BlackRock FundsSM BlackRock Value Opportunities Fund, Inc. BlackRock World Income Fund, Inc. FDP Series, Inc. Managed Account Series

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1 BlackRock Funds SM BlackRock All-Cap Energy & Resources Portfolio BlackRock Asset Allocation Portfolio BlackRock China Fund BlackRock Commodity Strategies Fund BlackRock Emerging Markets Long/Short Equity Fund BlackRock Energy & Resources Portfolio BlackRock Exchange Portfolio BlackRock Global Long/Short Credit Fund BlackRock Global Opportunities Portfolio BlackRock Health Sciences Opportunities Portfolio BlackRock Index Equity Portfolio BlackRock India Fund BlackRock International Opportunities Portfolio BlackRock Mid-Cap Growth Equity Portfolio BlackRock Mid-Cap Value Equity Portfolio BlackRock Money Market Portfolio BlackRock Municipal Money Market Portfolio BlackRock New Jersey Municipal Money Market Portfolio BlackRock North Carolina Municipal Money Market Portfolio BlackRock Ohio Municipal Money Market Portfolio BlackRock Pennsylvania Municipal Money Market Portfolio BlackRock Science & Technology Opportunities Portfolio BlackRock Small Cap Growth Equity Portfolio BlackRock U.S. Opportunities Portfolio BlackRock U.S. Treasury Money Market Portfolio BlackRock Virginia Municipal Money Market Portfolio BlackRock World Gold Fund BlackRock Funds II BlackRock Aggressive Growth Prepared Portfolio BlackRock Conservative Prepared Portfolio BlackRock Emerging Market Debt Portfolio BlackRock Floating Rate Income Portfolio BlackRock Global Dividend Income Portfolio BlackRock GNMA Portfolio BlackRock Growth Prepared Portfolio BlackRock High Yield Bond Portfolio BlackRock Multi-Asset Income Portfolio BlackRock Inflation Protected Bond Portfolio BlackRock U.S. Government Bond Portfolio BlackRock International Bond Portfolio BlackRock Long Duration Bond Portfolio BlackRock Low Duration Bond Portfolio BlackRock Moderate Prepared Portfolio BlackRock Multi-Sector Bond Portfolio BlackRock Prepared Portfolio 2015 BlackRock Prepared Portfolio 2020 BlackRock Prepared Portfolio 2025 BlackRock Prepared Portfolio 2030 BlackRock Prepared Portfolio 2035 BlackRock Prepared Portfolio 2040 BlackRock Prepared Portfolio 2045 BlackRock Prepared Portfolio 2050 BlackRock Strategic Income Opportunities Portfolio BlackRock Core Bond Portfolio BlackRock Value Opportunities Fund, Inc. BlackRock World Income Fund, Inc. FDP Series, Inc. Marsico Growth FDP Fund MFS Research International FDP Fund Van Kampen Value FDP Fund Franklin Templeton Total Return FDP Fund Managed Account Series BlackRock U.S. Mortgage Portfolio BlackRock Funds III BlackRock ACWI ex-us Index Fund BlackRock Bond Index Fund BlackRock CoreAlpha Bond Fund BlackRock S&P 500 Stock Fund BlackRock Russell 1000 Index Fund LifePath Retirement Portfolio LifePath 2020 Portfolio LifePath 2025 Portfolio LifePath 2030 Portfolio LifePath 2035 Portfolio LifePath 2040 Portfolio LifePath 2045 Portfolio LifePath 2050 Portfolio LifePath 2055 Portfolio LifePath Index 2020 Portfolio LifePath Index 2025 Portfolio LifePath Index 2030 Portfolio LifePath Index 2035 Portfolio LifePath Index 2040 Portfolio LifePath Index 2045 Portfolio LifePath Index 2050 Portfolio LifePath Index 2055 Portfolio LifePath Index Retirement Portfolio BlackRock Balanced Capital Fund, Inc. BlackRock Basic Value Fund, Inc. BlackRock Bond Fund, Inc. BlackRock Total Return Fund BlackRock California Municipal Series Trust BlackRock California Municipal Bond Fund BlackRock Capital Appreciation Fund, Inc. BlackRock Emerging Markets Fund, Inc. BlackRock Equity Dividend Fund

2 BlackRock EuroFund BlackRock Focus Growth Fund, Inc. BlackRock Global Allocation Fund, Inc. BlackRock Global Dynamic Equity Fund BlackRock Global SmallCap Fund, Inc. BlackRock Index Funds, Inc. BlackRock International Index Fund BlackRock S&P 500 Index Fund BlackRock Small Cap Index Fund BlackRock Large Cap Series Funds, Inc. BlackRock Large Cap Core Fund BlackRock Large Cap Core Plus Fund BlackRock Large Cap Growth Fund BlackRock Large Cap Value Fund BlackRock Large Cap Growth Retirement Portfolio BlackRock Large Cap Value Retirement Portfolio BlackRock Large Cap Core Retirement Portfolio BlackRock Mid Cap Value Opportunities Series, Inc. BlackRock Mid Cap Value Opportunities Fund BlackRock Multi-State Municipal Series Trust BlackRock New Jersey Municipal Bond Fund BlackRock New York Municipal Bond Fund BlackRock Pennsylvania Municipal Bond Fund BlackRock Municipal Bond Fund, Inc. BlackRock High Yield Municipal Fund BlackRock National Municipal Fund BlackRock Short-Term Municipal Fund BlackRock Municipal Series Trust BlackRock Intermediate Municipal Fund BlackRock Natural Resources Trust BlackRock Pacific Fund, Inc. BlackRock Series, Inc. BlackRock International Fund BlackRock Small Cap Growth Fund II BlackRock Latin America Fund, Inc. (each, a Fund and collectively, the Funds ) Supplement dated May 1, 2012 to the Prospectus and Statement of Additional Information of each Fund Effective immediately, each Fund s Prospectus is amended as set forth below: The section entitled Sales Charges Reduced or Eliminated for Investor A Shares in each Fund s current Prospectus is deleted in its entirety and replaced with the following: Sales Charges Reduced or Eliminated for Investor A Shares There are several ways in which the sales charge can be reduced or eliminated. Purchases of Investor A Shares at certain fixed dollar levels, known as breakpoints, cause a reduction in the front-end sales charge (as described above in the Investor A Shares Initial Sales Charge Option section). Additionally, the front-end sales charge can be reduced or eliminated through one or a combination of the following: a Letter of Intent, right of accumulation, the reinstatement privilege (described under Account Services and Privileges ), or a waiver of the sales charge (described below). Reductions or eliminations through the right of accumulation or Letter of Intent will apply to the value of all qualifying holdings in shares of mutual funds sponsored and advised by BlackRock or its affiliates ( BlackRock Funds ) owned by (a) the investor, or (b) the investor s spouse and any children and a trust, custodial account or fiduciary account for the benefit of any such individuals. For this purpose, the value of an investor s holdings means the offering price of the newly purchased shares (including any applicable sales charge) plus the current value (including any sales charges paid) of all other shares the investor already holds taken together. Qualifying Holdings: Investor Shares, Institutional Shares (in most BlackRock Funds) and investments in the BlackRock CollegeAdvantage 529 Program Qualifying Holdings may include shares held in accounts held at a financial intermediary, including personal accounts, certain retirement accounts, UGMA/UTMA accounts, Joint Tenancy accounts, trust accounts and Transfer on Death accounts, as well as shares purchased by a trust of which the investor is a beneficiary. For purposes of the right of accumulation and Letter of Intent the investor may not combine with the investor s other holdings shares held in pension, profit sharing or other employee benefit plans if those shares are held in the name of a nominee or custodian. In order to receive a reduced sales charge, at the time an investor purchases shares of the Fund, the investor should inform the financial professional, financial intermediary and/or BlackRock Funds of any other shares of the Fund 2

3 or any other BlackRock Fund that qualify for a reduced sales charge. Failure by the investor to notify the financial professional, financial intermediary or BlackRock Funds may result in the investor not receiving the sales charge reduction to which the investor is otherwise entitled. The financial professional, financial intermediary or BlackRock Funds may request documentation including account statements and records of the original cost of the shares owned by the investor, the investor s spouse and/or children showing that the investor qualifies for a reduced sales charge. The investor should retain these records because depending on where an account is held or the type of account the Fund and/or the investor s financial professional, financial intermediary or BlackRock Funds may not be able to maintain this information. For more information, see the SAI or contact your financial professional or financial intermediary. The section entitled Letter of Intent in each Fund s current Prospectus is deleted in its entirety and replaced with the following: Letter of Intent An investor may qualify for a reduced front-end sales charge immediately by signing a Letter of Intent stating the investor s intention to buy a specified amount of Investor A, Investor C and/or Institutional Shares and/or make an investment through the BlackRock CollegeAdvantage 529 Program in one or more BlackRock Funds within the next 13 months that would, if bought all at once, qualify the investor for a reduced sales charge. The initial investment must meet the minimum initial purchase requirement. The 13-month Letter of Intent period commences on the day that the Letter of Intent is received by the Fund, and the investor must tell the Fund that later purchases are subject to the Letter of Intent. Purchases submitted prior to the date the Letter of Intent is received by the Fund are not counted toward the sales charge reduction. During the term of the Letter of Intent, the Fund will hold Investor A Shares representing up to 5% of the indicated amount in an escrow account for payment of a higher sales load if the full amount indicated in the Letter of Intent is not purchased. If the full amount indicated is not purchased within the 13-month period, and the investor does not pay the higher sales load within 20 days, the Fund will redeem enough of the Investor A Shares held in escrow to pay the difference. The section entitled Right of Accumulation in each Fund s current Prospectus is deleted in its entirety and replaced with the following: Right of Accumulation Investors have a right of accumulation under which the current value of (i) an investor s existing BlackRock Funds Investor A and A1, Investor B, B1, B2 and B3, Investor C, C1, C2 and C3 and Institutional Shares and/or (ii) the investment in the BlackRock CollegeAdvantage 529 Program by the investor or by or on behalf of the investor s spouse and children may be combined with the amount of the current purchase in determining whether an investor qualifies for a breakpoint and a reduced front-end sales charge. Financial intermediaries may value current holdings of their customers differently for purposes of determining whether an investor qualifies for a breakpoint and a reduced front-end sales charge, although customers of the same financial intermediary will be treated similarly. In order to use this right, the investor must alert BlackRock to the existence of any previously purchased shares. The first paragraph and following bullet points of the section entitled Other Front-End Sales Charge Waivers in each Fund s current Prospectus are deleted in their entirety and replaced with the following: The following persons may also buy Investor A Shares without paying a sales charge: Authorized qualified employee benefit plans or savings plans; Rollovers of current investments through authorized qualified employee benefit plans or savings plans, provided the shares are transferred to the same BlackRock Fund as either a direct rollover, or subsequent to distribution, the rolled-over proceeds are contributed to a BlackRock IRA through an account directly with the Fund; Persons investing through an authorized payroll deduction plan; Persons investing through an authorized investment plan for organizations that operate under Section 501(c)(3) of the Internal Revenue Code; Registered investment advisers, trust companies and bank trust departments exercising discretionary investment authority with respect to amounts to be invested in the Fund; 3

4 Persons participating in a fee-based program (such as a wrap account) under which they (i) pay advisory fees to a broker-dealer or other financial institution or (ii) pay fees to a broker-dealer or other financial institution for providing transaction processing and other administrative services, but not investment advisory services; Financial intermediaries who have entered into an agreement with the Distributor and have been approved by the Distributor to offer Fund shares to self-directed investment brokerage accounts that may or may not charge a transaction fee; Persons associated with the Funds, the Fund s Manager, Sub-Advisers, Transfer Agent, Distributor, fund accounting agents, Barclays PLC and their affiliates (to the extent permitted by these firms) including: (a) officers, directors and partners; (b) employees and retirees; (c) employees of firms who have entered into selling agreements to distribute shares of BlackRock-advised funds; (d) immediate family members of such persons; and (e) any trust, pension, profit-sharing or other benefit plan for any of the persons set forth in (a) through (d); Certain state sponsored 529 college savings plans. Effective immediately, each Fund s Statement of Additional Information is amended as set forth below: The fifth paragraph of the section entitled Reduced Initial Sales Charge in Part II of each Fund s current Statement of Additional Information is deleted in its entirety and replaced with the following: Other. The following persons may also buy Investor A Shares without paying a sales charge: (a) authorized qualified employee benefit plans or savings plans; (b) rollovers of current investments through authorized qualified employee benefit plans or savings plans, provided the shares are transferred to the same BlackRock Fund as either a direct rollover, or subsequent to distribution, the rolled over proceeds are contributed to a BlackRock IRA through an account directly with the Fund; (c) persons investing through an authorized payroll deduction plan; (d) persons investing through an authorized investment plan for organizations which operate under Section 501(c)(3) of the Code; (e) registered investment advisers, trust companies and bank trust departments exercising discretionary investment authority with respect to amounts to be invested in a Fund; (f) persons participating in a fee-based program (such as a wrap account) under which they (i) pay advisory fees to a broker-dealer or other financial institution or (ii) pay fees to a broker-dealer or other financial institution for providing transaction processing and other administrative services, but not investment advisory services; (g) certain state sponsored 529 college savings plans; (h) persons involuntarily liquidated from a Fund, who within 60 days of liquidation buy new shares of another BlackRock Fund (but only up to the amount that was liquidated); and (i) insurance company separate accounts. The following persons associated with the Funds, the Fund s Manager, Sub-Advisers, Transfer Agent, Distributor, fund accounting agents, Barclays PLC and their affiliates may buy Investor A Shares of each of the Funds without paying a sales charge to the extent permitted by these firms including: (a) officers, directors and partners; (b) employees and retirees; (c) employees of firms who have entered into selling agreements to distribute shares of BlackRock-advised funds; (d) immediate family members of such persons ( immediate family members shall be defined as the investor, the investor s spouse or domestic partner, children, parents and siblings); and (e) any trust, pension, profit-sharing or other benefit plan for any of the persons set forth in (a) through (d). Investors who qualify for any of these exemptions from the sales charge should purchase Investor A Shares. Shareholders should retain this Supplement for future reference. PRO-MULTI-0512SUP

5 April 30, 2012 Prospectus BlackRock Funds III Investor A and Institutional Shares BlackRock ACWI ex-us Index Fund BlackRock Russell 1000 Index Fund Fund Investor A Shares Institutional Shares BlackRock ACWI ex-us Index Fund BDOAX BDOIX BlackRock Russell 1000 Index Fund BRGAX BRGNX This Prospectus contains information you should know before investing, including information about risks. Please read it before you invest and keep it for future reference. The Securities and Exchange Commission has not approved or disapproved these securities or passed upon the accuracy or adequacy of this Prospectus. Any representation to the contrary is a criminal offense. Not FDIC Insured No Bank Guarantee May Lose Value

6 Table of Contents Fund Overview Key facts and details about the Funds, including investment objectives, principal strategies, risk factors, fee and expense information, and historical performance information Key Facts About BlackRock ACWI ex-us Index Fund... 3 Key Facts About BlackRock Russell 1000 Index Fund... 6 Important Additional Information... 8 Details About the Funds How Each Fund Invests... 9 Investment Risks...12 Account Information How to Choose the Share Class that Best Suits Your Needs...17 Details About the Share Classes...17 Distribution and Service Payments...18 How to Buy, Sell and Transfer Shares...19 Account Services and Privileges...23 Funds Rights...24 Short-Term Trading Policy...24 Master/Feeder Structure...25 Management of the Funds Information about BlackRock Fund Advisors and the Portfolio Managers Investment Adviser...26 Portfolio Managers...27 Conflicts of Interest...27 Valuation of Fund Investments...28 Dividends, Distributions and Taxes...29 Financial Highlights Financial Performance of the Funds...31 General Information Shareholder Documents...33 Certain Fund Policies...33 Statement of Additional Information...34 Glossary Glossary of Investment Terms...35 For More Information Funds and Service Providers...Inside Back Cover Additional Information...Back Cover

7 Fund Overview Key Facts About BlackRock ACWI ex-us Index Fund Investment Objective The investment objective of BlackRock ACWI ex-us Index Fund ( ACWI ex-us Index Fund or the Fund ), a series of BlackRock Funds III (the Trust ), is to match the performance of the MSCI All Country World ex-usa Index (the MSCI ACWI ex-usa Index ) in U.S. dollars with net dividends as closely as possible before the deduction of Fund expenses. Fees and Expenses of the Fund The table below describes the fees and expenses that you may pay if you buy and hold shares of the ACWI ex-us Index Fund. Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) 1 Investor A Shares Institutional Shares Management Fee % 0.15% Distribution and/or Service (12b-1) Fees 0.25% None Other Expenses 2,3 2.90% 2.82% Administration Fee 0.10% 0.10% Miscellaneous Other Expenses 2,3 2.80% 2.72% Acquired Fund Fees and Expenses % 0.03% Total Annual Fund Operating Expenses % 3.00% Fee Waivers and/or Expense Reimbursements 4 (2.65)% (2.57)% Total Annual Fund Operating Expenses After Fee Waivers and/or Expense Reimbursements % 0.43% 1 The fees and expenses shown in the table and the example that follows include both the expenses of the Fund and its share of the allocated expenses of ACWI ex-us Index Master Portfolio (the Master Portfolio ), a series of Master Investment Portfolio ( MIP ). The management fees are paid by the Master Portfolio. 2 Other Expenses and Miscellaneous Other Expenses have been restated to reflect current fees. 3 The Total Annual Fund Operating Expenses do not correlate to the ratio 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 or the restatement of Other Expenses and Miscellaneous Other Expenses to reflect current fees. 4 As described in the Management of the Funds section of the Fund s prospectus on pages 26-30, BlackRock Fund Advisors ( BFA ) and BlackRock Institutional Trust Company, N.A. ( BTC ) have contractually agreed to waive and/or reimburse fees and/or expenses in order to limit Total Annual Fund Operating Expenses After Fee Waivers and/or Expense Reimbursements of the Fund (excluding Dividend Expense, Interest Expense, Acquired Fund Fees and Expenses and certain other Fund expenses) as a percentage of average daily net assets to 0.65% for Investor A Shares and 0.40% for Institutional Shares until May 1, The Fund may have to repay some of these waivers and reimbursements to BFA and BTC in the following two years. This agreement may be terminated upon 90 days notice by a majority of the non-interested trustees of the Trust or of MIP, as applicable, or by a vote of a majority of the outstanding voting securities of the Fund or the Master Portfolio, as applicable. Example: This Example is intended to help you compare the cost of investing in shares of the Fund with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in shares of 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 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 Investor A Shares $69 $776 Institutional Shares $44 $684 Portfolio Turnover: The Master Portfolio 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 period, the Master Portfolio s portfolio turnover rate was 4% of the average value of its portfolio. 3

8 Principal Investment Strategies of the Fund The ACWI ex-us Index Fund employs a passive management approach, attempting to invest in a portfolio of assets whose performance is expected to match approximately the performance of the MSCI ACWI ex-usa Index. The Fund will be substantially invested in equity securities in the MSCI ACWI ex-usa Index, and will invest, under normal circumstances, at least 80% of its assets in securities or other financial instruments that are components of or have economic characteristics similar to the securities included in the MSCI ACWI ex-usa Index. Equity securities consist primarily of common stock, preferred stock, securities convertible into common stock and securities or other instruments whose price is linked to the value of common stock. The Fund will invest in the common stocks represented in the MSCI ACWI ex-usa Index in roughly the same proportions as their weightings in the MSCI ACWI ex-usa Index. The MSCI ACWI ex-usa Index is a free float-adjusted market capitalization index designed to measure the combined equity market performance of developed and emerging market countries, excluding the United States. The component stocks have a market capitalization between $69 million and $207 billion as of March 31, The Fund may also engage in futures transactions. At times, the Fund may not invest in all of the common stocks in the MSCI ACWI ex-usa Index, or in the same weightings as in the MSCI ACWI ex-usa Index. At those times, the Fund chooses investments so that the market capitalizations, industry weightings and other fundamental characteristics of the stocks chosen are similar to the MSCI ACWI ex-usa Index as a whole. The Fund may lend securities with a value up to % of its total assets to financial institutions that provide cash or securities issued or guaranteed by the U.S. Government as collateral. The Fund will concentrate its investments (i.e., hold 25% or more of its total assets) in a particular industry or group of industries to approximately the same extent that the MSCI ACWI ex-usa Index is concentrated. The Fund is a feeder fund that invests all of its assets in the Master Portfolio, which has the same investment objective and strategies as the Fund. All investments are made at the Master Portfolio level. This structure is sometimes called a master/feeder structure. The Fund s investment results will correspond directly to the investment results of the Master Portfolio. For simplicity, this prospectus uses the terms ACWI ex-us Index Fund or Fund to include the Master Portfolio. Principal Risks of Investing in the Fund Risk is inherent in all investing. The value of your investment in the ACWI ex-us Index 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 certain risks of investing in the Fund. Concentration Risk To the extent the Fund concentrates in a particular industry, it may be more susceptible to economic conditions and risks affecting that industry. 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. 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. Equity Securities Risk Stock markets are volatile. The price of equity securities fluctuates based on changes in a company s financial condition and overall market and economic conditions. 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 Fund s 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. 4

9 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. Futures Risk The Fund s use of futures may reduce the Fund s returns. In these transactions, the Fund is subject to liquidity risk and correlation risk (i.e., that fluctuations in a future s value may not correlate perfectly with the change in market value of the instruments held by the Fund). Index Fund Risk An index fund has operating and other expenses while an index does not. As a result, while the Fund will attempt to track the MSCI ACWI ex-usa Index as closely as possible, it will tend to underperform the index to some degree over time. If an index fund is properly correlated to its stated index, the fund will perform poorly when the index performs poorly. 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 indexes or the securities selected by other funds with similar investment objectives and investment strategies. This means you may lose money. Mid-Cap Securities Risk The securities of mid-cap companies generally trade in lower volumes and are generally subject to greater and less predictable price changes than the securities of larger capitalization companies. Non-Diversification Risk The Fund is a non-diversified fund. Because the Fund may invest in securities of a smaller number of issuers, it may be more exposed to the risks associated with and developments affecting an individual issuer than a fund that invests more widely. Securities Lending Risk Securities lending involves the risk that the borrower may fail to return the securities in a timely manner or at all. As a result, the Fund may lose money and there may be a delay in recovering the loaned securities. The Fund could also lose money if it does not recover the securities and/or the value of the collateral falls, including the value of investments made with cash collateral. These events could trigger adverse tax consequences for the Fund. Small Cap and Emerging Growth Securities Risk Small cap or emerging growth companies may have limited product lines or markets. They may be less financially secure than larger, more established companies. They may depend on a more limited management group than larger capitalized companies. Tracking Error Risk The performance of the Fund may diverge from that of the MSCI ACWI ex-usa Index. Performance Information Because the ACWI ex-us Index Fund does not have a full calendar year of operations, it does not have performance information an investor would find useful in evaluating the risks of investing in the Fund. The Fund s primary benchmark is the MSCI ACWI ex-usa Index. Investment Adviser The Master Portfolio s investment adviser is BlackRock Fund Advisors (previously defined as BFA ). Portfolio Managers Portfolio Manager of the Name Master Portfolio Since Title Edward Corallo 2011 Managing Director of BlackRock, Inc. Christopher Bliss, CFA, CPA 2011 Managing Director of BlackRock, Inc. Greg Savage, CFA 2012 Managing Director of BlackRock, Inc. *** For important information about the purchase and sale of Fund shares, tax information and financial intermediary compensation, please turn to Important Additional Information on page 8 of this prospectus. 5

10 Fund Overview Key Facts About BlackRock Russell 1000 Index Fund Investment Objective The investment objective of BlackRock Russell 1000 Index Fund ( Russell 1000 Index Fund or the Fund ), a series of BlackRock Funds III (the Trust ), is to match the performance of the Russell 1000 Index (the Russell 1000 ), as closely as possible before the deduction of Fund expenses. Fees and Expenses of the Fund The table below describes the fees and expenses that you may pay if you buy and hold shares of the Russell 1000 Index Fund. Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) 1 Investor A Shares Institutional Shares Management Fee % 0.05% Distribution and/or Service (12b-1) Fees 0.25% None Other Expenses 2,3 1.40% 1.46% Administration Fees 0.08% 0.08% Miscellaneous Other Expenses 2,3 1.32% 1.38% Acquired Fund Fees and Expenses % 0.01% Total Annual Fund Operating Expenses % 1.52% Fee Waivers and/or Expense Reimbursements 4 (1.22)% (1.28)% Total Annual Fund Operating Expenses After Fee Waivers and/or Expense Reimbursements % 0.24% 1 The fees and expenses shown in the table and the example that follows include both the expenses of the Fund and its share of the allocated expenses of Russell 1000 Index Master Portfolio (the Master Portfolio ), a series of Master Investment Portfolio ( MIP ). The management fees are paid by the Master Portfolio. 2 Other Expenses and Miscellaneous Other Expenses have been restated to reflect current fees. 3 The Total Annual Fund Operating Expenses do not correlate to the ratio 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 or the restatement of Other Expenses and Miscellaneous Other Expenses to reflect current fees. 4 As described in the Management of the Funds section of the Fund s prospectus on pages 26-30, BlackRock Fund Advisors ( BFA ) and BlackRock Institutional Trust Company, N.A. ( BTC ) have contractually agreed to waive and/or reimburse fees and/or expenses in order to limit Total Annual Fund Operating Expenses After Fee Waivers and/or Expense Reimbursements of the Fund (excluding Dividend Expense, Interest Expense, Acquired Fund Fees and Expenses and certain other Fund expenses) as a percentage of average daily net assets to 0.48% for Investor A Shares and 0.23% for Institutional Shares, until May 1, The Fund may have to repay some of these waivers and reimbursements to BFA and BTC in the following two years. This agreement may be terminated upon 90 days notice by a majority of the non-interested trustees of the Trust or of MIP, as applicable, or by a vote of a majority of the outstanding voting securities of the Fund or the Master Portfolio, as applicable. Example: This Example is intended to help you compare the cost of investing in shares of the Fund with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in shares of 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 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 Investor A Shares $50 $419 $813 $1,917 Institutional Shares $25 $354 $707 $1,703 Portfolio Turnover: The Master Portfolio 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 period, the Master Portfolio s portfolio turnover rate was 10% of the average value of its portfolio. 6

11 Principal Investment Strategies of the Fund The Russell 1000 Index Fund employs a passive management approach, attempting to invest in a portfolio of assets whose performance is expected to match approximately the performance of the Russell The Fund will be substantially invested in equity securities in the Russell 1000, and will invest, under normal circumstances, at least 80% of its assets in securities or other financial instruments that are components of or have economic characteristics similar to the securities included in the Russell Equity securities include common stock, preferred stock, securities convertible into common stock and securities or other instruments whose price is linked to the value of common stock. The Fund will invest in the common stocks represented in the Russell 1000 in roughly the same proportions as their weightings in the Russell As of May 31, 2011, the most recent rebalance date, the companies in the Russell 1000 have a market capitalization ranging from $1.624 billion to $ billion. The Fund may also engage in futures transactions. At times, the Fund may not invest in all of the common stocks in the Russell 1000, or in the same weightings as in the Russell At those times, the Fund chooses investments so that the market capitalizations, industry weightings and other fundamental characteristics of the stocks chosen are similar to the Russell 1000 as a whole. The Fund may lend securities with a value up to % of its total assets to financial institutions that provide cash or securities issued or guaranteed by the U.S. Government as collateral. The Fund will concentrate its investments (i.e., hold 25% or more of its total assets) in a particular industry or group of industries to approximately the same extent that the Russell 1000 is concentrated. The Fund is a feeder fund that invests all of its investable assets in the Master Portfolio, which has the same investment objective and strategies as the Fund. All investments are made at the Master Portfolio level. This structure is sometimes called a master/feeder structure. The Fund s investment results will correspond directly to the investment results of the Master Portfolio. For simplicity, this prospectus uses the name of the Fund or the term Fund (as applicable) to include the Master Portfolio. Principal Risks of Investing in the Fund Risk is inherent in all investing. The value of your investment in the Russell 1000 Index 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 certain risks of investing in the Fund. Concentration Risk To the extent the Fund concentrates in a particular industry, it may be more susceptible to economic conditions and risks affecting that industry. Equity Securities Risk Stock markets are volatile. The price of equity securities fluctuates based on changes in a company s financial condition and overall market and economic conditions. Futures Risk The Fund s use of futures may reduce the Fund s returns. In these transactions, the Fund is subject to liquidity risk and correlation risk (i.e., that fluctuations in a future s value may not correlate perfectly with the change in the market value of the instruments held by the Fund). Index Fund Risk An index fund has operating and other expenses while an index does not. As a result, while the Fund will attempt to track the Russell 1000 as closely as possible, it will tend to underperform the index to some degree over time. If an index fund is properly correlated to its stated index, the fund will perform poorly when the index performs poorly. Market Risk and Selection Risk Market risk is the risk that one or more markets in which the Fund invests will go down in value, including the possibility that the markets will go down sharply and unpredictably. Selection risk is the risk that the securities selected by Fund management will underperform the markets, the relevant indices or the securities selected by other funds with similar investment objectives and investment strategies. This means you may lose money. Mid-Cap Securities Risk The securities of mid-cap companies generally trade in lower volumes and are generally subject to greater and less predictable price changes than the securities of larger capitalization companies. Securities Lending Risk Securities lending involves the risk that the borrower may fail to return the securities in a timely manner or at all. As a result, the Fund may lose money and there may be a delay in recovering the loaned securities. The Fund could also lose money if it does not recover the securities and/or the value of the collateral falls, including the value of investments made with cash collateral. These events could trigger adverse tax consequences for the Fund. Tracking Error Risk The performance of the Fund may diverge from that of the Russell

12 Performance Information Because the Russell 1000 Index Fund does not have a full calendar year of operations, it does not have performance information an investor would find useful in evaluating the risks of investing in the Fund. The Fund s primary benchmark is the Russell Investment Adviser The Master Portfolio s investment adviser is BlackRock Fund Advisors (previously defined as BFA ). Portfolio Managers Portfolio Manager of the Name Master Portfolio Since Title Edward Corallo 2011 Managing Director of BlackRock, Inc. Christopher Bliss, CFA, CPA 2011 Managing Director of BlackRock, Inc. Greg Savage, CFA 2012 Managing Director of BlackRock, Inc. *** For important information about purchase and sale of Fund shares, tax information and financial intermediary compensation, please see Important Additional Information below. Important Additional Information Purchase and Sale of Fund Shares You may purchase or redeem shares of a Fund 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 a Fund, you should contact the Fund by phone at (800) , by mail (c/o BlackRock Funds III, P.O. Box 9819, Providence, Rhode Island, ), or by the Internet at Each Fund s initial and subsequent investment minimums generally are as follows, although the Fund may reduce or waive the minimums in some cases: Minimum Initial Investment Minimum Additional Investment Investor A $1,000 for all accounts except: $250 for certain fee-based programs. $100 for retirement plans. $50, if establishing an Automatic Investment Plan. $50 for all accounts except certain retirement plans and payroll deduction programs may have a lower minimum. Institutional Shares $2 million for institutions and individuals. Institutional Shares are available to clients of registered investment advisors who have $250,000 invested in the Fund. No subsequent minimum. Tax Information Each Fund s dividends and distributions may be subject to U.S. 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 U.S. Federal income tax upon withdrawal from such tax deferred arrangements. Payments to Broker/Dealers and Other Financial Intermediaries If you purchase shares of a Fund through a broker-dealer or other financial intermediary, the Fund and BlackRock Investments, LLC, the Fund s distributor, or its affiliates may pay the intermediary for the sale of Fund shares and other 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 intermediary s website for more information. 8

13 Details About the Funds Included in this prospectus are sections that tell you about buying and selling shares, management information, shareholder features of BlackRock ACWI ex-us Index Fund ( ACWI ex-us Index Fund ) and BlackRock Russell 1000 Index Fund ( Russell 1000 Index Fund") (each a Fund and collectively the Funds ), each a series of BlackRock Funds III (the Trust ), and your rights as a shareholder. ACWI ex-us Index Fund and Russell 1000 Index Fund are each feeder funds that invest all of their assets in a corresponding master portfolio (each a Master Portfolio ) of Master Investment Portfolio ( MIP ), a mutual fund that has the same objective and strategies as the applicable Fund. All investments will be made at the Master Portfolio level. This structure is sometimes called a master/feeder structure. The ACWI ex-us Index Fund invests all of its assets in the ACWI ex-us Index Master Portfolio ( ACWI ex-us Index Master Portfolio ). The Russell 1000 Index Fund invests all of its assets in the Russell 1000 Index Master Portfolio ( Russell 1000 Index Master Portfolio ). Each Fund s investment results will correspond directly to the investment results of the applicable Master Portfolio. For simplicity, this prospectus uses the name of the Fund or the term Fund to include the applicable Master Portfolio in which the Fund invests. How Each Fund Invests ACWI ex-us Index Fund Investment Objective The investment objective of the ACWI ex-us Index Fund is to match the performance of the MSCI All Country World ex- USA Index (the MSCI ACWI ex-usa Index ) in U.S. dollars with net dividends as closely as possible before the deduction of Fund expenses. The Fund s investment objective may be changed by the Trust s Board of Trustees without shareholder approval. The MSCI ACWI ex-usa Index is a free float-adjusted market capitalization index designed to measure the combined equity market performance of developed and emerging market countries, excluding the United States. As of May 31, 2011, the index consisted of companies in the following countries: Australia, Austria, Belgium, Brazil, Canada, Chile, China, Colombia, the Czech Republic, Denmark, Egypt, Finland, France, Germany, Greece, Hong Kong, Hungary, India, Indonesia, Ireland, Israel, Italy, Japan, Malaysia, Mexico, Morocco, the Netherlands, New Zealand, Norway, Peru, the Philippines, Poland, Portugal, Russia, Singapore, South Africa, South Korea, Spain, Sweden, Switzerland, Taiwan, Thailand, Turkey and the United Kingdom. MSCI s selection of a stock for the MSCI ACWI ex-usa Index does not mean that MSCI believes the stock to be an attractive investment. The MSCI ACWI ex-usa Index is maintained by MSCI Inc. ( MSCI ). MSCI does not sponsor, endorse, sell or promote the Fund or the Master Portfolio, nor is it affiliated in any way with BlackRock Institutional Trust Company, N.A. ( BTC ), the Fund s administrator, BlackRock Fund Advisors ( BFA ), the Master Portfolio s investment adviser, the Fund or the Master Portfolio. MSCI makes no representation or warranty, expressed or implied, regarding the advisability of investing in the Fund or the Master Portfolio. Neither BFA nor BTC has or will have a role in maintaining the MSCI ACWI ex-usa Index. Investment Process The ACWI ex-us Index Fund will not attempt to buy or sell securities based on Fund management s economic, financial or market analysis, but will instead employ a passive investment approach. This means that Fund management will attempt to invest in a portfolio of assets whose performance is expected to match approximately the performance of the MSCI ACWI ex-usa Index before deduction of Fund expenses. The Fund will buy or sell securities only when Fund management believes it is necessary to do so in order to match the performance of the MSCI ACWI ex-usa Index. Accordingly, it is anticipated that the Fund s portfolio turnover and trading costs will be lower than those of an actively managed fund. However, the Fund has operating and other expenses, while an index does not. Therefore, the Fund will tend to underperform its target index to some degree over time. At times, the portfolio composition of the Fund may be altered (or rebalanced ) to reflect changes in the characteristics of the index that the Fund tracks. Principal Investment Strategies The ACWI ex-us Index Fund attempts to achieve, in both rising and falling markets, a correlation of at least 95% between the total return of its net assets before fees and expenses and the total return of the Fund s benchmark index, the MSCI ACWI ex-usa Index. Notwithstanding the factors described below, perfect (100%) correlation would be achieved if the total return of the Fund s net assets, before fees and expenses, increased or decreased exactly as the total return of the Fund s benchmark index increased or decreased. The Fund s ability to match its investment performance to the investment performance of its benchmark index may be affected by, among other things, the Fund s expenses, the amount of cash and cash equivalents held by the Fund, the manner in which the total return of the Fund s benchmark index is calculated; the size of the Fund s investment portfolio; and the timing, frequency and size of shareholder purchases and redemptions. 9

14 The ACWI ex-us Index Fund will be substantially invested in securities in the MSCI ACWI ex-usa Index, and will invest, under normal circumstances, at least 80% of its assets in securities or other financial instruments that are components of or have economic characteristics similar to the securities included in the MSCI ACWI ex-usa Index. This is a non-fundamental policy of the Fund and may not be changed without 60 days prior notice to shareholders. The Fund may change its target index if Fund management believes a different index would better enable the Fund to match the performance of the market segment represented by the MSCI ACWI ex-usa Index and, accordingly, the investment objective of the Fund may be changed without shareholder approval. The Fund may invest in all stocks in the MSCI ACWI ex-usa Index in roughly the same proportions as their weightings in the MSCI ACWI ex-usa Index. For example, if 2% of the MSCI ACWI ex-usa Index is made up of the stock of a particular company, the Fund will normally invest approximately 2% of its assets in that company. This strategy is known as full replication. However, when Fund management believes it would be cost efficient, Fund management is authorized to deviate from full replication and to invest instead in a statistically selected sample of the stocks in the MSCI ACWI ex- USA Index which has aggregate investment characteristics, such as average market capitalization and industry weightings, similar to the MSCI ACWI ex-usa Index as a whole, but which involves less transaction cost than would be incurred through full replication. The Fund also may engage in futures transactions to manage its short-term liquidity and/or as substitutes for comparable market positions in the securities in its benchmark index. Fund management may also purchase stocks not included in the MSCI ACWI ex-usa Index when it believes that to do so would be a cost efficient way of approximating the performance of the MSCI ACWI ex-usa Index. Fund management may omit or remove a security which is included in the index from the portfolio of the Fund if, following objective criteria, Fund management judges the security to be insufficiently liquid or believes the merit of the investment has been substantially impaired by extraordinary events or financial conditions. If Fund management uses these techniques, the Fund may not track the MSCI ACWI ex-usa Index as closely as it would if it were fully replicating the MSCI ACWI ex-usa Index. The Fund may lend securities with a value up to % of its total assets to financial institutions that provide cash or securities issued or guaranteed by the U.S. Government as collateral. The Fund will concentrate its investments (i.e., hold 25% or more of its total assets) in a particular industry or group of industries to approximately the same extent that the MSCI ACWI ex-usa Index is concentrated. The Fund is classified as non-diversified under the Investment Company Act of 1940, as amended (the Investment Company Act ). ABOUT THE PORTFOLIO MANAGEMENT TEAM OF THE FUND/MASTER PORTFOLIO The Master Portfolio is managed by a team of financial professionals. Edward Corallo, Christopher Bliss, CFA, CPA and Greg Savage, CFA are the portfolio managers of the Master Portfolio and are jointly and primarily responsible for the day-to-day management of the Master Portfolio. Please see Management of the Funds Portfolio Managers for additional information about the portfolio management team. Russell 1000 Index Fund Investment Objective The investment objective of the Russell 1000 Index Fund is to match the performance of the Russell 1000 Index (the Russell 1000 ) as closely as possible before the deduction of Fund expenses. The Fund s investment objective may be changed by the Trust s Board of Trustees without shareholder approval. The Russell 1000 measures the performance of the large cap segment of the U.S. equity universe. It is a subset of the Russell 3000 Index and includes approximately 1,000 of the largest securities based on a combination of their market capitalization and current index membership, as determined by the Russell Investment Group. As of May 31, 2011, the most recent rebalance date, the companies in the Russell 1000 have a market capitalization ranging from $1.624 billion to $ billion. The Russell 1000 represents approximately 92% of the total market capitalization of the Russell 3000 Index. The Russell Investment Group s selection of a stock for the Russell 1000 does not mean that the Russell Investment Group believes the stock to be an attractive investment. The Russell Investment Group updates the Russell 1000 once each year, at which time there may be substantial changes in the composition of the index (and consequently, significant turnover in the Fund). Stocks of companies that merge, are acquired or otherwise cease to exist during the year are not replaced in the index. The Russell Investment Group does not sponsor, endorse, sell or promote the Fund or the Master Portfolio. The Russell Investment Group makes no representation or warranty, expressed or implied, regarding the advisability of investing in the Fund or the Master Portfolio. Neither BFA nor BlackRock Institutional Trust Company, N.A. ( BTC ), the Fund s administrator, has or will have a role in maintaining the Russell Investment Process The Russell 1000 Index Fund will not attempt to buy or sell securities based on Fund management s economic, financial or market analysis, but will instead employ a passive investment approach. This means that Fund management will attempt to invest in a portfolio of assets whose performance is expected to match approximately the 10