BlackRock Equity Dividend

Transcription

1 BlackRock Equity Dividend

2 Table of Contents 1. Introduction to BlackRock 2. Investment Process 3. Investment Team 4. Portfolio Details Investing involves risk. Certain information contained herein has been obtained from various third party sources believed to be reliable, but we cannot guarantee its accuracy or completeness. Any information expressed herein is historical and subject to change, and is not a guarantee or an indication of future results. The information expressed herein does not constitute an offer to buy or sell any securities or derivative instruments. Please see Important Notes at the presentation for more information. SMA-1017

3 Introduction to BlackRock

4 BlackRock: Built for These Times Many investors are asking: How do I achieve the outcomes I need? BlackRock s capabilities are built around our clients greatest needs: Client focus We partner with clients and their advisers to build portfolios that reflect their objectives, risk tolerance and time horizons Broader capabilities to help improve outcomes We provide an industry-leading breadth of investment solutions across active management, quantitative, and index strategies, including our ishares funds A dedicated group Client Solutions creates customized, multi-asset solutions to address specialized needs Global insights to uncover opportunities Investment teams in over 30* countries share their best thinking to gain the insights that can help change outcomes Culture of risk management BlackRock s risk management team works with portfolio managers while remaining truly independent, so their recommendations are unbiased and portfolio managers can make more informed decisions Alternatives 1 2% Expertise across asset classes Active Fixed Income 15% Passive Equity 47% Passive Fixed Income 15% $ 4.72 trillion in assets as June 30, 2015 ¹Includes commodity and currency mandates Multi-Asset 8% Cash Management 6% Advisory 0% Active Equity 6% *As of June 30, 2015 AUM in USD as of June 30, 2015

5 Significant Presence in all Major Markets Our global footprint enables a deep understanding of local markets/ industries/ regulatory dynamics 28 primary investment centers worldwide facilitate access to major capital markets Global trading capabilities enable us to source assets and negotiate favorable terms for investors Valuable insights through access to management and perspective as an investor across the capital structure in thousands of companies worldwide Investment insight gained at a local level and shared globally maximizes investment opportunities for our clients Investment platform promotes knowledge sharing across the firm; daily calls connect investment teams, linking the insights from up to seven trading desks and over 100 portfolio teams across asset classes and geographies Over 12,000 employees, including more than 1,900 investment professionals, leverage the firm s global resources More than 65 offices in over 30 countries provide local expertise and global experience to our diverse client base North America Bloomfield Hills Boston* Charlotte Chicago Durham Montreal New York* Newport Beach* Philadelphia* Pittsburgh* Princeton* San Francisco* Seattle* Toronto Wilmington* Latin America Bogota Mexico City Santiago São Paulo* UK, Continental Europe & Middle East Amsterdam Jersey Bratislava London* Brussels Madrid Cape Towne Milan Copenhagen Munich* Douglas Paris Dubai Peterborough Dublin* Stockholm Edinburgh* Vienna Frankfurt Warsaw Geneva Zurich* Australia Brisbane Melbourne* Sydney* Asia Beijing Gurgaon Hong Kong* Seoul* Singapore* Taipei* Tokyo* Additional regional offices located throughout the continental US * BlackRock Primary Investment Center As of December 31, 2014

6 BlackRock Organization Regions Client Businesses Retail ishares Institutional BRS Americas, EMEA, APAC Strategic Product Management Investment Strategy Groups Technology Product Management Alpha Beta Multi-Asset Alternatives Business Operations Corporate Governance Aladdin BlackRock Investment Institute Trading & Liquidity Risk & Quantitative Analysis Finance Human Resources Strategy & Planning Legal & Compliance Marketing & Comms Gov t Relations Internal Audit For Illustrative Purposes Only

7 Extensive Resources Dedicated to Equities Broad platform, open access to research, and sharing of investment ideas provide alpha generation opportunities across equity portfolios Deep capabilities: fundamental, scientific active, and index on a single platform Fundamental Equity uses focused portfolio management to actively manage style-specific portfolios built on BlackRock proprietary research Scientific Active Equity seeks superior investment outcomes through a stock selection process that aims to systemically find and exploit pricing opportunities while actively managing risk and cost Index Equity uses the conscious and structured balance of risk, return, and cost that seeks to offer an efficient, low-cost way of obtaining controlled exposure to specific market segments Straight-through processing and trading systems allow portfolio managers to focus on idea generation Risk management embedded in BlackRock s culture Risk analytics and technology internally developed since firm s inception BlackRock Solutions (BRS) and Risk & Quantitative Analysis (RQA) work together to support the equity platform RQA partners with investment teams to analyze portfolio risks and improve investment process *AUM in USD as of June 30, 2015 Fundamental Global Global Allocation Large, Small, and All Cap Emerging Markets Regional Asia Pacific EAFE Europe Japan Latin America UK US Equity Large, Mid/SMID, Small Core, Growth, Value Sector-Specific All Cap and Small Cap Energy Global Science & Technology Health Sciences Natural Resources Agriculture Emerging Europe Health Sciences Energy (Global, Emerging) European Opportunities Health Sciences Market Neutral (Diversified, Pan Asia, Pan Europe, Un-levered) Equity: $2.51 trillion* Scientific Active Long Only Alpha Tilts Global International Europe US Canada Japan Australia Partial Short 130/30 Asia Europe US Canada Index Institutional Indexing Developed Markets Emerging Markets Frontier Markets Commodities Markets REITs ishares Equity Hedged Strategies Middle East & North Africa Swiss Equities UK Emerging Companies UK Equity US Large Cap US Middle Market Strategies

8 Building Wealth Through Dividend Growth

9 S&P 500 Dividend payers have outperformed non-dividend payers Dividend Payers Weather Diverse Market Conditions 30% Bull Markets Bear Markets Overall 15% 18.1% 16.0% 18.2% 20.0% 14.4% 11.7% 13.3% 13.5% 0% -0.2% -3.6% -5.7% -8.1% -15% Dividend Growers & Initators Dividend Cutters & Eliminators Equal-Weighted Universe Non-Dividend Payers Source: BlackRock. Data from 12/31/1978 through 12/31/2014. The investment universe is the 500 largest U.S. stocks by market cap. Dividend policy constituents are calculated on a rolling 12-month basis and are rebalanced monthly. Category returns are calculated on a monthly basis. Shown for illustrative purposes only. Past performance is not indicative of future returns. The Dividend Growers & Initiators category represents performance for companies which either increased or initiated their dividend distribution. The Dividend Cutters & Eliminators category represents performance for companies which either cut or eliminated their dividend distribution. The Equal Weighted category represents performance for the 500 largest U.S. stocks by market cap, calculated by assigning the same weighting (0.20%) to each constituent. The Nonpayers category represents performance for companies which do not pay a dividend. SMA-1017

10 Returns of Stocks by Dividend Policy Dividend growers and initiators have demonstrated a history of outperformance Returns of the 500 Largest U.S. Stocks by Dividend Policy Cumulative Returns Dividend Growers & Initators Equal Weighted Universe No Change Non-Dividend Payers Dividend Cutters & Eliminators Source: BlackRock. Data from 12/31/1978 through 12/31/2014. The investment universe is the 500 largest U.S. stocks by market cap. Dividend policy constituents are calculated on a rolling 12-month basis and are rebalanced monthly. Category returns are calculated on a monthly basis. Shown for illustrative purposes only. Past performance is not indicative of future returns. The Dividend Growers & Initiators category represents performance for companies which either increased or initiated their dividend distribution. The Equal Weighted category represents performance for the 500 largest U.S. stocks by market cap, calculated by assigning the same weighting (0.20%) to each constituent. The No Change category represents performance for companies which pay a dividend but have not increased nor decreased their dividend distribution. The Nonpayers category represents performance for companies which do not pay a dividend. The Dividend Cutters & Eliminators category represents performance for companies which either cut or eliminated their dividend distribution. No representation is being made that any account, product, or strategy will or is likely to achieve profits, losses, or results similar to those shown. SMA-1017

11 Investment Process

12 Investment Process: Research Screen Universe: The 500 largest U.S. stocks by market capitalization Goal: To supplement existing bottom-up fundamental research and idea generation Quality Factors Value Factors Dividend Growth Balance Sheet Strength Dividend Yield Profitability Free Cash Flow 60% Earnings Cash flow 40% Competitive Advantage Book Value Improving Trends All buy and sell decisions are based on fundamental research As of 30 June The research screen begins with a universe of the 500 largest U.S. stocks by market capitalization. The screen is rebalanced on a monthly basis and is designed to be a tool which supplements existing bottom-up fundamental research and idea generation. Constituents in the universe are assessed according to quantitative factors; 60% of the factors assess a company for Quality characteristics and 40% of the factors assess a company for Value characteristics. The universe is then scored and ranked in descending order (from the highest scoring company to the lowest scoring company). The research screen is used for illustrative purposes only and the quality & value factors listed are not an exhaustive list. SMA-1017

13 Investment Process: Research Develop Investment & Dividend Growth Thesis Company Reporting Research Financial statement analysis Examine ratios and multiples Focus on balance sheet strength Model cash flows and earnings Develop scenario and sensitivity analysis Field Research Meet with managements, customers, suppliers and competitors Evaluate strength of company management team & franchise Identify business drivers & industry trends prior to consensus Research Process Industry Research Analyze industry supply & demand and pricing trends Investigate competitive advantages and potential threats Consider regulatory environment and local markets Expand research in attractive industries to related companies As of 30 June This is the current process for selecting investments in the strategy s portfolio, in accordance with its stated investment objectives and policies. Process is subject to change based on market conditions, portfolio manager s opinion and other factors. SMA-1017

14 Rationale Underlying Our Stock Decisions Dividend growth thesis Quality company Buy Criteria Balance sheet strength - limiting downside risk Sell Discipline Adverse fundamental change Valuation / investment thesis fully realized Competition for capital better investment opportunity Shares attractively priced As of 30 June Decision making as to buy and sell criteria is subject to change based on market conditions, portfolio manager s opinion and other factors. SMA-1017

15 Summary A portfolio built on dividend growth Longevity makes outpacing inflation critical Dividend-paying stocks have outperformed during bull and bear markets Focusing on dividend growth is key to success BlackRock Equity Dividend Strategy Conservative, core holding History of dividend growth Experience through diverse markets High quality businesses + Dividend growth + Lower volatility = Conservative, core holding SMA-1017

16 Investment Team

17 Key Investment Professionals Portfolio Management Team Robert Shearer, CFA (30) Co-Head of Equity Dividend Team Portfolio Manager Tony DeSpirito (22) Co-Head of Equity Dividend Team Portfolio Manager BlackRock Equity Dividend Team Resources Kathleen Anderson (32) PM / Fundamental Analyst David Cassese, CFA (17) PM / Fundamental Analyst Scott Malatesta (22) Portfolio Strategist Kelsey DeBriyn (5) Fundamental Analyst Nikhil Uppal, CFA (11) Fundamental Analyst William Gannon (17) Portfolio Strategist Ibrahim Kanan (5) Fundamental Analyst William McSweeney (2) Fundamental Analyst Stephen Murray (19) Portfolio Strategist Seasoned team of investment professionals averaging more than 18 years of industry experience Co-heads of strategy define investment process & strategy and have ultimate decision-making authority for all buy and sell decisions Analysts are sector specialists and perform deep, bottom-up fundamental research to identify attractively valued, high quality, companies with prospects for dividend growth Team conducts ongoing risk measurement and monitoring with respect to investment, macroeconomic and valuation risks As of 30 June Brackets ( ) indicate years of experience. SMA-1017

18 Equity Dividend Investment Team Biographies Bob Shearer, CFA Portfolio Manager Robert Shearer, CFA, Managing Director, is a member of the Fundamental Equity division of BlackRock's Alpha Strategies Group. Bob Shearer is Co-Head of the Equity Dividend team and a Portfolio Manager for the BlackRock Equity Dividend Fund. Mr. Shearer also manages the BlackRock Natural Resources Trust. Mr. Shearer's service with the firm dates back to 1997, including his years with Merrill Lynch Investment Managers (MLIM), which merged with BlackRock in At MLIM, he managed the Merrill Lynch World Natural Resources Portfolio. Prior to joining MLIM, Mr. Shearer worked for David L. Babson & Company, Inc. as a Vice President and Assistant Fund Manager. He has also held the position of Vice President and Sector Manager at Concert Capital Management, Inc. and Vice President at Fiduciary Trust Company International. Mr. Shearer earned a BS degree in economics at the University of Wisconsin in 1978, an MA degree in international management at Thunderbird, School of Global Management in 1982, and an MBA degree from the University of Wisconsin in Tony DeSpirito Portfolio Manager Tony DeSpirito, Managing Director, is a member of the Fundamental Equity division of BlackRock's Alpha Strategies Group. Tony DeSpirito is Co-Head of the Equity Dividend team and a Portfolio Manager for the BlackRock Equity Dividend Fund. Prior to joining BlackRock, Mr. DeSpirito worked at Pzena Investment Management, where he served as Managing Principal, Portfolio Manager and a member of the firm s Executive Committee. Mr. DeSpirito was responsible for a suite of large-cap value, all-cap value and two hedge fund portfolios. Having managed value equity assets since 1996, Mr. DeSpirito served as a portfolio manager for the John Hancock Classic Value, PACE Large Company Value and Vanguard Windsor funds. Mr. DeSpirito earned his bachelor s degree in Economics with a concentration in Finance with summa cum laude honors from the Wharton School of the University of Pennsylvania in 1990 and his juris doctor s degree with magna cum laude honors from Harvard Law School in SMA-1017

19 Portfolio Details

20 EquityDividendModelPortfolioData Supplemental Information* Equity Sector Allocation(as of 6/30/15) 40% 30% 20% 10% Equity Dividend 0% Russell 1000 Value Index Consumer Discr. 6.8% 5.4% Consumer Staples 6.9% 6.7% Energy 9.2% 14.2% Financials 26.1% 29.6% Health Care 14.2% 11.8% Indst l 14.0% 10.2% Info. Tech. 6.6% 11.0% Materials 5.0% 3.0% Telecom. Services 1.9% 2.5% Utilities 5.1% 5.7% * The above model portfolio information is supplemental to theequitydividendcomposite disclosure slide located in the appendix. Investinginvolvesrisk. The sector allocation of the Equity Dividend model portfolio reflects the current strategy for the equity portion of a fully discretionary, unconstrained account and is not the result of actual trading. Actual portfolios may differ as a result of account size, client-imposed investment restrictions, the timing of client investments and market, economic and individual company considerations. It is not possible to invest directly in an index. Please seeimportantnotes at the end of the presentation for additional disclosure information.

21 EquityDividendModelPortfolioData Supplemental Information* Top10EquityHoldingsbyweight(asof6/30/15) Company 1.JPMorganChase&Co. 2.WellsFargo&Company 3. Citigroup Inc. 4. General Electric Company 5. Home Depot, Inc. 6. Bristol-Myers Squibb Company 7. Unitedhealth Group Incorporated 8. Suntrust Banks, Inc. 9. Pfizer Inc. 10.Merck&Co.,Inc. Sector Financials Financials Financials Industrials Consumer Discretionary Health Care Health Care Financials Health Care Health Care % Portfolio Equity Portfolio Characteristics(as of 6/30/15) Equity Dividend Russell 1000 Value Index Number of Holdings Weighted Average Market Cap Dividend Yield Weighted Harmonic Price/Book Weighted Harmonic P/E 69 $121.3 billion 2.7% 2.2x 17.1x 684 $106.4 billion * The above model portfolio information is supplemental to the Equity Dividend composite disclosure slide located in the appendix. Investing involves risk. The portfolio holdings and characteristics of the Equity Dividend model portfolio reflects the current strategy for the equity portion of a fully discretionary, unconstrained account and is not the result of actual trading. Actual portfolios may differ as a result of account size, client-imposed investment restrictions, the timing of client investments and market, economic and individual company considerations. Top 10 holdings do not represent all of the securities purchased, sold or recommended for any particular advisory client and in the aggregate may represent only a small percentage of an account's portfolio holdings. Securities are shown for illustrative purposes only and are not a solicitation to buy or sell any particular securityorinvestinaparticularsector.holdingsaresubjecttochange.itisnotpossibletoinvestdirectlyinanunmanagedindex.pleaseseeimportantnotesattheendofthepresentation for additional disclosure information. 2.5% 1.8x 16.7x

22 Equity Dividend Composite Performance Quarterly Performance(% returns, not annualized for less than one year) Yeartodate 3/31/15 6/30/15 9/30/15 12/31/15 Equity Dividend Composite(Net) Equity Dividend Composite(Gross) Russell 1000 Value Index Average annual total returns(%) through 6/30/15 1-Year 3-Year 5-Year 10-Year Since Inception(1/1/89) Equity Dividend Composite(Net) Equity Dividend Composite(Gross) Russell 1000 Value Index Historical performance(% yearly total returns) Equity Dividend Composite(Net) Equity Dividend Composite(Gross) Russell 1000 Value Index Data as of 6/30/15. Investing involves risk. Past performance does not guarantee or indicate future results. Net performance reflects deductions of the maximum annual fee of 3.00%. The performance results from January 1, 2009 to the end of the most recent calendar quarter represent the composite of all fully discretionary, unconstrained separately managed account (SMA) program accounts, including one proprietary separate account that did not pay any fees (the proprietary account ), managed in this style by the firm for at least one month. The results from August 1, 2008 to December 31, 2008 represent the performance of the proprietary account. Prior results represent the composite of a mutual fund and other fully discretionary, unconstrained institutional accounts managed in this style by the firm for at least one month. Please see Important Notes for additional performance and fees, bench-mark and composite disclosure information.

23 Important Notes Investing involves risk. The performance information shown reflects the performance of composites of accounts (or portions of accounts) that does not necessarily reflect the performance that any particular account investing in the same or similar securities may have had during the period. Actual account performance is likely to differ from the composite performance shown for a variety of reasons, including but not limited to: differences in market conditions, portfolio turnover and in the number, types, availability and diversity of securities that can be purchased; economies of scale, regulations and other factors applicable to the management of large separate accounts and mutual funds; client-imposed investment restrictions; the timing of client investments and withdrawals; the deduction of taxes; tax considerations; and other factors. Past performance is not a guarantee or a reliable indicator of future results. Net composite returns reflect the deduction of an annual fee of 3.0%. Fees typically are deducted quarterly. Due to the compounding effect of these fees, annual net composite returns may be lower than stated gross returns less stated fee. Index returns do not reflect transaction costs or the deduction of fees and it is not possible to invest directly in an index. Composite and benchmark / index performance results reflect realized and unrealized appreciation and the reinvestment of dividends, interest, and / or capital gains. Taxes have not been deducted. Gross composite returns do not reflect actual performance because they do not reflect the deduction of any investment advisory fees (described in Part II of BlackRock's Form ADV) but they do reflect commissions, other expenses (except custody), and reinvestment of earnings. Such fees that a client may incur in the management of their investment advisory account may reduce the client's return. For example, assuming an annual gross return of 8% and an annual management/advisory fee of.40%, the net annualized total return of the portfolio would be 7.58% over a 5-year period. The net of fees' performance figures reflect the deduction of actual investment advisory fees but do not reflect the deduction of custodial fees. All periods longer than one year are annualized. The Russell 1000 Value Index is a subset of the Russell 1000 Index that measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values. The Russell 1000 Index consists of the 1,000 largest companies in the Russell 3000 Index, which is comprised of the 3,000 largest U.S.-domiciled publicly traded companies by market capitalization, representing approximately 98% of the publicly-traded equity market. The firm s performance results are the product of the efforts of numerous personnel and the firm-wide global resources made available to them. The personnel and resources contributing to the firm s performance results include portfolio managers and their staff, research analysts, risk management professionals, in-house trading professionals, investment supervisory personnel, and the firm s proprietary investment processes, integrated global research systems and access to thirdparty research resources. During the periods shown, changes may have occurred in the investment team responsible, and / or the investment process utilized, for managing client accounts. Additional changes to the investment team and / or investment process may occur in the future. This material has been created by BlackRock and the information included herein has not been verified by your program sponsor and may differ from information provided by your program sponsor. This material must be preceded or accompanied by the manager profile, which you can obtain from your Financial Advisor. BLACKROCK is a registered trademark of BlackRock, Inc. All other trademarks are the property of their respective owners BlackRock, Inc. All Rights Reserved. SMA-1017

24 Historical Data: BlackRock Equity Dividend SMA Composite Calendar Year Pure Gross of Fee Composite Return (%) Net of Fee Composite Return (%) Benchmark Return (%) Number of Portfolios Composite Dispersion (%) Composite 3-Year Annualized Standard Deviation (%)** Benchmark 3-Year Annualized Standard Deviation (%)** Total Assets at End of Period (US$mn) Percentage of Firm Assets Percentage of Wrap-fee Paying Assets * 0 * ,089 * 0 * * 0 * * 94 * * 79 * Total Firm Assets (US$mn) , <1 89 3,527, , ,806 <1 90 3,495, , ,866 <1 95 3,775, , ,955 <1 99 4,307, , ,779 <1 98 4,632,820 Past Performance is not indicative of future results. Please see the following page for important disclosures related to this composite. * Performance results presented for periods prior to September 29, 2006 occurred while members of the portfolio management team were affiliated with another investment advisor ( Prior Firm ). Such members of the portfolio management team were responsible for investment decisions at the Prior Firm and the decision making process has remained intact and independent within the firm. Performance results presented for periods prior to December 1, 2010, occurred while these assets were not part of the current firm definition. See Note 10. Data shown may be subject to revisions from time to time based on availability of new information. Any such revisions are not material. **N/A 36 months of data not available for that period. GIPS-0091 SMA-1017

25 Historical Data: BlackRock Equity Dividend SMA Composite (Cont.) Notes: 1. For purposes of compliance with the Global Investment Performance Standards (GIPS ), the firm refers to the investment adviser and national trust bank subsidiaries of BlackRock, Inc., located globally, with the exception of BlackRock Kelso Capital Advisors, LLC. This definition excludes: i) BlackRock, Inc. subsidiaries that do not provide investment advisory or management services, and ii) the Absolute Return Strategies (funds-of-hedge-funds) business unit under the BlackRock Alternative Advisers platform. 2. BlackRock claims compliance with the GIPS standards and has prepared and presented this report in compliance with the GIPS standards. BlackRock has been independently verified for the periods January 1, 1993 through December 31, The verification reports are available upon request. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm s policies and procedures are designed to calculate and present performance in compliance with the GIPS standards. Verification does not ensure the accuracy of any specific composite presentation. The firm is verified annually by Deloitte & Touche LLP. 3. Portfolio returns are calculated monthly, using the Modified Dietz method. Trade date accounting has been used since the inception of the composite. The returns are expressed in US dollars and are asset-weighted since inception. 4. The benchmark index shown is the Russell 1000 Value Index. 5. Composite dispersion measures represent the consistency of a firm s composite performance results with respect to the individual portfolio returns within a composite. Composite dispersion is the square root of the sum of monthly variances of portfolio returns around the composite returns. The monthly variance is the sum of the asset-weighted squared differences between the individual portfolio returns and the composite returns. Only portfolios that have been included in the composite style for a full month are accounted for in the dispersion calculation. For composites containing only one account, a measure of dispersion is not meaningful (NM). 6. Percentage of Firm Assets are rounded to the nearest whole percent. 7. There have been no alterations of the composite due to changes in personnel or other reasons. 8. Futures and options may not be used in the portfolio to create leverage or for any other reason. 9. Gross of fee performance results are presented before management, custodial fees, broker fees and transaction costs, but net of withholding taxes (if applicable). The wrap fee covers the firm s management services and transaction costs. Net returns are calculated by subtracting the highest applicable wrap fee (3% on an annual basis, or 0.75% quarterly). 10. A complete list and description of all composites maintained by BlackRock and the related performance results are available upon request by ing [email protected]. Additional information regarding policies for calculating and reporting returns is also available upon request. BlackRock Equity Dividend SMA Composite: This investment strategy seeks long-term capital appreciation, and to a lesser extent, current income. It invests primarily in dividendpaying equity securities of large capitalization companies domiciled in the US. It also may invest in equity securities of small and medium capitalization companies and companies domiciled outside of the US. Selection of this strategy indicates a willingness to assume a risk level that at times may be greater than that of the US stock market in general. More detailed information on this strategy is available upon request. The performance results from June 1, 2008 to the end of the most recent calendar year represents the composite of all fully discretionary, unconstrained Separately Managed Account (SMA) program accounts, including one proprietary separate account that did not pay any fees (the proprietary account ), managed in this style by the firm for at least one month. The results from July 1, 2007 May 31, 2008 represent the performance of the proprietary account. Prior results represent the performance of a mutual fund managed in this style by the firm. The creation date of the composite is December 31, New accounts and accounts that have changed their investment mandate to that of the composite are included in the composite upon the completion of the first full month under management. Closed accounts and accounts that change their investment mandate are included in the composite through the completion of the last full month under management or the last full month under the old strategy. Performance presented for periods prior to September 29, 2006 occurred while members of the portfolio management team were affiliated with Merrill Lynch Investment Managers, L.P ( Prior Firm ). Such members of the portfolio management team were responsible for investment decisions for SMA program accounts managed in the Equity Dividend SMA style at the Prior Firm and the decision making process has remained intact and independent within the firm. The performance presented is for those portfolios that were brought over to the firm from the Prior Firm. In firm management s opinion, such performance composite conforms to the GIPS with regard to the portability of investment results, and, as such, all historical performance results from the Prior Firm have been linked to the on-going performance results of the composite. Performance records of the Prior Firm are available upon request. GIPS-0091 SMA-1017

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