Sponsor Program(s) Investment Strategy Relationship Team ...

[Pages:737]Thank you for selecting BlackRock to manage your separately managed account ("SMA"). Enclosed please find BlackRock's Form ADV Part 2A and Form ADV Part 2B Brochure Supplements. The "Retail Separately Managed Accounts" Brochure Supplement contains information on various BlackRock personnel who are responsible for the day-to-day management of BlackRock's retail SMA program accounts ("Relationship Managers"). Relationship Managers generally are assigned to such accounts based on several factors which may include, but are not limited to, the particular SMA program sponsor, the size of the account, the location of the client and/or its financial professional, and the investment strategy requested by the client. The "BlackRock" Brochure Supplement contains information on various BlackRock personnel who are responsible for identifying the particular investments that are appropriate for the investment strategies available to retail SMA program clients ("Strategy Managers"). The following table identifies each BlackRock investment strategy currently available in the SMA program(s) identified below, as well as the Relationship Managers and Strategy Managers that likely would be involved with providing investment advisory services to you in the event BlackRock were to manage your SMA program account in accordance with the particular investment strategy. Please review the enclosed Brochure Supplements for biographical and other information about those Managers.

Sponsor Program(s)

Morgan Stanley Smith Barney Fiduciary Services

Investment Strategy Large Cap Core

Large Cap Value

Equity Dividend

Core Bond (With BATS) Low Duration (With BATS)

Short Term Municipal Fixed Income

Long Term Municipal Fixed Income

Intermediate Municipal Fixed Income

Short Term Taxable Fixed Income

Fundamental Core Taxable Fixed Income

Intermediate Taxable Fixed Income

Global Dividend

Global Fixed Income

Relationship Team Brendan O'Neill, David Dressel, Fred Park, Joe Hurchik Brendan O'Neill, Joe Hurchik, Kerry Scharschmidt, Thomas Steiger Brendan O'Neill, Joe Hurchik, Stacy Salvatore, Kerry Scharschmidt, Thomas Steiger Dave Chendak

Dave Chendak

Todd Ciemniecki, Greg Cavallo, Bennet Scauzzo, Ryan Nielson, Michael Hanratty Todd Ciemniecki, Greg Cavallo, Bennet Scauzzo, Ryan Nielson, Michael Hanratty Todd Ciemniecki, Greg Cavallo, Bennet Scauzzo, Ryan Nielson, Michael Hanratty Vikas Goyal, Greg Cavallo, Bennet Scauzzo, Ryan Nielson, Michael Hanratty Vikas Goyal, Greg Cavallo, Bennet Scauzzo, Ryan Nielson, Michael Hanratty Vikas Goyal, Greg Cavallo, Bennet Scauzzo, Ryan Nielson, Michael Hanratty Brendan O'Neill, Thomas Steiger, Jim Manning, Joseph Hurchik

George Mishkin, Brett Buchness

Strategy Team Peter Stournaras

Peter Stournaras

Bob Shearer, Tony DeSpirito, Kathleen Anderson, David Cassese

Mike Heilbronn, Matthew Marra, Thomas Musmanno Mike Heilbronn, Matthew Marra, Thomas Musmanno Peter Hayes, William Henderson, Jr, Ted Jaeckel, Walter O'Connor, James Pruskowski

Peter Hayes, William Henderson, Jr, Ted Jaeckel, Walter O'Connor, James Pruskowski

Peter Hayes, William Henderson, Jr, Ted Jaeckel, Walter O'Connor, James Pruskowski

Mike Heilbronn, Matthew Marra, Thomas Musmanno

Mike Heilbronn, Matthew Marra, Thomas Musmanno

Mike Heilbronn, Matthew Marra, Thomas Musmanno

James Bristow, Stuart Reeve, Teun Anton Draaisma, Andrew Wheatley-Hubbard, Gary Clarke George Mishkin, Brett Buchness

Item 1 Cover Page

BlackRock Investment Management, LLC

1 University Square Drive Princeton, NJ 08540 212-810-5300

September 29, 2014

This Brochure provides information about the qualifications and business practices of BlackRock Investment Management, LLC as well as certain other affiliated registered investment adviser subsidiaries ( the "Advisers") of BlackRock, Inc. (together with its subsidiaries, "BlackRock"). If you have any questions about the contents of this Brochure, please contact BlackRock Investment Management, LLC at 212-810-5300. The information in this Brochure has not been approved or verified by the United States Securities and Exchange Commission ("SEC") or by any state securities authority. BlackRock Investment Management, LLC is registered as an investment adviser with the SEC. Registration as an investment adviser does not imply any level of skill or training. Additional information about BlackRock Investment Management, LLC is available on the SEC's website at adviserinfo..

Item 2 Material Changes

Item 2 Material Changes

No changes, deemed to be material, have been made to the Brochure since the annual updating amendment on March 28, 2014.

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Item 3 Table of Contents

Item 3 Table of Contents

Item 1 Cover Page........................................................................................................................i Item 2 Material Changes.............................................................................................................ii Item 3 Table of Contents ...........................................................................................................iii Item 4 Advisory Business ..........................................................................................................1

OVERVIEW OF BLACKROCK REGISTERED INVESTMENT ADVISERS ....................................1 ADVISORY SERVICES .................................................................................................................1

Institutional Separate Accounts and Separately Managed Accounts ..............................3 SERVICES OF AFFILIATES..........................................................................................................5 Item 5 Fees and Compensation .................................................................................................6 ADVISORY FEES..........................................................................................................................6 FEE SCHEDULES.........................................................................................................................6

US Registered Funds......................................................................................................6 Private Funds..................................................................................................................6 Institutional Separate Accounts.......................................................................................6 Private Investors Accounts..............................................................................................6 Separately Managed Accounts (Other than Private Investors Accounts)........................9 Dual Contract SMA Program Accounts...........................................................................9 TIMING AND PAYMENT OF ADVISORY FEES ..........................................................................10 OTHER FEES AND EXPENSES .................................................................................................11 Item 6 Performance-Based Fees and Side-By-Side Management ........................................12 Item 7 Types of Clients.............................................................................................................13 OVERVIEW OF CLIENTS ...........................................................................................................13 US Registered Funds....................................................................................................14 Private Funds................................................................................................................14 Other Pooled Investment Vehicles................................................................................16 Separately Managed Accounts .....................................................................................16 Item 8 Methods of Analysis, Investment Strategies and Risk of Loss .................................17 FIXED INCOME MANDATES ......................................................................................................17 EQUITY MANDATES ..................................................................................................................18 CASH MANAGEMENT MANDATES ...........................................................................................18 ALTERNATIVE MANDATES .......................................................................................................18 MULTI-ASSET MANDATES ........................................................................................................18 INDEX MANDATES.....................................................................................................................19 OTHER STRATEGIES ................................................................................................................19 Borrowing and Leverage ...............................................................................................19 INVESTMENT STRATEGY RISKS..............................................................................................19 OPERATING EVENTS ................................................................................................................26

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Item 3 Table of Contents

Item 9 Disciplinary Information................................................................................................27

Item 10 Other Financial Industry Activities and Affiliations..................................................28 AFFILIATED BROKER-DEALERS...............................................................................................28 CFTC - COMMODITY POOL OPERATOR / COMMODITY TRADING ADVISOR........................28 RELATIONSHIPS OR ARRANGEMENTS WITH AFFILIATES AND/OR RELATED PERSONS ..28 Securities Lending ........................................................................................................30 Transition Management ................................................................................................30 BlackRock Alternative Investors....................................................................................30 BlackRock Solutions? ...................................................................................................31

Item 11 Code of Ethics, Participation or Interest in Client Transactions and Personal Trading....................................................................................................................................... 32

BLACKROCK'S PERSONAL TRADING POLICY AND OTHER ETHICAL RESTRICTIONS .......33 OUTSIDE ACTIVITIES ................................................................................................................34 POLITICAL CONTRIBUTIONS....................................................................................................34 POTENTIAL CONFLICTS RELATING TO ADVISORY ACTIVITIES............................................34

Financial or Other Interests in Underlying Funds ..........................................................35 Cross Trades ................................................................................................................35 Inconsistent Investment Positions and Timing of Competing Transactions ..................35 Conflicts Relating to Portfolio Management of Various Accounts .................................36 SIDE-BY-SIDE MANAGEMENT ..................................................................................................36 MANAGEMENT OF INDEX FUNDS ............................................................................................37 CERTAIN PRINCIPAL TRANSACTIONS IN CONNECTION WITH THE ORGANIZATION OF A PRIVATE FUND AND BLACKROCK US FUND ..........................................................................37 POTENTIAL RESTRICTIONS AND CONFLICTS RELATING TO INFORMATION POSSESSED OR PROVIDED BY BLACKROCK ...............................................................................................38 Availability of Proprietary Information............................................................................38 Material Non-Public Information/Insider Trading ...........................................................38 POTENTIAL CONFLICTS THAT MAY ARISE WITH RESPECT TO SERVICES PROVIDED BY OR THROUGH VARIOUS BLACKROCK ENTITIES AND THE PNC AFFILIATES......................39 Services Provided to a BlackRock Client by other BlackRock Investment Advisers or through Investments in a BlackRock Investment Product .............................................40 BlackRock's Registered Investment Companies, Private Funds and Other Investment Products ........................................................................................................................ 40 Rule 12b-1 Plans of BlackRock US Registered Funds and Additional Payments .........42 Use of PNC Affiliates to Provide Services or Execute Transactions .............................43 Transactions in Securities, Futures and Similar Instruments ........................................43 Purchases of Unregistered Securities through a PNC Broker-Dealer ...........................44 Purchases of Securities for which a PNC Broker-Dealer is an Underwriter ..................44 Borrowing or Lending Funds or Securities and Cash Management ..............................44 Pricing and Valuation of Securities and Other Investments ..........................................45 Banking, Custodial and Related Services .....................................................................47 Considerations for ERISA Clients .................................................................................47 POTENTIAL CONFLICTS RELATING TO PRODUCTS AND SERVICES OF PNC AFFILIATES 48

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Item 3 Table of Contents

Investment Products or Services of PNC Affiliates May Compete with BlackRock Clients ...........................................................................................................................48 Investments in Service Clients of the BlackRock Group or the PNC Affiliates ..............48 POTENTIAL CONFLICTS RELATING TO BLACKROCK CLIENTS' USE OF INVESTMENT CONSULTANTS AND BLACKROCK'S RELATIONSHIP WITH PENSION CONSULTANTS.......48 BLACKROCK MAY IN-SOURCE OR OUTSOURCE TO THIRD-PARTIES .................................49 POTENTIAL RESTRICTIONS ON INVESTMENT ADVISER ACTIVITY ......................................49 Item 12 Brokerage Practices....................................................................................................51 SELECTION OF BROKERS, DEALERS AND OTHER TRADING VENUES AND METHODS ....51 Soft Dollars ...................................................................................................................52 Access Fees Paid to, and Discounts Provided by, ECNs, Swap Clearing Firms and Other Trading Systems .................................................................................................53 COMPETING OR COMPLEMENTARY INVESTMENTS AND TRADE AGGREGATION.............53 DIRECTED BROKERAGE...........................................................................................................55 NON-DISCRETIONARY ACCOUNTS .........................................................................................56 CHANGES TO BLACKROCK'S BROKERAGE ARRANGEMENTS.............................................57 Item 13 Review of Accounts ....................................................................................................58 NATURE AND FREQUENCY OF CLIENT ACCOUNT REVIEW .................................................58 FREQUENCY AND CONTENT OF CLIENT ACCOUNT REPORTS............................................58 Item 14 Client Referrals and Other Compensation ................................................................59 PAYMENTS TO BLACKROCK BY A NON-CLIENT IN CONNECTION WITH ADVICE PROVIDED TO A CLIENT ..............................................................................................................................59 SOLICITATION, INTRODUCTION OR PLACEMENT ARRANGEMENTS ...................................59 SOLICITATIONS BY MLPF&S OR ITS EMPLOYEES .................................................................59 Item 15 Custody ........................................................................................................................64 Item 16 Investment Discretion .................................................................................................65 Item 17 Voting Client Securities ..............................................................................................66 Item 18 Financial Information ..................................................................................................69 GLOSSARY ................................................................................................................................ 70 BlackRock Privacy Principles..................................................................................................74

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Item 4 Advisory Business

Item 4 Advisory Business

OVERVIEW OF BLACKROCK REGISTERED INVESTMENT ADVISERS

Each BlackRock entity listed below (individually, an Adviser) is registered as an investment adviser with the SEC and is a wholly-owned subsidiary of BlackRock, Inc., a publicly traded company. Although referred to collectively throughout this Brochure as the Advisers, each Adviser is a separate and distinct company that may have differing investment capabilities and functions. The Advisers generally have common policies and procedures with respect to United States ("US") investment advisory clients and share senior management teams. This Brochure provides an overview of each Adviser listed in the table below:

BlackRock ? Advisers BlackRock Financial Management, Inc. ("BFM")

BlackRock Advisors, LLC ("BAL")

BlackRock International Limited ("BIL") BlackRock Capital Management, Inc. ("BCM") BlackRock Investment Management, LLC ("BIM")

BlackRock Fund Advisors ("BFA")

BlackRock (Singapore) Limited ("BSL") BlackRock Asset Management North Asia Limited ("BAMNAL")

BlackRock Asset Management Schweiz AG ("BAMS")3

SEC File # 80148433 80147710 80151087

80157038

80156972 80122609 80176926 80177343

80178476

In Business

Since1 10/21/1994

19 years 09/23/1994

19 years 10/04/1995

18 years

11/19/1999 14 years

09/28/1999 14 years

09/20/1984 29 years

12/02/2000 13 years

08/10/1998 15 years

6/17/20054 9 years

Regulatory Assets Under Management (as of 06/30/2014)2

Discretionary 545,684,287,388

NonDiscretionary 6,289,219,497

454,136,940,753

46,120,055,932

Total 551,973,506,885

454,136,940,753

46,120,055,932

53,447,462,471

53,447,462,471

211,180,455,897 814,146,091,323

7,971,208,436 21,521,359,108

235,817,133 109,545,067

211,416,273,030 814,146,091,323

7,971,208,436 21,630,904,176

3,936,130,414 2,620,525,704

6,556,656,118

ADVISORY SERVICES

As part of their investment management services, the Advisers collectively offer a range of investment solutions from fundamental and quantitative active management, to indexing strategies designed to gain broad exposure to the world's capital markets. Each Adviser generally provides investment management services in accordance with applicable investment guidelines and restrictions, which may include restrictions on investing in certain securities, or types of securities or other financial instruments, that are developed in consultation with the client, or in accordance with the mandate selected by the client (e.g., fixed income, cash management, equity, alternative, index or multi-asset). Each pooled investment vehicle managed or otherwise advised by an Adviser (e.g., US registered investment companies, exchange traded funds ("ETFs") and private investment funds) is managed in accordance with its investment guidelines and restrictions and is not tailored to the individualized needs of any particular fund shareholder or fund investor, and an investment in such a vehicle does not, in and of itself, create an advisory relationship between the shareholder or investor and an Adviser. The Advisers may use both an

1 "In Business" is based on each Adviser's date of incorporation or organization, as appropriate. 2 Since the other-than-annual amendment of this Brochure on June 25, 2014, certain sub-advisory agreements BAL had with Advisers located in the US expired. The regulatory assets under management for the relevant Advisers have been updated to reflect the expiration of such agreements. The regulatory assets under management reflected in this Brochure are as of June 30, 2014. 3 BlackRock Asset Management Schweiz AG is the successor adviser to BlackRock Private Equity Partners AG as of May 20, 2014. 4 BlackRock Asset Management Schweiz AG was originally incorporated on June 17, 2005 as Barclays Asset Management Schweiz AG.

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Item 4 Advisory Business

automated and/or manual processes to help ensure portfolios are managed in accordance with their stated portfolio investment guidelines and restrictions.

An overview of each Adviser and its primary focus is provided in the table below:

BlackRock - Advisers BFM

BAL BIL5 BCM BIM

BFA BSL6 BAMNAL 7 BAMS 8

Primary Focus Manages institutional equity fixed income, multi-asset and quantitative equity separate accounts, private investment funds, institutional separate accounts and US registered investment companies, and acts as a sub-adviser for institutional separate accounts, US registered investment companies, including ETFs and private investment funds.

Manages US registered investment companies focused on fixed income, cash management, money market, multi-asset and equity strategies, and acts as a sub-adviser to US registered investment companies. Manages institutional US and non-US equity, multi-asset and fixed income separate accounts, and acts as a sub-adviser for US registered investment companies, including US registered investment companies which are ETFs. Manages institutional equity and cash management separate accounts and private investment funds, and acts as sub-adviser for US registered investment companies and accounts for clients of PNC Bank, National Association, and PNC Bank, Delaware. Manages equity, fixed income, multi-asset and alternative asset institutional separate accounts, private investment funds and separately managed accounts (including "wrap fee" program accounts), and acts as a sub-adviser for institutional accounts, separately managed accounts, US registered investment companies and non-US alternative asset products. Also sponsors a separately managed account "wrap fee" program.

Manages US registered investment companies, including US registered investment companies which are ETFs, focused on fixed income, equity, cash management, multi-asset and index strategies. Also manages pooled investment vehicles. Acts as a sub-adviser for US registered investment companies, including ETFs. Manages institutional fixed income, pooled investment vehicles, government entities and agencies. Acts as a sub-adviser for US registered investment companies.

Manages government entities and agencies, institutional equities, as well as pooled investment vehicles, including ETFs. Provides real estate related investment services, which are principally related to the acquisition, disposition and supervision of management and improvement of real estate investments. Acts as a sub-adviser for US registered investment companies. Manages private equity and infrastructure private investment funds and institutional separate accounts. Engages in distribution activity in relation to non-US domiciled collective investment schemes and non-US exchange traded funds.

The Advisers' investment management services are offered (directly or indirectly through a sub-advisory arrangement with the client's primary investment adviser) to registered investment companies, single-investor funds, discretionary and non-discretionary advisory programs, commingled investment vehicles, and individuals and institutional investors through separate account management. The types of clients to which each Adviser

5 BIL is located in the United Kingdom and authorized by the Financial Conduct Authority of the United Kingdom. In some cases, laws, rules and regulations applicable to BIL may differ from those described generally herein. Accordingly, BIL may have separate policies and procedures in support of such laws, rules and regulations.

6 BSL is located in Singapore and licensed by the Monetary Authority of Singapore. In some cases, laws, rules and regulations applicable to BSL may differ from those described generally herein. Accordingly, BSL may have separate policies and procedures in support of such laws, rules and regulations.

7 BAMNAL is located in Hong Kong and licensed by the Securities and Futures Commission and Mandatory Provident Fund Schemes Authority of Hong Kong. In some cases, laws, rules and regulations applicable to BAMNAL may differ from those described generally herein. Accordingly, BAMNAL may have separate policies and procedures in support of such laws, rules and regulations.

8 BAMS is located in Switzerland and registered as management company with the Swiss Financial Market Supervisory Authority. In some cases, laws, rules and regulations applicable to BAMS may differ from those described generally herein. Accordingly, BAMS may have separate policies and procedures in support of such laws, rules and regulations.

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