Ladies and gentlemen, thank you for standing by and welcome to the KKR Second Quarter 2016 Earnings Conference Call. During today's presentation, all parties will be in a listen-only mode. Following management's prepared remarks, the conference will be open for questions. As a reminder, this conference is being recorded. I will now hand the call over to Craig Larson, Head of Investor Relations for KKR. Craig, please go ahead.

Thanks, Tanya. Welcome to our second quarter 2016 earnings call. Thank you for joining us. As usual, I'm joined by Bill Janetschek, our CFO; and Scott Nuttall, Global Head of Capital and Asset Management. We'd like to remind everyone that we'll refer to non-GAAP measures on the call which are reconciled to GAAP figures in our press release, which is available on the Investor Center section of kkr.com. This call will also contain forward-looking statements which do not guarantee future events or performance. Please refer to our SEC filings for cautionary factors related to these statements. And like previous quarters, we've also posted a supplementary presentation to our website, which we'll be referring to a number of times over the course of the call. This morning, we reported our second quarter results. Of note, we reported second quarter economic net income of $249 million, which equates to $0.23 of after-tax economic net income per unit and after-tax total distributable earnings of $508 million. We've again announced our $0.16 per unit distribution and on the buyback front. In total over the almost nine months since we announced our $500 million authorization, we repurchased and cancelled 33.9 million units and have about $60 million remaining under the authorization. And when we look at our payout ratio over these last three quarters, so looking at our distributions together with the buyback activity, our payout ratio actually exceeds 100% over this timeframe. If you can turn to page two of the presentation, the page highlights the main themes in our business that we'll be expanding on over the next 15 or 20 minutes. First, this was a strong distributable earnings quarter given our monetization activity. And as noted on the page, the $508 million figure is the third-highest distributable earnings quarter we've had as a public company. Second, we continue to have success from a fundraising standpoint. Our AUM has increased 14% on a year-over-year basis, driven by the $34 billion of gross inflows over this period. And finally, we believe we are exceptionally well-positioned in this market environment. Fundamentally, having more dry powder than we've had at any point in our history to invest behind our ideas during volatile markets will be, we believe, a very good thing for our firm over the long term. And with that, I'll turn it over to Bill.

Thanks, Craig. To set the stage for our results, I'll start with our performance. As you can see on page three of our supplement, we had strong investment performance both on a quarterly and year-to-date basis across our carry-paying funds. Year-to-date, our three key flagship PE funds – NAXI, Asia II and Europe III – outperformed relative benchmarks by 200 basis points to 1,900 basis points. Overall, our private equity portfolio was up 4.5% in the quarter with the private portfolio contributing 6% growth and public security contributing 3%. Within real assets, our Real Estate and Infrastructure Funds continue to perform and EIGF was up 10% in the quarter as underlying commodity prices rebounded. Shifting to Alternative Credit, our benchmark Special Sits and Mezz funds trailed both credit indices in the quarter, while Lending Partners II continued to perform. Focusing on total segment financials, management, monitoring and transaction fees were $262 million, with management fees exceeding $200 million in the quarter for the first time. Year-over-year, management fees were up 12%, reflecting our fee-paying AUM growth. Performance income in the quarter was $329 million, up significantly over last quarter. Strong unrealized marks coupled with the pronounced level of realization activity across a large number of our portfolio of investments were the key contributors to this increase. Page four highlights our realization activity. In total, realization event at 10 portfolio companies drove a 200% increase in cash carry compared to last quarter. On a blended basis, these exits were done at 3.2 times our cost, an IRR of 19% and were diversified across geographies and type of exits. Shifting to investment income, we had a strong realization quarter driven primarily by a few of the same names that contributed to carry. Exits in Walgreens and HCA in particular drove the realized…

And Tanya, before we turn it directly over to you, if we could ask everyone just to please limit themselves to one question and a follow-up. We do have quite a long list of folks on the queue. And with that, we're ready for questions, Tanya.

Certainly. And our first question comes from Glenn Schorr of Evercore. Your line is open, Glenn.

Hi. Thanks. Not sure if I missed it, but you noted all those post-2Q monetization activity. Did you mention the distributable earnings associated with it?

What we did highlight is based upon those transactions and assuming that they all do close, that is going to drive roughly about $250 million of distributable earnings in the second half of 2016.

Okay. Awesome. Thanks. And the other one was I wanted a little more color on your comments about the debt and preferred issuances. You mentioned wanting greater liquidity and flexibility. You seem to have a lot. So maybe expand on that or maybe just help us think through where you draw the line of how much is an offer. Is this just an ongoing you'll build it and you want to keep a cap, let's say, $1 billion of pure liquidity?

Well, Glenn, it's going to ebb and flow. As I mentioned, we started the quarter at $1.5 billion. We had nice monetizations and so that's $1.9 billion. During the quarter, we did take the opportunity to top up that perpetual preferred. We originally did something of $355 million and we added another one $145 million to get that up to the $500 million. We like liquidity in this type of environment. And to the extent that there's going to be dislocations, we want to have the ability to have that cash to exit on those types of opportunities. Keep in mind, the cash is probably one of the best hedges you could possibly have. And so, I wouldn't say that we're going to continue to grow that dollar amount continually, but keep in mind that as we sell investments and redeploy that capital back into our balance sheet, we do expect the balance sheet to grow over time. And so, cash as a percentage of that total by just default will continue to grow. Scott C. Nuttall - Member & Head-Global Capital & Asset Management Group, KKR & Co. LP: Yeah. The only other thing I'd mention, Glenn, is that if you look at the press release, you see actually the uncalled commitments we have to our underlying fund has actually doubled over the last year or so. They're about $2.6 billion now. So, we also keep an eye on that as we think about how much liquidity to have.

All right. That's fair. Thank you. Appreciate it.

And our next question comes from Ken Hill of Barclays. Your line is open.

Hi. Good morning, everyone. Scott C. Nuttall - Member & Head-Global Capital & Asset Management Group, KKR & Co. LP: Good morning.

I wanted to kind of hone in on energy here. I think last quarter, it was a pretty decent drag and this quarter, it seemed to be pretty good. So wondering kind of if you can provide some updates on how that's progressing in 3Q. And then just thinking about that exposure longer term, I mean it's not a small exposure for you now, but there seem to be a lot of interesting opportunities in the market. So, wondering if you could maybe speak to those opportunities and how you're thinking about the concentration there longer term.

Hey, Ken. This is Bill Janetschek. At a high-level energy, when you think about what that impact was on the balance sheet this quarter, it drove about $40 million of earnings. One thing we could call out is if you take a look at page 11, we actually disclosed one of our oil and gas investments and you could see that that was up roughly about 12%. This quarter, roughly $70 million. And obviously, with the rebound in commodity prices and especially how we model our investments, if you go out to where the two- and three-year forward curve was, that was up about 15%. And so, you would imagine that you could see that come through our P&L to the extent that we had that rebound in the commodity price. You are right. When you look at the balance sheet, we do have a good amount of exposure. But when you look at that total over the total size of our balance sheet portfolio, we're pretty comfortable from an asset allocation percentage to the amount that we've got in energy right now. Scott C. Nuttall - Member & Head-Global Capital & Asset Management Group, KKR & Co. LP: I'll just point to a couple other stats. Energy is about less than 2% of our global private equity portfolio, less than 4% in credit and direct energy anyway is less than 6% of the balance sheet. So on a relative to indices basis, we're actually underexposed. We did have very good quarter in Q2 and we saw some of the marks we took in Q1 bounce back pretty materially. We do have dry powder in our Energy Income & Growth Fund and we're looking for opportunities. To date, we've found a couple of things to do, but we continue to be patient as some of the opportunities actually seem to be reflecting ahead of the forward curve. And so, we're waiting for things to come back. There's a bit more, but we've got capital to be opportunistic when we see something we like.

Just to give you a number on that because Scott's right, we do have a good amount of dry powder. That number on the energy platform is in excess of $2 billion.

Okay. Appreciate the color there. The other thing I like was the UK commentary earlier on the call. I was wondering if you could maybe talk about that. In Europe, more generally, I think last quarter, you guys talked about good long-term performance in private equity but also areas like credit, real estate, infrastructure. Wondering if any of those look more appetizing, I guess, now post Brexit? Scott C. Nuttall - Member & Head-Global Capital & Asset Management Group, KKR & Co. LP: Well, I think there are a lot of interesting opportunities across Europe. I would expect UK activity to be down. In UK specifically, we're going to be cautious. We frankly don't think that valuations have come down to reflect the uncertainty in the market. There's clearly more political uncertainty in Europe, but we are finding more opportunities as we discuss last quarter to work with the banks, as an example, to help them with some of the assets that they have on their balance sheet. We think that's a big opportunity for us. We're spending time in real estate. We see opportunities in private equity on the continent in particular, so there's a significant amount of opportunity in Europe despite the market uncertainty and the political uncertainty. We're just watching valuations. It seems like valuations are a bit high so we're going to be patient. We've got a lot of dry powder to move quickly when we see something that we like.

Okay. Fair enough. Thanks for taking my questions. Scott C. Nuttall - Member & Head-Global Capital & Asset Management Group, KKR & Co. LP: Thank you.

And our next question comes from Alex Blostein of Goldman Sachs. Your line is open. Alexander Blostein - Goldman Sachs & Co.: Hey, guys. Good morning. Scott, a follow-up to your comment around expectation to keep a more meaningful portion of your deal on balance sheet going forward, should we think about kind of the payout that we've seen over the course of this quarter, so something a little south to 40% as a decent run rate as we think about the buyback going forward? Scott C. Nuttall - Member & Head-Global Capital & Asset Management Group, KKR & Co. LP: Yeah. I'm not sure I'm going to point you to the specific payout ratio on a go-forward basis, Alex. I guess let me tell you how we think about it, and appreciate the question. But if we revisit the history a little bit, last October when we announced the change in the distribution policy, we announced this $500 million authorization. We said you should expect us to use that likely over the course of 12 months. We've used about 90% in about nine months. We also said that we would be using buybacks to offset dilution and control our share count. Since that period of time, the share counts actually come down even though we used some shares for the Marshall Wace transaction. So, I would tell you that the fact that we used over 100% of our distributable earnings in the last nine months for dividends and buybacks, I would not expect that to be the norm. What I would point you to is that the statement we've made and we'll remake now is that you should expect us to control our share count over time. And so, as you model out the share count, I would just…

Our next question comes from Chris Harris of Wells Fargo. Your line is open.

Thanks. Hey, guys. The $400 million sale of assets off the balance sheet to separate accounts, I didn't quite follow that. Did that happened post Q2? I guess for the first part of the question. And then, the second part of the question is maybe you guys could talk a little bit about strategically the thought process behind that and whether it's the start of a process perhaps to simplify your balance sheet in a more significant way.

Okay. Chris, this is Bill. The transaction itself did takes place by the close of Q2. However, the proceeds weren't received by the end of Q2. And so that's why I alluded to the fact that you'll see approximately $400 million come in, in the second half of the year. And the way to think about this is, is we had assets on our balance sheet and we were fortunate enough to enter into two transactions with two separate parties, where they wanted a preferred return. But to the extent that we beat that preferred return, they were willing to give us significant profit participation above that preferred return. So, the way we look at it, we sold roughly 85% of the assets that we had on the balance sheet and some of those assets, as I mentioned, it was in private equity; it was in credit. As we've started to ramp up our growth strategy, and that would be in technology and in healthcare, we had actually invested a good amount on the balance sheet. When we had two investors that were willing to participate in those strategies, it seemed like a win-win for them and for us. And again, roughly 85% of the assets got sold with significant participation on the upside to the extent that we have performance. And I would think that as we have the balance sheet that we have and we will continue to use it strategically as we add additional assets and we come across investors who want to participate in those assets and we can work out economic arrangements that are good for them and us, we'll continue to do this. Scott C. Nuttall - Member & Head-Global Capital & Asset Management Group, KKR & Co. LP: Yeah. The second part to…

And, Chris, one more follow-up on this. It was not only a balance sheet play to the extent that there was one particular investment that was interested in healthcare and technology. In addition to transacting with us based on the balance sheet asset, they also made a primary commitment to that strategy on a go-forward basis. So it's a way for us to raise additional AUM lock-step with selling those assets.

Thanks, guys. Scott C. Nuttall - Member & Head-Global Capital & Asset Management Group, KKR & Co. LP: Thank you.

And our next question comes from Bill Katz of Citi. Your line is open.

Okay. Thanks very much. Just coming back to capital management and maybe free cash flow priorities, I mean as you look at over the next 12 months, I know you sort of hedged a little bit in terms of the go-forward payout. But how do you sort of work through where your stock is trading right now against the very strong fundamentals and sort of the perception issues that you called out in your prepared remarks versus redeployment into other businesses? And I guess the ultimate question here is why wouldn't you be buying back a ton of stock at these levels? What's the holdback here? Scott C. Nuttall - Member & Head-Global Capital & Asset Management Group, KKR & Co. LP: Thanks for the question, Bill. Look, I think – I'm not going to revisit some of the topics that I hit before. I guess from my perspective, the buyback conversation has really taken on a bit of a life of its own and I find that we're talking more about buybacks than we are about our business and how we can grow and where we see opportunity from here. So, I think that's why we're pointing you to the comment, we're not going to predict this, model our share count flat, that's what you should expect on a go-forward basis from us over time, and we're going to leave it at that for now. We clearly see opportunities. We've talked about all the different opportunities we see in the market to invest for return. You've seen the commitments we've made to our underlying funds; we want to keep liquidity for that. But over the long term, just expect our share count flat and we'll keep you updated on our performance on the balance sheet and in our funds.

Okay. Thank you for that. So then a related question then would be, is there any thought to revisit the fixed nature of the dividend, distribution, excuse me? Scott C. Nuttall - Member & Head-Global Capital & Asset Management Group, KKR & Co. LP: No change. I think if you go back to the earnings call we had last October where we announced this change in policy, we said fixed distribution, which we're underwriting over time, that could go up based on our earnings trajectory of the firm and we're going to use the capital we retain for buybacks and to invest more in what we do every day. And that's really what we've been doing. It's been heavier on the buyback for the last nine months. I think over time, you'll see it balance out more, but really no change from what we said last October.

Okay. Thank you for taking my questions, Scott. Scott C. Nuttall - Member & Head-Global Capital & Asset Management Group, KKR & Co. LP: Thank you.

Our next question comes from Brian Bedell of Deutsche Bank. Your line is open, Brian.

Thanks. Good morning, folks. And thanks for all the extra disclosure in the presentation. It's really, really good. The first question is just on the timing of the $20 billion of commitments that are not yet earning fees. You gave some good disclosure on the NAXI, but maybe just a little bit more color on sort of the timeline of when you think that might turn on. And I realize it does depend on deployment.

Sure, and you're spot on. It all depends on deployment. And when we're talking about NAXI and Americas XII, we're about, say, 75% invested in NAXI. And so, once NAXI goes from the investment period to the post-investment period, that is when we would turn on $10.5 billion of that $20 billion and you would expect that to be invested over a period of anywhere in between three and five years. As it relates to the other $10-plus billion, a lot of that is raised but has yet to be invested in the products like Special Sits II and Direct Lending II. And so, we expect the time horizon of that capital, which we have and will go from AUM to fee-paying AUM, to take place over the next two or three years.

Right. Okay. And then, just maybe the fundraising has been very strong in the first half of this year. Maybe if you can talk a little bit about what's the plan for the second half of the year from a fundraising perspective. Scott C. Nuttall - Member & Head-Global Capital & Asset Management Group, KKR & Co. LP: Sure, Brian. There's a lot of different things going on. So, we have several funds in the market still from kind of the more episodic funds. So Americas XII, you should expect to wrap up here in the second half. We're still in the market with our second real estate opportunistic fund, our second mezzanine fund which we call Private Credit Opportunities, growth equity in the technology space, various things going on in real estate credit. And then coming down the pipe, we've got global Direct Lending III and then at some point, Asia III. And you saw on the slide the very strong performance we've had in our Asia private equity platform. So a lot of things in market, a number coming. We've also got a number of things going on on the more continuously raised side of things, including our hedge fund strategies and our strategic partnership with Marshall Wace and with Nephila. And then on the leveraged credit front, a lot happening – high-yield leveraged loans, CLOs, separate accounts – so a pretty continuous process across multiple different strategies and geographies.

Okay. Just – I mean the pace has been strong in the first half. We should expect that to just moderate from the very robust pace in the second half, I would think, right? Scott C. Nuttall - Member & Head-Global Capital & Asset Management Group, KKR & Co. LP: Well, I think if you look at the last 12 months, it's been pretty equal between private market and public market, $13 billion, $14 billion each. There is some lumpiness, as you know, in the private market side in particular. So, I would expect that number is probably a bit elevated due to the Americas XII raise. But as Asia III rolls on hopefully that we can raise significant capital there as well. But I'd say it's probably a little elevated because of Americas XII. Everything else I'd say is relatively normal course.

Okay. Great. Great. Thanks so much.

And our next question comes from Devin Ryan of JMP Securities. Your line is open.

Hey. Great. Thanks. Good morning everyone. I guess just coming back to the slide deck here, performance of the major industry indices outside the U.S. is obviously challenging. Touched on the UK and Europe a bit. In Asia, which – the indices have been the hardest hit, maybe from a higher starting point, I'm just trying to get some perspective around whether you feel a sense of urgency over there just given that markets are off quite a bit. Do you capital deploy to take advantage or is it more just a mean reversion in valuations so we shouldn't really expect a big acceleration there? Scott C. Nuttall - Member & Head-Global Capital & Asset Management Group, KKR & Co. LP: Oh, it's hard to predict deployment, but I will tell you that one of the reasons we're so upbeat about the Asia platform is the performance that we've seen. You can see on slide 11 how the Asia II private equity fund, as an example, has performed relative to the MSCI Asia Pacific, so 2,600 basis points of our performance net. So what we're finding is we're seeing opportunities in private equity that really don't show up in the public markets. These are a lot of times growth equity opportunities, non-core subsidiary sales, and so we do see opportunities there. Hopefully, the valuation backdrop in the public markets will bring prices down further and give us opportunities. But we've been very focused on deploying capital in Asia where we see value and that will continue to be the case. I would just say the valuation backdrop just makes it more helpful and hopefully over time can motivate more activity once it finds a level.

Great. Thanks. And then with respect to the $0.16 quarterly distribution today against that context of $20 billion of the capital commitments not earning fees yet and obviously the commentary around the visibility there in the management fees, I mean should we think about the timing of the stair step higher in the distribution really coming on if the fees are turned on just kind of in conjunction? Or is this something that you'll evaluate at the end of the year and then think through kind of what the distribution should be? Scott C. Nuttall - Member & Head-Global Capital & Asset Management Group, KKR & Co. LP: It's more of the latter, Devin. It's something that we're going to evaluate over time. I think we're kind of thinking a bit more in a traditional corporate context and keeping an eye on any potential pass-through tax liability we're sending through our individual shareholders. So, we'll revisit that more or less annually and keep you updated.

Got it. Also thanks, guys. Scott C. Nuttall - Member & Head-Global Capital & Asset Management Group, KKR & Co. LP: Thank you.

And our next question comes from Craig Siegenthaler of Credit Suisse. Your line is open. Craig Siegenthaler - Credit Suisse Securities (USA) LLC (Broker): Thanks. Good morning. I just want to circle back on Asia II. The fund is performing really well, especially relative public markets. And I just want to see what you'd characterize as the key investing themes that have benefited your portfolio of companies, maybe differentiate that from some of the things we're seeing from the U.S. investments. Scott C. Nuttall - Member & Head-Global Capital & Asset Management Group, KKR & Co. LP: Sure. So, I'd say a few different things going on. One is that it's – as I mentioned a minute ago, I think looking at the public market, especially in places like China, really what you've got is a lot of SOE, state-owned enterprise-type companies that it's not really where we spend our time. I'd say one big theme has been for us investing in growth companies that are basically exposed to the growth of the middle class and the rise of the consumer. And were finding a lot of opportunities off the beaten track. We have a big team in China where we see those opportunities. We've also been investing. Another theme would be in areas like food safety or environmental safety. We've made several investments in things like dairy farms, pork producers, chicken producers, focused on food safety. Environmental safety has also been a big theme for us in Asia and in China, in particular. If you go across the region from there, if we go to Japan, one of the things that we've liked is the opening up of Japan to the private equity-style investing in particular. A relatively recent transaction was Panasonic Healthcare, which we bought in partnership with Panasonic. They actually rolled an interest into the buyout and then we've used that as a platform to go make acquisitions on a cross-border basis. So, we bought a business from Bayer not long ago using Panasonic as a platform for that. So, that would be another example. We also bought Pioneer's DJ equipment business not long ago, similar theme in terms of finding opportunities in Japan. And increasingly, we're spending time in places like Indonesia as well where we announced a recent transaction and we've got more in the pipeline. So again, these are not deals that you're normally going to read about. They're smaller on an average basis than a lot of what we see in the U.S. There are a lot more growth; typically a lot less leverage, if any leverage; and we're helping these companies get to the next stage of development and oftentimes, ultimately, the capital markets. I hope that's a little bit of color that's helpful.

One thing I'd add on that is when you do look at the performance of that portfolio broadly, that performance you see is very broad based. So when we look in a quarter like this, it's always nice when you see a nice percentage, a high percentage of companies that actually perform well in the quarter and they're not being reliant only on one or two specific names. The performance has been broad based. Craig Siegenthaler - Credit Suisse Securities (USA) LLC (Broker): Thanks for all the detail there. And I just have one follow-up. And you touched on this a little bit earlier, but the GP interest in Americas XII is 9.5%, which is well above sort of the other funds. I know your free cash flow generation ex the dividend is much higher now, but how do you think about how much capital to allocate in the fundraising process? Scott C. Nuttall - Member & Head-Global Capital & Asset Management Group, KKR & Co. LP: It's a good question. Look, just to give you a sense for it, that the $1 billion or so that you see in the table there, we still expect Americas XII to hit its $12 billion hard cap. And then with the balance sheet investment plus individual investments, we expect to be over $13 billion for that fund. That will impact your percentage a little bit, but we look at it in a relatively straightforward way, which is we think that it's going to generate quite attractive returns and we'd like to have some of the balance sheet exposed to that. It's part of our strategy as a firm is to own more what we do every day. And so, as we look at our asset allocation models and where we want to take the balance sheet over time, that's how we got to that $1 billion figure. We did the same thing for every strategy that we launch and we look at it on overall ROE basis. So it's the same approach we've taken to other funds and we'll continue to on a go-forward basis.

And our next question goes to Ann Dai of KBW. Your line is open, Ann. Ann Dai - Keefe, Bruyette & Woods, Inc.: Hi. Good morning. Thanks for taking my question. I'm calling in for Rob Lee. I was hoping to go back to fundraising and focus more specifically on hedge funds. So year-to-date performance in the aggregate has been not great broadly for hedge funds and we're continuing to see flow pressures. So would you be able to provide some color on how the environment has been for capital-raising in your own hedge fund-oriented strategies and the strategic partnerships and then any detail around performance in those strategies? Scott C. Nuttall - Member & Head-Global Capital & Asset Management Group, KKR & Co. LP: Sure, Ann. Happy to help. Look, clearly, the industry has been going through a relatively difficult time in getting a bit smaller and working hard to justify what it does. We do think that there is a real place for this in the portfolio, in particular, for managers that have a real competitive and differentiated advantage. In terms of the questions you've asked in terms of capital access, we have seen growth in the first half in our strategic partners. We don't disclose AUM or performance by partner, but in aggregate, we have seen growth in AUM both for the strategic partnerships that we have and Marshall Wace and Nephila, the two largest. And Marshall Wace by far is the largest partnership that we have. And also for Prisma, we've seen good fundraising on the growth side, which has been offset by some outflows. So, we feel like we're more than holding our own in this environment. I think that it is a period to watch out a bit for the industry. It's probably long-term healthy, and we just need to continue to perform and spend time with our clients and make sure that they understand the competitive advantage that we have. And so, that's how we're approaching it. I think it will be ultimately good for us long term. And we've been able to grow in aggregate through the course of the last six to 12 months. So, we're pleased with how we've been doing on a relative-to-the-industry basis.

And, Ann, just to give you a little more color on that. When you take a look at AUM that we've raised over the three-month period and six-month period, when you combine our hedge fund to fund platform, which is Prisma, plus the strategic partnerships that we have like Marshall Wace, the capital we raised this quarter was in excess of $1 billion and over the last six months with $2.5 billion. So, we are seeing inflows into the space. Ann Dai - Keefe, Bruyette & Woods, Inc.: Great. Thanks so much. Scott C. Nuttall - Member & Head-Global Capital & Asset Management Group, KKR & Co. LP: Thank you.

And our next question comes from Chris Kotowski of Oppenheimer. Your line is open, Chris. Chris Kotowski - Oppenheimer & Co., Inc. (Broker): Yeah. Good morning. I'm looking at page 13 of your press release where you have your fee-paying AUM roll forward. And I'm just trying to think about how the $46 billion in private equity would increase just with what we know. So, I guess if Fund XII turned on, you'd add $10.6 billion, you'd subtract the $1 billion that you've put in yourself, and then the step-down on NAXI is like...

Look, Chris... Chris Kotowski - Oppenheimer & Co., Inc. (Broker): So you'd end up with like $53 billion, $54 billion.

Yes. And so, the way we're thinking about it, if you're talking very specifically about NAXI and then Americas XII turning on, we think we're actually going to see and hit a $12 billion hard cap or LP money. So, as far as fee-paying AUM, you should see that number go up by $12 billion. Chris Kotowski - Oppenheimer & Co., Inc. (Broker): Okay. And then, you mentioned a tech, healthcare and venture capital kind of fund that you're working on. Are those three separate funds or is it one fund? And roughly how much from your balance sheet investments are you putting into that and how much external money do you anticipate raising?

Okay. Right now, the numbers aren't that big. But just to address the question, as it relates to TMT growth, we actually have a fund and we're raising capital for that right now. It's not showing up on the fund table yet, only for the fact that it's early stages. And so, we would expect to raise anywhere between $500 million and $750 million in that fund upon its close and once that does take place, you'll see that in the fund table. And the amount that we'll commit to that strategy is roughly going to be $150 million. Chris Kotowski - Oppenheimer & Co., Inc. (Broker): Okay.

As it relates to healthcare growth, that is not a strategy where we're raising capital from third-party investors right now, and that's the beauty of the balance sheet. We're making those investments off the balance sheet directly. I mentioned earlier, through an SMA, we have the ability now to get a commitment from an SMA to invest side-by-side with us in that healthcare space. But over time, the assumption will be that, and this will again be over time, we'll more likely raise a dedicated healthcare growth fund. Scott C. Nuttall - Member & Head-Global Capital & Asset Management Group, KKR & Co. LP: And, Chris, just on the first point you asked as it relates to NAXI and the impact of when Americas XII turns on, from a fee-paying standpoint, right now NAXI is at the full size of the committed fund. When it's in the post-investment period, it will be based off of remaining costs. So as of June 30, we had roughly $4.8 billion – $4.7 billion of remaining costs with still over $3 billion of uncalled commitments. You might see a modest decline from a fee-paying standpoint again once it enters the post-investment period. Chris Kotowski - Oppenheimer & Co., Inc. (Broker): Okay. And when I look at page nine of the presentation, there's $2 billion of deployment in the – that are pending. Is most of that in NAXI or is that spread through the funds?

It's spread throughout the funds, but the predominant number is coming from net NAXI. So, if you take a look at the top three investments that are shown on page nine, those are all going to be net NAXI investments. Chris Kotowski - Oppenheimer & Co., Inc. (Broker): Okay. And do you have an estimated time when XII turns on or...?

Hard to predict. There's a lot of ebbs and flows. Right now, I would say that based upon signed commitments, we're about, say, 80% committed with that fund. We still need to size up how much we're going to need for a reserve before we go from NAXI to Americas XII, but I would say that it would probably be conservatively something that will take place in the first half or probably first quarter of 2017. Chris Kotowski - Oppenheimer & Co., Inc. (Broker): Okay. Great. Thank you. Scott C. Nuttall - Member & Head-Global Capital & Asset Management Group, KKR & Co. LP: Thank you.

And our next question comes from Mike Carrier of Bank of America. Your line is open.

Hey, Scott. Maybe just on the performance, the private equity performance is strong overall. I think on the exits, the MOCs were strong. Yet there's a lot of macro uncertainty out there. So can you just talk about the performance on the public versus the private side? And then more importantly, just any new insight you can give on how the portfolio is performing, whether it's on like EBITDA or revenue growth, just what you guys look at. Scott C. Nuttall - Member & Head-Global Capital & Asset Management Group, KKR & Co. LP: Yeah. Sure. Happy to, Mike. It's a good question. Well, I think we've been able to see monetizations coming from a variety of different places, but in terms of the second part of your question on portfolio company performance, it's actually been quite good. So last 12 months, 7% or so revenue growth, 8% EBITDA growth. So 7% on the top line, 8% on the bottom line. If you look at that relative to the market, it's been having earnings declines year-over-year. We think there's a lot of very good things happening idiosyncratically within our portfolio based on the operational improvements we're able to make and it really has been coming from a lot of different places. So, we talked about the secondaries. We talked last quarter about some of the strategic exits that we've seen in particular on a global basis to buyers in Japan and China. And we've also been using the capital markets. So you've seen us do dividend deals, dividend recaps within the portfolio. So, I'd say it all starts with good operating fundamental performance within the portfolio and then a pretty robust bid on some strategic buyers and jumping through the capital market windows when they're open. There's been volatility, but we've seen the debt markets open. We jump through when they are and you've seen us take companies public like US Food when the IPO markets open. So, I think you see a lot of that continue. The reason that we've highlighted the 40% in public companies in the PE portfolio is we think we have a lot of access to liquidity going forward. And a good portion of our portfolio, 60% or so, is now valued in excess of 1.5 times cost over 40% in excess of 2 times cost. And so, the portfolio is quite mature. So, hopefully, that's a little bit of color that's helpful for you.

Yeah. No, it's helpful. And then, just a quick follow-up maybe for Bill. Just on the transactions that you did on the balance sheet into like separate accounts, I don't know if you can look at it and say like how much volatility did those investments create in the past? I'm just trying to figure out why those assets – what the decision was. And this could be for Bill or Scott, but when you think about capital deployment, it seems like whenever you get close to your buyback authorization – and not just you guys, but everyone, that question comes up. On the flipside, it seems like over the past three to five years, you guys have been investing in a lot of growth areas. Can you maybe just spend a little bit of time, when we think about strategic investments like Marshall Wace versus putting some commitment in Fund XII or other strategic investments in companies, just where do you see the opportunities if the buyback pace is going to be a bit slower in the near term?

Hey, Mike. This is Bill. I'll take the first question, which was a heck of a lot shorter than the second question.

Yeah.

But the punch line there is that, yeah, there is some volatility, the assets that we had on the balance sheet that we moved over to these two separately managed accounts, we mark-to-market every single quarter. I would say that when you take a look at the healthcare and the growth ones, in particular, because they're somewhat relatively new, as we've held those assets over the last 12 to 18 months, you wouldn't see a lot of volatility there. But on some of the more aged credit assets that we've had, you could see a little bit of volatility. But that honestly didn't come into any sort of thought process when we were trying to think about what to do with these assets. It just so happens that in conversations with these two investors, again, it just seemed like the right thing to do for us and for them, which is why we moved forward. Scott C. Nuttall - Member & Head-Global Capital & Asset Management Group, KKR & Co. LP: Yeah. Look, I'd say on the balance sheet deal, Mike, I'd say it was largely done just from a position of strength. We viewed it as an interesting opportunity to access more capital for the firm, both LP capital and more for the balance sheet. But the only thing in there that we've been working to reduce our exposure and I've talked about in the past, the CLO equity, but we like the assets in there, that's why we wanted to keep the upside in the transactions that we structured. For the last part of your question, the capital deployment, look, it's hard to give you a precise answer on that. We have used the balance sheet, as you pointed out, to create fee-related earnings and carry opportunity for…

Okay. Makes sense. Thanks a lot. Scott C. Nuttall - Member & Head-Global Capital & Asset Management Group, KKR & Co. LP: Thank you.

And our next question comes from Michael Cyprys of Morgan Stanley. Your line is open. Michael J. Cyprys - Morgan Stanley & Co. LLC: Hi. Good morning. Thanks for taking the question. Just to follow up on the last point on capital deployment strategy, I think you mentioned earlier cash. You view that as the best hedge in this environment. Maybe you can talk a little bit about how you're thinking about strategic M&A from the balance sheet perspective. You've done the Marshall Wace transaction, what other product or distribution gaps do you feel you have at this point that perhaps that cash could be put to use for that sort of opportunity? Scott C. Nuttall - Member & Head-Global Capital & Asset Management Group, KKR & Co. LP: Thanks, Michael. This is Scott. I'll take that one. For strategic M&A, look, I think the way we're looking at the firm is we don't feel like we need to create new legs to the stool. We created the real estate business, as an example, four or five years ago. We don't see another real estate, like another big asset class that we want to build a business in. So really now, it's about scaling what we've started. And if you look at page 14 of the supplemental materials, when you think about the size of the end markets in the infrastructure space, real estate, credit, hedge funds, these are massive spaces where our market share is still pretty low. So, I think you could see us do more tuck-in type strategic M&A. Remember a couple, few years ago, we did the Avoca acquisition in Europe which added to our leveraged credit platform. I think you could see more things like that across our different asset classes that allows us to…

And we have a question from Patrick Davitt. Your line is open.

Hey, good morning. I just have one quick one left. I think in the past, you pushed back on the idea of expecting maybe kind of significant fee earning margin improvement. When we think about the slide 13 and the big jump from Americas XII coming in, the fact that you don't have what I imagine was a pretty big headwind going from 2006 to NAXI, given some of the smaller NAXI. Why shouldn't we expect a big pop in that particularly when XII turns on?

Patrick, this is Bill. Very specifically around that, you will see margin improvement when we go from net NAXI to Americas XII only for the fact that all the costs or majority of the costs are already there. And so, you will see a big uptick in management fees and you will see margin improvement.

Fair enough. Thank you.

Thank you.

And our last question comes from Robert Lee of KBW. Your line is open. Robert Lee - Keefe, Bruyette & Woods, Inc.: Great. Thanks and thanks for taking Ann's question before. But I just have one follow-up. I know a strategic initiative for you guys going back five-plus years has been to expand your LP base along with obviously the number of strategies. So could you maybe just update us if we look at Americas XII, maybe some kind of metrics? Kind of what you're seeing in terms of mix between existing and new clients to KKR and maybe any kind of color around – and I'm sure some of the new track, like how many of your LPs now have invested in multiple products versus, say, three, four years ago? Scott C. Nuttall - Member & Head-Global Capital & Asset Management Group, KKR & Co. LP: Great. Happy to take that, Robert. So just by way of update, we now have about 950 investors across the firm and that continues to grow. When we really in earnest begin creating our marketing efforts, that number was closer to 300 or 325. So we've seen good growth. We still see a lot of opportunity for growth. The cross-sell statistic is about 1.7 products per customer. Right now, if you think about it, we've been – when you add a number of customers, you normally add them at one product each, so adding a lot of clients. We've kept that 1.7 times more or less constant as growth with existing is offset, adding the new clients. Our top 40 will average between three and four products, just to give you a sense for the opportunity ahead of us. And critically, we only have about a third of our clients in more than…

I'm showing no further questions. I'd now like to turn the call back over to management for closing remarks.

Thank you everybody for joining us. We look forward to chatting next quarter.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day.