READY ASSETS PRIME MONEY FUND (the Fund ) Supplement dated September 2, 2015 to the Prospectus of the Fund, dated August 28, 2015

Transcription

1 READY ASSETS PRIME MONEY FUND (the Fund ) Supplement dated September 2, 2015 to the Prospectus of the Fund, dated August 28, 2015 This Supplement was previously filed on July 29, The Board of Trustees of the Fund (the Board ) recently approved certain changes to the principal investment strategies of the Fund in order for the Fund to meet the definition of a government money market fund under Rule 2a-7 under the Investment Company Act of 1940, as amended. The Board has chosen not to subject the Fund to discretionary or default liquidity fees or temporary suspensions of redemptions due to declines in the Fund s weekly liquid assets. In connection with such changes, the Board also approved a change in the name of the Fund to Ready Assets Government Liquidity Fund. These changes will become effective January 4, Investors should review carefully the specific changes to the prospectus of the Fund, which are detailed below. Accordingly, effective January 4, 2016, the Fund s prospectus is amended as follows: Change in the Fund s Name Ready Assets Prime Money Fund is renamed Ready Assets Government Liquidity Fund. Changes in the Fund s Strategies and Risks The section of the prospectus entitled Fund Overview Key Facts About Ready Assets Prime Money Fund Principal Investment Strategies of the Fund is deleted in its entirety and replaced with the following: Principal Investment Strategies of the Fund The Fund invests at least 99.5% of its total assets in cash, U.S. Treasury bills, notes and other obligations issued or guaranteed as to principal and interest by the U.S. Government, its agencies or instrumentalities, and repurchase agreements secured by such obligations or cash. The Fund invests in a portfolio of securities maturing in 397 days or less (with certain exceptions) that will have a dollar-weighted average maturity of 60 days or less and a dollar-weighted average life of 120 days or less. The Fund may invest in variable and floating rate instruments, and transact in securities on a when-issued, delayed delivery or forward commitment basis. The securities purchased by the Fund are subject to the quality, diversification, and other requirements of Rule 2a-7 under the Investment Company Act of 1940, as amended (the 1940 Act ), and other rules of the Securities and Exchange Commission (the SEC ). The Fund will only purchase securities that present minimal credit risk as determined by BlackRock, the Fund s investment manager, pursuant to guidelines approved by the Trust s Board of Trustees. The section of the prospectus entitled Fund Overview Key Facts About Ready Assets Prime Money Fund Principal Risks of Investing in the Fund is amended to delete Extension Risk, Foreign Exposure Risk, Mortgage- and Asset-Backed Securities Risk, Prepayment Risk, Regulatory Risk, Reverse Repurchase Agreements Risk and Variable Rate Demand Obligations Risk; and to add the following risk: Regulatory Risk On July 23, 2014, the SEC adopted amendments to money market fund regulations, which structurally change the way that certain money market funds will be required to operate. The compliance periods for the amendments range between July 2015 and October When implemented, the changes may affect the Fund s investment strategies, fees and expenses, portfolio and share liquidity and return potential.

2 The section of the prospectus entitled Details About the Fund How the Fund Invests Investment Process is deleted in its entirety and replaced with the following: Investment Process In seeking to achieve Money Fund s investment objective, Fund management varies the kinds of short-term U.S. Government securities held in the Fund s portfolio, as well as the Fund s average maturity. Fund management decides which securities to buy and sell, as well as whether to enter into repurchase agreements, based on its assessment of their relative values and future interest rates. The section of the prospectus entitled Details About the Fund How the Fund Invests Principal Investment Strategies is deleted in its entirety and replaced with the following: Principal Investment Strategies The Fund invests at least 99.5% of its total assets in cash, U.S. Treasury bills, notes and other obligations issued or guaranteed as to principal and interest by the U.S. Government, its agencies or instrumentalities, and repurchase agreements secured by such obligations or cash. The U.S. Government securities in which the Fund may invest include: Repurchase Agreements Repurchase agreements are transactions in which the Fund purchases a class of securities with the obligation to resell the securities shortly thereafter at a specified price which reflects interest payable to the Fund. The Fund may engage in repurchase agreements secured by U.S. Treasury bills, notes and other obligations issued or guaranteed as to principal and interest by the U.S. Government, its agencies or instrumentalities and cash. U.S. Treasury Obligations Obligations that are direct obligations of the U.S. Treasury. These also include Treasury Receipts where the principal and interest components are traded separately under the Separate Trading of Registered Interest and Principal of Securities ( STRIPS ) Program. U.S. Government Obligations Obligations issued or guaranteed by the U.S. Government or its agencies, authorities, instrumentalities and sponsored enterprises, and related custodial receipts. Variable and Floating Rate Instruments Instruments that provide for adjustments in the interest rate on certain reset dates (variable) or whenever a specified interest rate index changes (floating). When-Issued and Delayed Settlement Transactions The purchase or sale of securities on a when-issued basis, on a delayed delivery basis or through a forward commitment involves the purchase or sale of securities by the Fund at an established price with payment and delivery taking place in the future. The Fund enters into these transactions to obtain what is considered an advantageous price to the Fund at the time of entering into the transaction. The section of the prospectus entitled Details About the Fund How the Fund Invests Other Strategies is amended to delete Foreign Securities and U.S. Treasury Floating Rate Notes. The section of the prospectus entitled Details About the Fund Investment Risks Principal Risks of Investing in the Fund is amended to delete Extension Risk, Foreign Exposure Risk, Mortgage- and Asset-Backed Securities Risk, Prepayment Risk, Regulatory Risk, Reverse Repurchase Agreements Risk and Variable Rate Demand Obligations Risk; and to add the following risk:

3 Regulatory Risk On July 23, 2014, the Securities and Exchange Commission adopted amendments to money market fund regulations, which structurally change the way that certain money market funds will be required to operate. The compliance periods for the amendments range between July 2015 and October When implemented, the changes may affect the Fund s investment strategies, fees and expenses, portfolio and share liquidity and return potential. Shareholders should retain this Supplement for future reference. PRO SUP

4 AUGUST 28, 2015 PROSPECTUS Ready Assets Prime Money Fund MRAXX This Prospectus contains information you should know before investing, including information about risks. Please read it before you invest and keep it for future reference. The Securities and Exchange Commission has not approved or disapproved these securities or passed upon the adequacy of this Prospectus. Any representation to the contrary is a criminal offense. Not FDIC Insured May Lose Value No Bank Guarantee

5 Table of Contents Fund Overview Key facts and details about the Fund, including investment objective, principal investment strategies, principal risk factors, fee and expense information, and historical performance information Investment Objective... 3 Fees and Expenses of the Fund... 3 Principal Investment Strategies of the Fund... 3 Principal Risks of Investing in the Fund... 4 Performance Information... 5 Investment Manager... 5 Purchase and Sale of Fund Shares... 6 Tax Information... 6 Payments to Broker/Dealers and Other Financial Intermediaries... 6 Details About the Fund Information about how the Fund invests, including investment objective, investment processes, principal strategies and risk factors How the Fund Invests... 7 Investment Risks... 9 Account Information Information about account services, sales charges and waivers, shareholder transactions, and distribution and other payments Shareholder Servicing Plan How to Buy, Sell and Transfer Shares Fund s Rights Short-Term Trading Policy Management of the Fund Information about BlackRock BlackRock Conflicts of Interest Valuation of Fund Investments Dividends, Distributions and Taxes Financial Highlights Financial Performance of the Fund General Information Shareholder Documents Certain Fund Policies Statement of Additional Information Glossary Glossary of Investment Terms For More Information Fund and Service Providers... Inside Back Cover Additional Information... Back Cover

6 Fund Overview Key Facts About Ready Assets Prime Money Fund Investment Objective The investment objective of Ready Assets Prime Money Fund (the Fund ) is to seek preservation of capital, liquidity and the highest possible current income consistent with this objective available from investing in a diversified portfolio of short-term money market securities. Fees and Expenses of the Fund This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) Management Fee 0.393% Distribution and/or Service (12b-1) Fees 0.125% Other Expenses 0.202% Total Annual Fund Operating Expenses 0.72% Example: This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Fund s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: 1 Year 3 Years 5 Years 10 Years $74 $230 $401 $894 Principal Investment Strategies of the Fund The Fund seeks to achieve its investment objective by investing in a diversified portfolio of short-term money market securities. These securities are generally debt securities and other instruments that mature within 13 months, with certain exceptions. Other than U.S. Government securities and certain U.S. Government agency securities, certain securities issued by U.S. Government sponsored enterprises and instrumentalities and U.S. Treasury obligations, the Fund only invests in money market instruments of issuers with one of the two highest short-term ratings from a nationally recognized statistical rating organization or in unrated instruments that, in the opinion of Fund management, are of similar credit quality. The money market securities in which the Fund may invest include repurchase agreements, reverse repurchase agreements, variable and floating rate obligations, municipal variable rate demand obligations, foreign short-term debt obligations and other short-term obligations, such as mortgage- or asset-backed instruments. The Fund may transact in securities on a when-issued, delayed delivery or forward commitment basis. In seeking to achieve the Fund s investment objective, Fund management varies the kinds of money market securities in the portfolio and the average maturity of the portfolio. Fund management decides which securities to buy and sell based on its assessment of the relative values of different securities and future interest rates. The Fund s dollarweighted average maturity will be 60 days or less, and the dollar-weighted average life of all of its investments will be 120 days or less. 3

7 Principal Risks of Investing in the Fund Risk is inherent in all investing. The value of your investment in the Fund, as well as the amount of return you receive on your investment, may fluctuate significantly from day to day and over time. You may lose part or all of your investment in the Fund or your investment may not perform as well as other similar investments. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of an investment at $1.00 per share, it is possible to lose money by investing in the Fund. The following is a summary description of principal risks of investing in the Fund. Credit Risk Credit risk refers to the possibility that the issuer of a security will not be able to make principal and interest payments when due. Changes in an issuer s credit rating or the market s perception of an issuer s creditworthiness may also affect the value of the Fund s investment in that issuer. Extension Risk When interest rates rise, certain obligations will be paid off by the obligor more slowly than anticipated, causing the value of these obligations to fall. Foreign Exposure Risk Securities issued or supported by foreign entities, including foreign banks and corporations, may involve additional risks and considerations. Extensive public information about the foreign issuer may not be available, and unfavorable political, economic or governmental developments in the foreign country involved could affect the payment of principal and interest. Income Risk Income risk is the risk that the Fund s yield will vary as short-term securities in its portfolio mature and the proceeds are reinvested in securities with different interest rates. Interest Rate Risk Interest rate risk is the risk that the value of a debt security may fall when interest rates rise. In general, the market price of debt securities with longer maturities will go up or down more in response to changes in interest rates than the market price of shorter-term securities. Additionally, securities issued or guaranteed by the U.S. Government, its agencies, instrumentalities and sponsored enterprises have historically involved little risk of loss of principal if held to maturity. However, due to fluctuations in interest rates, the market value of such securities may vary during the period shareholders own shares of the Fund. Market Risk and Selection Risk Market risk is the risk that one or more markets in which the Fund invests will go down in value, including the possibility that the markets will go down sharply and unpredictably. Selection risk is the risk that the securities selected by Fund management will underperform the markets, the relevant indices or the securities selected by other funds with similar investment objectives and investment strategies. This means you may lose money. Mortgage- and Asset-Backed Securities Risk Mortgage- and asset-backed securities represent interests in pools of mortgages or other assets, including consumer loans or receivables held in trust. Mortgage- and assetbacked securities are subject to credit, interest rate, prepayment and extension risks. These securities also are subject to risk of default on the underlying mortgage or asset, particularly during periods of economic downturn. Small movements in interest rates (both increases and decreases) may quickly and significantly reduce the value of certain mortgage-backed securities. Prepayment Risk When interest rates fall, certain obligations will be paid off by the obligor more quickly than originally anticipated, and the Fund may have to invest the proceeds in securities with lower yields. Regulatory Risk On July 23, 2014, the Securities and Exchange Commission adopted amendments to money market fund regulations, which structurally change the way that certain money market funds will be required to operate. The compliance periods for the amendments range between July 2015 and October When implemented, the changes may affect the Fund s investment strategies, fees and expenses, portfolio and share liquidity and return potential. The Fund has announced changes to its strategy to implement the new regulations. Repurchase Agreement Risk If the other party to a repurchase agreement defaults on its obligation under the agreement, the Fund may suffer delays and incur costs or lose money in exercising its rights under the agreement. If the seller fails to repurchase the security and the market value of the security declines, the Fund may lose money. Reverse Repurchase Agreements Risk Reverse repurchase agreements involve the risk that the other party to the reverse repurchase agreement may fail to return the securities in a timely manner or at all. The Fund could lose money if it is unable to recover the securities and the value of the collateral held by the Fund, including the value of the investments made with cash collateral, is less than the value of the securities. These events could also trigger adverse tax consequences to the Fund. Treasury Obligations Risk Treasury obligations may differ in their interest rates, maturities, times of issuance and other characteristics. Direct obligations of the U.S. Treasury have historically involved little risk of loss of principal if held to maturity. However, due to fluctuations in interest rates, the market value of such securities may vary during the period shareholders own shares of the Fund. 4

8 U.S. Government Obligations Risk Certain securities in which the Fund may invest, including securities issued by certain government agencies and government sponsored enterprises, are not guaranteed by the U.S. Government or supported by the full faith and credit of the United States. Variable and Floating Rate Instrument Risk The absence of an active market for these instruments could make it difficult for the Fund to dispose of them if the issuer defaults. Variable Rate Demand Obligations Risk Variable rate demand obligations are floating rate securities that combine an interest in a long-term municipal bond with a right to demand payment before maturity from a bank or other financial institution. If the bank or financial institution is unable to pay, the Fund may lose money. When-Issued and Delayed Delivery Securities and Forward Commitments Risk When-issued and delayed delivery securities and forward commitments involve the risk that the security the Fund buys will lose value prior to its delivery. There also is the risk that the security will not be issued or that the other party to the transaction will not meet its obligation. If this occurs, the Fund may lose both the investment opportunity for the assets it set aside to pay for the security and any gain in the security s price. Performance Information The information shows you how the Fund s performance has varied year by year and provides some indication of the risks of investing in the Fund. As with all such investments, past performance is not an indication of future results. To the extent that dividends and distributions have been paid by the Fund, the performance information for the Fund in the chart and table assumes reinvestment of the dividends and distributions. The table includes all applicable fees and sales charges. If the Fund s investment manager and its affiliates had not waived or reimbursed certain Fund expenses during these periods, the Fund s returns would have been lower. The Fund is a money market fund managed pursuant to the requirements of Rule 2a-7 under the Investment Company Act of 1940, as amended (the Investment Company Act ). Effective May 28, 2010, Rule 2a-7 was amended to impose new liquidity, credit quality and maturity requirements on all money market funds. Fund performance shown prior to May 28, 2010 is based on Investment Company Act rules then in effect and is not an indication of future returns. Updated information on the Fund s performance can be obtained by phone at (800) % ANNUAL TOTAL RETURNS Ready Assets Prime Money Fund As of 12/31 5% 4% 4.41% 4.81% 3% 2% 2.61% 2.62% 1% 0% 0.24% 0.01% 0.00% 0.00% 0.00% 0.01% During the ten-year period shown in the bar chart, the highest return for a quarter was 1.21% (quarter ended September 30, 2007) and the lowest return for a quarter was 0.00% (quarter ended March 31, 2014). The year-todate return as of June 30, 2015 was 0.00%. As of 12/31/14 Average Annual Total Returns 1 Year 5 Years 10 Years Ready Assets Prime Money Fund 0.01% 0.00% 1.45% To obtain the Fund s current 7-day yield, call (800) Investment Manager The Fund s investment manager is BlackRock Advisors, LLC. 5

9 Purchase and Sale of Fund Shares You may purchase or redeem shares of the Fund each day the New York Stock Exchange is open. To purchase or sell shares you should contact your financial intermediary or financial professional, or, if you hold your shares through Financial Data Services, Inc. (the Transfer Agent ), you should contact the Transfer Agent by phone at (800) The initial and subsequent minimums generally are as follows, although the Fund may reduce or waive the minimums in some cases: Minimum Initial Investment Minimum Additional Investment $5,000 for all accounts except: $300 for accounts advised by banks and registered investment advisers. $100 for certain employer-sponsored retirement plans. $1,000 for all accounts except: $100 for accounts advised by banks and registered investment advisers. $1 for certain employer-sponsored retirement plans. Tax Information The Fund anticipates that most of its distributions will be taxed as ordinary income or capital gains, unless you are a tax-exempt investor or are investing through a retirement plan, in which case you may be subject to Federal income tax upon withdrawal from such tax-deferred arrangements. Payments to Broker/Dealers and Other Financial Intermediaries If you purchase shares of the Fund through a broker-dealer or other financial intermediary, the Fund and BlackRock Investments, LLC, the Fund s distributor, or its affiliates may pay the financial intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other financial intermediary and your individual financial professional to recommend the Fund over another investment. Ask your individual financial professional or visit your financial intermediary s website for more information. 6

10 Details About the Fund Included in this prospectus are sections that tell you about buying and selling shares, management information, shareholder features of Ready Assets Prime Money Fund (the Fund ) and your rights as a shareholder. How the Fund Invests The Fund is a money market fund managed pursuant to Rule 2a-7 under the Investment Company Act of 1940, as amended (the Investment Company Act ). The Fund seeks to maintain a net asset value of $1.00 per share. The Fund will maintain a dollar-weighted average maturity of 60 days or less and a dollar-weighted average life of 120 days or less. For a discussion of dollar-weighted average maturity and dollar-weighted average life, please see the Glossary on page 24. Pursuant to Rule 2a-7, the Fund is subject to a general liquidity requirement that requires that the Fund hold securities that are sufficiently liquid to meet reasonably foreseeable shareholder redemptions in light of its obligations under Section 22(e) of the Investment Company Act regarding share redemptions and any commitments the Fund has made to shareholders. To comply with this general liquidity requirement, BlackRock Advisors, LLC ( BlackRock ) must consider factors that could affect the Fund s liquidity needs, including characteristics of the Fund s investors and their likely redemptions. Depending upon the volatility of its cash flows (particularly shareholder redemptions), this may require the Fund to maintain greater liquidity than would be required by the daily and weekly minimum liquidity requirements discussed below. The Fund will not acquire any illiquid securities (i.e., securities that cannot be sold or disposed of in the ordinary course of business within seven days at approximately the value ascribed to them by the Fund) if, immediately following such purchase, more than 5% of the Fund s total assets are invested in illiquid securities. The Fund will not acquire any security other than a daily liquid asset unless, immediately following such purchase, at least 10% of its total assets would be invested in daily liquid assets, and the Fund will not acquire any security other than a weekly liquid asset unless, immediately following such purchase, at least 30% of its total assets would be invested in weekly liquid assets. For a discussion of daily liquid assets and weekly liquid assets, please see the Glossary on page 24. The Fund is ordinarily limited to investing so that, immediately following any acquisition, not more than 5% of its total assets will be invested in securities issued by any one issuer (other than U.S. Government obligations, repurchase agreements collateralized by such securities and securities subject to certain guarantees or otherwise providing a right to demand payment) or, in the event that such securities are not First Tier Securities (as defined in Rule 2a-7), not more than ½ of 1% of the Fund s total assets. In addition, Rule 2a-7 requires that not more than 3% of the Fund s total assets be invested in Second Tier Securities (as defined in Rule 2a-7) and that Second Tier Securities may only be purchased if they have a remaining maturity of 45 days or less at the time of acquisition. Investment Objective The investment objective of the Fund is to seek preservation of capital, liquidity and the highest possible current income consistent with this objective available from investing in a diversified portfolio of short-term money market securities. Investment Process In seeking to achieve the Fund s investment objective, Fund management varies the kinds of money market securities in the portfolio and the average maturity of the portfolio. Fund management makes decisions on which securities to buy and sell based on its assessment of the relative values of different securities and future interest rates. Principal Investment Strategies The Fund invests primarily in short-term money market securities. These instruments are generally debt securities that mature or reset to a new interest rate within 13 months, with certain exceptions. For example, certain government securities held by the Fund may have remaining maturities exceeding 13 months if such securities provide for adjustments in their interest rates not less frequently than every 13 months. Other than U.S. Government and U.S. Government agency securities, certain securities issued by U.S. Government sponsored enterprises and instrumentalities and direct obligations of the U.S. Treasury, the Fund only invests in money market instruments of 7

11 issuers with one of the two highest short-term ratings from a nationally recognized statistical rating organization or unrated instruments that, in the opinion of Fund management, are of similar credit quality. The money market securities in which the Fund may invest include: U.S. Government Securities debt securities issued by or guaranteed as to principal and interest by the U.S. Government and supported by the full faith and credit of the United States. U.S. Government Agency Securities debt securities issued or guaranteed as to principal and interest by U.S. Government agencies that are not direct obligations of the United States. These securities may not be backed by the full faith and credit of the United States. U.S. Treasury Securities direct obligations of the U.S. Treasury. The Fund may also invest in Treasury receipts where the principal and interest components are traded separately under the Separate Trading of Registered Interest and Principal of Securities program. Securities Issued By U.S. Government Sponsored Enterprises obligations of private corporations sponsored by the federal government that have the legal status of government agencies such as the Federal Home Loan Mortgage Corporation, the Student Loan Marketing Association or the Federal National Mortgage Association. Securities issued by such entities are not backed by the full faith and credit of the United States. Securities Issued By U.S. Government Instrumentalities obligations of supranational entities sponsored by the U.S. and other governments, such as the World Bank or the Inter-American Development Bank whose securities are not backed by the full faith and credit of the United States. Bank Money Instruments obligations of commercial banks or other depository institutions, such as (but not limited to) certificates of deposit, time deposits, bank notes and bankers acceptances. The Fund will not invest more than 25% of its total assets (taken at market value at the time of each investment) in obligations of foreign depository institutions and their foreign branches and subsidiaries or in obligations of foreign branches or subsidiaries of U.S. depository institutions that are not backed by the U.S. parent. The Fund treats bank money instruments issued by U.S. branches or subsidiaries of foreign banks as obligations issued by domestic banks (and not subject to the 25% limitation) if the branch or subsidiary is subject to the same bank regulation as U.S. banks. Commercial Paper obligations, usually of nine months or less, issued by corporations, securities firms and other businesses for short-term funding. Foreign Short-Term Debt Instruments U.S. dollar-denominated commercial paper and other short-term obligations issued by foreign entities. Insurance Company Obligations short-term funding agreements and guaranteed insurance contracts with fixed or floating interest rates. Master Notes variable principal amount demand instruments issued by securities firms and other corporate issuers. Other Eligible Investments other money market instruments permitted by Securities and Exchange Commission (the SEC ) rules governing money market funds. Other Short-Term Obligations obligations issued by trusts, corporations, partnerships or other entities, including mortgage- or asset-backed instruments. Repurchase Agreements The Fund may enter into certain types of repurchase agreements involving the money market securities described above. Under a repurchase agreement, the seller agrees to repurchase a security at a mutually agreed-upon time and price. Reverse Repurchase Agreements Reverse repurchase agreements involve the sale of securities held by the Fund with an agreement to repurchase the securities at an agreed-upon price, date and interest rate. The Fund may enter into reverse repurchase agreements involving the money market securities described above. Variable and Floating Rate Obligations obligations of government agencies, corporations, depository institutions or other issuers which periodically or automatically reset their interest rate to reflect a current market rate, such as the Federal funds rate or a bank s prime rate, or the level of an interest rate index, such as the London Interbank Offered Rate ( LIBOR ) (a well-known short-term interest rate index). Variable Rate Demand Obligations floating rate securities that combine an interest in a long term municipal bond with a right to demand payment periodically or on notice. The Fund also may buy a participation interest in a variable rate demand obligation owned by a commercial bank or other financial institution. When the Fund purchases a participation interest, it receives the right to demand payment on notice to the owner of the obligation. The Fund may transact in securities on a when-issued, delayed delivery or forward commitment basis. The purchase or sale of securities on a when-issued basis or on a delayed delivery basis or through a forward commitment involves the 8

12 purchase or sale of securities by the Fund at an established price with payment and delivery taking place in the future. The Fund enters into these transactions to obtain what is considered an advantageous price to the Fund at the time of entering into the transaction. Other Strategies In addition to the principal strategies discussed above, the Fund may also invest or engage in the following investments/strategies: Borrowing The Fund may borrow only to meet redemptions. Foreign Securities The Fund may invest in obligations of foreign issuers, including both Eurodollar and Yankeedollar obligations. Eurodollar obligations are obligations issued by foreign branches or subsidiaries of U.S. banks. Yankeedollar obligations are obligations issued by U.S. branches or subsidiaries of foreign banks. Illiquid/Restricted Securities The Fund may invest up to 5% of its total assets in illiquid securities that it cannot sell within seven days at approximately current value. The Fund may also invest in restricted securities, which are securities that cannot be offered for public resale unless registered under the applicable securities laws or that have a contractual restriction that prohibits or limits their resale (i.e., Rule 144A securities). Restricted securities may include private placement securities that have not been registered under the applicable securities laws. Restricted securities may not be listed on an exchange and may have no active trading market and therefore may be considered to be illiquid. Rule 144A securities are restricted securities that can be resold to qualified institutional buyers but not to the general public and may be considered to be liquid securities. Securities Lending The Fund may lend securities with a value up to % of its total assets to financial institutions that provide cash or securities issued or guaranteed by the U.S. Government as collateral. U.S. Treasury Floating Rate Notes The Fund may invest in U.S. Treasury Floating Rate Notes ( FRNs ). These are two-year notes issued by the U.S. Treasury that reset their interest rates on a weekly basis. At maturity, the face value of an FRN is paid to the note holder. Investment Risks Risk is inherent in all investing. The value of your investment in the Fund, as well as the amount of return you receive on your investment, may fluctuate significantly from day to day and over time. You may lose part or all of your investment in the Fund or your investment may not perform as well as other similar investments. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of an investment at $1.00 per share, it is possible to lose money by investing in the Fund. The following is a description of certain risks of investing in the Fund. Principal Risks of Investing in the Fund Credit Risk Credit risk refers to the possibility that the issuer of a security will not be able to make principal and interest payments when due. Changes in an issuer s credit rating or the market s perception of an issuer s creditworthiness may also affect the value of the Fund s investment in that issuer. The degree of credit risk depends on both the financial condition of the issuer and the terms of the obligation. Extension Risk When interest rates rise, certain obligations will be paid off by the obligor more slowly than anticipated, causing the value of these obligations to fall. Rising interest rates tend to extend the duration of securities, making them more sensitive to changes in interest rates. The value of longer-term securities generally changes more in response to changes in interest rates than shorter-term securities. As a result, in a period of rising interest rates, securities may exhibit additional volatility and may lose value. Foreign Exposure Risk Securities issued or supported by foreign entities, including foreign banks and corporations, may involve additional risks and considerations. Extensive public information about the foreign issuer may not be available, and unfavorable political, economic or governmental developments in the foreign country involved could affect the payment of principal and interest. Income Risk The Fund s yield will vary as the short-term securities in its portfolio mature and the proceeds are reinvested in securities with different interest rates. Interest Rate Risk Interest rate risk is the risk that the value of a debt security may fall when interest rates rise. In general, the market price of debt securities with longer maturities will go up or down more in response to changes in interest rates than the market price of shorter-term securities. Additionally, securities issued or guaranteed by the U.S. Government, its agencies, instrumentalities and sponsored enterprises have historically involved little risk of loss of principal if held to maturity. However, due to fluctuations in interest rates, the market value of such securities may vary during the period shareholders own shares of the Fund. 9

13 Market Risk and Selection Risk Market risk is the risk that one or more markets in which the Fund invests will go down in value, including the possibility that the markets will go down sharply and unpredictably. Selection risk is the risk that the securities selected by Fund management will underperform the markets, the relevant indices or the securities selected by other funds with similar investment objectives and investment strategies. This means you may lose money. Mortgage- and Asset-Backed Securities Risk Mortgage-backed securities (residential and commercial) and asset-backed securities represent interests in pools of mortgages or other assets, including consumer loans or receivables held in trust. Although asset-backed and commercial mortgage-backed securities ( CMBS ) generally experience less prepayment than residential mortgage-backed securities, mortgage-backed and asset-backed securities, like traditional fixed-income securities, are subject to credit, interest rate, prepayment and extension risks. Small movements in interest rates (both increases and decreases) may quickly and significantly reduce the value of certain mortgage-backed securities. The Fund s investments in asset-backed securities are subject to risks similar to those associated with mortgage-related securities, as well as additional risks associated with the nature of the assets and the servicing of those assets. These securities also are subject to the risk of default on the underlying mortgage or assets, particularly during periods of economic downturn. Certain CMBS are issued in several classes with different levels of yield and credit protection. Mortgage-backed securities may be either pass-through securities or collateralized mortgage obligations ( CMOs ). Pass-through securities represent a right to receive principal and interest payments collected on a pool of mortgages, which are passed through to security holders. CMOs are created by dividing the principal and interest payments collected on a pool of mortgages into several revenue streams ( tranches ) with different priority rights to portions of the underlying mortgage payments. Certain CMO tranches may represent a right to receive interest only ( IOs ) or principal only ( POs ). These securities are frequently referred to as mortgage derivatives and may be extremely sensitive to changes in interest rates. If the Fund invests in CMO tranches (including CMO tranches issued by government agencies) and interest rates move in a manner not anticipated by Fund management, it is possible that the Fund could lose all or substantially all of its investment. The mortgage market in the United States has experienced difficulties that may adversely affect the performance and market value of certain of the Fund s mortgage-related investments. Delinquencies and losses on mortgage loans (including subprime and second-lien mortgage loans) generally have increased and may continue to increase, and a decline in or flattening of real-estate values (as has been experienced and may continue to be experienced in many housing markets) may exacerbate such delinquencies and losses. Also, a number of mortgage loan originators have experienced serious financial difficulties or bankruptcy. Asset-backed securities entail certain risks not presented by mortgage-backed securities, including the risk that in certain states it may be difficult to perfect the liens securing the collateral backing certain asset-backed securities. In addition, certain asset-backed securities are based on loans that are unsecured, which means that there is no collateral to seize if the underlying borrower defaults. Prepayment Risk When interest rates fall, certain obligations will be paid off by the obligor more quickly than originally anticipated, and the Fund may have to invest the proceeds in securities with lower yields. In periods of falling interest rates, the rate of prepayments tends to increase (as does price fluctuation) as borrowers are motivated to pay off debt and refinance at new lower rates. During such periods, reinvestment of the prepayment proceeds by Fund management will generally be at lower rates of return than the return on the assets that were prepaid. Prepayment reduces the yield to maturity and the average life of the security. Regulatory Risk On July 23, 2014, the SEC adopted amendments to money market fund regulations, which structurally change the way that certain money market funds will be required to operate. The effect of these amendments on an individual money market fund will depend on the type of investors (e.g., retail or institutional) and the principal investments of the fund. For example, institutional money market funds will be required to sell and redeem fund shares using a floating net asset value and may, at the discretion of the fund s board of trustees, impose fees on shareholder redemptions and temporarily suspend redemptions if the fund s weekly liquid assets fall below a certain threshold. Retail money market funds may impose fees and suspend redemptions, but may continue to sell and redeem shares at a constant net asset value, whereas Government money market funds are exempt from these structural changes. The compliance periods for the amendments range between July 2015 and October When implemented, the changes may affect the Fund s investment strategies, fees and expenses, portfolio and share liquidity and return potential. The Fund has announced changes to its strategy to implement the new regulations. Repurchase Agreement Risk If the other party to a repurchase agreement defaults on its obligation under the agreement, the Fund may suffer delays and incur costs or lose money in exercising its rights under the agreement. If the seller fails to repurchase the security and the market value of the security declines, the Fund may lose money. 10

14 Reverse Repurchase Agreements Risk Reverse repurchase agreements involve the sale of securities held by the Fund with an agreement to repurchase the securities at an agreed-upon price, date and interest payment. Reverse repurchase agreements involve the risk that the other party may fail to return the securities in a timely manner or at all. The Fund could lose money if it is unable to recover the securities and the value of the collateral held by the Fund, including the value of the investments made with cash collateral, is less than the value of the securities. These events could also trigger adverse tax consequences for the Fund. Treasury Obligations Risk Treasury obligations may differ in their interest rates, maturities, times of issuance and other characteristics. Direct obligations of the U.S. Treasury have historically involved little risk of loss of principal if held to maturity. However, due to fluctuations in interest rates, the market value of such securities may vary during the period shareholders own shares of the Fund. U.S. Government Obligations Risk Obligations of U.S. Government agencies, authorities, instrumentalities and sponsored enterprises have historically involved little risk of loss of principal if held to maturity. However, not all U.S. Government securities are backed by the full faith and credit of the United States. Obligations of certain agencies, authorities, instrumentalities and sponsored enterprises of the U.S. Government are backed by the full faith and credit of the United States (e.g., the Government National Mortgage Association); other obligations are backed by the right of the issuer to borrow from the U.S. Treasury (e.g., the Federal Home Loan Banks) and others are supported by the discretionary authority of the U.S. Government to purchase an agency s obligations. Still others are backed only by the credit of the agency, authority, instrumentality or sponsored enterprise issuing the obligation. No assurance can be given that the U.S. Government would provide financial support to any of these entities if it is not obligated to do so by law. Variable and Floating Rate Instrument Risk The absence of an active market for these instruments could make it difficult for the Fund to dispose of them if the issuer defaults. Variable Rate Demand Obligations Risk Variable rate demand obligations are floating rate securities that combine an interest in a long-term municipal bond with a right to demand payment before maturity from a bank or other financial institution. Municipal securities involve the following risks: the ability of the issuer to repay the obligations, the relative lack of information about certain issuers of municipal securities, and the possibility that future legislative changes could affect the market for and the value of municipal securities. Additionally, certain municipal securities, including private activity bonds, are not backed by the full faith, credit and taxing power of the issuer. With respect to variable rate demand obligations, if the bank or financial institution from which the Fund has the right to demand payment is unable to pay, the Fund may lose money. When-Issued and Delayed Delivery Securities and Forward Commitments Risk When-issued and delayed delivery securities and forward commitments involve the risk that the security the Fund buys will lose value prior to its delivery. There also is the risk that the security will not be issued or that the other party to the transaction will not meet its obligation. If this occurs, the Fund may lose both the investment opportunity for the assets it set aside to pay for the security and any gain in the security s price. Other Risks of Investing in the Fund The Fund may also be subject to certain other risks associated with its investments and investment strategies, including: Borrowing Risk Borrowing may exaggerate changes in the net asset value of Fund shares and in the return on the Fund s portfolio. Borrowing will cost the Fund interest expense and other fees. The costs of borrowing may reduce the Fund s return. Borrowing may cause the Fund to liquidate positions when it may not be advantageous to do so to satisfy its obligations. Expense Risk Fund expenses are subject to a variety of factors, including fluctuations in the Fund s net assets. Accordingly, actual expenses may be greater or less than those indicated. For example, to the extent that the Fund s net assets decrease due to market declines or redemptions, the Fund s expenses will increase as a percentage of Fund net assets. During periods of high market volatility, these increases in the Fund s expense ratio could be significant. Liquidity Risk Liquidity risk refers to the possibility that it may be difficult or impossible to sell certain positions at an acceptable price. Securities Lending Risk Securities lending involves the risk that the borrower may fail to return the securities in a timely manner or at all. As a result, the Fund may lose money and there may be a delay in recovering the loaned securities. The Fund could also lose money if it does not recover the securities and/or the value of the collateral falls, including the value of investments made with cash collateral. These events could trigger adverse tax consequences for the Fund. 11

15 Account Information Shareholder Servicing Plan The Fund has adopted a shareholder servicing plan (the Plan ) under Rule 12b-1 of the Investment Company Act that allows the Fund to pay fees for the sale of its shares. Plan Payments Under the Plan, Fund shares pay a fee to BlackRock Investments, LLC (the Distributor ) and/or its affiliates, including The PNC Financial Services Group, Inc. ( PNC ) and its affiliates, for account maintenance and sales and promotional activities and services in connection with the sale of Fund shares. The fee may also be used to pay the Distributor and financial professionals or selected securities dealers, brokers, investment advisers, service providers or industry professionals (including BlackRock, PNC and their respective affiliates) (each a Financial Intermediary ) for the costs of making services available to shareholders (including assistance in connection with inquiries related to shareholder accounts), sales commissions to Financial Intermediaries for selling Fund shares, compensation, sales incentives and payments to sales and marketing personnel and the payment of expenses incurred in sales and promotional activities. Fund shares pay a maximum fee per year that is a percentage of the average daily net asset value of the Fund attributable to such shares. Because the fees paid by the Fund under the Plan are paid out of Fund assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges. For more information on the Plan, including a complete list of services provided thereunder, see the SAI. Other Payments by the Fund In addition to, rather than in lieu of, fees that the Fund may pay to a Financial Intermediary pursuant to the Plan and fees the Fund pays its transfer agent, Financial Data Services, Inc. (the Transfer Agent ), BlackRock, on behalf of the Fund, may enter into non-plan agreements with a Financial Intermediary pursuant to which the Fund will pay a Financial Intermediary for administrative, networking, recordkeeping, sub-transfer agency and shareholder services. These non- Plan payments are generally based on either (1) a percentage of the average daily net assets of Fund shareholders serviced by a Financial Intermediary or (2) a fixed dollar amount for each account serviced by a Financial Intermediary. The aggregate amount of these payments may be substantial. Other Payments by BlackRock The Plan permits BlackRock, the Distributor and their affiliates to make payments relating to distribution and sales support activities out of their past profits or other sources available to them (and not as an additional charge to the Fund). From time to time, BlackRock, the Distributor or their affiliates also may pay a portion of the fees for administrative, networking, recordkeeping, sub-transfer agency and shareholder services described above at its or their own expense and out of its or their profits. BlackRock, the Distributor and their affiliates may compensate affiliated and unaffiliated Financial Intermediaries for the sale and distribution of shares of the Fund or for these other services to the Fund and its shareholders. These payments would be in addition to the Fund payments described in this prospectus and may be a fixed dollar amount, may be based on the number of customer accounts maintained by the Financial Intermediary, or may be based on a percentage of the value of shares sold to, or held by, customers of the Financial Intermediary. The aggregate amount of these payments by BlackRock, the Distributor and their affiliates may be substantial. Payments by BlackRock may include amounts that are sometimes referred to as revenue sharing payments. In some circumstances, these revenue sharing payments may create an incentive for a Financial Intermediary, its employees or associated persons to recommend or sell shares of the Fund to you. Please contact your Financial Intermediary for details about payments it may receive from the Fund or from BlackRock, the Distributor or their affiliates. For more information, see the SAI. 12