Good morning. My name is Jennifer, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the BlackRock Incorporated Second Quarter 2015 Earnings Teleconference. Our hosts for today's call will be Chairman and Chief Executive Officer, Laurence D. Fink; Chief Financial Officer, Gary S. Shedlin; President, Robert S. Kapito; and General Counsel, Matthew Mallow. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer period. Thank you. Mr. Mallow, you may begin your conference. Matthew J. Mallow - Senior Managing Director & General Counsel: Thanks very much. Good morning, everyone. I'm Matt Mallow, the General Counsel of BlackRock. Before Larry and Gary make their remarks, let me remind you that during the course of this call, we may make a number of forward-looking statements and call your attention to the fact that BlackRock's actual results, may of course differ from those statements. As you know, BlackRock has filed and will file reports with the SEC, which lists some of the factors that may cause the results of BlackRock to differ materially from what we say today. And BlackRock assumes no duty and will not undertake to update any forward-looking statements. So, with that, let's begin the call. Gary? Gary S. Shedlin - Chief Financial Officer & Senior Managing Director: Thank you, Matt, and good morning everyone. It's my pleasure to be here to present results for the second quarter of 2015. Before I turn it over to Larry to offer his comments, I'll review our quarterly financial performance and business results. As usual, I will be focusing primarily on our as adjusted results. Our second quarter results again demonstrate the value of the investments we've made to assemble the industry's broadest…

your first question comes from Luke Montgomery with Bernstein. Laurence Douglas Fink - Chairman & Chief Executive Officer: Hey, Luke. Luke Montgomery - Sanford C. Bernstein & Co. LLC: Good morning. Thanks. I really appreciate the addition of the organic revenue growth disclosure in the supplement, so thanks for that. I was hoping you might provide a little context – just a little more context around the various drivers of revenue yield and base fee growth between FX translation, AUM inflow mix shift and anything around the anterior rates of AUM and revenue yield as you head into Q3? Laurence Douglas Fink - Chairman & Chief Executive Officer: That feels like a half an hour answers though. Okay, Gary. Gary S. Shedlin - Chief Financial Officer & Senior Managing Director: Well, Luke, we appreciate that you recognize that we are trying to add to a more appropriate disclosure for you guys. I think as we've talked about at length with you guys, the fee rates are constantly changing for us. It's a function of not only the organic component, which I think we're now demonstrating to everybody that is in our control. And as we continue to see stronger growth in our higher fee retail and iShares businesses, which carry higher fee rates on an organic basis. If nothing else changes in the world, we would expect the overall fee rate to be accretive for us. In other words, obviously, organic revenue growth in excess of organic AUM growth obviously helps that over time. However, we can't control things like divergent beta and FX. And obviously, as we've talked about over time, that will have an impact depending on where we go. In this quarter, it happened to help us, but in other quarters, it has hurt us over time.…

Your next question comes from Alex Blostein with Goldman Sachs. Laurence Douglas Fink - Chairman & Chief Executive Officer: Hi, Alex. Alexander V. Blostein - Goldman Sachs & Co.: Hey, good morning, everyone. Larry, first question, on fixed income markets for you guys. Obviously, we saw a pretty big move in the ten year and the quarter, BlackRock's overall fixed income franchise did a pretty good job, obviously handling this move. When you look out, with respect to client's response to prospect of higher rate announcing the move we've seen so far, what are you hearing with respect to the overall allocations and just kind of the remix... Laurence Douglas Fink - Chairman & Chief Executive Officer: So, I find this a humorous narrative. There is a big article a couple of days ago, I think even Barron had a big article about, oh, what's going to happen in fixed income. Hey, higher rates will lead to more players in fixed income, not less, and I'll get into that in a minute. Secondarily, 70% of our fixed income investors are pension and insurance companies. They're not influenced by market moves. They're trying to match a liability, and that's the problem with the narrative, they're not the players who're going to whip around the interest rates. But the true component is, so many pension funds and insurance companies were so harmed by lower interest rates. In some cases, we know many insurance companies have actually a wide gap – their liabilities are longer than their assets. So, if we actually saw a rising rate environment, this is actually quite additive to the balance sheets of insurance companies. If we saw a rise in interest rates, especially in the short end, the pension funds liabilities will look less onerous, because it's all…

Your next question comes from Dan Fannon with Jefferies. Laurence Douglas Fink - Chairman & Chief Executive Officer: Hey, Dan.

Can you discuss a little bit more detail about some of the rebalancing that is occurring in the index products. Maybe the type of customers, are the kind of discussions, something you anticipate ongoing and it does seem, I think you referenced most of it, coming from the EMEA region, but just a little more color that would be helpful? Laurence Douglas Fink - Chairman & Chief Executive Officer: No, I don't think, I referenced what region. It's international what I said. We've had times, if you go back six quarters or eight quarters and we had big rebalancing then. People use beta as a place holder of a tactical allocation, I mean that's one thing that people still don't understand how much beta products are being utilized now for alpha. And there are many enterprises are tactically allocating whether overweighting or underweighting using beta products. And we see this more increasingly every day and in some – and in the second quarter and part of the first quarter, we saw some of the big utilizers who had beta as an alpha component of their tactical allocation for – in some cases, they were taking profits and then they – because of domestic issues, they are sitting with higher cash balances, some of them may have been a little more frightened of what's going on in some components to the world and are putting more and more money in cash. But more importantly, I would say, most of the tactical allocation was out of investment products, more into cash for domestic issues. And this was not a performance issue, this was not moving money from BlackRock to another manager in most cases. It was moving from BlackRock to another BlackRock product and in most cases, the money was used for domestic needs, work needs.

Okay, thank you. And then, Gary, a question on just the G&A outlook. It's been a volatile for you last few quarters, I guess. Are we still expecting a ramp into the back half of the year, and if you could help kind of think of – help us with some quantification around that? Gary S. Shedlin - Chief Financial Officer & Senior Managing Director: Sure. Look, I think as we look at the quarter, I think there's no question that our second quarter margin benefited from a lower level of G&A spend. If you recall, last quarter, where many of you've pointed out a year-over-year decline in our operating margin, we communicated to you that we felt our reported year-over-year margin comparison really understated the operating leverage in the business. And I think this quarter, frankly, we had the opposite. I think that our 250 basis points of year-over-year margin expansion is overstated by a lower level of G&A spend that frankly is not likely sustainable. Look, part of the lower level of G&A spend in the quarter is better financial discipline in the current environment, but part of it is frankly simply expenses that came in lower than we expected, and I wouldn't – I really wouldn't read too much into it on a trend basis. It was simply a low G&A quarter relative to historical spend levels. Looking forward, I think I would say we continue to anticipate a higher, more normalized level of G&A spend in the second half of the year, and at this time, we're not intending to "push out," I think the words that you may have used, that reduce second quarter spend into the back half of the year.

Your next question comes from Brian Bedell with Deutsche Bank Laurence Douglas Fink - Chairman & Chief Executive Officer: Hi, Brian.

Hi, good morning. A question on ETF and maybe if you could dissect the flows between core series and what you're seeing in the institutional usage. May be, Larry, if you can comment on. Laurence Douglas Fink - Chairman & Chief Executive Officer: I will let Rob.

I'm sorry. Laurence Douglas Fink - Chairman & Chief Executive Officer: I will let Rob comment on that one.

Okay, sure. Yeah. Just a comment on the traction that you're getting in the financial advisory community on the core series and then also a commentary on institutional usage including hedging and may be as you mentioned as a substitute for fixed income, both cash trading and derivatives increasing usage of ETF.

So the exciting part of the ETF business is that as people become more aware of the benefits of ETFs, they're coming up with other uses for ETF. So it's become not only a way to express your view in the market, but you can express it in a much more precise way. So a lot of the flows that we're seeing are coming from this new usage. One of the new usage is as you cite is that ETFs became cheaper to use than futures. So we've seen a lot of institutions now as they become aware of that and we know how to talk about it, they are coming to us and asking us how they can use ETFs to better express their views in the marketplace. So we're seeing flows coming in from that as well as just a generic core. And as you know, the two segments are certainly the buy and hold segment and we have introduced the core ETFs for that and we're seeing growths in – growth in that to the tune of $3.8 billion, which is a 7% organic growth in the quarter. So we're very excited as that continues to grow. But at the same time, we're seeing those who are utilizing those for trading activities to express their views continue to grow as well. And a lot of that is in the high yield area, where they're expressing their views, positive or negative, so you see flows in that. And then you just see people that are actually looking at ETFs as a replacement also for their mutual fund business as well. So I think there is lots of opportunities in this. We're just beginning to scratch the surface and new uses for this. We continue to think that it's going to continue to grow going forward, and we want to be the innovator using ETFs to innovate and to solve people's issues in their portfolios.

Great. And just in the quarter, I guess, the lower flows on the institutional side is more of a beta issue than anything structural that you're seeing? Laurence Douglas Fink - Chairman & Chief Executive Officer: Well, we actually had good flows in the active side, and obviously, institutional side was all related to those beta stories that I discussed previously.

Right, great. And then just a follow-up, Larry, maybe on the Department of Labor proposed rules on how do you think that might impact allocations in the 401(k) plans longer-term, and what it might mean for your target-date business if that's another catalyst for that business? Laurence Douglas Fink - Chairman & Chief Executive Officer: We shared the Department of Labor's goals in promoting better retirement and security. This is one of the big issues and we've been stressing. I do believe our retirement – our inadequacy in retirement is going to be the big story in the coming years. I do believe the elevated savings rates that we're just seeing so far in the first six months, possibly could be related to people starting to become more aware that they have an inadequate retirement plan. So, we will be vigilant and outspoken on retirement issues. Look, related to specifically your question, the need of investors are going to be differing, we all want good investment outcomes, and we need to make sure that we, as an industry, provide client choice – hopefully client choice with low cost. Cost is – it can't be primary because we have to be outcome-focused, obviously, outcome-focused with cost is the emphasis, not the other way around. So the DoL's indicated interest for our comments, we submitted the commentary, we're going to have to see, wait and see how this all plays out. I think – I don't believe we understand or have enough information to know how this will all play out. I think this will be evolving, but we are working constructively with the DoL, and whatever they determine, we'll – I'll be able to tell you in the coming quarters how that will play out for BlackRock and the impact. On the surface, it's going to have – it has impact on BlackRock, if it is as it is today, because it has impact on some of our distribution platforms, but we'll be able to navigate that.

Your next question comes from Chris Harris with Wells Fargo. Laurence Douglas Fink - Chairman & Chief Executive Officer: Hi, Chris.

Quick question on your retail business. Clearly, it's been a great performer for you guys for quite a long while now, your top five. Just wondering at this point, what additional opportunities do you see for that part of your business? And really, I'm wondering due to the fact that your share has seemingly gone up quite a lot, just wondering if incremental gains at this point might be a little bit harder to come by? Laurence Douglas Fink - Chairman & Chief Executive Officer: Three years ago, four years ago, we started talking about our building out of retail. Three years and four years ago we started talking about building a stronger brand in retail. Two years ago, we integrated our retail and our iShares teams to be – to offer more outcome-oriented solutions that are – instead of just product pushing. And I think this has all created a more elevated position with our distribution platform. And I believe we have much more to go. We are still way behind other firms related to the RIAs. We still have deeper penetration to go with some of the big distribution platforms. And importantly, I believe because of our technology – because of Aladdin, I think we can provide better models from – to assisting our distribution partners in creating better models, better advice, and if we can continue to help our distribution platforms to be better at what they do, combination of beta products and alpha products, maybe with liquid alts, we should enjoy higher penetration of wallet, and I believe, we're just beginning on that path.

Great, thank you.

And your final question comes from Craig Siegenthaler with Credit Suisse. Laurence Douglas Fink - Chairman & Chief Executive Officer: Hey, Craig – operator, we have time – we have 10 more minutes. So, if there is no one behind, Craig, we could carry on. Craig Siegenthaler - Credit Suisse Securities (USA) LLC (Broker): I think so I will get started here. So... Laurence Douglas Fink - Chairman & Chief Executive Officer: Okay. Craig Siegenthaler - Credit Suisse Securities (USA) LLC (Broker): First, just on active ETFs. I'm wondering, do you guys have plans to launch some of your active products into a transparent ETF structure? And also, do you think your competition will more aggressively pursue this option just given the lack of non-transparent ETF options today?

Yeah, so, we've looked at this, we continue to look at this, and right now collectively, we're not sure that this is going to be a big opportunity in the marketplace. One of the benefits of the ETFs is the transparency, the diversification, and that enhances the trading and the liquidity of these. So, we're not sure that this is an opportunity we're going to pursue. We're thinking about it, and we'll just see how the market continues to evolve. So, we're not ruling it out, but right now, we're not looking at that, and we view that as something that will compete more directly with mutual funds than it will with the normal ETFs. Laurence Douglas Fink - Chairman & Chief Executive Officer: I would – once again, I think I've said in the past. I think there's way too much emphasis on this product. We have said that we believe the ETF industry is going to go from a $3 trillion to $6 trillion industry. Active ETFs will be a component of it, but it will be dwarfed by the industry's growth in traditional beta products. Where you may see ETFs grow is really more based on model or smart beta products, so where you're going to have tilts, but I still don't see active ETF playing a large role in the totality of the market, and I agree with Rob. If there is growth in it, it's going to be growth that's going to be taking away more growth from traditional mutual funds. Craig Siegenthaler - Credit Suisse Securities (USA) LLC (Broker): And if I can just squeeze one follow-up here. I heard your commentary on the RIA market and how you'd like to increase market share there, but as demographics increasingly become difficult for 401(k) plans, what is your plan to increase your market share in the RIA segment? Laurence Douglas Fink - Chairman & Chief Executive Officer: I said the RIA – they were independents, not the – not IRIS, but I was talking about the independent advisor. So Craig, I'm not sure – I did not make a statement related that define (54:37) contribution on IRIS... Gary S. Shedlin - Chief Financial Officer & Senior Managing Director: I think he's talking about RIAs. Laurence Douglas Fink - Chairman & Chief Executive Officer: But RIAs, we had very weak penetration three years, four years ago. We had very little visibility with many of the RIAs, and these are – we have to become a trusted partner. There are some other firms that have had a long-standing trusted relationship with these independent channels, and I – we are very pleased with the growth that we have in our RIA channel in 2015. And I expect, as I said earlier, that we're going to build more share because I do believe we can become another trusted advisor to their channels.

And your next question comes from Ken Hill with Barclays. Laurence Douglas Fink - Chairman & Chief Executive Officer: Hey, Ken?

So I wanted to follow up on one of the earlier questions. You guys have a really nice story to tell on the fixed income market as ETFs play a greater role in supplying liquidity in what has otherwise been a pretty illiquid corporate bond market. When you think about the dynamics of ETFs playing a larger role longer-term, is there anything in there that you're particularly concerned about as these passive products grow as a percentage of the market? Do you think that really increases your regulatory bullseye here? And while it's still a relatively small piece of the market now, do you think there's a natural cap on how much of the market ETFs can make up?

So, our view of ETFs is a bit different. We think it actually enhances the liquidity of the markets because of the transparency. So you know what the underlying securities are. So there is a market in those. And then there's a market of those as a whole. And in periods of volatility, we've actually seen very little creation or redemption of any of those assets. We've actually seen the ETFs trade themselves. So, we think it enhances the liquidity. And, therefore, we think this market could continue to grow. So, we don't really – I wouldn't agree with you on illiquidity in the corporate bond market. It's just that it's been more one-sided because there's more demand right now. So there really isn't a large secondary market. I don't call that illiquid, I call that overdemand for yield securities because of the environment. So if interest rates rise, that will change a bit, but we think that this has been providing good opportunity in the marketplace, and just think of how large the fixed income market is, and when you take a look at that, any percentage, any small percentage increase in ETF, so the fixed income market is going to be very substantial and very large. So, we're very bullish on the future of ETFs and how large they can grow relative to the fixed income market. Laurence Douglas Fink - Chairman & Chief Executive Officer: But, let's just talk about market dynamics a little bit. So, ETFs are far more liquid and constructive versus a mutual fund. An ETF throughout the day has a buyer that matches with a seller. So every time you have a buyer matching a seller during the time, the underlying assets are not traded. And so, this is one of the –…

Yeah. I'm sorry. I wasn't trying to imply that ETFs were part of the problem. I was just talking about dealer inventory levels and a relatively illiquid corporate bond market. Laurence Douglas Fink - Chairman & Chief Executive Officer: Well, keep in mind, I don't know how dealers report because this is a stock. More and more dealers are big market makers in ETFs. And if it's under the equity desk, a bond ETF, because it's an equity, that's a major component of the business today.

Right. Okay. I appreciate all the color there. Thanks very much.

Ladies and gentlemen, we have reached the allotted time for questions. Mr. Fink, do you have any closing remarks? Laurence Douglas Fink - Chairman & Chief Executive Officer: I just want to thank everyone for joining us this morning and for your continued interest at BlackRock. Once again, our second quarter highlighted the investments we made over many years to enhance the differentiated platform that we have – a platform that's diverse, a platform that's global, a platform that can work in both alpha and beta products. And I believe the second quarter was a good testimony to all that buildup. We continue to take a long-term view and hopefully, we're staying ahead of our clients' needs. And most importantly, as I suggested, when we have 3,000 clients calling in to – BlackRock Institute call, we're winning more and more hearts and minds of our clients, which in my – our deepest hope, that leads to larger share of their wallet. And if we continue to do that, we'll continue to drive performance for our shareholders in a landscape that is obviously very volatile. Everyone have a good quarter, and we'll talk to you next quarter. Thank you.

This concludes today's teleconference. You may now disconnect.