Why Munis Have a Place in Core Holdings...characteristic of the OTC bond market. Most stocks are traded on centralized exchanges, such as the NYSE. Through the exchange, investors

For Financial Professionals. Not for Public Distribution. PROPRIETARY.

Permission to reprint or distribute any content from this presentation requires the w ritten approv al of S&P Dow Jones Indices .

Why Munis Have a Place in Core Holdings THURSDAY, SEPTEMBER 10, 2015, AT 2:00 P.M. (EDT)

FOR FINANCIAL PROFESSIONALS/NOT FOR PUBLIC DISTRIBUTION


Permission to reprint or distribute any content from this presentation requires the written approval of S&P Dow Jones Indices .

Disclaimer

This presentation includes information from New Square Capital, BlackRock, and Betterment.

This presentation includes information for the webinar from guest speakers and firms, including

New Square Capital, BlackRock, and Betterment, and their respective representatives Matthew L.

Forester, Karen Schenone, and Ellie Lan. Guest speakers and firms are not affiliated with S&P

Dow Jones Indices, and S&P Dow Jones Indices makes no representations or warranties

regarding the completeness, accuracy, reliability, suitability or availability of opinions or other

information from guest speakers and firms, for any purpose.

S&P Dow Jones Indices has presented Information from guest speakers and firms as provided to

it, without editing. Each guest speaker and firm is responsible for its own content, and the views

and opinions of guest speakers and firms do not necessarily represent the views or opinions of

other guest speakers or firms or of S&P Dow Jones Indices. S&P Dow Jones Indices does not

sponsor, endorse, sell, or promote any investment product nor does it make any recommendations

or representations regarding the advisability of investing in products, including any product based

on an S&P Dow Jones index.

2

3 For Financial Professionals. Not for Public Distribution. PROPRIETARY.


Discussion Topic: Munis as Core

Why Munis Have a Place in Core Holdings

Munis as Core Holdings September 10, 2015

Matthew L. Forester [email protected]

610.325.6169

mailto:[email protected]

NewSquare Capital LLC is a registered Investment Advisor.

HIGHEST FEDERAL TAX BRACKET RATE (%)

0

10

20

30

40

50

60

70

80

90

100

1913 1918 1923 1928 1933 1938 1943 1948 1953 1958 1963 1968 1973 1978 1983 1988 1993 1998 2003 2008 2013

Highest Federal Tax Bracket Rate


DEMAND INCREASING FOR TAX-EXEMPTS

More Individuals Need Tax-Exempt Income Higher Federal Income Taxes and NIIT (3.8%) More Limited Deductions

NIIT = Net Investment Income Tax

Capital Gains

Ordinary Income Qualified Dividends ST LT

Pre 2013 35.0% 15.0% 35.0% 15.0%

Post 2013 39.6% 20.0% 39.6% 20.0%


EXPECTED TAX RATES

New Expected Tax Rate Calculation E (Tr) = Tax RateFederal + Tax RateState + Tax RateLocal

Higher rates drive millions of households into a need for tax-exempt income.

S&P Dow Jones Indices CONFIDENTIAL & P ROP RIETARY

S&P National AMT-Free Municipal Bond Index

The 500 Index for Municipal Bonds

September 10, 2015

CONFIDENTIAL & P ROP RIETARY 9 S&P Dow Jones Indices

S&P National AMT-Free Municipal Bond Index, the 500 Index of Municipals

S&P National AMT-Free Municipal Bond Index

(Tracking ~ 10,000 bond issues, ~$650bill) (SPMUNUST)

California

New York

Short Term

1 Mo. but less than 5 Years

Methodology:

• Bonds must be:

- Tax-exempt (Excludes bonds subject to Alternative Minimum Tax and taxable municipal bonds)

- Fixed rate

- Rated investment grade by Moody’s, S&P and/or Fitch. Lowest rating is used.

• Deal size: when initially brought to market the deal size must have been at least $100million (deal level)

• Minimum par amount outstanding: each bond must have $25million outstanding at each rebalancing

• Minimum term: at least one month and one day.

• Concentration limits: No one issuer can represent 25% or more of the weight of the index and individual issuers that

represent at least 5% of the weight of the index cannot account for more than 50% of the weight of the index in

aggregate. Result is we cap the largest borrowers to ensure diversification.

• Sector exclusions: Commercial paper, housing, for-profit conduit financings (healthcare, corporate backed etc), non-insured conduit bonds, non-rated bonds, tobacco settlement bonds, derivative securities and variable rate debt. Goal: ‘plain vanilla’ municipal bonds.

Source: S&P Dow Jones Indices. Data as of August 31, 2015.

Objective: tax-free, high quality, diversified, ‘plain vanilla’ muni bonds

Index launched Aug 31, 2007

Municipal Bond Market

Over 1,500,000 bonds. Approx. 80,000 issuers. ~$3.6trillion Outstanding


S&P Dow Jones Fixed Income Indices

Exhibit from S&P Dow Jones Indices “Should Municipal Bonds Be Considered Core?” February 2015

Why Munis Have a Place in

Core Holdings

Karen Schenone, CFA

iShares Fixed Income Strategy

iS-16499 FOR FINANCIAL PROFESDSIONAL USE ONLY - NOT FOR PUBLIC DISTRIBUTION

12

How Are Municipal Index ETFs Managed? Stratified Sampling

Sector/issue

type

Maturity/average

life

Credit rating

Call/payment

structure

State/Sector

Matu

rity

Cell

• California

• General Obligation

• A-rated

• Revenue

• 7–10 years

maturity

Municipal Securities

Portfolios are constructed by sampling bonds from each index cell

Stratified sampling methodology: Dividing the

various indices into subsets (cells) based on

relative parameters

For illustrative purpose only. Source: BlackRock

iS-16499 - FOR FINANCIAL PROFESSIONAL USE ONLY - NOT FOR PUBLIC DISTRIBUTION

iShares Municipal Bond ETF Suite

13

National Muni Market ETFs iShares National AMT-Free Municipal MUB 0.25 6.33 1.74%

iShares ST National AMT-Free Municipal SUB 0.25 2.09 0.54%

State Specific ETFs iShares California AMT-Free Municipal CMF 0.25 6.72 1.68%

iShares New York AMT-Free Municipal NYF 0.25 6.23 1.71%

iBonds® ETFs iShares® iBonds® Sep 2016 AMT-Free Muni Bond ETF IBME 0.18 0.84 0.10%

iShares® iBonds® Sep 2017 AMT-Free Muni Bond ETF IBMF 0.18 1.78 0.50%

iShares® iBonds® Sep 2018 AMT-Free Muni Bond ETF IBMG 0.18 2.68 0.81%

iShares® iBonds® Sep 2019 AMT-Free Muni Bond ETF IBMH 0.18 3.54 1.05%

iShares® iBonds® Sep 2020 AMT-Free Muni Bond ETF IBMI 0.18 4.37 1.31%

iShares® iBonds® Dec 2021 AMT-Free Muni Bond ETF IBMJ 0.18 5.05 N/A

iShares® iBonds® Dec 2022 AMT-Free Muni Bond ETF IBMK 0.18 5.83 N/A

Ticker Net Expense Ratio (%)*

EFFECTIV E DURATION

SEC Yield

Source: BlackRock; data as of 9/3/2015. Past performance is no guarantee of future results. For standardized fund returns, please see slide 14.

*A contractual fee waiver of 12bps is in effect for the iBonds Muni Series ETFs for a net expense ratio of 18 bps


The Future of Financial Advice

Ellie Lan

Every cashflow should be tax-, market-, and transaction-cost-aware to maximize risk-adjusted returns.

15



Discussion Topic: Effectiveness of Muni ETFs


Betterment’s Bond ETFs in a Taxable Account

17


S&P Dow Jones Fixed Income Indices – Municipal Bond Performance

Source: S&P Dow Jones Indices. Data as of August 31, 2015.


S&P Dow Jones Fixed Income Indices – SPIVA U.S. Scorecard Mid-Year 2015

Not all bond funds beat their benchmarks!

Source: S&P Dow Jones Indices LLC., CRSP. Data as of June 30, 2015. Outperformance is based upon equal weighted fund counts. All index returns are total returns. Past performance is no guarantee of future results. It is not possible to inv est directly in an index, and index returns do not reflect expenses an investor would pay.

Fund Category Comparison Index One Year Three Year Five Year Ten Year

Government Long Funds Barclays Long Government 98.82 85.39 97.78 93.33 Government Intermediate Funds Barclays Intermediate Government 88.89 82.86 70.00 75.56

Government Short Funds Barclays 1-3 Year Government 86.67 80.00 59.09 75.61

Investment-Grade Long Funds Barclays Long Government/Credit 82.93 40.60 91.91 92.93 Investment-Grade Intermediate Funds Barclays Intermediate Government/Credit 79.62 34.92 40.70 52.57

Investment-Grade Short Funds Barclays 1-3 Year Government/Credit 83.51 34.78 30.23 57.35

High Yield Funds Barclays High Yield 51.08 77.31 84.31 92.92

Mortgage-Backed Securities Funds Barclays Mortgage-Backed Securities 58.73 65.63 58.06 77.55

Global Income Funds Barclays Global Aggregate 30.67 35.16 46.43 56.52 Emerging Markets Debt Funds Barclays Emerging Markets 90.43 93.94 96.97 81.25

Loan Participation Funds S&P/LSTA U.S Leveraged Loan 100 12.77 50.00 70.00

General Municipal Debt Funds S&P National AMT-Free Municipal Bond 34.62 32.63 41.11 69.62

California Municipal Debt Funds S&P California AMT-Free Municipal Bond 28.95 45.71 44.74 87.50

New York Municipal Debt Funds S&P New York AMT-Free Municipal Bond 41.94 61.29 66.67 94.29

Bond vs. Stock Markets

Bond markets Equity markets

Fixed income ETFs allow investors to trade bonds like stocks

In the “over-the-counter” (OTC) bond market, buyers

and sellers negotiate one-on-one to reach a deal.

Bonds can be hard to find, and an investor may get

different prices from different brokers.

This opaqueness—“Where can I find bonds?

Can I get a good price?”—is a defining

characteristic of the OTC bond market.

Most stocks are traded on centralized

exchanges, such as the NYSE.

Through the exchange, investors can easily see

execution prices throughout the trading day.

Fixed income ETFs provide transparency to the

bond market, allowing investors to trade bonds

like stocks

20 iS-16499 - FOR FINANCIAL PROFESSIONAL USE ONLY - NOT FOR PUBLIC DISTRIBUTION

iShares Muni bond ETFs can trade millions every day

Liquidity—iShares ETFs help address challenges with bond trading

Source: BlackRock, GAO and Municipal Securities Rulemaking Board 2014 Fact Book.

There can be no assurance that an active trading market for shares of an ETF will

develop or be maintained. Source: Bloomberg, as of 8/31/2015

Most municipal bonds do not trade daily

The municipal bond market can be very illiquid

Individual bonds can trade very infrequently after

issuance

~1% of municipal bonds trade daily according to a GAO

study

MUB (iShares National AMT-Free National Muni Bond

ETF) has experienced an increase in trading volumes.

Because ETFs trade on an exchange, investors can

access bonds as easily as they can access stocks.

iShares ETFs offer investors the ability to get in and out

MUB 20-Day Average Volume ($MM)

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

0

0.2

5 1 2 3 4 5 6 7 8 9

10

11

12

13

14

15

16

17

18

19

20

Pa

r A

mo

un

t ($

B)

Years After Sale Date

Par Amount Traded by Years After Sale Date

$-

$10

$20

$30

$40

$50

$60

$70

Ave

rage D

aily

Volu

me ($ m

m)

2010: Meredith

Whitney Default

Predictions

2013: Taper

Tantrum

2008:

Loss of

Muni

Insurance 2009:

Market

Rally

2012:

Market

Rally

2015:

Puerto Rico

Default Risk


iS-14707

Low cost—iShares ETFs help you keep more of what you earn

Sources: BlackRock, Bloomberg, Barclays, Morningstar, Investment Company Institute, as of 8/31/2015. Underlying bid/offer data based on actual spreads of underlying national municipal bonds. Buying and selling shares of iShares Funds will result in brokerage commissions.

Fixed income iShares ETFs offer bond market access at a lower cost

The average municipal bond mutual fund has an

0.84% expense ratio

iShares ETFs have lower expense ratios than the

average MF and do not charge front or back end sales

loads

Transactions costs, in the form of bid-offer spreads,

can be high in the muni bond market

iShares Municipal ETFs tend to trade at much tighter

bid-offer spreads than the underlying bond market

Fees and Expenses Lower Transaction Costs

Category Avg. Mutual

Fund iShares ETF

National

Municipal Bonds 0.88% 0.25% (MUB)

Short Term

Municipal Bonds 0.72% 0.25% (SUB)

State Specific -

CA 0.85% 0.25% (CMF)

State Specific -

NY 0.90% 0.25% (NYF)

0

20

40

60

80

100

120

140

iShares (MUB) Bid-

Offer

Institutional Muni

Bond Bid-Offer

Retail Muni Bond

Bid-Offer

Bid

-Offe

r S

read (bps)

iS-16499- FOR FINANCIAL PROFESSIONAL USE ONLY - NOT FOR PUBLIC DISTRIBUTION

iShares Municipal ETFs have a track record of tax-efficiency

23

iShares funds track the S&P AMT-Free Index family

• Index methodology is designed to screen out AMT-eligible bonds

ETF mechanics allow our funds to be efficient at avoiding capital gains

• iShares municipal bond ETFs have never posted capital gains since inception

Category % of Mutual Funds That Posted Capital Gains *

2007 2008 2009 2010 2011 2012 2013 2014

Long-Term/Intermediate National Municipal

OE Funds 26% 26% 25% 36% 39% 46% 39% 26%

Short-Term National Municipal OE Funds 0% 4% 4% 21% 21% 28% 53% 31%

California Municipal OE Funds 37% 20% 20% 24% 12% 31% 10% 15%

New York Municipal OE Funds 35% 35% 25% 30% 23% 32% 26% 17%

iShares Municipal Bond ETFs 0% 0% 0% 0% 0% 0% 0% 0%

Mutual Fund Capital Gains

Sources: S&P, MorningStar, BlackRock, as of 12/31/2014.

* Based on the number of funds that paid capital gains. Past distributions not indicative of future distributions.



S&P National AMT-Free Municipal Bond Index, the 500 Index of Municipals

Source: S&P Dow Jones Indices. Data as of August 31, 2015. Past performance is no guarantee of future results.

Index is designed to track only the larger more liquid bonds in the market place. • This rules-based index consists of investment grade general obligation bonds and

essential purpose revenue bonds. • High risk revenue bonds from sectors that have higher default rates than the rest of the

municipal bond market are excluded. Often these are bonds for single revenue source projects.


S&P Dow Jones Fixed Income Indices – Municipal Bond Defaults

12 Month Trailing Default Rates: U.S. Municipal and Corporate Bonds


S&P Dow Jones Fixed Income Indices – Municipal Bond Transaction Costs

Historical Bond Transaction Costs (%)

Period Investment-Grade

Municipal Bonds

Investment Grade

Corporate Bonds

High-Yield

Municipal Bonds

High-Yield

Corporate Bonds

2011 December 2.01 1.40 2.46 2.27

2012 December 1.97 1.00 2.49 1.93

2013 December 1.73 0.87 2.23 1.74

2014 December 1.30 0.84 2.13 1.94

2015

January 1.23 0.86 2.19 1.69

February 1.26 0.82 2.28 1.65

March 1.23 0.79 2.17 1.57

April 1.22 0.78 2.28 1.59

May 1.27 0.79 2.15 1.57

Source: S&P Dow Jones Indices LLC. Data as of May 2015. Charts and tables are provided for illustrative purposes. The investment-grade

municipal bonds are represented by constituents of the S&P National AMT-Free Municipal Bond Index. High-yield municipal bonds are

represented by constituents of the S&P Municipal Bond High Yield Index, investment-grade corporate bonds are represented by the

constituents of the S&P U.S. Issued Investment Grade Corporate Bond Index and high-yield corporate bonds are represented by the

constituents of the S&P U.S. Issued High Yield Corporate Bond Index

Retail Trade Transaction Costs: Trades of $100,000 face value and lower


MUNICIPAL BOND ETF ASSETS ($MM)

Source: Bloomberg, NewSquare Capital LLC.

Muni ETF Candidates

28


S&P Short Term National AMT-Free Municipal Bond Index

Source: S&P Dow Jones Indices. Data as of August 31, 2015. Past performance is no guarantee of future results.

Sub-index of the S&P National AMT-Free Municipal Bond Index • Same rules apply except for the maturity inclusion rule

• Maturity inclusion rule: 1 month up to 5 years.


RATES RISE 1% (100 BASIS POINTS)

2% Bond in 2% Rate Environment: Rates rise to 3% 5% Bond in 5% Rate Environment: Rates rise to 6%


RATES FALL 1% (100 BASIS POINTS)



Discussion Topic: Duration Management & Laddering



MUNI ETF LADDER EXAMPLE

Expense

Ratio

Weighted

Average

Coupon

Effective

Duration

Weighted

Average

Maturity

Weighted

Average

YTM TEY Holdings

TEY /

Duration

2017 0.18 4.73% 1.77 1.84 0.66% 1.10% 666 0.62%

2018 0.18 4.68% 2.67 2.84 0.97% 1.62% 546 0.61%

2019 0.18 4.75% 3.54 3.85 1.28% 2.13% 544 0.60%

2020 0.18 4.75% 4.36 4.85 1.52% 2.53% 461 0.58%

2021 0.18 4.73% 5.04 5.74 1.80% 3.00% 76 0.60%

2022 0.18 4.68% 5.83 6.78 2.01% 3.35% 68 0.57%

Expense

Ratio

Weighted

Average

Coupon

Effective

Duration

Weighted

Average

Maturity

Weighted

Average

YTM TEY Holdings

TEY /

Duration

Blend 0.22 4.87% 6.14 9.08 2.60% 4.33% 3442 0.71%

National 0.25 4.70% 4.75 5.56 2.02% 3.37% 2771 0.71%


S&P Dow Jones Fixed Income Indices – Municipal Bond Laddering

Source: S&P Dow Jones Indices.


S&P Dow Jones Fixed Income Indices – Municipal Bond Laddering

Source: S&P Dow Jones Indices. Data as of August 31, 2015. Charts and tables are Provided for illustrative purposes.

Characteristics of the S&P AMT-Free Municipal Series

Index Name

Weighted

Average

Coupon

Weighted

Average

Price

Weighted

Years to

Maturity

Weighted

Average

Yield-to-

Maturity

Weighted

Average

Yield-to-

Worst

S&P AMT-Free Municipal

Series 2016 4.42 103.59 0.87 0.30 0.30


Series 2017 4.49 107.01 1.87 0.71 0.71


Series 2018 4.52 109.80 2.87 1.03 1.03


Series 2019 4.59 112.28 3.87 1.32 1.32


Series 2020 4.55 113.82 4.87 1.58 1.58


Series 2021 4.51 114.67 5.88 1.86 1.86


Series 2022 4.60 115.88 6.88 2.09 2.09


Series 2023 4.67 117.03 7.88 2.28 2.28


Series 2024 4.63 117.54 8.88 2.41 2.41

Introducing municipal bond indices that track bonds that mature in June, July and August of each year: The S&P AMT-Free Municipal Series

Bond Ladders Just Got Easier to Manage with iBonds ETFs

iBonds ETFs offer investors an easier way to build and maintain bond ladders.

iBonds ETFs are designed to:

Mature, like a bond. Investment grade bond portfolios with a specified maturity date. Like individual bonds, investors are exposed to less interest rate risk over time as iBonds ETFs

approach maturity.

Trade, like a stock. iBonds ETFs trade throughout the day on the exchange, so you are not

subject to trading in the over-the-counter (OTC) bond market.

Diversify, like a fund. Exposure to hundreds of bonds in a single fund.

36

Year 1 Year 2 Year 3 Year 4 Year 5

Po

ten

tia

l Y

ield

iBonds

ETF

iBonds

ETF

iBonds

ETF

iBonds

ETF

iBonds

ETF Create new bond ladders with iBonds ETFs

Plug holes in existing ladders when bonds

mature, get called or default

Reinvest bond coupons into iBonds ETFs

Manage a 5-Year Bond Ladder with just 5 iBonds

Suite 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Corporate IBDF IBDJ IBDH IBDK IBDL IBDM IBDN IBDO IBDP IBDQ

Municipal IBMD IBME IBMF IBMG IBMH IBMI IBMJ IBMK

Designed to:

MATURE, like a bond

TRADE, like a stock

DIVERSIFY, like a fund

For illustrative purposes only. Not meant to portray any specific fund yield.


iBonds® make it easier to build and maintain bond ladders Build new bond ladders, plug holes in existing ladders and reinvest cash flows

37

The strategies discussed are strictly for illustrative and educational purposes and should not be construed as a recommendation to purchase or sell, or an offer to sell or a solicitation of an offer to buy any security. There is no guarantee that any strategies discussed will be effective.

TR

AD

ITIO

NA

L

BO

ND

S

iBO

ND

S

2016

IBDF

2017

IBDJ

2018

IBDH

2019

IBDK

2020

IBDL

2021

IBDM

50 clients/

250 bonds

50 clients/

5 iBonds

10 clients Traditional bonds iBond

Not Scalable: Time consuming to research and monitor issuers

Coupons, calls and maturities require reinvestment

Hard to Diversify: Selecting different bonds for each clients leads to performance differences across accounts

Access to Bonds is Decreasing: Desired bonds are not always available

Scaleable: iBonds make it easy to establish and monitor portfolios for multiple clients.

Highly Diversified: iBonds provide exposure to a diversified pool of investment grade bonds in both municipals and corporates

Efficient Access: iBonds tradeon the exchange and provide efficient access to bonds

1 iBond

Multiple

bonds

Simplify reinvestment with iBonds

Coupons, calls and maturities require reinvestment


The Investor Experience: A Closer Look at IBMD (2015)

At inception, iShares Sept 2015 AMT-Free Muni Bond ETF (IBMD) had about 5.7 years until

its target end date (January 2010 to September 2015) and a duration of 4.76. IBMD’s duration

declined as its holdings and the fund approached its end date (chart 1).

The fund grew from $5.0 mm to $89 mm (chart 2).

When bonds matured betw een June and September of 2015, the proceeds w ere invested in

short-term tax-exempt money market instruments (chart 3).

The bonds in IBMD’s portfolio had a w eighted average yield to maturity of 1.93% after fees at

inception. The fund earned a total NAV return of 1.83% - w ithin 10 bps of the initial YTM less

fees.

This return can be compared to data on 5-year muni bond yields on the fund’s inception date.

IBMD’s total return w as in line w ith prevailing municipal bonds yields of similar quality and

maturity (chart 3).

38

Chart 1: IBMD’s Duration

Chart 3: IBMD’s Portfolio Shifted to Cash as Bonds Mature

Chart 4: IBMD vs. Comparable Muni Bonds Yields (At Fund Inception)

Source: BlackRock and Bloomberg as of 9/01/2015. Past performance does not guarantee future

results. Inv estment return and principal v alue of an inv estment will fluctuate so that an

inv estor’s shares, when sold or redeemed, may be worth more or less than the original cost.

See Appendix for standardized returns. Bond yields based on averages for national general

obligation municipal bonds with 5 years to maturity on 1/7/2010.


0

1

2

3

4

5

6

Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15

Du

rati

on

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

May-15 Jun-15 Jul-15 Aug-15

% Cash Equivalents

% Bonds

1.68% 1.83%

1.93% 1.94%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

AAA-Rated MuniBonds

IBMD TotalReturn

IBMD YTM afterFees

AA-Rated MuniBonds

Mu

nic

ipa

l B

on

d Y

ield

s o

r To

tal

Re

turn

Chart 2: IBMD’s Total AUM Growth

$-

$50

$100

$150

Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15

To

tal A

sse

ts (

$ m

m)

iBonds ETF Case Study MUAA, MUAB, MUAC and IBMD

MUAA (2012) MUAB (2013) MUAC (2014) IBMD (2015)

Inception Date 1/7/2010 1/7/2010 1/7/2010 1/7/2010

Termination Date 8/15/2012 8/15/2013 8/15/2014 9/1/2015

YTM at Inception 0.96% 1.35% 1.68% 2.20%

Less Fees* (0.30%) (0.30%) (0.30%) (0.27%)

Net YTM 0.66% 1.05% 1.38% 1.93%

Realized Yield / NAV

Return (Since Inception)

0.69% 1.09% 1.41% 1.83%

Performance

Difference

+0.03% +0.04% +0.03% -0.10%

Initial NAV $50.38 $50.06 $50.03 $50.49

Final NAV $50.62 $50.50 $51.18 $52.27

Difference in NAV +$0.24 +$0.44 +$1.15 +$1.78

39

Investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less

than the original cost. See Appendix for standardized returns.

Fund performance and yields show n for illustrative purposes only. There is not a guarantee that other iBonds funds w ill experience the same investment results.

*A contractual fee w aiver of 12bps is in effect for the remaining iBonds Muni Series ETFs for a net expense ratio of 18bps.


iBonds® Ladder Tool on iShares.com

High Yield

Find the iBonds Ladder Tool:

iShares.com – iShares Resources – Tools

http://www.blackrock.com/tools/portfolio-

analysis/ibonds

Build customized bond ladders using iBonds

Analyze portfolio level characteristics

Save Portfolios for ease of monitoring

Create a PDF report with ladder characteristics

Download data to excel

Built in Net Acquisition Yield Calculator

Visit the iBonds Landing Page for additional

resources:

http://www.ishares.com/us/strategies/ibonds

This information should not be relied upon as research, investment advice or a recommendation regarding the Funds or any security in particular. This information is strictly for i l lustrative 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. Past performance does not

guarantee future results. For standardized performance, please see the end of this document.


http://www.blackrock.com/tools/portfolio-analysis/ibonds






Standardized Performance as of 6/30/15

41

The performance quoted represents past performance of specific funds and does not guarantee future results for such funds. In vestment return

and principal value of an investment w ill fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than the

original cost. Current performance may be lower or higher than the performance quoted. Performance data current to the most r ecent month end

may be obtained by visiting www.iShares.com or www.blackrock.com. Shares of iShares Funds are bought and sold at market price (not NAV) and are

not individually redeemed from the Fund. Brokerage commissions w ill reduce returns. Market returns are based upon the midpoint of the bid/ask spread at

4:00 p.m. eastern time (w hen NAV is normally determined for most iShares Funds), and do not represent the returns you w ould receive if you traded shares at

other times.

Fund Name

Fund Inception

Date

Gross Expense

Ratio

30-Day SEC Yield (With / Without

Waiver)

Contractual Fee Waiver Expiration

(If Applicable)

1-Year Returns 5-Year Returns 10-Year Returns Since Inception

NAV Mkt Price NAV Mkt Price NAV Mkt Price NAV Mkt Price

iShares® iBonds® Dec 2016 Corporate ETF (IBDF) 5/28/2014 0.10% 0.82% -- 0.81% 1.37% -- -- -- -- 0.63% 1.33%

iShares® iBonds® Dec 2017 Corporate ETF (IBDJ) 3/10/2015 0.10% 1.34% -- -- -- -- -- -- -- 0.30% 0.86%

iShares® iBonds® Dec 2018 Corporate ETF (IBDH) 5/28/2014 0.10% 1.79% -- 1.71% 2.23% -- -- -- -- 1.34% 2.00%

iShares® iBonds® Dec 2019 Corporate ETF (IBDK) 3/10/2015 0.10% 2.23% -- -- -- -- -- -- -- 0.14% 0.99%

iShares® iBonds® Dec 2020 Corporate ETF (IBDL) 12/2/2014 0.10% 2.61% -- -- -- -- -- -- -- 1.41% 1.81%

iShares® iBonds® Dec 2021 Corporate ETF (IBDM) 3/10/2015 0.10% 2.95% -- -- -- -- -- -- -- -0.62% 1.04%

iShares® iBonds® Dec 2022 Corporate ETF (IBDN) 3/10/2015 0.10% 3.25% -- -- -- -- -- -- -- -1.09% -0.65%

iShares® iBonds® Dec 2023 Corporate ETF (IBDO) 3/11/2015 0.10% 3.43% -- -- -- -- -- -- -- -1.61% -1.17%

iShares® iBonds® Dec 2024 Corporate ETF (IBDP) 3/11/2015 0.10% 3.67% -- -- -- -- -- -- -- -2.27% -1.95%

iShares® iBonds® Dec 2024 Corporate ETF (IBDP) 3/11/2015 0.10% 3.67% -- -- -- -- -- -- -- -2.27% -1.95%

iShares® iBonds® Dec 2025 Corporate ETF (IBDQ) 3/11/2015 0.10% 3.81% -- -- -- -- -- -- -- -2.40% -2.37%

iShares® iBonds® Sep 2015 AMT-Free Muni Bond ETF (IBMD) 1/7/2010 0.30% 0.21% / 0.10% Termination of the fund -0.03% -0.47% 1.57% 1.38% -- -- 1.89% 1.82%

iShares® iBonds® Sep 2016 AMT-Free Muni Bond ETF (IBME) 1/7/2010 0.30% 0.22% / 0.10% Termination of the fund 0.21% -0.13% 2.33% 2.13% -- -- 2.68% 2.63%

iShares® iBonds® Sep 2017 AMT-Free Muni Bond ETF (IBMF) 1/7/2010 0.30% 0.64% / 0.52% Termination of the fund 0.36% 0.32% 2.86% 2.73% -- -- 3.28% 3.31%

iShares® iBonds® Sep 2018 AMT-Free Muni Bond ETF (IBMG) 3/19/2013 0.30% 1.00% / 0.89% Termination of the fund 0.62% 0.62% -- -- -- -- 1.61% 1.71%

iShares® iBonds® Sep 2019 AMT-Free Muni Bond ETF (IBMH) 2/4/2014 0.30% 1.23% / 1.11% Termination of the fund 1.49% 1.05% -- -- -- -- 1.98% 1.90%

iShares® iBonds® Sep 2020 AMT-Free Muni Bond ETF (IBMI) 8/12/2014 0.30% 1.50% / 1.39% Termination of the fund -- -- -- -- -- -- 1.78% 1.98%

iShares 2012 AMT-Free Muni Bond ETF (MUAA) 1/7/2010 0.30% N/A -- -- -- -- -- -- -- 0.69% 0.26%

iShares 2013 AMT-Free Muni Bond ETF (MUAB) 1/7/2010 0.30% N/A -- -- -- -- -- -- -- 1.09% 0.82%

iShares 2014 AMT-Free Muni Bond ETF (MUAC) 1/7/2010 0.30% N/A -- -- -- -- -- -- -- 1.41% 1.14%


Carefully consider the Funds' investment objectives, risk factors, and charges and expenses before investing. This and other information can be found in the Funds' prospectuses or, if available, the summary prospectuses which may be obtained by visiting www.iShares.com or www.blackrock.com. Read the prospectus carefully before investing.

Investing involves risk, including possible loss of principal.

Fixed income risks include interest-rate and credit risk. Typically, when interest rates rise, there is a corresponding decline in bond values. Credit risk refers to the possibility that the bond issuer will not be able to make principal and interest payments. There may be less information on the financial condition of municipal issuers than for public corporations. The market for municipal bonds may be less liquid than for taxable bonds. Some investors may be subject to federal or state income taxes or the Alternative Minimum Tax (AMT). Capital gains distributions, if any, are taxable. Funds that concentrate investments in specific industries, sectors, markets or asset classes may underperform or be more volatile than other industries, sectors, markets or asset classes and than the general securities market.

The iShares® iBonds® ETFs (“Funds”) will terminate on or about March 31 or December 31 of the year in each Fund’s name. The iShares® iBonds® Muni ETFs (“Funds”) will terminate on or about September 1 of the year in the Fund’s name. An investment in the Fund(s) is not guaranteed, and an investor may experience losses, including near or at the termination date. Unlike a direct investment in a bond that has a level coupon payment and a fixed payment at maturity, the Fund(s) will make distributions of income that vary over time. In the final months of each Fund’s operation, as the bonds it holds mature, its portfolio will transition to cash and cash-like instruments. As a result, its yield will tend to move toward prevailing money market rates, and may be lower than the yields of the bonds previously held by the Fund and lower than prevailing yields in the bond market.

Following the Fund’s termination date, the Fund will distribute substantially all of its net assets, after deduction of any l iabilities, to then-current investors without further notice and will no longer be listed or traded. The Funds’ distributions and liquidation proceeds are not pred ictable at the time of investment and the Funds do not seek to return any predetermined amount.

The rate of Fund distribution payments may adversely affect the tax characterization of an investor’s returns from an investment in the Fund relative to a direct investment in bonds. If the amount an investor receives as liquidation proceeds upon the Fund’s termination is higher or lower than the investor’s cost basis, the investor may experience a gain or loss for tax purposes.

Investment in the iShares® iBonds® Corporate ETFs is subject to the risks of the other funds and ETFs (underlying funds) in which it invests. The iShares® iBonds® Corporate ETFs will incur acquired fund fees and expenses associated with its investments the underlying funds and additional fees associated with turnover in the underlying funds that are not included in the acquired fund fees and expenses.

The Funds are distributed by BlackRock Investments, LLC (together with its affiliates, “BlackRock”). The iShares Funds are not sponsored, endorsed, issued, sold or promoted by S&P Dow Jones Indices LLC, nor are they sponsored, endorsed or issued by Barclays Capital Inc. Neither of these companies makes any representation regarding the advisability of investing in the Funds. BlackRock is not affiliated with S&P Dow Jones Indic es LLC or Barclays Capital Inc.

©2015 BlackRock. All rights reserved. iSHARES, iBONDS and BLACKROCK are registered trademarks of BlackRock. All other marks are the property of their respective owners. iS-16499-0915

42

Important Information Regarding iShares ETFs


Brokerage services provided to clients of Betterment LLC by Betterment Securities, an SEC registered broker-dealer and member FINRA/SIPC. Investments: Not FDIC Insured • No Bank Guarantee • May Lose Value. Investing in securities involves risks, and there is always the potential of losing money when you invest in securities. Before investing, consider your investment objectives and Betterment 's charges and expenses. Past performance does not guarantee future results, and the likelihood of investment outcomes are hypothetical in nature.

This presentation is not an offer, solicitation of an offer, or advice to buy or sell securities.

43

http://www.bettermentsecurities.com/

http://www.finra.org/

http://www.sipc.org/



PERFORMANCE DISCLOSURE

44

The S&P National AMT-Free Municipal Bond Index was launched August 31, 2007, the S&P Short Term National AMT-Free Municipal Bond Index was launched on August 29, 2008, the S&P AMT-Free Municipal Series 2016, 2017, 2018, & 2019 were launched September 30, 2009, the S&P AMT-Free Municipal Series 2020 was launched March 31, 2011, the S&P AMT-Free Municipal Series 2021 was launched November 1, 2011, the S&P AMT-Free Municipal Series 2022 was launched June 13, 2012, the S&P AMT-Free Municipal Series 2023 was launched March 4, 2013 and the S&P AMT-Free Municipal Series 2024 was launched June 9, 2014. All information presented prior to an index’s Launch Date is hypothetical (back-tested), not actual performance. The back-test calculations are based on the same methodology that was in effect on the index Launch Date. Complete index methodology details are available at www.spdji.com.

S&P Dow Jones Indices defines various dates to assist our clients in providing transparency on their products. The First Value Date is the first day for which there is a calculated value (either live or back-tested) for a given index. The Base Date is the date at which the Index is set at a fixed value for calculation purposes. The Launch Date designates the date upon which the values of an index are first considered live. S&P Dow Jones Indices defines the Launch Date as the date by which the values of an index are known to have been released to the public, for example via the company’s public Web site or its datafeed to external parties.

Past performance of an index is no guarantee of future results. Prospective application of the methodology used to construct the Index may not result in performance commensurate with the back-test returns shown. Actual performance may be lower than back-tested performance. The back-test period does not necessarily correspond to the entire available history of the Index. Please refer to the methodology paper for the Index, available at www.spdji.com for more details about the index, including the manner in which it is rebalanced, the timing of such rebalancing, criteria for additions and deletions, as well as all index calculations.

Another limitation of using back-tested information is that the back-tested calculation is generally prepared with the benefit of hindsight. Back-tested information reflects the application of the index methodology and selection of index constituents in hindsight. No hypothetical record can completely account for the impact of financial risk in actual trading. For example, there are numerous factors related to the equities (or fixed income, or commodities) markets in general which cannot be, and have not been accounted for in the preparation of the index information set forth, all of which can affect actual performance.

Additionally, it is not possible to invest directly in an Index. Index returns shown do not represent the results of actual trading of investable assets or securities. S&P Dow Jones Indices maintains indices and calculates index levels and performance, but does not manage actual assets.

Index returns do not reflect payment of any sales charges or other expenses an investor may pay to purchase securities underlying an index or incurred by investment funds that are intended to track the performance of an index. The imposition of these fees and charges would cause actual and back-tested performance of the securities or investment fund to be lower than the corresponding index performance shown. For example, if an index returned 10% on a US $100,000 investment for a 12-month period (or US$ 10,000) and an actual asset-based fee of 1.5% was imposed at the end of the period on the investment plus accrued interest (or US$ 1,650), the net return would be 8.35% (or US$ 8,350) for the year. Over a three-year period, an annual 1.5% fee taken at year end with an assumed 10% return per year would result in a cumulative gross return of 33.10%, a total fee of US$ 5,375, and a cumulative net return of 27.2% (or US$ 27,200)..



GENERAL DISCLAIMER

45

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