N-CSR 1 primary-document.htm
 
UNITED STATES
 SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM N-CSR
 
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
 
 
Investment Company Act file number: 811-23339
 
Name of Fund:  BlackRock Funds V
BlackRock Core Bond Portfolio
BlackRock GNMA Portfolio
BlackRock High Yield Bond Portfolio
BlackRock Impact Mortgage Fund (Formerly BlackRock U.S. Government Bond Portfolio)
BlackRock Income Fund
BlackRock Low Duration Bond Portfolio
BlackRock Sustainable High Yield Bond Fund
BlackRock Sustainable Low Duration Bond Fund
                                
     
 
Fund Address:   100 Bellevue Parkway, Wilmington, DE 19809
 
Name and address of agent for service:  John M. Perlowski, Chief Executive Officer, BlackRock Funds V, 55 East 52nd Street, New York, NY 10055
 
Registrant’s telephone number, including area code: (800) 441-7762
 
Date of fiscal year end: 09/30/2022
 
Date of reporting period: 09/30/2022
 
Item 1 – Report to Stockholders
(a)
   
The Report to Shareholders is attached herewith.
(b)
   
Not Applicable
September
30,
2022
Not
FDIC
Insured
-
May
Lose
Value
-
No
Bank
Guarantee
2022
Annual
Report
BlackRock
Funds
V
BlackRock
Core
Bond
Portfolio
BlackRock
High
Yield
Bond
Portfolio
BlackRock
Low
Duration
Bond
Portfolio
Dear
Shareholder,
The
12-month
reporting
period
as
of
September
30,
2022
saw
the
emergence
of
significant
challenges
that
disrupted
the
economic
recovery
and
strong
financial
markets
of
2021.
The
U.S.
economy
shrank
in
the
first
half
of
2022,
ending
the
run
of
robust
growth
that
followed
the
reopening
of
global
economies
and
the
development
of
COVID-19
vaccines.
Changes
in
consumer
spending
patterns
and
a
tight
labor
market
led
to
elevated
inflation,
which
reached
a
40-year
high.
Moreover,
while
the
foremost
effect
of
Russia’s
invasion
of
Ukraine
has
been
a
severe
humanitarian
crisis,
the
ongoing
war
continued
to
present
challenges
for
both
investors
and
policymakers.
Equity
prices
fell
as
interest
rates
rose,
particularly
weighing
on
relatively
high-valuation
growth
stocks
and
economically
sensitive
small-capitalization
stocks.
While
both
large-
and
small-capitalization
U.S.
stocks
fell,
declines
for
small-capitalization
U.S.
stocks
were
steeper.
Both
emerging
market
stocks
and
international
equities
from
developed
markets
fell
significantly,
pressured
by
rising
interest
rates
and
a
strengthening
U.S.
dollar.
The
10-year
U.S.
Treasury
yield
(which
is
inversely
related
to
bond
prices)
rose
notably
during
the
reporting
period
as
investors
reacted
to
higher
inflation
and
attempted
to
anticipate
its
impact
on
future
interest
rate
changes.
The
corporate
bond
market
also
faced
inflationary
headwinds,
and
increasing
uncertainty
led
to
higher
corporate
bond
spreads
(the
difference
in
yield
between
U.S.
Treasuries
and
similarly-dated
corporate
bonds).
The
U.S.
Federal
Reserve
(the
“Fed”),
acknowledging
that
inflation
is
proving
more
persistent
than
expected,
raised
interest
rates
five
times
while
indicating
that
additional
rate
hikes
were
likely.
Furthermore,
the
Fed
wound
down
its
bond-buying
programs
and
is
accelerating
the
reduction
of
its
balance
sheet.
As
investors
attempted
to
assess
the
Fed’s
future
trajectory,
the
Fed’s
statements
late
in
the
reporting
period
led
markets
to
believe
that
additional
tightening
is
likely
in
the
near
term.
The
pandemic’s
restructuring
of
the
economy
brought
an
ongoing
mismatch
between
supply
and
demand,
contributing
to
the
current
inflationary
regime.
While
growth
has
slowed
in
2022,
we
believe
that
taming
inflation
requires
a
more
dramatic
economic
decline
to
bring
demand
back
to
a
lower
level
that
is
more
in
line
with
the
economy’s
capacity.
The
Fed
has
been
raising
interest
rates
at
the
fastest
pace
in
decades,
and
seems
set
to
overtighten
in
its
effort
to
get
inflation
back
to
target.
With
this
in
mind,
we
believe
the
possibility
of
a
U.S.
recession
in
the
near-term
is
high,
and
the
outlook
for
Europe
and
the
U.K.
is
also
troubling.
Investors
should
expect
a
period
of
higher
volatility
as
markets
adjust
to
the
new
economic
reality
and
policymakers
attempt
to
adapt
to
rapidly
changing
conditions.
In
this
environment,
while
we
favor
an
overweight
to
equities
in
the
long-term,
the
market’s
concerns
over
excessive
rate
hikes
from
central
banks
moderate
our
outlook.
Rising
input
costs
and
a
deteriorating
economic
backdrop
in
China
and
Europe
are
likely
to
challenge
corporate
earnings,
so
we
are
underweight
equities
overall
in
the
near
term.
However,
we
see
better
opportunities
in
credit,
where
higher
spreads
provide
income
opportunities
and
partially
compensate
for
inflation
risk.
We
believe
that
investment-grade
corporates,
local-
currency
emerging
market
debt,
and
inflation-protected
bonds
(particularly
in
Europe)
offer
strong
opportunities
for
a
six-
to
twelve-month
horizon.
Overall,
our
view
is
that
investors
need
to
think
globally,
position
themselves
to
be
prepared
for
a
decarbonizing
economy,
and
be
nimble
as
market
conditions
change.
We
encourage
you
to
talk
with
your
financial
advisor
and
visit
blackrock.com
for
further
insight
about
investing
in
today’s
markets.
Sincerely,
Rob
Kapito
President,
BlackRock
Advisors,
LLC
The
Markets
in
Review
Rob
Kapito
President,
BlackRock
Advisors,
LLC
Past
performance
is
not
an
indication
of
future
results.
Index
performance
is
shown
for
illustrative
purposes
only.
You
cannot
invest
directly
in
an
index.
Total
Returns
as
of
September
30,
2022
6-Month
12-Month
U.S.
large
cap
equities
(S&P
500
®
Index)
(20.20
)%
(15.47
)%
U.S.
small
cap
equities
(Russell
2000
®
Index)
(19.01
)
(23.50
)
International
equities
(MSCI
Europe,
Australasia,
Far
East
Index)
(22.51
)
(25.13
)
Emerging
market
equities
(MSCI
Emerging
Markets
Index)
(21.70
)
(28.11
)
3-month
Treasury
bills
(ICE
BofA
3-Month
U.S.
Treasury
Bill
Index)
0.58
0.63
U.S.
Treasury
securities
(ICE
BofA
10-Year
U.S.
Treasury
Index)
(10.81
)
(16.20
)
U.S.
investment
grade
bonds
(Bloomberg
U.S.
Aggregate
Bond
Index)
(9.22
)
(14.60
)
Tax-exempt
municipal
bonds
(Bloomberg
Municipal
Bond
Index)
(6.30
)
(11.50
)
U.S.
high
yield
bonds
(Bloomberg
U.S.
Corporate
High
Yield
2%
Issuer
Capped
Index)
(10.42
)
(14.15
)
This
Page
is
not
Part
of
Your
Fund
Report
2
Table
of
Contents
Page
3
The
Markets
in
Review
...................................................................................................
2
Annual
Report:
Fund
Summaries
.......................................................................................................
4
The
Benefits
and
Risks
of
Leveraging
..........................................................................................
13
About
Fund
Performance
..................................................................................................
14
Disclosure
of
Expenses
...................................................................................................
15
Derivative
Financial
Instruments
.............................................................................................
15
Financial
Statements:
Schedules
of
Investments
...............................................................................................
16
Statements
of
Assets
and
Liabilities
.........................................................................................
110
Statements
of
Operations
................................................................................................
113
Statements
of
Changes
in
Net
Assets
........................................................................................
114
Financial
Highlights
.....................................................................................................
116
Notes
to
Financial
Statements
...............................................................................................
133
Report
of
Independent
Registered
Public
Accounting
Firm
..............................................................................
151
Important
Tax
Information
.................................................................................................
152
Disclosure
of
Investment
Advisory
Agreement
and
Sub-Advisory
Agreements
..................................................................
153
Trustee
and
Officer
Information
..............................................................................................
157
Additional
Information
....................................................................................................
160
Glossary
of
Terms
Used
in
this
Report
..........................................................................................
162
Fund
Summary
as
of
September
30,
2022
2022
BlackRock
Annual
Report
to
Shareholders
4
BlackRock
Core
Bond
Portfolio
Investment
Objective
BlackRock
Core
Bond
Portfolio’s
(the
“Fund”)
investment
objective
is
to
seek
to
realize
a
total
return
that
exceeds
that
of
the
reference
benchmark.
Portfolio
Management
Commentary
How
did
the
Fund
perform?
For
the
12-month
period
ended
September
30,
2022,
the
Fund
underperformed
its
benchmark,
the
Bloomberg
U.S.
Aggregate
Bond
Index.
What
factors
influenced
performance?
Holdings
of
structured
products,
U.S.
investment
grade
corporate
bonds
and
emerging
market
debt
were
the
primary
detractors
from
the
Fund’s
performance
relative
to
the
benchmark
over
the
period.
The
Fund’s
active
positioning
with
respect
to
duration
(sensitivity
to
interest
rate
changes)
was
the
most
significant
contributor
to
performance
relative
to
the
benchmark
as
Treasury
yields
rose
over
the
period.
Positioning
with
respect
to
foreign
currencies
also
proved
additive.
The
Fund
held
a
6.2%
cash
position
on
average
over
the
period
and
a
4.6%
cash
position
at
period
end.
For
much
of
the
period,
the
managers
were
underweight
duration
versus
the
benchmark
as
the
yield
curve
steepened,
while
also
holding
an
elevated
cash
position.
The
Fund’s
cash
position
did
not
have
a
material
impact
on
performance
during
the
period.
Describe
recent
portfolio
activity.
Early
in
the
reporting
period
the
Fund
shifted
towards
a
much
more
defensive
posture
given
a
challenging
macro
and
geopolitical
backdrop.
The
Fund
trimmed
exposure
to
more
credit
sensitive
sectors,
most
notably
emerging
market
debt,
while
holding
an
elevated
cash
position
and
elevated
exposure
to
high-quality
assets,
including
U.S.
investment
grade
corporate
bonds
and
agency
mortgage-backed
securities
(“MBS”).
In
the
second
quarter
of
2022,
the
Fund
tactically
reduced
U.S.
duration
given
elevated
interest
rate
volatility
and
yield
curve
steepening.
Within
investment
grade
corporate
bonds,
the
Fund
added
exposure
while
favoring
less-cyclical
sectors
given
elevated
credit
cycle
concerns
and
sticky
inflation.
Holdings
of
agency
MBS
were
trimmed
on
substantial
weakness
relative
to
other
spread
sectors,
while
emerging
market
exposure
was
kept
low
given
high
inflation
and
weakening
growth.
Entering
the
third
quarter
of
2022,
the
Fund
tactically
added
duration
on
the
front-
and
back-end
of
the
yield
curve
given
more
attractive
yield
levels
and
risk/reward
profiles.
The
Fund
rotated
across
select
spread
sectors
given
more
attractive
opportunities,
favoring
U.S.
investment
grade
corporate
bonds
given
attractive
valuations,
while
tactically
adding
to
agency
MBS.
In
addition,
the
Fund
held
a
core
allocation
to
securitized
assets
while
taking
a
defensive
posture
with
respect
to
emerging
markets.
Describe
portfolio
positioning
at
period
end.
At
period
end,
the
Fund
maintained
an
overall
underweight
to
duration.
Outside
of
the
United
States,
the
Fund
held
a
tactical
position
in
short-dated
U.K.
sovereign
bonds,
while
remaining
less
favorable
towards
European
sovereigns.
The
Fund
was
overweight
investment
grade
corporate
bonds
and
agency
MBS.
The
Fund
was
focused
on
the
top
of
the
capital
structure
within
structured
products
and
was
cautiously
positioned
with
respect
to
emerging
market
debt.
The
views
expressed
reflect
the
opinions
of
BlackRock
as
of
the
date
of
this
report
and
are
subject
to
change
based
on
changes
in
market,
economic
or
other
conditions.
These
views
are
not
intended
to
be
a
forecast
of
future
events
and
are
no
guarantee
of
future
results.
Fund
Summary
as
of
September
30,
2022
(continued)
5
Fund
Summary
BlackRock
Core
Bond
Portfolio