0001398078 2011-12-29 2012-12-28 0001398078 brf18:S000029307Member brf18:InvestorAndInstitutionalSharesMember 2011-12-29 2012-12-28 0001398078 brf18:S000029307Member brf18:InvestorAndInstitutionalSharesMember brf18:C000090125Member 2011-12-29 2012-12-28 0001398078 brf18:S000029307Member brf18:InvestorAndInstitutionalSharesMember brf18:C000090126Member 2011-12-29 2012-12-28 0001398078 brf18:S000029307Member brf18:InvestorAndInstitutionalSharesMember brf18:C000090127Member 2011-12-29 2012-12-28 0001398078 brf18:S000029307Member brf18:PrimeSharesMember 2011-12-29 2012-12-28 0001398078 brf18:S000029307Member brf18:PrimeSharesMember brf18:C000093814Member 2011-12-29 2012-12-28 0001398078 brf18:S000029307Member brf18:InvestorAndInstitutionalSharesMember rr:AfterTaxesOnDistributionsMember brf18:C000090125Member 2011-12-29 2012-12-28 0001398078 brf18:S000029307Member brf18:InvestorAndInstitutionalSharesMember rr:AfterTaxesOnDistributionsAndSalesMember brf18:C000090125Member 2011-12-29 2012-12-28 0001398078 brf18:S000029307Member brf18:InvestorAndInstitutionalSharesMember brf18:SAndPleveragedLoanIndexMember 2011-12-29 2012-12-28 0001398078 brf18:S000029307Member brf18:PrimeSharesMember rr:AfterTaxesOnDistributionsMember brf18:C000093814Member 2011-12-29 2012-12-28 0001398078 brf18:S000029307Member brf18:PrimeSharesMember rr:AfterTaxesOnDistributionsAndSalesMember brf18:C000093814Member 2011-12-29 2012-12-28 0001398078 brf18:S000029307Member brf18:PrimeSharesMember brf18:SAndPleveragedLoanIndexMember 2011-12-29 2012-12-28 pure iso4217:USD 2012-12-28 485BPOS BlackRock Funds II 0001398078 2012-12-28 2012-12-28 false 2012-08-31 Fund Overview Key Facts about BlackRock Floating Rate Income Portfolio Investment Objective Fees and Expenses of the Fund The primary investment objective of the BlackRock Floating Rate Income Portfolio (the “Floating Rate Income Portfolio” or the “Fund”) is to seek to provide high current income, with a secondary objective of long-term capital appreciation. This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in the BlackRock-advised fund complex. More information about these and other discounts is available from your financial professional and in the “Details about the Share Classes” section on page 20 of the Fund’s prospectus and in the “Purchase of Shares” section on page II-71 of the Fund’s statement of additional information. Shareholder Fees (fees paid directly from your investment) Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) Example: This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: 0.025 0 0 0 0.01 0 0.0055 0.0055 0.0055 0.0025 0 0.01 0.0031 0.0031 0.0025 0.0001 0.0001 0.0001 0.0112 0.0187 0.0081 -0.0006 -0.0006 -0.001 0.0106 0.0181 0.0071 <a name="toc423930_3"></a>Investment Objective <a name="toc423930_4"></a>Fees and Expenses of the Fund This table describes the fees and expenses that you may pay if you buy and hold Investor C1 Shares of the Fund. Example: This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: You would pay the following expenses if you did not redeem your shares: Portfolio Turnover: The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover may indicate higher transaction costs and may result in higher taxes when shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was approximately 60% of the average value of its portfolio. <a name="toc423930_5"></a>Principal Investment Strategies of the Fund <a name="toc423930_6"></a>Principal Risks of Investing in the Fund <a name="toc423930_7"></a>Performance Information The information shows you how the Fund’s performance has varied year by year and provides some indication of the risks of investing in the Fund. The table compares the Fund’s performance to that of the S&P Leveraged Loan Index. The Fund acquired the assets and liabilities of BlackRock Senior Floating Rate Fund, Inc. (“Predecessor Fund”) in a reorganization on March 21, 2011. The Predecessor Fund’s performance and financial history have been adopted by the Fund and will be used going forward from the date of the reorganization. As a result, the total returns for Investor C1 Shares in the chart below prior to the date of the reorganization are those of the Predecessor Fund’s shares of Common Stock, adjusted to reflect the distribution and service (12b-1) fees applicable to Investor C1 Shares. Sales charges are not reflected in the bar chart. If they were, returns would be less than those shown. The returns in the table for Investor C1 Shares are based on the Predecessor Fund’s shares of Common Stock adjusted to reflect the applicable sales charges and distribution and service (12b-1) fees. As with all such investments, past performance (before and after taxes) is not an indication of future results. If the Fund’s investment manager and its affiliates had not waived or reimbursed certain Fund expenses during these periods, the Fund’s returns would have been lower. Updated information on the Fund’s performance can be obtained by visiting http://www.blackrock.com/funds or can be obtained by phone at 800-882-0052. During the ten-year period shown in the bar chart, the highest return for a quarter was 14.63% (quarter ended June 30, 2009) and the lowest return for a quarter was –23.08% (quarter ended December 31, 2008). The year-to-date return as of September 30, 2012 was 6.34%. After-tax returns are calculated using the historical highest individual Federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown, and the after-tax returns shown are not relevant to investors who hold their shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. 355 284 73 591 582 249 846 1005 440 1574 2186 992 184 582 1005 2186 Portfolio Turnover: The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover may indicate higher transaction costs and may result in higher taxes when shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was approximately 60% of the average value of its portfolio. The information shows you how the Fund’s performance has varied year by year and provides some indication of the risks of investing in the Fund. The table compares the Fund’s performance to that of the S&P Leveraged Loan Index. The Fund acquired the assets and liabilities of BlackRock Senior Floating Rate Fund, Inc. (“Predecessor Fund”) in a reorganization on March 21, 2011. The Predecessor Fund’s performance and financial history have been adopted by the Fund and will be used going forward from the date of the reorganization. As a result, the total returns for Investor A Shares in the chart below prior to the date of the reorganization are those of the Predecessor Fund’s shares of Common Stock. Sales charges are not reflected in the bar chart. If they were, returns would be less than those shown. The returns in the table for Investor A, Investor C and Institutional Shares are based on the Predecessor Fund’s shares of Common Stock adjusted to reflect the applicable sales charges, if any. The returns for Investor A, Investor C and Institutional Shares are also adjusted to reflect the applicable expenses and distribution and service (12b-1) fees, if any. As with all such investments, past performance (before and after taxes) is not an indication of future results. If the Fund’s investment manager and its affiliates had not waived or reimbursed certain Fund expenses during these periods, the Fund’s returns would have been lower. Updated information on the Fund’s performance can be obtained by visiting http://www.blackrock.com/funds or can be obtained by phone at 800-882-0052. During the ten-year period shown in the bar chart, the highest return for a quarter was 14.77% (quarter ended June 30, 2009) and the lowest return for a quarter was –22.98% (quarter ended December 31, 2008). The year-to-date return as of September 30, 2012 was 6.72%. After-tax returns are calculated using the historical highest individual Federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown, and the after-tax returns shown are not relevant to investors who hold their shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. After-tax returns are shown for Investor A Shares only, and the after-tax returns for Investor C Shares and Institutional Shares will vary. Fund Overview Key Facts about BlackRock Floating Rate Income Portfolio The Fund normally invests at least 80% of its assets in floating rate investments and investments that are the economic equivalent of floating rate investments, which effectively enables the Fund to achieve a floating rate of income. These investments may include, but are not limited to, any combination of the following securities: (i) senior secured floating rate loans or debt; (ii) second lien or other subordinated or unsecured floating rate loans or debt; and (iii) fixed-rate loans or debt with respect to which the Fund has entered into derivative instruments to effectively convert the fixed-rate interest payments into floating rate interest payments. The Fund may also purchase, without limitation, participations or assignments in senior floating rate loans or second lien floating rate loans. For purposes of the Fund’s investments, the term debt includes investments in convertible or preferred securities. The Fund may invest in investments of any credit quality without limitation, including investments rated below investment grade. The Fund anticipates that, under current market conditions, a substantial portion of its portfolio will consist of leveraged loans rated below investment grade and similar investments. These investments are expected to exhibit credit risks similar to high yield securities, which are commonly referred to as “junk bonds.” The Fund may invest up to 20% of its assets in fixed income securities with respect to which the Fund has not entered into derivative instruments to effectively convert the fixed-rate interest payments into floating-rate interest payments. Such fixed income securities include, but are not limited to, corporate bonds, preferred securities, convertible securities, mezzanine investments, collateralized loan obligations, senior loans, second lien loans, structured products and U.S. government debt securities. The Fund’s investments in any floating rate and fixed income securities may be of any duration or maturity. The Fund may invest in securities of foreign issuers, including issuers located in emerging markets, without limitation. The Fund may also invest up to 15% of its assets in illiquid securities. The Fund may also invest in companies whose financial condition is uncertain, where the borrower has defaulted in the payment of interest or principal or in the performance of its covenants or agreements, or that may be involved in bankruptcy proceedings, reorganizations or financial restructurings. The Fund may invest up to 10% of its assets in common stocks or other equity securities. In addition, the Fund may acquire and hold such securities (or rights to acquire such securities) in unit offerings with fixed income securities, in connection with an amendment, waiver, conversion or exchange of fixed income securities, in connection with the bankruptcy or workout of a distressed fixed income security, or upon the exercise of a right or warrant obtained on account of a fixed income security. The Fund may buy or sell options or futures on a security or an index of securities, buy or sell options on futures or enter into credit default swaps and interest rate or foreign currency transactions, including swaps and forward contracts (collectively, commonly known as derivatives). The Fund may use derivatives for hedging purposes, but is not required to, as well as to increase the total return on its portfolio investments. Risk is inherent in all investing. The value of your investment in the Fund, as well as the amount of return you receive on your investment, may fluctuate significantly from day to day and over time. You may lose part or all of your investment in the Fund or your investment may not perform as well as other similar investments. The following is a summary description of principal risks of investing in the Fund.<ul type="square"><li style="margin-left: -20px">Convertible Securities Risk — The market value of a convertible security performs like that of a regular debt security; that is, if market interest rates rise, the value of a convertible security usually falls. In addition, convertible securities are subject to the risk that the issuer will not be able to pay interest or dividends when due, and their market value may change based on changes in the issuer’s credit rating or the market’s perception of the issuer’s creditworthiness. Since it derives a portion of its value from the common stock into which it may be converted, a convertible security is also subject to the same types of market and issuer risks that apply to the underlying common stock.</li></ul><ul type="square"><li style="margin-left: -20px">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.</li></ul><ul type="square"><li style="margin-left: -20px">Counterparty Risk — The counterparty to an over-the-counter derivatives contract or a borrower of the Fund’s securities may be unable or unwilling to make timely principal, interest or settlement payments, or otherwise to honor its obligations.</li></ul><ul type="square"><li style="margin-left: -20px">Credit Risk — Credit risk refers to the possibility that the issuer of a security will not be able to make payments of interest and principal when due. Changes in an issuer’s credit rating or the market’s perception of an issuer’s creditworthiness may also affect the value of the Fund’s investment in that issuer.</li></ul><ul type="square"><li style="margin-left: -20px">Derivatives Risk — The Fund’s use of derivatives may reduce the Fund’s returns and/or increase volatility. Volatility is defined as the characteristic of a security, an index or a market to fluctuate significantly in price within a short time period. Derivatives are also subject to counterparty risk, which is the risk that the other party in the transaction will not fulfill its contractual obligation. A risk of the Fund’s use of derivatives is that the fluctuations in their values may not correlate perfectly with the overall securities markets. The possible lack of a liquid secondary market for derivatives and the resulting inability of the Fund to sell or otherwise close a derivatives position could expose the Fund to losses and could make derivatives more difficult for the Fund to value accurately. Derivatives may give rise to a form of leverage and may expose the Fund to greater risk and increase its costs. Recent legislation calls for new regulation of the derivatives markets. The extent and impact of the regulation is not yet known and may not be known for some time. New regulation may make derivatives more costly, may limit the availability of derivatives, or may otherwise adversely affect the value or performance of derivatives.</li></ul><ul type="square"><li style="margin-left: -20px">Distressed Securities Risk — Distressed securities are speculative and involve substantial risks in addition to the risks of investing in junk bonds. The Fund will generally not receive interest payments on the distressed securities and may incur costs to protect its investment. In addition, distressed securities involve the substantial risk that principal will not be repaid. These securities may present a substantial risk of default or may be in default at the time of investment. The Fund may incur additional expenses to the extent it is required to seek recovery upon a default in the payment of principal of or interest on its portfolio holdings. In any reorganization or liquidation proceeding relating to a portfolio company, the Fund may lose its entire investment or may be required to accept cash or securities with a value less than its original investment. Distressed securities and any securities received in an exchange for such securities may be subject to restrictions on resale.</li></ul><ul type="square"><li style="margin-left: -20px">Dividend Risk — Because most of the corporate loans held by the Fund will have floating or variable interest rates, the amounts of the Fund’s monthly distributions to its stockholders are expected to vary with fluctuations in market interest rates. Generally, when market interest rates fall, the amount of the distributions to stockholders will likewise decrease.</li></ul><ul type="square"><li style="margin-left: -20px">Emerging Markets Risk — Emerging markets are riskier than more developed markets because they tend to develop unevenly and may never fully develop. Investments in emerging markets may be considered speculative. Emerging markets are more likely to experience hyperinflation and currency devaluations, which adversely affect returns to U.S. investors. In addition, many emerging securities markets have far lower trading volumes and less liquidity than developed markets.</li></ul><ul type="square"><li style="margin-left: -20px">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.</li></ul><ul type="square"><li style="margin-left: -20px">Event Risk — Event risk is the risk that corporate issuers may undergo restructurings, such as mergers, leveraged buyouts, takeovers, or similar events financed by increased debt. As a result of the added debt, the credit quality and market value of a company’s bonds and/or other debt securities may decline significantly.</li></ul><ul type="square"><li style="margin-left: -20px">Extension Risk — When interest rates rise, certain obligations will be paid off by the obligor more slowly than anticipated, causing the value of these securities to fall.</li></ul><ul type="square"><li style="margin-left: -20px">Foreign Securities Risk — Foreign investments often involve special risks not present in U.S. investments that can increase the chances that the Fund will lose money. These risks include:</li></ul><ul type="square"><li style="margin-left: 00px"><blockquote>The Fund generally holds its foreign securities and cash in foreign banks and securities depositories, which may be recently organized or new to the foreign custody business and may be subject to only limited or no regulatory oversight.</blockquote></li></ul><ul type="square"><li style="margin-left: 00px"><blockquote>Changes in foreign currency exchange rates can affect the value of the Fund’s portfolio.</blockquote></li></ul><ul type="square"><li style="margin-left: 00px"><blockquote>The economies of certain foreign markets may not compare favorably with the economy of the United States with respect to such issues as growth of gross national product, reinvestment of capital, resources and balance of payments position.</blockquote></li></ul><ul type="square"><li style="margin-left: 00px"><blockquote>The governments of certain countries may prohibit or impose substantial restrictions on foreign investments in their capital markets or in certain industries.</blockquote></li></ul><ul type="square"><li style="margin-left: 00px"><blockquote>Many foreign governments do not supervise and regulate stock exchanges, brokers and the sale of securities to the same extent as does the United States and may not have laws to protect investors that are comparable to U.S. securities laws.</blockquote></li></ul><ul type="square"><li style="margin-left: 00px"><blockquote>Settlement and clearance procedures in certain foreign markets may result in delays in payment for or delivery of securities not typically associated with settlement and clearance of U.S. investments.</blockquote></li></ul><ul type="square"><li style="margin-left: 00px"><blockquote>The European financial markets have recently experienced volatility and adverse trends due to concerns about economic downturns in, or rising government debt levels of several European countries. These events have adversely affected the exchange rate of the Euro and may spread to other countries in Europe, including countries that do not use the Euro. These events may affect the value and liquidity of certain of the Fund’s investments.</blockquote></li></ul><ul type="square"><li style="margin-left: -20px">Interest Rate Risk — Interest rate risk is the risk that prices of bonds and other fixed income securities will increase as interest rates fall, and decrease as interest rates rise.</li></ul><ul type="square"><li style="margin-left: -20px">Liquidity Risk — Liquidity risk exists when particular investments are difficult to purchase or sell. The Fund’s investments in illiquid securities may reduce the returns of the Fund because it may be difficult to sell the illiquid securities at an advantageous time or price. To the extent that the Fund’s principal investment strategies involve derivatives or securities with substantial market and/or credit risk, the Fund will tend to have the greatest exposure to liquidity risk. Liquid investments may become illiquid after purchase by the Fund, particularly during periods of market turmoil. Illiquid investments may be harder to value, especially in changing markets, and if the Fund is forced to sell these investments to meet redemption requests or for other cash needs, the Fund may suffer a loss. In addition, when there is illiquidity in the market for certain securities, the Fund, due to limitations on illiquid investments, may be subject to purchase and sale restrictions.</li></ul><ul type="square"><li style="margin-left: -20px">Market Risk and Selection Risk — Market risk is the risk that one or more markets in which the Fund invests will go down in value, including the possibility that the markets will go down sharply and unpredictably. Selection risk is the risk that the securities selected by Fund management will underperform the markets, the relevant indices or the securities selected by other funds with similar investment objectives and investment strategies. This means you may lose money.</li></ul><ul type="square"><li style="margin-left: -20px">Mezzanine Securities Risk — Mezzanine securities carry the risk that the issuer will not be able to meet its obligations and that the equity securities purchased with the mezzanine investments may lose value.</li></ul><ul type="square"><li style="margin-left: -20px">Non-Investment Grade Bonds Risk — Although non-investment grade bonds generally pay higher rates of interest than investment grade bonds, non-investment grade bonds are high risk investments that may cause income and principal losses for the Fund.</li></ul><ul type="square"><li style="margin-left: -20px">Preferred Securities Risk — Preferred securities may pay fixed or adjustable rates of return. Preferred securities are subject to issuer-specific and market risks applicable generally to equity securities. In addition, a company’s preferred securities generally pay dividends only after the company makes required payments to holders of its bonds and other debt. For this reason, the value of preferred securities will usually react more strongly than bonds and other debt to actual or perceived changes in the company’s financial condition or prospects. Preferred securities of smaller companies may be more vulnerable to adverse developments than preferred stock of larger companies.</li></ul><ul type="square"><li style="margin-left: -20px">Prepayment Risk — When interest rates fall, certain obligations will be paid off by the obligor more quickly than originally anticipated, and the Fund may have to invest the proceeds in securities with lower yields.</li></ul><ul type="square"><li style="margin-left: -20px">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.</li></ul><ul type="square"><li style="margin-left: -20px">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 loan’s 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 borrower’s 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 borrower. Uncollateralized senior loans involve a greater risk of loss. The senior loans in which the Fund invests are usually rated below investment grade. Senior loans made in connection with highly leveraged transactions are subject to greater risks than other senior loans. For example, the risks of default or bankruptcy of the borrower or the risks that other creditors of the borrower may seek to nullify or subordinate the Fund’s claims on any collateral securing the loan are greater in highly leveraged transactions.</li></ul><ul type="square"><li style="margin-left: -20px">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. Structured notes are based upon the movement of one or more factors, including currency exchange rates, interest rates, referenced bonds and stock indices, and changes in interest rates and impact of these factors may cause significant price fluctuations. Additionally, changes in the reference instrument or security may cause the interest rate on the structured note to be reduced to zero.</li></ul><ul type="square"><li style="margin-left: -20px">U.S. Government Issuer Risk — Treasury obligations may differ in their interest rates, maturities, times of issuance and other characteristics. Obligations of U.S. Government agencies and authorities are supported by varying degrees of credit but generally are not backed by the full faith and credit of the U.S. Government. No assurance can be given that the U.S. Government will provide financial support to its agencies and authorities if it is not obligated by law to do so.</li></ul> Investor C1 Shares ANNUAL TOTAL RETURNS BlackRock Floating Rate Income Portfolio As of 12/31 As of 12/31/11 Average Annual Total Returns January 1, 2014 0.6 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. You may lose part or all of your investment in the Fund or your investment may not perform as well as other similar investments. The information shows you how the Fund’s performance has varied year by year and provides some indication of the risks of investing in the Fund. 800-882-0052 http://www.blackrock.com/funds As with all such investments, past performance (before and after taxes) is not an indication of future results. Sales charges are not reflected in the bar chart. If they were, returns would be less than those shown. After-tax returns are calculated using the historical highest individual Federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown, and the after-tax returns shown are not relevant to investors who hold their shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. year-to-date return 2012-09-30 0.0634 highest return 2009-06-30 0.1463 lowest return 2008-12-31 -0.2308 January 1, 2014 0.6 You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in the BlackRock-advised fund complex. 262 50000 502 866 1889 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. You would pay the following expenses if you did not redeem your shares: Principal Investment Strategies of the Fund The Fund normally invests at least 80% of its assets in floating rate investments and investments that are the economic equivalent of floating rate investments, which effectively enables the Fund to achieve a floating rate of income. These investments may include, but are not limited to, any combination of the following securities: (i) senior secured floating rate loans or debt; (ii) second lien or other subordinated or unsecured floating rate loans or debt; and (iii) fixed-rate loans or debt with respect to which the Fund has entered into derivative instruments to effectively convert the fixed-rate interest payments into floating rate interest payments. The Fund may also purchase, without limitation, participations or assignments in senior floating rate loans or second lien floating rate loans. For purposes of the Fund’s investments, the term debt includes investments in convertible or preferred securities. The Fund may invest in investments of any credit quality without limitation, including investments rated below investment grade. The Fund anticipates that, under current market conditions, a substantial portion of its portfolio will consist of leveraged loans rated below investment grade and similar investments. These investments are expected to exhibit credit risks similar to high yield securities, which are commonly referred to as “junk bonds.” The Fund may invest up to 20% of its assets in fixed income securities with respect to which the Fund has not entered into derivative instruments to effectively convert the fixed-rate interest payments into floating-rate interest payments. Such fixed income securities include, but are not limited to, corporate bonds, preferred securities, convertible securities, mezzanine investments, collateralized loan obligations, senior loans, second lien loans, structured products and U.S. government debt securities. The Fund’s investments in any floating rate and fixed income securities may be of any duration or maturity. The Fund may invest in securities of foreign issuers, including issuers located in emerging markets, without limitation. The Fund may also invest up to 15% of its assets in illiquid securities. The Fund may also invest in companies whose financial condition is uncertain, where the borrower has defaulted in the payment of interest or principal or in the performance of its covenants or agreements, or that may be involved in bankruptcy proceedings, reorganizations or financial restructurings. The Fund may invest up to 10% of its assets in common stocks or other equity securities. In addition, the Fund may acquire and hold such securities (or rights to acquire such securities) in unit offerings with fixed income securities, in connection with an amendment, waiver, conversion or exchange of fixed income securities, in connection with the bankruptcy or workout of a distressed fixed income security, or upon the exercise of a right or warrant obtained on account of a fixed income security. The Fund may buy or sell options or futures on a security or an index of securities, buy or sell options on futures or enter into credit default swaps and interest rate or foreign currency transactions, including swaps and forward contracts (collectively, commonly known as derivatives). The Fund may use derivatives for hedging purposes, but is not required to, as well as to increase the total return on its portfolio investments. 0.0055 Principal Risks of Investing in the Fund Risk is inherent in all investing. The value of your investment in the Fund, as well as the amount of return you receive on your investment, may fluctuate significantly from day to day and over time. You may lose part or all of your investment in the Fund or your investment may not perform as well as other similar investments. The following is a summary description of principal risks of investing in the Fund. <ul type="square"><li style="margin-left: -20px"> Convertible Securities Risk — The market value of a convertible security performs like that of a regular debt security; that is, if market interest rates rise, the value of a convertible security usually falls. In addition, convertible securities are subject to the risk that the issuer will not be able to pay interest or dividends when due, and their market value may change based on changes in the issuer’s credit rating or the market’s perception of the issuer’s creditworthiness. Since it derives a portion of its value from the common stock into which it may be converted, a convertible security is also subject to the same types of market and issuer risks that apply to the underlying common stock.</li></ul><ul type="square"><li style="margin-left: -20px">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.</li></ul><ul type="square"><li style="margin-left: -20px">Counterparty Risk — The counterparty to an over-the-counter derivatives contract or a borrower of the Fund’s securities may be unable or unwilling to make timely principal, interest or settlement payments, or otherwise to honor its obligations.</li></ul><ul type="square"><li style="margin-left: -20px">Credit Risk — Credit risk refers to the possibility that the issuer of a security will not be able to make payments of interest and principal when due. Changes in an issuer’s credit rating or the market’s perception of an issuer’s creditworthiness may also affect the value of the Fund’s investment in that issuer.</li></ul><ul type="square"><li style="margin-left: -20px">Derivatives Risk — The Fund’s use of derivatives may reduce the Fund’s returns and/or increase volatility. Volatility is defined as the characteristic of a security, an index or a market to fluctuate significantly in price within a short time period. Derivatives are also subject to counterparty risk, which is the risk that the other party in the transaction will not fulfill its contractual obligation. A risk of the Fund’s use of derivatives is that the fluctuations in their values may not correlate perfectly with the overall securities markets. The possible lack of a liquid secondary market for derivatives and the resulting inability of the Fund to sell or otherwise close a derivatives position could expose the Fund to losses and could make derivatives more difficult for the Fund to value accurately. Derivatives may give rise to a form of leverage and may expose the Fund to greater risk and increase its costs. Recent legislation calls for new regulation of the derivatives markets. The extent and impact of the regulation is not yet known and may not be known for some time. New regulation may make derivatives more costly, may limit the availability of derivatives, or may otherwise adversely affect the value or performance of derivatives.</li></ul><ul type="square"><li style="margin-left: -20px">Distressed Securities Risk — Distressed securities are speculative and involve substantial risks in addition to the risks of investing in junk bonds. The Fund will generally not receive interest payments on the distressed securities and may incur costs to protect its investment. In addition, distressed securities involve the substantial risk that principal will not be repaid. These securities may present a substantial risk of default or may be in default at the time of investment. The Fund may incur additional expenses to the extent it is required to seek recovery upon a default in the payment of principal of or interest on its portfolio holdings. In any reorganization or liquidation proceeding relating to a portfolio company, the Fund may lose its entire investment or may be required to accept cash or securities with a value less than its original investment. Distressed securities and any securities received in an exchange for such securities may be subject to restrictions on resale.</li></ul><ul type="square"><li style="margin-left: -20px">Dividend Risk — Because most of the corporate loans held by the Fund will have floating or variable interest rates, the amounts of the Fund’s monthly distributions to its stockholders are expected to vary with fluctuations in market interest rates. Generally, when market interest rates fall, the amount of the distributions to stockholders will likewise decrease.</li></ul><ul type="square"><li style="margin-left: -20px">Emerging Markets Risk — Emerging markets are riskier than more developed markets because they tend to develop unevenly and may never fully develop. Investments in emerging markets may be considered speculative. Emerging markets are more likely to experience hyperinflation and currency devaluations, which adversely affect returns to U.S. investors. In addition, many emerging securities markets have far lower trading volumes and less liquidity than developed markets.</li></ul><ul type="square"><li style="margin-left: -20px">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.</li></ul><ul type="square"><li style="margin-left: -20px">Event Risk — Event risk is the risk that corporate issuers may undergo restructurings, such as mergers, leveraged buyouts, takeovers, or similar events financed by increased debt. As a result of the added debt, the credit quality and market value of a company’s bonds and/or other debt securities may decline significantly.</li></ul><ul type="square"><li style="margin-left: -20px">Extension Risk — When interest rates rise, certain obligations will be paid off by the obligor more slowly than anticipated, causing the value of these securities to fall.</li></ul><ul type="square"><li style="margin-left: -20px">Foreign Securities Risk — Foreign investments often involve special risks not present in U.S. investments that can increase the chances that the Fund will lose money. These risks include:</li></ul><ul type="square"><li style="margin-left: 00px"><blockquote>The Fund generally holds its foreign securities and cash in foreign banks and securities depositories, which may be recently organized or new to the foreign custody business and may be subject to only limited or no regulatory oversight.</blockquote></li></ul><ul type="square"><li style="margin-left: 00px"><blockquote>Changes in foreign currency exchange rates can affect the value of the Fund’s portfolio.</blockquote></li></ul><ul type="square"><li style="margin-left: 00px"><blockquote>The economies of certain foreign markets may not compare favorably with the economy of the United States with respect to such issues as growth of gross national product, reinvestment of capital, resources and balance of payments position.</blockquote></li></ul><ul type="square"><li style="margin-left: 00px"><blockquote>The governments of certain countries may prohibit or impose substantial restrictions on foreign investments in their capital markets or in certain industries.</blockquote></li></ul><ul type="square"><li style="margin-left: 00px"><blockquote>Many foreign governments do not supervise and regulate stock exchanges, brokers and the sale of securities to the same extent as does the United States and may not have laws to protect investors that are comparable to U.S. securities laws.</blockquote></li></ul><ul type="square"><li style="margin-left: 00px"><blockquote>Settlement and clearance procedures in certain foreign markets may result in delays in payment for or delivery of securities not typically associated with settlement and clearance of U.S. investments.</blockquote></li></ul><ul type="square"><li style="margin-left: 00px"><blockquote>The European financial markets have recently experienced volatility and adverse trends due to concerns about economic downturns in, or rising government debt levels of several European countries. These events have adversely affected the exchange rate of the Euro and may spread to other countries in Europe, including countries that do not use the Euro. These events may affect the value and liquidity of certain of the Fund’s investments.</blockquote></li></ul> <ul type="square"><li style="margin-left: -20px">Interest Rate Risk — Interest rate risk is the risk that prices of bonds and other fixed income securities will increase as interest rates fall, and decrease as interest rates rise.</li></ul><ul type="square"><li style="margin-left: -20px">Liquidity Risk — Liquidity risk exists when particular investments are difficult to purchase or sell. The Fund’s investments in illiquid securities may reduce the returns of the Fund because it may be difficult to sell the illiquid securities at an advantageous time or price. To the extent that the Fund’s principal investment strategies involve derivatives or securities with substantial market and/or credit risk, the Fund will tend to have the greatest exposure to liquidity risk. Liquid investments may become illiquid after purchase by the Fund, particularly during periods of market turmoil. Illiquid investments may be harder to value, especially in changing markets, and if the Fund is forced to sell these investments to meet redemption requests or for other cash needs, the Fund may suffer a loss. In addition, when there is illiquidity in the market for certain securities, the Fund, due to limitations on illiquid investments, may be subject to purchase and sale restrictions.</li></ul><ul type="square"><li style="margin-left: -20px">Market Risk and Selection Risk — Market risk is the risk that one or more markets in which the Fund invests will go down in value, including the possibility that the markets will go down sharply and unpredictably. Selection risk is the risk that the securities selected by Fund management will underperform the markets, the relevant indices or the securities selected by other funds with similar investment objectives and investment strategies. This means you may lose money.</li></ul><ul type="square"><li style="margin-left: -20px">Mezzanine Securities Risk — Mezzanine securities carry the risk that the issuer will not be able to meet its obligations and that the equity securities purchased with the mezzanine investments may lose value.</li></ul><ul type="square"><li style="margin-left: -20px">Non-Investment Grade Bonds Risk — Although non-investment grade bonds generally pay higher rates of interest than investment grade bonds, non-investment grade bonds are high risk investments that may cause income and principal losses for the Fund.</li></ul><ul type="square"><li style="margin-left: -20px">Preferred Securities Risk — Preferred securities may pay fixed or adjustable rates of return. Preferred securities are subject to issuer-specific and market risks applicable generally to equity securities. In addition, a company’s preferred securities generally pay dividends only after the company makes required payments to holders of its bonds and other debt. For this reason, the value of preferred securities will usually react more strongly than bonds and other debt to actual or perceived changes in the company’s financial condition or prospects. Preferred securities of smaller companies may be more vulnerable to adverse developments than preferred stock of larger companies.</li></ul><ul type="square"><li style="margin-left: -20px">Prepayment Risk — When interest rates fall, certain obligations will be paid off by the obligor more quickly than originally anticipated, and the Fund may have to invest the proceeds in securities with lower yields.</li></ul><ul type="square"><li style="margin-left: -20px">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.</li></ul><ul type="square"><li style="margin-left: -20px">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 loan’s 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 borrower’s 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 borrower. Uncollateralized senior loans involve a greater risk of loss. The senior loans in which the Fund invests are usually rated below investment grade. Senior loans made in connection with highly leveraged transactions are subject to greater risks than other senior loans. For example, the risks of default or bankruptcy of the borrower or the risks that other creditors of the borrower may seek to nullify or subordinate the Fund’s claims on any collateral securing the loan are greater in highly leveraged transactions.</li></ul><ul type="square"><li style="margin-left: -20px">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. Structured notes are based upon the movement of one or more factors, including currency exchange rates, interest rates, referenced bonds and stock indices, and changes in interest rates and impact of these factors may cause significant price fluctuations. Additionally, changes in the reference instrument or security may cause the interest rate on the structured note to be reduced to zero.</li></ul><ul type="square"><li style="margin-left: -20px">U.S. Government Issuer Risk — Treasury obligations may differ in their interest rates, maturities, times of issuance and other characteristics. Obligations of U.S. Government agencies and authorities are supported by varying degrees of credit but generally are not backed by the full faith and credit of the U.S. Government. No assurance can be given that the U.S. Government will provide financial support to its agencies and authorities if it is not obligated by law to do so.</li></ul> 0.0075 0.0028 0.0001 0.0159 You may lose part or all of your investment in the Fund or your investment may not perform as well as other similar investments. The information shows you how the Fund’s performance has varied year by year and provides some indication of the risks of investing in the Fund. 800-882-0052 http://www.blackrock.com/funds As with all such investments, past performance (before and after taxes) is not an indication of future results. Performance Information 0.0159 Investor A Shares ANNUAL TOTAL RETURNS BlackRock Floating Rate Income Portfolio As of 12/31 As of 12/31/11 Average Annual Total Returns Sales charges are not reflected in the bar chart. If they were, returns would be less than those shown. After-tax returns are calculated using the historical highest individual Federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown, and the after-tax returns shown are not relevant to investors who hold their shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. After-tax returns are shown for Investor A Shares only, and the after-tax returns for Investor C Shares and Institutional Shares will vary. year-to-date return 2012-09-30 0.0672 highest return 2009-06-30 0.1477 lowest return 2008-12-31 0 -0.2298 0.01 -0.025 0.1534 -0.02 0.0636 0.0455 0.0564 0.0168 -0.2866 0.3984 0.0861 0.0241 -0.0015 -0.0172 -0.0011 0.0073 0.0279 0.0151 0.0192 -0.0001 0.0048 0.0169 0.0272 0.0416 0.0381 0.0195 0.0214 0.033 0.0434 0.0495 162 502 866 1889 -0.0299 0.1477 0.0583 0.0403 0.0512 0.0117 -0.2902 0.3915 A contingent deferred sales charge (“CDSC”) of 0.75% is assessed on certain redemptions of Investor A Shares made within 18 months after purchase where no initial sales charge was paid at time of purchase as part of an investment of $500,000 or more. 0.0807 0.0196 0.0098 -0.0048 0.0063 0.0151 0.0194 0.0004 0.0052 0.0416 0.0356 0.0172 0.0195 0.0495 Shareholder Fees (fees paid directly from your investment) Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) -0.02 -0.02 -0.02 <div style="display:none">~ http://www.blackrock.com/role/ScheduleShareholderFeesBlackRockFloatingRateIncomePortfolioInvestorC1Shares column period compact * ~</div> <div style="display:none">~ http://www.blackrock.com/role/ScheduleAnnualFundOperatingExpensesBlackRockFloatingRateIncomePortfolioInvestorC1Shares column period compact * ~</div> <div style="display:none">~ http://www.blackrock.com/role/ScheduleAverageAnnualTotalReturnsTransposedBlackRockFloatingRateIncomePortfolioInvestorC1Shares column period compact * ~</div> <div style="display:none">~ http://www.blackrock.com/role/ScheduleExpenseExampleTransposedBlackRockFloatingRateIncomePortfolioInvestorC1Shares column period compact * ~</div> <div style="display:none">~ http://www.blackrock.com/role/ScheduleAnnualTotalReturnsBlackRockFloatingRateIncomePortfolioInvestorC1SharesBarChart column period compact * ~</div> <div style="display:none">~ http://www.blackrock.com/role/ScheduleExpenseExampleNoRedemptionTransposedBlackRockFloatingRateIncomePortfolioInvestorC1Shares column period compact * ~</div> <div style="display:none">~ http://www.blackrock.com/role/ScheduleShareholderFeesBlackRockFloatingRateIncomePortfolio column period compact * ~</div> <div style="display:none">~ http://www.blackrock.com/role/ScheduleAnnualFundOperatingExpensesBlackRockFloatingRateIncomePortfolio column period compact * ~</div> <div style="display:none">~ http://www.blackrock.com/role/ScheduleExpenseExampleTransposedBlackRockFloatingRateIncomePortfolio column period compact * ~</div> <div style="display:none">~ http://www.blackrock.com/role/ScheduleAnnualTotalReturnsBlackRockFloatingRateIncomePortfolioBarChart column period compact * ~</div> <div style="display:none">~ http://www.blackrock.com/role/ScheduleAverageAnnualTotalReturnsTransposedBlackRockFloatingRateIncomePortfolio column period compact * ~</div> <div style="display:none">~ http://www.blackrock.com/role/ScheduleExpenseExampleNoRedemptionTransposedBlackRockFloatingRateIncomePortfolio column period compact * ~</div> The primary investment objective of the BlackRock Floating Rate Income Portfolio (the “Floating Rate Income Portfolio” or the “Fund”) is to seek to provide high current income, with a secondary objective of long-term capital appreciation. There is no CDSC on Investor C1 Shares after one year. 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. As described in the "Management of the Fund" section of the Fund's prospectus on page 27, 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 1.80% for Investor C1 Shares of average daily net assets until January 1, 2014. The Fund may have to repay some or all of these waivers and reimbursements to BlackRock in the following two years. The contractual agreement may be terminated upon 90 days' notice by a majority of the non-interested trustees of the Fund or by a vote of a majority of the outstanding voting securities of the Fund. A contingent deferred sales charge ("CDSC") of 0.75% is assessed on certain redemptions of Investor A Shares made within 18 months after purchase where no initial sales charge was paid at time of purchase as part of an investment of $500,000 or more. There is no CDSC on Investor C Shares after one year. As described in the "Management of the Fund" section of the Fund's prospectus on page 34, 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 1.05% (for Investor A Shares), 1.80% (for Investor C Shares) and 0.70% (for Institutional Shares) of average daily net assets until January 1, 2014. The Fund may have to repay some or all of these waivers and reimbursements to BlackRock in the following two years. The contractual agreement may be terminated upon 90 days' notice by a majority of the non-interested trustees of the Fund or by a vote of a majority of the outstanding voting securities of the Fund.