Table of Contents I. BlackRock Update

Employees’ Retirement Association
Fresno County Employees’ Retirement Association February 6, 2008 Andrew Phillips, Managing Director, Co-Head of US Fixed Income Dan McLaughlin, CFA, Managing Director

Table of Contents I. BlackRock Update II. Review of Fixed Income Investment Philosophy and Process III. Market Review and Update IV. Portfolio Review Appendices A. FCERA Guidelines Summary

Total Assets of US$1.36 Trillion Institutional Client Types
BlackRock Update Acquired fund of funds business from Quellos Group, LLC on 1 October Adds attractive absolute return products and enhances ability to deliver innovative solutions to clients Bryan White, former Quellos CIO, leads combined fund of funds platform with more than $28 billion1 in assets under management New Developments Multi-Asset Portfolio Strategies (MAPS) group Focuses on portable alpha, target and relative return, global tactical & strategic asset allocation, LDI, and fiduciary services Multi-Strategy Fixed Income Alpha (MSFIA) strategy Alpha engine for portable alpha product; complements Multi- Strategy Hedged Equity Alpha (MSHEA) strategy Prepared Portfolios for DC investors: Target Date and Target Risk funds Enhanced Commodity strategy for US and non-US investors Existing Products - Investment and Growth Global real estate equity and debt businesses total $29 billion Interest in alpha extension strategies from US, UK, and Australia Growth in equity strategies, particularly US large cap, natural resources, global, European, UK, and quantitative equity Opportunities in global bond and local currency mandates As of 31 December 2007 Total Assets of US$1.36 Trillion Alternatives / Real Estate $71 Billion Asset Allocation / Balanced $139 Billion Liquidity $313 Billion Equity $322 Billion Fixed Income $511 Billion Risk Management $5.75 Trillion Investment Accounting $100 Billion Institutional Client Types Corporations % Insurers % Public Funds & Union / Industry % Sub-Advisory % Official Institutions % Non-profit & Healthcare % Government Authorities % As of 31 December 2007 1BAA assets as of 1 Oct 2007; assets for BAA closed end funds reflect net asset value as of the most recent valuation date plus unfunded capital commitments

BlackRock, Inc. Corporate Governance
Ownership Structure Approximately 49% Merrill Lynch & Co.; 45% voting interest 34% The PNC Financial Services Group, Inc. 17% Employees and the public NYSE Listing BLK Board Composition 17 Directors: 3 BlackRock, 2 Merrill, 2 PNC, 10 independents Chairman & CEO Laurence Fink President Rob Kapito Executive Committee (ExCo) Laurence Fink, Paul Audet, Robert Connolly, Bob Doll, Rob Fairbairn, Peter Fisher, Ben Golub, Charles Hallac, Robert Kapito, Barbara Novick, Quintin Price, Susan Wagner, and Bryan White Operating Committee (OpCo) Rob Kapito, Scott Amero, Paul Audet, Bob Doll, Ben Golub, Peter Hayes, Michael Huebsch, Susan Mink, Fred Lieblich, Milan Lint, Barbara Novick, and Bryan White Organizational Initiatives Strategic & corporate management overseen by Laurence Fink and Sue Wagner Rob Kapito oversees day-to-day operations Committees work with ExCo and OpCo to streamline governance process BlackRock Board Members Current Composition Laurence Fink William Albertini* Mathis Cabiallavetta* Dennis Dammerman* Bill Demchak Robert Doll Kenneth Dunn* Gregory Fleming Murry Gerber* James Grosfeld* Robert Kapito David Komansky* Sir Deryck Maughan* Thomas O’Brien* Linda Gosden Robinson* James Rohr John A. Thain *independent

BlackRock is a Global Organization
12/31/07 Client Domicile Countries: 1 Argentina (SDESA- Still managing UCITS low duration account) 3/9/07 2 Australia 3 Austria 4 Bahamas 5 Bahrain 6 Barbados 7 Belgium (Hewlett Packard Belgium Penstion Fund) 3/9/07 8 Bermuda 9 Botswana 10 Brazil (UCIT Client GPS) 11 Brunei Darussalam 12 Canada 13 Chile 14 China 15 Colombia 16 Denmark 17 Egypt 18 Estonia (ESB) 11/27/06 19 Finland 20 France 21 Germany 22 Hong Kong 23 Iceland 24 India 25 Ireland 26 Isle of Man 27 Israel 28 Italy 29 Japan 30 Jersey/Guerney (channel islands) 31 Jordan (added ) 32 Kazakhstan 33 Kenya (added ) 34 Korea (South), Republic of 35 Kuwait 36 Liechtenstein 37 Luxembourg 38 Malaysia 39 Mexico 40 Netherlands 41 New Zealand 42 Nicaragua 43 Nigeria 44 Norway 45 Pakistan 46 Panama 47 Philippines 48 Poland (MLIIF Client) 11/27/06 49 Portugal 50 Russian Federation 51 Saint Lucia 52 Saudi Arabia 53 Singapore 54 South Africa 55 Spain 56 Sudan 57 Sweden 58 Switzerland 59 Taiwan (Republic of China) 60 Thailand 61 Trinidad and Tobago 62 Tunisia (formerly Ivory coast acct) 63 United Arab Emirates 64 United Kingdom 65 Venezuela (PDVSA- Instl $ mkt fund) 3/9/07 66 United States Not including: Territories: Cayman Islands Puerto Rico Virgin Islands, British Virgin Islands, US NOTE: Cyprus - Rich Guerin or Nicholas Stoop to contact when HEPF funds so Cyprus can be colored Updated (11/22/06) Added Geneva to list of cities on map Updated (11/27/06) Colored in Poland and Estonia as clients Updated (1/12/06) Colored in Russia as clients Updated (3/9/07) Colored Argentina, Venezuela Updated ( ) Hong Kong* investment center Updated ( ) Colored in Qatar Updated ( ) Colored in Malayasia Updated (30 Aug 2007) Deleted Qatar Updated (10 October 2007) Colored in Jordan as clients Colored in Kenya as clients Updated ( ) Added Nigeria Added Malaysia *Countries that do not appear in ADAM but query the ticker to double check 2Q07 (8.1.07) Atlanta 7 Bloomfield, 4 Boston 207 Chicago 18 Charlotte 1 Cincinnati 2 Dallas 7 Washington1 Wilmington 286 Pennington 0 Houston 2 Jackonsville 4 Los Angeles 3 Laguna Hills 4 La Jolla, CA 1 Miami 2 Florham Park 113 Newport Beach 28 New York 1031 Palm Beach 2 Pittsburgh 4 Philadelphia 15 Phoenix 2 Princeton 965 Regional Offices 105 Seattle 2 San Francisco 75 Stamford 5 St.Petersburg 2 North America 2895 Amsterdam 14 Douglas, Isle of Man 7 Edinburgh 135 Eindoven 14 Frankfurt 25 Geneva 1 London 768 Luxembourg 13 Madrid 10 Milan 16 Munich 7 Paris 8 Jersey 7 Stockholm 1 Zurich 10 Europe 1036 Brisbane 2 Melbourne 109 Sydney 19 Australia 130 Hong Kong 45 Singapore 11 Toyko 166 Taipei 12 Asia 234 Montevideo 1 South America 1 All Professionals 4300 11/09/07 Added: Brussels Vienna Stockholm Peterborough Replaced: Jersey with St. Helier Take off: Shanghai BlackRock is a Global Organization Over 5,500 employees in 19 countries, including more than 700 investment professionals Seventeen investment centers in US, UK, Europe, Asia and Australia Clients located in over 60 countries North America: Atlanta Boston* Chicago Durham* Florham Park* Newport Beach* New York* Los Angeles Philadelphia* Pittsburgh Princeton* San Francisco* Seattle* Wilmington* Regional Offices Asia: Hong Kong* Seoul Singapore Taipei Tokyo* UK, Continental Europe & Middle East: Amsterdam Brussels Eindhoven* Frankfurt Geneva Luxembourg Madrid Milan Munich Paris Australia: Brisbane Melbourne* Perth Sydney* South America: Montevideo Stockholm Vienna Zurich United Kingdom Edinburgh* London* Peterborough Isle of Man St. Helier Institutional clients *Denotes investment centers As of 31 December 2007

Clients Benefit from Pooled Expertise of BlackRock’s Resources
“One BlackRock” reflects an organizational structure with functional, regional, and product dimensions Ensures consistency on a global basis Tailors products and services to clients and to local needs Promotes teamwork Facilitates operational integrity and efficiency BlackRock Total AUM of US$1.36 Trillion Over 5,500 Employees Account Management Pension Plans Foundations · Endowments Financial Institutions Official Institutions Corporations Consultants Private Clients New York · Boston · Chicago Edinburgh · Florham Park · Hong Kong London · Princeton · San Francisco Seattle Sydney Tokyo · Wilmington Regional and Country Offices Worldwide Portfolio Management Fixed Income Equity Multi-Asset Portfolio Strategies Liquidity Real Estate Alternatives Risk & Quantitative Analysis New York · Boston · Durham Edinburgh · Eindhoven · Florham Park Hong Kong · London · Melbourne Newport Beach · Philadelphia Princeton · San Francisco Seattle · Sydney · Tokyo · Wilmington BlackRock Solutions® Financial Modeling Investment Data & Accounting Advisory & Hedging Portfolio Analytics Trading Systems Technology Transition Management New York · Edinburgh · London Melbourne · Philadelphia · Princeton Tokyo · Wilmington Firmwide Infrastructure Portfolio Administration & Operations Strategy & Product Development Facilities Management Legal & Compliance Finance Human Resources

Diverse Products in Multiple Asset Classes and Styles
Total AUM of US$1.36 Trillion Fixed Income: $511 Billion US Core/Core PLUS/Core Enhanced Index 130,998 26% Global/Regional/Non-Dollar 85,226 17% US Intermediate 65,697 13% US Municipals 37,329 6% US Long 32,369 US Short 28,291 5% Mortgages/CMBS 24,154 CDOs 22,377 4% LIBOR 14,723 3% Managed Accounts 14,458 2% Stable Value 12,650 Enhanced Cash 10,368 High Yield 10,128 Corporates 6,443 1% Bank Loan 5,182 US Inflation-Linked 3,980 Emerging Markets 2,613 Absolute Return 1,858 <1% Preferred 1,675 Equity & Asset Allocation / Balanced: $461 Billion Asset Allocation / Balanced 13,820 30% Index/Enh Index 75,145 16% US Large/Multi-Cap 65,871 14% Sector-Specific 55,155 12% UK 23,906 5% Global 20,834 Europe 15,318 4% Asia Pacific 15,157 3% Managed Accounts 13,548 Emerging Markets 10,647 2% Latin America 8,186 US Mid/SMID Cap 6,799 US Small Cap 6,349 1% EAFE/Non-US 5,435 Alternatives & Real Estate: $71 Billion Private Equity & Debt: Private Equity FoF, BlackRock Kelso Capital Hedge Fund of Funds: Broadly Diversified Core, Focus, Custom Real Estate Equity: Core, Core/Enhanced Core, Value-Added, UK Property, European Property, Australian Property Real Estate Debt: Anthracite Capital (REIT), Carbon Capital I, II, and III Single-Strategy Hedge Funds: Diversified Fixed Income, Municipal Bond, Credit-Oriented Fixed Income, Sector-Specific Equity, Region-Specific Equity Capital Markets: Opportunistic Credit, Opportunistic Mortgage, CDOs, Business Development Corporation Commodities: Active Long-Only and Hedged, Passive/Futures-Based Multi-Asset Class Strategies: Portable Alpha, Target and Relative Return, Global Tactical and Strategic Asset Allocation, LDI, and Fiduciary Services Liquidity: $313 Billion Prime 193,622 62% Tax-Exempt 49,994 16% International 25,995 8% Government 24,461 Securities Lending 19,265 6% As of 31 December 2007

Investment Philosophy Emphasizes Relative Value
UTX-DB rep portf beginning 1Q’01 (SBC-C before). 2Q02 use UTX-DB. 3Q02 onwards, use BOE. Portfolio duration is controlled within a narrow band Value is added primarily through sector and sub-sector rotation and security selection Representative Core PLUS Portfolio as of 31 December 2007 As of 4Q03 representative portfolio is BOE-DB Narrow Duration Band vs. Benchmark Active Sector Rotation As of 1Q07 representative portfolio is DIA-CORE Years Extended Sectors include: HY, Non-$, and Emg Market Quarters Ended Quarters Ended BlackRock Core PLUS Portfolio BlackRock Duration Band Treasury/Agency MBS Corporates ABS CMBS Extended Sectors

Sub-Sector Rotation Adds Value
LB Agg info from website BlackRock’s relative value approach encompasses a broad range of sub-sectors within the corporate and mortgage sectors All securities are evaluated within our risk management framework Mortgages/CMBS chart: The 45%/55% split used consistently in the past still needs to be applied to Generic/Seasoned PT’s. We need to apply the split as follows: i.e., At 3Q03 LB MBS=34.63 Generic = (45%)(34.63) = Seasoned = (55%)(34.63) = 19.05 Representative Core PLUS Portfolio as of 31 December 2007 Corporates/Asset-Backeds Mortgages/Commercial Mortgage-Backeds Corp sub-sector: May not foot to full corporate figure in slide on prev page b/c the “other” buckets could be excluded here when we cannot identify an industry (others are generally prf stk conv. Bds. and/or structured/index bonds) Quarters Ended Quarters Ended Finance Industrial Utility Emerging Markets 15-Yr Generic 30-Yr Generic ARMs CMOs Non-US Non-Credit ABS High Yield 15-Yr Seasoned 30-Yr Seasoned CMBS/Multifamily

Investment Strategy Group Sets Macro Investment Themes
Top-down determination of investment themes based upon bottom-up inputs Investment themes establish parameters for bottom-up sub-sector and security selection Pre-ISG Meetings ISG Meeting Investment Themes Global Governments Team Interest Rate Risk Investment Strategy Group Co-Chairs Scott Amero, CIO Peter Fisher Risk Review Team Presentations Discussion Dissent Special Topics Minutes Country/Currency Risk Global Credit Team Yield Curve Risk Global Mortgage Team Cash Flow Risk Global ABS Team Credit Risk Risk & Quantitative Analysis Team Liquidity Risk

Andy Phillips ∙ Stuart Spodek ∙ Matthew Marra ∙ Brian Weinstein
Bottom-Up Portfolio Construction is a Team Effort Senior portfolio managers oversee groups of portfolios and determine investment needs based upon ISG themes, mandate type, and account guidelines Scott Amero, CIO, and Peter Fisher are co-heads of fixed income Core Team Andy Phillips ∙ Stuart Spodek ∙ Matthew Marra ∙ Brian Weinstein Steve Switzky Kelly Campbell Joshua Friedberg Sector specialists source opportunities and work together to address the needs of all portfolios Lead sector specialists facilitate idea generation US Govt / Agency Derivatives Residential Mortgages Commercial Mortgages Corporates High Yield ABS / CDO Municipals Stuart Spodek1 Peter Fisher Matthew Marra Jeff Jacobs Tom Musmanno David Sayles Brian Weinstein Josh Friedberg Jack Hattem Scott Wetzel New York Jeff Cucunato1 Scott Amero Michael Huebsch John Burger Andrew Yorks Kevin Holt Brad Perkins Stephan Bassas Daniel Chen Marc Dichek Greg Cavallo Kristina Koutrakos Nathaniel Toothaker Europe2 Paul Shuttleworth1 Adam Cohen Daniel McKernan Tom Mondelaers Owen Murfin Marc Rovers Calum Smith Kevin Booth1 James Keenan1 Mark Williams Jeff Gary Tom Colwell Mitchell Garfin Adrian Marshall Derek Schoenhofen Eric Pellicciaro1 Dave Chesney Ron D’Vari Michael Lustig Glen Perillo Andy Phillips Laura Powers Kishore Yalamanchili Colm Murtagh Ron Sion Daron Greene Matthew Kraeger Sean MacDonald Alexander Reiss Marshall Sebring Matthew Rodriguez Steve Switzky1 Ron D’Vari Reginald Leese Mark Warner Kelly Campbell Jeanie Spano Andrew Kaufman Steve Kleiman Todd Kopstein1 Ron D’Vari1 Reginald Leese Kishore Yalamanchili David Carney Michael Khankin Steve Ruth Sriram Sumaithangi Xavier Goss Peter Hayes1 Ted Jaeckel James Pruskowski Walter O’Connor Joe Andrews Marie Sheehan Margaret Heymsfeld Non-Dollar Global EMD Euro Yen AUD Sterling Andrew Gordon1 Scott Thiel1 Brita Steffelin Yudhveer Chaudhry Yoni Saposh Amar Bashir Hiroyuki Nozaki Javier Revelo Imran Hussain1 Daniel Ruiz Daniel Shaykevich Scott Thiel1 Michael Krautzberger1 Jason Smith Hans Kamminga Michel Van der Sanden Chris Allen Neil Weller Shigeru Endo1 Shuji Fujita Kunihide Takeuchi Steve Miller1 Russell Maddox Penny Chin Cameron Garlick Joseph Berbari Andrew Belshaw1 Stuart Niman Panos Ferendinos David Curtin ¹Lead sector specialist; 2European investment centers include London, Eindhoven, and Edinburgh

Deep and Experienced Team of Analysts Supports Investment Process
Research analysts are embedded within the portfolio management team Sit with portfolio managers in New York, Edinburgh, London, Princeton, and Tokyo High Yield Corporates Investment Grade Corporates - US Investment Grade Corporates – Non-US Non-Corporate ABS, MBS, CMBS Municipals Peter Schwartzman1 Rob Wartell1 Zach Alpern Philip Brendel Dave Delbos Anthony Heyman Atif Malik Chirag Patel Paul Merwin Ryan Mollett Amit Patel Melvin Rosa Doug Oare1 Matt Anavy Ned Hole Ann Keane Gary Low Keven Maloney Keith Olsen Karina Saade Sandra Sullivan Ted Stevens Dave Taerstein Bruce Hamilton1 Kevin Craig Andrew Fraser Shuji Fujita Christian Holder Stephen Hunnisett Tatiana Spineanu Kunihide Takeuchi David Bai Christian Holder Michael Khankin Steve Kleiman Keith Olsen Alexander Reiss Gabriel Rivera Mark Schnell Ted Stevens Sriram Sumaithangi Jack Erbeck1 Jim Schwartz1 Brian DePaulo Chris Fornal Susan Heide Karen Hogan Lidia Martinez Tim Milway Joe Pangallozzi Joe Plonski Brian Pyhel Todd Smith 1Lead analyst Proprietarily-developed tools aid research process Galileo™, our global research database, allows analysts to share, store and access information and insights across asset classes and locations The Matrix™, our risk monitor, enables portfolio managers to view issuer exposure across portfolios on a real-time basis Mortgage prepayment modeling provides option-based valuations and scenario analysis across a wide variety of mortgage types Quandamental™ process for structured finance securities Rigorous collateral analysis and expected loss forecasting Advanced modeling of complex cash flow structures Proprietary ongoing deal surveillance using updated econometric models

BlackRock is a Leader in Risk Management
TALKING POINTS BlackRock is a LEADER in Risk Management. This is our reputation. Don't be afraid to state it boldly. The picture on the right purposely uses the same language as slide one to talk about types of risk. Here are three major risk events of the past decade which resulted in major dislocations in the market, and the dispersion of returns across managers was huge. In each case the returns were more than 800bp from the top performer to the bottom performer for the year in which this risk event occurred. In all cases, BlackRock's performance was at the higher end of the spectrum without being the "highest". These are real examples with real numbers and illustrate the importance and relevance of "cash flow risk", "liquidity risk", and "credit risk", and BlackRock's ability to manage through these events to the benefit of our clients. BlackRock is a Leader in Risk Management Risk events have increased investor awareness and sensitivity Investment success reflects significant commitment to people and systems since inception of firm Global research team includes approximately 50 analysts BlackRock Solutions® has over 1,000 professionals and $5.75 trillion under risk management Risk-aware culture focuses on providing consistent, risk-adjusted returns Benefit of risk management tools is highlighted during periods of increased market uncertainty Risk Events Impact Results 1994: Cash Flow Risk Mortgage prepayments slowed dramatically as the Fed tightened 1998: Liquidity Risk LTCM had broad market impact 2002: Credit Risk Corporate debacles resulted in numerous downgrades and high profile bankruptcies 1994 Return (%) High Median Low BLK MBS LB MBS n n 1998 Return (%) High Median Low BLK Core LB US Agg 2002 Return (%) High Median Low BLK Core LB US Agg g g n g n g n n n g g g Mortgage-Broad Market and Active Sector Rotation Manager Universe. Source: (c) Frank Russell Company © Russell/Mellon Analytical Services LLC, All rights reserved.

U.S. Economy and Markets in Review
Text updated: 1/22/08 Fixed Income Market Performance Equity Market Performance Interest rates closed the quarter lower as uncertainties surrounding monetary policy, housing weakness, and credit market turmoil resulted in a massive flight to quality. Capping off a volatile year, U.S. equities experienced severe pressure during the final two months of trading. Uncertainty related to housing weakness and the credit crisis resulted in a significant decline in consensus earnings expectations, pummeling a market which was already disappointed by the extent of Fed easing in December. Graphs updated: 1/16/08 TO UPDATE THE GRAPHS: Economic Data GDP: Gross Domestic Product Annual Rates, Reported Quarterly Core CPI and PPI (Year-over-Year) CORE CPI: BLOOMBERG CPI XYOY <INDEX> GO CORE PPI: BLOOMBERG PPI XYOY <INDEX> GO Source: Bloomberg Summary The FOMC lowered the benchmark interest rate by 75 basis points to 3.50% on January 22nd, the biggest single cut since The emergency reduction came a week prior to their regularly scheduled meeting, as the Federal Reserve was confronted with a global stock sell-off fanned by increased fears of a recession. The discount rate was also lowered by the same amount to 4.00%. Policymakers stated they took the action “in view of a weakening of the economic outlook and increasing downside risks to growth.” The Fed has now cut its target rate by a sharp 1.75 percentage points since August 2007.

U.S. Economy and Markets in Review
Text updated: 1/28/08 Economic Data 2-Year Treasury Yields vs. Fed Funds Target Rate Home Sales and Prices Graphs updated: 1/24/08 2-year Treasury Yields (weekly, daily data: BLOOMBERG: GT2 <GOVT> HP Source: Bloomberg Growth The U.S. economy expanded at a 4.9% annual pace in the third quarter, revised from a previously estimated 3.9%. The change was caused by an upward revision in private inventory estimates and a better trade balance. This growth compares with gains of 0.6% and 3.8% in the first and second quarters, respectively. U.S. employment posted its smallest increase in over four years while the jobless rate hit a two-year high, as the housing downturn continued to take its toll in December. Payrolls grew by 18,000 after a 115,000 increase in November. The unemployment rate rose to 5.0% from 4.7% in November. Average hourly earnings rose 0.4%, and were 3.7% higher from a year earlier. U.S. consumer confidence unexpectedly rose in December due to an increase in consumers’ expectations for the state of economic activity in the near future. The Conference Board’s Index of Consumer Sentiment rose to 88.6, the first gain in five months, from a revised 87.8 in November. Orders for U.S.-made durable goods increased by 0.1% in November, following a 0.4% decline in October. Excluding transportation goods, orders fell 0.7%. Housing starts declined 14% in December to an annual rate of million. For all of 2007, starts were down 25%. Building permits slid to the lowest level in 12 years, falling 8.1% to a million annual pace. New home sales fell 4.7% in December to a seasonally adjusted annual rate of 604,000, also a 12-year low. Year-over-year new home sales were down 26%. Existing home sales fell 2.2% in December to an annual rate of 4.89 million, declining 13% for all of 2007. Inflation Headline consumer prices increased 0.3% in December, bringing the year-on-year rate to 4.1%. Excluding food and energy, CPI climbed 0.2% and is up 2.4% year-on-year. U.S. producer prices fell 0.1% in December, following a 3.2% gain in November. Headline and core PPI rates are up 6.3% and 2.0% year-on-year, respectively. Housing Starts (weekly, with daily data): BLOOMBERG: NHSPSTOT <INDEX> HP Housing Starts

Treasury and Agency Securities
Text updated: 1/4/08 Treasuries Agencies Treasuries sold off following the Fed’s announcement of their new Term Auction Facility (TAF), designed to help ease liquidity concerns over year end. The curve steepened 4 bps in December, as the 2-year rose 5 bps while 10-year yields climbed 9 bps, closing the year at 3.05% and 4.02%, respectively. Agency debt posted positive excess returns in December. Though excess returns were still negative for the year, agencies were the best performer among spread sectors. GSE portfolios continue to shrink which has kept long-term debt issuance light. Graphs updated: 1/17/08 10-Year Nominal Treasury Yields Yield Curve Shifts Net Purchases of US Fixed Income Securities by all Foreign Investors – 6-Month Rolling Sum To Update the Graphs: Yield Curve Shifts: BLOOMBERG: C15 <GOVT> GO, page forward 3m 2y 3y 5y 10y 30y Source: Bloomberg Source: US Treasury Portfolio Strategy Treasury and agency debt outstanding (weekly): click on grand total Short duration versus the index with a bias to position the portfolio for a yield curve steepener. Continue to be underweight agencies, but have opportunistically added to gain swap spread exposure.

Investment Grade Corporate Bonds
Text updated: 1/4/08 Outlook Investment grade credit gained 8 bps over duration-matched Treasuries in December. The 25 bps cut by the Fed in the middle of the month disappointed market participants who were looking for a larger reduction to help stem the slowdown in economic activity. However, subsequent steps by the Fed and other central banks to relieve short-term funding pressures helped to lead a rally in credit. Despite announcements of further write-downs related to subprime mortgage investments, capital was still readily available to most large financial institutions as evidenced by convertible and preferred issuance out of Fannie Mae, Freddie Mac, Citigroup, and Wachovia. Lastly, the announcement that Citigroup would take its seven SIVs back on balance sheet was a net positive for the broader credit market and helped support credit into the quiet holiday period. Graphs updated: 1/10/08 To Update the Graphs: Corporate Issuance (monthly): Fixed Income  Products Credit  High Grade  Reports Investment Grade Corporate Update  Investment Grade Corporate Bond Net Supply Investment Grade Corporate Bond Gross Issuance Lehman Credit Index: OAS versus Credit Quality Composition Baa = 22% OAS = 97 Baa = 32% OAS = 181 $ Billions Lehman Credit Index (monthly): Fixed Income  FI Indices Credit  Sector Weights Source: Lehman Brothers Portfolio Strategy Opportunistically adding exposure through attractively valued new issues. Prefer the shorter end of the curve where swap spreads are wider and breakevens more attractive. Favor financials over industrials and are biased towards high quality, non-cyclical credits.

Mortgage-Backed Securities
Text updated: 1/4/08 Outlook Mortgages posted 11 bps of excess return versus Treasuries in December. The basis, along with most other high quality spread sectors, benefited from tighter swap spreads and better than expected financing over year end. The underperformance across spread products in November was primarily due to investors preparing for a wave of delevering trades at distressed levels in December, as financing over year end was expected to be extremely difficult and at highly unattractive rates when available. These concerns were allayed with the announcement of the Fed’s newly created Term Auction Facility program which made $40 billion in financing available over year-end to a wide array of investors, as well as news that many large financial institutions secured new capital, eliminating the need for “fire sales” to delever balance sheets. While mortgages outperformed Treasuries, they underperformed CMBS, investment grade corporates, and swap spreads in December. Graphs updated: 1/24/08 To Update the Graphs: Housing Starts All MBS Holdings by Large Banks: October Present Housing Starts (monthly): BLOOMBERG: NHSPSTOT <INDEX> HP $ Billions For MBS Holdings by Large Banks (weekly): Source: Bloomberg Source: Federal Reserve Portfolio Strategy Remain overweight MBS, with a bias toward premium (above par) coupons relative to discounts within pass-throughs. Continue to look for opportunities in high quality, but less liquid assets in the CMBS, ABS, ARM and CMO markets.

Commercial Mortgage-Backed Securities (CMBS)
Text updated: 1/4/08 Outlook Volatility continued in the Commercial Real Estate sector in December, with CMBS posting 107 bps of excess return. CMBS triple-A spreads to benchmark swaps tightened as a number of fast money investors and dealers covered short positions in the synthetic CMBX product by using cash bonds as a substitute as the basis was dislocated. Four deals came to market totaling $6.6 billion, down from an average monthly issuance in 2007 of $25 billion, as the origination of loans in the commercial real estate space is grinding to a halt. Limited issuance has caused thinly traded subordinate cash spread visibility to remain weak. Underlying commercial real estate fundamentals remain sound and CMBS delinquencies are at historically low levels. Graphs updated: 1/24/08 To Update the Graphs: Investment Grade CMBS Spreads to Swaps Seasoned CMBS Delinquencies Spread to Swaps of CMBS (weekly): Fixed Income  Products  Securitized Products  US CMBS  Market Monitor  CMBS Index  retrieve spread for AAA locked out, AA, A, BBB.  click on spread figure and hover arrow to pull most recent spread data Basis Points AAA Spreads AA Spreads A Spreads BBB Spreads Source: Lehman Brothers Source: Bear Stearns Portfolio Strategy Overweight the sector as fundamentals remain strong and short to mid-term supply technicals look positive. Higher-rated CMBS classes, both new and old, continue to represent attractive relative value, offering stable, high credit quality cash flows and less idiosyncratic risk than other spread sectors. Favor stable, seasoned deals which have collateral with transparent histories. Overweight the short to intermediate and 10-year part of the curve. Seasoned CMBS Delinquencies (monthly): Ask Andy Kaufman to provide data from Bear Sterns

Asset-Backed Securities (ABS)
Text updated: 1/16/08 Outlook Graphs updated: 1/24/08 Volatility and lack of liquidity continued to be the dominant themes within the ABS sector during December. In terms of residential ABS, negative housing data and continued deterioration in the subprime mortgage market caused the ABX indices to sell off early in the month, closing down roughly 5-10pts for the month. One positive headline for the sector was the announcement of the Treasury department to enforce a rate reset freeze on select subprime borrowers who currently have adjustable rate mortgages. Following the announcement, various tranches of the ABX indices rallied as much as 15pts but eventually sold off as investors viewed the changes as a marginal positive for the sector. In addition, the major rating agencies downgraded numerous subordinate home equity bonds and CDOs which caused spreads on subordinate bonds to widen even further. On the contrary, senior AAA rated home equity bonds rallied as buyers returned to the market with the feeling that senior bonds had been oversold. Consumer ABS spreads also began to widen early in the month due to a lack of liquidity and investors’ fear of contagion from the subprime mortgage sector but rallied late in the month. Auto and credit card ABS sectors tightened 10-20bps. To Update the Graphs: Spread to Tsy of ABS (weekly): Fixed Income  Products  Securitized Products  US ABS  Market Monitor  beneath the graph click on expand click on the spread to treasury figure for the 3-year AAA ABS sector you’re looking for (ex home equity loans AAA 3)  hover arrow to pull most recent spread data Spreads to Treasuries of Selected ABS Sub-sectors (AAA-Rated) Annual Issuance of Asset-Backed Securities 886 792 629 $ billions 454 529 368 287 231 180 190 201 153 108 Credit Card 3-Yr Auto Loan 3-Yr Home Eq. 3-Yr Source: Lehman Brothers Source: JP Morgan Annual Issuance of ABS (weekly): Bond.hub.com JPM  Securitized Products  ABS Flagship Research  Global ABS/CDO Weekly Market Snapshot  US Public New Issue By Month Portfolio Strategy Remain cautious on credit and valuations. Bearish on the home equity sector but are selectively purchasing bonds from issuers/servicers with strong track records. Favor short, high quality paper. Adding two-year auto paper from prime issuers with low concentrations of subprime borrowers. Neutral on credit card paper at current levels and are negative on subordinated home equity bonds.

High Yield Corporate Bonds
Text updated: 1/4/08 Outlook Despite a strong start to the year, subprime-related concerns caused the high yield index to return 1.87% in 2007, the smallest return since Relative to duration-neutral Treasuries, high yield lagged 777 bps. The overall flight to quality was reflected in returns by credit quality. However, instead of double-B credits leading the way, single-B paper fared better. The best performing sectors in December were paper, wirelines, healthcare, and utilities. The worst performing sectors were building materials, automotive and retailers. The yield spread on the index at year-end was 569 bps, with a yield to worst of 9.64% versus 7.70% at the end of 2006. Graphs updated: 1/3/08 To Update the Graphs: Altman’s Default Rate (quarterly) Bond Hub- Click on C Do an advanced search: criteria: - In the last year - Keyword: altman - product: high yield Spread to Worst of High Yield Index (quarterly): Bond Hub- Click on CS Spread to Worst Data: Fixed Income  Global leveraged finance Indices  High Yield Index Scroll down to “Data monthly from 1986 – Month to date Retrieve latest quarterly data Spread to Worst of High Yield Index vs. Altman’s Default Rates High Yield Corporate Bonds: Yield Spread to 10-Year Treasuries Spread Default Rates Basis Points Basis Points Source: Spreads from CSFB; Default Rates from Altman/SSB Source: Lehman Brothers Portfolio Strategy Maintain an allocation of approximately 2% in high-yield. Emphasis on select names at the higher quality end of the credit spectrum. Biased toward the Wireless and Media Non-Cable sectors, while underweight Gas Pipelines and Food & Beverage sectors. High Yield Corporate Bonds: Yield Spread to 10-year Treasuries (monthly): Go to Fixed Income  Fixed Income Indices  US High yield  Change as of date to month-end  Basic Statistics  scroll down to quality distribution for Ba and B take the average spread number

Global Economic Summary
Non-U.S. Dollar Text updated: 1/22/08 Global Economic Summary The market remains focused on global monetary policy prospects. Recent data in Europe confirm the existing softening trend in activity and is presenting clearer evidence about the magnitude of the credit crunch and the extent to which it is spilling over to the European economy. The risk from credit-market fallout has caused the ECB to shelve its tightening plans for now, and in Japan, a lackluster growth picture and uncertainty in the global economy will likely delay the normalization of monetary policy by the BOJ. Graphs updated: 1/24/08 Central Bank Rates Dollar Index (DXY) Source: Central Bank Websites Source: Bloomberg To Update the Graphs: Central Bank Watch ECB: Rates left unchanged at 4.00% in January Bank of Japan: Rates left unchanged at 0.50% in January Bank of Canada: Cut rates by 25 basis points to 4.00% in January Reserve Bank of New Zealand: Rates left unchanged at 8.25% in December Bank of England: Rates left unchanged at 5.50% in January Performance of the U.S. dollar was broadly stronger during December amid a major credit squeeze and another wave of risk liquidation. Wide scale repatriation and accumulation of dollars for balance sheet needs helped the greenback reach 8-week highs against the Euro, Swiss Franc and Japanese Yen around mid-month. However, most of these gains were ceded towards the end of the month, with the Yen and Swiss franc finishing mostly unchanged, down 0.4% and 0.1% respectively against the USD. Dollar Index (weekly, daily data): BLOOMBERG: DXY <CURRENCY> HP Portfolio Strategy Long position in European bonds.

Emerging Markets Text updated: 1/4/08 Graphs updated: 12/3/07 Outlook
Emerging Market external debt reversed the negative return in November and gained 0.62% in December, to close 2007 up 6.28%. The negative events in Pakistan concerning Benazir Bhutto remained mostly local with no contagion effects into other countries. Emerging market currencies generally had positive returns across the board, but experienced some selling pressure in the middle of the period due to strength in the U.S. dollar against other global currencies. Local rates continued to move higher in many countries albeit at a slower pace than that experienced in November, particularly in Brazil and Turkey. Going into 2008, the main downward risks to the asset class are global episodes of risk aversion similar to those experienced with subprime in 2007, and the materialization of a prolonged slowdown in the global economy triggered by slowing consumption in the United States. The direction of commodity prices will remain important for balance of payments expectations. Policy makers may allow currencies to appreciate further to mitigate the inflation shock experienced through 2007 with commodity prices. Graphs updated: 12/3/07 Index ticker: EMBIGLOBAL Year-to-Date Performance -- External Debt vs. Local Debt Year-to-Date Spread Performance Source: JP Morgan, Bloomberg Portfolio Strategy Retain strong quality and liquidity biases. Small positions in Argentina, Peru and Colombia.

Fixed Income Market Review: Fourth Quarter 2007
Data released over the course of the fourth quarter suggest that some of the underlying growth momentum in the real economy has slowed. Headwinds to growth in 2008 include mortgage-related weakness, higher energy prices and tighter lending standards. Yield Curve Shifts Yield Curve The year ended with lower yields, a steeper curve, and higher implied volatility – a risk reduction theme we have witnessed in the U.S. markets since late in the second quarter. The FOMC cut the fed funds target rate 25 bps at each of its scheduled meetings over the quarter, and it now stands at 4.25%. The benchmark 2-year note rallied 94 basis points over the quarter to close the year at 3.05%. The yield curve steepened 55 bps as thirty-year yields fell 38 bps, closing the quarter at 4.45%. Source: Bloomberg Spread Sector Performance The global fixed income markets were hostage to headlines in the fourth quarter, as news of portfolio write-downs, ratings downgrades and malfunctioning money markets fueled a flight to quality. Spread sectors of the Lehman Aggregate Index dramatically underperformed Treasuries in November. With the exception of the asset-backed sector, spreads bounced back and tightened during December. Nonetheless, spread sector excess returns for the year were significantly negative. Q407 credit sub-sector excess returns: Industrials (-205 bps), Utilities (-227 bps), Financials (-333 bps). Duration-Adjusted Excess Returns vs. Treasuries (Basis Points) 4Q07 2007 Source: Lehman * Lehman High Yield 2% Issuer Capped Index **Lehman Emerging Markets Index (US Dollar)

Broader Fixed Income Opportunities Appear To Be Ahead In 2008
Market environment changes during 2007 increased the dispersion of investment returns across sectors. Factors which had supported low volatility and reduced risk premia were: Prolonged tightening of global monetary policy Increased financial innovation and growth of structured products Complacency among investors High returns of lower-quality credit assets Perilous risk/reward profiles Factors contributing to the reemergence of volatility: Housing market turmoil Credit market volatility Dispersion of Returns Across Sectors - Lehman U.S. Aggregate Index Duration-Adjusted Excess Returns vs. Treasuries by Calendar Year* *As of 31 December 2007 Source: Lehman Brothers We believe active management and a focus on relative value opportunities should benefit from the return of market volatility.

Fresno County Employees' Retirement Association Portfolio Review and Outlook: 4Q07
BlackRock Strategy as of December 31, 2007 Deteriorating growth fundamentals likely will prompt additional rate cuts from the Fed. However, weakness in consumption may not bring any lessening of inflationary pressure. Probable implications include a steeper yield curve, a reversal of the monetary easing at the Fed’s earliest opportunity and the persistence of volatility. Modestly short duration relative to the index with a slight yield curve steepening bias. Spread risk: Overweight relative to the index. Limited exposure to “plus” sectors. Sector biases: Treasuries: Underweight with a bias toward on-the-run issues. Allocation to TIPS. Agencies: Underweight. Mortgages: Remain overweight MBS, with a bias toward premium (above par) coupons relative to discounts within pass-throughs. Continue to look for opportunities to swap out of agency MBS and into other high quality, but less liquid assets in the CMBS, ABS, ARM and CMO markets. Corporates: Opportunistically adding exposure through attractively valued new issues. Prefer the shorter end of the curve where swap spreads are wider and breakevens more attractive. Favor financials over industrials and are biased towards high quality, non-cyclical credits. CMBS: Overweight. Favor seasoned, high quality issues. ABS: Small overweight with an up-in-quality, tier-1 security bias. Favor short-dated fixed rate auto ABS. High Yield: Modest exposure. Continued focus on higher credit quality names. Non-USD: Long position in European bonds. Small allocation to Japanese yen-denominated debt and Mexican peso securities. Emerging Markets: Small positions in Argentina, Peru and Colombia. Sector Allocation vs. Benchmark (% Market Value) Performance Attribution Positives Negatives Credit underweight Non-dollar allocation ABS security selection CMBS overweight Yield curve positioning Non-agency MBS allocation As of 9/30/07 As of 12/31/07

Portfolio Composition: Fresno County Employees’ Retirement Association
September 30, 2007 Characteristics as of September 30, 2007 Effective Effective Average S&P Duration (Yrs.) Convexity Yield Credit Quality Portfolio AA+ Benchmark AAA Difference Characteristics as of December 31, 2007 December 31, 2007 Effective Effective Average S&P Duration (Yrs.) Convexity Yield Credit Quality Portfolio AA+ Benchmark AAA Difference

Portfolio Characteristics: Fresno County Employees’ Retirement Association
Sector Allocation as of January 25, 2008 Credit Quality as of January 25, 2008 Estimated NAV: $231,551,450 Sector Allocation vs. Lehman Aggregate Index Characteristics as of January 25, 2008 Effective Effective Average S&P Duration (Yrs.) Convexity Yield Credit Quality Portfolio (0.38) AA+ Benchmark (0.26) AAA Difference (0.22) (0.12) 0.87

Portfolio Performance: FCERA
As of December 31, 2007 Gross-of-Fees Total Return in USD (Ann%) Net-of-Fees Total Return in USD (Ann%) 1 Month 4Q07 1 Yr 3 Yr Since Inception Active Return .10 -0.17 -0.42 0.02 0.07 1 Month 4Q07 1 Yr 3 Yr Since Inception Active Return 0.08 -0.23 -0.66 -0.21 -0.16 FCERA Portfolio Lehman US Aggregate Index *Results do not reflect the deduction of management/advisory fees; management/advisory fees and other expenses will reduce a client's return. For example, assuming an annual gross return of 8% and an annual management/advisory fee of 0.25%, the net annualized total return of the portfolio would be 7.74% over a 5-year period. Fees are described in Part II of BlackRock's Form ADV. Past results are not necessarily indicative of future results. **Results reflect the deduction of management fees. The fees for the Fresno County Employees' Retirement Association are 25 basis points on the first $100 million, 20 basis points on the next $100 million, 17.5 basis points on the next $100 million and 15 basis points on assets above $300 million. Past results are not necessarily indicative of future results.

FCERA Guideline Summary

Table of Contents I. BlackRock Update

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