BlackRock Dividend Achievers Trust Annual Report 2015

FY2015 Annual Report · BlackRock Dividend Achievers Trust

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2015
ANNUAL
REPORT

BlackRock’s foundation, built on a diverse
global investment platform, commitment
to technology and risk management
and a principled fiduciary culture, drives
our ability to anticipate and adapt ahead
of change to create better financial futures
for our clients.

1
1

GLOBAL INVESTMENT PLATFORM
BLACKROCK’S FOUNDATION BUILT FOR CHANGE

At BlackRock, our goal is to create better financial futures for our
clients — and their clients — from institutions, corporations and
governments to individuals planning for retirement and saving for
their children’s college educations.

We do this by providing investment advice and managing investment
strategies across one of the deepest, broadest investment platforms
in the financial services industry.

BREADTH AND DEPTH OF DIVERSE INVESTMENT PLATFORM

BlackRock offers clients a full range of investment solutions across styles, asset classes and
regions, extensive market insights and industry-leading risk management and analytical
capabilities supported by Aladdin.® BlackRock’s investment management teams span Alpha and
Beta Strategies, including fundamental and quantitative equity and fixed income, Multi-Asset,

Alternative and Trading & Liquidity Strategies, with more than 1,800 investment professionals

in more than 25 investment centers around the world.

INDEX & iSHARES®

iSHARES

Chart above reflects mix of assets under management by style, asset class, client type and region.

BlackRock’s clients trust us to

manage more money than any other

investment firm in the world. Our

diverse global investment platform

positions us to focus on what our

clients need, when they need it.

Statement above based on
AUM as of 12/31/15.

GLOBAL INVESTMENT PLATFORM
BLACKROCK’S FOUNDATION BUILT FOR CHANGE

Changes in the investment landscape are prompting investors
to search for new sources of return. And changes in demographics,
environmental issues and government regulation are driving an
increasing number of investors to portfolios that simultaneously
generate positive social or environmental impact. Building on
the strength of our global investment platform, BlackRock continues
to make investments in our platform to provide our clients with
solutions for their changing needs.

SUSTAINABLE INVESTING

Launched in 2015, BlackRock’s sustainable investing platform provides clients with a
range of sustainable investment strategies across asset classes, investment vehicles and
impact profiles. With more than $200 billion in sustainable assets under management,
BlackRock leverages our differentiated investment platform, proprietary technology,

data analytics, deep environmental, social and governance (ESG) expertise and culture of

innovation to offer our institutional and retail clients access to:

• Exclusionary screens that avoid specific companies or industries not aligned with

investors’ values (e.g., alcohol, tobacco, firearms, fossil fuels)

• ESG factor strategies that incorporate environmental, social and governance factors

to identify investment risks and opportunities

• Impact investments that target measurable social or environmental outcomes and

financial returns

FACTOR INVESTING

Factors drive risk and return in portfolios. Factor investing — a time-tested concept now
taken to new levels by advances in technology — is a framework that empowers investors by

identifying and precisely targeting broad, persistent and long-recognized drivers of return.

Leveraging a world-class research team and strong history of expertise in systematic
strategies, BlackRock offers a range of solutions from smart beta to enhanced-factor
strategies designed to help investors pursue specific objectives. BlackRock manages
more than $125 billion in factor-based strategies.

INFRASTRUCTURE INVESTING

Infrastructure investments can provide clients with long-duration income, uncorrelated
returns, inflation protection, diversification and the potential for capital appreciation while
providing economies with economic growth, job creation and in many cases promoting
sustainability and providing other social benefits.

BlackRock has grown our infrastructure platform to more than $8.7 billion in assets,
including one of the industry’s leading renewable power franchises, a premier infrastructure
debt platform and an innovative Infrastructure Solutions business. In 2015, we developed
our footprint in Latin America through the acquisition of I Cuadrada, one of Mexico’s leading

infrastructure investment firms.

INNOVATION IN TECHNOLOGY
AND RISK MANAGEMENT
BLACKROCK’S FOUNDATION BUILT FOR CHANGE

BlackRock was founded on the idea that technology can help
us better understand and manage risk in our clients’ portfolios.
The combined power of human insight, financial science and
technology at the heart of our business enables us to solve our
clients’ most complex investment challenges.

ALADDIN: BLACKROCK’S UNIFYING TECHNOLOGY PLATFORM

Aladdin is BlackRock’s investment and risk management technology platform. It unites the
information, people and technology needed to manage money on a single platform, and helps
facilitate better decision-making, more effective risk management and more efficient
trading by investment professionals. In addition to supporting BlackRock’s asset management
business, Aladdin and its risk analytics are relied on by more than 160 institutions around the
world to manage and monitor their own investment portfolios.

ALADDIN COMBINES

SOPHISTICATED RISK

ANALYTICS

COMPREHENSIVE PORTFOLIO

MANAGEMENT, TRADING AND

OPERATIONAL TOOLS

TO DELIVER BETTER RESULTS FOR ITS 20,000 USERS

FOCUS ON RISK & QUANTITATIVE ANALYSIS (“RQA”)

BlackRock’s independent RQA team partners with investment, operational and technology

professionals to ensure deliberate, diversified and scaled risk-taking in our clients’

portfolios. Our risk management philosophy is rooted in a culture of constructive challenge

and is a prime example of the benefits of technology and people working together. This helps

BlackRock set the standard for risk management, analytics and investment technology.

CHARLIE HALLAC
CO-PRESIDENT
IN MEMORIAM

INNOVATION IN TECHNOLOGY
AND RISK MANAGEMENT
BLACKROCK’S FOUNDATION BUILT FOR CHANGE

Technology is democratizing access to information that was previously
inaccessible and changing the way consumers engage with the
world, including how they interact with their investment portfolios.

In 2015, BlackRock continued to make investments in technology
to better serve our clients — most notably through investing
in technology that expands our intermediary partners’ reach and
investment management capabilities and harnessing big data
to generate alpha.

FUTURE ADVISOR: ENHANCING DIGITAL WE ALTH MANAGEMENT

In 2015, BlackRock acquired FutureAdvisor, a leading digital wealth management platform

whose technology-enabled advice capabilities include:

• Personalized advice across the breadth of clients’ existing investment accounts
• Tax-efficient portfolio management
• Mobile and desktop interface, online account enrollment and multi-custodian support

Building on BlackRock’s diverse investment platform, Aladdin risk analytics, proprietary retire-
ment technology and experience as a long-standing enterprise technology partner, FutureAdvisor

and BlackRock’s combined solution can accelerate our intermediary partner firms’ abilities

to deliver high-quality, technology-enabled advice to an increasing number of investors.

LE VER AGING BIG DATA TO GENER ATE ALPHA

Every second, the world is generating massive amounts of data. BlackRock’s ability to
analyze data is increasing as computing power continues to grow — creating new opportunities
to generate consistent, differentiated alpha for our clients across quantitative and
fundamental investment styles.

BlackRock’s sophisticated machine learning and text analysis algorithms search for investment
signals by sifting through vast amounts of public data and aggregating millions of viewpoints
within seconds, enabling us to respond quickly to opportunities that other investors may
overlook. We leverage insights from the analysis of big data across our investment platform

with the goal of enhancing alpha generation for our clients.

95%

92%

71%

72%

Funda-
mental
Active
Equity

Scien-
tific
Active
Equity

Tax-
Exempt
Active
Fixed
Income

Taxable
Active
Fixed
Income

ASSETS ABOVE
BENCHMARK
OR PEER MEDIAN

5-YEAR PERIOD

DEDICATED PEOPLE
BLACKROCK’S FOUNDATION BUILT FOR CHANGE

It takes the dedication and connectivity of many people to fulfill
our mission of creating better financial futures for our clients.

Our people, whether they are managing portfolios, working with
clients or analyzing risk, are our most important asset. BlackRock
has grown our employee base from eight employees in a single
office at our founding to more than 12,000 in 30 countries today.
As we pursue our mission together, we are guided by our culture
and principles, which have remained unchanged since the founding
of the firm.

THE BLACKROCK PRINCIPLES

WE ARE:

Our principles define who we are and how
we operate. We place our clients’ interests
first, perform at the highest level on behalf
of our clients, shareholders and fellow
employees, stay connected, challenge
each other to collectively raise our game
and continuously innovate and bring the
best of BlackRock to our clients.

DEDICATED PEOPLE
BLACKROCK’S FOUNDATION BUILT FOR CHANGE

To continue to anticipate and adapt ahead of change, BlackRock’s
employees must be students of the markets and connected with one
another and with our clients. BlackRock fosters a culture of connectivity
and collaboration, learning and innovation across all levels of the
organization, so that we can create solutions for our clients’ future needs.

ENHANCING CONNECTIVIT Y ACROSS OUR INVESTMENT PL ATFORM

The BlackRock Investment Institute plays a key role in enabling BlackRock to anticipate

change in the investment landscape by keeping our investment professionals connected and

well-informed, and then sharing our insights with our clients.

The BlackRock Investment Institute aims to:

• Foster an ongoing dialogue and culture of knowledge-sharing across the investment platform

• Leverage the macroeconomic and policy expertise across the firm to develop investment insights

• Ensure we deliver value-added market and investment insights consistently to our clients

PROMOTING INNOVATION ACROSS THE ORGANIZ ATION

All employees are responsible for being students of technology. We are constantly challenging

ourselves and each other as to how we can better leverage technology to invest, to service our

clients and to improve the experience of BlackRock employees.

BlackRock’s annual hackathon, HACK:BLK, is just one example of our firm-wide innovation initiatives.
This global innovation challenge is focused on improving Aladdin and using technology to solve the
world’s most complex financial challenges. It provides employees with the opportunity to transform
their own ideas into a working prototype and collaborate with creative minds across the firm.
The 2015 Hackathon generated nearly 340 new ideas.

The 2016 Hackathon categories are designed to reflect the firm’s strategic focus areas and include:

• Advancing Alpha and Investment Strategies

• Pioneering New Client Solutions

• Enhancing Employee Experience

• New Frontier & Emerging Technologies

• Sustainable Investing and Social Good

GLOBAL EXECUTIVE COMMITTEE

Nearly every year, we take a fresh look at our organization with our Board of Directors to ensure

our leaders are in roles that can broaden their experiences and maximize their potential both

for BlackRock and our clients.

The strength of our Global Executive Committee has been built through our intentional approach
to talent development and is critical to leading an enduring company through times of
significant change.

Laurence D. Fink
Chairman & Chief
Executive Officer

Robert S. Kapito
President

David J. Blumer
Head of Europe,
Middle East & Africa

Geraldine Buckingham
Global Head of
Corporate Strategy

Robert W. Fairbairn
Global Head of Retail
& iShares

Robert L. Goldstein
Chief Operating Officer
& Global Head of
BlackRock Solutions

Bennett W. Golub, PhD
Chief Risk Officer

Philipp Hildebrand
Vice Chairman

J. Richard Kushel
Global Head of
Multi-Asset Strategies

Matthew J. Mallow
Chief Legal Officer

Mark S. McCombe
Global Head of
Institutional Client
Business and Co-
Head of BlackRock
Alternative Investors

Barbara G. Novick
Vice Chairman

Linda G. Robinson
Global Head of
Marketing
& Communications

Amy L. Schioldager
Global Head of Beta
Strategies

Gary S. Shedlin
Chief Financial Officer

Jeffrey A. Smith, PhD
Global Head of Human
Resources

Derek N. Stein
Global Head of
Business Operations
& Technology

Ryan Stork
Head of Asia Pacific

Mark K. Wiedman
Global Head of iShares

Kendrick R. Wilson III
Vice Chairman

FINANCIAL HIGHLIGHTS

($mm, except per share data)

2015

2014

2013

Revenue

$ 11,401

$ 11,081

$ 10,180

Net income attributable to BLK, GAAP

3,345

3,294

2,932

Net income attributable to BLK, as adjusted

Operating income, as adjusted

Operating margin, as adjusted

3,313

4,695

42.9%

3,310

4,563

42.9%

2,882

4,024

41.4%

Per Share

Diluted earnings, GAAP

Diluted earnings, as adjusted

Dividends declared

$ 19.79

$ 19.25

$ 16.87

19.60

8.72

19.34

7.72

16.58

6.72

Diluted weighted-average common shares

169,038,571

171,112,261

173,828,902

Total AUM (end of period)

$ 4,645,412

$ 4,651,895

$ 4,324,088

Please review the Important Notes on page 25 for information on certain non-GAAP figures shown above
and through page 24, as well as for source information on other data points on pages 2 through 24.

1414

MY FELLOW
SHAREHOLDERS:

L AURENCE D. FINK
Chairman and Chief Executive Officer

Since BlackRock’s founding 28 years ago,
we have earned the trust of our clients
and created value for our shareholders
by helping investors navigate the global
markets to build better financial futures.

Investors today are facing tremendous uncertainty
fueled by slowing economic growth, technological
disruption and social and geopolitical instability.
Particularly worrying is the adoption of negative interest
rates by central banks attempting to spark economic
growth. These actions are severely punishing the world’s
savers and creating incentives to reach for yield, pushing
investors into less liquid asset classes and increased
levels of risk, with potentially dangerous financial and
economic consequences.

Markets are still digesting the dramatic shift in the cost
of energy as a mix of technology and geopolitics has
transformed supply. Beyond its effect on energy prices,
technology continues to disrupt many industries, and
even societies, as it reshapes global employment
markets. In China, growth is slowing, with global
effects. In the U.S., the quality of corporate earnings
is deteriorating, with record share repurchases in
2015 driving valuations — an indication of companies
succumbing to the pressures of short-termism in place
of constructive, long-term strategies. Finally, electoral
politics is contributing to market uncertainty around
the globe. Polarizing elections in the U.S. and Germany;
government transitions in Spain, Taiwan and Canada;
political and economic crises in Brazil and the UK vote
in June on whether to leave the European Union will
all continue to drive volatility.

In such a hostile landscape, our mission for investors
has never been more vital, nor the responsibility we

feel to clients stronger. We believe the trust that
clients place in us must be earned every day, and that’s
why we remain committed to constant improvement
and reinvention.

BlackRock has always worked to anticipate and
embrace the changes affecting our clients, the
global markets and the financial services industry
itself. From our earliest efforts to build our own
technology to help clients quantify risk in their
portfolios, to providing investors with access to a
full range of active and index investment solutions
on a single platform, to expanding the use of new
investment strategies like factor investing and big
data, BlackRock has never stopped innovating —
and we never will.

Our commitment to our clients and to constantly
evolving our organization to meet their needs is also
central to our framework for creating long-term value
for our shareholders. In a letter I sent earlier this year
to CEOs of companies in which we invest on behalf
of our clients, I asked every CEO to lay out for their
shareholders a strategic framework for long-term
value creation — one that provides a perspective on
the future, articulates the impact of the ecosystem on
their strategy, explains how changes in that ecosystem
might force the company to change course and
identifies metrics that support a framework for long-
term sustainability. In this letter, it is my goal to do that
for you, BlackRock’s shareholders.

This year’s annual report explores how the foundation
we have constructed over the past 28 years at
BlackRock is built for change. It tells the story of how
evolution and transformation are core to how we serve
clients and the way we manage the firm; how our
global investment platform, use of technology and One
BlackRock culture allow us to serve our clients; how we
help our clients invest with purpose and advocate on
their behalf and how we are developing the firm’s next
generation of leaders — all of which will generate value
for our shareholders over the long term.

GENERATING LONG-TERM SHAREHOLDER VALUE

BlackRock’s Strategic Framework for Long-Term
Shareholder Value Creation
BlackRock’s framework for long-term shareholder
value creation is directly aligned with acting as a
fiduciary to our clients. Our goal is not simply to
sell individual products, but rather to understand
clients’ objectives and fashion cohesive solutions
that help achieve those objectives. While many firms
claim to do the same, no other firm can draw on our
breadth of active, index and alternative strategies;
of investment styles across asset classes and regions
and of risk management and technology capabilities.
And because our clients’ needs are constantly
changing, we regularly take a step back, think about
what products, services and solutions they will need
in the future, and invest in those areas.

We believe that investing in and building our platform
to meet client needs will enable us to deliver industry-
leading organic growth (net new asset flows from

clients), leverage scale to increase operating margins
over time and return capital to shareholders on a
consistent basis.

Our long-term shareholder value creation framework
was developed in close collaboration with our Board of
Directors and our Board continues to play an active role
in overseeing our strategies to deliver on the framework
and in measuring our progress against it. At each of
our full Board meetings, which take place a minimum
of six times per year and include at least one full
session dedicated to firm-level strategy, BlackRock’s
Board reviews our financial performance as well as the
high-level and business-specific strategies directed
at driving our results. The Board fosters constructive
debate with senior business leaders on their near-
and long-term strategies in the context of the markets,
the regulatory environment and the competitive
landscape in which we operate.

While our long-term value-creation framework has
remained consistent over the past several years, we
are constantly evaluating the ecosystem in which
we operate to identify areas that might require us to
pivot our strategy. For example, in response to market
volatility in recent quarters, we have sharpened our
focus on expense discipline and resource allocation
to ensure our ongoing investment spend is optimized
to achieve our long-term growth strategy.

In our strategic framework, we have set a firm-level
organic asset growth target of 5%. We seek to achieve
that goal by executing on our strategies across client
businesses, which we anticipate will drive organic base

DRIVERS OF SHAREHOLDER VALUE

%
5

%
4

%
3

%
9
.
2
4

%
9
.
2
% 4

4
.
1
4

2013

2014

2015

2013

2014

2015

LONG-TERM
ORGANIC
AUM GROWTH

1616

OPERATING
MARGIN,
AS ADJUSTED

fee growth in excess of 5%, as growth in our higher-fee
Retail and iShares businesses outpaces that in our
Institutional business.

Specifically, we are working to achieve:
• high-single-digit organic asset growth in Retail by

enhancing our product set, focusing on an outcome-
oriented approach to creating client solutions and
more deeply penetrating distribution channels;
• low-double-digit organic asset growth for iShares
by driving global market expansion and increasing
our global market share as we pursue growth
themes in client and product segments, including
core investments, financial instruments, precision
exposures and fixed income ETFs; and

• low-single-digit organic asset growth in Institutional,
by deepening client relationships through a solutions-
oriented approach, effective cross-selling and
leveraging BlackRock Solutions’ analytical and risk
management expertise.

We believe in scale as an important driver of operating
leverage, and capitalize on it in areas including index-
based investment strategies, brand building and our
technology platform and associated Aladdin business.

capabilities that enhance our ability to serve clients
and drive future organic growth. We target a dividend
payout ratio of 40–50% and implement a balanced
share repurchase program, while maintaining flexibility
to address strategic opportunities should they arise.

Tactically, generating shareholder value is a function
of enhancing our global investment platform while
leveraging our distribution capabilities and our global
reach. Over the past several years, we have made
significant investments in areas that are generating
growth and, therefore, value for shareholders today.

However, we do not generate value for our shareholders
in a vacuum. Fluctuations in market dynamics and
longer-term changes in the investment and regulatory
landscape, in technology and in demographics have
implications for our growth strategy and how we
execute on it. In the next few pages, I will discuss
how these developments are impacting our business
and the future needs of our clients, how BlackRock
performed against this backdrop in 2015 and how
BlackRock is adapting our strategy in light of changes
in our ecosystem in order to continue generating
consistent growth over time.

Finally, we are committed to leveraging our cash flow first
and foremost to invest in our business for growth, and
then returning all excess cash to shareholders through
a consistent and predictable capital management
policy. We use our cash to seed and co-invest in our
own products to facilitate time-to-market and align
interests with clients, and we take a targeted approach
to acquisitions, focusing on strategic, complementary

Executing on Our Strategic Framework in Volatile
Markets: BlackRock’s 2015 Results
The key driver of BlackRock’s performance in 2015
was not our actions during the year, but rather our
deliberate effort over time to build a diverse, future-
focused platform that positions our business to
generate results and deliver value to shareholders
in a changing world. We grew revenue and operating

2
7
.
8
$

14%
CAGR

2
7
.
7

2 $
7
.
6
$

$1.0B

$1.1B

s
e
s
a
h
c
r
u
p
e
R

e
r
a
h
S

0
6
.
9
1
$

4
3
.
9
1
$

9%
CAGR

8
5
.
6
1
$

2013

2014

2015

2013

2014

2015

CAPITAL
MANAGEMENT:
DIVIDENDS
PER SHARE

EARNINGS
PER SHARE,
AS ADJUSTED

income, as adjusted, each by 3% in 2015, despite more
than $150 billion of negative foreign exchange impact and
market depreciation on our assets under management.

We generated industry-leading organic asset growth
of 4% through $152 billion of long-term net inflows,
maintained a stable operating margin, as adjusted, at
42.9% while continuing to invest in our business
in a challenging market environment and returned
approximately $2.6 billion of capital to our shareholders,
representing a total payout ratio of 77%.

Organic growth was the result of global client demand
for both active and index solutions across asset
classes and across regions.

We saw $61 billion of net inflows in active and $92 billion
in index & iShares.

We constantly strive to improve our active performance
and, in 2015, we continued to invest in our team and
capabilities to build the industry’s most durable alpha-
generating franchise.

Flows into active products in 2015 were driven by the
strength of our active performance. At year end, 91% of
our active taxable fixed income assets and 90% of our
scientific active equity assets were above benchmark or
peer median for the three-year period. Our fundamental
active equity business benefited from our efforts to
reinvigorate and globalize the team, generating strong
returns for our clients, with 76% of assets above
benchmark or peer median for the one-year period.

We raised $39 billion of net inflows in Retail, $130 billion
in iShares and $27 billion in Institutional Active, offset
by $43 billion in low-fee Institutional Index outflows.

In Retail, we manage more than $540 billion on behalf
of clients and have significant room to increase
our share of global distribution. We are enhancing
distribution by harnessing our technological
advantages, building on existing strength with
integrated wealth management firms and leveraging
our differentiated platform to increase our presence
in the fast-growing Registered Investment Advisor
channel. We continually evolve our product set to
ensure we have both the active and index strategies
our clients need to achieve desired outcomes, and
we continue to invest in the BlackRock brand.

As ETF adoption spreads, we are forecasting global ETF
assets to double to $6 trillion over the next five years.
Growth in iShares will be driven by the growth of the
overall market — via new product uses and deeper and
broader adoption across client segments.

Across our Institutional Client base, we remain focused
on further deepening relationships, and 53% of our
largest institutional clients now have five or more products
with BlackRock. Using strategies across our diverse
platform, we create multi-asset, hybrid solutions
to solve our clients’ most complex investment needs.
We leverage the analytical capabilities of Aladdin,
our proprietary risk management and operational
platform, as well as the advisory capabilities of our
Client Solutions and Financial Markets Advisory teams
to provide the guidance our clients need to achieve
their long-term objectives.

Across client types, we generated $53 billion of net
inflows in equity, $77 billion in fixed income, $17 billion
in multi-asset and $5 billion in alternatives.

And the global and diverse nature of our platform is
resonating with clients, as we achieved net inflows
in excess of $1 billion in each of 13 countries, and a record
65 Retail and iShares funds each generated more than
$1 billion of net inflows for the year.

BlackRock’s diverse platform enables us to generate
stable cash flow through market cycles, which
positions us to invest for the long term. If we continue to
distinguish ourselves from our competitors — especially
in terms of organic growth — and strike an appropriate
balance between investing for future growth and
practical discretionary expense management, we will
continue to deliver value for our shareholders.

ADDRESSING CHANGES IN THE INVESTMENT
L ANDSCAPE: IMPACT ON OUR CLIENTS AND
OUR BUSINESS

BlackRock’s ability to create value for shareholders
depends on our ability to understand, anticipate and
adapt ahead of changes to the ecosystem in which
we operate.

Markets have struggled to digest the dramatic shift
in the cost of energy over the past 18 months.
Producers, exporters, equipment suppliers and other
sector participants have suffered, but we have yet
to see a noticeable uptick in spending as consumers
pay less at the pump. Markets are also weighed down
by oil-producing nations selling securities to meet
liquidity needs.

In China, the waning construction boom has left a lasting
impact on real estate values and bank balance sheets,
raising questions on how the country will fuel future
growth. Sell-offs in the Chinese markets and inconsistent
policy responses have heightened investor frustration
and uncertainty and threatened global growth.

Extraordinary monetary policy continues to be a major
driver of markets. According to Bloomberg, average
yields on more than $1 trillion of German debt have been
held below zero for a record stretch, and more than
two-thirds of Japanese government debt has a
negative yield. To be fair, these actions are the result
of central banks being asked to solve economic
problems without the help of coherent (and in the case
of Europe, cross-border) fiscal policies.

There has been plenty of discussion about how the
extended period of low interest rates has contributed
to inflation in asset prices. Investors are being forced
to trade liquidity for yield by taking on more risk and
investing in less liquid asset classes — a potentially
dangerous combination for retirement savers.

Not nearly enough attention has
been paid to the toll these low
rates — and now negative rates —
are taking on the ability of investors
to save and plan for the future.

Not nearly enough attention has been paid to the
toll these low rates — and now negative rates —
are taking on the ability of investors to save and plan
for the future. People need to invest more today to
achieve their desired annual retirement income in the
future. For example, a 35-year-old looking to generate
$48,000 per year in retirement income beginning at
age 65 would need to invest $178,000 today in a
5% interest rate environment. In a 2% interest rate
environment, however, that individual would need to
invest $563,000 (or 3.2 times as much) to achieve
the same outcome in retirement.

This reality has profound implications for economic
growth: consumers saving for retirement need
to reduce spending if they are going to reach their
retirement income goals, and retirees with lower
incomes will need to cut consumption as well.
A monetary policy intended to spark growth, then,
in fact, risks reducing consumer spending.

Against this backdrop, the world is undergoing
significant technological and demographic changes.
While the valuations of many high-growth tech firms
have fallen in recent months, automation and innovation
are accelerating, putting downward pressure on jobs
and transforming industries. Research cited in the
United States’ 2016 Economic Report of the President
suggests an 83% probability that automation
will replace jobs that have an hourly wage below $20.

Workers and governments must also navigate the
effects of increased longevity, as large segments of
the population are increasingly unable to support
themselves in old age, and we have yet to find effective
ways to fully harness their economic potential.

Governments around the world must adopt more
aggressive plans to address the retirement-savings
crisis and the resulting broad set of economic risks.

The failure of governments globally, including the
United States, to develop and execute plans for long-
term growth and address the dire need for investment
in infrastructure distorts the role of monetary policy,
diminishes employment opportunities and hurts savers
by robbing them of vibrant economies to invest in.

The United States, in particular, is at a crossroads
in our efforts to address the questions of technology,
longevity, climate change, trade and immigration —
not to mention massive geopolitical instability —
questions that should be front and center as the
country prepares to choose its next president.

Taken in totality, these and other risks create a level
of fragility in the global economy that we have not
seen since the lead-up to the financial crisis. While
there are some positive indicators, like sustained,
albeit modest, growth in Europe and the United States,
and the probability for ongoing recovery remains high,
the tail risk if that recovery falters has profound and
far-reaching consequences.

We are working across our platform at BlackRock
and with our clients around the world to understand
and anticipate the impact of these changing market
dynamics. It is in times like this, marked by volatility
and rapid change, that we believe BlackRock’s
differentiation can most benefit clients and truly
sets us apart as a firm.

INVESTING IN OUR FUTURE: STRATEGIC
INVESTMENTS THAT WILL DRIVE LONG-TERM
SHAREHOLDER VALUE

Our Technological Edge
From Aladdin’s humble beginnings on a single computer
sandwiched between the refrigerator and coffeemaker
to its current configuration as one of the world’s leading
technology platforms, BlackRock has always used the
power of technology to help our clients understand and
navigate markets. With more than 1,000 developers
and technology professionals today, we remain true to
our roots as a technology firm.

Aladdin — the heart and soul of our technology
platform — is more than a system: it is a common
language for the firm and a lens for problem
solving. Comprising 25 million lines of code, Aladdin
carries out 250,000 trades and billions of financial
calculations every day. We are constantly investing in,
building and evolving Aladdin, and are exploring new
ways to leverage its capabilities.

Beyond Aladdin, BlackRock is intensifying efforts to
leverage the industry’s most advanced technologies to
identify new sources of alpha, build better investment
products and portfolios and enhance client service.

Synthesizing Big Data
Second by second, the world is generating massive
amounts of data — as much as 2.5 quintillion (2.5 x
1018) bytes every day. IBM estimates that 90% of the
data in the world today was created in the last two
years. It’s critical to surface and harness the infinite
number of insights hidden in that data to generate
alpha for our clients.

BlackRock investment teams — including our Scientific
Active Equity (SAE), Model-Based Fixed Income and
Multi-Asset Strategies teams — utilize technology-
based tools and research methodologies, such as
machine learning, natural language processing,
scientific data visualization and distributed computing,
to produce sustainable alpha. We recently unified our
equity platform to better leverage SAE’s insights in
fundamental equity strategies. These tools can help
to discern what human indicators, such as analysts
and employees, are trying to tell us about individual
companies, as well as to construct better economic
indicators that may offer clues to the outlook for entire
industries and countries.

Focusing on Factors
Advances in data science and analytics are highlighting
the importance of factors, creating the potential for
deeper understanding of these return drivers and their
causes and effects.

Factor-based investing seeks to identify,
systematically target and capture broad, persistent
drivers of return. It formalizes, for example, the
concept of identifying inexpensive companies (value
investing) or high-quality balance sheets (quality
investing) — investment styles that have long been
part of the active management toolkit.

BlackRock manages more than $125 billion in factor-
based strategies across equities, fixed income and
commodities. The platform is led by Dr. Andrew Ang, who
joined us from Columbia Business School in 2015.
Dr. Ang is a pioneer in the field of factor investing and
the study of risk and return in asset prices.

Our platform combines “Smart Beta” and enhanced-
factor strategies. Smart Beta consists of long-only,
benchmark-driven strategies built to capture one or
multiple factors while pursuing a variety of outcomes —
such as reducing risk, enhancing returns or improving
diversification. Our enhanced-factor strategies are
dynamic multi-asset solutions managed with discretion,
including strategies such as risk parity or market-
neutral offerings.

New Ways of Reaching and Serving Clients
According to BlackRock’s 2015 Global Investor Pulse
Survey, 87% of investors use the Internet for some
form of financial activity, from online banking to
managing their investments. Understandably, clients
also want financial advisors to use technology to help
them save and invest. In 2015, we embraced this

revolution by acquiring the Silicon Valley start-up
FutureAdvisor, a cutting-edge solution for BlackRock’s
intermediary distribution partners.

FutureAdvisor, which operates within BlackRock
Solutions, allows us to strengthen our relationships
with our partner institutions by offering their
clients high-quality, technology-enabled advice and
thereby improve client acquisition and retention.

We are complementing FutureAdvisor’s capabilities,
which include personalized advice across the breadth of
clients’ existing investment accounts, with multi-asset
model portfolios, superior investment products and
risk management, as well as the power of Aladdin. Since
we closed the acquisition in the fourth quarter of 2015,
significant client interest has already produced several
business-to-business contracts.

Aladdin — the heart and soul of
our technology platform — is more
than a system: it is a common
language for the firm and a lens
for problem solving.

Enhancing Connectivity
Every year, we assess how BlackRock’s organizational
structure might be enhanced to stay ahead of changes
in the market and our clients’ needs. More than ever,
clients demand guidance and unified solutions that
span the globe, asset classes and the full spectrum of
products. This year, to better meet our clients’ evolving
investment objectives and to strengthen our investment
platform for the long term, we made a number of
changes to enhance connectivity across regions and
investment strategies.

In equities, our clients increasingly seek sophisticated
active solutions, whether fundamental or quantitative
strategies. To drive connectivity (and returns), we
recently combined our Fundamental Active Equity and
SAE groups into a unified active equity business to
allow our investment professionals to deliver alpha by
more effectively drawing on both SAE’s data expertise
and our fundamental franchise’s depth of research.

We also strengthened the role of our regional
leadership to drive local growth opportunities and
attract talent, helping support our goal of being
both global and local in how we manage investment
products and serve clients. We are sharpening our
focus on key growth areas, such as multi-asset
strategies, where our breadth of capabilities gives
us a strong competitive advantage.

Finally, we are creating a common, unified infrastructure
to support our investment professionals and
communicate with clients about our products and
investment insights. As part of this evolution, we

broadened the mandate of the BlackRock Investment
Institute (BII) to include deeper research capabilities
and more market insights for clients. BII is a vital tool
to offer our investment professionals a more cohesive
understanding of the world and provide better
insights to our clients.

Investing for Purpose
As a global citizen, BlackRock is committed to making
a positive impact on the countries in which we do
business and on the lives of our clients — from
providing clients investment products that align with
their values, to investing in infrastructure that both
delivers desirable investment outcomes and drives
economic growth, to helping clients think about and
plan their retirements more effectively.

Infrastructure investing helps
create a more fertile long-term
economic environment,
generates jobs and aligns with
the longer time horizons
afforded by greater longevity.

Sustainable Investing
Demand — and opportunity — are growing for
investment approaches that combine positive social
or environmental outcomes with financial results.

The diverse motivations driving this demand range
from risks posed by global challenges, asset owners’
missions and regulations and pressure from various
third-party constituents to demographic shifts, as
women and millennials gather more assets.

We launched BlackRock’s sustainable investing
platform to provide three primary categories of
sustainable investment strategies for clients who
seek to invest for purpose and performance:
• Exclusionary screens, which avoid specific companies

or industries not aligned with clients’ values;

• Environmental, social and governance (ESG) Factor

strategies, which incorporate ESG factors to identify
investment risks and opportunities; and

• Impact investing solutions, which target measurable

social or environmental outcomes and financial
returns.

BlackRock currently manages more than $200 billion
across sustainable investment strategies.

Survey indicated they would increase their allocation
to real assets in 2016. Infrastructure investments
offer clients diversification, yield, inflation protection
and potential for capital appreciation and long-
duration returns.

Infrastructure investments, however, are not just a
growing source of return for our clients — they
are a global necessity, providing numerous benefits
to society. According to The Economist, a $1 trillion
annual gap in global infrastructure investment is
decreasing productivity and economic opportunity.
Infrastructure investing helps create a more fertile
long-term economic environment, generates jobs
and aligns with the longer time horizons afforded by
greater longevity.

These growing needs create both an opportunity and
a responsibility to further develop our infrastructure
capabilities. We recently acquired Latin America’s
leading infrastructure firm, I Cuadrada, and are working
closely with governments and institutions around the
world to connect public projects and private capital.

This year, we also unified our multi-product infrastructure
and real estate businesses to form a Real Assets
group, leveraging their complementary capabilities and
expanding their global presence in a combined platform
with more than 320 professionals across 22 offices
globally, managing more than $30 billion in assets.

Closing the Retirement Gap with iRetire
Life expectancy continues to rise, but the structure
and quality of retirement planning and policy are not
keeping pace. For too long, investors have planned
for retirement using the outdated concept of the nest
egg, which provides little clarity on how much income
their investments will yield in retirement.

BlackRock is offering distribution partners a new
solution for their financial advisors to help turn client
focus from the nest egg to retirement income. iRetire
enables advisors to combine the best of BlackRock’s
technology and retirement thinking — model
portfolios, our CoRI® retirement income indices and
the risk management and analytics of Aladdin —
to help clients reach their retirement income goals.

iRetire is more than a technology and investment
platform: it’s part of BlackRock’s effort to help reframe
the retirement conversation. By providing advisors and
investors with a powerful tool to plan for the future, we
can not only help clients meet their financial goals, but
also change the retirement mind-set for all investors.

Building Infrastructure
Another increasingly attractive investment that also
provides a social benefit is infrastructure. Persistent
low rates and modest risk premiums are elevating
real assets, including infrastructure, as an attractive
way to achieve clients’ long-term financial goals:
53% of respondents to a BlackRock Institutional Client

Taking Responsibility
BlackRock’s fiduciary perspective and sense of
responsibility as a public company drive us not only
to secure better financial futures for our clients and
those they serve, but also to ensure the long-term
sustainability of our own firm and of the companies
we invest in on behalf of our clients.

BOARD OF DIRECTORS

Laurence D. Fink
Chairman & Chief
Executive Officer,
BlackRock, Inc.

Abdlatif Y. Al-Hamad
Director General/
Chairman of the Board
of Directors, Arab Fund
for Economic & Social
Development

Mathis Cabiallavetta
Former Vice Chairman
of the Board, Swiss Re

Pamela Daley
Former Senior Vice
President of Corporate
Business Development,
General Electric Company

William S. Demchak
President & Chief
Executive Officer,
The PNC Financial
Services Group, Inc.

Jessica Einhorn
Former Dean,
Paul H. Nitze School of
Advanced International
Studies (SAIS) at The
Johns Hopkins University

Fabrizio Freda
President & Chief
Executive Officer,
The Estée Lauder
Companies Inc.

Murry S. Gerber
Former Chairman
& Chief Executive Officer,
EQT Corporation

James Grosfeld
Former Chairman
& Chief Executive Officer,
Pulte Homes, Inc.

Robert S. Kapito
President,
BlackRock, Inc.

David H. Komansky
Former Chairman
& Chief Executive Officer,
Merrill Lynch & Co., Inc.

Sir Deryck Maughan
Former Senior Advisor,
Kohlberg Kravis Roberts

Cheryl D. Mills
Chief Executive Officer,
BlackIvy Group

Gordon Nixon
Former President & Chief
Executive Officer, RBC

Thomas H. O’Brien
Former Chairman
& Chief Executive Officer,
The PNC Financial
Services Group, Inc.

Ivan G. Seidenberg
Former Chairman
of the Board & Chief
Executive Officer,
Verizon Communications

Marco Antonio
Slim Domit
Chairman of the Board
of Directors,
Grupo Financiero Inbursa

John Varley
Former Chief Executive,
Barclays PLC

Susan L. Wagner
Former Vice Chairman,
BlackRock, Inc.

Financial Regulatory Reform
Financial regulatory reform began with the banking
system and has expanded over the past few years
to encompass an increasing number of capital markets
issues as well as other aspects of asset management.
Just a few examples illustrate the breadth of change that
is under way: the chair of the Securities and Exchange
Commission has laid out a series of initiatives addressing
investment advisors and mutual funds, the UK’s Financial
Conduct Authority has announced its asset management
market study and the U.S. Department of Labor
is changing the landscape for retirement accounts.

BlackRock supports financial regulatory reform that
increases transparency, protects investors and
facilitates responsible growth of capital markets while
preserving consumer choice, assessing benefits versus
implementation costs and maintaining a level playing
field across products. Our Government Relations
and Public Policy team has provided thought leadership
on a wide range of regulatory reform issues based on
these guiding principles.

Investment Stewardship
To engage effectively with companies in which we invest
on behalf of our clients, we have built the industry’s
largest investment stewardship team. This global
team engages with approximately 1,500 companies per
year on a range of issues and votes at more than
15,000 shareholder meetings worldwide on more than
130,000 proposals.

We continue to encourage these companies to create
long-term shareholder value by asking CEOs to lay
out a strategic framework for long-term value creation
and affirm that it has been reviewed by their board.
The goal is not only to diminish short-term pressures
in financial markets, but also to create a more vibrant
and sustainable economic environment.

Generating sustainable long-term returns for our
clients also requires us to factor the ESG challenges
companies face today, such as climate or changing
labor markets, into our investment analysis and
decision-making processes. To better inform our
portfolio managers on these issues, we have integrated
ESG ratings and data on our portfolio companies
directly into Aladdin.

Corporate Sustainability at BlackRock
BlackRock’s approach to corporate sustainability is
critical to delivering on our framework for long-term
shareholder value creation. We embrace a long-term
perspective in the way we operate, invest, serve our
clients and give back to the communities in which we
and our clients live and work.

As an asset management firm, BlackRock is a
human-capital intensive business, and our long-term
sustainability depends on our people. We’re dedicated to
developing and retaining talent, fostering a strong firm-
wide culture and maintaining an inclusive and diverse

corporate environment. We also firmly believe in a pay-
for-performance culture, aligning employee incentives
and compensation with company-level performance.

With more than 12,000 employees throughout
offices in 30 countries, BlackRock is deliberate in
our commitment to using resources responsibly. We
continuously look for new ways to reduce or offset our
environmental impact. By investing in LED technology,
upgrading mechanical equipment, using renewable
hydroelectric power for two of our largest data centers
and pursuing a high utilization rate of our corporate
offices, BlackRock has reduced our carbon footprint
and cut our energy consumption by 11% per employee
since 2012.

BlackRock’s fiduciary perspective
and sense of responsibility as a
public company drive us not only to
secure better financial futures
for our clients and those they serve,
but also to ensure the long-term
sustainability of our own firm and
of the companies we invest in on
behalf of our clients.

We pride ourselves on our reputation for conducting
business activities in the highest ethical and professional
manner, guided by our corporate governance principles
and practices as well as strong Board oversight.

OUR BOARD OF DIRECTORS:
ENGAGED AND VITAL TO SUCCESS

It has always been important to me that BlackRock’s
Board of Directors function as a key strategic partner
and sounding board for management, challenging
us to be better and more innovative. This perspective
is in line with our broader corporate governance
philosophy: Boards should be deeply engaged,
providing informed and frank guidance and feedback,
and rely on an open dialogue with management, based
on a clear understanding of short- and longer-term
strategic plans.

BlackRock’s Board continues to play just such an integral
oversight role in our growth and success. As I mentioned
earlier, at each Board meeting, we review components of
our strategy with our Directors, and each discussion
results in thorough dialogue and robust debate, which
our leadership team embraces. Those discussions
are not without controversy and disagreement — and
those tough conversations push us to make the difficult
decisions required to build a better BlackRock. The
Board plays an active part in our talent development as
well, dedicating at least one meeting per year to talent to
ensure we have the right people in place to execute on our

strategies now and are developing others to fill these
roles in the future. Building a generation of leaders that
is open to both Board and external ideas is vital to
BlackRock’s long-term success.

ever had at BlackRock. In designing a plan to develop
the next generation of leaders, we aim to elevate
people who embody BlackRock’s principles — our
identity as fiduciaries and innovators.

Our Board also takes an active role in ensuring
best corporate governance practices, and in 2015,
incorporated feedback from shareholders on
proxy access policies and practices to inform the
management proposal for proxy access included
in this year’s Proxy Statement.

It has always been important
to me that BlackRock’s Board of
Directors function as a key
strategic partner and sounding
board for management,
challenging us to be better
and more innovative.

As BlackRock has evolved, so has our Board’s pursuit
of strong corporate governance and standards of
excellence. This year, Gordon Nixon joined the Board,
having led Royal Bank of Canada, a global and
diversified financial services organization, at a time
of substantial regulatory and economic change.

BlackRock is fortunate to have the partnership and
oversight of a strong and multi-faceted Board that
offers diverse perspectives rooted in deep experience
in finance, industry, academia and government. Our
Directors’ counsel is invaluable, and I thank them for
their service.

OUR CULTURE: FIDUCIARIES AND INNOVATORS

BlackRock’s fiduciary and innovative culture guides us
as we work to reinvent and improve the firm. Developing
talent and new leadership has always been a core part
of who we are and drives our ongoing assessment of our
people and organization to surface ways to improve.

In keeping with this commitment, this year we
again announced a number of enhancements to our
leadership team — as we did in 2012 and 2014 —
many of which I touched on above. Each time, these
organizational changes have been a great benefit
to our clients, our shareholders and the development
of the leaders themselves.

While we have many talented leaders who have lived
those principles, no one embodied that identity more
than Charlie Hallac, our Co-President, who passed
away last year.

Charlie was BlackRock, and to all of us who cherished
him as a friend and part of our families for so many
years, it is still difficult to adjust to working in a world
without him. As much as anyone, he helped shape our
culture and the firm’s passion for innovation — and
he envisioned using technology to transform our industry
in unique and powerful ways. But what enabled him
to turn this vision into reality was his ability to lead
people — to see their potential and develop it. He
believed deeply that technology without people was
nothing. That vision continues to guide us today: even as
we invest in powerful new technologies, developing our
people is the most fundamental element of our success.

THE OPPORTUNIT Y AHEAD

Each year, I have the privilege of writing to you about
BlackRock to recognize our accomplishments, to
address our challenges and to share with you our
outlook and plans for the future. And each year, I am
more excited about the pace and scale of change
that the firm is undertaking to fulfill our unwavering
focus on serving our clients.

As we continue to enhance and implement our strategies
to do that, we will simultaneously advance our strategic
framework for long-term shareholder value creation.

The uncertain environment we face, while unsettling
for many, is also an opportunity to look out to the
future, to use technology in innovative ways and to
build on our platform.

But most important, it is an opportunity to shape the
future of our industry — and, more than ever before, to
fulfill our founding mission of shaping better financial
futures for our clients.

Sincerely,

I’m incredibly proud of our depth of talent, and I believe
that we now have the strongest leadership team we’ve

Laurence D. Fink
Chairman and Chief Executive Officer

IMPORTANT NOTES
IMPORTANT NOTES

OPINIONS

Opinions expressed through page 24 are those of
BlackRock, Inc. as of March 2016 and are subject
to change.

BL ACKROCK DATA POINTS

All data through page 24 reflects as-adjusted full-year
2015 results or as of December 31, 2015, unless
otherwise noted. 2015 organic growth is defined as
full-year 2015 net flows divided by assets under
management (AUM) for the entire firm, a particular
segment or particular product as of December 31, 2014.
Long-term product offerings include active and
passive strategies across equity, fixed income, multi-
asset and alternatives, and exclude AUM and flows from
the cash management and advisory businesses.

GA AP AND AS-ADJUSTED RESULTS

See pages 35–36 of the Financial Section for explanation
of the use of Non-GAAP Financial Measures.

PERFORMANCE NOTES

data shown reflects information for all actively and
passively managed equity and fixed income accounts,
including U.S. registered investment companies,
European-domiciled retail funds and separate accounts
for which performance data is available, including
performance data for high-net-worth accounts available
as of November 30, 2015. The performance data does
not include accounts terminated prior to December 31,
2015 and accounts for which data has not yet been
verified. If such accounts had been included, the
performance data provided may have substantially
differed from that shown.

Performance comparisons shown are gross-of-fees
for institutional and high-net-worth separate accounts,
and net-of-fees for retail funds. The performance
tracking shown for index accounts is based on
gross-of-fees performance and includes all institutional
accounts and all iShares funds globally using an index
strategy. AUM information is based on AUM available
as of December 31, 2015 for each account or fund in
the asset class shown without adjustment for overlapping
management of the same account or fund. Fund
performance reflects the reinvestment of dividends
and distributions.

Past performance is not indicative of future results.
Except as specified, the performance information
shown is as of December 31, 2015 and is based on
preliminary data available at that time. The performance

Source of performance information and peer medians
is BlackRock, Inc. and is based in part on data
from Lipper Inc. for U.S. funds and Morningstar, Inc.
for non-U.S. funds.

The following contains information from BlackRock’s Form 10-K as filed on February 26, 2016.

BLACKROCK, INC.
FORM 10-K
TABLE OF CONTENTS

PART I

Item 1

Business

Item 1A Risk Factors

Item 1B Unresolved Staff Comments

Item 2

Properties

Item 3

Legal Proceedings

Item 4 Mine Safety Disclosures

PART II

Item 5 Market for Registrant’s Common Equity, Related Stockholder Matters

and Issuer Purchases of Equity Securities

Item 6

Selected Financial Data

Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A Quantitative and Qualitative Disclosures About Market Risk

Item 8

Financial Statements and Supplemental Data

Item 9

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9A Controls and Procedures

Item 9B Other Information

PART III

Item 10 Directors, Executive Officers and Corporate Governance

Item 11 Executive Compensation

Item 12 Security Ownership of Certain Beneficial Owners and Management

and Related Stockholder Matters

Item 13 Certain Relationships and Related Transactions, and Director Independence

Item 14 Principal Accountant Fees and Services

PART IV

Item 15 Exhibits and Financial Statement Schedules

Signatures

Management seeks to achieve attractive returns for
stockholders over time by, among other things, capitalizing
on the following factors:

• the Company’s focus on strong performance providing

alpha for active products and limited or no tracking error
for index products;

• the Company’s global reach and commitment to best

practices around the world, with approximately 48% of
employees outside the United States supporting local
investment capabilities and serving clients, and
approximately 42% of total AUM managed for clients
domiciled outside the United States;

• the Company’s diversified active and index product

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

• the Company’s differentiated client relationships and

fiduciary focus, which enable effective positioning toward
changing client needs and macro trends including the
secular shift to passive investing and ETFs, a focus on
income and retirement, and barbelling of risk using index
and active products, including alternatives; and

• the Company’s longstanding commitment to risk

management and the continued development of, and
increased interest in, BRS products and services.

BlackRock operates in a global marketplace characterized
by a high degree of market volatility and economic
uncertainty, factors that can significantly affect earnings
and stockholder returns in any given period.

The Company’s ability to increase revenue, earnings and
stockholder value over time is predicated on its ability to
generate new business, including business in BRS products
and services. New business efforts depend on BlackRock’s
ability to achieve clients’ investment objectives in a manner
consistent with their risk preferences and to deliver
excellent client service. All of these efforts require the
commitment and contributions of BlackRock employees.
Accordingly, the ability to attract, develop and retain
talented professionals is critical to the Company’s long-term
success.

PART I

Item 1. Business

OV ER VIE W

BlackRock, Inc. (together, with its subsidiaries, unless the
context otherwise indicates, “BlackRock” or the “Company”)
is a leading publicly traded investment management firm
with $4.645 trillion of assets under management (“AUM”) at
December 31, 2015. With employees in more than 30
countries who serve clients in over 100 countries across the
globe, BlackRock provides a broad range of investment and
risk management services to institutional and retail clients
worldwide.

Our diverse platform of active (alpha) and index (beta)
investment strategies across asset classes enables the
Company to tailor investment outcomes and asset allocation
solutions for clients. Our 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® exchange-traded funds (“ETFs”),
separate accounts, collective investment funds and other
pooled investment vehicles. We also offer our BlackRock
Solutions® (“BRS”) investment and risk management
technology platform, Aladdin®, risk analytics and advisory
services and solutions to a broad base of institutional
investors. The Company is highly regulated and serves its
clients as a fiduciary. We do not engage in proprietary
trading activities that could conflict with the interests of our
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
relationships by marketing its services to investors directly
and through financial professionals and pension
consultants, and establishing third-party distribution
relationships.

BlackRock is an independent, publicly traded company, with
no single majority shareholder and over two-thirds of its
Board of Directors consisting of independent directors. At
December 31, 2015, The PNC Financial Services Group, Inc.
(“PNC”) held 21.1% of BlackRock’s voting common stock and
22.2% of BlackRock’s capital stock, which includes
outstanding common stock and nonvoting preferred stock.

FIN A N C IA L H IGH L IGH TS

(in millions, except per share data)

2015

2014

2013

2012

2011

Total revenue

Operating income

Operating margin

$ 11,401

$ 11,081

$ 10,180

$ 9,337

$ 9,081

$ 4,664

$ 4,474

$ 3,857

$ 3,524

$ 3,249

40.9%

40.4%

37.9%

37.7%

35.8%

5-Year
CAGR(4)

Nonoperating income (expense)(1)

(69)

(49)

(36)

$ (116)

N/A

Net income attributable to BlackRock, Inc.

$ 3,345

$ 3,294

$ 2,932

$ 2,458

$ 2,337

Diluted earnings per common share

$ 19.79

$ 19.25

$ 16.87

$ 13.79

$ 12.37

(in millions, except per share data)

2015

2014

2013

2012

2011

10%

13%

5-Year
CAGR(4)

$4,695

$4,563

$4,024

$3,574

$3,392

42.9%

41.4%

40.4%

39.7%

$ (70)

$ (56)

$ (42)

$ (113)

N/A

$3,313

$19.60

$3,310

$19.34

$2,882

$16.58

$2,438

$13.68

$2,239

$11.85

12%

As adjusted(2):

Operating income

Operating margin(2)

Nonoperating income (expense)(1)

Net income attributable to BlackRock, Inc.(3)

Diluted earnings per common share(3)

N/A — not applicable

(1) Net of net income (loss) attributable to noncontrolling interests (“NCI”) (redeemable and nonredeemable).

(2) BlackRock reports its financial results in accordance with accounting principles generally accepted in the United States (“GAAP”); however,

management believes evaluating the Company’s ongoing operating results may be enhanced if investors have additional non-GAAP financial
measures.

See Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations — Non-GAAP Financial Measures, for further
information on non-GAAP financial measures and for as adjusted items for 2015, 2014, and 2013. In 2012, operating income, as adjusted, included
an adjustment related to estimated lease exit costs initially recorded in 2011 and the contribution to certain of the Company’s bank-managed short-
term investment funds (“STIFs”). In 2011, operating income, as adjusted, included U.K. lease exit costs which represent costs to exit two locations in
London and restructuring charges. In 2012 and 2011, 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 did not
impact BlackRock’s book value. Compensation expense associated with appreciation (depreciation) on investments related to certain BlackRock
deferred compensation plans has been excluded as returns on investments set aside for these plans, which substantially offset this expense, are
reported in nonoperating income (expense).

(3) Net income attributable to BlackRock, Inc., as adjusted, and diluted earnings per common share, as adjusted exclude the after-tax impact of the

items listed above and also include the effect on deferred income tax expense resulting from certain income tax matters.

(4) Percentage represents compounded annual growth rate (“CAGR”) over a five-year period (2010-2015).

ASSETS UNDER MANAGEMENT

The Company’s AUM by product type for the years 2011 through 2015 is presented below.

(in millions)

Equity

Fixed income

Multi-asset

Alternatives

Long-term

Cash management

Advisory

Total

December 31,

2015

2014

2013

2012

2011

$ 2,423,772

$ 2,451,111

$ 2,317,695

$ 1,845,501

$ 1,560,106

1,422,368

1,393,653

1,242,186

1,259,322

1,247,722

376,336

112,839

377,837

111,240

341,214

111,114

267,748

109,795

225,170

104,948

4,335,315

4,333,841

4,012,209

3,482,366

3,137,946

299,884

10,213

296,353

21,701

275,554

36,325

263,743

45,479

254,665

120,070

$ 4,645,412

$ 4,651,895

$ 4,324,088

$ 3,791,588

$ 3,512,681

5-Year
CAGR(1)

15%

(42)%

(1) Percentage represents CAGR over a five-year period (2010-2015).

Component changes in AUM by product type for the five years ended December 31, 2015 are presented below.

(in millions)

Equity

Fixed income

Multi-asset

Alternatives

Long-term

Cash management

Advisory

Total

December 31,
2010

Net Inflows
(Outflows)

Adjustment/
Acquisitions(1)

Market
Change

FX Impact

December 31,
2015

5-Year
CAGR(2)

$ 1,694,467

$ 252,591

$ (16,112)

$ 605,577

$ (112,751)

$ 2,423,772

1,141,324

185,587

109,738

3,131,116

279,175

150,677

122,375

146,838

(6,541)

515,263

25,411

(134,686)

2,968

6,442

21,345

14,643

—

230,218

62,110

(6,310)

(74,517)

(24,641)

(5,393)

1,422,368

376,336

112,839

891,595

(217,302)

4,335,315

3,487

1,676

(8,189)

(7,454)

299,884

10,213

$ 3,560,968

$ 405,988

$ 14,643

$ 896,758

$ (232,945)

$ 4,645,412

15%

(42)%

(1) Amounts include AUM acquired from Claymore Investments, Inc. (“Claymore”) in March 2012, Swiss Re Private Equity Partners (“SRPEP”) in

September 2012, Credit Suisse’s ETF franchise (“Credit Suisse ETF Transaction”) in July 2013 and MGPA in October 2013. Amounts also include AUM
acquired in the acquisitions of certain assets of BlackRock Kelso Capital Advisors LLC (“BKCA”) in March 2015, Infraestructura Institucional and
FutureAdvisor in October 2015, and other reclassifications to conform to current period combined AUM policy and presentation. Amounts also
include Barclays Global Investors merger-related outflows due to manager concentration considerations prior to the third quarter of 2011 and
outflows from scientific active equity performance prior to the second quarter of 2011. As a result of client investment manager concentration limits
and the scientific active equity performance, outflows were expected to occur for a period of time subsequent to the close of the transaction.

(2) Percentage represents CAGR over a five-year period (2010-2015).

AUM represents the broad range of financial assets we
manage for clients on a discretionary basis pursuant to
investment management agreements that are expected to
continue for at least 12 months. In general, reported AUM
reflects the valuation methodology that corresponds to the
basis used for billing (for example, net asset value). Reported
AUM does not include assets for which we provide risk
management or other forms of nondiscretionary advice, or
assets that we are retained to manage on a short-term,
temporary basis.

Investment management fees are typically expressed as a
percentage of AUM. We also earn performance fees on
certain portfolios relative to an agreed-upon benchmark or
return hurdle. On some products, we also may earn
securities lending revenue. In addition, BlackRock offers its
proprietary Aladdin investment system as well as risk

management, outsourcing and advisory services, to
institutional investors under the BRS name. Revenue for
these services may be based on several criteria including
value of positions, number of users, accomplishment of
specific deliverables or other objectives.

At December 31, 2015, total AUM was $4.645 trillion,
representing a CAGR of 5% over the last five years. AUM
growth during the period was achieved through the
combination of net market valuation gains, net inflows and
acquisitions, including Claymore and SRPEP, which
collectively added $13.7 billion of AUM in 2012, Credit Suisse
and MGPA, which collectively added $26.9 billion of AUM in
2013 and BKCA, Infraestructura Institucional and
FutureAdvisor, which collectively added $2.2 billion of AUM
in 2015. Our AUM mix encompasses a broadly diversified
product range, as described below.

The Company considers the categorization of its AUM by client type, product type, investment style and client region useful to
understanding its business. The following discussion of the Company’s AUM will be organized as follows:

Client Type

‘ Retail

‘ iShares

‘ Institutional

CLI ENT TYPE

Our organizational structure was designed to ensure that
strong investment performance is our highest priority, and
that we best align with our clients’ needs to capitalize on
broader industry trends. Furthermore, our structure

Product Type

‘ Equity

‘ Fixed Income

‘ Multi-asset

‘ Alternatives

‘ Cash Management

Client Region

‘ Americas

‘ Europe, the Middle East and Africa (“EMEA”)

‘ Asia-Pacific

facilitates strong teamwork globally across both functions
and regions in order to enhance our ability to leverage best
practices to serve our clients and continue to develop our
talent. Specifically, our investments functions are split into
distinct strategies: Active Equity and Fixed Income, Beta,
Multi-Asset, Alternatives and Trading/Liquidity.

We serve 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. iShares is presented as a separate
client type below, with investments in iShares by institutions
and retail clients excluded from figures and discussions in
their respective sections below.

AUM by investment style and client type at December 31, 2015 is presented below.

(in millions)

Active

Non-ETF Index

iShares

Long-term

Cash management

Advisory

Total AUM

Retail

iShares

Institutional

Total

$ 499,820

41,305

—

1,092,561

$ 962,852

$ 1,462,672

1,738,777

—

1,780,082

1,092,561

541,125

1,092,561

2,701,629

4,335,315

27,406

—

272,478

10,213

299,884

10,213

$ 568,531

$ 1,092,561

$ 2,984,320

$ 4,645,412

BlackRock serves retail investors globally through a wide
array of vehicles across the active and passive spectrum,
including separate accounts, open-end and closed-end
funds, unit trusts and private investment funds. Retail
investors are served principally through intermediaries,
including broker-dealers, banks, trust companies, insurance
companies and independent financial advisors. Clients
invest primarily in mutual funds, which totaled $446.4

billion, or 83%, of retail long-term AUM at year-end, with the
remainder invested in private investment funds and
separately managed accounts (“SMAs”). The majority
(92%) of long-term retail AUM is invested in active products,
although this is impacted by iShares being shown
separately. Retail represented 13% of long-term AUM at
December 31, 2015 and 35% of long-term base fees for
2015.

Component changes in retail long-term AUM for 2015 are presented below.

(in millions)

Equity

Fixed income

Multi-asset class

Alternatives

Total Retail

December 31,
2014

Net Inflows

Acquisitions(1)

Market
Change

FX
Impact

December 31,
2015

$ 200,445

$ 8,543

$ —

$(10,040)

$(5,193)

$ 193,755

189,820

125,341

18,723

31,114

(1,307)

162

$ 534,329

$ 38,512

—

366

1,293

$ 1,659

(5,691)

(8,108)

(177)

(2,590)

(985)

(591)

212,653

115,307

19,410

$(24,016)

$(9,359)

$ 541,125

(1) Amounts represent $1.3 billion of AUM acquired in the BKCA acquisition in March 2015 and $366 million of AUM acquired in the FutureAdvisor

acquisition in October 2015. The FutureAdvisor acquisition amount does not include AUM that was held in iShares holdings.

The retail client base is diversified geographically, with 70%
of long-term AUM managed for investors based in the
Americas, 24% in EMEA and 6% in Asia-Pacific at year-end
2015.

• U.S. retail long-term net inflows of $18.7 billion, or 5%
organic growth, were led by fixed income net inflows of
$20.9 billion. Fixed income net inflows were diversified
across exposures and products, with strong flows into
our unconstrained, high yield and core bond offerings.
Equity net inflows of $1.3 billion were driven by flows
into our index mutual funds, and we continued to make
progress on the reinvigoration and globalization of our
fundamental active equity business. Multi-asset class
net outflows of $2.5 billion were primarily due to a large
single-client transition out of mutual funds into a series
of iShares across asset classes.

• International retail long-term net inflows of $19.8

billion, representing 12% organic growth, were positive
across major regions and diversified across asset
classes. Fixed income products generated net inflows of
$10.3 billion, led by short duration and unconstrained
strategies as investors looked to manage duration and
generate yield in their portfolios. Multi-asset class net
inflows of $1.2 billion were driven by flows into managed
volatility strategies and the cross-border version of our
Multi-Asset Income fund. Equity net inflows of $7.2
billion reflected strong flows into international equities.
Alternatives net inflows totaled $1.2 billion, and we
remain committed to broadening the distribution of
alternatives funds to bring institutional quality
alternatives to retail investors.

iShares

iShares is the leading ETF provider in the world, with $1.1 trillion of AUM at December 31, 2015 and was the top asset gatherer
globally in 20151 with $129.9 billion of net inflows for an organic growth rate of 13%. Equity net inflows of $78.4 billion were
driven by flows into the Core Series and into funds with broad developed market equity exposures, partially offset by outflows
from emerging market products. Record fixed income net inflows of $50.3 billion were diversified across exposures and
product lines, led by flows into core, corporate and high yield bond funds. iShares multi-asset class and alternatives funds
contributed a combined $1.2 billion of net inflows, primarily into core allocation funds. iShares represented 25% of long-term
AUM at December 31, 2015 and 35% of long-term base fees for 2015.

Component changes in iShares AUM for 2015 are presented below.

(in millions)

Equity

Fixed income

Multi-asset class

Alternatives(1)

Total iShares

December 31,
2014

Net
Inflows

Market
Change

FX
Impact

December 31,
2015

$ 790,067

$ 78,408

$(32,349)

$(12,970)

$ 823,156

217,671

1,773

14,717

50,309

1,074

(7,508)

(6,282)

(90)

(2,160)

(27)

(133)

254,190

2,730

12,485

$ 1,024,228

$ 129,852

$(42,107)

$(19,412)

$ 1,092,561

(1) Amounts include commodity iShares.

Our broad iShares product range offers investors a precise,
transparent and efficient way to tap market returns and gain
access to a full range of asset classes and global markets
that have been difficult for many investors to access, as well
as the liquidity required to make adjustments to their
exposures quickly and cost-efficiently.

• U.S. iShares AUM ended 2015 at $811.4 billion with $97.2
billion of net inflows driven by strong demand for the Core
Series and broad developed market equities as well as a
diverse range of fixed income products.2 In 2015, we saw
increased investor focus on risk-aware, “smart beta”
products, with our minimum volatility funds raising $8.3
billion.

• International iShares AUM ended 2015 at $281.1 billion
with net inflows of $32.7 billion led by fixed income net
inflows of $19.2 billion, primarily into yield-focused
categories including high yield and investment grade
corporate debt.2 Our international Core Series ranges in
Canada and Europe demonstrated solid results in their
second year, raising a combined $14.1 billion in net
inflows as we continue to expand our international
presence among buy-and-hold investors.

Institutional

BlackRock’s institutional AUM is well diversified by both
product and region, and we serve institutional investors on
six continents in sub-categories including: pensions,
endowments and foundations, official institutions, and
financial institutions.

Component changes in Institutional long-term AUM for 2015 are presented below.

(in millions)

Active:

Equity

Fixed income

Multi-asset class

Alternatives

Active subtotal

Index:

Equity

Fixed income

Multi-asset class

Alternatives

Index subtotal

December 31, 2014

Net Inflows
(Outflows)

Acquisition(1)

Market
Change

FX
Impact

December 31, 2015

$ 125,143

(462)

$ —

960

$ (4,199)

$ 121,442

518,590

242,913

72,514

959,160

1,335,456

467,572

7,810

5,286

1,816,124

5,690

18,409

3,109

26,746

(33,711)

(10,169)

(1,009)

1,793

(43,096)

—

560

—

(1,220)

1,074

(175)

(8,632)

(10,355)

(1,067)

639

(24,253)

6,157

2,317

(289)

(924)

(22,483)

(18,623)

(254)

(152)

514,428

252,041

74,941

962,852

1,285,419

441,097

6,258

6,003

7,261

(41,512)

1,738,777

Total Institutional

$ 2,775,284

$ (16,350)

$ 560

$ 7,900

$ (65,765)

$ 2,701,629

(1) Amounts represent $560 million of AUM acquired in the Infraestructura Institucional acquisition in October 2015.

Source: BlackRock; Bloomberg

Regional iShares amounts based on jurisdiction of product, not underlying client

Institutional active AUM ended 2015 at $962.9 billion,
reflecting $26.8 billion of net inflows. Institutional active
represented 22% of long-term AUM and 20% of long-term
base fees. Growth in AUM reflected continued strength in
multi-asset class products with net inflows of $18.4 billion
reflecting ongoing demand for solutions offerings and the
LifePath® target-date suite. Our top-performing fixed
income platform generated net inflows of $5.7 billion,
diversified across exposures. Alternatives net inflows of $3.1
billion were led by inflows into infrastructure and
alternatives solutions offerings. In addition, 2015 was
another strong fundraising year for illiquid alternatives, and
we raised over $5 billion in new commitments, which will be
a source of future net inflows. Equity net outflows of $0.5
billion reflected fundamental net outflows of $2.2 billion,
which were partially offset by scientific net inflows of $1.7
billion.

Institutional index AUM totaled $1.739 trillion at
December 31, 2015, reflecting net outflows of $43.1 billion.
Equity net outflows of $33.7 billion were primarily due to
low-fee global and regional index equity outflows as clients
looked to re-allocate, re-balance or meet their cash needs.
Fixed income net outflows of $10.2 billion were concentrated
in local currency mandates, linked to outflows from liability
management strategies. Institutional index represented
40% of long-term AUM at December 31, 2015 and accounted
for 10% of long-term base fees for 2015.

The Company’s institutional clients consist of the following:

• Pensions, Foundations and Endowments. BlackRock is
among the world’s largest managers of pension plan
assets with $1.847 trillion, or 68%, of long-term

institutional AUM managed for defined benefit, defined
contribution and other pension plans for corporations,
governments and unions at December 31, 2015. The
market landscape is shifting from defined benefit to
defined contribution, driving strong flows in our defined
contribution channel, which had $36.2 billion of long-
term net inflows for the year, or 6% organic growth,
driven by continued demand for our LifePath target-
date suite. Defined contribution represented $630.9
billion of total pension AUM, and we remain well
positioned to capitalize on the on-going evolution of the
defined contribution market and demand for outcome-
oriented investments. An additional $52.8 billion, or 2%
of long-term institutional AUM, was managed for other
tax-exempt investors, including charities, foundations
and endowments.

• Official Institutions. We also managed $185.0 billion, or

7%, of long-term institutional AUM for official
institutions, including central banks, sovereign wealth
funds, supranationals, multilateral entities and
government ministries and agencies at year-end 2015.
These clients often require specialized investment
advice, the use of customized benchmarks and training
support.

• Financial and Other Institutions. BlackRock is a top

independent manager of assets for insurance
companies, which accounted for $237.7 billion, or 9%,
of institutional long-term AUM at year-end 2015. Assets
managed for other taxable institutions, including
corporations, banks and third-party fund sponsors for
which we provide sub-advisory services, totaled $379.4
billion, or 14%, of long-term institutional AUM at year-
end.

PRODUC T TYPE

Component changes in AUM by product type and investment style for 2015 are presented below.

(in millions)

Equity:

Active

iShares

Non-ETF index

Equity subtotal

Fixed income:

Active

iShares

Non-ETF index

Fixed income subtotal

Multi-asset class

Alternatives:

Core

Currency and commodities

Alternatives subtotal

Long-term

Cash management

Advisory

December 31, 2014

Net Inflows
(Outflows)

Acquisitions(1)

Market
Change

FX
Impact

December 31, 2015

$ 292,802

4,210

$ —

$ (7,738)

(7,955)

$ 281,319

790,067

1,368,242

2,451,111

701,324

217,671

474,658

1,393,653

377,837

88,006

23,234

111,240

4,333,841

296,353

21,701

78,408

(29,840)

52,778

35,928

50,309

(9,293)

76,944

17,167

4,080

1,045

5,125

152,014

7,510

(9,629)

—

366

1,853

—

1,853

2,219

—

(32,349)

4,815

(12,970)

(23,920)

(35,272)

(44,845)

(6,907)

(7,508)

2,313

(12,102)

(7,413)

(213)

(3,223)

(3,436)

(10,692)

(6,282)

(19,153)

(36,127)

(11,621)

(1,641)

(302)

(1,943)

(58,223)

(94,536)

267

461

(4,246)

(2,320)

823,156

1,319,297

2,423,772

719,653

254,190

448,525

1,422,368

376,336

92,085

20,754

112,839

4,335,315

299,884

10,213

Total AUM

$ 4,651,895

$ 149,895

$ 2,219

$(57,495)

$(101,102)

$ 4,645,412

(1) Amounts represent $1.3 billion of AUM acquired in the BKCA acquisition in March 2015, $560 million of AUM acquired in the Infraestructura

Institucional acquisition in October 2015 and $366 million of AUM acquired in the FutureAdvisor acquisition in October 2015. The FutureAdvisor
acquisition amount does not include AUM that was held in iShares holdings.

Long-term product offerings include active and index
strategies. Our active strategies seek to earn attractive
returns in excess of a market benchmark or performance
hurdle while maintaining an appropriate risk profile. We offer
two types of active strategies: those that rely primarily on
fundamental research and those that utilize primarily
quantitative models to drive portfolio construction. In
contrast, index strategies seek to closely track the returns of
a corresponding index, generally by investing in substantially
the same underlying securities within the index or in a
subset of those securities selected to approximate a similar
risk and return profile of the index. Index strategies include
both our non-ETF index products and iShares ETFs.

Although many clients use both active and index strategies,
the application of these strategies may differ. For example,
clients may use index products to gain exposure to a market
or asset class. In addition, institutional non-ETF index
assignments tend to be very large (multi-billion dollars) and
typically reflect low fee rates. This has the potential to
exaggerate the significance of net flows in institutional index
products on BlackRock’s revenues and earnings.

Equity

Year-end 2015 equity AUM totaled $2.424 trillion, reflecting
net inflows of $52.8 billion. Net inflows included $78.4 billion
and $4.2 billion into iShares and active products,
respectively. iShares net inflows were driven by the Core
Series and flows into broad developed market equity
exposures, and active net inflows reflected demand for
international equities. iShares and active net inflows were
partially offset by non-ETF index net outflows of $29.8
billion.

BlackRock’s effective fee rates fluctuate due to changes in
AUM mix. Approximately half of BlackRock’s equity AUM is

tied to international markets, including emerging markets,
which tend to have higher fee rates than U.S. equity
strategies. Accordingly, fluctuations in international equity
markets, which do not consistently move in tandem with U.S.
markets, may have a greater impact on BlackRock’s effective
equity fee rates and revenues.

Fixed Income

Fixed income AUM ended 2015 at $1.422 trillion, increasing
$28.7 billion, or 2%, from December 31, 2014. The increase
in AUM reflected $76.9 billion in net inflows, partially offset
by $48.2 billion in net market depreciation and foreign
exchange movements. In 2015, active net inflows of $35.9
billion were diversified across fixed income offerings, with
strong flows into our unconstrained, total return and high
yield strategies. Flagship funds in these product areas
include our unconstrained Strategic Income Opportunities
and Fixed Income Strategies funds, with net inflows of $7.0
billion and $3.7 billion, respectively; our Total Return fund
with net inflows of $2.7 billion; and our High Yield Bond fund
with net inflows of $3.5 billion. Fixed income iShares net
inflows of $50.3 billion were led by flows into core, corporate
and high yield bond funds. Active and iShares net inflows
were partially offset by non-ETF index net outflows of $9.3
billion.

Multi-Asset Class

BlackRock’s multi-asset class team manages a variety of
balanced funds and bespoke mandates for a diversified
client base that leverages our broad investment expertise in
global equities, bonds, currencies and commodities, and our
extensive risk management capabilities. Investment
solutions might include a combination of long-only portfolios
and alternative investments as well as tactical asset
allocation overlays.

Component changes in multi-asset class AUM for 2015 are presented below.

(in millions)

December 31, 2014

Net Inflows
(Outflows)

Acquisition(1)

Market Change

FX Impact

December 31, 2015

Asset allocation and

balanced

Target date/risk

Fiduciary

FutureAdvisor

Multi-asset

$ 183,032

128,611

66,194

—

$ 12,926

$ —

218

3,985

—

366

$ 366

$ (6,731)

(1,308)

627

(1)

$ (3,391)

$ 185,836

(1,857)

(6,373)

—

125,664

64,433

403

$ (7,413)

$ (11,621)

$ 376,336

$ 377,837

$ 17,167

(1) Amounts represent $366 million of AUM acquired in the FutureAdvisor acquisition in October 2015. The FutureAdvisor acquisition amount does not

include AUM that was held in iShares holdings.

Multi-asset class net inflows reflected ongoing institutional
demand for our solutions-based advice with $17.4 billion of
net inflows coming from institutional clients. Defined
contribution plans of institutional clients remained a
significant driver of flows, and contributed $7.3 billion to
institutional multi-asset class net new business in 2015,
primarily into target date and target risk product offerings.
Retail net outflows of $1.3 billion were primarily due to a
large single-client transition out of mutual funds into a
series of iShares across asset classes. Notwithstanding this
transition, retail flows reflected demand for our Multi-Asset
Income fund family, which raised $4.6 billion in 2015.

The Company’s multi-asset class strategies include the
following:

• Asset allocation and balanced products represented

49% of multi-asset class AUM at year-end, with growth
in AUM driven by net new business of $12.9 billion.
These strategies combine equity, fixed income and
alternative components for investors seeking a tailored
solution relative to a specific benchmark and within a
risk budget. In certain cases, these strategies seek to
minimize downside risk through diversification,
derivatives strategies and tactical asset allocation
decisions. Flagship products in this category include our
Global Allocation and Multi-Asset Income suites.

• Target date and target risk product flows were impacted
by a large single-client transition out of mutual funds
into a series of iShares across asset classes.
Institutional investors represented 95% of target date
and target risk AUM, with defined contribution plans
accounting for over 88% of AUM. Flows were driven by
defined contribution investments in our LifePath and
LifePath Retirement Income® offerings. LifePath
products utilize a proprietary asset allocation model
that seeks to balance risk and return over an
investment horizon based on the investor’s expected
retirement timing.

• Fiduciary management services are complex mandates
in which pension plan sponsors or endowments and
foundations retain BlackRock to assume responsibility
for some or all aspects of plan management. These
customized services require strong partnership with the
clients’ investment staff and trustees in order to tailor
investment strategies to meet client-specific risk
budgets and return objectives.

• FutureAdvisor is a leading digital wealth management

platform, acquired by BlackRock in October 2015.
FutureAdvisor operates as a service within BRS,
providing financial institutions with high quality,
technology-enabled advice capabilities to improve their
clients’ investment experience. As consumers
increasingly engage with technology to invest,
BlackRock and FutureAdvisor are positioned to
empower distribution partners to better serve their
clients by combining FutureAdvisor’s high-quality
technology-enabled advice with BlackRock’s multi-
asset investment capabilities, proprietary technology
and risk analytics

Alternatives

BlackRock Alternative Investors (“BAI”) focuses on sourcing
and managing high-alpha investments with lower correlation
to public markets and developing a holistic approach to
address client needs in alternatives investing. Our
alternatives products fall into two main categories — 1)
core, and 2) currency and commodities. Core includes
alternative solutions, direct hedge funds, hedge fund and
private equity solutions (funds of funds), opportunistic
private equity and credit, real estate and infrastructure
offerings. The products offered under the BAI umbrella are
described below.

In 2015, BlackRock returned $3.3 billion of capital to
investors, which is included in outflows. In addition, we
raised $5.7 billion of new commitments in 2015 across a
variety of strategies, including private equity solutions,
opportunistic credit, alternative solutions, real estate and
infrastructure. At year-end, we had $10.9 billion of non-fee
paying, unfunded commitments, which are expected to be
deployed in future years; these commitments are not
included in AUM until they are invested.

We believe that as alternatives become more conventional
and investors adapt their asset allocation strategies,
investors will further increase their use of alternative
investments to complement core holdings. As a top ten
alternative provider3 our highly diversified $112.8 billion
alternatives franchise is well positioned to meet growing
demand from both institutional and retail investors.

Component changes in alternatives AUM for 2015 are presented in the table below.

(in millions)

Core:

Alternative solutions
Hedge funds:

Direct hedge fund

strategies

Hedge fund solutions

Hedge funds subtotal

Illiquid and opportunistic:

Private equity solutions
Opportunistic private
equity and credit
strategies

Illiquid and

opportunistic
subtotal

Real assets:

Real estate
Infrastructure

Real assets subtotal

Core subtotal

Currency and commodities

December 31,
2014

Net Inflows
(Outflows)

Acquisitions(1) Market Change

FX
Impact

December 31,
2015

Memo:
Return of
Capital(2)

528

$ 1,367

$ —

(9)

$ —

1,886

(127)

31,996
19,583

51,579

12,340

(452)
506

690

—
—

—

508
59

567

(1,001)
(31)

(1,032)

31,051
20,117

51,168

—
(47)

(47)

(475)

(146)

12,409

(1,109)

802

295

1,293

(18)

—

2,372

(436)

13,142

985

1,293

(493)

(146)

14,781

(1,545)

22,001
756

22,757

88,006

23,234

(481)
2,155

1,674

4,080

1,045

—
560

560

1,853

—

(313)
35

(278)

(213)

(3,223)

(445)
(18)

(463)

(1,641)

(302)

20,762
3,488

24,250

92,085

20,754

(1,463)
(76)

(1,539)

(3,258)

—

Alternatives

$ 111,240

$ 5,125

$ 1,853

$ (3,436)

$ (1,943)

$ 112,839

$ (3,258)

(1) Amounts represent $1.3 billion of AUM acquired in the BKCA acquisition in March 2015 and $560 million of AUM acquired in the Infraestructura

Institucional acquisition in October 2015.

(2) Return of capital is included in outflows.

Source: Towers Watson, July 2015

Core.

Cash Management

• Alternative Solutions represent holistic, highly

customized portfolios of alternative investments. In
2015, alternative solutions portfolios had $1.4 billion of
net inflows.

• Hedge Funds net inflows of $0.1 billion were led by net
inflows of $0.5 billion into hedge fund solutions, our
funds of hedge funds offering, partially offset by $0.4
billion of net outflows from direct hedge funds. Direct
hedge fund AUM includes a variety of single- and multi-
strategy offerings.

• Illiquid and Opportunistic AUM included $12.4 billion in
private equity solutions and $2.4 billion in opportunistic
private equity and credit offerings. Net inflows of $1.0
billion were predominantly into private equity solutions.
Our acquisition of certain assets of BKCA further
enhanced our credit platform through the addition of a
middle market, private credit capability.

• Real Assets AUM totaled $24.3 billion, up $1.5 billion, or
7%. Real assets, which include infrastructure and real
estate, saw net inflows of $1.7 billion. In 2015, we
continued to build our infrastructure capabilities
through the acquisition of Infraestructura Institucional,
a leading infrastructure investment business in Mexico.
This acquisition advances our growth strategy in Mexico
and Latin America and furthers our commitment to
being a leader in infrastructure investing.

Currency and Commodities.

AUM in currency and commodities declined 11% from year-
end 2014, reflecting portfolio valuation declines of $3.5
billion. Currency and commodities products include a range
of active and passive products. Our iShares commodities
products represented $12.5 billion of AUM and are not
eligible for performance fees.

Cash management AUM totaled $299.9 billion at
December 31, 2015, up $3.5 billion, or 1%, from year-end
2014. Cash management products include taxable and tax-
exempt money market funds and customized separate
accounts. Portfolios are denominated in U.S. dollars,
Canadian dollars, Australian dollars, Euros or British
pounds. We generated net inflows of $7.5 billion during
2015, a period marked by a near zero interest rate
environment. BlackRock is working to bring all U.S. money
market funds into full compliance with new regulatory
requirements in advance of the 2016 deadlines, and is
actively repurposing and streamlining our product lineup to
meet the future requirements of clients. In Europe, we
continue to be a market leader highlighted by our
implementation of the reverse distribution mechanism in our
euro funds when faced with negative rates. In November
2015, BlackRock and Bank of America’s asset management
business, BofA Global Capital Management (“BACM”)
entered into an agreement to transfer to BlackRock
investment management responsibilities for approximately
$87 billion of AUM in cash products currently managed by
BACM. The transaction is expected to close in the first half of
2016, subject to customary approvals and closing
conditions.

CLIENT REGION

Our footprints in the Americas, EMEA and Asia-Pacific
regions reflect strong relationships with intermediaries and
an established ability to deliver our global investment
expertise in funds and other products tailored to local
regulations and requirements.

AUM by product type and client region at December 31, 2015 is presented below.

(in millions)

Equity

Fixed income

Multi-asset class

Alternatives

Long-term

Cash management

Advisory

Total

Americas

EMEA

Asia-Pacific

Total

$ 1,610,776

$ 622,744

$ 190,252

$ 2,423,772

807,722

233,441

59,644

485,388

120,362

35,855

129,258

1,422,368

22,533

17,340

376,336

112,839

2,711,583

1,264,349

359,383

4,335,315

216,079

7,364

80,962

2,849

2,843

—

299,884

10,213

$ 2,935,026

$ 1,348,160

$ 362,226

$ 4,645,412

Component changes in AUM by client region for 2015 are presented below.

(in millions)

Americas

EMEA

Asia-Pacific

Total

December 31, 2014

Net Inflows

Acquisitions(1)

Market Change

FX Impact

December 31, 2015

$ 2,867,353

$ 154,742

$2,219

$(66,714)

$ (22,574)

$ 2,935,026

1,413,441

371,101

(2,912)

(1,936)

—

10,631

(1,411)

(73,000)

(5,528)

1,348,160

362,226

$ 4,651,895

$ 149,894

$2,219

$(57,494)

$(101,102)

$ 4,645,412

(1) Amounts represent $1.3 billion of AUM acquired in the BKCA acquisition in March 2015, $560 million of AUM acquired in the Infraestructura

Americas.

Long-term net new business of $144.6 billion was positive
across all asset classes, with net inflows of $84.6 billion,
$49.7 billion, $6.3 billion and $4.0 billion in equity, fixed
income, multi-asset class and alternatives products,
respectively. During the year, we served clients through
offices in 31 states in the United States as well as Canada,
Mexico, Brazil, Chile, Colombia and Spain.

EMEA.

During the year, clients awarded us long-term net new
business of $8.7 billion, including inflows from investors in
23 countries across the region. EMEA net new business was
led by fixed income net inflows of $10.8 billion, reflecting
strong flows into iShares and unconstrained fixed income.
Our offerings include fund families in the United Kingdom,
the Netherlands, Luxembourg and Dublin and iShares listed
on stock exchanges throughout Europe as well as separate
accounts and pooled investment products.

Asia-Pacific.

Clients in the Asia-Pacific region are served through offices
in Japan, Australia, Hong Kong, Malaysia, Singapore, Taiwan,
Korea, China, and India. Long-term net outflows of $1.3
billion were due to equity net outflows of $20.2 billion,
primarily from institutional index mandates. Fixed income,
multi-asset class and alternatives saw net inflows of $16.5
billion, $2.3 billion and $0.1 billion, respectively.

INVES TM ENT PE RFOR MAN CE

Investment performance across active and passive products
as of December 31, 2015 was as follows:

One-year
period

Three-year
period

Five-year
period

Fixed Income:

Actively managed AUM above
benchmark or peer median

Taxable

Tax-exempt

Index AUM within or above

tolerance

Equity:

Actively managed AUM above
benchmark or peer median

Fundamental

Scientific

Index AUM within or above

tolerance

69%

47%

94%

76%

65%

97%

91%

55%

99%

60%

90%

96%

92%

72%

99%

71%

95%

97%

Product Performance Notes. Past performance is not
indicative of future results. Except as specified, the
performance information shown is as of December 31, 2015
and is based on preliminary data available at that time. The
performance data shown reflects information for all actively
and passively managed equity and fixed income accounts,
including U.S. registered investment companies, European-
domiciled retail funds and separate accounts for which
performance data is available, including performance data
for high net worth accounts available as of November 30,
2015. The performance data does not include accounts
terminated prior to December 31, 2015 and accounts for
which data has not yet been verified. If such accounts had

been included, the performance data provided may have
substantially differed from that shown.

Performance comparisons shown are gross-of-fees for
institutional and high net worth separate accounts, and net-
of-fees for retail funds. The performance tracking shown for
index accounts is based on gross-of-fees performance and
includes all institutional accounts and all iShares funds
globally using an index strategy. AUM information is based
on AUM available as of December 31, 2015 for each account
or fund in the asset class shown without adjustment for
overlapping management of the same account or fund. Fund
performance reflects the reinvestment of dividends and
distributions.

Source of performance information and peer medians is
BlackRock, Inc. and is based in part on data from Lipper Inc.
for U.S. funds and Morningstar, Inc. for non-U.S. funds.

BLACKROCK SOLUTIONS

BRS offers investment management technology systems,
risk management services and advisory services on a fee
basis. Aladdin is our proprietary technology platform, which
serves as the risk management system for both BlackRock
and a growing number of sophisticated institutional
investors around the world. BRS also offers comprehensive
risk reporting capabilities via the Green Package® and risk
management advisory services; interactive fixed income
analytics through our web-based calculator, AnSer®; middle
and back office outsourcing services; and investment
accounting. BRS’ Financial Markets Advisory (“FMA”) group
advises global financial institutions, regulators, and
government entities on complex financial and risk issues
though core competencies across capital markets, data
analysis and modeling; strategic advice regarding regulatory
compliance, risk management, business transformations
and transaction support; and integrated project
management. FutureAdvisor, acquired by BlackRock in 2015,
is a digital wealth management platform operating within
BRS that provides financial institutions with high quality,
technology-enabled advice capabilities to improve their
clients’ investment experience.

BRS record revenues of $646 million were up 2% year-over-
year. Aladdin, which represented 82% of BRS revenue for the
year, continues to benefit from trends favoring global
investment platform consolidation and multi-asset risk
solutions. Aladdin assignments are typically long-term
contracts that provide significant recurring revenue.

Our FMA group continued to post solid revenues, even as the
business transitions from a “crisis management” emphasis
to a more institutionalized advisory business model, with a
strong focus on helping clients navigate and implement
requirements for the evolving regulatory environment.
Advisory AUM decreased to $10.2 billion, driven by $9.6
billion of planned client distributions reflecting our
continued success in disposing of assets for clients at, or
above, targeted levels.

At year-end, BRS served clients, including banks, insurance
companies, official institutions, pension funds, asset
managers and other institutional investors across North
America, Europe, Asia and Australia.

SEC U RIT IE S LE NDI NG

Securities lending is managed by a dedicated team,
supported by quantitative analysis, proprietary technology
and disciplined risk management. BlackRock receives both
cash (primarily for U.S. domiciled portfolios) and noncash
collateral under securities lending arrangements. The cash
management team invests the cash we receive as collateral
for securities on loan in other portfolios. Fees for securities
lending for U.S. domiciled portfolios can be structured as a
share of earnings, or as a management fee based on a
percentage of the value of the cash collateral or both. The
value of the securities on loan and the revenue earned are
captured in the corresponding asset class being managed.
The value of the collateral is not included in AUM.

Outstanding loan balances ended the year at approximately
$218 billion, up from $187 billion at year-end 2014. Liability
spreads were generally flat compared to 2014 levels.

BlackRock employs a conservative investment style for cash
and securities lending collateral that emphasizes quality,
liquidity and interest rate risk management. Disciplined risk
management, including a rigorous credit surveillance
process, is an integral part of the investment process.
BlackRock’s Cash Management Credit Committee has
established risk limits, such as aggregate issuer exposure
limits and maturity limits, across many of the products
BlackRock manages, including over all of its cash
management products. In the ordinary course of our
business, there may be instances when a portfolio may
exceed an internal risk limit or when an internal risk limit
may be changed. No such instances, individually or in the
aggregate, have been material to the Company. To the extent
that daily evaluation and reporting of the profile of the
portfolios identify that a limit has been exceeded, the
relevant portfolio will be adjusted. To the extent a portfolio
manager would like to obtain a temporary waiver of a risk
limit, the portfolio manager must obtain approval from the
credit research team, which is independent from the cash
management portfolio managers. While a risk limit may be
waived temporarily, such waivers are infrequent.

RISK & QUA N TITA TIVE A N A L YSIS

Across all asset classes, in addition to the efforts of the
portfolio management teams, the Risk & Quantitative
Analysis (“RQA”) group at BlackRock draws on extensive
analytical systems and proprietary and third-party data to
identify, measure and manage a wide range of risks. RQA
provides risk management advice and independent risk
oversight of the investment management processes,
identifies and helps manage counterparty and operational
risks, coordinates standards for firm wide investment
performance measurement and determines risk
management-related analytical and information
requirements. Where appropriate, RQA will work with
portfolio managers and developers to facilitate the
development or improvement of risk models and analytics.

COMPETITION

BlackRock competes with investment management firms,
mutual fund complexes, insurance companies, banks,
brokerage firms and other financial institutions that offer
products that are similar to, or alternatives to, those offered
by BlackRock. In order to grow its business, BlackRock must

be able to compete effectively for AUM. Key competitive
factors include investment performance track records, the
efficient delivery of beta for index products, investment style
and discipline, client service and brand name recognition.
Historically, the Company has competed principally on the
basis of its long-term investment performance track record,
its investment process, its risk management and analytic
capabilities and the quality of its client service.

GEOGRA PH IC IN FORMA TION

At December 31, 2015, BlackRock served clients in more
than 100 countries across the globe, including the United
States, the United Kingdom and Japan. See Note 22,
Segment Information, contained in Part II, Item 8 of this filing
for more information.

E M P L O Y E E S

At December 31, 2015, BlackRock had a total of
approximately 13,000 employees, including approximately
6,200 located in offices outside the United States.
Consistent with our commitment to continually expand and
enhance our talent base to support our clients, we added
approximately 800 employees during the year, including in
strategic focus areas.

REGULATION

Virtually all aspects of BlackRock’s business are subject to
various laws and regulations around the world, some of
which are summarized below. These laws and regulations
are primarily intended to protect investment advisory clients,
investors in registered and unregistered investment
companies, trust customers of BlackRock Institutional Trust
Company, N.A. (“BTC”), PNC and its bank subsidiaries and
their customers and the financial system. Under these laws
and regulations, agencies that regulate investment advisers,
investment funds and bank holding companies and other
individuals and entities have broad administrative powers,
including the power to limit, restrict or prohibit the regulated
entity or person from carrying on business if it fails to comply
with such laws and regulations. Possible sanctions for
significant compliance failures include the suspension of
individual employees, limitations on engaging in certain lines
of business for specified periods of time, revocation of
investment adviser and other registrations, censures and
fines both for individuals and BlackRock.

The rules governing the regulation of financial institutions
and their holding companies and subsidiaries are very
detailed and technical. Accordingly, the discussion below is
general in nature, does not purport to be complete and is
current only as of the date of this report.

GLOBAL REGULATORY REFORM

BlackRock is subject to numerous regulatory reform
initiatives around the world. Any such initiative, or any new
laws or regulations or changes in enforcement of existing
laws or regulations, could materially and adversely impact
the scope or profitability of BlackRock’s business activities,
lead to business disruptions, require BlackRock to alter its
business or operating activities and expose BlackRock to
additional costs (including compliance and legal costs) as
well as reputational harm. BlackRock’s profitability also

could be materially and adversely affected by modification of
the rules and regulations that impact the business and
financial communities in general, including changes to the
laws governing banking, taxation, antitrust regulation and
electronic commerce.

Dodd-Frank Wall Street Reform and Consumer Protection Act

In July 2010, the Dodd-Frank Wall Street Reform and
Consumer Protection Act (the “DFA”) was signed into law in the
U.S. The DFA is expansive in scope and requires the adoption of
extensive regulations and numerous regulatory decisions,
many of which have been adopted. BlackRock has commenced
a conformance program to address certain regulations
adopted under the DFA, as well as financial reforms that have
been introduced as part of the SEC’s investment company
modernization initiatives. The cost of these initial conformance
activities have been absorbed by BlackRock; however, as the
full extent of the DFA and other rules will only become evident
over time, it is not yet possible to predict the ultimate effects
that the DFA, or subsequent implementing regulations and
decisions, will have upon BlackRock’s business, financial
condition, and operating activities.

Systemically Important Financial Institution Review

Both the Financial Stability Board (“FSB”) working with the
International Organization of Securities Commissions
(“IOSCO”) and the Financial Stability Oversight Council
(“FSOC”) are considering potential systemic risk related to
asset management. In July 2014, the FSOC issued a
statement indicating that their review would focus on
products and activities, and FSOC subsequently released a
request for information addressing: market liquidity and
fund redemption risk, the use of leverage, operational risk,
and the resolution of asset managers including the
transition of client assets. In June 2015, IOSCO issued a
statement indicating they also favored a products and
activities approach in their review of asset managers, and in
July 2015, the FSB made a similar announcement. In
September 2015, the FSB released a statement indicating
that their review would focus on: market liquidity and fund
redemption risk, the use of leverage, securities lending
practices, operational risk, and risks from pension funds and
sovereign wealth funds.

Although FSOC, IOSCO and FSB have shifted from a focus on
designating firms and/or funds as systemically important
(i.e., G-SIFI or SIFI designations), the process is ongoing and
may lead to designations in the future. In the event that
BlackRock receives a SIFI designation, under the DFA, the
Board of Governors of the Federal Reserve System (the
“Federal Reserve”) is charged with establishing enhanced
regulatory requirements for nonbank financial institutions
and BlackRock could become subject to direct supervision
by the Federal Reserve. If BlackRock was designated a SIFI
or G-SIFI, it could become subject to enhanced prudential,
capital, supervisory and other requirements, such as risk-
based capital requirements, leverage limits, liquidity
requirements, resolution plan and credit exposure report
requirements, concentration limits, a contingent capital
requirement, enhanced public disclosures, short-term debt
limits and overall risk management requirements.
Requirements such as these, which were designed to
regulate banking institutions, would be extremely
burdensome for BlackRock, unless they were modified to be
applicable to an asset manager. No proposals have been

made indicating how such measures would be adapted for
asset managers, if at all.

Securities and Exchange Commission Review of Asset
Managers

BlackRock’s business may also be impacted by Securities
and Exchange Commission (“SEC”) regulatory initiatives. The
SEC and its staff continue to engage in various initiatives and
reviews that seek to improve and modernize the regulatory
structure governing the asset management industry, and
registered investment companies in particular. During 2015,
the SEC proposed, among other things: enhanced reporting
by investment advisors, enhanced reporting on registered
mutual funds, new rules for liquidity risk management in
registered funds, and new rules governing the use of
derivatives and leverage by registered investment companies
and business development companies. Furthermore, in June
2015, the SEC issued a request for comments regarding
practices related to exchange-traded funds (“ETFs”), which is
widely expected to result in a future rulemaking. The SEC has
also indicated an intention to propose new rules for the
stress testing of registered investment companies and
transition planning by asset managers, including the transfer
of client assets. The SEC’s focus has also been directed
toward risk identification and controls in various areas,
including the use of derivatives and other trading practices
(as reflected in the SEC’s late December 2015 rule proposal
described more particularly under” — Regulation of Swaps
and Derivatives below), cyber-security and the evaluation of
systemic risks. While these proposals have yet to be finalized
into new rules, any new rules, guidance or regulatory
initiatives resulting from these efforts could expose
BlackRock to additional compliance and reporting costs and
may require the Company to change how it operates its
business or manages funds.

Money Market Fund Reform

In July 2014, the SEC adopted new rules designed to reform
the regulatory structure governing money market funds
(“MMFs”) and to address the perceived systemic risks that
such funds present. The new rules, to which U.S. MMFs must
conform by October 2016, require institutional prime and
institutional municipal MMFs to employ a floating net asset
value per share method of pricing, which allows the daily
share prices of these funds to fluctuate along with changes
in the market-based value of fund assets. Retail MMFs may
continue operating with a constant net asset value per
share. The rules also provide for new tools for institutional
and retail MMFs’ boards designed to address market
shocks, including liquidity fees and redemption gates. The
new rules do not apply to government (non-municipal)
MMFs, although such funds may “opt-in” to the new liquidity
fee and redemption gate provisions if previously disclosed to
investors. Implementation of these new rules requires the
development of new or additional systems by BlackRock and
the funds’ service providers. BlackRock has commenced
efforts to move its MMFs into compliance in advance of the
deadline. The impact of the rules that affect the structure of
the funds on BlackRock’s business remains uncertain as
clients must decide which products fit their investment
needs. The new rules will, however, affect certain of
BlackRock’s funds’ investment strategies, portfolio liquidity
and return potential. The new rules will also result in
changes to BlackRock’s existing U.S. MMFs and may reduce
the attractiveness of certain U.S. MMFs to investors.

Regulation of Swaps and Derivatives

The SEC, the Internal Revenue Service (“IRS”) and the
Commodity Futures Trading Commission (“CFTC”) each
continue to review practices and regulations relating to the
use of futures, swaps and other derivatives. Such reviews
could result in regulations that restrict or limit the use of
such products by funds or accounts. If adopted, these
limitations could require BlackRock to change certain
business practices or implement new reporting or
compliance processes, which could result in additional costs
and/or restrictions. In December 2015, the SEC proposed a
new rule governing the use of derivatives and other financial
commitment transactions by investment companies that, if
enacted, would represent a fundamental change in the
nature of the SEC’s regulations governing the use of
derivatives and other financial commitment transactions by
investment companies. This proposal has the potential to
require BlackRock to change or restrict certain investment
strategies or practices for some investment companies and
incur additional costs. In some circumstances the proposed
rule could make certain products less competitive with other
investment options in the marketplace, which could
negatively impact assets under management.

Further, the full implementation of regulations under the
DFA and similar regulations in the European Union (“EU”)
and other global jurisdictions relating to regulation of swaps
and derivatives could impact the manner in which
BlackRock-advised funds and accounts use and trade swaps
and other derivatives, increasing the costs of derivatives
trading for BlackRock’s clients. For example, various global
rules and regulations applicable to the use of financial
products by funds, accounts and counterparties that have
been adopted or proposed will require BlackRock to build
and implement new compliance monitoring procedures to
address the enhanced level of oversight to which it and its
clients will be subject. These rules also introduce new
requirements for centrally clearing certain swaps
transactions and for executing certain swaps transactions
on or through CFTC or SEC-registered trading venues (as
opposed to over the phone or other execution methods).

Jurisdictions outside the U.S. in which BlackRock operates
also have adopted and implemented, or are in the process of
considering, adopting or implementing more pervasive
regulation of many elements of the financial services
industry, which could further impact BlackRock and the
broader markets. This includes the implementation of
mandated central clearing of swaps in the EU and the
implementation of trade reporting, documentation, central
clearing and other requirements in various jurisdictions
globally.

In the United States, certain interest rate swaps and certain
index credit default swaps are already subject to the DFA
central clearing and electronic trading venue requirements,
with additional products and asset classes potentially
becoming subject to these requirements in 2016 and
beyond. For swaps and security-based swaps that are not
centrally cleared, U.S. bank regulators recently adopted
rules that could require BlackRock-advised funds and
accounts to post margin payments when trading with a swap
dealer that is regulated by one of the U.S. bank regulators.
The CFTC also recently adopted similar margin rules
applicable when trading non-cleared swaps with swap
dealers who are not regulated by one of the U.S. bank
regulators. These rules have the potential to increase the

complexity and cost of trading non-cleared derivatives for
BlackRock’s clients. In EMEA, central clearing requirements
will be implemented in a phased manner and will apply to
BlackRock funds and accounts beginning in the latter half of
2016. The new rules and regulations may produce regulatory
inconsistencies in global derivatives trading rules and
increase BlackRock’s operational and legal risks.

Regulation of Exchange Traded Funds

As a result of recent market volatility, regulators globally are
examining the potential risks in ETFs, including those related
to transparency, liquidity and structural resiliency.
BlackRock and other large issuers of ETFs are working with
market participants and regulators to address certain of
these issues but there can be no assurance that structural
or regulatory reforms will be implemented in a manner
favorable to BlackRock, or at all. Depending on the outcome
of this renewed regulatory analysis, or any associated
structural reforms, ETF products may become subject to
increased regulatory scrutiny or restrictions, which may
require BlackRock to incur additional compliance and
reporting expenses and adversely affect the Company’s
business.

Taxation

BlackRock’s businesses may be affected by new tax
legislation or regulations, or the modification of existing tax
laws, regulations and rulings, by U.S. or non-U.S. authorities.
In particular, BlackRock may be impacted by the Foreign
Account Tax Compliance Act (“FATCA”) and the Common
Reporting Standard (“CRS”) which have introduced new
investor onboarding, withholding and reporting rules aimed
at ensuring persons with financial assets outside of the their
tax residence country pay appropriate taxes. FATCA and CRS
rules will impact both U.S. and non-U.S. funds and subject
BlackRock to additional administrative burdens. In many
instances, bilateral Intergovernmental Agreements (“IGAs”)
between the U.S. and the countries in which BlackRock does
business will govern implementation of the new rules. While
many of these IGAs have been put into place, others have yet
to be concluded.

The Organization for Economic Co-operation and
Development (“OECD”) has also launched a base erosion and
profit shifting (“BEPS”) proposal that aims to rationalize tax
treatment across jurisdictions. In October 2015, the OECD
released its final BEPS package in an effort to curb the use
of certain tax regimes and elements of tax planning,
primarily in a cross-border context. The final package was
endorsed by the G20 and is subject to implementation. In
addition, in January 2016, the European Commission
announced an Anti-Tax Avoidance Package (“EU Package”)
for consideration by the European Parliament and Council,
containing measures to regulate certain elements of tax
planning and to boost tax transparency. Once implemented,
the BEPS package and the EU Package could curtail the
amount of investments channeled by, and have unintended
taxation consequences for funds as well as BlackRock’s
overall tax position, which could adversely affect
BlackRock’s financial condition and that of its clients.

In addition, certain EU Member States, such as France and
Italy, have enacted financial transaction taxes (“FTTs”) which
impose taxation on a broad range of financial instruments
and derivatives transactions. Several other Member States

continue to discuss introducing FTTs. In general, any tax on
securities and derivatives transactions would impact
investors and would likely have a negative impact on the
liquidity of the securities and derivatives markets, could
diminish the attractiveness of certain types of products that
BlackRock manages in those countries and could cause
clients to shift assets away from such products. An FTT
could significantly increase the operational costs of
BlackRock entering into, on behalf of its clients, securities
and derivatives transactions that would be subjected to an
FTT, which could adversely impact BlackRock’s financial
results and clients’ performance results.

Lastly, the application of tax regulations involves numerous
uncertainties and, in the normal course of business, U.S. and
non-U.S. tax authorities may review and challenge
BlackRock’s historical tax positions. These challenges may
result in adjustments to BlackRock’s tax position, or impact
the timing or amount of taxable income, deductions or other
tax allocations, which may adversely affect BlackRock’s
effective tax rate and overall financial condition.

Volcker Rule

Provisions of the DFA referred to as the “Volcker Rule” place
limitations on the ability of banks and their subsidiaries to
engage in proprietary trading and to invest in and transact
with certain private investment funds, including hedge
funds, private equity funds and funds of funds (collectively
“covered funds”). Because the Federal Reserve currently
treats BlackRock as a nonbank subsidiary of PNC, BlackRock
may be required to conform its activities to the requirements
of the Volcker Rule. On December 18, 2014, the Federal
Reserve announced a second extension to the Volcker Rule
conformance period, giving banking entities until July 21,
2016, to conform investments in and relationships with
covered funds and foreign funds that were in place prior to
December 31, 2013 (“legacy covered funds”). The Federal
Reserve also announced its intention to grant banking
entities an additional one-year extension of the
conformance period until July 21, 2017, to conform
ownership interests in and relationships with these legacy
covered funds. The Volcker Rule’s restrictions may, among
other things, limit BlackRock’s ability to invest in covered
funds and require BlackRock to remove its name from the
names of its covered funds, which could subject BlackRock
to additional expense. The Volcker Rule may also require
BlackRock to sell certain seed and co-investments that it
holds in covered funds which may occur at a discount to
existing carrying value, depending on market conditions. The
Volcker Rule may also reduce the level of market making and
liquidity activities of several of BlackRock’s trading
counterparties, which may adversely impact the liquidity
and, in some cases, the pricing of various financial
instruments in which BlackRock client accounts invest. For a
further discussion of the Volcker Rule, see “Item 1A — Risk
Factors — Legal and Regulatory Risks.”

Revised Department of Labor (“DoL”) Fiduciary Rule

In April 2015, the DoL proposed a new regulation defining the
term “fiduciary” for purposes of the fiduciary responsibility
provisions of Title I of the Employee Retirement Income
Security Act of 1974 (“ERISA”) and the prohibited transaction
exercise tax provisions of the IRS. The rule has been highly
criticized by industry participants, particularly retail
intermediaries, and BlackRock is engaging with the DoL,
trade associations and industry participants in an effort to

affect revisions to the proposed rule. To the extent the rule is
enacted as written, it will require BlackRock to re-paper a
number of its distribution relationships, create compliance
and operational challenges for BlackRock’s distribution
partners and may limit BlackRock’s ability to provide certain
useful services and education to its clients.

Markets in Financial Instruments Directives

BlackRock is also subject to numerous regulatory reform
initiatives in Europe. For example, in the EU rules and
regulations made under the current Markets in Financial
Instruments Directive (“MiFID”) regime (described more
particularly under “ —European Regulation” below) are in
the process of being revised through implementation of the
“MiFID II” package of measures made up of a recast Directive
and a new Markets in Financial Instruments Regulation.
MiFID II, which was originally scheduled to come into effect
in January 2017, but is now scheduled to come into effect in
January 2018, will be implemented through a number of
Implementing and Regulatory Technical Standards to be
made through Delegated Acts made by the European
Commission following advice from the European Securities
and Markets Authority (“ESMA”). MiFID II will build upon
many of the measures introduced by MiFID, and will extend
investor protection, trading transparency, clearing and
trading venue access and reporting requirements. It is
expected that MiFID II will have significant and wide-ranging
impacts on EU securities and derivatives markets. In
particular, there will be (i) enhanced governance and investor
protection standards, (ii) prescriptive rules on portfolio
management firms’ ability to receive and pay for investment
research relating to all asset classes, (iii) enhanced
regulation of algorithmic trading, (iv) the movement of
trading in certain shares and derivatives on to regulated
execution venues, (v) the extension of pre- and post-trade
transparency requirements to wider categories of financial
instruments, (vi) restrictions on the use of so-called dark
pool trading, (vii) the creation of a new type of trading venue
called the Organized Trading Facility for non-equity financial
instruments, (viii) commodity derivative position limits and
reporting requirements, (ix) a move away from vertical silos
in execution, clearing and settlement, (x) an enhanced role
for ESMA in supervising EU securities and derivatives
markets and (xi) new requirements regarding non-EU
investment firms’ access to EU financial markets.
Implementation of these measures will have direct and
indirect impacts on BlackRock and its subsidiaries and may
require significant changes to client servicing models. A
significant number of the impacts are yet to be determined
because MiFID II contains a wide ranging and complex set of
measures.

Undertakings for Collective Investment in Transferable
Securities

The EU has also adopted directives on the coordination of
laws, regulations and administrative provisions relating to
undertakings for collective investment in transferable
securities (“UCITS”). The latest initiative in this area, UCITS V
seeks to align the UCITS depositary regime, UCITS
remuneration rules and regulators’ power to sanction for
breaches of the UCITS Directive with the requirements of the
Alternative Investment Fund Managers Directive (“AIFMD”).
UCITS V is required to be adopted in the national law of each
EU member state by March 18, 2016 though further
implementing measures will only become effective in late
2016. Compliance with the updated UCITS directive will

subject BlackRock to additional expenses associated with
new depositary oversight and other organizational
requirements.

Reform of European Retail Distribution

BlackRock must also comply with retail distribution rules
aimed at enhancing consumer protections, overhauling
mutual fund fee structures by banning the payment of
commissions to distributors and increasing professionalism
in the retail investment sector. The rules were originally
introduced in the United Kingdom in 2012 and similar rules
have since been introduced in other jurisdictions where
BlackRock operates such as the Netherlands, and are under
discussion elsewhere. Similarly, MiFID II will contain a ban
on certain advisers recovering commissions and other
nonmonetary benefits from fund managers. These rules will
lead to greater fragmentation of distribution rules and may
lead to changes to BlackRock’s client servicing and
distribution models, in particular affecting the fees
BlackRock is able to charge to its clients and the
commissions it is able to pay to its distribution partners.

Financial Conduct Authority (“FCA”) Asset Management
Market Survey

As part of its strategic priorities, the FCA is undertaking a
market study into the asset management sector. The aim of
this study is to understand whether competition is working
effectively to enable both institutional and retail investors to
get value for money when purchasing asset management
services. The FCA is interested in understanding whether
there are any barriers to innovation or technological
advances which may be preventing new ways of doing
business that could benefit investors (Fintech). If the FCA
concludes that competition is not working well, the FCA may
intervene through rule-making, introducing firm-specific
remedies or enforcement action, publishing general
guidance or proposing enhanced industry self-regulation.
BlackRock is one of 40 firms included in the study and is
currently responding to an information request that consists
of qualitative and quantitative data. The FCA is aiming to
engage with firms throughout 2016 with the proposal to
issue a draft report to the industry in the summer of 2016.
The FCA expect to publish their final report in early 2017.

EU Benchmarks Regulation

EX ISTING U.S. REGUL A TION - OVERV IEW

Political agreement on the EU Benchmarks Regulation was
reached at the end of 2015. The Regulation provides the
legislative framework to implement the 2013 IOSCO
Principles for Financial Benchmarks. The scope of the
Regulation is broad as it includes submission based
benchmarks through to transaction based market indices.
Proportionality is applied to create a stricter framework for
the systemically relevant benchmarks such as LIBOR and
EURIBOR. Although the Regulation creates a number of
obligations on administrators of, and submitters to,
benchmarks, it is less extensive as regards the obligations of
users of benchmarks, such as asset managers. The
Regulation formalizes due diligence procedures for users
and implies other additional administrative requirements of
users of third-party benchmarks. Managers using third-
party and/or bespoke benchmarks to assess fund
performance are also caught by the Regulation. It is
expected that detailed rule-making underpinning the
Regulation’s framework will be developed during 2016 and
implemented beginning in 2018. While it is not yet possible
to assess the full effect of the Regulation on BlackRock’s
business, it may impose additional administrative and due
diligence requirements on the Company, the burden of which
is likely to increase as BlackRock makes additional
enhancements to its indexing business.

Financial Crimes Enforcement Network (“FinCEN”) Proposed
Rulemaking for Registered Investment Advisers

FinCEN has issued a Notice of Proposed Rulemaking
(“Proposed Rule”) that would extend to a number of
BlackRock’s subsidiaries, which are registered or required to
be registered with the SEC under the Investment Advisers
Act of 1940 (the “Advisers Act”), the requirement to establish
anti-money laundering programs and report suspicious
activity to FinCEN under the Bank Secrecy Act of 1970 (the
“Bank Secrecy Act”). The Proposed Rule would extend to
those BlackRock subsidiaries captured within the Bank
Secrecy Act’s definition of “financial institutions”, which
would require them to comply with the Bank Secrecy Act
reporting and recordkeeping requirements. If enacted in its
current form, the Proposed Rule would expose BlackRock to
additional compliance costs.

BlackRock and certain of its U.S. subsidiaries are currently
subject to extensive regulation, primarily at the federal level,
by the SEC, the DoL, the Federal Reserve, the Office of the
Comptroller of the Currency (“OCC”), the Financial Industry
Regulatory Authority (“FINRA”), the National Futures
Association (“NFA”), the CFTC and other government
agencies and regulatory bodies. Certain of BlackRock’s U.S.
subsidiaries are also subject to various anti-terrorist
financing, privacy, anti-money laundering regulations and
economic sanctions laws and regulations established by
various agencies.

The Advisers Act imposes numerous obligations on
registered investment advisers such as BlackRock, including
record-keeping, operational and marketing requirements,
disclosure obligations and prohibitions on fraudulent
activities. The Investment Company Act of 1940 (the
“Investment Company Act”) imposes stringent governance,
compliance, operational, disclosure and related obligations
on registered investment companies and their investment
advisers and distributors, such as BlackRock and its
affiliated companies. The SEC is authorized to institute
proceedings and impose sanctions for violations of the
Advisers Act and the Investment Company Act, ranging from
fines and censure to termination of an investment adviser’s
registration. Investment advisers also are subject to certain
state securities laws and regulations. Non-compliance with
the Advisers Act, the Investment Company Act or other
federal and state securities laws and regulations could
result in investigations, sanctions, disgorgement, fines and
reputational damage.

BlackRock’s trading and investment activities for client
accounts are regulated under the Securities Exchange Act of
1934 (the “Exchange Act”), as well as the rules of various
securities exchanges and self-regulatory organizations,
including laws governing trading on inside information,
market manipulation and a broad number of technical
requirements (e.g., short sale limits, volume limitations and
reporting obligations) and market regulation policies.
Violation of any of these laws and regulations could result in
restrictions on BlackRock’s activities and damage its

reputation. Furthermore, one of BlackRock’s subsidiaries,
BTC, was required to register as a municipal advisor (as that
term is defined in the statute) with the SEC and Municipal
Securities Rulemaking Board (“MSRB”) as a result of SEC
rules giving effect to a section of the DFA requiring such
registration. The rules subject BTC to new and additional
regulation by the SEC and MSRB.

BlackRock manages a variety of private pools of capital,
including hedge funds, funds of hedge funds, private equity
funds, collateralized debt obligations (“CDOs”), collateralized
loan obligations (“CLOs”), real estate funds, collective
investment trusts, managed futures funds and hybrid funds.
Congress, regulators, tax authorities and others continue to
explore, on their own and in response to demands from the
investment community and the public, increased regulation
related to private pools of capital, including changes with
respect to investor eligibility, certain limitations on trading
activities, record-keeping and reporting, the scope of anti-
fraud protections, safekeeping of client assets and a variety
of other matters. BlackRock may be materially and adversely
affected by new legislation, rule-making or changes in the
interpretation or enforcement of existing rules and
regulations imposed by various regulators in this area.

Certain BlackRock subsidiaries are subject to ERISA, and to
regulations promulgated thereunder by the DoL, insofar as
they act as a “fiduciary” under Title I of ERISA with respect to
benefit plan clients. ERISA and applicable provisions of the
Internal Revenue Code impose certain duties on persons
who are fiduciaries under ERISA, prohibit certain
transactions involving ERISA plan clients and impose excise
taxes for violations of these prohibitions, mandate certain
required periodic reporting and disclosures and require
certain BlackRock entities to carry bonds insuring against
losses caused by fraud or dishonesty. ERISA also imposes
additional compliance, reporting and operational
requirements on BlackRock that otherwise are not
applicable to non-benefit plan clients.

BlackRock has seven subsidiaries that are registered as
commodity pool operators (“CPOs”) and/or commodity
trading advisors (“CTAs”) with the CFTC and are members of
the NFA. The CFTC and NFA each administer a comparable
regulatory system covering futures contracts and various
other financial instruments, including swaps as a result of
the DFA, in which certain BlackRock clients may invest. Two
of BlackRock’s other subsidiaries, BlackRock Investments,
LLC (“BRIL”) and BlackRock Execution Services, are
registered with the SEC as broker-dealers and are member-
firms of FINRA. Each broker-dealer has a membership
agreement with FINRA that limits the scope of such broker-
dealer’s permitted activities. BRIL is also an approved
person with the New York Stock Exchange (“NYSE”) and a
member of the MSRB, subject to MSRB rules.

U.S. Banking Regulation

PNC is a bank holding company and regulated as a “financial
holding company” by the Federal Reserve under the Bank
Holding Company Act of 1956 (the “BHC Act”). As described
in “Item 1-Business”, as of December 31, 2015 PNC owned
approximately 22% of BlackRock’s capital stock. Based on
the Federal Reserve’s interpretation of the BHC Act, the
Federal Reserve currently takes the position that this
ownership interest causes BlackRock to be treated as a
nonbank subsidiary of PNC for purposes of the BHC Act,
thereby subjecting BlackRock to banking regulation,

including the supervision and regulation of the Federal
Reserve and to most banking laws, regulations and orders
that apply to PNC, including the Volcker Rule. The
supervision and regulation of PNC and its subsidiaries under
applicable banking laws are intended primarily for the
protection of its banking subsidiaries, its depositors, the
Deposit Insurance Fund of the Federal Deposit Insurance
Corporation, and the financial system as a whole, rather
than for the protection of stockholders, creditors or clients
of PNC or BlackRock.

BlackRock generally may conduct only activities that are
authorized for a financial holding company under the BHC
Act. Investment management is an authorized activity, but
must be conducted within applicable regulatory
requirements, which in some cases are more restrictive than
those BlackRock faces under applicable securities laws.
BlackRock may also invest in investment companies and
private investment funds to which it provides advisory,
administrative or other services, only to the extent
consistent with applicable law and regulatory
interpretations. Based on the Federal Reserve’s position that
BlackRock is a nonbank subsidiary of PNC, the Federal
Reserve has broad powers to approve, deny or refuse to act
upon applications or notices for BlackRock to conduct new
activities, acquire or divest businesses or assets, or
reconfigure existing operations, and there are limits on the
ability of bank subsidiaries of PNC to extend credit to or
conduct other transactions with BlackRock or its funds. PNC
and its subsidiaries are also subject to examination by
various banking regulators, which results in examination
reports and ratings that may adversely impact the conduct
and growth of BlackRock’s businesses. Furthermore, the
Federal Reserve has broad enforcement authority over
nonbank subsidiaries, including the power to prohibit them
from conducting any activity that, in the Federal Reserve’s
opinion, is unauthorized or constitutes an unsafe or unsound
practice. The Federal Reserve may also impose substantial
fines and other penalties for violations of applicable banking
laws, regulations and orders. The DFA strengthened the
Federal Reserve’s supervisory and enforcement authority
over a bank holding company’s nonbank subsidiaries.

Any failure of PNC to maintain its status as a financial
holding company could result in substantial limitations on
certain BlackRock activities and its growth. Such a change of
status could be caused by any failure of PNC or one of PNC’s
bank subsidiaries to remain “well capitalized” and “well
managed,” by any examination downgrade of one of PNC’s
bank subsidiaries, or by any failure of one of PNC’s bank
subsidiaries to maintain a satisfactory rating under the
Community Reinvestment Act.

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

Regulation of Securities Lending Financing Transactions

In its 2014 Annual Report, the FSOC identified securities
lending indemnification by asset managers who act as
lending agents as a potential systemic risk that required
further review and monitoring. The Federal Reserve is also
considering whether to impose specific margin or minimum
haircut requirements for securities financing transactions
(“SFTs”). In addition, in October 2015, the European
Parliament adopted the European Commission’s proposal
for a European regulation on the reporting and transparency
of SFTs. The SFT regulation aims to improve the
transparency surrounding SFTs and limit the perceived risks
of SFTs by, among other things, requiring central reporting of
SFTs, requiring disclosure of SFTs to investors and imposing
minimum requirements relating to the difference in prices at
which a market maker can buy and sell a security in SFTs. If
the recent scrutiny of SFTs results in additional regulatory
requirements or reporting obligations, BlackRock may be
required to introduce additional compliance measures,
which will subject BlackRock to additional expenses and
could lead to modifications in BlackRock’s SFT activities,
including potential adjustments to its activities as agent
lender for its clients.

EX ISTIN G IN TERN A TION A L REGUL A TION —
OV ER VIE W

BlackRock’s international operations are subject to the laws
and regulations of a number of international jurisdictions, as
well as oversight by numerous regulatory agencies and
bodies in those jurisdictions. In some instances, these
operations are also affected by U.S. laws and regulations
that have extra-territorial application.

Below is a summary of certain international regulatory
standards to which BlackRock is subject. It is not meant to
be comprehensive as there are parallel legal and regulatory
arrangements in force in many jurisdictions where
BlackRock’s subsidiaries conduct business.

Of note among the various other international regulations to
which BlackRock is subject, are the extensive and complex
regulatory reporting requirements that necessitate the
monitoring and reporting of issuer exposure levels
(thresholds) across the holdings of managed funds and
accounts and those of the Company.

European Regulation

The FCA currently regulates certain BlackRock subsidiaries
in the United Kingdom (“U.K.”). It also regulates those U.K.
subsidiaries’ branches established in other European Union
countries and the U.K. branches of certain of BlackRock’s
U.S. subsidiaries. In addition, the Prudential Regulation
Authority (“PRA”) regulates one BlackRock U.K. insurance
subsidiary. Authorization by the FCA and (where relevant) the
PRA is required to conduct certain financial services related
business in the U.K. under the Financial Services and
Markets Act 2000 (the “FSMA”). The FCA’s rules adopted
under the FSMA govern the majority of a firm’s capital
resources requirements, senior management arrangements,
conduct of business, interaction with clients, and systems
and controls, whereas the rules of the PRA focus solely on
the prudential requirements that apply to BlackRock’s U.K.-
regulated insurance subsidiary. The FCA supervises
BlackRock’s U.K.-regulated subsidiaries through a
combination of proactive engagement, event-driven and

reactive supervision and thematic based reviews in order to
monitor BlackRock’s compliance with regulatory
requirements. Breaches of the FCA’s rules may result in a
wide range of disciplinary actions against BlackRock’s U.K.-
regulated subsidiaries and/or its employees.

In addition, BlackRock’s U.K.-regulated subsidiaries and
other European subsidiaries and branches, must comply
with the pan-European regulatory regime established by
MiFID, which regulates the provision of investment services
and activities throughout the wider EEA. MiFID, the scope of
which is being enhanced through MiFID II (which is described
more particularly under “— Global Regulatory Reform”
above), sets out detailed requirements governing the
organization and conduct of business of investment firms
and regulated markets. It also includes pre- and post-trade
transparency requirements for equity and non-equity
markets and extensive transaction reporting requirements.
Certain BlackRock European subsidiaries must also comply
with the Consolidated Life Directive and Insurance Mediation
Directive. In addition, relevant entities must comply with
revised obligations on capital resources for banks and
certain investment firms (the Capital Requirements
Directive). These include requirements on capital, as well as
matters of governance and remuneration. The obligations
introduced through these directives will have a direct effect
on some of BlackRock’s European operations.

BlackRock’s EU-regulated subsidiaries are also subject to an
EU regulation on OTC derivatives, central counterparties and
trade repositories, which requires (i) the central clearing of
standardized OTC derivatives, (ii) the application of risk-
mitigation techniques to non-centrally cleared OTC
derivatives and (iii) the reporting of all derivative contracts
since February 2014.

Regulation in the Asia-Pacific Region

In Japan, a BlackRock subsidiary is subject to the Financial
Instruments and Exchange Law (“FIEL”) and the Law
Concerning Investment Trusts and Investment Corporations.
These laws are administered and enforced by the Japanese
Financial Services Agency (“JFSA”), which establishes
standards for compliance, including capital adequacy and
financial soundness requirements, customer protection
requirements and conduct of business rules. The JFSA is
empowered to conduct administrative proceedings that can
result in censure, fines, the issuance of cease and desist
orders or the suspension or revocation of registrations and
licenses granted under the FIEL. This Japanese subsidiary
also holds a license for real estate brokerage activity which
subjects it to the regulations set forth in the Real Estate
Brokerage Business Act.

In Australia, BlackRock’s subsidiaries are subject to various
Australian federal and state laws, and certain subsidiaries
are regulated by the Australian Securities and Investments
Commission (“ASIC”). ASIC regulates companies and
financial services in Australia and is responsible for
promoting investor, creditor and consumer protection.
Failure to comply with applicable laws and regulations could
result in the cancellation, suspension or variation of the
regulated subsidiaries’ licenses in Australia.

The activities of certain BlackRock subsidiaries in Hong Kong
are subject to the Securities and Futures Ordinance (“SFO”)
which governs the securities and futures markets and
regulates, among others, offers of investments to the public
and provides for the licensing of intermediaries. The SFO is

administered by the Securities and Futures Commission
(“SFC”). The SFC is also empowered to establish standards
for compliance as well as codes and guidelines. The relevant
BlackRock subsidiaries and the employees conducting any
of the regulated activities specified in the SFO are required
to be licensed with the SFC, and are subject to the rules,
codes and guidelines issued by the SFC. Failure to comply
with the applicable laws, regulations, codes and guidelines
issued by the SFC could result in the suspension or
revocations of the licenses granted by the SFC.

BlackRock’s operations in Taiwan are regulated by the
Taiwan Financial Supervisory Commission, which is
responsible for regulating securities markets (including the
Taiwan Stock Exchange and the Taiwan Futures Exchange),
the banking industry and the insurance sector. Other
financial regulators oversee BlackRock subsidiaries,
branches, and representative offices across the Asia-Pacific
region, including in Singapore and South Korea. Regulators
in these jurisdictions have authority with respect to financial
services including, among other things, the authority to grant
or cancel required licenses or registrations. In addition,
these regulators may subject certain BlackRock subsidiaries
to net capital requirements.

A V A IL A B L E IN F O R M A T IO N

BlackRock files annual, quarterly and current reports, proxy
statements and all amendments to these reports and other
information with the SEC. BlackRock makes available free-
of-charge, on or through its website at http://
www.blackrock.com, the Company’s Annual Reports on Form
10-K, Quarterly Reports on Form 10-Q, Current Reports on
Form 8-K, proxy statements and all amendments to those
filings, as soon as reasonably practicable after such material
is electronically filed with or furnished to the SEC. The
Company also makes available on its website the charters
for the Audit Committee, Management Development and
Compensation Committee, Nominating and Governance
Committee and Risk Committee of the Board of Directors, its
Code of Business Conduct and Ethics, its Code of Ethics for
Chief Executive and Senior Financial Officers and its
Corporate Governance Guidelines. Further, BlackRock will
provide, without charge, upon written request, a copy of the
Company’s Annual Reports on Form 10-K, Quarterly Reports
on Form 10-Q, Current Reports on Form 8-K, proxy
statements and all amendments to those filings as well as
the committee charters, its Code of Business Conduct and
Ethics, its Code of Ethics for Chief Executive and Senior
Financial Officers and its Corporate Governance Guidelines.
Requests for copies should be addressed to Investor
Relations, BlackRock, Inc., 55 East 52nd Street, New York,
New York 10055. Investors may read and copy any document
BlackRock files at the SEC’s Public Reference Room at 100 F
Street N.E., Washington, D.C. 20549. Please call 1-800-SEC-
0330 for further information on the operation of the Public
Reference Room. Reports, proxy statements and other
information regarding issuers that file electronically with the
SEC, including BlackRock’s filings, are also available to the

public from the SEC’s website at http://www.sec.gov.

Item 1A. Risk Factors

As a leading investment management firm, risk is an
inherent part of BlackRock’s business. Global markets, by
their nature, are prone to uncertainty and subject
participants to a variety of risks. While BlackRock devotes
significant resources across all of its operations to identify,
measure, monitor, manage and analyze market, operating,
legal, compliance, fiduciary and investment risks,
BlackRock’s business, financial condition, operating results
and nonoperating results could be materially adversely
affected and the Company’s stock price could decline as a
result of any of these risks and uncertainties, including the
ones discussed below.

MARKET AND C OMPETITION RISKS

Changes in the value levels of equity, debt, real estate,
commodities, currency or other asset markets may cause
assets under management (“AUM”), revenue and earnings
to decline.

BlackRock’s investment management revenue is primarily
comprised of fees based on a percentage of the value of
AUM and, in some cases, performance fees which are
normally expressed as a percentage of returns to the client.
Numerous factors, including price movements in the equity,
debt or currency markets, or in the price of real estate,
commodities or alternative investments in which BlackRock
invests, could cause:

• the value of AUM, or the returns BlackRock realizes on

AUM, to decrease;

• the withdrawal of funds from BlackRock’s products in

favor of products offered by competitors;

• the rebalancing or reallocating of assets into BlackRock

products that yield lower fees;

• an impairment to the value of intangible assets and

goodwill; or

• a decrease in the value of seed or co-investment

capital.

The occurrence of any of these events may cause the
Company’s AUM, revenue and earnings to decline.

BlackRock’s investment advisory contracts may be
terminated or may not be renewed by clients or fund
boards on favorable terms and the liquidation of certain
funds may be accelerated at the option of investors.

BlackRock derives a substantial portion of its revenue from
its investment advisory business. The advisory or
management contracts BlackRock has entered into with its
clients, including the agreements that govern many of
BlackRock’s investment funds, provide investors or, in some
cases, the independent directors of private investment
funds, with significant latitude to terminate such contracts,
withdraw funds or liquidate funds by simple majority vote

with limited notice or penalty, or to remove BlackRock as a
fund’s investment advisor (or equivalent). BlackRock also
manages its U.S. mutual funds, closed-end and exchange-
traded funds under management contracts that must be
renewed and approved annually by the funds’ respective
boards of directors, a majority of whom are independent
from the Company. BlackRock’s fee arrangements under any
of its advisory or management contracts may be subject to
reduction (including at the behest of a fund’s board of
directors). In addition, if a number of BlackRock’s clients
terminate their contracts, remove BlackRock from advisory
roles, liquidate funds or fail to renew management contracts
on favorable terms, the fees or carried interest BlackRock
earns could be reduced which may cause BlackRock’s AUM,
revenue and earnings to decline.

Increased competition may cause BlackRock’s AUM,
revenue and earnings to decline.

The investment management industry is highly competitive
and has relatively low barriers to entry. BlackRock competes
based on a number of factors including: investment
performance, the level of fees charged, the quality and
diversity of services and products provided, name
recognition and reputation, and the ability to develop new
investment strategies and products to meet the changing
needs of investors. Increased competition on the basis of
any of these factors, including competition leading to fee
reductions on existing or new business, may cause the
Company’s AUM, revenue and earnings to decline.

Failure to maintain Aladdin’s competitive position in a
dynamic market for risk analytics could lead to a loss of
clients and could impede BlackRock’s productivity and
growth.

The sophisticated risk analytics that BlackRock provides via
the Aladdin technology platform to support investment
advisory and BlackRock Solutions clients are an important
element of BlackRock’s competitive success. Aladdin’s
competitive position is based in part on its ability to combine
sophisticated risk analytics with comprehensive portfolio
management, trading and operations tools on a single
platform. Increased competition from risk analytics and
investment management technology providers or a shift in
client demand away to standalone or internally developed
solutions, whether due to market-based or regulatory
factors, may weaken Aladdin’s competitive position and may
cause the Company’s revenue and earnings to decline. In
addition, there can be no assurance that the Company will
be able to effectively protect and enforce its intellectual
property rights in Aladdin.

The impairment or failure of other financial institutions
may cause BlackRock’s AUM, revenue and earnings to
decline.

BlackRock’s investment management activities expose the
products and accounts it manages to many different
industries and counterparties, including brokers and dealers,
commercial and investment banks, clearing organizations,
mutual and hedge funds, and other institutional clients.
Transactions with counterparties expose the products and
accounts BlackRock manages to credit risk in the event the
applicable counterparty defaults. Although BlackRock
regularly assesses risks posed by its counterparties, such
counterparties may be subject to sudden swings in the
financial and credit markets that may impair their ability to
perform or they may otherwise fail to meet their obligations.

Any such impairment or failure could negatively impact the
performance of products or accounts managed by BlackRock,
which could lead to the loss of clients and may cause
BlackRock’s AUM, revenue and earnings to decline.

The failure or negative performance of products offered by
competitors may cause AUM in similar BlackRock products
to decline irrespective of BlackRock’s performance.

Many competitors offer similar products to those offered by
BlackRock and the failure or negative performance of
competitors’ products could lead to a loss of confidence in
similar BlackRock products, irrespective of the performance
of such products. Any loss of confidence in a product type
could lead to withdrawals, redemptions and liquidity issues
in such products, which may cause the Company’s AUM,
revenue and earnings to decline.

Changes in the value of seed and co-investments that
BlackRock owns could affect its nonoperating income and
could increase the volatility of its earnings.

At December 31, 2015, BlackRock’s net economic
investment exposure of approximately $1.5 billion in its
investments (see “Item 7 — Management’s Discussion and
Analysis of Financial Condition and Results of Operations-
Investments”) primarily resulted from co-investments and
seed investments in its sponsored investment funds.
Movements in the equity, debt or currency markets, or in the
price of real estate, commodities or alternative investments,
could lower the value of these investments, increase the
volatility of BlackRock’s earnings and may cause earnings to
decline.

Acts of terror and the continued threat of terrorism, as well
as increased geopolitical unrest could adversely affect the
global economy or specific international, regional and
domestic markets, which may cause BlackRock’s AUM,
revenue and earnings to decline.

Terrorist activity and the continued threat of terrorism and
acts of civil or international hostility, both within the United
States and abroad, as well as ongoing military and other
actions and heightened security measures in response to
these types of threats, may cause significant volatility and
declines in the global markets, loss of life, property damage,
disruptions to commerce and reduced economic activity.
Acts of terror may also result in increased border security
between countries which could adversely affect trade,
impede growth and exacerbate refugee crises arising out of
civil or international conflicts. Continued geopolitical unrest
and terrorist activity that adversely affect the global
economy or capital markets may cause BlackRock’s AUM,
revenue and earnings to decline.

RISKS RELATED TO INVESTMENT P ERFORMANCE

Poor investment performance could lead to the loss of
clients and may cause AUM, revenue and earnings to
decline.

The Company’s management believes that investment
performance, including the efficient delivery of beta for
passively managed products, is one of the most important
factors for the growth and retention of AUM. Poor
investment performance relative to applicable portfolio
benchmarks or to competitors may cause AUM, revenue and
earnings to decline as a result of:

• client withdrawals in favor of better performing

products;

• client shifts from active to passive products which

charge lower fees;

• the diminishing ability to attract additional funds from

existing and new clients;

• the Company earning reduced, minimal or no

performance fees;

• an impairment to the value of intangible assets and

goodwill; or

• a decrease in investment returns on seed and co-

investment capital.

Performance fees may increase volatility of both revenue
and earnings.

A portion of BlackRock’s revenue is derived from
performance fees on investment advisory assignments.
Performance fees represented $621 million, or 5%, of total
revenue for the year ended December 31, 2015. Generally,
the Company is entitled to a performance fee only if the
agreement pursuant to which it is managing the assets
provides for one and if returns on the related portfolio
exceed agreed-upon periodic or cumulative return targets. If
these targets are not exceeded, a performance fee for that
period will not be earned and, if targets are based on
cumulative returns, the Company may not earn performance
fees in future periods, which may cause AUM, revenue and
earnings to decline.

Failure to identify errors in the quantitative models
BlackRock utilizes to manage its business could adversely
impact product performance and client relationships.

BlackRock employs various quantitative models to support
its investment decisions and allocations, including those
related to risk assessment, portfolio management, trading
and hedging activities and product valuations. Any errors in
the underlying models or model assumptions could have
unanticipated and adverse consequences on BlackRock’s
business and reputation.

TECHNOLOGY AND OPE RAT IO NA L RISK S

A failure in BlackRock’s operational systems or
infrastructure, including business continuity plans, could
disrupt operations, damage the Company’s reputation and
may cause BlackRock’s AUM, revenue and earnings to
decline.

BlackRock’s infrastructure, including its technological
capacity, data centers and office space, is vital to the
competitiveness of its business. Moreover a significant
portion of BlackRock’s critical business operations are
concentrated in a limited number of geographic areas,
including San Francisco, New York, London and Gurgaon.
The failure to maintain an infrastructure commensurate with
the size and scope of BlackRock’s business, or the
occurrence of a business outage or event outside
BlackRock’s control, including a major earthquake,
hurricane, fire, terrorist act, pandemic or other catastrophic
event in any location at which BlackRock maintains a major
presence, could materially impact operations, result in
disruption to the business or impede its growth.
Notwithstanding BlackRock’s efforts to ensure business
continuity, if it fails to keep business continuity plans up-to-
date or if such plans, including secure back-up facilities and

systems and the availability of back-up employees, are
improperly implemented or deployed during a disruption, the
Company’s ability to operate could be adversely impacted
which may cause AUM, revenue and earnings to decline or
impact the Company’s ability to comply with regulatory
obligations leading to reputational harm, regulatory fines
and/or sanctions.

A cyber-attack or a failure to implement effective
information and cyber security policies, procedures and
capabilities could disrupt operations and cause financial
losses that may cause BlackRock’s AUM, revenue and
earnings to decline.

BlackRock is dependent on the effectiveness of the
information and cyber security policies, procedures and
capabilities it maintains to protect its computer and
telecommunications systems and the data that reside on or
are transmitted through them. An externally caused
information security incident, such as a hacker attack, virus,
phishing scam or worm, or an internally caused issue, such
as failure to control access to sensitive systems, could
materially interrupt business operations or cause disclosure
or modification of sensitive or confidential client or
competitive information.

There have been a number of recent highly publicized cases
involving financial services and consumer-based companies
reporting the unauthorized disclosure of client or customer
information, as well as cyber-attacks involving the
dissemination, theft and destruction of corporate
information or other assets, as a result of failure to follow
procedures by employees or contractors or as a result of
actions by third parties, including actions by terrorist
organizations and hostile foreign governments. BlackRock
has been the target of attempted cyber-attacks, as well as
the co-opting of its brand to create fraudulent websites, and
must continuously monitor and develop its systems to
protect its technology infrastructure and data from
misappropriation or corruption, as the failure to do so could
disrupt BlackRock’s operations and cause financial losses.
In addition, due to BlackRock’s interconnectivity with third-
party vendors, central agents, exchanges, clearing houses
and other financial institutions, BlackRock may be adversely
affected if any of them are subject to a successful cyber-
attack or other information security event. Any information
security incident or cyber-attack against BlackRock or third
parties with whom it is connected could result in material
financial loss, loss of competitive position, regulatory fines
and/or sanctions, breach of client contracts, reputational
harm or legal liability, which, in turn, may cause BlackRock’s
AUM, revenue and earnings to decline.

Failure or unavailability of third-party dependencies may
adversely affect Aladdin operations and could lead to a
loss of clients and could impede BlackRock’s productivity
and growth

BlackRock relies on its ability to maintain a robust and
secure technological framework to maximize the benefit of
the Aladdin platform. The analytical capabilities of Aladdin
depend on the ability of a number of third parties to provide
data and other information as inputs into Aladdin analytical
calculations. The failure of these third parties to provide
such data or information, or disruption of such information
flows, could result in operational difficulties and adversely
impact BlackRock’s ability to provide services to its
investment advisory and BlackRock Solutions clients.

Operating risks associated with BlackRock’s securities
lending program may result in client losses.

BlackRock lends securities to banks and broker-dealers on
behalf of certain of its clients. 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 must manage this process and is charged with
mitigating the associated operational risks. The failure of
BlackRock’s controls to mitigate such operational risks
could result in financial losses for the Company’s clients that
participate in its securities lending programs (separate from
the risks of collateral investments), and BlackRock may be
held liable for any failure to manage any such risks.

BlackRock indemnifies certain securities lending clients
for specified losses as a result of a borrower default.

BlackRock provides borrower default indemnification to
certain of its securities lending clients. In the event of a
borrower default, BlackRock would use the collateral
pledged by the borrower to repurchase securities out on loan
in order to replace them in a client’s account. Borrower
default indemnification is limited to the shortfall that occurs
in the event the collateral available at the time of the
borrower’s default is insufficient to repurchase those
securities out on loan. BlackRock requires all borrowers to
mark to market their pledged collateral daily to levels in
excess of the value of the securities on loan to mitigate the
likelihood of the indemnity being triggered. Where the
collateral is in the form of cash, the indemnities BlackRock
provides do not guarantee, assume or otherwise insure the
investment performance or return of any cash collateral
vehicle into which that cash collateral is invested. The
amount of securities on loan as of December 31, 2015 and
subject to indemnification was $169.3 billion. BlackRock
held, as agent, cash and securities totaling $179.6 billion as
collateral for indemnified securities on loan at December 31,
2015. Significant borrower defaults occurring
simultaneously with rapid declines in the value of collateral
pledged and/or increases in the value of the securities
loaned may create collateral shortfalls, which could result in
material liabilities under these indemnities and may cause
the Company’s AUM, revenue and earnings to decline.

BlackRock’s decision to provide support to particular
products from time to time, or the inability to provide
support, may cause AUM, revenue and earnings to decline.

BlackRock may, at its option, from time to time support
investment products through capital or other credit support.
Such support may utilize capital and liquidity that would
otherwise be available for other corporate purposes. Losses
on such support, as well as regulatory restrictions on the
Company’s ability to provide such support or the failure to
have available or devote sufficient capital or liquidity to
support products, may cause AUM, revenue and earnings to
decline.

flows. Failure to maintain adequate liquidity could lead to
unanticipated costs and force BlackRock to revise existing
strategic and business initiatives. BlackRock’s access to
equity and debt markets and its ability to issue public or
private debt, or secure lines of credit or commercial paper
back-up lines, on reasonable terms may be limited by
adverse market conditions, a reduction in its long- or short-
term credit ratings, or changes in government regulations,
including tax and interest rates. Failure to obtain funds and/
or financing, or any adverse change to the cost of obtaining
such funds and/or financing, may cause BlackRock’s AUM,
revenue and earnings to decline, curtail its operations and
limit or impede its prospects for growth.

Fraud, or the circumvention of controls and risk
management policies, could have an adverse effect on
BlackRock’s reputation, which may cause the Company’s
AUM, revenue and earnings to decline.

Although BlackRock has adopted a comprehensive risk
management process and continues to enhance various
controls, procedures, policies and systems to monitor and
manage risks, it cannot assure that such controls,
procedures, policies and systems will successfully identify
and manage internal and external risks to its businesses.
BlackRock is subject to the risk that its employees,
contractors or other third parties may deliberately seek to
circumvent established controls to commit fraud or act in
ways that are inconsistent with the Company’s controls,
policies and procedures. Persistent attempts to circumvent
policies and controls or repeated incidents involving fraud,
conflicts of interests or transgressions of policies and
controls could have an adverse effect on BlackRock’s
reputation, which could cause costly regulatory inquiries,
fines and/or sanctions and may cause the Company’s AUM,
revenue and earnings to decline.

BlackRock may be unable to develop new products and
services and the development of new products and
services may expose BlackRock to additional costs or
operational risk.

BlackRock’s financial performance depends, in part, on its
ability to develop, market and manage new investment
products and services. The development and introduction of
new products and services require continued innovative
efforts on the part of BlackRock and may require significant
time and resources as well as ongoing support and
investment. Substantial risk and uncertainties are
associated with the introduction of new products and
services, including the implementation of new and
appropriate operational controls and procedures, shifting
client and market preferences, the introduction of
competing products or services and compliance with
regulatory requirements. A failure to continue to innovate to
introduce new products and services or to successfully
manage the risks associated with such products and
services may cause BlackRock’s costs to fluctuate, which
may cause its AUM, revenue and earnings to decline.

Failure to maintain adequate corporate and contingent
liquidity may cause BlackRock’s AUM, liquidity and
earnings to decline, as well as harm its prospects for
growth.

BlackRock’s ability to meet anticipated cash needs depends
upon a number of factors, including its ability to maintain
and grow AUM, its creditworthiness and operating cash

The failure to recruit and retain employees and develop
and implement effective executive succession could lead
to the loss of clients and may cause AUM, revenue and
earnings to decline.

BlackRock’s success is largely dependent on the talents and
efforts of its highly skilled workforce and the Company’s
ability to plan for the future long-term growth of the

business by identifying and developing those employees who
can ultimately transition into key roles within BlackRock. The
market for qualified fund managers, investment analysts,
technology and risk specialists and other professionals is
competitive, and factors that affect BlackRock’s ability to
attract and retain such employees include the Company’s
reputation, the compensation and benefits it provides, and
its commitment to effectively managing executive
succession, including the development and training of
qualified individuals. BlackRock’s ability to attract and retain
talent may also be affected if European regulations
instituting bonus caps or limiting the amount of
compensation that asset managers can pay to certain
employees are enacted in the varying formats in which they
have been proposed.

In addition, a percentage of the deferred compensation that
BlackRock pays to its employees is tied to the Company’s share
price. As such, if BlackRock’s share price were to decrease
materially, the retention value of such deferred compensation
would decrease. There can be no assurance that the Company
will continue to be successful in its efforts to recruit and retain
employees and effectively manage executive succession. If
BlackRock is unable to offer competitive compensation or
otherwise attract and retain talented individuals, or if it fails to
effectively manage executive succession, the Company’s ability
to compete effectively and retain its existing clients may be
materially impacted.

Future inorganic transactions may harm the Company’s
competitive or financial position if they are not successful.

BlackRock employs a variety of organic and inorganic
strategies intended to enhance earnings, increase product
offerings, access new clients, leverage advances in
technology and expand into new geographies. Inorganic
strategies have included hiring smaller-sized investment
teams, and acquiring investment management businesses
and other small and medium-sized companies. Inorganic
transactions involve a number of financial, accounting, tax,
regulatory, geographical and operational challenges and
uncertainties, including in some cases the assumption of
pre-existing liabilities. Any failure to identify and mitigate
these risks through due diligence and indemnification
provisions could adversely impact BlackRock’s reputation,
may cause its AUM, revenue and earnings to decline, and
may harm the Company’s competitive position in the
investment management industry. Moreover, there can be
no assurances that BlackRock will be able to successfully
integrate or realize the intended benefits from future
inorganic transactions.

Investments in real assets such as real estate,
infrastructure and energy assets may expose BlackRock
and its funds and accounts to new or increased risks and
liabilities, as well as reputational harm.

Investments in real assets, including real estate,
infrastructure and energy assets, may expose BlackRock
and its funds and accounts to increased risks and liabilities
that are inherent in the ownership and management of such
assets. These may include:

• construction risks, including labor disputes or work

stoppages, shortages of material or interruptions to the
availability of necessary equipment;

• accidents, adverse weather, force majeure or

catastrophic events, such as explosions, fires or
terrorist activity beyond BlackRock’s control;

• personal injury or property damage;

• failures on the part of third-party managers or sub-

contractors appointed in connection with investments
or projects to adequately perform their contractual
duties or operate in accordance with applicable laws;

• exposure to stringent and complex foreign, federal,
state and local laws, ordinances and regulations,
including those related to permits, government
contracting, conservation, exploration and production,
tenancy, occupational health and safety, foreign
investment and environmental protection;

• environmental hazards, such as natural gas leaks,

product and waste spills, pipeline and tank ruptures,
and unauthorized discharges of products, wastes and
other pollutants;

• changes to the supply and demand for properties and/

or tenancies or fluctuations in the price of commodities;

• the financial resources of tenants; and

• contingent liabilities on disposition of assets.

The above risks may expose BlackRock’s funds and accounts
to additional expenses and liabilities, including costs
associated with delays or remediation costs, and increased
legal or regulatory costs, all of which could impact the
returns earned by BlackRock’s clients. These risks could also
result in direct liability for BlackRock by exposing BlackRock
to regulatory sanction or litigation, including claims for
compensatory or punitive damages. Similarly, market
conditions may change during the course of developments or
projects in which BlackRock invests that make such
development or project less attractive than at the time it was
commenced and potentially harm the investment returns of
BlackRock’s clients. The occurrence of any such events may
expose BlackRock to reputational harm, divert
management’s time and attention away from BlackRock’s
business activities or cause AUM, revenue and earnings to
decline.

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

As a result of BlackRock’s extensive international
operations, the Company faces associated operational,
regulatory, reputational, political and foreign exchange rate
risks, many of which are outside of the Company’s control.
The failure of the Company’s systems of internal control to
mitigate such risks, or of its operating infrastructure to
support its global activities, could result in operational
failures and regulatory fines and/or sanctions, which may
cause the Company’s AUM, revenue and earnings to decline.

RISKS RELATED TO KEY THIRD- PARTY
RELATIONSHIPS

The failure of a key vendor to BlackRock to fulfill its
obligations could have a material adverse effect on
BlackRock’s reputation or business, which may cause the
Company’s AUM, revenue and earnings to decline.

BlackRock depends on a number of key vendors for various
fund administration, accounting, custody, risk analytics,
market data, market indices and transfer agent roles and
other distribution and operational needs. BlackRock
performs focused diligence on its vendors in an effort to
ensure they operate in accordance with expectations;

however, to the extent any significant deficiencies are
uncovered, there may be few, or no, feasible alternative
vendors available to BlackRock in certain areas. The failure
or inability of BlackRock to diversify its sources for key
services or the failure of any key vendor to fulfill its
obligations could lead to operational and regulatory issues
for the Company, including with respect to certain of its
products, which could result in reputational harm and may
cause BlackRock’s AUM, revenue and earnings to decline.

Any disruption to the Company’s distribution channels may
cause BlackRock’s AUM, revenue and earnings to decline.

BlackRock relies on a number of third parties to provide
distribution, portfolio administration and servicing for
certain BlackRock investment management products and
services through their various distribution channels. In
particular, BlackRock entered into a global distribution
agreement with Bank of America/Merrill Lynch in 2006,
which is subject to renegotiation at the end of 2016.
BlackRock’s ability to maintain strong relationships with its
distributors is material to the Company’s future
performance. If BlackRock is unable to distribute its
products and services successfully, if it experiences an
increase in distribution-related costs, or if it is unable to
replace or renew existing distribution arrangements,
BlackRock’s AUM, revenue and earnings may decline.

Disruption to the operations of third parties whose
functions are integral to BlackRock’s Exchange Traded
Fund (“ETF”) platform may adversely affect the prices at
which ETFs trade, particularly during periods of market
volatility.

BlackRock is the largest provider of ETFs globally. Shares of
ETFs trade on stock exchanges at prices at, above or below
the ETF’s most recent net asset value (“NAV”). The NAV of an
ETF is calculated at the end of each business day and
fluctuates with changes in the market value of the ETF’s
holdings. The trading price of the ETF’s shares fluctuates
continuously throughout trading hours. While an ETF’s
creation/redemption feature and the arbitrage mechanism
are designed to make it more likely that the ETF’s shares
normally will trade at prices close to the ETF’s NAV,
exchange prices may deviate significantly from the ETF’s
NAV. ETF market prices are subject to numerous potential
risks, including trading halts invoked by a stock exchange,
inability or unwillingness of market markers, authorized
participants, settlement systems or other market
participants to perform functions necessary for an ETF’s
arbitrage mechanism to function effectively, or significant
market volatility. Although BlackRock and other large issuers
of ETFs are working with market participants to enhance
U.S. equity market resiliency, there can be no assurance that
structural reforms will be implemented in a timely or
effective fashion, or at all. Moreover, if market events lead to
incidences where ETFs trade at prices that deviate
significantly from an ETF’s NAV, or trading halts are invoked
by the relevant stock exchange or market, investors may lose
confidence in ETF products and redeem their holdings,
which may cause BlackRock’s AUM, revenue and earnings to
decline.

LEGAL A ND REGULATORY RISK S

BlackRock is subject to extensive and pervasive regulation
around the world.

BlackRock’s business is subject to extensive regulation
around the world. These regulations subject BlackRock’s
business activities to a pervasive array of increasingly
detailed operational requirements, compliance with which is
costly, time-consuming and complex. BlackRock may be
adversely affected by its failure to comply with current laws
and regulations or by changes in the interpretation or
enforcement of existing laws and regulations. Challenges
associated with interpreting regulations issued in numerous
countries in a globally consistent manner may add to such
risks, if regulators in different jurisdictions have inconsistent
views or provide only limited regulatory guidance. In
particular, violation of applicable laws or regulations could
result in fines and/or sanctions, temporary or permanent
prohibition of certain activities, reputational harm and
related client terminations, suspensions of employees or
revocation of their licenses, suspension or termination of
investment adviser, broker-dealer or other registrations, or
suspension or termination of bank charter or other
sanctions, which could have a material adverse effect on
BlackRock’s reputation or business and may cause the
Company’s AUM, revenue and earnings to decline. For a
more extensive discussion of the laws, regulations and
regulators to which BlackRock is subject, see “Item 1 —
Business — Regulation.”

Regulatory reforms in the United States and internationally
expose BlackRock and its clients to increasing regulatory
scrutiny.

In recent years a number of proposals for regulatory reform
have been introduced, and the level of regulatory scrutiny to
which BlackRock is subject is expected to increase. See
“Item 1 — Business — Regulation.” A number of regulatory
reforms that have been proposed may require BlackRock to
alter its business or operating activities, which could be
time-consuming and costly and which may impede the
Company’s growth and may cause AUM, revenue and
earnings to decline. Regulatory reform may also impact
BlackRock’s banking, insurance company and pension fund
clients, which could cause them to change their investment
strategies or allocations in manners that may be adverse to
BlackRock. Key regulatory reforms that may impact the
Company include:

• Designation as a systemically important financial

institution: Both the FSB, working with IOSCO, and FSOC
are considering potential systemic risk related to asset
management. In July 2014, the FSOC issued a
statement indicating that their review would focus on
products and activities, and FSOC subsequently
released a request for information addressing: market
liquidity and fund redemption risk, the use of leverage,
operational risk, and the resolution of asset managers
including the transition of client assets. In June 2015,
IOSCO issued a statement indicating they also favored a
products and activities approach in their review of asset

managers, and in July 2015, the FSB made a similar
announcement. In September 2015, the FSB released a
statement indicating that their review would focus on:
market liquidity and fund redemption risk, the use of
leverage, securities lending practices, operational risk,
and risks from pension funds and sovereign wealth
funds. Although FSOC, IOSCO and FSB have shifted from
a focus on designating firms and/or funds as
systemically important (i.e., G-SIFI or SIFI designations),
the process is ongoing and may lead to designations in
the future. In the event that BlackRock receives a SIFI
designation, under the DFA, the Federal Reserve System
is charged with establishing enhanced regulatory
requirements for nonbank financial institutions and
BlackRock could become subject to its direct
supervision. If BlackRock were designated a SIFI or G-
SIFI, it could become subject to enhanced prudential,
capital, supervisory and other requirements, such as
risk-based capital requirements, leverage limits,
liquidity requirements, resolution plan and credit
exposure report requirements, concentration limits, a
contingent capital requirement, enhanced public
disclosures, short-term debt limits and overall risk
management requirements. Requirements such as
these, which were designed to regulate banking
institutions, would be extremely burdensome for
BlackRock, unless they were modified to be applicable
to an asset manager. No proposals have been made
indicating how such measures would be adapted for
asset managers, if at all.

• The Volcker Rule: Provisions of the DFA referred to as

the “Volcker Rule” created a new section of the BHC Act
that places limitations on the ability of banks and their
subsidiaries to engage in proprietary trading and to
invest in and transact with certain private investment
funds, including hedge funds, private equity funds and
funds of funds (collectively “covered funds”).
Conformance with the Volcker Rule’s requirements may
reduce the level of market making and liquidity
activities of several of BlackRock’s trading
counterparties, which may adversely impact the
liquidity and, in some cases, the pricing of various
financial instruments in which BlackRock client
accounts invest. Because the Federal Reserve currently
treats BlackRock as a nonbank subsidiary of PNC,
BlackRock may be required to conform its activities to
the requirements of the Volcker Rule. On December 18,
2014, the Federal Reserve announced a second
extension to the Volcker Rule conformance period,
giving banking entities until July 21, 2016, to conform
investments in and relationships with covered funds
and foreign funds that were in place prior to
December 31, 2013 (“legacy covered funds”). The
Federal Reserve also announced its intention to grant
banking entities an additional one-year extension of the
conformance period until July 21, 2017, to conform
ownership interests in and relationships with these
legacy covered funds. BlackRock has chosen to
commence a conformance program for covered funds,
including legacy covered funds. The Volcker Rule’s
restrictions may, among other things, limit BlackRock’s
ability to invest in covered funds and require BlackRock
to remove its name from the names of its covered funds.
The Volcker Rule may also require BlackRock to sell
certain seed and co-investments that it holds in covered
funds, which may occur at a discount to existing
carrying value, depending on market conditions.

• Money market mutual fund reform: Approximately 3% of
BlackRock’s AUM as of December 31, 2015, consisted of
assets in U.S. MMFs, of which institutional prime or
institutional municipal MMFs (including offshore funds
that feed into such MMFs) comprised approximately
2%. In July 2014, the SEC adopted new rules designed
to reform the regulatory structure governing MMFs and
to address the perceived systemic risks that such funds
present. The new rules, to which U.S. MMFs must
conform by October 2016, require institutional prime
and institutional municipal MMFs to employ a floating
net asset value per share method of pricing, which
allows the daily share prices of these funds to fluctuate
along with changes in the market-based value of fund
assets. Retail MMFs may continue operating with a
constant net asset value per share. The rules also
provide for new tools for institutional and retail MMFs’
boards designed to address market shocks, including
liquidity fees and redemption gates. The new rules do
not apply to government (non-municipal) MMFs,
although such funds may “opt-in” to the new liquidity
fee and redemption gate provisions if previously
disclosed to investors. Implementation of these new
rules requires the development of new or additional
systems by BlackRock and the funds’ service providers.
BlackRock has commenced efforts to move its MMFs
into compliance in advance of the deadline. The impact
of the rules that affect the structure of the funds on
BlackRock’s business remains uncertain as clients
must decide which products fit their investment needs.
The new rules will, however, affect certain of
BlackRock’s funds’ investment strategies, portfolio
liquidity and return potential. The new rules will also
result in changes to BlackRock’s existing U.S. MMFs
and may reduce the attractiveness of certain U.S. MMFs
to investors.

• Regulation of swaps and derivatives: The

implementation of DFA regulations, similar regulations
in the EU and other global jurisdictions relating to
swaps and derivatives could impact the manner in
which BlackRock-advised funds and accounts use and
trade swaps and other derivatives, increasing the costs
of derivatives trading for BlackRock’s clients. Various
global rules and regulations applicable to the use of
financial products by funds, accounts and
counterparties that have been adopted or proposed will
require BlackRock to build and implement new
compliance monitoring procedures to address the
enhanced level of oversight to which it and its clients
will be subject. These rules will also introduce new
central clearing requirements for certain swap
transactions and will require that certain swaps be
executed only on or through electronic trading venues
(as opposed to over the phone or other execution
methods), with which BlackRock will have to comply. In
the United States, certain interest rate swaps and
certain index credit default swaps are already subject to
the DFA central clearing and electronic trading venue
requirements, with additional products and asset
classes potentially becoming subject to these
requirements in 2016 and beyond. For swaps and
security-based swaps that are not centrally cleared,
U.S. bank regulators recently adopted rules that could
require BlackRock-advised funds and accounts to post
margin payments when trading with a swap dealer that
is regulated by one of the U.S. bank regulators. The
CFTC also recently adopted similar margin rules

applicable when trading non-cleared swaps with swap
dealers who are not regulated by one of the U.S. bank
regulators. These rules have the potential to increase
the complexity and cost of trading non-cleared
derivatives for BlackRock’s clients. In EMEA, central
clearing requirements will be implemented in a phased
manner and will apply to BlackRock funds and accounts
beginning in the latter half of 2016. The new rules and
regulations may produce regulatory inconsistencies in
global derivatives trading rules and increase
BlackRock’s operational and legal risks.

• SEC asset management industry initiatives: The SEC and

its staff continue to engage in various initiatives and
reviews that seek to improve and modernize the
regulatory structure governing the asset management
industry, and registered investment companies in
particular. During 2015, the SEC proposed, among other
things: enhanced reporting by investment advisors,
enhanced reporting on registered mutual funds, new
rules for liquidity risk management in registered funds,
and new rules governing the use of derivatives and
leverage by registered investment companies and
business development companies. Furthermore, in June
2015, the SEC issued a request for comments regarding
practices related to ETFs, which is widely expected to
result in a future rulemaking. The SEC has also
indicated an intention to propose new rules for the
stress testing of registered investment companies and
transition planning by asset managers, including the
transfer of client assets. The SEC’s focus has also been
directed toward risk identification and controls in
various areas, including the use of derivatives and other
trading practices (as reflected in the SEC’s late
December 2015 rule proposal referenced in “Item 1 —
Business — Regulation — Regulation of Swaps and
Derivatives” above), cyber-security and the evaluation of
systemic risks. While these proposals have yet to be
finalized into new rules, any new rules, guidance or
regulatory initiatives resulting from these efforts could
require BlackRock to alter its business or operating
activities or fund management practices, or increase its
public reporting and disclosure requirements, which
could be time-consuming and costly and which may
impede BlackRock’s growth and may cause AUM,
revenue and earnings to decline.

• Revised DoL Fiduciary Rule: In April 2015, the DoL

proposed a new regulation defining the term “fiduciary”
for purposes of the fiduciary responsibility provisions of
Title I of ERISA and the prohibited transaction exercise
tax provisions of the IRS. The rule has been highly
criticized by industry participants, particularly retail
intermediaries, and BlackRock is engaging with the DoL,
trade associations and industry participants in an effort
to affect revisions to the proposed rule. To the extent
the rule is enacted as written, it will require BlackRock
to re-paper a number of its distribution relationships,
create compliance and operational challenges for
BlackRock’s distribution partners and may limit
BlackRock’s ability to provide certain useful services
and education to its clients.

• Increased international regulatory scrutiny: In addition
to the extensive scrutiny BlackRock faces from U.S.-
based regulators, the Company and its subsidiaries are
also subject to the authority of numerous governmental
and regulatory bodies globally, in particular in Europe

and the Asia-Pacific region. These regulators have
imposed numerous regulations, guidelines and
standards on the activities of BlackRock and its
subsidiaries covering a variety of areas, including
capital resources requirements, marketing activities,
client and investor protections, senior management
arrangements, and system and control requirements. In
the event that BlackRock or any of its subsidiaries fails
to comply with these often complex guidelines,
regulations and standards, the regulators have broad
powers to suspend or revoke any licenses they may have
granted and/or to impose fines and/or sanctions.

• European Union Directives: In the aftermath of the
financial crisis, the European Commission (“EC”)
initiated a plan for EU financial reform, including a
number of consultations and initiatives intended to
improve retail investor protections, which the EC
reflected in new or updated Directives and regulations.
The resulting review of MiFID, introduction of AIFMD,
the introduction of MiFID II and the revision of the UCITS
Directive have increased the compliance, disclosure and
other obligations BlackRock faces in the European
Economic Area. Once fully implemented, these
Directives will have significant and wide-ranging
impacts on EU securities and derivative markets,
products and distribution, and internal governance
arrangements, which will directly and indirectly impact
BlackRock’s EU regulated subsidiaries and other group
companies.

• Reform of European Retail Distribution: BlackRock must

also comply with retail distribution rules aimed at
enhancing consumer protections, overhauling mutual
fund fee structures by banning the payment of
commissions to distributors and increasing
professionalism in the retail investment sector. The
rules were originally introduced in the United Kingdom
in 2012 and similar rules have since been introduced in
other jurisdictions where BlackRock operates such as
the Netherlands, and are under discussion elsewhere.
Similarly, MiFID II will contain a ban on certain advisers
recovering commissions and other nonmonetary
benefits from fund managers. These rules will lead to
greater fragmentation of distribution rules and may
lead to changes to BlackRock’s client servicing and
distribution models, in particular affecting the fees
BlackRock is able to charge to its clients and the
commissions it is able to pay to its distribution partners.

Legal proceedings may cause the Company’s AUM, revenue
and earnings to decline.

BlackRock is subject to a number of sources of potential
legal liability and the Company, certain of the investment
funds it manages and certain of its subsidiaries and
employees have been named as defendants in various legal
actions, including arbitrations, class actions and other
litigation arising in connection with BlackRock’s activities.
Certain of BlackRock’s subsidiaries and employees are also
subject to periodic examination, special inquiries and
potential proceedings by regulatory authorities, including
the SEC, Federal Reserve, OCC, DoL, CFTC and FCA.
Similarly, from time to time, BlackRock receives subpoenas
or other requests for information from various U.S. and non-
U.S. governmental and regulatory authorities in connection
with certain industry-wide, company-specific or other
investigations or proceedings. These examinations, inquiries

and proceedings, have in the past and could in the future, if
compliance failures or other violations are found, cause the
relevant regulator to institute proceedings and impose
sanctions for violations. Any such action may also result in
litigation by investors in BlackRock’s funds, other BlackRock
clients or by BlackRock’s shareholders, which could harm
the Company’s reputation and may cause its AUM, revenue
and earnings to decline, potentially harm the investment
returns of the applicable fund, or result in the Company
being liable for damages.

In addition, when clients retain BlackRock to manage their
assets or provide them with products or services, they
typically specify contractual requirements or guidelines that
BlackRock must observe in the provision of its services. A
failure to comply with these guidelines or requirements
could expose BlackRock to lawsuits, harm its reputation or
cause clients to withdraw assets or terminate contracts.

As BlackRock’s business continues to grow, the Company
must routinely address conflicts of interest, as well as the
perception of conflicts of interest, between itself and its
clients, employees or vendors. In addition, the SEC and other
regulators have increased their scrutiny of potential
conflicts. BlackRock has procedures and controls in place
that are designed to detect and address these issues.
However, appropriately dealing with conflicts of interest is
complex and if the Company fails, or appears to fail, to
appropriately deal with any conflict of interest, it may face
reputational damage, litigation, regulatory proceedings, or
penalties, fines and/or sanctions, any of which may cause
BlackRock’s AUM, revenue and earnings to decline.

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

As described in “Item 1-Business-Regulation”, PNC owns
approximately 22% of BlackRock’s capital stock. Based on
the Federal Reserve’s interpretation of the BHC Act, the
Federal Reserve takes the position that this ownership
interest causes BlackRock to be treated as a nonbank
subsidiary of PNC for purposes of the BHC Act, thereby
subjecting BlackRock to banking regulation, including the
supervision and regulation of the Federal Reserve. Such
banking regulation limits the activities and the types of
businesses that a nonbank subsidiary may conduct. The
Federal Reserve has broad enforcement authority over
nonbank subsidiaries, including the power to prohibit them
from conducting any activity that, in the Federal Reserve’s
opinion, is unauthorized or constitutes an unsafe or unsound
practice, and to impose substantial fines and other penalties
for violations. PNC is regulated as a “financial holding
company” under the BHC Act, which allows PNC and
BlackRock to engage in a much broader set of activities than
would otherwise be permitted under the BHC Act; any failure
of PNC to maintain its status as a financial holding company
could result in substantial limitations on certain BlackRock
activities and its growth.

In addition, BlackRock’s trust bank subsidiary, which is
organized as a national bank, is separately subject to
banking regulation by the OCC. The OCC has broad
supervisory and enforcement authority over BlackRock’s
trust bank subsidiary and also subjects it to capital
requirements. Being subject to banking regulation may put
BlackRock at a competitive disadvantage because certain of
its competitors are not subject to these limitations.

Failure to comply with ownership reporting requirements
could result in harm to BlackRock’s reputation and may
cause its AUM, revenue and earnings to decline.

Of note among the various international regulations to which
BlackRock is subject are the extensive and increasingly
stringent regulatory reporting requirements that necessitate
the monitoring and reporting of issuer exposure levels
(thresholds) across the holdings of managed funds and
accounts and those of the Company. The specific triggers
and the reporting methods that these threshold filings entail
vary significantly by regulator and across jurisdictions.
BlackRock continues to invest in technology, training and its
employees to enhance its monitoring and reporting functions
and improve the timeliness and accuracy of its disclosures.
Despite these investments, the complexity of the various
threshold reporting requirements combined with the
breadth of the assets managed by the Company and high
volume of securities trading have caused errors and
omissions to occur in the past, and pose a risk that errors or
omissions will occasionally occur in the future. Any such
errors may expose BlackRock to monetary penalties, which
could have an adverse effect on BlackRock’s reputation and
may cause its AUM, revenue and earnings to decline.

New tax legislation or changes in U.S. and foreign tax laws,
treaties and regulations or challenges to BlackRock’s
historical taxation practices may adversely affect
BlackRock’s effective tax rate, business and overall
financial condition.

BlackRock’s businesses may be affected by new tax
legislation or regulations, or the modification of existing tax
laws, regulations and rulings, by U.S. or non-U.S. authorities.
In particular, FATCA and the CRS have introduced new
investor onboarding, withholding and reporting rules aimed
at ensuring persons with financial assets outside of their tax
residence country pay appropriate taxes. FATCA and CRS will
impact both U.S. and non-U.S. funds and subject BlackRock
to additional administrative burdens. Similarly, certain EU
Member States have enacted FTTs, which impose taxation
on a broad range of financial instrument and derivatives
transactions. Several other EU Member States continue to
discuss introducing FTTs. If introduced as proposed, FTTs
could have an adverse effect on BlackRock’s financial
results and on clients’ performance results. In addition, in
October 2015 the OECD released its final BEPS package in
an effort to curb the use of certain tax regimes and elements
of tax planning, primarily in a cross-border context. The final
package was endorsed by the G20 and is subject to
implementation. BEPS contains a number of provisions that
may negatively impact cross-border investing using
commingled investment vehicles. In addition, in January
2016, the European Commission announced an Anti-Tax
Avoidance Package (“EU Package”) for consideration by the
European Parliament and Council containing measures to
regulate certain elements of tax planning further and to
boost tax transparency. Once implemented, the BEPS
package and the EU Package could curtail the amount of
investments channeled by, and have unintended taxation
consequences for, funds as well as the BlackRock’s overall
tax position, which could adversely affect BlackRock’s
financial condition and that of its clients.

The Company also manages significant assets in products
and accounts that have specific tax objectives, which could
be adversely impacted by changes in tax law or policy,

particularly with respect to U.S. municipal income, the U.S.
individual income tax rate on qualified dividends and long-
term capital gains and, globally, alternative products. The
application of complex tax regulations involves numerous
uncertainties and, in the normal course of business, U.S. and
non-U.S. tax authorities may review and challenge
BlackRock’s historical tax positions. These challenges may
result in adjustments to BlackRock’s tax position, or impact
the timing or amount of, taxable income, deductions or other
tax allocations, which may adversely affect BlackRock’s
effective tax rate and overall financial condition.

RISKS R EL ATED TO BLAC KR O C K’ S SI G N I F I C ANT
SH A RE H OL DE R

PNC owns a large portion of BlackRock’s capital stock.
Future sales or distributions of BlackRock’s common stock
in the public market by the Company or PNC could
adversely affect the trading price of BlackRock’s common
stock.

As of December 31, 2015, PNC owned 22% of the Company’s
capital stock. Sales or distributions of a substantial number
of shares of BlackRock’s common stock in the public market,
or the perception that these sales or distributions might
occur, may cause the market price of BlackRock’s common
stock to decline.

PNC has agreed to vote as a stockholder in accordance
with the recommendation of BlackRock’s Board of
Directors, and certain actions will require special board
approval or the prior approval of PNC.

As discussed in BlackRock’s proxy statement, PNC has
agreed to vote all of its voting shares in accordance with the
recommendation of BlackRock’s Board of Directors in
accordance with the provisions of its stockholder agreement
with BlackRock. As a consequence, if the shares held by PNC
constitute a substantial portion of the outstanding voting
shares, matters submitted to a stockholder vote that require
a majority or a plurality of votes for approval, including
elections of directors, will have a substantial number of
shares voted in accordance with the determination of the
BlackRock Board of Directors. This arrangement has the
effect of concentrating a significant block of voting control
over BlackRock in its Board of Directors, whether or not
stockholders agree with any particular determination of the
Board.

As discussed in BlackRock’s proxy statement, pursuant to
BlackRock’s stockholder agreement with PNC, the following
may not be done without prior approval of all of the
independent directors, or at least two-thirds of the directors,
then in office:

• appointment of a new Chief Executive Officer of

BlackRock;

• any merger, issuance of shares or similar transaction in

which beneficial ownership of a majority of the total
voting power of BlackRock capital stock would be held
by persons different than those currently holding such
majority of the total voting power, or any sale of all or
substantially all assets of BlackRock;

• any acquisition of any person or business which has a
consolidated net income after taxes for its preceding

fiscal year that equals or exceeds 20% of BlackRock’s
consolidated net income after taxes for its preceding
fiscal year if such acquisition involves the current or
potential issuance of BlackRock capital stock
constituting more than 10% of the total voting power of
BlackRock capital stock issued and outstanding
immediately after completion of such acquisition;

• any acquisition of any person or business constituting a

line of business that is materially different from the
lines of business BlackRock and its controlled affiliates
are engaged in at that time if such acquisition involves
consideration in excess of 10% of the total assets of
BlackRock on a consolidated basis;

• except for repurchases otherwise permitted under the
stockholder agreement, any repurchase by BlackRock
or any subsidiary of shares of BlackRock capital stock
such that after giving effect to such repurchase
BlackRock and its subsidiaries shall have repurchased
more than 10% of the total voting power of BlackRock
capital stock within the 12-month period ending on the
date of such repurchase;

• any amendment to BlackRock’s certificate of

incorporation or bylaws; or

• any matter requiring stockholder approval pursuant to

the rules of the NYSE.

Additionally, BlackRock may not enter into any of the
following transactions without the prior approval of PNC:

• any sale of any subsidiary of BlackRock, the annualized
revenue of which, together with the annualized revenue
of any other subsidiaries disposed of within the same
year, are more than 20% of the annualized revenue of
BlackRock for the preceding fiscal year on a
consolidated basis;

• for so long as BlackRock is a subsidiary of PNC for

purposes of the BHC Act, entering into any business or
activity that is prohibited for any such subsidiary under
the BHC Act;

• any amendment of any provision of a stockholder

agreement between BlackRock and any stockholder
beneficially owning greater than 20% of BlackRock
capital stock that would be viewed by a reasonable
person as being adverse to PNC or materially more
favorable to the rights of any stockholder beneficially
owning greater than 20% of BlackRock capital stock
than to PNC;

• any amendment, modification, repeal or waiver of

BlackRock’s certificate of incorporation or bylaws that
would be viewed by a reasonable person as being
adverse to the rights of PNC or more favorable to the
rights of any stockholder beneficially owning greater
than 20% of BlackRock capital stock, or any settlement
or consent in a regulatory enforcement matter that
would be reasonably likely to cause PNC or any of its
affiliates to suffer regulatory disqualification,
suspension of registration or license or other material
adverse regulatory consequences; or

• a voluntary bankruptcy or similar filing by BlackRock.

Item 1B. Unresolved Staff
Comments

The Company has no unresolved comments from the SEC
staff relating to BlackRock’s periodic or current reports filed
with the SEC pursuant to the Exchange Act.

Item 2. Properties

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

Item 3. Legal Proceedings

From time to time, BlackRock receives subpoenas or other
requests for information from various U.S. federal, state
governmental and domestic 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 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.

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. On
March 25, 2015, Defendants’ motion to dismiss the
Consolidated Complaint was denied. The Defendants believe
the claims in both lawsuits are without merit and intend to
vigorously defend the actions.

Between November 12, 2015 and November 16, 2015,
BlackRock, Inc., BlackRock Realty Advisors, Inc. (“BRA”) and
the BlackRock Granite Property Fund, Inc. (“Granite Fund”),
along with certain other Granite Fund-related entities
(collectively, the “BlackRock Parties”) were named as
defendants in thirteen separate 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 is the
property manager of the Property, and certain other entities,
including the developer of the Property, building contractors
and building materials suppliers. The plaintiffs allege,
among other things, that the BlackRock Parties were
negligent in their ownership, control and maintenance of the
Property’s balcony, and seek monetary, including punitive,
damages. BlackRock believes the claims in the lawsuits are
without merit and intends to vigorously defend the actions.

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.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

Item 5. Market for Registrant’s
Common Equity, Related
Stockholder
Matters and Issuer Purchases of
Equity Securities

BlackRock’s common stock is listed on the NYSE and is
traded under the symbol “BLK”. At the close of business on
January 31, 2016, there were 272 common stockholders of
record. Common stockholders include institutional or
omnibus accounts that hold common stock for many
underlying investors.

The following table sets forth for the periods indicated the
high and low reported sale prices, period-end closing prices
for the common stock and dividends declared per share for
the common stock as reported on the NYSE:

Common Stock
Price Ranges

High

Low

Closing
Price

Cash
Dividend
Declared

2015

First Quarter

$ 380.33

$ 340.51

$ 365.84

Second Quarter

$ 377.85

$ 344.54

$ 345.98

Third Quarter

$ 354.54

$ 293.52

$ 297.47

Fourth Quarter

$ 363.72

$ 295.92

$ 340.52

2014

First Quarter

$ 323.89

$ 286.39

$ 314.48

Second Quarter

$ 319.85

$ 293.71

$ 319.60

Third Quarter

$ 336.47

$ 301.10

$ 328.32

Fourth Quarter

$ 364.40

$ 303.91

$ 357.56

$ 2.18

$ 1.93

BlackRock’s closing common stock price as of February 25, 2016
was $313.62.

DIVIDENDS

On January 14, 2016, the Board of Directors approved
BlackRock’s quarterly dividend of $2.29 to be paid on
March 23, 2016 to stockholders of record at the close of
business on March 7, 2016.

PNC receives dividends on shares of nonvoting participating
preferred stock, which are equivalent to the dividends
received by common stockholders.

ISSU E R PURC HASE S OF E Q UIT Y SE C U RI T I E S

During the three months ended December 31, 2015, the Company made the following purchases of its common stock, which is
registered pursuant to Section 12(b) of the Exchange Act.

October 1, 2015 through October 31, 2015

November 1, 2015 through November 30, 2015

December 1, 2015 through December 31, 2015

Total

Total
Number of
Shares
Purchased

Average
Price Paid
per Share

244,379(2)

$ 331.76

491,287(2)

$ 355.43

62,180(2)

$ 358.99

797,846

$ 348.46

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

243,705

488,869

56,484

789,058

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

6,825,131

6,336,262

6,279,778

(1)

(2)

In January 2015, the Board of Directors approved an increase in the availability of shares that may be repurchased under the Company’s existing
share repurchase program to allow for the repurchase of up to a total of 9.4 million additional shares of BlackRock common stock with no stated
expiration date.

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.

Item 6. Selected Financial Data

The selected financial data presented below has been derived in part from, and should be read in conjunction with, the
consolidated financial statements of BlackRock and Item 7, Management’s Discussion and Analysis of Financial Condition and
Results of Operations included in this Form 10-K.

(in millions, except per share data)

Income statement data:

Revenue

Related parties(1)

Other third parties

Total revenue

Expense

Restructuring charges

Other operating expenses

Total expenses

Operating income

Total nonoperating income (expense)

Income before income taxes

Income tax expense

Net income

Less: Net income (loss) attributable to noncontrolling interests

Year ended December 31,

2015

2014

2013

2012

2011

$ 7,084

$ 6,994

$ 6,260

$ 5,501

$ 5,431

4,317

4,087

3,920

11,401

11,081

10,180

—

6,737

4,664

(62)

4,602

1,250

3,352

—

6,607

4,474

(79)

4,395

1,131

3,264

(30)

—

6,323

3,857

116

3,973

1,022

2,951

3,836

9,337

—

5,813

3,524

3,650

9,081

5,800

5,832

3,249

(54)

(114)

3,470

1,030

2,440

(18)

3,135

796

2,339

Net income attributable to BlackRock, Inc.

$ 3,345

$ 3,294

$ 2,932

$ 2,458

$ 2,337

Per share data:(2)

Basic earnings

Diluted earnings

Book value(3)

Cash dividends declared and paid per share

$ 20.10

$ 19.58

$ 17.23

$ 14.03

$ 12.56

$ 19.79

$ 19.25

$ 16.87

$ 13.79

$ 12.37

$ 172.12

$ 164.06

$ 156.69

$ 148.20

$ 140.07

8.72

7.72

6.72

6.00

5.50

(1) BlackRock’s related party revenue includes fees for services provided to registered investment companies that it manages, which include mutual

funds and exchange-traded funds, as a result of the Company’s advisory relationship. In addition, equity method investments are considered related
parties due to the Company’s influence over the financial and operating policies of the investee. See Note 16, Related Party Transactions, to the
consolidated financial statements for more information.

(2) Participating preferred stock is considered to be a common stock equivalent for purposes of earnings per share calculations.

(3) Total BlackRock stockholders’ equity, excluding appropriated retained earnings, divided by total common and preferred shares outstanding at

December 31 of the respective year-end.

(in millions)

2015

2014

2013

2012

2011

December 31,

Balance sheet data:

Cash and cash equivalents

Goodwill and intangible assets, net

Total assets(1)

Less:

6,083

5,723

4,390

4,606

3,506

30,495

225,261

30,305

239,792

30,481

219,859

30,312

200,433

30,148

179,880

Separate account assets(2)

150,851

161,287

155,113

134,768

118,871

Collateral held under securities lending

agreements(2)

Consolidated investment vehicles(3)

Adjusted total assets

Short-term borrowings

Long-term borrowings

Total borrowings
Total BlackRock, Inc. stockholders’ equity

Assets under management:

Equity:

Active

iShares

Non-ETF index

Equity subtotal

Fixed income:

Active

iShares

Non-ETF index

Fixed income subtotal

Multi-asset

Alternatives:

Core

Currency and commodities(4)

Alternatives subtotal

Long-term

Cash management

Advisory(5)

Total

31,336

678

33,654

3,787

21,788

2,714

23,021

2,813

$
$

42,396

41,064

40,244

39,831

— $

4,930

4,930
28,503

4,922

4,922
27,366

$
$

4,925

4,925
26,460

$
$

100

5,669

5,769
25,403

$
$

20,918

2,006

38,085

100

4,674

4,774
25,048

$ 281,319

292,802

317,262

287,215

275,156

823,156

1,319,297

2,423,772

790,067

1,368,242

2,451,111

718,135

1,282,298

2,317,695

534,648

1,023,638

1,845,501

419,651

865,299

1,560,106

719,653

254,190

448,525

701,324

217,671

474,658

652,209

178,835

411,142

656,331

192,852

410,139

614,804

153,802

479,116

1,422,368

1,393,653

1,242,186

1,259,322

1,247,722

376,336

377,837

341,214

267,748

225,170

92,085

20,754

88,006

23,234

85,026

26,088

68,367

41,428

63,647

41,301

112,839

111,240

111,114

109,795

104,948

4,335,315

4,333,841

4,012,209

3,482,366

3,137,946

299,884

10,213

296,353

21,701

275,554

36,325

263,743

45,479

254,665

120,070

$ 4,645,412

$ 4,651,895

$ 4,324,088

$ 3,791,588

$ 3,512,681

(1)

Includes separate account assets that are segregated funds held for purposes of funding individual and group pension contracts and collateral held
under securities lending agreements related to these assets that have equal and offsetting amounts recorded in liabilities and ultimately do not
impact BlackRock’s stockholders’ equity or cash flows.

(2) Equal and offsetting amounts, related to separate account assets and collateral held under securities lending agreements, are recorded in liabilities.

(3) Amounts include assets held by consolidated sponsored investment products. During 2015, the Company adopted new accounting guidance on

consolidations effective January 1, 2015 using the modified retrospective method. As a result of the adoption, the Company’s balance sheet at
December 31, 2015 reflects the deconsolidation of the Company’s previously consolidated collateralized loan obligations.

(4) Amounts include commodity iShares.

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

(12) fluctuations in the carrying value of BlackRock’s
economic investments; (13) 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; (14) BlackRock’s success in
maintaining the distribution of its products; (15) 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 (16) the
impact of problems at other financial institutions or the
failure or negative performance of products at other
financial institutions.

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 $4.645 trillion of AUM at December 31, 2015. With
approximately 13,000 employees in more than 30 countries,
BlackRock provides a broad range of investment and risk
management services to institutional and retail clients
worldwide.

For further information see Note 1, Introduction and Basis of
Presentation, in the notes to the consolidated financial
statements beginning on page F-1 of this Form 10-K.

Item 7. Management’s Discussion
and Analysis of Financial Condition
and Results of Operations

FORWARD-L OO KI NG ST ATE MEN T S

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.

In addition to risk factors previously disclosed in BlackRock’s
Securities and Exchange Commission (“SEC”) reports and
those identified elsewhere in this report, the following
factors, among others, could cause actual results to differ
materially from forward-looking statements or historical
performance: (1) the introduction, withdrawal, success and
timing of business initiatives and strategies; (2) changes and
volatility in political, economic or industry conditions, the
interest rate environment, foreign exchange rates or
financial and capital markets, which could result in changes
in demand for products or services or in the value of assets
under management (“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 impact of legislative and regulatory
actions and reforms, including the Dodd-Frank Wall Street
Reform and Consumer Protection Act, and regulatory,
supervisory or enforcement actions of government agencies
relating to BlackRock or The PNC Financial Services Group,
Inc. (“PNC”); (10) 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; (11) the ability to
attract and retain highly talented professionals;

EXE C UT IVE S UMMAR Y

(in millions, except per share data)

GAAP basis:

Total revenue

Total expense

Operating income

Operating margin

Nonoperating income (expense), less net income (loss) attributable to noncontrolling

interests(1)

Income tax expense

Net income attributable to BlackRock

Diluted earnings per common share

Effective tax rate

As adjusted(2):

Total revenue

Total expense

Operating income

Operating margin

Nonoperating income (expense), less net income (loss) attributable to noncontrolling

interests(1)

Income tax expense

Net income attributable to BlackRock

Diluted earnings per common share

Effective tax rate

Other:

Assets under management (end of period)

Diluted weighted-average common shares outstanding(3)

Common and preferred shares outstanding (end of period)

Book value per share(4)

Cash dividends declared and paid per share

2015

2014

2013

11,401

6,737

4,664

40.9%

(69)

(1,250)

3,345

19.79

27.2%

11,401

6,706

4,695

42.9%

(70)

(1,312)

3,313

19.60

28.4%

11,081

6,607

4,474

40.4%

(49)

(1,131)

3,294

19.25

25.6%

11,081

6,518

4,563

42.9%

(56)

(1,197)

3,310

19.34

26.6%

10,180

6,323

3,857

37.9%

(1,022)

2,932

16.87

25.8%

10,180

6,156

4,024

41.4%

(1,149)

2,882

16.58

28.5%

4,645,412

4,651,895

4,324,088

169,038,571

171,112,261

173,828,902

165,596,139

166,921,863

168,724,763

172.12

8.72

164.06

7.72

156.69

6.72

(1) Net of net income (loss) attributable to noncontrolling interests (“NCI”) (redeemable and nonredeemable).

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

(3) Nonvoting participating preferred shares are considered to be common stock equivalents for purposes of determining basic and diluted earnings per

share calculations.

(4) Total BlackRock stockholders’ equity, excluding an appropriated retained deficit of $19 million for 2014 and appropriated retained earnings of $22

million for 2013, divided by total common and preferred shares outstanding at December 31 of the respective year-end.

201 5 C OM PARED WIT H 2014

GAAP. Operating income of $4,664 million increased $190
million and operating margin of 40.9% increased 50 bps
from 2014. Operating income reflected growth in base fees
and performance fees, partially offset by higher expense.
The Company’s 2015 expense reflected higher revenue-
related expense, including compensation, and distribution
and servicing costs, partially offset by lower general and
administration expense and lower amortization of intangible
assets. In connection with the Barclays Global Investors
(“BGI”) acquisition, BlackRock recorded a $50 million
indemnification asset for unrecognized tax benefits. Due to
the resolution of outstanding tax matters in 2014, BlackRock
recorded $50 million of general and administration expense
in 2014 to reflect the reduction of the indemnification asset
and an offsetting $50 million tax benefit. Results for 2014
also included $11 million of closed-end fund launch costs.
Nonoperating income (expense), less net income (loss)
attributable to NCI, decreased $20 million from 2014 due to
lower net gains on investments in 2015.

Income tax expense for 2015 included a $54 million net
noncash benefit associated with the revaluation of certain
deferred income tax liabilities, including the effect of tax
legislation enacted in the United Kingdom and state and
local income tax changes and benefited from $75 million of
nonrecurring items. Income tax expense for 2014 included
$94 million of tax benefits, including the $50 million tax
benefit mentioned above, a $9 million net noncash benefit,
primarily associated with the revaluation of certain deferred
income tax liabilities as a result of domestic state and local
tax changes, and a $73 million net tax benefit related to
several favorable nonrecurring items.

Diluted earnings per common share rose $0.54, or 3%,
compared with the prior year period, reflecting higher
operating income and the benefit of share repurchases,
partially offset by the impact of a higher 2015 effective tax
rate and lower nonoperating income.

As Adjusted. Operating income of $4,695 million increased
$132 million from 2014 and the operating margin for both
2015 and 2014 was 42.9%. Income tax expense on an as
adjusted basis for 2015 included a $75 million net benefit
and excluded the net noncash benefit of $54 million

described above. General and administration expense for
2014 excluded the $50 million related to the reduction of the
indemnification asset described above. Income tax expense
for 2014 included a $73 million net benefit and excluded a
$50 million tax benefit associated with the reduction of the
same indemnification asset and $9 million of net noncash
benefits described above. Diluted earnings per common
share rose $0.26, or 1%, from 2014.

2014 C OM PARED WIT H 2013

GAAP. Operating income of $4,474 million increased $617
million from 2013, reflecting growth in base fees and
BlackRock Solutions and advisory revenue, partially offset by
higher expense. The Company’s 2014 expense reflected
higher revenue-related expense, including compensation
and direct fund expense. Expense for 2014 also included the
previously mentioned $50 million general and administration
expense related to the reduction of an indemnification asset
and $11 million of closed-end fund launch costs. The 2013
expense included $124 million of expense related to the
Charitable Contribution described below and $18 million of
closed-end fund launch costs.

Nonoperating income (expense), less net income (loss)
attributable to NCI, decreased $146 million from 2013.
Expense for 2013 included a $39 million noncash,
nonoperating pre-tax gain related to the carrying value of the
Company’s equity method investment as a result of an initial
public offering of PennyMac Financial Services, Inc. (the
“PennyMac IPO”). In addition, in 2013, the Company made a
charitable contribution of approximately six million units of
the Company’s investment in PennyMac to a donor advised
fund (the “Charitable Contribution”). In connection with the
Charitable Contribution, the Company also recorded a
noncash, nonoperating pre-tax gain of $80 million related to
the contributed investment. The decrease in nonoperating
income (expense) also reflected net lower returns on the co-
investment and seed portfolio and higher interest expense
resulting from a long-term debt issuance in March 2014,
partially offset by the positive impact of the monetization of
a nonstrategic, opportunistic private equity investment
during 2014.

Income tax expense of $1,131 million included $94 million of
tax benefits, including the $50 million tax benefit mentioned
above. Income tax expense for 2014 and 2013 reflected the
revaluation of deferred income tax liabilities related to
intangible assets and goodwill. Income tax expense for 2014
included a $9 million net noncash benefit arising primarily
from state and local income tax changes and a $73 million
net benefit related to several favorable nonrecurring items.
Income tax expense for 2013 included a $69 million noncash
benefit, primarily related to legislation enacted in the United
Kingdom and state and local income tax changes. In
addition, 2013 income tax expense included a benefit of
approximately $48 million recognized in connection with the
Charitable Contribution, a benefit of approximately $29
million, primarily due to the realization of tax loss
carryforwards, and benefits from certain nonrecurring items.

Diluted earnings per common share rose $2.38, or 14%, from
2013 due to higher net income and the benefit of share
repurchases.

As Adjusted. Operating income of $4,563 million and
operating margin of 42.9% increased $539 million and 150
basis points, respectively, from 2013. Results for 2014
excluded a $50 million general and administrative expense
related to the reduction of an indemnification asset. The
2014 income tax expense included a $73 million net benefit
and excluded a $50 million tax benefit associated with the
reduction of the same indemnification asset and $9 million
of net noncash benefits described above. The 2013 results
excluded the financial impact of the Charitable Contribution,
but included the $39 million pre-tax nonoperating gain
related to the PennyMac IPO. The 2013 income tax expense
included a benefit of approximately $29 million and benefits
from certain nonrecurring items and excluded the $69
million net noncash benefit, described above. Diluted
earnings per common share rose $2.76, or 17%, from 2013.

See Non-GAAP Financial Measures for further information on
as adjusted items.

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

BUSINESS OUTLOOK

BlackRock’s framework for long-term value creation is
predicated on generating differentiated organic growth,
leveraging scale to increase operating margins over time,
and returning capital to shareholders on a consistent basis.
BlackRock’s diversified platform, in terms of style, product,
client and geography, enables it to generate more stable
cash flows through market cycles, positioning BlackRock to
invest for the long-term by striking an appropriate balance
between investing for future growth and practical
discretionary expense management.

BlackRock’s highly diversified multi-product platform was
created to meet the needs of its clients in all market
environments. BlackRock is positioned to provide active and
index investment solutions across asset classes and
geographies and leverage BlackRock Solutions’ world-class
risk management, analytics and advisory capabilities on
behalf of clients. BlackRock serves a diverse mix of
institutional and retail clients across the globe, including
investors in iShares ETFs, maintaining differentiated client
relationships and a fiduciary focus.

BlackRock’s Retail strategy is focused on an outcome-
oriented approach to creating client solutions, including
active, index and alternative products, and enhanced
distribution. In the United States, BlackRock is leveraging its
integrated wholesaler force to further penetrate wirehouse
distribution platforms and gain share among registered
investment advisors. Internationally, BlackRock continues to
diversify the range of investment solutions available to
clients, penetrate new distribution channels and capitalize
on regulatory change impacting retrocession arrangements.

iShares growth strategy is centered on increasing global
iShares market share and driving global market expansion.
BlackRock intends to achieve these goals by pursuing global
growth themes in client and product segments including
core investments, fixed income, financial instruments and
precision exposures.

BlackRock believes Institutional results will be driven by
strength in specialty areas, including Defined Contribution,
Financial Institutions, Official Institutions and Foundations,
Family Offices and Endowments; deepening client
relationships through effective cross-selling efforts;
enhancing BlackRock’s solutions-oriented approach and
leveraging BlackRock Solutions’ analytical and risk
management expertise.

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.

N O N - G A A P F IN A N C IA L ME A S U R E S

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, for the reasons described
below, considers them to be effective indicators, for both
management and investors, of BlackRock’s financial
performance over time. Management also uses non-GAAP
financial measures as a benchmark to compare its

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 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 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.

(in millions)

Operating income, GAAP basis

Non-GAAP expense adjustments:

PNC LTIP funding obligation

Compensation expense related to appreciation (depreciation) on deferred compensation plans

Reduction of indemnification asset

Charitable Contribution

Operating income, as adjusted

Product launch costs and commissions

Operating income used for operating margin measurement

Revenue, GAAP basis

Non-GAAP adjustments:

Distribution and servicing costs

Amortization of deferred sales commissions

Revenue used for operating margin measurement

Operating margin, GAAP basis

Operating margin, as adjusted

2015

2014

2013

$ 4,664

$ 4,474

$ 3,857

—

4,695

4,563

—

124

4,024

$ 4,700

$ 4,574

$ 4,042

$ 11,401

$ 11,081

$ 10,180

(409)

(48)

(364)

(56)

(353)

(52)

$ 10,944

$ 10,661

$ 9,775

40.9%

42.9%

40.4%

42.9%

37.9%

41.4%

• 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. Compensation expense
associated with appreciation (depreciation) on
investments related to certain BlackRock deferred
compensation plans has been excluded as returns on
investments set aside for these plans, which
substantially offset this expense, are reported in
nonoperating income (expense). In 2014, general and
administration expense relating to the reduction of an
indemnification asset has been excluded since it is
directly offset by a tax benefit of the same amount and,
consequently, does not impact BlackRock’s book value.

In 2013, the $124 million expense related to the
Charitable Contribution was excluded from operating
income, as adjusted, due to its nonrecurring nature and
because the noncash, nonoperating pre-tax gain of $80
million directly related to the contributed PennyMac
investment is reported in nonoperating income
(expense).

• 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.

Revenue used for operating margin, as adjusted,
excludes distribution and servicing costs paid to related
parties and other third parties. 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 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) Nonoperating income (expense), less net income (loss)
attributable to NCI, as adjusted:

Nonoperating income (expense), less net income (loss)
attributable to NCI, as adjusted, equals nonoperating
income (expense), GAAP basis, less net income (loss)
attributable to NCI, adjusted for compensation expense
associated with (appreciation) depreciation on investments
related to certain BlackRock deferred compensation plans.
The compensation expense offset is recorded in operating
income. This compensation expense has been included in

(3) Net income attributable to BlackRock, as adjusted:

(in millions, except per share data)

Net income attributable to BlackRock, GAAP basis

Non-GAAP adjustments:

PNC LTIP funding obligation, net of tax

Income tax matters

Amount related to the Charitable Contribution, net of tax

Net income attributable to BlackRock, as adjusted

Diluted weighted-average common shares outstanding(4)

Diluted earnings per common share, GAAP basis(4)

Diluted earnings per common share, as adjusted(4)

nonoperating income (expense), less net income (loss)
attributable to NCI, as adjusted, to offset returns on
investments set aside for these plans, which are reported in
nonoperating income (expense), GAAP basis.

During 2013, the noncash, nonoperating pre-tax gain of $80
million related to the contributed PennyMac investment was
excluded from nonoperating income (expense), less net
income (loss) attributable to NCI, as adjusted due to its
nonrecurring nature and because the more than offsetting
associated Charitable Contribution expense of $124 million
is reported in operating income.

(in millions)

2015

2014

2013

Nonoperating income (expense),

GAAP basis

Less: Net income (loss) attributable

to NCI

Nonoperating income (expense), net of

NCI

Gain related to Charitable

Contribution

Compensation expense related to
(appreciation) depreciation on
deferred compensation plans

Nonoperating income (expense), less

net income (loss) attributable to NCI,
as adjusted

$ (62)

$ (79)

$ 116

(30)

(69)

(49)

—

(80)

(1)

(7)

(10)

$ (70)

$ (56)

2015

2014

2013

$ 3,345

$ 3,294

$ 2,932

(54)

—

(9)

—

(69)

(4)

$ 3,313

$ 3,310

$ 2,882

169.0

$ 19.79

$ 19.60

171.1

173.8

$ 19.25

$ 16.87

$ 19.34

$ 16.58

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

For each period presented, the non-GAAP adjustment related to the PNC LTIP funding obligation was tax effected at the
respective blended rates applicable to the adjustments. Amounts for 2013 included a tax benefit of approximately $48 million
recognized in connection with the Charitable Contribution. The tax benefit has been excluded from net income attributable to
BlackRock, Inc., as adjusted due to the nonrecurring nature of the Charitable Contribution.

Non-GAAP income tax matters adjustments for 2015, 2014 and 2013 reflected the revaluation of deferred income tax
liabilities. The amount for 2015 included a $54 million net noncash benefit, primarily related to the impact of legislation
enacted in the United Kingdom and state and local income tax changes. The amount for 2014 included a $9 million net
noncash tax benefit arising primarily from state and local income tax changes. The amount for 2013 included a $69 million
noncash tax benefit, primarily related to the impact of legislation enacted in the United Kingdom and state and local income
tax changes. Such amounts for 2015, 2014 and 2013 have been excluded from as adjusted results as they will not have a cash
flow impact and to ensure comparability among periods presented.

(4) Nonvoting participating preferred stock is considered to be a common stock equivalent for purposes of determining basic

and diluted earnings per share calculations.

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

(in millions)

Retail

iShares

Institutional:

Active

Index

Institutional subtotal

Long-term

Cash management

Advisory(1)

Total

2015

AUM

2014

Net Inflows (Outflows)

2013

2015

2014

2013

$ 541,125

534,329

487,777

$ 38,512

$ 54,944

$ 38,804

1,092,561

1,024,228

914,372

129,852

100,601

63,971

962,852

1,738,777

2,701,629

959,160

932,410

1,816,124

1,677,650

2,775,284

2,610,060

26,746

(43,096)

(16,350)

4,335,315

4,333,841

4,012,209

152,014

299,884

10,213

296,353

21,701

275,554

36,325

7,510

(9,629)

(10,420)

36,128

25,708

181,253

25,696

(13,173)

(928)

15,266

14,338

117,113

10,056

(7,442)

$ 4,645,412

$ 4,651,895

$ 4,324,088

$ 149,895

$ 193,776

$ 119,727

AUM and Net Inflows (Outflows) by Product Type

(in millions)

Equity

Fixed income

Multi-asset

Alternatives

Core

Currency and commodities(2)

Subtotal

Long-term

Cash management

Advisory(1)

Total

2015

AUM

2014

Net Inflows (Outflows)

2013

2015

2014

2013

$ 2,423,772

$ 2,451,111

$ 2,317,695

$ 52,778

$ 52,420

$ 69,257

1,422,368

1,393,653

1,242,186

376,336

377,837

341,214

76,944

17,167

96,406

28,905

11,508

42,298

92,085

20,754

112,839

88,006

23,234

85,026

26,088

111,240

111,114

4,080

1,045

5,125

3,061

461

3,522

2,703

(8,653)

(5,950)

4,335,315

4,333,841

4,012,209

152,014

181,253

117,113

299,884

10,213

296,353

21,701

275,554

36,325

7,510

(9,629)

25,696

(13,173)

10,056

(7,442)

$ 4,645,412

$ 4,651,895

$ 4,324,088

$ 149,895

$ 193,776

$ 119,727

AUM and Net Inflows (Outflows) by Investment Style

(in millions)

Active

Index & iShares

Long-term

Cash management

Advisory(1)

Total

2015

AUM

2014

Net Inflows (Outflows)

2013

2015

2014

2013

$ 1,462,672

$ 1,453,613

$ 1,391,243

$ 60,510

$ 34,408

$ 41,177

2,872,643

2,880,228

2,620,966

91,504

4,335,315

4,333,841

4,012,209

152,014

299,884

10,213

296,353

21,701

275,554

36,325

7,510

(9,629)

146,845

181,253

25,696

(13,173)

75,936

117,113

10,056

(7,442)

$ 4,645,412

$ 4,651,895

$ 4,324,088

$ 149,895

$ 193,776

$ 119,727

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

(2) Amounts include commodity iShares.

The following table presents the component changes in BlackRock’s AUM for 2015, 2014 and 2013.

(in millions)

Beginning assets under management

Net inflows (outflows)

Long-term
Cash management
Advisory(1)

Total net inflows (outflows)

Acquisitions(2)
Market change
FX impact(3)

Total change

December 31,

2015

2014

2013

$ 4,651,895

$ 4,324,088

$ 3,791,588

152,014
7,510
(9,629)

149,895
2,219
(57,495)
(101,102)

(6,483)

181,253
25,696
(13,173)

193,776
—
261,682
(127,651)

327,807

117,113
10,056
(7,442)

119,727
26,932
398,707
(12,866)

532,500

Ending assets under management

$ 4,645,412

$ 4,651,895

$ 4,324,088

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

(2) Amounts for 2015 represent $1.3 billion of AUM acquired in the acquisition of certain assets of BlackRock Kelso Capital Advisors LLC (“BKCA”) in

March 2015, $560 million of AUM acquired in the Infraestructura Institucional acquisition in October 2015 and $366 million of AUM acquired in the
FutureAdvisor acquisition in October 2015. The FutureAdvisor acquisition amount does not include AUM that was held in iShares holdings. Amounts
for 2013 represent $16.0 billion of AUM acquired in the Credit Suisse ETF franchise in July 2013 (the “Credit Suisse ETF Transaction”) and $11.0
billion of AUM acquired in the MGPA acquisition in October 2013.

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

BlackRock has historically grown AUM through organic growth and acquisitions. Management believes that the Company will
be able to continue to grow AUM organically by focusing on strong investment performance, efficient delivery of beta for index
products, client service, developing new products and optimizing distribution capabilities.

Component Changes in AUM for 2015

The following table presents the component changes in AUM by client type and product type for 2015.

December 31,
2014

Net
inflows
(outflows)

Acquisitions(1)

Market
change

FX
impact(2)

December 31,
2015

(in millions)

Retail:

Equity
Fixed income
Multi-asset
Alternatives

Retail subtotal
iShares:

Equity
Fixed income
Multi-asset
Alternatives

iShares subtotal
Institutional:
Active:

Equity
Fixed income
Multi-asset
Alternatives

Active subtotal
Index:

Equity
Fixed income
Multi-asset
Alternatives

Index subtotal

Institutional subtotal

Long-term

Cash management
Advisory(4)

200,445
189,820
125,341
18,723

534,329

790,067
217,671
1,773
14,717

8,543
31,114
(1,307)
162

38,512

78,408
50,309
1,074
61

1,024,228

129,852

125,143
518,590
242,913
72,514

959,160

1,335,456
467,572
7,810
5,286

1,816,124

2,775,284

(462)
5,690
18,409
3,109

26,746

(33,711)
(10,169)
(1,009)
1,793

(43,096)

(16,350)

4,333,841

152,014

296,353
21,701

7,510
(9,629)

$ —
—
366
1,293

1,659

—
—
—
—

—

—
—
—
560

560

—
—
—
—

—

560

2,219

—
—

$ (10,040)
(5,691)
(8,108)
(177)

(24,016)

(32,349)
(7,508)
(90)
(2,160)

(42,107)

960
(1,220)
1,074
(175)

639

6,157
2,317
(289)
(924)

7,261

7,900

(5,193)
(2,590)
(985)
(591)

(9,359)

(12,970)
(6,282)
(27)
(133)

(19,412)

(4,199)
(8,632)
(10,355)
(1,067)

(24,253)

(22,483)
(18,623)
(254)
(152)

(41,512)

(65,765)

(58,223)

(94,536)

267
461

(4,246)
(2,320)

Full Year
Average
AUM(3)

199,474
205,919
125,019
19,351

549,763

810,836
239,164
1,924
14,268

$ 193,755
212,653
115,307
19,410

541,125

823,156
254,190
2,730
12,485

1,092,561

1,066,192

125,410
523,536
254,781
73,683

977,410

1,333,159
466,494
7,305
5,907

1,812,865

2,790,275

$ 4,406,230

121,442
514,428
252,041
74,941

962,852

1,285,419
441,097
6,258
6,003

1,738,777

2,701,629

4,335,315

299,884
10,213

Total

$ 4,651,895

$ 149,895

$ 2,219

$ (57,495)

$ (101,102)

$ 4,645,412

(1) Amounts represent $1.3 billion of AUM acquired in the acquisition of certain assets of BKCA in March 2015, $560 million of AUM acquired in the

Infraestructura Institucional acquisition in October 2015 and $366 million of AUM acquired in the FutureAdvisor acquisition in October 2015. The
FutureAdvisor acquisition amount does not include AUM that was held in iShares holdings.

(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.

The following table presents component changes in AUM by product type for 2015.

(in millions)

Equity:

Active

iShares

Non-ETF index

Equity subtotal

Fixed income:

Active

iShares

Non-ETF index

Fixed income subtotal

Multi-asset

Alternatives:

Core

Currency and commodities(4)

Alternatives subtotal

Long-term

Cash management

Advisory(5)

Total

December 31,
2014

Net
inflows

(outflows) Acquisitions(1)

Market
change

FX
impact(2)

December 31,
2015

Full Year
Average
AUM(3)

292,802

4,210

$ —

$ (7,738) $

(7,955)

$ 281,319

292,204

790,067

78,408

1,368,242

(29,840)

2,451,111

52,778

701,324

217,671

474,658

1,393,653

377,837

88,006

23,234

111,240

35,928

50,309

(9,293)

76,944

17,167

4,080

1,045

5,125

4,333,841

152,014

296,353

21,701

7,510

(9,629)

—

(32,349)

(12,970)

823,156

810,836

4,815

(23,920)

1,319,297

1,365,839

(35,272)

(44,845)

2,423,772

2,468,879

(6,907)

(7,508)

(10,692)

(6,282)

2,313

(19,153)

719,653

254,190

448,525

722,023

239,164

473,926

(12,102)

(36,127)

1,422,368

1,435,113

366

(7,413)

(11,621)

376,336

389,029

1,853

—

1,853

2,219

—

(213)

(1,641)

(302)

92,085

20,754

90,077

23,132

(1,943)

112,839

113,209

(3,223)

(3,436)

(58,223)

(94,536)

4,335,315

$ 4,406,230

267

461

(4,246)

(2,320)

299,884

10,213

$ 4,651,895

$ 149,895

$ 2,219

$(57,495) $ (101,102) $ 4,645,412

(1) Amounts represent $1.3 billion of AUM acquired in the acquisition of certain assets of BKCA in March 2015, $560 million of AUM acquired in the

(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) Amounts include commodity iShares.

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

The following table presents component changes in AUM by investment style for 2015.

(in millions)

Active

Index & iShares

Long-term

Cash management

Advisory(4)

December 31,
2014

Net
inflows
(outflows)

Acquisitions(1)

Market
change

FX
impact(2)

December 31,
2015

Full Year
Average
AUM(3)

$ 1,453,613

$ 60,510

$ 2,219

$ (22,026)

$ (31,644)

$ 1,462,672

$ 1,487,060

2,880,228

4,333,841

296,353

21,701

91,504

152,014

7,510

(9,629)

—

2,219

—

(36,197)

(58,223)

267

461

(62,892)

(94,536)

(4,246)

(2,320)

2,872,643

2,919,170

4,335,315

$ 4,406,230

299,884

10,213

Total

$ 4,651,895

$ 149,895

$ 2,219

$ (57,495)

$ (101,102)

$ 4,645,412

(1) Amounts represent $1.3 billion of AUM acquired in the acquisition of certain assets of BKCA in March 2015, $560 million of AUM acquired in the

(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.

AUM decreased $6.5 billion to $4.645 trillion at
December 31, 2015 from $4.652 trillion at December 31,
2014 driven largely by foreign exchange movements and net
market depreciation that more than offset organic growth.

Net market depreciation of $57.5 billion was driven by $35.3
billion from equity products due to lower U.S. and global
equity markets and $12.1 billion from fixed income products.

AUM decreased $101.1 billion due to the impact of foreign
exchange movements, primarily resulting from the
strengthening of the U.S. dollar against the euro, the British
pound and the Canadian dollar.

For further discussion on AUM, see “Item 1. Business —
Assets Under Management”.

Component Changes in AUM for 2014

The following table presents the component changes in AUM by client type and product type for 2014.

(in millions)

Retail:

Equity

Fixed income

Multi-asset

Alternatives

Retail subtotal

iShares:

Equity

Fixed income

Multi-asset

Alternatives

iShares subtotal

Institutional:

Active:

Equity

Fixed income

Multi-asset

Alternatives

Active subtotal

Index:

Equity

Fixed income

Multi-asset

Alternatives

Index subtotal

Institutional subtotal

Long-term

Cash management

Advisory(3)

Total

December 31,
2013

Net
inflows
(outflows)

Market
change

FX
impact(1)

December 31,
2014

Full Year
Average
AUM(2)

203,035

1,582 $

1,831 $

(6,003) $ 200,445

207,280

151,475

117,054

16,213

487,777

718,135

178,835

1,310

16,092

36,995

13,366

3,001

54,944

59,626

40,007

439

529

3,698

(4,080)

152

1,601

(2,348)

(999)

(643)

189,820

125,341

18,723

(9,993)

534,329

26,517

(14,211)

4,905

(6,076)

(1,722)

(13)

(182)

790,067

217,671

1,773

14,717

170,490

123,619

18,487

519,876

751,830

199,410

1,535

16,453

914,372

100,601

29,737

(20,482)

1,024,228

969,228

138,726

505,109

215,276

73,299

(18,648)

(6,943)

15,835

(664)

9,935

34,062

23,435

1,494

(4,870)

(13,638)

(11,633)

(1,615)

932,410

(10,420)

68,926

(31,756)

125,143

518,590

242,913

72,514

959,160

131,779

515,411

233,729

73,075

953,994

1,257,799

9,860

102,549

(34,752)

1,335,456

1,305,930

406,767

26,347

56,086

(21,628)

467,572

440,047

7,574

5,510

(735)

656

1,652

(693)

(681)

(187)

7,810

5,286

7,001

6,061

1,677,650

36,128

159,594

(57,248)

1,816,124

1,759,039

2,610,060

25,708

228,520

(89,004)

2,775,284

2,713,033

4,012,209

181,253

259,858

(119,479)

4,333,841

$ 4,202,137

275,554

25,696

36,325

(13,173)

715

1,109

(5,612)

(2,560)

296,353

21,701

$ 4,324,088

$ 193,776 $ 261,682 $ (127,651) $ 4,651,895

(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 thirteen months.

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

The following table presents component changes in AUM by product type for 2014.

(in millions)

Equity:

Active

iShares

Non-ETF index

Equity subtotal

Fixed income:

Active

iShares

Non-ETF index

Fixed income subtotal

Multi-asset

Alternatives:

Core

Currency and commodities(3)

Alternatives subtotal

Long-term

Cash management

Advisory(4)

Total

December 31,
2013

Net
inflows
(outflows)

Market
change

FX
impact(1)

December 31,
2014

Full Year
Average
AUM(2)

317,262

$(24,882) $

9,867 $

(9,445)

$ 292,802

310,551

718,135

59,626

26,517

(14,211)

790,067

751,830

1,282,298

17,676

104,448

(36,180)

1,368,242

1,334,438

2,317,695

52,420

140,832

(59,836)

2,451,111

2,396,819

652,209

178,835

411,142

1,242,186

27,694

40,007

28,705

96,406

36,942

(15,521)

4,905

56,904

98,751

(6,076)

(22,093)

701,324

217,671

474,658

680,078

199,410

445,870

(43,690)

1,393,653

1,325,358

341,214

28,905

21,044

(13,326)

377,837

365,884

85,026

26,088

111,114

3,061

461

3,522

1,808

(2,577)

(1,889)

(738)

88,006

23,234

87,689

26,387

(769)

(2,627)

111,240

114,076

4,012,209

181,253

259,858

(119,479)

4,333,841

$ 4,202,137

275,554

36,325

25,696

(13,173)

715

1,109

(5,612)

(2,560)

296,353

21,701

$ 4,324,088

$ 193,776 $ 261,682 $ (127,651) $ 4,651,895

(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 thirteen months.

(3) Amounts include commodity iShares.

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

The following table presents component changes in AUM by investment style for 2014.

(in millions)

Active

Index & iShares

Long-term

Cash management

Advisory(3)

Total

December 31,
2013

Net
inflows
(outflows)

Market
change

FX
impact(1)

December 31,
2014

Full Year
Average
AUM(2)

$ 1,391,243

$ 34,408

$ 67,816

$ (39,851)

$ 1,453,616

$ 1,439,474

2,620,966

4,012,209

275,554

36,325

146,845

181,253

25,696

(13,173)

192,042

259,858

715

1,109

(79,628)

2,880,225

2,762,663

(119,479)

4,333,841

$ 4,202,137

(5,612)

(2,560)

296,353

21,701

$ 4,324,088

$ 193,776

$ 261,682

$ (127,651)

$ 4,651,895

(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 thirteen months.

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

AUM increased $327.8 billion, or 8%, to $4.652 trillion at
December 31, 2014 from $4.324 trillion at December 31,
2013. The increase in AUM was driven by net market
appreciation of $261.7 billion and net inflows of $193.8
billion, partially offset by foreign exchange movements.

Net market appreciation of $261.7 billion included $140.8
billion of growth in equity products primarily due to higher
U.S. equity markets, and appreciation of $98.8 billion and
$21.0 billion in fixed income and multi-asset products,
respectively, across the majority of strategies.

AUM decreased $127.7 billion from foreign exchange
movements, primarily resulting from the strengthening of
the U.S. dollar against the euro, the British pound and the
Japanese yen.

DISCUSSION OF FINANCIAL RESUL TS

Introduction

BlackRock derives a substantial portion of its revenue from
investment advisory and administration fees, which are
recognized as the services are performed. Such fees are
primarily based on predetermined percentages of the
market value of AUM or percentages of committed capital
during investment periods of certain alternative products
and are affected by changes in AUM, including market
appreciation or depreciation, foreign exchange translation
and net inflows or outflows. Net inflows or outflows
represent the sum of new client assets, additional fundings
from existing clients (including dividend reinvestment),

withdrawals of assets from, and termination of, client
accounts and distributions to investors representing return
of capital and return on investments to investors. Market
appreciation or depreciation includes current income earned
on, and changes in the fair value of, securities held in client
accounts. Foreign exchange translation reflects the impact
of translating non-U.S. dollar denominated AUM into U.S.
dollars for reporting purposes.

BlackRock also earns revenue by lending securities on
behalf of clients to highly rated banks and broker-dealers.
The securities loaned are secured by collateral in the form of
cash or securities, with minimum collateral generally
ranging from approximately 102% to 112% of the value of
the loaned securities. Generally, the revenue earned is
shared between BlackRock and the funds or accounts
managed by the Company from which the securities are
borrowed. Historically, securities lending revenue in the
second quarter exceeds the other quarters during the year
driven by higher seasonal demand.

Investment advisory agreements for certain separate
accounts and investment funds provide for performance
fees based upon relative and/or absolute investment
performance, in addition to base fees based on AUM.
Investment advisory performance fees generally are earned
after a given period of time and when investment
performance exceeds a contractual threshold. As such, the
timing of recognition of performance fees may increase the
volatility of BlackRock’s revenue and earnings. The
magnitude of performance fees can fluctuate quarterly due
to the timing of carried interest recognition on alternative
products; however, the third and fourth quarters have a
greater number of nonalternative products with
performance measurement periods that end on either
September 30 or December 31.

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

BlackRock builds upon its leadership position to meet the
growing need for investment and risk management
solutions. Through its scale and diversity of products, it is
able to provide its clients with customized solutions
including fiduciary outsourcing for liability-driven
investments and overlay strategies for pension plan
sponsors, balance sheet management and related services
for insurance companies and target date and target return
funds, as well as asset allocation portfolios, for retail
investors. BlackRock is also able to service these clients via

its Aladdin platform to provide risk management and other
outsourcing services for institutional investors and custom
and tailored solutions to address complex risk exposures.

The Company earns fees for transition management services
primarily comprised of commissions from acting as a broker-
dealer in connection with buying and selling securities on
behalf of its customers. Commissions related to transition
management services are recorded on a trade-date basis as
securities transactions occur.

The Company also earns revenue related to certain strategic
investments accounted for as equity method investments.

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

• Employee compensation and benefits expense includes
salaries, commissions, temporary help, deferred and
incentive compensation, employer payroll taxes,
severance and related benefit costs.

• Distribution and servicing costs, which are primarily

AUM driven, include payments made to Merrill Lynch-
affiliated entities under a global distribution agreement,
to PNC and Barclays, as well as other third parties,
primarily associated with obtaining and retaining client
investments in certain BlackRock products.

• Direct fund expense primarily consists of third-party

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

• General and administration expense includes marketing
and promotional, occupancy and office-related costs,
portfolio services (including clearing expense related to
transition management services), technology,
professional services, communications, closed-end
fund launch costs and other general and administration
expense, including the impact of foreign currency
remeasurement. Foreign currency remeasurement
(gains) losses were $(8) million, $(11) million and $1
million for 2015, 2014 and 2013, respectively.

Approximately 75% of the Company’s revenue is generated
in U.S. dollars. The Company’s revenue and expense
generated in foreign currencies (primarily the euro and
British pound) are impacted by foreign exchange rates. Any
effect of foreign exchange rate change on revenue is partially
offset by a change in expense driven by the Company’s
considerable non-dollar expense base related to its
operations outside the United States.

Nonoperating income (expense) includes the effect of
changes in the valuations on investments (excluding
available-for-sale investments) and earnings on equity
method investments as well as interest and dividend income

and interest expense. Other comprehensive income includes
changes in valuations related to available-for-sale
investments. BlackRock primarily holds seed and
co-investments in sponsored investment products that invest
in a variety of asset classes, including private equity, hedge
funds and real estate. Investments generally are made for
co-investment purposes, to establish a performance track
record or for regulatory purposes, including Federal Reserve
Bank stock. BlackRock does not engage in proprietary trading
activities that could conflict with the interests of its clients.

Revenue

In addition, nonoperating income (expense) includes the
impact of changes in the valuations of consolidated
sponsored investment funds. The portion of nonoperating
income (expense) not attributable to BlackRock is allocated
to NCI on the consolidated statements of income.

The following table presents the Company’s revenue for 2015, 2014 and 2013.

(in millions)

2015

2014

2013

Investment advisory, administration fees and securities lending revenue:

Equity:

Active

iShares

Non-ETF index

Equity subtotal

Fixed income:

Active

iShares

Non-ETF index

Fixed income subtotal

Multi-asset

Alternatives:

Core

Currency and commodities

Alternatives subtotal

Long-term

Cash management

Total base fees

Investment advisory performance fees:

Equity

Fixed income

Multi-asset

Alternatives

Total performance fees

BlackRock Solutions and advisory

Distribution fees

Other revenue

Total revenue

$ 1,709

$ 1,844

$ 1,741

2,751

680

5,140

2,705

677

5,226

2,390

594

4,725

1,566

1,396

1,269

554

282

2,402

1,253

653

726

9,521

319

9,840

205

356

621

646

239

484

260

2,140

1,204

638

727

9,297

292

9,589

111

376

550

635

237

464

238

1,971

1,039

576

107

683

8,418

321

8,739

421

561

577

230

$ 11,401

$ 11,081

$ 10,180

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:

Mix of Base Fees

Mix of Average AUM by Asset Class(1)

2015

2014

2013

2015

2014

2013

Equity:

Active

iShares

Non-ETF index

Equity subtotal

Fixed income:

Active

iShares

Non-ETF index

Fixed income subtotal

Multi-asset

Alternatives:

Core

Currency and commodities

Alternatives subtotal

Long-term

Cash management

17%

28%

52%

18%

28%

53%

20%

26%

53%

15%

24%

13%

97%

23%

13%

97%

23%

12%

96%

Total excluding Advisory AUM

100% 100% 100%

17%

30%

53%

16%

10%

31%

94%

100%

17%

30%

54%

15%

10%

29%

94%

100%

16%

29%

52%

16%

10%

31%

93%

100%

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

2015 Compared with 2014

Revenue increased $320 million, or 3%, from 2014, driven by
higher base fees and growth in performance fees.

mandates and lower revenue from disposition-related
advisory assignments. BlackRock Solutions and advisory
revenue included $528 million in Aladdin revenue compared
with $474 million in 2014.

Investment advisory, administration fees and securities
lending revenue of $9,840 million for 2015 increased $251
million from $9,589 million in 2014 primarily driven by
organic growth, despite the impact of foreign exchange and
market volatility. Securities lending revenue increased $36
million from 2014 to $513 million in 2015, reflecting an
increase in average balances of securities on loan.

Investment advisory performance fees were $621 million in
2015 compared with $550 million in 2014. The current year
reflected higher fees from equity products and strong 2015
performance from a single hedge fund with an annual
performance measurement period that ended in the third
quarter of 2015. The prior year reflected a large fee
associated with the liquidation of a closed-end mortgage
fund in 2014.

BlackRock Solutions and advisory revenue in 2015 totaled
$646 million compared with $635 million in 2014. The
current year reflected higher revenue from Aladdin

2014 Compared with 2013

Revenue increased $901 million, or 9%, from 2013, reflecting
growth in markets, long-term net inflows and strength in
BlackRock Solutions and advisory revenue.

Investment advisory, administration fees and securities
lending revenue of $9,589 million for 2014 increased $850
million from $8,739 million in 2013 due to higher long-term
average AUM, reflecting organic growth and market
appreciation. Securities lending revenue increased $30
million from 2013 to $477 million in 2014.

BlackRock Solutions and advisory revenue in 2014 totaled
$635 million compared with $577 million in 2013. The year
ended 2014 reflected higher revenue from Aladdin mandates
and higher revenue from advisory assignments. BlackRock
Solutions and advisory revenue included $474 million in
Aladdin revenue compared with $433 million in 2013.

Expense

The following table presents the Company’s expense for 2015, 2014 and 2013.

(in millions)

Expense, GAAP:

Employee compensation and benefits

Distribution and servicing costs

Amortization of deferred sales commissions

Direct fund expense

General and administration:

Marketing and promotional

Occupancy and office related

Portfolio services

Technology

Professional services

Communications

Regulatory, filing and license fees

Closed-end fund launch costs

Charitable Contribution

Reduction of indemnification asset

Other general and administration

Total general and administration expense

Amortization of intangible assets

Total expense, GAAP

Less non-GAAP expense adjustments:

Employee compensation and benefits:

PNC LTIP funding obligation

Compensation expense related to appreciation (depreciation) on deferred compensation plans

Subtotal

General and administration:

Reduction of indemnification asset

Charitable Contribution

Subtotal

Total non-GAAP expense adjustments

Expense, as adjusted:

Employee compensation and benefits

Distribution and servicing costs

Amortization of deferred sales commissions

Direct fund expense

General and administration

Amortization of intangible assets

Total expense, as adjusted

2015

2014

2013

$ 4,005

$ 3,829

$ 3,560

409

767

365

280

221

170

120

—

364

748

413

267

215

164

126

—

159

1,380

128

133

1,453

157

353

657

409

277

203

160

128

124

—

155

1,540

161

$ 6,737

$ 6,607

$ 6,323

—

124

$ 167

$ 3,974

$ 3,790

$ 3,517

409

767

1,380

128

364

748

1,403

157

353

657

1,416

161

$ 6,706

$ 6,518

$ 6,156

2015 Compared with 2014

GAAP. Expense increased $130 million, or 2%, from 2014,
primarily reflecting higher revenue-related expense,
including compensation and benefits expense, and
distribution and servicing costs, partially offset by lower
general and administration expense and amortization of
intangible assets. Expense for 2014 included an expense
related to a $50 million reduction of an indemnification asset.

Employee compensation and benefits expense increased
$176 million, or 5%, to $4,005 million in 2015 from $3,829
million in 2014, reflecting higher headcount, and higher
incentive and deferred compensation, partially offset by the
impact of foreign exchange movements. Employees at
December 31, 2015 totaled approximately 13,000 compared
with approximately 12,200 at December 31, 2014.

Distribution and servicing costs totaled $409 million in 2015
compared with $364 million in 2014. These costs included
payments to Bank of America/Merrill Lynch under a global
distribution agreement and payments to PNC, as well as
other third parties, primarily associated with the distribution
and servicing of client investments in certain BlackRock
products. Distribution and servicing costs for 2015 and 2014
included $194 million and $183 million, respectively,
attributable to Bank of America/Merrill Lynch.

General and administration expense decreased $73 million
from 2014, primarily reflecting the previously mentioned $50
million reduction of an indemnification asset, lower
marketing and promotional expense, and lower legal and
regulatory expense, partially offset by the impact of
transaction-related expense.

Amortization of intangible assets expense decreased $29
million, or 18%, to $128 million in 2015 from $157 million in
2014, reflecting certain finite-lived intangible assets
becoming fully amortized.

As Adjusted. Expense, as adjusted, increased $188 million,
or 3%, to $6,706 million in 2015 from $6,518 million in 2014.
The increase in total expense, as adjusted, is primarily
attributable to higher revenue-related expense, including
compensation and benefits expense and distribution and
servicing costs, partially offset by lower amortization of
intangible assets and lower general and administration
expense. Amounts related to the reduction of the
indemnification asset in 2014 have been excluded from as
adjusted results.

2014 Compared with 2013

GAAP. Expense increased $284 million, or 4%, from 2013,
primarily reflecting higher revenue-related expenses,
including compensation and direct fund expense and a $50
million reduction of an indemnification asset. Expense for
2013 included the $124 million expense related to the
Charitable Contribution.

Employee compensation and benefits expense increased
$269 million, or 8%, to $3,829 million in 2014 from $3,560
million in 2013, reflecting higher headcount and higher
incentive compensation driven by higher operating income.
Employees at December 31, 2014 totaled approximately
12,200 compared with approximately 11,400 at
December 31, 2013.

Distribution and servicing costs totaled $364 million in 2014
compared with $353 million in 2013. Distribution and
servicing costs for 2014 and 2013 included $183 million and
$184 million, respectively, attributable to Bank of America/
Merrill Lynch.

Direct fund expense increased $91 million, reflecting higher
average AUM, primarily related to iShares, where BlackRock
pays certain nonadvisory expense of the funds.

General and administration expense decreased $87 million,
primarily due to the $124 million related to the Charitable
Contribution incurred in 2013 and foreign currency
remeasurement, partially offset by the $50 million reduction
of an indemnification asset.

As Adjusted. Expense, as adjusted, increased $362 million,
or 6%, to $6,518 million in 2014 from $6,156 million in 2013.
The increase in total expense, as adjusted, is primarily
attributable to higher employee compensation and benefits
and direct fund expense. Amounts related to the reduction of
the indemnification asset and the Charitable Contribution
have been excluded from as adjusted results.

NONOPERATING RESULTS

Nonoperating income (expense), less net income (loss)
attributable to NCI for 2015, 2014 and 2013 was as follows:

(in millions)

2015

2014

2013

Nonoperating income (expense),

GAAP basis

Less: Net income (loss) attributable

to NCI(1)

Nonoperating income (expense)(2)

Gain related to the Charitable

Contribution

Compensation expense related to
(appreciation) depreciation on
deferred compensation plans

Nonoperating income (expense), as

$ (62)

$ (79)

$ 116

(69)

(30)

(49)

—

(80)

(1)

(7)

(10)

adjusted(2)

$ (70)

$ (56)

(1) Amounts included a gain of $58 million and a loss of $41 million
attributable to consolidated variable interest entities (“VIEs”) for
2015 and 2014, respectively. During 2013, the Company did not
record any nonoperating income (loss) or net income (loss)
attributable to VIEs on the consolidated statements of income.

(2) Net of net income (loss) attributable to NCI.

The components of nonoperating income (expense), less net income (loss) attributable to NCI for 2015, 2014 and 2013 were as
follows:

(in millions)

Net gain (loss) on investments(1)

Private equity

Real estate

Other alternatives(2)

Other investments(3)

Subtotal

Other gains(4)

Gain related to the PennyMac IPO

Gain related to the Charitable Contribution

Investments related to deferred compensation plans

Total net gain (loss) on investments(1)

Interest and dividend income

Interest expense

Net interest expense

Total nonoperating income (expense)(1)
Gain related to the Charitable Contribution

Compensation expense related to (appreciation) depreciation on deferred compensation plans

2015

2014

2013

$ 71

$ 69

$ 52

(2)

(19)

—

109

(204)

(178)

(69)
—

(1)

147

157

—

154

(232)

(203)

(49)
—

(7)

—

286

(211)

(189)

97
(80)

(10)

Nonoperating income (expense), as adjusted(1)

$ (70)

$ (56)

(1) Net of net income (loss) attributable to NCI. Amounts for 2015 also include net gain (loss) on consolidated VIEs.

(2) Amounts primarily include net gains (losses) related to direct hedge fund strategies and hedge fund solutions. The prior year periods also included

net gains related to opportunistic credit strategies.

(3) Amounts include net gains (losses) related to equity and fixed income investments, and BlackRock’s seed capital hedging program.

(4) The amount for 2015 primarily includes a gain related to the acquisition of certain assets of BKCA.

2015 Compared with 2014

2014 Compared with 2013

BlackRock Kelso Capital Advisors LLC. On March 6, 2015,
BlackRock acquired certain assets related to managing
BlackRock Capital Investment Corporation (formerly known
as BlackRock Kelso Capital Corporation) from BKCA. In
connection with the acquisition, BlackRock recorded a
noncash, nonoperating, pre-tax gain of $40 million related to
the fair value of its pre-existing interest in BKCA. See Note 9,
Goodwill, and Note 10, Intangible Assets, for further
discussion on the BKCA acquisition.

Net gains on investments of $109 million in 2015 decreased
$45 million from 2014 due to lower net positive marks in
2015. Net gains on investments in 2015 included a $40
million gain related to the BKCA acquisition and a $35 million
unrealized gain on a private equity investment. Net gains on
investments in 2014 included the positive impact of the
monetization of a nonstrategic, opportunistic private equity
investment.

Interest expense decreased $28 million from 2014 primarily
due to repayments of long-term borrowings in the fourth
quarter of 2014.

Income Tax Expense

(in millions)

Income before income taxes(1)

Income tax expense

Effective tax rate

(1) Net of net income (loss) attributable to NCI.

Net gains on investments of $154 million in 2014 decreased
$132 million from 2013. Net gains on investments in 2013
included the noncash, nonoperating pre-tax gain of $80
million related to the Charitable Contribution and the $39
million pre-tax gain related to the PennyMac IPO. Net gains
on investments in 2014 included the positive impact of the
monetization of a nonstrategic, opportunistic private equity
investment.

Net interest expense increased $14 million from 2013
primarily due to higher interest expense resulting from a
long-term debt issuance in March 2014.

For further information on the Company’s long-term debt,
see Liquidity and Capital Resources herein.

GAAP

2014

As adjusted

2013

2015

2014

2013

$ 4,425

$ 1,131

$ 3,954

$ 1,022

$ 4,625

$ 1,312

$ 4,507

$ 1,197

$ 4,031

$ 1,149

2015

$ 4,595

$ 1,250

27.2%

25.6%

25.8%

28.4%

26.6%

28.5%

The Company’s tax rate is affected by tax rates in foreign
jurisdictions and the relative amount of income earned in
those jurisdictions, which the Company expects to be fairly
consistent in the near term. The significant foreign
jurisdictions, which have lower statutory tax rates than the
U.S. federal statutory rate of 35%, include the United
Kingdom, Channel Islands, Canada and the Netherlands.
U.S. income taxes were not provided for certain
undistributed foreign earnings intended to be indefinitely
reinvested outside the United States.

2015. Income tax expense (GAAP) reflected:

• a net noncash benefit of $54 million, primarily

associated with the revaluation of certain deferred
income tax liabilities; and

• a benefit from $75 million of nonrecurring items.

The as adjusted effective tax rate of 28.4% for 2015
excluded the net noncash benefit of $54 million mentioned
above, as it will not have a cash flow impact and to ensure
comparability among periods presented.

2014. Income tax expense (GAAP) reflected:

• a $94 million tax benefit, primarily due to the resolution

of certain outstanding tax matters related to the
acquisition of BGI, including the previously mentioned
$50 million tax benefit (see Executive Summary for more
information);

• a $73 million net tax benefit related to several favorable

nonrecurring items; and

• a net noncash benefit of $9 million associated with the

revaluation of deferred income tax liabilities.

The as adjusted effective tax rate of 26.6% for 2014
excluded the $9 million net noncash benefit as it will not
have a cash flow impact and to ensure comparability among
periods presented and $50 million tax benefit mentioned
above. The $50 million general and administrative expense
and $50 million tax benefit have been excluded from as
adjusted results as there is no impact on BlackRock’s book
value.

2013. Income tax expense (GAAP) reflected:

• a $69 million net noncash benefit primarily related to

the revaluation of certain deferred income tax liabilities
related to intangible assets and goodwill, including the
effect of legislation enacted in the United Kingdom and
domestic state and local income tax changes;

• a tax benefit of approximately $48 million recognized in

connection with the Charitable Contribution; and

• a tax benefit of approximately $29 million, primarily due
to the realization of tax loss carryforwards, and benefits
from certain nonrecurring items.

The as adjusted effective tax rate of 28.5% for 2013
excluded the $69 million net noncash benefit and the $48
million tax benefit related to the Charitable Contribution
mentioned above.

B A L A N C E SH E E T O V E R V I E W

As Adjusted Balance Sheet

The following table presents a reconciliation of the
consolidated statement of financial condition presented on a
GAAP basis to the 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, 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
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 Company’s 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 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 beginning on
page F-1 of this Form 10-K for further information of the
Company’s consolidation policy.

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.

(in millions)

Assets

Cash and cash equivalents

Accounts receivable

Investments

Assets of consolidated VIEs:

Cash and cash equivalents

Investments

Other assets

Separate account assets and collateral held under securities lending

agreements

Other assets(3)

Subtotal

Goodwill and intangible assets, net

Total assets

Liabilities

Accrued compensation and benefits

Accounts payable and accrued liabilities

Liabilities of consolidated VIEs

Borrowings

Separate account liabilities and collateral liabilities under securities lending

agreements

Deferred income tax liabilities(4)

Other liabilities

Total liabilities

Equity

Total stockholders’ equity

Noncontrolling interests

Total equity

Total liabilities and equity

December 31, 2015

Separate
Account
Assets/
Collateral(1)

Consolidated
Sponsored
Investment
Funds(2)

GAAP
Basis

As
Adjusted

6,083

2,237

1,578

148

1,030

—

182,187

1,436

194,766

30,495

—

182,187

—

$ 88

$ 5,995

—

148

297

—

(6)

678

—

2,237

1,494

—

733

—

1,442

11,901

30,495

$ 225,261

$ 182,187

$ 678

$ 42,396

$ —

$ 1,971

1,971

1,068

177

4,930

—

182,187

4,851

1,033

—

196,217

182,187

28,503

541

29,044

—

177

—

(40)

137

—

541

1,068

—

4,930

—

4,851

1,073

13,893

28,503

—

28,503

$ 42,396

$ 225,261

$ 182,187

$ 678

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

(2) Amounts 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 billion of deferred income tax liabilities related to goodwill and intangibles. See Note 20, Income Taxes, in the

notes to the consolidated financial statements beginning on page F-1 of this Form 10-K for more information.

The following discussion summarizes the significant
changes in assets and liabilities on a GAAP basis. Please see
the consolidated statements of financial condition as of
December 31, 2015 and 2014 contained in Part II, Item 8 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 December 31, 2015
and 2014 included $100 million and $120 million,
respectively, of cash held by consolidated sponsored
investment funds (see Liquidity and Capital Resources for
details on the change in cash and cash equivalents during
2015).

Accounts receivable at December 31, 2015 increased $117
million from December 31, 2014 due 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 performance fee receivables.
Investments were $1,578 million at December 31, 2015 (for
more information see Investments herein). Goodwill and
intangible assets increased $190 million from December 31,
2014, primarily due to the BKCA, Infraestructura
Institucional and FutureAdvisor acquisitions, partially offset
by $128 million of amortization of intangible assets. Other
assets (including property, plant and equipment) increased
$284 million from December 31, 2014, primarily related to an
increase in property and equipment, higher earnings from
certain strategic investments, and an increase in current
taxes receivable.

Liabilities. Accrued compensation and benefits at
December 31, 2015 increased $106 million from
December 31, 2014, primarily due to 2015 incentive
compensation accruals. Accounts payable and accrued
liabilities at December 31, 2015 increased $33 million from

December 31, 2014 due to higher unit trust payables
(substantially offset by an increase in unit trust receivables
recorded within accounts receivable) and increased
accruals, partially offset by a decrease in current income
taxes payable.

Net deferred income tax liabilities at December 31, 2015
decreased $138 million, primarily due to the effects of
temporary differences associated with stock compensation,
the BKCA acquisition, realization of loss carryforwards, and
goodwill and intangibles. Other liabilities increased $147
million from December 31, 2014, primarily resulting from an
increase in uncertain tax positions and consolidated funds
liabilities.

Investments and Investments of Consolidated VIEs

The Company’s investments and investments of
consolidated VIEs (collectively, “Total Investments”) were
$1,578 million and $1,030 million, respectively, at
December 31, 2015. 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 its 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 gauge for investors.
The economic impact of Total Investments held pursuant to
deferred compensation arrangements is substantially 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.

(in millions)

Investments, GAAP

Investments held by consolidated VIEs, GAAP(1)

Total Investments

Investments held by consolidated VREs

Investments held by consolidated VIEs

Net interest in consolidated VREs

Net interest in consolidated VIEs(2)

Total Investments, as adjusted

Federal Reserve Bank stock

Deferred compensation investments

Hedged investments

Carried interest (VIEs/VREs)

Total “economic” investment exposure

December 31,
2015

December 31,
2014

$ 1,578

1,030

$ 1,921

3,320

2,608

(700)

(1,030)

616

733

2,227

(93)

(79)

(407)

(100)

5,241

(713)

(3,320)

696

—

1,904

(92)

(85)

(323)

(85)

$ 1,548

$ 1,319

(1) Amounts represent investments held in sponsored investment funds that are consolidated in accordance with GAAP as either a VIE or VRE. See Note

2, Significant Accounting Policies, for further information on the Company’s consolidation policy and the 2015 adoption of ASU 2015-02.

(2) Amount includes $81 million of carried interest (VIEs), 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
December 31, 2015 and 2014:

(in millions)

Private equity

Real estate

Other alternatives(1)

Other investments(2)

Total “economic” investment exposure

December 31,
2015

December 31,
2014

$ 375

$ 314

240

842

117

289

599

$ 1,548

$ 1,319

(1) Other alternatives include distressed credit/mortgage funds/opportunistic funds and hedge funds/funds of hedge funds.

(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 2015 was as follows:

(in millions)

Total Investments, as adjusted, December 31, 2014

Purchases/capital contributions

Sales/maturities

Distributions (1)

Market appreciation(depreciation)/earnings from equity method investments

Carried interest capital allocations/distributions received

Total Investments, as adjusted, December 31, 2015

(1) Amounts include distributions representing return of capital and return on investments.

$ 1,904

1,300

(847)

(169)

$ 2,227

LI QU ID ITY A ND CAPI TAL R ESO U RC E S

BlackRock Cash Flows Excluding the Impact of
Consolidated Sponsored Investment Funds

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

(in millions)

Impact on
Cash Flows
of Consolidated
Sponsored
Investment
Funds

Cash Flows
Excluding
Impact of
Consolidated
Sponsored
Investment
Funds

GAAP
Basis

Cash and cash equivalents, December 31, 2013

$ 4,390

$ 114

$ 4,276

Cash flows from operating activities

Cash flows from investing activities

Cash flows from financing activities

Effect of exchange rate changes on cash and cash equivalents

Net change in cash and cash equivalents

Cash and cash equivalents, December 31, 2014

Cash flows from operating activities

Cash flows from investing activities

Cash flows from financing activities

Effect of exchange rate changes on cash and cash equivalents

Net change in cash and cash equivalents

Cash and cash equivalents, December 31, 2015

3,087

239

(1,861)

(132)

1,333

(534)

(174)

714

—

3,621

413

(2,575)

(132)

1,327

$ 5,723

$ 120

$ 5,603

3,004

(465)

(2,064)

(115)

360

(348)

(156)

484

—

(20)

3,352

(309)

(2,548)

(115)

380

$ 6,083

$ 100

$ 5,983

Sources of BlackRock’s operating cash primarily include
investment advisory, administration fees and securities
lending revenue, performance fees, revenue from BlackRock
Solutions and advisory products and services, 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.

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 other
revenue 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 from investing activities, excluding the impact
of Consolidated Sponsored Investment Funds, for 2015 were
$309 million and primarily reflected $412 million of
investment purchases, $221 million of purchases of property
and equipment and $273 million related to certain
acquisitions, partially offset by $531 million of net proceeds
from sales and maturities of certain investments.

Cash outflows from financing activities, excluding the impact
of Consolidated Sponsored Investment Funds, for 2015 were
$2,548 million, primarily resulting from $1.3 billion of share
repurchases, including $1.1 billion in open-market
transactions and $231 million of employee tax withholdings
related to employee stock transactions and $1.5 billion of
cash dividend payments, partially offset by $126 million of
proceeds from stock options and $105 million of excess tax
benefits from vested stock-based compensation awards.

The Company manages its financial condition and funding to
maintain appropriate liquidity for the business. Liquidity
resources at December 31, 2015 and 2014 were as follows:

(in millions)

December 31,
2015

December 31,
2014

Cash and cash equivalents(1)

$ 6,083

$ 5,723

Cash and cash equivalents held
by consolidated sponsored
investment funds, excluding
VIEs(2)

Subtotal

Credit facility — undrawn

(100)

5,983

4,000

(120)

5,603

3,990

Total liquidity resources(3)

$ 9,983

$ 9,593

(1) The percentage of cash and cash equivalents held by the Company’s
U.S. subsidiaries was approximately 50% at both December 31, 2015
and 2014. 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) Amounts do not reflect year-end incentive compensation accruals of

approximately $1.5 billion and $1.4 billion for 2015 and 2014,
respectively, which were paid in February of the following year.

Total liquidity resources increased $390 million during 2015,
primarily reflecting cash from operations, partially offset by
cash payments of 2014 year-end incentive awards, share
repurchases of $1.3 billion and cash dividend payments.

A significant portion of the Company’s $2,227 million of Total
Investments, as adjusted, is illiquid in nature and, as such,
cannot be readily convertible to cash.

Share Repurchases. The Company repurchased 3.1 million
common shares in open market-transactions under the
share repurchase program for approximately $1.1 billion
during 2015. At December 31, 2015, there were 6.3 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 activities.
BTC provides investment management services, including

investment advisory and securities lending agency services,
to institutional investors and other clients. BTC is subject to
regulatory capital and liquid asset requirements
administered by the Office of the Comptroller of the
Currency.

At both December 31, 2015 and 2014, the Company was
required to maintain approximately $1.1 billion 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.

Undistributed Earnings of Foreign Subsidiaries. As of
December 31, 2015, the Company has not provided for U.S.
federal and state income taxes on approximately $4.7 billion
of undistributed earnings of its foreign subsidiaries. Such
earnings are considered indefinitely reinvested outside the
United States. The Company’s current plans do not
demonstrate a need to repatriate these funds.

Short-Term Borrowings

2015 Revolving Credit Facility. In April 2015, the Company’s
credit facility was further amended to extend the maturity
date to March 2020 and to increase the amount of the
aggregate commitment to $4.0 billion (the “2015 credit
facility”). The 2015 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 2015 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
2015 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
December 31, 2015. The 2015 credit facility provides back-
up liquidity to fund ongoing working capital for general
corporate purposes and various investment opportunities. At
December 31, 2015, the Company had no amount
outstanding under the 2015 credit facility.

Commercial Paper Program. The maximum aggregate
amount for which the Company could 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 as amended in April
2015. The commercial paper program is currently supported
by the 2015 credit facility. At December 31, 2015, BlackRock
had no CP Notes outstanding.

Long-Term Borrowings.

The carrying value of long-term borrowings at December 31, 2015 included the following:

(in millions)

6.25% Notes

5.00% Notes

4.25% Notes

3.375% Notes

3.50% Notes

1.25% Notes

Maturity Amount

Carrying Value

Maturity

$ 700

1,000

750

1,000

760

$ 699

September 2017

997

745

744

992

753

December 2019

May 2021

June 2022

March 2024

May 2025

Total Long-term Borrowings

$ 4,960

$ 4,930

During 2015, the Company fully repaid $750 million of
1.375% notes at maturity. In May 2015, the Company issued
€700 million of 1.25% senior unsecured notes maturing in
May 2025. Upon conversion to U.S. dollars the Company
designated the €700 million debt offering as a net

investment hedge to offset its currency exposure relating to
its net investment in certain euro functional currency
operations. For more information on Company’s borrowings,
see Note 12, Borrowings, in the notes to the consolidated
financial statements beginning on page F-1 of this Form
10-K.

Contractual Obligations, Commitments and Contingencies

The following table sets forth contractual obligations, commitments and contingencies by year of payment at December 31,
2015:

(in millions)

2016

2017

2018

2019

2020

Thereafter

Total

Contractual obligations and commitments:

Long-term borrowings:

Principal

Interest

Operating leases

Purchase obligations

Investment commitments

Total contractual obligations and commitments

Contingent obligations:

Contingent distribution obligations

Contingent payments related to business acquisitions(1)

Total contractual obligations, commitments and

contingent obligations(2)

$ — $

196

134

179

588

185

700

196

133

—

1,079

—

$ — $ 1,000

$ —

$ 3,260

$ 4,960

152

131

—

285

—

152

125

—

1,277

—

102

120

—

222

—

224

560

—

1,022

1,203

131

179

4,044

7,495

—

185

$ 785

$ 1,087

$ 306

$ 1,287

$ 234

$ 4,044

$ 7,743

(1) The amount of contingent payments reflected for any year represents
the expected payment amounts using foreign currency exchange
rates as of December 31, 2015 under the terms of the business
acquisition’s agreement. The fair value of the contingent obligations
is not significant to the consolidated statement of financial condition
and is recorded within other liabilities.

(2) At December 31, 2015, the Company had approximately $350 million
of net unrecognized tax benefits. Due to the uncertainty of timing and
amounts that will ultimately be paid, this amount has been excluded
from the table above.

Operating Leases. The Company leases its primary office
locations under agreements that expire on varying dates
through 2035. In connection with certain lease agreements,
the Company is responsible for escalation payments. The
contractual obligations table above includes only
guaranteed minimum lease payments for such leases and
does not project potential escalation or other lease-related
payments. These leases are classified as operating leases
and, as such, are not recorded as liabilities on the
consolidated statements of financial condition.

Purchase Obligations. In the ordinary course of business,
BlackRock enters into contracts or purchase obligations with
third parties whereby the third parties provide services to or
on behalf of BlackRock. Purchase obligations included in the

contractual obligations table above represent executory
contracts, which are either noncancelable or cancelable with
a penalty. At December 31, 2015, the Company’s obligations
primarily reflected standard service contracts for portfolio
services, market data, office-related services and third-
party marketing and promotional services, and obligations
for equipment. Purchase obligations are recorded on the
consolidated financial statements when services are
provided and, as such, obligations for services and
equipment not received are not included in the consolidated
statement of financial condition at December 31, 2015.

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 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.

Contingent Distribution Obligations. In November 2010,
BlackRock entered into a second amended and restated
global distribution agreement with Merrill Lynch, which
requires the Company to make payments to Merrill Lynch
contingent upon sales of products and level of AUM
maintained in certain BlackRock products. The initial term of
the agreement remained in effect until January 2014 and
was renewed for one automatic three-year extension.

The fair value of the remaining aggregate contingent
payments at December 31, 2015 is included in other
liabilities and is not significant to the consolidated
statement of financial condition.

The following items have not been included in the
contractual obligations, commitments and contingencies
table:

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 consolidated
statements of financial condition. Carried interest is
recorded as performance fees on BlackRock’s consolidated
statements of income upon the earlier of the termination of
the investment fund or when the likelihood of clawback is
considered mathematically improbable.

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 and, therefore, has not been included in the table
above or recorded in the consolidated statement of financial
condition at December 31, 2015. See further discussion in
Note 13, Commitments and Contingencies, to the
consolidated financial statements beginning on page F-1 of
this Form 10-K.

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 December 31, 2015, the
Company indemnified certain of its clients for their
securities lending loan balances of approximately $169.3
billion. The Company held, as agent, cash and securities
totaling $179.6 billion as collateral for indemnified securities
on loan at December 31, 2015. The fair value of these
indemnifications was not material at December 31, 2015.

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.

Compensation and Benefit Obligations. The Company has
various compensation and benefit obligations, including
bonuses, commissions and incentive payments payable,
defined contribution plan matching contribution obligations,
and deferred compensation arrangements, that are
excluded from the contractual obligations and commitments
table above. Accrued compensation and benefits at
December 31, 2015 totaled $1,971 million and included
incentive compensation of $1,452 million, deferred
compensation of $266 million and other compensation and
benefits related obligations of $253 million. Substantially all
of the incentive compensation liability was paid in the first
quarter of 2016, while the deferred compensation
obligations are generally payable over periods of up to five
years.

Critical Accounting Policies

The preparation of 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
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 consolidated
financial statements. For a summary of these and additional
accounting policies see Note 2, Significant Accounting
Policies, in the consolidated financial statements beginning
on page F-1 of this Form 10-K.

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, Consolidated Voting Right Entities, in the notes to
the consolidated financial statements beginning on page F-1
of this Form 10-K for more information. Investments that are
determined to be VIEs are consolidated if the Company is the
primary beneficiary (“PB”) of the entity.

At December 31, 2015, BlackRock was determined to be the
PB for certain investment products 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. See Note 5, Variable Interest
Entities, in the notes to the consolidated financial
statements beginning on page F-1 of this Form 10-K for
more information.

See Note 2, Significant Accounting Policies — Accounting
Pronouncements Adopted in 2015, in the notes to the
consolidated financial statements beginning on page F-1 of
this Form 10-K for more information on ASU 2015-02.

Investments

Equity Method Investments. For equity investments where
BlackRock does not control the investee, and where it is not the
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. The evaluation of
whether the Company exerts control or significant influence
over the financial and operational policies of its investees
requires significant judgment based on the facts and
circumstances surrounding each individual investment.
Factors considered in these evaluations may include the type
of investment, the legal structure of the investee, the terms
and structure of the investment agreement, including investor
voting or other rights, the terms of BlackRock’s advisory
agreement or other agreements with the investee, any
influence BlackRock may have on the governing board of the
investee, the legal rights of other investors in the entity
pursuant to the fund’s operating documents and the
relationship between BlackRock and other investors in the
entity.

BlackRock’s equity method investees that are investment
companies record their underlying investments at fair value.
Therefore, under the equity method of accounting,
BlackRock’s share of the investee’s underlying net income
predominantly represents fair value adjustments in the
investments held by the equity method investees.
BlackRock’s share of the investee’s underlying net income or
loss is based upon the most currently available information

and is recorded as nonoperating income (expense) for
investments in investment companies, or as other revenue
for certain strategic investments, which are recorded in
other assets, since such investees are considered to be an
extension of BlackRock’s core business.

At December 31, 2015, the Company had $527 million and
$265 million of equity method investments, including equity
method investments held for deferred compensation,
reflected within investments and other assets, respectively,
and at December 31, 2014, the Company had $654 million
and $208 million of equity method investees reflected in
investments and other assets, respectively.

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

For equity method, held-to-maturity and cost method
investments, if circumstances indicate that an OTTI may
exist, the investments are evaluated using market values,
where available, or the expected future cash 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 available-for-sale securities, when the fair value is lower
than cost, the Company considers, among other factors, the
length of time the security has been in a loss position, the
extent to which the security’s fair value is less than cost, the
financial condition and near-term prospects of the security’s
issuer and the Company’s ability and intent to hold the
security for a length of time sufficient to allow for recovery of
such unrealized losses. For equity securities, if the
impairment is considered other-than-temporary, an
impairment charge is recognized for the excess of the
carrying amount of the investment over its fair value. For
debt securities, the Company considers whether: (1) it has
the intent to sell the security; (2) it is more likely than not
that it will be required to sell the security before recovery; or
(3) it expects to recover the entire amortized cost basis of the
security. If the Company intends to sell the security or it is
more likely than not that it will be required to sell the
security, the entire difference between the amortized cost
and fair value must be recognized in earnings. If the
Company does not intend to sell a security and it is not more
likely than not that it will be required to sell the security but
the security has suffered an impairment related to credit,
the credit loss will be bifurcated from the total decline in
value and recorded in earnings with the remaining portion
recorded in accumulated other comprehensive income.

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.

Evaluation of impairments involves significant assumptions
and management judgments, which could differ from actual
results, and these differences could have a material impact
on the consolidated statements of income.

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 consolidated financial
statements beginning on page F-1 of this Form 10-K for
more information on fair value measurements.

Changes in Valuation. Changes in value on $2,261 million of
Total Investments will impact the Company’s nonoperating
income (expense), $44 million will impact accumulated other
comprehensive income, $203 million are held at cost or
amortized cost and the remaining $100 million relates to
carried interest, which will not impact nonoperating income
(expense). At December 31, 2015, changes in fair value of
approximately $1,649 million of such consolidated VIEs/
VREs will impact BlackRock’s net income (loss) attributable
to noncontrolling interests on the consolidated statements
of income. BlackRock’s net exposure to changes in fair value
of such consolidated sponsored investment funds was
$1,268 million.

Goodwill and Intangible Assets

The value of advisory contracts acquired in business
acquisitions to manage AUM in proprietary open-end
investment funds as well as collective trust funds without a
specified termination date are classified as indefinite-lived
intangible assets. The assignment of indefinite lives to such
investment fund contracts is based upon the assumption
there is no foreseeable limit on the contract period to
manage these funds due to the likelihood of continued
renewal at little or no cost. In addition, trade names/
trademarks are considered indefinite-lived intangibles as
they are expected to generate cash flows indefinitely.
Goodwill represents the cost of a business acquisition in
excess of the fair value of the net assets acquired. In
accordance with the applicable provisions of ASC 350,
Intangibles – Goodwill and Other (“ASC 350”), indefinite-lived
intangible assets and goodwill are not amortized. Finite-
lived management contracts, which relate to acquired
separate accounts and funds with a specified termination
date, are amortized over their remaining expected useful
lives, which, at December 31, 2015, ranged from 1 to 9 years
with a weighted-average remaining estimated useful life of
3.7 years.

Goodwill. The Company assesses its goodwill for impairment
at least annually, considering such factors as the book value
and the market capitalization of the Company. The
impairment assessment performed as of July 31, 2015
indicated no impairment charge was required. The Company
continues to monitor its book value per share compared with
closing prices of its common stock for potential indicators of
impairment. At December 31, 2015, the Company’s common
stock closed at $340.52, which exceeded its book value of
approximately $172.12 per share.

Indefinite-lived and finite-lived intangibles. The Company
performs assessments to determine if any intangible assets
are impaired and whether the indefinite-life and finite-life
classifications are still appropriate.

In evaluating whether it is more likely than not that the fair
value of indefinite-lived intangibles is less than carrying

value, BlackRock performed certain quantitative
assessments and assessed various significant qualitative
factors including AUM, revenue basis points, projected AUM
growth rates, operating margins, tax rates and discount
rates. In addition, the Company considered other factors
including: (i) macroeconomic conditions such as a
deterioration in general economic conditions, limitations on
accessing capital, fluctuations in foreign exchange rates, or
other developments in equity and credit markets; (ii) industry
and market considerations such as a deterioration in the
environment in which an entity operates, an increased
competitive environment, a decline in market-dependent
multiples or metrics, a change in the market for an entity’s
services, or regulatory, legal or political developments; and
(iii) entity-specific events, such as a change in management
or key personnel, overall financial performance and litigation
that could affect significant inputs used to determine the
fair value of the indefinite-lived intangible asset. If an
indefinite-lived intangible is determined to be more likely
than not impaired, then the fair value of the asset is
compared with its carrying value and any excess of the
carrying value over the fair value would be recognized as an
expense in the period in which the impairment occurs.

For finite-lived intangible assets, if potential impairment
circumstances are considered to exist, the Company will
perform a recoverability test, using an undiscounted cash
flow analysis. Actual results could differ from these cash
flow estimates, which could materially impact the
impairment conclusion. If the carrying value of the asset is
determined not to be recoverable based on the undiscounted
cash flow test, the difference between the book value of the
asset and its current fair value would be recognized as an
expense in the period in which the impairment occurs.

In addition, management judgment is required to estimate
the period over which finite-lived intangible assets will
contribute to the Company’s cash flows and the pattern in
which these assets will be consumed. A change in the
remaining useful life of any of these assets, or the
reclassification of an indefinite-lived intangible asset to a
finite-lived intangible asset, could have a significant impact
on the Company’s amortization expense, which was $128
million, $157 million and $161 million for 2015, 2014 and
2013, respectively.

In 2015, 2014 and 2013, the Company performed impairment
tests, including evaluating various qualitative factors and
performing certain quantitative assessments. The Company
determined that no impairment charges were required, the
classification of indefinite-lived versus finite-lived
intangibles was still appropriate and no changes to the
expected lives of the finite-lived intangibles were required.
The Company continuously monitors various factors,
including AUM, for potential indicators of impairment.

Income Taxes

Deferred income tax assets and liabilities are recognized for
future tax consequences attributable to temporary
differences between the financial statement carrying
amounts of existing assets and liabilities and their
respective tax bases using currently enacted tax rates in
effect for the year in which the differences are expected to
reverse. The effect of a change in tax rates on deferred tax
assets and liabilities is recognized in income in the period
that includes the enactment date.

Significant management judgment is required in estimating
the ranges of possible outcomes and determining the
probability of favorable or unfavorable tax outcomes and
potential interest and penalties related to such unfavorable
outcomes. Actual future tax consequences relating to
uncertain tax positions may be materially different than the
Company’s current estimates. At December 31, 2015,
BlackRock had $466 million of gross unrecognized tax
benefits, of which $320 million, if recognized, would affect
the effective tax rate.

Management is required to estimate the timing of the
recognition of deferred tax assets and liabilities, make
assumptions about the future deductibility of deferred
income tax assets and assess deferred income tax liabilities
based on enacted tax rates for the appropriate tax
jurisdictions to determine the amount of such deferred
income tax assets and liabilities. At December 31, 2015, the
Company had deferred tax assets of $20 million and net
deferred tax liabilities of approximately $4,851 million on the
consolidated statement of financial condition. Changes in
deferred tax assets and liabilities may occur in certain
circumstances, including statutory income tax rate changes,
statutory tax law changes, changes in the anticipated timing
of recognition of deferred tax assets and liabilities or
changes in the structure or tax status of the Company.

The Company assesses whether a valuation allowance
should be established against its deferred income tax assets
based on consideration of all available evidence, both
positive and negative, using a more likely than not standard.
The assessment considers, among other matters, the
nature, frequency and severity of recent losses, forecast of
future profitability, the duration of statutory carry back and
carry forward periods, the Company’s experience with tax
attributes expiring unused, and tax planning alternatives.

The Company records income taxes based upon its
estimated income tax liability or benefit. The Company’s
actual tax liability or benefit may differ from the estimated
income tax liability or benefit. The Company had current
income taxes receivables of approximately $166 million and
current income taxes payables of $79 million at
December 31, 2015.

Revenue Recognition

Investment advisory and administration fees are recognized
as the services are performed. Such fees are primarily based
on pre-determined percentages of the market value of AUM
or, in the case of certain real estate clients, net operating
income generated by the underlying properties. Investment
advisory and administration 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.

The Company contracts with third parties and related parties
for various fund distribution and shareholder servicing to be
performed on behalf of certain funds the Company manages.
Such arrangements generally are priced as a portion of the
management fee paid by the fund. In certain cases, the fund

takes on the primary responsibility for payment for services
such that the Company bears no credit risk to the third-
party. The Company accounts for such retrocession
arrangements in accordance with ASC 605-45, Revenue
Recognition – Principal Agent Considerations (“ASC 605-45”),
and records its management fees net of retrocessions.
Retrocessions for 2015, 2014 and 2013 were $870 million,
$891 million and $785 million, respectively. The Company
has additional contracts for similar services with third
parties, which due to the terms of the contracts, are
recorded as distribution and servicing costs and thus not
netted on the consolidated statements of income.

The Company earns revenue by lending securities on behalf
of clients to highly rated banks and broker-dealers. Revenue
is accounted for on an accrual basis. The securities loaned
are secured by collateral, generally ranging from 102% to
112% of the value of the loaned securities. Generally, the
revenue earned is shared between the Company and the
funds or accounts managed by the Company from which the
securities are borrowed. For 2015, 2014 and 2013, securities
lending revenue earned by the Company totaled $513
million, $477 million and $447 million, respectively, and is
recorded in investment advisory, administration fees and
securities lending revenue on the consolidated statements
of income. Investment advisory, administration fees and
securities lending revenue are reported together as the fees
for these services often are agreed upon with clients as a
bundled fee.

The Company receives investment advisory performance
fees or incentive allocations, from certain actively managed
investment funds and certain SMAs. These performance
fees are dependent upon exceeding specified relative or
absolute investment return thresholds. Such fees are
recorded upon completion of the measurement period,
which varies by product or account, and could be monthly,
quarterly, annually or longer.

In addition, 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 in Total Investments or cash/
cash of consolidated VIEs to the extent that it is distributed,
on its consolidated statements of financial condition.
Carried interest is recorded as performance fee revenue
upon the earlier of the termination of the investment fund or
when the likelihood of clawback is considered
mathematically improbable.

The Company records a 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 December 31, 2015 and 2014, the Company had
$143 million and $105 million, respectively, of deferred
carried interest recorded in other liabilities/other liabilities
of consolidated VIEs on the consolidated statements of
financial condition. A portion of the deferred carried interest
liability will be paid to certain employees. The ultimate
timing of the recognition of performance fee revenue, if any,
for these products is unknown.

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 estate, 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
December 31, 2015, the Company had outstanding total
return swaps and interest rate swaps with an aggregate
notional value of approximately $360 million and $46 million,
respectively.

At December 31, 2015, approximately $1.7 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 $1,548 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 December 31, 2015, the
Company’s net exposure to equity market price risk in its
investment portfolio was approximately $578 million of the
Company’s total economic investment exposure.
Investments subject to market price risk include private
equity and real estate 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 $57.8 million in
the carrying value of such investments.

The following table presents changes in the deferred carried
interest liability (including the portion related to
consolidated VIEs) for 2015 and 2014:

(in millions)

Beginning balance

Net increase (decrease)

Performance fee revenue recognized

Ending balance

2015

2014

$ 105

$ 108

(31)

(72)

$ 143

$ 105

For 2015, 2014 and 2013, performance fee revenue totaled
$621 million, $550 million and $561 million, respectively.

Fees earned for BlackRock Solutions, which include advisory
services, are recorded as services are performed or when
completed and are determined using some, or all, of the
following methods: (i) percentages of various attributes of
advisory AUM or value of positions on the Aladdin platform,
(ii) fixed fees and (iii) performance fees if contractual
thresholds are met. Revenue earned on advisory
assignments was comprised of one-time advisory and
portfolio structuring fees and ongoing fees based on AUM of
the respective portfolio assignment. For 2015, 2014 and
2013, BlackRock Solutions and advisory revenue totaled
$646 million, $635 million and $577 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 revenue
until performance thresholds have been exceeded and the
likelihood of clawback is mathematically improbable.

R E C E N T DE V E L O P M E N T S

In November 2015, the Company announced that it had
entered an agreement to assume investment management
responsibilities of approximately $87 billion of cash assets
under management from BofA® Global Capital Management,
Bank of America’s asset management business. The
transaction is expected to close in the first half of 2016,
subject to customary regulatory approvals and closing
conditions. This transaction is not expected to be material to
the Company’s consolidated financial condition or results of
operations.

Accounting Developments

For accounting pronouncements that the Company adopted
during 2015 and for recent accounting pronouncements not
yet adopted, see Note 2, Significant Accounting Policies, in
the consolidated financial statements beginning on page F-1
of this Form 10-K.

Item 7a. 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 December 31, 2015, the majority
of the Company’s investment advisory and administration

Interest-Rate/Credit Spread Risk. At December 31, 2015,
the Company was exposed to interest rate risk and credit
spread risk as a result of approximately $970 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 $14.6 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 pound sterling and euro, was $343
million at December 31, 2015. A 10% adverse change in the
applicable foreign exchange rates would result in
approximately a $34.3 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 December 31, 2015,
the Company had outstanding forward foreign currency
exchange contracts with an aggregate notional value of
approximately $169 million.

Item 8. Financial Statements and
Supplemental Data

The report of the independent registered public accounting
firm and financial statements listed in the accompanying
index are included in Item 15 of this report. See Index to the

consolidated financial statements on page F-1 of this Form
10-K.

Item 9. Changes in and
Disagreements with Accountants on
Accounting and Financial
Disclosure

There have been no disagreements on accounting and
financial disclosure matters. BlackRock has not changed
accountants in the two most recent fiscal years.

Item 9a. 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 annual report on
Form 10-K. 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 fourth quarter of the fiscal year ending
December 31, 2015 that have materially affected or are
reasonably likely to materially affect our internal control over
financial reporting.

Management’s Report on Internal Control Over Financial Reporting

Management of BlackRock, Inc. (the “Company”) is responsible for establishing and maintaining effective internal control over
financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) under the Securities
Exchange Act of 1934, as amended, as a process designed by, or under the supervision of, the Company’s principal executive
and principal financial officers, or persons performing similar functions, and affected by the Company’s board of directors,
management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the
United States of America and includes those policies and procedures that:

• pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and

dispositions of the assets of the Company;

• provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements

in accordance with accounting principles generally accepted in the United States of America, and that receipts and
expenditures of the Company are being made only in accordance with the authorizations of management and directors of
the Company; and

• provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of

the Company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper
management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely
basis. Also, projections of any evaluation of effectiveness of the internal control over financial reporting to future periods are
subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2015
based on the criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on this assessment, management concluded that, as of December 31,
2015, the Company’s internal control over financial reporting is effective.

The Company’s independent registered public accounting firm has issued an attestation report on the effectiveness of the
Company’s internal control over financial reporting.

February 26, 2016

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of BlackRock, Inc.:

We have audited the internal control over financial reporting of BlackRock, Inc. and subsidiaries (the “Company”) as of
December 31, 2015, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee
of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining
effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial
reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility
is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal
control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of
internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design
and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s
principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s
board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets
of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper
management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely
basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods
are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of
December 31, 2015, based on the criteria established in Internal Control — Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States),
the consolidated statement of financial condition as of December 31, 2015 and the related consolidated statements of
income, comprehensive income, changes in equity and cash flows for the year then ended of the Company and our report
dated February 26, 2016 expressed an unqualified opinion on those consolidated financial statements.

/s/ Deloitte & Touche LLP

New York, New York
February 26, 2016

Item 9b. Other Information

The Company is furnishing no other information in this Form
10-K.

PART III

Item 10. Directors, Executive
Officers and Corporate Governance

The information regarding directors and executive officers
set forth under the captions “Item 1: Election of Directors –
Information Concerning the Nominees and Directors” and
“Item 1: Election of Directors – Other Executive Officers” of
the Proxy Statement is incorporated herein by reference.

The information regarding compliance with Section 16(a) of
the Exchange Act set forth under the caption “Item 1:
Section 16(a) Beneficial Ownership Reporting Compliance” of
the Proxy Statement is incorporated herein by reference.

The information regarding BlackRock’s Code of Ethics for
Chief Executive and Senior Financial Officers under the
caption “Item 1: Corporate Governance Guidelines and Code
of Business Conduct and Ethics” of the Proxy Statement is
incorporated herein by reference.

Item 11. Executive Compensation

The information contained in the sections captioned “Item 1:
Compensation of Executive Officers” and “Item 1: 2015
Director Compensation” of the Proxy Statement is
incorporated herein by reference.

Item 12. Security Ownership of
Certain Beneficial Owners and
Management and Related
Stockholder Matters

The information contained in the sections captioned “Item 1:
Ownership of BlackRock Common and Preferred Stock” and
“Equity Compensation Plan Information” of the Proxy
Statement is incorporated herein by reference.

Item 13. Certain Relationships and
Related Transactions, and Director
Independence

The information contained in the sections captioned “Item 1:
Certain Relationships and Related Transactions” and “Item
1: Director Independence” of the Proxy Statement is
incorporated herein by reference.

Item 14. Principal Accountant Fees
and Services

The information regarding BlackRock’s independent auditor
fees and services in the section captioned “Item 4:
Ratification of Appointment of Independent Registered
Public Accounting Firm” of the Proxy Statement is
incorporated herein by reference.

PART IV

Item 15. Exhibits and Financial
Statement Schedules

1. Financial Statements

The Company’s consolidated financial statements are
included beginning on page F-1.

2. Financial Statement Schedules

Ratio of Earnings to Fixed Charges has been included as
Exhibit 12.1. All other schedules have been omitted because
they are not applicable, not required or the information
required is included in the Company’s consolidated financial
statements or notes thereto.

3. Exhibit Index

As used in this exhibit list, “BlackRock” refers to BlackRock,
Inc. (formerly named New BlackRock, Inc. and previously,
New Boise, Inc.) (Commission File No. 001-33099) and “Old
BlackRock” refers to BlackRock Holdco 2, Inc. (formerly
named BlackRock, Inc.) (Commission File No. 001-15305),
which is the predecessor of BlackRock. The following
exhibits are filed as part of this Annual Report on Form 10-K:

Please note that the agreements included as exhibits to this
Form 10-K are included to provide information regarding
their terms and are not intended to provide any other factual
or disclosure information about BlackRock or the other
parties to the agreements. The agreements contain
representations and warranties by each of the parties to the
applicable agreement that have been made solely for the
benefit of the other parties to the applicable agreement and
may not describe the actual state of affairs as of the date
they were made or at any other time.

Exhibit
No.

Description

3.1

3.2

3.3

3.4

3.5

3.6

3.7

4.1

4.2

4.3

4.4

4.5

4.6

4.7

4.8

4.9

(1)

(2)

(3)

(1)

(4)

(5)

(6)

(7)

(8)

(9)

(10)

(11)

(12)

(13)

Amended and Restated Certificate of Incorporation of BlackRock.

Certificate of Amendment to the Amended and Restated Certificate of Incorporation of BlackRock, Inc.

Amended and Restated Bylaws of BlackRock.

Certificate of Designations of Series A Convertible Participating Preferred Stock of BlackRock.

Certificate of Designations of Series B Convertible Participating Preferred Stock of BlackRock.

Certificate of Designations of Series C Convertible Participating Preferred Stock of BlackRock.

Certificate of Designations of Series D Convertible Participating Preferred Stock of BlackRock.

Specimen of Common Stock Certificate.

Indenture, dated September 17, 2007, between BlackRock and The Bank of New York, as trustee, relating to senior
debt securities.

Form of 6.25% Notes due 2017.

Form of 5.00% Notes due 2019.

Form of 4.25% Notes due 2021.

Form of 3.375% Notes due 2022.

Form of 3.500% Notes due 2024.

Form of 1.250% Notes due 2025.

(13) Officers’ Certificate, dated May 6, 2015, for the 1.250% Notes due 2025 issued pursuant to the Indenture.

10.1

BlackRock, Inc. Second Amended and Restated 1999 Stock Award and Incentive Plan.+

10.2 (14) Amended and Restated BlackRock, Inc. 1999 Annual Incentive Performance Plan.+

10.3 (15) Amendment No. 1 to the BlackRock, Inc. Amended and Restated 1999 Annual Incentive Performance Plan.+

10.4 (16)

Form of Restricted Stock Unit Agreement under the BlackRock, Inc. Second Amended and Restated 1999 Stock
Award and Incentive Plan.+

10.5 (16)

Form of Performance-Based Restricted Stock Unit Agreement (BPIP) under the BlackRock, Inc. Second Amended
and Restated 1999 Stock Award and Incentive Plan.+

10.6 (1)

10.7 (1)

10.8 (1)

Form of Stock Option Agreement expected to be used in connection with future grants of Stock Options under the
BlackRock, Inc. Second Amended and Restated 1999 Stock Award and Incentive Plan.+

Form of Restricted Stock Agreement expected to be used in connection with future grants of Restricted Stock
under the BlackRock, Inc. Second Amended and Restated 1999 Stock Award and Incentive Plan.+

Form of Directors’ Restricted Stock Unit Agreement expected to be used in connection with future grants of
Restricted Stock Units under the BlackRock, Inc. Second Amended and Restated 1999 Stock Award and Incentive
Plan.+

10.9

BlackRock, Inc. Amended and Restated Voluntary Deferred Compensation Plan, as amended and restated as of
November 16, 2015.+

10.10(17) Share Surrender Agreement, dated October 10, 2002 (the “Share Surrender Agreement”), among Old BlackRock,

PNC Asset Management, Inc. and The PNC Financial Services Group, Inc.+

10.11(18)

First Amendment, dated as of February 15, 2006, to the Share Surrender Agreement.+

10.12(19) Second Amendment, dated as of June 11, 2007, to the Share Surrender Agreement.+

10.13(4)

Third Amendment, dated as of February 27, 2009, to the Share Surrender Agreement.+

10.14(20)

Fourth Amendment, dated as of August 7, 2012, to the Share Surrender Agreement.+

10.15(21)

Five-Year Revolving Credit Agreement, dated as of March 10, 2011, by and among BlackRock, Inc., certain of its
subsidiaries, Wells Fargo Bank, National Association, as administrative agent, swingline lender, issuing lender and
L/C agent, Sumitomo Mitsui Banking Corporation, as Japanese Yen lender, a group of lenders, Wells Fargo
Securities, LLC, Citigroup Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Barclays
Capital, J.P. Morgan Securities LLC and Morgan Stanley Senior Funding, Inc., as joint lead arrangers and joint
bookrunners, Citibank, N.A., as syndication agent and Bank of America, N.A., Barclays Bank PLC, JPMorgan Chase
Bank, N.A. and Morgan Stanley Senior Funding, Inc., as documentation agents.

10.16(22) Amendment No. 1, dated as of March 30, 2012, by and among BlackRock, Inc., certain of its subsidiaries, Wells

Fargo Bank, National Association, as administrative agent, swingline lender, issuing lender, L/C agent and a
lender, and the banks and other financial institutions referred to therein.

10.17(23) Amendment No. 2, dated as of March 28, 2013, by and among BlackRock, Inc., certain of its subsidiaries, Wells

Fargo Bank, National Association, as administrative agent, swingline lender, issuing lender, L/C agent and a
lender, and the banks and other financial institutions referred to therein.

10.18(24) Amendment No. 3, dated as of March 28, 2014, by and among BlackRock, Inc., certain of its subsidiaries, Wells

Fargo Bank, National Association, as administrative agent, swingline lender, issuing lender, L/C agent and a
lender, and the banks and other financial institutions referred to therein.

Exhibit No.

10.19

(25)

Amendment No. 4, dated as of April 2, 2015, by and among BlackRock, Inc., certain of its subsidiaries, Wells
Fargo Bank, National Association, as administrative agent, swingline lender, issuing lender, L/C agent and a
lender, and the banks and other financial institutions referred to therein.

Description

10.20

(26)† Second Amended and Restated Global Distribution Agreement, dated as of November 15, 2010, among

BlackRock and Merrill Lynch & Co., Inc.

10.21

(3)

10.22

(27)

10.23

(28)

10.24

10.25

(29)

(30)

10.26

(30)

10.27

(30)

10.28

(30)

12.1

21.1

23.1

31.1

31.2

32.1

101.INS

101.SCH

101.CAL

101.DEF

101.LAB

101.PRE

Amended and Restated Implementation and Stockholder Agreement, dated as of February 27, 2009, between
The PNC Financial Services Group, Inc. and BlackRock.

Amendment No. 1, dated as of June 11, 2009, to the Amended and Restated Implementation and Stockholder
Agreement between The PNC Financial Services Group, Inc. and BlackRock.

Lease Agreement, dated as of February 17, 2010, among BlackRock Investment Management (UK) Limited and
Mourant & Co Trustees Limited and Mourant Property Trustees Limited as Trustees of the Drapers Gardens
Unit Trust for the lease of Drapers Gardens, 12 Throgmorton Avenue, London, EC2, United Kingdom.

Letter Agreement, dated February 12, 2013, between Gary S. Shedlin and BlackRock.+

Amended and Restated Commercial Paper Dealer Agreement between BlackRock and Barclays Capital Inc.,
dated as of December 23, 2014.

Amended and Restated Commercial Paper Dealer Agreement between BlackRock and Citigroup Global
Markets Inc., dated as of December 23, 2014.

Amended and Restated Commercial Paper Dealer Agreement between BlackRock and Merrill Lynch, Pierce,
Fenner & Smith Incorporated, dated as of January 6, 2015.

Amended and Restated Commercial Paper Dealer Agreement between BlackRock and Credit Suisse Securities
(USA) LLC dated as of January 6, 2015.

Computation of Ratio of Earnings to Fixed Charges.

Subsidiaries of Registrant.

Deloitte & Touche LLP Consent.

Section 302 Certification of Chief Executive Officer.

Section 302 Certification of Chief Financial Officer.

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

XBRL Instance Document.

XBRL Taxonomy Extension Schema Document.

XBRL Taxonomy Extension Calculation Linkbase Document.

XBRL Taxonomy Extension Definition Linkbase Document.

XBRL Taxonomy Extension Label Linkbase Document.

XBRL Taxonomy Extension Presentation Linkbase Document.

(1)

Incorporated by reference to BlackRock’s Current Report on Form 8-K filed on October 5, 2006.

(2)

Incorporated by reference to BlackRock’s Current Report on Form 8-K filed on May 25, 2012.

(3)

Incorporated by reference to BlackRock’s Annual Report on Form 10-K for the year ended December 31, 2012.

(4)

Incorporated by reference to BlackRock’s Current Report on Form 8-K filed on February 27, 2009.

(5)

Incorporated by reference to BlackRock’s Current Report on Form 8-K filed on December 3, 2009.

(6)

Incorporated by reference to BlackRock’s Registration Statement on Form S-8 (Registration No. 333-137708) filed on September 29, 2006.

(7)

Incorporated by reference to BlackRock’s Annual Report on Form 10-K for the year ended December 31, 2007.

(8)

Incorporated by reference to BlackRock’s Current Report on Form 8-K filed on September 17, 2007.

(9)

Incorporated by reference to BlackRock’s Current Report on Form 8-K filed on December 10, 2009.

(10) Incorporated by reference to BlackRock’s Current Report on Form 8-K filed on May 25, 2011.

(11) Incorporated by reference to BlackRock’s Current Report on Form 8-K filed on May 31, 2012.

(12) Incorporated by reference to BlackRock’s Current Report on Form 8-K filed on March 18, 2014.

(13) Incorporated by reference to BlackRock’s Current Report on Form 8-K filed on May 6, 2015.

(14) Incorporated by reference to Old BlackRock’s Annual Report on Form 10-K for the year ended December 31, 2002.

(15) Incorporated by reference to Old BlackRock’s Current Report on Form 8-K filed on May 24, 2006.

(16) Incorporated by reference to BlackRock’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015

(17) Incorporated by reference to Old BlackRock’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2002.

(18) Incorporated by reference to Old BlackRock’s Current Report on Form 8-K filed on February 22, 2006.

(19) Incorporated by reference to BlackRock’s Current Report on Form 8-K filed on June 15, 2007.

(20) Incorporated by reference to BlackRock’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012.

(21) Incorporated by reference to BlackRock’s Current Report on Form 8-K/A filed on August 24, 2012.

(22) Incorporated by reference to BlackRock’s Current Report on Form 8-K filed on April 4, 2012.

(23) Incorporated by reference to BlackRock’s Current Report on Form 8-K filed on April 3, 2013.

(24) Incorporated by reference to BlackRock’s Current Report on Form 8-K filed on March 28, 2014.

(25) Incorporated by reference to BlackRock’s Current Report on Form 8-K filed on April 3, 2015.

(26) Incorporated by reference to BlackRock’s Current Report on Form 8-K/A filed on August 24, 2012.

(27) Incorporated by reference to BlackRock’s Current Report on Form 8-K filed on June 17, 2009.

(28) Incorporated by reference to BlackRock’s Annual Report on Form 10-K for the year ended December 31, 2009.

(29) Incorporated by reference to BlackRock’s Current Report on Form 8-K filed on February 19, 2013.

(30) Incorporated by reference to BlackRock’s Annual Report on Form 10-K for the year ended December 31, 2014.

+ Denotes compensatory plans or arrangements.

†

Confidential treatment has been granted for certain portions of this exhibit, which portions have been omitted and filed separately with the Securities
and Exchange Commission.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

By:

/s/ LAURENCE D. FINK

Laurence D. Fink

Chairman, Chief Executive Officer and Director

February 26, 2016

Each of the officers and directors of BlackRock, Inc. whose signature appears below, in so signing, also makes, constitutes and
appoints Laurence D. Fink, Gary S. Shedlin, Matthew J. Mallow, Christopher J. Meade, Daniel R. Waltcher and R. Andrew
Dickson III, his or her true and lawful attorneys-in-fact, with full power and substitution, for him or her in any and all
capacities, to execute and cause to be filed with the Securities and Exchange Commission any and all amendments to the
Annual Report on Form 10-K, with exhibits thereto and other documents connected therewith and to perform any acts
necessary to be done in order to file such documents, and hereby ratifies and confirms all that said attorney-in-fact or his or
her substitute or substitutes may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature

/S/ LAURENCE D. FINK

Laurence D. Fink

/S/ GARY SHEDLIN

Gary S. Shedlin

/S/ JOSEPH FELICIANI, JR.

Joseph Feliciani, Jr.

/S/ ABDLATIF Y. AL-HAMAD

Abdlatif Y. Al-Hamad

/S/ MATHIS CABIALLAVETTA

Mathis Cabiallavetta

/S/ PAMELA DALEY

Pamela Daley

/S/ WILLIAM S. DEMCHAK

William S. Demchak

/S/ JESSICA EINHORN

Jessica Einhorn

/S/ FABRIZIO FREDA

Fabrizio Freda

/S/ MURRY S. GERBER

Murry S. Gerber

/S/ JAMES GROSFELD

James Grosfeld

/S/ ROBERT S. KAPITO

Robert S. Kapito

/S/ DAVID H. KOMANSKY

David H. Komansky

/S/ SIR DERYCK MAUGHAN

Sir Deryck Maughan

/S/ CHERYL D. MILLS

Cheryl D. Mills

/S/ GORDON M. NIXON

Gordon M. Nixon

Title

Date

Chairman, Chief Executive Officer and
Director (Principal Executive Officer)

February 26, 2016

Senior Managing Director and Chief Financial
Officer (Principal Financial Officer)

February 26, 2016

Managing Director and Chief Accounting
Officer (Principal Accounting Officer)

Director

February 26, 2016

Signature

Title

Date

/S/ THOMAS H. O’BRIEN

Thomas H. O’Brien

/S/ IVAN G. SEIDENBERG

Ivan G. Seidenberg

/S/ MARCO ANTONIO SLIM DOMIT

Marco Antonio Slim Domit

/S/ JOHN S. VARLEY

John S. Varley

/S/ SUSAN L. WAGNER

Susan L. Wagner

Director

February 26, 2016

INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

Consolidated Statements of Financial Condition

Consolidated Statements of Income

Consolidated Statements of Comprehensive Income

Consolidated Statements of Changes in Equity

Consolidated Statements of Cash Flows

Notes to the Consolidated Financial Statements

F-2

F-3

F-4

F-5

F-6

F-8

F-9

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of BlackRock, Inc.:

We have audited the accompanying consolidated statements of financial condition of BlackRock, Inc. and subsidiaries (the
“Company”) as of December 31, 2015 and 2014, and the related consolidated statements of income, comprehensive income,
changes in equity, and cash flows for each of the three years in the period ended December 31, 2015. These financial
statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of
BlackRock, Inc. and subsidiaries at December 31, 2015 and 2014, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 2015, in conformity with accounting principles generally accepted in
the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States),
the Company’s internal control over financial reporting as of December 31, 2015, based on criteria established in Internal
Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and
our report dated February 26, 2016 expressed an unqualified opinion on the Company’s internal control over financial
reporting.

/s/ Deloitte & Touche LLP

New York, New York
February 26, 2016

F-2

BlackRock, Inc.
Consolidated Statements of Financial Condition

(in millions, except shares and per share data)

Assets

Cash and cash equivalents

Accounts receivable

Investments

Assets of consolidated variable interest entities:

Cash and cash equivalents

Investments

Other assets

Separate account assets

Separate account collateral held under securities lending agreements

Property and equipment (net of accumulated depreciation of $570 and $587 at December 31,

2015 and 2014, respectively)

Intangible assets (net of accumulated amortization of $745 and $1,040 at December 31,

2015 and 2014, respectively)

Goodwill

Other assets

Total assets

Liabilities

Accrued compensation and benefits

Accounts payable and accrued liabilities

Liabilities of consolidated variable interest entities:

Borrowings

Other liabilities

Borrowings

Separate account liabilities

Separate account collateral liabilities under securities lending agreements

Deferred income tax liabilities

Other liabilities

Total liabilities

Commitments and contingencies (Note 13)

Temporary equity

Redeemable noncontrolling interests

Permanent Equity

BlackRock, Inc. stockholders’ equity

Common stock, $ 0.01 par value;

Shares authorized: 500,000,000 at December 31, 2015 and 2014; Shares issued: 171,252,185 at

December 31, 2015 and 2014; Shares outstanding: 163,461,064 and 164,786,788 at
December 31, 2015 and 2014, respectively;

Series B nonvoting participating preferred stock, $0.01 par value;

Shares authorized: 150,000,000 at December 31, 2015 and 2014; Shares issued and outstanding:

823,188 at December 31, 2015 and 2014;

Series C nonvoting participating preferred stock, $0.01 par value;

Shares authorized: 6,000,000 at December 31, 2015 and 2014; Shares issued and outstanding:

1,311,887 at December 31, 2015 and 2014

Additional paid-in capital

Retained earnings

Appropriated retained earnings

Accumulated other comprehensive loss

Treasury stock, common, at cost (7,791,121 and 6,465,397 shares held at December 31, 2015 and 2014,

respectively)

Total BlackRock, Inc. stockholders’ equity

Nonredeemable noncontrolling interests

Total permanent equity

December 31,
2015

December 31,
2014

6,083

$ 5,723

2,237

1,578

148

1,030

150,851

31,336

2,120

1,921

278

3,320

161,287

33,654

581

467

17,372

13,123

855

17,344

12,961

685

$225,261

$239,792

1,971

1,068

$ 1,865

1,035

—

177

4,930

150,851

31,336

4,851

1,033

196,217

464

—

19,405

12,033

—

(448)

(2,489)

28,503

28,580

3,389

245

4,922

161,287

33,654

4,989

886

212,272

—

19,386

10,164

(19)

(273)

(1,894)

27,366

119

27,485

Total liabilities, temporary equity and permanent equity

$225,261

$239,792

See accompanying notes to consolidated financial statements.

F-3

BlackRock, Inc.
Consolidated Statements of Income

(in millions, except shares and per share data)

2015

2014

2013

Year ended December 31,

Revenue

Investment advisory, administration fees and securities lending revenue:

Related parties

Other third parties

Total investment advisory, administration fees and securities lending revenue

Investment advisory performance fees

BlackRock Solutions and advisory

Distribution fees

Other revenue

Total revenue

Expense

Employee compensation and benefits

Distribution and servicing costs

Amortization of deferred sales commissions

Direct fund expenses

General and administration

Amortization of intangible assets

Total expense

Operating income

Nonoperating income (expense)

Net gain (loss) on investments

Net gain (loss) on consolidated variable interest entities

Interest and dividend income

Interest expense

Total nonoperating income (expense)

Income before income taxes

Income tax expense

Net income

Less:

Net income (loss) attributable to redeemable noncontrolling interests

Net income (loss) attributable to nonredeemable noncontrolling interests

Net income attributable to BlackRock, Inc.

Earnings per share attributable to BlackRock, Inc. common stockholders:

Basic

Diluted

Cash dividends declared and paid per share

Weighted-average common shares outstanding:

Basic

Diluted

See accompanying notes to consolidated financial statements.

6,875

2,965

9,840

621

646

239

6,738

2,851

9,589

550

635

237

5,991

2,748

8,739

561

577

230

11,401

11,081

10,180

4,005

409

767

1,380

128

6,737

4,664

(204)

(62)

4,602

1,250

3,352

3,345

20.10

19.79

8.72

3,829

364

748

1,453

157

6,607

4,474

165

(41)

(232)

(79)

4,395

1,131

3,264

(32)

3,294

19.58

19.25

7.72

3,560

353

657

1,540

161

6,323

3,857

305

—

(211)

116

3,973

1,022

2,951

(1)

2,932

17.23

16.87

6.72

166,390,009

168,225,154

170,185,870

169,038,571

171,112,261

173,828,902

F-4

BlackRock, Inc.
Consolidated Statements of Comprehensive Income

(in millions)

Net income

Other comprehensive income:

Change in net unrealized gains (losses) from available-for-sale investments, net of tax:

Unrealized holding gains (losses)(1)

Less: reclassification adjustment included in net income(1)

Net change from available-for-sale investments

Benefit plans, net

Foreign currency translation adjustments(2)

Other comprehensive income (loss)

Comprehensive income

Less: Comprehensive income (loss) attributable to noncontrolling interests

Comprehensive income attributable to BlackRock, Inc.

(1) The tax benefit (expense) was not material in 2015, 2014 and 2013.

Year ended December 31,

2015

2014

2013

$ 3,352

$ 3,264

$ 2,951

(1)

(3)

(173)

(175)

(5)

(2)

(231)

(238)

(9)

3,177

3,026

2,975

(30)

$ 3,170

$ 3,056

$ 2,956

(2) Amount for the year ended December 31, 2015 includes gains from a net investment hedge of $19 million, net of tax of $11 million.

See accompanying notes to consolidated financial statements.

F-5

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BlackRock, Inc.
Consolidated Statements of Cash Flows

(in millions)

Cash flows from operating activities

Net income
Adjustments to reconcile net income to cash flows from operating activities:

Depreciation and amortization
Amortization of deferred sales commissions
Stock-based compensation
Deferred income tax expense (benefit)
Other gains
Net (gains) losses on nontrading investments
Purchases of investments within consolidated sponsored investment funds
Proceeds from sales and maturities of investments within consolidated sponsored investment funds
Gain related to PennyMac initial public offering
Gain related to the charitable contribution
Charitable contribution
Assets and liabilities of consolidated VIEs:
Change in cash and cash equivalents
Net (gains) losses within consolidated VIEs
Net (purchases) proceeds within consolidated VIEs

(Earnings) losses from equity method investees
Distributions of earnings from equity method investees
Other adjustments
Changes in operating assets and liabilities:

Accounts receivable
Investments, trading
Other assets
Accrued compensation and benefits
Accounts payable and accrued liabilities
Other liabilities
Cash flows from operating activities

Cash flows from investing activities

Purchases of investments
Proceeds from sales and maturities of investments
Distributions of capital from equity method investees
Net consolidations (deconsolidations) of sponsored investment funds
Acquisitions, net of cash acquired
Purchases of property and equipment

Cash flows from investing activities

Cash flows from financing activities

Repayments of short-term borrowings
Repayments of long-term borrowings
Proceeds from long-term borrowings
Cash dividends paid
Proceeds from stock options exercised
Repurchases of common stock
Net proceeds from (repayments of) borrowings by consolidated VIEs
Net (redemptions/distributions paid)/subscriptions received from noncontrolling interest holders
Excess tax benefit from stock-based compensation
Other financing activities

Cash flows from financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year

Supplemental disclosure of cash flow information:
Cash paid for:
Interest
Interest on borrowings of consolidated VIEs
Income taxes (net of refunds)
Supplemental schedule of noncash investing and financing transactions:
Issuance of common stock
Increase (decrease) in noncontrolling interests due to net consolidation (deconsolidation) of sponsored investment

funds

Increase (decrease) in borrowings due to consolidation/deconsolidation of VIEs

See accompanying notes to consolidated financial statements.

Year ended December 31,

2015

2014

2013

$ 3,352

$ 3,264

$ 2,951

247
48
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12
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456
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(273)
(221)
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(160)
137
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239

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145
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124

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126
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105
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4
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512
202
106
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1,333
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28
(1,243)
(410)
203
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17
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$ 1,276

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$ 102
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600

$ 646

$ 429

$ (104)
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$ (269)
$ 585

$ (229)
$ 363

F-8

BlackRock, Inc.
Notes to the Consolidated Financial
Statements

1. Introduction and Basis of Presentation

Business. BlackRock, Inc. (together, with its subsidiaries,
unless the context otherwise indicates, “BlackRock” or the
“Company”) is a leading publicly traded investment
management firm providing a broad range of investment and
risk management services to institutional and retail clients
worldwide.

BlackRock’s diverse platform of active (alpha) and index
(beta) 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® exchange-traded funds (“ETFs”),
separate accounts, collective investment funds and other
pooled investment vehicles. BlackRock also offers the
BlackRock Solutions® investment and risk management
technology platform, Aladdin®, risk analytics and advisory
services and solutions to a broad base of institutional
investors.

At December 31, 2015, The PNC Financial Services Group,
Inc. (“PNC”) held 21.1% of the Company’s voting common
stock and 22.2% of the Company’s capital stock, which
includes outstanding common and nonvoting preferred
stock.

Basis of Presentation. These 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 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 items previously reported have been reclassified to
conform to the current year presentation.

2. Significant Accounting Policies

Accounting Pronouncements Adopted in 2015

Amendments to the Consolidation Analysis. In February
2015, the Financial Accounting Standards Board (“FASB”)
issued ASU 2015-02, Consolidation: Amendments to the
Consolidation Analysis, (“ASU 2015-02”) that requires
companies to reevaluate all legal entities under revised
consolidation guidance. The revised consolidation rules
provide guidance for evaluating: i) limited partnerships and
similar entities for consolidation ii) how decision maker or

service provider fees affect the consolidation analysis, iii)
how interests held by related parties affect the consolidation
analysis, and iv) the consolidation analysis required for
certain investment funds. The consolidation guidance also
provides a scope exception for reporting entities with
interests in legal entities that are required to comply with or
operate in accordance with requirements similar to those in
Rule 2a-7 of the Investment Company Act of 1940 for
registered money market funds.

The Company early adopted ASU 2015-02 using the modified
retrospective method with an effective adoption date of
January 1, 2015. The modified retrospective method did not
require the restatement of prior year periods. In connection
with the adoption of ASU 2015-02, the Company reevaluated
all of its investment products for consolidation. As of
January 1, 2015, the Company deconsolidated all of its
previously consolidated collateralized loan obligations
(“CLOs”) as its fee arrangements were no longer deemed to
be variable interests and it held no other interests in these
entities.

The adoption of the ASU also resulted in the consolidation of
certain investment products that were not previously
consolidated. Upon adoption, these products became
consolidated variable interest entities (“VIEs”) as the
Company is considered the party with both (i) the power to
direct the activities of the VIE that most significantly impact
its economic performance and (ii) the obligation to absorb
losses of the entity or the right to receive benefits from the
entity that could potentially be significant to the VIE.

The impact to the consolidated statement of financial
condition upon adoption was primarily the deconsolidation
of approximately $3.6 billion of assets and $3.6 billion of
liabilities related to certain CLOs that the Company manages
with an adjustment to appropriated retained earnings of
$19 million. In addition, certain investment products
previously accounted for as voting rights entities (“VREs”)
became VIEs under the new accounting guidance and were
consolidated.

Debt Issuance Costs. In April 2015, the FASB issued ASU
2015-03, Simplifying the Presentation of Debt Issuance Costs
(“ASU 2015-03”). ASU 2015-03 requires debt issuance costs
to be presented in the balance sheet as a direct deduction
from the carrying value of the associated debt liability,
consistent with the presentation of a debt discount. The
Company early adopted ASU 2015-03 during 2015 on a
retrospective basis, which required the restatement of prior
periods. The adoption of ASU 2015-03 was not material to
the consolidated financial statements.

Disclosures for Investments in Certain Entities that
Calculate NAV per Share. In May 2015, the FASB issued ASU
2015-07, Disclosures for Investments in Certain Entities That
Calculate Net Asset Value per Share (or Its Equivalent) (“ASU
2015-07”). ASU 2015-07 removes the requirement to
categorize within the fair value hierarchy all investments for
which fair value is measured using the net asset value
(“NAV”) per share practical expedient. The Company early
adopted ASU 2015-07 during 2015 on a retrospective basis,
which required the restatement of prior periods. As a result
of the adoption, $647 million and $692 million as of
December 31, 2015 and 2014, respectively, of NAV
investments are no longer included in Level 2 and 3 within
the fair value hierarchy.

F-9

Cash and Cash Equivalents. Cash and cash equivalents
primarily consists of cash, money market funds and short-
term, highly liquid investments with original maturities of
three months or less in which the Company is exposed to
market and credit risk. Cash and cash equivalent balances
that are legally restricted from use by the Company are
recorded in other assets on the consolidated statements of
financial condition. Cash balances maintained by
consolidated VREs are not considered legally restricted and
are included in cash and cash equivalents on the
consolidated statements of financial condition. Cash
balances maintained by consolidated VIEs are included in
assets of consolidated variable interest entities on the
consolidated statements of financial condition.

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

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
consolidated statements of financial condition with changes
in fair value recorded in nonoperating income (expense) on
the consolidated statements of income in the period of the
change.

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 consolidated statements
of financial condition.

Available-for-sale securities are those securities that are not
classified as trading or held-to-maturity. Available-for-sale
securities are carried at fair value on the 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 consolidated
statements of income.

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 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.

Cost Method. For nonmarketable equity investments where
BlackRock neither controls nor has significant influence over
the investee, the investments are accounted for using the
cost method of accounting. Dividends received from the

investment are recorded as dividend income within
nonoperating income (expense).

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

Consolidation. 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 VIEs are consolidated if the Company is the
PB of the entity. VREs are typically consolidated if the
Company holds the majority voting interest. Upon the
occurrence of certain events (such as contributions and
redemptions, either by the Company, or third parties, or
amendments to the governing documents of the Company’s

F-10

investment products), management reviews and reconsiders
its previous conclusion regarding the status of an entity as a
VIE or a VRE. Additionally, management continually
reconsiders whether the Company is deemed to be a VIE’s PB
that consolidates such entity.

Consolidation of Variable Interest Entities. Certain
investment products for which a controlling financial
interest is achieved through arrangements that do not
involve or are not directly linked to voting interests are
deemed VIEs. BlackRock reviews factors, including whether
or not i) the entity has equity that is sufficient to permit the
entity to finance its activities without additional
subordinated support from other parties and ii) the equity
holders at risk have the obligation to absorb losses, the right
to receive residual returns, and the right to direct the
activities of the entity that most significantly impact the
entity’s economic performance, to determine if the
investment product is a VIE. BlackRock re-evaluates such
factors as facts and circumstances change.

Prior to the adoption of ASU 2015-02, the Company used two
methods for determining whether it was the PB of a VIE
depending on the nature and characteristics of the entity.
For CLOs, the Company was deemed to be the PB if it had the
power to direct activities of the entity that most significantly
impacted the entity’s economic performance and had the
obligation to absorb losses or the right to receive benefits
that potentially could be significant to the VIE. For certain
sponsored investment funds, the Company was deemed to
be the PB if it absorbed the majority of the entity’s expected
losses, received a majority of the entity’s expected residual
returns, or both.

Following the adoption of ASU 2015-02, all VIEs are
evaluated for consolidation under a single method. The PB of
a VIE is defined as the variable interest holder that has a
controlling financial interest in the VIE. A controlling
financial interest is defined as (i) the power to direct the
activities of the VIE that most significantly impact its
economic performance and (ii) the obligation to absorb
losses of the entity or the right to receive benefits from the
entity that potentially could be significant to the VIE. The
consolidation analysis can generally be performed
qualitatively, however, if it is not readily apparent that the
Company is not the PB, a quantitative analysis may also be
performed.

Consolidation of Voting Rights Entities. BlackRock is required
to consolidate an investee to the extent that BlackRock can
exert control over the financial and operating policies of the
investee, which generally exists if there is a greater than
50% voting equity interest.

Retention of Specialized Investment Company Accounting
Principles. Upon consolidation of sponsored investment
funds, the Company retains the specialized investment
company accounting principles of the underlying funds. All
of the underlying investments held by such consolidated
sponsored investment funds are carried at fair value with
corresponding changes in the investments’ fair values
reflected in nonoperating income (expense) on the
consolidated statements of income. When the Company no
longer controls these funds due to reduced ownership
percentage or other reasons, the funds are deconsolidated
and accounted for as an equity method investment,
available-for-sale security or trading investment if the
Company still maintains an investment.

Money Market Fee Waivers. The Company is currently
voluntarily waiving a portion of its management fees on
certain money market funds to ensure that they maintain a
minimum level of daily net investment income (the “Yield
Support waivers”). During 2015, these waivers resulted in a
reduction of management fees of approximately
$137 million. Approximately 50% of Yield Support waivers
were offset by a reduction of BlackRock’s distribution and
servicing costs paid to a financial intermediary. BlackRock
has provided Yield Support waivers in prior periods and may
increase or decrease the level of fee 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 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 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 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 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. During 2015 and 2014, the Company had not
resold or repledged any of the collateral received under
these arrangements. At December 31, 2015 and 2014, the

F-11

fair value of loaned securities held by separate accounts was
approximately $28.8 billion and $30.6 billion, respectively,
and the fair value of the collateral held under these
securities lending agreements was approximately
$31.3 billion and $33.7 billion, respectively.

Indefinite-lived intangible assets and goodwill are not
amortized. Finite-lived management contracts, which relate
to acquired separate accounts and funds with a specified
termination date, are amortized over their remaining useful
lives.

Property and Equipment. Property and equipment are
recorded at cost less accumulated depreciation.
Depreciation is generally determined by cost less any
estimated residual value using the straight-line method over
the estimated useful lives of the various classes of property
and equipment. Leasehold improvements are amortized
using the straight-line method over the shorter of the
estimated useful life or the remaining lease term.

BlackRock develops a variety of risk management,
investment analytic and investment system services for
internal use, utilizing proprietary software that is hosted and
maintained by BlackRock. The Company capitalizes certain
costs incurred in connection with developing or obtaining
software for internal use. Capitalized software costs are
included within property and equipment on the consolidated
statements of financial condition and are amortized,
beginning when the software project is ready for its intended
use, over the estimated useful life of the software of
approximately three years.

Goodwill and Intangible Assets. Goodwill represents the
cost of a business acquisition in excess of the fair value of
the net assets acquired. The Company has determined that
it has one reporting unit for goodwill impairment testing
purposes, the consolidated BlackRock single operating
segment, which is consistent with internal management
reporting and management’s oversight of operations. In its
assessment of goodwill for impairment, the Company
considers such factors as the book value and market
capitalization of the Company.

On a quarterly basis, the Company considers if triggering
events have occurred that may indicate a potential goodwill
impairment. If a triggering event has occurred, the Company
performs assessments, which may include reviews of
significant valuation assumptions, to determine if goodwill
may be impaired. The Company performs an impairment
assessment of its goodwill at least annually as of July 31st.

Intangible assets are comprised of indefinite-lived intangible
assets and finite-lived intangible assets acquired in a
business acquisition. The value of contracts to manage
assets in proprietary open-end funds and collective trust
funds and certain other commingled products without a
specified termination date is generally classified as
indefinite-lived intangible assets. The assignment of
indefinite lives to such contracts primarily is based upon the
following: (i) the assumption that there is no foreseeable
limit on the contract period to manage these products;
(ii) the Company expects to, and has the ability to, continue
to operate these products indefinitely; (iii) the products have
multiple investors and are not reliant on a single investor or
small group of investors for their continued operation;
(iv) current competitive factors and economic conditions do
not indicate a finite life; and (v) there is a high likelihood of
continued renewal based on historical experience. In
addition, trade names/trademarks are considered
indefinite-lived intangible assets when they are expected to
generate cash flows indefinitely.

The Company performs assessments to determine if any
intangible assets are potentially impaired and whether the
indefinite-lived and finite-lived classifications are still
appropriate. The carrying value of finite-lived management
contracts and their remaining useful lives are reviewed at least
annually to determine if circumstances exist which may
indicate a potential impairment or revisions to the amortization
period. The Company performs impairment assessments of all
of its intangible assets at least annually, as of July 31st. In
evaluating whether it is more likely than not that the fair value
of indefinite-lived intangibles is less than its carrying value,
BlackRock assesses various significant qualitative factors,
including assets under management (“AUM”), revenue basis
points, projected AUM growth rates, operating margins, tax
rates and discount rates. In addition, the Company considers
other factors, including (i) macroeconomic conditions such as a
deterioration in general economic conditions, limitations on
accessing capital, fluctuations in foreign exchange rates, or
other developments in equity and credit markets; (ii) industry
and market considerations such as a deterioration in the
environment in which the entity operates, an increased
competitive environment, a decline in market-dependent
multiples or metrics, a change in the market for an entity’s
services, or regulatory, legal or political developments; and
(iii) entity-specific events, such as a change in management or
key personnel, overall financial performance and litigation that
could affect significant inputs used to determine the fair value
of the indefinite-lived intangible asset. If an indefinite-lived
intangible is determined to be more likely than not impaired,
then the fair value of the asset is compared with its carrying
value and any excess of the carrying value over the fair value
would be recognized as an expense in the period in which the
impairment occurs.

For finite-lived intangible assets, if potential impairment
circumstances are considered to exist, the Company will
perform a recoverability test using an undiscounted cash
flow analysis. Actual results could differ from these cash
flow estimates, which could materially impact the
impairment conclusion. If the carrying value of the asset is
determined not to be recoverable based on the undiscounted
cash flow test, the difference between the carrying value of
the asset and its current fair value would be recognized as
an expense in the period in which the impairment occurs.

Noncontrolling Interests. The Company reports
noncontrolling interests as equity, separate from the parent’s
equity, on the consolidated statements of financial condition.
In addition, the Company’s consolidated net income on the
consolidated statements of income includes the income
(loss) attributable to noncontrolling interest holders of the
Company’s consolidated investment products. Income (loss)
attributable to noncontrolling interests is not adjusted for
income taxes for consolidated investment products that are
treated as pass-through entities for tax purposes.

Classification and Measurement of Redeemable Securities.
The Company includes redeemable noncontrolling interests
related to certain consolidated investment products in
temporary equity on the consolidated statements of
financial condition.

F-12

Treasury Stock. The Company records common stock
purchased for treasury at cost. At the date of subsequent
reissuance, the treasury stock account is reduced by the
cost of such stock using the average cost method.

Revenue Recognition

Investment Advisory, Administration Fees and Securities
Lending Revenue. Investment advisory and administration
fees are recognized as the services are performed. Such fees
are primarily based on pre-determined percentages of the
market value of AUM or committed capital. Investment
advisory and administration 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.

The Company contracts with third parties and related parties
for various mutual fund distribution and shareholder
servicing to be performed on behalf of certain funds the
Company manages. Such arrangements generally are priced
as a portion of the management fee paid by the fund. In
certain cases, the fund (primarily international funds) takes
on the primary responsibility for payment for services such
that the Company bears no credit risk to the third-party. The
Company accounts for such retrocession arrangements in
accordance with Accounting Standards Codification (“ASC”)
605-45, Revenue Recognition – Principal Agent
Considerations, and records its management fees net of
retrocessions. Retrocessions for 2015, 2014 and 2013 were
$870 million, $891 million and $785 million, respectively,
and were reflected net in investment advisory,
administration fees and securities lending revenue on the
consolidated statements of income.

The Company also earns revenue by lending securities as an
agent on behalf of clients, primarily to brokerage
institutions. Revenue is accounted for on an accrual basis.
The revenue earned is 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 or
incentive allocations from certain actively managed
investment funds and certain separately managed accounts
(“SMAs”). These performance fees are dependent upon
exceeding specified relative or absolute investment return
thresholds. Such fees are recorded upon completion of the
measurement period, which varies by product or account,
and could be monthly, quarterly, annually or longer.

In addition, 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 in total investments or cash/
cash of consolidated VIEs to the extent that it is distributed,
on its consolidated statements of financial condition.
Carried interest is recorded as performance fee revenue
upon the earlier of the termination of the investment fund or
when the likelihood of clawback is considered
mathematically improbable.

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

Other Revenue. The Company earns fees for transition
management services comprised of commissions from
acting as an introducing broker-dealer in buying and selling
securities on behalf of the Company’s customers.
Commissions related to transition management services are
recorded on a trade-date basis as securities transactions
occur and are reflected in other revenue on the consolidated
statements of income.

The Company earns commissions revenue upon the sale of
unit trusts and Class A mutual funds. Revenue is recorded at
the time of the sale of the product.

Other revenue also includes equity method investment
earnings related to certain strategic investments.

Stock-based Compensation. Entities are required to
measure the cost of employee services received in exchange
for an award of equity instruments based on the grant-date
fair value of the award. The compensation cost is recognized
over the period during which an employee is required to
provide service (usually the vesting period) in exchange for
the stock-based award.

The Company measures the grant-date fair value of
restricted stock units (“RSUs”) using the Company’s share
price on the date of grant. For employee share options and
instruments with market conditions, the Company uses
pricing models. If an equity award is modified after the
grant-date, incremental compensation cost is recognized for
an amount equal to the excess of the fair value of the
modified award over the fair value of the original award
immediately before the modification. Awards under the
Company’s stock-based compensation plans vest over
various periods. Compensation cost is recorded by the
Company on a straight-line basis over the requisite service

F-13

period for each separate vesting portion of the award as if
the award is, in-substance, multiple awards. Compensation
cost is reduced by the number of awards expected to be
forfeited prior to vesting. Forfeiture estimates generally are
derived using historical forfeiture information, where
available, and are reviewed for reasonableness at least
quarterly.

The Company amortizes the grant-date fair value of stock-
based compensation awards made to retirement-eligible
employees over the requisite service period. Upon
notification of retirement, the Company accelerates the
unamortized portion of the award over the contractually
required retirement notification period.

Distribution and Servicing Costs. Distribution and servicing
costs include payments to third parties, primarily associated
with distribution and servicing of client investments in
certain BlackRock products. Distribution and servicing costs
are expensed when incurred.

Amortization of Deferred Sales Commissions. The Company
holds the rights to receive certain cash flows from sponsored
mutual funds sold without a front-end sales charge (“back-
end load shares”). The carrying value of these deferred
mutual fund commissions is recorded within other assets on
the consolidated statements of financial condition and is
being amortized over periods between one and six years. The
Company receives distribution fees from these funds and
contingent deferred sales commissions (“CDSCs”) upon
shareholder redemption of certain back-end load shares
that are recorded within distribution fees on the
consolidated statements of income. Upon receipt of CDSCs,
the Company records revenue and the remaining
unamortized deferred sales commission is expensed.

Direct Fund Expenses. Direct fund expenses, which are
expensed as incurred, primarily consist of third-party
nonadvisory expenses incurred by BlackRock related to
certain funds for the use of certain index trademarks,
reference data for certain indices, custodial services, fund
administration, fund accounting, transfer agent services,
shareholder reporting services, audit and tax services as well
as other fund-related expenses directly attributable to the
nonadvisory operations of the fund.

Leases. The Company accounts for its office facilities leases
as operating leases, which may include escalation clauses.
The Company expenses the lease payments associated with
operating leases evenly during the lease term (including
rent-free periods) commencing when the Company obtains
the right to control the use of the leased property.

Foreign Exchange. Foreign currency transactions are
recorded at the exchange rates prevailing on the dates of the
transactions. Monetary assets and liabilities that are
denominated in foreign currencies are subsequently
remeasured into the functional currencies of the Company’s
subsidiaries at the rates prevailing at each balance sheet
date. Gains and losses arising on remeasurement are
included in general and administration expense on the
consolidated statements of income. Revenue and expenses
are translated at average exchange rates during the period.
Gains or losses resulting from translating foreign currency
financial statements into U.S. dollars are included in
accumulated other comprehensive income, a separate
component of stockholders’ equity, on the consolidated
statements of financial condition.

Income Taxes. Deferred income tax assets and liabilities are
recognized for the future tax consequences attributable to
temporary differences between the financial statement
carrying amounts of existing assets and liabilities and their
respective tax bases using currently enacted tax rates in
effect for the year in which the differences are expected to
reverse. The effect of a change in tax rates on deferred
income tax assets and liabilities is recognized on the
consolidated statements of income in the period that
includes the enactment date.

Management periodically assesses the recoverability of its
deferred income tax assets based upon expected future
earnings, taxable income in prior carryback years, future
deductibility of the asset, changes in applicable tax laws and
other factors. If management determines that it is not more
likely than not that the deferred tax asset will be fully
recoverable in the future, a valuation allowance will be
established for the difference between the asset balance
and the amount expected to be recoverable in the future.
This allowance will result in additional income tax expense.
Further, the Company records its income taxes receivable
and payable based upon its estimated income tax position.

Excess tax benefits related to stock-based compensation
are recognized as additional paid-in capital and are reflected
as financing cash flows on the consolidated statements of
cash flows. If the Company does not have additional paid-in
capital credits (cumulative tax benefits recorded to
additional paid-in capital), the Company will record an
expense for any deficit, or shortfall, between the recorded
tax benefit and tax return benefit. At December 31, 2015 and
2014, BlackRock had excess additional paid-in capital
credits to absorb potential future deficits between recorded
tax benefits and tax return benefits.

Earnings per Share (“EPS”). Basic EPS is calculated by dividing
net income applicable to common shareholders by the
weighted-average number of shares outstanding during the
period. Diluted EPS includes the determinants of basic EPS
and common stock equivalents outstanding during the period.
Diluted EPS is computed using the treasury stock method.

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

Business Segments. 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, Segment Reporting (“ASC 280-10”).

Fair Value Measurements.

Hierarchy of Fair Value Inputs. The Company uses a fair value
hierarchy that prioritizes inputs to valuation techniques
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

F-14

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, bank loans,

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,
investments in CLOs, bank loans and bonds.

• Level 3 liabilities include contingent liabilities related to
acquisitions valued based upon discounted cash flow
analysis using unobservable market data. Level 3
liabilities at December 31, 2014 also included
borrowings of consolidated CLOs valued based upon
nonbinding single-broker quotes.

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 Techniques. The fair values of certain Level 3
assets and liabilities were determined using various
methodologies 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 bank loans 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 methodologies,
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 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
distressed credit hedge funds, opportunistic funds, real
estate 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 may 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. The Company may also use derivatives within
its separate account assets, which are segregated for
purposes of funding individual and group pension contracts.
In addition, certain consolidated sponsored investment
funds may also invest in 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 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 different from the reporting currency
of the parent company. 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 consolidated

F-15

statements of financial condition. The Company reassesses
the effectiveness of its net investment hedge on a quarterly
basis.

3. Investments

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

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 Company is
currently evaluating the impact of adopting ASU 2014-09,
which is effective for the Company on January 1, 2018.

Accounting for Measurement-Period Adjustments. In
September 2015, the FASB issued ASU 2015-16, Simplifying
the Accounting for Measurement-Period Adjustments (“ASU
2015-16”). Under ASU 2015-16, an acquirer must recognize,
upon determination, adjustments to the original amounts
recorded for a business acquisition that are identified during
the one-year period following the acquisition date.
Previously prior period information was required to be
revised. The Company adopted ASU 2015-16 prospectively
on January 1, 2016 and will apply the ASU to any
adjustments related to business acquisitions.

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 is currently evaluating
the impact of adopting ASU 2016-01, which is effective for
the Company on January 1, 2018.

Leases. In February 2016, the FASB issued ASU 2016-02,
Leases (“ASU 2016-02”). ASU 2016-02 requires lessees to
recognize assets and liabilities arising from most operating
leases on the statement of financial position. The Company
is currently evaluating the impact of adopting ASU 2016-02,
which is effective for the Company on January 1, 2019.

(in millions)

December 31,
2015

December 31,
2014

Available-for-sale investments

Held-to-maturity investments

Trading investments:

Consolidated sponsored

investment funds

Other equity and debt

securities

Deferred compensation
plan mutual funds

Total trading investments

Other investments:

Consolidated sponsored

investment funds

Equity method investments

Deferred compensation
plan equity method
investments

Cost method investments(1)

Carried interest

Total other investments

108

700

785

—

513

641

Total investments

$ 1,578

$ 201

443

536

270

633

1,105

$ 1,921

(1) Amounts primarily include Federal Reserve Bank (“FRB”) Stock.

Available-for-Sale Investments

A summary of the cost and carrying value of investments
classified as available-for-sale investments is as follows:

Gross Unrealized

(in millions)

Cost

Gains

Losses

December 31, 2015

December 31, 2014

$ 45

$ 205

$ 2

$ 5

$ (3)

$ (9)

Carrying
Value

$ 44

$ 201

At December 31, 2015 available-for-sale investments
primarily included investments in CLOs. At
December 31, 2014, available-for-sale investments primarily
included seed investment in BlackRock sponsored mutual
funds.

A summary of sale activity of available-for-sale securities
during 2015, 2014 and 2013 is shown below.

(in millions)

Sales proceeds

Net realized gain (loss):

Gross realized gains

Gross realized losses

Net realized gain (loss)

Year ended December 31,

2015

2014

2013

$ 36

$ 155

$ 139

$ 3

$ 14

$ 20

(1)

(3)

(1)

$ 2

$ 11

$ 19

Held-to-Maturity Investments

The carrying value of held-to-maturity investments was
$108 million and $79 million at December 31, 2015 and
2014, respectively. Held-to-maturity investments included
foreign government debt held primarily for regulatory
purposes. The amortized cost (carrying value) of these
investments approximated fair value. At December 31, 2015,
$96 million of these investments mature in one year or less
and $12 million mature after five years through ten years.

F-16

Trading Investments

A summary of the cost and carrying value of trading
investments is as follows:

December 31, 2015 December 31, 2014

Cost

Carrying
Value

Cost

Carrying
Value

$ 48

$ 65

$ 48

$ 64

294

279

210

239

(in millions)

Trading investments:

Deferred

compensation plan
mutual funds

Equity securities/

multi-asset mutual
funds

Debt securities/fixed

income mutual
funds:

Corporate debt

Government debt

Asset/mortgage
backed debt

194

202

190

202

109

100

110

103

Total trading investments $ 787

$ 785

$ 487

$ 536

At December 31, 2015, trading investments included
$437 million of debt securities and $263 million of equity
securities held by consolidated sponsored investment funds
accounted for as VREs, $65 million of certain deferred
compensation plan mutual fund investments and $20 million
of other equity and debt securities.

At December 31, 2014, trading investments included
$223 million of debt securities and $220 million of equity
securities held by consolidated sponsored investment funds
accounted for as VREs, $64 million of certain deferred
compensation plan mutual fund investments and $29 million
of other equity and debt securities.

Other Investments

A summary of the cost and carrying value of other
investments is as follows:

(in millions)

Other investments:

Consolidated
sponsored
investment funds
accounted for as
VREs

Equity method
Investments

Deferred

compensation plan
equity method
investments

Cost method

investments:

Federal Reserve
Bank stock

Other

Total cost method
investments

Carried interest(1)

December 31, 2015 December 31, 2014

Cost

Carrying
Value

Cost

Carrying
Value

$ —

$ 268

$ 270

429

513

518

633

—

Total other investments

$ 538

$ 641

$ 903

$ 1,105

(1) Carried interest related to VREs.

F-17

At December 31, 2014, consolidated sponsored investment
funds accounted for as VREs include third-party private
equity funds, direct investments in private companies and
third-party hedge funds held by BlackRock sponsored
investment funds.

Equity method investments primarily include BlackRock’s
direct investments in certain BlackRock sponsored
investment funds. See Note 11, Other Assets, for more
information on the Company’s investment in PennyMac
Financial Services, Inc. (“PennyMac”), which is included in
other assets on the consolidated statements of financial
condition.

Cost method investments include nonmarketable securities,
primarily FRB stock, which is held for regulatory purposes
and is restricted from sale. At December 31, 2015 and 2014,
there were no indicators of impairment on these
investments.

Carried interest 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.

4. 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 or other investments. The
following table presents the balances related to these
consolidated VREs that were recorded on the consolidated
statements of financial condition, including BlackRock’s net
interest in these funds:

(in millions)

December 31,
2015

December 31,
2014

Cash and cash equivalents

$ 100

$ 120

Investments:

Trading investments

Other investments

Other assets

Other liabilities

Noncontrolling interests

BlackRock’s net interests in

700

—

(77)

(125)

443

270

(18)

(139)

consolidated VREs

$ 616

$ 696

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.

In addition, at December 31, 2015 and 2014, certain
consolidated sponsored investment funds, which were
accounted for as VIEs, were excluded from the balances in
the table above as the balances for these investment
products are reported separately on the consolidated
statements of financial condition. See Note 5, Variable
Interest Entities, for further discussion on these
consolidated investment products. See Note 2, Significant
Accounting Policies, for the Company’s consolidation policy
and for further information on the adoption of ASU 2015-02.

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

5. 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 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 PB. See Note 2, Significant Accounting
Policies, for further information on the Company’s
accounting policy on consolidation.

As a result of the adoption of ASU 2015-02, the Company
deconsolidated all previously consolidated CLOs effective
January 1, 2015 as its fees are no longer deemed variable
interests. The Company also consolidated certain
investment products that were not previously consolidated.
See Note 2, Significant Accounting Policies – Accounting
Pronouncements Adopted in 2015, for further information on
ASU 2015-02.

Consolidated VIEs. The Company’s consolidated VIEs as of
December 31, 2015 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.

The Company’s consolidated VIEs under previous accounting
guidance as of December 31, 2014 primarily included CLOs
in which BlackRock did not have an investment; however, as
the collateral manager, BlackRock was deemed to have both
the power to direct the most significant activities of the CLOs
and the right to receive benefits that could potentially be
significant to the CLOs.

Consolidated VIE assets and liabilities are presented after
intercompany eliminations at December 31, 2015 and 2014
in the following table:

(in millions)

Assets of consolidated VIEs:

Cash and cash equivalents

Investments
Other assets

Total investments and other

assets

Liabilities of consolidated VIEs:

Borrowings

Other liabilities

Appropriated retained earnings

Noncontrolling interests of

consolidated VIEs

BlackRock’s net interests in

consolidated VIEs

December 31,
2015

December 31,
2014

$ 148

1,030
67

$ 278

3,320
32

1,097

3,352

—

(177)

—

(416)

(3,389)

(245)

(15)

$ 652

$ —

The Company recorded a $58 million nonoperating net gain
for 2015 related to consolidated VIEs. Net income
attributable to noncontrolling interests related to
consolidated VIEs for 2015 was $6 million.

The Company recorded $41 million of nonoperating expense
and an equal and offsetting loss attributable to
noncontrolling interests related to consolidated VIEs for
2014. No gain or loss was recorded for 2013.

Non-Consolidated VIEs. At December 31, 2015 and 2014, the Company’s carrying value of assets and liabilities included on
the 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 December 31, 2015