BlackRock Income Strategies Trust plc. August 31st 2015
FOR PROFESSIONAL CLIENTS / QUALIFIED INVESTORS ONLY
FOR PROFESSIONAL CLIENTS / QUALIFIED INVESTORS ONLY ISGPS-0683
2 FOR PROFESSIONAL CLIENTS / QUALIFIED INVESTORS ONLY ISGPS-0683
How can the investment trust structure help multi-asset investors?
The investment trust structure is ideal for long-term multi-asset investment strategies
Unit Trust Investment Trust
Long-term leverage
Illiquid assets
Reserve Income
BlackRock Income Strategies Trust
Multi-Asset Strategy, outcome-oriented approach
• Aim to achieve a total return of CPI +4% per annum (before ongoing charges) over 5-7 year cycle*.
• Aim to deliver dividend growth in line with inflation and strive to never cut the dividend in absolute terms
• Focus on capital stability when compared to an equity only portfolio
• Global, multi-asset approach with c.40% invested in the BlackRock UK Equity Income team
• No individual company exposure in the portfolio may exceed 10% of total assets. No more than 15% may be invested in unlisted alternative assets
• May use derivatives to enhance portfolio returns and efficient portfolio management
• May use gearing; not normally be expected to exceed 20%.
Source: BlackRock *Note: Target returns and expected volatility are not guaranteed.
FOR PROFESSIONAL CLIENTS / QUALIFIED INVESTORS ONLY ISGPS-0683 3
Introducing the UK’s first dynamic diversified income investment trust
BLACKROCK INCOME
STRATEGIES TRUST
Diversified Income and Growth Strategies
Access global investment opportunities across equities, bonds and non-traditional assets, such as property
Investment Trust
Utilises the full flexibility of the Trust structure
BlackRock’s Dynamic Asset Allocation Process
Adapts to changing market conditions and aims to deliver consistent results
FOR PROFESSIONAL CLIENTS / QUALIFIED INVESTORS ONLY ISGPS-0683 4
BlackRock research shows that a multi-asset approach can meet the priorities for financial futures
51 Funding a comfortable retirement
%
Preserving my wealth 26 %
Being able to earn or draw an income from savings and investments
24 %
1 Aims for long term real capital growth
Aims for lower risk
Diversified income sources
2
3
Top three financial priorities Why a multi-asset approach?
Source: BlackRock Investor Pulse survey, research conducted from 24 July to 23 August 2014 amongst a nationally representative sample of 27,500 financial decision-makers, in 20 countries, aged 25 to 74 years old, of which 2,000 are UK residents. The results of this survey are provided for information purposes. The conclusions are intended to provide an indication of the current attitude of a sample of citizens in the UK to saving and investing and should not be relied upon for any other purposes
FOR PROFESSIONAL CLIENTS / QUALIFIED INVESTORS ONLY ISGPS-0683 5
Dynamic asset allocation in action
Asset allocation is shown for illustrative purposes only to highlight the dynamic characteristics of the investment strategy and asset allocation process. It is taken from the vehicle with the longest tenure of the dynamic diversified growth strategy. This will vary from the actual allocation of BlackRock Income Strategies Trust. Source: BlackRock. BIJF DDG Fund as at 31 December 2014. 1 Note: Cash represents Cash, FX and Derivatives Cover
% Asset allocation for Dynamic Diversified Growth Strategy
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q32005
Q12006
Q32006
Q12007
Q32007
Q12008
Q32008
Q12009
Q32009
Q12010
Q32010
Q12011
Q32011
Q12012
Q32012
Q12013
Q32013
Q12014
Q32014
Equities Fixed Income Alternatives Cash*1
2008: Quickly increased allocation to cash, to
protect investor capital
2009 / 10: Maintained a large allocation to investment grade credit as investors sought yield
2013: Reduced exposure to alternatives (commodities) as super-cycle drew to a close
FOR PROFESSIONAL CLIENTS / QUALIFIED INVESTORS ONLY ISGPS-0683 6
How much do we want to
invest?
How do we want to invest?
Where do we want to invest?
BlackRock dynamic asset allocation investment process: refined over many years
Global Economic Roadmap
Formulate Economic Road Map
Identify asset preferences / key themes
Draw on BlackRock specialists to enhance research
Idea Selection
Does not follow a benchmark
Multiple Investment Tools e.g. active and passive
Scaling & Risk
Constantly monitor impact of decisions on risk
Scaling reflects conviction
System allows us to have a very detailed view of the investments held to analyse all holdings
Our process has been refined and enhanced over many years to ensure tight control over risk and aims to capture income and growth opportunities
FOR PROFESSIONAL CLIENTS / QUALIFIED INVESTORS ONLY ISGPS-0683 7
A highly experienced portfolio management team dedicated to delivering client outcomes
Adam graduated in Engineering from Cambridge University in 1991
Source: BlackRock. 31 July 2015
18 strong Diversified Strategies team within BlackRock’s Multi-Asset Strategies Group
20 years of industry experience. Adam has been head of the flagship Dynamic Diversified Growth Strategy since 2008
Adam joined BlackRock in 1999 where he has managed private client, fixed income and absolute return portfolios.
He was previously at Credit Suisse and Goldman Sachs
Adam Ryan
Head of Diversified
Strategies team
FOR PROFESSIONAL CLIENTS / QUALIFIED INVESTORS ONLY ISGPS-0683 8
What? Why? Who?
Proposed multi-asset approach
Expert stock picking identifies sustainable and
growing dividends
Uncover a range of income and growth opportunities
across equities and bonds
Identify non-traditional sources of income
Mark Wharrier BlackRock UK Equity team
Adam Ryan BlackRock Diversified
Strategies Team
Adam Ryan BlackRock Diversified
Strategies Team
Tactical Asset Allocation
UK Equity Income
Alternative Investments (up to 15%)
FOR PROFESSIONAL CLIENTS / QUALIFIED INVESTORS ONLY ISGPS-0683 9
Investment solution: Look beyond the UK for sources of income
Data as at 30 September, income percentage above given as a broad indication of asset class income yield. Reference to asset allocation on this slide is merely for explaining the investment strategy, and should not be construed as investment advice or investment recommendation of those companies.
4-8
Equity Derivative Strategies
UK Equities
Alternatives
10
4
%
%
High Yield Bonds 6 %
Asset Potential Income
%
FOR PROFESSIONAL CLIENTS / QUALIFIED INVESTORS ONLY ISGPS-0683 10
Portfolio Activity
11
Purchases Pearson BHP Billiton
Sky Altria
Barclays
Additions Bodycote Admiral Royal Dutch Shell
Legal & General Carnival
Reductions Imperial Tobacco
Aviva
Sales Prudential Howdens Joinery
3i Spectris
Diageo Compass Friends Life Informa
Source BlackRock 1 April 2015 to 31 July 2015. Reference to the names of each company mentioned in this communications is merely for explaining the investment strategy, and should not be construed as investment advice or investment recommendation of those companies
70% Yield & Free Cash Flow
10% Turnarounds
20% Growth
Companies
FOR PROFESSIONAL CLIENTS / QUALIFIED INVESTORS ONLY ISGPS-0683
Investment idea: Alternatives for income diversification
Direct Lending
Commercial Property
Renewable Energy
Residential mortgages
• Intention to build alternatives exposure up to 15% total portfolio allocation over several years
• Intention, over time, to leverage BlackRock’s broad range of income-generating alternative strategies
All investments involve risk to both income and capital and you may get back less than you invested
FOR PROFESSIONAL CLIENTS / QUALIFIED INVESTORS ONLY ISGPS-0683 12
13 FOR PROFESSIONAL CLIENTS / QUALIFIED INVESTORS ONLY ISGPS-0683
BIST Performance versus wider opportunity Set From 27th February 2015 to 31st August 2015
Source: BlackRock, August 31st 2015. NAV calculated with debt at fair value, BlackRock official inception date 26th Feb 2015 performance calculated from 27th Feb 2015 (month end).UK Equities: FTSE All Share Index (Total Return), UK Gilts: FTSE Actuaries All Gilt Index (Total Return Index). CPI data, one month lagged. May not available, April data used as a substitute. BIST performance figures impacted by the transition that occurred during the month of March 2015. UK Equities FTSE ALL SHARE - TOT RETURN IND £ Global Equities MSCI ACWI (£) - TOT RETURN IND, Emerging Market Equities: MSCI EM (Local) Gold Spot Rate $ Commodities Goldman Sachs Commodities Index $ Oil Spot Index $ Gilts BOFA ML UK GILTS ALL STOCKS (£) - TOT RETURN IND US 10yr Treasuries US BENCHMARK 10 YEAR DS GOVT. INDEX - TOT RETURN IND $ German 10yr Bunds BD BENCHMARK 10 YEAR DS GOVT. INDEX - TOT RETURN IND (LC) UK Corporate Bonds IBOXX £ CORP. ALL MATS. - TOT RETURN IND (£) Global Corporate Bonds BOFA ML GLB BROAD CORP (£) - TOT RETURN IND Global High Yield Bonds BOFA ML GLB ORIGINAL HIGH YIELD (£) - TOT RETURN IND Emerging Market Debt JPM GBI-EM BROAD Composite ($) - REITS TOT RETURN IND REITS FTSE/NAREIT
14 FOR PROFESSIONAL CLIENTS / QUALIFIED INVESTORS ONLY ISGPS-0683
Yield Comparison vs. cross-asset opportunity set: 31st August 2015
Yield Comparator
% Y
ield
Source: BlackRock, August 31st 2015. Dividend yield used for equities, and BIST. Yield to Maturity used for fixed income. UK Equities FTSE ALL SHARE - TOT RETURN IND £ Global Equities MSCI ACWI (£) - TOT RETURN IND, Gilts: BOFA ML UK GILTS ALL STOCKS (£) - TOT RETURN IND US 10yr Treasuries: US BENCHMARK 10 YEAR DS GOVT. INDEX - TOT RETURN IND $ German 10yr Bunds: BD BENCHMARK 10 YEAR DS GOVT. INDEX - TOT RETURN IND (LC) UK Corporate Bonds IBOXX £ CORP. ALL MATS. - TOT RETURN IND (£) Global Corporate Bonds BOFA ML GLB BROAD CORP (£) - TOT RETURN IND Global High Yield Bonds BOFA ML GLB ORIGINAL HIGH YIELD (£) - TOT RETURN IND Emerging Market Debt JPM GBI-EM BROAD Composite ($) – REITS: TOT RETURN IND REITS FTSE/NAREIT
15 FOR PROFESSIONAL CLIENTS / QUALIFIED INVESTORS ONLY ISGPS-0683
Equities (Income & Growth) 44.5% Investment Grade Credit 5.2% BlackRock UK Equity Income Sleeve 41.4% BlackRock Global Investment Grade Corporate Bond Fund 5.2%
UK Equity Hedge -7.0%BlackRock Global Equity Income Fund 5.2% High Yield Bonds 12.3%
BlackRock Throgmorton Trust 2.4% High Yield Index Strategy 5.5%BlackRock Emerging Equity Income Fund 1.5% BlackRock Credit Opportunities Sleeve 4.5%
Scottish Mortgage Investment Trust 1.1% BlackStone GSO Loan Fund 2.2%
Equities Thematic 7.7% International Government Bonds (Income) 3.0%European Periphery Basket 3.7% Portuguese Government Bonds 3.0%
US Policy Basket 2.1%Oil Beneficiaries Basket 2.0% Listed Alternatives 5.2%
iShares UK Property Fund 1.1%Equities Tactical 9.7% BlueCrest Blue Trend 1.1%
TOPIX Index 4.1% Foresight Solar Fund 1.1%Options 1.7% NB Distressed Debt Fund 1.0%
DAX Index 1.0% Woodford Patient Capital Fund 0.8%India ETF 1.0%
BlackRock Asian Dragon Fund 0.9% Cash & Short Dated Government Bonds 2.0%BlackRock ASEAN Leaders Fund 0.9% Australian Government Bonds 3.0%
New Zealand Government Bonds 0.9%Volatility Strategies 10.5% Synthetic Cash (margin) -23.0%
Volatility Strategies 10.5% Physical Cash 21.1%
Commodities 0.0% Total 100.0%Gold Options Strategies 0.0%
Portfolio Holdings: August 31st 2015
Source: BlackRock, 31st August 2015. Cash includes derivatives cover and does not include cash held in the UK equity sleeve. Weightings as of date shown and do not necessarily represent current or future portfolio holdings. Reference to the names of each holding mentioned in this communication is merely for explaining the investment strategy, and should not be construed as investment advice or investment recommendation of those holdings.
Why BlackRock?
Strongly positioned to capitalise on the opportunity
Strong Track Record underpins proposition for Shareholders
BlackRock Income Strategies is at the heart of BlackRock’s retirement solutions offering
Excellent reputation in multi-asset
Committed to success in this
growing market space
Marketing and distribution strengths
FOR PROFESSIONAL CLIENTS / QUALIFIED INVESTORS ONLY ISGPS-0683 16
Source: BlackRock 30th Sept 2015. European Equities: ESTOXX, UK Equities FTSE All Share, US Equities: S&P 500, EM Equities: MSCI Em Markets. *TED Spread The TED spread is the difference between the interest rates on interbank loans and on short-term U.S. government debt ("T-bills"). TED is an acronym formed from T-Bill and ED, the ticker symbol for the Eurodollar futures contract.
Global equity market sell-off Peak to trough June 30th to September 30th 2015
Market Snapshot: Q3 2015
Shanghai A Shares: The bubble bursts Dec 31st 2013 to Sept 30th 2015
Volatility at levels not seen since 2011: Vix Index 31st Dec 2007 to 30th Sept 2015
No signs of severe financial market stress: TED Spreads have not moved aggressively*
-40% off the highs
FOR PROFESSIONAL CLIENTS / QUALIFIED INVESTORS ONLY ISGPS-0683 18
Seeking out the best opportunities globally
Australia • Can economy rebalance from dependency
on mining and avoid downturn?
Europe (core) • German Bunds with low yields, re-
pricing of longer end, increase of volatility
• Subdued inflation pushing ECB towards further action
Europe (periphery) • Peripheral sovereigns are reaping the rewards of
reforms and recovery is supported by ECB QE • Reform momentum? • Election woes?
US • How will the Fed react to US labour
market strength? • “global economic and financial
developments” • Fed inertia fuelling market
uncertainty?
UK • Strong economic momentum, however
BoE rate hike priced to 2017.
Emerging Markets • Commodity supercycle
coming to an end • Concerns around China
and knock-on impact • Select opportunities
eg India
Japan • Large QE programme enough to
spur inflation and growth?
Source: BlackRock as at 30 September 2015
For Professional Clients / Qualified Investors Only IISGPS-0693
No asset class is an island
Volatility is making a comeback
Sources: Bloomberg Move Index and VIX Index as at 26 August 2015
Downside protection In Portfolios
Volatility in fixed income markets has been
moving higher since late 2014, it was a matter
of time before this fed in to equity market
volatility
In August, equity volatility reached its highest
level since November 2011 as investors
focused on slowing Chinese growth, falling oil
prices, renewed concern over Greece, and the
prospect of higher interest rates in the US.
As equity volatility moves higher over the
medium term….the cost of mistiming asset
allocation decisions in increasing
0
5
10
15
20
25
30
35
40
0
20
40
60
80
100
120
31/0
1/20
1428
/02/
2014
31/0
3/20
14
30/0
4/20
14
31/0
5/20
14
30/0
6/20
14
31/0
7/20
14
31/0
8/20
14
30/0
9/20
14
31/1
0/20
14
30/1
1/20
14
31/1
2/20
14
31/0
1/20
1528
/02/
2015
31/0
3/20
15
30/0
4/20
15
31/0
5/20
15
30/0
6/20
15
31/0
7/20
15
Vix
Inde
x
Mov
e In
dex
Fixed Income Volatility (MOVE Index) Equity (VIX Index)
FOR PROFESSIONAL CLIENTS / QUALIFIED INVESTORS ONLY ISGPS-0683 20
The Fed wants to hike rates…..
Labour market slack is diminishing
Sources: Blackrock/ Bloomberg/ Thomson Reuters Datastream, July 2015
Avoid duration assets In Portfolios
Its time for the Fed to raise interest rates.
Macro-economic and labour market data in the
US continues to point towards a broad based
and sustained economic recovery
Whilst the Fed have signalled their desire to
begin normalizing interest rates in 2015,
continued oil price declines and uncertainty
around the outlook for global growth may push
interest rate hikes out to the new year.
The market is pricing a gradual pace of hikes
and lower terminal rate
Fed tightening has widespread implications
for global asset prices
0
2
4
6
8
10
12
% u
nem
ploy
ed
US Unemployment
FOR PROFESSIONAL CLIENTS / QUALIFIED INVESTORS ONLY ISGPS-0683 21
The hunt for yield to continue
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
US Treasury US Municipal Global Credit Global High Yield
US Agencies Emerging Market US MBS US CMBS
Euro Periphery Euro Core
Actively managed credit In Portfolios
Fixed Income Asset Yielding over 4% Despite the prospect of rising rates in the
US, the proportion of global fixed income
assets yielding over 4% continues to fall.
With many sovereign and even some
corporate bond yields in negative territory,
investors are desperate to find yield where
they can.
Depressed yields in sovereign bonds should
provide support for investment grade credit.
While default rates remain low, active
management is preferable as rising rates
should induce more volatility into fixed
income markets in 2015.
Sources: Blackrock/ Bloomberg/ Thomson Reuters Datastream, February 2015
FOR PROFESSIONAL CLIENTS / QUALIFIED INVESTORS ONLY ISGPS-0683 22
European QE and the domestic recovery
The ECB surpassed market expectations in
January by announcing a €1.1 trillion program of
quantitative easing.
The domestic recovery in peripheral Europe is
already well underway
Despite recent underperformance in European
sovereign bonds, we think the fundamentals point
to lower yields from here. Supply and demand
dynamics over the summer should cause a gradual
grind lower in yields and the periphery should
converge with the core
As deflationary pressures from the continued fall in
commodity prices may lead the ECB to act further
in the coming months
Peripheral sovereign debt and European domestic equities In Portfolios
Forward Eurozone Inflation Expectations
Sources: Markit 5yr5yr Inflation swaps 08/25/2015
1.4
1.5
1.6
1.7
1.8
1.9
2.0
2.1
2.2
Infla
tion
Rat
e
FOR PROFESSIONAL CLIENTS / QUALIFIED INVESTORS ONLY ISGPS-0683 23
No more bull in the China shop
Most indicators point to slowing growth
Sources: Blackrock/ Bloomberg/ Thomson Reuters Datastream, July 2015
China’s growth is slowing and financial
leverage is reaching its limits as China
attempts to make the transition to a services
based economy.- China cannot deleverage
without accepting lower growth.
Continued RMB depreciation could lead to
further capital outflows and tighter
monetary conditions onshore – an
undesirable outcome for China.
Chinese official GDP continues to print
higher than one would expect looking at
the underlying economic data- but it is
clear that Chinese economic growth is
slowing, and this will have profound
implications beyond emerging markets
Avoid China Related Assets In Portfolios
-20%
0%
20%
40%
60%
% G
row
th
Steel Production
-50%
0%
50%
100%
150%
% G
row
th
Auto Sales
FOR PROFESSIONAL CLIENTS / QUALIFIED INVESTORS ONLY ISGPS-0683 24
FOR PROFESSIONAL CLIENTS / QUALIFIED INVESTORS ONLY ISGPS-0683
Portfolio Holdings: August 31st 2015
Source: BlackRock, 31st August 2015. Cash includes derivatives cover and does not include cash held in the UK equity sleeve. Weightings as of date shown and do not necessarily represent current or future portfolio holdings. Reference to the names of each holding mentioned in this communication is merely for explaining the investment strategy, and should not be construed as investment advice or investment recommendation of those holdings.
26
UK Equities 43.8% Investment Grade Corporate Bonds 5.2% BlackRock UK Equity Income Sleeve 41.4% BlackRock Global Investment Grade Corporate Bond Fund 5.2%
BlackRock Throgmorton Trust 2.4%High Yield Bonds 12.3%
High Yield Index Strategy 5.5%Overseas Equities 15.5% BlackRock Credit Opportunities Sleeve 4.5%
BlackRock Global Equity Income Fund 5.2% BlackStone GSO Loan Fund 2.2%TOPIX Index 4.1%
European Periphery Basket 3.7% International Government Bonds 6.9%US Policy Basket 2.1% Portuguese Government Bonds 3.0%
Oil Beneficiaries Basket 2.0% New Zealand Government Bonds 0.9%Gold Miners Index 1.6% Australian Government Bonds 3.0%
iShares UK Property Fund 1.1%Scottish Mortgage Investment Trust 1.1% Commodities 0.0%
India ETF 1.0% Gold Options Strategy 0.0%DAX Index 1.0%
Individual Equities (legacy) 0.2% Alternatives 4.0%Options -0.7% BlueCrest Blue Trend 1.1%
Equities Futures (Hedging) -7.0% Foresight Solar Fund 1.1%NB Distressed Debt Fund 1.0%
Emerging Market Equities 3.3% Woodford Patient Capital Fund 0.8%BlackRock Asian Dragon Fund 0.9%
BlackRock ASEAN Leaders Fund 0.9% Cash Equivalents -1.4%BlackRock Emerging Equity Income Fund 1.5% Synthetic Cash (margin) -22.5%
Physical Cash 21.1%
Volatility Strategies 10.5%Volatility Strategies 10.5% Total 100.0%
• Expect sustained lower oil prices – any recovery likely to be shallow rather than V-shaped
• Analysts are slow to incorporate new commodity price environment into pricing models
• Potential for sectors where oil is a significant operating cost • Those which indirectly benefit from higher consumer
disposable income and companies with negative EPS sensitivity to the oil price to outperform e.g. Airlines, Trucking, Retail.
• Prefer companies that have not hedged commodity exposure
• Build bespoke basket to reflect these themes • Equal weight constituent companies to avoid stock specific
risk
• Implemented position on 30th January 2015.
Multi-Asset Research
Maximise return from our research
Portfolio construction
Trade example: Oil Beneficiaries basket
Source: BlackRock representative account, breakdown of basket as at 30/1/2015
Market Cap split by Geography
Market Cap split by Industry
ISGPS-0547 27 FOR PROFESSIONAL CLIENTS / QUALIFIED INVESTORS ONLY ISGPS-0683
28 FOR PROFESSIONAL CLIENTS / QUALIFIED INVESTORS ONLY ISGPS-0683
Source: Bloomberg. 10yr weekly correlations of total returns (in local currency) Aug 2005-Aug 2015
Low correlation to equities
Source: Credit Suisse, July 2015
Growing market = Greater opportunity
Source: S&P LCD, March 2015
Leveraged loan spreads remain elevated
Source: Barclays, July 2015
Significant yield pick-up available down the European credit spectrum
BlackRock Credit Opportunities Yield enhancement amidst improving macro and company fundamentals
1
2
3
4
0
5
10
15
20
25
30
Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 Jul-12 Jul-13 Jul-14
%
Pan-European HY Yield % Pan-European IG Yield %Ratio HY Yield to IG Yield (RH Axis)
200250300350400450500550600
Rol
ling
3 M
onth
Ave
rage
of
Term
Loa
n B
New
Issu
e Sp
read
s (b
ps)
050
100150200250300350400450500
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Eur B
n. O
utst
andi
ng
• The high yield market has grown
rapidly post crisis, offering
increased opportunities for credit
selection and generating yield
• Leveraged loan issuance (not
shown) has also been increasing
amidst renewed demand
New issue European
leveraged loan spreads
currently look cheap on a
risk-adjusted basis and
benefit from senior secured
status at good LTV
attachments
Correlation Matrix
European High Yield
European Lev. Loans
Eurostoxx 50 FTSE 100
European High Yield
1.00 0.76 0.66 0.66
European Lev. Loans
0.76 1.00 0.44 0.33
Eurostoxx 50 0.66 0.44 1.00 0.78
FTSE 100 0.66 0.33 0.78 1.00
29
Performance (as at 31st August 2015)*
*As the Company’s investment objective and strategy changed with effect from 27 February 2015, investment performance has not been given for any periods prior to this date. Annual performance to the latest calendar quarter end will be given for the first time from 31 March 2016. **BlackRock took over the investment management of the Company with effect from 27 February 2015. ***NAV performance is calculated based on Net Asset Value with debt at market value and with dividends reinvested. Where a company holds debt, for example in the form of a Bond or Debenture, this can be valued at Par value (i.e. the ultimate cost to the company of redeeming that debt) or, where the debt instrument is quoted, a market valuation may be used to value the debt. BlackRock Income Strategies Trust plc. has a £60m 2031 Bond, which is included in the NAV at market valuation based on the latest available quoted offer price on the London Stock Exchange. ****The Company’s investment objective is, over the medium term (5 to 7 years), to aim to preserve capital in real terms and to grow the dividend at least in line with inflation. The Company targets a total portfolio return of UK Consumer Price Index (“CPI”) plus 4 per cent. per annum (before ongoing charges) over a 5 to 7 year cycle. The percentage calculations given for CPI+4% above are for information purposes.
Performance (£)* 1m (%) 3m (%) 6m (%) Since Inception**
Share Price -1.6 -1.9 1.3 1.8
Net Asset Value*** -3.8 -5.2 -5.6 -5.5
Net Aset Vaue (before deduction of ongoing charges) -3.8 -5.1 -5.4 -5.3
CPI +4%**** 0.6 1.1 2.8 2.8
Sources: BlackRock, Office of National Statistics
FOR PROFESSIONAL CLIENTS / QUALIFIED INVESTORS ONLY ISGPS-0683
30
Fund Information (as at 31st August 2015)*
Fund Information (as at 31.08.2015)
Net Asset Value including income (debt at fair value): 134.06p
Share Price 134.75p
Premium to cum income NAV (debit at fair value): 0.5%
Total assets (including income): £440.0 (m)
Net yield*: 5.0%
2014 Ongoing charges ratio** 0.65%
* Yield calculations are based on dividends announced in the last 12 months as at the date of release of this announcement. ** Calculated as a percentage of average net assets and using expenses excluding interest costs for the year ended 30 September 2014.
FOR PROFESSIONAL CLIENTS / QUALIFIED INVESTORS ONLY ISGPS-0683
Board Members
James Long (Chairman) was appointed in 2006. He was formerly Director of Risk and Compliance for AstraZeneca Europe, Corporate Finance Director of Inchcape plc and Managing Director, Asia and Emerging Markets, for the ESAB Group. He is Chairman of JPMorgan Asian Investment Trust plc.
Lynn Ruddick was appointed in 2010. She is a fellow of the Chartered Association of Certified Accountants. She is non-executive chairman of Fidelity Special Values plc, and a non-executive director of Standard Life UK Smaller Companies Trust plc, a member of the Investment Committee of the Pearson Group Pension Plan and Chairman of the Scottish & Newcastle and Western Provident Association Pension Plans. Before retiring from Merrill Lynch Investment Managers in 2004 she headed their investment trust business unit.
FOR PROFESSIONAL CLIENTS / QUALIFIED INVESTORS ONLY ISGPS-0683 31
Board Members
Jim Grover was appointed on 25 June 2013. He was, until September 2013, Group Strategy Director of Diageo plc and a member of its Executive Committee.
Jimmy West (Senior Independent Director) was appointed in 1995 and was formerly a Managing Director of Lazard Brothers and Co Ltd and Chief Executive of Lazard Asset Management Ltd. He is Chairman of New City High Yield Fund Ltd and a non-executive director of JPMorgan Income & Capital Trust plc, Aberdeen Smaller Companies High Income Trust plc and Threadneedle UK Select Trust plc. He is Chairman of Associated British Foods Pension Fund Ltd.
Ian Russell (Chairman of the Audit Committee) was appointed in 2008. He was formerly Chief Executive of Scottish Power plc. He is currently non-executive Chairman of Johnston Press plc, Remploy Ltd, and the Advanced Power AG advisory board, a non-executive director of British Polythene Industries plc, The Mercantile Investment Trust plc, and HICL Infrastructure Company Limited, and an adviser to the Clyde Bergemann Power Group.
FOR PROFESSIONAL CLIENTS / QUALIFIED INVESTORS ONLY ISGPS-0683 32
Board Members
FOR PROFESSIONAL CLIENTS / QUALIFIED INVESTORS ONLY ISGPS-0683
Julian Sinclair was appointed as a director of BlackRock Income Strategies Trust plc on 21 July 2015. He is the Chief Investment Officer at Talisman Global Asset Management Limited. Prior to joining Talisman, he was a Senior Portfolio Manager at BlueBay Asset Management plc and a Partner at Altima Partners LLP. He started his career at Gartmore as an analyst and portfolio manager.
33
Diversified Strategies Team
Andrew Warwick Managing Director (22 yrs experience)
Diversified Strategies Team Top-down, macro asset allocation team responsible for portfolio management, risk monitoring, and tactical investment ideas Managing assets for individual investors, institutions, pension plans, central banks and sovereign wealth funds Risk & Quantitative Analysis: Daily interaction & stress testing with dedicated risk managers and analysts
Dominic Byrne
Joanna Langton
Kyle Smith
John Mullins
BlackRock Global Investment Platform
Multi-Asset Research
+170 investment professionals dedicated to multi-asset
investing
Global Investment Teams
+1,700 investment professionals with specialties across all
asset classes
Risk & Quantitative Analysis
+500 professionals partner with investment teams to monitor
and analyze risk
BlackRock Solutions
Proprietary Aladdin® platform integrates portfolio
management, risk analytics, trading and operations
BlackRock Investment Institute
Internal forum facilitates idea sharing and debates insights
Adam Ryan Managing Director
Head of Team (22 yrs experience)
Sara Morgan Managing Director (25 yrs experience)
19 Investment Professionals
Source: BlackRock as at October 2015
34
Jason Byrom
Aatish Patel
Einar Benediktsson
James Ayling
Rupert Harrison
Conan MacKenzie
Mindaugas Mazeikis
Carlo Zarattini
Beata Harasim
Filip Wyszynski
Mihail Calinescu
Roderick MacKenzie
For Professional Clients / Qualified Investors Only IISGPS-0693
• Alternative investments (such as property, renewable power) are expected to have a different risk and return profile to the rest of the Trust’s investment portfolio. These investments will be relatively illiquid and it may be difficult for the Company to realise these investments over a short time period, which may have a negative impact on the Trust’s performance.
• The Company may from time to time utilise gearing. Gearing works by magnifying the company’s performance. If a company ‘gears up’ and then markets rise and the returns on the investments outstrip the costs of borrowing, the overall returns to investors will be even greater. But if markets fall and the performance of the assets in the portfolio is poor, then losses suffered by the investor will also be magnified.
• Net Asset Value (NAV) performance is not the same as share price performance, and shareholders may realise returns that are lower or higher than NAV performance.
• The Trust invests in fixed interest securities such as corporate or government bonds which pay a fixed or variable rate of interest (also known as the ‘coupon’) and behave similarly to a loan. These securities are therefore exposed to changes in interest rates which will affect the value of any securities held.
• The Trust invests in fixed interest securities issued by companies which, compared to bonds issued or guaranteed by governments, are exposed to greater risk of default in the repayment of the capital provided to the company or interest payments due to the fund.
• The Trust may be exposed to finance sector companies, as a service provider or as counter party for financial contracts. Liquidity in the financial markets has been severely restricted, causing a number of firms to withdrawn from the market, or in some extreme cases, becoming insolvent. This may have an adverse affect on the activities of the fund.
• Derivatives may be used substantially for complex investment strategies. These include the creation of short positions where the Investment Manager artificially sells an investment it does not physically own. Derivatives can also be used to generate exposure to investments greater than the net asset value of the fund / investment trust. Investment Managers refer to this practice as obtaining market leverage or gearing. As a result, a small positive or negative movement in stockmarkets will have a larger impact on the value of these derivatives than owning the physical investments. The use of derivatives in this manner may have the effect of increasing the overall risk profile of the Funds.
• Certain developing countries are especially large debtors to commercial banks and foreign governments. Investment in debt obligations (sovereign debt) issued or guaranteed by developing governments or their agencies involve a high degree of risk.
• The Trust invests a large portion of assets which are denominated in other currencies; hence changes in the relevant exchange rate will affect the value of the investment.
• The Trust can invest in Exchange Traded Funds and Collective Investment Schemes that may also be managed by BlackRock.
Key Risks
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Important Information
This material is for distribution to Professional Clients (as defined by the FCA Rules) and should not be relied upon by any other persons.
Issued by BlackRock Investment Management (UK) Limited, authorised and regulated by the Financial Conduct Authority. Registered office: 12 Throgmorton Avenue, London, EC2N 2DL. Tel: 020 7743 3000. Registered in England No. 2020394. For your protection telephone calls are usually recorded. BlackRock is a trading name of BlackRock Investment Management (UK) Limited.
Past performance is not a guide to future performance. The value of investments and the income from them can fall as well as rise and is not guaranteed. You may not get back the amount originally invested. Changes in the rates of exchange between currencies may cause the value of investments to diminish or increase. Fluctuation may be particularly marked in the case of a higher volatility fund and the value of an investment may fall suddenly and substantially. Levels and basis of taxation may change from time to time.
Any research in this document has been procured and may have been acted on by BlackRock for its own purpose. The results of such research are being made available only incidentally. The views expressed do not constitute investment or any other advice and are subject to change. They do not necessarily reflect the views of any company in the BlackRock Group or any part thereof and no assurances are made as to their accuracy.
This document is for information purposes only and does not constitute an offer or invitation to anyone to invest in any BlackRock funds and has not been prepared in connection with any such offer. BlackRock have not considered the suitability of this investment against your individual needs and risk tolerance. Any decision to invest must be based solely on the information contained in the Company’s Prospectus, and the latest half-yearly report and unaudited accounts and/or annual report and audited accounts. BlackRock Investor Pulse survey, conducted in association with research agency Cicero Group in September 2013 amongst a nationally representative sample of 17,600 individuals in 12 countries aged 25 to 74 years old, of which 2,000 UK residents. The results of this survey are provided for information purposes. The conclusions are intended to provide an indication of the current attitude of a sample of citizens in the UK to saving and investing and should not be relied upon for any other purposes. Any research in this document has been procured and may have been acted on by BlackRock for its own purpose. The results of such research are being made available only incidentally. The views expressed do not constitute investment or any other advice and are subject to change. They do not necessarily reflect the views of any company in the BlackRock Group or any part thereof and no assurances are made as to their accuracy. This document is for information purposes only and does not constitute an offer or invitation to anyone to invest in any BlackRock funds and has not been prepared in connection with any such offer. Important information The BlackRock Investment Trusts ISA is managed by BlackRock Investment Management (UK) Limited. The BlackRock Investment Trusts Savings Plan is operated by BlackRock Investment Management (UK) Limited. BlackRock have not considered the suitability of this investment against your individual needs and risk tolerance. To ensure you understand whether our product is suitable, please read the Key Features document, current Shareholder circular and the Annual and Half Yearly Reports which are available from the manager and provide more information about the risk profile of the investment. We strongly recommend you seek financial advice prior to investing. Non-mainstream pooled investment products status The Company currently conducts its affairs so that its securities can be recommended by IFAs to ordinary retail investors in accordance with the FCA’s rules in relation to non-mainstream investment products and intends to continue to do so for the foreseeable future. The securities are excluded from the FCA’s restrictions which apply to non-mainstream investment products because they are shares in an investment trust.
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