asset allocation and your portfolio

Asset Allocation and Your Portfolio

Asset Allocation Basics

Key Benefits of Asset Allocation

How to Use Asset Allocation

| NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE |


Asset allocation basics

Asset Allocation:A Strategic Division of Assets

Stocks

Cash Equivalents

Bonds


Diversify Further Within Stocks


StyleGrowth and

Value

Small and mid-sized company stocks involve greater risks than those customarily associated with larger companies. Foreign investment entails special risks. These risks are heightened in emerging markets. Emphasizing a particular industry sector involves greater risk than customarily associated with a more diversified portfolio.

SizeSmall, Mid and

Large

SectorTechnology, Energy

and Healthcare

Geography

Domestic and Foreign


Style: Growth and Value


Investing involves risk. The information shown is for illustrative purposes only.

Higher

Lower

Growth Growth Growth Value

Value Value Value Growth

Price/Earnings

Ratio

Price/Book Ratio

Expected Earnings

Growth Rate

Dividend Yield


Size: Small, Mid and Large


0%

5%

10%

15%

20%

10% 13% 16% 19% 22% 25%

15-Year Risk vs. Return (as of December 31, 2009)

Source: PSN Enterprise. Large Cap is represented by the S&P 500 Index. Mid Cap is represented by the S&P 400 Mid Cap Index. Small Cap is represented by the S&P 600 Small Cap Index. Past performance is no guarantee of future results. Returns assume reinvestment of all distributions. Risk is measured by standard deviation of quarterly returns. It is not possible to invest directly in an index.

Retu

rn

Risk

Large Cap

Mid CapSmall Cap


Geography: Domestic and Foreign


Global Market Share Over Time

66%

34%

46%

54%

1970 2009

Source: Standard & Poor’s; Morgan Stanley Capital International. US companies represented by the S&P 500 Index. Non-US companies represented by the MSCI EAFE Index.


Sector:Technology, Energy and Healthcare


2000 Utilities Healthcare Financials

2001 Materials Cons. Disc. Industrials

2002 Cons. Staples Materials Energy

2003 Technology Materials Cons. Disc.

2004 Energy Utilities Telecom

2005 Energy Utilities Financials

2006 Telecom Energy Utilities

2007 Energy Materials Utilities

2008 Cons. Staples Healthcare Utilities

2009 Technology Materials Cons. Disc.

Year First Second Third

Top Three Sectors: Total Returns (2000-2009)

Source: Standard & Poor’s, a division of The McGraw-Hill Companies; Lipper, Inc. Past performance does not guarantee or indicate future results. Investing involves risk. Standard & Poor’s offers sector indexes on the S&P 500 based upon the Global Industry Classification Standard (GICS), a standard that is jointly maintained by Standard & Poor’s and Morgan Stanley Capital International (MSCI). Each stock is classified according to sector, industry group, industry and sub-industry according to its largest source of revenue. For informational purposes only. This information does not represent the performance of any particular investment. The S&P 500 Index and the S&P sectors cannot be invested in directly.



Diversify Further Within Bonds

Fixed income securities are subject to the risks associated with debt securities including credit, price and interest rate risk. Bond values will decline as interest rates rise. Lower-rated bonds may contain more risk due to the increased possibility of default. US government bonds are guaranteed as to payment of principal and interest if held to maturity. Foreign investment entails special risks.

SectorCorporate, Government

and Mortgage

Credit Quality

High and Low

GeographyDomestic and Foreign

MaturityLong,

Intermediate and Short


Diversify Further WithinBonds: Sector & Credit


2005 2006 2007 2008 2009

Cash3.1%

High Yield Bonds11.8%

US Treasuries

9.1%

US Treasuries

14.0%


US Treasuries

2.8%

Cash4.9%

Investment Grade

Bonds 7.2%

Investment Grade

Bonds 6.2%

Investment Grade

Bonds 5.2%


Investment Grade

Bonds 4.3%

Low Duration Bonds6.9%



Investment Grade

Bonds 2.6%


Cash5.0%

Cash2.1%

Cash0.2%


US Treasuries

3.1%


High Yield Bonds-26.2%

US Treasuries -

3.7%Source: PSN Enterprise. For informational purposes only. Past performance does not guarantee or indicate future results. Investing involves risk. It is not possible to invest directly in an index. The information shown does not reflect any particular investment. Performance returns assume the reinvestment of all distributions. High Yield Bonds are represented by the Merrill Lynch US High Yield Master Index. Cash is represented by the Merrill Lynch US Treasury Bill 3 Month Index. US Treasuries are represented by the Merrill Lynch US Treasury Bill Master Index. Low Duration Bonds are represented by the Merrill Lynch 1-3 Year Corporate & Government Index. Investment Grade Bonds are represented by the Merrill Lynch US Domestic Master Index.

Calendar Year Total Returns


Diversify Further WithinBonds: Maturity


2005 2006 2007 2008 2009Muni 22+

Years6.8%

Muni 22+ Years6.6%

Muni 3-7 Years5.3%

Muni 3-7 Years5.9%

Muni 22+ Years23.6%

Muni 12-22 Years4.4%


Muni 7-12 Years4.8%

Muni 1-3 Years5.2%


Muni 7-12 Years2.8%

Muni 7-12 Years4.6%

Muni 1-3 Years4.7%

Muni 7-12 Years2.2%

Muni 7-12 Years9.8%

Muni 1-3 Years1.4%

Muni 3-7 Years3.4%


Muni 12-22 Years-6.3%

Muni 3-7 Years7.2%

Muni 3-7 Years1.3%

Muni 1-3 Years3.3%

Muni 22+ Years0.9%

Muni 22+ Years

-14.5%

Muni 1-3 Years4.2%

Source: PSN Enterprise. For informational purposes only. Past performance does not guarantee or indicate future results. Investing involves risk. It is not possible to invest directly in an index. The information shown does not reflect any particular investment. Performance returns assume the reinvestment of all distributions. Muni 1-3 Years is represented by the ML 1-3 Year Municipal Securities Index. Muni 3-7 Years is represented by the ML 3-7 Year Municipal Securities Index. Muni 7-12 Years is represented by the ML 7-12 Year Municipal Securities Index. Muni 12-22 Years is represented by the ML 12-22 Year Municipal Securities Index. Muni 22+ Years is represented by the ML 22+ Year Municipal Securities Index.

Calendar Year Total Returns


Key benefits of asset allocation

Three Major Benefits of Asset Allocation1 Gain exposure to rotating market leaders

2 Help reduce exposure to volatility

3 Potentially increase your returns


1Gain Exposure to Rotating Market Leaders

Key benefits of asset allocation

2000 Fixed Income Large Cap Value Cash

2001 Fixed Income Cash Small Cap

2002 Fixed Income Cash Large Cap Value

2003 Small Cap International Large Cap Value

2004 International Small Cap Large Cap Value

2005 International Large Cap ValueLarge Cap

Growth

2006 International Large Cap Value Small Cap

2007Large Cap

GrowthInternational Fixed Income

2008 Fixed Income Cash Small Cap

2009Large Cap

GrowthInternational Small Cap

Year First Second Third

Source: PSN Enterprise. Past performance does not guarantee or indicate future results. Investing involves risk. This information is for illustrative purposes only. It does not reflect any particular investment. Large Cap Value stocks—Russell 1000 Value Index. Large Cap Growth stocks—Russell 1000 Growth Index. Large Cap Core stocks—S&P 500 Index. Small Cap stocks—Russell 2000 Index. International stocks—MSCI EAFE Index. Fixed Income—Barclays Capital US Aggregate Index. Cash—Merrill Lynch US Treasury Bill 3 Month Index. It is not possible to invest directly in an index.

Top three asset classes: Total Returns 2000-2009


2Key benefits of asset allocation

Sources: BlackRock; PSN Enterprise. Past performance does not guarantee or indicate future results. Investing involves risk. Stocks are represented by the S&P 500 Index. Bonds are represented by the Merrill Lynch US Treasuries 10+ Year Bond Index. Bonds held to maturity offer a fixed rate of return. It is not possible to invest directly in an index.

Help Reduce Exposure to Volatility

The Efficient Frontier: 1980-2009

8%

9%

10%

11%

12%

9% 10% 11% 12% 13% 14% 15% 16%Risk

Ret

urn

100% Stocks

100% Bonds


3Key benefits of asset allocation

Potentially Increase Your Returns

Return: 7.4%Risk: 3.5%

Cash24%

Stocks 8%

Bonds68%

Return: 7.6%Risk: 3.5%

Cash20%

Bonds80%

Higher Return PortfolioFixed Income Portfolio

Asset allocation does not assure a profit or protect against a loss.Source: PSN Enterprise, BlackRock. Risk and return are measured by standard deviation and compound annual return, respectively. They are based on monthly data over the period 1984 to 2008. Stocks are represented by the performance of the S&P 500® Index, bonds by the Barclays Capital Bond Index and cash by the Merrill Lynch 3-month Treasury Bill Index. It is not possible to invest in an index. Past performance does not guarantee or indicate future results. The information provided is for illustrative purposes only and is not meant to represent the performance of any particular investment.


How to use asset allocation

Asset Allocation Is Personal

Aggressive Conservative

Small-Cap

Stocks

Large-Cap

Stocks

High-Yield Bonds

International Stocks

Mortgage Bonds

Cash

GovernmentBonds

The above allocations are for illustrative purposes only and are not intended as investment advice.

10%10%

25%

10%

40%

5%

20%

20%

40%

5%

15%

Mortgage Bonds

Cash

Large-Cap

Stocks

International Stocks



Asset Allocation Requires Tune Ups

*Standard deviations are calculated using monthly returns.Sources: BlackRock, PSN Enterprise. Stocks are represented by 25% Russell 1000 Value Index, 25% Russell 1000 Growth Index, 25% Russell 2500 Index and 25% MSCI EAFE Index. Bonds are represented by the Barclays Capital US Aggregate Bond Index. It is not possible to invest directly in an index. Assumes reinvestment of all dividends

Investment of $1,000,000 in a Portfolio Containing 50% Stocks and 50% Bonds on 1.1.85

Bonds50%

Stocks50%

Bonds 50%Final Portfolio Value: $10,485,84825-Year Average Annual Return: 9.9%

25-Year Standard Deviation*: 8.3%

Portfolio with Annual Rebalancing on 12.31.09

Bonds38% Stocks

62%

Final Portfolio Value: $9,413,35125 Year Average Annual Return: 9.4%25 Year Standard Deviation*: 10.2%

Portfolio without Rebalancing on 12.31.09

DifferenceFinal Portfolio Value: $1,072,497

25-Year Average Annual Return: 0.5%25-Year Standard Deviation*: 1.9%



Dollar Cost Averaging:Discipline Rewarded

Hypothetical example. Does not represent any particular investment. No investment is risk free, and a systematic investment plan does not ensure profits or protect against losses in declining markets. Because Dollar-Cost averaging involves continuous investment in securities regardless of fluctuating price levels, you should carefully consider your ability to continue to purchase during periods of price declines.

Add dollar cost averaging

Month Purchased Price/Share

Shares Purchased Cost

January $25 40 $1,000

February $25 40 $1,000

March $20 50 $1,000

April $20 50 $1,000

May $18 55.6 $1,000

June $16 62.5 $1,000

July $15 66.7 $1,000

August $15 66.7 $1,000

September $17 58.8 $1,000

October $20 50 $1,000

November $25 40 $1,000

December $27 37 $1,000

Total $243 617.3 $12,000

Average Price per Share Average Cost per Share (Dollar-Cost Averaging)

$20.25 ($243/12) $19.44 ($12,000/617.3)


Risks of Asset Allocation

1 General market risk (value of portfolios will fluctuate with market conditions)

2 Asset allocation does not assure a profit or protect against a loss3 Performance is dependant on ability to select appropriate asset

categories


Important InformationThe S&P 500 Index is an unmanaged index that consists of the common stocks of 500 large capitalization companies, within various industrial sectors, most of which are listed on the New York Stock Exchange. The S&P MidCap 400 Index is a market value-weighted index that consists of 400 domestic stocks and measures the performance of the midsize company segment of the US market. The S&P 600 SmallCap 600 Index is an unmanaged market-value weighted index consisting of 600 domestic stocks, representing all major industries in the small-capitalization of the US stock market. The Merrill Lynch US High Yield Master Index tracks the performance of below investment-grade US dollar-denominated corporate bonds publicly issued in the US domestic market. The Merrill Lynch US Treasury Bill 3 Month Index is an unmanaged index based on the value of a 3-month Treasury Bill assumed to be purchased at the beginning of the month and rolled into another single issue at the end of the month. The Merrill Lynch US Treasury Bill Master Index tracks the performance of all outstanding Treasury Bills issued by the US government. The Merrill Lynch 1-3 Year Corporate & Government Index is comprised of investment grade corporate bonds and agency and US Treasury securities with a maturity ranging from one to three years. The Merrill Lynch US Domestic Master Index includes a mixture of government bonds, corporate bonds and mortgage pass-through securities of investment-grade quality, having maturity greater than or equal to one year. The Merrill Lynch 1-3 Year Municipal Securities Index tracks the performance of municipal investment-grade debt of US municipalities having at least one year and less than three years remaining term to maturity. The Merrill Lynch 3-7 Year Municipal Securities Index tracks the performance of municipal investment-grade debt of US municipalities having at least three years and less than seven years remaining term to maturity. The Merrill Lynch 7-12 Year Municipal Securities Index tracks the performance of municipal investment-grade debt of US municipalities having at least seven years and less than 12 years remaining term to maturity. The Merrill Lynch 12-22 Year Municipal Securities Index tracks the performance of municipal investment-grade debt of US municipalities having at least 12 years and less than 22 years remaining term to maturity. The Merrill Lynch 22+ Year Municipal Securities Index tracks the performance of municipal investment-grade debt of US municipalities having at least 22 years remaining term to maturity. The Merrill Lynch Municipal Master Index tracks the performance of the investment-grade US municipal bond market.


Important Information (cont’d)The Russell 1000 Value Index is composed of those Russell 1000 securities with less-than-average growth orientation, generally having low price-to-book and price-to-earnings ratios, higher dividend yields and lower forecasted growth values. The Russell 1000 Growth Index is composed of those Russell 1000 securities with greater-than-average growth orientation, generally having higher price-to-book and price-to-earnings ratios, lower dividend yields and higher forecasted growth values. The Russell 2000 Index is a market-weighted small capitalization index composed of the smaller 2,000 stocks, ranked by market capitalization, of the Russell 3000 Index. The Russell 2500 Index consists of the bottom 500 companies in the Russell 1000 Index, as ranked by total market capitalization, and all 2,000 companies in the Russell 2000 Index. The Morgan Stanley Capital International (MSCI) EAFE Index represents international equity performance and is a capitalization-weighted index based on securities from Europe, Australasia and the Far East. The Barclays Capital Aggregate Bond Index is an unmanaged index composed of more than 5,000 investment-grade taxable bonds. The Merrill Lynch US Treasuries 10+ Year Index is an unmanaged index which includes US Treasury securities with maturities greater than 10 years.


Investing involves risk. This presentation is provided as an educational tool only. BlackRock is not engaged in rendering any legal, tax, accounting or investment advice. Investors should consult with qualified professionals for this type of advice. Data not provided by BlackRock, although deemed to be reliable, is not guaranteed as to accuracy or completeness.

You should consider the investment objectives, risks, charges and expenses of any BlackRock mutual fund carefully before investing. The fund’s prospectus contains this and other information about the fund and is available by calling 800-882-0052 or from your financial professional. The prospectus should be read carefully before investing.

| NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE |

Important Information (cont’d)

BLACKROCK is a registered trademark of BlackRock, Inc.

Prepared by BlackRock Investments, LLC, member FINRA

© 2010 BlackRock, Inc. All Rights Reserved

Feburary 2010

asset allocation and your portfolio

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