Laurence D. Fink – Chairman, Chief Executive Officer Anne Marie Petach – Chief Financial Officer Robert P. Connolly - Managing Director and General Counsel

William R. Katz - Buckingham Research Craig Siegenthaler - Credit Suisse Douglas Sipkin - Wachovia Prashant Bhatia - Citigroup Michael Hecht - Banc of America Mark Irizarry - Goldman Sachs & Company Hojoon Lee – Morgan Stanley

Welcome to the BlackRock Inc. second quarter 2008 earnings teleconference. Our host for today’s call will be Chairman and Chief Executive Officer, Lawrence Fink; Chief Financial Officer, Anne Marie Petach and General Counsel, Robert P. Connolly. (Operator Instructions)

Before Larry and Anne make their remarks I want to point out that during the course of this conference call, we may make a number of forward-looking statements. We call to your attention the fact that BlackRock's actual results may differ from these statements. As you know BlackRock has filed with the SEC reports which list some of the factors which may cause our results to differ materially from these statements. Finally, BlackRock assumes no duty to and does not undertake to update any forward-looking statements. With that I'll turn it over to Anne Marie, our Chief Financial Officer.

Hello. I’m just going to walk you through the highlights of our results for the quarter. Second quarter reported results are $2.05 per share. Second quarter as adjusted earnings are $285 million or $2.14 per share. The as adjusted results are up 13% compared to $1.90 in the first quarter and up 19% compared to $1.80 in the second quarter of 2007. As adjusted earnings for the first half of $4.04 are up 19% compared to 2007. The year-over-year improvement is more than explained by operating results. Operating income is up 44% for the quarter and for the first half offset partially by lower non-operating income. Non-operating income includes marks on our seed and co-investment portfolio and I’ll provide some more details on that in a moment. Second quarter results are being driven by strong net new business flows, revenue balance across products, regions and client type and continued success in the BlackRock Solutions Business. The $44 billion of new advisory assignments will generate ongoing revenue based on AUM. Due to these factors the top line grew. Revenues of $1.4 billion are up 7% compared to the first quarter and up 26% compared to the second quarter of 2008. Base fees are up 22% spread across all asset classes year-over-year. The revenue growth since second quarter 2007 is driven by organic asset growth of $170 billion and the acquisition of $22 billion of assets from Quellos. We have seen real balance in our business model as cash management revenues increased almost 53% compared to a year ago and BlackRock Solutions revenue increased 115%. BlackRock’s capability in safeguarding assets and managing risks have contributed to revenue strength in a volatile market. The 7% revenue growth compared to the first quarter is also being driven by assets. While cash outflows were $4.6 billion on June 30 compared to the first quarter, average cash assets and revenues were actually up about 5%. Almost $7 billion of cash assets have been funded since quarter end. A trend towards duration targeted investing contributed over 5% growth in fixed income revenue and assets. Strong relative performance and flows have contributed to equity revenue growth year-over-year and revenue stability compared to the first quarter. Operating margin as adjusted in the second quarter is 37.9%, an improvement compared to 37.6% in the first quarter and 36.1% in the second quarter of 2007. Compensation expense of $552 million in the second quarter is up $83 million compared to the first quarter. Compensation expense includes $25 million of mark-to-market on deferred comp plans. This portion of deferred compensation expense is offset largely on non-operating income where the income on assets is reported. The expense is in operating results and the income is in non-operating results. Excluding this factor compensation expense is up about 12% compared to the first quarter explained primarily by higher incentive comps. This factor is also affecting the second quarter comp to revenue ratio of 39.8%. Second quarter G&A costs are down $7 million from the first quarter and $9 million a year ago due in part to foreign exchange. Non-operating income in the second quarter added $0.08 per share. Second quarter non-operating income of $17 million includes the gains on deferred comp assets I mentioned earlier offset by interest expense of $3 million. In addition, non-operating losses on real estate and other investments were offset largely by gains on our new credit and mortgage funds and certain hedge funds and fund-to-funds. In the first half of 2007 net non-operating income contributed $0.48 per share compared to a $0.04 loss in the first half of 2008. Just to state again, our investment portfolio is composed of investments to seed new products, invest side-by-side with our clients and some deferred comp related assets. We are fiduciaries of these assets. We do not use the balance sheet for proprietary investment or house trading. The portfolio is comprised primarily as marketable securities which we hedge as appropriate, hedge funds and fund-to-funds, some of the new distressed credit funds we have launched, private equity fund-to-funds and real estate. Each of these asset categories represent about between 15-25% of the total portfolio. Given the decline in non-operating year-over-year the 19% improvement in earnings in the first half compared to the same period of 2007 is more than explained by strong operating results. This is my first earnings call as BlackRock’s CFO. It feels great to report earnings which are being driven by strong and balanced business fundamentals and which show improved revenue and margin trends compared to prior periods. With that I’ll turn it over to Larry.

Good morning everyone. Despite the strong headwinds in the global financial markets which we are not immune to, which we face the same headwinds as everyone else faces, our business model has truly differentiated ourselves with our clients and will continue to differentiate ourselves as we go forward. Having a global connected firm, integrated global platform has allowed us to manage risk accordingly, has appropriately helped us understand our positions globally and allowed us to cross-fertilize ideas from our management teams in Hong Kong, Tokyo, London, Boston, New York, Philadelphia and Delaware – I don’t want to go to every place but it has allowed us to minimize as best as possible the impacts from the marketplace. Most importantly it allowed us to work with our clients, prepare our clients for the issues around the marketplace, advise our clients and provide them what I would call a comprehensive business relationship whereby our clients can come to us and think about BlackRock in terms of their needs in asset allocation, their needs in equities, fixed income, liquidity and the management of risk. I don’t believe there is any other organization that has that comprehensive platform in which we can navigate the markets more successfully than most, but importantly that we can provide I think the leadership and confidence to our clients in helping them navigate in these really difficult global financial markets. I believe having what we call the “One BlackRock Platform,” the one organization to represent ourselves globally to our clients, clients who have relationships with us in Asia, Europe or North America, they have the same understanding of what BlackRock can provide and we can then provide them with a unified comprehensive relationship. This model we believe will continue to be enhanced as we grow our organization and as we build out our global brand which we launched in the third quarter. On May 1 we dropped the hyphenated BlackRock-Merrill Lynch Investment Management name in our mutual fund platforms outside the United States and in actuality our flows in mutual funds after that moment actually increased. We saw significant flows as clients worldwide came to appreciate the branded platform of BlackRock and we are making great headway in building that global brand. I must say we have years to work on that. We are just beginning that development and hopefully over the course of the next few years we become truly a global branded platform. Let me review the numbers. I think the numbers speak for themselves. $1.427 trillion in assets. $63 billion in net in flows which is really gratified by having over $24 billion in long debt in flows broken out by $17 billion in fixed income, $6 billion in equities and $1.5 billion in alternatives. We did experience net out flows in liquidity however our average assets were up substantially during the quarter. Most of the out flows were quarter end out flows and most of that money is back but we are seeing, as we have said in some of our other statements throughout the quarter, we are seeing some clients of ours starting to look for other opportunities whether they be lending in their own business, some clients may be buying back more shares as the equity markets have deteriorated, so we are beginning to see clients start utilizing their cash and some of our clients are actually now looking to invest in more risky assets whether distressed debt, distressed mortgages and in many cases equity. So we are seeing a slow down in cash however our flows are still very strong overall. We look at that as a very strong positive. We hope one day we can see larger out flows in cash one day and that money is repositioned in longer dated assets. I think for the global economies this would be a good thing as we start seeing fear reduced and I’m not suggesting fear is being reduced but I’m suggesting in some cases we are starting to see clients looking to reassess their overall cash positions and looking to assess how they are utilizing their cash and it could be just for internal driven reasons or it could be reasons in which they are going to re-deploy into different asset categories and have BlackRock assist them. So we have seen overall in the quarter very nice, consistent flows. I am very gratified in the quarter once again getting back to the comprehensive relationship where we have a relationship with clients in liquidity, in equities and fixed income so we can have that overall relationship with our clients. I would really like to highlight also our position in the retail mutual funds. We had an extraordinary quarter globally. One of the strong hopes of ours when we closed our Merrill Lynch Investment Management merger was the ability to build out a global retail platform under the BlackRock name. Our hope was also to build out significantly our third-party distribution partners and I think we are beginning to see the result of that expansion both domestically and globally. In the second quarter we had net in flows in retail of $3.6 billion in retail. Internationally we had a $2.5 billion net in flow so $6.7 billion overall flows. Year-to-date we are close to $15 billion in global retail flows net. Now let me talk with a little more granularity about flows in both. In the second quarter we saw more third-party sales than we have ever seen within our platform so it is true that we are building out that reputation and that platform to sell third-party platforms in the U.S. What is truly remarkable is our accomplishments internationally. As of the end of May, I don’t have the June results, in the European mutual fund platforms globally, not ours I am talking about the industry, there was close to $50 billion of out flows. There was a re-intermediation of clients going back from mutual funds back into deposits all throughout Europe. I think we are the largest net in flow mutual fund platform in Europe, a real testimony to our team and to our positioning in Europe and in Asia. So really an outstanding quarter and first six months for our team on the retail side. I am emphasizing this and de-emphasizing in my oral statements the success we had in institutional. We did have an outstanding quarter in institutional as evidenced in the flows across all the products but I wanted to really emphasize the success we had in retail. In equities our performance has been very, very strong. Over 73% of our funds are above the index and I think this is one of the reasons we have truly seen some strong flows in our mutual fund platform. I would like to just highlight two of our big successes in the quarter in equities. Our global opportunity funds crossed over $50 billion in the management, one of the fastest growing mutual fund platforms and products in the world. A real testimony to Dennis Statman and his team. I would like to also give recognition to our global natural resource team who also as a team crossed over $50 billion in assets and the management of these products. In both cases with outstanding performance in the first six months of this year. Our Solutions business has given us quite a bit of notoriety over the course of the quarter. The visibility of our UBS transaction, the visibility of us working alongside the Federal Reserve and management of the Bear Stearns assets. What was less visible was during the quarter we also won five new Aladdin assignments. That is now 9 year-to-date. We are also in negotiations from other very substantial assignments in our Solutions space. Historically I would tell you we are always at risk because of the sheer in flows of business and we have to navigate and manage the business flows. Our team has done an extraordinarily great job in doing that and we are open for business. We have had a very successful period of time in hiring people who I would have said a year ago or two years ago would have been very difficult for BlackRock to hire. The people coming in here are real pros and are helping us to build. The intellectual capital we already had within this platform and we are building a position to have even greater strengths in the future. One other point I would like to highlight which is beyond our estimates in terms of where we thought we could take the business, we basically crossed the $100 million revenue mark for Solutions in the second quarter, an extraordinary increase from any other quarter in the past. Business momentum continues. Our pipeline was $64 billion. Investment management pipeline was $31.5 billion. $23 billion elongated. Mandates about $8 billion in cash. Our advisory products in which we are advising down positions very similar to the UBS and our Bear Stearns portfolio has increased in the pipeline of $32.5 billion. So another fine quarter which indicates the continued momentum we have in our business platform. Let me discuss all the noise about BlackRock and Merrill Lynch. We are very pleased this morning to announce the reaffirmation of our business partnership with Merrill Lynch. We have agreed to extend our global distribution agreement which was up for review on September 2009. We agreed to expand that relationship out another four years so the agreement is now five years from now, 5.25 in terms of having that relationship. It has been a powerful relationship for BlackRock and for Merrill Lynch and I believe this reaffirmation of our strategic partnership, the success we enjoy working alongside Merrill Lynch, the success we have in building products and building ideas together for the betterment of both organizations is a real statement in terms of a reaffirmation of our relationship. I would like to firstly thank John Thain and Greg Flemming. There was obviously quite a bit of noise over the last three weeks in terms of Merrill Lynch’s position within BlackRock and I also believe Merrill Lynch will affirm the strong business cooperation and partnership we have together. We look forward to working even closer with Merrill Lynch and building a very strong platform together. Let me just touch on the markets. The markets are obviously very volatile. Obviously yesterday it was very volatile in the upside and we have seen some tremendous declines in valuations in the equity markets and specifically financial institutions. We believe we are at a point in time in the credit cycle in which we still have great uncertainty in the future. I believe the credit crisis could be over if we could believe residential housing declines are behind us or near behind us. However, if the residential markets in the United States continue to fall we believe we have many more credit crises in front of us. Needless to say, we believe the opportunities in investing in distressed debt; distressed mortgages are really great at this moment despite the uncertainty and the direction of residential real estate. In many areas the purchase of residential debt right now the marketplace is pricing this debt at losses far exceeding the losses now. The marketplace is predicting we will actually see more declines in residential real estate. So you are able to buy these assets today already anticipating these losses. Therefore we still believe there are opportunities. We are not saying to our clients put all their cash in these opportunities. We are recommending clients put some of their cash into these opportunities to start utilizing their cash positions. We are not here to suggest we have found a bottom, but we are suggesting you can make an adequate risk return in investing in these products today. So we are quite nervous about the future because we don’t have the ability to truly predict the direction of residential real estate. It is our opinion that to stabilize residential real estate we will need a change in governmental policy; we will need more government involvement to stabilize residential real estate. I do not believe it is just a private sector solution. We believe it is going to be the cooperation between private sector and government in stabilizing residential real estate which then will stabilize consumer confidence. We also believe because of the big declines in residential real estate and if they decline more the fear of inflation today will most certainly abate out six or nine months. The temps market is saying that unless it tips today out a year the tips market is suggesting we are not going to have the inflation fears today out nine months. Indeed if you are a young couple trying to buy a house for the first time this is a tremendous opportunity buying a house down, depending on the region, 5% or 30% or whatever you can attain. So much has been written about all the pain but there is a whole part of the economy where this is a positive and we can’t lose sight of that. Overall we are concerned about the overall economy. We believe we have risks ahead of us but those risks can be managed and if they are managed successfully we can have a much brighter future. Overall, the BlackRock position or strategic position with our clients, our comprehensive business model has proven to be very successful and we believe we are in a very good position to take advantage of that. I would like to close the same way Anne Marie closed. I believe our platform, our business model that 100% of our business is a fiduciary business. We only use our balance sheet on behalf of clients. We do not have any proprietary trading. We don’t employ any accounts we manage on behalf of ourselves. None of our risk capital and none of our capital on the balance sheet is used for the house. It is all entirely used for fiduciary purposes. The entire business model is based on a fiduciary platform and I believe that will continue and I believe this is what is differentiating ourselves with our clients. I would also state one of the strong reasons why we are a firm in which people are seeking our advice in terms of our advisory advice and in terms of our balance sheet advice we are the only firm that has a separation of our investment management business and our investment advisory business. Separate teams, Chinese walls and as a result of that we can’t offer strategic advice to our clients that is cordoned off with the rest of the business. We have that separation for years. We have now over $7 trillion in assets we give investment advice to and risk management advice to. It is that history of our BlackRock Solutions product, the separation of that position and that platform from the investment management platform to provide that totally advice that is separate from the overall platform that is purely for our client’s needs. Once again I would like to thank all our shareholders, especially Merrill Lynch, and PNC and I would like to especially thank all the BlackRock employees for an incredible quarter, patience and last I would like to just thank all the BlackRock citizens. We have worked really hard. We have seen many sleepy eyes over the course of the quarter. I will say to everyone I did not see one unhappy face. People believe we are doing the right thing on behalf of clients and people believe we are motivated on building this platform. I would like to thank everyone and we will open it up for questions.

(Operator Instructions) We’ll take our first question from William R. Katz - Buckingham Research. William R. Katz - Buckingham Research: Larry, just going back to the new business pipeline and the allocation are you starting to see where clients are coming to you and saying we want to get out of cash or where are we in that process in light of the fact the markets have been so volatile particularly in the last 6-8 weeks?

I would have thought because of all we have seen in the last 6-8 weeks we have seen more people putting in cash. So once again I would have been wrong. You say industry wide cash balances were down in June. We didn’t see that. We are having more conversations with clients about opportunities out in the yields per credit, other products but I do believe away from their conversations with us and I do believe clients whether they are looking to finally build that new plant or purchase equipment if they are an exporter and our clients are seeing their stocks down a lot they may be looking to buy in shares. I would have thought with all the volatility you would have seen an incredible run to the sidelines especially with all the volatility. We just did not see that. William R. Katz - Buckingham Research: The second question I have is in the advisory business I guess the $32 billion platform might be the Canadian operation, the asset backed paper. I’m just curious beyond that what is sort of the prospects for the business and I’m just wondering if you can help us with some of the economics of these mandates as it relates to both the base management fee and the extent of any impact with performance fees associated with that.

We see a very large pipeline of opportunities. The financial stresses as evidenced by stock prices is not over. Obviously in the last few days we have seen a huge rally in terms of the equity prices and the financial institutions which is very good. I would have said before yesterday Bill the problem if financial institutions cannot raise capital obviously for every dollar of capital they cannot raise they are going to have to sell anywhere from $12-15 in debt. That was my fear a few days ago. Obviously when the equity markets rally maybe that fear can be mitigated a little bit but we were quite worried we were going to see a huge onslaught of asset sales because people could not raise capital. We are seeing many institutions who are still in a need to de-leverage, who are still looking for solutions with problem products and so we have as many conversations today than we have ever had in terms of working with clients. We have never seen more interest in our Aladdin system going forward. So the pipeline has never been more robust. Once again these are binary decisions so we could lose all of them or people could move away from it but at this moment it looks very strong. In terms of how we are paid in some of them we do have a lower base fee and a higher performance fee base. In some of them we have a very high base fee and no performance fees. Also in these assignments we do get a set up fee too and so some of the earnings in the second quarter were associated with set up fees or advice driven fees related to assets. We already have done one other advice fee already in this quarter and so there is once again no rhyme or reason. We customize it to the needs of the client. William R. Katz - Buckingham Research: Last question relates to the discussion on the Merrill Lynch relationship. You mentioned you extended out the relationship. I’m just sort of wondering on the other side of things have you changed the lock out period in any way.

No.

The next question comes from the line of Craig Siegenthaler - Credit Suisse. Craig Siegenthaler - Credit Suisse: I’m just trying to think about the profitability of $43 billion advisory asset to BlackRock team in terms of a blended C rate and I’m also trying to think about the persistency versus other asset classes so I believe this is labeled as long progression and the second question I have is the Bear Stearns UBS in Texas large mandates are they in this $43 billion?

The UBS transaction and the Bear Stearns transaction are in the numbers. You mentioned Texas. I didn’t… Craig Siegenthaler - Credit Suisse: I believe you won a $15 million mandate.

That is a fixed income assignment so that is in the other number, that is not an advisory assignment. The persistency. The persistency of the assets are, and we have the Canadian assignment too that I mentioned is going to be in the pipeline. It closes any time soon. We also have one German assignment that is in the pipeline. These are probably it really depends on the needs of the client and the UBS transaction is a private equity investment buy. BlackRock’s clients, we are managing that to provide a total rate of return to our clients. If we saw opportunities to have that liquidated in 3-5 years we could. We will determine that with our advisory committee with that specific assignment about the persistency of that assignment. But these are long dated assignments. We are differentiating them for more transparency because in those assignments, this is how we have rationalized the segregation of these assets. These assets are not growing in terms of assets. Our job over a period of time is to liquidate these assets and achieve a high total rate of return. So this is why we segregate them differently and why we think of them differently. Also importantly we also want to segregate this for transparency purposes to identify that these positions are actually managed differently and they are part of the BlackRock solutions platform. Craig did I answer your question? Craig Siegenthaler - Credit Suisse: You did. I just have actually one other question here. You break out minority interest and non-controlling interest as positions I believe in your proprietary fund which you co-manage with investors. When we look at the first quarter results I believe initially it was negative $9.6 million for this item which is offset against your investment portfolio gains and I believe in your current press release it is positive $5.4 million.

It is $8 million. Are you talking about non-operating income? Craig Siegenthaler - Credit Suisse: I’m talking about minority interest after tax.

I’m going to let Anne Marie answer that one.

The minority interest number are you saying we changed the number compared to what you recognized in the first quarter? Craig Siegenthaler - Credit Suisse: When I look at the first quarter press release and then I look at for the first quarter 2008 I look at non-controlling interest right above net income in the P&L and then I look at the current press release for how you disclosed first quarter 2008, the ending results are the same. The minority interest line or this non-controlling interest line is different. It went from negative $9.6 to $5.4 and it should be the same item.

The net is the same there is just some sorting out of…

Just so you know what can happen to us is that we closed down earnings and then we sometimes do have adjustments on private equity related aspects that come after the close. We sometimes are required to go back and realign first quarter results in that regard. Remember most of these, a lot of this non-controlling interest represents private equity related investments and we do close very early so you do get some changes in that but that is all it is. It will be all identified and explained in the Q.

I would just say also one thing on these are C investments in these funds alongside our investors in fund-to-fund private equity. Craig Siegenthaler - Credit Suisse: This quarter was very large add back to net income. Your private equity returns look strong. Hedge funds look strong. Real estate was a little weak with the market but it looks like there was a big add back this quarter. I’m just wondering rationally why was that.

I tried to pull that together in my comments. What we have had was a very positive return on some deferred comp assets and so I mentioned our deferred comp expense was really sort of grossed up by $25 million because there is an offset in our non-operating income because of the add that has had to return.

The next question comes from the line of Douglas Sipkin – Wachovia. Douglas Sipkin - Wachovia: Much of my stuff has already been answered but I just want to spend a little bit more time talking a little bit about the expenses. I was surprised to see just looking at the non-comp coming in, $5-6 million or so. Is that some sort of, I know you guys have talked about it in the past about some benefits of the Merrill Lynch integration which maybe you had pushed off because business was sort of robust and you had to focus on that before making some other adjustments. Is that what this reflects? I was just surprised given the ramp up in AUM business, etc. that the non-comp came in.

The non-comp came in, let me just walk you through some of the pieces there. First of all we had lower effects of negative foreign exchange worth about $7 million which would totally explain the difference and in addition we had some up and down. We had some higher marketing expenses that were associated with the re-brand.

Remember we did re-brand in the second quarter and so we had a lot of high expenses.

That were associated with the re-brand. Some offsets in really more timing related than other but we are seeing some lower consulting fees and some lower fees associated with outside advice. Douglas Sipkin - Wachovia: I just wanted to dig in a little bit more; I think the first question was about the special advisory assignments. I guess sort of thinking about the incremental revenue for BlackRock solutions this quarter and I appreciate you guys providing the additional color on the additional set up costs, but it looked like us not knowing the set up costs about $40 million or so incremental. Should we be thinking about this as the generally speaking $40 billion in new assignments that hit this quarter generally sort of roughly that incremental $25-40 million?

Yes. I would say so. You should not expect that to happen out in the future so don’t put that into your model. I would say that is fair. I would say if we hit on some of these pipeline negotiations we have we should see that again but once again I would not monetize those types of set up fees. Douglas Sipkin - Wachovia: But, can you give us some color stripping out set up fees what sort of reasonable solutions numbers would look like pre any additional funding? Obviously I know the number changes but I’m just trying to get a flavor for what sort of…

It is so fluid out there and so many different assignments right now I don’t know what I could reasonably tell you. My general counsel is looking at me I’m not supposed to talk about forecasting so…I think probably off line Anne Marie could probably help you on that. Douglas Sipkin - Wachovia: Perfect. Just to dig into the fixed income I know you had mentioned the Texas Retirement win in there. Is there anything else going on in fixed income this quarter? I know you guys have had two quarters of out flows. Maybe the competitive landscape, I know you said it is always tough, some of your competitors are really struggling. Are you seeing the benefit of that at all or is it really just sort of these big one-off’s where you get a big mandate?

No actually we are seeing more flows. One would have thought people would be taking money out of fixed and reallocating it into equities. I think we have seen more inquiry because there is more fear. We didn’t see it in liquidity we saw it in more longer dated or intermediate flows. Most of our wins were less elongated but were more in the lower duration area. It could be stated that people instead of putting it in cash were looking for some little excess return in the low duration area. Douglas Sipkin - Wachovia: The final question, could you just talk a little bit about the initial benefits of the strategic relationship with Merrill Lynch and sort of pushing this out another 4 years and what that could potentially mean?

We have the ability to work alongside with the FA’s at Merrill Lynch. We have a unique position in that in terms of working with the FA’s. We have offices near or within the offices of Merrill Lynch in the global wealth management area. So we have this ability to work with them and help them with their clients in terms of idea generation and it has been a very powerful relationship for BlackRock and for Merrill Lynch. It is one of the reasons why we have seen in terms of our relationship since the transaction closed our market share of mutual fund sales within there have actually increased. Having the third-party brand name and yet having that ability to have that uniqueness in their pie form. Douglas Sipkin - Wachovia: Is there any sort of ownership requirement sort of level they need to maintain? I know they are free to sell I guess at the end of next year. Whether or not they do or how much they do will that impact that strategic relationship one way or the other?

No, that relationship is separated now from any equity position that Merrill Lynch has. Douglas Sipkin - Wachovia: After the sort of lock up period do you guys still have a right to be sort of the first buyer of that or does that go away after the lock up period?

I think it is all in the full documents but I believe we still have that right and they can’t sell all at one quarter anyway. I don’t have the exact formula but they have to sell a little at a time after a certain point. I would recommend working with Anne Marie or Sue Agner in terms of helping you get more granularity and reminding me where that document…I guess it is in our shareholder agreement.

The next question comes from the line of Prashant Bhatia – Citigroup. Prashant Bhatia - Citigroup: Just on the bulk sale transaction you did with UBS if you can could you just give an update on that portfolio? More importantly do you have capacity to do more of these types of transactions?

The answer is clearly yes. We are working on some right now. On that transaction alone I think we had the ability to raise free XE equity that we needed. So we saw huge demand for distressed assets. In terms of how the portfolio is performing it is performing exactly where we thought it would be performing in terms of cash flows. So far we only have 1.5 months of experience. In terms of the first month of cash flows the performance did exactly what we modeled. Prashant Bhatia - Citigroup: Is getting financing any sort of limiting factor? I know in a lot of transactions it is seller financed. If it weren’t seller financed would that be a limiting factor in doing these types of bulk asset sales?

Yes. To get the returns the equity holders are looking for they need some form of leverage to take it on. There are other investors of ours who would like to just buy un-leveraged but that would be just a single account relationship, a separate account. But to do the type of transaction we did with UBS where it was structured as a single purpose corporation the investors there were looking for a leveraged return. It really depends on the desire of the investors. I would tell you leveraged returns in this asset category there is a lot of equity demand for that. So yes. A limiting factor of that type of product is leverage. Prashant Bhatia - Citigroup: I guess just broadly around the Fannie and Freddie situation, you being one of the biggest fixed income money managers in the world, how do you think about this situation and how do you think this plays out and does there need to be more extensive government involvement and any risk to your franchise?

I do not believe in any circumstance that the debt be impaired at all. We are a large holder of their debt in terms of mortgage backed securities. If the credit markets are an accurate representation of what the market feeling is Freddie and Fannie securities have basically done fine. In fact a few days ago they tightened a lot. I think yesterday they widened because of the change in the marketplace but the credit markets are saying whatever is the outcome the credit should be fine. I think putting on my Mr. Public hat for a second I believe is no other choice than to make sure the credit is fine because a high percentage of this credit is held by foreigners, by sovereign wealth funds, by central banks and I think this is known within the administration and I would see no…I see no outcome in which if there was ever a need to do something in which the debt would not be paid in full. The equity is a bigger story, a bigger question. I think there is stability in the two GSE’s in the last two days. I see them up today. The raging debate in all financial markets is if there is a need to do something with the agencies and/or if there is a need by the FDIC to consolidate a bank what would the regulators do to the preferred holders. That is the big question that is in the capital markets now. Obviously preferred is definitionally equity. However, in the case that if there was any need to close a bank the raging debate is would they make the FDIC make the preferred holders whole or would they get zero. That would have pronounced ramifications to the whole capital structure of banks going forward. I think if we determined that preferred is zero in a nationalization of a bank or close down of a bank one would think it would be very difficult in the future to ever raise preferred again because you were not paid that much difference versus common. Therefore I think it would be very difficult for banks to raise preferred and it would have a pronounced impact on leverage ratios because they would only have capital raised through equity or common equity. This is something I am watching and we are paying attention to. I don’t have an answer but I think it is going to be one of the definitive issues we will have to watch. Regarding Freddie and Fannie, as I said earlier this country needs a strong platform for mortgages. Freddie and Fannie have provided the strength around the residential mortgage market. Whatever the outcome is and I don’t have a crystal ball; I hope they are able to resolve it. I think for everyone it would be good to have a very strong Freddie and Fannie but I do believe whatever the outcome is we have to have a strong secondary housing security market or the residential housing market will be impaired for many, many years beyond anyone’s dreams. I believe it is just incredibly necessary as we think to have a strong GSE whether that is a GSE that is presently structured as is and they are able to rebound and to get the strength that the market hopes they are going to get or whether it needs other type of assistance in the form of what Secretary Paulson has suggested in back stops. Prashant Bhatia - Citigroup: You have got a very active dialogue with sovereign wealth funds. Has that appetite changed over the past year or so? Maybe a shift in direct investment to outsourcing some of this to third-parties and is that something that could potentially benefit BlackRock as we look out over the next couple of years?

Most certainly our sovereign wealth fund business has grown dramatically. I don’t think we ever list that but it has grown dramatically. I see that continuing to grow dramatically but I also see them and work with them that they are looking for direct investments. The sovereign wealth funds have been very involved in some of our structured products. They are looking for customized solutions. We had sovereign wealth funds invest in our UBS portfolio and so whether that is direct or indirect I’m not sure how that differentiates it. In our case our relationships are growing. Our dialogue is constant. We are working with them on things that ultimately we are not investing for them. We have that constant dialogue in which we are helping them as they have greater and greater needs as their cash balances are exploding. Prashant Bhatia - Citigroup: Would you care to size the business in terms of assets?

No. Prashant Bhatia - Citigroup: One final one just looking at your stock and the relative out performance versus a lot of other asset management type entities, is this a time when you would think about acquisitions to fill in any kinds of needs you had or would you tend to be more inquisitive here just based on your relative out performance versus some of your peers?

You may not like this answer. I don’t look at our relative PE as a means in which we look at acquisitions. That may be the tenth reason or fifteenth reason. We look at acquisitions purely if they enhance our manufacturing platform and/or our distribution platform. I would say very clearly we are not interested in doing acquisitions for accretion. That is a one time gain. The market sees right through it. It is too much hard work and displacement of time and people to do something because of solely accretion. If we can do a transaction in which it totally transforms our manufacturing and/or our distribution platform and it is accretive we would look at that type of transaction. We have had numerous inquiries over the last quarter in which a client would we be interested in doing another strategic acquisition. So there are many organizations worldwide who have requested to have dialogue with us. I would not tell you we are anywhere close in doing any. But we are not walking away from any dialogue. We have a very high bar to do anything. I love where we are. We have incredible momentum. We are transforming our business relationships with our clients in a very positive way. I would have to have a very high bar to do a transaction because I would not want to disrupt the organic momentum we have. Prashant Bhatia - Citigroup: Just a final one on auction rates. Larry, how far along are you in terms of refinancing what you need to get done and I’m just curious on the appetite for money funds on picking up some of these new securities. I know there has been an effort to make them compliant so money funds can own them but how much of an appetite are you seeing money funds actually wanting to do some of these new securities?

The new securities are not complete yet. So we are working towards it. We have had the IRS come back and give us a ruling that makes us believe we are going to get the ability to make these 287’s eligible. We are working with the banks so we do meet standby commitments for banks. Obviously the credit market is the issue. That is why we are having such problems but to do this properly we still need banks to sign up on this for standby commitments so ultimately the assets would be put back to the fund. But if there are any triggers and we are working alongside our banks at the moment to do that. If we get that I believe there will be a sound and large 287 market for these products.

The next question comes from the line of Michael Hecht - Banc of America. Michael Hecht - Banc of America: I just wanted to come back on the backlog and I apologize if I missed this but did you guys give the color for the long dated products, the $23 billion of backlog you guys talked about in the release there across equities versus fixed income and more U.S. versus non-U.S. centered?

I have it here. I think it is in the press release. Michael Hecht - Banc of America: I thought it was just in like long data. Maybe I missed it.

$14.6 in fixed. $6 in equities. $2.5 in alternatives. Break down international versus U.S. $10.8 in U.S., $20.7 international. Michael Hecht - Banc of America: On the money fund out flows I think you guys talked about in the release is kind of seemed towards quarter end and any other color on that? I guess this goes back to an earlier question but does that suggest you are seeing signs that clients are taking more risk and shifting out of cash or something else driving that? Also in the money funds anything you are seeing cross mix of institutional versus retail on the flows?

Clearly the industry saw a large out flow in June. I think it was $50 billion I saw. According to Paul that was all institutional out flows. There is no question we are seeing some clients who are looking to extend into more risky assets but I do believe more clients or many clients are saying maybe it is time to relent, to utilize the cash for their own internal needs. G&A, plant and equipment purchases which have probably been delayed and one of the reasons I think cash is so large, and obviously with declining stock prices I think some of the clients are obviously using some of the cash for stock repurchases. I don’t think there is any one reason. We did see a big flow of cash back. If we look at the pipeline $8.5 billion is back to our platform. Michael Hecht - Banc of America: Any more color on just kind of investment portfolio trends broadly? Do you have any numbers in terms of where you guys rank in the Lipper rankings across equity and fixed income?

Can I give that to you off line? I don’t have that in front of me. As I said our equity numbers are very strong. Michael Hecht - Banc of America: Lastly, a housekeeping thing. Any additional color on the outlook for performance fees in the second half? Q2 they were up a fair amount versus a year ago so does that suggest strong year-over-year comps for the second half and how should we think about performance fees versus how we think about comp expense in the second half too?

We have a lot of performance fee triggers in the third and fourth quarter. That is where we get them. I can’t predict what the market is going to do and how well we out perform or under perform so in some of the areas we are in the right spaces and some of the areas we are in the wrong spaces right now. We did have strong performance fees in the last few years in real estate. We don’t expect to see strong performance fees this year in those spaces. So it really depends on the product. Fortunately over the last few years we have really built out a more robust and diversified alternative to space and we believe we will have flows and performance fees but I am not permitted to forecast them out.

The next question comes from the line of Mark Irizarry - Goldman Sachs & Company. Mark Irizarry - Goldman Sachs & Company: Larry a question, actually it is a pipeline question again. If fixed income, the $13 billion mandate you won from Texas did that fully fund in the second quarter?

That is not a pipeline. That was the second quarter. Mark Irizarry - Goldman Sachs & Company: So that is fully funded. Around the edges if you take a step back and look at quarter cash mandates down, winning these big advisory mandates if you will, can you talk about those two businesses in terms of the fees and the stickiness in duration of the two different assets? Which one, it seemed to me the advisory business in winning that business over losing some of the cash mandates is a net positive for your fee mix and your margins.

It is a night and day difference, no question. Let me go back to cash. Our cash assets were up a lot for the quarter so we witnessed most of the out flows in the last week. So we saw it go back. I would say we are definitely seeing a deceleration in cash. I would say that but once again the question related to the different fee businesses, the advisory fee business is far stronger, far better, far more predictable than longer dated. Mark Irizarry - Goldman Sachs & Company: On the performance fees it looked like your long only or your equity balanced fees were up about 4x year-over-year and obviously that would imply not only performance but you are probably taking in some more assets on the institutional side that are performance fee based. Can you help size the AUM base on the institutional side or separate account size that actually earns performance fees?

I don’t think we provide that granularity. If we do, I don’t have it in front of me but I’m sure offline Anne Marie could work with you on that. But your notion of are we seeing more flows in those products, absolutely. The other issue is I think as you suggested the performance was strong. I think that also suggested why we are seeing more institutional flows. It is also suggesting why we had a pretty robust retail flows in equities. Mark Irizarry - Goldman Sachs & Company: So it is both performance and flows driving higher AUM performance?

Absolutely. One product we launched an agriculture fund that fully ramped up quickly and performance is strong obviously already. So there is a good product launched. It is doing well. It has got a lot of notoriety and success. I don’t know if it is closed yet or we are near closing. We did close it? So that would be a good example of a product we had expertise in. We ramped it up and we got it fully ramped up in the second quarter. Mark Irizarry - Goldman Sachs & Company: On the $32 billion can you just talk about where you have those set up fees hitting in the advisory mandates. Would you have those set up fees hitting in the third quarter?

Probably yes. One of them yes. I don’t know…we are not certain when the second one will fund. We don’t have any definitiveness. We are working with them but I don’t know…it requires some governmental signs offs and all that.

The final question comes from the line of Hojoon Lee – Morgan Stanley. Hojoon Lee – Morgan Stanley: Just two quick questions. In terms of your alternative business can you give us a sense of where you are seeing stronger or weaker demand? Whether it is in fund-to-funds or proprietary hedge funds or real estate or private equity?

Our flows were even across both of them. Which would signify actually a greater momentum in our own manufactured products because we never had this type of momentum in those products before. Hojoon Lee – Morgan Stanley: In terms of the non-operating income items, I noticed you guys had a slight positive gain in private equity. Was that due to crystallization or just a mark-to-market gain?

That is a mark-to-market. Hojoon Lee – Morgan Stanley: Could you just give me a sense of what drove the mark-to-market decline in real estate?

We appraise our properties every quarter and from Peter Cooper Village which is one to others where the market atmosphere, we had the third party appraiser appraise them down. We market those up and down with whatever the direction of the marketplace is. Hojoon Lee – Morgan Stanley: Final question, I think last quarter you guys had slight mark-to-market declines on some of the recent credit and mortgage investments that you made. Is that $15 million in gains in non-operating income related to those assets?

Are you looking at the “other” there? Hojoon Lee – Morgan Stanley: Yes, the other investments.

Included in the hedge funds which is driving 11 there is in part those assets which I think are you are right we have positive marks on those assets. If you are looking at the “other” what is driving that is what I described earlier as some deferred comp related assets.

Thank you everyone. Have a good quarter. Hopefully we can have a summer and we can have some summer vacations this year versus last year. Thank you.