FEBRUARY 28, 2014, AS AMENDED APRIL 2, 2014
PROSPECTUS
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BlackRock Global Allocation Fund,
Inc. | Investor, Institutional and Class R Shares
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BlackRock Global Allocation Fund
Investor A:
MDLOX Investor B: MBLOX Investor C: MCLOX Institutional: MALOX Class R: MRLOX
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This Prospectus contains information
you should know before investing, including information about risks. Please read it before you invest and keep it for future
reference.
The Securities and Exchange
Commission has not approved or disapproved these securities or passed upon the adequacy of this Prospectus. Any representation to the contrary is a
criminal offense.
Not FDIC Insured No Bank Guarantee May Lose Value
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Fund Overview
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Key facts and details about the Fund listed in this prospectus including investment objectives, principal investment strategies,
principal risk factors, fee and expense information and historical performance information
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11
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Details About the
Fund
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12
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15
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Account Information
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Information about account services, sales charges & waivers, shareholder transactions, and distributions and other
payments
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26
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29
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41
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42
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Management of the Fund
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Information about BlackRock and the Portfolio Managers
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44
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47
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48
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Financial Highlights
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50
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General Information
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55
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55
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56
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Glossary
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57
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For More Information
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Inside Back Cover
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Back Cover
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Fund Overview
Key Facts About BlackRock Global Allocation Fund,
Inc.
The investment objective of the BlackRock Global Allocation Fund,
Inc. (the Fund″) is to provide high total investment return through a fully managed investment policy utilizing United States and foreign
equity securities, debt and money market securities, the combination of which will be varied from time to time both with respect to types of securities
and markets in response to changing market and economic trends.
Total return means the combination of capital growth and
investment income.
Fees and Expenses of the
Fund
This table describes the fees and expenses that you may pay if you
buy and hold shares of the Fund. You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least
$25,000 in the fund complex advised by BlackRock Advisors, LLC (BlackRock) or its affiliates. More information about these
and other discounts is available from your financial professional or your selected securities dealer, broker, investment adviser, service provider
or industry professional (including BlackRock, The PNC Financial Services Group, Inc. (PNC) and their respective affiliates) (each a
Financial Intermediary) and in the Details About the Share Classes section on page
29 of the Funds prospectus and in the Purchase of Shares section on page II-67 of the
Funds statement of additional information.
Shareholder Fees
(fees paid
directly from your investment)
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Investor A
Shares
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Investor B
Shares
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Investor C
Shares
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Institutional
Shares
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Class R
Shares
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Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering
price)
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5.25
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%
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None
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None
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None
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None
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Maximum Deferred Sales Charge (Load) (as a percentage of offering price or redemption proceeds, whichever
is lower)
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None
1
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4.50
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%
2
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1.00
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%
3
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None
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None
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Annual Fund Operating Expenses
(expenses that you pay each year as a
percentage of the value of your investment)
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Investor A
Shares
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Investor B
Shares
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Investor C
Shares
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Institutional
Shares
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Class R
Shares
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Management Fee
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0.75
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%
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0.75
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%
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0.75
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%
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0.75
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%
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0.75
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%
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Distribution and/or Service (12b-1) Fees
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0.25
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%
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1.00
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%
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1.00
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%
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None
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0.50
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%
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Other Expenses
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0.13
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%
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0.20
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%
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0.13
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%
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0.12
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%
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0.23
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Other Expenses of the Fund
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0.13%
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0.20%
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0.13%
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0.12%
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0.23%
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Other Expenses of the Subsidiary
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Acquired Fund Fees and Expenses
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0.01
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%
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0.01
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%
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0.01
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%
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0.01
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%
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0.01
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%
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Total Annual Fund Operating Expenses
5
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1.14
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%
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1.96
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%
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1.89
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%
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0.88
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1.49
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1
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A contingent deferred sales charge
(CDSC) of 1.00% is assessed on certain redemptions of Investor A Shares made within 18 months after purchase where no initial sales charge
was paid at time of purchase as part of an investment of $1,000,000 or more.
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The CDSC is 4.50% if shares are redeemed in less
than one year. The CDSC for Investor B Shares decreases for redemptions made in subsequent years. After six years there is no CDSC on Investor B
Shares. (See the section Details About the Share Classes Investor B Shares in the Funds prospectus for
the complete schedule of CDSCs.)
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There is no CDSC on Investor C Shares after one
year.
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4
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Other expenses of the BlackRock Cayman Global
Allocation Fund I, Ltd. (the Subsidiary) were less than 0.01% for the Funds last fiscal year.
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The Total Annual Fund Operating Expenses do not
correlate to the ratio of expenses to average net assets given in the Funds most recent annual report, which does not include Acquired Fund Fees
and Expenses.
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3
Example:
This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the time periods indicated
and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the
Funds operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would
be:
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1 Year
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3 Years
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5 Years
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10 Years
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Investor A Shares
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$
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635
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$
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868
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$
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1,120
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$
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1,838
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Investor B Shares
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$
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649
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$
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965
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$
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1,257
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$
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2,073
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Investor C Shares
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$
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292
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$
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594
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$
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1,021
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$
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2,212
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Institutional Shares
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$
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90
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$
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281
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$
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488
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$
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1,084
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Class R Shares
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$
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152
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$
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471
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$
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813
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$
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1,779
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You would pay the following expenses if you do not redeem your
shares:
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1 Year
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3 Years
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5 Years
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10 Years
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Investor B Shares
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$
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199
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$
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615
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$
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1,057
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$
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2,073
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Investor C Shares
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$
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192
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$
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594
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$
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1,021
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$
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2,212
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Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it buys
and sells securities (or turns over its portfolio). A higher portfolio turnover may indicate higher transaction costs and may result in
higher taxes when shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example,
affect the Funds performance. During the most recent fiscal year, the Funds portfolio turnover rate was
50% of the average value of its portfolio.
Principal Investment Strategies of
the Fund
The Fund invests in a portfolio of equity, debt and money market
securities. Generally, the Funds portfolio will include both equity and debt securities. Equity securities include common stock, preferred stock,
securities convertible into common stock, rights and warrants or securities or other instruments whose price is linked to the value of common stock. At
any given time, however, the Fund may emphasize either debt securities or equity securities. In selecting equity investments, the Fund mainly seeks
securities that Fund management believes are undervalued. The Fund may buy debt securities of varying maturities, debt securities paying a fixed or
fluctuating rate of interest, and debt securities of any kind, including, by way of example, securities issued or guaranteed by the U.S. Government or
its agencies or instrumentalities, by foreign governments or international agencies or supranational entities, or by domestic or foreign private
issuers, debt securities convertible into equity securities, inflation-indexed bonds, structured notes, loan assignments and loan participations. In
addition, the Fund may invest up to 35% of its total assets in junk bonds, corporate loans and distressed securities. The Fund may also
invest in Real Estate Investment Trusts (REITs) and securities related to real assets (like real estate- or precious metals-related
securities) such as stock, bonds or convertible bonds issued by REITs or companies that mine precious metals.
When choosing investments, Fund management considers various
factors, including opportunities for equity or debt investments to increase in value, expected dividends and interest rates. The Fund generally seeks
diversification across markets, industries and issuers as one of its strategies to reduce volatility. The Fund has no geographic limits on where it may
invest. This flexibility allows the Fund management to look for investments in markets around the world, including emerging markets, that it believes
will provide the best asset allocation to meet the Funds objective. The Fund may invest in the securities of companies of any market
capitalization.
Generally, the Fund may invest in the securities of corporate and
governmental issuers located anywhere in the world. The Fund may emphasize foreign securities when Fund management expects these investments to
outperform U.S. securities. When choosing investment markets, Fund management considers various factors, including economic and political conditions,
potential for economic growth and possible changes in currency exchange rates. In addition to investing in foreign securities, the Fund actively
manages its exposure to foreign currencies through the use of forward currency contracts and other currency derivatives. The Fund may own foreign cash
equivalents or foreign bank deposits as part of the Funds investment strategy. The Fund will also invest in non-U.S. currencies. The Fund may
underweight or overweight a currency based on the Fund management teams outlook.
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The Funds composite Reference Benchmark has at all
times since the Funds formation included a 40% weighting in non-US securities. The Reference Benchmark is an unmanaged weighted index comprised
as follows: 36% of the S&P 500 Index; 24% FTSE World (ex US) Index; 24% BofA Merrill Lynch Current 5-year US Treasury Index; and 16% Citigroup
Non-US Dollar World Government Bond Index. Throughout its history, the Fund has maintained a weighting in non-US securities, often exceeding the
40% Reference Benchmark weighting and rarely falling below this allocation. Under normal circumstances, the Fund will continue to allocate a
substantial amount (approximately 40% or more unless market conditions are not deemed favorable by BlackRock, in which case the Fund would
invest at least 30%) of its total assets in securities of (i) foreign government issuers, (ii) issuers organized or located outside the U.S.,
(iii) issuers which primarily trade in a market located outside the U.S., or (iv) issuers doing a substantial amount of business outside the U.S.,
which the Fund considers to be companies that derive at least 50% of their revenue or profits from business outside the U.S. or have at least 50% of
their sales or assets outside the U.S. The Fund will allocate its assets among various regions and countries including the United States (but in no
less than three different countries). For temporary defensive purposes the Fund may deviate very substantially from the allocation described
above.
The Fund may use derivatives, including options, futures, indexed securities, inverse securities, swaps
and forward contracts both to seek to increase the return
of the Fund and to hedge (or protect) the value of its assets against
adverse movements in currency exchange rates, interest rates and movements in the securities markets. The Fund may seek to
provide exposure to the investment returns of real assets that trade in the commodity markets through investment in
commodity-linked derivative instruments and investment vehicles such as exchange traded funds that invest exclusively in commodities
and are designed
to provide
this exposure without direct investment in
physical commodities. The Fund may also gain exposure to
commodity markets by
investing up to 25% of its total assets in BlackRock Cayman Global Allocation Fund I, Ltd. (the Subsidiary), a
wholly owned subsidiary of the Fund formed in the Cayman Islands, which invests primarily in
commodity-related instruments.
Principal Risks of Investing in
the Fund
Risk is inherent in all investing. The value of your investment in
the Fund, as well as the amount of return you receive on your investment, may fluctuate significantly from day to day and over time. You may lose part
or all of your investment in the Fund or your investment may not perform as well as other similar investments. The following is a summary description
of principal risks of investing in the Fund.
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Commodities Related Investments Risks
Exposure to the commodities markets may subject the Fund to greater volatility than investments in traditional securities. The value of
commodity-linked derivative investments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates,
or sectors affecting a particular industry or commodity, such as drought, floods, weather, embargoes, tariffs and international economic, political and
regulatory developments.
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Convertible Securities Risk
The market value
of a convertible security performs like that of a regular debt security; that is, if market interest rates rise, the value of a convertible security
usually falls. In addition, convertible securities are subject to the risk that the issuer will not be able to pay interest or dividends when due, and
their market value may change based on changes in the issuers credit rating or the markets perception of the issuers
creditworthiness. Since it derives a portion of its value from the common stock into which it may be converted, a convertible security is also subject
to the same types of market and issuer risks that apply to the underlying common stock.
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Corporate Loans Risk
Commercial banks and
other financial institutions or institutional investors make corporate loans to companies that need capital to grow or restructure. Borrowers generally
pay interest on corporate loans at rates that change in response to changes in market interest rates such as the London Interbank Offered Rate
(LIBOR) or the prime rates of U.S. banks. As a result, the value of corporate loan investments is generally less exposed to the adverse
effects of shifts in market interest rates than investments that pay a fixed rate of interest. The market for corporate loans may be subject to
irregular trading activity, wide bid/ask spreads and extended trade settlement periods.
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Debt Securities Risk
Debt securities, such as bonds, involve interest rate risk, credit risk, extension risk, and prepayment risk, among
other things.
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Interest Rate Risk
The
market value of bonds and other fixed-income securities changes in response to interest rate changes and other factors. Interest rate risk is the risk
that prices of bonds and other fixed-income securities will increase as interest rates fall and decrease as interest rates rise. The Fund may be
subject to a greater risk of rising interest rates due to the current period of historically low rates. For example, if interest rates increase
by 1%, assuming a current portfolio duration of ten years, and all other factors being equal, the value of the Funds portfolio
would be expected to decrease by 10%. The magnitude of these fluctuations in the market price of bonds
5
and other fixed-income securities is generally greater for those securities with
longer maturities. Fluctuations in the market price of the Funds investments will not affect interest income derived from instruments
already owned by the Fund, but will be reflected in the Funds net asset value. The Fund may lose money if short-term or long-term
interest rates rise sharply in a manner not anticipated by Fund management. To the extent the Fund invests in debt securities that may be
prepaid at the option of the obligor (such as mortgage-backed securities), the sensitivity of such securities to changes in interest rates may
increase (to the detriment of the Fund) when interest rates rise. Moreover, because rates on certain floating rate debt securities typically reset only
periodically, changes in prevailing interest rates (and particularly sudden and significant changes) can be expected to cause some fluctuations
in the net asset value of the Fund to the extent that it invests in floating rate debt securities. These basic principles of bond prices
also apply to U.S. Government securities. A security backed by the full faith and credit of the U.S. Government is guaranteed only
as to its stated interest rate and face value at maturity, not its current market price. Just like other fixed-income securities,
government-guaranteed securities will fluctuate in value when interest rates change.
Credit Risk
Credit risk
refers to the possibility that the issuer of a debt security (i.e., the borrower) will not be able to make principal and interest payments when
due. Changes in an issuers credit rating or the markets perception of an issuers creditworthiness may also affect the value of
the Funds investment in that issuer. The degree of credit risk depends on the issuers financial condition and on the terms of the
securities.
Extension Risk
When
interest rates rise, certain obligations will be paid off by the obligor more slowly than anticipated, causing the value of these obligations to
fall.
Prepayment Risk
When
interest rates fall, certain obligations will be paid off by the obligor more quickly than originally anticipated, and the Fund may have to
invest the proceeds in securities with lower yields.
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Derivatives Risk
The Funds use of
derivatives may reduce the Funds returns and/or increase volatility. Volatility is defined as the characteristic of a security, an index or a
market to fluctuate significantly in price within a short time period. A risk of the Funds use of derivatives is that the fluctuations in
their values may not correlate perfectly with the overall securities markets. Derivatives are also subject to counterparty risk,
which is the risk that the other party in the transaction will not fulfill its contractual obligation. The possible lack of a liquid secondary
market for derivatives and the resulting inability of the Fund to sell or otherwise close a derivatives position could expose the Fund to losses and
could make derivatives more difficult for the Fund to value accurately. Valuation may be more difficult in times of market turmoil since many
investors and market makers may be reluctant to purchase complex instruments or quote prices for them. Derivatives also may expose the Fund
to greater risk and increase its costs. Certain transactions in derivatives involve substantial leverage risk and may expose the Fund to potential
losses that exceed the amount originally invested by the Fund. Recent legislation calls for new regulation of the derivatives markets. The
extent and impact of the regulation is not yet known and may not be known for some time. New regulation may make derivatives more costly, may limit the
availability of derivatives, or may otherwise adversely affect the value or performance of derivatives. Certain aspects of the tax treatment of
derivative instruments, including swap agreements and commodity-linked derivative instruments are currently unclear and may be affected by
changes in legislation, regulations or other legally binding authority that could affect the character, timing and amount of the Funds
taxable income or gains and distributions.
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Distressed Securities Risk
Distressed
securities are speculative and involve substantial risks in addition to the risks of investing in junk bonds. The Fund will generally not receive
interest payments on the distressed securities and may incur costs to protect its investment. In addition, distressed securities involve the
substantial risk that principal will not be repaid. These securities may present a substantial risk of default or may be in default at the time of
investment. The Fund may incur additional expenses to the extent it is required to seek recovery upon a default in the payment of principal of or
interest on its portfolio holdings. In any reorganization or liquidation proceeding relating to a portfolio company, the Fund may lose its entire
investment or may be required to accept cash or securities with a value less than its original investment. Distressed securities and any securities
received in an exchange for such securities may be subject to restrictions on resale.
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Emerging Markets Risk
Emerging markets are
riskier than more developed markets because they tend to develop unevenly and may never fully develop. Investments in emerging markets may be
considered speculative. Emerging markets are more likely to experience hyperinflation and currency devaluations, which adversely affect returns to U.S.
investors. In addition, many emerging securities markets have far lower trading volumes and less liquidity than developed markets.
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Equity Securities Risk
Stock markets are
volatile. The price of an equity security fluctuates based on changes in a companys financial condition and overall market
and economic conditions.
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6
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Foreign Securities Risk
Foreign investments
often involve special risks not present in U.S. investments that can increase the chances that the Fund will lose money. These risks
include:
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The Fund generally holds its foreign securities and cash in
foreign banks and securities depositories, which may be recently organized or new to the foreign custody business and may be subject to only limited or
no regulatory oversight.
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Changes in foreign currency exchange rates can affect the value of
the Funds portfolio.
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The economies of certain foreign markets may not compare favorably
with the economy of the United States with respect to such issues as growth of gross national product, reinvestment of capital, resources and balance
of payments position.
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The governments of certain countries may prohibit or impose
substantial restrictions on foreign investments in their capital markets or in certain industries.
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Many foreign governments do not supervise and regulate stock
exchanges, brokers and the sale of securities to the same extent as does the United States and may not have laws to protect investors that are
comparable to U.S. securities laws.
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Settlement and clearance procedures in certain foreign markets may
result in delays in payment for or delivery of securities not typically associated with settlement and clearance of U.S. investments.
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The European financial markets have recently experienced
volatility and adverse trends due to concerns about economic downturns in, or rising government debt levels of, several European countries.
These events may spread to other countries in Europe. These events may affect the value and liquidity of certain of the Funds
investments.
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Junk Bonds Risk
Although junk bonds generally
pay higher rates of interest than investment grade bonds, junk bonds are high risk investments that may cause income and principal losses for the
Fund.
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Leverage Risk
Some transactions may give
rise to a form of economic leverage. These transactions may include, among others, derivatives, and may expose the Fund to greater risk and
increase its costs. The use of leverage may cause the Fund to liquidate portfolio positions when it may not be advantageous to do so to satisfy
its obligations or to meet any required asset segregation requirements. Increases and decreases in the value of the Funds portfolio
will be magnified when the Fund uses leverage.
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Market Risk and Selection Risk
Market risk is
the risk that one or more markets in which the Fund invests will go down in value, including the possibility that the markets will go down sharply and
unpredictably. Selection risk is the risk that the securities selected by Fund management will underperform the markets, the relevant indices or the
securities selected by other funds with similar investment objectives and investment strategies. This means you may lose money.
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Mid Cap Securities Risk
The securities of mid
cap companies generally trade in lower volumes and are generally subject to greater and less predictable price changes than the securities of larger
capitalization companies.
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Precious Metal Related Securities Risk
Prices
of precious metals and of precious metal related securities historically have been very volatile. The high volatility of precious metal prices may
adversely affect the financial condition of companies involved with precious metals. The production and sale of precious metals by governments or
central banks or other larger holders can be affected by various economic, financial, social and political factors, which may be unpredictable and may
have a significant impact on the prices of precious metals. Other factors that may affect the prices of precious metals and securities related to them
include changes in inflation, the outlook for inflation and changes in industrial and commercial demand for precious metals.
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Real Estate Related Securities Risk
The main
risk of real estate related securities is that the value of the underlying real estate may go down. Many factors may affect real estate values. These
factors include both the general and local economies, the amount of new construction in a particular area, the laws and regulations (including zoning,
and tax laws) affecting real estate and the costs of owning, maintaining and improving real estate. The availability of mortgages and changes in
interest rates may also affect real estate values. If the Funds real estate related investments are concentrated in one geographic area or in one
property type, the Fund will be particularly subject to the risks associated with that area or property type.
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REIT Investment Risk
Investments in REITs
involve unique risks. REITs may have limited financial resources, may trade less frequently and in limited volume and may be more volatile than other
securities.
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Small Cap and Emerging Growth Securities Risk
Small cap or emerging growth companies may have limited product lines or markets. They may be less financially secure than larger, more established
companies. They may depend on a more limited management group than larger capitalized companies.
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7
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Sovereign Debt Risk
Sovereign debt
instruments are subject to the risk that a governmental entity may delay or refuse to pay interest or repay principal on its sovereign debt, due, for
example, to cash flow problems, insufficient foreign currency reserves, political considerations, the relative size of the governmental entitys
debt position in relation to the economy or the failure to put in place economic reforms required by the International Monetary Fund or other
multilateral agencies.
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Structured Notes Risk
Structured notes and
other related instruments purchased by the Fund are generally privately negotiated debt obligations where the principal and/or interest is determined
by reference to the performance of a specific asset, benchmark asset, market or interest rate (reference measure). The purchase of
structured notes exposes the Fund to the credit risk of the issuer of the structured product. Structured notes may be leveraged, increasing the
volatility of each structured notes value relative to the change in the reference measure. Structured notes may also be less liquid and more
difficult to price accurately than less complex securities and instruments or more traditional debt securities.
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Subsidiary Risk
By investing in the
Subsidiary, the Fund is indirectly exposed to the risks associated with the Subsidiarys investments. The commodity-related instruments held by
the Subsidiary are generally similar to those that are permitted to be held by the Fund and are subject to the same risks that apply to similar
investments if held directly by the Fund (see Commodities Related Investment Risks above). There can be no assurance that the investment
objective of the Subsidiary will be achieved. The Subsidiary is not registered under the Investment Company Act of 1940, as amended (the
Investment Company Act), and, unless otherwise noted in this prospectus, is not subject to all the investor protections of the Investment
Company Act. However, the Fund wholly owns and controls the Subsidiary, and the Fund and the Subsidiary are both managed by BlackRock, making it
unlikely that the Subsidiary will take action contrary to the interests of the Fund and its shareholders. Changes in the laws of the United States
and/or the Cayman Islands could result in the inability of the Fund and/or the Subsidiary to operate as described in this prospectus and the Statement
of Additional Information (SAI) and could adversely affect the Fund.
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Warrants Risk
If the price of the underlying
stock does not rise above the exercise price before the warrant expires, the warrant generally expires without any value and the Fund loses any amount
it paid for the warrant. Thus, investments in warrants may involve substantially more risk than investments in common stock. Warrants may trade in the
same markets as their underlying stock; however, the price of the warrant does not necessarily move with the price of the underlying stock.
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8
The information shows you how the Funds performance has
varied year by year and provides some indication of the risks of investing in the Fund. The table compares the Funds performance to that
of the FTSE World Index, the S&P 500 Index, the FTSE World (ex US) Index, the BofA Merrill Lynch Current 5-Year US Treasury Index, the Citigroup
Non-US Dollar World Government Bond Index and the Reference Benchmark, which are relevant to the Fund because they have characteristics similar to the
Funds investment strategies. As with all such investments, past performance (before and after taxes) is not an indication of future results.
Sales charges are not reflected in the bar chart. If they were, returns would be less than those shown. However, the table includes all applicable fees
and sales charges. If the Funds investment manager and its affiliates had not waived or reimbursed certain Fund expenses during these periods,
the Funds returns would have been lower. Updated information on the Funds performance, including its current net asset value, can be
obtained by visiting http://www.blackrock.com/funds or can be obtained by phone at 800-882-0052.
During the ten-year period shown in the bar chart, the highest
return for a quarter was 12.06% (quarter ended June 30, 2009) and the lowest return for a quarter was
12.18% (quarter ended September 30, 2008).
As of 12/31/13
Average Annual Total Returns
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1 Year
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5 Years
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10 Years
1
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BlackRock Global Allocation Fund Investor A Shares
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Return Before Taxes
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8.42%
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8.95%
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7.60%
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Return After Taxes on Distributions
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6.74%
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8.12%
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6.34%
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Return After Taxes on Distributions and Sale of Shares
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5.67%
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6.83%
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5.74%
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BlackRock Global Allocation Fund Investor B Shares
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Return Before Taxes
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9.01%
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8.96%
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7.49%
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BlackRock Global Allocation Fund Investor C Shares
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Return Before Taxes
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12.60%
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9.32%
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7.36%
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BlackRock Global Allocation Fund Institutional Shares
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Return Before Taxes
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14.71%
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10.43%
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8.46%
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BlackRock Global Allocation Fund Class R Shares
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Return Before Taxes
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14.02%
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9.75%
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7.84%
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FTSE World Index
(Reflects no deduction for fees, expenses or taxes)
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24.67%
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15.62%
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7.87%
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Standard & Poors (S&P) 500 Index
(Reflects no deduction for fees, expenses or
taxes)
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32.39%
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17.94%
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7.41%
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FTSE World (ex US) Index
(Reflects no deduction for fees, expenses or taxes)
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17.41%
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13.39%
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8.16%
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BofA Merrill Lynch Current 5-Year US Treasury Index
(Reflects no deduction for fees, expenses or
taxes)
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(2.42)%
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2.77%
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4.21%
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Citigroup Non-US Dollar World Government Bond Index
(Reflects no deduction for fees, expenses or
taxes)
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(4.56)%
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2.27%
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4.10%
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Reference Benchmark
(Reflects no deduction for fees, expenses or taxes)
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13.67%
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10.94%
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6.71%
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In 2006, a portion of the Funds total
investment return for each share class consisted of a payment by the Funds former investment manager in order to resolve a regulatory issue
relating to an investment.
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9
After-tax returns are calculated using the historical highest
individual Federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the
investors tax situation and may differ from those shown, and the after-tax returns shown are not relevant to investors who hold their shares
through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. After-tax returns are shown for Investor A Shares only, and
the after-tax returns for Investor B, Investor C, Institutional and Class R Shares will vary.
The Funds investment manager is BlackRock Advisors, LLC
(BlackRock). The Funds sub-adviser is BlackRock Investment Management, LLC. Where applicable, the use of the
term BlackRock also refers to the Funds sub-adviser.
Name
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Portfolio Manager
of the Fund
Since
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Title
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Dennis Stattman, CFA
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1989
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Managing Director of BlackRock, Inc.
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Dan Chamby, CFA
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2003
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Managing Director of BlackRock, Inc.
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Aldo Roldan, PhD
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2006
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Managing Director of BlackRock, Inc.
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Purchase and Sale of Fund
Shares
You may purchase or redeem shares of the Fund each day the New
York Stock Exchange (NYSE) is open. To purchase or sell shares you should contact your Financial
Intermediary, or, if you hold your shares through the Fund, you should contact the Fund by phone at (800) 441-7762, by mail (c/o
BlackRock Funds, P.O. Box 9819, Providence, Rhode Island 02940-8019), or by the Internet at www.blackrock.com/funds. The Funds initial and
subsequent investment minimums generally are as follows, although the Fund may reduce or waive the minimums in some cases:
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Investor A and
Investor C
Shares
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Investor B Shares
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Institutional Shares
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Class R Shares
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Minimum Initial Investment
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$1,000 for all accounts except:
· $250 for
certain fee- based programs.
· $100 for certain employer-sponsored retirement
plans.
· $50, if establishing an Automatic Investment
Plan (AIP).
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Available only through exchanges and dividend reinvestments by current holders and for
purchase by certain employer-sponsored retirement plans.
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$2 million for institutions and individuals.
Institutional Shares are available to clients of registered
investment advisers who have $250,000 invested in the Fund.
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$100 for all accounts.
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Minimum Additional Investment
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$50 for all accounts (with the exception of certain employer-sponsored retirement plans
which may have a lower minimum).
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N/A
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No subsequent minimum.
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No subsequent minimum.
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10
The Funds dividends and distributions may be subject to
Federal income taxes and may be taxed as ordinary income or capital gains, unless you are a tax-exempt investor or are investing through a retirement
plan, in which case you may be subject to Federal income tax upon withdrawal from such tax deferred arrangements.
Payments to Broker/Dealers and
Other Financial Intermediaries
If you purchase shares of the Fund through a
Financial Intermediary, the Fund and BlackRock Investments, LLC, the Funds distributor, or its affiliates may pay the
Financial Intermediary for the sale of Fund shares and services. These payments may create a conflict of interest by
influencing the Financial Intermediary and your individual financial professional to recommend the Fund over another
investment. Ask your individual Financial Intermediary or visit your Financial
Intermediarys website for more information.
11
Details About the Fund
Included in this prospectus are sections that tell you about
buying and selling shares, management information, shareholder features of the Fund and your rights as a shareholder.
Investment Objective
The investment objective of the Fund is to provide high total
investment return through a fully managed investment policy utilizing United States and foreign equity securities, debt and money market securities,
the combination of which will be varied from time to time both with respect to types of securities and markets in response to changing market and
economic trends. In other words, the Fund seeks to achieve a combination of capital growth and income.
This investment objective is a fundamental policy of the Fund and
may not be changed without approval of a majority of the Funds outstanding voting securities, as defined in the Investment Company
Act.
Investment Process
In making investment decisions, Fund management tries to identify
the long term trends and changes that could benefit particular markets and/or industries relative to other markets and industries. Fund management will
consider a variety of factors when selecting the markets, such as the rate of economic growth, natural resources, capital reinvestment and the social
and political environment.
In deciding between equity and debt investments, Fund management
looks at a number of factors, such as the relative opportunity for capital appreciation, capital recovery risk, dividend yields and the level of
interest rates paid on debt securities of different maturities.
Fund management will invest in junk bonds, corporate
loans and distressed securities only when it believes that they will provide an attractive total return, relative to their risk, as compared to higher
quality debt securities.
Fund management will invest in distressed securities when Fund
management believes they offer significant potential for higher returns or can be exchanged for other securities that offer this potential. However,
there can be no assurance that the Fund will generally achieve these returns or that the issuer will make an exchange offer or adopt a plan of
reorganization.
Principal Investment Strategies
The Fund seeks to achieve its objective by investing in both
equity and debt securities, including money market securities and other short-term securities or instruments, of issuers located around the world.
There is no limit on the percentage of assets the Fund can invest in a particular type of security. Generally, the Fund seeks diversification across
markets, industries and issuers as one of its strategies to reduce volatility. Except as described below, the Fund has no geographic limits on where
its investments may be located. This flexibility allows Fund management to look for investments in markets around the world that it believes will
provide the best relative asset allocation to meet the Funds objective.
Fund management uses the Funds investment flexibility to
create a portfolio of assets that, over time, tends to be relatively balanced between equity and debt securities and that is widely diversified among
many individual investments. The Fund may invest in both developed and emerging markets. As of October 31, 2013, the Fund was invested in
47 different countries with approximately 47% of its total assets invested outside of the United States. In
addition to investing in foreign securities, the Fund actively manages its exposure to foreign currencies through the use of forward currency contracts
and other currency derivatives. From time to time, the Fund may own foreign cash equivalents or foreign bank deposits as part of the Funds
investment strategy. The Fund will also invest in non-U.S. currencies, however, the Fund may underweight or overweight a currency based on the Fund
management teams outlook.
The Fund may also invest in REITs. REITs are companies that own
interests in real estate or in real estate related loans or other interests, and have revenue primarily consisting of rent derived from owned, income
producing real estate properties and capital gains from the sale of such properties. REITs can generally be classified as equity REITs, mortgage REITs
and hybrid REITs. Equity REITs invest the majority of their assets directly in real property and derive
12
their income primarily from rents. Equity REITs can also
realize capital gains by selling properties that have appreciated in value. Mortgage REITs invest the majority of their assets in real estate mortgages
and derive their income primarily from interest payments. Hybrid REITs combine the characteristics of both equity REITs and mortgage REITs. REITs are
not taxed on income distributed to shareholders provided they comply with the requirements of the Internal Revenue Code of 1986, as amended (the
Internal Revenue Code).
The Funds composite Reference Benchmark has at all times
since the Funds formation included a 40% weighting in non-US securities. Throughout its history, the Fund has maintained a weighting in non-US
securities, often exceeding the 40% Reference Benchmark weighting and rarely falling below this allocation. Under normal circumstances, the Fund
will continue to allocate a substantial amount (approximately 40% or more unless market conditions are not deemed favorable by BlackRock, in
which case the Fund would invest at least 30%) of its total assets in securities of (i) foreign government issuers, (ii) issuers organized or
located outside the U.S., (iii) issuers which primarily trade in a market located outside the U.S., or (iv) issuers doing a substantial amount of
business outside the U.S., which the Fund considers to be companies that derive at least 50% of their revenue or profits from business outside the U.S.
or have at least 50% of their sales or assets outside the U.S. The Fund will allocate its assets among various regions and countries, including the
United States (but in no less than three different countries). For temporary defensive purposes the Fund may deviate very substantially from the
allocation described above.
The Fund may invest a portion of its assets in securities related
to real assets (like real estate- or precious metals-related securities) such as stock, bonds or convertible bonds issued by real estate investment
trusts or companies that mine precious metals.
The Fund may seek to provide exposure to the investment returns of real assets that trade in the commodity
markets through investment in commodity-linked derivative instruments and investment vehicles such as exchange traded funds
that invest exclusively in commodities and are
designed to provide this exposure
without direct investment in physical commodities. The Fund may
also gain exposure to commodity markets by investing in the Subsidiary. The Subsidiary invests primarily in
commodity-related instruments. The Subsidiary may also
hold cash and invest in other instruments, including fixed income securities, either as
investments or to serve as margin or collateral for the Subsidiarys derivative positions. BlackRock is the manager of
the Subsidiary. The Subsidiary (unlike the Fund) may invest without limitation in commodity-related instruments. However,
the Subsidiary is otherwise subject to the same
fundamental, non-fundamental and certain other investment restrictions as the
Fund. The Fund will limit its investments in the Subsidiary to 25% of its total assets.
The Subsidiary is managed pursuant to compliance policies and
procedures that are the same, in all material respects, as the policies and procedures adopted by the Fund. As a result, BlackRock, in managing the
Subsidiarys portfolio, is subject to the same investment policies and restrictions that apply to the management of the Fund, and, in particular,
to the requirements relating to portfolio leverage, liquidity, brokerage, and the timing and method of the valuation of the Subsidiarys portfolio
investments and shares of the Subsidiary. These policies and restrictions are described in detail in the SAI. The Funds Chief Compliance Officer
oversees implementation of the Subsidiarys policies and procedures, and makes periodic reports to the Board regarding the Subsidiarys
compliance with its policies and procedures. The Fund and Subsidiary test for compliance with certain investment restrictions on a consolidated basis,
except that with respect to its investments in certain securities that may involve leverage, the Subsidiary complies with asset segregation
requirements to the same extent as the Fund.
BlackRock provides investment management and other services to the
Subsidiary. BlackRock does not receive separate compensation from the Subsidiary for providing it with investment management or administrative
services. However, the Fund pays BlackRock based on the Funds assets, including the assets invested in the Subsidiary. The Subsidiary will also
enter into separate contracts for the provision of custody, transfer agency, and audit services with the same or with affiliates of the same service
providers that provide those services to the Fund.
The financial statements of the Subsidiary will be consolidated
with the Funds financial statements in the Funds Annual and Semi-Annual Reports. The Funds Annual and Semi-Annual Reports are
distributed to shareholders, and copies of the reports are provided without charge upon request as indicated on the back cover of this prospectus.
Please refer to the SAI for additional information about the organization and management of the Subsidiary.
Equity Securities
The Fund can invest in all
types of equity securities, including common stock, preferred stock, warrants, convertible securities and stock purchase rights of companies of any
market capitalization. A warrant gives the Fund the right to buy stock. The warrant specifies the amount of underlying stock, the purchase (or
exercise) price, and the date the warrant expires. The Fund has no obligation to exercise the warrant and buy the stock. Fund management
may seek to invest in the stock of smaller or emerging growth companies that it expects will provide a higher total return than other equity
investments. Investing in smaller or emerging growth companies involves greater risk than investing in more established companies.
13
Debt Securities
The Fund can invest in all
types of debt securities, including U.S. and foreign government bonds, corporate bonds and convertible bonds, mortgage and asset backed securities, and
securities issued or guaranteed by certain international organizations such as the World Bank.
The Fund may invest up to 35% of its total assets in
junk bonds, corporate loans and distressed securities. Junk bonds are bonds that are rated below investment grade by independent rating
agencies or are bonds that are not rated but which Fund management considers to be of comparable quality. Corporate loans are direct obligations of
U.S. or foreign companies, which may include corporations, partnerships, trusts or other corporate-like entities. Distressed securities are securities,
including loans purchased in the secondary market, that are the subject of bankruptcy proceedings or otherwise in default or in risk of being in
default as to the repayment of principal and/or interest at the time of acquisition by the Fund or that are rated in the lower rating categories by one
or more nationally recognized statistical rating organizations (for example, Ca or lower by Moodys and CC or lower by S&P or Fitch or, if
unrated, are in the judgment of BlackRock of equivalent quality (Distressed Securities)). These securities offer the possibility of
relatively higher returns but are significantly riskier than higher rated debt securities.
Derivatives
The Fund may use derivatives,
including options, futures, indexed securities, inverse securities, swaps and forward contracts both to seek to increase the return of the Fund and to
hedge (or protect) the value of its assets against adverse movements in currency exchange rates, interest rates and movements in the securities
markets. Derivatives are financial instruments whose value is derived from another security, a commodity (such as oil or gas), a currency or an index,
including but not limited to the S&P 500 Index and the VIX. The use of options, futures, indexed securities, inverse securities, swaps and forward
contracts can be effective in protecting or enhancing the value of the Funds assets.
Other Strategies
In addition to the principal strategies discussed
above, the Fund may also invest or engage in the following investments/strategies:
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Borrowing
The Fund may borrow for temporary
or emergency purposes, including to meet redemptions, for the payment of dividends, for share repurchases or for the clearance of
transactions.
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Depositary Receipts
The Fund may invest in
securities of foreign issuers in the form of depositary receipts or other securities that are convertible into securities of foreign issuers. American
Depositary Receipts are receipts typically issued by an American bank or trust company that evidence underlying securities issued by a foreign
corporation. European Depositary Receipts (issued in Europe) and Global Depositary Receipts (issued throughout the world) each evidence a similar
ownership arrangement. The Fund may invest in unsponsored depositary receipts.
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Illiquid/Restricted Securities
The Fund may
invest up to 15% of its net assets in illiquid securities that it cannot sell within seven days at approximately current value. The Subsidiary will
also limit its investment in illiquid securities to 15% of its net assets. In applying the illiquid securities restriction to the Fund, the Funds
investment in the Subsidiary is considered to be liquid. Restricted securities are securities that cannot be offered for public resale unless
registered under the applicable securities laws or that have a contractual restriction that prohibits or limits their resale (i.e., certain Rule 144A
securities). They may include private placement securities that have not been registered under the applicable securities laws. Restricted securities
may not be listed on an exchange and may have no active trading market. Rule 144A securities are restricted securities that can be resold to qualified
institutional buyers but not to the general public, and will be considered liquid if they can be sold within seven days at approximately current
value.
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Indexed and Inverse Securities
The Fund may
invest in securities that provide a return based on fluctuations in a stock or other financial index. For example, the Fund may invest in a security
that increases in value with the price of a particular securities index. In some cases, the return of the security may be inversely related to the
price of the index. This means that the value of the security will rise as the price of the index falls and vice versa. Although these types of
securities can make it easier for the Fund to access certain markets or hedge risks of other assets held by the Fund, these securities are subject to
the risks related to the underlying index or other assets.
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Investment Companies and Trusts
The Fund has
the ability to invest in other investment companies, such as exchange-traded funds, unit investment trusts, and open-end and closed-end funds. The Fund
may invest in affiliated investment companies, including affiliated money market funds and affiliated exchange-traded funds, and affiliated
trusts.
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Mortgage-Backed and Asset-Backed Securities
The Fund may invest in mortgage-backed or other asset-backed securities. Mortgage-backed securities and asset-backed securities represent interests in
pools of mortgages or other assets, including consumer loans or receivables held in trust.
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Non-U.S. Dollar Cash Investments
The Fund may
hold non-U.S. dollar cash investments.
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Repurchase Agreements, Purchase and Sale Contracts
The Fund may enter into certain types of repurchase agreements or purchase and sale contracts. Under a repurchase agreement, the seller agrees
to repurchase a security at a mutually agreed-upon time and price. A purchase and sale contract is similar to a repurchase agreement, but purchase and
sale contracts also provide that the purchaser receives any interest on the security paid during the period.
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Securities Lending
The Fund may lend securities with a value up to 33
1
⁄
3
%
of its total assets to financial institutions that provide cash or securities issued or guaranteed by the U.S. Government
as collateral.
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Short Sales
The Fund may engage in short
sales, which are transactions in which the Fund sells securities borrowed from others with the expectation that the price of the security will fall
before the Fund must purchase the security to return it to the lender. The Fund may make short sales of securities, either as a hedge against potential
declines in value of a portfolio security or to realize appreciation when a security that the Fund does not own declines in value. The Fund will not
make a short sale if, after giving effect to such sale, the market value of all securities sold short exceeds 20% of the value of its total assets.
However, the Fund may make short sales against the box without being subject to this limitation. In this type of short sale, at the time of
the sale, the Fund owns or has the immediate and unconditional right to acquire the identical securities at no additional cost.
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Short-Term Securities or Instruments
The Fund
can invest in high quality short-term U.S. dollar or non-U.S. dollar denominated fixed income securities or other instruments, such as U.S. or foreign
government securities, commercial paper and money market instruments issued by U.S. or foreign commercial banks or depository institutions. Fund
management may increase the Funds investment in these instruments in times of market volatility or when it believes that it is prudent or timely
to be invested in lower yielding but less risky securities. Large investments in such securities or instruments may prevent the Fund from achieving its
investment objective.
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Standby Commitment Agreements
Standby
commitment agreements commit the Fund, for a stated period of time, to purchase a stated amount of securities that may be issued and sold to the Fund
at the option of the issuer.
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Temporary Defensive Strategies
For temporary
defensive purposes, the Fund may restrict the markets in which it invests and may invest without limitation in cash, cash equivalents, money market
securities, such as U.S.
Treasury and agency obligations, other U.S. Government securities, short-term debt obligations of corporate issuers,
certificates of deposit, bankers acceptances, commercial paper (short term, unsecured, negotiable promissory notes of a domestic or foreign issuer) or
other high quality fixed income securities. Temporary defensive positions may affect the Funds ability to achieve its investment
objective.
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When Issued and Delayed Delivery Securities and Forward
Commitments
The purchase or sale of securities on a when issued basis or on a delayed delivery basis or through a forward commitment
involves the purchase or sale of securities by the Fund at an established price with payment and delivery taking place in the future. The Fund enters
into these transactions to obtain what is considered an advantageous price to the Fund at the time of entering into the transaction.
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ABOUT THE PORTFOLIO MANAGEMENT TEAM OF
THE FUND
|
The
Fund is managed by a team of financial professionals. Dennis Stattman, CFA, Dan Chamby, CFA and Aldo Roldan, PhD are the Funds portfolio
managers, and are jointly and primarily responsible for the management of the Fund. Please see Management of the Fund Portfolio Manager
Information for additional information on the portfolio management team.
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This section contains a discussion of the general risks of
investing in the Fund. The Investment Objectives and Policies section in the SAI also includes more information about the
Fund, its investments and the related risks. As with any fund, there can be no guarantee that the Fund will meet its investment objective or
that the Funds performance will be positive for any period of time. An investment in the Fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or by any bank or governmental agency.
15
Principal Risks of Investing in the Fund:
Commodities Related Investments Risks
Exposure to the commodities markets may subject the Fund to greater volatility
than investments in traditional securities. The value of commodity-linked derivative investments may be affected by changes in overall market
movements, commodity index volatility, changes in interest rates, or sectors affecting a particular industry or commodity, such as drought, floods,
weather, embargoes, tariffs and international economic, political and regulatory developments.
Convertible Securities Risk
The market value
of a convertible security performs like that of a regular debt security; that is, if market interest rates rise, the value of a convertible security
usually falls. In addition, convertible securities are subject to the risk that the issuer will not be able to pay interest or dividends when due, and
their market value may change based on changes in the issuers credit rating or the markets perception of the issuers
creditworthiness. Since it derives a portion of its value from the common stock into which it may be converted, a convertible security is also subject
to the same types of market and issuer risks that apply to the underlying common stock.
Corporate Loans Risk
Commercial banks and
other financial institutions or institutional investors make corporate loans to companies that need capital to grow or restructure. Borrowers generally
pay interest on corporate loans at rates that change in response to changes in market interest rates such as the London Interbank Offered Rate
(LIBOR) or the prime rates of U.S. banks. As a result, the value of corporate loan investments is generally less exposed to the adverse
effects of shifts in market interest rates than investments that pay a fixed rate of interest. However, because the trading market for certain
corporate loans may be less developed than the secondary market for bonds and notes, the Fund may experience difficulties in selling its corporate
loans. Leading financial institutions often act as agent for a broader group of lenders, generally referred to as a syndicate. The syndicates
agent arranges the corporate loans, holds collateral and accepts payments of principal and interest. If the agent develops financial problems, the Fund
may not recover its investment or recovery may be delayed. By investing in a corporate loan, the Fund may become a member of the
syndicate.
The corporate loans in which the Fund invests are subject to the
risk of loss of principal and income. Although borrowers frequently provide collateral to secure repayment of these obligations they do not always do
so. If they do provide collateral, the value of the collateral may not completely cover the borrowers obligations at the time of a default. If a
borrower files for protection from its creditors under the U.S. bankruptcy laws, these laws may limit the Funds rights to its collateral. In
addition, the value of collateral may erode during a bankruptcy case. In the event of a bankruptcy, the holder of a corporate loan may not recover its
principal, may experience a long delay in recovering its investment and may not receive interest during the delay.
Debt Securities Risk
Debt securities, such
as bonds, involve interest rate risk, credit risk, extension risk, and prepayment risk, among other things.
Interest Rate Risk
The
market value of bonds and other fixed-income securities changes in response to interest rate changes and other factors. Interest rate risk is the risk
that prices of bonds and other fixed-income securities will increase as interest rates fall and decrease as interest rates rise. The Fund may be
subject to a greater risk of rising interest rates due to the current period of historically low rates. For example, if interest rates increase
by 1%, assuming a current portfolio duration of ten years, and all other factors being equal, the value of the Funds portfolio
would be expected to decrease by 10%. The magnitude of these fluctuations in the market price of bonds and other fixed-income securities is
generally greater for those securities with longer maturities. Fluctuations in the market price of the Funds investments will not affect
interest income derived from instruments already owned by the Fund, but will be reflected in the Funds net asset value. The Fund may lose
money if short-term or long-term interest rates rise sharply in a manner not anticipated by Fund management. To the extent the Fund invests in
debt securities that may be prepaid at the option of the obligor (such as mortgage-backed securities), the sensitivity of such securities
to changes in interest rates may increase (to the detriment of the Fund) when interest rates rise. Moreover, because rates on certain floating rate
debt securities typically reset only periodically, changes in prevailing interest rates (and particularly sudden and significant changes) can be
expected to cause some fluctuations in the net asset value of the Fund to the extent that it invests in floating rate debt securities. These
basic principles of bond prices also apply to U.S. Government securities. A security backed by the full faith and credit of the
U.S. Government is guaranteed only as to its stated interest rate and face value at maturity, not its current market price. Just like
other fixed-income securities, government-guaranteed securities will fluctuate in value when interest rates change.
Credit Risk
Credit risk
refers to the possibility that the issuer of a debt security (i.e., the borrower) will not be able to make principal and interest payments when
due. Changes in an issuers credit rating or the markets perception of an issuers creditworthiness may also affect the value of
the Funds investment in that issuer. The degree of credit risk depends on the issuers financial condition and on the terms of the
securities.
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Extension Risk
When
interest rates rise, certain obligations will be paid off by the obligor more slowly than anticipated, causing the value of these obligations to
fall. Rising interest rates tend to extend the duration of securities, making them more sensitive to changes in interest rates. The value of
longer-term securities generally changes more in response to changes in interest rates than shorter-term securities. As a result, in a period of
rising interest rates, securities may exhibit additional volatility and may lose value.
Prepayment Risk
When
interest rates fall, certain obligations will be paid off by the obligor more quickly than originally anticipated, and the Fund may have to
invest the proceeds in securities with lower yields. In periods of falling interest rates, the rate of prepayments tends to increase (as does
price fluctuation) as borrowers are motivated to pay off debt and refinance at new lower rates. During such periods, reinvestment of the prepayment
proceeds by the management team will generally be at lower rates of return than the return on the assets that were prepaid. Prepayment
reduces the yield to maturity and the average life of the security.
Derivatives Risk
Derivatives
are volatile and involve significant risks, including:
Volatility Risk
The
Funds use of derivatives may reduce the Funds returns and/or increase volatility. Volatility is defined as the characteristic of a
security, an index or a market to fluctuate significantly in price within a short time period. A risk of the Funds use of derivatives is
that the fluctuations in their values may not correlate perfectly with the overall securities markets.
Counterparty Risk
Derivatives are also subject to counterparty risk, which is the risk that the other party in the transaction will not fulfill its contractual
obligation.
Market and Liquidity Risk
Some derivatives are more sensitive to interest rate changes and market price fluctuations than other securities. The possible lack of a
liquid secondary market for derivatives and the resulting inability of the Fund to sell or otherwise close a derivatives position could expose
the Fund to losses and could make derivatives more difficult for the Fund to value accurately. The Fund could also suffer losses related to its
derivatives positions as a result of unanticipated market movements, which losses are potentially unlimited. Finally, BlackRock may not
be able to predict correctly the direction of securities prices, interest rates and other economic factors, which could cause the Funds
derivatives positions to lose value.
Valuation Risk
Valuation may be more difficult in times of market turmoil since many investors and market makers may be reluctant to purchase complex
instruments or quote prices for them. Derivatives may also expose the Fund to greater risk and increase its costs. Certain transactions in
derivatives involve substantial leverage risk and may expose the Fund to potential losses that exceed the amount originally invested by the
Fund.
Hedging Risk
When a
derivative is used as a hedge against a position that the Fund holds, any loss generated by the derivative generally should be substantially
offset by gains on the hedged investment, and vice versa. While hedging can reduce or eliminate losses, it can also reduce or eliminate gains.
Hedges are sometimes subject to imperfect matching between the derivative and the underlying security, and there can be no assurance that the
Funds hedging transactions will be effective. The use of hedging may result in certain adverse tax consequences noted
below.
Tax Risk
The federal
income tax treatment of a derivative may not be as favorable as a direct investment in an underlying asset and may adversely affect the timing,
character and amount of income the Fund realizes from its investments. As a result, a larger portion of the Funds distributions may be
treated as ordinary income rather than capital gains. In addition, certain derivatives are subject to mark-to-market or straddle provisions of
the Internal Revenue Code of 1986, as amended (the Internal Revenue Code). If such provisions are applicable, there could be
an increase (or decrease) in the amount of taxable dividends paid by the Fund. In addition, the tax treatment of certain derivatives, such as
swaps, is unsettled and may be subject to future legislation, regulation or administrative pronouncements issued by the
Internal Revenue Service (the “IRS”).
Regulatory Risk
Recent
legislation calls for new regulation of the derivatives markets. The extent and impact of the regulation is not yet known and may not be known
for some time. In particular, the Dodd-Frank Wall Street Reform Act (the Reform Act) may make derivatives more costly, may limit the
availability of derivatives, or may otherwise adversely affect the value or performance of derivatives. The Reform Act substantially increases
regulation of the over-the-counter (OTC) derivatives market and participants in that market, including imposing clearing and
reporting requirements on transactions involving instruments that fall within the Reform Acts definition of swap and
security-based swap, which terms generally include OTC derivatives and imposing registration and potential substantive
requirements on certain swap and security-based swap market participants. In addition, under the Reform Act, the Fund may be subject to
additional recordkeeping and reporting requirements. Other future regulatory developments may also impact the Funds ability to invest or
remain invested in certain derivatives. Legislation or regulation may also change the way in which the Fund itself is regulated. BlackRock
cannot predict
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the effects of any new
governmental regulation that may be implemented on the ability of the Fund to use swaps or any other financial derivative product, and there can
be no assurance that any new governmental regulation will not adversely affect the Funds ability to achieve its investment
objective.
Risks Specific to Certain Derivatives Used by the
Fund
Swaps
Swap agreements are
two-party contracts entered into for periods ranging from a few weeks to more than one year. In a standard swap transaction, two
parties agree to exchange the returns (or differentials in rates of return) earned or realized on particular predetermined investments or
instruments, which can be adjusted for an interest factor. Swap agreements involve the risk that the party with whom the Fund has entered into
the swap will default on its obligation to pay the Fund and the risk that the Fund will not be able to meet its obligations to pay the
other party to the agreement.
Credit Default Swaps
Credit
default swaps may have as reference obligations one or more securities that are not currently held by the Fund. The protection buyer
may be obligated to pay the protection seller an up-front payment or a periodic stream of payments over the term of the contract,
provided generally that no credit event on a reference obligation has occurred. Credit default swaps involve special risks in addition to those
mentioned above because they are difficult to value, are highly susceptible to liquidity and credit risk, and generally pay a return to the
party that has paid the premium only in the event of an actual default by the issuer of the underlying obligation (as opposed to a credit
downgrade or other indication of financial difficulty).
Forward Foreign Currency Exchange
Contracts
Forward foreign currency exchange transactions are OTC contracts to purchase or sell a specified amount of a
specified currency or multinational currency unit at a price and future date set at the time of the contract. Forward foreign currency exchange
contracts do not eliminate fluctuations in the value of non-U.S. securities but rather allow the Fund to establish a fixed rate of exchange for
a future point in time. This strategy can have the effect of reducing returns and minimizing opportunities for gain.
Indexed and Inverse Securities
Indexed and inverse securities provide a potential return based on a particular index of value or interest
rates. The Funds return on these securities will be subject to risk with respect to the value of the particular index. These securities
are subject to leverage risk and correlation risk. Certain indexed and inverse securities have greater sensitivity to
changes in interest rates or index levels than other securities, and the Funds investment in such instruments may decline significantly in
value if interest rates or index levels move in a way Fund management does not anticipate.
Futures
Futures are
standardized, exchange-traded contracts that obligate a purchaser to take delivery, and a seller to make delivery, of a specific amount of an
asset at a specified future date at a specified price. The primary risks associated with the use of futures contracts and options are (a) the
imperfect correlation between the change in market value of the instruments held by a Fund and the price of the futures contract or option; (b)
possible lack of a liquid secondary market for a futures contract and the resulting inability to close a futures contract when desired; (c)
losses caused by unanticipated market movements, which are potentially unlimited; (d) the investment advisors inability to predict
correctly the direction of securities prices, interest rates, currency exchange rates and other economic factors; and (e) the possibility that
the counterparty will default in the performance of its obligations.
Options
An option is an
agreement that, for a premium payment or fee, gives the option holder (the purchaser) the right but not the obligation to buy (a call
option) or sell (a put option) the underlying asset (or settle for cash an amount based on an underlying asset, rate, or
index) at a specified price (the exercise price) during a period of time or on a specified date. Investments in options are
considered speculative. When the Fund purchases an option, it may lose the premium paid for it if the price of the underlying security or other
assets decreased or remained the same (in the case of a call option) or increased or remained the same (in the case of a put option). If a put
or call option purchased by the Fund were permitted to expire without being sold or exercised, its premium would represent a loss to the
Fund. To the extent that the Fund writes or sells an option, if the decline or increase in the underlying asset is significantly below or above
the exercise price of the written option, the Fund could experience a substantial loss.
Commodity-Linked Derivatives
The value of a commodity-linked derivative investment typically is based upon the price movements of a commodity, a commodity futures contract
or commodity index, or some other readily measurable economic variable. The value of commodity-linked derivative instruments may be affected by
changes in overall market movements, volatility of the underlying benchmark, changes in interest rates, or factors affecting a particular
industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and
regulatory developments. The value of commodity-linked derivatives will rise or fall in response to changes in the underlying commodity or
related index. Investments in commodity-linked derivatives may be subject to greater volatility than non-derivative based investments. A highly
liquid secondary market may not exist for certain commodity-linked derivatives, and there can be no assurance that one will
develop.
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Commodity-linked derivatives also may be subject to credit and
interest rate risks that in general affect the values of fixed income securities. Therefore, at maturity, the Fund may receive more or less
principal than it originally invested. The Fund might receive interest payments that are more or less than the stated coupon interest
payments.
In connection with the Funds direct and indirect
investments in commodity-linked derivatives, the Fund will attempt to manage its counterparty exposure so as to limit its exposure to any one
counterparty. However, due to the limited number of entities that may serve as counterparties (and which the Fund believes are creditworthy) at
any one time the Fund may enter into swap agreements with a limited number of counterparties and may invest in commodity-linked notes
issued by a limited number of issuers that will act as counterparties, which may increase the Funds exposure to counterparty credit risk.
There can be no assurance that the Fund will be able to limit exposure to any one counterparty at all times.
Distressed Securities Risk
Distressed
securities are speculative and involve substantial risks in addition to the risks of investing in junk bonds. The Fund will generally not receive
interest payments on the distressed securities and may incur costs to protect its investment. In addition, distressed securities involve the
substantial risk that principal will not be repaid. These securities may present a substantial risk of default or may be in default at the time of
investment. The Fund may incur additional expenses to the extent it is required to seek recovery upon a default in the payment of principal of or
interest on its portfolio holdings. In any reorganization or liquidation proceeding relating to a portfolio company, the Fund may lose its entire
investment or may be required to accept cash or securities with a value less than its original investment. Distressed securities and any securities
received in an exchange for such securities may be subject to restrictions on resale.
Emerging Markets Risk
The risks of foreign
investments are usually much greater for emerging markets. Investments in emerging markets may be considered speculative. Emerging markets include
those in countries defined as emerging or developing by the World Bank, the International Finance Corporation or the United Nations. Emerging markets
are riskier than more developed markets because they tend to develop unevenly and may never fully develop. They are more likely to experience
hyperinflation and currency devaluations, which adversely affect returns to U.S. investors. In addition, many emerging markets have far lower trading
volumes and less liquidity than developed markets. Since these markets are often small, they may be more likely to suffer sharp and frequent price
changes or long-term price depression because of adverse publicity, investor perceptions or the actions of a few large investors. In addition,
traditional measures of investment value used in the United States, such as price to earnings ratios, may not apply to certain small markets. Also,
there may be less publicly available information about issuers in emerging markets than would be available about issuers in more developed capital
markets, and such issuers may not be subject to accounting, auditing and financial reporting standards and requirements comparable to those to which
U.S. companies are subject.
Many emerging markets have histories of political instability and
abrupt changes in policies. As a result, their governments are more likely to take actions that are hostile or detrimental to private enterprise or
foreign investment than those of more developed countries, including expropriation of assets, confiscatory taxation, high rates of inflation or
unfavorable diplomatic developments. In the past, governments of such nations have expropriated substantial amounts of private property, and most
claims of the property owners have never been fully settled. There is no assurance that such expropriations will not reoccur. In such an event, it is
possible that the Fund could lose the entire value of its investments in the affected market. Some countries have pervasiveness of corruption and crime
that may hinder investments. Certain emerging markets may also face other significant internal or external risks, including the risk of war, and
ethnic, religious and racial conflicts. In addition, governments in many emerging market countries participate to a significant degree in their
economies and securities markets, which may impair investment and economic growth. National policies that may limit the Funds investment
opportunities include restrictions on investment in issuers or industries deemed sensitive to national interests.
Emerging markets may also have differing legal systems and the
existence or possible imposition of exchange controls, custodial restrictions or other foreign or U.S. governmental laws or restrictions applicable to
such investments. Sometimes, they may lack or be in the relatively early development of legal structures governing private and foreign investments and
private property. Many emerging markets do not have income tax treaties with the United States, and as a result, investments by the Fund may
be subject to higher withholding taxes in such countries. In addition, some countries with emerging markets may impose differential
capital gains taxes on foreign investors.
Practices in relation to settlement of securities transactions in
emerging markets involve higher risks than those in developed markets, in part because the Fund will need to use brokers and counterparties that are
less well capitalized, and custody and registration of assets in some countries may be unreliable. The possibility of fraud, negligence, undue
influence being exerted by the issuer or refusal to recognize ownership exists in some emerging markets, and, along with other factors, could result in
ownership registration being completely lost. The Fund would
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absorb any loss resulting from such registration problems and
may have no successful claim for compensation. In addition, communications between the United States and emerging market countries may be unreliable,
increasing the risk of delayed settlements or losses of security certificates.
Equity Securities Risk
Common and preferred
stocks represent equity ownership in a company. Stock markets are volatile. The price of equity securities will fluctuate and can decline and reduce
the value of a portfolio investing in equities. The value of equity securities purchased by the Fund could decline if the financial condition of the
companies the Fund invests in declines or if overall market and economic conditions deteriorate. They may also decline due to factors that
affect a particular industry or industries, such as labor shortages or an increase in production costs and competitive conditions within an industry.
In addition, they may decline due to general market conditions that are not specifically related to a company or industry, such as real or perceived
adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or generally adverse investor
sentiment.
Foreign Securities Risk
Securities traded in
foreign markets have often (though not always) performed differently from securities traded in the United States. However, such investments often
involve special risks not present in U.S. investments that can increase the chances that the Fund will lose money. In particular, the Fund is subject
to the risk that because there may be fewer investors on foreign exchanges and a smaller number of securities traded each day, it may be more difficult
for the Fund to buy and sell securities on those exchanges. In addition, prices of foreign securities may go up and down more than prices of securities
traded in the United States.
Certain Risks of Holding Fund Assets
Outside the United States
The Fund generally holds its foreign securities and cash in foreign banks and securities depositories. Some
foreign banks and securities depositories may be recently organized or new to the foreign custody business. In addition, there may be limited or no
regulatory oversight of their operations. Also, the laws of certain countries limit the Funds ability to recover its assets if a foreign bank,
depository or issuer of a security, or any of their agents, goes bankrupt. In addition, it is often more expensive for the Fund to buy, sell and hold
securities in certain foreign markets than in the United States. The increased expense of investing in foreign markets reduces the amount the Fund can
earn on its investments and typically results in a higher operating expense ratio for the Fund than for investment companies invested only in the
United States.
Currency Risk
Securities
and other instruments in which the Fund invests may be denominated or quoted in currencies other than the U.S. dollar. For this reason, changes in
foreign currency exchange rates can affect the value of the Funds portfolio.
Generally, when the U.S. dollar rises in
value against a foreign currency, a security denominated in that currency loses value because the currency is worth fewer U.S. dollars. Conversely,
when the U.S. dollar decreases in value against a foreign currency, a security denominated in that currency gains value because the currency is worth
more U.S. dollars. This risk, generally known as currency risk, means that, to the extent the Fund is invested in securities denominated in
a foreign currency, a strong U.S. dollar will reduce returns for U.S. investors while a weak U.S. dollar will increase those returns.
Foreign Economy Risk
The
economies of certain foreign markets may not compare favorably with the economy of the United States with respect to such issues as growth of gross
national product, reinvestment of capital, resources and balance of payments position. Certain foreign economies may rely heavily on particular
industries or foreign capital and are more vulnerable to diplomatic developments, the imposition of economic sanctions against a particular country or
countries, changes in international trading patterns, trade barriers and other protectionist or retaliatory measures. Investments in foreign markets
may also be adversely affected by governmental actions such as the imposition of capital controls, nationalization of companies or industries,
expropriation of assets or the imposition of punitive taxes. In addition, the governments of certain countries may prohibit or impose substantial
restrictions on foreign investments in their capital markets or in certain industries. Any of these actions could severely affect securities prices or
impair the Funds ability to purchase or sell foreign securities or transfer the Funds assets or income back into the United States, or
otherwise adversely affect the Funds operations.
Other potential foreign market risks
include foreign exchange controls, difficulties in pricing securities, defaults on foreign government securities, difficulties in enforcing legal
judgments in foreign courts and political and social instability. Diplomatic and political developments, including rapid and adverse political changes,
social instability, regional conflicts, terrorism and war, could affect the economies, industries and securities and currency markets, and the value of
the Funds investments, in non-U.S. countries. These factors are extremely difficult, if not impossible, to predict and take into account with
respect to the Funds investments.
Governmental Supervision and
Regulation/Accounting Standards
Many foreign governments do not supervise and regulate stock exchanges, brokers and the sale of securities
to the same extent as such regulations exist in the United States. They also may not have laws to protect investors that are comparable to U.S.
securities laws. For
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example, some foreign countries may
have no laws or rules against insider trading. Insider trading occurs when a person buys or sells a companys securities based on material
non-public information about that company. In addition, some countries may have legal systems that may make it difficult for the Fund to vote proxies,
exercise shareholder rights, and pursue legal remedies with respect to its foreign investments. Accounting standards in other countries are not
necessarily the same as in the United States. If the accounting standards in another country do not require as much detail as U.S. accounting
standards, it may be harder for Fund management to completely and accurately determine a companys financial condition.
Settlement Risk
Settlement
and clearance procedures in certain foreign markets differ significantly from those in the United States. Foreign settlement and clearance procedures
and trade regulations also may involve certain risks (such as delays in payment for or delivery of securities) not typically associated with the
settlement of U.S. investments.
At times, settlements in certain foreign
countries have not kept pace with the number of securities transactions. These problems may make it difficult for the Fund to carry out transactions.
If the Fund cannot settle or is delayed in settling a purchase of securities, it may miss attractive investment opportunities and certain of its assets
may be uninvested with no return earned thereon for some period. If the Fund cannot settle or is delayed in settling a sale of securities, it may lose
money if the value of the security then declines or, if it has contracted to sell the security to another party; the Fund could be liable for any
losses incurred.
European Economic Risk
The
European financial markets have recently experienced volatility and adverse trends due to concerns about economic downturns in, or rising government
debt levels of several European countries. These events may spread to other countries in Europe. These events may affect the value and liquidity
of certain of the Funds investments.
Responses to the financial problems by
European governments, central banks and others, including austerity measures and reforms, may not work, may result in social unrest and may limit
future growth and economic recovery or have other unintended consequences. Further defaults or restructuring by governments and others of their debt
could have additional adverse effects on economies, financial markets and asset valuations around the world. In addition, one or more countries may
abandon the Euro, the common currency of the European Union, and/or withdraw from the European Union. The impact of these actions, especially if they
occur in a disorderly fashion, is not clear but could be significant and far reaching.
Junk Bonds Risk
Although junk bonds
generally pay higher rates of interest than investment grade bonds, junk bonds are high risk investments that may cause income and principal losses for
the Fund. The major risks of junk bond investments include:
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Junk bonds may be issued by less creditworthy issuers. Issuers of
junk bonds may have a larger amount of outstanding debt relative to their assets than issuers of investment grade bonds. In the event of an
issuers bankruptcy, claims of other creditors may have priority over the claims of junk bond holders, leaving few or no assets available to repay
junk bond holders.
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Prices of junk bonds are subject to extreme price fluctuations.
Adverse changes in an issuers industry and general economic conditions may have a greater impact on the prices of junk bonds than on other higher
rated fixed-income securities.
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Issuers of junk bonds may be unable to meet their interest or
principal payment obligations because of an economic downturn, specific issuer developments, or the unavailability of additional financing.
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Junk bonds frequently have redemption features that permit an
issuer to repurchase the security from the Fund before it matures. If the issuer redeems junk bonds, the Fund may have to invest the proceeds in bonds
with lower yields and may lose income.
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Junk bonds may be less liquid than higher rated fixed-income
securities, even under normal economic conditions. There are fewer dealers in the junk bond market, and there may be significant differences in the
prices quoted for junk bonds by the dealers. Because they are less liquid, judgment may play a greater role in valuing certain of the Funds
securities than is the case with securities trading in a more liquid market.
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The Fund may incur expenses to the extent necessary to seek
recovery upon default or to negotiate new terms with a defaulting issuer.
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The credit rating of a high yield security does not necessarily
address its market value risk. Ratings and market value may change from time to time, positively or negatively, to reflect new developments regarding
the issuer.
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Leverage Risk
Some transactions may give
rise to a form of economic leverage. These transactions may include, among others, derivatives, and may expose the Fund to greater risk and
increase its costs. As an open-end investment company registered with the SEC, the Fund is subject to the federal securities laws, including the
Investment Company Act, the rules thereunder, and various SEC and SEC staff interpretive positions. In accordance with these laws, rules
and positions, the Fund must set aside liquid assets (often referred to as asset segregation), or engage in other
SEC- or staff-approved measures, to cover open positions with respect to certain kinds of instruments. The use of leverage may
cause the Fund to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet any required
asset segregation requirements. Increases and decreases in the value of the Funds portfolio will be magnified when the Fund uses
leverage.
Market Risk and Selection Risk
Market risk is
the risk that one or more markets in which the Fund invests will go down in value, including the possibility that the markets will go down sharply and
unpredictably. Selection risk is the risk that the securities selected by Fund management will underperform the markets, the relevant indices or the
securities selected by other funds with similar investment objectives and investment strategies. This means you may lose money.
Mid Cap Securities Risk
The securities of mid
cap companies generally trade in lower volumes and are generally subject to greater and less predictable price changes than the securities of larger
capitalization companies.
Precious Metal Related Securities Risk
Prices
of precious metals and of precious metal related securities historically have been very volatile. The high volatility of precious metal prices may
adversely affect the financial condition of companies involved with precious metals. The production and sale of precious metals by governments or
central banks or other larger holders can be affected by various economic, financial, social and political factors, which may be unpredictable and may
have a significant impact on the prices of precious metals. Other factors that may affect the prices of precious metals and securities related to them
include changes in inflation, the outlook for inflation and changes in industrial and commercial demand for precious metals.
Some precious metals mining operation companies may hedge, to
varying degrees, their exposure to falls in precious metals prices by selling forward future production. This may limit the companys ability to
benefit from future increases in the price of precious metals, thereby lowering returns to the Fund. Hedging techniques also have their own risk,
including the possibility that a mining company or other party will be unable to meet its contractual obligations and potential margin
requirements.
Other factors that may affect the prices of precious metals and
securities related to them include changes in inflation, the outlook for inflation and changes in industrial and commercial demand for precious metals.
Additionally, increased environmental or labor costs may depress the value of mining and metal investments.
Real Estate Related Securities Risk
The main
risk of real estate related securities is that the value of the underlying real estate may go down. Many factors may affect real estate values. These
factors include both the general and local economies, vacancy rates, tenant bankruptcies, the ability to re-lease space under expiring leases on
attractive terms, the amount of new construction in a particular area, the laws and regulations (including zoning, environmental and tax laws)
affecting real estate and the costs of owning, maintaining and improving real estate. The availability of mortgage financing and changes in interest
rates also affect real estate values. If the Funds real estate related investments own real estate assets which are concentrated in one
geographic area or in one property type, the Fund will be particularly subject to the risks associated with that area or property type. Many issuers of
real estate related securities are highly leveraged, which increases the risk to holders of such securities. The value of the securities the Fund buys
will not necessarily track the value of the underlying investments of the issuers of such securities.
REIT Investment Risk
In addition to the risks
facing real estate-related securities, such as a decline in property values due to increasing vacancies, a decline in rents resulting from
unanticipated economic, legal or technological developments or a decline in the price of securities of real estate companies due to a failure of
borrowers to pay their loans or poor management, investments in REITs involve unique risks. REITs may have limited financial resources, may trade less
frequently and in limited volume and may be more volatile than other securities.
Small Cap and Emerging Growth Securities Risk
Small cap or emerging growth companies may have limited product lines or markets. They may be less financially secure than larger, more established
companies. They may depend on a small number of key personnel. If a product fails or there are other adverse developments, or if management changes,
the Funds investment in a small cap company or emerging growth company may lose substantial value. In addition, it is more difficult to
get information on smaller companies, which tend to be less well known, have shorter operating histories, do not have significant ownership by large
investors and are followed by relatively few securities analysts.
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The securities of small cap or emerging growth companies generally
trade in lower volumes and are subject to greater and more unpredictable price changes than larger cap securities or the market as a whole. In
addition, small cap or emerging growth securities may be particularly sensitive to changes in interest rates, borrowing costs and earnings.
Investing in small cap or emerging growth securities requires a longer term view.
Sovereign Debt Risk
Sovereign debt
instruments are subject to the risk that a governmental entity may delay or refuse to pay interest or repay principal on its sovereign debt, due, for
example, to cash flow problems, insufficient foreign currency reserves, political considerations, the relative size of the governmental entitys
debt position in relation to the economy or the failure to put in place economic reforms required by the International Monetary Fund or other
multilateral agencies. If a governmental entity defaults, it may ask for more time in which to pay or for further loans. There is no legal process for
collecting sovereign debt that a government does not pay nor are there bankruptcy proceedings through which all or part of the sovereign debt that a
governmental entity has not repaid may be collected.
Structured Notes Risk
Structured notes and
other related instruments purchased by the Fund are generally privately negotiated debt obligations where the principal and/or interest is determined
by reference to the performance of a specific asset, benchmark asset, market or interest rate (reference measure). The interest rate or the
principal amount payable upon maturity or redemption may increase or decrease, depending upon changes in the value of the reference measure. The terms
of a structured note may provide that, in certain circumstances, no principal is due at maturity and, therefore, may result in a loss of invested
capital by the Fund. The interest and/or principal payments that may be made on a structured product may vary widely, depending on a variety of
factors, including the volatility of the reference measure.
Structured notes may be positively or negatively indexed, so the
appreciation of the reference measure may produce an increase or a decrease in the interest rate or the value of the principal at maturity. The rate of
return on structured notes may be determined by applying a multiplier to the performance or differential performance of reference measures. Application
of a multiplier involves leverage that will serve to magnify the potential for gain and the risk of loss.
The purchase of structured notes exposes the Fund to the credit
risk of the issuer of the structured product. Structured notes may also be more volatile, less liquid, and more difficult to price accurately than less
complex securities and instruments or more traditional debt securities.
Subsidiary Risk
By investing in the
Subsidiary, the Fund is indirectly exposed to the risks associated with the Subsidiarys investments. The commodity-related instruments held by
the Subsidiary are generally similar to those that are permitted to be held by the Fund and are subject to the same risks that apply to similar
investments if held directly by the Fund (see Commodities Related Investment Risks above). These risks are described elsewhere in this
prospectus. There can be no assurance that the investment objective of the Subsidiary will be achieved. The Subsidiary is not registered under the
Investment Company Act, and, unless otherwise noted in this prospectus, is not subject to all the investor protections of the Investment Company Act.
However, the Fund wholly owns and controls the Subsidiary, and the Fund and the Subsidiary are both managed by BlackRock, making it unlikely that the
Subsidiary will take action contrary to the interests of the Fund and its shareholders. The Board has oversight responsibility for the investment
activities of the Fund, including its investment in the Subsidiary, and the Funds role as sole shareholder of the Subsidiary. The Subsidiary will
be subject to the same investment restrictions and limitations, and follow the same compliance policies and procedures, as the Fund. Changes in the
laws of the United States and/or the Cayman Islands could result in the inability of the Fund and/or the Subsidiary to operate as described in this
prospectus and the SAI and could adversely affect the Fund. For example, the Cayman Islands does not currently impose any income, corporate or capital
gains tax, estate duty, inheritance tax, gift tax or withholding tax on the Subsidiary. If Cayman Islands law changes such that the Subsidiary must pay
Cayman Islands taxes, Fund shareholders would likely suffer decreased investment returns.
Warrants Risk
If the price of the underlying
stock does not rise above the exercise price before the warrant expires, the warrant generally expires without any value and the Fund loses any amount
it paid for the warrant. Thus, investments in warrants may involve substantially more risk than investments in common stock. Warrants may trade in the
same markets as their underlying stock; however, the price of the warrant does not necessarily move with the price of the underlying
stock.
The Fund may also be subject to certain other risks associated
with its investments and investment strategies, including:
Borrowing Risk
Although the Fund may borrow
only for temporary or emergency purposes, borrowing may exaggerate changes in the net asset value of Fund shares and in the return on the Funds
portfolio. Borrowing will cost the Fund interest expense and other fees. The costs of borrowing may reduce the Funds return. Borrowing may cause
the Fund to liquidate positions when it may not be advantageous to do so to satisfy its obligations.
23
Depositary Receipts Risk
The issuers of
unsponsored depositary receipts are not obligated to disclose information that is, in the United States, considered material. Therefore, there may be
less information available regarding these issuers and there may not be a correlation between such information and the market value of the depositary
receipts. Depositary receipts are generally subject to the same risks as the foreign securities that they evidence or into which they may be
converted.
Expense Risk
Fund expenses are subject to a
variety of factors, including fluctuations in the Funds net assets. Accordingly, actual expenses may be greater or less than those indicated. For
example, to the extent that the Funds net assets decrease due to market declines or redemptions, the Funds expenses will increase as a
percentage of Fund net assets. During periods of high market volatility, these increases in the Funds expense ratio could be
significant.
Indexed and Inverse Securities Risk
Certain
indexed and inverse securities have greater sensitivity to changes in interest rates or index levels than other securities, and the Funds
investment in such instruments may decline significantly in value if interest rates or index levels move in a way Fund management does not
anticipate.
Investment in Other Investment Companies Risk
As with other investments, investments in other investment companies are subject to market and selection risk. In addition, if the Fund acquires shares
of investment companies, including ones affiliated with the Fund, shareholders bear both their proportionate share of expenses in the Fund (including
management and advisory fees) and, indirectly, the expenses of the investment companies. To the extent the Fund is held by an affiliated fund, the
ability of the Fund itself to hold other investment companies may be limited.
Liquidity Risk
Liquidity risk exists when
particular investments are difficult to purchase or sell. The Funds investments in illiquid securities may reduce the returns of the Fund because
it may be difficult to sell the illiquid securities at an advantageous time or price. To the extent that the Funds principal investment
strategies involve derivatives or securities with substantial market and/or credit risk, the Fund will tend to have the greatest exposure to liquidity
risk. Liquid investments may become illiquid after purchase by the Fund, particularly during periods of market turmoil. Illiquid investments may be
harder to value, especially in changing markets, and if the Fund is forced to sell these investments to meet redemption requests or for other cash
needs, the Fund may suffer a loss. In addition, when there is illiquidity in the market for certain securities, the Fund, due to limitations on
illiquid investments, may be subject to purchase and sale restrictions.
Mortgage- and Asset-Backed Securities Risks
Mortgage-backed securities (residential and commercial) and asset-backed securities represent interests in pools of mortgages or other
assets, including consumer loans or receivables held in trust. Although asset-backed and commercial mortgage-backed securities (CMBS)
generally experience less prepayment than residential mortgage-backed securities, mortgage-backed and asset-backed securities, like traditional
fixed-income securities, are subject to credit, interest rate, prepayment and extension risks.
Small movements in interest rates (both increases and decreases)
may quickly and significantly reduce the value of certain mortgage-backed securities. The Funds investments in asset-backed securities are
subject to risks similar to those associated with mortgage-related securities, as well as additional risks associated with the nature of the assets and
the servicing of those assets. These securities also are subject to the risk of default on the underlying mortgage or assets, particularly during
periods of economic downturn. Certain CMBS are issued in several classes with different levels of yield and credit protection. The Funds
investments in CMBS with several classes may be in the lower classes that have greater risks than the higher classes, including greater interest rate,
credit and prepayment risks.
Mortgage-backed securities may be either pass-through securities
or collateralized mortgage obligations (CMOs). Pass-through securities represent a right to receive principal and interest payments
collected on a pool of mortgages, which are passed through to security holders. CMOs are created by dividing the principal and interest payments
collected on a pool of mortgages into several revenue streams (tranches) with different priority rights to portions of the underlying mortgage
payments. Certain CMO tranches may represent a right to receive interest only (IOs), principal only (POs) or an amount that
remains after floating-rate tranches are paid (an inverse floater). These securities are frequently referred to as mortgage derivatives and
may be extremely sensitive to changes in interest rates. Interest rates on inverse floaters, for example, vary inversely with a short-term floating
rate (which may be reset periodically). Interest rates on inverse floaters will decrease when short-term rates increase, and will increase when
short-term rates decrease. These securities have the effect of providing a degree of investment leverage. In response to changes in market interest
rates or other market conditions, the value of an inverse floater may increase or decrease at a multiple of the increase or decrease in the value of
the underlying securities. If the Fund invests in CMO tranches (including CMO tranches issued by government agencies) and interest rates move in a
manner not anticipated by Fund management, it is possible that the Fund could lose all or substantially all of its investment. Certain
mortgage-backed securities in which the Fund may invest may also provide a degree of investment leverage, which could cause the Fund to lose all
or substantially all of its investment.
24
The mortgage market in the United States has experienced
difficulties that may adversely affect the performance and market value of certain of the Funds mortgage-related investments. Delinquencies and
losses on mortgage loans (including subprime and second-lien mortgage loans) generally have increased and may continue to increase, and a
decline in or flattening of real-estate values (as has been experienced and may continue to be experienced in many housing markets) may
exacerbate such delinquencies and losses. Also, a number of mortgage loan originators have experienced serious financial difficulties or
bankruptcy. Reduced investor demand for mortgage loans and mortgage-related securities and increased investor yield requirements have caused limited
liquidity in the secondary market for mortgage-related securities, which can adversely affect the market value of mortgage-related securities. It is
possible that such limited liquidity in such secondary markets could continue or worsen.
Asset-backed securities entail certain risks not presented by
mortgage-backed securities, including the risk that in certain states it may be difficult to perfect the liens securing the collateral backing certain
asset-backed securities. In addition, certain asset-backed securities are based on loans that are unsecured, which means that there is no collateral to
seize if the underlying borrower defaults.
Repurchase Agreements, Purchase and Sale Contracts
Risks
If the other party to a repurchase agreement or purchase and sale contract defaults on its obligation under the agreement, the
Fund may suffer delays and incur costs or lose money in exercising its rights under the agreement. If the seller fails to repurchase the security in
either situation and the market value of the security declines, the Fund may lose money.
Securities Lending Risk
Securities lending
involves the risk that the borrower may fail to return the securities in a timely manner or at all. As a result, the Fund may lose money and there may
be a delay in recovering the loaned securities. The Fund could also lose money if it does not recover the securities and/or the value of the collateral
falls, including the value of investments made with cash collateral. These events could trigger adverse tax consequences for the Fund.
Short Sales Risk
Because making short sales
in securities that it does not own exposes the Fund to the risks associated with those securities, such short sales involve speculative exposure risk.
The Fund will incur a loss as a result of a short sale if the price of the security increases between the date of the short sale and the date on which
the Fund replaces the security sold short. The Fund will realize a gain if the security declines in price between those dates. As a result, if the Fund
makes short sales in securities that increase in value, it will likely underperform similar funds that do not make short sales in securities they do
not own. There can be no assurance that the Fund will be able to close out a short sale position at any particular time or at an acceptable price.
Although the Funds gain is limited to the amount at which it sold a security short, its potential loss is limited only by the maximum attainable
price of the security, less the price at which the security was sold. The Fund may also pay transaction costs and borrowing fees in connection with
short sales.
Standby Commitment Agreements Risk
Standby
commitment agreements involve the risk that the security the Fund buys will lose value prior to its delivery to the Fund and will no longer be worth
what the Fund has agreed to pay for it. These agreements also involve the risk that if the security goes up in value, the counterparty will decide not
to issue the security. In this case, the Fund loses both the investment opportunity for the assets it set aside to pay for the security and any gain in
the securitys price.
When-Issued and Delayed Delivery Securities and Forward
Commitments Risks
When-issued and delayed delivery securities and forward commitments involve the risk that the security the Fund buys
will lose value prior to its delivery. There also is the risk that the security will not be issued or that the other party to the transaction will not
meet its obligation. If this occurs, the Fund may lose both the investment opportunity for the assets it set aside to pay for the
security and any gain in the securitys price.
25
Account Information
How to Choose the Share Class
that Best Suits Your Needs
The Fund currently offers multiple share classes (Investor A,
Investor B, Investor C, Institutional and Class R Shares in this prospectus), each with its own sales charge and expense structure, allowing you to
invest in the way that best suits your needs. Each share class represents an ownership interest in the same investment
portfolio. When you choose your class of shares, you should consider the size of your investment and how long you plan to hold your shares.
Either your financial professional or Financial Intermediary (including BlackRock, PNC and their respective affiliates) can help you
determine which share class is best suited to your personal financial goals. Investor A Shares, Investor B Shares and Investor C Shares are
sometimes referred to herein collectively as Investor Shares.
For example, if you select Institutional Shares, you will not pay
any sales charge. However, only certain investors may buy Institutional Shares. If you select Investor A Shares, you generally pay a sales charge at
the time of purchase and an ongoing service fee of 0.25% per year. You may be eligible for a sales charge reduction or waiver.
If you select Investor C or Class R Shares, you will invest the
full amount of your purchase price, but you will be subject to a distribution fee of 0.75% per year for Investor C Shares and 0.25% per year for Class
R Shares and a service fee of 0.25% per year for both classes of shares under plans adopted pursuant to Rule 12b-1 under the Investment Company Act.
Because these fees are paid out of the Funds assets on an ongoing basis, over time these fees increase the cost of your investment and may cost
you more than paying other types of sales charges. In addition, you may be subject to a deferred sales charge when you sell Investor C Shares within
one year. Classes with lower expenses will have higher net asset values and dividends relative to other share classes.
Investor B Shares are offered on a very limited basis as described
below. Investor B Shares are subject to ongoing service and distribution fees and may be subject to a deferred sales charge.
The Funds shares are distributed by BlackRock Investments,
LLC (the Distributor), an affiliate of BlackRock.
26
The table below summarizes key features of each of the share
classes of the Fund.
Share Classes at a Glance
1
|
|
Investor A
|
|
Investor B
|
|
Investor C
2,3
|
|
Institutional
|
|
Class R
|
Availability
|
|
Generally available through Financial Intermediaries.
|
|
Available only through exchanges and dividend reinvestments, and by current holders and for
purchase by certain employer-sponsored retirement plans.
|
|
Generally available through Financial Intermediaries.
|
|
Limited to certain investors, including:
·
Current Institutional shareholders that meet certain requirements
· Certain
employer-sponsored retirement plans
· Participants in certain programs
sponsored by BlackRock or its affiliates or other Financial Intermediaries
· Certain employees and affiliates of BlackRock or its affiliates
|
|
Available only to certain employer-sponsored retirement plans.
|
Minimum
Investment
|
|
$1,000 for all accounts except:
· $250 for
certain
fee-based programs
· $100 for certain employer-sponsored
retirement plans
· $50, if establishing an
AIP
|
|
Investor B Shares are not generally available for purchase (see above).
|
|
$1,000 for all accounts except:
· $250 for
certain
fee-based programs
· $100 for certain employer-sponsored
retirement plans
· $50, if establishing an
AIP
|
|
$2 million for institutions and individuals.
Institutional Shares are available to clients of registered
investment advisers who have $250,000 invested in the Fund.
|
|
$100 for all accounts.
|
Initial Sales
Charge?
|
|
Yes. Payable at time of purchase. Lower sales charges are available for larger
investments.
|
|
No. Entire purchase price is invested in shares of the Fund.
|
|
No. Entire purchase price is invested in shares of the Fund.
|
|
No. Entire purchase price is invested in shares of the Fund.
|
|
No. Entire purchase price is invested in shares of the Fund.
|
Deferred Sales
Charge?
|
|
No. (May be charged for purchases of $1 million or more that are redeemed within 18
months).
|
|
Yes. Payable if you redeem within six years of purchase.
|
|
Yes. Payable if you redeem within one year of purchase.
|
|
No.
|
|
No.
|
Distribution and
Service (12b-1)
Fees?
|
|
No Distribution Fee. 0.25% Annual Service Fee.
|
|
0.75% Annual Distribution Fee. 0.25% Annual Service Fee.
|
|
0.75% Annual Distribution Fee. 0.25% Annual Service Fee.
|
|
No.
|
|
0.25% Annual Distribution Fee. 0.25% Annual Service Fee.
|
Redemption Fees?
|
|
No.
|
|
No.
|
|
No.
|
|
No.
|
|
No.
|
27
Share Classes at a Glance
1
|
|
Investor A
|
|
Investor B
|
|
Investor C
2,3
|
|
Institutional
|
|
Class R
|
Conversion to
Investor A Shares?
|
|
N/A
|
|
Yes, automatically after approximately eight years.
|
|
No.
|
|
No.
|
|
No.
|
Advantage
|
|
Makes sense for investors who are eligible to have the sales charge reduced or eliminated or who have a
long-term investment horizon because there are no ongoing distribution fees.
|
|
No up-front sales charge so you start off owning more shares.
|
|
No up-front sales charge so you start off owning more shares. These shares may make sense for investors who
have a shorter investment horizon relative to Investor A Shares.
|
|
No up-front sales charge so you start off owning more shares. No distribution or service
fee.
|
|
No up-front sales charge so you start off owning more shares.
|
Disadvantage
|
|
You pay a sales charge up-front, and therefore you start off owning fewer shares.
|
|
Limited availability. You pay ongoing distribution fees each year you own Investor B Shares, which means
that you can expect lower total performance than Investor A Shares.
|
|
You pay ongoing distribution fees each year you own Investor C Shares, which means that
over the long term you can expect higher total fees per share than Investor A Shares and, as a result,
lower total performance.
|
|
Limited availability.
|
|
Limited availability. You pay ongoing distribution fees each year you own shares, which means that you can
expect lower total performance per share than Investor A Shares. Class R Shares do not convert to Investor A Shares, so you will continue paying the
ongoing distribution fees as long as you hold the Class R Shares. Over the long term, this can add up to higher total fees than Investor A Shares.
There is limited availability of these shares.
|
1
|
|
Please see Details About the
Share Classes for more information about each share class.
|
2
|
|
If you establish a new account directly with the
Fund and do not have a Financial Intermediary associated with your account, you may only invest in Investor A Shares.
Applications without a Financial Intermediary that select Investor C Shares will not be accepted.
|
3
|
|
The Fund will not accept a purchase order of
$500,000 or more for Investor C Shares. Your Financial Intermediary may set a lower maximum for Investor C
Shares.
|
The following pages will cover the additional details of each
share class, including the Institutional Shares requirements, the sales charge table for Investor A Shares, reduced sales charge information, Investor
B and Investor C Share CDSC information, and sales charge waivers.
More information about existing sales charge reductions and
waivers is available free of charge in a clear and prominent format via hyperlink at www.blackrock.com and in the SAI, which is available on the
website or on request.
28
Details About the
Share Classes
Investor A Shares Initial Sales Charge
Option
The following table shows the front-end sales charges that you may
pay if you buy Investor A Shares. The offering price for Investor A Shares includes any front-end sales charge. The front-end sales charge expressed as
a percentage of the offering price may be higher or lower than the charge described below due to rounding. Similarly, any contingent deferred sales
charge paid upon certain redemptions of Investor A Shares expressed as a percentage of the applicable redemption amount may be higher or lower than the
charge described below due to rounding. You may qualify for a reduced front-end sales charge. Purchases of Investor A Shares at certain fixed dollar
levels, known as breakpoints, cause a reduction in the front-end sales charge. Once you achieve a breakpoint, you pay that sales charge on
your entire purchase amount (and not just the portion above the breakpoint). If you select Investor A Shares, you will pay a sales charge at the time
of purchase as shown in the following table.
Your Investment
|
|
|
|
Sales Charge
as a %
of
Offering Price
|
|
Sales Charge
as a % of
Your
Investment
1
|
|
Dealer
Compensation
as a % of
Offering Price
|
Less than $25,000
|
|
|
|
5.25%
|
|
5.54%
|
|
5.00%
|
$25,000 but less than $50,000
|
|
|
|
4.75%
|
|
4.99%
|
|
4.50%
|
$50,000 but less than $100,000
|
|
|
|
4.00%
|
|
4.17%
|
|
3.75%
|
$100,000 but less than $250,000
|
|
|
|
3.00%
|
|
3.09%
|
|
2.75%
|
$250,000 but less than $500,000
|
|
|
|
2.50%
|
|
2.56%
|
|
2.25%
|
$500,000 but less than $750,000
|
|
|
|
2.00%
|
|
2.04%
|
|
1.75%
|
$750,000 but less than $1,000,000
|
|
|
|
1.50%
|
|
1.52%
|
|
1.25%
|
$1,000,000 and over
2
|
|
|
|
0.00%
|
|
0.00%
|
|
|
1
|
|
Rounded to the nearest one-hundredth
percent.
|
2
|
|
If you invest $1,000,000 or more in Investor A
Shares, you will not pay an initial sales charge. In that case, BlackRock compensates the financial intermediary from its own resources. See the SAI
for details. However, if you redeem your shares within 18 months after purchase, you may be charged a deferred sales charge of 1.00% of the lesser of
the original cost of the shares being redeemed or your redemption proceeds. Such deferred sales charge may be waived in connection with certain
fee-based programs.
|
No initial sales charge applies to Investor A Shares that you buy
through reinvestment of Fund dividends or capital gains.
Sales Charges Reduced or Eliminated for Investor A
Shares
There are several ways in which the sales charge can be reduced or
eliminated. Purchases of Investor A Shares at certain fixed dollar levels, known as breakpoints, cause a reduction in the front-end sales
charge (as described above in the Investor A Shares Initial Sales Charge Option section). Additionally, the front-end sales charge
can be reduced or eliminated through one or a combination of the following: a Letter of Intent, the right of accumulation, the reinstatement
privilege (described under Account Services and Privileges), or a waiver of the sales charge (described below).
Reductions or eliminations through a Letter of Intent
or right of accumulation will apply to the value of all qualifying holdings in shares of mutual funds sponsored and advised by BlackRock or
its affiliates (BlackRock Funds) owned by (a) the investor, or (b) the investors spouse and any children and a trust, custodial
account or fiduciary account for the benefit of any such individuals. For this purpose, the value of an investors holdings means the offering
price of the newly purchased shares (including any applicable sales charge) plus the current value (including any sales charges paid) of all other
shares the investor already holds taken together.
Qualifying Holdings
|
|
Investor Shares, Institutional Shares (in most BlackRock Funds)
and investments in the BlackRock CollegeAdvantage 529 Program.
|
Qualifying Holdings may include shares held in
accounts held at a Financial Intermediary, including personal accounts, certain retirement accounts, UGMA/UTMA accounts,
Joint Tenancy accounts, trust accounts and Transfer on Death accounts, as well as shares purchased by a trust of which the investor is a beneficiary.
For purposes of the Letter of Intent and right of accumulation, the investor may not combine with the investors other
holdings shares held in pension, profit sharing or other employer-sponsored retirement plans if those shares are held in the name of a
nominee or custodian.
In order to receive a reduced sales charge, at the time an
investor purchases shares of the Fund, the investor should inform the Financial Intermediary and/or BlackRock Funds of any
other shares of the Fund or any other BlackRock Fund that qualify for a reduced sales charge. Failure by the investor to notify the
Financial Intermediary or BlackRock Funds may result in the investor not receiving the sales charge reduction to
which the investor is otherwise entitled.
29
The Financial Intermediary or
BlackRock Funds may request documentation including account statements and records of the original cost of the shares owned by the investor, the
investors spouse and/or children showing that the investor qualifies for a reduced sales charge. The investor should retain these records because
depending on where an account is held or the type of account the Fund and/or the investors Financial
Intermediary or BlackRock Funds may not be able to maintain this information.
For more information, see the SAI or contact your
Financial Intermediary.
Letter of Intent
An investor may qualify for a reduced front-end sales charge
immediately by signing a Letter of Intent stating the investors intention to buy a specified amount of Investor A, Investor C or
Institutional Shares and/or make an investment through the BlackRock CollegeAdvantage 529 Program in one or more BlackRock Funds within the next 13
months that would, if bought all at once, qualify the investor for a reduced sales charge. The initial investment must meet the minimum initial
purchase requirement. The 13-month Letter of Intent period commences on the day that the Letter of Intent is received by the Fund, and the investor
must tell the Fund that later purchases are subject to the Letter of Intent. Purchases submitted prior to the date the Letter of Intent is received by
the Fund are not counted toward the sales charge reduction. During the term of the Letter of Intent, the Fund will hold Investor A Shares representing
up to 5% of the indicated amount in an escrow account for payment of a higher sales load if the full amount indicated in the Letter of Intent is not
purchased. If the full amount indicated is not purchased within the 13-month period, and the investor does not pay the higher sales load within 20
days, the Fund will redeem enough of the Investor A Shares held in escrow to pay the difference.
Right of Accumulation
Investors have a right of accumulation under which the
current value of an investors existing Investor A and A1, Investor B, B1 and B3, Investor C, C1, C2 and C3, and
Institutional Shares and the investment in the BlackRock CollegeAdvantage 529 Program by the investor or by or on behalf of the investors
spouse and children may be combined with the amount of the current purchase in determining whether an investor qualifies for a breakpoint and a reduced
front-end sales charge. Financial Intermediaries may value current holdings of their customers differently for purposes of determining
whether an investor qualifies for a breakpoint and a reduced front-end sales charge, although customers of the same Financial
Intermediary will be treated similarly. In order to use this right, the investor must alert BlackRock to the existence of any previously
purchased shares.
Other Front-End Sales Charge Waivers
The following persons may also buy Investor A Shares without
paying a sales charge:
n
|
|
Certain employer-sponsored retirement plans. For
purposes of this sales charge waiver, employer-sponsored retirement plans do not include SEP IRAs, SIMPLE IRAs or SARSEPs;
|
n
|
|
Rollovers of current investments through certain
employer-sponsored retirement plans provided the shares are transferred to the same BlackRock Fund as either a direct rollover, or subsequent to
distribution, the rolled-over proceeds are contributed to a BlackRock IRA through an account directly with the Fund; or purchases by IRA
programs that are sponsored by Financial Intermediary firms provided the Financial Intermediary firm has entered into a Class A Net Asset
Value agreement with respect to such program with the Distributor;
|
n
|
|
Insurance company separate accounts;
|
n
|
|
Registered investment advisers, trust companies and bank trust
departments exercising discretionary investment authority with respect to amounts to be invested in the Fund;
|
n
|
|
Persons participating in a fee-based program (such as a wrap
account) under which they pay advisory fees to a broker-dealer or other financial institution;
|
n
|
|
Financial Intermediaries who have entered into an agreement
with the Distributor and have been approved by the Distributor to offer Fund shares to self-directed investment brokerage accounts that may or
may not charge a transaction fee;
|
n
|
|
Persons associated with the Fund, the Funds manager, the
Funds sub-adviser, transfer agent, Distributor, fund accounting agents, Barclays PLC (Barclays) and their respective
affiliates (to the extent permitted by these firms) including: (a) officers, directors and partners; (b) employees and retirees; (c) employees
of firms who have entered into selling agreements to distribute shares of BlackRock Funds; (d) immediate family members of such persons;
and (e) any trust, pension, profit-sharing or other benefit plan for any of the persons set forth in (a) through (d); and
|
n
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State sponsored 529 college savings plans.
|
The availability of Investor A Shares sales charge waivers may
depend on the policies, procedures and trading platforms of your Financial Intermediary; consult your financial adviser.
30
Investor A Shares at Net Asset Value
If you invest $1,000,000 or more in Investor A Shares, you will
not pay any initial sales charge. However, if you redeem your Investor A Shares within 18 months after purchase, you may be charged a deferred sales
charge of 1.00% of the lesser of the original cost of the shares being redeemed or your redemption proceeds. For a discussion on waivers, see
Contingent Deferred Sales Charge Waivers.
If you are eligible to buy both Investor A and Institutional
Shares, you should buy Institutional Shares since Investor A Shares are subject to a front end sales charge and an annual 0.25% service fee, while
Institutional Shares are not. The Distributor normally pays the annual Investor A Shares service fee to dealers as a shareholder servicing fee on a
monthly basis.
Investor B and Investor C Shares Deferred Sales Charge
Options
Investor B Shares are currently available for purchase only
through exchanges and dividend reinvestments by current holders of Investor B Shares and for purchases by certain employer-sponsored
retirement plans. If you select Investor C Shares, you do not pay an initial sales charge at the time of purchase. However, if you redeem your
Investor B Shares within six years after purchase or your Investor C Shares within one year after purchase, you may be required to pay a deferred sales
charge. The charge will apply to the lesser of the original cost of shares being redeemed or the proceeds of your redemption. No deferred sales charge
applies to shares that you buy through reinvestment of dividends or capital gains. You will also pay distribution fees of 0.75% and service fees of
0.25% for both classes of shares each year.
Because these fees are paid out of the Funds assets on an
ongoing basis, over time these fees increase the cost of your investment and may cost you more than paying other types of sales charges. The
Distributor uses the money that it receives from the deferred sales charges and the distribution fees to cover the costs of marketing, advertising and
compensating the financial professional or Financial Intermediary who assists you in purchasing Fund
shares.
The Distributor currently pays dealers a sales concession of 4.00%
of the purchase price of Investor B Shares from its own resources at the time of sale. The Distributor also normally pays the annual Investor B Shares
service fee to dealers as a shareholder servicing fee on a monthly basis. The Distributor normally retains the Investor B Shares distribution
fee.
The Distributor currently pays dealers a sales concession of 1.00%
of the purchase price of Investor C Shares from its own resources at the time of sale. The Distributor pays the annual Investor C Shares distribution
fee and the annual Investor C Shares service fee as an ongoing concession and as a shareholder servicing fee, respectively, to dealers for Investor C
Shares held for over a year and normally retains the Investor C Shares distribution fee and service fee during the first year after purchase. For
certain employer-sponsored retirement plans, the Distributor will pay the full Investor C Shares distribution fee and service fee to
dealers beginning in the first year after purchase in lieu of paying the sales concession. The foregoing may depend on the policies,
procedures and trading platforms of your Financial Intermediary; consult your financial adviser.
Investor B Shares
If you redeem Investor B Shares within six years after purchase,
you may be charged a deferred sales charge. No deferred sales charge applies to shares that you buy through reinvestment of dividends or capital gains.
When you redeem Investor B Shares, the redemption order is processed so that the lowest deferred sales charge is charged. Investor B Shares that are
not subject to the deferred sales charge are redeemed first. After that, the Fund redeems the Shares that have been held the longest. The amount of the
charge gradually decreases as you hold your shares over time, according to the following schedule:
Years Since Purchase
|
|
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|
Sales Charge
1
|
0 1
|
|
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|
4.50%
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1 2
|
|
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|
4.00%
|
2 3
|
|
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3.50%
|
3 4
|
|
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|
3.00%
|
4 5
|
|
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|
2.00%
|
5 6
|
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|
1.00%
|
6 and thereafter
|
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0.00%
|
1
|
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The percentage charge will apply to the lesser of
the original cost of the shares being redeemed or the proceeds of your redemption. Not all BlackRock Funds have identical deferred sales charge
schedules. If you exchange your shares for shares of another BlackRock Fund, the original deferred sales charge schedule will apply.
|
31
Any CDSC paid on a redemption of Investor B Shares expressed as a
percentage of the applicable redemption amount may be higher or lower than the charge described due to rounding.
Your Investor B Shares convert automatically into Investor A
Shares approximately eight years after purchase. Any Investor B Shares received through reinvestment of dividends paid on converting shares will also
convert pro rata based on the amount of shares being converted. Investor A Shares are subject to lower annual expenses than Investor B Shares. The
conversion of Investor B Shares to Investor A Shares is not a taxable event for Federal income tax purposes.
Different conversion schedules apply to Investor B Shares of
different BlackRock Funds. For example, Investor B Shares of fixed-income funds typically convert approximately ten years after purchase compared to
approximately eight years for equity funds. If you acquire your Investor B Shares in an exchange from another BlackRock Fund with a
different conversion schedule, the conversion schedule that applies to the shares you acquire in the exchange will apply. The length of time that you
hold both the original and exchanged Investor B Shares in both funds will count toward the conversion schedule. The conversion schedule may be modified
in certain other cases as well.
Investor C Shares
If you redeem Investor C Shares within one year after purchase,
you may be charged a deferred sales charge of 1.00%. The charge will apply to the lesser of the original cost of the shares being redeemed or the
proceeds of your redemption. When you redeem Investor C Shares, the redemption order is processed so that the lowest deferred sales charge is
charged. Investor C Shares that are not subject to the deferred sales charge are redeemed first. In addition, you will not be charged a deferred sales
charge when you redeem shares that you acquire through reinvestment of Fund dividends or capital gains. Any CDSC paid on the redemptions of Investor C
Shares expressed as a percentage of the applicable redemption amount may be higher or lower than the charge described due to rounding.
Investor C Shares do not offer a conversion
privilege.
Contingent Deferred Sales Charge Waivers
The deferred sales charge relating to Investor A, Investor B and
Investor C Shares may be reduced or waived in certain circumstances, such as:
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Redemptions of shares purchased through certain
employer-sponsored retirement plans and rollovers of current investments in the Fund through such plans;
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Exchanges pursuant to the exchange privilege, as described in
How to Buy, Sell, Exchange and Transfer Shares How to Exchange Shares or Transfer your Account;
|
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Redemptions made in connection with
minimum required distributions from IRA or 403(b)(7) accounts due to the shareholder reaching the age of 70
1
⁄
2
;
|
n
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Certain post-retirement withdrawals
from an IRA or other retirement plan if you are over 59
1
⁄
2
years old and you purchased your shares prior to October
2, 2006;
|
n
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Redemptions made with respect to certain retirement plans
sponsored by the Fund, BlackRock or an affiliate;
|
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Redemptions resulting from shareholder death as long as the waiver
request is made within one year of death or, if later, reasonably promptly following completion of probate (including in connection with the
distribution of account assets to a beneficiary of the decedent);
|
n
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|
Withdrawals resulting from shareholder disability (as defined in
the Internal Revenue Code) as long as the disability arose subsequent to the purchase of the shares;
|
n
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|
Involuntary redemptions made of shares in accounts with low
balances;
|
n
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|
Certain redemptions made through the Systematic Withdrawal Plan
offered by the Fund, BlackRock or an affiliate;
|
n
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|
Redemptions related to the payment of BNY Mellon Investment
Servicing Trust Company custodial IRA fees; and
|
n
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Redemptions when a shareholder can demonstrate hardship, in the
absolute discretion of the Fund.
|
More information about existing sales charge reductions and
waivers is available free of charge in a clear and prominent format via hyperlink at www.blackrock.com and in the SAI, which is available on the
website or on request.
Institutional Shares
Institutional Shares are not subject to any sales charge. Only
certain investors are eligible to buy Institutional Shares. Your Financial Intermediary can help you determine whether you
are eligible to buy Institutional Shares. The Fund may permit a lower initial investment for certain investors if their purchase, combined with
purchases by other investors received together by the Fund, meets the minimum investment requirement.
32
Eligible Institutional investors include the
following:
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Investors who currently own Institutional Shares of the Fund may
make additional purchases of Institutional Shares of the Fund directly from the Fund;
|
n
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|
Institutional and individual retail investors with a minimum
investment of $2 million who purchase directly from the Fund;
|
n
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Certain employer-sponsored retirement plans. For
this purpose, employer-sponsored retirement plans do not include SEP IRAs, SIMPLE IRAs or SARSEPs;
|
n
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|
Investors in selected fee-based programs;
|
n
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|
Clients of registered investment advisers who have $250,000
invested in the Fund;
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n
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|
Trust department clients of PNC Bank and Bank of America, N.A. and
their affiliates for whom they (i) act in a fiduciary capacity (excluding participant directed employee benefit plans); (ii) otherwise have investment
discretion; or (iii) act as custodian for at least $2 million in assets;
|
n
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Unaffiliated banks, thrifts or trust companies that have
agreements with the Distributor;
|
n
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|
Holders of certain Bank of America Corporation
(BofA Corp.) sponsored unit investment trusts (UITs) who reinvest dividends received from such UITs in shares of the Fund;
and
|
n
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Employees, officers and directors/trustees of BlackRock, Inc.,
BlackRock Funds, BofA Corp., PNC, Barclays or their respective affiliates.
|
Class R Shares
Class R Shares are available only to certain
employer-sponsored retirement plans. For this purpose, employer-sponsored retirement plans do not include SEP IRAs, SIMPLE IRAs or
SARSEPs. If you buy Class R Shares, you will pay neither an initial sales charge nor a CDSC. However, Class R Shares are subject to a distribution
fee of 0.25% per year and a service fee of 0.25% per year. Because these fees are paid out of the Funds assets on an ongoing basis, over time
these fees increase the cost of your investment and may cost you more than paying other types of sales charges. Class R Shares do not offer a
conversion privilege.
The Distributor currently pays the annual Class R Shares
distribution fee and annual Class R Shares service fee to dealers as an ongoing concession and as a shareholder servicing fee, respectively, on a
monthly basis.
Distribution and Service
Payments
The Fund has adopted plans (the Plans) that allow the
Fund to pay distribution fees for the sale of its shares under Rule 12b-1 of the Investment Company Act and shareholder servicing fees for certain
services provided to its shareholders.
Plan Payments
Under the Plans, Investor B, Investor C and Class R Shares pay a
distribution fee to the Distributor, and/or its affiliates including PNC and its affiliates, for distribution and sales support services. The
distribution fees may be used to pay the Distributor for distribution services and to pay the Distributor and affiliates of BlackRock and PNC for sales
support services provided in connection with the sale of Investor B, Investor C and Class R Shares. The distribution fees may also be used to pay
Financial Intermediaries for sales support services and related expenses. All Investor B, Investor C and Class R Shares pay a maximum
distribution fee per year that is a percentage of the average daily net asset value of the Fund attributable to Investor B, Investor C and Class R
Shares, as applicable. Institutional and Investor A Shares do not pay a distribution fee.
Under the Plans, the Fund also pays shareholder servicing fees
(also referred to as shareholder liaison services fees) to Financial Intermediaries for providing support services to their customers who own Investor
A, Investor B, Investor C and Class R Shares of the Fund. The shareholder servicing fee payment is calculated as a percentage of the average
daily net asset value of Investor A, Investor B, Investor C and Class R Shares of the Fund. All Investor A, Investor B, Investor C and Class R Shares
pay this shareholder servicing fee. Institutional Shares do not pay a shareholder servicing fee.
In return for the shareholder servicing fee, Financial
Intermediaries (including BlackRock) may provide one or more of the following services to their customers who own Investor A, Investor B, Investor C
and Class R Shares:
n
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Responding to customer questions on the services performed by the
Financial Intermediary and investments in Investor A, Investor B, Investor C and Class R Shares;
|
n
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|
Assisting customers in choosing and changing dividend options,
account designations and addresses; and
|
33
n
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Providing other similar shareholder liaison services.
|
The shareholder servicing fees payable pursuant to the Plans are
paid to compensate Financial Intermediaries for the administration and servicing of shareholder accounts and are not costs which are primarily intended
to result in the sale of the Funds shares. Because the fees paid by the Fund under the Plans are paid out of Fund assets on an ongoing basis,
over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges. In addition, the
distribution fees paid by Investor B, Investor C and Class R Shares may over time cost investors more than the front-end sales charge on Investor A
Shares. For more information on the Plans, including a complete list of services provided thereunder, see the SAI.
Other Payments by the Fund
In addition to, rather than in lieu of, distribution and
shareholder servicing fees that the Fund may pay to a Financial Intermediary pursuant to the Plans and fees the Fund pays to its transfer agent, BNY
Mellon Investment Servicing (US) Inc. (the Transfer Agent), BlackRock, on behalf of the Fund, may enter into non-Plan agreements with a
Financial Intermediary pursuant to which the Fund will pay a Financial Intermediary for administrative, networking, recordkeeping, subtransfer agency
and shareholder services. These non-Plan payments are generally based on either (1) a percentage of the average daily net assets of Fund shareholders
serviced by a Financial Intermediary or (2) a fixed dollar amount for each account serviced by a Financial Intermediary. The aggregate amount of these
payments may be substantial.
Other Payments by BlackRock
The Plans permit BlackRock, the Distributor and their affiliates
to make payments relating to distribution and sales support activities out of their past profits or other sources available to them (and not as an
additional charge to the Fund). From time to time, BlackRock, the Distributor or their affiliates also may pay a portion of the fees for
administrative, networking, recordkeeping, sub-transfer agency and shareholder services described above at its or their own expense and out of its or
their profits. BlackRock, the Distributor and their affiliates may compensate affiliated and unaffiliated Financial Intermediaries for the sale and
distribution of shares of the Fund or for these other services to the Fund and shareholders. These payments would be in addition to the Fund payments
described in this prospectus and may be a fixed dollar amount, may be based on the number of customer accounts maintained by the Financial
Intermediary, or may be based on a percentage of the value of shares sold to, or held by, customers of the Financial Intermediary. The aggregate amount
of these payments by BlackRock, the Distributor and their affiliates may be substantial. Payments by BlackRock may include amounts that are sometimes
referred to as revenue sharing payments. In some circumstances, these revenue sharing payments may create an incentive for a Financial
Intermediary, its employees or associated persons to recommend or sell shares of the Fund to you. Please contact your Financial Intermediary for
details about payments it may receive from the Fund or from BlackRock, the Distributor or their affiliates. For more information, see the
SAI.
How to Buy, Sell, Exchange and
Transfer Shares
The chart on the following pages summarizes how to buy, sell,
exchange and transfer shares through your Financial Intermediary. You may also buy, sell, exchange and transfer shares
through BlackRock, if your account is held directly with BlackRock. To learn more about buying, selling, exchanging or transferring
shares through BlackRock, call (800) 441-7762. Because the selection of a mutual fund involves many considerations, your Financial
Intermediary may help you with this decision.
The Fund may reject any purchase order, modify or waive the
minimum initial or subsequent investment requirements for any shareholders and suspend and resume the sale of any share class of the Fund at any time
for any reason.
In addition, the Fund may waive certain requirements regarding the
purchase, sale, exchange or transfer of shares described below.
Under certain circumstances, if no activity occurs in an account
within a time period specified by state law, a shareholders shares in the Fund may be transferred to that state.
34
How to Buy Shares
|
|
Your Choices
|
|
Important Information for You to
Know
|
Initial Purchase
|
|
First, select the share class appropriate for you
|
|
Refer to the Share Classes at a Glance table in this prospectus (be sure to read this prospectus carefully). When you place your
initial order, you must indicate which share class you select (if you do not specify a share class and do not qualify to purchase Institutional Shares,
you will receive Investor A Shares).
|
|
|
|
|
Certain factors, such as the amount of your investment, your time frame for investing, and your financial
goals, may affect which share class you choose. Your Financial Intermediary can help you determine which share class is appropriate for
you. Class R Shares are available only to certain employer-sponsored retirement plans.
|
|
|
Next, determine the amount of your investment
|
|
· Refer to the minimum initial investment in the Share Classes at a Glance table of this
prospectus. Be sure to note the maximum investment amounts in Investor C Shares.
|
|
|
|
|
· See Account Information Details About
the Share Classes for information on a lower initial investment requirement for certain Fund investors if their purchase, combined with purchases
by other investors received together by the Fund, meets the minimum investment requirement.
|
|
|
Have your Financial Intermediary submit your purchase order
|
|
The
price of your shares is based on the next calculation of the Funds net asset value after your order is placed. Any purchase orders placed prior
to the close of business on the NYSE (generally 4:00 p.m. Eastern time) will be priced at the net asset value determined that day. Certain Financial
Intermediaries, however, may require submission of orders prior to that time. Purchase orders placed after that time will be priced at the net
asset value determined on the next business day. A broker-dealer or financial institution maintaining the account in which you hold shares may
charge a separate account, service or transaction fee on the purchase or sale of Fund shares that would be in addition to the fees and expenses shown
in the Funds Fees and Expenses table.
|
|
|
|
|
The Fund may reject any order to buy shares and may suspend the sale of shares at any time. Other financial
intermediaries may charge a processing fee to confirm a purchase.
|
|
|
Or contact BlackRock (for accounts held directly with BlackRock)
|
|
To purchase shares directly with BlackRock, call (800) 441-7762 and request a new account application. Mail
the completed application along with a check payable to BlackRock Funds to the Transfer Agent at the address on the
application.
|
Add to Your Investment
|
|
Purchase additional shares
|
|
For Investor A and Investor C Shares, the minimum investment for additional purchases is generally
$50 for all accounts (with the exception of certain employer-sponsored retirement plans which may have a lower minimum for additional
purchases). (The minimums for additional purchases may be waived under certain circumstances.) Institutional and Class R Shares have no minimum
for additional purchases.
|
|
|
Have your financial professional or financial intermediary submit your purchase order for
additional shares
|
|
To purchase additional shares you may contact your Financial
Intermediary.
|
|
|
|
For
more details on purchasing by Internet see below.
|
|
|
Or contact BlackRock (for accounts held directly with BlackRock)
|
|
Purchase by Telephone:
Call (800) 441-7762 and speak with one of our representatives. The Fund has the right to reject any telephone
request for any reason.
|
|
|
|
Purchase in Writing:
You may send a written request to BlackRock at the address on the back cover of this prospectus.
|
|
|
|
Purchase by VRU:
Investor Shares may also be purchased by use of the Funds automated voice
response unit service (VRU) at (800) 441-7762.
|
35
How to Buy Shares (continued)
|
|
Your Choices
|
|
Important Information for You to
Know
|
Add to Your
Investment
(continued)
|
|
Or contact BlackRock (for accounts held directly with BlackRock) (continued)
|
|
Purchase by Internet:
You may purchase your shares, and view activity in your account, by logging onto the BlackRock website at
www.blackrock.com/funds. Purchases made on the Internet using the Automated Clearing House (ACH) network will have a trade date that is the
day after the purchase is made.
|
|
|
|
|
Certain institutional clients purchase orders of Institutional Shares placed by wire prior to the close of business on the NYSE will be
priced at the net asset value determined that day. Contact your Financial Intermediary or BlackRock for further
information. The Fund limits Internet purchases in shares of the Fund to $25,000 per trade. Different maximums may apply to certain institutional
investors.
|
|
|
|
|
Please read the On-Line Services Disclosure Statement and User Agreement, the Terms and Conditions page and the Consent to Electronic Delivery
Agreement (if you consent to electronic delivery), before attempting to transact online.
|
|
|
|
|
The Fund employs reasonable procedures to confirm that transactions entered over the Internet are genuine.
By entering into the User Agreement with the Fund in order to open an account through the website, the shareholder waives any right to reclaim any
losses from the Fund or any of its affiliates, incurred through fraudulent activity.
|
|
|
Acquire additional shares by reinvesting dividends and capital gains
|
|
All dividends and capital gains distributions are automatically reinvested without a sales charge. To make
any changes to your dividend and/or capital gains distributions options, please call (800) 441-7762, or contact your Financial
Intermediary (if your account is not held directly with BlackRock).
|
|
|
Participate in the Automatic Investment Plan
|
|
BlackRocks AIP allows you to invest a specific amount on a periodic basis from your checking or savings account into your
investment account.
|
|
|
|
|
Refer to the Account Services and Privileges section of this prospectus for additional
information.
|
How to Pay for Shares
|
|
Making payment for purchases
|
|
Payment for an order must be made in Federal funds or other immediately available funds by the time specified by your Financial
Intermediary, but in no event later than 4:00 p.m. (Eastern time) on the third business day (in the case of Investor Shares) or first
business day (in the case of Institutional Shares) following BlackRocks receipt of the order. If payment is not received by this time, the order
will be canceled and you and your Financial Intermediary will be responsible for any loss to the
Fund.
|
|
|
|
|
For shares purchased directly from the Fund, a check payable to BlackRock Funds which bears the name of the
Fund must accompany a completed purchase application. There is a $20 fee for each purchase check that is returned due to
insufficient funds. The Fund does not accept third-party checks. You may also wire Federal funds to the Fund to purchase shares, but you must call
(800) 441-7762 before doing so to confirm the wiring instructions.
|
36
How to Sell Shares
|
|
Your Choices
|
|
Important Information for You to
Know
|
Full or Partial
Redemption of Shares
|
|
Have your Financial Intermediary submit your sales order
|
|
You
can make redemption requests through your Financial Intermediary. Shareholders should indicate whether they are redeeming Investor A,
Investor B, Investor C, Institutional or Class R Shares. The price of your shares is based on the next calculation of the Funds net asset value
after your order is placed. For your redemption request to be priced at the net asset value on the day of your request, you must submit your request to
your Financial Intermediary prior to that days close of business on the NYSE (generally 4:00 p.m. Eastern time).
Certain Financial Intermediaries, however, may require submission of orders prior to that time. Any redemption request
placed after that time will be priced at the net asset value at the close of business on the next business day.
|
|
|
|
|
Financial Intermediaries may charge a fee to process a redemption of shares.
|
|
|
|
|
The Fund may reject an order to sell shares under certain circumstances.
|
|
|
Selling shares held directly with BlackRock
|
|
Methods of Redeeming
|
|
|
|
Redeem by Telephone:
You may redeem Investor Shares held directly at BlackRock by telephone request if certain
conditions are met and if the amount being sold is less than (i) $100,000 for payments by check or (ii) $250,000 for payments through ACH or wire
transfer. Certain redemption requests, such as those in excess of these amounts, must be in writing with a medallion signature guarantee. For
Institutional Shares, certain redemption requests may require written instructions with a medallion signature guarantee. Call (800) 441-7762 for
details. You can obtain a medallion signature guarantee stamp from a bank, securities dealer, securities broker, credit union, savings and loan
association, national securities exchange or registered securities association. A notary public seal will not be acceptable.
|
|
|
|
|
The
Fund, its administrators and the Distributor will employ reasonable procedures to confirm that instructions communicated by telephone are genuine. The
Fund and its service providers will not be liable for any loss, liability, cost or expense for acting upon telephone instructions that are reasonably
believed to be genuine in accordance with such procedures. The Fund may refuse a telephone redemption request if it believes it is advisable to do
so.
|
|
|
|
|
During periods of substantial economic or market change, telephone redemptions may be difficult to complete. Please find alternative
redemption methods below.
|
|
|
|
|
Redeem by VRU:
Investor Shares may also be redeemed by use of the Funds automated VRU service. Payment for
Investor Shares redeemed by VRU may be made for non-retirement accounts in amounts up to $25,000, either through check, ACH or wire.
|
|
|
|
|
Redeem by Internet:
You may redeem in your account, by logging onto the BlackRock website at
www.blackrock.com/funds. Proceeds from Internet redemptions may be sent via check, ACH or wire to the bank account of record. Payment for Investor
Shares redeemed by Internet may be made for non-retirement accounts in amounts up to $25,000, either through check, ACH or wire. Different maximums may
apply to investors in Institutional Shares.
|
37
How to Sell Shares (continued)
|
|
Your Choices
|
|
Important Information for You to
Know
|
Full or Partial Redemption of Shares (continued)
|
|
Selling shares held directly with BlackRock (continued)
|
|
Redeem in Writing:
You may sell shares held at BlackRock by writing to BlackRock, P.O. Box 9819, Providence, Rhode Island 02940-8019 or for
overnight delivery, 4400 Computer Drive, Westborough, Massachusetts 01588. All shareholders on the account must sign the letter. A medallion signature
guarantee will generally be required but may be waived in certain limited circumstances. You can obtain a medallion signature guarantee stamp from a
bank, securities dealer, securities broker, credit union, savings and loan association, national securities exchange or registered securities
association. A notary public seal will not be acceptable. If you hold stock certificates, return the certificates with the letter.
|
|
|
|
|
Proceeds from redemptions may be sent via check, ACH or wire to the bank account of record.
|
|
|
|
|
Payment of Redemption Proceeds:
Redemption proceeds may be paid by check or, if the Fund has verified banking information on file, through
ACH or by wire transfer.
|
|
|
|
|
Payment by Check:
BlackRock will normally mail redemption proceeds within seven days following receipt of a properly completed request.
Shares can be redeemed by telephone and the proceeds sent by check to the shareholder at the address on record. Shareholders will pay $15 for
redemption proceeds sent by check via overnight mail. You are responsible for any additional charges imposed by your bank for this
service.
|
|
|
|
|
Payment by Wire Transfer:
Payment for redeemed shares for which a redemption order is received before 4:00 p.m. (Eastern time) on a
business day is normally made in Federal funds wired to the redeeming shareholder on the next business day, provided that the Funds custodian is
also open for business. Payment for redemption orders received after 4:00 p.m. (Eastern time) or on a day when the Funds custodian is closed is
normally wired in Federal funds on the next business day following redemption on which the Funds custodian is open for business. The Fund
reserves the right to wire redemption proceeds within seven days after receiving a redemption order if, in the judgment of the Fund, an earlier payment
could adversely affect the Fund.
|
|
|
|
|
If a
shareholder has given authorization for expedited redemption, shares can be redeemed by Federal wire transfer to a single previously designated bank
account. Shareholders will pay $7.50 for redemption proceeds sent by Federal wire transfer. You are responsible for any additional charges imposed by
your bank for this service. No charge for wiring redemption payments with respect to Institutional Shares is imposed by the Fund.
|
|
|
|
|
The
Fund is not responsible for the efficiency of the Federal wire system or the shareholders firm or bank. To change the name of the single,
designated bank account to receive wire redemption proceeds, it is necessary to send a written request to the Fund at the address on the back cover of
this prospectus.
|
|
|
|
|
Payment by ACH:
Redemption proceeds may be sent to the shareholders bank account (checking or savings) via ACH. Payment for redeemed
shares for which a redemption order is received before 4:00 p.m. (Eastern time) on a business day is normally sent to the redeeming shareholder the
next business day, with receipt at the receiving bank within the next two business days (48-72 hours); provided that the Funds custodian is also
open for business. Payment for redemption orders received after 4:00 p.m. (Eastern time) or on a day when the Funds custodian is closed is
normally sent on the next business day following redemption on which the Funds custodian is open for business.
|
|
|
|
|
The
Fund reserves the right to send redemption proceeds within seven days after receiving a redemption order if, in the judgment of the Fund, an earlier
payment could adversely affect the Fund. No charge for sending redemption payments via ACH is imposed by the Fund.
|
|
|
|
|
*
* *
|
|
|
|
|
If you make a redemption request before the Fund has collected payment for the purchase of shares, the Fund
may delay mailing your proceeds. This delay will usually not exceed ten days.
|
38
How to Exchange Shares or Transfer Your
Account
|
|
Your Choices
|
|
Important Information for You to
Know
|
Exchange Privilege
|
|
Selling shares of one fund to purchase shares of another BlackRock Fund (exchanging)
|
|
Investor or Institutional Shares of the Fund are generally exchangeable for shares of the same class of another BlackRock Fund. No
exchange privilege is available for Class R Shares.
|
|
|
|
You
can exchange $1,000 or more of Investor Shares from one fund into the same class of another fund which offers that class of shares (you can
exchange less than $1,000 of Investor Shares if you already have an account in the fund into which you are exchanging). Investors who currently
own Institutional Shares of the Fund may make exchanges into Institutional Shares of other BlackRock Funds except for investors holding shares through
certain client accounts at Financial Intermediaries that are omnibus with the Fund and do not meet applicable minimums. There is no
required minimum amount with respect to exchanges of Institutional Shares.
|
|
|
|
|
You
may only exchange into a share class and fund that are open to new investors or in which you have a current account if the fund is closed to new
investors.
|
|
|
|
|
Some
of the BlackRock Funds impose a different initial or deferred sales charge schedule. The CDSC will continue to be measured from the date of the
original purchase. The CDSC schedule applicable to your original purchase will apply to the shares you receive in the exchange and any subsequent
exchange.
|
|
|
|
|
To
exercise the exchange privilege, you may contact your Financial Intermediary. Alternatively, if your account is held
directly with BlackRock, you may: (i) call (800) 441-7762 and speak with one of our representatives, (ii) make the exchange via the Internet by
accessing your account online at www.blackrock.com/funds, or (iii) send a written request to the Fund at the address on the back cover of this
prospectus. Please note, if you indicated on your New Account Application that you did not want the Telephone Exchange Privilege, you will not be able
to place exchanges via the telephone until you update this option either in writing or by calling (800) 441-7762. The Fund has the right to reject any
telephone request for any reason.
|
|
|
|
|
Although there is currently no limit on the number of exchanges that you can make, the exchange privilege
may be modified or terminated at any time in the future. The Fund may suspend or terminate your exchange privilege at any time for any reason,
including if the Fund believes, in its sole discretion, that you are engaging in market timing activities. See Short Term Trading Policy
below. For Federal income tax purposes a share exchange is a taxable event and a capital gain or loss may be realized. Please consult your tax adviser
or other Financial Intermediaries before making an exchange request.
|
Transfer Shares to Another Financial Intermediary
|
|
Transfer to a participating Financial Intermediary
|
|
You
may transfer your shares of the Fund only to another Financial Intermediary that has entered into an agreement with the Distributor.
Certain shareholder services may not be available for the transferred shares. All future trading of these assets must be coordinated by the receiving
firm.
|
|
|
|
If your account is held directly with BlackRock, you may call (800) 441-7762 with any questions; otherwise
please contact your Financial Intermediary to accomplish the transfer of shares.
|
|
|
Transfer to a non- participating Financial Intermediary
|
|
You
must either:
|
|
|
|
· Transfer your shares to an account with the Fund; or
· Sell your shares, paying any applicable deferred sales charge.
|
|
|
|
If your account is held directly with BlackRock, you may call (800) 441-7762 with any questions; otherwise
please contact your Financial Intermediary to accomplish the transfer of shares.
|
39
Account Services and
Privileges
The following table provides examples of account services and
privileges available in your BlackRock account. Certain of these account services and privileges are only available to shareholders of Investor Shares
whose accounts are held directly with BlackRock. If your account is held directly with BlackRock, please call (800) 441-7762 or visit
www.blackrock.com/funds for additional information as well as forms and applications. Otherwise, please contact your Financial
Intermediary for assistance in requesting one or more of the following services and privileges.
|
|
|
|
|
Automatic
Investment Plan
|
|
Allows systematic investments on a periodic basis from your checking or savings
account.
|
|
BlackRocks AIP allows you to invest a specific amount on a periodic basis from your
checking or savings account into your investment account. You may apply for this option upon account opening or by completing the Automatic Investment
Plan application. The minimum investment amount for an automatic investment is $50 per portfolio. There is no AIP for Investor B
Shares.
|
Dividend Allocation Plan
|
|
Automatically invests your distributions into another BlackRock Fund of your choice pursuant to
your instructions, without any fees or sales charges.
|
|
Dividend and capital gains distributions may be reinvested in your account to purchase additional shares or
paid in cash. Using the Dividend Allocation Plan, you can direct your distributions to your bank account (checking or savings), to purchase shares of
another fund at BlackRock without any fees or sales charges, or by check to special payee. Please call (800) 441-7762 for details. If investing
in another BlackRock Fund, the receiving fund must be open to new purchases.
|
EZ Trader
|
|
Allows an investor to purchase or sell Investor Shares by telephone or over the Internet through ACH.
|
|
(NOTE: This option is offered to shareholders whose accounts are held directly with BlackRock. Please speak with your Financial
Intermediary if your account is held elsewhere).
|
|
|
|
Prior to establishing an EZ Trader account, please contact your bank to confirm that it is a member of the ACH system. Once confirmed, complete an
application, making sure to include the appropriate bank information, and return the application to the address listed on the form.
|
|
|
|
|
Prior to placing a telephone or Internet purchase or sale order, please call (800) 441-7762 to
confirm that your bank information has been updated on your account. Once this is established, you may place your request to sell shares with the Fund
by telephone or Internet. Proceeds will be sent to your pre-designated bank account.
|
Systematic Exchange Plan
|
|
This feature can be used by investors to systematically exchange money from one fund to up to four
other funds.
|
|
A minimum of $10,000 in the initial BlackRock Fund is required and investments in any additional funds must
meet minimum initial investment requirements.
|
Systematic Withdrawal Plan (SWP)
|
|
This feature can be used by investors who want to receive regular distributions from their accounts.
|
|
To
start an SWP a shareholder must have a current investment of $10,000 or more in a BlackRock Fund.
|
|
|
Shareholders can elect to receive cash payments of $50 or more at any interval they choose. Shareholders may sign up by completing the SWP
Application Form which may be obtained from BlackRock. Shareholders should realize that if withdrawals exceed income the invested principal in their
account will be depleted.
|
|
|
|
|
To
participate in the SWP, shareholders must have their dividends reinvested. Shareholders may change or cancel the SWP at any time, with a minimum of 24
hours notice. If a shareholder purchases additional Investor A Shares of a fund at the same time he or she redeems shares through the SWP, that
investor may lose money because of the sales charge involved. No CDSC will be assessed on redemptions of Investor A, Investor B or Investor C Shares
made through the SWP that do not exceed 12% of the accounts net asset value on an annualized basis. For example, monthly, quarterly, and
semi-annual SWP redemptions of Investor A, Investor B or Investor C Shares will not be subject to the CDSC if they do not exceed 1%, 3% and 6%,
respectively, of an accounts net asset value on the redemption date. SWP redemptions of Investor A, Investor B or Investor C Shares in excess of
this limit will still pay any applicable CDSC.
|
|
|
|
|
Ask your financial adviser or Financial Intermediary for
details.
|
40
|
|
|
|
|
|
|
|
|
Reinstatement Privilege
|
|
|
|
|
|
|
|
If you redeem Investor A or Institutional Shares, and within 60 days buy new Investor A Shares of the same
or another BlackRock Fund (equal to all or a portion of the redemption amount), you will not pay a sales charge on the new purchase
amount. This right may be exercised once a year and within 60 days of the redemption, provided that the Investor A Share class of that fund is
currently open to new investors or the shareholder has a current account in that closed fund. Shares will be purchased at the net asset value
calculated at the close of trading on the day the request is received. To exercise this privilege, the Fund must receive written notification from the
shareholder of record or the Financial Intermediary of record at the time of purchase. Investors should consult a tax
adviser concerning the tax consequences of exercising this reinstatement privilege.
|
The Fund may:
n
|
|
Suspend the right of redemption if trading is halted or restricted
on the NYSE or under other emergency conditions described in the Investment Company Act;
|
n
|
|
Postpone the date of payment upon redemption if trading is
halted or restricted on the NYSE or under other emergency conditions described in the Investment Company Act or if a redemption request is made before
the Fund has collected payment for the purchase of shares;
|
n
|
|
Redeem shares for property other than cash if conditions exist
which make cash payments undesirable in accordance with its rights under the Investment Company Act; and
|
n
|
|
Redeem shares involuntarily in certain cases, such as when the
value of a shareholder account falls below a specified level.
|
Note on Low Balance Accounts.
Because of the high cost of
maintaining smaller shareholder accounts, BlackRock has set a minimum balance of $500 in each Fund position you hold within your account (Fund
Minimum), and may take one of two actions if the balance in the Fund falls below the Fund Minimum.
First, the Fund may redeem the shares in your account (without
charging any deferred sales charge) if the net asset value of your account falls below $250 for any reason, including market fluctuation. You will be
notified that the value of your account is less than $250 before the Fund makes an involuntary redemption. The notification will provide you with a 90
calendar day period to make an additional investment in order to bring the value of your account to at least $250 before the Fund makes an involuntary
redemption or to the Fund Minimum in order not to be assessed an annual low balance fee of $20, as set forth below. This involuntary redemption may not
apply to accounts of certain employer-sponsored retirement plans, selected fee-based programs, accounts established under the Uniform
Gifts or Transfers to Minors Acts, and certain intermediary accounts.
Second, the Fund charges an annual $20 low balance fee on all
fund accounts that have a balance below the Fund Minimum for any reason, including market fluctuation. The low balance fee will be
assessed on fund accounts in all BlackRock funds, regardless of a funds minimum investment amount. The fee
will be deducted from the fund account only once per calendar year. You will be notified that the value of your account is less than the
Fund Minimum before the fee is imposed. You will then have a 90 calendar day period to make an additional investment to bring the value of your account
to the Fund Minimum before the Fund imposes the low balance fee. This low balance fee does not apply to accounts of certain
employer-sponsored retirement plans, selected fee-based programs, or, accounts established under the Uniform Gifts or Transfers to Minors
Acts.
Participation in Fee-Based
Programs
If you participate in certain fee-based programs offered by
BlackRock or an affiliate of BlackRock, or Financial Intermediaries that have agreements with the Distributor, you may be
able to buy Institutional Shares, including by exchange from other share classes. Sales charges on the shares being exchanged may be reduced or waived
under certain circumstances. You generally cannot transfer shares held through a fee-based program into another account. Instead, you will have to
redeem your shares held through the program and purchase shares of another class, which may be subject to distribution and service fees. This may be a
taxable event and you will pay any applicable sales charges.
41
Shareholders that participate in a fee-based program generally
have two options at termination. The program can be terminated and the shares liquidated or the program can be terminated and the shares held in an
account. In general, when a shareholder chooses to continue to hold the shares, whatever share class was held in the program can be held after
termination. Shares that have been held for less than specified periods within the program may be subject to a fee upon redemption. Shareholders that
held Investor A or Institutional Shares in the program are eligible to purchase additional shares of the respective share class of the Fund, but may be
subject to upfront sales charges with respect to Investor A Shares. Additional purchases of Institutional Shares are permitted only if you have
an existing position at the time of purchase or are otherwise eligible to purchase Institutional Shares.
Details about these features and the relevant charges are included
in the client agreement for each fee-based program and are available from your financial professional or Financial
Intermediary.
Short-Term Trading Policy
The Board of Directors (the Board) has determined that
the interests of long-term shareholders and the Funds ability to manage its investments may be adversely affected when shares are repeatedly
bought, sold or exchanged in response to short-term market fluctuations also known as market timing. The Fund is not designed for
market timing organizations or other entities using programmed or frequent purchases and sales or exchanges. The exchange privilege for Investor Shares
and Institutional Shares is not intended as a vehicle for short-term trading. Excessive purchase and sale or exchange activity may interfere with
portfolio management, increase expenses and taxes and may have an adverse effect on the performance of the Fund and its returns to shareholders.
For example, large flows of cash into and out of the Fund may require the management team to allocate a significant amount of assets to cash or other
short-term investments or sell securities, rather than maintaining such assets in securities selected to achieve the Funds investment objective.
Frequent trading may cause the Fund to sell securities at less favorable prices, and transaction costs, such as brokerage commissions, can reduce the
Funds performance.
A Funds investment in non-U.S. securities is
subject to the risk that an investor may seek to take advantage of a delay between the change in value of the funds portfolio
securities and the determination of the funds net asset value as a result of different closing times of U.S. and non-U.S. markets
by buying or selling fund shares at a price that does not reflect their true value. A similar risk exists for funds that invest in
securities of small capitalization companies, securities of issuers located in emerging markets or high yield securities (junk bonds) that are thinly
traded and therefore may have actual values that differ from their market prices. This short-term arbitrage activity can reduce the return received by
long-term shareholders. The Fund will seek to eliminate these opportunities by using fair value pricing, as described in Valuation of Fund
Investments below.
The Fund discourages market timing and seeks to prevent frequent
purchases and sales or exchanges of Fund shares that it determines may be detrimental to the Fund or long-term shareholders. The Board has approved the
policies discussed below to seek to deter market timing activity. The Board has not adopted any specific numerical restrictions on purchases, sales and
exchanges of Fund shares because certain legitimate strategies will not result in harm to the Fund or shareholders.
If as a result of its own investigation, information provided by a
Financial Intermediary or other third party, or otherwise, the Fund believes, in its sole discretion, that your short-term
trading is excessive or that you are engaging in market timing activity, it reserves the right to reject any specific purchase or exchange order. If
the Fund rejects your purchase or exchange order, you will not be able to execute that transaction, and the Fund will not be responsible for any losses
you therefore may suffer. For transactions placed directly with the Fund, the Fund may consider the trading history of accounts under common ownership
or control for the purpose of enforcing these policies. Transactions placed through the same Financial Intermediary on an
omnibus basis may be deemed part of a group for the purpose of this policy and may be rejected in whole or in part by the Fund. Certain accounts, such
as omnibus accounts and accounts at Financial Intermediaries, however, include multiple investors and such accounts
typically provide the Fund with net purchase or redemption and exchange requests on any given day where purchases, redemptions and exchanges of shares
are netted against one another and the identity of individual purchasers, redeemers and exchangers whose orders are aggregated may not be known by the
Fund. While the Fund monitors for market timing activity, the Fund may be unable to identify such activities because the netting effect in omnibus
accounts often makes it more difficult to locate and eliminate market timers from the Fund. The Distributor has entered into agreements with respect to
Financial Intermediaries that maintain omnibus accounts with the Transfer Agent pursuant to which such
Financial Intermediaries undertake to cooperate with the Distributor in monitoring purchase, exchange and redemption orders
by their customers in order to detect and prevent short-term or excessive trading in the Funds shares through such accounts. Identification of
market timers may also be limited by operational systems and technical limitations. In
42
the event that a Financial Intermediary is determined by
the Fund to be engaged in market timing or other improper trading activity, the Funds Distributor may terminate such Financial
Intermediarys agreement with the Distributor, suspend such Financial Intermediarys trading
privileges or take other appropriate actions.
There is no assurance that the methods described above will
prevent market timing or other trading that may be deemed abusive.
The Fund may from time to time use other methods that it believes
are appropriate to deter market timing or other trading activity that may be detrimental to the Fund or long-term
shareholders.
43
Management of the Fund
BlackRock, the Funds investment adviser, manages the
Funds investments and its business operations subject to the oversight of the Board. While BlackRock is ultimately responsible for the management
of the Fund, it is able to draw upon the trading, research and expertise of its asset management affiliates for portfolio decisions and management with
respect to certain portfolio securities. BlackRock is an indirect, wholly owned subsidiary of BlackRock, Inc.
BlackRock, a registered investment adviser, was organized in 1994
to perform advisory services for investment companies. BlackRock Investment Management, LLC, the Funds sub-adviser (the
Sub-Adviser), is a registered investment adviser organized in 1999. BlackRock and its affiliates had
approximately $4.324 trillion in investment company and other portfolio assets under management as of December 31,
2013.
The Fund has entered into a management agreement (the
Management Agreement) with BlackRock. Under the Management Agreement BlackRock receives for its services
to the Fund a fee at the annual rate of 0.75% of the Funds average daily net assets.
BlackRock has entered into a sub-advisory agreement
with the Sub-Adviser, an affiliate of BlackRock. Under the sub-advisory agreement BlackRock
pays the Sub-Adviser for services it provides a fee equal to a percentage of the management fee paid to BlackRock under the
Management Agreement. The Sub-Adviser is responsible for the day-to-day management of the Funds portfolio. Prior to July
1, 2013, BlackRock International Limited was a sub-adviser to the Fund and received for its services a fee from BlackRock equal to a percentage of the management fee paid to BlackRock under the Management Agreement.
BlackRock has agreed to voluntarily waive a portion of its
management fee payable by the Fund so that such fee is reduced for average daily net assets of the Fund as follows:
In Excess of
|
|
|
|
Not Exceeding
|
|
Rate Waived to
|
$0
|
|
|
|
$10 billion
|
|
0.75%
|
$10 billion
|
|
|
|
$15 billion
|
|
0.69%
|
$15 billion
|
|
|
|
$20 billion
|
|
0.68%
|
$20 billion
|
|
|
|
$25 billion
|
|
0.67%
|
$25 billion
|
|
|
|
$30 billion
|
|
0.65%
|
$30 billion
|
|
|
|
$40 billion
|
|
0.63%
|
$40 billion
|
|
|
|
$60 billion
|
|
0.62%
|
$60 billion
|
|
|
|
$80 billion
|
|
0.61%
|
$80 billion
|
|
|
|
|
|
0.60%
|
This voluntary waiver may be reduced or discontinued at any time
without notice.
For the fiscal year ended October 31, 2013, the
Manager received a fee, net of the applicable waivers, at the annual rate of 0.66% of the Funds average daily
net assets.
The Manager voluntarily agreed to waive its investment advisory
fees by the amount of investment advisory fees the Fund pays to the Manager indirectly through its investment in affiliated money market
funds.
44
BlackRock has agreed to voluntarily waive management fees to the
amounts noted in the table above. After taking into account this voluntary fee waiver, the Total Annual Fund Operating Expenses were as
follows:
|
|
|
|
Total Annual Fund Operating
Expenses* after giving effect
to voluntary waivers on
Management Fees
1,2
(excluding
Interest Expense,
Dividend
Expense, Acquired Fund Fees
and Expenses and certain
other Fund expenses)
|
Investor A Shares
|
|
|
|
1.05%
|
Investor B Shares
|
|
|
|
1.86%
|
Investor C Shares
|
|
|
|
1.80%
|
Institutional Shares
|
|
|
|
0.78%
|
Class R Shares
|
|
|
|
1.39%
|
|
*
|
As a percentage of average daily net
assets.
|
|
1
|
Voluntary waivers may be reduced or discontinued at
any time without notice.
|
|
2
|
Voluntary waivers are based on the management fee
received by BlackRock, net of the applicable waivers for the fiscal year ended October 31, 2013.
|
A discussion of the basis for the Board of Directors
approval of the Management Agreement with BlackRock and the sub-advisory agreement between BlackRock and the Sub-Adviser is included in
the Funds annual shareholder report for the fiscal year ended October 31, 2013.
From time to time, a manager, analyst, or other employee of
BlackRock or its affiliates may express views regarding a particular asset class, company, security, industry, or market sector. The views expressed by
any such person are the views of only that individual as of the time expressed and do not necessarily represent the views of BlackRock or any other
person within the BlackRock organization. Any such views are subject to change at any time based upon market or other conditions and BlackRock
disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for the Fund
are based on numerous factors, may not be relied on as an indication of trading intent on behalf of the Fund.
As discussed above, the Fund intends to gain exposure to
commodities markets by investing in the Subsidiary. BlackRock provides investment management and other services to the Subsidiary. BlackRock does not
receive separate compensation from the Subsidiary for providing it with investment management or administrative services. However, the Fund pays
BlackRock based on the Funds assets, including the assets in the Subsidiary.
Legal Proceedings
. On February 21, 2014, a lawsuit was filed in the United States District
Court for the District of New Jersey by Owen Clancy and Jack Hornstein, purported investors in the Fund, against BlackRock,
BlackRock Investment Management, LLC and BlackRock International Limited (collectively, the Defendants) for
alleged violations of Section 36(b) of the Investment Company Act (the “Clancy Complaint”). The Clancy Complaint
purports to be brought derivatively
on behalf of the
Fund. The Clancy Complaint alleges that the
Defendants breached their fiduciary duties under the Investment Company
Act by charging excessive investment advisory fees, and that the investment advisory agreement between the Fund and
BlackRock is unenforceable under Section 47(b) of the
Investment Company Act. The plaintiffs seek injunctive relief, rescission of the
investment advisory agreement and compensatory damages, including repayment to the Fund of all allegedly excessive
investment advisory fees paid by the Fund from one year
prior to the filing of the lawsuit plus lost investment returns on those amounts
and interest. The Defendants believe the claims in the Clancy Complaint are without merit and intend to vigorously defend
the action.
On March 28, 2014, a lawsuit was filed in
the United States District Court for the District of New Jersey by Brendan Foote, in his capacity as trustee on behalf of the Separate
Property TR U/A DTD 10-26-12, a purported investor in the Fund, against BlackRock (the “Foote Complaint”). The Foote
Complaint purports to be brought derivatively on behalf of the Fund. The Foote Complaint alleges that BlackRock breached its fiduciary
duties by charging excessive investment advisory fees, in alleged violation of Section 36(b) of the Investment Company Act. The
plaintiff seeks injunctive and declaratory relief, rescission of the investment advisory agreement and compensatory damages, including
repayment to the Fund of all allegedly excessive investment advisory fees paid by the Fund from one year prior to the filing of
the lawsuit. BlackRock believes the claims in the Foote Complaint are without merit and intends to vigorously defend the action.
45
Portfolio Manager
Information
Information regarding the portfolio managers of the Fund is set
forth below. Further information regarding the portfolio managers, including other accounts managed, compensation, ownership of Fund shares, and
possible conflicts of interest, is available in the Funds SAI.
The Fund is managed by a team of financial professionals. Dennis
Stattman, CFA, Dan Chamby, CFA and Aldo Roldan, PhD are jointly and primarily responsible for the management of the Fund.
Portfolio Manager
|
|
Primary Role
|
|
Since
|
|
Title and Recent Biography
|
Dennis Stattman, CFA
|
|
Jointly responsible for the management of the Funds portfolio, including setting the Funds
overall investment strategy and overseeing the management of the Fund
|
|
1989
|
|
Managing Director of BlackRock, Inc. since 2006 and Head of BlackRocks Global Allocation
Team.
|
Dan Chamby, CFA
|
|
Jointly responsible for the management of the Funds portfolio, including setting the Funds
overall investment strategy and overseeing the management of the Fund
|
|
2003
|
|
Managing Director of BlackRock, Inc. since 2007; Director of BlackRock, Inc. in 2006.
|
Aldo Roldan, PhD
|
|
Jointly responsible for the management of the Funds portfolio, including setting the Funds
overall investment strategy and overseeing the management of the Fund
|
|
2006
|
|
Managing Director of BlackRock, Inc. since 2008; Director of BlackRock, Inc from 2006 to
2007.
|
The investment activities of BlackRock and its affiliates
(including BlackRock, Inc. and PNC and their affiliates, directors, partners, trustees, managing members, officers and employees (collectively, the
Affiliates)) in the management of, or their interest in, their own accounts and other accounts they manage, may present conflicts of
interest that could disadvantage the Fund and its shareholders. BlackRock and its Affiliates provide investment management services to other funds and
discretionary managed accounts that follow investment programs similar to that of the Fund. BlackRock and its Affiliates are involved
worldwide with a broad spectrum of financial services and asset management activities and may engage in the ordinary course of business in activities
in which their interests or the interests of their clients may conflict with those of the Fund. One or more Affiliates act or may act as an investor,
investment banker, research provider, investment manager, financier, advisor, market maker, trader, prime broker, lender, agent and principal, and have
other direct and indirect interests, in securities, currencies and other instruments in which the Fund directly and indirectly invests. Thus, it is
likely that the Fund will have multiple business relationships with and will invest in, engage in transactions with, make voting decisions with respect
to, or obtain services from entities for which an Affiliate performs or seeks to perform investment banking or other services. One or more Affiliates
may engage in proprietary trading and advise accounts and funds that have investment objectives similar to those of the Fund and/or that engage in and
compete for transactions in the same types of securities, currencies and other instruments as the Fund. The trading activities of these Affiliates are
carried out without reference to positions held directly or indirectly by the Fund and may result in an Affiliate having positions that are adverse to
those of the Fund. No Affiliate is under any obligation to share any investment opportunity, idea or strategy with the Fund. As a result, an Affiliate
may compete with the Fund for appropriate investment opportunities. The results of the Funds investment activities, therefore, may differ from
those of an Affiliate and of other accounts managed by an Affiliate and it is possible that the Fund could sustain losses during periods in which one
or more Affiliates and other accounts achieve profits on their trading for proprietary or other accounts. The opposite result is also possible. In
addition, the Fund may, from time to time, enter into transactions in which an Affiliate or its other clients have an adverse interest. Furthermore,
transactions undertaken by Affiliate-advised clients may adversely impact the Fund. Transactions by one or more Affiliate-advised clients or BlackRock
may have the effect of diluting or otherwise disadvantaging the values, prices or investment strategies of the Fund. The Funds activities may be
limited because of regulatory restrictions applicable to one or more Affiliates, and/or their internal policies designed to comply with such
restrictions. In addition, the Fund may invest in securities of companies with which an Affiliate has or is trying to develop investment banking
relationships or in which an Affiliate has significant debt or equity investments. The Fund also may invest in securities of companies for which an
Affiliate provides or may someday provide research coverage. An Affiliate may have business relationships with and purchase or distribute or
sell services or products from or to
46
distributors, consultants or others who recommend the Fund or
who engage in transactions with or for the Fund, and may receive compensation for such services. The Fund may also make brokerage and other payments to
Affiliates in connection with the Funds portfolio investment transactions.
Under a securities lending program approved by the Board,
the Fund has retained an Affiliate of BlackRock to serve as the securities lending agent for the Fund to the extent that the Fund participates in the
securities lending program. For these services, the lending agent will receive a fee from the Fund, including a fee based on the returns earned on the
Funds investment of the cash received as collateral for the loaned securities. In addition, one or more Affiliates may be among the entities to
which the Fund may lend its portfolio securities under the securities lending program.
The activities of Affiliates may give rise to other conflicts of
interest that could disadvantage the Fund and its shareholders. BlackRock has adopted policies and procedures designed to address these potential
conflicts of interest. See the SAI for further information.
Valuation of Fund
Investments
When you buy shares, you pay the net asset value, plus any
applicable sales charge. This is the offering price. Shares are also redeemed at their net asset value, minus any applicable deferred sales charge. The
Fund calculates the net asset value of each class of its shares (generally by using market quotations) each day the NYSE is open as of the close of
business on the NYSE, based on prices at the time of closing. The NYSE generally closes at 4:00 p.m. Eastern time. The net asset value used in
determining your share price is the next one calculated after your purchase or redemption order is placed.
Generally, Institutional Shares will have the highest net asset
value because that class has the lowest expenses, Investor A Shares will have a higher net asset value than Investor B, Investor C or Class R Shares,
and Class R Shares will have a higher net asset value than Investor B or Investor C Shares. Also, dividends paid on Investor A, Institutional and Class
R Shares will generally be higher than dividends paid on Investor B and Investor C Shares because Investor A, Institutional and Class R Shares have
lower expenses.
The Funds assets and liabilities are valued primarily on the
basis of market quotations. Equity investments and other instruments for which market quotations are readily available are valued at market value,
which is generally determined using the last reported sale price on the exchange or market on which the security or instrument is primarily
traded at the time of valuation. The Fund values fixed income portfolio securities and non-exchange traded derivatives using market prices provided
directly from one or more broker-dealers, market makers, or independent third-party pricing services which may use matrix pricing and valuation models
to derive values, each in accordance with valuation procedures approved by the Board. Short-term debt securities with remaining maturities of sixty
days or less are valued on the basis of amortized cost.
Foreign currency exchange rates are generally determined as of the
close of business on the NYSE. Foreign securities owned by the Fund may trade on weekends or other days when the Fund does not price its
shares. As a result, the Funds net asset value may change on days when you will not be able to purchase or redeem the Funds
shares.
Generally, trading in foreign securities, U.S. government
securities and money market instruments and certain fixed income securities is substantially completed each day at various times prior to the close of
business on the NYSE. The values of such securities used in computing the net asset value of the Funds shares are determined as of such
times.
When market quotations are not readily available or are not
believed by BlackRock to be reliable, the Funds investments are valued at fair value. Fair value determinations are made by BlackRock in
accordance with procedures approved by the Board. BlackRock may conclude that a market quotation is not readily available or is unreliable if a
security or other asset or liability does not have a price source due to its lack of liquidity, if BlackRock believes a market quotation from a
broker-dealer or other source is unreliable, where the security or other asset or other liability is thinly traded (e.g., municipal securities, certain
small cap and emerging growth companies, and certain non-U.S. securities) or where there is a significant event subsequent to the most recent market
quotation. For this purpose, a significant event is deemed to occur if BlackRock determines, in its business judgment prior to or at the
time of pricing the Funds assets or liabilities, that it is likely that the event will cause a material change to the last closing market price
of one or more assets or liabilities held by the Fund. For instance, significant events may occur between the foreign market close and the close of
business on the NYSE that may not be reflected in the computation of the Funds net assets. If such event occurs, those instruments
may be fair valued. Similarly, foreign securities whose values are affected by volatility that occurs in U.S. markets on a trading day after the close
of foreign securities markets may be fair valued.
47
For certain foreign securities, a third-party vendor supplies
evaluated, systematic fair value pricing based upon the movement of a proprietary multi-factor model after the relevant foreign markets have closed.
This systematic fair value pricing methodology is designed to correlate the prices of foreign securities following the close of the local markets to
the price that might have prevailed as of a Funds pricing time.
Fair value represents a good faith approximation of the value of a
security. The fair value of one or more securities may not, in retrospect, be the price at which those assets could have been sold during the period in
which the particular fair values were used in determining the Funds net asset value.
The Fund may accept orders from certain authorized Financial
Intermediaries or their designees. The Fund will be deemed to receive an order when accepted by the intermediary or designee and the order will receive
the net asset value next computed by the Fund after such acceptance. If the payment for a purchase order is not made by a designated later time, the
order will be canceled and the Financial Intermediary could be held liable for any losses.
Dividends, Distributions and
Taxes
BUYING A DIVIDEND
|
Unless your investment is in a tax deferred account, you may want to avoid buying shares shortly before the Fund pays a dividend. The reason? If
you buy shares when the Fund has declared but not yet distributed ordinary income or capital gains, you will pay the full price for the
shares and then receive a portion of the price back in the form of a taxable dividend. Before investing you may want to consult your tax
adviser.
|
The Fund will distribute net investment income, if any, and net realized capital gain, if any, at least
annually. This is the “Distribution Requirement.” The Fund may also pay a special distribution at the end of the
calendar year to comply with Federal
tax requirements. Dividends may be
reinvested automatically in
shares of the Fund at net asset value without a sales charge or
may be taken in cash. If you would like to receive dividends in cash, contact your Financial Intermediary or the Fund.
Although this cannot be predicted with any certainty, the Fund anticipates that a significant amount of its dividends, if
any, will consist of capital gains. Capital gains may be taxable to you at different rates depending on how long the Fund
held the assets sold.
You will pay tax on dividends from the Fund whether you receive
them in cash or additional shares. If you redeem Fund shares or exchange them for shares of another fund, you generally will be treated as having sold
your shares and any gain on the transaction may be subject to tax. Certain dividend income received by the Fund, including dividends received from
qualifying foreign corporations, and long-term capital gains are eligible for taxation at a maximum rate of 15% for individuals with incomes
below approximately $400,000 ($450,000 if married filing jointly), amounts adjusted annually for
inflation, and 20% for individuals with any income in excess of those amounts that is long-term capital gain. To the extent the Fund makes any
distributions derived from long-term capital gains and qualifying dividend income, such distributions will be eligible for taxation at the reduced
rate.
The Subsidiary will not be subject to Federal income tax. It will,
however, be considered a controlled foreign corporation, and the Fund will be required to include as income annually amounts earned by the Subsidiary
during that year. Gains from the sales of investments by the Subsidiary will not be eligible for capital gains treatment but instead will be treated as
ordinary income when included in income by the Fund. Furthermore, the Fund will be subject to the Distribution Requirement on such Subsidiarys
net income, whether or not the Subsidiary makes a distribution to the Fund during the taxable year.
A 3.8% Medicare contribution tax is imposed
on the net investment income (which includes, but is not limited to, interest, dividends and net gain from investments) of U.S. individuals with
income exceeding $200,000 or $250,000 if married and filing jointly, and of trusts and estates.
If you are neither a tax resident nor a citizen of the United
States or if you are a foreign entity, the Funds ordinary income dividends (which include distributions of net short-term capital gain) will
generally be subject to a 30% U.S. withholding tax, unless a lower treaty rate applies. However, for taxable years of the Fund beginning before January
1, 2014, certain distributions reported by a Fund as either interest related dividends or short-term capital gain dividends and paid to a foreign
shareholder will be eligible for an exemption from U.S. withholding tax.
A 30% withholding tax will be imposed on U.S.-source
dividends, interest and other income items paid after June 30, 2014, and proceeds from the sale of property producing U.S.-source
dividends and interest paid after December 31, 2016 to (i) foreign financial institutions including non-U.S. investment funds,
unless they agree to collect and disclose to the IRS information regarding their direct and indirect U.S. account holders and (ii) certain other
foreign entities
48
unless they certify certain information regarding their direct
and indirect U.S. owners. To avoid withholding, foreign financial institutions will need to (i) enter into agreements with the IRS that state that they
will provide the IRS information including the names, addresses and taxpayer identification numbers of direct and indirect U.S. account holders, comply
with due diligence procedures with respect to the identification of U.S. accounts, report to the IRS certain information with respect to U.S. accounts
maintained, agree to withhold tax on certain payments made to non-compliant foreign financial institutions or to account holders who fail to provide
the required information, and determine certain other information as to their account holders, or, (ii) in the event that an intergovernmental
agreement and implementing legislation are adopted, provide local revenue authorities with similar account holder information. Other
foreign entities will need to provide the name, address, and taxpayer identification number of each substantial U.S. owner or certifications of no
substantial U.S. ownership unless certain exceptions apply.
Dividends and interest received by the Fund may give rise to
withholding and other taxes imposed by foreign countries. Tax conventions between certain countries and the United States may reduce or eliminate such
taxes. You may be able to claim a credit or take a deduction for foreign taxes paid by the Fund if certain requirements are met.
By law, your dividends and redemption proceeds will be subject to
a 28% withholding tax if you have not provided a taxpayer identification number or social security number or the number you have provided is
incorrect.
This Section summarizes some of the consequences under current
Federal tax law of an investment in the Fund. It is not a substitute for personal tax advice. Consult your personal tax adviser about the potential tax
consequences of an investment in the Fund under all applicable tax laws.
49
The Financial Highlights table is intended to help you understand
the Funds financial performance for the periods shown. Certain information reflects the financial results for a single Fund share. The total
returns in the table represent the rate that an investor would have earned or lost on an investment in the Fund (assuming reinvestment of all
dividends and/or distributions). The information has been audited by Deloitte & Touche LLP, whose report, along with the Funds financial
statements, is included in the Funds Annual Report, which is available upon request.
|
|
Institutional
|
|
|
Year Ended October 31,
|
|
|
Consolidated
|
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
Per Share Operating Performance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, beginning of year
|
|
$
|
19.54
|
|
|
$
|
19.16
|
|
|
$
|
19.07
|
|
|
$
|
17.42
|
|
|
$
|
15.20
|
|
Net investment income
1
|
|
|
0.28
|
|
|
|
0.31
|
|
|
|
0.38
|
|
|
|
0.33
|
|
|
|
0.35
|
|
Net realized and unrealized gain
|
|
|
2.43
|
|
|
|
0.64
|
|
|
|
0.08
|
2
|
|
|
1.65
|
2
|
|
|
2.61
|
2
|
Net increase from investment operations
|
|
|
2.71
|
|
|
|
0.95
|
|
|
|
0.46
|
|
|
|
1.98
|
|
|
|
2.96
|
|
Dividends and distributions from:
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
(0.30
|
)
|
|
|
(0.38
|
)
|
|
|
(0.37
|
)
|
|
|
(0.33
|
)
|
|
|
(0.74
|
)
|
Net realized gain
|
|
|
|
|
|
|
(0.19
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total dividends and distributions
|
|
|
(0.30
|
)
|
|
|
(0.57
|
)
|
|
|
(0.37
|
)
|
|
|
(0.33
|
)
|
|
|
(0.74
|
)
|
Net asset value, end of year
|
|
$
|
21.95
|
|
|
$
|
19.54
|
|
|
$
|
19.16
|
|
|
$
|
19.07
|
|
|
$
|
17.42
|
|
Total Investment Return
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Based on net asset value
|
|
|
13.97
|
%
|
|
|
5.20
|
%
|
|
|
2.39
|
%
|
|
|
11.54
|
%
|
|
|
20.43
|
%
|
Ratios to Average Net Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses
|
|
|
0.87
|
%
|
|
|
0.87
|
%
|
|
|
0.87
|
%
|
|
|
0.88
|
%
|
|
|
0.91
|
%
|
Total expenses after fees waived
|
|
|
0.78
|
%
|
|
|
0.79
|
%
|
|
|
0.78
|
%
|
|
|
0.81
|
%
|
|
|
0.87
|
%
|
Total expenses after fees waived and excluding interest expense, dividend expense and stock
loan fees
|
|
|
0.78
|
%
|
|
|
0.79
|
%
|
|
|
0.78
|
%
|
|
|
0.81
|
%
|
|
|
0.85
|
%
|
Net investment income
|
|
|
1.35
|
%
|
|
|
1.61
|
%
|
|
|
1.92
|
%
|
|
|
1.83
|
%
|
|
|
2.26
|
%
|
Supplemental Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets, end of year (000)
|
|
$
|
20.968,279
|
|
|
$
|
18,657,773
|
|
|
$
|
16,879,389
|
|
|
$
|
12,894,088
|
|
|
$
|
8,066,571
|
|
Portfolio turnover
|
|
|
50
|
%
|
|
|
39
|
%
|
|
|
31
|
%
|
|
|
29
|
%
|
|
|
33
|
%
|
1
|
|
Based on average shares
outstanding.
|
2
|
|
Includes a redemption fee, which is less
than $0.01 per share.
|
3
|
|
Determined in accordance with
federal income tax regulations.
|
4
|
|
Where applicable, assumes the reinvestment
of dividends and distributions.
|
50
Financial Highlights
(continued)
|
|
|
|
Investor A
|
|
|
|
|
Year Ended October 31,
|
|
|
|
|
Consolidated
|
|
|
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
Per Share Operating Performance
|
Net asset value, beginning of year
|
|
|
|
$
|
19.44
|
|
|
$
|
19.06
|
|
|
$
|
18.97
|
|
|
$
|
17.34
|
|
|
$
|
15.13
|
|
Net investment income
1
|
|
|
|
|
0.22
|
|
|
|
0.25
|
|
|
|
0.32
|
|
|
|
0.28
|
|
|
|
0.31
|
|
Net realized and unrealized gain
|
|
|
|
|
2.41
|
|
|
|
0.65
|
|
|
|
0.09
|
2
|
|
|
1.64
|
2
|
|
|
2.60
|
2
|
Net increase from investment operations
|
|
|
|
|
2.63
|
|
|
|
0.90
|
|
|
|
0.41
|
|
|
|
1.92
|
|
|
|
2.91
|
|
Dividends and distributions from:
3
|
Net investment income
|
|
|
|
|
(0.24
|
)
|
|
|
(0.33
|
)
|
|
|
(0.32
|
)
|
|
|
(0.29
|
)
|
|
|
(0.70
|
)
|
Net realized gain
|
|
|
|
|
|
|
|
|
(0.19
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total dividends and distributions
|
|
|
|
|
(0.24
|
)
|
|
|
(0.52
|
)
|
|
|
(0.32
|
)
|
|
|
(0.29
|
)
|
|
|
(0.70
|
)
|
Net asset value, end of year
|
|
|
|
$
|
21.83
|
|
|
$
|
19.44
|
|
|
$
|
19.06
|
|
|
$
|
18.97
|
|
|
$
|
17.34
|
|
Total Investment Return
4
|
Based on net asset value
|
|
|
|
|
13.63
|
%
|
|
|
4.92
|
%
|
|
|
2.13
|
%
|
|
|
11.20
|
%
|
|
|
20.14
|
%
|
Ratios to Average Net Assets
|
Total expenses
|
|
|
|
|
1.13
|
%
|
|
|
1.15
|
%
|
|
|
1.14
|
%
|
|
|
1.15
|
%
|
|
|
1.18
|
%
|
Total expenses after fees waived
|
|
|
|
|
1.05
|
%
|
|
|
1.07
|
%
|
|
|
1.06
|
%
|
|
|
1.08
|
%
|
|
|
1.13
|
%
|
Total expenses after fees waived and excluding interest expense, dividend expense and stock
loan fees
|
|
|
|
|
1.05
|
%
|
|
|
1.07
|
%
|
|
|
1.06
|
%
|
|
|
1.08
|
%
|
|
|
1.12
|
%
|
Net investment income
|
|
|
|
|
1.08
|
%
|
|
|
1.33
|
%
|
|
|
1.63
|
%
|
|
|
1.56
|
%
|
|
|
2.00
|
%
|
Supplemental Data
|
Net assets, end of year (000)
|
|
|
|
$
|
18,858,846
|
|
|
$
|
17,292,587
|
|
|
$
|
17,638,914
|
|
|
$
|
15,724,095
|
|
|
$
|
11,844,981
|
|
Portfolio turnover
|
|
|
|
|
50
|
%
|
|
|
39
|
%
|
|
|
31
|
%
|
|
|
29
|
%
|
|
|
33
|
%
|
1
|
|
Based on average shares outstanding.
|
2
|
|
Includes a redemption fee, which is less than $0.01
per share.
|
3
|
|
Determined in accordance with federal income tax
regulations.
|
4
|
|
Where applicable, excludes the effects of
any sales charges and assumes the reinvestment of dividends and distributions.
|
51
Financial Highlights
(continued)
|
|
|
|
Investor B
|
|
|
|
|
Year Ended October 31,
|
|
|
|
|
Consolidated
|
|
|
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
Per Share Operating Performance
|
Net asset value, beginning of year
|
|
|
|
$
|
18.96
|
|
|
$
|
18.57
|
|
|
$
|
18.49
|
|
|
$
|
16.91
|
|
|
$
|
14.76
|
|
Net investment income
1
|
|
|
|
|
0.06
|
|
|
|
0.09
|
|
|
|
0.10
|
|
|
|
0.13
|
|
|
|
0.18
|
|
Net realized and unrealized gain
|
|
|
|
|
2.35
|
|
|
|
0.65
|
|
|
|
0.14
|
2
|
|
|
1.61
|
2
|
|
|
2.53
|
2
|
Net increase from investment operations
|
|
|
|
|
2.41
|
|
|
|
0.74
|
|
|
|
0.24
|
|
|
|
1.74
|
|
|
|
2.71
|
|
Dividends and distributions from:
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
|
|
(0.06
|
)
|
|
|
(0.16
|
)
|
|
|
(0.16
|
)
|
|
|
(0.16
|
)
|
|
|
(0.56
|
)
|
Net realized gain
|
|
|
|
|
|
|
|
|
(0.19
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total dividends and distributions
|
|
|
|
|
(0.06
|
)
|
|
|
(0.35
|
)
|
|
|
(0.16
|
)
|
|
|
(0.16
|
)
|
|
|
(0.56
|
)
|
Net asset value, end of year
|
|
|
|
$
|
21.31
|
|
|
$
|
18.96
|
|
|
$
|
18.57
|
|
|
$
|
18.49
|
|
|
$
|
16.91
|
|
Total Investment Return
4
|
Based on net asset value
|
|
|
|
|
12.75
|
%
|
|
|
4.10
|
%
|
|
|
1.25
|
%
|
|
|
10.35
|
%
|
|
|
19.15
|
%
|
Ratios to Average Net Assets
|
Total expenses
|
|
|
|
|
1.95
|
%
|
|
|
1.95
|
%
|
|
|
1.97
|
%
|
|
|
1.96
|
%
|
|
|
2.00
|
%
|
Total expenses after fees waived
|
|
|
|
|
1.86
|
%
|
|
|
1.86
|
%
|
|
|
1.87
|
%
|
|
|
1.89
|
%
|
|
|
1.95
|
%
|
Total expenses after fees waived and excluding interest expense, dividend expense and stock
loan fees
|
|
|
|
|
1.86
|
%
|
|
|
1.86
|
%
|
|
|
1.87
|
%
|
|
|
1.89
|
%
|
|
|
1.94
|
%
|
Net investment income
|
|
|
|
|
0.28
|
%
|
|
|
0.51
|
%
|
|
|
0.50
|
%
|
|
|
0.74
|
%
|
|
|
1.17
|
%
|
Supplemental Data
|
Net assets, end of year (000)
|
|
|
|
$
|
500,197
|
|
|
$
|
660,370
|
|
|
$
|
930,028
|
|
|
$
|
1,209,744
|
|
|
$
|
1,442,397
|
|
Portfolio turnover
|
|
|
|
|
50
|
%
|
|
|
39
|
%
|
|
|
31
|
%
|
|
|
29
|
%
|
|
|
33
|
%
|
1
|
|
Based on average shares outstanding.
|
2
|
|
Includes a redemption fee, which is less than $0.01
per share.
|
3
|
|
Determined in accordance with federal income tax
regulations.
|
4
|
|
Where applicable, excludes the effects of
any sales charges and assumes the reinvestment of dividends and distributions.
|
52
Financial Highlights
(continued)
|
|
|
|
Investor C
|
|
|
|
|
Year Ended October 31,
|
|
|
|
|
Consolidated
|
|
|
|
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
Per Share Operating Performance
|
Net asset value, beginning of year
|
|
|
|
$
|
18.06
|
|
|
$
|
17.75
|
|
|
$
|
17.70
|
|
|
$
|
16.21
|
|
|
$
|
14.19
|
|
Net investment income
1
|
|
|
|
|
0.06
|
|
|
|
0.10
|
|
|
|
0.16
|
|
|
|
0.13
|
|
|
|
0.18
|
|
Net realized and unrealized gain
|
|
|
|
|
2.26
|
|
|
|
0.59
|
|
|
|
0.08
|
2
|
|
|
1.54
|
2
|
|
|
2.43
|
2
|
Net increase from investment operations
|
|
|
|
|
2.32
|
|
|
|
0.69
|
|
|
|
0.24
|
|
|
|
1.67
|
|
|
|
2.61
|
|
Dividends and distributions from:
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
|
|
(0.11
|
)
|
|
|
(0.19
|
)
|
|
|
(0.19
|
)
|
|
|
(0.18
|
)
|
|
|
(0.59
|
)
|
Net realized gain
|
|
|
|
|
|
|
|
|
(0.19
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total dividends and distributions
|
|
|
|
|
(0.11
|
)
|
|
|
(0.38
|
)
|
|
|
(0.19
|
)
|
|
|
(0.18
|
)
|
|
|
(0.59
|
)
|
Net asset value, end of year
|
|
|
|
$
|
20.27
|
|
|
$
|
18.06
|
|
|
$
|
17.75
|
|
|
$
|
17.70
|
|
|
$
|
16.21
|
|
Total Investment Return
4
|
Based on net asset value
|
|
|
|
|
12.86
|
%
|
|
|
4.08
|
%
|
|
|
1.34
|
%
|
|
|
10.37
|
%
|
|
|
19.24
|
%
|
Ratios to Average Net Assets
|
Total expenses
|
|
|
|
|
1.88
|
%
|
|
|
1.90
|
%
|
|
|
1.90
|
%
|
|
|
1.91
|
%
|
|
|
1.94
|
%
|
Total expenses after fees waived
|
|
|
|
|
1.80
|
%
|
|
|
1.82
|
%
|
|
|
1.81
|
%
|
|
|
1.84
|
%
|
|
|
1.89
|
%
|
Total expenses after fees waived and excluding interest expense, dividend expense and stock
loan fees
|
|
|
|
|
1.80
|
%
|
|
|
1.82
|
%
|
|
|
1.81
|
%
|
|
|
1.84
|
%
|
|
|
1.88
|
%
|
Net investment income
|
|
|
|
|
0.33
|
%
|
|
|
0.58
|
%
|
|
|
0.89
|
%
|
|
|
0.81
|
%
|
|
|
1.23
|
%
|
Supplemental Data
|
Net assets, end of year (000)
|
|
|
|
$
|
16,170,658
|
|
|
$
|
15,179,009
|
|
|
$
|
15,853,615
|
|
|
$
|
14,921,531
|
|
|
$
|
11,251,502
|
|
Portfolio turnover
|
|
|
|
|
50
|
%
|
|
|
39
|
%
|
|
|
31
|
%
|
|
|
29
|
%
|
|
|
33
|
%
|
1
|
|
Based on average shares outstanding.
|
2
|
|
Includes a redemption fee, which is less than $0.01
per share.
|
3
|
|
Determined in accordance with federal income tax
regulations.
|
4
|
|
Where applicable, excludes the effects of
any sales charges and assumes the reinvestment of dividends and distributions.
|
53
Financial Highlights
(concluded)
|
|
|
|
Class R
|
|
|
|
|
Year Ended October 31,
|
|
|
|
|
Consolidated
|
|
|
|
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
Per Share Operating Performance
|
Net asset value, beginning of year
|
|
|
|
$
|
18.78
|
|
|
$
|
18.44
|
|
|
$
|
18.36
|
|
|
$
|
16.80
|
|
|
$
|
14.69
|
|
Net investment income
1
|
|
|
|
|
0.15
|
|
|
|
0.18
|
|
|
|
0.21
|
|
|
|
0.21
|
|
|
|
0.25
|
|
Net realized and unrealized gain
|
|
|
|
|
2.33
|
|
|
|
0.62
|
|
|
|
0.13
|
2
|
|
|
1.59
|
2
|
|
|
2.51
|
2
|
Net increase from investment operations
|
|
|
|
|
2.48
|
|
|
|
0.80
|
|
|
|
0.34
|
|
|
|
1.80
|
|
|
|
2.76
|
|
Dividends and distributions from:
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
|
|
(0.18
|
)
|
|
|
(0.27
|
)
|
|
|
(0.26
|
)
|
|
|
(0.24
|
)
|
|
|
(0.65
|
)
|
Net realized gain
|
|
|
|
|
|
|
|
|
(0.19
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total dividends and distributions
|
|
|
|
|
(0.18
|
)
|
|
|
(0.46
|
)
|
|
|
(0.26
|
)
|
|
|
(0.24
|
)
|
|
|
(0.65
|
)
|
Net asset value, end of year
|
|
|
|
$
|
21.08
|
|
|
$
|
18.78
|
|
|
$
|
18.44
|
|
|
$
|
18.36
|
|
|
$
|
16.80
|
|
Total Investment Return
4
|
Based on net asset value
|
|
|
|
|
13.26
|
%
|
|
|
4.52
|
%
|
|
|
1.84
|
%
|
|
|
10.83
|
%
|
|
|
19.67
|
%
|
Ratios to Average Net Assets
|
Total expenses
|
|
|
|
|
1.48
|
%
|
|
|
1.51
|
%
|
|
|
1.47
|
%
|
|
|
1.49
|
%
|
|
|
1.54
|
%
|
Total expenses after fees waived
|
|
|
|
|
1.39
|
%
|
|
|
1.43
|
%
|
|
|
1.38
|
%
|
|
|
1.42
|
%
|
|
|
1.49
|
%
|
Total expenses after fees waived and excluding interest expense, dividend expense and stock
loan fees
|
|
|
|
|
1.39
|
%
|
|
|
1.43
|
%
|
|
|
1.38
|
%
|
|
|
1.42
|
%
|
|
|
1.48
|
%
|
Net investment income
|
|
|
|
|
0.74
|
%
|
|
|
0.97
|
%
|
|
|
1.11
|
%
|
|
|
1.22
|
%
|
|
|
1.65
|
%
|
Supplemental Data
|
Net assets, end of year (000)
|
|
|
|
$
|
1,296,522
|
|
|
$
|
1,171,179
|
|
|
$
|
1,077,174
|
|
|
$
|
926,471
|
|
|
$
|
576,189
|
|
Portfolio turnover
|
|
|
|
|
50
|
%
|
|
|
39
|
%
|
|
|
31
|
%
|
|
|
29
|
%
|
|
|
33
|
%
|
1
|
|
Based on average shares outstanding.
|
2
|
|
Includes a redemption fee, which is less than $0.01
per share.
|
3
|
|
Determined in accordance with federal income tax
regulations.
|
4
|
|
Where applicable, assumes the
reinvestment of dividends and distributions.
|
54
General Information
Electronic Access to Annual Reports, Semi-Annual Reports and
Prospectuses
Electronic copies of most financial reports and prospectuses are
available on BlackRocks website. Shareholders can sign up for e-mail notifications of annual and semi-annual reports and prospectuses by
enrolling in the Funds electronic delivery program. To enroll:
Shareholders Who Hold Accounts with Investment Advisers, Banks
or Brokerages:
Please contact your Financial Intermediary. Please note that not all investment advisers, banks or
brokerages may offer this service.
Shareholders Who Hold Accounts Directly With
BlackRock:
n
|
|
Access the BlackRock website at
http://www.blackrock.com/edelivery; and
|
Delivery of Shareholder Documents
The Fund delivers only one copy of shareholder documents,
including prospectuses, shareholder reports and proxy statements, to shareholders with multiple accounts at the same address. This practice is known as
householding and is intended to eliminate duplicate mailings and reduce expenses. Mailings of your shareholder documents may be householded
indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your
household, please contact the Fund at (800) 441-7762.
Anti-Money Laundering Requirements
The Fund is subject to the USA PATRIOT Act (the Patriot
Act). The Patriot Act is intended to prevent the use of the U.S. financial system in furtherance of money laundering, terrorism or other illicit
activities. Pursuant to requirements under the Patriot Act, the Fund is required to obtain sufficient information from shareholders to
enable it to form a reasonable belief that it knows the true identity of its shareholders. This information will be used to verify the identity of
investors or, in some cases, the status of Financial Intermediaries. Such information may be verified using third-party sources. This
information will be used only for compliance with the Patriot Act or other applicable laws, regulations and rules in connection with money
laundering, terrorism or economic sanctions.
The Fund reserves the right to reject purchase orders from persons
who have not submitted information sufficient to allow the Fund to verify their identity. The Fund also reserves the right to redeem any amounts in the
Fund from persons whose identity it is unable to verify on a timely basis. It is the Funds policy to cooperate fully with appropriate regulators
in any investigations conducted with respect to potential money laundering, terrorism or other illicit activities.
BlackRock Privacy Principles
BlackRock is committed to maintaining the privacy of its current
and former fund investors and individual clients (collectively, Clients) and to safeguarding their nonpublic personal information. The
following information is provided to help you understand what personal information BlackRock collects, how we protect that information and why in
certain cases we share such information with select parties.
If you are located in a jurisdiction where specific laws, rules or
regulations require BlackRock to provide you with additional or different privacy-related rights beyond what is set forth below, then BlackRock will
comply with those specific laws, rules or regulations.
BlackRock obtains or verifies personal nonpublic information from
and about you from different sources, including the following: (i) information we receive from you or, if applicable, your Financial Intermediary, on
applications, forms or other documents; (ii) information about your transactions with us, our affiliates, or others; (iii) information we receive from
a consumer reporting agency; and (iv) from visits to our website.
55
BlackRock does not sell or disclose to nonaffiliated third parties
any nonpublic personal information about its Clients, except as permitted by law, or as is necessary to respond to regulatory requests or to service
Client accounts. These nonaffiliated third parties are required to protect the confidentiality and security of this information and to use it only for
its intended purpose.
We may share information with our affiliates to service your
account or to provide you with information about other BlackRock products or services that may be of interest to you. In addition, BlackRock restricts
access to nonpublic personal information about its Clients to those BlackRock employees with a legitimate business need for the information. BlackRock
maintains physical, electronic and procedural safeguards that are designed to protect the nonpublic personal information of its Clients, including
procedures relating to the proper storage and disposal of such information.
Statement of Additional
Information
If you would like further information about the Fund, including
how it invests, please see the SAI.
For a discussion of the Funds policies and procedures
regarding the selective disclosure of its portfolio holdings, please see the SAI. The Fund makes its top ten holdings available on a monthly basis at
www.blackrock.com generally within 5 business days after the end of the month to which the information applies.
56
This glossary contains an explanation of some of the common terms
used in this prospectus. For additional information about the Fund, please see the SAI.
Acquired Fund Fees and Expenses
fees and
expenses charged by other investment companies in which the Fund invests a portion of its assets.
Annual Fund Operating Expenses
expenses that
cover the costs of operating the Fund.
BofA Merrill Lynch Current 5-Year US Treasury Index
an unmanaged index designed to track the total return of the current coupon five-year U.S. Treasury bond.
Citigroup Non-US Dollar World Government Bond Index
an unmanaged, market capitalization-weighted index that tracks 22 government bond indices, excluding the United States.
Distribution Fees
fees used to support the
Funds marketing and distribution efforts, such as compensating Financial Intermediaries, advertising and
promotion.
Dividend Expense
represents dividends paid to
lenders of borrowed securities. Dividend Expenses will vary depending on whether the securities the Fund sells short pay dividends and the amount of
those dividends.
FTSE World Index
a broad-based
capitalization-weighted index comprised of 2,431 equities from 35 countries in 4 regions, including the
United States.
FTSE World (ex US) Index
an unmanaged
capitalization-weighted index comprised of 1,816 equities in 34 countries, excluding the United
States.
Management Fee
a fee paid to BlackRock for
managing the Fund.
Other Expenses
include accounting, transfer
agency, custody, professional fees and registration fees.
Reference Benchmark
an unmanaged weighted
Index comprised as follows: 36% of the S&P 500 Index; 24% FTSE World (ex US) Index; 24% BofA Merrill Lynch Current 5-Year US Treasury Index; and
16% Citigroup Non-US Dollar World Government Bond Index.
Service Fees
fees used to compensate
Financial Intermediaries for certain shareholder servicing activities.
Shareholder Fees
these fees include sales
charges that you may pay when you buy or sell shares of the Fund.
Standard & Poors (S&P) 500 Index
an unmanaged index that covers 500 industrial, utility, transportation and financial companies of the US markets (mostly New York Stock Exchange
(NYSE) issues) representing about 75% of NYSE market capitalization and 30% of NYSE issues.
57
[This page intentionally left blank]
For More Information
Fund and Service Providers
FUND
BlackRock Global Allocation Fund,
Inc.
100 Bellevue Parkway
Wilmington, DE 19809
Written Correspondence:
P.O. Box 9819
Providence, Rhode Island 02940-8019
Overnight Mail:
4400
Computer Drive
Westborough, Massachusetts 01588
(800) 441-7762
MANAGER
BlackRock Advisors, LLC
100 Bellevue
Parkway
Wilmington, DE 19809
SUB-ADVISER
BlackRock Investment Management, LLC
1 University Square Drive
Princeton, New Jersey 08540-6455
TRANSFER AGENT
BNY Mellon Investment Servicing (US)
Inc.
301 Bellevue Parkway
Wilmington, DE 19809
INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
Deloitte & Touche LLP
200
Berkeley Street
Boston, Massachusetts 02116
ACCOUNTING SERVICES
PROVIDER
State Street Bank and Trust Company
100 Summer Street
Boston, Massachusetts 02110
DISTRIBUTOR
BlackRock Investments, LLC
40 East
52nd Street
New York, NY 10022
CUSTODIAN
Brown Brothers Harriman & Co.
40
Water Street
Boston, Massachusetts 02109
COUNSEL
Willkie Farr & Gallagher LLP
787
Seventh Avenue
New York, New York 10019-6099
This prospectus contains important
information you should know before investing, including information about risks. Please read it before you invest and keep
it for future reference. More information about the Fund is available at no charge upon request. This information includes:
Annual/Semi-Annual Reports
These reports contain additional
information about each of the Funds investments. The annual report describes the Funds performance, lists portfolio holdings, and discusses
recent market conditions, economic trends and Fund investment strategies that significantly affected the Funds performance for the last fiscal
year.
Statement of Additional Information
A Statement of Additional
Information, (SAI) dated February 28, 2014, has been filed with the Securities and Exchange
Commission (SEC). The SAI, which includes additional information about the Fund, may be obtained free of charge, along with the Funds annual and
semi-annual reports, by calling (800) 441-7762. The SAI, as supplemented from time to time, is incorporated by reference into this
prospectus.
BlackRock Investor Services
Representatives are available to
discuss account balance information, mutual fund prospectuses, literature, programs and services available. Hours: 8:00 a.m. to 6:00 p.m. (Eastern
time), on any business day. Call: (800) 441-7762.
Purchases and Redemptions
Call your Financial
Intermediary or BlackRock Investor Services at (800) 441-7762.
World Wide Web
General Fund
information and specific Fund performance, including the SAI and annual/semi-annual reports, can be accessed free of charge at
www.blackrock.com/prospectus. Mutual fund prospectuses and literature can also be requested via this website.
Written Correspondence
BlackRock Global Allocation Fund,
Inc
P.O. Box 9819
Providence, Rhode Island 02940-8019
Overnight Mail
BlackRock Global Allocation Fund,
Inc
4400 Computer Drive
Westborough, Massachusetts 01588
Internal Wholesalers/Broker Dealer Support
Available on any business day
to support investment professionals. Call: (800) 882-0052
Portfolio Characteristics and Holdings
A description of the Funds
policies and procedures related to disclosure of portfolio characteristics and holdings is available in the SAI.
For information about portfolio
holdings and characteristics, BlackRock fund shareholders and prospective investors may call (800) 882-0052.
Securities and Exchange Commission
You may also view and copy public
information about the Fund, including the SAI, by visiting the EDGAR database on the SECs website (http://www.sec.gov) or the SECs
Public Reference Room in Washington, D.C. Copies of this information can be obtained, for a duplicating fee, by electronic request at the
following e-mail address: publicinfo@sec.gov, or by writing to the Public Reference Room of the SEC, Washington, D.C. 20549. Information
about obtaining documents on the SECs website without charge may be obtained by calling (800) SEC-0330.
You should rely only on the
information contained in this prospectus. No one is authorized to provide you with information that is different from information contained in this
prospectus.
The Securities and Exchange
Commission has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
INVESTMENT COMPANY ACT FILE #
811-05576
© BlackRock Advisors, LLC
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