Matthew J. Mallow – General Counsel Laurence D. Fink – Chairman and Chief Executive Officer Gary S. Shedlin – Chief Financial Officer Robert S. Kapito – President

Glenn P. Schorr – International Strategy & Investment Group LLC Marc S. Irizarry – Goldman Sachs & Co. Luke Montgomery – Sanford C. Bernstein & Co. LLC William R. Katz – Citigroup Global Markets Inc. Kenneth B. Worthington – JPMorgan Securities LLC Craig W. Siegenthaler – Credit Suisse Securities LLC Daniel T. Fannon – Jefferies LLC Brennan Mc Hawken – UBS Securities LLC Michael R. Carrier – Bank of America Merrill Lynch Chris M. Harris – Wells Fargo Securities LLC

Good morning. My name is Regina and I will be your conference facilitator today. At this time, I would like to welcome everyone to the BlackRock Incorporated Second Quarter 2014 Earnings Teleconference. Our host 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. (Operator Instructions) Thank you. Mr. Mallow, you may begin your conference. Matthew J. Mallow: Thanks very much. Good morning, everyone. Before Larry and Gary make their remarks, let me remind all of you that during the course of this call, we may make a number of forward-looking statements. And of course, we call your attention to the fact that BlackRock’s actual results may differ from these statements. As you know, BlackRock has filed reports with the SEC, which list some of the factors that may cause the results of BlackRock to differ materially from what we say today. And as we usually warn you, BlackRock assumes no duty and does not undertake to update any forward-looking statements. So with that, let the call begin. Gary? Gary S. Shedlin: Thanks Matt, and good morning everyone. It’s my pleasure to be here to present results for the second quarter of 2014. 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 as adjusted results. At our Investor Day last month, I reaffirmed the growth framework, predicated on driving organic growth, using scale to create operating leverage in a consistent capital management strategy. BlackRock executed on each of these drivers during the second quarter, resulting in continued earnings growth. We generated second quarter earnings per share of $4.89, up 18% compared to the second quarter of 2013. Operating income was $1.1 billion, 15% higher than a year ago. Non-operating results reflected a $37 million increase in the market value of our [Steed & Co.] investments. Recall that non-operating income in the second quarter of 2013 reflected $30 million – $39 million pretax gain related to PennyMac’s IPO, and the results in the first quarter of 2014 were impacted by the monetization of a non-strategic opportunistic private equity investment. Our 24.8% as adjusted tax rate for the second quarter benefited from several favorable non-recurring items and an improved geographic mix of earnings. As a result of increased growth in our international businesses, we now estimate that 29% is a reasonable tax rate for the second half of 2014. And based on what we know today, 30% represents a reasonable projected tax rate for 2015. Our second quarter results were driven by $38 billion of long-term net new flows, representing an annualized organic growth rate of almost 4%. Flows were driven by our retail and iShares client businesses. As we discussed at Investor Day, faster growth in these businesses will drive favorable change in our revenue mix. And we once again saw organic base fee growth meaningfully outpacing organic asset growth during the quarter. Second quarter revenue was $2.8 billion, up $296 million, or 12% from a year ago, and was driven by continued growth in base fees, performance fees and revenue from BlackRock Solutions. We once again experienced year-over-year base fee growth across all long-dated asset classes. Base fees increased $257 million, or 12% from a year-ago, as average AUM increased due to organic growth, market appreciation and the acquisitions of the Credit Suisse ETF and MGPA real estate businesses. Base fees were up 6% compared to the first quarter, aided in part by the seasonal increase in securities lending activities we typically see in the second quarter. Performance fees for the quarter increased $26 million, or 29% from a year ago, driven by stronger performance in our broad suite of single strategy hedge funds, as well as certain long-only equity strategies. Recall that first quarter performance fees included a significant fee associated with the planned final liquidation of an opportunistic 2007 vintage closed-end mortgage fund. BlackRock Solutions revenues of a $146 million, was up 6% year-over-year, but down 5% compared to the first quarter. Our Aladdin business, which represented 75% of BRS revenue in the quarter, grew 11% year-over-year. Flat sequential quarter results for Aladdin were once again, impacted by the timing and recognition of certain revenue, as we continue to onboard a number of large clients onto the Aladdin platform. We anticipate that several of these large clients will go live in the coming months, generating revenue uplift as we move past the implementation phase. Our financial markets advisory business continues to transition from a crisis management orientation to a more institutionalized advisory business model with continued momentum in bank regulatory-related assignments, including ECB AQR and Fed CCAR diagnostics. As we mentioned in last quarter, FMA results have recently reflected higher levels of revenue associated with asset disposition assignments. While the second quarter of 2014 was also positively impacted by residual disposition activity, the revenue impact was at a lower level than recent quarters. Other income increased $17 million sequentially as a result of higher transition management service fees, earnings from certain strategic investments and real estate related disposition fees. Expense for the second quarter rose $145 million year-over-year, driven primarily by revenue related items, including compensation and direct fund expense and an increase in general and administration expense. While compensation as a percentage of revenue declined year-over-year as a function of aggregate levels and mix of performance fees and timing of certain accruals, quarterly comparisons are less relevant and our overall compensation policies have not changed. G&A expense increased $36 million year-over-year or 11%, driven primarily by increased occupancy and office related costs and other expense, including elevated legal and regulatory expense. Aggregate G&A expense in the first half of the year benefitted from a delay related to the timing of our total marketing and promotional spend, the balance of which is expected to be incurred during the remainder of 2014. Sequentially, G&A expense increased $64 million from the first quarter, primarily reflecting the timing of marketing and promotional spend, increased occupancy expense, reflecting the dilapidation reversal in the prior quarter and the previously mentioned increased level of legal and regulatory expense. Overall, total expense increased 10% from a year ago, compared to a 12% increase in revenue over the same period, resulting in an as adjusted operating margin of 42.4%, 110 basis points higher than last year’s second quarter. We remain committed to a consistent and systematic capital management policy. During the second quarter, we repurchased an additional $250 million of stock, consistent with repurchase levels during the last few quarters and view that as a good planning rate over the balance of the year. Through both transformational acquisitions and targeted organic growth, we built the industry’s broadest asset management platform. Our diversification whether in terms of clients, products or geographies is a critical component of our strategy and enables us to deliver more consistent growth and more stable financial results over time. Another element of our strategy is the growth opportunity in global retail. We saw long-term net flows of $13.1 billion during the second quarter; driving 10% annualized organic growth with positive flows across products and regions. results were driven by our outcome-oriented offerings, including multi-asset alternatives, and unconstrained fixed income and efficient beta. International retail, once again, demonstrated stronger results, generating long-term net inflows of $8.9 billion in the quarter. Equity flows of $2.9 billion were led by net inflows into index funds, which have witnessed accelerated activity as the post-RBR European distribution model evolves and demand for efficiently packaged retail investment vehicles increases. Multi-asset net inflows of $1.4 billion reflected continued demand for our global allocation fund, a key component of our packaged outcomes offering. Fixed income net inflows of $4.7 billion were driven by flows into short duration, unconstrained and high yield bond products, as well as index funds. Within international fixed income, we saw $1.4 billion of flows into our BGF Euro Short Duration bond fund and nearly $850 million into our Fixed Income Global Opportunities fund or FIGO, which is a cross-border version of Strategic Income Opportunities or SIO, our flagship domestic unconstrained fixed income fund. U.S. Retail’s quarterly long-term net inflows of $4.2 billion were led by our duration managed fixed income suite and packaged outcomes, including our multi-asset income and global long/short credit funds. unconstrained fixed income continues to be led by SIO where we’re seeing strong interest from both retail and institutional clients. We also saw growing momentum in our unconstrained Strategic Municipal Opportunities fund or SMO, which raised over $500 million. Global iShares generated $30.4 billion of net new business in the quarter, representing annualized organic growth of 13%, driven by strong equity flows. Organic growth for iShares over the last 12 months has returned to low double digits, consistent with our longer-term targets. Equity flows of $20.6 billion were driven by a rebound in emerging markets and demand for developed market exposures. In emerging markets, EEM generated over $6 billion of quarterly net flows and in developed markets; we saw continued demand across a variety of exposures and geographies. Fixed income net flows of $9.5 billion represented the leading share of fixed income ETF flows during the second quarter paced by flows into longer duration U.S. treasuries, investment grade corporates, emerging markets debt and high yield. The buy-and-hold segment remains an important growth story for iShares. During the quarter, we generated $5.5 billion of flows into the U.S. Core Series; while also extending its reach and launching a European version of the core. Our institutional business experienced $5.5 billion in quarterly long-term net outflows, as net inflows into institutional active mandates were more than offset by net outflows in index equities. Institutional active net inflows of $1 billion included $5.3 billion of net inflows into multi-asset class products, driven by continued demand for our LifePath target-date suite and fiduciary wins. Our strength in fundamental fixed income drove net inflows of $900 million with demand across unconstrained strategies; regional credit mandates and CLOs. Institutional active equity outflows included fundamental and scientific outflows of $2.4 billion and $2.1 billion respectively. We continue to experience outflows in fundamental equity products that are performance-challenged, though SAE outflows were primarily driven by partial redemptions from clients harvesting gains in appreciated portfolios. In core institutional alternatives, net inflows into alternative, hedge fund and private equity solutions mandates were offset by outflows in certain single strategy hedge funds and capital successfully returned to investors. Nonetheless, strong momentum continues in alternatives with an additional $1 billion of commitments raised in the second quarter. Since the beginning of 2013, we have raised $8.5 billion of commitments across alternatives, $6.7 billion of which has yet to be deployed. Future net new business will be generated as these commitments are invested. Institutional index equities experienced net outflows of $7.9 billion, driven primarily by portfolio rebalancing. In the face of strong equity markets and improved funding ratios, pension clients continue to rebalance their portfolios and as interest rates rise, we expect to see additional immunization activity if equity markets remain at or near current levels. This quarter once again, demonstrated the breadth and depth of our business model. BlackRock’s diversification continues to enable us to deliver consistent results, one element of S&P’s decision to upgrade BlackRock’s credit rating to AA-, making us one of the most highly rated firms in the global financial services industry. At Investor Day, we elaborated on the strategy to achieve our growth targets. We remain confident that we have the right strategy, tools and talent to execute. And with that, I’ll turn it over to Larry. Laurence D. Fink: Good morning, everyone. Thank you for joining the call. thanks, Gary. The second quarter marked the sixth great quarterly rise for the S&P 500, and rising markets, equity markets across the globe. This was driven by growing confidence in the United States, and in Europe, and in pockets of outperformance in the emerging economies. The 10-year treasury is back to near 2.5%, the Fed continues to ease their bond buying efforts, and even in light of some of the recent volatility, the VIX is hovering near pre-crisis lows. Markets have been complacent in the face of this risk with down days quickly followed by elevated buying trends. Credit standards are loosening, cap rates are falling, and correlations remain very high, following the spring shakeup in the global momentum trade. However, the positive environment and the market gains we’ve seen in the past several years have been driven primarily by accommodative policy decisions and coordinated central bank actions. More of the same won’t be enough to move market forward from here. Corporate results and earnings growth will be needed to become larger drivers of valuation. That’s where our attention has been, and in the past couple of days, we’ve seen second quarter kickoffs with some bellwether names, posting very strong results. Investors are also going to have to focus more economic growth to justify driving asset prices higher. for that to happen, governments across the globe must take meaningful action beyond monetary policy. The United States needs to address issues like immigration and infrastructure, and readers like Prime Minister, Abe in Japan, and Prime Minister, Renzi in Italy must advance their reform agendas to produce tangible economic results. Around the world, infrastructure is a key area where governments and private capital providers can partner to drive long-term economic growth and job creation. At BlackRock, we remain highly focused on building a deep understanding of markets and evaluating risk from all angles. I believe that the accommodative policy we’ve seen over the past five years will ultimately lead to increased volatility, as policy decision diverge and investors become more focused on the performance of individual countries, individual industries and obviously individual companies. It is our responsibility, as a fiduciary to help our clients to prepare for this type of shift by building durable portfolios designed to perform over the long-term. We do this by providing our clients with a set of capabilities and a client experience that we don’t believe anyone else in the industry can replicate. We talked at our recent Investor Day about the key differentiators that set BlackRock apart, and that will enable us to drive long-term results for our clients and importantly, for our shareholders. it starts with our people. Talent and culture are critical to our success, and I’m pleased to say that the management changes we announced earlier this year have gone into effect as of June 1. Our team is working together in this new structure to execute against our key strategies to meet the needs of our clients. I strongly believe that we have at this time the deepest, most talented team in the asset management industry and the strength of our next generation of leaders will drive BlackRock’s future success. BlackRock is the world’s most global asset manager. We manage money for clients in more than 100 countries around the world through the combination of our on-the-ground presence in more than 30 countries and our ability to provide clients with the industry’s broadest set of global and local investment solutions. That global investment and distribution infrastructure positions BlackRock to capitalize on the future growth and development of the world’s capital markets that will be necessary to support global economic growth. BlackRock’s global platform generated $131 billion of long-term net flows over the last 12 months, representing an organic growth rate of approximately 4%. These results were driven by our diverse investment platform, another key element that sets BlackRock apart from our competitors. We have expertise across asset classes and we can deliver that expertise across a variety of investment vehicles. We have active and index on a single platform, which helps us position the firm to meet a holistic approach and needs of our clients. The second quarter showcases BlackRock’s product breadth, with 12 funds across retail and iShares generating more than $1 billion in flows, tying a record number of $1 billion plus funds that we saw in our fourth quarter of 2013. These funds are spread across developed and emerging markets, domestic and international clients, equities, fixed income and multi-asset class, active and index, and short and long duration exposures, together demonstrating BlackRock’s ability to be clients’ needs across the investment platform and spectrum. As I mentioned many times in the past, the diversity of our platform, our deep client relationships and our global footprint all positions BlackRock to deliver consistent financial results for our shareholders. And that consistency enables our management team to look forward at the key trends impacting our business and invest aggressively, where we see opportunities. One of those key growth areas is outcome-oriented investing. The investment landscape is shifting. Investors are looking for outcomes that target their investment goals, rather than benchmark-specific performance. This outcome-oriented style of investing requires a combination of a diverse set of investment capabilities, and a focus, and a deep focus on client service. Most asset managers specialize in one thing, and so they look at every client problem to the lens of that one specialty whether it may be active investments or index investments, or fixed income, or equities. BlackRock’s diverse platform allows us to instead to focus holistically on our clients’ needs and draw upon and across the entire firm to meet our clients’ needs. The investments we’ve made to build the combination of active and index across asset classes and regions, and our technology and risk management capabilities differentiate BlackRock in the outcomes and solutions space. And BlackRock’s offerings of packaged outcomes continue to drive growth in the second quarter, particularly in our retail businesses. Our five star multi-asset income fund, MAI, led by Michael Fredericks is one of our flagship package outcomes, an example of a fund that targets a critical challenge for our clients, generating reasonable income in a low yield environment by tactically balancing income across equities, fixed income and non-traditional sources of income. MAI has raised over $1 billion in the quarter and crossed the $7 billion mark in total assets. This fund has doubled in size organically over the last 12 months. Similarly, in the unconstrained fixed income area, SIO has raised $3 billion in flows in the quarter, stands at over $16 billion in AUM, and is the second most active mutual fund in the U.S. in terms of year-to-date net new flows. The interest in outcome-oriented investing is especially strong among our institutional clients. they are increasingly looking for investment partners that provide analytical insight, thought leadership, and breadth and depth of investment capabilities, all which play strongly to BlackRock’s strengths. At BlackRock, we take a consultative approach with our institutional clients, focused on understanding their specific needs and leveraging Aladdin’s capabilities to deliver investment solutions, a capability that is differentiated from other asset managers. Our relentless approach to risk management and technology positions BlackRock to offer a complete advice to our clients to help them not only achieve their returning targets, but to do so with a comprehensive understanding of their individualized risk and making sure they understand the risks that they are taking. The combination of Aladdin, our global platform, and our investment expertise across broad ranges of strategies positions BlackRock to deliver highly customized solutions to all our institutional clients worldwide. For example, on the first half of 2014, we closed more than $1.6 billion in custom alternative commitments and we saw strong flows in our fiduciary business, especially, in EMEA and demand for our LifePath target date suite in the United States. Our iShares business is also positioned to provide outcomes and solutions to a wide range of clients with differing investment preferences and differing objectives. iShares continues to be a major growth driver for the firm, delivering $77.5 billion of net flows in the last 12 months. And $30.4 billion of net flows in the second quarter across a variety of products and client segments. As Mark Wiedman discussed at Investor Day, there are three ways our clients are looking at ETFs and iShares specifically. One is core investments, or building blocks to construct the basis of buy-and-hold portfolios; two, precision exposures to express a specific, a targeted investment viewpoint, and three, as a financial instrument to efficiently add beta exposure to a variety of equity and/or fixed income markets in some case, replacing futures with ETFs and iShares. Each of these key product segments globally contributes to iShares’ growth in the quarter, delivering the number one ETF flow market share position for both the quarter and now year-to-date. Regardless of our strengths for growth, we cannot be successful, unless we produce superior investment performance. Nothing is more important than delivering performance for our clients. After the financial crisis, we restructured much of our active fixed income business. Our focused execution has paid off and we have strong performance across fixed income, with 90% of our active taxable and 70% of our active tax-exempt fixed income AUM is above our benchmark for peer medium for a three-year period of time. As of the end of June, we’ve seen strong performance in our fixed income total return fund, which is in the top decile for the one, for the three and a five-year period. Our low duration bond fund is the top decile for one and three years. And our newly launched Strategic Municipal Opportunities fund or SMO is in the sixth percentile for a one-year period of time. We also continue to see strong performance in our scientific active equities with 93% of our products above benchmark or peer medium for a three-year period. And from our index offerings, where we have 98% of our assets, we’re within or above the tolerant level, risk level for over a three-year period of time. I have spoken at length about the steps we are taking in our fundamental equity business to improve performance. We streamlined our investment process and recruited tough quality managers to add to our existing talent base. Most recently, Chris Jones has joined BlackRock as our Co-Head of Global Fundamental Equities and is our new CIO of America Equity Teams. And Antonio DeSpirito joined us, or will be joining us in our Equity Dividend Team later this year, working very closely with Bob Shearer. In the second quarter, several of our fundamental equity managers who had put up strong performance in recent months suffered a setback in a variety of global momentum aided strategies, and had produced strong alpha reversals. We recognize that we remain in a rebuilding phase in this business and though, we never like to see performance setback, we remain confident today in our capabilities of our teams and all our processes. To give you a few examples of the strength of some of our new managers Andrew Swan, who manages our Asian equities and Bart Geer who manages our Basic Value are in the 14th and fifth percentile respectively, since they joined BlackRock. And that performance is starting to begin to pay dividends with flows. We believe that over time, fundamental equities will be a growth area for BlackRock. We believe the combination of investing in our talent and our global footprint, our access to information and idea-sharing and our risk management capabilities positions BlackRock to deliver sustained superior investment performance to our clients. We know this is a multi-year effort, and we are committed to seeing it through. These investments in our fundamental equity business will further enhance the depth and breadth of our global business that we build over time throughout BlackRock. As I said at the beginning, we believe that BlackRock is a truly differentiated firm from any other firm in the world. We are seeing a consistent result that this model can deliver quarter-after-quarter. If you look at our growth on a year-over-year basis as adjusted, you will see we grew assets under management by 19%, we grew revenues by 12%, we grew operating income by 15%, and we grew earnings per share by 18%. That double-digit growth demonstrates the benefits of our diverse platform and our ability to deliver strong financial results to our shareholders. And I am confident that we not only have the platform, but we also have the right leadership team in place to continue to drive growth in the future even as the environment continues to evolve as we know it will. Constantly, adapting to the changing environment and improving our performance is something we are intensely focused on. That is how we intend to continue to unlock value for our clients and then ultimately our shareholders. Finally, I would like to thank our leadership team and our employees for delivering a very strong quarter and helping our clients build better financial futures. With that, operator, let’s open it up for questions.

(Operator Instructions) Our first question will come from the line of Glenn Schorr with ISI. Please go ahead. Laurence D. Fink: Hey, Glenn. Glenn P. Schorr – International Strategy & Investment Group LLC: Hey, how are you? Laurence D. Fink: Good. Glenn P. Schorr – International Strategy & Investment Group LLC: So I guess the first question I have is the cost of leverage on the street is kind of rising as banks get their houses in order, and that pushes out the cost of leverage to various products that companies like yours run. So I’m just curious, it certainly didn’t seem to affect your flows in the current period, but in things like long/short credit, multi-strat products that you’ve had success growing, does that factor in at all in terms of a) the growth and b) the profitability of those? Laurence D. Fink: That’s a good question. There is no question, you’re seeing, as you’re referring to the cost of leverage, I will just say, the Basel III, Volcker rule, Dodd-Frank has forced many sell-side organizations to reduce their overall capital committing in the marketplace. And two, you’re seeing obviously, liquidity issues in some asset categories. Glenn, to date, we have not seen a dramatic change in our ability to buy or sell for our hedge fund strategy. But we’re mindful of that, and indeed you’re correct, if we see a continuing amount of inability to navigate our trades and we are seeing larger bid/ask spreads, there’s no question that can minimize the opportunities that our alternative products have. I should say though one other ways that investors are utilizing, or trying to change their behaviors, and this is a growth engine for us, we’re seeing hedge funds utilizing ETFs as – instead of futures or single-stock or single-bond strategies, they’re using ETFs as the mechanism to express a long or short type of exposure. So in some respects, if there’s more liquidity in different products such as an ETF, you may see that. And so I think, in some respects, the changes in the world related to dealer behaviors is a benefit for the ETF market in itself, and we’re benefitting from that and I tried to express one of the avenues in which people use ETFs. But one of the big things we have seen is the utilization and the cost of using futures, margins and all that has elevated and people are using ETFs as another example. But you’re absolutely correct that we have to be mindful of liquidity by market in terms of the exposures we have in some of the long/short products. Glenn P. Schorr – International Strategy & Investment Group LLC: Okay. And maybe, just a follow-up, I appreciate that is related to alternatives, and I don’t know if it’s a technical question, but the platform across the board seems great. Your retail penetration is clearly growing and yet the net flows into the total, the alternatives bucket is pretty modest. Laurence D. Fink: Yes. Glenn P. Schorr – International Strategy & Investment Group LLC: Less than $300 million this quarter, now I don’t know if that’s a – some are growing, some are shrinking thing, or is it – the technical part of the question is, if you raised a lot, but have not deployed the capital, does it show up as a flow or does it show up as a flow when you get – my question is commitment versus funding? Laurence D. Fink: We do not put commitment in our AUM bucket, some firms do. So, as Gary said in his speech, we did raise a little over $1.3 billion in commitments. Over the course of the year, we raised about $8.5 billion of commitments and we funded approximately 1.8 of it. That is a big change. We also – and we mentioned this in the first quarter and we’re still doing it. We’re actually monetizing some of our alternative products. So you’re seeing our commitments grow, but we’re not – but we haven’t invested in that, and yet, you’re seeing on the same time, we are monetizing some of our alternatives, because of the success of the strategies and we’re giving back the capital. Gary S. Shedlin: So Glenn, it’s Gary. I would say one way to think about it is the return of capital hits the flows immediately and this quarter that was roughly $925 million thereabouts. And we were basically able to raise new commitments of $1 billion. So over the long-term, the new $1 billion that we’ve raised will obviously replace the $900 million that we just paid out. but unfortunately, it takes some time to basically invest the money over the… Laurence D. Fink: Well, we take the more conservative approach the way we identify those with the asset raise. Gary S. Shedlin: So Larry’s point is that of the $8 billion plus that we’ve raised since 2013, about $1.5 billion of that has effectively hit flows, meaning it has been invested and the dry powder or the $6.5 billion or $6.7 billion will hit flows over time as it’s invested. Laurence D. Fink: But we are probably in more dialogue with more clients on our alternative space than we ever have been in the history of the firm. So we like where we’re positioned, but also we like the fact that we can monetize good successful strategies for our clients.

Your next question will come from the line of Marc Irizarry with Goldman Sachs. Please go ahead. Laurence D. Fink: Hey, Marc. Marc S. Irizarry – Goldman Sachs & Co.: Hey, Larry. Just following on the alternatives question, the performance fee is always tough to get our arms around, the alternatives performance. But can you give us some sense maybe of what kind of embedded gains you have in some of the portfolios that you’re harvesting, and maybe, what that means for the outlook? And then I guess just broadly across the alternatives platform, how is performance holding up there? Thanks. Laurence D. Fink: I’ll let Gary answer that. Gary S. Shedlin: So Marc, as you know, we obviously don’t take the approach to economic net income that some of the pure play alternative managers do. so as we effectively see gains building up, which trigger accruals of, if you will embedded performance fees. We fully reserve for that going forward until they become permanent and no longer subject… Laurence D. Fink: They don’t report us. Gary S. Shedlin: So that’s not in our P&L and frankly, we don’t really disclose those as a matter of course. I think obviously, you saw performance fees were up 29% year-over-year. I think the important thing to note for us is very broad based. So it’s not a single fund that is basically driving that, it is a very deep. The breadth of the platform is evident in the fact that it’s when you see the results, it’s lots and lots and lots of different funds. Though it was clear that this particular quarter, we had a number of annual locks, meaning that they lock annually as opposed to quarterly, and we benefitted from a much stronger performance in this 12-month lock period than we did in the prior year. But broadly speaking, I think we’re feeling very happy with the performance of the alternatives platform and the performance fees are coming through. Laurence D. Fink: And we are, as I said Marc, some great opportunities we have, I mentioned in the speech, in the infrastructure space, where we think this is going to be a great driver in the future for us and our clients. And so we have great opportunities in front of us across the alternative space, Rob Kapito and team and Charlie have spent a lot of time in a quietly rebooting our whole alternative platform under Matt Botein and Andy Stewart, and it’s been in the short-term, we’re starting to see real tangible results. Marc S. Irizarry – Goldman Sachs & Co.: Okay. And then Larry, just one follow-on, can you give us some – an update, if possible, on any of the asset management regulation, and maybe, specifically any update around maybe the discourse on systemic importance for asset managers? Laurence D. Fink: I wish I had something to tell you that is factual, I don’t. We don’t know anything more than what you’ve been reading in the newspapers. Under Dodd-Frank, banks, anybody related to Dodd-Frank, whether it’s SIFI, or anything. we’re not allowed to have a dialogue, it is called lobbying, and it has to be publicly revealed that we’re lobbying. So there is not, there is – you don’t have the transparency of the process at all. this is very unusual. Any other type of world creation in Washington, there’s always a process of dialogue and this was explicitly prohibited in the law of Dodd-Frank. And so we don’t know anything more than what we read, and unfortunately, what we read, sometimes we believe there are leaks. And so it’s a pretty inappropriate process from our perspective. But our job is a constructive participant in this. We have been occasionally asked to provide information to various different regulators worldwide on different things that they may be studying. It’s a one-directional approach. we provide information and we get very little back and that’s obviously what the laws say. So I don’t know anything more, but what I’d like to do is give you some of how we think about asset managers and regulatory oversight. We calculated BlackRock, there’s $225 trillion in global financial assets. Assets that are being managed by investment firms, managed $62 trillion of the $225 trillion. So over 70% of the financial assets are owned and managed directly by the owners. And the other thing I would like to say, as you know, these are not our assets across the board. We have a contract in what we invest in and how we invest with every client. As you know, at BlackRock, we have hundreds of portfolio managers making decisions, we don’t have one CIO managing all the assets across all the spectrum going left or right or forward, and we’re – so this isn’t, we don’t take principal risk. And the last thing, I would just say related to BlackRock, if you dissect our platform, 62% of our assets or $2.8 trillion of our assets are index products. And then we manage about 32% of our assets are in active and another 6% in cash and advisory. So you think about the makeup of even as large as we look upon, much of our activities are very different than a lot of other asset managers in itself. So we believe that narrative that I just expressed is beginning to be more understood. And there was a proposal in Congress yesterday to allow for greater transparency in the process, deeper dialogues in the process and we welcome that type of activity. And we want to be a constructive participant in this dialogue.

Your next question will come from the line of Luke Montgomery with Sanford Bernstein. Please go ahead. Laurence D. Fink: Hey, Luke. Luke Montgomery – Sanford C. Bernstein & Co. LLC: Good morning. thanks, guys. So a couple of questions on retail distribution. You entered 2013, I think, with a range of new strategic initiatives. Then the results over the last year or so have been pretty impressive as indicated by net flows. But aside from some of the key products that drove that growth, you’ve touched on them multi-asset in the Core ETF series. Could you give us a sense of how successful you’ve been with the goal of really broadening that penetration with the warehouses outside of that relationship you had historically with Merrill Lynch. Laurence D. Fink: Well, it’s – I’m going to let Rob answer that. Rob, why don’t you? Robert S. Kapito: Yes. so we have grown significantly from being Merrill Lynch-centric on retail, and in fact broadened the distribution to several others in a very significantly way. And in fact, our market share at some of the larger warehouses beyond Merrill Lynch has more than doubled over the last two years. So we continue to penetrate, because we are bringing products that a lot of them do not offer, and especially, in the ETF side, we’ve seen a lot of growth in that particular area. There’s other channels that have also been developed beyond just a typical warehouse, which is the RIA channel, of which a lot of financial advisors have moved from the large broker dealers into smaller channels, and we have pretty significant penetration in the RIA channel. We also as you know, have read about our joint venture was fidelity and that has been more successful than we had originally planned. So that broadens out our effort. And one of the things that has really been successful for us is that rather than going out with individual sales forces for our ETF channel and for our mutual fund channel, over the last year, we have combined our sales force to have the largest sales force going out and talking to broaden the distribution and treating the FAs more holistically, because they own in their portfolios both mutual funds, active, index and ETF. So we can talk to them about a more holistic solution. And I don’t think that many of our competitors can claim to be able to do that. And the last thing that has also helped to broaden out the channels is that we announced a core series and are specifically developing in the ETF channel, specific ETFs for the buy-and-hold retail segment. And again, that’s something that has also broadened out our retail network and has been very successful. So many things are going from years ago when we were more Merrill Lynch-centric. now we have a much broader and deeper retail penetration in our products. Laurence D. Fink: Let me add one other thing, Luke, which I think is not fully understood by the investment community, and that is the substantial growth in mutual fund sales in Europe. As you know, banks continue to deleverage, more and more activities are going onto the capital markets, greater confidence in Europe and the Europe’s future with a huge amount of savings in Europe. And so we’re seeing much greater penetration across the board in European retail. So there are two other macro trends that are going on in Europe. one, domestic managers are losing out to the global international managers. And so across the board, you’re seeing the international investment managers picking up market share in Europe. And the last thing I would say you’re seeing a real consolidation in flows. the top 10 managers in Europe are driving almost 90% plus, maybe 110%, I don’t have the actual number in front of me, of all the flows, because with the smaller managers are actually having net outflows. but if you look at the substantial growth of $9 billion in international retail, this year-to-date that’s a high component of our growth. And I would – I should say international retail means Asia, it means Europe, it means South – Latin America. So let’s get back to my comments earlier about being in 30 countries, being local in 30 different countries. We are benefitting from that, and we believe as the world begins to look for other alternatives away from bank deposits looking for the strategies for their retirement, if you link in longevity and longevity issues, investors worldwide are looking for global advice and we’re very well positioned across that. Luke Montgomery – Sanford C. Bernstein & Co. LLC: Okay, thanks. And so my follow-up and I apologize, Larry, because I know you chafe at the comparison of your firm to Vanguard’s, but a question on the distribution strategy in retail ETFs and index markets. I think over the years… Laurence D. Fink: (Indiscernible) say I chafe. Luke Montgomery – Sanford C. Bernstein & Co. LLC: All right. Maybe I missed characterized that, but I’ve heard some warehouse distribution executives over the years lament that Vanguard products basically free ride on the warehouse distributors who have to custody their products as a courtesy to FAs and clients. So I wonder do you see any specific opportunity based on your willingness to partner more directly with those firms to pay channel access fees, etc. Does that give you an opportunity to supplant some of the market share they’ve acquired [concurrently] (ph)? Laurence D. Fink: I’ll let Rob answer that. Gary S. Shedlin: Yeah. I don’t think. Laurence D. Fink: Bob, do you chase? Robert S. Kapito: I don’t chase that at all. I view our strategies as quite different. We’re using; we’re going to expand by education, the use of how ETFs are going to benefit client’s portfolios, both institutional and retial. And I think in a product life cycle, this is very typical that you have people come in at first and you want to just get involved and then you have all the other uses of this product. Larry mentioned one for example, where we have a notice that ETFs are cheaper to use than futures. There is nobody better to go out into the marketplace and educate the community on a change like that than BlackRock is. And this is something that many of the other issuers of ETFs really don’t think about. they are out selling products. We’re selling a solution. An ETF is a part of that solution. when it comes to people that are looking for large credit portfolios, we’re able to talk to them about a holistic solution where they can get diversification, liquidity and actually have a better structured portfolio by the use of iShares than just buying the individual assets itself. We have so many different ways that we are developing the users of ETFs that a broker dealer community and the institutional community looks to us to use ETFs as part of an overall solution. So we’re not out there just pushing one product versus another product, because it’s half, we’re using this as a full part of a portfolio allocation. I think that’s very important. So it’s core investments, it’s to get more precision exposures into the marketplace and we are treating this as a significant financial instrument, not just a product that we hope to the garner more assets in. It’s a very different strategy than Vanguard is. they’re a good firm. So we’re glad to compete with them.

Your next question will come from the line of Bill Katz with Citigroup. Please go ahead. Laurence D. Fink: Hi, Bill. William R. Katz – Citigroup Global Markets Inc.: Hi, good morning, everybody. Thanks for taking my questions. Larry, just coming back to the regulatory front for a second, maybe a two-part question, one is what has been the sort of reaction from the institutional clients given the SEC discussion about possibly voting on a prime fund with a floating-rate NAV? And then a separate part of the question is, in certain early days, it looks like MiFID out of Europe is coming up with some pretty onerous shifts of views on how they are treating research versus trading, sort of wondering how you might be thinking about that dynamic as it relates to your business? Laurence D. Fink: So, we have continuously been a constructive organization working side-by-side with our regulators related to money market funds. So we’ve been continuously engaged with the SEC throughout the process. we have made a number of recommendations. we have spoken to when asked about what we think about it, we’ve had dialogues with many of the commissioners when asked, and importantly, we’re well positioned regardless of where the SEC comes out on the portfolio – on the proposal excuse me. money is moving around and like we’re going to see how this all plays out for our clients that when you think about where we are as a firm in terms of money markets. We have money market funds; we have separate accounts, or money market accounts. we have short duration bond funds. we had ETF. we have other vehicles. Money will be in motion; money will change if clients find whatever the outcome is as very restrictive, they’ll move money elsewhere. We will also see, but most importantly, we’re well positioned and I do believe the SEC has been – have been very open to conversation related to recommendations and all that. We’ll see how this all plays out. The one thing I can’t say, can’t comment on, because I don’t – we don’t know what this means related to bank deposits, necessary, bank deposits could be even a better alternative. So obviously, money market funds are – in some cases, alternative to bank deposits and the flows of money market funds is a function of what bank rates are. But a lot of people are very mindful of how much exposure they would have with any one single bank. And so I think this is why money market funds are desired by clients and this is one thing that we try to express to regulators, clients like money market funds. And we’re well positioned. We have many government funds as a separate account. So we’ll standby and hear how – what the outcome will be from the SEC related to their decision. We know as much as you do. In theory, there is going to be some decision next week and we’ll find out. Related to MiFID and RDR in terms of regulatory changes, you’re going to see consolidation with managers. Our risk management tools is a huge benefit. And I do believe our index ETF platform efficient exposures. I think you’re going to see more movement towards ETFs as a result of the MiFID RDR type of regulatory changes. So it may reduce some of our business in Europe, but it’s going to enhance the other side of BlackRock’s business. And this is another example where, by the diversity of our products, our positioning globally really differentiates us. So we are working with regulators; we are mindful of this. We are telling regulators what clients want, what they expect. But we’re pretty well positioned one way or another related to whatever the outcome is related to MiFID and RDR.

Your next question will come from the line of Ken Worthington with JPMorgan. Please go ahead. Kenneth B. Worthington – JPMorgan Securities LLC: Hi, good morning. Just one question from me. I wanted to ask about the retirement business outside the U.S. We’ve seen changes to the UK Pension Plan this year, which appears to benefit maybe asset managers over insurance companies. The EU has been underway for pension reform for I think the last four years. BlackRock has had some success in the U.S. taking market share and driving growth in the U.S. retirement business. Maybe, Larry, you could discuss what’s happening outside the U.S., and maybe, where the biggest opportunities lie for BlackRock? Laurence D. Fink: Well, there’s no question some of the rule changes in the UK is a big opening for firms like us, especially, related to the UK pension reform. As you suggested, it was really an insurance product and now it’s migrating to much more opportunities. So the defined contribution savers will have now an option. They can take and withdraw beyond the 25% tax-free lump sum. So we believe, this is a big opportunity for us, yeah. so especially, in light of how we think about investment outcomes and solutions. I mean retirement is something that we are spending a great deal of time trying to help savers and potential retirees in thinking about longevity and how their solutions are going to have to be more weighted towards equities, less annuitized products. Historically, as you suggested Ken, annuitized products were the prime driver of this, and if you are going to be living a long time, earning 2% on an annuitized product for 3% you’re just going to have to be saving a lot more money to earn the necessary pool of money you want. This is what we’re rolling out, we rolled out CoRI overseas in the UK, we’re going to continue to roll out our investment type of products to provide what I would say that solution based strategy. So we’re encouraged, we think we’re well positioned for these changes, and as you suggested, hopefully, we’re in a good position to take share.

Your next question will come from the line of Craig Siegenthaler with Credit Suisse. Please go ahead. Laurence D. Fink: Hey, Craig. Craig W. Siegenthaler – Credit Suisse Securities LLC: Hey, Larry. Good morning, guys. First, just on Target date, can you talk about how the longer-term themes of open architecture and the adoption of passes are really progressing really both in the Target date funds in the U.S.? And I’m really thinking your perspective here from both your LifePath and your GlidePath products. Laurence D. Fink: Rob, you want to answer that. Robert S. Kapito: Yes, I mean, look, it is the same trend on retirement. People have not saved enough for retirement and they have lived through too much volatility in both the equity and fixed income markets. So they are looking for an alternative for someone to manage the asset allocation and the process throughout their lifetime. So to us, the opportunity is to develop the tools to the technology and one that we have is called the CoRI Index, Cost of Retirement Index, of which we can manage through target date funds and LifePath funds, a better way to do the asset allocation as a person gets closer to retirement. Do you think there is going to be incredible opportunities for us in this way because the advice and asset allocation is something that we specialize in? The models that we have specifically target retirees and manage this process throughout their life. And it’s something where we see a lot of the sponsors are moving towards and, as Larry mentioned, a lot of DB and DC plans changing that have someone else to manage this asset allocation throughout their life. :

Your next question will come from the line of Dan Fannon with Jefferies. Laurence D. Fink: Hi, Dan. Daniel T. Fannon – Jefferies LLC: Hi, I just want to talk about fixed income. I mean, can you talk about the momentum you are seeing particularly on the institutional side? Performance was flagged as improving. I just want to talk about just kind of client dialogue, kind of outlook for growth and how that compares to in the recent periods. Laurence D. Fink: Well, having 90% of our fixed income products above their benchmarks for three years, having a lot of products that are in the top decile, if there is a conversation to be had firms are going to be talked, assess what are the possibilities? That puts us into a very good position. We’re seeing very mix types of conversation across board, we continue to see large-scale pension funds derisking as they’ve taken profits in equities, we’re seeing a lot of pension funds looking now towards looking now towards some form of immunization as they get closer to their liability or even in some cases above their liability are using bonds as a vehicle. But probably the most important key for us is our fixed income platform is more than just one product. It’s across the board where we are seeing increased activities. We are in more dialogue today than we have ever have been in fixed income, in terms of new flows. In the unconstrained area we’re just beginning to see public pension plans, migrate out of index based products into unconstrained products. So we are in some very large dialogues at this moment, we do believe one or two conversations constitute some large wins in the third quarter. We continue to be in deep dialogue with many clients related to credit, and high yield and whether it’s an insurance company who is looking and in need of some form of income to us, to assess their annuity liabilities. And we’re still seeing a large scale international investors are looking to continue to invest in dollar-based assets and expressing those investments in the form of fixed income. And so across the board we are seeing heightened interest in fixed income, even in the low interest rate environment. As I said, some of it is because they’re de-risking in equities, but some of it is because they’re seeing increased activity in their own business, like an insurance company. But I would say overall, probably overall theme I can say related to BlackRock’s future and future activities in fixed income, having the performance that we have across our platform for our platform for five years, for three years, for one year is giving us a position where we are in dialogue with many clients worldwide.

Next question will come from the line of Brennan Hawken with UBS. Brennan Mc Hawken – UBS Securities LLC: Good morning. Laurence D. Fink: Good morning. Brennan Mc Hawken – UBS Securities LLC: : Laurence D. Fink: Rob? Robert S. Kapito: I don’t know, we are willing to breakdown what is coming from one place for another. But I can also tell you that the growth that we expected is probably twice what we had anticipated. Brennan Mc Hawken – UBS Securities LLC: For core series. Robert S. Kapito: For a core series. And we have high aspirations for this, because there is a segment of the market that is really not looking for the liquidity, they’re looking for the buy-and-hold. And this is a particular segment of that Fidelity actually addresses, so we have expectations of future growth for that, but we don’t rely especially in that just upon one distribution segment, there are other distribution segments that also cater to the buy-and-hold segment. That being said, there is – the other segment, which is the institutional or the trading segment, they are looking more at the liquidity of this and the access for asset allocation in their portfolios. So what we are trying to do is have products to appeal to the right segments and we'll price those appropriately and make sure the performance of those is appropriate for those particular targets. Laurence D. Fink: I would just say also we are benefiting tremendously this year from the, and Rob said it earlier from the integration of two sales forces. And so, you asked a question related to fidelity, but we’re seeing in large activities across all the independent channels from all the major distributors, and so, I would say it’s pretty broad based, but our relationship with Fidelity is strong, growing and it’s a very good partnership.

Your next question will come from the line of Michael Carrier with Bank of America. Laurence D. Fink: Hey, Michael. Michael R. Carrier – Bank of America Merrill Lynch: Hi, Larry. Larry, just a question. If I look at the growth that you guys have generated in iShares and on the retail side, it’s been very consistent on retail, big improvement over the past couple years. And on the institutional side, I feel like you guys have the relationships. When I look at the solution products, the alternatives, it seems like the product offering is there, but the flows just aren’t as strong as on the other channel. So is it an allocation problem? I know you mentioned some on the performance side, whether it is active equity or the (indiscernible) is just not there. But just from an outlook standpoint, do you guys feel like things are in place. so over the next two years that we kind of see the same trend that we saw on the retail side, or is there something else that’s somewhat of a hindrance there? Laurence D. Fink: You are right in suggesting – in terms of iShares, our rolling 12 months were growing 10%; in retail, our rolling 12 months is about 13% growth, and our rolling 12 months in institutional is flat. And so those are actual facts. What we’re witnessing in institutional though, and if you look at our revenues are growing faster than our AUM, we are seeing a mix change. We’re growing more in alts, which is lower AUM, higher fees. And importantly, we have seen some large scale clients derisking in equities, saying going into cash. A lot of that was international and so the net result is a flat type of growth rate over the last 12 months. I’ll be bold enough to say we believe we are well-positioned in institutional and that we are going to see opportunity for growth in institutional. Whether it is in fixed income, as I said earlier about all the unconstrained conversations we’re having with large pension plans in the fixed income space, we continue to be driving more opportunities in alternatives, and I hope I can comment in the future that we’re going to continue – we’re going to start seeing opportunities in their model based equity business, because we’ve had exceptional return. But we also have opportunities in the official institution business and corporate, in the DC plans and in the financial institution group. So among those different areas, we are in more dialogue today than we have been. But I am disappointed in the net results of AUM, and I’m not upset at the revenue growth that we’re seeing in the institutional side.

Your next question will come from the line of Chris Harris with Wells Fargo. Chris M. Harris – Wells Fargo Securities LLC: Thanks. Hey, guys. So just a quick follow-up on fixed income. You guys and others in the industry, clearly benefiting from growth in unconstrained and you’ve highlighted that. I’m kind of curious if you guys think investors understand, or fully understand the risks of these funds and then maybe how sticky do you think these assets will be if things get a little bit more volatile in the market? Laurence D. Fink: Well, as things get more volatile, in other words, if you have more volatility, which probably means higher interest rates, you’re going to be happier in an unconstrained product versus an intermediate duration target like a core product. So that is what clients are looking for. so they don’t have a tethering to a benchmark that has no connection to their liability. And that is one of the big issues that’s confronting a lot of investors. Investors are worried about those are in fixed income and if they are not in fixed income for immunization purposes, they are worried about the eventuality of higher rates. We are seeing growth in our global long/short credit products, which have zero duration. So do I think clients understand what they’re getting into one 100%, clients were looking to immunize, they are looking for as long a duration as they possibly can have. So we’re not going worse –we should be clear – we’re seeing movement across fixed income, we’re seeing some people who are worried about being tethered to a benchmark that has no connection to a liability. They are either looking more towards liability matching in fixed income, or they’re seeing a movement towards unconstrained. We’re seeing some clients who remain steadfast in credit and are looking to add to credit whether it is in the form of a CLO or in the form of high yield. There is not one single behavior but you’d ask me specifically related unconstrained, I believe our investors are investing in unconstrained for a reason, for a purpose. And the dialogues that we’ve had with clients year-to-date, validate my view that they understand what they’re doing related to the associated risk and the volatility that you discussed, I think, would be attached the higher rates. And that is one of the reasons why people are looking to unconstrained. So obviously, they have to perform in that environment, and they’re going to perform much better than a tethered core product that’s tethered to a four or five-year duration.

Ladies and gentlemen, we’ve reached the allotted time for question. Mr. Fink, if you have any closing remarks. Laurence D. Fink: No, I hope everyone has a decent summer. Hopefully, the volatility doesn't begin this summer, so we can take this summer. I just want to thank all our shareholders for your interest in our company. And I would like to thank the employees of BlackRock for a good quarter. Have a good quarter. Thanks everyone.

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