BlackRock Global Fixed Income SMA Capabilities
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 end of the presentation for more information. SMA-0915
Introduction to BlackRock
BlackRock: Built for These Times Many investors are asking: How do I achieve the outcomes I need? Expertise across asset classes 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 Alternatives 1 2% Active Fixed Income 16% Passive Equity 45% Passive Fixed Income 16% Multi-Asset 8% Cash Management 6% Advisory 0% Active Equity 6% A dedicated group Client Solutions creates customized, multi-asset solutions to address specialized needs Global insights to uncover opportunities $ 4.51 trillion in assets as September 30, 2015 ¹Includes commodity and currency mandates 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 *As of September 30, 2015 AUM in USD as of September 30, 2015
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
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
Extensive Resources Dedicated to Fixed Income Culture of teamwork and information-sharing captures the power of BlackRock s global resources to generate alpha across fixed income portfolios Global platform driven by senior leadership Team structure facilitates sharing of local insights and ideas to benefit client portfolios Wide breadth of strategies, styles, and capabilities Broad product range across mutual funds, ETFs, commingled funds, and separate accounts Comprehensive global market coverage on a single platform Daily communication among fixed income, liquidity, equity, real estate, and credit research teams worldwide Technology platform facilitates sharing of ideas 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 fixed income platform RQA partners with investment teams to analyze portfolio risks and improve investment process Index Fixed Income Long-Only: $1.45 trillion* Institutional Indexing Aggregate Global Government Government/Credit Credit Emerging Markets MBS/CMBS/ABS Inflation-Linked International ishares Long/Short Asian Credit Capital Structure Diversified Relative Value Fixed Income Global Opportunities Global Credit Global Diversified Alpha Global Rates Total Return (Enhanced and Active) US Bond Multi-Sector (Core Strategies/Intermediate Duration) Investment Grade Corp/Long Duration Mortgages Short Duration Financial Institutions On Balance Sheet Crossover Strategic Cash Stable Value Leveraged Finance High Yield/Distressed Debt Bank Loan Distressed Debt Global/Non-Dollar Global Bond (Aggregate, Credit) Local Currency (AUD, CAD, EUR, GBP, JPY) Inflation-Linked Liability-Driven Emerging Market Debt Municipals Total Return Income Liability-Matching Crossover Strategic Cash *AUM in USD as of September 30, 2015
One Portfolio, One Client at a Time BlackRock Customized Fixed Income Solutions, combines BlackRock s expertise in Fixed Income and private portfolio management offering a consultative, comprehensive approach to helping you achieve your individual investment goals Customized Fixed Income Solutions With Customized Fixed Income Solutions, one typically delegates investment discretion to an Investment Manager, who will manage your assets according to the investment style selected. Assets are held in the client s own account, allowing for specific investment needs to be taken into consideration Personal, flexible approach Custom solutions for high-net worth clients and institutions. Dedicated Portfolio Manager Portfolio Managers available for annual in person meetings and quarterly conference calls. Disciplined investment process Access to BlackRock s institutional product line-up. Leverages BlackRock s risk management capabilities. Benefits of Customized Fixed Income Solutions Personal, flexible approach Dedicated Portfolio Manager Disciplined investment process As of 12/31/14 and is subject to change. SMA-0915
A Disciplined Investment Process BlackRock Customized Fixed Income Solutions applies a rigorous investment process to all our Separately Managed Accounts Your portfolio will be managed by experienced professionals supported by the global resources of one of the world s leading investment firms. In managing Customized Fixed Income Solutions accounts, we leverage the stringent risk management and quality-control guidelines maintained by BlackRock. Your BlackRock Portfolio Manager can work in partnership with your advisor to recommend an investment strategy tailored to your specific needs. Investment Process Investment policy and strategy committees Senior-level input and perspective go into developing investment strategy and asset allocation guidelines Investment teams The investment teams establish sector weightings and make security selections through a disciplined investment process that includes proprietary, quantitative tools and fundamental inputs Portfolio Managers Portfolio Managers implement trades across client accounts and can accommodate reasonable investment restrictions Client Portfolios Investment process as of 12/31/14 and is subject to change. SMA-0915
A Dedicated Investment Professional Consider your BlackRock Portfolio Manager to be an ongoing member of your investment team Your BlackRock Portfolio Manager will manage, monitor and service the account, making adjustments to keep your investments aligned with the strategy you have selected. You will have regular access to your BlackRock portfolio management team including quarterly conference calls and annual in person meetings. You can Expect a Strong Commitment to the Relationship, Including Risk profiling Investment strategy recommendations Ongoing fiduciary management of your portfolio Quarterly performance reporting Annual in-person meeting with your BlackRock Portfolio Manager Information as of 12/31/14 and is subject to change. SMA-0915
A Personal, Flexible Approach At BlackRock Customized Fixed Income Solutions, we partner with you to provide a consultative, holistic approach to helping you achieve your investment goals. We also understand that wealthy investors can have complex financial considerations that need to be addressed Your BlackRock Portfolio Manager will take Multiple Factors into Consideration Time horizon Investment objectives Income needs Individual tax situation Comfort level with risk Current holdings Liquidity needs and can Add Expertise on the Complex Considerations of Wealthy Investors Tax aware investing* Your BlackRock Portfolio Manager can help determine your annual tax thresholds and position your investments across your taxable and tax-exempt accounts, in order to optimize after-tax returns. Retirement and income planning Your BlackRock Portfolio Manager can combine your investment team s insight with industry-leading probability analysis software to create retirement and income solutions tailored to your goals and lifestyle, while keeping your wishes for the next generation in mind. *BlackRock does not provide tax, accounting or legal advice, and clients are advised to consult qualified professionals for such needs. SMA-0915
Tailor your Portfolio Customized Fixed Income Solutions strategies can be tailored to meet an investor s specific needs and objectives. All clients can impose reasonable investment restrictions; however, some customization requests may require investment minimums Customization Available in Fixed Income Accounts Customization Exclude issuer Exclude mortgage backed securities Governments only Social screens (corporate securities only) Minimum Credit quality Sector Duration / maturity Coupon / income State specificity Accounts less than $2mn will not have access to the services of a Preferred Portfolio Manager. Some customization requests result in higher minimums. Please contact your PPM Portfolio Manager for questions regarding minimums and customizations. SMA-0915
Investment Process
Investment Philosophy and Objective We believe superior long-term performance can be generated within the International Fixed Income universe by focusing primarily on currency rotation and secondarily on interest rate anticipation Objective: seeks total return derived primarily from capital appreciation, and secondarily, coupon interest. It generally invests in investment grade Fixed Income securities of US and foreign governments. It gains currency exposure through investment in non-us dollar denominated government securities. Government securities include securities issued or guaranteed by a government or a government agency or instrumentality. It also may invest in securities issued by certain international organizations designated or supported by governments or government agencies to promote economic reconstruction or development (including but not limited to the International Bank for Reconstruction and Development (the World Bank) and the Inter-American Development Bank). It also may invest in mutual funds and other pooled investment vehicles, which may pay fees and expenses to BlackRock that are in addition to the fees payable to BlackRock for managing the account. Selection of this strategy indicates a willingness to assume the additional risks involved with global investing, particularly currency fluctuations and changes in global interest rates. More detailed information on this strategy is available upon request. The credit rating of all the constituent markets is BBB+ or better, with the average being AA. The index is widely accepted as one of two of the industry leaders as a measurement for investors in the global government bond markets. Benchmark * (unhedged): The Citigroup World Government Bond Index is a market-capitalization-weighted benchmark that tracks the performance of the government bond markets of: Australia Finland Japan Poland Sweden Austria France Malaysia Portugal Switzerland Belgium Germany Mexico Singapore UK Canada Ireland The Netherlands Spain US Denmark Italy Norway South Africa Additional countries Brazil Czech Republic Indonesia New Zealand Sri Lanka Chile Greece India Peru Taiwan China Hong Kong Israel Philippines Thailand Columbia Hungary Korea Portugal Turkey *Source: Citigroup. Up to 10% of the portfolio can be invested in currencies outside of the index. SMA-0915
Investment Process A research intensive portfolio construction process attempts to generate superior returns with reduced volatility Country/currency weighting Top-down economic analysis Technical and momentum analysis of currencies Interest rate forecast (macro) Estimated Contribution from Different Factors Factors Ranges Currency Return 50 75% Bond Return 25 50% Security Selection 5 25% Review and Update Strategy Overall portfolio duration Determine interest rate sensitivity and establish target portfolio duration Risk management Assess credit risk, currency risk, duration risk and yield curve risk Security selection Domestic vs. off-shore issuers Individual country yield curve analysis Interest rate anticipation (country specific) Investing involves risk. The investment process discussed herein is based on the current process for selecting portfolio investments and is subject to change. SMA-0915
Global Investing Allows for Currency Diversification By investing globally, investors obtain exposure to currencies which have the potential to appreciate against the USD Top currencies by annual change in spot rate vs. the USD 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 USA 12.8% Swedish Krona 16.1% Polish Zloty 17.7% Japanese Yen 23.1% Australian Dollar 27.4% Japanese Yen 14.7% Japanese Yen 5.5% Mexican Peso 8.4% Danish Krone 4.2% USA 12.3% Mexican Peso 5.1% British Pound 13.9% Canadian Dollar 17.6% Swiss Franc 6.3% Norwegian Krone 20.3% Australian Dollar 14.0% USA 1.5% Norwegian Krone 7.4% Euro 4.2% Indian Rupee -1.97% Canadian Dollar 3.4% Polish Zloty 11.7% Norwegian Krone 14.8% USA 6.0% Canadian Dollar 15.3% Swiss Franc 10.8% Australian Dollar 0.2% Singapore Dollar 6.1% British Pound 1.9% Chinese Renmibi -2.44% Singapore Dollar -1.8% Danish Krone 11.5% Australian Dollar 11.2% Singapore Dollar 0.1% British Pound 10.8% Singapore Dollar 9.5% Swiss Franc -0.5% Swedish Krona 5.9% Swedish Krona 1.0% S. Korean Won -3.77% Australian Dollar -6.3% Euro 11.5% Danish Krone 10.6% Danish Krone -4.2% Swedish Krona 9.7% Swedish Krona 6.4% British Pound -0.5% British Pound 4.6% USA 0.3% New Zealand Dollar -5.08% Polish Zloty -7.4% Singapore Dollar 8.4% Euro 10.6% Euro -4.3% Mexican Peso 6.3% Canadian Dollar 6.2% Singapore Dollar -1.0% Canadian Dollar 2.9% New Zealand Dollar -0.9% British Pound -5.92% Norwegian Krone -10.0% USA -8.2% USA -8.3% Polish Zloty -16.8% USA -4.2% USA 1.5% Canadian Dollar -2.2% USA -0.5% Mexican Peso -1.4% Turkish Lira -8.00% Past performance is no guarantee of future results. International investing involves risks, including currency, liquidity, regulatory, political and economic. The information shown is for illustrative purposes only and is not meant to represent the performance of any particular investment. Returns shown are represented by year over year change in the spot rate of the currency indicated vs. the USD. Countries included are the currencies of the 22 government bond markets represented in the Citigroup World Bond Index plus the Mexican Peso. Excludes any currencies pegged to the USD. Source: Bloomberg SMA-0915
Country / Currency Weightings Through extensive economic, market and currency analysis, we determine the percent of the portfolio that will be invested in any one country / currency Economic and Market Variable Analysis Central Bank policies Economic fundamentals Interest rate differentials Interest rate / purchasing power parity Inflation expectations Geopolitical trends Currency/interest rate intervention Technical and Momentum Analysis of Currencies Trend analysis Medium-term Long-term Moving averages It s a tough world full of many difficult questions. More than ever, the decisions of our policymakers will make a significant impact on investment performance in the US and globally. BlackRock can help you make sense of these uncertainties to build an investment outlook that is prepared for the world ahead Who will be the next country to engage in Currency Wars? Will China have a soft landing? Will the secular trend of diversification away from the US Dollar continue? Is it safe to invest in Emerging Markets? Are the worst of the Eurozone s problems over? SMA-0915
Security Selection and Trade Execution Key factors in the security selection process 1. Withholding tax issues 2. Liquidity 3. Yield to maturity Onshore vs. offshore Issuer Security 4. Current yield 5. Structure Example: Eurozone Even though the debt of each country in the Eurozone is denominated in Euros, the level of risk (and corresponding yield) can vary greatly from country to country European 10-year yields as of 12/31/14 40 30 20 10 0 0.5% 0.8% 1.6% 2.7% 9.4% Germany France Spain Portugal Greece Source: Bloomberg. SMA-0915
Trade Execution Extensive bottom-up research on the credit quality and relative value of securities determines final security selection Credit Risk Investment in governments, gov t agencies and equivalents, quasi-govt s, and supranationals No corporates, no high-yield May add up to 10% of Emerging Markets exposure via pooled vehicle May add up to 10% of additional countries followed by benchmark Currency Risk Unhedged Limited to +/- 20% of the benchmark for nondomestic currencies Limited to +/- 30% of the benchmark for US Duration Risk Limited to +/- 30% of the benchmark Risk Management Oversight BlackRock risk and performance oversight of accounts Relative return analysis Dispersion of account returns Portfolio metrics Commonality Credit quality Benefits of Trade Execution at BlackRock Buying at an institutional level eliminates layers of expenses such as trader costs, sales person costs and inventory costs Dominant market presence and contact with multiple dealers helps seek best prices for clients Leverage expertise of full-time traders focused on individual sectors SMA-0915
Investment Team
Investment Team George E. Mishkin Jr. Director / Senior Portfolio Manager George is the Senior Portfolio Manager for BlackRock s Global Fixed Income Separately Managed Account (SMA) portfolio. In this capacity, he and his team manage USD and non-usd investment grade bonds for ultra high-net worth individuals and institutions. George joined BlackRock following the merger with Merrill Lynch Investment Managers (MLIM) in 2006. Prior to his joining MLIM, George was responsible for foreign exchange and non-dollar bond trading as well as international portfolio management at Offibank in New York for nine years. Mr. Mishkin earned a BS degree from Penn State University in 1983. Brett Buchness Vice President / Portfolio Manager Brett is a portfolio manager within BlackRock's Private Investors Fixed Income Group. He manages non-dollar, taxable, and municipal fixed income assets for institutions and high-net worth individuals. His responsibilities include the research and development of global and international fixed income trade recommendations across different mandates. He is also responsible for implementing various global, taxable, and municipal fixed income strategies in clients' accounts. Mr. Buchness' service with the firm dates back to 2007, when he joined the firm as part of BlackRock's Summer Analyst Program. He was a Portfolio Specialist in the Private Investors Fixed Income group from 2008 to 2010. Prior to his time at BlackRock, he worked on the fixed income trading desk at Stifel Nicolaus. Mr. Buchness earned a BS degree with special attainments in commerce, cum laude, in business administration from Washington and Lee University in 2008. He became a Fellow of the RSA (Royal Society for the encouragement of Arts, Manufacturers and Commerce) in 2013. In 2012, he was accepted as a Carnegie New Leader by the Carnegie Council for Ethics in International Affairs. In 2011, he was accepted into the New York Society of Security Analysts (NYSSA). * SMA-0915
Target Portfolio Details
Global Fixed Income Model Portfolio Data Geographic Allocation(as of 9/30/15) 60% 50% 40% 30% 20% 10% Global Fixed Income 0% Citigroup World Gov t Bond United States 44.6% 33.5% Europe 25.2% 31.7% Japan 10.2% 22.0% United Kingdom 10.2% 6.5% Other 9.8% 6.3% Data as of 9/30/15Investinginvolvesrisk. Model portfolio data based on current strategy for 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. The CitigroupWorldGovernmentBondIndex is composed of issues of the government markets of the United States, Japan, Germany, France, the United Kingdom, Canada, Italy, Australia, Belgium, Denmark, The Netherlands, Spain, Sweden and Austria, and measures total return performance for government bond markets with a remaining maturity of at least one year. The Index assumes no management, custody, transaction or other expenses, reflects realized and unrealized appreciation, and assumes reinvestment of dividends, interest and/or capital gains. It is not possible to invest directly in an index.
Global Fixed Income Model Portfolio Data Supplemental Information* Global Fixed Income(as of 9/30/15) Average Duration Average Maturity Average Yield to Maturity Global Fixed Income 5.5 years 6.2 years 1.50% Citigroup World Gov't Bond 7.5 years 8.6 years 1.10% *The above model portfolio information is supplemental to the Global Fixed Income SMA Composite disclosure slide located in the Appendix. Investing involves risk. Model portfolio data based on current strategy for 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. The Citigroup World Government Bond Index is composed of issues of the government markets of the United States, Japan, Germany, France, the United Kingdom, Canada, Italy, Australia, Belgium, Denmark, The Netherlands, Spain, Sweden and Austria, and measures total return performance for government bond markets with a remaining maturity of at least one year. The Index assumes no management, custody, transaction or other expenses, reflects realized and unrealized appreciation, and assumes reinvestment of dividends, interest and/or capital gains. It is not possible to invest directly in an index. The Index assumes no management, custody, transaction or other expenses, reflects realized and unrealized appreciation, and assumes reinvestment of dividends,interestand/orcapitalgains.itisnotpossibletoinvestdirectlyinanindex.
Global Fixed Income 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 Global Fixed Income Composite(Net) -3.1-2.3-1.2 0.4 Global Fixed Income Composite(Gross) -2.1-2.0-0.9 0.7 Citigroup World Gov't Bond -2.4-2.5-1.6 1.7 Average annual total returns(%) through 9/30/15 1-Year 3-Year 5-Year 10-Year Since Inception(1/1/88) Global Fixed Income Composite(Net) -4.5-4.2-1.2 2.4 5.2 Global Fixed Income Composite(Gross) -3.3-3.0 0.0 3.7 6.5 Citigroup World Gov't Bond -3.8-2.9-0.2 3.4 5.8 Historical performance(% yearly total returns) 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 Global Fixed Income Composite(Net) -2.9-5.0 1.9 5.1 4.3 4.2 6.7 11.5 4.8-8.9 Global Fixed Income Composite(Gross) -1.7-3.8 3.2 6.5 5.7 5.5 8.0 12.9 6.1-7.8 Citigroup World Gov't Bond -0.5-4.0 1.6 6.4 5.2 2.6 10.9 10.9 6.1-6.9 Data as of 9/30/15. Investing involves risk. Past performance does not guarantee or indicate future results. Please see Important Notes for additional performance and fees, benchmark and composite information.
Important Notes Past performance does not guarantee or indicate future results. The performance information shown reflects the performance of composites 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. 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 fees or expenses. The net composite returns reflect the deduction of an annual fee of 1.25%, which represents the highest maximum fee payable pursuant to any Separately Managed Account program in which the strategy currently is available. Fees are typically 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. 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 professional, investment supervisory personnel, and the firm s proprietary investment processes, integrated global research systems and access to third-party research sources. 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. For Global Fixed Income, the performance results from May 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 managed in this style by the firm for at least two months. The performance results from January 1, 2005 April 30, 2009 represent the composite of all fully discretionary, unconstrained SMA program accounts managed in this style by the firm for at least one month. The performance results prior to January 1, 2005 represent the composite of all fully discretionary, unconstrained SMA program accounts managed in this style by the firm for at least one quarter. The Citigroup World Government Bond Index is comprised of issues of the government markets of the US, Japan, Germany, France, the UK, Canada, Italy, Australia, Belgium, Denmark, The Netherlands, Spain, Sweden and Austria, and measures total return performance for government bond markets with a remaining maturity of at least one year. 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. 2015 BlackRock, Inc. All rights reserved. BLACKROCK is a registered trademark of BlackRock, Inc. or its subsidiaries in the United States and elsewhere. All other trademarks are the property of their respective owners. SMA-0915
Historical Data: BlackRock Global Fixed Income 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 2005-7.78-8.92-6.88 85 0.71 N/A N/A 137 * * 2006 6.13 4.81 6.12 85 0.53 N/A N/A 158 * * 2007 12.89 11.49 10.95 75 0.24 5.68 5.48 131 * * 2008 8.01 6.66 10.89 94 0.84 7.37 7.39 226 * * 2009 5.49 4.18 2.55 88 0.71 8.7 8.83 213 * * Total Firm Assets (US$mn) 2010 5.66 4.35 5.17 99 0.57 9.14 9.26 306 <1 3,527,898 2011 6.45 5.13 6.35 112 0.41 7.87 7.57 324 <1 3,495,787 2012 3.20 1.92 1.65 139 0.46 5.69 5.39 355 <1 3,775,033 2013-3.84-5.04-4.00 113 0.53 4.46 4.27 261 <1 4,307,669 2014-1.71-2.94-0.48 69 0.24 4.64 4.73 136 <1 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. U-GFI GIPS-0138
Historical Data: BlackRock Global Fixed Income 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 Capital Investment Corporation. This definition excludes: i) BlackRock 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 1 January 1993 through 31 December 2014. 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 Citigroup World Government Bond Index 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. No non-fee paying assets have been included in the Composite. 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 (1.25% on an annual basis, or 0.3125% quarterly). 10. A complete list and description of all composites maintained by BlackRock and the related performance results are available upon request by emailing SMAMarketing@BlackRock.com. Additional information regarding policies for calculating and reporting returns is also available upon request. BlackRock Global Fixed Income SMA Composite: This investment strategy seeks total return derived primarily from capital appreciation, and secondarily, coupon interest. It generally invests in investment grade Fixed Income Securities of US and foreign governments. It gains currency exposure through investment in non-us dollar denominated government securities. Government securities include securities issued or guaranteed by a government or a government agency or instrumentality. It also may invest in securities issued by certain international organizations designated or supported by governments or government agencies to promote economic reconstruction or development (including but not limited to the International Bank for Reconstruction and Development (the World Bank) and the Inter-American Development Bank). It also may invest in mutual funds and other pooled investment vehicles, which may pay fees and expenses to BlackRock that are in addition to the fees payable to BlackRock for managing the account. Selection of this strategy indicates a willingness to assume the additional risks involved with global investing, particularly currency fluctuations and changes in global interest rates. More detailed information on this strategy is available upon request. The performance results from May 1, 2009 to the end of the most recent calendar year represents the composite of all fully discretionary, unconstrained Separately Managed Account (SMA) program accounts managed in this style by the firm for at least two months. The performance results from January 1, 2005 April 30, 2009 represent the composite of all fully discretionary, unconstrained SMA program accounts managed in this style by the firm for at least one month. The performance results prior to January 1, 2005 represent the composite of all fully discretionary, unconstrained SMA program accounts managed in this style by the firm for at least one quarter. The creation date of the composite is December 31, 2010. 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 second 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 Global Fixed Income 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. U-GFI GIPS-0138