1. Art and Diseño

PERFORMANCE & POSITIONING
blackrock.com
4Q
Institutional: PNIGX • A: CIGAX • C: BIGCX • R: BGBRX1
 The Fund posted returns of 1.62% (Institutional shares) and 1.45% (Investor A
2014
US GOVERNMENT BOND FUND
C O M M E N TA R Y
shares, without sales charge) for the fourth quarter of 2014, while the Barclays
U.S. Govt./Mortgage Index returned 1.83%.
 The Fund's underweight allocation to mortgage-backed securities (MBS) relative
to U.S. Treasuries and underweight duration positioning (lower sensitivity to
interest rate movements) relative to the benchmark index detracted from
performance. The largest positive contributors were the Fund's underweight in
short-maturity U.S. rates versus longer-maturity U.S. Treasuries, an overweight
in higher-coupon (4.5% and 5%) 30-year MBS and an underweight in
15-year MBS.
 The Fund ended the fourth quarter underweight in duration versus the
benchmark and underweight in agency MBS relative to U.S. Treasuries. The
Fund’s duration underweight was expressed in short-maturity U.S. rates. Our
positive outlook for the U.S. economy was manifested through long exposure to
the U.S. dollar versus the euro, Japanese yen and Australian dollar.
Contributors
Detractors
The Fund's U.S. yield curve flattening bias
contributed significantly to performance,
as did its U.S.-dollar long exposure versus
other major currencies. Additionally, an
overweight in 30-year MBS and
underweight in 15-year MBS added to
performance as the curve flattened.
The Fund's underweight in duration
detracted from performance as rates
rallied lower during the quarter. The
Fund's underweight allocation to MBS
relative to U.S. Treasuries also detracted.
Further Insight
The Fund finished the fourth quarter of 2014 underweight in U.S. duration, with
a yield curve flattening bias, along with a slight underweight in MBS relative to
U.S. Treasuries. Due to the global divergence in monetary policies, we
maintained long U.S. dollar exposure. The Fund’s allocations within agency MBS
favored 4.5% coupons broadly, with underweights in 3.5% and 4% coupons as
30-year primary mortgage rates touched year-to-date lows late in December,
potentially increasing pre-payment risk early in 2015. The Fund remained
overweight in securitized assets including commercial mortgage-backed
securities and asset-backed securities, and Canadian covered bonds.
Overall Morningstar Rating™:
Institutional
★★★★
Rated against 307 Intermediate Government Funds, as
of 12/31/14, based on risk-adjusted total return. Ratings
are determined monthly and subject to change. The
Overall Morningstar Rating for a fund is derived from a
weighted average of the performance figures associated
with its 3-, 5- and 10-year (if applicable) Morningstar
Rating metrics.††
Portfolio Management
Bob Miller, Matthew Kraeger
Investment Approach
Invests primarily in the highest rated
government and agency bonds and
maintains an average portfolio
duration within ±20% of the Barclays
Intermediate Government Index. The
fund normally invests at least 80% of
its assets in bonds issued or
guaranteed by the U.S. government
and its agencies. Securities
purchased by the fund generally are
rated in the highest rating category
(AAA or Aaa) at the time of purchase
by at least one major rating agency
or are determined by the fund
management team to be of similar
quality.
% AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/14
4Q14
YTD
(not annualized) (not annualized)
Institutional
Investor A (Without Sales Charge)3
Investor A (With Sales Charge)
3
Lipper Intermediate U.S. Government
Funds Avg.4
Morningstar Intermediate Government
Funds Avg.
Barclays U.S. Govt./Mortgage5
1 Year
3 Year
5 Years
10 Years
Since
Inception2
1.62
5.64
5.64
2.00
3.77
4.10
5.18
1.45
5.34
5.34
1.70
3.43
3.71
4.79
-2.61
1.13
1.13
0.33
2.59
3.29
4.60
1.21
3.81
3.81
1.02
2.90
3.61
—
1.32
4.73
4.73
1.47
3.33
3.94
—
1.83
5.41
5.41
1.81
3.69
4.50
—
Data represents past performance and is no guarantee of future results. Investment returns and principal values may fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original cost. All returns assume reinvestment of dividends and capital
gains. Current performance may be lower or higher than that shown. Refer to blackrock.com for most recent month-end performance. Index
performance is shown for illustrative purposes only. You cannot invest directly in an index. Share classes have different fees and other features.
Returns with sales charge reflect deduction of current maximum initial sales charge of 4% for Investor A shares. Institutional shares have no
front- or back-end load. Minimum initial investment for Institutional shares is $2 million. Institutional shares also are available to clients of registered investment advisors with $250,000 invested in the fund, and offered to participants in various wrap fee programs and other sponsored
arrangements at various minimums. Expenses for Institutional shares: Total 0.84%; Net, Including Investment Related Expenses (dividend
expense, interest expense, acquired fund fees and expenses and certain other fund expenses) 0.64%; Net, Excluding Investment Related
Expenses 0.62%. For Investor A shares: Total 1.07%; Net, Including Investment Related Expenses 0.92%; Net, Excluding Investment Related
Expenses 0.90%. Institutional and Investor A shares have contractual waivers with an end date of 2/1/15 terminable upon 90 days' notice. For
certain share classes, BlackRock may voluntarily agree to waive certain fees and expenses in which the adviser may discontinue at any time
without notice. Expenses stated as of the fund’s most recent prospectus.
Important Risks: The fund is actively managed and its characteristics will vary. Holdings shown should not be deemed as a recommendation to buy or sell securities. Bond values fluctuate in price so the value of your investment can go down depending on
market conditions. Fixed income risks include interest-rate and credit risk. Typically, when interest rates rise, there is a corresponding decline in bond values. Credit risk refers to the possibility that the bond issuer will not be able to make principal and
interest payments. Principal of mortgage- or asset-backed securities normally may be prepaid at any time, reducing the yield and
market value of those securities. Obligations of U.S. gov't agencies are supported by varying degrees of credit but generally are
not backed by the full faith and credit of the U.S. gov't. The fund may use derivatives to hedge its investments or to seek to
enhance returns. Derivatives entail risks relating to liquidity, leverage and credit that may reduce returns and increase volatility.
The opinions expressed are those of the fund’s portfolio management team as of December 31, 2014, and may change as subsequent conditions vary. Information and opinions are derived from
proprietary and nonproprietary sources deemed by BlackRock to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. Past performance is no guarantee of future
results. There is no guarantee that any forecasts made will come to pass. This material does not constitute investment advice and is not intended as an endorsement of any specific investment.
Investment involves risk. Reliance upon information in this material is at the sole discretion of the reader.
1 Institutional shares are not available to all investors. Please see prospectus for details. 2 Fund inception: 4/20/92. 3 Performance for Investor A shares prior to their introduction (5/11/92) is
based on the performance of Institutional shares adjusted to reflect the class-specific fees applicable to Investor A at time of such share class launch. This information may be considered when
assessing the fund’s performance, but does not represent actual performance of these share classes. 4 Lipper category is as of 12/31/14 and may not accurately represent the current composition of the portfolio. 5 The Barclays U.S. Government/Mortgage Index is comprised of the Barclays U.S. Treasury Index, which includes public obligations of the U.S. Treasury; the Barclays U.S.
Agency Index, which includes native currency agency debentures from issuers such as Fannie Mae (FNMA), Freddie Mac (FHLMC) and Federal Home Loan Bank; and the Barclays U.S. MBS
Index, which includes U.S. agency mortgage-backed pass-through securities (both fixed-rate and hybrid ARM) issued by Ginnie Mae (GNMA), FNMA and FHLMC. †† For each fund with a 3-year
history, a Morningstar Rating™ is calculated based on risk-adjusted returns that account for variations in a fund’s monthly performance (including sales charges, loads and redemption fees),
placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the
next 22.5% receive 2 stars and the bottom 10% receive 1 star. (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in
the distribution percentages.) The fund was rated against the following numbers of U.S.-domiciled Intermediate Government funds over the following time periods:307 in the last 3 years, 273 in
the last 5 years and 224 in the last 10 years. With respect to these Intermediate Government funds, the fund received a Morningstar Rating of 4, 4 and 3 stars for the 3-, 5- and 10-year periods, respectively.Other classes may have different performance characteristics.
You should consider the investment objectives, risks, charges and expenses of the fund carefully before investing. The
prospectus and, if available, the summary prospectus contain this and other information about the fund and are available,
along with information on other BlackRock funds, by calling 800-882-0052 or from your financial professional. The prospectus
should be read carefully before investing.
FOR MORE INFORMATION OR TO RECEIVE UPDATES, VISIT: blackrock.com
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Prepared by BlackRock Investments, LLC, member FINRA.
Not FDIC Insured • May Lose Value • No Bank Guarantee
01/15 — US Government Bond Fund
USR-5121