BlackRock Funds
SM
| Service
Shares
> BlackRock Managed Volatility
Portfolio
Fund
|
|
|
|
|
|
|
|
|
|
|
|
Service
Shares
|
BlackRock Managed Volatility Portfolio
|
|
|
|
|
|
|
|
|
|
|
|
PCBSX
|
Before you invest, you may want to review the Funds
prospectus, which contains more information about the Fund and its risks. You can find the Funds prospectus (including amendments and
supplements) and other information about the Fund, including the Funds statement of additional information and shareholder report, online at
http://www.blackrock.com/prospectus. You can also get this information at no cost by calling (800) 441-7762 or by sending an e-mail request to
prospectus.request@blackrock.com
, or from your financial professional. The Funds prospectus and statement of additional information, both
dated May 15, 2012, as amended November 6, 2012 and as may be further amended and supplemented from time to time, are incorporated by reference into
(legally made a part of) this Summary Prospectus.
This Summary Prospectus contains information you should know
before investing, including information about risks. Please read it before you invest and keep it for future reference.
The Securities and Exchange Commission has not approved or
disapproved these securities or passed upon the adequacy of this Summary Prospectus. Any representation to the contrary is a criminal
offense.
Not FDIC Insured No Bank Guarantee May Lose Value
|
|
|
|
Summary Prospectus
The investment objective of BlackRock Managed Volatility
Portfolio, formerly BlackRock Asset Allocation Portfolio (Managed Volatility Portfolio or the Fund), a series of BlackRock
Funds
SM
(the Trust), is to seek total return.
Fees and Expenses of the
Fund
This table describes the fees and expenses that you may pay if you
buy and hold shares of Managed Volatility Portfolio.
Annual Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your investment)
|
|
|
|
Service Shares
|
Management Fee
1,2
|
|
|
|
|
0.55
|
%
|
Distribution and/or Service (12b-1) Fees
|
|
|
|
|
0.25
|
%
|
Other Expenses
|
|
|
|
|
0.40
|
%
|
Interest Expense
|
|
|
|
|
0.01%
|
|
Miscellaneous Other Expenses
1
|
|
|
|
|
0.39%
|
|
Acquired Fund Fees and Expenses
1,3
|
|
|
|
|
0.18
|
%
|
Total Annual Fund Operating Expenses
1,3
|
|
|
|
|
1.38
|
%
|
Fee Waivers and/or Expense Reimbursements
2
|
|
|
|
|
(0.05
|
)%
|
Total Annual Fund Operating Expenses After Fee Waivers and/or Expense
Reimbursements
2
|
|
|
|
|
1.33
|
%
|
1
|
|
Miscellaneous Other Expenses and Acquired
Fund Fees and Expenses have been restated to reflect current fees. The Management Fee payable by the Fund is based on assets estimated to be
attributable to the Funds direct investments in fixed-income and equity securities and instruments, including exchange-traded funds
(ETFs) advised by BlackRock Advisors, LLC (BlackRock) or other investment advisers, other investments and cash and cash
equivalents (including money market funds). BlackRock has contractually agreed to waive the Management Fee on assets estimated to be attributed to the
Funds investments in other equity, fixed-income and money market mutual funds managed by BlackRock or its affiliates (the
mutual funds).
|
2
|
|
As described in the Management of the
Fund section of the Funds prospectus on pages 69-73, BlackRock Advisors, LLC
(BlackRock) has contractually agreed to waive 0.05% of its Management Fee until June 1, 2013. In addition, 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 1.17% of average
daily net assets until June 1, 2013. The Fund may have to repay some of these waivers and reimbursements to BlackRock in the following two years. The
agreement may be terminated upon 90 days notice by a majority of the non-interested trustees of the Trust or by a vote of a majority of the
outstanding voting securities of the Fund.
|
3
|
|
The Total Annual Fund Operating Expenses do not
correlate to the ratio of expenses to average net assets given in the Funds most recent annual report which does not include the Acquired Fund
Fees and Expenses or the restatement of Miscellaneous Other Expenses or Acquired Fund Fees and Expenses.
|
Example:
This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the time periods indicated
and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the
Funds operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would
be:
|
|
|
|
1 Year
|
|
3 Years
|
|
5 Years
|
|
10 Years
|
Service Shares
|
|
|
|
$
|
135
|
|
|
$
|
432
|
|
|
$
|
750
|
|
|
$
|
1,653
|
|
Portfolio Turnover:
The Fund pays transaction costs, such as commissions, when it buys
and sells securities (or turns over its portfolio). A higher portfolio turnover may indicate higher transaction costs and may result in
higher taxes when shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example,
affect the Funds performance. During the most recent fiscal year, the Funds portfolio turnover rate was 401% of the average value of its
portfolio.
2
Principal Investment
Strategies of the Fund
Managed Volatility Portfolio uses an asset allocation strategy,
investing varying percentages of its portfolio in three major categories: stocks, bonds and money market instruments. The Fund has wide flexibility in
the relative weightings given to each category.
The Fund may also invest a significant portion of its assets in
affiliated and unaffiliated ETFs and mutual funds. See Information About the ETFs and Mutual Funds.
With respect to its equity investments, the Fund may invest in
ETFs, mutual funds or individual equity securities to an unlimited extent. The Fund, the ETFs and the mutual funds may invest in common stock,
preferred stock, securities convertible into common stock, non-convertible preferred stock and depositary receipts. The Fund, the ETFs and the mutual
funds may invest in securities of both U.S. and non-U.S. issuers without limit, which can be U.S. dollar-based or non-U.S. dollar-based and may be
currency hedged or unhedged. The Fund, the ETFs and the mutual funds may invest in securities of companies of any market
capitalization.
With respect to its fixed-income investments, the Fund may invest
in ETFs, mutual funds or individual fixed-income securities to an unlimited extent. The Fund, the ETFs and the mutual funds may invest in a portfolio
of fixed-income securities such as corporate bonds and notes, commercial and residential mortgage-backed securities (bonds that are backed by a
mortgage loan or pools of loans secured either by commercial property or residential mortgages, as applicable), collateralized mortgage obligations
(bonds that are backed by cash flows from pools of mortgages and may have multiple classes with different payment rights and protections),
collateralized debt obligations, asset-backed securities, convertible securities, debt obligations of governments and their sub-divisions (including
those of non-U.S. governments), other floating or variable rate obligations, municipal obligations and zero coupon debt securities. The Fund, the ETFs
and the mutual funds may also invest a significant portion of their assets in non-investment grade bonds (junk bonds or distressed securities),
non-investment grade bank loans, foreign bonds (both U.S. dollar- and non-U.S. dollar-denominated) and bonds of emerging market issuers. The Fund, the
ETFs and the mutual funds may invest in non-U.S. dollar-denominated bonds on a currency hedged or unhedged basis.
With respect to its cash investments, the Fund may hold high
quality money market securities, including short term U.S. Government securities, U.S. Government agency securities, securities issued by U.S.
Government-sponsored enterprises and U.S. Government instrumentalities, bank obligations, commercial paper, including asset-backed commercial paper,
corporate notes and repurchase agreements. The Fund may invest a significant portion of its assets in money market funds, including those advised by
BlackRock or its affiliates.
The Fund may invest in derivatives, including, but not limited to,
interest rate, total return and credit default swaps, indexed and inverse floating rate securities, options, futures, options on futures and swaps and
foreign currency transactions (including swaps), for hedging purposes, as well as to increase the return on its portfolio investments. 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 Fund may also use forward foreign currency exchange contracts
(obligations to buy or sell a currency at a set rate in the future) to hedge against movement in the value of non-U.S. currencies. The ETFs and the
mutual funds may, to varying degrees, also invest in derivatives.
The Fund may invest in U.S. and non-U.S. real estate investment
trusts (REITs), structured products (including, but not limited to, structured notes, credit linked notes and participation notes, or other
instruments evidencing interests in special purpose vehicles, trusts, or other entities that hold or represent interests in fixed-income securities)
and floating rate securities (such as bank loans).
The Fund incorporates a volatility control process that seeks to
reduce risk when portfolio volatility is expected to deviate from the Funds targeted total return volatility of 10% over a one-year period.
Volatility is a statistical measurement of the magnitude of up and down fluctuations in the value of a financial instrument or index over time.
Volatility may result in rapid and dramatic price swings. While BlackRock attempts to manage the Funds volatility exposure to stabilize
performance, there can be no guarantee that the Fund will reach its target volatility. The Fund will adjust its asset allocation in response to periods
of high or low expected volatility. The Fund may without limitation allocate assets into cash or short-term fixed-income securities, and away from
riskier assets such as equity and high yield fixed-income securities. When volatility decreases, the Fund may move assets out of cash and back into
riskier securities. At any given time, the Fund may be invested entirely in equities, fixed-income or cash. The Fund may engage in active and frequent
trading of portfolio securities to achieve its primary investment strategies.
3
Risk is inherent in all investing. The value of your investment in
Managed Volatility Portfolio, 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 principal
risks set forth below are the principal risks of investing in the Fund, the ETFs and/or the mutual funds. In the following discussion, references to
the Fund shall mean any one or more of the relevant ETFs or mutual funds and the Fund, where applicable.
Principal Risks of the Funds Fund of Funds
Structure
n
|
|
Affiliated Fund Risk
In managing the Fund,
BlackRock will have authority to select and substitute ETFs or mutual funds. BlackRock may be subject to potential conflicts of interest in selecting
ETFs or mutual funds because the fees paid to BlackRock by some ETFs or mutual funds are higher than the fees paid by other ETFs or mutual funds.
However, BlackRock is a fiduciary to the Fund and is legally obligated to act in the Funds best interests when selecting ETFs and mutual
funds.
|
n
|
|
Allocation Risk
The Funds ability to
achieve its investment objective depends upon BlackRocks skill in determining the Funds strategic asset class allocation and in selecting
the best mix of ETFs, mutual funds and direct investments. There is a risk that BlackRocks evaluations and assumptions regarding asset classes or
ETFs or mutual funds may be incorrect in view of actual market conditions.
|
n
|
|
Investments in ETFs and Other Mutual Funds Risk
The Funds net asset value will change with changes in the value of the ETFs, mutual funds and other securities in which it invests. As
with other investments, investments in other investment companies, including ETFs, are subject to market risk and, for non-index strategies, selection
risk. In addition, if the Fund acquires shares of investment companies, including ETFs, shareholders bear both their proportionate share of expenses in
the Fund (including management and advisory fees) and, indirectly, the expenses of the investment companies. If the Fund acquires shares of
affiliated mutual funds, shareholders bear both their proportionate share of expenses in the Fund (excluding management and advisory fees) and,
indirectly, the expenses of the mutual funds. To the extent the Fund is held by an affiliated fund, the ability of the Fund itself to hold other
investment companies may be limited.
|
|
|
One ETF or mutual fund may buy the same securities that another
ETF or mutual fund sells. In addition, the Fund may buy the same securities that an ETF or mutual fund sells, or vice-versa. If this happens, an
investor in the Fund would indirectly bear the costs of these transactions without accomplishing the intended investment purpose. Also, an investor in
the Fund may receive taxable gains from portfolio transactions by an ETF or mutual fund, as well as taxable gains from transactions in shares of the
ETF or mutual fund by the Fund. Certain of the ETFs or mutual funds may hold common portfolio securities, thereby reducing the diversification benefits
of the Fund.
|
Principal ETF-Specific Risks
n
|
|
Cash Transaction Risk
Certain ETFs intend to
effect creations and redemptions principally for cash, rather than primarily in-kind because of the nature of the ETFs investments. Investments
in such ETFs may be less tax efficient than investments in ETFs that effect creations and redemptions in-kind.
|
n
|
|
Management Risk
If an ETF does not fully
replicate the underlying index, it is subject to the risk that the managers investment management strategy may not produce the intended
results.
|
n
|
|
Passive Investment Risk
ETFs purchased by the
Fund are not actively managed and may be affected by a general decline in market segments relating to their respective indices. An ETF typically
invests in securities included in, or representative of, its index regardless of their investment merits and does not attempt to take defensive
positions in declining markets.
|
n
|
|
Representative Sampling Risk
When an ETF
deviates from a full replication indexing strategy to utilize a representative sampling strategy, the ETF is subject to an increased risk of tracking
error, in that the securities selected in the aggregate for the ETF may not have an investment profile similar to those of its index.
|
n
|
|
Shares of an ETF May Trade at Prices Other Than Net Asset
Value
The trading prices of an ETFs shares fluctuate continuously throughout trading hours based on market supply and demand
rather than net asset value. The trading prices of an ETFs shares may deviate significantly from net asset value during periods of market
volatility. Any of these factors may lead to an ETFs shares trading at a premium or discount to net asset value. However, because shares can be
created and redeemed in Creation Units, which are aggregated blocks of shares that authorized participants who have entered into agreements with the
ETFs distributor can purchase or redeem directly from the ETF, at net asset value, large discounts or premiums to the net asset value of an ETF
are not likely to be sustained over the long term. If a shareholder purchases at a time when the market price is at a premium to the net asset value or
sells at a time when the market price is at a discount to the net asset value, the shareholder may sustain losses.
|
4
n
|
|
Tracking Error Risk
Imperfect correlation
between an ETFs portfolio securities and those in its index, rounding of prices, the timing of cash flows, the ETFs size, changes to the
index and regulatory requirements may cause tracking error, which is the divergence of an ETFs performance from that of its underlying index.
This risk may be heightened during times of increased market volatility or other unusual market conditions. Tracking error also may result because an
ETF incurs fees and expenses while its underlying index does not.
|
Other Principal Risks of Investing in the
Fund
n
|
|
Collateralized Debt Obligations Risk
The pool
of high yield securities underlying collateralized debt obligations is typically separated into 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.
|
n
|
|
Concentration Risk
To the extent that the
Funds portfolio reflects concentration in the securities of issuers in a particular region, market, industry, group of industries, country, group
of countries, sector or asset class, the Fund may be adversely affected by the performance of those securities, may be subject to increased price
volatility and may be more susceptible to adverse economic, market, political or regulatory occurrences affecting that region, market, industry, group
of industries, country, group of countries, sector or asset class.
|
n
|
|
Convertible Securities Risk
The market value
of a convertible security performs like that of a regular debt security; that is, if market interest rates rise, the value of a convertible security
usually falls. In addition, convertible securities are subject to the risk that the issuer will not be able to pay interest or dividends when due, and
their market value may change based on changes in the issuers credit rating or the markets perception of the issuers
creditworthiness. Since it derives a portion of its value from the common stock into which it may be converted, a convertible security is also subject
to the same types of market and issuer risks that apply to the underlying common stock.
|
n
|
|
Corporate Loans Risk
Commercial banks and
other financial institutions or institutional investors make corporate loans to companies that need capital to grow or restructure. Borrowers generally
pay interest on corporate loans at rates that change in response to changes in market interest rates such as the London Interbank Offered Rate
(LIBOR) or the prime rates of U.S. banks. As a result, the value of corporate loan investments is generally less exposed to the adverse
effects of shifts in market interest rates than investments that pay a fixed rate of interest. The market for corporate loans may be subject to
irregular trading activity, wide bid/ask spreads and extended trade settlement periods. The corporate loans in which the Fund invests are usually rated
below investment grade.
|
n
|
|
Counterparty Risk
The counterparty to an
over-the-counter derivatives contract or a borrower of the Funds securities may be unable or unwilling to make timely principal, interest or
settlement payments, or otherwise to honor its obligations.
|
n
|
|
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. The degree of credit risk depends on
the issuers financial condition and on the terms of the securities.
|
n
|
|
Debt Securities Risk
Debt securities, such as
bonds, involve credit risk. Debt securities are also subject to interest rate risk.
|
n
|
|
Derivatives Risk
The Funds use of
derivatives may reduce the Funds returns and/or increase volatility. Volatility is defined as the characteristic of a security, an index or a
market to fluctuate significantly in price within a short time period. 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 Funds 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.
|
n
|
|
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.
|
5
n
|
|
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.
|
n
|
|
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.
|
n
|
|
Equity Securities Risk
Stock markets are
volatile. The price of equity securities fluctuates based on changes in a companys financial condition and overall market and economic
conditions.
|
n
|
|
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.
|
n
|
|
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:
|
|
|
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.
|
|
|
Changes in foreign currency exchange rates can affect the value of
the Funds portfolio.
|
|
|
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.
|
|
|
The governments of certain countries may prohibit or impose
substantial restrictions on foreign investments in their capital markets or in certain industries.
|
|
|
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.
|
|
|
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.
|
n
|
|
High Portfolio Turnover Risk
High portfolio
turnover (more than 100%) may result in increased transaction costs to the Fund and potentially higher capital gains or losses for shareholders. The
effects of higher than normal portfolio turnover may adversely affect Fund performance.
|
n
|
|
Indexed and Inverse Securities Risk
Certain
indexed and inverse securities have greater sensitivity to changes in interest rates or index levels than other securities, and the Funds
investment in such instruments may decline significantly in value if interest rates or index levels move in a way Fund management does not
anticipate.
|
n
|
|
Inflation Indexed Bonds Risk
The principal
value of an investment is not protected or otherwise guaranteed by virtue of the Funds investments in inflation-indexed bonds.
|
|
|
Inflation-indexed bonds are fixed-income securities whose
principal value is periodically adjusted according to the rate of inflation. If the index measuring inflation falls, the principal value of
inflation-indexed bonds will be adjusted downward, and consequently the interest payable on these securities (calculated with respect to a smaller
principal amount) will be reduced.
|
|
|
Repayment of the original bond principal upon maturity (as
adjusted for inflation) is guaranteed in the case of U.S. Treasury inflation-indexed bonds. For bonds that do not provide a similar guarantee, the
adjusted principal value of the bond repaid at maturity may be less than the original principal value.
|
|
|
The value of inflation-indexed bonds is expected to change in
response to changes in real interest rates. Real interest rates are tied to the relationship between nominal interest rates and the rate of inflation.
If nominal interest rates increase at a faster rate than inflation, real interest rates may rise, leading to a decrease in value of inflation-indexed
bonds. Short-term increases in inflation may lead to a decline in value. Any increase in the principal amount of an inflation-indexed bond will be
considered taxable ordinary income, even though investors do not receive their principal until maturity.
|
|
|
Periodic adjustments for inflation to the principal amount of an
inflation-indexed bond may give rise to original issue discount, which will be includable in the Funds gross income. Due to original issue
discount, the Fund may be required to make annual distributions to shareholders that exceed the cash received, which may cause the Fund to liquidate
certain investments when it is not advantageous to do so. Also, if the principal value of an inflation-indexed
|
6
|
|
bond is adjusted downward due to deflation, amounts previously
distributed in the taxable year may be characterized in some circumstances as a return of capital.
|
n
|
|
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. In general, the
market price of debt securities with longer maturities will go up or down more in response to changes in interest rates than the market price of
shorter term securities.
|
n
|
|
Investment Style Risk
Under certain market
conditions, growth investments have performed better during the later stages of economic expansion and value investments have performed better during
periods of economic recovery. Therefore, these investment styles may over time go in and out of favor. At times when the investment style used by the
Fund is out of favor, the Fund may underperform other funds that use different investment styles.
|
n
|
|
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.
|
n
|
|
Leverage Risk
Some transactions may give rise
to a form of economic leverage. These transactions may include, among others, derivatives, and may expose the Fund to greater risk and increase its
costs. The use of leverage may cause the Fund to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or
to meet any required asset segregation requirements. Increases and decreases in the value of the Funds portfolio will be magnified when the Fund
uses leverage.
|
n
|
|
Liquidity Risk
Liquidity risk exists when
particular investments are difficult to purchase or sell. The Funds investments in illiquid securities may reduce the returns of the Fund because
it may be difficult to sell the illiquid securities at an advantageous time or price. To the extent that the Funds principal investment
strategies involve derivatives or securities with substantial market and/or credit risk, the Fund will tend to have the greatest exposure to liquidity
risk. Liquid investments may become illiquid after purchase by the Fund, particularly during periods of market turmoil. Illiquid investments may be
harder to value, especially in changing markets, and if the Fund is forced to sell these investments to meet redemption requests or for other cash
needs, the Fund may suffer a loss. In addition, when there is illiquidity in the market for certain securities, the Fund, due to limitations on
illiquid investments, may be subject to purchase and sale restrictions.
|
n
|
|
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.
|
n
|
|
Mid-Cap Securities Risk
The securities of
mid-cap companies generally trade in lower volumes and are generally subject to greater and less predictable price changes than the securities of
larger capitalization companies.
|
n
|
|
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.
|
n
|
|
Municipal Securities Risks
Municipal
securities risks include the ability of the issuer to repay the obligation, the relative lack of information about certain issuers of municipal
securities, and the possibility of future legislative changes which could affect the market for and value of municipal securities. These risks
include:
|
|
|
General Obligation Bonds Risks
Timely payments
depend on the issuers credit quality, ability to raise tax revenues and ability to maintain an adequate tax base.
|
|
|
Revenue Bonds Risks
These payments depend on the
money earned by the particular facility or class of facilities, or the amount of revenues derived from another source.
|
|
|
Private Activity Bonds Risks
Municipalities and
other public authorities issue private activity bonds to finance development of industrial facilities for use by a private enterprise. The private
enterprise pays the principal and interest on the bond, and the issuer does not pledge its faith, credit and taxing power for repayment.
|
|
|
Moral Obligation Bonds Risks
Moral obligation bonds
are generally issued by special purpose public authorities of a state or municipality. If the issuer is unable to meet its obligations, repayment of
these bonds becomes a moral commitment, but not a legal obligation, of the state or municipality.
|
|
|
Municipal Notes Risks
Municipal notes are shorter
term municipal debt obligations. If there is a shortfall in the anticipated proceeds, the notes may not be fully repaid and the Fund may lose
money.
|
7
|
|
Municipal Lease Obligations Risks
In a municipal
lease obligation, the issuer agrees to make payments when due on the lease obligation. Although the issuer does not pledge its unlimited taxing power
for payment of the lease obligation, the lease obligation is secured by the leased property.
|
n
|
|
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.
|
n
|
|
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.
|
n
|
|
Real Estate Related Securities Risks
The main
risk of real estate related securities is that the value of the underlying real estate may go down. Many factors may affect real estate values. These
factors include both the general and local economies, the amount of new construction in a particular area, the laws and regulations (including zoning
and tax laws) affecting real estate and the costs of owning, maintaining and improving real estate. The availability of mortgages and changes in
interest rates may also affect real estate values. If the Funds real estate related investments are concentrated in one geographic area or in one
property type, the Fund will be particularly subject to the risks associated with that area or property type.
|
n
|
|
REIT Investment Risk
Investments in REITs
involve unique risks. REITs may have limited financial resources, may trade less frequently and in limited volume and may be more volatile than other
securities.
|
n
|
|
Repurchase Agreements and 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.
|
n
|
|
Reverse Repurchase Agreements Risk
Reverse
repurchase agreements involve the risk that the other party to the reverse repurchase agreement 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.
|
n
|
|
Risks of Loan Assignments and Participations
As the purchaser of an assignment, the Fund typically succeeds to all the rights and obligations of the assigning institution and becomes a lender
under the credit agreement with respect to the debt obligation; however, the Fund may not be able unilaterally to enforce all rights and remedies under
the loan and with regard to any associated collateral. Because assignments may be arranged through private negotiations between potential assignees and
potential assignors, the rights and obligations acquired by the Fund as the purchaser of an assignment may differ from, and be more limited than, those
held by the assigning lender. In addition, if the loan is foreclosed, the Fund could become part owner of any collateral and could bear the costs and
liabilities of owning and disposing of the collateral. The Fund may be required to pass along to a purchaser that buys a loan from the Fund by way of
assignment a portion of any fees to which the Fund is entitled under the loan. In connection with purchasing participations, the Fund generally will
have no right to enforce compliance by the borrower with the terms of the loan agreement relating to the loan, nor any rights of set-off against the
borrower, and the Fund may not directly benefit from any collateral supporting the loan in which it has purchased the participation. As a result, the
Fund will be subject to the credit risk of both the borrower and the lender that is selling the participation. In the event of the insolvency of the
lender selling a participation, the Fund may be treated as a general creditor of the lender and may not benefit from any set-off between the lender and
the borrower.
|
n
|
|
Second Lien Loans Risk
Second lien loans
generally are subject to similar risks as those associated with investments in senior loans. Because second lien loans are subordinated or unsecured
and thus lower in priority of payment to senior loans, they are subject to the additional risk that the cash flow of the borrower and property securing
the loan or debt, if any, may be insufficient to meet scheduled payments after giving effect to the senior secured obligations of the
borrower.
|
n
|
|
Senior Loans Risk
There is less readily
available, reliable information about most senior loans than is the case for many other types of securities. An economic downturn generally leads to a
higher non-payment rate, and a senior loan may lose significant value before a default occurs. Moreover, any specific collateral used to secure a
senior loan may decline in value or become illiquid, which would adversely affect the senior loans value. No active trading market may exist for
certain senior loans, which may impair the ability of the Fund to realize full value in the event of the need to sell a senior loan and which may make
it difficult to value senior loans. Although senior loans in which the Fund will invest generally will be secured by specific collateral, there can be
no assurance that liquidation of such collateral would satisfy the borrowers obligation in the event of non-payment of scheduled interest or
principal or that such collateral could be readily liquidated. To the extent that a senior loan is collateralized by stock in the borrower or its
subsidiaries, such stock may lose all of its value in the event of the bankruptcy of the
|
8
|
|
borrower. Uncollateralized senior loans involve a greater risk of
loss. The senior loans in which the Fund invests are usually rated below investment grade.
|
n
|
|
Small Cap and Emerging Growth Securities
Risks
Small cap or emerging growth companies may have limited product lines or markets. They may be less financially secure than
larger, more established companies. They may depend on a more limited management group than larger capitalized companies.
|
n
|
|
Sovereign Debt Risk
Sovereign debt
instruments are subject to the risk that a governmental entity may delay or refuse to pay interest or repay principal on its sovereign debt, due, for
example, to cash flow problems, insufficient foreign currency reserves, political considerations, the relative size of the governmental entitys
debt position in relation to the economy or the failure to put in place economic reforms required by the International Monetary Fund or other
multilateral agencies.
|
n
|
|
Structured Products Risk
Holders of
structured products bear risks of the underlying investments, index or reference obligation and are subject to counterparty risk. The Fund may have the
right to receive payments only from the structured product, and generally does not have direct rights against the issuer or the entity that sold the
assets to be securitized. Certain structured products may be thinly traded or have a limited trading market. In addition to the general risks
associated with debt securities discussed herein, structured products carry additional risks, including, but not limited to: the possibility that
distributions from collateral securities will not be adequate to make interest or other payments; the quality of the collateral may decline in value or
default; and the possibility that the structured products are subordinate to other classes.
|
n
|
|
Supranational Entities Risk
The Fund may
invest in obligations issued or guaranteed by the International Bank for Reconstruction and Development (the World Bank). If one or more stockholders
of the World Bank fail to make necessary additional capital contributions, the entity may be unable to pay interest or repay principal on its debt
securities, and the Fund may lose money on such investments.
|
n
|
|
Tender Option Bonds and Related Securities Risk
Investments in tender option bonds, residual interest tender option bonds and inverse floaters expose the Fund to the same risks as investments
in derivatives, as well as risks associated with leverage, described above, especially the risk of increased volatility. An investment in these
securities may be subject to the risk of loss of principal. Residual interest tender option bonds and inverse floaters generally will underperform the
market for fixed rate municipal securities in a rising interest rate environment.
|
n
|
|
U.S. Government Mortgage-Related Securities Risk
There are a number of important differences among the agencies and instrumentalities of the U.S. Government that issue mortgage-related
securities and among the securities that they issue. Mortgage-related securities guaranteed by the Government National Mortgage Association
(Ginnie Mae) are guaranteed as to the timely payment of principal and interest by Ginnie Mae and such guarantee is backed by the full faith
and credit of the United States. Ginnie Mae securities also are supported by the right of Ginnie Mae to borrow funds from the U.S. Treasury to make
payments under its guarantee. Mortgage-related securities issued by The Federal National Mortgage Association (Fannie Mae) or The Federal
Home Loan Mortgage Corporation (Freddie Mac) are solely the obligations of Fannie Mae or Freddie Mac, as the case may be, and are not
backed by or entitled to the full faith and credit of the United States but are supported by the right of the issuer to borrow from the U.S.
Treasury.
|
n
|
|
U.S. Government Obligations Risk
Certain
securities in which the Fund may invest, including securities issued by certain U.S. Government agencies and U.S. Government sponsored enterprises, are
not guaranteed by the U.S. Government or supported by the full faith and credit of the United States.
|
n
|
|
Variable and Floating Rate Instrument Risk
The absence of an active market for these securities could make it difficult for the Fund to dispose of them if the issuer defaults.
|
n
|
|
Warrants Risk
If the price of the underlying
stock does not rise above the exercise price before the warrant expires, the warrant generally expires without any value and the Fund loses any amount
it paid for the warrant. Thus, investments in warrants may involve substantially more risk than investments in common stock.
|
n
|
|
Zero Coupon Securities Risk
While interest
payments are not made on such securities, holders of such securities are deemed to have received income (phantom income) annually,
notwithstanding that cash may not be received currently. Some of these securities may be subject to substantially greater price fluctuations during
periods of changing market interest rates than are comparable securities that pay interest currently. Longer term zero coupon bonds are more exposed to
interest rate risk than shorter term zero coupon bonds.
|
9
Effective May 15, 2012, Managed Volatility Portfolio changed its
investment strategy to invest a significant portion of its assets in ETFs and, to a lesser extent, in mutual funds and directly in securities.
Performance for the periods shown below is based on the investment strategy utilized by the Fund prior to May 15, 2012, which focused on investing
directly in securities.
On January 31, 2005, the Fund reorganized with the State Street
Research Asset Allocation Fund (the SSR Fund), which had investment objectives and strategies similar to the Fund. For periods prior to
January 31, 2005, the chart and table show performance information for the SSR Fund. The information shows you how the Funds performance has
varied year by year and provides some indication of the risks of investing in the Fund. The table compares the Funds performance to that of the
Standard & Poors (S&P) 500
®
Index, the Barclays U.S. Aggregate Bond Index, the MSCI All Country World Index
(the MSCI ACWI Index), the Citigroup World Government Bond Index (hedged into USD) (the Citigroup WGBI (hedged into USD)) and
three customized weighted indices comprised of the returns of the S&P 500
®
Index, the MSCI ACWI Index, the Barclays U.S. Aggregate
Bond Index and the Citigroup WGBI (hedged into USD) in the percentages and combinations set forth in the table. Effective October 1, 2011, the Fund
changed one of the components making up the customized weighted index from the S&P 500
®
Index to the MSCI ACWI Index. Fund
management believes that the MSCI ACWI Index better reflects the Funds increasing exposure to non-U.S. equities. Effective May 15, 2012, the Fund
changed one of the components making up the customized weighted index from the Barclays U.S. Aggregate Bond Index to the Citigroup WGBI (hedged into
USD). Fund management believes that the Citigroup WGBI (hedged into USD) better reflects the Funds increasing global exposure. 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 BlackRock and its affiliates
had not waived or reimbursed certain Fund expenses during these periods, the Funds returns would have been lower. Updated information on the
Funds results 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
1
BlackRock Managed Volatility Portfolio
As of 12/31
During the ten-year period shown in the bar chart, the highest
return for a quarter was 13.78% (quarter ended September 30, 2009) and the lowest return for a quarter was 13.12% (quarter ended December 31,
2008). The year-to-date return as of September 30, 2012 was 9.13%.
10
As of 12/31/11
Average Annual
Total Returns
|
|
|
|
1 Year
|
|
5 Years
1
|
|
10 Years
1
|
BlackRock Managed Volatility Portfolio Service Shares
|
Return Before Taxes
|
|
|
|
|
(3.49
|
)%
|
|
|
2.16
|
%
|
|
|
4.35
|
%
|
Return After Taxes on Distributions
|
|
|
|
|
(4.03
|
)%
|
|
|
1.39
|
%
|
|
|
3.44
|
%
|
Return After Taxes on Distributions and Sale of Shares
|
|
|
|
|
(1.66
|
)%
|
|
|
1.67
|
%
|
|
|
3.46
|
%
|
S&P 500
®
Index
(Reflects no deduction for fees, expenses or taxes)
|
|
|
|
|
2.11
|
%
|
|
|
(0.25
|
)%
|
|
|
2.92
|
%
|
Barclays U.S. Aggregate Bond Index
(Reflects no deduction for fees, expenses or taxes)
|
|
|
|
|
7.84
|
%
|
|
|
6.50
|
%
|
|
|
5.78
|
%
|
MSCI ACWI Index
(Reflects no deduction for fees, expenses or taxes)
|
|
|
|
|
(7.35
|
)%
|
|
|
(1.93
|
)%
|
|
|
4.24
|
%
|
Citigroup WGBI (hedged into USD)
(Reflects no deduction for fees, expenses or taxes)
|
|
|
|
|
5.49
|
%
|
|
|
4.92
|
%
|
|
|
4.75
|
%
|
60% S&P 500
®
Index/40% Barclays U.S. Aggregate Bond Index
(Reflects no deduction for
fees, expenses or taxes)
|
|
|
|
|
4.69
|
%
|
|
|
2.84
|
%
|
|
|
4.40
|
%
|
60% MSCI ACWI Index/40% Barclays U.S. Aggregate Bond Index
(Reflects no deduction for fees, expenses or
taxes)
|
|
|
|
|
(1.14
|
)%
|
|
|
1.91
|
%
|
|
|
5.27
|
%
|
60% MSCI ACWI Index/40% Citigroup WGBI (hedged into USD)
(Reflects no deduction for fees, expenses or
taxes)
|
|
|
|
|
(1.96
|
)%
|
|
|
1.38
|
%
|
|
|
4.89
|
%
|
1
|
|
A portion of the Funds total return was attributable to
proceeds received in the fiscal year ended September 30, 2009 in settlement of litigation.
|
After-tax returns are calculated using the historical highest
individual Federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the
investors tax situation and may differ from those shown, and the after-tax returns shown are not relevant to investors who hold their shares
through tax-deferred arrangements such as 401(k) plans or individual retirement accounts.
Managed Volatility Portfolios investment manager is
BlackRock Advisors, LLC (previously defined as BlackRock). The Funds sub-advisers are BlackRock Financial Management,
Inc., BlackRock International Limited, BlackRock (Hong Kong) Limited and BlackRock (Singapore) Limited. Where applicable, BlackRock
refers also to the Funds sub-advisers.
Name
|
Portfolio Manager
of the Fund
Since
|
Title
|
Philip Green
|
2006
|
Managing Director of BlackRock, Inc.
|
Purchase and Sale of Fund
Shares
You may purchase or redeem shares of Managed Volatility Portfolio
each day the New York Stock Exchange is open. To purchase or sell shares you should contact your financial intermediary or financial professional, or,
if you hold your shares through the Fund, you should contact the Fund by phone at (800) 537-4942, by mail (c/o BlackRock Funds, P.O. Box 9819,
Providence, Rhode Island 02940-8019), or by the Internet at www.blackrock.com/funds. The Funds initial and subsequent investment minimums for
Service Shares generally are as follows, although the Fund may reduce or waive the minimums in some cases:
|
Service Shares
|
Minimum Initial Investment
|
$5,000
|
Minimum Additional Investment
|
No subsequent minimum.
|
11
Managed Volatility Portfolios dividends and distributions
may be subject to Federal income taxes and may be taxed as ordinary income or capital gains, unless you are a tax-exempt investor or are investing
through a retirement plan, in which case you may be subject to Federal income tax upon withdrawal from such tax-deferred arrangements.
Payments to Broker/Dealers
and Other Financial Intermediaries
If you purchase shares of Managed Volatility Portfolio through a
broker-dealer or other financial intermediary, the Fund and BlackRock Investments, LLC, the Funds distributor, or its affiliates may pay the
intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or
other financial intermediary and your individual financial professional to recommend the Fund over another investment. Ask your individual financial
professional or visit your financial intermediarys website for more information.
INVESTMENT COMPANY ACT FILE #811-05742
© BlackRock Advisors, LLC
SPRO-MV-SVC-0512R
|
|
|
|
|
Antero Midstream (NYSE:AM)
Historical Stock Chart
From May 2024 to Jun 2024
Antero Midstream (NYSE:AM)
Historical Stock Chart
From Jun 2023 to Jun 2024