UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-22061

Name of Fund: BlackRock Funds II

LifePath® Active 2015 Portfolio (formerly, BlackRock Prepared Portfolio 2015)

LifePath® Active 2020 Portfolio (formerly, BlackRock Prepared Portfolio 2020)

LifePath® Active 2025 Portfolio (formerly, BlackRock Prepared Portfolio 2025)

LifePath® Active 2030 Portfolio (formerly, BlackRock Prepared Portfolio 2030)

LifePath® Active 2035 Portfolio (formerly, BlackRock Prepared Portfolio 2035)

LifePath® Active 2040 Portfolio (formerly, BlackRock Prepared Portfolio 2040)

LifePath® Active 2045 Portfolio (formerly, BlackRock Prepared Portfolio 2045)

LifePath® Active 2050 Portfolio (formerly, BlackRock Prepared Portfolio 2050)

Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809

 

Name

and address of agent for service: John M. Perlowski, Chief Executive Officer, BlackRock Funds II, 55 East
52 nd Street, New York, NY 10055

Registrant’s telephone number, including area code: (800) 441-7762

Date of fiscal year end: 10/31/2012

Date of reporting period: 10/31/2012

Item 1 – Report to Stockholders

LOGO

   October 31, 2012

 

 

 

    

     Annual Report

    

LifePath ® Active Portfolios of BlackRock Funds II

u    LifePath ® Active 2015 Portfolio

u    LifePath ® Active 2020 Portfolio

u    LifePath ® Active 2025 Portfolio

u    LifePath ® Active 2030 Portfolio

u    LifePath ® Active 2035 Portfolio

u    LifePath ® Active 2040 Portfolio

u    LifePath ® Active 2045 Portfolio

u    LifePath ® Active 2050 Portfolio

 

 

 

 

 

 

 

      Not FDIC Insured  §   No Bank Guarantee  §   May Lose Value          

 

 

 

 

Table of Contents

 

           Page

Dear Shareholder

   3

Annual Report:

  

Fund Summaries

   4

About Fund Performance

   18

Disclosure of Expenses

   18

Financial Statements:

  

Schedules of Investments

   20

Statements of Assets and Liabilities

   36

Statements of Operations

   38

Statements of Changes in Net Assets

   39

Financial Highlights

   42

Notes to Financial Statements

   58

Report of Independent Registered Public Accounting Firm

   67

Important Tax Information

   67

Disclosure of Investment Advisory Agreement

   68

Officers and Trustees

   72

Additional Information

   75

A World-Class Mutual Fund Family

   77

 

                 
2       BLACKROCK FUNDS II       OCTOBER 31, 2012   

 

Dear Shareholder

In the final months of 2011, financial markets were highly volatile but were in a mode of gradual improvement. Global central bank actions and better-than-expected economic data tempered investors’ anxiety after markets had been upended in the previous quarter by sovereign debt turmoil in the United States and Europe. Improving sentiment carried over into early 2012 as investors felt some relief from the world’s financial woes. Volatility was low and risk assets (including stocks, commodities and high yield bonds) moved boldly higher through the first two months of 2012, while climbing Treasury yields pressured higher-quality fixed income assets.

Markets reversed course in the spring when Europe’s debt problems boiled over once again. High levels of volatility returned as political instability threatened Greece’s membership in the eurozone and debt problems in Spain grew increasingly severe. Sovereign debt yields in peripheral European countries continued to rise while finance leaders deliberated over the fiscal integration of the currency bloc. Alongside the drama in Europe, investors were discouraged by gloomy economic reports from various parts of the world. A slowdown in China, a key powerhouse for global growth, emerged as a particular concern. In the United States, disappointing jobs reports dealt a crushing blow to investor sentiment. Risk assets sold off in the second quarter as investors retreated to safe haven assets.

Despite ongoing concerns about the health of the global economy and the debt crisis in Europe, most asset classes enjoyed a robust summer rally powered mainly by expectations for policy stimulus from central banks in Europe and the United States. Global economic data continued to be mixed, but the spate of downside surprises seen in the second quarter had receded and, outside of some areas of Europe, the risk of recession largely subsided. Additionally, in response to mounting debt pressures, the European Central Bank allayed fears by affirming its conviction to preserve the euro bloc. Early in September, the European Central Bank announced its plan to purchase sovereign debt in the eurozone’s most troubled nations. Later that month, the US Federal Reserve announced its long-awaited - and surprisingly aggressive - stimulus program, committing to purchase $40 billion of agency mortgage-backed securities per month until the US economy exhibits enough strength to sustain real growth and the labor market shows solid improvement. These central bank actions boosted investor confidence and risk assets rallied globally.

European stocks continued their advance in the final month of the reporting period as progress toward fiscal integration created a more positive atmosphere for investors. However, as corporate earnings season got underway in the United States, lackluster results pointed to the fragility of global growth and pushed US equity markets down for the month of October. The period ended with increasing concern about how and when US politicians would resolve the nation’s looming fiscal crisis, known as the “fiscal cliff.”

All asset classes performed well for the 12-month period ended October 31, 2012, with the strongest returns coming from US stocks and high yield bonds. For the six-month period ended October 31, 2012, equities underperformed fixed income investments, where high yield was the leading sector. US and international stocks finished the six-month period with modest gains, while emerging market stocks lagged other asset classes amid ongoing uncertainty. Near-zero short term interest rates continued to keep yields on money market securities near their all-time lows.

Although the financial world remains highly uncertain, we believe there are new avenues of opportunity – new ways to invest and new markets to consider. We believe it’s our responsibility to help investors adapt to today’s new world of investing and build the portfolios these times require. We encourage you to visit www.blackrock.com/newworld for more information.

Sincerely,

 

LOGO

Rob Kapito

President, BlackRock Advisors, LLC

 

LOGO

“Although the financial world remains highly uncertain, we believe there are new avenues of opportunity.”

Rob Kapito

President, BlackRock Advisors, LLC

 

 

Total Returns as of October 31, 2012

 

     

 

6-month

    12-month  

US large cap equities (S&P 500 ® Index)

    2.16 %      15.21 % 
US small cap equities (Russell 2000 ® Index)     0.95        12.08   
International equities (MSCI Europe, Australasia, Far East Index)     2.12        4.61   
Emerging market equities (MSCI Emerging Markets Index)     (1.25 )      2.63   
3-month Treasury bill (BofA Merrill Lynch 3-Month Treasury Bill Index)     0.06        0.08   
US Treasury securities (BofA Merrill Lynch 10- Year US Treasury Index)     3.49        7.46   
US investment grade bonds (Barclays US Aggregate Bond Index)     2.75        5.25   
Tax-exempt municipal bonds (S&P Municipal Bond Index)     3.65        9.57   
US high yield bonds (Barclays US Corporate High Yield 2% Issuer Capped Index)     6.24        13.58   

Past performance is no guarantee of future results. Index performance is shown for illustrative purposes only. You cannot invest directly in an index.

 

 

 

 

                 
      THIS PAGE NOT PART OF YOUR FUND REPORT      3

 

 

Fund Summaries as of October 31, 2012

 

 

LifePath Active Portfolios

 

 

    Investment Objective

 

The LifePath ® Active Portfolios’ (the “Funds”) investment objective seeks a balance between long term capital appreciation and high current income consistent with their current asset allocation.

 

 

    Portfolio Management Commentary

 

 

—  

On November 27, 2012, the Funds changed their name from “BlackRock Lifecycle Prepared Portfolios” to “LifePath ® Active Portfolios.” In addition, each Fund’s Institutional Shares were redesignated as Class K Shares.

How did the Funds perform?

 

—  

For the 12-month period ended October 31, 2012, the Fund with a target date of 2015 outperformed its respective custom benchmark. The Class K Shares and Investor A Shares of the Fund with a 2020 target date outperformed the Fund’s custom benchmark, while Class R Shares performed in line with its custom benchmark. The Class K Shares of the Fund with a 2025 target date outperformed the Fund’s custom benchmark, while Investor A and Class R Shares underperformed. The Funds with target dates from 2030 to 2050 underperformed their respective custom benchmarks. All of the Funds (target dates 2015 through 2050) underperformed the broad stock market S&P 500 ® Index. The following discussion of relative performance pertains to each Fund’s respective custom benchmark.

What factors influenced performance?

 

—  

During the period, the Funds benefited from their investment in Master Total Return Portfolio (“Total Return”). Exposure to securitized assets, including commercial mortgage-backed securities (“CMBS”) and non-agency residential mortgage-backed securities (“MBS”), was the most significant driver of positive performance in Total Return. Allocations to high yield and investment grade credit also contributed to Total Return’s performance, as did security selection within industrials, active trading in the agency MBS space, and tactical exposures to sovereign debt and credit names in Europe. Also having a positive impact within each Fund’s fixed income allocation was their exposure outside their respective custom benchmarks to BlackRock High Yield Bond Portfolio. High yield as an asset class outperformed broader fixed income markets during the period due to strong demand from investors seeking yield in a low interest rate environment. Within equities, the Funds benefited from a tactical allocation to underlying funds that invest in German stocks, which outperformed the broader eurozone.

 

—  

At the broad asset allocation level, the Funds were conservatively positioned with underweights in both equity and fixed income relative to their respective custom benchmarks in light of the market outlook. The Funds’ allocations to cash detracted from relative performance as stock markets broadly rallied in the late summer months and fixed income assets continued to perform well in a low-yield environment.

 

—  

Detractors from performance included the Funds’ investments in BlackRock Equity Dividend Fund (“Equity Dividend”) and BlackRock Capital Appreciation Fund, Inc. (“Capital Appreciation”) as both underperformed their respective benchmarks despite generating positive double-digit returns for the 12-month period. Equity Dividend’s portfolio of higher-quality, dividend-paying stocks lagged the broader equity market rally as risk-seeking investors favored lower-quality stocks during the period. From a long-term perspective, Equity Dividend continues to

 
   

exhibit strong performance relative to its benchmark, the Russell 1000 ® Value Index. Capital Appreciation underperformed its benchmark, the Russell 1000 ® Growth Index, primarily due to poor stock selection in key sectors including information technology (“IT”) and consumer discretionary. More broadly, exposure to IT across the Funds’ equity allocation had a negative impact as IT lagged other sectors during the period. Tactical exposures in emerging markets also hurt returns as these stocks suffered in the risk-averse environment.

Describe recent portfolio activity.

 

—  

From an asset allocation perspective, the Funds reduced exposure to both fixed income and equity during the 12-month period. The Funds increased their tactical allocation to cash and cash equivalents in light of macro-level uncertainties and heightened market volatility.

 

—  

In equities, the Funds added exposure to Germany during the period. The Funds also added to positions in emerging market equities, which, after a period of underperformance, once again offered attractive opportunities. Within US equities, the Funds favored underlying funds with exposure to technology stocks on the basis of the advisor’s belief that technology stocks had strong fundamentals, including strong cash flows and reasonably priced valuations.

 

—  

The Funds continued to maintain exposure to core fixed income through their investment in Total Return. During the period, Total Return tactically managed its corporate credit exposure, cautiously seeking to take advantage of relative value opportunities in industrials and financials. However, following good performance in corporate credit early in 2012, Total Return began reducing exposure to the sector while adding to its securitized credit allocation. Total Return added exposure to CMBS and auto loan asset-backed securities and reduced its allocation to agency MBS. Total Return also added a small position in Italian sovereign debt during the period.

Describe Funds positioning at period end.

 

—  

At period end, each Fund was positioned with underweights in both equity and fixed income relative to its respective custom benchmark and maintained a small allocation to cash and cash equivalents. From a regional perspective, the Funds were overweight in US stocks versus Europe and overweight in German stocks versus the rest of the eurozone. Additionally, the Funds’ equity allocations maintained an underweight to Asia and overweight to emerging markets. Within fixed income, each Fund held an allocation to high yield debt, which is not represented in the custom benchmark; therefore, each Fund ended the period underweight in core fixed income relative to its custom benchmark.

 

 

The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results.

 

                 
4       BLACKROCK FUNDS II       OCTOBER 31, 2012   

 
 

 

LifePath Active Portfolios

 

 

Glidepath Evolution

 

 

Under normal circumstances, the asset allocation of each LifePath Active Portfolio (the “LifePath Active Portfolio” or “each LifePath Active Portfolio”) will change over time according to a “glidepath” as each of the LifePath Active Portfolios approaches its respective target date. The glidepath represents the shifting of asset classes over time. Each LifePath Active Portfolio’s asset mix becomes more conservative both prior to and after retirement - as time elapses. This reflects the need for reduced investment risks as retirement approaches and the need for lower volatility of each LifePath Active Portfolio, which may be a primary source of income after retirement. As each LifePath Active Portfolio approaches its target date, its asset allocation will shift so that each LifePath Active Portfolio invests a greater percentage of its assets in fixed income funds. The asset allocation targets are established by the portfolio managers working with oversight from a committee of BlackRock investment professionals. The investment team, including the portfolio

managers and this investment committee, meets regularly to assess market conditions, review the asset allocation targets of each LifePath Active Portfolio, and determine whether any changes are required to enable each LifePath Active Portfolio to achieve its investment objective.

Although the asset allocation targets listed for the glidepath are general, long-term targets, BlackRock may periodically adjust the proportion of equity and fixed income funds in each LifePath Active Portfolio, based on an assessment of the current market conditions, the potential contribution of each asset class to the expected risk and return characteristics of each LifePath Active Portfolio. In general, such adjustments will be limited to +/- 10% relative to the target allocation. BlackRock may determine that a greater degree of variation is warranted to protect each LifePath Active Portfolio or achieve each LifePath Active Portfolio’s investment objective.

 

 

                 
      BLACKROCK FUNDS II       OCTOBER 31, 2012    5

 
 

 

LifePath Active 2015 Portfolio

 

 

  Total Return Based on a $10,000 Investment

 

 

 

 

 

LOGO

 

  

1    Assuming maximum sales charges, if any, transaction costs and other operating expenses, including administration fees. Class K Shares (formerly Institutional Shares) do not have a sales charge.

  

2    The Fund, which is a fund of funds, normally invests its assets in underlying funds according to an asset allocation strategy designed for investors planning to retire or begin withdrawing assets around the year 2015. Prior to November 27, 2012, the Fund followed a different glidepath under the name “BlackRock Prepared Portfolio 2015.”

  

3    This unmanaged index covers 500 industrial, utility, transportation and financial companies of the US markets (mostly New York Stock Exchange (“NYSE”) issues) representing about 75% of NYSE market capitalization and 30% of NYSE issues.

  

4    The Fund compares its performance to that of a customized weighted index (the “2015 Custom Benchmark”), comprised of the indexes indicated below, and reflecting the investment advisor’s changes of the benchmarks’ weightings over time. The investment advisor adjusts the weightings of these indexes periodically with its evaluation and adjustment of the Fund’s asset allocation strategy.

 

Period

   Barclays
US Aggregate Bond Index * 		  Russell 3000 ®  Index *   MSCI EAFE Index *

4/20/07 to 6/11/07

       37.5 %       50.0 %       12.5 %

6/12/07 to 1/03/08

       42.0         46.4         11.6  

1/04/08 to 1/02/09

       44.0         44.8         11.2  

1/03/09 to 1/05/10

       44.7         44.2         11.1  

1/06/10 to 4/30/11

       45.8         43.4         10.8  

5/01/11 to 10/31/12

       46.6         42.7         10.7  

 

  *See “About Fund Performance” on page 18 for a description of the Custom Benchmark.

 

  

5    Commencement of operations.

 

 

  Performance Summary for the Period Ended October 31, 2012

 

 

 

 

 

         Average Annual Total Returns 6
         1 Year   5 Years   Since Inception 7
       6-Month
Total Returns 		  w/o sales
charge 		  w/sales
charge 		  w/o sales
charge 		  w/sales
charge 		  w/o sales
charge 		  w/sales
charge

Class K

       2.68 %       10.31 %       N/A         2.95 %       N/A         4.03 %       N/A  

Investor A

       2.51         9.96         4.18 %       2.57         1.46 %       3.65         2.65 %

Class R

       2.31         9.59         N/A         2.25         N/A         3.32         N/A  

S&P 500 ® Index

       2.16         15.21         N/A         0.36         N/A         1.28         N/A  

2015 Custom Benchmark

       2.42         9.35         N/A         2.83         N/A         3.39         N/A  

 

  6  

Assuming maximum sales charges, if any. Average annual total returns with and without sales charges reflect reductions for distribution and service fees. See “About Fund Performance” on page 18 for a detailed description of share classes, including any related sales charges and fees.

  7  

The Fund commenced operations on April 20, 2007.

N/A - Not applicable as share class and index do not have a sales charge.

Past performance is not indicative of future results.

 

                 
6       BLACKROCK FUNDS II       OCTOBER 31, 2012   

 
 

 

LifePath Active 2020 Portfolio

 

 

  Total Return Based on a $10,000 Investment

 

 

 

 

 

LOGO

 

  

1    Assuming maximum sales charges, if any, transaction costs and other operating expenses, including administration fees. Class K Shares (formerly Institutional Shares) do not have a sales charge.

  

2    The Fund, which is a fund of funds, normally invests its assets in underlying funds according to an asset allocation strategy designed for investors planning to retire or begin withdrawing assets around the year 2020. Prior to November 27, 2012, the Fund followed a different glidepath under the name “BlackRock Prepared Portfolio 2020.”

  

3    This unmanaged index covers 500 industrial, utility, transportation and financial companies of the US markets (mostly NYSE issues) representing about 75% of NYSE market capitalization and 30% of NYSE issues.

  

4    The Fund compares its performance to that of a customized weighted index (the “2020 Custom Benchmark”), comprised of the indexes indicated below, and reflecting the investment advisor’s changes of the benchmarks’ weightings over time. The investment advisor adjusts the weightings of these indexes periodically with its evaluation and adjustment of the Fund’s asset allocation strategy.

 

Period

   Barclays
US Aggregate Bond Index * 		  Russell 3000 ®  Index *   MSCI EAFE Index *

4/20/07 to 6/11/07

       30.0 %       56.0 %       14.0 %

6/12/07 to 1/03/08

       35.0         52.0         13.0  

1/04/08 to 1/02/09

       38.0         49.6         12.4  

1/03/09 to 1/05/10

       39.1         48.7         12.2  

1/06/10 to 4/30/11

       40.4         47.7         11.9  

5/01/11 to 10/31/12

       41.6         46.7         11.7  

 

  *See “About Fund Performance” on page 18 for a description of the Custom Benchmark.

 

  

5    Commencement of operations.

 

 

Performance Summary for the Period Ended October 31, 2012

 

 

 

 

         Average Annual Total Returns 6
         1 Year   5 Years   Since Inception 7
       6-Month
Total Returns 		  w/o sales
charge 		  w/sales
charge 		  w/o sales
charge 		  w/sales
charge 		  w/o sales
charge 		  w/sales
charge

Class K

       2.42 %       10.41 %       N/A         2.31 %       N/A         3.58 %       N/A  

Investor A

       2.14         9.98         4.19 %       1.90         0.80 %       3.17         2.18 %

Class R

       2.06         9.67         N/A         1.61         N/A         2.88         N/A  

S&P 500 ® Index

       2.16         15.21         N/A         0.36         N/A         1.28         N/A  

2020 Custom Benchmark

       2.39         9.63         N/A         2.34         N/A         2.98         N/A  
  6  

Assuming maximum sales charges, if any. Average annual total returns with and without sales charges reflect reductions for distribution and service fees. See “About Fund Performance” on page 18 for a detailed description of share classes, including any related sales charges and fees.

  7  

The Fund commenced operations on April 20, 2007.

N/A - Not applicable as share class and index do not have a sales charge.

Past performance is not indicative of future results.

 

                 
      BLACKROCK FUNDS II       OCTOBER 31, 2012    7

 
 

 

LifePath Active 2025 Portfolio

 

 

  Total Return Based on a $10,000 Investment

 

 

 

 

 

LOGO

 

  

1    Assuming maximum sales charges, if any, transaction costs and other operating expenses, including administration fees. Class K Shares (formerly Institutional Shares) do not have a sales charge.

  

2    The Fund, which is a fund of funds, normally invests its assets in underlying funds according to an asset allocation strategy designed for investors planning to retire or begin withdrawing assets around the year 2025. Prior to November 27, 2012, the Fund followed a different glidepath under the name “BlackRock Prepared Portfolio 2025.”

  

3    This unmanaged index covers 500 industrial, utility, transportation and financial companies of the US markets (mostly NYSE issues) representing about 75% of NYSE market capitalization and 30% of NYSE issues.

  

4    The Fund compares its performance to that of a customized weighted index (the “2025 Custom Benchmark”), comprised of the indexes indicated below, and reflecting the investment advisor’s changes of the benchmarks’ weightings over time. The investment advisor adjusts the weightings of these indexes periodically with its evaluation and adjustment of the Fund’s asset allocation strategy.

 

Period

   Barclays
US Aggregate Bond Index * 		  Russell 3000 ®  Index *   MSCI EAFE Index *

4/20/07 to 6/11/07

       22.5 %       62.0 %       15.5 %

6/12/07 to 1/03/08

       26.0         59.2         14.8  

1/04/08 to 1/02/09

       29.0         56.8         14.2  

1/03/09 to 1/05/10

       31.3         55.0         13.7  

1/06/10 to 4/30/11

       33.2         53.4         13.4  

5/01/11 to 10/31/12

       34.7         52.2         13.1  

 

  *See “About Fund Performance” on page 18 for a description of the Custom Benchmark.

 

  

5    Commencement of operations.

 

Performance Summary for the Period Ended October 31, 2012

 

 

 

 

         Average Annual Total Returns 6
         1 Year   5 Years   Since Inception 7
       6-Month
Total Returns 		  w/o sales
charge 		  w/sales
charge 		  w/o sales
charge 		  w/sales
charge 		  w/o sales
charge 		  w/sales
charge

Class K

       2.01 %       10.38 %       N/A         1.40 %       N/A         3.03 %       N/A  

Investor A

       1.82         9.98         4.18 %       1.00         (0.08 )%       2.63         1.64 %

Class R

       1.72         9.72         N/A         0.74         N/A         2.33         N/A  

S&P 500 ® Index

       2.16         15.21         N/A         0.36         N/A         1.28         N/A  

2025 Custom Benchmark

       2.32         10.15         N/A         1.60         N/A         2.33         N/A  
  6  

Assuming maximum sales charges, if any. Average annual total returns with and without sales charges reflect reductions for distribution and service fees. See “About Fund Performance” on page 18 for a detailed description of share classes, including any related sales charges and fees.

  7  

The Fund commenced operations on April 20, 2007.

N/A - Not applicable as share class and index do not have a sales charge.

Past performance is not indicative of future results.

 

                 
8       BLACKROCK FUNDS II       OCTOBER 31, 2012   

 
 

 

LifePath Active 2030 Portfolio

 

 

  Total Return Based on a $10,000 Investment

 

 

 

 

 

LOGO

 

  

1    Assuming maximum sales charges, if any, transaction costs and other operating expenses, including administration fees. Class K Shares (formerly Institutional Shares) do not have a sales charge.

  

2    The Fund, which is a fund of funds, normally invests its assets in underlying funds according to an asset allocation strategy designed for investors planning to retire or begin withdrawing assets around the year 2030. Prior to November 27, 2012, the Fund followed a different glidepath under the name “BlackRock Prepared Portfolio 2030.”

  

3    This unmanaged index covers 500 industrial, utility, transportation and financial companies of the US markets (mostly NYSE issues) representing about 75% of NYSE market capitalization and 30% of NYSE issues.

  

4    The Fund compares its performance to that of a customized weighted index (the “2030 Custom Benchmark”), comprised of the indexes indicated below, and reflecting the investment advisor’s changes of the benchmarks’ weightings over time. The investment advisor adjusts the weightings of these indexes periodically with its evaluation and adjustment of the Fund’s asset allocation strategy.

 

Period

   Barclays
US Aggregate Bond Index * 		  Russell 3000 ®  Index *   MSCI EAFE Index *

4/20/07 to 6/11/07

       15.0 %       68.0 %       17.0 %

6/12/07 to 1/03/08

       7.0         74.4         18.6  

1/04/08 to 1/02/09

       16.0         67.2         16.8  

1/03/09 to 1/05/10

       20.1         63.9         16.0  

1/06/10 to 4/30/11

       22.9         61.7         15.4  

5/01/11 to 10/31/12

       25.1         59.9         15.0  

 

  *See “About Fund Performance” on page 18 for a description of the Custom Benchmark.

 

  

5    Commencement of operations.

 

 

Performance Summary for the Period Ended October 31, 2012

 

 

 

 

         Average Annual Total Returns 6
         1 Year   5 Years   Since Inception 7
       6-Month
Total Returns 		  w/o sales
charge 		  w/sales
charge 		  w/o sales
charge 		  w/sales
charge 		  w/o sales
charge 		  w/sales
charge

Class K

       1.43 %       10.24 %       N/A         0.51 %       N/A         2.36 %       N/A  

Investor A

       1.13         9.72         3.93 %       0.06         (1.01 )%       1.91         0.93 %

Class R

       1.03         9.49         N/A         (0.21 )       N/A         1.63         N/A  

S&P 500 ® Index

       2.16         15.21         N/A         0.36         N/A         1.28         N/A  

2030 Custom Benchmark

       2.23         10.79         N/A         0.36         N/A         1.23         N/A  

 

  6  

Assuming maximum sales charges, if any. Average annual total returns with and without sales charges reflect reductions for distribution and service fees. See “About Fund Performance” on page 18 for a detailed description of share classes, including any related sales charges and fees.

  7  

The Fund commenced operations on April 20, 2007.

N/A - Not applicable as share class and index do not have a sales charge.

Past performance is not indicative of future results.

 

                 
      BLACKROCK FUNDS II       OCTOBER 31, 2012    9

 
 

 

LifePath Active 2035 Portfolio

 

 

  Total Return Based on a $10,000 Investment

 

 

 

 

 

LOGO

 

 

1    Assuming maximum sales charges, if any, transaction costs and other operating expenses, including administration fees. Class K Shares (formerly Institutional Shares) do not have a sales charge.

2    The Fund, which is a fund of funds, normally invests its assets in underlying funds according to an asset allocation strategy designed for investors planning to retire or begin withdrawing assets around the year 2035. Prior to November 27, 2012, the Fund followed a different glidepath under the name “BlackRock Prepared Portfolio 2035.”

3    This unmanaged index covers 500 industrial, utility, transportation and financial companies of the US markets (mostly NYSE issues) representing about 75% of NYSE market capitalization and 30% of NYSE issues.

4    The Fund compares its performance to that of a customized weighted index (the “2035 Custom Benchmark”), comprised of the indexes indicated below, and reflecting the investment advisor’s changes of the benchmarks’ weightings over time. The investment advisor adjusts the weightings of these indexes periodically with its evaluation and adjustment of the Fund’s asset allocation strategy.

 

Period

   Barclays
US Aggregate Bond Index * 		  Russell 3000 ®  Index *   MSCI EAFE Index *

4/20/07 to 6/11/07

       7.5 %       74.0 %       18.5 %

6/12/07 to 1/03/08

       –         80.0         20.0  

1/04/08 to 10/31/12

       10.0         72.0         18.0  

* See “About Fund Performance” on page 18 for a description of the Custom Benchmark.

 

  

5    Commencement of operations.

 

 

Performance Summary for the Period Ended October 31, 2012

 

 

 

 

         Average Annual Total Returns 6
         1 Year   5 Years   Since Inception 7
       6-Month
Total Returns 		  w/o sales
charge 		  w/sales
charge 		  w/o sales
charge 		  w/sales
charge 		  w/o sales
charge 		  w/sales
charge

Class K

       0.60 %       10.45 %       N/A         (0.27 )%       N/A         1.56 %       N/A  

Investor A

       0.30         9.71         3.95 %       (0.70 )       (1.77 )%       1.12         0.15 %

Class R

       0.20         9.53         N/A         (0.99 )       N/A         0.83         N/A  

S&P 500 ® Index

       2.16         15.21         N/A         0.36         N/A         1.28         N/A  

2035 Custom Benchmark

       2.03         11.95         N/A         0.01         N/A         0.94         N/A  

 

  6  

Assuming maximum sales charges, if any. Average annual total returns with and without sales charges reflect reductions for distribution and service fees. See “About Fund Performance” on page 18 for a detailed description of share classes, including any related sales charges and fees.

  7  

The Fund commenced operations on April 20, 2007.

N/A - Not applicable as share class and index do not have a sales charge.

Past performance is not indicative of future results.

 

                 
10       BLACKROCK FUNDS II       OCTOBER 31, 2012   

 
 

 

LifePath Active 2040 Portfolio

 

 

  Total Return Based on a $10,000 Investment

 

 

 

 

 

 

LOGO

 

  

1    Assuming maximum sales charges, if any, transaction costs and other operating expenses, including administration fees. Class K Shares (formerly Institutional Shares) do not have a sales charge.

 

2    The Fund, which is a fund of funds, normally invests its assets in underlying funds according to an asset allocation strategy designed for investors planning to retire or begin withdrawing assets around the year 2040. Prior to November 27, 2012, the Fund followed a different glidepath under the name “BlackRock Prepared Portfolio 2040.”

 

3    This unmanaged index covers 500 industrial, utility, transportation and financial companies of the US markets (mostly NYSE issues) representing about 75% of NYSE market capitalization and 30% of NYSE issues.

 

4    The Fund compares its performance to that of a customized weighted index (the “2040 Custom Benchmark”), comprised of the indexes indicated below, and reflecting the investment advisor’s changes of the benchmarks’ weightings over time. The investment advisor adjusts the weightings of these indexes periodically with its evaluation and adjustment of the Fund’s asset allocation strategy.

 

Period

   Barclays
US Aggregate Bond Index * 		  Russell 3000 ®  Index *   MSCI EAFE Index *

4/20/07 to 1/03/08

       –         80.0 %       20.0 %

1/04/08 to 10/31/12

       10.0 %       72.0         18.0  

*    See “About Fund Performance” on page 18 for a description of the Custom Benchmark.

       

 

  

5    Commencement of operations.

 

  Performance Summary for the Period Ended October 31, 2012

 

         Average Annual Total Returns 6
         1 Year   5 Years   Since Inception 7
       6-Month
Total Returns 		  w/o sales
charge 		  w/sales
charge 		  w/o sales
charge 		  w/sales
charge 		  w/o sales
charge 		  w/sales
charge

Class K

       0.20 %       10.01 %       N/A         (0.27 )%       N/A         1.80 %       N/A  

Investor A

       0.00         9.56         3.77 %       (0.76 )       (1.82 )%       1.32         0.35 %

Class R

       (0.10 )       9.20         N/A         (0.97 )       N/A         1.08         N/A  

S&P 500 ® Index

       2.16         15.21         N/A         0.36         N/A         1.28         N/A  

2040 Custom Benchmark

       2.02         12.04         N/A         0.03         N/A         0.99         N/A  
  6  

Assuming maximum sales charges, if any. Average annual total returns with and without sales charges reflect reductions for distribution and service fees. See “About Fund Performance” on page 18 for a detailed description of share classes, including any related sales charges and fees.

 

  7  

The Fund commenced operations on April 20, 2007.

  N/A - Not applicable as share class and index do not have a sales charge.

  Past performance is not indicative of future results.

 

                 
      BLACKROCK FUNDS II       OCTOBER 31, 2012    11

 
 

 

LifePath Active 2045 Portfolio

 

  Total Return Based on a $10,000 Investment    

 

 

LOGO

 

  

1    Assuming maximum sales charges, if any, transaction costs and other operating expenses, including administration fees. Class K Shares (formerly Institutional Shares) do not have a sales charge.

 

2    The Fund, which is a fund of funds, normally invests its assets in underlying funds according to an asset allocation strategy designed for investors planning to retire or begin withdrawing assets around the year 2045. Prior to November 27, 2012, the Fund followed a different glidepath under the name “BlackRock Prepared Portfolio 2045.”

 

3    This unmanaged index covers 500 industrial, utility, transportation and financial companies of the US markets (mostly NYSE issues) representing about 75% of NYSE market capitalization and 30% of NYSE issues.

 

4    The Fund compares its performance to that of a customized weighted index (the “2045 Custom Benchmark”), comprised of the indexes indicated below, and reflecting the investment advisor’s changes of the benchmarks’ weightings over time. The investment advisor adjusts the weightings of these indexes periodically with its evaluation and adjustment of the Fund’s asset allocation strategy.

 

Period

  Barclays
US Aggregate Bond Index * 		  Russell 3000 ®  Index *   MSCI EAFE Index *

4/20/07 to 1/03/08

      –         80.0 %       20.0 %

1/04/08 to 10/31/12

      10.0 %       72.0         18.0  
* See “About Fund Performance” on page 18 for a description of the Custom Benchmark.   

 

  

5    Commencement of operations.

 

  Performance Summary for the Period Ended October 31, 2012

 

         Average Annual Total Returns 6
         1 Year   5 Years   Since Inception 7
       6-Month
Total Returns 		  w/o sales
charge 		  w/ sales
charge 		  w/o sales
charge 		  w/ sales
charge 		  w/o sales
charge 		  w/ sales
charge

Class K

       0.88 %       10.76 %       N/A         (0.32 )%       N/A         1.99 %       N/A  

Investor A

       0.59         10.29         4.49 %       (0.84 )       (1.91 )%       1.45         0.48 %

Class R

       0.50         9.92         N/A         (1.08 )       N/A         1.20         N/A  

S&P 500 ® Index

       2.16         15.21         N/A         0.36         N/A         1.28         N/A  

2045 Custom Benchmark

       2.02         12.04         N/A         0.03         N/A         0.99         N/A  
  6  

Assuming maximum sales charges, if any. Average annual total returns with and without sales charges reflect reductions for distribution and service fees. See “About Fund Performance” on page 18 for a detailed description of share classes, including any related sales charges and fees.

 

  7  

The Fund commenced operations on April 20, 2007.

  N/A - Not applicable as share class and index do not have a sales charge.

  Past performance is not indicative of future results.

 

                 
12       BLACKROCK FUNDS II       OCTOBER 31, 2012   

 
 

 

LifePath Active 2050 Portfolio

 

 

  Total Return Based on a $10,000 Investment

 

    

 

 

LOGO

 

  

1    Assuming maximum sales charges, if any, transaction costs and other operating expenses, including administration fees. Class K Shares (formerly Institutional Shares) do not have a sales charge.

 

2    The Fund, which is a fund of funds, normally invests its assets in underlying funds according to an asset allocation strategy designed for investors planning to retire or begin withdrawing assets around the year 2050. Prior to November 27, 2012, the Fund followed a different glidepath under the name “BlackRock Prepared Portfolio 2050.”

 

3    This unmanaged index covers 500 industrial, utility, transportation and financial companies of the US markets (mostly NYSE issues) representing about 75% of NYSE market capitalization and 30% of NYSE issues.

 

4    The Fund compares its performance to that of a customized weighted index (the “2050 Custom Benchmark”), comprised of the indexes indicated below, and reflecting the investment advisor’s changes of the benchmarks’ weightings over time. The investment advisor adjusts the weightings of these indexes periodically with its evaluation and adjustment of the Fund’s asset allocation strategy.

 

Period

   Barclays
US Aggregate Bond Index * 		  Russell 3000 ®  Index *   MSCI EAFE Index *

4/20/07 to 1/03/08

       –         80.0 %       20.0 %

1/04/08 to 10/31/12

       10.0 %       72.0         18.0  

*    See “About Fund Performance” on page 18 for a description of the Custom Benchmark.

       

 

  

5    Commencement of operations.

 

  Performance Summary for the Period Ended October 31, 2012

 

         Average Annual Total Returns 6
         1 Year   5 Years   Since Inception 7
       6-Month
Total Returns 		  w/o sales
charge 		  w/ sales
charge 		  w/o sales
charge 		  w/ sales
charge 		  w/o sales
charge 		  w/ sales
charge

Class K

       0.43 %       10.20 %       N/A         (1.17 )%       N/A         1.06 %       N/A  

Investor A

       0.11         9.69         3.91 %       (1.63 )       (2.69 )%       0.58         (0.39 )%

Class R

       0.00         9.32         N/A         (1.87 )       N/A         0.33         N/A  

S&P 500 ® Index

       2.16         15.21         N/A         0.36         N/A         1.28         N/A  

2050 Custom Benchmark

       2.02         12.04         N/A         0.03         N/A         0.99         N/A  
  6  

Assuming maximum sales charges, if any. Average annual total returns with and without sales charges reflect reductions for distribution and service fees. See “About Fund Performance” on page 18 for a detailed description of share classes, including any related sales charges and fees.

 

  7  

The Fund commenced operations on April 20, 2007.

  N/A - Not applicable as share class and index do not have a sales charge.

  Past performance is not indicative of future results.

 

                 
      BLACKROCK FUNDS II       OCTOBER 31, 2012    13

 
 
 

 

 

  LifePath Active 2015 Portfolio

 

Portfolio Composition    Percent of
Affiliated
Investment
Companies

Equity Funds

         53 %   

Fixed Income Funds

         45     

Short-Term Securities

         2       
Portfolio Holdings    Percent of
Affiliated
Investment
Companies

Master Total Return Portfolio

         43 %   

BlackRock Equity Dividend Fund, Institutional Class

         9     

Master S&P 500 Index Series

         8     

BlackRock Capital Appreciation Fund, Inc., BlackRock Class

         6     

Master Large Cap Growth Portfolio

         6     

BlackRock Long-Horizon Equity Fund, Institutional Class

         4     

Master Basic Value LLC.

         4     

BlackRock International Fund, Institutional Class

         3     

iShares MSCI Emerging Markets Index Fund

         3     

BlackRock Liquidity Funds, TempFund, Institutional Class

         2     

BlackRock High Yield Bond Portfolio, BlackRock Class

         2     

BlackRock Small Cap Growth Equity Portfolio, Institutional Class

         2     

Master Value Opportunities LLC

         2     

BlackRock International Opportunities Portfolio, Institutional Class

         2     

iShares MSCI Germany Index Fund

         2     

iShares Dow Jones U.S. Technology Sector Index Fund

         2       
 

 

 

  LifePath Active 2020 Portfolio

 

Portfolio Composition    Percent of
Affiliated
Investment
Companies

Equity Funds

         57 %   

Fixed Income Funds

         40     

Short-Term Securities

         3       
Portfolio Holdings   

 

Percent of
Affiliated
Investment
Companies

Master Total Return Portfolio

         38 %   

BlackRock Equity Dividend Fund, Institutional Class

         11     

Master S&P 500 Index Series

         8     

BlackRock Capital Appreciation Fund, Inc., BlackRock Class

         7     

Master Large Cap Growth Portfolio

         5     

BlackRock Long-Horizon Equity Fund, Institutional Class

         5     

BlackRock International Fund, Institutional Class

         3     

Master Basic Value LLC.

 

         3     

BlackRock Liquidity Funds, TempFund, Institutional Class

         3     

iShares MSCI Emerging Markets Index Fund

         3     

BlackRock Small Cap Growth Equity Portfolio, Institutional Class

         3     

Master Value Opportunities LLC

         3     

BlackRock International Opportunities Portfolio, Institutional Class

         2     

BlackRock High Yield Bond Portfolio, BlackRock Class

         2     

iShares MSCI Germany Index Fund

         2     

iShares Dow Jones U.S. Technology Sector Index Fund

         2       
 

 

The Funds’ allocation and holdings listed above are current as of the report date. However, the Funds are regularly monitored and their composition may vary throughout various periods.

                 
14       BLACKROCK FUNDS II       OCTOBER 31, 2012   

 
 
 
 

 

 

  LifePath Active 2025 Portfolio

 

 

 

 

Portfolio Composition    Percent of
Affiliated
Investment
Companies

Equity Funds

         63 %   

Fixed Income Funds

         33     

Short-Term Securities

         4       
Portfolio Holdings    Percent of
Affiliated
Investment
Companies

Master Total Return Portfolio

         31 %   

BlackRock Equity Dividend Fund, Institutional Class

         12     

Master S&P 500 Index Series

         11     

BlackRock Capital Appreciation Fund, Inc., BlackRock Class

         8     

Master Large Cap Growth Portfolio

         7     

BlackRock Long-Horizon Equity Fund, Institutional Class

         5     

Master Basic Value LLC.

         4     

BlackRock Liquidity Funds, TempFund, Institutional Class

         4     

BlackRock International Fund, Institutional Class

         3     

iShares MSCI Emerging Markets Index Fund

         3     

BlackRock Small Cap Growth Equity Portfolio, Institutional Class

         2     

Master Value Opportunities LLC

         2     

BlackRock International Opportunities Portfolio, Institutional Class

         2     

BlackRock High Yield Bond Portfolio, BlackRock Class

         2     

iShares MSCI Germany Index Fund

         2     

iShares Dow Jones U.S. Technology Sector Index Fund

         2       
 

 

 

  LifePath Active 2030 Portfolio

 

 

Portfolio Composition    Percent of
Affiliated
Investment
Companies

Equity Funds

         72 %   

Fixed Income Funds

         26     

Short-Term Securities

         2       
Portfolio Holdings    Percent of
Affiliated
Investment
Companies

Master Total Return Portfolio

         24 %   

BlackRock Equity Dividend Fund, Institutional Class

         13     

BlackRock Capital Appreciation Fund, Inc., BlackRock Class

         10     

Master S&P 500 Index Series

         10     

BlackRock Long-Horizon Equity Fund, Institutional Class

         7     

Master Large Cap Growth Portfolio

         7     

Master Basic Value LLC.

         5     

BlackRock International Fund, Institutional Class

         4     

BlackRock Small Cap Growth Equity Portfolio, Institutional Class

         3     

Master Value Opportunities LLC

         3     

BlackRock International Opportunities Portfolio, Institutional Class

         3     

iShares MSCI Emerging Markets Index Fund

         3     

BlackRock Liquidity Funds, TempFund, Institutional Class

         2     

iShares MSCI Germany Index Fund

         2     

iShares Dow Jones U.S. Technology Sector Index Fund

         2     

BlackRock High Yield Bond Portfolio, BlackRock Class

         2       
 

 

The Funds’ allocation and holdings listed above are current as of the report date. However, the Funds are regularly monitored and their composition may vary throughout various periods.

 

                 
      BLACKROCK FUNDS II       OCTOBER 31, 2012    15

 
 
 
 

 

 

  LifePath Active 2035 Portfolio

 

Portfolio Composition    Percent of
Affiliated
Investment
Companies

Equity Funds

         90 %   

Fixed Income Funds

         8     

Short-Term Securities

         2       
Portfolio Holdings    Percent of
Affiliated
Investment
Companies

BlackRock Equity Dividend Fund, Institutional Class

         20 %   

BlackRock Capital Appreciation Fund, Inc., BlackRock Class

         13     

Master S&P 500 Index Series

         12     

BlackRock Long-Horizon Equity Fund, Institutional Class

         9     

Master Large Cap Growth Portfolio

         7     

Master Total Return Portfolio

         6     

Master Basic Value LLC.

         5     

BlackRock International Fund, Institutional Class

         5     

BlackRock Small Cap Growth Equity Portfolio, Institutional Class

         4     

Master Value Opportunities LLC

         4     

BlackRock International Opportunities Portfolio, Institutional Class

         4     

iShares MSCI Emerging Markets Index Fund

         3     

BlackRock High Yield Bond Portfolio, BlackRock Class

         2     

BlackRock Liquidity Funds, TempFund, Institutional Class

         2     

iShares MSCI Germany Index Fund

         2     

iShares Dow Jones U.S. Technology Sector Index Fund

         2       

 

 

 

 

  LifePath Active 2040 Portfolio

 

Portfolio Composition    Percent of
Affiliated
Investment
Companies

Equity Funds

         89 %   

Fixed Income Funds

         8     

Short-Term Securities

         3       
Portfolio Holdings    Percent of
Affiliated
Investment
Companies

BlackRock Equity Dividend Fund, Institutional Class

         17 %   

Master S&P 500 Index Series

         13     

BlackRock Capital Appreciation Fund, Inc., BlackRock Class

         13     

Master Large Cap Growth Portfolio

         10     

BlackRock Long-Horizon Equity Fund, Institutional Class

         8     

Master Basic Value LLC.

         7     

Master Total Return Portfolio

         7     

BlackRock International Fund, Institutional Class

         4     

BlackRock Small Cap Growth Equity Portfolio, Institutional Class

         4     

Master Value Opportunities LLC

         4     

BlackRock Liquidity Funds, TempFund, Institutional Class

         3     

BlackRock International Opportunities Portfolio, Institutional Class

         3     

iShares MSCI Emerging Markets Index Fund

         3     

iShares MSCI Germany Index Fund

         2     

iShares Dow Jones U.S. Technology Sector Index Fund

         1     

BlackRock High Yield Bond Portfolio, BlackRock Class

         1       
 

 

The Funds’ allocation and holdings listed above are current as of the report date. However, the Funds are regularly monitored and their composition may vary throughout various periods.

 

                 
16       BLACKROCK FUNDS II       OCTOBER 31, 2012   

 
 
 
 

 

 

  LifePath Active 2045 Portfolio

 

Portfolio Composition    Percent of
Affiliated
Investment
Companies

Equity Funds

         89 %   

Fixed Income Funds

         8     

Short-Term Securities

         3       
Portfolio Holdings    Percent of
Affiliated
Investment
Companies

BlackRock Equity Dividend Fund, Institutional Class

         17 %   

BlackRock Capital Appreciation Fund, Inc., BlackRock Class

     113     

Master S&P 500 Index Series

         11     

Master Large Cap Growth Portfolio

         11     

BlackRock Long-Horizon Equity Fund, Institutional Class

         8     

Master Basic Value LLC.

         7     

BlackRock International Fund, Institutional Class

         6     

Master Total Return Portfolio

         6     

BlackRock Small Cap Growth Equity Portfolio, Institutional Class

         4     

BlackRock Liquidity Funds, TempFund, Institutional Class

         3     

BlackRock International Opportunities Portfolio, Institutional Class

         3     

iShares MSCI Emerging Markets Index Fund

         3     

BlackRock High Yield Bond Portfolio, BlackRock Class

         2     

Master Value Opportunities LLC

         2     

iShares MSCI Germany Index Fund

         2     

iShares Dow Jones U.S. Technology Sector Index Fund

         2       
 

 

 

  LifePath Active 2050 Portfolio

 

Portfolio Composition    Percent of
Affiliated
Investment
Companies

Equity Funds

         89 %   

Fixed Income Funds

         8     

Short-Term Securities

         3       
Portfolio Holdings    Percent of
Affiliated
Investment
Companies

BlackRock Equity Dividend Fund, Institutional Class

         17 %   

BlackRock Capital Appreciation Fund, Inc., BlackRock Class

         14     

Master S&P 500 Index Series

         11     

Master Large Cap Growth Portfolio

         10     

BlackRock Long-Horizon Equity Fund, Institutional Class

         8     

Master Basic Value LLC.

         7     

BlackRock International Fund, Institutional Class

         5     

Master Total Return Portfolio

         5     

BlackRock Small Cap Growth Equity Portfolio, Institutional Class

         4     

Master Value Opportunities LLC

         4     

BlackRock International Opportunities Portfolio, Institutional Class

         3     

BlackRock High Yield Bond Portfolio, BlackRock Class

         3     

BlackRock Liquidity Funds, TempFund, Institutional Class

         3     

iShares MSCI Emerging Markets Index Fund

         3     

iShares MSCI Germany Index Fund

         2     

iShares Dow Jones U.S. Technology Sector Index Fund

         1       
 

 

The Funds’ allocation and holdings listed above are current as of the report date. However, the Funds are regularly monitored and their composition may vary throughout various periods.

 

                 
      BLACKROCK FUNDS II       OCTOBER 31, 2012    17

 

 

    About Fund Performance

 

 

—  

Class K Shares (formerly Institutional Shares) are not subject to any sales charge. These shares bear no ongoing distribution or service fees and are available only to eligible investors.

 

—  

Investor A Shares are subject to a maximum initial sales charge (front end load) of 5.25% and a service fee of 0.25% per year (but no distribution fee).

 

—  

Class R Shares are not subject to any sales charge. These shares are subject to a distribution fee of 0.25% per year and a service fee of 0.25% per year. These shares are available only to certain retirement and other similar plans.

Performance information reflects past performance and does not guarantee future results. Current performance may be lower or higher than the performance data quoted. Refer to www.blackrock.com/funds to obtain performance data current to the most recent month-end. Performance results do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Figures shown in each of the performance tables on the previous pages assume reinvestment of all dividends and distributions, if any, at net asset value (“NAV”) on the ex-dividend date. Investment return and principal value of shares will fluctuate so that shares, when redeemed, may be worth more or less than their original cost.

BlackRock Advisors, LLC (the “Manager”), the Funds’ investment advisor, waived and/or reimbursed a portion of each Fund’s expenses. Without such waiver and/or reimbursement, a Fund’s performance would have been lower. The Manager is under no obligation to waive or reimburse or

 

to continue waiving or reimbursing its fees after the applicable termination date. See Note 2 of the Notes to Financial Statements for additional information on waivers and reimbursements. Dividends paid to each class of shares will vary because of the different levels of service, distribution and transfer agency fees applicable to each class, which are deducted from the income available to be paid to shareholders.

Prior to November 27, 2012, the Funds’ Custom Benchmarks were comprised of the Barclays US Aggregate Bond Index, the Russell 3000 ® Index and the MSCI EAFE Index. Effective November 27, 2012, the Funds’ Custom Benchmarks are comprised of the Russell 1000 ® Index, Russell 2000 ® Index, MSCI ACWI ex US IMI Index, FTSE EPRA/NAREIT Developed Real Estate Index, Dow Jones UBS Commodities Index and Barclays US Aggregate Bond Index.

The Barclays US Aggregate Bond Index is an unmanaged market-weighted index comprised of investment grade corporate bonds (rated BBB or better), mortgages and US Treasury and government agency issues with at least one year to maturity. The Russell 3000 ® Index is an unmanaged index comprised of the 3,000 largest US companies as determined by total market capitalization. The MSCI EAFE Index is an unmanaged broad-based index that measures the total returns of developed foreign stock markets in Europe, Australasia and the Far East. The customized weighted index for each Fund is created by BlackRock and is adjusted periodically to represent the weightings of the unmanaged indices as compared to each Fund’s glide path.

 
 

    Disclosure of Expenses

 

Shareholders of each Fund may incur the following charges: (a) expenses related to transactions, including sales charges and exchange fees; and (b) operating expenses, including administration fees, service and distribution fees, including 12b-1 fees, acquired fund fees and expenses and other Fund expenses. The expense examples on the next page (which are based on a hypothetical investment of $1,000 invested on May 1, 2012 and held through October 31, 2012) are intended to assist shareholders both in calculating expenses based on an investment in each Fund and in comparing these expenses with similar costs of investing in other mutual funds.

The expense examples provide information about actual account values and actual expenses. In order to estimate the expenses a shareholder paid during the period covered by this report, shareholders can divide their account value by $1,000 and then multiply the result by the number corresponding to their Fund and share class under the heading entitled “Expenses Paid During the Period.”

The expense examples also provide information about hypothetical account values and hypothetical expenses based on a Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses. In order to assist shareholders in comparing the ongoing expenses of investing in these Funds and other funds, compare the 5% hypothetical examples with the 5% hypothetical examples that appear in other funds’ shareholder reports.

The expenses shown in the expense examples are intended to highlight shareholders’ ongoing costs only and do not reflect any transactional expenses, such as sales charges or exchange fees, if any. Therefore, the hypothetical examples are useful in comparing ongoing expenses only, and will not help shareholders determine the relative total expenses of owning different funds. If these transactional expenses were included, shareholder expenses would have been higher.

 

 

                 
18       BLACKROCK FUNDS II       OCTOBER 31, 2012   

 

 

 

   Expense Examples

 

 

     Actual         Hypothetical 1     
       Beginning
Account Value
May 1, 2012 		   Ending
Account Value
October 31, 2012 		   Expenses Paid
During the Period 2 		          Beginning
Account Value
May 1, 2012 		   Ending
Account Value
October 31, 2012 		   Expenses Paid
During the Period 2 		   Annualized
Expense Ratio

LifePath Active 2015 Portfolio

Class K

   $1,000.00    $1,026.80    $1.17       $1,000.00    $1,023.98    $1.17    0.23%

Investor A

   $1,000.00    $1,025.10    $3.56       $1,000.00    $1,021.62    $3.56    0.70%

Class R

   $1,000.00    $1,023.10    $4.53         $1,000.00    $1,020.66    $4.52    0.89%

LifePath Active 2020 Portfolio

Class K

   $1,000.00    $1,024.20    $1.12       $1,000.00    $1,024.03    $1.12    0.22%

Investor A

   $1,000.00    $1,021.40    $3.40       $1,000.00    $1,021.77    $3.40    0.67%

Class R

   $1,000.00    $1,020.60    $4.47         $1,000.00    $1,020.71    $4.47    0.88%

LifePath Active 2025 Portfolio

Class K

   $1,000.00    $1,020.10    $1.12       $1,000.00    $1,024.03    $1.12    0.22%

Investor A

   $1,000.00    $1,018.20    $3.55       $1,000.00    $1,021.62    $3.56    0.70%

Class R

   $1,000.00    $1,017.20    $4.56         $1,000.00    $1,020.61    $4.57    0.90%

LifePath Active 2030 Portfolio

Class K

   $1,000.00    $1,014.30    $0.96       $1,000.00    $1,024.18    $0.97    0.19%

Investor A

   $1,000.00    $1,011.30    $3.29       $1,000.00    $1,021.87    $3.30    0.65%

Class R

   $1,000.00    $1,010.30    $4.35         $1,000.00    $1,020.81    $4.37    0.86%

LifePath Active 2035 Portfolio

Class K

   $1,000.00    $1,006.00    $0.76       $1,000.00    $1,024.38    $0.76    0.15%

Investor A

   $1,000.00    $1,003.00    $3.27       $1,000.00    $1,021.87    $3.30    0.65%

Class R

   $1,000.00    $1,002.00    $4.38         $1,000.00    $1,020.76    $4.42    0.87%

LifePath Active 2040 Portfolio

Class K

   $1,000.00    $1,002.00    $0.81       $1,000.00    $1,024.33    $0.81    0.16%

Investor A

   $1,000.00    $1,000.00    $3.32       $1,000.00    $1,021.82    $3.35    0.66%

Class R

   $1,000.00    $999.00    $4.42         $1,000.00    $1,020.71    $4.47    0.88%

LifePath Active 2045 Portfolio

Class K

   $1,000.00    $1,008.80    $0.96       $1,000.00    $1,024.18    $0.97    0.19%

Investor A

   $1,000.00    $1,005.90    $3.48       $1,000.00    $1,021.67    $3.51    0.69%

Class R

   $1,000.00    $1,005.00    $4.69         $1,000.00    $1,020.46    $4.72    0.93%

LifePath Active 2050 Portfolio

Class K

   $1,000.00    $1,004.30    $0.81       $1,000.00    $1,024.33    $0.81    0.16%

Investor A

   $1,000.00    $1,001.10    $3.32       $1,000.00    $1,021.82    $3.35    0.66%

Class R

   $1,000.00    $1,000.00    $4.52         $1,000.00    $1,020.61    $4.57    0.90%

 

  1  

Hypothetical 5% annual return before expenses is calculated by pro rating the number of days in the most recent fiscal half year divided by 366.

 

  2  

For each class, expenses are equal to the annualized expense ratio for the class, multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period shown). Because the Fund invests in Master Portfolios, the expense example reflects the expenses of both the Fund and the Master Portfolios in which it invests. The fees and expenses of the underlying funds in which the Fund invests are not included in the Fund’s annualized expense ratio.

See “Disclosure of Expenses” on page 18 for further information on how expenses were calculated.

 

                 
      BLACKROCK FUNDS II       OCTOBER 31, 2012    19

 

 

Schedule of Investments October 31, 2012

 

 

LifePath Active 2015 Portfolio

(Percentages shown are based on Net Assets)

 

Affiliated Investment Companies (a)    Shares/
Beneficial
Interest 		     Value  

 

 

Equity Funds – 52.2%

  

BlackRock Capital Appreciation Fund, Inc., BlackRock Class (b)

     47,700       $ 1,147,183   

BlackRock Equity Dividend Fund, Institutional Class

     81,533         1,623,329   

BlackRock International Fund, Institutional Class

     42,955         528,346   

BlackRock International Opportunities Portfolio, Institutional Class

     9,838         325,255   

BlackRock Long-Horizon Equity Fund, Institutional Class

     58,740         730,133   

BlackRock Small Cap Growth Equity Portfolio, Institutional Class (b)

     14,712         375,310   

iShares Dow Jones U.S. Technology Sector Index Fund

     3,845         270,265   

iShares MSCI Emerging Markets Index Fund

     11,003         452,333   

iShares MSCI Germany Index Fund

     13,256         304,093   

Master Basic Value LLC

   $ 642,714         642,714   

Master Large Cap Growth Portfolio

   $ 1,043,733         1,043,733   

Master S&P 500 Index Series

   $ 1,323,084         1,323,084   

Master Value Opportunities LLC

   $ 371,260         371,260   
     

 

 

 
        9,137,038   

 

 

    

     
     
Affiliated Investment Companies (a)    Shares/
Beneficial
Interest 		     Value  

 

 

Fixed Income Funds — 45.7%

  

BlackRock High Yield Bond Portfolio, BlackRock Class

     49,674       $ 396,395   

Master Total Return Portfolio

   $ 7,613,169         7,613,169   
     

 

 

 
        8,009,564   

 

 

    

     
     

Short-Term Securities – 2.3%

  

BlackRock Liquidity Funds, TempFund, Institutional Class, 0.17% (c)

     396,469         396,469   

 

 

Total Affiliated Investment Companies

(Cost – $16,486,383) – 100.2%

  

  

     17,543,071   

Liabilities in Excess of Other Assets – (0.2)%

  

     (37,498 ) 
     

 

 

 

Net Assets – 100.0%

      $ 17,505,573   
     

 

 

 

 

 

 

(a) Investments in issuers considered to be an affiliate of the Fund during the year ended October 31, 2012, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:
Affiliate   

Shares/
Beneficial
Interest

Held at
October 31,
2011

     Shares/
Beneficial
Interest
Purchased 		     Shares/
Beneficial
Interest
Sold 		   

Shares/
Beneficial
Interest

Held at
October 31,
2012

    

Value

at
October 31,
2012

     Income      Realized
Gain
(Loss) 		 

BlackRock Capital Appreciation Fund, Inc., BlackRock Class

     44,318         26,632         23,250        47,700       $ 1,147,183         –       $ 45,478   

BlackRock Emerging Markets Fund, Inc., Institutional Class

     12,601         10,550         23,151        –         –       $ 1,199       $ 46,933   

BlackRock Equity Dividend Fund, Institutional Class

     93,460         42,692         54,619        81,533       $ 1,623,329       $ 37,294       $ 51,247   

BlackRock Floating Rate Income Portfolio, Institutional Class

     75,697         2,662         78,359        –         –       $ 1,754       $ (20,575 ) 

BlackRock High Yield Bond Portfolio, BlackRock Class

     151,329         15,146         116,801        49,674       $ 396,395       $ 28,953       $ (3,985 ) 

BlackRock Inflation Protected Bond Portfolio, BlackRock Class

     15         –         15        –         –       $ 3       $ 41   

BlackRock International Fund, Institutional Class

     –         69,416         26,461        42,955       $ 528,346         –       $ (23,674 ) 

BlackRock International Opportunities Portfolio, Institutional Class

     20,779         3,418         14,359        9,838       $ 325,255       $ 12,673       $ (29,315 ) 

BlackRock Latin America Fund, Inc, Institutional Class

     1,169         174         1,343        –         –       $ 636       $ 6,863   

BlackRock Liquidity Funds, TempFund, Institutional Class

     13,448         383,021 1          –        396,469       $ 396,469       $ 354         –   

BlackRock Long-Horizon Equity Fund, Institutional Class

     78,453         13,748         33,461        58,740       $ 730,133       $ 26,072       $ (28,050 ) 

BlackRock Pacific Fund, Inc., Institutional Class

     15,221         2,840         18,061        –         –       $ 1,940       $ 894   

BlackRock Small Cap Growth Equity Portfolio, Institutional Class

     15,882         2,695         3,865        14,712       $ 375,310         –       $ 13,721   

BlackRock U.S. Opportunities Portfolio, Institutional Class

     5,402         1,474         6,876        –         –         –       $ 20,778   

iShares Dow Jones U.S. Healthcare Sector Index Fund

     –         3,552         3,552        –         –       $ 1,155       $ 4,143   

iShares Dow Jones U.S. Industrial Sector Index Fund

     –         4,074         4,074        –         –       $ 996       $ (6,983 ) 

iShares Dow Jones U.S. Technology Sector Index Fund

     –         3,845         –        3,845       $ 270,265       $ 1,122         –   

iShares MSCI Emerging Markets Index Fund

     –         11,003         –        11,003       $ 452,333         –         –   

iShares MSCI Germany Index Fund

     –         13,256         –        13,256       $ 304,093       $ 7,708         –   

iShares MSCI Italy Index Fund

     –         25,472         25,472        –         –       $ 6,492       $ 54,923   

Master Basic Value LLC

   $ 627,040       $ 15,674 1          –      $ 642,714       $ 642,714       $ 17,786       $ 47,188   

Master Large Cap Growth Portfolio

   $ 1,250,746         –       $ 207,013 2     $ 1,043,733       $ 1,043,733       $ 29,249       $ 112,467   

Master S&P 500 Index Series

     –       $ 1,323,084 1          –      $ 1,323,084       $ 1,323,084       $ 2,620       $ 4,889   

Master Total Return Portfolio

   $ 5,748,320       $ 1,864,849 1          –      $ 7,613,169       $ 7,613,169       $ 289,902       $ 110,086   

Master Value Opportunities LLC

   $ 182,386       $ 188,874 1         –      $ 371,260       $ 371,260       $ 2,380       $ 22,768   

 

1

Represents net shares/beneficial interest purchased.

2

Represents net beneficial interest sold.

 

(b) Non-income producing security.
(c) Represents the current yield as of report date.

 

 

 

See Notes to Financial Statements.     
                 
20       BLACKROCK FUNDS II       OCTOBER 31, 2012   

 

 

Schedule of Investments (concluded)

 

 

LifePath Active 2015 Portfolio

 

  —  

Fair Value Measurements – Various inputs are used in determining the fair value of investments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes as follows:

 

  —  

Level 1 – unadjusted price quotations in active markets/exchanges for identical assets and liabilities that the Fund has the ability to access

 

  —  

Level 2 – other observable inputs (including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market–corroborated inputs)

 

  —  

Level 3 – unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Fund’s own assumptions used in determining the fair value of investments)

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Fund’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. The categorization of a value determined for investments is based on the pricing transparency of the investment and is not necessarily an indication of the risks associated with investing in those securities. For information about the Fund’s policy regarding valuation of investments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.

The following table summarizes the Fund’s investments categorized in the disclosure hierarchy as of October 31, 2012:

 

 

 

 
        Level 1     Level 2     Level 3   Total  
 

 

 
 

Assets:

       
 

Investments:

       
 

Affiliated
Investment Companies

  $   6,549,111      $   10,993,960      –   $ 17,543,071   
 

 

 

Certain of the Fund’s assets are held at carrying amount, which approximates fair value for financial statement purposes. As of October 31, 2012, cash of $9,785 is categorized as Level 1 within the disclosure hierarchy.

There were no transfers between levels during the year ended October 31, 2012.

    

 

 

See Notes to Financial Statements.

                 
      BLACKROCK FUNDS II       OCTOBER 31, 2012    21

 

 

Schedule of Investments October 31, 2012

 

 

LifePath Active 2020 Portfolio

(Percentages shown are based on Net Assets)

 

Affiliated Investment Companies (a)    Shares/
Beneficial
Interest 		     Value  

 

 

Equity Funds – 56.6%

     

BlackRock Capital Appreciation Fund, Inc., BlackRock Class (b)

     60,993       $ 1,466,879   

BlackRock Emerging Markets Fund, Inc., Institutional Class

     8         163   

BlackRock Equity Dividend Fund, Institutional Class

     108,657         2,163,363   

BlackRock International Fund, Institutional Class

     54,452         669,762   

BlackRock International Opportunities Portfolio, Institutional Class

     14,592         482,419   

BlackRock Latin America Fund, Inc., Institutional Class

     1         28   

BlackRock Long-Horizon Equity Fund, Institutional Class

     84,421         1,049,349   

BlackRock Small Cap Growth Equity Portfolio, Institutional Class (b)

     20,703         528,132   

iShares Dow Jones U.S. Technology Sector Index Fund

     4,948         347,795   

iShares MSCI Emerging Markets Index Fund

     14,023         576,486   

iShares MSCI Germany Index Fund

     17,059         391,333   

Master Basic Value LLC

   $ 645,245         645,245   

Master Large Cap Growth Portfolio

   $ 1,065,007         1,065,007   
Affiliated Investment Companies (a)    Shares/
Beneficial
Interest 		     Value  

 

 

Equity Funds (concluded)

     

Master S&P 500 Index Series

   $ 1,671,234       $ 1,671,234   

Master Value Opportunities LLC

   $ 509,484         509,484   
     

 

 

 
        11,566,679   

 

 

    

     

    

     

Fixed Income Funds – 40.9%

     

BlackRock High Yield Bond Portfolio, BlackRock Class

     58,926         470,230   

Master Total Return Portfolio

   $ 7,898,916         7,898,916   
     

 

 

 
        8,369,146   

 

 

    

     
     

Short-Term Securities – 2.9%

     

BlackRock Liquidity Funds, TempFund, Institutional Class, 0.17% (c)

     602,354         602,354   

 

 

Total Affiliated Investment Companies
(Cost – $18,964,980) – 100.4%

   

     20,538,179   

Liabilities in Excess of Other Assets – (0.4)%

  

     (88,705 ) 
     

 

 

 

Net Assets – 100.0%

      $ 20,449,474   
     

 

 

 
 

 

(a) Investments in issuers considered to be an affiliate of the Fund during the year ended October 31, 2012, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

 

 
Affiliate   

Shares/
Beneficial
Interest

Held at
October 31,
2011

     Shares/
Beneficial
Interest
Purchased 		    Shares/
Beneficial
Interest
Sold 		    

Shares/
Beneficial
Interest

Held at
October 31,
2012

     Value at
October 31,
2012 		     Income      Realized
Gain
(Loss) 		 

 

 

BlackRock Capital Appreciation Fund, Inc., BlackRock Class

     60,184         19,570        18,761         60,993       $ 1,466,879         –       $ 48,775   

BlackRock Emerging Markets Fund, Inc., Institutional Class

     14,994         12,728        27,714         8       $ 163       $ 1,448       $ 57,732   

BlackRock Equity Dividend Fund, Institutional Class

     121,928         24,599        37,870         108,657       $ 2,163,363       $ 48,461       $ 27,513   

BlackRock Floating Rate Income Portfolio, Institutional Class

     81,411         403        81,814         –         –       $ 1,839       $ (18,307 ) 

BlackRock High Yield Bond Portfolio, BlackRock Class

     174,535         13,513        129,122         58,926       $ 470,230       $ 33,829       $ (1,189 ) 

BlackRock International Fund, Institutional Class

     –         86,795        32,343         54,452       $ 669,762         –       $ (32,030 ) 

BlackRock International Opportunities Portfolio, Institutional Class

     26,890         4,033        16,331         14,592       $ 482,419       $ 16,139       $ (30,946 ) 

BlackRock Latin America Fund, Inc, Institutional Class

     1,404         187        1,590         1       $ 28       $ 775       $ 8,486   

BlackRock Liquidity Funds, TempFund, Institutional Class

     942         601,412 1         –         602,354       $ 602,354       $ 351         –   

BlackRock Long-Horizon Equity Fund, Institutional Class

     103,124         16,603        35,306         84,421       $ 1,049,349       $ 34,771       $ (31,528 ) 

BlackRock Pacific Fund, Inc., Institutional Class

     19,526         3,362        22,888         –         –       $ 2,450       $ 4,286   

BlackRock Small Cap Growth Equity Portfolio, Institutional Class

     20,880         3,252        3,429         20,703       $ 528,132         –       $ 14,170   

BlackRock U.S. Opportunities Portfolio, Institutional Class

     6,797         1,757        8,554         –         –         –       $ 29,457   

iShares Dow Jones U.S. Healthcare Sector Index Fund

     –         4,571        4,571         –         –       $ 1,486       $ 5,331   

iShares Dow Jones U.S. Industrial Sector Index Fund

     –         5,243        5,243         –         –       $ 1,282       $ (8,986 ) 

iShares Dow Jones U.S. Technology Sector Index Fund

     –         4,948        –         4,948       $ 347,795       $ 1,443         –   

iShares MSCI Emerging Markets Index Fund

     –         14,023        –         14,023       $ 576,486         –         –   

iShares MSCI Germany Index Fund

     –         17,059        –         17,059       $ 391,333       $ 9,919         –   

iShares MSCI Italy Index Fund

     –         32,780        32,780         –         –       $ 8,354       $ 70,681   

Master Basic Value LLC

   $ 869,553         –      $ 224,308 2        $ 645,245       $ 645,245       $ 27,349       $ 70,282   

Master Large Cap Growth Portfolio

   $ 1,626,349         –      $ 561,342 2        $ 1,065,007       $ 1,065,007       $ 37,216       $ 142,476   

Master S&P 500 Index Series

     –       $ 1,671,234 1       –       $ 1,671,234       $ 1,671,234       $ 3,309       $ 6,175   

Master Total Return Portfolio

   $ 6,077,769       $ 1,821,147 1       –       $ 7,898,916       $ 7,898,916       $ 328,977       $ 126,169   

Master Value Opportunities LLC

   $ 238,330       $ 271,154 1       –       $ 509,484       $ 509,484       $ 3,245       $ 31,413   

 

 

 

1

Represents net shares/beneficial interest purchased.

2

Represents net beneficial interest sold.

 

(b) Non-income producing security.
(c) Represents the current yield as of report date.

 

See Notes to Financial Statements.

                 
22       BLACKROCK FUNDS II       OCTOBER 31, 2012   

 

 

Schedule of Investments (concluded)

 

 

LifePath Active 2020 Portfolio

 

  —  

Fair Value Measurements – Various inputs are used in determining the fair value of investments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes as follows:

 

  —  

Level 1 – unadjusted price quotations in active markets/exchanges for identical assets and liabilities that the Fund has the ability to access

 

  —  

Level 2 – other observable inputs (including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market–corroborated inputs)

 

  —  

Level 3 – unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Fund’s own assumptions used in determining the fair value of investments)

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Fund’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. The categorization of a value determined for investments is based on the pricing transparency of the investment and is not necessarily an indication of the risks associated with investing in those securities. For information about the Fund’s policy regarding valuation of investments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.

The following table summarizes the Fund’s investments categorized in the disclosure hierarchy as of October 31, 2012:

 

          Level 1     Level 2     Level 3   Total  
 

Assets:

       
 

Investments:

       
 

Affiliated
Investment
Companies

  $ 8,748,293      $ 11,789,886      –   $ 20,538,179   

Certain of the Fund’s assets are held at carrying amount, which approximates fair value for financial statement purposes. As of October 31, 2012, cash of $9,658 is categorized as Level 1 within the disclosure hierarchy.

There were no transfers between levels during the year ended October 31, 2012.

 

 

See Notes to Financial Statements.

                 
      BLACKROCK FUNDS II       OCTOBER 31, 2012    23

 

 

Schedule of Investments October 31, 2012

 

 

LifePath Active 2025 Portfolio

(Percentages shown are based on Net Assets)

 

Affiliated Investment Companies (a)    Shares/
Beneficial
Interest 		     Value  

Equity Funds – 62.9%

     

BlackRock Capital Appreciation Fund, Inc., BlackRock Class (b)

     46,918       $ 1,128,367   

BlackRock Equity Dividend Fund, Institutional Class

     86,897         1,730,114   

BlackRock International Fund, Institutional Class

     38,785         477,061   

BlackRock International Opportunities Portfolio, Institutional Class

     8,670         286,642   

BlackRock Long-Horizon Equity Fund, Institutional Class

     60,623         753,549   

BlackRock Small Cap Growth Equity Portfolio, Institutional Class (b)

     14,782         377,098   

iShares Dow Jones U.S. Technology Sector Index Fund

     3,384         237,861   

iShares MSCI Emerging Markets Index Fund

     9,978         410,195   

iShares MSCI Germany Index Fund

     11,668         267,664   

Master Basic Value LLC

   $ 636,814         636,814   

Master Large Cap Growth Portfolio

   $ 980,098         980,098   

Master S&P 500 Index Series

   $ 1,602,270         1,602,270   

Master Value Opportunities LLC

   $ 365,741         365,741   
     

 

 

 
                9,253,474   
     
     
Affiliated Investment Companies (a)    Shares/
Beneficial
Interest 		     Value  

Fixed Income Funds – 33.5%

     

BlackRock High Yield Bond Portfolio, BlackRock Class

     34,773       $ 277,489   

Master Total Return Portfolio

   $ 4,652,263         4,652,263   
     

 

 

 
                4,929,752   
     
     

Short-Term Securities – 3.9%

     

BlackRock Liquidity Funds, TempFund, Institutional Class, 0.17% (c)

     572,283         572,283   

Total Affiliated Investment Companies

(Cost – $13,683,179) – 100.3%

  

  

     14,755,509   

Liabilities in Excess of Other Assets – (0.3)%

  

     (47,272 ) 
     

 

 

 

Net Assets – 100.0%

      $ 14,708,237   
     

 

 

 
 

 

(a) Investments in issuers considered to be an affiliate of the Fund during the year ended October 31, 2012, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliate  

Shares/
Beneficial
Interest

Held at
October 31,
2011

    Shares/
Beneficial
Interest
Purchased 		    Shares/
Beneficial
Interest
Sold 		   

Shares/
Beneficial
Interest

Held at
October 31,
2012

   

Value

at
October 31,
2012

    Income     Realized
Gain
(Loss) 		 

BlackRock Capital Appreciation Fund, Inc., BlackRock Class

    46,166        15,812        15,060        46,918      $ 1,128,367        –      $ 39,358   

BlackRock Emerging Markets Fund, Inc., Institutional Class

    9,920        7,962        17,882        –        –      $ 893      $ 37,110   

BlackRock Equity Dividend Fund, Institutional Class

    89,964        25,704        28,771        86,897      $ 1,730,114      $ 36,598      $ 10,703   

BlackRock Floating Rate Income Portfolio, Institutional Class

    45,436        576        46,012        –        –      $ 1,026      $ (11,440 ) 

BlackRock High Yield Bond Portfolio, BlackRock Class

    106,424        8,421        80,072        34,773      $ 277,489      $ 20,282      $ (6,137 ) 

BlackRock Inflation Protected Bond Portfolio, BlackRock Class

    19        –        19        –        –      $ 3      $ 49   

BlackRock International Fund, Institutional Class

    –        56,176        17,391        38,785      $ 477,061        –      $ (18,911 ) 

BlackRock International Opportunities Portfolio, Institutional Class

    20,022        2,786        14,138        8,670      $ 286,642      $ 11,309      $ (21,210 ) 

BlackRock Latin America Fund, Inc, Institutional Class

    920        113        1,033        –        –      $ 474      $ 5,500   

BlackRock Liquidity Funds, TempFund, Institutional Class

    18,448        553,835 1       –        572,283      $ 572,283      $ 421        –   

BlackRock Long-Horizon Equity Fund, Institutional Class

    76,672        11,461        27,510        60,623      $ 753,549      $ 24,110      $ (21,460 ) 

BlackRock Pacific Fund, Inc., Institutional Class

    14,034        2,244        16,278        –        –      $ 1,657      $ 1,922   

BlackRock Small Cap Growth Equity Portfolio, Institutional Class

    15,535        2,241        2,994        14,782      $ 377,098        –      $ 11,369   

BlackRock U.S. Opportunities Portfolio, Institutional Class

    5,097        1,229        6,326        –        –        –      $ 21,242   

iShares Dow Jones U.S. Healthcare Sector Index Fund

    –        3,126        3,126        –        –      $ 1,016      $ 3,646   

iShares Dow Jones U.S. Industrial Sector Index Fund

    –        3,586        3,586        –        –      $ 877      $ (6,146 ) 

iShares Dow Jones U.S. Technology Sector Index Fund

    –        3,384        –        3,384      $ 237,861      $ 987        –   

iShares MSCI Emerging Markets Index Fund

    –        9,978        –        9,978      $ 410,195        –        –   

iShares MSCI Germany Index Fund

    –        11,668        –        11,668      $ 267,664      $ 6,785        –   

iShares MSCI Italy Index Fund

    –        22,422        22,422        –        –      $ 5,714      $ 48,347   

Master Basic Value LLC

  $ 678,007        –      $ 41,193 2       $ 636,814      $ 636,814      $ 23,274      $ 55,581   

Master Large Cap Growth Portfolio

  $ 1,199,737        –      $ 219,639 2       $ 980,098      $ 980,098      $ 30,311      $ 111,235   

Master S&P 500 Index Series

    –      $ 1,602,270 1         –      $ 1,602,270      $ 1,602,270      $ 3,173      $ 5,920   

Master Total Return Portfolio

  $ 3,328,424      $ 1,323,839 1         –      $ 4,652,263      $ 4,652,263      $ 182,082      $ 73,157   

Master Value Opportunities LLC

  $ 177,974      $ 187,767 1        –      $ 365,741      $ 365,741      $ 2,339      $ 22,550   

 

1

Represents net shares/beneficial interest purchased.

2

Represents net beneficial interest sold.

 

(b) Non-income producing security.
(c) Represents the current yield as of report date.

 

See Notes to Financial Statements.

                 
24       BLACKROCK FUNDS II       OCTOBER 31, 2012   

 

 

Schedule of Investments (concluded)

 

 

LifePath Active 2015 Portfolio

 

 

  —  

Fair Value Measurements – Various inputs are used in determining the fair value of investments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes as follows:

 

  —  

Level 1 – unadjusted price quotations in active markets/exchanges for identical assets and liabilities that the Fund has the ability to access

 

  —  

Level 2 – other observable inputs (including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs)

 

  —  

Level 3 – unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Fund’s own assumptions used in determining the fair value of investments)

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Fund’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. The categorization of a value determined for investments is based on the pricing transparency of the investment and is not necessarily an indication of the risks associated with investing in those securities. For information about the Fund’s policy regarding valuation of investments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.

The following table summarizes the Fund’s investments categorized in the disclosure hierarchy as of October 31, 2012:

 

 

 

 
        Level 1     Level 2     Level 3   Total  
 

 

 
 

Assets:

       
 

Investments:

       
 

Affiliated Investment Companies

  $ 6,518,323      $ 8,237,186      –   $ 14,755,509   
 

 

 

Certain of the Fund’s assets are held at carrying amount, which approximates fair value for financial statement purposes. As of October 31, 2012, cash of $9,345 is categorized as Level 1 within the disclosure hierarchy.

There were no transfers between levels during the year ended October 31, 2012.

    

 

 

See Notes to Financial Statements.

                 
      BLACKROCK FUNDS II       OCTOBER 31, 2012    25

 

 

Schedule of Investments October 31, 2012

 

 

LifePath Active 2030 Portfolio

(Percentages shown are based on Net Assets)

 

Affiliated Investment Companies (a)    Shares/
Beneficial
Interest 		     Value  

 

 

Equity Funds – 73.7%

     

BlackRock Capital Appreciation Fund, Inc., BlackRock Class (b)

     83,772       $ 2,014,727   

BlackRock Equity Dividend Fund, Institutional Class

     126,239         2,513,426   

BlackRock International Fund, Institutional Class

     68,772         845,895   

BlackRock International Opportunities Portfolio, Institutional Class

     18,333         606,091   

BlackRock Long-Horizon Equity Fund, Institutional Class

     110,434         1,372,696   

BlackRock Small Cap Growth Equity Portfolio, Institutional Class (b)

     25,739         656,590   

iShares Dow Jones U.S. Technology Sector Index Fund

     4,632         325,583   

iShares MSCI Emerging Markets Index Fund

     12,997         534,307   

iShares MSCI Germany Index Fund

     15,969         366,329   

Master Basic Value LLC

   $ 857,508         857,508   

Master Large Cap Growth Portfolio

   $ 1,353,789         1,353,789   

Master S&P 500 Index Series

   $ 1,980,356         1,980,356   

Master Value Opportunities LLC

   $ 632,589         632,589   
     

 

 

 
        14,059,886   

 

 

     

     
Affiliated Investment Companies (a)    Shares/
Beneficial
Interest 		     Value  

 

 

Fixed Income Funds – 25.5%

     

BlackRock High Yield Bond Portfolio, BlackRock Class

     36,897       $ 294,435   

Master Total Return Portfolio

   $ 4,579,931         4,579,931   
     

 

 

 
        4,874,366   

 

 

     

     

Short-Term Securities – 2.1%

     

BlackRock Liquidity Funds, TempFund, Institutional Class, 0.17% (c)

     392,896         392,896   

 

 

Total Affiliated Investment Companies
(Cost – $17,788,046) – 101.3%

   

     19,327,148   

Liabilities in Excess of Other Assets – (1.3)%

  

     (249,212 ) 
     

 

 

 

Net Assets – 100.0%

      $ 19,077,936   
     

 

 

 
 

 

(a) Investments in issuers considered to be an affiliate of the Fund during the year ended October 31, 2012, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

 

 
Affiliate    Shares/
Beneficial
Interest
Held at
October 31,
2011 		     Shares/
Beneficial
Interest
Purchased 		    Shares/
Beneficial
Interest
Sold 		    Shares/
Beneficial
Interest
Held at
October 31,
2012 		     Value at
October 31,
2012 		     Income      Realized
Gain
(Loss) 		 

 

 

BlackRock Capital Appreciation Fund, Inc., BlackRock Class

     74,240         28,212        18,680        83,772       $ 2,014,727         –       $ 19,565   

BlackRock Emerging Markets Fund, Inc., Institutional Class

     13,265         12,324        25,589        –         –       $ 1,249       $ 52,445   

BlackRock Equity Dividend Fund, Institutional Class

     138,422         41,504        53,687        126,239       $ 2,513,426       $ 55,587       $ 30,373   

BlackRock Floating Rate Income Portfolio, Institutional Class

     45,763         339        46,102        –         –       $ 1,037       $ (12,381 ) 

BlackRock High Yield Bond Portfolio, BlackRock Class

     112,158         10,710        85,971        36,897       $ 294,435       $ 21,499       $ (11,849 ) 

BlackRock Inflation Protected Bond Portfolio, BlackRock Class

     25         –        25        –         –       $ 4       $ 66   

BlackRock International Fund, Institutional Class

     –         93,239        24,467        68,772       $ 845,895         –       $ (28,142 ) 

BlackRock International Opportunities Portfolio, Institutional Class

     30,447         6,145        18,259        18,333       $ 606,091       $ 18,054       $ (39,857 ) 

BlackRock Latin America Fund, Inc, Institutional Class

     1,215         212        1,427        –         –       $ 654       $ 7,656   

BlackRock Liquidity Funds, TempFund, Institutional Class

     8,237         384,659 1       –        392,896       $ 392,896       $ 500         –   

BlackRock Long-Horizon Equity Fund, Institutional Class

     118,927         25,399        33,892        110,434       $ 1,372,696       $ 39,099       $ (28,136 ) 

BlackRock Pacific Fund, Inc., Institutional Class

     20,988         4,718        25,706        –         –       $ 2,602       $ 2,482   

BlackRock Small Cap Growth Equity Portfolio, Institutional Class

     24,071         5,015        3,347        25,739       $ 656,590         –       $ 14,921   

BlackRock U.S. Opportunities Portfolio, Institutional Class

     7,821         2,469        10,290        –         –         –       $ 33,313   

iShares Dow Jones U.S. Healthcare Sector Index Fund

     –         4,279        4,279        –         –       $ 1,391       $ 4,990   

iShares Dow Jones U.S. Industrial Sector Index Fund

     –         4,908        4,908        –         –       $ 1,200       $ (8,412 ) 

iShares Dow Jones U.S. Technology Sector Index Fund

     –         4,632        –        4,632       $ 325,583       $ 1,350         –   

iShares MSCI Emerging Markets Index Fund

     –         12,997        –        12,997       $ 534,307         –         –   

iShares MSCI Germany Index Fund

     –         15,969        –        15,969       $ 366,329       $ 9,286         –   

iShares MSCI Italy Index Fund

     –         30,686        30,686        –         –       $ 7,820       $ 66,166   

Master Basic Value LLC

   $ 1,111,464         –      $ 253,956 2     $ 857,508       $ 857,508       $ 32,461       $ 84,702   

Master Large Cap Growth Portfolio

   $ 1,837,811         –      $ 484,022 2     $ 1,353,789       $ 1,353,789       $ 43,069       $ 164,933   

Master S&P 500 Index Series

     –       $ 1,980,356 1       –      $ 1,980,356       $ 1,980,356       $ 3,921       $ 7,318   

Master Total Return Portfolio

   $ 3,317,757       $ 1,262,174 1       –      $ 4,579,931       $ 4,579,931       $ 182,031       $ 69,650   

Master Value Opportunities LLC

   $ 275,261       $ 357,328 1       –      $ 632,589       $ 632,589       $ 3,938       $ 38,490   

 

 

 

1

Represents net shares/beneficial interest purchased.

2

Represents net beneficial interest sold.

 

(b)  Non-income producing security.
(c)  Represents the current yield as of report date.

 

See Notes to Financial Statements.

                 
26       BLACKROCK FUNDS II       OCTOBER 31, 2012   

 

 

Schedule of Investments (concluded)

 

 

LifePath Active 2030 Portfolio

 

  —  

Fair Value Measurements – Various inputs are used in determining the fair value of investments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes as follows:

 

  —  

Level 1 - unadjusted price quotations in active markets/exchanges for identical assets and liabilities that the Fund has the ability to access

 

  —  

Level 2 - other observable inputs (including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market–corroborated inputs)

 

  —  

Level 3 - unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Fund’s own assumptions used in determining the fair value of investments)

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Fund’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. The categorization of a value determined for investments is based on the pricing transparency of the investment and is not necessarily an indication of the risks associated with investing in those securities. For information about the Fund’s policy regarding valuation of investments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.

The following table summarizes the Fund’s investments categorized in the disclosure hierarchy as of October 31, 2012:

 

          Level 1     Level 2     Level 3   Total  
 

Assets:

       
 

Investments:

       
 

Affiliated
Investment
Companies

  $ 9,922,975      $ 9,404,173      –   $ 19,327,148   

Certain of the Fund’s assets are held at carrying amount, which approximates fair value for financial statement purposes. As of October 31, 2012, cash of $9,353 is categorized as Level 1 within the disclosure hierarchy.

There were no transfers between levels during the year ended October 31, 2012.

    

 

 

See Notes to Financial Statements.

                 
      BLACKROCK FUNDS II       OCTOBER 31, 2012    27

 

 

Schedule of Investments October 31, 2012

 

 

LifePath Active 2035 Portfolio

(Percentages shown are based on Net Assets)

 

Affiliated Investment Companies (a)   Shares/
Beneficial
Interest 		    Value  

 

 

Equity Funds – 89.9%

   

BlackRock Capital Appreciation Fund, Inc., BlackRock Class (b)

    44,959      $ 1,081,264   

BlackRock Equity Dividend Fund, Institutional Class

    81,419        1,621,060   

BlackRock International Fund, Institutional Class

    31,216        383,958   

BlackRock International Opportunities Portfolio, Institutional Class

    9,688        320,301   

BlackRock Long-Horizon Equity Fund, Institutional Class

    61,485        764,260   

BlackRock Small Cap Growth Equity Portfolio, Institutional Class (b)

    13,934        355,468   

iShares Dow Jones U.S. Technology Sector Index Fund

    2,034        142,970   

iShares MSCI Emerging Markets Index Fund

    5,959        244,974   

iShares MSCI Germany Index Fund

    7,015        160,924   

Master Basic Value LLC

  $ 424,541        424,541   

Master Large Cap Growth Portfolio

  $ 623,237        623,237   

Master S&P 500 Index Series

  $ 974,823        974,823   

Master Value Opportunities LLC

  $ 344,735        344,735   
   

 

 

 
      7,442,515   

 

 

    

   
   
Affiliated Investment Companies (a)  

Shares/

Beneficial
Interest

    Value  

 

 

Fixed Income Funds – 8.1%

   

BlackRock High Yield Bond Portfolio, BlackRock Class

    24,633      $ 196,568   

Master Total Return Portfolio

  $ 474,059        474,059   
   

 

 

 
      670,627   

 

 

    

   
   

Short-Term Securities – 2.0%

   

BlackRock Liquidity Funds, TempFund, Institutional Class, 0.17% (c)

    163,571        163,571   

 

 

Total Affiliated Investment Companies

(Cost – $7,347,606) – 100.0%

      8,276,713   

Liabilities in Excess of Other Assets – 0.0%

  

    (860 ) 
   

 

 

 

Net Assets – 100.0%

    $ 8,275,853   
   

 

 

 
 

 

(a) Investments in issuers considered to be an affiliate of the Fund during the year ended October 31, 2012, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

 
Affiliate  

Shares/
Beneficial
Interest

Held at
October 31,
2011

    Shares/
Beneficial
Interest
Purchased 		    Shares/
Beneficial
Interest
Sold 		    Shares/
Beneficial
Interest
Held at
October 31,
2012 		   

Value

at
October 31,
2012

    Income     Realized
Gain
(Loss) 		 

 

 

BlackRock Capital Appreciation Fund, Inc., BlackRock Class

    50,190        12,451        17,682        44,959      $ 1,081,264        –      $ 35,375   

BlackRock Emerging Markets Fund, Inc., Institutional Class

    7,014        4,197        11,211        –        –      $ 643      $ 21,979   

BlackRock Equity Dividend Fund, Institutional Class

    88,854        23,028        30,463        81,419      $ 1,621,060      $ 35,186      $ 11,612   

BlackRock Floating Rate Income Portfolio, Institutional Class

    11,556        89        11,645        –        –      $ 259      $ (2,698 ) 

BlackRock High Yield Bond Portfolio, BlackRock Class

    33,952        21,302        30,621        24,633      $ 196,568      $ 7,581      $ (3,174 ) 

BlackRock Inflation Protected Bond Portfolio, BlackRock Class

    32        –        32        –        –      $ 5      $ 85   

BlackRock International Fund, Institutional Class

    –        39,723        8,507        31,216      $ 383,958        –      $ (7,496 ) 

BlackRock International Opportunities Portfolio, Institutional Class

    19,325        2,856        12,493        9,688      $ 320,301      $ 11,545      $ (23,267 ) 

BlackRock Latin America Fund, Inc, Institutional Class

    638        82        720        –        –      $ 335      $ 3,520   

BlackRock Liquidity Funds, TempFund, Institutional Class

    16,275        147,296 1       –        163,571      $ 163,571      $ 230        –   

BlackRock Long-Horizon Equity Fund, Institutional Class

    77,135        12,187        27,837        61,485      $ 764,260      $ 24,696      $ 12,183   

BlackRock Pacific Fund, Inc., Institutional Class

    13,040        2,211        15,251        –        –      $ 1,628      $ (670 ) 

BlackRock Small Cap Growth Equity Portfolio, Institutional Class

    15,619        2,397        4,082        13,934      $ 355,468        –      $ 13,465   

BlackRock U.S. Opportunities Portfolio, Institutional Class

    5,146        1,314        6,460        –        –        –      $ 20,194   

iShares Dow Jones U.S. Healthcare Sector Index Fund

    –        1,879        1,879        –        –      $ 611      $ 2,191   

iShares Dow Jones U.S. Industrial Sector Index Fund

    –        2,156        2,156        –        –      $ 527      $ (3,695 ) 

iShares Dow Jones U.S. Technology Sector Index Fund

    –        2,034        –        2,034      $ 142,970      $ 593        –   

iShares MSCI Emerging Markets Index Fund

    –        5,959        –        5,959      $ 244,974        –        –   

iShares MSCI Germany Index Fund

    –        7,015        –        7,015      $ 160,924      $ 4,079        –   

iShares MSCI Italy Index Fund

    –        13,480        13,480        –        –      $ 3,435      $ 29,066   

Master Basic Value LLC

  $ 766,141        –      $ 341,600 2     $ 424,541      $ 424,541      $ 19,666      $ 47,573   

Master Large Cap Growth Portfolio

  $ 1,175,665        –      $ 552,428 2     $ 623,237      $ 623,237      $ 24,488      $ 88,137   

Master S&P 500 Index Series

    –      $ 974,823 1       –      $ 974,823      $ 974,823      $ 2,245      $ 4,259   

Master Total Return Portfolio

  $ 795,837        –      $ 321,778 2     $ 474,059      $ 474,059      $ 27,432      $ 9,925   

Master Value Opportunities LLC

  $ 178,487      $ 166,248 1       –      $ 344,735      $ 344,735      $ 2,247      $ 21,477   

 

 

 

1

Represents net shares/beneficial interest purchased.

2

Represents net beneficial interest sold.

 

(b)  Non-income producing security.
(c)  Represents the current yield as of report date.

 

See Notes to Financial Statements.

                 
28       BLACKROCK FUNDS II       OCTOBER 31, 2012   

 

 

Schedule of Investments (concluded)

 

 

LifePath Active 2035 Portfolio

 

  —  

Fair Value Measurements – Various inputs are used in determining the fair value of investments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes as follows:

 

  —  

Level 1 - unadjusted price quotations in active markets/exchanges for identical assets and liabilities that the Fund has the ability to access

 

  —  

Level 2 - other observable inputs (including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs)

 

  —  

Level 3 - unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Fund’s own assumptions used in determining the fair value of investments)

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Fund’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. The categorization of a value determined for investments is based on the pricing transparency of the investment and is not necessarily an indication of the risks associated with investing in those securities. For information about the Fund’s policy regarding valuation of investments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.

The following table summarizes the Fund’s investments categorized in the disclosure hierarchy as of October 31, 2012:

 

          Level 1     Level 2     Level 3   Total  
 

Assets:

       
 

Investments:

       
 

Affiliated Investment Companies

  $ 5,435,318      $ 2,841,395      –   $ 8,276,713   

Certain of the Fund’s assets are held at carrying amount, which approximates fair value for financial statement purposes. As of October 31, 2012, cash of $8,404 is categorized as Level 1 within the disclosure hierarchy.

There were no transfers between levels during the year ended October 31, 2012.

See Notes to Financial Statements.

 

 

                 
      BLACKROCK FUNDS II       OCTOBER 31, 2012    29

 

 

Schedule of Investments October 31, 2012

 

 

LifePath Active 2040 Portfolio

(Percentages shown are based on Net Assets)

 

Affiliated Investment Companies (a)   Shares/
Beneficial
Interest 		    Value  

Equity Funds – 89.5%

   

BlackRock Capital Appreciation Fund, Inc., BlackRock Class (b)

    63,740      $ 1,532,948   

BlackRock Equity Dividend Fund, Institutional Class

    100,606        2,003,070   

BlackRock International Fund, Institutional Class

    39,264        482,945   

BlackRock International Opportunities Portfolio, Institutional Class

    11,769        389,084   

BlackRock Long-Horizon Equity Fund, Institutional Class

    76,313        948,570   

BlackRock Small Cap Growth Equity Portfolio, Institutional Class (b)

    17,362        442,894   

iShares Dow Jones U.S. Technology Sector Index Fund

    2,632        185,003   

iShares MSCI Emerging Markets Index Fund

    7,588        311,943   

iShares MSCI Germany Index Fund

    9,077        208,226   

Master Basic Value LLC

  $ 850,787        850,787   

Master Large Cap Growth Portfolio

  $ 1,232,751        1,232,751   

Master S&P 500 Index Series

  $   1,541,461        1,541,461   

Master Value Opportunities LLC

  $ 441,958        441,958   
   

 

 

 
      10,571,640   

 

 
   
   
Affiliated Investment Companies (a)   Shares/
Beneficial
Interest 		    Value  

Fixed Income Funds – 7.8%

   

BlackRock High Yield Bond Portfolio, BlackRock Class

    13,569      $ 108,283   

Master Total Return Portfolio

  $   816,540        816,540   
   

 

 

 
      924,823   

 

 
   
   

Short-Term Securities – 3.5%

   

BlackRock Liquidity Funds, TempFund, Institutional Class, 0.17% (c)

    416,442        416,442   

 

 

Total Affiliated Investment Companies

(Cost – $10,819,005) – 100.8%

      11,912,905   

Liabilities in Excess of Other Assets – (0.8)%

  

    (97,620 ) 
   

 

 

 

Net Assets – 100.0%

    $ 11,815,285   
   

 

 

 
 

 

(a) Investments in issuers considered to be an affiliate of the Fund during the year ended October 31, 2012, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:
Affiliate   Shares/
Beneficial
Interest
Held at
October 31,
2011 		    Shares/
Beneficial
Interest
Purchased 		    Shares/
Beneficial
Interest
Sold 		    Shares/
Beneficial
Interest
Held at
October 31,
2012 		   

Value

at
October 31,
2012

    Income     Realized
Gain
(Loss) 		 

BlackRock Capital Appreciation Fund, Inc., BlackRock Class

    52,879        23,616        12,755        63,740      $ 1,532,948        –      $ 10,993   

BlackRock Emerging Markets Fund, Inc., Institutional Class

    7,402        5,076        12,478        –        –      $ 699      $ 25,431   

BlackRock Equity Dividend Fund, Institutional Class

    93,756        34,900        28,050        100,606      $ 2,003,070      $ 41,379      $ 3,207   

BlackRock Floating Rate Income Portfolio, Institutional Class

    12,247        310        12,557        –        –      $ 280      $ (2,626 ) 

BlackRock High Yield Bond Portfolio, BlackRock Class

    35,786        10,404        32,621        13,569      $ 108,283      $ 5,681      $ (3,107 ) 

BlackRock International Fund, Institutional Class

    –        48,648        9,384        39,264      $ 482,945        –      $ (10,690 ) 

BlackRock International Opportunities Portfolio, Institutional Class

    20,414        4,067        12,712        11,769      $ 389,084      $ 12,237      $ (27,280 ) 

BlackRock Latin America Fund, Inc, Institutional Class

    668        120        788        –        –      $ 360      $ 4,305   

BlackRock Liquidity Funds, TempFund, Institutional Class

    14,635        401,807 1         –        416,442      $ 416,442      $ 320        –   

BlackRock Long-Horizon Equity Fund, Institutional Class

    81,385        17,143        22,215        76,313      $ 948,570      $ 26,825      $ 1,276   

BlackRock Pacific Fund, Inc., Institutional Class

    13,770        3,059        16,829        –        –      $ 1,726      $ 2,293   

BlackRock Small Cap Growth Equity Portfolio, Institutional Class

    16,479        3,378        2,495        17,362      $ 442,894        –      $ 10,106   

BlackRock U.S. Opportunities Portfolio, Institutional Class

    5,723        1,784        7,507        –        –        –      $ 24,716   

iShares Dow Jones U.S. Healthcare Sector Index Fund

    –        2,432        2,432        –        –      $ 791      $ 2,836   

iShares Dow Jones U.S. Industrial Sector Index Fund

    –        2,790        2,790        –        –      $ 682      $ (4,782 ) 

iShares Dow Jones U.S. Technology Sector Index Fund

    –        2,632        –        2,632      $ 185,003      $ 768        –   

iShares MSCI Emerging Markets Index Fund

    –        7,588        –        7,588      $ 311,943        –        –   

iShares MSCI Germany Index Fund

    –        9,077        –        9,077      $ 208,226      $ 5,278        –   

iShares MSCI Italy Index Fund

    –        17,442        17,442        –        –      $ 4,445      $ 37,609   

Master Basic Value LLC

  $ 807,779      $ 43,008 1         –      $ 850,787      $ 850,787      $ 25,391      $ 62,887   

Master Large Cap Growth Portfolio

  $ 1,239,893        –      $ 7,142 2       $ 1,232,751      $ 1,232,751      $ 31,595      $ 122,750   

Master S&P 500 Index Series

    –      $ 1,541,461 1         –      $ 1,541,461      $ 1,541,461      $ 3,052      $ 5,696   

Master Total Return Portfolio

  $ 841,713        –      $ 25,173 2       $ 816,540      $ 816,540      $ 35,337      $ 13,550   

Master Value Opportunities LLC

  $ 188,399      $ 253,559 1        –      $ 441,958      $ 441,958      $ 2,683      $ 26,084   

 

1

Represents net shares/beneficial interest purchased.

2

Represents net beneficial interest sold.

 

(b) Non-income producing security.
(c) Represents the current yield as of report date.

See Notes to Financial Statements.

 

                 
30       BLACKROCK FUNDS II       OCTOBER 31, 2012   

 

 

Schedule of Investments (concluded)

 

 

LifePath Active 2040 Portfolio

 

  —  

Fair Value Measurements – Various inputs are used in determining the fair value of investments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes as follows:

 

  —  

Level 1 – unadjusted price quotations in active markets/exchanges for identical assets and liabilities that the Fund has the ability to access

 

  —  

Level 2 – other observable inputs (including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market–corroborated inputs)

 

  —  

Level 3 – unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Fund’s own assumptions used in determining the fair value of investments)

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Fund’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. The categorization of a value determined for investments is based on the pricing transparency of the investment and is not necessarily an indication of the risks associated with investing in those securities. For information about the Fund’s policy regarding valuation of investments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.

The following table summarizes the Fund’s investments categorized in the disclosure hierarchy as of October 31, 2012:

 

      Level 1     Level 2     Level 3   Total  

Assets:

       

Investments:

       

Affiliated
Investment
Companies

  $ 7,029,408      $ 4,883,497      –   $ 11,912,905   

Certain of the Fund’s assets are held at carrying amount, which approximates fair value for financial statement purposes. As of October 31, 2012, cash of $9,113 is categorized as Level 1 within the disclosure hierarchy.

There were no transfers between levels during the year ended October 31, 2012.

 

    

 

 

See Notes to Financial Statements.

 

                 
      BLACKROCK FUNDS II       OCTOBER 31, 2012    31

 

 

Schedule of Investments October 31, 2012

 

 

LifePath Active 2045 Portfolio

(Percentages shown are based on Net Assets)

 

Affiliated Investment Companies (a)    Shares/
Beneficial
Interest 		     Value  

Equity Funds – 89.8%

     

BlackRock Capital Appreciation Fund, Inc., BlackRock Class (b)

     30,093       $ 723,745   

BlackRock Equity Dividend Fund, Institutional Class

     48,177         959,200   

BlackRock International Fund, Institutional Class

     28,839         354,719   

BlackRock International Opportunities Portfolio, Institutional Class

     4,819         159,311   

BlackRock Long-Horizon Equity Fund, Institutional Class

     34,329         426,711   

BlackRock Small Cap Growth Equity Portfolio, Institutional Class (b)

     7,848         200,202   

iShares Dow Jones U.S. Technology Sector Index Fund

     1,268         89,128   

iShares MSCI Emerging Markets Index Fund

     3,659         150,421   

iShares MSCI Germany Index Fund

     4,374         100,340   

Master Basic Value LLC

   $ 378,502         378,502   

Master Large Cap Growth Portfolio

   $ 589,253         589,253   

Master S&P 500 Index Series

   $ 608,887         608,887   

Master Value Opportunities LLC

   $ 101,627         101,627   
     

 

 

 
                4,842,046   
     

    

  

Affiliated Investment Companies (a)    Shares/
Beneficial
Interest 		     Value  

Fixed Income Funds – 8.0%

     

BlackRock High Yield Bond Portfolio, BlackRock Class

     13,493       $ 107,674   

Master Total Return Portfolio

   $ 323,168         323,168   
     

 

 

 
                430,842   
     

    

  

Short-Term Securities – 3.2%

     

BlackRock Liquidity Funds, TempFund, Institutional Class, 0.17% (c)

     172,264         172,264   

Total Affiliated Investment Companies

(Cost – $4,964,366) – 101.0%

        5,445,152   

Liabilities in Excess of Other Assets – (1.0)%

  

     (55,825 ) 
     

 

 

 

Net Assets – 100.0%

      $ 5,389,327   
     

 

 

 
 
     

 

 

(a) Investments in issuers considered to be an affiliate of the Fund during the year ended October 31, 2012, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliate   Shares/
Beneficial
Interest
Held at
October 31,
2011 		    Shares/
Beneficial
Interest
Purchased 		    Shares/
Beneficial
Interest
Sold 		    Shares/
Beneficial
Interest
Held at
October 31,
2012 		   

Value

at
October 31,
2012

    Income     Realized
Gain
(Loss) 		 

BlackRock Capital Appreciation Fund, Inc., BlackRock Class

    24,602        14,238        8,747        30,093      $ 723,745        –      $ 619   

BlackRock Emerging Markets Fund, Inc., Institutional Class

    3,299        3,097        6,396        –        –      $ 305      $ 13,155   

BlackRock Equity Dividend Fund, Institutional Class

    42,993        22,966        17,782        48,177      $ 959,200      $ 18,471      $ (1,045)   

BlackRock Floating Rate Income Portfolio, Institutional Class

    5,599        103        5,702        –        –      $ 127      $ (1,266)   

BlackRock High Yield Bond Portfolio, BlackRock Class

    16,321        13,458        16,286        13,493      $ 107,674      $ 1,034      $ (2,723)   

BlackRock International Fund, Institutional Class

    –        33,451        4,612        28,839      $ 354,719        –      $ (5,025)   

BlackRock International Opportunities Portfolio, Institutional Class

    9,195        1,901        6,277        4,819      $ 159,311      $ 5,407      $ (15,209)   

BlackRock Latin America Fund, Inc, Institutional Class

    303        56        359        –        –      $ 160      $ 1,928   

BlackRock Liquidity Funds, TempFund, Institutional Class

    14,338        157,926 1         –        172,264      $ 172,264      $ 183        –   

BlackRock Long-Horizon Equity Fund, Institutional Class

    37,617        8,198        11,486        34,329      $ 426,711      $ 12,149      $ (2,008)   

BlackRock Pacific Fund, Inc., Institutional Class

    6,165        1,414        7,579        –        –      $ 758      $ 814   

BlackRock Small Cap Growth Equity Portfolio, Institutional Class

    7,588        1,612        1,352        7,848      $ 200,202        –      $ 4,279   

BlackRock U.S. Opportunities Portfolio, Institutional Class

    155        50        205        –        –        –      $ 657   

iShares Dow Jones U.S. Healthcare Sector Index Fund

    –        1,172        1,172        –        –      $ 381      $ 1,367   

iShares Dow Jones U.S. Industrial Sector Index Fund

    –        1,344        1,344        –        –      $ 329      $ (2,304)   

iShares Dow Jones U.S. Technology Sector Index Fund

    –        1,268        –        1,268      $ 89,128      $ 370        –   

iShares MSCI Emerging Markets Index Fund

    –        3,659        –        3,659      $ 150,421        –        –   

iShares MSCI Germany Index Fund

    –        4,374        –        4,374      $ 100,340      $ 2,543        –   

iShares MSCI Italy Index Fund

    –        8,406        8,406        –        –      $ 2,142      $ 18,125   

Master Basic Value LLC

  $ 376,513      $ 1,989 1         –      $ 378,502      $ 378,502      $ 13,064      $ 30,696   

Master Large Cap Growth Portfolio

  $ 571,126      $ 18,127 1         –      $ 589,253      $ 589,253      $ 16,741      $ 60,580   

Master S&P 500 Index Series

    –      $ 608,887 1         –      $ 608,887      $ 608,887      $ 16,886      $ 3,583   

Master Total Return Portfolio

  $ 388,343        –      $ 65,175 2       $ 323,168      $ 323,168      $ 1,658      $ 6,494   

Master Value Opportunities LLC

  $ 86,920      $ 14,707 1        –      $ 101,627      $ 101,627      $ 293      $ 11,372   

 

1

Represents net shares/beneficial interest purchased.

2

Represents net beneficial interest sold.

 

(b) Non-income producing security.
(c) Represents the current yield as of report date.

 

See Notes to Financial Statements.

                 
32       BLACKROCK FUNDS II       OCTOBER 31, 2012   

 

 

Schedule of Investments (concluded)

 

 

LifePath Active 2045 Portfolio

 

  —  

Fair Value Measurements – Various inputs are used in determining the fair value of investments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes as follows:

 

  —  

Level 1 – unadjusted price quotations in active markets/exchanges for identical assets and liabilities that the Fund has the ability to access

 

  —  

Level 2 – other observable inputs (including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market–corroborated inputs)

 

  —  

Level 3 – unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Fund’s own assumptions used in determining the fair value of investments)

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Fund’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. The categorization of a value determined for investments is based on the pricing transparency of the investment and is not necessarily an indication of the risks associated with investing in those securities. For information about the Fund’s policy regarding valuation of investments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.

The following table summarizes the Fund’s investments categorized in the disclosure hierarchy as of October 31, 2012:

 

          Level 1     Level 2     Level 3   Total  
 

Assets:

       
 

Investments:

       
 

Affiliated
Investment
Companies

  $ 3,443,715      $ 2,001,437      –   $ 5,445,152   

Certain of the Fund’s assets are held at carrying amount, which approximates fair value for financial statement purposes. As of October 31, 2012, cash of $9,084 is categorized as Level 1 within the disclosure hierarchy.

There were no transfers between levels during the year ended October 31, 2012.

    

 

 

See Notes to Financial Statements.

                 
      BLACKROCK FUNDS II       OCTOBER 31, 2012    33

 

 

Schedule of Investments October 31, 2012

 

 

LifePath Active 2050 Portfolio

(Percentages shown are based on Net Assets)

 

 

Affiliated Investment Companies (a)    Shares/
Beneficial
Interest 		     Value  

Equity Funds – 90.3%

     

BlackRock Capital Appreciation Fund, Inc., BlackRock Class (b)

     24,655       $ 592,952   

BlackRock Equity Dividend Fund, Institutional Class

     38,002         756,622   

BlackRock International Fund, Institutional Class

     18,329         225,441   

BlackRock International Opportunities Portfolio, Institutional Class

     4,165         137,679   

BlackRock Long-Horizon Equity Fund, Institutional Class

     27,671         343,952   

BlackRock Small Cap Growth Equity Portfolio, Institutional Class (b)

     6,291         160,482   

iShares Dow Jones U.S. Technology Sector Index Fund

     949         66,705   

iShares MSCI Emerging Markets Index Fund

     2,716         111,655   

iShares MSCI Germany Index Fund

     3,274         75,106   

Master Basic Value LLC

   $ 298,915         298,915   

Master Large Cap Growth Portfolio

   $ 459,484         459,484   

Master S&P 500 Index Series

   $ 496,801         496,801   

Master Value Opportunities LLC

   $ 159,908         159,908   
     

 

 

 
                3,885,702   
     

    

  

Affiliated Investment Companies (a)    Shares/
Beneficial
Interest 		     Value  

Fixed Income Funds – 8.0%

     

BlackRock High Yield Bond Portfolio, BlackRock Class

     16,188       $ 129,181   

Master Total Return Portfolio

   $ 214,076         214,076   
     

 

 

 
                343,257   
     
     

Short-Term Securities – 2.8%

     

BlackRock Liquidity Funds, TempFund,
Institutional Class, 0.17% (c)

     123,189         123,189   

Total Affiliated Investment Companies

(Cost – $3,983,248) – 101.1%

        4,352,148   

Liabilities in Excess of Other Assets –(1.1)%

  

     (49,374 ) 
     

 

 

 

Net Assets – 100.0%

      $ 4,302,774   
     

 

 

 
 
     

 

 

(a) Investments in issuers considered to be an affiliate of the Fund during the year ended October 31, 2012, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliate   Shares/
Beneficial
Interest
Held at
October 31,
2011 		    Shares/
Beneficial
Interest
Purchased 		    Shares/
Beneficial
Interest
Sold 		    Shares/
Beneficial
Interest
Held at
October 31,
2012 		   

Value

at
October 31,
2012

    Income     Realized
Gain
(Loss) 		 

BlackRock Capital Appreciation Fund, Inc., BlackRock Class

    19,159        10,324        4,828        24,655      $ 592,952        –      $ 1,520   

BlackRock Emerging Markets Fund, Inc., Institutional Class

    2,679        2,026        4,705        –        –      $ 251      $ 9,633   

BlackRock Equity Dividend Fund, Institutional Class

    33,784        14,681        10,463        38,002      $ 756,622      $ 15,120      $ 154   

BlackRock Floating Rate Income Portfolio, Institutional Class

    4,398        60        4,458        –        –      $ 99      $ (1,001)   

BlackRock High Yield Bond Portfolio, BlackRock Class

    12,912        14,894        11,618        16,188      $ 129,181      $ 4,767      $ (1,291)   

BlackRock International Fund, Institutional Class

    –        21,818        3,489        18,329      $ 225,441        –      $ (3,713)   

BlackRock International Opportunities Portfolio, Institutional Class

    7,241        1,575        4,651        4,165      $ 137,679      $ 4,353      $ (10,335)   

BlackRock Latin America Fund, Inc, Institutional Class

    243        45        288        –        –      $ 130      $ 1,570   

BlackRock Liquidity Funds, TempFund, Institutional Class

    14,514        108,675 1         –        123,189      $ 123,189      $ 137        –   

BlackRock Long-Horizon Equity Fund, Institutional Class

    29,333        6,705        8,367        27,671      $ 343,952      $ 9,595      $ (519)   

BlackRock Pacific Fund, Inc., Institutional Class

    4,956        1,192        6,148        –        –      $ 623      $ 836   

BlackRock Small Cap Growth Equity Portfolio, Institutional Class

    5,932        1,325        966        6,291      $ 160,482        –      $ 4,007   

BlackRock U.S. Opportunities Portfolio, Institutional Class

    2,043        679        2,722        –        –        –      $ 8,447   

iShares Dow Jones U.S. Healthcare Sector Index Fund

    –        877        877        –        –      $ 285      $ 1,023   

iShares Dow Jones U.S. Industrial Sector Index Fund

    –        1,006        1,006        –        –      $ 246      $ (1,724)   

iShares Dow Jones U.S. Technology Sector Index Fund

    –        949        –        949      $ 66,705      $ 277        –   

iShares MSCI Emerging Markets Index Fund

    –        2,716        –        2,716      $ 111,655        –        –   

iShares MSCI Germany Index Fund

    –        3,274        –        3,274      $ 75,106      $ 1,904        –   

iShares MSCI Italy Index Fund

    –        6,291        6,291        –        –      $ 1,603      $ 13,565   

Master Basic Value LLC

  $ 293,015      $ 5,900 1         –      $ 298,915      $ 298,915      $ 8,664      $ 21,711   

Master Large Cap Growth Portfolio

  $ 447,132      $ 12,352 1         –      $ 459,484      $ 459,484      $ 11,739      $ 45,248   

Master S&P 500 Index Series

    –      $ 496,801 1         –      $ 496,801      $ 496,801      $ 1,097      $ 2,256   

Master Total Return Portfolio

  $ 301,621        –      $ 87,545 2       $ 214,076      $ 214,076      $ 10,309      $ 3,163   

Master Value Opportunities LLC

  $ 68,166      $ 91,742 1        –      $ 159,908      $ 159,908      $ 974      $ 9,513   

 

1

Represents net shares/beneficial interest purchased.

2

Represents net beneficial interest sold.

(b) Non-income producing security.

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

 

 

See Notes to Financial Statements.

                 
34       BLACKROCK FUNDS II       OCTOBER 31, 2012   

 

 

Schedule of Investments (concluded)

 

 

LifePath Active 2050 Portfolio

 

 

  —  

Fair Value Measurements — Various inputs are used in determining the fair value of investments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes as follows:

 

  —  

Level 1 – unadjusted price quotations in active markets/exchanges for identical assets and liabilities that the Fund has the ability to access

 

  —  

Level 2 – other observable inputs (including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market–corroborated inputs)

 

  —  

Level 3 – unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Fund’s own assumptions used in determining the fair value of investments)

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Fund’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. The categorization of a value determined for investments is based on the pricing transparency of the investment and is not necessarily an indication of the risks associated with investing in those securities. For information about the Fund’s policy regarding valuation of investments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.

The following table summarizes the Fund’s investments categorized in the disclosure hierarchy as of October 31, 2012:

 

          Level 1     Level 2     Level 3   Total  
 

Assets:

       
 

Investments:

       
 

Affiliated Investment Companies

  $ 2,722,964      $ 1,629,184      –   $ 4,352,148   

Certain of the Fund’s assets are held at carrying amount, which approximates fair value for financial statement purposes. As of October 31, 2012, cash of $9,583 is categorized as Level 1 within the disclosure hierarchy.

There were no transfers between levels during the year ended October 31, 2012.

    

 

 

See Notes to Financial Statements.     
                 
      BLACKROCK FUNDS II       OCTOBER 31, 2012    35

 

 

Statements of Assets and Liabilities

 

 

October 31, 2012   

LifePath
Active

2015
Portfolio

    

LifePath
Active

2020
Portfolio

    

LifePath
Active

2025
Portfolio

    

LifePath
Active

2030
Portfolio

     LifePath
Active
2035
Portfolio 		    

LifePath
Active

2040
Portfolio

     LifePath
Active
2045
Portfolio 		     LifePath
Active
2050
Portfolio 		 

Assets

                                                                       

Investments at value – affiliated 1

   $ 17,543,071       $ 20,538,179       $ 14,755,509       $ 19,327,148       $ 8,276,713       $ 11,912,905       $ 5,445,152       $ 4,352,148   

Cash

     9,785         9,658         9,345         9,353         8,404         9,113         9,084         9,583   

Capital shares sold receivable

     17,741         20,651         20,378         13,124         52,015         17,500         11,893         6,426   

Receivable from Manager

     9,764         11,896         11,304         11,575         10,123         10,845         12,062         12,749   

Dividends receivable – affiliated

     92         89         64         82         33         60         24         22   

Prepaid expenses

     14,576         12,990         13,052         13,327         12,370         13,613         12,205         12,483   
  

 

 

 

Total assets

     17,595,029         20,593,463         14,809,652         19,374,609         8,359,658         11,964,036         5,490,420         4,393,411   
  

 

 

 
                       

Liabilities

                                                                       

Capital shares redeemed payable

     20,531         72,524         33,417         224,481         20,436         82,610         38,508         27,648   

Professional fees payable

     28,717         27,893         29,308         28,221         30,092         29,688         32,097         32,640   

Custodian fees payable

     11,910         11,828         11,881         12,834         11,890         11,849         11,809         11,821   

Accounting fees payable

     9,352         9,352         9,352         9,352         9,352         9,352         9,352         9,352   

Printing fees payable

     6,417         8,320         6,057         7,876         3,504         4,556         2,209         1,649   

Service and distribution fees payable

     5,327         6,022         4,402         5,942         2,360         3,522         1,590         1,334   

Transfer agent fees payable

     4,864         5,518         4,549         5,328         4,124         4,958         3,366         4,092   

Officer’s and Trustees’ fees payable

     1,235         1,179         1,258         1,190         1,227         1,199         1,275         1,270   

Other affiliates payable

     88         101         77         82         –         –         –         –   

Other accrued expenses payable

     1,015         1,252         1,114         1,367         820         1,017         887         831   
  

 

 

 

Total liabilities

     89,456         143,989         101,415         296,673         83,805         148,751         101,093         90,637   
  

 

 

 

Net Assets

   $ 17,505,573       $ 20,449,474       $ 14,708,237       $ 19,077,936       $ 8,275,853       $ 11,815,285       $ 5,389,327       $ 4,302,774   
  

 

 

 
                       

Net Assets Consist of

                                                                       

Paid-in capital

   $ 15,763,549       $ 18,055,092       $ 13,077,533       $ 16,721,108       $ 6,945,916       $ 10,297,194       $ 4,752,238       $ 3,755,162   

Undistributed net investment income

     221,235         260,160         159,283         173,138         63,902         87,305         36,951         28,776   

Accumulated net realized gain

     464,101         561,023         399,091         644,588         336,928         336,886         119,352         149,936   

Net unrealized appreciation/depreciation

     1,056,688         1,573,199         1,072,330         1,539,102         929,107         1,093,900         480,786         368,900   
  

 

 

 

Net Assets

   $ 17,505,573       $ 20,449,474       $ 14,708,237       $ 19,077,936       $ 8,275,853       $ 11,815,285       $ 5,389,327       $ 4,302,774   
  

 

 

 

1 Investments at cost – affiliated

   $ 16,486,383       $ 18,964,980       $ 13,683,179       $ 17,788,046       $ 7,347,606       $ 10,819,005       $ 4,964,366       $ 3,983,248   

 

See Notes to Financial Statements.   
                 
36       BLACKROCK FUNDS II       OCTOBER 31, 2012   

 

 

Statements of Assets and Liabilities (concluded)

 

 

October 31, 2012    LifePath
Active
2015
Portfolio 		    

LifePath
Active

2020

Portfolio

     LifePath
Active
2025
Portfolio 		     LifePath
Active
2030
Portfolio 		     LifePath
Active
2035
Portfolio 		     LifePath
Active
2040
Portfolio 		     LifePath
Active
2045
Portfolio 		     LifePath
Active
2050
Portfolio 		 

Net Asset Value

                                                                       

Class K 1

                       

Net assets

   $ 138,682       $ 594,192       $ 183,736       $ 431,710       $ 233,533       $ 401,356       $ 221,828       $ 137,251   

Shares outstanding 2

     12,935         56,216         18,085         43,359         23,201         40,296         21,369         14,529   

Net asset value

   $ 10.72       $ 10.57       $ 10.16       $ 9.96       $ 10.07       $ 9.96       $ 10.38       $ 9.45   

Investor A

                                                                       

Net assets

   $ 9,189,438       $ 11,084,326       $ 7,931,619       $ 9,342,678       $ 4,794,416       $ 6,202,804       $ 2,641,131       $ 2,000,346   

Shares outstanding 2

     864,853         1,056,558         786,184         946,962         480,743         629,199         257,974         214,020   

Net asset value

   $ 10.63       $ 10.49       $ 10.09       $ 9.87       $ 9.97       $ 9.86       $ 10.24       $ 9.35   

Class R

                                                                       

Net assets

   $ 8,177,453       $ 8,770,956       $ 6,592,882       $ 9,303,548       $ 3,247,904       $ 5,211,125       $ 2,526,368       $ 2,165,177   

Shares outstanding 2

     769,703         842,633         657,594         947,707         327,536         530,303         248,659         232,501   

Net asset value

   $ 10.62       $ 10.41       $ 10.03       $ 9.82       $ 9.92       $ 9.83       $ 10.16       $ 9.31   

 

1 On November 27, 2012, each Fund’s Institutional Shares were redesignated as Class K Shares.

2 Unlimited number of shares authorized, $0.001 par value.

  

  

 

 

See Notes to Financial Statements.

                 
      BLACKROCK FUNDS II       OCTOBER 31, 2012    37

 

 

Statements of Operations

 

 

Year Ended October 31, 2012  

LifePath

Active

2015

Portfolio

    LifePath
Active
2020
Portfolio 		    LifePath
Active
2025
Portfolio 		    LifePath
Active
2030
Portfolio 		    LifePath
Active
2035
Portfolio 		    LifePath
Active
2040
Portfolio 		    LifePath
Active
2045
Portfolio 		    LifePath
Active
2050
Portfolio 		 

Investment Income

                                                               

Dividends – affiliated

  $ 128,351      $ 162,547      $ 112,152      $ 161,332      $ 91,353      $ 101,471      $ 44,359      $ 39,390   

Net investment income allocated from affiliated Master Portfolios:

               

Income

    341,937        400,096        241,179        265,420        76,078        98,058        48,642        32,783   

Expenses

    (41,587 )      (49,947 )      (31,699 )      (37,941 )      (14,084 )      (17,493 )      (9,194 )      (6,383 ) 

Total income

    428,701        512,696        321,632        388,811        153,347        182,036        83,807        65,790   
               

Fund Expenses

                                                               

Registration

    37,710        38,310        37,446        38,281        37,312        37,315        36,819        36,758   

Professional

    34,619        36,452        33,685        35,737        31,949        32,446        31,703        31,673   

Service and distribution – Class R

    31,296        39,654        27,456        40,846        15,398        19,808        12,064        8,950   

Service – Investor A

    20,715        25,049        16,937        21,140        11,631        13,980        4,943        4,139   

Accounting

    15,603        15,603        15,603        15,603        15,603        15,603        15,603        15,603   

Custodian

    13,008        12,902        12,979        12,979        12,979        12,945        12,873        12,873   

Printing.

    11,986        16,145        10,783        14,780        6,977        8,677        4,226        3,491   

Officer and Trustees

    6,075        6,112        6,010        6,082        5,855        5,857        5,761        5,731   

Administration

    11,007        13,764        9,322        12,774        5,962        7,359        3,424        2,661   

Administration – Class K 1

    28        97        35        97        52        62        43        25   

Administration – Investor A

    2,075        2,507        1,696        2,117        1,164        1,400        494        414   

Administration – Class R

    1,567        1,984        1,375        2,044        771        991        604        448   

Transfer agent – Class K 1

    273        559        330        445        398        397        548        322   

Transfer agent – Investor A

    14,313        17,633        13,744        15,039        11,602        14,906        8,030        10,509   

Transfer agent – Class R

    9,692        11,087        9,921        13,281        10,134        12,786        9,892        11,986   

Miscellaneous

    9,890        9,969        9,833        9,952        9,769        9,802        9,724        9,680   

Total expenses

    219,857        247,827        207,155        241,197        177,556        194,334        156,751        155,263   

Less administration fees waived

    (11,007 )      (13,764 )      (9,322 )      (12,774 )      (5,962 )      (7,359 )      (3,424 )      (2,661 ) 

Less administration fees waived – Class K 1

    (28 )      (97 )      (35 )      (97 )      (52 )      (62 )      (43 )      (25 ) 

Less administration fees waived – Investor A

    (22 )      –        (267 )      –        (785 )      (1,295 )      (494 )      (414 ) 

Less administration fees waived – Class R

    –        –        (61 )      –        (634 )      (861 )      (604 )      (448 ) 

Less transfer agent fees waived – Class K 1

    (15 )      (9 )      (15 )      (17 )      (17 )      (17 )      (27 )      (20 ) 

Less transfer agent fees waived – Investor A

    –        –        (5 )      –        (102 )      (162 )      (134 )      (131 ) 

Less transfer agent fees waived – Class R

    –        –        –        –        (41 )      (35 )      (26 )      (28 ) 

Less transfer agent fees reimbursed – Class K 1

    (258 )      (550 )      (315 )      (428 )      (381 )      (380 )      (521 )      (302 ) 

Less transfer agent fees reimbursed – Investor A

    –        –        (1 )      –        (449 )      (820 )      (2,951 )      (6,236 ) 

Less transfer agent fees reimbursed – Class R

    –        –        –        –        (3,151 )      (3,660 )      (4,073 )      (7,648 ) 

Less expenses reimbursed by Manager

    (128,891 )      (135,493 )      (126,339 )      (133,414 )      (120,444 )      (122,645 )      (116,709 )      (115,809 ) 

Total expenses after fees waived and reimbursed

    79,636        97,914        70,795        94,467        45,538        57,038        27,745        21,541   

Net investment income

    349,065        414,782        250,837        294,344        107,809        124,998        56,062        44,249   
               

Realized and Unrealized Gain

                                                               

Net realized gain from:

               

Investments – affiliated

    93,153        94,030        59,427        47,737        72,405        34,781        3,138        7,987   

Capital gain distributions received from affiliated investment companies

    39,286        49,415        34,515        55,463        36,265        39,506        8,226        14,185   

Allocation from affiliated Master Portfolios

    297,398        376,515        268,443        365,093        171,371        230,967        112,725        81,891   
    429,837        519,960        362,385        468,293        280,041        305,254        124,089        104,063   

Net change in unrealized appreciation/depreciation on:

               

Investments – affiliated

    339,478        509,754        365,946        610,635        307,365        381,517        202,356        153,019   

Allocation from affiliated Master Portfolios

    204,954        249,342        143,574        134,586        59,553        8,054        37,717        9,272   
    544,432        759,096        509,520        745,221        366,918        389,571        240,073        162,291   

Total realized and unrealized gain

    974,269        1,279,056        871,905        1,213,514        646,959        694,825        364,162        266,354   

Net Increase in Net Assets Resulting from Operations

  $ 1,323,334      $ 1,693,838      $ 1,122,742      $ 1,507,858      $ 754,768      $ 819,823      $ 420,224      $ 310,603   

1 On November 27, 2012, each Fund’s Institutional Shares were redesignated as Class K Shares.

  

 

 

See Notes to Financial Statements.

                 
38       BLACKROCK FUNDS II       OCTOBER 31, 2012   

 

 

Statements of Changes in Net Assets

 

 

       LifePath Active 2015 Portfolio          LifePath Active 2020 Portfolio          LifePath Active 2025 Portfolio  
     Year Ended October 31,    Year Ended October 31,          Year Ended October 31,  
Increase in Net Assets:    2012     2011          2012     2011          2012     2011  

Operations

                                                          

Net investment income

   $ 349,065      $ 304,078         $ 414,782      $ 321,009         $ 250,837      $ 180,033   

Net realized gain

     429,837        824,918           519,960        1,177,942           362,385        755,127   

Net change in unrealized appreciation/depreciation

     544,432        (603,006 )         759,096        (716,876 )         509,520        (507,514 ) 
  

 

 

      

 

 

      

 

 

 

Net increase in net assets resulting from operations

     1,323,334        525,990           1,693,838        782,075           1,122,742        427,646   
  

 

 

      

 

 

      

 

 

 

    

                  

Dividends and Distributions to Shareholders From 1

  

Net investment income:

                  

Class K 2

     (3,084 )      (1,807 )         (9,546 )      (5,871 )         (3,267 )      (1,734 ) 

Investor A

     (233,212 )      (118,476 )         (237,302 )      (160,104 )         (141,264 )      (69,421 ) 

Class R

     (138,705 )      (109,718 )         (173,153 )      (99,027 )         (90,469 )      (88,847 ) 

Net realized gain:

                  

Class K 2

     (3,101 )      –           (9,483 )      –           (5,726 )      –   

Investor A

     (266,415 )      –           (277,514 )      –           (289,733 )      –   

Class R

     (187,188 )      –           (224,180 )      –           (233,299 )      –   
  

 

 

      

 

 

      

 

 

 

Decrease in net assets resulting from dividends and distributions to shareholders

     (831,705 )      (230,001 )         (931,178 )      (265,002 )         (763,758 )      (160,002 ) 
  

 

 

      

 

 

      

 

 

 

    

                  

Capital Share Transactions

  

                                                 

Net increase in net assets derived from capital share transactions

     2,024,009        3,561,619           1,767,193        2,052,265           2,609,533        907,054   
  

 

 

      

 

 

      

 

 

 

    

                  

Net Assets

                                                          

Total increase in net assets

     2,515,638        3,857,608           2,529,853        2,569,338           2,968,517        1,174,698   

Beginning of year

     14,989,935        11,132,327           17,919,621        15,350,283           11,739,720        10,565,022   
  

 

 

      

 

 

      

 

 

 

End of year

   $       17,505,573      $       14,989,935         $       20,449,474      $       17,919,621         $       14,708,237      $       11,739,720   
  

 

 

      

 

 

      

 

 

 

Undistributed net investment income

   $ 221,235      $ 254,936         $ 260,160      $ 272,396         $ 159,283      $ 147,470   
  

 

 

      

 

 

      

 

 

 

 

  1

Dividends and distributions are determined in accordance with federal income tax regulations.

  2

On November 27, 2012, each Fund’s Institutional Shares were redesignated as Class K Shares.

 

See Notes to Financial Statements.   
                 
      BLACKROCK FUNDS II       OCTOBER 31, 2012    39

 

 

Statements of Changes in Net Assets (continued)

 

 

       LifePath Active 2030 Portfolio          LifePath Active 2035 Portfolio          LifePath Active 2040 Portfolio  
     Year Ended October 31,    Year Ended October 31,          Year Ended October 31,  
Increase (Decrease) in Net Assets:    2012     2011          2012     2011          2012     2011  

Operations

                                                          

Net investment income

   $ 294,344      $ 191,513         $ 107,809      $ 55,507         $ 124,998      $ 64,040   

Net realized gain

     468,293        1,117,268           280,041        506,322           305,254        565,445   

Net change in unrealized appreciation/depreciation

     745,221        (601,325 )         366,918        (240,885 )         389,571        (259,268 ) 
  

 

 

      

 

 

      

 

 

 

Net increase in net assets resulting from operations

     1,507,858        707,456           754,768        320,944           819,823        370,217   
  

 

 

      

 

 

      

 

 

 

    

                  

Dividends and Distributions to Shareholders From 1

  

Net investment income:

                  

Class K 2

     (8,515 )      (4,898 )         (3,180 )      (1,846 )         (3,272 )      (2,448 ) 

Investor A

     (149,990 )      (75,252 )         (58,797 )      (26,519 )         (58,230 )      (30,231 ) 

Class R

     (116,496 )      (74,851 )         (23,024 )      (23,637 )         (26,498 )      (21,323 ) 

Net realized gain:

                  

Class K 2

     (18,664 )      –           (3,621 )      –           (8,253 )      –   

Investor A

     (402,158 )      –           (89,889 )      –           (208,658 )      –   

Class R

     (382,863 )      –           (59,977 )      –           (136,750 )      –   
  

 

 

      

 

 

      

 

 

 

Decrease in net assets resulting from dividends and distributions to shareholders

     (1,078,686 )      (155,001 )         (238,488 )      (52,002 )         (441,661 )      (54,002 ) 
  

 

 

      

 

 

      

 

 

 

    

                  

Capital Share Transactions

  

                                         

Net increase (decrease) in net assets derived from capital share transactions

     2,821,971        421,725           (598,943 )      572,942           2,599,504        200,250   
  

 

 

      

 

 

      

 

 

 

    

                  

Net Assets

                                                          

Total increase (decrease) in net assets

     3,251,143        974,180           (82,663 )      841,884           2,977,666        516,465   

Beginning of year

     15,826,793        14,852,613           8,358,516        7,516,632           8,837,619        8,321,154   
  

 

 

      

 

 

      

 

 

 

End of year

   $       19,077,936      $       15,826,793         $       8,275,853      $       8,358,516         $       11,815,285      $       8,837,619   
  

 

 

      

 

 

      

 

 

 

Undistributed net investment income

   $ 173,138      $ 155,118         $ 63,902      $ 37,562         $ 87,305      $ 47,908   
  

 

 

      

 

 

      

 

 

 

 

  1

Dividends and distributions are determined in accordance with federal income tax regulations.

  2

On November 27, 2012, each Fund’s Institutional Shares were redesignated as Class K Shares.

 

See Notes to Financial Statements.
                 
40       BLACKROCK FUNDS II       OCTOBER 31, 2012   

 

 

Statements of Changes in Net Assets (concluded)

 

 

     LifePath Active 2045 Portfolio          LifePath Active 2050 Portfolio  
     Year Ended October 31,          Year Ended October 31,  
Increase in Net Assets:    2012     2011          2012     2011  

Operations

                                     

Net investment income

   $ 56,062      $ 21,743         $ 44,249      $ 19,010   

Net realized gain

     124,089        186,032           104,063        188,004   

Net change in unrealized appreciation/depreciation

     240,073        (97,076 )         162,291        (83,176 ) 
  

 

 

      

 

 

 

Net increase in net assets resulting from operations

     420,224        110,699           310,603        123,838   
  

 

 

      

 

 

 
           

Dividends and Distributions to Shareholders From 1

                                     

Net investment income:

           

Class K 2

     (2,034 )      (441 )         (1,380 )      (1,814 ) 

Investor A

     (16,317 )      (8,075 )         (15,905 )      (8,145 ) 

Class R

     (16,649 )      (13,985 )         (12,715 )      (11,441 ) 

Net realized gain:

           

Class K 2

     (2,311 )      –           (3,601 )      (577 ) 

Investor A

     (26,461 )      –           (57,696 )      (4,066 ) 

Class R

     (37,592 )      –           (67,688 )      (6,759 ) 
  

 

 

      

 

 

 

Decrease in net assets resulting from dividends and distributions to shareholders

     (101,364 )      (22,501 )         (158,985 )      (32,802 ) 
  

 

 

      

 

 

 
           

Capital Share Transactions

                                     

Net increase in net assets derived from capital share transactions

     1,113,262        789,248           1,013,384        339,205   
  

 

 

      

 

 

 
           

Net Assets

                                     

Total increase in net assets

     1,432,122        877,446           1,165,002        430,241   

Beginning of year

     3,957,205        3,079,759           3,137,772        2,707,531   
  

 

 

      

 

 

 

End of year

   $       5,389,327      $       3,957,205         $       4,302,774      $       3,137,772   
  

 

 

      

 

 

 

Undistributed net investment income

   $ 36,951      $ 15,840         $ 28,776      $ 13,452   
  

 

 

      

 

 

 

 

  1

Dividends and distributions are determined in accordance with federal income tax regulations.

  2

On November 27, 2012, each Fund’s Institutional Shares were redesignated as Class K Shares.

 

See Notes to Financial Statements.
                 
      BLACKROCK FUNDS II       OCTOBER 31, 2012    41

 

 

Financial Highlights

 

 

LifePath Active 2015 Portfolio

 

     Class K 1          Investor A  
     Year Ended October 31,          Year Ended October 31,  
     2012     2011     2010     2009     2008          2012     2011     2010     2009     2008  

Per Share Operating Performance

  

                                                                            

Net asset value, beginning of year

   $ 10.37      $ 10.12      $ 8.97      $ 7.78      $ 10.76         $ 10.28      $ 10.05      $ 8.92      $ 7.73      $ 10.74   

Net investment income 2

     0.30        0.27        0.26        0.38        0.27           0.26        0.23        0.22        0.22        0.24   

Net realized and unrealized gain (loss)

     0.70        0.19        1.08        1.03        (3.10 )         0.70        0.18        1.08        1.17        (3.11 ) 

Net increase (decrease) from investment operations

     1.00        0.46        1.34        1.41        (2.83 )         0.96        0.41        1.30        1.39        (2.87 ) 

Dividends and distributions from: 3

                       

Net investment income

     (0.32 )      (0.21 )      (0.19 )      (0.22 )      (0.08 )         (0.28 )      (0.18 )      (0.17 )      (0.20 )      (0.07 ) 

Net realized gain

     (0.33 )      –        –        –        (0.07 )         (0.33 )      –        –        –        (0.07 ) 

Total dividends and distributions

     (0.65 )      (0.21 )      (0.19 )      (0.22 )      (0.15 )         (0.61 )      (0.18 )      (0.17 )      (0.20 )      (0.14 ) 

Net asset value, end of year

   $ 10.72      $ 10.37      $ 10.12      $ 8.97      $ 7.78           $ 10.63      $ 10.28      $ 10.05      $ 8.92      $ 7.73   
                       

Total Investment Return 4

                                                                                     

Based on net asset value

     10.31 %      4.56 % 5       15.09 % 6       18.78 %      (26.66 )%         9.96 %      4.10 % 5       14.69 % 6       18.52 %      (27.03 )% 
                       

Ratios to Average Net Assets

                                                                                     

Total expenses

     1.50 % 7       1.51 % 8       1.55 % 9       3.10 % 10       5.03 % 11          1.69 % 7       1.62 % 8       1.70 % 9       2.81 % 10       5.34 % 11  

Total expenses after fees waived and reimbursed

     0.28 % 7       0.27 % 8       0.10 % 9       0.12 % 10       0.10 % 11          0.73 % 7       0.65 % 8       0.47 % 9       0.50 % 10       0.46 % 11  

Net investment income

     2.88 % 7       2.61 % 8       2.70 % 9       4.86 % 10       2.77 % 11          2.50 % 7       2.23 % 8       2.31 % 9       2.80 % 10       2.46 % 11  
                       

Supplemental Data

                                                                                     

Net assets, end of year (000)

   $ 139      $ 96      $ 54      $ 45      $ 50         $ 9,189      $ 8,594      $ 5,429      $ 3,437      $ 1,511   

Portfolio turnover

     87%        112%        98%        57%        52%           87%        112%        98%        57%        52%   

 

  1  

On November 27, 2012, the Fund’s Institutional Shares were redesignated as Class K Shares.

  2  

Based on average shares outstanding.

  3  

Dividends and distributions are determined in accordance with federal income tax regulations.

  4  

Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

  5  

Includes payment received from affiliate, which had no impact on the Fund’s Class K and Investor A Shares total return.

  6  

Includes payment received from affiliate, which impacted the Fund’s total return. Not including the payment from affiliate, the Fund’s total return would have been 14.86% and 14.46% for the Class K and Investor A Shares, respectively.

  7  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.33%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  8  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.43%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  9  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.66%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  10  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.55%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  11  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

 

See Notes to Financial Statements.     
                 
42       BLACKROCK FUNDS II       OCTOBER 31, 2012   

 

 

Financial Highlights (concluded)

 

 

LifePath Active 2015 Portfolio

 

     Class R  
     Year Ended October 31,  
     2012     2011     2010     2009     2008  

Per Share Operating Performance

  

                               

Net asset value, beginning of year

   $ 10.26      $ 10.04      $ 8.91      $ 7.74      $ 10.72   

Net investment income 1

     0.23        0.20        0.18        0.20        0.20   

Net realized and unrealized gain (loss)

     0.70        0.18        1.09        1.15        (3.08 ) 

Net increase (decrease) from investment operations.

     0.93        0.38        1.27        1.35        (2.88 ) 

Dividends and distributions from: 2

          

Net investment income

     (0.24 )      (0.16 )      (0.14 )      (0.18 )      (0.03 ) 

Net realized gain

     (0.33 )      –        –        –        (0.07 ) 

Total dividends and distributions

     (0.57 )      (0.16 )      (0.14 )      (0.18 )      (0.10 ) 

Net asset value, end of year.

   $ 10.62      $ 10.26      $ 10.04      $ 8.91      $ 7.74   
          

Total Investment Return 3

                                        

Based on net asset value

     9.59%        3.76% 4       14.36% 5       17.92%        (27.11)%   
          

Ratios to Average Net Assets

                                        

Total expenses.

     1.91% 6       1.92% 7       2.06% 8       3.19% 9       4.59% 10  

Total expenses after fees waived and reimbursed.

     0.96% 6       0.97% 7       0.81% 8       0.84% 9       0.75% 10  

Net investment income

     2.21% 6       1.92% 7       1.96% 8       2.51% 9       2.08% 10  
          

Supplemental Data

                                        

Net assets, end of year (000)

   $ 8,177      $ 6,299      $ 5,649      $ 3,793      $ 1,984   

Portfolio turnover

     87%        112%        98%        57%        52%   

 

  1  

Based on average shares outstanding.

  2  

Dividends and distributions are determined in accordance with federal income tax regulations.

  3  

Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

  4  

Includes payment received from affiliate, which had no impact on the Fund’s Class R Shares total return.

  5  

Includes payment received from affiliate, which impacted the Fund’s total return. Not including the payment from affiliate, the Fund’s total return would have been 14.13%.

  6  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.33%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  7  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.43%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  8  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.66%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  9  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.55%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  10

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

 

See Notes to Financial Statements.     
                 
      BLACKROCK FUNDS II       OCTOBER 31, 2012    43

 

 

Financial Highlights

 

 

LifePath Active 2020 Portfolio

 

     Class K 1          Investor A  
     Year Ended October 31,          Year Ended October 31,  
     2012     2011     2010     2009     2008          2012     2011     2010     2009     2008  

Per Share Operating Performance

  

                                            

Net asset value, beginning of year

   $ 10.16      $ 9.90      $ 8.75      $ 7.57      $ 10.84         $ 10.08      $ 9.84      $ 8.71      $ 7.53      $ 10.82   

Net investment income 2

     0.28        0.25        0.23        0.23        0.24           0.24        0.20        0.19        0.20        0.23   

Net realized and unrealized gain (loss)

     0.71        0.22        1.09        1.15        (3.38 )         0.71        0.22        1.09        1.16        (3.40)   

Net increase (decrease) from investment operations

     0.99        0.47        1.32        1.38        (3.14 )         0.95        0.42        1.28        1.36        (3.17 ) 

Dividends and distributions from: 3

                       

Net investment income

     (0.29 )      (0.21 )      (0.17 )      (0.20 )      (0.06 )         (0.25 )      (0.18 )      (0.15 )      (0.18 )      (0.05 ) 

Net realized gain

     (0.29 )      –        –        –        (0.07 )           (0.29 )      –        –        –        (0.07 ) 

Total dividends and distributions

     (0.58 )      (0.21 )      (0.17 )      (0.20 )      (0.13 )         (0.54 )      (0.18 )      (0.15 )      (0.18 )      (0.12 ) 

Net asset value, end of year

   $ 10.57      $ 10.16      $ 9.90      $ 8.75      $ 7.57         $ 10.49      $ 10.08      $ 9.84      $ 8.71      $ 7.53   
                       

Total Investment Return 4

  

                                            

Based on net asset value

     10.41%        4.78% 5       15.26% 6       18.89%        (29.30)%           9.98%        4.24% 5       14.78% 6       18.56%        (29.58)%   
                       

Ratios to Average Net Assets

  

                                            

Total expenses

     1.25% 7       1.26% 8       1.21% 9       2.05% 10       3.50% 11          1.54% 7       1.52% 8       1.52% 9       2.31% 10       3.68% 11  

Total expenses after fees waived and reimbursed

     0.27% 7       0.25% 8       0.11% 9       0.13% 10       0.08% 11          0.72% 7       0.68% 8       0.55% 9       0.55% 10       0.43% 11  

Net investment income

     2.75% 7       2.40% 8       2.50% 9       3.04% 10       2.41% 11          2.35% 7       1.97% 8       2.05% 9       2.54% 10       2.32% 11  
                       

Supplemental Data

  

                                            

Net assets, end of year (000)

   $ 594      $ 326      $ 262      $ 223      $ 193         $ 11,084      $ 9,994      $ 8,433      $ 4,926      $ 2,967   

Portfolio turnover

     68%        138%        106%        44%        55%           68%        138%        106%        44%        55%   

 

  1  

On November 27, 2012, the Fund’s Institutional Shares were redesignated as Class K Shares.

  2  

Based on average shares outstanding.

  3  

Dividends and distributions are determined in accordance with federal income tax regulations.

  4  

Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

  5  

Includes payment received from affiliate, which had no impact on the Fund’s Class K and Investor A Shares total return.

  6  

Includes payment received from affiliate, which impacted the Fund’s total return. Not including the payment from affiliate, the Fund’s total return would have been 15.15% and 14.54% for the Class K and Investor A Shares, respectively.

  7  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.36%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  8  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.47%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  9  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.66%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  10

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.56%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  11

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

 

See Notes to Financial Statements.

    
                 

44

      BLACKROCK FUNDS II       OCTOBER 31, 2012   

 

 

Financial Highlights (concluded)

 

 

LifePath Active 2020 Portfolio

 

     Class R  
     Year Ended October 31,  
     2012     2011     2010     2009     2008  

Per Share Operating Performance

  

                               

Net asset value, beginning of year

   $ 10.01      $ 9.77      $ 8.65      $ 7.50      $ 10.80   

Net investment income 1

     0.21        0.17        0.16        0.16        0.18   

Net realized and unrealized gain (loss)

     0.70        0.22        1.09        1.16        (3.36 ) 

Net increase (decrease) from investment operations

     0.91        0.39        1.25        1.32        (3.18 ) 

Dividends and distributions from: 2

          

Net investment income

     (0.22 )      (0.15 )      (0.13 )      (0.17 )      (0.05 ) 

Net realized gain

     (0.29 )      –        –        –        (0.07 ) 

Total dividends and distributions

     (0.51 )      (0.15 )      (0.13 )      (0.17 )      (0.12 ) 

Net asset value, end of year

   $ 10.41      $ 10.01      $ 9.77      $ 8.65      $ 7.50   
          

Total Investment Return 3

  

                               

Based on net asset value

     9.67%        3.95% 4       14.53% 5       18.11%        (29.76)%   
          

Ratios to Average Net Assets

  

                               

Total expenses

     1.75% 6       1.79% 7       1.84% 8       2.64% 9       4.30% 10  

Total expenses after fees waived and reimbursed

     0.94% 6       0.96% 7       0.85% 8       0.87% 9       0.84% 10  

Net investment income

     2.12% 6       1.69% 7       1.76% 8       2.08% 9       1.88% 10  
          

Supplemental Data

  

                               

Net assets, end of year (000)

   $ 8,771      $ 7,599      $ 6,655      $ 5,287      $ 1,914   

Portfolio turnover

     68%        138%        106%        44%        55%   

 

  1  

Based on average shares outstanding.

  2  

Dividends and distributions are determined in accordance with federal income tax regulations.

  3  

Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

  4  

Includes payment received from affiliate, which had no impact on the Fund’s Class R Shares total return.

  5  

Includes payment received from affiliate, which impacted the Fund’s total return. Not including the payment from affiliate, the Fund’s total return would have been 14.29%.

  6  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.36%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  7  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.47%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  8  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.66%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  9  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.56%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  10

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

 

See Notes to Financial Statements.     
                 
      BLACKROCK FUNDS II       OCTOBER 31, 2012    45

 

 

Financial Highlights

 

 

LifePath Active 2025 Portfolio

 

    Class K 1         Investor A  
    Year Ended October 31,         Year Ended October 31,  
    2012     2011     2010     2009     2008         2012     2011     2010     2009     2008  

Per Share Operating Performance

  

                                                                   

Net asset value, beginning of year

  $ 9.95      $ 9.66      $ 8.50      $ 7.38      $ 11.00        $ 9.88      $ 9.60      $ 8.46      $ 7.35      $ 10.98   

Net investment income 2

    0.25        0.22        0.20        0.20        0.22          0.21        0.17        0.15        0.16        0.17   

Net realized and unrealized gain (loss)

    0.70        0.27        1.10        1.06        (3.67 )        0.70        0.27        1.10        1.07        (3.64 ) 

Net increase (decrease) from investment operations

    0.95        0.49        1.30        1.26        (3.45 )        0.91        0.44        1.25        1.23        (3.47 ) 

Dividends and distributions from: 3

                     

Net investment income

    (0.27 )      (0.20 )      (0.14 )      (0.14 )      (0.09 )        (0.23 )      (0.16 )      (0.11 )      (0.12 )      (0.08 ) 

Net realized gain

    (0.47 )      –        –        –        (0.08 )        (0.47 )      –        –        –        (0.08 ) 

Total dividends and distributions

    (0.74 )      (0.20 )      (0.14 )      (0.14 )      (0.17 )        (0.70 )      (0.16 )      (0.11 )      (0.12 )      (0.16 ) 

Net asset value, end of year

  $ 10.16      $ 9.95      $ 9.66      $ 8.50      $ 7.38        $ 10.09      $ 9.88      $ 9.60      $ 8.46      $ 7.35   
                     

Total Investment Return 4

                                                                                   

Based on net asset value

    10.38%        5.05% 5        15.41% 6        17.55%        (31.85)%          9.98%        4.54% 5        14.93% 6        17.08%        (32.05)%   
                     

Ratios to Average Net Assets

  

                                                                   

Total expenses

    1.60% 7        1.64% 8        1.59% 9        3.05% 10        6.13% 11          1.82% 7        1.85% 8        1.79% 9        3.10% 10        6.13% 11   

Total expenses after fees waived and reimbursed

    0.25% 7        0.23% 8        0.13% 9        0.15% 10        0.13% 11          0.73% 7        0.65% 8        0.55% 9        0.57% 10        0.49% 11   

Net investment income

    2.57% 7        2.14% 8        2.22% 9        2.77% 10        2.24% 11          2.13% 7        1.70% 8        1.70% 9        2.14% 10        1.81% 11   
                     

Supplemental Data

                                                                                   

Net assets, end of year (000)

  $ 184      $ 116      $ 64      $ 56      $ 76        $ 7,932      $ 6,181      $ 4,353      $ 2,354      $ 1,569   

Portfolio turnover

    76%        119%        116%        54%        80%          76%        119%        116%        54%        80%   

 

  1  

On November 27, 2012, the Fund’s Institutional Shares were redesignated as Class K Shares.

  2  

Based on average shares outstanding.

  3  

Dividends and distributions are determined in accordance with federal income tax regulations.

  4  

Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

  5  

Includes payment received from affiliate, which had no impact on the Fund’s Class K and Investor A Shares total return.

  6  

Includes payment received from affiliate, which impacted the Fund’s total return. Not including the payment from affiliate, the Fund’s total return would have been 15.29% and 14.81% for the Class K and Investor A Shares, respectively.

  7  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.38%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  8  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.49%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  9  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.64%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  10  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.57%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  11  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

 

See Notes to Financial Statements.     
                 
46       BLACKROCK FUNDS II       OCTOBER 31, 2012   

 

 

Financial Highlights (concluded)

 

 

LifePath Active 2025 Portfolio

 

    Class R  
    Year Ended October 31,  
    2012     2011     2010     2009     2008  

Per Share Operating Performance

                                       

Net asset value, beginning of year

  $ 9.80      $ 9.52      $ 8.41      $ 7.32      $ 10.95   

Net investment income 1

    0.18        0.14        0.13        0.12        0.13   

Net realized and unrealized gain (loss)

    0.70        0.27        1.08        1.08        (3.61)   

Net increase (decrease) from investment operations

    0.88        0.41        1.21        1.20        (3.48)   

Dividends and distributions from: 2

         

Net investment income

    (0.18)        (0.13)        (0.10)        (0.11)        (0.07)   

Net realized gain

    (0.47)        –        –        –        (0.08)   

Total dividends and distributions

    (0.65)        (0.13)        (0.10)        (0.11)        (0.15)   

Net asset value, end of year

  $ 10.03      $ 9.80      $ 9.52      $ 8.41      $ 7.32   
         

Total Investment Return 3

                                       

Based on net asset value

    9.72%        4.35% 4        14.47% 5        16.75%        (32.20)%   
         

Ratios to Average Net Assets

                                       

Total expenses

    2.05% 6        2.09% 7        2.13% 8        3.39% 9        5.99% 10   

Total expenses after fees waived and reimbursed

    0.96% 6        0.95% 7        0.86% 8        0.89% 9        0.80% 10   

Net investment income

    1.87% 6        1.42% 7        1.49% 8        1.61% 9        1.41% 10   
         

Supplemental Data

                                       

Net assets, end of year (000)

  $ 6,593      $ 5,443      $ 6,148      $ 4,502      $ 1,306   

Portfolio turnover

    76%        119%        116%        54%        80%   
  1  

Based on average shares outstanding.

  2  

Dividends and distributions are determined in accordance with federal income tax regulations.

  3  

Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

  4  

Includes payment received from affiliate, which had no impact on the Fund’s Class R Shares total return.

  5  

Includes payment received from affiliate, which impacted the Fund’s total return. Not including the payment from affiliate, the Fund’s total return would have been 14.35%.

  6  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.38%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  7  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.49%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  8  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.64%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  9  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.57%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  10  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

 

See Notes to Financial Statements.     
                 
      BLACKROCK FUNDS II       OCTOBER 31, 2012    47

 

 

Financial Highlights

 

 

LifePath Active 2030 Portfolio

 

     Class K 1          Investor A  
     Year Ended October 31,          Year Ended October 31,  
     2012     2011     2010     2009     2008          2012     2011     2010     2009     2008  

Per Share Operating Performance

  

                                                                    

Net asset value, beginning of year

   $ 9.76      $ 9.43      $ 8.25      $ 7.10      $ 11.09         $ 9.68      $ 9.35      $ 8.20      $ 7.07      $ 11.07   

Net investment income 2

     0.22        0.17        0.16        0.13        0.13           0.18        0.13        0.12        0.10        0.11   

Net realized and unrealized gain (loss)

     0.71        0.31        1.13        1.11        (3.97 )         0.69        0.31        1.12        1.09        (3.97 ) 

Net increase (decrease) from investment operations

     0.93        0.48        1.29        1.24        (3.84 )         0.87        0.44        1.24        1.19        (3.86 ) 

Dividends and distributions from: 3

                       

Net investment income

     (0.23 )      (0.15 )      (0.11 )      (0.09 )      (0.06 )         (0.18 )      (0.11 )      (0.09 )      (0.06 )      (0.05 ) 

Net realized gain

     (0.50 )      –        –        –        (0.09 )         (0.50 )      –        –        –        (0.09 ) 

Total dividends and distributions

     (0.73 )      (0.15 )      (0.11 )      (0.09 )      (0.15 )         (0.68 )      (0.11 )      (0.09 )      (0.06 )      (0.14 ) 

Net asset value, end of year

   $ 9.96      $ 9.76      $ 9.43      $ 8.25      $ 7.10         $ 9.87      $ 9.68      $ 9.35      $ 8.20      $ 7.07   
                       

Total Investment Return 4

                                                                                     

Based on net asset value

     10.24%        5.04% 5       15.76% 6       17.83%        (34.98)%           9.72%        4.69% 5       15.17% 7       17.11%        (35.35)%   
                       

Ratios to Average Net Assets

                                                                                     

Total expenses

     1.22% 8       1.21% 9       1.34% 10       2.11% 11       4.95% 12          1.53% 8       1.51% 9       1.62% 10       2.73% 11       4.94% 12  

Total expenses after fees waived and reimbursed

     0.22% 8       0.20% 9       0.15% 10       0.18% 11       0.08% 12          0.68% 8       0.62% 9       0.59% 10       0.65% 11       0.51% 12  

Net investment income

     2.30% 8       1.74% 9       1.81% 10       1.62% 11       1.35% 12          1.84% 8       1.32% 9       1.37% 10       1.37% 11       1.14% 12  
                       

Supplemental Data

                                                                                     

Net assets, end of year (000)

   $ 432      $ 355      $ 302      $ 166      $ 24         $ 9,343      $ 8,008      $ 6,787      $ 4,223      $ 1,675   

Portfolio turnover

     73%        117%        114%        29%        62%           73%        117%        114%        29%        62%   

 

  1  

On November 27, 2012, the Fund’s Institutional Shares were redesignated as Class K Shares.

  2  

Based on average shares outstanding.

  3  

Dividends and distributions are determined in accordance with federal income tax regulations.

  4  

Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

  5  

Includes payment received from affiliate, which had no impact on the Fund’s Class K and Investor A Shares total return.

  6  

Includes payment received from affiliate, which impacted the Fund’s total return. Not including the payment from affiliate, the Fund’s total return would have been 15.64%.

  7  

Includes payment received from affiliate, which had no impact on the Fund’s Investor A Shares total return.

  8  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.45%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  9  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.54%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  10  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.63%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  11  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.59%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  12  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

 

See Notes to Financial Statements.     
                 
48       BLACKROCK FUNDS II       OCTOBER 31, 2012   

 

 

Financial Highlights (concluded)

 

 

LifePath Active 2030 Portfolio

 

     Class R  
     Year Ended October 31,  
     2012     2011     2010     2009     2008  

Per Share Operating Performance

                                        

Net asset value, beginning of year

   $ 9.62      $ 9.31      $ 8.16      $ 7.05      $ 11.05   

Net investment income 1

     0.15        0.10        0.09        0.08        0.06   

Net realized and unrealized gain (loss)

     0.70        0.30        1.13        1.09        (3.93 ) 

Net increase (decrease) from investment operations

     0.85        0.40        1.22        1.17        (3.87 ) 

Dividends and distributions from: 2

          

Net investment income

     (0.15 )      (0.09 )      (0.07 )      (0.06 )      (0.04 ) 

Net realized gain

     (0.50 )      –        –        –        (0.09 ) 

Total dividends and distributions

     (0.65 )      (0.09 )      (0.07 )      (0.06 )      (0.13 ) 

Net asset value, end of year

   $ 9.82      $ 9.62      $ 9.31      $ 8.16      $ 7.05   
          

Total Investment Return 3

                                        

Based on net asset value

     9.49%        4.25% 4       14.97% 5       16.81%        (35.44)%   
          

Ratios to Average Net Assets

                                        

Total expenses

     1.77% 6       1.80% 7       1.94% 8       3.04% 9       5.31% 10  

Total expenses after fees waived and reimbursed

     0.91% 6       0.92% 7       0.88% 8       0.91% 9       0.89% 10  

Net investment income

     1.59% 6       1.01% 7       1.04% 8       1.03% 9       0.70% 10  
          

Supplemental Data

                                        

Net assets, end of year (000)

   $ 9,304      $ 7,463      $ 7,763      $ 5,039      $ 1,575   

Portfolio turnover

     73%        117%        114%        29%        62%   

 

  1  

Based on average shares outstanding.

  2  

Dividends and distributions are determined in accordance with federal income tax regulations.

  3  

Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

  4  

Includes payment received from affiliate, which had no impact on the Fund’s Class R Shares total return.

  5  

Includes payment received from affiliate, which impacted the Fund’s total return. Not including the payment from affiliate, the Fund’s total return would have been 14.85%.

  6  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.45%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  7  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.54%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  8  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.63%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  9  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.59%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  10  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

 

See Notes to Financial Statements.     
                 
      BLACKROCK FUNDS II       OCTOBER 31, 2012    49

 

 

Financial Highlights

 

 

LifePath Active 2035 Portfolio

 

     Class K 1          Investor A  
     Year Ended October 31,          Year Ended October 31,  
     2012     2011     2010     2009     2008          2012     2011     2010     2009     2008  

Per Share Operating Performance

  

                                                            

Net asset value, beginning of year

   $ 9.46      $ 9.13      $ 7.98      $ 6.90      $ 11.04         $ 9.39      $ 9.07      $ 7.93      $ 6.86      $ 11.02   

Net investment income 2

     0.18        0.12        0.12        0.10        0.14           0.14        0.07        0.08        0.07        0.09   

Net realized and unrealized gain (loss)

     0.77        0.31        1.12        1.03        (4.14 )         0.74        0.32        1.12        1.02        (4.11 ) 

Net increase (decrease) from investment operations

     0.95        0.43        1.24        1.13        (4.00 )         0.88        0.39        1.20        1.09        (4.02 ) 

Dividends and distributions from: 3

                       

Net investment income

     (0.16 )      (0.10 )      (0.09 )      (0.05 )      (0.05 )         (0.12 )      (0.07 )      (0.06 )      (0.02 )      (0.05 ) 

Net realized gain

     (0.18 )      –        –        –        (0.09 )         (0.18 )      –        –        –        (0.09 ) 

Total dividends and distributions

     (0.34 )      (0.10 )      (0.09 )      (0.05 )      (0.14 )         (0.30 )      (0.07 )      (0.06 )      (0.02 )      (0.14 ) 

Net asset value, end of year

   $ 10.07      $ 9.46      $ 9.13      $ 7.98      $ 6.90         $ 9.97      $ 9.39      $ 9.07      $ 7.93      $ 6.86   
                       

Total Investment Return 4

  

                                                                    

Based on net asset value

     10.45%        4.73% 5       15.55% 5       16.48%        (36.63)%           9.71%        4.32% 5       15.21% 5       16.05%        (36.92)%   
                       

Ratios to Average Net Assets

  

                                                                    

Total expenses

     1.98% 6       1.84% 7       2.19% 8       4.53% 7       9.29% 9          2.29% 6       2.16% 7       2.36% 8       4.70% 7       8.89% 9  

Total expenses after fees waived and reimbursed

     0.18% 6       0.17% 7       0.17% 8       0.19% 7       0.11% 9          0.67% 6       0.60% 7       0.56% 8       0.63% 7       0.50% 9  

Net investment income

     1.87% 6       1.23% 7       1.38% 8       1.39% 7       1.41% 9          1.44% 6       0.77% 7       0.92% 8       1.06% 7       0.92% 9  
                       

Supplemental Data

                                                                                     

Net assets, end of year (000)

   $ 234      $ 207      $ 70      $ 56      $ 32         $ 4,794      $ 4,878      $ 3,227      $ 1,774      $ 1,122   

Portfolio turnover

     76%        94%        115%        37%        67%           76%        94%        115%        37%        67%   

 

  1  

On November 27, 2012, the Fund’s Institutional Shares were redesignated as Class K Shares.

  2  

Based on average shares outstanding.

  3  

Dividends and distributions are determined in accordance with federal income tax regulations.

  4  

Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

  5  

Includes payment received from affiliate, which had no impact on the Fund’s Class K and Investor A Shares total return.

  6  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.54%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  7  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.60%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  8  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.61%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  9  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

 

See Notes to Financial Statements.     
                 
50       BLACKROCK FUNDS II       OCTOBER 31, 2012   

 

 

Financial Highlights (concluded)

 

 

LifePath Active 2035 Portfolio

 

     Class R  
     Year ended October 31,  
     2012     2011     2010     2009     2008  

Per Share Operating Performance

                                        

Net asset value, beginning of year

   $ 9.31      $ 9.00      $ 7.89      $ 6.84      $ 11.00   

Net investment income 1

     0.11        0.05        0.05        0.04        0.04   

Net realized and unrealized gain (loss)

     0.75        0.31        1.11        1.03        (4.08 ) 

Net increase (decrease) from investment operations.

     0.86        0.36        1.16        1.07        (4.04 ) 

Dividends and distributions from: 2

          

Net investment income

     (0.07 )      (0.05 )      (0.05 )      (0.02 )      (0.03 ) 

Net realized gain

     (0.18 )      –        –        –        (0.09 ) 

Total dividends and distributions

     (0.25 )      (0.05 )      (0.05 )      (0.02 )      (0.12 ) 

Net asset value, end of year

   $ 9.92      $ 9.31      $ 9.00      $ 7.89      $ 6.84   
          

Total Investment Return 3

                                        

Based on net asset value

     9.53%        3.96% 4       14.76% 5       15.72%        (37.09)%   
          

Ratios to Average Net Assets

                                        

Total expenses

     2.62% 6       2.43% 7       2.85% 8       5.25% 7       9.63% 9  

Total expenses after fees waived and reimbursed

     0.91% 6       0.91% 7       0.91% 8       0.94% 7       0.93% 9  

Net investment income

     1.20% 6       0.48% 7       0.56% 8       0.58% 7       0.46% 9  
          

Supplemental Data

                                        

Net assets, end of year (000)

   $ 3,248      $ 3,273      $ 4,219      $ 2,300      $ 582   

Portfolio turnover

     76%        94%        115%        37%        67%   

 

  1  

Based on average shares outstanding.

  2  

Dividends and distributions are determined in accordance with federal income tax regulations.

  3  

Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

  4  

Includes payment received from affiliate, which had no impact on the Fund’s Class R Shares total return.

  5  

Includes payment received from affiliate, which impacted the Fund’s total return. Not including the payment from affiliate, the Fund’s total return would have been 14.64%.

  6  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.54%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  7  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.60%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  8  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.61%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  9  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

 

See Notes to Financial Statements.     
                 
      BLACKROCK FUNDS II       OCTOBER 31, 2012    51

 

 

Financial Highlights

 

 

LifePath Active 2040 Portfolio

 

     Class K 1          Investor A  
     Year Ended October 31,          Year Ended October 31,  
     2012     2011     2010     2009     2008          2012     2011     2010     2009     2008  

Per Share Operating Performance

  

Net asset value, beginning of year

   $ 9.60      $ 9.25      $ 8.07      $ 6.96      $ 11.19         $ 9.50      $ 9.17      $ 8.01      $ 6.92      $ 11.17   

Net investment income 2

     0.18        0.13        0.11        0.10        0.10           0.13        0.08        0.07        0.06        0.08   

Net realized and unrealized gain (loss)

     0.72        0.33        1.15        1.07        (4.17 )         0.73        0.32        1.14        1.06        (4.18 ) 

Net increase (decrease) from investment operations

     0.90        0.46        1.26        1.17        (4.07 )         0.86        0.40        1.21        1.12        (4.10 ) 

Dividends and distributions from: 3

                       

Net investment income

     (0.15 )      (0.11 )      (0.08 )      (0.06 )      (0.06 )         (0.11 )      (0.07 )      (0.05 )      (0.03 )      (0.05 ) 

Net realized gain

     (0.39 )      –        –        –        (0.10 )         (0.39 )      –        –        –        (0.10 ) 

Total dividends and distributions

     (0.54 )      (0.11 )      (0.08 )      (0.06 )      (0.16 )         (0.50 )      (0.07 )      (0.05 )      (0.03 )      (0.15 ) 

Net asset value, end of year

   $ 9.96      $ 9.60      $ 9.25      $ 8.07      $ 6.96         $ 9.86      $ 9.50      $ 9.17      $ 8.01      $ 6.92   
                       

Total Investment Return 4

  

                                                                            

Based on net asset value

     10.01%        4.95% 5       15.67% 6       17.02%        (36.87 )%         9.56%        4.30% 5       15.21% 7       16.38%        (37.16 )% 
                       

Ratios to Average Net Assets

  

                                                                    

Total expenses

     1.68% 8       1.78% 9       1.89% 10       3.82% 11       9.56% 12          2.05% 8       2.16% 9       2.34% 10       4.41% 11       9.62% 12  

Total expenses after fees waived and reimbursed

     0.18% 8       0.17% 9       0.17% 10       0.19% 11       0.12% 12          0.68% 8       0.66% 9       0.66% 10       0.69% 11       0.59% 12  

Net investment income

     1.81% 8       1.31% 9       1.32% 10       1.35% 11       1.07% 12          1.38% 8       0.82% 9       0.84% 10       0.88% 11       0.86% 12  
                       

Supplemental Data

  

                                                                            

Net assets, end of year (000)

   $ 401      $ 224      $ 204      $ 111      $ 37         $ 6,203      $ 5,199      $ 4,621      $ 2,656      $ 1,126   

Portfolio turnover

     68%        99%        114%        29%        80%           68%        99%        114%        29%        80%   

 

  1  

On November 27, 2012, the Fund’s Institutional Shares were redesignated as Class K Shares.

  2  

Based on average shares outstanding.

  3  

Dividends and distributions are determined in accordance with federal income tax regulations.

  4  

Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

  5  

Includes payment received from affiliate, which had no impact on the Fund’s Class K and Investor A Shares total return.

  6  

Includes payment received from affiliate, which had no impact on the Fund’s Class K Shares total return.

  7  

Includes payment received from affiliate, which impacted the Fund’s total return. Not including the payment from affiliate, the Fund’s total return would have been 15.08%.

  8  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.51%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  9  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.63%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  10

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.61%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  11

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.60%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  12

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

 

See Notes to Financial Statements.

    
                 
52       BLACKROCK FUNDS II       OCTOBER 31, 2012   

 

 

Financial Highlights (concluded)

 

 

LifePath Active 2040 Portfolio

 

     Class R  
     Year Ended October 31,  
     2012     2011     2010     2009     2008  

Per Share Operating Performance

                                        

Net asset value, beginning of year

   $ 9.47      $ 9.14      $ 7.99      $ 6.92      $ 11.14   

Net investment income 1

     0.10        0.05        0.06        0.04        0.03   

Net realized and unrealized gain (loss)

     0.73        0.33        1.13        1.06        (4.14 ) 

Net increase (decrease) from investment operations

     0.83        0.38        1.19        1.10        (4.11 ) 

Dividends and distributions from: 2

          

Net investment income

     (0.08 )      (0.05 )      (0.04 )      (0.03 )      (0.01 ) 

Net realized gain

     (0.39 )      –        –        –        (0.10 ) 

Total dividends and distributions

     (0.47 )      (0.05 )      (0.04 )      (0.03 )      (0.11 ) 

Net asset value, end of year

   $ 9.83      $ 9.47      $ 9.14      $ 7.99      $ 6.92   
          

Total Investment Return 3

  

                       

Based on net asset value

     9.20%        4.18% 4       14.93% 5       16.08%        (37.24 )% 
          

Ratios to Average Net Assets

  

                               

Total expenses

     2.35% 6       2.51% 7       2.83% 8       4.83% 9       9.66% 10  

Total expenses after fees waived and reimbursed

     0.91% 6       0.91% 7       0.91% 8       0.93% 9       0.92% 10  

Net investment income

     1.09% 6       0.56% 7       0.65% 8       0.52% 9       0.33% 10  
          

Supplemental Data

  

                               

Net assets, end of year (000)

   $ 5,211      $ 3,414      $ 3,496      $ 2,582      $ 532   

Portfolio turnover

     68%        99%        114%        29%        80%   

 

  1  

Based on average shares outstanding.

  2  

Dividends and distributions are determined in accordance with federal income tax regulations.

  3  

Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

  4  

Includes payment received from affiliate, which had no impact on the Fund’s Class R Shares total return.

  5  

Includes payment received from affiliate, which impacted the Fund’s total return. Not including the payment from affiliate, the Fund’s total return would have been 14.81%.

  6  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.51%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  7  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.63%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  8  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.61%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  9  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.60%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  10

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

 

See Notes to Financial Statements.     
                 
      BLACKROCK FUNDS II       OCTOBER 31, 2012    53

 

 

Financial Highlights

 

 

LifePath Active 2045 Portfolio

 

     Class K 1          Investor A  
     Year Ended October 31,          Year Ended October 31,  
     2012     2011     2010     2009     2008          2012     2011     2010     2009     2008  

Per Share Operating Performance

  

                                                                    

Net asset value, beginning of year

   $ 9.68      $ 9.32      $ 8.16      $ 7.02      $ 11.33         $ 9.55      $ 9.21      $ 8.08      $ 6.97      $ 11.30   

Net investment income 2

     0.18        0.12        0.12        0.11        0.09           0.13        0.07        0.07        0.08        0.07   

Net realized and unrealized gain (loss)

     0.82        0.36        1.12        1.06        (4.24 )         0.82        0.35        1.10        1.04        (4.26 ) 

Net increase (decrease) from investment operations

     1.00        0.48        1.24        1.17        (4.15 )         0.95        0.42        1.17        1.12        (4.19 ) 

Dividends and distributions from: 3

                       

Net investment income

     (0.14 )      (0.12 )      (0.08 )      (0.03 )      (0.07 )         (0.10 )      (0.08 )      (0.04 )      (0.01 )      (0.05 ) 

Net realized gain

     (0.16 )      –        –        –        (0.09 )         (0.16 )      –        –        –        (0.09 ) 

Total dividends and distributions

     (0.30 )      (0.12 )      (0.08 )      (0.03 )      (0.16 )         (0.26 )      (0.08 )      (0.04 )      (0.01 )      (0.14 ) 

Net asset value, end of year

   $ 10.38      $ 9.68      $ 9.32      $ 8.16      $ 7.02         $ 10.24      $ 9.55      $ 9.21      $ 8.08      $ 6.97   
                       

Total Investment Return 4

  

                                                                            

Based on net asset value

     10.76%        5.10% 5       15.20% 5       16.70%        (37.12 )%         10.29%        4.50% 5       14.55% 5       16.13%        (37.48 )% 
                       

Ratios to Average Net Assets

  

                                                                            

Total expenses

     3.17% 6       4.10% 7       4.80% 8       9.92% 7       32.26% 9          3.50% 6       4.24% 7       4.76% 8       9.55% 7       23.08% 9  

Total expenses after fees waived and reimbursed

     0.20% 6       0.17% 7       0.17% 8       0.19% 7       0.10% 9          0.70% 6       0.67% 7       0.67% 8       0.68% 7       0.61% 9  

Net investment income

     1.82% 6       1.19% 7       1.33% 8       1.54% 7       0.97% 9          1.33% 6       0.73% 7       0.83% 8       1.08% 7       0.80% 9  
                       

Supplemental Data

  

                                                                            

Net assets, end of year (000)

   $ 222      $ 133      $ 35      $ 23      $ 20         $ 2,641      $ 1,656      $ 950      $ 677      $ 538   

Portfolio turnover

     103%        82%        123%        49%        103%           103%        82%        123%        49%        103%   

 

  1  

On November 27, 2012, the Fund’s Institutional Shares were redesignated as Class K Shares.

  2  

Based on average shares outstanding.

  3  

Dividends and distributions are determined in accordance with federal income tax regulations.

  4  

Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

  5  

Includes payment received from affiliate, which had no impact on the Fund’s Class K and Investor A Shares total return.

  6  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.49%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  7  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.60%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  8  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.66%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  9  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

 

See Notes to Financial Statements.     
                 
54       BLACKROCK FUNDS II       OCTOBER 31, 2012   

 

 

Financial Highlights (concluded)

 

 

LifePath Active 2045 Portfolio

 

     Class R  
     Year Ended October 31,  
     2012     2011     2010     2009     2008  

Per Share Operating Performance

  

                               

Net asset value, beginning of year

   $ 9.48      $ 9.15      $ 8.04      $ 6.94      $ 11.28   

Net investment income 1

     0.11        0.05        0.05        0.04        0.07   

Net realized and unrealized gain (loss)

     0.80        0.34        1.10        1.06        (4.26 ) 

Net increase (decrease) from investment operations

     0.91        0.39        1.15        1.10        (4.19 ) 

Dividends and distributions from: 2

          

Net investment income

     (0.07 )      (0.06 )      (0.04 )      –        (0.06 ) 

Net realized gain

     (0.16 )      –        –        –        (0.09 ) 

Total dividends and distributions

     (0.23 )      (0.06 )      (0.04 )      –        (0.15 ) 

Net asset value, end of year

   $ 10.16      $ 9.48      $ 9.15      $ 8.04      $ 6.94   
          

Total Investment Return 3

  

                               

Based on net asset value

     9.92%        4.24% 4       14.38% 5       15.85%        (37.62 )% 
          

Ratios to Average Net Assets

  

                               

Total expenses

     3.78% 6       4.41% 7       5.29% 8       10.42% 7       30.15% 9  

Total expenses after fees waived and reimbursed

     0.94% 6       0.91% 7       0.91% 8       0.93% 7       0.86% 9  

Net investment income

     1.10% 6       0.50% 7       0.55% 8       0.51% 7       0.71% 9  
          

Supplemental Data

  

                               

Net assets, end of year (000)

   $ 2,526      $ 2,168      $ 2,094      $ 890      $ 189   

Portfolio turnover

     103%        82%        123%        49%        103%   

 

  1  

Based on average shares outstanding.

  2  

Dividends and distributions are determined in accordance with federal income tax regulations.

  3  

Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

  4  

Includes payment received from affiliate, which had no impact on the Fund’s Class R Shares total return.

  5  

Includes payment received from affiliate, which impacted the Fund’s total return. Not including the payment from affiliate, the Fund’s total return would have been 14.25%.

  6  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.49%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  7  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.60%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  8  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.66%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  9  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

 

See Notes to Financial Statements.     
                 
      BLACKROCK FUNDS II       OCTOBER 31, 2012    55

 

 

Financial Highlights

 

 

LifePath Active 2050 Portfolio

 

    Class K 1         Investor A  
   
    Year Ended October 31,         Year Ended October 31,  
    2012     2011     2010     2009     2008         2012     2011     2010     2009     2008  

Per Share Operating Performance

  

Net asset value, beginning of year

  $ 9.08      $ 8.79      $ 7.64      $ 6.73      $ 11.24        $ 8.99      $ 8.71      $ 7.58      $ 6.70      $ 11.21   

Net investment income 2

    0.17        0.11        0.11        0.10        0.12          0.12        0.07        0.07        0.06        0.07   

Net realized and unrealized gain (loss)

    0.70        0.32        1.10        0.93        (4.46)          0.70        0.31        1.10        0.92        (4.43)   

Net increase (decrease) from investment operations

    0.87        0.43        1.21        1.03        (4.34)          0.82        0.38        1.17        0.98        (4.36)   

Dividends and distributions from: 3

                     

Net investment income

    (0.14)        (0.11)        (0.06)        (0.05)        (0.08)          (0.10)        (0.07)        (0.04)        (0.03)        (0.06)   

Net realized gain

    (0.36)        (0.03)        –        (0.07)        (0.09)          (0.36)        (0.03)        –        (0.07)        (0.09)   

Total dividends and distributions

    (0.50)        (0.14)        (0.06)        (0.12)        (0.17)          (0.46)        (0.10)        (0.04)        (0.10)        (0.15)   

Net asset value, end of year

  $ 9.45      $ 9.08      $ 8.79      $ 7.64      $ 6.73        $ 9.35      $ 8.99      $ 8.71      $ 7.58      $ 6.70   
                     

Total Investment Return 4

  

                                                                   

Based on net asset value

    10.20%        4.91% 5        15.86% 5        15.68%        (39.15)%          9.69%        4.39% 5        15.42% 5        14.94%        (39.37)%   
                     

Ratios to Average Net Assets

  

Total expenses

    3.86% 6        4.00% 7        4.88% 8        11.13% 8        35.98% 9          4.42% 6        4.87% 7        5.60% 8        11.55% 8        32.00% 9   

Total expenses after fees waived and reimbursed

    0.18% 6        0.17% 7        0.17% 8        0.20% 8        0.15% 9          0.68% 6        0.67% 7        0.67% 8        0.70% 8        0.67% 9   

Net investment income

    1.88% 6        1.21% 7        1.36% 8        1.48% 8        1.26% 9          1.35% 6        0.73% 7        0.83% 8        0.85% 8        0.77% 9   
                     

Supplemental Data

  

Net assets, end of year (000)

  $ 137      $ 76      $ 139      $ 104      $ 74        $ 2,000      $ 1,374      $ 1,063      $ 668      $ 157   

Portfolio turnover

    81%        96%        104%        34%        102%          81%        96%        104%        34%        102%   

 

  1  

On November 27, 2012, the Fund’s Institutional Shares were redesignated as Class K Shares.

  2  

Based on average shares outstanding.

  3  

Dividends and distributions are determined in accordance with federal income tax regulations.

  4  

Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

  5  

Includes payment received from affiliate, which had no impact on the Fund’s Class K and Investor A Shares total return.

  6  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.53%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  7  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.60%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  8  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.61%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  9  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

 

See Notes to Financial Statements.
                 
56       BLACKROCK FUNDS II       OCTOBER 31, 2012   

 

 

Financial Highlights (concluded)

 

LifePath Active 2050 Portfolio

 

    Class R  
    Year Ended October 31,  
    2012     2011     2010     2009     2008  

Per Share Operating Performance

                                       

Net asset value, beginning of year

  $ 8.95      $ 8.68      $ 7.56      $ 6.70      $ 11.19   

Net investment income 1

    0.10        0.04        0.05        0.04        0.05   

Net realized and unrealized gain (loss)

    0.69        0.32        1.09        0.92        (4.42)   

Net increase (decrease) from investment operations

    0.79        0.36        1.14        0.96        (4.37)   

Dividends and distributions from: 2

         

Net investment income

    (0.07)        (0.06)        (0.02)        (0.03)        (0.03)   

Net realized gain

    (0.36)        (0.03)        –        (0.07)        (0.09)   

Total dividends and distributions

    (0.43)        (0.09)        (0.02)        (0.10)        (0.12)   

Net asset value, end of year

  $ 9.31      $ 8.95      $ 8.68      $ 7.56      $ 6.70   
         

Total Investment Return 3

                                       

Based on net asset value

    9.32%        4.17% 4        15.13% 4        14.61%        (39.44)%   
         

Ratios to Average Net Assets

                                       

Total expenses.

    4.72% 5        5.17% 6        6.20% 7        12.23% 7        28.99% 8   

Total expenses after fees waived and reimbursed

    0.92% 5        0.91% 6        0.91% 7        0.94% 7        0.94% 8   

Net investment income

    1.12% 5        0.48% 6        0.58% 7        0.56% 7        0.55% 8   
         

Supplemental Data

                                       

Net assets, end of year (000)

  $ 2,165      $ 1,688      $ 1,506      $ 885      $ 186   

Portfolio turnover

    81%        96%        104%        34%        102%   
  1  

Based on average shares outstanding.

  2  

Dividends and distributions are determined in accordance with federal income tax regulations.

  3  

Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

  4  

Includes payment received from affiliate, which had no impact on the Fund’s Class R Shares total return.

  5  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.53%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  6  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.60%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  7  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.61%, although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

  8  

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds although the ratio does include the Fund’s share of the Master Portfolios’ allocated expenses and/or net investment income.

 

See Notes to Financial Statements.
                 
      BLACKROCK FUNDS II       OCTOBER 31, 2012    57

 

 

Notes to Financial Statements

 

 

1. Organization and Significant Accounting Policies:

BlackRock Funds II (the “Trust”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Trust is organized as a Massachusetts business trust. LifePath Active 2015 Portfolio (formerly BlackRock Prepared Portfolio 2015), LifePath Active 2020 Portfolio (formerly BlackRock Prepared Portfolio 2020), LifePath Active 2025 Portfolio (formerly BlackRock Prepared Portfolio 2025), LifePath Active 2030 Portfolio (formerly BlackRock Prepared Portfolio 2030), LifePath Active 2035 Portfolio (formerly BlackRock Prepared Portfolio 2035), LifePath Active 2040 Portfolio (formerly BlackRock Prepared Portfolio 2040), LifePath Active 2045 Portfolio (formerly BlackRock Prepared Portfolio 2045) and LifePath Active 2050 Portfolio (formerly BlackRock Prepared Portfolio 2050) (collectively, the “Funds” or individually, a “Fund”) are each a series of the Trust. The Funds are classified as non-diversified. The Funds generally will invest in other registered investment companies (each an “Underlying Fund” and collectively the “Underlying Funds”) that are managed by subsidiaries of BlackRock, Inc. (“BlackRock”) and its affiliates and affiliates of the Funds. The Funds may also invest in Master Portfolios that are managed by subsidiaries of BlackRock (the “Master Portfolios”). As of October 31, 2012, LifePath Active 2015 Portfolio’s, LifePath Active 2020 Portfolio’s and LifePath Active 2025 Portfolio’s investment in the Master Total Return Portfolio of Master Bond LLC (the “Master Total Return Portfolio”) was 43.5%, 38.6% and 31.6% respectively, of each Fund’s net assets. The financial statements of the Master Total Return Portfolio, including the Schedule of Investments, should be read in conjunction with LifePath Active 2015 Portfolio’s, LifePath Active 2020 Portfolio’s and LifePath Active 2025 Portfolio’s financial statements. The Master Total Return Portfolio’s financial statements, included in filings under Master Bond LLC, are available, without charge, on the SEC’s website at http://www.sec.gov. By owning shares of the Underlying Funds and investing in the Master Portfolios, each of the Funds indirectly invest, to varying degrees, in securities of US and non-US companies, including small and medium-sized companies, and in fixed income securities. Equity funds may also include funds that invest in real estate related and other similar securities. Fixed income funds may include funds that invest in domestic and non-US bonds, US Government securities, high yield (or junk) bonds, and cash or money market instruments. In addition, the Underlying Funds and Master Portfolios may invest in derivatives. The Funds’ financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”), which may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. Each Fund offers multiple classes of shares. Class K Shares (formerly Institutional Shares) are sold without a sales charge and only to certain eligible investors. Investor A Shares are generally sold with a front-end sales charge. Class R Shares are sold without a sales charge and only to certain retirement and other similar plans. All classes of shares have identical voting, dividend, liquidation and other rights and the same terms and conditions, except that Investor A and Class R Shares bear certain expenses related to the shareholder servicing of such shares, and Class R Shares also bear

certain expenses related to the distribution of such shares. Each class has exclusive voting rights with respect to matters relating to its shareholder servicing and distribution expenditures.

On September 11, 2012, the Board of Trustees of the Trust (the “Board”) approved a change in the name of the Funds to LifePath Active Portfolios. The Board also determined to redesignate each Fund’s Institutional Shares as Class K Shares and launch a new Institutional Share Class. These changes became effective on November 27, 2012.

The following is a summary of significant accounting policies followed by the Funds:

Valuation: US GAAP defines fair value as the price the Funds would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The Funds fair value their financial instruments at market value. The BlackRock Global Valuation Methodologies Committee is the committee formed by management to develop global pricing policies and procedures and to provide oversight of the pricing function for the Funds for all financial instruments. The market value of the Funds’ investments in the Underlying Funds is based on the published NAV of each Underlying Fund computed as of the close of regular trading on the New York Stock Exchange (“NYSE”) on days when the NYSE is open. The Funds record their proportionate investment in the Master Portfolios at fair value which is based upon their pro rata ownership in the net assets of the Master Portfolios.

Investment Transactions and Investment Income: For financial reporting purposes, investment transactions are recorded on the dates the transactions are entered into (the trade dates). Realized gains and losses on investment transactions are determined on the identified cost basis. Dividend income is recorded on the ex-dividend dates. Interest income is recognized on the accrual basis. The Funds record their proportionate share of the Master Portfolios’ income, expenses and realized and unrealized gains and losses. Income and realized and unrealized gains and losses are allocated daily to each class based on its relative net assets. In addition to the direct expenses borne by the shareholders of the Funds, the shareholders also bear indirectly a proportionate share of the expenses of the Underlying Funds in which the Funds invest. Capital gain distributions from the Underlying Funds are recorded as realized gains.

Dividends and Distributions: Dividends and distributions paid by the Funds are recorded on the ex-dividend dates. The portion of distributions that exceeds a Fund’s current and accumulated earnings and profits, which are measured on a tax basis, will constitute a nontaxable return of capital. Distributions in excess of a Fund’s taxable income and net capital gains, but not in excess of a Fund’s earnings and profits, will be taxable to shareholders as ordinary income and will not constitute a non-taxable return of capital. Capital losses carried forward from years beginning before 2011 do not reduce earnings and profits, even if such carried forward losses offset current year realized gains. The character

 

 

                 
58       BLACKROCK FUNDS II       OCTOBER 31, 2012   

 

 

Notes to Financial Statements (continued)

 

 

and timing of dividends and distributions are determined in accordance with federal income tax regulations, which may differ from US GAAP.

Income Taxes: It is the Funds’ policy to comply with the requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies and to distribute substantially all of their taxable income to their shareholders. Therefore, no federal income tax provision is required.

Each Fund files US federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Funds’ US federal tax returns remains open for each of the four years ended October 31, 2012. The statutes of limitations on each Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction. Management does not believe there are any uncertain tax positions that require recognition of a tax liability.

Recent Accounting Standard: In December 2011, the Financial Accounting Standards Board issued guidance that will expand current disclosure requirements on the offsetting of certain assets and liabilities. The new disclosures will be required for investments and derivative financial instruments subject to master netting or similar agreements which are eligible for offset in the Statements of Assets and Liabilities and will require an entity to disclose both gross and net information about such investments and transactions in the financial statements. The guidance is effective for financial statements with fiscal years beginning on or after January 1, 2013, and interim periods within those fiscal years. Management is evaluating the impact of this guidance on the Funds’ financial statement disclosures.

Other: Expenses directly related to a Fund or its classes are charged to that Fund or class. Other operating expenses shared by several funds are pro rated among those funds on the basis of relative net assets or other appropriate methods. Expenses directly related to a Fund and other shared expenses pro rated to a Fund are allocated daily to each class based on its relative net assets or other appropriate methods.

The Funds have an arrangement with the custodian whereby fees may be reduced by credits earned on uninvested cash balances, which, if applicable, are shown as fees paid indirectly in the Statements of Operations. The custodian imposes fees on overdrawn cash balances, which can be offset by accumulated credits earned or may result in additional custody charges.

2. Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. (“PNC”) is the largest stockholder and an affiliate, for 1940 Act purposes, of BlackRock.

The Trust, on behalf of the Funds, entered into an Investment Advisory Agreement with the Manager, the Funds’ investment advisor, an indirect, wholly owned subsidiary of BlackRock, to provide investment advisory

and administration services. The Manager does not receive any management fees from the Funds for its investment advisory services.

The Trust, on behalf of the Funds, entered into a Distribution Agreement and Distribution and Service Plan with BlackRock Investments, LLC (“BRIL”), an affiliate of the Manager. Pursuant to the Distribution and Service Plan and in accordance with Rule 12b-1 under the 1940 Act, the Funds pay BRIL ongoing service and distribution fees. The fees are accrued daily and paid monthly at annual rates based upon the average daily net assets of the shares of each Fund as follows:

 

      

Service

Fee

   

Distribution

Fee

 
    

Investor A

     0.25 %      –   

Class R

     0.25 %      0.25 % 

Pursuant to sub-agreements with BRIL, broker-dealers and BRIL provide shareholder servicing and distribution services to each Fund. The ongoing service and/or distribution fee compensates BRIL and each broker-dealer for providing shareholder servicing and/or distribution related services to Investor A and Class R shareholders.

Pursuant to written agreements, certain financial intermediaries, some of which may be affiliates, provide the Funds with sub-accounting, recordkeeping, sub-transfer agency and other administrative services with respect to sub-accounts they service. For these services, these entities receive an annual fee per shareholder account, which will vary depending on share class and/or net assets.

The Manager maintains a call center, which is responsible for providing certain shareholder services to the Funds, such as responding to shareholder inquiries and processing transactions based upon instructions from shareholders with respect to the subscription and redemption of Fund shares. For the year ended October 31, 2012, each Fund reimbursed the Manager the following amounts for costs incurred in running the call center, which are included in transfer agent — class specific in the Statements of Operations:

 

       Class K      Investor A      Class R      Total  

LifePath Active 2015 Portfolio

   $ 15       $ 189       $ 57       $ 261   

LifePath Active 2020 Portfolio

   $ 9       $ 187       $ 68       $ 264   

LifePath Active 2025 Portfolio

   $ 15       $ 175       $ 62       $ 252   

LifePath Active 2030 Portfolio

   $ 17       $ 170       $ 67       $ 254   

LifePath Active 2035 Portfolio

   $ 17       $ 146       $ 44       $ 207   

LifePath Active 2040 Portfolio

   $ 17       $ 206       $ 38       $ 261   

LifePath Active 2045 Portfolio

   $ 27       $ 134       $ 26       $ 187   

LifePath Active 2050 Portfolio

   $ 20       $ 131       $ 28       $ 179   

BNY Mellon Investment Servicing (US) Inc. (“BNYMIS”) and the Manager act as co-administrators for the Funds. For these services, the co-administrators receive a combined administration fee computed daily and payable monthly, based on a percentage of the average daily net

 

 

                 
      BLACKROCK FUNDS II       OCTOBER 31, 2012    59

 

 

Notes to Financial Statements (continued)

 

 

assets of each Fund. The combined administration fee is paid at the following annual rates: 0.075% of the first $500 million, 0.065% of the next $500 million and 0.055% of the average daily net assets in excess of $1 billion. In addition, each of the share classes is charged an administration fee based on the following percentages of average daily net assets of each respective class: 0.025% of the first $500 million, 0.015% of the next $500 million and 0.005% of the average daily net assets in excess of $1 billion. In addition, BNYMIS and the Manager may have, at their discretion, voluntarily waived all or any portion of their administration fees for a Fund or a share class which are included in administration fees waived and administration fees waived – class specific in the Statements of Operations.

The Manager contractually agreed to waive and/or reimburse fees or expenses in order to limit expenses as a percentage of average daily net assets to 0.00%, 0.50%, and 0.74% for Class K, Investor A, and Class R shares, respectively, of each Fund. The expense limits exclude interest expense, dividend expense, acquired fund fees and expenses and certain other fund expenses.

The Manager has agreed not to reduce or discontinue this contractual waiver or reimbursement prior to March 1, 2013 unless approved by the Board, including a majority of the Independent Trustees.

These amounts are included in administration fees waived and shown as administration fees waived – class specific, transfer agent fees waived – class specific, transfer agent fees reimbursed – class specific and expenses reimbursed by Manager, respectively, in the Statements of Operations. For the year ended October 31, 2012, the amounts included in administration fees waived were as follows:

 

LifePath Active 2015 Portfolio

   $ 11,007   

LifePath Active 2020 Portfolio

   $ 13,764   

LifePath Active 2025 Portfolio

   $ 9,322   

LifePath Active 2030 Portfolio

   $ 12,774   

LifePath Active 2035 Portfolio

   $ 5,962   

LifePath Active 2040 Portfolio

   $ 7,359   

LifePath Active 2045 Portfolio

   $ 3,424   

LifePath Active 2050 Portfolio

   $ 2,661   

Additionally, the Manager has agreed in perpetuity to an expense limit of 1.00%, 1.50%, and 1.74% for Class K, Investor A, and Class R shares, respectively, of each fund. This agreement has no effective termination date unless approved by the Board, including a majority of the Independent Trustees.

If during a Fund’s fiscal year the operating expenses of a share class, that at any time during the prior two fiscal years received a waiver or reimbursement from the

Manager, are less than the expense limit for that share class, the Manager is entitled to be reimbursed by such share class up to the lesser of (a) the amount of fees waived or expenses reimbursed during those prior two fiscal years under the agreement and (b) the amount by which the expense limit for that share class exceeds the operating expenses of the share class for the current fiscal year, provided that: (1) the Fund of which the share class is a part has more than $50 million in assets for the fiscal year and (2) the Manager or an affiliate continues to serve as the Fund’s investment advisor or administrator. In the event the expense limit for a share class is changed subsequent to a fiscal year in which the Manager becomes entitled to reimbursement for fees waived or reimbursed, the amount available to reimburse the Manager shall be calculated by reference to the expense limit for that share class in effect at the time the Manager became entitled to receive such reimbursement, rather than the subsequently changed expense limit for that share class.

On October 31, 2012, the amounts subject to possible future recoupment under the expense limitation agreement are as follows:

 

       Expiring
October 31, 		 
       2013      2014  

LifePath Active 2015 Portfolio

   $ 140,284       $ 140,221   

LifePath Active 2020 Portfolio

   $ 144,724       $ 149,913   

LifePath Active 2025 Portfolio

   $ 134,845       $ 136,360   

LifePath Active 2030 Portfolio

   $ 143,931       $ 146,730   

LifePath Active 2035 Portfolio

   $ 133,946       $ 132,018   

LifePath Active 2040 Portfolio

   $ 137,737       $ 137,296   

LifePath Active 2045 Portfolio

   $ 128,315       $ 129,006   

LifePath Active 2050 Portfolio

   $ 131,958       $ 133,722   

The following waivers previously recorded by the Funds, which were subject to recoupment by the Manager, expired on October 31, 2012:

 

LifePath Active 2015 Portfolio

   $ 120,835   

LifePath Active 2020 Portfolio

   $ 129,568   

LifePath Active 2025 Portfolio

   $ 121,203   

LifePath Active 2030 Portfolio

   $ 126,069   

LifePath Active 2035 Portfolio

   $ 115,227   

LifePath Active 2040 Portfolio

   $ 122,389   

LifePath Active 2045 Portfolio

   $ 109,246   

LifePath Active 2050 Portfolio

   $ 112,953   

For the year ended October 31, 2012, affiliates earned underwriting discounts, direct commissions and dealer concessions on sales of each Fund’s Investor A Shares as follows:

 

LifePath Active 2015 Portfolio

   $ 736   

LifePath Active 2020 Portfolio

   $ 1,075   

LifePath Active 2025 Portfolio

   $ 1,809   

LifePath Active 2030 Portfolio

   $ 1,275   

LifePath Active 2035 Portfolio

   $ 559   

LifePath Active 2040 Portfolio

   $ 502   

LifePath Active 2045 Portfolio

   $ 1,841   

LifePath Active 2050 Portfolio

   $ 272   

Certain officers and/or trustees of the Trust are officers and/or directors of BlackRock or its affiliates. The Funds reimburse the Manager for a portion of the compensation paid to the Trust’s Chief Compliance Officer.

 

 

                 
60       BLACKROCK FUNDS II       OCTOBER 31, 2012   

 

 

Notes to Financial Statements (continued)

 

 

3. Investments:

Purchases and sales of investments, excluding short-term securities, for the year ended October 31, 2012, were as follows:

 

       Purchases      Sales  

LifePath Active 2015 Portfolio

   $ 13,315,414       $ 12,496,155   

LifePath Active 2020 Portfolio

   $ 12,625,063       $ 12,246,866   

LifePath Active 2025 Portfolio

   $ 10,527,323       $ 9,247,636   

LifePath Active 2030 Portfolio

   $ 13,926,434       $ 12,265,880   

LifePath Active 2035 Portfolio

   $ 5,965,420       $ 7,001,288   

LifePath Active 2040 Portfolio

   $ 8,335,516       $ 6,529,450   

LifePath Active 2045 Portfolio

   $ 5,456,486       $ 4,603,520   

LifePath Active 2050 Portfolio

   $ 3,558,867       $ 2,834,188   

4. Income Tax Information:

US GAAP requires that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. These reclassifications have no effect on net assets or net asset values per share. The following permanent differences as of October 31, 2012 attributable to foreign currency transactions and distributions received from a regulated investment company were reclassified to the following accounts:

 

       LifePath
Active 2015
Portfolio 		    LifePath
Active 2020
Portfolio 		    LifePath
Active 2025
Portfolio 		 

Undistributed net investment income

   $ (7,765 )    $ (7,017 )    $ (4,024 ) 

Accumulated net realized gain

   $ 7,765      $ 7,017      $ 4,024   
                          

 

       LifePath
Active 2030
Portfolio 		    LifePath
Active 2035
Portfolio 		    LifePath
Active 2040
Portfolio 		 

Undistributed net investment income

   $ (1,323 )    $ 3,532      $ 2,399   

Accumulated net realized gain

   $ 1,323      $ (3,532 )    $ (2,399 ) 
                          

 

       LifePath
Active 2045
Portfolio 		    LifePath
Active 2050
Portfolio 		 

Undistributed net investment income

   $ 49      $ 1,075   

Accumulated net realized gain

   $ (49 )    $ (1,075 ) 
                  

The tax character of distributions paid during the fiscal years ended October 31, 2012 and October 31, 2011 was as follows:

 

       LifePath
Active 2015
Portfolio 		     LifePath
Active 2020
Portfolio 		     LifePath
Active 2025
Portfolio 		 

Ordinary income

        

10/31/12

   $ 577,510       $ 538,153       $ 511,681   

10/31/11

   $ 230,001       $ 265,002       $ 160,002   

Long-term capital gains

        

10/31/12

     254,195         393,025         252,077   

Total

        

10/31/12

   $ 831,705       $ 931,178       $ 763,758   
  

 

 

 

10/31/11

   $ 230,001       $ 265,002       $ 160,002   
  

 

 

 
       LifePath
Active 2030
Portfolio 		     LifePath
Active 2035
Portfolio 		     LifePath
Active 2040
Portfolio 		 

Ordinary income

        

10/31/12

   $ 772,985       $ 130,899       $ 315,849   

10/31/11

   $ 155,001       $ 52,002       $ 54,002   

Long-term capital gains

        

10/31/12

     305,701         107,589         125,812   

Total

                          

10/31/12

   $ 1,078,686       $ 238,488       $ 441,661   
  

 

 

 

10/31/11

   $ 155,001       $ 52,002       $ 54,002   
  

 

 

 

 

       LifePath
Active 2045
Portfolio 		     LifePath
Active 2050
Portfolio 		 

Ordinary income

     

10/31/12

   $ 56,501       $ 121,371   

10/31/11

   $ 22,501       $ 21,400   

Long-term capital gains

     

10/31/12

     44,863         37,614   

10/31/11

     –         11,402   

Total

     

10/31/12

   $ 101,364       $ 158,985   
  

 

 

 

10/31/11

   $ 22,501       $ 32,802   
  

 

 

 

As of October 31, 2012, the tax components of accumulated net earnings were as follows:

 

       LifePath
Active 2015
Portfolio 		     LifePath
Active 2020
Portfolio 		     LifePath
Active 2025
Portfolio 		 

Undistributed ordinary income

   $ 292,971       $ 370,058       $ 216,820   

Undistributed long-term capital gains

     205,743         257,897         165,430   

Net unrealized gains 1

     1,243,310         1,766,427         1,248,454   

Total

   $ 1,742,024       $ 2,394,382       $ 1,630,704   
  

 

 

 

 

       LifePath
Active 2030
Portfolio 		     LifePath
Active 2035
Portfolio 		     LifePath
Active 2040
Portfolio 		 

Undistributed ordinary income

   $ 254,167       $ 99,239       $ 110,649   

Undistributed long-term capital gains

     237,341         160,090         152,394   

Net unrealized gains 1

     1,865,320         1,070,608         1,255,048   

Total

   $ 2,356,828       $ 1,329,937       $ 1,518,091   
  

 

 

 

 

     LifePath
Active 2045
Portfolio 		     LifePath
Active 2050
Portfolio 		 

Undistributed ordinary income

   $ 45,728       $ 44,459   

Undistributed long-term capital gains

     42,485         47,237   

Net unrealized gains 1

     548,876         455,916   

Total

   $ 637,089       $ 547,612   
  

 

 

 

 

  1  

The difference between book-basis and tax-basis net unrealized gains was attributable primarily to the tax deferral of losses on wash sales and the timing and recognition of partnership income.

 

 

                 
      BLACKROCK FUNDS II       OCTOBER 31, 2012    61

 

 

Notes to Financial Statements (continued)

 

 

As of October 31, 2012, gross unrealized appreciation and gross unrealized depreciation based on cost for federal income tax purposes were as follows:

 

      LifePath
Active 2015
Portfolio 		    LifePath
Active 2020
Portfolio 		    LifePath
Active 2025
Portfolio 		    LifePath
Active 2030
Portfolio 		 

Tax cost

  $ 16,299,761      $ 18,771,752      $ 13,507,055      $ 17,461,828   
 

 

 

 

Gross unrealized appreciation

  $ 1,978,470      $ 2,646,745      $ 1,898,822      $ 2,534,107   

Gross unrealized depreciation

    (735,160 )      (880,318 )      (650,368 )      (668,787 ) 
 

 

 

 

Net unrealized appreciation

  $ 1,243,310      $ 1,766,427      $ 1,248,454      $ 1,865,320   
 

 

 

 
       

                               
     

 

LifePath
Active 2035
Portfolio

    LifePath
Active 2040
Portfolio 		    LifePath
Active 2045
Portfolio 		    LifePath
Active 2050
Portfolio 		 

Tax cost

  $ 7,206,105      $ 10,657,855      $ 4,896,276      $ 3,896,232   

Gross unrealized appreciation

  $ 1,347,818      $ 1,654,646      $ 740,213      $ 591,749   

Gross unrealized depreciation

    (277,210 )      (399,598 )      (191,337 )      (135,833 ) 

Net unrealized appreciation

  $ 1,070,608      $ 1,255,048      $ 548,876      $ 455,916   

5. Borrowings:

The Trust, on behalf of the Funds, along with certain other funds managed by the Manager and its affiliates, is a party to a $500 million credit agreement with a group of lenders, which expires in November 2012 and was subsequently renewed until November 2013. The Funds may borrow under the credit agreement to fund shareholder redemptions. Effective November 2010 to November 2011, the credit agreement had the following terms: a commitment fee of 0.08% per annum based on the Funds’ pro rata share of the unused portion of the credit agreement and interest at a rate equal to the higher of (a) the one-month London Interbank Offered Rate (“LIBOR”) plus 1.00% per annum or (b) the Fed Funds rate plus 1.00% per annum on amounts borrowed. In addition, the Funds paid administration and arrangement fees which were allocated to the Funds based on their net assets as of October 31, 2010. The credit agreement, which expired in November 2011, was renewed until November 2012. Effective November 2011 to November 2012, the credit agreement has the following terms: a commitment fee of 0.065% per annum based on the Fund’s pro rata share of the unused portion of the credit agreement and interest at a rate equal to the higher of (a) the one-month LIBOR plus 0.80% per annum or (b) the Fed Funds rate plus 0.80% per annum on amounts borrowed. In addition, the Funds paid administration and arrangement fees which were allocated to the Funds’ based on their net assets as of October 31, 2011. The Funds did not borrow under the credit agreement during the year ended October 31, 2012.

6. Market and Credit Risk:

In the normal course of business, through their investments in the Underlying Funds and Master Portfolios, the Funds enter into transactions where risks exist due to fluctuations in the market (market risk) or failure of the issuer of a security to meet all its obligations (issuer credit risk). The value of securities held by the Funds may decline in response to certain events, including those directly involving the issuers whose securities are owned by the Funds; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; and currency and interest rate and price fluctuations. Similar to issuer credit risk, the Funds may be exposed to counterparty credit risk, or the risk that an entity with which the Funds have unsettled or open transactions may fail to or be unable to perform on its commitments. The Funds manage counterparty credit risk by entering into transactions only with counterparties that they believe have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Funds to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Funds’ exposure to market, issuer and counterparty credit risks with respect to these financial assets is generally approximated by their value recorded in the Statements of Assets and Liabilities, less any collateral held by the Funds.

 

 

                 
62       BLACKROCK FUNDS II       OCTOBER 31, 2012   

 

 

Notes to Financial Statements (continued)

 

 

7. Capital Share Transactions:

Transactions in capital shares for each class were as follows:

 

    

Year Ended

October 31, 2012

         

Year Ended

October 31, 2011

 

LifePath Active 2015 Portfolio

     Shares         Amount              Shares         Amount   

Class K

                                        

Shares sold

     3,357         $34,984            5,842         $ 60,104   

Shares issued in reinvestment of dividends and distributions

     360         3,486            136         1,389   

Shares redeemed

     (61)         (629)            (1,999)         (21,073)   

Net increase

     3,656         $37,841            3,979         $ 40,420   
              

Investor A

                                        

Shares sold

     332,415         $ 3,431,287            493,727         $ 5,100,091   

Shares issued in reinvestment of dividends and distributions

     51,210         493,147            11,593         118,138   

Shares redeemed

     (354,476)         (3,592,487)            (209,753)         (2,156,794)   

Net increase

     29,149         $    331,947            295,567         $ 3,061,435   
              

Class R

                                        

Shares sold

     399,013         $ 4,151,002            409,447         $ 4,227,208   

Shares issued in reinvestment of dividends and distributions

     33,689         324,760            10,736         109,406   

Shares redeemed

     (276,740)         (2,821,541)            (369,194)         (3,876,850)   

Net increase

     155,962         $ 1,654,221            50,989         $    459,764   
              

Total Net Increase

     188,767         $ 2,024,009              350,535         $ 3,561,619   
              

LifePath Active 2020 Portfolio

              

Class K

                                        

Shares sold

     22,370         $233,264            5,236         $53,383   

Shares issued in reinvestment of dividends and distributions

     1,832         17,454            521         5,246   

Shares redeemed

     (114)         (1,118)            (101)         (1,010)   

Net increase

     24,088         $249,600            5,656         $57,619   
              

Investor A

                                        

Shares sold

     349,400         $ 3,548,515            803,868         $ 8,168,536   

Shares issued in reinvestment of dividends and distributions

     53,486         508,122            15,824         158,712   

Shares redeemed

     (337,320)         (3,378,170)            (685,627)         (7,146,354)   

Net increase

     65,566         $    678,467            134,065         $ 1,180,894   
              

Class R

                                        

Shares sold

     414,458         $ 4,136,663            577,503         $ 5,893,732   

Shares issued in reinvestment of dividends and distributions

     41,981         396,302            9,853         98,233   

Shares redeemed

     (373,138)         (3,693,839)            (509,552)         (5,178,213)   

Net increase

     83,301         $    839,126            77,804         $    813,752   
              

Total Net Increase

     172,955         $ 1,767,193              217,525         $ 2,052,265   

 

                 
      BLACKROCK FUNDS II       OCTOBER 31, 2012    63

 

 

Notes to Financial Statements (continued)

 

 

 

       Year Ended
October 31, 2012 		         Year Ended
October 31, 2011 		 

LifePath Active 2025 Portfolio

     Shares        Amount             Shares        Amount   

Class K

                                     

Shares sold

     9,659      $ 95,382           5,467      $ 54,170   

Shares issued in reinvestment of dividends and distributions

     638        5,844           135        1,341   

Shares redeemed

     (3,828 )      (37,358 )         (594 )      (5,902 ) 

Net increase

     6,469      $ 63,868           5,008      $ 49,609   
           

Investor A

                                     

Shares sold

     329,243      $ 3,240,747           410,488      $ 4,111,171   

Shares issued in reinvestment of dividends and distributions

     45,758        417,770           6,766        66,711   

Shares redeemed

     (214,147 )      (2,096,966 )         (245,524 )      (2,420,315 ) 

Net increase

     160,854      $ 1,561,551           171,730      $ 1,757,567   
           

Class R

                                     

Shares sold

     376,975      $ 3,663,452           236,248      $ 2,361,862   

Shares issued in reinvestment of dividends and distributions

     35,474        322,459           9,039        88,580   

Shares redeemed

     (310,205 )      (3,001,797 )         (335,425 )      (3,350,564 ) 

Net increase (decrease)

     102,244      $ 984,114           (90,138 )    $ (900,122 ) 
           

Total Net Increase

     269,567      $ 2,609,533             86,600      $ 907,054   
           

LifePath Active 2030 Portfolio

           

Class K

                                     

Shares sold

     5,870      $ 56,827           10,571      $ 107,102   

Shares issued in reinvestment of dividends and distributions

     2,386        21,447           382        3,740   

Shares redeemed

     (1,303 )      (11,993 )         (6,607 )      (68,630 ) 

Net increase

     6,953      $ 66,281           4,346      $ 42,212   
           

Investor A

                                     

Shares sold

     432,364      $ 4,149,324           593,001      $ 5,914,126   

Shares issued in reinvestment of dividends and distributions

     58,192        520,232           7,308        71,172   

Shares redeemed

     (371,105 )      (3,538,664 )         (498,418 )      (5,002,088 ) 

Net increase

     119,451      $ 1,130,892           101,891      $ 983,210   
           

Class R

                                     

Shares sold

     428,480      $ 4,080,711           384,124      $ 3,803,407   

Shares issued in reinvestment of dividends and distributions

     55,899        498,066           7,691        74,678   

Shares redeemed

     (312,397 )      (2,953,979 )         (450,333 )      (4,481,782 ) 

Net increase (decrease)

     171,982      $ 1,624,798           (58,518 )    $ (603,697 ) 
           

Total Net Increase

     298,386      $ 2,821,971             47,719      $ 421,725   

 

                 
64       BLACKROCK FUNDS II       OCTOBER 31, 2012   

 

 

Notes to Financial Statements (continued)

 

 

     Year Ended
October 31, 2012 		         Year Ended
October 31, 2011 		 

LifePath Active 2035 Portfolio

     Shares        Amount             Shares        Amount   

Class K

                                     

Shares sold

     3,637      $ 35,563           27,755      $ 264,043   

Shares issued in reinvestment of dividends and distributions

     563        5,114           168        1,618   

Shares redeemed

     (2,875 )      (27,154 )         (13,700 )      (134,759 ) 

Net increase

     1,325      $ 13,523           14,223      $ 130,902   
           

Investor A

                                     

Shares sold

     221,281      $ 2,135,696           275,419      $ 2,713,194   

Shares issued in reinvestment of dividends and distributions

     16,389        148,153           2,763        26,446   

Shares redeemed

     (276,653 )      (2,671,883 )         (114,340 )      (1,124,270 ) 

Net increase (decrease)

     (38,983 )    $ (388,034 )         163,842      $ 1,615,370   
           

Class R

                                     

Shares sold

     192,060      $ 1,824,410           225,351      $ 2,167,097   

Shares issued in reinvestment of dividends and distributions

     9,167        82,497           2,473        23,542   

Shares redeemed

     (225,228 )      (2,131,339 )         (345,298 )      (3,363,969 ) 

Net decrease

     (24,001 )    $ (224,432 )         (117,474 )    $ (1,173,330 ) 

    

                                     

Total Net Increase (Decrease)

     (61,659 )    $ (598,943 )         60,591      $ 572,942   
           

LifePath Active 2040 Portfolio

                                     

Class K

                                     

Shares sold

     18,311      $ 181,381           2,375      $ 23,452   

Shares issued in reinvestment of dividends and distributions

     1,143        10,282           228        2,229   

Shares redeemed

     (2,523 )      (23,962 )         (1,303 )      (13,339 ) 

Net increase

     16,931      $ 167,701           1,300      $ 12,342   
           

Investor A

                                     

Shares sold

     261,567      $ 2,508,310           273,791      $ 2,703,163   

Shares issued in reinvestment of dividends and distributions

     29,819        266,888           3,120        30,230   

Shares redeemed

     (209,277 )      (1,972,622 )         (233,929 )      (2,286,789 ) 

Net increase

     82,109      $ 802,576           42,982      $ 446,604   
           

Class R

                                     

Shares sold

     356,797      $ 3,421,624           264,837      $ 2,565,369   

Shares issued in reinvestment of dividends and distributions

     18,177        162,319           2,197        21,218   

Shares redeemed

     (205,268 )      (1,954,716 )         (289,113 )      (2,845,283 ) 

Net increase (decrease)

     169,706      $ 1,629,227           (22,079 )    $ (258,696 ) 

    

                                     

Total Net Increase

     268,746      $ 2,599,504           22,203      $ 200,250   

 

                 
      BLACKROCK FUNDS II       OCTOBER 31, 2012    65

 

 

Notes to Financial Statements (concluded)

 

 

     Year Ended
October 31, 2012 		         Year Ended
October 31, 2011 		 

LifePath Active 2045 Portfolio

     Shares        Amount             Shares        Amount   

Class K

                                     

Shares sold

     8,209      $ 82,497           10,049      $ 102,876   

Shares issued in reinvestment of dividends and distributions

     401        3,731           21        207   

Shares redeemed

     (1,001 )      (10,002 )         (55 )      (547 ) 

Net increase

     7,609      $ 76,226           10,015      $ 102,536   
           

Investor A

                                     

Shares sold

     139,942      $ 1,389,579           97,145      $ 975,150   

Shares issued in reinvestment of dividends and distributions

     4,631        42,748           831        8,074   

Shares redeemed

     (59,983 )      (579,360 )         (27,783 )      (275,157 ) 

Net increase

     84,590      $ 852,967           70,193      $ 708,067   
           

Class R

                                     

Shares sold

     154,335      $ 1,518,771           100,415      $ 978,571   

Shares issued in reinvestment of dividends and distributions

     5,858        53,771           1,435        13,866   

Shares redeemed

     (140,138 )      (1,388,473 )         (102,222 )      (1,013,792 ) 

Net increase (decrease)

     20,055      $ 184,069           (372 )    $ (21,355 ) 

    

                                     

Total Net Increase

     112,254      $ 1,113,262           79,836      $ 789,248   
           

LifePath Active 2050 Portfolio

           

Class K

                                     

Shares sold

     6,382      $ 59,861           3,589      $ 33,776   

Shares issued in reinvestment of dividends and distributions

     442        3,770           211        1,941   

Shares redeemed

     (656 )      (6,183 )         (11,234 )      (110,322 ) 

Net increase (decrease)

     6,168      $ 57,448           (7,434 )    $ (74,605 ) 
           

Investor A

                                     

Shares sold

     106,924      $ 969,632           90,858      $ 851,189   

Shares issued in reinvestment of dividends and distributions

     8,515        72,031           1,292        11,846   

Shares redeemed

     (54,247 )      (487,103 )         (61,290 )      (574,035 ) 

Net increase

     61,192      $ 554,560           30,860      $ 289,000   

    

                                     

Class R

                                     

Shares sold

     142,557      $ 1,292,528           106,377      $ 978,248   

Shares issued in reinvestment of dividends and distributions

     9,418        79,584           1,971        18,014   

Shares redeemed

     (108,061 )      (970,736 )         (93,212 )      (871,452 ) 

Net increase

     43,914      $ 401,376           15,136      $ 124,810   

    

                                     

Total Net Increase

     111,274      $ 1,013,384           38,562      $ 339,205   

8. Subsequent Events:

Management’s evaluation of the impact of all subsequent events on the Funds’ financial statements was completed through the date the financial statements were issued and the following items were noted: On November 13, 2012, the Board approved certain changes to the contractual expense caps of the Funds in order to decrease the net expenses applicable to the Funds’ Investor A and Class R Shares by 0.15%. The lower expense caps became effective on November 27, 2012.

 

                 
66       BLACKROCK FUNDS II       OCTOBER 31, 2012   

 

 

Report of Independent Registered Public Accounting Firm

 

 

To the Board of Trustees of BlackRock Funds II and Shareholders of LifePath Active 2015 Portfolio (formerly known as BlackRock Prepared Portfolio 2015), LifePath Active 2020 Portfolio (formerly known as BlackRock Prepared Portfolio 2020), LifePath Active 2025 Portfolio (formerly known as BlackRock Prepared Portfolio 2025), LifePath Active 2030 Portfolio (formerly known as BlackRock Prepared Portfolio 2030), LifePath Active 2035 Portfolio (formerly known as BlackRock Prepared Portfolio 2035), LifePath Active 2040 Portfolio (formerly known as BlackRock Prepared Portfolio 2040), LifePath Active 2045 Portfolio (formerly known as BlackRock Prepared Portfolio 2045) and LifePath Active 2050 Portfolio (formerly known as BlackRock Prepared Portfolio 2050):

We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of the LifePath Active 2015 Portfolio (formerly known as BlackRock Prepared Portfolio 2015), LifePath Active 2020 Portfolio (formerly known as BlackRock Prepared Portfolio 2020), LifePath Active 2025 Portfolio (formerly known as BlackRock Prepared Portfolio 2025), LifePath Active 2030 Portfolio (formerly known as BlackRock Prepared Portfolio 2030), LifePath Active 2035 Portfolio (formerly known as BlackRock Prepared Portfolio 2035), LifePath Active 2040 Portfolio (formerly known as BlackRock Prepared Portfolio 2040), LifePath Active 2045 Portfolio (formerly known as BlackRock Prepared Portfolio 2045) and LifePath Active 2050 Portfolio (formerly known as BlackRock Prepared Portfolio 2050) (collectively, the “Funds”), each a series of BlackRock Funds II, as of October 31, 2012, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2012, by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the Funds as of October 31, 2012, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP

Philadelphia, Pennsylvania

December 21, 2012

 

 

 

 

Important Tax Information (Unaudited)

 

The following information is provided with respect to the ordinary income distributions paid by the Funds during the fiscal year ended October 31, 2012:

       Payable
Date 		   Qualified Dividend
Income for
Individuals 1 		  Dividends Received
Deduction for
Corporations 1

LifePath Active 2015 Portfolio

       12/27/11          22.30 %       16.97 %

LifePath Active 2020 Portfolio

       12/27/11          31.18 %       23.78 %

LifePath Active 2025 Portfolio

       12/27/11          24.04 %       18.62 %

LifePath Active 2030 Portfolio

       12/27/11          25.45 %       19.73 %

LifePath Active 2035 Portfolio

       12/27/11          81.29 %       62.02 %

LifePath Active 2040 Portfolio

       12/27/11          35.40 %       26.84 %

LifePath Active 2045 Portfolio

       12/27/11          82.80 %       61.51 %

LifePath Active 2050 Portfolio

       12/27/11          32.53 %       24.58 %

 

1

The Funds hereby designate the percentage indicated above or the maximum amount allowable by law.

Additionally, the Funds distributed long-term capital gains per share to shareholders of record on December 23, 2011 as follows:

       Long-Term
Capital Gains

LifePath Active 2015 Portfolio

   $0.181100

LifePath Active 2020 Portfolio

   $0.223552

LifePath Active 2025 Portfolio

   $0.225056

LifePath Active 2030 Portfolio

   $0.188518

LifePath Active 2035 Portfolio

   $0.127476

LifePath Active 2040 Portfolio

   $0.138347

LifePath Active 2045 Portfolio

   $0.110191

LifePath Active 2050 Portfolio

   $0.105713

 

                 
      BLACKROCK FUNDS II       OCTOBER 31, 2012    67

  

 

Disclosure of Investment Advisory Agreement

  

 

The Board of Trustees (the “Board,” and the members of which are referred to as “Board Members”) of LifePath ® Active 2015 Portfolio (the “2015 Fund”), LifePath ® Active 2020 Portfolio (the “2020 Fund”), LifePath ® Active 2025 Portfolio (the “2025 Fund”), LifePath ® Active 2030 Portfolio (the “2030 Fund”), LifePath ® Active 2035 Portfolio (the “2035 Fund”), LifePath ® Active 2040 Portfolio (the “2040 Fund”), LifePath ® Active 2045 Portfolio (the “2045 Fund”) and LifePath ® Active 2050 Portfolio (the “2050 Fund”) (each, a “Fund,” and collectively, the “Funds”), each a series of BlackRock Funds II (the “Trust”), met on April 10, 2012 and May 8-9, 2012 to consider the approval of the Trust’s investment advisory agreement (the “Agreement”), on behalf of each Fund, with BlackRock Advisors, LLC (the “Manager,” or “BlackRock”), each Fund’s investment advisor.

Activities and Composition of the Board

The Board consists of thirteen individuals, ten of whom are not “interested persons” of the Trust as defined in the Investment Company Act of 1940, as amended (the “1940 Act”) (the “Independent Board Members”). The Board Members are responsible for the oversight of the operations of the Funds and perform the various duties imposed on the directors of investment companies by the 1940 Act. The Independent Board Members have retained independent legal counsel to assist them in connection with their duties. The Chairman of the Board is an Independent Board Member. The Board has established five standing committees: an Audit Committee, a Governance and Nominating Committee, a Compliance Committee, a Performance Oversight Committee and an Executive Committee, each of which is chaired by an Independent Board Member and composed of Independent Board Members (except for the Performance Oversight Committee and the Executive Committee, each of which also has one interested Board Member).

The Agreement

Pursuant to the 1940 Act, the Board is required to consider the continuation of the Agreement on an annual basis. The Board has four quarterly meetings per year, each extending over two days, and a fifth meeting to consider specific information surrounding the consideration of renewing the Agreement. In connection with this process, the Board assessed, among other things, the nature, scope and quality of the services provided to each Fund by BlackRock, its personnel and its affiliates, including investment management, administrative and shareholder services, oversight of fund accounting and custody, marketing services, risk oversight, compliance and assistance in meeting applicable legal and regulatory requirements.

The Board, acting directly and through its committees, considers at each of its meetings, and from time to time as appropriate, factors that are relevant to its annual consideration of the renewal of the Agreement, including the services and support provided by BlackRock to each Fund and its shareholders. Among the matters the Board considered were: (a) investment performance for one-, three- and five-year and/or since inception periods, as applicable, against peer funds, and applicable benchmarks, if any, as well as senior management’s and portfolio managers’ analysis of the reasons for any over performance or

underperformance against its peers and/or benchmark, as applicable; (b) fees, including advisory, administration, if applicable, and other amounts paid to BlackRock and its affiliates by each Fund for services, such as marketing and distribution, call center and fund accounting; (c) Fund operating expenses and how BlackRock allocates expenses to each Fund; (d) the resources devoted to, risk oversight of, and compliance reports relating to, implementation of each Fund’s investment objective, policies and restrictions; (e) each Fund’s compliance with its Code of Ethics and other compliance policies and procedures; (f) the nature, cost and character of non-investment management services provided by BlackRock and its affiliates; (g) BlackRock’s and other service providers’ internal controls and risk and compliance oversight mechanisms; (h) BlackRock’s implementation of the proxy voting policies approved by the Board; (i) the use of brokerage commissions and execution quality of portfolio transactions; (j) BlackRock’s implementation of each Fund’s valuation and liquidity procedures; (k) an analysis of management fees for products with similar investment objectives across the open-end fund, exchange traded fund (“ETF”), closed-end fund and institutional account product channels, as applicable; (l) BlackRock’s compensation methodology for its investment professionals and the incentives it creates; and (m) periodic updates on BlackRock’s business.

The Board has engaged in an ongoing strategic review with BlackRock of opportunities to consolidate funds and of BlackRock’s commitment to investment performance. In addition, the Board requested, to the extent reasonably possible, an analysis of the risk and return relative to selected funds in peer groups. BlackRock provides information to the Board in response to specific questions. These questions covered issues such as profitability, investment performance and management fee levels. The Board considered the importance of: (i) managing fixed income assets with a view toward preservation of capital; (ii) portfolio managers’ investments in the funds they manage; (iii) BlackRock’s controls surrounding the coding of quantitative investment models; and (iv) BlackRock’s oversight of relationships with third party service providers.

Board Considerations in Approving the Agreement

The Approval Process: Prior to the April 10, 2012 meeting, the Board requested and received materials specifically relating to the Agreement. The Board is engaged in a process with its independent legal counsel and BlackRock to review periodically the nature and scope of the information provided to better assist its deliberations. The materials provided in connection with the April meeting included (a) information independently compiled and prepared by Lipper, Inc. (“Lipper”) on Fund fees and expenses and the investment performance of each Fund as compared with a peer group of funds as determined by Lipper (collectively, “Peers”); (b) a discussion of fall-out benefits to BlackRock and its affiliates; (c) a general analysis provided by BlackRock concerning investment management fees (a combination of the advisory fee and the administration fee, if any) charged to other clients, such as institutional clients, ETFs and closed-end funds, under similar investment mandates, as well as the performance of such other clients, as applicable; (d) the existence, impact and sharing of potential economies of scale; (e) a summary of aggregate amounts paid by each Fund to BlackRock; (f)

 

 

                 
68       BLACKROCK FUNDS II       OCTOBER 31, 2012   

  

 

Disclosure of Investment Advisory Agreement (continued)

  
  

 

sales and redemption data regarding each Fund’s shares; and (g) if applicable, a comparison of management fees to similar BlackRock open-end funds, as classified by Lipper.

At an in-person meeting held on April 10, 2012, the Board reviewed materials relating to its consideration of the Agreement. As a result of the discussions that occurred during the April 10, 2012 meeting, and as a culmination of the Board’s year-long deliberative process, the Board presented BlackRock with questions and requests for additional information. BlackRock responded to these requests with additional written information in advance of the May 8-9, 2012 Board meeting.

At an in-person meeting held on May 8-9, 2012, the Board, including all the Independent Board Members, approved the continuation of the Agreement between the Manager and the Trust, on behalf of each Fund, for a one-year term ending June 30, 2013. In approving the continuation of the Agreement, the Board considered: (a) the nature, extent and quality of the services provided by BlackRock; (b) the investment performance of each Fund and BlackRock; (c) the advisory fee and the cost of the services and profits to be realized by BlackRock and its affiliates from their relationship with each Fund; (d) economies of scale; (e) fallout benefits to BlackRock as a result of its relationship with the Fund; and (f) other factors deemed relevant by the Board Members.

The Board also considered other matters it deemed important to the approval process, such as payments made to BlackRock or its affiliates relating to the distribution of Fund shares and securities lending, services related to the valuation and pricing of Fund portfolio holdings, direct and indirect benefits to BlackRock and its affiliates from their relationship with each Fund and advice from independent legal counsel with respect to the review process and materials submitted for the Board’s review. The Board noted the willingness of BlackRock personnel to engage in open, candid discussions with the Board. The Board did not identify any particular information as controlling, and each Board Member may have attributed different weights to the various items considered.

A. Nature, Extent and Quality of the Services Provided by BlackRock: The Board, including the Independent Board Members, reviewed the nature, extent and quality of services provided by BlackRock, including the investment advisory services and the resulting performance of each Fund. Throughout the year, the Board compared Fund performance to the performance of a comparable group of mutual funds and/or the performance of a relevant benchmark, if any. The Board met with BlackRock’s senior management personnel responsible for investment operations, including the senior investment officers. The Board also reviewed the materials provided by each Fund’s portfolio management team discussing Fund performance and the Fund’s investment objective, strategies and outlook.

The Board considered, among other factors, the number, education and experience of BlackRock’s investment personnel generally and each Fund’s portfolio management team, investments by portfolio managers in the funds they manage, BlackRock’s portfolio trading capabilities,

BlackRock’s use of technology, BlackRock’s commitment to compliance, BlackRock’s credit analysis capabilities, BlackRock’s risk analysis and oversight capabilities and BlackRock’s approach to training and retaining portfolio managers and other research, advisory and management personnel. The Board engaged in a review of BlackRock’s compensation structure with respect to each Fund’s portfolio management team and BlackRock’s ability to attract and retain high-quality talent and create performance incentives.

In addition to advisory services, the Board considered the quality of the administrative and non-investment advisory services provided to each Fund. BlackRock and its affiliates provide each Fund with certain administrative, shareholder and other services (in addition to any such services provided to a Fund by third parties) and officers and other personnel as are necessary for the operations of the Fund. In particular, BlackRock and its affiliates provide each Fund with the following administrative services including, among others: (i) preparing disclosure documents, such as the prospectus, the statement of additional information and periodic shareholder reports; (ii) assisting with daily accounting and pricing; (iii) overseeing and coordinating the activities of other service providers; (iv) organizing Board meetings and preparing the materials for such Board meetings; (v) providing legal and compliance support; and (vi) performing other administrative functions necessary for the operation of the Fund, such as tax reporting, fulfilling regulatory filing requirements and call center services. The Board reviewed the structure and duties of BlackRock’s fund administration, accounting, legal and compliance departments and considered BlackRock’s policies and procedures for assuring compliance with applicable laws and regulations.

B. The Investment Performance of each Fund and BlackRock: The Board, including the Independent Board Members, also reviewed and considered the performance history of each Fund. In preparation for the April 10, 2012 meeting, the Board worked with its independent legal counsel, BlackRock and Lipper to develop a template for, and was provided with, reports independently prepared by Lipper, which included a comprehensive analysis of each Fund’s performance. The Board also reviewed a narrative and statistical analysis of the Lipper data that was prepared by BlackRock, which analyzed various factors that affect Lipper’s rankings. In connection with its review, the Board received and reviewed information regarding the investment performance of each Fund as compared to funds in the Fund’s applicable Lipper category. The Board was provided with a description of the methodology used by Lipper to select peer funds and periodically meets with Lipper representatives to review their methodology. The Board and the Board’s Performance Oversight Committee regularly review, and meet with Fund management to discuss, the performance of each Fund throughout the year.

The Board noted that the 2015 Fund ranked in the second, first and first quartiles against its Lipper Performance Universe for the one-year, three-year and since-inception periods reported, respectively.

The Board noted that the 2020 Fund ranked in the second, second and first quartiles against its Lipper Performance Universe for the one-year, three-year and since-inception periods reported, respectively.

 

 

                 
      BLACKROCK FUNDS II       OCTOBER 31, 2012    69

  

 

Disclosure of Investment Advisory Agreement (continued)

  

 

The Board noted that the 2025 Fund ranked in the first, third and first quartiles against its Lipper Performance Universe for the one-year, three-year and since-inception periods reported, respectively.

The Board noted that the 2030 Fund ranked in the first, second and first quartiles against its Lipper Performance Universe for the one-year, three-year and since-inception periods reported, respectively.

The Board noted that the 2035 Fund ranked in the second, fourth and second quartiles against its Lipper Performance Universe for the one-year, three-year and since-inception periods reported, respectively.

The Board noted that the 2040 Fund ranked in the second, third and first quartiles against its Lipper Performance Universe for the one-year, three-year and since-inception periods reported, respectively.

The Board noted that the 2045 Fund ranked in the second, fourth and second quartiles against its Lipper Performance Universe for the one-year, three-year and since-inception periods reported, respectively.

The Board noted that the 2050 Fund ranked in the first, third and second quartiles against its Lipper Performance Universe for the one-year, three-year and since-inception periods reported, respectively.

C. Consideration of the Advisory/Management Fees and the Cost of the Services and Profits to be Realized by BlackRock and its Affiliates from their Relationship with each Fund: The Board, including the Independent Board Members, reviewed each Fund’s contractual management fee rate compared with the other funds in its Lipper category. It also compared each Fund’s total expense ratio, as well as actual management fee rate, to those of other funds in its Lipper category. The Board considered the services provided and the fees charged by BlackRock to other types of clients with similar investment mandates, including separately managed institutional accounts.

The Board reviewed BlackRock’s profitability with respect to other funds the Board currently oversees for the year ended December 31, 2011 compared to available aggregate profitability data provided for the years ended December 31, 2010 and December 31, 2009. The Board reviewed BlackRock’s profitability with respect to other fund complexes managed by the Manager and/or its affiliates. The Board reviewed BlackRock’s assumptions and methodology of allocating expenses in the profitability analysis, noting the inherent limitations in allocating costs among various advisory products. The Board recognized that profitability may be affected by numerous factors including, among other things, fee waivers and expense reimbursements by the Manager, the types of funds managed, expense allocations and business mix, and the difficulty of comparing profitability as a result of those factors.

The Board noted that, in general, individual fund or product line profitability of other advisors is not publicly available. The Board considered BlackRock’s operating margin, in general, compared to the operating margin for leading investment management firms whose operations include advising open-end funds, among other product types. In addition, the Board considered, among other things, certain third party data

comparing BlackRock’s operating margin with that of other publicly-traded asset management firms. The Board considered the differences between BlackRock and these other firms, including the contribution of technology at BlackRock, BlackRock’s expense management, and the relative product mix.

In addition, the Board considered the cost of the services provided to each Fund by BlackRock, and BlackRock’s and its affiliates’ profits relating to the management and distribution of each Fund and the other funds advised by BlackRock and its affiliates. As part of its analysis, the Board reviewed BlackRock’s methodology in allocating its costs to the management of each Fund. The Board also considered whether BlackRock has the financial resources necessary to attract and retain high quality investment management personnel to perform its obligations under the Agreement and to continue to provide the high quality of services that is expected by the Board.

The Board noted that BlackRock will not receive any advisory fees from the Funds for its investment advisory service. The Board noted that each Fund’s contractual management fee ratio (a combination of the advisory fee and the administration fee, if any) was lower than or equal to the median contractual management fee ratio paid by the Fund’s Peers, in each case before taking into account any expense reimbursements or fee waivers. The Board also noted that BlackRock has contractually agreed to waive fees or reimburse expenses in order to limit, to a specified amount, each Fund’s total net expenses on a class-by-class basis, as applicable.

D. Economies of Scale: The Board, including the Independent Board Members, considered the extent to which economies of scale might be realized as the assets of each Fund increase, as well as the existence of expense caps. The Board also considered the extent to which each Fund benefits from such economies and whether there should be changes in the advisory fee rate or structure in order to enable the Fund to participate in these economies of scale, for example through the use of breakpoints in the advisory fee based upon the asset level of the Fund. In its consideration, the Board Members took into account the existence of expense caps and further considered the continuation and/or implementation, as applicable, of such caps.

E. Other Factors Deemed Relevant by the Board Members: The Board, including the Independent Board Members, also took into account other ancillary or “fall-out” benefits that BlackRock or its affiliates may derive from their respective relationships with each Fund, both tangible and intangible, such as BlackRock’s ability to leverage its investment professionals who manage other portfolios and risk management personnel, an increase in BlackRock’s profile in the investment advisory community, and the engagement of BlackRock’s affiliates as service providers to each Fund, including for administrative, distribution, securities lending and cash management services. The Board also considered BlackRock’s overall operations and its efforts to expand the scale of, and improve the quality of, its operations. The Board also noted that BlackRock may use and benefit from third party research obtained by soft dollars generated by certain registered fund transactions to assist in managing all or

 

 

                 
70       BLACKROCK FUNDS II       OCTOBER 31, 2012   

  

 

Disclosure of Investment Advisory Agreement (concluded)

 

  

 

a number of its other client accounts. The Board further noted that it had considered the investment by BlackRock’s funds in ETFs without any offset against the management fees payable by the funds to BlackRock.

In connection with its consideration of the Agreement, the Board also received information regarding BlackRock’s brokerage and soft dollar practices. The Board received reports from BlackRock which included information on brokerage commissions and trade execution practices throughout the year.

The Board noted the competitive nature of the open-end fund marketplace, and that shareholders are able to redeem their Fund shares if they believe that a Fund’s fees and expenses are too high or if they are dissatisfied with the performance of the Fund.

Conclusion

The Board, including all the Independent Board Members, approved the continuation of the Agreement between the Manager and the Trust on

behalf of each Fund for a one-year term ending June 30, 2013. Based upon its evaluation of all of the aforementioned factors in their totality, the Board, including the Independent Board Members, was satisfied that the terms of the Agreement were fair and reasonable and in the best interest of each Fund and its shareholders. In arriving at its decision to approve the Agreement, the Board did not identify any single factor or group of factors as all-important or controlling, but considered all factors together, and different Board Members may have attributed different weights to the various factors considered. The Independent Board Members were also assisted by the advice of independent legal counsel in making this determination. The contractual fee arrangements for each Fund reflect the results of several years of review by the Board Members and predecessor Board Members, and discussions between such Board Members (and predecessor Board Members) and BlackRock. As a result, the Board Members’ conclusions may be based in part on their consideration of these arrangements in prior years.

 

 

                 
      BLACKROCK FUNDS II       OCTOBER 31, 2012    71

 

 

Officers and Trustees

 

 

 

Name, Address,

and Year of Birth

 

  

Position(s)

Held with

Trust

 

  

Length

of Time

Served as

a Trustee 2

 

  

Principal Occupation(s) During Past 5 Years

 

  

Number of BlackRock-
Advised Registered
Investment Companies
(“RICs”) Consisting of
Investment Portfolios
(“Portfolios”) Overseen

 

  

Public

Directorships

 

    Independent Trustees 1
Robert M. Hernandez 55 East 52nd Street New York, NY 10055 1944    Chairman of the Board and Trustee    Since 2007    Director, Vice Chairman and Chief Financial Officer of USX Corporation (energy and steel business) from 1991 to 2001. Director, TE Connectivity (electronics) from 2006 to 2012.    29 RICs consisting of
82 Portfolios 		   ACE Limited (insurance company); Eastman Chemical Company (chemicals); RTI International Metals, Inc. (metals)

 

Fred G. Weiss
55 East 52nd Street New York, NY 10055 1941 		   Vice Chairman of the Board and Trustee    Since 2007    Managing Director, FGW Associates (consulting and investment company) since 1997; Director and Treasurer, Michael J. Fox Foundation for Parkinson’s Research since 2000; Director, BTG International Plc (medical technology commercialization company) from 2001 to 2007.    29 RICs consisting of
82 Portfolios 		   Watson Pharmaceutical Inc.

 

James H. Bodurtha

55 East 52nd Street New York, NY 10055 1944

   Trustee    Since 2007    Director, The China Business Group, Inc. (consulting firm) since 1996 and Executive Vice President thereof from 1996 to 2003; Chairman of the Board, Berkshire Holding Corporation since 1980.    29 RICs consisting of
82 Portfolios 		   None

 

Bruce R. Bond

55 East 52nd Street New York, NY 100

55 1946

   Trustee    Since 2007    Trustee and Member of the Governance Committee, State Street Research Mutual Funds from 1997 to 2005; Board Member of Governance, Audit and Finance Committee, Avaya Inc. (computer equipment) from 2003 to 2007.    29 RICs consisting of
82 Portfolios 		   None

 

Donald W. Burton

55 East 52nd Street New York, NY 10055 1944

   Trustee    Since 2007    Managing General Partner, The Burton Partnership, LP (an investment partnership) since 1979; Managing General Partner, The South Atlantic Venture Funds since 1983; Director, Lifestyle Family Fitness (fitness industry) since 2006; Director, IDology, Inc. (technology solutions) since 2006; Member of the Investment Advisory Council of the Florida State Board of Administration from 2001 to 2007.    29 RICs consisting of
82 Portfolios 		   Knology, Inc. (telecommu- nications); Capital Southwest (financial)

 

Honorable Stuart E. Eizenstat

55 East 52nd Street New York, NY 10055 1943

   Trustee    Since 2007    Partner and Head of International Practice, Covington and Burling LLP (law firm) since 2001; International Advisory Board Member, The Coca-Cola Company from 2002 to 2011; Advisory Board Member, Veracity Worldwide, LLC (risk management) since 2007; Member of the International Advisory Board GML (energy) since 2003; Advisory Board Member, BT Americas (telecommunications) from 2004 to 2010.    29 RICs consisting of
82 Portfolios 		   Alcatel-Lucent (telecom- munications); Global Specialty Metallurgical (metallurgical industry); UPS Corporation (delivery service)

 

Kenneth A. Froot

55 East 52nd Street New York, NY 10055 1957

   Trustee    Since 2007    Professor, Harvard University since 1992.    29 RICs consisting of
82 Portfolios 		   None

 

John F. O’Brien

55 East 52nd Street New York, NY 10055 1943

   Trustee    Since 2007    Chairman and Director, Woods Hole Oceanographic Institute since 2009 and Trustee thereof from 2003 to 2009; Director, Ameresco, Inc. (energy solutions company) from 2006 to 2007.    29 RICs consisting of
82 Portfolios 		   Cabot Corporation (chemicals); LKQ Corporation (auto parts manufacturing); TJX Companies, Inc. (retailer)

 

Roberta Cooper Ramo

55 East 52nd Street New York, NY 10055 1942

   Trustee    Since 2007    Shareholder, Modrall, Sperling, Roehl, Harris & Sisk, P.A. (law firm) since 1993; Chairman of the Board, Cooper’s Inc., (retail) since 2000; Director ECMC Group (service provider to students, schools and lenders) since 2001; President, The American Law Institute (non-profit) since 2008; President, American Bar Association from 1995 to 1996.    29 RICs consisting of
82 Portfolios 		   None

 

 

                 
72       BLACKROCK FUNDS II       OCTOBER 31, 2012   

 

 

Officers and Trustees (continued)

 

 

 

Name, Address,

and Year of Birth

 

 

Position(s)

Held with

Trust

 

 

Length

of Time

Served as

a Trustee 2

 

 

Principal Occupation(s) During Past 5 Years

 

 

Number of BlackRock-
Advised Registered
Investment Companies
(“RICs”) Consisting of
Investment Portfolios
(“Portfolios”) Overseen

 

 

Public

Directorships

 

Independent Trustees 1 (concluded)

David H. Walsh

55 East 52nd Street

New York, NY

10055 1941

  Trustee   Since 2007   Director, National Museum of Wildlife Art since 2007; Trustee, University of Wyoming Foundation since 2008; Director, Ruckleshaus Institute and Haub School of Natural Resources at the University of Wyoming from 2006 to 2008; Director, The American Museum of Fly Fishing since 1997; Director, The National Audubon Society from 1998 to 2005.   29 RICs consisting of 82 Portfolios   None
 

1    Each Independent Trustee holds office until his or her successor is duly elected and qualifies or until his or her earlier death, resignation or removalas provided by the Trust’s by-laws or charter or statute. In no event may an Independent Trustee hold office beyond December 31 of the year in which he or she turns 74.

 

2    Date shown is the earliest date a person has served for the Trust covered by this annual report. Following the combination of Merrill Lynch Investment Managers, L.P. (“MLIM”) and BlackRock, Inc. (“BlackRock”) in September 2006, the various legacy MLIM and legacy BlackRock Fund boards were realigned and consolidated into three new fund boards in 2007. As a result, although the chart shows certain Trustees as joining the Trust’s Board in 2007, each Trustee first became a member of the board of other legacy MLIM or legacy BlackRock Funds as follows: James H. Bodurtha, 1995; Bruce R. Bond, 2005; Donald W. Burton, 2002; Stuart E. Eizenstat, 2001; Kenneth A. Froot, 2005; Robert M. Hernandez, 1996; John F. O’Brien, 2004; Roberta Cooper Ramo, 1999; David H. Walsh, 2003; and Fred G. Weiss, 1998.

 

Interested Trustees 3

Paul L. Audet

55 East 52nd Street New York, NY 10055

1953

  Trustee   Since 2011   Senior Managing Director of BlackRock and Head of U.S. Mutual Funds since 2011; Chair of the U.S. Mutual Funds Committee reporting to the Global Executive Committee since 2011; Head of BlackRock’s Real Estate business from 2008 to 2011; Member of BlackRock’s Global Operating and Corporate Risk Management Committees and of the BlackRock Alternative Investors Executive Committee and Investment Committee for the Private Equity Fund of Funds business since 2008; Head of BlackRock’s Global Cash Management business from 2005 to 2010; Acting Chief Financial Officer of BlackRock from 2007 to 2008; Chief Financial Officer of BlackRock from 1998 to 2005.   158 RICs consisting of 277 Portfolios   None

Laurence D. Fink 55 East 52nd Street New York, NY 10055

1952

  Trustee   Since 2007   Chairman and Chief Executive Officer of BlackRock since its formation in 1998 and of BlackRock’s predecessor entities since 1988 and Chairman of the Executive and Management Committees; Formerly Managing Director, The First Boston Corporation, Member of its Management Committee, Co-head of its Taxable Fixed Income Division and Head of its Mortgage and Real Estate Products Group; Chairman of the Board of several of BlackRock’s alternative investment vehicles; Director of several of BlackRock’s offshore funds; Member of the Board of Trustees of New York University, Chair of the Financial Affairs Committee and a member of the Executive Committee, the Ad Hoc Committee on Board Governance, and the Committee on Trustees; Co-Chairman of the NYU Hospitals Center Board of Trustees, Chairman of the Development/Trustee Stewardship Committee and Chairman of the Finance Committee; Trustee, The Boys’ Club of New York.   29 RICs consisting of 82 Portfolios   BlackRock

Henry Gabbay 55 East 52nd Street New York, NY 10055

1947

  Trustee   Since 2007   Consultant, BlackRock from 2007 to 2008; Managing Director, BlackRock from 1989 to 2007; Chief Administrative Officer, BlackRock Advisors, LLC from 1998 to 2007; President of BlackRock Funds and BlackRock Bond Allocation Target Shares from 2005 to 2007 and Treasurer of certain closed-end funds in the BlackRock fund complex from 1989 to 2006.   158 RICs consisting of 277 Portfolios   None
 

3    Messrs. Audet and Fink are both “interested persons,” as defined in the 1940 Act, of the Trust based on their positions with BlackRock and its affiliates. Mr. Gabbay is an “interested person” of the Trust based on his former positions with BlackRock and its affiliates as well as his ownership of BlackRock and The PNC Financial Services Group, Inc. securities. Mr. Audet and Mr. Gabbay are also Directors of the BlackRock registered closed-end funds and Directors of other BlackRock registered open-ended funds. Interested Trustees serve until their resignation, removal or death, or until December 31 of the year in which they turn 72.

 

 

 

                 
      BLACKROCK FUNDS II       OCTOBER 31, 2012    73

 

 

Officers and Trustees (concluded)

 

 

Name, Address,

and Year of Birth

 

  

Position(s)

Held with

Trust

 

  

Length

of Time

Served

 

  

Principal Occupation(s) During Past 5 Years

 

Trust Officers 1

              

John M. Perlowski

55 East 52nd Street

New York, NY 10055

1964

  

President

and Chief

Executive

Officer

  

Since

2010

   Managing Director of BlackRock since 2009; Global Head of BlackRock Fund Administration since 2009; Managing Director and Chief Operating Officer of the Global Product Group at Goldman Sachs Asset Management, L.P. from 2003 to 2009; Treasurer of Goldman Sachs Mutual Funds from 2003 to 2009 and Senior Vice President thereof from 2007 to 2009; Director of Goldman Sachs Offshore Funds from 2002 to 2009; Director of Family Resources Network (charitable foundation) since 2009.

Brendan Kyne

55 East 52nd Street

New York, NY 10055

1977

   Vice President   

Since

2009

   Managing Director of BlackRock since 2010; Director of BlackRock from 2008 to 2009; Head of Product Development and Management for BlackRock’s U.S. Retail Group since 2009 and Co-head thereof from 2007 to 2009; Vice President of BlackRock from 2005 to 2008.

Neal Andrews

55 East 52nd Street

New York, NY 10055

1966

   Chief Financial Officer   

Since

2007

   Managing Director of BlackRock since 2006; Senior Vice President and Line of Business Head of Fund Accounting and Administration at PNC Global Investment Servicing (U.S.) Inc. from 1992 to 2006.

Jay Fife

55 East 52nd Street

New York, NY 10055

1970

   Treasurer   

Since

2007

   Managing Director of BlackRock since 2007; Director of BlackRock in 2006; Assistant Treasurer of the MLIM and Fund Asset Management, L.P. advised funds from 2005 to 2006; Director of MLIM Fund Services Group from 2001 to 2006.

Brian Kindelan

55 East 52nd Street

New York, NY 10055

1959

  

Chief Compliance

Officer and

Anti-Money Laundering

Officer

  

Since

2007

   Chief Compliance Officer of the BlackRock-advised Funds since 2007; Managing Director and Senior Counsel of BlackRock since 2005.

Benjamin Archibald

55 East 52nd Street

New York, NY 10055

1975

   Secretary   

Since

2012

   Director of BlackRock since 2010; Assistant Secretary to the funds from 2010 to 2012; General Counsel and Chief Operating Officer of Uhuru Capital Management from 2009 to 2010; Executive Director and Counsel of Goldman Sachs Asset Management from 2005 to 2009.
     1 Officers of the Trust serve at the pleasure of the Board of Trustees.
    

Further information about the Trust’s Officers and Trustees is available in the Trust’s Statement of Additional Information, which can be obtained without charge by calling 1-800-441-7762.

 

Investment Advisor and    Accounting Agent,    Independent Registered Public    Address of the Trust
Co-Administrator    Co-Administrator and    Accounting Firm    100 Bellevue Parkway
BlackRock Advisors, LLC    Transfer Agent    Deloitte & Touche LLP    Wilmington, DE 19809
Wilmington, DE 19809    BNY Mellon Investment    Philadelphia, PA 19103   
   Servicing (US) Inc.      
   Wilmington, DE 19809      
Custodian    Distributor    Legal Counsel   
The Bank of New York Mellon New York, NY 10286   

BlackRock Investments, LLC

New York, NY 10022

  

Willkie Farr & Gallagher LLP New

York, NY 10019

  

 

 

Effective May 8, 2012, Ira P. Shapiro resigned as Secretary of the Trust and Benjamin Archibald became Secretary of the Trust.

 

 

                 
74       BLACKROCK FUNDS II       OCTOBER 31, 2012   

 

 

Additional Information

 

 

 

 

General Information

 

 

Electronic Delivery

Electronic copies of most financial reports and prospectuses are available on the Funds’ website or shareholders can sign up for e-mail notifications of quarterly statements, annual and semi-annual reports and prospectuses by enrolling in the Funds’ electronic delivery program.

To enroll:

Shareholders Who Hold Accounts with Investment Advisors, Banks or Brokerages:

Please contact your financial advisor. Please note that not all investment advisors, banks or brokerages may offer this service.

Shareholders Who Hold Accounts Directly With BlackRock:

 

1) Access the BlackRock website at http://www.blackrock.com/ edelivery

 

2) Select “eDelivery” under the “More Information” section

 

3) Log into your account

Householding

The Funds will mail only one copy of shareholder documents, including prospectuses, annual and semi-annual reports and proxy statements, to shareholders with multiple accounts at the same address. This practice is commonly called “householding” and is intended to reduce expenses and eliminate duplicate mailings of shareholder documents. Mailings of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact the Funds at (800) 441-7762.

Availability of Quarterly Schedule of Investments

The Funds file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the SEC’s website at http:// www.sec.gov and may also be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on how to access documents on the SEC’s website without charge may be obtained by calling (800) SEC-0330. The Funds’ Forms N-Q may also be obtained upon request and without charge by calling (800) 441-7762.

Availability of Proxy Voting Policies and Procedures

A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities is available (1) without charge, upon request, by calling (800) 441-7762; (2) at http://www.blackrock.com; and (3) on the SEC’s website at http:// www.sec.gov.

Availability of Proxy Voting Record

Information about how the Funds voted proxies relating to securities held in the Funds’ portfolios during the most recent 12-month period ended June 30 is available, upon request and without charge (1) at http://www.blackrock.com or by calling (800) 441-7762 and (2) on the SEC’s website at http://www.sec.gov.

 

 

 

Shareholder Privileges

 

 

Account Information

Call us at (800) 441-7762 from 8:00 AM to 6:00 PM EST on any business day to get information about your account balances, recent transactions and share prices. You can also reach us on the Web at http:// www.blackrock.com/funds.

Automatic Investment Plans

Investor Class shareholders who want to invest regularly can arrange to have $50 or more automatically deducted from their checking or savings account and invested in any of the BlackRock funds.

 

Systematic Withdrawal Plan

Investor Class shareholders can establish a systematic withdrawal plan and receive periodic payments of $50 or more from their BlackRock portfolios, as long as their account balance is at least $10,000.

Retirement Plans

Shareholders may make investments in conjunction with Traditional, Rollover, Roth, Coverdell, Simple IRAs, SEP IRAs and 403(b) Plans.

 

 

                 
      BLACKROCK FUNDS II       OCTOBER 31, 2012    75

 

 

Additional Information (concluded)

 

 

BlackRock Privacy Principles

BlackRock is committed to maintaining the privacy of its current and former fund investors and individual clients (collectively, “Clients”) and to safeguarding their non-public personal information. The following information is provided to help you understand what personal information BlackRock collects, how we protect that information and why in certain cases we share such information with select parties.

If you are located in a jurisdiction where specific laws, rules or regulations require BlackRock to provide you with additional or different privacy-related rights beyond what is set forth below, then BlackRock will comply with those specific laws, rules or regulations.

BlackRock obtains or verifies personal non-public information from and about you from different sources, including the following: (i) information we receive from you or, if applicable, your financial intermediary, on applications, forms or other documents; (ii) information about your transactions with us, our affiliates, or others; (iii) information we receive from a consumer reporting agency; and (iv) from visits to our websites.

BlackRock does not sell or disclose to non-affiliated third parties any non-public personal information about its Clients, except as permitted by law or as is necessary to respond to regulatory requests or to service Client accounts. These non-affiliated third parties are required to protect the confidentiality and security of this information and to use it only for its intended purpose.

We may share information with our affiliates to service your account or to provide you with information about other BlackRock products or services that may be of interest to you. In addition, BlackRock restricts access to non-public personal information about its Clients to those BlackRock employees with a legitimate business need for the information. BlackRock maintains physical, electronic and procedural safeguards that are designed to protect the non-public personal information of its Clients, including procedures relating to the proper storage and disposal of such information.

 

 

                 
76       BLACKROCK FUNDS II       OCTOBER 31, 2012   

 

 

A World-Class Mutual Fund Family

 

 

BlackRock offers a diverse lineup of open-end mutual funds crossing all investment styles and managed by experts in equity, fixed income and tax-exempt investing.

 

     Equity Funds

         

BlackRock ACWI ex-US Index Fund

   BlackRock Global Dividend Income Portfolio    BlackRock Mid-Cap Growth Equity Portfolio

BlackRock All-Cap Energy & Resources Portfolio

   BlackRock Global Opportunities Portfolio    BlackRock Mid Cap Value Opportunities Fund

BlackRock Balanced Capital Fund†

   BlackRock Global SmallCap Fund    BlackRock Natural Resources Trust

BlackRock Basic Value Fund

   BlackRock Health Sciences Opportunities Portfolio    BlackRock Pacific Fund

BlackRock Capital Appreciation Fund

   BlackRock Index Equity Portfolio    BlackRock Real Estate Securities Fund

BlackRock China Fund

   BlackRock India Fund    BlackRock Russell 1000 Index Fund

BlackRock Commodity Strategies Fund

   BlackRock International Fund    BlackRock Science & Technology

BlackRock Emerging Markets Fund

   BlackRock International Index Fund   

Opportunities Portfolio

BlackRock Emerging Markets Long/Short

   BlackRock International Opportunities Portfolio    BlackRock Small Cap Growth Equity Portfolio

Equity Fund

   BlackRock Large Cap Core Fund    BlackRock Small Cap Growth Fund II

BlackRock Energy & Resources Portfolio

   BlackRock Large Cap Core Plus Fund    BlackRock Small Cap Index Fund

BlackRock Equity Dividend Fund

   BlackRock Large Cap Growth Fund    BlackRock S&P 500 Index Fund

BlackRock EuroFund

   BlackRock Large Cap Value Fund    BlackRock S&P 500 Stock Fund

BlackRock Flexible EquityFund

   BlackRock Latin America Fund    BlackRock U.S. Opportunities Portfolio

BlackRock Focus Growth Fund

   BlackRock Long-Horizon Equity Fund    BlackRock Value Opportunities Fund

BlackRock Global Allocation Fund†

   BlackRock Managed Volatility Portfolio†    BlackRock World Gold Fund
     
     
     

     Taxable Fixed Income Funds

         

BlackRock Bond Index Fund

   BlackRock High Yield Bond Portfolio    BlackRock Strategic Income

BlackRock Core Bond Portfolio

   BlackRock Inflation Protected Bond Portfolio    Opportunities Portfolio

BlackRock CoreAlpha Bond Fund

   BlackRock International Bond Portfolio    BlackRock Total Return Fund

BlackRock Emerging Market Local Debt Portfolio

   BlackRock Long Duration Bond Portfolio    BlackRock US Government Bond Portfolio

BlackRock Floating Rate Income Portfolio

   BlackRock Low Duration Bond Portfolio    BlackRock US Mortgage Portfolio

BlackRock Global Long/Short Credit Fund

   BlackRock Multi-Asset Income Portfolio†    BlackRock World Income Fund

BlackRock GNMA Portfolio

   BlackRock Secured Credit Portfolio   
     
     

     Municipal Fixed Income Funds

         

BlackRock California Municipal Bond Fund

   BlackRock National Municipal Fund    BlackRock Pennsylvania Municipal Bond Fund

BlackRock High Yield Municipal Fund

   BlackRock New Jersey Municipal Bond Fund    BlackRock Short-Term Municipal Fund

BlackRock Intermediate Municipal Fund

   BlackRock New York Municipal Bond Fund   

     Target Risk & Target Date Funds†

         

 

BlackRock Prepared Portfolios

   LifePath Active Portfolios      LifePath Portfolios       LifePath Index Portfolios

Conservative Prepared Portfolio

   2015    2035          Retirement    2040        Retirement    2040

Moderate Prepared Portfolio

   2020    2040          2020    2045        2020    2045

Growth Prepared Portfolio

   2025    2045          2025    2050        2025    2050

Aggressive Growth Prepared Portfolio

   2030    2050          2030    2055        2030    2055
               2035           2035   

 

† Mixed asset fund.

 

BlackRock mutual funds are currently distributed by BlackRock Investments, LLC. You should consider the investment objectives, risks, charges and expenses of the funds under consideration carefully before investing. Each fund’s prospectus contains this and other information and is available at www.blackrock.com or by calling (800) 441-7762 or from your financial advisor. The prospectus should be read carefully before investing.

 

                 
      BLACKROCK FUNDS II       OCTOBER 31, 2012    77

 

 

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This report is transmitted to shareholders only. It is not authorized for use as an offer of sale or a solicitation of an offer to buy shares of a Fund unless accompanied or preceded by that Fund’s current prospectus. Past performance results shown in this report should not be considered a representation of future performance. Investment returns and principal value of shares will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Statements and other information herein are as dated and are subject to change.

 

LOGO

 

LOGO

LifeActive-10/12-AR

Item 2 –

   Code of Ethics – The registrant (or the “Fund”) has adopted a code of ethics, as of the end of the period covered by this report, applicable to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. During the period covered by this report, there have been no amendments to or waivers granted under the code of ethics. A copy of the code of ethics is available without charge at www.blackrock.com.

 

Item 3 –

  

Audit Committee Financial Expert – The registrant’s board of trustees (the “board of trustees”), has determined that (i) the registrant has the following audit committee financial experts serving on its audit committee and (ii) each audit committee financial expert is independent:

Robert M. Hernandez

Fred G. Weiss

Stuart E. Eizenstat

 

Under applicable securities laws, a person determined to be an audit committee financial expert will not be deemed an “expert” for any purpose, including without limitation for the purposes of Section 11 of the Securities Act of 1933, as a result of being designated or identified as an audit committee financial expert. The designation or identification of a person as an audit committee financial expert does not impose on such person any duties, obligations, or liabilities greater than the duties, obligations, and liabilities imposed on such person as a member of the audit committee and board of trustees in the absence of such designation or identification.

 

Item 4 –

  

Principal Accountant Fees and Services

 

The following table presents fees billed by Deloitte & Touche LLP (“D&T”) in each of the last two fiscal years for the services rendered to the Fund:

 

       (a) Audit Fees    (b) Audit-Related Fees 1    (c) Tax Fees 2    (d) All Other Fees 3
Entity Name    Current
Fiscal Year
End 		   Previous
Fiscal Year
End 		   Current
Fiscal Year
End 		   Previous
Fiscal Year
End 		   Current
Fiscal Year
End 		   Previous
Fiscal Year
End 		   Current
Fiscal Year
End 		   Previous
Fiscal  Year
End
LifePath® Active 2015 Portfolio    $18,800    $18,600    $0    $0    $12,350    $12,350    $0    $0
LifePath® Active 2020 Portfolio    $18,800    $18,600    $0    $0    $12,350    $12,350    $0    $0
LifePath® Active 2025 Portfolio    $18,800    $18,600    $0    $0    $12,350    $12,350    $0    $0
LifePath® Active 2030 Portfolio    $18,800    $18,600    $0    $0    $12,350    $12,350    $0    $0
LifePath® Active 2035 Portfolio    $18,800    $18,600    $0    $0    $12,350    $12,350    $0    $0
LifePath® Active 2040 Portfolio    $18,800    $18,600    $0    $0    $12,350    $12,350    $0    $0
LifePath® Active 2045 Portfolio    $18,600    $18,600    $0    $0    $12,350    $12,350    $0    $0
LifePath® Active 2050 Portfolio    $18,600    $18,600    $0    $0    $12,350    $12,350    $0    $0

 

2

The following table presents fees billed by D&T that were required to be approved by the registrant’s audit committee (the “Committee”) for services that relate directly to the operations or financial reporting of the Fund and that are rendered on behalf of BlackRock Advisors, LLC (“Investment Adviser” or “BlackRock”) and entities controlling, controlled by, or under common control with BlackRock (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) that provide ongoing services to the Fund (“Fund Service Providers”):

 

      Current Fiscal Year End   Previous Fiscal Year End
(b) Audit-Related Fees 1   $0   $0
(c) Tax Fees 2   $0   $0
(d) All Other Fees 3   $2,970,000   $3,030,000

1 The nature of the services includes assurance and related services reasonably related to the performance of the audit of financial statements not included in Audit Fees.

2 The nature of the services includes tax compliance, tax advice and tax planning.

3 Aggregate fees borne by BlackRock in connection with the review of compliance procedures and attestation thereto performed by D&T with respect to all of the registered closed-end funds and some of the registered open-end funds advised by BlackRock.

(e)(1) Audit Committee Pre-Approval Policies and Procedures:

The Committee has adopted policies and procedures with regard to the pre-approval of services. Audit, audit-related and tax compliance services provided to the registrant on an annual basis require specific pre-approval by the Committee. The Committee also must approve other non-audit services provided to the registrant and those non-audit services provided to the Investment Adviser and Fund Service Providers that relate directly to the operations and the financial reporting of the registrant. Certain of these non-audit services that the Committee believes are (a) consistent with the SEC’s auditor independence rules and (b) routine and recurring services that will not impair the independence of the independent accountants may be approved by the Committee without consideration on a specific case-by-case basis (“general pre-approval”). The term of any general pre-approval is 12 months from the date of the pre-approval, unless the Committee provides for a different period. Tax or other non-audit services provided to the registrant which have a direct impact on the operations or financial reporting of the registrant will only be deemed pre-approved provided that any individual project does not exceed $10,000 attributable to the registrant or $50,000 per project. For this purpose, multiple projects will be aggregated to determine if they exceed the previously mentioned cost levels.

Any proposed services exceeding the pre-approved cost levels will require specific pre-approval by the Committee, as will any other services not subject to general pre-approval (e.g., unanticipated but permissible services). The Committee is informed of each service approved subject to general pre-approval at the next regularly scheduled in-person board meeting. At this meeting, an analysis of such services is presented to the Committee for ratification. The Committee may delegate to the Committee Chairman the authority to approve the provision of and fees for any specific engagement of permitted non-audit services, including services exceeding pre-approved cost levels.

(e)(2) None of the services described in each of Items 4(b) through (d) were approved by the Committee pursuant to the de minimus exception in paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

(f) Not Applicable

 

3

(g) The aggregate non-audit fees paid to the accountant for services rendered by the accountant to the registrant, the Investment Adviser and the Fund Service Providers were:

 

 

Entity Name

 

Current Fiscal Year

End

 

Previous Fiscal Year

End

 

LifePath® Active 2015 Portfolio

  $12,350   $12,350
 

LifePath® Active 2020 Portfolio

  $12,350   $12,350
 

LifePath® Active 2025 Portfolio

  $12,350   $12,350
 

LifePath® Active 2030 Portfolio

  $12,350   $12,350
 

LifePath® Active 2035 Portfolio

  $12,350   $12,350
 

LifePath® Active 2040 Portfolio

  $12,350   $12,350
 

LifePath® Active 2045 Portfolio

  $12,350   $12,350
 

LifePath® Active 2050 Portfolio

  $12,350   $12,350

Additionally, SSAE 16 Review (Formerly, SAS No. 70) fees for the current and previous fiscal years of $2,970,000 and $3,030,000, respectively, were billed by D&T to the Investment Adviser.

(h) The Committee has considered and determined that the provision of non-audit services that were rendered to the Investment Adviser and the Fund Service Providers that were not pre-approved pursuant to paragraph (c)(7)(ii) of
Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence.

 

Item 5 –    Audit Committee of Listed Registrants – Not Applicable

 

Item 6 –   

Investments

(a) The registrant’s Schedule of Investments is included as part of the Report to Stockholders filed under Item 1 of this
Form.

(b) Not Applicable due to no such divestments during the semi-annual period covered since the previous Form N-CSR
filing.

 

Item 7 –    Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies – Not Applicable

 

Item 8 –    Portfolio Managers of Closed-End Management Investment Companies – Not Applicable

 

Item 9 –    Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers – Not
Applicable

 

Item 10 –    Submission of Matters to a Vote of Security Holders – There have been no material changes to these procedures.

 

Item 11 –  

Controls and Procedures

 

  (a) The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”)) are effective as of a date within 90 days of the filing of this report based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rule 15d-15(b) under the Securities Exchange Act of 1934, as amended.

 

4

  (b) There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

 

Item 12 –    Exhibits attached hereto

 

  (a)(1) Code of Ethics – See Item 2

 

  (a)(2) Certifications – Attached hereto

 

  (a)(3) Not Applicable

 

  (b) Certifications – Attached hereto

 

5

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

BlackRock Funds II

 

By:      

/s/ John M. Perlowski

  John M. Perlowski
  Chief Executive Officer (principal executive officer) of
  BlackRock Funds II

Date: January 3, 2013

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

By:      

/s/ John M. Perlowski

  John M. Perlowski
  Chief Executive Officer (principal executive officer) of
  BlackRock Funds II

Date: January 3, 2013

 

By:      

/s/ Neal J. Andrews

  Neal J. Andrews
  Chief Financial Officer (principal financial officer) of
  BlackRock Funds II

Date: January 3, 2013

 

6

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