iShares

Why Fixed Income Portfolios?

Their high degree of modularity makes ETFs useful instruments for constructing fixed income portfolios to meet a wide range of risk/return profiles. The Fixed Income Portfolio Builder tool on iShares.com lets users assemble hypothetical portfolios to meet specific risk parameters and/or yield targets, generating an actual sample portfolio that includes holdings and weights. Portfolios can be modified over time based on changing market conditions, views, or investor circumstances that would warrant revisions to risk and return objectives. Users can also modify inputs to perform scenario analyses.

Investors have long looked to fixed income as an important component of a balanced portfolio that can provide stability and offset some of the volatility associated with the rest of their portfolio.

The fixed income market offers a wide spectrum of risk, return and credit quality characteristics to suit a number of portfolio applications and investor objectives. From Treasury Inflation Protected Securities (TIPS) that seek to preserve an investor's purchasing power in the face of rising price levels, to municipal bonds that can provide tax-free income, to securitized instruments like mortgage-backed bonds — the fixed income marketplace continues to evolve to help meet investor's needs.

Carefully consider the iShares Funds' investment objectives, risk factors, and charges and expenses before investing. This and other information can be found in the Funds' prospectuses, which may be obtained by calling 1-800-iShares (1-800-474-2737), or by viewing or downloading a prospectus. Read the prospectus carefully before investing.

Investing involves risk, including possible loss of principal. Diversification may not protect against market risk.

Bonds and bond funds will decrease in value as interest rates rise. TIPS can provide investors a hedge against inflation, as the inflation adjustment feature helps preserve the purchasing power of the investment. Because of this inflation adjustment feature, inflation protected bonds typically have lower yields than conventional fixed rate bonds and will likely decline in price during periods of deflation, which could result in losses. Government backing applies only to government issued securities, not iShares exchange traded funds. A portion of the Fund’s income may be subject to federal or state income taxes or the alternative minimum tax. Capital gains, if any, are subject to capital gains tax. Mortgage-backed securities are subject to prepayment and extension risk and therefore react differently to changes in interest rates than other bonds. Small movements in interest rates may quickly and significantly reduce the value of certain mortgage-backed securities.

An investment in the fund(s) is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

No proprietary technology or asset allocation model is a guarantee against loss of principal. There can be no assurance that an investment strategy based on the tools will be successful.

The iShares Funds ("Funds") are distributed by BlackRock Investments, LLC (together with its affiliates, "BlackRock").

© 2000-2012 BlackRock. All rights reserved. iShares® and BlackRock® are registered trademarks of BlackRock. All other trademarks, servicemarks or registered trademarks are the property of their respective owners.

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