May 16, 2011

Dear Shareholder:

The Board of Trustees (the “Board”) is pleased to announce the reorganization of BlackRock Bond Portfolio (“Bond Portfolio”) and the reorganization of BlackRock Managed Income Portfolio (“Managed Income Portfolio” and together with Bond Portfolio, the “Target Funds” and each, a “Target Fund”), each a series of BlackRock Funds II (the “Trust”), with BlackRock Total Return Portfolio II (“Total Return Portfolio II” or the “Acquiring Fund”), also a series of the Trust. The reorganizations do not require your approval, and you are not being asked to vote. The attached Combined Prospectus/Information Statement contains information about the Acquiring Fund, outlines the differences between the Target Funds and the Acquiring Fund and provides details about the terms and conditions of the reorganizations. You should review the Combined Prospectus/Information Statement carefully and retain it for future reference.

In each reorganization, your Target Fund shares will be exchanged for the same class of shares of the Acquiring Fund with the same aggregate net asset value of the Target Fund shares that you currently hold. It is currently anticipated that the reorganization of each Target Fund will be effected on a tax-free basis for federal income tax purposes. The reorganizations are expected to close during the third quarter of 2011.

BlackRock Advisors, LLC (“BlackRock Advisors”), each fund’s investment adviser, proposed the reorganization involving your Target Fund, as well as a number of other reorganizations involving other funds advised by BlackRock Advisors or an affiliate, to eliminate certain redundancies and in an effort to achieve certain operating efficiencies.

BlackRock Advisors believes that the shareholders of each Target Fund generally will benefit more from the potential operating efficiencies and economies of scale that may be achieved by combining the Target Fund’s assets in the respective reorganization, than by continuing to operate the Target Fund separately. The Board of Trustees of the Trust, including all of the Independent Trustees, believes each reorganization is in the best interests of the respective Target Fund, and has approved each reorganization.

As always, we appreciate your support.

Sincerely,

JOHN PERLOWSKI

President and Chief Executive Officer

BlackRock Managed Income Portfolio

BlackRock Bond Portfolio

BlackRock Funds II

100 Bellevue Parkway, Wilmington, DE 19809

(800) 441-7762

QUESTIONS & ANSWERS

We recommend that you read the complete Combined Prospectus/Information Statement. The following Questions and Answers provide a discussion of certain matters related to the Reorganizations.

Q: What is this document and why did we send it to you?

A: This is a Combined Prospectus/Information Statement that provides you with information about (i) an agreement and plan of reorganization (a “Reorganization Agreement”) between BlackRock Funds II (the “Trust”), on behalf of the BlackRock Bond Portfolio (the “Bond Portfolio”), and the Trust, on behalf of the BlackRock Total Return Portfolio II (the “Total Return Portfolio II” or “Acquiring Fund”); and (ii) a Reorganization Agreement between the Trust, on behalf of the BlackRock Managed Income Portfolio (the “Managed Income Portfolio” and together with the Bond Portfolio, the “Target Funds” and each, a “Target Fund”), and the Trust, on behalf of the Total Return Portfolio II (together with the Target Funds, the “Funds” and each, a “Fund”). Each Fund pursues an identical investment objective. Each Fund also employs substantially similar investment strategies in seeking to achieve its respective investment objective. When the reorganization (“Reorganization”) relating to your Target Fund is completed, an account at the Acquiring Fund will be set up in your name, you will become a shareholder of the Acquiring Fund, and your Target Fund will be terminated as a series of the Trust. Please refer to the Combined Prospectus/Information Statement for a detailed explanation of the Reorganization relating to your Target Fund and for a more complete description of the Acquiring Fund.

You are receiving this Combined Prospectus/Information Statement because you owned shares of your Target Fund as of April 27, 2011. The Reorganization does not require approval by shareholders of either the Target Fund or the Acquiring Fund, and you are not being asked to vote.

Q: Did the Board of Trustees of the Trust approve the Reorganizations?

A: Yes, the Board of Trustees of the Trust (the “Board”) approved each Reorganization. After careful consideration, the Board, including all of the Trustees who are not “interested persons” of the Trust (as defined in the Investment Company Act of 1940 (the “1940 Act”)) (the “Independent Board Members”), determined that each Reorganization is in the best interests of the respective Target Fund and that the Target Fund’s existing shareholders will not be diluted as a result of the Reorganization and approved the Reorganization. The Board has determined that shareholders of each Target Fund may benefit from the following:

(i) Shareholders of each Target Fund will remain invested in a diversified, open-end fund that has greater net assets;

(ii) The larger net asset size of the combined fund (the “Combined Fund”) is expected to give rise to possible operating efficiencies (e.g., certain fixed costs, such as printing shareholder reports and proxy statements, legal expenses, audit fees, mailing costs and other expenses, will be spread across a larger asset base, thereby potentially lowering the total expense ratio borne by shareholders of the Combined Fund);

(iii) The larger net asset size of the Combined Fund is expected to result in a lower effective management fee rate under the management agreement relating to the Managed Income Portfolio; and

(iv) The compatibility of the types of portfolio securities held by each of the Funds, the identical investment objectives of each Fund, the substantially similar principal investment strategies of each Fund, and the similarities between the risk profiles of each Fund.

Q: How will the Reorganizations affect me?

A: The Reorganizations are expected to take place during the third quarter of 2011. Upon the closing of the Reorganizations, all of the assets and certain stated liabilities of each Target Fund will be combined with those of the Acquiring Fund. You will receive the same class of shares of the Acquiring Fund as you currently hold of your Target Fund. The aggregate net asset value of the shares you receive in the Reorganization will equal the aggregate net asset value of the shares you own immediately prior to the

Reorganization. As a result of the Reorganizations, however, a shareholder of a Target Fund will hold a smaller percentage of ownership in the Combined Fund than such shareholder’s percentage of ownership in the Target Fund prior to the Reorganizations.

Upon the closing of the Reorganizations, the Total Return Portfolio II will be renamed the “BlackRock Core Bond Portfolio” and will be permitted to invest up to 10% of its assets in non-dollar denominated bonds and bonds of emerging market issuers.

In addition, upon the closing of the Reorganization relating to the Bond Portfolio, BlackRock Advisors has contractually agreed to waive fees and/or reimburse expenses in order to limit the Combined Fund’s 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 0.56% (for Institutional Shares) of average daily net assets until February 1, 2014.

Q: In the Reorganization, will I receive the same class of shares of the Acquiring Fund as the shares of the Target Fund that I now hold?

A: Yes. You will receive the same class of shares of the Acquiring Fund as the shares you own of the Target Fund.

Q: Will I own the same number of shares of the Acquiring Fund as I currently own of the Target Fund?

A: No. You will receive shares of the Acquiring Fund with the same aggregate net asset value as the shares of the Target Fund you own prior to the Reorganization relating to your Target Fund. However, the number of shares you receive will depend on the relative net asset value of the shares of the relevant Target Fund and the Acquiring Fund as of the close of trading on the New York Stock Exchange on the business day immediately before the closing of the Reorganization (the “Valuation Time”). Thus, if as of the Valuation Time the net asset value of a share of the Acquiring Fund is lower than the net asset value of the corresponding share class of the relevant Target Fund, you will receive a greater number of shares of the Acquiring Fund in the Reorganization than you held in the Target Fund before the Reorganization. On the other hand, if as of the Valuation Time, the net asset value of a share of the Acquiring Fund is higher than the net asset value of the corresponding share class of the relevant Target Fund, you will receive fewer shares of the Acquiring Fund in the Reorganization than you held in the Target Fund before the Reorganization. The aggregate net asset value of your Combined Fund shares immediately after the Reorganization will be the same as the aggregate net asset value of your Target Fund shares immediately prior to the Reorganization.

Q: Who will advise the Combined Fund once the Reorganizations are completed?

A: Each Target Fund is advised by BlackRock Advisors, LLC (“BlackRock Advisors”). The Acquiring Fund is also advised by BlackRock Advisors and the Combined Fund is expected to be advised by BlackRock Advisors once the Reorganizations are completed. Each Target Fund is sub-advised by BlackRock Financial Management, Inc. The Acquiring Fund is also sub-advised by BlackRock Financial Management, Inc. and the Combined Fund is expected to be sub-advised by BlackRock Financial Management, Inc. once the Reorganizations are completed. The Target Funds and the Acquiring Fund have the same portfolio management team, Rick Rieder, Matthew Marra and Eric Pellicciaro. This same portfolio management team is expected to manage the Combined Fund once the Reorganizations are completed.

Q: How will the Reorganizations affect Fund fees and expenses?

Assuming the Reorganizations had occurred as of September 30, 2010, the Combined Fund would have (i) total annual fund operating expenses for its share classes that are expected to be the same as or lower than those of the corresponding share classes of each Target Fund prior to the Reorganizations as of such date, with the exception of the Institutional Shares of the Bond Portfolio, which are expected to be higher; (ii) net annual fund operating expenses that are expected to be the same as or lower than those of the

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corresponding share classes of each Target Fund prior to the Reorganizations as of such date, with the exception of Investor B Shares, Service Shares and BlackRock Shares of the Bond Portfolio, which are expected to be higher, in each case after excluding the effects of certain fees and expenses and after giving effect to all applicable contractual fee waivers and/or expense reimbursements that BlackRock Advisors has agreed to continue or implement for Investor A, Investor B, Investor C, Service, BlackRock and Institutional Shares of the Combined Fund for a certain period of time following the closing of the Reorganizations; and (iii) net annual fund operating expenses that are expected to be the same as or lower than those of the corresponding share classes of each Target Fund prior to the Reorganizations as of such date, with the exception of Investor B Shares and Investor C Shares of the Bond Portfolio, which are expected to increase by less than one basis point, in each case after excluding the effects of certain fees and expenses and after giving effect to both all applicable contractual fee waivers and/or expense reimbursements that BlackRock has agreed to continue or implement for a certain period of time following the closing of the Reorganizations and certain voluntary fee waivers and/or expense reimbursements. Voluntary fee waivers and/or expense reimbursements that BlackRock Advisors has agreed to continue or implement may be reduced or discontinued at any time without notice. When the Reorganizations are completed, BlackRock Advisors has agreed to continue contractual fee waivers and/or expense reimbursements with respect to Investor A, Investor B, Investor C, Service and BlackRock Shares of the Combined Fund until June 1, 2012, and to implement contractual fee waivers and/or expense reimbursements with respect to Institutional Shares of the Combined Fund until February 1, 2014. The contractual and voluntary fee waivers and/or expense reimbursements referenced above do not apply to the following expenses: Dividend Expense, Interest Expense, Acquired Fund Fees and Expenses and certain other Fund expenses.

The contractual management fee rates for the Combined Fund are the same as the contractual management fee rates for the Target Funds. The effective management fee rates for the Combined Fund are expected to be lower than those of Managed Income Portfolio and higher than those of Bond Portfolio (by one basis point).

Q: Are there any differences in front-end sales loads or contingent deferred sales charges?

A: The distribution and service fees and sales charges (including contingent deferred sales charges (“CDSCs”)) on the shares of the Acquiring Fund to be issued in the Reorganizations (Investor A, Investor B, Investor C, Institutional, Service and BlackRock) to the holders of shares of the Target Funds will be substantially similar to the corresponding charges on the shares of the Target Funds held by such shareholders immediately prior to the Reorganizations. The only difference is that Investor A Shares of Managed Income Portfolio have a CDSC of 0.50% imposed on investments of $1 million or more if redeemed within eighteen months, while Investor A Shares of Total Return Portfolio II have a CDSC of 0.75% imposed on investments of $1 million or more if redeemed within eighteen months. The Acquiring Fund’s CDSC schedule will remain in place in the Combined Fund for new purchases. However, Investor A shareholders of Managed Income Portfolio will continue to be subject to the lower CDSC applicable to Managed Income Portfolio for the Investor A shares they receive in the Combined Fund in connection with the applicable Reorganization.

Q: Will I have to pay any sales load, commission or other similar fee in connection with the Reorganizations?

A: No, you will not pay any sales load, commission or other similar fee in connection with the Reorganizations. As more fully discussed in the Combined Prospectus/Information Statement, the holding period with respect to any contingent deferred sales charge that applies to shares of the Acquired Fund acquired by you in the Reorganizations will be measured from the earlier of the time (i) you purchased your Target Fund shares or (ii) you purchased your shares of any other fund advised by BlackRock Advisors and subsequently exchanged them for shares of the Target Fund.

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Q: What will I have to do to open an account in the Acquiring Fund? What happens to my account when the Reorganizations are completed?

A: Your shares automatically will be converted into shares of the Acquiring Fund on the date of the completion of the applicable Reorganization. You will receive written confirmation that this change has taken place. No certificates for shares will be issued in connection with the Reorganizations. If you currently hold certificates representing your shares of the Target Fund, it is not necessary to surrender such certificates. You will receive the same class of shares of the Acquiring Fund as you currently hold of your Target Fund. The aggregate net asset value of the shares you receive in the Reorganization relating to your Target Fund will be equal to the aggregate net asset value of the shares you own in the Target Fund immediately prior to the Reorganization.

Q: Will the Reorganizations create a taxable event for me?

A: Each Reorganization is expected to qualify as a tax-free “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended. If a Reorganization so qualifies, in general, a Target Fund will not recognize any gain or loss as a result of the transfer of all of its assets and certain stated liabilities in exchange for shares of the Acquiring Fund or as a result of its liquidation, and you will not recognize any gain or loss upon your receipt of shares of the Acquiring Fund in connection with the Reorganization.

BlackRock Advisors does not expect to sell any material portion of the portfolio assets of either Target Fund in connection with the Reorganizations. If there are any sales of portfolio assets, the tax impact of any such sales will depend on the difference between the price at which such portfolio assets are sold and a Target Fund’s basis in such assets. Any capital gains recognized in these sales on a net basis will be distributed to a Target Fund’s shareholders as capital gain dividends (to the extent of net realized long-term capital gains) and/or ordinary dividends (to the extent of net realized short-term capital gains) during or with respect to the year of sale, and such distributions will be taxable to shareholders. In addition, prior to a Reorganization, a Target Fund will distribute to its shareholders all investment company taxable income, net tax-exempt income and net realized capital gains not previously distributed to shareholders, and such distribution of investment company taxable income and net realized capital gains will be taxable to shareholders.

Q: What if I redeem my shares before the Reorganizations take place?

A: If you choose to redeem your shares before the Reorganizations take place, then the redemption will be treated as a normal sale of shares and, generally, will be a taxable transaction and may be subject to any applicable CDSC.

Q: Who will pay for the Reorganizations?

A: The estimated Reorganization expenses for Total Return Portfolio II and Managed Income Portfolio are $88,667 and $116,905, respectively, which BlackRock Advisors or its affiliates are expected to entirely absorb through fee waivers and expense reimbursements. BlackRock Advisors or its affiliates will pay the Bond Portfolio’s Reorganization expenses, which are estimated to be $195,653. The foregoing estimated expenses will be borne (to the extent incurred) by Total Return Portfolio II, Managed Income Portfolio and BlackRock Advisors or its affiliates, regardless of whether the Reorganizations are consummated.

Q: Why is no shareholder action necessary?

A: Neither a vote of the shareholders of the Target Funds nor a vote of the shareholders of the Acquiring Fund is required to approve the Reorganization. The Trust’s Declaration of Trust provides that the Board may combine portfolios of the Trust (such as in this instance the Target Funds and the Acquiring Fund) without a shareholder vote if the Trustees reasonably determine that such combination will not have a materially adverse effect on any shareholders of either portfolio. In addition, under Rule 17a-8 under the 1940 Act, a vote of the shareholders of the Target Funds is not required.

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Q: I have received combined prospectuses/proxy statements from other funds in the BlackRock mutual fund complex. Is this a duplicate combined prospectus/proxy statement?

A: This is not a duplicate of another combined prospectus/proxy statement. If you are a shareholder of other BlackRock-advised funds, you may have separately received one or more combined prospectuses/proxy statements and proxy cards relating to other reorganizations. If you own shares of a target fund in a reorganization for which shareholder approval is required, you will be asked to vote separately for each fund. The Reorganizations discussed in this Combined Prospectus/Information Statement do not require a shareholder vote and were not included in any other combined prospectus/proxy statement.

Q: When will the Reorganizations occur?

A: The Reorganizations are expected to occur during the third quarter of 2011.

Q: Whom do I contact if I have questions?

A: You can contact your financial advisor for further information. Direct shareholders may contact the Funds at (800) 441-7762.

Important additional information about the Reorganizations is set forth in the accompanying Combined Prospectus/Information Statement. Please read it carefully.

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COMBINED PROSPECTUS/INFORMATION STATEMENT

BLACKROCK FUNDS II

BlackRock Bond Portfolio

BlackRock Managed Income Portfolio

BlackRock Total Return Portfolio II

100 Bellevue Parkway Wilmington, Delaware 19809 (800) 441-7762

This Combined Prospectus/Information Statement is furnished to you as a shareholder of the BlackRock Bond Portfolio (the “Bond Portfolio”) and/or the BlackRock Managed Income Portfolio (the “Managed Income Portfolio” and together with the Bond Portfolio, the “Target Funds” and each, a “Target Fund”), each a series of BlackRock Funds II, a Massachusetts business trust (the “Trust”). As provided in each Agreement and Plan of Reorganization (“Reorganization Agreement”), each Target Fund will transfer all of its assets to the BlackRock Total Return Portfolio II (the “Acquiring Fund”), a series of the Trust, in exchange for the assumption by the Acquiring Fund of certain stated liabilities of the Target Fund and shares of the Acquiring Fund, after which those shares will be distributed by the Target Fund to the holders of its shares.

The Board of Trustees of the Trust (the “Board”) has approved the reorganization (“Reorganization”) with respect to each Target Fund by which the Target Fund, a separate series of the Trust, an open-end management investment company, would be acquired by the Acquiring Fund. The Acquiring Fund pursues an investment objective identical to that of the Target Funds. Each Fund has an investment objective to seek to maximize total return, consistent with income generation and prudent investment management. The Acquiring Fund also has certain strategies that are similar and compatible with those of each of the Target Funds. The Target Funds and the Acquiring Fund, however, employ certain differing investment strategies to achieve their respective objectives, as discussed in more detail below. For more information on each Fund’s investment strategies, see “Summary—Investment Objectives and Principal Investment Strategies” below.

At the closing of the Reorganization relating to a Target Fund, the Target Fund will transfer its assets to the Acquiring Fund. The Acquiring Fund will assume certain stated liabilities of the Target Fund and will issue shares to the Target Fund in an amount equal to the aggregate net asset value of the outstanding shares of the Target Fund. Immediately thereafter, the Target Fund will distribute these shares of the Acquiring Fund to its shareholders. After distributing these shares, the Target Fund will be terminated as a series of the Trust. When the Reorganization is complete, the Target Fund’s shareholders will hold the same class of shares of the Acquiring Fund as they currently hold of the Target Fund. The aggregate net asset value of the Acquiring Fund shares received in the Reorganization will equal the aggregate net asset value of the Target Fund shares held by Target Fund shareholders immediately prior to the Reorganization. As a result of the Reorganization, however, a shareholder of the Target Fund will represent a smaller percentage of ownership in the Combined Fund than such shareholder’s percentage of ownership in the Target Fund prior to the Reorganization.

This Combined Prospectus/Information Statement sets forth concisely the information shareholders of each Target Fund should know about the Reorganization relating to their Fund and constitutes an offering of the shares of the Acquiring Fund being issued in the Reorganization. Please read it carefully and retain it for future reference.

The following documents containing additional information about the Acquiring Fund and the Target Funds (together, the “Funds”), each having been filed with the Securities and Exchange Commission (the “SEC”), are incorporated by reference into (legally considered to be part of) this Combined Prospectus/Information Statement:

• the Statement of Additional Information dated May 16, 2011 (the “Reorganization SAI”), relating to this Combined Prospectus/Information Statement;

• the Prospectuses relating to Investor A, Investor B, Investor C and Institutional Shares of the Bond Portfolio, each dated January 28, 2011, as amended May 16, 2011 and as supplemented;

• the Prospectuses relating to Service and BlackRock Shares of the Bond Portfolio, each dated January 28, 2011, as supplemented;

• the Prospectuses relating to Investor A, Investor B, Investor C and Institutional Shares of the Managed Income Portfolio, each dated January 28, 2011, as amended May 16, 2011 and as supplemented;

• the Prospectus relating to Service Shares of the Managed Income Portfolio, dated January 28, 2011, as supplemented;

• the Statement of Additional Information relating to the Bond Portfolio, dated January 28, 2011, as amended May 16, 2011 and as supplemented;

• the Statement of Additional Information relating to the Managed Income Portfolio, dated January 28, 2011, as amended May 16, 2011 and as supplemented;

• the Annual Report to shareholders of the Bond Portfolio for the fiscal year ended September 30, 2010;

• the Annual Report to shareholders of the Managed Income Portfolio for the fiscal year ended September 30, 2010; and

• the Statement of Additional Information relating to the Acquiring Fund, dated January 28, 2011, as amended May 16, 2011 and as supplemented.

The following documents each have been filed with the SEC, and are incorporated herein by reference into (each legally forms a part of), and also accompany, this Combined Prospectus/Information Statement:

• the Prospectuses relating to Investor A, Investor B, Investor C, Institutional, Service and BlackRock Shares of the Acquiring Fund, each dated January 28, 2011, as amended May 16, 2011 and as supplemented;

• the Annual Report to shareholders of the Acquiring Fund for the fiscal year ended September 30, 2010.

Except as otherwise described herein, the policies and procedures set forth under “Account Information” in the Acquiring Fund’s Prospectuses (collectively, the “Acquiring Fund Prospectus”) will apply to the shares issued by the Acquiring Fund in connection with the Reorganizations. The Funds are subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and the Investment Company Act of 1940, as amended (the “1940 Act”), and in accordance therewith, file reports and other information, including proxy materials, with the SEC.

Additional copies of the foregoing and any more recent reports filed after the date hereof may be obtained without charge by calling or writing:

BlackRock Bond Portfolio and	BlackRock Total Return Portfolio II
BlackRock Managed Income Portfolio	BlackRock Funds II
BlackRock Funds II	100 Bellevue Parkway
100 Bellevue Parkway	Wilmington, Delaware 19809
Wilmington, Delaware 19809	(800) 441-7762
(800) 441-7762

If you wish to request the Reorganization SAI, please ask for the “Reorganization SAI.” The Reorganization SAI may also be obtained without charge at (800) 441-7762.

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You also may view or obtain these documents from the SEC:

In Person:	At the SEC’s Public Reference Room at 100 F Street, N.E. Washington, DC 20549.
By Phone:	(202) 551-8090
By Mail:	Public Reference Section Office of Consumer Affairs and Information Services Securities and Exchange Commission 100 F Street, N.E. Washington, DC 20549 (duplicating fee required)
By E-mail:	publicinfo@sec.gov (duplicating fee required)
By Internet:	www.sec.gov

We are not asking you for a proxy and you are requested not to send us a proxy.

No person has been authorized to give any information or make any representation not contained in this Combined Prospectus/Information Statement and, if so given or made, such information or representation must not be relied upon as having been authorized. This Combined Prospectus/Information Statement does not constitute an offer to sell or a solicitation of an offer to buy any securities in any jurisdiction in which, or to any person to whom, it is unlawful to make such offer or solicitation.

Neither the SEC nor any state regulator has approved or disapproved of these securities or passed upon the adequacy of this Combined Prospectus/Information Statement. Any representation to the contrary is a criminal offense.

The date of this Combined Prospectus/Information Statement is May 16, 2011.

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TABLE OF CONTENTS

	Page
SUMMARY		1
Background and Reasons for the Reorganizations		2
Investment Objectives and Principal Investment Strategies		4
Fees and Expenses		9
Portfolio Turnover		14
Federal Tax Consequences		14
Purchase, Exchange, Redemption and Valuation of Shares		15
COMPARISON OF THE FUNDS		15
Principal Investment Risks		15
Fundamental Investment Restrictions		22
Performance Information		23
Management of the Funds		26
Investment Advisory and Management Agreement		27
Administration Agreement		30
Other Service Providers		30
Distributor; Distribution and Service Fees		31
Dividends and Distributions		31
Purchase, Exchange, Redemption and Valuation of Shares		31
Payments to Broker/Dealers and Other Financial Intermediaries		32
Disclosure of Portfolio Holdings		33
Market Timing Trading Policies and Procedures		33
FINANCIAL HIGHLIGHTS		33
INFORMATION ABOUT THE REORGANIZATIONS		33
General		33
Terms of the Reorganization Agreements		34
Reasons for the Reorganizations		35
Material U.S. Federal Income Tax Consequences of the Reorganizations		37
Expenses of the Reorganizations		38
Continuation of Shareholder Accounts and Plans; Share Certificates		39
Legal Matters		39
OTHER INFORMATION		39
Capitalization		39
Shareholder Rights and Obligations		40
Appendix I—Fundamental Investment Restrictions		I-1
Appendix II—Form of Agreement and Plan of Reorganization		II-1

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SUMMARY

The following is a summary of certain information contained elsewhere in this Combined Prospectus/Information Statement and is qualified in its entirety by reference to the more complete information contained herein. Shareholders should read the entire Combined Prospectus/Information Statement carefully.

The Trust is an open-end management investment company registered with the SEC. Each of the Funds is a diversified, separate series of the Trust. The Trust is organized as a business trust under the laws of the Commonwealth of Massachusetts. The investment objective of each Fund is identical. Each Fund has an investment objective to seek to maximize total return, consistent with income generation and prudent investment management. The investment objective of each Fund is a non-fundamental objective, which means it may be changed without the approval of the Fund’s shareholders. Should a Fund’s Board determine that the investment objective of the Fund should be changed, shareholders of such Fund must be given at least 30 days’ notice before any such change is implemented.

The Acquiring Fund, following completion of the Reorganizations, may be referred to as the “Combined Fund” in this Combined Prospectus/Information Statement. The Combined Fund will be renamed the BlackRock Core Bond Portfolio upon the closing of the Reorganizations.

BlackRock Advisors, LLC (“BlackRock Advisors” or the “Adviser”) serves as the investment adviser of each of the Funds. The portfolio managers of each of the Funds are Rick Rieder, Matthew Marra and Eric Pellicciaro, and they are expected to continue to be the portfolio managers of the Combined Fund following the closing of the Reorganizations. Each of the Funds publicly offers its shares on a continuous basis, and shares may be purchased through each Fund’s distributor, BlackRock Investments, LLC (“BRIL” or the “Distributor”), and numerous intermediaries.

Bond Portfolio and Total Return Portfolio II. The Bond Portfolio and the Total Return Portfolio II employ substantially similar investment strategies to achieve their respective objectives. Both Funds invest at least 80% of their assets in bonds. The principal difference between the Funds’ principal investment strategies is that the Bond Portfolio maintains an average portfolio duration that is within ±20% of the duration of the Barclays Capital Intermediate Government/Credit Index, while the Total Return Portfolio II maintains an average portfolio duration that is within ±20% of the Barclays Capital U.S. Aggregate Bond Index. The Bond Portfolio also maintains a dollar-weighted average maturity between three and ten years, while Total Return Portfolio II has no such requirement. Each Fund invests primarily in dollar-denominated investment grade bonds, and both Funds may invest up to 10% of their assets in non-dollar denominated bonds (on a currency hedged or unhedged basis); however, the Bond Portfolio’s 10% limit also includes bonds of emerging market issuers. Upon the closing of the Reorganization, Total Return Portfolio II will also be permitted to invest up to 10% of its assets in non-dollar denominated bonds and bonds of emerging markets issuers. Each Fund only buys securities that are rated investment grade at the time of purchase by at least one major rating agency or determined by the management team to be of similar quality. Each Fund may engage in active and frequent trading of its portfolio securities to achieve its primary investment strategies. Each Fund may engage in derivatives transactions. Each Fund may use derivatives as a substitute for taking a position in the underlying asset and/or as part of a strategy designed to reduce exposure to other risks. Each Fund may also use derivatives to enhance returns.

Managed Income Portfolio and Total Return Portfolio II. The Managed Income Portfolio and the Total Return Portfolio II employ substantially similar investment strategies to achieve their respective objectives. Both Funds invest at least 80% of their assets in bonds. Both Funds maintain an average portfolio duration that is within ±20% of the Barclays Capital U.S. Aggregate Bond Index. Each Fund only buys securities that are rated investment grade at the time of purchase by at least one major rating agency or determined by the management team to be of similar quality. Each Fund invests primarily in dollar-denominated investment grade bonds, and both Funds may invest up to 10% of their assets in non-dollar denominated bonds (on a currency hedged or unhedged basis). Upon the closing of the Reorganization, Total Return Portfolio II will be permitted to invest up to 10% of

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its assets in non-dollar denominated bonds and bonds of emerging markets issuers. Each Fund may engage in active and frequent trading of its portfolio securities to achieve its primary investment strategies. Each Fund may engage in derivatives transactions. Each Fund may use derivatives as a substitute for taking a position in the underlying asset and/or as part of a strategy designed to reduce exposure to other risks. Each Fund may also use derivatives to enhance returns.

The Board, including all of the Trustees who are not “interested persons” of the Trust (as defined in the 1940 Act) (the “Independent Board Members”), has approved each Reorganization, on behalf of each of the Bond Portfolio and the Managed Income Portfolio, as applicable. Each Reorganization provides for:

• the transfer of all the assets of the Target Fund to the Acquiring Fund in exchange for the assumption by the Acquiring Fund of certain stated liabilities of the Target Fund and shares of the Acquiring Fund having an aggregate net asset value equal to the value of the assets of the Target Fund acquired by the Acquiring Fund reduced by the amount of such assumed liabilities;

• the distribution of such shares of the Acquiring Fund to the relevant Target Fund’s shareholders; and

• the termination of the Target Fund as a series of the Trust.

When the Reorganizations are completed, each Target Fund’s shareholders will hold shares of the same class of the Combined Fund as they currently hold of the Target Fund with an aggregate net asset value equal to the aggregate net asset value of Target Fund shares owned immediately prior to the Reorganization.

Background and Reasons for the Reorganizations

BlackRock Advisors believes that the shareholders of each Fund generally will benefit more from the potential operating efficiencies and economies of scale that may be achieved by combining the Funds’ assets in the Reorganizations, than by continuing to operate the Funds separately. BlackRock Advisors believes that the Acquiring Fund’s investment objective and strategies make it a compatible fund within the BlackRock-advised complex for a reorganization with each Target Fund. As a result of the identical investment objectives and substantially similar strategies of the Funds, there is substantial overlap in the portfolio securities currently owned by the Funds. Consistent with the flexibility permitted by each Fund’s investment strategies, the portfolio management team is generally managing Total Return Portfolio II in the same manner as the Managed Income Portfolio and in a substantially similar manner as the Bond Portfolio. In particular, as of September 30, 2010: (i) 74% of Bond Portfolio’s assets were invested in securities that were also held by Total Return Portfolio II and 64% of Total Return Portfolio II’s assets were invested in securities that were also held by Bond Portfolio; and (ii) 81% of Managed Income Portfolio’s assets were invested in securities that were also held by Total Return Portfolio II and 81% of Total Return Portfolio II’s assets were invested in securities that were also held by the Managed Income Portfolio.

In approving each Reorganization, the Board, including all of the Independent Board Members, determined that participation in the Reorganization is in the best interests of the respective Target Fund and that the interests of the Target Fund’s shareholders will not be diluted as a result of the Reorganization. The Board considered the Reorganization proposals at meetings held on February 8-9, 2011 and March 18, 2011, and the Board, including all of the Independent Board Members, approved each Reorganization. The approval determinations were made on the basis of each Board member’s judgment after consideration of all of the factors taken as a whole, though individual Board members may have placed different weight on various factors and assigned different degrees of materiality to various conclusions.

The factors considered by the Board with regard to each Reorganization include, but are not limited to, the following:

• that the investment objectives of the Target Funds and Acquiring Fund are identical, and that certain strategies of the relevant Target Fund and the Acquiring Fund are substantially similar and compatible, while others are different. The Board considered the principal differences in investment strategies

2

between the relevant Target Fund and the Acquiring Fund. See “Summary—Investment Objectives and Principal Investment Strategies.”

• that assuming the Reorganizations had occurred as of September 30, 2010, the Combined Fund would have (i) total annual fund operating expenses for its share classes that are expected to be the same as or lower than those of the corresponding share classes of each Target Fund prior to the Reorganizations as of such date, with the exception of the Institutional Shares of the Bond Portfolio, which are expected to be higher; (ii) net annual fund operating expenses that are expected to be the same as or lower than those of the corresponding share classes of each Target Fund prior to the Reorganizations as of such date, with the exception of Investor B Shares, Service Shares and BlackRock Shares of the Bond Portfolio, which are expected to be higher, in each case after excluding the effects of certain fees and expenses and after giving effect to all applicable contractual fee waivers and/or expense reimbursements that BlackRock Advisors has agreed to continue or implement for Investor A, Investor B, Investor C, Service, BlackRock and Institutional Shares of the Combined Fund for a certain period of time following the closing of the Reorganizations; and (iii) net annual fund operating expenses that are expected to be the same as or lower than those of the corresponding share classes of each Target Fund prior to the Reorganizations as of such date, with the exception of Investor B Shares and Investor C Shares of the Bond Portfolio, which are expected to increase by less than one basis point, in each case after excluding the effects of certain fees and expenses and after giving effect to both all applicable contractual fee waivers and/or expense reimbursements that BlackRock has agreed to continue or implement for a certain period of time following the closing of the Reorganizations and certain voluntary fee waivers and/or expense reimbursements. Voluntary fee waivers and/or expense reimbursements that BlackRock Advisors has agreed to continue or implement may be reduced or discontinued at any time without notice. When the Reorganizations are completed, BlackRock Advisors has agreed to continue contractual fee waivers and/or expense reimbursements with respect to Investor A, Investor B, Investor C, Service and BlackRock Shares of the Combined Fund until June 1, 2012, and to implement contractual fee waivers and/or expense reimbursements with respect to Institutional Shares of the Combined Fund until February 1, 2014. The contractual and voluntary fee waivers and/or expense reimbursements referenced above do not apply to the following expenses: Dividend Expense, Interest Expense, Acquired Fund Fees and Expenses and certain other Fund expenses.

• that, when the Reorganization relating to Bond Portfolio is consummated, BlackRock Advisors has contractually agreed to waive fees and/or reimburse expenses until February 1, 2014, in order to limit the Combined Fund’s Total Annual Fund Operating Expenses After Fee Waivers and Reimbursements (excluding Dividend Expense, Interest Expense, Acquired Fund Fees and Expenses and certain other Fund expenses) to 0.56% (for Institutional Shares) of average daily net assets.

• the expectation that the Combined Fund will achieve certain operating efficiencies from its larger net asset size and the potential for further reduced expense ratios by sharing certain fixed costs over a larger asset base.

• that although the effective management fee rate under the Management Agreement relating to the Bond Portfolio is expected to increase by one basis point in the Combined Fund, the same contractual management fee rate schedule as the Acquiring Fund’s will remain in place in the Combined Fund, and the substantially greater net assets of the Combined Fund are expected to result in a lower effective management fee rate under the Management Agreement relating to the Managed Income Portfolio.

• that the same portfolio management team (as described below under “Comparison of the Funds—Management of the Funds”) that currently manages each Fund is expected to manage the Combined Fund following the closing of the Reorganizations.

• the relative performance histories of each Fund. See “Comparison of the Funds—Performance Information.”

• that shareholders of each Target Fund will not pay any sales charges in connection with the Reorganizations. Shareholders of each Target Fund will receive shares of the Acquiring Fund. Also,

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that there are certain differences in the contingent deferred sales charges (“CDSCs”) of the Investor A Shares of the Funds. Investor A Shares of the Managed Income Portfolio have a CDSC of 0.50% imposed on investments of $1 million or more if redeemed within eighteen months, while Investor A Shares of the Total Return Portfolio II and the Bond Portfolio have a CDSC of 0.75% imposed on investments of $1 million or more if redeemed within eighteen months. The Acquiring Fund’s CDSC schedule will remain in place in the Combined Fund for new purchases. However, Investor A shareholders of Managed Income Portfolio will continue to be subject to the lower CDSC applicable to Managed Income Portfolio for the Investor A shares they receive in the Combined Fund in connection with the applicable Reorganization.

• that there is expected to be no gain or loss recognized by shareholders for federal income tax purposes as a result of the Reorganizations, as each Reorganization is expected to be a tax-free transaction. In addition, prior to a Reorganization, each Target Fund will distribute to its shareholders all investment company taxable income, net tax-exempt income and net realized capital gains not previously distributed to shareholders, and such distribution of investment company taxable income and net realized capital gains will be taxable to shareholders.

• that the aggregate net asset value of the shares that shareholders of the relevant Target Fund will receive in a Reorganization is expected to equal the aggregate net asset value of the shares that shareholders of the relevant Target Fund own immediately prior to the Reorganization, and that shareholders of the relevant Target Fund will not be diluted as a result of the Reorganization.

• that the estimated Reorganization expenses for Total Return Portfolio II and Managed Income Portfolio are $88,667 and $116,905, respectively, which BlackRock Advisors or its affiliates are expected to entirely absorb through fee waivers and expense reimbursements. BlackRock Advisors or its affiliates will pay the Bond Portfolio’s Reorganization expenses, which are estimated to be $195,653. The foregoing estimated expenses will be borne (to the extent incurred) by Total Return Portfolio II, Managed Income Portfolio and BlackRock Advisors or its affiliates, regardless of whether the Reorganizations are consummated.

The Board, including all of the Independent Board Members, concluded that, based upon the factors and determinations summarized above, completion of each Reorganization is advisable and in the best interests of the respective Target Fund and that the interests of the shareholders of each Target Fund will not be diluted with respect to net asset value as a result of a Reorganization. The Board of the Acquiring Fund concluded that completion of each Reorganization is advisable and in the best interests of the Acquiring Fund and that the interests of the shareholders of the Acquiring Fund will not be diluted with respect to net asset value as a result of the Reorganizations. The determinations were made on the basis of the business judgment of each member of the Board of the Trust with respect to each Fund after consideration of all of the factors taken as a whole, though individual members may have placed different weight on various factors and assigned different degrees of materiality to various conclusions.

Neither a shareholder vote of the Target Funds nor a shareholder vote of the Acquiring Fund is required to approve the Reorganizations. The Trust’s Declaration of Trust provides that the Board may, without the vote of shareholders, combine portfolios of the Trust (such as in this instance the Target Funds and the Acquiring Fund), if the Trustees reasonably determine that such combination will not have a materially adverse affect on any shareholders of either portfolio. In addition, under Rule 17a-8 under the 1940 Act, a vote of the shareholders of the Target Funds is not required.

Investment Objectives and Principal Investment Strategies

Comparison of the Bond Portfolio and the Total Return Portfolio II

Investment Objectives. The investment objectives of the Bond Portfolio and the Total Return Portfolio II are identical. The investment objective of the Funds is to seek to maximize total return, consistent with income

4

generation and prudent investment management. The investment objective of each of the Funds is a non-fundamental objective, which means it may be changed without the approval of the Fund’s shareholders. Should a Fund’s Board of Trustees determine that the investment objective of the Fund should be changed, shareholders of such Fund must be given at least 30 days’ notice before any such change is implemented.

Principal Investment Strategies. The Bond Portfolio and the Total Return Portfolio II employ substantially similar principal strategies in achieving their respective objectives. The similarities and differences of the principal investment strategies of the Funds are described in the chart below.

Bond Portfolio (Target Fund)	Total Return Portfolio II (Acquiring Fund)
•    The Fund invests primarily in bonds and maintains an average portfolio duration that is within ±20% of the duration of the Barclays Capital Intermediate Government/Credit Index. (As of December 31, 2010, the duration of the benchmark was 3.91 years.) •    The Fund normally invests at least 80% of its assets in bonds. •    The Fund’s dollar-weighted average maturity will be between 3 and 10 years.	•    The Fund normally invests at least 80% of its assets in bonds and maintains an average portfolio duration that is within ±20% of the duration of the Barclays Capital U.S. Aggregate Bond Index. (As of December 31, 2010, the average duration of the benchmark was 4.98 years.)
•    Same as Acquiring Fund.	•    The Fund only buys securities that are rated investment grade at the time of purchase by at least one major rating agency or determined by the management team to be of similar quality. Split rated bonds will be considered to have the higher credit rating.
•    The Fund invests primarily in dollar-denominated investment grade bonds, but may invest up to 10% of its assets in non-dollar denominated bonds and bonds of emerging market issuers. The Fund’s investment in non-dollar denominated bonds may be on a currency hedged or unhedged basis.	•    The Fund may invest up to 10% of its assets in non-dollar denominated bonds of issuers located outside of the United States. The Fund’s investment in non-dollar denominated bonds may be on a currency hedged or unhedged basis. •    Upon the closing of the Reorganization, the Fund will also be permitted to invest up to 10% of its assets in non-dollar denominated bonds and bonds of emerging markets issuers.
•    Same as Acquiring Fund.	•    The Fund may buy or sell options or futures on a security or an index of securities, or enter into credit default swaps and interest rate or foreign currency transactions, including swaps (collectively, commonly known as derivatives).
•    Same as Acquiring Fund.	•    The Fund typically uses derivatives as a substitute for taking a position in the underlying asset and/or as part of a strategy designed to reduce exposure to other risks, such as interest rate or currency risk. The Fund may also use derivatives to enhance returns, in which case their use would involve leveraging risk.

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Bond Portfolio (Target Fund)	Total Return Portfolio II (Acquiring Fund)
•    Same as Acquiring Fund.	•    The Fund may seek to obtain market exposure to the securities in which it primarily invests by entering into a series of purchase and sale contracts or by using other investment techniques (such as reverse repurchase agreements or dollar rolls).
•    Same as Acquiring Fund.	•    The management team evaluates sectors of the bond market and individual securities within these sectors. The management team selects bonds from several sectors including: U.S. Treasuries and agency securities, commercial and residential mortgage-backed securities, CMOs, asset-backed securities and corporate bonds.
•    Same as Acquiring Fund.	•    The Fund may engage in active and frequent trading of portfolio securities to achieve its primary investment strategies.

Comparison. The principal difference between the principal strategies of the Bond Portfolio and Total Return Portfolio II is that Bond Portfolio maintains an average portfolio duration that is within ±20% of the duration of the Barclays Capital Intermediate Government/Credit Index, while Total Return Portfolio II maintains an average portfolio duration that is within ±20% of the Barclays Capital U.S. Aggregate Bond Index. Bond Portfolio also maintains a dollar-weighted average maturity between three and ten years, while Total Return Portfolio II has no such requirement. Each Fund invests primarily in dollar-denominated investment grade bonds, and may invest up to 10% of its assets in non-dollar denominated bonds (on a currency hedged or unhedged basis). For Bond Portfolio, the 10% limit also includes bonds of emerging market issuers. Upon the closing of the Reorganization, Total Return Portfolio II will also be permitted to invest up to 10% of its assets in non-dollar denominated bonds and bonds of emerging markets issuers. Each Fund only buys securities that are rated investment grade at the time of purchase by at least one major rating agency or determined by the management team to be of similar quality. Each Fund’s management team selects bonds from several sectors including U.S. Treasuries and agency securities, commercial and residential mortgage-backed securities, collateralized mortgage obligations, asset-backed securities and corporate bonds. Each Fund may engage in active and frequent trading of its portfolio securities to achieve its primary investment strategies. Each Fund may engage in derivatives transactions. Each Fund may use derivatives as a substitute for taking a position in the underlying asset and/or as part of a strategy designed to reduce exposure to other risks. Each Fund may also use derivatives to enhance returns. Total Return Portfolio II also has certain non-principal strategies that are identical to the non-principal strategies of Bond Portfolio.

Notwithstanding the small differences in the investment strategies of the Funds, as noted above, because of the identical investment objectives and substantially similar strategies there is substantial overlap in the portfolio securities currently owned by the Funds. Consistent with the flexibility permitted by each Fund’s investment strategies, the portfolio management team is generally managing the Funds in a substantially similar manner and the same portfolio management team is also expected to manage the Combined Fund after the Reorganization. In particular, as noted above, as of September 30, 2010, 74% of Bond Portfolio’s securities overlapped with Total Return Portfolio II’s securities and 64% of Total Return Portfolio II’s securities overlapped with Bond Portfolio’s securities. Thus, the Reorganization is not expected to cause significant portfolio turnover or transaction expenses associated with the sale of securities held by Bond Portfolio.

Comparison of the Managed Income Portfolio and the Total Return Portfolio II

Investment Objectives. The investment objectives of the Managed Income Portfolio and the Total Return Portfolio II are identical. The investment objective of the Funds is to seek to maximize total return, consistent

6

with income generation and prudent investment management. The investment objective of each of the Funds is a non-fundamental objective, which means it may be changed without the approval of the Fund’s shareholders. Should a Fund’s Board of Trustees determine that the investment objective of the Fund should be changed, shareholders must be given at least 30 days’ notice before any such change is implemented.

Principal Investment Strategies. The Managed Income Portfolio and the Total Return Portfolio II employ substantially similar principal strategies in achieving their respective objectives. The similarities and differences of the principal investment strategies of the Funds are described in the chart below.

Managed Income Portfolio (Target Fund)	Total Return Portfolio II (Acquiring Fund)
•    The Fund invests primarily in investment grade bonds and maintains an average portfolio duration that is within ±20% of the Barclays Capital U.S. Aggregate Bond Index. (As of December 31, 2010, the duration of the benchmark was 4.98 years.) •    Under normal circumstances, the Fund invests at least 80% of its assets in bonds.	•    The Fund normally invests at least 80% of its assets in bonds and maintains an average portfolio duration that is within ±20% of the duration of the Barclays Capital U.S. Aggregate Bond Index. (As of December 31, 2010, the average duration of the benchmark was 4.98 years.)
•    Same as Acquiring Fund	•    The Fund only buys securities that are rated investment grade at the time of purchase by at least one major rating agency or determined by the management team to be of similar quality. Split rated bonds will be considered to have the higher credit rating.
•    Same as Acquiring Fund •    Same as Acquiring Fund	•    The Fund may invest up to 10% of its assets in non-dollar denominated bonds of issuers located outside of the United States. •    Upon the closing of the Reorganization, the Fund will be permitted to invest up to 10% of its assets in non-dollar denominated bonds and bonds of emerging markets issuers. •    The Fund’s investment in non-dollar denominated bonds may be on a currency hedged or unhedged basis.
•    Same as Acquiring Fund •    Same as Acquiring Fund	•    The Fund may buy or sell options or futures on a security or an index of securities, or enter into credit default swaps and interest rate or foreign currency transactions, including swaps (collectively, commonly known as derivatives). •    The Fund typically uses derivatives as a substitute for taking a position in the underlying asset and/or as part of a strategy designed to reduce exposure to other risks, such as interest rate or currency risk. The Fund may also use derivatives to enhance returns, in which case their use would involve leveraging risk.

7

Managed Income Portfolio (Target Fund)	Total Return Portfolio II (Acquiring Fund)
•    Same as Acquiring Fund	•    The Fund may seek to obtain market exposure to the securities in which it primarily invests by entering into a series of purchase and sale contracts or by using other investment techniques (such as reverse repurchase agreements or dollar rolls).
•    Same as Acquiring Fund	•    The management team evaluates sectors of the bond market and individual securities within these sectors. The management team selects bonds from several sectors including: U.S. Treasuries and agency securities, commercial and residential mortgage-backed securities, CMOs, asset-backed securities and corporate bonds.
•    Same as Acquiring Fund	•    The Fund may engage in active and frequent trading of portfolio securities to achieve its primary investment strategies.

Comparison. The principal strategies of the Funds are the same. Each Fund invests at least 80% of its assets in bonds. Each Fund only buys securities that are rated investment grade at the time of purchase by at least one major rating agency or determined by the management team to be of similar quality. Each Fund maintains an average portfolio duration that is within ±20% of the Barclays Capital U.S. Aggregate Bond Index. Each Fund’s management team selects bonds from several sectors including U.S. Treasuries and agency securities, commercial and residential mortgage-backed securities, collateralized mortgage obligations, asset-backed securities and corporate bonds. Each Fund invests primarily in dollar-denominated investment grade bonds, and may invest up to 10% of its assets in non-dollar denominated bonds (on a currency hedged or unhedged basis). Upon the closing of the Reorganization, Total Return Portfolio II will be permitted to invest up to 10% of its assets in non-dollar denominated bonds and bonds of emerging markets issuers. Each Fund may use derivatives as a substitute for taking a position in the underlying asset and/or as part of a strategy designed to reduce exposure to other risks. Each Fund may engage in active and frequent trading of its portfolio securities to achieve its primary investment strategies. Each Fund may also use derivatives to enhance returns. Total Return Portfolio II also has certain non-principal strategies that are identical to the non-principal strategies of Managed Income Portfolio.

As noted above, because of the identical investment objectives and substantially similar current strategies there is substantial overlap in the portfolio securities currently owned by the Funds. Consistent with the flexibility permitted by each Fund’s investment strategies, the portfolio management team is generally managing the Funds in the same manner and the same portfolio management team is also expected to manage the Combined Fund after the Reorganization. In particular, as noted above, as of September 30, 2010, 81% of Managed Income’s assets were invested in securities that were also held by the Total Return Portfolio II and 81% of Total Return Portfolio II’s assets were invested in securities that were also held by the Managed Income. BlackRock Advisors does not expect to sell any material portion of the portfolio assets of either Target Fund in connection with the Reorganizations. Thus, the Reorganization is not expected to cause significant portfolio turnover or transaction expenses associated with the sale of securities held by Managed Income Portfolio.

8

Fees and Expenses

When a Reorganization is completed, holders of Target Fund shares will receive the same class of shares in the Combined Fund that they previously held in the Target Fund.

Bond Portfolio (Target Fund)	Managed Income Portfolio (Target Fund)	Combined Fund (Acquiring Fund)
BlackRock	N/A	BlackRock
Institutional	Institutional	Institutional
Service	Service	Service
Investor A	Investor A	Investor A
Investor B	Investor B	Investor B
Investor C	Investor C	Investor C

Fee Tables as of September 30, 2010 (unaudited)

The fee tables below provide information about the fees and expenses attributable to each class of shares of the Funds, assuming the Reorganizations had taken place on September 30, 2010, and the estimated pro forma fees and expenses attributable to each class of shares of the Total Return Portfolio II Pro Forma Combined Fund. The percentages presented in the fee tables are based on fees and expenses incurred during the 12-month period ended September 30, 2010. Future fees and expenses may be greater or less than those indicated below. For information concerning the net assets of each Fund as of September 30, 2010, see “Other Information—Capitalization.” You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $25,000 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 of the Acquiring Fund Prospectus, which accompanies this Combined Prospectus/Information Statement and is incorporated herein by reference and in the “Purchase of Shares” section of the Acquiring Fund SAI, which is incorporated herein by reference.

	Bond Portfolio (Target Fund) Investor A Shares			Managed Income Portfolio (Target Fund) Investor A Shares			Total Return II (Acquiring Fund) Investor A Shares			Total Return Portfolio II Pro-Forma Combined Fund Investor  A Shares
Shareholder Fees (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price)		4.00	%		4.00	%		4.00	%		4.00	%
Maximum Deferred Sales Charge (Load) (as a percentage of offering price or redemption proceeds, whichever is lower)		None	1		None	1		None	1		None	1
Annual Fund Operating Expenses (expenses that are deducted from Fund assets)
Management Fee		.050	%		0.50	%		0.47	%		0.45	%
Distribution and/or Service (12b-1) fees		0.25	%		0.25	%		0.25	%		0.25	%
Other Expenses		0.44	%2		0.45	%2		0.46	%2		0.43	%
Interest Expense		0.13	%		0.12	%		0.19	%		0.16	%
Miscellaneous Other Expenses		0.31	%2		0.33	%2		0.27	%2		0.27	%
Acquired Fund Fees and Expenses		0.01	%3		0.01	%3		0.01	%3		0.01	%
Total Annual Fund Operating Expenses		1.20	%3		1.21	%3		1.19	%3		1.14	%
Fee Waivers and/or Expense Reimbursements		(0.11	)%4		—	5		(0.10	)%6		(0.08	)%7
Total Annual Fund Operating Expenses After Fee Waivers and/or Expense Reimbursements		1.09	%4		1.21	%5		1.09	%6		1.06	%7

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	Bond Portfolio (Target Fund) Investor B Shares			Managed Income Portfolio (Target Fund) Investor B Shares			Total Return Portfolio II (Acquiring Fund) Investor B Shares			Total Return Portfolio II Pro-Forma Combined Fund Investor  B Shares
Shareholder Fees (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price)		None			None			None			None
Maximum Deferred Sales Charge (Load) (as a percentage of offering price or redemption proceeds, whichever is lower)		4.50	%8		4.50	%8		4.50	%8		4.50	%8
Annual Fund Operating Expenses (expenses that are deducted from Fund assets)
Management Fee		0.50	%		0.50	%		0.47	%		0.45	%
Distribution and/or Service (12b-1) fees		1.00	%		1.00	%		1.00	%		1.00	%
Other Expenses		0.46	%2		0.59	%2		0.56	%2		0.49	%
Interest Expense		0.13	%		0.12	%		0.19	%		0.16	%
Miscellaneous Other Expenses		0.33	%2		0.47	%2		0.37	%2		0.33	%
Acquired Fund Fees and Expenses		0.01	%3		0.01	%3		0.01	%3		0.01	%
Total Annual Fund Operating Expenses		1.97	%3		2.10	%3		2.04	%3		1.95	%
Fee Waivers and/or Expense Reimbursements		(0.13	)%4		(0.10	)%5		(0.11	)%6		(0.05	)%7
Total Annual Fund Operating Expenses After Fee Waivers and/or Expense Reimbursements		1.84	%4		2.00	%5		1.93	%6		1.90	%7
	Bond Portfolio (Target Fund) Investor C Shares			Managed Income Portfolio (Target Fund) Investor C Shares			Total Return Portfolio  II (Acquiring Fund) Investor C Shares			Total Return Portfolio II Pro-Forma Combined Fund Investor  C Shares
Shareholder Fees (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price)		None			None			None			None
Maximum Deferred Sales Charge (Load) (as a percentage of offering price or redemption proceeds, whichever is lower)		1.00	%9		1.00	%9		1.00	%9		1.00	%9
Annual Fund Operating Expenses (expenses that are deducted from Fund assets)
Management Fee		0.50	%		0.50	%		0.47	%		0.45	%
Distribution and/or Service (12b-1) fees		1.00	%		1.00	%		1.00	%		1.00	%
Other Expenses		0.38	%2		0.46	%2		0.47	%2		0.41	%
Interest Expense		0.13	%		0.12	%		0.19	%		0.16	%
Miscellaneous Other Expenses		0.25	%2		0.34	%2		0.28	%2		0.25	%
Acquired Fund Fees and Expenses		0.01	%3		0.01	%3		0.01	%3		0.01	%
Total Annual Fund Operating Expenses		1.89	%3		1.97	%3		1.95	%3		1.87	%
Fee Waivers and/or Expense Reimbursements		(0.05	)%4		—	5		(0.09	)%6		(0.04	)%7
Total Annual Fund Operating Expenses After Fee Waivers and/or Expense Reimbursements		1.84	%4		1.97	%5		1.86	%6		1.83	%7

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	Bond Portfolio (Target  Fund) Institutional Shares		Managed Income Portfolio (Target Fund) Institutional Shares		Total Return Portfolio  II (Acquiring Fund) Institutional Shares		Total Return Portfolio II Pro-Forma Combined  Fund Institutional Shares
Shareholder Fees (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price)		None		None		None		None
Maximum Deferred Sales Charge (Load) (as a percentage of offering price or redemption proceeds, whichever is lower)		None		None		None		None
Annual Fund Operating Expenses (expenses that are deducted from Fund assets)
Management Fee		0.50%		0.50%		0.47%		0.45%
Distribution and/or Service (12b-1) fees		None		None		None		None
Other Expenses		0.36%2		0.51%2		0.49%2		0.42%
Interest Expense		0.13%		0.12%		0.19%		0.16%
Miscellaneous Other Expenses		0.23%2		0.39%2		0.30%2		0.26%
Acquired Fund Fees and Expenses		0.01%3		0.01%3		0.01%3		0.01%
Total Annual Fund Operating Expenses		0.87%3		1.02%3		0.97%3		0.88%
Fee Waivers and/or Expense Reimbursements		(0.13)%4		(0.24)%5		(0.19)%6		(0.15)%7
Total Annual Fund Operating Expenses After Fee Waivers and/or Expense Reimbursements		0.74%4		0.78%5		0.78%6		0.73%7
	Bond Portfolio (Target  Fund) Service Shares		Managed Income Portfolio (Target Fund) Service Shares		Total Return Portfolio  II (Acquiring Fund) Service Shares		Total Return Portfolio II Pro-Forma Combined  Fund Service Shares
Shareholder Fees (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price)		None		None		None		None
Maximum Deferred Sales Charge (Load) (as a percentage of offering price or redemption proceeds, whichever is lower)		None		None		None		None
Annual Fund Operating Expenses (expenses that are deducted from Fund assets)
Management Fee		0.50%		0.50%		0.47%		0.45%
Distribution and/or Service (12b-1) fees		0.25%		0.25%		0.25%		0.25%
Other Expenses		0.40%2		0.36%2		0.47%2		0.37%
Interest Expense		0.13%		0.12%		0.19%		0.16%
Miscellaneous Other Expenses		0.27%2		0.24%2		0.28%2		0.21%
Acquired Fund Fees and Expenses		0.01%3		0.01%3		0.01%3		0.01%
Total Annual Fund Operating Expenses		1.16%3		1.12%3		1.20%3		1.08%
Fee Waivers and/or Expense Reimbursements		(0.12)%4		(0.04)%5		(0.07)%6		—   7
Total Annual Fund Operating Expenses After Fee Waivers and/or Expense Reimbursements		1.04%4		1.08%5		1.13%6		1.08%7

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	Bond Portfolio (Target Fund) BlackRock Shares			Total Return Portfolio II (Acquiring  Fund) BlackRock Shares			Total Return Portfolio II Pro-Forma Combined  Fund BlackRock Shares
Shareholder Fees (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price)		None			None			None
Maximum Deferred Sales Charge (Load) (as a percentage of offering price or redemption proceeds, whichever is lower)		None			None			None
Annual Fund Operating Expenses (expenses that are deducted from Fund assets)
Management Fee		0.50	%		0.47	%		0.45	%
Distribution and/or Service (12b-1) fees		None			None			None
Other Expenses		0.29	%2		0.33	%2		0.29	%
Interest Expense		0.13	%		0.19	%		0.16	%
Miscellaneous Other Expenses		0.16	%2		0.14	%2		0.13	%
Acquired Fund Fees and Expenses		0.01	%3		0.01	%3		0.01	%
Total Annual Fund Operating Expenses		0.80	%3		0.81	%3		0.75	%
Fee Waivers and/or Expense Reimbursements		(0.19	)%4		(0.16	)%6		(0.13	)%7
Total Annual Fund Operating Expenses After Fee Waivers and/or Expense Reimbursements		0.61	%4		0.65	%6		0.62	%7

1. A contingent deferred sales charge (“CDSC”) of 0.50% for Managed Income Portfolio and of 0.75% for Bond Portfolio and Total Return Portfolio II 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 $1,000,000 or more. The Acquiring Fund’s CDSC schedule will remain in place in the Combined Fund for new purchases. However, Investor A shareholders of Managed Income Portfolio will continue to be subject to the lower CDSC applicable to Managed Income Portfolio for the Investor A shares they receive in the Combined Fund in connection with the applicable Reorganization.

2. 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 to reflect current fees.

4. BlackRock Advisors has contractually agreed to waive and/or reimburse fees or expenses in order to limit Bond Portfolio’s Total Annual Fund Operating Expenses After Fee Waivers and Reimbursements (excluding Dividend Expense, Interest Expense, Acquired Fund Fees and Expenses and certain other Fund expenses) to 0.95% (for Investor A Shares), 1.70% (for Investor B and Investor C Shares), 0.60% (for Institutional Shares), 0.90% (for Service Shares) and 0.47% (for BlackRock Shares) of average daily net assets until February 1, 2012. The Fund may have to repay some of these waivers and reimbursements to BlackRock Advisors in the following two years. The agreement may be terminated upon 90 days’ notice by a majority of the Independent Board Members or by a vote of a majority of the outstanding voting securities of the Fund.

5. BlackRock Advisors has contractually agreed to waive and/or reimburse fees or expenses in order to limit Managed Income Portfolio’s Total Annual Fund Operating Expenses After Fee Waivers and Reimbursements (excluding Dividend Expense, Interest Expense, Acquired Fund Fees and Expenses and certain other Fund expenses) to 1.12% (for Investor A Shares), 1.87% (for Investor B and Investor C Shares), 0.65% (for Institutional Shares) and 0.95% (for Service Shares) of average daily net assets until February 1, 2012. The Fund may have to repay some of these waivers and reimbursements to BlackRock Advisors in the following two years. The agreement may be terminated upon 90 days’ notice by a majority of the Independent Board Members or by a vote of a majority of the outstanding voting securities of the Fund.

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6. BlackRock Advisors has contractually agreed to waive and/or reimburse fees or expenses in order to limit Total Return Portfolio II’s Total Annual Fund Operating Expenses After Fee Waivers and Reimbursements (excluding Dividend Expense, Interest Expense, Acquired Fund Fees and Expenses and certain other Fund expenses) to 0.89% (for Investor A Shares), 1.73% (for Investor B Shares), 1.66% (for Investor C Shares), 0.58% (for Institutional Shares), 0.93% (for Service Shares) and 0.45% (for BlackRock Shares) of average daily net assets until February 1, 2012. The Fund may have to repay some of these waivers and reimbursements to BlackRock Advisors in the following two years. The agreement may be terminated upon 90 days’ notice by a majority of the Independent Board Members or by a vote of a majority of the outstanding voting securities of the Fund.

7. When the Reorganization relating to the Bond Portfolio is completed, the Acquiring Fund’s fee waiver and/or expense limitation agreement for the Investor A, Investor B, Investor C, Service and BlackRock Shares will remain in place with the Combined Fund until June 1, 2012. In addition, BlackRock Advisors has contractually agreed to waive and/or reimburse fees or expenses in order to limit the Combined Fund’s Total Annual Fund Operating Expenses After Fee Waivers and Reimbursements (excluding Dividend Expense, Interest Expense, Acquired Fund Fees and Expenses and certain other Fund expenses) to 0.56% (for Institutional Shares) of average daily net assets until February 1, 2014. The Fund may have to repay some of these waivers and reimbursements to BlackRock Advisors in the following two years. The agreement may be terminated upon 90 days’ notice by a majority of the Independent Board Members or by a vote of a majority of the outstanding voting securities of the Fund.

8. The CDSC is 4.50% if shares are redeemed in less than one year, The CDSC for Investor B Shares decreases for redemptions made in subsequent years. After six years there is no CDSC on Investor B Shares.

9. There is no CDSC on Investor C Shares after one year.

EXAMPLE:

This Example is intended to help you compare the cost of investing in the relevant Fund with the cost of investing in other mutual funds. This Example assumes that you invest $10,000 in the Fund for the time periods indicated (for the periods ended September 30, 2010) and then redeem all of your shares at the end of those periods. This 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 and the net expenses shown in the fee table, your costs would be:

	One Year		Three Years		Five Years		Ten Years
Bond Portfolio (Target Fund) A Shares	$	507	$	755	$	1,023	$	1,787
Managed Income Portfolio (Target Fund) A Shares	$	518	$	769	$	1,038	$	1,807
Total Return Portfolio II (Acquiring Fund) A Shares	$	507	$	753	$	1,019	$	1,777
Total Return Portfolio II Pro-Forma Combined Fund A Shares	$	504	$	740	$	995	$	1,724
Bond Portfolio (Target Fund) B Shares	$	637	$	956	$	1,250	$	1,992
Managed Income Portfolio (Target Fund) B Shares	$	653	$	998	$	1,320	$	2,088
Total Return Portfolio II (Acquiring Fund) B Shares	$	646	$	979	$	1,288	$	2,039
Total Return Portfolio II Pro-Forma Combined Fund B Shares	$	643	$	957	$	1,248	$	1,962
Bond Portfolio (Target Fund) C Shares	$	287	$	589	$	1,017	$	2,208
Managed Income Portfolio (Target Fund) C Shares	$	300	$	618	$	1,062	$	2,296
Total Return Portfolio II (Acquiring Fund) C Shares	$	289	$	604	$	1,044	$	2,268
Total Return Portfolio II Pro-Forma Combined Fund C Shares	$	286	$	584	$	1,007	$	2,187
Bond Portfolio (Target Fund) Institutional Shares	$	76	$	265	$	469	$	1,061
Managed Income Portfolio (Target Fund) Institutional Shares	$	80	$	301	$	540	$	1,226
Total Return Portfolio II (Acquiring Fund) Institutional Shares	$	80	$	290	$	518	$	1,172
Total Return Portfolio II Pro-Forma Combined Fund Institutional Shares	$	75	$	250	$	457	$	1,056

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	One Year		Three Years		Five Years		Ten Years
Bond Portfolio (Target Fund) BlackRock Shares	$	62	$	236	$	426	$	972
Total Return Portfolio II (Acquiring Fund) BlackRock Shares	$	66	$	243	$	434	$	987
Total Return Portfolio II Pro-Forma Combined Fund BlackRock Shares	$	63	$	227	$	404	$	918
Bond Portfolio (Target Fund) Service Shares	$	106	$	357	$	627	$	1,398
Managed Income Portfolio (Target Fund) Service Shares	$	110	$	352	$	613	$	1,360
Total Return Portfolio II (Acquiring Fund) Service Shares	$	115	$	374	$	653	$	1,448
Total Return Portfolio II Pro-Forma Combined Fund Service Shares	$	110	$	343	$	595	$	1,317

You would pay the following expenses if you did not redeem your shares:

	One Year		Three Years		Five Years		Ten Years
Bond Portfolio (Target Fund) B Shares	$	187	$	606	$	1,050	$	1,992
Managed Income Portfolio (Target Fund) B Shares	$	203	$	648	$	1,120	$	2,088
Total Return Portfolio II (Acquiring Fund) B Shares	$	196	$	629	$	1,088	$	2,039
Total Return Portfolio II Pro-Forma Combined Fund B Shares	$	193	$	607	$	1,048	$	1,962
Bond Portfolio (Target Fund) C Shares	$	187	$	589	$	1,017	$	2,208
Managed Income Portfolio (Target Fund) C Shares	$	200	$	618	$	1,062	$	2,296
Total Return Portfolio II (Acquiring Fund) C Shares	$	189	$	604	$	1,044	$	2,268
Total Return Portfolio II Pro-Forma Combined Fund C Shares	$	186	$	584	$	1,007	$	2,187

Portfolio Turnover

Each 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 a Fund’s performance. During its most recent fiscal year, each Fund had the following portfolio turnover rate:

Fund	Fiscal Year End		Rate
Bond Portfolio (Target Fund)		9/30/10		671	%
Managed Income Portfolio (Target Fund)		9/30/10		704	%
Total Return Portfolio II (Acquiring Fund)		9/30/10		724	%

Federal Tax Consequences

Each Reorganization is expected to qualify as a tax-free “reorganization” for U.S. federal income tax purposes. If a Reorganization so qualifies, in general, the relevant Target Fund and the Acquiring Fund will not recognize gain or loss for U.S. federal income tax purposes in the transactions contemplated by the Reorganization (except for any gain or loss that may be required to be recognized solely as a result of the close of a Target Fund’s taxable year due to the Reorganization or as a result of the transfer of certain assets). As a condition to the closing of each Reorganization, the Trust, on behalf of the Acquiring Fund, and the Trust, on behalf of each Target Fund, will receive an opinion from Willkie Farr & Gallagher LLP to that effect. An opinion of counsel is not binding on the Internal Revenue Service (the “IRS”) or any court and thus does not preclude the IRS from asserting, or a court from rendering, a contrary position.

BlackRock Advisors does not expect to sell any material portion of the portfolio assets of either Target Fund in connection with the Reorganizations. If any of the portfolio assets of either Target Fund are sold (or deemed sold by reason of marking to market of certain assets upon the termination of the Target Fund’s taxable year or as a result of the transfer of an interest in a passive foreign investment company) by the Target Fund in connection

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with a Reorganization, the tax impact of such sales (or deemed sales) will depend on the difference between the price at which such portfolio assets are sold and the Target Fund’s basis in such assets. Any gains will be distributed to the Target Fund’s shareholders as either capital gain dividends (to the extent of long-term capital gains) or ordinary dividends (to the extent of short-term capital gains) during or with respect to the year of sale (or deemed sale), and such distributions will be taxable to shareholders.

At any time prior to the consummation of a Reorganization, a shareholder may redeem shares of the Target Fund, likely resulting in recognition of gain or loss to such shareholder for U.S. federal and state income tax purposes. For more information about the U.S. federal income tax consequences of a Reorganization, see “Material U.S. Federal Income Tax Consequences of the Reorganization.”

Purchase, Exchange, Redemption and Valuation of Shares

Procedures for the purchase, exchange, redemption and valuation of shares of each Target Fund and the Acquiring Fund are identical.

COMPARISON OF THE FUNDS

Principal Investment Risks

Bond Portfolio and Total Return Portfolio II

Because of their substantially similar investment objectives and investment strategies, the Bond Portfolio and Total Return Portfolio II are subject to similar principal investment risks associated with an investment in the relevant Fund. The principal risks of each Fund (including any corresponding non-principal risks in the other Fund) are set out in the table below.

Risk	Bond Portfolio (Target Fund)	Total Return Portfolio II (Acquiring Fund)
Borrowing Risk	Non-Principal Risk	Principal Risk
Credit Risk	Principal Risk	Principal Risk
Derivatives Risk	Principal Risk	Principal Risk
Dollar Rolls Risk	Principal Risk	Principal Risk
Emerging Markets Risk	Principal Risk	Principal Risk*
Extension Risk	Principal Risk	Principal Risk
Foreign Securities Risk	Principal Risk	Principal Risk
High Portfolio Turnover Risk	Principal Risk	Principal Risk
Interest Rate Risk	Principal Risk	Principal Risk
Leverage Risk	Principal Risk	Principal Risk
Liquidity Risk	Principal Risk	Principal Risk
Market Risk and Selection Risk	Principal Risk	Principal Risk
Mortgage- and Asset-Backed Securities Risk	Principal Risk	Principal Risk
Prepayment Risk	Principal Risk	Principal Risk
Repurchase Agreements/Purchase and Sale Contracts Risks	Principal Risk	Principal Risk
Reverse Repurchase Agreements Risk	Principal Risk	Principal Risk
U.S. Government Issuer Risk	Principal Risk	Principal Risk

*Emerging Markets Risk will become a principal risk of the Total Return Portfolio II upon the closing of the Reorganization.

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Managed Income Portfolio and Total Return Portfolio II

Because of their substantially similar investment objectives and investment strategies, the Managed Income Portfolio and Total Return Portfolio II are subject to similar principal investment risks associated with an investment in the relevant Fund. The principal risks of each Fund (including any corresponding non-principal risks in the other Fund) are set out in the table below.

Risk	Managed Income Portfolio (Target Fund)	Total Return Portfolio II (Acquiring Fund)
Borrowing Risk	Non-Principal Risk	Principal Risk
Credit Risk	Principal Risk	Principal Risk
Derivatives Risk	Principal Risk	Principal Risk
Dollar Rolls Risk	Principal Risk	Principal Risk
Emerging Markets Risk	N/A	Principal Risk*
Extension Risk	Principal Risk	Principal Risk
Foreign Securities Risk	Principal Risk	Principal Risk
High Portfolio Turnover Risk	Principal Risk	Principal Risk
Interest Rate Risk	Principal Risk	Principal Risk
Leverage Risk	Principal Risk	Principal Risk
Liquidity Risk	Principal Risk	Principal Risk
Market Risk and Selection Risk	Principal Risk	Principal Risk
Mortgage- and Asset-Backed Securities Risk	Principal Risk	Principal Risk
Prepayment Risk	Principal Risk	Principal Risk
Repurchase Agreements/Purchase and Sale Contracts Risks	Principal Risk	Principal Risk
Reverse Repurchase Agreements Risk	Principal Risk	Principal Risk
U.S. Government Issuer Risk	Principal Risk	Principal Risk

*Emerging Markets Risk will become a principal risk of the Total Return Portfolio II upon the closing of the Reorganization.

Combined Fund

There is no guarantee that shares of the Combined Fund will not lose value. This means that as shareholders of the Combined Fund, the Target Fund shareholders could lose money. Shares of the Combined Fund are not bank deposits and are not guaranteed or insured by any bank, government entity or the Federal Deposit Insurance Corporation. As with any Fund, the value of the Combined Fund’s investments, and, therefore, the value of the Combined Fund’s shares, may fluctuate. In addition, there are specific factors that may affect the value of a particular security. Also, the Combined Fund may invest in securities that underperform the markets, the relevant indices or securities selected by other funds with similar investment objectives and investment strategies.

The following discussion describes the principal risks that may affect the Acquiring Fund and, therefore, the Combined Fund. You will find additional descriptions of specific risks in the Acquiring Fund Prospectus, which accompanies this Combined Prospectus/Information Statement and is incorporated herein by reference.

Borrowing Risk—Borrowing may exaggerate changes in the net asset value of Fund shares and in the return on the Fund’s portfolio. Borrowing will cost the Fund interest expense and other fees. The costs of borrowing may reduce the Fund’s return. Borrowing may cause the Fund to liquidate positions when it may not be advantageous to do so to satisfy its obligations.

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Credit Risk—Credit risk refers to the possibility that the issuer of a security will not be able to make principal and interest payments 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. The degree of credit risk depends on both the financial condition of the issuer and the terms of the obligation.

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. 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. Derivatives are also subject to counterparty risk, which is the risk that the other party in the transaction will not fulfill its contractual obligation. In addition, some derivatives are more sensitive to interest rate changes and market price fluctuations than other securities. 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. The Fund could also suffer losses related to its derivatives positions as a result of unanticipated market movements, which losses are potentially unlimited. Finally, BlackRock may not be able to predict correctly the direction of securities prices, interest rates and other economic factors, which could cause the Fund’s derivatives positions to lose value. When a derivative is used as a hedge against a position that the Fund holds, any loss generated by the derivative generally should be substantially offset by gains on the hedged investment, and vice versa. While hedging can reduce or eliminate losses, it can also reduce or eliminate gains. Hedges are sometimes subject to imperfect matching between the derivative and the underlying security, and there can be no assurance that the Fund’s hedging transactions will be effective. The income from certain derivatives may be subject to Federal income tax. Swap agreements involve the risk that the party with whom the Fund has entered into the swap will default on its obligation to pay the Fund and the risk that the Fund will not be able to meet its obligations to pay the other party to the agreement. Credit default swaps involve special risks in addition to those mentioned above because they are difficult to value, are highly susceptible to liquidity and credit risk, and generally pay a return to the party that has paid the premium only in the event of an actual default by the issuer of the underlying obligation (as opposed to a credit downgrade or other indication of financial difficulty). Forward foreign currency exchange contracts do not eliminate fluctuations in the value of non-U.S. securities but rather allow the Fund to establish a fixed rate of exchange for a future point in time. This strategy can have the effect of reducing returns and minimizing opportunities for gain.

Dollar Rolls Risk—A dollar roll transaction involves a sale by the Fund of a mortgage-backed or other security concurrently with an agreement by the Fund to repurchase a similar security at a later date at an agreed-upon price. Dollar roll transactions involve the risk that the market value of the securities the Fund is required to purchase may decline below the agreed upon repurchase price of those securities. If the broker/dealer to whom the Fund sells securities becomes insolvent, the Fund’s right to purchase or repurchase securities may be restricted. Successful use of mortgage dollar rolls may depend upon the adviser’s ability to correctly predict interest rates and prepayments. There is no assurance that dollar rolls can be successfully employed.

Emerging Markets Risk*—The risks of foreign investments are usually much greater for emerging markets. Investments in emerging markets may be considered speculative. Emerging markets include those in countries defined as emerging or developing by the World Bank, the International Finance Corporation or the United Nations. Emerging markets are riskier than more developed markets because they tend to develop unevenly and may never fully develop. They are more likely to experience hyperinflation and currency devaluations, which adversely affect returns to U.S. investors. In addition, many emerging markets have far lower trading volumes and less liquidity than developed markets. Since these markets are often small, they may be more likely to suffer sharp and frequent price changes or long-term price depression because of adverse publicity, investor perceptions or the actions of a few large investors. In addition, traditional measures of investment value used in the United States, such as price to earnings ratios, may not apply to certain small markets.

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Also, there may be less publicly available information about issuers in emerging markets than would be available about issuers in more developed capital markets, and such issuers may not be subject to accounting, auditing and financial reporting standards and requirements comparable to those to which U.S. companies are subject.

Many emerging markets have histories of political instability and abrupt changes in policies. As a result, their governments are more likely to take actions that are hostile or detrimental to private enterprise or foreign investment than those of more developed countries, including expropriation of assets, confiscatory taxation, high rates of inflation or unfavorable diplomatic developments. In the past, governments of such nations have expropriated substantial amounts of private property, and most claims of the property owners have never been fully settled. There is no assurance that such expropriations will not reoccur. In such an event, it is possible that the Fund could lose the entire value of its investments in the affected market. Some countries have pervasiveness of corruption and crime that may hinder investments. Certain emerging markets may also face other significant internal or external risks, including the risk of war, and ethnic, religious and racial conflicts. In addition, governments in many emerging market countries participate to a significant degree in their economies and securities markets, which may impair investment and economic growth. National policies that may limit the Fund’s investment opportunities include restrictions on investment in issuers or industries deemed sensitive to national interests.

Emerging markets may also have differing legal systems and the existence or possible imposition of exchange controls, custodial restrictions or other foreign or U.S. governmental laws or restrictions applicable to such investments. Sometimes, they may lack or be in the relatively early development of legal structures governing private and foreign investments and private property. In addition to withholding taxes on investment income, some countries with emerging markets may impose differential capital gains taxes on foreign investors.

Practices in relation to settlement of securities transactions in emerging markets involve higher risks than those in developed markets, in part because the Fund will need to use brokers and counterparties that are less well capitalized, and custody and registration of assets in some countries may be unreliable. The possibility of fraud, negligence, undue influence being exerted by the issuer or refusal to recognize ownership exists in some emerging markets, and, along with other factors, could result in ownership registration being completely lost. The Fund would absorb any loss resulting from such registration problems and may have no successful claim for compensation. In addition, communications between the United States and emerging market countries may be unreliable, increasing the risk of delayed settlements or losses of security certificates.

* Emerging Markets Risk will become a principal risk of the Acquiring Fund upon the closing of the Reorganizations.

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. Rising interest rates tend to extend the duration of securities, making them more sensitive to changes in interest rates. The value of longer-term securities generally changes more in response to changes in interest rates than shorter-term securities. As a result, in a period of rising interest rates, securities may exhibit additional volatility and may lose value.

Foreign Securities Risk—Securities traded in foreign markets have often (though not always) performed differently from securities traded in the United States. However, such investments often involve special risks not present in U.S. investments that can increase the chances that the Fund will lose money. In particular, the Fund is subject to the risk that because there may be fewer investors on foreign exchanges and a smaller number of securities traded each day, it may be more difficult for the Fund to buy and sell securities on those exchanges. In addition, prices of foreign securities may go up and down more than prices of securities traded in the United States.

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Certain Risks of Holding Fund Assets Outside the United States—The Fund generally holds its foreign securities and cash in foreign banks and securities depositories. Some foreign banks and securities depositories may be recently organized or new to the foreign custody business. In addition, there may be limited or no regulatory oversight of their operations. Also, the laws of certain countries limit the Fund’s ability to recover its assets if a foreign bank, depository or issuer of a security, or any of their agents, goes bankrupt. In addition, it is often more expensive for the Fund to buy, sell and hold securities in certain foreign markets than in the United States. The increased expense of investing in foreign markets reduces the amount the Fund can earn on its investments and typically results in a higher operating expense ratio for the Fund than for investment companies invested only in the United States.

Currency Risk—Securities and other instruments in which the Fund invests may be denominated or quoted in currencies other than the U.S. dollar. For this reason, changes in foreign currency exchange rates can affect the value of the Fund’s portfolio.

Generally, when the U.S. dollar rises in value against a foreign currency, a security denominated in that currency loses value because the currency is worth fewer U.S. dollars. Conversely, when the U.S. dollar decreases in value against a foreign currency, a security denominated in that currency gains value because the currency is worth more U.S. dollars. This risk, generally known as “currency risk,” means that a strong U.S. dollar will reduce returns for U.S. investors while a weak U.S. dollar will increase those returns.

Foreign Economy Risk—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. Certain foreign economies may rely heavily on particular industries or foreign capital and are more vulnerable to diplomatic developments, the imposition of economic sanctions against a particular country or countries, changes in international trading patterns, trade barriers and other protectionist or retaliatory measures. Investments in foreign markets may also be adversely affected by governmental actions such as the imposition of capital controls, nationalization of companies or industries, expropriation of assets or the imposition of punitive taxes. In addition, the governments of certain countries may prohibit or impose substantial restrictions on foreign investments in their capital markets or in certain industries. Any of these actions could severely affect securities prices or impair the Fund’s ability to purchase or sell foreign securities or transfer the Fund’s assets or income back into the United States, or otherwise adversely affect the Fund’s operations.

Other potential foreign market risks include foreign exchange controls, difficulties in pricing securities, defaults on foreign government securities, difficulties in enforcing legal judgments in foreign courts and political and social instability. Diplomatic and political developments, including rapid and adverse political changes, social instability, regional conflicts, terrorism and war, could affect the economies, industries and securities and currency markets, and the value of the Fund’s investments, in non-U.S. countries. These factors are extremely difficult, if not impossible, to predict and take into account with respect to the Fund’s investments.

Governmental Supervision and Regulation/Accounting Standards—Many foreign governments do not supervise and regulate stock exchanges, brokers and the sale of securities to the same extent as such regulations exist in the United States. They also may not have laws to protect investors that are comparable to U.S. securities laws. For example, some foreign countries may have no laws or rules against insider trading. Insider trading occurs when a person buys or sells a company’s securities based on material non-public information about that company. In addition, some countries may have legal systems that may make it difficult for the Fund to vote proxies, exercise shareholder rights, and pursue legal remedies with respect to its foreign investments. Accounting standards in other countries are not necessarily the same as in the United States. If the accounting standards in another country do not require as much detail as U.S. accounting standards, it may be harder for Fund management to completely and accurately determine a company’s financial condition.

Settlement Risk—Settlement and clearance procedures in certain foreign markets differ significantly from those in the United States. Foreign settlement and clearance procedures and trade regulations also may

19

involve certain risks (such as delays in payment for or delivery of securities) not typically associated with the settlement of U.S. investments.

At times, settlements in certain foreign countries have not kept pace with the number of securities transactions. These problems may make it difficult for the Fund to carry out transactions. If the Fund cannot settle or is delayed in settling a purchase of securities, it may miss attractive investment opportunities and certain of its assets may be uninvested with no return earned thereon for some period. If the Fund cannot settle or is delayed in settling a sale of securities, it may lose money if the value of the security then declines or, if it has contracted to sell the security to another party, the Fund could be liable for any losses incurred.

High Portfolio Turnover Risk—The Fund may engage in active and frequent trading of its portfolio securities. High portfolio turnover (more than 100%) may result in increased transaction costs to the Fund, including brokerage commissions, dealer mark-ups and other transaction costs on the sale of the securities and on reinvestment in other securities. The sale of Fund portfolio securities may result in the realization and/or distribution to shareholders of higher capital gains or losses as compared to a fund with less active trading policies. Given the frequency of sales, such gain or loss will likely be short-term capital gain or loss and, in the case of a gain, would increase an investor’s tax liability unless shares are held through a tax-deferred or exempt vehicle. These effects of higher than normal portfolio turnover may adversely affect Fund performance. Total Return Portfolio II’s investment in mortgage dollar rolls and participation in TBA transactions may significantly increase the Fund’s portfolio turnover rate. A TBA transaction is a method of trading mortgage-backed securities where the buyer and seller agree upon general trade parameters such as agency, settlement date, par amount, and price.

Interest Rate Risk—Interest rate risk is the risk that prices of fixed-income securities generally increase when interest rates decline and decrease when interest rates increase. Prices of longer-term securities generally change more in response to interest rate changes than prices of shorter-term securities. The Fund may lose money if short-term or long-term interest rates rise sharply or otherwise change in a manner not anticipated by Fund management.

Leverage Risk—Some transactions may give rise to a form of leverage. These transactions may include, among others, derivatives, and may expose the Fund to greater risk and increase its costs. To mitigate leverage risk, the Fund’s management team will segregate liquid assets on the books of the Fund or otherwise cover the transactions. The use of leverage may cause the Fund to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet segregation requirements. Increases and decreases in the value of the Fund’s portfolio will be magnified when the Fund uses leverage.

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.

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.

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Mortgage- and Asset-Backed Securities Risks—Mortgage-backed securities (residential and commercial) and asset-backed securities represent interests in “pools” of mortgages or other assets, including consumer loans or receivables held in trust. Although asset-backed and commercial mortgage-backed securities (“CMBS”) generally experience less prepayment than residential mortgage-backed securities, mortgage-backed and asset-backed securities, like traditional fixed-income securities, are subject to credit, interest rate, prepayment and extension risks.

Small movements in interest rates (both increases and decreases) may quickly and significantly reduce the value of certain mortgage-backed securities. The Fund’s investments in asset-backed securities are subject to risks similar to those associated with mortgage-related securities, as well as additional risks associated with the nature of the assets and the servicing of those assets. These securities also are subject to the risk of default on the underlying mortgage or assets, particularly during periods of economic downturn. Certain CMBS are issued in several classes with different levels of yield and credit protection. The Fund’s investments in CMBS with several classes may be in the lower classes that have greater risks than the higher classes, including greater interest rate, credit and prepayment risks.

Mortgage-backed securities may be either pass-through securities or collateralized mortgage obligations (“CMOs”). Pass-through securities represent a right to receive principal and interest payments collected on a pool of mortgages, which are passed through to security holders. CMOs are created by dividing the principal and interest payments collected on a pool of mortgages into several revenue streams (tranches) with different priority rights to portions of the underlying mortgage payments. Certain CMO tranches may represent a right to receive interest only (“IOs”), principal only (“POs”) or an amount that remains after floating-rate tranches are paid (an inverse floater). These securities are frequently referred to as “mortgage derivatives” and may be extremely sensitive to changes in interest rates. Interest rates on inverse floaters, for example, vary inversely with a short-term floating rate (which may be reset periodically). Interest rates on inverse floaters will decrease when short-term rates increase, and will increase when short-term rates decrease. These securities have the effect of providing a degree of investment leverage. In response to changes in market interest rates or other market conditions, the value of an inverse floater may increase or decrease at a multiple of the increase or decrease in the value of the underlying securities. If the Fund invests in CMO tranches (including CMO tranches issued by government agencies) and interest rates move in a manner not anticipated by Fund management, it is possible that the Fund could lose all or substantially all of its investment.

The mortgage market in the United States recently has experienced difficulties that may adversely affect the performance and market value of certain of the Fund’s mortgage-related investments. Delinquencies and losses on mortgage loans (including subprime and second-lien mortgage loans) generally have increased recently and may continue to increase, and a decline in or flattening of real-estate values (as has recently been experienced and may continue to be experienced in many housing markets) may exacerbate such delinquencies and losses. Also, a number of mortgage loan originators have recently experienced serious financial difficulties or bankruptcy. Reduced investor demand for mortgage loans and mortgage-related securities and increased investor yield requirements have caused limited liquidity in the secondary market for mortgage-related securities, which can adversely affect the market value of mortgage-related securities. It is possible that such limited liquidity in such secondary markets could continue or worsen.

Asset-backed securities entail certain risks not presented by mortgage-backed securities, including the risk that in certain states it may be difficult to perfect the liens securing the collateral backing certain asset-backed securities. In addition, certain asset-backed securities are based on loans that are unsecured, which means that there is no collateral to seize if the underlying borrower defaults. Certain mortgage-backed securities in which the Fund may invest may also provide a degree of investment leverage, which could cause the Fund to lose all or substantially all of its investment.

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. In

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periods of falling interest rates, the rate of prepayments tends to increase (as does price fluctuation) as borrowers are motivated to pay off debt and refinance at new lower rates. During such periods, reinvestment of the prepayment proceeds by the management team will generally be at lower rates of return than the return on the assets that were prepaid. Prepayment reduces the yield to maturity and the average life of the security.

Repurchase Agreements, Purchase and Sale Contracts Risks—If the other party to a repurchase agreement or purchase and sale contract defaults on its obligation under the agreement, the Fund may suffer delays and incur costs or lose money in exercising its rights under the agreement. If the seller fails to repurchase the security in either situation and the market value of the security declines, the Fund may lose money.

Reverse Repurchase Agreements Risk—Reverse repurchase agreements involve the sale of securities held by the Fund with an agreement to repurchase the securities at an agreed-upon price, date and interest payment. Reverse repurchase agreements involve the risk that the other party may fail to return the securities in a timely manner or at all. The Fund could lose money if it is unable to recover the securities and the value of the collateral held by the Fund, including the value of the investments made with cash collateral, is less than the value of securities. These events could also trigger adverse tax consequences to the Fund.

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.

Fundamental Investment Restrictions

The Funds have identical fundamental investment restrictions, as indicated in Appendix I.

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Performance Information

The following bar charts and tables illustrate the past performance of an investment in each Fund for the periods shown. The information shows you how each Fund’s performance has varied year by year and provides some indication of the risks of investing in each Fund. Past performance is not predictive of future performance. Sales charges are not reflected in the bar chart. If they were, returns would be less than those shown. However, the table includes all applicable fees and sales charges. For more information concerning the performance of each Fund, please refer to each Fund’s Prospectus and Annual Report. As a shareholder of a Fund, you have already received a copy of the Prospectus and Annual Report. You may request a copy of the Prospectus and Annual Report at no charge by calling (800) 441-7762 or writing the Fund. The returns would have been lower if BlackRock Advisors and its affiliates had not waived or reimbursed certain expenses during these periods.

Investor A Shares

ANNUAL TOTAL RETURNS

BlackRock Bond Portfolio

(Target Fund)

As of 12/31

During the ten-year period shown in the bar chart, the highest return for a quarter was 4.87% (quarter ended September 30, 2001) and the lowest return for a quarter was –4.12% (quarter ended September 30, 2008).

As of 12/31/10 Average Annual Total Returns	1 Year			5 Years			10 Years
BlackRock Bond Portfolio—Investor A
Return Before Taxes		1.00	%		3.82	%		4.48	%
Return After Taxes on Distributions		–0.51	%		2.25	%		2.76	%
Return After Taxes on Distributions and Sale of Shares		0.66	%		2.33	%		2.81	%
BlackRock Bond Portfolio—Investor B
Return Before Taxes		–0.04	%		3.51	%		4.33	%
BlackRock Bond Portfolio—Investor C
Return Before Taxes		3.51	%		3.91	%		4.12	%
BlackRock Bond Portfolio—Institutional
Return Before Taxes		5.60	%		5.05	%		5.29	%
BlackRock Bond Portfolio—Service
Return Before Taxes		5.26	%		4.72	%		4.97	%
BlackRock Bond Portfolio—BlackRock
Return Before Taxes		5.80	%		5.14	%		5.39	%
Barclays Capital Intermediate Government/Credit Index (Reflects
no deduction for fees, expenses or taxes)		5.89	%		5.53	%		5.51	%

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Investor A Shares

ANNUAL TOTAL RETURNS

BlackRock Managed Income Portfolio

(Target Fund)

As of 12/31

During the ten-year period shown in the bar chart, the highest return for a quarter was 6.48% (quarter ended September 30, 2009) and the lowest return for a quarter was –5.59% (quarter ended September 30, 2008).

As of 12/31/10 Average Annual Total Returns	1 Year			5 Years			10 Years
BlackRock Managed Income Portfolio—Investor A
Return Before Taxes		3.45	%		3.75	%		4.54	%
Return After Taxes on Distributions		2.02	%		2.10	%		2.72	%
Return After Taxes on Distributions and Sale of Shares		2.23	%		2.21	%		2.79	%
BlackRock Managed Income Portfolio—Investor B
Return Before Taxes		2.42	%		3.42	%		4.42	%
BlackRock Managed Income Portfolio—Investor C
Return Before Taxes		6.05	%		3.79	%		4.18	%
BlackRock Managed Income Portfolio—Institutional
Return Before Taxes		8.16	%		4.99	%		5.41	%
BlackRock Managed Income Portfolio—Service
Return Before Taxes		7.83	%		4.68	%		5.10	%
Barclays Capital U.S. Aggregate Bond Index (Reflects no deduction for fees, expenses or taxes)		6.54	%		5.80	%		5.84	%

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Investor A Shares

ANNUAL TOTAL RETURNS

BlackRock Total Return Portfolio II

(Acquiring Fund)

As of 12/31

During the ten-year period shown in the bar chart, the highest return for a quarter was 6.15% (quarter ended September 30, 2009) and the lowest return for a quarter was –5.81% (quarter ended September 30, 2008).

As of 12/31/10 Average Annual Total Returns	1 Year			5 Years			10 Years
BlackRock Total Return Portfolio II—Investor A
Return Before Taxes		3.53	%		3.50	%		4.45	%
Return After Taxes on Distributions		2.02	%		1.83	%		2.60	%
Return After Taxes on Distributions and Sale of Shares		2.28	%		1.98	%		2.69	%
BlackRock Total Return Portfolio II—Investor B
Return Before Taxes		2.66	%		3.20	%		4.33	%
BlackRock Total Return Portfolio II—Investor C
Return Before Taxes		6.13	%		3.49	%		4.05	%
BlackRock Total Return Portfolio II—Institutional
Return Before Taxes		8.22	%		4.69	%		5.22	%
BlackRock Total Return Portfolio II—Service
Return Before Taxes		7.91	%		4.41	%		4.93	%
BlackRock Total Return Portfolio II—BlackRock
Return Before Taxes		8.33	%		4.78	%		5.36	%
Barclays Capital U.S. Aggregate Bond Index (Reflects no deduction for fees, expenses or taxes)		6.54	%		5.80	%		5.84	%

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 B, Investor C, Institutional, BlackRock and Service Shares will vary.

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The accounting survivor of each Reorganization will be the Total Return Portfolio II. As a result, the Combined Fund will continue the performance history of the Total Return Portfolio II after the closing of each Reorganization.

The Barclays Capital Intermediate Government/Credit Index is an unmanaged index comprised of U.S. Government securities from the more comprehensive Barclays Capital U.S. Aggregate Bond Index. This index concentrates on intermediate maturity bonds and thus excludes all maturities from the broader index that are 10 years or greater.

The Barclays Capital U.S. Aggregate Bond Index is an unmanaged market-weighted index comprised of investment grade corporate bonds (rated BBB or better), mortgages and U.S. Treasury and government agency issues with at least one year to maturity.

Management of the Funds

BlackRock Advisors, located at 100 Bellevue Parkway, Wilmington, Delaware 19809, manages each Fund’s investments and its business operations subject to the oversight of the Board. While BlackRock Advisors is ultimately responsible for the management of the Funds, it is able to draw upon the research and expertise of its asset management affiliates for portfolio decisions and management with respect to certain portfolio securities. BlackRock Advisors is a wholly owned subsidiary of BlackRock, Inc. BlackRock Advisors and its affiliates had approximately $3.648 trillion in investment company and other portfolio assets under management as of March 31, 2011.

Rick Rieder, Matthew Marra and Eric Pellicciaro are the portfolio managers and are jointly and primarily responsible for the day-to-day management of each Fund. Mr. Rieder, Mr. Marra and Mr. Pellicciaro are expected to serve as the portfolio managers of the Combined Fund following the completion of the Reorganizations.

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Portfolio Managers of the Combined Fund	Primary Role	Since		Title and Recent Biography
Rick Rieder	Responsible for the day-to-day management of the Funds, including setting each Fund’s overall investment strategy and overseeing the management of the Funds.		2010	Chief Investment Officer of Fixed Income, Fundamental Portfolios of BlackRock Inc. and Head of its Global Credit Business and Credit Strategies, Multi-Sector, and Mortgage Groups since 2010; Managing Director of BlackRock, Inc. since 2009; President and Chief Executive Officer of R3 Capital Partners from 2008 to 2009; Managing Director of Lehman Brothers from 1994 to 2008.
Matthew Marra	Responsible for the day-to-day management of the Funds, including setting each Fund’s overall investment strategy and overseeing the management of the Funds.		2006	Deputy Head of Retail and Mutual Fund Products of BlackRock, Inc. and Co-head of Mutual Fund Multi Sector Portfolios since 2010; Managing Director of BlackRock, Inc. since 2006; Director of BlackRock, Inc. from 2002 to 2005.
Eric Pellicciaro	Responsible for the day-to-day management of the Funds, including setting each Fund’s overall investment strategy and overseeing the management of the Funds.		2010	Managing Director of BlackRock, Inc. since 2005; Head of the Global Rates Investment Team within BlackRock’s Fixed Income Portfolio Management Group.

The Acquiring Fund’s Statement of Additional Information provides additional information about the compensation of the portfolio managers, other accounts managed by such managers and such managers’ ownership of securities in the Acquiring Fund and other funds managed by BlackRock Advisors.

Investment Advisory and Management Agreement

The Trust, on behalf of each of the Funds, has entered into a management agreement with BlackRock Advisors (the “Management Agreement”), pursuant to which BlackRock Advisors receives for its services to each Fund a management fee at the following annual rates that decrease as the total assets of the relevant Fund increase above the following levels:

Aggregate average daily net assets of the Fund	Management Fee Rate
First $1 billion	0.500%
$1 billion to $2 billion	0.450%
$2 billion to $3 billion	0.425%
Greater than $3 billion	0.400%

BlackRock Advisors has currently agreed to cap net expenses (excluding (i) interest, taxes, dividends tied to short sales, brokerage commissions, and other expenditures which are capitalized in accordance with generally

27

accepted accounting principles; (ii) expenses incurred directly or indirectly by a Fund as a result of investments in other investment companies and pooled investment vehicles; (iii) other expenses attributable to, and incurred as a result of, a Fund’s investments; and (iv) other extraordinary expenses (including litigation expenses) not incurred in the ordinary course of a Fund’s business, if any), of each share class of each Fund at the levels shown below. (Items (i), (ii), (iii) and (iv) in the preceding sentence may be referred to as “Dividend Expense, Interest Expense, Acquired Fund Fees and Expenses and certain other Fund expenses” in this Combined Prospectus/Information Statement.) To achieve these caps, BlackRock Advisors has agreed to waive or reimburse fees or expenses if these operating expenses exceed a certain limit.

With respect to each of the Funds, BlackRock Advisors has currently agreed to contractually and voluntarily waive and/or reimburse fees or expenses in order to limit Total Annual Fund Operating Expenses to the amounts noted in the tables below.

	Caps on Total Annual Fund Operating Expenses* (excluding Dividend Expense, Interest Expense, Acquired Fund Fees and Expenses and certain other Fund expenses)						Total Annual Fund Operating Expenses* after giving  effect to all applicable contractual and/or voluntary fee waivers and/or expense reimbursements (excluding Dividend Expense, Interest Expense, Acquired Fund Fees and Expenses and certain other Fund expenses)**
Fund	Contractual Caps			Voluntary Caps
Bond Portfolio (Target Fund)1
Investor A		0.95	%		—			0.90	%
Investor B		1.70	%		—			1.67	%
Investor C		1.70	%		—			1.59	%
Institutional		0.60	%		0.56	%		0.56	%
Service		0.90	%		—			0.86	%
BlackRock		0.47	%		—			0.47	%
Managed Income Portfolio (Target Fund)1
Investor A		1.12	%		—			1.05	%
Investor B		1.87	%		—			1.87	%
Investor C		1.87	%		—			1.81	%
Institutional		0.65	%		—			0.65	%
Service		0.95	%		—			0.95	%
Total Return Portfolio II (Acquiring Fund)1
Investor A		0.89	%		—			0.86	%
Investor B		1.73	%		—			1.70	%
Investor C		1.66	%		—			1.61	%
Institutional		0.58	%		—			0.58	%
Service		0.93	%		—			0.87	%
BlackRock		0.45	%		—			0.45	%
Combined Fund***
Investor A3		0.89	%		—			0.86	%
Investor B3		1.73	%		—			1.68	%
Investor C3		1.66	%		—			1.60	%
Institutional2		0.56	%		—			0.56	%
Service3		0.93	%		—			0.81	%
BlackRock3		0.45	%		—			0.45	%

* As a percentage of average daily net assets.

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** Includes expenses net of contractual fee waivers, any class-level voluntary waivers, and waivers that may be imposed upon shares as a result of an equal reduction of fund-level fees for all classes.

*** Assumes the Reorganizations had taken place on September 30, 2010.

¹  The contractual waivers or reimbursements are in effect until February 1, 2012.

²  The contractual waivers or reimbursements will be in effect until February 1, 2014.

³  The contractual waivers or reimbursements will be in effect until June 1, 2014.

The Funds may have to repay some of these contractual waivers and reimbursements to BlackRock Advisors in the following two years. The contractual fee waivers and/or expense reimbursement agreement may be terminated upon 90 days’ notice by a majority of the Independent Board Members or by a vote of a majority of the outstanding voting securities (as defined in the 1940 Act) of the relevant Fund. Voluntary waivers or reimbursements may be reduced or discontinued at any time without notice to shareholders.

The Management Agreement with respect to the Acquiring Fund will remain in place following the Reorganizations and the management fee rate of the Combined Fund under the Management Agreement will be identical to the current management fee rate applicable to the Acquiring Fund.

A discussion of the approval of the Board of the Trust with respect to each Fund of the Management Agreement with BlackRock Advisors on behalf of each Fund is included in the Fund’s Annual Report for the fiscal period ended on the date indicated in the following chart:

Fund	Report for Fiscal Period
Bond Portfolio (Target Fund)		9/30/10
Managed Income Portfolio (Target Fund)		9/30/10
Total Return Portfolio II (Acquiring Fund)		9/30/10

BlackRock Advisors will manage the Combined Fund as investment manager, pursuant to the Management Agreement, the principal terms of which are described below.

Terms of the Management Agreement. The Management Agreement generally provides that, subject to the oversight of the Board of the Trust with respect to each Fund, BlackRock Advisors will (a) act as investment adviser for and supervise and manage the investment and reinvestment of each Fund’s assets, (b) supervise continuously the investment of each Fund, (c) arrange for the purchase and sale of securities and other assets held in the investment portfolio of each Fund, and (d) provide investment research to each Fund. BlackRock Advisors will provide the services in accordance with each Fund’s investment objectives, policies and restrictions as stated in its registration statements and the resolutions of the Board.

Under the Management Agreement, BlackRock Advisors will comply with (i) the provisions of the 1940 Act and the Investment Advisers Act of 1940 and all applicable rules and regulations of the SEC, (ii) any other applicable provision of law and (iii) the provisions of each Fund’s organizational documents as such are amended from time to time. BlackRock Advisors will place orders either directly with the issuer or with any broker or dealer and will attempt to obtain the best price and the most favorable execution of its orders. In placing orders, BlackRock Advisors will consider the experience and skill of the firm’s securities traders as well as the firm’s financial responsibility and administrative efficiency.

The Management Agreement provides that BlackRock Advisors may, to the extent permitted by applicable law, appoint one or more sub-advisers, including affiliates of BlackRock Advisors, to perform investment advisory services with respect to the Funds.

Under the Management Agreement, BlackRock Advisors will maintain books and records with respect to each Fund’s securities transactions and will furnish the Board such periodic and special reports as the Board may request.

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Under the Management Agreement, BlackRock Advisors is not liable for any error of judgment or mistake of law or for any loss suffered by a Fund in connection with the performance of the Management Agreement. Under the Management Agreement, BlackRock Advisors is liable for a loss resulting from a breach of fiduciary duty with respect to the receipt of compensation for services or a loss resulting from willful misfeasance, bad faith or gross negligence in the performance of its duties or from reckless disregard of its duties and obligations thereunder. The Management Agreement is terminable as to a Fund by vote of the Board or by the holders of a majority of the outstanding voting securities of the respective Fund, at any time without penalty, on 60 days’ written notice to BlackRock Advisors. BlackRock Advisors may also terminate its advisory relationship with respect to a Fund on 60 days’ written notice to such Fund. Finally, BlackRock Advisors is liable for the acts and omissions of any sub-adviser as it is for its own acts and omissions.

BlackRock Advisors has a sub-advisory agreement with BlackRock Financial Management, Inc., an affiliate of BlackRock Advisors, with respect to each Fund under which BlackRock Advisors pays a fee for services it receives equal to a percentage of the advisory fee BlackRock Advisors receives from each Fund. BlackRock Financial Management, Inc. is responsible for the day-to-day management of each Fund’s portfolio and is expected to continue to act as the sub-adviser to the Combined Fund.

Administration Agreement

BlackRock Advisors and BNY Mellon Investment Servicing (US) Inc. (“BNY Mellon”) (formerly, PNC Global Investment Servicing (U.S.) Inc.) serve as the Trust’s co-administrators pursuant to an administration agreement (the “Administration Agreement”). Under the Administration Agreement, the Trust pays to BlackRock Advisors and BNY Mellon, on behalf of each Fund a fee, computed daily and payable monthly, at an aggregate annual rate of (i) 0.075% of the first $500 million of each Fund’s average daily net assets, 0.065% of the next $500 million of each Fund’s average daily net assets and 0.055% of the average daily net assets of each Fund in excess of $1 billion for general administration services and (ii) 0.025% of the first $500 million of average daily net assets allocated to each class of shares of each Fund, 0.015% of the next $500 million of such average daily net assets and 0.005% of the average daily net assets allocated to each class of shares of each Fund in excess of $1 billion for additional administration services provided with respect to such class of shares. The Administration Agreement will remain in place following the closing of each Reorganization with respect to the Combined Fund.

Other Service Providers

	Bond Portfolio (Target Fund)	Managed Income Portfolio (Target Fund)	Total Return Portfolio II (Acquiring Fund)
Custodian	PFPC Trust Company 8800 Tinicum Boulevard Philadelphia, Pennsylvania 19153	PFPC Trust Company 8800 Tinicum Boulevard Philadelphia, Pennsylvania 19153	PFPC Trust Company 8800 Tinicum Boulevard Philadelphia, Pennsylvania 19153
Transfer Agent	BNY Mellon 301 Bellevue Parkway Wilmington, Delaware 19809	BNY Mellon 301 Bellevue Parkway Wilmington, Delaware 19809	BNY Mellon 301 Bellevue Parkway Wilmington, Delaware 19809
Legal Counsel	Willkie Farr & Gallagher LLP 787 Seventh Avenue New York, New York 10019	Willkie Farr & Gallagher LLP 787 Seventh Avenue New York, New York 10019	Willkie Farr & Gallagher LLP 787 Seventh Avenue New York, New York 10019

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	Bond Portfolio (Target Fund)	Managed Income Portfolio (Target Fund)	Total Return Portfolio II (Acquiring Fund)
Independent Registered Public Accounting Firm	Deloitte & Touche LLP 1700 Market Street Philadelphia, Pennsylvania 19103	Deloitte & Touche LLP 1700 Market Street Philadelphia, Pennsylvania 19103	Deloitte & Touche LLP 1700 Market Street Philadelphia, Pennsylvania 19103
Accounting Services Provider	BNY Mellon 301 Bellevue Parkway Wilmington, Delaware 19809	BNY Mellon 301 Bellevue Parkway Wilmington, Delaware 19809	BNY Mellon 301 Bellevue Parkway Wilmington, Delaware 19809

Combined Fund. Following the closing of each Reorganization, the Acquiring Fund’s current service providers will serve the Combined Fund.

Distributor; Distribution and Service Fees

BlackRock Investments, LLC (“BRIL”), 40 East 52nd Street, New York, New York 10022, an affiliate of BlackRock Advisors, acts as each Fund’s distributor and will act as distributor for the Combined Fund following the closing of each Reorganization.

The share classes of each Fund are subject to annual service and/or distribution fees at the following rates, expressed as a percentage of a Fund’s average daily net assets attributable to the share class:

Share Class	Annual Service Fee Rate	Annual Distribution Fee Rate
Investor A	0.25%	None
Investor B	0.25%	0.75%
Investor C	0.25%	0.75%
Institutional	None	None
BlackRock	None	None
Service	0.25%	None

Combined Fund. Following the closing of each Reorganization, the Acquiring Fund’s distribution and service fees will be applied to investors.

Dividends and Distributions

The Acquiring Fund will distribute net investment income monthly. The Acquiring Fund’s Board may change the timing of such dividend payments. Net realized capital gains (including net short-term capital gains), if any, will be distributed by the Acquiring Fund at least annually at a date determined by the Fund’s Board. Following the closing of each Reorganization, the Acquiring Fund’s dividends and distributions policy will be continued by the Combined Fund.

Purchase, Exchange, Redemption and Valuation of Shares

Shareholders should refer to the Acquiring Fund Prospectus (a copy of which accompanies this Combined Prospectus/Information Statement) for the specific procedures applicable to purchases, exchanges and redemptions of shares. The following discussion describes the policies and procedures related to the purchase, exchange, redemption and valuation of shares of the Acquiring Fund, which policies and procedures will be the same for the Combined Fund following the closing of the Reorganization, except as noted below.

Purchasing Shares. The Acquiring Fund offers its shares to the public on a continuous basis. Investor A, Investor C, Institutional, BlackRock and Service Shares may be purchased through orders placed with its

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distributor, BRIL, or the shareholders’ intermediaries. Investor B Shares are offered on a very limited basis. Investor B Shares are currently available for purchase only through exchanges and dividend reinvestments by current holders of Investor B Shares and for purchase by certain qualified employee benefit plans. Only certain investors are eligible to buy Institutional Shares. Shares of the Acquiring Fund may be purchased at Net Asset Value (“NAV”), plus any applicable sales charge, through written or telephone instructions. NAV is computed as of the close of trading on the New York Stock Exchange (“NYSE”) on any day the NYSE is open for trading. Orders to purchase shares must be placed before the close of regular trading on the NYSE, which is normally 4:00 p.m., Eastern time. Orders made after the close of trading will be priced based on the next calculation of NAV per share.

Exchanging Shares. Acquiring Fund shareholders have the right to exchange their shares for shares of the same class of another fund in the BlackRock Advisors mutual fund complex, provided that the share class and fund is available and open to new investors, except as noted below. There is a minimum required amount for exchanges of Acquiring Fund Investor A, Investor B or Investor C Shares of $1,000 and none for Institutional Shares. Shares are exchanged at NAV.

Shareholders of the Combined Fund (other than holders of BlackRock Shares and Service Shares) will have an exchange privilege into the same or similarly designated shares of other funds in the complex of funds advised by BlackRock Advisors or its affiliates.

Redeeming Shares. The Acquiring Fund does not charge a redemption fee. Institutional Shares, BlackRock Shares and Service Shares are redeemed at NAV, while Investor A, Investor B and Investor C Shares are redeemed at NAV, adjusted for any applicable deferred sales charges. Investor A Shares do not have a CDSC, except there is a CDSC of 0.75% for redemption of an investment of $1 million or more if the redemption is made within 18 months after the investment. However, Investor A shares received in the Reorganizations in exchange for Investor A shares of Managed Income Portfolio that are subject to a CDSC will retain the lower Investor A CDSC schedule applicable to Managed Income Portfolio (0.50% for redemption of an investment of $1 million or more if the redemption is made within 18 months after the investment). Investor B Shares have a CDSC of 4.50% for redemption of an investment within one year, and the CDSC for Investor B Shares decreases for redemptions made in subsequent years, with no CDSC after six years. Investor C Shares have a CDSC of 1.00% for redemption of an investment within 12 months after the investment. Investor A, Investor B, Investor C, Institutional, Service and BlackRock Shares may be redeemed through orders placed with its distributor, BRIL, or the shareholders’ intermediaries. NAV of the Acquiring Fund is computed as of the close of trading on the NYSE on any day the NYSE is open for trading, through written or telephone instructions. The order must be placed before the close of regular trading on the NYSE, which is normally 4:00 p.m., Eastern time. Orders made after the close of trading will be priced based on the next calculation of NAV per share.

Comparison of Valuation Policies. The valuation policies of the Funds are identical. Each Fund uses current market quotations to value its portfolio securities, if such quotations are readily available and reflect the fair value of the security. In the absence of current market quotations, or if current market quotations are available but, in the judgment of a Fund’s adviser, do not reflect the fair value of a security, each Fund uses fair valuation policies to determine the value of a security. The Board of each Fund has designated a separate pricing/valuation committee with the responsibility for day-to-day determinations of fair value. Each Fund’s policies also provide for the use of independent pricing services to assist in the determination of fair value.

Combined Fund. The Combined Fund’s valuation policies will be those of the Acquiring Fund, which are identical to those of each Target Fund.

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 BRIL, 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

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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.

Disclosure of Portfolio Holdings

For a discussion of the Acquiring Fund’s policies and procedures regarding the selective disclosure of its portfolio holdings, please see the Acquiring Fund’s Statement of Additional Information. The Fund makes its top ten holdings available on a monthly basis at www.blackrock.com generally within 5 business days after the end of the month to which the information applies.

Market Timing Trading Policies and Procedures

The Funds have identical market timing policies. See the Acquiring Fund Prospectus—“Account Information—Short-Term Trading Policy.”

FINANCIAL HIGHLIGHTS

The financial highlights tables for the existing share classes of the Acquiring Fund that are contained in the Acquiring Fund Prospectus, a copy of which accompanies this Combined Prospectus/Information Statement, have been derived from the financial statements audited by Deloitte & Touche LLP. Financial highlights tables for the share classes of the Target Funds may be found in the Target Funds’ Prospectuses and Annual Reports, which are available without charge by calling (800) 441-7762.

INFORMATION ABOUT THE REORGANIZATIONS

The following summary of each Reorganization Agreement does not purport to be complete and is qualified in its entirety by reference to the form of each Reorganization Agreement, a copy of which is attached as Appendix II and is incorporated herein by reference.

General

Under the Reorganization Agreements, the relevant Target Fund will transfer its assets to the Acquiring Fund in exchange for the assumption of certain stated liabilities of the Target Fund and shares of the Acquiring Fund. The form of each Reorganization Agreement is attached as Appendix II—“Form of Agreement and Plan of Reorganization.” The shares of the Acquiring Fund issued to each Target Fund will have an aggregate NAV equal to the aggregate NAV of the Target Fund’s shares outstanding as of the close of trading on the NYSE on the business day immediately prior to the Closing Date (as defined in Appendix II) of the Reorganization (the “Valuation Time”). Upon receipt by a Target Fund of the shares of the Acquiring Fund, the Target Fund will distribute the shares to its shareholders and thereafter, as soon as practicable after the Closing Date, the Target Fund will be terminated as a series of the Trust under Massachusetts state law.

The distribution of Acquiring Fund shares to each Target Fund’s shareholders will be accomplished by opening new accounts on the books of the Acquiring Fund in the names of each Target Fund’s shareholders and transferring to those shareholder accounts the shares of the Acquiring Fund. Such newly-opened accounts on the books of the Acquiring Fund will represent the respective pro rata number of shares that each Target Fund is to receive under the terms of the Reorganization Agreement. See “Terms of the Reorganization Agreements” below.

As a result of a Reorganization, the relevant Target Fund shareholder will own the same class of shares of the Combined Fund, as indicated in the table below. A Target Fund shareholder will receive shares of the Combined

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Fund with an aggregate NAV equal to the aggregate NAV of the shares of the Target Fund that the shareholder owned immediately prior to the Reorganization.

Bond Portfolio (Target Fund)	Managed Income Portfolio (Target Fund)	Combined Fund
Investor A	Investor A	Investor A
Investor B	Investor B	Investor B
Investor C	Investor C	Investor C
Institutional	Institutional	Institutional
BlackRock	N/A	BlackRock
Service	Service	Service

No sales charge or fee of any kind will be assessed to shareholders of either Target Fund in connection with their receipt of shares of the Combined Fund in the Reorganizations.

Terms of the Reorganization Agreements

Pursuant to the Reorganization Agreements, the Acquiring Fund will acquire the assets of the relevant Target Fund on the Closing Date in consideration for the assumption of certain stated liabilities of the Target Fund and shares of the Acquiring Fund.

On the Closing Date, the relevant Target Fund will transfer to the Acquiring Fund its assets in exchange solely for the shares of the Acquiring Fund that are equal in value to the value of the net assets of the Target Fund transferred to the Acquiring Fund as of the Closing Date, as determined in accordance with the Acquiring Fund’s valuation procedures or such other valuation procedures as shall be mutually agreed upon by the Funds, and the assumption by the Acquiring Fund of certain stated liabilities of the Target Fund. In order to minimize any potential for undesirable federal income and excise tax consequences in connection with each Reorganization, the relevant Target Fund will distribute on or before the Closing Date all of its undistributed net investment income and net capital gains as of such date.

Each Target Fund expects to distribute the shares of the Acquiring Fund to the shareholders of the Target Fund promptly after the Closing Date. Upon distribution of such shares, all outstanding shares of the Target Fund will be redeemed in accordance with Massachusetts state law and the charter of the Target Fund. Thereafter, the relevant Target Fund will be terminated as a series of the Trust under Massachusetts law.

Each Fund has made certain standard representations and warranties to each other regarding capitalization, status and conduct of business.

Unless waived in accordance with the applicable Reorganization Agreement, the obligations of the Acquiring Fund and Target Funds, respectively, are conditioned upon, among other things:

• the absence of any rule, regulation, order, injunction or proceeding preventing or seeking to prevent the consummation of the transactions contemplated by the Reorganization Agreement;

• the receipt of all necessary approvals, consents, registrations and exemptions under federal, state and local laws;

• the truth in all material respects as of the Closing Date of the representations and warranties of the Funds and performance and compliance in all material respects with the Funds’ agreements, obligations and covenants required by the Reorganization Agreement;

• the effectiveness under applicable law of the registration statement of which this Combined Prospectus/Information Statement forms a part and the absence of any stop orders under the Securities Act of 1933 pertaining thereto;

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• the declaration of a dividend by the Target Fund to distribute all of its undistributed net investment income and net capital gains; and

• the receipt of opinions of counsel relating to, among other things, the tax-free nature of the Reorganization for U.S. federal income tax purposes.

Each Reorganization Agreement may be terminated or amended by the mutual consent of the Funds prior to closing.

Reasons for the Reorganizations

The Board evaluated each Reorganization independently of the other Reorganization and approved each Reorganization separately. The factors considered by the Board with regard to each Reorganization include, but are not limited to, the following:

• that the investment objectives of the Target Funds and Acquiring Fund are identical. The fact that certain strategies of the relevant Target Fund and the Acquiring Fund are substantially similar and compatible, while others are different. The Board considered the principal differences in investment strategies between the relevant Target Fund and the Acquiring Fund. See “Summary—Investment Objectives and Principal Investment Strategies.”

• that assuming the Reorganizations had occurred as of September 30, 2010, the Combined Fund would have (i) total annual fund operating expenses for its share classes that are expected to be the same as or lower than those of the corresponding share classes of each Target Fund prior to the Reorganizations as of such date, with the exception of the Institutional Shares of the Bond Portfolio, which are expected to be higher; (ii) net annual fund operating expenses that are expected to be the same as or lower than those of the corresponding share classes of each Target Fund prior to the Reorganizations as of such date, with the exception of Investor B Shares, Service Shares and BlackRock Shares of the Bond Portfolio, which are expected to be higher, in each case after excluding the effects of certain fees and expenses and after giving effect to all applicable contractual fee waivers and/or expense reimbursements that BlackRock Advisors has agreed to continue or implement for Investor A, Investor B, Investor C, Service, BlackRock and Institutional Shares of the Combined Fund for a certain period of time following the closing of the Reorganizations; and (iii) net annual fund operating expenses that are expected to be the same as or lower than those of the corresponding share classes of each Target Fund prior to the Reorganizations as of such date, with the exception of Investor B Shares and Investor C Shares of the Bond Portfolio, which are expected to increase by less than one basis point, in each case after excluding the effects of certain fees and expenses and after giving effect to both all applicable contractual fee waivers and/or expense reimbursements that BlackRock has agreed to continue or implement for a certain period of time following the closing of the Reorganizations and certain voluntary fee waivers and/or expense reimbursements. Voluntary fee waivers and/or expense reimbursements that BlackRock Advisors has agreed to continue or implement may be reduced or discontinued at any time without notice. When the Reorganizations are completed, BlackRock Advisors has agreed to continue contractual fee waivers and/or expense reimbursements with respect to Investor A, Investor B, Investor C, Service and BlackRock Shares of the Combined Fund until June 1, 2012, and to implement contractual fee waivers and/or expense reimbursements with respect to Institutional Shares of the Combined Fund until February 1, 2014. The contractual and voluntary fee waivers and/or expense reimbursements referenced above do not apply to the following expenses: Dividend Expense, Interest Expense, Acquired Fund Fees and Expenses and certain other Fund expenses.

• that, when the Reorganization relating to Bond Portfolio is consummated, BlackRock Advisors has contractually agreed to waive fees and/or reimburse expenses until February 1, 2014, in order to limit the Combined Fund’s Total Annual Fund Operating Expenses After Fee Waivers and Reimbursements (excluding Dividend Expense, Interest Expense, Acquired Fund Fees and Expenses and certain other Fund expenses) to 0.56% (for Institutional Shares) of average daily net assets.

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• the expectation that the Combined Fund will achieve certain operating efficiencies from its larger net asset size and the potential for further reduced expense ratios by sharing certain fixed costs over a larger asset base.

• that although the effective management fee rate under the Management Agreement relating to the Bond Portfolio is expected to increase by one basis point in the Combined Fund, the same contractual management fee rate schedule as the Acquiring Fund’s will remain in place in the Combined Fund, and the substantially greater net assets of the Combined Fund are expected to result in a lower effective management fee rate under the Management Agreement relating to Managed Income Portfolio.

• that the same portfolio management team (as described above under “Comparison of the Funds—Management of the Funds”) that currently manages each Fund is expected to manage the Combined Fund following the closing of the Reorganizations.

• the relative performance histories of each Fund. See “Comparison of the Funds—Performance Information.”

• that shareholders of each Target Fund will not pay any sales charges in connection with the Reorganizations. Shareholders of each Target Fund will receive shares of the Acquiring Fund. Also, that there are certain differences in the CDSCs of the Investor A Shares of the Funds. Investor A Shares of the Managed Income Portfolio have a CDSC of 0.50% imposed on investments of $1 million or more if redeemed within eighteen months, while Investor A Shares of the Total Return Portfolio II and the Bond Portfolio have a CDSC of 0.75% imposed on investment of $1 million or more if redeemed within eighteen months. The Acquiring Fund’s CDSC schedule will remain in place in the Combined Fund for new purchases. However, Investor A shareholders of Managed Income Portfolio will continue to be subject to the lower CDSC applicable to Managed Income Portfolio for the Investor A shares they receive in the Combined Fund in connection with the applicable Reorganization.

• that there is expected to be no gain or loss recognized by shareholders for federal income tax purposes as a result of the Reorganizations, as each Reorganization is expected to be a tax-free transaction. In addition, prior to a Reorganization, each Target Fund will distribute to its shareholders all investment company taxable income, net tax-exempt income and net realized capital gains not previously distributed to shareholders, and such distribution of investment company taxable income and net realized capital gains will be taxable to shareholders.

• that the aggregate NAV of the shares that shareholders of the relevant Target Fund will receive in a Reorganization is expected to equal the aggregate NAV of the shares that shareholders of the relevant Target Fund own immediately prior to the Reorganization, and that shareholders of the relevant Target Fund will not be diluted as a result of the Reorganization.

• that the estimated Reorganization expenses for Total Return Portfolio II and Managed Income Portfolio are $88,667 and $116,905, respectively, which BlackRock Advisors or its affiliates are expected to entirely absorb through fee waivers and expense reimbursements. BlackRock Advisors or its affiliates will pay the Bond Portfolio’s Reorganization expenses, which are estimated to be $195,653. The foregoing estimated expenses will be borne (to the extent incurred) by Total Return Portfolio II, Managed Income Portfolio and BlackRock Advisors or its affiliates, regardless of whether the Reorganizations are consummated.

For these and other reasons, the Board, including all of the Independent Board Members, concluded that, based upon the factors and determinations summarized above, consummation of each Reorganization is in the best interests of the respective Target Fund and the interests of the Target Fund’s existing shareholders will not be diluted as a result of the Reorganization. The approval determinations were made on the basis of each Board member’s business judgment after consideration of all of the factors taken as a whole, though individual Board members may have placed different weight on various factors and assigned different degrees of materiality to various conclusions.

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Material U.S. Federal Income Tax Consequences of the Reorganizations

The following is a general summary of the material anticipated U.S. federal income tax consequences of each Reorganization. The discussion is based upon the Internal Revenue Code of 1986, as amended (the “Code”), Treasury Regulations, court decisions, published positions of the IRS and other applicable authorities, all as in effect on the date hereof and all of which are subject to change or differing interpretations (possibly with retroactive effect). The discussion is limited to U.S. persons who hold shares of the Target Funds as capital assets for U.S. federal income tax purposes. This summary does not address all of the U.S. federal income tax consequences that may be relevant to a particular shareholder or to shareholders who may be subject to special treatment under federal income tax laws. No assurance can be given that the IRS would not assert, or that a court would not sustain, a position contrary to any of the tax aspects described below. Shareholders should consult their own tax advisers as to the U.S. federal income tax consequences of a Reorganization, as well as the effects of state, local and non-U.S. tax laws.

It is a condition to the closing of each Reorganization that each Fund receive an opinion from Willkie Farr & Gallagher LLP, special tax counsel to each Fund, dated as of the Closing Date, that the Reorganization will be a “reorganization” within the meaning of Section 368(a) of the Code and that the Target Fund and the Acquiring Fund each will be a “party to a reorganization” within the meaning of Section 368(b) of the Code. As a “reorganization” within the meaning of Section 368(a) of the Code, the U.S. federal income tax consequences of each Reorganization can be summarized as follows:

• No gain or loss will be recognized by a Target Fund or by the Acquiring Fund upon the transfer of substantially all of the assets of the Target Fund to the Acquiring Fund solely in exchange for the shares of the Acquiring Fund and the assumption by the Acquiring Fund of certain stated liabilities of the Target Fund except for (A) any gain or loss that may be recognized on “Section 1256 contracts” as defined in Section 1256(b) of the Code as a result of the closing of the tax year of the Target Fund, (B) any gain that may be recognized on the transfer of stock in a “passive foreign investment company” as defined in Section 1297(a) of the Code, and (C) any other gain or loss that may be required to be recognized as a result of the closing of the tax year of the Target Fund.

• No gain or loss will be recognized by a shareholder of a Target Fund who exchanges all of his, her or its shares of the Target Fund solely for the shares of the Acquiring Fund pursuant to a Reorganization.

• The tax basis of the shares of the Acquiring Fund received by a shareholder of a Target Fund pursuant to a Reorganization (including any fractional share) will be the same as the tax basis of the shares of the Target Fund surrendered in exchange therefor.

• The holding period of the shares of the Acquiring Fund received by a shareholder of a Target Fund pursuant to a Reorganization (including any fractional share) will include the holding period of the shares of the Target Fund surrendered in exchange therefor.

• The Acquiring Fund’s tax basis in assets of a Target Fund received by the Acquiring Fund pursuant to a Reorganization will, in each instance, equal the tax basis of such assets in the hands of the Target Fund immediately prior to the Reorganization increased by the amount of gain or decreased by the amount of loss, if any, recognized by the Target Fund upon the transfer, and the Acquiring Fund’s holding period for such assets will, in each instance, include the period during which the assets were held by the Target Fund except for any assets which may be marked to market for federal income tax purposes on the termination of the Target Fund’s taxable year or on which gain was recognized upon the transfer to the Acquiring Fund.

The opinion of Willkie Farr & Gallagher LLP relating to each Reorganization will be based on U.S. federal income tax law in effect on the Closing Date. In rendering each opinion, Willkie Farr & Gallagher LLP will also rely upon certain representations of the management of the Acquiring Fund and the relevant Target Fund and assume, among other things, that the applicable Reorganization will be consummated in accordance with the operative documents. Each opinion will not express an opinion as to the tax effects to the respective Target Fund or the Acquiring Fund from the marking to market of certain categories of assets as of the closing of the taxable

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year of each Target Fund at the time of the applicable Reorganization or as a result of the transfer of certain types of assets. An opinion of counsel is not binding on the IRS or any court.

The Acquiring Fund intends to continue to be taxed under the rules applicable to regulated investment companies as defined in Section 851 of the Code, which are the same rules currently applicable to each Target Fund and its shareholders.

Prior to the Closing Date, each Target Fund will declare a distribution to its shareholders that, together with all previous distributions, will have the effect of distributing to its shareholders all of its investment company taxable income (computed without regard to the deduction for dividends paid), net tax-exempt income and net realized capital gains, if any, through the Closing Date (after reduction for any capital loss carryforward).

BlackRock Advisors does not expect to sell any material portion of the portfolio assets of either Target Fund in connection with the Reorganizations. A portion of the portfolio assets of the Target Fund may be required to be marked to market as a result of the termination of a Target Fund’s taxable year or as a result of the transfer of certain assets in the Reorganization. The tax impact of any such sales (or deemed sales) will depend on the difference between the price at which such portfolio assets are sold and the Target Fund’s basis in such assets. Any capital gains recognized in these sales (or deemed sales) on a net basis will be distributed to Target Fund shareholders as capital gain dividends (to the extent of net realized long-term capital gains) and/or ordinary dividends (to the extent of net realized short-term capital gains) during or with respect to the year of sale (or deemed sale) and prior to or on the date of the Reorganization, and such distributions will be taxable to shareholders of the Target Fund.

The capital loss carryforwards of the Acquiring Fund and the Target Funds should not be limited by reason of a Reorganization. However, Managed Income Portfolio and Acquiring Fund shareholders are expected to experience dilution of capital loss carryforwards per share in the Combined Fund. As a result, it is possible that the shareholders of Managed Income Portfolio and of the Acquiring Fund would receive taxable distributions of capital gains earlier than they would have in the absence of the Reorganizations. For five years beginning after the Closing Date of a Reorganization, the Combined Fund will not be allowed to offset certain pre-Reorganization built-in gains attributable to any of the Funds (if any) with the capital loss carryforwards attributable to any of the other Funds, other than the Fund to which the built-in gains were attributable (here, limited to Managed Income Portfolio and the Acquiring Fund).

Shareholders of each Target Fund may redeem their shares at any time prior to the closing of a Reorganization. Generally, these are taxable transactions. Shareholders must consult with their own tax advisers regarding potential transactions.

Expenses of the Reorganizations

The estimated Reorganization expenses for Total Return Portfolio II and Managed Income Portfolio are $88,667 and $116,905, respectively, which BlackRock Advisors or its affiliates are expected to entirely absorb through fee waivers and expense reimbursements. BlackRock Advisors or its affiliates will pay the Bond Portfolio’s Reorganization expenses, which are estimated to be $195,653. The foregoing estimated expenses will be borne (to the extent incurred) by Total Return Portfolio II, Managed Income Portfolio and BlackRock Advisors or its affiliates, regardless of whether the Reorganizations are consummated. BlackRock Advisors follows a formula for determining how to allocate Reorganization costs. Each Fund is allocated all of the Reorganization costs attributable to such Fund. In addition, Reorganization costs common to more than one Fund will be allocated across the Funds based upon relative net assets or other appropriate methods. If BlackRock Advisors expects that a Fund will not recover that portion of the Reorganization costs allocated to it within one year as a result of expense savings directly related to the Reorganization, that portion of the costs will be borne by BlackRock Advisors or its affiliates. The Board of each Fund believes that this methodology is reasonable and equitable to the Funds and that the resulting costs to be borne by each Fund, if any, are reasonable.

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The Reorganizations’ expenses include, but are not limited to, costs and expenses (including legal fees) related to the preparation and distribution of materials to the Board, attending the Board meetings and preparing the minutes of the Board meetings, obtaining an opinion of counsel as to certain tax matters, the preparation of each Reorganization Agreement and the N-14 Registration Statement, fees of the SEC and any state securities commission, transfer agency fees, auditing fees associated with each Fund’s financial statements, portfolio transfer taxes (if any), expenses relating to preparing, printing and mailing the Combined Prospectus/Information Statement and any other legal and auditing fees in connection with the foregoing.

Continuation of Shareholder Accounts and Plans; Share Certificates

Upon consummation of each Reorganization, the Acquiring Fund will establish a position for each Target Fund shareholder on the books of the Acquiring Fund containing the appropriate number of shares of the Acquiring Fund to be received in the Reorganization. If you currently hold certificates representing your shares of a Target Fund, it is not necessary to surrender such certificates. No certificates for shares of the Acquiring Fund will be issued in connection with the Reorganizations.

Legal Matters

Certain legal matters concerning the federal income tax consequences of each Reorganization will be passed on by Willkie Farr & Gallagher LLP, special tax counsel to the Acquiring Fund. Certain matters concerning the issuance of shares of the Acquiring Fund have been passed on by Bingham McCutchen LLP, which serves as Massachusetts counsel to the Trust.

OTHER INFORMATION

Capitalization

The following table sets forth as of September 30, 2010: (i) the unaudited capitalization of the Bond Portfolio; (ii) the unaudited capitalization of the Managed Income Portfolio; (iii) the unaudited capitalization of the Acquiring Fund; and (iv) the unaudited pro forma combined capitalization of the Combined Fund, assuming each Reorganization has been consummated. The capitalizations are likely to be different when a Reorganization is scheduled to be completed as a result of daily share purchase and redemption activity.

Managed Income Portfolio (Target Fund)

	Investor A		Investor B		Investor C		Institutional		Service		Total
Total net assets	$	25,401,952	$	697,808	$	7,551,791	$	312,659,189	$	154,030,640	$	500,341,380
Shares outstanding		2,465,835		67,772		734,976		30,360,792		14,956,285		48,585,660
Net asset value per share	$	10.30	$	10.30	$	10.27	$	10.30	$	10.30	$	10.30

Bond Portfolio (Target Fund)

	Investor A		Investor B		Investor C		Institutional		Service		BlackRock		Total
Total net assets	$	277,102,212	$	3,835,592	$	79,508,463	$	527,175,859	$	139,733,738	$	152,849,981	$	1,180,205,845
Shares outstanding		28,712,931		397,491		8,231,804		54,625,972		14,471,007		15,833,370		122,272,575
Net asset value per share	$	9.65	$	9.65	$	9.66	$	9.65	$	9.66	$	9.65	$	9.65

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Total Return Portfolio II (Acquiring Fund)

	Investor A		Investor B		Investor C		Institutional		Class R(1)		Service		BlackRock		Total
Total net assets	$	280,856,521	$	10,118,318	$	133,691,499	$	790,767,841	$	394,960	$	37,639,153	$	1,077,975,866	$	2,331,444,158
Shares outstanding		29,263,032		1,055,046		13,991,003		82,506,212		41,129		3,925,059		112,179,686		242,961,167
Net asset value per share	$	9.60	$	9.59	$	9.56	$	9.58	$	9.60	$	9.59	$	9.61	$	9.60

Pro Forma Adjustments

	Investor A			Investor B			Investor C			Institutional			Class  R(1)			Service			BlackRock			Total
Total net assets(2)	$	(1,084,203	)	$	(548	)	$	(6,875	)	$	(3,848,123	)	$	(15	)	$	(307,234	)	$	(865,936	)	$	(6,112,934	)
Shares outstanding(3)		226,815			7,381			143,477			2,237,465			—			1,174,794			(17,135	)		3,772,799

Total Return Portfolio II Pro-Forma Combined Fund⁽⁴⁾

	Investor A		Investor B		Investor C		Institutional		Class  R(1)		Service		BlackRock		Total
Total net assets	$	582,276,482	$	14,651,170	$	220,744,878	$	1,626,754,766	$	394,945	$	331,096,297	$	1,229,959,911	$	4,005,878,449
Shares outstanding		60,668,613		1,527,690		23,101,260		169,730,441		41,129		34,527,145		127,995,921		417,592,201
Net asset value per share	$	9.60	$	9.59	$	9.56	$	9.58	$	9.60	$	9.59	$	9.61	$	9.59

(1) The Target Funds do not have Class R Shares outstanding. No Class R shares will be issued in the Reorganizations.

(2) Reflects the distribution of undistributed net investment income of $5,907,362, of which $1,532,354 was attributable to the Managed Income Portfolio and $4,375,008 was attributable to the Bond Portfolio. Also reflects the charge for estimated Reorganization expenses of $205,572, of which $116,905 was attributable to the Managed Income Portfolio and $88,667 was attributable to the Total Return Portfolio II.

(3) Adjustments are due to differences in net asset value per share.

(4) Assumes the Reorganizations had taken place on September 30, 2010.

Shareholder Rights and Obligations

Each Fund is a series of BlackRock Funds II, a business trust organized under the laws of the Commonwealth of Massachusetts. Under the Trust’s organizational documents, each Fund is authorized to issue an unlimited number of shares of beneficial interest, with a par value of $0.001 per share.

With respect to each Fund, shares of the same class within such Fund have equal dividend, distribution, liquidation, and voting rights, and fractional shares have those rights proportionately. Shares of each class of each Fund bear their pro rata portion of all operating expenses paid by a Fund, except transfer agency fees, certain administrative/servicing fees and amounts payable under the Trust’s Amended and Restated Distribution and Service Plan, and have exclusive voting rights with respect to matters relating to the class’ account maintenance and/or distribution expenditures.

There are no preemptive rights in connection with shares of either Target Fund or the Acquiring Fund. When issued in accordance with the provisions of their respective prospectuses (and, in the case of shares of the Acquiring Fund, issued in connection with the Reorganizations), all shares are fully paid and non-assessable.

May 16, 2011

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APPENDIX I

FUNDAMENTAL INVESTMENT RESTRICTIONS

Each Fund may not:

1. Purchase securities of any one issuer (other than securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities or certificates of deposit for any such securities) if more than 5% of the value of the Fund’s total assets would (taken at current value) be invested in the securities of such issuer, or more than 10% of the issuer’s outstanding voting securities would be owned by the Fund or the Trust, except that up to 25% of the value of the Fund’s total assets may (taken at current value) be invested without regard to these limitations. For purposes of this limitation, a security is considered to be issued by the entity (or entities) whose assets and revenues back the security. A guarantee of a security shall not be deemed to be a security issued by the guarantors when the value of all securities issued and guaranteed by the guarantor, and owned by the Fund, does not exceed 10% of the value of the Fund’s total assets.

2. Purchase any securities which would cause 25% or more of the value of the Fund’s total assets at the time of purchase to be invested in the securities of one or more issuers conducting their principal business activities in the same industry, provided that (a) there is no limitation with respect to (i) instruments issued or guaranteed by the United States and tax-exempt instruments issued by any state, territory or possession of the United States, the District of Columbia or any of their authorities, agencies, instrumentalities or political subdivisions, and (ii) repurchase agreements secured by the instruments described in clause (i); (b) wholly-owned finance companies will be considered to be in the industries of their parents if their activities are primarily related to financing the activities of the parents; and (c) utilities will be divided according to their services; for example, gas, gas transmission, electric and gas, electric and telephone will each be considered a separate industry.

3. Issue senior securities, borrow money or pledge its assets, except that a Fund may borrow from banks or enter into reverse repurchase agreements or dollar rolls in amounts aggregating not more than 33 ¹/3% of the value of its total assets (calculated when the loan is made) to take advantage of investment opportunities and may pledge up to 33 ¹/3% of the value of its total assets to secure such borrowings. Each Fund is also authorized to borrow an additional 5% of its total assets without regard to the foregoing limitations for temporary purposes such as clearance of portfolio transactions and share redemptions. For purposes of these restrictions, the purchase or sale of securities on a “when-issued,” delayed delivery or forward commitment basis, the purchase and sale of options and futures contracts and collateral arrangements with respect thereto are not deemed to be the issuance of a senior security, a borrowing or a pledge of assets.

4. Purchase or sell real estate, except that each Fund may purchase securities of issuers which deal in real estate and may purchase securities which are secured by interests in real estate.

5. Acquire any other investment company or investment company security except in connection with a merger, consolidation, reorganization or acquisition of assets or where otherwise permitted by the 1940 Act.

6. Act as an underwriter of securities within the meaning of the Securities Act of 1933 except to the extent that the purchase of obligations directly from the issuer thereof, or the disposition of securities, in accordance with the Fund’s investment objective, policies and limitations may be deemed to be underwriting.

7. Write or sell put options, call options, straddles, spreads, or any combination thereof, except for transactions in options on securities and securities indices, futures contracts and options on futures contracts.

8. Purchase securities of companies for the purpose of exercising control.

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9. Purchase securities on margin, make short sales of securities or maintain a short position, except that (a) this investment limitation shall not apply to a Fund’s transactions in futures contracts and related options or a Fund’s sale of securities short against the box, and (b) a Fund may obtain short-term credit as may be necessary for the clearance of purchases and sales of portfolio securities.

10. Purchase or sell commodity contracts, or invest in oil, gas or mineral exploration or development programs, except that each Fund may, to the extent appropriate to its investment policies, purchase securities of companies engaging in whole or in part in such activities and may enter into futures contracts and related options.

11. Make loans, except that each Fund may purchase and hold debt instruments and enter into repurchase agreements in accordance with its investment objective and policies and may lend portfolio securities.

12. Purchase or sell commodities except that each Fund may, to the extent appropriate to its investment policies, purchase securities of companies engaging in whole or in part in such activities, may engage in currency transactions and may enter into futures contracts and related options.

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APPENDIX II

FORM OF AGREEMENT AND PLAN OF REORGANIZATION

THIS AGREEMENT AND PLAN OF REORGANIZATION (the “Agreement”) is made as of this [    ] day of [            ], 2011, by and between BlackRock Funds II, a registered investment company and a Massachusetts business trust (the “Company”), on behalf of [BlackRock Bond Portfolio] [BlackRock Managed Income Portfolio], a separate series of the Company (the “Target Fund”), and the Company, on behalf of BlackRock Total Return Portfolio II, a separate series of the Company (the “Acquiring Fund”).

This Agreement is intended to be, and is adopted as, a plan of reorganization within the meaning of Section 368(a) of the United States Internal Revenue Code of 1986, as amended (the “Code”), and the Treasury Regulations promulgated thereunder. The reorganization will consist of: (i) the transfer of substantially all of the assets of the Target Fund to the Acquiring Fund, in exchange for the assumption by the Acquiring Fund of the Stated Liabilities (as defined in paragraph 1.3) of the Target Fund and [Investor A, Investor B, Investor C, Institutional, BlackRock and Service] [Investor A, Investor B, Investor C, Institutional and Service] shares of the Acquiring Fund (“Acquiring Fund Shares”) having an aggregate net asset value equal to the value of the assets of the Target Fund acquired by the Acquiring Fund reduced by the Stated Liabilities; (ii) the distribution, on or as soon as practicable after the Closing Date (as defined in paragraph 3.1), of the Acquiring Fund Shares to the shareholders of the Target Fund, and (iii) the termination, dissolution and complete liquidation of the Target Fund, all upon the terms and conditions set forth in this Agreement (the “Reorganization”);

WHEREAS, the Company is an open-end, registered management investment company within the meaning of the Investment Company Act of 1940 (the “1940 Act”);

WHEREAS, each of the Acquiring Fund and the Target Fund qualifies as a “regulated investment company” under Subchapter M of the Code;

WHEREAS, the Acquiring Fund is authorized to issue the Acquiring Fund Shares;

WHEREAS, the Board of Trustees of the Company has determined that the Reorganization is in the best interests of the Acquiring Fund;

WHEREAS, the Board of Trustees of the Target Fund has determined that the Reorganization is in the best interests of the Target Fund and has approved the Reorganization;

NOW, THEREFORE, in consideration of the premises and of the covenants and agreements hereinafter set forth, the parties hereto covenant and agree as follows:

ARTICLE I

THE REORGANIZATION

1.1 THE EXCHANGE. Subject to the terms and conditions contained herein and on the basis of the representations and warranties contained herein, the Target Fund agrees to convey, transfer and deliver substantially all of the assets of the Target Fund free and clear of all liens, encumbrances and claims whatsoever to the Acquiring Fund. In exchange, the Acquiring Fund agrees: (a) to deliver to the Target Fund, the number of full and fractional Acquiring Fund Shares, determined by dividing: (i) the aggregate value of the Target Fund’s assets with respect to each class of the Target Fund, net of the Stated Liabilities (as defined in paragraph 1.3) of the Target Fund with respect to each class of the Target Fund, computed in the manner and as of the time and date set forth in paragraph 2.1, by (ii) the net asset value of one share of the corresponding class of the Acquiring

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Fund computed in the manner and as of the time and date set forth in paragraph 2.2; and (b) to assume the Stated Liabilities of the Target Fund described in paragraph 1.3. Such transactions shall take place at the closing (the “Closing”) provided for in paragraph 3.1. For the purposes of this Agreement, the Investor A Shares of the Target Fund correspond to the Investor A Shares of the Acquiring Fund, the Investor B Shares of the Target Fund correspond to the Investor B Shares of the Acquiring Fund, the Investor C Shares of the Target Fund correspond to the Investor C Shares of the Acquiring Fund, the Institutional Shares of the Target Fund correspond to the Institutional Shares of the Acquiring Fund, the Service Shares of the Target Fund correspond to the Service Shares of the Acquiring Fund, [the BlackRock Shares of the Target Fund correspond to the BlackRock Shares of the Acquiring Fund,] and the term “Acquiring Fund Shares” should be read to include each such class of shares of the Acquiring Fund unless the context otherwise requires.

1.2 ASSETS TO BE ACQUIRED. The assets of the Target Fund to be acquired by the Acquiring Fund shall consist of all property owned by the Target Fund, including, without limitation, all cash, securities, commodities, interests in futures and other financial instruments, claims (whether absolute or contingent, known or unknown), receivables (including dividends, interest, principal, subscriptions and other receivables), goodwill and other intangible property, all books and records belonging to the Target Fund, any deferred or prepaid expenses shown as an asset on the books of the Target Fund on the Closing Date, and all interests, rights, privileges and powers, other than cash in an amount necessary to pay dividends and distributions as provided in paragraph 7.2 and other than the Target Fund’s rights under this Agreement (the “Assets”).

1.3 LIABILITIES TO BE ASSUMED. The Target Fund will endeavor to identify and discharge, to the extent practicable, all of its liabilities and obligations, including all liabilities relating to operations, before the Closing Date. The Acquiring Fund shall assume only those accrued and unpaid liabilities of the Target Fund set forth in the Target Fund’s statement of assets and liabilities as of the Closing Date delivered by the Target Fund to the Acquiring Fund pursuant to paragraph 5.2 (the “Stated Liabilities”). The Acquiring Fund shall assume only the Stated Liabilities and shall not assume any other debts, liabilities or obligations of the Target Fund.

1.4 STATE FILINGS. Prior to the Closing Date, the Company shall make any filings with the Commonwealth of Massachusetts that are required under the laws of the Commonwealth of Massachusetts to be made prior to the Closing Date.

1.5 LIQUIDATION AND DISTRIBUTION. On or as soon as practicable after the Closing Date, (i) the Target Fund will distribute in complete liquidation of the Target Fund, pro rata to its shareholders of record, determined as of the close of business at the Valuation Time (as defined below) (the “Target Fund Shareholders”), all of the Acquiring Fund Shares received by the Target Fund. Such distribution will be accomplished by the transfer on the books of the Acquiring Fund of Acquiring Fund Shares credited to the account of the Target Fund to open accounts on the share records of the Acquiring Fund in the name of the Target Fund Shareholders, and representing the respective pro rata number and class of Acquiring Fund Shares due Target Fund Shareholders and (ii) the Target Fund will dissolve as a separate series of the Company. The Acquiring Fund shall not issue certificates representing Acquiring Fund Shares in connection with such transfer.

1.6 OWNERSHIP OF SHARES. Ownership of Acquiring Fund Shares will be shown on the books of the Acquiring Fund’s transfer agent (the “Acquiring Fund Transfer Agent”).

1.7 TRANSFER TAXES. Any transfer taxes payable upon the issuance of Acquiring Fund Shares in a name other than the registered holder of the Target Fund shares on the books of the Target Fund as of that time shall, as a condition of such transfer, be paid by the person to whom such Acquiring Fund Shares are to be issued and transferred.

1.8 REPORTING RESPONSIBILITY. Any reporting responsibility of the Company, on behalf of the Target Fund, including, without limitation, the responsibility for filing of regulatory reports, tax returns or other documents with the Securities and Exchange Commission (the “Commission”), any state securities commission,

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and any federal, state or local tax authorities or any other relevant regulatory authority, is and shall remain the responsibility of the Company, on behalf of the Target Fund.

1.9 BOOKS AND RECORDS. Immediately after the Closing Date, the share transfer books relating to the Target Fund shall be closed and no transfer of shares shall thereafter be made on such books. All books and records of the Target Fund, including all books and records required to be maintained under the 1940 Act and the rules and regulations thereunder transferred to the Acquiring Fund, shall be made available to the Target Fund from and after the Closing Date at the Acquiring Fund’s cost of producing such books and records until at least the date through which such books and records must be maintained under applicable law.

1.10 ACTION BY THE COMPANY. The Company shall take all actions expressed herein as being the obligations of the Company, on behalf of the Acquiring Fund. The Company shall take all actions expressed herein as being the obligations of the Company, on behalf of the Target Fund.

ARTICLE II

VALUATION

2.1 VALUATION OF ASSETS. The gross value of the Assets to be acquired by the Acquiring Fund hereunder shall be the gross value of such Assets as of the close of regular trading on the New York Stock Exchange (“NYSE”) on the business day prior to the Closing Date (the “Valuation Time”), after the payment of the dividends pursuant to Section 7.2, using the Acquiring Fund’s valuation procedures or such other valuation procedures as shall be mutually agreed upon by the parties.

2.2 VALUATION OF SHARES. Full Acquiring Fund Shares, and to the extent necessary, fractional Acquiring Fund Shares, of an aggregate net asset value equal to the gross value of the Assets of the Target Fund acquired, determined as hereinafter provided, reduced by the amount of Stated Liabilities of the Target Fund assumed by the Acquiring Fund, shall be issued by the Acquiring Fund in exchange for such Assets of the Target Fund. The net asset value per share of the [Investor A, Investor B, Investor C, Institutional, BlackRock and Service] [Investor A, Investor B, Investor C, Institutional and Service] Acquiring Fund Shares shall be the net asset value per share for the [Investor A, Investor B, Investor C, Institutional, BlackRock and Service Shares] [Investor A, Investor B, Investor C, Institutional and Service Shares], respectively, of the Target Fund computed as of the Valuation Time, using the Acquiring Fund’s valuation procedures or such other valuation procedures as shall be mutually agreed upon by the parties.

ARTICLE III

CLOSING AND CLOSING DATE

3.1 CLOSING DATE. Subject to the terms and conditions set forth herein, the Closing shall occur in the third quarter of 2011, or such other date as the parties may agree to in writing (the “Closing Date”). Unless otherwise provided, all acts taking place at the Closing shall be deemed to take place as of 7:00 a.m. on the Closing Date. The Closing shall be held at the offices of Willkie Farr & Gallagher LLP, 787 Seventh Avenue, New York, New York 10019, or at such other time and/or place as the parties may agree.

3.2 CUSTODIAN’S CERTIFICATE. The Target Fund shall instruct its custodian (the “Target Fund Custodian”), to deliver at the Closing a certificate of an authorized officer stating that: (a) the Assets have been delivered in proper form to the Acquiring Fund on the Closing Date; and (b) all necessary taxes including all applicable federal and state stock transfer stamps, if any, have been paid, or provision for payment shall have been made, in conjunction with the delivery of Assets by the Target Fund. The Target Fund’s Assets represented by a certificate or other written instrument shall be presented by the Target Fund Custodian to the custodian for

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the Acquiring Fund (the “Acquiring Fund Custodian”), for examination no later than five (5) business days preceding the Closing Date and all Assets of the Target Fund at the Valuation Time shall be transferred and delivered by the Target Fund as of the Closing Date for the account of the Acquiring Fund, duly endorsed in proper form for transfer in such condition as to constitute good delivery thereof free and clear of all liens, encumbrances and claims whatsoever, in accordance with the custom of brokers. The Target Fund’s Assets deposited with a securities depository (as defined in Rule 17f-4 under the 1940 Act) or other permitted counterparties or a futures commission merchant (as defined in Rule 17f-6 under the 1940 Act) shall be delivered as of the Closing Date by book entry in accordance with the customary practices of such depositories and futures commission merchants and the Target Fund Custodian. The cash to be transferred by the Target Fund shall be transferred and delivered by the Target Fund as of the Closing Date for the account of the Acquiring Fund.

3.3 EFFECT OF SUSPENSION IN TRADING. In the event that, as of the Valuation Time, either: (a) the NYSE or another primary exchange on which the portfolio securities of the Acquiring Fund or the Target Fund are purchased or sold shall be closed to trading or trading on such exchange shall be restricted; or (b) trading or the reporting of trading on the NYSE or elsewhere shall be disrupted so that accurate appraisal of the value of the net assets of the Acquiring Fund or the Target Fund is impracticable, the Closing shall be postponed until the business day after the day when trading is fully resumed and reporting is restored or such other date as the parties may agree to.

3.4 TRANSFER AGENT’S CERTIFICATE. The Target Fund shall instruct the Target Fund’s transfer agent (the “Target Fund Transfer Agent”), to deliver at the Closing a certificate of an authorized officer stating that its records contain the names and addresses of Target Fund Shareholders as of the Valuation Time, and the number and percentage ownership (to four decimal places) of outstanding shares of the Target Fund owned by each Target Fund Shareholder immediately prior to the Closing. The Acquiring Fund shall issue and deliver, or instruct the Acquiring Fund Transfer Agent to issue and deliver, a confirmation evidencing Acquiring Fund Shares to be credited on the Closing Date to the Target Fund, or provide evidence reasonably satisfactory to the Target Fund that such Acquiring Fund Shares have been credited to the Target Fund Shareholders’ accounts on the books of the Acquiring Fund.

3.5 DELIVERY OF ADDITIONAL ITEMS. At the Closing, each party shall deliver to the other such bills of sale, checks, assignments, assumption of liabilities, receipts and other documents, if any, as such other party or its counsel may reasonably request.

3.6 FAILURE TO DELIVER ASSETS. If the Target Fund is unable to make delivery pursuant to paragraph 3.2 hereof to the Acquiring Fund Custodian of any of the Assets of the Target Fund for the reason that any of such Assets have not yet been delivered to it by the Target Fund’s broker, dealer or other counterparty, then, in lieu of such delivery, the Target Fund shall deliver, with respect to said Assets, executed copies of an agreement of assignment and due bills executed on behalf of said broker, dealer or other counterparty, together with such other documents as may be required by the Acquiring Fund or the Acquiring Fund Custodian, including brokers’ confirmation slips.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

4.1 REPRESENTATIONS OF THE COMPANY, ON BEHALF OF THE TARGET FUND. The Company, on behalf of the Target Fund, represents and warrants to the Company, on behalf of the Acquiring Fund, as follows:

(a) The Company is a voluntary association with transferable shares commonly referred to as a Massachusetts business trust that is existing under the laws of the Commonwealth of Massachusetts and is duly authorized to exercise in the Commonwealth of Massachusetts all of the powers recited in the

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Company’s declaration of trust. The Company has filed the necessary certificates required to be filed under Chapter 182 of the General Laws of the Commonwealth of Massachusetts and paid the necessary fees due thereon. The Company is duly authorized to transact business in the Commonwealth of Massachusetts and is qualified to do business in all jurisdictions in which it is required to be so qualified, except jurisdictions in which the failure to so qualify would not have a material adverse effect on the Company or the Target Fund. The Target Fund is a legally designated, separate series of the Company. The Company, on behalf of the Target Fund, has all material federal, state and local authorizations necessary to own all of its properties and assets and to carry on its business as now being conducted, except authorizations which the failure to so obtain would not have a material adverse effect on the Target Fund.

(b) The Company is registered as an open-end management investment company under the 1940 Act, and its registration with the Commission as an investment company under the 1940 Act is in full force and effect. The Company is in compliance in all material respects with the 1940 Act and the rules and regulations thereunder with respect to the Target Fund.

(c) The Registration Statement on Form N-14 of the Acquiring Fund and the Combined Prospectus/Information Statement contained therein relating to the transactions contemplated by the Agreement that is filed with the Commission and becomes effective, as such Registration Statement may be amended or supplemented subsequent to the effective date of the Registration Statement (the “Registration Statement”), as of such effective date and at all times subsequent thereto up to and including the Closing Date, conforms and will conform, as it relates to the Company and the Target Fund based on information provided in writing by the Target Fund for inclusion therein, in all material respects to the requirements of the federal and state securities laws and the rules and regulations thereunder and does not and will not include, as it relates to the Company and the Target Fund based on information provided by the Target Fund for inclusion therein, any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Any written information furnished by the Company with respect to the Company or the Target Fund for use in the Registration Statement or any other materials provided by the Target Fund in connection with the Reorganization, as of the effective date of the Registration Statement and at all times subsequent thereto up to and including the Closing Date, does not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated or necessary to make the statements, in light of the circumstances under which such statements were made, not misleading.

(d) The Company’s prospectus, statement of additional information and shareholder reports, in each case relating to the Target Fund and to the extent incorporated by reference in the Registration Statement, are accurate and complete in all material respects and comply in all material respects with federal securities and other applicable laws and regulations, and do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or necessary to make the statements, in light of the circumstances in which such statements were made, not misleading.

(e) The Target Fund is not in violation of, and, subject to the satisfaction of the conditions precedent set forth in Articles VI and VIII of this Agreement, the execution, delivery and performance of this Agreement in accordance with its terms by the Company on behalf of the Target Fund will not result in the violation of Massachusetts law, or any provision of the Company’s declaration of trust or code of regulations or of any material agreement, indenture, note, mortgage, instrument, contract, lease or other undertaking to which the Company is a party on behalf of the Target Fund or by which the Target Fund is bound, nor will the execution, delivery and performance of this Agreement by the Company result in the acceleration of any obligation, or the imposition of any penalty, under any material agreement, indenture, instrument, contract, lease or other undertaking to which the Company is a party, on behalf of the Target Fund, or by which the Target Fund is bound.

(f) The Target Fund has no material contracts, agreements or other commitments that will not be terminated without liability to it before the Closing Date, other than liabilities, if any, to be discharged prior to the Closing Date or reflected as Stated Liabilities or in the statement of assets and liabilities as provided in paragraph 5.2 hereof.

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(g) No litigation, claims, actions, suits, proceedings or investigations of or before any court or governmental body are pending or to the Company’s knowledge threatened against the Target Fund or any of its properties or assets which, if adversely determined, would materially and adversely affect the Target Fund’s financial condition, the conduct of its business or which would prevent or hinder the ability of the Target Fund to carry out the transactions contemplated by this Agreement. The Company knows of no facts that might form the basis for the institution of such proceedings and is not a party to or subject to the provisions of any order, decree or judgment of any court or governmental body that materially and adversely affects its business or its ability to consummate the transactions contemplated herein.

(h) (i) The audited financial statements of the Target Fund as of September 30, 2010, and for the fiscal year then ended, have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) consistently applied and have been audited by Deloitte & Touche LLP, and such statements (true and complete copies of which have been furnished to the Acquiring Fund) fairly reflect the financial condition and the results of operations of the Target Fund as of such date and the results of operations and changes in net assets for the periods indicated, and there are no material liabilities of the Target Fund whether actual or contingent and whether or not determined or determinable as of such date that are required to be disclosed but are not disclosed in such statements; and (ii) the unaudited financial statements of the Target Fund for the six months ended March 31, 2011 will be prepared in accordance with GAAP consistently applied by the Target Fund, and such statements (true and complete copies of which will have been furnished to the Acquiring Fund) will fairly reflect in all material respects the financial condition and the results of operations of the Target Fund as of such date and the results of operations and changes in net assets for the periods indicated, and there are no material liabilities of Target Fund whether actual or contingent and whether or not determined or determinable as of such date that are required by GAAP consistently applied, to be disclosed but are not disclosed in such statements.

(i) There have been no changes in the financial position of the Target Fund as reflected in the audited financial statements as of September 30, 2010, other than those occurring in the ordinary course of business consistent with past practice in connection with the purchase and sale of portfolio assets, the issuance and redemption of Target Fund shares and the payment of normal operating expenses, dividends and capital gains distributions. Since the date of the financial statements referred to in paragraph 4.1(h) above, there has been no material adverse change in the Target Fund’s financial condition, assets, liabilities or business, results of operations or the manner of conducting business of the Target Fund (other than changes occurring in the ordinary course of business). For the purposes of this paragraph 4.1(i), a decline in the net asset value of the Target Fund due to declines in the value of the Target Fund’s Assets, the discharge of the Target Fund’s liabilities or the redemption of Target Fund shares by Target Fund Shareholders shall not constitute a material adverse change.

(j) Since September 30, 2010, there has not been (i) any pending or to the knowledge of the Company threatened litigation, which has had or may have a material adverse effect on the business, results of operations, assets or financial condition of the Target Fund; (ii) any option to purchase or other right to acquire shares of the Target Fund issued or granted by or on behalf of the Target Fund to any person other than subscriptions to purchase shares at net asset value in accordance with the terms in the current prospectus for the Target Fund; (iii) any contract or agreement or amendment or termination of any contract or agreement entered into by or on behalf of the Target Fund, except as otherwise contemplated by this Agreement; (iv) any indebtedness incurred, other than in the ordinary course of business, by or on behalf of the Target Fund for borrowed money or any commitment to borrow money by or on behalf of the Target Fund; (v) any amendment of the Company’s organizational documents in a manner materially affecting the Target Fund; and (vi) any grant or imposition of any lien, claim, charge or encumbrance (other than encumbrances arising in the ordinary course of business with respect to covered options) upon any asset of the Target Fund other than a lien for taxes not yet due and payable.

(k) As of the date hereof and at the Closing Date, all federal and other tax returns and reports of the Target Fund required by law to be filed have or shall have been timely and duly filed by such dates

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(including any extensions) and are or will be correct in all material respects, and all federal and other taxes required to be paid pursuant to such returns and reports have been paid. To the best of the Target Fund’s knowledge after reasonable investigation, no such return is currently under audit or examination, and no assessment or deficiency has been asserted with respect to any such returns.

(l) The Company is authorized to issue an unlimited number of shares of beneficial interest, par value $0.001 per share, of the Target Fund. All issued and outstanding shares of beneficial interest of the Target Fund have been offered and sold in compliance in all material respects with applicable registration requirements of the Securities Act of 1933 (“1933 Act”) and applicable state securities laws and are, and on the Closing Date will be, duly authorized and validly issued and outstanding, fully paid and nonassessable, and are not subject to preemptive or dissenter’s rights. All of the issued and outstanding shares of the Target Fund will, at the Valuation Time, be held by the persons and in the amounts set forth in the records of the Target Fund Transfer Agent as provided in paragraph 3.4. The Target Fund has no outstanding options, warrants or other rights to subscribe for or purchase any of the Target Fund shares and has no outstanding securities convertible into any of the Target Fund shares.

(m) At the Closing Date, the Target Fund will have good and marketable title to the Assets to be transferred to the Acquiring Fund pursuant to paragraph 1.2, and full right, power and authority to sell, assign, transfer and deliver such Assets hereunder, free of any lien or other encumbrance, except those liens or encumbrances as to which the Acquiring Fund has received notice and which have been taken into account in the net asset valuation of the Target Fund, and, upon delivery of the Assets and the filing of any documents that may be required under Massachusetts state law, the Acquiring Fund will acquire good and marketable title to the Assets, subject to no restrictions on their full transfer, other than such restrictions as might arise under the 1933 Act, and other than as disclosed to and accepted in writing by the Acquiring Fund.

(n) The Company, on behalf of the Target Fund, has the power to enter into this Agreement and to consummate the transactions contemplated herein. The execution, delivery and performance of this Agreement and consummation of the transactions contemplated herein have been duly authorized by all necessary action on the part of the Trustees of the Company. This Agreement constitutes a valid and binding obligation of the Target Fund, enforceable in accordance with its terms, and no other action or proceedings by the Company on behalf of the Target Fund are necessary to authorize this Agreement and the transactions contemplated herein, subject as to enforcement to bankruptcy, insolvency, reorganization, moratorium and other laws relating to or affecting creditors’ rights and to general equity principles.

(o) The information to be furnished by the Target Fund for use in no-action letters, applications for orders, registration statements, proxy materials and other documents that may be necessary in connection with the transactions contemplated herein shall be accurate and complete in all material respects and shall comply in all material respects with federal securities and other applicable laws and regulations.

(p) The Target Fund has elected to qualify and has qualified as a “regulated investment company” under the Code (a “RIC”) as of and since its first taxable year; has been a RIC under the Code at all times since the end of its first taxable year when it so qualified; qualifies and will continue to qualify as a RIC under the Code for its taxable year through the date of Reorganization; and has satisfied the distribution requirements imposed by the Code for each of its taxable years.

(q) Except for the Registration Statement, no consent, approval, authorization or order under any federal or state law or of any court or governmental authority is required for the consummation by the Target Fund of the transactions contemplated herein, except those that have already been obtained. No consent of or notice to any third party or entity is required for the consummation by the Target Fund of the transactions contemplated by this Agreement.

(r) [Intentionally left blank.]

(s) Prior to the valuation of the Assets as of the Valuation Time, the Target Fund shall have declared a dividend, dividends or other distribution or distributions, with a record and ex-dividend date prior to the

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Valuation Time, which, together with all previous dividends and distributions, shall have the effect of distributing to the Target Fund Shareholders all of the Target Fund’s investment company taxable income for all taxable periods ending on or before the Closing Date (computed without regard to any deduction for dividends paid), if any, plus the excess of its interest income, if any, excludable from gross income under Section 103(a) of the Code over its deductions disallowed under Sections 265 and 171(a)(2) of the Code for all taxable periods ending on or before the Closing Date and all of its net capital gains realized in all taxable periods ending on or before the Closing Date (after reduction for any capital loss carry forward).

4.2 REPRESENTATIONS OF THE COMPANY, ON BEHALF OF THE ACQUIRING FUND. The Company, on behalf of the Acquiring Fund, represents and warrants to the Company, on behalf of the Target Fund, as follows:

(a) The Company is a voluntary association with transferable shares commonly referred to as a Massachusetts business trust that is existing under the laws of the Commonwealth of Massachusetts and is duly authorized to exercise in the Commonwealth of Massachusetts all of the powers recited in the Company’s declaration of trust. The Company has filed the necessary certificates required to be filed under Chapter 182 of the General Laws of the Commonwealth of Massachusetts and paid the necessary fees due thereon. The Company is duly authorized to transact business in the Commonwealth of Massachusetts and is qualified to do business in all jurisdictions in which it is required to be so qualified, except jurisdictions in which the failure to so qualify would not have a material adverse effect on the Company or the Acquiring Fund. The Acquiring Fund is a legally designated, separate series of the Company. The Company, on behalf of the Acquiring Fund, has all material federal, state and local authorizations necessary to own all of its properties and assets and to carry on its business as now being conducted, except authorizations which the failure to so obtain would not have a material adverse effect on the Acquiring Fund.

(b) The Company is registered as an open-end management investment company under the 1940 Act, and its registration with the Commission as an investment company under the 1940 Act is in full force and effect. The Company is in compliance in all material respects with the 1940 Act and the rules and regulations thereunder with respect to the Acquiring Fund.

(c) The Registration Statement as of its effective date and at all times subsequent thereto up to and including the Closing Date, conforms and will conform, as it relates to the Company and the Acquiring Fund, in all material respects to the requirements of the federal and state securities laws and the rules and regulations thereunder and does not and will not include, as it relates to the Company and the Acquiring Fund, any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, except that no representations and warranties in this paragraph 4.2(c) apply to statements or omissions made in reliance upon and in conformity with written information concerning the Company or the Target Fund furnished to the Company by the Target Fund. Any written information furnished by the Company with respect to the Company or the Acquiring Fund for use in the Registration Statement or any other materials provided by the Acquiring Fund in connection with the Reorganization, as of the effective date of the Registration Statement and at all times subsequent thereto up to and including the Closing Date, does not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated or necessary to make the statements, in light of the circumstances under which such statements were made, not misleading.

(d) The prospectus, statement of additional information and shareholder reports of the Company, in each case relating to the Acquiring Fund, and to the extent incorporated by reference in the Registration Statement, are accurate and complete in all material respects and comply in all material respects with federal securities and other applicable laws and regulations, and do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or necessary to make the statements, in light of the circumstances in which such statements were made, not misleading.

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(e) The Acquiring Fund is not in violation of, and, subject to the satisfaction of the conditions precedent set forth in Articles VII and VIII of this Agreement, the execution, delivery and performance of this Agreement in accordance with its terms by the Company, on behalf of the Acquiring Fund, will not result in the violation of, Massachusetts law or any provision of the Company’s declaration of trust or code of regulations or of any material agreement, indenture, note, mortgage, instrument, contract, lease or other undertaking to which the Company is a party, on behalf of the Acquiring Fund, or by which the Acquiring Fund is bound, nor will the execution, delivery and performance of this Agreement by the Company, on behalf of the Acquiring Fund, result in the acceleration of any obligation, or the imposition of any penalty, under any material agreement, indenture, instrument, contract, lease or other undertaking to which the Company is a party, on behalf of the Acquiring Fund, or by which the Acquiring Fund is bound.

(f) No litigation, claims, actions, suits, proceedings or investigations of or before any court or governmental body are pending or to the Company’s knowledge threatened against the Acquiring Fund or any of its properties or assets which, if adversely determined, would materially and adversely affect the Acquiring Fund’s financial condition, the conduct of its business or which would prevent or hinder the ability of the Acquiring Fund to carry out the transactions contemplated by this Agreement. The Company knows of no facts that might form the basis for the institution of such proceedings and is not a party to or subject to the provisions of any order, decree or judgment of any court or governmental body that materially and adversely affects its business or its ability to consummate the transactions contemplated herein.

(g) (i) The audited financial statements of the Acquiring Fund as of September 30, 2010, and for the fiscal year then ended, have been prepared in accordance with GAAP consistently applied and have been audited by Deloitte & Touche LLP, and such statements (true and complete copies of which have been furnished to the Target Fund) fairly reflect the financial condition and the results of operations of the Acquiring Fund as of such date and the results of operations and changes in net assets for the periods indicated, and there are no material liabilities of the Acquiring Fund whether actual or contingent and whether or not determined or determinable as of such date that are required to be disclosed but are not disclosed in such statements; and (ii) the unaudited financial statements of the Acquiring Fund for the six months ended March 31, 2011 will be prepared in accordance with GAAP consistently applied by the Acquiring Fund, and such statements (true and complete copies of which will have been furnished to the Target Fund) will fairly reflect in all material respects the financial condition and the results of operations of Acquiring Fund as of such date and the results of operations and changes in net assets for the periods indicated, and there are no material liabilities of the Acquiring Fund whether actual or contingent and whether or not determined or determinable as of such date that are required by GAAP consistently applied, to be disclosed but are not disclosed in such statements.

(h) There have been no changes in the financial position of the Acquiring Fund as reflected in the audited financial statements of the Acquiring Fund as of September 30, 2010, other than those occurring in the ordinary course of business consistent with past practice in connection with the purchase and sale of portfolio assets, the issuance and redemption of Acquiring Fund shares and the payment of normal operating expenses, dividends and capital gains distributions. Since the date of the financial statements referred to in paragraph 4.2(g) above, there has been no material adverse change in the Acquiring Fund’s financial condition, assets, liabilities or business, results of operations or the manner of conducting business of the Acquiring Fund (other than changes occurring in the ordinary course of business). For the purposes of this paragraph 4.2(h), a decline in the net asset value of the Acquiring Fund due to declines in the value of the Acquiring Fund’s assets, the discharge of Acquiring Fund’s liabilities or the redemption of Acquiring Fund shares by Acquiring Fund shareholders shall not constitute a material adverse change.

(i) Since September 30, 2010, there has not been (i) any pending or to the knowledge of the Company threatened litigation, which has had or may have a material adverse effect on the business, results of operations, assets or financial condition of the Acquiring Fund; (ii) any option to purchase or other right to acquire shares of the Acquiring Fund issued or granted by or on behalf of the Acquiring Fund to any person other than subscriptions to purchase shares at net asset value in accordance with the terms in the current

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prospectus for the Acquiring Fund; (iii) any contract or agreement or amendment or termination of any contract or agreement entered into by or on behalf of the Acquiring Fund, except as otherwise contemplated by this Agreement; (iv) any indebtedness incurred, other than in the ordinary course of business, by or on behalf of the Acquiring Fund for borrowed money or any commitment to borrow money by or on behalf of the Acquiring Fund; (v) any amendment of the Acquiring Fund’s organizational documents in a manner materially affecting the Acquiring Fund; and (vi) any grant or imposition of any lien, claim, charge or encumbrance (other than encumbrances arising in the ordinary course of business with respect to covered options) upon any asset of the Acquiring Fund other than a lien for taxes not yet due and payable.

(j) As of the date hereof and at the Closing Date, all federal and other tax returns and reports of the Acquiring Fund required by law to be filed have or shall have been timely and duly filed by such dates (including any extensions) and are or will be correct in all material respects, and all federal and other taxes required to be paid pursuant to such returns and reports have been paid. To the best of the Acquiring Fund’s knowledge after reasonable investigation, no such return is currently under audit or examination, and no assessment or deficiency has been asserted with respect to any such returns.

(k) The Company is authorized to issue an unlimited number of shares of beneficial interest, par value $0.001 per share, of the Acquiring Fund. All issued and outstanding shares of beneficial interest of the Acquiring Fund have been offered and sold in compliance in all material respects with applicable registration requirements of the 1933 Act and applicable state securities laws and are, and on the Closing Date will be, duly authorized and validly issued and outstanding, fully paid and nonassessable, and are not subject to preemptive or dissenter’s rights. The Acquiring Fund has no outstanding options, warrants or other rights to subscribe for or purchase any of the Acquiring Fund shares and has no outstanding securities convertible into any of the Acquiring Fund shares.

(l) At the Closing Date, the Acquiring Fund will have good and marketable title to all of its assets, and full right, power and authority to sell, assign, transfer and deliver such assets, free of any lien or other encumbrance, except those liens or encumbrances as to which the Target Fund has received notice at or prior to the Closing Date, and which have been taken into account in the net asset valuation of the Acquiring Fund.

(m) The Company, on behalf of the Acquiring Fund, has the power to enter into this Agreement and to consummate the transactions contemplated herein. The execution, delivery and performance of this Agreement and consummation of the transactions contemplated herein have been duly authorized by all necessary action on the part of the Trustees of the Company. This Agreement constitutes a valid and binding obligation of the Acquiring Fund, enforceable in accordance with its terms, and no other action or proceedings by the Company, on behalf of the Acquiring Fund, are necessary to authorize this Agreement and the transactions contemplated herein, subject as to enforcement to bankruptcy, insolvency, reorganization, moratorium and other laws relating to or affecting creditors’ rights and to general equity principles.

(n) The Acquiring Fund Shares to be issued and delivered to the Target Fund for the account of the Target Fund Shareholders pursuant to the terms of this Agreement will, at the Closing Date, have been duly authorized. When so issued and delivered, the Acquiring Fund Shares will be duly and validly issued and will be fully paid and nonassessable (except as disclosed in the Acquiring Fund’s prospectus).

(o) The information to be furnished by the Acquiring Fund for use in no-action letters, applications for orders, registration statements, proxy materials and other documents that may be necessary in connection with the transactions contemplated herein shall be accurate and complete in all material respects and shall comply in all material respects with federal securities and other applicable laws and regulations.

(p) The Acquiring Fund has elected to qualify and has qualified as a RIC as of and since its first taxable year; has been a RIC under the Code at all times since the end of its first taxable year when it so qualified; qualifies and will continue to qualify as a RIC under the Code for its taxable year through the date of Reorganization; and has satisfied the distribution requirements imposed by the Code for each of its taxable years.

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(q) Except for the Registration Statement, no consent, approval, authorization or order under any federal or state law or of any court or governmental authority is required for the consummation by the Acquiring Fund of the transactions contemplated herein, except those that have already been obtained. No consent of or notice to any third party or entity is required for the consummation by the Acquiring Fund of the transactions contemplated by this Agreement.

ARTICLE V

COVENANTS OF THE COMPANY, ON BEHALF OF THE ACQUIRING FUND, AND THE COMPANY, ON BEHALF OF THE TARGET FUND

5.1 OPERATION IN ORDINARY COURSE. Subject to paragraphs 7.2 and 7.5, each of the Acquiring Fund and the Target Fund will operate its business in the ordinary course of business between the date of this Agreement and the Closing Date, it being understood that such ordinary course of business will include customary dividends and shareholder purchases and redemptions. No party shall take any action that would, or would reasonably be expected to, result in any of its representations and warranties set forth in this Agreement being or becoming untrue in any material respect.

5.2 STATEMENT OF ASSETS AND LIABILITIES. The Target Fund will prepare and deliver to the Acquiring Fund at least five business days prior to the Closing Date a statement of the assets and the liabilities of the Target Fund as of such date for review and agreement by the parties to determine that the assets and the liabilities of the Target Fund are being correctly determined in accordance with the terms of this Agreement. The Target Fund will deliver at the Closing (1) a statement of Assets and Stated Liabilities of the Target Fund as of the Valuation Time and (2) a list of the Target Fund’s Assets as of the Closing Date showing the tax costs of each of its assets by lot and the holding periods of such Assets, and certified by the Treasurer or Assistant Treasurer of the Target Fund.

5.3 ACCESS TO BOOKS AND RECORDS. Upon reasonable notice, the Target Fund shall make available to the Company’s officers and agents all books and records of the Company relating to the Target Fund, and the Acquiring Fund shall make available to the Company’s officers and agents all books and records of the Company relating to the Acquiring Fund.

5.4 ADDITIONAL INFORMATION. The Target Fund will assist the Acquiring Fund in obtaining such information as the Acquiring Fund reasonably requests concerning the beneficial ownership of the Target Fund’s shares.

5.5 CONTRACT TERMINATION. The Company, on behalf of the Target Fund, will terminate all agreements to which the Company, on behalf of the Target Fund, is a party (other than this Agreement), effective as of the Closing Date without any liability not paid prior to the Closing Date other than as accrued as part of the Stated Liabilities.

5.6 FURTHER ACTION. Subject to the provisions of this Agreement, the Acquiring Fund and the Target Fund will take or cause to be taken all action and do or cause to be done all things reasonably necessary, proper or advisable to consummate and make effective the transactions contemplated by this Agreement, including any actions required to be taken after the Closing Date. In particular, the Company, on behalf of the Target Fund, covenants that it will, as and when reasonably requested by the Acquiring Fund, execute and deliver or cause to be executed and delivered all such assignments and other instruments and will take or cause to be taken such further action as the Acquiring Fund may reasonably deem necessary or desirable in order to vest in and confirm the Acquiring Fund’s title to and possession of all the Assets and otherwise to carry out the intent and purpose of this Agreement.

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5.7 PREPARATION OF REGISTRATION STATEMENT. The Company, on behalf of the Acquiring Fund, will prepare and file with the Commission the Registration Statement relating to the Acquiring Fund Shares to be issued to shareholders of the Target Fund. The Registration Statement shall include a Combined Prospectus/Information Statement relating to the transactions contemplated by this Agreement. At the time the Registration Statement becomes effective and at the Closing Date, the Registration Statement shall be in compliance in all material respects with the 1933 Act, the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the 1940 Act, as applicable. Each party will provide the materials and information necessary to prepare the Registration Statement, for inclusion therein, including in the case of the Target Fund any special interim financial information necessary for inclusion therein. If at any time prior to the Closing Date a party becomes aware of any untrue statement of material fact or omission to state a material fact required to be stated therein or necessary to make the statements made not misleading in light of the circumstances under which they were made, the party discovering the item shall notify the other party and the parties shall cooperate in promptly preparing and filing with the Commission and, if appropriate, distributing to shareholders appropriate disclosure with respect to the item.

5.8 TAX STATUS OF REORGANIZATION. The intention of the parties is that the transaction contemplated by this Agreement will qualify as a reorganization within the meaning of Section 368(a) of the Code.

Neither the Acquiring Fund (nor the Company on behalf of the Acquiring Fund) nor the Target Fund (nor the Company on behalf of the Target Fund) shall take any action or cause any action to be taken (including, without limitation, the filing of any tax return) that is inconsistent with such treatment or results in the failure of the transaction to qualify as a reorganization within the meaning of Section 368(a) of the Code. At or prior to the Closing Date, the Acquiring Fund and the Target Fund will take such action, or cause such action to be taken, as is reasonably necessary to enable Willkie Farr & Gallagher LLP, special United States federal income tax counsel to the Acquiring Fund and the Target Fund, to render the tax opinion required herein (including, without limitation, each party’s execution of representations reasonably requested by and addressed to Willkie Farr & Gallagher LLP).

5.9 REASONABLE BEST EFFORTS. The Company, on behalf of each of the Acquiring Fund and the Target Fund, shall use its reasonable best efforts to fulfill or obtain the fulfillment of the conditions precedent to effect the transactions contemplated by this Agreement.

5.10 AUTHORIZATIONS. The Company, on behalf of the Acquiring Fund, agrees to use all reasonable efforts to obtain the approvals and authorizations required by the 1933 Act, the 1940 Act and any state blue sky or securities laws as it may deem appropriate in order to operate in the normal course of business after the Closing Date.

5.11 STATEMENT OF EARNINGS AND PROFITS. As promptly as practicable, the Company shall furnish to the Acquiring Fund, in such form as is reasonably satisfactory to the Acquiring Fund, a statement of the earnings and profits of the Target Fund for U.S. federal income tax purposes, as well as any capital loss carryovers and items that the Acquiring Fund will succeed to and take into account as a result of Section 381 of the Code.

5.12 INFORMATION STATEMENT. The Company, on behalf of the Target Fund, agrees to mail to shareholders who owned shares of the Target Fund as of April 27, 2011, the combined prospectus/information statement contained in the Registration Statement, which complies in all material respects with the 1933 Act, the Exchange Act, the 1940 Act, and the rules and regulations, respectively, thereunder.

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ARTICLE VI

CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY, ON BEHALF OF THE TARGET FUND

The obligations of the Company, on behalf of the Target Fund, to consummate the transactions provided for herein shall be subject, at its election, to the performance by the Company, on behalf of the Acquiring Fund, of all the obligations to be performed by the Acquiring Fund (or the Company, on behalf of the Acquiring Fund), pursuant to this Agreement on or before the Closing Date and, in addition, subject to the following conditions:

6.1 All representations, covenants and warranties of the Company, on behalf of the Acquiring Fund, contained in this Agreement shall be true and correct in all material respects as of the date hereof and as of the Closing Date, with the same force and effect as if made on and as of the Closing Date.

6.2 The Board of Trustees of the Company has approved this Agreement, with respect to the Target Fund.

6.3 As of the Closing Date, there shall have been no material change in the investment objectives, policies and restrictions nor any material increase in the investment management fee rate or other fee rates the Acquiring Fund is currently contractually obligated to pay for services provided to the Acquiring Fund nor any material reduction in the fee waiver or expense reduction undertakings (either voluntary or contractual) from those described in the Registration Statement, if any.

ARTICLE VII

CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY, ON BEHALF OF THE ACQUIRING FUND

The obligations of the Company, on behalf of the Acquiring Fund, to consummate the transactions provided for herein shall be subject, at its election, to the performance by the Target Fund of all the obligations to be performed by the Target Fund pursuant to this Agreement on or before the Closing Date and, in addition, shall be subject to the following conditions:

7.1 All representations, covenants and warranties of the Company, on behalf of the Target Fund, contained in this Agreement shall be true and correct in all material respects as of the date hereof and as of the Closing Date, with the same force and effect as if made on and as of the Closing Date.

7.2 Except to the extent prohibited by Rule 19b-1 under the 1940 Act, prior to the valuation of the Assets as of the Valuation Time, the Target Fund shall have declared a dividend, dividends or other distribution or distributions, with a record and ex-dividend date prior to the valuation of the Assets, which, together with all previous dividends and distributions, shall have the effect of distributing to the Target Fund Shareholders all of the Target Fund’s investment company taxable income for all taxable periods ending on or before the Closing Date (computed without regard to any deduction for dividends paid), if any, plus the excess of its interest income, if any, excludable from gross income under Section 103(a) of the Code over its deductions disallowed under Sections 265 and 171(a)(2) of the Code for all taxable periods ending on or before the Closing Date and all of its net capital gains realized in all taxable periods ending on or before the Closing Date (after reduction for any capital loss carryforward).

7.3 The Board of Trustees of the Company has approved this Agreement with respect to the Acquiring Fund.

7.4 As of the Closing Date, there shall have been no material change in the investment objectives, policies and restrictions or any material increase in the investment management fee rate or other fee rates the Target Fund

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is currently contractually obligated to pay for services provided to the Target Fund nor any material reduction in the fee waiver or expense reduction undertakings (either voluntary or contractual) from those described in the Registration Statement.

7.5 The Company, on behalf of the Target Fund, shall have taken all steps required to terminate all agreements to which the Target Fund is a party (other than this Agreement) and pursuant to which the Target Fund has outstanding or contingent liabilities, unless such liabilities have been accrued as part of the Stated Liabilities.

ARTICLE VIII

FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY, ON BEHALF OF EACH OF THE ACQUIRING FUND AND THE TARGET FUND

If any of the conditions set forth below shall not have been satisfied on or before the Closing Date or shall not remain satisfied with respect to the Company, the Target Fund or the Acquiring Fund, the other party to this Agreement shall, at its option, not be required to consummate the transactions contemplated by this Agreement:

8.1 [Intentionally left blank]

8.2 The Commission shall not have issued an unfavorable report under Section 25(b) of the 1940 Act, or instituted any proceeding seeking to enjoin the consummation of the transactions contemplated by this Agreement under Section 25(c) of the 1940 Act.

8.3 All third party consents and all consents, orders and permits of federal, state and local regulatory authorities (including those of the Commission and of state securities authorities, including any necessary “no-action” positions and exemptive orders from such federal authorities) in each case required to permit consummation of the transactions contemplated herein shall have been obtained, except where failure to obtain any such consent, order or permit would not reasonably be expected to have a material adverse effect on the assets or properties of the Acquiring Fund or the Target Fund, provided that any party hereto may waive any such conditions for itself.

8.4 The Registration Statement shall have become effective under the 1933 Act, and no stop orders suspending the effectiveness thereof shall have been issued. To the best knowledge of the parties to this Agreement, no investigation or proceeding for that purpose shall have been instituted or be pending, threatened or contemplated under the 1933 Act. The registration statement of the Acquiring Fund on Form N-1A under the 1933 Act covering the sale of shares of the Acquiring Fund shall be effective.

8.5 As of the Closing Date, there shall be no pending litigation brought by any person against the Target Fund, the Acquiring Fund or the Company or any of the investment advisers, directors, trustees or officers of the foregoing, as applicable, arising out of, or seeking to prevent completion of the transactions contemplated by, this Agreement. Furthermore, no action, suit or other proceeding shall be pending before any court or governmental agency in which it is sought to restrain or prohibit, or obtain damages or other relief in connection with, this Agreement or the transactions contemplated herein.

8.6 The Company, on behalf of the Acquiring Fund, and the Company, on behalf of the Target Fund, each shall have received an opinion of Willkie Farr & Gallagher LLP, special United States tax counsel to the Acquiring Fund and the Target Fund, substantially to the effect that, based on certain facts, assumptions and representations of the parties, for federal income tax purposes:

(a) the transfer of the Assets of the Target Fund solely in exchange for Acquiring Fund Shares and the assumption by the Acquiring Fund of the Stated Liabilities of the Target Fund followed by the distribution

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of Acquiring Fund Shares to the Target Fund Shareholders in complete dissolution and liquidation of the Target Fund, all pursuant to the Agreement, will constitute a “reorganization” within the meaning of Section 368(a) of the Code, and the Acquiring Fund and the Target Fund will each be a “party to a reorganization” within the meaning of Section 368(b) of the Code;

(b) under Section 1032 of the Code, no gain or loss will be recognized by the Acquiring Fund upon the receipt of the Assets of the Target Fund solely in exchange for Acquiring Fund Shares and the assumption by the Acquiring Fund of the Stated Liabilities of the Target Fund;

(c) under Sections 361 and 357(a) of the Code, no gain or loss will be recognized by the Target Fund upon the transfer of the Assets of the Target Fund to the Acquiring Fund solely in exchange for Acquiring Fund Shares and the assumption by the Acquiring Fund of the Stated Liabilities of the Target Fund or upon the distribution of Acquiring Fund Shares to Target Fund Shareholders in exchange for such shareholders’ shares of the Target Fund in liquidation of the Target Fund, except for any gain or loss that may be required to be recognized solely or as a result of the close of the Target Fund’s taxable year due to the Reorganization or as a result of the transfer of any stock in a passive foreign investment company as defined in Section 1297(a) of the Code;

(d) under Section 354 of the Code, no gain or loss will be recognized by the Target Fund Shareholders upon the exchange of their Target Fund shares solely for Acquiring Fund Shares pursuant to the Reorganization;

(e) under Section 358 of the Code, the aggregate tax basis of Acquiring Fund Shares received by each Target Fund Shareholder pursuant to the Reorganization will be the same as the aggregate tax basis of the Target Fund shares exchanged therefor by such shareholder;

(f) under Section 1223(1) of the Code, the holding period of Acquiring Fund Shares to be received by each Target Fund Shareholder pursuant to the Reorganization will include the period during which the Target Fund shares exchanged therefor were held by such shareholder, provided such Target Fund shares are held as capital assets at the time of the Reorganization;

(g) under Section 362(b) of the Code, the tax basis of the Assets acquired by the Acquiring Fund will be the same as the tax basis of such Assets to the Target Fund immediately before the Reorganization, except for certain adjustments that may be required to be made solely as a result of the close of the Target Fund’s taxable year due to the Reorganization or as a result of gain recognized on the transfer of certain assets of the Target Fund; and

(h) under Section 1223(2) of the Code, the holding period of the Assets in the hands of the Acquiring Fund will include the period during which those Assets were held by the Target Fund except for any assets which may be marked to market for U.S. federal income tax purposes on the termination of the Target Fund’s taxable year or on which gain was recognized upon the transfer to the Acquiring Fund.

Such opinion shall be based on customary assumptions and such representations as Willkie Farr & Gallagher LLP may reasonably request, and each of the Target Fund and the Acquiring Fund will cooperate to make and certify the accuracy of such representations. Notwithstanding anything herein to the contrary, neither the Company, on behalf of the Acquiring Fund, nor the Company, on behalf of the Target Fund, may waive the conditions set forth in this paragraph 8.6.

The Tax Opinion will not express an opinion as to the effect of the Reorganization on the Target Fund with respect to the recognition of any unrealized gain or loss for any Asset that is required to be marked to market for U.S. federal income tax purposes upon termination of the Target Fund’s taxable year or as a result of the transfer of certain assets of the Target Fund.

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ARTICLE IX

EXPENSES

The Target Fund, the Acquiring Fund and any other open-end investment company that sells substantially all of its assets to the Acquiring Fund on or about the Closing Date (for purposes of this Article IX only, each, a “Fund”) will bear expenses incurred in connection with the Reorganization, including but not limited to, costs and expenses (including legal fees) related to the preparation and distribution of materials to the Board, attending the Board meetings and preparing the minutes of the Board meetings, obtaining an opinion of counsel as to certain tax matters, the preparation of this Agreement and the Registration Statement, fees of the Commission and any state securities commission, transfer agency fees, auditing fees associated with each Fund’s financial statements, portfolio transfer taxes (if any), expenses relating to preparing, printing and mailing the Combined Prospectus/Information Statement included in the Registration Statement and any other legal and auditing fees in connection with the foregoing, which expenses will be borne directly by the respective Fund incurring the expense or allocated among the Funds based upon methodology as appropriate, unless BlackRock Advisors, LLC or one of its affiliates has agreed to bear the expenses of a particular Fund pursuant to a separate arrangement between BlackRock Advisors, LLC and such Fund. Neither the Funds nor the investment adviser will pay any expenses of shareholders arising out of or in connection with the Reorganization.

ARTICLE X

ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES

10.1 The Company, on behalf of the Acquiring Fund, and the Company, on behalf of the Target Fund, agree that no party has made to the other party any representation, warranty and/or covenant not set forth herein and that this Agreement constitutes the entire agreement between the parties.

10.2 The representations and warranties of the parties hereto set forth in this Agreement shall not survive the consummation of the transactions contemplated herein.

ARTICLE XI

TERMINATION

11.1 This Agreement may be terminated by the mutual agreement of the Company on behalf of the Acquiring Fund and the Company on behalf of the Target Fund. In addition, the Company, on behalf of the Acquiring Fund, or the Company, on behalf of the Target Fund, may at its option terminate this Agreement at or before the Closing Date due to:

(a) a material breach by the other of any representation, warranty or agreement contained herein to be performed at or before the Closing Date, if not cured within 30 days; or

(b) a condition herein expressed to be precedent to the obligations of the terminating party or both parties that has not been met if it reasonably appears that it will not or cannot be met.

11.2 In the event of any such termination, in the absence of willful default, there shall be no liability for damages on the part of a party, or its Board of Trustees, or officers, as applicable, to the other party or its Board of Trustees. In the event of willful default, all remedies at law or in equity of the party adversely affected shall survive.

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ARTICLE XII

AMENDMENTS

This Agreement may be amended, modified or supplemented in such manner as may be mutually agreed upon in writing by the officers of the Company, on behalf of the Acquiring Fund, or the Company, on behalf of the Target Fund as specifically authorized by their respective Board of Trustees.

ARTICLE XIII

HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF LIABILITY

13.1 The article and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

13.2 This Agreement may be executed in any number of counterparts, each of which shall be deemed an original.

13.3 This Agreement shall be governed by and construed in accordance with the laws of the State of New York without giving effect to principles of conflicts of law.

13.4 This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and assigns, but, except as provided in this paragraph, no assignment or transfer hereof or of any rights or obligations hereunder shall be made by any party without the written consent of the other party. Nothing herein expressed or implied is intended or shall be construed to confer upon or give any person, firm or corporation, other than the parties hereto and their respective successors and assigns, any rights or remedies under or by reason of this Agreement.

13.5 It is expressly agreed that the obligations of the Acquiring Fund and the Target Fund hereunder shall not be binding upon any of the Company, or its Trustees, shareholders, nominees, officers, agents or employees personally, but shall bind only the property of the Target Fund and the Acquiring Fund, as provided in the Company’s declaration of trust and code of regulations. Moreover, no series of the Company other than the Acquiring Fund and the Target Fund, shall be responsible for the obligations of the Acquiring Fund or Target Fund hereunder, and all persons shall look only to the assets of the Acquiring Fund and Target Fund to satisfy the obligations of the Acquiring Fund and Target Fund hereunder. The execution and delivery of this Agreement have been authorized by the Board of Trustees of the Company on behalf of the Acquiring Fund, and the Board of Trustees of the Company on behalf of the Target Fund, and signed by authorized officers of the Company, acting as such. Neither the authorization by such Board of Trustees nor the execution and delivery by such officers shall be deemed to have been made by any of them individually or to impose any liability on any of them personally, but shall bind only the property of the Acquiring Fund and Target Fund as provided in the Company’s declaration of trust and code of regulations.

ARTICLE XIV

NOTICES

Any notice, report, statement or demand required or permitted by any provisions of this Agreement shall be in writing and shall be deemed duly given if delivered by hand (including by FedEx or similar express courier) or transmitted by facsimile or three days after being mailed by prepaid registered or certified mail, return receipt requested, addressed to the applicable party: to the Target Fund, 100 Bellevue Parkway, Wilmington, Delaware 19809, Attention: John M. Perlowski, Chief Executive Officer, or to the Acquiring Fund, 100 Bellevue Parkway,

II-17

Wilmington, Delaware 19809, Attention: John M. Perlowski, Chief Executive Officer, or to any other address that the Target Fund or the Acquiring Fund shall have last designated by notice to the other party.

IN WITNESS WHEREOF, the parties have duly executed this Agreement, all as of the date first written above.

BLACKROCK FUNDS II, ON BEHALF OF ITS SERIES, [BLACKROCK BOND PORTFOLIO] [BLACKROCK MANAGED INCOME PORTFOLIO]
By:
	Name:
	Title:

BLACKROCK FUNDS II, ON BEHALF OF ITS SERIES, BLACKROCK TOTAL RETURN PORTFOLIO II
By:
	Name:
	Title:

II-18

BLACKROCK FUNDS II

BlackRock Bond Portfolio

BlackRock Managed Income Portfolio

BlackRock Total Return Portfolio II

PART B

STATEMENT OF ADDITIONAL INFORMATION

May 16, 2011

This Statement of Additional Information (the “SAI”) relates to the reorganization (“Reorganization”) of each of the BlackRock Bond Portfolio (the “Bond Portfolio”) and the BlackRock Managed Income Portfolio (the “Managed Income Portfolio,” and together with the Bond Portfolio, the “Target Funds” and each, a “Target Fund”), each a series of BlackRock Funds II (the “Trust”), into the BlackRock Total Return Portfolio II (the “Total Return Portfolio II” or the “Acquiring Fund” and together with the Target Funds, the “Funds”), a series of the Trust.

This SAI contains information that may be of interest to shareholders of each Target Fund relating to the applicable Reorganization, but which is not included in the Combined Prospectus/Information Statement dated May 16, 2011 (the “Combined Prospectus/Information Statement”). As described in the Combined Prospectus/Information Statement, each Reorganization would involve the transfer of the assets of the relevant Target Fund in exchange for the assumption of certain stated liabilities of the Target Fund and shares of the Acquiring Fund. Each Target Fund will distribute the Acquiring Fund shares it receives to its shareholders in a complete liquidation of the Target Fund.

This SAI is not a prospectus, and should be read in conjunction with the Combined Prospectus/Information Statement. The Combined Prospectus/Information Statement has been filed with the Securities and Exchange Commission, and is available upon request and without charge by writing to Total Return Portfolio II, 100 Bellevue Parkway, Wilmington, Delaware 19809, or by calling (800) 441-7762.

Capitalized terms used in this SAI and not otherwise defined herein have the meanings given them in the Combined Prospectus/Information Statement.

S-1

TABLE OF CONTENTS

Additional Information about the Bond Portfolio, the Managed Income Portfolio and the Total Return Portfolio II	S-3
Financial Statements	S-3
Pro Forma Condensed Combined Schedule of Investments as of September 30, 2010 (Unaudited)	S-4
Pro Forma Condensed Combined Statement of Assets and Liabilities as of September 30, 2010 (Unaudited)	S-41
Pro Forma Condensed Combined Statement of Operations for the twelve months ended September  30, 2010 (Unaudited)	S-43
Notes to Pro Forma Condensed Combined Financial Statements (Unaudited)*	S-45

* The accompanying notes are an integral part of the pro forma condensed combined financial statements and schedule.

S-2

ADDITIONAL INFORMATION ABOUT THE BOND PORTFOLIO,

THE MANAGED INCOME PORTFOLIO AND

THE TOTAL RETURN PORTFOLIO II

For the Bond Portfolio: Incorporates by reference the Annual Report to Shareholders for the fiscal year ended September 30, 2010, filed December 2, 2010 (SEC Accession No. 0001193125-10-272918), as filed with the Securities and Exchange Commission (the “SEC”).

For the Managed Income Portfolio: Incorporates by reference the Annual Report to Shareholders for the fiscal year ended September 30, 2010, filed December 2, 2010 (SEC Accession No. 0001193125-10-272918), as filed with the SEC.

For the Total Return Portfolio II: Incorporates by reference the Statement of Additional Information included in the Registration Statement on Form N-1A of the Target and Acquiring Portfolio dated January 28, 2011, as supplemented (SEC Accession No. 0001193125-11-017534); and the Annual Report for the fiscal year ended September 30, 2010, filed December 2, 2010 (SEC Accession No. 0001193125-10-272918), as filed with the SEC.

FINANCIAL STATEMENTS

This SAI incorporates by reference (i) the Annual Report to Shareholders of the Bond Portfolio for the fiscal year ended September 30, 2010, (ii) the Annual Report to Shareholders of the Managed Income Portfolio for the fiscal year ended September 30, 2010 and (iii) the Annual Report to Shareholders of the Total Return Portfolio II for the fiscal year ended September 30, 2010, each of which have been filed with the SEC. Each of these reports contains historical financial information regarding the Funds. The financial statements therein, and, in the case of the Annual Reports, the reports of independent registered public accountants therein, are incorporated herein by reference.

Unaudited pro forma financial statements of the Bond Portfolio, Managed Income Portfolio and Total Return Portfolio II are provided on the following pages.

The unaudited pro forma condensed combined schedule of investments and pro forma condensed combined statement of assets and liabilities reflect financial positions as if the Reorganizations occurred on September 30, 2010. The unaudited pro forma condensed combined statement of operations reflects expenses for the twelve months ended September 30, 2010. The pro forma condensed combined financial statements give effect to the proposed exchange of assets of each Target Fund in consideration for the assumption of certain stated liabilities of each Target Fund and shares of the Acquiring Fund, with the Acquiring Fund being the surviving entity in each case. Each Reorganization will be accounted for as a tax-free reorganization in accordance with accounting principles generally accepted in the United States. The historical cost basis of the investments is carried over to the surviving entity. It is not anticipated that the BlackRock Total Return Portfolio II will sell any securities of the BlackRock Bond Portfolio or BlackRock Managed Income Portfolio acquired in the Reorganizations other than in the ordinary course of business.

S-3

Pro Forma Condensed Combined Schedule of Investments for

BlackRock Total Return Portfolio II, BlackRock Managed Income Portfolio and BlackRock Bond Portfolio

As of September 30, 2010 (Unaudited)

(Percentages shown are based on Combined Net Assets)

		BlackRock Managed Income Portfolio					BlackRock Bond Portfolio					BlackRock Total Return Portfolio II					BlackRock Total Return Portfolio II Pro Forma Combined
Asset-Backed Securities		Par (000)		Value			Par (000)		Value			Par (000)		Value			Par (000)		Value
321 Henderson Receivables I LLC:
Series 2010-2A, Class A, 4.07%, 1/15/28 (a)	USD		495	$	503,667	USD		—	$	—	USD		2,473	$	2,518,334	USD		2,968	$	3,022,001
Series 2010-1A, Class A, 5.56%, 8/15/35 (a)			1,825		1,986,501			3,381		3,680,869			7,318		7,967,250			12,524		13,634,620
AEP Texas Central Transition Funding LLC,
Series 2006-A, Class A4, 5.17%, 1/01/18			—		—			940		1,097,908			—		—			940		1,097,908
Ameriquest Mortgage Securities, Inc.,
Series 2004-R11, Class A1, 0.56%, 11/25/34 (b)			1,373		1,262,002			—		—			—		—			1,373		1,262,002
AMRESCO Independence Funding, Inc.,
Series 2000-1A, Class A, 1.40%, 1/15/27 (a)(b)			—		—			484		271,057			—		—			484		271,057
Bank of America Auto Trust,
Series 2009-2A, Class A2, 1.16%, 2/15/12 (a)			1,182		1,182,504			2,427		2,429,019			5,480		5,484,664			9,089		9,096,187
Bear Stearns Asset-Backed Securities Trust,
Series 2006-3, Class A1, 0.41%, 8/25/36 (b)			—		—			754		750,768			—		—			754		750,768
Capital One Multi-Asset Execution Trust:
Series 2004-A8, Class A8, 0.39%, 8/15/14 (b)			635		634,345			1,285		1,283,674			2,960		2,956,947			4,880		4,874,966
Series 2006-A5, Class A5, 0.32%, 1/15/16 (b)			460		455,665			—		—			2,150		2,129,741			2,610		2,585,406
Carrington Mortgage Loan Trust,
Series 2006-NC4, Class A1, 0.31%, 10/25/36 (b)			273		268,264			—		—			—		—			273		268,264
Conseco Financial Corp.,
Series 1996-7, Class A6, 7.65%, 10/15/27 (b)			819		830,684			263		266,789			—		—			1,082		1,097,473
Countrywide Asset-Backed Certificates,
Series 2007-12, Class 2A1, 0.61%, 5/25/29 (b)			—		—			2,938		2,723,309			—		—			2,938		2,723,309
Series 2004-14, Class A4, 0.54%, 6/25/35 (b)			181		173,460			—		—			616		591,134			797		764,594
Daimler Chrysler Auto Trust,
Series 2006-D, Class A4, 4.94%, 2/08/12			2,106		2,107,719			—		—			—		—			2,106		2,107,719
DT Auto Owner Trust,
Series 2007-A, Class A3, 5.60%,3/15/13 (a)(f)			—		—			1,399		1,401,331			—		—			1,399		1,401,331
Ford Credit Auto Owner Trust
Series 2007-A, Class A4B, 0.31%, 6/15/12 (b)			—		—			4,797		4792825			—		—			4,797		4,792,825
Series 2009-A, Class A3B, 2.76% 5/15/13 (b)			8,405		8,521,376			16,271		16,496,679			39,208		39,753,210			63,884		64,771,265
Globaldrive BV,
Series 2008-2, Class A, 4.00%, 10/20/2016	EUR		898		1,241,811	EUR		1,895		2,620,300	EUR		4,140		5,724,828	EUR		6,933		9,586,939
GSAA Trust
Series 2004-8, Class A3A, 0.63%, 9/25/34 (b)			—		—	USD		193		149,139			—		—	USD		193		149,139
Series 2006-5, Class 2A1, 0.33%, 3/25/36 (b)								—		—			2,140		1,669,738			2,140		1,669,738
Home Equity Asset Trust,
Series 2007-2, Class 2A1, 0.37%, 7/25/37 (b)	USD		588		579,099			—		—	USD		3,601		3,549,122			4,189		4,128,221

S-4

Pro Forma Condensed Combined Schedule of Investments for

BlackRock Total Return Portfolio II, BlackRock Managed Income Portfolio and BlackRock Bond Portfolio

As of September 30, 2010 (Unaudited)

(Percentages shown are based on Combined Net Assets)

		BlackRock Managed Income Portfolio					BlackRock Bond Portfolio					BlackRock Total Return Portfolio II					BlackRock Total Return Portfolio II Pro Forma Combined
Asset-Backed Securities (concluded)		Par (000)		Value			Par (000)		Value			Par (000)		Value			Par (000)		Value
IFC SBA Loan-Backed Adjustable Rate Certificate,
Series 1997-1, Class A, 1.25%, 1/15/24 (a)(b)	USD		—	$	—	USD		196	$	145,328	USD		—	$	—	USD		196	$	145,328
Lehman XS Trust,
Series 2005-5N, Class 3A2, 0.62%, 11/25/35 (b)			1,702		506,246			—		—			7,012		2,086,127			8,714		2,592,373
Maryland Insurance Backed Securities Trust,
Series 2006-1A, Class A, 5.55%, 12/10/65 (a)								—		—			18,935		11,361,000			18,935		11,361,000
Mercedes-Benz Auto Receivables Trust,
Series 2009-1, Class A3, 1.67%, 1/15/14			—		—			8,215		8,328,079			—		—			8,215		8,328,079
Nissan Auto Receivables Owner Trust,
Series 2009-A, Class A2, 2.94%, 7/15/11			30		30,443			59		58,940			142		141,961			231		231,344
Option One Mortgage Loan Trust,
Series 2007-5, Class 2A1, 0.35%, 5/25/37 (b)								—		—			3,562		3,433,864			3,562		3,433,864
PMC Capital LP,
Series 1998-1, Class A, 2.25%, 4/01/21 (a)(b)			—		—			490		342,880			—		—			490		342,880
Popular ABS Mortgage Pass-Through Trust,
Series 2006-D, Class A1, 0.32%, 11/25/46 (b)			—		—			92		91,515			—		—			92		91,515
Santander Drive Auto Receivables Trust:
Series 2010-A, Class A2, 1.37%, 8/15/13 (a)			1,200		1,203,547			2,325		2,331,873			4,860		4,874,367			8,385		8,409,787
Series 2010-A, Class A3, 1.83%, 11/17/14 (a)			930		940,056			1,800		1,819,464			3,770		3,810,765			6,500		6,570,285
Series 2010-A, Class A4, 2.39%, 6/15/17 (a)			470		479,007			910		927,439			1,900		1,936,411			3,280		3,342,857
SLM Student Loan Trust:
Series 2010-C, Class A1, 1.91%, 12/15/17 (a)(b)			1,275		1,275,835			2,605		2,605,961			5,355		5,356,697			9,235		9,238,493
Series 2008-5, Class A3, 1.62%, 1/25/18 (b)			2,410		2,483,213			3,040		3,132,351			10,260		10,571,685			15,710		16,187,249
Series 2005-4, Class A2, 0.58%, 4/26/21 (b)			1,181		1,178,009			2,101		2,095,710			5,565		5,550,322			8,847		8,824,041
Series 2008-5, Class A4, 2.20%, 7/25/23 (b)			4,810		5,038,998			6,150		6,442,794			20,750		21,737,883			31,710		33,219,675
Series 2005-8, Class A4, 1.25%, 1/25/28 (b)			—		—			7,725		7,586,614			—		—			7,725		7,586,614
Small Business Administration,
Series 2003-10A, Class 1, 4.63%, 3/10/13								—		—			4,125		4,332,558			4,125		4,332,558
Structured Asset Receivables Trust Certificates,
Series 2003-2A, 0.92%, 1/21/11 (a)(b)			1		1,265			2		1,767			4		4,414			7		7,446
Structured Asset Securities Corp.,
Series 2003-AL1, Class A, 3.36%, 4/25/31 (a)			—		—			1,674		1,593,553			—		—			1,674		1,593,553
Series 2007-BC1, Class A2, 0.31%, 2/25/37 (b)			1,216		1,169,309			—		—			—		—			1,216		1,169,309
SWB Loan-Backed Certificates,
Series 1999-1, Class A, 7.38%, 5/15/25 (a)			—		—			476		404,683			—		—			476		404,683
USAA Auto Owner Trust,
Series 2006-4, Class A4, 4.98%, 10/15/12			2,266		2,269,844			—		—			—		—			2,266		2,269,844
Total Asset-Backed Securities - 6.5%					36,322,869					75,872,618					147,543,022					259,738,509

S-5

Pro Forma Condensed Combined Schedule of Investments for

BlackRock Total Return Portfolio II, BlackRock Managed Income Portfolio and BlackRock Bond Portfolio

As of September 30, 2010 (Unaudited)

(Percentages shown are based on Combined Net Assets)

		BlackRock Managed Income Portfolio					BlackRock Bond Portfolio					BlackRock Total Return Portfolio II					BlackRock Total Return Portfolio II Pro Forma Combined
Corporate Bonds		Par (000)		Value			Par (000)		Value			Par (000)		Value			Par (000)		Value
Aerospace & Defense - 0.0%
United Technologies Corp., 5.70%, 4/15/40	USD		—	$	—	USD		400	$	458,212	USD		—	$	—	USD		400	$	458,212
Automobiles - 0.1%
Daimler Finance North America LLC:
5.75%, 9/08/11			—		—			2,300		2,401,556			—		—			2,300		2,401,556
6.50%, 11/15/13			—		—			475		543,318			—		—			475		543,318
					—					2,944,874					—					2,944,874
Beverages - 0.9%
Anheuser-Busch InBev Worldwide, Inc., 3.00%, 10/15/12			4,270		4,433,473			8,715		9,048,645			20,220		20,994,102			33,205		34,476,220
Capital Markets - 2.6%
The Goldman Sachs Group, Inc.:
5.25%, 10/15/13			1,475		1,603,166			5,075		5,515,977			6,645		7,222,397			13,195		14,341,540
3.70%, 8/01/15			1,080		1,104,960			5,570		5,698,728			4,530		4,634,693			11,180		11,438,381
5.38%, 3/15/20 (c)			1,750		1,844,521			3,200		3,372,838			11,300		11,910,336			16,250		17,127,695
6.00%, 6/15/20			690		758,922			3,220		3,541,636			2,780		3,057,686			6,690		7,358,244
Lehman Brothers Holdings, Inc., 6.75%, 12/28/17 (d)(e)			2,275		227			2,550		255			9,575		958			14,400		1,440
Morgan Stanley:
5.05%, 1/21/11 (c)			270		273,563			—		—			2,640		2,674,835			2,910		2,948,398
5.63%, 1/09/12								—		—			250		263,274			250		263,274
2.88%, 5/14/13 (b)			1,070		1,090,428			—		—			4,190		4,269,995			5,260		5,360,423
4.20%, 11/20/14 (c)(f)			2,250		2,332,622			5,655		5,862,657			8,690		9,009,105			16,595		17,204,384
4.00%, 7/24/15			540		550,336			1,090		1,110,864			2,290		2,333,833			3,920		3,995,033
6.25%, 8/28/17			340		371,752			2,875		3,143,488			115		125,740			3,330		3,640,980
5.63%, 9/23/19			925		963,065			—		—			—		—			925		963,065
UBS AG, 2.25%, 8/12/13			2,650		2,676,831			5,350		5,404,169			11,200		11,313,400			19,200		19,394,400
					13,570,393					33,650,612					56,816,252					104,037,257
Commercial Banks - 1.9%
Cie de Financement Foncier, 2.50%, 9/16/15 (a)			1,800		1,810,264			3,600		3,620,527			8,200		8,246,756			13,600		13,677,547
Deutsche Bank AG, 5.38%, 10/12/12			—		—			3,175		3,455,079			—		—			3,175		3,455,079
HSBC Bank Plc, 3.50%, 6/28/15 (a)			1,120		1,174,837			2,160		2,265,758			4,500		4,720,329			7,780		8,160,924
JPMorgan Chase Bank, N.A.:
6.00%, 7/05/17			1,535		1,737,479			3,575		4,046,571			11,975		13,554,598			17,085		19,338,648
6.00%, 10/01/17 9 (c)			2,335		2,650,477			930		1,055,650			—		—			3,265		3,706,127

S-6

Pro Forma Condensed Combined Schedule of Investments for

BlackRock Total Return Portfolio II, BlackRock Managed Income Portfolio and BlackRock Bond Portfolio

As of September 30, 2010 (Unaudited)

(Percentages shown are based on Combined Net Assets)

		BlackRock Managed Income Portfolio					BlackRock Bond Portfolio					BlackRock Total Return Portfolio II					BlackRock Total Return Portfolio II Pro Forma Combined
Corporate Bonds (continued)		Par (000)		Value			Par (000)		Value			Par (000)		Value			Par (000)		Value
Commercial Banks (concluded)
Stadshypotek AB, 1.45%, 9/30/13 (a)	USD		2,130	$	2,136,959	USD		4,330	$	4,344,146	USD		9,935	$	9,967,458	USD		16,395	$	16,448,563
The Toronto-Dominion Bank, 2.20%, 7/29/15 (a)			1,775		1,798,805			3,560		3,607,743			7,465		7,565,113			12,800		12,971,661
					11,308,821					22,395,474					44,054,254					77,758,549
Consumer Finance - 0.3%
American Express Credit Corp., 2.75%, 09/15/15			—		—			2,000		2,012,542			—		—			2,000		2,012,542
SLM Corp.
0.80%, 1/27/14 (b)			—		—			—		—			6,750		5,830,569			6,750		5,830,569
3.17%, 1/31/14 (b)			—		—			3,850		3,333,253			—		—			3,850		3,333,253
					—					5,345,795					5,830,569					11,176,364
Diversified Financial Services - 3.0%
AngloGold Ashanti Holdings Plc, 5.38%, 04/15/20			380		401,996			1,795		1,898,902			1,540		1,629,141			3,715		3,930,039
6.50%, 4/15/40								500		521,027								500		521,027
Bank of America Corp.:
5.63%, 10/14/16								—		—			3,000		3238509			3,000		3,238,509
6.00%, 9/01/17			670		725,420			2,400		2,598,518			—		—			3,070		3,323,938
5.75%, 12/01/17 (c)(f)			1,085		1,160,032			560		598,726			—		—			1,645		1,758,758
5.63%, 7/01/20 (c)			930		982,730			1,895		2,002,445			3,770		3,983,755			6,595		6,968,930
The Bear Stearns Cos. LLC:
5.50%, 8/15/11								1,850		1,928,403								1,850		1,928,403
6.95%, 8/10/12								3,575		3,951,973								3,575		3,951,973
BP Capital Markets Plc
3.13%, 3/10/12			2,155		2,197,201			4,175		4,256,759			10,220		10,420,138			16,550		16,874,098
5.25%, 11/07/13								1,200		1,306,958								1,200		1,306,958
Citigroup, Inc.:
4.75%, 5/19/15			790		831,153			3,265		3,435,084			3,675		3,866,442			7,730		8,132,679
5.38%, 8/09/20			940		972,554			2,415		2,498,636			3,585		3,709,156			6,940		7,180,346
Countrywide Financial Corp., 5.80%, 6/07/12								3,120		3,314,357								3,120		3,314,357
Crown Castle Towers LLC, 6.11%, 1/15/20 (a)			2,135		2,358,599			4,700		5,192,231			9,780		10,804,259			16,615		18,355,089
General Electric Capital Corp.:
4.88%, 10/21/10								4,120		4,128,063								4,120		4,128,063
0.65%, 4/10/12 (b)								1,025		1,019,944								1,025		1,019,944
5.50%, 1/08/20 (c)			1,300		1,422,080			5,650		6,180,580			7,525		8,231,658			14,475		15,834,318
4.38%, 9/16/20 (c)			1,230		1,234,555			2,510		2,519,295			5,770		5,791,366			9,510		9,545,216
JPMorgan Chase & Co., 0.96%, 2/26/13 (b)			445		446,718			—		—			3,480		3,493,436			3,925		3,940,154

S-7

Pro Forma Condensed Combined Schedule of Investments for

BlackRock Total Return Portfolio II, BlackRock Managed Income Portfolio and BlackRock Bond Portfolio

As of September 30, 2010 (Unaudited)

(Percentages shown are based on Combined Net Assets)

		BlackRock Managed Income Portfolio					BlackRock Bond Portfolio					BlackRock Total Return Portfolio II					BlackRock Total Return Portfolio II Pro Forma Combined
Corporate Bonds (continued)		Par (000)		Value			Par (000)		Value			Par (000)		Value			Par (000)		Value
Diversified Financial Services (concluded)
Osprey Trust/Osprey I, Inc., 7.80%, 1/15/49 (a)(b)(d)(e)						USD		—	$	—	USD		2,375	$	17,812	USD		2,375	$	17,812
TIAA Global Markets, Inc., 5.13%, 10/10/12 (a)								3,925		4,247,627								3,925		4,247,627
				$	12,733,038					51,599,528					55,185,672			—		119,518,238
Diversified Telecommunication Services - 1.6%
AT&T Inc., 6.50%, 9/01/37	USD		600		694,172			—		—			4,500		5,206,289			5,100		5,900,461
BellSouth Telecommunications, Inc., 0.00%, 12/15/95 (f)			900		661,987			—		—			—		—			900		661,987
France Telecom MSA, 7.75%, 3/01/11			—		—			—		—			600		617,607			600		617,607
Sprint Capital Corp., 7.63%, 1/30/11								635		645,319			—		—			635		645,319
Telecom Italia Capital SA
6.2—  %, 7/18/11			—		—			3,875		4,014,698			—		—			3,875		4,014,698
5.25%, 11/15/13			—		—			3,670		3,943,037			285		306,203			3,955		4,249,240
5.25%, 10/01/15			1,000		1,079,136			—		—			3,700		3,992,803			4,700		5,071,939
Telefonica Emisiones SAU:
5.98%, 6/20/11								3,500		3,630,046								3,500		3,630,046
5.86%, 2/04/13								1,875		2,046,004								1,875		2,046,004
4.95%, 1/15/15			900		984,764			—		—			4,525		4,951,174			5,425		5,935,938
6.42%, 6/20/16			600		703,241			2,275		2,666,457			2,475		2,900,871			5,350		6,270,569
TELUS Corp., 8.00%, 6/01/11								1,031		1,079,597								1,031		1,079,597
Verizon Communications, Inc., 8.75%, 11/01/18 (c)(f)			1,531		2,083,264			3,950		5,374,848			5,527		7,520,705			11,008		14,978,817
6.40%, 2/15/38								700		809,605								700		809,605
Verizon New England, Inc., 7.88%, 11/15/29			200		231,321			—		—			1,355		1,567,198			1,555		1,798,519
Verizon New Jersey, Inc., 5.88%, 1/17/12			—		—			5,215		5,523,483			—		—			5,215		5,523,483
					6,437,885					29,733,094					27,062,850					63,233,829
Electric Utilities - 1.2%
American Transmission Systems, Inc., 5.25%, 1/15/22 (a)			—		—			1,865		2,062,863			—		—			1,865		2,062,863
Carolina Power & Light Co., 5.30%, 1/15/19			—		—			2,425		2,818,105			—		—			2,425		2,818,105
The Detroit Edison Co., 6.35%, 10/15/32			—		—			—		—			5		5,941			5		5,941
Duke Energy Carolinas LLC
5.25%, 1/15/18			—		—			925		1,075,420			—		—			925		1,075,420
6.00%, 1/15/38			—		—			—		—			4,000		4,733,648			4,000		4,733,648
Duke Energy Corp., 3.35%, 4/01/15			—		—			1,000		1,055,170			—		—			1,000		1,055,170

S-8

Pro Forma Condensed Combined Schedule of Investments for

BlackRock Total Return Portfolio II, BlackRock Managed Income Portfolio and BlackRock Bond Portfolio

As of September 30, 2010 (Unaudited)

(Percentages shown are based on Combined Net Assets)

		BlackRock Managed Income Portfolio					BlackRock Bond Portfolio					BlackRock Total Return Portfolio II					BlackRock Total Return Portfolio II Pro Forma Combined
Corporate Bonds (continued)		Par (000)		Value			Par (000)		Value			Par (000)		Value			Par (000)		Value
Electric Utilities (concluded)
EDP Finance BV, 5.38%, 11/02/12 (a)(c)	USD		—	$	—	USD		8,435	$	8,763,408	USD		—	$	—	USD		8,435	$	8,763,408
Florida Power & Light Co.
4.95%, 6/01/35			600		618,347			—		—			2,275		2,344,567			2,875		2,962,914
5.69%, 3/01/40			—		—			400		460,070			—		—			400		460,070
Florida Power Corp.:
6.65%, 7/15/11			960		1,003,720			—		—			—		—			960		1,003,720
5.90%, 3/01/33			175		200,241			—		—			605		692,260			780		892,501
MidAmerican Energy Holdings Co.:
5.95%, 5/15/37			325		365,579			—		—			3,000		3,374,580			3,325		3,740,159
6.50%, 9/15/37			875		1,050,697			—		—			—		—			875		1,050,697
NiSource Finance Corp., 7.88%, 11/15/10								2,475		2,492,117			—		—			2,475		2,492,117
PacifiCorp
5.50%, 1/15/19			—		—			3,600		4,235,857			—		—			3,600		4,235,857
6.25%, 10/15/37			700		848,163			500		605,831			3,000		3,634,983			4,200		5,088,977
Progress Energy, Inc.:
7.10%, 3/01/11			—		—			3,914		4,011,733			—		—			3,914		4,011,733
6.00%, 12/01/39			—		—			400		451,785			—		—			400		451,785
Southern California Edison Co., 5.95%, 02/01/38			—		—			—		—			1,000		1,184,561			1,000		1,184,561
Tenaska Alabama II Partners LP, 6.13%, 3/30/23 (a)			—		—			—		—			116		126,684			116		126,684
09/01/40			—		—			400		391,103			—		—			400		391,103
					4,086,747					28,423,462					16,097,224					48,607,433
Energy Equipment & Services - 0.0%
Halliburton Co., 5.50%, 10/15/10			—		—			1,925		1,927,464			—		—			1,925		1,927,464
Food & Staples Retailing - 0.0%
Wal-Mart Stores, Inc., 5.63%, 4/01/40			—		—			500		566,435			—		—			500		566,435
Food Products - 0.6%
Kraft Foods, Inc.:
6.00%, 2/11/13								1,280		1,421,559								1,280		1,421,559
6.50%, 8/11/17								2,475		2,965,206			4,170		4995923			6,645		7,961,129
5.38%, 2/10/20			1,710		1,910,154			3,315		3,703,017			4,925		5,501,466			9,950		11,114,637
6.50%, 2/09/40			530		620,559			685		802,043			1,525		1,785,571			2,740		3,208,173
					2,530,713					8,891,825					12,282,960					23,705,498

S-9

Pro Forma Condensed Combined Schedule of Investments for

BlackRock Total Return Portfolio II, BlackRock Managed Income Portfolio and BlackRock Bond Portfolio

As of September 30, 2010 (Unaudited)

(Percentages shown are based on Combined Net Assets)

		BlackRock Managed Income Portfolio					BlackRock Bond Portfolio					BlackRock Total Return Portfolio II					BlackRock Total Return Portfolio II Pro Forma Combined
Corporate Bonds (continued)		Par (000)		Value			Par (000)		Value			Par (000)		Value			Par (000)		Value
Health Care Equipment & Supplies - 0.1%
CareFusion Corp., 6.38%, 8/01/19	USD		850	$	1,011,302	USD		—	$	—	USD		—	$	—	USD		850	$	1,011,302
Covidien International Finance SA, 2.80%, 06/15/15			330		341,963			630		652,839			1,320		1,367,853			2,280		2,362,655
					1,353,265					652,839					1,367,853					3,373,957
Health Care Providers & Services - 0.1%
UnitedHealth Group, Inc., 5.25%, 3/15/11			—		—			2,750		2,802,267			—		—			2,750		2,802,267
WellPoint, Inc., 5.00%, 1/15/11			—		—			2,000		2,023,312			—		—			2,000		2,023,312
					—					4,825,579					—					4,825,579
Insurance - 2.2%
Berkshire Hathaway Finance Corp., 4.75%, 5/15/2012			—		—			—		—			3,290		3,494,582			3,290		3,494,582
Hartford Life Global Funding Trusts, 0.47%, 6/16/14 (b)			—		—			5,100		4,789,323			7,700		7,230,939			12,800		12,020,262
Manulife Financial Corp., 3.40%, 9/17/15			1,030		1,039,820			4,090		4,128,994			4,820		4,865,954			9,940		10,034,768
MetLife, Inc.:
7.72%, 2/15/19			—		—			2,800		3,563,557			—		—			2,800		3,563,557
4.75%, 2/08/21			—		—			1,800		1,909,627			—		—			1,800		1,909,627
6.38%, 6/15/34			350		400,856			—		—			900		1,030,772			1,250		1,431,628
5.88%, 2/06/41			325		353,506			—		—			1,325		1,441,217			1,650		1,794,723
Metropolitan Life Global Funding I:
2.88%, 9/17/12 (a)			—		—			1,100		1,134,452			—		—			1,100		1,134,452
2.50%, 1/11/13 (a)			3,830		3,921,729			—		—			7,535		7,715,463			11,365		11,637,192
5.13%, 4/10/13 (a)(c)			2,750		2,993,086			—		—			7,000		7,618,765			9,750		10,611,851
5.13%, 6/10/14 (a)			—		—			3,625		4,021,531			—		—			3,625		4,021,531
New York Life Global Funding, 5.25%, 10/16/12 (a)(c)			—		—			4,825		5,235,728			—		—			4,825		5,235,728
Pricoa Global Funding I, 5.40%, 10/18/12 (a)			—		—			3,950		4,237,698			—		—			3,950		4,237,698
Prudential Financial, Inc.
5.80%, 6/15/12			—		—			2,250		2,406,049			—		—			2,250		2,406,049
4.75%, 9/17/15			1,825		1,973,679			—		—			4,000		4,325,872			5,825		6,299,551
5.38%, 6/21/20			—		—			900		972,856			—		—			900		972,856
Teachers Insurance & Annuity Association of America, 6.85%, 12/16/39 (a)			745		916,781			1,640		2,018,150			3,465		4,263,956			5,850		7,198,887
					11,599,457					34,417,965					41,987,520					88,004,942
Life Sciences Tools & Services - 0.0%
Life Technologies Corp., 6.00%, 3/01/20			635		719,336			—		—			—		—			635		719,336

S-10

Pro Forma Condensed Combined Schedule of Investments for

BlackRock Total Return Portfolio II, BlackRock Managed Income Portfolio and BlackRock Bond Portfolio

As of September 30, 2010 (Unaudited)

(Percentages shown are based on Combined Net Assets)

		BlackRock Managed Income Portfolio					BlackRock Bond Portfolio					BlackRock Total Return Portfolio II					BlackRock Total Return Portfolio II Pro Forma Combined
Corporate Bonds (continued)		Par (000)		Value			Par (000)		Value			Par (000)		Value			Par (000)		Value
Media - 1.8%
Comcast Cable Communications Holdings, Inc., 9.46%, 11/15/22	USD		—	$	—	USD		2,050	$	2,891,220	USD		—	$	—	USD		2,050	$	2,891,220
Comcast Corp.:
6.95%, 8/15/37			695		814,950			—		—			2,460		2,884,571			3,155		3,699,521
6.40%, 3/01/40			—		—			575		639,305			709		788,290			1,284		1,427,595
Cox Communications, Inc.
7.13%, 10/01/12			—		—			900		996,384			—		—			900		996,384
8.38%, 3/01/39 (a)			1,125		1,510,226			2,050		2,751,967			5,200		6,980,600			8,375		11,242,793
DIRECTV Holdings LLC/DIRECTV Financing Co.,
3.13%, 2/15/16								700		706,815								700		706,815
Inc., 6.00%, 8/15/40			310		320,160			630		650,648			1,390		1,435,556			2,330		2,406,364
Discovery Communications LLC, 3.70%, 6/1/2015			680		720,553			1,310		1,388,124			2,740		2,903,405			4,730		5,012,082
NBC Universal, Inc.:
5.15%, 4/30/20 (a)			985		1,063,727			1,870		2,019,462			3,965		4,281,907			6,820		7,365,096
4.38%, 4/01/21 (a)			1,305		1,320,900			2,650		2,682,288			6,095		6,169,261			10,050		10,172,449
News America Holdings, Inc.:
7.75%, 1/20/24			—		—			—		—			1,285		1,609,155			1,285		1,609,155
9.50%, 7/15/24								575		791,717								575		791,717
8.50%, 2/23/25			—		—			675		857,232			1,920		2,438,350			2,595		3,295,582
8.45%, 8/01/34			—		—			—		—			840		1,110,535			840		1,110,535
7.75%, 12/01/45			—		—			—		—			110		137,759			110		137,759
8.25%, 10/17/96			—		—			—		—			45		56,890			45		56,890
News America, Inc.:
7.13%, 4/08/28			300		342,132			—		—			1,175		1,340,017			1,475		1,682,149
7.63%, 11/30/28			1,150		1,377,508			—		—			2,010		2,407,644			3,160		3,785,152
TCI Communications, Inc.
7.88%, 2/15/26			—		—			—		—			2,540		3,146,908			2,540		3,146,908
7.13%, 2/15/28			620		709,822			—		—			—		—			620		709,822
Time Warner Cable, Inc., 5.00%, 2/01/20			470		503,338			950		1,017,384			2,090		2,238,246			3,510		3,758,968
Time Warner, Inc.:
4.70%, 1/15/21			280		296,684			570		603,964			1,320		1,398,654			2,170		2,299,302
6.10%, 7/15/40			190		204,596			380		409,193			870		936,836			1,440		1,550,625
Turner Broadcasting System, Inc., 8.38%, 07/01/13			—		—			300		348,631			—		—			300		348,631
					9,184,596					18,754,334					42,264,584					70,203,514

S-11

Pro Forma Condensed Combined Schedule of Investments for

BlackRock Total Return Portfolio II, BlackRock Managed Income Portfolio and BlackRock Bond Portfolio

As of September 30, 2010 (Unaudited)

(Percentages shown are based on Combined Net Assets)

		BlackRock Managed Income Portfolio					BlackRock Bond Portfolio					BlackRock Total Return Portfolio II					BlackRock Total Return Portfolio II Pro Forma Combined
Corporate Bonds (continued)		Par (000)		Value			Par (000)		Value			Par (000)		Value			Par (000)		Value
Metals & Mining - 0.0%
Teck Resources Ltd.:
4.50%, 1/15/21	USD		—	$	—	USD		500	$	518,011	USD		—	$	—	USD		500	$	518,011
6.00%, 8/15/40			—		—			500		524,469			—		—			500		524,469
					—					1,042,480					—					1,042,480
Multi-Utilities - 0.1%
CenterPoint Energy, Inc., 6.50%, 5/01/18			—		—			1,500		1,741,047			—		—			1,500		1,741,047
Dominion Resources, Inc., 5.20%, 8/15/19			—		—			500		571,753			—		—			500		571,753
					—					2,312,800					—					2,312,800
Oil, Gas & Consumable Fuels - 1.5%
Anadarko Petroleum Corp., 6.38%, 9/15/17			—		—			800		881,564			—		—			800		881,564
Atlantic Richfield Co., 9.13%, 3/01/11			—		—			—		—			4,960		5124493			4,960		5,124,493
Canadian Natural Resources Ltd., 6.50%, 02/15/37			900		1,061,276			1,500		1,768,794			3,700		4,363,025			6,100		7,193,095
6.25%, 3/15/38			—		—			500		574,815			—		—			500		574,815
Cenovus Energy, Inc., 6.75%, 11/15/39			810		977,968			2,500		3,018,420			3,975		4,799,288			7,285		8,795,676
CenterPoint Energy Resources Corp., 6.15%, 5/1/2016			—		—			—		—			2,100		2,407,247			2,100		2,407,247
Devon Financing Corp. ULC, 7.88%, 9/30/31			—		—			—		—			925		1,238,803			925		1,238,803
Enterprise Products Operating LLC, 6.13%,
6.50%, 1/31/19			—		—			—		—			1,725		2010249			1,725		2,010,249
5.25%, 1/31/20								700		757,842								700		757,842
5.20%, 9/01/20			—		—			—		—			2,275		2463470			2,275		2,463,470
6.13%, 10/15/39			675		726,549			1,225		1,318,552			2,300		2,475,649			4,200		4,520,750
Kinder Morgan Energy Partners LP, 5.30%, 9/15/2020			740		797,483			1,390		1,497,975			2,960		3,189,933			5,090		5,485,391
Rockies Express Pipeline LLC, 3.90%, 4/15/15 (a)			995		995,397			1,825		1,825,728			4,105		4,106,638			6,925		6,927,763
Valero Energy Corp., 6.63%, 6/15/37			1200		1,205,092			2,850		2,862,093			4,875		4,895,685			8,925		8,962,870
XTO Energy, Inc., 6.25%, 8/01/17			—		—			2,700		3,348,046			—		—			2,700		3,348,046
					5,763,765					17,853,829					37,074,480					60,692,074
Paper & Forest Products - 0.2%
7.95%, 6/15/18			—		—			—		—			4,000		4850996			4,000		4,850,996
International Paper Co., 7.30%, 11/15/39			520		582,135			975		1,091,504			1,885		2,110,241			3,380		3,783,880
					582,135					1,091,504					6,961,237					8,634,876

S-12

Pro Forma Condensed Combined Schedule of Investments for

BlackRock Total Return Portfolio II, BlackRock Managed Income Portfolio and BlackRock Bond Portfolio

As of September 30, 2010 (Unaudited)

(Percentages shown are based on Combined Net Assets)

		BlackRock Managed Income Portfolio					BlackRock Bond Portfolio					BlackRock Total Return Portfolio II					BlackRock Total Return Portfolio II Pro Forma Combined
Corporate Bonds (continued)		Par (000)		Value			Par (000)		Value			Par (000)		Value			Par (000)		Value
Pharmaceuticals - 0.1%
Abbott Laboratories, 5.60%, 5/15/11 (f)	USD		—	$	—	USD		1,315	$	1,357,657	USD		—	$	—	USD		1,315	$	1,357,657
Bristol-Myers Squibb Co., 6.88%, 8/01/97			—		—			—		—			559		680,366			559		680,366
Teva Pharmaceutical Finance Co. LLC, 6.15%, 02/01/36			—		—			400		480,748								400		480,748
					—					1,838,405					680,366					2,518,771
Road & Rail - 0.1%
Burlington Northern Santa Fe LLC, 5.75%, 05/01/40			770		849,753			—		—			3090		3,410,047			3860		4,259,800
Software - 0.1%
Oracle Corp.:
5.25%, 1/15/16			—		—			—		—			50		58156			50		58,156
5.38%, 7/15/40 (a)			—		—			500		537,789			4,000		4,302,312			4,500		4,840,101
					—					537,789					4,360,468					4,898,257
Tobacco - 0.4%
Philip Morris International, Inc.:
4.88%, 5/16/13								2,965		3,254,995								2,965		3,254,995
6.88%, 3/17/14			900		1,061,108			—		—			4,150		4,892,887			5,050		5,953,995
4.50%, 3/26/20			1,100		1,200,099			1,700		1,854,698			4,300		4,691,296			7,100		7,746,093
					2,261,207					5,109,693					9,584,183					16,955,083
Wireless Telecommunication Services - 0.6%
Rogers Communications, Inc., 6.25%, 6/15/13			—		—			2,625		2,953,878								2,625		2,953,878
Vodafone Group Plc, 4.15%, 6/10/14 (c)(f)			2,850		3,078,222			5,125		5,535,400			11,790		12,734,120			19,765		21,347,742
					3,078,222					8,489,278					12,734,120					24,301,620
Total Corporate Bonds - 19.5%					90,492,806					291,911,915					398,748,741					781,153,462
Foreign Agency Obligations
Achmea Hypotheekbank NV, 3.20%, 11/03/14 (a)			1,975		2,099,488			4,145		4,406,268			9,100		9,673,591			15,220		16,179,347
Bank Nederlandse Gemeenten, 1.75%, 10/06/15 (a)			3,390		3,379,796			8,030		8,005,830			15,795		15,747,457			27,215		27,133,083
CDP Financial, Inc., 3.00%, 11/25/14 (a)			2,915		3,027,015			6,185		6,422,671			13,420		13,935,690			22,520		23,385,376
Dexia Credit Local SA
2.00%, 3/05/13 (a)			1,555		1,566,728			2,860		2,881,570			6,415		6,463,382			10,830		10,911,680
2.75%, 4/29/14 (a)			—		—			28,930		29,695,509			3,595		3,690,126			32,525		33,385,635

S-13

Pro Forma Condensed Combined Schedule of Investments for

BlackRock Total Return Portfolio II, BlackRock Managed Income Portfolio and BlackRock Bond Portfolio

As of September 30, 2010 (Unaudited)

(Percentages shown are based on Combined Net Assets)

		BlackRock Managed Income Portfolio					BlackRock Bond Portfolio					BlackRock Total Return Portfolio II					BlackRock Total Return Portfolio II Pro Forma Combined
Foreign Agency Obligations (concluded)		Par (000)		Value			Par (000)		Value			Par (000)		Value			Par (000)		Value
Eksportfinans ASA:
1.88%, 4/02/13	USD		4,115	$	4,203,592	USD		7,570	$	7,732,975	USD		16,775	$	17,136,149	USD		28,460	$	29,072,716
3.00%, 11/17/14			2,225		2,346,051			2,720		2,867,982			6,700		7,064,513			11,645		12,278,546
2.00%, 9/15/15			3,215		3,222,980			6,515		6,531,170			14,980		15,017,180			24,710		24,771,330
5.50%, 5/25/16 (c)			1,625		1,897,826			3,150		3,678,863			7,150		8,350,435			11,925		13,927,124
FIH Erhvervsbank A/S, 2.45%, 8/17/12 (a)			—		—			9,230		9,465,762			—		—			9,230		9,465,762
Japan Finance Corp., 2.00%, 6/24/11			1,425		1,439,826			2,775		2,803,871			6,510		6,577,730			10,710		10,821,427
Korea Electric Power Corp., 5.13%, 4/23/34 (a)			—		—			—		—			75		81,177			75		81,177
Kreditanstalt fuer Wiederaufbau:
1.38%, 7/15/13			885		898,508			1,795		1,822,397			3,720		3,776,778			6,400		6,497,683
2.75%, 9/08/20			390		392,462			790		794,988			1,800		1,811,365			2,980		2,998,815
Landwirtschaftliche Rentenbank:
5.25%, 7/02/12			630		678,796			1,220		1,314,494			2,925		3,151,553			4,775		5,144,843
4.38%, 1/15/13			405		437,464			780		842,522			1,975		2,133,310			3,160		3,413,296
4.13%, 7/15/13			185		200,754			355		385,231			850		922,384			1,390		1,508,369
4.00%, 2/02/15			365		403,365			710		784,628			2,170		2,398,089			3,245		3,586,082
Pemex Finance Ltd., 9.03%, 2/15/11			351		356,634			—		—			170		172,975			521		529,609
Petrobras International Finance Co.:
5.88%, 3/01/18			115		127,787			1,060		1,177,866			545		605,601			1,720		1,911,254
5.75%, 1/20/20			2,610		2,889,387			5,480		6,066,607			12,330		13,649,865			20,420		22,605,859
Qatari Diar Finance QSC, 3.50%, 7/21/15 (a)			490		500,212			985		1,005,528			2,055		2,097,828			3,530		3,603,568
Total Foreign Agency Obligations - 6.6%					30,068,671			—		98,686,732					134,457,178					263,212,581
Foreign Government Obligations
Canada - 0.8%
Province of Ontario Canada:
1.88%, 11/19/12			1,765		1,806,564			3,750		3,838,309			8,140		8,331,689			13,655		13,976,562
4.10%, 6/16/14			1,875		2,059,747			4,205		4,619,327			8,680		9,535,258			14,760		16,214,332
					3,866,311					8,457,636					17,866,947					30,190,894
Israel - 0.5%
Israel Government AID Bond:								—		—
AID-Israel, 5.50%, 9/18/23			5,000		6,171,385			—		—			—		—			5,000		6,171,385
5.50%, 4/26/24			—		—			—		—			5,475		6,805,436			5,475		6,805,436
5.50%, 9/18/33			—		—			—		—			6,735		8,119,575			6,735		8,119,575
					6,171,385					—					14,925,011					21,096,396

S-14

Pro Forma Condensed Combined Schedule of Investments for

BlackRock Total Return Portfolio II, BlackRock Managed Income Portfolio and BlackRock Bond Portfolio

As of September 30, 2010 (Unaudited)

(Percentages shown are based on Combined Net Assets)

		BlackRock Managed Income Portfolio					BlackRock Bond Portfolio					BlackRock Total Return Portfolio II					BlackRock Total Return Portfolio II Pro Forma Combined
Foreign Government Obligations (concluded)		Par (000)		Value			Par (000)		Value			Par (000)		Value			Par (000)		Value
Mexico - 0.2%
United Mexican States:
5.63%, 1/15/17	USD		495	$	566,280	USD		1,360	$	1,555,840	USD		2,945	$	3,369,080	USD		4,800	$	5,491,200
5.13%, 1/15/20			320		357,600			530		592,275			1,240		1,385,700			2,090		2,335,575
7.50%, 4/08/33					—			200		265,000			440		583,000			640		848,000
					923,880					2,413,115					5,337,780					8,674,775
Total Foreign Government Obligations - 1.5%					10,961,576					10,870,751					38,129,738					59,962,065
Non-Agency Mortgage-Backed Securities
Collateralized Mortgage Obligations - 4.9%
Arkle Master Issuer Plc,
Series 2010-1A, Class 2A, 1.52%, 2/17/15 (a)(b)			2,070		2,052,534			3,900		3,867,094			8,320		8,249,800			14,290		14,169,428
Bear Stearns Adjustable Rate Mortgage Trust,
Series 2004-7, Class 4A, 3.06%, 10/25/34 (b)			—		—			1,178		1,115,383			—		—			1,178		1,115,383
Bear Stearns Alt-A Trust:
Series 2004-13, Class A1, 1.00%, 11/25/34 (b)			—		—			1,322		1,071,663			—		—			1,322		1,071,663
Series 2004-12, Class 1A1, 0.61%, 1/25/35 (b)			—		—			1,096		820,487			—		—			1,096		820,487
Countrywide Alternative Loan Trust:
Series 2005-21CB, Class A17, 6.00%, 06/25/35			3,768		3,395,941			4,626		4,169,700			16,024		14,443,496			24,418		22,009,137
Series 2005-20CB, Class 3A3, 5.50%, 07/25/35			—		—			—		—			2,370		2,348,652			2,370		2,348,652
Series 2006-OA21, Class A1, 0.45%, 3/20/47 (b)			1,836		1,002,452			2,380		1,299,475			—		—			4,216		2,301,927
Countrywide Home Loan Mortgage Pass-Through Trust:
Series 2004-29, Class 1A1, 0.80%, 2/25/35 (b)			—		—			700		585,021								700		585,021
Series 2007-J3, Class A10, 6.00%, 07/25/37			3,411		2,851,724			—		—			14,103		11,791,881			17,514		14,643,605
Series 2006-OA5, Class 2A1, 0.46%, 4/25/46 (b)			785		453,905			977		565,065			3,380		1,954,571			5,142		2,973,541
Series 2006-OA5, Class 3A1, 0.46%, 4/25/46 (b)			1,396		859,907			—		—			5,742		3,536,762			7,138		4,396,669
Credit Suisse Mortgage Capital Certificates,
Series 2006-8, Class 3A1, 6.00%, 10/25/21			726		595,491			998		818,800			3,312		2,716,928			5,036		4,131,219
Deutsche Alt-A Securities, Inc.,
Series 2006-OA1, Class A1, 0.46%, 2/25/47 (b)			—		—			753		478,840			—		—			753		478,840
First Horizon Alternative Mortgage Securities,
Series 2004-AA4, Class A1, 2.43%, 10/25/34 (b)			2,157		1,849,457			2,397		2,054,952			—		—			4,554		3,904,409
First Horizon Asset Securities, Inc.,
Series 2005-AR3, Class 3A1, 5.52%, 8/25/35 (b)			591		563,418			—		—			2,569		2,448,157			3,160		3,011,575
GSR Mortgage Loan Trust,
Series 2005-AR4, Class 6A1, 5.25%, 7/25/35 (b)			998		973,787			408		398,367			2,859		2,788,573			4,265		4,160,727

S-15

Pro Forma Condensed Combined Schedule of Investments for

BlackRock Total Return Portfolio II, BlackRock Managed Income Portfolio and BlackRock Bond Portfolio

As of September 30, 2010 (Unaudited)

(Percentages shown are based on Combined Net Assets)

		BlackRock Managed Income Portfolio					BlackRock Bond Portfolio					BlackRock Total Return Portfolio II					BlackRock Total Return Portfolio II Pro Forma Combined
Non-Agency Mortgage-Backed Securities (continued)		Par (000)		Value			Par (000)		Value			Par (000)		Value			Par (000)		Value
Collateralized Mortgage Obligations (concluded)
Harborview Mortgage Loan Trust,
Series 2005-8, Class 1A2A, 0.59%, 9/19/35 (b)	USD		196	$	122,568	USD		—	$	—	USD		—	$	—	USD		196	$	122,568
Holmes Master Issuer Plc,
Series 2007-2A, Class 3A1, 0.61%, 7/15/21 (b)			950		940,655			—		—			3,700		3,663,603			4,650		4,604,258
Homebanc Mortgage Trust
Series 2005-4, Class A1, 0.53%, 10/25/35 (b)			1,831		1,353,783			—		—			6,214		4,593,360			8,045		5,947,143
Series 2006-2, Class A1, 0.44%, 12/25/36 (b)			—		—			1,922		1,393,780								1,922		1,393,780
JPMorgan Mortgage Trust:
Series 2007-S1, Class 1A2, 5.50%, 03/25/22			333		313,132			381		357,866			1,286		1,207,796			2,000		1,878,794
Series 2006-S2, Class 2A2, 5.88%, 07/25/36			379		360,112			474		450,139			1,611		1,530,474			2,464		2,340,725
MortgageIT Trust,
Series 2004-1, Class A1, 0.65%,11/25/34 (b)								2,481		2,092,520								2,481		2,092,520
Residential Accredit Loans, Inc.,
Series 2006-QO2, Class A1, 0.48%, 2/25/46 (b)			1,063		431,544			—		—			4,314		1,752,068			5,377		2,183,612
Station Place Securitization Trust,
Series 2009-1, Class A, 1.76%, 1/25/40 (a)(b)			2,390		2,390,000			5,255		5,255,000			11,035		11,035,000			18,680		18,680,000
Structured Adjustable Rate Mortgage Loan Trust, Series 2005-19XS, Class 1A1, 0.58%,
Series 2004-6, Class 4A1, 4.86%, 6/25/34 (b)			—		—			5,458		5,121,165			—		—			5,458		5,121,165
Series 2004-13, Class A2, 0.56%, 9/25/34 (b)								698		534,706								698		534,706
Series 2005-19XS, Class 1A1, 0.58%, 10/25/35 (b)			—		—			—		—			4,780		3,190,372			4,780		3,190,372
Series 2007-3, Class 2A1, 5.58%, 4/25/47 (b)			4,398		3,323,574			—		—			19,036		14,384,426			23,434		17,708,000
WaMu Mortgage Pass-Through Certificates, Series 2007-OA4, Class 1A, 1.16%, 5/25/47 (b)			903		577,738			1,139		728,452			—		—			2,042		1,306,190
Wells Fargo Mortgage Backed Securities Trust:
Series 2006-AR2, Class 2A5, 4.34%, 3/25/36 (b)			2,354		2,002,491			—		—			160		136,533			2,514		2,139,024
Series 2006-AR3, Class A4, 5.55%, 3/25/36 (b)			—		—			—		—			19,390		17,080,346			19,390		17,080,346
Series 2006-AR12, Class 2A1, 5.97%, 9/25/36 (b)			1,012		934,721			—		—			4,229		3,905,057			5,241		4,839,778
Series 2006-AR15, Class A1, 5.45%, 10/25/36 (b)			3,198		2,759,542			—		—			—		—			3,198		2,759,542
Series 2006-AR18, Class 2A1, 5.52%, 11/25/36 (b)			4,473		3,736,673			—		—			18,479		15,437,366			22,952		19,174,039
					33,845,149					33,178,475					128,195,221					195,218,845
Commercial Mortgage-Backed Securities - 10.4%
Banc of America Commercial Mortgage, Inc.:																		—		—
Series 2001-1, Class A2, 6.50%, 04/15/11			2,169		2,195,232			2,665		2,696,377			7,402		7,489,935			12,236		12,381,544
Series 2002-PB2, Class A4, 6.19%, 01/11/12			3,519		3,691,643			—		—			—		—			3,519		3,691,643
Series 2007-3, Class A4, 5.84%, 5/10/17 (b)			530		546,939			—		—			2,495		2,574,741			3,025		3,121,680

S-16

Pro Forma Condensed Combined Schedule of Investments for

BlackRock Total Return Portfolio II, BlackRock Managed Income Portfolio and BlackRock Bond Portfolio

As of September 30, 2010 (Unaudited)

(Percentages shown are based on Combined Net Assets)

		BlackRock Managed Income Portfolio					BlackRock Bond Portfolio					BlackRock Total Return Portfolio II					BlackRock Total Return Portfolio II Pro Forma Combined
Non-Agency Mortgage-Backed Securities (continued)		Par (000)		Value			Par (000)		Value			Par (000)		Value			Par (000)		Value
Commercial Mortgage-Backed Securities (continued)
Series 2002-2, Class A3, 5.12%, 07/11/43	USD		—	$	—	USD		—	$	—	USD		22,670	$	23,639,668	USD		22,670	$	23,639,668
Series 2006-5, Class AM, 5.45%, 09/10/47			155		141,451			—		—			725		661,627			880		803,078
Bear Stearns Commercial Mortgage Securities, Series 2005-PW10, Class AM, 5.45%, 12/15/15 (b)			180		180,433			—		—			810		811,947			990		992,380
Citigroup Commercial Mortgage Trust, Series 2006-C5, Class A4, 5.43%, 10/15/49			525		567,624			—		—			—		—			525		567,624
Citigroup/Deutsche Bank Commercial Mortgage Trust, Series 2007-CD4, Class A2B, 5.21%, 03/11/12			—		—			1,310		1,366,034			2,890		3,013,618			4,200		4,379,652
Series 2007-CD5, Class A4, 5.89%, 8/15/17 (b)			—		—			893		965,121								893		965,121
Commercial Mortgage Loan Trust, Series 2008-LS1, Class A4B, 6.21%, 9/10/17 (b)			—		—			3,730		3,940,102								3,730		3,940,102
Commercial Mortgage Pass-Through Certificates,
Series 2004-LB3A, Class A3, 5.09%, 7/10/37 (b)			1,965		2,008,689			2,385		2,438,027			8,540		8,729,874			12,890		13,176,590
Series 2006-C8, Class A4, 5.31%, 12/10/46			—		—			2,500		2,599,107								2,500		2,599,107
Series 2007-C9, Class A4, 6.01%, 12/10/49 (b)			—		—			—		—			3,600		3,918,536			3,600		3,918,536
Credit Suisse First Boston Mortgage Securities Corp.:
Series 2001-CF2, Class A4, 6.51%, 01/15/11			—		—			1,473		1,476,138								1,473		1,476,138
Series 2002-CP5, Class A2, 4.94%, 12/15/35			4,865		5,168,748			6,185		6,571,162			—		—			11,050		11,739,910
Series 2002-CKS4, Class A2, 5.18%, 11/15/35			3,140		3,322,098			4,050		4,284,872			—		—			7,190		7,606,970
CW Capital Cobalt Ltd.,			—		—			—		—			12,951		13,604,414			12,951		13,604,414
Series 2006-C1, Class A2, 5.17%, 8/15/48 (o)
DLJ Commercial Mortgage Corp.,
Series 1998-CG1, Class B1, 6.91%, 6/10/31 (b)			—		—			—		—			1,908		1,908,142			1,908		1,908,142
First Union National Bank Commercial Mortgage
Series 2001-C3, Class A3, 6.42%, 06/15/11			—		—			5,781		5,913,321			—		—			5,781		5,913,321
Series 2001-C2, Class A2, 6.66%, 01/12/43			2,488		2,520,305			—		—			—		—			2,488		2,520,305
GE Capital Commercial Mortgage Corp.:
Series 2002-1A, Class A3, 6.27%, 12/10/35			3,791		4,002,106			4,839		5,107,951			14,137		14,923,643			22,767		24,033,700
Series 2002-2A, Class A3, 5.35%, 08/11/34			2,910		3,073,997			—		—			16,200		17,112,974			19,110		20,186,971
Series 2007-C1, Class A2, 5.42%, 12/10/49 (a)			—		—			—		—			18,000		18,634,855			18,000		18,634,855
GMAC Commercial Mortgage Securities, Inc.,
Series 2000-C3, Class A2, 6.96%, 11/15/10			—		—			96		96,323			302		301,408			398		397,731
Series 2001-C1, Class A2, 6.47%, 04/15/34			—		—			—		—			13,864		14,001,722			13,864		14,001,722
Series 2003-C3, Class A3, 4.65%, 04/10/40			—		—			—		—			996		1,013,609			996		1,013,609
Series 2003-C2, Class A2, 5.66%, 5/10/40 (b)			—		—			5,830		6,399,464			18,085		19,851,510			23,915		26,250,974
Series 2004-C3, Class A3, 4.21%, 12/10/41			—		—			1,345		1,347,631								1,345		1,347,631
Series 2006-C1, Class AM, 5.29%, 11/10/45 (b)			270		264,631			—		—			1,270		1,244,748			1,540		1,509,379

S-17

Pro Forma Condensed Combined Schedule of Investments for

BlackRock Total Return Portfolio II, BlackRock Managed Income Portfolio and BlackRock Bond Portfolio

As of September 30, 2010 (Unaudited)

(Percentages shown are based on Combined Net Assets)

		BlackRock Managed Income Portfolio					BlackRock Bond Portfolio					BlackRock Total Return Portfolio II					BlackRock Total Return Portfolio II Pro Forma Combined
Non-Agency Mortgage-Backed Securities (continued)		Par (000)		Value			Par (000)		Value			Par (000)		Value			Par (000)		Value
Commercial Mortgage-Backed Securities (continued)
Greenwich Capital Commercial Funding Corp.:
Series 2007-GG9, Class A2, 5.38%, 07/10/12	USD		—	$	—	USD		—	$	—	USD		19,776	$	20,492,084	USD		19,776	$	20,492,084
Series 2004-GG1, Class A4, 4.76%, 06/10/36			—		—			—		—			2,218		2,229,229			2,218		2,229,229
GS Mortgage Securities Corp. II,
Series 2004-GG2, Class A4, 4.96%, 08/10/38			3,500		3,662,685			—		—			—		—			3,500		3,662,685
Series 2006-GG8, Class A4, 5.56%, 11/10/39			—		—			—		—			2,760		2,939,702			2,760		2,939,702
JPMorgan Chase Commercial Mortgage Securities Corp.:
Series 2004-CB9, Class A2, 5.11%, 5/12/11 (b)			—		—			6,247		6,365,848								6,247		6,365,848
Series 2001-CIB2, Class A3, 6.43%, 06/15/11			3,016		3,085,394			—		—			—		—			3,016		3,085,394
Series 2001-C1, Class A3, 5.86%, 10/12/11			3,773		3,901,583			—		—			14,120		14,600,456			17,893		18,502,039
Series 2001-CIB3, Class A3, 6.47%, 12/15/11			—		—			—		—			16,870		17,546,691			16,870		17,546,691
Series 2004-CB8, Class A1A, 4.16%, 4/12/14 (a)			—		—			1,917		1,969,517			7,409		7,610,274			9,326		9,579,791
Series 2007-LD11, Class A2, 5.99%, 6/15/49 (b)			—		—			—		—			20,000		20,893,668			20,000		20,893,668
LB-UBS Commercial Mortgage Trust:
Series 2003-C7, Class A2, 4.06%, 8/15/10 (b)			463		463,229			—		—			—		—			463		463,229
Series 2001-C3, Class A2, 6.37%, 12/15/28			—		—			6,505		6,665,267								6,505		6,665,267
Series 2006-C4, Class AM, 6.10%, 6/15/38 (b)			200		199,693			—		—			910		908,605			1,110		1,108,298
Series 2006-C7, Class AM, 5.38%, 11/15/38			190		187,689			—		—			910		898,930			1,100		1,086,619
Series 2007-C7, Class A3, 5.87%, 9/15/45 (b)			—		—			4,825		5,104,322								4,825		5,104,322

S-18

Pro Forma Condensed Combined Schedule of Investments for

BlackRock Total Return Portfolio II, BlackRock Managed Income Portfolio and BlackRock Bond Portfolio

As of September 30, 2010 (Unaudited)

(Percentages shown are based on Combined Net Assets)

		BlackRock Managed Income Portfolio					BlackRock Bond Portfolio					BlackRock Total Return Portfolio II					BlackRock Total Return Portfolio II Pro Forma Combined
Non-Agency Mortgage-Backed Securities (continued)		Par (000)		Value			Par (000)		Value			Par (000)		Value			Par (000)		Value
Commercial Mortgage-Backed Securities (concluded)
Merrill Lynch Mortgage Trust, Series 2003-KEY1,
Series 2007-C1, Class A4, 6.02%, 06/12/17 (b)	USD		—	$	—	USD		1,750	$	1,871,511	USD		—	$	—	USD		1,750	$	1,871,511
Series 2003-KEY1, Class A4, 5.24%, 11/12/35 (b)			—		—			—		—			7,100		7,675,865			7,100		7,675,865
Morgan Stanley Capital I, Series 2004-HQ4, Class A7, 4.97%, 4/14/40			—		—			2,500		2,629,860			—		—			2,500		2,629,860
Prudential Mortgage Capital Funding LLC, Series 2001-ROCK, Class A2, 6.61%, 05/10/34			—		—			—		—			11,007		11,166,569			11,007		11,166,569
RBSCF Trust, Series 2010-RR3, Class WBTA, 6.10%, 4/16/17 (a)(b)			—		—			4,200		4,612,125			—		—			4,200		4,612,125
Wachovia Bank Commercial Mortgage Trust:
Series 2003-C6, Class A4, 5.13%, 8/15/35 (b)			4,470		4,832,317			—		—			18,000		19,458,995			22,470		24,291,312
Series 2005-C21, Class A3, 5.20%, 10/15/44 (b)			534		533,245			648		647,308			2,317		2,315,480			3,499		3,496,033
Series 2006-C26, Class A2, 5.94%, 06/15/45			14,000		15,161,224			—		—			—		—			14,000		15,161,224
					59,710,955			—		75,067,388					282,173,519					416,951,862
Interest Only Collateralized Mortgage Obligations - 0.0%
Salomon Brothers Mortgage Securities VI, Inc.:																		—		—
Series 1987-1, 11.00%, 2/17/17			—		—			—		—			59		7,785			59		7,785
Series 1987-2, 11.00%, 3/06/17			—		—			—		—			53		9,655			53		9,655
					—					—					17,440			—		17,440
Interest Only Commercial Mortgage-Backed Securities - 0.0%
Credit Suisse First Boston Mortgage Securities Corp.:
Series 1997-C1, Class AX, 1.66%, 6/20/29 (a)(b)			—		—			—		—			6,382		198593			6,382		198,593
Series 1997-C2, Class AX, 0.27%, 1/17/35 (b)			—		—			—		—			2,256		11607			2,256		11,607
Structured Asset Securities Corp., Series 1996-CFL, Class X1, 2.10%, 2/25/28 (b)			—		—			—		—			2,106		119			2,106		119

S-19

Pro Forma Condensed Combined Schedule of Investments for

BlackRock Total Return Portfolio II, BlackRock Managed Income Portfolio and BlackRock Bond Portfolio

As of September 30, 2010 (Unaudited)

(Percentages shown are based on Combined Net Assets)

		BlackRock Managed Income Portfolio					BlackRock Bond Portfolio					BlackRock Total Return Portfolio II					BlackRock Total Return Portfolio II Pro Forma Combined
Non-Agency Mortgage-Backed Securities (concluded)		Par (000)		Value			Par (000)		Value			Par (000)		Value			Par (000)		Value
Interest Only Commercial Mortgage-Backed Securities (concluded)
WaMu Commercial Mortgage Securities Trust, Series 2005-C1A, Class X, 1.83%, 5/25/36 (a)(b)	USD		13,172	$	235,992	USD		16,997	$	304,512	USD		—	$	—	USD		30,169	$	540,504
					235,992					304,512					210,319					750,823
Principal Only Collateralized Mortgage Obligations - 0.0%
Salomon Brothers Mortgage Securities VI, Inc.:
Series 1987-1, 0.33%, 2/17/17 (j)			—		—			—		—			61		59,983			61		59,983
Series 1987-2, 0.52%, 3/06/17 (j)			—		—			—		—			53		51,182			53		51,182
					—					—					111,165					111,165
Total Non-Agency Mortgage-Backed Securities - 15.3%					93,792,096					108,550,375					410,707,664					613,050,135
Preferred Securities
Capital Trusts
Banks - 0.1%
State Street Capital Trust III, 8.25%, 3/15/42 (b)			—		—			4,220		4,327,779			—		—			4,220		4,327,779
Diversified Financial Services - 0.5%
Credit Suisse Guernsey, 5.86% (b)(g)			499		474,362			4,610		4,382,381			—		—			5,109		4,856,743
General Electric Capital Corp., 6.38%, 11/15/67 (b)								75		74,813								75		74,813
Goldman Sachs Capital II, 5.79% (b)(g)			725		615,344			—		—			1,925		1,633,844			2,650		2,249,188
JPMorgan Chase & Co., 7.90% (b)(g)			490		525,099			3,000		3,214,890			8,915		9,553,581			12,405		13,293,570
Lehman Brothers Holdings Capital Trust VII, 5.86% (b)(d)(e)(g)			360		36			—		—			1,270		127			1,630		163
					1,614,841			—		7,672,084					11,187,552					20,474,477
Insurance - 0.4%
Chubb Corp., 6.38%, 3/29/67 (b)			775		763,375			975		960,375			5,000		4,925,000			6,750		6,648,750
Lincoln National Corp., 6.05%, 4/20/67 (b)			—		—			—		—			3,075		2,682,938			3,075		2,682,938
The Travelers Cos., Inc., 6.25%, 3/15/37 (b)			—		—			1,000		960,000			4,000		3,840,000			5,000		4,800,000
					763,375					1,920,375					11,447,938					14,131,688
Total Capital Trusts - 1.0%					2,378,216					13,920,238					22,635,490					38,933,944

S-20

Pro Forma Condensed Combined Schedule of Investments for

BlackRock Total Return Portfolio II, BlackRock Managed Income Portfolio and BlackRock Bond Portfolio

As of September 30, 2010 (Unaudited)

(Percentages shown are based on Combined Net Assets)

		BlackRock Managed Income Portfolio					BlackRock Bond Portfolio					BlackRock Total Return Portfolio II					BlackRock Total Return Portfolio II Pro Forma Combined
Preferred Stocks		Par (000)		Value			Par (000)		Value			Par (000)		Value			Par (000)		Value
Diversified Telecommunication Services - 0.0%
Centaur Funding Corp. (a)	USD		—	$	—	USD		—	$	—	USD		205	$	223,322	USD		205	$	223,322
Total Preferred Securities - 1.0%					2,378,216					13,920,238					22,858,812					39,157,266
Project Loans - 0.0%
Federal Housing Authority, USGI Project,
Series 56, 7.46%, 1/01/23			—		—			96		94,737			—		—			96		94,737
USGI, Series 87, 7.43%, 12/01/22			70		68,915			—		—			—		—			70		68,915
					68,915					94,737					—					163,652
Taxable Municipal Bonds
Belvoir Land LLC, Series A-1, 5.27%, 12/15/47 (a)			—		—			—		—			1,600		1349472			1,600		1,349,472
Belvoir Land LLC, Class A-2, 5.40%, 12/15/47 (a)			1,175		958,882			—		—			—		—			1,175		958,882
The Board of Trustees of The Leland Stanford Junior University, 4.25%, 5/01/16			750		841,080			—		—			3,340		3,745,610			4,090		4,586,690
Chicago O’Hare International Airport RB, 6.40%, 1/1/1940			350		373,453			650		693,557			1,000		1,067,010			2,000		2,134,020
Irwin Land LLC RB, Series A-2, 5.30%, 12/15/35 (a)			—		—			—		—			3,415		2,954,180			3,415		2,954,180
Metropolitan Transportation Authority, New York RB, 7.34%, 11/15/39			1,075		1,352,092			—		—			4,790		6,024,670			5,865		7,376,762
New York State Dormitory Authority RB, Series F, 5.63%, 3/15/39			825		866,118			1,750		1,837,220			3,850		4,041,884			6,425		6,745,222
Ohana Military Communities LLC, 6.19%, 4/01/49 (a)			750		750,577			—		—			—		—			750		750,577
Port Authority of New York & New Jersey RB, 6.04%, 12/01/29			625		702,850			1,190		1,338,226			2,845		3,199,373			4,660		5,240,449
State of California GO:
5.45%, 4/01/15			3,950		4,232,583			7,625		8,170,493			18,050		19,341,297			29,625		31,744,373
7.50%, 4/01/34			510		561,826			980		1,079,588			2,060		2,269,337			3,550		3,910,751
7.30%, 10/01/39			1,435		1,521,545			4,660		4,941,045			6,515		6,907,920			12,610		13,370,510
7.35%, 11/01/39			510		543,951			970		1,034,573			2,050		2,186,468			3,530		3,764,992
State of Wisconsin RB (AGM Insured), Series A, 4.80%, 5/01/13			—		—			1,910		2,064,901								1,910		2,064,901
University of California RB, 5.95%, 5/15/45			585		594,963			1,185		1,205,181			2,730		2,776,492			4,500		4,576,636
Yale University, 2.90%, 10/15/14			—		—			4,204		4,450,623								4,204		4,450,623
Total Taxable Municipal Bonds - 2.4%					13,299,920					26,815,407					55,863,713					95,979,040

S-21

Pro Forma Condensed Combined Schedule of Investments for

BlackRock Total Return Portfolio II, BlackRock Managed Income Portfolio and BlackRock Bond Portfolio

As of September 30, 2010 (Unaudited)

(Percentages shown are based on Combined Net Assets)

		BlackRock Managed Income Portfolio					BlackRock Bond Portfolio					BlackRock Total Return Portfolio II					BlackRock Total Return Portfolio II Pro Forma Combined
U.S. Government Sponsored Agency Securities		Par (000)		Value			Par (000)		Value			Par (000)		Value			Par (000)		Value
Agency Obligations - 2.9%
Fannie Mae:
5.25%, 8/01/12 (h)(i)	USD		3,275	$	3,533,044	USD		3,225	$	3,479,104	USD		14,600	$	15,750,363	USD		21,100	$	22,762,511
4.63%, 5/01/13 I (h)(i)			2,550		2,762,040			2,065		2,236,711			11,815		12,797,453			16,430		17,796,204
6.63%, 11/15/30			—		—			1,500		2,063,625			—		—			1,500		2,063,625
Federal Farm Credit Bank, 2.63%, 4/17/14			—		—			14,000		14,756,504			—		—			14,000		14,756,504
Federal Home Loan Bank, 5.63%, 6/13/16			—		—			4,550		5,079,820			—		—			4,550		5,079,820
Freddie Mac, 5.00%, 2/16/17																		—		—
5.00%, 2/16/17 - 6/15/23			570		669,397			1,623		1,822,038			2,390		2,806,771			4,583		5,298,206
5.50%, 8/23/17 - 7/15/27			—		—			4,951		5,687,460			—		—			4,951		5,687,460
Resolution Funding Corp. Interest Strip:
2.53%, 7/15/18 (j)			1,725		1,417,969			—		—			2,850		2,342,731			4,575		3,760,700
2.59%, 10/15/18 (j)			1,725		1,402,397			—		—			2,850		2,317,004			4,575		3,719,401
Small Business Administration,
Series 2001-P10B, Class 1, 6.34%, 08/01/11			—		—			68		70,394			—		—			68		70,394
Small Business Administration Participation Certificates:
Series 1992-20H, 7.40%, 8/01/12			—		—			117		121,011			7		7261			124		128,272
Series 1996-20B, Class 1, 6.38%, 02/01/16			660		705,011			—		—			—		—			660		705,011
Series 1996-20J, 7.20%, 10/01/16			—		—			—		—			301		323,000			301		323,000
Series 1996-20H, 7.25%, 8/01/16			—		—			513		557,362			—		—			513		557,362
Series 1996-20K, 6.95%, 11/01/16			993		1,059,707			—		—			—		—			993		1,059,707
Series 1997-20B, Class 1, 7.10%, 02/01/17			652		707,839			—		—			300		325,519			952		1,033,358
Series 1997-20F, Class 1, 7.20%, 06/01/17			202		222,807			—		—			—		—			202		222,807
Series 1997-20G, Class 1, 6.85%, 07/01/17			1,541		1,695,203			—		—			—		—			1,541		1,695,203
Tennessee Valley Authority, 5.25%, 9/15/39			2,630		3,052,465			5,425		6,296,434			16,910		19,626,304			24,965		28,975,203
					17,227,879					42,170,463					56,296,406					115,694,748
Collateralized Mortgage Obligations - 1.8%
Fannie Mae:
Series 2005-97, Class HM, 5.00%, 01/25/26			—		—			512		513,319								512		513,319
Series 2005-118, Class MC, 6.00%, 01/25/32			—		—			1,095		1,105,900								1,095		1,105,900
Series 2002-T6, Class A1, 3.31%, 02/25/32			—		—			992		1,017,203								992		1,017,203
Series 2006-M2, Class A2A, 5.27%, 10/25/32 (b)			7,525		8,484,723			—		—			11,515		12,983,599			19,040		21,468,322
Series 2005-109, Class PV, 6.00%, 10/25/32			—		—			7,744		8,469,689								7,744		8,469,689
Series 2005-118, Class WA, 6.00%, 10/25/33			—		—			1,135		1,146,454								1,135		1,146,454
Series 2004-88, Class HA, 6.50%, 07/25/34			—		—			—		—			3,270		3,536,551			3,270		3,536,551
Series 2005-48, Class AR, 5.50%, 02/25/35			2,969		3,307,362			—		—			—		—			2,969		3,307,362

S-22

Pro Forma Condensed Combined Schedule of Investments for

BlackRock Total Return Portfolio II, BlackRock Managed Income Portfolio and BlackRock Bond Portfolio

As of September 30, 2010 (Unaudited)

(Percentages shown are based on Combined Net Assets)

		BlackRock Managed Income Portfolio					BlackRock Bond Portfolio					BlackRock Total Return Portfolio II					BlackRock Total Return Portfolio II Pro Forma Combined
U.S. Government Sponsored Agency Securities (continued)		Par (000)		Value			Par (000)		Value			Par (000)		Value			Par (000)		Value
Collateralized Mortgage Obligations (concluded)
Series 2005-29, Class AT, 4.50%, 04/25/35	USD		—	$	—	USD		994	$	1,067,190						USD		994	$	1,067,190
Series 2005-29, Class WB, 4.75%, 04/25/35			—		—			3,365		3,639,942								3,365		3,639,942
Series 2005-62, Class CQ, 4.75%, 07/25/35			—		—			4,429		4,794,188								4,429		4,794,188
Freddie Mac:
Series 3215, Class EP, 5.38%, 9/15/11			—		—			—		—	USD		3,761	$	3,860,472			3,761		3,860,472
Series 2594, Class TV, 5.50%, 3/15/14			—		—			—		—			3,259		3,527,702			3,259		3,527,702
Series 2825, Class VP, 5.50%, 06/15/15			2,195		2,397,711			—		—			—		—			2,195		2,397,711
Series 1591, Class PK, 6.35%, 10/15/23			—		—			—		—			3,222		3,510,791			3,222		3,510,791
Series 3207, Class NB, 6.00%, 11/15/30								2,231		2,254,730								2,231		2,254,730
Series 2864, Class NA, 5.50%, 1/15/31			—		—			—		—			6,276		6,643,207			6,276		6,643,207
Series 2996, Class MK, 5.50%, 6/15/35			—		—			—		—			88		97,776			88		97,776
					14,189,796					24,008,615					34,160,098					72,358,509
Federal Deposit Insurance Corporation Guaranteed - 2.1%
Citigroup Funding, Inc.:			2,285		2,348,706			4,420		4,543,230			10,475		10,767,043			17,180		17,658,979
2.13%, 7/12/12 (i)
1.88%, 10/22/12 (c)(i)			4,400		4,512,279			9,335		9,573,211			20,200		20,715,464			33,935		34,800,954
General Electric Capital Corp.:
2.00%, 9/28/12 (c)(i)			2,750		2,825,719			5,700		5,856,944			12,800		13,152,435			21,250		21,835,098
2.13%, 12/21/12			1,110		1,145,343			2,255		2,326,801			5,125		5,288,185			8,490		8,760,329
					10,832,047					22,300,186					49,923,127					83,055,360
Interest Only Collateralized Mortgage Obligations - 1.5%
Fannie Mae:
Series 2006-82, Class SI, 6.17%, 9/25/36 (b)			7,759		809,094			—		—			34,818		3,630,724			042,577		—   4,439,818
Series 2009-70, Class SI, 6.19%, 9/25/36 (b)			7,319		855,655			—		—			32,874		3,843,434			40,193		4,699,089
Series 2009-90, Class IA, 5.49%, 3/25/37 (b)			7,637		668,307			—		—			35,695		3,123,506			43,332		3,791,813
Series 2009-42, Class SI, 5.74%, 6/25/39 (b)			6,239		614,602			—		—			28,978		2,854,598			35,217		3,469,200
Series 2010-64, Class AS, 6.24%, 6/25/40 (b)			6,573		761,207			—		—			29,626		3,430,792			36,199		4,191,999
Series 2010-118, Class YB, 6.24%, 10/25/40 (b)			9,200		1,071,723			—		—			41,000		4,776,158			50,200		5,847,881
Ginnie Mae:
Series 2009-106, Class SL, 5.84%, 4/20/36 (b)			5,393		718,360			10,394		1,384,418			25,283		3,367,646			41,070		5,470,424
Series 2006-69, Class SA, 6.54%, 12/20/36 (b)			1,318		148,652			—		—			5,302		598,065			6,620		746,717

S-23

Pro Forma Condensed Combined Schedule of Investments for

BlackRock Total Return Portfolio II, BlackRock Managed Income Portfolio and BlackRock Bond Portfolio

As of September 30, 2010 (Unaudited)

(Percentages shown are based on Combined Net Assets)

		BlackRock Managed Income Portfolio					BlackRock Bond Portfolio					BlackRock Total Return Portfolio II					BlackRock Total Return Portfolio II Pro Forma Combined
U.S. Government Sponsored Agency Securities (continued)		Par (000)		Value			Par (000)		Value			Par (000)		Value			Par (000)		Value
Interest Only Collateralized Mortgage Obligations (concluded)
Series 2009-16, Class SL, 7.08%, 1/20/37 (b)	USD		3,970	$	458,478	USD		—	$	—	USD		16,292	$	1,881,545	USD		20,262	$	2,340,023
Series 2007-9, Class BI, 6.56%, 3/20/37 (b)			3,263		366,904			—		—			13,421		1,509,152			16,684		1,876,056
Series 2009-106, Class SU, 5.94%, 5/20/37 (b)			3,074		322,406			—		—			13,612		1,427,798			16,686		1,750,204
Series 2007-27, Class S, 6.24%, 5/20/37 (b)			2,449		257,823			—		—			9,948		1,047,405			12,397		1,305,228
Series 2007-36, Class SA, 6.21%, 6/20/37 (b)			1,708		197,395			—		—			6,944		802,452			8,652		999,847
Series 2009-33, Class SK, 6.14%, 5/20/39 (b)			7,134		683,003			—		—			28,468		2,725,690			35,602		3,408,693
Series 2009-66, Class US, 5.74%, 8/16/39 (b)			4,512		403,160			—		—			20,090		1,794,889			24,602		2,198,049
Series 2009-93, Class SN, 5.79%, 10/16/39 (b)			2,576		225,305			—		—			11,751		1,027,609			14,327		1,252,914
Series 2009-93, Class SM, 5.79%, 10/16/39 (b)			1,822		159,361			—		—			8,232		719,873			10,054		879,234
Series 2009-88, Class SK, 5.99%, 10/16/39 (b)			3,248		344,596			—		—			14,441		1,532,351			17,689		1,876,947
Series 2009-92, Class SL, 6.04%, 10/16/39 (b)			4,654		485,794			—		—			21,532		2,247,705			26,186		2,733,499
Series 2009-110, Class CS, 6.13%, 11/16/39 (b)			3,422		335,015			—		—			14,458		1,415,267			17,880		1,750,282
Series 2009-106, Class KS, 6.14%, 11/20/39 (b)			7,342		744,748			—		—			34,216		3,470,808			41,558		4,215,556
					10,631,588					1,384,418					47,227,467					59,243,473
Mortgage-Backed Securities - 68.2%
Fannie Mae Mortgage-Backed Securities:
7.00%, 12/01/10 - 6/01/32			4		4,630			—		—			536		574,451			540		579,081
5.50%, 6/01/11 - 10/01/40 (c)(k)			69,115		73,776,696			32,400		34,494,250			400,395		426,874,437			501,910		535,145,383
6.00%, 9/01/11 - 10/01/40 (k)			87,166		93,831,921			38,247		41,273,585			300,862		324,082,465			426,275		459,187,971
4.50%, 12/01/20 - 10/01/40 (c)(k)			49,400		51,405,250			37,800		39,359,250			251,795		262,510,603			338,995		353,275,103
4.00%, 2/01/25 - 10/01/40 (k)			48,993		50,545,980			65,428		67,617,421			287,362		297,235,140			401,783		415,398,541
5.00%, 10/01/25 - 10/01/40 (c)(k)			68,566		72,592,216			65,047		69,001,750			294,776		312,108,076			428,389		453,702,042
3.64%, 1/01/31 (b)			—		—			—		—			1,431		1,500,924			1,431		1,500,924
2.93%, 12/01/34 (b)			2,304		2,416,586			—		—			—		—			2,304		2,416,586
4.83%, 8/01/38 (b)			2,886		3,056,467			—		—			—		—			2,886		3,056,467
5.07%, 8/01/38 (b)			—		—			—		—			8,434		8,965,013			8,434		8,965,013
5.14%, 8/01/38 (b)			—		—			—		—			9,063		9,651,422			9,063		9,651,422
3.50%, 10/01/40 (k)			4,900		4,935,219			—		—			22,500		22,661,719			27,400		27,596,938
6.50%, 10/01/40 (k)			7,100		7,741,219			—		—			30,500		33,254,531			37,600		40,995,750
Freddie Mac Mortgage-Backed Securities:
5.50%, 3/01/11 - 10/01/40 (k)			404		434,158			2,700		2,862,843			6,201		6,643,024			9,305		9,940,025
6.50%, 10/01/10 - 7/01/17			7		7,516			—		—			73		78,055			80		85,571
6.00%, 10/01/11 - 12/01/32 (k)			422		457,896			—		—			7,175		7,783,410			7,597		8,241,306
8.00%, 11/01/22 - 10/01/25			—		—			—		—			8		9,428			8		9,428
4.00%, 1/01/25 - 10/01/25 (k)			44,145		46,175,496			44,824		46,986,639			94,672		99,236,907			183,641		192,399,042
5.00%, 10/01/25 - 10/01/40 (k)			10,374		10,900,212			—		—			43,994		46,227,973			54,368		57,128,185

S-24

Pro Forma Condensed Combined Schedule of Investments for

BlackRock Total Return Portfolio II, BlackRock Managed Income Portfolio and BlackRock Bond Portfolio

As of September 30, 2010 (Unaudited)

(Percentages shown are based on Combined Net Assets)

		BlackRock Managed Income Portfolio					BlackRock Bond Portfolio					BlackRock Total Return Portfolio II					BlackRock Total Return Portfolio II Pro Forma Combined
U.S. Government Sponsored Agency Securities (continued)		Par (000)		Value			Par (000)		Value			Par (000)		Value			Par (000)		Value
Mortgage-Backed Securities (concluded)
3.17%, 10/01/35 (b)	USD		—	$	—	USD		—	$	—	USD		6,716	$	6,967,295	USD		6,716	$	6,967,295
5.37%, 11/01/38 (b)			1,492		1,595,943			—		—			—		—			1,492		1,595,943
4.50%, 4/01/40 - 10/01/40 (k)			8,500		8,896,435			32,239		33,635,775			67,646		70,577,602			108,385		113,109,812
Ginnie Mae Mortgage-Backed Securities:
7.00%, 3/15/13			—		—			—		—			37		37,769			37		37,769
9.50%, 9/15/16 - 11/15/16			10		11,204			—		—			—		—			10		11,204
9.00%, 7/15/18			—		—			—		—			1		1,146			1		1,146
7.50%, 11/15/29			—		—			—		—			1		603			1		603
5.50%, 3/15/32			—		—			—		—			20		21,972			20		21,972
5.50%, 11/15/33			20		21,346			—		—			—		—			20		21,346
6.00%, 12/15/36 - 10/01/40 (k)			—		—			100		108,250			538		587,121			638		695,371
5.00%, 10/01/40 (k)			2,700		2,866,212			—		—			11,200		11,889,472			13,900		14,755,684
6.50%, 10/01/40 (k)			2,800		3,078,250			—		—			11,100		12,203,063			13,900		15,281,313
					434,750,852					335,339,763					1,961,683,621					2,731,774,236
Principal Only Collateralized Mortgage Obligations - 0.0%
Fannie Mae, Series 1989-16, Class B, 0.54%, 3/25/19 (j)			—		—			41		39,083			—		—			41		39,083
Total U.S. Government Sponsored Agency Securities - 76.4%					487,632,162					425,242,528					2,149,290,719					3,062,165,409
U.S. Treasury Obligations
U.S. Treasury Bonds:
8.13%, 5/15/21 - 8/15/21 (c)(i)			6,885		10,403,914			15,855		23,957,174			30,590		46,221,794			53,330		80,582,882
8.00%, 11/15/21 (c)(h)(i)			4,360		6,576,105			8,440		12,729,892			29,490		44,479,207			42,290		63,785,204
7.25%, 8/15/22			2,025		2,935,934			4,110		5,958,859			9,455		13,708,275			15,590		22,603,068
3.50%, 2/15/39 (f)(i)			—		—			—		—			7,490		7,246,575			7,490		7,246,575
4.25%, 5/15/39 (i)			4,290		4,716,319			—		—			12,625		13,879,609			16,915		18,595,928
4.38%, 5/15/40 (h)(i)			3,375		3,790,564			28,080		31,537,490			29,300		32,907,709			60,755		68,235,763
3.88%, 8/15/40			6,715		6,941,631			8,480		8,766,200			26,360		27,249,650			41,555		42,957,481
U.S. Treasury Notes:
0.88%, 2/29/12 (i)			25,430		25,623,777			28,000		28,213,360			76,110		76,689,958			129,540		130,527,095
1.00%, 3/31/12			—		—			—		—			8,159		8,239,611			8,159		8,239,611

S-25

Pro Forma Condensed Combined Schedule of Investments for

BlackRock Total Return Portfolio II, BlackRock Managed Income Portfolio and BlackRock Bond Portfolio

As of September 30, 2010 (Unaudited)

(Percentages shown are based on Combined Net Assets)

			BlackRock Managed Income Portfolio					BlackRock Bond Portfolio					BlackRock Total Return Portfolio II					BlackRock Total Return Portfolio II Pro Forma Combined
U.S. Treasury Obligations (concluded)		Par (000)		Value			Par (000)		Value			Par (000)		Value			Par (000)		Value
U.S. Treasury Bonds (concluded)
0.38%, 8/31/12 - 9/30/12 (i)(k)	USD		3,795	$	3,792,184	USD		58,680	$	58,630,026	USD		48,900	$	48,863,716	USD		111,375	$	111,285,926
1.25%, 9/30/15 (i)			63,990		63,890,048			84,635		84,502,800			265,345		264,930,531			413,970		413,323,379
2.63%, 8/15/20 (i)			17,477		17,640,847			182,775		184,488,516			119,485		120,605,172			319,737		322,734,535
Total U.S. Treasury Obligations - 32.2%					146,311,323					438,784,317					705,021,807					1,290,117,447
Total Long-Term Investments (Cost - $6,375,048,789) - 161.4%					911,328,554					1,490,749,618					4,062,621,394					6,464,699,566
Short-Term Securities		Shares					Shares					Shares					Shares
Money Market Funds - 0.6%
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.23% (l)(m)			785,936		785,936			—		—			24,142,136		24,142,136			24,928,072		24,928,072
Total Short-Term Securities (Cost - $24,928,072) - 0.6%					785,936					—					24,142,136					24,928,072
Options Purchased		Contracts					Contracts					Contracts					Contracts
Exchange-Traded Call Options Purchased
U.S. Treasury Notes (5 Year), Strike Price USD 121, Expires 11/26/10			29		18,352			58		36,703			121		76,570			208		131,625
Exchange-Traded Put Options Purchased
U.S. Treasury Notes (5 Year), Strike Price USD 117, Expires 11/26/10			29		1,133			58		2,266			121		4,727			208		8,126
Over-the-Counter Call Swaptions Purchased		Notional Amount (000)					Notional Amount (000)					Notional Amount (000)					Notional Amount (000)
Receive a fixed rate of 3.000% and pay a floating rate based on 3-month LIBOR, Expires 9/02/11, Broker, UBS AG			6,500		259,731			13,300		531,450			30,300		1,210,747			50,100		2,001,928
Receive a fixed rate of 3.650% and pay a floating rate based on 3-month LIBOR, Expires 5/05/11, Broker, Credit Suisse International			8,100		675,762			24,700		2,060,655			52,900		4,413,306			85,700		7,149,723

S-26

Pro Forma Condensed Combined Schedule of Investments for

BlackRock Total Return Portfolio II, BlackRock Managed Income Portfolio and BlackRock Bond Portfolio

As of September 30, 2010 (Unaudited)

(Percentages shown are based on Combined Net Assets)

		BlackRock Managed Income Portfolio					BlackRock Bond Portfolio					BlackRock Total Return Portfolio II					BlackRock Total Return Portfolio II Pro Forma Combined
Over-the-Counter Call Swaptions Purchased (concluded)		Notional Amount (000)		Value			Notional Amount (000)		Value			Notional Amount (000)		Value			Notional Amount (000)		Value
Receive a fixed rate of 3.703% and pay afloating rate based on 3-month LIBOR, Expires 8/03/12, Broker, Credit Suisse International	USD		6,300	$	461,557	USD		12,800	$	937,767	USD		26,500	$	1,941,470	USD		45,600	$	3,340,794
Receive a fixed rate of 3.805% and pay afloating rate based on 3-month LIBOR, Expires 9/17/13, Broker, Citibank, N.A.			1,900		133,360			3,900		273,739			9,000		631,707			14,800		1,038,806
Receive a fixed rate of 3.855% and pay afloating rate based on 3-month LIBOR, Expires 5/19/11, Broker, JPMorgan Chase Bank, N.A.			15,300		1,510,609			44,200		4,363,982			92,300		9,113,021			151,800		14,987,612
Receive a fixed rate of 3.885% and pay afloating rate based on 3-month LIBOR, Expires 7/09/12, Broker, Goldman Sachs Bank USA			5,600		475,703			11,300		959,900			23,600		2,004,747			40,500		3,440,350
Receive a fixed rate of 3.925% and pay afloating rate based on 3-month LIBOR, Expires 7/16/12, Broker, Goldman Sachs Bank USA			6,300		549,495			12,700		1,107,712			26,600		2,320,090			45,600		3,977,297
Receive a fixed rate of 4.000% and pay afloating rate based on 3-month LIBOR, Expires 5/16/11, Broker, BNP Paribas			—		—			16,500		1,826,547								16,500		1,826,547
Receive a fixed rate of 4.005% and pay afloating rate based on 3-month LIBOR, Expires 5/16/11, Broker, Goldman Sachs Bank USA			—		—			—		—			34,600		3,844,288			34,600		3,844,288
Receive a fixed rate of 4.215% and pay afloating rate based on 3-month LIBOR, Expires 4/29/11, Broker, Credit Suisse International			8,000		1,034,934			—		—			—		—			8,000		1,034,934
Receive a fixed rate of 4.388% and pay afloating rate based on 3-month LIBOR, Expires 5/08/12, Broker, Citibank, N.A.			3,400		412,233			6,400		775,968			13,600		1,648,932			23,400		2,837,133
Receive a fixed rate of 5.200% and pay afloating rate based on 3-month LIBOR,
Expires 4/28/15, Broker, Citibank, N.A.			13,400		1,808,031			25,300		3,413,670			53,800		7,259,108			92,500		12,480,809
Receive a fixed rate of 5.210% and pay afloating rate based on 3-month LIBOR, Expires 3/03/11, Broker, Goldman Sachs Bank USA			—		—			9,500		2,108,111			—		—			9,500		2,108,111
Total Over-the-Counter Call Swaptions Purchased					7,321,415					18,359,501					34,387,416					60,068,332

S-27

Pro Forma Condensed Combined Schedule of Investments for

BlackRock Total Return Portfolio II, BlackRock Managed Income Portfolio and BlackRock Bond Portfolio

As of September 30, 2010 (Unaudited)

(Percentages shown are based on Combined Net Assets)

			BlackRock Managed Income Portfolio					BlackRock Bond Portfolio					BlackRock Total Return Portfolio II					BlackRock Total Return Portfolio II Pro Forma Combined
Over-the-Counter Put Swaptions Purchased		Notional Amount (000)		Value			Notional Amount (000)		Value			Notional Amount (000)		Value			Notional Amount (000)		Value
Pay a fixed rate of 2.015% and receive afloating rate based on 3-month LIBOR, Expires 11/10/10, Broker, Bank of America, N.A.	USD		7,700	$	2,832	USD		15,500	$	5,701	USD		32,500	$	11,954	USD		55,700	$	20,487
Pay a fixed rate of 3.000% and receive afloating rate based on 3-month LIBOR, Expires 9/02/11, Broker, UBS AG			6,500		214,668			13,300		439,244			30,300		1,000,684			50,100		1,654,596
Pay a fixed rate of 3.703% and receive afloating rate based on 3-month LIBOR, Expires 8/03/12, Broker, Credit Suisse International			6,300		216,599			12,800		440,073			26,500		911,089			45,600		1,567,761
Pay a fixed rate of 3.805% and receive afloating rate based on 3-month LIBOR, Expires 9/17/13, Broker, Citibank, N.A.			1,900		99,268			3,900		203,761			9,000		470,218			14,800		773,247
Pay a fixed rate of 3.855% and receive afloating rate based on 3-month LIBOR, Expires 5/19/11, Broker, JPMorgan Chase Bank, N.A.			15,300		90,700			44,200		262,022			92,300		547,164			151,800		899,886
Pay a fixed rate of 3.885% and receive afloating rate based on 3-month LIBOR, Expires 7/09/12, Broker, Goldman Sachs Bank USA			5,600		157,529			11,300		317,871			23,600		663,873			40,500		1,139,273
Pay a fixed rate of 3.925% and receive afloating rate based on 3-month LIBOR, Expires 7/16/12, Broker, Goldman Sachs Bank USA			6,300		173,672			12,700		350,101			26,600		733,283			45,600		1,257,056
Pay a fixed rate of 4.000% and receive afloating rate based on 3-month LIBOR, Expires 5/16/11, Broker, BNP Paribas			—		—			16,500		74,074			—		—			16,500		74,074
Pay a fixed rate of 4.005% and receive afloating rate based on 3-month LIBOR, Expires 5/16/11, Broker, Goldman Sachs Bank USA			—		—			—		—			34,600		154,011			34,600		154,011
Pay a fixed rate of 4.020% and receive afloating rate based on 3-month LIBOR, Expires 5/05/11, Broker, Credit Suisse International			13,100		51,371			24,700		96,861			52,900		207,446			90,700		355,678
Pay a fixed rate of 4.215% and receive afloating rate based on 3-month LIBOR, Expires 4/29/11, Broker, Credit Suisse International			8,000		20,745			—		—			—		—			8,000		20,745
Pay a fixed rate of 4.388% and receive afloating rate based on 3-month LIBOR, Expires 5/08/12, Broker, Citibank, N.A.			3,400		53,062			6,400		99,882			13,600		212,250			23,400		365,194
Pay a fixed rate of 5.200% and receive afloating rate based on 3-month LIBOR, Expires 4/28/15, Broker, Citibank, N.A.			13,400		472,860			25,300		892,789			53,800		1,898,499			92,500		3,264,148
Pay a fixed rate of 5.210% and receive afloating rate based on 3-month LIBOR, Expires 3/03/11, Broker, Goldman Sachs Bank USA								9,500		1,096								9,500		1,096
Total Over-the-Counter Put Swaptions Purchased					1,553,306					3,183,475					6,810,471					11,547,252

S-28

Pro Forma Condensed Combined Schedule of Investments for

BlackRock Total Return Portfolio II, BlackRock Managed Income Portfolio and BlackRock Bond Portfolio

As of September 30, 2010 (Unaudited)

(Percentages shown are based on Combined Net Assets)

		BlackRock Managed Income Portfolio						BlackRock Bond Portfolio						BlackRock Total Return Portfolio II						BlackRock Total Return Portfolio II Pro Forma Combined
Over-the-Counter Put Swaptions Purchased		Notional Amount (000)		Value				Notional Amount (000)		Value				Notional Amount (000)		Value				Notional Amount (000)		Value
Total Options Purchased (Cost - $58,329,237) - 1.8%	USD			$	8,894,206		USD			$	21,581,945		USD			$	41,279,184		USD			$	71,755,335
Total Investments Before TBA Sale Commitments and Options Written (Cost - $6,458,306,098*) - 163.8%					921,008,696						1,512,331,563						4,128,042,714						6,561,382,973
Total TBA Sale Commitments (k)		Par (000)						Par (000)						Par (000)						Par (000)
Fannie Mae Mortgage-Backed Securities:
4.00%, 10/01/25 - 10/01/40			39,700		(40,920,916	)			65,400		(67,448,238	)			243,900		(252,140,862	)			349,000		(360,510,016	)
4.50%, 10/01/25 - 10/01/40			42,900		(44,652,344	)			28,400		(29,571,500	)			251,000		(261,451,406	)			322,300		(335,675,250	)
5.00%, 10/01/25 - 10/01/40			54,784		(57,673,722	)			64,947		(68,357,655	)			239,113		(251,732,256	)			358,844		(377,763,633	)
5.50%, 10/01/25 - 10/01/40			39,967		(42,518,931	)			28,000		(29,758,750	)			289,906		(308,293,058	)			357,873		(380,570,739	)
6.00%, 10/01/40			42,300		(45,429,625	)			38,000		(40,790,020	)			111,000		(119,186,250	)			191,300		(205,405,895	)
Freddie Mac Mortgage-Backed Securities:
6.00%, 7/01/25			—		—				—		—				2,900		(3,150,125	)			2,900		(3,150,125	)
4.00%, 10/01/25			41,200		(42,944,614	)			44,800		(46,648,000	)			84,500		(87,985,625	)			170,500		(177,578,239	)
4.50%, 10/01/40			8,400		(8,736,000	)			32,239		(33,528,124	)			67,646		(70,351,494	)			108,285		(112,615,618	)
5.00%, 10/01/40			10,274		(10,790,832	)			—		—				43,694		(45,892,664	)			53,968		(56,683,496	)
5.50%, 10/01/40									2,700		(2,862,843	)									2,700		(2,862,843	)
Ginnie Mae Mortgage-Backed Securities, 6.00%, 10/01/40			—		—				—		—				500		(541,250	)			500		(541,250	)
Total TBA Sale Commitments (Proceeds - $2,019,975,711) - (50.3)%					(293,666,984	)					(318,965,130	)					(1,400,724,990	)					(2,013,357,104	)
Options Written		Notional Amount (000)						Notional Amount (000)						Notional Amount (000)						Notional Amount (000)
Over-the-Counter Call Swaptions Written
Pay a fixed rate of 2.210% and receive afloating rate based on 3-month LIBOR, Expires 12/02/10, Broker, Citibank, N.A.			2,600		(7,178	)			5,400		(14,908	)			12,400		(34,233	)			20,400		(56,319	)

S-29

Pro Forma Condensed Combined Schedule of Investments for

BlackRock Total Return Portfolio II, BlackRock Managed Income Portfolio and BlackRock Bond Portfolio

As of September 30, 2010 (Unaudited)

(Percentages shown are based on Combined Net Assets)

		BlackRock Managed Income Portfolio						BlackRock Bond Portfolio						BlackRock Total Return Portfolio II						BlackRock Total Return Portfolio II Pro Forma Combined
Options Written (continued)		Notional Amount (000)		Value				Notional Amount (000)		Value				Notional Amount (000)		Value				Notional Amount (000)		Value
Over-the-Counter Call Swaptions Written (continued)
Pay a fixed rate of 2.320% and receive afloating rate based on 3-month LIBOR, Expires 12/03/10, Broker, Citibank, N.A.	USD		3,800	$	(18,079	)	USD		7,700	$	(36,633	)	USD		17,600	$	(83,733	)	USD		29,100	$	(138,445	)
Pay a fixed rate of 2.720% and receive afloating rate based on 3-month LIBOR, Expires 12/02/10, Broker, Bank of America, N.A.			8,700		(168,394	)			17,700		(342,595	)			40,400		(781,969	)			66,800		(1,292,958	)
Pay a fixed rate of 3.075% and receive afloating rate based on 3-month LIBOR, Expires 9/14/11, Broker, Bank of America, N.A.			3,700		(162,524	)			7,500		(329,440	)			17,400		(764,300	)			28,600		(1,256,264	)
Pay a fixed rate of 3.230% and receive afloating rate based on 3-month LIBOR, Expires 9/03/13, Broker, Citibank, N.A.	EUR		7,300		(482,945	)	EUR		14,800		(979,121	)	EUR		33,800		(2,236,100	)	EUR		55,900		(3,698,166	)
Pay a fixed rate of 3.830% and receive afloating rate based on 3-month LIBOR, Expires 7/30/12, Broker, Citibank, N.A.	USD		3,300		(267,208	)	USD		8,400		(680,166	)	USD		10,000		(809,722	)	USD		21,700		(1,757,096	)
Pay a fixed rate of 3.860% and receive afloating rate based on 3-month LIBOR, Expires 6/02/11, Broker, UBS AG			8,500		(836,817	)			16,500		(1,624,409	)			—		—				25,000		(2,461,226	)
Pay a fixed rate of 3.970% and receive afloating rate based on 3-month LIBOR, Expires 8/11/15, Broker, Bank of America, N.A.			3,800		(165,657	)			7,600		(331,314	)			16,900		(736,738	)			28,300		(1,233,709	)
Pay a fixed rate of 4.050% and receive afloating rate based on 3-month LIBOR, Expires 6/18/12, Broker, Deutsche Bank AG			4,900		(471,295	)			9,500		(913,735	)			20,000		(1,923,653	)			34,400		(3,308,683	)
Pay a fixed rate of 4.060% and receive afloating rate based on 3-month LIBOR, Expires 5/13/11, Broker, BNP Paribas			5,100		(589,604	)			9,700		(1,121,404	)			20,500		(2,369,977	)			35,300		(4,080,985	)
Pay a fixed rate of 4.060% and receive afloating rate based on 3-month LIBOR, Expires 7/15/13, Broker, Credit Suisse International			3,400		(288,838	)			—		—				—		—				3,400		(288,838	)
Pay a fixed rate of 4.063% and receive afloating rate based on 3-month LIBOR, Expires 5/12/11, Broker, Royal Bank of Scotland Plc			9,800		(1,135,603	)			18,600		(2,155,328	)			39,200		(4,542,411	)			67,600		(7,833,342	)
Pay a fixed rate of 4.070% and receive afloating rate based on 3-month LIBOR, Expires 7/08/13, Broker, Deutsche Bank AG			—		—				4,700		(402,751	)			12,500		(1,071,147	)			17,200		(1,473,898	)
Pay a fixed rate of 4.140% and receive afloating rate based on 3-month LIBOR, Expires 6/15/12, Broker, Deutsche Bank AG			—		—				9,700		(990,991	)			43,000		(4,393,052	)			52,700		(5,384,043	)

S-30

Pro Forma Condensed Combined Schedule of Investments for

BlackRock Total Return Portfolio II, BlackRock Managed Income Portfolio and BlackRock Bond Portfolio

As of September 30, 2010 (Unaudited)

(Percentages shown are based on Combined Net Assets)

		BlackRock Managed Income Portfolio						BlackRock Bond Portfolio						BlackRock Total Return Portfolio II						BlackRock Total Return Portfolio II Pro Forma Combined
Options Written (continued)		Notional Amount (000)		Value				Notional Amount (000)		Value				Notional Amount (000)		Value				Notional Amount (000)		Value
Over-the-Counter Call Swaptions Written (concluded)
Pay a fixed rate of 4.210% and receive afloating rate based on 3-month LIBOR, Expires 8/06/15, Broker, Goldman Sachs Bank USA	USD		5,100	$	(254,583	)	USD		10,300	$	(514,158	)	USD		21,500	$	(1,073,242	)	USD		36,900	$	(1,841,983	)
Pay a fixed rate of 4.315% and receive afloating rate based on 3-month LIBOR, Expires 5/28/13, Broker, Royal Bank of Scotland Plc			1,300		(131,539	)			2,200		(222,605	)			6,200		(627,341	)			9,700		(981,485	)
Pay a fixed rate of 4.755% and receive afloating rate based on 3-month LIBOR, Expires 5/30/17, Broker, JPMorgan Chase Bank, N.A.			4,500		(456,211	)			8,600		(871,869	)			18,100		(1,834,980	)			31,200		(3,163,060	)
Pay a fixed rate of 4.840% and receive afloating rate based on 3-month LIBOR, Expires 12/02/14, Broker, JPMorgan Chase Bank, N.A.			—		—				—		—				17,500		(2,044,126	)			17,500		(2,044,126	)
Pay a fixed rate of 4.890% and receive afloating rate based on 3-month LIBOR, Expires 12/03/14, Broker, Deutsche Bank AG			4,300		(514,678	)			9,500		(1,137,078	)			20,100		(2,405,818	)			33,900		(4,057,574	)
Pay a fixed rate of 4.895% and receive afloating rate based on 3-month LIBOR, Expires 3/04/13, Broker, Deutsche Bank AG			7,100		(1,013,821	)			15,500		(2,213,271	)			29,200		(4,169,517	)			51,800		(7,396,609	)
Pay a fixed rate of 4.920% and receive a floating rate based on 3-month LIBOR, Expires 3/05/13, Broker, Deutsche Bank AG			10,000		(1,445,067	)			20,000		(2,890,134	)			41,000		(5,924,775	)			71,000		(10,259,976	)
Pay a fixed rate of 5.000% and receive afloating rate based on 3-month LIBOR, Expires 4/22/13, Broker, JPMorgan Chase Bank, N.A.			8,800		(1,301,024	)			16,700		(2,468,989	)			35,400		(5,233,666	)			60,900		(9,003,679	)
Pay a fixed rate of 5.050% and receive afloating rate based on 3-month LIBOR, Expires 5/16/11, Broker, Citibank, N.A.			14,900		(2,985,633	)			22,000		(4,408,317	)			—		—				36,900		(7,393,950	)
					(12,696,698	)					(24,649,216	)					(43,060,500	)					(80,406,414	)
Over-the-Counter Put Swaptions Written
Receive a fixed rate of 1.960% and pay a floating rate based on 3-month LIBOR, Expires 11/30/10, Broker, Deutsche Bank AG			—		—				12,800		(17,793	)			29,200		(40,591	)			42,000		(58,384	)
Receive a fixed rate of 2.100% and pay afloating rate based on 3-month LIBOR, Expires 12/02/10, Broker, Citibank, N.A.			21,400		(5	)			41,200		(9	)			86,500		(20	)			149,100		(34	)

S-31

Pro Forma Condensed Combined Schedule of Investments for

BlackRock Total Return Portfolio II, BlackRock Managed Income Portfolio and BlackRock Bond Portfolio

As of September 30, 2010 (Unaudited)

(Percentages shown are based on Combined Net Assets)

		BlackRock Managed Income Portfolio						BlackRock Bond Portfolio						BlackRock Total Return Portfolio II						BlackRock Total Return Portfolio II Pro Forma Combined
Options Written (continued)		Notional Amount (000)		Value				Notional Amount (000)		Value				Notional Amount (000)		Value				Notional Amount (000)		Value
Over-the-Counter Put Swaptions Written (continued)
Receive a fixed rate of 2.315% and pay afloating rate based on 3-month LIBOR, Expires 11/10/10, Broker, Bank of America, N.A.	USD		7,700	$	(304	)	USD		15,500	$	(612	)	USD		32,500	$	(1,284	)	USD		55,700	$	(2,200	)
Receive a fixed rate of 2.720% and pay afloating rate based on 3-month LIBOR, Expires 12/02/10, Broker, Bank of America, N.A.			8,700		(103,534	)			17,700		(210,639	)			40,400		(480,780	)			66,800		(794,953	)
Receive a fixed rate of 3.075% and pay afloating rate based on 3-month LIBOR, Expires 9/14/11, Broker, Bank of America, N.A.			3,700		(115,432	)			7,500		(233,984	)			17,400		(542,843	)			28,600		(892,259	)
Receive a fixed rate of 3.210% and pay afloating rate based on 3-month LIBOR, Expires 12/02/10, Broker, Citibank, N.A.			2,600		(5,348	)			5,400		(11,108	)			12,400		(25,507	)			20,400		(41,963	)
Receive a fixed rate of 3.230% and pay afloating rate based on 3-month LIBOR, Expires 9/03/13, Broker, Citibank, N.A.	EUR		7,300		(452,707	)	EUR		14,800		(917,816	)	EUR		33,800		(2,096,094	)	EUR		55,900		(3,466,617	)
Receive a fixed rate of 3.320% and pay afloating rate based on 3-month LIBOR, Expires 12/03/10, Broker, Citibank, N.A.	USD		3,800		(5,206	)	USD		7,700		(10,550	)	USD		17,600		(24,113	)	USD		29,100		(39,869	)
Receive a fixed rate of 3.830% and pay afloating rate based on 3-month LIBOR, Expires 7/30/12, Broker, Citibank, N.A.			3,300		(101,153	)			8,400		(257,481	)			10,000		(306,525	)			21,700		(665,159	)
Receive a fixed rate of 3.860% and pay afloating rate based on 3-month LIBOR, Expires 6/02/11, Broker, UBS AG			8,500		(55,887	)			16,500		(108,486	)			—		—				25,000		(164,373	)
Receive a fixed rate of 3.970% and pay afloating rate based on 3-month LIBOR, Expires 8/11/15, Broker, Bank of America, N.A.			3,800		(132,960	)			7,600		(265,920	)			16,900		(591,322	)			28,300		(990,202	)
Receive a fixed rate of 4.000% and pay afloating rate based on 3-month LIBOR, Expires 8/13/12, Broker, Morgan Stanley Capital Services, Inc.			10,800		(295,096	)			21,800		(595,657	)			48,200		(1,317,004	)			80,800		(2,207,757	)
Receive a fixed rate of 4.050% and pay afloating rate based on 3-month LIBOR, Expires 6/18/12, Broker, Deutsche Bank AG			4,900		(114,456	)			9,500		(221,904	)			20,000		(467,166	)			34,400		(803,526	)
Receive a fixed rate of 4.060% and pay afloating rate based on 3-month LIBOR, Expires 5/13/11, Broker, BNP Paribas			5,100		(20,185	)			9,700		(38,390	)			20,500		(81,134	)			35,300		(139,709	)
Receive a fixed rate of 4.060% and pay afloating rate based on 3-month LIBOR, Expires 7/15/13, Broker, Credit Suisse International			3,400		(142,522	)			—		—				—		—				3,400		(142,522	)
Receive a fixed rate of 4.063% and pay afloating rate based on 3-month LIBOR, Expires 5/12/11, Broker, Royal Bank of Scotland Plc			9,800		(38,269	)			18,600		(72,634	)			39,200		(153,077	)			67,600		(263,980	)

S-32

Pro Forma Condensed Combined Schedule of Investments for

BlackRock Total Return Portfolio II, BlackRock Managed Income Portfolio and BlackRock Bond Portfolio

As of September 30, 2010 (Unaudited)

(Percentages shown are based on Combined Net Assets)

		BlackRock Managed Income Portfolio						BlackRock Bond Portfolio						BlackRock Total Return Portfolio II						BlackRock Total Return Portfolio II Pro Forma Combined
Options Written (continued)		Notional Amount (000)		Value				Notional Amount (000)		Value				Notional Amount (000)		Value				Notional Amount (000)		Value
Over-the Counter Put Swaptions Written (continued)
Receive a fixed rate of 4.070% and pay afloating rate based on 3-month LIBOR, Expires 7/08/13, Broker, Deutsche Bank AG	USD		—	$	—		USD		4,700	$	(194,356	)	USD		12,500	$	(516,903	)	USD		17,200	$	(711,259	)
Receive a fixed rate of 4.140% and pay afloating rate based on 3-month LIBOR, Expires 6/15/12, Broker, Deutsche Bank AG			—		—				9,700		(208,613	)			43,000		(924,779	)			52,700		(1,133,392	)
Receive a fixed rate of 4.210% and pay afloating rate based on 3-month LIBOR, Expires 8/06/15, Broker, Goldman Sachs Bank USA			5,100		(158,680	)			10,300		(320,472	)			21,500		(668,946	)			36,900		(1,148,098	)
Receive a fixed rate of 4.315% and pay afloating rate based on 3-month LIBOR, Expires 5/28/13, Broker, Royal Bank of Scotland Plc			1,300		(43,661	)			2,200		(73,888	)			6,200		(208,231	)			9,700		(325,780	)
Receive a fixed rate of 4.468% and pay afloating rate based on 3-month LIBOR, Expires 8/05/15, Broker, JPMorgan Chase Bank, N.A.			10,500		(288,397	)			21,200		(582,288	)			44,500		(1,222,255	)			76,200		(2,092,940	)
Receive a fixed rate of 4.755% and pay afloating rate based on 3-month LIBOR, Expires 5/30/17, Broker, JPMorgan Chase Bank, N.A.			4,500		(241,652	)			8,600		(461,824	)			18,100		(971,978	)			31,200		(1,675,454	)
Receive a fixed rate of 4.840% and pay afloating rate based on 3-month LIBOR, Expires 12/02/14, Broker, JPMorgan Chase Bank, N.A.			—		—				—		—				17,500		(686,028	)			17,500		(686,028	)
Receive a fixed rate of 4.890% and pay afloating rate based on 3-month LIBOR, Expires 12/03/14, Broker, Deutsche Bank AG			4,300		(164,232	)			9,500		(362,838	)			20,100		(767,689	)			33,900		(1,294,759	)
Receive a fixed rate of 4.895% and pay afloating rate based on 3-month LIBOR, Expires 3/04/13, Broker, Deutsche Bank AG			7,100		(142,612	)			15,500		(311,337	)			29,200		(586,518	)			51,800		(1,040,467	)
Receive a fixed rate of 4.920% and pay afloating rate based on 3-month LIBOR, Expires 3/05/13, Broker, Deutsche Bank AG			10,000		(197,826	)			20,000		(395,652	)			41,000		(811,087	)			71,000		(1,404,565	)
Receive a fixed rate of 5.000% and pay a floating rate based on 3-month LIBOR, Expires 4/22/13, Broker, JPMorgan Chase Bank, N.A.			8,800		(178,464	)			16,700		(338,675	)			35,400		(717,910	)			60,900		(1,235,049	)
Receive a fixed rate of 5.050% and pay a floating rate based on 3-month LIBOR, Expires 5/16/11, Broker, Citibank, N.A.			14,900		(10,853	)			22,000		(16,024	)			—		—				36,900		(26,877	)
					(3,009,441	)					(6,228,950	)					(14,209,784	)					(23,448,175	)

S-33

Pro Forma Condensed Combined Schedule of Investments for

BlackRock Total Return Portfolio II, BlackRock Managed Income Portfolio and BlackRock Bond Portfolio

As of September 30, 2010 (Unaudited)

(Percentages shown are based on Combined Net Assets)

	BlackRock Managed Income Portfolio				BlackRock Bond Portfolio				BlackRock Total Return Portfolio II				BlackRock Total Return Portfolio II Pro Forma Combined
Options Written (concluded)	Notional Amount (000)	Value			Notional Amount (000)	Value			Notional Amount (000)	Value			Notional Amount (000)	Value
Total Options Written (Premiums Received - $83,643,203) - (2.6)%		$	(15,706,139	)		$	(30,878,166	)		$	(57,270,284	)			(103,854,589	)
Total Investments Net of TBA Sale Commitments and Options Written - 110.9%			611,635,573				1,162,488,267				2,670,047,440				4,444,171,280
Other Assets Less Liabilities (Liabilities in Excess of Other Assets) - (10.9)%			(111,294,193	)			17,717,578				(338,603,282	)			(438,292,831	)(n)
Net Assets - 100.0%		$	500,341,380			$	1,180,205,845			$	2,331,444,158			$	4,005,878,449

* The cost and unrealized appreciation (depreciation) of investments as of September 30, 2010, as computed for federal income tax purposes, were as follows:

Aggregate cost. . .	$	6,465,235,078
Gross unrealized appreciation. . .	$	187,933,825
Gross unrealized depreciation . . .		(91,785,930	)
Net unrealized appreciation . . .	$	96,147,895

(a) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration to qualified institutional investors.

(b) Variable rate security. Rate shown is as of report date.

(c) Security, or a portion thereof, has been pledged as collateral for swap contracts.

(d) Non-income producing security.

(e) Issuer filed for bankruptcy and/or is in default of interest payments.

(f) Represents a step-up bond that pays an initial coupon rate for the first period and then a higher coupon rate for the following periods. Rate shown reflects the current yield as of report date.

(g) Security is perpetual in nature and has no stated maturity date.

(h) All or a portion of security pledged as collateral in connection with open financial futures contracts.

(i) All or a portion of security pledged as collateral for reverse repurchase agreements.

(j) Represents a zero-coupon bond. Rate shown reflects the current yield as of report date.

S-34

Pro Forma Condensed Combined Schedule of Investments for

BlackRock Total Return Portfolio II, BlackRock Managed Income Portfolio and BlackRock Bond Portfolio

As of September 30, 2010 (Unaudited)

(k) Represents or includes a to-be-announced (“TBA”) transaction. Unsettled TBA transactions as of report date were as follows:

Counterparty	Market Value			Unrealized Appreciation (Depreciation)
Bank of America, N.A.	$	(34,332,812	)	$	37,281
BNP Paribas	$	(99,987,305	)	$	106,452
Citibank, N.A.	$	183,496,215		$	30,978
Credit Suisse International	$	(67,706,497	)	$	(193,636	)
Deutsche Bank AG	$	(2,515,858	)	$	66,211
First Union Capital Markets	$	(46,648,000	)	$	56,000
Goldman Sachs Bank USA	$	(261,386,488	)	$	3,240,709
JPMorgan Chase Bank, N.A.	$	87,775,952		$	365,976
Morgan Stanley Capital Services, Inc.	$	(157,068,148	)	$	646,911
Nomura Securities International, Inc.	$	31,208,187		$	206,407
RBC Dain Rauscher, Inc.	$	3,635,781		$	(352	)
Royal Bank of Scotland Plc	$	112,218,609		$	472,942
UBS AG	$	(18,208,504	)	$	122,886
Wachovia Investors	$	106,063		$	94
Wells Fargo & Co.	$	(82,906,052	)	$	128,994

(l) Investments in companies considered to be an affiliate of the Fund during the year, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

Combined Affiliate	Shares Held at September 30, 2009		Net Activity			Shares Held at September 30, 2010		Realized Gain		Income
BlackRock Liquidity Funds, TempFund
Institutional Class		25,213,008		(284,936	)		24,928,072	$	58	$	46,125

(m) Represents the current yield as of report date.

(n) Reflects the distribution of undistributed net investment income of $5,907,362, of which $1,532,354 was attributable to BlackRock Managed Income Portfolio and $4,375,008 was attributable to BlackRock Bond Portfolio. Also reflects estimated reorganization costs of $205,572, of which $88,667 was attributable to BlackRock Total Return Portfolio II and $116,905 was attributable to BlackRock Managed Income Portfolio, respectively.

(o) All or a portion of security has been pledged as collateral in connection with Term Asset-Backed Securities Loan Facility (“TALF”) Program.

• Reverse repurchase agreements outstanding as of September 30, 2010 were as follows:

Counterparty	Interest Rate			Settlement Date		Maturity Date		Net Closing Amount		Par
Credit Suisse International		0.23	%		3/11/2010		10/1/2010	$	3,049,722	$	3,045,733
Credit Suisse International		0.19	%		3/11/2010		Open	$	3,196,035	$	3,192,597
Bank of America, N.A.		0.16	%		3/12/2010		Open	$	2,778,817	$	2,776,313
Credit Suisse International		0.19	%		3/16/2010		Open	$	2,346,061	$	2,343,600
Credit Suisse International		0.15	%		3/16/2010		Open	$	5,867,524	$	5,862,663
Barclays Bank Plc		0.16	%		4/8/2010		Open	$	77,834,454	$	77,805,000
Barclays Bank Plc		0.26	%		5/17/2010		Open	$	2,718,312	$	2,715,625
Credit Suisse International		0.28	%		8/13/2010		Open	$	4,608,143	$	4,606,387
Barclays Bank Plc		0.27	%		8/24/2010		Open	$	2,288,508	$	2,287,856
Barclays Bank Plc		0.27	%		8/24/2010		Open	$	4,340,737	$	4,339,500
JP Morgan Chase Bank, N.A.		0.20	%		9/9/2010		Open	$	3,587,138	$	3,586,700
Credit Suisse International		0.05	%		9/15/2010		Open	$	46,942,293	$	46,941,250
Barclays Bank Plc		0.24	%		9/17/2010		Open	$	77,422,225	$	77,415,000
Barclays Bank Plc		0.17	%		9/22/2010		Open	$	50,314,638	$	50,312,500
Barclays Bank Plc		0.20	%		9/23/2010		Open	$	60,042,525	$	60,039,856
Barclays Bank Plc		0.19	%		9/23/2010		10/1/2010	$	7,087,801	$	7,087,500
Barclays Bank, Plc		0.24	%		9/29/2010		Open	$	16,120,215	$	16,120,000
Barclays Bank Plc		0.19	%		9/30/2010		10/1/2010	$	191,362,918	$	191,361,908
Credit Suisse International		0.28	%		9/30/2010		Open	$	195,756,522	$	195,755,000
Bank of America, N.A.		0.30	%		9/30/2010		10/1/2010	$	3,030,025	$	3,030,000

S-35

Pro Forma Condensed Combined Schedule of Investments for

BlackRock Total Return Portfolio II, BlackRock Managed Income Portfolio and BlackRock Bond Portfolio

As of September 30, 2010 (Unaudited)

Counterparty	Interest Rate			Settlement Date		Maturity Date		Net Closing Amount		Par
JP Morgan Chase Bank, N.A.		0.38	%		9/30/2010		10/1/2010	$	92,768,479	$	92,767,500
JP Morgan Chase Bank, N.A.		0.23	%		9/30/2010		10/15/2010	$	1,997,691	$	1,997,500
Total										$	855,389,988

Foreign currency exchange contracts as of September 30, 2010 were as follows:

BlackRock Total Return Portfolio II Pro Forma Combined
Currency Purchased		Currency Sold			Counterparty	Unrealized Settlement Date		Unrealized Appreciation (Depreciation)
CHF	76,578,335		EUR	58,715,000	Citibank, N.A.		10/14/2010	$	(2,094,502	)
CHF	19,013,293		EUR	14,345,000	Goldman Sachs Bank USA		10/14/2010	$	(202,311	)
CHF	18,445,447		EUR	14,345,000	Royal Bank of Scotland Plc		10/14/2010	$	(780,262	)
EUR	14,345,000		CHF	18,445,949	Goldman Sachs Bank USA		10/14/2010	$	779,751
EUR	58,715,000		CHF	77,078,997	Goldman Sachs Bank USA		10/14/2010	$	1,584,935
EUR	14,345,000		CHF	18,728,258	Royal Bank of Scotland Plc		10/14/2010	$	492,418
EUR	28,795,000		USD	37,627,636	Citibank, N.A.		10/14/2010	$	1,623,240
EUR	31,410,000		USD	40,103,973	Goldman Sachs Bank USA		10/14/2010	$	2,711,447
EUR	28,795,000		USD	37,567,398	Royal Bank of Scotland Plc		10/14/2010	$	1,683,478
JPY	2,507,644,781		USD	29,955,000	BNP Paribas		10/14/2010	$	87,564
JPY	3,139,394,522		USD	37,195,000	BNP Paribas		10/14/2010	$	416,172
JPY	2,111,089,499		USD	24,840,000	BNP Paribas		10/14/2010	$	451,677
JPY	318,225,380		USD	3,740,000	Citibank, N.A.		10/14/2010	$	72,464
JPY	3,223,770,600		USD	38,440,000	Credit Agricole SA		10/14/2010	$	182,030
JPY	2,125,047,825		USD	24,975,000	Citibank, N.A.		10/14/2010	$	483,903
JPY	3,224,617,164		USD	38,460,000	Morgan Stanley Capital Services, Inc.		10/14/2010	$	172,173
JPY	35,180,460		USD	420,000	Royal Bank of Scotland Plc		10/14/2010	$	1,475
JPY	1,840,060,400		USD	21,455,000	Royal Bank of Scotland Plc		10/14/2010	$	544,642
USD	23,440,000		JPY	1,965,279,920	BNP Paribas		10/14/2010	$	(104,821	)
JPY	656,528,990		USD	7,670,000	Royal Bank of Scotland Plc		10/14/2010	$	195,474
JPY	310,948,290		USD	3,720,000	BNP Paribas		10/14/2010	$	5,282
USD	37,580,101		EUR	28,795,000	Citibank, N.A.		10/14/2010	$	(1,670,774	)
USD	26,788,868		EUR	20,685,000	Citibank, N.A.		10/14/2010	$	(1,407,151	)
USD	12,005,272		EUR	9,355,000	Goldman Sachs Bank USA		10/14/2010	$	(746,662	)
USD	30,859,079		EUR	23,820,000	Citibank, N.A.		10/14/2010	$	(1,610,304	)
USD	8,155,372		EUR	6,355,000	Goldman Sachs Bank USA		10/14/2010	$	(507,220	)
USD	19,225,000		EUR	1,619,677,411	BNP Paribas		10/14/2010	$	(179,368	)
USD	11,640,000		JPY	983,358,840	Citibank, N.A.		10/14/2010	$	(141,023	)
USD	15,295,000		JPY	1,282,378,685	BNP Paribas		10/14/2010	$	(68,398	)
USD	7,595,000		JPY	641,633,195	Citibank, N.A.		10/14/2010	$	(92,016	)
USD	38,460,000		JPY	3,238,293,540	Deutsche Bank AG		10/14/2010	$	(336,021	)
USD	38,735,000		JPY	3,243,068,507	Deutsche Bank AG		10/14/2010	$	(118,226	)
USD	19,235,000		JPY	1,623,087,770	Goldman Sachs Bank USA		10/14/2010	$	(210,225	)
USD	19,100,000		JPY	1,612,230,950	Royal Bank of Scotland Plc		10/14/2010	$	(215,156	)
USD	38,190,000		JPY	3,219,819,903	UBS AG		10/14/2010	$	(384,699	)
USD	2,320,944		JPY	1,825,000	Citibank, N.A.		11/17/2010		(166,053	)
								$	452,933

S-36

Pro Forma Condensed Combined Schedule of Investments for

BlackRock Total Return Portfolio II, BlackRock Managed Income Portfolio and BlackRock Bond Portfolio

As of September 30, 2010 (Unaudited)

Financial futures contracts purchased as of September 30, 2010 were as follows:

BlackRock Total Return Portfolio II Pro Forma Combined
Contracts	Issue	Exchange	Expiration Date	Notional Value		Unrealized Appreciation (Depreciation)
499	U.S. Treasury Notes (5 Year)	Chicago Board Options	December 2010	$	60,312,727	$	7,883
5,561	U.S. Treasury Notes (10 Year)	Chicago Board Options	December 2010	$	437,004,516	$	(489,991	)
464	U.S. Treasury Bonds (30 Year)	Chicago Board Options	December 2010	$	48,406,187	$	271,728
143	Euro-Bund	Eurex	December 2010	$	14,333,779	$	(123,903	)
Total						$	(334,283	)

Financial futures contracts sold as of September 30, 2010 were as follows:

BlackRock Total Return Portfolio II Pro Forma Combined
Contracts	Issue	Exchange	Expiration Date	Notional Value		Unrealized Appreciation (Depreciation)
1,459	U.S. Treasury Notes (2 Year)	Chicago Board Options	December 2010	$	320,227,704	$	(32,064	)
308	U.S. Treasury Bonds (30 Year)	Chicago Board Options	December 2010	$	41,185,375	$	(148,712	)
361	U.S. Treasury Notes (5 Year)	Chicago Board Options	December 2010	$	43,633,055	$	(2,035	)
679	Ultra Treasury Bonds	Chicago Board Options	December 2010	$	95,929,968	$	157,396
191	Euro Dollar Futures	Chicago Mercantile	December 2010	$	47,578,100	$	(25,805	)
403	Euro Dollar Futures	Chicago Mercantile	March 2011	$	100,336,925	$	(73,061	)
345	Euro Dollar Futures	Chicago Mercantile	June 2011	$	85,831,688	$	(87,893	)
341	Euro Dollar Futures	Chicago Mercantile	September 2011	$	84,755,550	$	(247,284	)
1,044	Euro Dollar Futures	Chicago Mercantile	December 2011	$	259,173,000	$	(892,200	)
259	Euro Dollar Futures	Chicago Mercantile	March 2012	$	64,209,337	$	(106,486	)
171	Euro Dollar Futures	Chicago Mercantile	June 2012	$	42,328,912	$	(83,034	)
139	Euro Dollar Futures	Chicago Mercantile	September 2012	$	34,355,587	$	(72,540	)
127	Euro Dollar Futures	Chicago Mercantile	December 2012	$	31,334,075	$	(74,986	)
126	Euro Dollar Futures	Chicago Mercantile	March 2013	$	31,035,375	$	(74,052	)
74	Euro Dollar Futures	Chicago Mercantile	June 2013	$	18,191,975	$	(42,422	)
24	Euro Dollar Futures	Chicago Mercantile	September 2013	$	5,888,700	$	(6,310	)
Total						$	(1,811,488	)

Interest rate swaps outstanding as of September 30, 2010 were as follows:

BlackRock Total Return Portfolio II Pro Forma Combined
Fixed Rate	Floating Rate	Counterparty	Expiration	Notional Amount		Unrealized Appreciation (Depreciation)
1.12%(a)	3-month LIBOR	BNP Paribas	January 2012	$	38,300	$	(375,702	)
1.21%(a)	3-month LIBOR	Citibank, N.A.	May 2012	$	79,800		1,215,151
0.81%(a)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	July 2012	$	15,700		(79,715	)
0.79%(b)	3-month LIBOR	Deutsche Bank AG	July 2012	$	31,500		(146,246	)
0.85%(b)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	July 2012	$	31,500		(181,700	)
0.81%(b)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	July 2012	$	31,500		(159,938	)
0.76%(b)	3-month LIBOR	Credit Suisse International	August 2012	$	21,000		(83,416	)
0.68%(a)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	August 2012	$	18,100		42,785
0.73%(a)	3-month LIBOR	Deutsche Bank AG	August 2012	$	25,000		(83,714	)
0.76%(a)	3-month LIBOR	Credit Suisse International	August 2012	$	10,400		(41,311	)
0.68%(b)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	August 2012	$	6,300		14,892
0.76%(a)	3-month LIBOR	Credit Suisse International	August 2012	$	13,600		(54,022	)
0.68%(a)	3-month LIBOR	Deutsche Bank AG	September 2012	$	30,200		55,368
0.68%(a)	3-month LIBOR	UBS AG	September 2012	$	29,500		50,201
0.68%(b)	3-month LIBOR	Deutsche Bank AG	September 2012	$	42,000		(69,799	)

S-37

Pro Forma Condensed Combined Schedule of Investments for

BlackRock Total Return Portfolio II, BlackRock Managed Income Portfolio and BlackRock Bond Portfolio

As of September 30, 2010 (Unaudited)

BlackRock Total Return Portfolio II Pro Forma Combined
Fixed Rate	Floating Rate	Counterparty	Expiration	Notional Amount		Unrealized Appreciation (Depreciation)
0.68%(b)	3-month LIBOR	Deutsche Bank AG	September 2012	$	14,800	$	27,134
0.68%(b)	3-month LIBOR	UBS AG	September 2012	$	14,500		24,675
0.67%(b)	3-month LIBOR	JPMorgan Chase Bank, N.A.	September 2012	$	43,000		69,316
3.05%(b)	3-month LIBOR	Credit Suisse International	August 2014	$	50,600		(3,857,014	)
2.23%(b)	3-month LIBOR	Deutsche Bank AG	May 2015	$	31,800		1,432,325
2.38%(b)	3-month LIBOR	BNP Paribas	June 2015	$	16,800		859,068
1.69%(a)	3-month LIBOR	Royal Bank of Scotland Plc	August 2015	$	8,300		(98,690	)
1.64%(a)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	August 2015	$	55,100		(527,391	)
1.94%(a)	3-month LIBOR	Royal Bank of Scotland Plc	July 2015	$	7,300		185,168
1.67%(b)	3-month LIBOR	Bank of America, N.A.	August 2015	$	7,400		(81,537	)
1.69%(b)	3-month LIBOR	Royal Bank of Scotland Plc	August 2015	$	6,200		(73,720	)
1.66%(b)	3-month LIBOR	Royal Bank of Scotland Plc	August 2015	$	21,800		(223,188	)
1.67%(a)	3-month LIBOR	Bank of America, N.A.	August 2015	$	3,700		(40,768	)
1.69%(a)	3-month LIBOR	Royal Bank of Scotland Plc	August 2015	$	3,100		(36,860	)
1.64%(a)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	August 2015	$	12,300		(117,730	)
1.66%(a)	3-month LIBOR	Royal Bank of Scotland Plc	August 2015	$	10,800		(110,570	)
1.62%(a)	3-month LIBOR	Deutsche Bank AG	August 2015	$	11,900		(97,391	)
1.71%(a)	3-month LIBOR	Citibank, N.A.	September 2015	$	62,550		(686,284	)
1.69%(b)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	September 2015	$	15,000		141,768
1.60%(a)	3-month LIBOR	Deutsche Bank AG	September 2015	$	8,800		(39,422	)
1.72%(a)	3-month LIBOR	Citibank, N.A.	September 2015	$	7,800		93,520
1.71%(b)	3-month LIBOR	Citibank, N.A.	September 2015	$	27,210		(298,542	)
1.70%(b)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	September 2015	$	9,000		(94,367	)
1.69%(a)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	September 2015	$	27,700		261,798
1.65%(a)	3-month LIBOR	Deutsche Bank AG	September 2015	$	11,600		89,758
1.57%(b)	3-month LIBOR	JPMorgan Chase Bank, N.A.	September 2015	$	500		2,617
1.72%(b)	3-month LIBOR	Citibank, N.A.	September 2015	$	3,900		46,760
1.72%(b)	3-month LIBOR	Deutsche Bank AG	September 2015	$	4,500		54,063
1.71%(a)	3-month LIBOR	Citibank, N.A.	September 2015	$	13,415		(147,186	)
1.70%(a)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	September 2015	$	32,000		(335,528	)
1.69%(b)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	September 2015	$	14,600		137,987
2.13%(b)	3-month LIBOR	Plc	August 2017	$	5,600		(46,479	)
2.13%(a)	3-month LIBOR	Royal Bank of Scotland Plc	August 2017	$	11,600		(96,278	)
2.13%(a)	3-month LIBOR	Barclays Bank Plc	August 2017	$	2,700		(22,409	)
4.87%(a)	3-month LIBOR	Deutsche Bank AG	February 2020	$	17,800		(2,961,879	)
4.82%(b)	3-month LIBOR	Goldman Sachs Bank USA	May 2020	$	16,300		(2,858,409	)
4.80%(a)	3-month LIBOR	Royal Bank of Scotland Plc	June 2020	$	72,400		(11,773,043	)
3.15%(b)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	July 2020	$	19,000		(1,128,927	)
2.93%(a)	3-month LIBOR	Citibank, N.A.	July 2020	$	1,300		50,586
2.96%(a)	3-month LIBOR	Citibank, N.A.	July 2020	$	7,900		328,305
3.05%(b)	3-month LIBOR	UBS AG	July 2020	$	5,800		(289,249	)
2.50%(a)	3-month LIBOR	Deutsche Bank AG	August 2020	$	68,600		224,322
2.92%(b)	3-month LIBOR	Barclays Bank Plc	August 2020	$	4,100		(151,317	)
2.88%(a)	3-month LIBOR	Bank of America, N.A.	August 2020	$	2,200		73,031
2.76%(b)	3-month LIBOR	Royal Bank of Scotland Plc	August 2020	$	3,600		(79,049	)
2.70%(b)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	August 2020	$	4,800		(79,605	)
2.68%(a)	3-month LIBOR	Citibank, N.A.	August 2020	$	4,000		57,348
2.68%(a)	3-month LIBOR	Deutsche Bank AG	August 2020	$	9,700		139,070
2.57%(a)	3-month LIBOR	Deutsche Bank AG	August 2020	$	3,100		13,649
2.56%(a)	3-month LIBOR	Credit Suisse International	August 2020	$	2,400		5,984
2.50%(b)	3-month LIBOR	Deutsche Bank AG	August 2020	$	31,300		102,351
2.92%(a)	3-month LIBOR	Barclays Bank Plc	August 2020	$	800		(29,525	)
2.88%(b)	3-month LIBOR	Bank of America, N.A.	August 2020	$	1,100		36,516
2.76%(a)	3-month LIBOR	Royal Bank of Scotland Plc	August 2020	$	1,800		(39,524	)
2.70%(a)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	August 2020	$	2,400		(39,803	)

S-38

Pro Forma Condensed Combined Schedule of Investments for

BlackRock Total Return Portfolio II, BlackRock Managed Income Portfolio and BlackRock Bond Portfolio

As of September 30, 2010 (Unaudited)

BlackRock Total Return Portfolio II Pro Forma Combined
Fixed Rate	Floating Rate	Counterparty	Expiration	Notional Amount		Unrealized Appreciation (Depreciation)
2.68%(b)	3-month LIBOR	Citibank, N.A.	August 2020	$	2,000	$	28,674
2.57%(b)	3-month LIBOR	Deutsche Bank AG	August 2020	$	1,500		6,604
2.50%(a)	3-month LIBOR	Deutsche Bank AG	August 2020	$	15,300		50,031
2.56%(a)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	September 2020	$	25,900		(30,503	)
2.77%(a)	3-month LIBOR	Deutsche Bank AG	September 2020	$	13,280		(261,947	)
2.82%(a)	3-month LIBOR	Citibank, N.A.	September 2020	$	3,100		(74,345	)
2.68%(a)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	September 2020	$	16,900		(197,208	)
2.80%(a)	3-month LIBOR	Royal Bank of Scotland Plc	September 2020	$	7,100		(155,448	)
2.69%(a)	3-month LIBOR	Citibank, N.A.	September 2020	$	32,900		(376,497	)
2.62%(a)	3-month LIBOR	Credit Suisse International	September 2020	$	19,800		(111,194	)
2.70%(b)	3-month LIBOR	Deutsche Bank AG	September 2020	$	76,200		979,056
2.70%(a)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	September 2020	$	8,700		(107,445	)
2.62%(a)	3-month LIBOR	UBS AG	September 2020	$	14,900		(81,650	)
2.57%(a)	3-month LIBOR	Deutsche Bank AG	September 2020	$	6,200		(7,438	)
2.59%(a)	3-month LIBOR	Goldman Sachs Bank USA	September 2020	$	4,500		(10,822	)
2.60%(b)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	September 2020	$	25,900		97,264
2.59%(b)	3-month LIBOR	Deutsche Bank AG	September 2020	$	9,900		24,036
2.55%(a)	3-month LIBOR	UBS AG	September 2020	$	10,100		10,720
2.56%(b)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	September 2020	$	11,300		(13,308	)
2.61%(a)	3-month LIBOR	Citibank, N.A.	September 2020	$	15,400		93,084
2.77%(b)	3-month LIBOR	Deutsche Bank AG	September 2020	$	5,800		(114,404	)
2.82%(b)	3-month LIBOR	Citibank, N.A.	September 2020	$	1,400		(33,575	)
2.70%(b)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	September 2020	$	5,700		(77,237	)
2.68%(b)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	September 2020	$	7,400		(86,352	)
2.80%(b)	3-month LIBOR	Royal Bank of Scotland Plc	September 2020	$	3,100		(67,872	)
2.69%(b)	3-month LIBOR	Citibank, N.A.	September 2020	$	14,300		(163,645	)
2.62%(b)	3-month LIBOR	Credit Suisse International	September 2020	$	8,600		(48,296	)
2.70%(a)	3-month LIBOR	Deutsche Bank AG	September 2020	$	33,100		425,286
2.70%(b)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	September 2020	$	3,800		(46,930	)
2.62%(b)	3-month LIBOR	UBS AG	September 2020	$	6,500		(35,619	)
2.60%(a)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	September 2020	$	11,300		42,435
2.59%(a)	3-month LIBOR	Deutsche Bank AG	September 2020	$	3,500		8,497
2.55%(b)	3-month LIBOR	UBS AG	September 2020	$	4,400		4,670
2.53%(b)	3-month LIBOR	Deutsche Bank AG	September 2020	$	2,500		(11,236	)
2.69%(b)	3-month LIBOR	Barclays Bank Plc	September 2020	$	6,700		88,093
2.69%(b)	3-month LIBOR	Tha Bank of New York Mellon	September 2020	$	4,100		54,541
2.56%(a)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	September 2020	$	5,600		(6,595	)
2.61%(b)	3-month LIBOR	Citibank, N.A.	September 2020	$	7,600		45,937
2.77%(a)	3-month LIBOR	Deutsche Bank AG	September 2020	$	2,900		(57,202	)
2.82%(a)	3-month LIBOR	Citibank, N.A.	September 2020	$	700		(16,788	)
2.70%(a)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	September 2020	$	2,800		(37,941	)
2.68%(a)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	September 2020	$	3,600		(42,009	)
2.77%(b)	3-month LIBOR	Deutsche Bank AG	September 2020	$	7,000		134,408
2.80%(a)	3-month LIBOR	Royal Bank of Scotland Plc	September 2020	$	1,500		(32,842	)
2.72%(a)	3-month LIBOR	JPMorgan Chase Bank, N.A.	September 2020	$	8,700		(127,969	)
2.69%(a)	3-month LIBOR	Citibank, N.A.	September 2020	$	7,000		(80,106	)
2.62%(a)	3-month LIBOR	Credit Suisse International	September 2020	$	4,200		(23,586	)
2.70%(b)	3-month LIBOR	Deutsche Bank AG	September 2020	$	16,300		209,430
2.70%(a)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	September 2020	$	1,900		(23,465	)
2.62%(a)	3-month LIBOR	UBS AG	September 2020	$	3,200		(17,535	)
2.57%(a)	3-month LIBOR	Deutsche Bank AG	September 2020	$	1,300		(1,560	)
2.60%(b)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	September 2020	$	5,600		21,030
2.59%(b)	3-month LIBOR	Deutsche Bank AG	September 2020	$	2,100		5,098
2.55%(a)	3-month LIBOR	UBS AG	September 2020	$	2,200		2,335
3.46%(a)	3-month LIBOR	BNP Paribas	October 2020	$	15,800		(1,226,697	)

S-39

Pro Forma Condensed Combined Schedule of Investments for

BlackRock Total Return Portfolio II, BlackRock Managed Income Portfolio and BlackRock Bond Portfolio

As of September 30, 2010 (Unaudited)

BlackRock Total Return Portfolio II Pro Forma Combined
Fixed Rate	Floating Rate	Counterparty	Expiration	Notional Amount		Unrealized Appreciation (Depreciation)
3.50%(b)	3-month LIBOR	Deutsche Bank AG	September 2040	$	6,000	$	(205,357	)
3.48%(b)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	September 2040	$	3,800		(114,336	)
3.50%(a)	3-month LIBOR	Deutsche Bank AG	September 2040	$	13,700		(468,898	)
3.48%(a)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	September 2040	$	8,700		(261,768	)
3.50%(a)	3-month LIBOR	Deutsche Bank AG	September 2040	$	2,900		(99,256	)
3.48%(a)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	September 2040	$	1,900		(57,168	)
Total						$	(24,584,551	)

(a) Fund pays fixed interest rate and receives floating rate.

(b) Fund pays floating interest rate and receives fixed rate.

Credit default swaps on single-name issues—sold protection outstanding as of September 30, 2010 were as follows:

BlackRock Total Return Portfolio II Pro Forma Combined

Issuer

Receive Fixed Rate

Counterparty

Expiration

Credit  Rating1

Notional Amount

Unrealized Appreciation

Rogers Cable, Inc.

1.02

%

Morgan Stanley Capital Services, Inc.

December 2014

BBB

$

16,100

$

67,521

Total

$

67,521

1. Using S&P’s rating of the issuer.

2. The maximum potential amount the Fund may pay should a negative credit event take place as defined under the terms of the agreement.

Credit default swaps on traded indexes—buy protection outstanding as of September 30, 2010 were as follows:

BlackRock Total Return Portfolio II Pro Forma Combined
Index	Pay Fixed Rate			Counterparty	Expiration		Notional Amount		Unrealized Depreciation
CDX.NA.IG Series 14 Version 1		1.00	%	Citibank, N.A.		June 2015	$	23,800	($	128,258	)
CDX.NA.IG Series 14 Version 1		1.00	%	Citibank, N.A.		June 2015	$	23,800	($	151,186	)
Total									($	279,444	)

Total return swaps outstanding as of September 30, 2010 were as follows:

BlackRock Total Return Portfolio II Pro Forma Combined
Interest Payable Rate	Counterparty	Expiration		Notional Amount		Unrealized Appreciation (Depreciation)
6.50%	Goldman Sachs Bank USA		January 2038	$	14,001	$	(113,211	) 1
6.50%	JPMorgan Chase Bank, N.A.		January 2038	$	14,077	$	(65,201	) 1
6.50%	JPMorgan Chase Bank, N.A.		January 2038	$	36,271	$	(98,259	) 1
6.50%	Credit Suisse International		January 2038	$	30,771	$	(104,964	) 1
5.50%	Goldman Sachs Bank USA		January 2039	$	26,175	$	244,323	2
Total
						$	(137,312	)

1. Based on the change in the return of the Markit IOS Index referencing the interest component of the 6.50% coupon, 30-year, fixed-rate Fannie Mae residential mortgage-backed securities pools.

2. Based on the change in the return of the Markit IOS Index referencing the interest component of the 5.50% coupon, 30-year, fixed-rate Fannie Mae residential mortgage-backed securities pools.

See Notes to Condensed Combined Financial Statements

S-40

Pro Forma Condensed Combined Statement of Assets and Liabilities for

BlackRock Managed Income Portfolio, BlackRock Bond Portfolio, and BlackRock Total Return Portfolio II

as of September 30, 2010 (Unaudited)

	BlackRock Managed Income Portfolio		BlackRock Bond Portfolio		BlackRock Total Return Portfolio II		Pro Forma Adjustments			BlackRock Total Return Portfolio II Pro Forma Combined
Assets:
Investments at value - unaffiliated(1)	$	920,222,760	$	1,512,331,563	$	4,103,900,578				$	6,536,454,901
Investments at value - affiliated(2)		785,936		—		24,142,136					24,928,072
Cash		1,408,030		2,022,004		—					3,430,034
Foreign currency at value(3)		52,718		108,912		240,283					401,913
Cash held as collateral for financial futures contracts		20,000		—		—					20,000
TBA sale commitments receivable		294,635,096		320,188,412		1,405,152,203					2,019,975,711
Investments sold receivable		277,579,794		369,663,317		1,369,649,093					2,016,892,204
Interest receivable		4,236,086		9,020,125		18,767,612					32,023,823
Unrealized appreciation on swaps		3,394,650		3,346,013		1,737,926					8,478,589
Unrealized appreciation on foreign currency exchange		1,503,201		3,054,804		6,930,120					11,488,125
Capital shares sold receivable		1,032,141		1,635,355		4,508,844					7,176,340
Receivable from advisor		46,708		661		14,912					62,281
Margin variation receivable		20,396		53,622		195,303					269,321
Dividends receivable - affiliated		255		3,959		2,574					6,788
Principal paydown receivable		92,422		—		599,510					691,932
Prepaid expenses		41,553		60,162		121,123					222,838
Other assets		—		9,602		—					9,602
Total Assets		1,505,071,746		2,221,498,511		6,935,962,217					10,662,532,474
Liabilities:
Bank overdraft		—		—		20,358,625				$	20,358,625
Investments purchased payable		535,680,564		509,447,461		2,538,972,878					3,584,100,903
TBA sale commitments at value(4)		293,666,984		318,965,130		1,400,724,990					2,013,357,104
Reverse repurchase agreements		149,725,850		160,724,475		544,939,663					855,389,988
Options written at value(5)		15,706,139		30,878,166		57,270,284					103,854,589
Unrealized depreciation on swaps		5,313,948		10,909,433		17,188,994					33,412,375
Capital shares redeemed payable		465,611		1,684,234		3,612,090					5,761,935
Cash collateral received for swap contracts		—		2,180,000		4,600,000					6,780,000
Cash collateral on reverse repurchase agreements		—		—		297,000					297,000
Interest expense payable		503,979		518,296		2,303,324					3,325,599
Unrealized depreciation on foreign currency exchange contracts		1,442,590		2,940,195		6,652,407					11,035,192
Income dividends payable		976,887		1,121,368		2,147,493	$	5,907,362	(8)		10,153,110
Reorganization expenses		—		—		—		205,572	(9)		205,572
Investment advisory fees payable		190,757		283,459		731,832					1,206,048
Service and distribution fees payable		43,639		125,573		182,885					352,097
Margin variation payable		152,027		281,879		593,624					1,027,530
Other affiliates payable		16,533		51,275		88,916					156,724
Officer’s and Trustees’ fees payable		5,813		9,340		16,841					31,994
Swap premiums received		645,512		735,945		3,096,956					4,478,413
Other accrued expenses payable		193,533		436,437		739,257					1,369,227
Total liabilities	$	1,004,730,366	$	1,041,292,666	$	4,604,518,059	$	6,112,934		$	6,656,654,025
Net Assets:	$	500,341,380	$	1,180,205,845	$	2,331,444,158	$	(6,112,934	)	$	4,005,878,449

S-41

Pro Forma Condensed Combined Statement of Assets and Liabilities for

BlackRock Managed Income Portfolio, BlackRock Bond Portfolio, and BlackRock Total Return Portfolio II

as of September 30, 2010 (Unaudited)

	BlackRock Managed Income Portfolio			BlackRock Bond Portfolio		BlackRock Total Return II Portfolio			Pro Forma Adjustments			BlackRock Total Return Portfolio II Pro Forma Combined
Net Assets Consist of:
Paid-in capital		512,756,252			1,148,119,708		2,441,631,998			(205,572	)(9)		4,102,302,386
Undistributed net investment income		1,532,354			4,375,008		8,063,352			(5,907,362	)(8)		8,063,352
Accumulated net realized gain (loss)		(22,413,317	)		894,687		(145,838,851	)					(167,357,481	)
Net unrealized appreciation/depreciation		8,466,091			26,816,442		27,587,659						62,870,192
Net Assets	$	500,341,380		$	1,180,205,845	$	2,331,444,158		$	(6,112,934	)	$	4,005,878,449
(1) Investments at cost—unaffiliated	$	906,727,299		$	1,471,727,878	$	4,054,922,849					$	6,433,378,026
(2) Investments at cost—affiliated	$	785,936		$	—	$	24,142,136					$	24,928,072
(3) Foreign currency at cost	$	50,619		$	104,822	$	231,607					$	387,048
(4) Proceeds from TBA sale   commitments	$	294,635,096		$	320,188,412	$	1,405,152,203					$	2,019,975,711
(5) Premiums received	$	11,805,198		$	23,850,926	$	47,987,079					$	83,643,203
Net Asset Value:
BlackRock
Net assets	$	—		$	152,849,981	$	1,077,975,866			(865,936	)(8)(9)	$	1,229,959,911
Shares outstanding(6)		—			15,833,370		112,179,686			(17,135	)(7)		127,995,921
Net asset value	$	—		$	9.65	$	9.61					$	9.61
Institutional
Net assets	$	312,659,189		$	527,175,859	$	790,767,841			(3,848,123	)(8)(9)	$	1,626,754,766
Shares outstanding(6)		30,360,792			54,625,972		82,506,212			2,237,465	(7)		169,730,441
Net asset value	$	10.30		$	9.65	$	9.58					$	9.58
Service
Net assets	$	154,030,640		$	139,733,738	$	37,639,153			(307,234	)(8)(9)	$	331,096,297
Shares outstanding(6)		14,956,285			14,471,007		3,925,059			1,174,794	(7)		34,527,145
Net asset value	$	10.30		$	9.66	$	9.59					$	9.59
Investor A
Net assets	$	25,401,952		$	277,102,212	$	280,856,521			(1,084,203	)(8)(9)	$	582,276,482
Shares outstanding(6)		2,465,835			28,712,931		29,263,032			226,815	(7)		60,668,613
Net asset value	$	10.30		$	9.65	$	9.60					$	9.60
Investor B
Net assets	$	697,808		$	3,835,592	$	10,118,318			(548	)(9)	$	14,651,170
Shares outstanding(6)		67,772			397,491		1,055,046			7,381	(7)		1,527,690
Net asset value	$	10.30		$	9.65	$	9.59					$	9.59
Investor C
Net assets	$	7,551,791		$	79,508,463	$	133,691,499			(6,875	)(9)	$	220,744,878
Shares outstanding(6)		734,976			8,231,804		13,991,003			143,477	(7)		23,101,260
Net asset value	$	10.27		$	9.66	$	9.56					$	9.56
Class R
Net assets	$	—		$	—	$	394,960			(15	)(9)	$	394,945
Shares outstanding(6)		—			—		41,129						41,129
Net asset value	$	—		$	—	$	9.60					$	9.60

(6) Unlimited number of shares authorized, $0.001 par value.

(7) Reflects the capitalization adjustments giving the effect of the transfer of shares of the BlackRock Managed Income Portfolio and BlackRock Bond Portfolio which the BlackRock Total Return Portfolio II fund’s shareholders will receive as if the Reorganization had taken place on September 30, 2010. The foregoing should not be relied upon to reflect the number of shares of the BlackRock Total Return Portfolio II.

(8) Reflects the distribution of undistributed net investment income of $5,907,362, of which $1,532,354 was attributable to BlackRock Managed Income Portfolio and $4,375,008 was attributable to BlackRock Bond Portfolio.

(9) Reflects the charge for estimated reorganization expenses of $205,572, of which $116,905 was attributable to BlackRock Managed Income Portfolio and $88,667 was attributable to BlackRock Total Return Portfolio II.

See Notes to Condensed Combined Financial Statements

S-42

Pro Forma Condensed Combined Statement of Operations

BlackRock Managed Income Portfolio, BlackRock Bond Portfolio, and BlackRock Total Return Portfolio II

For the Twelve Months Ended September 30, 2010 (Unaudited)

	BlackRock Managed Income Portfolio			BlackRock Bond Portfolio			BlackRock Total  Return Portfolio II			Pro Forma Adjustments			BlackRock Total  Return Portfolio II Pro Forma Combined(1)
Investment Income:
Interest	$	27,240,629		$	47,591,635		$	114,634,124					$	189,466,388
Dividends		—			—			18,614						18,614
Dividends - affiliated		6,083			15,696			24,346						46,125
Total income		27,246,712			47,607,331			114,677,084						189,531,127
Expenses:
Investment advisory		2,546,602			5,124,329			10,373,040		$	(1,317,408	)(2)		16,726,563
Service - Investor A		56,435			263,307			636,898			—			956,640
Service and distribution - Investor B		9,242			47,895			115,552			—			172,689
Service and distribution - Investor C		66,803			713,564			1,169,069			—			1,949,436
Service and distribution - Class R		—			—			1,781			—			1,781
Service and distribution - Service		422,503			410,029			99,507			—			932,039
Transfer agent - BlackRock		—			14,838			115,671			—			130,509
Transfer agent - Institutional		605,488			381,251			1,059,925			—			2,046,664
Transfer agent - Investor A		28,651			145,070			354,390			—			528,111
Transfer agent - Investor B		2,255			7,703			24,627			—			34,585
Transfer agent - Investor C		8,687			69,552			162,716			—			240,955
Transfer agent - Class R		—			—			722			—			722
Transfer agent - Service		74,263			192,214			57,064			—			323,541
Administration - fund level		380,912			714,577			1,362,982			(249,194	)(3)		2,209,277
Printing		61,969			143,705			251,893			(23,431	)(4)		434,136
Administration - BlackRock		—			42,597			206,008			(34,107	)(3)		214,498
Administration - Institutional		77,589			125,590			149,285			(128,107	)(3)		224,357
Administration - Investor A		5,641			26,255			63,667			105	(3)		95,668
Administration - Investor B		233			1,199			2,894			(10	)(3)		4,316
Administration - Investor C		1,668			17,801			29,208			61	(3)		48,738
Administration - Class R		—			—			88			—			88
Administration - Service		42,227			41,077			9,853			(206	)(3)		92,951
Custodian		123,806			146,981			305,040			(161,997	)(4)		413,830
Professional		114,942			155,791			313,886			(168,951	)(4)		415,668
Registration		60,831			131,623			125,842			(186,673	)(4)		131,623
Officer and Trustees		26,035			38,740			61,393			(23,361	)(4)		102,807
Borrowing costs(5)		—			31,030			93,022			—			124,052
Miscellaneous		89,111			124,040			200,420			(183,511	)(4)		230,060
Recoupment of past waived fees - class specific		981			16,788			38,862			(56,631	)(5)		—
Total expenses excluding interest expense and fees		4,806,874			9,127,546			17,385,305			(2,533,421	)		28,786,304
Interest expense		684,001			1,307,559			4,099,727			—			6,091,287
Total expenses		5,490,875			10,435,105			21,485,032			(2,533,421	)		34,877,591
Less fees waived by advisor		(69,526	)		(1,682,274	)		(2,973,996	)		910,465	(5)		(3,815,331	)
Less administration fees waived - BlackRock		—			(42,597	)		(205,423	)		33,522	(5)		(214,498	)
Less administration fees waived - Institutional		(77,589	)		(48,240	)		(111,526	)		12,998	(5)		(224,357	)
Less administration fees waived - Investor A		—			(216	)		—			216	(5)		—
Less administration fees waived - Investor B		(124	)		(21	)		(772	)		917	(5)		—
Less administration fees waived - Investor C		(12	)		—			—			12	(5)		—
Less administration fees waived - Class R		—			—			(32	)		(4	)(5)		(36	)
Less administration fees waived - Service		(29,319	)		(854	)		—			30,173	(5)		—
Less transfer agent fees waived - BlackRock		—			(706	)		(3,412	)		(21	)(5)		(4,139	)
Less transfer agent fees waived - Institutional		(1,106	)		(225	)		(9,426	)		(4,532	)(5)		(15,289	)
Less transfer agent fees waived - Investor A		—			(21	)		—			21	(5)		—

S-43

Pro Forma Condensed Combined Statement of Operations

BlackRock Managed Income Portfolio, BlackRock Bond Portfolio, and BlackRock Total Return Portfolio II

For the Twelve Months Ended September 30, 2010 (Unaudited)

	BlackRock Managed Income Portfolio			BlackRock Bond Portfolio			BlackRock Total  Return Portfolio II			Pro Forma Adjustments			BlackRock Total  Return Portfolio II Pro Forma Combined(1)
Less transfer agent fees waived - Investor B	$	(66	)	$	(1	)	$	(54	)	$	121	(5)	$	—
Less transfer agent fees waived - Investor C		(1	)					—			1	(5)		—
Less transfer agent fees waived - Class R		—						(3	)		3	(5)		—
Less transfer agent fees waived - Service		(6	)		(20	)		—			26	(5)		—
Less transfer agent fees reimbursed - BlackRock		—			(14,059	)		(111,414	)		(897	)(5)		(126,370	)
Less transfer agent fees reimbursed - Institutional		(596,968	)		(4,548	)		(292,103	)		491,987	(5)		(401,632	)
Less transfer agent fees reimbursed - Investor A					(36	)		—			36	(5)		—
Less transfer agent fees reimbursed - Investor B		(539	)		(18	)		(50	)		607	(5)		—
Less transfer agent fees reimbursed - Investor C		(14	)		—			—			14	(5)		—
Less transfer agent fees reimbursed - Class R		—			—			(109	)		109	(5)		—
Less transfer agent fees reimbursed - Service		(221	)		(191	)		—			412	(5)		—
Lees fees paid indirectly		(34	)		(199	)		(607	)		840	(5)		—
Total expenses after fees waived, reimbursed and paid indirectly		4,715,350			8,640,879			17,776,105			(1,056,395	)		30,075,939
Net investment income		22,531,362			38,966,452			96,900,979			1,056,395			159,455,188
Realized and Unrealized Gain (Loss):
Net realized gain (loss) from:
Investments - unaffiliated		6,574,722			14,089,745			37,309,088			—			57,973,555
Options written		7,879,791			15,908,666			31,170,343			—			54,958,800
Financial futures contracts		(1,561,726	)		(2,706,814	)		(8,224,793	)		—			(12,493,333	)
Swaps		168,783			4,083,698			5,838,410			—			10,090,891
Foreign currency transactions		633,371			1,338,212			2,975,700			—			4,947,283
		13,694,941			32,713,507			69,068,748			—			115,477,196
Net change in unrealized appreciation/depreciation on:
Investments - unaffiliated		21,746,456			32,289,808			96,589,840			—			150,626,104
Options written		(1,712,077	)		(4,084,528	)		(8,684,887	)		—			(14,481,492	)
Financial futures contracts		(456,157	)		(764,017	)		(2,715,483	)		—			(3,935,657	)
Swaps		(3,849,473	)		(13,847,638	)		(21,390,163	)		—			(39,087,274	)
Foreign currency transactions		1,093,595			151,035			(665,440	)		—			579,190
		16,822,344			13,744,660			63,133,867			—			93,700,871
Total realized and unrealized gain		30,517,285			46,458,167			132,202,615			—			209,178,067
Net Increase in Net Assets Resulting from Operations:	$	53,048,647		$	85,424,619		$	229,103,594		$	1,056,395		$	368,633,255

(1) This Pro Forma Condensed Combined Statement of Operations excludes non-recurring aggregate estimated Reorganization expense of $205,572, of which $116,905 was attributable to BlackRock Managed Income Portfolio and $88,667 was attributable to the BlackRock Total Return Portfolio II.

(2) Reflects adjustments due to contractual advisory agreement of BlackRock Total Return Portfolio II.

(3) Reflects adjustments due to contractual administration agreement of BlackRock Total Return Portfolio II.

(4) Reflects the anticipated savings as a result of the Reorganization through consolidated of custody, legal and other services.

(5) Reflects adjustments due to the expense limitation agreement of BlackRock Total Return Portfolio II currently in effect and changes that will be in effect upon completion of the Reorganization.

See Notes to Condensed Combined Financial Statements

S-44

Notes to Pro Forma Condensed Combined Financial Statements as of September 30, 2010 (Unaudited)

NOTE 1 — Basis of Combination:

The Board of Trustees (the “Board”) of BlackRock Funds II (the “Trust”) on behalf of its portfolios, BlackRock Total Return Portfolio II, BlackRock Managed Income Portfolio, and BlackRock Bond Portfolio (collectively, the “Funds”), at a meeting held on March 18, 2011, approved the Funds entering into an Agreement and Plan of Reorganization (the “Plan”) pursuant to which the BlackRock Managed Income Portfolio and BlackRock Bond Portfolio will transfer all of their assets, subject to certain stated liabilities, to the BlackRock Total Return Portfolio II, in exchange for the shares of the BlackRock Total Return Portfolio II equal in value to the net assets of the BlackRock Managed Income Portfolio and BlackRock Bond Portfolio (the “Reorganization”). If the Reorganization is consummated, shares of the BlackRock Total Return Portfolio II then will be distributed to BlackRock Managed Income Portfolio and BlackRock Bond Portfolio shareholders on a pro rata basis in liquidation of BlackRock Managed Income Portfolio and BlackRock Bond Portfolio.

The Reorganization will be accounted for as a tax-free merger of investment companies. The unaudited pro forma condensed combined schedule of investments and condensed combined statement of assets and liabilities reflect the financial position of the Funds as though the merger had been effected on September 30, 2010. The unaudited pro forma condensed combined statement of operations reflects the results of operations of the Funds for the twelve months ended September 30, 2010. These statements have been derived from the books and records of the Funds utilized in calculating daily net asset values at the dates indicated above in conformity with accounting principles generally accepted in the United States of America, which may require the use of management accruals and estimates. Actual results may differ from these estimates. As of September 30, 2010, all the securities held by the BlackRock Managed Income Portfolio and BlackRock Bond Portfolio comply with the compliance guidelines and/or investment restrictions of BlackRock Total Return Portfolio II. The historical cost of investment securities will be carried forward to the surviving legal entity.

The historical financial statements of the Funds included or incorporated by reference in their respective prospectuses should be read in conjunction with the accompanying pro forma condensed combined financial statements. Such pro forma condensed combined financial statements are presented for information purposes only and may not necessarily be representative of what the actual combined financial statements would have been had the Reorganization occurred on September 30, 2010. Following the Reorganization, BlackRock Total Return Portfolio II will be the legal survivor.

The estimated expenses of the Reorganization attributable to each Fund are as follows:

Estimated Reorganization Expenses
BlackRock Total Return Portfolio II	BlackRock Managed Income Portfolio	BlackRock Bond Portfolio
$88,667, which BlackRock Advisors or its affiliates are expected to entirely absorb through fee waivers and expense reimbursements.	$116,905, which BlackRock Advisors or its affiliates are expected to entirely absorb through fee waivers and expense reimbursements.	$195,653 all of which will be paid by BlackRock Advisors or its affiliates

BlackRock Advisors follows a formula for determining how to allocate Reorganization costs. Each Fund is allocated all of the Reorganization costs attributable to such Fund. In addition, Reorganization costs common to more than one Fund will be allocated across the Funds based upon relative net assets or other appropriate methods. If BlackRock Advisors expects that a Fund will not recover that portion of the Reorganization costs allocated to it within one year as a result of expense savings directly related to the Reorganization, that portion of

S-45

the costs will be borne by BlackRock Advisors or its affiliates. The Board believes that this methodology is reasonable and equitable to the Funds and that the resulting costs to be borne by each Fund, if any, are reasonable.

NOTE 2 — BlackRock Total Return Portfolio II, BlackRock Managed Income Portfolio, and BlackRock Bond Portfolio Valuation:

The Funds fair value their financial instruments at market value using independent dealers or pricing services under policies approved by the Board. The Funds value their bond investments on the basis of last available bid prices or current market quotations provided by dealers or pricing services. Floating rate loan interests are valued at the mean of the bid prices for one or more brokers or dealers as obtained from a pricing service. In determining the value of a particular investment, pricing services may use certain information with respect to transactions in such investments, quotations from dealers, pricing matrixes, market transactions in comparable investments, various relationships observed in the market between investments and calculated yield measures based on valuation technology commonly employed in the market for such investments. Asset-backed and mortgage-backed securities are valued by independent pricing services using models that consider estimated cash flows of each tranche of the security, establish a benchmark yield and develop an estimated tranche specific spread to the benchmark yield based on the unique attributes of the tranche. Financial futures contracts traded on exchanges are valued at their last sale price. Swap agreements are valued utilizing quotes received daily by the Funds’ pricing service or through brokers, which are derived using daily swap curves and models that incorporate a number of market data factors, such as discounted cash flows and trades and values of the underlying reference instruments. To-be-announced (“TBA”) commitments are valued on the basis of last available bid prices or current market quotations provided by pricing services. Short-term securities with remaining maturities of 60 days or less may be valued at amortized cost, which approximates fair value. Investments in open-end investment companies are valued at net asset value each business day.

Equity investments traded on a recognized securities exchange or the NASDAQ Global Market System are valued at the last reported sale price that day or the NASDAQ official closing price, if applicable. For equity investments traded on more than one exchange, the last reported sale price on the exchange where the stock is primarily traded is used. Equity investments traded on a recognized exchange for which there were no sales on that day are valued at the last available bid price. If no bid price is available, the prior day’s price will be used, unless it is determined that such prior day’s price no longer reflects the fair value of the security.

Exchange-traded options are valued at the mean between the last bid and ask prices at the close of the options market in which the options trade. An exchange-traded option for which there is no mean price is valued at the last bid (long positions) or ask (short positions) price. If no bid or ask price is available, the prior day’s price will be used, unless it is determined that the prior day’s price no longer reflects the fair value of the option. Over-the-counter (“OTC”) options are valued by an independent pricing service using a mathematical model which incorporates a number of market data factors, such as the trades and prices of the underlying instruments.

Securities and other assets and liabilities denominated in foreign currencies are translated into US dollars using exchange rates determined as of the close of business on the New York Stock Exchange (“NYSE”). Foreign currency exchange contracts are valued at the mean between the bid and ask prices and are determined as of the close of business on the NYSE. Interpolated values are derived when the settlement date of the contract is an interim date for which quotations are not available.

In the event that application of these methods of valuation results in a price for an investment which is deemed not to be representative of the market value of such investment or is not available, the investment will be valued in accordance with a policy approved by the Board as reflecting fair value (“Fair Value Assets”). When determining the price for Fair Value Assets, the investment advisor and/or the sub-advisor seeks to determine the price that each Fund might reasonably expect to receive from the current sale of that asset in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the investment advisor and/or

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sub-advisor deems relevant. The pricing of all Fair Value Assets is subsequently reported to the Board or a committee thereof.

Generally, trading in foreign instruments is substantially completed each day at various times prior to the close of business on the NYSE. Occasionally, events affecting the values of such instruments may occur between the foreign market close and the close of business on the NYSE that may not be reflected in the computation of each Fund’s net assets. If events (for example, a company announcement, market volatility or a natural disaster) occur during such periods that are expected to materially affect the value of such instruments, those instruments may be Fair Value Assets and be valued at their fair values, as determined in good faith by the investment advisor using a pricing service and/or policies approved by the Board.

NOTE 3 — Capital Shares:

The pro forma net asset value per share assumes the issuance of shares of BlackRock Total Return Portfolio II that would have been issued at September 30, 2010 in connection with the proposed Reorganization. The number of shares assumed to be issued is equal to the net asset value of the respective shares of the BlackRock Managed Income Portfolio and BlackRock Bond Portfolio, as of September 30, 2010, divided by the net asset value per share of the shares of BlackRock Total Return Portfolio II as of September 30, 2010. The pro forma number of shares outstanding, by class, for BlackRock Total Return Portfolio II consists of the following at September 30, 2010.

Capital Shares Table

Class of Shares	Shares of BlackRock Total Return Portfolio II Pre-Combination		Additional Shares Assumed Issued in Reorganization			Total Outstanding Shares Post-Combination
BlackRock		112,179,686		15,816,235	(a)		127,995,921
Institutional		82,506,212		87,224,229			169,730,441
Service		3,925,059		30,602,086			34,527,145
Investor A		29,263,032		31,405,581			60,668,613
Investor B		1,055,046		472,644			1,527,690
Investor C		13,991,003		9,110,257			23,101,260
Class R		41,129		—	(b)		41,129

(a) BlackRock Bond Portfolio has no shares outstanding for this class.

(b) BlackRock Managed Income Portfolio and BlackRock Bond Portfolio have no Class R shares outstanding.

NOTE 4 — Pro Forma Operating Expenses:

The pro forma condensed combined statement of operations for the twelve month period ended September 30, 2010, as adjusted, giving effect to the Reorganization reflects changes in expenses of BlackRock Total Return Portfolio II as if the Reorganization was consummated on October 1, 2009. Although it is anticipated that there will be an elimination of certain duplicative expenses because of the Reorganization, the actual amount of such expenses cannot be determined because it is not possible to predict the cost of future operations.

NOTE 5 — Federal Income Taxes:

Each of the BlackRock Total Return Portfolio II, the BlackRock Managed Income Portfolio and the BlackRock Bond Portfolio has elected to be taxed as a “regulated investment company” under the Internal Revenue Code of 1986, as amended (the “Code”). If the Reorganization is consummated, unless it is determined that such qualification is no longer in the best interest of shareholders, BlackRock Total Return Portfolio II will seek to continue to qualify as a regulated investment company by complying with the provisions applicable to certain investment companies, as defined in applicable sections of the Code, and to make distributions of taxable

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income sufficient to relieve it from all, or substantially all, Federal income taxes. In addition, the BlackRock Managed Income Portfolio and BlackRock Bond Portfolio will make any required income or capital gain distributions prior to consummation of the Reorganization, in accordance with provisions of the Code relating to tax-free reorganizations of investment companies.

The BlackRock Total Return Portfolio II will succeed to the capital loss carryforwards of the BlackRock Managed Income Portfolio and BlackRock Bond Portfolio. BlackRock Managed Income Portfolio and BlackRock Bond Portfolio’s capital loss carryforwards will be subject to the limitations of the Code. In addition, for five years beginning after the Closing Date of the Reorganization, the BlackRock Total Return Portfolio II will not be allowed to offset certain pre-Reorganization built-in gains attributable to the BlackRock Managed Income Portfolio and BlackRock Bond Portfolio with capital loss carryforwards. Due to the operation of these loss limitation rules, it is possible that the shareholders of the BlackRock Managed Income Portfolio and BlackRock Bond Portfolio would receive taxable distributions earlier than they would have in the absence of the respective Reorganization.

Shareholders of the BlackRock Managed Income Portfolio and BlackRock Bond Portfolio may tender their shares before the Reorganizations take place, which will be treated as a normal tender of shares and, generally, will be a taxable transaction. Shareholders must consult with their own tax advisers regarding potential transactions.

NOTE 6 — Pro Forma Calculation:

The accompanying Pro Forma Condensed Combined Financial Statements include pro forma calculations that are based on estimates and as such may not necessarily be representative of the actual combined fund financial statements.

NOTE 7 — Subsequent Events:

Management has evaluated the impact of all subsequent events on the Funds through the date the Pro Forma Condensed Combined Financial Statements were issued and has determined that there were no subsequent events requiring adjustment or additional disclosure in the Pro Forma Condensed Combined Financial Statements.

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