The document provides an outlook for the second half of 2012. It discusses that the global economy remains in a slow recovery threatened by the ongoing European crisis. The US economy is expected to continue modest growth of around 2% for the rest of the year. However, risks include the potential "fiscal cliff" facing the US and uncertainty around resolving Europe's banking and debt issues, which could trigger a global recession if not addressed. The outlook remains cautious given these geopolitical and economic uncertainties.

1. Mid-Year Outlook
What’s in Store for the Second Half of 2012
iShares Market Perspectives | July 2012

2. iSHARES MARKET PERSPECTIVES [2]
Despite another episode of intense but fleeting
Executive Summary
euphoria earlier in the year, at mid-year the global
economy is in roughly the same position as it was six
months ago—an anemic recovery threatened by a
European crisis. Coming into 2012, our view was that
there was an approximately two-thirds probability that
the global economy would continue to expand, albeit at
a below-trend pace, and a one-third probability that
Europe would be the catalyst for another crisis. As of
early June, we would stick with those odds.
Investors can take some comfort in the fact that the United States is on marginally firmer
footing and that emerging market growth should begin to stabilize in the second half of
the year as the impact of 2011’s monetary tightening wanes. That said, a number of risks
have the potential to cause a global double-dip recession:
• Europe remains the major risk. While it appears that a Greek exit is not as imminent as
some had feared back in May, the election results do not change the underlying
fundamentals. Even if Greece remains in the euro, a bolder plan for tighter fiscal
integration is proving frustratingly elusive.
• The need to recapitalize the Spanish banking system. This is now probably a bigger threat
to the European enterprise than whether or not Greece decides to remain in the euro.
Russ Koesterich,
Managing Director, • The potential “fiscal cliff” facing the United States in six months, which investors may be
iShares Chief
Investment Strategist
underestimating. Not surprisingly, there has been no progress to date on addressing
either the long-term fiscal imbalances or the massive, pending fiscal drag facing the
United States in January. Given the soft recovery, if current policy is not altered, the risk
of a US double-dip recession rises. As of this writing, while the subject is much debated,
investor behavior suggests that this risk is not currently discounted into asset prices.
In light of these realities, we believe investors are in for a rocky road and volatility will
remain elevated. We would still continue to advocate for a relatively conservative portfolio
composed of high-dividend paying stocks—including in emerging markets—and US
spread products, such as investment grade and municipal bonds.

3. iSHARES MARKET PERSPECTIVES [3]
Summer Reruns What is interesting is how narrow the differences among asset
classes have been year-to-date: most are close to where they
A specter is haunting Europe… started the year, with few producing better than mid-single
—Karl Marx digit returns.
Marx was referring to communism, not the dissolution of the While the general economic and market environments have been
European Union, but the language could apply in the current broadly in line with our outlook, we have made at least one
environment. At the end of our 2012 outlook piece (see January mid-course correction. The ever-present threat in Europe, coupled
Market Perspectives), we suggested that this was likely to be with what looked like investor complacency—no amount of
another year in which financial market fortunes would be largely rationalization justified the VIX Index in the mid-teens as recently
driven by the effectiveness, or lack thereof, of policy makers. As of as early May—caused us to adopt a more defensive posture in
the end of May, the jury is still out as to whether the European mid-April. At the time, we suggested that financial volatility was
Union can summon the necessary political will to address the likely to rise, and equity markets were facing a correction.
euro’s structural flaws.
Against that backdrop, with the market already experiencing
Despite positive growth in the United States and a few tentative a 10% correction, what are our expectations for the remainder
signs of a soft landing in China, Europe continues to represent a of the year?
significant threat to the global economy. As was the case in 2010
and 2011, marginal improvements in the global economy have Economic Outlook: 2% Growth Ad Infinitum?
been overshadowed by the threat of a disorderly Greek default
and broader fears regarding the solvency and longevity of the Absent a crisis in Europe, we would continue to expect economic
entire European Economic and Monetary Union. growth in the second half of 2012 to be broadly in line with the
first quarter—positive but subpar. In the United States that
While the early months of 2012 looked better than expected and suggests growth of around 2%, while global growth should be
recent ones worse, so far 2012 has played broadly to the scenarios roughly 3% to 3.5%.
we laid out in our 2012 outlook. The US and global economies have
chugged along at a positive, but uninspiring rate. Europe has, as In the United States, our preferred measure of economic
was expected, been a drag on global growth—with the weakness activity—the Chicago Fed National Activity Index (CFNAI)—
disproportionately evident in the south. Inflation has remained remains in the same range that has defined it since 2009. The
muted, and while rates hit a new low in early June, they have spent CFNAI has been an exceptionally reliable indicator, historically
most of the first half of the year stuck in the same range that has explaining roughly 45% of the variation in next quarter’s GDP. It
broadly defined the bond market since last September. has kept us relatively measured in our expectations for economic
growth through both the pathos of last summer and the prema-
In terms of financial markets, our expectation for 2012 was for a ture euphoria of earlier this year. Despite all the gyrations in
decent but uninspiring year for stocks, which we expected to at sentiment, the CFNAI continues to oscillate somewhere around
least outperform bonds. Within equities, we favored dividend- zero, which is consistent with GDP growth of 2% or slightly better
paying mega capitalization stocks (mega caps), smaller devel- (see Figure 1). In the absence of an exogenous shock—Europe
oped countries and emerging markets. In fixed income, we being the most likely, but not the only candidate—we would
expected interest rates to remain contained, but for municipal continue to expect the United States to grow at around 2% for
and investment grade bonds to outperform. the remainder of 2012 and into 2013.
On the whole, performance year-to-date has generally conformed to Similar to the CFNAI, we find that the Global Purchasing Manag-
that view, with the notable exception of emerging markets. Equities ers Index (PMI) provides a reasonably accurate read of near-term
are narrowly beating bonds and mega caps have outperformed both global economic activity. Here we see the same picture as in the
small and large caps. The one call which has not had much of an United States with the indicator suggesting that global growth is
impact to date is our preference for emerging markets. Year-to-date, unlikely to collapse or accelerate in the near term. The Global
EM equities have performed in-line with those in developed markets. PMI ended April at 52.2, well above its levels in 2008, early 2009
and last summer and indicative of growth, but down from the
On the bond side, we started the year with a particular focus on more robust levels of earlier in the year (see Figure 2). Absent a
US investment grade debt and a continued preference for high collapse in Europe, the global economy should be able to limp
grade municipals. So far, performance has been broadly in line along for the remainder of the year.
with our comments, with both investment grade and municipals
outperforming broader bond indices.

4. iSHARES MARKET PERSPECTIVES [4]
Even in China, the picture remains remarkably similar. Growth The ongoing global economic sluggishness begs a question: why is
disappointed in the first quarter and is likely to be soft again in growth so weak nearly three years after the end of such a brutal
the second quarter; however, Chinese leading indicators suggest recession, and how long is it likely to remain stuck in first gear?
slow growth, but no meaningful deceleration. Leaving aside the risk associated with the European chaos, the US
fiscal drag or higher oil prices, the answer is that the same
While the data out of China has been decidedly mixed and headwinds that have inhibited the recovery since 2009 remain
difficult to interpret, our best guess is that China engineers a broadly in place. Debt levels in the developed world are still too
soft landing in the back half of the year, with growth settling at high and the deleveraging process is likely to continue to exert a
around 8%. After all, China has both the motivation and the headwind for the foreseeable future. In the United States, in
means to do so. The motivation is the pending leadership particular, consumer debt levels, while lower, are still extremely
transition in the fall, for which we believe Chinese officials will high by historical standards, and are unlikely to return to a more
take whatever steps necessary to ensure a reasonably smooth sustainable level until probably 2014.
transition, including keeping growth at a respectable rate. And as
is the case with other emerging market countries—notably In addition, consumers are also struggling with stagnant wage
Brazil—China has the fiscal and monetary flexibility to provide growth, which for hourly workers is at a record low, and negative in
further stimulus. In the run-up to the transition, we would expect real terms. Even for the broader working population, income growth
additional steps, such as cuts in the reserve requirement and is barely keeping pace with inflation. One little-noticed develop-
targeted stimulus aimed at consumption, to ensure a soft landing. ment is that personal income growth has decelerated sharply over
the past 12 months. Part of the reason for this is the slowdown in
government transfer payments—direct payments such as
unemployment benefits—which are no longer supporting personal
Figure 1: Chicago Fed National Activity Index income growth to the extent they were in 2009 and 2010. In the
(2000 to Present) absence of ever-increasing largess from Washington, personal
2 income growth has decelerated from 6% year-over-year in early
1 2011 to barely 3% today (see Figure 3).
Chicago Fed National
0
In the first quarter, consumption was supported by a decline in the
Activity Index
-1
savings rate, which fell from 4.7% at the end of 2011 to 3.8% in
-2 March (see Figure 4). This drop in the savings rate helped to propel
-3 real personal consumption to a five-quarter high in the first quarter.
Given the already low level of personal savings in the United States,
-4
we would not expect this tailwind to continue, and believe personal
-5
2/00 2/02 2/04 2/06 2/08 2/10 2/12
consumption is likely to be slower for the remainder of the year.
Source: Bloomberg, as of 5/15/12.
Figure 3: United States Personal Income Growth
Figure 2: Global Purchasing Managers Index (2000 to Present)
(2004 to Present)
70 10%
Global Purchasing Managers
8%
Personal Income Growth
60 6%
Year-over-Year
4%
Index
50 2%
0%
40
-2%
-4%
30
-6%
4/04 4/06 4/08 4/10 4/12
1/00 1/02 1/04 1/06 1/08 1/10 3/12
Source: Bloomberg, as of 5/15/12. Source: Bloomberg, as of 5/15/12.

5. iSHARES MARKET PERSPECTIVES [5]
Will the United States Plunge Over the Fiscal Cliff? fiscal drag were to occur, we believe a double-dip recession
becomes much more likely. This view has recently been echoed by
A major threat to the above scenario of slow but positive growth is, the Congressional Budget Office, which now forecasts a contrac-
of course, Europe. Before addressing Europe, it is worth reiterating tion of more than 1% in the first half of next year unless current
that the United States also poses a significant, though less policy is amended.
imminent, threat to the global recovery.
The odds still favor an eleventh-hour compromise that is likely to
As has been well reported over the past several months, the United delay part or all of the fiscal drag, but this is by no means assured.
States is potentially facing the largest fiscal drag in decades. At the After all, despite widespread views that a compromise would be
end of 2012, several tax hikes and spending cuts are scheduled to reached last year, Washington failed to reach a consensus on the
hit simultaneously. The cumulative impact will be more than $600 US spending cuts, resulting in the sequester scheduled to take
billion in fiscal drag, or the equivalent of roughly 4% of GDP (see effect next year. Given that the upcoming election is likely to be
Figure 5). Given our view that under the current deleveraging trend highly bitter, and may very well increase the partisanship in both
growth in the United States is unlikely to be better than 2%, if the the House and Senate, a compromise is not certain. As of this
writing, despite all the headlines, we believe that investors are
placing a very low probability on the fiscal drag actually occurring.
This is partly evidenced by the fact that 2013 growth forecasts
Figure 4: United States Personal Savings Rate
have remained remarkably stable over the past nine months,
(2000 to Present) despite the pending fiscal drag.
10%
If in the run-up to the election a continuation of divided govern-
ment starts to appear more likely, we believe that the market will
come under pressure. At the very least, absent a clear consensus
US Personal Savings Rate
8%
coming out of the election, November and December are likely to
6% be marked by heightened volatility as investors grapple with the
odds of a last-minute compromise.
4%
2% In Europe: Greek Rage, Spanish Banks and
German Politics
0%
2/00 2/02 2/04 2/06 2/08 2/10 3/12
While investors enjoyed a temporary lull in early 2012, courtesy of
Source: Bloomberg, as of 5/15/12. the European Central Bank’s (ECB’s) massive injection of liquidity,
the focus is once again on Europe. The deepening of the Spanish
banking crisis and the uncertainty surrounding Greek solvency
are just the latest manifestations of Europe’s lingering structural
Figure 5: Cost of Federal Fiscal Policies Set to Expire in 2013 problems. While the second Greek election appears to have
Under Current Law resulted in a more market-friendly outcome, the country’s
fundamentals continue to deteriorate: the economy continues to
Dollar Value 2013
Fiscal Policy shrink, banks are still bleeding deposits, and Greece’s debt
($ Billion)
burden still appears unsustainable.
Emergency Unemployment Insurance –35
Payroll Tax Holiday –110 Going forward, there are three critical developments we’ll be
watching. First are events in Greece. Despite New Democracy’s win
Bonus Depreciation –64
on June 17 there are still uncertainties regarding Greece’s ability
Affordable Care Act (Obamacare) –46 to fulfill its obligations under the March agreement. The coalition
Bush Era Tax Cut (Top Bracket) –83 government is likely to attempt to renegotiate the terms of the
bailout. Given this scenario, there is still a significant tail risk that
Bush Era Tax Cut (Other Brackets) –198
Greece may eventually decide to exit the euro. Should that occur
Automatic Spending Cuts (Sequestration) –90 while Europe’s banking issues remain unresolved, this will raise
Total –626 the likelihood of a full-blown banking crisis. Even if an agreement
can be reached between Greece and the troika it is important to
Source: CBO, OMB, Moody’s Analytics, Dismal Scientist 5/15/12 watch the outflows from Greek banks. If the Greek banks continue

6. iSHARES MARKET PERSPECTIVES [6]
to bleed deposits, the ECB will need to provide more emergency have yet to seize the opportunity to provide a long-term credible
assistance to prevent a collapse of the Greek banking system. path. Until then, we believe that Europe will continue to be a source
of chronic stress and periodic bouts of risk aversion. If Greece cannot
Second, and an even larger threat to Europe, are the Spanish abide by the terms of its austerity package, or if the Spanish banking
banks. Spain needs to recapitalize its banking system, which is bailout proves inadequate or unwieldy, then the chronic stress is
likely to cost at least €50 billion and perhaps much more. To date, likely to erupt into a crisis.
there is no credible plan; investors are still looking for the
government to articulate the mechanism by which the banks Given these risks, how should investors consider positioning their
would be recapitalized as well as the source of the funds. portfolios going into the back half of 2012?
The final development to watch in Europe is how the political Seize the Yield
winds blow in Europe’s ultimate creditor—Germany. The Germans
are coming under increasing pressure to accept some scheme for One of the consequences of the current environment is investors
mutualizing European debt. To date, Chancellor Merkel has been should expect more volatility in the second half of the year. Europe’s
in strict opposition to this development. However, if the political lingering fiscal dilemma and the pending drama of the US budget all
climate in Germany veers toward a grand coalition between suggest that markets can advance in the second half of the year, but
Chancellor Merkel’s Christian Democrats and the opposition the ascent is unlikely to be smooth. Since the early spring, we’ve been
Socialists, she may be more inclined to entertain pooling at least expecting more equity market volatility. We believe that markets are
some of Europe’s debt obligations. Any development in this likely to remain on edge throughout the remainder of 2012.
direction would be a positive for the markets.
One potential solution to the present volatility is the equity
The net result of this uncertainty is likely to be continued stress dividend play. In addition to the yield story, dividend stocks are
in the financial system. Credit spreads have been widening in generally less volatile than the broader market. Since the
recent weeks. The pressure on the global financial system is also correction began, dividend-focused indices have generally
evident in the Global Financial Stress Index, produced by Bank of outperformed the broader averages.
America Merrill Lynch. The indicator recently rose to its highest
level since early January (see Figure 6). Recent performance is consistent with the historical pattern. In
general, dividend stocks and funds tend to be less volatile than
In summary, when we look at the overall investment climate, we the broader averages. The beta (a measure of the tendency of
don’t see another recession or a Greek exit as foregone conclusions. securities to move with the market at large) of the Dow Jones U.S.
That said, Europe is no closer to a political, economic or financial Select Dividend Index to the S&P 500 Index has historically been
resolution to its problems. The ECB’s two long-term refinancing around 0.8, meaning that for every 1% the market moves this
operations (LTROs) mitigated, but did not remove, the stress on the index typically moves around 80 basis points. Even in emerging
European banking system. While they did buy time for the politicians markets—typically a more volatile sector of the market—divi-
to arrive at a political solution to Europe’s debt problems, politicians dend stocks do tend to cushion the downside. The Dow Jones
Emerging Markets Select Dividend Index has a beta of roughly 0.8
to the broader MSCI Emerging Markets Index1. In general,
dividend stocks and funds have demonstrated muted volatility
when compared to broader indices.
Figure 6: Global Financial Stress Index
(2007 to Present)
In addition, many segments of this style are actually trading at a
3 significant discount to the broader global market, particularly
outside of the United States. The Dow Jones EPAC Select Divi-
2 dend Index, covering Europe and Asia, is currently trading for less
GFS Index Score
than 12x earnings versus a multiple of around 13.5x for the MSCI
1
World Index2. This trend is also evident in emerging markets. The
Dow Jones Emerging Markets Select Dividend Index trades at
0
less than 10x earnings versus around 11x for the broader MSCI
Emerging Markets Index. 3
-1
2/07 2/08 2/09 2/10 2/11 5/12 1
Source: Bloomberg 4/30/12.
2
Source: Bloomberg 4/30/12.
Source Bloomberg, Bank of America Merrill Lynch 5/15/12
3
Source: Bloomberg 4/30/12.

7. iSHARES MARKET PERSPECTIVES [7]
Emerging Market Stocks have tended to outperform over a one-year horizon whenever the
relative valuation is at a 20% or greater discount to developed
Our other main view on the equity side balances out the defensive tilt markets. We would therefore view current levels as an attractive
implicit in our preference for dividends. As we’ve advocated since late opportunity to add positions, particularly in Latin America, China and
last year, we would look to overweight emerging markets. While this Taiwan. As discussed above, we would also have a preference for
has not produced positive relative returns year-to-date, we’re sticking gaining our emerging market exposure through high-dividend stocks
with the call. and instruments.
The argument rests on a number of factors: a longer-term trend Sticking with Investment Grade
toward less volatility, stronger economic growth, falling inflation and
more compelling valuations. Focusing on the last two, it is worth In the fixed income space, we’ve had a preference for municipal
highlighting that emerging market inflation continues to fall, with the bonds since late 2010. This asset class has continued to do well.
notable exception of India where we remain underweight. Most of the With municipal yields still at a significant premium to comparable
larger emerging markets have witnessed a significant deceleration in Treasuries, and with little evidence of the feared meltdown in
inflation over the past six months. In China, inflation has fallen from municipal finances, we would stick with this call.
6.5% in July 2011 to 3.4% in April 2012. In Brazil, a country with a
history of struggling with high inflation, inflation has decelerated by The final theme we would emphasize would be our continued
more than 2% since September 2011 (see Figure 7). preference for US corporate bonds, particularly investment grades.
One of the many ironies of the last several years is, despite the
As we’ve discussed in the past, lower inflation in emerging markets is ongoing fiscal deterioration in the US balance sheet and the
particularly critical as equity valuations are very sensitive to inflation. continued improvement in corporate profitability, credit spreads
As inflation falls, multiples in emerging markets typically rise at a remain high by historical standards. This is particularly true of much
faster rate than for a similar drop in developed markets. of the US investment grade space, which largely sat out the risk-
driven rally earlier in the year. As a result, while investment grade
The potential for multiple expansion is arguably greater given that bonds have narrowly outperformed the Barclays U.S. Aggregate
emerging market valuations are currently low by most measures. In Index year-to-date, spreads still appear wide by any measure.
late May, the MSCI Emerging Markets Index was trading for less than
11x earnings, the bottom quintile of its historical range. Valuations Currently, the yield spread between Moody’s Baa index and the
appear even more compelling when compared to developed markets. 10-year Treasury note is approximately 340 basis points. While
Emerging markets are currently trading at a 20% discount to devel- spreads were much wider during the height of the financial crisis,
oped markets. In late 2010, emerging market stocks were trading at current levels look exceptionally wide when compared to the 20-year
less than a 10% discount (see Figure 8). Historically, emerging markets average of around 230 basis points and even more so against the
long-term average of around 185 basis points (see Figure 9).
Figure 7: Emerging Market Inflation
(2005 to Present) Figure 8: Emerging Market Relative Valuations
(2000 to Present)
10%
10%
8%
Inflation Year-over-Year
US Personal Savings Rate
6% 8%
4% 6%
2%
4%
0%
2%
-2%
-4% 0%
8/05 7/06 7/07 7/08 7/09 7/10 7/11 4/12 2/00 2/02 2/04 2/06 2/08 2/10 3/12
Brazil China Source: Bloomberg 5/24/12
Source: Bloomberg, as of 5/15/12.

8. iSHARES MARKET PERSPECTIVES [8]
It is true that we would expect spreads to be somewhat wider given the In the meantime, we expect volatility to remain elevated, partly due to
sluggish nature of the recovery. However, current levels look extreme Europe and partly due to the uncertainty surrounding US fiscal policy.
unless you believe the United States is headed back toward another In this environment, while equity markets can move higher, we would
recession. Spreads also look exaggerated when you consider the expect that move to be accompanied by a reasonable amount of
ongoing profitability of the US corporate sector, as well as the continued volatility, certainly more than we experienced in the first quarter and
strengthening of balance sheets, particularly for large cap companies. As early second quarter. Given that scenario, we would prefer the
such, we would continue to advocate that investors trade duration for relatively low beta of high dividend stocks—both in developed and
credit risk, with US credit being an attractive place to start. emerging markets—and to use any market weakness as an opportunity
to add to longer-term positions in emerging markets. On the fixed
Conclusion income side, while high yield was the flavor of the month in the first
quarter, we believe historically high spreads and less risk favor
Give me control of a nation’s money and I care not who makes her laws. investment grade in the coming months.
—Mayer Amschel Rothschild
Over the coming weeks, months and years, Mayer Rothschild’s axiom
is likely to be put to the test. While Germany continues to ultimately
control Europe’s checkbook, this may be insufficient in the presence
of rising anger in much of the periphery. If politicians cannot adopt a
complement of pro-growth policies and address Europe’s fragile
banking system, a broader European crisis becomes inevitable.
Actions by the ECB at the end of last year and again in February were
a powerful palliative, but did nothing to resolve longer-term questions
over Greek solvency, Spanish banks, longer-term growth or fiscal
integration. Based on the market’s recent performance, outside of
some modest reforms in Spain and Italy, 2012 has been little better.
That said, a European crisis is not preordained. Economic solutions do
exist, although whether they are politically viable is still an open
question. Nevertheless, in some respects—a growing awareness of the
need for growth and tentative signs that Germany may accept
eurobonds—Europe is stumbling toward a consensus. The big question
is whether they will get there in time.
Figure 9: Credit Spreads
(1990 to Present)
700
Spread MOODY’S Baa Index
600
to 10-Year Treasury (bps)
500
400
Long Term Average
300
200
100
2/90 1/94 1/98 1/02 1/06 1/10 1/12
Source: Bloomberg 5/25/12

9. iSHARES MARKET PERSPECTIVES [9]
Figure 2: iShares Investment Strategy Group Near-Term Outlooks
Global Region Underweight Neutral Overweight Related iShares ETF Tickers
Developed Markets
Global Equities x ACWI, HDV, IOO, OEF, IDV, URTH, ACWV
Developed Markets x EFA, IDV, ACWX, EFAV, SCZ
Australia x EWA, EPP, EWAS, DVYA
Canada x EWC, EWCS
France x EWQ
Germany x EWG, EWGS
Hong Kong x EWH, EWHS
Italy x EWI
Japan x EWJ, SCJ
Netherlands x EWN
Norway x ENOR
Singapore x EWS, EWSS
Spain x EWP
Sweden x EWD
Switzerland x EWL
United Kingdom x EWU, EWUS
United States x EUSA, IWV, IVV, USMV
Emerging Markets
Emerging Markets x EEM, EEMV, DVYE, EEMS
Brazil x EWZ, EWZS
China x MCHI, ECNS
India x INDY, INDA, SMIN
Indonesia x EIDO
Mexico x EWW
Russia x ERUS
South Africa x EZA
South Korea x EWY
Taiwan x EWT
Global Sector Underweight Neutral Overweight Related iShares ETF Tickers
Consumer Discretionary x
Consumer Staples x IYK, KXI, AXSL
Energy x IXC, FILL, EMEY, AXEN
European Banks x EUFN
Financials x IYF, IXG, AXFN, EMFN, EUFN, FEFN, IAT
Healthcare x IYH, IXJ, AXHE
Industrials x IYJ, EXI, AXID
Information Technology x IXN, AXIT, AAIT, IYW, SOXX
Materials x IYM, MXI, AXMT, EMMT, RING, PICK, SLVP
REITs x ICF, IYR
Telecommunications x IXP, AXTE, IYZ
US Industrials x IYJ
US Regional Banks x IAT
US Retail x N/A
US Technology x IYW
US Utilities x IDU
Utilities x IDV, JXI, AXUT
Fixed Income Sector Underweight Neutral Overweight Related iShares ETF Tickers
Emerging Markets x EMB, LEMB, CEMB, EMHY
High Yield Credit x HYG, HYXU, GHYG, QLTB, QLTC
LQD, FLOT, QLTA, MONY, ENGN, AMPS, CSJ,
Investment Grade Credit x
CIU, CFT, CLY, QLTA
Mortgage-Backed Securities x MBB, GNMA, CMBS
Municipals x SUB, MUB
Non-US Developed Markets x ISHG, IGOV
TIPS/Global Inflation-Linked x STIP, TIP, GTIP, ITIP
US Treasuries x SHY, IEI, IEF, TLH, TLT, GOVT, SHV
Global Style Underweight Neutral Overweight Related iShares ETF Tickers
Global Mega Caps x OEF, IOO, HDV, DVY, IDV
Small Caps x IWM
This material represents an assessment of the market environment at a specific time and is not intended to be a forecast of future events or a guarantee of future results. This information
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illustrative and educational purposes and is subject to change. This information does not represent the actual current, past or future holdings or portfolio of any BlackRock client.

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au. You should read the PDS or prospectus and consider whether an iShares ETF is appropriate
Bonds and bond funds will decrease in value as interest rates rise. A portion of a municipal bond for you before deciding to invest. iShares securities trade on ASX at market price (not, net asset
fund’s income may be subject to federal or state income taxes or the alternative minimum tax. value (“NAV”)). iShares securities may only be redeemed directly by persons called “Authorised
Capital gains, if any, are subject to capital gains tax. An investment in the Fund(s) is not insured Participants.”
or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
The strategies discussed are strictly for illustrative and educational purposes and should not be
Index returns are for illustrative purposes only and do not represent actual iShares Fund construed as a recommendation to purchase or sell, or an offer to sell or a solicitation of an offer
performance. Index performance returns do not reflect any management fees, transac- to buy any security. There is no guarantee that any strategies discussed will be effective. The
tion costs or expenses. Indexes are unmanaged and one cannot invest directly in an information provided is not intended to be a complete analysis of every material fact respecting
index. Past performance does not guarantee future results. For actual iShares Fund per- any strategy. The examples presented do not take into consideration commissions, tax implica-
formance, please visit www.iShares.com or request a prospectus by calling 1-800-iShares tions or other transactions costs, which may significantly affect the economic consequences of
(1-800-474-2737). a given strategy.
The iShares Funds that are registered with the US Securities and Exchange Commission under This material represents an assessment of the market environment at a specific time and is not
the Investment Company Act of 1940 (“Funds”) are distributed in the US by BlackRock intended to be a forecast of future events or a guarantee of future results. This information should
Investments, LLC (together with its affiliates, “BlackRock”). This material is solely for educa- not be relied upon by the reader as research or investment advice regarding the funds or any
tional purposes and does not constitute an offer or solicitation to sell or a solicitation of an offer security in particular.
to buy any shares of any fund (nor shall any such shares be offered or sold to any person) in any
jurisdiction in which an offer, solicitation, purchase or sale would be unlawful under the securities ©2012 BlackRock. All rights reserved. iShares® and BlackRock® are registered trademarks
law of that jurisdiction. of BlackRock. All other trademarks, servicemarks or registered trademarks are the property of
their respective owners. iS-7428-0612 3911-03RB-6/12
In Latin America, for Institutional and Professional Investors Only (Not for public Distribution):
iS-7428-0612
If any funds are mentioned or inferred to in this material, it is possible that some or all of the funds
have not been registered with the securities regulator of Brazil, Chile, Colombia, Mexico, Peru, Not FDIC Insured • No Bank Guarantee • May Lose Value