BlackRock 20/80 Target Allocation Fund, Investor A (BACPX) N-CSRS Certified semi-annual shareholder report (management investment company)

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 811-05742

Name of Fund:  BlackRock Funds

BlackRock All-Cap Energy & Resources Portfolio

BlackRock China Fund

BlackRock Energy & Resources Portfolio

BlackRock Global Opportunities Portfolio

BlackRock Health Sciences Opportunities Portfolio

BlackRock International Opportunities Portfolio

BlackRock Managed Volatility Portfolio (Formerly, BlackRock Asset Allocation Portfolio)

BlackRock Mid-Cap Growth Equity Portfolio

BlackRock Mid-Cap Value Equity Portfolio

BlackRock Science & Technology Opportunities Portfolio

BlackRock Small Cap Growth Equity Portfolio

BlackRock U.S. Opportunities Portfolio

BlackRock World Gold Fund

Fund Address:    100 Bellevue Parkway, Wilmington, DE 19809

Name and address of agent for service: John M. Perlowski, Chief Executive Officer, BlackRock Funds, 55 East 52^nd

Street, New York, NY 10055

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

Date of fiscal year end: 09/30/2012

Date of reporting period: 03/31/2012

Item 1 – Report to Stockholders

March 31, 2012

Semi-Annual Report (Unaudited)

BlackRock Funds^SM

u BlackRock All-Cap Energy & Resources Portfolio

u BlackRock China Fund

u BlackRock Energy & Resources Portfolio

u BlackRock World Gold Fund

    Not FDIC Insured • No Bank Guarantee • May  Lose Value    

Table of Contents

	Page
Dear Shareholder		3
Semi-Annual Report:
Fund Summaries		4
About Fund Performance		12
Disclosure of Expenses		13
Derivative Financial Instruments		13
Financial Statements:
Schedules of Investments		14
Statements of Assets and Liabilities		24
Statements of Operations		26
Statements of Changes in Net Assets		27
Financial Highlights		29
Notes to Financial Statements		36
Officers and Trustees		47
Additional Information		48
A World-Class Mutual Fund Family		50

2     BLACKROCK FUNDS     MARCH 31, 2012

Dear Shareholder

Twelve months ago, risk assets were charging forward, only to be met with a sharp reversal in May 2011 when escalating political strife in Greece rekindled fears about sovereign debt problems spreading across Europe. Concurrently, global economic indicators signaled that the recovery had slowed. Confidence was further shaken by the prolonged debt ceiling debate in Washington, DC. On August 5, 2011, Standard & Poor’s made history by downgrading the US government’s credit rating, and turmoil erupted in financial markets around the world. Extraordinary levels of volatility persisted in the months that followed as the European debt crisis intensified. Macro news flow became a greater influence on trading decisions than the fundamentals of the securities traded, resulting in high correlations between asset prices. By the end of the third quarter, equity markets had fallen nearly 20% from their April peak while safe-haven assets such as US Treasuries and gold had rallied to historic highs.

October brought enough positive economic data to assuage fears of a global double-dip recession. Additionally, European leaders began to show progress toward stemming the region’s debt crisis. Investors began to reenter the markets, putting risk assets on the road to recovery. Improving investor sentiment carried over into the first several months of 2012. Debt problems in Europe stabilized as policymakers secured a bailout plan for Greece and completed the nation’s debt restructuring without significant market disruptions. While concerns about slowing growth in China and a European recession weighed on the outlook for the global economy, an acceleration of the US recovery lifted sentiment. Several consecutive months of stronger jobs data signaled solid improvement in the US labor market, a pivotal factor for economic growth. Meanwhile, the European Central Bank revived financial markets with additional liquidity through its long-term refinancing operations. The improving market conditions and generally better-than-expected economic news lured investors still holding cash on the sidelines back to risk assets. Stocks, commodities and high yield bonds rallied through the first two months of the year while rising Treasury yields pressured higher-quality fixed income assets. The rally softened in late March, however, as concerns about slowing growth in China were refueled by negative signals from the world’s second-largest economy. Additionally, concerns over the European debt crisis resurfaced given uncertainty around policies for sovereign debt financing in peripheral countries and rising yields in Portugal and Spain.

Thanks in large part to an exceptionally strong first quarter of 2012, risk assets, including equities and high yield bonds, posted solid returns for the 6-month period ended March 31, 2012. On a 12-month basis, US large-cap stocks and high yield bonds delivered positive results, while small-cap stocks finished in slightly negative territory. International and emerging markets, which experienced significant downturns in 2011, lagged the broader rebound. Fixed income securities experienced mixed results, given recent volatility in yields. US Treasury bonds performed particularly well for the 12-month period; however, an early-2012 sell-off resulted in a negative return for the 6–month period. Municipal bonds staged a solid advance over the past year. Continued low short-term interest rates kept yields on money market securities near their all-time lows.

While markets have improved in recent months, considerable headwinds remain. Europe faces a prolonged recession and the financial situations in Italy, Portugal and Spain remain worrisome. Higher oil and gasoline prices along with slowing growth in China and other emerging-market countries weigh heavily on the future of the global economy. But, we believe that with these challenges come opportunities. We remain committed to working with you and your financial professional to identify actionable ideas for your portfolio. We encourage you to visit www.blackrock.com/newworld for more information.

Sincerely,

Rob Kapito

President, BlackRock Advisors, LLC

“While markets have improved in recent months, considerable headwinds remain.”

Rob Kapito

President, BlackRock Advisors, LLC

Total Returns as of March 31, 2012
	6-month			12-month
US large cap equities (S&P 500® Index)		25.89	%		8.54	%
US small cap equities (Russell 2000® Index)		29.83			(0.18	)
International equities (MSCI Europe, Australasia, Far East Index)		14.56			(5.77	)
Emerging market equities (MSCI Emerging Markets Index)		19.12			(8.81	)
3-month Treasury bill (BofA Merrill Lynch 3-Month Treasury Bill Index)		0.01			0.06
US Treasury securities (BofA Merrill Lynch 10- Year US Treasury Index)		(1.05	)		14.92
US investment grade bonds (Barclays US Aggregate Bond Index)		1.43			7.71
Tax-exempt municipal bonds (S&P Municipal Bond Index)		4.16			12.56
US high yield bonds (Barclays US Corporate High Yield 2% Issuer Capped Index)		12.17			6.43

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 Summary as of March  31, 2012   BlackRock All-Cap Energy & Resources Portfolio

Investment Objective    

BlackRock All-Cap Energy & Resources Portfolio’s (the “Fund”) investment objective is to provide long-term growth of capital.

Portfolio Management Commentary

How did the Fund perform?

— For the six-month period ended March 31, 2012, the Fund posted a positive double-digit return, but underperformed its custom benchmark, which is a blend of 70% Wilshire 5000 Modified Energy Cap Weighted Index and 30% MSCI All-Country World Energy Index. The Fund also underperformed the broad-market S&P 500^® Index. The following discussion of relative performance pertains to the Fund’s custom blended benchmark.

What factors influenced performance?

— The Fund benefited from its sizable exposure to oil-focused names within the oil & gas exploration & production sub-industry. Oil producers such as Whiting Petroleum Corp., Plains Exploration & Production Co. and Energy XXI Bermuda Ltd. posted solid double-digit gains on stronger global pricing and increased recognition of their respective production profiles. Natural gas producers in this group suffered the impact of extremely low natural gas prices and thus muted the otherwise strong performance from oil-oriented stocks.

— The largest detractor from returns relative to the custom blended benchmark was the Fund’s overweight allocation to gold names. Gold stocks dropped off sharply in tandem with spot market prices in the beginning of the fourth quarter of 2011, but did not keep pace with the recovery in gold spot prices during January and February of 2012.

— The Fund’s overweight in oil, gas & consumable fuels also detracted substantially. Coal names struggled throughout the period from the effects of the warm winter in the United States. Negative performance was exacerbated by the impact of power producers switching to natural gas, as natural gas prices traded at historically low levels. Alpha Natural Resources, Inc., Peabody Energy Corp. and CONSOL Energy, Inc. had the largest impact on relative returns within the group.

— The Fund’s lack of exposure to refiners, one of the best-performing segments in the first quarter of 2012, hampered returns as a widening spread between global and US crude oil prices enabled these companies to realize higher margins.

Describe recent portfolio activity.

— During the six-month period, positioning in the portfolio remained relatively unchanged.

Describe portfolio positioning at period end.

— At period end, the Fund continued to favor oil-focused names across the capitalization spectrum. The Fund maintained exposure to coal and low-cost natural gas producers that have experienced selling pressure in recent months.

— With energy stocks implying prices of $80 per barrel for crude oil and $2 per ton for coal margins as of period end, Fund management believes the sector is poised to rally from its oversold/under-owned conditions. While the timing of such a rebound remains uncertain given macroeconomic headwinds, Fund management believes the energy sector offers compelling value.

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.

Portfolio Information

Ten Largest Holdings	Percent of Long-Term Investments
Whiting Petroleum Corp.		5	%
Silver Wheaton Corp.		4
EOG Resources, Inc.		4
Occidental Petroleum Corp.		4
Core Laboratories NV		4
Apache Corp.		3
CONSOL Energy, Inc.		3
Goldcorp, Inc.		3
Chevron Corp.		3
Plains Exploration & Production Co.		3

Industry Allocation	Percent of Long-Term Investments
Oil, Gas & Consumable Fuels		74	%
Energy Equipment & Services		15
Metals & Mining		9
Chemicals		2

For Fund compliance purposes, the Fund’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by Fund management. These definitions may not apply for purposes of this report, which may combine industry sub-classifications for reporting ease.

4     BLACKROCK FUNDS     MARCH 31, 2012

BlackRock All-Cap Energy & Resources Portfolio

Total Return Based on a $10,000 Investment

¹  Assuming maximum sales charges, if any, transaction costs and other operating expenses, including investment advisory fees. Institutional Shares do not have a sales charge.

²  Under normal market conditions, the Fund invests at least 80% of its total assets in equity securities of global energy and natural resources companies and companies in associated businesses, as well as utilities (such as gas, water, cable, electrical and telecommunications utilities).

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 Wilshire 5000 Modified Energy Cap Weighted Index is a customized index comprised of the energy sector constituents of the Wilshire 5000 (Full Cap) Index which have been market capitalization weighted and the six largest securities and all securities that have a percentage market value below 0.01% have been removed.

⁵  The MSCI All-Country World Energy Index is comprised of the energy sector constituents of the MSCI All-Country World Index, a free float-adjusted market capitalization weighted index designed to measure the equity market performance of developed and emerging markets.

⁶  Commencement of operations.

Performance Summary for the Period Ended March 31, 2012

				Average Annual Total Returns7
				1 Year						5 Years						Since Inception8
	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
Institutional		17.46	%		(22.37	)%		N/A			2.81	%		N/A			8.89	%		N/A
Service		17.23			(22.63	)		N/A			2.42			N/A			8.47			N/A
Investor A		17.14			(22.73	)		(26.79	)%		2.40			1.31	%		8.45			7.63	%
Investor B		16.68			(23.31	)		(26.76	)		1.63			1.30			7.64			7.64
Investor C		16.65			(23.28	)		(24.05	)		1.65			1.65			7.68			7.68
S&P 500® Index		25.89			8.54			N/A			2.01			N/A			4.30			N/A
70% Wilshire 5000 Modified Energy Cap Weighted Index / 30% MSCI All-Country World Energy Index		23.55			(10.61	)		N/A			4.78			N/A			10.32			N/A

⁷  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 12 for a detailed description of share classes, including any related sales charges and fees.

⁸  The Fund commenced operations on February 16, 2005.

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

Past performance is not indicative of future results.

Expense Example

	Actual									Hypothetical10
	Beginning Account Value October 1, 2011			Ending Account Value March 31, 2012			Expenses Paid During the  Period9			Beginning Account Value October 1, 2011			Ending Account Value March 31, 2012			Expenses Paid During the  Period9			Annualized Expense Ratio
Institutional		$	1,000.00		$	1,174.60		$	5.06		$	1,000.00		$	1,020.35		$	4.70		0.93	%
Service		$	1,000.00		$	1,172.30		$	6.90		$	1,000.00		$	1,018.65		$	6.41		1.27	%
Investor A		$	1,000.00		$	1,171.40		$	7.27		$	1,000.00		$	1,018.30		$	6.76		1.34	%
Investor B		$	1,000.00		$	1,166.80		$	11.38		$	1,000.00		$	1,014.50		$	10.58		2.10	%
Investor C		$	1,000.00		$	1,166.50		$	11.21		$	1,000.00		$	1,014.65		$	10.43		2.07	%

⁹  For each class of the Fund, expenses are equal to the annualized expense ratio for the class, multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period shown).

¹⁰  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.

See “Disclosure of Expenses” on page 13 for further information on how expenses were calculated.

    BLACKROCK FUNDS     MARCH 31, 2012 5

  Fund Summary as of March 31, 2012   BlackRock China Fund

Investment Objective

BlackRock China Fund’s (the “Fund”) investment objective is to seek to maximize total return. Total return means the combination of capital appreciation and investment income.

Portfolio Management Commentary

How did the Fund perform?

— For the six-month period ended March 31, 2012, the Fund outperformed its benchmark, the MSCI China 10/40 Index, and the MSCI China Index. The following discussion of relative performance pertains to the MSCI China 10/40 Index.

What factors influenced performance?

— The Fund outperformed its benchmark as a result of strong stock selection, particularly within the energy and financials sectors. In energy, the Fund’s underweight positions relative to the benchmark in China Shenhua Energy Co., PetroChina Co. Ltd. and Yanzhou Coal Mining Co. Ltd. had a positive impact on performance, as did an overweight holding in China Coal Energy Co. Ltd. Within financials, the Fund’s overweight positions in China CITIC Bank Corp. Ltd. and China Minsheng Banking Corp. Ltd. were the largest contributors to performance. From an individual security perspective, the Fund’s top contributor to performance for the period was diversified electronics manufacturer ZhuZhou CSR Times Electric Co. Ltd. The Fund maintained an overweight position in this core holding as it continued to benefit from the loosening of specific government policy that supports the development of the company’s rail network.

— Detracting from performance was the Fund’s overweight holding in materials company Huabao International Holdings Ltd., which saw its stock price decline due to allegations of fraud in the final quarter of 2011. An overweight position in wireless communications provider China Unicom Hong Kong Ltd. also had a negative impact on Fund performance during the period.

Describe recent portfolio activity.

— During the six-month period, the Fund purchased health care stock Sinopharm Group Co. as a long-term structural growth holding. The Fund also added Kingdee International Software Group Co. Ltd. to its portfolio holdings, which reduced the Fund’s underweight in the information technology (“IT”) sector. In the industrials sector, the Fund initiated a small position in AviChina Industry & Technology Co. Ltd., a developer and manufacturer of aviation products, for its attractive long-term growth potential.

— The Fund reduced exposure to the consumer staples sector during the period by exiting its position and taking profits on Want Want China Holdings Ltd. The Fund also exited its position in China Taiping Insurance Holdings Co. Ltd. and invested some of those proceeds in New China Life Insurance Co. Ltd., but remained underweight in Chinese life insurers overall.

Describe portfolio positioning at period end.

— As of period end, the Fund maintained sector overweights relative to the MSCI China 10/40 Index in consumer discretionary, health care, industrials and materials, and a marginal overweight in utilities. The Fund was underweight in consumer staples, energy, IT and telecommunications services, and slightly underweight in financials. The Fund ended the period positioned to purchase securities on price weakness amid a trend of downward revisions of corporate earnings reports while continuing to add to its long-term secular growth stocks, particularly in the IT, health care and consumer discretionary sectors.

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.

    Portfolio Information

Ten Largest Holdings	Percent of Long-Term Investments
CNOOC Ltd.		7	%
Industrial & Commercial Bank of China, H Shares		7
China Mobile Ltd.		7
China Construction Bank Corp., H Shares		6
Bank of China Ltd., H Shares		6
China Petroleum & Chemical Corp., H Shares		4
China Unicom Hong Kong Ltd.		3
China Pacific Insurance Group Co. Ltd., H Shares		3
Zhuzhou CSR Times Electric Co. Ltd., H Shares		3
China CITIC Bank Corp. Ltd., H Shares		3

Sector Allocation	Percent of Long-Term Investments
Financials		36	%
Energy		17
Industrials		11
Telecommunication Services		10
Materials		7
Consumer Discretionary		7
Health Care		5
Information Technology		3
Utilities		3
Consumer Staples		1

For Fund compliance purposes, the Fund’s sector classifications refer to any one or more of the sector sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by Fund management. These definitions may not apply for purposes of this report, which may combine sector sub-classifications for reporting ease.

6     BLACKROCK FUNDS     MARCH 31, 2012

BlackRock China Fund

Total Return Based on a $10,000 Investment

¹  Assuming maximum sales charges, if any, transaction costs and other operating expenses, including investment advisory fees. Institutional Shares do not have a sales charge.

²  The Fund seeks to achieve its objective by investing at least 80% of its total assets in equity securities of companies domiciled, or exercising the predominant part of their economic activity, in China, including its special administrative regions such as Hong Kong, or in instruments with similar economic characteristics.

³  A free float-adjusted market capitalization index that is designed to measure equity market performance in China, taking into consideration the concentration constraints of the European Union’s UCITS III regulations.

⁴  An unmanaged free float-adjusted market capitalization index designed to measure equity market performance of China.

⁵  Commencement of operations.

Performance Summary for the Period Ended March 31, 2012

				Total Returns6
				Since Inception7
	6-Month Total Returns			w/o sales charge			w/sales charge
Institutional		20.27	%		(17.01	)%		N/A
Investor A		20.10			(17.25	)		(21.57	)%
Investor C		19.71			(17.76	)		(18.57	)
MSCI China 10/40 Index		19.20			(14.08	)		N/A
MSCI China Index		18.82			(14.20	)		N/A

⁶  Assuming maximum sales charges, if any. Total returns with and without sales charges reflect reductions for distribution and service fees. See “About Fund Performance” on page 12 for a detailed description of share classes, including any related sales charges and fees.

⁷  The Fund commenced operations on April 29, 2011.

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

Past performance is not indicative of future results.

Expense Example

	Actual									Hypothetical9
	Beginning Account Value October 1, 2011			Ending Account Value March 31, 2012			Expenses Paid During the Period8			Beginning Account Value October 1, 2011			Ending Account Value March 31, 2012			Expenses Paid During the Period8			Annualized Expense Ratio
Institutional		$	1,000.00		$	1,202.70		$	9.09		$	1,000.00		$	1,016.75		$	8.32		1.65	%
Investor A		$	1,000.00		$	1,201.00		$	10.45		$	1,000.00		$	1,015.50		$	9.57		1.90	%
Investor C		$	1,000.00		$	1,197.10		$	14.56		$	1,000.00		$	1,011.75		$	13.33		2.65	%

⁸  For each class of the Fund, expenses are equal to the annualized expense ratio for the class, multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period shown).

⁹  Hypothetical 5% annual return before expenses is calculated by pro rating the number of days in the most recent fiscal period divided by 366.

See “Disclosure of Expenses” on page 13 for further information on how expenses were calculated.

    BLACKROCK FUNDS     MARCH 31, 2012 7

  Fund Summary as of March 31, 2012   BlackRock Energy & Resources Portfolio

Investment Objective

BlackRock Energy & Resources Portfolio’s (the “Fund”) investment objective is to provide long-term growth of capital.

Portfolio Management Commentary

How did the Fund perform?

— For the six-month period ended March 31, 2012, the Fund posted a positive double-digit return, but underperformed its benchmark, the Wilshire 5000 Modified Energy Equal Weighted Index, and the broad-market S&P 500^® Index. The following discussion of relative performance pertains to the Fund’s benchmark.

What factors influenced performance?

— The Fund benefited from its sizable exposure to oil-focused names in the oil & gas exploration & production sub-industry. Oil producers such as Plains Exploration & Production Co., Energy XXI Bermuda Ltd. and Clayton Williams Energy, Inc. posted solid double-digit gains on stronger global pricing and increased recognition of their respective production profiles. Cobalt International Energy, Inc. stock price more than doubled on the announcement of the company’s exploration success off the coast of Africa. Natural gas producers in this group suffered the impact of extremely low natural gas prices and thus muted the otherwise strong performance from oil-oriented stocks.

— The Fund also benefited from stock selection in oil & gas storage & transportation, as Cheniere Energy, Inc. shares soared on the company’s significant progress toward becoming the first viable candidate to export liquefied natural gas.

— The largest detractor from returns relative to the benchmark was the Fund’s overweight allocation to the oil, gas & consumable fuels segment. Coal names struggled throughout the period from the effects of the warm winter in the United States. Negative performance was exacerbated by the impact of power producers switching to natural gas, as natural gas prices traded at historically low levels. Alpha Natural Resources, Inc., Peabody Energy Corp. and CONSOL Energy, Inc. had the

largest impact on relative returns within the group. Stock selection in the oil & gas equipment & services group also detracted from returns, primarily due to the Fund’s lack of exposure to several strong-performing stocks within the customized benchmark including OYO Geospace Corp., which returned close to 90% during the period after announcing its contract to monitor deep-water reservoirs off the coast of Brazil.

— The Fund’s modest overweight position in gold and precious metals also detracted from returns, as equity names did not keep up with spot prices which recovered from large drops in the fourth quarter of 2011. The Fund’s lack of weighting in refiners, one of the best-performing segments in the first quarter, hampered returns as these names benefited from a widening spread between global and US crude oil prices, enabling them to realize higher margins.

Describe recent portfolio activity.

— During the six-month period, positioning in the portfolio remained relatively unchanged.

Describe portfolio positioning at period end.

— At period end, the Fund’s holdings reflected an emphasis on small- and mid-sized oil producers with the ability to grow their volumes in the coming years. The Fund also exhibited a preference for low-cost natural gas producers and coal producers, a segment which could be among the last to move up on firming market conditions, but could also have the largest upward move.

— With energy stocks implying prices of $80 per barrel for crude oil and $2 per ton for coal margins as of period end, Fund management believes the sector is poised to rally from its oversold/under-owned conditions. While the timing of such a rebound remains uncertain given macroeconomic headwinds, Fund management believes the energy sector offers compelling value.

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.

Portfolio Information

Ten Largest Holdings	Percent of Long-Term Investments
Plains Exploration & Production Co.		6	%
CONSOL Energy, Inc.		5
Alpha Natural Resources, Inc.		5
Energy XXI Bermuda Ltd.		4
Range Resources Corp.		4
Clayton Williams Energy, Inc.		4
Pioneer Natural Resources Co.		4
EQT Corp.		4
Weatherford International Ltd.		3
Peabody Energy Corp.		3

Industry Allocation	Percent of Long-Term Investments
Oil, Gas & Consumable Fuels		80	%
Energy Equipment & Services		13
Metals & Mining		7

For Fund compliance purposes, the Fund’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by Fund management. These definitions may not apply for purposes of this report, which may combine industry sub-classifications for reporting ease.

8     BLACKROCK FUNDS     MARCH 31, 2012

BlackRock Energy & Resources Portfolio

Total Return Based on a $10,000 Investment

¹  Assuming maximum sales charges, if any, transaction costs and other operating expenses, including investment advisory fees. Institutional Shares do not have a sales charge.

²  Under normal market conditions, the Fund invests at least 80% of its total assets in equity securities of global energy and natural resources companies and companies in associated businesses, as well as utilities (such as gas, water, cable, electrical and telecommunications utilities).

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 Wilshire 5000 Modified Energy Equal Weighted Index is a customized index comprised of the energy sector constituents of the Wilshire 5000 (Full Cap) Index which have been equally weighted and the six largest securities and all securities that have a percentage market value below 0.01% have been removed.

Performance Summary for the Period Ended March 31, 2012

				Average Annual Total Returns5
				1 Year						5 Years						10 Years
	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
Institutional		21.99	%		(23.81	)%		N/A			3.14	%		N/A			15.99	%		N/A
Investor A		21.79			(24.06	)		(28.04	)%		2.80			1.69	%		15.60			14.98	%
Investor B		21.36			(24.63	)		(27.88	)		2.02			1.82			14.93			14.93
Investor C		21.32			(24.61	)		(25.33	)		2.06			2.06			14.78			14.78
S&P 500® Index		25.89			8.54			N/A			2.01			N/A			4.12			N/A
Wilshire 5000 Modified Energy Equal Weighted Index		24.83			(13.29	)		N/A			6.63			N/A			16.11			N/A

⁵  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 12 for a detailed description of share classes, including any related sales charges and fees.

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

Past performance is not indicative of future results.

Expense Example

	Actual									Hypothetical7
	Beginning Account Value October 1, 2011			Ending Account Value March 31, 2012			Expenses Paid During the Period6			Beginning Account Value October 1, 2011			Ending Account Value March 31, 2012			Expenses Paid During the Period6			Annualized Expense Ratio
Institutional		$	1,000.00		$	1,219.90		$	5.49		$	1,000.00		$	1,020.05		$	5.00		0.99	%
Investor A		$	1,000.00		$	1,217.90		$	7.49		$	1,000.00		$	1,018.25		$	6.81		1.35	%
Investor B		$	1,000.00		$	1,213.60		$	11.62		$	1,000.00		$	1,014.50		$	10.58		2.10	%
Investor C		$	1,000.00		$	1,213.20		$	11.40		$	1,000.00		$	1,014.70		$	10.38		2.06	%

⁶  For each class of the Fund, expenses are equal to the annualized expense ratio for the class, multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period shown).

⁷  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.

See “Disclosure of Expenses” on page 13 for further information on how expenses were calculated.

    BLACKROCK FUNDS     MARCH 31, 2012 9

  Fund Summary as of March 31, 2012   BlackRock World Gold Fund

Investment Objective

BlackRock World Gold Fund’s (the “Fund”) investment objective is to seek to maximize total return. Total return means the combination of capital appreciation and investment income.

Portfolio Management Commentary

How did the Fund perform?

— For the six-month period ended March 31, 2012, the Fund outperformed its benchmark, the FTSE Gold Mines Index.

What factors influenced performance?

— The Fund’s exposure to several small-to-mid-cap gold companies with a focus on development projects contributed to performance during the six-month period, with investments in European Goldfields Ltd., Banro Corp. and B2Gold Corp. performing particularly well. Shares of European Goldfields Ltd. moved higher following the company’s acquisition by Eldorado Gold Corp. in the fourth quarter 2011. Banro Corp., a developer operating in the Democratic Republic of the Congo, announced a positive operations update for its Twangiza open-pit gold mine, reassuring investors that its production increase is on schedule. B2Gold Corp. continued to deliver on production guidance while keeping its operating costs low. The Fund’s allocation to non-gold holdings also aided performance. Silver producers were among the strongest of these, as they benefited from a 75% rise in the average silver price in 2011 relative to the average price in 2010.

— Detracting from relative performance was the Fund’s holding of Kinross Gold Corp., a North American-listed gold producer. During the period, Kinross Gold Corp. reported that the development of its Tasiast mine in Mauritania was facing some delays and wrote down $2.9 billion in goodwill against this asset.

— The Fund’s broad underweight to the major large-cap gold producers was a source of negative performance in the fourth quarter of 2011, as these stocks broadly held up better than their mid-tier counterparts in the risk-averse environment.

Describe recent portfolio activity.

— The Fund added to its position in Eldorado Gold Corp. in early 2012, after the stock sold off due to its acquisition of European Goldfields Ltd. Eldorado Gold Corp. stock has been trading on a lower valuation, presenting an attractive buying opportunity. The Fund initiated a new position in Canadian-listed stock Osisko Mining Corp., which recently worked to resolve issues at its flagship Malartic mine. The outlook for Osisko Mining Corp. is positive given increased production and lower operational risk at the Malartic mine. The Fund sold its entire position in small-cap gold producer Guyana Goldfields, Inc. due to uncertainty about its feasibility study.

Describe portfolio positioning at period end.

— At period end, the Fund had 84% of its portfolio invested in gold companies, 12% in silver companies and 3% in platinum names, with the remaining assets allocated to other metals and minerals and cash.

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.

Portfolio Information

Ten Largest Holdings	Percent of Long-Term Investments
Newcrest Mining Ltd.		9	%
Goldcorp, Inc.		9
Eldorado Gold Corp.		6
Fresnillo Plc.		6
Kinross Gold Corp.		5
Yamana Gold, Inc.		5
Randgold Resources Ltd. - ADR		5
Industrias Penoles SAB de CV		4
Barrick Gold Corp.		3
Alamos Gold, Inc.		3

Geographic Allocation	Percent of Long-Term Investments
Canada		49	%
Australia		15
Mexico		9
South Africa		7
Jersey, Channel Islands		6
United States		5
Peru		5
United Kingdom		4

10     BLACKROCK FUNDS     MARCH 31, 2012

BlackRock World Gold Fund

Total Return Based on a $10,000 Investment

¹  Assuming maximum sales charges, if any, transaction costs and other operating expenses, including investment advisory fees. Institutional Shares do not have a sales charge.

²  Under normal circumstances, the Fund will invest at least 80% of its net assets, plus any borrowings for investment purposes, in equity securities of gold-related companies.

³  An index designed to reflect the performance of the worldwide market in the shares of companies whose principal activity is the mining of gold.

⁴  Commencement of operations.

Performance Summary for the Period Ended March 31, 2012

				Average Annual Total Returns5
				1 Year						Since Inception6
	6-Month Total Returns			w/o sales charge			w/sales charge			w/o sales charge			w/sales charge
Institutional		(6.06	)%		(16.02	)%		N/A			3.70	%		N/A
Investor A		(6.13	)		(16.17	)		(20.58	)%		3.48			0.52	%
Investor C		(6.55	)		(16.90	)		(17.73	)		2.65			2.65
FTSE Gold Mines Index		(11.65	)		(17.46	)		N/A			(0.97	)		N/A

⁵  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 12 for a detailed description of share classes, including any related sales charges and fees.

⁶  The Fund commenced operations on May 26, 2010.

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

Past performance is not indicative of future results.

Expense Example

	Actual									Hypothetical8
	Beginning Account Value October 1, 2011			Ending Account Value March 31, 2012			Expenses Paid During the  Period7			Beginning Account Value October 1, 2011			Ending Account Value March 31, 2012			Expenses Paid During the  Period7			Annualized Expense Ratio
Institutional		$	1,000.00		$	939.40		$	6.01		$	1,000.00		$	1,018.80		$	6.26		1.24	%
Investor A		$	1,000.00		$	938.70		$	7.22		$	1,000.00		$	1,017.55		$	7.52		1.49	%
Investor C		$	1,000.00		$	934.50		$	10.98		$	1,000.00		$	1,013.65		$	11.43		2.27	%

⁷  For each class of the Fund, expenses are equal to the annualized expense ratio for the class, multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period shown).

⁸  Hypothetical 5% annual return before expenses is calculated by pro rating the number of days in the most recent fiscal period divided by 366.

See “Disclosure of Expenses” on page 13 for further information on how expenses were calculated.

    BLACKROCK FUNDS     MARCH 31, 2012 11

About Fund Performance

— Institutional Shares are not subject to any sales charge. Institutional Shares bear no ongoing distribution or service fees and are available only to eligible investors.

— Service Shares are not subject to any sales charge (front-end load) or deferred sales charge. Service Shares are subject to a service fee of 0.25% per year (but no distribution fee).

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

— Investor B Shares are subject to a maximum contingent deferred sales charge (“CDSC”) of 4.50% declining to 0% after six years. In addition, Investor B Shares are subject to a distribution fee of 0.75% per year and a service fee of 0.25% per year. Investor B Shares automatically convert to Investor A Shares after approximately eight years. (There is no initial sales charge for automatic share conversions.) All returns for periods greater than eight years reflect this conversion. Investor B Shares are only available through exchanges, dividend reinvestment by existing shareholders or for purchase by certain qualified employee benefit plans.

— Investor C Shares are subject to a 1.00% CDSC if redeemed within one year of purchase. In addition, Investor C Shares are subject to a distribution fee of 0.75% per year and a service fee of 0.25% per year.

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.

Performance for the BlackRock Energy & Resources Portfolio for the periods prior to January 31, 2005 is based on performance of a certain former State Street Research mutual fund that reorganized with BlackRock Energy & Resources Portfolio on that date.

The Funds’ investment advisor, BlackRock Advisors, LLC (the “Manager”), 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 3 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.

12     BLACKROCK FUNDS     MARCH 31, 2012

Disclosure of Expenses

Shareholders of the Funds may incur the following charges: (a) expenses related to transactions, including sales charges and exchange fees; and (b) operating expenses, including investment advisory fees, service and distribution fees, including 12b-1 fees, acquired fund fees and expenses and other Fund expenses. The expense examples on the previous pages (which are based on a hypothetical investment of $1,000 invested on October 1, 2011 and held through March 31, 2012) are intended to assist shareholders both in calculating expenses based on an investment in the Funds and in comparing these expenses with similar costs of investing in other mutual funds.

The tables 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 headings entitled “Expenses Paid During the Period.”

The tables 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 example with the 5% hypothetical examples that appear in other funds’ shareholder reports.

The expenses shown in the tables 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.

Derivative Financial Instruments

The Funds may invest in various derivative financial instruments, including foreign currency exchange contracts as specified in Note 2 of the Notes to Financial Statements, which may constitute forms of economic leverage. Such derivative financial instruments are used to obtain exposure to a market without owning or taking physical custody of securities or to hedge market and/or foreign currency exchange rate risks. Derivative financial instruments involve risks, including the imperfect correlation between the value of a derivative financial instrument and the underlying asset, possible default of the counterparty to the transaction or illiquidity of the derivative financial instrument. The Funds’

ability to use a derivative financial instrument successfully depends on the investment advisor’s ability to predict pertinent market movements accurately, which cannot be assured. The use of derivative financial instruments may result in losses greater than if they had not been used, may require a Fund to sell or purchase portfolio investments at inopportune times or for distressed values, may limit the amount of appreciation a Fund can realize on an investment, may result in lower dividends paid to shareholders or may cause a Fund to hold an investment that it might otherwise sell. The Funds’ investments in these instruments are discussed in detail in the Notes to Financial Statements.

    BLACKROCK FUNDS     MARCH 31, 2012 13

  Schedule of Investments March  31, 2012 (Unaudited)   BlackRock All-Cap Energy & Resources Portfolio (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Chemicals – 1.6%
Potash Corp. of Saskatchewan, Inc.		259,000	$	11,833,710
Energy Equipment & Services – 15.1%
Atwood Oceanics, Inc. (a)		93,100		4,179,259
Basic Energy Services, Inc. (a)		182,300		3,162,905
Calfrac Well Services Ltd.		53,400		1,493,669
Core Laboratories NV		208,600		27,445,502
Halliburton Co.		221,100		7,338,309
Key Energy Services, Inc. (a)(b)		898,600		13,883,370
National Oilwell Varco, Inc.		145,000		11,523,150
Patterson-UTI Energy, Inc.		482,133		8,336,080
Schlumberger Ltd.		148,641		10,394,465
Seadrill Ltd.		322,200		12,098,602
Technip SA		80,900		9,553,110
Trican Well Service Ltd.		435,600		6,397,854
				115,806,275
Metals & Mining – 8.8%
Eldorado Gold Corp.		692,020		9,504,911
Goldcorp, Inc.		524,652		23,640,819
Silver Wheaton Corp.		1,022,124		33,934,517
				67,080,247
Oil, Gas & Consumable Fuels – 72.7%
Alpha Natural Resources, Inc. (a)		1,178,219		17,920,711
Anadarko Petroleum Corp.		143,900		11,273,126
Angle Energy, Inc. (a)		575,400		3,253,552
Apache Corp.		255,630		25,675,477
Bill Barrett Corp. (a)		325,800		8,474,058
Bonanza Creek Energy, Inc. (a)(b)		367,900		8,038,615
Cenovus Energy, Inc.		368,260		13,235,264
Cheniere Energy, Inc. (a)		554,600		8,307,908
Chesapeake Energy Corp.		644,400		14,930,748
Chevron Corp.		215,000		23,056,600
Concho Resources, Inc. (a)		70,200		7,166,016
CONSOL Energy, Inc.		699,830		23,864,203
Continental Resources, Inc. (a)(b)		156,400		13,422,248
Crescent Point Energy Corp.		449,370		19,345,278
Crew Energy, Inc. (a)		436,300		4,164,195
Denbury Resources, Inc. (a)		1,034,690		18,862,399
Energy XXI Bermuda Ltd. (a)		413,800		14,942,318
EOG Resources, Inc.		276,370		30,704,707
EQT Corp.		155,110		7,477,853
Exxon Mobil Corp.		133,400		11,569,782
Gasco Energy, Inc. (a)		1,528,300		408,362
Guide Exploration Ltd., Class A (a)		781,394		1,723,462
Hess Corp.		154,270		9,094,217
Hugoton Royalty Trust		1		15
James River Coal Co. (a)(b)		493,800		2,528,256

Common Stocks	Shares		Value
Oil, Gas & Consumable Fuels (concluded)
Kodiak Oil & Gas Corp. (a)(b)		853,600	$	8,501,856
Kosmos Energy Ltd. (a)		312,000		4,130,880
Noble Energy, Inc.		210,700		20,602,246
Occidental Petroleum Corp.		312,050		29,716,521
OGX Petroleo e Gas Participacoes SA (a)		1,190,900		9,864,093
Patriot Coal Corp. (a)(b)		447,816		2,794,372
Peabody Energy Corp.		496,390		14,375,454
PetroBakken Energy Ltd., Class A		108,842		1,812,487
PetroChina Co. Ltd. - ADR		37,790		5,310,629
Pioneer Natural Resources Co.		110,800		12,364,172
Plains Exploration & Production Co. (a)		494,010		21,069,527
Range Resources Corp.		254,700		14,808,258
Rex Energy Corp. (a)(b)		425,400		4,543,272
Rosetta Resources, Inc. (a)(b)		231,200		11,273,312
Royal Dutch Shell Plc - ADR		187,800		13,170,414
Southwestern Energy Co. (a)		168,400		5,153,040
Statoil ASA		427,022		11,590,282
StatoilHydro ASA - ADR		180,240		4,886,306
Suncor Energy, Inc.		416,180		13,609,086
Total SA - ADR		217,300		11,108,376
Whiting Petroleum Corp. (a)		672,160		36,498,288
				556,622,241
Total Long-Term Investments (Cost – $641,082,030) – 98.2%				751,342,473
Short-Term Securities
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.14% (c)(d)		8,924,473		8,924,473
	Beneficial Interest (000)
BlackRock Liquidity Series, LLC Money Market Series, 0.24% (c)(d)(e)	$	27,397		27,396,922
Total Short-Term Securities (Cost – $36,321,395) – 4.7%				36,321,395
Total Investments (Cost – $677,403,425) – 102.9%				787,663,868
Liabilities in Excess of Other Assets – (2.9)%				(22,345,875	)
Net Assets – 100.0%			$	765,317,993

(a) Non-income producing security.

(b) Security, or a portion of security, is on loan.

Portfolio Abbreviations

To simplify the listings of portfolio holdings in the Schedules of Investments, the names and descriptions of many of the securities have been abbreviated according to the following list:

ADR	American Depositary Receipts
CAD	Canadian Dollar
MXN	Mexican Peso
USD	US Dollar

See Notes to Financial Statements.

14     BLACKROCK FUNDS     MARCH 31, 2012

  Schedule of Investments (concluded)   BlackRock All-Cap Energy & Resources Portfolio

(c) Investments in companies considered to be an affiliate of the Fund during the period, 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 September 30, 2011		Net Activity			Shares/ Beneficial Interest Held at March 31, 2012		Income
BlackRock Liquidity Funds, TempFund, Institutional Class		35,736,782		(26,812,309	)		8,924,473	$	8,572
BlackRock Liquidity Series, LLC Money Market Series	$	7,413,123	$	19,983,799		$	27,396,922	$	41,208

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

(e) Security was purchased with the cash collateral from loaned securities.

— For Fund compliance purposes, the Fund’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by Fund management. These definitions may not apply for purposes of this report, which may combine industry sub-classifications for reporting ease.

— Fair Value Measurements — Various inputs are used in determining the fair value of investments. These inputs 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

— 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)

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. 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 inputs used as of March 31, 2012 in determining the fair valuation of the Fund’s investments:

Valuation Inputs	Level 1		Level 2		Level 3	Total
Assets:
Investments:
Long-Term Investments:
Common Stocks:
Chemicals	$	11,833,710		–	–	$	11,833,710
Energy Equipment & Services		94,154,563	$	21,651,712	–		115,806,275
Metals & Mining.		67,080,247		–	–		67,080,247
Oil, Gas & Consumable Fuels		545,031,959		11,590,282	–		556,622,241
Short-Term Securities		8,924,473		27,396,922	–		36,321,395
Total	$	727,024,952	$	60,638,916	–	$	787,663,868

See Notes to Financial Statements.

    BLACKROCK FUNDS     MARCH 31, 2012 15

  Schedule of Investments March 31, 2012 (Unaudited)   BlackRock China Fund (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Aerospace & Defense – 0.6%
AviChina Industry & Technology Co. Ltd., H Shares		36,000	$	16,504
Automobiles – 1.6%
Dongfeng Motor Group Co. Ltd., H Shares		24,000		43,330
Chemicals – 2.4%
Huabao International Holdings Ltd.		99,000		64,381
Commercial Banks – 21.3%
Bank of China Ltd., H Shares		399,000		160,822
China CITIC Bank Corp. Ltd., H Shares		111,200		66,873
China Construction Bank Corp., H Shares		210,000		162,255
Industrial & Commercial Bank of China, H Shares		276,000		178,063
				568,013
Construction & Engineering – 2.4%
China Communications Construction Co. Ltd., H Shares		63,000		63,198
Construction Materials – 0.7%
China Shanshui Cement Group Ltd.		11,000		8,683
TCC International Holdings Ltd.		28,000		10,673
				19,356
Diversified Financial Services – 0.6%
China Everbright Ltd.		10,000		15,169
Diversified Telecommunication Services – 3.1%
China Unicom Hong Kong Ltd.		48,000		81,344
Electrical Equipment – 3.1%
Xinjiang Goldwind Science & Technology Co. Ltd., H Shares (a)		22,410		12,149
Zhuzhou CSR Times Electric Co. Ltd., H Shares		27,000		68,982
				81,131
Electronic Equipment, Instruments & Components – 0.1%
China High Precision Automation Group Ltd.		20,000		3,065
Food Products – 0.9%
Uni-President China Holdings Ltd.		34,000		23,862
Health Care Equipment & Supplies – 0.8%
Mindray Medical International Ltd. - ADR		674		22,222
Health Care Providers & Services – 1.6%
Sinopharm Group Co., H Shares		15,200		42,475
Hotels, Restaurants & Leisure – 1.0%
REXLot Holdings Ltd.		300,000		26,656
Independent Power Producers & Energy Traders – 2.7%
China Resources Power Holdings Co. Ltd.		26,000		48,146
Datang International Power Generation Co. Ltd., H Shares		66,000		23,287
				71,433
Insurance – 6.0%
AIA Group Ltd.		7,600		27,843
China Life Insurance Co. Ltd., H Shares		16,000		41,517
China Pacific Insurance Group Co. Ltd., H Shares		24,800		76,806
New China Life Insurance Co. Ltd., H Shares		3,312		13,499
				159,665
Life Sciences Tools & Services – 2.0%
WuXi PharmaTech Cayman, Inc. - ADR (a)		3,737		53,813

Common Stocks	Shares		Value
Machinery – 1.3%
China Rongsheng Heavy Industry Group Co. Ltd.		67,000	$	17,687
CSR Corp. Ltd., H Shares		21,000		14,332
Zoomlion Heavy Industry Science and Technology Co. Ltd., H Shares		2,600		3,462
				35,481
Marine – 0.8%
China Shipping Development Co. Ltd., H Shares		32,000		22,170
Metals & Mining – 2.5%
Angang Steel Co. Ltd., H Shares		26,000		16,707
Shougang Fushan Resources Group Ltd.		76,000		25,739
Zijin Mining Group Co. Ltd., H Shares		60,000		23,797
				66,243
Multiline Retail – 0.3%
PCD Stores Group Ltd.		60,000		8,499
Oil, Gas & Consumable Fuels – 15.3%
China Coal Energy Co., Ltd., H Shares		52,000		58,324
China Petroleum & Chemical Corp., H Shares		102,000		111,122
CNOOC Ltd.		91,000		187,026
PetroChina Co. Ltd., H Shares		36,000		50,902
				407,374
Paper & Forest Products – 1.0%
Lee & Man Paper Manufacturing Ltd.		38,000		17,714
Shandong Chenming Paper Holdings Ltd., H Shares		18,000		8,484
				26,198
Real Estate Management & Development – 5.8%
China Vanke Co. Ltd., B Shares		20,100		23,839
Franshion Properties China Ltd.		104,000		26,785
Poly Hong Kong Investments Ltd.		62,000		28,822
Shenzhen Investment Ltd.		106,000		23,069
Shimao Property Holdings Ltd.		27,500		29,357
Shui On Land Ltd.		55,500		22,441
				154,313
Semiconductors & Semiconductor Equipment – 0.7%
Trina Solar Ltd. - ADR (a)		2,550		18,181
Software – 1.9%
Kingdee International Software Group Co. Ltd.		58,000		13,967
Kingsoft Corp. Ltd.		26,000		11,551
Shanda Games Ltd. - ADR (a)		4,900		25,480
				50,998
Specialty Retail – 1.6%
Esprit Holdings Ltd.		3,100		6,227
GOME Electrical Appliances Holding Ltd.		159,000		32,965
Pou Sheng International Holdings Ltd. (a)		18,000		2,272
				41,464
Textiles, Apparel & Luxury Goods – 1.8%
Peak Sport Products Co. Ltd.		58,000		14,041
Ports Design Ltd.		22,500		33,031
				47,072
Transportation Infrastructure – 1.9%
Beijing Capital International Airport Co. Ltd., H Shares		86,000		49,725

See Notes to Financial Statements.
16	BLACKROCK FUNDS	MARCH 31, 2012

  Schedule of Investments (continued)   BlackRock China Fund (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Wireless Telecommunication Services – 6.6%
China Mobile Ltd.		16,000	$	176,060
Total Common Stocks – 92.4%				2,459,395
Participation Notes
Automobiles – 0.4%
Deutsche Bank AG (BYD Co. Ltd.), due 11/10/16 (a)		3,500		9,780
Commercial Banks – 0.8%
Citibank, N.A. (Agricultural Bank of China Ltd.), due 1/20/15 (a)		52,700		22,365
Diversified Financial Services – 2.1%
Morgan Stanley Capital Services, Inc. (China Minsheng Banking Corp. Ltd.), due 5/02/12 (a)		48,500		43,906
Morgan Stanley Capital Services, Inc. (Evergrande Real Estate Group Ltd.), due 5/11/12 (a)		22,000		11,785
				55,691
Insurance – 0.3%
Citibank, N.A. (China Life Insurance Co. Ltd.), due 1/20/15 (a)		3,400		8,803
Machinery – 0.6%
Morgan Stanley Capital Services, Inc. (Zoomlion Heavy Industry Science and Technology Co. Ltd.), due 5/28/12 (a)		11,000		14,647
Metals & Mining – 1.2%
Citibank, N.A. (Baoshan Iron & Steel Co. Ltd.), due 1/20/15 (a)		28,700		21,678
Deutsche Bank AG (Baoshan Iron & Steel Co. Ltd.), due 11/11/19 (a)		6,600		5,076
UBS AG (Baoshan Iron & Steel Co. Ltd.), due 6/18/13 (a)		6,487		4,900
				31,654
Total Participation Notes – 5.4%				142,940
Total Long-Term Investments (Cost – $3,065,364) – 97.8%				2,602,335
Short-Term Securities
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.14% (b)(c)		10,559		10,559
Total Short-Term Securities (Cost – $10,559) – 0.4%				10,559
Total Investments (Cost – $3,075,923) – 98.2%				2,612,894
Other Assets Less Liabilities – 1.8%				47,747
Net Assets – 100.0%			$	2,660,641

(a) Non-income producing security.

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

Affiliate	Shares Held at September 30, 2011		Net Activity			Shares Held at March 31, 2012		Income
BlackRock Liquidity Funds, TempFund, Institutional Class		77,730		(67,171	)		10,559	$	18

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

— For Fund compliance purposes, the Fund’s industry classifications refer to any one or more of the industry sub classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by Fund management. These definitions may not apply for purposes of this report, which may combine industry sub-classifications for reporting ease.

— Fair Value Measurements – Various inputs are used in determining the fair value of investments. These inputs 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

— 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)

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. 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.

See Notes to Financial Statements.
	BLACKROCK FUNDS	MARCH 31, 2012	17

  Schedule of Investments (concluded)   BlackRock China Fund

The following table summarizes the inputs used as of March 31, 2012 in determining the fair valuation of the Fund’s investments:

Valuation Inputs	Level 1		Level 2		Level 3	Total
Assets:
Investments:
Long-Term Investments:
Common Stocks:
Aerospace & Defense		–	$	16,504	–	$	16,504
Automobiles		–		43,330	–		43,330
Chemicals		–		64,381	–		64,381
Commercial Banks		–		568,013	–		568,013
Construction & Engineering		–		63,198	–		63,198
Construction Materials		–		19,356	–		19,356
Diversified Financial Services		–		15,169	–		15,169
Diversified Telecommunication Services		–		81,344	–		81,344
Electrical Equipment		–		81,131	–		81,131
Electronic Equipment, Instruments & Components	$	3,065		–	–		3,065
Food Products		–		23,862	–		23,862
Health Care Equipment & Supplies		22,222		–	–		22,222
Health Care Providers & Services		–		42,475	–		42,475
Hotels, Restaurants & Leisure		–		26,656	–		26,656
Independent Power Producers & Energy Traders		–		71,433	–		71,433
Insurance		13,499		146,166	–		159,665
Life Sciences Tools & Services		53,813		–	–		53,813
Machinery		–		35,481	–		35,481
Marine		–		22,170	–		22,170
Metals & Mining		–		66,243	–		66,243
Multiline Retail		–		8,499	–		8,499
Oil, Gas & Consumable Fuels		–		407,374	–		407,374
Paper & Forest Products		–		26,198	–		26,198
Real Estate Management & Development		–		154,313	–		154,313
Semiconductors & Semiconductor Equipment		18,181		–	–		18,181
Software		25,480		25,518	–		50,998
Specialty Retail		–		41,464	–		41,464

Valuation Inputs	Level 1		Level 2		Level 3	Total
Textiles, Apparel & Luxury Goods	$	33,031	$	14,041	–	$	47,072
Transportation Infrastructure		–		49,725	–		49,725
Wireless Telecom- munication Services		–		176,060	–		176,060
Participation Notes:
Automobiles		9,780		–	–		9,780
Commercial Banks		22,365		–	–		22,365
Diversified Financial Services		55,691		–	–		55,691
Insurance		8,803		–	–		8,803
Machinery		14,647		–	–		14,647
Metals & Mining		31,654		–	–		31,654
Short-Term Securities		10,559		–	–		10,559
Total	$	322,790	$	2,290,104	–	$	2,612,894

See Notes to Financial Statements.
18	BLACKROCK FUNDS	MARCH 31, 2012

  Schedule of Investments March 31, 2012 (Unaudited)   BlackRock Energy & Resources Portfolio (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Capital Markets – 0.1%
Treasure Island Royalty Trust (a)		643,822	$	824,092
Commercial Services & Supplies – 0.0%
Republic Resources, Inc. (a)		28,750		–
Diversified Financial Services – 0.0%
Sprott Resource Lending Corp.		61,000		99,684
Electrical Equipment – 0.0%
ITM Power Plc (a)		525,200		565,984
Electronic Equipment, Instruments & Components – 0.0%
Opsens, Inc. (a)		2,175,000		512,432
Energy Equipment & Services – 12.7%
Diamond Offshore Drilling, Inc.		147,100		9,818,925
Essential Energy Services Ltd. (a)		925,069		2,170,195
Gasfrac Energy Services, Inc. (a)		211,900		1,595,437
Geokinetics, Inc. (a)(b)		1,039,033		1,828,698
Halliburton Co.		800,326		26,562,820
Lufkin Industries, Inc.		112,368		9,062,479
McDermott International, Inc. (a)		700,000		8,967,000
Parker Drilling Co. (a)		884,700		5,281,659
Pioneer Drilling Co. (a)		1,000,000		8,800,000
Poseidon Concepts Corp.		42,481		597,108
Schlumberger Ltd.		199,600		13,958,028
Strad Energy Services Ltd.		242,100		1,288,838
Transocean Ltd.		132,500		7,247,750
Wavefront Technology Solutions, Inc. (a)		710,000		562,334
Weatherford International Ltd. (a)		2,686,496		40,539,225
Western Energy Services Corp. (a)		591,860		4,830,057
Western Energy Services Corp. (Acquired 2/25/10, cost $3,752,521) (a)(c)		1,000,000		8,160,810
Xtreme Coil Drilling Corp. (a)		527,700		1,655,924
				152,927,287
Machinery – 0.0%
Railpower Technologies Corp. (a)		360,600		–
Metals & Mining – 6.9%
Alexco Resource Corp. (a)		967,683		6,776,925
Archipelago Resources Plc (a)		2,247,400		2,336,548
Baja Mining Corp. (a)		3,654,800		3,517,578
Balmoral Resources Ltd. (a)		1,500,000		1,188,030
Banro Corp. (a)		1,000,000		4,631,811
Brigus Gold Corp. (a)		1,368,600		1,042,795
Crosshair Energy Corp. (a)		139,900		70,129
Dalradian Resources, Inc. (a)		1,000,900		1,485,119
Eastmain Resources, Inc. (a)		3,700,000		4,636,824
Eldorado Gold Corp.		168,965		2,320,738
Eurasian Minerals, Inc. (a)		400,000		922,352
Explor Resources, Inc. (a)		1,000,000		215,550
Freeport-McMoRan Copper & Gold, Inc.		600,000		22,824,000
Goldcorp, Inc.		4,600		207,345
Golden Predator Corp. (a)		2,000,000		1,223,119
Helio Resource Corp. (a)		3,000,000		691,764
Imperial Metals Corp. (a)		120,924		2,022,169
Kilo Goldmines Ltd. (a)		4,805,300		963,517
Kinross Gold Corp.		111,175		1,088,403
Lake Shore Gold Corp. (a)		1,294,602		1,336,849
MAG Silver Corp. (a)		964,000		9,761,291
Minaurum Gold, Inc. (a)		2,000,000		521,329
Nevsun Resources Ltd.		554,800		2,046,884
Oromin Explorations Ltd. (a)		1,850,000		1,613,615
Paramount Gold and Silver Corp. (a)		219,437		497,195

Common Stocks Shares Value

Metals & Mining (concluded)
Pilot Gold, Inc. (a)	1,000,000	$	1,814,627
Probe Mines Ltd. (a)	130,800		177,031
Renaissance Gold, Inc. (a)	750,000		654,168
Romarco Minerals, Inc. (a)	223,000		221,334
Sunridge Gold Corp. (a)(b)	6,325,559		2,917,196
Virginia Mines, Inc. (a)	216,350		2,114,805
West Kirkland Mining, Inc. (a)	500,000		416,061
			82,257,101
Oil, Gas & Consumable Fuels – 80.9%
Alpha Natural Resources, Inc. (a)	3,516,189		53,481,235
Americas Petrogas, Inc. (a)	2,655,000		9,475,964
Angle Energy, Inc. (a)	1,505,800		8,514,424
Antares Energy Ltd. (Acquired 6/14/10, cost $5,189,100) (a)(c)	10,000,000		5,179,255
Arch Coal, Inc.	1,828,800		19,586,448
Arsenal Energy, Inc. (a)	2,572,000		1,701,860
Atlas Energy LP	2		66
ATP Oil & Gas Corp. (a)	268,800		1,975,680
Aurora Oil & Gas Ltd. (a)	1,148,400		4,547,777
Baytex Energy Corp.	169,948		8,824,108
Bellatrix Exploration Ltd. (a)	1,040,732		5,488,245
Bonanza Creek Energy, Inc. (a)	202,300		4,420,255
BPZ Resources, Inc. (a)	1,499,600		6,043,388
Cabot Oil & Gas Corp.	234,400		7,306,248
Carrizo Oil & Gas, Inc. (a)	400,400		11,315,304
Cequence Energy Ltd. (a)	57,000		75,432
Cheniere Energy, Inc. (a)	1,534,800		22,991,304
Chesapeake Energy Corp.	550,000		12,743,500
Clayton Williams Energy, Inc. (a)	599,421		47,618,004
Coastal Energy Co. (a)	1,303,500		20,399,654
Cobalt International Energy, Inc. (a)	738,187		22,167,756
Compton Petroleum Corp. (Acquired 9/24/04, cost $727,951) (a)(c)	521		2,074
Comstock Resources, Inc. (a)	203,300		3,218,239
CONSOL Energy, Inc.	1,725,000		58,822,500
Crew Energy, Inc. (a)	1,380,537		13,176,313
Crew Energy, Inc. (Acquired 6/24/98 through 10/09/98, cost $183,115) (a)(c)	191,300		1,825,831
Crocotta Energy, Inc. (a)	2,182,400		6,038,823
DeeThree Exploration Ltd. (a)	979,300		4,359,208
Delphi Energy Corp. (a)	955,200		1,369,428
Denbury Resources, Inc. (a)	395,200		7,204,496
Endeavour International Corp. (a)	335,132		3,971,314
Energy XXI Bermuda Ltd. (a)	1,420,780		51,304,366
EOG Resources, Inc.	107,200		11,909,920
EQT Corp.	922,400		44,468,904
Fairborne Energy Ltd. (a)	712,958		1,572,518
Far East Energy Corp. (a)(b)	18,000,000		4,678,200
Forest Oil Corp. (a)	100,000		1,212,000
FX Energy, Inc. (a)	398,500		2,167,840
Gastar Exploration Ltd. (a)	677,960		2,027,100
Goodrich Petroleum Corp. (a)	1,009,700		19,204,494
Gran Tierra Energy, Inc. (a)	1,202,849		7,585,263
Greenfields Petroleum Corp. (Acquired 11/03/10, cost $926,522) (a)(c)	110,000		634,117
Guide Exploration Ltd., Class A (a)	1,001,598		2,209,149
Guide Exploration Ltd., Class A (Acquired 2/09/04, cost $346,401) (a)(c)	173,600		382,896
Gulfport Energy Corp. (a)	88,300		2,571,296
Ithaca Energy, Inc. (a)	268,300		855,375

See Notes to Financial Statements.
	BLACKROCK FUNDS	MARCH 31, 2012	19

  Schedule of Investments (continued)   BlackRock Energy & Resources Portfolio (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Oil, Gas & Consumable Fuels (concluded)
James River Coal Co. (a)		297,600	$	1,523,712
Kodiak Oil & Gas Corp. (a)		1,296,600		12,914,136
Lone Pine Resources, Inc. (a)		61,248		398,112
Longview Energy Co. (Acquired 8/13/04, cost $1,281,000) (a)(c)		85,400		1,043,511
Lynden Energy Corp. (a)		200,400		94,429
Magnum Hunter Resources Corp. (a)		1,200,500		7,695,205
Manitok Energy, Inc. (a)		1,996,900		3,443,449
Matador Resources Co. (Acquired 10/14/03 through 4/13/06, cost $2,957,155) (a)(c)		513,393		5,621,653
Max Petroleum Plc (a)		5,000,000		1,016,579
McMoRan Exploration Co. (a)		508,500		5,440,950
Niko Resources Ltd.		302,800		10,652,416
Novus Energy, Inc. (a)		3,422,100		3,568,083
NuVista Energy Ltd. (a)		817,600		3,024,657
Open Range Energy Corp. (a)		48,061		57,821
Pace Oil and Gas Ltd. (a)(b)		2,660,330		13,255,642
Pace Oil and Gas Ltd. (Acquired 9/29/05, cost $1,971,490) (a)(c)		57,740		287,701
Painted Pony Petroleum Ltd., Class A (a)		1,169,900		9,828,826
Palliser Oil & Gas Corp. (a)		1,974,200		1,484,435
Pan Orient Energy Corp. (a)		959,100		3,913,516
Patriot Coal Corp. (a)		477,346		2,978,639
Peabody Energy Corp.		1,045,436		30,275,827
Penn Virginia Corp.		1,608,300		7,317,765
Penn West Petroleum Ltd.		153,333		2,996,100
Petroleum Development Corp. (a)		387,200		14,361,248
Pinecrest Energy, Inc. (a)		662,500		1,952,729
Pioneer Natural Resources Co.		408,100		45,539,879
Plains Exploration & Production Co. (a)		1,656,625		70,655,056
PRD Energy, Inc. (a)		990,200		416,947
Range Resources Corp.		829,200		48,209,688
Rex Energy Corp. (a)		556,300		5,941,284
Rosetta Resources, Inc. (a)		579,000		28,232,040
Scorpio Tankers, Inc. (a)		277,710		1,960,633
Ship Finance International Ltd.		27		413
Sonde Resources Corp. (a)		1,246,060		3,052,847
Sonde Resources Corp. (Acquired 1/15/10, cost $3,034,134) (a)(c)		1,200,000		2,935,486
Southwestern Energy Co. (a)		825,600		25,263,360
Stone Energy Corp. (a)		27,274		779,764
Swift Energy Co. (a)		448,900		13,031,567
Touchstone Exploration, Inc. (a)		2,154,300		842,325
Tourmaline Oil Corp. (a)		57,420		1,269,349
Trilogy Energy Corp.		956,222		25,270,452
Trioil Resources Ltd., Class A (a)		810,183		2,745,419
Uranium One, Inc. (a)		1,005,765		2,793,091
Valero Energy Corp.		357,600		9,215,352
Vero Energy, Inc. (a)		91,642		253,579
Yangarra Resources Ltd. (a)		2,302,800		1,085,083
Yoho Resources, Inc. (a)(b)		2,146,300		5,594,646
ZaZa Energy Corp. (a)		726,557		3,393,021
				970,255,993
Total Common Stocks – 100.6%				1,207,442,573

Warrants (d)	Shares		Value
Oil, Gas & Consumable Fuels – 0.0%
Compton Petroleum Corp. (Issued/Exercisable 8/18/11, 1 Share for 1 Warrant, Expires 8/23/14, Strike Price CAD 11.92)		1,043	$	2,300
Magnum Hunter Resources Corp. (Issued/Exercisable 8/29/11, 1 Share for 1 Warrant, Expires 10/14/13, Strike Price USD 10.50)		60,050		–
Total Warrants – 0.0%				2,300
Total Long-Term Investments (Cost – $1,177,469,134) – 100.6%				1,207,444,873
Short-Term Securities
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.14% (e)(f)		95,805		95,805
Total Short-Term Securities (Cost – $95,805) – 0.0%				95,805
Total Investments (Cost – $1,177,564,939) – 100.6%				1,207,540,678
Liabilities in Excess of Other Assets – (0.6)%				(7,769,832	)
Net Assets – 100.0%			$	1,199,770,846

(a) Non-income producing security.

(b) Investments in companies (whereby the Fund held 5% or more of the companies’ outstanding securities) that were considered to be an affiliate during the period, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

Affiliate	Shares Held at September 30, 2011		Shares Purchased		Shares Held at March 31, 2012		Value at March 31, 2012
Far East Energy Corp.		18,000,000		–		18,000,000	$	4,678,200
Geokinetics, Inc.		739,033		300,000		1,039,033	$	1,828,698
Pace Oil and Gas Ltd.		2,660,330		–		2,660,330	$	13,255,642
Sunridge Gold Corp.		4,325,559		2,000,000		6,325,559	$	2,917,196
Yoho Resources, Inc.1		2,146,300		–		2,146,300	$	5,594,646

¹  No longer an affiliated company or held by the Fund as of report date.

(c) Restricted security as to resale. As of report date, the Fund held 2.2% of its net assets, with a current value of $26,073,334 and an original cost of $20,369,389, in these securities.

(d) Warrants entitle the Fund to purchase a predetermined number of shares of common stock and are non-income producing. The purchase price and number of shares are subject to adjustment under certain conditions until the expiration date, if any.

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

  Schedule of Investments (concluded)   BlackRock Energy & Resources Portfolio

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

Affiliate	Shares Held at September 30, 2011		Net Activity			Shares Held at March 31, 2012		Income
BlackRock Liquidity Funds, TempFund, Institutional Class		232,783		(136,978	)		95,805	$	3,475

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

— For Fund compliance purposes, the Fund’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by Fund management. These definitions may not apply for purposes of this report, which may combine industry sub-classifications for reporting ease.

— Fair Value Measurements – Various inputs are used in determining the fair value of investments. These inputs 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

— 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)

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. 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 of 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 inputs used as of March 31, 2012 in determining the fair valuation of the Fund’s investments:

Valuation Inputs	Level 1		Level 2		Level 3		Total
Assets:
Investments:
Long-Term     Investments:
Common Stocks:
Capital Markets	$	824,092		–		–	$	824,092
Commercial Services & Supplies		–		–		–		–
Diversified Financial Services		99,684		–		–		99,684
Electrical Equipment		565,984		–		–		565,984
Electronic Equipment, Instruments & Components		512,432		–		–		512,432
Energy Equipment & Services		152,927,287		–		–		152,927,287
Machinery		–		–		–		–
Metals & Mining		82,257,101		–		–		82,257,101
Oil, Gas & Consumable Fuels		959,447,045	$	9,765,437	$	1,043,511		970,255,993
Warrants		2,300		–		–		2,300
Short-Term     Securities		95,805		–		–		95,805
Total	$	1,196,731,730	$	9,765,437	$	1,043,511	$	1,207,540,678

See Notes to Financial Statements.
	BLACKROCK FUNDS	MARCH 31, 2012	21

  Consolidated Schedule of Investments March 31, 2012 (Unaudited)   BlackRock World Gold Fund

(Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Australia – 14.8%
Ampella Mining Ltd. (a)		39,560	$	41,145
Aquarius Platinum Ltd.		17,370		39,542
Centamin Plc (a)		19,560		21,560
Dampier Gold Ltd. (a)		21,520		5,240
Evolution Mining Ltd. (a)		33,770		60,922
Indochine Mining Ltd. (a)		151,560		28,813
Integra Mining Ltd. (a)		192,990		103,154
Kingsgate Consolidated Ltd.		2,810		18,658
Medusa Mining Ltd.		7,820		40,747
Newcrest Mining Ltd.		29,000		891,945
Northern Star Resources Ltd. (a)		56,000		49,733
Papillon Resources Ltd. (a)		60,000		67,753
Silver Lake Resources Ltd. (a)		18,648		65,736
				1,434,948
Canada – 48.6%
Agnico-Eagle Mines Ltd.		4,580		152,628
Alamos Gold, Inc.		17,300		317,573
B2Gold Corp. (a)		22,000		94,401
Banro Corp. (a)		30,000		138,954
Barrick Gold Corp.		7,405		321,969
Belo Sun Mining Corp. (a)		58,000		54,078
Centerra Gold, Inc.		10,520		163,582
Detour Gold Corp. (a)		5,600		139,628
Eldorado Gold Corp.		42,000		576,871
Goldcorp, Inc.		19,000		856,424
IAMGOLD Corp.		23,640		314,742
Kinross Gold Corp.		49,500		483,859
Lake Shore Gold Corp. (a)		13,000		13,424
Minefinders Corp. (a)		7,240		101,401
New Gold, Inc. (a)		26,540		262,087
Osisko Mining Corp. (a)		4,340		50,386
Romarco Minerals, Inc. (a)		106,000		105,208
SEMAFO, Inc.		15,900		84,804
Yamana Gold, Inc.		30,400		474,233
				4,706,252
China – 0.1%
Real Gold Mining Ltd.		13,000		7,416
Hong Kong – 0.2%
G-Resources Group Ltd. (a)		228,000		13,958
Jersey, Channel Islands – 5.6%
Minera IRL Ltd. (a)		95,860		102,765
Randgold Resources Ltd. - ADR		5,025		442,100
				544,865
Mexico – 9.3%
Fresnillo Plc		22,000		564,112
Industrias Penoles SAB de CV		7,000		339,692
				903,804
Peru – 4.4%
Cia de Minas Buenaventura SA - ADR		7,300		294,263
Volcan Cia Minera SAA, Class B (a)		96,500		132,409
				426,672
Russia – 0.2%
Polymetal International Plc (a)		1,240		18,316
South Africa – 7.4%
AngloGold Ashanti Ltd.		4,395		162,192

Common Stocks	Shares		Value
South Africa (concluded)
Gold Fields Ltd.		8,580	$	118,537
Harmony Gold Mining Co. Ltd.		21,610		236,435
Impala Platinum Holdings Ltd.		9,990		197,295
				714,459
United Kingdom – 3.5%
Archipelago Resources Plc (a)		27,980		29,090
Hochschild Mining Plc		8,810		65,515
Hummingbird Resources Plc (a)		25,000		52,983
Patagonia Gold Plc (a)		68,930		42,723
Petropavlovsk Plc		9,955		88,860
Rio Tinto Plc		1,120		62,078
				341,249
United States – 3.3%
Freeport-McMoRan Copper & Gold, Inc.		2,300		87,492
Gold Resource Corp.		1,280		31,117
Newmont Mining Corp.		4,000		205,080
				323,689
Total Common Stocks – 97.4%				9,435,628

Investment Companies
Jersey, Channel Islands – 0.6%
ETFS Physical Platinum (a)	400	63,562
United States – 1.8%
SPDR Gold Trust (a)	1,050	170,247
Total Investment Companies – 2.4%		233,809

Warrants (b)
Canada – 0.0%
Kinross Gold Corp. (Issued/Exercisable 10/28/10, 1 Share for 1 Warrant, Expires 9/17/14, Strike Price USD 21.30) (a)	757		486
Total Investments (Cost – $10,229,408) – 99.8%			9,669,923
Other Assets Less Liabilities – 0.2%			22,983
Net Assets – 100.0%		$	9,692,906

(a) Non-income producing security.

(b) Warrants entitle the Fund to purchase a predetermined number of shares of common stock and are non-income producing. The purchase price and number of shares are subject to adjustment under certain conditions until the expiration date, if any.

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

Affiliate	Shares Held at September 30, 2011		Net Activity			Shares Held at March 31, 2012	Income
BlackRock Liquidity Funds, TempFund, Institutional Class		156,211		(156,211	)	–	$	27

See Notes to Financial Statements.
22	BLACKROCK FUNDS	MARCH 31, 2012

Consolidated Schedule of Investments (concluded)   BlackRock World Gold Fund

— Foreign currency exchange contracts as of March 31, 2012 were as follows:

Currency Purchased		Currency Sold			Counterparty	Settlement Date		Unrealized Depreciation
USD	38,554		CAD	38,569	Bank of New York Mellon		4/02/12		$  (113)
USD	9,608		MXN	122,975	Bank of New York Mellon		4/02/12		(4)
USD	27,186		CAD	27,259	Bank of New York Mellon		4/12/12		(143)
Total									$  (260)

— Fair Value Measurements – Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs 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

— 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 and derivative financial instruments)

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instrument 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 derivative financial instruments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.

The following tables summarize the inputs used as of March 31, 2012 in determining the fair valuation of the Fund’s investments and derivative financial instruments:

Valuation Inputs	Level 1		Level 2		Level 3	Total
Assets:
Investments:
Long-Term Investments:
Common Stocks:
Australia	$	5,240	$	1,429,708	–	$	1,434,948
Canada		4,706,252		–	–		4,706,252
China		7,416		–	–		7,416
Hong Kong		–		13,958	–		13,958
Jersey, Channel Islands		544,865		–	–		544,865
Mexico		339,692		564,112	–		903,804
Peru		426,672		–	–		426,672
Russia		18,316		–	–		18,316
South Africa		–		714,459	–		714,459
United Kingdom		124,796		216,453	–		341,249
United States		323,689		–	–		323,689
Investment Companies		233,809		–	–		233,809
Warrants		486		–	–		486
Total	$	6,731,233	$	2,938,690	–	$	9,669,923

Valuation Inputs	Level 1			Level 2	Level 3	Total
Derivative Financial Instruments1
Liabilities:
Foreign currency exchange contracts	$	(260	)	–	–	$	(260	)
Total	$	(260	)	–	–	$	(260	)

¹  Derivative financial instruments are foreign currency exchange contracts which are valued at the unrealized appreciation/depreciation on the instrument.

See Notes to Financial Statements.
	BLACKROCK FUNDS	MARCH 31, 2012	23

Statements of Assets and Liabilities

March 31, 2012 (Unaudited)	BlackRock All-Cap Energy & Resources Portfolio			BlackRock China Fund			BlackRock Energy & Resources Portfolio			BlackRock World Gold Fund1
Assets
Investments at value – unaffiliated2,3	$	751,342,473		$	2,602,335		$	1,178,170,491		$	9,669,923
Investments at value – affiliated4		36,321,395			10,559			29,370,187			–
Investments sold receivable		6,123,754			–			18,224,483			88,971
Cash		–			3,601			1,502			–
Foreign currency at value5		667			2,302			27,802			–
Capital shares sold receivable		764,840			–			1,845,059			35,306
Dividends and reclaims receivable – unaffiliated		404,516			467			282,884			9,749
Securities lending income receivable – affiliated		2,718			–			–			–
Receivable from advisor		–			41,183			–			–
Dividends receivable – affiliated		1,944			5			149			12
Prepaid expenses		71,244			49,033			73,874			35,433
Total assets		795,033,551			2,709,485			1,227,996,431			9,839,394
Liabilities
Collateral on securities loaned at value		27,396,922			–			–			–
Bank overdraft		–			–			–			47,428
Investments purchased payable		–			–			18,743,745			–
Unrealized depreciation on foreign currency exchange contracts		–			–			–			260
Capital shares redeemed payable		1,250,353			29,362			7,404,134			29,927
Investment advisory fees payable.		509,380			–			900,786			21,336
Service and distribution fees payable		161,160			65			323,813			3,023
Other affiliates payable		80,078			–			125,175			–
Custodian fees payable		61,741			7,595			109,800			3,779
Professional fees payable		31,702			5,913			40,697			33,991
Officer’s and Trustees’ fees payable		7,424			1,024			11,728			1,042
Printing fees payable		5,860			–			5,213			–
Other accrued expenses payable		210,938			4,885			560,494			5,702
Total liabilities		29,715,558			48,844			28,225,585			146,488
Net Assets	$	765,317,993		$	2,660,641		$	1,199,770,846		$	9,692,906
Net Assets Consist of
Paid-in capital	$	764,239,702		$	3,214,349		$	1,164,875,216		$	10,680,747
Accumulated net investment loss		(1,021,738	)		(10,640	)		(43,606,504	)		(105,782	)
Accumulated net realized gain (loss)		(108,160,429	)		(80,070	)		48,526,390			(322,058	)
Net unrealized appreciation/depreciation		110,260,458			(462,998	)		29,975,744			(560,001	)
Net Assets	$	765,317,993		$	2,660,641		$	1,199,770,846		$	9,692,906
1   Consolidated Statement of Assets and Liabilities
2   Investments at cost – unaffiliated	$	641,082,030		$	3,065,364		$	1,177,469,134		$	10,229,408
3   Securities loaned at value	$	26,679,973			–			–			–
4   Investments at cost – affiliated	$	36,321,395		$	10,559		$	46,657,999			–
5   Foreign currency at cost	$	566		$	2,271		$	27,749			–

See Notes to Financial Statements.

24     BLACKROCK FUNDS     MARCH 31, 2012

Statements of Assets and Liabilities (concluded)

March 31, 2012 (Unaudited)	BlackRock All-Cap Energy & Resources Portfolio		BlackRock China Fund		BlackRock Energy & Resources Portfolio		BlackRock World Gold Fund1
Net Asset Value
Institutional
Net assets	$	439,070,513	$	2,457,908	$	336,534,269	$	4,009,832
Shares outstanding2		30,798,404		301,188		9,043,505		384,060
Net asset value	$	14.26	$	8.16	$	37.21	$	10.44
Service
Net assets	$	4,943,565		–		–		–
Shares outstanding2		354,491		–		–		–
Net asset value	$	13.95		–		–		–
Investor A
Net assets	$	195,786,012	$	170,434	$	683,674,679	$	3,032,683
Shares outstanding2		14,045,223		20,929		21,070,893		291,062
Net asset value	$	13.94	$	8.14	$	32.45	$	10.42
Investor B
Net assets	$	18,704,575		–	$	13,138,646		–
Shares outstanding2		1,399,944		–		547,942		–
Net asset value	$	13.36		–	$	23.98		–
Investor C
Net assets	$	106,813,328	$	32,299	$	166,423,252	$	2,650,391
Shares outstanding2		7,980,981		3,982		7,001,808		257,707
Net asset value	$	13.38	$	8.11	$	23.77	$	10.28

¹  Consolidated Statement of Assets and Liabilities.

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

See Notes to Financial Statements.

    BLACKROCK FUNDS     MARCH 31, 2012 25

Statements of Operations

Six Months Ended March 31, 2012 (Unaudited)	BlackRock All-Cap Energy & Resources Portfolio			BlackRock China Fund			BlackRock Energy & Resources Portfolio			BlackRock World Gold Fund1
Investment Income
Dividends and reclaims – unaffiliated	$	4,104,897		$	10,614		$	2,565,541		$	58,892
Foreign taxes withheld		(274,184	)		(235	)		(96,418	)		(3,762	)
Dividends – affiliated		8,572			18			3,475			27
Securities lending – affiliated		41,208			–			–			–
Total income		3,880,493			10,397			2,472,598			55,157
Expenses
Investment advisory		2,944,818			12,578			4,709,466			42,303
Service and distribution – class specific		932,736			276			1,880,744			19,815
Transfer agent – class specific		441,367			270			1,145,554			8,547
Administration		289,118			10,963			444,117			9,120
Administration – class specific		98,225			314			147,871			1,411
Registration		44,204			3,297			67,152			18,013
Professional		30,991			29,115			37,225			29,994
Custodian		30,173			4,050			47,285			6,830
Printing		29,810			10,099			41,688			1,171
Officer and Trustees		11,765			1,418			18,300			1,517
Offering		–			75,460			–			–
Miscellaneous		14,862			7,411			14,956			4,731
Recoupment of past waived fees – class specific		6,525			–			105,854			–
Total expenses		4,874,594			155,251			8,660,212			143,452
Less fees waived by advisor		(6,905	)		(12,578	)		(2,871	)		(40,476	)
Less administration fees waived		–			(943	)		–			(1,447	)
Less administration fees waived – class specific		(3,099	)		(299	)		(5,255	)		(1,406	)
Less transfer agent fees waived – class specific		(1,758	)		(7	)		(2,041	)		(452	)
Less transfer agent fees reimbursed – class specific		(5,881	)		(224	)		(17,794	)		(7,483	)
Less expenses reimbursed by advisor		–			(120,163	)		–			(1,680	)
Less fees paid indirectly		(122	)		–			(304	)		(6	)
Total expenses after fees waived, reimbursed and paid indirectly		4,856,829			21,037			8,631,947			90,502
Net investment loss		(976,336	)		(10,640	)		(6,159,349	)		(35,345	)
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from: Investments – unaffiliated		(3,248,015	)		(58,948	)		62,482,359			(161,921	)
Foreign currency transactions		(7,429	)		48			(12,439	)		(1,555	)
		(3,255,444	)		(58,900	)		62,469,920			(163,476	)
Net change in unrealized appreciation/depreciation on:
Investments – unaffiliated		126,335,020			497,295			181,501,191			(459,437	)
Investments – affiliated		–			–			(2,669,765	)		–
Foreign currency transactions		2,456			(76	)		6,732			(190	)
		126,337,476			497,219			178,838,158			(459,627	)
Total realized and unrealized gain (loss)		123,082,032			438,319			241,308,078			(623,103	)
Net Increase (Decrease) in Net Assets Resulting from Operations	$	122,105,696		$	427,679		$	235,148,729		$	(658,448	)

¹  Consolidated Statement of Operations.

See Notes to Financial Statements.

26     BLACKROCK FUNDS     MARCH 31, 2012

Statements of Changes in Net Assets

	BlackRock All-Cap Energy & Resources Portfolio						BlackRock China Fund
Increase (Decrease) in Net Assets:	Six Months Ended March 31, 2012 (Unaudited)			Year Ended September 30, 2011			Six Months Ended March 31, 2012 (Unaudited)			Period April 29, 20111 to September 30, 2011
Operations
Net investment income (loss)	$	(976,336	)	$	(2,702,610	)	$	(10,640	)	$	38,392
Net realized gain (loss)		(3,255,444	)		47,587,036			(58,900	)		(21,267	)
Net change in unrealized appreciation/depreciation		126,337,476			(148,099,558	)		497,219			(960,217	)
Net increase (decrease) in net assets resulting from operations		122,105,696			(103,215,132	)		427,679			(943,092	)
Dividends to Shareholders From
Net investment income:
Institutional		–			(3,839,400	)		(36,656	)		–
Service		–			(26,046	)		–			–
Investor A		–			(1,129,552	)		(1,275	)		–
Investor C		–			–			(364	)		–
Decrease in net assets resulting from dividends to shareholders		–			(4,994,998	)		(38,295	)		–
Capital Share Transactions
Net increase (decrease) in net assets derived from capital share transactions		(67,194,693	)		43,265,442			153,198			3,061,151
Redemption Fees
Redemption fees		–			11,916			–			–
Net Assets
Total increase (decrease) in net assets		54,911,003			(64,932,772	)		542,582			2,118,059
Beginning of period		710,406,990			775,339,762			2,118,059			–
End of period	$	765,317,993		$	710,406,990		$	2,660,641		$	2,118,059
Undistributed (accumulated) net investment income (loss)	$	(1,021,738	)	$	(45,402	)	$	(10,640	)	$	38,295

¹  Commencement of operations.

See Notes to Financial Statements.

    BLACKROCK FUNDS     MARCH 31, 2012 27

Statements of Changes in Net Assets (concluded)

	BlackRock Energy & Resources Portfolio						BlackRock World Gold Fund1
Increase (Decrease) in Net Assets:	Six Months Ended March 31, 2012 (Unaudited)			Year Ended September 30, 2011			Six Months Ended March 31, 2012 (Unaudited)			Year Ended September 30, 2011
Operations
Net investment loss	$	(6,159,349	)	$	(8,481,928	)	$	(35,345	)	$	(30,854	)
Net realized gain (loss)		62,469,920			183,610,918			(163,476	)		(119,194	)
Net change in unrealized appreciation/depreciation		178,838,158			(346,757,344	)		(459,627	)		(740,821	)
Net increase (decrease) in net assets resulting from operations		235,148,729			(171,628,354	)		(658,448	)		(890,869	)
Dividends and Distributions to Shareholders From
Net investment income:
Institutional		(6,472,682	)		(4,255,273	)		(6,994	)		(54,178	)
Investor A		(12,596,485	)		(7,643,972	)		–			(17,212	)
Investor B		(256,431	)		(108,168	)		–			–
Investor C		(2,987,927	)		(1,292,699	)		–			(5,391	)
Tax return of capital:
Institutional		–			–			–			(14,591	)
Investor A		–			–			–			(4,882	)
Investor C		–			–			–			(1,788	)
Net realized gain:
Institutional		(6,605,013	)		–			–			(48,469	)
Investor A		(15,831,908	)		–			–			(16,216	)
Investor B		(545,981	)		–			–			–
Investor C		(5,160,872	)		–			–			(5,939	)
Decrease in net assets resulting from dividends and distributions to shareholders		(50,457,299	)		(13,300,112	)		(6,994	)		(168,666	)
Capital Share Transactions
Net increase (decrease) in net assets derived from capital share transactions		(85,989,561	)		198,994,525			(42,202	)		6,780,995
Redemption Fees
Redemption fees		–			85,902			–			218
Net Assets
Total increase (decrease) in net assets		98,701,869			14,151,961			(707,644	)		5,721,678
Beginning of period		1,101,068,977			1,086,917,016			10,400,550			4,678,872
End of period	$	1,199,770,846		$	1,101,068,977		$	9,692,906		$	10,400,550
Accumulated net investment loss	$	(43,606,504	)	$	(15,133,630	)	$	(105,782	)	$	(63,443	)

¹  Consolidated Statements of Changes in Net Assets.

See Notes to Financial Statements.

28     BLACKROCK FUNDS     MARCH 31, 2012

  Financial Highlights   BlackRock All-Cap Energy & Resources Portfolio

	Institutional																		Service
	Six Months Ended March 31, 2012 (Unaudited)			Year Ended September 30,															Six Months Ended March 31, 2012 (Unaudited)			Year Ended September 30,
				2011			2010			2009			2008			2007						2011			2010			2009			2008			2007
Per Share Operating Performance
Net asset value, beginning of period	$	12.14		$	13.76		$	12.46		$	16.20		$	19.40		$	13.85		$	11.90		$	13.49		$	12.24		$	16.01		$	19.19		$	13.75
Net investment income (loss)1		0.00	2		0.01			0.02			0.02			0.24			0.05			(0.02	)		(0.05	)		(0.03	)		(0.03	)		0.12			(0.02	)
Net realized and unrealized gain (loss)		2.12			(1.51	)3		1.38	3		(2.14	)3		(2.90	)3		5.90	3		2.07			(1.47	)3		1.35	3		(2.12	)3		(2.83	)3		5.86	3
Net increase (decrease) from investment operations		2.12			(1.50	)		1.40			(2.12	)		(2.66	)		5.95			2.05			(1.52	)		1.32			(2.15	)		(2.71	)		5.84
Dividends and distributions from:
Net investment income		–			(0.12	)		(0.10	)		–			(0.23	)		–			–			(0.07	)		(0.07	)		–			(0.16	)		–
Net realized gain		–			–			–			(1.62	)		(0.31	)		(0.40	)		–			–			–			(1.62	)		(0.31	)		(0.40	)
Total dividends and distributions		–			(0.12	)		(0.10	)		(1.62	)		(0.54	)		(0.40	)		–			(0.07	)		(0.07	)		(1.62	)		(0.47	)		(0.40	)
Net asset value, end of period	$	14.26		$	12.14		$	13.76		$	12.46		$	16.20		$	19.40		$	13.95		$	11.90		$	13.49		$	12.24		$	16.01		$	19.19
Total Investment Return4
Based on net asset value		17.46%	5		(11.10)%	6		11.32%	6		(7.53)%	6		(14.25)%	6		43.66%	6		17.23%	5		(11.36)%	6		10.79%	6		(7.85)%	6		(14.59)%	6		43.16%	6
Ratios to Average Net Assets
Total expenses		0.94%	7		0.93%			0.94%			0.98%			0.89%			0.93%			1.27%	7		1.27%			1.34%			1.54%			1.25%			1.42%
Total expenses excluding recoupment of past waived fees		0.94%	7		0.91%			0.93%			0.97%			0.89%			0.93%			1.27%	7		1.24%			1.27%			1.47%			1.25%			1.42%
Total expenses after fees waived, reimbursed and paid indirectly		0.93%	7		0.93%			0.93%			0.93%			0.89%			0.93%			1.27%	7		1.26%			1.34%			1.35%			1.25%			1.33%
Net investment income (loss)		0.05%	7		0.03%			0.16%			0.17%			1.14%			0.31%			(0.28)%	7		(0.30)%			(0.25)%			(0.26)%			0.56%			(0.11)%
Supplemental Data
Net assets, end of period (000)	$	439,071		$	400,269		$	420,071		$	328,434		$	510,804		$	598,747		$	4,944		$	4,816		$	4,231		$	3,426		$	4,836		$	3,435
Portfolio turnover		13%			22%			38%			22%			38%			31%			13%			22%			38%			22%			38%			31%

¹  Based on average shares outstanding.

²  Less than $0.01 per share.

³ Includes redemption fees, which are less than $0.01 per share.

⁴  Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

⁵  Aggregate total investment return.

⁶  Redemption fee of 2.00% is reflected in total return calculations. There was no impact to the return.

⁷  Annualized.

See Notes to Financial Statements.
	BLACKROCK FUNDS	MARCH 31, 2012	29

  Financial Highlights (continued)   BlackRock All-Cap Energy & Resources Portfolio

	Investor A																		Investor B
	Six Months Ended March 31, 2012 (Unaudited)			Year Ended September 30,															Six Months Ended March 31, 2012 (Unaudited)			Year Ended September 30,
				2011			2010			2009			2008			2007						2011			2010			2009			2008			2007
Per Share Operating Performance
Net asset value, beginning of period	$	11.90		$	13.50		$	12.24		$	16.01		$	19.18		$	13.75		$	11.45		$	13.03		$	11.84		$	15.68		$	18.82		$	13.59
Net investment income (loss)1		(0.02	)		(0.06	)		(0.03	)		(0.02	)		0.17			(0.02	)		(0.07	)		(0.18	)		(0.13	)		(0.09	)		0.01			(0.13	)
Net realized and unrealized gain (loss)		2.06			(1.47	)2		1.35	2		(2.13	)2		(2.87	)2		5.85	2		1.98			(1.40	)2		1.32	2		(2.13	)2		(2.81	)2		5.76	2
Net increase (decrease) from investment operations		2.04			(1.53	)		1.32			(2.15	)		(2.70	)		5.83			1.91			(1.58	)		1.19			(2.22	)		(2.80	)		5.63
Dividends and distributions from:
Net investment income		–			(0.07	)		(0.06	)		–			(0.16	)		–			–			–			–			–			(0.03	)		–
Net realized gain		–			–			–			(1.62	)		(0.31	)		(0.40	)		–			–			–			(1.62	)		(0.31	)		(0.40	)
Total dividends and distributions		–			(0.07	)		(0.06	)		(1.62	)		(0.47	)		(0.40	)		–			–			–			(1.62	)		(0.34	)		(0.40	)
Net asset value, end of period	$	13.94		$	11.90		$	13.50		$	12.24		$	16.01		$	19.18		$	13.36		$	11.45		$	13.03		$	11.84		$	15.68		$	18.82
Total Investment Return3
Based on net asset value		17.14%	4		(11.46)%	5		10.84%	5		(7.85)%	5		(14.55)%	5		43.09%	5		16.68%	4		(12.13)%	5		10.05%	5		(8.56)%	5		(15.23)%	5		42.11%	5
Ratios to Average Net Assets
Total expenses		1.34%	6		1.35%			1.34%			1.48%			1.27%			1.34%			2.19%	6		2.11%			2.17%			2.35%			2.09%			2.23%
Total expenses excluding recoupment of past waived fees		1.34%	6		1.28%			1.32%			1.45%			1.27%			1.34%			2.19%	6		2.09%			2.16%			2.33%			2.09%			2.23%
Total expenses after fees waived, reimbursed and paid indirectly		1.34%	6		1.34%			1.34%			1.34%			1.26%			1.31%			2.10%	6		2.10%			2.10%			2.06%			2.04%			2.04%
Net investment income (loss)		(0.35)%	6		(0.38)%			(0.25)%			(0.25)%			0.81%			(0.10)%			(1.11)%	6		(1.15)%			(1.03)%			(0.95)%			0.06%			(0.82)%
Supplemental Data
Net assets, end of period (000)	$	195,786		$	187,017		$	207,523		$	178,364		$	267,422		$	347,598		$	18,705		$	18,872		$	27,113		$	30,873		$	42,399		$	55,538
Portfolio turnover		13%			22%			38%			22%			38%			31%			13%			22%			38%			22%			38%			31%

¹  Based on average shares outstanding.

² Includes redemption fees, which are less than $0.01 per share.

³ Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

⁴ Aggregate total investment return.

⁵ Redemption fee of 2.00% is reflected in total return calculations. There was no impact to the return.

⁶ Annualized.

See Notes to Financial Statements.
30	BLACKROCK FUNDS	MARCH 31, 2012

  Financial Highlights (concluded)   BlackRock All-Cap Energy & Resources Portfolio

	Investor C
	Six Months Ended March 31, 2012 (Unaudited)			Year Ended September 30,
				2011			2010			2009			2008			2007
Per Share Operating Performance
Net asset value, beginning of period	$	11.47		$	13.04		$	11.85		$	15.69		$	18.84		$	13.60
Net investment income (loss)1		(0.07	)		(0.17	)		(0.13	)		(0.09	)		0.02			(0.13	)
Net realized and unrealized gain (loss)		1.98			(1.40	)2		1.32	2		(2.13	)2		(2.82	)2		5.77	2
Net increase (decrease) from investment operations		1.91			(1.57	)		1.19			(2.22	)		(2.80	)		5.64
Dividends and distributions from:
Net investment income		–			–			–			–			(0.04	)		–
Net realized gain		–			–			–			(1.62	)		(0.31	)		(0.40	)
Total dividends and distributions		–			–			–			(1.62	)		(0.35	)		(0.40	)
Net asset value, end of period	$	13.38		$	11.47		$	13.04		$	11.85		$	15.69		$	18.84
Total Investment Return3
Based on net asset value		16.65%	4		(12.04)%	5		10.04%	5		(8.54	)%5		(15.21)%	5		42.15%	5
Ratios to Average Net Assets
Total expenses		2.07%	6		2.05%			2.08%			2.23%			2.02%			2.12%
Total expenses excluding recoupment of past waived fees		2.07%	6		2.03%			2.08%			2.21%			2.02%			2.12%
Total expenses after fees waived, reimbursed and paid indirectly		2.07%	6		2.04%			2.08%			2.05%			2.01%			2.04%
Net investment income (loss)		(1.08)%	6		(1.08)%			(1.00)%			(0.95)%			0.08%			(0.83)%
Supplemental Data
Net assets, end of period (000)	$	106,813		$	99,433		$	116,401		$	113,347		$	153,512		$	207,194
Portfolio turnover		13%			22%			38%			22%			38%			31%

¹  Based on average shares outstanding.

² Includes redemption fees, which are less than $0.01 per share.

³ Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

⁴ Aggregate total investment return.

⁵ Redemption fee of 2.00% is reflected in total return calculations. There was no impact to the return.

⁶ Annualized.

See Notes to Financial Statements.
	BLACKROCK FUNDS	MARCH 31, 2012	31

  Financial Highlights   BlackRock China Fund

	Institutional						Investor A						Investor C
	Six Months Ended March 31, 2012 (Unaudited)			Period April 29, 20111 to September 30, 2011			Six Months Ended March 31, 2012 (Unaudited)			Period April 29, 20111 to September 30, 2011			Six Months Ended March 31, 2012 (Unaudited)			Period April 29, 20111 to September 30, 2011
Per Share Operating Performance
Net asset value, beginning of period	$	6.90		$	10.00		$	6.89		$	10.00		$	6.87		$	10.00
Net investment income (loss)2		(0.03	)		0.13			(0.05	)		0.09			(0.07	)		0.09
Net realized and unrealized gain (loss)		1.41			(3.23	)		1.42			(3.20	)		1.41			(3.22	)
Net increase (decrease) from investment operations		1.38			(3.10	)		1.37			(3.11	)		1.34			(3.13	)
Dividends from net investment income		(0.12	)		–			(0.12	)		–			(0.10	)		–
Net asset value, end of period	$	8.16		$	6.90		$	8.14		$	6.89		$	8.11		$	6.87
Total Investment Return3
Based on net asset value		20.27%			(31.00)%			20.10%			(31.10)%			19.71%			(31.30)%
Ratios to Average Net Assets4
Total expenses		12.26%			9.67%	5		13.81%			12.18%	5		13.83%			11.73%	5
Total expenses after fees waived and reimbursed		1.65%			1.65%			1.90%			1.90%			2.65%			2.65%
Net investment income (loss)		(0.82)%			3.39%			(1.14)%			2.47%			(1.80)%			2.30%
Supplemental Data
Net assets, end of period (000)	$	2,458		$	2,049		$	170		$	51		$	32		$	19
Portfolio turnover		20%			14%			20%			14%			20%			14%

¹ Commencement of operations.

²  Based on average shares outstanding.

³  Aggregate total investment return.

⁴  Annualized.

⁵  Organization costs were not annualized in the calculation of the expense ratios. If these expenses were annualized, the total expenses for Institutional, Investor A and Investor C would have been 13.81%, 18.86% and 16.54%, respectively.

See Notes to Financial Statements.
32	BLACKROCK FUNDS	MARCH 31, 2012

  Financial Highlights   BlackRock Energy & Resources Portfolio

	Institutional																		Investor A
	Six Months Ended March 31,			Year Ended September 30,															Six Months Ended March 31,			Year Ended September 30,
	2012 (Unaudited)			2011			2010			2009			2008			2007			2012 (Unaudited)			2011			2010			2009			2008			2007
Per Share Operating Performance
Net asset value, beginning of period	$	31.70		$	34.98		$	32.61		$	51.31		$	63.42		$	68.57		$	27.73		$	30.63		$	28.67		$	47.29		$	59.02		$	64.90
Net investment income (loss)1		(0.11)			(0.08)			0.05			(0.07)			(0.13)			(0.02)			(0.16)			(0.20)			(0.12)			(0.13)			(0.32)			(0.16)
Net realized and unrealized gain (loss)		7.08			(2.68)			2.31			(9.60)			(2.78)			14.26			6.21			(2.34)			2.08			(9.46)			(2.29)			13.41
Net increase (decrease) from investment operations		6.97			(2.76)			2.36			(9.67)			(2.91)			14.24			6.05			(2.54)			1.96			(9.59)			(2.61)			13.25
Dividends and distributions from:
Net investment income		(0.72)			(0.52)			–			–			(2.01)			(0.81)			(0.59)			(0.36)			–			–			(1.92)			(0.55)
Net realized gain		(0.74)			–			–			(9.04)			(7.22)			(18.58)			(0.74)			–			–			(9.04)			(7.22)			(18.58)
Total dividends and distributions		(1.46)			(0.52)			–			(9.04)			(9.23)			(19.39)			(1.33)			(0.36)			–			(9.04)			(9.14)			(19.13)
Redemption fees added to paid-in capital		–			0.00	2		0.01			0.01			0.03			0.00	2		–			0.00	2		0.00	2		0.01			0.02			0.00	2
Net asset value, end of period	$	37.21		$	31.70		$	34.98		$	32.61		$	51.31		$	63.42		$	32.45		$	27.73		$	30.63		$	28.67		$	47.29		$	59.02
Total Investment Return3
Based on net asset value		21.99%	4		(8.28)%			7.27%	5,6		(7.64)%	7,8		(6.77)%	6		23.55%	9		21.79%	4		(8.61)%			6.84%	9,10		(8.20)%	6,11		(6.78)%	8		23.25%	9
Ratios to Average Net Assets
Total expenses		0.99%	12		0.93%			0.97%			1.00%			0.92%			1.07%			1.35%	12		1.28%			1.35%			1.40%			1.25%			1.30%
Total expenses excluding recoupment of past waived fees		0.98%	12		0.93%			0.97%			0.98%			0.92%			1.07%			1.33%	12		1.26%			1.31%			1.38%			1.25%			1.30%
Total expenses after fees waived, reimbursed and paid indirectly		0.99%	12		0.92%			0.97%			0.99%			0.92%			1.03%			1.35%	12		1.27%			1.35%			1.31%			1.25%			1.29%
Net investment income (loss)		(0.60)%	12		(0.18)%			0.13%			(0.25)%			(0.18)%			(0.03)%			(0.96)%	12		(0.52)%			(0.39)%			(0.55)%			(0.49)%			(0.28)%
Supplemental Data
Net assets, end of period (000)	$	336,534		$	306,403		$	274,009		$	134,187		$	82,147		$	37,498		$	683,675		$	632,030		$	644,786		$	636,437		$	689,646		$	685,590
Portfolio turnover		9%			40%			16%			25%			32%			15%			9%			40%			16%	��		25%			32%			15%

¹  Based on average shares outstanding.

²  Less than $0.01 per share.

³  Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

⁴  Aggregate total investment return.

⁵  Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been 7.20%.

⁶  Redemption fee of 2.00% is reflected in total return calculations. The impact to the return from redemption fees received during the period was an increase of 0.03%.

⁷  Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been (7.66)%.

⁸  Redemption fee of 2.00% is reflected in total return calculations. The impact to the return from redemption fees received during the period was an increase of 0.02%.

⁹  Redemption fee of 2.00% is reflected in total return calculations. There was no impact to the return.

¹⁰  Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been 6.77%.

¹¹  Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been (8.23)%.

¹²  Annualized.

See Notes to Financial Statements.

    BLACKROCK FUNDS     MARCH 31, 2012 33

  Financial Highlights (concluded)   BlackRock Energy & Resources Portfolio

	Investor B																		Investor C
	Six Months Ended			Year Ended September 30,															Six Months Ended			Year Ended September 30,
	March 31, 2012 (Unaudited)			2011			2010			2009			2008			2007			March 31, 2012 (Unaudited)			2011			2010			2009			2008			2007
Per Share Operating Performance
Net asset value, beginning of period	$	20.65		$	22.86		$	21.56		$	39.68		$	50.87		$	58.19		$	20.55		$	22.81		$	21.51		$	39.61		$	50.84		$	58.19
Net investment loss1		(0.21)			(0.38)			(0.27)			(0.22)			(0.67)			(0.50)			(0.21)			(0.37)			(0.24)			(0.22)			(0.66)			(0.50)
Net realized and unrealized gain (loss)		4.63			(1.73)			1.57			(8.87)			(1.81)			11.82			4.60			(1.69)			1.54			(8.85)			(1.79)			11.83
Net increase (decrease) from investment operations		4.42			(2.11)			1.30			(9.09)			(2.48)			11.32			4.39			(2.06)			1.30			(9.07)			(2.45)			11.33
Dividends and distributions from:
Net investment income		(0.35)			(0.10)			–			–			(1.51)			(0.06)			(0.43)			(0.20)			–			–			(1.58)			(0.04)
Net realized gain		(0.74)			–			–			(9.04)			(7.22)			(18.58)			(0.74)			–			–			(9.04)			(7.22)			(18.58)
Total dividends and distributions		(1.09)			(0.10)			–			(9.04)			(8.73)			(18.64)			(1.17)			(0.20)			–			(9.04)			(8.80)			(18.62)
Redemption fees added to paid-in capital		–			0.00	2		0.00	2		0.01			0.02			0.00	2		–			0.00	2		0.00	2		0.01			0.02			0.00	2
Net asset value, end of period	$	23.98		$	20.65		$	22.86		$	21.56		$	39.68		$	50.87		$	23.77		$	20.55		$	22.81		$	21.51		$	39.61		$	50.84
Total Investment Return3
Based on net asset value		21.36%	4		(9.33)%			6.03%	5,6		(8.74)%	7,8		(7.63)%	9		22.35%	6		21.32%	4		(9.25)%			6.04%	6,10		(8.68)%	8,11		(7.57)%	9		22.36%	6
Ratios to Average Net Assets
Total expenses		2.15%	12		2.07%			2.10%			2.25%			2.01%			2.08%			2.06%	12		2.04%			2.06%			2.16%			1.96%			2.02%
Total expenses excluding recoupment of past waived fees		2.15%	12		2.03%			2.10%			2.23%			2.01%			2.08%			2.05%	12		1.99%			2.05%			2.16%			1.96%			2.02%
Total expenses after fees waived, reimbursed and paid indirectly		2.10%	12		2.07%			2.09%			2.05%			2.00%			2.03%			2.06%	12		2.03%			2.05%			2.05%			1.96%			2.01%
Net investment loss		(1.70)%	12		(1.31)%			(1.17)%			(1.28)%			(1.24)%			(1.01)%			(1.67)%	12		(1.29)%			(1.07)%			(1.29)%			(1.21)%			(1.00)%
Supplemental Data
Net assets, end of period (000)	$	13,139		$	16,450		$	25,633		$	34,218		$	57,174		$	80,178		$	166,423		$	146,186		$	142,490		$	129,556		$	151,409		$	144,300
Portfolio turnover		9%			40%			16%			25%			32%			15%			9%			40%			16%			25%			32%			15%

¹  Based on average shares outstanding.

²  Less than $0.01 per share.

³  Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

⁴  Aggregate total investment return.

⁵  Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been 5.94%.

⁶  Redemption fee of 2.00% is reflected in total return calculations. There was no impact to the return.

⁷  Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been (8.77)%.

⁸  Redemption fee of 2.00% is reflected in total return calculations. The impact to the return from redemption fees received during the period was an increase of 0.04%.

⁹  Redemption fee of 2.00% is reflected in total return calculations. The impact to the return from redemption fees received during the period was an increase of 0.02%.

¹⁰  Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been 5.95%.

¹¹  Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been (8.71)%.

¹²  Annualized.

See Notes to Financial Statements.

34     BLACKROCK FUNDS     MARCH 31, 2012

  Financial Highlights   BlackRock World Gold Fund

	Institutional									Investor A									Investor C
	Six Months Ended March 31, 2012 (Unaudited)1			Year Ended September 30, 20111			Period May 26, 20102 to September 30, 2010			Six Months Ended March 31, 2012 (Unaudited)1			Year Ended September 30, 20111			Period May 26, 20102 to September 30, 2010			Six Months Ended March 31, 2012 (Unaudited)1			Year Ended September 30, 20111			Period May 26, 20102 to September 30, 2010
Per Share Operating Performance
Net asset value, beginning of period	$	11.13		$	12.07		$	10.00		$	11.10		$	12.05		$	10.00		$	11.00		$	12.02		$	10.00
Net investment income (loss)3		(0.02	)		(0.02	)		(0.01	)		(0.03	)		(0.04	)		0.00	4		(0.07	)		(0.13	)		(0.04	)
Net realized and unrealized gain (loss)5		(0.65	)		(0.63	)		2.08			(0.65	)		(0.62	)		2.05			(0.65	)		(0.62	)		2.06
Net increase (decrease) from investment operations		(0.67	)		(0.65	)		2.07			(0.68	)		(0.66	)		2.05			(0.72	)		(0.75	)		2.02
Dividends and distributions from:
Net investment income		(0.02	)		(0.13	)		—			—			(0.13	)		—			—			(0.11	)		—
Tax return of capital		—			(0.04	)		—			—			(0.04	)		—			—			(0.04	)		—
Net realized gain		—			(0.12	)		—			—			(0.12	)		—			—			(0.12	)		—
Total dividends and distributions		(0.02	)		(0.29	)		—			—			(0.29	)		—			—			(0.27	)		—
Net asset value, end of period	$	10.44		$	11.13		$	12.07		$	10.42		$	11.10		$	12.05		$	10.28		$	11.00		$	12.02
Total Investment Return6
Based on net asset value		(6.06)%	7		(5.69)%			20.70%	7		(6.13)%	7		(5.83)%			20.50%	7		(6.55)%	7		(6.57)%			20.20%	7
Ratios to Average Net Assets
Total expenses		2.11%	8		4.05%			5.79%	8,9		2.51%	8		4.45%			7.16%	8,9		3.22%	8		5.14%			7.37%	8,9
Total expenses after fees waived and reimbursed		1.24%	8		1.24%			1.24%	8		1.49%	8		1.49%			1.49%	8		2.27%	8		2.27%			2.27%	8
Net investment income (loss)		(0.27)%	8		(0.15)%			(0.39)%	8		(0.51)%	8		(0.36)%			0.07%	8		(1.30)%	8		(1.05)%			(1.15)%	8
Supplemental Data
Net assets, end of period (000)	$	4,010		$	4,432		$	3,974		$	3,033		$	3,242		$	572		$	2,650		$	2,726		$	132
Portfolio turnover		12%			29%			1%			12%			29%			1%			12%			29%			1%

¹ Consolidated Financial Highlights.

²  Commencement of operations.

³ Based on average shares outstanding.

⁴ Less than $0.01 per share.

⁵ Includes redemption fees, which are less than $0.01 per share.

⁶ Redemption fee of 2.00% is reflected in total return calculations. There was no impact to the return.

⁷ Aggregate total investment return.

⁸ Annualized.

⁹ Organization costs were not annualized in the calculation of the expense ratios. If these expenses were annualized, the total expenses for Institutional, Investor A and Investor C would have been 6.17%, 8.00% and 7.94%, respectively.

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

Notes to Financial Statements (Unaudited)

1. Organization and Significant Accounting Policies:

BlackRock Funds^SM (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. BlackRock All-Cap Energy & Resources Portfolio (“All-Cap Energy & Resources”), BlackRock China Fund (“China Fund”), BlackRock Energy & Resources Portfolio (“Energy & Resources”) and BlackRock World Gold Fund (“World Gold”) (collectively, the “Funds” or individually, a “Fund”) are each a series of the Trust. The Funds are classified as non-diversified. 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 and disclosures in the financial statements. Actual results could differ from those estimates. Each Fund offers multiple classes of shares. Institutional Shares are sold without a sales charge and only to certain eligible investors. Service Shares are sold without a sales charge. Investor A Shares are generally sold with a front-end sales charge. Investor B and Investor C Shares may be subject to a CDSC. All classes of shares have identical voting, dividend, liquidation and other rights and the same terms and conditions, except that Service, Investor A, Investor B and Investor C Shares bear certain expenses related to the shareholder servicing of such shares, and Investor B and Investor C Shares also bear certain expenses related to the distribution of such shares. Investor B Shares automatically convert to Investor A Shares after approximately eight years. Investor B Shares are only available through exchanges, dividend reinvestment by existing shareholders or for purchase by certain qualified employee benefit plans. Each class has exclusive voting rights with respect to matters relating to its shareholder servicing and distribution expenditures (except that Investor B shareholders may vote on material changes to the Investor A distribution and service plan).

The following is a summary of significant accounting policies followed by the Funds:

Basis of Consolidation: The accompanying consolidated financial statements of World Gold include the accounts of BlackRock Cayman World Gold Fund 1, Ltd. (the “Subsidiary”), a wholly owned subsidiary of World Gold, which primarily invests in commodity-related instruments. The Subsidiary enables World Gold to hold these commodity-related instruments and still satisfy Regulated Investment Company (“RIC”) tax requirements. World Gold may invest up to 25% of its total assets in the Subsidiary. Intercompany accounts and transactions have been eliminated. The Subsidiary is subject to the same investment policies and restrictions that apply to World Gold.

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 using independent dealers or pricing services under policies approved by the Board of Trustees of the Trust (the “Board”). Equity investments traded on a recognized

securities exchange or the NASDAQ Global Market System (“NASDAQ”) are valued at the last reported sale price that day or the NASDAQ official closing price, if applicable. For equity investments traded on more than one exchange, the last reported sale price on the exchange where the stock is primarily traded is used. Equity investments traded on a recognized exchange for which there were no sales on that day are valued at the last available bid price. If no bid price is available, the prior day’s price will be used, unless it is determined that such prior day’s price no longer reflects the fair value of the security. Investments in open-end registered investment companies are valued at NAV each business day. Short-term securities with remaining maturities of 60 days or less may be valued at amortized cost, which approximates fair value.

The Funds value their investments in BlackRock Liquidity Series, LLC Money Market Series (the “Money Market Series”) at fair value, which is ordinarily based upon their pro rata ownership in the underlying fund’s net assets. The Money Market Series seeks current income consistent with maintaining liquidity and preserving capital. Although the Money Market Series is not registered under the 1940 Act, its investments will follow the parameters of investments by a money market fund that is subject to Rule 2a-7 under the 1940 Act. Each Fund may withdraw up to 25% of its investment daily, although the manager of the Money Market Series, in its sole discretion, may permit an investor to withdraw more than 25% on any one day.

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

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

Generally, trading in foreign instruments is substantially completed each day at various times prior to the close of business on the NYSE. Occasionally, events affecting the values of such instruments may occur between the foreign market close and the close of business on the NYSE that may not be reflected in the computation of each Fund’s net assets. If events (for example, a company announcement, market volatility or a natural disaster) occur during such periods that are expected to materially affect the value of such instruments, those instruments may be Fair Value

36     BLACKROCK FUNDS     MARCH 31, 2012

Notes to Financial Statements (continued)

Assets and be valued at their fair value, as determined in good faith by the investment advisor using a pricing service and/or policies approved by the Board. Each business day, the Funds use a pricing service to assist with the valuation of certain foreign exchange-traded equity securities and foreign exchange-traded and over-the-counter (“OTC”) options (the “Systematic Fair Value Price”). Using current market factors, the Systematic Fair Value Price is designed to value such foreign securities and foreign options at fair value as of the close of business on the NYSE, which follows the close of the local markets.

Foreign Currency Transactions: The Funds’ books and records are maintained in US dollars. Purchases and sales of investment securities are recorded at the rates of exchange prevailing on the respective date of such transactions. Generally, when the US dollar rises in value against a foreign currency, the Funds’ investments denominated in that currency will lose value because its currency is worth fewer US dollars; the opposite effect occurs if the US dollar falls in relative value.

The Funds do not isolate the portion of the results of operations arising as a result of changes in the foreign exchange rates from the changes in the market prices of investments held or sold for financial reporting purposes. Accordingly, the effects of changes in foreign currency exchange rates on investments are not segregated on the Statements of Operations from the effects of changes in market prices of those investments but are included as a component of net realized and unrealized gain (loss) from investments. The Funds report realized currency gains (losses) on foreign currency related transactions as components of net realized gain (loss) for financial reporting purposes, whereas such components are treated as ordinary income for federal income tax purposes.

Participation Notes: China Fund may invest in participation notes (“P-Notes”). P-Notes are promissory notes issued by banks or broker-dealers that are designed to offer the Fund a return measured by the change in the value of the underlying security or basket of securities (the “underlying security”) while not holding the actual shares of the underlying security. P-Notes are typically used to allow the Fund to gain exposure to securities traded in foreign markets that may be restricted due to country-specific regulations. When the P-Note matures, the issuer will pay to, or receive from, the Fund the difference between the value of the underlying security at the time of the purchase and the underlying security’s value at maturity of the P-Notes. Income received on P-Notes is recorded by the Fund as dividend income in the Statements of Operations. An investment in a P-Note involves additional risks beyond the risks normally associated with a direct investment in the underlying security. While the holder of a P-Note is entitled to receive from the bank or broker-dealer any dividends paid by the underlying security, the holder is not entitled to the same rights (e.g., voting rights) as a direct owner of the underlying security. P-Notes are considered general unsecured contractual obligations of the bank or broker-dealer. The Fund must rely on the creditworthiness of the issuer for its investment returns on the P-Notes and has no rights against the issuer of the underlying security. A P-Note may be more volatile and less liquid than other investments held by the Fund since the P-Note generally is dependent on the liquidity in the local trading market for the underlying security.

Segregation and Collateralization: In cases in which the 1940 Act and the interpretive positions of the Securities and Exchange Commission (“SEC”) require that a Fund either deliver collateral or segregate assets in connection with certain investments (e.g., foreign currency exchange contracts), the Fund will, consistent with SEC rules and/or certain interpretive letters issued by the SEC, segregate collateral or designate on its books and records cash or liquid securities having a market value at least equal to the amount that would otherwise be required to be physically segregated. Furthermore, based on requirements and agreements with certain exchanges and third party broker-dealers, each party to such transactions has requirements to deliver/deposit securities as collateral for certain investments.

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. Dividends from foreign securities where the ex-dividend date may have passed are subsequently recorded when the Funds are informed of the ex-dividend date. Under the applicable foreign tax laws, a withholding tax at various rates may be imposed on capital gains, dividends and interest. Income and realized and unrealized gains and losses are allocated daily to each class based on its relative net assets.

Dividends and Distributions: Dividends and distributions paid by the Funds are recorded on the ex-dividend dates. If the total dividends and distributions made in any tax year exceeds net investment income and accumulated realized capital gains, a portion of the total distribution may be treated as a tax return of capital. The amount and timing of dividends and distributions are determined in accordance with federal income tax regulations, which may differ from US GAAP.

Securities Lending: The Funds may lend securities to approved borrowers, such as banks, brokers and other financial institutions. The borrower pledges cash, securities issued or guaranteed by the US government or irrevocable letters of credit issued by a bank as collateral, which will be maintained at all times in an amount equal to at least 100% of the current market value of the loaned securities. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. Securities lending income, as disclosed in the Statements of Operations, represents the income earned from the investment of the cash collateral, net of rebates paid to, or fees paid by, borrowers and less the fees paid to the securities lending agent. During the term of the loan, the Funds earn dividend or interest income on the securities loaned but do not receive dividend or interest income on the securities received as collateral. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions. In the event that the borrower defaults on its obligation to return borrowed securities because of insolvency or for any other reason, the Funds could experience delays and costs in gaining access to the collateral. The

    BLACKROCK FUNDS     MARCH 31, 2012 37

Notes to Financial Statements (continued)

Funds also could suffer a loss if the value of an investment purchased with cash collateral falls below the market value of loaned securities or if the value of an investment purchased with cash collateral falls below the value of the original cash collateral received. During the six months ended March 31, 2012, any securities on loan were collaterized by cash.

Income Taxes: It is each Fund’s policy to comply with the requirements of the Internal Revenue Code of 1986, as amended, applicable to RICs and to distribute substantially all of its taxable income to its shareholders. Therefore, no federal income tax provision is required.

The Funds file US federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on All-Cap Energy & Resources and Energy & Resources Funds’ US federal tax returns remains open for each of the four years ended September 30, 2011. The statute of limitations on World Gold’s US federal tax returns remains open for each of the two periods ended September 30, 2011. The statute of limitations on China’s US federal tax return remains open for the period ended September 30, 2011. 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.

China Fund has adopted certain revisions to its tax laws and regulations that may result in holdings of the China Fund located in China being subject to withholding taxes on dividends and other income which may include taxes on capital gains. During the six months ended March 31, 2012, the China Fund invested in certain Chinese securities “A-shares” available only to local Chinese investors and Qualified Foreign Institutional Investors (“QFIIs”) through P-Notes. The China Fund gained access to the A-share market through various unaffiliated QFIIs. There is uncertainty in the current Chinese tax law whether capital gains realized on the China Fund’s investments in A-shares will be subject to tax. If such tax is imposed, the China Fund’s NAV or return could be adversely impacted.

Recent Accounting Standards: In May 2011, the Financial Accounting Standards Board (the “FASB”) issued amended guidance to improve disclosure about fair value measurements which will require the following disclosures for fair value measurements categorized as Level 3: quantitative information about the unobservable inputs and assumptions used in the fair value measurement, a description of the valuation policies and procedures and a narrative description of the sensitivity of the fair value measurement to changes in unobservable inputs and the interrelationships between those unobservable inputs. In addition, the amounts and reasons for all transfers in and out of Level 1 and Level 2 will be required to be disclosed as well as disclosure of the level in the fair value hierarchy of assets and liabilities not recorded at fair value but where fair value is disclosed. The amended guidance is effective for financial statements for fiscal years beginning after December 15, 2011, and interim periods within those fiscal years. Management is evaluating the impact of this guidance on the Funds’ financial statement disclosures.

In December 2011, the FASB 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.

Organization and Offering Costs: Upon commencement of operations, organization costs associated with the establishment of China Fund were expensed by China Fund and reimbursed by the Manager. Offering costs are amortized over a 12-month period beginning with the commencement of operations.

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 the Funds and other shared expenses pro rated to the Funds 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. Derivative Financial Instruments:

The Funds engage in various portfolio investment strategies using derivative contracts both to increase the returns of the Funds and to economically hedge, or protect, their exposure to foreign currency exchange rate risk. These contracts may be transacted on an exchange or OTC.

Losses may arise if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument or if the counterparty does not perform under the contract. The Funds’ maximum risk of loss from counterparty credit risk on OTC derivatives is generally the aggregate unrealized gain netted against any collateral pledged by/posted to the counterparty.

The Funds may mitigate counterparty risk by procuring collateral and through netting provisions included within an International Swaps and Derivatives Association, Inc. master agreement (“ISDA Master Agreement”) implemented between a Fund and each of its respective counterparties. An ISDA Master Agreement allows each Fund to offset with each separate counterparty certain derivative financial instrument’s payables and/or receivables with collateral held. The amount of collateral moved to/from applicable counterparties is generally based upon

38     BLACKROCK FUNDS     MARCH 31, 2012

Notes to Financial Statements (continued)

minimum transfer amounts of up to $500,000. To the extent amounts due to the Funds from their counterparties are not fully collateralized contractually or otherwise, the Funds bear the risk of loss from counterparty non-performance. See Note 1 “Segregation and Collateralization” for information with respect to collateral practices. In addition, the Funds manage counterparty risk by entering into agreements only with counterparties that they believe have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties.

Certain ISDA Master Agreements allow counterparties to OTC derivatives to terminate derivative contracts prior to maturity in the event the Funds’ net assets decline by a stated percentage or the Funds fail to meet the terms of its ISDA Master Agreements, which would cause the Funds to accelerate payment of any net liability owed to the counterparty.

Foreign Currency Exchange Contracts: The Funds enter into foreign currency exchange contracts as an economic hedge against either specific transactions or portfolio instruments or to obtain exposure to foreign currencies (foreign currency exchange rate risk). A foreign currency exchange contract is an agreement between two parties to buy and sell a currency at a set exchange rate on a future date. Foreign currency exchange contracts, when used by the Funds, help to manage the overall exposure to the currencies in which some of the investments held by the Funds are denominated. The contract is marked-to-market daily and the change in market value is recorded by the Funds as an unrealized gain or loss. When the contract is closed, the Funds record a realized gain or loss equal to the difference between the value at the time it was opened and the value at the time it was closed. The use of foreign currency exchange contracts involves the risk that the value of a foreign currency exchange contract changes unfavorably due to movements in the value of the referenced foreign currencies and the risk that a counterparty to the contract does not perform its obligations under the agreement.

Derivative Financial Instruments Categorized by Risk Exposure:

Fair Values of Derivative Financial Instruments as of March 31, 2012
Liability Derivatives
	Statements of Assets and Liabilities Location	World Gold
Foreign currency exchange contracts	Unrealized depreciation on foreign currency exchange contracts	$	260

The Effect of Derivative Financial Instruments in the Statements of Operations Six Months Ended March 31, 2012
Net Realized Gain (Loss) From
	All-Cap Energy & Resources		China Fund		Energy & Resources		World Gold
Foreign currency exchange contracts		$(11,437)		$(13)		$57,685		$ (1,275)

Net Change in Unrealized Appreciation/Depreciation on
	Energy & Resources	World Gold
Foreign currency exchange contracts	$(187)		$2,245

For the six months ended March 31, 2012, the average quarterly balances of outstanding derivative financial instruments were as follows:

	All-Cap Energy & Resources			China Fund		Energy & Resources			World Gold
Foreign currency exchange contracts:
Average number of contracts - US dollars purchased		2			1		1			2
Average number of contracts - US dollars sold		1			1		1			1
Average US dollar amounts purchased		$1,668,421			$94		$642,931	1		$37,674
Average US dollar amounts sold		$1,507,465	1		$19		$  14,211			$13,718	1

¹  Average contract amount shown due to limited activity.

3. Investment Advisory Agreements and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. (“PNC”) and Barclays Bank PLC (“Barclays”) are the largest stockholders of BlackRock, Inc.

(“BlackRock”). Due to the ownership structure, PNC is an affiliate for 1940 Act purposes, but Barclays is not.

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 is responsible for the management of each Fund’s portfolio and provides the necessary personnel, facilities, equipment and certain other services necessary to the operations of each Fund. For such services, each Fund except China Fund pays the Manager a monthly fee based on a percentage of each Fund’s average daily net assets at the following annual rates:

Average Daily Net Assets	Investment Advisory Fee
First $1 Billion	0.750%
$1 Billion - $2 Billion	0.700%
$2 Billion - $3 Billion	0.675%
Greater than $3 Billion	0.650%

For such services, China Fund pays the Manager a monthly fee at an annual rate of 1.00% of its average daily net assets.

    BLACKROCK FUNDS     MARCH 31, 2012 39

Notes to Financial Statements (continued)

The Manager contractually agreed to waive and/or reimburse fees or expenses, excluding interest expense, dividend expense, acquired fund fees and expenses and certain other fund expenses, in order to limit expenses. The expense limitations as a percentage of average daily net assets are as follows:

Share Classes	All-Cap Energy & Resources			China Fund			Energy & Resources			World Gold
BlackRock		0.92	%1		N/A			N/A			N/A
Institutional		0.96	%		1.65	%		1.07	%		1.24	%
Service.		1.38	%		N/A			1.38	%1		N/A
Investor A		1.38	%		1.90	%		1.38	%		1.49	%
Investor B		2.10	%		N/A			2.10	%		N/A
Investor C		2.10	%		2.65	%		2.10	%		2.27	%
Class R		1.83	%1		N/A			1.94	%1		N/A

¹  There were no shares outstanding as of March 31, 2012.

The Manager has agreed not to reduce or discontinue this contractual waiver or reimbursement prior to February 1, 2013 unless approved by the Board, including a majority of the Independent Trustees. These amounts are included in fees waived by advisor and shown as administration fees waived – class specific, transfer agent fees waived – class specific, transfer agent fees reimbursed – class specific and expenses reimbursed by advisor, respectively, in the Statements of Operations. For the six months ended March 31, 2012, the Manager waived $12,558 and $40,435 of investment advisory fees for China Fund and World Gold, respectively, which are included in fees waived by advisor. Class specific expense waivers or reimbursements are as follows:

Administration Fees Waived
Share Classes	All-Cap Energy & Resources		China Fund		Energy & Resources		World Gold
Institutional		–	$	282	$	628	$	570
Service	$	10		–				–
Investor A		407		13		2,183		454
Investor B		2,581		–		2,058		–
Investor C		101		4		386		382
Total	$	3,099	$	299	$	5,255	$	1,406
Transfer Agent Fees Waived
Share Classes	All-Cap Energy & Resources		China Fund		Energy & Resources		World Gold
Institutional		–	$	1	$	116	$	118
Service	$	5		–		–		–
Investor A		169		4		875		212
Investor B		1,584		–		921		–
Investor C		–		2		129		122
Total	$	1,758	$	7	$	2,041	$	452

Transfer Agent Fees Reimbursed
Share Classes	All-Cap Energy & Resources		China Fund		Energy & Resources		World Gold
Institutional		–	$	49	$	2,522	$	1,436
Investor A	$	1,042		120		12,038		3,818
Investor B		4,839		–		1,347		–
Investor C		–		55		1,887		2,229
Total	$	5,881	$	224	$	17,794	$	7,483

The Manager voluntarily agreed to waive its investment advisory fees by the amount of investment advisory fees each Fund pays to the Manager indirectly through its investment in affiliated money market funds. However, the Manager does not waive its investment advisory fees by the amount of investment advisory fees paid in connection with each Fund’s investment in other affiliated investment companies, if any. These amounts are included in fees waived by advisor in the Statements of Operations. For the six months ended March 31, 2012, the amounts waived were as follows:

All-Cap Energy & Resources	$	6,905
China Fund	$	20
Energy & Resources	$	2,871
World Gold	$	41

The Manager provides investment management and other services to the Subsidiary. The Manager does not receive separate compensation from the Subsidiary for providing investment management or administrative services. However, World Gold pays the Manager based on World Gold’s net assets, which include the assets of the Subsidiary.

The Manager entered into a sub-advisory agreement with BlackRock International Limited (“BIL”), an affiliate of the Manager, to serve as sub-advisor for World Gold. The Manager pays BIL, for services it provides, a monthly fee that is a percentage of the investment advisory fees paid by World Gold to the Manager.

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.

40     BLACKROCK FUNDS     MARCH 31, 2012

Notes to Financial Statements (continued)

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.

For the six months ended March 31, 2012, the Manager recouped the following waivers previously recorded by the Funds:

Recoupment of Past Waived Fees
Share Classes	All-Cap Energy & Resources		Energy & Resources
Institutional		–	$	11,869
Service	$	25		–
Investor A		6,500		81,875
Investor B		–		–
Investor C		–		12,110
Total	$	6,525	$	105,854

On March 31, 2012, the amounts subject to possible future recoupment under the expense limitation agreement are as follows:

	Expiring September 30,
	2012		2013		2014
All-Cap Energy & Resources	$	14,359	$	1,561	$	10,737
China Fund		–	$	139,204	$	134,196
Energy & Resources		–	$	357	$	25,087
World Gold	$	61,160	$	253,276	$	52,904

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
Service		0.25	%		–
Investor A		0.25	%		–
Investor B		0.25	%		0.75	%
Investor C		0.25	%		0.75	%

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 compensate BRIL and each broker-dealer for providing shareholder servicing and/or distribution related services to Service, Investor A, Investor B and Investor C shareholders.

For the six months ended March 31, 2012, the following table shows the class specific service and distribution fees borne directly by each class of each Fund:

Service and Distribution Fees
Share Classes	All-Cap Energy & Resources		China Fund		Energy & Resources		World Gold
Service	$	6,819		–		–		–
Investor A		259,903	$	133	$	913,843	$	4,542
Investor B		103,235		–		87,690		–
Investor C		562,779		143		879,211		15,273
Total.	$	932,736	$	276	$	1,880,744	$	19,815

For the six months ended March 31, 2012, affiliates earned underwriting discounts, direct commissions and dealer concessions on sales of each Fund’s Investor A Shares as follows:

All-Cap Energy & Resources	$	10,781
China Fund	$	184
Energy & Resources	$	41,755
World Gold	$	4,501

For the six months ended March 31, 2012, affiliates received the following CDSCs relating to transactions in Investor A, Investor B and Investor C Shares as follows:

	Investor A		Investor B		Investor C
All-Cap Energy & Resources	$	46	$	10,320	$	8,565
Energy & Resources	$	6,224	$	10,236	$	21,109
World Gold	$	485		–	$	1,529

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. For the six months ended March 31, 2012, the Funds paid the following to affiliates in return for these services, which are included in transfer agent – class specific in the Statements of Operations.

All-Cap Energy & Resources	$	402
Energy & Resources	$	4,072

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 six months ended March 31, 2012, each Fund reimbursed the Manager the following amounts for costs incurred in running

    BLACKROCK FUNDS     MARCH 31, 2012 41

Notes to Financial Statements (continued)

the call center, which are included in transfer agent – class specific in the Statements of Operations:

Share Classes	All-Cap Energy & Resources		China Fund		Energy & Resources		World Gold
Institutional	$	2,139	$	2	$	2,973	$	121
Service		230		–		–		–
Investor A		8,038		4		23,153		212
Investor B		1,600		–		1,390		–
Investor C		4,005		2		5,077		122
Total	$	16,012	$	8	$	32,593	$	455

For the six months ended March 31, 2012, the following table shows the class specific transfer agent fees borne directly by each class of each Fund:

Transfer Agent Fees
Share Classes	All-Cap Energy & Resources		China Fund		Energy & Resources		World Gold
Institutional	$	102,845	$	80	$	195,067	$	1,631
Service		3,599		–		–		–
Investor A		203,259		131		772,499		4,094
Investor B		30,564		–		24,423		–
Investor C		101,100		59		153,565		2,822
Total	$	441,367	$	270	$	1,145,554	$	8,547

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 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. For the six months ended March 31, 2012, the Funds paid the following to the Manager in return for these services, which are included in administration, administration – class specific, administration fees waived and administration fees waived – class specific in the Statements of Operations:

Administration Fees
All-Cap Energy & Resources	$	271,511
Energy & Resources	$	407,601

For the six months ended March 31, 2012, the following table shows the administration fees – class specific borne directly by each class of each Fund:

Administration Fees – Class Specific
Share Classes	All-Cap Energy & Resources		China Fund		Energy & Resources		World Gold
Institutional	$	54,902	$	297	$	43,868	$	575
Service		682		–		–		–
Investor A		25,990		13		79,831		454
Investor B		2,581		–		2,192		–
Investor C		14,070		4		21,980		382
Total	$	98,225	$	314	$	147,871	$	1,411

The Funds received an exemptive order from the SEC permitting them, among other things, to pay an affiliated securities lending agent a fee based on a share of the income derived from the securities lending activities and have retained BlackRock Investment Management, LLC (“BIM”) as the securities lending agent. BIM may, on behalf of the Funds, invest cash collateral received by a Fund for such loans, among other things, in a private investment company managed by the Manager or in registered money market funds advised by the Manager or its affiliates. As securities lending agent, BIM is responsible for all transaction fees and all other operational costs relating to securities lending activities, other than extraordinary expenses. BIM does not receive any fees for managing the cash collateral. The market value of securities on loan and the value of the related collateral, if applicable, are shown in the Statements of Assets and Liabilities as securities loaned at value and collateral on securities loaned at value, respectively. The cash collateral invested by BIM is disclosed in the Schedules of Investments, if any. Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of rebates paid to, or fees paid by, borrowers of securities. The Funds retain 65% of securities lending income and pay a fee to BIM equal to 35% of such income. The share of income earned by the Funds on the reinvestment of cash collateral is shown as securities lending – affiliated in the Statements of Operations. For the six months ended March 31, 2012, BIM received $24,715 in securities lending agent fees related to securities lending activities for the Funds.

During the six months ended March 31, 2012, Energy & Resources received reimbursements of $7,869 from an affiliate, which is included in capital share transactions on the Statements of Changes in Net Assets, relating to processing errors.

Certain officers and/or trustees of the Trust are officers and/or directors of BlackRock or its affiliates. The Funds reimburse the Manager for compensation paid to the Trust’s Chief Compliance Officer.

42     BLACKROCK FUNDS     MARCH 31, 2012

Notes to Financial Statements (continued)

4. Investments:

Purchases and sales of investments, excluding short-term securities, for the six months ended March 31, 2012, were as follows:

	Purchases		Sales
All-Cap Energy & Resources	$	100,583,698	$	142,392,090
China Fund	$	637,909	$	481,663
Energy & Resources	$	117,863,558	$	231,303,436
World Gold	$	1,299,626	$	1,415,792

5. Income Tax Information:

As of September 30, 2011, All-Cap Energy & Resources had a capital loss carryforward of $101,763,569 available to offset future realized capital gains, which expires in 2018.

As of September 30, 2011, China Fund had a short-term capital loss carryforward available to offset future realized capital gains in the amount of $18,788. The capital loss carryforward is not subject to expiration and must first be utilized to offset future realized gains of the same character.

Under the RIC Modernization Act of 2010, capital losses incurred by the Funds after September 30, 2011 will not be subject to expiration. In addition, any such losses must be utilized prior to the losses incurred in pre-enactment taxable years.

As of March 31, 2012, gross unrealized appreciation and gross unrealized depreciation based on cost for federal income tax purposes were as follows:

	All-Cap Energy & Resources			China Fund			Energy & Resources			World Gold
Tax cost	$	680,544,840		$	3,078,305		$	1,192,634,326		$	10,439,926
Gross unrealized appreciation	$	199,060,948		$	80,867 $			266,435,183		$	830,275
Gross unrealized depreciation		(91,941,920	)		(546,278	)		(251,528,831	)		(1,600,278	)
Net unrealized appreciation (depreciation)	$	107,119,028		$	(465,411	)	$	14,906,352		$	(770,003	)

6. 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. 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 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 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 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 six months ended March 31, 2012.

7. Concentration, Market and Credit Risk:

In the normal course of business, the Funds invest in securities and 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 Funds’ Statements of Assets and Liabilities, less any collateral held by the Funds.

As of March 31, 2012, All-Cap Energy & Resources and Energy & Resources invested a significant portion of their assets in securities in the energy sector. Changes in economic conditions affecting the energy sector would have a greater impact on All-Cap Energy & Resources and Energy & Resources and could affect the value, income and/or liquidity of positions in such securities.

As of March 31, 2012, China Fund invested a significant portion of its assets in securities in the financial sector. Changes in economic conditions affecting the financial sector would have a greater impact on China Fund and could affect the value, income and/or liquidity of positions in such securities.

As of March 31, 2012, World Gold invested a significant portion of its assets in securities in the materials sector. Changes in economic conditions affecting the materials sector would have a greater impact on World Gold and could affect the value, income and/or liquidity of positions in such securities.

    BLACKROCK FUNDS     MARCH 31, 2012 43

Notes to Financial Statements (continued)

China Fund invests a substantial amount of its assets in issuers located in a single country or a limited number of countries. When the Fund concentrates its investments in this manner, it assumes the risk that economic, political and social conditions in those countries may have a significant impact on its investment performance. Foreign issuers may not be subject to the same uniform accounting, auditing and financial reporting standards and practices as used in the U.S. Foreign securities markets may also be less liquid, more volatile, and less subject to governmental supervision not typically associated with investing in U.S. securities.

As of March 31, 2012, the Funds listed below had the following geographic allocations:

Geographic Allocations	All-Cap Energy & Resources			Energy & Resources
United States		68	%		68	%
Canada		16			21
Netherlands		5			–
Bermuda		4			4
France		3			–
Norway		2			–
Brazil		1			–
China		1			–
Switzerland		–			4
United Kingdom		–			2
Australia		–			1

8. Capital Shares Transactions:

Transactions in capital shares for each class were as follows:

	Six Months Ended March 31, 2012						Year Ended September 30, 2011
All-Cap Energy & Resources	Shares			Amount			Shares			Amount
Institutional
Shares sold		3,812,195		$	54,883,895			11,764,153		$	196,149,612
Shares issued in reinvestment of dividends		–			–			236,670			3,753,576
Shares redeemed		(5,978,883	)		(85,619,126	)		(9,569,807	)		(155,160,649	)
Net increase (decrease)		(2,166,688	)	$	(30,735,231	)		2,431,016		$	44,742,539
Service
Shares sold		16,353		$	233,099			233,545		$	3,751,758
Shares issued in reinvestment of dividends		–			–			1,559			24,303
Shares redeemed		(66,511	)		(946,970	)		(144,086	)		(2,329,320	)
Net increase (decrease)		(50,158	)	$	(713,871	)		91,018		$	1,446,741
Investor A
Shares sold and automatic conversion of shares		1,231,404		$	17,099,787			7,235,798		$	116,893,102
Shares issued in reinvestment of dividends		–			–			68,620			1,070,479
Shares redeemed		(2,899,203	)		(40,229,586	)		(6,968,976	)		(111,272,616	)
Net increase (decrease)		(1,667,799	)	$	(23,129,799	)		335,442		$	6,690,965
Investor B
Shares sold		7,773		$	110,471			51,499		$	813,829
Shares redeemed and automatic conversion of shares		(256,213	)		(3,475,567	)		(484,707	)		(7,428,635	)
Net decrease		(248,440	)	$	(3,365,096	)		(433,208	)	$	(6,614,806	)

44     BLACKROCK FUNDS     MARCH 31, 2012

Notes to Financial Statements (continued)

	Six Months Ended March 31, 2012						Year Ended September 30, 2011
All-Cap Energy & Resources (concluded)	Shares			Amount			Shares			Amount
Investor C
Shares sold		270,192		$	3,657,294			1,743,965		$	27,386,669
Shares redeemed		(960,230	)		(12,907,990	)		(2,001,029	)		(30,386,666	)
Net decrease		(690,038	)	$	(9,250,696	)		(257,064	)	$	(2,999,997	)
Total net increase (decrease)		(4,823,123	)	$	(67,194,693	)		2,167,204		$	43,265,442
							Period April 29, 20111 to September 30, 2011
China Fund							Shares			Amount
Institutional
Shares sold		5,083		$	40,597			297,943		$	2,978,100
Shares issued in reinvestment of dividends		59			425			–			–
Shares redeemed		(1,097	)		(8,249	)		(800	)		(7,351	)
Net increase		4,045		$	32,773			297,143		$	2,970,749
Investor A
Shares sold		18,659		$	152,952			7,911		$	69,004
Shares issued in reinvestment of dividends		89			642			–			–
Shares redeemed		(5,155	)		(42,821	)		(575	)		(3,963	)
Net increase		13,593		$	110,773			7,336		$	65,041
Investor C
Shares sold		1,232		$	9,489			2,727		$	25,361
Shares issued in reinvestment of dividends		23			163			–			–
Net increase		1,255		$	9,652			2,727		$	25,361
Total net increase		18,893		$	153,198			307,206		$	3,061,151

¹ Commencement of operations.

						Year Ended September 30, 2011
Energy & Resources						Shares			Amount
Institutional
Shares sold	1,448,483		$	56,014,262			7,170,242		$	330,432,080
Shares issued in reinvestment of dividends and distributions	310,297			11,564,803			84,123			3,587,025
Shares redeemed	(2,380,228	)		(89,585,113	)		(5,422,553	)		(234,438,204	)
Net increase (decrease)	(621,448	)	$	(22,006,048	)		1,831,812		$	99,580,901
Investor A
Shares sold and automatic conversion of shares	2,822,715		$	94,634,906			12,876,717		$	509,593,830
Shares issued in reinvestment of dividends and distributions	850,675			27,672,619			197,658			7,392,389
Shares redeemed	(5,392,845	)		(177,511,357	)		(11,335,505	)		(436,454,466	)
Net increase (decrease)	(1,719,455	)	$	(55,203,832	)		1,738,870		$	80,531,753

    BLACKROCK FUNDS     MARCH 31, 2012 45

Notes to Financial Statements (concluded)

	Six Months Ended March 31, 2012						Year Ended September 30, 2011
Energy & Resources (concluded)	Shares			Amount			Shares			Amount
Investor B
Shares sold		4,722		$	122,632			26,094		$	771,312
Shares issued in reinvestment of dividends and distributions		32,306			778,303			3,677			103,069
Shares redeemed and automatic conversion of shares		(285,651	)		(7,050,740	)		(354,576	)		(10,074,825	)
Net decrease		(248,623	)	$	(6,149,805	)		(324,805	)	$	(9,200,444	)
Investor C
Shares sold		538,096		$	13,398,694			2,552,890		$	75,921,530
Shares issued in reinvestment of dividends and distributions		325,305			7,768,854			43,559			1,214,416
Shares redeemed		(976,744	)		(23,797,424	)		(1,727,294	)		(49,053,631	)
Net increase (decrease)		(113,343	)	$	(2,629,876	)		869,155		$	28,082,315
Total net increase (decrease)		(2,702,869	)	$	(85,989,561	)		4,115,032		$	198,994,525
World Gold
Institutional
Shares sold		32,694		$	377,246			181,768		$	2,270,406
Shares issued in reinvestment of dividends and distributions		159			1,794			1,892			24,354
Shares redeemed		(47,094	)		(534,474	)		(114,738	)		(1,416,911	)
Net increase (decrease)		(14,241	)	$	(155,434	)		68,922		$	877,849
Investor A
Shares sold		120,306		$	1,389,149			470,161		$	5,767,358
Shares issued in reinvestment of dividends and distributions		–			–			2,868			36,880
Shares redeemed		(121,380	)		(1,372,053	)		(228,392	)		(2,864,351	)
Net increase (decrease)		(1,074	)	$	17,096			244,637		$	2,939,887
Investor C
Shares sold		89,630		$	1,018,577			274,614		$	3,410,785
Shares issued in reinvestment of dividends and distributions		–			–			964			12,364
Shares redeemed		(79,727	)		(922,441	)		(38,767	)		(459,890	)
Net increase		9,903		$	96,136			236,811		$	2,963,259
Total net increase (decrease)		(5,412	)	$	(42,202	)		550,370		$	6,780,995

Prior to April 1, 2011, there was a 2% redemption fee on shares redeemed or exchanged that have been held 30 days or less. The redemption fees were collected and retained by the Funds for the benefit of the remaining shareholders. The redemption fees were recorded as a credit to paid-in capital. Effective April 1, 2011, the redemption fee was terminated and is no longer charged by the Funds.

At March 31, 2012, 296,000 Institutional Shares, 2,000 Investor A Shares and 2,000 Investor C Shares of China Fund were owned by affiliates.

At March 31, 2012, 296,000 Institutional Shares, 2,000 Investor A Shares and 2,000 Investor C Shares of World Gold were owned by affiliates.

9. Subsequent Events:

Management has evaluated the impact of all subsequent events on the Funds through the date the financial statements were issued and has determined that there were no subsequent events requiring adjustment or additional disclosure in the financial statements.

46     BLACKROCK FUNDS     MARCH 31, 2012

Officers and Trustees

Ronald W. Forbes, Co-Chairman of the Board and Trustee

Rodney D. Johnson, Co-Chairman of the Board and Trustee

Paul L. Audet, Trustee

David O. Beim, Trustee

Henry Gabbay, Trustee

Dr. Matina S. Horner, Trustee

Herbert I. London, Trustee

Cynthia A. Montgomery, Trustee

Joseph P. Platt, Trustee

Robert C. Robb, Jr., Trustee

Toby Rosenblatt, Trustee

Kenneth L. Urish, Trustee

Frederick W. Winter, Trustee

John M. Perlowski, President and Chief Executive Officer

Richard Hoerner, CFA, Vice President

Brendan Kyne, Vice President

Simon Mendelson, Vice President

Christopher Stavrakos, CFA, Vice President

Neal Andrews, Chief Financial Officer

Jay Fife, Treasurer

Brian Kindelan, Chief Compliance Officer and Anti-Money Laundering Officer

Ira P. Shapiro, Secretary

Investment Advisor and Co-Administrator

BlackRock Advisors, LLC

Wilmington, DE 19809

Sub-Advisor - World Gold

BlackRock International Limited

Edinburgh, Scotland EH3 8JB

Accounting Agent, Co-Administrator and Transfer Agent

BNY Mellon Investment Servicing (US) Inc.

Wilmington, DE 19809

Custodian

The Bank of New York Mellon

New York, NY 10286

Distributor

BlackRock Investments, LLC

New York, NY 10022

Legal Counsel

Sidley Austin LLP

New York, NY 10019

Independent Registered Public Accounting Firm

Deloitte & Touche LLP

Philadelphia, PA 19103

Address of the Trust

100 Bellevue Parkway

Wilmington, DE 19809

    BLACKROCK FUNDS     MARCH 31, 2012 47

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 funds, 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.

48     BLACKROCK FUNDS     MARCH 31, 2012

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.

    BLACKROCK FUNDS     MARCH 31, 2012 49

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 All-Cap Energy & Resources Portfolio BlackRock Balanced Capital Fund† BlackRock Basic Value Fund BlackRock Capital Appreciation Fund BlackRock China Fund BlackRock Commodity Strategies Fund BlackRock Emerging Markets Fund BlackRock Emerging Markets Long/Short Equity Fund BlackRock Energy & Resources Portfolio BlackRock Equity Dividend Fund BlackRock EuroFund BlackRock Focus Growth Fund BlackRock Global Allocation Fund BlackRock Global Dividend Income Portfolio†	BlackRock Global Dynamic Equity Fund BlackRock Global Opportunities Portfolio BlackRock Global SmallCap Fund BlackRock Health Sciences Opportunities Portfolio BlackRock Index Equity Portfolio BlackRock India Fund BlackRock International Fund BlackRock International Index Fund BlackRock International Opportunities Portfolio BlackRock Large Cap Core Fund BlackRock Large Cap Core Plus Fund BlackRock Large Cap Growth Fund BlackRock Large Cap Value Fund BlackRock Latin America Fund BlackRock Managed Volatility Portfolio† BlackRock Mid-Cap Growth Equity Portfolio	BlackRock Mid-Cap Value Equity Portfolio BlackRock Mid Cap Value Opportunities Fund BlackRock Natural Resources Trust BlackRock Pacific Fund BlackRock Russell 1000 Index Fund BlackRock Science & Technology Opportunities Portfolio BlackRock Small Cap Growth Equity Portfolio BlackRock Small Cap Growth Fund II BlackRock Small Cap Index Fund BlackRock S&P 500 Index Fund BlackRock S&P 500 Stock Fund BlackRock U.S. Opportunities Portfolio BlackRock Value Opportunities Fund BlackRock World Gold Fund

Fixed Income Funds
BlackRock Bond Index Fund BlackRock Core Bond Portfolio BlackRock CoreAlpha Bond Fund BlackRock Emerging Market Debt Portfolio BlackRock Floating Rate Income Portfolio BlackRock Global Long/Short Credit Fund BlackRock GNMA Portfolio	BlackRock High Yield Bond Portfolio BlackRock Inflation Protected Bond Portfolio BlackRock International Bond Portfolio BlackRock Long Duration Bond Portfolio BlackRock Low Duration Bond Portfolio BlackRock Multi-Asset Income Portfolio† BlackRock Multi-Sector Bond Portfolio	BlackRock Strategic Income Opportunities Portfolio BlackRock Total Return Fund BlackRock US Government Bond Portfolio BlackRock US Mortgage Portfolio BlackRock World Income Fund

Municipal Bond Funds
BlackRock California Municipal Bond Fund BlackRock High Yield Municipal Fund BlackRock Intermediate Municipal Fund	BlackRock National Municipal Fund BlackRock New Jersey Municipal Bond Fund BlackRock New York Municipal Bond Fund	BlackRock Pennsylvania Municipal Bond Fund BlackRock Short-Term Municipal Fund

Target Risk & Target Date Funds†
BlackRock Prepared Portfolios	BlackRock Lifecycle Prepared 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.

50     BLACKROCK FUNDS     MARCH 31, 2012

[THIS PAGE INTENTIONALLY LEFT BLANK.]

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 the Funds 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.

Investment in foreign securities involves special risks including fluctuating foreign exchange rates, foreign government regulations, differing degrees of liquidity and the possibility of substantial volatility due to adverse political, economic or other developments.

EQUITY1-3/12-SAR

March 31, 2012

Semi-Annual Report (Unaudited)

BlackRock Funds^SM

u BlackRock Mid-Cap Growth Equity Portfolio

u BlackRock Mid-Cap Value Equity Portfolio

u BlackRock Small Cap Growth Equity Portfolio

Not FDIC Insured   n   No Bank Guarantee   n   May Lose Value

Table of Contents

	Page
Dear Shareholder	3
Semi-Annual Report:
Fund Summaries	4
About Fund Performance	10
Disclosure of Expenses	10
Derivative Financial Instruments	11
Financial Statements:
Schedules of Investments	12
Statements of Assets and Liabilities	21
Statements of Operations	23
Statements of Changes in Net Assets	24
Financial Highlights	25
Notes to Financial Statements	34
Officers and Trustees	45
Additional Information	46
A World-Class Mutual Fund Family	48

2     BLACKROCK FUNDS     MARCH 31, 2012

Dear Shareholder

Twelve months ago, risk assets were charging forward, only to be met with a sharp reversal in May 2011 when escalating political strife in Greece rekindled fears about sovereign debt problems spreading across Europe. Concurrently, global economic indicators signaled that the recovery had slowed. Confidence was further shaken by the prolonged debt ceiling debate in Washington, DC. On August 5, 2011, Standard & Poor’s made history by downgrading the US government’s credit rating, and turmoil erupted in financial markets around the world. Extraordinary levels of volatility persisted in the months that followed as the European debt crisis intensified. Macro news flow became a greater influence on trading decisions than the fundamentals of the securities traded, resulting in high correlations between asset prices. By the end of the third quarter, equity markets had fallen nearly 20% from their April peak while safe-haven assets such as US Treasuries and gold had rallied to historic highs.

October brought enough positive economic data to assuage fears of a global double-dip recession. Additionally, European leaders began to show progress toward stemming the region’s debt crisis. Investors began to reenter the markets, putting risk assets on the road to recovery. Improving investor sentiment carried over into the first several months of 2012. Debt problems in Europe stabilized as policymakers secured a bailout plan for Greece and completed the nation’s debt restructuring without significant market disruptions. While concerns about slowing growth in China and a European recession weighed on the outlook for the global economy, an acceleration of the US recovery lifted sentiment. Several consecutive months of stronger jobs data signaled solid improvement in the US labor market, a pivotal factor for economic growth. Meanwhile, the European Central Bank revived financial markets with additional liquidity through its long-term refinancing operations. The improving market conditions and generally better-than-expected economic news lured investors still holding cash on the sidelines back to risk assets. Stocks, commodities and high yield bonds rallied through the first two months of the year while rising Treasury yields pressured higher-quality fixed income assets. The rally softened in late March, however, as concerns about slowing growth in China were refueled by negative signals from the world’s second-largest economy. Additionally, concerns over the European debt crisis resurfaced given uncertainty around policies for sovereign debt financing in peripheral countries and rising yields in Portugal and Spain.

Thanks in large part to an exceptionally strong first quarter of 2012, risk assets, including equities and high yield bonds, posted solid returns for the 6-month period ended March 31, 2012. On a 12-month basis, US large-cap stocks and high yield bonds delivered positive results, while small-cap stocks finished in slightly negative territory. International and emerging markets, which experienced significant downturns in 2011, lagged the broader rebound. Fixed income securities experienced mixed results, given recent volatility in yields. US Treasury bonds performed particularly well for the 12-month period; however, an early-2012 sell-off resulted in a negative return for the 6–month period. Municipal bonds staged a solid advance over the past year. Continued low short-term interest rates kept yields on money market securities near their all-time lows.

While markets have improved in recent months, considerable headwinds remain. Europe faces a prolonged recession and the financial situations in Italy, Portugal and Spain remain worrisome. Higher oil and gasoline prices along with slowing growth in China and other emerging-market countries weigh heavily on the future of the global economy. But, we believe that with these challenges come opportunities. We remain committed to working with you and your financial professional to identify actionable ideas for your portfolio. We encourage you to visit www.blackrock.com/newworld for more information.

Sincerely,

Rob Kapito

President, BlackRock Advisors, LLC

“While markets have improved in recent months, considerable headwinds remain.”

Rob Kapito

President, BlackRock Advisors, LLC

Total Returns as of March 31, 2012
	6-month		12-month
US large cap equities (S&P 500® Index)	25.89	%	8.54	%
US small cap equities (Russell 2000® Index)	29.83		(0.18	)
International equities (MSCI Europe, Australasia, Far East Index)	14.56		(5.77	)
Emerging market equities (MSCI Emerging Markets Index)	19.12		(8.81	)
3-month Treasury bill (BofA Merrill Lynch 3-Month Treasury Bill Index)	0.01		0.06
US Treasury securities (BofA Merrill Lynch 10- Year US Treasury Index)	(1.05	)	14.92
US investment grade bonds (Barclays US Aggregate Bond Index)	1.43		7.71
Tax-exempt municipal bonds (S&P Municipal Bond Index)	4.16		12.56
US high yield bonds (Barclays US Corporate High Yield 2% Issuer Capped Index)	12.17		6.43

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 Summary as of March 31, 2012   BlackRock Mid-Cap Growth Equity Portfolio

    Investment Objective

BlackRock Mid-Cap Growth Equity Portfolio’s (the “Fund”) investment objective is long-term capital appreciation.

    Portfolio Management Commentary

How did the Fund perform?

— The Fund’s Investor A, Institutional and Service Shares outperformed its benchmark, the Russell Midcap Growth^® Index, while its Investor B, Investor C and Class R Shares slightly underperformed for the six-month period ended March 31, 2012. All Share Classes posted positive double-digit returns.

What factors influenced performance?

— Stock selection across a variety of sectors, including health care, industrials and materials all positively impacted performance for the six-month period. Stock selection in health care was the most significant contributor to overall performance. Holdings in pharmaceuticals performed notably well as the industry returned more than 40% within the portfolio. ViroPharma, Inc. was the biggest contributor in the space, as the stock jumped after announcing a distribution agreement for its legacy antibiotic treatment, removing near-term uncertainty over the possibility that the drug would become a generic offering. Also within the pharmaceutical space, Elan Corp. Plc finished higher on strong sales of the company’s treatment for multiple sclerosis symptoms. Positive stock selection in industrials and materials also boosted returns. Within industrials, global equipment manufacturer Terex Corp. significantly contributed given the improving fundamentals for this late-cycle construction business. Chemicals company Rockwood Holdings, Inc. also finished higher during the period due to strong financial results.

— Weak stock selection within the consumer staples and energy sectors held back the Fund’s performance. Retail coffee holding Green Mountain Coffee Roasters, Inc. sunk close to 50% after missing revenue estimates, leading to a sharp increase in short interest in the stock. Stock selection within energy also notable detracted. Holdings in Superior Energy Services, Inc., Cabot Oil & Gas Corp. and Range Resources Corp. all finished flat to down during the period, after having strong runs to finish 2011. Coal producer Alpha Natural Resources, Inc. also negatively impacted returns, as the significantly lower natural gas prices kept a lid on thermal coal prices within the United States.

Describe recent portfolio activity.

— The Fund reduced its overall weightings in the health care and energy sectors during the six-month period.

Describe portfolio positioning at period end.

— At period end, the Fund’s largest overweight relative to the Russell Midcap Growth^® Index was in the health care sector, while its most significant underweight was in consumer discretionary. In general, sector allocations are a function of our bottom-up stock selection process, and therefore a result of where we are finding individual opportunities in the mid-cap growth universe.

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.

    Portfolio Information

Ten Largest Holdings	Percent of Long-Term Investments
Teva Pharmaceutical Industries Ltd. - ADR		3	%
Cubist Pharmaceuticals, Inc.		3
Elan Corp. Plc - ADR		2
TiVo, Inc.		2
Broadcom Corp., Class A		2
Boston Scientific Corp.		2
Teradata Corp.		2
Jazz Pharmaceuticals, Inc.		2
Whole Foods Market, Inc.		2
BE Aerospace, Inc.		2

Sector Allocation	Percent of Long-Term Investments
Information Technology		23	%
Health Care		19
Consumer Discretionary		18
Industrials		14
Energy		8
Materials		8
Financials		5
Consumer Staples		5

For Fund compliance purposes, the Fund’s sector classifications refer to any one or more of the sector sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by Fund management. These definitions may not apply for purposes of this report, which may combine sector sub-classifications for reporting ease.

4     BLACKROCK FUNDS     MARCH 31, 2012

BlackRock Mid-Cap Growth Equity Portfolio

    Total Return Based on a $10,000 Investment

¹  Assuming maximum sales charges, if any, transaction costs and other operating expenses, including investment advisory fees. Institutional Shares do not have a sales charge.

²  The Fund normally invests at least 80% of its net assets in equity securities issued by US mid-capitalization growth companies, which the portfolio management team believes have above-average earnings growth potential.

³  An index that consists of the bottom 800 securities of the Russell 1000^® Index with greater-than-average growth orientation as ranked by total market capitalization. Securities in this index generally have higher price-to-book and price-to-earnings ratios, lower dividend yields and higher forecasted growth values.

    Performance Summary for the Period Ended March 31, 2012

				Average Annual Total Returns4
				1 Year						5 Years						10 Years
	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
Institutional		27.75	%		5.35	%		N/A			3.60	%		N/A			5.09	%		N/A
Service		27.46			4.95			N/A			3.29			N/A			4.75			N/A
Investor A		27.59			5.03			(0.46	)%		3.17			2.07	%		4.62			4.06	%
Investor B		27.03			4.16			(0.35	)		2.38			2.01			4.00			4.00
Investor C		27.00			4.15			3.15			2.39			2.39			3.85			3.85
Class R		27.35			4.79			N/A			3.09			N/A			4.55			N/A
Russell Midcap® Growth Index		27.39			4.43			N/A			4.44			N/A			6.92			N/A

⁴  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 10 for a detailed description of share classes, including any related sales charges and fees.

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

Past performance is not indicative of future results.

    Expense Example

	Actual									Hypothetical6
	Beginning Account Value October 1, 2011			Ending Account Value March 31, 2012			Expenses Paid During the  Period5			Beginning Account Value October 1, 2011			Ending Account Value March 31, 2012			Expenses Paid During the  Period5			Annualized Expense Ratio
Institutional		$	1,000.00		$	1,277.50		$	6.26		$	1,000.00		$	1,019.50		$	5.55		1.10	%
Service		$	1,000.00		$	1,274.60		$	8.98		$	1,000.00		$	1,017.10		$	7.97		1.58	%
Investor A		$	1,000.00		$	1,275.90		$	7.91		$	1,000.00		$	1,018.05		$	7.01		1.39	%
Investor B		$	1,000.00		$	1,270.30		$	12.26		$	1,000.00		$	1,014.20		$	10.88		2.16	%
Investor C		$	1,000.00		$	1,270.00		$	12.26		$	1,000.00		$	1,014.20		$	10.88		2.16	%
Class R		$	1,000.00		$	1,273.50		$	9.38		$	1,000.00		$	1,016.75		$	8.32		1.65	%

⁵  For each class of the Fund, expenses are equal to the annualized expense ratio for the class, multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period shown).

⁶  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.

See “Disclosure of Expenses” on page 10 for further information on how expenses were calculated.

    BLACKROCK FUNDS     MARCH 31, 2012 5

  Fund Summary as of March 31, 2012   BlackRock Mid-Cap Value Equity Portfolio

    Investment Objective

BlackRock Mid-Cap Value Equity Portfolio’s (the “Fund”) investment objective is long-term capital appreciation.

    Portfolio Management Commentary

How did the Fund perform?

— For the six-month period ended March 31, 2012, the Fund outperformed its benchmark, the Russell Midcap^® Value Index.

What factors influenced performance?

— Stock selection was the greatest contributor to the Fund’s outperformance, most notably in the information technology (“IT”), consumer discretionary and energy sectors. In IT, Seagate Technology Plc. was the strongest performer. The disk drive maker raised its revenue expectations during the period as flooding in Thailand hampered production at many of its competitors. Other notable contributors in the IT sector included network communications equipment maker ADTRAN, Inc. and electronic components producer TE Connectivity Ltd. In consumer discretionary, improving consumer spending trends drove strong gains in holdings of specialty retailers Abercrombie & Fitch Co. and Ascena Retail Group, Inc. Auto parts manufacturer Dana Holding Corp. and hotel and resort operator Gaylord Entertainment Co. also made notable contributions to the Fund’s return. Energy stocks generally performed well during the period due to an improving outlook for global economic growth. Among the Fund’s energy holdings, drilling equipment maker National Oilwell Varco, Inc. and oil & gas exploration & production companies Denbury Resources, Inc. and Whiting Petroleum Corp. boosted returns.

— Detracting from performance was stock selection within the utilities, materials and health care sectors. The relatively defensive utilities sector underperformed the broader market during the period as investors favored higher risk assets. Accordingly, the Fund’s sector underweight

relative to the benchmark index was beneficial; however, the benefit was overshadowed by the negative impact of stock selection within the sector. Key areas of weakness were the Fund’s holdings in independent power producers and electric utilities. In materials, stock selection within the metals & mining and chemicals industries detracted from performance. In the health care sector, weaker performers included drug distributor AmerisourceBergen Corp., health care benefits provider WellPoint, Inc. and high-tech health care equipment provider Thermo Fisher Scientific, Inc.

Describe recent portfolio activity.

— During the six-month period, the Fund modestly increased exposure to the utilities sector with new positions in Edison International Co. and NV Energy, Inc. The Fund also increased its weighting in health care with the purchase of Boston Scientific Corp. and Covidien Plc. Conversely, the Fund reduced exposure to financials, primarily within real estate investment trusts (“REITs”), and trimmed its allocation to the materials sector with the sale of agricultural chemicals producer Agrium, Inc. and coal producer Walter Energy, Inc.

Describe portfolio positioning at period end.

— At period end, the Fund’s positioning remained biased toward continued gradual improvement in the global economy and a generally positive environment for the US equity market. The Fund’s most notable sector weightings relative to the Russell Midcap^® Value Index included overweights in IT and health care, and underweights in utilities, consumer staples and financials.

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.

    Portfolio Information

Ten Largest Holdings	Percent of Long-Term Investments
The J.M. Smucker Co.		2	%
Loews Corp.		2
AXIS Capital Holdings Ltd.		2
XL Group Plc		2
RenaissanceRe Holdings Ltd.		2
TE Connectivity Ltd.		2
Ashland, Inc.		2
Take-Two Interactive Software, Inc.		2
BioMed Realty Trust, Inc.		2
PPL Corp.		2

Sector Allocation	Percent of Long-Term Investments
Financials		29	%
Information Technology		15
Consumer Discretionary		11
Utilities		11
Industrials		10
Health Care		9
Energy		6
Consumer Staples		5
Materials		4

For Fund compliance purposes, the Fund’s sector classifications refer to any one or more of the sector sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by Fund management. These definitions may not apply for purposes of this report, which may combine sector sub-classifications for reporting ease.

6     BLACKROCK FUNDS     MARCH 31, 2012

BlackRock Mid-Cap Value Equity Portfolio

  Total Return Based on a $10,000 Investment

¹  Assuming maximum sales charges, if any, transaction costs and other operating expenses, including investment advisory fees. Institutional Shares do not have a sales charge.

²  The Fund normally invests at least 80% of its net assets in equity securities issued by US mid-capitalization value companies.

³  An index that consists of the bottom 800 securities of the Russell 1000^® Index with less-than-average growth orientation as ranked by total market capitalization. Securities in this index generally have low price-to-book and price-to-earnings ratios, higher dividend yields and lower forecasted growth values.

  Performance Summary for the Period Ended March 31, 2012

				Average Annual Total Returns4
				1 Year						5 Years						10 Years
	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
Institutional		27.36	%		(1.00	)%		N/A			1.11	%		N/A			6.07	%		N/A
Service		27.22			(1.28	)		N/A			0.83			N/A			5.76			N/A
Investor A		27.27			(1.22	)		(6.42	)%		0.82			(0.26	)%		5.76			5.19	%
Investor B		26.81			(2.07	)		(6.48	)		0.05			(0.30	)		5.15			5.15
Investor C		26.78			(1.99	)		(2.97	)		0.04			0.04			4.98			4.98
Class R		26.99			(1.65	)		N/A			0.79			N/A			5.83			N/A
Russell Midcap® Value Index.		26.30			2.28			N/A			1.26			N/A			8.02			N/A

⁴  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 10 for a detailed description of share classes, including any related sales charges and fees.

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

Past performance is not indicative of future results.

  Expense Example

	Actual									Hypothetical6
	Beginning Account Value October 1, 2011			Ending Account Value March 31, 2012			Expenses Paid During the  Period5			Beginning Account Value October 1, 2011			Ending Account Value March 31, 2012			Expenses Paid During the Period5			Annualized Expense Ratio
Institutional		$	1,000.00		$	1,273.60		$	5.51		$	1,000.00		$	1,020.15		$	4.90		0.97	%
Service		$	1,000.00		$	1,272.20		$	7.33		$	1,000.00		$	1,018.55		$	6.51		1.29	%
Investor A		$	1,000.00		$	1,272.70		$	7.33		$	1,000.00		$	1,018.55		$	6.51		1.29	%
Investor B		$	1,000.00		$	1,268.10		$	11.68		$	1,000.00		$	1,014.70		$	10.38		2.06	%
Investor C		$	1,000.00		$	1,267.80		$	11.68		$	1,000.00		$	1,014.70		$	10.38		2.06	%
Class R		$	1,000.00		$	1,269.90		$	9.36		$	1,000.00		$	1,016.75		$	8.32		1.65	%

⁵  For each class of the Fund, expenses are equal to the annualized expense ratio for the class, multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period shown).

⁶  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.

See “Disclosure of Expenses” on page 10 for further information on how expenses were calculated.

    BLACKROCK FUNDS     MARCH 31, 2012 7

  Fund Summary as ofMarch 31, 2012   BlackRock Small Cap Growth Equity Portfolio

  Investment Objective

BlackRock Small Cap Growth Equity Portfolio’s (the “Fund”) investment objective is long-term capital appreciation.

  Portfolio Management Commentary

How did the Fund perform?

— The Fund outperformed its benchmark, the Russell 2000^® Growth Index, for the six-month period ended March 31, 2012.

What factors influenced performance?

— Stock selection across a variety of sectors contributed to the Fund’s performance relative to the benchmark index, including health care and industrials. Stock selection within the health care sector was the most significant contributor to relative returns. Holdings in Inhibitex, Inc., ViroPharma, Inc. and SonoSite, Inc. each experienced substantial stock price movements, adding more than 1% each to relative returns due to strong drug profiles and medical device products that each respective company possesses. Stock selection within industrials also lifted returns. Capital-intensive companies such as Wabash National Corp. and Altra Holdings, Inc. all experienced a strong bounce from their August 2011 pullback, as these stocks benefited from secular growth within the highly cyclical machinery industry. The Fund’s overall underweight exposure to consumer staples slightly benefited relative returns, as the sector underperformed the overall market.

— Stock selection within the consumer discretionary and financials sectors slightly held back relative returns during the six-month period. Within

specialty retail, the Fund’s position in The Children’s Place Retail Stores, Inc. hampered overall returns and lagged the return of the overall return of the benchmark despite being up more than 10% during the period. The largest overall detractor within the consumer discretionary space was Shutterfly, Inc., as worries of increasing competition sent the online photo provider down more than 30%. Within financials, higher-conviction holding DFC Global Corp. fell more than 10% after having a strong run during the prior reporting period.

Describe recent portfolio activity.

— The Fund reduced its overall weightings in the health care and energy sectors during the six-month period, while it increased its overall exposure to industrials.

Describe portfolio positioning at period end.

— At period end, the Fund’s largest overweight relative to the Russell 2000^® Growth Index was in the energy sector, while its most significant underweight was in financials. In general, sector allocations are a function of our bottom-up stock selection process, and therefore a result of where we are finding individual opportunities in the small-cap growth universe.

  Portfolio Information

Ten Largest Holdings	Percent of Long-Term Investments
TiVo, Inc.		4	%
Cubist Pharmaceuticals, Inc.		4
ExlService Holdings, Inc.		3
Acorda Therapeutics, Inc.		3
Jazz Pharmaceuticals, Inc.		3
Elan Corp. Plc - ADR		2
DFC Global Corp.		2
ViroPharma, Inc.		2
ACCO Brands Corp		2
Caribou Coffee Co., Inc.		2

Sector Allocation	Percent of Long-Term Investments
Information Technology		26	%
Health Care		21
Industrials		19
Consumer Discretionary		13
Energy		11
Materials		4
Financials		2
Consumer Staples		2
Telecommunication Services		2

For Fund compliance purposes, the Fund’s sector classifications refer to any one or more of the sector sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by Fund management. These definitions may not apply for purposes of this report, which may combine sector sub-classifications for reporting ease.

8     BLACKROCK FUNDS     MARCH 31, 2012

BlackRock Small Cap Growth Equity Portfolio

    Total Return Based on a $10,000 Investment

¹  Assuming maximum sales charges, if any, transaction costs and other operating expenses, including investment advisory fees. Institutional Shares do not have a sales charge.

²  The Fund normally invests at least 80% of its net assets in the equity securities issued by US small capitalization companies (market capitalizations between approximately $76.4 million and $3.1 billion as of June 30, 2011), which the portfolio management team believes offer superior prospects for growth.

³  An index that contains those securities with greater-than-average growth orientations, generally having higher price-to-book and price-to-earnings ratios.

    Performance Summary for the Period Ended March 31, 2012

				Average Annual Total Returns4
				1 Year						5 Years						10 Years
	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
Institutional		38.51	%		6.82	%		N/A			5.08	%		N/A			8.37	%		N/A
Service		38.22			6.45			N/A			4.80			N/A			8.09			N/A
Investor A		38.26			6.37			0.78	%		4.67			3.54	%		7.97			7.39	%
Investor B		37.67			5.56			1.06			3.80			3.46			7.26			7.26
Investor C		37.72			5.57			4.57			3.73			3.73			7.06			7.06
Russell 2000® Growth Index		30.26			0.68			N/A			4.15			N/A			6.00			N/A

⁴ 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 10 for a detailed description of share classes, including any related sales charges and fees.

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

Past performance is not indicative of future results.

    Expense Example

	Actual									Hypothetical6
	Beginning Account Value October 1, 2011			Ending Account Value March 31, 2012			Expenses Paid During the  Period5			Beginning Account Value October 1, 2011			Ending Account Value March 31, 2012			Expenses Paid During the  Period5			Annualized Expense Ratio
Institutional		$	1,000.00		$	1,385.10		$	4.89		$	1,000.00		$	1,020.90		$	4.14		0.82	%
Service		$	1,000.00		$	1,382.20		$	7.03		$	1,000.00		$	1,019.10		$	5.96		1.18	%
Investor A		$	1,000.00		$	1,382.60		$	6.91		$	1,000.00		$	1,019.20		$	5.86		1.16	%
Investor B		$	1,000.00		$	1,376.70		$	11.88		$	1,000.00		$	1,015.00		$	10.08		2.00	%
Investor C		$	1,000.00		$	1,377.20		$	11.65		$	1,000.00		$	1,015.20		$	9.87		1.96	%

⁵  For each class of the Fund, expenses are equal to the annualized expense ratio for the class, multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period shown).

⁶  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.

See “Disclosure of Expenses” on page 10 for further information on how expenses were calculated.

    BLACKROCK FUNDS     MARCH 31, 2012 9

About Fund Performance

— Institutional Shares are not subject to any sales charge. Institutional Shares bear no ongoing distribution or service fees and are available only to eligible investors.

— Service Shares are not subject to any sales charge (front-end load) or deferred sales charge. Service Shares are subject to a service fee of 0.25% per year (but no distribution fee).

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

— Investor B Shares are subject to a maximum contingent deferred sales charge (“CDSC”) of 4.50% declining to 0% after six years. In addition, Investor B Shares are subject to a distribution fee of 0.75% per year and a service fee of 0.25% per year. Investor B Shares automatically convert to Investor A Shares after approximately eight years. (There is no initial sales charge for automatic share conversions.) All returns for periods greater than eight years reflect this conversion. Investor B Shares are only available through exchanges, dividend reinvestment by existing shareholders or for purchase by certain qualified employee benefit plans.

— Investor C Shares are subject to a 1.00% CDSC if redeemed within one year of purchase. In addition, Investor C Shares are subject to a distribution fee of 0.75% per year and a service fee of 0.25% per year.

— Class R Shares are not subject to any sales charge. Class R Shares are subject to a distribution fee of 0.25% per year and a service fee of 0.25% per year. Class R Shares are available only to certain retirement and other similar plans. Prior to October 2, 2006, the performance results of Class R Shares of BlackRock Mid-Cap Growth Equity Portfolio are those of Institutional Shares (which have no distribution or service fees) restated to reflect Class R Shares fees. Prior to July 30, 2010, the

performance results of BlackRock Mid-Cap Value Equity Portfolio’s Class R Shares are those of Institutional Shares (which have no distribution or service fees) restated to reflect Class R Shares fees.

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.

Performance for BlackRock Mid-Cap Value Equity Portfolio for the periods prior to January 31, 2005 is based on performance of a certain former State Street Research mutual fund that reorganized with BlackRock Mid-Cap Value Equity Portfolio on that date.

The Funds’ investment advisor, BlackRock Advisors, LLC (the “Manager”), 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 3 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.

Disclosure of Expenses

Shareholders of the Funds may incur the following charges: (a) expenses related to transactions, including sales charges and exchange fees; and (b) operating expenses, including investment advisory fees, service and distribution fees, including 12b-1 fees, acquired fund fees and expenses and other Fund expenses. The expense examples on the previous pages (which are based on a hypothetical investment of $1,000 invested on October 1, 2011 and held through March 31, 2012) are intended to assist shareholders both in calculating expenses based on an investment in the Funds and in comparing these expenses with similar costs of investing in other mutual funds.

The tables 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 headings entitled “Expenses Paid During the Period.”

The tables 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 example with the 5% hypothetical examples that appear in other funds’ shareholder reports.

The expenses shown in the tables 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.

10     BLACKROCK FUNDS     MARCH 31, 2012

Derivative Financial Instruments

The Funds may invest in various derivative financial instruments, including options as specified in Note 2 of the Notes to Financial Statements, which may constitute forms of economic leverage. Such derivative financial instruments are used to obtain exposure to a market without owning or taking physical custody of securities or to hedge market and/or equity risks. Derivative financial instruments involve risks, including the imperfect correlation between the value of a derivative financial instrument and the underlying asset, possible default of the counterparty to the transaction or illiquidity of the derivative financial instrument. The Funds’ ability to use a derivative financial instrument successfully depends on

the investment advisor’s ability to predict pertinent market movements accurately, which cannot be assured. The use of derivative financial instruments may result in losses greater than if they had not been used, may require a Fund to sell or purchase portfolio investments at inopportune times or for distressed values, may limit the amount of appreciation a Fund can realize on an investment, may result in lower dividends paid to shareholders or may cause a Fund to hold an investment that it might otherwise sell. The Funds’ investments in these instruments are discussed in detail in the Notes to Financial Statements.

    BLACKROCK FUNDS     MARCH 31, 2012 11

  Schedule of Investments March 31, 2012 (Unaudited)   BlackRock Mid-Cap Growth Equity Portfolio (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Aerospace & Defense – 3.1%
BE Aerospace, Inc. (a)(b)		127,000	$	5,901,690
Precision Castparts Corp.		19,200		3,319,680
TransDigm Group, Inc. (a)		11,300		1,308,088
				10,529,458
Air Freight & Logistics – 0.7%
Expeditors International of Washington, Inc.		53,900		2,506,889
Auto Components – 2.3%
Dana Holding Corp. (a)		213,900		3,315,450
Lear Corp.		94,400		4,388,656
				7,704,106
Automobiles – 1.1%
Harley-Davidson, Inc.		76,200		3,739,896
Biotechnology – 5.3%
Acorda Therapeutics, Inc. (a)		57,572		1,528,537
Alkermes Plc (a)		46,600		864,430
Amarin Corp. Plc - ADR (a)(b)		271,964		3,078,632
Cubist Pharmaceuticals, Inc. (a)(b)(c)		209,945		9,080,121
Vertex Pharmaceuticals, Inc. (a)		81,900		3,358,719
				17,910,439
Capital Markets – 1.0%
Lazard Ltd., Class A		117,700		3,361,512
Chemicals – 5.6%
Airgas, Inc.		48,000		4,270,560
Ashland, Inc.		74,200		4,530,652
Celanese Corp.		73,400		3,389,612
Ecolab, Inc.		53,200		3,283,504
Rockwood Holdings, Inc. (a)		61,100		3,186,365
				18,660,693
Commercial Banks – 1.3%
First Republic Bank (a)		68,100		2,243,214
SVB Financial Group (a)(b)		30,900		1,988,106
				4,231,320
Communications Equipment – 2.5%
Ciena Corp. (a)(b)		213,100		3,450,089
Riverbed Technology, Inc. (a)(b)		177,300		4,978,584
				8,428,673
Computers & Peripherals – 1.6%
NetApp, Inc. (a)		117,100		5,242,567
Diversified Financial Services – 1.3%
IntercontinentalExchange, Inc. (a)		32,700		4,493,634
Electrical Equipment – 1.2%
AMETEK, Inc.		79,650		3,863,822
Energy Equipment & Services – 0.8%
Superior Energy Services, Inc. (a)		102,400		2,699,264
Food & Staples Retailing – 1.8%
Whole Foods Market, Inc.		73,600		6,123,520
Food Products – 3.4%
Flowers Foods, Inc.		189,900		3,868,263

Common Stocks	Shares		Value
Food Products (concluded)
Green Mountain Coffee Roasters, Inc. (a)(b)		88,700	$	4,154,708
The Hershey Co.		57,000		3,495,810
				11,518,781
Health Care Equipment & Supplies – 2.6%
Boston Scientific Corp. (a)		1,069,900		6,398,002
DENTSPLY International, Inc.		41,700		1,673,421
Hologic, Inc. (a)		38,200		823,210
				8,894,633
Health Care Providers & Services – 0.3%
HealthSouth Corp. (a)		43,200		884,736
Hotels, Restaurants & Leisure – 1.0%
Darden Restaurants, Inc.		35,400		1,811,064
Starwood Hotels & Resorts Worldwide, Inc.		29,600		1,669,736
				3,480,800
Insurance – 1.0%
RenaissanceRe Holdings Ltd.		46,100		3,491,153
Internet & Catalog Retail – 1.3%
priceline.com, Inc. (a)		5,900		4,233,250
IT Services – 5.3%
Alliance Data Systems Corp. (a)(b)		39,100		4,925,036
Gartner, Inc. (a)(b)		87,200		3,718,208
Genpact Ltd. (a)		173,400		2,826,420
Teradata Corp. (a)		93,700		6,385,655
				17,855,319
Life Sciences Tools & Services – 0.5%
Illumina, Inc. (a)		32,600		1,715,086
Machinery – 5.5%
CNH Global NV		110,300		4,378,910
Flowserve Corp.		7,200		831,672
Navistar International Corp. (a)		81,000		3,276,450
Stanley Black & Decker, Inc.		21,400		1,646,944
Terex Corp. (a)		137,200		3,087,000
Timken Co.		32,200		1,633,828
Trinity Industries, Inc.		112,600		3,710,170
				18,564,974
Media – 2.1%
AMC Networks, Inc., Class A (a)		30,700		1,370,141
CBS Corp., Class B		165,000		5,595,150
				6,965,291
Metals & Mining – 0.8%
Globe Specialty Metals, Inc.		176,400		2,623,068
Multiline Retail – 1.5%
Dollar Tree, Inc. (a)		24,300		2,296,107
Nordstrom, Inc.		46,500		2,590,980
				4,887,087
Oil, Gas & Consumable Fuels – 7.2%
Alpha Natural Resources, Inc. (a)		50,500		768,105
Cabot Oil & Gas Corp.		99,800		3,110,766
CONSOL Energy, Inc.		102,200		3,485,020

    Portfolio Abbreviations

To simplify the listings of portfolio holdings in the Schedules of Investments, the names and descriptions of many of the securities have been abbreviated according to the following list: ADR USD American Depositary Receipts US Dollar

See Notes to Financial Statements.

12     BLACKROCK FUNDS     MARCH 31, 2012

  Schedule of Investments (continued)   BlackRock Mid-Cap Growth Equity Portfolio (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Oil, Gas & Consumable Fuels (concluded)
Energy XXI Bermuda Ltd. (a)(b)		26,375	$	952,401
Plains Exploration & Production Co. (a)		129,000		5,501,850
Range Resources Corp.		52,000		3,023,280
SandRidge Energy, Inc. (a)(b)		624,800		4,892,184
SM Energy Co.		36,400		2,576,028
				24,309,634
Paper & Forest Products – 1.1%
International Paper Co.		104,100		3,653,910
Pharmaceuticals – 9.5%
Elan Corp. Plc - ADR (a)		482,700		7,245,327
Endo Pharmaceuticals Holdings, Inc. (a)		90,700		3,512,811
Jazz Pharmaceuticals, Inc. (a)(b)		128,461		6,226,505
Teva Pharmaceutical Industries Ltd.- ADR		224,000		10,093,440
ViroPharma, Inc. (a)(b)		159,671		4,801,307
				31,879,390
Professional Services – 2.9%
IHS, Inc., Class A (a)		58,300		5,459,795
Robert Half International, Inc.		146,900		4,451,070
				9,910,865
Real Estate Investment Trusts (REITs) – 0.8%
DuPont Fabros Technology, Inc. (b)		105,900		2,589,255
Semiconductors & Semiconductor Equipment – 7.5%
Analog Devices, Inc.		137,900		5,571,160
Avago Technologies Ltd.		125,500		4,890,735
Broadcom Corp., Class A (a)		164,000		6,445,200
ON Semiconductor Corp. (a)		589,400		5,310,494
Xilinx, Inc.		81,300		2,961,759
				25,179,348
Software – 5.4%
Check Point Software Technologies Ltd. (a)		83,100		5,305,104
Citrix Systems, Inc. (a)		11,300		891,683
Intuit, Inc.		86,500		5,201,245
TiVo, Inc. (a)		563,700		6,758,763
				18,156,795
Specialty Retail – 6.9%
The Children’s Place Retail Stores, Inc. (a)(b)		30,400		1,570,768
Dick’s Sporting Goods, Inc.		38,400		1,846,272
Express, Inc. (a)		217,700		5,438,146
GameStop Corp., Class A (b)		161,966		3,537,337
The Gap, Inc.		74,300		1,942,202
Limited Brands, Inc.		101,100		4,852,800
TJX Cos., Inc.		97,800		3,883,638
				23,071,163
Textiles, Apparel & Luxury Goods – 1.4%
Fossil, Inc. (a)(b)		35,500		4,685,290
Total Common Stocks – 97.6%				328,045,621

Warrants (d)	Shares		Value
Pharmaceuticals – 0.0%
Alexza Pharmaceuticals, Inc. (Issued/Exercisable 5/06/11, 1 Share for 1 Warrant, Expires 5/06/16, Strike Price USD 1.77)		81,252		–
Total Long-Term Investments (Cost – $263,693,026) – 97.6%			$	328,045,621

Short-Term Securities
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.14% (e)(f)		3,078,608	3,078,608
	Beneficial Interest (000)
BlackRock Liquidity Series, LLC Money Market Series, 0.24% (e)(f)(g)	$	55,216	55,216,453
Total Short-Term Securities (Cost – $58,295,061) – 17.3%			58,295,061
Total Investments Before Options Written (Cost – $321,988,087) – 114.9%			386,340,682

Options Written	Contracts
Exchange-Traded Call Options Written
Cubist Pharmaceuticals, Inc., Strike Price USD 43, Expires 4/21/12
(Premiums Received – $21,334) – (0.0)%		220		(29,150	)
Total Investments Net of Options Written –114.9%				386,311,532
Liabilities in Excess of Other Assets – (14.9)%				(50,197,093	)
Net Assets – 100.0%			$	336,114,439

(a) Non-income producing security.

(b) Security, or a portion of security, is on loan.

(c) All or a portion of security has been pledged/segregated as collateral in connection with outstanding options written.

(d) Warrants entitle the Fund to purchase a predetermined number of shares of common stock and are non-income producing. The purchase price and number of shares are subject to adjustment under certain conditions until the expiration date, if any.

See Notes to Financial Statements.

    BLACKROCK FUNDS     MARCH 31, 2012 13

  Schedule of Investments (concluded)   BlackRock Mid-Cap Growth Equity Portfolio

(e) Investments in companies considered to be an affiliate of the Fund during the period, 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 September 30, 2011	Net Activity	Shares/ Beneficial Interest Held at March 31, 2012	Income
BlackRock Liquidity Funds, TempFund, Institutional Class	9,900,843	(6,822,235)	3,078,608	$   2,493
BlackRock Liquidity Series, LLC Money Market Series	$24,618,918��	$30,597,535	$55,216,453	$ 44,184

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

(g) Security was purchased with the cash collateral from loaned securities.

— For Fund compliance purposes, the Fund’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by Fund management. These definitions may not apply for purposes of this report, which may combine industry sub-classifications for reporting ease.

— Fair Value Measurements – Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs 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

— 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 and derivative financial instruments)

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instrument 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 derivative financial instruments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.

The following tables summarize the inputs used as of March 31, 2012 in
determining the fair valuation of the Fund’s investment and derivative
financial instruments:

Valuation Inputs	Level 1		Level 2		Level 3	Total
Assets:
Investments:
Long-Term Investments1	$	328,045,621		–	–	$	328,045,621
Short-Term Securities		3,078,608	$	55,216,453	–		58,295,061
Total	$	331,124,229	$	55,216,453	–	$	386,340,682

¹ See above Schedule of Investments for values in each industry.

Valuation Inputs	Level 1			Level 2	Level 3	Total
Derivative Financial Instruments2
Liabilities:
Equity contracts	$	(29,150	)	–	–	$	(29,150	)

² Derivative financial instruments are options written which are shown at value.

See Notes to Financial Statements.
14	BLACKROCK FUNDS	MARCH 31, 2012

  Schedule of Investments March 31, 2012 (Unaudited)   BlackRock Mid-Cap Value Equity Portfolio (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Aerospace & Defense – 0.9%
Spirit AeroSystems Holdings, Inc., Class A (a)(b)		363,710	$	8,896,347
Auto Components – 3.3%
Dana Holding Corp. (a)		959,092		14,865,926
The Goodyear Tire & Rubber Co. (a)		801,560		8,993,503
Lear Corp.		222,400		10,339,376
				34,198,805
Beverages – 1.2%
Coca-Cola Enterprises, Inc.		445,600		12,744,160
Building Products – 0.8%
Fortune Brands Home & Security, Inc. (a)		375,960		8,297,437
Capital Markets – 2.6%
Ameriprise Financial, Inc.		214,770		12,269,810
Freedom Pay, Inc. (a)		43,051		–
Invesco Ltd. (b)		531,700		14,180,439
				26,450,249
Chemicals – 2.1%
Ashland, Inc.		288,690		17,627,411
Cytec Industries, Inc.		60,280		3,664,421
				21,291,832
Commercial Banks – 3.8%
Comerica, Inc.		486,610		15,746,700
M&T Bank Corp.		168,500		14,639,280
SunTrust Banks, Inc.		379,960		9,183,633
				39,569,613
Commercial Services & Supplies – 1.6%
Corrections Corp. of America		599,720		16,378,353
Communications Equipment – 0.6%
Comverse Technology, Inc. (a)		894,990		6,148,581
Computers & Peripherals – 1.9%
Seagate Technology Plc		301,400		8,122,730
Western Digital Corp. (a)		270,780		11,207,584
				19,330,314
Construction & Engineering – 1.0%
Jacobs Engineering Group, Inc. (a)		240,840		10,686,071
Consumer Finance – 0.9%
Discover Financial Services		293,620		9,789,291
Containers & Packaging – 1.8%
Crown Holdings, Inc. (a)		389,600		14,348,968
Rock-Tenn Co., Class A		61,050		4,124,538
				18,473,506
Diversified Financial Services – 1.3%
NYSE Euronext, Inc.		432,760		12,987,128
Diversified Telecommunication Services – 1.5%
CenturyLink, Inc.		408,370		15,783,501
Electric Utilities – 8.3%
American Electric Power Co., Inc.		380,630		14,684,705
Edison International Co.		388,520		16,515,985
Northeast Utilities		399,950		14,846,144
NV Energy, Inc.		428,570		6,908,548
PPL Corp.		593,803		16,780,873
Westar Energy, Inc.		567,350		15,846,085
				85,582,340

Common Stocks	Shares		Value
Electronic Equipment, Instruments & Components – 2.5%
Ingram Micro, Inc., Class A (a)		424,690	$	7,882,246
TE Connectivity Ltd.		489,400		17,985,450
				25,867,696
Energy Equipment & Services – 1.5%
Nabors Industries Ltd. (a)		484,730		8,477,928
National Oilwell Varco, Inc.		86,790		6,897,201
				15,375,129
Food Products – 3.6%
H.J. Heinz Co.		124,890		6,687,860
The J.M. Smucker Co.		257,120		20,919,283
TreeHouse Foods, Inc. (a)		166,010		9,877,595
				37,484,738
Health Care Equipment & Supplies – 1.6%
Boston Scientific Corp. (a)		1,574,520		9,415,630
Covidien Plc		134,500		7,354,460
				16,770,090
Health Care Providers & Services – 5.7%
AmerisourceBergen Corp.		387,250		15,366,080
CIGNA Corp.		291,150		14,339,138
Tenet Healthcare Corp. (a)		937,560		4,978,444
Universal Health Services, Inc., Class B		258,710		10,842,536
WellPoint, Inc.		180,280		13,304,664
				58,830,862
Hotels, Restaurants & Leisure – 2.7%
Gaylord Entertainment Co. (a)(b)		454,216		13,989,853
Vail Resorts, Inc.		203,400		8,797,050
Wynn Resorts Ltd.		40,010		4,996,449
				27,783,352
Household Durables – 0.8%
MDC Holdings, Inc.		301,040		7,763,822
Independent Power Producers & Energy Traders – 1.2%
NRG Energy, Inc. (a)		783,180		12,272,431
Insurance – 9.8%
AON Plc		258,770		12,695,256
AXIS Capital Holdings Ltd.		596,830		19,796,851
Lincoln National Corp.		436,681		11,510,911
Loews Corp.		509,450		20,311,771
RenaissanceRe Holdings Ltd.		243,440		18,435,711
XL Group Plc		861,050		18,676,175
				101,426,675
Internet Software & Services – 0.8%
Yahoo!, Inc. (a)		550,480		8,378,306
IT Services – 1.6%
Broadridge Financial Solutions, Inc.		682,082		16,308,581
Life Sciences Tools & Services – 0.2%
Thermo Fisher Scientific, Inc.		45,520		2,566,418
Machinery – 3.4%
Parker Hannifin Corp.		133,970		11,327,164
Stanley Black & Decker, Inc.		144,960		11,156,122
Timken Co.		238,500		12,101,490
				34,584,776

See Notes to Financial Statements.

    BLACKROCK FUNDS     MARCH 31, 2012 15

  Schedule of Investments (continued)   BlackRock Mid-Cap Value Equity Portfolio (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Media – 0.3%
The Interpublic Group of Cos., Inc.		311,660	$	3,556,041
Metals & Mining – 0.6%
Coeur d’Alene Mines Corp. (a)		125,040		2,968,450
Freeport-McMoRan Copper & Gold, Inc.		76,900		2,925,276
				5,893,726
Multiline Retail – 0.6%
Macy’s, Inc.		154,930		6,155,369
Multi-Utilities – 1.5%
Wisconsin Energy Corp.		428,000		15,057,040
Office Electronics – 1.1%
Xerox Corp.		1,351,740		10,922,059
Oil, Gas & Consumable Fuels – 4.3%
Alpha Natural Resources, Inc. (a)		201,290		3,061,621
Denbury Resources, Inc. (a)		483,490		8,814,023
EQT Corp.		139,460		6,723,367
Noble Energy, Inc.		101,190		9,894,358
Valero Energy Corp.		322,760		8,317,525
Whiting Petroleum Corp. (a)		130,240		7,072,032
				43,882,926
Personal Products – 0.4%
Avon Products, Inc.		224,690		4,349,998
Pharmaceuticals – 1.3%
Forest Laboratories, Inc. (a)(b)		390,760		13,555,464
Professional Services – 1.0%
Towers Watson & Co., Class A		154,387		10,200,349
Real Estate Investment Trusts (REITs) – 6.6%
BioMed Realty Trust, Inc. (b)		906,600		17,207,268
CubeSmart (b)		863,706		10,278,101
Duke Realty Corp.		603,260		8,650,748
DuPont Fabros Technology, Inc. (b)		304,400		7,442,580
Kilroy Realty Corp. (REIT) (b)		206,660		9,632,423
Vornado Realty Trust (b)		182,300		15,349,660
				68,560,780
Real Estate Management & Development – 0.9%
Forestar Group, Inc. (a)(b)		619,437		9,533,135
Road & Rail – 1.3%
Hertz Global Holdings, Inc. (a)		866,730		13,035,619

Common Stocks	Shares		Value
Semiconductors & Semiconductor Equipment – 3.1%
Analog Devices, Inc.		181,200	$	7,320,480
ON Semiconductor Corp. (a)		1,816,691		16,368,386
Teradyne, Inc. (a)(b)		483,160		8,160,572
				31,849,438
Software – 1.7%
Take-Two Interactive Software, Inc. (a)(b)		1,134,110		17,448,282
Specialty Retail – 2.9%
Abercrombie & Fitch Co., Class A		241,640		11,987,760
Ascena Retail Group, Inc. (a)		46,800		2,074,176
Staples, Inc.		559,250		9,048,665
Williams-Sonoma, Inc.		173,240		6,493,035
				29,603,636
Textiles, Apparel & Luxury Goods – 0.4%
PVH Corp.		50,770		4,535,284
Thrifts & Mortgage Finance – 2.4%
Capitol Federal Financial, Inc.		1,234,854		14,645,368
People’s United Financial, Inc.		769,320		10,185,797
				24,831,165
Total Long-Term Investments (Cost – $875,861,828) – 99.4%				1,024,990,715

Short-Term Securities
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.14% (c)(d)		2,785,039		2,785,039
	Beneficial Interest (000)
BlackRock Liquidity Series, LLC Money Market Series, 0.24% (c)(d)(e)	$	61,450		61,450,013
Total Short-Term Securities (Cost – $64,235,052) – 6.2%				64,235,052
Total Investments (Cost – $940,096,880) – 105.6%				1,089,225,767
Liabilities in Excess of Other Assets – (5.6)%				(57,955,916	)
Net Assets – 100.0%			$	1,031,269,851

(a) Non-income producing security.

(b) Security, or a portion of security, is on loan.

(c) Investments in companies considered to be an affiliate of the Fund during the period, 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 September 30, 2011		Net Activity		Shares/ Beneficial Interest Held at March 31, 2012		Realized Gain		Income
BlackRock Liquidity Funds, TempFund, Institutional Class		13,687,713		(10,902,674)		2,785,039		$180		$ 7,085
BlackRock Liquidity Series, LLC Money Market Series		$73,910,690		$(12,460,677)		$61,450,013		–		$65,701

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

(e) Security was purchased with the cash collateral from loaned securities.

See Notes to Financial Statements.

16     BLACKROCK FUNDS     MARCH 31, 2012

  Schedule of Investments (concluded)   BlackRock Mid-Cap Value Equity Portfolio

— For Fund compliance purposes, the Fund’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes and/or as defined by Fund management. These definitions may not apply for purposes of this report, which may combine industry sub-classifications for reporting ease.

— Fair Value Measurements – Various inputs are used in determining the fair value of investments. These inputs 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

— 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)

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. 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 inputs used as of March 31, 2012 in determining the fair valuation of the Fund’s investments:

Valuation Inputs	Level 1		Level 2	Level 3	Total
Assets:
Investments:
Long- Term Investments1	$	1,024,990,715	–	–	$	1,024,990,715
Short- Term Securities		2,785,039	$61,450,013	–		64,235,052
Total	$	1,027,775,754	$61,450,013	–	$	1,089,225,767

¹ See above Schedule of Investments for values in each industry.

See Notes to Financial Statements.

    BLACKROCK FUNDS     MARCH 31, 2012 17

  Schedule of Investments March 31, 2012 (Unaudited)   BlackRock Small Cap Growth Equity Portfolio (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Aerospace & Defense – 2.4%
BE Aerospace, Inc. (a)(b)		430,236	$	19,993,067
Orbital Sciences Corp. (a)		1,274,885		16,764,738
				36,757,805
Air Freight & Logistics – 1.4%
Atlas Air Worldwide Holdings, Inc. (a)(b)		424,514		20,890,334
Airlines – 1.0%
Alaska Air Group, Inc. (a)		420,138		15,049,343
Auto Components – 1.4%
Dana Holding Corp. (a)		1,350,352		20,930,456
Biotechnology – 10.8%
Acorda Therapeutics, Inc. (a)(b)		1,505,139		39,961,441
Alkermes Plc (a)		346,100		6,420,155
Amarin Corp. Plc - ADR (a)(b)		1,834,851		20,770,513
BioSpecifics Technologies Corp. (a)(c)		763,967		12,085,958
Cubist Pharmaceuticals, Inc. (a)(b)(d)		1,387,573		60,012,532
Gentium SpA - ADR (a)(c)		2,929,088		25,541,647
				164,792,246
Building Products – 1.2%
Trex Co., Inc. (a)(b)		590,853		18,954,564
Chemicals – 1.0%
Ferro Corp. (a)(b)		2,583,567		15,346,388
Commercial Services & Supplies – 2.0%
ACCO Brands Corp. (a)(b)		2,452,922		30,440,762
Communications Equipment – 2.5%
Ciena Corp. (a)(b)		723,831		11,718,824
Riverbed Technology, Inc. (a)		949,159		26,652,385
				38,371,209
Construction & Engineering – 0.9%
Chicago Bridge & Iron Co. NV		313,456		13,538,165
Consumer Finance – 2.2%
DFC Global Corp. (a)		1,787,264		33,725,672
Diversified Telecommunication Services – 1.5%
Cbeyond, Inc. (a)(c)		2,908,177		23,265,416
Energy Equipment & Services – 4.1%
Heckmann Corp. (a)(b)		3,948,501		17,018,039
Hornbeck Offshore Services, Inc. (a)(b)		453,208		19,048,332
Newpark Resources, Inc. (a)(b)		1,639,475		13,427,300
Superior Energy Services, Inc. (a)(b)		484,022		12,758,820
				62,252,491
Food Products – 1.7%
Annie’s, Inc. (a)		15,500		540,020
Darling International, Inc. (a)		179,600		3,128,632
Hain Celestial Group, Inc. (a)(b)		180,000		7,885,800
Sanderson Farms, Inc.		263,843		13,991,594
				25,546,046
Health Care Equipment & Supplies – 1.2%
ArthroCare Corp. (a)		587,443		15,772,845
GenMark Diagnostics, Inc. (a)		559,769		2,267,065
				18,039,910
Health Care Providers & Services – 0.3%
HealthSouth Corp. (a)		212,600		4,354,048
Health Care Technology – 1.1%
Epocrates, Inc. (a)(c)		1,969,031		16,894,286

Common Stocks	Shares		Value
Hotels, Restaurants & Leisure – 1.9%
Caribou Coffee Co., Inc. (a)(b)(c)		1,579,901	$	29,449,355
Household Durables – 1.4%
Skullcandy, Inc. (a)(b)		1,325,336		20,980,069
Internet Software & Services – 2.8%
DealerTrack Holdings, Inc. (a)(b)		534,900		16,186,074
NIC, Inc. (a)		2,138,750		25,943,038
				42,129,112
IT Services – 5.5%
ExlService Holdings, Inc. (a)(c)		1,724,520		47,320,829
Global Cash Access Holdings, Inc. (a)		2,697,372		21,039,502
MoneyGram International, Inc. (a)		187,400		3,373,200
WNS Holdings Ltd. - ADR (a)		935,924		11,277,884
				83,011,415
Leisure Equipment & Products – 1.0%
Brunswick Corp.		572,000		14,729,000
Machinery – 5.3%
Altra Holdings, Inc. (a)		750,815		14,415,648
Chart Industries, Inc. (a)(b)		49,800		3,651,834
Navistar International Corp. (a)		295,000		11,932,750
Terex Corp. (a)		640,490		14,411,025
Titan International, Inc. (b)		459,300		10,862,445
Wabash National Corp. (a)(b)		2,531,815		26,204,285
				81,477,987
Media – 1.9%
National CineMedia, Inc.		1,850,470		28,312,191
Metals & Mining – 1.1%
Globe Specialty Metals, Inc.		1,150,927		17,114,285
Oil, Gas & Consumable Fuels – 6.5%
Cheniere Energy, Inc. (a)		726,000		10,875,480
Energy XXI Bermuda Ltd. (a)(b)		704,048		25,423,173
James River Coal Co. (a)(b)		606,150		3,103,488
Kodiak Oil & Gas Corp. (a)(b)		1,621,399		16,149,134
Magnum Hunter Resources Corp. (a)(b)		1,715,620		10,997,124
McMoRan Exploration Co. (a)(b)		560,742		5,999,939
SandRidge Energy, Inc. (a)(b)		1,510,641		11,828,319
Swift Energy Co. (a)		502,295		14,581,624
				98,958,281
Paper & Forest Products – 2.2%
KapStone Paper and Packaging Corp. (a)		570,363		11,236,151
Schweitzer-Mauduit International, Inc.		333,384		23,023,499
				34,259,650
Pharmaceuticals – 6.9%
Elan Corp. Plc - ADR (a)		2,250,424		33,778,864
Jazz Pharmaceuticals, Inc. (a)(b)		808,530		39,189,449
ViroPharma, Inc. (a)(b)		1,076,407		32,367,559
				105,335,872
Professional Services – 4.1%
The Corporate Executive Board Co.		432,143		18,586,470
CoStar Group, Inc. (a)(b)		345,836		23,879,976
Kforce, Inc., Class A (a)		354,270		5,278,623
On Assignment, Inc. (a)(b)		817,771		14,286,459
				62,031,528
Semiconductors & Semiconductor Equipment – 7.3%
Cavium, Inc. (a)(b)		305,700		9,458,358

See Notes to Financial Statements.

18     BLACKROCK FUNDS     MARCH 31, 2012

  Schedule of Investments (continued)   BlackRock Small Cap Growth Equity Portfolio (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Semiconductors & Semiconductor Equipment (concluded)
Lattice Semiconductor Corp. (a)		3,782,088	$	24,318,826
Microsemi Corp. (a)(b)		1,114,560		23,896,166
OmniVision Technologies, Inc. (a)		41,600		832,000
ON Semiconductor Corp. (a)		2,792,191		25,157,641
Semtech Corp. (a)(b)		955,081		27,181,605
				110,844,596
Software – 7.6%
Fortinet, Inc. (a)		624,611		17,270,494
Gateway Industries, Inc. (Acquired 2/11/11 through 12/27/11, cost $590,861) (a)(e)		2,635,275		7,642,298
PROS Holdings, Inc. (a)		368,052		6,882,572
QLIK Technologies, Inc. (a)		271,600		8,691,200
TiVo, Inc. (a)		5,207,671		62,439,975
Tyler Technologies, Inc. (a)		180,125		6,918,601
Ultimate Software Group, Inc. (a)(b)		76,800		5,627,904
				115,473,044
Specialty Retail – 4.2%
The Children’s Place Retail Stores, Inc. (a)(b)		382,586		19,768,219
Express, Inc. (a)		1,013,908		25,327,422
Lumber Liquidators Holdings, Inc. (a)		774,214		19,440,514
				64,536,155
Textiles, Apparel & Luxury Goods – 1.3%
G-III Apparel Group Ltd. (a)		704,782		20,029,904
Trading Companies & Distributors – 0.5%
Rush Enterprises, Inc., Class A (a)(b)		361,600		7,673,152
Total Common Stocks – 98.2%				1,495,494,737
Warrants (f)
Pharmaceuticals – 0.0%
Alexza Pharmaceuticals, Inc. (Issued/Exercisable 5/06/11, 1 Share for 1 Warrant, Expires 5/06/16, Strike Price USD 1.77)		1,000,249		–

	Value
Total Long-Term Investments (Cost – $1,235,118,028) – 98.2%	$	1,495,494,737

Short-Term Securities	Shares
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.14% (g)(h)		42,112,900	42,112,900
	Beneficial Interest (000)
BlackRock Liquidity Series, LLC Money Market Series, 0.24% (g)(h)(i)	$	398,889	398,889,234
Total Short-Term Securities (Cost – $441,002,134) – 29.0%			441,002,134
Total Investments Before Options Written (Cost – $1,676,120,162) – 127.2%			1,936,496,871

Options Written	Contracts
Exchange-Traded Call Options Written
Cubist Pharmaceuticals, Inc., Strike Price USD 43, Expires 4/21/12
(Premiums Received – $90,767) – (0.0)%		936		(124,020	)
Total Investments Net of Options Written – 127.2%				1,936,372,851
Liabilities in Excess of Other Assets – (27.2)%				(413,755,007	)
Net Assets – 100.0%			$	1,522,617,844

(a)    Non-income producing security.

(b)    Security, or a portion of security, is on loan.

(c) Investments in companies (whereby the Fund held 5% or more of the companies’ outstanding securities) that were considered to be an affiliate during the period, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

Affiliate	Shares Held at September 30, 2011		Shares Purchased		Shares Sold		Shares Held at March 31, 2012		Value at March 31, 2012		Realized Gain (Loss)			Income
BioSpecifics Technologies Corp.		666,887		97,080		–		763,967	$	12,085,958		–			–
Caribou Coffee Co., Inc.		1,249,470		453,851		123,420		1,579,901	$	29,449,355	$	376,961			–
Cbeyond, Inc.		1,923,850		984,327		–		2,908,177	$	23,265,416		–			–
Epocrates, Inc.		–		1,969,031		–		1,969,031	$	16,894,286		–			–
ExlService Holdings, Inc.		1,463,120		361,960		100,560		1,724,520	$	47,320,829	$	284,356			–
Gentium SpA - ADR		1,930,876		998,212		–		2,929,088	$	25,541,647		–			–
SonoSite, Inc.1		782,395		161,400		943,795		–		–	$	23,589,702			–
Summit Hotel Properties, Inc.1		1,532,482		127,199		1,659,681		–		–	$	(3,480,677	)	$	310,903

¹ No longer an affiliated company or held by the Fund as of report date.

See Notes to Financial Statements.

    BLACKROCK FUNDS     MARCH 31, 2012 19

  Schedule of Investments (concluded)   BlackRock Small Cap Growth Equity Portfolio

(d) All or a portion of security has been pledged/segregated as collateral in connection with outstanding options written.

(e) Restricted security as to resale. As of report date the Fund held 0.5% of its net assets, with a current value of $7,642,298 and original cost of $590,861, in this security.

(f) Warrants entitle the Fund to purchase a predetermined number of shares of common stock and are non-income producing. The purchase price and number of shares are subject to adjustment under certain conditions until the expiration date, if any.

(g) Investments in companies considered to be an affiliate of the Fund during the period, 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 September 30, 2011		Shares/ Beneficial Interest Purchased			Shares Sold		Shares/ Beneficial Interest Held at March 31, 2012		Value at March 31, 2012		Realized Gain		Income
BlackRock Liquidity Funds, TempFund, Institutional Class		20,809,320		21,303,580	1		–		42,112,900	$	42,112,900		–	$	10,456
BlackRock Liquidity Series LLC, Money Market Series	$	226,303,648	$	172,585,586	1		–	$	398,889,234	$	398,889,234		–	$	803,540
iShares Russell 2000 Growth Index Fund		125,100		1,752,400			1,877,500		–		–	$	2,425,606	$	192,221

  ¹ Represents net shares/beneficial interest purchased.

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

(i) Security was purchased with the cash collateral from loaned securities.

— For Fund compliance purposes, the Fund’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by Fund management. These definitions may not apply for purposes of this report, which may combine industry sub-classifications for reporting ease.

— Fair Value Measurements – Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs 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

— 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 and derivative financial instruments)

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instrument 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 derivative financial instruments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.

The following tables summarize the inputs used as of March 31, 2012 in determining the fair valuation of the Fund’s investments and derivative financial instruments:

Valuation Inputs	Level 1		Level 2		Level 3		Total
Assets:
Investments:
Long- Term Investments:1
Common Stocks	$	1,487,852,439	$	7,642,298		–	$	1,495,494,737
Short-Term Securities		42,112,900		398,889,234		–		441,002,134
Total	$	1,529,965,339	$	406,531,532		–	$	1,936,496,871

¹ See above Schedule of Investments for values in each industry excluding Level 2, Software, within the table.

Valuation Inputs	Level 1			Level 2	Level 3	Total
Derivative Financial Instruments2
Liabilities:
Equity contracts	$	(124,020	)	–	–	$	(124,020	)

² Derivative financial instruments are options written which are shown at value.

See Notes to Financial Statements.

20     BLACKROCK FUNDS     MARCH 31, 2012

Statements of Assets and Liabilities

March 31, 2012 (Unaudited)	BlackRock Mid-Cap Growth Equity Portfolio			BlackRock Mid-Cap Value Equity Portfolio			BlackRock Small Cap Growth Equity Portfolio
Assets
Investments at value – unaffiliated1,2	$	328,045,621		$	1,024,990,715		$	1,340,937,246
Investments at value – affiliated3		58,295,061			64,235,052			595,559,625
Investments sold receivable		10,597,387			7,029,881			90,682,919
Capital shares sold receivable		3,226,492			535,625			2,404,620
Dividends receivable – unaffiliated		50,487			1,499,197			2,291
Receivable from advisor		8,626			64,674			–
Securities lending income receivable – affiliated		3,650			1,271			108,341
Dividends receivable – affiliated		892			704			4,846
Prepaid expenses		47,952			63,731			63,737
Total assets		400,276,168			1,098,420,850			2,029,763,625
Liabilities
Options written at value4		29,150			–			124,020
Collateral on securities loaned at value		55,216,453			61,450,013			398,889,234
Investments purchased payable		7,567,982			2,240,330			36,475,291
Capital shares redeemed payable		750,088			1,689,864			69,920,300
Investment advisory fees payable		207,687			696,173			702,782
Service and distribution fees payable		88,299			287,378			117,572
Other affiliates payable		8,041			48,953			154,292
Officer’s and Trustees’ fees payable		2,918			9,609			10,523
Other accrued expenses payable		291,111			728,679			751,767
Total liabilities		64,161,729			67,150,999			507,145,781
Net Assets	$	336,114,439		$	1,031,269,851		$	1,522,617,844
Net Assets Consist of
Paid-in capital	$	285,435,574		$	1,054,881,023		$	1,166,975,808
Undistributed (accumulated) net investment income (loss)		(672,707	)		669,210			(2,500,281	)
Accumulated net realized gain (loss)		(12,993,207	)		(173,409,269	)		97,798,861
Net unrealized appreciation/depreciation		64,344,779			149,128,887			260,343,456
Net Assets	$	336,114,439		$	1,031,269,851		$	1,522,617,844
1 Investments at cost – unaffiliated	$	263,693,026		$	875,861,828		$	1,106,438,280
2 Securities loaned at value	$	53,555,517		$	60,145,450		$	387,767,797
3 Investments at cost – affiliated	$	58,295,061		$	64,235,052		$	569,681,882
4 Premiums received	$	21,334			–		$	90,767

See Notes to Financial Statements.

    BLACKROCK FUNDS     MARCH 31, 2012 21

Statements of Assets and Liabilities (concluded)

March 31, 2012 (Unaudited)	BlackRock Mid-Cap Growth Equity Portfolio		BlackRock Mid-Cap Value Equity Portfolio		BlackRock Small Cap Growth Equity Portfolio
Net Asset Value
Institutional
Net assets	$	23,085,038	$	192,206,355	$	1,075,224,701
Shares outstanding1		1,628,238		15,520,485		39,637,621
Net asset value	$	14.18	$	12.38	$	27.13
Service
Net assets	$	1,182,468	$	1,391,099	$	30,125,190
Shares outstanding1		88,466		114,298		1,182,652
Net asset value	$	13.37	$	12.17	$	25.47
Investor A
Net assets	$	278,421,798	$	683,007,407	$	384,437,351
Shares outstanding1		21,506,061		56,839,729		15,614,148
Net asset value	$	12.95	$	12.02	$	24.62
Investor B
Net assets	$	6,972,580	$	24,144,266	$	1,981,538
Shares outstanding1		618,104		2,219,250		94,394
Net asset value	$	11.28	$	10.88	$	20.99
Investor C
Net assets	$	20,483,907	$	129,340,135	$	30,849,064
Shares outstanding1		1,814,619		11,937,186		1,471,116
Net asset value	$	11.29	$	10.84	$	20.97
Class R
Net assets	$	5,968,648	$	1,180,589		–
Shares outstanding1		462,724		95,588		–
Net asset value	$	12.90	$	12.35		–

¹ Unlimited number of shares authorized, $0.001 par value.

See Notes to Financial Statements.

22     BLACKROCK FUNDS     MARCH 31, 2012

Statements of Operations

Six Months Ended March 31, 2012 (Unaudited)	BlackRock Mid-Cap Growth Equity Portfolio			BlackRock Mid-Cap Value Equity Portfolio			BlackRock Small Cap Growth Equity Portfolio
Investment Income
Dividends – unaffiliated	$	1,572,806		$	9,678,052		$	2,760,568
Foreign taxes withheld		(28,892	)		–			(5,042	)
Securities lending – affiliated		44,184			65,701			803,540
Dividends – affiliated		2,493			7,085			513,580
Total income		1,590,591			9,750,838			4,072,646
Expenses
Investment advisory		1,256,507			4,008,077			3,807,048
Transfer agent – class specific		505,125			1,219,237			1,367,552
Service and distribution – class specific		473,381			1,581,678			586,342
Administration		117,798			350,490			466,275
Administration – class specific		39,284			117,885			148,154
Registration		33,896			39,966			42,337
Professional		29,263			29,748			29,862
Custodian		14,688			34,042			52,786
Printing		11,309			29,783			43,681
Officer and Trustees		5,717			14,552			19,741
Miscellaneous		12,971			20,080			20,472
Recoupment of past waived fees – class specific		656			790			–
Total expenses		2,500,595			7,446,328			6,584,250
Less fees waived by advisor		(1,597	)		(4,579	)		(5,801	)
Less administration fees waived – class specific		(38,258	)		(117,601	)		(2,761	)
Less transfer agent fees waived – class specific		(39,620	)		(38,815	)		(212	)
Less transfer agent fees reimbursed – class specific		(157,498	)		(533,451	)		(2,437	)
Less fees paid indirectly		(324	)		(328	)		(112	)
Total expenses after fees waived, reimbursed and paid indirectly		2,263,298			6,751,554			6,572,927
Net investment income (loss)		(672,707	)		2,999,284			(2,500,281	)
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from:
Investments – unaffiliated		11,662,402			(17,008,222	)		89,189,640
Investments – affiliated		–			180			23,195,948
Options written.		(122,470	)		251,245			(488,801	)
		11,539,932			(16,756,797	)		111,896,787
Net change in unrealized appreciation/depreciation on:
Investments – unaffiliated		64,136,922			252,272,536			295,652,801
Investments – affiliated		–			–			45,761,988
Options written.		(7,816	)		40,926			(33,253	)
		64,129,106			252,313,462			341,381,536
Total realized and unrealized gain.		75,669,038			235,556,665			453,278,323
Net Increase in Net Assets Resulting from Operations	$	74,996,331		$	238,555,949		$	450,778,042

See Notes to Financial Statements.

    BLACKROCK FUNDS     MARCH 31, 2012 23

Statements of Changes in Net Assets

	BlackRock Mid-Cap Growth Equity Portfolio						BlackRock Mid-Cap Value Equity Portfolio						BlackRock Small Cap Growth Equity Portfolio
Increase (Decrease) in Net Assets:	Six Months Ended March 31, 2012 (Unaudited)			Year Ended September 30, 2011			Six Months Ended March 31, 2012 (Unaudited)			Year Ended September 30, 2011			Six Months Ended March 31, 2012 (Unaudited)			Year Ended September 30, 2011
Operations
Net investment income (loss)	$	(672,707	) $		(2,024,414	)	$	2,999,284		$	7,157,810		$	(2,500,281	)	$	(9,856,705	)
Net realized gain (loss)		11,539,932			25,183,896			(16,756,797	)		193,447,017			111,896,787			163,582,740
Net change in unrealized appreciation/depreciation		64,129,106			(23,853,188	)		252,313,462			(247,371,603	)		341,381,536			(188,023,895	)
Net increase (decrease) in net assets resulting from operations		74,996,331			(693,706	)		238,555,949			(46,766,776	)		450,778,042			(34,297,860	)
Dividends and Distributions to Shareholders From
Net investment income:
Institutional		–			–			(1,662,860	)		(1,930,361	)		–			–
Service		–			–			(8,174	)		(3,730	)		–			–
Investor A		–			–			(3,726,374	)		(5,160,440	)		–			–
Investor B		–			–			–			(34,422	)		–			–
Investor C		–			–			–			(265,420	)		–			–
Class R		–			–			(2,690	)		(5,689	)		–			–
Net realized gain:
Institutional		–			–			–			–			(25,878,958	)		–
Service		–			–			–			–			(735,003	)		–
Investor A		–			–			–			–			(7,371,034	)		–
Investor B		–			–			–			–			(60,195	)		–
Investor C		–			–			–			–			(874,865	)		–
Decrease in net assets resulting from dividends and distributions to shareholders		–			–			(5,400,098	)		(7,400,062	)		(34,920,055	)		–
Capital Share Transactions
Net increase (decrease) in net assets derived from capital share transactions		(21,304,824	)		(52,938,926	)		(126,325,668	)		(145,080,585	)		(109,815,277	)		91,798,500
Redemption Fees
Redemption fees		–			–			–			–			–			29,171
Net Assets
Total increase (decrease) in net assets		53,691,507			52,245,220			106,830,183			(199,247,423	)		306,042,710			57,529,811
Beginning of period		282,422,932			230,177,712			924,439,668			1,123,687,091			1,216,575,134			1,159,045,323
End of period	$	336,114,439		$	282,422,932		$	1,031,269,851		$	924,439,668		$	1,522,617,844		$	1,216,575,134
Undistributed (accumulated) net investment income (loss)	$	(672,707	)		–		$	669,210		$	3,070,024		$	(2,500,281	)		–

See Notes to Financial Statements.

24     BLACKROCK FUNDS     MARCH 31, 2012

  Financial Highlights   BlackRock Mid-Cap Growth Equity Portfolio

	Institutional																	Service
	Six Months Ended March 31, 2012			Year Ended September 30,														Six Months Ended March 31, 2012			Year Ended September 30,
	(Unaudited)			2011			2010			2009			2008		2007			(Unaudited)			2011			2010			2009			2008		2007
Per Share Operating Performance
Net asset value, beginning of period	$	11.10		$	11.18		$	10.27		$	10.33		$	13.49	$	10.70		$	10.49		$	10.60		$	9.78		$	9.87		$	12.92	$	10.27
Net investment loss1		(0.01)			(0.05)			(0.01)			(0.04)			(0.04)		(0.07)			(0.04)			(0.10)			(0.05)			(0.06)			(0.07)		(0.09)
Net realized and unrealized gain (loss)		3.09			(0.03)			0.92			(0.02)			(3.12)		2.86	2		2.92			(0.01)			0.87			(0.03)			(2.98)		2.74	2
Net increase (decrease) from investment operations		3.08			(0.08)			0.91			(0.06)			(3.16)		2.79			2.88			(0.11)			0.82			(0.09)			(3.05)		2.65
Net asset value, end of period	$	14.18		$	11.10		$	11.18		$	10.27		$	10.33	$	13.49		$	13.37		$	10.49		$	10.60		$	9.78		$	9.87	$	12.92
Total Investment Return3
Based on net asset value		27.75%	4		(0.72)%	5		8.86%	6		(0.58)%	7		(23.43)%		26.08%	8		27.46%	4		(1.04)%	9		8.38%	10		(0.91)%	11		(23.61)%		25.80%	8
Ratios to Average Net Assets
Total expenses		1.18%	12		1.17%			1.15%			1.20%			1.07%		1.06%			2.03%	12		1.87%			1.63%			1.65%			1.29%		1.32%
Total expenses excluding recoupment of past waived fees		1.18%	12		1.17%			1.14%			1.20%			1.07%		1.06%			2.03%	12		1.87%			1.62%			1.64%			1.29%		1.32%
Total expenses after fees waived, reimbursed and paid indirectly		1.10%	12		1.17%			1.15%			1.18%			1.06%		1.05%			1.58%	12		1.58%			1.58%			1.51%			1.28%		1.22%
Net investment loss		(0.08)%	12		(0.38)%			(0.09)%			(0.44)%			(0.33)%		(0.59)%			(0.58)%	12		(0.83)%			(0.52)%			(0.76)%			(0.56)%		(0.76)%
Supplemental Data
Net assets, end of period (000)	$	23,085		$	19,348		$	24,421		$	25,572		$	26,468	$	75,577		$	1,182		$	714		$	330		$	360		$	459	$	714
Portfolio turnover		44%			131%			76%			53%			45%		53%			44%			131%			76%			53%			45%		53%

¹  Based on average shares outstanding.

²  Includes redemption fees, which are less than $0.01 per share.

³  Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

⁴  Aggregate total investment return.

⁵  Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been (0.90)%.

⁶  Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been 8.47%.

⁷  Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been (0.87)%.

⁸  Redemption fee of 2.00% is reflected in total return calculations. There was no impact to the return.

⁹  Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been (1.23)%.

¹⁰  Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been 7.98%.

¹¹  Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been (1.22)%.

¹²  Annualized.

See Notes to Financial Statements.

    BLACKROCK FUNDS     MARCH 31, 2012 25

  Financial Highlights (continued)   BlackRock Mid-Cap Growth Equity Portfolio

	Investor A																		Investor B
	Six Months Ended March 31, 2012			Year Ended September 30,															Six Months Ended March 31, 2012			Year Ended September 30,
	(Unaudited)			2011			2010			2009			2008			2007			(Unaudited)			2011			2010			2009			2008			2007
Per Share Operating Performance
Net asset value, beginning of period	$	10.15		$	10.27		$	9.47		$	9.56		$	12.55		$	10.00		$	8.88		$	9.05		$	8.42		$	8.56		$	11.32		$	9.09
Net investment loss1		(0.02	)		(0.09	)		(0.05	)		(0.06	)		(0.10	)		(0.12	)		(0.06	)		(0.16	)		(0.12	)		(0.10	)		(0.17	)		(0.18	)
Net realized and unrealized gain (loss)		2.82			(0.03	)		0.85			(0.03	)		(2.89	)		2.67	2		2.46			(0.01	)		0.75			(0.04	)		(2.59	)		2.41	2
Net increase (decrease) from investment operations		2.80			(0.12	)		0.80			(0.09	)		(2.99	)		2.55			2.40			(0.17	)		0.63			(0.14	)		(2.76	)		2.23
Net asset value, end of period	$	12.95		$	10.15		$	10.27		$	9.47		$	9.56		$	12.55		$	11.28		$	8.88		$	9.05		$	8.42		$	8.56		$	11.32
Total Investment Return3
Based on net asset value		27.59%	4		(1.17	)%5		8.45%	6		(0.94	)%7		(23.83	)%		25.50%	8		27.03%	4		(1.88	)%9		7.48%	10		(1.64	)%11		(24.38	)%		24.53%	8
Ratios to Average Net Assets
Total expenses		1.53%12			1.59%			1.58%			1.76%			1.53%			1.60%			2.61%12			2.43%			2.48%			2.73%			2.45%			2.46%
Total expenses excluding recoupment of past waived fees		1.53%12			1.56%			1.55%			1.72%			1.53%			1.60%			2.61%12			2.42%			2.47%			2.64%			2.45%			2.46%
Total expenses after fees waived, reimbursed and paid indirectly		1.39%12			1.58%			1.58%			1.59%			1.53%			1.57%			2.16%12			2.39%			2.38%			2.34%			2.31%			2.25%
Net investment loss		(0.38)%12			(0.79)%			(0.51)%			(0.85)%			(0.81)%			(1.11)%			(1.13%)12			(1.58)%			(1.36)%			(1.57)%			(1.58)%			(1.79)%
Supplemental Data
Net assets, end of period (000)	$	278,422		$	232,924		$	180,501		$	181,159		$	195,980		$	274,333		$	6,973		$	7,596		$	8,209		$	11,978		$	19,565		$	43,610
Portfolio turnover		44%			131%			76%			53%			45%			53%			44%			131%			76%			53%			45%			53%

¹  Based on average shares outstanding.

²  Includes redemption fees, which are less than $0.01 per share.

³  Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

⁴  Aggregate total investment return.

⁵  Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been (1.36)%.

⁶  Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been 8.03%.

⁷  Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been (1.26)%.

⁸  Redemption fee of 2.00% is reflected in total return calculations. There was no impact to the return.

⁹  Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been (2.10)%.

¹⁰ Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been 7.01%.

¹¹ Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been (1.99)%.

¹² Annualized.

See Notes to Financial Statements.

26     BLACKROCK FUNDS     MARCH 31, 2012

  Financial Highlights (concluded)   BlackRock Mid-Cap Growth Equity Portfolio

	Investor C																		Class R
	Six Months Ended March 31, 2012			Year Ended September 30,															Six Months Ended March 31, 2012			Year Ended September 30,												Period October 2, 20061 to September
	(Unaudited)			2011			2010			2009			2008			2007			(Unaudited)			2011			2010			2009			2008			30, 2007
Per Share Operating Performance
Net asset value, beginning of period	$	8.89		$	9.05		$	8.41		$	8.56		$	11.32		$	9.09		$	10.13		$	10.25		$	9.46		$	9.56		$	12.55		$	9.92
Net investment loss2		(0.06	)		(0.16	)		(0.11	)		(0.11	)		(0.16	)		(0.19	)		(0.04	)		(0.10	)		(0.04	)		(0.07	)		(0.10	)		(0.13	)
Net realized and unrealized gain (loss)		(2.46	)		(0.00	)3		0.75			(0.04	)		(2.60	)		2.42	4		2.81			(0.02	)		0.83			(0.03	)		(2.89	)		2.76	4
Net increase (decrease) from investment operations		2.40			(0.16	)		0.64			(0.15	)		(2.76	)		2.23			2.77			(0.12	)		0.79			(0.10	)		(2.99	)		2.63
Net asset value, end of period	$	11.29		$	8.89		$	9.05		$	8.41		$	8.56		$	11.32		$	12.90		$	10.13		$	10.25		$	9.46		$	9.56		$	12.55
Total Investment Return5
Based on net asset value		27.00%6			(1.77)%	7		7.61%8			(1.75)%	9		(24.38)%			24.53%	10		27.35%6			(1.17)%	11		8.35%	12		(1.05)%	13		(23.83)%			26.51%	6,10
Ratios to Average Net Assets
Total expenses		2.34%14			2.34%			2.33%			2.46%			2.25%			2.31%			1.85%14			1.91%			1.97%			2.04%			1.73%			1.63%14
Total expenses excluding recoupment of past waived fees		2.34%14			2.31%			2.30%			2.44%			2.25%			2.31%			1.85%14			1.91%			1.97%			2.04%			1.73%			1.63%14
Total expenses after fees waived, reimbursed and paid indirectly		2.16%14			2.33%			2.33%			2.34%			2.25%			2.30%			1.65%14			1.65%			1.65%			1.63%			1.58%			1.59%14
Net investment loss		(1.15)%14			(1.54)%			(1.26)%			(1.59)%			(1.53)%			(1.84)%			(0.63)%14			(0.84)%			(0.44)%			(0.89)%			(0.82)%			(1.12)%14
Supplemental Data
Net assets, end of period (000)	$	20,484		$	16,615		$	12,578		$	12,418		$	13,964		$	20,203		$	5,969		$	5,227		$	4,138		$	2,323		$	723		$	25
Portfolio turnover		44%			131%			76%			53%			45%			53%			44%			131%			76%			53%			45%			53%

¹  Commencement of operations.

²  Based on average shares outstanding.

³  Less than $(0.01) per share.

⁴  Includes redemption fees, which are less than $0.01 per share.

⁵  Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

⁶  Aggregate total investment return.

⁷  Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been (1.99)%.

⁸  Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been 7.13%.

⁹  Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been (2.10)%.

¹⁰ Redemption fee of 2.00% is reflected in total return calculations. There was no impact to the return.

¹¹ Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been (1.37)%.

¹² Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been 7.93%.

¹³  Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been (1.36)%.

¹⁴  Annualized.

See Notes to Financial Statements.

    BLACKROCK FUNDS     MARCH 31, 2012 27

  Financial Highlights   BlackRock Mid-Cap Value Equity Portfolio

	Institutional																		Service
	Six Months Ended March 31, 2012			Year Ended September 30,															Six Months Ended March 31, 2012			Year Ended September 30,
	(Unaudited)			2011			2010			2009			2008			2007			(Unaudited)			2011			2010			2009			2008			2007
Per Share Operating Performance
Net asset value, beginning of period	$	9.81		$	10.53		$	9.34		$	9.94		$	14.35		$	13.67		$	9.63		$	10.33		$	9.17		$	9.78		$	14.14		$	13.49
Net investment income1		0.05			0.12			0.10			0.08			0.10			0.11			0.04			0.08			0.04			0.05			0.06			0.10
Net realized and unrealized gain (loss)		2.62			(0.74	)		1.16			(0.61	)		(2.77	)		2.38	2		2.57			(0.73	)		1.17			(0.60	)		(2.72	)		2.33	2
Net increase (decrease) from investment operations		2.67			(0.62	)		1.26			(0.53	)		(2.67	)		2.49			2.61			(0.65	)		1.21			(0.55	)		(2.66	)		2.43
Dividends and distributions from:
Net investment income		(0.10	)		(0.10	)		(0.07	)		(0.07	)		–			(0.15	)		(0.07	)		(0.05	)		(0.05	)		(0.06	)		–			(0.12	)
Tax return of capital		–			–			–			–			(0.02	)		–			–			–			–			–			(0.02	)		–
Net realized gain		–			–			–			–			(1.72	)		(1.66	)		–			–			–			–			(1.68	)		(1.66	)
Total dividends and distributions		(0.10	)		(0.10	)		(0.07	)		(0.07	)		(1.74	)		(1.81	)		(0.07	)		(0.05	)		(0.05	)		(0.06	)		(1.70	)		(1.78	)
Net asset value, end of period	$	12.38		$	9.81		$	10.53		$	9.34		$	9.94		$	14.35		$	12.17		$	9.63		$	10.33		$	9.17		$	9.78		$	14.14
Total Investment Return3
Based on net asset value		27.36%4			(6.03)%	5		13.56%			(5.09)%			(20.74)%			19.35%	6		27.22%4			(6.38)%	5		13.20%			(5.36)%			(20.95)%			19.10%	6
Ratios to Average Net Assets
Total expenses		1.15%7			1.08%			1.13%			1.16%			1.10%			1.07%			1.69%7			1.49%			1.31%			1.32%			1.25%			1.24%
Total expenses excluding recoupment of past waived fees		1.15%7			1.08%			1.13%			1.16%			1.10%			1.07%			1.69%7			1.49%			1.31%			1.32%			1.25%			1.24%
Total expenses after fees waived, reimbursed and paid indirectly		0.97%7			0.97%			0.97%			0.95%			0.94%			0.95%			1.29%7			1.29%			1.27%			1.26%			1.23%			1.20%
Net investment income		0.96%7			0.98%			0.99%			1.00%			0.82%			0.79%			0.67%7			0.65%			0.37%			0.69%			0.54%			0.68%
Supplemental Data
Net assets, end of period (000)	$	192,206		$	195,753		$	204,286		$	165,710		$	141,900		$	134,665		$	1,391		$	1,025		$	737		$	2,561		$	2,431		$	3,716
Portfolio turnover		51%			137%			123%			181%			117%			202%			51%			137%			123%			181%			117%			202%

¹  Based on average shares outstanding.

²  Includes redemption fees, which are less than $0.01 per share.

³  Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

⁴  Aggregate total investment return.

⁵  Includes proceeds received from a settlement of litigation, which had no impact on the Fund’s total return.

⁶  Redemption fee of 2.00% is reflected in total return calculations. There was no impact to the return.

⁷  Annualized.

See Notes to Financial Statements.

28     BLACKROCK FUNDS     MARCH 31, 2012

  Financial Highlights (continued)   BlackRock Mid-Cap Value Equity Portfolio

	Investor A																		Investor B
	Six Months Ended March 31, 2012			Year Ended September 30,															Six Months Ended March 31, 2012			Year Ended September 30,
	(Unaudited)			2011			2010			2009			2008			2007			(Unaudited)			2011			2010			2009			2008			2007
Per Share Operating Performance
Net asset value, beginning of period	$	9.50		$	10.21		$	9.06		$	9.66		$	14.00		$	13.38		$	8.58		$	9.25		$	8.23		$	8.84		$	12.92		$	12.46
Net investment income (loss)1		0.04			0.08			0.06			0.05			0.06			0.08			(0.01	)		(0.01	)		(0.02	)		(0.00	)2		(0.02	)		(0.01	)
Net realized and unrealized gain (loss)		2.54			(0.72	)		1.13			(0.59	)		(2.70	)		2.32	3		2.31			(0.65	)		1.04			(0.56	)		(2.47	)		2.15	4
Net increase (decrease) from investment operations		2.58			(0.64	)		1.19			(0.54	)		(2.64	)		2.40			2.30			(0.66	)		1.02			(0.56	)		(2.49	)		2.14
Dividends and distributions from:
Net investment income		(0.06	)		(0.07	)		(0.04	)		(0.06	)		–			(0.12	)		–			(0.01	)		–			(0.05	)		–			(0.02	)
Tax return of capital		–			–			–			–			(0.02	)		–			–			–			–			–			(1.59	)		(1.66	)
Net realized gain		–			–			–			–			(1.68	)		(1.66	)		–			–			–			–			–			–
Total dividends and distributions		(0.06	)		(0.07	)		(0.04	)		(0.06	)		(1.70	)		(1.78	)		–			(0.01	)		–			(0.05	)		(1.59	)		(1.68	)
Net asset value, end of period	$	12.02		$	9.50		$	10.21		$	9.06		$	9.66		$	14.00		$	10.88		$	8.58		$	9.25		$	8.23		$	8.84		$	12.92
Total Investment Return5
Based on net asset value		27.27%6			(6.33)%7			13.21%			(5.32)%			(21.04)%			19.02%4			26.81%6			(7.17)%7			12.39%			(6.12%)			(21.53%)			18.18%
Ratios to Average Net Assets
Total expenses.		1.41%8			1.37%			1.40%			1.51%			1.43%			1.40%			2.35%8			2.13%			2.22%			2.38%			2.24%			2.23%
Total expenses excluding recoupment of past waived fees		1.41%8			1.37%			1.40%			1.51%			1.43%			1.40%			2.35%8			2.12%			2.20%			2.38%			2.24%			2.23%
Total expenses after fees waived, reimbursed and paid indirectly		1.29%8			1.29%			1.29%			1.26%			1.25%			1.25%			2.06%8			2.06%			2.04%			2.02%			2.00%			2.00%
Net investment income (loss)		0.66%8			0.66%			0.61%			0.70%			0.53%			0.61%			(0.12%)8			(0.10%)			(0.24)%			(0.04%)			(0.21%)			(0.09%)
Supplemental Data
Net assets, end of period (000)	$	683,007		$	587,989		$	726,666		$	395,763		$	470,265		$	642,264		$	24,144		$	26,233		$	42,239		$	41,196		$	67,656		$	119,768
Portfolio turnover		51%			137%			123%			181%			117%			202%			51%			137%			123%			181%			117%			202%

¹  Based on average shares outstanding.

²  Less than $(0.01) per share.

³  Includes redemption fees, which are less than $0.01 per share.

⁴  Redemption fee of 2.00% is reflected in total return calculations. There was no impact to the return.

⁵  Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

⁶  Aggregate total investment return.

⁷  Includes proceeds received from a settlement of litigation, which had no impact on the Fund’s total return.

⁸  Annualized.

See Notes to Financial Statements.

    BLACKROCK FUNDS     MARCH 31, 2012 29

  Financial Highlights (concluded)   BlackRock Mid-Cap Value Equity Portfolio

	Investor C																Class R
	Six Months Ended March 31, 2012			Year Ended September 30,													Six Months Ended March 31, 2012			Year Ended September 30,	Period July 30, 20101 to
	(Unaudited)			2011			2010		2009			2008		2007			(Unaudited)			2011	September 30, 2010
Per Share Operating Performance
Net asset value, beginning of period	$	8.55		$	9.22		$	8.20	$	8.81		$	12.90	$	12.46		$	9.75		$        10.51	$        10.24
Net investment income (loss)2		(0.01)			(0.01)			(0.01)		(0.00)	3		(0.02)		(0.02)			0.02		0.04	0.004
Net realized and unrealized gain (loss)		2.30			(0.64)			1.03		(0.56)			(2.47)		2.15	5		2.61		(0.73)	0.27
Net increase (decrease) from investment operations		2.29			(0.65)			1.02		(0.56)			(2.49)		2.13			2.63		(0.69)	0.27
Dividends and distributions from:
Net investment income		–			(0.02)			–		(0.05)			–		(0.03)			(0.03)		(0.07)	–
Net realized gain		–			–			–		–			(1.60)		(1.66)			–		–	–
Total dividends and distributions		–			(0.02)			–		(0.05)			(1.60)		(1.69)			(0.03)		(0.07)	–
Net asset value, end of period	$	10.84		$	8.55		$	9.22	$	8.20		$	8.81	$	12.90		$	12.35		$        9.75	$        10.51
Total Investment Return6
Based on net asset value		26.78%	7		(7.11)%	8		12.44%		(6.14)%			(21.56)%		18.16%	9		26.99%	7	(6.66)%8	13.17%7
Ratios to Average Net Assets
Total expenses		2.19%	10		2.16%			2.22%		2.39%			2.20%		2.21%			1.73%	10	1.72%	2.21%10
Total expenses excluding recoupment of past waived fees		2.19%	10		2.16%			2.22%		2.39%			2.20%		2.21%			1.73%	10	1.70%	2.21%10
Total expenses after fees waived, reimbursed and paid indirectly		2.06%	10		2.06%			2.06%		2.02%			2.00%		2.00%			1.65%	10	1.65%	1.65%10
Net investment income (loss)		(0.12)%	10		(0.11)%			(0.17)%		(0.06)%			(0.22)%		(0.14)%			0.30%	10	0.31%	0.08%10
Supplemental Data
Net assets, end of period (000)	$	129,340		$	112,520		$	148,923	$	92,141		$	118,186	$	173,731		$	1,181		$        920	$        838
Portfolio turnover		51%			137%			123%		181%			117%		202%			51%		137%	123%

¹  Commencement of operations.

²  Based on average shares outstanding.

³  Less than $(0.01) per share.

⁴  Less than $0.01 per share.

⁵  Includes redemption fees, which are less than $0.01 per share.

⁶  Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

⁷  Aggregate total investment return.

⁸  Includes proceeds received from a settlement of litigation, which had no impact on the Fund’s total return.

⁹  Redemption fee of 2.00% is reflected in total return calculations. There was no impact to the return.

¹⁰  Annualized.

See Notes to Financial Statements.

30     BLACKROCK FUNDS     MARCH 31, 2012

  Financial Highlights   BlackRock Small Cap Growth Equity Portfolio

	Institutional																		Service
	Six Months Ended March 31, 2012			Year Ended September 30,															Six Months Ended March 31, 2012			Year Ended September 30,
	(Unaudited)			2011			2010			2009			2008			2007			(Unaudited)			2011			2010			2009			2008			2007
Per Share Operating Performance
Net asset value, beginning of period	$	20.09		$	20.42		$	18.66		$	20.33		$	23.71		$	19.26		$	18.93		$	19.29		$	17.67		$	19.30		$	22.58		$	18.38
Net investment income (loss)1		(0.03	)		(0.13	)		(0.12	)		(0.07	)		0.03			(0.07	)		(0.07	)		(0.18	)		(0.16	)		(0.10	)		(0.03	)		(0.11)
Net realized and unrealized gain (loss)		7.67			(0.20	)2		1.88	2		(1.60	)2		(3.41	)2		4.52	2		7.21			(0.18	)2		1.78	2		(1.53	)2		(3.25	)2		4.312
Net increase (decrease) from investment operations		7.64			(0.33	)		1.76			(1.67	)		(3.38	)		4.45			7.14			(0.36	)		1.62			(1.63	)		(3.28	)		4.20
Distributions from net realized gain		(0.60	)		–			–			–			–			–			(0.60	)		–			–			–			–			–
Net asset value, end of period	$	27.13		$	20.09		$	20.42		$	18.66		$	20.33		$	23.71		$	25.47		$	18.93		$	19.29		$	17.67		$	19.30		$	22.58
Total Investment Return3
Based on net asset value		38.51%	4		(1.62	)%5,6		9.43%	6		(8.22	)%6,7		(14.26	)%6		23.11%	6		38.22%	4		(1.87	)%5,6		9.17%	6		(8.45	)%6,8		(14.53	)%6		22.85%6
Ratios to Average Net Assets
Total expenses		0.82%	9		0.80%			0.83%			0.88%			0.77%			0.82%			1.22%	9		1.07%			1.10%			1.15%			1.07%			1.02%
Total expenses excluding recoupment of past waived fees		0.82%	9		0.80%			0.83%			0.88%			0.77%			0.82%			1.22%	9		1.07%			1.10%			1.14%			1.07%			1.02%
Total expenses after fees waived, reimbursed and paid indirectly		0.82%	9		0.80%			0.83%			0.88%			0.77%			0.82%			1.18%	9		1.07%			1.10%			1.11%			1.07%			1.02%
Net investment income (loss)		(0.24%	)9		(0.55	)%		(0.59	)%		(0.48	)%		0.15%			(0.34	)%		(0.60%	)9		(0.81	)%		(0.86	)%		(0.70	)%		(0.14	)%		(0.54)%
Supplemental Data
Net assets, end of period (000)	$	1,075,225		$	931,857		$	806,461		$	855,375		$	699,761		$	587,586		$	30,125		$	23,683		$	47,917		$	43,932		$	40,514		$	35,945
Portfolio turnover		81%			141%			128%			82%			81%			81%			81%			141%			128%			82%			81%			81%

¹  Based on average shares outstanding.

²  Includes redemption fees, which are less than $0.01 per share.

³  Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

⁴  Aggregate total investment return.

⁵  Includes proceeds received from a settlement of litigation, which had no impact on the Fund’s total return.

⁶  Redemption fee of 2.00% is reflected in total return calculations. There was no impact to the return.

⁷  Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been (8.26)%.

⁸  Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been (8.50)%.

⁹  Annualized.

See Notes to Financial Statements.

    BLACKROCK FUNDS     MARCH 31, 2012 31

  Financial Highlights (continued)   BlackRock Small Cap Growth Equity Portfolio

	Investor A																		Investor B
	Six Months Ended March 31, 2012			Year Ended September 30,															Six Months Ended March 31, 2012			Year Ended September 30,
	(Unaudited)			2011			2010			2009			2008			2007			(Unaudited)			2011			2010			2009			2008			2007
Per Share Operating Performance
Net asset value, beginning of period	$	18.31		$	18.69		$	17.14		$	18.76		$	21.97		$	17.90		$	15.75		$	16.20		$	15.00		$	16.56		$	19.57		$	16.07
Net investment loss1		(0.07)			(0.21)			(0.18)			(0.13)			(0.05)			(0.13)			(0.13)			(0.32)			(0.30)			(0.21)			(0.21)			(0.26)
Net realized and unrealized gain (loss)		6.98			(0.17)	2		1.73	2		(1.49)	2		(3.16)	2		4.20	2		5.97			(0.13)	2		1.50	2		(1.35)	2		(2.80)	2		3.76	2
Net increase (decrease) from investment operations		6.91			(0.38)			1.55			(1.62)			(3.21)			4.07			5.84			(0.45)			1.20			(1.56)			(3.01)			3.50
Distributions from net realized gain		(0.60)			–			–						–			–			(0.60)			–			–			–			–			–
Net asset value, end of period	$	24.62		$	18.31		$	18.69		$	17.14		$	18.76		$	21.97		$	20.99		$	15.75		$	16.20		$	15.00		$	16.56		$	19.57
Total Investment Return3
Based on net asset value		38.26%	4		(2.03)%	5,6		9.04%	6		(8.64)%	6,7		(14.61)%	6		22.74%	6		37.67%	4		(2.78)%	5,6		8.00%	6		(15.38)%	6		(9.42)%	6,8		21.78%	6
Ratios to Average Net Assets
Total expenses		1.16%	9		1.18%			1.22%			1.33%			1.16%			1.12%			2.00%	9		1.96%			2.19%			2.30%			2.08%			2.02%
Total expenses excluding recoupment of past waived fees		1.16%	9		1.18%			1.22%			1.33%			1.16%			1.12%			2.00%	9		1.96%			2.07%			2.20%			2.08%			2.02%
Total expenses after fees waived, reimbursed and paid indirectly		1.16%	9		1.18%			1.22%			1.33%			1.16%			1.12%			2.00%	9		1.96%			2.19%			2.20%			2.08%			1.92%
Net investment loss		(0.61)%	9		(0.94)%			(0.98)%			(0.92)%			(0.22)%			(0.64)%			(1.42%)	9		(1.72)%			(1.94)%			(1.72)%			(1.11)%			(1.44)%
Supplemental Data
Net assets, end of period (000)	$	384,437		$	235,400		$	269,080		$	240,361		$	211,065		$	189,575		$	1,982		$	1,687		$	2,369		$	3,327		$	5,721		$	10,222
Portfolio turnover		81%			141%			128%			82%			81%			81%			81%			141%			128%			82%			81%			81%

¹  Based on average shares outstanding.

²  Includes redemption fees, which are less than $0.01 per share.

³  Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

⁴  Aggregate total investment return.

⁵  Includes proceeds received from a settlement of litigation, which had no impact on the Fund’s total return.

⁶  Redemption fee of 2.00% is reflected in total return calculations. There was no impact to the return.

⁷  Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been (8.69)%.

⁸  Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been (9.48)%.

⁹  Annualized.

See Notes to Financial Statements.

32     BLACKROCK FUNDS     MARCH 31, 2012

  Financial Highlights (concluded)   BlackRock Small Cap Growth Equity Portfolio

	Investor C
	Six Months Ended March 31, 2012			Year Ended September 30,
	(Unaudited)			2011			2010			2009			2008			2007
Per Share Operating Performance
Net asset value, beginning of period	$	15.73		$	16.19		$	14.99		$	16.56		$	19.57		$	16.09
Net investment loss1		(0.13)			(0.35)			(0.30)			(0.22)			(0.21)			(0.29)
Net realized and unrealized gain (loss)		5.97			(0.11)	2		1.50	2		(1.35)	2		(2.80)	2		3.772
Net increase (decrease) from investment operations		5.84			(0.46)			1.20			(1.57)			(3.01)			3.48
Distributions from net realized gain		(0.60)			–			–			–			–			–
Net asset value, end of period	$	20.97		$	15.73		$	16.19		$	14.99		$	16.56		$	19.57
Total Investment Return3
Based on net asset value		37.72%	4		(2.84)%	5,6		8.01%	6		(9.48)%	6,7		(15.38)%	6		21.63%6
Ratios to Average Net Assets
Total expenses		1.96%	8		2.08%			2.19%			2.31%			2.08%			2.09%
Total expenses excluding recoupment of past waived fees		1.96%	8		2.05%			2.13%			2.29%			2.08%			2.09%
Total expenses after fees waived, reimbursed and paid indirectly		1.96%	8		2.07%			2.16%			2.22%			2.08%			2.04%
Net investment loss		(1.38%)	8		(1.83)%			(1.92)%			(1.81)%			(1.14)%			(1.56)%
Supplemental Data
Net assets, end of period (000)	$	30,849		$	23,947		$	33,219		$	25,915		$	24,405		$	21,847
Portfolio turnover		81%			141%			128%			82%			81%			81%

¹  Based on average shares outstanding.

²  Includes redemption fees, which are less than $0.01 per share.

³  Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

⁴  Aggregate total investment return.

⁵  Includes proceeds received from a settlement of litigation, which had no impact on the Fund’s total return.

⁶  Redemption fee of 2.00% is reflected in total return calculations. There was no impact to the return.

⁷  Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been (9.54)%.

⁸  Annualized.

See Notes to Financial Statements.

    BLACKROCK FUNDS     MARCH 31, 2012 33

Notes to Financial Statements (Unaudited)

1. Organization and Significant Accounting Policies:

BlackRock Funds^SM (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 Massa-chusetts business trust. BlackRock Mid-Cap Growth Equity Portfolio (“Mid-Cap Growth Equity”), BlackRock Mid-Cap Value Equity Portfolio (“Mid-Cap Value Equity”) and BlackRock Small Cap Growth Equity Portfolio (“Small Cap Growth Equity”) (collectively, the “Funds” or individually, a “Fund”) are each a series of the Trust. The Funds are classified as diversified. 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 and disclosures in the financial statements. Actual results could differ from those estimates. Each Fund offers multiple classes of shares. Institutional Shares are sold without a sales charge and only to certain eligible investors. Service Shares are sold without a sales charge. Investor A Shares are generally sold with a front-end sales charge. Investor B and Investor C Shares may be subject to a CDSC. 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 Service, Investor A, Investor B, Investor C and Class R Shares bear certain expenses related to the shareholder servicing of such shares, and Investor B, Investor C and Class R Shares also bear certain expenses related to the distribution of such shares. Investor B Shares automatically convert to Investor A Shares after approximately eight years. Investor B Shares are only available through exchanges, dividend reinvestment by existing shareholders or for purchase by certain qualified employee benefit plans. Each class has exclusive voting rights with respect to matters relating to its shareholder servicing and distribution expenditures (except that Investor B shareholders may vote on material changes to the Investor A distribution and service plan).

Reorganizations: The Board of Trustees of the Trust (the “Board”) and of Mid-Cap Growth Equity and the Board and shareholders of BlackRock Small/Mid-Cap Growth Portfolio (“Small/Mid-Cap Growth”), a series of the Trust, approved the reorganization of Small/Mid-Cap Growth into Mid-Cap Growth Equity pursuant to which Mid-Cap Growth Equity acquired substantially all of the assets and assumed certain stated liabilities of Small/Mid-Cap Growth in exchange for an equal aggregate value of Mid-Cap Growth Equity shares.

Each shareholder of Small/Mid-Cap Growth received shares of Mid-Cap Growth Equity with the same class designation and an aggregate NAV of such shareholder’s Small/Mid-Cap Growth shares, as determined at the close of business on September 9, 2011.

The reorganization was accomplished by a tax-free exchange of shares of Mid-Cap Growth Equity in the following amounts and at the following conversion ratios:

	Small/Mid-Cap Growth Shares Prior to Reorganization		Conversion Ratio		Shares of Mid-Cap Growth Equity
Institutional		325,605		1.02754184		334,572
Investor A		6,985,641		1.04197646		7,278,873
Investor B		302,749		0.99544086		301,369
Investor C		784,243		0.99592366		781,046
Class R		216,432		1.02709786		222,297

Small/Mid-Cap Growth’s net assets and composition of net assets on September 9, 2011, the date of the reorganization, were as follows:

Net  Assets	Paid-in Capital		Accumulated Net Realized Loss			Net Unrealized Appreciation
$92,348,707	$	99,897,827	$	(8,980,281	)	$	1,431,161

For financial reporting purposes, assets received and shares issued by Mid-Cap Growth Equity were recorded at fair value; however, the cost basis of the investments received from Small/Mid-Cap Growth was carried forward to align ongoing reporting of Mid-Cap Growth Equity’s realized and unrealized gains and losses with amounts distributable to shareholders for tax purposes.

The aggregate net assets of Mid-Cap Growth Equity immediately after the acquisition amounted to $294,911,916. Small/Mid-Cap Growth’s fair value and cost of investments prior to the reorganization were $93,085,931 and $91,654,770, respectively.

The purpose of the transaction was to combine two funds managed by the Manager, the investment advisor to both Small/Mid-Cap Growth and Mid-Cap Growth Equity with the same or substantially similar (but not identical) investment objectives, investment policies, strategies, risks and restrictions. The reorganization was a tax-free event and was effective on September 12, 2011.

Assuming the acquisition had been completed on October 1, 2010, the beginning of the annual reporting period of Mid-Cap Growth Equity, the pro forma results of operations for the year ended September 30, 2011, were as follows:

— Net investment loss: $(3,404,549)

— Net realized and change in unrealized gain/loss on investments: $12,060,317

— Net increase in the net assets resulting from operations: $8,655,768

Because the combined investment portfolios have been managed as a single integrated portfolio since the acquisition was completed, it is not practicable to separate the amounts of revenue and earnings of Small/ Mid-Cap Growth that have been included in the Mid-Cap Growth Equity’s Statement of Changes since September 12, 2011.

34     BLACKROCK FUNDS     MARCH 31, 2012

Notes to Financial Statements (continued)

Reorganization costs incurred by Mid-Cap Growth Equity in connection with the reorganization were expensed by Mid-Cap Growth Equity.

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 using independent dealers or pricing services under policies approved by the Board. Equity investments traded on a recognized securities exchange or the NASDAQ Global Market System (“NASDAQ”) are valued at the last reported sale price that day or the NASDAQ official closing price, if applicable. For equity investments traded on more than one exchange, the last reported sale price on the exchange where the stock is primarily traded is used. Equity investments traded on a recognized exchange for which there were no sales on that day are valued at the last available bid price. If no bid price is available, the prior day’s price will be used, unless it is determined that such prior day’s price no longer reflects the fair value of the security. Investments in open-end registered investment companies are valued at NAV each business day. Short-term securities with remaining maturities of 60 days or less may be valued at amortized cost, which approximates fair value.

The Funds value their investments in BlackRock Liquidity Series, LLC Money Market Series (the “Money Market Series”) at fair value, which is ordinarily based upon their pro rata ownership in the underlying fund’s net assets. The Money Market Series seeks current income consistent with maintaining liquidity and preserving capital. Although the Money Market Series is not registered under the 1940 Act, its investments will follow the parameters of investments by a money market fund that is subject to Rule 2a-7 under the 1940 Act. Each Fund may withdraw up to 25% of its investment daily, although the manager of the Money Market Series, in its sole discretion, may permit an investor to withdraw more than 25% on any one day.

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

In the event that application of these methods of valuation results in a price for an investment which is deemed not to be representative of the market value of such investment or if a price is not available, the investment will be valued in accordance with a policy approved by the Board as reflecting fair value (“Fair Value Assets”). When determining the price

for Fair Value Assets, the investment advisor seeks to determine the price that each Fund might reasonably expect to receive from the current sale of that asset in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the investment advisor deems relevant. The pricing of all Fair Value Assets is subsequently reported to the Board or a committee thereof.

Segregation and Collateralization: In cases in which the 1940 Act and the interpretive positions of the Securities and Exchange Commission (“SEC”) require that a Fund either deliver collateral or segregate assets in connection with certain investments (e.g., options written), the Fund will, consistent with SEC rules and/or certain interpretive letters issued by the SEC, segregate collateral or designate on its books and records cash or liquid securities having a market value at least equal to the amount that would otherwise be required to be physically segregated. Furthermore, based on requirements and agreements with certain exchanges and third party broker-dealers, each party to such transactions has requirements to deliver/deposit securities as collateral for certain investments.

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. Dividends from foreign securities where the ex-dividend date may have passed are subsequently recorded when the Funds are informed of the ex-dividend date. Under the applicable foreign tax laws, a withholding tax at various rates may be imposed on capital gains, dividends and interest. Upon notification from issuers, some of the dividend income received from a real estate investment trust may be redesignated as a reduction of cost of the related investment and/or realized gain. Income and realized and unrealized gains and losses are allocated daily to each class based on its relative net assets.

Dividends and Distributions: Dividends and distributions paid by the Funds are recorded on the ex-dividend dates. The amount and timing of dividends and distributions are determined in accordance with federal income tax regulations, which may differ from US GAAP.

Securities Lending: The Funds may lend securities to approved borrowers, such as banks, brokers and other financial institutions. The borrower pledges cash, securities issued or guaranteed by the US government or irrevocable letters of credit issued by a bank as collateral, which will be maintained at all times in an amount equal to at least 100% of the current market value of the loaned securities. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. Securities lending income, as disclosed in the Statements of Operations, represents the income earned from the investment of the cash collateral, net of rebates paid to, or fees paid by, borrowers and less the fees paid to the securities lending agent. During the term of the loan, the Funds earn dividend or interest income on the securities

    BLACKROCK FUNDS     MARCH 31, 2012 35

Notes to Financial Statements (continued)

loaned but do not receive dividend or interest income on the securities received as collateral. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions. In the event that the borrower defaults on its obligation to return borrowed securities because of insolvency or for any other reason, the Funds could experience delays and costs in gaining access to the collateral. The Funds also could suffer a loss if the value of an investment purchased with cash collateral falls below the market value of loaned securities or if the value of an investment purchased with cash collateral falls below the value of the original cash collateral received. During the six months ended March 31, 2012, any securities on loan were collaterized by cash.

Income Taxes: It is each Fund’s 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 its taxable income to its 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 September 30, 2011. 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 Standards: In May 2011, the Financial Accounting Standards Board (the “FASB”) issued amended guidance to improve disclosure about fair value measurements which will require the following disclosures for fair value measurements categorized as Level 3: quantitative information about the unobservable inputs and assumptions used in the fair value measurement, a description of the valuation policies and procedures and a narrative description of the sensitivity of the fair value measurement to changes in unobservable inputs and the interrelationships between those unobservable inputs. In addition, the amounts and reasons for all transfers in and out of Level 1 and Level 2 will be required to be disclosed as well as disclosure of the level in the fair value hierarchy of assets and liabilities not recorded at fair value but where fair value is disclosed. The amended guidance is effective for financial statements for fiscal years beginning after December 15, 2011, and interim periods within those fiscal years. Management is evaluating the impact of this guidance on the Funds’ financial statement disclosures.

In December 2011, the FASB 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 the Funds and other shared expenses pro rated to the Funds 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. Derivative Financial Instruments:

The Funds engage in various portfolio investment strategies using derivative contracts both to increase the returns of the Funds and to economically hedge, or protect, their exposure to equity risk. These contracts may be transacted on an exchange or OTC.

Losses may arise if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument or if the counterparty does not perform under the contract. The Funds’ maximum risk of loss from counterparty credit risk on OTC derivatives is generally the aggregate unrealized gain netted against any collateral pledged by/posted to the counterparty. For OTC options purchased, the Funds bear the risk of loss in the amount of the premiums paid plus the positive change in market values net of any collateral received on the options should the counterparty fail to perform under the contracts. Options written by the Funds do not give rise to counterparty credit risk, as options written obligate the Funds to perform and not the counterparty. Counterparty risk related to exchange-traded options is deemed to be minimal due to the protection against defaults provided by the exchange on which these contracts trade.

The Funds may mitigate counterparty risk by procuring collateral and through netting provisions included within an International Swaps and Derivatives Association, Inc. master agreement (“ISDA Master Agreement”) implemented between a Fund and each of its respective counterparties. An ISDA Master Agreement allows each Fund to offset with each separate counterparty certain derivative financial instrument’s payables and/or receivables with collateral held. The amount of collateral moved to/from applicable counterparties is generally based upon minimum transfer amounts of up to $500,000. To the extent amounts due to the Funds from their counterparties are not fully collateralized contractually or otherwise, the Funds bear the risk of loss from counterparty non-performance. See Note 1 “Segregation and Collateralization” for information with respect to collateral practices. In

36     BLACKROCK FUNDS     MARCH 31, 2012

Notes to Financial Statements (continued)

addition, the Funds manage counterparty risk by entering into agreements only with counterparties that they believe have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties.

Certain ISDA Master Agreements allow counterparties to OTC derivatives to terminate derivative contracts prior to maturity in the event the Funds’ net assets decline by a stated percentage or the Funds fail to meet the terms of its ISDA Master Agreements, which would cause the Funds to accelerate payment of any net liability owed to the counterparty.

Options: The Funds purchase and write call and put options to increase or decrease their exposure to underlying instruments (including equity risk) and/or, in the case of options written, to generate gains from options premiums. A call option gives the purchaser (holder) of the option the right (but not the obligation) to buy, and obligates the seller (written) to sell (when the option is exercised), the underlying instrument at the exercise or strike price at any time or at a specified time during the option period. A put option gives the holder the right to sell and obligates the writer to buy the underlying instrument at the exercise or strike price at any time or at a specified time during the option period. When a Fund purchases (writes) an option, an amount equal to the premium paid (received) by a Fund is reflected as an asset (liability). The amount of the asset (liability) is subsequently marked-to-market to reflect the current market value of the option purchased (written). When an instrument is purchased or sold through an exercise of an option, the related premium paid (or received) is added to (or deducted from) the basis of the instrument acquired or deducted from (or added to) the proceeds of the instrument sold. When an option expires (or a Fund enters into a closing transaction), a Fund realizes a gain or loss on the option to the extent of the premiums received or paid (or gain or loss to the extent the cost of the closing transaction exceeds the premiums received or paid). When a Fund writes a call option, such option is “covered,” meaning that a Fund holds the underlying instrument subject to being called by the option counterparty. When a Fund writes a put option, such option is covered by cash in an amount sufficient to cover the obligation.

In purchasing and writing options, a Fund bears the risk of an unfavorable change in the value of the underlying instrument or the risk that a Fund may not be able to enter into a closing transaction due to an illiquid market. Exercise of a written option could result in a Fund purchasing or selling a security at a price different from the current market value.

Derivative Financial Instruments Categorized by Risk Exposure:

Fair Values of Derivative Financial Instruments as of March 31, 2012
Liability Derivatives
	Statements of Assets and Liabilities Location		Mid-Cap Growth Equity		Small Cap Growth Equity
Equity contracts		Options written at value	$	29,150	$	124,020

The Effect of Derivative Financial Instruments in the Statements of Operations Six Months Ended March 31, 2012
Net Realized Gain (Loss) From
	Mid-Cap Growth Equity			Mid-Cap Value Equity			Small Cap Growth Equity
Equity contracts:
Options	$	(122,470	)	$	251,245		$	(488,801	)
Net Change in Unrealized Appreciation/Depreciation on
	Mid-Cap Growth Equity			Mid-Cap Value Equity			Small Cap Growth Equity
Equity contracts:
Options	$	(7,816	)	$	40,926		$	(33,253	)
For the six months ended March 31, 2012, the average quarterly bal-ances of outstanding derivative financial instruments were as follows:
	Mid-Cap Growth Equity			Mid-Cap Value Equity			Small Cap Growth Equity
Options:
Average number of option contracts purchased		–			1	1		–
Average number of option contracts written		1			1	1		1
Average notional value of option contracts purchased		—		$	2,625,000	1		–
Average notional value of option contracts written	$	473,000		$	1,726,2881		$	2,012,400

¹  Average contract amount shown due to limited activity.

3. Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. (“PNC”) and Barclays Bank PLC (“Barclays”) are the largest stockholders of BlackRock. Due to the ownership structure, PNC is an affiliate for 1940 Act purposes, but Barclays is not.

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 is responsible for the management of each Fund’s portfolio and provides the necessary personnel, facilities, equipment and certain other services necessary to the operations of each Fund. For such services, each Fund pays the Manager a

    BLACKROCK FUNDS     MARCH 31, 2012 37

Notes to Financial Statements (continued)

monthly fee based on a percentage of each Fund’s average daily net assets at the following annual rates:

	Mid-Cap Growth Equity and Mid-Cap Value Equity	Small Cap Growth Equity
Average Daily Net Assets	Investment Advisory Fee	Investment Advisory Fee
First $1 Billion.	0.800%	0.550%
$1 Billion - $2 Billion	0.700%	0.500%
$2 Billion - $3 Billion	0.650%	0.475%
Greater than $3 Billion	0.625%	0.450%

The Manager contractually or voluntarily agreed to waive and/or reimburse fees or expenses, excluding interest expense, dividend expense, acquired fund fees and expenses and certain other fund expenses, in order to limit expenses. The expense limitations as a percentage of average daily net assets are as follows:

Share Classes	Mid-Cap Growth Equity	Mid-Cap Value Equity	Small Cap Growth Equity
	Contractual	Contractual2	Contractual2	Voluntary3
Institutional	1.11%1	0.97%	1.02%		–
Service	1.58%2	1.29%	1.29%		1.18%
Investor A	1.39%1	1.29%	1.50%		–
Investor B	2.16%1	2.06%	2.28%		–
Investor C	2.16%1	2.06%	2.28%		–
Class R	1.65%2	1.65%4	1.72%5		–

¹  The Manager has agreed not to reduce or discontinue this contractual waiver or reimbursement prior to February 1, 2014 unless approved by the Board, including a majority of the Independent Trustees.

²  The Manager has agreed not to reduce or discontinue this contractual waiver or reimbursement prior to February 1, 2013, except for Mid-Cap Value Equity’s Class R Shares which is prior to February 1, 2022, unless approved by the Board, including a majority of the Independent Trustees.

³  The voluntary waiver or reimbursement may be reduced or discontinued at any time.

⁴  On February 1 of each year, the waiver agreement will renew automatically for an additional one year so that the agreement will have a perpetual ten year term.

⁵  There were no shares outstanding as of March 31, 2012.

These amounts are shown as administration fees waived – class specific, transfer agent fees waived – class specific and transfer agent fees reimbursed – class specific, respectively, in the Statements of Operations. Class specific expense waivers or reimbursements are as follows:

Administration Fees Waived
Share Classes	Mid-Cap Growth Equity		Mid-Cap Value Equity		Small Cap Growth Equity
Institutional	$	1,639	$	24,331		–
Service		119		158	$	2,761
Investor A		32,462		74,325		–
Investor B		947		3,242		–
Investor C		2,384		15,407		–
Class R		707		138		–
Total	$	38,258	$	117,601	$	2,761

Transfer Agent Fees Waived
Share Classes	Mid-Cap Growth Equity		Mid-Cap Value Equity		Small Cap Growth Equity
Institutional	$	781	$	1,228		–
Service		184		145	$	212
Investor A		29,317		28,030		–
Investor B		3,421		3,559		–
Investor C		5,890		5,832		–
Class R		27		21		–
Total	$	39,620	$	38,815	$	212

Transfer Agent Fees Reimbursed
Share Classes	Mid-Cap Growth Equity		Mid-Cap Value Equity		Small Cap Growth Equity
Institutional	$	6,359	$	147,675		–
Service		1,846		2,250	$	2,437
Investor A		123,317		289,671		–
Investor B		12,573		31,663		–
Investor C		8,325		61,903		–
Class R		5,078		289		–
Total	$	157,498	$	533,451	$	2,437

The Manager voluntarily agreed to waive its investment advisory fees by the amount of investment advisory fees each Fund pays to the Manager indirectly through its investment in affiliated money market funds. However the Manager does not waive its investment advisory fees by the amount of investment advisory fees paid in connection with each Fund’s investment in other affiliated investment companies, if any. These amounts are included in fees waived by advisor in the Statements of Operations. For the six months ended March 31, 2012, the amounts waived were as follows:

Mid-Cap Growth Equity	$1,597
Mid-Cap Value Equity	$	4,579
Small Cap Growth Equity	$	5,801

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.

38     BLACKROCK FUNDS     MARCH 31, 2012

Notes to Financial Statements (continued)

For the six months ended March 31, 2012, the Manager recouped the following waivers previously recorded by the Funds:

Recoupment of Past Waived Fees
Share Classes	Mid-Cap Growth Equity		Mid-Cap Value Equity
Institutional	$	656		–
Investor B		–	$	287
Investor C		–		503
Total	$	656	$	790

On March 31, 2012, the amounts subject to possible future recoupment under the expense limitation agreement are as follows:

	Expiring September 30,
		2012		2013		2014
Mid-Cap Growth Equity	$	18,353	$	46,944	$	235,374
Mid-Cap Value Equity	$	990,928	$	1,061,191	$	689,854

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
Service	0.25%		–
Investor A	0.25%		–
Investor B	0.25%		0.75	%
Investor C	0.25%		0.75	%
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 compensate BRIL and each broker-dealer for providing shareholder servicing and/or distribution related services to Service, Investor A, Investor B, Investor C and Class R shareholders.

For the six months ended March 31, 2012, the following table shows the class specific service and distribution fees borne directly by each class of each Fund:

Service and Distribution Fees
Share Classes	Mid-Cap Growth Equity		Mid-Cap Value Equity		Small Cap Growth Equity
Service	$	1,188	$	1,579	$	34,434
Investor A		324,621		822,083		402,874
Investor B		37,889		129,725		9,461
Investor C		95,361		625,539		139,573
Class R		14,322		2,752		–
Total	$	473,381	$	1,581,678	$	586,342

For the six months ended March 31, 2012, affiliates earned underwriting discounts, direct commissions and dealer concessions on sales of each Fund’s Investor A Shares as follows:

Mid-Cap Growth Equity	$	2,986
Mid-Cap Value Equity	$	4,754
Small Cap Growth Equity	$	7,400

For the six months ended March 31, 2012, affiliates received the following CDSCs relating to transactions in Investor A, Investor B and Investor C Shares as follows:

		Investor A		Investor B		Investor C
Mid-Cap Growth Equity		–	$	1,852	$	1,029
Mid-Cap Value Equity	$	109	$	9,079	$	2,579
Small Cap Growth Equity	$	1,090	$	1,109	$	808

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. For the six months ended March 31, 2012, the Funds paid the following to affiliates in return for these services, which are included in transfer agent – class specific in the Statements of Operations:

Mid-Cap Growth Equity	$	5,138
Mid-Cap Value Equity	$	6,587
Small Cap Growth Equity	$	113,580

    BLACKROCK FUNDS     MARCH 31, 2012 39

Notes to Financial Statements (continued)

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 six months ended March 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:

Share Classes	Mid-Cap Growth Equity		Mid-Cap Value Equity		Small Cap Growth Equity
Institutional	$	1,096	$	1,228	$	3,318
Service		184		145		690
Investor A		29,317		28,030		6,143
Investor B		3,421		3,567		128
Investor C		5,890		5,843		756
Class R		30		21		–
Total	$	39,938	$	38,834	$	11,035

For the six months ended March 31, 2012, the following table shows the class specific transfer agent fees borne directly by each class of each Fund:

Transfer Agent Fees
Share Classes	Mid-Cap Growth Equity		Mid-Cap Value Equity		Small Cap Growth Equity
Institutional	$	22,184	$	216,115	$	869,332
Service		3,886		3,282		43,379
Investor A		408,930		775,034		408,763
Investor B		24,208		57,791		3,237
Investor C		34,879		165,331		42,841
Class R		11,038		1,684		–
Total	$	505,125	$	1,219,237	$	1,367,552

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 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 – class specific in the Statements of Operations. For the six months ended March 31, 2012, the Funds paid the following to the Manager in return for these services, which are included in administration, administration – class specific and administration fees

waived – class specific in the Statements of Operations:

Administration Fees
Mid-Cap Growth Equity	$	80,661
Mid-Cap Value Equity	$	249,694
Small Cap Growth Equity	$	479,843

For the six months ended March 31, 2012, the following table shows the administration fees – class specific borne directly by each class of each Fund:

Administration Fees – Class Specific
Share Classes	Mid-Cap Growth Equity		Mid-Cap Value Equity		Small Cap Growth Equity
Institutional	$	2,656	$	24,330	$	100,698
Service		119		158		3,443
Investor A		32,462		74,325		40,287
Investor B		947		3,296		237
Investor C		2,384		15,638		3,489
Class R		716		138		–
Total	$	39,284	$	117,885	$	148,154

The Funds received an exemptive order from the SEC permitting them, among other things, to pay an affiliated securities lending agent a fee based on a share of the income derived from the securities lending activities and has retained BlackRock Investment Management, LLC (“BIM”) as the securities lending agent. BIM may, on behalf of the Funds, invest cash collateral received by the Funds for such loans, among other things, in a private investment company managed by the Manager or in registered money market funds advised by the Manager or its affiliates. As securities lending agent, BIM is responsible for all transaction fees and all other operational costs relating to securities lending activities, other than extraordinary expenses. BIM does not receive any fees for managing the cash collateral. The market value of securities on loan and the value of the related collateral, if applicable, are shown in the Statements of Assets and Liabilities as securities loaned at value and collateral on securities loaned at value, respectively. The cash collateral invested by BIM is disclosed in the Schedules of Investments, if any. Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of rebates paid to, or fees paid by, borrowers of securities. The Funds retain 65% of securities lending income and pay a fee to BIM equal to 35% of such income. The share of income earned by the Funds on the reinvestment of cash collateral is shown as securities lending – affiliated in the Statements of Operations. For the six months ended March 31, 2012, BIM received $483,279 in securities lending agent fees related to securities lending activities for the Funds.

Certain officers and/or trustees of the Trust are officers and/or directors of BlackRock or its affiliates. The Funds reimburse the Manager for compensation paid to the Trust’s Chief Compliance Officer.

40     BLACKROCK FUNDS     MARCH 31, 2012

Notes to Financial Statements (continued)

4. Investments:

Purchases and sales of investments, excluding short-term securities, for the six months ended March 31, 2012, were as follows:

	Purchases		Sales
Mid-Cap Growth Equity	$	136,351,636	$	161,464,461
Mid-Cap Value Equity	$	504,062,471	$	631,148,969
Small Cap Growth Equity	$	1,146,895,804	$	1,333,064,194

Transactions in options written for the six months ended March 31, 2012, were as follows:

	Mid-Cap Growth Equity
	Calls						Puts
	Contracts			Premiums Received			Contracts			Premiums Received
Outstanding options,beginning of period		–			–			–			–
Options written		3,080		$	373,154			555		$	43,832
Options expired		(885	)		(52,480	)		(555	)		(43,832	)
Options closed		(1,975	)		(299,340	)		–			–
Outstanding options,at end of period		220		$	21,334			–			–
	Mid-Cap Value Equity
	Calls						Puts
	Contracts			Premiums Received			Contracts			Premiums Received
Outstanding options,beginning of period		–			–			1,750		$	55,574
Options written		15,155		$	363,752			1,000			62,976
Options expired		(8,905	)		(220,838	)		(2,250	)		(65,063	)
Options closed		(6,250	)		(142,914	)		(500	)		(53,487	)
Outstanding options,at end of period.		–			–			–			–
	Small Cap Growth Equity
	Calls						Puts
	Contracts			Premiums Received			Contracts			Premiums Received
Outstanding options,beginning of period		–			–			–			–
Options written		14,897		$	1,641,740			2,360		$	186,383
Options expired		(5,453	)		(265,526	)		(2,360	)		(186,383	)
Options closed		(8,508	)		(1,285,447	)		–			–
Outstanding options,at end of period		936		$	90,767			–			–

5. Income Tax Information:

As of September 30, 2011, the Funds had capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates as follows:

Expires September 30,	Mid-Cap Growth Equity		Mid-Cap Value Equity
2017	$	7,635,980	$	35,789,825
2018		14,650,983		90,011,532
Total	$	22,286,963	$	125,801,357

Under the Regulated Investment Company Modernization Act of 2010, capital losses incurred by the Funds after September 30, 2011 will not be subject to expiration. In addition any such losses must be utilized prior to the losses incurred in pre-enactment taxable years.

As of March 31, 2012, gross unrealized appreciation and gross unrealized depreciation based on cost for federal income tax purposes were as follows:

	Mid-Cap Growth Equity			Mid-Cap Value Equity			Small Cap Growth Equity
Tax cost	$	324,234,263		$	970,884,546		$	1,687,784,749
Gross unrealized appreciation	$	70,235,381		$	128,715,684		$	297,245,067
Gross unrealized depreciation		(8,128,962	)		(10,374,463	)		(48,532,945	)
Net unrealized appreciation	$	62,106,419		$	118,341,221		$	248,712,122

6. 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. 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 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 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 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 six months ended March 31, 2012.

7. Concentration, Market and Credit Risk:

In the normal course of business, the Funds invest in securities and 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

    BLACKROCK FUNDS     MARCH 31, 2012 41

Notes to Financial Statements (continued)

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 Funds’ Statements of Assets and Liabilities, less any collateral held by the Funds.

As of March 31, 2012, Mid-Cap Growth Equity invested a significant portion of its assets in securities in the information technology sector. Changes in economic conditions affecting the information technology

sector would have a greater impact on Mid-Cap Growth Equity and could affect the value, income and/or liquidity of positions in such securities.

As of March 31, 2012, Mid-Cap Value Equity invested a significant portion of its assets in securities in the financials sector. Changes in economic conditions affecting the financials sector would have a greater impact on Mid-Cap Value Equity and could affect the value, income and/or liquidity of positions in such securities.

As of March 31, 2012, Small Cap Growth Equity invested a significant portion of its assets in securities in the information technology and health care sectors. Changes in economic conditions affecting the information technology and health care sectors would have a greater impact on Small Cap Growth Equity and could affect the value, income and/or liquidity of positions in such securities.

8. Capital Shares Transactions:

Transactions in capital shares for each class were as follows:	Six Months Ended March 31, 2012						Year Ended September 30, 2011
Mid-Cap Growth Equity	Shares			Amount			Shares			Amount
Institutional
Shares issued in the reorganization1		–			–			334,572		$	3,832,627
Shares sold		235,098		$	3,103,853			168,193			2,166,903
Shares redeemed		(349,829	)		(4,439,974	)		(943,989	)		(11,724,048	)
Net decrease		(114,731	)	$	(1,336,121	)		(441,224	)	$	(5,724,518	)
Service
Shares sold		29,221		$	360,475			53,858		$	659,568
Shares redeemed		(8,836	)		(112,200	)		(16,917	)		(201,967	)
Net increase		20,385		$	248,275			36,941		$	457,601
Investor A
Shares issued in the reorganization1		–			–			7,278,873		$	76,262,939
Shares sold and automatic conversion of shares		1,030,470		$	12,481,642			821,451			9,555,528
Shares redeemed		(2,469,157	)		(29,057,610	)		(2,738,897	)		(31,713,217	)
Net increase (decrease)		(1,438,687	)	$	(16,575,968	)		5,361,427		$	54,105,250
Investor B
Shares issued in the reorganization1		–			–			301,369		$	2,763,072
Shares sold		3,381		$	35,309			4,104			42,022
Shares redeemed and automatic conversion of shares		(240,797	)		(2,485,158	)		(356,866	)		(3,666,901	)
Net decrease		(237,416	)	$	(2,449,849	)		(51,393	)	$	(861,807	)
Investor C
Shares issued in the reorganization1		–			–			781,046		$	7,166,019
Shares sold		121,850		$	1,250,736			143,308			1,461,945
Shares redeemed		(177,035	)		(1,839,072	)		(443,743	)		(4,626,917	)
Net increase (decrease)		(55,185	)	$	(588,336	)		480,611		$	4,001,047
1See Note 1 regarding the reorganization.

42     BLACKROCK FUNDS     MARCH 31, 2012

Notes to Financial Statements (continued)

	Six Months Ended March 31, 2012						Year Ended September 30, 2011
Mid-Cap Growth Equity (concluded)	Shares			Amount			Shares			Amount
Class R
Shares issued in the reorganization1		–			–			222,297		$	2,324,050
Shares sold		54,552		$	647,989			197,272			2,255,026
Shares redeemed		(107,860	)		(1,250,814	)		(307,256	)		(3,617,723	)
Net increase (decrease)		(53,308	)	$	(602,825	)		112,313		$	961,353
Total net increase (decrease)		(1,878,942	)	$	(21,304,824	)		5,498,675		$	52,938,926
Mid-Cap Value Equity
Institutional
Shares sold		2,589,413		$	29,411,551			6,509,862		$	77,245,215
Shares issued in reinvestment of dividends		137,628			1,496,015			128,801			1,469,614
Shares redeemed		(7,168,059	)		(80,607,872	)		(6,077,324	)		(72,257,371	)
Net increase (decrease)		(4,441,018	)	$	(49,700,306	)		561,339		$	6,457,458
Service
Shares sold		19,050		$	212,619		$	52,134		$	599,387
Shares issued in reinvestment of dividends		671			7,167			312			3,505
Shares redeemed		(11,819	)		(131,537	)		(17,365	)		(202,577	)
Net increase		7,902		$	88,249			35,081		$	400,315
Investor A
Shares sold and automatic conversion of shares		3,054,030		$	33,875,661			8,354,777		$	95,689,822
Shares issued in reinvestment of dividends		341,640			3,604,318			448,160			4,965,604
Shares redeemed		(8,448,699	)		(93,614,556	)		(18,072,495	)		(206,259,093	)
Net decrease		(5,053,029	)	$	(56,134,577	)		(9,269,558	)	$	(105,603,667	)
Investor B
Shares sold		8,019		$	80,976			26,595		$	270,530
Shares issued in reinvestment of dividends and distributions		–			–			3,305			33,308
Shares redeemed and automatic conversion of shares		(844,759	)		(8,465,429	)		(1,542,686	)		(15,892,141	)
Net decrease		(836,740	)	$	(8,384,453	)		(1,512,786	)	$	(15,588,303	)
Investor C
Shares sold		363,737		$	3,654,168			1,304,791		$	13,523,538
Shares issued in reinvestment of dividends and distributions		–			–			25,130			252,303
Shares redeemed		(1,588,399	)		(15,858,266	)		(4,328,420	)		(44,713,990	)
Net decrease		(1,224,662	)	$	(12,204,098	)		(2,998,499	)	$	(30,938,149	)

¹ See Note 1 regarding the reorganization.

    BLACKROCK FUNDS     MARCH 31, 2012 43

Notes to Financial Statements (concluded)

	Six Months Ended March 31, 2012						Year Ended September 30, 2011
Mid-Cap Value Equity (concluded)	Shares			Amount			Shares			Amount
Class R
Shares sold		11,593		$	133,615			41,377		$	503,720
Shares issued in reinvestment of dividends		248			2,690			499			5,689
Shares redeemed		(10,609	)		(126,788	)		(27,177	)		(317,648	)
Net increase		1,232		$	9,517			14,699		$	191,761
Total net decrease		(11,546,315	)	$	(126,325,668	)		(13,169,724	)	$	(145,080,585	)
Small Cap Growth Equity
Institutional
Shares sold		6,925,459		$	170,836,933			18,551,956		$	439,584,953
Shares issued in reinvestment of distributions		1,043,022			24,469,310			–			–
Shares redeemed		(14,716,127	)		(360,698,589	)		(11,662,254	)		(278,499,643	)
Net increase (decrease)		(6,747,646	)	$	(165,392,346	)		6,889,702		$	161,085,310
Service
Shares sold		268,737		$	6,185,778			471,352		$	10,611,161
Shares issued in reinvestment of distributions		28,033			618,413			–			–
Shares redeemed		(365,263	)		(8,320,227	)		(1,704,268	)		(35,739,318	)
Net decrease		(68,493	)	$	(1,516,036	)		(1,232,916	)	$	(25,128,157	)
Investor A
Shares sold and automatic conversion of shares		6,306,514		$	137,479,548			3,960,009		$	86,832,105
Shares issued in reinvestment of distributions		338,833			7,223,935			–			–
Shares redeemed		(3,885,237	)		(86,479,180	)		(5,506,578	)		(120,110,671	)
Net increase (decrease)		2,760,110		$	58,224,303			(1,546,569	)	$	(33,278,566	)
Investor B
Shares sold		3,607		$	66,726			16,430		$	317,768
Shares issued in reinvestment of distributions		3,114			56,765			–			–
Shares redeemed and automatic conversion of shares		(19,427	)		(362,309	)		(55,590	)		(1,050,685	)
Net decrease		(12,706	)	$	(238,818	)		(39,160	)	$	(732,917	)
Investor C
Shares sold		138,958		$	2,716,636			367,663		$	6,971,644
Shares issued in reinvestment of distributions		45,987			837,427			–			–
Shares redeemed		(236,026	)		(4,446,443	)		(896,784	)		(17,118,814	)
Net decrease		(51,081	)	$	(892,380	)		(529,121	)	$	(10,147,170	)
Total net increase (decrease)		(4,119,816	)	$	(109,815,277	)		3,541,936		$	91,798,500

Prior to April 1, 2011, there was a 2% redemption fee on shares of Small Cap Growth Equity redeemed or exchanged that have been held 30 days or less. The redemption fees were collected and retained by the Fund for the benefit of the remaining shareholders. The redemption fees were recorded as a credit to paid-in capital. Effective April 1, 2011, the redemption fee was terminated and is no longer charged by the Fund.

9. Subsequent Events:

Management has evaluated the impact of all subsequent events on the Funds through the date the financial statements were issued and has determined that there were no subsequent events requiring adjustment or additional disclosure in the financial statements.

44     BLACKROCK FUNDS     MARCH 31, 2012

Officers and Trustees

Ronald W. Forbes, Co-Chairman of the Board and Trustee

Rodney D. Johnson, Co-Chairman of the Board and Trustee

Paul L. Audet, Trustee

David O. Beim, Trustee

Henry Gabbay, Trustee

Dr. Matina S. Horner, Trustee

Herbert I. London, Trustee

Cynthia A. Montgomery, Trustee

Joseph P. Platt, Trustee

Robert C. Robb, Jr., Trustee

Toby Rosenblatt, Trustee

Kenneth L. Urish, Trustee

Frederick W. Winter, Trustee

John M. Perlowski, President and Chief Executive Officer

Richard Hoerner, CFA, Vice President

Brendan Kyne, Vice President

Simon Mendelson, Vice President

Christopher Stavrakos, CFA, Vice President

Neal Andrews, Chief Financial Officer

Jay Fife, Treasurer

Brian Kindelan, Chief Compliance Officer and Anti-Money Laundering Officer

Ira P. Shapiro, Secretary

Investment Advisor and Co-Administrator

BlackRock Advisors, LLC

Wilmington, DE 19809

Accounting Agent, Co-Administrator and Transfer Agent

BNY Mellon Investment Servicing (US) Inc.

Wilmington, DE 19809

Custodian

The Bank of New York Mellon

New York, NY 10286

Distributor

BlackRock Investments, LLC

New York, NY 10022

Legal Counsel

Sidley Austin LLP

New York, NY 10019

Independent Registered Public Accounting Firm

Deloitte & Touche LLP

Philadelphia, PA 19103

Address of the Trust

100 Bellevue Parkway

Wilmington, DE 19809

    BLACKROCK FUNDS     MARCH 31, 2012 45

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 funds, 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.

46     BLACKROCK FUNDS     MARCH 31, 2012

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.

    BLACKROCK FUNDS     MARCH 31, 2012 47

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 Dynamic Equity Fund	BlackRock Mid-Cap Value 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 Russell 1000 Index Fund
BlackRock China Fund	BlackRock India Fund	BlackRock Science & Technology
BlackRock Commodity Strategies Fund	BlackRock International Fund	Opportunities Portfolio
BlackRock Emerging Markets Fund	BlackRock International Index Fund	BlackRock Small Cap Growth Equity Portfolio
BlackRock Emerging Markets Long/Short	BlackRock International Opportunities Portfolio	BlackRock Small Cap Growth Fund II
Equity Fund	BlackRock Large Cap Core Fund	BlackRock Small Cap Index Fund
BlackRock Energy & Resources Portfolio	BlackRock Large Cap Core Plus Fund	BlackRock S&P 500 Index Fund
BlackRock Equity Dividend Fund	BlackRock Large Cap Growth Fund	BlackRock S&P 500 Stock Fund
BlackRock EuroFund	BlackRock Large Cap Value Fund	BlackRock U.S. Opportunities Portfolio
BlackRock Focus Growth Fund	BlackRock Latin America Fund	BlackRock Value Opportunities Fund
BlackRock Global Allocation Fund	BlackRock Managed Volatility Portfolio†	BlackRock World Gold Fund
BlackRock Global Dividend Income Portfolio†	BlackRock Mid-Cap Growth Equity Portfolio
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 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 Multi-Sector Bond Portfolio
Municipal Bond 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	BlackRock Lifecycle	Prepared 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.

48     BLACKROCK FUNDS     MARCH 31, 2012

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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 the Funds 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.

EUITY3-3/12-SAR             

March 31, 2012

Semi-Annual Report (Unaudited)

BlackRock Funds^SM

u BlackRock Global Opportunities Portfolio

u BlackRock Health Sciences Opportunities Portfolio

u BlackRock International Opportunities Portfolio

u BlackRock Science & Technology Opportunities Portfolio

u BlackRock U.S. Opportunities Portfolio

        Not FDIC Insured   ¡   No Bank Guarantee  ¡  May Lose Value         

Table of Contents

	Page
Dear Shareholder	3
Semi-Annual Report:
Fund Summaries	4
About Fund Performance	14
Disclosure of Expenses	15
Derivative Financial Instruments	15
Financial Statements:
Schedules of Investments	16
Statements of Assets and Liabilities	33
Statements of Operations	35
Statements of Changes in Net Assets	36
Financial Highlights	38
Notes to Financial Statements	53
Officers and Trustees	69
Additional Information	70
A World-Class Mutual Fund Family	72

2     BLACKROCK FUNDS     MARCH 31, 2012

Dear Shareholder

Twelve months ago, risk assets were charging forward, only to be met with a sharp reversal in May 2011 when escalating political strife in Greece rekindled fears about sovereign debt problems spreading across Europe. Concurrently, global economic indicators signaled that the recovery had slowed. Confidence was further shaken by the prolonged debt ceiling debate in Washington, DC. On August 5, 2011, Standard & Poor’s made history by downgrading the US government’s credit rating, and turmoil erupted in financial markets around the world. Extraordinary levels of volatility persisted in the months that followed as the European debt crisis intensified. Macro news flow became a greater influence on trading decisions than the fundamentals of the securities traded, resulting in high correlations between asset prices. By the end of the third quarter, equity markets had fallen nearly 20% from their April peak while safe-haven assets such as US Treasuries and gold had rallied to historic highs.

October brought enough positive economic data to assuage fears of a global double-dip recession. Additionally, European leaders began to show progress toward stemming the region’s debt crisis. Investors began to reenter the markets, putting risk assets on the road to recovery. Improving investor sentiment carried over into the first several months of 2012. Debt problems in Europe stabilized as policymakers secured a bailout plan for Greece and completed the nation’s debt restructuring without significant market disruptions. While concerns about slowing growth in China and a European recession weighed on the outlook for the global economy, an acceleration of the US recovery lifted sentiment. Several consecutive months of stronger jobs data signaled solid improvement in the US labor market, a pivotal factor for economic growth. Meanwhile, the European Central Bank revived financial markets with additional liquidity through its long-term refinancing operations. The improving market conditions and generally better-than-expected economic news lured investors still holding cash on the sidelines back to risk assets. Stocks, commodities and high yield bonds rallied through the first two months of the year while rising Treasury yields pressured higher-quality fixed income assets. The rally softened in late March, however, as concerns about slowing growth in China were refueled by negative signals from the world’s second-largest economy. Additionally, concerns over the European debt crisis resurfaced given uncertainty around policies for sovereign debt financing in peripheral countries and rising yields in Portugal and Spain.

Thanks in large part to an exceptionally strong first quarter of 2012, risk assets, including equities and high yield bonds, posted solid returns for the 6-month period ended March 31, 2012. On a 12-month basis, US large-cap stocks and high yield bonds delivered positive results, while small-cap stocks finished in slightly negative territory. International and emerging markets, which experienced significant downturns in 2011, lagged the broader rebound. Fixed income securities experienced mixed results, given recent volatility in yields. US Treasury bonds performed particularly well for the 12-month period; however, an early-2012 sell-off resulted in a negative return for the 6-month period. Municipal bonds staged a solid advance over the past year. Continued low short-term interest rates kept yields on money market securities near their all-time lows.

While markets have improved in recent months, considerable headwinds remain. Europe faces a prolonged recession and the financial situations in Italy, Portugal and Spain remain worrisome. Higher oil and gasoline prices along with slowing growth in China and other emerging-market countries weigh heavily on the future of the global economy. But, we believe that with these challenges come opportunities. We remain committed to working with you and your financial professional to identify actionable ideas for your portfolio. We encourage you to visit www.blackrock.com/newworld for more information.

Sincerely,

Rob Kapito

President, BlackRock Advisors, LLC

“While markets have improved in recent months, considerable headwinds remain.”

Rob Kapito

President, BlackRock Advisors, LLC

Total Returns as of March 31, 2012

	6-month			12-month
US large cap equities (S&P 500® Index)		25.89	%		8.54	%
US small cap equities (Russell 2000® Index)		29.83			(0.18	)
International equities (MSCI Europe, Australasia, Far East Index)		14.56			(5.77	)
Emerging market equities (MSCI Emerging Markets Index)		19.12			(8.81	)
3-month Treasury bill (BofA Merrill Lynch 3-Month Treasury Bill Index)		0.01			0.06
US Treasury securities (BofA Merrill Lynch 10- Year US Treasury Index)		(1.05	)		14.92
US investment grade bonds (Barclays US Aggregate Bond Index)		1.43			7.71
Tax-exempt municipal bonds (S&P Municipal Bond Index)		4.16			12.56
US high yield bonds (Barclays US Corporate High Yield 2% Issuer Capped Index)		12.17			6.43

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 Summary as of March 31, 2012	BlackRock Global Opportunities Portfolio
Investment Objective

BlackRock Global Opportunities Portfolio’s (the “Fund”) investment objective is to provide long-term capital appreciation.

Portfolio Management Commentary

  How did the Fund perform?

— For the six-month period ended March 31, 2012, the Fund posted a positive double-digit return, but underperformed its benchmark, the MSCI All Country World Index (ACWI).

  What factors influenced performance?

— Relative to the benchmark index, the Fund benefited most from stock selection in the industrials sector. The Fund’s holdings in industrial machinery delivered strong returns, more than doubling the returns on the segment as represented in the benchmark index, due to the Fund’s bias toward US companies. Stock selection within information technology (“IT”) was another significant source of positive performance, particularly within technology hardware & equipment, where F5 Networks, Inc. was a notable contributor. Positioning within financials, predominately in regional banks, also had a positive impact.

Global central banks provided financial markets with liquidity during the six-month period and investors increased their appetite for risk. In this environment, the more economically sensitive sectors, including IT, consumer discretionary and industrials, outperformed the traditionally defensive consumer staples, telecommunication services, health care and utilities segments. Relative to the benchmark index, the Fund’s underweight in industrials and overweight in consumer staples detracted

from returns. Other overweight positions that did not perform well during the period include US-based electric utilities, wireless telecom providers and select companies within the integrated oil & gas industry. However, the Fund continues to maintain these positions as longer-term investments.

  Describe recent portfolio activity.

— During the six-month period, the Fund added to its exposure in the industrials sector by closing its underweight position in capital goods, and increased its weighting in consumer discretionary, particularly in the retail space. These additions were offset by reductions in consumer staples and integrated telecommunication services.

  Describe portfolio positioning at period end.

— At period end, the Fund’s positioning reflected several key characteristics. For one, given the number of headwinds faced by equity markets and the potential severity of the risks they impose, the Fund’s holdings were diversified in a manner that reduces the Fund’s vulnerability to any particular development or macro event. Additionally, the Fund’s holdings did not reflect an intentional bias toward any particular sector or security characteristic. The Fund’s overall portfolio risk was derived more from the individual security risks associated with its holdings than from systematic risks (i.e., risks that impact an entire market or market segment).

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.

Portfolio Information

Ten Largest Holdings	Percent of Long-Term Investments
Exxon Mobil Corp.		2	%
Apple, Inc.		2
JPMorgan Chase & Co.		1
British American Tobacco Plc		1
PepsiCo, Inc.		1
Reynolds American, Inc.		1
Royal Dutch Shell Plc, A Shares		1
Google, Inc., Class A		1
Stanley Black & Decker, Inc.		1
Raytheon Co.		1

Geographic Allocation	Percent of Long-Term Investments
United States		56	%
United Kingdom		7
Japan		5
Germany		4
France		3
Canada		3
Switzerland		2
Netherlands		2
South Korea		2
Hong Kong		2
Other1		14

¹ Other includes a 1% or less investment in each of the following countries: China, Ireland, Brazil, Australia, Mexico, Italy, Belgium, Singapore, Norway, Taiwan, South Africa, Argentina, India, Indonesia, Israel, Sweden, Spain and Luxembourg.

4     BLACKROCK FUNDS     MARCH 31, 2012

BlackRock Global Opportunities Portfolio

Total Return Based on a $10,000 Investment

¹    Assuming maximum sales charges, if any, transaction costs and other operating expenses, including investment advisory fees. Institutional Shares do not have a sales charge.

²    The Fund will invest, under normal market conditions, at least 75% of its total assets in global equity securities of any market capitalization, selected for their with above-average return potential. The Fund may invest up to 25% of its total assets in stocks of issuers in emerging market countries. The Fund may also invest up to 25% of its total assets in global fixed income securities, including emerging market debt.

³    This unmanaged market capitalization-weighted index is made up of equities from 45 countries, including the United States.

⁴    Commencement of operations.

Performance Summary for the Period Ended March 31, 2012

				Average Annual Total Returns5
				1 Year						5 Years						Since Inception6
	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
Institutional		19.12	%		(4.95	)%		N/A			0.74	%		N/A			3.06	%		N/A
Investor A		19.06			(5.21	)		(10.15	)%		0.45			(0.63	)%		2.78			1.89	%
Investor B		18.46			(6.02	)		(10.25	)		(0.29	)		(0.67	)		2.03			2.03
Investor C		18.54			(5.95	)		(6.90	)		(0.32	)		(0.32	)		2.01			2.01
Class R		18.83			(5.49	)		N/A			0.09			N/A			2.40			N/A
MSCI All Country World Index (ACWI)		19.91			(0.73	)		N/A			(0.19	)		N/A			2.58			N/A

⁵  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 14 for a detailed description of share classes, including any related sales charges and fees.

⁶  The Fund commenced operations on January 31, 2006.

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

Past performance is not indicative of future results.

Expense Example

	Actual									Hypothetical8
	Beginning Account Value October 1, 2011			Ending Account Value March 31, 2012			Expenses Paid During the  Period7			Beginning Account Value October 1, 2011			Ending Account Value March 31, 2012			Expenses Paid During the Period7		Annualized Expense Ratio
Institutional		$	1,000.00		$	1,191.20		$	5.81		$	1,000.00		$	1,019.70		$  5.35		1.06	%
Investor A		$	1,000.00		$	1,190.60		$	7.28		$	1,000.00		$	1,018.35		$  6.71		1.33	%
Investor B		$	1,000.00		$	1,184.60		$	11.91		$	1,000.00		$	1,014.10		$10.98		2.18	%
Investor C		$	1,000.00		$	1,185.40		$	11.69		$	1,000.00		$	1,014.30		$10.78		2.14	%
Class R		$	1,000.00		$	1,188.30		$	9.25		$	1,000.00		$	1,016.55		$  8.52		1.69	%

⁷  For each class of the Fund, expenses are equal to the annualized expense ratio for the class, multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period shown).

⁸  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.

See “Disclosure of Expenses” on page 15 for further information on how expenses were calculated.

    BLACKROCK FUNDS     MARCH 31, 2012 5

Fund Summary as of March 31, 2012 BlackRock Health Sciences Opportunities Portfolio

Investment Objective

BlackRock Health Sciences Opportunities Portfolio’s (the “Fund”) investment objective is to provide long-term growth of capital.

Portfolio Management Commentary

  How did the Fund perform?

— For the six-month period ended March 31, 2012, the Fund posted a positive double-digit return, but underperformed its benchmark, the Russell 3000^® Health Care Index, and the broad-market S&P 500^® Index. The following discussion of relative performance pertains to the Russell 3000^® Health Care Index.

  What factors influenced performance?

— On an industry basis, the key contributors to performance relative to the Russell 3000^® Health Care Index were the Fund’s underweight allocation to pharmaceuticals and overweight in biotechnology. Stock selection in life sciences & tools and health care technology also had a positive impact.

— The primary detractor from the Fund’s performance relative to the benchmark index was the Fund’s overweight allocation and stock selection in the health care providers & services industry. More specifically, an underweight allocation and stock selection in both the health care services and managed health care segments hampered returns, as did an overweight and stock selection in health care distributors. Also having a negative impact was stock selection in the health care equipment & supplies and pharmaceuticals industries.

  Describe recent portfolio activity.

— Early in the six-month period, the Fund continued to reduce its overweight position in health care equipment & supplies. The Fund reduced

its weighting in the health care providers & services industry, and slightly added to its biotechnology allocation. The Fund added exposure to pharmaceuticals while remaining materially underweight in the industry relative to the large allocation in the benchmark index. However, in the middle of the period, the Fund reduced its pharmaceuticals weighting given recent price appreciation in the space and a less favorable risk reward profile. The proceeds of these sales were invested in the health care equipment & supplies, health care providers & services and biotechnology industries.

  Describe portfolio positioning at period end.

— Fund management views health care valuations as attractive, while noting that political uncertainty stemming from the Supreme Court’s review of the Health Care Reform legislation and the pending US presidential election continues to weigh on the sector. As of period end, the Fund continued to maintain a focus on innovative companies with products or services that address an unmet medical need or significantly reduce the costs associated with a current product or procedure. The Fund held limited exposure to companies that are reliant on government reimbursement or vulnerable to broad trends in health care utilization improvement.

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.

Portfolio Information

Ten Largest Holdings	Percent of Long-Term Investments
UnitedHealth Group, Inc.		4	%
Johnson & Johnson		3
Alexion Pharmaceuticals, Inc.		3
Amgen, Inc.		3
Pfizer, Inc.		3
Biogen Idec, Inc.		3
WellPoint, Inc.		3
Allergan, Inc.		3
Gilead Sciences, Inc.		3
Merck & Co., Inc.		3

Industry Allocation	Percent of Long-Term Investments
Pharmaceuticals		28	%
Biotechnology		24
Health Care Providers & Services		21
Health Care Equipment & Supplies		18
Life Sciences Tools & Services		5
Industrial Conglomerates		2
Health Care Technology		1
Food & Staples Retailing		1

For Fund compliance purposes, the Fund’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by Fund management. These definitions may not apply for purposes of this report, which may combine industry sub-classifications for reporting ease.

6     BLACKROCK FUNDS     MARCH 31, 2012

BlackRock Health Sciences Opportunities Portfolio

Total Return Based on a $10,000 Investment

¹    Assuming maximum sales charges, if any, transaction costs and other operating expenses, including investment advisory fees. Institutional Shares do not have a sales charge.

²    Under normal market conditions, the Fund invests at least 80% of its total assets in equity securities of companies in health sciences and related industries.

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    An unmanaged index representative of companies involved in medical services or health care in the Russell 3000^® Index, which is comprised of the 3,000 largest US companies as determined by total market capitalization.

Performance Summary for the Period Ended March 31, 2012

				Average Annual Total Returns5
				1 Year						5 Years						10 Years
	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
Institutional		18.40	%		9.39	%		N/A			8.85	%		N/A			12.24	%		N/A
Service		18.28			9.10			N/A			8.51			N/A			11.92			N/A
Investor A		18.25			9.06			3.34	%		8.51			7.35	%		11.89			11.29	%
Investor B		17.74			8.19			3.69			7.64			7.34			11.21			11.21
Investor C		17.81			8.30			7.30			7.73			7.73			11.10			11.10
Class R		17.99			8.60			N/A			8.00			N/A			11.36			N/A
S&P 500® Index		25.89			8.54			N/A			2.01			N/A			4.12			N/A
Russell 3000® Health Care Index		21.21			14.72			N/A			5.23			N/A			3.82			N/A

⁵  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 14 for a detailed description of share classes, including any related sales charges and fees.

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

Past performance is not indicative of future results.

Expense Example

	Actual									Hypothetical7
	Beginning Account Value October 1, 2011			Ending Account Value March 31, 2012			Expenses Paid During the  Period6			Beginning Account Value October 1, 2011			Ending Account Value March 31, 2012			Expenses Paid During the  Period6			Annualized Expense Ratio
Institutional		$	1,000.00		$	1,184.00		$	5.35		$	1,000.00		$	1,020.10		$	4.95		0.98	%
Service		$	1,000.00		$	1,182.80		$	6.93		$	1,000.00		$	1,018.65		$	6.41		1.27	%
Investor A		$	1,000.00		$	1,182.50		$	6.98		$	1,000.00		$	1,018.60		$	6.46		1.28	%
Investor B		$	1,000.00		$	1,177.40		$	11.38		$	1,000.00		$	1,014.55		$	10.53		2.09	%
Investor C		$	1,000.00		$	1,178.10		$	10.94		$	1,000.00		$	1,014.95		$	10.13		2.01	%
Class R		$	1,000.00		$	1,179.90		$	9.10		$	1,000.00		$	1,016.65		$	8.42		1.67	%

⁶  For each class of the Fund, expenses are equal to the annualized expense ratio for the class, multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period shown).

⁷  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.

See “Disclosure of Expenses” on page 15 for further information on how expenses were calculated.

    BLACKROCK FUNDS     MARCH 31, 2012 7

Fund Summary as of March 31, 2012 BlackRock International Opportunities Portfolio

Investment Objective

BlackRock International Opportunities Portfolio’s (the “Fund”) investment objective is to seek long-term capital appreciation.

Portfolio Management Commentary

  How did the Fund perform?

— For the six-month period ended March 31, 2012, the Fund outperformed its benchmark, the MSCI All Country World Index (ACWI) Ex-US.

  What factors influenced performance?

— Relative to the benchmark, the Fund’s performance benefited from strong stock selection in eight out of ten sectors during the period. The largest contribution to the Fund’s performance relative to the benchmark came from IT, where holdings in software & services delivered strong returns. The Fund’s preference for emerging market-based internet software companies had a positive impact. Additionally, an overweight in semiconductors proved beneficial as the industry posted strong returns due to an inventory correction and growing demand. Stock selection was also beneficial in consumer discretionary, utilities, financials, health care, materials, consumer staples and energy.

— Global central banks provided financial markets with liquidity during the six-month period and investors increased their appetite for risk. In this environment, the more economically sensitive sectors, including IT, consumer discretionary and industrials, outperformed the traditionally defensive consumer staples, telecommunication services and utilities segments. Relative to the benchmark index, the Fund’s underweights to industrials and financials and overweight in consumer staples detracted from performance. The Fund held an allocation to cash as a means to

reduce the impact on market volatility on the portfolio. As equity markets advanced during the period, the cash position hindered Fund returns. Stock selection in telecommunication services and industrials also had a negative impact on performance.

  Describe recent portfolio activity.

— During the six-month period, the Fund added to its exposure in the industrials sector by closing its underweight in capital goods. The Fund increased its materials allocation via investments in fertilizers, gold and paper products, and increased its weighting in consumer discretionary, particularly in the retail space. These additions were offset by reductions in consumer staples and telecommunication services.

  Describe portfolio positioning at period end.

— At period end, the Fund’s positioning reflected several key characteristics. For one, given the number of headwinds faced by equity markets and the potential severity of the risks they impose, the Fund’s holdings were diversified in a manner that reduces the Fund’s vulnerability to any particular development or macro event. Additionally, the Fund’s holdings did not reflect an intentional bias toward any particular sector or security characteristic. The Fund’s overall portfolio risk was derived more from the individual security risks associated with its holdings than from systematic risks (i.e., risks that impact an entire market or market segment).

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.

Portfolio Information

Ten Largest Holdings	Percent of Long-Term Investments
Nestle SA		2	%
Royal Dutch Shell Plc, A Shares		2
British American Tobacco Plc		2
Australia & New Zealand Banking Group Ltd		1
Banco Bradesco SA, Preference Shares		1
HSBC Holdings Plc		1
National Grid Plc		1
BP Plc		1
Sanofi SA		1
IHI Corp.		1

Geographic Allocation	Percent of Long-Term Investments
United Kingdom		17	%
Japan		13
Germany		8
Switzerland		7
Canada		5
Netherlands		4
France		4
Brazil		4
Australia		4
Hong Kong		4
Singapore		3
China		3
Ireland		3
South Korea		2
Taiwan		2
Sweden.		2
Italy		2
Spain		2
Other1		11

¹  Other includes a 1% or less investment in each of the following countries: Mexico, Norway, Argentina, Indonesia, South Africa, Israel, Belgium, Luxembourg, Bermuda, India, Malaysia, United States and Gibraltar.

8     BLACKROCK FUNDS     MARCH 31, 2012

BlackRock International Opportunities Portfolio

Total Return Based on a $10,000 Investment

¹    Assuming maximum sales charges, if any, transaction costs and other operating expenses, including investment advisory fees. Institutional Shares do not have a sales charge.

²    The Fund, under normal market conditions, invests at least 80% of its net assets in equity securities issued by foreign companies of any market capitalization. The Fund may invest up to 40% of its net assets in stocks of issuers in emerging market countries.

³    This market capitalization weighted index is designed to provide a broad measure of stock performance throughout the world, with the exception of US-based companies. The index includes both developed and emerging markets.

Performance Summary for the Period Ended March 31, 2012

				Average Annual Total Returns4
				1 Year						5 Years						10 Years
	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
Institutional		16.96	%		(7.16	)%		N/A			(1.65	)%		N/A			10.53	%		N/A
Service		16.69			(7.58	)		N/A			(2.01	)		N/A			10.18			N/A
Investor A		16.84			(7.41	)		(12.26	)%		(1.93	)		(2.98	)%		10.17			9.57	%
Investor B		16.36			(8.12	)		(12.22	)		(2.70	)		(3.02	)		9.49			9.49
Investor C		16.35			(8.14	)		(9.05	)		(2.69	)		(2.69	)		9.33			9.33
MSCI All Country World Index (ACWI) Ex-US		15.37			(7.18	)		N/A			(1.56	)		N/A			7.28			N/A

⁴  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 14 for a detailed description of share classes, including any related sales charges and fees.

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

Past performance is not indicative of future results.

Expense Example

	Actual									Hypothetical6
	Beginning Account Value October 1, 2011			Ending Account Value March 31, 2012			Expenses Paid During the  Period5			Beginning Account Value October 1, 2011			Ending Account Value March 31, 2012			Expenses Paid During the  Period5			Annualized Expense Ratio
Institutional		$	1,000.00		$	1,169.60		$	7.05		$	1,000.00		$	1,018.50		$	6.56		1.30	%
Service		$	1,000.00		$	1,166.90		$	9.70		$	1,000.00		$	1,016.05		$	9.02		1.79	%
Investor A		$	1,000.00		$	1,168.40		$	8.40		$	1,000.00		$	1,017.25		$	7.82		1.55	%
Investor B		$	1,000.00		$	1,163.60		$	12.82		$	1,000.00		$	1,013.15		$	11.93		2.37	%
Investor C		$	1,000.00		$	1,163.50		$	12.71		$	1,000.00		$	1,013.25		$	11.83		2.35	%

⁵  For each class of the Fund, expenses are equal to the annualized expense ratio for the class, multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period shown).

⁶  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.

See “Disclosure of Expenses” on page 15 for further information on how expenses were calculated.

    BLACKROCK FUNDS     MARCH 31, 2012 9

Fund Summary as of March 31, 2012 BlackRock Science & Technology Opportunities Portfolio

Investment Objective

BlackRock Science & Technology Opportunities Portfolio’s (the “Fund”) investment objective is to provide long-term capital appreciation.

Portfolio Management Commentary

  How did the Fund perform?

— For the six-month period, the Fund posted a positive double-digit return, but underperformed its benchmark, the NYSE Arca Tech 100 Index^SM.

  What factors influenced performance?

— The Fund benefited from stock selection in IT where network security solutions providers Fortinet, Inc. and Imperva, Inc. and software provider Temenos Group AG were strong performers. The Fund continued to favor the strategically important areas of network security and business analytics given their strong growth-rate projections relative to personal computers, notebooks and handsets. The Fund’s preference for growth in smartphones over feature phones also had a positive impact. In particular, an investment in Avago Technologies Ltd., which supplies chips for smartphones, was a meaningful contributor in the first quarter of 2012. Outside of IT, the Fund’s underweight in health care versus the benchmark index proved beneficial.

— Conversely, the Fund’s underperformance was largely attributable to its industry allocations relative to the benchmark index. The Fund’s underweight to computer hardware-related names and overweights to software and semiconductor stocks detracted from relative returns for the period. Hardware stocks staged a sharp rebound, with many of the consumer-centric names like Apple, Inc. performing particularly well, and materially outperformed the software and semiconductor segments. Stock selection in each of these segments also had a negative impact on Fund performance.

  Describe recent portfolio activity.

— During the six-month period, the Fund increased exposure to software with additions in internet providers, application software and systems software. The Fund reduced its underweight in communications equipment, but remained cautious on hardware stocks overall. The Fund reduced the size of its position in Apple, Inc. in order to mitigate the negative-event risk associated with such a large, high-profile holding. Also during the period, the Fund reduced its allocation to the health care sector, which represented less than 2% of the Fund’s net assets as of period end.

  Describe portfolio positioning at period end.

— At period end, the Fund remained overweight in the IT sector relative to the NYSE Arca Tech 100 Index^SM, and underweight in health care. Within IT, the Fund’s positioning was biased toward particular themes. The Fund’s software holdings reflected a preference for the mission-critical nature of security and business analytics. In semiconductors, the Fund held companies with exposure to smartphones, with a particular focus on names that sell to the supply chain of industry leaders like Apple, Inc. and Samsung Electronics Co. Ltd. In computer hardware, the Fund held exposure to data storage given attractive long-term growth prospects.

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.

Portfolio Information

Ten Largest Holdings	Percent of Long-Term Investments
Apple, Inc.		9	%
QUALCOMM, Inc.		4
International Business Machines Corp.		3
Google, Inc., Class A		3
eBay, Inc.		3
Red Hat, Inc.		3
Cisco Systems, Inc.		3
MICROS Systems, Inc.		2
Intel Corp.		2
Accenture Plc, Class A		2

Industry Allocation	Percent of Long-Term Investments
Software		26	%
Semiconductors & Semiconductor Equipment		17
Internet Software & Services		14
Computers & Peripherals		14
IT Services		12
Communications Equipment		10
Diversified Consumer Services		2
Other1		5

¹  Other includes a 1% or less investment in each of the following industries: Electronic Equipment, Instruments & Components, Internet & Catalog Retail, HealthCare Equipment & Supplies, Biotechnology, Pharmaceuticals and Machinery.

For Fund compliance purposes, the Fund’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by Fund management. These definitions may not apply for purposes of this report, which may combine industry sub-classifications for reporting ease.

10     BLACKROCK FUNDS     MARCH 31, 2012

BlackRock Science & Technology Opportunities Portfolio

Total Return Based on a $10,000 Investment

¹    Assuming maximum sales charges, if any, transaction costs and other operating expenses, including investment advisory fees. Institutional Shares do not have a sales charge.

²    The Fund, under normal circumstances, invests at least 80% of its net assets in equity securities issued by US and non-US science and technology companies in all market capitalization ranges selected for their rapid and sustainable growth potential from the development, advancement and use of science and/or technology. The Fund may invest up to 25% of its net assets in emerging market countries.

³    A price-weighted index comprised of not more than 100 individual stocks listed on the NYSE, AMEX or NASDAQ. The index is modeled to represent a broad spectrum of companies engaged principally in manufacturing products and/or providing services within technology fields.

Performance Summary for the Period Ended March 31, 2012

				Average Annual Total Returns4
				1 Year						5 Years						10 Years
	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
Institutional		24.04	%		0.09	%		N/A			6.90	%		N/A			6.52	%		N/A
Service		23.92			0.00			N/A			6.57			N/A			6.20			N/A
Investor A		23.63			(0.30	)		(5.49	)%		6.47			5.33	%		6.07			5.50	%
Investor B		23.26			(1.18	)		(5.63	)		5.54			5.22			5.38			5.38
Investor C		23.29			(1.18	)		(2.17	)		5.52			5.52			5.20			5.20
Class R		23.61			(0.48	)		N/A			6.14			N/A			5.72			N/A
NYSE Arca Tech 100 IndexSM		31.13			14.26			N/A			9.07			N/A			7.30			N/A

⁴  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 14 for a detailed description of share classes, including any related sales charges and fees.

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

Past performance is not indicative of future results.

Expense Example

	Actual									Hypothetical6
	Beginning Account Value October 1, 2011			Ending Account Value March 31, 2012			Expenses Paid During the  Period5			Beginning Account Value October 1, 2011			Ending Account Value March 31, 2012			Expenses Paid During the  Period5			Annualized Expense Ratio
Institutional		$	1,000.00		$	1,240.40		$	7.79		$	1,000.00		$	1,018.05		$	7.01		1.39	%
Service		$	1,000.00		$	1,239.20		$	8.73		$	1,000.00		$	1,017.20		$	7.87		1.56	%
Investor A		$	1,000.00		$	1,236.30		$	9.73		$	1,000.00		$	1,016.30		$	8.77		1.74	%
Investor B		$	1,000.00		$	1,232.60		$	14.29		$	1,000.00		$	1,012.20		$	12.88		2.56	%
Investor C		$	1,000.00		$	1,232.90		$	14.63		$	1,000.00		$	1,011.90		$	13.18		2.62	%
Class R		$	1,000.00		$	1,236.10		$	10.90		$	1,000.00		$	1,015.25		$	9.82		1.95	%

⁵  For each class of the Fund, expenses are equal to the annualized expense ratio for the class, multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period shown).

⁶  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.

See “Disclosure of Expenses” on page 15 for further information on how expenses were calculated.

    BLACKROCK FUNDS     MARCH 31, 2012 11

Fund Summary as of March 31, 2012 BlackRock U.S. Opportunities Portfolio

Investment Objective

BlackRock U.S. Opportunities Portfolio’s (the “Fund”) investment objective is to provide long-term capital appreciation.

Portfolio Management Commentary

  How did the Fund perform?

— For the six-month period ended March 31, 2012, the Fund posted a positive double-digit return, but underperformed its benchmark, the Russell Midcap^® Index.

  What factors influenced performance?

— The Fund benefited from its positioning in the materials sector, where its specialty chemicals holdings delivered strong returns. Specifically, overweight positions in Cytec Industries, Inc., Celanese Corp. and Valspar Corp. had a positive impact on returns as each of these stocks posted gains above 35% during the period, driven by upside surprises to their earnings. The Fund’s investments in the consumer staples sector also contributed positively, most notably in packaged foods & meats. The Fund maintained a preference for private label food names, which have passed through higher soft commodity prices better than branded competitors while capitalizing on financially strapped consumers. Stock selection across the media industry also aided returns, with notable contributions from holdings of Liberty Global, Inc., Scripps Networks Interactive, Inc. and The Interpublic Group of Cos., Inc.

— The Fund’s underperformance relative to the benchmark was largely attributable to stock selection in IT, energy and health care. The Fund’s IT holdings were the largest drag on a relative basis. After a double-digit start to the fourth quarter in 2011, the Fund’s semiconductor holdings gave back their gains over the following consecutive months as several large competitors in the space issued weakening earnings guidance, dragging the entire segment down. In a similar manner, a number of enterprise software and IT services-related holdings favored in the Fund

declined in the wake of cautionary comments from Oracle Corp. In energy, the Fund’s holdings in the oil & gas exploration & production and the oil & gas drilling segments weakened on concerns about slowing global growth. In the health care sector, manufacturing issues and production concerns hampered returns of select holdings in health care equipment & supplies.

  Describe recent portfolio activity.

— During the six-month period, the Fund reduced exposure to consumer staples, telecommunication services and utilities, bringing those allocations closer to a neutral position relative to the benchmark index. The proceeds were used to reduce the Fund’s underweight in industrials and to increase positions in materials stocks with favorable risk-reward profiles. The Fund maintained its underweight in financials, but added to capital market names with potential for a pick-up in activity as well as healthier small- to medium-sized US banks that may be poised to return capital to their shareholders.

  Describe portfolio positioning at period end.

— At period end, the Fund’s positioning reflected several key characteristics. For one, given the number of headwinds faced by equity markets and the potential severity of the risks they impose, the Fund’s holdings were diversified in a manner that reduces the Fund’s vulnerability to any particular development or macro event. Additionally, the Fund’s holdings did not reflect an intentional bias toward any particular sector or security characteristic. The Fund’s overall portfolio risk was derived more from the individual security risks associated with its holdings than from systematic risks (i.e., risks that impact an entire market or market segment).

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.

Portfolio Information

Ten Largest Holdings	Percent of Long-Term Investments
CBRE Group, Inc.		1	%
Federal Realty Investment Trust		1
Hospitality Properties Trust		1
Essex Property Trust, Inc.		1
International Paper Co.		1
Rayonier, Inc.		1
Ross Stores, Inc.		1
O’Reilly Automotive, Inc.		1
Affiliated Managers Group, Inc.		1
Ryder System, Inc.		1

Sector Allocation	Percent of Long-Term Investments
Financials		19	%
Consumer Discretionary		17
Information Technology		14
Industrials		12
Health Care		10
Energy		8
Utilities		7
Materials		6
Consumer Staples		6
Telecommunication Services		1

For Fund compliance purposes, the Fund’s sector classifications refer to any one or more of the sector sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by Fund management. These definitions may not apply for purposes of this report, which may combine sector sub-classifications for reporting ease.

12     BLACKROCK FUNDS     MARCH 31, 2012

BlackRock U.S. Opportunities Portfolio

Total Return Based on a $10,000 Investment

¹    Assuming maximum sales charges, if any, transaction costs and other operating expenses, including investment advisory fees. Institutional Shares do not have a sales charge.

²    The Fund normally invests at least 80% of its net assets in equity securities issued by US emerging capitalization companies with relatively attractive earnings growth potential and valuation.

³    A market index that measures the performance of the mid-cap segment of the US equities universe. It is a subset of the Russell 1000^® Index including approximately 800 of the smallest securities based on a combination of their market cap and current index membership. The Russell Midcap^® Index represents approximately 31% of the total market capitalization of the Russell 1000^® companies.

Performance Summary for the Period Ended March 31, 2012

				Average Annual Total Returns4
				1 Year						5 Years						10 Years
	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
Institutional		23.51	%		(4.72	)%		N/A			5.27	%		N/A			8.06	%		N/A
Service		23.22			(5.17	)		N/A			4.81			N/A			7.64			N/A
Investor A		23.17			(5.22	)		(10.20	)%		4.75			3.63	%		7.56			6.99	%
Investor B		22.70			(5.93	)		(9.69	)		3.96			3.62			6.92			6.92
Investor C		22.73			(5.91	)		(6.74	)		3.99			3.99			6.77			6.77
Russell Midcap® Index		26.84			3.31			N/A			3.03			N/A			7.85			N/A

⁴  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 14 for a detailed description of share classes, including any related sales charges and fees.

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

Past performance is not indicative of future results.

Expense Example

	Actual									Hypothetical6
	Beginning Account Value October 1, 2011			Ending Account Value March 31, 2012			Expenses Paid During the  Period5			Beginning Account Value October 1, 2011			Ending Account Value March 31, 2012			Expenses Paid During the  Period5			Annualized Expense Ratio
Institutional		$	1,000.00		$	1,235.10		$	5.76		$	1,000.00		$	1,019.85		$	5.20		1.03	%
Service		$	1,000.00		$	1,232.20		$	8.43		$	1,000.00		$	1,017.45		$	7.62		1.51	%
Investor A		$	1,000.00		$	1,231.70		$	8.65		$	1,000.00		$	1,017.25		$	7.82		1.55	%
Investor B		$	1,000.00		$	1,227.00		$	12.86		$	1,000.00		$	1,013.45		$	11.63		2.31	%
Investor C		$	1,000.00		$	1,227.30		$	12.64		$	1,000.00		$	1,013.65		$	11.43		2.27	%

⁵  For each class of the Fund, expenses are equal to the annualized expense ratio for the class, multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period shown).

⁶  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.

See “Disclosure of Expenses” on page 15 for further information on how expenses were calculated.

    BLACKROCK FUNDS     MARCH 31, 2012 13

About Fund Performance

— Institutional Shares are not subject to any sales charge. Institutional Shares bear no ongoing distribution or service fees and are available only to eligible investors.

— Service Shares are not subject to any sales charge (front-end load) or deferred sales charge. Service Shares are subject to a service fee of 0.25% per year (but no distribution fee). Prior to January 28, 2005, the performance results of Service Shares of the BlackRock Health Sciences Opportunities Portfolio (“Health Sciences Opportunities”) are those of Investor A Shares restated to reflect Service Shares’ fees.

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

— Investor B Shares are subject to a maximum contingent deferred sales charge (“CDSC”) of 4.50% declining to 0% after six years. In addition, Investor B Shares are subject to a distribution fee of 0.75% per year and a service fee of 0.25% per year. Investor B Shares automatically convert to Investor A Shares after approximately eight years. (There is no initial sales charge for automatic share conversions.) All returns for periods greater than eight years reflect this conversion. Investor B Shares are only available through exchanges, dividend reinvestments by existing shareholders or for purchase by certain qualified employee benefit plans.

— Investor C Shares are subject to a 1.00% CDSC if redeemed within one year of purchase. In addition, Investor C Shares are subject to a distribution fee of 0.75% per year and a service fee of 0.25% per year.

— Class R Shares are not subject to any sales charge. Class R Shares are subject to a distribution fee of 0.25% per year and a service fee of 0.25% per year. Class R Shares are available only to certain retirement and other similar plans. Prior to September 8, 2008, the performance results of Class R Shares of BlackRock Science & Technology Opportunities Portfolio are those of Institutional Shares (which have no distribution or service fees) restated to reflect Class R Shares’ fees. Prior to

September 12, 2011, the performance results of Class R Shares of BlackRock Global Opportunities’ Portfolio and Health Sciences Opportunities’ are those of Institutional Shares (which have no distribution or service fees) restated to reflect Class R Shares’ fees.

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.

Performance for Health Sciences Opportunities for the periods prior to January 31, 2005 is based on performance of a certain former State Street Research mutual fund that reorganized with Health Sciences Opportunities on that date.

The Funds’ investment advisor, BlackRock Advisors, LLC (the “Manager”), 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 3 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.

14     BLACKROCK FUNDS     MARCH 31, 2012

Disclosure of Expenses

Shareholders of the Funds may incur the following charges: (a) expenses related to transactions, including sales charges and exchange fees; and (b) operating expenses, including investment advisory fees, service and distribution fees, including 12b-1 fees, acquired fund fees and expenses and other Fund expenses. The expense examples on the previous pages (which are based on a hypothetical investment of $1,000 invested on October 1, 2011 and held through March 31, 2012) are intended to assist shareholders both in calculating expenses based on an investment in the Funds and in comparing these expenses with similar costs of investing in other mutual funds.

The tables 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 headings entitled “Expenses Paid During the Period.”

The tables 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 example with the 5% hypothetical examples that appear in other funds’ shareholder reports.

The expenses shown in the tables 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.

Derivative Financial Instruments

The Funds may invest in various derivative financial instruments, including financial futures contracts, foreign currency exchange contracts and options as specified in Note 2 of the Notes to Financial Statements, which may constitute forms of economic leverage. Such derivative financial instruments are used to obtain exposure to a market without owning or taking physical custody of securities or to hedge market, equity and/ or foreign currency exchange rate risks. Derivative financial instruments involve risks, including the imperfect correlation between the value of a derivative financial instrument and the underlying asset, possible default of the counterparty to the transaction or illiquidity of the derivative financial instrument. The Funds’ ability to use a derivative financial

instrument successfully depends on the investment advisor’s ability to predict pertinent market movements accurately, which cannot be assured. The use of derivative financial instruments may result in losses greater than if they had not been used, may require a Fund to sell or purchase portfolio investments at inopportune times or for distressed values, may limit the amount of appreciation a Fund can realize on an investment, may result in lower dividends paid to shareholders or may cause a Fund to hold an investment that it might otherwise sell. The Funds’ investments in these instruments are discussed in detail in the Notes to Financial Statements.

    BLACKROCK FUNDS     MARCH 31, 2012 15

Schedule of Investments March 31, 2012 (Unaudited)	BlackRock Global Opportunities Portfolio
	(Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Argentina – 0.5%
Arcos Dorados Holdings, Inc., Class A		110,100	$	1,991,709
Australia – 1.1%
Australia & New Zealand Banking Group Ltd.		53,700		1,295,473
Newcrest Mining Ltd.		60,200		1,851,555
PanAust Ltd. (a)		285,700		900,408
				4,047,436
Belgium – 0.8%
Anheuser-Busch InBev NV		41,000		2,985,997
Brazil – 1.3%
Banco Bradesco SA, Preference Shares		191,000		3,327,289
BM&FBovespa SA		200,042		1,226,256
				4,553,545
Canada – 2.7%
First Quantum Minerals Ltd.		56,800		1,083,098
Manulife Financial Corp.		126,900		1,718,802
Saputo, Inc.		46,300		2,005,738
Suncor Energy, Inc.		48,600		1,587,923
The Toronto-Dominion Bank		21,200		1,799,380
TransCanada Corp.		33,200		1,425,591
				9,620,532
China – 1.5%
Air China Ltd., H Shares		1,062,000		735,596
China Construction Bank Corp., H Shares		3,052,400		2,355,901
China Eastern Airlines Corp. Ltd., H Shares (a)		1,354,000		444,556
China Southern Airlines Co. Ltd., H Shares (a)		1,266,000		604,703
Lentuo International, Inc. - ADR (a)		53,000		200,340
Zoomlion Heavy Industry Science and
Technology Co. Ltd., H Shares		753,200		1,001,510
				5,342,606
France – 3.1%
Arkema SA		19,400		1,809,238
AXA SA		46,200		766,688
BNP Paribas SA		24,880		1,183,553
Danone SA		26,700		1,862,485
LVMH Moet Hennessy Louis Vuitton SA		13,200		2,271,526
Sanofi SA		41,400		3,212,306
				11,105,796
Germany – 3.7%
Allianz SE		20,200		2,410,914
Continental AG		20,300		1,916,403
Daimler AG		26,000		1,567,815
Deutsche Bank AG		41,000		2,041,364
Deutsche Lufthansa AG		145,300		2,031,821
Merck KGaA		20,500		2,268,541
Volkswagen AG, Preference Shares		5,660		995,390
				13,232,248

Common Stocks	Shares		Value
Hong Kong – 1.6%
AIA Group Ltd.		837,000	$	3,072,726
Hong Kong Exchanges and Clearing Ltd.		89,600		1,508,000
Wharf Holdings Ltd.		193,900		1,057,318
				5,638,044
India – 0.5%
ICICI Bank Ltd.		42,700		740,596
Jubilant Foodworks Ltd. (a)		53,440		1,234,022
				1,974,618
Indonesia – 0.5%
Adaro Energy Tbk PT		5,748,200		1,214,454
Tower Bersama Infrastructure Tbk PT (a)		2,260,500		730,671
				1,945,125
Ireland – 1.3%
Accenture Plc, Class A		39,000		2,515,500
Covidien Plc		42,500		2,323,900
				4,839,400
Israel – 0.5%
Check Point Software Technologies Ltd. (a)		27,871		1,779,285
Italy – 0.9%
ENI SpA		65,700		1,539,698
Intesa Sanpaolo SpA		922,800		1,654,031
				3,193,729
Japan – 4.4%
Bridgestone Corp.		56,600		1,384,187
Hino Motors Ltd.		240,000		1,750,754
Honda Motor Co. Ltd.		44,700		1,721,585
IHI Corp.		1,389,100		3,530,974
ORIX Corp.		18,900		1,815,833
Softbank Corp.		69,000		2,054,211
Sumitomo Mitsui Financial Group, Inc.		53,600		1,774,039
Toyota Motor Corp.		43,400		1,888,425
				15,920,008
Luxembourg – 0.3%
ArcelorMittal		58,100		1,112,237
Mexico – 0.9%
Fomento Economico Mexicano SAB de CV - ADR		22,300		1,834,621
Grupo Modelo SAB de CV, Series C		201,600		1,413,460
				3,248,081
Netherlands – 2.1%
Akzo Nobel NV		38,300		2,262,403
Corio NV		15,400		812,497
Royal Dutch Shell Plc, A Shares		113,800		3,987,096

Portfolio Abbreviations

To simplify the listings of portfolio holdings in the Schedules of Investments, the names and descriptions of many of the securities have been abbreviated according to the following list:

ADR	American Depositary Receipts	HKD	Hong Kong Dollar
AUD	Australian Dollar	JPY	Japanese Yen
CAD	Canadian Dollar	MXN	Mexican Peso
CHF	Swiss Franc	NOK	Norwegian Krone
DKK	Danish Krone	SEK	Swedish Krona
EUR	Euro	SGD	Singapore Dollar
GBP	British Pound	USD	US Dollar

See Notes to Financial Statements.

16     BLACKROCK FUNDS     MARCH 31, 2012

Schedule of Investments (continued)	BlackRock Global Opportunities Portfolio
	(Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Netherlands (concluded)
Ziggo NV (a)		14,700	$	458,572
				7,520,568
Norway – 0.7%
Statoil ASA		90,300		2,450,933
Singapore – 0.8%
Avago Technologies Ltd.		49,600		1,932,912
Sakari Resources Ltd.		538,900		1,000,715
				2,933,627
South Africa – 0.6%
Naspers Ltd., N Shares		38,500		2,166,065
South Korea – 1.8%
Dongbu Insurance Co. Ltd.		59,400		2,569,870
Samsung Electronics Co. Ltd.		1,725		1,945,894
Samsung Life Insurance Co. Ltd.		21,400		1,870,766
				6,386,530
Spain – 0.4%
Repsol YPF SA		54,591		1,372,334
Sweden – 0.5%
Volvo AB, B Shares		115,300		1,679,611
Switzerland – 2.3%
Julius Baer Group Ltd.		48,000		1,938,150
Novartis AG		15,400		852,508
Roche Holding AG		14,700		2,558,246
Weatherford International Ltd. (a)		83,800		1,264,542
Xstrata Plc		105,600		1,809,110
				8,422,556
Taiwan – 0.7%
First Financial Holding Co. Ltd.		2,332,400		1,406,400
Taiwan Semiconductor Manufacturing Co. Ltd.		341,000		980,367
				2,386,767
United Kingdom – 7.3%
Afren Plc (a)		471,800		1,008,721
Barclays Plc		574,400		2,164,586
BG Group Plc		82,400		1,910,567
BP Plc		323,800		2,411,413
British American Tobacco Plc		90,100		4,538,717
Compass Group Plc		133,300		1,397,444
GlaxoSmithKline Plc		97,800		2,186,383
HSBC Holdings Plc		239,983		2,131,565
Inmarsat Plc		167,300		1,233,284
National Grid Plc		214,600		2,162,907
Subsea 7 SA		73,600		1,949,348
Vodafone Group Plc - ADR		114,300		3,162,681
				26,257,616
United States – 54.0%
Allergan, Inc.		22,600		2,156,718
Amazon.com, Inc. (a)		8,100		1,640,331
American Electric Power Co., Inc.		75,000		2,893,500
Ameriprise Financial, Inc.		49,700		2,839,361
Apple, Inc.		9,300		5,575,071
AT&T Inc.		91,900		2,870,037
Baxter International, Inc.		39,300		2,349,354
Biogen Idec, Inc. (a)		10,838		1,365,263
Caterpillar, Inc.		14,600		1,555,192
Cisco Systems, Inc.		71,600		1,514,340
Citigroup, Inc.		36,760		1,343,578
Comcast Corp., Class A		67,400		2,022,674
ConAgra Foods, Inc.		80,300		2,108,678
Costco Wholesale Corp.		30,200		2,742,160
Crown Holdings, Inc. (a)		49,800		1,834,134

Common Stocks	Shares		Value
United States (concluded)
CSX Corp.		86,000	$	1,850,720
Dominion Resources, Inc.		44,000		2,253,240
Dover Corp.		41,600		2,618,304
eBay, Inc. (a)		67,100		2,475,319
Eli Lilly & Co.		63,400		2,553,118
EMC Corp. (a)		72,600		2,169,288
EQT Corp.		25,000		1,205,250
Exelon Corp.		55,200		2,164,392
Exxon Mobil Corp.		81,200		7,042,476
F5 Networks, Inc. (a)		12,000		1,619,520
Federal Realty Investment Trust		23,600		2,284,244
FedEx Corp.		17,200		1,581,712
Fortinet, Inc. (a)		67,669		1,871,048
Freeport-McMoRan Copper & Gold, Inc.		50,900		1,936,236
General Mills, Inc.		71,900		2,836,455
Gilead Sciences, Inc. (a)		32,526		1,588,895
The Goldman Sachs Group, Inc.		23,800		2,960,006
Google, Inc., Class A (a)		5,900		3,783,316
Huntsman Corp.		156,300		2,189,763
Informatica Corp. (a)		27,400		1,449,460
Intel Corp.		66,400		1,866,504
International Business Machines Corp.		14,600		3,046,290
International Paper Co.		98,700		3,464,370
Johnson & Johnson		25,400		1,675,384
JPMorgan Chase & Co.		105,800		4,864,684
KeyCorp		205,000		1,742,500
Kraft Foods, Inc., Class A		65,800		2,501,058
Las Vegas Sands Corp.		35,800		2,061,006
Liberty Global, Inc., Class A (a)		46,900		2,348,752
Lowe’s Cos., Inc.		80,700		2,532,366
Manpower, Inc.		19,582		927,599
Medtronic, Inc.		31,700		1,242,323
MetLife, Inc.		56,600		2,114,010
Microsoft Corp.		57,400		1,851,150
Monsanto Co.		27,400		2,185,424
The NASDAQ OMX Group, Inc. (a)		69,300		1,794,870
Newmont Mining Corp.		43,900		2,250,753
NII Holdings, Inc. (a)		34,900		639,019
NIKE, Inc., Class B		17,600		1,908,544
Occidental Petroleum Corp.		32,000		3,047,360
Oracle Corp.		60,500		1,764,180
Owens Corning (a)		59,500		2,143,785
PepsiCo, Inc.		62,000		4,113,700
Pfizer, Inc.		126,300		2,861,958
Polycom, Inc. (a)		83,400		1,590,438
PPL Corp.		108,500		3,066,210
The Procter & Gamble Co.		27,900		1,875,159
QLIK Technologies, Inc. (a)		64,567		2,066,144
QUALCOMM, Inc.		33,300		2,265,066
Raytheon Co.		68,500		3,615,430
Reynolds American, Inc.		98,900		4,098,416
Rockwell Automation, Inc.		26,900		2,143,930
Rowan Cos., Inc. (a)		40,800		1,343,544
Schlumberger Ltd.		43,600		3,048,948
SPX Corp.		37,700		2,922,881
Stanley Black & Decker, Inc.		47,942		3,689,616
Stryker Corp.		27,000		1,497,960
Symantec Corp. (a)		63,100		1,179,970
Teradata Corp. (a)		30,664		2,089,752
TIBCO Software, Inc. (a)		46,764		1,426,302
Time Warner, Inc.		72,700		2,744,425
United States Steel Corp.		74,600		2,191,002
UnitedHealth Group, Inc.		40,600		2,392,964
Verizon Communications, Inc.		57,000		2,179,110
Viacom, Inc., Class B		38,100		1,808,226
WellPoint, Inc.		12,200		900,360

See Notes to Financial Statements.

    BLACKROCK FUNDS     MARCH 31, 2012 17

Schedule of Investments (continued)	BlackRock Global Opportunities Portfolio
	(Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
United States (concluded)
Wells Fargo & Co.		104,600	$	3,571,044
Whirlpool Corp.		14,200		1,091,412
Whole Foods Market, Inc.		23,100		1,921,920
				194,910,971
Total Long-Term Investments
(Cost – $316,335,420) – 96.8%				349,017,974

Short-Term Securities	Shares		Value
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.14% (b)(c)		9,341,977	$	9,341,977
Total Short-Term Securities (Cost – $9,341,977) – 2.6%				9,341,977
Total Investments (Cost – $325,677,397) – 99.4%				358,359,951
Other Assets Less Liabilities – 0.6%				2,253,566
Net Assets – 100.0%			$	360,613,517
(a)  Non-income producing security.
(b)  Represents the current yield as of report date.

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

Affiliate	Shares Held at September 30, 2011		Net Activity		Shares Held at March 31, 2012		Realized Gain	Income
BlackRock Liquidity Funds, TempFund, Institutional Class		4,695,511		4,646,466		9,341,977	$199		$3,355

• Foreign currency exchange contracts as of March 31, 2012 were as follows:

	Currency Purchased		Currency Sold	Counterparty	Settle- ment Date	Unrealized Appreciation (Depreciation)
AUD	1,380,000	USD	1,439,976	Citibank, N.A.	4/11/12		$    (12,438	)
AUD	253,000	USD	268,791	Citibank, N.A.	4/11/12		(7,076	)
AUD	190,000	USD	202,187	Citibank, N.A.	4/11/12		(5,642	)
AUD	6,530,000	USD	6,682,149	Citibank, N.A.	4/11/12		72,796
CAD	396,000	USD	395,625	Citibank, N.A.	4/11/12		1,294
CAD	448,000	USD	447,459	Citibank, N.A.	4/11/12		1,581
CAD	8,788,000	USD	8,595,714	Citibank, N.A.	4/11/12		212,671
CHF	156,000	USD	172,353	Citibank, N.A.	4/11/12		487
CHF	265,000	USD	288,648	Citibank, N.A.	4/11/12		4,958
CHF	652,000	USD	716,208	Citibank, N.A.	4/11/12		6,173
CHF	817,000	USD	895,290	Citibank, N.A.	4/11/12		9,902
CHF	1,669,000	USD	1,820,856	UBS AG	4/11/12		28,308
CHF	3,968,000	USD	4,205,978	UBS AG	4/11/12		190,355
DKK	8,120,000	USD	1,463,740	Citibank, N.A.	4/11/12		(8,293	)
EUR	352,000	USD	462,010	Citibank, N.A.	4/11/12		7,478
EUR	1,673,000	USD	2,199,222	Citibank, N.A.	4/11/12		32,182
EUR	2,237,000	USD	2,951,100	Citibank, N.A.	4/11/12		32,552
EUR	1,833,000	USD	2,410,619	Citibank, N.A.	4/11/12		34,189
EUR	3,188,000	USD	4,182,296	Citibank, N.A.	4/11/12		69,775
EUR	2,832,000	USD	3,754,184	UBS AG	4/11/12		23,063
GBP	1,700,000	USD	2,689,271	Bank of New York Mellon	4/11/12		29,668
GBP	891,000	USD	1,405,573	Citibank, N.A.	4/11/12		19,471
GBP	4,608,000	USD	7,034,425	Citibank, N.A.	4/11/12		335,499
GBP	2,594,000	USD	4,104,735	Credit Suisse	4/11/12		44,046
				International
GBP	587,000	USD	919,770	UBS AG	4/11/12		19,063
HKD	6,190,000	USD	798,444	Citibank, N.A.	4/11/12		(1,295	)
HKD	10,961,000	USD	1,411,115	Citibank, N.A.	4/11/12		444

	Currency Purchased		Currency Sold	Counterparty	Settle- ment Date	Unrealized Appreciation (Depreciation)
JPY	112,311,000	USD	1,465,472	Citibank, N.A.	4/11/12		$    (108,416	)
JPY	106,565,000	USD	1,360,101	Citibank, N.A.	4/11/12		(72,474	)
JPY	453,056,000	USD	5,424,872	Citibank, N.A.	4/11/12		49,415
JPY	701,897,500	USD	9,146,305	Royal Bank of Scotland Plc	4/11/12		(665,261	)
JPY	104,727,000	USD	1,303,940	UBS AG	4/11/12		(38,521	)
MXN	14,313,000	USD	1,045,483	Citibank, N.A.	4/11/12		71,961
NOK	9,066,000	USD	1,583,580	Citibank, N.A.	4/11/12		7,681
SEK	29,055,000	USD	4,205,879	Royal Bank of Scotland Plc	4/11/12		183,716
SGD	1,670,000	USD	1,295,915	Royal Bank of Scotland Plc	4/11/12		32,605
USD	1,246,845	AUD	1,202,000	Deutsche Bank AG	4/11/12		3,439
USD	1,104,332	CAD	1,105,000	Royal Bank of Canada	4/11/12		(3,231	)
USD	1,914,164	CAD	1,915,000	UBS AG	4/11/12		(5,279	)
USD	20,077	CAD	20,000	UBS AG	4/11/12		31
USD	937,593	CHF	859,000	Citibank, N.A.	4/11/12		(14,133	)
USD	451,495	CHF	411,000	Citibank, N.A.	4/11/12		(3,871	)
USD	1,097,004	EUR	850,000	Citibank, N.A.	4/11/12		(36,704	)
USD	1,536,342	EUR	1,175,000	Citibank, N.A.	4/11/12		(30,842	)
USD	13,909,080	EUR	10,865,000	Goldman Sachs Bank USA	4/11/12		(582,373	)
USD	17,998,500	EUR	14,200,000	Northern Trust Co.	4/11/12		(941,088	)
USD	874,172	EUR	670,000	UBS AG	4/11/12		(19,457	)
USD	1,002,858	EUR	760,000	UBS AG	4/11/12		(10,810	)
USD	466,451	EUR	353,000	UBS AG	4/11/12		(4,371	)
USD	1,325,990	GBP	840,000	Citibank, N.A.	4/11/12		(17,485	)
USD	1,285,962	GBP	815,000	UBS AG	4/11/12		(17,529	)

See Notes to Financial Statements.

18     BLACKROCK FUNDS     MARCH 31, 2012

Schedule of Investments (concluded) BlackRock Global Opportunities Portfolio

	Currency Purchased		Currency Sold	Counterparty	Settle- ment Date	Unrealized Appreciation (Depreciation)
USD	23,215	HKD	180,000	Citibank, N.A.	4/11/12	$	34
USD	830,782	HKD	6,443,000	Citibank, N.A.	4/11/12		1,051
USD	2,124,479	HKD	16,479,000	Citibank, N.A.	4/11/12		2,311
USD	691,608	HKD	5,363,000	Credit Suisse	4/11/12		959
				International
USD	1,273,104	JPY	96,907,000	Citibank, N.A.	4/11/12		102,174
USD	2,221,358	JPY	172,450,000	Citibank, N.A.	4/11/12		137,640
USD	1,236,307	JPY	94,180,000	Deutsche Bank AG	4/11/12		98,328
USD	405,699	JPY	31,168,000	UBS AG	4/11/12		29,096
USD	363,061	NOK	2,062,000	Citibank, N.A.	4/11/12		1,139
USD	1,819,107	NOK	10,943,000	UBS AG	4/11/12		(101,604	)
USD	574,317	NOK	3,232,000	UBS AG	4/11/12		7,038
USD	1,252,375	NOK	7,046,000	UBS AG	4/11/12		15,664
USD	536,009	SEK	3,566,000	Citibank, N.A.	4/11/12		(2,738	)
USD	242,890	SEK	1,624,000	Citibank, N.A.	4/11/12		(2,462	)
USD	548,627	SEK	3,685,000	Deutsche Bank AG	4/11/12		(8,098	)
Total						$	(801,254	)

— Fair Value Measurements – Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs 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

— 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 and derivative financial instruments)

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instrument 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 derivative financial instruments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.

The following tables summarize the inputs used as of March 31, 2012 in determining the fair valuation of the Fund’s investments and derivative financial instruments:

Valuation Inputs	Level 1	Level 2	Level 3	Total
Assets:
Investments:
Long-Term Investments:
Common Stocks:
Argentina	$  1,991,709	–	–	$  1,991,709
Australia	–	$    4,047,436	–	4,047,436
Belgium	–	2,985,997	–	2,985,997
Brazil	4,553,545	–	–	4,553,545
Canada	9,620,532	–	–	9,620,532
China	200,340	5,142,266	–	5,342,606
France	–	11,105,796	–	11,105,796
Germany	–	13,232,248	–	13,232,248
Hong Kong	–	5,638,044	–	5,638,044
India	–	1,974,618	–	1,974,618
Indonesia	–	1,945,125	–	1,945,125
Ireland	4,839,400	–	–	4,839,400
Israel	1,779,285	–	–	1,779,285
Italy	–	3,193,729	–	3,193,729
Japan	–	15,920,008	–	15,920,008
Luxembourg	–	1,112,237	–	1,112,237
Mexico	3,248,081	–	–	3,248,081
Netherlands	458,572	7,061,996	–	7,520,568
Norway	–	2,450,933	–	2,450,933
Singapore	1,932,912	1,000,715	–	2,933,627
South Africa	–	2,166,065	–	2,166,065
South Korea	–	6,386,530	–	6,386,530
Spain	–	1,372,334	–	1,372,334
Sweden	–	1,679,611	–	1,679,611
Switzerland	1,264,542	7,158,014	–	8,422,556
Taiwan	–	2,386,767	–	2,386,767
United Kingdom	3,162,681	23,094,935	–	26,257,616
United States	194,910,971	–	–	194,910,971
Short-Term Securities	9,341,977	–	–	9,341,977
Total	$237,304,547	$121,055,404	–	$358,359,951
Valuation Inputs	Level 1	Level 2	Level 3	Total
Derivative Financial Instruments1
Assets:
Foreign currency exchange contracts	–	$1,920,237	–	$1,920,237
Liabilities:
Foreign currency exchange contracts	–	(2,721,491)	–	(2,721,491)
Total	–	$(801,254)	–	$(801,254)

¹ Derivative financial instruments are foreign currency exchange contracts which are valued at the unrealized appreciation/depreciation on the instrument.

See Notes to Financial Statements.

    BLACKROCK FUNDS     MARCH 31, 2012 19

Schedule of Investments March 31, 2012 (Unaudited)	BlackRock Health Sciences Opportunities Portfolio
	(Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Biotechnology – 23.7%
3SBio, Inc. - ADR (a)		467,000	$	6,911,600
Achillion Pharmaceuticals, Inc. (a)(b)		225,400		2,159,332
Acorda Therapeutics, Inc. (a)		633,100		16,808,805
Affymax, Inc. (a)		180,700		2,121,418
Alexion Pharmaceuticals, Inc. (a)		601,324		55,838,947
Algeta ASA (a)		49,000		1,236,652
Amgen, Inc.		760,610		51,713,874
Amylin Pharmaceuticals, Inc. (a)(b)		566,700		14,144,832
Ardea Biosciences, Inc. (a)(b)		27,600		600,576
ARIAD Pharmaceuticals, Inc. (a)(b)		1,228,707		19,597,877
ArQule, Inc. (a)		333,200		2,335,732
Biogen Idec, Inc. (a)		373,659		47,069,824
BioMarin Pharmaceutical, Inc. (a)(b)		259,800		8,898,150
Celgene Corp. (a)		432,900		33,558,408
Cepheid, Inc. (a)		43,300		1,811,239
ChemoCentryx, Inc. (a)		153,000		1,630,980
CSL Ltd.		135,100		5,030,903
Cubist Pharmaceuticals, Inc. (a)(b)		329,000		14,229,250
Dendreon Corp. (a)(b)		738,200		7,865,521
Exelixis, Inc. (a)		1,293,300		6,699,294
Genomic Health, Inc. (a)(b)		90,100		2,757,961
Gilead Sciences, Inc. (a)		923,467		45,111,363
Human Genome Sciences, Inc. (a)(b)		494,200		4,072,208
Incyte Corp. Ltd. (a)(b)		447,900		8,644,470
Medivation, Inc. (a)		299,000		22,341,280
Momenta Pharmaceuticals, Inc. (a)(b)		227,000		3,477,640
Onyx Pharmaceuticals, Inc. (a)(b)		183,500		6,914,280
Pharmacyclics, Inc. (a)		556,552		15,449,883
Regeneron Pharmaceuticals, Inc. (a)(b)		60,500		7,055,510
Rigel Pharmaceuticals, Inc. (a)(b)		149,800		1,205,890
Synta Pharmaceuticals Corp. (a)		852,600		3,708,810
Theravance, Inc. (a)(b)		217,400		4,239,300
Verastem, Inc. (a)		139,500		1,524,735
Vertex Pharmaceuticals, Inc. (a)		229,270		9,402,363
				436,168,907
Diversified Consumer Services – 0.2%
Stewart Enterprises, Inc., Class A		681,400		4,136,098
Food & Staples Retailing – 0.7%
CVS Caremark Corp. (c)		301,200		13,493,760
Health Care Equipment & Supplies – 17.4%
Alere, Inc. (a)(b)		191,800		4,988,718
Align Technology, Inc. (a)(b)		500,933		13,800,704
Baxter International, Inc.		629,700		37,643,466
Becton, Dickinson & Co.		56,800		4,410,520
Covidien Plc		744,100		40,687,388
DENTSPLY International, Inc.		522,100		20,951,873
Elekta AB, B Shares		96,300		4,874,703
Given Imaging Ltd. (a)		184,300		3,451,939
Hologic, Inc. (a)		1,775,200		38,255,560
Intuitive Surgical, Inc. (a)		57,000		30,879,750
Medtronic, Inc.		1,140,200		44,684,438
Natus Medical, Inc. (a)		204,900		2,444,457
Sirona Dental Systems, Inc. (a)		111,200		5,731,248
St. Jude Medical, Inc.		469,400		20,799,114
Stryker Corp.		444,700		24,671,956
Varian Medical Systems, Inc. (a)		67,100		4,627,216
Zimmer Holdings, Inc.		282,400		18,152,672
				321,055,722
Health Care Providers & Services – 20.6%
Acadia Healthcare Co., Inc. (a)		141,200		2,301,560

Common Stocks	Shares		Value
Health Care Providers & Services (concluded)
Aetna, Inc.		785,318	$	39,391,551
AMERIGROUP Corp. (a)		55,300		3,720,584
AmerisourceBergen Corp.		238,300		9,455,744
Brookdale Senior Living, Inc. (a)		240,100		4,494,672
Cardinal Health, Inc.		469,700		20,248,767
Centene Corp. (a)		77,800		3,809,866
CIGNA Corp.		329,100		16,208,175
Coventry Health Care, Inc.		263,000		9,354,910
Express Scripts, Inc. (a)(b)		255,400		13,837,572
HCA Holdings, Inc. (a)		286,500		7,088,010
Henry Schein, Inc. (a)		124,214		9,400,516
Humana, Inc.		288,225		26,655,048
Laboratory Corp. of America Holdings (a)		40,400		3,698,216
McKesson Corp.		330,700		29,025,539
Medco Health Solutions, Inc. (a)		124,750		8,769,925
MEDNAX, Inc. (a)(b)		57,300		4,261,401
Quest Diagnostics, Inc.		519,000		31,736,850
UnitedHealth Group, Inc.		1,180,400		69,572,776
Universal Health Services, Inc., Class B		160,400		6,722,364
VCA Antech, Inc. (a)		579,500		13,450,195
WellPoint, Inc.		633,733		46,769,495
				379,973,736
Health Care Technology – 1.4%
Cerner Corp. (a)		191,900		14,615,104
SXC Health Solutions Corp. (a)		124,600		9,340,016
Vocera Communications, Inc. (a)		37,800		884,520
				24,839,640
Industrial Conglomerates – 1.9%
Danaher Corp.		453,400		25,390,400
Koninklijke Philips Electronics NV		465,500		9,447,825
				34,838,225
Life Sciences Tools & Services – 4.6%
Agilent Technologies, Inc.		446,014		19,852,083
Life Technologies Corp. (a)		381,800		18,639,476
Luminex Corp. (a)(b)		245,100		5,723,085
Mettler-Toledo International, Inc. (a)(b)		49,004		9,053,489
Thermo Fisher Scientific, Inc.		233,200		13,147,816
Waters Corp. (a)		185,175		17,158,315
				83,574,264
Pharmaceuticals – 27.8%
Abbott Laboratories		651,500		39,930,435
Allergan, Inc.		480,300		45,835,029
Auxilium Pharmaceuticals, Inc. (a)		94,445		1,753,844
Bristol-Myers Squibb Co.		536,700		18,113,625
Elan Corp. Plc - ADR (a)		1,840,200		27,621,402
Eli Lilly & Co.		1,007,400		40,567,998
Endo Pharmaceuticals Holdings, Inc. (a)		273,600		10,596,528
GlaxoSmithKline Plc		775,800		17,343,516
Johnson & Johnson		904,700		59,674,012
Merck & Co., Inc.		1,170,100		44,931,840
Merck KGaA		151,900		16,809,333
Mylan, Inc. (a)		389,800		9,140,810
Novartis AG		160,300		8,873,835
Pfizer, Inc.		2,084,140		47,226,612
Roche Holding AG		149,600		26,034,942
Sanofi SA		570,500		44,266,194
Shire Plc - ADR		51,100		4,841,725
Teva Pharmaceutical Industries Ltd. - ADR		396,100		17,848,266
UCB SA		152,700		6,590,877

See Notes to Financial Statements.

20     BLACKROCK FUNDS     MARCH 31, 2012

Schedule of Investments (continued)	BlackRock Health Science Opportunities Portfolio
	(Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Pharmaceuticals (concluded)
Valeant Pharmaceuticals International, Inc. (a)		182,600	$	9,803,794
ViroPharma, Inc. (a)		255,700		7,688,899
Watson Pharmaceuticals, Inc. (a)		96,900		6,498,114
				511,991,630
Total Long-Term Investments
(Cost – $1,500,626,133) – 98.3%				1,810,071,982
Short-Term Securities
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.14% (d)(e)		88,935,556		88,935,556
	Beneficial Interest (000)
BlackRock Liquidity Series, LLC Money Market Series, 0.24% (d)(e)(f)	$	103,423		103,422,838
Total Short-Term Securities (Cost – $192,358,394) – 10.4%				192,358,394
Total Investments Before Options Written
(Cost – $1,692,984,527) – 108.7%				2,002,430,376

Options Written	Contracts		Value
Exchange-Traded Call Options Written
CVS Caremark Corp., Strike Price $45, Expires 4/21/12		600	$	(34,200	)
Exchange-Traded Put Options Written
Dendreon Corp., Strike Price $9, Expires 4/21/12		3,780		(54,810	)
Medivation, Inc., Strike Price $70, Expires 4/21/12		870		(108,750	)
Total Options Written
(Premiums Received – $664,296) – (0.0)%				(197,760	)
Total Investments Net of Options Written – 108.7%				2,002,232,616
Liabilities in Excess of Other Assets – (8.7)%				(160,681,281	)
Net Assets – 100.0%			$	1,841,551,335

(a) Non-income producing security.

(b) Security, or a portion of security, is on loan.

(c) All or a portion of security has been pledged/segregated as collateral in connection with outstanding options written.

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

(e) Investments in companies considered to be an affiliate of the Fund during the period, 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 September 30, 2011		Net Activity			Shares/ Beneficial Interest Held at March 31, 2012		Realized Gain		Income
BlackRock Liquidity Funds, TempFund, Institutional Class		114,422,161		(25,486,605	)		88,935,556	$	321	$	50,791
BlackRock Liquidity Series, LLC Money Market Series	$	27,098,498	$	76,324,340		$	103,422,838		–	$	112,779

(f) Security was purchased with the cash collateral from loaned securities.

— Foreign currency exchange contracts as of March 31, 2012 were as follows:

	Currency Purchased		Currency Sold	Counterparty	Settlement Date	Unrealized Appreciation (Depreciation)
EUR	4,139,000	USD	5,492,879	Citibank, N.A.	4/03/12	$	27,333
EUR	1,531,000	USD	2,042,054	Citibank, N.A.	4/04/12		(149	)
AUD	3,949,000	USD	4,195,481	Citibank, N.A.	4/11/12		(110,446	)
CHF	22,866,000	USD	25,057,175	Citibank, N.A.	4/11/12		277,137
CHF	15,875,000	USD	17,319,404	UBS AG	4/11/12		269,252
EUR	5,864,000	USD	7,696,670	Citibank, N.A.	4/11/12		124,580
GBP	1,354,000	USD	2,135,966	Citibank, N.A.	4/11/12		29,589
GBP	8,771,000	USD	13,879,195	Credit Suisse International	4/11/12		148,932
USD	1,013,435	AUD	975,000	Citibank, N.A.	4/11/12		4,848
USD	4,164,878	AUD	4,006,000	Citibank, N.A.	4/11/12		20,880
USD	3,501,053	AUD	3,352,000	Citibank, N.A.	4/11/12		33,584

	Currency Purchased		Currency Sold	Counterparty	Settlement Date	Unrealized Appreciation (Depreciation)
USD	8,910,757	CHF	8,146,000	Citibank, N.A.	4/11/12	$	(114,578	)
USD	1,217,681	CHF	1,157,000	Citibank, N.A.	4/11/12		(64,214	)
USD	63,507,307	CHF	59,914,000	UBS AG	4/11/12		(2,874,219	)
USD	2,769,759	EUR	2,105,000	Citibank, N.A.	4/11/12		(37,835	)
USD	607,276	EUR	477,000	Citibank, N.A.	4/11/12		(28,934	)
USD	5,493,024	EUR	4,139,000	Citibank, N.A.	4/11/12		(27,466	)
USD	1,030,030	EUR	788,000	Citibank, N.A.	4/11/12		(21,031	)
USD	401,775	EUR	317,000	Citibank, N.A.	4/11/12		(21,031	)
USD	652,879	EUR	500,000	Citibank, N.A.	4/11/12		(14,008	)
USD	2,042,109	EUR	1,531,000	Citibank, N.A.	4/11/12		101
USD	65,802,172	EUR	51,401,000	Goldman Sachs Bank	4/11/12		(2,755,136	)
				USA
USD	594,913	GBP	388,000	Citibank, N.A.	4/11/12		(25,645	)
USD	32,305,680	GBP	21,098,000	Goldman Sachs Bank	4/11/12		(1,437,955	)
				USA

See Notes to Financial Statements.

    BLACKROCK FUNDS     MARCH 31, 2012 21

Schedule of Investments (concluded) BlackRock Health Sciences Opportunities Portfolio

	Currency Purchased		Currency Sold	Counterparty	Settle- ment Date	Unrealized Appreciation (Depreciation)
USD	2,363,923	SEK	16,508,000	Citibank, N.A.	4/11/12	$	(130,086	)
USD	74,029	SEK	515,000	Citibank, N.A.	4/11/12		(3,777	)
USD	1,839,232	SEK	12,733,000	UBS AG	4/11/12		(84,455	)
Total						$	(6,814,729	)

— For Fund compliance purposes, the Fund’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes and/or as defined by Fund management. These definitions may not apply for purposes of this report, which may combine industry sub-classifications for reporting ease.

— Fair Value Measurements – Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs 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

— 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 and derivative financial instruments)

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instrument 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 derivative financial instruments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.

The following tables summarize the inputs used as of March 31, 2012 in determining the fair valuation of the Fund’s investments and derivative financial instruments:

Valuation Inputs	Level 1	Level 2	Level 3	Total
Assets:
Investments:
Long-Term Investments:
Common Stocks:
Biotechnology	$ 429,901,352	$6,267,555	–	$436,168,907
Diversified Consumer Services	4,136,098	–	–	4,136,098
Food & Staples Retailing	13,493,760	–	–	13,493,760
Health Care Equipment & Supplies	316,181,019	4,874,703	–	321,055,722
Health Care Providers & Services	379,973,736	–	–	379,973,736
Health Care Technology	24,839,640	–	–	24,839,640
Industrial Conglomerates	25,390,400	9,447,825	–	34,838,225
Life Sciences Tools & Services	83,574,264	–	–	83,574,264
Pharmaceuticals	392,072,933	119,918,697	–	511,991,630
Short-Term Securities	88,935,556	103,422,838	–	192,358,394
Total	$1,758,498,758	$243,931,618	–	$2,002,430,376

Valuation Inputs	Level 1			Level 2			Level 3	Total
Derivative Financial Instruments1
Assets:
Foreign currency exchange contracts	$	27,333 $			908,903		–	$	936,236
Liabilities:
Equity contracts		(197,760	)		–		–		(197,760	)
Foreign currency exchange contracts		(149	)		(7,750,816	)	–		(7,750,965	)
Total	$	(170,576	)	$	6,841,913	)	–	$	7,012,489	)

¹  Derivative financial instruments are foreign currency exchange contracts and options. Foreign currency exchange contracts are valued at the unrealized appreciation/depreciation on the instrument and options are shown at value.

See Notes to Financial Statements.

22     BLACKROCK FUNDS     MARCH 31, 2012

Schedule of Investments March 31, 2012 (Unaudited)	BlackRock International Opportunities Portfolio
	(Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Argentina – 1.1%
Arcos Dorados Holdings, Inc., Class A		608,300	$	11,004,147
MercadoLibre, Inc. (a)		109,567		10,714,557
				21,718,704
Australia – 3.5%
Australia & New Zealand Banking Group Ltd.		1,127,600		27,202,526
BHP Billiton Ltd.		437,600		15,775,346
CSL Ltd.		140,500		5,231,990
Newcrest Mining Ltd.		579,100		17,811,224
				66,021,086
Belgium – 0.9%
Anheuser-Busch InBev NV		244,500		17,806,736
Bermuda – 0.7%
Seadrill Ltd.		333,700		12,530,427
Brazil – 3.9%
Banco Bradesco SA, Preference Shares		1,485,400		25,876,206
BM&FBovespa SA		1,988,400		12,188,883
BRF - Brasil Foods SA		480,600		9,491,156
Cia Energetica de Minas Gerais - ADR		505,225		12,014,252
PDG Realty SA Empreendimentos e Participacoes		1,560,700		5,377,744
Tractebel Energia SA		560,200		9,973,705
				74,921,946
Canada – 4.7%
First Quantum Minerals Ltd.		507,400		9,675,420
Gildan Activewear, Inc.		225,300		6,200,296
Manulife Financial Corp.		721,600		9,773,739
Royal Bank of Canada		262,900		15,237,104
Suncor Energy, Inc.		422,300		13,797,942
The Toronto-Dominion Bank		135,500		11,500,757
TransCanada Corp.		185,000		7,943,807
Yamana Gold, Inc.		1,009,200		15,743,297
				89,872,362
China – 2.7%
Baidu, Inc. - ADR (b)		73,300		10,684,941
China Construction Bank Corp., H Shares		26,177,800		20,204,530
Lentuo International, Inc. - ADR (b)		301,000		1,137,780
Tencent Holdings Ltd.		419,400		11,707,332
Zoomlion Heavy Industry Science and
Technology Co. Ltd., H Shares		6,556,400		8,717,871
				52,452,454
France – 4.1%
AXA SA		861,027		14,288,730
BNP Paribas SA		151,170		7,191,223
Danone SA		167,900		11,712,034
GDF SUEZ		367,600		9,501,954
LVMH Moet Hennessy Louis Vuitton SA		62,800		10,806,955
Sanofi SA		280,600		21,772,295
Société Generale SA		90,300		2,649,672
				77,922,863
Germany – 7.6%
Adidas AG		162,305		12,682,696
Allianz SE		155,400		18,547,326
Continental AG		96,400		9,100,553
Daimler AG		184,500		11,125,454
Deutsche Bank AG		347,800		17,316,742
Deutsche Lufthansa AG		728,200		10,182,876
Gerry Weber International AG		358,688		13,762,916
Infineon Technologies AG		1,144,671		11,699,042
K+S AG		260,000		13,597,267

Common Stocks	Shares		Value
Germany (concluded)
Merck KGaA		136,300	$	15,083,029
Volkswagen AG, Preference Shares		72,648		12,776,167
				145,874,068
Gibraltar – 0.1%
Bwin.Party Digital Entertainment Plc		788,075		1,955,839
Hong Kong – 3.4%
AIA Group Ltd.		4,648,000		17,063,357
China Merchants Holdings International Co. Ltd.		3,013,900		10,094,117
China Mobile Ltd.		829,100		9,129,699
Hong Kong Exchanges and Clearing Ltd.		499,100		8,400,031
Melco Crown Entertainment Ltd. - ADR (b)		653,300		8,891,413
REXLot Holdings Ltd.		40,096,100		3,564,428
Wharf Holdings Ltd.		1,540,000		8,397,470
				65,540,515
India – 0.6%
ICICI Bank Ltd.		283,800		4,922,275
Jubilant Foodworks Ltd. (b)		284,601		6,571,931
				11,494,206
Indonesia – 1.1%
Adaro Energy Tbk PT		35,183,200		7,433,348
Indofood Sukses Makmur Tbk PT		17,589,500		9,345,932
Tower Bersama Infrastructure Tbk PT (b)		11,940,500		3,859,581
				20,638,861
Ireland – 2.5%
Accenture Plc, Class A		186,300		12,016,350
Covidien Plc		204,400		11,176,592
Experian Plc		1,287,361		20,080,972
Shire Plc - ADR		55,600		5,268,100
				48,542,014
Israel – 0.9%
Check Point Software Technologies Ltd. (b)		168,800		10,776,192
Teva Pharmaceutical Industries Ltd. - ADR		161,000		7,254,660
				18,030,852
Italy – 1.4%
ENI SpA		652,000		15,279,802
Intesa Sanpaolo SpA		6,878,000		12,328,158
				27,607,960
Japan – 12.1%
Bridgestone Corp.		720,000		17,608,030
The Chiba Bank Ltd.		1,892,000		12,121,806
Daiwa Office Investment Corp.		1,369		3,670,391
Honda Motor Co. Ltd.		320,100		12,328,395
IHI Corp.		8,449,000		21,476,642
Japan Prime Realty Investment Corp.		1,770		5,106,616
JGC Corp.		477,000		14,886,155
Kubota Corp.		1,711,100		16,562,903
Mitsui Fudosan Co. Ltd.		586,300		11,321,997
ORIX Corp.		118,000		11,336,944
SMC Corp.		84,200		13,474,583
Softbank Corp.		435,200		12,956,412
Sumitomo Mitsui Financial Group, Inc.		570,500		18,882,259
Tokyo Electron Ltd.		36,100		2,081,684
Toray Industries, Inc.		2,339,500		17,450,112
Toyota Motor Corp.		354,300		15,416,339
Yamato Holdings Co. Ltd.		476,800		7,406,213
Zeon Corp.		1,780,600		16,647,032
				230,734,513

See Notes to Financial Statements.

    BLACKROCK FUNDS     MARCH 31, 2012 23

Schedule of Investments (continued)	BlackRock International Opportunities Portfolio
	(Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Luxembourg – 0.8%
ArcelorMittal		830,500	$	15,898,679
Malaysia – 0.5%
Genting Malaysia BHD		6,800,400		8,710,752
Mexico – 1.3%
Fomento Economico Mexicano SAB de CV - ADR		199,200		16,388,184
Grupo Modelo SAB de CV, Series C		1,209,500		8,480,057
				24,868,241
Netherlands – 4.1%
Akzo Nobel NV		223,800		13,219,996
ASML Holding NV		41,900		2,099,257
Corio NV		34,539		1,822,262
Koninklijke DSM NV		252,800		14,634,816
Royal Dutch Shell Plc, A Shares		999,000		35,000,954
Unilever NV		271,900		9,251,284
Ziggo NV (b)		77,800		2,427,002
				78,455,571
Norway – 1.3%
Statoil ASA		675,300		18,329,073
Storebrand ASA		1,267,000		6,412,708
				24,741,781
Singapore – 3.0%
Avago Technologies Ltd.		303,100		11,811,807
DBS Group Holdings Ltd.		1,165,000		13,163,870
Sakari Resources Ltd.		6,385,600		11,857,791
Singapore Telecommunications Ltd.		8,177,100		20,528,219
				57,361,687
South Africa – 1.0%
MTN Group Ltd.		529,900		9,343,890
Naspers Ltd., N Shares		165,600		9,316,894
				18,660,784
South Korea – 2.3%
Hyundai Marine & Fire Insurance Co. Ltd.		441,200		12,706,061
Samsung Electronics Co. Ltd.		15,000		16,920,822
Samsung Life Insurance Co. Ltd.		125,600		10,979,820
SK Hynix, Inc.		146,100		3,778,147
				44,384,850
Spain – 1.4%
Banco Santander SA		1,350,400		10,384,702
Repsol YPF SA		290,195		7,295,055
Telefonica SA		574,600		9,427,223
				27,106,980
Sweden – 1.5%
Svenska Cellulosa AB, B Shares		533,900		9,252,064
Volvo AB, B Shares		1,338,500		19,498,342
				28,750,406
Switzerland – 6.8%
Julius Baer Group Ltd.		320,500		12,941,191
Nestle SA		654,800		41,197,772
Novartis AG		86,300		4,777,367
Roche Holding AG		81,100		14,113,862
Swiss Re AG		284,300		18,155,316
Syngenta AG		35,500		12,232,666
TE Connectivity Ltd.		263,000		9,665,250
Xstrata Plc		930,909		15,948,075
				129,031,499
Taiwan – 2.1%
Chunghwa Telecom Co. Ltd. - ADR		239,767		7,375,233

Common Stocks	Shares		Value
Taiwan (concluded)
Mega Financial Holding Co. Ltd.		16,132,946	$	11,413,221
Taiwan Semiconductor Manufacturing Co. Ltd.		3,586,000		10,309,664
United Microelectronics Corp.		21,590,000		10,516,245
				39,614,363
United Kingdom – 16.3%
Barclays Plc		4,041,200		15,228,981
Barratt Developments Plc (b)		467,962		1,055,649
Bellway Plc		196,942		2,580,028
BG Group Plc		843,800		19,564,766
BP Plc		3,075,900		22,906,931
British American Tobacco Plc		591,000		29,771,165
Britvic Plc		1,891,800		11,643,719
Compass Group Plc		732,600		7,680,175
Diageo Plc		393,000		9,461,725
GlaxoSmithKline Plc		629,200		14,066,177
HSBC Holdings Plc		2,874,099		25,528,175
Imperial Tobacco Group Plc		528,600		21,442,903
Inchcape Plc		1,114,820		6,706,931
Invensys Plc		3,411,000		10,864,219
Kazakhmys Plc		452,184		6,583,142
Meggitt Plc		1,527,300		9,875,623
National Grid Plc		2,335,200		23,535,979
Persimmon Plc		224,270		2,298,809
Rexam Plc		2,033,100		13,924,025
SSE Plc		719,000		15,289,590
Subsea 7 SA		660,200		17,485,867
Taylor Wimpey Plc		3,365,206		2,775,428
Vodafone Group Plc - ADR		738,600		20,437,062
				310,707,069
United States – 0.3%
NII Holdings, Inc. (b)		255,200		4,672,712
Total Long-Term Investments (Cost – $1,675,847,474) – 94.0%				1,796,630,780
Short-Term Securities
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.14% (c)(d)		73,310,419		73,310,419
	Beneficial Interest (000)
BlackRock Liquidity Series, LLC Money Market Series, 0.24% (c)(d)(e)		$  475		474,700
Total Short-Term Securities (Cost – $73,785,119) – 3.8%				73,785,119
Total Investments (Cost – $1,749,632,593) – 97.8%				1,870,415,899
Other Assets Less Liabilities – 2.2%				41,141,169
Net Assets – 100.0%			$	1,911,557,068

  (a) Security, or a portion of security, is on loan.

  (b) Non-income producing security.

See Notes to Financial Statements.

24     BLACKROCK FUNDS     MARCH 31, 2012

Schedule of Investments (continued) BlackRock International Opportunities Portfolio

(c) Investments in companies considered to be an affiliate of the Fund during the period, 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 September 30, 2011		Net Activity			Shares/ Beneficial Interest Held at March 31, 2012		Realized Gain		Income
BlackRock Liquidity Funds, TempFund, Institutional Class		71,355,791		1,954,628			73,310,419	$	1,306	$	50,135
BlackRock Liquidity Series, LLC Money Market Series	$	7,202,388	$	(6,727,688	)	$	474,700		–	$	4,390

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

(e)   Security was purchased with the cash collateral from loaned securities.

— Foreign currency exchange contracts as of March 31, 2012 were as follows:

	Currency Purchased		Currency Sold	Counterparty	Settle- ment Date	Unrealized Appreciation (Depreciation)
AUD	22,676,000	USD	23,100,087	Citibank, N.A.	4/11/12	$	357,054
AUD	32,305,000	USD	33,057,707	Citibank, N.A.	4/11/12		360,133
CAD	14,060,000	USD	14,043,008	Citibank, N.A.	4/11/12		49,607
CAD	66,129,000	USD	64,682,062	Citibank, N.A.	4/11/12		1,600,335
CHF	580,000	USD	640,798	Citibank, N.A.	4/11/12		1,811
CHF	2,671,000	USD	2,934,036	Citibank, N.A.	4/11/12		25,290
CHF	7,819,000	USD	8,568,269	Citibank, N.A.	4/11/12		94,767
CHF	4,189,000	USD	4,570,141	UBS AG	4/11/12		71,049
CHF	19,314,000	USD	20,472,346	UBS AG	4/11/12		926,539
DKK	50,987,000	USD	9,191,095	Citibank, N.A.	4/11/12		(52,071	)
EUR	14,692,000	USD	19,382,010	Citibank, N.A.	4/11/12		213,796
EUR	13,593,000	USD	17,876,453	Citibank, N.A.	4/11/12		253,534
EUR	19,308,000	USD	25,381,100	Citibank, N.A.	4/11/12		371,405
EUR	21,732,000	USD	28,523,880	Citibank, N.A.	4/11/12		461,693
EUR	5,554,000	USD	7,362,549	UBS AG	4/11/12		45,231
GBP	1,241,000	USD	1,957,706	Citibank, N.A.	4/11/12		27,120
GBP	14,753,000	USD	22,521,458	Citibank, N.A.	4/11/12		1,074,136
GBP	28,936,000	USD	45,788,211	Credit Suisse	4/11/12		491,333
				International
GBP	2,044,000	USD	3,202,744	UBS AG	4/11/12		66,381
HKD	132,411,000	USD	17,046,545	Citibank, N.A.	4/11/12		5,367
JPY	1,130,915,000	USD	14,756,564	Citibank, N.A.	4/11/12		(1,091,691	)
JPY	615,674,000	USD	8,006,018	Citibank, N.A.	4/11/12		(566,815	)
JPY	502,722,000	USD	6,416,297	Citibank, N.A.	4/11/12		(341,895	)
JPY	803,890,000	USD	9,625,742	Citibank, N.A.	4/11/12		87,680
JPY	3,341,599,500	USD	43,543,805	Royal Bank of Scotland Plc	4/11/12		(3,167,179	)
MXN	171,945,000	USD	12,559,597	Citibank, N.A.	4/11/12		864,482
NOK	69,893,000	USD	12,208,378	Citibank, N.A.	4/11/12		59,213
NOK	44,378,000	USD	7,971,432	UBS AG	4/11/12		(182,224	)
SEK	223,645,000	USD	32,373,902	Royal Bank of Scotland Plc	4/11/12		1,414,120
USD	535,301	AUD	515,000	Citibank, N.A.	4/11/12		2,561
USD	2,202,000	AUD	2,118,000	Citibank, N.A.	4/11/12		11,039

	Currency Purchased		Currency Sold	Counterparty	Settle- ment Date	Unrealized Appreciation (Depreciation)
USD	1,850,796	AUD	1,772,000	Citibank, N.A.	4/11/12	$	17,754
USD	9,182,195	AUD	8,769,000	Citibank, N.A.	4/11/12		111,122
USD	9,596,520	CAD	9,690,000	Citibank, N.A.	4/11/12		(115,957	)
USD	2,821,905	CAD	2,826,000	Citibank, N.A.	4/11/12		(10,650	)
USD	12,604,442	CHF	11,555,500	Citibank, N.A.	4/11/12		(198,438	)
USD	5,348,106	CHF	4,972,000	Citibank, N.A.	4/11/12		(160,606	)
USD	3,351,447	CHF	3,101,000	Citibank, N.A.	4/11/12		(84,296	)
USD	4,797,763	CHF	4,386,000	Citibank, N.A.	4/11/12		(61,692	)
USD	4,325,051	CHF	3,940,000	Citibank, N.A.	4/11/12		(40,260	)
USD	1,245,205	EUR	935,000	Bank of New York Mellon	4/11/12		(1,811	)
USD	7,647,324	EUR	5,826,000	Citibank, N.A.	4/11/12		(123,242	)
USD	10,011,406	EUR	7,550,000	Citibank, N.A.	4/11/12		(58,587	)
USD	3,753,136	EUR	2,823,000	Citibank, N.A.	4/11/12		(12,107	)
USD	84,208,500	EUR	65,779,000	Goldman Sachs Bank USA	4/11/12		(3,525,809	)
USD	89,739,000	EUR	70,800,000	Northern Trust Co.	4/11/12		(4,692,188	)
USD	9,320,877	EUR	7,175,000	UBS AG	4/11/12		(248,950	)
USD	5,995,146	EUR	4,537,000	UBS AG	4/11/12		(56,185	)
USD	11,570,845	GBP	7,330,000	Citibank, N.A.	4/11/12		(152,581	)
USD	7,631,428	GBP	4,815,000	Citibank, N.A.	4/11/12		(69,567	)
USD	5,814,281	GBP	3,665,000	Citibank, N.A.	4/11/12		(47,432	)
USD	1,648,064	GBP	1,052,000	Citibank, N.A.	4/11/12		(34,479	)
USD	2,053,375	GBP	1,296,000	Citibank, N.A.	4/11/12		(19,417	)
USD	1,318,719	GBP	832,000	Citibank, N.A.	4/11/12		(11,962	)
USD	1,559,700	GBP	994,000	Deutsche Bank AG	4/11/12		(30,079	)
USD	1,895,742	HKD	14,716,000	Citibank, N.A.	4/11/12		613
USD	1,062,950	HKD	8,242,000	Citibank, N.A.	4/11/12		1,544
USD	2,830,752	HKD	21,949,000	Citibank, N.A.	4/11/12		4,156
USD	5,551,054	HKD	43,058,000	Citibank, N.A.	4/11/12		6,037
USD	1,541,275	HKD	11,950,000	UBS AG	4/11/12		2,352
USD	9,133,844	JPY	709,085,000	Citibank, N.A.	4/11/12		565,953
USD	8,378,979	JPY	637,797,000	Citibank, N.A.	4/11/12		672,463
USD	8,143,715	JPY	620,376,000	Deutsche Bank AG	4/11/12		647,697
USD	8,746,300	JPY	671,938,000	UBS AG	4/11/12		627,257
USD	1,944,998	NOK	11,070,000	Citibank, N.A.	4/11/12		1,996
USD	1,918,834	NOK	10,898,000	Citibank, N.A.	4/11/12		6,021

See Notes to Financial Statements.

    BLACKROCK FUNDS     MARCH 31, 2012 25

Schedule of Investments (concluded) BlackRock International Opportunities Portfolio

	Currency Purchased		Currency Sold	Counterparty	Settle- ment Date	Unrealized Appreciation (Depreciation)
USD	3,541,123	NOK	19,815,000	Citibank, N.A.	4/11/12	$	63,203
USD	38,429,813	NOK	231,178,000	UBS AG	4/11/12		(2,146,456	)
USD	3,053,016	NOK	17,181,000	UBS AG	4/11/12		37,414
USD	6,656,286	NOK	37,449,000	UBS AG	4/11/12		83,253
USD	1,972,418	SEK	13,774,000	Citibank, N.A.	4/11/12		(108,542	)
USD	6,223,930	SEK	41,407,000	Citibank, N.A.	4/11/12		(31,790	)
USD	2,819,255	SEK	18,850,000	Citibank, N.A.	4/11/12		(28,581	)
USD	6,398,319	SEK	42,976,000	Deutsche Bank AG	4/11/12		(94,444	)
USD	1,990,178	SEK	13,778,000	UBS AG	4/11/12		(91,386	)
USD	5,037,458	SGD	6,324,000	Citibank, N.A.	4/11/12		6,584
USD	3,174,563	SGD	3,990,000	Deutsche Bank AG	4/11/12		434
USD	10,863,180	SGD	13,999,000	Royal Bank of Scotland Plc	4/11/12		(273,317	)
USD	3,806,537	SGD	4,782,000	Royal Bank of Scotland Plc	4/11/12		2,356
Total						$	(6,138,801	)

— Fair Value Measurements – Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs 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

— 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 and derivative financial instruments)

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instrument 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 derivative financial instruments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.

The following tables summarize the inputs used as of March 31, 2012 in determining the fair valuation of the Fund’s investments and derivative financial instruments:

Valuation Inputs	Level 1		Level 2			Level 3	Total
Assets:
Investments:
Long-Term Investments:
Common Stocks:
Argentina	$	21,718,704		–		–	$	21,718,704
Australia		–	$	66,021,086		–		66,021,086
Belgium		–		17,806,736		–		17,806,736
Bermuda		–		12,530,427		–		12,530,427
Brazil		74,921,946		–		–		74,921,946
Canada		89,872,362		–		–		89,872,362
China		11,822,721		40,629,733		–		52,452,454
France		–		77,922,863		–		77,922,863
Germany		–		145,874,068		–		145,874,068
Gibraltar		–		1,955,839		–		1,955,839
Hong Kong		8,891,413		56,649,102		–		65,540,515
India		–		11,494,206		–		11,494,206
Indonesia		–		20,638,861		–		20,638,861
Ireland		28,461,042		20,080,972		–		48,542,014
Israel		18,030,852		–		–		18,030,852
Italy		–		27,607,960		–		27,607,960
Japan		–		230,734,513		–		230,734,513
Luxembourg		–		15,898,679		–		15,898,679
Malaysia		–		8,710,752		–		8,710,752
Mexico		24,868,241		–		–		24,868,241
Netherlands		2,427,002		76,028,569		–		78,455,571
Norway		–		24,741,781	��	–		24,741,781
Singapore		11,811,807		45,549,880		–		57,361,687
South Africa		–		18,660,784		–		18,660,784
South Korea		–		44,384,850		–		44,384,850
Spain		–		27,106,980		–		27,106,980
Sweden		–		28,750,406		–		28,750,406
Switzerland		9,665,250		119,366,249		–		129,031,499
Taiwan		7,375,233		32,239,130		–		39,614,363
United Kingdom		20,437,062		290,270,007		–		310,707,069
United States		4,672,712		–		–		4,672,712
Short-Term Securities		73,310,419		474,700		–		73,785,119
Total	$	408,286,766	$	1,462,129,133		–	$	1,870,415,899

Valuation Inputs	Level 1	Level 2			Level 3	Total
Derivative Financial Instruments1
Assets:
Foreign currency exchange contracts	–	$	11,793,885		–	$	11,793,885
Liabilities:
Foreign currency exchange contracts	–		(17,932,686	)	–		(17,932,686	)
Total	–	$	(6,138,801	)	–	$	(6,138,801	)

¹  Derivative financial instruments are foreign currency exchange contracts which are valued at the unrealized appreciation/depreciation on the instrument.

See Notes to Financial Statements.

26     BLACKROCK FUNDS     MARCH 31, 2012

Schedule of Investments March 31, 2012	BlackRock Science & Technology Opportunities Portfolio
(Unaudited)	(Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Biotechnology – 0.7%
Biogen Idec, Inc. (a)		6,137	$	773,078
Gilead Sciences, Inc. (a)		12,700		620,395
				1,393,473
Communications Equipment – 9.7%
Acme Packet, Inc. (a)		6,125		168,560
Cisco Systems, Inc.		242,473		5,128,304
F5 Networks, Inc. (a)		25,900		3,495,464
Finisar Corp. (a)		8,989		181,128
Juniper Networks, Inc. (a)		8,250		188,760
Polycom, Inc. (a)		21,392		407,945
QUALCOMM, Inc.		109,846		7,471,725
Riverbed Technology, Inc. (a)		96,950		2,722,356
				19,764,242
Computers & Peripherals – 13.5%
Apple, Inc.		30,797		18,461,878
EMC Corp. (a)		124,199		3,711,066
NetApp, Inc. (a)		44,700		2,001,219
SanDisk Corp. (a)		53,182		2,637,295
Synaptics, Inc. (a)		17,270		630,528
				27,441,986
Diversified Consumer Services – 1.5%
New Oriental Education & Technology Group, Inc. - ADR (a)		113,900		3,127,694
Electronic Equipment, Instruments & Components – 1.4%
Jabil Circuit, Inc.		113,600		2,853,632
Health Care Equipment & Supplies – 0.7%
Baxter International, Inc.		12,300		735,294
Medtronic, Inc.		17,500		685,825
				1,421,119
Internet & Catalog Retail – 1.2%
Amazon.com, Inc. (a)		12,300		2,490,873
Internet Software & Services – 14.3%
Baidu, Inc. - ADR (a)		14,550		2,120,953
Bazaarvoice, Inc. (a)		30,900		613,983
Brightcove, Inc. (a)		86,100		2,135,280
Constant Contact, Inc. (a)		69,500		2,070,405
Demandware, Inc. (a)		9,000		268,200
eBay, Inc. (a)		145,600		5,371,184
ExactTarget, Inc. (a)		33,100		860,600
Google, Inc., Class A (a)		10,175		6,524,617
LogMeIn, Inc. (a)		11,416		402,186
MercadoLibre, Inc.		20,858		2,039,704
Millennial Media, Inc. (a)		58,400		1,372,400
Responsys, Inc. (a)		108,086		1,293,789
Sina Corp. (a)		3,075		199,875
Sohu.com, Inc. (a)(b)		39,034		2,153,506
Tencent Holdings Ltd.		39,600		1,105,413
Yelp, Inc. (a)		22,200		596,958
				29,129,053
IT Services – 11.9%
Accenture Plc, Class A		67,300		4,340,850
Automatic Data Processing, Inc.		34,701		1,915,148
Cognizant Technology Solutions Corp., Class A (a)		51,850		3,989,857
International Business Machines Corp.		31,600		6,593,340
Mastercard, Inc., Class A		4,700		1,976,538
Teradata Corp. (a)		36,098		2,460,079
Vantiv, Inc., Class A (a)		52,300		1,026,649

Common Stocks	Shares			Value
IT Services (concluded)
Visa, Inc., A Shares		16,700		$	1,970,600
					24,273,061
Machinery – 0.2%
Proto Labs, Inc. (a)		12,300			419,307
Pharmaceuticals – 0.4%
Pfizer, Inc.		32,500			736,450
Semiconductors & Semiconductor Equipment – 17.2%
Advanced Micro Devices, Inc. (a)		243,130			1,949,903
Altera Corp.		50,375			2,005,933
ASML Holding NV		23,500			1,177,388
Avago Technologies Ltd.		108,100			4,212,657
Broadcom Corp., Class A (a)		77,400			3,041,820
Cavium, Inc. (a)		30,807			953,169
Fairchild Semiconductor International, Inc. (a)		141,724	��		2,083,343
Infineon Technologies AG		95,100			971,964
Intel Corp.		164,200			4,615,662
Intersil Corp., Class A		87,500			980,000
Lam Research Corp. (a)		23,625			1,054,147
Linear Technology Corp.		20,341			685,492
Micron Technology, Inc. (a)		234,000			1,895,400
ON Semiconductor Corp. (a)		94,150			848,291
RF Micro Devices, Inc. (a)		77,449			385,696
Samsung Electronics Co. Ltd.		975			1,099,853
Skyworks Solutions, Inc. (a)		85,292			2,358,324
Tokyo Electron Ltd.		6,400			369,052
TriQuint Semiconductor, Inc. (a)		30,925			213,228
Xilinx, Inc.		109,000			3,970,870
					34,872,192
Software – 26.1%
ACI Worldwide, Inc. (a)(b)		83,400			3,358,518
Ariba, Inc. (a)		79,700			2,606,987
Check Point Software Technologies Ltd. (a)		31,975			2,041,284
Citrix Systems, Inc. (a)		36,691			2,895,287
CommVault Systems, Inc. (a)		10,485			520,475
Fortinet, Inc. (a)		97,700			2,701,405
Guidewire Software, Inc. (a)		58,100			1,788,318
Imperva, Inc. (a)(b)		70,924			2,776,675
Informatica Corp. (a)		11,875			628,187
Intuit, Inc.		3,300			198,429
MICROS Systems, Inc. (a)		88,844			4,912,185
Microsoft Corp.		77,650			2,504,213
MicroStrategy, Inc., Class A (a)		13,400			1,876,000
Oracle Corp.		99,300			2,895,588
QLIK Technologies, Inc. (a)		96,300			3,081,600
Red Hat, Inc. (a)		87,700			5,252,353
Rovi Corp. (a)		54,600			1,777,230
Salesforce.com, Inc. (a)		6,427			993,036
SAP AG - ADR		28,500			1,989,870
Symantec Corp. (a)		111,000			2,075,700
TIBCO Software, Inc. (a)		116,540			3,554,470
Totvs SA		33,181			609,653
VMware, Inc., Class A (a)		18,400			2,067,608
					53,105,071
Total Long-Term Investments
(Cost – $161,749,712) – 98.8%					201,028,153

See Notes to Financial Statements.

    BLACKROCK FUNDS     MARCH 31, 2012 27

Schedule of Investments (continued)	BlackRock Science & Technology Opportunities Portfolio
	(Percentages shown are based on Net Assets)

Short-Term Securities	Shares		Value
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.14% (c)(d)		5,656,112	$	5,656,112
	Beneficial Interest (000)
BlackRock Liquidity Series, LLC Money Market Series, 0.24% (c)(d)(e)	$	2,816		2,815,500
Total Short-Term Securities (Cost – $8,471,612) – 4.2%				8,471,612

	Value
Total Investments (Cost – $170,221,324)		209,499,765
Liabilities in Excess of Other Assets – (3.0)%		(6,010,657	)
Net Assets – 100.0%	$	203,489,108

(a) Non-income producing security.

(b) Security, or a portion of security, is on loan.

(c) Investments in companies considered to be an affiliate of the Fund during the period, 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 September 30, 2011		Net Activity			Shares/ Beneficial Interest Held at March 31, 2012		Realized Gain		Income
BlackRock Liquidity Funds, TempFund, Institutional Class		6,191,478		(535,366	)		5,656,112		$222	$	2,893
BlackRock Liquidity Series, LLC Money Market Series		$8,808,582	$	(5,993,082	)	$	2,815,500		–	$	53,465

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

(e) Security was purchased with the cash collateral from loaned securities.

— Foreign currency exchange contracts as of March 31, 2012 were as follows:

	Currency Purchased		Currency Sold	Counterparty	Settle- ment Date	Unrealized Appreciation (Depreciation)
CHF	114,000	USD	125,950	Citibank, N.A.	4/11/12	$           356
CHF	371,000	USD	407,536	Citibank, N.A.	4/11/12	3,513
CHF	204,000	USD	221,779	Citibank, N.A.	4/11/12	4,242
CHF	697,000	USD	759,199	Citibank, N.A.	4/11/12	13,040
CHF	3,015,000	USD	3,303,918	Citibank, N.A.	4/11/12	36,542
GBP	265,000	USD	419,032	Royal Bank of Scotland Plc	4/11/12	4,803
HKD	7,851,000	USD	1,012,734	Citibank, N.A.	4/11/12	(1,681)
JPY	356,000	USD	4,433	UBS AG	4/11/12	(131)
USD	4,854,683	CHF	4,580,000	UBS AG	4/11/12	(219,714)
USD	1,473,479	EUR	1,151,000	Goldman Sachs Bank	4/11/12	(61,695)
				USA
USD	402,714	EUR	310,000	UBS AG	4/11/12	(10,756)
USD	405,773	GBP	265,000	Goldman Sachs Bank USA	4/11/12	(18,061)
USD	2,132,843	HKD	16,564,000	Goldman Sachs Bank USA	4/11/12	(272)
USD	518,275	JPY	39,773,000	Royal Bank of Scotland Plc	4/11/12	37,697
Total						$(212,117)

— For Fund compliance purposes, the Fund’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes and/or as defined by Fund management. These definitions may not apply for purposes of this report, which may combine industry sub-classifications for reporting ease.

— Fair Value Measurements – Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs 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

— 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 and derivative financial instruments)

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instrument 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 derivative financial instruments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.

See Notes to Financial Statements.

28     BLACKROCK FUNDS     MARCH 31, 2012

Schedule of Investments (concluded) BlackRock Science & Technology Opportunities Portfolio

The following tables summarize the inputs used as of March 31, 2012 in determining the fair valuation of the Fund’s investments and derivative financial instruments:

Valuation Inputs	Level 1		Level 2		Level 3	Total
Assets:
Investments:
Long-Term Investments:
Common Stocks:
Biotechnology	$	1,393,473		–	–	$	1,393,473
Communications Equipment		19,764,242		–	–		19,764,242
Computers & Peripherals		27,441,986		–	–		27,441,986
Diversified Consumer Services		3,127,694		–	–		3,127,694
Electronic Equipment, Instruments & Components		2,853,632		–	–		2,853,632
Health Care Equipment & Supplies		1,421,119		–	–		1,421,119
Internet & Catalog Retail		2,490,873		–	–		2,490,873
Internet Software & Services		28,023,640	$	1,105,413	–		29,129,053
IT Services		24,273,061		–	–		24,273,061
Machinery		419,307		–	–		419,307
Pharmaceuticals		736,450		–	–		736,450
Semiconductors & Semiconductor Equipment		31,253,935		3,618,257	–		34,872,192
Software		53,105,071		–	–		53,105,071
Short-Term Securities		5,656,112		2,815,500	–		8,471,612
Total	$	201,960,595	$	7,539,170	–	$	209,499,765

Valuation Inputs	Level 1	Level 2		Level 3	Total
Derivative Financial Instruments1
Assets:
Foreign currency exchange contracts	–	$	100,193	–	$	100,193
Liabilities:
Foreign currency exchange contracts	–		(312,310)	–		(312,310	)
Total	–	$	(212,117)	–		$(212,117	)

¹ Derivative financial instruments are foreign currency exchange contracts which are valued at the unrealized appreciation/depreciation on the instrument.

See Notes to Financial Statements.

    BLACKROCK FUNDS     MARCH 31, 2012 29

Schedule of Investments March 31, 2012 (Unaudited)	BlackRock U.S. Opportunities Portfolio
	(Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Aerospace & Defense – 1.0%
Raytheon Co.		290,000	$	15,306,200
Triumph Group, Inc.		263,200		16,492,112
				31,798,312
Air Freight & Logistics – 0.4%
Expeditors International of Washington, Inc.		273,800		12,734,438
Airlines – 0.5%
Southwest Airlines Co.		2,031,300		16,737,912
Auto Components – 1.2%
The Goodyear Tire & Rubber Co. (a)		1,762,800		19,778,616
Lear Corp.		384,000		17,852,160
				37,630,776
Automobiles – 0.5%
Tesla Motors, Inc. (a)(b)		392,100		14,601,804
Beverages – 0.7%
Coca-Cola Enterprises, Inc.		774,600		22,153,560
Biotechnology – 1.6%
Alexion Pharmaceuticals, Inc. (a)		302,700		28,108,722
ARIAD Pharmaceuticals, Inc. (a)(b)		442,163		7,052,500
Dendreon Corp. (a)(b)		116,800		1,244,504
Medivation, Inc. (a)		66,000		4,931,520
Vertex Pharmaceuticals, Inc. (a)		174,000		7,135,740
				48,472,986
Building Products – 0.6%
Owens Corning (a)(b)		539,300		19,430,979
Capital Markets – 3.9%
Affiliated Managers Group, Inc. (a)		297,600		33,274,656
Ameriprise Financial, Inc.		472,700		27,005,351
Jefferies Group, Inc.		273,635		5,155,283
Lazard Ltd., Class A (b)		933,800		26,669,328
TD Ameritrade Holding Corp.		1,408,200		27,797,868
				119,902,486
Chemicals – 3.2%
Celanese Corp.		416,300		19,224,734
Cytec Industries, Inc.		375,300		22,814,487
Huntsman Corp.		946,400		13,259,064
PPG Industries, Inc.		233,900		22,407,620
Valspar Corp.		443,700		21,426,273
				99,132,178
Commercial Banks – 3.0%
Associated Banc-Corp		941,162		13,138,621
Comerica, Inc.		701,400		22,697,304
Commerce Bancshares, Inc.		291,865		11,826,370
Iberiabank Corp.		293,100		15,672,057
KeyCorp		3,378,300		28,715,550
				92,049,902
Communications Equipment – 1.2%
F5 Networks, Inc. (a)		204,100		27,545,336
Juniper Networks, Inc. (a)		429,300		9,822,384
				37,367,720
Computers & Peripherals – 1.0%
NetApp, Inc. (a)		389,200		17,424,484
SanDisk Corp. (a)		254,508		12,621,052
				30,045,536
Construction & Engineering – 0.6%
Chicago Bridge & Iron Co. NV		217,800		9,406,782
KBR, Inc.		288,700		10,263,285
				19,670,067

Common Stocks	Shares		Value
Containers & Packaging – 1.2%
Crown Holdings, Inc. (a)		661,800	$	24,374,094
Rock-Tenn Co., Class A		192,400		12,998,544
				37,372,638
Diversified Financial Services – 1.0%
CBOE Holdings, Inc.		403,500		11,467,470
The NASDAQ OMX Group, Inc. (a)		725,500		18,790,450
				30,257,920
Electric Utilities – 1.4%
FirstEnergy Corp.		373,000		17,005,070
PPL Corp.		908,800		25,682,688
				42,687,758
Electrical Equipment – 1.1%
The Babcock & Wilcox Co. (a)		568,000		14,626,000
Rockwell Automation, Inc.		245,200		19,542,440
				34,168,440
Electronic Equipment, Instruments & Components – 0.7%
Jabil Circuit, Inc.		828,100		20,801,872
Energy Equipment & Services – 2.7%
Cameron International Corp. (a)		270,600		14,295,798
Dresser-Rand Group, Inc. (a)(b)		341,705		15,851,695
Oceaneering International, Inc.		233,400		12,577,926
Rowan Cos., Inc. (a)(b)		891,700		29,363,681
Weatherford International Ltd. (a)		669,900		10,108,791
				82,197,891
Food & Staples Retailing – 0.6%
Whole Foods Market, Inc.		211,600		17,605,120
Food Products – 4.2%
ConAgra Foods, Inc.		772,700		20,291,102
Green Mountain Coffee Roasters, Inc. (a)(b)		152,970		7,165,115
Post Holdings, Inc. (a)		165,168		5,438,982
Ralcorp Holdings, Inc. (a)		330,336		24,474,594
Sara Lee Corp.		1,444,500		31,100,085
Smithfield Foods, Inc. (a)		912,400		20,100,172
Snyders-Lance, Inc.		148,900		3,849,065
TreeHouse Foods, Inc. (a)		296,400		17,635,800
				130,054,915
Health Care Equipment & Supplies – 2.3%
Align Technology, Inc. (a)(b)		91,541		2,521,955
DENTSPLY International, Inc.		369,200		14,815,996
Hologic, Inc. (a)		1,108,700		23,892,485
Intuitive Surgical, Inc. (a)(b)		31,232		16,919,936
Varian Medical Systems, Inc. (a)(b)		50,000		3,448,000
Zimmer Holdings, Inc.		131,500		8,452,820
				70,051,192
Health Care Providers & Services – 3.0%
Aetna, Inc.		265,694		13,327,211
AMERIGROUP Corp. (a)		46,700		3,141,976
AmerisourceBergen Corp.		177,300		7,035,264
Centene Corp. (a)		65,800		3,222,226
Coventry Health Care, Inc.		133,000		4,730,810
HCA Holdings, Inc. (a)		241,900		5,984,606
Henry Schein, Inc. (a)(b)		116,800		8,839,424
Humana, Inc.		148,736		13,755,105
Laboratory Corp. of America Holdings (a)		37,000		3,386,980
Quest Diagnostics, Inc.		220,200		13,465,230
Universal Health Services, Inc., Class B		113,100		4,740,021
VCA Antech, Inc. (a)(b)		435,600		10,110,276
				91,739,129

See Notes to Financial Statements.

30     BLACKROCK FUNDS     MARCH 31, 2012

Schedule of Investments (continued)	BlackRock U.S. Opportunities Portfolio
	(Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Health Care Technology – 0.7%
Cerner Corp. (a)		213,500	$	16,260,160
SXC Health Solutions Corp. (a)(b)		76,400		5,726,944
				21,987,104
Hotels, Restaurants & Leisure – 1.8%
Penn National Gaming, Inc. (a)(b)		337,900		14,522,942
Starwood Hotels & Resorts Worldwide, Inc.		524,500		29,587,045
Wynn Resorts Ltd.		100,800		12,587,904
				56,697,891
Household Durables – 2.8%
Jarden Corp.		501,000		20,155,230
PulteGroup, Inc. (a)(b)		1,658,500		14,677,725
Toll Brothers, Inc. (a)		637,600		15,296,024
Tupperware Brands Corp.		410,900		26,092,150
Whirlpool Corp.		121,200		9,315,432
				85,536,561
Independent Power Producers & Energy Traders – 0.8%
Calpine Corp. (a)		1,528,000		26,296,880
Insurance – 2.9%
AON Plc		473,300		23,220,098
Hartford Financial Services Group, Inc.		1,053,000		22,197,240
The Progressive Corp.		229,176		5,312,300
Reinsurance Group of America, Inc.		241,800		14,379,846
RenaissanceRe Holdings Ltd.		321,300		24,332,049
				89,441,533
IT Services – 1.8%
Fiserv, Inc. (a)(b)		375,900		26,083,701
Teradata Corp. (a)		315,438		21,497,100
The Western Union Co.		518,100		9,118,560
				56,699,361
Life Sciences Tools & Services – 1.0%
Agilent Technologies, Inc.		251,533		11,195,734
Life Technologies Corp. (a)		245,400		11,980,428
Waters Corp. (a)		100,054		9,271,004
				32,447,166
Machinery – 3.7%
Dover Corp.		310,800		19,561,752
Ingersoll-Rand Plc (b)		422,600		17,474,510
Joy Global, Inc.		285,200		20,962,200
Parker Hannifin Corp.		189,300		16,005,315
Snap-On, Inc.		273,400		16,669,198
Stanley Black & Decker, Inc.		301,640		23,214,214
				113,887,189
Media – 2.5%
Liberty Global, Inc., Class A (a)		620,600		31,079,648
Liberty Media Corp., Class A (a)		332,500		29,309,875
Scripps Networks Interactive, Inc., Class A		368,300		17,932,527
				78,322,050
Metals & Mining – 0.4%
Nucor Corp.		172,600		7,413,170
United States Steel Corp. (b)		212,800		6,249,936
				13,663,106
Multiline Retail – 2.9%
Dollar Tree, Inc. (a)(b)		286,650		27,085,559
Macy’s, Inc.		705,600		28,033,488
Nordstrom, Inc.		410,000		22,845,200
Saks, Inc. (a)(b)		1,000,000		11,610,000
				89,574,247

Common Stocks	Shares		Value
Multi-Utilities – 4.5%
Alliant Energy Corp.		420,400	$	18,211,728
CenterPoint Energy, Inc.		977,300		19,272,356
CMS Energy Corp.		820,900		18,059,800
Public Service Enterprise Group, Inc.		570,200		17,453,822
Sempra Energy		528,100		31,664,876
Wisconsin Energy Corp.		440,800		15,507,344
Xcel Energy, Inc.		687,700		18,203,419
				138,373,345
Oil, Gas & Consumable Fuels – 4.7%
Cabot Oil & Gas Corp.		346,600		10,803,522
Concho Resources, Inc. (a)		176,500		18,017,120
EQT Corp.		369,300		17,803,953
Kosmos Energy Ltd. (a)(b)		1,433,700		18,982,188
Peabody Energy Corp.		267,000		7,732,320
Pioneer Natural Resources Co.		170,000		18,970,300
Range Resources Corp.		319,900		18,598,986
Southwestern Energy Co. (a)(b)		343,100		10,498,860
Whiting Petroleum Corp. (a)		462,400		25,108,320
				146,515,569
Paper & Forest Products – 1.1%
International Paper Co.		993,100		34,857,810
Pharmaceuticals – 1.5%
Elan Corp. Plc - ADR (a)(b)		1,455,700		21,850,057
Endo Pharmaceuticals Holdings, Inc. (a)		260,100		10,073,673
Mylan, Inc. (a)		471,200		11,049,640
ViroPharma, Inc. (a)(b)		159,600		4,799,172
				47,772,542
Professional Services – 1.5%
Equifax, Inc.		523,300		23,161,258
Manpower, Inc.		167,742		7,945,939
Robert Half International, Inc.		496,624		15,047,707
				46,154,904
Real Estate Investment Trusts (REITs) – 6.3%
Essex Property Trust, Inc. (b)		234,500		35,529,095
Federal Realty Investment Trust (b)		423,500		40,990,565
Health Care REIT, Inc. (b)		316,600		17,400,336
Hospitality Properties Trust		1,519,500		40,221,165
Rayonier, Inc.		787,350		34,714,261
SL Green Realty Corp. (b)		239,800		18,596,490
Washington REIT (b)		291,006		8,642,878
				196,094,790
Real Estate Management & Development – 1.3%
CBRE Group, Inc. (a)		2,075,800		41,432,968
Road & Rail – 1.2%
Ryder System, Inc.		600,200		31,690,560
Swift Transportation Co. (a)		372,301		4,296,354
				35,986,914
Semiconductors & Semiconductor Equipment – 4.0%
Advanced Micro Devices, Inc. (a)		2,026,045		16,248,881
Altera Corp.		399,100		15,892,162
Avago Technologies Ltd.		665,000		25,915,050
International Rectifier Corp. (a)(b)		149,461		3,448,065
Intersil Corp., Class A		283,300		3,172,960
Linear Technology Corp.		498,000		16,782,600
Micron Technology, Inc. (a)		838,400		6,791,040
ON Semiconductor Corp. (a)		1,624,578		14,637,448
RF Micro Devices, Inc. (a)		677,977		3,376,325
Skyworks Solutions, Inc. (a)		582,319		16,101,120
				122,365,651

See Notes to Financial Statements.

    BLACKROCK FUNDS     MARCH 31, 2012 31

Schedule of Investments (concluded)	BlackRock U.S. Opportunities Portfolio
	(Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Software – 5.0%
Advent Software, Inc. (a)		87,639	$	2,243,558
Autodesk, Inc. (a)		137,200		5,806,304
Check Point Software Technologies Ltd. (a)		291,300		18,596,592
Citrix Systems, Inc. (a)		190,200		15,008,682
Fortinet, Inc. (a)		555,917		15,371,105
Intuit, Inc.		107,100		6,439,923
Nuance Communications, Inc. (a)(b)		254,800		6,517,784
QLIK Technologies, Inc. (a)		755,770		24,184,640
Red Hat, Inc. (a)		260,100		15,577,389
Rovi Corp. (a)		430,000		13,996,500
Symantec Corp. (a)(b)		513,100		9,594,970
TIBCO Software, Inc. (a)(b)		687,766		20,976,863
				154,314,310
Specialty Retail – 3.5%
Abercrombie & Fitch Co., Class A		232,800		11,549,208
Guess?, Inc.		681,200		21,287,500
O’Reilly Automotive, Inc. (a)(b)		365,500		33,388,425
Ross Stores, Inc.		589,200		34,232,520
rue21, Inc. (a)(b)		261,500		7,672,410
				108,130,063
Textiles, Apparel & Luxury Goods – 1.6%
Coach, Inc.		183,100		14,149,968
Deckers Outdoor Corp. (a)(b)		175,100		11,040,055
PVH Corp.		266,000		23,761,780
				48,951,803

Common Stocks	Shares		Value
Trading Companies & Distributors – 0.7%
United Rentals, Inc. (a)(b)		474,500	$	20,351,305
Wireless Telecommunication Services — 1.3%
NII Holdings, Inc. (a)		553,100		10,127,261
SBA Communications Corp., Class A (a)(b)		611,600		31,075,396
				41,202,657
Total Long-Term Investments
(Cost – $2,536,316,657) – 97.1%				3,005,723,250
Short-Term Securities
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.14% (c)(d)		89,365,810		89,365,810
	Beneficial Interest (000)
BlackRock Liquidity Series, LLC Money Market Series, 0.24% (c)(d)(e)	$	331,247		331,246,609
Total Short-Term Securities (Cost – $420,612,419) – 13.6%				420,612,419
Total Investments (Cost – $2,956,929,076) – 110.7%				3,426,335,669
Liabilities in Excess of Other Assets – (10.7)%				(331,960,583	)
Net Assets – 100.0%			$	3,094,375,086

(a)   Non-income producing security.

(b)  Security, or a portion of security, is on loan.

(c) Investments in companies considered to be an affiliate of the Fund during the period, 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 September 30, 2011		Net Activity			Shares/ Beneficial Interest Held at March 31, 2012		Realized Gain		Income
BlackRock Liquidity Funds, TempFund, Institutional Class		187,421,477		(98,055,667	)		89,365,810		$1,359	$	71,331
BlackRock Liquidity Series, LLC Money Market Series		$274,382,587	$	56,864,022			$331,246,609		–	$	667,278

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

(e) Security was purchased with the cash collateral from loaned securities.

— For Fund compliance purposes, the Fund’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes and/or as defined by Fund management. These definitions may not apply for purposes of this report, which may combine industry sub-classifications for reporting ease.

— Fair Value Measurements – Various inputs are used in determining the fair value of investments. These inputs 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

— 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)

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. 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 inputs used as of March 31, 2012 in determining the fair valuation of the Fund’s investments:

Valuation Inputs	Level 1	Level 2	Level 3	Total
Assets:
Investments:
Long-Term Investments1	$3,005,723,250	–	–	$3,005,723,250
Short-Term Securities	89,365,810	$331,246,609	–	420,612,419
Total	$3,095,089,060	$331,246,609	–	$3,426,335,669

¹  See above Schedule of Investments for values in each industry.

        See Notes to Financial Statements.

32     BLACKROCK FUNDS     MARCH 31, 2012

Statements of Assets and Liabilities

March 31, 2012 (Unaudited)	BlackRock Global Opportunities Portfolio			BlackRock Health Sciences Opportunities Portfolio			BlackRock International Opportunities Portfolio			BlackRock Science & Technology Opportunities Portfolio			BlackRock U.S. Opportunities Portfolio
Assets
Investments at value – unaffiliated1,2	$	349,017,974		$	1,810,071,982		$	1,796,630,780		$	201,028,153		$	3,005,723,250
Investments at value – affiliated3		9,341,977			192,358,394			73,785,119			8,471,612			420,612,419
Cash		312			–			1,311,619			12,652			–
Cash pledged as collateral for options written		–			9,966,600			–			–			–
Foreign currency at value4		5,322,110			1,233,903			42,594,099			541,005			–
Investments sold receivable		450,745			20,123,181			3,160,648			–			20,369,412
Unrealized appreciation on foreign currency exchange contracts		1,920,237			936,236			11,793,885			100,193			–
Dividends and reclaims receivable – unaffiliated		717,372			2,878,609			6,336,137			53,876			3,095,321
Capital shares sold receivable		156,766			3,338,259			2,573,182			643,330			5,041,140
Receivable from advisor		38,324			–			–			–			222,871
Dividends receivable – affiliated		861			8,782			9,852			517			9,552
Securities lending income receivable – affiliated		–			13,875			645			3,119			81,286
Prepaid expenses		42,254			86,462			81,746			56,961			117,919
Total assets		367,008,932			2,041,016,283			1,938,277,712			210,911,418			3,455,273,170
Liabilities
Options written at value5		–			197,760			–			–			–
Bank overdraft		–			–			–			–			263
Collateral on securities loaned at value		–			103,422,838			474,700			2,815,500			331,246,609
Investments purchased payable		2,000,198			81,734,108			–			3,579,702			15,764,395
Unrealized depreciation on foreign currency exchange contracts		2,721,491			7,750,965			17,932,686			312,310			–
Capital shares redeemed payable		968,960			3,671,148			4,914,638			255,626			7,552,165
Investment advisory fees payable		277,410			1,100,373			1,586,562			169,390			2,559,140
Service and distribution fees payable		118,248			566,439			342,822			56,884			484,939
Other affiliates payable		13,521			166,507			227,702			19,682			296,127
Officer’s and Trustees’ fees payable		1,649			9,328			13,575			2,225			28,827
Other accrued expenses payable		293,938			845,482			1,227,959			210,991			2,965,619
Total liabilities		6,395,415			199,464,948			26,720,644			7,422,310			360,898,084
Net Assets	$	360,613,517		$	1,841,551,335		$	1,911,557,068		$	203,489,108		$	3,094,375,086
Net Assets Consist of
Paid-in capital	$	493,211,561		$	1,507,078,006		$	1,915,498,173		$	221,331,820		$	2,588,129,004
Undistributed (distributions in excess of) net investment income (loss)		1,062,385			(3,303,124	)		(8,562,793	)		(1,984,678	)		3,650,388
Accumulated net realized gain (loss)		(165,555,896	)		34,589,874			(110,473,889	)		(54,931,681	)		33,189,101
Net unrealized appreciation/depreciation		31,895,467			303,186,579			115,095,577			39,073,647			469,406,593
Net Assets	$	360,613,517		$	1,841,551,335		$	1,911,557,068		$	203,489,108		$	3,094,375,086
1 Investments at cost – unaffiliated	$	316,335,420		$	1,500,626,133		$	1,675,847,474		$	161,749,712		$	2,536,316,657
2 Securities loaned at value		–		$	101,088,423		$	459,613		$	2,762,296		$	323,942,234
3 Investments at cost – affiliated	$	9,341,977		$	192,358,394		$	73,785,119		$	8,471,612		$	420,612,419
4 Foreign currency at cost	$	5,312,497		$	1,208,157		$	42,300,818		$	534,272			–
5 Premiums received		–		$	664,296			–			–			–

See Notes to Financial Statements.

    BLACKROCK FUNDS     MARCH 31, 2012 33

Statements of Assets and Liabilities (concluded)

March 31, 2012 (Unaudited)	BlackRock Global Opportunities Portfolio		BlackRock Health Sciences Opportunities Portfolio		BlackRock International Opportunities Portfolio		BlackRock Science & Technology Opportunities Portfolio		BlackRock U.S. Opportunities Portfolio
Net Asset Value
Institutional
Net assets	$	62,752,267	$	428,522,089	$	908,188,023	$	41,786,824	$	1,812,851,118
Shares outstanding1		5,661,049		13,283,161		27,933,829		3,913,688		48,529,542
Net asset value	$	11.08	$	32.26	$	32.51	$	10.68	$	37.36
Service
Net assets		–	$	15,720,858	$	52,022,009	$	1,169,351	$	189,524,789
Shares outstanding1		–		499,543		1,656,361		113,467		5,310,917
Net asset value		–	$	31.47	$	31.41	$	10.31	$	35.69
Investor A
Net assets	$	214,140,558	$	968,879,959	$	766,074,737	$	121,050,061	$	791,614,641
Shares outstanding1		19,451,949		30,854,145		24,641,453		11,922,337		22,450,535
Net asset value	$	11.01	$	31.40	$	31.09	$	10.15	$	35.26
Investor B
Net assets	$	6,411,746	$	45,626,289	$	13,581,934	$	3,269,968	$	15,504,064
Shares outstanding1		594,799		1,547,966		467,438		354,790		488,955
Net asset value	$	10.78	$	29.47	$	29.06	$	9.22	$	31.71
Investor C
Net assets	$	61,186,939	$	370,240,870	$	171,690,365	$	31,588,318	$	284,880,474
Shares outstanding1		5,697,695		12,614,734		5,962,955		3,431,310		8,978,318
Net asset value	$	10.74	$	29.35	$	28.79	$	9.21	$	31.73
Class R
Net assets	$	16,122,007	$	12,561,270		–	$	4,624,586		–
Shares outstanding1		1,466,058		401,439		–		443,953		–
Net asset value	$	11.00	$	31.29		–	$	10.42		–
1 Unlimited number of shares authorized, $0.001 par value.

See Notes to Financial Statements.

34     BLACKROCK FUNDS     MARCH 31, 2012

Statements of Operations

Six Months Ended March 31, 2012 (Unaudited)	BlackRock Global Opportunities Portfolio			BlackRock Health Sciences Opportunities Portfolio			BlackRock International Opportunities Portfolio			BlackRock Science & Technology Opportunities Portfolio			BlackRock U.S. Opportunities Portfolio
Investment Income
Dividends and reclaims – unaffiliated	$	3,613,624		$	13,770,521		$	20,104,762		$	495,166		$    24,372,499
Foreign taxes withheld		(142,254	)		(286,005	)		(1,186,370	)		(5,191	)	(1,633)
Dividends – affiliated		3,355			50,791			50,135			2,893		71,331
Interest		–			430			5,967			305		–
Securities lending – affiliated		–			112,779			4,390			53,465		667,278
Total income		3,474,725			13,648,516			18,978,884			546,638		25,109,475
Expenses
Investment advisory		1,638,624			6,171,638			9,081,086			842,930		17,415,658
Service and distribution – class specific		654,761			3,115,692			1,940,839			314,541		2,862,586
Transfer agent – class specific		343,515			1,474,606			1,989,048			349,313		3,803,281
Administration		136,552			540,271			586,286			70,244		984,736
Administration – class specific		45,637			191,890			201,537			23,448		276,289
Professional		40,096			30,525			37,811			33,262		35,499
Custodian		31,713			68,220			135,282			14,196		87,521
Registration		24,334			51,761			60,408			35,884		93,378
Printing		12,002			50,063			59,536			7,468		115,679
Officer and Trustees		5,873			23,057			24,692			3,762		47,280
Miscellaneous		19,078			30,514			50,043			13,393		35,697
Recoupment of past waived fees – class specific		2,061			–			1,304			19,302		550
Total expenses		2,954,246			11,748,237			14,167,872			1,727,743		25,758,154
Less fees waived by advisor		(4,567	)		(27,966	)		(30,756	)		(2,381	)	(1,778,585)
Less administration fees waived – class specific		(44,202	)		(651	)		(1,720	)		(4,714	)	(125,827)
Less transfer agent fees waived – class specific		(7,116	)		(85	)		(2,306	)		(1,861	)	(86,698)
Less transfer agent fees reimbursed – class specific		(254,671	)		(531	)		(245	)		(9,112	)	(2,111,718)
Less fees paid indirectly		(49	)		(447	)		(280	)		(81	)	(431)
Total expenses after fees waived, reimbursed and paid indirectly		2,643,641			11,718,557			14,132,565			1,709,594		21,654,895
Net investment income (loss)		831,084			1,929,959			4,846,319			(1,162,956	)	3,454,580
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from:
Investments – unaffiliated		(8,953,037	)1		32,912,669			(48,514,399	)		7,633,985		38,197,170
Investments – affiliated		199			321			1,306			222		1,359
Options written		311,864			1,206,001			–			–		–
Financial futures contracts		–			–			4,387,622			(307,584	)	3,640,472
Foreign currency transactions		(824,798	)		13,481,431			9,216,104			1,242,612		–
		(9,465,772	)		47,600,422			(34,909,367	)		8,569,235		41,839,001
Net change in unrealized appreciation/depreciation on:
Investments		71,409,698			244,316,134			317,419,412			33,515,100		637,800,116
Options written		–			466,536			–			–		–
Financial futures contracts		–			–			1,617,815			–		10,765,517
Foreign currency transactions		617,444			(12,180,700	)		(6,311,286	)		(1,010,956	)	–
		72,027,142			232,601,970			312,725,941			32,504,144		648,565,633
Total realized and unrealized gain		62,561,370			280,202,392			277,816,574			41,073,379		690,404,634
Net Increase in Net Assets Resulting from Operations	$	63,392,454		$	282,132,351		$	282,662,893		$	39,910,423		$    693,859,214
1 Net of $(2,110) foreign capital gain tax.

See Notes to Financial Statements.

    BLACKROCK FUNDS     MARCH 31, 2012 35

Statements of Changes in Net Assets

	BlackRock Global Opportunities Portfolio						BlackRock Health Sciences Opportunities Portfolio
Increase in Net Assets:	Six Months Ended March 31, 2012 (Unaudited)			Year Ended September 30, 2011			Six Months Ended March 31, 2012 (Unaudited)			Year Ended September 30, 2011
Operations
Net investment income (loss)	$	831,084		$	275,112		$	1,929,959		$	(5,001,828)
Net realized gain (loss)		(9,465,772	)		3,378,527			47,600,422			91,796,358
Net change in unrealized appreciation/depreciation		72,027,142			(26,740,125	)		232,601,970			(53,887,779)
Net increase (decrease) in net assets resulting from operations		63,392,454			(23,086,486	)		282,132,351			32,906,751
Dividends and Distributions to Shareholders From
Net investment income:
Institutional		(118,127	)		(151,636	)		–			(356,523)
Investor A		(283,735	)		(128,372	)		–			–
Class R		(4,925	)		–			–			–
Net realized gain:
Institutional		–			–			(18,534,663	)		(10,061,316)
Service		–			–			(758,372	)		(519,043)
Investor A		–			–			(44,254,685	)		(30,115,936)
Investor B		–			–			(2,120,280	)		(1,712,754)
Investor C		–			–			(15,906,640	)		(11,157,356)
Class R		–			–			(527,704	)		–
Decrease in net assets resulting from dividends and distributions to shareholders		(406,787	)		(280,008	)		(82,102,344	)		(53,922,928)
Capital Share Transactions
Net increase (decrease) in net assets derived from capital share transactions		(51,792,404	)		288,633,793			57,090,390			344,887,812
Redemption Fees
Redemption fees		–			2,143			–			17,727
Net Assets
Total increase in net assets		11,193,263			265,269,442			257,120,397			323,889,362
Beginning of period		349,420,254			84,150,812			1,584,430,938			1,260,541,576
End of period	$	360,613,517		$	349,420,254		$	1,841,551,335		$	1,584,430,938
Undistributed (distributions in excess of) net investment income (loss)	$	1,062,385		$	638,088		$	(3,303,124	)	$	(5,233,083)

See Notes to Financial Statements.

36     BLACKROCK FUNDS     MARCH 31, 2012

Statements of Changes in Net Assets (concluded)

	BlackRock International Opportunities Portfolio						BlackRock Science & Technology Opportunities Portfolio						BlackRock U.S. Opportunities Portfolio
Increase (Decrease) in Net Assets:	Six Months Ended March 31, 2012 (Unaudited)			Year Ended September 30, 2011			Six Months Ended March 31, 2012 (Unaudited)			Year Ended September 30, 2011			Six Months Ended March 31, 2012 (Unaudited)			Year Ended September 30, 2011
Operations
Net investment income (loss)	$	4,846,319		$	26,393,452		$	(1,162,956	)	$	(2,170,676	)	$	3,454,580		$	(6,590,565)
Net realized gain (loss)		(34,909,367	)		149,988,562			8,569,235			(1,510,360	)		41,839,001			396,998,889
Net change in unrealized appreciation/depreciation		312,725,941			(417,009,868	)		32,504,144			(7,020,373	)		648,565,633			(659,559,092)
Net increase (decrease) in net assets resulting from operations		282,662,893			(240,627,854	)		39,910,423			(10,701,409	)		693,859,214			(269,150,768)
Dividends and Distributions to Shareholders From
Net investment income:
Institutional		(16,930,123	)		(10,989,330	)		–			–			–			–
Service		(747,975	)		(459,323	)		–			–			–			–
Investor A		(13,129,458	)		(7,220,618	)		–			–			–			–
Investor B		(122,493	)		(6,972	)		–			–			–			–
Investor C		(1,570,033	)		(523,946	)		–			–			–			–
Net realized gain:
Institutional		–			–			–			–			(200,665,343	)		(33,361,497)
Service		–			–			–			–			(20,074,027	)		(3,268,451)
Investor A		–			–			–			–			(94,447,429	)		(16,649,136)
Investor B		–			–			–			–			(1,740,672	)		(237,927)
Investor C		–			–			–			–			(31,519,270	)		(4,147,409)
Decrease in net assets resulting from dividends and distributions to shareholders		(32,500,082	)		(19,200,189	)		–			–			(348,446,741	)		(57,664,420)
Capital Share Transactions
Net increase (decrease) in net assets derived from capital share transactions		(67,397,031	)		71,985,983			(12,184,581	)		12,679,272			(525,822,006	)		263,237,665
Redemption Fees
Redemption fees		–			28,640			–			10,894			–			87,311
Net Assets
Total increase (decrease) in net assets		182,765,780			(187,813,420	)		27,725,842			1,988,757			(180,409,533	)		(63,490,212)
Beginning of period		1,728,791,288			1,916,604,708			175,763,266			173,774,509			3,274,784,619			3,338,274,831
End of period	$	1,911,557,068		$	1,728,791,288		$	203,489,108		$	175,763,266		$	3,094,375,086		$	3,274,784,619
Undistributed (distributions in excess of) net investment income (loss)	$	(8,562,793	)	$	19,090,970		$	(1,984,678	)	$	(821,722	)	$	3,650,388		$	195,808

See Notes to Financial Statements.

    BLACKROCK FUNDS     MARCH 31, 2012 37

Financial Highlights BlackRock Global Opportunities Portfolio

	Institutional
	Six Months Ended March 31,			Year Ended September 30,
	2012
	(Unaudited)			2011			2010			2009			2008			2007
Per Share Operating Performance
Net asset value, beginning of period	$	9.32		$	10.52		$	10.13		$	9.96		$	13.31		$	10.10
Net investment income1		0.04			0.08			0.06			0.06			0.09			0.09
Net realized and unrealized gain (loss)		1.74			(1.20)	2		0.482			0.122			(2.77)	2		3.212
Net increase (decrease) from investment operations		1.78			(1.12)			0.54			0.18			(2.68)			3.30
Dividends and distributions from:
Net investment income		(0.02)			(0.08)			(0.15)			(0.01)			(0.17)			(0.09)
Net realized gain		–			–			–			–			(0.50)			–
Total dividends and distributions		(0.02)			(0.08)			(0.15)			(0.01)			(0.67)			(0.09)
Net asset value, end of period	$	11.08		$	9.32		$	10.52		$	10.13		$	9.96		$	13.31
Total Investment Return3
Based on net asset value		19.12%	4		(10.81)%	5		5.32%	5		1.78%	5		(21.16)%	5		32.81%	5
Ratios to Average Net Assets
Total expenses		1.24%	6		1.53%			1.43%			1.50%			1.33%			1.32%
Total expenses excluding recoupment of past waived fees		1.24%	6		1.52%			1.42%			1.49%			1.33%			1.32%
Total expenses after fees waived, reimbursed and paid indirectly		1.06%	6		1.34%			1.37%			1.36%			1.32%			1.29%
Net investment income		0.85%	6		0.68%			0.64%			0.70%			0.77%			0.78%
Supplemental Data
Net assets, end of period (000)	$	62,752		$	58,793		$	21,699		$	16,971		$	36,625		$	35,679
Portfolio turnover		54%			137%			146%			190%			181%			107%

¹   Based on average shares outstanding.

²   Includes redemption fees, which are less than $0.01 per share.

³   Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

⁴   Aggregate total investment return.

⁵   Redemption fee of 2.00% is reflected in total return calculations. There was no impact to the return.

⁶   Annualized.

See Notes to Financial Statements.

38     BLACKROCK FUNDS     MARCH 31, 2012

Financial Highlights (continued) BlackRock Global Opportunities Portfolio

	Investor A																	Investor B
	Six Months Ended March 31, 2012 (Unaudited)																	Six Months Ended March 31, 2012 (Unaudited)
				Year Ended September 30,																	Year Ended September 30,
				2011			2010			2009			2008			2007					2011			2010			2009			2008			2007
Per Share Operating Performance
Net asset value, beginning of period	$	9.26		$	10.45		$	10.08		$	9.92		$	13.27			$10.08	$	9.10		$	10.31		$	9.93		$	9.83		$	13.16		$        10.03
Net investment income (loss)1		0.03			0.05			0.03			0.04			0.06			0.04		(0.01	)		(0.04	)		(0.04	)		(0.02	)		(0.04	)	(0.04)
Net realized and unrealized gain (loss)		1.73			(1.20	)2		0.46	2		0.12	2		(2.77	)2		3.222		1.69			(1.17	)2		0.45	2		0.12	2		(2.76	)2	3.222
Net increase (decrease) from investment operations		1.76			(1.15	)		0.49			0.16			(2.71	)		3.26		1.68			(1.21	)		0.41			0.10			(2.80	)	3.18
Dividends and distributions from:
Net investment income		(0.01	)		(0.04	)		(0.12	)		–			(0.14	)		(0.07)		–			–			(0.03	)		–			(0.03	)	(0.05)
Net realized gain		–			–			–			–			(0.50	)		–		–			–			–			–			(0.50	)	–
Total dividends and distributions		(0.01	)		(0.04	)		(0.12	)		–			(0.64	)		(0.07)		–			–			(0.03	)		–			(0.53	)	(0.05)
Net asset value, end of period	$	11.01		$	9.26		$	10.45		$	10.08		$	9.92			$13.27	$	10.78		$	9.10		$	10.31		$	9.93		$	9.83		$        13.16
Total Investment Return3
Based on net asset value		19.06%	4		(11.11)%	5		4.92%	5		1.61%	5		(21.44)%	5		32.51%5		18.46%	4		(11.74)%	5		4.09%	5		1.02%	5		(22.13)%	5	31.79%5
Ratios to Average Net Assets
Total expenses		1.50%	6		1.76%			1.72%			1.81%			1.60%			1.68%		2.19%	6		2.56%			2.45%			2.65%			2.37%		3.06%
Total expenses excluding recoupment of past waived fees		1.50%	6		1.74%			1.70%			1.80%			1.60%			1.68%		2.19%	6		2.53%			2.45%			2.63%			2.37%		3.06%
Total expenses after fees waived, reimbursed and paid indirectly		1.33%	6		1.61%			1.67%			1.66%			1.60%			1.56%		2.18%	6		2.42%			2.43%			2.42%			2.36%		2.33%
Net investment income (loss)		0.58%	6		0.42%			0.32%			0.49%			0.49%			0.36%		(0.27)%	6		(0.39)%			(0.44)%			(0.25)%			(0.30)%		(0.39)%
Supplemental Data
Net assets, end of period (000)	$	214,141		$	210,299		$	39,280		$	45,110		$	37,529			$40,467	$	6,412		$	6,750		$	3,617		$	4,351		$	5,665		$        7,673
Portfolio turnover		54%			137%			146%			190%			181%			107%		54%			137%			146%			190%			181%		107%

¹ Based on average shares outstanding.

² Includes redemption fees, which are less than $0.01 per share.

³  Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

⁴  Aggregate total investment return.

⁵  Redemption fee of 2.00% is reflected in total return calculations. There was no impact to the return.

⁶  Annualized.

See Notes to Financial Statements.

    BLACKROCK FUNDS     MARCH 31, 2012 39

Financial Highlights (concluded) BlackRock Global Opportunities Portfolio

	Investor C																Class R
	Six Months Ended March 31, 2012 (Unaudited)			Year Ended September 30,													Six Months Ended March 31, 2012 (Unaudited)
				2011			2010			2009			2008			2007		Period September 12, 20111 to September 30,  2011
Per Share Operating Performance
Net asset value, beginning of period	$	9.06		$	10.27		$	9.91		$	9.82		$	13.16		$10.03	$    9.26		$    9.76
Net investment income (loss)2		(0.01	)		(0.04	)		(0.04	)		(0.02	)		(0.03	)	(0.05)	0.01		0.00	3
Net realized and unrealized gain (loss)		1.69			(1.17	)4		0.45	4		0.11	4		(2.77	)4	3.234	1.73		(0.50)4
Net increase (decrease) from investment operations		1.68			(1.21	)		0.41			0.09			(2.80	)	3.18	1.74		(0.50)
Dividends and distributions from:
Net investment income		–			–			(0.05	)		–			(0.04	)	(0.05)	(0.00)5		–
Net realized gain		–			–			–			–			(0.50	)	–	–		–
Total dividends and distributions		–			–			(0.05	)		–			(0.54	)	(0.05)	–		–
Net asset value, end of period	$	10.74		$	9.06		$	10.27		$	9.91		$	9.82		$13.16	$    11.00		$    9.26
Total Investment Return6
Based on net asset value		18.54%	7		(11.78)%	8		4.13%	8		0.92%	8		(22.14)%	8	31.76%8	18.83%7		(4.83)%	7,8
Ratios to Average Net Assets
Total expenses		2.31%	9		2.59%			2.49%			2.62%			2.38%		2.42%	1.95%9		1.98%	9
Total expenses excluding recoupment of past waived fees		2.31%	9		2.57%			2.49%			2.62%			2.38%		2.42%	1.92%9		1.98%	9
Total expenses after fees waived, reimbursed and paid indirectly		2.14%	9		2.42%			2.44%			2.42%			2.37%		2.35%	1.69%9		1.72%	9
Net investment income (loss)		(0.23)%	9		(0.38)%			(0.40)%			(0.26)%			(0.26)%		(0.40)%	0.22%9		0.23%	9
Supplemental Data
Net assets, end of period (000)	$	61,187		$	58,687		$	19,554		$	16,348		$	18,074		$18,217	$    16,122		$    14,891
Portfolio turnover		54%			137%			146%			190%			181%		107%	54%		137%
1    Commencement of operations.
2    Based on average shares outstanding.
3    Less than $0.01 per share.
4    Includes redemption fees, which are less than $0.01 per share.
5    Less than $(0.01) per share.
6    Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.
7    Aggregate total investment return.
8    Redemption fee of 2.00% is reflected in total return calculations. There was no impact to the return.
9    Annualized.

See Notes to Financial Statements.

40     BLACKROCK FUNDS     MARCH 31, 2012

Financial Highlights BlackRock Health Sciences Opportunities Portfolio

	Institutional																	Service
	Six Months Ended March 31, 2012 (Unaudited)			Year Ended September 30,														Six Months Ended March 31, 2012 (Unaudited)			Year Ended September 30,
					2011			2010			2009			2008			2007					2011			2010			2009			2008		2007
Per Share Operating Performance
Net asset value, beginning of period		$    28.77		$	28.92		$	26.29		$	28.77		$	30.41		$	26.18	$	28.05		$	28.22		$	25.74		$	28.20		$	29.85		$    25.78
Net investment income (loss)1		0.10			0.02			0.06			0.08			0.08			0.06		0.05			(0.07	)		(0.03	)		0.01			(0.02	)	(0.02)
Net realized and unrealized gain (loss)		4.95			1.23	2		2.57	2		(0.14	)2		(0.49)	2		4.522		4.85			1.19	2		2.51	2		(0.14	)2		(0.49	)2	4.442
Net increase (decrease) from investment operations		5.05			1.25			2.63			(0.06	)		(0.41)			4.58		4.90			1.12			2.48			(0.13	)		(0.51	)	4.42
Dividends and distributions from:
Net investment income		–			(0.05	)		–			–			–			–		–			–			–			–			–		–
Net realized gain		(1.56	)		(1.35	)		–			(2.42	)		(1.23)			(0.35)		(1.48	)		(1.29	)		–			(2.33	)		(1.14	)	(0.35)
Total dividends and distributions		(1.56	)		(1.40	)		–			(2.42	)		(1.23)			(0.35)		(1.48	)		(1.29	)		–			(2.33	)		(1.14	)	(0.35)
Net asset value, end of period		$    32.26		$	28.77		$	28.92		$	26.29		$	28.77		$	30.41	$	31.47		$	28.05		$	28.22		$	25.74		$	28.20		$    29.85
Total Investment Return3
Based on net asset value		18.40%	4		4.41%	5		10.00%	5,6		1.91%	5		(1.64)%5			17.68%5		18.28%	4		4.04%	5		9.64%	5,6		1.59%	5		(1.98	)%5	17.33%5
Ratios to Average Net Assets
Total expenses		0.98%	7		1.00%			1.00%			1.03%			1.00%			1.02%		1.27%	7		1.32%			1.33%			1.37%			1.35%		1.32%
Total expenses excluding recoupment of past waived fees		0.98%	7		1.00%			1.00%			1.03%			1.00%			1.02%		1.27%	7		1.31%			1.33%			1.35%			1.35%		1.32%
Total expenses after fees waived, reimbursed and paid indirectly		0.98%	7		1.00%			1.00%			1.03%			1.00%			1.02%		1.27%	7		1.31%			1.32%			1.36%			1.35%		1.30%
Net investment income (loss)		0.64%	7		0.07%			0.21%			0.36%			0.28%			0.21%		0.34%	7		(0.24)%			(0.12)%			0.03%			(0.06)%		(0.08)%
Supplemental Data
Net assets, end of period (000)		$428,522		$	362,292		$	232,697		$	171,607		$	185,933		$	172,902	$	15,721		$	13,478		$	11,704		$	8,110		$	5,764		$    7,806
Portfolio turnover		72%			135%			184%			153%			91%			98%		72%			135%			184%			153%			91%		98%
1    Based on average shares outstanding.
2    Includes redemption fees, which are less than $0.01 per share.
3    Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.
4    Aggregate total investment return.
5    Redemption fee of 2.00% is reflected in total return calculations. There was no impact to the return.
6    Includes proceeds received from a settlement of litigation, which had no impact on the Fund’s total return.
7    Annualized.

See Notes to Financial Statements.

    BLACKROCK FUNDS     MARCH 31, 2012 41

Financial Highlights (continued) BlackRock Health Sciences Opportunities Portfolio

	Investor A																Investor B
	Six Months Ended March 31, 2012 (Unaudited)			Year Ended September 30,													Six Months Ended March 31, 2012 (Unaudited)			Year Ended September 30,
					2011			2010			2009			2008		2007					2011			2010			2009			2008		2007
Per Share Operating Performance
Net asset value, beginning of period	$	28.00		$	28.18		$	25.69		$	28.14		$	29.77		$25.72	$	26.26		$	26.39		$	24.25		$	26.73		$	28.28		$    24.65
Net investment income (loss)1		0.05			(0.07	)		(0.03	)		0.01			(0.02	)	(0.03)		(0.07	)		(0.28	)		(0.23	)		(0.17	)		(0.23	)	(0.25)
Net realized and unrealized gain (loss)		4.83			1.19	2		2.52	2		(0.15	)2		(0.49	)2	4.432		4.54			1.14	2		2.37	2		(0.16	)2		(0.49	)2	4.232
Net increase (decrease) from investment operations		4.88			1.12			2.49			(0.14	)		(0.51	)	4.40		4.47			0.86			2.14			(0.33	)		(0.72	)	3.98
Distributions from net realized gain		(1.48	)		(1.30	)		–			(2.31	)		(1.12	)	(0.35)		(1.26	)		(0.99	)		–			(2.15	)		(0.83	)	(0.35)
Net asset value, end of period	$	31.40		$	28.00		$	28.18		$	25.69		$	28.14		$29.77	$	29.47		$	26.26		$	26.39		$	24.25		$	26.73		$    28.28
Total Investment Return3
Based on net asset value		18.25%	4		4.03%	5		9.69%	5,6		1.57%	5		(1.97	)%5	17.29%5		17.74%	4		3.27%	5		8.82%	5,6		0.73%	5		(2.78	)%5	16.33%5
Ratios to Average Net Assets
Total expenses		1.28%	7		1.31%			1.31%			1.37%			1.35%		1.35%		2.10%	7		2.06%			2.10%			2.20%			2.14%		2.22%
Total expenses excluding recoupment of past waived fees		1.28%	7		1.31%			1.31%			1.37%			1.35%		1.35%		2.10%	7		2.06%			2.10%			2.17%			2.14%		2.22%
Total expenses after fees waived, reimbursed and paid indirectly		1.28%	7		1.31%			1.31%			1.37%			1.35%		1.35%		2.09%	7		2.06%			2.09%			2.20%			2.14%		2.19%
Net investment income (loss)		0.33%	7		(0.24)%			(0.11)%			0.02%			(0.06)%		(0.13)%		(0.48)%	7		(0.99)%			(0.88)%			(0.80)%			(0.85)%		(0.96)%
Supplemental Data
Net assets, end of period (000)	$	968,880		$	825,046		$	682,857		$	478,273		$	564,943		$697,451	$	45,626		$	46,180		$	47,855		$	57,835		$	80,269		$    95,231
Portfolio turnover		72%			135%			184%			153%			91%		98%		72%			135%			184%			153%			91%		98%
1    Based on average shares outstanding.
2    Includes redemption fees, which are less than $0.01 per share.
3    Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.
4    Aggregate total investment return.
5    Redemption fee of 2.00% is reflected in total return calculations. There was no impact to the return.
6    Includes proceeds received from a settlement of litigation, which had no impact on the Fund’s total return.
7    Annualized.

See Notes to Financial Statements.

42     BLACKROCK FUNDS     MARCH 31, 2012

Financial Highlights (concluded) BlackRock Health Sciences Opportunities Portfolio

	Investor C																		Class R
	Six Months Ended March 31, 2012 (Unaudited)			Year Ended September 30,															Six Months Ended March 31, 2012 (Unaudited)			Period September 12, 20111 to September 30, 2011
					2011			2010			2009			2008			2007
Per Share Operating Performance
Net asset value, beginning of period	$	26.18		$	26.37		$	24.22		$	26.70		$	28.27		$	24.62		$	28.00		$    28.19
Net investment loss2		(0.05	)		(0.27	)		(0.21	)		(0.15	)		(0.21	)		(0.23	)		(0.01	)	(0.01)
Net realized and unrealized gain (loss)		4.52			1.14	3		2.36	3		(0.16	)3		(0.47	)3		4.23	3		4.82		(0.18)3
Net increase (decrease) from investment operations		4.47			0.87			2.15			(0.31	)		(0.68	)		4.00			4.81		(0.19)
Distributions from net realized gain		(1.30	)		(1.06	)		–			(2.17	)		(0.89	)		(0.35	)		(1.52	)	–
Net asset value, end of period	$	29.35		$	26.18		$	26.37		$	24.22		$	26.70		$	28.27		$	31.29		$    28.00
Total Investment Return4
Based on net asset value		17.81%	5		3.32%	6		8.88%	6,7		0.81%	6		(2.66	)%6		16.43%	6		17.99%	5	(0.64)%5,6
Ratios to Average Net Assets
Total expenses		2.02%	8		2.02%			2.04%			2.09%			2.05%			2.12%			1.69%	8	1.75%8
Total expenses excluding recoupment of past waived fees		2.02%	8		2.02%			2.04%			2.09%			2.05%			2.12%			1.69%	8	1.75%8
Total expenses after fees waived, reimbursed and paid indirectly		2.01%	8		2.02%			2.04%			2.09%			2.05%			2.11%			1.67%	8	1.75%8
Net investment loss		(0.40)%	8		(0.95)%			(0.83)%			(0.70)%			(0.76)%			(0.89)%			(0.04)%	8	(0.82)%8
Supplemental Data
Net assets, end of period (000)	$	370,241		$	327,855		$	285,428		$	255,340		$	305,015		$	363,739		$	12,561		$    9,580
Portfolio turnover		72%			135%			184%			153%			91%			98%			72%		135%
1    Commencement of operations.
2    Based on average shares outstanding.
3    Includes redemption fees, which are less than $0.01 per share.
4    Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.
5    Aggregate total investment return.
6    Redemption fee of 2.00% is reflected in total return calculations. There was no impact to the return.
7    Includes proceeds received from a settlement of litigation, which had no impact on the Fund’s total return.
8    Annualized.

See Notes to Financial Statements.

    BLACKROCK FUNDS     MARCH 31, 2012 43

Financial Highlights BlackRock International Opportunities Portfolio

	Institutional																		Service
	Six Months Ended March 31, 2012 (Unaudited)			Year Ended September 30,															Six Months Ended March 31, 2012 (Unaudited)			Year Ended September 30,
					2011			2010			2009			2008			2007						2011			2010			2009			2008			2007
Per Share Operating Performance
Net asset value, beginning of period	$	28.37		$	32.76		$	31.36		$	29.44		$	51.08		$	42.16		$	27.34		$	31.58		$	30.26		$	28.36		$	49.52		$	41.06
Net investment income1		0.12			0.49			0.28			0.34			0.47			0.48			0.04			0.34			0.16			0.27			0.28			0.32
Net realized and unrealized gain (loss)		4.62			(4.52	)2		1.58	2		1.68	2		(13.66	)2		14.98	2		4.47			(4.37	)2		1.53	2		1.63	2		(13.14	)2		14.58	2
Net increase (decrease) from investment operations		4.74			(4.03	)		1.86			2.02			(13.19	)		15.46			4.51			(4.03	)		1.69			1.90			(12.86	)		14.90
Dividends and distributions from:
Net investment income		(0.60	)		(0.36	)		(0.46	)		(0.10	)		(1.21	)		(0.71	)		(0.44	)		(0.21	)		(0.37	)		–			(1.06	)		(0.61	)
Net realized gain		–			–			–			–			(7.24	)		(5.83	)		–			–			–			–			(7.24	)		(5.83	)
Total dividends and distributions		(0.60	)		(0.36	)		(0.46	)		(0.10	)		(8.45	)		(6.54	)		(0.44	)		(0.21	)		(0.37	)		–			(8.30	)		(6.44	)
Net asset value, end of period	$	32.51		$	28.37		$	32.76		$	31.36		$	29.44		$	51.08		$	31.41		$	27.34		$	31.58		$	30.26		$	28.36		$	49.52
Total Investment Return3
Based on net asset value		16.96%	4		(12.50)%	5		5.99%	5		6.99%	5		(30.87)%	5,6		40.42%	5		16.69%	4		(12.88)%	5		5.63%	5		6.70%	5		(31.10)%	5,6		40.00%	5
Ratios to Average Net Assets
Total expenses		1.30%	7		1.26%			1.35%			1.45%			1.25%			1.25%			1.81%	7		1.66%			1.72%			1.75%			1.58%			1.59%
Total expenses excluding recoupment of past waived fees		1.30%	7		1.26%			1.34%			1.45%			1.25%			1.25%			1.81%	7		1.66%			1.69%			1.73%			1.58%			1.59%
Total expenses after fees waived, reimbursed and paid indirectly		1.30%	7		1.26%			1.35%			1.43%			1.25%			1.25%			1.79%	7		1.65%			1.72%			1.70%			1.58%			1.58%
Net investment income		0.75%	7		1.41%			0.91%			1.36%			1.18%			1.06%			0.24%	7		1.02%			0.53%			1.13%			0.72%			0.73%
Supplemental Data
Net assets, end of period (000)	$	908,188		$	792,695		$	802,167		$	673,420		$	450,605		$	492,444		$	52,022		$	47,846		$	70,365		$	83,093		$	64,368		$	172,135
Portfolio turnover		41%			116%			116%			143%			138%			77%			41%			116%			116%			143%			138%			77%

¹  Based on average shares outstanding.

²  Includes redemption fees, which are less than $0.01 per share.

³  Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

⁴  Aggregate total investment return.

⁵  Redemption fee of 2.00% is reflected in total return calculations. There was no impact to the return.

⁶  Payment from affiliate of $112,880 received by the Fund is reflected in total return calculations. There was no impact to the return.

⁷  Annualized.

See Notes to Financial Statements.

44     BLACKROCK FUNDS     MARCH 31, 2012

Financial Highlights (continued) BlackRock International Opportunities Portfolio

	Investor A																	Investor B
	Six Months																	Six Months
	Ended																	Ended
	March 31,			Year Ended September 30,														March 31,			Year Ended September 30,
	2012																	2012
	(Unaudited)			2011			2010			2009			2008			2007		(Unaudited)			2011			2010			2009			2008			2007
Per Share Operating Performance
Net asset value, beginning of period		$    27.10		$	31.33		$	30.02		$	28.14		$	49.19		$	40.81	$	25.18		$	29.10		$	27.83		$	26.29		$	46.43		$	38.81
Net investment income1		0.07			0.39			0.21			0.27			0.33			0.30		(0.05	)		0.10			(0.05	)		0.09			(0.06	)		(0.04)
Net realized and unrealized gain (loss)		4.44			(4.34	)2		1.50	2		1.62	2		(13.09	)2		14.492		4.15			(4.01	)2		1.42	2		1.45	2		(12.16	)2		13.742
Net increase (decrease) from investment operations		4.51			(3.95	)		1.71			1.89			(12.76	)		14.79		4.10			(3.91	)		1.37			1.54			(12.22	)		13.70
Dividends and distributions from:
Net investment income		(0.52	)		(0.28	)		(0.40	)		(0.01	)		(1.05	)		(0.58)		(0.22	)		(0.01	)		(0.10	)		–			(0.68	)		(0.25)
Net realized gain		–			–			–			–			(7.24	)		(5.83)		–			–			–			–			(7.24	)		(5.83)
Total dividends and distributions		(0.52	)		(0.28	)		(0.40	)		(0.01	)		(8.29	)		(6.41)		(0.22	)		(0.01	)		(0.10	)		–			(7.92	)		(6.08)
Net asset value, end of period		$    31.09		$	27.10		$	31.33		$	30.02		$	28.14		$	49.19	$	29.06		$	25.18		$	29.10		$	27.83		$	26.29		$	46.43
Total Investment Return3
Based on net asset value		16.84%	4		(12.77)%	5		5.73%	5		6.73%	5		(31.09)%	5,6		39.98%5		16.36%	4		(13.45)%	5		4.92%	5		5.86%	5		(31.63)%	5,6		38.89%5
Ratios to Average Net Assets
Total expenses		1.56%	7		1.54%			1.59%			1.68%			1.58%			1.60%		2.38%	7		2.32%			2.38%			2.49%			2.35%			2.37%
Total expenses excluding recoupment of past waived fees		1.56%	7		1.54%			1.59%			1.68%			1.58%			1.60%		2.38%	7		2.32%			2.38%			2.49%			2.35%			2.37%
Total expenses after fees waived, reimbursed and paid indirectly		1.55%	7		1.53%			1.59%			1.68%			1.58%			1.60%		2.37%	7		2.32%			2.38%			2.49%			2.35%			2.37%
Net investment income		0.48%	7		1.16%			0.72%			1.15%			0.87%			0.69%		(0.35)%	7		0.34%			(0.18)%			0.41%			(0.15)%			(0.10)%
Supplemental Data
Net assets, end of period (000)		$766,075		$	703,201		$	794,034		$	604,283		$	482,526		$	555,189	$	13,582		$	15,568		$	25,080		$	33,094		$	42,927		$	102,624
Portfolio turnover		41%			116%			116%			143%			138%			77%		41%			116%			116%			143%			138%			77%

¹  Based on average shares outstanding.

²  Includes redemption fees, which are less than $0.01 per share.

³  Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

⁴  Aggregate total investment return.

⁵  Redemption fee of 2.00% is reflected in total return calculations. There was no impact to the return.

⁶  Payment from affiliate of $112,880 received by the Fund is reflected in total return calculations. There was no impact to the return.

⁷  Annualized.

See Notes to Financial Statements.

    BLACKROCK FUNDS     MARCH 31, 2012 45

Financial Highlights (concluded) BlackRock International Opportunities Portfolio

	Investor C
	Six Months
	Ended			Year Ended September 30,
	March 31,
	2012
	(Unaudited)			2011			2010			2009			2008			2007
Per Share Operating Performance
Net asset value, beginning of period	$	24.98		$	28.92		$	27.74		$	26.21		$	46.34		$	38.78
Net investment income (loss)1		(0.04	)		0.11			(0.02	)		0.08			0.03			(0.03	)
Net realized and unrealized gain (loss)		4.10			(3.98	)2		1.39	2		1.45	2		(12.20	)2		13.71	2
Net increase (decrease) from investment operations		4.06			(3.87	)		1.37			1.53			(12.17	)		13.68
Dividends and distributions from:
Net investment income		(0.25	)		(0.07	)		(0.19	)		–			(0.72	)		(0.29	)
Net realized gain		–			–			–			–			(7.24	)		(5.83	)
Total dividends and distributions		(0.25	)		(0.07	)		(0.19	)		–			(7.96	)		(6.12	)
Net asset value, end of period	$	28.79		$	24.98		$	28.92		$	27.74		$	26.21		$	46.34
Total Investment Return3
Based on net asset value		16.35%	4		(13.44)%	5		4.95%	5		5.84%	5		(31.61)%	5,6		38.91%	5
Ratios to Average Net Assets
Total expenses		2.35%	7		2.31%			2.36%			2.49%			2.32%			2.36%
Total expenses excluding recoupment of past waived fees		2.35%	7		2.31%			2.36%			2.49%			2.32%			2.36%
Total expenses after fees waived, reimbursed and paid indirectly		2.35%	7		2.31%			2.36%			2.48%			2.32%			2.36%
Net investment income (loss)		(0.31)%	7		0.37%			(0.06)%			0.38%			0.08%			(0.08)%
Supplemental Data
Net assets, end of period (000)	$	171,690		$	169,481		$	224,958		$	187,246		$	194,068		$	255,980
Portfolio turnover		41%			116%			116%			143%			138%			77%

¹  Based on average shares outstanding.

²  Includes redemption fees, which are less than $0.01 per share.

³  Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

⁴  Aggregate total investment return.

⁵  Redemption fee of 2.00% is reflected in total return calculations. There was no impact to the return.

⁶  Payment from affiliate of $112,880 received by the Fund is reflected in total return calculations. There was no impact to the return.

⁷  Annualized.

See Notes to Financial Statements.

46     BLACKROCK FUNDS     MARCH 31, 2012

Financial Highlights BlackRock Science & Technology Opportunities Portfolio

	Institutional																	Service
	Six Months Ended March 31, 2012 (Unaudited)			Year Ended September 30,														Six Months Ended March 31, 2012 (Unaudited)			Year Ended September 30,
					2011			2010			2009			2008			2007					2011			2010			2009			2008		2007
Per Share Operating Performance
Net asset value, beginning of period	$	8.61		$	9.02		$	7.79		$	6.98		$	9.03		$	7.20	$	8.32		$	8.72		$	7.56		$	6.80		$	8.83		$        7.07
Net investment loss1		(0.04	)		(0.06	)		(0.05	)		(0.02	)		(0.05	)		(0.03)		(0.05	)		(0.07	)		(0.08	)		(0.04	)		(0.06	)	(0.07)
Net realized and unrealized gain (loss)		2.11			(0.35	)2		1.28	2		0.83	2		(2.00	)2		1.862		2.04			(0.33	)2		1.24	2		0.80	2		(1.97	)2	1.832
Net increase (decrease) from investment operations		2.07			(0.41	)		1.23			0.81			(2.05	)		1.83		1.99			(0.40	)		1.16			0.76			(2.03	)	1.76
Net asset value, end of period	$	10.68		$	8.61		$	9.02		$	7.79		$	6.98		$	9.03	$	10.31		$	8.32		$	8.72		$	7.56		$	6.80		$        8.83
Total Investment Return3
Based on net asset value		24.04%	4		(4.55)%	5		15.79%	5,6		11.60%	5,7		(22.70)%	5		25.42%5		23.92%	4		(4.59)%	5		15.34%	5,8		11.18%	5,9		(22.99)%	5	24.89%5
Ratios to Average Net Assets
Total expenses		1.46%	10		1.46%			1.55%			1.90%			1.70%			1.91%		1.57%	10		1.55%			1.76%			1.96%			2.01%		2.30%
Total expenses excluding recoupment of past waived fees		1.46%	10		1.46%			1.55%			1.90%			1.70%			1.91%		1.54%	10		1.54%			1.67%			1.96%			2.01%		2.30%
Total expenses after fees waived, reimbursed and paid indirectly		1.39%	10		1.39%			1.39%			1.36%			1.35%			1.35%		1.56%	10		1.53%			1.74%			1.75%			1.73%		1.73%
Net investment loss		(0.81)%	10		(0.60)%			(0.59)%			(0.27)%			(0.55)%			(0.44)%		(1.00)%	10		(0.74)%			(0.94)%			(0.71)%			(0.75)%		(0.85)%
Supplemental Data
Net assets, end of period (000)	$	41,787		$	33,982		$	33,135		$	27,013		$	42,886		$	1,449	$	1,169		$	851		$	659		$	193		$	106		$        123
Portfolio turnover		164%			103%			97%			158%			89%			92%		164%			103%			97%			158%			89%		92%
1    Based on average shares outstanding.
2    Includes redemption fees, which are less than $0.01 per share.
3    Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.
4    Aggregate total investment return.
5    Redemption fee of 2.00% is reflected in total return calculations. There was no impact to the return.
6    Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been 15.53%.
7    Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been 9.03%.
8    Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been 15.08%.
9    Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been 8.53%.
10  Annualized.

See Notes to Financial Statements.

    BLACKROCK FUNDS     MARCH 31, 2012 47

Financial Highlights (continued) BlackRock Science & Technology Opportunities Portfolio

	Investor A																		Investor B
	Six Months Ended March 31, 2012 (Unaudited)			Year Ended September 30,															Six Months Ended March 31, 2012 (Unaudited)			Year Ended September 30,
				2011			2010			2009			2008			2007						2011			2010			2009			2008			2007
Per Share Operating Performance
Net asset value, beginning of period	$	8.21		$	8.62		$	7.48		$	6.73		$	8.74		$	7.00		$	7.48		$	7.93		$	6.94		$	6.30		$	8.26		$      6.66
Net investment loss1		(0.05	)		(0.09	)		(0.08	)		(0.04	)		(0.06	)		(0.06	)		(0.08	)		(0.16	)		(0.14	)		(0.08	)		(0.13	)	(0.12)
Net realized and unrealized gain (loss)		1.99			(0.32	)2		1.22	2		0.79	2		(1.95	)2		1.80	2		1.82			(0.29	)2		1.13	2		0.72	2		(1.83	)2	1.722
Net increase (decrease) from investment operations		1.94			(0.41	)		1.14			0.75			(2.01	)		1.74			1.74			(0.45	)		0.99			0.64			(1.96	)	1.60
Net asset value, end of period	$	10.15		$	8.21		$	8.62		$	7.48		$	6.73		$	8.74		$	9.22		$	7.48		$	7.93		$	6.94		$	6.30		$      8.26
Total Investment Return3
Based on net asset value		23.63%	4		(4.76	)%5		15.24%	5,6		11.14%	5,7		(23.00	)%5		24.86%	5		23.26%	4		(5.68	)%5		14.27%	5,8		10.16%	5,9		(23.73	)%5	24.02%5
Ratios to Average Net Assets
Total expenses		1.75%	10		1.79%			1.82%			2.24%			2.04%			2.16%			2.56%	10		2.67%			2.70%			3.13%			2.96%		3.01%
Total expenses excluding recoupment of past waived fees		1.72%	10		1.71%			1.81%			2.24%			2.04%			2.16%			2.56%	10		2.44%			2.65%			3.00%			2.96%		3.01%
Total expenses after fees waived, reimbursed and paid indirectly		1.74%	10		1.78%			1.79%			1.77%			1.75%			1.73%			2.56%	10		2.66%			2.69%			2.65%			2.65%		2.50%
Net investment loss		(1.15)%	10		(0.98)%			(0.99)%			(0.68)%			(0.77)%			(0.80)%			(1.96)%	10		(1.87)%			(1.90)%			(1.53)%			(1.70)%		(1.59)%
Supplemental Data
Net assets, end of period (000)	$	121,050		$	106,632		$	105,577		$	83,734		$	72,659		$	21,632		$	3,270		$	3,130		$	4,390		$	6,538		$	11,473		$      9,030
Portfolio turnover		164%			103%			97%			158%			89%			92%			164%			103%			97%			158%			89%		92%
1    Based on average shares outstanding.
2    Includes redemption fees, which are less than $0.01 per share.
3    Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.
4    Aggregate total investment return.
5    Redemption fee of 2.00% is reflected in total return calculations. There was no impact to the return.
6    Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been 14.97%.
7    Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been 8.47%.
8    Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been 13.98%.
9    Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been 7.30%.
10  Annualized.

See Notes to Financial Statements.

48     BLACKROCK FUNDS     MARCH 31, 2012

Financial Highlights (concluded) BlackRock Science & Technology Opportunities Portfolio

	Investor C																								Class R
	Six Months Ended				Year Ended September 30,																				Six Months Ended				Year Ended September 30,												Period September 8, 20081 to September 30, 2008
	March 31,																								March 31,
	2012																								2012
	(Unaudited)				2011				2010				2009				2008				2007				(Unaudited)				2011				2010				2009
Per Share Operating Performance
Net asset value, beginning of period		$	7.47			$	7.92			$	6.94			$	6.29			$	8.25			$	6.66			$	8.43			$	8.88			$	7.72			$	6.97			$	7.38
Net investment loss2			(0.08	)			(0.16	)			(0.14	)			(0.09	)			(0.13	)			(0.12)				(0.06	)			(0.12	)			(0.11	)			(0.06	)			(0.01	)
Net realized and unrealized gain (loss)			1.82				(0.29	)3			1.12	3			0.74	3			(1.83	)3			1.713				2.05				(0.33	)3			1.27	3			0.81	3			(0.40	)3
Net increase (decrease) from investment operations			1.74				(0.45	)			0.98				0.65				(1.96	)			1.59				1.99				(0.45	)			1.16				0.75				(0.41	)
Net asset value, end of period		$	9.21			$	7.47			$	7.92			$	6.94			$	6.29			$	8.25			$	10.42			$	8.43			$	8.88			$	7.72			$	6.97
Total Investment Return4
Based on net asset value			23.29%	5			(5.68	)%6			14.12%	6,7			10.33%	6,8			(23.76	)%6			23.87%	6			23.61%	5			(5.07	)%6			15.03%	6,9			10.76%	6,10			(5.56	)%5,6
Ratios to Average Net Assets
Total expenses			2.63%	11			2.68%				2.73%				3.23%				2.73%				2.88%				1.96%	11			2.00%				2.10%				2.42%				2.36%	11
Total expenses excluding recoupment of past waived fees			2.61%	11			2.59%				2.73%				3.23%				2.73%				2.88%				1.95%	11			2.00%				2.10%				2.42%				2.36%	11
Total expenses after fees waived, reimbursed and paid indirectly			2.62%	11			2.67%				2.71%				2.68%				2.62%				2.61%				1.95%	11			2.00%				2.09%				2.13%				2.13%	11
Net investment loss			(2.04)%	11			(1.88)%				(1.92)%				(1.59)%				(1.67)%				(1.69)%				(1.38)%	11			(1.21)%				(1.29)%				(1.04)%				(1.49)%	11
Supplemental Data
Net assets, end of period (000)		$	31,588			$	27,651			$	27,053			$	22,575			$	22,003			$	9,755			$	4,625			$	3,518			$	2,961			$	1,904			$	1,362
Portfolio turnover			164%				103%				97%				158%				89%				92%				164%				103%				97%				158%				89%

¹  Commencement of operations.

²  Based on average shares outstanding.

³  Includes redemption fees, which are less than $0.01 per share.

⁴  Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

⁵  Aggregate total investment return.

⁶  Redemption fee of 2.00% is reflected in total return calculations. There was no impact to the return.

⁷  Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been 13.83%.

⁸  Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been 7.47%.

⁹  Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been 14.77%.

¹⁰  Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been 8.18%.

¹¹  Annualized.

See Notes to Financial Statements.

    BLACKROCK FUNDS     MARCH 31, 2012 49

Financial Highlights BlackRock U.S. Opportunities Portfolio

	Institutional																	Service
	Six Months Ended			Year Ended September 30,														Six Months Ended			Year Ended September 30,
	March 31,																	March 31,
	2012																	2012
	(Unaudited)			2011			2010			2009			2008			2007		(Unaudited)			2011			2010			2009			2008			2007
Per Share Operating Performance
Net asset value, beginning of period		$33.86			$36.94			$32.20			$31.69			$37.05			$29.07		$32.44			$35.40			$30.93			$30.58			$35.89			$28.28
Net investment income (loss)1		0.09			0.05			0.04			0.09			0.09			0.03		0.00	2		(0.12	)		(0.11	)		(0.01	)		(0.06	)		(0.09	)
Net realized and unrealized gain (loss)		7.35			(2.44	)		4.77			0.42			(5.45	)		7.95		7.03			(2.34	)		4.58			0.35			(5.25	)		7.70
Net increase (decrease) from investment operations		7.44			(2.39	)		4.81			0.51			(5.36	)		7.98		7.03			(2.46	)		4.47			0.34			(5.31	)		7.61
Dividends and distributions from:
Net investment income		–			–			(0.07	)		(0.01	)		–			–		–			–			–			–			–			–
Net realized gains		(3.94	)		(0.69	)		–			–			–			–		(3.78	)		(0.50	)		–			–			–			–
Total dividends and distributions		(3.94	)		(0.69	)		(0.07	)		(0.01	)		–			–		(3.78	)		(0.50	)		–			–			–			–
Redemption fees added to paid-in capital		–			0.00	2		0.00	2		0.01			0.00	2		0.002		–			0.00	2		0.00	2		0.01			0.00	2		0.00	2
Net asset value, end of period		$37.36			$33.86			$36.94			$32.20			$31.69			$37.05		$35.69			$32.44			$35.40			$30.93			$30.58			$35.89
Total Investment Return3
Based on net asset value		23.51%	4		(6.75)%	5		14.96%	5,6		1.63%	7		(14.47)%	5		27.45%5		23.22%	4		(7.16)%	5		14.45%	5,6		1.14%	7		(14.80)%	5		26.91%	5
Ratios to Average Net Assets
Total expenses		1.38%	8		1.36%			1.30%			1.40%			1.42%			1.42%		1.62%	8		1.57%			1.60%			1.71%			1.68%			1.69%
Total expenses excluding recoupment of past waived fees		1.38%	8		1.36%			1.30%			1.40%			1.42%			1.42%		1.62%	8		1.57%			1.60%			1.70%			1.68%			1.69%
Total expenses after fees waived, reimbursed and paid indirectly		1.03%	8		1.03%			1.03%			1.01%			1.00%			1.01%		1.51%	8		1.46%			1.48%			1.49%			1.43%			1.40%
Net investment income (loss)		0.49%	8		0.12%			0.13%			0.36%			0.26%			0.09%		0.01%	8		(0.30)%			(0.34)%			(0.06)%			(0.17)%			(0.28)%
Supplemental Data
Net assets, end of period (000)		$1,812,851			$1,905,254			$1,588,509			$890,264			$298,166			$158,094		$189,525			$183,604			$235,926			$191,318			$109,679			$43,763
Portfolio turnover		47%			120%			123%			166%			164%			106%		47%			120%			123%			166%			164%			106%

¹  Based on average shares outstanding.

²  Less than $0.01 per share.

³  Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

⁴  Aggregate total investment return.

⁵  Redemption fee of 2.00% is reflected in total return calculations. There was no impact to the return.

⁶  Includes proceeds received from a settlement of litigation, which had no impact on the Fund’s total return.

⁷  Redemption fee of 2.00% is reflected in total return calculations. The impact to the return from redemption fees received during the period was an increase of 0.03%.

⁸  Annualized.

See Notes to Financial Statements.

50     BLACKROCK FUNDS     MARCH 31, 2012

Financial Highlights (continued) BlackRock U.S. Opportunities Portfolio

	Investor A																						Investor B
	Six Months Ended				Year Ended September 30,																		Six Months Ended				Year Ended September 30,
	March 31,																						March 31,
	2012																						2012
	(Unaudited)				2011				2010				2009				2008				2007		(Unaudited)				2011				2010				2009				2008				2007
Per Share Operating Performance
Net asset value, beginning of period		$	32.08			$	35.02			$	30.61			$	30.29			$	35.57			$28.03		$	29.11			$	31.96			$	28.16			$	28.06			$	33.20			$	26.37
Net investment loss1			(0.01	)			(0.13	)			(0.12	)			(0.04	)			(0.08	)		(0.10)			(0.12	)			(0.40	)			(0.35	)			(0.17	)			(0.31	)			(0.32	)
Net realized and unrealized gain (loss)			6.95				(2.31	)			4.53				0.35				(5.20	)		7.64			6.27				(2.06	)			4.15				0.26				(4.83	)			7.15
Net increase (decrease) from investment operations			6.94				(2.44	)			4.41				0.31				(5.28	)		7.54			6.15				(2.46	)			3.80				0.09				(5.14	)			6.83
Distributions from net realized gains			(3.76	)			(0.50	)			–				–				–			–			(3.55	)			(0.39	)			–				–				–				–
Redemption fees added to paid-in capital			–				0.00	2			0.00	2			0.01				0.00	2		0.002			–				0.00	2			0.00	2			0.01				0.00	2			0.00	2
Net asset value, end of period		$	35.26			$	32.08			$	35.02			$	30.61			$	30.29			$35.57		$	31.71			$	29.11			$	31.96			$	28.16			$	28.06			$	33.20
Total Investment Return3
Based on net asset value			23.17%	4			(7.19)%	5			14.41%	5,6			1.06%	7			(14.84)%	5		26.90%5			22.70%	4			(7.90)%	5			13.49%	5,6			0.36%	7			(15.48)%	5			25.90%	5
Ratios to Average Net Assets
Total expenses			1.66%	8			1.59%				1.64%				1.76%				1.73%			1.77%			2.44%	8			2.39%				2.44%				2.59%				2.56%				2.56%
Total expenses excluding recoupment of past waived fees			1.66%	8			1.59%				1.64%				1.75%				1.73%			1.77%			2.44%	8			2.37%				2.44%				2.59%				2.56%				2.56%
Total expenses after fees waived, reimbursed and paid indirectly			1.55%	8			1.49%				1.51%				1.56%				1.48%			1.48%			2.31%	8			2.28%				2.30%				2.27%				2.22%				2.23%
Net investment loss			(0.04)%	8			(0.34)%				(0.37)%				(0.15)%				(0.22)%			(0.32)%			(0.79)%	8			(1.12)%				(1.18)%				(0.77)%				(0.95)%				(1.06)%
Supplemental Data
Net assets, end of period (000)		$	791,615			$	888,293			$	1,158,626			$	855,127			$	495,656			$228,668		$	15,504			$	15,047			$	20,255			$	21,849			$	20,998			$	35,928
Portfolio turnover			47%				120%				123%				166%				164%			106%			47%				120%				123%				166%				164%				106%

¹ Based on average shares outstanding.

² Less than $0.01 per share.

³ Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

⁴ Aggregate total investment return.

⁵ Redemption fee of 2.00% is reflected in total return calculations. There was no impact to the return.

⁶ Includes proceeds received from a settlement of litigation, which had no impact on the Fund’s total return.

⁷ Redemption fee of 2.00% is reflected in total return calculations. The impact to the return from redemption fees received during the period was an increase of 0.04%.

⁸ Annualized.

See Notes to Financial Statements.

    BLACKROCK FUNDS     MARCH 31, 2012 51

Financial Highlights (concluded) BlackRock U.S. Opportunities Portfolio

	Investor C
	Six Months Ended			Year Ended September 30,
	March 31, 2012
	(Unaudited)			2011			2010			2009			2008			2007
Per Share Operating Performance
Net asset value, beginning of period	$	29.11		$	31.95		$	28.14		$	28.04		$	33.18		$	26.34
Net investment loss1		(0.12	)		(0.38	)		(0.33	)		(0.19	)		(0.30	)		(0.32	)
Net realized and unrealized gain (loss)		6.28			(2.07	)		4.14			0.28			(4.84	)		7.16
Net increase (decrease) from investment operations		6.16			(2.45	)		3.81			0.09			(5.14	)		6.84
Distributions from net realized gains		(3.54	)		(0.39	)		–			–			–			–
Redemption fees added to paid-in capital		–			0.00	2		0.00	2		0.01			0.00	2		0.00	2
Net asset value, end of period	$	31.73		$	29.11		$	31.95		$	28.14		$	28.04		$	33.18
Total Investment Return3
Based on net asset value		22.73%	4		(7.87)%	5		13.54%	5,6		0.36%	7		(15.49)%	5		25.97%	5
Ratios to Average Net Assets
Total expenses		2.37%	8		2.34%			2.39%			2.52%			2.46%			2.51%
Total expenses excluding recoupment of past waived fees		2.37%	8		2.33%		��	2.38%			2.52%			2.46%			2.51%
Total expenses after fees waived, reimbursed and paid indirectly		2.27%	8		2.24%			2.27%			2.28%			2.21%			2.20%
Net investment loss		(0.75)%	8		(1.08)%			(1.12)%			(0.85)%			(0.95)%			(1.04)%
Supplemental Data
Net assets, end of period (000)	$	284,880		$	282,586		$	334,958		$	238,819		$	145,626		$	88,826
Portfolio turnover		47%			120%			123%			166%			164%			106%

¹  Based on average shares outstanding.

²  Less than $0.01 per share.

³  Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

⁴  Aggregate total investment return.

⁵  Redemption fee of 2.00% is reflected in total return calculations. There was no impact to the return.

⁶  Includes proceeds received from a settlement of litigation, which had no impact on the Fund’s total return.

⁷  Redemption fee of 2.00% is reflected in total return calculations. The impact to the return from redemption fees received during the period was an increase of 0.04%.

⁸  Annualized.

See Notes to Financial Statements.

52     BLACKROCK FUNDS     MARCH 31, 2012

Notes to Financial Statements (Unaudited)

1. Organization and Significant Accounting Policies:

BlackRock Funds^SM (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. BlackRock Global Opportunities Portfolio (“Global Opportunities”), BlackRock Health Sciences Opportunities Portfolio (“Health Sciences Opportunities”), BlackRock International Opportunities Portfolio (“International Opportunities”), BlackRock Science & Technology Opportunities Portfolio (“Science & Technology Opportunities”) and BlackRock U.S. Opportunities Portfolio (“U.S. Opportunities”) (collectively, the “Funds” or individually, a “Fund”) are each a series of the Trust. Each of the Funds, except Health Sciences Opportunities, is diversified. 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 and disclosures in the financial statements. Actual results could differ from those estimates. Each Fund offers multiple classes of shares. Institutional Shares are sold without a sales charge and only to certain eligible investors. Service Shares are sold without a sales charge. Investor A Shares are generally sold with a front-end sales charge. Investor B and Investor C Shares may be subject to a CDSC. 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 Service, Investor A, Investor B, Investor C and Class R Shares bear certain expenses related to the shareholder servicing of such shares, and Investor B, Investor C and Class R Shares also bear certain expenses related to the distribution of such shares. Investor B Shares automatically convert to Investor A Shares after approximately eight years. Investor B Shares are only available through exchanges, dividend reinvestment by existing shareholders or for purchase by certain qualified employee benefit plans. Each class has exclusive voting rights with respect to matters relating to its shareholder servicing and distribution expenditures (except that Investor B shareholders may vote on material changes to the Investor A distribution and service plan).

Reorganizations: The Board of Trustees of the Trust (the “Board”) and of Global Opportunities and the Board of Directors and shareholders of BlackRock Global Growth Fund, Inc. (“Global Growth”) approved the reorganization of Global Growth into Global Opportunities pursuant to which Global Opportunities acquired substantially all of the assets and assumed certain stated liabilities of Global Growth in exchange for an equal aggregate value of Global Opportunities shares.

Each shareholder of Global Growth received shares of Global Opportunities with the same class designation and an aggregate NAV of such shareholder’s Global Growth shares, as determined at the close of business on September 9, 2011. In connection with the reorganization, Global Opportunities issued newly created Class R Shares.

The reorganization was accomplished by a tax-free exchange of shares of Global Opportunities in the following amounts and at the following conversion ratios:

	Global Growth Shares Prior to Reorganization		Conversion Ratio		Shares of Global Opportunities
Institutional		3,509,188		1.33658929		4,690,343
Investor A		14,755,527		1.32869118		19,605,539
Investor B		367,181		1.29848147		476,778
Investor C		3,757,078		1.29501571		4,865,475
Class R		1,252,737		1.28821323		1,613,792

Global Growth’s net assets and composition of net assets on September 9, 2011, the date of the reorganization, were as follows:
Net Assets	Paid-in Capital	Accumulated Net Investment Income	Accumulated Net Realized Loss			Net Unrealized Depreciation
$304,152,785	$462,591,696	$180,888	$	(135,908,279	)	$(22,711,520)

For financial reporting purposes, assets received and shares issued by Global Opportunities were recorded at fair value; however, the cost basis of the investments received from Global Growth was carried forward to align ongoing reporting of Global Opportunities’ realized and unrealized gains and losses with amounts distributable to shareholders for tax purposes.

The aggregate net assets of Global Opportunities immediately after the acquisition amounted to $373,249,936. Global Growth’s fair value and cost of investments prior to the reorganization were $320,739,432 and $298,207,845, respectively.

The purpose of the transaction was to combine two funds managed by the Manager, the investment advisor to both Global Growth and Global Opportunities with the same or substantially similar (but not identical) investment objectives, investment policies, strategies, risks and restrictions. The reorganization was a tax-free event and was effective on September 12, 2011.

Assuming the acquisition had been completed on October 1, 2010, the beginning of the annual reporting period of Global Opportunities, the pro forma results of operations for the year ended September 30, 2011, were as follows:

• Net investment income: $2,320,634

• Net realized and change in unrealized gain/loss on investments: $(41,230,418)

• Net decrease in the net assets resulting from operations: $(38,909,784)

Because the combined investment portfolios have been managed as a single integrated portfolio since the acquisition was completed, it is not practicable to separate the amounts of revenue and earnings of Global Growth that have been included in the Global Opportunities’ Statement of Operations since September 12, 2011.

Reorganization costs incurred by Global Opportunities in connection with the reorganization were expensed by Global Opportunities.

The Board of Health Sciences Opportunities and the Board of Directors and shareholders of BlackRock Healthcare Fund, Inc. (“Healthcare”)

    BLACKROCK FUNDS     MARCH 31, 2012 53

Notes to Financial Statements (continued)

approved the reorganization of Healthcare into Health Sciences Opportunities pursuant to which Health Sciences Opportunities acquired substantially all of the assets and assumed certain stated liabilities of Healthcare in exchange for an equal aggregate value of Health Sciences Opportunities shares.

Each shareholder of Healthcare received shares of Health Sciences Opportunities with the same class designation and an aggregate NAV of such shareholder’s Healthcare shares, as determined at the close of business on September 9, 2011. In connection with the reorganization, Health Sciences Opportunities issued newly created Class R Shares.

The reorganization was accomplished by a tax-free exchange of shares of Health Sciences Opportunities in the following amounts and at the following conversion ratios:

	Healthcare Shares Prior to Reorganization		Conversion Ratio		Shares of Health Sciences Opportunities
Institutional		13,244,297		0.19034241		2,520,951
Investor A		27,277,774		0.16917605		4,614,746
Investor B		2,622,885		0.10066507		264,033
Investor C		17,312,942		0.10007561		1,732,603
Class R		3,541,881		0.09820156		347,818

Healthcare’s net assets and composition of net assets on September 9, 2011, the date of the reorganization, were as follows:
Net Assets	Paid-in Capital	Accumulated Net Investment Loss	Accumulated Net Realized Loss	Net Unrealized Appreciation
$265,090,492	$262,990,491	$(202,292)	$(913,655)	$3,215,948

For financial reporting purposes, assets received and shares issued by Health Sciences Opportunities were recorded at fair value; however, the cost basis of the investments received from Healthcare was carried forward to align ongoing reporting of Health Sciences Opportunities’ realized and unrealized gains and losses with amounts distributable to shareholders for tax purposes.

The aggregate net assets of Health Sciences Opportunities immediately after the acquisition amounted to $1,597,073,853. Healthcare’s fair value and cost of investments prior to the reorganization were $263,048,253 and $265,906,507, respectively.

The purpose of the transaction was to combine two funds managed by the Manager, the investment advisor to Healthcare and Health Sciences Opportunities with the same or substantially similar (but not identical) investment objectives, investment policies, strategies, risks and restrictions. The reorganization was a tax-free event and was effective on September 12, 2011.

Assuming the acquisition had been completed on October 1, 2010; the beginning of the annual reporting period of Health Sciences Opportunities, the pro forma results of operations for the year ended September 30, 2011, were as follows:

• Net investment loss: $(7,044,861)

• Net realized and change in unrealized gain/loss on investments: $(518,793)

• Net decrease in the net assets resulting from operations: $(7,563,654)

Because the combined investment portfolios have been managed as a single integrated portfolio since the acquisition was completed, it is not practicable to separate the amounts of revenue and earnings of Healthcare that have been included in the Health Sciences Opportunities’ Statement of Operations since September 12, 2011.

Reorganization costs incurred by Health Sciences Opportunities in connection with the reorganization were paid by the Manager.

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 using independent dealers or pricing services under policies approved by the Board. Equity investments traded on a recognized securities exchange or the NASDAQ Global Market System (“NASDAQ”) are valued at the last reported sale price that day or the NASDAQ official closing price, if applicable. For equity investments traded on more than one exchange, the last reported sale price on the exchange where the stock is primarily traded is used. Equity investments traded on a recognized exchange for which there were no sales on that day are valued at the last available bid price. If no bid price is available, the prior day’s price will be used, unless it is determined that such prior day’s price no longer reflects the fair value of the security. Financial futures contracts traded on exchanges are valued at their last sale price. Investments in open-end registered investment companies are valued at NAV each business day. Short-term securities with remaining maturities of 60 days or less may be valued at amortized cost, which approximates fair value.

The Funds value their investments in BlackRock Liquidity Series, LLC Money Market Series (the “Money Market Series”) at fair value, which is ordinarily based upon their pro rata ownership in the underlying fund’s net assets. The Money Market Series seeks current income consistent with maintaining liquidity and preserving capital. Although the Money Market Series is not registered under the 1940 Act, its investments will follow the parameters of investments by a money market fund that is subject to Rule 2a-7 under the 1940 Act. Each Fund may withdraw up to 25% of its investment daily, although the manager of the Money Market Series, in its sole discretion, may permit an investor to withdraw more than 25% on any one day.

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

54     BLACKROCK FUNDS     MARCH 31, 2012

Notes to Financial Statements (continued)

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

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

Generally, trading in foreign instruments is substantially completed each day at various times prior to the close of business on the NYSE. Occasionally, events affecting the values of such instruments may occur between the foreign market close and the close of business on the NYSE that may not be reflected in the computation of each Fund’s net assets. If events (for example, a company announcement, market volatility or a natural disaster) occur during such periods that are expected to materially affect the value of such instruments, those instruments may be Fair Value Assets and be valued at their fair value, as determined in good faith by the investment advisor using a pricing service and/or policies approved by the Board. Each business day, the Funds use a pricing service to assist with the valuation of certain foreign exchange-traded equity securities and foreign exchange-traded and OTC options (the “Systematic Fair Value Price”). Using current market factors, the Systematic Fair Value Price is designed to value such foreign securities and foreign options at fair value as of the close of business on the NYSE, which follows the close of the local markets.

Foreign Currency Transactions: The Funds’ books and records are maintained in US dollars. Purchases and sales of investment securities are recorded at the rates of exchange prevailing on the respective date of such transactions. Generally, when the US dollar rises in value against a foreign currency, the Funds’ investments denominated in that currency will lose value because its currency is worth fewer US dollars; the opposite effect occurs if the US dollar falls in relative value.

The Funds do not isolate the portion of the results of operations arising as a result of changes in the foreign exchange rates from the changes in the market prices of investments held or sold for financial reporting purposes. Accordingly, the effects of changes in foreign currency exchange rates on investments are not segregated on the Statements of Operations from the effects of changes in market prices of those investments

but are included as a component of net realized and unrealized gain (loss) from investments. The Funds report realized currency gains (losses) on foreign currency related transactions as components of net realized gain (loss) for financial reporting purposes, whereas such components are treated as ordinary income for federal income tax purposes.

Segregation and Collateralization: In cases in which the 1940 Act and the interpretive positions of the Securities and Exchange Commission (“SEC”) require that a Fund either deliver collateral or segregate assets in connection with certain investments (e.g., financial futures contracts, foreign currency exchange contracts and options written), the Fund will, consistent with SEC rules and/or certain interpretive letters issued by the SEC, segregate collateral or designate on its books and records cash or liquid securities having a market value at least equal to the amount that would otherwise be required to be physically segregated. Furthermore, based on requirements and agreements with certain exchanges and third party broker-dealers, each party to such transactions has requirements to deliver/deposit securities as collateral for certain investments.

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. Dividends from foreign securities where the ex-dividend date may have passed are subsequently recorded when the Funds are informed of the ex-dividend date. Under the applicable foreign tax laws, a withholding tax at various rates may be imposed on capital gains, dividends and interest. Upon notification from issuers, some of the dividend income received from a real estate investment trust may be redesignated as a reduction of cost of the related investment and/or realized gain. Income and realized and unrealized gains and losses are allocated daily to each class based on its relative net assets.

Dividends and Distributions: Dividends and distributions paid by the Funds are recorded on the ex-dividend dates. The amount and timing of dividends and distributions are determined in accordance with federal income tax regulations, which may differ from US GAAP.

Securities Lending: The Funds may lend securities to approved borrowers, such as banks, brokers and other financial institutions. The borrower pledges cash, securities issued or guaranteed by the US government or irrevocable letters of credit issued by a bank as collateral, which will be maintained at all times in an amount equal to at least 100% of the current market value of the loaned securities. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. Securities lending income, as disclosed in the Statements of Operations, represents the income earned from the investment of the cash collateral, net of rebates paid to, or fees paid by, borrowers and less the fees paid to the securities lending agent. During the term of the loan, the Funds earn dividend or interest income on the securities loaned but do not receive dividend or interest income on the securities received as collateral. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions. In the

    BLACKROCK FUNDS     MARCH 31, 2012 55

Notes to Financial Statements (continued)

event that the borrower defaults on its obligation to return borrowed securities because of insolvency or for any other reason, the Funds could experience delays and costs in gaining access to the collateral. The Funds also could suffer a loss if the value of an investment purchased with cash collateral falls below the market value of loaned securities or if the value of an investment purchased with cash collateral falls below the value of the original cash collateral received. During the six months ended March 31, 2012, any securities on loan were collateralized by cash.

Income Taxes: It is each Fund’s 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 its taxable income to its 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 September 30, 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 Standards: In May 2011, the Financial Accounting Standards Board (the “FASB”) issued amended guidance to improve disclosure about fair value measurements which will require the following disclosures for fair value measurements categorized as Level 3: quantitative information about the unobservable inputs and assumptions used in the fair value measurement, a description of the valuation policies and procedures and a narrative description of the sensitivity of the fair value measurement to changes in unobservable inputs and the interrelationships between those unobservable inputs. In addition, the amounts and reasons for all transfers in and out of Level 1 and Level 2 will be required to be disclosed as well as disclosure of the level in the fair value hierarchy of assets and liabilities not recorded at fair value but where fair value is disclosed. The amended guidance is effective for financial statements for fiscal years beginning after December 15, 2011, and interim periods within those fiscal years. Management is evaluating the impact of this guidance on the Funds’ financial statement disclosures.

In December 2011, the FASB 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 the Funds and other shared expenses pro rated to the Funds 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. Derivative Financial Instruments:

The Funds engage in various portfolio investment strategies using derivative contracts both to increase the returns of the Funds and to economically hedge, or protect, their exposure to equity risk or foreign currency exchange rate risk. These contracts may be transacted on an exchange or OTC.

Losses may arise if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument or if the counterparty does not perform under the contract. The Funds’ maximum risk of loss from counterparty credit risk on OTC derivatives is generally the aggregate unrealized gain netted against any collateral pledged by/posted to the counterparty. For OTC options purchased, the Funds bear the risk of loss in the amount of the premiums paid plus the positive change in market values net of any collateral received on the options should the counterparty fail to perform under the contracts. Options written by the Funds do not give rise to counterparty credit risk, as options written obligate the Funds to perform and not the counterparty. Counterparty risk related to exchange-traded options is deemed to be minimal due to the protection against defaults provided by the exchange on which these contracts trade.

The Funds may mitigate counterparty risk by procuring collateral and through netting provisions included within an International Swaps and Derivatives Association, Inc. master agreement (“ISDA Master Agreement”) implemented between a Fund and each of its respective counterparties. The ISDA Master Agreement allows each Fund to offset with each separate counterparty certain derivative financial instrument’s payables and/or receivables with collateral held. The amount of collateral moved to/from applicable counterparties is generally based upon minimum transfer amounts of up to $500,000. To the extent amounts due to the Funds from their counterparties are not fully collateralized contractually or otherwise, the Funds bear the risk of loss from counterparty non-performance. See Note 1 “Segregation and Collateralization” for information with respect to collateral practices. In addition, the Funds manage counterparty risk by entering into agreements only with counterparties that they believe have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties.

Certain ISDA Master Agreements allow counterparties to OTC derivatives to terminate derivative contracts prior to maturity in the event the Funds’ net assets decline by a stated percentage or the Funds fail to meet the terms of its ISDA Master Agreements, which would cause the Funds to accelerate payment of any net liability owed to the counterparty.

56     BLACKROCK FUNDS     MARCH 31, 2012

Notes to Financial Statements (continued)

Financial Futures Contracts: The Funds, except for Global Opportunities and Health Sciences Opportunities purchase or sell financial futures contracts and options on financial futures contracts to gain exposure to, or economically hedge against, changes in the value of equity securities (including equity risk). Financial futures contracts are agreements between the Fund and counterparty to buy or sell a specific quantity of an underlying instrument at a specified price and at a specified date. Depending on the terms of the particular contract, financial futures contracts are settled either through physical delivery of the underlying instrument on the settlement date or by payment of a cash settlement amount on the settlement date. Pursuant to the contract, the Funds agree to receive from or pay to the broker an amount of cash equal to the daily fluctuation in value of the contract. Such receipts or payments are known as variation margin and are recorded by the Funds as unrealized appreciation or depreciation. When the contract is closed, the Funds record a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. The use of financial futures contracts involves the risk of an imperfect correlation in the movements in the price of financial futures contracts and the underlying assets.

Foreign Currency Exchange Contracts: The Funds, except for U.S. Opportunities, enter into foreign currency exchange contracts as an economic hedge against either specific transactions or portfolio instruments or to obtain exposure to foreign currencies (foreign currency exchange rate risk). A foreign currency exchange contract is an agreement between two parties to buy and sell a currency at a set exchange rate on a future date. Foreign currency exchange contracts, when used by the Funds, help to manage the overall exposure to the currencies in which some of the investments held by the Funds are denominated. The contract is marked-to-market daily and the change in market value is recorded by the Funds as an unrealized gain or loss. When the contract is closed, the Funds record a realized gain or loss equal to the difference between the value at the time it was opened and the value at the time it was closed.

The use of foreign currency exchange contracts involves the risk that the value of a foreign currency exchange contract changes unfavorably due to movements in the value of the referenced foreign currencies and the risk that a counterparty to the contract does not perform its obligations under the agreement.

Options: The Funds, except for International Opportunities, Science & Technology Opportunities and U.S. Opportunities, purchase and write call and put options to increase or decrease their exposure to underlying instruments (including equity risk) and/or, in the case of options written, to generate gains from options premiums. A call option gives the purchaser (holder) of the option the right (but not the obligation) to buy, and obligates the seller (writer) to sell (when the option is exercised), the underlying instrument at the exercise or strike price at any time or at a specified time during the option period. A put option gives the holder the right to sell and obligates the writer to buy the underlying instrument at the exercise or strike price at any time or at a specified time during the option period. When a Fund purchases (writes) an option, an amount equal to the premium paid (received) by a Fund is reflected as an asset (liability). The amount of the asset (liability) is subsequently marked-to-market to reflect the current market value of the option purchased (written). When an instrument is purchased or sold through an exercise of an option, the related premium paid (or received) is added to (or deducted from) the basis of the instrument acquired or deducted from (or added to) the proceeds of the instrument sold. When an option expires (or a Fund enters into a closing transaction), a Fund realizes a gain or loss on the option to the extent of the premiums received or paid (or gain or loss to the extent the cost of the closing transaction exceeds the premiums received or paid). When a Fund writes a call option, such option is “covered,” meaning that a Fund holds the underlying instrument subject to being called by the option counterparty. When a Fund writes a put option, such option is covered by cash in an amount sufficient to cover the obligation.

In purchasing and writing options, a Fund bears the risk of an unfavorable change in the value of the underlying instrument or the risk that a Fund may not be able to enter into a closing transaction due to an illiquid market. Exercise of a written option could result in a Fund purchasing or selling a security at a price different from the current market value.

Derivative Financial Instruments Categorized by Risk Exposure:

	Fair Values of Derivative Financial Instruments as of March 31, 2012
		Asset Derivatives
	Statements of Assets and Liabilities Location	Global Opportunities		Health Sciences Opportunities		International Opportunities		Science & Technology Opportunities
Foreign currency exchange contracts	Unrealized appreciation on foreign currency exchange contracts		$1,920,237		$936,236		$11,793,885	$100,193
		Liability Derivatives
	Statements of Assets and Liabilities Location	Global Opportunities		Health Sciences Opportunities		International Opportunities		Science & Technology Opportunities
Foreign currency exchange contracts	Unrealized depreciation on foreign currency exchange contracts		$2,721,491		$7,750,965		$17,932,686	$312,310
Equity contracts	Options written at value		–		197,760		–	–
Total			$2,721,491		$7,948,725		$17,932,686	$312,310

    BLACKROCK FUNDS     MARCH 31, 2012 57

Notes to Financial Statements (continued)

	The Effect of Derivative Financial Instruments in the Statements of Operations Six Months Ended March 31, 2012
	Net Realized Gain (Loss) From
	Global Opportunities	Health Sciences Opportunities	International Opportunities	Science & Technology Opportunities	U.S. Opportunities
Foreign currency exchange contracts	$(1,357,741)	$ 12,742,659	$  6,821,891	$1,213,869	–
Equity contracts:
Financial futures contracts	–	–	4,387,622	(307,584)	$  3,640,472
Options	311,864	1,206,001	–	–	–
Total	$(1,045,877)	$ 13,948,660	$11,209,513	$   906,285	$  3,640,472
		Net Change in Unrealized Appreciation/Depreciation on
	Global Opportunities	Health Sciences Opportunities	International Opportunities	Science & Technology Opportunities	U.S. Opportunities
Foreign currency exchange contracts	$    578,879	$(12,116,807)	$  (7,957,534)	$(1,034,160)	–
Equity contracts:
Financial futures contracts	–	–	1,617,815	–	$10,765,517
Options	–	466,536	–	–	–
Total	$    578,879	$(11,650,271)	$  (6,339,719)	$(1,034,160)	$10,765,517

For the six months ended March 31, 2012, the average quarterly balances of outstanding derivative financial instruments were as follows:

	Global Opportunities		Health Sciences Opportunities		International Opportunities		Science & Technology Opportunities			U.S. Opportunities
Financial futures contracts:
Average number of contracts purchased		–		–		453		126	1		609	1
Average notional value of contracts purchased		–		–		$  28,371,390		$  7,956,982	1		$43,682,183	1
Foreign currency exchange contracts:
Average number of contracts - US dollars purchased		33		20		52		9			–
Average number of contracts - US dollars sold		32		6		37		9			–
Average US dollar amounts purchased		$53,277,762		$188,467,035		$428,623,568		$13,138,859			–
Average US dollar amounts sold		$77,857,987		$  43,730,341		$513,303,180		$  7,091,243			–
Options:
Average number of option contracts written		1		5		–		–			–
Average notional value of option contracts written		$  1,063,750		$  30,494,750		–		–			–

    ¹  Average contract amount shown due to limited activity.

3. Investment Advisory Agreements and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. (“PNC”) and Barclays Bank PLC (“Barclays”) are the largest stockholders of BlackRock, Inc. (“BlackRock”). Due to the ownership structure, PNC is an affiliate for 1940 Act purposes, but Barclays is not.

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 is responsible for the management of each Fund’s portfolio and provides the necessary personnel, facilities, equipment and certain other services necessary to the operations of each Fund. For such services, each Fund pays the Manager a monthly fee based on a percentage of each Fund’s average daily net assets at the following annual rates:

	First $1 Billion	$1 Billion - $2 Billion	$2 Billion - $3 Billion	Greater Than $3 Billion
Global Opportunities and Science & Technology Opportunities	0.900%	0.850%	0.800%	0.750%
Health Sciences Opportunities	0.750%	0.700%	0.675%	0.650%
International Opportunities	1.000%	0.950%	0.900%	0.850%
U.S. Opportunities	1.100%	1.050%	1.025%	1.000%

The Manager contractually agreed to waive and/or reimburse fees or expenses, excluding interest expense, dividend expense, acquired fund fees and expenses and certain other fund expenses, in order to limit expenses.

58     BLACKROCK FUNDS     MARCH 31, 2012

Notes to Financial Statements (continued)

The expense limitations as a percentage of average daily net assets are as follows:

	Global Opportunities	Health Sciences Opportunities2	International Opportunities2	Science & Technology Opportunities2	U.S. Opportunities2
Institutional	1.06%1	N/A	1.49%	1.39%	1.03%
Service	1.70%2,3	N/A	1.80%	1.78%	1.65%
Investor A	1.33%1	N/A	1.98%	1.80%	1.65%
Investor B	2.18%1	N/A	2.75%	2.73%	2.32%
Investor C	2.14%1	N/A	2.75%	2.73%	2.32%
Class R	1.72%1	1.81%	2.18%3	2.57%	2.39%3

¹  The Manager has agreed not to reduce or discontinue this contractual waiver or reimbursement prior to February 1, 2015 unless approved by the Board, including a majority of the Independent Trustees.

²  The Manager has agreed not to reduce or discontinue this contractual waiver or reimbursement prior to February 1, 2013 unless approved by the Board, including a majority of the Independent Trustees.

³  There were no shares outstanding as of March 31, 2012.

Prior to January 31, 2012, the expense limitations as a percentage of average daily net assets of Health Sciences Opportunities were as follows.

	Health Sciences Opportunities
Institutional	1.25%
Service	1.55%
Investor A	1.55%
Investor B	2.25%
Investor C	2.25%

These amounts are included in fees waived by advisor and shown as administration fees waived – class specific, transfer agent fees waived – class specific and transfer agent fees reimbursed – class specific, respectively, in the Statements of Operations. For the six months ended March 31, 2012, the amounts included in fees waived by advisor were as follows:

Global Opportunities	$	1,363
Science & Technology Opportunities	$	150
U.S. Opportunities	$	1,729,503

Class specific expense waivers and reimbursements are as follows:

Administration Fees Waived					Share Classes
	Institutional		Service		Investor A		Investor B		Investor C		Class R		Total
Global Opportunities	$	7,712		–	$	27,418	$	137	$	7,684	$	1,251	$	44,202
Health Sciences Opportunities		–		–		–		–		–	$	651	$	651
International Opportunities		–	$	1,720		–		–		–		–	$	1,720
Science & Technology Opportunities	$	4,429	$	2	$	219		–	$	57	$	7	$	4,714
U.S. Opportunities	$	123,659		–	$	969	$	1,199		–		–	$	125,827
Transfer Agent Fees Waived					Share Classes
	Institutional		Service		Investor A		Investor B		Investor C		Class R		Total
Global Opportunities	$	1,095		–	$	4,376	$	9	$	1,540	$	96	$	7,116
Health Sciences Opportunities		–		–		–		–		–	$	85	$	85
International Opportunities		–	$	2,306		–		–		–		–	$	2,306
Science & Technology Opportunities	$	1,757	$	1	$	73		–	$	28	$	2	$	1,861
U.S. Opportunities	$	86,264		–		–	$	434		–		–	$	86,698
Transfer Agent Fees Reimbursed					Share Classes
	Institutional		Service		Investor A		Investor B		Investor C		Class R		Total
Global Opportunities	$	46,490		–	$	146,762	$	135	$	42,310	$	18,974	$	254,671
Health Sciences Opportunities		–		–		–		–		–	$	531	$	531
International Opportunities		–	$	245		–		–		–		–	$	245
Science & Technology Opportunities	$	6,919	$	14	$	1,855		–	$	315	$	9	$	9,112
U.S. Opportunities	$	2,111,467		–		–	$	251		–		–	$	2,111,718

The Manager voluntarily agreed to waive its investment advisory fees by the amount of investment advisory fees each Fund pays to the Manager indirectly through its investment in affiliated money market funds. However the Manager does not waive its investment advisory fees by the amount of investment advisory fees paid in connection with each Fund’s investment in other affiliated investment companies, if any. These amounts are included in fees waived by advisor in the Statements of

Operations. For the six months ended March 31, 2012, the amounts waived were as follows:

Global Opportunities	$	3,204
Health Sciences Opportunities	$	27,966
International Opportunities	$	30,756
Science & Technology Opportunities	$	2,231
U.S. Opportunities	$	49,082

    BLACKROCK FUNDS     MARCH 31, 2012 59

Notes to Financial Statements (continued)

The Manager entered into separate sub-advisory agreements with BlackRock Financial Management, Inc. (“BFM”), an affiliate of the Manager, to serve as sub-advisor for a portion of the assets of Global Opportunities and with BlackRock International Limited (“BIL”), an affiliate of the Manager, to serve as sub-advisor for International Opportunities. The Manager pays BFM and BIL, for services they provide, a monthly fee that is a percentage of the investment advisory fees paid by the applicable Fund to the Manager.

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.

For the six months ended March 31, 2012, the Manager recouped the following waivers previously recorded by the Funds:

Recoupment of Past Waived Fees	Share Classes
	Service			Investor A			Investor B		Investor C			Class R			Total
Global Opportunities			–			–		$74			–		$	1,987		$	2,061
International Opportunities		$	1,304			–		–			–			–		$	1,304
Science & Technology Opportunities		$	150		$	16,313		–		$	2,760		$	79		$	19,302
U.S. Opportunities			–		$	549		$  1						–		$	550

On March 31, 2012, the amounts subject to possible future recoupment under the expense limitation agreement are as follows:

	Expiring September 30,
	2012		2013		2014
Global Opportunities	$	27,177	$	164,811	$	307,350
Health Sciences Opportunities		–		–	$	1,267
International Opportunities		–		–	$	4,267
Science & Technology Opportunities	$	49,307	$	27,435	$	15,837
U.S. Opportunities	$	5,213,829	$	9,403,382	$	4,053,746

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
Service		0.25	%		–
Investor A		0.25	%		–
Investor B		0.25	%		0.75	%
Investor C		0.25	%		0.75	%
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 compensate BRIL and each broker-dealer for providing shareholder servicing and/or distribution related services to Service, Investor A, Investor B, Investor C and Class R shareholders.

For the six months ended March 31, 2012, the following table shows the class specific service and distribution fees borne directly by each class of each Fund:

Service and Distribution Fees	Share Classes
	Service		Investor A		Investor B		Investor C		Class R		Total
Global Opportunities		–	$	274,185	$	33,485	$	307,371	$	39,720	$	654,761
Health Sciences Opportunities	$	18,753	$	1,117,370	$	230,904	$	1,721,693	$	26,972	$	3,115,692
International Opportunities	$	62,887	$	936,756	$	75,071	$	866,125		–	$	1,940,839
Science & Technology Opportunities	$	1,224	$	141,132	$	15,504	$	146,847	$	9,834	$	314,541
U.S. Opportunities	$	239,613	$	1,088,427	$	78,715	$	1,455,831		–	$	2,862,586

60     BLACKROCK FUNDS     MARCH 31, 2012

Notes to Financial Statements (continued)

For the six months ended March 31, 2012, affiliates earned underwriting discounts, direct commissions and dealer concessions on sales of each Fund’s Investor A Shares as follows:

Global Opportunities	$	1,819
Health Sciences Opportunities	$	49,719
International Opportunities	$	16,386
Science & Technology Opportunities	$	2,772
U.S. Opportunities	$	3,210

For the six months ended March 31, 2012, affiliates received the following CDSCs relating to transactions in Investor A, Investor B and Investor C Shares as follows:

	Investor A		Investor B		Investor C
Global Opportunities	$	28,857	$	6,661	$	2,2245
Health Sciences Opportunities	$	609	$	24,592	$	18,220
International Opportunities	$	5,859	$	8,916	$	10,174
Science & Technology Opportunities	$	866	$	2,264	$	2,529
U.S. Opportunities	$	2,467	$	17,924	$	21,509

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. For the six months ended March 31, 2012, the Funds paid the following to affiliates in return for these services, which are included in transfer agent – class specific in the Statements of Operations:

Global Opportunities	$	17
Health Sciences Opportunities	$	74
International Opportunities	$	220,031
Science & Technology Opportunities	$	1,612
U.S. Opportunities	$	158,505

For the six months ended March 31, 2012, the following table shows the class specific transfer agent fees borne directly by each class of each Fund:

Transfer Agent Fees	Share Classes
	Institutional		Service		Investor A		Investor B		Investor C		Class R		Total
Global Opportunities	$	52,028		–	$	187,884	$	3,798	$	72,102	$	27,703	$	343,515
Health Sciences Opportunities	$	260,882	$	12,736	$	837,494	$	57,036	$	287,882	$	18,576	$	1,474,606
International Opportunities	$	880,386	$	113,927	$	764,902	$	20,087	$	209,746		–	$	1,989,048
Science & Technology Opportunities	$	64,809	$	863	$	197,940	$	7,035	$	72,022	$	6,644	$	349,313
U.S. Opportunities	$	2,197,930	$	196,169	$	1,084,729	$	21,845	$	302,608		–	$	3,803,281

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 six months ended March 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:

	Share Classes
	Institutional		Service		Investor A		Investor B		Investor C		Class R		Total
Global Opportunities	$	1,095		–	$	4,376	$	456	$	1,540	$	182	$	7,649
Health Sciences Opportunities	$	4,978	$	496	$	28,486	$	2,521	$	7,883	$	246	$	44,610
International Opportunities	$	4,498	$	3,121	$	14,507	$	1,090	$	6,440		–	$	29,656
Science & Technology Opportunities	$	1,997	$	56	$	4,188	$	174	$	1,388	$	76	$	7,879
U.S. Opportunities	$	86,264	$	1,815	$	26,438	$	935	$	10,386		–	$	125,838

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 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 – class specific in the Statements of Operations. For the six months ended March 31, 2012, the Funds paid the following to the Manager in return for these services, which are included in administration, administration – class specific and administration fees waived – class specific in the Statements of Operations:

Administration Fees
Global Opportunities	$	85,717
Health Sciences Opportunities	$	529,334
International Opportunities	$	567,190
Science & Technology Opportunities	$	58,808
U.S. Opportunities	$	880,929

    BLACKROCK FUNDS     MARCH 31, 2012 61

Notes to Financial Statements (continued)

For the six months ended March 31, 2012, the following table shows the administration fees — class specific borne directly by each class of each Fund:

Administration Fees–Class Specific							Share Classes
	Institutional			Service			Investor A			Investor B			Investor C			Class R			Total
Global Opportunities		$	7,711			–		$	27,418		$	837		$	7,685		$	1,986		$	45,637
Health Sciences Opportunities		$	47,809		$	1,875		$	92,042		$	5,772		$	43,042		$	1,350		$	191,890
International Opportunities		$	90,513		$	6,289		$	81,205		$	1,877		$	21,653			–		$	201,537
Science & Technology Opportunities		$	4,659		$	122		$	14,113		$	391		$	3,671		$	492		$	23,448
U.S. Opportunities		$	123,660		$	23,961		$	90,305		$	1,968		$	36,395			–		$	276,289

The Funds received an exemptive order from the SEC permitting them, among other things, to pay an affiliated securities lending agent a fee based on a share of the income derived from the securities lending activities and have retained BlackRock Investment Management, LLC (“BIM”) as the securities lending agent. BIM may, on behalf of the Funds, invest cash collateral received by a Fund for such loans, among other things, in a private investment company managed by the Manager or in registered money market funds advised by the Manager or its affiliates. As securities lending agent, BIM is responsible for all transaction fees and all other operational costs relating to securities lending activities, other than extraordinary expenses. BIM does not receive any fees for managing the cash collateral. The market value of securities on loan and the value of the related collateral, if applicable, are shown in the Statements of Assets and Liabilities as securities loaned at value and collateral on securities loaned at value, respectively. The cash collateral invested by BIM is disclosed in the Schedules of Investments, if any. Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of rebates paid to, or fees paid by, borrowers of securities. The Fund retains 65% of securities lending income and pay a fee to BIM equal to 35% of such income. The share of income earned by the Funds on the reinvestment of cash collateral is shown as securities lending – affiliated in the Statements of Operations. For the six months ended March 31, 2012, BIM received $501,117 in securities lending agent fees related to securities lending activities for the Funds.

During the six months ended March 31, 2012, Science & Technology Opportunities received reimbursements of $93 from an affiliate, which is included in capital share transactions on the Statements of Changes in Net Assets, relating to processing errors.

Certain officers and/or trustees of the Trust are officers and/or directors of BlackRock or its affiliates. The Funds reimburse the Manager for compensation paid to the Trust’s Chief Compliance Officer.

4. Investments:

Purchases and sales of investments, excluding short-term securities, for the six months ended March 31, 2012, were as follows:

	Purchases			Sales
Global Opportunities		$	188,898,947		$	241,866,786
Health Sciences Opportunities		$	1,197,524,993		$	1,166,700,034
International Opportunities		$	713,000,537		$	801,271,763
Science & Technology Opportunities		$	296,426,312		$	300,444,015
U.S. Opportunities		$	1,481,609,414		$	2,205,042,139

Transactions in options written for the six months ended March 31, 2012, were as follows:

	Global Opportunities
	Calls							Puts
	Contracts			Premiums Received				Contracts			Premiums Received
Outstanding options, beginning of period		–				–			–				–
Options written		4,299			$	214,096			4,255			$	97,767
Options expired		(4,299	)			(214,096	)		(4,255	)			(97,767	)
Outstanding options, at end of period		–				–			–				–
	Health Sciences Opportunities
	Calls							Puts
	Contracts			Premiums Received				Contracts			Premiums Received
Outstanding options, beginning of period		–				–			–				–
Options written		10,947			$	1,733,794			19,925			$	2,212,924
Options expired		(3,312	)			(467,230	)		(15,275	)			(1,597,212	)
Options closed		(7,028	)			(1,216,601	)		–				–
Options exercised		(7	)			(1,379	)		–				–
Outstanding options, at end of period		600			$	48,584			4,650			$	615,712

5. Income Tax Information:

As of September 30, 2011, the Funds had capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates as follows:

Expires September 30,	Global Opportunities			International Opportunities			Science & Technology Opportunities
2015		$	25,919,213			–		$	53,421,695
2016			106,463,888			–			–
2017			11,844,687		$	10,669,404			4,448,928
2018			6,825,363			63,081,604			–
2019			–			–			783,208
No expiration date1			3,120,805			–			–
Total		$	154,173,956		$	73,751,008		$	58,653,831

     ¹ Not subject to expiration and must be utilized prior to losses subject

to expiration.

Under the Regulated Investment Company Modernization Act of 2010, capital losses incurred by the Funds after September 30, 2011 will not be subject to expiration. In addition, any such losses must be utilized prior to the losses incurred in pre-enactment taxable years.

62     BLACKROCK FUNDS     MARCH 31, 2012

Notes to Financial Statements (continued)

As of March 31, 2012, gross unrealized appreciation and gross unrealized depreciation based on cost for federal income tax purposes were as follows:

	Global Opportunities				Health Sciences Opportunities				International Opportunities				Science & Technology Opportunities				U.S. Opportunities
Tax cost		$	327,593,567			$	1,704,949,288			$	1,753,108,797			$	174,184,343			$	2,976,291,757
Gross unrealized appreciation		$	43,201,431			$	308,639,690			$	205,429,919			$	35,680,428			$	513,519,252
Gross unrealized depreciation			(12,435,047	)			(11,158,602	)			(88,122,817	)			(365,006	)			(63,475,340	)
Net unrealized appreciation		$	30,766,384			$	297,481,088			$	117,307,102			$	35,315,422			$	450,043,912

6. 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. 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 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 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 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 six months ended March 31, 2012.

7. Concentration, Market and Credit Risk:

In the normal course of business, the Funds invest in securities and 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 Funds’ Statements of Assets and Liabilities, less any collateral held by the Funds.

As of March 31, 2012, Health Sciences Opportunities invested a significant portion of its assets in securities in the health care sector. Changes in economic conditions affecting the health care sector would have a greater impact on Health Sciences Opportunities and could affect the value, income and/or liquidity of positions in such securities.

As of March 31, 2012, Science & Technology Opportunities invested a significant portion of its assets in securities in the information technology sector. Changes in economic conditions affecting the information technology sector would have a greater impact on Science & Technology Opportunities and could affect the value, income and/or liquidity of positions in such securities.

As of March 31, 2012, Global Opportunities invested a substantial amount of its assets in issuers located in a single country or a limited number of countries. When the Fund concentrates its investments in this manner, it assumes the risk that economic, political and social conditions in those countries may have a significant impact on its investment performance.

As of March 31, 2012, the Funds listed below had the following industry classifications:

Industry	Global Opportunities	International Opportunities
Oil, Gas & Consumable Fuels	9%	9%
Commercial Banks	7	13
Pharmaceuticals	6	5
Machinery	5	5
Chemicals	–	5
Insurance	–	6
Metals & Mining	–	5
Other1	73	52

   ¹   All other industries held were each less than 5% of long-term   investments.

    BLACKROCK FUNDS     MARCH 31, 2012 63

Notes to Financial Statements (continued)

8. Capital Shares Transactions:

Transactions in capital shares for each class were as follows:

	Six Months Ended March 31, 2012							Year Ended September 30, 2011
Global Opportunities	Shares			Amount				Shares			Amount
Institutional
Shares issued in the reorganization1		–				–			4,690,343			$	46,049,322
Shares sold		436,289			$	4,454,266			550,794				6,086,117
Shares issued in reinvestment of dividends		10,082				100,322			11,360				128,593
Shares redeemed		(1,095,285	)			(11,311,325	)		(1,004,993	)			(11,033,445	)
Net increase (decrease)		(648,914	)		$	(6,756,737	)		4,247,504			$	41,230,587
Investor A
Shares issued in the reorganization1		–				–			19,605,539			$	191,318,695
Shares sold and automatic conversion of shares		640,994			$	6,604,539			760,598				8,385,507
Shares issued in reinvestment of dividends		24,774				245,035			10,826				122,113
Shares redeemed		(3,925,856	)			(40,968,134	)		(1,424,020	)			(15,313,906	)
Net increase (decrease)		(3,260,088	)		$	(34,118,560	)		18,952,943			$	184,512,409
Investor B
Shares issued in the reorganization1		–				–			476,778			$	4,571,444
Shares sold		2,147			$	21,847			8,464				96,689
Shares redeemed and automatic conversion of shares		(149,439	)			(1,517,107	)		(94,007	)			(1,002,860	)
Net increase (decrease)		(147,292	)		$	(1,495,260	)		391,235			$	3,665,273
Investor C
Shares issued in the reorganization1		–				–			4,865,475			$	46,465,289
Shares sold		147,839			$	1,476,358			308,404				3,430,169
Shares redeemed		(929,071	)			(9,385,975	)		(598,941	)			(6,374,896	)
Net increase (decrease)		(781,232	)		$	(7,909,617	)		4,574,938			$	43,520,562
								Period September 12, 20112 to September 30, 2011
								Shares			Amount
Class R
Shares issued in the reorganization1		–				–			1,613,792			$	15,748,035
Shares sold		260,790			$	2,663,564			36,132				355,964
Shares issued in reinvestment of dividends		497				4,914			22,035				228,067
Shares redeemed		(403,153	)			(4,180,708	)		(42,000	)			(399,037	)
Net increase (decrease)		(141,866	)		$	(1,512,230	)		1,607,924			$	15,704,962
Total net increase (decrease)		(4,979,392	)		$	(51,792,404	)		29,774,544			$	288,633,793

¹ See Note 1 regarding the reorganization

² Commencement of Operations

64     BLACKROCK FUNDS     MARCH 31, 2012

Notes to Financial Statements (continued)

	Six Months Ended March 31, 2012							Year Ended September 30, 2011
Health Sciences Opportunities	Shares			Amount				Shares			Amount
Institutional
Shares issued in the reorganization1		–				–			2,520,951			$	72,864,825
Shares sold		2,239,365			$	67,716,697			5,310,915				165,243,096
Shares issued in reinvestment of dividends and distributions		616,409				17,222,456			342,151				9,686,180
Shares redeemed		(2,166,633	)			(63,993,042	)		(3,625,515	)			(109,106,448	)
Net increase		689,141			$	20,946,111			4,548,502			$	138,687,653
Service
Shares sold		123,574			$	3,589,121			282,548			$	8,479,494
Shares issued in reinvestment of distributions		27,004				736,672			17,268				477,975
Shares redeemed		(131,463	)			(3,809,061	)		(234,131	)			(6,889,355	)
Net increase		19,115			$	516,732			65,685			$	2,068,114
Investor A
Shares issued in the reorganization1		–				–			4,614,746			$	129,864,024
Shares sold and automatic conversion of shares		5,000,254			$	146,282,644			8,538,548				256,119,158
Shares issued in reinvestment of distributions		1,553,813				42,294,790			1,055,037				29,150,534
Shares redeemed		(5,162,823	)			(150,375,392	)		(8,979,890	)			(263,921,203	)
Net increase		1,391,244			$	38,202,042			5,228,441			$	151,212,513
Investor B
Shares issued in the reorganization1		–				–			264,033			$	6,971,367
Shares sold		16,976			$	470,082			23,409				663,728
Shares issued in reinvestment of distributions		78,735				2,017,206			62,470				1,628,570
Shares redeemed and automatic conversion of shares		(306,101	)			(8,460,863	)		(404,936	)			(11,242,595	)
Net decrease		(210,390	)		$	(5,973,575	)		(55,024	)		$	(1,978,930	)
Investor C
Shares issued in the reorganization1		–				–			1,732,603			$	45,602,289
Shares sold		792,297			$	21,836,095			1,964,605				55,634,617
Shares issued in reinvestment of distributions		581,778				14,834,985			398,100				10,342,259
Shares redeemed		(1,281,445	)			(34,970,554	)		(2,395,905	)			(66,305,169	)
Net increase		92,630			$	1,700,526			1,699,403			$	45,273,996
								Period September 12, 20112 to September 30, 2011
								Shares			Amount
Class R
Shares issued in the reorganization1		–				–			347,818			$	9,787,987
Shares sold		109,922			$	3,226,291			11,745				335,213
Shares issued in reinvestment of dividends		19,428				527,655			–				–
Shares redeemed		(70,062	)			(2,055,392	)		(17,412	)			(498,734	)
Net increase		59,288			$	1,698,554			342,151			$	9,624,466
Total net increase		2,041,028			$	57,090,390			11,829,158			$	344,887,812

¹ See Note 1 regarding the reorganization

² Commencement of Operations

    BLACKROCK FUNDS     MARCH 31, 2012 65

Notes to Financial Statements (continued)

	Six Months Ended March 31, 2012							Year Ended September 30, 2011
International Opportunities	Shares			Amount				Shares			Amount
Institutional
Shares sold		5,671,214			$	175,717,406			16,478,827			$	566,277,414
Shares issued in reinvestment of dividends		491,173				14,312,818			214,265				7,418,383
Shares redeemed		(6,171,722	)			(188,885,167	)		(13,232,744	)			(457,095,405	)
Net increase (decrease)		(9,335	)		$	1,145,057			3,460,348			$	116,600,392
Service
Shares sold		121,102			$	3,597,850			310,969			$	10,329,417
Shares issued in reinvestment of dividends		26,176				737,899			13,386				448,013
Shares redeemed		(240,964	)			(7,136,962	)		(802,715	)			(26,887,480	)
Net decrease		(93,686	)		$	(2,801,213	)		(478,360	)		$	(16,110,050	)
Investor A
Shares sold and automatic conversion of shares		3,331,252			$	97,644,783			9,774,128			$	314,050,543
Shares issued in reinvestment of dividends		458,335				12,782,955			211,387				7,007,357
Shares redeemed		(5,093,703	)			(149,715,490	)		(9,380,973	)			(312,127,798	)
Net increase (decrease)		(1,304,116	)		$	(39,287,752	)		604,542			$	8,930,102
Investor B
Shares sold		3,035			$	83,684			10,981			$	340,576
Shares issued in reinvestment of dividends		4,391				114,745			200				6,178
Shares redeemed and automatic conversion of shares		(158,281	)			(4,349,548	)		(254,785	)			(7,867,647	)
Net decrease		(150,855	)		$	(4,151,119	)		(243,604	)		$	(7,520,893	)
Investor C
Shares sold		313,175			$	8,538,781			1,317,687			$	40,785,132
Shares issued in reinvestment of dividends		56,675				1,467,326			15,662				481,446
Shares redeemed		(1,191,551	)			(32,308,111	)		(2,327,389	)			(71,180,146	)
Net decrease		(821,701	)		$	(22,302,004	)		(994,040	)		$	(29,913,568	)
Total net increase (decrease)		(2,379,693	)		$	(67,397,031	)		2,348,886			$	71,985,983

66     BLACKROCK FUNDS     MARCH 31, 2012

Notes to Financial Statements (continued)

	Six Months Ended March 31, 2012							Year Ended September 30, 2011
Science & Technology Opportunities	Shares			Amount				Shares			Amount
Institutional
Shares sold		606,070			$	5,851,969			1,206,173			$	12,255,183
Shares redeemed		(637,128	)			(6,148,309	)		(935,690	)			(9,390,243	)
Net increase (decrease)		(31,058	)		$	(296,340	)		270,483			$	2,864,940
Service
Shares sold		17,654			$	167,504			76,484			$	728,734
Shares redeemed		(6,476	)			(59,782	)		(49,792	)			(484,979	)
Net increase		11,178			$	107,722			26,692			$	243,755
Investor A
Shares sold and automatic conversion of shares		755,068			$	6,993,893			4,564,043			$	43,817,474
Shares redeemed		(1,826,910	)			(16,561,003	)		(3,812,838	)			(36,639,657	)
Net increase (decrease)		(1,071,842	)		$	(9,567,110	)		751,205			$	7,177,817
Investor B
Shares sold		14,859			$	125,846			68,629			$	598,949
Shares redeemed and automatic conversion of shares		(78,600	)			(676,426	)		(203,615	)			(1,789,504	)
Net decrease		(63,741	)		$	(550,580	)		(134,986	)		$	(1,190,555	)
Investor C
Shares sold		282,348			$	2,362,487			1,125,911			$	10,129,287
Shares redeemed		(551,177	)			(4,509,243	)		(840,174	)			(7,390,677	)
Net increase (decrease)		(268,829	)		$	(2,146,756	)		285,737			$	2,738,610
Class R
Shares sold		115,167			$	1,095,072			252,128			$	2,505,574
Shares redeemed		(88,579	)			(826,589	)		(168,337	)			(1,660,869	)
Net increase		26,588			$	268,483			83,791			$	844,705
Total net increase (decrease)		(1,397,704	)		$	(12,184,581	)		1,282,922			$	12,679,272

    BLACKROCK FUNDS     MARCH 31, 2012 67

Notes to Financial Statements (concluded)

	Six Months Ended March 31, 2012							Year Ended September 30, 2011
U.S. Opportunities	Shares			Amount				Shares			Amount
Institutional
Shares sold		8,586,070			$	303,242,752			34,490,335			$	1,403,849,188
Shares issued in reinvestment of dividends and distributions		4,597,296				151,572,873			562,799				22,489,473
Shares redeemed		(20,930,559	)			(755,987,158	)		(21,778,639	)			(883,122,611	)
Net increase (decrease)		(7,747,193	)		$	(301,171,533	)		13,274,495			$	543,216,050
Service
Shares sold		50,759			$	1,714,289			746,753			$	29,457,121
Shares issued in reinvestment of distributions		633,064				19,966,853			84,568				3,249,935
Shares redeemed		(1,032,906	)			(35,408,841	)		(1,835,825	)			(71,884,470	)
Net decrease		(349,083	)		$	(13,727,699	)		(1,004,504	)		$	(39,177,414	)
Investor A
Shares sold and automatic conversion of shares		1,376,377			$	46,675,969			8,996,743			$	349,422,572
Shares issued in reinvestment of distributions		2,846,386				88,721,884			413,341				15,711,130
Shares redeemed		(9,462,210	)			(319,704,493	)		(14,804,518	)			(575,969,728	)
Net decrease		(5,239,447	)		$	(184,306,640	)		(5,394,434	)		$	(210,836,026	)
Investor B
Shares sold		1,652			$	50,752			19,782			$	714,834
Shares issued in reinvestment of distributions		59,433				1,669,467			6,293				218,440
Shares redeemed and automatic conversion of shares		(89,105	)			(2,720,626	)		(142,776	)			(5,054,884	)
Net decrease		(28,020	)		$	(1,000,407	)		(116,701	)		$	(4,121,610	)
Investor C
Shares sold		198,498			$	6,062,838			2,022,997			$	71,961,051
Shares issued in reinvestment of distributions		1,073,324				30,171,224			114,346				3,967,782
Shares redeemed		(2,001,794	)			(61,849,789	)		(2,912,160	)			(101,772,168	)
Net decrease		(729,972	)		$	(25,615,727	)		(774,817	)		$	(25,843,335	)
Total net increase (decrease)		(14,093,715	)		$	(525,822,006	)		5,984,039			$	263,237,665

Prior to April 1, 2011, there was a 2% redemption fee on shares redeemed or exchanged that have been held 30 days or less. The redemption fees were collected and retained by the Funds for the benefit of the remaining shareholders. The redemption fees were recorded as a credit to paid-in capital. Effective April 1, 2011, the redemption fee was terminated and is no longer charged by the Funds.

9. Subsequent Events:

Management has evaluated the impact of all subsequent events on the Funds through the date the financial statements were issued and has determined that there were no subsequent events requiring adjustment or additional disclosure in the financial statements.

68     BLACKROCK FUNDS     MARCH 31, 2012

Officers and Trustees

Ronald W. Forbes, Co-Chairman of the Board and Trustee

Rodney D. Johnson, Co-Chairman of the Board and Trustee

Paul L. Audet, Trustee

David O. Beim, Trustee

Henry Gabbay, Trustee

Dr. Matina S. Horner, Trustee

Herbert I. London, Trustee

Cynthia A. Montgomery, Trustee

Joseph P. Platt, Trustee

Robert C. Robb, Jr., Trustee

Toby Rosenblatt, Trustee

Kenneth L. Urish, Trustee

Frederick W. Winter, Trustee

John M. Perlowski, President and Chief Executive Officer

Richard Hoerner, CFA, Vice President

Brendan Kyne, Vice President

Simon Mendelson, Vice President

Christopher Stavrakos, CFA, Vice President

Neal Andrews, Chief Financial Officer

Jay Fife, Treasurer

Brian Kindelan, Chief Compliance Officer and

Anti-Money Laundering Officer

Ira P. Shapiro, Secretary

Investment Advisor and Co-Administrator

BlackRock Advisors, LLC

Wilmington, DE 19809

Sub-Advisors

BlackRock Financial Management, Inc.¹

New York, NY 10055

BlackRock International Limited²

Edinburgh, Scotland EH3 8JB

Accounting Agent, Co-Administrator and Transfer Agent

BNY Mellon Investment Servicing (US) Inc.

Wilmington, DE 19809

Custodians

The Bank of New York Mellon

New York, NY 10286

Distributor

BlackRock Investments, LLC

New York, NY 10022

Legal Counsel

Sidley Austin LLP

New York, NY 10019

Independent Registered Public Accounting Firm

Deloitte & Touche LLP

Philadelphia, PA 19103

Address of the Trust

100 Bellevue Parkway

Wilmington, DE 19809

¹  For Global Opportunities.

²  For International Opportunities.

    BLACKROCK FUNDS     MARCH 31, 2012 69

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 funds, 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.

70     BLACKROCK FUNDS     MARCH 31, 2012

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.

    BLACKROCK FUNDS     MARCH 31, 2012 71

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 Dynamic Equity Fund	BlackRock Mid-Cap Value 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 Russell 1000 Index Fund
BlackRock China Fund	BlackRock India Fund	BlackRock Science & Technology
BlackRock Commodity Strategies Fund	BlackRock International Fund	Opportunities Portfolio
BlackRock Emerging Markets Fund	BlackRock International Index Fund	BlackRock Small Cap Growth Equity Portfolio
BlackRock Emerging Markets Long/Short	BlackRock International Opportunities Portfolio	BlackRock Small Cap Growth Fund II
Equity Fund	BlackRock Large Cap Core Fund	BlackRock Small Cap Index Fund
BlackRock Energy & Resources Portfolio	BlackRock Large Cap Core Plus Fund	BlackRock S&P 500 Index Fund
BlackRock Equity Dividend Fund	BlackRock Large Cap Growth Fund	BlackRock S&P 500 Stock Fund
BlackRock EuroFund	BlackRock Large Cap Value Fund	BlackRock U.S. Opportunities Portfolio
BlackRock Focus Growth Fund	BlackRock Latin America Fund	BlackRock Value Opportunities Fund
BlackRock Global Allocation Fund	BlackRock Managed Volatility Portfolio†	BlackRock World Gold Fund
BlackRock Global Dividend Income Portfolio†	BlackRock Mid-Cap Growth Equity Portfolio

Fixed Income Funds
BlackRock Bond Index Fund	BlackRock High Yield Bond Portfolio	BlackRock Strategic Income
BlackRock CoreAlpha Bond Fund	BlackRock Inflation Protected Bond Portfolio	Opportunities Portfolio
BlackRock Core Bond Portfolio	BlackRock International Bond Portfolio	BlackRock Total Return Fund
BlackRock Emerging Market 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 Multi-Sector Bond Portfolio

Municipal Bond 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	BlackRock Lifecycle Prepared 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.

72     BLACKROCK FUNDS     MARCH 31, 2012

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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 the Funds 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.

Investment in foreign securities involves special risks including fluctuating foreign exchange rates, foreign government regulations, differing degrees of liquidity and the possibility of substantial volatility due to adverse political, economic or other developments.

EQUITY5-3/12-SAR

  March 31, 2012    

        Semi-Annual Report (Unaudited)

              BlackRock Managed Volatility Portfolio | of BlackRock Funds^SM

Not FDIC Insured  n  No Bank Guarantee  n  May Lose Value

Table of Contents

	Page
Dear Shareholder	3
Semi-Annual Report:
Fund Summary	4
About Fund Performance	6
Disclosure of Expenses	6
The Benefits and Risks of Leveraging	7
Derivative Financial Instruments	7
Financial Statements:
Schedule of Investments	8
Statement of Assets and Liabilities	25
Statement of Operations	26
Statements of Changes in Net Assets	27
Financial Highlights	28
Notes to Financial Statements	31
Officers and Trustees	43
Additional Information	44
A World-Class Mutual Fund Family	46

2                 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2012

Dear Shareholder Twelve months ago, risk assets were charging forward, only to be met with a sharp reversal in May 2011 when escalating political strife in Greece rekindled fears about sovereign debt problems spreading across Europe. Concurrently, global economic indicators signaled that the recovery had slowed. Confidence was further shaken by the prolonged debt ceiling debate in Washington, DC. On August 5, 2011, Standard & Poor’s made history by downgrading the US government’s credit rating, and turmoil erupted in financial markets around the world. Extraordinary levels of volatility persisted in the months that followed as the European debt crisis intensified. Macro news flow became a greater influence on trading decisions than the fundamentals of the securities traded, resulting in high correlations between asset prices. By the end of the third quarter, equity markets had fallen nearly 20% from their April peak while safe-haven assets such as US Treasuries and gold had rallied to historic highs. October brought enough positive economic data to assuage fears of a global double-dip recession. Additionally, European leaders began to show progress toward stemming the region’s debt crisis. Investors began to reenter the markets, putting risk assets on the road to recovery. Improving investor sentiment carried over into the first several months of 2012. Debt problems in Europe stabilized as policymakers secured a bailout plan for Greece and completed the nation’s debt restructuring without significant market disruptions. While concerns about slowing growth in China and a European recession weighed on the outlook for the global economy, an acceleration of the US recovery lifted sentiment. Several consecutive months of stronger jobs data signaled solid improvement in the US labor market, a pivotal factor for economic growth. Meanwhile, the European Central Bank revived financial markets with additional liquidity through its long-term refinancing operations. The improving market conditions and generally better-than-expected economic news lured investors still holding cash on the sidelines back to risk assets. Stocks, commodities and high yield bonds rallied through the first two months of the year while rising Treasury yields pressured higher-quality fixed income assets. The rally softened in late March, however, as concerns about slowing growth in China were refueled by negative signals from the world’s second-largest economy. Additionally, concerns over the European debt crisis resurfaced given uncertainty around policies for sovereign debt financing in peripheral countries and rising yields in Portugal and Spain. Thanks in large part to an exceptionally strong first quarter of 2012, risk assets, including equities and high yield bonds, posted solid returns for the 6-month period ended March 31, 2012. On a 12-month basis, US large-cap stocks and high yield bonds delivered positive results, while small-cap stocks finished in slightly negative territory. International and emerging markets, which experienced significant downturns in 2011, lagged the broader rebound. Fixed income securities experienced mixed results, given recent volatility in yields. US Treasury bonds performed particularly well for the 12-month period; however, an early-2012 sell-off resulted in a negative return for the 6-month period. Municipal bonds staged a solid advance over the past year. Continued low short-term interest rates kept yields on money market securities near their all-time lows. While markets have improved in recent months, considerable headwinds remain. Europe faces a prolonged recession and the financial situations in Italy, Portugal and Spain remain worrisome. Higher oil and gasoline prices along with slowing growth in China and other emerging-market countries weigh heavily on the future of the global economy. But, we believe that with these challenges come opportunities. We remain committed to working with you and your financial professional to identify actionable ideas for your portfolio. We encourage you to visit www.blackrock.com/newworld for more information. Sincerely, Rob Kapito President, BlackRock Advisors, LLC
	“While markets have improved in recent months, considerable headwinds remain.” Rob Kapito President, BlackRock Advisors, LLC Total Returns as of March 31, 2012
			6-month	12-month
		US large cap equities (S&P 500® Index)	25.89%	8.54%
		US small cap equities (Russell 2000® Index)	29.83	(0.18)
		International equities (MSCI Europe, Australasia, Far East Index)	14.56	(5.77)
		Emerging market equities (MSCI Emerging Markets Index)	19.12	(8.81)
		3-month Treasury bill (BofA Merrill Lynch 3-Month Treasury Bill Index)	0.01	0.06
		US Treasury securities (BofA Merrill Lynch 10- Year US Treasury Index)	(1.05)	14.92
		US investment grade bonds (Barclays US Aggregate Bond Index)	1.43	7.71
		Tax-exempt municipal bonds (S&P Municipal Bond Index)	4.16	12.56
		US high yield bonds (Barclays US Corporate High Yield 2% Issuer Capped Index)	12.17	6.43
	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 Summary as of March 31, 2012

    Investment Objective

BlackRock Managed Volatility Portfolio’s (the “Fund”) (formerly known as BlackRock Asset Allocation Portfolio) investment objective is to seek total return.

On February 28, 2012, the Board of Trustees (the “Board”) of BlackRock Funds^SM (the “Trust”), approved a proposal to amend the Fund’s investment objective, from “to seek to maximize total return, consistent with income generation and prudent investment management” to “to seek total return,” and policies and to change the name of the Fund from “BlackRock Asset Allocation Portfolio” to “BlackRock Managed Volatility Portfolio.” The Fund will change one of the components making up the customized weighted index from the Barclays US Aggregate Bond Index to the Citigroup World Government Bond Index (the “Citi WGBI Hedged Index”). Fund management believes that the Citi WGBI Hedged Index better reflects the Fund’s increasing global exposure. These changes were effective on May 15, 2012.

    Portfolio Management Commentary

How did the Fund perform?

— Effective October 1, 2011, the Fund changed the equity component of its reference benchmark against which the Fund measures its performance from the S&P 500^® Index to the MSCI All Country World Index (“ACWI”). Management believes that the MSCI ACWI better reflects the Fund’s increased exposure to non-US equities.

— For the six-month period ended March 31, 2012, the Fund outperformed its reference benchmark (60% MSCI ACWI Index/40% Barclays US Aggregate Bond Index). Individually, the Fund underperformed the MSCI ACWI Index and outperformed the Barclays US Aggregate Bond Index. For the same period, the Fund underperformed its former reference benchmark (60% S&P 500^® Index/40% Barclays US Aggregate Bond Index). The following discussion of relative performance pertains to the current reference benchmark.

What factors influenced performance?

— The Fund’s allocation shifts during the period, including increased exposure to equities and reduced exposure to fixed income and cash, had a positive impact on Fund performance as risk assets globally rallied over the period.

— Within the Fund’s equity allocation, sector biases toward information technology (“IT”) and energy contributed positively as both sectors performed particularly well during the period. Most notable was the Fund’s holding of the Technology Select Sector SPDR Fund, which soared 29% during the period. Also beneficial was the Fund’s overweight exposure to emerging-market stocks as they outperformed other equity classes in early 2012.

— Within the Fund’s fixed income allocation, the Fund’s allocation to high yield bonds, which are not represented in the benchmark index, boosted returns as the sector benefited from the global risk-asset rally and significantly outperformed the Barclays US Aggregate Bond Index during the period.

— Detracting from relative performance was the Fund’s cautious positioning at the beginning of the period as markets began to rally.

— The Fund held a significant position in cash in the first half of the period as a tactical method of reducing risk in the portfolio during what was a highly volatile period across global markets. The Fund’s elevated cash position proved beneficial early in the period; however, the position detracted from relative performance in December 2011 as risk assets rebounded. As market volatility normalized in the first quarter of 2012, the Fund’s cash allocation was reduced significantly as cash was put to work within equities as markets rallied around the globe.

Describe recent portfolio activity.

— During the six-month period, the Fund increased exposure to equities while reducing its allocations to fixed income and cash.

— Within equities, the Fund tactically traded exposure to emerging markets throughout the period. Having underperformed developed markets in 2011, emerging-market stock valuations were particularly compelling coming into 2012, at which time the Fund increased exposure. Emerging-market stocks rallied strongly throughout January and early February, significantly outperforming developed market stocks. The Fund took profits on its emerging-market holdings in March as valuations grew less compelling and slower economic growth in China became increasingly concerning. The proceeds from these sales were used to increase exposure to US and Japanese equities as fundamentals appeared relatively more attractive for those economies. In the US equity space, the Fund maintained its preference for IT stocks as companies in the sector have recently shown very strong balance sheets, demand for technology products remains robust and prospects for growth continue to look positive. The Fund also continued to favor the energy sector for its attractive fundamentals.

��� In fixed income, the Fund diversified its exposure by adding an out-of-index allocation to high yield bonds given their attractive yields and fundamentals in the low interest rate environment.

Describe portfolio positioning at period end.

— The Fund ended the period overweight relative to its reference benchmark in equities and underweight in fixed income, with a small allocation to cash and cash equivalents.

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.

    Portfolio Information

	Percent of
	Long-Term
Ten Largest Holdings	Investments
Fannie Mae	13%
Technology Select Sector SPDR Fund	6
U.S. Treasury Bonds	5
U.S. Treasury Notes	5
Ginnie Mae	3
iShares iBoxx $ High Yield Corporate Bonds Fund	2
Energy Select Sector SPDR Fund	2
Apple, Inc	1
Freddie Mac	1
Morgan Stanley Capital I	1

	Percent of
	Long-Term
Portfolio Composition	Investments
Common Stocks	42%
U.S. Government Sponsored Agency Securities	17
Corporate Bonds	11
Investment Companies	10
U.S. Treasury Obligations	10
Non-Agency Mortgage-Backed Securities	5
Asset-Backed Securities	3
Foreign Government Obligations	1
Foreign Agency Obligations	1

4                 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2012

  Total Return Based on a $10,000 Investment

	1	Assuming maximum sales charges, if any, transaction costs and other operating expenses, including investment advisory fees. Institutional Shares do not have a sales charge.
	2	The Fund uses an asset allocation strategy, investing varying percentages of its portfolio in three major categories: stocks, bonds and, to a lesser extent, money market instruments.
	3	This customized weighted index is comprised of the returns of the MSCI All Country World Index (60%) and Barclays US Aggregate Bond Index (40%).
	4	This is a free float-adjusted market capitalization weighted index designed to measure the equity market performance of developed and emerging markets.

  ⁵ This unmanaged market-weighted index is 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.

  ⁶ 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.

  ⁷ This customized weighted index is comprised of the returns of the S&P 500^® Index (60%) and Barclays US Aggregate Bond Index (40%).

  Performance Summary for the Period Ended March 31, 2012

		Average Annual Total Returns6
		1 Year		5 Years		10 Years
	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
Institutional	13.41%	1.51%	N/A	3.67%	N/A	5.52%	N/A
Service	13.28	1.23	N/A	3.40	N/A	5.25	N/A
Investor A	13.27	1.20	(4.09)%	3.32	2.21%	5.16	4.60%
Investor B	12.73	0.35	(4.05)	2.48	2.13	4.53	4.53
Investor C	12.84	0.49	(0.49)	2.58	2.58	4.41	4.41
60% MSCI All Country World Index/40% Barclays US Aggregate Bond Index	12.36	3.04	N/A	2.90	N/A	5.93	N/A
MSCI All Country World Index	19.91	(0.73)	N/A	(0.19)	N/A	5.33	N/A
Barclays US Aggregate Bond Index	1.43	7.71	N/A	6.25	N/A	5.80	N/A
S&P 500® Index	25.89	8.54	N/A	2.01	N/A	4.12	N/A
60% S&P 500® Index/40% Barclays US Aggregate Bond Index	15.67	8.58	N/A	4.15	N/A	5.14	N/A

⁸  Assuming maximum sales charge, if any. Average annual total returns with and without sales charges reflect reductions for distribution and service fees. See “About Fund Performance” on page 6 for a detailed description of share classes, including any related sales charges and fees.

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

Past performance is not indicative of future results.

  Expense Example

	Actual				Hypothetical11
			Including Interest Expense	Excluding Interest Expense		Including Interest Expense		Excluding Interest Expense
			and Fees	and Fees		and Fees		and Fees
	Beginning	Ending			Beginning	Ending		Ending
	Account Value October 1, 2011	Account Value     March 31,     2012	Expenses Paid During the  Period9	Expenses Paid During the  Period10	Account Value October 1, 2011	Account Value     March 31,     2012	Expenses Paid During the Period9	Account Value March 31, 2012	Expenses Paid During the  Period10
Institutional	$1,000.00	$1,134.10	$  4.80	$  4.75	$1,000.00	$1,020.50	$  4.55	$1,020.55	$  4.50
Service	$1,000.00	$1,132.80	$  6.29	$  6.24	$1,000.00	$1,019.10	$  5.96	$1,019.15	$  5.91
Investor A	$1,000.00	$1,132.70	$  6.45	$  6.40	$1,000.00	$1,018.95	$  6.11	$1,019.00	$  6.06
Investor B	$1,000.00	$1,127.30	$11.06	$11.01	$1,000.00	$1,014.60	$10.48	$1,014.65	$10.43
Investor C	$1,000.00	$1,128.40	$10.22	$10.16	$1,000.00	$1,015.40	$  9.67	$1,015.45	$  9.62

⁹  For each class of the Fund, expenses are equal to the annualized expense ratio for the class (0.90% for Institutional, 1.18% for Service, 1.21% for Investor A, 2.08% for Investor B and 1.92% for Investor C), multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period shown).

¹⁰ For each class of the Fund, expenses are equal to the annualized expense ratio for the class (0.89% for Institutional, 1.17% for Service, 1.20% for Investor A, 2.07% for Investor B and 1.91% for Investor C), multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period shown).

¹¹ 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.

See “Disclosure of Expenses” on page 6 for further information on how expenses were calculated.

BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2012                 5

About Fund Performance

— Institutional Shares are not subject to any sales charge. Institutional Shares bear no ongoing distribution or service fees and are available only to eligible investors.

— Service Shares are not subject to any sales charge (front-end load) or deferred sales charge. Service Shares are subject to a service fee of 0.25% per year (but no distribution fee). Prior to January 28, 2005, Service Shares’ performance results are those of Institutional Shares (which have no distribution or service fees) restated to reflect Service Shares’ fees.

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

— Investor B Shares are subject to a maximum contingent deferred sales charge (“CDSC”) of 4.50% declining to 0% after six years. In addition, Investor B Shares are subject to a distribution fee of 0.75% per year and a service fee of 0.25% per year. Investor B Shares automatically convert to Investor A Shares after approximately eight years. (There is no initial sales charge for automatic share conversions.) All returns for periods greater than eight years reflect this conversion. Investor B Shares are only available through exchanges, dividend reinvestment by existing shareholders or for purchase by certain qualified employee benefit plans.

— Investor C Shares are subject to a 1.00% CDSC if redeemed within one year of purchase. In addition, Investor C Shares are subject to a distribution fee of 0.75% per year and a service fee of 0.25% per year.

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 the performance tables on the previous page 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.

Performance for the Fund for the periods prior to January 31, 2005 is based on performance of a certain former State Street Research mutual fund that reorganized with the Fund on that date.

The Fund’s investment advisor, BlackRock Advisors, LLC (the “Manager”), waived and/or reimbursed a portion of the Fund’s expenses. Without such waiver and/or reimbursement, the 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 3 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.

Disclosure of Expenses

Shareholders of the Fund may incur the following charges: (a) expenses related to transactions, including sales charges and exchange fees; and (b) operating expenses, including investment advisory fees, service and distribution fees, including 12b-1 fees, acquired fund fees and expenses and other Fund expenses. The expense example on the previous page (which is based on a hypothetical investment of $1,000 invested on October 1, 2011 and held through March 31, 2012) is intended to assist shareholders both in calculating expenses based on an investment in the Fund and in comparing these expenses with similar costs of investing in other mutual funds.

The table provides 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 share class under the heading entitled “Expenses Paid During the Period.”

The table also provides information about hypothetical account values and hypothetical expenses based on the 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 the Fund and other funds, compare the 5% hypothetical example with the 5% hypothetical examples that appear in other funds’ shareholder reports.

The expenses shown in the table 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.

6                 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2012

The Benefits and Risks of Leveraging

The Fund may utilize leverage to seek to enhance its yield and NAV. However, these objectives cannot be achieved in all interest rate environments.

The Fund may utilize leverage through entering into reverse repurchase agreements and treasury roll transactions. In general, the concept of leveraging is based on the premise that the financing cost of assets to be obtained from leverage, which will be based on short-term interest rates, will normally be lower than the income earned by the Fund on its longer-term portfolio investments. To the extent that the total assets of the Fund (including the assets obtained through leverage) are invested in higher-yielding portfolio investments, the Fund’s shareholders will benefit from the incremental net income.

The interest earned on securities purchased with the proceeds from leverage is paid to shareholders in the form of dividends, and the value of these portfolio holdings is reflected in the per share NAV. However, in order to benefit shareholders, the yield curve must be positively sloped; that is, short-term interest rates must be lower than long-term interest rates. If the yield curve becomes negatively sloped, meaning short-term interest rates exceed long-term interest rates, income to shareholders will be lower than if the Fund had not used leverage.

If short-term interest rates rise, narrowing the differential between short-term and long-term interest rates, the incremental net income pickup will be reduced or eliminated completely. Furthermore, if prevailing short-term interest rates rise above long-term interest rates, the yield curve has a negative slope. In this case, the Fund pays higher short-term interest rates whereas the Fund’s total portfolio earns income based on lower long-term interest rates.

Furthermore, the value of the Fund’s portfolio investments generally varies inversely with the direction of long-term interest rates, although other factors can influence the value of portfolio investments. As a result, changes in interest rates can influence the Fund’s NAV positively or negatively in addition to the impact on the Fund’s performance from leverage and borrowings discussed above.

The use of leverage may enhance opportunities for increased income to the Fund, but as described above, it also creates risks as short- or long-term interest rates fluctuate. Leverage also will generally cause greater changes in the Fund’s NAVs and dividend rates than comparable portfolios without leverage. If the income derived from securities purchased with assets received from leverage exceeds the cost of leverage, the Fund’s net income will be greater than if leverage had not been used. Conversely, if the income from the securities purchased is not sufficient to cover the cost of leverage, the Fund’s net income will be less than if leverage had not been used, and therefore the amount available for distribution to shareholders will be reduced. The Fund may be required to sell portfolio securities at inopportune times or at distressed values in order to comply with regulatory requirements applicable to the use of leverage or as required by the terms of leverage instruments, which may cause the Fund to incur losses. The use of leverage may limit the Fund’s ability to invest in certain types of securities or use certain types of hedging strategies. The Fund will incur expenses in connection with the use of leverage, all of which are borne by Fund shareholders and may reduce income.

Derivative Financial Instruments

The Fund may invest in various derivative financial instruments, including financial futures contracts, foreign currency exchange contracts, options and swaps as specified in Note 2 of the Notes to Financial Statements, which may constitute forms of economic leverage. Such derivative financial instruments are used to obtain exposure to a market without owning or taking physical custody of securities or to hedge market, equity, credit, interest rate, foreign currency exchange rate and/or other risks. Derivative financial instruments involve risks, including the imperfect correlation between the value of a derivative financial instrument and the underlying asset, possible default of the counterparty to the transaction or illiquidity of the derivative financial instrument. The Fund’s ability to

use a derivative financial instrument successfully depends on the investment advisor’s ability to predict pertinent market movements accurately, which cannot be assured. The use of derivative financial instruments may result in losses greater than if they had not been used, may require the Fund to sell or purchase portfolio investments at inopportune times or for distressed values, may limit the amount of appreciation the Fund can realize on an investment, may result in lower dividends paid to shareholders or may cause the Fund to hold an investment that it might otherwise sell. The Fund’s investments in these instruments are discussed in detail in the Notes to Financial Statements.

BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2012                 7

Schedule of Investments March 31, 2012  (Unaudited) (Percentages shown are based on Net Assets)

Asset-Backed Securities	Par (000)		Value
321 Henderson Receivables I LLC:
Series 2010-1A, Class A, 5.56%, 8/15/35 (a)	USD	586	$	637,731
Series 2010-2A, Class A, 4.07%, 1/15/28 (a)		436		444,459
Series 2010-3A, Class A, 3.82%, 1/15/32 (a)		451		450,364
Series 2012-1A, Class A, 4.21%, 8/15/41 (a)		250		252,265
AEP Texas Central Transition Funding LLC, Series 2012-1, Class A3, 2.84%, 12/01/24		560		553,212
AH Mortgage Advance Trust, Series SART-3, Class 1A1, 2.98%, 3/13/13 (a)		305		305,282
AmeriCredit Automobile Receivables Trust:
Series 2011-2, Class C, 3.19%, 10/12/16		30		30,974
Series 2011-5, Class C, 3.44%, 10/08/15		190		193,762
Amortizing Residential Collateral Trust, Series 2002-BC5, Class M2, 2.04%, 7/25/32 (b)		11		3,820
CarMax Auto Owner Trust:
Series 2012-1, Class B, 1.76%, 1/15/16		105		104,557
Series 2012-1, Class C, 2.20%, 1/15/16		60		59,736
Series 2012-1, Class D, 3.09%, 1/15/16		75		74,676
CenterPoint Energy Transition Bond Co. LLC, Series 2012-1, Class A3, 3.03%, 10/15/24		545		548,633
Centex Home Equity, Series 2003-B, Class M3, 3.34%, 6/25/33 (b)		101		41,512
Conseco Financial Corp., Series 1996-7, Class A6, 7.65%, 10/15/27 (b)		22		22,699
Countrywide Asset-Backed Certificates:
Series 2003-2, Class M2, 2.72%, 3/26/33 (b)		123		11,711
Series 2003-3, Class M6, 4.63%, 7/25/32 (b)		3		444
Series 2003-BCI, Class M2, 3.24%, 9/25/32 (b)		35		13,516
DT Auto Owner Trust, Series 2011-3A, Class C, 4.03%, 2/15/14 (a)		250		250,088
Ford Credit Floorplan Master Owner Trust:
Series 2010-5, Class C, 2.07%, 9/15/13 (a)		150		151,092
Series 2010-5, Class D, 2.41%, 9/15/13 (a)		80		80,572
Series 2011-2, Class C, 2.37%, 9/15/13		190		190,302
Series 2011-2, Class D, 2.86%, 9/15/13		135		135,204
Series 2012-1, Class B, 1.14%, 1/15/14 (b)		100		100,023
Series 2012-1, Class C, 1.74%, 1/15/14 (b)		230		230,104
Series 2012-1, Class D, 2.34%, 1/15/14 (b)		215		215,137

Asset-Backed Securities	Par (000)		Value
Series 2012-2, Class B, 2.32%, 1/15/17	USD	120	$	119,497
Series 2012-2, Class C, 2.86%, 1/15/17		100		99,372
Series 2012-2, Class D, 3.51%, 1/15/17		100		99,377
Globaldrive BV, Series 2008-2, Class A, 4.00%, 10/20/16	EUR	110		148,479
GSAA Trust, Series 2005-11, Class 2A1, 0.52%, 10/25/35 (b)	USD	646		489,629
Home Equity Asset Trust, Series 2007-2, Class 2A1, 0.35%, 7/25/37 (b)		56		54,692
Hyundai Auto Receivables Trust, Series 2012-A, Class D, 2.61%, 3/15/16		135		134,637
Long Beach Mortgage Loan Trust:
Series 2003-4, Class M5A, 6.24%, 8/25/33 (b)		18		8,533
Series 2004-1, Class M5, 1.89%, 2/25/34 (b)		74		46,888
Nelnet Student Loan Trust, Series 2008-3, Class A4, 2.14%, 11/25/17 (b)		300		309,224
Option One Mortgage Loan Trust:
Series 2002-6, Class M1, 1.37%, 11/25/32 (b)		16		10,449
Series 2003-4, Class A2, 0.88%, 7/25/33 (b)		50		38,897
Series 2003-4, Class M5A, 5.87%, 7/25/33 (b)		19		4,195
Series 2003-5, Class M4, 4.59%, 8/25/33 (b)		20		5,229
PFS Financing Corp., Series 2012-AA, Class A, 1.44%, 2/17/14 (a)(b)		230		230,023
Residential Asset Mortgage Products, Inc., Series 2007-RS2, Class A1, 0.36%, 7/25/29 (b)		30		29,457
Residential Asset Securities Corp., Series 2002-KS4, Class AIIB, 0.74%, 7/25/32 (b)		26		14,541
Santander Consumer Acquired Receivables Trust:
Series 2011-S1A, Class B, 1.66%, 6/15/13 (a)(b)		246		244,350
Series 2011-S1A, Class C, 2.01%, 6/15/13 (a)		212		210,251
Series 2011-WO, Class C, 3.19%, 8/15/14 (a)		320		319,485
Santander Drive Auto Receivables Trust:
Series 2010-2, Class B, 2.24%, 12/15/14		460		461,765
Series 2010-2, Class C, 3.89%, 7/17/17		540		551,869
Series 2010-B, Class B, 2.10%, 9/15/14 (a)		385		386,982
Series 2010-B, Class C, 3.02%, 10/17/16 (a)		405		402,495
Series 2011-1, Class D, 4.01%, 2/15/17		500		501,678
Series 2011-S1A, Class B, 1.48%, 7/15/13 (a)		189		188,840

  Portfolio Abbreviations

To simplify the listings of portfolio holdings in the Schedule of Investments, the names and descriptions of many of the securities have been abbreviated according to the following list:	ADR	American Depositary Receipts	LIBOR	London Interbank Offered Rate
	AUD	Australian Dollar	PHP	Philippine Peso
	CAD	Canadian Dollar	RB	Revenue Bonds
	CHF	Swiss Franc	SGD	Singapore Dollar
	EUR	Euro	SPDR	Standard & Poor’s Depositary
	GBP	British Pound		Receipts
	HKD	Hong Kong Dollar	TBA	To-Be-Announced
See Notes to Financial Statements.	JPY	Japanese Yen	USD	US Dollar

8                 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2012

Schedule of Investments (continued) (Percentages shown are based on Net Assets)

Asset-Backed Securities	Par (000)		Value
Series 2011-S1A, Class D, 3.10%, 3/15/13 (a)	USD	204	$	203,948
Series 2012-1, Class B, 2.72%, 8/15/14		120		122,025
Series 2012-1, Class C, 3.78%, 6/15/15		160		163,683
Series 2012-2, Class C, 3.20%, 9/15/15		430		430,937
Series 2012-2, Class D, 3.87%, 1/15/16		255		255,864
Scholar Funding Trust, Series 2011-A, Class A, 1.45%, 7/28/34 (a)(b)		267		256,544
SLM Student Loan Trust:
Series 2004-B, Class A2, 0.67%, 6/15/21 (b)		300		287,381
Series 2008-5, Class A3, 1.86%, 1/25/18 (b)		245		250,263
Series 2008-5, Class A4, 2.26%, 7/25/23 (b)		445		460,918
Series 2012-A, Class A1, 1.64%, 4/15/16 (a)(b)		174		174,720
Series 2012-A, Class A2, 3.83%, 3/15/18 (a)		170		169,426
Total Asset-Backed Securities – 2.3%				12,988,418
Collateralized Debt Obligations
Knollwood Ltd., Series 2004-1A, Class C, 3.59%, 1/10/39 (a)(b)		124		–
Morgan Stanley, Series 2007-XLC1, Class A2 0.56%, 7/17/17 (b)		297		279,325
Total Collateralized Debt Obligations – 0.0%				279,325
Common Stocks	Shares
Aerospace & Defense – 1.6%
Alliant Techsystems, Inc.		4,900		245,588
The Boeing Co.		33,600		2,498,832
General Dynamics Corp.		12,400		909,912
L-3 Communications Holdings, Inc.		10,700		757,239
Lockheed Martin Corp.		8,100		727,866
Northrop Grumman Corp.		14,200		867,336
Precision Castparts Corp.		4,800		829,920
Raytheon Co.		5,800		306,124
TransDigm Group, Inc. (c)		7,810		904,086
United Technologies Corp.		10,200		845,988
				8,892,891
Airlines – 0.1%
Copa Holdings SA, Class A		8,200		649,440
Auto Components – 0.2%
Allison Transmission Holdings, Inc. (c)		11,200		267,456
BorgWarner, Inc. (c)		3,800		320,492
Lear Corp.		5,400		251,046
				838,994
Automobiles – 0.4%
Daimler AG		11,892		717,051
Nissan Motor Co. Ltd.		104,300		1,110,164
Tesla Motors, Inc. (c)(d)		14,100		525,084
				2,352,299

Common Stocks	Shares		Value
Beverages – 0.7%
Anheuser-Busch InBev NV		19,530	$	1,426,871
The Coca-Cola Co.		23,998		1,776,092
Constellation Brands, Inc., Class A (c)		28,900		681,751
PepsiCo, Inc.		4,100		272,035
				4,156,749
Biotechnology – 0.4%
Biogen Idec, Inc. (c)		7,500		944,775
Celgene Corp. (c)		9,200		713,184
Gilead Sciences, Inc. (c)		6,800		332,180
				1,990,139
Capital Markets – 0.7%
Ares Capital Corp.		30,939		505,853
Eaton Vance Corp.		3,428		97,972
Federated Investors, Inc., Class B (d)		21,324		477,871
The Goldman Sachs Group, Inc.		6,600		820,842
Jefferies Group, Inc.		33,900		638,676
UBS AG		77,507		1,086,145
Waddell & Reed Financial, Inc., Class A		16,609		538,298
				4,165,657
Chemicals – 1.2%
Celanese Corp.		16,500		761,970
CF Industries Holdings, Inc.		4,000		730,600
Cytec Industries, Inc.		11,300		686,927
E.I. du Pont de Nemours & Co.		13,261		701,507
LG Chem Ltd.		2,188		714,496
Linde AG		8,220		1,475,081
Monsanto Co.		14,425		1,150,538
Nitto Denko Corp.		19,800		797,789
				7,018,908
Commercial Banks – 1.0%
BNP Paribas SA		12,808		607,696
China Construction Bank Corp., H Shares		1,067,000		824,410
HSBC Holdings Plc		141,928		1,259,463
ICICI Bank Ltd. - ADR		20,900		728,783
Kasikornbank PCL		116,500		581,556
Standard Chartered Plc		33,326		831,551
Wells Fargo & Co.		30,700		1,048,098
				5,881,557
Commercial Services & Supplies – 0.2%
Corrections Corp. of America		28,500		778,335
Pitney Bowes, Inc.		22,468		394,987
				1,173,322
Communications Equipment – 0.5%
F5 Networks, Inc. (c)		2,100		283,416
QUALCOMM, Inc.		39,500		2,686,790
				2,970,206
Computers & Peripherals – 2.1%
Apple, Inc.		10,827		6,490,462
Dell, Inc. (c)		43,500		722,100
Diebold, Inc.		15,576		599,988
EMC Corp. (c)		9,376		280,155
Fusion-io, Inc. (c)(d)		11,446		325,181
Hewlett-Packard Co.		8,000		190,640

See Notes to Financial Statements.

BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2012                 9

Schedule of Investments (continued) (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Computers & Peripherals (concluded)
Lexmark International, Inc., Class A		20,800	$	691,392
NetApp, Inc. (c)		18,600		832,722
QLogic Corp. (c)		36,600		650,016
Seagate Technology Plc		24,200		652,190
Western Digital Corp. (c)		18,300		757,437
				12,192,283
Construction & Engineering – 0.2%
Chicago Bridge & Iron Co. NV		15,200		656,488
URS Corp.		15,700		667,564
				1,324,052
Consumer Finance – 0.1%
Discover Financial Services		24,600		820,164
Containers & Packaging – 0.1%
Sonoco Products Co.		9,265		307,598
Distributors – 0.1%
Genuine Parts Co.		11,205		703,114
Diversified Consumer Services – 0.2%
Career Education Corp. (c)(d)		36,800		296,608
Education Management Corp. (c)		14,200		194,398
H&R Block, Inc.		42,287		696,467
				1,187,473
Diversified Financial Services – 0.6%
ING Groep NV (c)		70,223		585,075
JPMorgan Chase & Co.		51,200		2,354,176
The NASDAQ OMX Group, Inc. (c)		25,500		660,450
				3,599,701
Diversified Telecommunication Services – 0.6%
AT&T Inc.		13,400		418,482
CenturyLink, Inc.		12,869		497,387
Frontier Communications Corp.		58,731		244,908
Level 3 Communications, Inc. (c)		6,600		169,818
Verizon Communications, Inc.		41,998		1,605,584
Windstream Corp.		40,560		474,958
				3,411,137
Electric Utilities – 0.2%
FirstEnergy Corp.		2,235		101,894
Hawaiian Electric Industries, Inc.		9,795		248,303
Pepco Holdings, Inc.		17,796		336,166
Progress Energy, Inc.		12,274		651,872
				1,338,235
Electrical Equipment – 0.4%
Emerson Electric Co.		2,278		118,866
Nidec Corp.		10,100		920,068
Roper Industries, Inc.		3,400		337,144
Schneider Electric SA		16,108		1,052,469
				2,428,547
Electronic Equipment, Instruments & Components – 0.6%
Avnet, Inc. (c)		19,600		713,244
Ingram Micro, Inc., Class A (c)		37,400		694,144
Jabil Circuit, Inc.		18,300		459,696
Molex, Inc.		378		10,629
Tech Data Corp. (c)		12,700		689,102
Vishay Intertechnology, Inc. (c)		53,700		652,992
				3,219,807

Common Stocks	Shares		Value
Energy Equipment & Services – 0.5%
Halliburton Co.		8,773	$	291,176
National Oilwell Varco, Inc.		9,100		723,177
Noble Corp.		12,000		449,640
Schlumberger Ltd.		17,967		1,256,432
				2,720,425
Food & Staples Retailing – 0.5%
Costco Wholesale Corp.		11,400		1,035,120
The Kroger Co.		28,300		685,709
Safeway, Inc.		16,500		333,465
Whole Foods Market, Inc.		8,400		698,880
				2,753,174
Food Products – 0.2%
Green Mountain Coffee Roasters, Inc. (c)		6,900		323,196
Kraft Foods, Inc., Class A		5,140		195,371
Smithfield Foods, Inc. (c)		19,400		427,382
				945,949
Health Care Equipment & Supplies – 0.2%
Intuitive Surgical, Inc. (c)		610		330,468
Medtronic, Inc.		1,699		66,584
Stryker Corp.		2,902		161,003
Zimmer Holdings, Inc.		12,500		803,500
				1,361,555
Health Care Providers & Services – 1.2%
Aetna, Inc.		18,300		917,928
AmerisourceBergen Corp.		16,500		654,720
Cardinal Health, Inc.		28,400		1,224,324
Coventry Health Care, Inc.		22,200		789,654
Humana, Inc.		8,600		795,328
Medco Health Solutions, Inc. (c)		15,400		1,082,620
UnitedHealth Group, Inc.		22,200		1,308,468
WellPoint, Inc.		2,200		162,360
				6,935,402
Health Care Technology – 0.2%
Cerner Corp. (c)		15,400		1,172,864
Hotels, Restaurants & Leisure – 0.4%
Chipotle Mexican Grill, Inc. (c)		800		334,400
Las Vegas Sands Corp.		18,000		1,036,260
Starbucks Corp.		19,500		1,089,855
				2,460,515
Household Durables – 0.1%
Leggett & Platt, Inc.		25,886		595,637
Household Products – 0.6%
Kimberly-Clark Corp.		7,067		522,181
The Procter & Gamble Co.		10,980		737,966
Reckitt Benckiser Group Plc		33,100		1,870,478
				3,130,625
Independent Power Producers & Energy Traders – 0.2%
The AES Corp. (c)		53,800		703,166
NRG Energy, Inc. (c)		29,200		457,564
				1,160,730
Industrial Conglomerates – 0.8%
Danaher Corp.		32,400		1,814,400
General Electric Co.		90,099		1,808,287

See Notes to Financial Statements.

10                 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2012

Schedule of Investments (continued) (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Industrial Conglomerates (concluded)
Tyco International Ltd.		17,200	$	966,296
				4,588,983
Insurance – 1.4%
AFLAC, Inc.		6,703		308,271
Allied World Assurance Co. Holdings AG		10,000		686,700
American Financial Group, Inc.		17,800		686,724
Assurant, Inc.		16,300		660,150
China Life Insurance Co. Ltd., H Shares		297,000		770,654
Chubb Corp.		4,300		297,173
Cincinnati Financial Corp.		17,368		599,370
Fidelity National Financial, Inc., Class A		13,300		239,799
HCC Insurance Holdings, Inc.		2,800		87,276
Principal Financial Group, Inc.		3,886		114,676
Protective Life Corp.		25,100		743,462
Prudential Financial, Inc.		14,700		931,833
Reinsurance Group of America, Inc.		12,800		761,216
Unum Group		28,900		707,472
W.R. Berkley Corp.		12,900		465,948
				8,060,724
Internet & Catalog Retail – 0.6%
Amazon.com, Inc. (c)(d)		10,000		2,025,100
Expedia, Inc.		19,550		653,752
priceline.com, Inc. (c)		900		645,750
				3,324,602
Internet Software & Services – 0.7%
eBay, Inc. (c)		21,400		789,446
Google, Inc., Class A (c)		4,080		2,616,259
IAC/InterActiveCorp.		2,400		117,816
Rackspace Hosting, Inc. (c)		9,500		549,005
				4,072,526
IT Services – 1.0%
Automatic Data Processing, Inc.		12,505		690,151
Broadridge Financial Solutions, Inc.		23,980		573,362
Computer Sciences Corp.		22,700		679,638
DST Systems, Inc.		13,100		710,413
Paychex, Inc.		19,074		591,103
SAIC, Inc.		51,700		682,440
VeriFone Systems, Inc. (c)		14,000		726,180
Visa, Inc., A Shares		6,900		814,200
				5,467,487
Machinery – 1.4%
AGCO Corp. (c)		7,500		354,075
Caterpillar, Inc.		7,757		826,276
CNH Global NV		16,400		651,080
Eaton Corp.		17,200		857,076
Harsco Corp.		6,541		153,452
Illinois Tool Works, Inc.		11,886		678,928
Makita Corp.		16,900		677,878
Oshkosh Corp. (c)		12,400		287,308
PACCAR, Inc.		10,600		496,398
Parker Hannifin Corp.		8,300		701,765
Railpower Technologies Corp. (c)		17,600		–
Stanley Black & Decker, Inc.		10,000		769,600
Terex Corp. (c)(d)		23,144		520,740

Common Stocks	Shares		Value
Machinery (concluded)
Vallourec SA		9,345	$	592,016
Zoomlion Heavy Industry Science and Technology Co. Ltd., H Shares		332,520		442,758
				8,009,350
Media – 0.6%
Comcast Corp., Class A		27,600		828,276
DISH Network Corp., Class A (c)		20,400		671,772
Gannett Co., Inc.		37,900		581,007
The Interpublic Group of Cos., Inc.		62,200		709,702
Liberty Global, Inc., Class A (c)		12,494		625,700
The McGraw-Hill Cos., Inc.		3,732		180,890
				3,597,347
Metals & Mining – 0.4%
Freeport-McMoRan Copper & Gold, Inc.		16,264		618,683
Rio Tinto Plc		18,031		993,839
Southern Copper Corp.		11,886		376,900
				1,989,422
Multiline Retail – 0.1%
Dillard’s, Inc., Class A		11,300		712,126
Multi-Utilities – 0.3%
Ameren Corp.		23,200		755,856
CenterPoint Energy, Inc.		12,986		256,084
NiSource, Inc.		30,281		737,342
				1,749,282
Oil, Gas & Consumable Fuels – 3.1%
Alpha Natural Resources, Inc. (c)		18,812		286,131
Anadarko Petroleum Corp.		14,500		1,135,930
Apache Corp.		9,500		954,180
BG Group Plc		63,468		1,469,956
Chevron Corp.		26,447		2,836,176
ConocoPhillips		21,700		1,649,417
Devon Energy Corp.		5,500		391,160
EQT Corp.		1,133		54,622
Exxon Mobil Corp.		22,712		1,969,812
Longview Energy Co. (Acquired 8/13/04, cost $48,000) (c)(e)		3,200		39,101
Marathon Oil Corp.		26,600		843,220
Marathon Petroleum Corp.		18,000		780,480
Matador Resources Co. (Acquired 4/13/06, cost $8,451) (c)(e)		939		10,282
Murphy Oil Corp.		4,300		241,961
OGX Petroleo e Gas Participacoes SA (c)		92,200		763,682
Range Resources Corp.		13,300		773,262
Spectra Energy Corp.		22,675		715,396
Tesoro Corp. (c)		25,400		681,736
Tullow Oil Plc		42,551		1,039,273
Valero Energy Corp.		31,200		804,024
				17,439,801
Paper & Forest Products – 0.3%
Ainsworth Lumber Co. Ltd. (a)(c)		19,432		27,664
Ainsworth Lumber Co. Ltd. (c)		17,115		24,365
Domtar Corp.		7,000		667,660

See Notes to Financial Statements.

BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2012                 11

Schedule of Investments (continued) (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Paper & Forest Products (concluded)
International Paper Co.		21,300	$	747,630
				1,467,319
Personal Products – 0.1%
Herbalife Ltd.		4,800		330,336
Pharmaceuticals – 2.5%
Abbott Laboratories		12,100		741,609
Bristol-Myers Squibb Co.		13,763		464,501
Eli Lilly & Co.		28,394		1,143,426
Forest Laboratories, Inc. (c)		21,300		738,897
Johnson & Johnson		6,360		419,506
Novartis AG		32,057		1,774,197
Pfizer, Inc.		183,877		4,166,653
Roche Holding AG		6,201		1,079,181
Sanofi-Aventis SA		29,907		2,322,630
Teva Pharmaceutical Industries Ltd. - ADR		12,100		545,226
Valeant Pharmaceuticals International, Inc. (c)		10,100		542,269
				13,938,095
Professional Services – 0.1%
Manpower, Inc.		9,400		445,278
Real Estate Investment Trusts (REITs) – 0.5%
American Capital Agency Corp.		19,878		587,196
American Tower Corp.		10,300		649,106
Annaly Capital Management, Inc. (d)		28,887		456,992
CommonWealth REIT		4,660		86,769
Piedmont Office Realty Trust, Inc., Class A		26,340		467,535
Senior Housing Properties Trust		21,748		479,543
Simon Property Group, Inc.		1		144
				2,727,285
Semiconductors & Semiconductor Equipment – 1.4%
Avago Technologies Ltd.		9,100		354,627
Broadcom Corp., Class A (c)		18,334		720,526
Infineon Technologies AG		106,327		1,087,108
Intel Corp.		18,476		519,360
Lam Research Corp. (c)		21,922		978,160
Marvell Technology Group Ltd. (c)		51,800		814,814
Maxim Integrated Products, Inc.		7,082		202,474
Microchip Technology, Inc.		15,749		585,863
NXP Semiconductor NV (c)		24,800		659,928
Tokyo Electron Ltd.		17,800		1,018,280
Veeco Instruments, Inc. (c)		23,247		664,864
Xilinx, Inc.		14,200		517,306
				8,123,310
Software – 1.5%
Activision Blizzard, Inc.		108,999		1,397,367
Check Point Software Technologies Ltd. (c)		13,900		887,376
Microsoft Corp.		85,325		2,751,731
Red Hat, Inc. (c)		12,400		742,636
Salesforce.com, Inc. (c)		7,880		1,217,539
Symantec Corp. (c)		34,300		641,410
VMware, Inc., Class A (c)		6,100		685,457
				8,323,516
Specialty Retail – 0.8%
American Eagle Outfitters, Inc.		14,751		253,570
Best Buy Co., Inc.		29,200		691,456
Foot Locker, Inc.		17,500		543,375
GameStop Corp., Class A (d)		28,800		628,992

Common Stocks	Shares		Value
Specialty Retail (concluded)
Hennes & Mauritz AB, B Shares		28,750	$	1,040,350
The Home Depot, Inc.		23,500		1,182,285
				4,340,028
Textiles, Apparel & Luxury Goods – 0.4%
Coach, Inc.		8,900		687,792
Michael Kors Holdings Ltd. (c)		9,500		442,605
The Swatch Group AG		2,177		1,002,042
Under Armour, Inc., Class A (c)		2,800		263,200
VF Corp.		395		57,662
				2,453,301
Thrifts & Mortgage Finance – 0.3%
Capitol Federal Financial, Inc.		68,465		811,995
New York Community Bancorp, Inc.		14,244		198,134
Washington Federal, Inc.		33,200		558,424
				1,568,553
Tobacco – 0.8%
Altria Group, Inc.		25,809		796,724
Imperial Tobacco Group Plc		52,072		2,111,364
Lorillard, Inc.		6,178		799,927
Philip Morris International, Inc.		8,900		788,629
Reynolds American, Inc.		1,381		57,229
				4,553,873
Trading Companies & Distributors – 0.1%
Noble Group Ltd.		459,000		503,894
Wireless Telecommunication Services – 0.8%
MetroPCS Communications, Inc. (c)		47,200		425,744
NTT DoCoMo, Inc.		714		1,185,256
Rogers Communications, Inc., Class B		34,921		1,386,407
Vodafone Group Plc		568,644		1,566,227
				4,563,634
Total Common Stocks – 36.3%				206,209,221
Corporate Bonds	Par (000)
Auto Components – 0.0%
BorgWarner, Inc., 4.63%, 9/15/20	USD	145		154,999
Building Products – 0.0%
Lafarge SA, 7.13%, 7/15/36		65		59,957
Capital Markets – 0.6%
Credit Suisse AG, 5.40%, 1/14/20		105		108,093
Credit Suisse AG/Guernsey:
1.63%, 3/06/15 (a)		590		588,598
2.60%, 5/27/16 (a)		280		285,461
The Goldman Sachs Group, Inc., 5.75%, 1/24/22		1,320		1,357,937
Morgan Stanley, 5.50%, 7/28/21		480		469,096
UBS AG, 2.25%, 3/30/17 (a)		390		389,049
				3,198,234
Chemicals – 0.2%
CF Industries, Inc., 7.13%, 5/01/20		395		470,544
The Dow Chemical Co., 4.13%, 11/15/21		170		174,887

See Notes to Financial Statements.

12                 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2012

Schedule of Investments (continued) (Percentages shown are based on Net Assets)

Corporate Bonds	Par (000)		Value
Chemicals (concluded)
Lyondell Chemical Co., 11.00%, 5/01/18	USD	305	$	336,617
				982,048
Commercial Banks – 0.8%
ABN AMRO Bank NV, 6.38%, 4/27/21	EUR	100		134,294
CIT Group, Inc., 7.00%, 5/02/17 (a)	USD	30		30,075
Commerzbank AG, 6.38%, 3/22/19	EUR	100		113,525
DnB NOR Boligkreditt AS, 2.90%, 3/29/16 (a)	USD	1,265		1,306,925
HSBC Bank Brasil SA - Banco Multiplo, 4.00%, 5/11/16 (a)		680		685,100
HSBC Bank Plc, 3.10%, 5/24/16 (a)		335		341,235
HSBC Holdings Plc, 6.10%, 1/14/42		150		174,529
Sparebank 1 Boligkreditt AS:
1.25%, 10/25/13 (a)		845		849,706
2.30%, 6/30/17		435		433,521
Wells Fargo & Co., 3.50%, 3/08/22		540		531,613
				4,600,523
Consumer Finance – 0.1%
Capital One Financial Corp., 4.75%, 7/15/21		365		384,061
SLM Corp., 6.25%, 1/25/16		362		376,480
				760,541
Diversified Financial Services – 0.9%
Bank of America Corp.:
6.50%, 8/01/16		145		159,425
3.88%, 3/22/17		275		276,517
7.63%, 6/01/19		175		201,795
5.70%, 1/24/22		120		127,030
BP Capital Markets Plc, 3.13%, 10/01/15		160		169,115
Citigroup, Inc.:
5.00%, 9/15/14		140		144,988
4.59%, 12/15/15		1,160		1,221,596
Ford Motor Credit Co. LLC:
7.80%, 6/01/12		225		226,969
6.63%, 8/15/17		100		110,813
General Electric Capital Corp., 6.15%, 8/07/37		360		407,665
JPMorgan Chase Bank, N.A.:
6.00%, 7/05/17		825		934,890
6.00%, 10/01/17		445		509,174
Northern Rock Asset Management Plc, 5.63%, 6/22/17 (a)		200		214,171
Woodside Finance Ltd., 4.60%, 5/10/21 (a)		100		104,009
				4,808,157
Diversified Telecommunication Services – 0.3%
Intelsat Jackson Holdings SA, 7.25%, 4/01/19		176		185,020
Level 3 Financing, Inc., 8.13%, 7/01/19 (a)		207		213,727
Sprint Capital Corp., 6.88%, 11/15/28		144		110,160
Telecom Italia Capital SA, 4.95%, 9/30/14		475		489,250
Verizon Communications, Inc.:
3.50%, 11/01/21		240		245,535
6.40%, 2/15/38		332		402,157
Virgin Media Secured Finance Plc, 6.50%, 1/15/18		280		304,150
				1,949,999
Electric Utilities – 0.5%
Alabama Power Co., 3.95%, 6/01/21		220		234,478
The Cleveland Electric Illuminating Co.:
8.88%, 11/15/18		66		87,137
5.95%, 12/15/36		151		162,391

Corporate Bonds	Par (000)		Value
Electric Utilities (concluded)
Duke Energy Carolinas LLC, 4.25%, 12/15/41		USD       185	$	184,586
Energy Future Intermediate Holding Co. LLC/EFIH Finance, Inc., 10.00%, 12/01/20		290		316,100
Florida Power & Light Co., 5.95%, 2/01/38		225		282,832
Georgia Power Co., 3.00%, 4/15/16		390		412,451
Jersey Central Power & Light Co., 7.35%, 2/01/19		120		150,158
MidAmerican Energy Holdings Co., 6.50%, 9/15/37		250		312,352
PacifiCorp, 6.25%, 10/15/37		200		254,848
Trans-Allegheny Interstate Line Co., 4.00%, 1/15/15 (a)		140		147,782
				2,545,115
Energy Equipment & Services – 0.3%
Ensco Plc:
3.25%, 3/15/16		90		93,893
4.70%, 3/15/21		195		210,382
Transocean, Inc.:
5.05%, 12/15/16		420		449,789
6.50%, 11/15/20		150		167,719
6.38%, 12/15/21		840		945,141
				1,866,924
Food Products – 0.1%
Kraft Foods, Inc.:
6.50%, 8/11/17		160		193,012
6.50%, 2/09/40		280		344,549
				537,561
Gas Utilities – 0.0%
KeySpan Gas East Corp., 5.82%, 4/01/41 (a)		185		221,143
Health Care Equipment & Supplies – 0.1%
Boston Scientific Corp., 6.25%, 11/15/15		614		678,025
Health Care Providers & Services – 0.3%
HCA, Inc.:
6.50%, 2/15/20		392		411,600
7.25%, 9/15/20 (a)		455		495,381
Tenet Healthcare Corp.:
6.25%, 11/01/18 (a)		235		242,637
8.88%, 7/01/19		305		341,600
UnitedHealth Group, Inc., 3.38%, 11/15/21		80		82,117
				1,573,335
Hotels, Restaurants & Leisure – 0.2%
MGM Resorts International:
10.38%, 5/15/14		200		226,750
11.13%, 11/15/17		260		294,125
Wyndham Worldwide Corp., 4.25%, 3/01/22		330		323,507
				844,382

See Notes to Financial Statements.

BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2012                 13

Schedule of Investments (continued) (Percentages shown are based on Net Assets)

Corporate Bonds	Par (000)		Value
Household Products – 0.1%
Reynolds Group Issuer, Inc./Reynolds Group Issuer LLC/Reynolds Group Issuer Luxembourg SA:
7.88%, 8/15/19 (a)	USD	345	$	370,875
6.88%, 2/15/21 (a)		270		279,450
				650,325
Independent Power Producers & Energy Traders – 0.0%
Constellation Energy Group, Inc., 7.60%, 4/01/32		75		97,511
Insurance – 1.2%
Allianz Finance II BV, 5.75%, 7/08/41 (b)	EUR	300		378,546
American International Group, Inc.:
3.80%, 3/22/17	USD	423		428,311
5.45%, 5/18/17		180		193,507
AXA SA, 5.25%, 4/16/40 (b)	EUR	200		228,225
Berkshire Hathaway Finance Corp., 4.75%, 5/15/12	USD	355		356,768
Fairfax Financial Holdings Ltd., 5.80%, 5/15/21 (a)		251		239,569
Hartford Financial Services Group, Inc., 6.00%, 1/15/19		170		185,701
Hartford Life Global Funding Trusts, 0.65%, 6/16/14 (b)		950		902,123
ING Verzekeringen NV, 2.69%, 6/21/21 (b)	EUR	40		49,618
Lincoln National Corp., 7.00%, 6/15/40	USD	160		187,906
Manulife Financial Corp., 3.40%, 9/17/15		420		432,342
Metropolitan Life Global Funding I:
2.88%, 9/17/12 (a)		225		227,085
2.50%, 1/11/13 (a)		1,370		1,384,266
5.13%, 6/10/14 (a)		300		325,784
Muenchener Rueckversicherungs AG, 6.00%, 5/26/41 (b)	EUR	200		264,222
Prudential Financial, Inc.:
4.75%, 9/17/15	USD	620		673,016
5.38%, 6/21/20		200		224,012
4.50%, 11/15/20		270		286,454
				6,967,455
Life Sciences Tools & Services – 0.1%
Life Technologies Corp., 6.00%, 3/01/20		230		263,126
Machinery – 0.0%
Joy Global, Inc., 5.13%, 10/15/21		100		108,280
Media – 1.1%
CBS Corp.:
4.63%, 5/15/18		80		87,108
8.88%, 5/15/19		185		243,059
5.75%, 4/15/20		120		137,961
CCH II LLC/CCH II Capital Corp., 13.50%, 11/30/16		700		798,000
Clear Channel Worldwide Holdings, Inc.:
9.25%, 12/15/17		104		113,490
Series B, 9.25%, 12/15/17		527		577,724
Comcast Corp.:
5.88%, 2/15/18		392		463,919
6.95%, 8/15/37		145		183,581
COX Communications, Inc., 8.38%, 3/01/39 (a)		375		527,983
CSC Holdings LLC, 8.50%, 4/15/14		133		147,963
DIRECTV Holdings LLC/DIRECTV Financing Co., Inc.:
6.38%, 3/01/41		237		267,469

Corporate Bonds	Par (000)		Value
Media (concluded)
5.15%, 3/15/42 (a)	USD	108	$	105,212
NBCUniversal Media LLC:
5.15%, 4/30/20		530		599,857
4.38%, 4/01/21		90		96,403
The New York Times Co., 6.63%, 12/15/16		1,000		1,042,500
News America, Inc., 6.20%, 12/15/34		100		110,902
Time Warner Cable, Inc.:
5.88%, 11/15/40		250		269,369
5.50%, 9/01/41		240		251,407
Time Warner, Inc.:
4.70%, 1/15/21		110		120,178
6.10%, 7/15/40		80		89,533
Unitymedia Hessen GmbH & Co. KG/Unitymedia NRW GmbH, 8.13%, 12/01/17 (a)		200		216,000
				6,449,618
Metals & Mining – 0.1%
Freeport-McMoRan Copper & Gold, Inc., 2.15%, 3/01/17		90		89,160
Newcrest Finance Pty Ltd., 4.45%, 11/15/21 (a)		190		191,948
Novelis, Inc., 8.75%, 12/15/20		295		323,025
				604,133
Multiline Retail – 0.2%
Dollar General Corp., 11.88%, 7/15/17 (b)		400		434,004
Macy’s Retail Holdings, Inc.:
5.90%, 12/01/16		395		453,283
7.45%, 7/15/17		286		347,208
				1,234,495
Multi-Utilities – 0.1%
Dominion Resources, Inc., 1.95%, 8/15/16		305		309,196
Oil, Gas & Consumable Fuels – 1.2%
Anadarko Petroleum Corp.:
5.95%, 9/15/16		634		730,937
6.38%, 9/15/17		443		526,380
Consol Energy, Inc.:
8.00%, 4/01/17		153		159,503
8.25%, 4/01/20		37		38,665
El Paso Pipeline Partners Operating Co. LLC, 6.50%, 4/01/20		280		312,900
Enterprise Products Operating LLC:
6.30%, 9/15/17		250		294,719
6.13%, 10/15/39		225		253,384
Kinder Morgan Energy Partners LP:
5.95%, 2/15/18		225		262,782
6.55%, 9/15/40		55		61,600
6.38%, 3/01/41		80		87,808
Kinder Morgan Finance Co. ULC, 5.70%, 1/05/16		250		263,750
Linn Energy LLC/Linn Energy Finance Corp., 6.25%, 11/01/19 (a)		345		334,650
Marathon Petroleum Corp., 6.50%, 3/01/41		401		433,176
MEG Energy Corp., 6.50%, 3/15/21 (a)		475		497,563
Nexen, Inc.:
6.40%, 5/15/37		200		219,896
7.50%, 7/30/39		335		411,330
Noble Holding International Ltd., 5.25%, 3/15/42		175		173,849
Peabody Energy Corp., 6.25%, 11/15/21 (a)		375		367,500

See Notes to Financial Statements.

14                 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2012

Schedule of Investments (continued) (Percentages shown are based on Net Assets)

Corporate Bonds	Par (000)		Value
Oil, Gas & Consumable Fuels (concluded)
Plains Exploration & Production Co., 10.00%, 3/01/16	USD	50	$	55,250
Pride International, Inc., 6.88%, 8/15/20		115		140,238
Range Resources Corp.:
7.25%, 5/01/18		405		427,275
5.75%, 6/01/21		55		57,750
Rockies Express Pipeline LLC, 3.90%, 4/15/15 (a)		425		391,000
Western Gas Partners LP, 5.38%, 6/01/21		350		375,200
				6,877,105
Paper & Forest Products – 0.1%
Ainsworth Lumber Co. Ltd., 11.00%, 7/29/15 (a)(f)		169		135,215
International Paper Co.:
7.50%, 8/15/21		25		31,513
4.75%, 2/15/22		200		210,763
6.00%, 11/15/41		225		244,231
				621,722
Pharmaceuticals – 0.1%
Teva Pharmaceutical Finance Co. BV, 3.65%, 11/10/21		100		101,228
Teva Pharmaceutical Finance II BV/Teva Pharmaceutical Finance III LLC, 3.00%, 6/15/15		270		284,187
Teva Pharmaceutical Finance IV BV, 3.65%, 11/10/21		240		242,947
				628,362
Real Estate Investment Trusts (REITs) – 0.2%
ERP Operating LP, 4.63%, 12/15/21		245		257,970
Hospitality Properties Trust, 5.63%, 3/15/17		186		198,392
Ventas Realty LP/Ventas Capital Corp., 4.75%, 6/01/21		135		136,210
Vornado Realty LP, 5.00%, 1/15/22		580		592,615
				1,185,187
Real Estate Management & Development – 0.1%
Realogy Corp., 7.88%, 2/15/19 (a)(g)		210		210,000
WEA Finance LLC, 4.63%, 5/10/21 (a)		150		151,739
				361,739
Road & Rail – 0.1%
Burlington Northern Santa Fe LLC, 5.75%, 5/01/40		500		570,865
Software – 0.1%
First Data Corp.:
7.38%, 6/15/19 (a)		100		101,875
8.25%, 1/15/21 (a)		10		9,775
Oracle Corp., 5.38%, 7/15/40		200		231,254
				342,904
Specialty Retail – 0.0%
QVC, Inc., 7.50%, 10/01/19 (a)		205		224,987
Thrifts & Mortgage Finance – 0.1%
Radian Group, Inc., 5.38%, 6/15/15		750		570,000
Wireless Telecommunication Services – 0.4%
America Movil SAB de CV, 2.38%, 9/08/16		400		404,930
Cricket Communications, Inc., 7.75%, 5/15/16		227		239,485
Crown Castle Towers LLC, 6.11%, 1/15/20 (a)		760		844,685
MetroPCS Wireless, Inc., 7.88%, 9/01/18		11		11,577

Corporate Bonds	Par (000)		Value
Wireless Telecommunication Services (concluded)
SBA Tower Trust, 5.10%, 4/15/17 (a)	USD	180	$	194,263
Sprint Nextel Corp., 9.00%, 11/15/18 (a)		440		482,900
				2,177,840
Total Corporate Bonds – 9.7%				55,025,793
Foreign Agency Obligations
Eksportfinans ASA, 5.50%, 5/25/16		255		249,618
Hydro Quebec:
9.40%, 2/01/21		195		285,826
8.40%, 1/15/22		405		571,510
8.05%, 7/07/24		940		1,352,958
Kreditanstalt fuer Wiederaufbau, 1.38%, 7/15/13		350		354,130
Petrobras International Finance Co., 3.88%, 1/27/16		745		784,189
Total Foreign Agency Obligations – 0.6%				3,598,231
Foreign Government Obligations
Italy – 0.2%
Buoni Poliennali Del Tesoro, 5.00%, 3/01/22	EUR	800		1,056,723
Mexico – 0.1%
United Mexican States:
8.30%, 8/15/31	USD	194		289,060
6.75%, 9/27/34		150		192,750
6.05%, 1/11/40		125		150,625
				632,435
Peru – 0.0%
Republic of Peru, 6.55%, 3/14/37		215		273,910
Poland – 0.1%
Republic of Poland:
5.13%, 4/21/21		200		213,600
5.00%, 3/23/22		250		263,505
				477,105
Russia – 0.2%
Russian Federation:
4.50%, 4/04/22 (a)		200		199,400
7.50%, 3/31/30 (h)		757		905,202
				1,104,602
South Africa – 0.1%
Republic of South Africa, 5.50%, 3/09/20		500		557,500
Turkey – 0.1%
Republic of Turkey:
6.75%, 4/03/18		260		291,525
6.25%, 9/26/22		250		268,750
				560,275
Total Foreign Government Obligations – 0.8%				4,662,550

See Notes to Financial Statements.

BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2012                 15

Schedule of Investments (continued) (Percentages shown are based on Net Assets)

Investment Companies	Shares		Value
Energy Select Sector SPDR Fund		156,000	$	11,189,880
iShares iBoxx $ High Yield Corporate Bonds Fund (i)		125,000		11,355,000
Technology Select Sector SPDR Fund		946,000		28,521,900
Total Investment Companies – 9.0%				51,066,780
Non-Agency Mortgage-Backed Securities	Par (000)
Collateralized Mortgage Obligations – 1.4%
Countrywide Alternative Loan Trust:
Series 2005-21CB, Class A17, 6.00%, 6/25/35	USD	838		780,828
Series 2005-59, Class 1A1, 0.61%, 11/20/35 (b)		1,114		637,712
Countrywide Home Loan Mortgage Pass-Through Trust:
Series 2003-58, Class B1, 2.79%, 2/19/34 (b)		110		46,963
Series 2006-J2, Class 1A1, 6.00%, 4/25/36		414		317,995
Series 2006-J4, Class A9, 6.25%, 9/25/36		483		361,815
Series 2006-OA5, Class 3A1, 0.44%, 4/25/46 (b)		299		190,329
Series 2007-J3, Class A10, 6.00%, 7/25/37 (b)		777		647,170
Credit Suisse Mortgage Capital Certificates:
Series 2011-2R, Class 1A1, 2.83%, 3/27/37 (a)(b)		296		279,047
Series 2011-2R, Class 2A1, 2.69%, 7/27/36 (a)(b)		767		735,709
First Horizon Asset Securities, Inc., Series 2005-AR3, Class 3A1, 5.54%, 8/25/35 (b)		94		80,972
FREMF Mortgage Trust, Series 2012-K706, Class C, 4.02%, 11/25/18 (a)(b)		80		71,764
GMAC Mortgage Corp. Loan Trust, Series 2006-AR1, Class 2A1, 5.32%, 4/19/36 (b)		766		625,733
Homebanc Mortgage Trust, Series 2006-2, Class A1, 0.42%, 12/25/36 (b)		341		223,790
Impac Commercial Mortgage-Backed Trust, Series 2004-7, Class M4, 2.04%, 11/25/34 (b)		44		14,438
IndyMac INDA Mortgage Loan Trust, Series 2007-AR7, Class 1A1, 5.65%, 9/25/37 (b)		341		272,934
JPMorgan Mortgage Trust:
Series 2006-S2, Class 2A2, 5.88%, 6/25/21		50		48,857
Series 2007-S1, Class 1A2, 5.50%, 3/25/22		51		47,305
Residential Accredit Loans, Inc., Series 2006-QO2, Class A1, 0.46%, 2/25/46 (b)		215		83,403
Residential Funding Mortgage Securities I:
Series 2005-S8, Class A1, 5.50%, 11/25/35		460		447,383
Series 2007-S4, Class A2, 6.00%, 4/25/37		610		497,602
Structured Adjustable Rate Mortgage Loan Trust, Series 2007-3, Class 3A1, 5.20%, 4/25/47 (b)		815		543,685

Non-Agency Mortgage-Backed Securities	Par (000)		Value
Collateralized Mortgage Obligations (concluded)
Structured Asset Securities Corp.:
Series 2001-21A, Class B2, 2.33%, 1/25/32 (b)	USD	5	$	498
Series 2003-2A, Class B2II, 2.68%, 2/25/33 (b)		37		20,636
WaMu Mortgage Pass-Through Certificates:
Series 2003-AR3, Class B2, 2.48%, 4/25/33 (b)		39		5,785
Series 2003-AR8, Class B1, 2.49%, 8/25/33 (b)		149		77,515
Series 2004-AR1, Class B1, 2.57%, 3/25/34 (b)		681		244,290
Series 2004-AR3, Class B1, 2.55%, 6/25/34 (b)		165		94,799
Wells Fargo Mortgage Backed Securities Trust, Series 2006-AR10, Class 3A1, 2.71%, 7/25/36 (b)		612		600,911
				7,999,868
Commercial Mortgage-Backed Securities – 2.8%
Banc of America Merrill Lynch Commercial Mortgage, Inc.:
Series 2006-5, Class AM, 5.45%, 9/10/16		65		62,957
Series 2007-3, Class A4, 5.63%, 5/10/17 (b)		420		466,406
Bear Stearns Commercial Mortgage Securities:
Series 2003-T12, Class A4, 4.68%, 8/13/39 (b)		1,025		1,064,516
Series 2005-PW10, Class AM, 5.45%, 12/15/15 (b)		70		72,775
Series 2007-PW17, Class A3, 5.74%, 6/11/50		495		516,201
Credit Suisse First Boston Mortgage Securities Corp.:
Series 2002-CKN2, Class A3, 6.13%, 4/15/37		90		89,722
Series 2003-C3, Class A5, 3.94%, 5/15/38		996		1,015,866
CW Capital Cobalt Ltd., Series 2006-C1, Class A4, 5.22%, 8/15/48		330		362,124
Deutsche Bank ReREMIC Trust, Series 2011-C32, Class A3A, 5.74%, 6/17/49 (a)(b)		175		194,745
Extended Stay America Trust:
Series 2010-ESHA, Class B, 4.22%, 11/05/15 (a)		300		303,320
Series 2010-ESHA, Class C, 4.86%, 11/05/15 (a)		105		106,316
Series 2010-ESHA, Class D, 5.50%, 11/05/15 (a)		230		232,467
GE Business Loan Trust:
Series 2003-1, Class A, 0.67%, 4/15/31 (a)(b)		80		73,505
Series 2003-2A, Class B, 1.24%, 11/15/31 (a)(b)		378		313,195
Series 2004-1, Class B, 0.94%, 5/15/32 (a)(b)		97		75,969
GMAC Commercial Mortgage Securities, Inc., Series 2006-C1, Class AM, 5.29%, 11/10/45 (b)		110		112,290

See Notes to Financial Statements.

16                 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2012

Schedule of Investments (continued) (Percentages shown are based on Net Assets)

Non-Agency Mortgage-Backed Securities	Par (000)		Value
Commercial Mortgage-Backed Securities (concluded)
Greenwich Capital Commercial Funding Corp., Series 2006-GG7, Class AJ, 5.88%, 7/10/38 (b)	USD	170	$	144,788
GS Mortgage Securities Corp. II, Series 2007-GG10, Class A4, 5.79%, 5/10/17 (b)		405		449,427
JPMorgan Chase Commercial Mortgage Securities Corp.:
Series 2004-LN2, Class A2, 5.12%, 8/15/14		400		426,230
Series 2006-CB14, Class AM, 5.45%, 12/12/44 (b)		180		185,351
Series 2007-CB18, Class A3, 5.45%, 7/12/16		441		463,350
Series 2007-CB18, Class A4, 5.44%, 1/12/17		670		744,897
Series 2008-C2, Class ASB, 6.13%, 4/12/17 (b)		915		987,141
LB-UBS Commercial Mortgage Trust:
Series 2006-C4, Class AM, 5.89%, 6/15/38 (b)		80		84,879
Series 2006-C7, Class AM, 5.38%, 10/15/16		80		80,224
Series 2007-C6, Class A4, 5.86%, 7/15/40 (b)		295		333,637
Series 2007-C7, Class A3, 5.87%, 9/15/45 (b)		200		226,577
Morgan Stanley Capital I:
Series 1998-WF2, Class G, 6.34%, 7/15/30 (a)(b)		290		305,305
Series 2003-IQ4, Class A2, 4.07%, 5/15/13		925		945,743
Series 2004-HQ4, Class A7, 4.97%, 4/14/40		500		531,544
Series 2005-HQ6, Class A4A, 4.99%, 8/13/42		2,000		2,196,048
Series 2007-HQ12, Class A2FX, 5.60%, 6/12/12 (b)		349		368,142
Series 2012-C4, Class XA, 2.90%, 3/15/22 (a)(b)		2,265		351,166
Morgan Stanley ReREMIC Trust:
Series 2009-IO, Class B, 5.04%, 11/17/14 (a)(j)		320		280,800
Series 2011-IO, Class A, 2.50%, 1/23/14 (a)		431		433,616
Series 2012-XA, Class A, 2.00%, 7/27/49		384		383,971
RBSCF Trust, Series 2010-RR3, Class WBTA, 5.90%, 4/16/17 (a)(b)		820		914,683
				15,899,893
Interest Only Collateralized Mortgage Obligations – 0.0%
Salomon Brothers Mortgage Securities VI, Inc.:
Series 1987-1, 11.00%, 2/17/17		7		867
Series 1987-2, 11.00%, 3/06/17		7		1,017
				1,884
Interest Only Commercial Mortgage-Backed Securities – 0.0%
WaMu Commercial Mortgage Securities Trust, Series 2005-C1A, Class X, 1.35%, 5/25/36 (a)(b)		1,472		24,665

Non-Agency Mortgage-Backed Securities	Par (000)		Value
Principal Only Collateralized Mortgage Obligations – 0.0%
Salomon Brothers Mortgage Securities VI, Inc.:
Series 1987-1, 0.71%, 2/17/17 (j)		USD       8	$	7,989
Series 1987-2, 0.93%, 3/06/17 (j)		7		6,443
				14,432
Total Non-Agency Mortgage-Backed Securities – 4.2%				23,940,742
Preferred Securities
Capital Trusts
Capital Markets – 0.0%
State Street Capital Trust IV, 1.47%, 6/15/37 (b)		30		22,050
Commercial Banks – 0.0%
Barclays Bank Plc, 5.93% (a)(b)(k)		100		92,500
Fifth Third Capital Trust IV, 6.50%, 4/15/37 (b)		245		243,775
				336,275
Consumer Finance – 0.1%
Capital One Capital V, 10.25%, 8/15/39		100		102,750
Capital One Capital VI, 8.88%, 5/15/40		330		332,218
				434,968
Diversified Financial Services – 0.0%
JPMorgan Chase Capital XXV, 6.80%, 10/01/37		100		100,560
Insurance – 0.2%
American International Group, Inc., 8.18%, 5/15/58 (b)		95		100,557
MetLife Capital Trust IV, 7.88%, 12/15/67 (a)		305		333,975
Swiss Re Capital I LP, 6.85% (a)(b)(k)		265		250,152
XL Group Plc, 6.50% (b)(k)		280		235,900
				920,584
Total Capital Trusts – 0.3%				1,814,437
Preferred Stocks	Shares
Thrifts & Mortgage Finance – 0.0%
Fannie Mae, 7.75%		10,000		13,500
Freddie Mac, 8.38%		10,000		13,890
Total Preferred Stocks – 0.0%				27,390
Trust Preferreds
Diversified Financial Services – 0.1%
Citigroup Capital XIII, 7.88%, 10/30/40 (b)		7,286		198,179
Total Preferred Securities – 0.4%				2,040,006

See Notes to Financial Statements.

BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2012                 17

Schedule of Investments (continued) (Percentages shown are based on Net Assets)

Taxable Municipal Bonds	Par (000)		Value
New York City Municipal Water Finance Authority RB:
5.38%, 6/15/43	USD	215	$	241,079
5.50%, 6/15/43		260		295,175
Total Taxable Municipal Bonds – 0.1%				536,254
U.S. Government Sponsored Agency Securities
Agency Obligations – 0.7%
Fannie Mae, 3.45%, 10/09/19 (j)		575		444,660
Federal Home Loan Bank, 5.63%, 6/13/16 (l)		890		1,012,710
Freddie Mac, 5.25%, 4/18/16		760		888,828
Resolution Funding Corp. Interest Strip:
1.80%, 7/15/18 (j)		150		134,002
1.87%, 10/15/18 (j)		150		132,835
Tennessee Valley Authority, 5.25%, 9/15/39		895		1,073,109
U.S. Small Business Administration, Series 1997-20F, Class 1, 7.20%, 6/01/17		131		145,133
				3,831,277
Collateralized Mortgage Obligations – 0.2%
Fannie Mae, Series 2004-88, Class HA, 6.50%, 7/25/34		7		7,682
Freddie Mac:
Series 2864, Class NA, 5.50%, 1/15/31		29		29,532
Series K013, Class A2, 3.97%, 1/25/21 (b)		450		490,099
Series K017, Class A2, 2.60%, 12/25/21		970		972,879
				1,500,192
Federal Deposit Insurance Corporation Guaranteed – 0.1%
General Electric Capital Corp., 2.13%, 12/21/12		385		390,268
Interest Only Collateralized Mortgage Obligations – 0.3%
Fannie Mae, Series 2003-T1, Class IO, 0.48%, 11/25/12 (b)		5,965		18,409
Ginnie Mae:
Series 2010-20, Class SE, 6.01%, 2/20/40 (b)		440		76,976
Series 2010-24, Class BS, 6.19%, 12/20/38 (b)		502		76,944
Series 2010-26, Class QS, 6.01%, 2/20/40 (b)		3,623		704,102
Series 2010-98, Class YS, 6.36%, 12/20/39 (b)		1,660		289,440
Series 2010-146, Class LS, 6.46%, 4/20/39 (b)		495		77,236
Series 2010-147, Class SA, 5.93%, 5/20/40 (b)		1,529		271,642
Series 2011-80, Class KS, 6.43%, 6/20/41 (b)		901		155,981
				1,670,730
Interest Only Commercial Mortgage-Backed Securities – 0.0%
Freddie Mac, Series K706, Class X1, 1.60%, 10/25/18 (b)		1,285		112,724

U.S. Government Sponsored Agency Securities	Par (000)		Value
Mortgage-Backed Securities – 13.9%
Fannie Mae Mortgage-Backed Securities:
7.00%, 8/01/14-1/01/16	USD	27	$	27,951
4.00%, 2/01/25-4/01/42 (m)		9,370		9,912,016
3.50%, 11/01/26-4/01/42 (m)		9,507		9,799,988
4.50%, 4/01/27-6/01/41 (m)		16,194		17,282,082
6.00%, 12/01/28-4/01/42 (m)		11,503		12,694,333
5.00%, 9/01/33-4/01/42 (m)		4,123		4,460,942
5.50%, 9/01/34-4/01/42 (m)		4,736		5,194,786
2.33%, 12/01/34 (b)		380		401,096
6.50%, 7/01/37-10/01/39		1,811		2,031,507
3.31%, 12/01/40 (b)		422		443,915
3.09%, 3/01/41 (b)		161		167,954
3.15%, 3/01/41 (b)		302		314,634
Freddie Mac Mortgage-Backed Securities:
6.00%, 4/01/13-6/01/16		17		18,494
9.50%, 12/01/22		74		84,285
8.00%, 2/01/23-8/01/27		10		11,333
5.50%, 8/01/33-4/01/42 (m)		113		122,222
2.36%, 12/01/35 (b)		218		231,492
4.95%, 4/01/38 (b)		407		432,794
3.05%, 2/01/41 (b)		332		346,718
4.50%, 4/01/42 (m)		200		211,906
5.00%, 4/01/42 (m)		2,300		2,472,859
Ginnie Mae Mortgage-Backed Securities:
5.50%, 4/15/33-4/15/42 (m)		1,619		1,811,086
5.00%, 10/20/33-4/15/42 (m)		3,642		4,025,169
1.75%, 5/20/34 (b)		76		78,795
4.00%, 4/15/42 (m)		1,600		1,717,000
4.50%, 4/15/42 (m)		2,900		3,154,656
6.00%, 4/15/42 (m)		1,300		1,468,187
				78,918,200
Total U.S. Government Sponsored Agency Securities – 15.2%				86,423,391
U.S. Treasury Obligations
U.S. Treasury Bonds:
8.13%, 5/15/21-8/15/21		2,140		3,241,354
6.25%, 8/15/23		1,700		2,354,500
3.50%, 2/15/39		1,380		1,433,690
4.25%, 5/15/39 (g)		2,020		2,379,813
4.38%, 5/15/40-5/15/41		870		1,045,667
4.75%, 2/15/41		1,400		1,784,343
3.13%, 11/15/41-2/15/42		12,899		12,371,916
U.S. Treasury Inflation Indexed Bonds:
2.13%, 2/15/41		823		1,085,078
0.75%, 2/15/42		767		731,475

See Notes to Financial Statements.

18                 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2012

Schedule of Investments (continued) (Percentages shown are based on Net Assets)

U.S. Treasury Obligations	Par (000)		Value
U.S. Treasury Notes:
0.25%, 1/31/14-2/15/15 (g)		USD        4,610	$	4,580,625
0.50%, 8/15/14		525		525,943
0.38%, 3/15/15		1,675		1,668,588
2.50%, 4/30/15		610		646,028
0.88%, 2/28/17 (g)		2,227		2,211,342
1.00%, 3/31/17		3,415		3,407,798
2.25%, 7/31/18		1,370		1,437,857
2.63%, 8/15/20		595		627,307
2.00%, 2/15/22 (g)		8,467		8,304,273
Total U.S. Treasury Obligations – 8.8%				49,837,597
Total Long-Term Investments (Cost – $446,178,781) – 87.4%				496,608,308
Short-Term Securities	Shares
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.14% (i)(n)		114,236,739		114,236,739
	Beneficial Interest (000)
BlackRock Liquidity Series, LLC Money Market Series, 0.24% (i)(n)(o)		USD        2,591		2,590,791
Total Short-Term Securities (Cost – $116,827,530) – 20.6%				116,827,530
Options Purchased	Contracts
Exchange-Traded Put Options – 0.0%
Euro Dollar (2 Year) Mid-Curve, Strike Price USD 99, Expires 5/11/12		111		29,831
	Notional      Amount      (000)
Over-the-Counter Put Options – 0.0%
AUD Currency, Strike Price USD 1, Expires 6/27/12, Broker Citibank, N.A.		AUD        4,485		70,830
Over-the-Counter Interest Rate Call Swaptions – 0.0%
Receive a fixed rate of 1.900% and pay a floating rate based on 3-month LIBOR, Expires 6/01/12, Broker Morgan Stanley Capital Services, Inc.		USD        1,600		2,018
Receive a fixed rate of 2.650% and pay a floating rate based on 3-month LIBOR, Expires 5/01/12, Broker Bank of America, N.A.		1,700		2,310
				4,328
Over-the-Counter Interest Rate Put Swaptions – 0.0%
Pay a fixed rate of 2.130% and receive a floating rate based on 3-month LIBOR, Expires 3/21/13, Broker Deutsche Bank AG		3,100		28,154
Pay a fixed rate of 2.700% and receive a floating rate based on 3-month LIBOR, Expires 7/23/12, Broker Deutsche Bank AG		1,700		15,946
Pay a fixed rate of 2.750% and receive a floating rate based on 3-month LIBOR, Expires 5/11/12, Broker JPMorgan Chase Bank, N.A.		1,800		3,429

Options Purchased	Notional Amount (000)		Value
Over-the-Counter Interest Rate Put Swaptions (concluded)
Pay a fixed rate of 2.950% and receive a floating rate based on 3-month LIBOR, Expires 6/14/12, Broker Deutsche Bank AG	USD	600	$	28,621
Pay a fixed rate of 4.500% and receive a floating rate based on 3-month LIBOR, Expires 3/20/17, Broker Deutsche Bank AG		1,100		47,327
				123,477
Total Options Purchased (Cost – $308,724) – 0.0%				228,466
Total Investments Before TBA Sale Commitments and Options Written (Cost – $563,315,035) – 108.0%				613,664,304
TBA Sale Commitments (m)	Par (000)
Fannie Mae Mortgage-Backed Securities:
4.00%, 4/01/27-4/01/42		8,990		(9,436,337	)
3.50%, 4/01/42		4,800		(4,929,000	)
4.50%, 4/01/42		8,300		(8,825,672	)
5.00%, 4/01/42		700		(754,908	)
5.50%, 4/01/42		4,700		(5,116,011	)
6.00%, 4/01/42		600		(660,938	)
Total TBA Sale Commitments (Proceeds – $29,661,663) – (5.2)%				(29,722,866	)
Options Written	Notional Amount (000)
Over-the-Counter Interest Rate Call Swaptions – (0.0)%
Pay a fixed rate of 1.965% and receive a floating rate based on 3-month LIBOR, Expires 1/27/14, Broker Citibank, N.A.		1,200		(19,403	)
Pay a fixed rate of 2.090% and receive a floating rate based on 3-month LIBOR, Expires 1/03/14, Broker Deutsche Bank AG		2,000		(39,254	)
Pay a fixed rate of 3.645% and receive a floating rate based on 3-month LIBOR, Expires 3/27/17, Broker JPMorgan Chase Bank, N.A.		500		(33,805	)
				(92,462	)
Over-the-Counter Interest Rate Put Swaptions – (0.1)%
Receive a fixed rate of 1.618% and pay a floating rate based on 3-month LIBOR, Expires 6/28/12, Broker Bank of America, N.A.		1,500		(5,198	)
Receive a fixed rate of 1.703% and pay a floating rate based on 3-month LIBOR, Expires 8/10/12, Broker Bank of America, N.A.		1,900		(8,710	)
Receive a fixed rate of 1.715% and pay a floating rate based on 3-month LIBOR, Expires 6/22/12, Broker Morgan Stanley Capital Services, Inc.		3,200		(7,480	)
Receive a fixed rate of 1.850% and pay a floating rate based on 3-month LIBOR, Expires 8/15/12, Broker Deutsche Bank AG		9,400		(31,742	)

See Notes to Financial Statements.

BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2012                 19

Schedule of Investments (continued) (Percentages shown are based on Net Assets)

Options Written	Notional Amount (000)		Value
Over-the-Counter Interest Rate Put Swaptions (concluded)
Receive a fixed rate of 1.965% and pay a floating rate based on 3-month LIBOR, Expires 1/27/14, Broker Citibank, N.A.		USD      1,200	$	(32,672	)
Receive a fixed rate of 2.090% and pay a floating rate based on 3-month LIBOR, Expires 1/03/14, Broker Deutsche Bank AG		2,000		(46,588	)
Receive a fixed rate of 2.900% and pay a floating rate based on 3-month LIBOR, Expires 1/09/13, Broker Citibank, N.A.		2,900		(54,138	)
Receive a fixed rate of 3.645% and pay a floating rate based on 3-month LIBOR, Expires 3/27/17, Broker JPMorgan Chase Bank, N.A.		500		(34,114	)
Receive a fixed rate of 6.000% and pay a floating rate based on 3-month LIBOR, Expires 3/20/17, Broker Deutsche Bank AG		2,200		(43,558	)
				(264,200	)
Total Options Written (Premiums Received – $404,303) – (0.1)%				(356,662	)
Total Investments Net of TBA Sale Commitments and Options Written – 102.7%				583,584,776
Liabilities in Excess of Other Assets – (2.7)%				(15,343,437	)
Net Assets – 100.0%			$	568,241,339

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

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

(c) Non-income producing security.

(d) Security, or a portion of security, is on loan.

(e) Restricted security as to resale. As of report date, the Fund held less than 0.1% of its net assets, with a current value of $49,383 and an original cost of $56,451, in these securities.

(f) Represents a payment-in-kind security which may pay interest/dividends in additional par/shares.

(g) All or a portion of security has been pledged as collateral in connection with open reverse repurchase agreements.

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

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

Affiliate	Shares/ Bene- ficial Interest Held at Sep- tember 30, 2011		Net Activity		Shares/ Bene- ficial Interest Held at March 31, 2012		Value at March 31, 2012		Income
BlackRock Liquidity Funds, Temp- Fund, Institu- tional Class		91,218,601		23,018,138		114,236,739	$	114,236,739	$	46,878

Affiliate	Shares/ Bene- ficial Interest Held at Sep- tember 30, 2011		Net Activity		Shares/ Bene- ficial Interest Held at March 31, 2012		Value at March 31, 2012		Income
BlackRock Liquidity Series, LLC Money Market Series		2,411,435		179,356		2,590,791	$	2,590,791	$	26,972
iShares iBoxx $ High Yield Corporate Bonds Fund		–		125,000		125,000	$	11,355,000		–

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

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

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

(m) Represents or includes a to-be-announced (“TBA”) transaction. Unsettled TBA transactions as of March 31, 2012 were as follows:

Counterparty	Value		Unrealized Appreciation (Depreciation)
Bank of America, N.A.	$	(174,016)	$	(2,945)
Barclays Bank Plc	$	1,971,531	$	4,234
BNP Paribas SA	$	7,495,122	$	(20,850)
Citibank, N.A.	$	4,720,672	$	3,063
Credit Suisse International	$	(2,470,500)	$	(4,236)
Deutsche Bank AG	$	(8,459,000)	$	(12,914)
Goldman Sachs Bank USA	$	(3,517,650)	$	(26,002)
JPMorgan Chase Bank, N.A.	$	2,179,723	$	(3,668)
Morgan Stanley Capital Services, Inc.	$	2,034,766	$	(7,582)
Nomura Securities International, Inc.	$	1,334,938	$	4,469
Royal Bank of Scotland Plc	$	(856,408)	$	(1,767)
UBS AG	$	718,813	$	2,324

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

(o) Security was purchased with the cash collateral from loaned securities.

— Reverse repurchase agreements outstanding as of March 31, 2012 were as follows:

Counterparty	Interest Rate	Trade Date	Maturity Date	Net Closing Amount		Face Amount
Bank of America, N.A.	0.11%	2/07/12	Open		$2,389,012		$2,388,625
Deutsche Bank AG	(1.25)%	3/12/12	Open		173,136		173,250
BNP Paribas SA	(0.51)%	3/30/12	4/02/12		2,215,771		2,215,865

See Notes to Financial Statements.

20                 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2012

Schedule of Investments (continued)

Counterparty	Interest Rate	Trade Date	Maturity Date	Net Closing Amount		Face Amount
Morgan Stanley Capital Services, Inc.	(0.05)%	3/30/12	4/02/12	$	1,974,992	$	1,975,000
Bank of America, N.A.	0.03%	3/30/12	4/02/12		3,925,347		3,925,338
Total				$	10,678,258	$	10,678,078

— Foreign currency exchange contracts as of March 31, 2012 were as follows:

Currency Purchased	Currency Sold		Counter- party	Settle- ment Date	Unrea- lized Appre- ciation (Depre- ciation)
USD       229,368	JPY	19,050,848	State Street Bank	4/02/12		$    (798	)
CAD         53,858	USD	54,041	Citibank, N.A.	4/03/12		(45	)
CHF       113,546	USD	125,757	Goldman Sachs Bank USA	4/03/12		28
EUR       229,063	USD	305,616	Goldman Sachs Bank USA	4/03/12		(113	)
GBP       256,309	USD	409,813	Goldman Sachs Bank USA	4/03/12		151
HKD       629,388	USD	81,068	Citibank, N.A.	4/03/12		(19	)
JPY   15,227,843	USD	185,797	Citibank, N.A.	4/04/12		(1,819	)
SGD         24,886	USD	19,823	Citibank, N.A.	4/04/12		(26	)
USD       470,269	AUD	442,500	Citibank, N.A.	4/10/12		12,474
USD       939,976	AUD	885,000	UBS AG	4/10/12		24,386
AUD    1,265,000	USD	1,310,761	Citibank, N.A.	4/12/12		(2,333	)
USD    1,310,863	AUD	1,265,000	Citibank, N.A.	4/12/12		2,434
USD       466,294	AUD	440,000	UBS AG	4/12/12		11,189
PHP  25,925,392	USD	610,000	Royal Bank of Scotland Plc	4/17/12		(6,972	)
SGD       757,254	USD	610,000	HSBC Bank USA, N.A.	4/17/12		(7,586	)
USD       610,000	PHP	26,053,100	Morgan Stanley Capital Services, Inc.	4/17/12		4,001
USD       610,000	SGD	769,814	Standard Chartered Bank	4/17/12		(2,406	)
EUR       547,000	USD	720,620	Citibank, N.A.	4/18/12		8,976
EUR       907,000	USD	1,219,849	Deutsche Bank AG	4/18/12		(10,080	)
USD    2,136,124	EUR	1,663,000	Citibank, N.A.	4/18/12		(82,009	)
USD       991,638	EUR	758,000	Citibank, N.A.	4/18/12		(19,392	)
USD    1,463,595	EUR	1,113,000	Deutsche Bank AG	4/18/12		(20,940	)
AUD    1,608,000	USD	1,643,416	Citibank, N.A.	4/19/12		18,472
USD       866,796	AUD	817,000	Citibank, N.A.	4/19/12		22,416
USD       505,000	JPY	41,649,875	Citibank, N.A.	6/18/12		1,429
USD       475,000	JPY	39,706,057	Deutsche Bank AG	6/18/12		(5,069	)
Total						$(53,651	)

— Financial futures contracts purchased as of March 31, 2012 were as follows:

Con- tracts	Issue	Ex- change	Expi- ration	Notional Value		Unrea- lized Appre- ciation (Depre- ciation)
237	DAX Index Futures	Eurex	June 2012	$	55,007,302	$	(1,091,100	)
705	Nikkei 225 Futures	Chicago Mercantile	June 2012	$	43,290,594		2,296,883
65	U.S. Treasury Notes (2 Year)	Chicago Board Options	June 2012	$	14,309,141		(5,819	)
141	U.S. Treasury Notes (5 Year)	Chicago Board Options	June 2012	$	17,278,008		50,126
50	U.S. Treasury Bonds (30 Year)	Chicago Board Options	June 2012	$	6,887,500		(46,175	)
1	Euro Dollar Futures	Chicago Mercantile	June 2013	$	248,488		190
3	Euro Dollar Futures	Chicago Mercantile	September 2013	$	744,900		658
2	Euro Dollar Futures	Chicago Mercantile	December 2013	$	496,100		430
Total						$	1,205,193

— Financial futures contracts sold as of March 31, 2012 were as follows:

Con- tracts	Issue	Ex- change	Expi- ration	Notional Value	Unrea- lized Appre- ciation (Depre- ciation)
224	E-Mini S&P 500® Futures	Chicago Mercantile	June 2012	$15,715,840		$(140,201	)
1	Euro-Bobl	Eurex	June 2012	$     165,526		81
7	Euro-Bund	Eurex	June 2012	$  1,292,935		103
85	U.S. Treasury Notes (10 Year)	Chicago Board Options	June 2012	$11,006,172		(17,465	)
112	Ultra Treasury Bonds	Chicago Board Options	June 2012	$16,908,500		753,160
5	Euro Dollar Futures	Chicago Mercantile	June 2012	$  1,244,125		163
2	Euro Dollar Futures	Chicago Mercantile	March 2013	$     497,250		(70	)
7	Euro Dollar Futures	Chicago Mercantile	March 2014	$  1,734,600		2,156
6	Euro Dollar Futures	Chicago Mercantile	June 2014	$  1,484,850		2,573
4	Euro Dollar Futures	Chicago Mercantile	September 2014	$     988,450		1,985
1	Euro Dollar Futures	Chicago Mercantile	December 2014	$     246,663		105

See Notes to Financial Statements.
	BLACKROCK MANAGED VOLATILITY PORTFOLIO	MARCH 31, 2012	21

Schedule of Investments (continued)

Con- tracts	Issue	Exchange	Expiration	Notional Value	Unrea- lized Appre- ciation (Depre- ciation)
43	Euro Dollar Futures	Chicago Mercantile	March 2015	$10,587,675		$  12,822
44	Euro Dollar Futures	Chicago Mercantile	June 2015	$10,813,000		15,209
44	Euro Dollar Futures	Chicago Mercantile	September 2015	$10,792,650		16,721
44	Euro Dollar Futures	Chicago Mercantile	December 2015	$10,772,850		17,852
Total						$665,194

— Interest rate swaps outstanding as of March 31, 2012 were as follows:

Fixed Rate	Floating Rate	Counter- party	Expiration Date	Notional Amount (000)		Unrea- lized Appre- ciation (Depre- ciation)
0.92%1	3-month LIBOR	Deutsche Bank AG	2/28/13	USD	4,600		$  (18,954	)
1.32%1	3-month LIBOR	Citibank, N.A.	12/17/13	USD	1,600		(26,775	)
1.41%1	3-month LIBOR	Deutsche Bank AG	12/20/13	USD	2,400		(44,349	)
1.26%1	3-month LIBOR	Deutsche Bank AG	12/24/13	USD	1,900		(29,185	)
0.60%1	3-month LIBOR	Deutsche Bank AG	3/15/14	USD	2,600		(1,031	)
1.25%1	3-month LIBOR	Deutsche Bank AG	10/05/16	USD	1,600		(14,965	)
1.39%1	3-month LIBOR	Deutsche Bank AG	3/19/17	USD	6,500		(41,078	)
1.39%1	3-month LIBOR	Deutsche Bank AG	3/19/17	USD	2,800		(17,695	)
2.38%1	3-month LIBOR	Morgan Stanley Capital Services, Inc.	11/17/17	USD	300		(17,688	)
1.74%2	3-month LIBOR	Deutsche Bank AG	3/30/18	USD	500		(361	)
2.57%2	3-month LIBOR	Deutsche Bank AG	10/27/20	USD	400		19,613
3.27%1	3-month LIBOR	Deutsche Bank AG	5/16/21	USD	440		(46,152	)
2.08%2	3-month LIBOR	Deutsche Bank AG	1/03/22	USD	100		(1,205	)
2.36%2	3-month LIBOR	Deutsche Bank AG	3/20/22	USD	300		2,180
2.46%1	3-month LIBOR	Goldman Sachs Bank USA	3/22/22	USD	1,700		(27,506	)
2.36%1	3-month LIBOR	Citibank, N.A.	3/26/22	USD	900		(6,330	)
2.29%2	3-month LIBOR	Morgan Stanley Capital Services, Inc.	4/03/22	USD	500		21

Fixed Rate	Floating Rate	Counter- party	Expiration Date	Notional Amount (000)		Unrea- lized Appre- ciation (Depre- ciation)
2.70%1	3-month LIBOR	Deutsche Bank AG	1/11/42	USD	500	$	33,034
2.85%1	3-month LIBOR	Bank of America, N.A.	2/09/42	USD	200		7,447
Total						$	(230,979	)

¹  Fund pays a fixed interest rate and receives a floating rate.

²  Fund pays a floating interest rate and receives a fixed rate.

— Credit default swaps on single-name issues - buy protection outstanding as of March 31, 2012 were as follows:

Issuer	Pay Fixed Rate	Counter- party	Expiration Date	Notional Amount (000)	Unrealized Appreciation (Depreciation)
Radian Group, Inc.	5.00%	Citibank, N.A.	6/20/15	USD 750	$	154,272
The New York Times Co.	1.00%	Barclays Bank Plc	12/20/16	USD 1,000		(16,061	)
Sara Lee Corp.	1.00%	JPMorgan Chase Bank, N.A.	3/20/17	USD 202		(363	)
Total					$	137,848

— Credit default swaps on single-name issues - sold protection outstanding as of March 31, 2012 were as follows:

Issuer	Receive Fixed Rate		Counter- party	Expi- ration Date		Issuer Credit Rating1	Notio- nal Amount (000)2		Unrea- lized Appre- ciation
Aviva USA Corp.		1.00%	Deutsche Bank AG		5/25/12	Not Rated		USD 560	$	3,696
MetLife, Inc.		1.00%	Credit Suisse International		9/20/16	A-		USD 70		2,985
MetLife, Inc.		1.00%	Deutsche Bank AG		9/20/16	A-		USD 180		6,410
MetLife, Inc.		1.00%	Goldman Sachs Bank USA		9/20/16	A-		USD 125		4,199
MetLife, Inc.		1.00%	Morgan Stanley Capital Services, Inc.		9/20/16	A-		USD 135		3,560
MetLife, Inc.		1.00%	Morgan Stanley Capital Services, Inc.		9/20/16	A-		USD 220		7,514
MetLife, Inc.		1.00%	Citibank, N.A.		12/20/16	A-		USD 130		4,030
MetLife, Inc.		1.00%	Citibank, N.A.		12/20/16	A-		USD 170		4,282

See Notes to Financial Statements.

22                 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2012

Schedule of Investments (continued)

Issuer	Receive Fixed Rate	Counterparty	Expiration Date	Issuer Credit Rating1	Notional Amount (000)2		Unrealized Appreciation
MetLife, Inc.	1.00%	Bank of America, N.A.	3/20/17	A-	USD	300		$  3,758
MetLife, Inc.	1.00%	Citibank, N.A.	3/20/17	A-	USD	160		2,004
MetLife, Inc.	1.00%	UBS AG	3/20/17	A-	USD	115		1,440
Total								$43,878

¹ Using Standard & Poor’s (“S&P’s”) rating.

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

— Credit default swaps on traded indexes - buy protection outstanding as of March 31, 2012 were as follows:

Index	Pay Fixed Rate			Counterparty	Expiration Date	Notional Amount (000)	Unrealized Appreciation (Depreciation)
CDX.EM Series 14 Version 1		5.00	%	Morgan Stanley Capital Services, Inc.	12/20/15	USD 540		$ 13,679
CDX.NA.IG Series 16 Version 1		1.00	%	Credit Suisse International	6/20/16	USD 190		(3,301)
CDX.NA.IG Series 16 Version 1		1.00	%	JPMorgan Chase Bank, N.A.	6/20/16	USD 11		(164)
CDX.NA.IG Series 17 Version 1		1.00	%	Morgan Stanley Capital Services, Inc.	12/20/16	USD 1,910		(33,399)
Total								$ (23,185)

— Credit default swaps on traded indexes - sold protection outstanding as of March 31, 2012 were as follows:

Index	Receive Fixed Rate			Counter- party	Expi- ration Date		Credit Rating1	Notional Amount (000)2		Unrea- lized Appre- ciation
CMBX.NA Series 3		0.08	%	Morgan Stanley Capital Services, Inc.		12/13/49	A+	USD	260		$  12,324
CMBX.NA Series 4		0.35	%	Morgan Stanley Capital Services, Inc.		2/17/51	A-	USD	260		12,607
Total											$  24,931

¹  Using S&P’s rating of the underlying securities.

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

— Total return swaps outstanding as of March 31, 2012 were as follows:

Reference Entity	Fund Pays/Receives the Total Return of the Reference Entity	Fixed Rate/ Floating Rate	Counterparty	Expiration Date		Notional Amount (000)		Unrealized Appreciation (Depreciation)
Change in Return of the MSCI Emerging Markets Index	Receives	1-month LIBOR plus 0.63%	Credit Suisse International		9/21/12	USD	66	$(157,894)
Change in Return of the Consumer Price Index for All Urban Consumers	Pays	2.18%1	Bank of America, N.A.		10/06/21	USD	915	(30,013)
Return on Markit IOS 4.50%, 30-year, fixed rate Fannie Mae	Receives	1-month LIBOR	Goldman Sachs Bank USA		1/12/40	USD	511	73
Return on Markit IOS 4.50%, 30-year, fixed rate Fannie Mae	Pays	1-month LIBOR	Citibank, N.A.		1/12/41	USD	698	(14,882)
Total								$(202,716)

¹  Net payment made at termination.

See Notes to Financial Statements.

BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2012                 23

Schedule of Investments (concluded)

— For Fund compliance purposes, the Fund’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes and/or as defined by Fund management. These definitions may not apply for purposes of this report, which may combine industry sub-classifications for reporting ease.

— Fair Value Measurements – Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs 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

— 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 and derivative financial instruments)

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instrument 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 derivative financial instruments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.

The following tables summarize the inputs used as of March 31, 2012 in determining the fair valuation of the Fund’s investments and derivative financial instruments:

Valuation Inputs	Level 1		Level 2		Level 3		Total
Assets:
Investments:
Long-Term Investments:
Asset-Backed Securities		–	$	12,778,167	$	210,251	$	12,988,418
Collateralized Debt Obligations		–		–		279,325		279,325
Common Stocks	$	171,955,484		34,214,636		39,101		206,209,221
Corporate Bonds		–		55,025,793		–		55,025,793
Foreign Agency Obligations		–		3,598,231		–		3,598,231
Foreign Government Obligations		–		4,662,550		–		4,662,550
Investment Companies		51,066,780		–		–		51,066,780
Non-Agency Mortgage-Backed Securities		–		23,940,742		–		23,940,742
Preferred Securities		225,569		1,814,437		–		2,040,006
Taxable Municipal Bonds		–		536,254		–		536,254

Valuation Inputs	Level 1	Level 2			Level 3	Total
U.S. Govern- ment Sponsored Agency Securities	–	$	86,423,391		–	$	86,423,391
U.S. Treasury Obligations	–		49,837,597		–		49,837,597
Short-Term Securities	$114,236,739		2,590,791		–		116,827,530
Liabilities:
Investments in Securities:
TBA Sale Commit-ments	–		(29,722,866	)	–		(29,722,866	)
Total	$337,484,572	$	245,699,723		$ 528,677	$	583,712,972

Valuation Inputs	Level 1			Level 2			Level 3	Total
Derivative Financial Instruments1
Assets:
Credit contracts		–		$	236,760		–	$	236,760
Equity contracts	$	2,296,883			–		–		2,296,883
Foreign currency exchange contracts		179			176,607		–		176,786
Interest rate contracts		904,165			190,173		–		1,094,338
Liabilities:
Credit contracts		–			(53,288	)	–		(53,288	)
Equity contracts		(1,231,301	)		–		–		(1,231,301	)
Foreign currency exchange contracts		(2,820	)		(156,787	)	–		(159,607	)
Interest rate contracts		(69,529	)		(664,818	)	–		(734,347	)
Other contracts		–			(187,907	)	–		(187,907	)
Total	$	1,897,577		$	(459,260	)	–	$	1,438,317

¹ Derivative financial instruments are swaps, financial futures contracts, foreign currency exchange contracts and options. Swaps, financial futures contracts and foreign currency exchange contracts are valued at the unrealized appreciation/ depreciation on the instrument and options are shown at value.

See Notes to Financial Statements.

24                 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2012

Statement of Assets and Liabilities

March 31, 2012 (Unaudited)

Assets
Investments at value – unaffiliated (including securities loaned at value of $2,485,338) (cost – $435,109,030)	$	485,481,774
Investments at value – affiliated (cost – $128,206,005)		128,182,530
Cash		1,279,621
Cash pledged as collateral for financial futures contracts		7,091,000
Cash pledged as collateral for swaps contracts		300,000
Foreign currency at value (cost – $613,309)		615,959
Swap premiums paid		161,773
Investments sold receivable		107,725,346
TBA sale commitments receivable		29,661,663
Interest receivable		1,529,247
Variation margin receivable		967,671
Capital shares sold receivable		524,538
Dividends and reclaims receivable – unaffiliated		477,086
Unrealized appreciation on swaps		299,128
Unrealized appreciation on foreign currency exchange contracts		105,956
Principal paydown receivable		27,510
Dividends receivable – affiliated		14,288
Securities lending income receivable – affiliated		7,525
Receivable from advisor		143
Prepaid expenses		51,008
Total assets		764,503,766
Liabilities
Investments purchased payable		150,191,630
TBA sale commitments at value (proceeds $29,661,663)		29,722,866
Reverse repurchase agreements		10,678,078
Collateral on securities loaned at value		2,590,791
Options written at value (premiums received $404,303)		356,662
Capital shares redeemed payable		650,428
Unrealized depreciation on swaps		549,351
Investment advisory fees payable		257,747
Swap premiums received		243,625
Service and distribution fees payable		191,728
Unrealized depreciation on foreign currency exchange contracts		159,607
Other affiliates payable		67,353
Variation margin payable		30,557
Officer’s and Trustees’ fees payable		4,373
Interest expense payable		390
Other accrued expenses payable		567,241
Total liabilities		196,262,427
Net Assets	$	568,241,339
Net Assets Consist of
Paid-in capital	$	502,021,433
Undistributed net investment income		797,081
Accumulated net realized gain		13,761,214
Net unrealized appreciation/depreciation		51,661,611
Net Assets	$	568,241,339
Net Asset Value
Institutional – Based on net assets of $40,955,484 and 2,646,809 shares outstanding, unlimited number of shares authorized, $0.001 par value	$	15.47
Service – Based on net assets of $1,783,174 and 115,588 shares outstanding, unlimited number of shares authorized, $0.001 par value	$	15.43
Investor A – Based on net assets of $407,304,106 and 26,420,636 shares outstanding, unlimited number of shares authorized, $0.001 par value	$	15.42
Investor B – Based on net assets of $26,672,544 and 1,750,864 shares outstanding, unlimited number of shares authorized, $0.001 par value	$	15.23
Investor C – Based on net assets of $91,526,031 and 6,037,686 shares outstanding, unlimited number of shares authorized, $0.001 par value	$	15.16

See Notes to Financial Statements.

BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2012                 25

Statement of Operations

Six Months Ended March 31, 2012 (Unaudited)

Investment Income
Interest	$	4,095,896
Dividends and reclaims – unaffiliated		3,020,155
Foreign taxes withheld		(30,048	)
Dividends – affiliated		46,878
Securities lending – affiliated		26,972
Total income		7,159,853
Expenses
Investment advisory		1,512,667
Service and distribution – class specific		1,074,141
Transfer agent – class specific		475,488
Administration		203,770
Custodian		148,482
Administration – class specific		68,797
Professional		67,623
Printing		38,310
Registration		32,409
Officer and Trustees		8,506
Miscellaneous		82,465
Total expenses excluding interest expense		3,712,658
Interest expense		40,622
Total expenses		3,753,280
Less fees waived by advisor		(26,073	)
Less administration fees waived – class specific		(5,359	)
Less transfer agent fees waived – class specific		(379	)
Less transfer agent fees reimbursed – class specific		(3,304	)
Less fees paid indirectly		(274	)
Total expenses after fees waived, reimbursed and paid indirectly		3,717,891
Net investment income		3,441,962
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from:
Investments		7,326,308
Options written		579,518
Financial futures contracts		3,668,979
Swaps		5,149,547
Foreign currency transactions		739,319
		17,463,671
Net change in unrealized appreciation/depreciation on:
Investments – unaffiliated		45,720,929
Investments – affiliated		(23,475	)
Options written		682,755
Financial futures contracts		2,176,411
Swaps		(1,566,676	)
Foreign currency transactions		44,994
		47,034,938
Total realized and unrealized gain		64,498,609
Net Increase in Net Assets Resulting from Operations	$	67,940,571

See Notes to Financial Statements.

26                 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2012

Statements of Changes in Net Assets

Increase (Decrease) in Net Assets:	Six Months     Ended March 31, 2012 (Unaudited)		Year Ended   September 30,     2011
Operations
Net investment income	$	3,441,962	$	8,645,327
Net realized gain		17,463,671		52,723,163
Net change in unrealized appreciation/depreciation		47,034,938		(60,944,465)
Net increase in net assets resulting from operations		67,940,571		424,025
Dividends and Distributions to Shareholders From
Net investment income:
Institutional		(274,673)		(885,056)
Service		(8,925)		(31,935)
Investor A		(1,892,937)		(7,180,490)
Investor B		(51,675)		(422,113)
Investor C		(172,578)		(969,379)
Net realized gain:
Institutional		(878,568)		–
Service		(35,472)		–
Investor A		(8,053,733)		–
Investor B		(650,345)		–
Investor C		(1,802,237)		–
Decrease in net assets resulting from dividends and distributions to shareholders		(13,821,143)		(9,488,973)
Capital Share Transactions
Net decrease in net assets derived from capital share transactions		(11,968,019)		(24,771,731)
Net Assets
Total increase (decrease) in net assets		42,151,409		(33,836,679)
Beginning of period		526,089,930		559,926,609
End of period	$	568,241,339	$	526,089,930
Undistributed (distributions in excess of) net investment income	$	797,081	$	(244,093)

See Notes to Financial Statements.

BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2012                 27

Financial Highlights

	Institutional																	Service
	Six Months   Ended		Year Ended September 30,															Six Months   Ended		Year Ended September 30,
	March 31, 2012 (Unaudited)		2011			2010			2009			2008			2007			March 31, 2012 (Unaudited)		2011			2010			2009			2008			2007
Per Share Operating Performance
Net asset value, beginning of period		$   14.03	$	14.31		$	13.28			$  12.96		$	17.07			$  15.53			$    13.99	$	14.27		$	13.24			$  12.93		$	17.03		$	15.51
Net investment income1		0.13		0.29			0.29			0.27			0.33			0.33			0.11		0.25			0.25			0.24			0.30			0.29
Net realized and unrealized gain (loss)		1.72		(0.26	)		1.02			0.45			(2.76	)		2.08	2		1.71		(0.26	)		1.03			0.44			(2.76	)		2.08	2
Net increase (decrease) from investment operations		1.85		0.03			1.31			0.72			(2.43	)		2.41			1.82		(0.01	)		1.28			0.68			(2.46	)		2.37
Dividends and distributions from:
Net investment income		(0.10)		(0.31	)		(0.28	)		(0.21	)		(0.38	)		(0.24	)		(0.07)		(0.27	)		(0.25	)		(0.18	)		(0.34	)		(0.22	)
Net realized gain		(0.31)		–			–			(0.19	)		(1.30	)		(0.63	)		(0.31)		–			–			(0.19	)		(1.30	)		(0.63	)
Total dividends and distributions		(0.41)		(0.31	)		(0.28	)		(0.40	)		(1.68	)		(0.87	)		(0.38)		(0.27	)		(0.25	)		(0.37	)		(1.64	)		(0.85	)
Net asset value, end of period		$   15.47	$	14.03		$	14.31			$  13.28		$	12.96			$  17.07			$    15.43	$	13.99		$	14.27			$  13.24		$	12.93		$	17.03
Total Investment Return3
Based on net asset value		13.41%4		0.06%			9.99%			6.15%	5		(15.81)%			16.04%	6		13.28%4		(0.21)%			9.74%			5.83%	7		(16.00)%			15.74%	6
Ratios to Average Net Assets
Total expenses		0.95%8		0.94%			0.95%			0.95%			0.94%			0.93%			1.27%8		1.24%			1.27%			1.18%			1.11%			1.31%
Total expenses excluding recoupment of past waived fees		0.95%8		0.94%			0.95%			0.95%			0.94%			0.93%			1.27%8		1.24%			1.27%			1.15%			1.11%			1.31%
Total expenses after fees waived, reimbursed and paid indirectly		0.90%8		0.90%			0.91%			0.88%			0.89%			0.86%			1.18%8		1.18%			1.19%			1.14%			1.11%			1.10%
Total expenses after fees waived, reimbursed and paid indirectly and excluding interest expense		0.89%8		0.89%			0.89%			0.88%			0.85%			0.86%			1.17%8		1.17%			1.17%			1.14%			1.07%			1.10%
Net investment income		1.72%8		1.91%			2.09%			2.43%			2.20%			2.03%			1.42%8		1.63%			1.80%			2.17%			1.96%			1.80%
Supplemental Data
Net assets, end of period (000)		$ 40,955	$	40,259		$	39,083			$29,127		$	23,083			$ 34,720			$    1,783	$	1,676		$	1,652			$  1,472		$	1,552		$	2,325
Portfolio turnover		192%9		401%	10		400%	11		354%	12		391%	13		93%			192%9		401%	10		400%	11		354%	12		391%	13		93%

¹  Based on average shares outstanding.

²  Includes redemption fees, which are less than $0.01 per share.

³  Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

⁴  Aggregate total investment return.

⁵  Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been 5.92%.

⁶  Redemption fee of 2.00% is reflected in total return calculations. There was no impact to the return.

⁷  Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been 5.60%.

⁸  Annualized.

⁹  Includes mortgage dollar roll transactions; excluding these transactions the portfolio turnover would have been 114%.

¹⁰  Includes mortgage dollar roll transactions; excluding these transactions the portfolio turnover would have been 236%.

¹¹  Includes mortgage dollar roll transactions; excluding these transactions the portfolio turnover would have been 302%.

¹²  Includes mortgage dollar roll transactions; excluding these transactions the portfolio turnover would have been 227%.

¹³  Includes TBA transactions; excluding these transactions the portfolio turnover would have been 121%.

See Notes to Financial Statements.

28                 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2012

Financial Highlights (continued)

	Investor A																	Investor B
	Six Months   Ended		Year Ended September 30,															Six Months   Ended		Year Ended September 30,
	March 31, 2012 (Unaudited)		2011			2010			2009			2008			2007			March 31, 2012 (Unaudited)		2011			2010			2009			2008			2007
Per Share Operating Performance
Net asset value, beginning of period		$    13.98	$	14.26		$	13.23		$	12.92		$	17.01			$   15.50			$   13.83	$	14.10		$	13.08		$	12.75		$	16.83		$	15.35
Net investment income1		0.10		0.25			0.24			0.23			0.28			0.27			0.05		0.13			0.12			0.14			0.16			0.14
Net realized and unrealized gain (loss)		1.72		(0.26	)		1.03			0.43			(2.75	)		2.07	2		1.68		(0.26	)		1.03			0.43			(2.75	)		2.07	2
Net increase (decrease) from investment operations		1.82		(0.01	)		1.27			0.66			(2.47	)		2.34			1.73		(0.13	)		1.15			0.57			(2.59	)		2.21
Dividends and distributions from:
Net investment income		(0.07)		(0.27	)		(0.24	)		(0.16	)		(0.32	)		(0.20	)		(0.02)		(0.14	)		(0.13	)		(0.05	)		(0.19	)		(0.10	)
Net realized gain		(0.31)		–			–			(0.19	)		(1.30	)		(0.63	)		(0.31)		–			–			(0.19	)		(1.30	)		(0.63	)
Total dividends and distributions		(0.38)		(0.27	)		(0.24	)		(0.35	)		(1.62	)		(0.83	)		(0.33)		(0.14	)		(0.13	)		(0.24	)		(1.49	)		(0.73	)
Net asset value, end of period		$    15.42	$	13.98		$	14.26		$	13.23		$	12.92			$   17.01			$   15.23	$	13.83		$	14.10		$	13.08		$	12.75		$	16.83
Total Investment Return3
Based on net asset value		13.27%4		(0.23)%			9.70%			5.66%	5		(16.05)%			15.58%	6		12.73%4		(1.01)%			8.78%			4.93%	7		(16.89)%			14.81%	6
Ratios to Average Net Assets
Total expenses		1.22%8		1.20%			1.23%			1.27%			1.24%			1.21%			2.09%8		2.00%			2.04%			2.07%			2.02%			2.01%
Total expenses excluding recoupment of past waived fees		1.22%8		1.20%			1.22%			1.27%			1.24%			1.21%			2.09%8		2.00%			2.02%			2.06%			2.02%			2.01%
Total expenses after fees waived, reimbursed and paid indirectly		1.21%8		1.20%			1.22%			1.26%			1.24%			1.21%			2.08%8		2.00%			2.04%			2.04%			2.02%			2.01%
Total expenses after fees waived, reimbursed and paid indirectly and excluding interest expense		1.20%8		1.19%			1.20%			1.26%			1.20%			1.21%			2.07%8		1.98%			2.02%			2.04%			1.97%			2.01%
Net investment income		1.39%8		1.61%			1.75%			2.04%			1.84%			1.68%			0.53%8		0.84%			0.91%			1.27%			1.06%			0.89%
Supplemental Data
Net assets, end of period (000)		$407,304	$	370,916		$	385,511		$	361,751		$	390,051			$506,537			$ 26,673	$	31,595		$	49,315		$	69,934		$	97,710		$	152,820
Portfolio turnover		192%9		401%	10		400%	11		354%	12		391%	13		93%			192%9		401%	10		400%	11		354%	12		391%	13		93%

¹  Based on average shares outstanding.

²  Includes redemption fees, which are less than $0.01 per share.

³  Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

⁴  Aggregate total investment return.

⁵  Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been 5.42%.

⁶  Redemption fee of 2.00% is reflected in total return calculations. There was no impact to the return.

⁷  Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been 4.69%.

⁸  Annualized.

⁹  Includes mortgage dollar roll transactions; excluding these transactions the portfolio turnover would have been 114%.

¹⁰  Includes mortgage dollar roll transactions; excluding these transactions the portfolio turnover would have been 236%.

¹¹  Includes mortgage dollar roll transactions; excluding these transactions the portfolio turnover would have been 302%.

¹²  Includes mortgage dollar roll transactions; excluding these transactions the portfolio turnover would have been 227%.

¹³  Includes TBA transactions; excluding these transactions the portfolio turnover would have been 121%.

See Notes to Financial Statements.

BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2012                 29

Financial Highlights (concluded)

	Investor C
	Six Months   Ended			Year Ended September 30,
	March 31, 2012 (Unaudited)			2011			2010			2009			2008			2007
Per Share Operating Performance
Net asset value, beginning of period	$	13.76		$	14.04		$	13.04		$	12.73		$	16.78		$	15.34
Net investment income1		0.05			0.13			0.14			0.15			0.17			0.15
Net realized and unrealized gain (loss)		1.69			(0.25	)		1.02			0.43			(2.71	)		2.042
Net increase (decrease) from investment operations		1.74			(0.12	)		1.16			0.58			(2.54	)		2.19
Dividends and distributions from:
Net investment income		(0.03	)		(0.16	)		(0.16	)		(0.08	)		(0.21	)		(0.12)
Net realized gain		(0.31	)		–			–			(0.19	)		(1.30	)		(0.63)
Total dividends and distributions		(0.34	)		(0.16	)		(0.16	)		(0.27	)		(1.51	)		(0.75)
Net asset value, end of period	$	15.16		$	13.76		$	14.04		$	13.04		$	12.73		$	16.78
Total Investment Return3
Based on net asset value		12.84%	4		(0.94)%			8.86%			4.99%	5		(16.66)%			14.68%6
Ratios to Average Net Assets
Total expenses		1.93%	7		1.93%			1.94%			1.98%			1.94%			1.95%
Total expenses excluding recoupment of past waived fees		1.93%	7		1.93%			1.94%			1.97%			1.94%			1.95%
Total expenses after fees waived, reimbursed and paid indirectly		1.92%	7		1.93%			1.94%			1.98%			1.94%			1.94%
Total expenses after fees waived, reimbursed and paid indirectly and excluding interest expense		1.91%	7		1.92%			1.92%			1.98%			1.90%			1.94%
Net investment income		0.67%	7		0.89%			1.05%			1.32%			1.14%			0.96%
Supplemental Data
Net assets, end of period (000)	$	91,526		$	81,644		$	84,367		$	72,063		$	69,584		$	84,596
Portfolio turnover		192%	8		401%	9		400%	10		354%	11		391%	12		93%

¹  Based on average shares outstanding.

²  Includes redemption fees, which are less than $0.01 per share.

³  Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

⁴  Aggregate total investment return.

⁵  Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been 4.75%.

⁶  Redemption fee of 2.00% is reflected in total return calculations. There was no impact to the return.

⁷  Annualized.

⁸  Includes mortgage dollar roll transactions; excluding these transactions the portfolio turnover would have been 114%.

⁹  Includes mortgage dollar roll transactions; excluding these transactions the portfolio turnover would have been 236%.

¹⁰  Includes mortgage dollar roll transactions; excluding these transactions the portfolio turnover would have been 302%.

¹¹  Includes mortgage dollar roll transactions; excluding these transactions the portfolio turnover would have been 227%.

¹²  Includes TBA transactions; excluding these transactions the portfolio turnover would have been 121%.

See Notes to Financial Statements.

30                 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2012

Notes to Financial Statements (Unaudited)

1.  Organization and Significant Accounting Policies:

BlackRock Funds^SM (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. These financial statements relate to one series of the Trust, BlackRock Managed Volatility Portfolio (formerly known as BlackRock Asset Allocation Portfolio) (the “Fund”). The Fund is classified as diversified. The Fund’s 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 and disclosures in the financial statements. Actual results could differ from those estimates. The Fund offers multiple classes of shares. Institutional Shares are sold without a sales charge and only to certain eligible investors. Service Shares are sold without a sales charge. Investor A Shares are generally sold with a front-end sales charge. Investor B and Investor C Shares may be subject to a CDSC. All classes of shares have identical voting, dividend, liquidation and other rights and the same terms and conditions, except that Service, Investor A, Investor B and Investor C Shares bear certain expenses related to the shareholder servicing of such shares, and Investor B and Investor C Shares also bear certain expenses related to the distribution of such shares. Investor B Shares automatically convert to Investor A Shares after approximately eight years. Investor B Shares are only available through exchanges, dividend reinvestment by existing shareholders or for purchase by certain qualified employee benefit plans. Each class has exclusive voting rights with respect to matters relating to its shareholder servicing and distribution expenditures (except that Investor B shareholders may vote on material changes to the Investor A distribution and service plan).

The following is a summary of significant accounting policies followed by the Fund:

Valuation: US GAAP defines fair value as the price the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The Fund fair values its financial instruments at market value using independent dealers or pricing services under policies approved by the Board of Trustees of the Trust (the “Board”). Equity investments traded on a recognized securities exchange or the NASDAQ Global Market System (“NASDAQ”) are valued at the last reported sale price that day or the NASDAQ official closing price, if applicable. For equity investments traded on more than one exchange, the last reported sale price on the exchange where the stock is primarily traded is used. Equity investments traded on a recognized exchange for which there were no sales on that day are valued at the last available bid price. If no bid price is available, the prior day’s price will be used, unless it is determined that such prior day’s price no longer reflects the fair value of the security. The Fund values its bond investments on the basis of last available bid prices or current market quotations provided by dealers or pricing services. In determining the value of a particular investment, pricing services may use certain information with respect to transactions in such investments, quotations from

dealers, pricing matrixes, market transactions in comparable investments, various relationships observed in the market between investments and calculated yield measures. Asset-backed and mortgage-backed securities are valued by independent pricing services using models that consider estimated cash flows of each tranche of the security, establish a benchmark yield and develop an estimated tranche specific spread to the benchmark yield based on the unique attributes of the tranche. Financial futures contracts traded on exchanges are valued at their last sale price. Swap agreements are valued utilizing quotes received daily by the Fund’s pricing service or through brokers, which are derived using daily swap curves and models that incorporate a number of market data factors, such as discounted cash flows, trades and values of the underlying reference instruments. To-be-announced (“TBA”) commitments are valued on the basis of last available bid prices or current market quotations provided by pricing services. Investments in open-end registered investment companies are valued at NAV each business day. Short-term securities with remaining maturities of 60 days or less may be valued at amortized cost, which approximates fair value.

The Fund values its investment in BlackRock Liquidity Series, LLC Money Market Series (the “Money Market Series”) at fair value, which is ordinarily based upon its pro rata ownership in the underlying fund’s net assets. The Money Market Series seeks current income consistent with maintaining liquidity and preserving capital. Although the Money Market Series is not registered under the 1940 Act, its investments will follow the parameters of investments by a money market fund that is subject to Rule 2a-7 under the 1940 Act. The Fund may withdraw up to 25% of its investment daily, although the manager of the Money Market Series, in its sole discretion, may permit an investor to withdraw more than 25% on any one day.

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

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

In the event that application of these methods of valuation results in a price for an investment which is deemed not to be representative of the

BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2012                 31

Notes to Financial Statements (continued)

market value of such investment or if a price is not available, the investment will be valued in accordance with a policy approved by the Board as reflecting fair value (“Fair Value Assets”). When determining the price for Fair Value Assets, the investment advisor and/or the sub-advisor seek to determine the price that the Fund might reasonably expect to receive from the current sale of that asset in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the investment advisor and/or sub-advisor deem relevant. The pricing of all Fair Value Assets is subsequently reported to the Board or a committee thereof.

Generally, trading in foreign instruments is substantially completed each day at various times prior to the close of business on the NYSE. Occasionally, events affecting the values of such instruments may occur between the foreign market close and the close of business on the NYSE that may not be reflected in the computation of the Fund’s net assets. If events (for example, a company announcement, market volatility or a natural disaster) occur during such periods that are expected to materially affect the value of such instruments, those instruments may be Fair Value Assets and be valued at their fair value, as determined in good faith by the investment advisor using a pricing service and/or policies approved by the Board. Each business day, the Fund uses a pricing service to assist with the valuation of certain foreign exchange-traded equity securities and foreign exchange-traded and OTC options (the “Systematic Fair Value Price”). Using current market factors, the Systematic Fair Value Price is designed to value such foreign securities and foreign options at fair value as of the close of business on the NYSE, which follows the close of the local markets.

Foreign Currency Transactions: The Fund’s books and records are maintained in US dollars. Purchases and sales of investment securities are recorded at the rates of exchange prevailing on the respective date of such transactions. Generally, when the US dollar rises in value against a foreign currency, the Fund’s investments denominated in that currency will lose value because its currency is worth fewer US dollars; the opposite effect occurs if the US dollar falls in relative value.

The Fund does not isolate the portion of the results of operations arising as a result of changes in the foreign exchange rates from the changes in the market prices of investments held or sold for financial reporting purposes. Accordingly, the effects of changes in foreign currency exchange rates on investments are not segregated on the Statement of Operations from the effects of changes in market prices of those investments but are included as a component of net realized and unrealized gain (loss) from investments. The Fund reports realized currency gains (losses) on foreign currency related transactions as components of net realized gain (loss) for financial reporting purposes, whereas such components are treated as ordinary income for federal income tax purposes.

Asset-Backed and Mortgage-Backed Securities: The Fund may invest in asset-backed securities. Asset-backed securities are generally issued as pass-through certificates, which represent undivided fractional ownership interests in an underlying pool of assets, or as debt instruments,

which are also known as collateralized obligations, and are generally issued as the debt of a special purpose entity organized solely for the purpose of owning such assets and issuing such debt. Asset-backed securities are often backed by a pool of assets representing the obligations of a number of different parties. The yield characteristics of certain asset-backed securities may differ from traditional debt securities. One such major difference is that all or a principal part of the obligations may be prepaid at any time because the underlying assets (i.e., loans) may be prepaid at any time. As a result, a decrease in interest rates in the market may result in increases in the level of prepayments as borrowers, particularly mortgagors, refinance and repay their loans. An increased prepayment rate with respect to an asset-backed security subject to such a prepayment feature will have the effect of shortening the maturity of the security. If the Fund has purchased such an asset-backed security at a premium, a faster than anticipated prepayment rate could result in a loss of principal to the extent of the premium paid.

The Fund may purchase certain mortgage pass-through securities. There are a number of important differences among the agencies and instrumentalities of the US government that issue mortgage-related securities and among the securities that they issue. For example, mortgage-related securities guaranteed by Ginnie Mae are guaranteed as to the timely payment of principal and interest by Ginnie Mae and such guarantee is backed by the full faith and credit of the United States. However, mortgage-related securities issued by Freddie Mac and Fannie Mae, including Freddie Mac and Fannie Mae guaranteed Mortgage Pass-Through Certificates, which are solely the obligations of Freddie Mac and Fannie Mae, are not backed by or entitled to the full faith and credit of the United States but are supported by the right of the issuer to borrow from the Treasury.

Multiple Class Pass-Through Securities: The Fund may invest in multiple class pass-through securities, including collateralized mortgage obligations (“CMOs”) and commercial mortgage-backed securities. These multiple class securities may be issued by Ginnie Mae, US government agencies or instrumentalities or by trusts formed by private originators of, or investors in, mortgage loans. In general, CMOs are debt obligations of a legal entity that are collateralized by, and multiple class pass-through securities represent direct ownership interests in, a pool of residential or commercial mortgage loans or mortgage pass-through securities (the “Mortgage Assets”), the payments on which are used to make payments on the CMOs or multiple pass-through securities. Classes of CMOs include interest only (“IOs”), principal only (“POs”), planned amortization classes and targeted amortization classes. IOs and POs are stripped mortgage-backed securities representing interests in a pool of mortgages, the cash flow from which has been separated into interest and principal components. IOs receive the interest portion of the cash flow while POs receive the principal portion. IOs and POs can be extremely volatile in response to changes in interest rates. As interest rates rise and fall, the value of IOs tends to move in the same direction as interest rates. POs perform best when prepayments on the underlying mortgages rise since this increases the rate at which the principal is

32                 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2012

Notes to Financial Statements (continued)

returned and the yield to maturity on the PO. When payments on mortgages underlying a PO are slower than anticipated, the life of the PO is lengthened and the yield to maturity is reduced. If the underlying Mortgage Assets experience greater than anticipated pre-payments of principal, the Fund may not fully recoup its initial investments in IOs.

Stripped Mortgage-Backed Securities: The Fund may invest in stripped mortgage-backed securities issued by the US government, its agencies and instrumentalities. Stripped mortgage-backed securities are usually structured with two classes that receive different proportions of the interest (IOs) and principal (POs) distributions on a pool of Mortgage Assets. The Fund also may invest in stripped mortgage-backed securities that are privately issued.

Capital Trusts: The Fund may invest in capital trusts. These securities are typically issued by corporations, generally in the form of interest-bearing notes with preferred securities characteristics, or by an affiliated business trust of a corporation, generally in the form of beneficial interests in subordinated debentures or similarly structured securities. The securities can be structured as either fixed or adjustable coupon securities that can have either a perpetual or stated maturity date. Dividends can be deferred without creating an event of default or acceleration, although maturity cannot take place unless all cumulative payment obligations have been met. The deferral of payments does not affect the purchase or sale of these securities in the open market. Payments on these securities are treated as interest rather than dividends for federal income tax purposes. These securities generally are rated below that of the issuing company’s senior debt securities.

Preferred Stock: The Fund may invest in preferred stock. Preferred stock has a preference over common stock in liquidation (and generally in receiving dividends as well) but is subordinated to the liabilities of the issuer in all respects. As a general rule, the market value of preferred stock with a fixed dividend rate and no conversion element varies inversely with interest rates and perceived credit risk, while the market price of convertible preferred stock generally also reflects some element of conversion value. Because preferred stock is junior to debt securities and other obligations of the issuer, deterioration in the credit quality of the issuer will cause greater changes in the value of a preferred stock than in a more senior debt security with similar stated yield characteristics. Unlike interest payments on debt securities, preferred stock dividends are payable only if declared by the issuer’s board of directors. Preferred stock also may be subject to optional or mandatory redemption provisions.

Collateralized Debt Obligations: The Fund may invest in collateralized debt obligations (“CDOs”), which include collateralized bond obligations (“CBOs”) and collateralized loan obligations (“CLOs”). CBOs and CLOs are types of asset-backed securities. A CDO is a bankruptcy remote entity which is backed by a diversified pool of debt securities (CBOs) or syndicated bank loans (CLOs). The cash flows of the CDO can be split into multiple segments, called “tranches”, which will vary in risk profile and yield. The riskiest segment is the subordinated or “equity” tranche.

This tranche bears the greatest risk of defaults from the underlying assets in the CDO and serves to protect the other, more senior, tranches from default in all but the most severe circumstances. Since it is shielded from defaults by the more junior tranches, a “senior” tranche will typically have higher credit ratings and lower yields than their underlying securities, and often receive investment grade ratings from one or more of the nationally recognized rating agencies. Despite the protection from the more junior tranches, senior tranches can experience substantial losses due to actual defaults, increased sensitivity to future defaults and the disappearance of one or more protecting tranches as a result of changes in the credit profile of the underlying pool of assets.

Forward Commitments and When-Issued Delayed Delivery Securities: The Fund may purchase securities on a when-issued basis and may purchase or sell securities on a forward commitment basis. Settlement of such transactions normally occurs within a month or more after the purchase or sale commitment is made. The Fund may purchase securities under such conditions with the intention of actually acquiring them, but may enter into a separate agreement to sell the securities before the settlement date. Since the value of securities purchased may fluctuate prior to settlement, the Fund may be required to pay more at settlement than the security is worth. In addition, the Fund is not entitled to any of the interest earned prior to settlement. When purchasing a security on a delayed delivery basis, the Fund assumes the rights and risks of ownership of the security, including the risk of price and yield fluctuations. In the event of default by the counterparty, the Fund’s maximum amount of loss is the unrealized appreciation of unsettled when-issued transactions, which is shown in the Schedule of Investments.

Inflation-Indexed Bonds: The Fund may invest in inflation-indexed bonds. Inflation-indexed bonds are fixed income securities whose principal value is periodically adjusted according to the rate of inflation. If the index measuring inflation rises or falls, the principal value of inflation-indexed bonds will be adjusted upward or downward, and consequently the interest payable on these securities (calculated with respect to a larger or smaller principal amount) will be increased or reduced, respectively. Repayment of the original bond principal upon maturity (as adjusted for inflation) is guaranteed in the case of US Treasury inflation-indexed bonds. For bonds that do not provide a similar guarantee, the adjusted principal value of the bond repaid at maturity may be less than the original principal.

TBA Commitments: The Fund may enter into TBA commitments. TBA commitments are forward agreements for the purchase or sale of mortgage-backed securities for a fixed price, with payment and delivery on an agreed upon future settlement date. The specific securities to be delivered are not identified at the trade date. However, delivered securities must meet specified terms, including issuer, rate and mortgage terms. The Fund generally enters into TBA commitments with the intent to take possession of or deliver the underlying mortgage-backed securities but can extend the settlement or roll the transaction. TBA commitments involve a risk of loss if the value of the security to be purchased or sold declines or increases, respectively, prior to settlement date.

BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2012                 33

Notes to Financial Statements (continued)

Mortgage Dollar Roll Transactions: The Fund may sell TBA mortgage-backed securities and simultaneously contract to repurchase substantially similar (same type, coupon and maturity) securities on a specific future date at an agreed-upon price. During the period between the sale and repurchase, the Fund will not be entitled to receive interest and principal payments on the securities sold. The Fund accounts for mortgage dollar roll transactions as purchases and sales and realizes gains and losses on these transactions. These transactions may increase the Fund’s portfolio turnover rate. Mortgage dollar rolls involve the risk that the market value of the securities that the Fund is required to purchase may decline below the agreed upon repurchase price of those securities.

Treasury Roll Transactions: The Fund may enter into treasury roll transactions. In a treasury roll transaction, the Fund sells a treasury security to a counterparty with a simultaneous agreement to repurchase the same security at an agreed upon price and future settlement date. The Fund receives cash from the sale of the treasury security to use for other investment purposes. The difference between the sale price and repurchase price represents net interest income or net interest expense reflective of an agreed upon rate between the Fund and the counterparty over the term of the borrowing. For US GAAP purposes, a treasury roll transaction is accounted for as a secured borrowing and not as a purchase or sale. During the term of the borrowing, interest income from the Treasury security and the related interest expense on the secured borrowing is recorded by the Fund on an accrual basis. The Fund will benefit from the transaction if the income earned on the investment purchased with the cash received in the treasury roll transaction exceeds the interest expense incurred by the Fund. If the interest expense exceeds the income earned, the Fund’s net investment income and dividends to shareholders may be adversely impacted. Treasury roll transactions involve the risk that the market value of the securities that the Fund is required to repurchase may decline below the agreed upon repurchase price of those securities.

Reverse Repurchase Agreements: The Fund may enter into reverse repurchase agreements with qualified third party broker-dealers. In a reverse repurchase agreement, the Fund sells securities to a bank or broker-dealer and agrees to repurchase the same securities at a mutually agreed upon date and price. Securities sold under reverse repurchase agreements are recorded at face value as a liability in the Statement of Assets and Liabilities. Due to the short term nature of the reverse repurchase agreements, face value approximates fair value. During the term of the reverse repurchase agreement, the Fund continues to receive the principal and interest payments on these securities. Certain agreements have no stated maturity and can be terminated by either party at any time. Interest on the value of the reverse repurchase agreements issued and outstanding is based upon competitive market rates determined at the time of issuance. The Fund may utilize reverse repurchase agreements when it is anticipated that the interest income to be earned from the investment of the proceeds of the transaction is greater than the interest expense of the transaction. Reverse repurchase agreements involve leverage risk and also the risk that the market value of the securities that the Fund is obligated to repurchase under the agreement may

decline below the repurchase price. In the event the buyer of securities under a reverse repurchase agreement files for bankruptcy or becomes insolvent, the Fund’s use of the proceeds of the agreement may be restricted while the other party, or its trustee or receiver, determines whether or not to enforce the Fund’s obligation to repurchase the securities.

Zero-Coupon Bonds: The Fund may invest in zero-coupon bonds, which are normally issued at a significant discount from face value and do not provide for periodic interest payments. Zero-coupon bonds may experience greater volatility in market value than similar maturity debt obligations which provide for regular interest payments.

Segregation and Collateralization: In cases in which the 1940 Act and the interpretive positions of the Securities and Exchange Commission (“SEC”) require that the Fund either delivers collateral or segregates assets in connection with certain investments (e.g., dollar rolls, TBA sale commitments, financial futures contracts, foreign currency exchange contracts, swaps and options written), or certain borrowings (e.g., reverse repurchase agreements and treasury roll transactions), the Fund will, consistent with SEC rules and/or certain interpretive letters issued by the SEC, segregate collateral or designate on its books and records cash or liquid securities having a market value at least equal to the amount that would otherwise be required to be physically segregated. Furthermore, based on requirements and agreements with certain exchanges and third party broker-dealers, each party to such transactions has requirements to deliver/deposit securities as collateral for certain investments.

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. Dividends from foreign securities where the ex-dividend date may have passed are subsequently recorded when the Fund is informed of the ex-dividend date. Under the applicable foreign tax laws, a withholding tax at various rates may be imposed on capital gains, dividends and interest. Upon notification from issuers, some of the dividend income received from a real estate investment trust may be redesignated as a reduction of cost of the related investment and/or realized gain. Interest income, including amortization and accretion of premiums and discounts on debt securities, is recognized on the accrual basis. Income and realized and unrealized gains and losses are allocated daily to each class based on its relative net assets. Consent fees are compensation for agreeing to changes in the terms of debt instruments and are included in interest income in the Statement of Operations.

Dividends and Distributions: Dividends and distributions paid by the Fund are recorded on the ex-dividend dates. The amount and timing of dividends and distributions are determined in accordance with federal income tax regulations, which may differ from US GAAP.

34                 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2012

Notes to Financial Statements (continued)

Securities Lending: The Fund may lend securities to approved borrowers, such as banks, brokers and other financial institutions. The borrower pledges cash, securities issued or guaranteed by the US government or irrevocable letters of credit issued by a bank as collateral, which will be maintained at all times in an amount equal to at least 100% of the current market value of the loaned securities. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. Securities lending income, as disclosed in the Statement of Operations, represents the income earned from the investment of the cash collateral, net of rebates paid to, or fees paid by, borrowers and less the fees paid to the securities lending agent. During the term of the loan, the Fund earns dividend or interest income on the securities loaned but does not receive dividend or interest income on the securities received as collateral. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions. In the event that the borrower defaults on its obligation to return borrowed securities because of insolvency or for any other reason, the Fund could experience delays and costs in gaining access to the collateral. The Fund also could suffer a loss if the value of an investment purchased with cash collateral falls below the market value of loaned securities or if the value of an investment purchased with cash collateral falls below the value of the original cash collateral received. During the six months ended March 31, 2012, any securities on loan were collaterized by cash.

Income Taxes: It is the Fund’s 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 its taxable income to its shareholders. Therefore, no federal income tax provision is required.

The 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 Fund’s US federal tax returns remains open for each of the four years ended September 30, 2011. The statutes of limitations on the 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 Standards: In May 2011, the Financial Accounting Standards Board (the “FASB”) issued amended guidance to improve disclosure about fair value measurements which will require the following disclosures for fair value measurements categorized as Level 3: quantitative information about the unobservable inputs and assumptions used in the fair value measurement, a description of the valuation policies and procedures and a narrative description of the sensitivity of the fair value measurement to changes in unobservable inputs and the interrelationships between those unobservable inputs. In addition, the amounts and reasons for all transfers in and out of Level 1 and Level 2 will be required to be disclosed, as well as disclosure of the level in the fair value hierarchy of assets and liabilities not recorded at fair value but where fair value

is disclosed. The amended guidance is effective for financial statements for fiscal years beginning after December 15, 2011, and interim periods within those fiscal years. Management is evaluating the impact of this guidance on the Fund’s financial statement disclosures.

In December 2011, the FASB 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 Statement 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 Fund’s financial statement disclosures.

Other: Expenses directly related to the Fund or its classes are charged to the 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 the Fund and other shared expenses pro rated to the Fund are allocated daily to each class based on its relative net assets or other appropriate methods.

The Fund has 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 Statement 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.  Derivative Financial Instruments:

The Fund engages in various portfolio investment strategies using derivative contracts both to increase the returns of the Fund and/or to economically hedge, or protect, its exposure to certain risks such as credit risk, equity risk, interest rate risk, foreign currency exchange rate risk or other risk (inflation risk). These contracts may be transacted on an exchange or OTC.

Losses may arise if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument or if the counterparty does not perform under the contract. The Fund’s maximum risk of loss from counterparty credit risk on OTC derivatives is generally the aggregate unrealized gain netted against any collateral pledged by/posted to the counterparty. For OTC options purchased, the Fund bears the risk of loss in the amount of the premiums paid plus the positive change in market values net of any collateral received on the options should the counterparty fail to perform under the contracts. Options written by the Fund do not give rise to counterparty credit risk, as options written obligate the Fund to perform and not the counterparty. Counterparty risk related to exchange-traded financial futures contracts and options and centrally cleared swaps is deemed to be minimal due to the protection against defaults provided by the exchange on which these contracts trade.

BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2012                 35

Notes to Financial Statements (continued)

The Fund may mitigate counterparty risk by procuring collateral and through netting provisions included within an International Swaps and Derivatives Association, Inc. master agreement (“ISDA Master Agreement”) implemented between the Fund and each of its respective counterparties. An ISDA Master Agreement allows the Fund to offset with each separate counterparty certain derivative financial instrument’s payables and/or receivables with collateral held. The amount of collateral moved to/from applicable counterparties is generally based upon minimum transfer amounts of up to $500,000. To the extent amounts due to the Fund from its counterparties are not fully collateralized contractually or otherwise, the Fund bears the risk of loss from counterparty non-performance. See Note 1 “Segregation and Collateralization” for information with respect to collateral practices. In addition, the Fund manages counterparty risk by entering into agreements only with counterparties that it believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties.

Certain ISDA Master Agreements allow counterparties to OTC derivatives to terminate derivative contracts prior to maturity in the event the Fund’s net assets decline by a stated percentage or the Fund fails to meet the terms of its ISDA Master Agreements, which would cause the Fund to accelerate payment of any net liability owed to the counterparty.

Financial Futures Contracts: The Fund purchases or sells financial futures contracts and options on financial futures contracts to gain exposure to, or economically hedge against, changes in the value of equity securities (equity risk), interest rates (interest rate risk) or foreign currencies (foreign currency exchange rate risk). Financial futures contracts are agreements between the Fund and counterparty to buy or sell a specific quantity of an underlying instrument at a specified price and at a specified date. Depending on the terms of the particular contract, financial futures contracts are settled either through physical delivery of the underlying instrument on the settlement date or by payment of a cash settlement amount on the settlement date. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in value of the contract. Such receipts or payments are known as variation margin and are recorded by the Fund as unrealized appreciation or depreciation. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. The use of financial futures contracts involves the risk of an imperfect correlation in the movements in the price of financial futures contracts, interest or foreign currency exchange rates and the underlying assets.

Foreign Currency Exchange Contracts: The Fund enters into foreign currency exchange contracts as an economic hedge against either specific transactions or portfolio instruments or to obtain exposure to foreign currencies (foreign currency exchange rate risk). A foreign currency

exchange contract is an agreement between two parties to buy and sell a currency at a set exchange rate on a future date. Foreign currency exchange contracts, when used by the Fund, help to manage the overall exposure to the currencies in which some of the investments held by the Fund are denominated. The contract is marked-to-market daily and the change in market value is recorded by the Fund as an unrealized gain or loss. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value at the time it was opened and the value at the time it was closed. The use of foreign currency exchange contracts involves the risk that the value of a foreign currency exchange contract changes unfavorably due to movements in the value of the referenced foreign currencies and the risk that a counterparty to the contract does not perform its obligations under the agreement.

Options: The Fund purchases and writes call and put options to increase or decrease its exposure to underlying instruments (including interest rate risk) and/or, in the case of options written, to generate gains from options premiums. A call option gives the purchaser (holder) of the option the right (but not the obligation) to buy, and obligates the seller (writer) to sell (when the option is exercised), the underlying instrument at the exercise or strike price at any time or at a specified time during the option period. A put option gives the holder the right to sell and obligates the writer to buy the underlying instrument at the exercise or strike price at any time or at a specified time during the option period. When the Fund purchases (writes) an option, an amount equal to the premium paid (received) by the Fund is reflected as an asset (liability). The amount of the asset (liability) is subsequently marked-to-market to reflect the current market value of the option purchased (written). When an instrument is purchased or sold through an exercise of an option, the related premium paid (or received) is added to (or deducted from) the basis of the instrument acquired or deducted from (or added to) the proceeds of the instrument sold. When an option expires (or the Fund enters into a closing transaction), the Fund realizes a gain or loss on the option to the extent of the premiums received or paid (or gain or loss to the extent the cost of the closing transaction exceeds the premiums received or paid). When the Fund writes a call option, such option is “covered,” meaning that the Fund holds the underlying instrument subject to being called by the option counterparty. When the Fund writes a put option, such option is covered by cash in an amount sufficient to cover the obligation.

Options on swaps (swaptions) are similar to options on securities except that instead of selling or purchasing the right to buy or sell a security, the writer or purchaser of the swap option is granting or buying the right to enter into a previously agreed upon interest rate or credit default swap agreement (interest rate risk and/or credit risk) at any time before the expiration of the option.

The Fund also purchases or sells listed or OTC foreign currency options, foreign currency futures and related options on foreign currency futures as a short or long hedge against possible variations in foreign exchange rates or to gain exposure to foreign currencies (foreign currency exchange rate risk). When foreign currency is purchased or sold through

36                 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2012

Notes to Financial Statements (continued)

an exercise of a foreign currency option, the related premium paid (or received) is added to (or deducted from) the basis of the foreign currency acquired or deducted from (or added to) the proceeds of the foreign currency sold. Such transactions may be effected with respect to hedges on non-US dollar denominated instruments owned by the Fund but not yet delivered, or committed or anticipated to be purchased by the Fund.

In purchasing and writing options, the Fund bears the risk of an unfavorable change in the value of the underlying instrument or the risk that the Fund may not be able to enter into a closing transaction due to an illiquid market. Exercise of a written option could result in the Fund purchasing or selling a security at a price different from the current market value.

Swaps: The Fund enters into swap agreements, in which the Fund and a counterparty agree to either make periodic net payments on a specified notional amount or net payment upon termination. Swap agreements are privately negotiated in the OTC market and may be executed on a registered financial and commodities exchange (“centrally cleared swaps”). In a centrally cleared swap, the Funds typically enter into an agreement with a counterparty; however, performance is guaranteed by the central clearinghouse reducing or eliminating the Fund’s exposure to the credit risk of the counterparty. These payments received or made by the Fund are recorded in the Statement of Operations as realized gains or losses, respectively. Any upfront fees paid are recorded as assets and any upfront fees received are recorded as liabilities and amortized over the term of the swap. Swaps are marked-to-market daily and changes in value are recorded as unrealized appreciation (depreciation). The daily change in valuation of centrally cleared swaps, if any, is recorded as a receivable or payable for variation margin in the Statement of Assets and Liabilities. When the swap is terminated, the Fund will record a realized gain or loss equal to the difference between the proceeds from (or cost of) the closing transaction and the Fund’s basis in the contract, if any. Generally, the basis of the contracts is the premium received or paid. Swap transactions involve, to varying degrees, elements of interest rate, credit and market risk in excess of the amounts recognized in the Statement of Assets and Liabilities. Such risks involve the possibility that there will be no liquid market for these agreements, that the counterparty to the agreements may default on its obligation to perform or disagree as to the meaning of the contractual terms in the agreements, and that there may be unfavorable changes in interest rates and/or market values associated with these transactions.

— Credit default swaps – The Fund enters into credit default swaps to manage its exposure to the market or certain sectors of the market, to reduce its risk exposure to defaults of corporate and/or sovereign issuers or to create exposure to corporate and/or sovereign issuers to which it is not otherwise exposed (credit risk). The Fund enters into credit default swap agreements to provide a measure of protection against the default of an issuer (as buyer of protection) and/or gain credit exposure to an issuer to which it is not otherwise exposed (as seller of protection). The Fund may either buy or sell (write) credit

default swaps on single-name issuers (corporate or sovereign), a combination or basket of single-name issuers or traded indexes. Credit default swaps on single-name issuers are agreements in which the buyer pays fixed periodic payments to the seller in consideration for a guarantee from the seller to make a specific payment should a negative credit event take place with respect to the referenced entity (e.g., bankruptcy, failure to pay, obligation accelerators, repudiation, moratorium or restructuring). Credit default swaps on traded indexes are agreements in which the buyer pays fixed periodic payments to the seller in consideration for a guarantee from the seller to make a specific payment should a write-down, principal or interest shortfall or default of all or individual underlying securities included in the index occurs. As a buyer, if an underlying credit event occurs, the Fund will either receive from the seller an amount equal to the notional amount of the swap and deliver the referenced security or underlying securities comprising the index or receive a net settlement of cash equal to the notional amount of the swap less the recovery value of the security or underlying securities comprising the index. As a seller (writer), if an underlying credit event occurs, the Fund will either pay the buyer an amount equal to the notional amount of the swap and take delivery of the referenced security or underlying securities comprising the index or pay a net settlement of cash equal to the notional amount of the swap less the recovery value of the security or underlying securities comprising the index.

— Total return swaps – The Fund enters into total return swaps to obtain exposure to a security or market without owning such security or investing directly in that market or to transfer the risk/return of one market (e.g., fixed income) to another market (e.g., equity) (equity risk and/or interest rate risk). Total return swaps are agreements in which there is an exchange of cash flows whereby one party commits to make payments based on the total return (coupons plus capital gains/losses) of an underlying instrument in exchange for fixed or floating rate interest payments. To the extent the total return of the instrument or index underlying the transaction exceeds or falls short of the offsetting interest rate obligation, the Fund will receive a payment from or make a payment to the counterparty.

— Interest rate swaps – The Fund enters into interest rate swaps to gain or reduce exposure to interest rates or to manage duration, the yield curve or interest rate risk by economically hedging the value of the fixed rate bonds which may decrease when interest rates rise (interest rate risk). Interest rate swaps are agreements in which one party pays a stream of interest payments, either fixed or floating rate, for another party’s stream of interest payments, either fixed or floating, on the same notional amount for a specified period of time. In more complex swaps, the notional principal amount may decline (or amortize) over time.

BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2012                 37

Notes to Financial Statements (continued)

Derivative Financial Instruments Categorized by Risk Exposure:

Fair Values of Derivative Financial Instruments as of March 31, 2012
Asset Derivatives
	Statement of Assets and Liabilities Location	Value
Interest rate contracts	Net unrealized appreciation/depreciation1; Unrealized appreciation on swaps1; Investments at value – unaffiliated2; Swap premiums paid	$	1,106,484
Foreign currency exchange contracts	Investments at value – unaffiliated2; Unrealized appreciation on foreign currency exchange contracts		176,786
Credit contracts	Unrealized appreciation on swaps1; Swap premiums paid		386,387
Equity contracts	Net unrealized appreciation/depreciation1		2,296,883
Total		$	3,966,540
	Liability Derivatives
	Statement of Assets and Liabilities Location	Value
Interest rate contracts	Net unrealized appreciation/depreciation1; Unrealized depreciation on swaps1; Options written at value	$	734,347
Foreign currency exchange contracts	Unrealized depreciation on foreign currency exchange contracts		159,607
Credit contracts	Unrealized depreciation on swaps1; Swap premiums received		296,913
Equity contracts	Net unrealized appreciation/depreciation1		1,231,301
Other contracts	Unrealized depreciation on swaps1		187,907
Total		$	2,610,075

¹ Includes cumulative appreciation/depreciation on financial futures contracts and centrally cleared swaps as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities.

² Includes options purchased at value as reported in the Schedule of Investments.

The Effect of Derivative Financial Instruments in the Statement of Operations Six Months Ended March 31, 2012
Net Realized Gain (Loss) From
Interest rate contracts:
Financial futures contracts	$	6,392,227
Swaps		417,389
Options3		(170,855	)
Foreign currency exchange contracts:
Financial futures contracts		131,573
Foreign currency exchange contracts		473,156
Options3		(106,854	)
Credit contracts:
Swaps		383,628
Options3		(22,569	)
Equity contracts:
Financial futures contracts		(2,854,821	)
Other contracts:
Swaps		4,348,530
Total	$	8,991,404

Net Change in Unrealized Appreciation/Depreciation on
Interest rate contracts:
Financial futures contracts	$	2,208,001
Swaps		(677,076	)
Options3		446,211
Foreign currency exchange contracts:
Financial futures contracts		120,988
Foreign currency exchange contracts		50,036
Options3		(185,771	)
Credit contracts:
Swaps		(696,491	)
Equity contracts:
Financial futures contracts		(152,578	)
Other contracts:
Swaps		(193,109	)
Total	$	920,211

³ Options purchased are included in the net realized gain (loss) from investments and net change in unrealized appreciation/depreciation on investments.

For the six months ended March 31, 2012, the average quarterly balances of outstanding derivative financial instruments were as follows:

Financial futures contracts:
Average number of contracts purchased		1,049
Average number of contracts sold		938
Average notional value of contracts purchased	$	124,699,906
Average notional value of contracts sold	$	110,788,604
Foreign currency exchange contracts:
Average number of contracts - US dollars purchased		25
Average number of contracts - US dollars sold		24
Average US dollar amounts purchased	$	14,112,829
Average US dollar amounts sold	$	11,147,228
Options:
Average number of option contracts purchased		9
Average number of option contracts written		4
Average notional value of option contracts purchased	$	59,630,281
Average notional value of option contracts written	$	12,538,446
Average number of swaption contracts purchased		9
Average number of swaption contracts written		10
Average notional value of swaption contracts purchased	$	19,752,035
Average notional value of swaption contracts written	$	22,217,000
Credit default swaps:
Average number of contracts - buy protection		9
Average number of contracts - sell protection		14
Average notional value - buy protection	$	6,632,500
Average notional value - sell protection	$	3,092,000
Interest rate swaps:
Average number of contracts - pays fixed rate		14
Average number of contracts - receives fixed rate		11
Average notional value - pays fixed rate	$	23,473,269
Average notional value - receives fixed rate	$	22,469,517
Total return swaps:
Average number of contracts		6
Average notional value	$	9,465,000

3. Investment Advisory Agreements and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. (“PNC”) and Barclays Bank PLC (“Barclays”) are the largest stockholders of BlackRock, Inc. (“BlackRock”). Due to the ownership structure, PNC is an affiliate for 1940 Act purposes, but Barclays is not.

38                 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2012

Notes to Financial Statements (continued)

The Trust, on behalf of the Fund, entered into an Investment Advisory Agreement with the Manager, the Fund’s investment advisor, an indirect, wholly owned subsidiary of BlackRock, to provide investment advisory and administration services. The Manager is responsible for the management of the Fund’s portfolio and provides the necessary personnel, facilities, equipment and certain other services necessary to the operations of the Fund. For such services, the Fund pays the Manager a monthly fee based on a percentage of the Fund’s average daily net assets at the following annual rates:

Average Daily Net Assets	Investment Advisory Fee
First $1 Billion		0.550%
$1 Billion - $2 Billion		0.500%
$2 Billion - $3 Billion		0.475%
Greater than $3 Billion		0.450%

The Manager contractually agreed to waive and/or reimburse fees or expenses, excluding interest expense, dividend expense, acquired fund fees and expenses and certain other fund expenses, in order to limit expenses. The expense limitations as a percentage of average daily net assets is as follows:

				Share Classes
Institutional		Service		Investor A		Investor B		Investor C		Class R1
	0.89%		1.17%		1.37%		2.14%		2.14%		1.81%

  ¹ There were no shares outstanding as of March 31, 2012.

The Manager has agreed not to reduce or discontinue this contractual waiver or reimbursement prior to February 1, 2013 unless approved by the Board, including a majority of the Independent Trustees. These amounts are included in fees waived by advisor and shown as administration fees waived – class specific, transfer agent fees waived – class specific and transfer agent fees reimbursed – class specific, respectively, in the Statement of Operations. For the six months ended March 31, 2012, the Manager waived $9,044 of investment advisory fees which are included in fees waived by advisor. Class specific expense waivers or reimbursements are as follows:

	Share Classes
	Institutional		Service		Total
Administration Fees Waived	$	5,144	$	215	$	5,359
Transfer Agent Fees Waived	$	329	$	50	$	379
Transfer Agent Fees Reimbursed	$	2,906	$	398	$	3,304

The Manager voluntarily agreed to waive its investment advisory fees by the amount of investment advisory fees the Fund pays to the Manager indirectly through its investment in affiliated money market funds. However, the Manager does not waive its investment advisory fees by the amount of investment advisory fees paid in connection with the Fund’s investment in other affiliated investment companies, if any. This amount is shown as fees waived by advisor in the Statement of Operations. For the six months ended March 31, 2012, the Manager waived $26,073.

The Manager entered into a sub-advisory agreement with BlackRock Financial Management, Inc. (“BFM”), an affiliate of the Manager. The

Manager pays BFM, for services it provides, a monthly fee that is a percentage of the investment advisory fees paid by the Fund to the Manager.

If during the 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 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 March 31, 2012, the amounts subject to possible future recoupment under the expense limitation agreement are as follows:

Expiring September 30,
2012	2013	2014
$14,357	$14,019	$9,042

The Trust, on behalf of the Fund, 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 Fund pays 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 the Fund as follows:

	Service Fee		Distribution Fee
Service		0.25%	–
Investor A		0.25%	–
Investor B		0.25%	0.75%
Investor C		0.25%	0.75%

Pursuant to sub-agreements with BRIL, broker-dealers and BRIL provide shareholder servicing and distribution services to the Fund. The ongoing service and/or distribution fee compensate BRIL and each broker-dealer for providing shareholder servicing and/or distribution related services to Service, Investor A, Investor B and Investor C shareholders.

For the six months ended March 31, 2012, the following table shows the class specific service and distribution fees borne directly by each class of the Fund:

Share Classes
Service	Investor A	Investor B	Investor C	Total
$  2,155	$488,510	$149,379	$434,097	$1,074,141

BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2012                 39

Notes to Financial Statements (continued)

For the six months ended March 31, 2012, affiliates earned underwriting discounts, direct commissions and dealer concessions on sales of the Fund’s Investor A Shares of $13,836.

For the six months ended March 31, 2012, affiliates received CDSCs relating to transactions in Investor A, Investor B, and Investor C Shares of $724, $10,486 and $6,427, respectively.

Pursuant to written agreements, certain financial intermediaries, some of which may be affiliates, provide the Fund 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. For the six months ended March 31, 2012, the Fund paid $11,139 to the Manager in return for these services, which are included in transfer agent – class specific in the Statement of Operations.

The Manager maintains a call center, which is responsible for providing certain shareholder services to the Fund, 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 six months ended March 31, 2012, the 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 Statement of Operations:

		Share Classes
Institutional	Service	Investor A	Investor B	Investor C	Total
$334	$50	$20,545	$2,784	$2,265	$25,978

For the six months ended March 31, 2012, the following table shows the class specific transfer agent fees borne directly by each class of the Fund:

		Share Classes
Institutional	Service	Investor A	Investor B	Investor C	Total
$31,689	$1,897	$338,685	$44,248	$58,969	$475,488

BNY Mellon Investment Servicing (US) Inc. (“BNYMIS”) and the Manager act as co-administrators for the Fund. 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 assets of the 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 the Fund or a share class which are included in administration fees waived – class specific in the Statement of Operations. For the six months ended March 31, 2012, the Fund paid $189,577 to the Manager in return for these services, which are included in administration, administration – class specific and administration fees waived – class specific in the Statement of Operations.

For the six months ended March 31, 2012, the following table shows the administration fees – class specific borne directly by each class of the Fund:

		Share Classes
Institutional	Service	Investor A	Investor B	Investor C	Total
$5,144	$215	$48,851	$3,735	$10,852	$68,797

The Fund received an exemptive order from the SEC permitting it, among other things, to pay an affiliated securities lending agent a fee based on a share of the income derived from the securities lending activities and has retained BlackRock Investment Management, LLC (the “BIM”) as the securities lending agent. BIM may, on behalf of the Fund, invest cash collateral received by the Fund for such loans, among other things, in a private investment company managed by the Manager or in registered money market funds advised by the Manager or its affiliates. As securities lending agent, BIM is responsible for all transaction fees and all other operational costs relating to securities lending activities, other than extraordinary expenses. BIM does not receive any fees for managing the cash collateral. The market value of securities on loan and the value of the related collateral, if applicable, are shown in the Statement of Assets and Liabilities as securities loaned at value and collateral on securities loaned at value, respectively. The cash collateral invested by BIM is disclosed in the Schedule of Investments, if any. Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of rebates paid to, or fees paid by, borrowers of securities. The Fund retains 65% of securities lending income and pays a fee to BIM equal to 35% of such income. The share of income earned by the Fund on the reinvestment of cash collateral is shown as securities lending – affiliated in the Statement of Operations. For the six months ended March 31, 2012, BIM received $16,660 in securities lending agent fees related to securities lending activities for the Fund.

Certain officers and/or trustees of the Trust are officers and/or directors of BlackRock or its affiliates. The Fund reimburses the Manager for compensation paid to the Trust’s Chief Compliance Officer.

4. Investments:

Purchases and sales of investments including paydowns, mortgage dollar roll and TBA transactions and excluding short-term securities and US government securities for the six months ended March 31, 2012, were $721,603,882 and $801,638,862, respectively.

Purchases and sales of US government securities for the six months ended March 31, 2012, were $315,755,990 and $306,669,733, respectively.

Purchases and sales of mortgage dollar rolls for the six months ended March 31, 2012, were $419,585,162 and $419,819,811, respectively.

40                 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2012

Notes to Financial Statements (continued)

Transactions in options written for the six months ended March 31, 2012, were as follows:

	Calls					Puts
	Contracts	Notional (000)		Premiums   Received		Contracts	Notional (000)		Premiums   Received
Outstanding options, beginning of period	62		16,550	$	290,810	–		26,705		$357,923
Options written	169		25,735		701,062	383		63,211		1,496,764
Options expired	(99)		(14,685)		(213,067)	(29)		(37,787)		(497,569)
Options closed	(132)		(23,900)		(669,797)	(354)		(27,329)		(1,061,823)
Outstanding options, end of period	–		3,700	$	109,008	–		24,800		$295,295

5. Income Tax Information:

As of March 31, 2012, gross unrealized appreciation and gross unrealized depreciation based on cost for federal income tax purposes were as follows:

Tax cost	$	567,867,719
Gross unrealized appreciation	$	51,997,094
Gross unrealized depreciation		(6,200,509	)
Net unrealized appreciation	$	45,796,585

6. Borrowings:

The Trust, on behalf of the Fund, 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. The Fund 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 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 1.00% per annum and (b) the Fed Funds rate plus 1.00% per annum on amounts borrowed. In addition, the Fund paid administration and arrangement fees which were allocated to the Fund based on its 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 Fund paid administration and arrangement fees which were allocated to the Fund based on its net assets as of October 31, 2011. The Fund did not borrow under the credit agreement during the six months ended March 31, 2012.

For the six months ended March 31, 2012, the Fund’s daily average amount of transactions considered as borrowings from reverse repurchase agreements and treasury rolls transactions was approximately $52,844,009 and the daily weighted average interest rates were 0.01%.

7. Concentration, Market and Credit Risk:

The Fund invested a significant portion of its assets in securities backed by commercial or residential mortgage loans or in issuers that hold mortgage and other asset-backed securities. Please see the Schedule of Investments for these securities. Changes in economic conditions, including delinquencies and/or defaults on assets underlying these securities, can affect the value, income and/or liquidity of such positions.

In the normal course of business, the Fund invests in securities and enters 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 Fund may decline in response to certain events, including those directly involving the issuers whose securities are owned by the Fund; 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 Fund may be exposed to counterparty credit risk, or the risk that an entity with which the Fund has unsettled or open transactions may fail to or be unable to perform on its commitments. The Fund manages counterparty credit risk by entering into transactions only with counterparties that it believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Fund to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Fund’s exposure to market, issuer and counterparty credit risks with respect to these financial assets is generally approximated by their value recorded in the Fund’s Statement of Assets and Liabilities, less any collateral held by the Fund.

BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2012                 41

Notes to Financial Statements (concluded)

8. Capital Shares Transactions:

Transactions in capital shares for each class were as follows:

	Six Months Ended March 31, 2012					Year Ended September 30, 2011
	Shares			Amount		Shares			Amount
Institutional
Shares sold		486,813			$   7,012,021		767,577			$ 11,749,107
Shares issued in reinvestment of dividends		78,331			1,107,350		53,454			816,733
Shares redeemed		(787,227	)		(11,448,224)		(683,594	)		(10,429,065)
Net increase (decrease)		(222,083	)		$  (3,328,853)		137,437			$   2,136,775
Service
Shares sold		2,834			$        41,446		34,908			$      535,953
Shares issued in reinvestment of dividends		3,024			42,639		1,860			28,363
Shares redeemed		(10,076	)		(144,604)		(32,736	)		(492,985)
Net increase (decrease)		(4,218	)		$       (60,519)		4,032			$        71,331
Investor A
Shares sold and automatic conversion of shares		1,484,028			$ 21,736,882		3,114,748			$ 47,609,574
Shares issued in reinvestment of dividends		685,616			9,666,578		456,769			6,944,504
Shares redeemed		(2,281,104	)		(33,512,690)		(4,078,562	)		(62,130,535)
Net decrease		(111,460	)		$  (2,109,230)		(507,045	)		$  (7,576,457)
Investor B
Shares sold		18,088			$      265,082		55,091			$      828,679
Shares issued in reinvestment of dividends		48,979			682,990		27,249			406,173
Shares redeemed and automatic conversion of shares		(600,448	)		(8,777,810)		(1,295,998	)		(19,544,899)
Net decrease		(533,381	)		$  (7,829,738)		(1,213,658	)		$(18,310,047)
Investor C
Shares sold		596,196			$   8,558,405		1,040,589			$ 15,590,367
Shares issued in reinvestment of dividends		135,848			1,884,050		60,569			904,720
Shares redeemed		(627,711	)		(9,082,134)		(1,177,536	)		(17,588,420)
Net increase (decrease)		104,333			$   1,360,321		(76,378	)		$  (1,093,333)
Total net decrease		(766,809	)		$(11,968,019)		(1,655,612	)		$(24,771,731)

9. Subsequent Events:

Management has evaluated the impact of all subsequent events on the Fund through the date the financial statements were issued and has determined that there were no subsequent events requiring adjustment or additional disclosure in the financial statements.

42                 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2012

Officers and Trustees

Ronald W. Forbes, Co-Chairman of the Board and Trustee

Rodney D. Johnson, Co-Chairman of the Board and Trustee

Paul L. Audet, Trustee

David O. Beim, Trustee

Henry Gabbay, Trustee

Dr. Matina S. Horner, Trustee

Herbert I. London, Trustee

Cynthia A. Montgomery, Trustee

Joseph P. Platt, Trustee

Robert C. Robb, Jr., Trustee

Toby Rosenblatt, Trustee

Kenneth L. Urish, Trustee

Frederick W. Winter, Trustee

John M. Perlowski, President and Chief Executive Officer

Richard Hoerner, CFA, Vice President

Brendan Kyne, Vice President

Simon Mendelson, Vice President

Christopher Stavrakos, CFA, Vice President

Neal Andrews, Chief Financial Officer

Jay Fife, Treasurer

Brian Kindelan, Chief Compliance Officer and Anti-Money Laundering Officer

Ira P. Shapiro, Secretary

Investment Advisor and Co-Administrator

BlackRock Advisors, LLC

Wilmington, DE 19809

Sub-Advisor

BlackRock Financial Management, Inc.

New York, NY 10055

Accounting Agent, Co-Administrator and Transfer Agent

BNY Mellon Investment Servicing (US) Inc.

Wilmington, DE 19809

Custodian

The Bank of New York

New York, NY 10286

Distributor

BlackRock Investments, LLC

New York, NY 10022

Legal Counsel

Sidley Austin LLP

New York, NY 10019

Independent Registered Public Accounting Firm

Deloitte & Touche LLP

Philadelphia, PA 19103

Address of the Trust

100 Bellevue Parkway

Wilmington, DE 19809

BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2012                 43

Additional Information

  General Information

Electronic Delivery

Electronic copies of most financial reports and prospectuses are available on the Fund’s websites or shareholders can sign up for e-mail notifications of quarterly statements, annual and semi-annual reports and prospectuses by enrolling in the Fund’s 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 Fund 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 Fund at (800) 441-7762.

Availability of Quarterly Schedule of Investments

The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund’s 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 Fund’s 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 Fund uses 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 Fund voted proxies relating to securities held in the Fund’s 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 funds, 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.

44                 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2012

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.

BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2012                 45

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 All-Cap Energy & Resources Portfolio

BlackRock Balanced Capital Fund†

BlackRock Basic Value Fund

BlackRock Capital Appreciation Fund

BlackRock China Fund

BlackRock Commodity Strategies Fund

BlackRock Emerging Markets Fund

BlackRock Emerging Markets Long/Short Equity Fund

BlackRock Energy & Resources Portfolio

BlackRock Equity Dividend Fund

BlackRock EuroFund

BlackRock Focus Growth Fund

BlackRock Global Allocation Fund

BlackRock Global Dividend Income Portfolio†

BlackRock Global Dynamic Equity Fund

BlackRock Global Opportunities Portfolio

BlackRock Global SmallCap Fund

BlackRock Health Sciences Opportunities Portfolio

BlackRock Index Equity Portfolio

BlackRock India Fund

BlackRock International Fund

BlackRock International Index Fund

BlackRock International Opportunities Portfolio

BlackRock Large Cap Core Fund

BlackRock Large Cap Core Plus Fund

BlackRock Large Cap Growth Fund

BlackRock Large Cap Value Fund

BlackRock Latin America Fund

BlackRock Managed Volatility Portfolio†

BlackRock Mid-Cap Growth Equity Portfolio

BlackRock Mid-Cap Value Equity Portfolio

BlackRock Mid Cap Value Opportunities Fund

BlackRock Natural Resources Trust

BlackRock Pacific Fund

BlackRock Russell 1000 Index Fund

BlackRock Science & Technology Opportunities Portfolio

BlackRock Small Cap Growth Equity Portfolio

BlackRock Small Cap Growth Fund II

BlackRock Small Cap Index Fund

BlackRock S&P 500 Index Fund

BlackRock S&P 500 Stock Fund

BlackRock U.S. Opportunities Portfolio

BlackRock Value Opportunities Fund

BlackRock World Gold Fund

    Fixed Income Funds

BlackRock Bond Index Fund

BlackRock Core Bond Portfolio

BlackRock CoreAlpha Bond Fund

BlackRock Emerging Market Debt Portfolio

BlackRock Floating Rate Income Portfolio

BlackRock Global Long/Short Credit Fund

BlackRock GNMA Portfolio

BlackRock High Yield Bond Portfolio

BlackRock Inflation Protected Bond Portfolio

BlackRock International Bond Portfolio

BlackRock Long Duration Bond Portfolio

BlackRock Low Duration Bond Portfolio

BlackRock Multi-Asset Income Portfolio†

BlackRock Multi-Sector Bond Portfolio

BlackRock Strategic Income Opportunities Portfolio

BlackRock Total Return Fund

BlackRock US Government Bond Portfolio

BlackRock US Mortgage Portfolio

BlackRock World Income Fund

    Municipal Bond Funds

BlackRock California Municipal Bond Fund

BlackRock High Yield Municipal Fund

BlackRock Intermediate Municipal Fund

BlackRock National Municipal Fund

BlackRock New Jersey Municipal Bond Fund

BlackRock New York Municipal Bond Fund

BlackRock Pennsylvania Municipal Bond Fund

BlackRock Short-Term Municipal Fund

    Target Risk & Target Date Funds†

BlackRock Prepared Portfolios	BlackRock Lifecycle Prepared 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.

46                 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2012

[THIS PAGE INTENTIONALLY LEFT BLANK.]

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 the Fund unless accompanied or preceded by the 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.

Investment in foreign securities involves special risks including fluctuating foreign exchange rates, foreign government regulations, differing degrees of liquidity and the possibility of substantial volatility due to adverse political, economic or other developments.

AA-3/12-SAR

Item 2 – Code of Ethics – Not Applicable to this semi-annual report

Item 3 – Audit Committee Financial Expert – Not Applicable to this semi-annual report

Item 4 – Principal Accountant Fees and Services – Not Applicable to this semi-annual report

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.

(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 – Not Applicable to this semi-annual report

(a)(2) – Certifications – Attached hereto

(a)(3) – Not Applicable

(b) –      Certifications – Attached hereto

2

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

By:	/s/ John M. Perlowski
	John M. Perlowski
	Chief Executive Officer (principal executive officer) of
	BlackRock Funds

Date: June 4, 2012

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

Date: June 4, 2012

By:	/s/ Neal J. Andrews
	Neal J. Andrews
	Chief Financial Officer (principal financial officer) of
	BlackRock Funds

Date: June 4, 2012

3