018 on a full retrospective basis. Accordingly, financial results for 2017 were recast to reflect the adoption of the new revenue recognition standard. For further information, refer to Note 2, Significant Accounting Policies, in the condensed consolidated financial statements.

Certain ~~items previously reported have been~~prior period presentations and disclosures, while not required to be recast, were reclassified to ~~conform to the~~ensure comparability with current period ~~presentation. For more information on the current period’s reclassification, see “Discussion of Financial Results – Revenue” herein.~~classifications.

OTHER DEVELOPMENTS

~~Acquisitions~~Acquisition and Divestiture

In June 2017, the Company completed the acquisition of the equity infrastructure franchise of First Reserve (“First Reserve Transaction”), expanding the Company’s energy and power infrastructure platform. Total consideration for the transaction was approximately $193 million, including $120 million of contingent consideration at fair value at time of close.

In July 2017, the Company completed the acquisition of Cachematrix (“Cachematrix Transaction”), a leading provider of financial technology which simplifies the cash management process for banks and their corporate clients in a streamlined, open-architecture platform. Total consideration for the transaction was approximately $38 million.

~~In June 2017,~~April 2018, the Company announced that it entered into an agreement ~~for~~to acquire Tennenbaum Capital Partners, LLC, a ~~minority investment in Scalable Capital, a digital investment~~leading manager ~~in Europe.~~focused on middle market performing credit and special situation credit opportunities. The transaction is expected to be completed in the ~~fourth~~third quarter of ~~2017,~~2018, subject to customary regulatory approvals and closing conditions. This transaction is not expected to be material to the Company’s condensed consolidated statements of financial condition or results of operations.

United Kingdom Exit from European Union

Following the June 2016 vote to exit the European Union (“EU”), the United Kingdom served notice under Article 50 of the Treaty on European Union on March 29, 2017 to initiate the process of exiting from the EU, commonly referred to as "Brexit". The outcome of the negotiations between the United Kingdom and the EU in connection with Brexit is highly uncertain and information regarding the long-term consequences is expected to become clearer over time as negotiations progress. The Company continues to prepare for a range of potential outcomes in connection with Brexit.

3541

EXECUTIVE SUMMARY

	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
(in millions, except shares and per share data)	2017			2016			2017			2016			2018			2017⁽⁴⁾
GAAP basis:
Total revenue	$	3,233		$	2,837		$	9,022		$	8,265		$	3,583		$	3,092
Total expense		1,839			1,628			5,239			4,920			2,208			1,949
Operating income		1,394			1,209			3,783			3,345			1,375			1,143
Operating margin		43.1	%		42.6	%		41.9	%		40.5	%		38.4	%		37.0	%
Nonoperating income (expense), less net income (loss) attributable to noncontrolling interests		(2	)		(1	)		(27	)		(70	)		(21	)		(16	)
Income tax expense		(445	)		(333	)		(1,090	)		(954	)		(265	)		(268	)
Net income attributable to BlackRock	$	947		$	875		$	2,666		$	2,321		$	1,089		$	859
Diluted earnings per common share	$	5.78		$	5.26		$	16.23		$	13.92		$	6.68		$	5.21
Effective tax rate		32.0	%		27.6	%		29.0	%		29.1	%		19.6	%		23.8	%
As adjusted⁽¹⁾:
Operating income	$	1,398		$	1,216		$	3,795		$	3,442		$	1,378		$	1,147
Operating margin		45.0	%		44.8	%		43.9	%		43.5	%		44.1	%		42.6	%
Nonoperating income (expense), less net income (loss) attributable to noncontrolling interests		(2	)		(1	)		(27	)		(70	)		(21	)		(16	)
Net income attributable to BlackRock	$	969		$	854		$	2,694		$	2,362		$	1,092		$	862
Diluted earnings per common share	$	5.92		$	5.14		$	16.40		$	14.16		$	6.70		$	5.23
Effective tax rate		30.6	%		29.7	%		28.5	%		30.0	%		19.6	%		23.8	%
Other:
Assets under management (end of period)	$	5,976,892		$	5,117,421		$	5,976,892		$	5,117,421		$	6,316,984		$	5,420,477
Diluted weighted-average common shares outstanding⁽²⁾		163,773,546			166,256,598			164,289,042			166,760,912			162,918,961			164,856,183
Common and preferred shares outstanding (end of period)		161,597,770			163,858,070			161,597,770			163,858,070			161,275,008			162,868,647
Book value per share⁽³⁾	$	185.91		$	176.40		$	185.91		$	176.40		$	198.28		$	178.94
Cash dividends declared and paid per share	$	2.50		$	2.29		$	7.50		$	6.87		$	2.88		$	2.50

⁽¹⁾⁽¹⁾

As adjusted items are described in more detail in Non-GAAP Financial Measures.

⁽²⁾⁽²⁾

Nonvoting participating preferred shares are considered to be common stock equivalents for purposes of determining basic and diluted earnings per share calculations.

⁽³⁾⁽³⁾

Total BlackRock stockholders’ equity divided by total common and preferred shares outstanding at ~~September 30~~March 31 of the respective period-end.

⁽⁴⁾	Financial results for 2017 were recast to reflect the adoption of the new revenue recognition standard. For further information, refer to Note 2, Significant Accounting Policies, in the condensed consolidated financial statements.

THREE MONTHS ENDED ~~SEPTEMBER 30, 2017~~MARCH 31, 2018 COMPARED WITH THREE MONTHS ENDED ~~SEPTEMBER 30, 2016~~MARCH 31, 2017

GAAP. Operating income of ~~$1,394~~$1,375 million increased ~~$185~~$232 million and operating margin of ~~43.1%~~38.4% increased 50140 bps from the ~~third~~first quarter of ~~2016.~~2017. Operating income and operating margin growth primarily reflected higher ~~year-over-year~~ base ~~fees, performance~~ fees and technology and risk management revenue, partially offset by higher compensation and benefits, ~~expense,~~ higher ~~direct fund~~volume-related expense, and higher general and administration expense.

~~Third~~First quarter 2018 income tax expense reflected a reduced tax rate associated with The Tax Cuts and Jobs Act enacted on December 22, 2017 (the “2017 Tax Act”) and included a $56 million discrete tax benefit related to stock-based compensation awards that vested in the first quarter of 2018. First quarter 2017 income tax expense included ~~net noncash expense of $19~~an $81 million discrete tax benefit related to the revaluation of certain deferred income tax liabilities as a result of domestic state and local changes. Third quarter 2016 income tax expense included a $26 million net noncash tax benefit, primarily related to the revaluation of certain deferred income tax liabilities as a result of legislation enactedstock-based compensation awards that vested in the ~~United Kingdom, and domestic state and local income tax changes. Third~~first quarter ~~2016 income tax expense also included nonrecurring tax benefits~~ of ~~$16 million primarily due to the resolution of certain outstanding tax matters.~~2017. See Income Tax Expense within Discussion of Financial Results for more information.

Earnings per diluted common share increased ~~$0.52,~~$1.47, or ~~10%~~28%, from the ~~third~~first quarter of ~~2016,~~2017, driven primarily by higher operating income, ~~and the benefit of share repurchases, partially offset by higher income~~lower tax ~~expense.~~

~~As Adjusted~~. Operating income of $1,398 million increased $182 million from the third quarter of 2016, and operating margin of 45.0% increased 20 bps from the third quarter of 2016. Income tax expense for the third quarter of 2017 and 2016 excluded the $19 million net noncash expense and $26 million net noncash benefit, respectively, described above. Earnings per diluted common share increased $0.78, or 15%, from the third quarter of 2016.

~~NINE MONTHS ENDED SEPTEMBER 30, 2017 COMPARED WITH NINE MONTHS ENDED SEPTEMBER 30, 2016~~

~~GAAP.~~ Operating income of $3,783 million increased $438 million and operating margin of 41.9% increased 140 bps from the nine months ended September 30, 2016. Operating income and operating margin growth primarily reflected higher year-over-year base fees, performance fees, and technology and risk management revenue, partially offset by higher compensation and benefits, higher direct fund expense, and higher general and administration expense. The nine months ended September 30, 2017 also included approximately $22 million of expense associated with the strategic repositioning of the active equity platform. Operating income for the nine months ended September 30, 2016 included a restructuring charge of $76 million in connection with a project to streamline and simplify the organization. Nonoperating income (expense), less net income (loss) attributable to noncontrolling interest (“NCI”), increased $43 million driven by higher net gains on investments. Nonoperating results for the nine months ended September 30, 2017 included a “make-whole” redemption premium of $14 million related to the refinancing of $700 million of 6.25% notes, which were paid prior to their September 2017 maturity.

Income tax expense for the nine months ended September 30, 2017 included an $81 million discrete tax benefit reflecting the adoption of new accounting guidance related to stock-based compensation awards that vested in the first quarter of 2017 and the $19 million net noncash expense mentioned above. Income tax expense for the nine months ended September 30, 2016 included the $26 million net noncash benefit mentioned above and nonrecurring tax benefits of $35 million. See ~~Income Tax Expense~~ ~~within~~ ~~Discussion of Financial Results~~ ~~for more information.~~

~~Earnings per diluted common share increased $2.31, or 17%, from the nine months ended September 30, 2016, driven primarily by higher net income,~~rate and the benefit of share repurchases.

As ~~Adjusted~~.Adjusted. Operating income of ~~$3,795~~$1,378 million increased ~~$353~~$231 million from the first quarter of 2017, and operating margin of ~~43.9%~~44.1% increased 40150 bps from the ~~nine months ended September 30, 2016. The pre-tax restructuring charge~~first quarter of $76 million described above was excluded from as adjusted results for the nine months ended September 30, 2016. Income tax expense for the nine months ended September 30, 2017 and 2016 excluded the previously described net noncash expense of $19 million and net noncash benefit of $26 million, respectively, and included the nonrecurring tax benefits described above.2017. Earnings per diluted common share increased ~~$2.24,~~$1.47, or ~~16%~~28%, from the ~~nine months ended September 30, 2016.~~first quarter of 2017.

See Non-GAAP Financial Measures for further information on as adjusted items and the reconciliation to accounting principles generally accepted in the United States (“GAAP“).

For further discussion of BlackRock’s revenue, expense, nonoperating results and income tax expense, see Discussion of Financial Results herein.

3743

NON-GAAP FINANCIAL MEASURES

BlackRock reports its financial results in accordance with GAAP; however, management believes evaluating the Company’s ongoing operating results may be enhanced if investors have additional non-GAAP financial measures. Management reviews non-GAAP financial measures to assess ongoing operations and considers them to be helpful, for both management and investors, in evaluating BlackRock’s financial performance over time. Management also uses non-GAAP financial measures as a benchmark to compare its performance with other companies and to enhance the comparability of this information for the reporting periods presented. Non-GAAP measures may pose limitations because they do not include all of BlackRock’s revenue and expense. BlackRock’s management does not advocate that investors consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Non-GAAP measures may not be comparable to other similarly titled measures of other companies.

Management uses both GAAP and non-GAAP financial measures in evaluating BlackRock’s financial performance. Adjustments to GAAP financial measures (“non-GAAP adjustments”) include certain items management deems nonrecurring or that occur infrequently, transactions that ultimately will not impact BlackRock’s book value or certain tax items that do not impact cash flow.

Computations for all periods are derived from the condensed consolidated statements of income as follows:

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

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

	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
(in millions)	2017			2016			2017			2016			2018			2017
Operating income, GAAP basis	$	1,394		$	1,209		$	3,783		$	3,345		$	1,375		$	1,143
Non-GAAP expense adjustments:
Restructuring charge		—			—			—			76
Non-GAAP expense adjustment:
PNC LTIP funding obligation		4			7			12			21			3			4
Operating income, as adjusted	$	1,398		$	1,216		$	3,795		$	3,442			1,378			1,147
Product launch costs and commissions														12			—
Operating income used for operating margin measurement													$	1,390		$	1,147
Revenue, GAAP basis	$	3,233		$	2,837		$	9,022		$	8,265		$	3,583		$	3,092
Non-GAAP adjustments:
Non-GAAP adjustment:
Distribution and servicing costs		(123	)		(114	)		(361	)		(320	)		(432	)		(401	)
Amortization of deferred sales commissions		(4	)		(8	)		(13	)		(27	)
Revenue used for operating margin measurement	$	3,106		$	2,715		$	8,648		$	7,918		$	3,151		$	2,691
Operating margin, GAAP basis		43.1	%		42.6	%		41.9	%		40.5	%		38.4	%		37.0	%
Operating margin, as adjusted		45.0	%		44.8	%		43.9	%		43.5	%		44.1	%		42.6	%

Operating income, as adjusted, includes non-GAAP expense adjustments. The portion of compensation expense associated with certain long-term incentive plans (“LTIP”) funded, or to be funded, through share distributions to participants of BlackRock stock held by PNC has been excluded because it ultimately does not impact BlackRock’s book value. For the nine months ended September 30, 2016, a restructuring charge comprised of severance and accelerated amortization expense of previously granted deferred compensation awards has been excluded to provide an analysis of BlackRock’s ongoing operations and to ensure comparability among periods presented.

•

Revenue used for operating margin, as adjusted, excludes distribution and servicing costs paid to related parties and other third parties. Management believes such costs represent a benchmark for the amount of revenue passed through to external parties who distribute the Company’s products. In addition, management believes the exclusion of such costs is useful because it creates consistency in the treatment for certain contracts for similar services, which due to the terms of the contracts, are accounted for under GAAP on a net basis within investment advisory, administration fees and securities lending revenue. Amortization of deferred sales commissions is excluded from revenue used for operating margin measurement, as adjusted, because such costs, over time, substantially offset distribution fee revenue the

Operating income used for measuring operating margin, as adjusted, is equal to operating income, as adjusted, excluding the impact of product launch costs (e.g. closed-end fund launch costs) and related commissions. Management believes the exclusion of such costs and related commissions is useful because these costs can fluctuate considerably and revenue associated with the expenditure of these costs will not fully impact BlackRock’s results until future periods.

38Revenue used for operating margin, as adjusted, excludes distribution and servicing costs paid to third parties. Management believes such costs represent a benchmark for the amount of revenue passed through to external parties who distribute the Company’s products. BlackRock excludes from revenue used for operating margin, as adjusted, the costs related to distribution and servicing costs as a proxy for such offsetting revenue.

~~Company earns. For each of these items, BlackRock excludes from revenue used for operating margin, as adjusted, the costs related to each of these items as a proxy for such offsetting revenue.~~

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

	Three Months Ended					Nine Months Ended					Three Months Ended
	September 30,					September 30,					March 31,
(in millions, except per share data)	2017		2016			2017		2016			2018		2017
Net income attributable to BlackRock, Inc., GAAP basis	$	947	$	875		$	2,666	$	2,321		$	1,089	$	859
Non-GAAP adjustments:
Restructuring charge (including $23 tax benefit)		—		—			—		53
PNC LTIP funding obligation, net of tax		3		5			9		14			3		3
Income tax matters		19		(26	)		19		(26	)
Net income attributable to BlackRock, Inc., as adjusted	$	969	$	854		$	2,694	$	2,362		$	1,092	$	862
Diluted weighted-average common shares outstanding⁽³⁾		163.8		166.3			164.3		166.8			162.9		164.9
Diluted earnings per common share, GAAP basis⁽³⁾	$	5.78	$	5.26		$	16.23	$	13.92		$	6.68	$	5.21
Diluted earnings per common share, as adjusted⁽³⁾	$	5.92	$	5.14		$	16.40	$	14.16		$	6.70	$	5.23

Management believes net income attributable to BlackRock, Inc., as adjusted, and diluted earnings per common share, as adjusted, are useful measures of BlackRock’s profitability and financial performance. Net income attributable to BlackRock, Inc., as adjusted, equals net income attributable to BlackRock, Inc., GAAP basis, adjusted for significant nonrecurring items and charges that ultimately will not impact BlackRock’s book ~~value or certain tax items that do not impact cash flow.~~

value.

See aforementioned discussion regarding operating income, as adjusted, and operating margin, as adjusted, for information on the PNC LTIP funding ~~obligation and the restructuring charge.~~obligation.

For each period presented, the non-GAAP adjustment related to the ~~restructuring charge and~~ PNC LTIP funding obligation was tax effected at the respective blended rates applicable to the adjustments. Amounts for income tax matters represent net noncash (benefits) expense primarily associated with the revaluation of certain deferred tax liabilities related to intangible assets and goodwill. Amounts have been excluded from the as adjusted results as these items will not have a cash flow impact and to ensure comparability among periods presented.adjustment.

Per share amounts reflect net income attributable to BlackRock, Inc., as adjusted divided by diluted weighted average common shares outstanding.

(3) Nonvoting participating preferred stock is considered to be a common stock equivalent for purposes of determining basic and diluted earnings per share calculations.

3945

ASSETS UNDER MANAGEMENT

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

AUM and Net Inflows (Outflows) by Client Type	AUM and Net Inflows (Outflows) by Client Type																		AUM and Net Inflows (Outflows) by Client Type
		AUM								Net inflows (outflows)										AUM						Net inflows (outflows)
		September 30,		June 30,		December 31,		September 30,		Three Months Ended September 30,			Nine Months Ended September 30,			Twelve Months Ended September 30,				March 31,		December 31,		March 31,		Three Months Ended March 31,			Twelve Months Ended March 31,
(in millions)		2017		2017		2016		2016		2017			2017			2017				2018		2017		2017		2018			2018
Retail		$	608,521	$	586,756	$	541,952	$	554,778	$	7,367		$	18,501		$	16,055			$	638,363	$	628,377	$	564,333	$	16,686		$	41,953
iShares ETFs			1,640,437		1,528,236		1,287,879		1,246,166		52,306			190,541			239,841				1,767,925		1,752,239		1,413,335		34,649			215,509
Institutional:
Active			1,105,224		1,075,855		1,009,974		1,039,653		155			3,735			10,043				1,130,446		1,139,308		1,037,233		(7,088	)		(156	)
Index			2,194,701		2,093,193		1,901,681		1,877,501		15,976			36,883			71,486				2,324,327		2,316,807		2,013,905		10,378			47,216
Total institutional			3,299,925		3,169,048		2,911,655		2,917,154		16,131			40,618			81,529				3,454,773		3,456,115		3,051,138		3,290			47,060
Long-term																					5,861,061		5,836,731		5,028,806		54,625			304,522
Cash management																					454,784		449,949		388,935		2,674			56,639
Advisory⁽¹⁾																					1,139		1,515		2,736		(353	)		(1,561	)
Total																				$	6,316,984	$	6,288,195	$	5,420,477	$	56,946		$	359,600

AUM and Net Inflows (Outflows) by Investment Style																			AUM and Net Inflows (Outflows) by Investment Style
																				AUM						Net inflows (outflows)
																				March 31,		December 31,		March 31,		Three Months Ended March 31,			Twelve Months Ended March 31,
(in millions)																				2018		2017		2017		2018			2018
Active																				$	1,693,883	$	1,696,005	$	1,543,519	$	5,513		$	31,804
Index and iShares ETFs																					4,167,178		4,140,726		3,485,287		49,112			272,718
Long-term			5,548,883		5,284,040		4,741,486		4,718,098		75,804			249,660			337,425				5,861,061		5,836,731		5,028,806		54,625			304,522
Cash management			425,423		402,575		403,584		388,982		20,381			14,854			32,526				454,784		449,949		388,935		2,674			56,639
Advisory⁽¹⁾			2,586		2,658		2,782		10,341		(73	)		(188	)		(7,573	)			1,139		1,515		2,736		(353	)		(1,561	)
Total		$	5,976,892	$	5,689,273	$	5,147,852	$	5,117,421	$	96,112		$	264,326		$	362,378			$	6,316,984	$	6,288,195	$	5,420,477	$	56,946		$	359,600

AUM and Net Inflows (Outflows) by Product Type	AUM and Net Inflows (Outflows) by Product Type																		AUM and Net Inflows (Outflows) by Product Type
		AUM								Net inflows (outflows)										AUM						Net inflows (outflows)
		September 30,		June 30,		December 31,		September 30,		Three Months Ended September 30,			Nine Months Ended September 30,			Twelve Months Ended September 30,				March 31,		December 31,		March 31,		Three Months Ended March 31,			Twelve Months Ended March 31,
(in millions)		2017		2017		2016		2016		2017			2017			2017				2018		2017		2017		2018			2018
Equity		$	3,172,465	$	3,014,696	$	2,657,176	$	2,566,039	$	11,935		$	94,362		$	152,328			$	3,363,237	$	3,371,641	$	2,865,515	$	26,514		$	112,602
Fixed income			1,788,420		1,704,624		1,572,365		1,628,268		59,549			135,837			161,144				1,886,523		1,855,465		1,630,569		26,683			172,097
Multi-asset			457,027		436,736		395,007		402,261		4,334			15,406			20,262				476,697		480,278		411,565		(1,987	)		16,793
Alternatives:
Core			99,168		97,551		88,630		88,731		(504	)		2,353			3,569				101,563		98,533		90,914		1,533			1,309
Currency and commodities⁽²⁾			31,803		30,433		28,308		32,799		490			1,702			122		��		33,041		30,814		30,243		1,882			1,721
Subtotal			130,971		127,984		116,938		121,530		(14	)		4,055			3,691				134,604		129,347		121,157		3,415			3,030
Long-term			5,548,883		5,284,040		4,741,486		4,718,098		75,804			249,660			337,425				5,861,061		5,836,731		5,028,806		54,625			304,522
Cash management			425,423		402,575		403,584		388,982		20,381			14,854			32,526				454,784		449,949		388,935		2,674			56,639
Advisory⁽¹⁾			2,586		2,658		2,782		10,341		(73	)		(188	)		(7,573	)			1,139		1,515		2,736		(353	)		(1,561	)
Total		$	5,976,892	$	5,689,273	$	5,147,852	$	5,117,421	$	96,112		$	264,326		$	362,378			$	6,316,984	$	6,288,195	$	5,420,477	$	56,946		$	359,600

AUM and Net Inflows (Outflows) by Investment Style
		AUM								Net inflows (outflows)
		September 30,		June 30,		December 31,		September 30,		Three Months Ended September 30,			Nine Months Ended September 30,			Twelve Months Ended September 30,
(in millions)		2017		2017		2016		2016		2017			2017			2017
Active		$	1,645,352	$	1,598,591	$	1,501,052	$	1,547,473	$	5,796		$	11,489		$	10,946
Index and iShares ETFs			3,903,531		3,685,449		3,240,434		3,170,625		70,008			238,171			326,479
Long-term			5,548,883		5,284,040		4,741,486		4,718,098		75,804			249,660			337,425
Cash management			425,423		402,575		403,584		388,982		20,381			14,854			32,526
Advisory⁽¹⁾			2,586		2,658		2,782		10,341		(73	)		(188	)		(7,573	)
Total		$	5,976,892	$	5,689,273	$	5,147,852	$	5,117,421	$	96,112		$	264,326		$	362,378

⁽¹⁾	Advisory AUM represents long-term portfolio liquidation assignments.

⁽²⁾	Amounts include commodity iShares ETFs.

4046

Component Changes in AUM for the Three Months Ended ~~September 30, 2017~~March 31, 2018

The following table presents the component changes in AUM by client type and product type for the three months ended ~~September 30, 2017.~~March, 2018.

	June 30,		Net inflows			Market			FX		September 30,		Average		December 31,		Net inflows			Market			FX			March 31,		Average
(in millions)	2017		(outflows)			change			impact⁽¹⁾		2017		AUM⁽²⁾		2017		(outflows)			change			impact⁽¹⁾			2018		AUM⁽²⁾
Retail:
Equity	$	215,808	$	1,734		$	6,110		$	2,016	$	225,668	$	220,944	$	233,218	$	4,248		$	(6,711	)	$	2,200		$	232,955	$	237,553
Fixed income		240,932		4,613			1,569			1,234		248,348		245,193		257,571		10,065			(2,188	)		1,123			266,571		262,506
Multi-asset		113,903		1,046			2,796			317		118,062		116,183		120,855		2,035			(1,556	)		267			121,601		122,671
Alternatives		16,113		(26	)		224			132		16,443		17,198		16,733		338			63			102			17,236		17,131
Retail subtotal		586,756		7,367			10,699			3,699		608,521		599,518		628,377		16,686			(10,392	)		3,692			638,363		639,861
iShares ETFs:
Equity		1,139,850		33,102			50,806			4,637		1,228,395		1,184,488		1,329,610		29,714			(17,345	)		2,585			1,344,564		1,366,390
Fixed income		364,991		17,526			1,055			2,695		386,267		376,880		395,252		3,210			(5,754	)		1,483			394,191		394,856
Multi-asset		3,240		169			77			5		3,491		3,359		3,761		48			(40	)		(3	)		3,766		3,792
Alternatives		20,155		1,509			576			44		22,284		21,283		23,616		1,677			91			20			25,404		24,852
iShares ETFs subtotal		1,528,236		52,306			52,514			7,381		1,640,437		1,586,010		1,752,239		34,649			(23,048	)		4,085			1,767,925		1,789,890
Institutional:
Active:
Equity		126,446		(3,296	)		5,866			1,350		130,366		128,842		137,185		(296	)		(1,739	)		1,320			136,470		139,478
Fixed income		553,652		496			4,513			3,366		562,027		559,121		570,050		(4,069	)		(7,134	)		4,725			563,572		567,142
Multi-asset		311,921		3,477			7,827			4,508		327,733		320,619		347,825		(4,110	)		(3,161	)		2,790			343,344		346,649
Alternatives		83,836		(522	)		1,161			623		85,098		83,851		84,248		1,387			673			752			87,060		85,908
Active subtotal		1,075,855		155			19,367			9,847		1,105,224		1,092,433		1,139,308		(7,088	)		(11,361	)		9,587			1,130,446		1,139,177
Index:
Equity		1,532,592		(19,605	)		65,291			9,758		1,588,036		1,562,897		1,671,628	��	(7,152	)		(29,307	)		14,079			1,649,248		1,687,392
Fixed income		545,049		36,914			(1,451	)		11,266		591,778		572,049		632,592		17,477			(2,987	)		15,107			662,189		643,857
Multi-asset		7,672		(358	)		389			38		7,741		7,824		7,837		40			(112	)		221			7,986		8,456
Alternatives		7,880		(975	)		156			85		7,146		7,544		4,750		13			43			98			4,904		4,910
Index subtotal		2,093,193		15,976			64,385			21,147		2,194,701		2,150,314		2,316,807		10,378			(32,363	)		29,505			2,324,327		2,344,615
Institutional subtotal		3,169,048		16,131			83,752			30,994		3,299,925		3,242,747		3,456,115		3,290			(43,724	)		39,092			3,454,773		3,483,792
Long-term		5,284,040		75,804			146,965			42,074		5,548,883		5,428,275		5,836,731		54,625			(77,164	)		46,869			5,861,061		5,913,543
Cash management		402,575		20,381			224			2,243		425,423		415,082		449,949		2,674			85			2,076			454,784		453,629
Advisory⁽³⁾		2,658		(73	)		(98	)		99		2,586		2,621		1,515		(353	)		(14	)		(9	)		1,139		1,323
Total	$	5,689,273	$	96,112		$	147,091		$	44,416	$	5,976,892	$	5,845,978	$	6,288,195	$	56,946		$	(77,093	)	$	48,936		$	6,316,984	$	6,368,495

⁽¹⁾ Foreign exchange reflects the impact of translating non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes.

⁽²⁾ Average AUM is calculated as the average of the month-end spot AUM amounts for the trailing four months.

⁽³⁾ Advisory AUM represents long-term portfolio liquidation assignments.

4147

The following table presents component changes in AUM by investment style and product type for the three months ended ~~September 30, 2017.~~March 31, 2018.

	June 30,		Net inflows			Market			FX		September 30,		Average		December 31,		Net inflows			Market			FX			March 31,		Average
(in millions)	2017		(outflows)			change			impact⁽¹⁾		2017		AUM⁽²⁾		2017		(outflows)			change			impact⁽¹⁾			2018		AUM⁽²⁾
Active:
Equity	$	290,196	$	(3,015	)	$	10,433		$	2,562	$	300,176	$	295,895	$	311,209	$	1,005		$	(6,458	)	$	2,611		$	308,367	$	316,310
Fixed income		782,622		4,836			6,079			4,303		797,840		792,042		815,135		4,858			(9,222	)		5,503			816,274		816,757
Multi-asset		425,824		4,523			10,623			4,825		445,795		436,802		468,679		(2,075	)		(4,716	)		3,057			464,945		469,320
Alternatives		99,949		(548	)		1,385			755		101,541		101,049		100,982		1,725			736			854			104,297		103,039
Active subtotal		1,598,591		5,796			28,520			12,445		1,645,352		1,625,788		1,696,005		5,513			(19,660	)		12,025			1,693,883		1,705,426
Index and iShares ETFs:
iShares ETFs:
Equity		1,139,850		33,102			50,806			4,637		1,228,395		1,184,488		1,329,610		29,714			(17,345	)		2,585			1,344,564		1,366,390
Fixed income		364,991		17,526			1,055			2,695		386,267		376,880		395,252		3,210			(5,754	)		1,483			394,191		394,856
Multi-asset		3,240		169			77			5		3,491		3,359		3,761		48			(40	)		(3	)		3,766		3,792
Alternatives		20,155		1,509			576			44		22,284		21,283		23,616		1,677			91			20			25,404		24,852
iShares ETFs subtotal		1,528,236		52,306			52,514			7,381		1,640,437		1,586,010		1,752,239		34,649			(23,048	)		4,085			1,767,925		1,789,890
Non-ETF Index:
Equity		1,584,650		(18,152	)		66,834			10,562		1,643,894		1,616,788		1,730,822		(4,205	)		(31,299	)		14,988			1,710,306		1,748,113
Fixed income		557,011		37,187			(1,448	)		11,563		604,313		584,321		645,078		18,615			(3,087	)		15,452			676,058		656,748
Multi-asset		7,672		(358	)		389			38		7,741		7,824		7,838		40			(113	)		221			7,986		8,456
Alternatives		7,880		(975	)		156			85		7,146		7,544		4,749		13			43			98			4,903		4,910
Non-ETF Index subtotal		2,157,213		17,702			65,931			22,248		2,263,094		2,216,477		2,388,487		14,463			(34,456	)		30,759			2,399,253		2,418,227
Index & iShares ETFs subtotal		3,685,449		70,008			118,445			29,629		3,903,531		3,802,487		4,140,726		49,112			(57,504	)		34,844			4,167,178		4,208,117
Long-term		5,284,040		75,804			146,965			42,074		5,548,883		5,428,275		5,836,731		54,625			(77,164	)		46,869			5,861,061		5,913,543
Cash management		402,575		20,381			224			2,243		425,423		415,082		449,949		2,674			85			2,076			454,784		453,629
Advisory⁽³⁾		2,658		(73	)		(98	)		99		2,586		2,621		1,515		(353	)		(14	)		(9	)		1,139		1,323
Total	$	5,689,273	$	96,112		$	147,091		$	44,416	$	5,976,892	$	5,845,978	$	6,288,195	$	56,946		$	(77,093	)	$	48,936		$	6,316,984	$	6,368,495

The following table presents component changes in AUM by product type for the three months ended ~~September 30, 2017.~~March 31, 2018.

	June 30,		Net inflows			Market			FX		September 30,		Average		December 31,		Net inflows			Market			FX			March 31,		Average
(in millions)	2017		(outflows)			change			impact⁽¹⁾		2017		AUM⁽²⁾		2017		(outflows)			change			impact⁽¹⁾			2018		AUM⁽²⁾
Equity	$	3,014,696	$	11,935		$	128,073		$	17,761	$	3,172,465	$	3,097,171	$	3,371,641	$	26,514		$	(55,102	)	$	20,184		$	3,363,237	$	3,430,813
Fixed income		1,704,624		59,549			5,686			18,561		1,788,420		1,753,243		1,855,465		26,683			(18,063	)		22,438			1,886,523		1,868,361
Multi-asset		436,736		4,334			11,089			4,868		457,027		447,985		480,278		(1,987	)		(4,869	)		3,275			476,697		481,568
Alternatives:
Core		97,551		(504	)		1,355			766		99,168		98,746		98,533		1,533			750			747			101,563		100,438
Currency and commodities⁽⁴⁾		30,433		490			762			118		31,803		31,130		30,814		1,882			120			225			33,041		32,363
Alternatives subtotal		127,984		(14	)		2,117			884		130,971		129,876		129,347		3,415			870			972			134,604		132,801
Long-term		5,284,040		75,804			146,965			42,074		5,548,883		5,428,275		5,836,731		54,625			(77,164	)		46,869			5,861,061		5,913,543
Cash management		402,575		20,381			224			2,243		425,423		415,082		449,949		2,674			85			2,076			454,784		453,629
Advisory⁽³⁾		2,658		(73	)		(98	)		99		2,586		2,621		1,515		(353	)		(14	)		(9	)		1,139		1,323
Total	$	5,689,273	$	96,112		$	147,091		$	44,416	$	5,976,892	$	5,845,978	$	6,288,195	$	56,946		$	(77,093	)	$	48,936		$	6,316,984	$	6,368,495

⁽¹⁾ Foreign exchange reflects the impact of translating non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes.

⁽²⁾	Average AUM is calculated as the average of the month-end spot AUM amounts for the trailing four months.

⁽³⁾	Advisory AUM represents long-term portfolio liquidation assignments.

⁽⁴⁾	Amounts include commodity iShares ETFs.

AUM increased ~~$287.6~~$28.8 billion ~~or 5%,~~ to ~~$6.0~~$6.3 trillion at ~~September 30, 2017 from $5.7 trillion at June 30, 2017,~~March 31, 2018, driven by ~~net market appreciation,~~ positive net inflows and the impact of foreign exchange ~~movements.~~movements, partially offset by net market depreciation.

Net market ~~appreciation~~depreciation of ~~$147.1~~$77.1 billion ~~was driven by higher~~included $55.1 billion from equity products due to lower U.S. and global equity ~~markets.~~markets and $18.1 billion from fixed income across all strategies.

Long-term net inflows of ~~$75.8~~$54.6 billion included ~~$52.3~~$34.6 billion, ~~$16.1~~$16.7 billion and ~~$7.4~~$3.3 billion from iShares ETFs, ~~institutional~~retail clients and ~~retail~~institutional clients, respectively. Net flows in long-term products are described below.

•

~~iShares~~ ~~ETFs net inflows of $52.3 billion reflected strength in~~ ~~iShares~~ ~~Core, precision exposure and financial instrument ETFs. Equity net inflows of $33.1~~

iShares ETFs net inflows of $34.6 billion reflected strength in iShares Core ETFs. Equity net inflows of $29.7 billion were driven by both U.S. and international equity market exposures. Fixed income and commodity iShares generated $3.2 billion and $1.7 billion of net inflows, respectively.

42Retail net inflows of $16.7 billion reflected net inflows of $8.7 billion in the United States and $8.0 billion internationally. Fixed income net inflows of $10.0 billion were diversified across the Company’s active platform, led by net inflows into unconstrained, emerging market and municipals categories. Equity net inflows of $4.2 billion reflected inflows into index mutual funds and international active equities. Multi-asset net inflows of $2.0 billion were largely due to inflows into the Multi-asset Income fund family.

~~equity market exposures. Fixed income net inflows of $17.5 billion reflected inflows into treasury, investment grade corporate and broad fixed income funds. Commodities~~ ~~iShares~~ ~~generated $1.5 billion of net inflows.~~

Institutional index net inflows of ~~$16~~$10.4 billion included fixed income net inflows of ~~$36.9~~$17.5 billion, ~~driven~~led by demand for liability-driven solutions, partially offset by equity net outflows of ~~$19.6~~$7.2 billion.

~~Retail~~Institutional activenet outflows of $7.1 billion were driven by fixed income outflows of $4.1 billion linked to risk reallocation and cash repatriation planning, and multi-asset net outflows of $4.1 billion resulting from a single redemption associated with client M&A activity. Alternatives net inflows of ~~$7.4 billion reflected net inflows of $3.7 billion in the United States and $3.7 billion internationally. Fixed income net inflows of $4.6~~$1.4 billion were ~~diversified across the Company’s top-performing active platform,~~ led by ~~net~~ inflows into ~~unconstrained, municipal~~hedge funds, private equity solutions and emerging market debt strategies. Equity net inflows of $1.7 billion reflected inflows into index mutual funds. Multi-asset net inflows of $1 billion were largely due to inflows into the Multi-asset Income fund family, partially offset by outflows from world allocation strategies.infrastructure offerings.

Cash management AUM increased 6%1% to ~~$425.4~~$454.8 billion, driven by ~~$20.4 billion~~positive net inflows and the impact of ~~net inflows.~~foreign exchange movements.

AUM increased ~~$44.4~~$48.9 billion due to the impact of foreign exchange movements, primarily resulting from the weakening of the U.S. dollar against the British pound, the Japanese yen and the Euro.

~~Component Changes in AUM for the Nine Months Ended September 30, 2017~~

~~The following table presents the component changes in AUM by client type and product for the nine months ended September 30, 2017.~~

December 31,

Net
inflows

Market

FX

September 30,

Average

(in millions)

2016

(outflows)

Acquisition⁽¹⁾

change

impact⁽²⁾

2017

AUM⁽³⁾

Retail:

Equity

$
196,221

$
3,009

$
-

$
20,892

$
5,546

$
225,668

$
212,224

Fixed income

222,256

16,497

-

6,003

3,592

248,348

236,065

Multi-asset

107,997

(847
)

-

10,005

907

118,062

112,831

Alternatives

15,478

(158
)

-

725

398

16,443

16,522

Retail subtotal

541,952

18,501

-

37,625

10,443

608,521

577,642

iShares ETFs:

Equity

951,252

129,488

-

134,562

13,093

1,228,395

1,095,500

Fixed income

314,707

58,779

-

5,105

7,676

386,267

351,985

Multi-asset

3,149

61

-

272

9

3,491

3,122

Alternatives

18,771

2,213

-

1,138

162

22,284

20,470

iShares ETFs subtotal

1,287,879

190,541

-

141,077

20,940

1,640,437

1,471,077

Institutional:

Active:

Equity

120,699

(12,357
)

-

18,023

4,001

130,366

126,223

Fixed income

536,727

(2,967
)

-

17,705

10,562

562,027

551,117

Multi-asset

276,933

16,692

-

21,531

12,577

327,733

301,793

Alternatives

75,615

2,367

3,264

2,021

1,831

85,098

79,818

Active subtotal

1,009,974

3,735

3,264

59,280

28,971

1,105,224

1,058,951

Index:

Equity

1,389,004

(25,778
)

-

193,874

30,936

1,588,036

1,504,119

Fixed income

498,675

63,528

-

97

29,478

591,778

540,163

Multi-asset

6,928

(500
)

-

1,098

215

7,741

7,518

Alternatives

7,074

(367
)

-

194

245

7,146

7,538

Index subtotal

1,901,681

36,883

-

195,263

60,874

2,194,701

2,059,338

Institutional subtotal

2,911,655

40,618

3,264

254,543

89,845

3,299,925

3,118,289

Long-term

4,741,486

249,660

3,264

433,245

121,228

5,548,883

5,167,008

Cash management

403,584

14,854

-

850

6,135

425,423

406,729

Advisory⁽⁴⁾

2,782

(188
)

-

(189
)

181

2,586

2,691

Total

$
5,147,852

$
264,326

$
3,264

$
433,906

$
127,544

$
5,976,892

$
5,576,428

⁽¹⁾ ~~Amount represents AUM acquired in the First Reserve Transaction.~~

⁽²⁾	~~Foreign exchange reflects the impact of translating non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes.~~

⁽³⁾	~~Average AUM is calculated as the average of the month-end spot AUM amounts for the trailing ten months.~~

⁽⁴⁾	~~Advisory AUM represents long-term portfolio liquidation assignments.~~

~~The following table presents component changes in AUM by investment style and product type for the nine months ended September 30, 2017.~~

December 31,

Net
inflows

Market

FX

September 30,

Average

(in millions)
2016

(outflows)

Acquisition⁽¹⁾

change

impact⁽²⁾

2017

AUM⁽³⁾

Active:

Equity
$
275,033

$
(17,475
)

$
-

$
34,966

$
7,652

$
300,176

$
289,036

Fixed income

749,996

10,910

-

23,502

13,432

797,840

775,996

Multi-asset

384,930

15,845

-

31,536

13,484

445,795

414,624

Alternatives

91,093

2,209

3,264

2,746

2,229

101,541

96,339

Active subtotal

1,501,052

11,489

3,264

92,750

36,797

1,645,352

1,575,995

Index and iShares ETFs:

iShares ETFs:

Equity

951,252

129,488

-

134,562

13,093

1,228,395

1,095,500

Fixed income

314,707

58,779

-

5,105

7,676

386,267

351,985

Multi-asset

3,149

61

-

272

9

3,491

3,122

Alternatives

18,771

2,213

-

1,138

162

22,284

20,470

iShares ETFs subtotal

1,287,879

190,541

-

141,077

20,940

1,640,437

1,471,077

Non-ETF Index

Equity

1,430,891

(17,651
)

-

197,823

32,831

1,643,894

1,553,530

Fixed income

507,662

66,148

-

303

30,200

604,313

551,349

Multi-asset

6,928

(500
)

-

1,098

215

7,741

7,518

Alternatives

7,074

(367
)

-

194

245

7,146

7,539

Non-ETF Index subtotal

1,952,555

47,630

-

199,418

63,491

2,263,094

2,119,936

Index & iShares ETFs subtotal

3,240,434

238,171

-

340,495

84,431

3,903,531

3,591,013

Long-term

4,741,486

249,660

3,264

433,245

121,228

5,548,883

5,167,008

Cash management

403,584

14,854

-

850

6,135

425,423

406,729

Advisory⁽⁴⁾

2,782

(188
)

-

(189
)

181

2,586

2,691

Total
$
5,147,852

$
264,326

$
3,264

$
433,906

$
127,544

$
5,976,892

$
5,576,428

~~The following table presents component changes in AUM by product type for the nine months ended September 30, 2017.~~

December 31,

Net
inflows

Market

FX

September 30,

Average

(in millions)

2016

(outflows)

Acquisition⁽¹⁾

change

impact⁽²⁾

2017

AUM⁽³⁾

Equity

$
2,657,176

$
94,362

$
-

$
367,351

$
53,576

$
3,172,465

$
2,938,066

Fixed income

1,572,365

135,837

-

28,910

51,308

1,788,420

1,679,330

Multi-asset

395,007

15,406

-

32,906

13,708

457,027

425,264

Alternatives:

Core

88,630

2,353

3,264

2,753

2,168

99,168

93,963

Currency and commodities⁽⁵⁾

28,308

1,702

-

1,325

468

31,803

30,385

Alternatives subtotal

116,938

4,055

3,264

4,078

2,636

130,971

124,348

Long-term

4,741,486

249,660

3,264

433,245

121,228

5,548,883

5,167,008

Cash management

403,584

14,854

-

850

6,135

425,423

406,729

Advisory⁽⁴⁾

2,782

(188
)

-

(189
)

181

2,586

2,691

Total

$
5,147,852

$
264,326

$
3,264

$
433,906

��
$
127,544

$
5,976,892

$
5,576,428

⁽¹⁾	~~Amount represents AUM acquired in the First Reserve Transaction.~~

⁽²⁾ ~~Foreign exchange reflects the impact of translating non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes.~~

⁽³⁾	~~Average AUM is calculated as the average of the month-end spot AUM amounts for the trailing ten months.~~

⁽⁴⁾	~~Advisory AUM represents long-term portfolio liquidation assignments.~~

⁽⁵⁾	~~Amounts include commodity~~ ~~iShares~~ ~~ETFs.~~

~~AUM increased $829.0 billion, or 16%, to $6.0 trillion at September 30, 2017 from $5.1 trillion at December 31, 2016,~~ ~~driven by net market appreciation, positive net inflows, the impact of foreign exchange movements and AUM acquired in the First Reserve Transaction.~~

~~Net market appreciation of $433.9 billion was primarily driven by higher U.S. and global equity markets.~~

~~Long-term net inflows of $249.7 billion were comprised of net inflows of $190.5 billion, $40.6 billion and $18.5 billion from~~ ~~iShares~~ ~~ETFs~~, ~~institutional clients and retail clients, respectively. Net flows in long-term products are described below.~~

~~iShares~~ ETFs net inflows of $190.5 billion were led by equity net inflows of $129.5 billion, driven by both U.S. and international equity market exposures. Fixed income net inflows of $58.8 billion reflected inflows into corporate investment grade, emerging markets debt and treasury bond funds.

~~Institutional index net inflows of $36.9 billion were driven by fixed income net inflows of $63.5 billion, partially offset by equity net outflows of $25.8 billion.~~

Retail net inflows of $18.5 billion reflected net inflows of $12.2 billion internationally and $6.3 billion in the United States. Retail net inflows were led by fixed income net inflows of $16.5 billion, reflecting inflows into emerging markets, municipal bond funds and unconstrained strategies.

•

Institutional active net inflows of $3.7 billion primarily reflected active multi-asset net inflows of $16.7 billion, partially offset by active equity net outflows of $12.4 billion. Multi-asset net inflows were driven by ongoing demand for the ~~LifePath~~^® ~~target-date series. Equity net outflows of $12.4 billion were primarily from U.S. equity and global strategies.~~

~~Cash management AUM increased 5% to $425.4 billion, driven by $14.9 billion of net inflows.~~

~~AUM increased $127.5 billion due to the impact of foreign exchange movements, primarily resulting from the weakening of the U.S. dollar against the British pound and the Euro.~~

4649

Component Changes in AUM for the Twelve Months Ended ~~September 30, 2017~~March 31, 2018

The following table presents the component changes in AUM by client type and product for the twelve months ended ~~September 30, 2017.~~March 31, 2018.

	September 30,		Net inflows					Market			FX			September 30,		Average		March 31,		Net inflows					Market			FX		March 31,		Average
(in millions)	2016		(outflows)			Acquisition⁽¹⁾		change			impact⁽²⁾			2017		AUM⁽³⁾		2017		(outflows)			Acquisition⁽¹⁾		change			impact⁽²⁾		2018		AUM⁽³⁾
Retail:
Equity	$	196,131	$	4,751		$	-	$	22,417		$	2,369		$	225,668	$	207,806	$	208,181	$	6,564		$	-	$	10,628		$	7,582	$	232,955	$	225,294
Fixed income		230,842		14,666			-		1,204			1,636			248,348		234,080		230,003		29,775			-		1,974			4,819		266,571		249,258
Multi-asset		111,369		(2,548	)		-		8,891			350			118,062		111,957		110,702		4,921			-		4,874			1,104		121,601		117,752
Alternatives		16,436		(814	)		-		693			128			16,443		16,435		15,447		693			-		609			487		17,236		16,964
Retail subtotal		554,778		16,055			-		33,205			4,483			608,521		570,278		564,333		41,953			-		18,085			13,992		638,363		609,268
iShares ETFs:
Equity		891,010		180,138			-		150,283			6,964			1,228,395		1,049,435		1,052,409		159,538			-		117,376			15,241		1,344,564		1,233,739
Fixed income		329,462		58,453			-		(5,239	)		3,591			386,267		345,114		337,904		50,358			-		(3,217	)		9,146		394,191		377,467
Multi-asset		2,506		755			-		223			7			3,491		2,999		2,890		747			-		123			6		3,766		3,466
Alternatives		23,188		495			-		(1,448	)		49			22,284		20,724		20,132		4,866			-		236			170		25,404		22,397
iShares ETFs subtotal		1,246,166		239,841			-		143,819			10,611			1,640,437		1,418,272		1,413,335		215,509			-		114,518			24,563		1,767,925		1,637,069
Institutional:
Active:
Equity		123,770		(15,161	)		-		20,675			1,082			130,366		124,915		124,817		(9,214	)		-		16,067			4,800		136,470		132,135
Fixed income		560,799		(1,700	)		-		3,168			(240	)		562,027		550,908		543,782		(3,477	)		-		10,299			12,968		563,572		559,731
Multi-asset		280,406		22,351			-		19,126			5,850			327,733		295,524		290,729		11,736			-		25,551			15,328		343,344		325,522
Alternatives		74,678		4,553			3,264		2,092			511			85,098		78,678		77,905		799			3,264		2,806			2,286		87,060		83,120
Active subtotal		1,039,653		10,043			3,264		45,061			7,203			1,105,224		1,050,025		1,037,233		(156	)		3,264		54,723			35,382		1,130,446		1,100,508
Index:
Equity		1,355,128		(17,400	)		-		246,625			3,683			1,588,036		1,468,656		1,480,108		(44,286	)		-		174,294			39,132		1,649,248		1,600,091
Fixed income		507,165		89,725			-		(15,805	)		10,693			591,778		528,790		518,880		95,441			-		5,605			42,263		662,189		590,625
Multi-asset		7,980		(296	)		-		371			(314	)		7,741		7,603		7,244		(611	)		-		1,062			291		7,986		7,952
Alternatives		7,228		(543	)		-		408			53			7,146		7,440		7,673		(3,328	)		-		243			316		4,904		6,374
Index subtotal		1,877,501		71,486			-		231,599			14,115			2,194,701		2,012,489		2,013,905		47,216			-		181,204			82,002		2,324,327		2,205,042
Institutional subtotal		2,917,154		81,529			3,264		276,660			21,318			3,299,925		3,062,514		3,051,138		47,060			3,264		235,927			117,384		3,454,773		3,305,550
Long-term		4,718,098		337,425			3,264		453,684			36,412			5,548,883		5,051,064		5,028,806		304,522			3,264		368,530			155,939		5,861,061		5,551,887
Cash management		388,982		32,526			-		1,074			2,841			425,423		404,180		388,935		56,639			-		1,104			8,106		454,784		427,375
Advisory⁽⁴⁾		10,341		(7,573	)		-		(137	)		(45	)		2,586		4,323		2,736		(1,561	)		-		(190	)		154		1,139		2,159
Total	$	5,117,421	$	362,378		$	3,264	$	454,621		$	39,208		$	5,976,892	$	5,459,567	$	5,420,477	$	359,600		$	3,264	$	369,444		$	164,199	$	6,316,984	$	5,981,421

⁽¹⁾ Amount represents AUM acquired in the First Reserve ~~Transaction.~~Infrastructure business transaction in June 2017 (“First Reserve Transaction”).

⁽²⁾	Foreign exchange reflects the impact of translating non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes.

⁽³⁾	Average AUM is calculated as the average of the month-end spot AUM amounts for the trailing thirteen months.

⁽⁴⁾	Advisory AUM represents long-term portfolio liquidation assignments.

4750

The following table presents component changes in AUM by investment style and product type for the twelve months ended ~~September 30, 2017.~~March 31, 2018.

	September 30,		Net inflows					Market			FX			September 30,		Average		March 31,		Net inflows					Market			FX		March 31,		Average
(in millions)	2016		(outflows)			Acquisition⁽¹⁾		change			impact⁽²⁾			2017		AUM⁽³⁾		2017		(outflows)			Acquisition⁽¹⁾		change			impact⁽²⁾		2018		AUM⁽³⁾
Active:
Equity	$	281,726	$	(22,023	)	$	-	$	38,028		$	2,445		$	300,176	$	285,819	$	285,716	$	(10,682	)	$	-	$	23,688		$	9,645	$	308,367	$	301,969
Fixed income		782,858		9,427			-		4,516			1,039			797,840		774,433		763,020		24,338			-		12,173			16,743		816,274		796,760
Multi-asset		391,775		19,803			-		28,017			6,200			445,795		407,481		401,431		16,657			-		30,425			16,432		464,945		443,274
Alternatives		91,114		3,739			3,264		2,785			639			101,541		95,113		93,352		1,491			3,264		3,415			2,775		104,297		100,084
Active subtotal		1,547,473		10,946			3,264		73,346			10,323			1,645,352		1,562,846		1,543,519		31,804			3,264		69,701			45,595		1,693,883		1,642,087
Index and iShares ETFs:
iShares ETFs:
Equity		891,010		180,138			-		150,283			6,964			1,228,395		1,049,435		1,052,409		159,538			-		117,376			15,241		1,344,564		1,233,739
Fixed income		329,462		58,453			-		(5,239	)		3,591			386,267		345,114		337,904		50,358			-		(3,217	)		9,146		394,191		377,467
Multi-asset		2,506		755			-		223			7			3,491		2,999		2,890		747			-		123			6		3,766		3,466
Alternatives		23,188		495			-		(1,448	)		49			22,284		20,724		20,132		4,866			-		236			170		25,404		22,397
iShares ETFs subtotal		1,246,166		239,841			-		143,819			10,611			1,640,437		1,418,272		1,413,335		215,509			-		114,518			24,563		1,767,925		1,637,069
Non-ETF Index:
Equity		1,393,303		(5,787	)		-		251,689			4,689			1,643,894		1,515,558		1,527,390		(36,254	)		-		177,301			41,869		1,710,306		1,655,551
Fixed income		515,948		93,264			-		(15,949	)		11,050			604,313		539,345		529,645		97,401			-		5,705			43,307		676,058		602,854
Multi-asset		7,980		(296	)		-		371			(314	)		7,741		7,603		7,244		(611	)		-		1,062			291		7,986		7,952
Alternatives		7,228		(543	)		-		408			53			7,146		7,440		7,673		(3,327	)		-		243			314		4,903		6,374
Non-ETF Index subtotal		1,924,459		86,638			-		236,519			15,478			2,263,094		2,069,946		2,071,952		57,209			-		184,311			85,781		2,399,253		2,272,731
Index & iShares ETFs subtotal		3,170,625		326,479			-		380,338			26,089			3,903,531		3,488,218		3,485,287		272,718			-		298,829			110,344		4,167,178		3,909,800
Long-term		4,718,098		337,425			3,264		453,684			36,412			5,548,883		5,051,064		5,028,806		304,522			3,264		368,530			155,939		5,861,061		5,551,887
Cash management		388,982		32,526			-		1,074			2,841			425,423		404,180		388,935		56,639			-		1,104			8,106		454,784		427,375
Advisory⁽⁴⁾		10,341		(7,573	)		-		(137	)		(45	)		2,586		4,323		2,736		(1,561	)		-		(190	)		154		1,139		2,159
Total	$	5,117,421	$	362,378		$	3,264	$	454,621		$	39,208		$	5,976,892	$	5,459,567	$	5,420,477	$	359,600		$	3,264	$	369,444		$	164,199	$	6,316,984	$	5,981,421

The following table presents component changes in AUM by product type for the twelve months ended ~~September 30, 2017.~~March 31, 2018.

	September 30,		Net inflows					Market			FX			September 30,		Average		March 31,		Net inflows					Market			FX		March 31,		Average
(in millions)	2016		(outflows)			Acquisition⁽¹⁾		change			impact⁽²⁾			2017		AUM⁽³⁾		2017		(outflows)			Acquisition⁽¹⁾		change			impact⁽²⁾		2018		AUM⁽³⁾
Equity	$	2,566,039	$	152,328		$	-	$	440,000		$	14,098		$	3,172,465	$	2,850,812	$	2,865,515	$	112,602		$	-	$	318,365		$	66,755	$	3,363,237	$	3,191,259
Fixed income		1,628,268		161,144			-		(16,672	)		15,680			1,788,420		1,658,892		1,630,569		172,097			-		14,661			69,196		1,886,523		1,777,081
Multi-asset		402,261		20,262			-		28,611			5,893			457,027		418,083		411,565		16,793			-		31,610			16,729		476,697		454,692
Alternatives:
Core		88,731		3,569			3,264		2,773			831			99,168		92,758		90,914		1,309			3,264		3,379			2,697		101,563		97,643
Currency and commodities⁽⁵⁾		32,799		122			-		(1,028	)		(90	)		31,803		30,519		30,243		1,721			-		515			562		33,041		31,212
Alternatives subtotal		121,530		3,691			3,264		1,745			741			130,971		123,277		121,157		3,030			3,264		3,894			3,259		134,604		128,855
Long-term		4,718,098		337,425			3,264		453,684			36,412			5,548,883		5,051,064		5,028,806		304,522			3,264		368,530			155,939		5,861,061		5,551,887
Cash management		388,982		32,526			-		1,074			2,841			425,423		404,180		388,935		56,639			-		1,104			8,106		454,784		427,375
Advisory⁽⁴⁾		10,341		(7,573	)		-		(137	)		(45	)		2,586		4,323		2,736		(1,561	)		-		(190	)		154		1,139		2,159
Total	$	5,117,421	$	362,378		$	3,264	$	454,621		$	39,208		$	5,976,892	$	5,459,567	$	5,420,477	$	359,600		$	3,264	$	369,444		$	164,199	$	6,316,984	$	5,981,421

⁽¹⁾ Amount represents AUM acquired in the First Reserve Transaction.

⁽²⁾ Foreign exchange reflects the impact of translating non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes.

⁽³⁾	Average AUM is calculated as the average of the month-end spot AUM amounts for the trailing thirteen months.

⁽⁴⁾	Advisory AUM represents long-term portfolio liquidation assignments.

⁽⁵⁾	Amounts include commodity iShares ETFs.

AUM increased ~~$859.5~~$896.5 billion, or 17%, to ~~$6.0~~$6.3 trillion at ~~September 30, 2017~~March 31, 2018 from ~~$5.1~~$5.4 trillion at ~~September 30, 2016,~~March 31, 2017, driven by net market appreciation, positive net inflows, the impact of foreign exchange movements and AUM acquired in the First Reserve Transaction.

Net market appreciation of ~~$454.6~~$369.4 billion was primarily driven by higher U.S. and global equity markets.

Long-term net inflows of ~~$337.4~~$304.5 billion were comprised of net inflows of ~~$239.8~~$215.5 billion, ~~$81.5~~$47.1 billion and ~~$16.1~~$41.9 billion from iShares ETFs, institutional clients and retail clients, respectively. Net flows in long-term products are described below.

48iShares ETFs net inflows of $215.5 billion were led by equity net inflows of $159.5 billion driven by both U.S. and international equity market exposures. Fixed income net inflows of $50.4 billion reflected inflows into treasury, emerging markets debt and corporate investment grade bond funds.

•

~~iShares~~ ~~ETFs net inflows of $239.8 billion were led by equity net inflows of $180.1 billion, reflecting demand for~~ ~~iShares~~ ~~Core and broad market exposures. Fixed income net inflows of $58.5 billion reflected inflows into corporate investment grade, emerging markets debt and treasury bond funds.~~

Institutional index net inflows of ~~$71.5~~$47.2 billion were driven by fixed income net inflows of ~~$89.7~~$95.4 billion, partially offset by equity net outflows of ~~$17.4~~$44.3 billion.

Institutional active net inflows of $10.0 billion reflected multi-asset net inflows of $22.4 billion and alternatives net inflows of $4.6 billion, partially offset by equity net outflows of $15.2 billion. Multi-asset net inflows were driven by ongoing demand for the ~~LifePath~~ target-date series. Alternatives net inflows of $4.6 billion were led by inflows into infrastructure offerings. Equity net outflows of $15.2 billion were primarily from U.S. equity and global strategies.

Retail net inflows of ~~$16.1~~$41.9 billion reflected net inflows of ~~$11.5 billion internationally and $4.6~~$22.7 billion in the United ~~States.~~States and $19.2 billion internationally. Retail net inflows primarily reflected net inflows of ~~$14.7~~$29.8 billion from fixed income products, led by ~~core,~~ unconstrained, emerging market, core, and municipal bond strategies, and ~~$4.8~~$6.6 billion from equity products.

•

Institutional active net outflows of $0.2 billion reflected equity net outflows of $9.2 billion and fixed income net outflows of $3.5 billion, partially offset by multi-asset net inflows of $11.7 billion. Multi-asset net inflows were driven by ongoing demand for the LifePath^® target-date series. Equity net outflows were primarily from U.S. equity and global strategies.

Cash management AUM increased 9%17% to ~~$425.4~~$454.8 billion, driven by ~~$32.5~~$56.6 billion of net inflows.

AUM increased ~~$39.2~~$164.2 billion due to the impact of foreign exchange movements, primarily due to the weakening of the U.S. dollar, largely against ~~the Euro and~~ British pound ~~partially offset by~~and the ~~strengthening of the U.S. dollar against the Japanese yen.~~Euro.

4952

DISCUSSION OF FINANCIAL RESULTS

The Company’s results of operations for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~ are discussed below. For a further description of the Company’s revenue and expense, see the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017 (“~~2016~~2017 Form 10-K”).

Revenue

	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30,				September 30,				March 31,
(in millions)	2017		2016		2017		2016		2018		2017
Investment advisory, administration fees and securities lending revenue:
Equity:
Active	$	421	$	409	$	1,235	$	1,201	$	438	$	400
iShares ETFs		836		691		2,333		1,970		926		721
Non-ETF index		170		170		509		508		176		160
Equity subtotal		1,427		1,270		4,077		3,679		1,540		1,281
Fixed income:
Active		442		427		1,281		1,237		456		407
iShares ETFs		210		188		595		512		208		185
Non-ETF index		88		78		257		217		93		85
Fixed income subtotal		740		693		2,133		1,966		757		677
Multi-asset		289		285		843		860		296		272
Alternatives:
Core		169		156		469		488		178		144
Currency and commodities		23		24		67		61		25		22
Alternatives subtotal		192		180		536		549		203		166
Long-term		2,648		2,428		7,589		7,054		2,796		2,396
Cash management		144		118		408		340		151		127
Total base fees		2,792		2,546		7,997		7,394		2,947		2,523
Investment advisory performance fees:
Equity		30		14		57		67		18		15
Fixed income		9		2		20		9		3		10
Multi-asset		2		1		14		6		5		5
Alternatives		150		41		218		84		44		40
Total performance fees		191		58		309		166		70		70
Technology and risk management revenue⁽¹⁾		175		152		497		439		184		154
Distribution fees		5		10		17		32
Distribution fees:
Retrocessions										192		155
12b-1 fees (U.S. mutual funds distribution fees)										108		122
Other										11		10
Total distribution fees										311		287
Advisory and other revenue
Advisory⁽¹⁾		25		22		74		78
Advisory										21		24
Other		45		49		128		156		50		34
Advisory and other revenue		70		71		202		234		71		58
Total revenue	$	3,233	$	2,837	$	9,022	$	8,265	$	3,583	$	3,092

⁽¹⁾

~~Beginning with the first quarter of 2017,~~ ~~Aladdin~~ ~~revenue previously reported within “BlackRock Solutions~~^® ~~and advisory” has been presented within “Technology and risk management revenue” on the condensed consolidated statement of income. The remaining previously reported “BlackRock Solutions~~ ~~and advisory” revenue is currently reported as part of “Advisory and other revenue.” Under the historical presentation,~~ ~~BlackRock Solutions~~ ~~and advisory revenue would have totaled $200 million and $571 million for the three and nine months ended September 30, 2017, respectively. The prior period amounts reported for~~ ~~BlackRock Solutions~~ ~~and advisory of $174 million and $517 million for the three and nine months ended September 30, 2016, respectively, have been reclassified to conform to the current presentation.~~

5053

The table below lists the asset type mix of investment advisory, administration fees and securities lending revenue (collectively “base fees”) and mix of average AUM by product type:

	Three Months Ended September 30,												Nine Months Ended September 30,												Three Months Ended March 31,
	Mix of Base Fees						Mix of Average AUM by Asset Class⁽¹⁾						Mix of Base Fees						Mix of Average AUM by Asset Class⁽²⁾						Mix of Base Fees						Mix of Average AUM by Asset Class⁽¹⁾
	2017			2016			2017			2016			2017			2016			2017			2016			2018			2017			2018			2017
Equity:
Active		15	%		16	%		5	%		6	%		15	%		16	%		5	%		6	%		15	%		16	%		5	%		6	%
iShares ETFs		30	%		27	%		20	%		17	%		29	%		27	%		20	%		17	%		31	%		29	%		21	%		18	%
Non-ETF index		6	%		7	%		28	%		27	%		6	%		7	%		28	%		27	%		6	%		6	%		27	%		28	%
Equity subtotal		51	%		50	%		53	%		50	%		50	%		50	%		53	%		50	%		52	%		51	%		53	%		52	%
Fixed income:
Active		16	%		17	%		13	%		15	%		17	%		16	%		13	%		16	%		15	%		16	%		13	%		14	%
iShares ETFs		8	%		7	%		6	%		6	%		7	%		7	%		6	%		6	%		8	%		7	%		6	%		6	%
Non-ETF index		3	%		3	%		10	%		10	%		3	%		3	%		10	%		10	%		3	%		3	%		10	%		10	%
Fixed income subtotal		27	%		27	%		29	%		31	%		27	%		26	%		29	%		32	%		26	%		26	%		29	%		30	%
Multi-asset		10	%		11	%		8	%		8	%		11	%		12	%		8	%		8	%		10	%		11	%		8	%		8	%
Alternatives:
Core		6	%		6	%		2	%		2	%		6	%		7	%		2	%		2	%		6	%		6	%		2	%		2	%
Currency and commodities		1	%		1	%		1	%		1	%		1	%		1	%		1	%		1	%		1	%		1	%		1	%		1	%
Alternatives subtotal		7	%		7	%		3	%		3	%		7	%		8	%		3	%		3	%		7	%		7	%		3	%		3	%
Long-term		95	%		95	%		93	%		92	%		95	%		96	%		93	%		93	%		95	%		95	%		93	%		93	%
Cash management		5	%		5	%		7	%		8	%		5	%		4	%		7	%		7	%		5	%		5	%		7	%		7	%
Total excluding Advisory AUM		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%

⁽¹⁾	Average AUM is calculated as the average of the month-end spot AUM amounts for the trailing four months.

⁽²⁾	~~Average AUM is calculated as the average of the month-end spot AUM amounts for the trailing ten months.~~

Three Months Ended ~~September 30, 2017~~March 31, 2018 Compared with Three Months Ended ~~September 30, 2016~~March 31, 2017

Revenue increased ~~$396~~$491 million, or ~~14%~~16%, from the ~~third~~first quarter of ~~2016,~~2017, driven by growth in base ~~fees, performance~~ fees, and technology and risk management revenue.

Investment advisory, administration fees and securities lending revenue of ~~$2,792~~$2,947 million increased ~~$246~~$424 million from ~~$2,546~~$2,523 million in the ~~third~~first quarter of ~~2016,~~2017, reflecting the impact of higher markets and organic growth on average AUM and the impact of foreign exchange movements, partially offset by previously announced pricing changes to select investment products. Securities lending revenue was ~~$150~~$155 million in the current quarter compared with ~~$142~~$141 million in the ~~third~~first quarter of ~~2016.~~

~~Investment advisory performance fees~~ of $191 million increased $133 million from the third quarter of 2016, primarily reflecting improved performance in a broad range of hedge and long-only funds, including strong performance from a single hedge fund with an annual performance measurement period that ends in the third quarter.2017.

Technology and risk management revenue of ~~$175~~$184 million increased ~~$23~~$30 million from ~~$152~~$154 million in the ~~third~~first quarter of ~~2016,~~2017, reflecting ongoing demand for institutional Aladdin and ~~other technology offerings.~~expansion of digital wealth and distribution technologies, including Aladdin Risk for Wealth Management and Cachematrix.

~~Nine Months Ended September 30, 2017 Compared with Nine Months Ended September 30, 2016~~

Revenue increased $757 million, or 9%, from the nine months ended September 30, 2016, driven by growth in base fees, performance fees, and technology and risk management revenue, partially offset by lower advisory and other revenue.

~~Investment advisory, administration fees and securities lending revenue~~ of $7,997 million increased $603 million from $7,394 million for the nine months ended September 30, 2016, reflecting the impact of higher markets and organic growth on average AUM, and the effect of AUM acquired in the BofA^® ~~Global Capital Management transaction, partially offset by previously announced pricing changes to select investment products. Securities lending revenue was $447 million for the nine months ended September 30, 2017 compared with $441 million for the nine months ended September 30, 2016.~~

5154

~~Investment advisory performance fees~~Expense of $309 million increased $143 million from the nine months ended September 30, 2016, primarily reflecting improved performance in a broad range of hedge and long-only funds, including strong performance from a single hedge fund with an annual performance measurement period that ends in the third quarter.

~~Technology and risk management revenue~~ ~~of $497 million increased $58 million from $439 million for the nine months ended September 30, 2016 reflecting ongoing demand for~~ ~~Aladdin~~ ~~and other technology offerings.~~

~~Advisory and other revenue~~ of $202 million decreased $32 million from $234 million for the nine months ended September 30, 2016, reflecting lower fees for distributing certain exchange-traded products, lower earnings from a strategic minority investment and lower commissions for sales of certain funds.

~~Expense~~

	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30,				September 30,				March 31,
(in millions)	2017		2016		2017		2016		2018		2017
Expense, GAAP:
Employee compensation and benefits	$	1,088	$	969	$	3,108	$	2,893	$	1,121	$	1,021
Distribution and servicing costs		123		114		361		320
Amortization of deferred sales commissions		4		8		13		27
Distribution and servicing costs:
Retrocessions										192		155
12b-1 costs										106		119
Other										134		127
Total distribution and servicing costs										432		401
Direct fund expense		234		200		666		583		261		206
General and administration:
Marketing and promotional		76		72		231		232		85		69
Occupancy and office related		68		65		202		208		74		65
Portfolio services		68		57		195		164		70		57
Technology		51		41		145		129		53		43
Professional services		37		27		92		84		32		25
Communications		8		9		24		29		10		8
Foreign exchange remeasurement										1		(11	)
Contingent consideration fair value adjustments										6		(4	)
Product launch costs										11		4
Other general and administration		55		41		125		100		41		40
Total general and administration expense		363		312		1,014		946		383		296
Restructuring charge		—		—		—		76
Amortization of intangible assets		27		25		77		75		11		25
Total expense, GAAP	$	1,839	$	1,628	$	5,239	$	4,920	$	2,208	$	1,949
Less non-GAAP expense adjustments:
Employee compensation and benefits:
PNC LTIP funding obligation		4		7		12		21		3		4
Restructuring charge		—		—		—		76
Total non-GAAP expense adjustments		4		7		12		97
Expense, as adjusted:
Employee compensation and benefits	$	1,084	$	962	$	3,096	$	2,872	$	1,118	$	1,017
Distribution and servicing costs		123		114		361		320		432		401
Amortization of deferred sales commissions		4		8		13		27
Direct fund expense		234		200		666		583		261		206
General and administration		363		312		1,014		946		383		296
Amortization of intangible assets		27		25		77		75		11		25
Total expense, as adjusted	$	1,835	$	1,621	$	5,227	$	4,823	$	2,205	$	1,945

Three Months Ended ~~September 30, 2017~~March 31, 2018 Compared with Three Months Ended ~~September 30, 2016~~March 31, 2017

GAAP. Expense increased ~~$211~~$259 million from the ~~third~~first quarter of ~~2016,~~2017, driven primarily by higher employee compensation and benefits expense, higher general and administration expense, and higher ~~direct fund~~volume-related expense.

Employee compensation and benefits expense increased ~~$119~~$100 million, or ~~12%~~10%, from the ~~third~~first quarter of ~~2016,~~2017, primarily reflecting higher incentive compensation, driven primarily by higher ~~performance fees and~~ operating income, and higher ~~headcount.~~headcount, partially offset by $20 million of expense associated with the strategic repositioning of the active equity platform. Employees at ~~September 30, 2017~~March 31, 2018 totaled approximately ~~13,700~~14,000 compared with approximately 13,000 at ~~September 30, 2016.~~March 31, 2017.

Direct fund expense increased ~~$34~~$55 million from the ~~third~~first quarter of ~~2016,~~2017, reflecting higher average AUM.

~~General and administration expense~~ increased $51 million from the third quarter of 2016, reflecting higher portfolio services, technology, and professional services expense, as well as increased foreign exchange remeasurement expense and contingent consideration fair value adjustments.

As Adjusted. Expense, as adjusted, increased ~~$214~~$260 million, or 13%, to ~~$1,835~~$2,205 million from ~~$1,621~~$1,945 million in the ~~third~~first quarter of ~~2016.~~2017. The increase in total expense, as adjusted, is driven primarily by higher employee compensation and benefits expense, higher general and administration expense, and higher ~~direct fund~~volume-related expense.

~~Nine Months Ended September 30, 2017 Compared with Nine Months Ended September 30, 2016~~55

~~GAAP~~. Expense increased $319 million from the nine months ended September 30, 2016, driven primarily by higher employee compensation and benefits expense, higher direct fund expense, higher general and administration expense, and approximately $22 million of expense associated with the strategic repositioning of the active equity platform, partially offset by a restructuring charge recorded in the first quarter of 2016.

~~Employee compensation and benefits expense~~ increased $215 million, or 7%, from the nine months ended September 30, 2016, reflecting higher incentive compensation, higher headcount, and approximately $20 million of severance and accelerated compensation expense associated with the repositioning of the active equity platform.

~~Distribution and servicing costs~~ ~~increased $41 million, or 13%, from the nine months ended September 30, 2016, reflecting higher average AUM and the effect of AUM acquired in the BofA Global Capital Management transaction.~~

~~Direct fund expense~~ ~~increased $83 million from the nine months ended September 30, 2016, reflecting higher average AUM.~~

~~General and administration expense~~ ~~increased $68 million from the nine months ended September 30, 2016, reflecting higher portfolio services and technology expense, and the impact of foreign exchange remeasurement expense.~~

~~As Adjusted~~. Expense, as adjusted, increased $404 million, or 8%, to $5,227 million from $4,823 million in the nine months ended September 30, 2016. The increase in total expense, as adjusted, is driven primarily by higher employee compensation and benefit expense, higher direct fund expense, higher general and administration expense and the $22 million expense associated with the repositioning of the active equity platform. The restructuring charge recorded in the first quarter of 2016 has been excluded from the as adjusted results.

Nonoperating Results

The summary and reconciliation of U.S. GAAP nonoperating income (expense) to nonoperating income (expense), as adjusted for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~ was as follows:

	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
(in millions)	2017			2016			2017			2016			2018			2017
Nonoperating income (expense), GAAP basis⁽¹⁾	$	10		$	1		$	4		$	(72	)	$	(16	)	$	(7	)
Less: Net income (loss) attributable to NCI		12			2			31			(2	)
Less: Net income (loss) attributable to noncontrolling interest (“NCI”)														5			9
Nonoperating income (expense), as adjusted, net of NCI⁽²⁾⁽³⁾	$	(2	)	$	(1	)	$	(27	)	$	(70	)	$	(21	)	$	(16	)

⁽¹⁾⁽¹⁾

Amounts include a gain of ~~$29~~$2 million and ~~$19~~$33 million for the three months ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016,~~ respectively, attributable to consolidated variable interest entities (“VIEs”). ~~Amounts include a gain of $95 million and $34 million for the nine months ended September 30, 2017 and 2016, respectively, attributable to consolidated VIEs.~~

⁽²⁾⁽²⁾

Net of income (loss) attributable to NCI.

⁽³⁾⁽³⁾

Management believes nonoperating income (expense), as adjusted, is an effective measure for reviewing BlackRock’s nonoperating contribution to results. See Non-GAAP Financial Measures for further information on non-GAAP financial measures for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2018 and ~~2016.~~2017.

Three Months Ended March 31, 2018 Compared with Three Months Ended March 31, 2017

First quarter 2017 interest expense included a “make-whole” redemption premium of $14 million related to the refinancing of $700 million of 6.25% notes, which were repaid prior to their September 2017 maturity.

The components of nonoperating income (expense), as adjusted, for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~ were as follows:

	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
(in millions)	2017			2016			2017			2016			2018			2017
Net gain (loss) on investments⁽¹⁾⁽²⁾
Private equity	$	7		$	2		$	21		$	11		$	1		$	6
Real assets		1			2			2			5			5			1
Other alternatives⁽³⁾		11			9			34			13			3			14
Other investments⁽⁴⁾		10			16			35			22			1			21
Subtotal		29			29			92			51
Other gains		—			—			5			—
Total net gain (loss) on investments⁽¹⁾⁽²⁾		29			29			97			51			10			42
Interest and dividend income		15			22			35			33			15			7
Interest expense		(46	)		(52	)		(159	)		(154	)		(46	)		(65	)
Net interest expense		(31	)		(30	)		(124	)		(121	)		(31	)		(58	)
Nonoperating income (expense), as adjusted⁽¹⁾⁽²⁾	$	(2	)	$	(1	)	$	(27	)	$	(70	)	$	(21	)	$	(16	)

⁽¹⁾	Net of net income (loss) attributable to NCI. Amounts also include net gain (loss) on consolidated VIEs.

⁽²⁾⁽²⁾

⁽³⁾⁽³⁾

Amounts primarily include net gains (losses) related to direct hedge fund strategies and hedge fund solutions.

⁽⁴⁾⁽⁴⁾

Amounts primarily include net gains (losses) related to equity and fixed income investments.

Interest expense for the nine months ended September 30, 2017 included a “make-whole” redemption premium of $14 million related to refinancing the $700 million 6.25% notes, which were repaid prior to their September 2017 maturity.

Income Tax Expense

	GAAP												As Adjusted												GAAP						As Adjusted
	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended						Three Months Ended						Three Months Ended
	September 30,						September 30,						September 30,						September 30,						March 31,						March 31,
(in millions)	2017			2016			2017			2016			2017			2016			2017			2016			2018			2017			2018			2017
Operating income⁽¹⁾	$	1,394		$	1,209		$	3,783		$	3,345		$	1,398		$	1,216		$	3,795		$	3,442		$	1,375		$	1,143		$	1,378		$	1,147
Total nonoperating income (expense)⁽¹⁾⁽²⁾		(2	)		(1	)		(27	)		(70	)		(2	)		(1	)		(27	)		(70	)		(21	)		(16	)		(21	)		(16	)
Income before income taxes⁽²⁾	$	1,392		$	1,208		$	3,756		$	3,275		$	1,396		$	1,215		$	3,768		$	3,372		$	1,354		$	1,127		$	1,357		$	1,131
Income tax expense	$	445		$	333		$	1,090		$	954		$	427		$	361		$	1,074		$	1,010		$	265		$	268		$	265		$	269
Effective tax rate		32.0	%		27.6	%		29.0	%		29.1	%		30.6	%		29.7	%		28.5	%		30.0	%		19.6	%		23.8	%		19.6	%		23.8	%

⁽¹⁾	See Non-GAAP Financial Measures for further information on and reconciliation of as adjusted items.

⁽²⁾⁽²⁾

Net of net income (loss) attributable to NCI.

~~2017.~~2018. The three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 income tax expense (GAAP) reflected a reduced tax rate associated with the 2017 Tax Act and included a $56 million discrete tax benefit related to stock-based compensation awards that vested in the first quarter of 2018.

2017. The three months ended March 31, 2017 income tax expense (GAAP) ~~reflected net noncash expense of $19 million related to the revaluation of certain deferred income tax liabilities as a result of domestic state and local tax changes.~~

~~The nine months ended September 30, 2017 income tax expense (GAAP) also~~ included an $81 million discrete tax benefit ~~reflecting the adoption of new accounting guidance~~ related to stock-based compensation awards that vested in the first quarter of 2017. ~~See Note 2,~~ ~~Significant Accounting Policies, for further information.~~

The as adjusted effective tax rate of 30.6% and 28.5% for the three and nine months ended September 30, 2017, respectively, excluded the net noncash expense of $19 million mentioned above as it will not have a cash flow impact and to ensure comparability among periods presented.

~~2016.~~ ~~The three and nine months ended September 30, 2016 income tax expense (GAAP) reflected:~~

a $26 million net noncash tax benefit, primarily related to the revaluation of certain deferred income tax liabilities as a result of legislation enacted in the United Kingdom, and domestic state and local tax changes, and

~~nonrecurring tax benefits, which totaled $16 million and $35 million for the three and nine months ended September 30, 2016, respectively.~~

The as adjusted effective tax rate of 29.7% and 30.0% for the three and nine months ended September 30, 2016, respectively, excluded the net noncash benefit of $26 million mentioned above, as it will not have a cash flow impact and to ensure comparability among periods presented.

5557

BALANCE SHEET OVERVIEW

As Adjusted Balance Sheet

The following table presents a reconciliation of the condensed consolidated statement of financial condition presented on a GAAP basis to the condensed consolidated statement of financial condition, excluding the impact of separate account assets and separate account collateral held under securities lending agreements (directly related to lending separate account securities) and separate account liabilities and separate account collateral liabilities under securities lending agreements and consolidated sponsored investment funds, including consolidated VIEs.

The Company presents the as adjusted balance sheet as additional information to enable investors to exclude certain assets that have equal and offsetting liabilities or noncontrolling interests that ultimately do not have an impact on stockholders’ equity or cash flows. Management views the as adjusted balance sheet, a non-GAAP financial measure, as an economic presentation of the Company’s total assets and liabilities; however, it does not advocate that investors consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.

Separate Account Assets and Liabilities and Separate Account Collateral Held under Securities Lending Agreements

Separate account assets are maintained by BlackRock Life Limited, a wholly owned subsidiary of the Company that is a registered life insurance company in the United Kingdom, and represent segregated assets held for purposes of funding individual and group pension contracts. The Company records equal and offsetting separate account liabilities. The separate account assets are not available to creditors of the Company and the holders of the pension contracts have no recourse to the Company’s assets. The net investment income attributable to separate account assets accrues directly to the contract owners and is not reported on the condensed consolidated statements of income. While BlackRock has no economic interest in these assets or liabilities, BlackRock earns an investment advisory fee for the service of managing these assets on behalf of its clients.

In addition, the Company records on its condensed consolidated statements of financial condition the separate account collateral received under BlackRock Life Limited securities lending arrangements as its own asset in addition to an equal and offsetting separate account collateral liability for the obligation to return the collateral. The collateral is not available to creditors of the Company, and the borrowers under the securities lending arrangements have no recourse to the Company’s assets.

Consolidated Sponsored Investment Funds

The Company consolidates certain sponsored investment funds accounted for as voting rights entities (“VREs”) and VIEs, (collectively, “Consolidated Sponsored Investment Funds”). See Note 2, Significant Accounting Policies, in the notes to the consolidated financial statements contained in the ~~2016~~2017 Form 10-K for more information on the Company’s consolidation policy.

5658

The Company cannot readily access cash and cash equivalents or other assets held by Consolidated Sponsored Investment Funds to use in its operating activities. In addition, the Company cannot readily sell investments held by Consolidated Sponsored Investment Funds in order to obtain cash for use in the Company’s operations.

	September 30, 2017									March 31, 2018
(in millions)	GAAP Basis		Separate Account Assets/ Collateral⁽¹⁾		Consolidated Sponsored Investment Funds⁽²⁾			As Adjusted		GAAP Basis		Separate Account Assets/ Collateral⁽¹⁾		Consolidated Sponsored Investment Funds⁽²⁾			As Adjusted
Assets
Cash and cash equivalents	$	6,165	$	—	$	63		$	6,102	$	5,978	$	—	$	33		$	5,945
Accounts receivable		3,183		—		—			3,183		2,677		—		—			2,677
Investments		1,928		—		28			1,900		2,050		—		70			1,980
Assets of consolidated VIEs:
Cash and cash equivalents		82		—		82			—		103		—		103			—
Investments		1,286		—		238			1,048		1,637		—		454			1,183
Other assets		46		—		46			—		113		—		113			—
Separate account assets and collateral held under securities lending agreements		175,369		175,369		—			—		170,118		170,118		—			—
Other assets⁽³⁾		1,882		—		8			1,874		2,746		—		—			2,746
Subtotal		189,941		175,369		465			14,107		185,422		170,118		773			14,531
Goodwill and intangible assets, net		30,626		—		—			30,626		30,595		—		—			30,595
Total assets	$	220,567	$	175,369	$	465		$	44,733	$	216,017	$	170,118	$	773		$	45,126
Liabilities
Accrued compensation and benefits	$	1,614	$	—	$	—		$	1,614	$	788	$	—	$	—		$	788
Accounts payable and accrued liabilities		1,652		—		—			1,652		1,421		—		—			1,421
Liabilities of consolidated VIEs		319		—		319			—		425		—		425			—
Borrowings		5,000		—		—			5,000		5,036		—		—			5,036
Separate account liabilities and collateral liabilities under securities lending agreements		175,369		175,369		—			—		170,118		170,118		—			—
Deferred income tax liabilities⁽⁴⁾		4,966		—		—			4,966		3,516		—		—			3,516
Other liabilities		1,230		—		(229	)		1,459		2,130		—		(257	)		2,387
Total liabilities		190,150		175,369		90			14,691		183,434		170,118		168			13,148
Equity
Total stockholders’ equity		30,042		—		—			30,042		31,978		—		—			31,978
Noncontrolling interests		375		—		375			—		605		—		605			—
Total equity		30,417		—		375			30,042		32,583		—		605			31,978
Total liabilities and equity	$	220,567	$	175,369	$	465		$	44,733	$	216,017	$	170,118	$	773		$	45,126

⁽¹⁾	Amounts represent segregated client assets generating advisory fees in which BlackRock has no economic interest or liability.

⁽²⁾	Amounts primarily represent the portion of assets and liabilities of Consolidated Sponsored Investment Funds attributable to NCI.

⁽³⁾	Amounts include property and equipment and other assets.

⁽⁴⁾	Amount includes approximately ~~$5.6~~$3.9 billion of deferred income tax liabilities related to goodwill and intangibles.

The following discussion summarizes the significant changes in assets and liabilities on a GAAP basis. Please see the condensed consolidated statements of financial condition as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 contained in Part I, Item 1 of this filing. The discussion does not include changes related to assets and liabilities that are equal and offsetting and have no impact on BlackRock’s stockholders’ equity.

Assets. Cash and cash equivalents at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 included ~~$73~~$44 million and ~~$53~~$63 million, respectively, of cash held by consolidated VREs (see Liquidity and Capital Resources for details on the change in cash and cash equivalents during the ~~nine~~three months ended ~~September 30, 2017)~~March 31, 2018).

Accounts receivable at ~~September 30, 2017 increased $833~~March 31, 2018 decreased $22 million from December 31, ~~2016~~2017. Investments were $2,677 million at March 31, 2018 (for more information see Investments herein). Goodwill and intangible assets decreased $14 million from December 31, 2017, primarily due to $11 million of amortization of intangible assets. Other assets (including property and equipment) increased $518 million from December 31, 2017, primarily related to an increase in unit trust receivables (substantially offset by an increase in unit trust payables recorded within ~~accounts payable and accrued liabilities) and higher BlackRock mutual funds,~~ ~~iShares~~ ~~ETFs and performance fee receivables. Investments were $1,928 million at September 30, 2017 (for more information see~~ ~~Investments~~ ~~herein). Goodwill and intangible assets increased $145 million from December 31, 2016, primarily due to the First Reserve Transaction and Cachematrix Transaction, partially offset by~~ ~~$77 million of amortization of intangible assets.~~ ~~Other assets (including property and equipment) increased $258 million from December 31, 2016, primarily related to an increase in current taxes receivable, certain strategic investments and~~ other ~~assets.~~liabilities.

5759

Liabilities. Accrued compensation and benefits at ~~September 30, 2017~~March 31, 2018 decreased ~~$266~~$1,365 million from December 31, ~~2016,~~2017, primarily due to ~~2016~~2017 incentive compensation cash payments in the first quarter of ~~2017,~~2018, partially offset by ~~2017~~2018 incentive compensation accruals. Accounts payable and accrued liabilities at ~~September 30, 2017~~March 31, 2018 increased ~~$558~~$260 million from December 31, ~~2016~~2017 due to higher current income taxes payables and increased accruals.

Other liabilities increased $504 million from December 31, 2017, primarily related to higher unit trust payables (substantially offset by an increase in unit trust receivables recorded within ~~accounts receivable).~~

Net deferred income tax liabilities at September 30, 2017 increased $126 million, partially due to the effects of temporary differences associated with stock-based compensation and intangibles. The change also reflects the revaluation of certain deferred income tax liabilities as a result of domestic state and local tax changes. Other liabilities increased $223 million from December 31, 2016, primarily related to an increase in contingent liabilities related to the First Reserve Transaction, uncertain tax positions,other assets) and other operating liabilities.

Investments and Investments of Consolidated VIEs

The Company’s investments and investments of consolidated VIEs (collectively, “Total Investments”) were ~~$1,928~~$2,050 million and ~~$1,286~~$1,637 million, respectively, at ~~September 30, 2017.~~March 31, 2018. Total Investments include consolidated investments held by sponsored investment funds accounted for as VREs and VIEs. Management reviews BlackRock’s Total Investments on an “economic” basis, which eliminates the portion of Total Investments that does not impact BlackRock’s book value or net income attributable to BlackRock. BlackRock’s management does not advocate that investors consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.

The Company presents Total Investments, as adjusted, to enable investors to understand the portion of Total Investments that is owned by the Company, net of NCI, as a gauge to measure the impact of changes in net nonoperating income (expense) on investments to net income (loss) attributable to BlackRock.

The Company further presents net “economic” investment exposure, net of deferred compensation investments and hedged investments, to reflect another helpful measure for investors. The economic impact of Total Investments held pursuant to deferred compensation arrangements is offset by a change in compensation expense. The impact of certain investments is substantially mitigated by swap hedges. Carried interest capital allocations are excluded as there is no impact to BlackRock’s stockholders’ equity until such amounts are realized as performance fees. Finally, the Company’s regulatory investment in Federal Reserve Bank stock, which is not subject to market or interest rate risk, is excluded from the Company’s net economic investment exposure.

	September 30,			December 31,			March 31,			December 31,
(in millions)	2017			2016			2018			2017
Investments, GAAP	$	1,928		$	1,595		$	2,050		$	1,981
Investments held by consolidated VIEs, GAAP		1,286			1,008			1,637			1,493
Total Investments		3,214			2,603			3,687			3,474
Investments held by consolidated VIEs		(1,286	)		(1,008	)		(1,637	)		(1,493	)
Investments held by consolidated VREs		(507	)		(465	)		(550	)		(512	)
Net interest in consolidated VREs		479			444			480			460
Net interest in consolidated VIEs⁽¹⁾		1,048			840			1,183			1,225
Total Investments, as adjusted		2,948			2,414			3,163			3,154
Federal Reserve Bank stock		(90	)		(89	)		(91	)		(91	)
Deferred compensation investments		(58	)		(66	)		(34	)		(56	)
Hedged investments		(538	)		(614	)		(546	)		(587	)
Carried interest (VIEs/VREs)		(280	)		(126	)		(305	)		(298	)
Total “economic” investment exposure	$	1,982		$	1,519		$	2,187		$	2,122

⁽¹⁾	Amount includes ~~$260~~$273 million of carried interest (VIEs) as of ~~September 30, 2017~~March 31, 2018 and ~~$108~~$266 million as of December 31, ~~2016,~~2017, which has no impact on the Company’s “economic” investment exposure.

The following table represents the carrying value of the Company’s economic investment exposure, by asset type, at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016:~~2017:

	September 30,		December 31,		March 31,		December 31,
(in millions)	2017		2016		2018		2017
Private equity	$	333	$	334	$	329	$	331
Real assets		304		94		326		313
Other alternatives⁽¹⁾		254		245		173		236
Other investments⁽²⁾		1,091		846		1,359		1,242
Total “economic” investment exposure	$	1,982	$	1,519	$	2,187	$	2,122

⁽¹⁾	Other alternatives include ~~distressed credit/mortgage funds/opportunistic funds~~direct hedge fund strategies and hedge ~~funds/funds of hedge funds.~~fund solutions.

⁽²⁾	Other investments primarily include seed investments in fixed income, equity and multi-asset mutual funds/strategies as well as U.K. government securities, primarily held for regulatory purposes.

As adjusted investment activity for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018 was as follows:

(in millions)				2018
Total Investments, as adjusted, December 31, 2016	$	2,414
Total Investments, as adjusted, beginning balance				$	3,154
Purchases/capital contributions		830			257
Sales/maturities		(603	)		(258	)
Distributions⁽¹⁾		(67	)		(16	)
Market appreciation(depreciation)/earnings from equity method investments		183			7
Carried interest capital allocations/(distributions)/acquired		154
Carried interest capital allocations/(distributions)					7
Other		37			12
Total Investments, as adjusted, September 30, 2017	$	2,948
Total Investments, as adjusted, ending balance				$	3,163

⁽¹⁾	Amount includes distributions representing return of capital and return on investments.

5961

LIQUIDITY AND CAPITAL RESOURCES

BlackRock Cash Flows Excluding the Impact of Consolidated Sponsored Investment Funds

The condensed consolidated statements of cash flows include the cash flows of the Consolidated Sponsored Investment Funds. The Company uses an adjusted cash flow statement, which excludes the impact of Consolidated Sponsored Investment Funds, as a supplemental non-GAAP measure to assess liquidity and capital requirements. The Company believes that its cash flows, excluding the impact of the Consolidated Sponsored Investment Funds, provide investors with useful information on the cash flows of BlackRock relating to its ability to fund additional operating, investing and financing activities. BlackRock’s management does not advocate that investors consider such non-GAAP measures in isolation from, or as a substitute for, its cash flows presented in accordance with GAAP.

The following table presents a reconciliation of the condensed consolidated statements of cash flows presented on a GAAP basis to the condensed consolidated statements of cash flows, excluding the impact of the cash flows of Consolidated Sponsored Investment Funds:

(in millions)	GAAP Basis			Impact on Cash Flows of Consolidated Sponsored Investment Funds			Cash Flows Excluding Impact of Consolidated Sponsored Investment Funds			GAAP Basis			Impact on Cash Flows of Consolidated Sponsored Investment Funds			Cash Flows Excluding Impact of Consolidated Sponsored Investment Funds
Cash and cash equivalents, December 31, 2016	$	6,091		$	53		$	6,038
Cash, cash equivalents and restricted cash, December 31, 2017										$	7,096		$	207		$	6,889
Cash flows from operating activities		2,486			(252	)		2,738			(141	)		(350	)		209
Cash flows from investing activities		(490	)		(52	)		(438	)		(53	)		(57	)		4
Cash flows from financing activities		(2,083	)		324			(2,407	)		(874	)		347			(1,221	)
Effect of exchange rate changes on cash and cash equivalents		161			—			161
Net change in cash and cash equivalents		74			20			54
Cash and cash equivalents, September 30, 2017	$	6,165		$	73		$	6,092
Effect of exchange rate changes on cash, cash equivalents and restricted cash											115			—			115
Net change in cash, cash equivalents and restricted cash											(953	)		(60	)		(893	)
Cash, cash equivalents and restricted cash, March 31, 2018										$	6,143		$	147		$	5,996

Sources of BlackRock’s operating cash primarily include investment advisory, administration fees and securities lending revenue, performance fees, revenue from technology and risk management services, advisory and other revenue and distribution fees. BlackRock uses its cash to pay all operating expense, interest and principal on borrowings, income taxes, dividends on BlackRock’s capital stock, repurchases of the Company’s stock, capital expenditures and purchases of co-investments and seed investments.

For details of the Company’s GAAP cash flows from operating, investing and financing activities, see the Condensed Consolidated Statements of Cash Flows contained in Part I, Item 1 of this filing.

Cash flows from operating activities, excluding the impact of Consolidated Sponsored Investment Funds, primarily include the receipt of investment advisory and administration fees, securities lending revenue and performance fees offset by the payment of operating expenses incurred in the normal course of business, including year-end incentive compensation accrued for in the prior year.

Cash ~~outflows~~inflows from investing activities, excluding the impact of Consolidated Sponsored Investment Funds, for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018 were ~~$438~~$4 million and primarily reflected $404 million of investment purchases, $100 million of purchases of property and equipment, $73 million related to the First Reserve Transaction and $29 million related to the Cachematrix Transaction, partially offset by $142$127 million of net proceeds from sales and maturities of certain ~~investments.~~investments, partially offset by $95 million of investment purchases and $33 million of purchases of property and equipment.

Cash outflows from financing activities, excluding the impact of Consolidated Sponsored Investment Funds, for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018 were ~~$2,407~~$1,221 million, primarily resulting from ~~$1,133~~$719 million of share repurchases, including ~~$825~~$335 million in open market transactions and ~~$308~~$384 million of employee tax withholdings related to employee stock transactions, ~~$1,259~~and $505 million of cash dividend ~~payments and $700 million of repayments of long-term borrowings, partially offset by $697 million of proceeds from issuance of long-term borrowings.~~payments.

6062

The Company manages its financial condition and funding to maintain appropriate liquidity for the business. Liquidity resources at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 were as follows:

	September 30,			December 31,			March 31,			December 31,
(in millions)	2017			2016			2018			2017
Cash and cash equivalents⁽¹⁾	$	6,165		$	6,091		$	5,978		$	6,894
Cash and cash equivalents held by consolidated VREs⁽²⁾		(73	)		(53	)		(44	)		(63	)
Subtotal		6,092			6,038			5,934			6,831
Credit facility – undrawn		4,000			4,000			4,000			4,000
Total liquidity resources⁽³⁾	$	10,092		$	10,038		$	9,934		$	10,831

(1)

The percentage of cash and cash equivalents held by the Company’s U.S. subsidiaries was approximately 35% and 40% ~~and 50%~~ at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively. See Net Capital Requirements herein for more information on net capital requirements in certain regulated subsidiaries.

(2)	The Company cannot readily access such cash to use in its operating activities.

(3)	Amount ~~at December 31, 2016~~ does not reflect year-end incentive compensation accruals, ~~of approximately $1.3 billion,~~ which ~~were~~are paid in the first ~~quarter of 2017.~~quarter.

Total liquidity resources ~~increased $54~~decreased $897 million during the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2018, primarily reflecting cash ~~flows from operating activities, partially offset by cash~~ payments of ~~2016~~2017 year-end incentive awards, share repurchases of ~~$1,133~~$719 million and cash dividend payments of ~~$1,259 million.~~$505 million, partially offset by cash flows from other operating activities.

A significant portion of the Company’s ~~$2,948~~$3,163 million of Total Investments, as adjusted, is illiquid in nature and, as such, cannot be readily convertible to cash.

Share Repurchases. In January 2017, the Board of Directors approved an increase in the shares that may be repurchased under the Company’s existing share repurchase program to allow for the repurchase of an additional 6 million shares for a total up to 9 million shares of BlackRock common stock.

The Company repurchased ~~2.1~~0.6 million common shares in open market transactions under the share repurchase program for approximately ~~$825~~$335 million during the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2018. At ~~September 30, 2017,~~March 31, 2018, there were ~~6.9~~5.8 million shares still authorized to be repurchased.

Net Capital Requirements. The Company is required to maintain net capital in certain regulated subsidiaries within a number of jurisdictions, which is partially maintained by retaining cash and cash equivalent investments in those subsidiaries or jurisdictions. As a result, such subsidiaries of the Company may be restricted in their ability to transfer cash between different jurisdictions and to their parents. Additionally, transfers of cash between international jurisdictions ~~including repatriation to the United States,~~ may have adverse tax consequences that could discourage such transfers.

BlackRock Institutional Trust Company, N.A. (“BTC”) is chartered as a national bank that does not accept client deposits and whose powers are limited to trust and other fiduciary activities. BTC provides investment management services, including investment advisory and securities lending agency services, to institutional clients. BTC is subject to regulatory capital and liquid asset requirements administered by the Office of the Comptroller of the Currency.

At ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, the Company was required to maintain approximately ~~$1.7~~$2.1 billion and ~~$1.4~~$1.8 billion, respectively, in net capital in certain regulated subsidiaries, including BTC, entities regulated by the Financial Conduct Authority and Prudential Regulation Authority in the United Kingdom, and the Company’s broker-dealers. The Company was in compliance with all applicable regulatory net capital requirements.

Short-Term Borrowings

Long-Term Borrowings

At ~~September 30, 2017,~~March 31, 2018, the principal amount of long-term borrowings outstanding was ~~$5.0~~$5.1 billion. See Note 12, Borrowings, in the ~~2016~~2017 Form 10-K for more information on borrowings outstanding as of December 31, ~~2016.~~

In March 2017, the Company issued $700 million in aggregate principal amount of 3.20% senior unsecured and unsubordinated notes maturing on March 15, 2027 (the “2027 Notes”). Interest is payable semi-annually on March 15 and September 15 of each year, commencing September 15, 2017, and is approximately $22 million per year. The 2027 Notes may be redeemed prior to maturity at any time in whole or in part at the option of the Company at a “make-whole” redemption price. The unamortized discount and debt issuance costs are being amortized over the remaining term of the 2027 Notes.

~~In April 2017, the net proceeds of the 2027 Notes were used to fully repay $700 million in aggregate principal amount outstanding of 6.25% notes prior to their maturity in September~~ 2017.

During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2018, the Company paid approximately ~~$149~~$29 million of interest on long-term borrowings. Future principal repayments and interest requirements at ~~September 30, 2017~~March 31, 2018 were as follows:

(in millions)
Year	Principal		Interest		Total Payments		Principal		Interest		Total Payments
Remainder of 2017	$	—	$	54	$	54
2018		—		175		175
Remainder of 2018							$	—	$	147	$	147
2019		1,000		175		1,175		1,000		175		1,175
2020		—		125		125		—		125		125
2021		750		109		859		750		109		859
2022		750		80		830		750		81		831
2023								—		68		68
Thereafter⁽¹⁾		2,528		184		2,712		2,561		117		2,678
Total	$	5,028	$	902	$	5,930	$	5,061	$	822	$	5,883

__________________________

⁽¹⁾⁽¹⁾

The amount of principal and interest payments for the 2025 Notes (issued in Euros) represents the expected payment amounts using foreign exchange rates as of ~~September 30, 2017.~~March 31, 2018.

Acquisition. In November 2017, the Company announced that it had entered an agreement to acquire the asset management business of Citibanamex, a subsidiary of Citigroup Inc. The transaction is expected to close in the second half of 2018, subject to customary regulatory approvals and closing conditions. Consideration for the transaction will include an upfront cash payment of $350 million and contingent consideration.

(in millions)

Year
Amount

2023
$
34

2024

51

2025

51

2026

51

2027

51

Thereafter

1,007

Total
$
1,245

Contingent Payments Related to Business Acquisitions. In connection with certain acquisitions, BlackRock is required to make contingent payments, subject to achieving specified performance targets, which may include revenue related to acquired contracts or new capital commitments for certain products. The fair value of the remaining aggregate contingent payments at ~~September 30, 2017~~March 31 2018 totaled ~~$228~~$242 million, ~~including $125 million related to the First Reserve Transaction,~~ and is included in other liabilities on the condensed consolidated statements of financial condition.

Carried Interest Clawback. As a general partner in certain investment funds, including private equity partnerships and certain hedge funds, the Company may receive carried interest cash distributions from the partnerships in accordance with distribution provisions of the partnership agreements. The Company may, from time to time, be required to return all or a portion of such distributions to the limited partners in the event the limited partners do not achieve a return as specified in the various partnership agreements. Therefore, BlackRock records carried interest subject to such clawback provisions in Total Investments, or cash/cash of consolidated VIEs to the extent that it is distributed, and as a deferred carried interest liability/other liabilities of consolidated VIEs on its condensed consolidated statements of financial condition. Carried interest is recorded as performance fees on BlackRock’s condensed consolidated statements of income ~~upon the earlier of the termination of the investment fund or~~ when the ~~likelihood~~fees are no longer probable of ~~clawback is considered mathematically improbable.~~significant reversal.

Indemnifications. On behalf of certain clients, the Company lends securities to highly rated banks and broker-dealers. In these securities lending transactions, the borrower is required to provide and maintain collateral at or above regulatory minimums. Securities on loan are marked to market daily to determine if the borrower is required to pledge additional collateral. BlackRock has issued certain indemnifications to certain securities lending clients against potential loss resulting from a borrower’s failure to fulfill its obligations under the securities lending agreement should the value of the collateral pledged by the borrower at the time of default be insufficient to cover the borrower’s obligation under the securities lending agreement. At ~~September 30, 2017,~~March 31 2018, the Company indemnified certain of its clients for their securities lending loan balances of approximately ~~$197.6~~$219 billion. The Company held, as agent, cash and securities totaling ~~$210.6~~$232 billion as collateral for indemnified securities on loan at ~~September 30, 2017.~~March 31, 2018. The fair value of these indemnifications was not material at ~~September 30, 2017.~~March 31, 2018.

While the collateral pledged by a borrower is intended to be sufficient to offset the borrower’s obligations to return securities borrowed and any other amounts owing to the lender under the relevant securities lending agreement, in the event of a borrower default, the Company can give no assurance that the collateral pledged by the borrower will be sufficient to fulfill such obligations. If the amount of such pledged collateral is not sufficient to fulfill such obligations to a client for whom the Company has provided indemnification, BlackRock would be responsible for the amount of the shortfall. These indemnifications cover only the collateral shortfall described above, and do not in any way guarantee, assume or otherwise insure the investment performance or return of any cash collateral vehicle into which securities lending cash collateral is invested.

Critical Accounting Policies

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expense during the reporting periods. Actual results could differ significantly from those estimates. Management considers the following critical accounting policies important to understanding the condensed consolidated financial statements. For a summary of these and additional accounting policies see Note 2, Significant Accounting Policies, in the condensed consolidated financial statements ~~contained in Part I, Item 1 of this filing~~ and Critical Accounting Policies in Management’s Discussion and Analysis of Financial Condition and Results of Operations ~~in the 2016 Form 10-K~~ and Note 2, Significant Accounting Policies, in the ~~2016~~2017 Form 10-K for further information.

Consolidation. In the normal course of business, the Company is the manager of various types of sponsored investment vehicles. The Company performs an analysis for investment products to determine if the product is a VIE or a VRE. Assessing whether an entity is a VIE or a VRE involves judgment and analysis. Factors considered in this assessment include the entity’s legal organization, the entity’s capital structure and equity ownership, and any related party or de facto agent implications of the Company’s involvement with the entity. Investments that are determined to be VREs are consolidated if the Company can exert control over the financial and operating policies of the investee, which generally exists if there is greater than 50% voting interest. See Note 4,5, Consolidated Voting Rights Entities, in the notes to the condensed consolidated financial statements for more information. Investments that are determined to be VIEs are consolidated if the Company is the primary beneficiary (“PB”) of the entity.

At ~~September 30, 2017,~~March 31, 2018, BlackRock was determined to be the PB for certain investment funds that were determined to be VIEs, which required BlackRock to consolidate them. BlackRock was deemed to be the PB because it has the power to direct the activities that most significantly impact the entities’ economic performance and has the obligation to absorb losses or the right to receive benefits that potentially could be significant to the VIE. The Company generally consolidates VIEs in which it holds an equity ownership interest of 10% or greater and deconsolidates such VIEs once equity ownership falls below 10%. See Note 5,6, Variable Interest Entities, in the notes to the condensed consolidated financial statements for more information.

Fair Value Measurements. The Company’s assessment of the significance of a particular input to the fair value measurement according to the fair value hierarchy (i.e., Level 1, 2 and 3 inputs, as defined) in its entirety requires judgment and considers factors specific to the financial instrument. See Note 2, Significant Accounting Policies, in the condensed consolidated financial statements for more information on fair value measurements.

Revenue Recognition. Revenue is recognized upon transfer of control of promised services to customers in an amount that reflects consideration to which the Company expects to be entitled in exchange for those services (the “transaction price”). The Company enters into contracts that can include multiple services, which are accounted for separately if they are determined to be distinct. Consideration for the Company’s services is generally in the form of variable consideration because the amount of fees is subject to market conditions that are outside of the Company’s influence. The Company includes variable consideration as part of its transaction price when it is no longer probable of significant reversal, i.e. when the associated uncertainty is resolved. For some contracts with customers, the Company has discretion to involve a third party in providing services to the customer. Generally, the Company is deemed to be the principal in these arrangements because the Company controls the promised services before they are transferred to customers, and accordingly presents the revenue gross of related costs. Management judgment may be required when determining the following: whether services are considered distinct and should be accounted for separately; when variable consideration is no longer probable of significant reversal (and hence can be included in the transaction price); whether certain revenue should be presented gross or net of certain related costs; when a promised service transfers to the customer; and the applicable method of measuring progress for services transferred to the customer over time.

Investment ~~Advisory Performance Fees / Carried Interest.~~advisory and administration fees are recognized as the services are performed over time. Such fees are primarily based on agreed-upon percentages of net asset value, AUM or committed capital. These fees are affected by changes in AUM, including market appreciation or depreciation, foreign exchange translation and net inflows or outflows. Investment advisory and administration fees for investment funds are shown net of fees waived pursuant to contractual expense limitations of the funds or voluntary waivers. In addition, the Company may contract with third parties to provide sub-advisory services on its behalf. The Company presents the investment advisory fees and associated costs to such advisors on a gross basis in the condensed consolidated statements of income where it is deemed to be the principal.

The Company earns revenue by lending securities on behalf of clients, primarily to highly rated banks and broker-dealers. Revenue is recognized over time as services are performed. The securities loaned are secured by collateral, generally ranging from 102% to 112% of the value of the loaned securities. Generally, the securities lending fees are shared between the Company and the funds or other third-party accounts managed by the Company from which the securities are borrowed. For the three months ended March 31, 2018 and 2017, securities lending revenue earned by the Company totaled $155 million and $141 million, respectively, and is recorded in investment advisory, administration fees and securities lending revenue on the condensed consolidated statements of income.

The Company receives investment advisory performance fees, orincluding incentive allocations (carried interest) from certain actively managed investment funds and certain separately managed accounts. These performance fees are dependent upon exceeding specified relative or absolute investment return ~~thresholds. Such fees are recorded upon completion of the measurement period,~~thresholds, which ~~varies~~may vary by product or account, and ~~could be~~include monthly, quarterly, annually or ~~longer.~~longer measurement periods. A portion of the fees the Company recognizes may be partially related to the services performed in prior periods that meet the recognition criteria in the current period.

~~In addition, the~~The Company is allocated carried interest from certain alternative investment products upon exceeding performance thresholds. BlackRock may be required to reverse/return all, or part, of such carried interest allocations depending upon future performance of these funds. Therefore, ~~BlackRock records~~ carried interest subject to such clawback provisions is recorded in ~~Total Investments,~~investments/investments of consolidated VIEs or cash/cash of consolidated VIEs to the extent that it is distributed, on its condensed consolidated statements of financial condition. ~~Carried~~

Performance fees, including carried interest, are recognized when it is ~~recorded~~determined that they are no longer probable of significant reversal (such as ~~performance fee revenue~~ upon the ~~earlier~~sale of ~~the termination of the~~a fund’s investment ~~fund~~ or when the ~~likelihood~~amount of ~~clawback~~AUM becomes known as of the end of a specified measurement period). Significant judgement is ~~considered mathematically improbable.~~involved in making such determination. At each reporting date, the Company considers various factors in estimating performance fees to be recognized, including carried interest. These factors include but are not limited to whether: (1) the fees are dependent on the market and thus are highly susceptible to factors outside the Company’s influence; (2) the fees have a large number and a broad

range of possible amounts; and (3) the funds or separately managed accounts have the ability to invest or reinvest its sales proceeds.

The Company records a contract liability for deferred carried interest ~~liability~~ to the extent it receives cash or capital allocations related to carried interest prior to meeting the revenue recognition criteria. At ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, the Company had ~~$303~~$224 million and ~~$152~~$219 million, respectively, of deferred carried interest recorded in other liabilities/other liabilities of consolidated VIEs on the condensed consolidated statements of financial condition. A portion of the deferred carried interest ~~liability will~~may also be paid to certain employees. The ultimate timing of the recognition of performance fee revenue and related compensation expense, if any, for these products is unknown.

For the three months ended March 31, 2018 and 2017, performance fee revenue (which included recognized carried interest) both totaled $70 million. See Note 13~~The following table presents~~, Revenue, in the notes to the condensed consolidated financial statements for detailed changes in the deferred carried interest liability ~~(including the portion related to consolidated VIEs)~~balance for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017.

Fees earned for technology and risk management revenue are recorded as services are performed and are generally determined using the value of positions on the Aladdin platform or on a fixed-rate basis. For the three months ended March 31, 2018 and 2017, technology and ~~2016:~~risk management revenue totaled $184 million and $154 million, respectively.

Adjustments to revenue arising from initial estimates recorded historically have been immaterial since the majority of BlackRock’s investment advisory and administration revenue is calculated based on AUM and since the Company does not record performance fee revenue until: (1) performance thresholds have been exceeded and (2) management determines the fees are no longer probable of significant reversal.

Three Months Ended

Nine Months Ended

September 30,

September 30,

(in millions)

2017

2016

2017

2016

Beginning balance

$
280

$
131

$
152

$
143

Net increase (decrease) in unrealized allocations

23

8

52

7

Performance fee revenue recognized

—

(11
)

(12
)

(22
)
Acquisition

—

—

111

—

Ending balance

$
303

$
128

$
303

$
128

The Company accounts for fund distribution services and shareholder servicing as distinct services, separate from fund management services, because customers can benefit from each of the services on their own and because the services are separately identifiable (that is, the nature of the promised services is to transfer each service individually). The Company records upfront and ongoing sales commissions as distribution fee revenue for serving as the principal underwriter and/or distributor for certain mutual funds that it manages. The Company recognizes the upfront fees for front-end load funds on a trade date basis, when the services are performed and the amount the Company is entitled to is known. The on-going distribution fees are generally based on net asset values and are recognized when the amount is known. Distribution services are satisfied at a point in time. Consequently, a portion of the on-going distribution fees the Company recognized may be related to the services performed in prior periods that met the recognition criteria in the current period. The Company recognizes ongoing shareholder servicing fee revenue when and as shareholder services are performed over time. The Company contracts with third parties for various fund distribution services and shareholder servicing of certain funds to be performed on its behalf. These arrangements are generally priced as a portion of the fee paid to the Company by the fund or as an agreed-upon percentage of net asset value. The Company presents its distribution fees and distribution and servicing costs incurred on a gross basis in the condensed consolidated statements of income as it is deemed to be the principal in such transactions.

Accounting Developments

~~Recent Accounting Pronouncements Not Yet Adopted.~~

~~Revenue from Contracts with Customers.~~ ~~In May 2014, the FASB issued ASU 2014-09,~~ ~~Revenue from Contracts with Customers~~ (“ASU 2014-09”). ASU 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The guidance also changes the accounting for certain contract costs and revises the criteria for determining if an entity is acting as a principal or agent in certain arrangements. The Company continues to evaluate the impact of ASU 2014-09 on the presentation and recognition of its revenue contracts and certain contract costs. The most significant change identified to date relates to the presentation of certain distribution costs, which are currently presented net against revenues (contra-revenue) and will likely be presented as an expense on a gross basis. The Company currently expects such net gross up to annual revenue to be approximately $1 billion with a corresponding gross up to annual expense. Consequently, the Company expects its GAAP operating margin to decline upon adoption of the new guidance due to the gross up of revenue. However, it currently does not expect any material impact to its as adjusted operating margin. The Company is currently evaluating which transition method it will apply when it adopts the new revenue recognition guidance in the first quarter of 2018.

For accounting pronouncements that the Company adopted during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018 and for ~~additional~~ recent accounting pronouncements not yet adopted, see Note 2, Significant Accounting Policies, in the condensed consolidated financial ~~statements contained in Part I, Items 1 of this filing.~~statements.

~~Item~~Item 3. Quantitative and Qualitative Disclosures About Market Risk

AUM Market Price Risk. BlackRock’s investment advisory and administration fees are primarily comprised of fees based on a percentage of the value of AUM and, in some cases, performance fees expressed as a percentage of the returns realized on AUM. At ~~September 30, 2017,~~March 31, 2018, the majority of the Company’s investment advisory and administration fees were based on average or period end AUM of the applicable investment funds or separate accounts. Movements in equity market prices, interest rates/credit spreads, foreign exchange rates or all three could cause the value of AUM to decline, which would result in lower investment advisory and administration fees.

Corporate Investments Portfolio Risks. As a leading investment management firm, BlackRock devotes significant resources across all of its operations to identifying, measuring, monitoring, managing and analyzing market and operating risks, including the management and oversight of its own investment portfolio. The Board of Directors of the Company has adopted guidelines for the review of investments to be made by the Company, requiring, among other things, that investments be reviewed by certain senior officers of the Company, and that certain investments may be referred to the Audit Committee or the Board of Directors, depending on the circumstances, for approval.

In the normal course of its business, BlackRock is exposed to equity market price risk, interest rate/credit spread risk and foreign exchange rate risk associated with its corporate investments.

BlackRock has investments primarily in sponsored investment products that invest in a variety of asset classes, including real assets, private equity and hedge funds. Investments generally are made for co-investment purposes, to establish a performance track record, to hedge exposure to certain deferred compensation plans or for regulatory purposes. Currently, the Company has a seed capital hedging program in which it enters into swaps to hedge market and interest rate exposure to certain investments. At ~~September 30, 2017,~~March 31, 2018, the Company had outstanding total return swaps with an aggregate notional value of approximately ~~$538~~$546 million. At ~~September 30, 2017,~~March 31, 2018, there were no outstanding interest rate swaps.

At ~~September 30, 2017,~~March 31, 2018, approximately ~~$1.8~~$2.2 billion of BlackRock’s Total Investments were maintained in consolidated sponsored investment funds accounted for as VREs and VIEs. Excluding the impact of the Federal Reserve Bank stock, carried interest, investments made to hedge exposure to certain deferred compensation plans and certain investments that are hedged via the seed capital hedging program, the Company’s economic exposure to its investment portfolio is ~~$1,982~~$2,187 million. See Balance Sheet Overview- Investments and Investments of Consolidated VIEs in Management’s Discussion and Analysis of Financial Condition and Results of Operations for further information on the Company’s Total Investments.

Equity Market Price Risk. At ~~September 30, 2017,~~March 31, 2018, the Company’s net exposure to equity market price risk in its investment portfolio was approximately ~~$816~~$1,078 million of the Company’s total economic investment exposure. Investments subject to market price risk include private equity and real assets investments, hedge funds and funds of funds as well as mutual funds. The Company estimates that a hypothetical 10% adverse change in market prices would result in a decrease of approximately ~~$81.6~~$107.8 million in the carrying value of such investments.

Interest Rate/Credit Spread Risk. At ~~September 30, 2017,~~March 31, 2018, the Company was exposed to interest-rate risk and credit spread risk as a result of approximately ~~$1,166~~$1,109 million of Total Investments in debt securities and sponsored investment products that invest primarily in debt securities. Management considered a hypothetical 100 basis point fluctuation in interest rates or credit spreads and estimates that the impact of such a fluctuation on these investments, in the aggregate, would result in a decrease, or increase, of approximately ~~$20.3~~$23.9 million in the carrying value of such investments.

Foreign Exchange Rate Risk. As discussed above, the Company invests in sponsored investment products that invest in a variety of asset classes. The carrying value of the total economic investment exposure denominated in foreign currencies, primarily the British pound and Euro, was ~~$404~~$968 million at ~~September 30, 2017.~~March 31, 2018. A 10% adverse change in the applicable foreign exchange rates would result in approximately a ~~$40.4~~$96.8 million decline in the carrying value of such investments.

Other Market Risks. The Company executes forward foreign currency exchange contracts to mitigate the risk of certain foreign exchange risk movements. At ~~September 30, 2017,~~March 31, 2018, the Company had outstanding forward foreign currency exchange contracts with an aggregate notional value of approximately ~~$1.3~~$1.5 billion.

Item 4. Controls and Procedures

Disclosure Controls and Procedures. Under the direction of BlackRock’s Chief Executive Officer and Chief Financial Officer, BlackRock evaluated the effectiveness of its disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this quarterly report on Form 10-Q. Based on this evaluation, BlackRock’s Chief Executive Officer and Chief Financial Officer have concluded that BlackRock’s disclosure controls and procedures were effective.

Internal Control over Financial Reporting. There were no changes in our internal control over financial reporting that occurred during the quarter ended ~~September 30, 2017~~March 31, 2018 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

6669

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

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

On May 27, 2014, certain ~~purported~~ investors in the BlackRock Global Allocation Fund, Inc. and the BlackRock Equity Dividend Fund (collectively, the “Funds”) filed a consolidated complaint (the “Consolidated Complaint”) in the U.S. District Court for the District of New Jersey against BlackRock Advisors, LLC, BlackRock Investment Management, LLC and BlackRock International Limited under the caption In re BlackRock Mutual Funds Advisory Fee Litigation. The Consolidated Complaint, which purports to be brought derivatively on behalf of the Funds, alleges that the defendants violated Section 36(b) of the Investment Company Act by receiving allegedly excessive investment advisory fees from the Funds. On February 24, 2015, the same plaintiffs filed another complaint in the same court against BlackRock Investment Management, LLC and BlackRock Advisors, LLC. The allegations and legal claims in both complaints are substantially similar, with the new complaint purporting to challenge fees received by defendants after the plaintiffs filed their prior complaint. Both complaints seek, among other things, to recover on behalf of the Funds all allegedly excessive advisory fees received by defendants in the twelve month period preceding the start of each lawsuit, along with purported lost investment returns on those amounts, plus interest. The defendants believe the claims in both lawsuits are without merit and ~~intend to~~are vigorously ~~defend~~defending the actions. On September 25, 2017, the defendants filed a motion for summary judgment to dismiss the ~~lawsuit.~~lawsuit, which is pending.

~~Between~~

In November ~~12, 2015 and November 16,~~ 2015, BlackRock, Inc., BlackRock Realty Advisors, Inc. (“BRA”), BlackRock US Core Property Fund, Inc. (formerly known as BlackRock Granite Property Fund, Inc.) (“Granite Fund”), and certain other Granite Fund related entities (collectively, the “BlackRock Parties”) were named as defendants in thirteen lawsuits filed in the Superior Court of the State of California for the County of Alameda arising out of the June 16, 2015 collapse of a balcony at the Library Gardens apartment complex in Berkeley, California (the “Property”). The Property is indirectly owned by the Granite Fund, which is managed by BRA. The plaintiffs also named as defendants in the lawsuits Greystar, which manages the Property, and certain other non-BlackRock related entities, including the developer of the Property, building contractors and building materials suppliers. The plaintiffs ~~allege,~~alleged, among other things, that the BlackRock Parties were negligent in their ownership, control and maintenance of the Property’s balcony, and ~~seek~~sought monetary, including punitive, damages. Additionally, on March 16, 2016, three former tenants of the Library Gardens apartment unit ~~that~~who were not physically injured but experienced the balcony collapse sued the BlackRock Parties. The former tenants, who witnessed (but were not physically injured in) the accident make allegations virtually identical to those in the other previously filed actions and claim that, as a result of the collapse, they suffered unspecifiedParties for emotional ~~damage. Several defendants also filed cross-complaints alleging a variety of claims, including claims against~~damages. In November 2017, the BlackRock Parties ~~for contribution, negligence,~~settled all of the lawsuits relating to Library Gardens and ~~declaratory relief. BlackRock, Inc. believes~~ the ~~claims against it are without merit~~cases were formally dismissed in March and ~~intends to vigorously defend the actions. A trial on all claims is scheduled to begin on February 5,~~April 2018.

April 5, 2011, to the present. The lawsuit generally alleges that the defendants breached their duties towards Plan participants in violation of the Employee Retirement Income Security Act of 1974 by, among other things, offering investment options that were overly expensive, underperformed peer funds, focused disproportionately on active versus passive strategies, and were unduly concentrated with investment options managed by BlackRock. While the complaint does not contain any specific amount in alleged damages, it claims that the purported underperformance and hidden fees cost Plan participants more than $60 million. On October 10, 2017, the plaintiffs filed an Amended

Complaint, which, among other things, adds as defendants certain current and former members of the BlackRock Retirement and Investment Committees. The Amended Complaint also includes a new purported class claim on behalf of investors in certain Collective Trust Funds (“CTFs”) managed by BTC. Specifically, the plaintiffs allege that BTC, ~~exercised~~as fiduciary ~~authority over its compensation for securities lending services~~ to the ~~CTFs.~~CTFs, engaged in self-dealing by, most significantly, selecting itself as the lending agent on terms that plaintiffs claim were excessive. The defendants believe the claims in this lawsuit are without merit and ~~intend~~are vigorously defending the action. BlackRock moved to ~~vigorously defend~~dismiss the ~~action.~~Amended Complaint on November 8, 2017.

6871

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the three months ended ~~September 30, 2017,~~March 31, 2018, the Company made the following purchases of its common stock, which is registered pursuant to Section 12(b) of the Exchange Act.

Total Number
of Shares
Purchased

Average
Price Paid
per Share

Total Number of
Shares
Purchased as
Part of Publicly
Announced Plans
or Programs

Maximum
Number of
Shares that May
Yet Be
Purchased Under
the Plans or
Programs⁽¹⁾

July 1, 2017 through July 31, 2017

198,234

⁽²⁾

$
427.31

183,716

7,407,531

August 1, 2017 through August 31, 2017

439,530

⁽²⁾

$
422.69

427,122

6,980,409

September 1, 2017 through September 30, 2017

39,343

⁽²⁾

$
419.40

37,753

6,942,656

Total

677,107

$
423.85

648,591

	Total Number of Shares Purchased			Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
January 1, 2018 through January 31, 2018		850,474	⁽¹⁾	$	565.70		188,538		6,178,635
February 1, 2018 through February 28, 2018		394,875	⁽¹⁾	$	537.61		386,740		5,791,895
March 1, 2018 through March 31, 2018		47,956	⁽¹⁾	$	541.37		33,879		5,758,016
Total		1,293,305		$	556.22		609,157

_______________________

⁽¹⁾	In January 2017, the Board of Directors authorized the repurchase of an additional 6 million shares under the Company’s existing share repurchase program for a total of up to 9 million shares of BlackRock common stock.

⁽²⁾

Includes purchases made by the Company primarily to satisfy income tax withholding obligations of employees and members of the Company’s Board of Directors related to the vesting of certain restricted stock or restricted stock unit awards and purchases made by the Company as part of the publicly announced share repurchase program.

6972

Item 6. Exhibits

Exhibit No.		Description

~~12.1~~10.1		~~Computation~~Form of ~~Ratio of Earnings to Fixed Charges~~

~~31.1~~		~~Section 302 Certification of Chief Executive Officer~~

~~31.2~~		~~Section 302 Certification of Chief Financial Officer~~

~~32.1~~		~~Section 906 Certification of Chief Executive Officer~~Performance-Based Stock Option Agreement under the BlackRock, Inc. Second Amended and ~~Chief Financial Officer~~

~~101.INS~~		~~XBRL Instance Document~~

~~101.SCH~~		~~XBRL Taxonomy Extension Schema Document~~

~~101.CAL~~		~~XBRL Taxonomy Extension Calculation Linkbase Document~~

~~101.DEF~~		~~XBRL Taxonomy Extension Definition Linkbase Document~~

~~101.LAB~~		~~XBRL Taxonomy Extension Label Linkbase Document~~

~~101.PRE~~		~~XBRL Taxonomy Extension Presentation Linkbase Document~~

Restated 1999 Stock Award and Incentive Plan. +~~EXHIBIT INDEX~~

~~Exhibit No.~~		~~Description~~

12.1		Computation of Ratio of Earnings to Fixed Charges

31.1		Section 302 Certification of Chief Executive Officer

31.2		Section 302 Certification of Chief Financial Officer

32.1		Section 906 Certification of Chief Executive Officer and Chief Financial Officer

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

+ Denotes compensatory plan or arrangement.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	BLACKROCK, INC.
	(Registrant)

	By:	/s/ Gary S. Shedlin
Date: ~~November 8, 2017~~May 9, 2018		Gary S. Shedlin
		Senior Managing Director & Chief Financial Officer

7274

(in millions)	June 30, 2016		Realized and Unrealized Gains (Losses) in Earnings and OCI			Purchases		Sales and Maturities			Issuances and other Settlements			Transfers into Level 3		Transfers out of Level 3		September 30, 2016		Total Net Unrealized Gains (Losses) Included in Earnings⁽¹⁾
Assets:
Investments:
Available-for-sale securities⁽²⁾	$	—	$	—		$	24	$	—		$	—		$	—	$	—	$	24
Trading		3		—			2		—			—			—		—		5
Total investments		3		—			26		—			—			—		—		29
Assets of consolidated VIEs - Private equity		189		11			—		(6	)		—			—		—		194	$	11
Total Level 3 assets	$	192	$	11		$	26	$	(6	)	$	—		$	—	$	—	$	223
Liabilities:
Other liabilities⁽³⁾	$	121	$	(2	)	$	—	$	—		$	(5	)	$	—	$	—	$	118	$	(2	)

(in millions)
Year	Amount
2023	$	34
2024		51
2025		51
2026		51
2027		51
Thereafter		1,007
Total	$	1,245