0001398078 2012-01-29 2013-01-28 0001398078 brf26:S000018381Member brf26:InvestorInstitutionalAndRSharesMember 2012-01-29 2013-01-28 0001398078 brf26:S000018381Member brf26:InvestorInstitutionalAndRSharesMember brf26:C000050837Member 2012-01-29 2013-01-28 0001398078 brf26:S000018381Member brf26:InvestorInstitutionalAndRSharesMember brf26:C000050838Member 2012-01-29 2013-01-28 0001398078 brf26:S000018381Member brf26:InvestorInstitutionalAndRSharesMember brf26:C000050839Member 2012-01-29 2013-01-28 0001398078 brf26:S000018381Member brf26:InvestorInstitutionalAndRSharesMember brf26:C000050836Member 2012-01-29 2013-01-28 0001398078 brf26:S000018381Member brf26:InvestorInstitutionalAndRSharesMember brf26:C000050840Member 2012-01-29 2013-01-28 0001398078 brf26:S000018381Member brf26:InvestorInstitutionalAndRSharesMember rr:AfterTaxesOnDistributionsMember brf26:C000050837Member 2012-01-29 2013-01-28 0001398078 brf26:S000018381Member brf26:InvestorInstitutionalAndRSharesMember rr:AfterTaxesOnDistributionsAndSalesMember brf26:C000050837Member 2012-01-29 2013-01-28 0001398078 brf26:S000018381Member brf26:InvestorInstitutionalAndRSharesMember brf26:BarclaysUsCorporateHighYieldTwoPercentageIssuerCappedIndexMember 2012-01-29 2013-01-28 0001398078 brf26:S000018358Member brf26:InvestorInstitutionalAndRSharesMember brf26:C000050733Member 2012-01-29 2013-01-28 0001398078 brf26:S000018358Member brf26:InvestorInstitutionalAndRSharesMember brf26:C000050734Member 2012-01-29 2013-01-28 0001398078 brf26:S000018358Member brf26:InvestorInstitutionalAndRSharesMember brf26:C000050735Member 2012-01-29 2013-01-28 0001398078 brf26:S000018358Member brf26:InvestorInstitutionalAndRSharesMember brf26:C000050732Member 2012-01-29 2013-01-28 0001398078 brf26:S000018358Member brf26:InvestorInstitutionalAndRSharesMember brf26:C000050724Member 2012-01-29 2013-01-28 0001398078 brf26:S000018375Member brf26:InvestorInstitutionalAndRSharesMember 2012-01-29 2013-01-28 0001398078 brf26:S000018375Member brf26:InvestorInstitutionalAndRSharesMember brf26:C000050798Member 2012-01-29 2013-01-28 0001398078 brf26:S000018375Member brf26:InvestorInstitutionalAndRSharesMember brf26:C000050799Member 2012-01-29 2013-01-28 0001398078 brf26:S000018375Member brf26:InvestorInstitutionalAndRSharesMember brf26:C000050800Member 2012-01-29 2013-01-28 0001398078 brf26:S000018375Member brf26:InvestorInstitutionalAndRSharesMember brf26:C000050797Member 2012-01-29 2013-01-28 0001398078 brf26:S000018375Member brf26:InvestorInstitutionalAndRSharesMember brf26:C000050801Member 2012-01-29 2013-01-28 0001398078 brf26:S000018358Member brf26:InvestorInstitutionalAndRSharesMember rr:AfterTaxesOnDistributionsMember brf26:C000050733Member 2012-01-29 2013-01-28 0001398078 brf26:S000018358Member brf26:InvestorInstitutionalAndRSharesMember rr:AfterTaxesOnDistributionsAndSalesMember brf26:C000050733Member 2012-01-29 2013-01-28 0001398078 brf26:S000018358Member brf26:InvestorInstitutionalAndRSharesMember brf26:BOfMerrillLynchYearUsCorporateAndGovernmentIndexMember 2012-01-29 2013-01-28 0001398078 brf26:S000018358Member brf26:InvestorInstitutionalAndRSharesMember 2012-01-29 2013-01-28 0001398078 brf26:S000018375Member brf26:InvestorInstitutionalAndRSharesMember rr:AfterTaxesOnDistributionsMember brf26:C000050798Member 2012-01-29 2013-01-28 0001398078 brf26:S000018375Member brf26:InvestorInstitutionalAndRSharesMember rr:AfterTaxesOnDistributionsAndSalesMember brf26:C000050798Member 2012-01-29 2013-01-28 0001398078 brf26:S000018375Member brf26:InvestorInstitutionalAndRSharesMember brf26:BarclayUsAggregateBondIndexMember 2012-01-29 2013-01-28 0001398078 brf26:S000018358Member brf26:BlackRockSharesMember brf26:C000050729Member 2012-01-29 2013-01-28 0001398078 brf26:S000018375Member brf26:BlackRockSharesMember 2012-01-29 2013-01-28 0001398078 brf26:S000018381Member brf26:ServiceSharesMember 2012-01-29 2013-01-28 0001398078 brf26:S000018358Member brf26:BlackRockSharesMember 2012-01-29 2013-01-28 0001398078 brf26:S000018381Member brf26:ServiceSharesMember brf26:C000050841Member 2012-01-29 2013-01-28 0001398078 brf26:S000018358Member brf26:BlackRockSharesMember rr:AfterTaxesOnDistributionsMember brf26:C000050729Member 2012-01-29 2013-01-28 0001398078 brf26:S000018358Member brf26:BlackRockSharesMember rr:AfterTaxesOnDistributionsAndSalesMember brf26:C000050729Member 2012-01-29 2013-01-28 0001398078 brf26:S000018358Member brf26:BlackRockSharesMember brf26:BOfMerrillLynchYearUsCorporateAndGovernmentIndexMember 2012-01-29 2013-01-28 0001398078 brf26:S000018375Member brf26:ServiceSharesMember 2012-01-29 2013-01-28 0001398078 brf26:S000018381Member brf26:ServiceSharesMember rr:AfterTaxesOnDistributionsMember brf26:C000050841Member 2012-01-29 2013-01-28 0001398078 brf26:S000018381Member brf26:ServiceSharesMember rr:AfterTaxesOnDistributionsAndSalesMember brf26:C000050841Member 2012-01-29 2013-01-28 0001398078 brf26:S000018381Member brf26:ServiceSharesMember brf26:BarclaysUsCorporateHighYield2PercentIssuerCappedIndexReflectsNoDeductionForFeesExpensesOrTaxesMember 2012-01-29 2013-01-28 0001398078 brf26:S000018375Member brf26:ServiceSharesMember brf26:C000050802Member 2012-01-29 2013-01-28 0001398078 brf26:S000018375Member brf26:ServiceSharesMember rr:AfterTaxesOnDistributionsMember brf26:C000050802Member 2012-01-29 2013-01-28 0001398078 brf26:S000018375Member brf26:ServiceSharesMember rr:AfterTaxesOnDistributionsAndSalesMember brf26:C000050802Member 2012-01-29 2013-01-28 0001398078 brf26:S000018375Member brf26:ServiceSharesMember brf26:BarclayUsAggregateBondIndexMember 2012-01-29 2013-01-28 0001398078 brf26:S000018375Member brf26:BlackRockSharesMember brf26:C000050796Member 2012-01-29 2013-01-28 0001398078 brf26:S000018381Member brf26:PrimeSharesMember 2012-01-29 2013-01-28 0001398078 brf26:S000018358Member brf26:PrimeSharesMember brf26:C000050726Member 2012-01-29 2013-01-28 0001398078 brf26:S000018358Member brf26:PrimeSharesMember brf26:C000100234Member 2012-01-29 2013-01-28 0001398078 brf26:S000018358Member brf26:PrimeSharesMember brf26:C000050731Member 2012-01-29 2013-01-28 0001398078 brf26:S000018358Member brf26:PrimeSharesMember brf26:C000100235Member 2012-01-29 2013-01-28 0001398078 brf26:S000018381Member brf26:PrimeSharesMember brf26:C000050833Member 2012-01-29 2013-01-28 0001398078 brf26:S000018381Member brf26:PrimeSharesMember brf26:C000050835Member 2012-01-29 2013-01-28 0001398078 brf26:S000018375Member brf26:BlackRockSharesMember rr:AfterTaxesOnDistributionsMember brf26:C000050796Member 2012-01-29 2013-01-28 0001398078 brf26:S000018375Member brf26:BlackRockSharesMember rr:AfterTaxesOnDistributionsAndSalesMember brf26:C000050796Member 2012-01-29 2013-01-28 0001398078 brf26:S000018375Member brf26:BlackRockSharesMember brf26:BarclayUsAggregateBondIndexMember 2012-01-29 2013-01-28 0001398078 brf26:S000018358Member brf26:PrimeSharesMember rr:AfterTaxesOnDistributionsMember brf26:C000050726Member 2012-01-29 2013-01-28 0001398078 brf26:S000018358Member brf26:PrimeSharesMember rr:AfterTaxesOnDistributionsAndSalesMember brf26:C000050726Member 2012-01-29 2013-01-28 0001398078 brf26:S000018358Member brf26:PrimeSharesMember brf26:BOfMerrillLynchYearUsCorporateAndGovernmentIndexMember 2012-01-29 2013-01-28 0001398078 brf26:S000018381Member brf26:PrimeSharesMember rr:AfterTaxesOnDistributionsMember brf26:C000050833Member 2012-01-29 2013-01-28 0001398078 brf26:S000018381Member brf26:PrimeSharesMember rr:AfterTaxesOnDistributionsAndSalesMember brf26:C000050833Member 2012-01-29 2013-01-28 0001398078 brf26:S000018381Member brf26:PrimeSharesMember brf26:BarclaysUsCorporateHighYieldTwoPercentageIssuerCappedIndexMember 2012-01-29 2013-01-28 0001398078 brf26:S000018358Member brf26:PrimeSharesMember 2012-01-29 2013-01-28 0001398078 brf26:S000018358Member brf26:ServiceSharesMember brf26:C000050725Member 2012-01-29 2013-01-28 0001398078 brf26:S000018358Member brf26:ServiceSharesMember rr:AfterTaxesOnDistributionsMember brf26:C000050725Member 2012-01-29 2013-01-28 0001398078 brf26:S000018358Member brf26:ServiceSharesMember rr:AfterTaxesOnDistributionsAndSalesMember brf26:C000050725Member 2012-01-29 2013-01-28 0001398078 brf26:S000018358Member brf26:ServiceSharesMember brf26:BOfMerrillLynchYearUsCorporateAndGovernmentIndexMember 2012-01-29 2013-01-28 0001398078 brf26:S000018358Member brf26:ServiceSharesMember 2012-01-29 2013-01-28 0001398078 brf26:S000018381Member brf26:BlackRockSharesMember 2012-01-29 2013-01-28 0001398078 brf26:S000018381Member brf26:BlackRockSharesMember brf26:C000050834Member 2012-01-29 2013-01-28 0001398078 brf26:S000018381Member brf26:BlackRockSharesMember rr:AfterTaxesOnDistributionsMember brf26:C000050834Member 2012-01-29 2013-01-28 0001398078 brf26:S000018381Member brf26:BlackRockSharesMember rr:AfterTaxesOnDistributionsAndSalesMember brf26:C000050834Member 2012-01-29 2013-01-28 0001398078 brf26:S000018381Member brf26:BlackRockSharesMember brf26:BarclaysUsCorporateHighYieldTwoPercentageIssuerCappedIndexMember brf26:C000050834Member 2012-01-29 2013-01-28 pure iso4217:USD 2013-01-28 485BPOS BlackRock Funds II 0001398078 2013-01-28 2013-01-28 false 2012-09-30 Fund Overview Key Facts about BlackRock High Yield Bond Portfolio Investment Objective The investment objective of the BlackRock High Yield Bond Portfolio (the “High Yield Fund” or the “Fund”) is to seek to maximize total return, consistent with income generation and prudent investment management. 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 BlackRock-advised fund complex. More information about these and other discounts is available from your financial professional and in the “Details about the Share Classes” section on page 33 of the Fund’s prospectus and in the “Purchase of Shares” section on page II-71 of the Fund’s statement of additional information. 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 Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 69% of the average value of its portfolio. The High Yield Fund invests primarily in non-investment grade bonds with maturities of ten years or less. The High Yield Fund normally invests at least 80% of its assets in high yield bonds. The high yield securities (commonly called “junk bonds”) acquired by the High Yield Fund will generally be in the lower rating categories of the major rating agencies (BB or lower by Standard & Poor’s (“S&P”) or Ba or lower by Moody’s Investor Services (“Moody’s”)) or will be determined by the High Yield Fund management team to be of similar quality. Split rated bonds will be considered to have the higher credit rating. The Fund may invest up to 30% of its assets in non-dollar denominated bonds of issuers located outside of the United States. The High Yield Fund’s investment in non-dollar denominated bonds may be on a currency hedged or unhedged basis. The Fund may also invest in convertible and preferred securities. Convertible securities will be counted toward the Fund’s 80% policy to the extent they have characteristics similar to the securities included within that policy. To add additional diversification, the management team can invest in a wide range of securities including corporate bonds, mezzanine investments, collateralized bond obligations, bank loans and mortgage-backed and asset-backed securities. The High Yield Fund can also invest, to the extent consistent with its investment objective, in non-U.S. and emerging market securities and currencies. The High Yield Fund may invest in securities of any rating, and may invest up to 10% of its assets (measured at the time of investment) in distressed securities that are in default or the issuers of which are in bankruptcy. The High Yield Fund may buy or sell options or futures on a security or an index of securities, or enter into credit default swaps and interest rate or foreign currency transactions, including swaps (collectively, commonly known as derivatives). The Fund may use derivative instruments to hedge its investments or to seek to enhance returns. The High Yield Fund may seek to obtain market exposure to the securities in which it primarily invests by entering into a series of purchase and sale contracts or by using other investment techniques (such as reverse repurchase agreements or dollar rolls). The High Yield Fund may engage in active and frequent trading of portfolio securities to achieve its principal investment strategies. 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. <ul type="square"><li style="margin-left:-20px"> Bank Loan Risk — The market for bank loans may not be highly liquid and a Fund may have difficulty selling them. These investments expose a Fund to the credit risk of both the financial institution and the underlying borrower.</li></ul><ul type="square"><li style="margin-left:-20px"> Collateralized Bond Obligation Risk — The pool of high yield securities underlying collateralized bond obligations is typically separated in groupings called tranches representing different degrees of credit quality. The higher quality tranches have greater degrees of protection and pay lower interest rates. The lower tranches, with greater risk, pay higher interest rates.</li></ul><ul type="square"><li style="margin-left:-20px"> 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 issuer’s credit rating or the market’s perception of the issuer’s 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.</li></ul><ul type="square"><li style="margin-left:-20px"> Credit Risk — Credit risk refers to the possibility that the issuer of a security will not be able to make payments of interest and principal when due. Changes in an issuer’s credit rating or the market’s perception of an issuer’s creditworthiness may also affect the value of the Fund’s investment in that issuer.</li></ul><ul type="square"><li style="margin-left:-20px"> Derivatives Risk — The Fund’s use of derivatives may reduce the Fund’s 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. Derivatives are also subject to counterparty risk, which is the risk that the other party in the transaction will not fulfill its contractual obligation. A risk of the Fund’s use of derivatives is that the fluctuations in their values may not correlate perfectly with the overall securities markets. 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. Derivatives may give rise to a form of leverage and may expose the Fund to greater risk and increase its costs. 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.</li></ul><ul type="square"><li style="margin-left:-20px"> 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.</li></ul><ul type="square"><li style="margin-left:-20px"> Dollar Rolls Risk — Dollar rolls involve the risk that the market value of the securities that the Fund is committed to buy may decline below the price of the securities the Fund has sold. These transactions may involve leverage.</li></ul><ul type="square"><li style="margin-left:-20px"> 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.</li></ul><ul type="square"><li style="margin-left:-20px"> Extension Risk — When interest rates rise, certain obligations will be paid off by the obligor more slowly than anticipated, causing the value of these securities to fall.</li></ul><ul type="square"><li style="margin-left:-20px"> 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:</li></ul> <ul type="square"><li style="margin-left:+15px"><blockquote>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.</blockquote></li></ul><ul type="square"><li style="margin-left:+15px"><blockquote>Changes in foreign currency exchange rates can affect the value of the Fund’s portfolio.</blockquote></li></ul><ul type="square"><li style="margin-left:+15px"><blockquote> 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.</blockquote></li></ul><ul type="square"><li style="margin-left:+15px"><blockquote>The governments of certain countries may prohibit or impose substantial restrictions on foreign investments in their capital markets or in certain industries.</blockquote></li></ul><ul type="square"><li style="margin-left:+15px"><blockquote> 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.</blockquote></li></ul><ul type="square"><li style="margin-left:+15px"><blockquote> 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.</blockquote></li></ul><ul type="square"><li style="margin-left:-20px"> High Portfolio Turnover Risk — The Fund may engage in active and frequent trading of its portfolio securities. High portfolio turnover (more than 100%) may result in increased transaction costs to the Fund, including brokerage commissions, dealer mark-ups and other transaction costs on the sale of the securities and on reinvestment in other securities. The sale of Fund portfolio securities may result in the realization and/or distribution to shareholders of higher capital gains or losses as compared to a fund with less active trading policies. These effects of higher than normal portfolio turnover may adversely affect Fund performance.</li></ul><ul type="square"><li style="margin-left:-20px"> Interest Rate Risk — 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.</li></ul><ul type="square"><li style="margin-left:-20px"> 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.</li></ul><ul type="square"><li style="margin-left:-20px"> 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 Fund’s portfolio will be magnified when the Fund uses leverage.</li></ul><ul type="square"><li style="margin-left:-20px"> Liquidity Risk — Liquidity risk exists when particular investments are difficult to purchase or sell. The Fund’s 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 Fund’s 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.</li></ul><ul type="square"><li style="margin-left:-20px"> 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.</li></ul><ul type="square"><li style="margin-left:-20px"> Mezzanine Securities Risk — Mezzanine securities carry the risk that the issuer will not be able to meet its obligations and that the equity securities purchased with the mezzanine investments may lose value.</li></ul><ul type="square"><li style="margin-left:-20px"> Mortgage- and Asset-Backed Securities Risks — Mortgage- and asset-backed securities represent interests in “pools” of mortgages or other assets, including consumer loans or receivables held in trust. Mortgage- and asset-backed securities are subject to credit, interest rate, prepayment and extension risks. These securities also are subject to risk of default on the underlying mortgage or asset, particularly during periods of economic downturn. Small movements in interest rates (both increases and decreases) may quickly and significantly reduce the value of certain mortgage-backed securities.</li></ul><ul type="square"><li style="margin-left:-20px"> Preferred Securities Risk — Preferred securities may pay fixed or adjustable rates of return. Preferred securities are subject to issuer-specific and market risks applicable generally to equity securities. In addition, a company’s preferred securities generally pay dividends only after the company makes required payments to holders of its bonds and other debt. For this reason, the value of preferred securities will usually react more strongly than bonds and other debt to actual or perceived changes in the company’s financial condition or prospects. Preferred securities of smaller companies may be more vulnerable to adverse developments than preferred stock of larger companies.</li></ul><ul type="square"><li style="margin-left:-20px"> 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. </li></ul><ul type="square"><li style="margin-left:-20px"> 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.</li></ul><ul type="square"><li style="margin-left:-20px"> Reverse Repurchase Agreements Risk — Reverse repurchase agreements involve the sale of securities held by the Fund with an agreement to repurchase the securities at an agreed-upon price, date and interest payment. Reverse repurchase agreements involve the risk that the other party may fail to return the securities in a timely manner or at all. The Fund could lose money if it is unable to recover the securities and the value of the collateral held by the Fund, including the value of the investments made with cash collateral, is less than the value of securities. These events could also trigger adverse tax consequences to the Fund.</li></ul> Investor A Shares ANNUAL TOTAL RETURNS BlackRock High Yield Bond Portfolio As of 12/31 As of 12/31/12 Average Annual Total Returns 0.04 0 0 0 0 0 0.045 0.01 0 0 0.0043 0.0025 0.01 0.01 0 0.005 0.0043 0.0043 0.0043 0.0043 0.0032 0.0034 0.0031 0.002 0.0041 0.0001 0.0001 0.0001 0.0001 0.0001 0.0101 0.0178 0.0175 0.0064 0.0135 0.0093 0.0178 0.0173 0.0064 0.0135 491 631 276 65 137 701 910 549 205 428 928 1164 947 357 739 1580 1797 2061 798 1624 181 176 560 549 964 947 1797 2061 <div style="display:none">~ http://www.blackrock.com/role/ScheduleShareholderFeesBLACKROCKHIGHYIELDBONDPORTFOLIO column period compact * ~</div> <div style="display:none">~ http://www.blackrock.com/role/ScheduleAnnualFundOperatingExpensesBLACKROCKHIGHYIELDBONDPORTFOLIO column period compact * ~</div> <div style="display:none">~ http://www.blackrock.com/role/ScheduleExpenseExampleTransposedBLACKROCKHIGHYIELDBONDPORTFOLIO column period compact * ~</div> <div style="display:none">~ http://www.blackrock.com/role/ScheduleExpenseExampleNoRedemptionTransposedBLACKROCKHIGHYIELDBONDPORTFOLIO column period compact * ~</div> Performance Information The information shows you how the Fund’s performance has varied year by year and provides some indication of the risks of investing in the Fund. The table compares the Fund’s performance to that of the Barclays U.S. Corporate High Yield 2% Issuer Capped Index. Prior to October 2, 2006, Class R Share performance results are those of Institutional Shares (which have no distribution or service fees) restated to reflect Class R Share fees. 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 Fund’s investment manager and its affiliates had not waived or reimbursed certain Fund expenses during these periods, the Fund’s returns would have been lower. Updated information on the Fund’s performance 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 17.28% (quarter ended June 30, 2009) and the lowest return for a quarter was –20.87% (quarter ended December 31, 2008). 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 investor’s 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. February 1, 2014 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 BlackRock-advised fund complex. 25000 The Total Annual Fund Operating Expenses do not correlate to the ratios of expenses to average net assets given in the Fund’s most recent annual report which does not include the Acquired Fund Fees and Expenses. 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 information shows you how the Fund’s performance has varied year by year and provides some indication of the risks of investing in the Fund. 800-882-0052 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. 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 investor's 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. highest return lowest return 2009-06-30 2008-12-31 0.1728 -0.2087 0.2749 0.1193 0.0352 0.1123 0.0243 -0.2805 0.5224 0.1796 0.0288 0.1677 http://www.blackrock.com/funds 0.1207 0.0957 0.0775 0.1127 0.147 0.1712 0.1622 0.1578 0.0831 0.0535 0.0524 0.0807 0.0836 0.0956 0.0887 0.1045 0.0963 0.0663 0.0647 0.0951 0.0925 0.1046 0.0981 0.106 -0.0008 -0.0002 0.0225 0 0 0 0 Investment Objective The investment objective of the BlackRock Core Bond Portfolio (the “Core Bond Fund” or the “Fund”) is to seek to maximize total return, consistent with income generation and prudent investment management. 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 BlackRock-advised fund complex. More information about these and other discounts is available from your financial professional and in the “Details about the Share Classes” section on page 33 of the Fund’s prospectus and in the “Purchase of Shares” section on page II-71 of the Fund’s statement of additional information. 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 Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 739% of the average value of its portfolio. Principal Investment Strategies of the Fund Principal Risks of Investing in the Fund 0 0.045 0.01 0 0 <div style="display:none">~ http://www.blackrock.com/role/ScheduleAnnualTotalReturnsBLACKROCKHIGHYIELDBONDPORTFOLIOBarChart column period compact * ~</div> <div style="display:none">~ http://www.blackrock.com/role/ScheduleAverageAnnualTotalReturnsTransposedBLACKROCKHIGHYIELDBONDPORTFOLIO column period compact * ~</div> Fund Overview Key Facts about BlackRock Core Bond Portfolio The Core Bond Fund normally invests at least 80% of its assets in bonds and maintains an average portfolio duration that is within ±20% of the duration of the benchmark. As of December 31, 2012, the average duration of the benchmark, the Barclays U.S. Aggregate Bond Index, was 4.5 years, as calculated by BlackRock. The Core Bond Fund may invest up to 25% of its assets in assets of foreign issuers, of which 10% (as a percentage of the Fund’s assets) may be invested in emerging markets issuers. Up to 10% of the Core Bond Fund’s assets may be exposed to non-US currency risk. A bond of a foreign issuer, including an emerging market issuer, will not count toward the 10% limit on non-US currency exposure if the bond is either (i) US dollar-denominated or (ii) non-US dollar-denominated, but hedged back to US dollars. The Core Bond Fund only buys securities that are rated investment grade at the time of purchase by at least one major rating agency or determined by the management team to be of similar quality. Split rated bonds will be considered to have the higher credit rating. The management team evaluates sectors of the bond market and individual securities within these sectors. The management team selects bonds from several sectors including: U.S. Treasuries and agency securities, commercial and residential mortgage-backed securities, collateralized mortgage obligations (“CMOs”), asset-backed securities and corporate bonds. The Core Bond Fund may buy or sell options or futures on a security or an index of securities, or enter into credit default swaps and interest rate or foreign currency transactions, including swaps (collectively, commonly known as derivatives). The Fund may use derivative instruments to hedge its investments or to seek to enhance returns. The Core Bond Fund may seek to obtain market exposure to the securities in which it primarily invests by entering into a series of purchase and sale contracts or by using other investment techniques (such as reverse repurchase agreements or dollar rolls). The Core Bond Fund may engage in active and frequent trading of portfolio securities to achieve its principal investment strategies. Shareholder Fees (fees paid directly from your investment) Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) You would pay the following expenses if you did not redeem your shares: 0.0048 0.0048 0.0048 0.0048 0.0048 0.0025 0.01 0.01 0 0.005 0.0029 0.0039 0.0028 0.0024 0.0045 0.0002 0.0002 0.0002 0.0002 0.0002 0.0027 0.0037 0.0026 0.0022 0.0043 0.0102 0.0187 0.0176 0.0072 0.0143 -0.0019 -0.0023 -0.0021 -0.0015 0.0083 0.0164 0.0155 0.0057 0.0143 February 1, 2014 7.39 25000 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 BlackRock-advised fund complex. You would pay the following expenses if you did not redeem your shares: Performance Information The information shows you how the Fund’s performance has varied year by year and provides some indication of the risks of investing in the Fund. The table compares the Fund’s performance to that of the Barclays U.S. Aggregate Bond Index. Prior to October 2, 2006, Class R Share performance results are those of Institutional Shares (which have no distribution or service fees) restated to reflect Class R Share fees. 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 Fund’s investment manager and its affiliates had not waived or reimbursed certain Fund expenses during these periods, the Fund’s returns would have been lower. Updated information on the Fund’s performance can be obtained by visiting http://www.blackrock.com/funds or can be obtained by phone at 800-882-0052. Investor A Shares ANNUAL TOTAL RETURNS BlackRock Core Bond Portfolio As of 12/31 During the ten-year period shown in the bar chart, the highest return for a quarter was 6.15% (quarter ended September 30, 2009) and the lowest return for a quarter was –5.81% (quarter ended September 30, 2008). As of 12/31/12 Average Annual Total Returns 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 investor’s 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. 308 617 258 58 146 524 916 534 215 452 758 1190 935 386 782 1428 1844 2056 880 1713 The information shows you how the Fund’s performance has varied year by year and provides some indication of the risks of investing in the Fund. 800-882-0052 http://www.blackrock.com/funds 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. 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 investor’s 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. 0.0383 0.042 0.021 0.0391 0.0548 -0.0831 0.1414 0.0789 0.0499 0.0703 167 158 0.04 0 0 0 0 0 0.045 0.01 0 0 566 534 990 935 1844 2056 0.0045 0.0045 0.0045 0.0045 0.0045 0.0025 0.01 0.01 0 0.005 0.0032 0.0036 0.0029 0.0028 0.0039 0.0002 0.0002 0.0002 0.0002 0.0002 0.0102 0.0181 0.0174 0.0073 0.0134 -0.0011 -0.0006 -0.0006 -0.0015 -0.0015 0.0091 0.0175 0.0168 0.0058 0.0119 0.003 0.0034 0.0027 0.0026 0.0037 0.0163 0.0094 0.0127 0.0366 0.0533 -0.093 You may lose part or all of your investment in the Fund or your investment may not perform as well as other similar investments. 0.1354 0.0508 0.0186 0.0484 489 628 271 59 121 701 914 542 0.0249 218 0.0168 410 0.0161 -0.005 0.0309 0.0521 0.0439 0.0148 930 1174 938 391 720 0.0246 0.0134 0.0143 0.0179 0.0218 0.0332 0.0241 0.0287 1588 1817 2047 892 1600 0.025 0.0139 0.0147 0.0199 0.0221 0.031 0.022 0.0311 178 171 564 542 974 938 1817 2047 Investment Objective The investment objective of the BlackRock Low Duration Bond Portfolio (the “Low Duration Fund” or the “Fund”) is to seek to maximize total return, consistent with income generation and prudent investment management. 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 $50,000 in the BlackRock-advised fund complex. More information about these and other discounts is available from your financial professional and in the “Details about the Share Classes” section on page 33 of the Fund’s prospectus and in the “Purchase of Shares” section on page II-71 of the Fund’s statement of additional information. 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 Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: 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 Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 203% of the average value of its portfolio. Principal Investment Strategies of the Fund Principal Risks of Investing in the Fund 0.0279 0.0173 0.0179 0.0173 0.0528 0.0739 0.0676 0.0421 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 investor’s 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 and Institutional Shares will vary. During the ten-year period shown in the bar chart, the highest return for a quarter was 4.77% (quarter ended September 30, 2009) and the lowest return for a quarter was –6.18% (quarter ended December 31, 2008). 0.0403 Fund Overview Key Facts about BlackRock Low Duration Bond Portfolio 0.0246 0.0249 Shareholder Fees (fees paid directly from your investment) 0.037 0.0411 Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) 0.052 0.0458 0.0595 Example: Investor A Shares ANNUAL TOTAL RETURNS BlackRock Low Duration Bond Portfolio As of 12/31 As of 12/31/12 Average Annual Total Returns Performance Information 0.0396 0.0238 0.0243 0.0381 0.0356 0.0472 0.0408 0.0518 You would pay the following expenses if you did not redeem your shares: 0.0048 0 The Low Duration Fund invests primarily in investment grade bonds and maintains an average portfolio duration that is within ±1 year of the duration of the benchmark. The benchmark has an average duration between 1 and 3 years. The Low Duration Fund normally invests at least 80% of its assets in debt securities. The Low Duration Fund may invest up to 10% of its assets in non-investment grade bonds (commonly called “high yield” or “junk bonds”). The Low Duration Fund may also invest up to 25% of its assets in assets of foreign issuers, of which 10% (as a percentage of the Fund’s assets) may be invested in emerging markets issuers. Up to 10% of the Low Duration Fund’s assets may be exposed to non-US currency risk. A bond of a foreign issuer, including an emerging market issuer, will not count toward the 10% limit on non-US currency exposure if the bond is either (i) US dollar-denominated or (ii) non-US dollar-denominated, but hedged back to US dollars. The management team evaluates sectors of the bond market and individual securities within these sectors. The management team selects bonds from several sectors including: U.S. Treasuries and agency securities, commercial and residential mortgage-backed securities, collateralized mortgage obligations (“CMOs”), asset-backed securities and corporate bonds. The Low Duration Fund may buy or sell options or futures on a security or an index of securities, or enter into credit default swaps and interest rate or foreign currency transactions, including swaps (collectively, commonly known as derivatives). The Fund may use derivative instruments to hedge its investments or to seek to enhance returns. The Fund may seek to obtain market exposure to the securities in which it primarily invests by entering into a series of purchase and sale contracts or by using other investment techniques (such as reverse repurchase agreements or dollar rolls). The Low Duration Fund may engage in active and frequent trading of portfolio securities to achieve its principal investment strategies. 0.0013 0.0002 0.0011 0.0061 The information shows you how the Fund’s performance has varied year by year and provides some indication of the risks of investing in the Fund. The table compares the Fund’s performance to that of the B of A Merrill Lynch 1-3 Year US Corporate and Government Index. Prior to July 18, 2011, Class R Share performance results are those of Institutional Shares (which have no distribution or service fees) restated to reflect Class R Share fees. 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 Fund’s investment manager and its affiliates had not waived or reimbursed certain Fund expenses during these periods, the Fund’s returns would have been lower. Updated information on the Fund’s performance can be obtained by visiting http://www.blackrock.com/funds or can be obtained by phone at 800-882-0052. -0.0018 0.0043 Fund Overview Key Facts about BlackRock Core Bond Portfolio Investment Objective The investment objective of the BlackRock Core Bond Portfolio (the “Core Bond Fund” or the “Fund”) is to seek to maximize total return, consistent with income generation and prudent investment management. 2.03 You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in the BlackRock-advised fund complex. 50000 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 information shows you how the Fund’s performance has varied year by year and provides some indication of the risks of investing in the Fund. 800-882-0052 44 http://www.blackrock.com/funds 177 322 745 Fees and Expenses of the Fund 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. This table describes the fees and expenses that you may pay if you buy and hold BlackRock Shares of the Fund. However, the table includes all applicable fees and sales charges. 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 investor’s 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 and Institutional Shares will vary. highest return 2009-09-30 0.0477 <div style="display:none">~ http://www.blackrock.com/role/ScheduleAnnualFundOperatingExpensesBLACKROCKHIGHYIELDBONDPORTFOLIOSERVICESHARES column period compact * ~</div> lowest return highest return 2008-12-31 -0.0618 2009-09-30 Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) 0.0615 lowest return 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 Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: 2008-09-30 <div style="display:none">~ http://www.blackrock.com/role/ScheduleExpenseExampleTransposedBLACKROCKHIGHYIELDBONDPORTFOLIOSERVICESHARES column period compact * ~</div> Portfolio Turnover: <div style="display:none">~ http://www.blackrock.com/role/ScheduleAnnualTotalReturnsBLACKROCKHIGHYIELDBONDPORTFOLIOSERVICESHARESBarChart column period compact * ~</div> 0.0214 0.0141 0.0169 0.0409 <div style="display:none">~ http://www.blackrock.com/role/ScheduleAverageAnnualTotalReturnsTransposedBLACKROCKHIGHYIELDBONDPORTFOLIOSERVICESHARES column period compact * ~</div> 0.0573 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 Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 739% of the average value of its portfolio. <div style="display:none">~ http://www.blackrock.com/role/ScheduleAnnualFundOperatingExpensesBLACKROCKLOWDURATIONBONDPORTFOLIOBLACKROCKSHARES column period compact * ~</div> -0.0894 Principal Investment Strategies of the Fund 0.1399 0.0548 0.0236 0.0043 0.0526 0.0025 0.0028 0.0001 0.0097 0.0097 <div style="display:none">~ http://www.blackrock.com/role/ScheduleExpenseExampleTransposedBLACKROCKLOWDURATIONBONDPORTFOLIOBLACKROCKSHARES column period compact * ~</div> The Core Bond Fund normally invests at least 80% of its assets in bonds and maintains an average portfolio duration that is within ±20% of the duration of the benchmark. As of December 31, 2012, the average duration of the benchmark, the Barclays U.S. Aggregate Bond Index, was 4.5 years, as calculated by BlackRock. The Core Bond Fund may invest up to 25% of its assets in assets of foreign issuers, of which 10% (as a percentage of the Fund’s assets) may be invested in emerging markets issuers. Up to 10% of the Core Bond Fund’s assets may be exposed to non-US currency risk. A bond of a foreign issuer, including an emerging market issuer, will not count toward the 10% limit on non-US currency exposure if the bond is either (i) US dollar-denominated or (ii) non-US dollar-denominated, but hedged back to US dollars. The Core Bond Fund only buys securities that are rated investment grade at the time of purchase by at least one major rating agency or determined by the management team to be of similar quality. Split rated bonds will be considered to have the higher credit rating. The management team evaluates sectors of the bond market and individual securities within these sectors. The management team selects bonds from several sectors including: U.S. Treasuries and agency securities, commercial and residential mortgage-backed securities, collateralized mortgage obligations (“CMOs”), asset-backed securities and corporate bonds. The Core Bond Fund may buy or sell options or futures on a security or an index of securities, or enter into credit default swaps and interest rate or foreign currency transactions, including swaps (collectively, commonly known as derivatives). The Fund may use derivative instruments to hedge its investments or to seek to enhance returns. The Core Bond Fund may seek to obtain market exposure to the securities in which it primarily invests by entering into a series of purchase and sale contracts or by using other investment techniques (such as reverse repurchase agreements or dollar rolls). The Core Bond Fund may engage in active and frequent trading of portfolio securities to achieve its principal investment strategies. 0.0526 0.0429 <div style="display:none">~ http://www.blackrock.com/role/ScheduleShareholderFeesBLACKROCKCOREBONDPORTFOLIO column period compact * ~</div> 0.0341 0.0148 0.0336 0.0209 0.0211 0.0287 Principal Risks of Investing in the Fund 0.0318 0.0191 0.0195 0.0311 <div style="display:none">~ http://www.blackrock.com/role/ScheduleAnnualTotalReturnsBLACKROCKLOWDURATIONBONDPORTFOLIOBLACKROCKSHARESBarChart column period compact * ~</div> <div style="display:none">~ http://www.blackrock.com/role/ScheduleAnnualFundOperatingExpensesBLACKROCKCOREBONDPORTFOLIO column period compact * ~</div> 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. <ul type="square"><li style="margin-left:-20px"> Borrowing Risk — Borrowing may exaggerate changes in the net asset value of Fund shares and in the return on the Fund’s portfolio. Borrowing will cost the Fund interest expense and other fees. The costs of borrowing may reduce the Fund’s return. Borrowing may cause the Fund to liquidate positions when it may not be advantageous to do so to satisfy its obligations.</li></ul><ul type="square"><li style="margin-left:-20px"> Credit Risk — Credit risk refers to the possibility that the issuer of a security will not be able to make payments of interest and principal when due. Changes in an issuer’s credit rating or the market’s perception of an issuer’s creditworthiness may also affect the value of the Fund’s investment in that issuer.</li></ul><ul type="square"><li style="margin-left:-20px"> Derivatives Risk — The Fund’s use of derivatives may reduce the Fund’s 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. Derivatives are also subject to counterparty risk, which is the risk that the other party in the transaction will not fulfill its contractual obligation. A risk of the Fund’s use of derivatives is that the fluctuations in their values may not correlate perfectly with the overall securities markets. 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. Derivatives may give rise to a form of leverage and may expose the Fund to greater risk and increase its costs. 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.</li></ul><ul type="square"><li style="margin-left:-20px"> Dollar Rolls Risk — Dollar rolls involve the risk that the market value of the securities that the Fund is committed to buy may decline below the price of the securities the Fund has sold. These transactions may involve leverage.</li></ul><ul type="square"><li style="margin-left:-20px"> 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.</li></ul><ul type="square"><li style="margin-left:-20px"> Extension Risk — When interest rates rise, certain obligations will be paid off by the obligor more slowly than anticipated, causing the value of these securities to fall.</li></ul><ul type="square"><li style="margin-left:-20px"> 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:</li></ul> <ul type="square"><li style="margin-left:+15px"><blockquote>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.</blockquote></li></ul><ul type="square"><li style="margin-left:+15px"><blockquote>Changes in foreign currency exchange rates can affect the value of the Fund’s portfolio.</blockquote></li></ul><ul type="square"><li style="margin-left:+15px"><blockquote>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.</blockquote></li></ul><ul type="square"><li style="margin-left:+15px"><blockquote>The governments of certain countries may prohibit or impose substantial restrictions on foreign investments in their capital markets or in certain industries.</blockquote></li></ul><ul type="square"><li style="margin-left:+15px"><blockquote> 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.</blockquote></li></ul><ul type="square"><li style="margin-left:+15px"><blockquote> 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.</blockquote></li></ul><ul type="square"><li style="margin-left:-20px"> High Portfolio Turnover Risk — The Fund may engage in active and frequent trading of its portfolio securities. High portfolio turnover (more than 100%) may result in increased transaction costs to the Fund, including brokerage commissions, dealer mark-ups and other transaction costs on the sale of the securities and on reinvestment in other securities. The sale of Fund portfolio securities may result in the realization and/or distribution to shareholders of higher capital gains or losses as compared to a fund with less active trading policies. These effects of higher than normal portfolio turnover may adversely affect Fund performance.</li></ul><ul type="square"><li style="margin-left:-20px"> Interest Rate Risk — 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.</li></ul><ul type="square"><li style="margin-left:-20px"> 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.</li></ul><ul type="square"><li style="margin-left:-20px"> 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 Fund’s portfolio will be magnified when the Fund uses leverage.</li></ul><ul type="square"><li style="margin-left:-20px"> Liquidity Risk — Liquidity risk exists when particular investments are difficult to purchase or sell. The Fund’s 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 Fund’s 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.</li></ul><ul type="square"><li style="margin-left:-20px"> 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.</li></ul><ul type="square"><li style="margin-left:-20px"> Mortgage- and Asset-Backed Securities Risks — Mortgage- and asset-backed securities represent interests in “pools” of mortgages or other assets, including consumer loans or receivables held in trust. Mortgage- and asset-backed securities are subject to credit, interest rate, prepayment and extension risks. These securities also are subject to risk of default on the underlying mortgage or asset, particularly during periods of economic downturn. Small movements in interest rates (both increases and decreases) may quickly and significantly reduce the value of certain mortgage-backed securities.</li></ul><ul type="square"><li style="margin-left:-20px"> 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.</li></ul><ul type="square"><li style="margin-left:-20px">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.</li></ul><ul type="square"><li style="margin-left:-20px"> Reverse Repurchase Agreements Risk — Reverse repurchase agreements involve the sale of securities held by the Fund with an agreement to repurchase the securities at an agreed-upon price, date and interest payment. Reverse repurchase agreements involve the risk that the other party may fail to return the securities in a timely manner or at all. The Fund could lose money if it is unable to recover the securities and the value of the collateral held by the Fund, including the value of the investments made with cash collateral, is less than the value of securities. These events could also trigger adverse tax consequences to the Fund.</li></ul><ul type="square"><li style="margin-left:-20px">U.S. Government Issuer Risk — Treasury obligations may differ in their interest rates, maturities, times of issuance and other characteristics. Obligations of U.S. Government agencies and authorities are supported by varying degrees of credit but generally are not backed by the full faith and credit of the U.S. Government. No assurance can be given that the U.S. Government will provide financial support to its agencies and authorities if it is not obligated by law to do so.</li></ul> <div style="display:none">~ http://www.blackrock.com/role/ScheduleExpenseExampleTransposedBLACKROCKCOREBONDPORTFOLIO column period compact * ~</div> <div style="display:none">~ http://www.blackrock.com/role/ScheduleAnnualFundOperatingExpensesBLACKROCKCOREBONDPORTFOLIOSERVICESHARES column period compact * ~</div> 99 <div style="display:none">~ http://www.blackrock.com/role/ScheduleAverageAnnualTotalReturnsTransposedBLACKROCKLOWDURATIONBONDPORTFOLIOBLACKROCKSHARES column period compact * ~</div> 309 536 1190 <div style="display:none">~ http://www.blackrock.com/role/ScheduleExpenseExampleNoRedemptionTransposedBLACKROCKCOREBONDPORTFOLIO column period compact * ~</div> <div style="display:none">~ http://www.blackrock.com/role/ScheduleExpenseExampleTransposedBLACKROCKCOREBONDPORTFOLIOSERVICESHARES column period compact * ~</div> 0.1675 0.1415 0.1079 0.1578 0.0915 0.0617 0.0597 0.1045 0.101 0.0708 0.0688 0.106 Investment Objective The investment objective of the BlackRock Low Duration Bond Portfolio (the “Low Duration Fund” or the “Fund”) is to seek to maximize total return, consistent with income generation and prudent investment management. Fees and Expenses of the Fund <div style="display:none">~ http://www.blackrock.com/role/ScheduleAnnualTotalReturnsBLACKROCKCOREBONDPORTFOLIOSERVICESHARESBarChart column period compact * ~</div> This table describes the fees and expenses that you may pay if you buy and hold BlackRock Shares of the Fund. <div style="display:none">~ http://www.blackrock.com/role/ScheduleAnnualTotalReturnsBLACKROCKCOREBONDPORTFOLIOBarChart column period compact * ~</div> 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 Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: Investment Objective Portfolio Turnover: The investment objective of the BlackRock High Yield Bond Portfolio (the “High Yield Fund” or the “Fund”) is to seek to maximize total return, consistent with income generation and prudent investment management. Fees and Expenses of the Fund This table describes the fees and expenses that you may pay if you buy and hold Service Shares of the Fund. 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 Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 203% of the average value of its portfolio. <div style="display:none">~ http://www.blackrock.com/role/ScheduleAverageAnnualTotalReturnsTransposedBLACKROCKCOREBONDPORTFOLIOSERVICESHARES column period compact * ~</div> Example: Principal Investment Strategies of the Fund 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 Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: Portfolio Turnover: <div style="display:none">~ http://www.blackrock.com/role/ScheduleShareholderFeesBLACKROCKLOWDURATIONBONDPORTFOLIO column period compact * ~</div> The Low Duration Fund invests primarily in investment grade bonds and maintains an average portfolio duration that is within ±1 year of the duration of the benchmark. The benchmark has an average duration between 1 and 3 years. The Low Duration Fund normally invests at least 80% of its assets in debt securities. The Low Duration Fund may invest up to 10% of its assets in non-investment grade bonds (commonly called “high yield” or “junk bonds”). The Low Duration Fund may also invest up to 25% of its assets in assets of foreign issuers, of which 10% (as a percentage of the Fund’s assets) may be invested in emerging markets issuers. Up to 10% of the Low Duration Fund’s assets may be exposed to non-US currency risk. A bond of a foreign issuer, including an emerging market issuer, will not count toward the 10% limit on non-US currency exposure if the bond is either (i) US dollar-denominated or (ii) non-US dollar-denominated, but hedged back to US dollars. The management team evaluates sectors of the bond market and individual securities within these sectors. The management team selects bonds from several sectors including: U.S. Treasuries and agency securities, commercial and residential mortgage-backed securities, collateralized mortgage obligations (“CMOs”), asset-backed securities and corporate bonds. The Low Duration Fund may buy or sell options or futures on a security or an index of securities, or enter into credit default swaps and interest rate or foreign currency transactions, including swaps (collectively, commonly known as derivatives). The Fund may use derivative instruments to hedge its investments or to seek to enhance returns. The Fund may seek to obtain market exposure to the securities in which it primarily invests by entering into a series of purchase and sale contracts or by using other investment techniques (such as reverse repurchase agreements or dollar rolls). The Low Duration Fund may engage in active and frequent trading of portfolio securities to achieve its principal investment strategies. Principal Risks of Investing in the Fund Investment Objective The investment objective of the BlackRock Core Bond Portfolio (the “Core Bond Fund” or the “Fund”) is to seek to maximize total return, consistent with income generation and prudent investment management. Fees and Expenses of the Fund Principal Risks of Investing in the Fund Performance Information This table describes the fees and expenses that you may pay if you buy and hold Service Shares of the Fund. Performance Information The information shows you how the Fund’s performance has varied year by year and provides some indication of the risks of investing in the Fund. The table compares the Fund’s performance to that of the B of A Merrill Lynch 1-3 Year US Corporate and Government Index. 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 Fund’s investment manager and its affiliates had not waived or reimbursed certain Fund expenses during these periods, the Fund’s returns would have been lower. Updated information on the Fund’s performance can be obtained by visiting http://www.blackrock.com/funds or can be obtained by phone at 800-882-0052. 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 Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: 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 investor’s 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. During the ten-year period shown in the bar chart, the highest return for a quarter was 17.26% (quarter ended June 30, 2009) and the lowest return for a quarter was –20.85% (quarter ended December 31, 2008). BlackRock Shares ANNUAL TOTAL RETURNS BlackRock Low Duration Bond Portfolio As of 12/31 Performance Information The information shows you how the Fund’s performance has varied year by year and provides some indication of the risks of investing in the Fund. The table compares the Fund’s performance to that of the Barclays U.S. Aggregate Bond Index. 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 Fund’s investment manager and its affiliates had not waived or reimbursed certain Fund expenses during these periods, the Fund’s returns would have been lower. Updated information on the Fund’s performance 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 4.86% (quarter ended September 30, 2009) and the lowest return for a quarter was –6.09% (quarter ended December 31, 2008). During the ten-year period shown in the bar chart, the highest return for a quarter was 6.05% (quarter ended September 30, 2009) and the lowest return for a quarter was –5.86% (quarter ended September 30, 2008). 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 investor’s 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. <div style="display:none">~ http://www.blackrock.com/role/ScheduleExpenseExampleTransposedBLACKROCKLOWDURATIONBONDPORTFOLIO column period compact * ~</div> 0.2751 0.1204 As of 12/31/12 Average Annual Total Returns 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 investor’s 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. 0.0353 <div style="display:none">~ http://www.blackrock.com/role/ScheduleExpenseExampleNoRedemptionTransposedBLACKROCKLOWDURATIONBONDPORTFOLIO column period compact * ~</div> 0.1133 0.0261 -0.2803 0.5198 0.1816 0.0269 0.0701 0.0592 0.0454 0.0421 Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) 0.1675 <div style="display:none">~ http://www.blackrock.com/role/ScheduleAnnualTotalReturnsBLACKROCKLOWDURATIONBONDPORTFOLIOBarChart column period compact * ~</div> 0.0488 0.033 0.0321 0.0595 0.0442 0.0282 0.0282 0.0518 <div style="display:none">~ http://www.blackrock.com/role/ScheduleAverageAnnualTotalReturnsTransposedBLACKROCKLOWDURATIONBONDPORTFOLIO column period compact * ~</div> 97 324 570 1274 Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) February 1, 2014 0.69 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.<ul type="square"><li style="margin-left:-20px">Borrowing Risk — Borrowing may exaggerate changes in the net asset value of Fund shares and in the return on the Fund’s portfolio. Borrowing will cost the Fund interest expense and other fees. The costs of borrowing may reduce the Fund’s return. Borrowing may cause the Fund to liquidate positions when it may not be advantageous to do so to satisfy its obligations.</li></ul><ul type="square"><li style="margin-left:-20px">Credit Risk — Credit risk refers to the possibility that the issuer of a security will not be able to make payments of interest and principal when due. Changes in an issuer’s credit rating or the market’s perception of an issuer’s creditworthiness may also affect the value of the Fund’s investment in that issuer.</li></ul><ul type="square"><li style="margin-left:-20px">Derivatives Risk — The Fund’s use of derivatives may reduce the Fund’s 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. Derivatives are also subject to counterparty risk, which is the risk that the other party in the transaction will not fulfill its contractual obligation. A risk of the Fund’s use of derivatives is that the fluctuations in their values may not correlate perfectly with the overall securities markets. 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. Derivatives may give rise to a form of leverage and may expose the Fund to greater risk and increase its costs. 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.</li></ul><ul type="square"><li style="margin-left:-20px">Dollar Rolls Risk — Dollar rolls involve the risk that the market value of the securities that the Fund is committed to buy may decline below the price of the securities the Fund has sold. These transactions may involve leverage.</li></ul><ul type="square"><li style="margin-left:-20px">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. </li></ul><ul type="square"><li style="margin-left:-20px"> Extension Risk — When interest rates rise, certain obligations will be paid off by the obligor more slowly than anticipated, causing the value of these securities to fall.</li></ul><ul type="square"><li style="margin-left:-20px">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:</li></ul><ul type="square"><li style="margin-left:+15px"><blockquote>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.</blockquote></li></ul><ul type="square"><li style="margin-left:+15px"><blockquote>Changes in foreign currency exchange rates can affect the value of the Fund’s portfolio. </blockquote></li></ul><ul type="square"><li style="margin-left:+15px"><blockquote> 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.</blockquote></li></ul><ul type="square"><li style="margin-left:+15px"><blockquote>The governments of certain countries may prohibit or impose substantial restrictions on foreign investments in their capital markets or in certain industries.</blockquote></li></ul><ul type="square"><li style="margin-left:+15px"><blockquote> 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.</blockquote></li></ul><ul type="square"><li style="margin-left:+15px"><blockquote> 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.</blockquote></li></ul><ul type="square"><li style="margin-left:-20px">High Portfolio Turnover Risk — The Fund may engage in active and frequent trading of its portfolio securities. High portfolio turnover (more than 100%) may result in increased transaction costs to the Fund, including brokerage commissions, dealer mark-ups and other transaction costs on the sale of the securities and on reinvestment in other securities. The sale of Fund portfolio securities may result in the realization and/or distribution to shareholders of higher capital gains or losses as compared to a fund with less active trading policies. These effects of higher than normal portfolio turnover may adversely affect Fund performance. In addition, investment in mortgage dollar rolls and participation in TBA transactions may significantly increase the Fund’s portfolio turnover rate A TBA transaction is a method of trading mortgage-backed securities where the buyer and seller agree upon general trade parameters such as agency, settlement date, par amount, and price.</li></ul><ul type="square"><li style="margin-left:-20px">Interest Rate Risk — 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.</li></ul><ul type="square"><li style="margin-left:-20px">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 Fund’s portfolio will be magnified when the Fund uses leverage.</li></ul><ul type="square"><li style="margin-left:-20px">Liquidity Risk — Liquidity risk exists when particular investments are difficult to purchase or sell. The Fund’s 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 Fund’s 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.</li></ul><ul type="square"><li style="margin-left:-20px">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.</li></ul><ul type="square"><li style="margin-left:-20px">Mortgage- and Asset-Backed Securities Risks — Mortgage- and asset-backed securities represent interests in “pools” of mortgages or other assets, including consumer loans or receivables held in trust. Mortgage- and asset-backed securities are subject to credit, interest rate, prepayment and extension risks. These securities also are subject to risk of default on the underlying mortgage or asset, particularly during periods of economic downturn. Small movements in interest rates (both increases and decreases) may quickly and significantly reduce the value of certain mortgage-backed securities.</li></ul><ul type="square"><li style="margin-left:-20px">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. </li></ul><ul type="square"><li style="margin-left:-20px"> 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.</li></ul><ul type="square"><li style="margin-left:-20px">Reverse Repurchase Agreements Risk — Reverse repurchase agreements involve the sale of securities held by the Fund with an agreement to repurchase the securities at an agreed-upon price, date and interest payment. Reverse repurchase agreements involve the risk that the other party may fail to return the securities in a timely manner or at all. The Fund could lose money if it is unable to recover the securities and the value of the collateral held by the Fund, including the value of the investments made with cash collateral, is less than the value of securities. These events could also trigger adverse tax consequences to the Fund.</li></ul><ul type="square"><li style="margin-left:-20px">U.S. Government Issuer Risk — Treasury obligations may differ in their interest rates, maturities, times of issuance and other characteristics. Obligations of U.S. Government agencies and authorities are supported by varying degrees of credit but generally are not backed by the full faith and credit of the U.S. Government. No assurance can be given that the U.S. Government will provide financial support to its agencies and authorities if it is not obligated by law to do so.</li></ul> The Total Annual Fund Operating Expenses do not correlate to the ratios of expenses to average net assets given in the Fund’s most recent annual report which does not include the Acquired Fund Fees and Expenses. You may lose part or all of your investment in the Fund or your investment may not perform as well as other similar investments. 0.0045 The information shows you how the Fund’s performance has varied year by year and provides some indication of the risks of investing in the Fund. 0.0025 800-882-0052 http://www.blackrock.com/funds Performance Information As with all such investments, past performance (before and after taxes) is not an indication of future results. The information shows you how the Fund’s performance has varied year by year and provides some indication of the risks of investing in the Fund. The table compares the Fund’s performance to that of the Barclays U.S. Aggregate Bond Index. 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 Fund’s investment manager and its affiliates had not waived or reimbursed certain Fund expenses during these periods, the Fund’s returns would have been lower. Updated information on the Fund’s performance can be obtained by visiting http://www.blackrock.com/funds or can be obtained by phone at 800-882-0052. 0.0035 0.0002 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. <ul type="square"><li style="margin-left:-20px">Borrowing Risk — Borrowing may exaggerate changes in the net asset value of Fund shares and in the return on the Fund’s portfolio. Borrowing will cost the Fund interest expense and other fees. The costs of borrowing may reduce the Fund’s return. Borrowing may cause the Fund to liquidate positions when it may not be advantageous to do so to satisfy its obligations.</li></ul><ul type="square"><li style="margin-left:-20px">Credit Risk — Credit risk refers to the possibility that the issuer of a security will not be able to make payments of interest and principal when due. Changes in an issuer’s credit rating or the market’s perception of an issuer’s creditworthiness may also affect the value of the Fund’s investment in that issuer.</li></ul><ul type="square"><li style="margin-left:-20px">Derivatives Risk — The Fund’s use of derivatives may reduce the Fund’s 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. Derivatives are also subject to counterparty risk, which is the risk that the other party in the transaction will not fulfill its contractual obligation. A risk of the Fund’s use of derivatives is that the fluctuations in their values may not correlate perfectly with the overall securities markets. 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. Derivatives may give rise to a form of leverage and may expose the Fund to greater risk and increase its costs. 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.</li></ul><ul type="square"><li style="margin-left:-20px">Dollar Rolls Risk — Dollar rolls involve the risk that the market value of the securities that the Fund is committed to buy may decline below the price of the securities the Fund has sold. These transactions may involve leverage.</li></ul><ul type="square"><li style="margin-left:-20px">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.</li></ul><ul type="square"><li style="margin-left:-20px">Extension Risk — When interest rates rise, certain obligations will be paid off by the obligor more slowly than anticipated, causing the value of these securities to fall.</li></ul><ul type="square"><li style="margin-left:-20px">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:</li></ul> <blockquote><ul type="square"><li style="margin-left:-20px">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.</li></ul></blockquote><blockquote><ul type="square"><li style="margin-left:-20px">Changes in foreign currency exchange rates can affect the value of the Fund’s portfolio.</li></ul></blockquote><blockquote><ul type="square"><li style="margin-left:-20px">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.</li></ul></blockquote><blockquote><ul type="square"><li style="margin-left:-20px">The governments of certain countries may prohibit or impose substantial restrictions on foreign investments in their capital markets or in certain industries.</li></ul></blockquote><blockquote><ul type="square"><li style="margin-left:-20px">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.</li></ul></blockquote><blockquote><ul type="square"><li style="margin-left:-20px">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.</li></ul></blockquote><ul type="square"><li style="margin-left:-20px">High Portfolio Turnover Risk — The Fund may engage in active and frequent trading of its portfolio securities. High portfolio turnover (more than 100%) may result in increased transaction costs to the Fund, including brokerage commissions, dealer mark-ups and other transaction costs on the sale of the securities and on reinvestment in other securities. The sale of Fund portfolio securities may result in the realization and/or distribution to shareholders of higher capital gains or losses as compared to a fund with less active trading policies. These effects of higher than normal portfolio turnover may adversely affect Fund performance. In addition, investment in mortgage dollar rolls and participation in TBA transactions may significantly increase the Fund’s portfolio turnover rate. A TBA transaction is a method of trading mortgage-backed securities where the buyer and seller agree upon general trade parameters such as agency, settlement date, par amount, and price.</li></ul><ul type="square"><li style="margin-left:-20px">Interest Rate Risk — 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.</li></ul><ul type="square"><li style="margin-left:-20px">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 Fund’s portfolio will be magnified when the Fund uses leverage.</li></ul><ul type="square"><li style="margin-left:-20px">Liquidity Risk — Liquidity risk exists when particular investments are difficult to purchase or sell. The Fund’s 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 Fund’s 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.</li></ul><ul type="square"><li style="margin-left:-20px">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.</li></ul><ul type="square"><li style="margin-left:-20px">Mortgage- and Asset-Backed Securities Risks — Mortgage- and asset-backed securities represent interests in “pools” of mortgages or other assets, including consumer loans or receivables held in trust. Mortgage- and asset-backed securities are subject to credit, interest rate, prepayment and extension risks. These securities also are subject to risk of default on the underlying mortgage or asset, particularly during periods of economic downturn. Small movements in interest rates (both increases and decreases) may quickly and significantly reduce the value of certain mortgage-backed securities.</li></ul><ul type="square"><li style="margin-left:-20px">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.</li></ul><ul type="square"><li style="margin-left:-20px">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.</li></ul><ul type="square"><li style="margin-left:-20px">Reverse Repurchase Agreements Risk — Reverse repurchase agreements involve the sale of securities held by the Fund with an agreement to repurchase the securities at an agreed-upon price, date and interest payment. Reverse repurchase agreements involve the risk that the other party may fail to return the securities in a timely manner or at all. The Fund could lose money if it is unable to recover the securities and the value of the collateral held by the Fund, including the value of the investments made with cash collateral, is less than the value of securities. These events could also trigger adverse tax consequences to the Fund.</li></ul><ul type="square"><li style="margin-left:-20px">U.S. Government Issuer Risk — Treasury obligations may differ in their interest rates, maturities, times of issuance and other characteristics. Obligations of U.S. Government agencies and authorities are supported by varying degrees of credit but generally are not backed by the full faith and credit of the U.S. Government. No assurance can be given that the U.S. Government will provide financial support to its agencies and authorities if it is not obligated by law to do so.</li></ul> 0.0033 BlackRock Shares ANNUAL TOTAL RETURNS BlackRock Core Bond Portfolio As of 12/31 During the ten-year period shown in the bar chart, the highest return for a quarter was 6.25% (quarter ended September 30, 2009) and the lowest return for a quarter was –5.81% (quarter ended September 30, 2008). 0.0105 As of 12/31/12 Average Annual Total Returns 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 investor’s 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. -0.001 0.0095 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.<ul type="square"><li style="margin-left:-20px">Borrowing Risk — Borrowing may exaggerate changes in the net asset value of Fund shares and in the return on the Fund’s portfolio. Borrowing will cost the Fund interest expense and other fees. The costs of borrowing may reduce the Fund’s return. Borrowing may cause the Fund to liquidate positions when it may not be advantageous to do so to satisfy its obligations.</li></ul><ul type="square"><li style="margin-left:-20px">Credit Risk — Credit risk refers to the possibility that the issuer of a security will not be able to make payments of interest and principal when due. Changes in an issuer’s credit rating or the market’s perception of an issuer’s creditworthiness may also affect the value of the Fund’s investment in that issuer.</li></ul><ul type="square"><li style="margin-left:-20px">Derivatives Risk — The Fund’s use of derivatives may reduce the Fund’s 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. Derivatives are also subject to counterparty risk, which is the risk that the other party in the transaction will not fulfill its contractual obligation. A risk of the Fund’s use of derivatives is that the fluctuations in their values may not correlate perfectly with the overall securities markets. 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. Derivatives may give rise to a form of leverage and may expose the Fund to greater risk and increase its costs. 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.</li></ul><ul type="square"><li style="margin-left:-20px">Dollar Rolls Risk — Dollar rolls involve the risk that the market value of the securities that the Fund is committed to buy may decline below the price of the securities the Fund has sold. These transactions may involve leverage.</li></ul><ul type="square"><li style="margin-left:-20px">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.</li></ul><ul type="square"><li style="margin-left:-20px">Extension Risk — When interest rates rise, certain obligations will be paid off by the obligor more slowly than anticipated, causing the value of these securities to fall.</li></ul><ul type="square"><li style="margin-left:-20px">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:</li></ul><ul type="square"><li style="margin-left:+15px"><blockquote>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.</blockquote></li></ul><ul type="square"><li style="margin-left:+15px"><blockquote>Changes in foreign currency exchange rates can affect the value of the Fund’s portfolio.</blockquote></li></ul><ul type="square"><li style="margin-left:+15px"><blockquote>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.</blockquote></li></ul><ul type="square"><li style="margin-left:+15px"><blockquote>The governments of certain countries may prohibit or impose substantial restrictions on foreign investments in their capital markets or in certain industries.</blockquote></li></ul><ul type="square"><li style="margin-left:+15px"><blockquote>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.</blockquote></li></ul><ul type="square"><li style="margin-left:+15px"><blockquote>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.</blockquote></li></ul><ul type="square"><li style="margin-left:-20px">High Portfolio Turnover Risk — The Fund may engage in active and frequent trading of its portfolio securities. High portfolio turnover (more than 100%) may result in increased transaction costs to the Fund, including brokerage commissions, dealer mark-ups and other transaction costs on the sale of the securities and on reinvestment in other securities. The sale of Fund portfolio securities may result in the realization and/or distribution to shareholders of higher capital gains or losses as compared to a fund with less active trading policies. These effects of higher than normal portfolio turnover may adversely affect Fund performance.</li></ul><ul type="square"><li style="margin-left:-20px">Interest Rate Risk — 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.</li></ul><ul type="square"><li style="margin-left:-20px">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.</li></ul><ul type="square"><li style="margin-left:-20px">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 Fund’s portfolio will be magnified when the Fund uses leverage.</li></ul><ul type="square"><li style="margin-left:-20px">Liquidity Risk — Liquidity risk exists when particular investments are difficult to purchase or sell. The Fund’s 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 Fund’s 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.</li></ul><ul type="square"><li style="margin-left:-20px">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.</li></ul><ul type="square"><li style="margin-left:-20px">Mortgage- and Asset-Backed Securities Risks — Mortgage- and asset-backed securities represent interests in “pools” of mortgages or other assets, including consumer loans or receivables held in trust. Mortgage- and asset-backed securities are subject to credit, interest rate, prepayment and extension risks. These securities also are subject to risk of default on the underlying mortgage or asset, particularly during periods of economic downturn. Small movements in interest rates (both increases and decreases) may quickly and significantly reduce the value of certain mortgage-backed securities.</li></ul><ul type="square"><li style="margin-left:-20px">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.</li></ul><ul type="square"><li style="margin-left:-20px">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.</li></ul><ul type="square"><li style="margin-left:-20px">Reverse Repurchase Agreements Risk — Reverse repurchase agreements involve the sale of securities held by the Fund with an agreement to repurchase the securities at an agreed-upon price, date and interest payment. Reverse repurchase agreements involve the risk that the other party may fail to return the securities in a timely manner or at all. The Fund could lose money if it is unable to recover the securities and the value of the collateral held by the Fund, including the value of the investments made with cash collateral, is less than the value of securities. These events could also trigger adverse tax consequences to the Fund.</li></ul><ul type="square"><li style="margin-left:-20px">U.S. Government Issuer Risk — Treasury obligations may differ in their interest rates, maturities, times of issuance and other characteristics. Obligations of U.S. Government agencies and authorities are supported by varying degrees of credit but generally are not backed by the full faith and credit of the U.S. Government. No assurance can be given that the U.S. Government will provide financial support to its agencies and authorities if it is not obligated by law to do so.</li></ul> February 1, 2014 7.39 0.04 0.0413 You may lose part or all of your investment in the Fund or your investment may not perform as well as other similar investments. 0.021 0.0399 0.0564 -0.082 0.1403 The information shows you how the Fund’s performance has varied year by year and provides some indication of the risks of investing in the Fund. 0.0791 0.0499 0.0701 Sales charges are not reflected in the bar chart. If they were, returns would be less than those shown. February 1, 2014 2.03 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 information shows you how the Fund’s performance has varied year by year and provides some indication of the risks of investing in the Fund. 800-882-0052 http://www.blackrock.com/funds As with all such investments, past performance (before and after taxes) is not an indication of future results. However, the table includes all applicable fees and sales charges. 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. Sales charges are not reflected in the bar chart. If they were, returns would be less than those shown. Actual after-tax returns depend on the investor's 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. However, the table includes all applicable fees and sales charges. Service Shares ANNUAL TOTAL RETURNS BlackRock High Yield Bond Portfolio As of 12/31 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. As of 12/31/12 Average Annual Total Returns Actual after-tax returns depend on the investor’s 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. highest return 2009-09-30 0.0486 lowest return 2008-12-31 -0.0609 800-882-0052 http://www.blackrock.com/funds 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. 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 investor’s 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. highest return 2009-09-30 0.0625 lowest return 2008-09-30 -0.0581 0.0045 Fund Overview Key Facts about BlackRock Low Duration Bond Portfolio 0 0.0015 0.0002 Fund Overview Key Facts about BlackRock High Yield Bond Portfolio 0.01 0 0 0 0 0.04 0.01 Investment Objective 0.01 The investment objective of the BlackRock High Yield Bond Portfolio (the “High Yield Fund” or the “Fund”) is to seek to maximize total return, consistent with income generation and prudent investment management. Fees and Expenses of the Fund This table describes the fees and expenses that you may pay if you buy and hold Investor B1 and Investor C1 Shares of the Fund. Fund Overview Key Facts about BlackRock High Yield Bond Portfolio 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. <ul type="square"><li style="margin-left:-20px"> Bank Loan Risk — The market for bank loans may not be highly liquid and a Fund may have difficulty selling them. These investments expose a Fund to the credit risk of both the financial institution and the underlying borrower.</li></ul><ul type="square"><li style="margin-left:-20px"> Collateralized Bond Obligation Risk — The pool of high yield securities underlying collateralized bond obligations is typically separated in groupings called tranches representing different degrees of credit quality. The higher quality tranches have greater degrees of protection and pay lower interest rates. The lower tranches, with greater risk, pay higher interest rates.</li></ul><ul type="square"><li style="margin-left:-20px"> 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 issuer’s credit rating or the market’s perception of the issuer’s 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.</li></ul><ul type="square"><li style="margin-left:-20px"> Credit Risk — Credit risk refers to the possibility that the issuer of a security will not be able to make payments of interest and principal when due. Changes in an issuer’s credit rating or the market’s perception of an issuer’s creditworthiness may also affect the value of the Fund’s investment in that issuer.</li></ul><ul type="square"><li style="margin-left:-20px"> Derivatives Risk — The Fund’s use of derivatives may reduce the Fund’s 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. Derivatives are also subject to counterparty risk, which is the risk that the other party in the transaction will not fulfill its contractual obligation. A risk of the Fund’s use of derivatives is that the fluctuations in their values may not correlate perfectly with the overall securities markets. 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. Derivatives may give rise to a form of leverage and may expose the Fund to greater risk and increase its costs. 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.</li></ul><ul type="square"><li style="margin-left:-20px"> 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.</li></ul><ul type="square"><li style="margin-left:-20px"> Dollar Rolls Risk — Dollar rolls involve the risk that the market value of the securities that the Fund is committed to buy may decline below the price of the securities the Fund has sold. These transactions may involve leverage.</li></ul><ul type="square"><li style="margin-left:-20px"> 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.</li></ul><ul type="square"><li style="margin-left:-20px"> Extension Risk — When interest rates rise, certain obligations will be paid off by the obligor more slowly than anticipated, causing the value of these securities to fall.</li></ul><ul type="square"><li style="margin-left:-20px"> 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:</li></ul> <ul type="square"><li style="margin-left:+15px"><blockquote>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.</blockquote></li></ul><ul type="square"><li style="margin-left:+15px"><blockquote>Changes in foreign currency exchange rates can affect the value of the Fund’s portfolio.</blockquote></li></ul><ul type="square"><li style="margin-left:+15px"><blockquote>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.</blockquote></li></ul><ul type="square"><li style="margin-left:+15px"><blockquote>The governments of certain countries may prohibit or impose substantial restrictions on foreign investments in their capital markets or in certain industries.</blockquote></li></ul><ul type="square"><li style="margin-left:+15px"><blockquote> 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.</blockquote></li></ul><ul type="square"><li style="margin-left:+15px"><blockquote> 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.</blockquote></li></ul><ul type="square"><li style="margin-left:-20px"> High Portfolio Turnover Risk — The Fund may engage in active and frequent trading of its portfolio securities. High portfolio turnover (more than 100%) may result in increased transaction costs to the Fund, including brokerage commissions, dealer mark-ups and other transaction costs on the sale of the securities and on reinvestment in other securities. The sale of Fund portfolio securities may result in the realization and/or distribution to shareholders of higher capital gains or losses as compared to a fund with less active trading policies. These effects of higher than normal portfolio turnover may adversely affect Fund performance.</li></ul><ul type="square"><li style="margin-left:-20px"> Interest Rate Risk — 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.</li></ul><ul type="square"><li style="margin-left:-20px"> 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.</li></ul><ul type="square"><li style="margin-left:-20px"> 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 Fund’s portfolio will be magnified when the Fund uses leverage.</li></ul><ul type="square"><li style="margin-left:-20px"> Liquidity Risk — Liquidity risk exists when particular investments are difficult to purchase or sell. The Fund’s 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 Fund’s 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.</li></ul><ul type="square"><li style="margin-left:-20px"> 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.</li></ul><ul type="square"><li style="margin-left:-20px"> Mezzanine Securities Risk — Mezzanine securities carry the risk that the issuer will not be able to meet its obligations and that the equity securities purchased with the mezzanine investments may lose value.</li></ul><ul type="square"><li style="margin-left:-20px"> Mortgage- and Asset-Backed Securities Risks — Mortgage- and asset-backed securities represent interests in “pools” of mortgages or other assets, including consumer loans or receivables held in trust. Mortgage- and asset-backed securities are subject to credit, interest rate, prepayment and extension risks. These securities also are subject to risk of default on the underlying mortgage or asset, particularly during periods of economic downturn. Small movements in interest rates (both increases and decreases) may quickly and significantly reduce the value of certain mortgage-backed securities.</li></ul><ul type="square"><li style="margin-left:-20px"> Preferred Securities Risk — Preferred securities may pay fixed or adjustable rates of return. Preferred securities are subject to issuer-specific and market risks applicable generally to equity securities. In addition, a company’s preferred securities generally pay dividends only after the company makes required payments to holders of its bonds and other debt. For this reason, the value of preferred securities will usually react more strongly than bonds and other debt to actual or perceived changes in the company’s financial condition or prospects. Preferred securities of smaller companies may be more vulnerable to adverse developments than preferred stock of larger companies.</li></ul><ul type="square"><li style="margin-left:-20px"> 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.</li></ul><ul type="square"><li style="margin-left:-20px">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.</li></ul><ul type="square"><li style="margin-left:-20px"> Reverse Repurchase Agreements Risk — Reverse repurchase agreements involve the sale of securities held by the Fund with an agreement to repurchase the securities at an agreed-upon price, date and interest payment. Reverse repurchase agreements involve the risk that the other party may fail to return the securities in a timely manner or at all. The Fund could lose money if it is unable to recover the securities and the value of the collateral held by the Fund, including the value of the investments made with cash collateral, is less than the value of securities. These events could also trigger adverse tax consequences to the Fund.</li></ul> Shareholder Fees (fees paid directly from your investment) Fund Overview Key Facts about BlackRock Core Bond Portfolio Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) 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 Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 739% of the average value of its portfolio. Principal Investment Strategies of the Fund The Core Bond Fund normally invests at least 80% of its assets in bonds and maintains an average portfolio duration that is within ±20% of the duration of the benchmark. As of December 31, 2012, the average duration of the benchmark, the Barclays U.S. Aggregate Bond Index, was 4.5 years, as calculated by BlackRock. The Core Bond Fund may invest up to 25% of its assets in assets of foreign issuers, of which 10% (as a percentage of the Fund’s assets) may be invested in emerging markets issuers. Up to 10% of the Core Bond Fund’s assets may be exposed to non-US currency risk. A bond of a foreign issuer, including an emerging market issuer, will not count toward the 10% limit on non-US currency exposure if the bond is either (i) US dollar-denominated or (ii) non-US dollar-denominated, but hedged back to US dollars. The Core Bond Fund only buys securities that are rated investment grade at the time of purchase by at least one major rating agency or determined by the management team to be of similar quality. Split rated bonds will be considered to have the higher credit rating. The management team evaluates sectors of the bond market and individual securities within these sectors. The management team selects bonds from several sectors including: U.S. Treasuries and agency securities, commercial and residential mortgage-backed securities, collateralized mortgage obligations (“CMOs”), asset-backed securities and corporate bonds. The Core Bond Fund may buy or sell options or futures on a security or an index of securities, or enter into credit default swaps and interest rate or foreign currency transactions, including swaps (collectively, commonly known as derivatives). The Fund may use derivative instruments to hedge its investments or to seek to enhance returns. The Core Bond Fund may seek to obtain market exposure to the securities in which it primarily invests by entering into a series of purchase and sale contracts or by using other investment techniques (such as reverse repurchase agreements or dollar rolls). The Core Bond Fund may engage in active and frequent trading of portfolio securities to achieve its principal investment strategies. 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. <ul type="square"><li style="margin-left:-20px">Borrowing Risk — Borrowing may exaggerate changes in the net asset value of Fund shares and in the return on the Fund’s portfolio. Borrowing will cost the Fund interest expense and other fees. The costs of borrowing may reduce the Fund’s return. Borrowing may cause the Fund to liquidate positions when it may not be advantageous to do so to satisfy its obligations.</li></ul><ul type="square"><li style="margin-left:-20px"> Credit Risk — Credit risk refers to the possibility that the issuer of a security will not be able to make payments of interest and principal when due. Changes in an issuer’s credit rating or the market’s perception of an issuer’s creditworthiness may also affect the value of the Fund’s investment in that issuer.</li></ul><ul type="square"><li style="margin-left:-20px"> Derivatives Risk — The Fund’s use of derivatives may reduce the Fund’s 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. Derivatives are also subject to counterparty risk, which is the risk that the other party in the transaction will not fulfill its contractual obligation. A risk of the Fund’s use of derivatives is that the fluctuations in their values may not correlate perfectly with the overall securities markets. 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. Derivatives may give rise to a form of leverage and may expose the Fund to greater risk and increase its costs. 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.</li></ul><ul type="square"><li style="margin-left:-20px"> Dollar Rolls Risk — Dollar rolls involve the risk that the market value of the securities that the Fund is committed to buy may decline below the price of the securities the Fund has sold. These transactions may involve leverage.</li></ul><ul type="square"><li style="margin-left:-20px"> 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.</li></ul><ul type="square"><li style="margin-left:-20px"> Extension Risk — When interest rates rise, certain obligations will be paid off by the obligor more slowly than anticipated, causing the value of these securities to fall.</li></ul><ul type="square"><li style="margin-left:-20px"> 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:</li></ul> <ul type="square"><li style="margin-left:+15px"><blockquote>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.</blockquote></li></ul><ul type="square"><li style="margin-left:+15px"><blockquote>Changes in foreign currency exchange rates can affect the value of the Fund’s portfolio.</blockquote></li></ul><ul type="square"><li style="margin-left:+15px"><blockquote>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.</blockquote></li></ul><ul type="square"><li style="margin-left:+15px"><blockquote>The governments of certain countries may prohibit or impose substantial restrictions on foreign investments in their capital markets or in certain industries.</blockquote></li></ul><ul type="square"><li style="margin-left:+15px"><blockquote> 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.</blockquote></li></ul><ul type="square"><li style="margin-left:+15px"><blockquote> 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.</blockquote></li></ul><ul type="square"><li style="margin-left:-20px">High Portfolio Turnover Risk — The Fund may engage in active and frequent trading of its portfolio securities. High portfolio turnover (more than 100%) may result in increased transaction costs to the Fund, including brokerage commissions, dealer mark-ups and other transaction costs on the sale of the securities and on reinvestment in other securities. The sale of Fund portfolio securities may result in the realization and/or distribution to shareholders of higher capital gains or losses as compared to a fund with less active trading policies. These effects of higher than normal portfolio turnover may adversely affect Fund performance. In addition, investment in mortgage dollar rolls and participation in TBA transactions may significantly increase the Fund’s portfolio turnover rate. A TBA transaction is a method of trading mortgage-backed securities where the buyer and seller agree upon general trade parameters such as agency, settlement date, par amount, and price.</li></ul><ul type="square"><li style="margin-left:-20px"> Interest Rate Risk — 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.</li></ul><ul type="square"><li style="margin-left:-20px"> 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 Fund’s portfolio will be magnified when the Fund uses leverage.</li></ul><ul type="square"><li style="margin-left:-20px"> Liquidity Risk — Liquidity risk exists when particular investments are difficult to purchase or sell. The Fund’s 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 Fund’s 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.</li></ul><ul type="square"><li style="margin-left:-20px"> 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.</li></ul><ul type="square"><li style="margin-left:-20px"> Mortgage- and Asset-Backed Securities Risks — Mortgage- and asset-backed securities represent interests in “pools” of mortgages or other assets, including consumer loans or receivables held in trust. Mortgage- and asset-backed securities are subject to credit, interest rate, prepayment and extension risks. These securities also are subject to risk of default on the underlying mortgage or asset, particularly during periods of economic downturn. Small movements in interest rates (both increases and decreases) may quickly and significantly reduce the value of certain mortgage-backed securities.</li></ul><ul type="square"><li style="margin-left:-20px"> 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. </li></ul><ul type="square"><li style="margin-left:-20px"> 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.</li></ul><ul type="square"><li style="margin-left:-20px"> Reverse Repurchase Agreements Risk — Reverse repurchase agreements involve the sale of securities held by the Fund with an agreement to repurchase the securities at an agreed-upon price, date and interest payment. Reverse repurchase agreements involve the risk that the other party may fail to return the securities in a timely manner or at all. The Fund could lose money if it is unable to recover the securities and the value of the collateral held by the Fund, including the value of the investments made with cash collateral, is less than the value of securities. These events could also trigger adverse tax consequences to the Fund.</li></ul><ul type="square"><li style="margin-left:-20px"> U.S. Government Issuer Risk — Treasury obligations may differ in their interest rates, maturities, times of issuance and other characteristics. Obligations of U.S. Government agencies and authorities are supported by varying degrees of credit but generally are not backed by the full faith and credit of the U.S. Government. No assurance can be given that the U.S. Government will provide financial support to its agencies and authorities if it is not obligated by law to do so.</li></ul> Service Shares ANNUAL TOTAL RETURNS BlackRock Core Bond Portfolio As of 12/31 The High Yield Fund invests primarily in non-investment grade bonds with maturities of ten years or less. The High Yield Fund normally invests at least 80% of its assets in high yield bonds. The high yield securities (commonly called “junk bonds”) acquired by the High Yield Fund will generally be in the lower rating categories of the major rating agencies (BB or lower by Standard & Poor’s (“S&P”) or Ba or lower by Moody’s Investor Services (“Moody’s”)) or will be determined by the High Yield Fund management team to be of similar quality. Split rated bonds will be considered to have the higher credit rating. The Fund may invest up to 30% of its assets in non-dollar denominated bonds of issuers located outside of the United States. The High Yield Fund’s investment in non-dollar denominated bonds may be on a currency hedged or unhedged basis. The Fund may also invest in convertible and preferred securities. Convertible securities will be counted toward the Fund’s 80% policy to the extent they have characteristics similar to the securities included within that policy. To add additional diversification, the management team can invest in a wide range of securities including corporate bonds, mezzanine investments, collateralized bond obligations, bank loans and mortgage-backed and asset-backed securities. The High Yield Fund can also invest, to the extent consistent with its investment objective, in non-U.S. and emerging market securities and currencies. The High Yield Fund may invest in securities of any rating, and may invest up to 10% of its assets (measured at the time of investment) in distressed securities that are in default or the issuers of which are in bankruptcy. The High Yield Fund may buy or sell options or futures on a security or an index of securities, or enter into credit default swaps and interest rate or foreign currency transactions, including swaps (collectively, commonly known as derivatives). The Fund may use derivative instruments to hedge its investments or to seek to enhance returns. The High Yield Fund may seek to obtain market exposure to the securities in which it primarily invests by entering into a series of purchase and sale contracts or by using other investment techniques (such as reverse repurchase agreements or dollar rolls). The High Yield Fund may engage in active and frequent trading of portfolio securities to achieve its principal investment strategies. As of 12/31/12 Average Annual Total Returns 0 0 0.006 -0.0013 0.0047 February 1, 2014 7.39 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 information shows you how the Fund’s performance has varied year by year and provides some indication of the risks of investing in the Fund. 800-882-0052 http://www.blackrock.com/funds 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. 0.04 0.01 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 investor’s 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. highest return 0.0013 2009-06-30 Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) 0.1726 lowest return 2008-12-31 -0.2085 48 179 322 738 0.0043 0.0043 0.0075 0.008 0.0038 0.0034 0.0001 0.0001 0.0157 0.0158 -0.001 -0.0001 0.0147 0.0157 0.0048 0.0048 0.0048 0.0048 0.001 0.009 0.004 0.009 0.076 0.0542 0.0028 0.0039 0.0024 0.0833 0.0039 0.1459 -0.0792 0.059 0.0002 0.0002 0.0002 0.0433 0.0002 0.0241 0.0468 0.0446 0.0026 0.0037 0.0022 0.0037 0.0086 0.0177 0.0112 0.0177 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 Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 69% of the average value of its portfolio. 0.076 0.0634 0.0492 0.0421 0.0533 0.036 0.0351 0.0595 0.0484 0.0309 0.0309 0.0518 Principal Investment Strategies of the Fund <div style="display:none">~ http://www.blackrock.com/role/ScheduleAnnualFundOperatingExpensesBLACKROCKCOREBONDPORTFOLIOBLACKROCKSHARES column period compact * ~</div> <div style="display:none">~ http://www.blackrock.com/role/ScheduleAverageAnnualTotalReturnsTransposedBLACKROCKCOREBONDPORTFOLIO column period compact * ~</div> 187 580 214 280 372 857 356 557 <div style="display:none">~ http://www.blackrock.com/role/ScheduleExpenseExampleTransposedBLACKROCKCOREBONDPORTFOLIOBLACKROCKSHARES column period compact * ~</div> <div style="display:none">~ http://www.blackrock.com/role/ScheduleAnnualFundOperatingExpensesBLACKROCKLOWDURATIONBONDPORTFOLIO column period compact * ~</div> <div style="display:none">~ http://www.blackrock.com/role/ScheduleAnnualTotalReturnsBLACKROCKCOREBONDPORTFOLIOBLACKROCKSHARESBarChart column period compact * ~</div> highest return lowest return <div style="display:none">~ http://www.blackrock.com/role/ScheduleAverageAnnualTotalReturnsTransposedBLACKROCKCOREBONDPORTFOLIOBLACKROCKSHARES column period compact * ~</div> 2009-09-30 2008-09-30 0.0605 -0.0586 572 1159 617 959 1150 2084 1363 2084 Portfolio Turnover: Principal Risks of Investing in the Fund 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 Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: 550 260 786 498 1046 859 1859 1877 150 160 486 498 846 859 1859 1877 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 Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 69% of the average value of its portfolio. Principal Investment Strategies of the Fund The High Yield Fund invests primarily in non-investment grade bonds with maturities of ten years or less. The High Yield Fund normally invests at least 80% of its assets in high yield bonds. The high yield securities (commonly called “junk bonds”) acquired by the High Yield Fund will generally be in the lower rating categories of the major rating agencies (BB or lower by Standard & Poor’s (“S&P”) or Ba or lower by Moody’s Investor Services (“Moody’s”)) or will be determined by the High Yield Fund management team to be of similar quality. Split rated bonds will be considered to have the higher credit rating. The Fund may invest up to 30% of its assets in non-dollar denominated bonds of issuers located outside of the United States. The High Yield Fund’s investment in non-dollar denominated bonds may be on a currency hedged or unhedged basis. The Fund may also invest in convertible and preferred securities. Convertible securities will be counted toward the Fund’s 80% policy to the extent they have characteristics similar to the securities included within that policy. To add additional diversification, the management team can invest in a wide range of securities including corporate bonds, mezzanine investments, collateralized bond obligations, bank loans and mortgage-backed and asset-backed securities. The High Yield Fund can also invest, to the extent consistent with its investment objective, in non-U.S. and emerging market securities and currencies. The High Yield Fund may invest in securities of any rating, and may invest up to 10% of its assets (measured at the time of investment) in distressed securities that are in default or the issuers of which are in bankruptcy. The High Yield Fund may buy or sell options or futures on a security or an index of securities, or enter into credit default swaps and interest rate or foreign currency transactions, including swaps (collectively, commonly known as derivatives). The Fund may use derivative instruments to hedge its investments or to seek to enhance returns. The High Yield Fund may seek to obtain market exposure to the securities in which it primarily invests by entering into a series of purchase and sale contracts or by using other investment techniques (such as reverse repurchase agreements or dollar rolls). The High Yield Fund may engage in active and frequent trading of portfolio securities to achieve its principal investment strategies. Principal Risks of Investing in the Fund 180 114 180 557 356 557 959 617 959 2084 1363 2084 0.0171 0.0118 0.0136 0.0374 0.0549 -0.0913 0.1372 0.0534 0.0203 0.0501 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. <ul type="square"><li style="margin-left:-20px"> Bank Loan Risk — The market for bank loans may not be highly liquid and a Fund may have difficulty selling them. These investments expose a Fund to the credit risk of both the financial institution and the underlying borrower.</li></ul><ul type="square"><li style="margin-left:-20px"> Collateralized Bond Obligation Risk — The pool of high yield securities underlying collateralized bond obligations is typically separated in groupings called tranches representing different degrees of credit quality. The higher quality tranches have greater degrees of protection and pay lower interest rates. The lower tranches, with greater risk, pay higher interest rates.</li></ul><ul type="square"><li style="margin-left:-20px"> 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 issuer’s credit rating or the market’s perception of the issuer’s 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.</li></ul><ul type="square"><li style="margin-left:-20px"> Credit Risk — Credit risk refers to the possibility that the issuer of a security will not be able to make payments of interest and principal when due. Changes in an issuer’s credit rating or the market’s perception of an issuer’s creditworthiness may also affect the value of the Fund’s investment in that issuer.</li></ul><ul type="square"><li style="margin-left:-20px"> Derivatives Risk — The Fund’s use of derivatives may reduce the Fund’s 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. Derivatives are also subject to counterparty risk, which is the risk that the other party in the transaction will not fulfill its contractual obligation. A risk of the Fund’s use of derivatives is that the fluctuations in their values may not correlate perfectly with the overall securities markets. 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. Derivatives may give rise to a form of leverage and may expose the Fund to greater risk and increase its costs. 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.</li></ul><ul type="square"><li style="margin-left:-20px"> 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.</li></ul><ul type="square"><li style="margin-left:-20px"> Dollar Rolls Risk — Dollar rolls involve the risk that the market value of the securities that the Fund is committed to buy may decline below the price of the securities the Fund has sold. These transactions may involve leverage.</li></ul><ul type="square"><li style="margin-left:-20px"> 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.</li></ul><ul type="square"><li style="margin-left:-20px"> Extension Risk — When interest rates rise, certain obligations will be paid off by the obligor more slowly than anticipated, causing the value of these securities to fall.</li></ul><ul type="square"><li style="margin-left:-20px"> 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:</li></ul> <ul type="square"><li style="margin-left:+15px"><blockquote>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.</blockquote></li></ul><ul type="square"><li style="margin-left:+15px"><blockquote>Changes in foreign currency exchange rates can affect the value of the Fund’s portfolio.</blockquote></li></ul><ul type="square"><li style="margin-left:+15px"><blockquote>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.</blockquote></li></ul><ul type="square"><li style="margin-left:+15px"><blockquote>The governments of certain countries may prohibit or impose substantial restrictions on foreign investments in their capital markets or in certain industries.</blockquote></li></ul><ul type="square"><li style="margin-left:+15px"><blockquote> 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.</blockquote></li></ul><ul type="square"><li style="margin-left:+15px"><blockquote> 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.</blockquote></li></ul><ul type="square"><li style="margin-left:-20px"> High Portfolio Turnover Risk — The Fund may engage in active and frequent trading of its portfolio securities. High portfolio turnover (more than 100%) may result in increased transaction costs to the Fund, including brokerage commissions, dealer mark-ups and other transaction costs on the sale of the securities and on reinvestment in other securities. The sale of Fund portfolio securities may result in the realization and/or distribution to shareholders of higher capital gains or losses as compared to a fund with less active trading policies. These effects of higher than normal portfolio turnover may adversely affect Fund performance.</li></ul><ul type="square"><li style="margin-left:-20px"> Interest Rate Risk — 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.</li></ul><ul type="square"><li style="margin-left:-20px"> 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.</li></ul><ul type="square"><li style="margin-left:-20px"> 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 Fund’s portfolio will be magnified when the Fund uses leverage.</li></ul><ul type="square"><li style="margin-left:-20px"> Liquidity Risk — Liquidity risk exists when particular investments are difficult to purchase or sell. The Fund’s 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 Fund’s 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.</li></ul><ul type="square"><li style="margin-left:-20px"> 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.</li></ul><ul type="square"><li style="margin-left:-20px"> Mezzanine Securities Risk — Mezzanine securities carry the risk that the issuer will not be able to meet its obligations and that the equity securities purchased with the mezzanine investments may lose value.</li></ul><ul type="square"><li style="margin-left:-20px"> Mortgage- and Asset-Backed Securities Risks — Mortgage- and asset-backed securities represent interests in “pools” of mortgages or other assets, including consumer loans or receivables held in trust. Mortgage- and asset-backed securities are subject to credit, interest rate, prepayment and extension risks. These securities also are subject to risk of default on the underlying mortgage or asset, particularly during periods of economic downturn. Small movements in interest rates (both increases and decreases) may quickly and significantly reduce the value of certain mortgage-backed securities.</li></ul><ul type="square"><li style="margin-left:-20px"> Preferred Securities Risk — Preferred securities may pay fixed or adjustable rates of return. Preferred securities are subject to issuer-specific and market risks applicable generally to equity securities. In addition, a company’s preferred securities generally pay dividends only after the company makes required payments to holders of its bonds and other debt. For this reason, the value of preferred securities will usually react more strongly than bonds and other debt to actual or perceived changes in the company’s financial condition or prospects. Preferred securities of smaller companies may be more vulnerable to adverse developments than preferred stock of larger companies.</li></ul><ul type="square"><li style="margin-left:-20px"> 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.</li></ul><ul type="square"><li style="margin-left:-20px">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.</li></ul><ul type="square"><li style="margin-left:-20px"> Reverse Repurchase Agreements Risk — Reverse repurchase agreements involve the sale of securities held by the Fund with an agreement to repurchase the securities at an agreed-upon price, date and interest payment. Reverse repurchase agreements involve the risk that the other party may fail to return the securities in a timely manner or at all. The Fund could lose money if it is unable to recover the securities and the value of the collateral held by the Fund, including the value of the investments made with cash collateral, is less than the value of securities. These events could also trigger adverse tax consequences to the Fund.</li></ul> 0.0393 0.0305 0.0254 0.0004 0.037 0.0302 0.0148 0.0292 0.0173 0.0178 0.0175 0.0281 0.0212 0.0287 You would pay the following expenses if you did not redeem your shares: 0.028 0.016 0.0168 0.0189 0.0259 0.019 0.0311 Performance Information The information shows you how the Fund’s performance has varied year by year and provides some indication of the risks of investing in the Fund. The table compares the Fund’s performance to that of the Barclays U.S. Corporate High Yield 2% Issuer Capped Index. Prior to October 2, 2006, Investor B1 and Investor C1 Share performance results are those of Institutional Shares (which have no distribution or service fees) restated to reflect Investor B1 and Investor C Share fees, respectively. 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 Fund’s investment manager and its affiliates had not waived or reimbursed certain Fund expenses during these periods, the Fund’s returns would have been lower. Updated information on the Fund’s performance can be obtained by visiting http://www.blackrock.com/funds or can be obtained by phone at 800-882-0052. The information shows you how the Fund’s performance has varied year by year and provides some indication of the risks of investing in the Fund. 800-882-0052 http://www.blackrock.com/funds As with all such investments, past performance (before and after taxes) is not an indication of future results. Investor B1 Shares ANNUAL TOTAL RETURNS BlackRock High Yield Bond Portfolio As of 12/31 During the ten-year period shown in the bar chart, the highest return for a quarter was 17.14% (quarter ended June 30, 2009) and the lowest return for a quarter was –20.97% (quarter ended December 31, 2008). Sales charges are not reflected in the bar chart. If they were, returns would be less than those shown. As of 12/31/12 Average Annual Total Returns However, the table includes all applicable fees and sales charges. 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 investor’s 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 B1 Shares only, and the after-tax returns for C1 Shares will vary. 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 investor’s 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 B1 Shares only, and the after-tax returns for C1 Shares will vary. Shareholder Fees (fees paid directly from your investment) 0.1215 0.0977 0.0781 0.1505 0.1578 0.084 0.0557 0.0541 0.0859 0.1045 0.0957 0.0663 0.0647 0.0949 0.106 Investment Objective The investment objective of the BlackRock Low Duration Bond Portfolio (the “Low Duration Fund” or the “Fund”) is to seek to maximize total return, consistent with income generation and prudent investment management. 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. Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) 0.2702 0.113 0.0306 0.1069 0.0195 -0.2838 0.5158 0.1747 0.024 0.1615 <div style="display:none">~ http://www.blackrock.com/role/ScheduleShareholderFeesBLACKROCKLOWDURATIONBONDPORTFOLIOInvestorA1,B3,C2,C3 column period compact * ~</div> highest return 2009-06-30 0.1714 lowest return 2008-12-31 -0.2097 <div style="display:none">~ http://www.blackrock.com/role/ScheduleAnnualFundOperatingExpensesBLACKROCKLOWDURATIONBONDPORTFOLIOInvestorA1,B3,C2,C3 column period compact * ~</div> 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 Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: You would pay the following expenses if you did not redeem your shares: 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 Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 203% of the average value of its portfolio. Principal Investment Strategies of the Fund Principal Risks of Investing in the Fund 0.0048 0.0025 0.0028 0.0002 0.0026 0.0101 -0.0014 0.0087 <div style="display:none">~ http://www.blackrock.com/role/ScheduleExpenseExampleTransposedBLACKROCKHIGHYIELDBONDPORTFOLIOB1,C1SHARES column period compact * ~</div> Performance Information The information shows you how the Fund’s performance has varied year by year and provides some indication of the risks of investing in the Fund. The table compares the Fund’s performance to that of the B of A Merrill Lynch 1-3 Year US Corporate and Government Index. Prior to October 2, 2006, the Low Duration Fund’s Investor A1 and Investor C2 Share performance results are those of Institutional Shares (which have no distribution or service fees) restated to reflect Fund’s Investor A1 and Investor C2 Share fees, respectively. The returns in the table for Investor B3 and Investor C3 Shares, which commenced operations on July 18, 2011, are based on the Fund’s Institutional Shares adjusted to reflect the applicable distribution and service (12b-1) fees. 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 Fund’s investment manager and its affiliates had not waived or reimbursed certain Fund expenses during these periods, the Fund’s returns would have been lower. Updated information on the Fund’s performance can be obtained by visiting http://www.blackrock.com/funds or can be obtained by phone at 800-882-0052. 89 Example: 308 544 1224 <div style="display:none">~ http://www.blackrock.com/role/ScheduleExpenseExampleTransposedBLACKROCKLOWDURATIONBONDPORTFOLIOInvestorA1,B3,C2,C3 column period compact * ~</div> 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 Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: <div style="display:none">~ http://www.blackrock.com/role/ScheduleExpenseExampleNoRedemptionTransposedBLACKROCKHIGHYIELDBONDPORTFOLIOB1,C1SHARES column period compact * ~</div> <div style="display:none">~ http://www.blackrock.com/role/ScheduleExpenseExampleNoRedemptionTransposedBLACKROCKLOWDURATIONBONDPORTFOLIOInvestorA1,B3,C2,C3 column period compact * ~</div> <div style="display:none">~ http://www.blackrock.com/role/ScheduleAnnualTotalReturnsBLACKROCKHIGHYIELDBONDPORTFOLIOB1,C1SHARESBarChart column period compact * ~</div> Principal Investment Strategies of the Fund 0.0158 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 investor’s 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 A1 Shares only, and the after-tax returns for Investor B3, Investor C2 and Investor C3 Shares will vary. 0.0107 0.0127 0.0366 0.0537 -0.0939 0.1353 0.0521 0.0188 0.0481 As of 12/31/12 Average Annual Total Returns During the ten-year period shown in the bar chart, the highest return for a quarter was 4.68% (quarter ended September 30, 2009) and the lowest return for a quarter was –6.24% (quarter ended December 31, 2008). 0.0481 0.04 0.0312 0.0148 Investor A1 Shares ANNUAL TOTAL RETURNS BlackRock Low Duration Bond Portfolio As of 12/31 <div style="display:none">~ http://www.blackrock.com/role/ScheduleAverageAnnualTotalReturnsTransposedBLACKROCKHIGHYIELDBONDPORTFOLIOB1,C1SHARES column period compact * ~</div> 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. <ul type="square"><li style="margin-left:-20px"> Borrowing Risk — Borrowing may exaggerate changes in the net asset value of Fund shares and in the return on the Fund’s portfolio. Borrowing will cost the Fund interest expense and other fees. The costs of borrowing may reduce the Fund’s return. Borrowing may cause the Fund to liquidate positions when it may not be advantageous to do so to satisfy its obligations.</li></ul><ul type="square"><li style="margin-left:-20px"> Credit Risk — Credit risk refers to the possibility that the issuer of a security will not be able to make payments of interest and principal when due. Changes in an issuer’s credit rating or the market’s perception of an issuer’s creditworthiness may also affect the value of the Fund’s investment in that issuer.</li></ul><ul type="square"><li style="margin-left:-20px"> Derivatives Risk — The Fund’s use of derivatives may reduce the Fund’s 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. Derivatives are also subject to counterparty risk, which is the risk that the other party in the transaction will not fulfill its contractual obligation. A risk of the Fund’s use of derivatives is that the fluctuations in their values may not correlate perfectly with the overall securities markets. 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. Derivatives may give rise to a form of leverage and may expose the Fund to greater risk and increase its costs. 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.</li></ul><ul type="square"><li style="margin-left:-20px"> Dollar Rolls Risk — Dollar rolls involve the risk that the market value of the securities that the Fund is committed to buy may decline below the price of the securities the Fund has sold. These transactions may involve leverage.</li></ul><ul type="square"><li style="margin-left:-20px"> 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.</li></ul><ul type="square"><li style="margin-left:-20px"> Extension Risk — When interest rates rise, certain obligations will be paid off by the obligor more slowly than anticipated, causing the value of these securities to fall.</li></ul><ul type="square"><li style="margin-left:-20px"> 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:</li></ul> <ul type="square"><li style="margin-left:+15px"><blockquote>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.</blockquote></li></ul><ul type="square"><li style="margin-left:+15px"><blockquote>Changes in foreign currency exchange rates can affect the value of the Fund’s portfolio.</blockquote></li></ul><ul type="square"><li style="margin-left:+15px"><blockquote>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.</blockquote></li></ul><ul type="square"><li style="margin-left:+15px"><blockquote>The governments of certain countries may prohibit or impose substantial restrictions on foreign investments in their capital markets or in certain industries.</blockquote></li></ul><ul type="square"><li style="margin-left:+15px"><blockquote> 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.</blockquote></li></ul><ul type="square"><li style="margin-left:+15px"><blockquote> 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.</blockquote></li></ul><ul type="square"><li style="margin-left:-20px"> High Portfolio Turnover Risk — The Fund may engage in active and frequent trading of its portfolio securities. High portfolio turnover (more than 100%) may result in increased transaction costs to the Fund, including brokerage commissions, dealer mark-ups and other transaction costs on the sale of the securities and on reinvestment in other securities. The sale of Fund portfolio securities may result in the realization and/or distribution to shareholders of higher capital gains or losses as compared to a fund with less active trading policies. These effects of higher than normal portfolio turnover may adversely affect Fund performance.</li></ul><ul type="square"><li style="margin-left:-20px"> Interest Rate Risk — 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.</li></ul><ul type="square"><li style="margin-left:-20px"> 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.</li></ul><ul type="square"><li style="margin-left:-20px"> 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 Fund’s portfolio will be magnified when the Fund uses leverage.</li></ul><ul type="square"><li style="margin-left:-20px"> Liquidity Risk — Liquidity risk exists when particular investments are difficult to purchase or sell. The Fund’s 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 Fund’s 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.</li></ul><ul type="square"><li style="margin-left:-20px"> 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.</li></ul><ul type="square"><li style="margin-left:-20px"> Mortgage- and Asset-Backed Securities Risks — Mortgage- and asset-backed securities represent interests in “pools” of mortgages or other assets, including consumer loans or receivables held in trust. Mortgage- and asset-backed securities are subject to credit, interest rate, prepayment and extension risks. These securities also are subject to risk of default on the underlying mortgage or asset, particularly during periods of economic downturn. Small movements in interest rates (both increases and decreases) may quickly and significantly reduce the value of certain mortgage-backed securities.</li></ul><ul type="square"><li style="margin-left:-20px"> 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.</li></ul><ul type="square"><li style="margin-left:-20px">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.</li></ul><ul type="square"><li style="margin-left:-20px"> Reverse Repurchase Agreements Risk — Reverse repurchase agreements involve the sale of securities held by the Fund with an agreement to repurchase the securities at an agreed-upon price, date and interest payment. Reverse repurchase agreements involve the risk that the other party may fail to return the securities in a timely manner or at all. The Fund could lose money if it is unable to recover the securities and the value of the collateral held by the Fund, including the value of the investments made with cash collateral, is less than the value of securities. These events could also trigger adverse tax consequences to the Fund.</li></ul><ul type="square"><li style="margin-left:-20px">U.S. Government Issuer Risk — Treasury obligations may differ in their interest rates, maturities, times of issuance and other characteristics. Obligations of U.S. Government agencies and authorities are supported by varying degrees of credit but generally are not backed by the full faith and credit of the U.S. Government. No assurance can be given that the U.S. Government will provide financial support to its agencies and authorities if it is not obligated by law to do so.</li></ul> 0.0181 0.0183 0.0287 The Low Duration Fund invests primarily in investment grade bonds and maintains an average portfolio duration that is within ±1 year of the duration of the benchmark. The benchmark has an average duration between 1 and 3 years. The Low Duration Fund normally invests at least 80% of its assets in debt securities. The Low Duration Fund may invest up to 10% of its assets in non-investment grade bonds (commonly called “high yield” or “junk bonds”). The Low Duration Fund may also invest up to 25% of its assets in assets of foreign issuers, of which 10% (as a percentage of the Fund’s assets) may be invested in emerging markets issuers. Up to 10% of the Low Duration Fund’s assets may be exposed to non-US currency risk. A bond of a foreign issuer, including an emerging market issuer, will not count toward the 10% limit on non-US currency exposure if the bond is either (i) US dollar-denominated or (ii) non-US dollar-denominated, but hedged back to US dollars. The management team evaluates sectors of the bond market and individual securities within these sectors. The management team selects bonds from several sectors including: U.S. Treasuries and agency securities, commercial and residential mortgage-backed securities, collateralized mortgage obligations (“CMOs”), asset-backed securities and corporate bonds. The Low Duration Fund may buy or sell options or futures on a security or an index of securities, or enter into credit default swaps and interest rate or foreign currency transactions, including swaps (collectively, commonly known as derivatives). The Fund may use derivative instruments to hedge its investments or to seek to enhance returns. The Fund may seek to obtain market exposure to the securities in which it primarily invests by entering into a series of purchase and sale contracts or by using other investment techniques (such as reverse repurchase agreements or dollar rolls). The Low Duration Fund may engage in active and frequent trading of portfolio securities to achieve its principal investment strategies. 0.0276 Fund Overview Key Facts about BlackRock Low Duration Bond Portfolio 0.0163 0.0168 0.0311 <div style="display:none">~ http://www.blackrock.com/role/ScheduleAnnualTotalReturnsBLACKROCKLOWDURATIONBONDPORTFOLIOInvestorA1,B3,C2,C3BarChart column period compact * ~</div> Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) Shareholder Fees (fees paid directly from your investment) <div style="display:none">~ http://www.blackrock.com/role/ScheduleAverageAnnualTotalReturnsTransposedBLACKROCKLOWDURATIONBONDPORTFOLIOInvestorA1,B3,C2,C3 column period compact * ~</div> <div style="display:none">~ http://www.blackrock.com/role/ScheduleAnnualFundOperatingExpensesBLACKROCKLOWDURATIONBONDPORTFOLIOSERVICESHARES column period compact * ~</div> 0.0294 <div style="display:none">~ http://www.blackrock.com/role/ScheduleExpenseExampleTransposedBLACKROCKLOWDURATIONBONDPORTFOLIOSERVICESHARES column period compact * ~</div> 0.69 <div style="display:none">~ http://www.blackrock.com/role/ScheduleAnnualFundOperatingExpensesBLACKROCKHIGHYIELDBONDPORTFOLIOB1,C1SHARES column period compact * ~</div> <div style="display:none">~ http://www.blackrock.com/role/ScheduleAnnualTotalReturnsBLACKROCKLOWDURATIONBONDPORTFOLIOSERVICESHARESBarChart column period compact * ~</div> <div style="display:none">~ http://www.blackrock.com/role/ScheduleShareholderFeesBLACKROCKHIGHYIELDBONDPORTFOLIOB1,C1SHARES column period compact * ~</div> Fund Overview Key Facts about BlackRock Low Duration Bond Portfolio Investment Objective The investment objective of the BlackRock Low Duration Bond Portfolio (the “Low Duration Fund” or the “Fund”) is to seek to maximize total return, consistent with income generation and prudent investment management. Fees and Expenses of the Fund This table describes the fees and expenses that you may pay if you buy and hold Service Shares of the Fund. Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) 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 Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 203% of the average value of its portfolio. Principal Investment Strategies of the Fund Fund Overview Key Facts about BlackRock High Yield Bond Portfolio The Low Duration Fund invests primarily in investment grade bonds and maintains an average portfolio duration that is within ±1 year of the duration of the benchmark. The benchmark has an average duration between 1 and 3 years. The Low Duration Fund normally invests at least 80% of its assets in debt securities. The Low Duration Fund may invest up to 10% of its assets in non-investment grade bonds (commonly called “high yield” or “junk bonds”). The Low Duration Fund may also invest up to 25% of its assets in assets of foreign issuers, of which 10% (as a percentage of the Fund’s assets) may be invested in emerging markets issuers. Up to 10% of the Low Duration Fund’s assets may be exposed to non-US currency risk. A bond of a foreign issuer, including an emerging market issuer, will not count toward the 10% limit on non-US currency exposure if the bond is either (i) US dollar-denominated or (ii) non-US dollar-denominated, but hedged back to US dollars. The management team evaluates sectors of the bond market and individual securities within these sectors. The management team selects bonds from several sectors including: U.S. Treasuries and agency securities, commercial and residential mortgage-backed securities, collateralized mortgage obligations (“CMOs”), asset-backed securities and corporate bonds. The Low Duration Fund may buy or sell options or futures on a security or an index of securities, or enter into credit default swaps and interest rate or foreign currency transactions, including swaps (collectively, commonly known as derivatives). The Fund may use derivative instruments to hedge its investments or to seek to enhance returns. The Fund may seek to obtain market exposure to the securities in which it primarily invests by entering into a series of purchase and sale contracts or by using other investment techniques (such as reverse repurchase agreements or dollar rolls). The Low Duration Fund may engage in active and frequent trading of portfolio securities to achieve its principal investment strategies. 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. <ul type="square"><li style="margin-left:-20px"> Borrowing Risk — Borrowing may exaggerate changes in the net asset value of Fund shares and in the return on the Fund’s portfolio. Borrowing will cost the Fund interest expense and other fees. The costs of borrowing may reduce the Fund’s return. Borrowing may cause the Fund to liquidate positions when it may not be advantageous to do so to satisfy its obligations. </li></ul> <ul type="square"><li style="margin-left:-20px"> Credit Risk — Credit risk refers to the possibility that the issuer of a security will not be able to make payments of interest and principal when due. Changes in an issuer’s credit rating or the market’s perception of an issuer’s creditworthiness may also affect the value of the Fund’s investment in that issuer. </li></ul> <ul type="square"><li style="margin-left:-20px"> Derivatives Risk — The Fund’s use of derivatives may reduce the Fund’s 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. Derivatives are also subject to counterparty risk, which is the risk that the other party in the transaction will not fulfill its contractual obligation. A risk of the Fund’s use of derivatives is that the fluctuations in their values may not correlate perfectly with the overall securities markets. 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. Derivatives may give rise to a form of leverage and may expose the Fund to greater risk and increase its costs. 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. </li></ul> <ul type="square"><li style="margin-left:-20px"> Dollar Rolls Risk — Dollar rolls involve the risk that the market value of the securities that the Fund is committed to buy may decline below the price of the securities the Fund has sold. These transactions may involve leverage. </li></ul> <ul type="square"><li style="margin-left:-20px"> 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. </li></ul> <ul type="square"><li style="margin-left:-20px"> Extension Risk — When interest rates rise, certain obligations will be paid off by the obligor more slowly than anticipated, causing the value of these securities to fall. </li></ul> <ul type="square"><li style="margin-left:-20px"> 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: </li></ul> <ul type="square"><li style="margin-left:+15px"><blockquote>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. </blockquote></li></ul> <ul type="square"><li style="margin-left:+15px"><blockquote> Changes in foreign currency exchange rates can affect the value of the Fund’s portfolio. </blockquote></li></ul> <ul type="square"><li style="margin-left:+15px"><blockquote> 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. </blockquote></li></ul> <ul type="square"><li style="margin-left:+15px"><blockquote>The governments of certain countries may prohibit or impose substantial restrictions on foreign investments in their capital markets or in certain industries. </blockquote></li></ul> <ul type="square"><li style="margin-left:+15px"><blockquote>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. </blockquote></li></ul> <ul type="square"><li style="margin-left:+15px"><blockquote>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. </blockquote></li></ul> <ul type="square"><li style="margin-left:-20px">High Portfolio Turnover Risk — The Fund may engage in active and frequent trading of its portfolio securities. High portfolio turnover (more than 100%) may result in increased transaction costs to the Fund, including brokerage commissions, dealer mark-ups and other transaction costs on the sale of the securities and on reinvestment in other securities. The sale of Fund portfolio securities may result in the realization and/or distribution to shareholders of higher capital gains or losses as compared to a fund with less active trading policies. These effects of higher than normal portfolio turnover may adversely affect Fund performance. </li></ul> <ul type="square"><li style="margin-left:-20px">Interest Rate Risk — 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. </li></ul> <ul type="square"><li style="margin-left:-20px">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. </li></ul> <ul type="square"><li style="margin-left:-20px">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 Fund’s portfolio will be magnified when the Fund uses leverage. </li></ul> <ul type="square"><li style="margin-left:-20px">Liquidity Risk — Liquidity risk exists when particular investments are difficult to purchase or sell. The Fund’s 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 Fund’s 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. </li></ul> <ul type="square"><li style="margin-left:-20px">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. </li></ul> <ul type="square"><li style="margin-left:-20px">Mortgage- and Asset-Backed Securities Risks — Mortgage- and asset-backed securities represent interests in “pools” of mortgages or other assets, including consumer loans or receivables held in trust. Mortgage- and asset-backed securities are subject to credit, interest rate, prepayment and extension risks. These securities also are subject to risk of default on the underlying mortgage or asset, particularly during periods of economic downturn. Small movements in interest rates (both increases and decreases) may quickly and significantly reduce the value of certain mortgage-backed securities. </li></ul> <ul type="square"><li style="margin-left:-20px">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. </li></ul> <ul type="square"><li style="margin-left:-20px">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. </li></ul> <ul type="square"><li style="margin-left:-20px">Reverse Repurchase Agreements Risk — Reverse repurchase agreements involve the sale of securities held by the Fund with an agreement to repurchase the securities at an agreed-upon price, date and interest payment. Reverse repurchase agreements involve the risk that the other party may fail to return the securities in a timely manner or at all. The Fund could lose money if it is unable to recover the securities and the value of the collateral held by the Fund, including the value of the investments made with cash collateral, is less than the value of securities. These events could also trigger adverse tax consequences to the Fund. </li></ul> <ul type="square"><li style="margin-left:-20px">U.S. Government Issuer Risk — Treasury obligations may differ in their interest rates, maturities, times of issuance and other characteristics. Obligations of U.S. Government agencies and authorities are supported by varying degrees of credit but generally are not backed by the full faith and credit of the U.S. Government. No assurance can be given that the U.S. Government will provide financial support to its agencies and authorities if it is not obligated by law to do so. </li></ul> 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 Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: Performance Information <div style="display:none">~ http://www.blackrock.com/role/ScheduleAverageAnnualTotalReturnsTransposedBLACKROCKLOWDURATIONBONDPORTFOLIOSERVICESHARES column period compact * ~</div> The information shows you how the Fund’s performance has varied year by year and provides some indication of the risks of investing in the Fund. The table compares the Fund’s performance to that of the B of A Merrill Lynch 1-3 Year US Corporate and Government Index. 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 Fund’s investment manager and its affiliates had not waived or reimbursed certain Fund expenses during these periods, the Fund’s returns would have been lower. Updated information on the Fund’s performance can be obtained by visiting http://www.blackrock.com/funds or can be obtained by phone at 800-882-0052. Service Shares ANNUAL TOTAL RETURNS BlackRock Low Duration Bond Portfolio As of 12/31 During the ten-year period shown in the bar chart, the highest return for a quarter was 4.75% (quarter ended September 30, 2009) and the lowest return for a quarter was –6.28% (quarter ended December 31, 2008). As of 12/31/12 Average Annual Total Returns 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 investor’s 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. Investment Objective The investment objective of the BlackRock High Yield Bond Portfolio (the “High Yield Fund” or the “Fund”) is to seek to maximize total return, consistent with income generation and prudent investment management. Fees and Expenses of the Fund February 1, 2014 This table describes the fees and expenses that you may pay if you buy and hold BlackRock Shares of the Fund. 2.03 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 information shows you how the Fund’s performance has varied year by year and provides some indication of the risks of investing in the Fund. 800-882-0052 http://www.blackrock.com/funds 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. 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 investor’s 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. Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) highest return 2.03 2009-09-30 0.0475 Example: lowest return 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 Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: Portfolio Turnover: 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 information shows you how the Fund’s performance has varied year by year and provides some indication of the risks of investing in the Fund. 800-882-0052 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 Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 69% of the average value of its portfolio. http://www.blackrock.com/funds Principal Investment Strategies of the Fund As with all such investments, past performance (before and after taxes) is not an indication of future results. The High Yield Fund invests primarily in non-investment grade bonds with maturities of ten years or less. The High Yield Fund normally invests at least 80% of its assets in high yield bonds. The high yield securities (commonly called “junk bonds”) acquired by the High Yield Fund will generally be in the lower rating categories of the major rating agencies (BB or lower by Standard & Poor’s (“S&P”) or Ba or lower by Moody’s Investor Services (“Moody’s”)) or will be determined by the High Yield Fund management team to be of similar quality. Split rated bonds will be considered to have the higher credit rating. The Fund may invest up to 30% of its assets in non-dollar denominated bonds of issuers located outside of the United States. The High Yield Fund’s investment in non-dollar denominated bonds may be on a currency hedged or unhedged basis. The Fund may also invest in convertible and preferred securities. Convertible securities will be counted toward the Fund’s 80% policy to the extent they have characteristics similar to the securities included within that policy. To add additional diversification, the management team can invest in a wide range of securities including corporate bonds, mezzanine investments, collateralized bond obligations, bank loans and mortgage-backed and asset-backed securities. The High Yield Fund can also invest, to the extent consistent with its investment objective, in non-U.S. and emerging market securities and currencies. The High Yield Fund may invest in securities of any rating, and may invest up to 10% of its assets (measured at the time of investment) in distressed securities that are in default or the issuers of which are in bankruptcy. The High Yield Fund may buy or sell options or futures on a security or an index of securities, or enter into credit default swaps and interest rate or foreign currency transactions, including swaps (collectively, commonly known as derivatives). The Fund may use derivative instruments to hedge its investments or to seek to enhance returns. The High Yield Fund may seek to obtain market exposure to the securities in which it primarily invests by entering into a series of purchase and sale contracts or by using other investment techniques (such as reverse repurchase agreements or dollar rolls). The High Yield Fund may engage in active and frequent trading of portfolio securities to achieve its principal investment strategies. Sales charges are not reflected in the bar chart. If they were, returns would be less than those shown. Principal Risks of Investing in the Fund 0.69 However, the table includes all applicable fees and sales charges. 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 investor’s 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. You may lose part or all of your investment in the Fund or your investment may not perform as well as other similar investments. highest return 2009-09-30 0.0468 lowest return 2008-12-31 -0.0624 2008-12-31 -0.0628 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. <ul type="square"><li style="margin-left:-20px">Bank Loan Risk — The market for bank loans may not be highly liquid and a Fund may have difficulty selling them. These investments expose a Fund to the credit risk of both the financial institution and the underlying borrower.</li></ul> <ul type="square"><li style="margin-left:-20px">Collateralized Bond Obligation Risk — The pool of high yield securities underlying collateralized bond obligations is typically separated in groupings called tranches representing different degrees of credit quality. The higher quality tranches have greater degrees of protection and pay lower interest rates. The lower tranches, with greater risk, pay higher interest rates.</li></ul> <ul type="square"><li style="margin-left:-20px">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 issuer’s credit rating or the market’s perception of the issuer’s 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.</li></ul> <ul type="square"><li style="margin-left:-20px">Credit Risk — Credit risk refers to the possibility that the issuer of a security will not be able to make payments of interest and principal when due. Changes in an issuer’s credit rating or the market’s perception of an issuer’s creditworthiness may also affect the value of the Fund’s investment in that issuer.</li></ul> <ul type="square"><li style="margin-left:-20px">Derivatives Risk — The Fund’s use of derivatives may reduce the Fund’s 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. Derivatives are also subject to counterparty risk, which is the risk that the other party in the transaction will not fulfill its contractual obligation. A risk of the Fund’s use of derivatives is that the fluctuations in their values may not correlate perfectly with the overall securities markets. 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. Derivatives may give rise to a form of leverage and may expose the Fund to greater risk and increase its costs. 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.</li></ul> <ul type="square"><li style="margin-left:-20px">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.</li></ul> <ul type="square"><li style="margin-left:-20px">Dollar Rolls Risk — Dollar rolls involve the risk that the market value of the securities that the Fund is committed to buy may decline below the price of the securities the Fund has sold. These transactions may involve leverage.</li></ul> <ul type="square"><li style="margin-left:-20px">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.</li></ul> <ul type="square"><li style="margin-left:-20px">Extension Risk — When interest rates rise, certain obligations will be paid off by the obligor more slowly than anticipated, causing the value of these securities to fall.</li></ul> <ul type="square"><li style="margin-left:-20px">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:</li></ul> <ul type="square"><li style="margin-left:+15px"><blockquote>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.</blockquote></li></ul> <ul type="square"><li style="margin-left:+15px"><blockquote>Changes in foreign currency exchange rates can affect the value of the Fund’s portfolio.</blockquote></li></ul> <ul type="square"><li style="margin-left:+15px"><blockquote>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.</blockquote></li></ul> <ul type="square"><li style="margin-left:+15px"><blockquote>The governments of certain countries may prohibit or impose substantial restrictions on foreign investments in their capital markets or in certain industries.</blockquote></li></ul> <ul type="square"><li style="margin-left:+15px"><blockquote>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.</blockquote></li></ul> <ul type="square"><li style="margin-left:+15px"><blockquote>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.</blockquote></li></ul> <ul type="square"><li style="margin-left:-20px">High Portfolio Turnover Risk — The Fund may engage in active and frequent trading of its portfolio securities. High portfolio turnover (more than 100%) may result in increased transaction costs to the Fund, including brokerage commissions, dealer mark-ups and other transaction costs on the sale of the securities and on reinvestment in other securities. The sale of Fund portfolio securities may result in the realization and/or distribution to shareholders of higher capital gains or losses as compared to a fund with less active trading policies. These effects of higher than normal portfolio turnover may adversely affect Fund performance.</li></ul> <ul type="square"><li style="margin-left:-20px">Interest Rate Risk — 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.</li></ul> <ul type="square"><li style="margin-left:-20px">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.</li></ul> <ul type="square"><li style="margin-left:-20px">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 Fund’s portfolio will be magnified when the Fund uses leverage.</li></ul><ul type="square"><li style="margin-left:-20px">Liquidity Risk — Liquidity risk exists when particular investments are difficult to purchase or sell. The Fund’s 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 Fund’s 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.</li></ul> <ul type="square"><li style="margin-left:-20px">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.</li></ul> <ul type="square"><li style="margin-left:-20px">Mezzanine Securities Risk — Mezzanine securities carry the risk that the issuer will not be able to meet its obligations and that the equity securities purchased with the mezzanine investments may lose value.</li></ul> <ul type="square"><li style="margin-left:-20px">Mortgage- and Asset-Backed Securities Risks — Mortgage- and asset-backed securities represent interests in “pools” of mortgages or other assets, including consumer loans or receivables held in trust. Mortgage- and asset-backed securities are subject to credit, interest rate, prepayment and extension risks. These securities also are subject to risk of default on the underlying mortgage or asset, particularly during periods of economic downturn. Small movements in interest rates (both increases and decreases) may quickly and significantly reduce the value of certain mortgage-backed securities.</li></ul> <ul type="square"><li style="margin-left:-20px">Preferred Securities Risk — Preferred securities may pay fixed or adjustable rates of return. Preferred securities are subject to issuer-specific and market risks applicable generally to equity securities. In addition, a company’s preferred securities generally pay dividends only after the company makes required payments to holders of its bonds and other debt. For this reason, the value of preferred securities will usually react more strongly than bonds and other debt to actual or perceived changes in the company’s financial condition or prospects. Preferred securities of smaller companies may be more vulnerable to adverse developments than preferred stock of larger companies.</li></ul> <ul type="square"><li style="margin-left:-20px">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.</li></ul> <ul type="square"><li style="margin-left:-20px">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.</li></ul> <ul type="square"><li style="margin-left:-20px">Reverse Repurchase Agreements Risk — Reverse repurchase agreements involve the sale of securities held by the Fund with an agreement to repurchase the securities at an agreed-upon price, date and interest payment. Reverse repurchase agreements involve the risk that the other party may fail to return the securities in a timely manner or at all. The Fund could lose money if it is unable to recover the securities and the value of the collateral held by the Fund, including the value of the investments made with cash collateral, is less than the value of securities. These events could also trigger adverse tax consequences to the Fund.</li></ul> Performance Information The information shows you how the Fund’s performance has varied year by year and provides some indication of the risks of investing in the Fund. The table compares the Fund’s performance to that of the Barclays U.S. Corporate High Yield 2% Issuer Capped Index. 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 Fund’s investment manager and its affiliates had not waived or reimbursed certain Fund expenses during these periods, the Fund’s returns would have been lower. Updated information on the Fund’s performance can be obtained by visiting http://www.blackrock.com/funds or can be obtained by phone at 800-882-0052. BlackRock Shares ANNUAL TOTAL RETURNS BlackRock High Yield Bond Portfolio As of 12/31 During the ten-year period shown in the bar chart, the highest return for a quarter was 17.16% (quarter ended June 30, 2009) and the lowest return for a quarter was –20.79% (quarter ended December 31, 2008). 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 investor’s 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. As of 12/31/12 Average Annual Total Returns 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 investor’s 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. However, the table includes all applicable fees and sales charges. 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. The information shows you how the Fund’s performance has varied year by year and provides some indication of the risks of investing in the Fund. 800-882-0052 http://www.blackrock.com/funds 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 Total Annual Fund Operating Expenses do not correlate to the ratios of expenses to average net assets given in the Fund’s most recent annual report which does not include the Acquired Fund Fees and Expenses. 0.69 February 1, 2014 0.0043 0 0.0014 0.0001 0.0058 0.0058 59 186 324 726 0.1719 0.1443 0.1107 0.1578 0.0964 0.0649 0.0628 0.1045 0.1056 0.0738 0.0718 0.106 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 Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: -0.0581 0.2825 0.1238 0.0408 0.1168 0.0286 -0.2775 0.5289 0.1864 0.0315 0.1719 highest return 2009-06-30 0.1716 lowest return 2008-12-31 -0.2079 <div style="display:none">~ http://www.blackrock.com/role/ScheduleAnnualTotalReturnsBLACKROCKHIGHYIELDBONDPORTFOLIOBLACKROCKSHARESBarChart column period compact * ~</div> <div style="display:none">~ http://www.blackrock.com/role/ScheduleAnnualFundOperatingExpensesBLACKROCKHIGHYIELDBONDPORTFOLIOBLACKROCKSHARES column period compact * ~</div> <div style="display:none">~ http://www.blackrock.com/role/ScheduleExpenseExampleTransposedBLACKROCKHIGHYIELDBONDPORTFOLIOBLACKROCKSHARES column period compact * ~</div> <div style="display:none">~ http://www.blackrock.com/role/ScheduleAverageAnnualTotalReturnsTransposedBLACKROCKHIGHYIELDBONDPORTFOLIOBLACKROCKSHARES column period compact * ~</div> The Total Annual Fund Operating Expenses do not correlate to the ratios of expenses to average net assets given in the Fund's most recent annual report which does not include the Acquired Fund Fees and Expenses. A contingent deferred sales charge (“CDSC”) of 4.00% is assessed if shares are redeemed within two years. The CDSC for Investor B1 Shares decreases for redemptions made in subsequent years. After six years there is no CDSC on Investor B1 Shares. (See the section “Details about the Share Classes — Investor B1 and B2 Shares” in the Fund’s prospectus for the complete schedule of CDSCs.) After-tax returns are shown for Investor A1 Shares only, and the after-tax returns for Investor B3, Investor C2 and Investor C3 Shares will vary. Portfolio Turnover: A contingent deferred sales charge (“CDSC”) of 0.75% 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. A contingent deferred sales charge (“CDSC”) of 0.75% 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. A contingent deferred sales charge (“CDSC”) of 0.75% 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 $500,000 or more. The information shows you how the Fund’s performance has varied year by year and provides some indication of the risks of investing in the Fund. The table compares the Fund’s performance to that of the Barclays U.S. Corporate High Yield 2% Issuer Capped Index. 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 Fund’s investment manager and its affiliates had not waived or reimbursed certain Fund expenses during these periods, the Fund’s returns would have been lower. Updated information on the Fund’s performance can be obtained by visiting http://www.blackrock.com/funds or can be obtained by phone at 800-882-0052. A contingent deferred sales charge (“CDSC”) of 4.00% is assessed if shares are redeemed within two years. The CDSC for Investor B3 Shares decreases for redemptions made in subsequent years. After six years there is no CDSC on Investor B3 Shares. (See the section “Details about the Share Classes — Investor B3 Shares” in the Fund’s prospectus for the complete schedule of CDSCs.) A contingent deferred sales charge ("CDSC") of 0.75% 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. 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 Fund's prospectus for the complete schedule of CDSCs.) There is no CDSC on Investor C Shares after one year. The Total Annual Fund Operating Expenses do not correlate to the ratios of expenses to average net assets given in the Fund's most recent annual report which does not include the Acquired Fund Fees and Expenses. As described in the "Management of the Funds" section on page 47, BlackRock has contractually agreed to waive and/or reimburse fees or expenses in order to limit Total Annual Fund Operating Expenses After Fee Waivers and/or Expense Reimbursements (excluding Dividend Expense, Interest Expense, Acquired Fund Fees and Expenses and certain other Fund expenses) to 0.92% (for Investor A Shares), 1.72% (for Investor C Shares) and 0.70% (for Institutional Shares) of average daily net assets until February 1, 2014. The Fund may have to repay some of these waivers and reimbursements to BlackRock in the following two years. The contractual agreement may be terminated upon 90 days' notice by a majority of the non-interested trustees of the Fund or by a vote of a majority of the outstanding voting securities of the Fund. As described in the "Management of the Funds" section on page 35, BlackRock has contractually agreed to limit Total Annual Fund Operating Expenses After Fee Waivers and/or Expense Reimbursements (excluding Dividend Expense, Interest Expense, Acquired Fund Fees and Expenses and certain other Fund expenses) to 0.41% of average daily net assets until February 1, 2014. The contractual agreement may be terminated upon 90 days' notice by a majority of the non-interested trustees of the Fund or by a vote of a majority of the outstanding voting securities of the Fund. A contingent deferred sales charge ("CDSC") of 0.75% 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. A contingent deferred sales charge ("CDSC") of 0.75% 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 $500,000 or more. As described in the "Management of the Funds" section on page 35, BlackRock has contractually agreed to limit Total Annual Fund Operating Expenses After Fee Waivers and/or Expense Reimbursements (excluding Dividend Expense, Interest Expense, Acquired Fund Fees and Expenses and certain other Fund expenses) to 0.45% of average daily net assets until February 1, 2014. The contractual agreement may be terminated upon 90 days' notice by a majority of the non-interested trustees of the Fund or by a vote of a majority of the outstanding voting securities of the Fund. As described in the "Management of the Funds" section on page 35, BlackRock has contractually agreed to limit Total Annual Fund Operating Expenses After Fee Waivers and/or Expense Reimbursements (excluding Dividend Expense, Interest Expense, Acquired Fund Fees and Expenses and certain other Fund expenses) to 1.02% of average daily net assets until February 1, 2014. The contractual agreement may be terminated upon 90 days' notice by a majority of the non-interested trustees of the Fund or by a vote of a majority of the outstanding voting securities of the Fund. As described in the "Management of the Funds" section on page 47, BlackRock has contractually agreed to waive and/or reimburse fees or expenses in order to limit Total Annual Fund Operating Expenses After Fee Waivers and/or Expense Reimbursements (excluding Dividend Expense, Interest Expense, Acquired Fund Fees and Expenses and certain other Fund expenses) to 0.89% (for Investor A Shares), 1.73% (for Investor B Shares), 1.66% (for Investor C Shares), 0.56% (for Institutional Shares) and 1.17% (for Class R Shares) of average daily net assets until February 1, 2014. The contractual agreement may be terminated upon 90 day's notice by a majority of the non-interested trustees of the Fund or by a vote of a majority of the outstanding voting securities of the Fund. As described in the "Management of the Funds" section on page 35, BlackRock has contractually agreed to limit Total Annual Fund Operating Expenses After Fee Waivers and/or Expense Reimbursements (excluding Dividend Expense, Interest Expense, Acquired Fund Fees and Expenses and certain other Fund expenses) to 0.93% of average daily net assets until February 1, 2014. The contractual agreement may be terminated upon 90 days' notice by a majority of the non-interested trustees of the Fund or by a vote of a majority of the outstanding voting securities of the Fund. 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 Fund's prospectus for the complete schedule of CDSCs.) As described in the "Management of the Funds" section on page 47, BlackRock has contractually agreed to waive and/or reimburse fees or expenses in order to limit Total Annual Fund Operating Expenses After Fee Waivers and/or Expense Reimbursements (excluding Dividend Expense, Interest Expense, Acquired Fund Fees and Expenses and certain other Fund expenses) to 0.81% (for Investor A Shares), 1.62% (for Investor B Shares) 1.53% (for Investor C Shares), 0.55% (for Institutional Shares) and 1.65% (for Class R Shares) of average daily net assets until February 1, 2014. The Fund may have to repay some of these waivers and reimbursements to BlackRock in the following two years. The contractual agreement may be terminated upon 90 days' notice by a majority of the non-interested trustees of the Fund or by a vote of a majority of the outstanding voting securities of the Fund. A contingent deferred sales charge ("CDSC") of 4.00% is assessed if shares are redeemed within two years. The CDSC for Investor B1 Shares decreases for redemptions made in subsequent years. After six years there is no CDSC on Investor B1 Shares. (See the section "Details about the Share Classes - Investor B1 and B2 Shares" in the Fund's prospectus for the complete schedule of CDSCs.) There is no CDSC on Investor C1 Shares after one year. 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 Fund's prospectus for the complete schedule of CDSCs.) There is no CDSC on Investor C2 and Investor C3 Shares after one year. The Total Annual Fund Operating Expenses do not correlate to the ratios of expenses to average net assets given in the Fund's most recent annual report which does not include the Acquired Fund Fees and Expenses. As described in the "Management of the Funds" section on page 33, BlackRock has contractually agreed to waive and/or reimburse fees or expenses in order to limit Total Annual Fund Operating Expenses After Fee Waivers and/or Expense Reimbursements (excluding Dividend Expense, Interest Expense, Acquired Fund Fees and Expenses and certain other Fund expenses) to 1.46% (for Investor B1 Shares) and 1.56% (for Investor C1 Shares) of average daily net assets until February 1, 2014. The Fund may have to repay some of these waivers and reimbursements to BlackRock in the following two years. The contractual agreement may be terminated upon 90 days' notice by a majority of the non-interested trustees of the Fund or by a vote of a majority of the outstanding voting securities of the Fund. As described in the "Management of the Funds" section on page 35, BlackRock has contractually agreed to limit Total Annual Fund Operating Expenses After Fee Waivers and/or Expense Reimbursements (excluding Dividend Expense, Interest Expense, Acquired Fund Fees and Expenses and certain other Fund expenses) to 0.85% of average daily net assets until February 1, 2014. The contractual agreement may be terminated upon 90 days' notice by a majority of the non-interested trustees of the Fund or by a vote of a majority of the outstanding voting securities of the Fund. As described in the "Management of the Funds" section on page 35, BlackRock has contractually agreed to limit Total Annual Fund Operating Expenses After Fee Waivers and/or Expense Reimbursements (excluding Dividend Expense, Interest Expense, Acquired Fund Fees and Expenses and certain other Fund expenses) to 0.58% of average daily net assets until February 1, 2014. The contractual agreement may be terminated upon 90 days' notice by a majority of the non-interested trustees of the Fund or by a vote of a majority of the outstanding voting securities of the Fund. A contingent deferred sales charge ("CDSC") of 4.00% is assessed if shares are redeemed within two years. The CDSC for Investor B3 Shares decreases for redemptions made in subsequent years. After six years there is no CDSC on Investor B3 Shares. (See the section "Details about the Share Classes - Investor B3 Shares" in the Fund's prospectus for the complete schedule of CDSCs.)