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 Emerging Markets Dividend Fund

BlackRock Energy & Resources Portfolio

BlackRock Flexible Equity Fund

BlackRock Global Opportunities Portfolio

BlackRock Health Sciences Opportunities Portfolio

BlackRock International Opportunities Portfolio

BlackRock Managed Volatility Portfolio

BlackRock Mid-Cap Growth Equity Portfolio

BlackRock Science & Technology Opportunities Portfolio

BlackRock Small Cap Growth Equity Portfolio

BlackRock U.S. Opportunities Portfolio

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: 09/30/2015

Date of reporting period: 03/31/2015

Item 1 – Report to Stockholders

MARCH 31, 2015        

  SEMI-ANNUAL REPORT (UNAUDITED)   BLACKROCK^®

BlackRock Funds^SM

„   BlackRock All-Cap Energy & Resources Portfolio

„   BlackRock Emerging Markets Dividend Fund

„   BlackRock Energy & Resources Portfolio

Not FDIC Insured ¡ May Lose Value ¡ No Bank Guarantee

Table of Contents

	Page
The Markets in Review	3
Semi-Annual Report:
Fund Summaries	4
About Fund Performance	10
Disclosure of Expenses	11
Derivative Financial Instruments	11
Financial Statements:
Schedules of Investments	12
Statements of Assets and Liabilities	20
Statements of Operations	22
Statements of Changes in Net Assets	23
Financial Highlights	24
Notes to Financial Statements	36
Officers and Trustees	49
Additional Information	50

2 BLACKROCK FUNDS MARCH 31, 2015

The Markets in Review

Dear Shareholder,

Market volatility has remained low from a long-term perspective, but increased over the course of 2014 amid higher valuations in risk assets (such as equities and high yield bonds), geopolitical risks, uneven global economic growth and uncertainty around policy moves from the world’s largest central banks. As the U.S. Federal Reserve (the “Fed”) gradually reduced its bond buying program (which ultimately ended in October 2014), U.S. interest rates surprisingly trended lower and stock prices forged ahead despite high valuations on the back of a multi-year bull market. Geopolitical tensions intensified in Ukraine and the Middle East and oil prices became highly volatile in the middle of the summer, stoking worries about economic growth outside the United States. As the U.S. economy continued to show steady improvement, the stronger data caused concern among investors that the Fed would raise short-term rates sooner than previously anticipated. The U.S. dollar appreciated and global credit markets tightened, ultimately putting a strain on investor flows, and financial markets broadly weakened in the third quarter.

U.S. economic growth picked up considerably in the fourth quarter while the broader global economy showed signs of slowing. U.S. markets significantly outperformed international markets even as the European Central Bank (“ECB”) and the Bank of Japan eased monetary policy, which drove further strengthening in the U.S. dollar. Oil prices plummeted in the fourth quarter due to a global supply-and-demand imbalance, sparking a selloff in energy-related assets and stress in emerging markets. Fixed income investors piled into U.S. Treasuries as their persistently low yields became relatively attractive as compared to international sovereign debt.

Equity markets reversed in the first quarter of 2015 and U.S. stocks underperformed international markets, notably Europe and Japan, but also emerging markets. Investors had held high expectations for the U.S. economy, but after a harsh winter, first-quarter data disappointed and high valuations took their toll on U.S. stocks. Meanwhile, economic reports in Europe and Asia easily beat investors’ very low expectations for those economies, and accommodative policies from global central banks helped international equities rebound. The ECB’s asset purchase program (announced in January and commenced in March) was the largest in scale and effect on the markets. Overall, market volatility decreased in the first quarter as global risks abated, with a ceasefire in Ukraine and an improving outlook for Greece’s continued membership in the Eurozone.

At BlackRock, we believe investors need to think globally, extend their scope across a broad array of asset classes and be prepared to move freely as market conditions change over time. We encourage you to talk with your financial advisor and visit blackrock.com for further insight about investing in today’s markets.

Sincerely,

Rob Kapito

President, BlackRock Advisors, LLC

Rob Kapito

President, BlackRock Advisors, LLC

Total Returns as of March 31, 2015
	6-month			12-month
U.S. large cap equities (S&P 500® Index)		5.93	%		12.73	%
U.S. small cap equities (Russell 2000® Index)		14.46			8.21
International equities (MSCI Europe, Australasia, Far East Index)		1.13			(0.92	)
Emerging market equities (MSCI Emerging Markets Index)		(2.37	)		0.44
3-month Treasury bill (BofA Merrill Lynch 3-Month U.S. Treasury Bill Index)		0.01			0.03
U.S. Treasury securities (BofA Merrill Lynch 10- Year U.S. Treasury Index)		6.25			9.88
U.S. investment grade bonds (Barclays U.S. Aggregate Bond Index)		3.43			5.72
Tax-exempt municipal bonds (S&P Municipal Bond Index)		2.29			6.60
U.S. high yield bonds (Barclays U.S. Corporate High Yield 2% Issuer Capped Index)		1.50			2.00
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, 2015 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?

Ÿ For the six-month period ended March 31, 2015, the Fund underperformed the MSCI World Energy Index.

What factors influenced performance?

Ÿ The Fund’s overweight positions in the North American exploration and production (E&P) stocks Encana Corp. and Laredo Petroleum, Inc. weighed on relative returns, as the companies’ growth rates appeared to be at risk following the drop in oil prices. Encana Corp. came under further pressure after announcing it was raising funds by issuing new equity.

Ÿ Toward the end of the period, a divergence in oil prices between Brent (international crude) and West Texas Intermediate (U.S. crude) was beneficial for the Gulf Coast refiners Valero Energy Corp. and Marathon Oil Corp., as these companies took advantage of the spread between the prices of the two types of oil. The Fund’s underweight in these stocks detracted from relative performance.

Ÿ Well-capitalized E&P companies with stronger-than-average balance sheets and tier one assets generally outperformed during the first quarter. Devon Energy Corp. and Cimarex Energy Co., both of which outpaced the broader sector, were prime examples of this trend. The Fund held overweights in the two stocks, aiding performance.

Ÿ Eni S.p.A., a European integrated energy company, announced a cut to its dividend near the end of the period. This was the first instance of a dividend cut by one of the major energy companies during this downturn. The stock fell sharply as a result, so the Fund’s underweight was a positive contributor to relative performance. At the close of the period, the Fund remained underweight in Eni S.p.A. in favor of more compelling value opportunities elsewhere in the sector.

Describe recent portfolio activity.

Ÿ The Fund initiated a position in Marathon Oil Corp., a high-quality, U.S.-focused oil producer, during the period. This purchase was funded through the sales of CONSOL Energy, Inc. and Laredo Petroleum, Inc. and the distribution company TransCanada Corp. The Fund also exited its position in the offshore service company Cameron International Corp. on concerns that the company’s business model will be particularly challenged by lower oil prices. The proceeds of these sales were rotated into a new position in the U.S.-focused land driller Helmerich & Payne, Inc.

Describe portfolio positioning at period end.

Ÿ The Fund retained a bias toward higher-quality companies, and a number of the major integrated energy companies remained in its top-ten holdings. The Fund’s investment advisor believed these companies’ strong asset bases and financial flexibility gave them the ability to adapt to a weak oil price environment.

Ÿ The Fund maintained an overweight to the E&P industry, and it also had significant exposure to U.S. onshore unconventional producers and international E&P companies. The Fund retained a strong focus on assessing valuations, asset bases and companies’ financial flexibility.

Ÿ Believing lower oil prices will lead to falling profit margins for offshore oil services companies, the Fund’s investment advisor remained cautious with respect to this industry group. In addition, these companies tend to be key beneficiaries of the major integrated companies’ capital expenditures (capex). As a result, the capex cuts that have occurred across the energy sector represent a potential headwind for oil services companies.

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.	11	%
Chevron Corp.	8
Royal Dutch Shell PLC, A Shares - ADR	7
ConocoPhillips	6
Anadarko Petroleum Corp.	5
BP PLC	5
TOTAL SA	5
Pioneer Natural Resources Co.	4
Marathon Oil Corp.	4
Enbridge, Inc.	4

Industry Allocation Percent of Long-Term  Investments

Oil, Gas & Consumable Fuels	93	%
Energy Equipment & Services	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 the investment advisor. These definitions may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

4 BLACKROCK FUNDS MARCH 31, 2015

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 and administration fees, if any. 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  A free float-adjusted market capitalization index that represents the energy segment in global developed market equity performance.

Performance Summary for the Period Ended March 31, 2015
				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		(18.91	)%		(17.18	)%		N/A			(0.41	)%		N/A			5.44	%		N/A
Service		(19.08	)		(17.46	)		N/A			(0.80	)		N/A			5.02			N/A
Investor A		(19.04	)		(17.52	)		(21.85	)%		(0.83	)		(1.90	)%		5.00			4.43	%
Investor B		(19.38	)		(18.12	)		(21.80	)		(1.57	)		(1.97	)		4.39			4.39
Investor C		(19.38	)		(18.12	)		(18.94	)		(1.55	)		(1.55	)		4.24			4.24
MSCI World Energy Index		(17.67	)		(16.58	)		N/A			2.96			N/A			4.59			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, 2014	Ending Account Value March 31, 2015	Expenses Paid During the Period5	Beginning Account Value October 1, 2014	Ending Account Value March 31, 2015	Expenses Paid During the Period5	Annualized Expense Ratio
Institutional	$1,000.00	$810.90	$4.33	$1,000.00	$1,020.14	$4.84	0.96%
Service	$1,000.00	$809.20	$6.22	$1,000.00	$1,018.05	$6.94	1.38%
Investor A	$1,000.00	$809.60	$6.23	$1,000.00	$1,018.05	$6.94	1.38%
Investor B	$1,000.00	$806.20	$9.46	$1,000.00	$1,014.46	$10.55	2.10%
Investor C	$1,000.00	$806.20	$9.46	$1,000.00	$1,014.46	$10.55	2.10%

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 182/365 (to reflect the one-half year period shown).

⁶  Hypothetical 5% annual return before expenses is calculated by prorating the number of days in the most recent fiscal half year divided by 365.

See “Disclosure of Expenses” on page 11 for further information on how expenses were calculated.

BLACKROCK FUNDS MARCH 31, 2015 5

Fund Summary as of March 31, 2015 BlackRock Emerging Markets Dividend Fund

Investment Objective

BlackRock Emerging Markets Dividend Fund’s (the “Fund”) investment objective is primarily to seek investment income and, as a secondary objective, to seek capital appreciation.

Portfolio Management Commentary

How did the Fund perform?

Ÿ For the six-month period ended March 31, 2015, the Fund underperformed its benchmark, the MSCI Emerging Markets Index.

What factors influenced performance?

Ÿ Stock selection in China was the largest detractor from performance during the semi-annual period, with the largest negative contribution coming from the Fund’s lack of a position in the internet provider Tencent Holdings Ltd. Stock selection in South Korea also weighed on returns. A lack of exposure to Samsung Co. Ltd., which the Fund does not own due to its low yield, was a notable detractor. The Brazilian industrial stock Marcopolo SA, which suffered as a result of macroeconomic headwinds in Brazil, was the largest detractor among individual stocks.

Ÿ The most significant contributions to relative performance came from stock selection in Russia, Taiwan and South Africa. The largest individual contributor was the Fund’s lack of exposure to the Brazilian oil & gas stock Petrobras SA, which suffered from an ongoing corruption scandal investigation and the volatility in oil prices. Positions in the Chinese paper products manufacturer Hengan International Group Co. Ltd. and Taiwan Semiconductor Manufacturing Co. Ltd. also contributed positively.

Describe recent portfolio activity.

Ÿ During the period, the Fund added to its positions in Taiwan, China and Thailand while reducing its weighting in Brazil and deploying cash. At the sector level, the Fund increased its weightings in information technology and financials while reducing its positions in materials and energy. The Fund initiated a position in Industrial & Commercial Bank of China Ltd. and increased its weighting in the Russian food retailer Magnit PJSC. These moves were partially funded by reducing exposure to MMC Norilsk Nickel OJSC, a Russian mining company, and exiting China Petroleum & Chemical Corp.

Describe portfolio positioning at period end.

Ÿ Divergence in the performance of individual countries continued to be a theme within the emerging markets. However, the moderation of economic growth, policy reforms and interest rate changes became larger drivers of performance across the asset class. The Fund’s investment advisor retained a positive view on the emerging markets, as valuations remained inexpensive relative to both their own history and valuations in the developed markets.

Ÿ The Fund held overweight positions in Thailand, Mexico and Taiwan at the close of the period, while its largest underweights were in South Korea, China, Malaysia and Brazil. The underweight position in South Korea was a result of the low dividend yields in that market. At the sector level, the Fund was overweight in industrials and financials and underweight in information technology and utilities.

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

Taiwan Semiconductor Manufacturing Co. Ltd. - ADR	6	%
Industrial & Commercial Bank of China Ltd., H Shares	4
Hengan International Group Co. Ltd.	4
SK Telecom Co. Ltd.	3
Itau Unibanco Holding SA - ADR	3
Powszechny Zaklad Ubezpieczen SA	3
FirstRand Ltd.	3
Grupo Aeroportuario del Pacifico SAB de CV, Class B	3
Sanlam Ltd.	3
China Merchants Holdings International Co. Ltd.	3

Geographic Allocation Percent of
Long-Term Investments

Taiwan	19	%
China	17
Mexico	12
Thailand	9
South Africa	8
Russia	5
South Korea	5
Brazil	5
Indonesia	3
Poland	3
Other1	14

¹  Includes holdings within countries that are 2% or less of long-term investments. Please refer to the Schedule of Investments for such countries.

6 BLACKROCK FUNDS MARCH 31, 2015

BlackRock Emerging Markets Dividend 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 and administration fees, if any. Institutional Shares do not have a sales charge. The Fund’s total returns prior to August 16, 2013, are the returns of the Fund when it followed different investment strategies under the name BlackRock China Fund.

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, or derivatives having economic characteristics similar to the dividend-paying equity securities of companies domiciled in, or tied economically to, emerging market countries.

³  A free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets. The MSCI Emerging Markets Index consists of the following 23 emerging market country indices: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Russia, South Africa, Taiwan, Thailand, Turkey and United Arab Emirates.

⁴  Commencement of operations.

Performance Summary for the Period Ended March 31, 2015
				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		(3.65	)%		(1.99	)%		N/A			(2.76	)%		N/A
Investor A		(3.80	)		(2.24	)		(7.37	)%		(3.01	)		(4.34	)%
Investor C		(4.31	)		(3.04	)		(3.99	)		(3.71	)		(3.71	)
MSCI Emerging Markets Index		(2.37	)		0.44			N/A			(2.85	)		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 10 for a detailed description of share classes, including any related sales charges and fees.

⁶  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			Hypothetical8
	Beginning Account Value October 1, 2014	Ending Account Value March 31, 2015	Expenses Paid During the Period7	Beginning Account Value October 1, 2014	Ending Account Value March 31, 2015	Expenses Paid During the Period7	Annualized Expense Ratio
Institutional	$1,000.00	$963.50	$7.39	$1,000.00	$1,017.40	$7.59	1.51%
Investor A	$1,000.00	$962.00	$8.61	$1,000.00	$1,016.16	$8.85	1.76%
Investor C	$1,000.00	$956.90	$12.25	$1,000.00	$1,012.42	$12.59	2.51%

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 182/365 (to reflect the one-half year period shown). The fees and expenses of the underlying funds in which the Fund invests are not included in the Fund’s annualized expense ratio.

⁸  Hypothetical 5% annual return before expenses is calculated by prorating the number of days in the most recent fiscal half year divided by 365.

See “Disclosure of Expenses” on page 11 for further information on how expenses were calculated.

BLACKROCK FUNDS MARCH 31, 2015 7

Fund Summary as of March 31, 2015 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?

Ÿ For the six-month period ended March 31, 2015, the Fund’s Institutional, Investor A and Investor C Shares outperformed the MSCI World Small and Mid-Cap Energy Index, while the Investor B Shares performed inline with the benchmark index.

What factors influenced performance?

Ÿ Well-capitalized exploration and production (E&P) companies with stronger-than-average balance sheets and tier one assets generally outperformed during the period. Carrizo Oil & Gas, Inc. and EOG Resources, Inc., both of which outpaced the broader sector, were prime examples of this trend. The Fund held over-weights in the two stocks, aiding performance.

Ÿ The Fund’s overweight position in the distribution company Enbridge, Inc. was a notable contributor to relative performance. As a distribution company, its share price was less impacted by the decline in oil prices. The market also reacted favorably to the company’s increase in its quarterly dividend and its announcement of a financial restructuring plan.

Ÿ The Fund’s overweight position in Canadian Oil Sands Ltd. was the largest detractor during the period. The company has relatively high operational costs, which meant that the stock was especially vulnerable to the drop in oil prices. The market also reacted negatively to the company’s announcement of its 2015 outlook. While Canadian Oil Sands Ltd. indicated that it would generate production growth in 2015, its estimate was below investor expectations. The company also made a substantial cut to its dividend.

Ÿ An overweight positions in North American E&P companies Encana Corp. and Ithaca Energy, Inc. weighed on relative returns, as the companies’ growth rates

appeared to be at risk following the drop in oil prices. Encana Corp. came under further pressure after announcing it was raising funds by issuing new equity.

Describe recent portfolio activity.

Ÿ The Fund initiated a position in Marathon Oil Corp., a high-quality, U.S.-focused oil producer, during the period. This purchase was funded through the sales of two U.S. E&P stocks, Denbury Resources, Inc. and Stone Energy Corp. The Fund also initiated a position in the distribution company Enbridge, Inc. due to its lower sensitivity to oil prices weakness compared to the energy sector as a whole.

Describe portfolio positioning at period end.

Ÿ The Fund retained a bias toward higher-quality companies, and it maintained an overweight to the E&P industry. The Fund also had significant exposure to U.S. onshore unconventional producers and international E&P companies. The Fund retained a strong focus on assessing valuations, asset bases and companies’ financial flexibility.

Ÿ Believing lower oil prices will lead to falling profit margins for offshore oil services companies, the Fund’s investment advisor remained cautious with respect to this industry group. In addition, these companies tend to be key beneficiaries of the major integrated companies’ capital expenditures (capex). As a result, the capex cuts that have occurred across the energy sector represent a potential headwind for oil services companies.

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

Enbridge, Inc.	7	%
Cimarex Energy Co.	6
Cabot Oil & Gas Corp.	5
EQT Corp.	5
AltaGas Ltd.	5
Murphy Oil Corp.	5
Range Resources Corp.	4
Marathon Oil Corp.	4
Carrizo Oil & Gas, Inc.	4
Southwestern Energy Co.	4

Industry Allocation Percent of
Long-Term Investments

Oil, Gas & Consumable Fuels	93	%
Energy Equipment & Services	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 the investment advisor. These definitions may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

8 BLACKROCK FUNDS MARCH 31, 2015

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 and administration fees, if any. Institutional Shares do not have a sales charge.

²  Under normal 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  An index comprised of the energy sector constituents of the MSCI World SMID Index, a free float-adjusted market capitalization weighted index designed to measure the equity market performance of the mid and small cap developed market.

Performance Summary for the Period Ended March 31, 2015
				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		(28.72	)%		(31.79	)%		N/A			(5.17	)%		N/A			2.28	%		N/A
Investor A		(28.82	)		(31.99	)		(35.56	)%		(5.48	)		(6.49	)%		1.96			1.41	%
Investor B		(29.12	)		(32.56	)		(35.59	)		(6.20	)		(6.56	)		1.35			1.35
Investor C		(29.07	)		(32.49	)		(33.16	)		(6.18	)		(6.18	)		1.22			1.22
MSCI World Small and Mid-Cap Energy Index		(29.14	)		(31.91	)		N/A			(1.74	)		N/A			3.71			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, 2014	Ending Account Value March 31, 2015	Expenses Paid During the  Period5	Beginning Account Value October 1, 2014	Ending Account Value March 31, 2015	Expenses Paid During the  Period5	Annualized Expense Ratio
Institutional	$1,000.00	$712.80	$4.57	$1,000.00	$1,019.60	$5.39	1.07%
Investor A	$1,000.00	$711.80	$5.89	$1,000.00	$1,018.05	$6.94	1.38%
Investor B	$1,000.00	$708.80	$8.95	$1,000.00	$1,014.46	$10.55	2.10%
Investor C	$1,000.00	$709.30	$8.95	$1,000.00	$1,014.46	$10.55	2.10%

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 182/365 (to reflect the one-half year period shown). The fees and expenses of the underlying funds in which the Fund invests are not included in the Fund’s annualized expense ratio.

⁶  Hypothetical 5% annual return before expenses is calculated by prorating the number of days in the most recent fiscal half year divided by 365.

See “Disclosure of Expenses” on page 11 for further information on how expenses were calculated.

BLACKROCK FUNDS MARCH 31, 2015 9

About Fund Performance

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

Ÿ Service Shares are not subject to any sales charge. These shares are subject to a service fee of 0.25% per year (but no distribution fee) and are only available to certain eligible investors.

Ÿ Investor A Shares are subject to a maximum initial sales charge (front-end load) of 5.25% and a service fee of 0.25% per year (but no distribution fee). Certain redemptions of these shares may be subject to a contingent deferred sales charge (“CDSC”) where no initial sales charge was paid at the time of purchase. These shares are generally available through financial intermediaries.

Ÿ Investor B Shares are subject to a maximum CDSC of 4.50%, declining to 0% after six years. In addition, these shares are subject to a distribution fee of 0.75% per year and a service fee of 0.25% per year. These 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. These shares are only available through exchanges and distribution reinvestments by current holders and for purchase by certain employer-sponsored retirement plans.

Ÿ Investor C Shares are subject to a 1.00% CDSC if redeemed within one year of purchase. In addition, these shares are subject to a distribution fee of 0.75% per year and a service fee of 0.25% per year. These shares are generally available through financial intermediaries.

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 pages assume reinvestment of all 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. Distributions 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.

BlackRock Advisors, LLC (the “Manager”), the Funds’ investment advisor, has contractually agreed to waive and/or reimburse a portion of certain Funds’ expenses. Without such waiver and/or reimbursement, such Funds’ performance would have been lower. The Manager is under no obligation to continue waiving and/or reimbursing its fees after the applicable termination date of such agreement. See Note 5 of the Notes to Financial Statements for additional information on waivers and/or reimbursements.

10 BLACKROCK FUNDS MARCH 31, 2015

Disclosure of Expenses

Shareholders of the Funds may incur the following charges: (a) transactional expenses, such as sales charges; and (b) operating expenses, including investment advisory fees, administration 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, 2014 and held through March 31, 2015) are intended to assist shareholders both in calculating expenses based on an investment in each Fund and in comparing these expenses with similar costs of investing in other mutual funds.

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

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

The expenses shown in the expense examples are intended to highlight shareholders’ ongoing costs only and do not reflect any transactional expenses, such as sales charges, 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. Derivative financial instruments are used to obtain exposure to a security, index and/or market without owning or taking physical custody of securities or to manage equity, credit, interest rate, foreign currency exchange rate, commodity and/or other risks. Derivative financial instruments may give rise to a form of economic leverage. Derivative financial instruments also 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 limit the amount of appreciation a Fund can realize on an investment and/or may result in lower distributions paid to shareholders. The Funds’ investments in these instruments are discussed in detail in the Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 11

Schedule of Investments March 31, 2015 (Unaudited)	BlackRock All-Cap Energy & Resources  Portfolio
	(Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Energy Equipment & Services — 7.0%
Halliburton Co.		38,300	$	1,680,604
Helmerich & Payne, Inc.		49,000		3,335,430
Schlumberger Ltd.		65,641		5,477,085
				10,493,119
Oil, Gas & Consumable Fuels — 92.4%
Anadarko Petroleum Corp.		96,100		7,958,041
BG Group PLC		116,825		1,433,873
BP PLC		1,125,600		7,296,290
Cabot Oil & Gas Corp.		130,900		3,865,477
Cairn Energy PLC (a)		512,600		1,187,670
Canadian Natural Resources Ltd.		50,300		1,541,705
Chevron Corp.		109,098		11,453,108
Cimarex Energy Co.		29,200		3,360,628
ConocoPhillips		156,600		9,749,916
Devon Energy Corp.		92,100		5,554,551
Enbridge, Inc.		116,900		5,634,791
Encana Corp.		404,400		4,514,797
EOG Resources, Inc.		59,140		5,422,546
Exxon Mobil Corp.		190,900		16,226,500
Kosmos Energy Ltd. (a)		173,414		1,371,705
Marathon Oil Corp.		222,200		5,801,642
Murphy Oil Corp.		45,900		2,138,940
Noble Energy, Inc.		81,500		3,985,350

Common Stocks	Shares		Value
Oil, Gas & Consumable Fuels (concluded)
Oil Search Ltd.		520,787	$	2,841,519
Phillips 66		55,500		4,362,300
Pioneer Natural Resources Co.		37,600		6,147,976
Range Resources Corp.		60,000		3,122,400
Royal Dutch Shell PLC, A Shares — ADR		184,542		11,007,930
Southwestern Energy Co. (a)		138,700		3,216,453
Statoil ASA		151,612		2,680,714
TOTAL SA		141,700		7,043,456
				138,920,278
Total Long-Term Investments (Cost — $154,561,727) — 99.4%				149,413,397
Short-Term Securities
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.06% (b)(c)		1,312,983		1,312,983
Total Short-Term Securities (Cost — $1,312,983) — 0.9%				1,312,983
Total Investments (Cost — $155,874,710) — 100.3%				150,726,380
Liabilities in Excess of Other Assets — (0.3)%				(515,247	)
Net Assets — 100.0%			$	150,211,133

Notes to Schedule of Investments

(a) Non-income producing security.

(b) During the six months ended March 31, 2015, investments in issuers considered to be an affiliate of the Fund 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, 2014		Net Activity			Shares/ Beneficial Interest Held at March  31, 2015		Income
BlackRock Liquidity Funds, TempFund, Institutional Class		3,666,592		(2,353,609	)		1,312,983	$	1,483
BlackRock Liquidity Series, LLC, Money Market Series		—		—			—	$	41

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

Portfolio Abbreviations
ADR	American Depositary Receipts	NVDR	Non-Voting Depository Receipts	ZAR	South African Rand
GDR	Global Depositary Receipts	USD	U.S. Dollar

See Notes to Financial Statements.

12 BLACKROCK FUNDS MARCH 31, 2015

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

Ÿ 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 the investment advisor. These definitions may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

Ÿ Fair Value Measurements — Various inputs are used in determining the fair value of investments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. 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. The three levels of the fair value hierarchy are as follows:

Ÿ Level 1 — unadjusted quoted prices in active markets/exchanges for identical assets or liabilities that the Fund has the ability to access

Ÿ 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)

Ÿ 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. In accordance with the Fund’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. For information about the Fund’s policy regarding valuation of investments, refer to Note 2 of the Notes to Financial Statements.

As of March 31, 2015, the following table summarizes the Fund’s investments categorized in the disclosure hierarchy:

	Level 1		Level 2		Level 3	Total
Assets:
Investments:
Long-Term Investments:
Common Stocks:
Energy Equipment & Services	$	10,493,119		—	—	$	10,493,119
Oil, Gas & Consumable Fuels		116,436,756	$	22,483,522	—		138,920,278
Short-Term Securities		1,312,983		—	—		1,312,983
Total	$	128,242,858	$	22,483,522	—	$	150,726,380

The Fund may hold assets and/or liabilities in which the fair value approximates the carrying amount for financial statement purposes. As of March 31, 2015, foreign currency at value of $24,324 is categorized as Level 1 within the disclosure hierarchy.

During the six months ended March 31, 2015, there were no transfers between levels.

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 13

Schedule of Investments March 31, 2015 (Unaudited)	BlackRock Emerging Markets Dividend Fund
	(Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Brazil — 4.7%
BB Seguridade Participacoes SA		5,020	$	51,450
Itau Unibanco Holding SA — ADR		11,983		132,532
Marcopolo SA, Preference		29,175		21,116
				205,098
Cambodia — 0.7%
NagaCorp Ltd.		48,000		31,870
Chile — 2.0%
Banco de Chile — ADR		1,301		87,245
China — 16.5%
Beijing Capital International Airport Co. Ltd., H Shares		66,000		64,452
China Hongqiao Group Ltd.		40,500		24,261
China Merchants Holdings International Co. Ltd.		28,432		111,419
China Mobile Ltd.		3,500		45,613
Hengan International Group Co. Ltd.		13,000		156,479
Industrial & Commercial Bank of China Ltd., H Shares		218,000		161,251
Jiangsu Expressway Co. Ltd., H Shares		56,000		75,198
Want Want China Holdings Ltd.		78,000		83,005
				721,678
Czech Republic — 1.1%
Komercni Banka AS		224		48,316
Greece — 0.5%
OPAP SA		2,589		24,165
Hong Kong — 0.9%
Chow Tai Fook Jewellery Group Ltd.		17,600		18,977
Sands China Ltd.		5,200		21,503
				40,480
India — 2.3%
Infosys Ltd. — ADR		2,932		102,855
Indonesia — 3.5%
Bank Central Asia Tbk PT		63,301		71,742
Bank Mandiri Persero Tbk PT		40,666		38,782
Media Nusantara Citra Tbk PT		186,524		40,832
				151,356
Kazakhstan — 0.3%
KCell JSC — GDR		1,523		14,240
Mexico — 11.4%
Bolsa Mexicana de Valores SAB de CV		34,189		58,276
Fibra Uno Administracion SA de CV		16,418		43,484
Fomento Economico Mexicano SAB de CV — ADR (a)		666		62,271
Grupo Aeroportuario del Pacifico SAB de CV, Class B		18,101		118,941
Grupo Aeroportuario del Sureste SAB de CV — ADR (a)		699		93,960
Kimberly-Clark de Mexico SAB de CV, Class A		27,619		57,706
Mexico Real Estate Management SA de CV		41,142		64,814
				499,452
Peru — 1.6%
Credicorp Ltd.		497		69,893

Common Stocks	Shares		Value
Philippines — 1.5%
Alliance Global Group, Inc.		113,000	$	66,845
Poland — 3.4%
Powszechna Kasa Oszczednosci Bank Polski SA		2,944		26,350
Powszechny Zaklad Ubezpieczen SA		964		124,382
				150,732
Russia — 5.4%
Lukoil OAO — ADR		2,396		110,983
Magnit PJSC — GDR		1,566		79,944
MMC Norilsk Nickel OJSC — ADR		2,574		45,727
				236,654
South Africa — 8.3%
FirstRand Ltd.		26,670		122,603
Mr. Price Group Ltd.		2,517		53,834
Sanlam Ltd.		18,110		116,715
Truworths International Ltd.		9,508		69,015
				362,167
South Korea — 3.8%
SK Telecom Co. Ltd.		568		139,766
SK Telecom Co. Ltd. — ADR		929		25,278
				165,044
Taiwan — 19.1%
Chipbond Technology Corp.		37,000		77,995
Delta Electronics, Inc.		8,000		50,412
Eclat Textile Co. Ltd.		2,000		26,208
Far EasTone Telecommunications Co. Ltd.		39,000		94,085
Himax Technologies, Inc. — ADR		2,853		18,059
Lite-On Technology Corp.		28,000		36,221
Makalot Industrial Co. Ltd.		4,000		28,713
MediaTek, Inc.		3,000		40,517
Quanta Computer, Inc.		21,000		50,687
Taiwan Semiconductor Manufacturing Co. Ltd.		9,000		41,828
Taiwan Semiconductor Manufacturing Co. Ltd. — ADR		10,311		242,102
Tripod Technology Corp.		20,000		40,226
Yageo Corp.		42,902		88,400
				835,453
Thailand — 8.8%
Advanced Info Service PCL — NVDR		7,900		57,412
Bangkok Expressway PCL — NVDR		14,500		17,362
BEC World PCL — NVDR		33,200		41,819
Kasikornbank PCL — NVDR		15,700		110,394
PTT PCL — NVDR		4,500		44,639
Siam City Cement PCL — NVDR		2,284		26,796
The Siam Commercial Bank PCL — NVDR		11,700		63,989
Thai Oil PCL — NVDR		13,800		22,026
				384,437
Turkey — 0.6%
Tupras Turkiye Petrol Rafinerileri AS		1,198		28,383

See Notes to Financial Statements.

14 BLACKROCK FUNDS MARCH 31, 2015

Schedule of Investments (continued)	BlackRock Emerging Markets Dividend Fund
	(Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
United Arab Emirates — 1.3%
Dragon Oil PLC		6,228	$	54,941
Total Common Stocks — 97.7%				4,281,304
Participation Notes (a)
South Korea — 1.3%
Deutsche Bank AG (Hyundai Motor & Finance Co.), due 8/12/23		2,530		56,554
Total Long-Term Investments (Cost — $4,215,044) — 99.0%				4,337,858

Short-Term Securities	Shares		Value
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.06% (b)(c)		52,359	$	52,359
Total Short-Term Securities (Cost — $52,359) — 1.2%				52,359
Total Investments (Cost — $4,267,403) — 100.2%				4,390,217
Liabilities in Excess of Other Assets — (0.2)%				(6,788	)
Net Assets — 100.0%			$	4,383,429

Notes to Schedule of Investments

(a) Non-income producing security.

(b) During the six months ended March 31, 2015, investments in issuers considered to be an affiliate of the Fund 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, 2014		Net Activity			Shares/ Beneficial Interest Held at March  31, 2015		Income
BlackRock Liquidity Funds, TempFund, Institutional Class		147,277		(94,918	)		52,359	$	24
BlackRock Liquidity Series, LLC, Money Market Series		—		—			—	$	90

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

Ÿ As of March 31, 2015, forward foreign currency exchange contracts outstanding were as follows:

Currency Purchased		Currency Sold			Counterparty	Settlement Date		Unrealized Appreciation (Depreciation)
USD	69,139		ZAR	802,351	Deutsche Bank AG		4/22/15	$	3,241
ZAR	802,351		USD	69,065	BNP Paribas S.A.		4/22/15		(3,167	)
Total								$	74

Ÿ Fair Value Measurements — Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instruments and is not necessarily an indication of the risks associated with investing in those securities. The three levels of the fair value hierarchy are as follows:

Ÿ Level 1 — unadjusted quoted prices in active markets/exchanges for identical assets or liabilities that the Fund has the ability to access

Ÿ 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)

Ÿ 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. In accordance with the Fund’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. For information about the Fund’s policy regarding valuation of investments and derivative financial instruments, refer to Note 2 of the Notes to Financial Statements.

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 15

Schedule of Investments (continued) BlackRock Emerging Markets Dividend Fund

As of March 31, 2015, the following tables summarize the Fund’s investments and derivative financial instruments categorized in the disclosure hierarchy:

	Level 1			Level 2			Level 3		Total
Assets:
Investments:
Long-Term Investments:
Common Stocks:
Brazil		$	205,098			—		—		$	205,098
Cambodia			—		$	31,870		—			31,870
Chile			87,245			—		—			87,245
China			—			721,678		—			721,678
Czech Republic			—			48,316		—			48,316
Greece			—			24,165		—			24,165
Hong Kong			—			40,480		—			40,480
India			102,855			—		—			102,855
Indonesia			—			151,356		—			151,356
Kazakhstan			14,240			—		—			14,240
Mexico			499,452			—		—			499,452
Peru			69,893			—		—			69,893
Philippines			—			66,845		—			66,845
Poland			—			150,732		—			150,732
Russia			236,654			—		—			236,654
South Africa			—			362,167		—			362,167
South Korea			25,278			139,766		—			165,044
Taiwan			260,161			575,292		—			835,453
Thailand			—			384,437		—			384,437
Turkey			—			28,383		—			28,383
United Arab Emirates			—			54,941		—			54,941
Participation Notes:
South Korea			—			56,554		—			56,554
Short-Term Securities			52,359			—		—			52,359
Total		$	1,553,235		$	2,836,982		—		$	4,390,217
	Level 1			Level 2			Level 3		Total
Derivative Financial Instruments1
Assets:
Forward foreign currency exchange contracts			—			$3,241		—		$	3,241
Liabilities:
Forward foreign currency exchange contracts			—			(3,167)		—			(3,167	)
Total			—			$74		—		$	74
1    Derivative financial instruments are forward foreign currency exchange contracts, which are valued at the unrealized appreciation/depreciation on the instrument.
The Fund may hold assets and/or liabilities in which the fair value approximates the carrying amount for financial statement purposes. As of March 31, 2015, such assets are categorized within the disclosure hierarchy as follows:
	Level 1			Level 2			Level 3		Total
Assets:
Cash		$	12,988			—		—		$	12,988
Foreign currency at value			6,045			—		—			6,045
Total		$	19,033			—		—		$	19,033

See Notes to Financial Statements.

16 BLACKROCK FUNDS MARCH 31, 2015

Schedule of Investments (concluded) BlackRock Emerging Markets Dividend Fund

Transfers between Level 1 and Level 2 were as follows:

	Transfers into Level 1		Transfers out of Level 11			Transfers into Level 21		Transfers out of Level 2
Assets:
Long-Term Investments:
Thailand		—	$	(50,794	)	$	50,794		—
1   External pricing service used to reflect any significant market movements between the time the Fund valued such foreign securities and the earlier closing of foreign markets.

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 17

Schedule of Investments March 31, 2015 (Unaudited)	BlackRock Energy & Resources Portfolio
	(Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Commercial Services & Supplies — 0.0%
Republic Resources, Inc. (Acquired 7/18/97 to 2/24/99, cost $779,869) (a)(b)		28,750		—
Energy Equipment & Services — 6.8%
Cameron International Corp. (b)		181,200	$	8,175,744
Helmerich & Payne, Inc.		180,500		12,286,635
Poseidon Concepts Corp. (b)		35,081		14
Superior Energy Services, Inc.		330,357		7,380,175
				27,842,568
Oil, Gas & Consumable Fuels — 93.4%
AltaGas Ltd.		618,100		20,623,668
Cabot Oil & Gas Corp.		763,700		22,552,061
Cairn Energy PLC (b)		4,115,600		9,535,652
Canadian Oil Sands Ltd.		758,000		5,894,990
Carrizo Oil & Gas, Inc. (b)		349,800		17,367,570
Cimarex Energy Co.		197,510		22,731,426
Concho Resources, Inc. (b)		38,100		4,416,552
CONSOL Energy, Inc.		443,600		12,372,004
Enbridge, Inc.		561,000		27,041,214
Encana Corp.		1,341,000		14,971,174
EOG Resources, Inc.		174,800		16,027,412
EQT Corp.		265,744		22,022,205
Genel Energy PLC (b)		366,200		2,550,245
Gulfport Energy Corp. (b)		220,835		10,138,535
Ithaca Energy, Inc. (b)		4,702,200		2,376,067
Kosmos Energy Ltd. (b)		1,398,788		11,064,413
Laredo Petroleum, Inc. (b)		682,200		8,895,888
Longview Energy Co. (Acquired 8/13/04, cost $1,281,000) (a)(b)		85,400		150,304
Marathon Oil Corp.		674,500		17,611,195
Murphy Oil Corp.		419,900		19,567,340
Noble Energy, Inc.		218,600		10,689,540
Oil Search Ltd.		3,041,800		16,596,678
Painted Pony Petroleum Ltd. (b)		635,900		2,972,270

Common Stocks	Shares		Value
Oil, Gas & Consumable Fuels (concluded)
Pioneer Natural Resources Co.		99,937	$	16,340,699
Range Resources Corp.		346,940		18,054,758
Rosetta Resources, Inc. (b)		452,600		7,703,252
RSP Permian, Inc. (b)		303,342		7,641,185
SM Energy Co.		248,900		12,863,152
Southwestern Energy Co. (b)		744,600		17,267,274
TransGlobe Energy Corp.		817,600		2,911,355
				380,950,078
Total Common Stocks — 100.2%				408,792,646
Warrants (c)
Oil, Gas & Consumable Fuels — 0.0%
Magnum Hunter Resources Corp. (Issued/Exercisable 10/15/13, 1 Share for 1 Warrant, Expires 4/15/16, Strike Price $8.50)		235,700		2
Total Warrants — 0.0%				2
Total Long-Term Investments (Cost — $448,055,319) — 100.2%				408,792,648
Short-Term Securities
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.06% (d)(e)		577,947		577,947
Total Short-Term Securities (Cost — $577,947) — 0.2%				577,947
Total Investments (Cost — $448,633,266) — 100.4%				409,370,595
Liabilities in Excess of Other Assets — (0.4)%				(1,447,517	)
Net Assets — 100.0%			$	407,923,078

Notes to Schedule of Investments

(a) Restricted security as to resale. As of report date, the Fund held restricted securities with a current value of $150,304 and an original cost of $2,060,869, which was less than 0.01% of its net assets.

(b) Non-income producing security.

(c) 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 of the warrants, if any.

(d) During the six months ended March 31, 2015, investments in issuers considered to be an affiliate of the Fund 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, 2014		Net Activity			Shares Held at March 31, 2015		Income		Realized Gain
BlackRock Liquidity Funds, TempFund, Institutional Class		9,547,958		(8,970,011	)		577,947	$	3,011	$	1,503

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

See Notes to Financial Statements.

18 BLACKROCK FUNDS MARCH 31, 2015

Schedule of Investments (concluded) BlackRock Energy & Resources Portfolio

Ÿ 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 the investment advisor. These definitions may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

Ÿ Fair Value Measurements — Various inputs are used in determining the fair value of investments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. 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. The three levels of the fair value hierarchy are as follows:

Ÿ Level 1 — unadjusted quoted prices in active markets/exchanges for identical assets or liabilities that the Fund has the ability to access

Ÿ 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)

Ÿ 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. In accordance with the Fund’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. For information about the Fund’s policy regarding valuation of investments, refer to Note 2 of the Notes to Financial Statements.

As of March 31, 2015, the following table summarizes the Fund’s investments categorized in the disclosure hierarchy:

	Level 1		Level 2		Level 3		Total
Assets:
Investments:
Long-Term Investments:
Common Stocks:
Energy Equipment & Services	$	27,842,554	$	14		—	$	27,842,568
Oil, Gas & Consumable Fuels		352,117,199		28,682,575	$	150,304		380,950,078
Warrants		—		2		—		2
Short-Term Securities		577,947		—		—		577,947
Total	$	380,537,700	$	28,682,591	$	150,304	$	409,370,595

The Fund may hold assets and/or liabilities in which the fair value approximates the carrying amount for financial statement purposes. As of March 31, 2015, foreign currency at value of $80,671 is categorized as Level 1 within the disclosure hierarchy.

During the six months ended March 31, 2015, there were no transfers between levels.

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 19

Statements of Assets and Liabilities

March 31, 2015 (Unaudited)	BlackRock All-Cap Energy & Resources Portfolio			BlackRock Emerging Markets Dividend Fund			BlackRock Energy & Resources Portfolio
Assets
Investments at value — unaffiliated1	$	149,413,397		$	4,337,858		$	408,792,648
Investments at value — affiliated2		1,312,983			52,359			577,947
Cash		—			12,988			—
Foreign currency at value3		24,324			6,045			80,671
Investments sold receivable		—			35,521			—
Unrealized appreciation on forward foreign currency exchange contracts		—			3,241			—
Capital shares sold receivable		273,353			11,968			513,972
Dividends receivable — unaffiliated		98,951			13,197			366,796
Receivable from Manager		17,841			13,989			14,306
Dividends receivable — affiliated		123			1			245
Securities lending income receivable — affiliated		41			79			—
Prepaid expenses		52,588			34,408			43,060
Total assets		151,193,601			4,521,654			410,389,645
Liabilities
Investments purchased payable		—			7,121			—
Unrealized depreciation on forward foreign currency exchange contracts		—			3,167			—
Capital shares redeemed payable		604,990			24,296			1,625,373
Transfer agent fees payable		137,478			1,509			339,081
Investment advisory fees payable		96,103			—			262,107
Service and distribution fees payable		57,445			639			100,267
Professional fees payable		40,318			64,779			40,006
Other affiliates payable		6,445			10			34,089
Pricing fees payable		5,802			22,438			6,920
Officer’s and Trustees’ fees payable		2,611			767			5,885
Other accrued expenses payable		31,276			13,499			52,839
Total liabilities		982,468			138,225			2,466,567
Net Assets	$	150,211,133		$	4,383,429		$	407,923,078
Net Assets Consist of
Paid-in capital	$	207,169,550		$	5,126,786		$	560,534,804
Undistributed (distributions in excess of) net investment income (loss)		849,177			(19,557	)		(2,390,690	)
Accumulated net realized loss		(52,656,018	)		(846,323	)		(110,953,068	)
Net unrealized appreciation/depreciation		(5,151,576	)		122,523			(39,267,968	)
Net Assets	$	150,211,133		$	4,383,429		$	407,923,078
1       Investments at cost — unaffiliated	$	154,561,727		$	4,215,044		$	448,055,319
2       Investments at cost — affiliated	$	1,312,983		$	52,359		$	577,947
3       Foreign currency at cost	$	24,321		$	6,050		$	80,664

See Notes to Financial Statements.

20 BLACKROCK FUNDS MARCH 31, 2015

Statements of Assets and Liabilities (concluded)

March 31, 2015 (Unaudited)	BlackRock All-Cap Energy & Resources Portfolio		BlackRock Emerging Markets Dividend Fund		BlackRock Energy & Resources Portfolio
Net Asset Value
Institutional
Net assets	$	30,878,629	$	2,702,577	$	119,420,591
Shares outstanding1		2,384,903		326,164		4,421,314
Net asset value	$	12.95	$	8.29	$	27.01
Service
Net assets	$	1,369,112		—		—
Shares outstanding1		108,367		—		—
Net asset value	$	12.63		—		—
Investor A
Net assets	$	69,389,743	$	1,290,234	$	230,249,697
Shares outstanding1		5,502,499		156,394		9,866,359
Net asset value	$	12.61	$	8.25	$	23.34
Investor B
Net assets	$	2,439,670		—	$	1,792,617
Shares outstanding1		202,915		—		106,424
Net asset value	$	12.02		—	$	16.84
Investor C
Net assets	$	46,133,979	$	390,618	$	56,460,173
Shares outstanding1		3,843,504		47,728		3,379,768
Net asset value	$	12.00	$	8.18	$	16.71

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

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 21

Statements of Operations

Six Months Ended March 31, 2015 (Unaudited)	BlackRock All-Cap Energy & Resources Portfolio			BlackRock Emerging Markets Dividend Fund			BlackRock Energy & Resources Portfolio
Investment Income
Dividends — unaffiliated	$	2,256,833		$	51,945		$	2,904,105
Dividends — affiliated		1,483			24			3,011
Other income — affiliated		—			42			—
Securities lending — affiliated — net		41			90			—
Foreign taxes withheld		(152,513	)		(5,458	)		(238,617	)
Total income		2,105,844			46,643			2,668,499
Expenses
Investment advisory		613,814			24,559			1,632,497
Service and distribution — class specific		366,872			4,500			644,826
Transfer agent — class specific		181,778			2,530			537,731
Administration		49,035			1,466			129,984
Professional		34,611			54,638			39,376
Registration		29,908			18,116			30,076
Administration — class specific		18,573			557			49,334
Accounting services		12,826			3,556			28,877
Printing		9,516			5,711			18,191
Custodian		7,759			8,255			15,587
Officer and Trustees		4,743			2,109			9,530
Pricing		2,678			10,356			3,194
Miscellaneous		6,985			3,475			8,945
Recoupment of past waived and/or reimbursed fees — class specific		—			—			2,465
Total expenses		1,339,098			139,828			3,150,613
Less fees waived by the Manager		(1,551	)		(24,594	)		(4,680	)
Less administration fees waived		—			(1,466	)		—
Less administration fees waived — class specific		(18,537	)		(550	)		(37,055	)
Less transfer agent fees waived — class specific		(11,490	)		(151	)		(14,666	)
Less transfer agent fees reimbursed — class specific		(51,466	)		(2,295	)		(33,754	)
Less expenses reimbursed by the Manager		—			(69,114	)		—
Total expenses after fees waived and/or reimbursed		1,256,054			41,658			3,060,458
Net investment income (loss)		849,790			4,985			(391,959	)
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from:
Investments		(1,500,310	)		(185,452	)		(22,944,267	)
Capital gain distributions received from affiliated investment companies		—			—			1,503
Foreign currency transactions		(48,882	)		5,861			(99,770	)
		(1,549,192	)		(179,591	)		(23,042,534	)
Net change in unrealized appreciation/depreciation on:
Investments		(36,453,414	)		(10,088	)		(139,468,681	)
Foreign currency translations		(892	)		(13,217	)		(2,233	)
		(36,454,306	)		(23,305	)		(139,470,914	)
Net realized and unrealized loss		(38,003,498	)		(202,896	)		(162,513,448	)
Net Decrease in Net Assets Resulting from Operations	$	(37,153,708	)	$	(197,911	)	$	(162,905,407	)

See Notes to Financial Statements.

22 BLACKROCK FUNDS MARCH 31, 2015

Statements of Changes in Net Assets

	BlackRock All-Cap Energy & Resources Portfolio						BlackRock Emerging Markets Dividend Fund						BlackRock Energy & Resources Portfolio
Increase (Decrease) in Net Assets:	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30, 2014			Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30, 2014			Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30, 2014
Operations
Net investment income (loss)	$	849,790		$	1,182,643		$	4,985		$	111,342		$	(391,959	)	$	(4,840,727	)
Net realized gain (loss)		(1,549,192	)		49,403,376			(179,591	)		(126,900	)		(23,042,534	)		114,806,534
Net change in unrealized appreciation/depreciation		(36,454,306	)		(36,681,534	)		(23,305	)		34,469			(139,470,914	)		(101,325,236	)
Net increase (decrease) in net assets resulting from operations		(37,153,708	)		13,904,485			(197,911	)		18,911			(162,905,407	)		8,640,571
Distributions to Shareholders From1
Net investment income:
Institutional		(552,322	)		(243,720	)		(44,898	)		(84,952	)		—			—
Service		(18,439	)		(7,889	)		—			—			—			—
Investor A		(877,257	)		(428,293	)		(28,189	)		(44,272	)		—			—
Investor C		(179,698	)		—			(5,914	)		(7,777	)		—			—
Decrease in net assets resulting from distributions to shareholders		(1,627,716	)		(679,902	)		(79,001	)		(137,001	)		—			—
Capital Share Transactions
Net increase (decrease) in net assets derived from capital share transactions		(8,610,591	)		(36,929,775	)		(500,506	)		1,020,647			37,097,918			(113,778,135	)
Net Assets
Total increase (decrease) in net assets		(47,392,015	)		(23,705,192	)		(777,418	)		902,557			(125,807,489	)		(105,137,564	)
Beginning of period		197,603,148			221,308,340			5,160,847			4,258,290			533,730,567			638,868,131
End of period	$	150,211,133		$	197,603,148		$	4,383,429		$	5,160,847		$	407,923,078		$	533,730,567
Undistributed (distributions in excess of) net investment income (loss), end of period	$	849,177		$	1,627,103		$	(19,557	)	$	54,459		$	(2,390,690	)	$	(1,998,731	)

¹  Distributions for annual periods determined in accordance with federal income tax regulations.

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 23

Financial Highlights BlackRock All-Cap Energy & Resources  Portfolio

	Institutional
	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	16.26		$	15.28		$	13.51		$	12.14		$	13.76		$	12.46
Net investment income1		0.11			0.19			0.06			0.05			0.01			0.02
Net realized and unrealized gain (loss)		(3.18	)		0.90			1.71			1.32			(1.51	)2		1.382
Net increase (decrease) from investment operations		(3.07	)		1.09			1.77			1.37			(1.50	)		1.40
Distributions from net investment income3		(0.24	)		(0.11	)		(0.00	)4		—			(0.12	)		(0.10	)
Net asset value, end of period	$	12.95		$	16.26		$	15.28		$	13.51		$	12.14		$	13.76
Total Return5
Based on net asset value		(18.91	)%6		7.16	%		13.13	%		11.29	%		(11.10	)%7		11.32	%7
Ratios to Average Net Assets
Total expenses		1.10	%8		1.00	%9		0.98	%9		0.95	%		0.93	%9		0.94	%9
Total expenses after fees waived and/or reimbursed and paid indirectly		0.96	%8		0.96	%		0.96	%		0.94	%		0.93	%		0.93	%
Net investment income		1.64	%8		1.15	%		0.49	%		0.34	%		0.03	%		0.16	%
Supplemental Data
Net assets, end of period (000)	$	30,879		$	36,865		$	35,726		$	272,779		$	400,269		$	420,071
Portfolio turnover rate		23	%		71	%		28	%		19	%		22	%		38	%

¹  Based on average shares outstanding.

²  Includes redemption fees, which are less than $0.005 per share.

³  Distributions for annual periods determined in accordance with federal income tax regulations.

⁴  Amount is greater than $(0.005) per share.

⁵  Where applicable, assumes the reinvestment of distributions.

⁶  Aggregate total return.

⁷  Redemption fee of 2.00% is reflected in total return calculations. There was no impact to the return.

⁸  Annualized.

⁹  Includes recoupment of past waived and/or reimbursed fees. Excluding the recoupment of past waived and/or reimbursed fees for the years ended September 30, 2011 and September 30, 2010, the ratio would have been 0.91% and 0.93%, respectively. There was no financial impact to the expense ratios for the years ended September 30, 2014 and September 30, 2013.

See Notes to Financial Statements.

24 BLACKROCK FUNDS MARCH 31, 2015

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

	Service
	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	15.81		$	14.87		$	13.20		$	11.90		$	13.49		$	12.24
Net investment income (loss)1		0.08			0.12			0.02			0.00	2		(0.05	)		(0.03	)
Net realized and unrealized gain (loss)		(3.09	)		0.88			1.65			1.30			(1.47	)3		1.35	3
Net increase (decrease) from investment operations		(3.01	)		1.00			1.67			1.30			(1.52	)		1.32
Distributions from net investment income4		(0.17	)		(0.06	)		—			—			(0.07	)		(0.07	)
Net asset value, end of period	$	12.63		$	15.81		$	14.87		$	13.20		$	11.90		$	13.49
Total Return5
Based on net asset value		(19.08	)%6		6.72	%		12.65	%		10.93	%		(11.36	)%7		10.79	%7
Ratios to Average Net Assets
Total expenses		1.42	%8		1.35	%9		1.34	%9		1.29	%9		1.27	%9		1.34	%9
Total expenses after fees waived and/or reimbursed and paid indirectly		1.38	%8		1.34	%		1.33	%		1.29	%		1.26	%		1.34	%
Net investment income (loss)		1.18	%8		0.77	%		0.17	%		0.00	%		(0.30	)%		(0.25	)%
Supplemental Data
Net assets, end of period (000)	$	1,369		$	2,046		$	2,298		$	3,828		$	4,816		$	4,231
Portfolio turnover rate		23	%		71	%		28	%		19	%		22	%		38	%

¹  Based on average shares outstanding.

²  Amount is less than $0.005 per share.

³  Includes redemption fees, which are less than $0.005 per share.

⁴  Distributions for annual periods determined in accordance with federal income tax regulations.

⁵  Where applicable, assumes the reinvestment of distributions.

⁶  Aggregate total return.

⁷  Redemption fee of 2.00% is reflected in total return calculations. There was no impact to the return.

⁸  Annualized.

⁹  Includes recoupment of past waived and/or reimbursed fees. Excluding the recoupment of past waived and/or reimbursed fees for the years ended September 30, 2011 and September 30, 2010, the ratio would have been 1.24% and 1.27%, respectively. There was no financial impact to the expense ratios for the years ended September 30, 2014, September 30, 2013 and September 30, 2012.

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 25

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

	Investor A
	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	15.77		$	14.85		$	13.19		$	11.90		$	13.50		$	12.24
Net investment income (loss)1		0.08			0.12			0.02			(0.01	)		(0.06	)		(0.03	)
Net realized and unrealized gain (loss)		(3.08	)		0.86			1.64			1.30			(1.47	)2		1.35	2
Net increase (decrease) from investment operations		(3.00	)		0.98			1.66			1.29			(1.53	)		1.32
Distributions from net investment income3		(0.16	)		(0.06	)		—			—			(0.07	)		(0.06	)
Net asset value, end of period	$	12.61		$	15.77		$	14.85		$	13.19		$	11.90		$	13.50
Total Return4
Based on net asset value		(19.04	)%5		6.65	%		12.59	%		10.84	%		(11.46	)%6		10.84	%6
Ratios to Average Net Assets
Total expenses		1.48	%7		1.40	%8		1.39	%8		1.35	%8		1.35	%8		1.34	%8
Total expenses after fees waived and/or reimbursed and paid indirectly		1.38	%7		1.38	%		1.37	%		1.34	%		1.34	%		1.34	%
Net investment income (loss)		1.18	%7		0.73	%		0.12	%		(0.09	)%		(0.38	)%		(0.25	)%
Supplemental Data
Net assets, end of period (000)	$	69,390		$	91,625		$	103,388		$	137,765		$	187,017		$	207,523
Portfolio turnover rate		23	%		71	%		28	%		19	%		22	%		38	%

¹  Based on average shares outstanding.

²  Includes redemption fees, which are less than $0.005 per share.

³  Distributions for annual periods determined in accordance with federal income tax regulations.

⁴  Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

⁵  Aggregate total return.

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

⁷  Annualized.

⁸  Includes recoupment of past waived and/or reimbursed fees. Excluding the recoupment of past waived and/or reimbursed fees for the years ended September 30, 2014, September 30, 2013, September 30, 2011 and September 30, 2010, the ratio would have been 1.38%, 1.37%, 1.28%, and 1.32%, respectively. There was no financial impact to the expense ratios for the year ended September 30, 2012.

See Notes to Financial Statements.

26 BLACKROCK FUNDS MARCH 31, 2015

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

	Investor B
	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	14.91		$	14.08		$	12.59		$	11.45		$	13.03		$	11.84
Net investment income (loss)1		0.03			(0.00	)2		(0.08	)		(0.11	)		(0.18	)		(0.13	)
Net realized and unrealized gain (loss)		(2.92	)		0.83			1.57			1.25			(1.40	)3		1.32	3
Net increase (decrease) from investment operations		(2.89	)		0.83			1.49			1.14			(1.58	)		1.19
Net asset value, end of period	$	12.02		$	14.91		$	14.08		$	12.59		$	11.45		$	13.03
Total Return4
Based on net asset value		(19.38	)%5		5.90	%		11.84	%		9.96	%		(12.13	)%6		10.05	%6
Ratios to Average Net Assets
Total expenses		2.56	%7		2.34	%8		2.28	%8		2.20	%8		2.11	%8		2.17	%8
Total expenses after fees waived and/or reimbursed and paid indirectly		2.10	%7		2.10	%		2.10	%		2.10	%		2.10	%		2.10	%
Net investment income (loss)		0.47	%7		(0.02	)%		(0.60	)%		(0.83	)%		(1.15	)%		(1.03	)%
Supplemental Data
Net assets, end of period (000)	$	2,440		$	3,935		$	9,802		$	15,162		$	18,872		$	27,113
Portfolio turnover rate		23	%		71	%		28	%		19	%		22	%		38	%

¹  Based on average shares outstanding.

²  Amount is greater than $(0.005) per share.

³  Includes redemption fees, which are less than $0.005 per share.

⁴  Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

⁵  Aggregate total return.

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

⁷  Annualized.

⁸  Includes recoupment of past waived and/or reimbursed fees. Excluding the recoupment of past waived and/or reimbursed fees for the years ended September 30, 2014, September 30, 2012, September 30, 2011 and September 30, 2010, the ratio would have been 2.33%, 2.19%, 2.09%, and 2.16%, respectively. There was no financial impact to the expense ratios for the year ended September 30, 2013.

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 27

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

	Investor C
	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	14.94		$	14.10		$	12.62		$	11.47		$	13.04		$	11.85
Net investment income (loss)1		0.03			0.00	2		(0.07	)		(0.10	)		(0.17	)		(0.13	)
Net realized and unrealized gain (loss)		(2.92	)		0.84			1.55			1.25			(1.40	)3		1.323
Net increase (decrease) from investment operations		(2.89	)		0.84			1.48			1.15			(1.57	)		1.19
Distributions from net investment income4		(0.05	)		—			—			—			—			—
Net asset value, end of period	$	12.00		$	14.94		$	14.10		$	12.62		$	11.47		$	13.04
Total Return5
Based on net asset value		(19.38	)%6		5.96	%		11.73	%		10.03	%		(12.04	)%7		10.04	%7
Ratios to Average Net Assets
Total expenses		2.17	%8		2.12	%9		2.12	%9		2.08	%		2.05	%9		2.08	%
Total expenses after fees waived and/or reimbursed and paid indirectly		2.10	%8		2.10	%		2.09	%		2.07	%		2.04	%		2.08	%
Net investment income (loss)		0.47	%8		0.00	%		(0.59	)%		(0.79	)%		(1.08	)%		(1.00	)%
Supplemental Data
Net assets, end of period (000)	$	46,134		$	63,133		$	70,094		$	85,649		$	99,433		$	116,401
Portfolio turnover rate		23	%		71	%		28	%		19	%		22	%		38	%

¹  Based on average shares outstanding.

²  Amount is less than $0.005 per share.

³  Includes redemption fees, which are less than $0.005 per share.

⁴  Distributions for annual periods determined in accordance with federal income tax regulations.

⁵  Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

⁶  Aggregate total return.

⁷  Redemption fee of 2.00% is reflected in total return calculations. There was no impact to the return.

⁸  Annualized.

⁹  Includes recoupment of past waived and/or reimbursed fees. Excluding the recoupment of past waived and/or reimbursed fees for the years ended September 30, 2014 and September 30, 2011, the ratio would have been 2.10% and 2.03%, respectively. There was no financial impact to the expense ratios for the year ended September 30, 2013.

See Notes to Financial Statements.

28 BLACKROCK FUNDS MARCH 31, 2015

Financial Highlights BlackRock Emerging Markets Dividend Fund

	Institutional
	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,									Period April 29, 20111 to September  30, 2011
				2014			2013			2012
Per Share Operating Performance
Net asset value, beginning of period	$	8.75		$	8.93		$	7.79		$	6.90		$	10.00
Net investment income2		0.02			0.22			0.15			0.12			0.13
Net realized and unrealized gain (loss)		(0.34	)		(0.12	)		1.11			0.89			(3.23	)
Net increase (decrease) from investment operations		(0.32	)		0.10			1.26			1.01			(3.10	)
Distributions from net investment income3		(0.14	)		(0.28	)		(0.12	)		(0.12	)		—
Net asset value, end of period	$	8.29		$	8.75		$	8.93		$	7.79		$	6.90
Total Return4
Based on net asset value		(3.65	)%5		1.06	%		16.15	%6		14.82	%		(31.00	)%5
Ratios to Average Net Assets
Total expenses7		5.44	%8		6.72	%		7.54	%		13.05	%		9.67	%8,9
Total expenses after fees waived and/or reimbursed7		1.51	%8		1.51	%		1.63	%		1.65	%		1.65	%8
Net investment income7		0.41	%8		2.41	%		1.71	%		1.55	%		3.39	%8
Supplemental Data
Net assets, end of period (000)	$	2,703		$	2,774		$	2,736		$	2,355		$	2,049
Portfolio turnover rate		29	%		71	%		150	%		40	%		14	%

¹  Commencement of operations.

²  Based on average shares outstanding.

³  Distributions for annual periods determined in accordance with federal income tax regulations.

⁴  Where applicable, assumes the reinvestment of distributions.

⁵  Aggregate total return.

⁶  Includes a payment from an affiliate related to securities lending which impacted the Fund’s total return. Not including this payment the Fund’s total return would have been 15.76%.

⁷  Excludes expenses incurred indirectly as a result of investments in underlying funds as follows:

	Six Months Ended March 31, 2015 (Unaudited)		Year Ended September 30,							Period April 29, 20111 to September 30, 2011
			2014			2013		2012
Investments in underlying funds		—		0.01	%		—		—		—

⁸  Annualized.

⁹  Organization costs were not annualized in the calculation of the expense ratios. If these expenses were annualized, the total expenses would have been 13.81%.

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 29

Financial Highlights (continued) BlackRock Emerging Markets Dividend Fund

	Investor A
	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,									Period April 29, 20111 to September 30, 2011
				2014			2013			2012
Per Share Operating Performance
Net asset value, beginning of period	$	8.71		$	8.89		$	7.77		$	6.89		$	10.00
Net investment income2		0.00	3		0.20			0.21			0.18			0.09
Net realized and unrealized gain (loss)		(0.33	)		(0.13	)		1.02			0.82			(3.20	)
Net increase (decrease) from investment operations		(0.33	)		0.07			1.23			1.00			(3.11	)
Distributions from net investment income4		(0.13	)		(0.25	)		(0.11	)		(0.12	)		—
Net asset value, end of period	$	8.25		$	8.71		$	8.89		$	7.77		$	6.89
Total Return5
Based on net asset value		(3.80	)%6		0.77	%		15.82	%7		14.64	%		(31.10	)%6
Ratios to Average Net Assets
Total expenses8		5.83	%9		7.17	%		8.33	%		14.41	%		12.18	%9,10
Total expenses after fees waived and/or reimbursed8		1.76	%9		1.76	%		1.87	%		1.90	%		1.90	%9
Net investment income8		0.09	%9		2.30	%		2.44	%		2.24	%		2.47	%9
Supplemental Data
Net assets, end of period (000)	$	1,290		$	1,887		$	1,308		$	360		$	51
Portfolio turnover rate		29	%		71	%		150	%		40	%		14	%

¹  Commencement of operations.

²  Based on average shares outstanding.

³  Amount is less than $0.005 per share.

⁴  Distributions for annual periods determined in accordance with federal income tax regulations.

⁵  Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

⁶  Aggregate total return.

⁷  Includes a payment from an affiliate related to securities lending which impacted the Fund’s total return. Not including this payment the Fund’s total return would have been 15.43%.

⁸  Excludes expenses incurred indirectly as a result of investments in underlying funds as follows:

	Six Months Ended March 31, 2015 (Unaudited)		Year Ended September 30,							Period April 29, 20111 to September 30, 2011
			2014			2013		2012
Investments in underlying funds		—		0.01	%		—		—		—

⁹  Annualized.

¹⁰  Organization costs were not annualized in the calculation of the expense ratios. If these expenses were annualized, the total expenses would have been 18.86%.

See Notes to Financial Statements.

30 BLACKROCK FUNDS MARCH 31, 2015

Financial Highlights (concluded) BlackRock Emerging Markets Dividend Fund

	Investor C
	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,									Period April 29, 20111 to September 30, 2011
				2014			2013			2012
Per Share Operating Performance
Net asset value, beginning of period	$	8.65		$	8.84		$	7.72		$	6.87		$	10.00
Net investment income (loss)2		(0.03	)		0.16			0.20			0.05			0.09
Net realized and unrealized gain (loss)		(0.34	)		(0.15	)		0.95			0.90			(3.22	)
Net increase (decrease) from investment operations		(0.37	)		0.01			1.15			0.95			(3.13	)
Distributions from net investment income3		(0.10	)		(0.20	)		(0.03	)		(0.10	)		—
Net asset value, end of period.	$	8.18		$	8.65		$	8.84		$	7.72		$	6.87
Total Return4
Based on net asset value		(4.31	)%5		0.10	%		14.95	%6		13.95	%		(31.30	)%5
Ratios to Average Net Assets
Total expenses7		6.66	%8		8.11	%		9.53	%		14.94	%		11.73	%8,9
Total expenses after fees waived and/or reimbursed7		2.51	%8		2.51	%		2.61	%		2.65	%		2.65	%8
Net investment income (loss)7		(0.60	)%8		1.76	%		2.33	%		0.60	%		2.30	%8
Supplemental Data
Net assets, end of period (000)	$	391		$	500		$	214		$	28		$	19
Portfolio turnover rate		29	%		71	%		150	%		40	%		14	%

¹  Commencement of operations.

²  Based on average shares outstanding.

³  Distributions for annual periods determined in accordance with federal income tax regulations.

⁴  Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

⁵  Aggregate total return.

⁶  Includes a payment from an affiliate related to securities lending which impacted the Fund’s total return. Not including this payment the Fund’s total return would have been 14.56%.

⁷  Excludes expenses incurred indirectly as a result of investments in underlying funds as follows:

	Six Months Ended March 31, 2015 (Unaudited)		Year Ended September 30,							Period April 29, 20111 to September 30, 2011
			2014			2013		2012
Investments in underlying funds		—		0.01	%		—		—		—

⁸  Annualized.

⁹  Organization costs were not annualized in the calculation of the expense ratios. If these expenses were annualized, the total expenses would have been 16.54%.

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 31

Financial Highlights BlackRock Energy & Resources Portfolio

	Institutional
	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	37.89		$	37.36		$	32.87		$	31.70		$	34.98		$	32.61
Net investment income (loss)1		0.02			(0.17	)		(0.04	)		(0.16	)		(0.08	)		0.05
Net realized and unrealized gain (loss)		(10.90	)		0.70			4.56			2.79			(2.68	)		2.31
Net increase (decrease) from investment operations		(10.88	)		0.53			4.52			2.63			(2.76	)		2.36
Distributions from:2
Net investment income		—			—			—			(0.25	)		(0.52	)		—
Return of capital		—			—			(0.03	)		(0.47	)		—			—
Net realized gain		—			—			—			(0.74	)		—			—
Total distributions		—			—			(0.03	)		(1.46	)		(0.52	)		—
Redemption fees added to paid-in capital		—			—			—			—			0.00	3		0.01
Net asset value, end of period	$	27.01		$	37.89		$	37.36		$	32.87		$	31.70		$	34.98
Total Return4
Based on net asset value		(28.72	)%5		1.42	%		13.78	%		7.76	%		(8.28	)%		7.27	%6,7
Ratios to Average Net Assets
Total expenses8		1.08	%9,10		1.03	%9		1.04	%9		0.99	%9		0.93	%9		0.97	%9
Total expenses after fees waived and/or reimbursed and paid indirectly8		1.07	%10		1.02	%		1.03	%		0.99	%		0.92	%		0.97	%
Net investment income (loss)8		0.15	%10		(0.43	)%		(0.11	)%		(0.44	)%		(0.18	)%		0.13	%
Supplemental Data
Net assets, end of period (000)	$	119,421		$	92,994		$	105,317		$	222,034		$	306,403		$	274,009
Portfolio turnover rate		28	%		56	%		33	%		15	%		40	%		16	%

¹  Based on average shares outstanding.

²  Distributions for annual periods determined in accordance with federal income tax regulations.

³  Amount is less than $0.005 per share.

⁴  Where applicable, assumes the reinvestment of distributions.

⁵  Aggregate total 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 7.20%.

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  Excludes expenses incurred indirectly as a result of investments in underlying funds as follows:

	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013		2012		2011		2010
Investments in underlying funds		0.01	%		0.01	%		—		—		—		—

⁹  Includes recoupment of past waived and/or reimbursed fees. Excluding the recoupment of past waived and/or reimbursed fees for the year ended September 30, 2013, the ratio would have been 1.03%. There was no financial impact to the expense ratios for the six months ended March 31, 2015, and the years ended September 30, 2014, September 30, 2012, September 30, 2011 and September 30, 2010.

¹⁰  Annualized.

See Notes to Financial Statements.

32 BLACKROCK FUNDS MARCH 31, 2015

Financial Highlights (continued) BlackRock Energy & Resources Portfolio

	Investor A
	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	32.79		$	32.42		$	28.62		$	27.73		$	30.63		$	28.67
Net investment loss1		(0.02	)		(0.25	)		(0.11	)		(0.24	)		(0.20	)		(0.12	)
Net realized and unrealized gain (loss)		(9.43	)		0.62			3.94			2.46			(2.34	)		2.08
Net increase (decrease) from investment operations		(9.45	)		0.37			3.83			2.22			(2.54	)		1.96
Distributions from:2
Net investment income		—			—			—			(0.17	)		(0.36	)		—
Return of capital		—			—			(0.03	)		(0.42	)		—			—
Net realized gain		—			—			—			(0.74	)		—			—
Total distributions		—			—			(0.03	)		(1.33	)		(0.36	)		—
Redemption fees added to paid-in capital		—			—			—			—			0.00	3		0.00	3
Net asset value, end of period	$	23.34		$	32.79		$	32.42		$	28.62		$	27.73		$	30.63
Total Return4
Based on net asset value		(28.82	)%5		1.14	%		13.42	%		7.41	%		(8.61	)%		6.84	%6,7
Ratios to Average Net Assets
Total expenses8		1.43	%9		1.31	%10		1.34	%10		1.34	%10		1.28	%10		1.35	%10
Total expenses after fees waived and/or reimbursed and paid indirectly8		1.38	%9		1.31	%		1.34	%		1.34	%		1.27	%		1.35	%
Net investment loss8		(0.15	)%9		(0.72	)%		(0.38	)%		(0.77	)%		(0.52	)%		(0.39	)%
Supplemental Data
Net assets, end of period (000)	$	230,250		$	353,706		$	425,568		$	539,085		$	632,030		$	644,786
Portfolio turnover rate		28	%		56	%		33	%		15	%		40	%		16	%

¹  Based on average shares outstanding.

²  Distributions for annual periods determined in accordance with federal income tax regulations.

³  Amount is less than $0.005 per share.

⁴  Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

⁵  Aggregate total 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 6.77%.

⁷  Redemption fee of 2.00% is reflected in total return calculations. There was no impact to the return.

⁸  Excludes expenses incurred indirectly as a result of investments in underlying funds as follows:

	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013		2012		2011		2010
Investments in underlying funds		0.01	%		0.01	%		—		—		—		—

⁹  Annualized.

¹⁰  Includes recoupment of past waived and/or reimbursed fees. Excluding the recoupment of past waived and/or reimbursed fees for the years ended September 30, 2013, September 30, 2012, September 30, 2011 and September 30, 2010, the ratio would have been 1.33%, 1.33%, 1.26% and 1.31%, respectively. There was no financial impact to the expense ratios for the year ended September 30, 2014.

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 33

Financial Highlights (continued) BlackRock Energy & Resources Portfolio

	Investor B
	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	23.76		$	23.68		$	21.07		$	20.65		$	22.86		$	21.56
Net investment loss1		(0.08	)		(0.38	)		(0.25	)		(0.36	)		(0.38	)		(0.27	)
Net realized and unrealized gain (loss)		(6.84	)		0.46			2.89			1.87			(1.73	)2		1.57	2
Net increase (decrease) from investment operations		(6.92	)		0.08			2.64			1.51			(2.11	)		1.30
Distributions from:3
Net investment income		—			—			—			(0.06	)		(0.10	)		—
Return of capital		—			—			(0.03	)		(0.29	)		—			—
Net realized gain		—			—			—			(0.74	)		—			—
Total distributions		—			—			(0.03	)		(1.09	)		(0.10	)		—
Net asset value, end of period	$	16.84		$	23.76		$	23.68		$	21.07		$	20.65		$	22.86
Total Return4
Based on net asset value		(29.12	)%5		0.34	%		12.57	%		6.63	%		(9.33	)%		6.03	%6,7
Ratios to Average Net Assets
Total expenses8		2.58	%9		2.32	%10		2.31	%10		2.16	%10		2.07	%10		2.10	%10
Total expenses after fees waived and/or reimbursed and paid indirectly8		2.10	%9		2.10	%		2.10	%		2.10	%		2.07	%		2.09	%
Net investment loss8		(0.88	)%9		(1.53	)%		(1.15	)%		(1.56	)%		(1.31	)%		(1.17	)%
Supplemental Data
Net assets, end of period (000)	$	1,793		$	3,082		$	4,576		$	7,687		$	16,450		$	25,633
Portfolio turnover rate		28	%		56	%		33	%		15	%		40	%		16	%

¹  Based on average shares outstanding.

²  Includes redemption fees, which are less than $0.005 per share.

³  Distributions for annual periods determined in accordance with federal income tax regulations.

⁴  Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

⁵  Aggregate total 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 5.94%.

⁷  Redemption fee of 2.00% is reflected in total return calculations. There was no impact to the return.

⁸  Excludes expenses incurred indirectly as a result of investments in underlying funds as follows:

	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013		2012		2011		2010
Investments in underlying funds		0.01	%		0.01	%		—		—		—		—

⁹  Annualized.

¹⁰  Includes recoupment of past waived and/or reimbursed fees. Excluding the recoupment of past waived and/or reimbursed fees for the years ended September 30, 2014, September 30, 2013 and September 30, 2011, the ratio would have been 2.31%, 2.30% and 2.03%, respectively. There was no financial impact to the expense ratios for the years ended September 30, 2012 and September 30, 2010.

See Notes to Financial Statements.

34 BLACKROCK FUNDS MARCH 31, 2015

Financial Highlights (concluded) BlackRock Energy & Resources Portfolio

	Investor C
	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	23.56		$	23.47		$	20.88		$	20.55		$	22.81		$	21.51
Net investment loss1		(0.08	)		(0.36	)		(0.24	)		(0.34	)		(0.37	)		(0.24	)
Net realized and unrealized gain (loss)		(6.77	)		0.45			2.86			1.84			(1.69	)2		1.54	2
Net increase (decrease) from investment operations		(6.85	)		0.09			2.62			1.50			(2.06	)		1.30
Distributions from:3
Net investment income		—			—			—			(0.09	)		(0.20	)		—
Return of capital		—			—			(0.03	)		(0.34	)		—			—
Net realized gain		—			—			—			(0.74	)		—			—
Total distributions		—			—			(0.03	)		(1.17	)		(0.20	)		—
Net asset value, end of period	$	16.71		$	23.56		$	23.47		$	20.88		$	20.55		$	22.81
Total Return4
Based on net asset value		(29.07	)%5		0.38	%		12.59	%		6.57	%		(9.25	)%		6.04	%6,7
Ratios to Average Net Assets
Total expenses8		2.16	%9		2.06	%10		2.10	%10		2.07	%10		2.04	%10		2.06	%10
Total expenses after fees waived and/or reimbursed and paid indirectly8		2.10	%9		2.05	%		2.09	%		2.07	%		2.03	%		2.05	%
Net investment loss8		(0.87	)%9		(1.47	)%		(1.12	)%		(1.50	)%		(1.29	)%		(1.07	)%
Supplemental Data
Net assets, end of period (000)	$	56,460		$	83,948		$	103,407		$	132,808		$	146,186		$	142,490
Portfolio turnover rate		28	%		56	%		33	%		15	%		40	%		16	%

¹  Based on average shares outstanding.

²  Includes redemption fees, which are less than $0.005 per share.

³  Distributions for annual periods determined in accordance with federal income tax regulations.

⁴  Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

⁵  Aggregate total 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 5.95%.

⁷  Redemption fee of 2.00% is reflected in total return calculations. There was no impact to the return.

⁸  Excludes expenses incurred indirectly as a result of investments in underlying funds as follows:

	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013		2012		2011		2010
Investments in underlying funds		0.01	%		0.01	%		—		—		—		—

⁹  Annualized.

¹⁰  Includes recoupment of past waived and/or reimbursed fees. Excluding the recoupment of past waived and/or reimbursed fees for the years ended September 30, 2014, September 30, 2011 and September 30, 2010, the ratio would have been 2.05%, 1.99% ,and 2.05%, respectively. There was no financial impact to the expense ratios for the years ended September 30, 2013 and September 30, 2012.

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 35

Notes to Financial Statements (Unaudited)

1. Organization:

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. The following are referred to herein collectively as the “Funds” or individually, a “Fund”:

Fund Name	Herein Referred To As	Diversification Classification
BlackRock All-Cap Energy & Resources Portfolio	All-Cap Energy & Resources	Non-diversified
BlackRock Emerging Markets Dividend Fund	Emerging Markets Dividend	Diversified
BlackRock Energy & Resources Portfolio	Energy & Resources	Non-diversified

Each Fund offers multiple classes of shares. All classes of shares have identical voting, dividend, liquidation and other rights and are subject to the same terms and conditions, except that certain classes bear expenses related to the shareholder servicing and distribution of such shares. Institutional and Service Shares are sold only to certain eligible investors. Investor B Shares are only available through exchanges and distribution reinvestments by current holders and for purchase by certain employer-sponsored retirement plans. Investor A and Investor C Shares are generally available through financial intermediaries. 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).

Share Class	Initial Sales Charge	CDSC	Conversion Privilege
Institutional and Service Shares	No	No	None
Investor A Shares	Yes	No1	None
Investor B Shares	No	Yes	To Investor A Shares after approximately 8 years
Investor C Shares	No	Yes	None

¹  Investor A Shares may be subject to a CDSC where no initial sales charge was paid at the time of purchase.

The Funds, together with certain other registered investment companies advised by the Manager or its affiliates, are included in a complex of open-end funds referred to as the Equity-Liquidity Complex.

2. Significant Accounting Policies:

The Funds’ financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. Each Fund is considered an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies The following is a summary of significant accounting policies followed by the Funds:

Valuation: The Funds’ investments are valued at fair value as of the close of trading on the New York Stock Exchange (“NYSE”) (generally 4:00 p.m., Eastern time). U.S. 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 determine the fair values of 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”). The BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) is the committee formed by management to develop global pricing policies and procedures and to provide oversight of the pricing function for the Funds for all financial instruments.

Equity investments traded on a recognized securities exchange are valued at the official close each day, if available. For equity investments traded on more than one exchange, the official close 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 may be valued at the last available bid (long positions) or ask (short positions) price. Investments in open-end registered investment companies are valued at NAV each business day.

Securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars using exchange rates determined as of the close of business on the NYSE. Forward 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.

The Funds value their investment 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

36 BLACKROCK FUNDS MARCH 31, 2015

Notes to Financial Statements (continued)

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.

In the event that the application of these methods of valuation results in a price for an investment that 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 by the Global Valuation Committee, or its delegate, in accordance with a policy approved by the Board as reflecting fair value (“Fair Value Investments”). When determining the price for Fair Value Investments, the Global Valuation Committee, or its delegate, seeks to determine the price that each Fund might reasonably expect to receive or pay from the current sale or purchase of that asset or liability in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the Global Valuation Committee, or its delegate, deems relevant consistent with the principles of fair value measurement, which include the market approach, income approach and/or in the case of recent investments, the cost approach, as appropriate. The market approach generally consists of using comparable market transactions. The income approach generally is used to discount future cash flows to present value and is adjusted for liquidity as appropriate. These factors include but are not limited to: (i) attributes specific to the investment or asset; (ii) the principal market for the investment or asset; (iii) the customary participants in the principal market for the investment or asset; (iv) data assumptions by market participants for the investment or asset, if reasonably available; (v) quoted prices for similar investments or assets in active markets; and (vi) other factors, such as future cash flows, interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks, recovery rates, liquidation amounts and/or default rates. Due to the inherent uncertainty of valuations of such investments, the fair values may differ from the values that would have been used had an active market existed. The Global Valuation Committee, or its delegate, employs various methods for calibrating valuation approaches for investments where an active market does not exist, including regular due diligence of the Funds’ pricing vendors, regular reviews of key inputs and assumptions, transactional back-testing or disposition analysis to compare unrealized gains and losses to realized gains and losses, reviews of missing or stale prices and large movements in market values and reviews of any market related activity. The pricing of all Fair Value Investments is subsequently reported to the Board or a committee thereof on a quarterly basis.

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 (e.g., 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 Investments and be valued at their fair value, as determined in good faith by the Global Valuation Committee, or its delegate, 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: Each Fund’s books and records are maintained in U.S. dollars. Purchases and sales of investment securities are recorded at the rates of exchange prevailing on the respective dates of such transactions. Generally, when the U.S. dollar rises in value against a foreign currency, each Fund’s investments denominated in that currency will lose value because that currency is worth fewer U.S. dollars; the opposite effect occurs if the U.S. dollar falls in relative value.

Each 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 in 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. Each 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 generally treated as ordinary income for federal income tax purposes.

Segregation and Collateralization: In cases where a Fund enters into certain investments (e.g., forward foreign currency exchange contracts) that would be “senior securities” for 1940 Act purposes, a Fund may segregate or designate on its books and records cash or liquid securities having a market value at least equal to the amount of a Fund’s future obligations under such investments. Doing so allows the investment to be excluded from treatment as a “senior security.” Furthermore, if required by an exchange or counterparty agreement, the Funds may be required to deliver/deposit cash and/or securities to/with an exchange, or broker-dealer or custodian as collateral for certain investments or obligations.

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 date. Dividends from foreign securities where the ex-dividend date may have passed are subsequently recorded when

BLACKROCK FUNDS MARCH 31, 2015 37

Notes to Financial Statements (continued)

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, expenses and realized and unrealized gains and losses are allocated daily to each class based on its relative net assets.

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

Recent Accounting Standard: In June 2014, the Financial Accounting Standards Board issued guidance to improve the financial reporting of reverse repurchase agreements and other similar transactions. The guidance will require expanded disclosure for entities that enter into reverse repurchase agreements and similar transactions accounted for as secured borrowings. It is effective for financial statements with fiscal years beginning on or after December 15, 2014 and for interim periods beginning after March 15, 2015. Management is evaluating the impact, if any, 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 the applicable class. Other operating expenses shared by several funds are prorated among those funds on the basis of relative net assets or other appropriate methods. Expenses directly related to the Funds and other shared expenses prorated 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 their 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.

3. Securities and Other Investments:

Participation Notes: Emerging Markets Dividend may invest in participation notes (“P-Notes”). P-Notes are promissory notes issued by banks or broker-dealers that are designed to offer Emerging Markets Dividend 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 Emerging Markets Dividend 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, Emerging Markets Dividend 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 Emerging Markets Dividend 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. Emerging Markets Dividend 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 Emerging Markets Dividend since the P-Note generally is dependent on the liquidity in the local trading market for the underlying security.

Securities Lending: Each Fund may lend its securities to approved borrowers, such as brokers, dealers and other financial institutions. The borrower pledges and maintains with the Funds collateral consisting of cash, an irrevocable letter of credit issued by a bank, or securities issued or guaranteed by the U.S. Government. The initial collateral received by each Fund is required to have a value of at least 102% of the current value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% for all other securities. The collateral is maintained thereafter, at a value equal to at least 100% of the current market value of the securities on loan. The market value of the loaned securities is determined at the close of each business day of the Fund and any additional required collateral is delivered to the Fund on the next business day. During the term of the loan, each Fund is entitled to all distributions made on or in respect of the loaned securities. 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.

The market value of securities on loan and the value of the related collateral are shown separately in the Statements of Assets and Liabilities as a component of investments at value — unaffiliated, and collateral on securities loaned at value, respectively. As of March 31, 2015, any securities on loan were collateralized by cash. The cash collateral invested by the securities lending agent, BlackRock Investment Management, LLC (“BIM”), if any, is disclosed in the Schedules of Investments.

Securities lending transactions are entered into by the Funds under Master Securities Lending Agreements (each, an “MSLA”) which provide the right, in the event of default (including bankruptcy or insolvency), for the non-defaulting party to liquidate the collateral and calculate a net exposure to the

38 BLACKROCK FUNDS MARCH 31, 2015

Notes to Financial Statements (continued)

defaulting party or request additional collateral. In the event that a borrower defaults, each Fund, as lender, would offset the market value of the collateral received against the market value of the securities loaned. When the value of the collateral is greater than that of the market value of the securities loaned, the lender is left with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, the borrower can resell or re-pledge the loaned securities, and the Funds can reinvest cash collateral, or, upon an event of default, resell or re-pledge the collateral.

The risks of securities lending include the risk that the borrower may not provide additional collateral when required or may not return the securities when due. To mitigate these risks, the Funds benefit from a borrower default indemnity provided by BIM. BIM’s indemnity allows for full replacement of the securities loaned if the collateral received does not cover the value on the securities loaned in the event of borrower default. Each Fund 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.

4. Derivative Financial Instruments:

Emerging Markets Dividend engages in various portfolio investment strategies using derivative contracts both to increase the returns of Emerging Markets Dividend and/or to economically manage its exposure to certain risks such as foreign currency exchange rate risk. These contracts may be transacted on an exchange or OTC.

Forward Foreign Currency Exchange Contracts: Emerging Markets Dividend enters into forward foreign currency exchange contracts as an economic hedge against either specific transactions or portfolio instruments or to obtain exposure to, or hedge exposure away from, foreign currencies (foreign currency exchange rate risk). A forward 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. Forward foreign currency exchange contracts, when used by Emerging Markets Dividend, help to manage the overall exposure to the currencies in which some of the investments held by Emerging Markets Dividend are denominated. The contract is marked-to-market daily and the change in market value is recorded by Emerging Markets Dividend as an unrealized gain or loss. When the contract is closed, Emerging Markets Dividend 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 forward foreign currency exchange contracts involves the risk that the value of a forward foreign currency exchange contract changes unfavorably due to movements in the value of the referenced foreign currencies.

The following is a summary of Emerging Markets Dividend’s derivative financial instruments categorized by risk exposure:

Fair Values of Derivative Financial Instruments as of March 31, 2015
		Value
	Statements of Assets and Liabilities Location	Derivative Assets		Derivative Liabilities
Foreign currency exchange contracts	Unrealized appreciation/depreciation on forward foreign currency exchange contracts	$	3,241	$	3,167

The Effect of Derivative Financial Instruments in the Statements of Operations Six Months Ended March 31, 2015
	Net Realized Gain (Loss) from	Net Change in Unrealized Appreciation/Depreciation on
Foreign currency exchange contracts:
Foreign currency transactions/ translations	$12,395	$(13,350)

For the six months ended March 31, 2015, the average quarterly balances of outstanding derivative financial instruments were as follows:

Forward foreign currency exchange contracts:
Average amounts purchased - in USD	$	147,514
Average amounts sold - in USD	$	84,966

Counterparty Credit Risk: A derivative contract may suffer a mark-to-market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform under the contract.

A Fund’s risk of loss from counterparty credit risk on OTC derivatives is generally limited to the aggregate unrealized gain less the value of any collateral held by such Fund.

BLACKROCK FUNDS MARCH 31, 2015 39

Notes to Financial Statements (continued)

In order to better define its contractual rights and to secure rights that will help the Fund mitigate their counterparty risk, a Fund may enter into an International Swaps and Derivatives Association, Inc. Master Agreement (“ISDA Master Agreement”) or similar agreement with its counterparties. An ISDA Master Agreement is a bilateral agreement between Emerging Markets Dividend and a counterparty that governs certain OTC derivatives and typically contains, among other things, collateral posting terms and netting provisions in the event of a default and/or termination event. Under an ISDA Master Agreement, Emerging Markets Dividend may, under certain circumstances, offset with the counterparty certain derivative financial instruments’ payables and/or receivables with collateral held and/or posted and create one single net payment. The provisions of the ISDA Master Agreement typically permit a single net payment in the event of default including the bankruptcy or insolvency of the counterparty. Bankruptcy or insolvency laws of a particular jurisdiction may restrict or prohibit the right of offset in bankruptcy, insolvency or other events. In addition, certain ISDA Master Agreements allow counterparties to terminate derivative contracts prior to maturity in the event Emerging Markets Dividend’s net assets decline by a stated percentage or Emerging Markets Dividend fails to meet the terms of its ISDA Master Agreements, which the result would cause Emerging Markets Dividend to accelerate payment of any net liability owed to the counterparty.

As of March 31, 2015, Emerging Markets Dividend’s derivative assets and liabilities (by type) are as follows:

	Assets		Liabilities
Derivative Financial Instruments:
Forward foreign currency exchange contracts	$	3,241	$	3,167
Total derivative assets and liabilities subject to an Master Netting Agreement (“MNA”)	$	3,241	$	3,167

As of March 31, 2015, the following table presents Emerging Markets Dividend’s derivative assets and/or liabilities by counterparty net of amounts available for offset under an MNA and net of the related collateral received and pledged by Emerging Markets Dividend:

Counterparty	Derivative Assets Subject to an MNA by Counterparty	Derivatives Available for Offset	Non-cash Collateral Received	Cash Collateral Received	Net Amount of Derivative Assets1
Deutsche Bank AG	$3,241	—	—	—	$3,241
Counterparty	Derivative Liabilities Subject to an MNA by Counterparty	Derivatives Available for Offset	Non-cash Collateral Pledged	Cash Collateral Pledged	Net Amount of Derivative Liabilities2
BNP Paribas S.A	$3,167	—	—	—	$3,167

¹  Net amount represents the net amount receivable from the counterparty in the event of default.

²  Net amount represents the net amount payable due to the counterparty in the event of default.

5. Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. is the largest stockholder and an affiliate of BlackRock, Inc. (“BlackRock”) for 1940 Act purposes.

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 services. The Manager is responsible for the management of each Fund’s portfolio and provides the necessary personnel, facilities, equipment and certain other services to the operations of each Fund. For such services, each Fund, except Emerging Markets Dividend, 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	%

40 BLACKROCK FUNDS MARCH 31, 2015

Notes to Financial Statements (continued)

Emerging Markets Dividend pays the Manager a monthly fee based on a percentage of its average daily net assets at the following annual rates:

Average Daily Net Assets	Investment Advisory Fee
First $1 Billion		1.00	%
$1 Billion - $3 Billion		0.94	%
$3 Billion - $5 Billion		0.90	%
$5 Billion - $10 Billion		0.87	%
Greater than $10 Billion		0.85	%

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 the Manager in the Statements of Operations. For the six months ended March 31, 2015, the amounts waived were as follows:

All-Cap Energy & Resources	$	1,536
Emerging Markets Dividend	$	35
Energy & Resources	$	4,680

The Manager, on behalf of each Fund, entered into sub-advisory agreements with BlackRock International Limited (“BIL”), an affiliate of the Manager. The Manager pays BIL, for services it provides, a monthly fee that is a percentage of the investment advisory fees paid by each Fund to the Manager.

The Trust, on behalf of the Funds, entered into a Distribution Agreement and a 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, each 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 relevant share class of each Fund as follows:

	Service			Investor A			Investor B			Investor C
Service Fee		0.25	%		0.25	%		0.25	%		0.25	%
Distribution Fee		—			—			0.75	%		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 compensates 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, 2015, the following table shows the class specific service and distribution fees borne directly by each class of each Fund:

	Service		Investor A		Investor B		Investor C		Total
All-Cap Energy & Resources	$	1,964	$	94,009	$	14,848	$	256,051	$	366,872
Emerging Markets Dividend		—	$	2,108		—	$	2,392	$	4,500
Energy & Resources		—	$	324,239	$	10,735	$	309,852	$	644,826

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 asset-based fee or an annual fee per shareholder account, which will vary depending on share class and/or net assets. For the six months ended March 31, 2015, Energy & Resources paid the following amounts to affiliates of BlackRock in return for these services, which are included in transfer agent — class specific in the Statements of Operations:

	Institutional		Investor A		Total
Energy & Resources	$	19,575	$	72	$	19,647

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, 2015, 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:

BLACKROCK FUNDS MARCH 31, 2015 41

Notes to Financial Statements (continued)

	Institutional		Service		Investor A		Investor B		Investor C		Total
All-Cap Energy & Resources	$	513	$	22	$	7,973	$	952	$	2,046	$	11,506
Emerging Markets Dividend	$	57		—	$	51		—	$	45	$	153
Energy & Resources	$	893		—	$	19,452	$	833	$	2,549	$	23,727
For the six months ended March 31, 2015, the following table shows the class specific transfer agent fees borne directly by each class of each Fund:
	Institutional		Service		Investor A		Investor B		Investor C		Total
All-Cap Energy & Resources	$	21,652	$	1,577	$	98,027	$	8,884	$	51,638	$	181,778
Emerging Markets Dividend	$	344		—	$	1,583		—	$	603	$	2,530
Energy & Resources	$	98,972		—	$	352,492	$	7,295	$	78,972	$	537,731

Effective January 1, 2015, the Trust, on behalf of the Funds, entered into an Administration Agreement with the Manager, an indirect, wholly owned subsidiary of BlackRock, to provide administrative services. For these services, the Manager receives an administration fee computed daily and payable monthly, based on a percentage of the average daily net assets of the Funds. The administration fee, which is shown as administration in the Statements of Operations, is paid at the annual rates below.

Average Daily Net Assets	Administration Fee
First $500 Million		0.0425	%
$500 Million - $1 Billion		0.0400	%
$1 Billion - $2 Billion		0.0375	%
$2 Billion - $4 Billion		0.0350	%
$4 Billion - $13 Billion		0.0325	%
Greater than $13 Billion		0.0300	%

In addition, the Manager charges each of the share classes an administration fee, which is shown as administration — class specific in the Statements of Operations, at an annual rate of 0.02% of the average daily net assets of each respective class.

Prior to January 1, 2015, BNY Mellon Investment Servicing (US) Inc. (“BNYMIS”) and the Manager act as co-administrators for the Funds. For these services, the co-administrators receive an administration fee computed daily and payable monthly to each administrator pursuant to separate fee arrangements, based on a percentage of the average daily net assets of each Fund. The combined administration fee, which is shown as administration in the Statements of Operations, was paid at the annual rates below. In addition, each of the share classes was charged an administration fee, which is shown as administration — class specific in the Statements of Operations, based on the following percentages of average daily net assets of each respective class:

Average Daily Net Assets	Administration Fee			Administration Fee — Class Specific
First $500 Million		0.075	%		0.025	%
$500 Million - $1 Billion		0.065	%		0.015	%
Greater than $1 Billion		0.055	%		0.005	%

For the six months ended March 31, 2015, the Funds paid the following to the Manager in return for these services, which are included in administration and administration — class specific in the Statements of Operations:

All-Cap Energy & Resources	$	53,242
Emerging Markets Dividend	$	557
Energy & Resources	$	147,047

For the six months ended March 31, 2015, the following table shows the class specific administration fees borne directly by each class of each Fund:

	Institutional		Service		Investor A		Investor B		Investor C		Total
All-Cap Energy & Resources	$	3,713	$	179	$	8,530	$	340	$	5,811	$	18,573
Emerging Markets Dividend	$	311		—	$	192		—	$	54	$	557
Energy & Resources	$	12,478		—	$	29,561	$	246	$	7,049	$	49,334

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.

42 BLACKROCK FUNDS MARCH 31, 2015

Notes to Financial Statements (continued)

The Manager contractually agreed to waive and/or reimburse fees or expenses in order to limit expenses, excluding interest expense, dividend expense, tax expense, acquired fund fees and expenses and certain other fund expenses, which constitute extraordinary expenses not incurred in the ordinary course of the Funds’ business. The expense limitations as a percentage of average daily net assets are as follows:

	BlackRock			Institutional			Service			Investor A			Investor B			Investor C			Class R
All-Cap Energy & Resources		0.92	%1		0.96	%		1.38	%		1.38	%		2.10	%		2.10	%		1.83	%1
Emerging Markets Dividend		N/A			1.50	%		N/A			1.75	%		N/A			2.50	%		N/A
Energy & Resources		N/A			1.07	%		1.38	%1		1.38	%		2.10	%		2.10	%		1.94	%1

¹  There were no shares outstanding as of March 31, 2015.

The Manager has agreed not to reduce or discontinue this contractual waiver or reimbursement prior to February 1, 2016, unless approved by the Board, including a majority of the independent Trustees.

These amounts waived or reimbursed are included in fees waived by the Manager, and shown as administration fees waived, administration fees waived — class specific, transfer agent fees waived — class specific, transfer agent fees reimbursed — class specific and expenses reimbursed by the Manager, respectively, in the Statements of Operations. For the six months ended March 31, 2015, the Manager waived $15 and $24,559 of investment advisory fees for All-Cap Energy & Resources and Emerging Markets Dividend, respectively, which is included in fees waived by the Manager.

Class specific expense waivers or reimbursements are as follows:

Administration Fees Waived	Institutional		Service		Investor A		Investor B		Investor C		Total
All-Cap Energy & Resources	$	3,713	$	143	$	8,530	$	340	$	5,811	$	18,537
Emerging Markets Dividend	$	304		—	$	192		—	$	54	$	550
Energy & Resources	$	5,220		—	$	24,903	$	246	$	6,686	$	37,055
Transfer Agent Fees Waived	Institutional		Service		Investor A		Investor B		Investor C		Total
All-Cap Energy & Resources	$	514	$	9	$	7,972	$	952	$	2,043	$	11,490
Emerging Markets Dividend	$	55		—	$	51		—	$	45	$	151
Energy & Resources	$	164		—	$	11,320	$	833	$	2,349	$	14,666
Transfer Agent Fees Reimbursed	Institutional		Service		Investor A		Investor B		Investor C		Total
All-Cap Energy & Resources	$	18,001	$	121	$	19,023	$	5,491	$	8,830	$	51,466
Emerging Markets Dividend	$	240		—	$	1,504		—	$	551	$	2,295
Energy & Resources	$	923		—	$	20,440	$	4,078	$	8,313	$	33,754

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, 2015, the Manager recouped waivers and/or reimbursements previously recorded of $2,465 for Energy & Resources Institutional Shares.

BLACKROCK FUNDS MARCH 31, 2015 43

Notes to Financial Statements (continued)

On March 31, 2015, the Fund level and class specific waivers and/or reimbursements subject to possible future recoupment under the expense limitation agreement are as follows:

	Expires September 30,
	2015		2016		2017
All-Cap Energy & Resources
Fund Level	$	406	$	9,430	$	15
Institutional	$	25,585	$	14,085	$	22,228
Service		—	$	65	$	273
Investor A	$	540	$	11,605	$	35,525
Investor B	$	22,079	$	15,786	$	6,783
Investor C	$	7,867	$	11,239	$	16,684
Emerging Markets Dividend
Fund Level	$	221,737	$	248,998	$	95,139
Institutional	$	1,750	$	1,503	$	599
Investor A	$	1,610	$	3,247	$	1,747
Investor C	$	461	$	1,046	$	650
Energy & Resources
Institutional		—	$	6,343	$	6,307
Investor A		—		—	$	56,663
Investor B	$	11,644	$	8,537	$	5,157
Investor C		—	$	1,415	$	17,348

For the six months ended March 31, 2015, affiliates earned underwriting discounts, direct commissions and dealer concessions on sales of each Fund’s Investor A Shares as follows:

All-Cap Energy & Resources	$	9,743
Emerging Markets Dividend	$	439
Energy & Resources	$	14,515

For the six months ended March 31, 2015, affiliates received CDSCs as follows:

	Investor A		Investor B		Investor C
All-Cap Energy & Resources	$	9,184	$	134	$	1,984
Emerging Markets Dividend		—		—	$	37
Energy & Resources	$	1	$	300	$	3,866

The U.S. Securities and Exchange Commission has issued an exemptive order which permits BIM, an affiliate of the Manager, to serve as securities lending agent for the Funds, subject to applicable conditions. As securities lending agent, BIM bears all operational costs directly related to securities lending. The Funds are responsible for expenses in connection with the investment of cash collateral received for securities on loan (the “collateral investment expenses”). The cash collateral is invested in a private investment company managed by the Manager or its affiliates. However, BIM has agreed to cap the collateral investment expenses of the private investment company to an annual rate of 0.04%. The investment advisor to the private investment company will not charge any advisory fees with respect to shares purchased by the Funds.

Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment expenses. Each Fund retains a portion of securities lending income and remits a remaining portion to BIM as compensation for its services as securities lending agent. BIM may lend securities only when the difference between the borrower rebate rate and the risk free rate exceeds a certain level (such securities, the “specials only securities”).

Pursuant to such agreement, each Fund retains 80% of securities lending income. In addition, commencing the business day following the date that the aggregate securities lending income earned across certain funds in the Equity-Liquidity Complex in a calendar year exceeds a specific threshold, each Fund, pursuant to the securities lending agreement, will retain for the remainder of the calendar year securities lending income in an amount equal to 85% of securities lending income. The share of securities lending income earned by each Fund is shown as securities lending — affiliated —net in the Statements of Operations. For the six months ended March 31, 2015, All-Cap Energy & Resources and Emerging Markets Dividend paid BIM $10 and $23, respectively, for securities lending agent services.

Emerging Markets Dividend recorded payments from an affiliate to compensate for foregone securities lending revenue, which is shown as other income — affiliated in the Statements of Operations.

44 BLACKROCK FUNDS MARCH 31, 2015

Notes to Financial Statements (continued)

Certain officers and/or trustees of the Trust are officers and/or directors of BlackRock or its affiliates. The Funds reimburse the Manager for a portion of the compensation paid to the Trust’s Chief Compliance Officer, which is included in officer and trustees in the Statements of Operations.

6. Purchases and Sales:

Purchases and sales of investments, excluding short-term securities, for the six months ended March 31, 2015, were as follows:

	Purchases		Sales
All-Cap Energy & Resources	$	37,760,081	$	44,522,544
Emerging Markets Dividend	$	1,409,432	$	1,746,606
Energy & Resources	$	169,751,900	$	124,179,500

7. Income Tax Information:

It is the Funds’ policy to comply with the requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies, and to distribute substantially all of their taxable income to their shareholders. Therefore, no federal income tax provision is required.

The Funds file U.S. 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’ U.S. federal tax returns remains open for each of the four years ended September 30, 2014. The statute of limitations on Emerging Markets Dividend’s U.S. federal tax returns remains open for the period ended September 30, 2011 and the three years ended September 30, 2014. 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 has analyzed tax laws and regulations and their application to the Funds as of March 31, 2015, inclusive of the open tax return years, and does not believe there are any uncertain tax positions that require recognition of a tax liability in the Funds’ financial statements.

As of September 30, 2014, the Funds had capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates as follows:

Expires September 30,	All-Cap Energy & Resources		Emerging Markets Dividend		Energy & Resources
2018	$	51,018,124		—		—
2019		—	$	18,788		—
No expiration date1		—		622,302	$	87,909,363
Total	$	51,018,124	$	641,090	$	87,909,363

¹  Must be utilized prior to losses subject to expiration.

As of March 31, 2015, gross unrealized appreciation and depreciation based on cost for federal income tax purposes were as follows:

	All-Cap Energy & Resources			Emerging Markets Dividend			Energy & Resources
Tax cost	$	155,963,411		$	4,293,263		$	448,634,437
Gross unrealized appreciation	$	12,496,798		$	382,884		$	42,689,168
Gross unrealized depreciation		(17,733,829	)		(285,930	)		(81,953,010	)
Net unrealized appreciation (depreciation)	$	(5,237,031	)	$	96,954		$	(39,263,842	)

8. Bank Borrowings:

The Trust, on behalf of the Funds, along with certain other funds managed by the Manager and its affiliates (“Participating Funds”), was a party to a 364-day, $1.1 billion credit agreement with a group of lenders, under which the Funds may borrow to fund shareholder redemptions. Excluding commitments designated for a certain individual fund, the Participating Funds, including the Funds, could borrow up to an aggregate commitment amount of $650 million, subject to asset coverage and other limitations as specified in the agreement. Effective November 25, 2014, the credit agreement was amended to an aggregate commitment amount of $2.1 billion, of which the Participating Funds, including the Funds, can borrow up to $1.6 billion at any time outstanding, subject to asset coverage and other limitations as specified in the agreement. The agreement terminates on April 23, 2015, unless otherwise extended to November 24, 2015 or renewed for a period of 364 days from April 23, 2015. The amended agreement has the following

BLACKROCK FUNDS MARCH 31, 2015 45

Notes to Financial Statements (continued)

terms: a fee of 0.06% per annum on unused commitment amounts and interest at a rate equal to the higher of (a) one-month LIBOR (but, in any event, not less than 0.00%) on the date the loan is made plus 0.80% per annum or (b) the Fed Funds rate (but, in any event, not less than 0.00%) in effect from time to time plus 0.80% per annum on amounts borrowed. Participating Funds paid administration, legal and arrangement fees, which are included in miscellaneous expenses in the Statements of Operations, and along with commitment fees, were allocated among such funds based upon portions of the aggregate commitment available to them and relative net assets of Participating Funds. During the six months ended March 31, 2015, the Funds did not borrow under the credit agreement.

9. Principal Risks:

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, interest rate and price fluctuations. Similar to issuer credit risk, the Funds may be exposed to counterparty credit risk, or the risk that an entity with which the Funds have unsettled or open transactions may fail to or be unable to perform on its commitments. The Funds manage counterparty credit risk by entering into transactions only with counterparties that they believe have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Funds to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Funds’ exposure to market, issuer and counterparty credit risks with respect to these financial assets is generally approximated by their value recorded in the Statements of Assets and Liabilities, less any collateral held by the Funds.

As of March 31, 2015, 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 such 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, 2015, Emerging Markets Dividend had the following industry classifications:

Industry	Percent of Long-Term Investments
Banks		19	%
Transportation Infrastructure		11
Semiconductors & Semiconductor Equipment		10
Wireless Telecommunication Services		9
Insurance		7
Oil, Gas & Consumable Fuels		6
Other1		38

¹  All other industries held were each less than 5% of long-term investments.

10. Capital Share Transactions:

Transactions in capital shares for each class were as follows:

	Six Months Ended March 31, 2015						Year Ended September 30, 2014
All-Cap Energy & Resources	Shares			Amount			Shares			Amount
Institutional
Shares sold		898,879		$	12,400,701			646,900		$	10,752,489
Shares issued in reinvestment of distributions		39,582			525,654			15,019			206,142
Shares redeemed		(821,405	)		(11,162,721	)		(732,240	)		(11,884,287	)
Net increase (decrease)		117,056		$	1,763,634			(70,321	)	$	(925,656	)
Service
Shares sold		5,833		$	77,369			23,463		$	375,705
Shares issued in reinvestment of distributions		1,395			18,098			521			7,757
Shares redeemed		(28,269	)		(387,328	)		(49,100	)		(757,516	)
Net decrease		(21,041	)	$	(291,861	)		(25,116	)	$	(374,054	)

46 BLACKROCK FUNDS MARCH 31, 2015

Notes to Financial Statements (continued)

	Six Months Ended March 31, 2015						Year Ended September 30, 2014
All-Cap Energy & Resources (concluded)	Shares			Amount			Shares			Amount
Investor A
Shares sold and automatic conversion of shares		784,151		$	10,478,685			958,490		$	15,089,057
Shares issued in reinvestment of distributions		66,408			859,979			28,029			439,558
Shares redeemed		(1,156,396	)		(15,581,719	)		(2,140,226	)		(33,842,288	)
Net decrease		(305,837	)	$	(4,243,055	)		(1,153,707	)	$	(18,313,673	)
Investor B
Shares sold		2,575		$	33,706			4,098		$	60,909
Shares redeemed and automatic conversion of shares		(63,565	)		(809,317	)		(436,554	)		(6,458,408	)
Net decrease		(60,990	)	$	(775,611	)		(432,456	)	$	(6,397,499	)
Investor C
Shares sold		608,535		$	7,559,112			271,508		$	4,146,097
Shares issued in reinvestment of distributions		13,701			169,204			—			—
Shares redeemed		(1,004,653	)		(12,792,014	)		(1,015,038	)		(15,064,990	)
Net decrease		(382,417	)	$	(5,063,698	)		(743,530	)	$	(10,918,893	)
Total Net Decrease		(653,229	)	$	(8,610,591	)		(2,425,130	)	$	(36,929,775	)
Emerging Markets Dividend
Institutional
Shares sold		23,810		$	201,559			14,124		$	128,245
Shares issued in reinvestment of distributions		409			3,382			391			3,458
Shares redeemed		(15,025	)		(124,865	)		(3,794	)		(34,150	)
Net increase		9,194		$	80,076			10,721		$	97,553
Investor A
Shares sold		40,644		$	342,661			106,687		$	958,337
Shares issued in reinvestment of distributions		3,014			24,954			4,316			38,037
Shares redeemed		(103,785	)		(867,233	)		(41,532	)		(366,879	)
Net increase (decrease)		(60,127	)	$	(499,618	)		69,471		$	629,495
Investor C
Shares sold		6,199		$	52,319			34,522		$	301,649
Shares issued in reinvestment of distributions		693			5,717			840			7,376
Shares redeemed		(17,001	)		(139,000	)		(1,751	)		(15,426	)
Net increase (decrease)		(10,109	)	$	(80,964	)		33,611		$	293,599
Total Net Increase (Decrease)		(61,042	)	$	(500,506	)		113,803		$	1,020,647
Energy & Resources
Institutional
Shares sold		2,796,180		$	90,068,297			725,115		$	29,170,844
Shares redeemed		(829,077	)		(24,367,807	)		(1,089,938	)		(42,500,141	)
Net increase (decrease)		1,967,103		$	65,700,490			(364,823	)	$	(13,329,297	)

BLACKROCK FUNDS MARCH 31, 2015 47

Notes to Financial Statements (concluded)

	Six Months Ended March 31, 2015						Year Ended September 30, 2014
Energy & Resources (concluded)	Shares			Amount			Shares			Amount
Investor A
Shares sold and automatic conversion of shares		1,467,250		$	36,217,985			1,705,523		$	59,839,840
Shares redeemed		(2,387,301	)		(60,407,512	)		(4,044,870	)		(138,244,319	)
Net decrease		(920,051	)	$	(24,189,527	)		(2,339,347	)	$	(78,404,479	)
Investor B
Shares sold		1,960		$	34,104			2,941		$	75,125
Shares redeemed and automatic conversion of shares		(25,275	)		(476,157	)		(66,483	)		(1,647,628	)
Net decrease		(23,315	)	$	(442,053	)		(63,542	)	$	(1,572,503	)
Investor C
Shares sold		544,893		$	9,581,215			279,728		$	7,033,404
Shares redeemed		(728,280	)		(13,552,207	)		(1,122,560	)		(27,505,260	)
Net decrease		(183,387	)	$	(3,970,992	)		(842,832	)	$	(20,471,856	)
Total Net Increase (Decrease)		840,350		$	37,097,918			(3,610,544	)	$	(113,778,135	)

At March 31, 2015, shares owned by affiliates of Emerging Markets Dividend were as follows:

Institutional	Investor A	Investor C
296,000	2,000	2,000

11. Subsequent Events:

Management’s evaluation of the impact of all subsequent events on the Funds’ financial statements was completed through the date the financial statements were issued and the following item was noted:

Effective April 23, 2015, the 364-day, $2.1 billion credit agreement to which the Funds are a party, was further amended to expire on April 21, 2016, unless otherwise extended or renewed.

48 BLACKROCK FUNDS MARCH 31, 2015

Officers and Trustees

Rodney D. Johnson, Chair of the Board and Trustee

David O. Beim, Trustee

Collette Chilton, Trustee

Frank J. Fabozzi, Trustee

Dr. Matina S. Horner, Trustee

Herbert I. London, Trustee

Ian A. MacKinnon, Trustee

Cynthia A. Montgomery, Trustee

Barbara G. Novick, Trustee

Joseph P. Platt, Trustee

Robert C. Robb, Jr., Trustee

Toby Rosenblatt, Trustee

Mark Stalnecker, Trustee

Kenneth L. Urish, Trustee

Frederick W. Winter, Trustee

John M. Perlowski, President and Chief Executive Officer

Jennifer McGovern, Vice President

Neal Andrews, Chief Financial Officer

Jay Fife, Treasurer

Charles Park, Chief Compliance Officer

Fernanda Piedra, Anti-Money Laundering Compliance Officer

Benjamin Archibald, Secretary

Effective December 31, 2014, Paul L. Audet and Henry Gabbay resigned as Trustees of the Trust and Ronald W. Forbes resigned as a Trustee of the Trust and Co-Chair of the Board. Effective January 1, 2015, Collette Chilton, Barbara G. Novick and Mark Stalnecker were appointed to serve as Trustees of the Trust.

Effective March 1, 2015, Charles Park resigned as Anti-Money Laundering Compliance Officer of the Trust and Fernanda Piedra became Anti- Money Laundering Compliance Officer of the Trust.

Investment Advisor and Administrator BlackRock Advisors, LLC Wilmington, DE 19809	Accounting Agent and Transfer Agent BNY Mellon Investment Servicing (US) Inc. Wilmington, DE 19809	Independent Registered Public Accounting Firm Deloitte & Touche LLP Philadelphia, PA 19103	Address of the Trust 100 Bellevue Parkway Wilmington, DE 19809
Sub-Advisor BlackRock International Limited Edinburgh, EH3 8BL United Kingdom	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

BLACKROCK FUNDS MARCH 31, 2015 49

Additional Information

General Information

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 call 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 upon request and without charge (1) 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.

BlackRock’s 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 taxexempt investing. Visit http://www.blackrock.com for more information.

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 Plans

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.

50 BLACKROCK FUNDS MARCH 31, 2015

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.

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BLACKROCK FUNDS MARCH 31, 2015 51

This report is intended for current holders. It is not authorized for use as an offer of sale or a solicitation of an offer to buy shares of the Funds unless preceded or accompanied by the Funds’ 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.

Eq-Allcap-3/15-SAR

MARCH 31, 2015        

  SEMI-ANNUAL REPORT (UNAUDITED)   BLACKROCK^®

BlackRock Funds^SM

▶   BlackRock Flexible Equity Fund

▶   BlackRock Mid-Cap Growth Equity Portfolio

▶   BlackRock Small Cap Growth Equity Portfolio

Not FDIC Insured ¡ May Lose Value ¡ No Bank Guarantee

Table of Contents

	Page
The Markets in Review	3
Semi-Annual Report:
Fund Summaries	4
About Fund Performance	10
Disclosure of Expenses	11
Derivative Financial Instruments	11
Financial Statements:
Schedules of Investments	16
Statements of Assets and Liabilities	26
Statements of Operations	28
Statements of Changes in Net Assets	29
Financial Highlights	30
Notes to Financial Statements	42
Officers and Trustees	58
Additional Information	59

	Shareholders can sign up for e-mail notifications of quarterly statements, annual and semi-annual shareholder reports and prospectuses by enrolling in the electronic delivery program. Electronic copies of shareholder reports and prospectuses are also available on Blackrock’s website.
	TO ENROLL IN ELECTRONIC DELIVERY:
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	1.  Access the Blackrock website at blackrock.com
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2 BLACKROCK FUNDS MARCH 31, 2015

The Markets in Review

Dear Shareholder,

Market volatility has remained low from a long-term perspective, but increased over the course of 2014 amid higher valuations in risk assets (such as equities and high yield bonds), geopolitical risks, uneven global economic growth and uncertainty around policy moves from the world’s largest central banks. As the U.S. Federal Reserve (the “Fed”) gradually reduced its bond buying program (which ultimately ended in October 2014), U.S. interest rates surprisingly trended lower and stock prices forged ahead despite high valuations on the back of a multi-year bull market. Geopolitical tensions intensified in Ukraine and the Middle East and oil prices became highly volatile in the middle of the summer, stoking worries about economic growth outside the United States. As the U.S. economy continued to show steady improvement, the stronger data caused concern among investors that the Fed would raise short-term rates sooner than previously anticipated. The U.S. dollar appreciated and global credit markets tightened, ultimately putting a strain on investor flows, and financial markets broadly weakened in the third quarter.

U.S. economic growth picked up considerably in the fourth quarter while the broader global economy showed signs of slowing. U.S. markets significantly outperformed international markets even as the European Central Bank (“ECB”) and the Bank of Japan eased monetary policy, which drove further strengthening in the U.S. dollar. Oil prices plummeted in the fourth quarter due to a global supply-and-demand imbalance, sparking a selloff in energy-related assets and stress in emerging markets. Fixed income investors piled into U.S. Treasuries as their persistently low yields became relatively attractive as compared to international sovereign debt.

Equity markets reversed in the first quarter of 2015 and U.S. stocks underperformed international markets, notably Europe and Japan, but also emerging markets. Investors had held high expectations for the U.S. economy, but after a harsh winter, first-quarter data disappointed and high valuations took their toll on U.S. stocks. Meanwhile, economic reports in Europe and Asia easily beat investors’ very low expectations for those economies, and accommodative policies from global central banks helped international equities rebound. The ECB’s asset purchase program (announced in January and commenced in March) was the largest in scale and effect on the markets. Overall, market volatility decreased in the first quarter as global risks abated, with a ceasefire in Ukraine and an improving outlook for Greece’s continued membership in the Eurozone.

At BlackRock, we believe investors need to think globally, extend their scope across a broad array of asset classes and be prepared to move freely as market conditions change over time. We encourage you to talk with your financial advisor and visit blackrock.com for further insight about investing in today’s markets.

Sincerely,

Rob Kapito

President, BlackRock Advisors, LLC

Rob Kapito

President, BlackRock Advisors, LLC

Total Returns as of March 31, 2015
	6-month			12-month
U.S. large cap equities (S&P 500® Index)		5.93	%		12.73	%
U.S. small cap equities (Russell 2000® Index)		14.46			8.21
International equities (MSCI Europe, Australasia, Far East Index)		1.13			(0.92	)
Emerging market equities (MSCI Emerging Markets Index)		(2.37	)		0.44
3-month Treasury bill (BofA Merrill Lynch 3-Month U.S. Treasury Bill Index)		0.01			0.03
U.S. Treasury securities (BofA Merrill Lynch 10- Year U.S. Treasury Index)		6.25			9.88
U.S. investment grade bonds (Barclays U.S. Aggregate Bond Index)		3.43			5.72
Tax-exempt municipal bonds (S&P Municipal Bond Index)		2.29			6.60
U.S. high yield bonds (Barclays U.S. Corporate High Yield 2% Issuer Capped Index)		1.50			2.00
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, 2015 BlackRock Flexible Equity Fund

Investment Objective

BlackRock Flexible Equity Fund’s (the “Fund”) investment objective is to seek to achieve long-term total return.

Portfolio Management Commentary

How did the Fund perform?

• For the six-month period ended March 31, 2015, the Fund underperformed its benchmark, the S&P 500^® Index.

What factors influenced performance?

• In a positive market environment, portfolio protection in the form of cash and short index futures were the largest detractors from performance. Due to concerns regarding stock market valuations, the Fund’s investment advisor sought to insulate the Fund from absolute losses and reduce beta by maintaining an elevated cash position and a series of short index futures positions. (Beta measures a portfolio’s volatility relative to the market as a whole.) The elevated cash position detracted from relative performance given that equity markets rallied during the fourth quarter of 2014. Short index positions on the Nikkei 225^® Index, Russell 2000^® Index, Nasdaq 100^® Index and S&P 500^® Index all detracted from performance at a time in which these indices gained ground.

• The Fund’s positions in North American oil & gas producers detracted from performance as the rapid decline in global oil prices pressured both groups during the period. While the Fund strived to emphasize producers with the ability to remain profitable in a low-price environment, even these types of companies were punished amid the broader sell-off in the energy sector. Against this backdrop, holdings Suncor Energy, Inc., Painted Pony Petroleum, Ltd. and EQT Corp. detracted from overall results.

• The Fund’s positioning in the information technology (“IT”) sector also hindered relative performance, with an overweight in poor-performing Micron Technology, Inc. and an underweight in Apple, Inc. having the largest negative impact.

• Conversely, the Fund experienced positive stock selection across multiple sectors. Within consumer discretionary, Orbitz Worldwide, Inc. made the largest contribution to return after industry leader Expedia, Inc. announced it would acquire the company at a premium. Since Orbitz Worldwide, Inc. was a top ten position in the Fund, the resulting rally in the stock helped buoy overall portfolio results. The

Fund had initiated the investment on the belief that the company was well positioned to either engage in a share buyback or be acquired by a competitor or private equity firm.

• When combined with the positive impact from currency management, the Fund’s position in Japan Airlines Co., Ltd. also made an important contribution to results. Falling oil prices provided a lift to the airline industry globally, boosting the share price of the Japanese carrier. Additionally, in a period of increased currency volatility and U.S. dollar strength, the decision to manage yen exposure in the stock proved to be a key driver of returns.

• Lastly, the Fund benefited from its position in managed-care firm UnitedHealth Group Inc., which rallied due to continued operating success and widespread strength in the broader health care sector.

Describe recent portfolio activity.

• Due to a combination of portfolio trading activity and market movement, the Fund’s weighting in the health care sector increased substantially during the period, specifically within the health care providers & services industry. In addition, the Fund increased its allocations to financials (mainly banks), IT (largely within the internet software & services and communications equipment industries) and consumer staples (primarily beverages).

• The Fund’s weighting in the consumer discretionary sector decreased significantly, with the largest reduction occurring in the media industry. The Fund also reduced its position in the energy sector, especially within the oil, gas & consumable fuels segment, and in materials, namely in the metals & mining industry.

Describe portfolio positioning at period end.

• Relative to the S&P 500^® Index, the Fund ended the period with its largest sector overweight in health care, followed by financials and IT. Utilities, consumer staples and telecommunication services were the most significant underweights.

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.	5	%
CVS Health Corp.	3
JPMorgan Chase & Co.	3
Comcast Corp., Class A	3
Lowe’s Companies, Inc.	3
Google, Inc., Class A	3
3M Co.	3
U.S. Bancorp	3
Bank of America Corp.	3
American International Group, Inc.	2

Sector Allocation Percent of Long-Term  Investments

Information Technology	23	%
Health Care	21
Financials	19
Consumer Discretionary	13
Industrials	8
Consumer Staples	7
Energy	7
Materials	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 the investment advisor. These definitions may not apply for purposes of this report, which may combine sector sub-classifications for reporting ease.

4 BLACKROCK FUNDS MARCH 31, 2015

BlackRock Flexible Equity 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 and administration fees, if any. 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 and equity-like securities and instruments with similar economic characteristics. The Fund seeks to invest in securities issued by North American companies. The Fund may invest in companies of any market capitalization size, style, or sector. The Fund’s total return prior to July 31, 2012 are the returns of the Fund when it followed a different investment strategy.

³  This unmanaged index covers 500 leading companies and captures approximately 80% coverage of available market capitalization.

Performance Summary for the Period Ended March 31, 2015
				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		4.42	%		4.06	%		N/A			8.44	%		N/A			6.43	%		N/A
Service		4.17			3.73			N/A			8.09			N/A			6.12			N/A
Investor A		4.27			3.75			(1.70	)%		8.10			6.94	%		6.11			5.54	%
Investor B		3.82			2.93			(0.92	)		7.26			6.96			5.47			5.47
Investor C		3.79			2.89			2.04			7.25			7.25			5.30			5.30
Class R		4.05			3.41			N/A			7.72			N/A			6.02			N/A
S&P 500® Index		5.93			12.73			N/A			14.47			N/A			8.01			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, 2014	Ending Account Value March 31, 2015	Expenses Paid During the  Period5	Beginning Account Value October 1, 2014	Ending Account Value March 31, 2015	Expenses Paid During the  Period5	Annualized Expense Ratio
Institutional	$1,000.00	$1,044.20	$4.69	$1,000.00	$1,020.34	$4.63	0.92%
Service	$1,000.00	$1,041.70	$6.26	$1,000.00	$1,018.80	$6.19	1.23%
Investor A	$1,000.00	$1,042.70	$6.32	$1,000.00	$1,018.75	$6.24	1.24%
Investor B	$1,000.00	$1,038.20	$10.21	$1,000.00	$1,014.91	$10.10	2.01%
Investor C	$1,000.00	$1,037.90	$10.21	$1,000.00	$1,014.91	$10.10	2.01%
Class R	$1,000.00	$1,040.50	$8.14	$1,000.00	$1,016.95	$8.05	1.60%

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 182/365 (to reflect the one-half year period shown).

⁶  Hypothetical 5% annual return before expenses is calculated by prorating the number of days in the most recent fiscal half year divided by 365.

See “Disclosure of Expenses” on page 11 for further information on how expenses were calculated.

BLACKROCK FUNDS MARCH 31, 2015 5

Fund Summary as of March 31, 2015 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?

• For the six-month period ended March 31, 2015, the Fund outperformed its benchmark, the Russell Midcap^® Growth Index.

What factors influenced performance?

• In sector terms, relative performance was supported by the Fund’s limited exposure to the energy sector, which posted significant declines in the reporting period. Additional contributions came from favorable stock selection within information technology (“IT”), particularly software & services, as well as from positioning in health care, namely biotechnology and pharmaceuticals.

• On an individual stock basis, BioMarin Pharmaceuticals Inc., Vipshop Holdings Ltd. and United Therapeutics Corp. were the Fund’s top contributors. BioMarin gained on improved financial results and investor excitement around the company’s drug pipeline that focuses on rare diseases/disorders. The announced acquisition of Dutch biotech firm Prosensa Holding NV was also a driver in the period, as was market speculation that BioMarin itself could be the next big takeover target in the industry. Vipshop Holdings outperformed after adding a record number of customers in the fourth quarter of 2014 and beating top- and bottom-line expectations. Shares of United Therapeutics climbed after the company received a favorable ruling in its patent infringement lawsuit against competitor Sandoz. Greater appreciation for the potential of the company’s oral version of Remodulin may also have lent support to the stock price.

• Positions in lululemon athletica inc., Madison Square Garden Co. and Acuity Brands Inc. also added to relative returns.

• Conversely, at the sector level, industrials was the main source of weakness in the six-month period, with marine industry holding Kirby Corp. as the Fund’s leading individual detractor. The company experienced a rapid and sharp decline in its on-land

diesel engine services business as uncertainty for land-based oil drilling led to order cancellations for new engines. Positioning within airlines and commercial services & supplies further hindered performance in the industrials sector.

• Elsewhere in the Fund, positions in Netflix Inc. and Liberty TripAdvisor Holdings Inc. detracted from relative returns. Netflix shares sank early in the reporting period after third-quarter subscriber growth missed the company’s prior guidance. Notably, the stock rebounded in the second half as its fourth-quarter earnings report showed subscriber growth back on trend. Liberty TripAdvisor Holdings lagged as subsidiary TripAdvisor Inc. underperformed due to disappointing earnings and a perceived lack of progress on its direct booking initiative. Additionally, investors worried about negative foreign exchange impact, as well as what a stronger dollar might mean for cross-border travel and the company’s future guidance.

Describe recent portfolio activity.

• Due to a combination of portfolio trading activity and market movement during the six-month period, the Fund’s weighting in the consumer discretionary sector increased, most notably within textiles, apparel & luxury goods, multiline retail and specialty retail. The allocation to IT increased as well, mainly within the software industry. The Fund’s weighting in the industrials sector decreased substantially, with reductions in several industries, including road & rail, machinery, electrical equipment and commercial services & supplies.

Describe portfolio positioning at period end.

• As of period end, the Fund’s largest sector overweight relative to the Russell Midcap^® Growth Index was in consumer discretionary, wherein internet & catalog retail exposure was balanced by idiosyncratic opportunities across segments, including media, textiles, apparel & luxury goods, and specialty retail. Industrials was the most significant underweight.

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

United Therapeutics Corp.	4	%
Liberty Ventures, Series A	4
Netflix, Inc.	3
Liberty TripAdvisor Holdings, Inc., Class A	3
The Madison Square Garden Co., Class A	3
Dollar General Corp.	3
FleetCor Technologies, Inc.	3
Vipshop Holdings Ltd. - ADR	3
Vertex Pharmaceuticals, Inc.	3
Uber Technologies, Inc., Series D	2

Sector Allocation Percent of Long-Term  Investments

Consumer Discretionary	38	%
Information Technology	20
Health Care	18
Industrials	8
Financials	6
Consumer Staples	5
Telecommunication Services	2
Materials	2
Energy	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 the investment advisor. These definitions may not apply for purposes of this report, which may combine sector sub-classifications for reporting ease.

6 BLACKROCK FUNDS MARCH 31, 2015

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 and administration fees, if any. 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 U.S. mid-capitalization companies, which Fund management believes have above-average earnings growth potential.

³  An unmanaged 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. They 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, 2015
				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		14.16	%		16.53	%		N/A			15.28	%		N/A			9.69	%		N/A
Service		13.92			15.98			N/A			14.75			N/A			9.26			N/A
Investor A		13.96			16.17			10.07	%		14.90			13.66	%		9.26			8.67	%
Investor B		13.58			15.32			10.85			14.03			13.79			8.60			8.60
Investor C		13.57			15.32			14.33			14.01			14.01			8.44			8.44
Class R		13.83			15.90			N/A			14.65			N/A			9.11			N/A
Russell Midcap® Growth Index		11.53			15.56			N/A			16.43			N/A			10.19			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, 2014	Ending Account Value March 31, 2015	Expenses Paid During the  Period5	Beginning Account Value October 1, 2014	Ending Account Value March 31, 2015	Expenses Paid During the  Period5	Annualized Expense Ratio
Institutional	$1,000.00	$1,141.60	$5.77	$1,000.00	$1,019.55	$5.44	1.08%
Service	$1,000.00	$1,139.20	$7.95	$1,000.00	$1,017.50	$7.49	1.49%
Investor A	$1,000.00	$1,139.60	$7.41	$1,000.00	$1,018.00	$6.99	1.39%
Investor B	$1,000.00	$1,135.80	$11.50	$1,000.00	$1,014.16	$10.85	2.16%
Investor C	$1,000.00	$1,135.70	$11.50	$1,000.00	$1,014.16	$10.85	2.16%
Class R	$1,000.00	$1,138.30	$8.80	$1,000.00	$1,016.70	$8.30	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 182/365 (to reflect the one-half year period shown).

⁶  Hypothetical 5% annual return before expenses is calculated by prorating the number of days in the most recent fiscal half year divided by 365.

See “Disclosure of Expenses” on page 11 for further information on how expenses were calculated.

BLACKROCK FUNDS MARCH 31, 2015 7

Fund Summary as of March 31, 2015 BlackRock Small Cap Growth Equity Portfolio

Investment Objective

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

Portfolio Management Commentary

How did the Fund perform?

• For the six-month period ended March 31, 2015, the Fund underperformed its benchmark, the Russell 2000^® Growth Index.

What factors influenced performance?

• The Fund’s underperformance was attributable primarily to stock selection within the energy and industrials sectors. Within energy, positions in domestic oil & gas producer Bonanza Creek Energy, Inc. and oil & gas equipment & services company Basic Energy Services, Inc. detracted most from performance. Shares of Bonanza Creek Energy fell sharply along with crude oil and natural gas prices, as investors expected increasing supply along with decreasing global demand for these commodities to hurt the company’s margins and revenues. Even with lower investor expectations, the company missed earnings and revenue estimates for the last two quarters of 2014. Basic Energy Services was also hurt by lower oil prices and industry weakness, along with misses on earnings and revenues. Within industrials, weaker expectations for domestic crude oil production negatively impacted railcar manufacturer The Greenbrier Cos, Inc., which has benefited extensively from demand for railcars driven by shale oil production. A position in metal and gas cylinder manufacturer Luxfer Holdings PLC lagged, as the company’s results were also hurt by the energy sector weakness.

• Stock selection within the information technology (“IT”) sector made the most significant positive contribution to performance. The Fund’s position

in Ambarella, Inc., a producer of high-definition chips for video cameras, appreciated considerably after the company released earnings and revenues that were above expectations. The company’s processing chips are used for high-definition wearable cameras, wireless security cameras and dashboard and rear-view cameras for automobiles. Ambarella is the exclusive chip supplier to wearable sports camera leader GoPro, which accounts for about one-third of the company’s revenues. A position in supply chain technology provider Manhattan Associates, Inc. contributed to performance, as the company’s shares appreciated on better-than-expected earnings, revenues and forward guidance. A position in flash memory producer Spansion, Inc. rose significantly over the period on strong earnings, as well as the announcement of an accretive merger with integrated circuits company Cypress Semiconductor, which is expected to achieve considerable cost synergies.

Describe recent portfolio activity.

• During the six-month period, the Fund’s weightings in the health care and consumer discretionary sectors increased while the weightings in energy and IT decreased.

Describe portfolio positioning at period end.

• Relative to the Russell 2000 Growth^® Index, the Fund’s most significant sector overweight position as of period end was consumer discretionary while the most significant underweight position was in IT.

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

Manhattan Associates, Inc.	2	%
STERIS Corp.	2
LogMeIn, Inc.	2
Burlington Stores, Inc.	2
Tenneco, Inc.	2
Jack in the Box, Inc.	2
JetBlue Airways Corp.	2
DuPont Fabros Technology, Inc.	2
Syntel, Inc.	2
Boise Cascade Co.	2

Sector Allocation Percent of Long-Term  Investments

Health Care	25	%
Information Technology	25
Consumer Discretionary	18
Industrials	14
Financials	8
Materials	4
Consumer Staples	3
Energy	2
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 the investment advisor. These definitions may not apply for purposes of this report, which may combine sector sub-classifications for reporting ease.

8 BLACKROCK FUNDS MARCH 31, 2015

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 and administration fees, if any. 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 small cap companies and at least 80% of its net assets (plus any borrowings for investment purposes) in securities or instruments of issuers located in the United States.

³  An unmanaged index that measures performance of the small-cap growth segment of the US equity universe. It includes those Russell 2000^® Index companies with higher price-to-value ratios and higher forecasted growth values.

Performance Summary for the Period Ended March 31, 2015
				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		11.82	%		7.99	%		N/A			14.07	%		N/A			10.13	%		N/A
Service		11.64			7.67			N/A			13.74			N/A			9.83			N/A
Investor A		11.65			7.67			2.01	%		13.69			12.47	%		9.75			9.16	%
Investor B		11.12			6.75			3.54			12.72			12.57			8.99			8.99
Investor C		11.23			6.80			6.09			12.76			12.76			8.81			8.81
Russell 2000® Growth Index		17.36			12.06			N/A			16.58			N/A			10.02			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, 2014	Ending Account Value March 31, 2015	Expenses Paid During the  Period5	Beginning Account Value October 1, 2014	Ending Account Value March 31, 2015	Expenses Paid During the  Period5	Annualized Expense Ratio
Institutional	$1,000.00	$1,118.20	$4.38	$1,000.00	$1,020.79	$4.18	0.83%
Service	$1,000.00	$1,116.40	$6.07	$1,000.00	$1,019.20	$5.79	1.15%
Investor A	$1,000.00	$1,116.50	$6.07	$1,000.00	$1,019.20	$5.79	1.15%
Investor B	$1,000.00	$1,111.20	$10.95	$1,000.00	$1,014.56	$10.45	2.08%
Investor C	$1,000.00	$1,112.30	$10.22	$1,000.00	$1,015.26	$9.75	1.94%

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 182/365 (to reflect the one-half year period shown).

⁶  Hypothetical 5% annual return before expenses is calculated by prorating the number of days in the most recent fiscal half year divided by 365.

See “Disclosure of Expenses” on page 11 for further information on how expenses were calculated.

BLACKROCK FUNDS MARCH 31, 2015 9

About Fund Performance

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

• Service Shares are not subject to any sales charge. These shares are subject to a service fee of 0.25% per year (but no distribution fee) and are only available to certain eligible investors.

• Investor A Shares are subject to a maximum initial sales charge (front-end load) of 5.25% and a service fee of 0.25% per year (but no distribution fee). Certain redemptions of these shares may be subject to a contingent deferred sales charge (“CDSC”) where no initial sales charge was paid at the time of purchase. These shares are generally available through financial intermediaries.

• Investor B Shares are subject to a maximum CDSC of 4.50% declining to 0% after six years. In addition, these shares are subject to a distribution fee of 0.75% per year and a service fee of 0.25% per year. These 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. These shares are only available through exchanges and distribution reinvestments by current holders and for purchase by certain employer-sponsored retirement plans.

• Investor C Shares are subject to a 1.00% CDSC if redeemed within one year of purchase. In addition, these shares are subject to a distribution fee of 0.75% per year and a service fee of 0.25% per year. These shares are generally available through financial intermediaries.

• Class R Shares are not subject to any sales charge. These shares are subject to a distribution fee of 0.25% per year and a service fee of

0.25% per year. These shares are available only to certain employer-sponsored retirement plans. Prior to October 2, 2006, Class R performance results of BlackRock Mid-Cap Growth Equity Portfolio are those of Institutional Shares (which have no distribution or service fees) restated to reflect Class R Share fees. Prior to July 30, 2010, Class R performance results of BlackRock Flexible Equity Fund are those of Institutional Shares (which have no distribution or service fees) restated to reflect Class R Share 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 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. Distributions 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.

BlackRock Advisors, LLC (the “Manager”), the Funds’ investment advisor, waived and/or reimbursed a portion of each Fund’s expenses. Without such waiver and/or reimbursement, each Fund’s performance would have been lower. The Manager is under no obligation to waive and/or reimburse or to continue waiving and/or reimbursing its fees after the applicable termination date. See Note 5 of the Notes to Financial Statements for additional information on waivers and reimbursements.

10 BLACKROCK FUNDS MARCH 31, 2015

Disclosure of Expenses

Shareholders of the Funds may incur the following charges: (a) transactional expenses, such as sales charges; and (b) operating expenses, including investment advisory fees, administration 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, 2014 and held through March 31, 2015) are intended to assist shareholders both in calculating expenses based on an investment in each Fund and in comparing these expenses with similar costs of investing in other mutual funds.

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

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

The expenses shown in the expense examples are intended to highlight shareholders’ ongoing costs only and do not reflect any transactional expenses, such as sales charges, 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. Derivative financial instruments are used to obtain exposure to a security, index and/or market without owning or taking physical custody of securities or to manage market, equity, credit, interest rate, foreign currency exchange rate, commodity and/or other risks. Derivative financial instruments may give rise to a form of economic leverage. Derivative financial instruments also 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 limit the amount of appreciation a Fund can realize on an investment and/or may result in lower distributions paid to shareholders. The Funds’ investments in these instruments are discussed in detail in the Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 11

Consolidated Schedule of Investments March 31, 2015 (Unaudited)	BlackRock Flexible Equity Fund
	(Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Aerospace & Defense — 1.2%
Honeywell International, Inc.		8,100	$	844,911
Raytheon Co.		53,176		5,809,478
				6,654,389
Air Freight & Logistics — 1.1%
FedEx Corp.		38,037		6,293,222
Airlines — 1.8%
Southwest Airlines Co.		87,650		3,882,895
United Continental Holdings, Inc. (a)		87,475		5,882,694
				9,765,589
Auto Components — 0.6%
Lear Corp.		27,700		3,069,714
Banks — 11.8%
Bank of America Corp.		882,604		13,583,276
Citigroup, Inc.		238,971		12,311,786
JPMorgan Chase & Co.		262,554		15,905,521
SunTrust Banks, Inc.		180,039		7,397,803
U.S. Bancorp		316,757		13,832,778
Wells Fargo & Co.		49,409		2,687,850
				65,719,014
Beverages — 2.7%
Dr Pepper Snapple Group, Inc.		115,590		9,071,503
Molson Coors Brewing Co., Class B		80,911		6,023,824
				15,095,327
Biotechnology — 1.9%
Amgen, Inc.		65,942		10,540,829
Capital Markets — 1.2%
Atlas Mara Co-Nvest Ltd. (a)		93,690		655,830
Freedom Pay, Inc. (a)		43,051		—
The Goldman Sachs Group, Inc.		32,111		6,035,905
				6,691,735
Chemicals — 0.3%
The Dow Chemical Co.		39,097		1,875,874
Communications Equipment — 3.2%
Brocade Communications Systems, Inc.		397,945		4,721,617
Cisco Systems, Inc.		331,545		9,125,776
QUALCOMM, Inc.		56,040		3,885,814
				17,733,207
Consumer Finance — 2.5%
Discover Financial Services		161,822		9,118,670
SLM Corp. (a)		493,733		4,581,842
				13,700,512
Containers & Packaging — 0.7%
Packaging Corp. of America		51,403		4,019,201
Electronic Equipment, Instruments & Components — 0.5%
Zebra Technologies Corp., Class A (a)		31,261		2,835,842
Energy Equipment & Services — 2.4%
Atwood Oceanics, Inc.		58,395		1,641,483
Halliburton Co.		24,076		1,056,455
Schlumberger Ltd.		104,580		8,726,155

Common Stocks	Shares		Value
Energy Equipment & Services (concluded)
Weatherford International PLC (a)		139,743	$	1,718,839
				13,142,932
Food & Staples Retailing — 4.1%
CVS Health Corp.		175,080		18,070,007
The Kroger Co.		8,200		628,612
Wal-Mart Stores, Inc.		51,465		4,232,996
				22,931,615
Food Products — 0.4%
Pilgrim’s Pride Corp. (b)		37,405		844,979
Tyson Foods, Inc., Class A		40,009		1,532,345
				2,377,324
Health Care Equipment & Supplies — 0.1%
Medtronic PLC		7,560		589,604
Health Care Providers & Services — 14.2%
Aetna, Inc.		117,700		12,538,581
Centene Corp. (a)		98,564		6,967,489
Cigna Corp.		66,840		8,651,770
Express Scripts Holding Co. (a)		22,834		1,981,306
Humana, Inc.		4,200		747,684
Laboratory Corp. of America Holdings (a)		52,646		6,638,134
McKesson Corp.		33,537		7,586,069
UnitedHealth Group, Inc.		227,683		26,932,622
Universal Health Services, Inc., Class B		58,239		6,855,313
				78,898,968
Hotels, Restaurants & Leisure — 1.7%
Carnival Corp.		135,649		6,489,448
Las Vegas Sands Corp.		50,222		2,764,219
				9,253,667
Industrial Conglomerates — 2.5%
3M Co.		84,054		13,864,707
Insurance — 3.5%
American International Group, Inc.		231,635		12,691,282
The Travelers Cos., Inc.		65,113		7,040,669
				19,731,951
Internet & Catalog Retail — 0.5%
The Priceline Group, Inc. (a)		2,221		2,585,577
Internet Software & Services — 3.9%
Facebook, Inc., Class A (a)		94,639		7,780,745
Google, Inc., Class A (a)		25,550		14,172,585
				21,953,330
IT Services — 3.0%
Alliance Data Systems Corp. (a)		3,725		1,103,531
Amdocs Ltd.		72,853		3,963,203
Cognizant Technology Solutions Corp., Class A (a)		43,501		2,714,027
DST Systems, Inc.		10,830		1,198,989
MasterCard, Inc., Class A		32,326		2,792,643
ServiceSource International, Inc. (a)		557,644		1,728,696
Total System Services, Inc.		82,088		3,131,657
				16,632,746

Portfolio Abbreviations
ADR	American Depositary Receipts	EUR	Euro	USD	U.S. Dollar
CAD	Canadian Dollar	JPY	Japanese Yen
CVR	Contingent Value Rights	KRW	Korean Won

See Notes to Financial Statements.

12 BLACKROCK FUNDS MARCH 31, 2015

Consolidated Schedule of Investments (continued)	BlackRock Flexible Equity Fund
	(Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Machinery — 0.7%
Parker Hannifin Corp.		34,655	$	4,116,321
Media — 3.1%
Comcast Corp., Class A		267,716		15,117,923
Omnicom Group, Inc.		30,701		2,394,064
				17,511,987
Multiline Retail — 0.7%
Macy’s, Inc.		60,810		3,947,177
Multi-Utilities — 0.4%
Public Service Enterprise Group, Inc.		48,129		2,017,568
Oil, Gas & Consumable Fuels — 4.4%
BP PLC — ADR		159,683		6,245,202
Exxon Mobil Corp.		21,359		1,815,515
Hess Corp.		54,612		3,706,516
Marathon Petroleum Corp.		26,003		2,662,447
PBF Energy, Inc., Class A		42,158		1,429,999
Suncor Energy, Inc.		242,587		7,095,670
Tesoro Corp.		16,922		1,544,809
				24,500,158
Paper & Forest Products — 0.7%
Domtar Corp.		78,475		3,627,115
Pharmaceuticals — 4.5%
AstraZeneca PLC — ADR		81,969		5,609,139
Johnson & Johnson		19,164		1,927,898
Pfizer, Inc.		17,382		604,720
Shire PLC — ADR		22,449		5,371,821
Teva Pharmaceutical Industries Ltd. — ADR		180,486		11,244,278
				24,757,856
Road & Rail — 0.9%
Norfolk Southern Corp.		34,624		3,563,502
Union Pacific Corp.		14,282		1,546,883
				5,110,385
Semiconductors & Semiconductor Equipment — 4.1%
Intel Corp.		345,522		10,804,473
Micron Technology, Inc. (a)		362,995		9,848,054
NVIDIA Corp.		112,900		2,362,434
				23,014,961
Software — 2.1%
Microsoft Corp.		177,697		7,224,272
Oracle Corp.		108,274		4,672,023
				11,896,295

Common Stocks	Shares		Value
Specialty Retail — 5.1%
The Home Depot, Inc.		78,160	$	8,879,758
Lowe’s Companies, Inc.		198,647		14,777,350
Ross Stores, Inc.		44,046		4,640,687
				28,297,795
Technology Hardware, Storage & Peripherals — 5.5%
Apple Inc.		63,988		7,962,027
EMC Corp.		286,176		7,314,659
Hewlett-Packard Co.		177,663		5,535,979
Western Digital Corp.		106,112		9,657,253
				30,469,918
Textiles, Apparel & Luxury Goods — 0.6%
Deckers Outdoor Corp. (a)		18,552		1,351,884
Fossil Group, Inc. (a)		24,771		2,042,369
				3,394,253
Total Common Stocks — 98.6%				548,618,665
Investment Companies — 0.1%
Utilities Select Sector SPDR Fund		19,180		852,167
Total Long-Term Investments (Cost — $534,656,902) — 98.7%				549,470,832
Short-Term Securities
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.06% (c)(d)		1,637,791		1,637,791
	Beneficial Interest (000)
BlackRock Liquidity Series, LLC, Money Market Series, 0.22% (c)(d)(e)	$	576		576,157
Total Short-Term Securities (Cost — $2,213,948) — 0.4%				2,213,948
Total Investments (Cost — $536,870,850) — 99.1%				551,684,780
Other Assets in Excess of Liabilities — 0.9%				4,881,233
Net Assets — 100.0%			$	556,566,013

Notes to Consolidated Schedule of Investments

(a) Non-income producing security.

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

(c) During the six months ended March 31, 2015, investments in issuers considered to be an affiliate of the Fund 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, 2014		Shares Purchased			Shares Sold			Shares/Beneficial Interest Held at March 31, 2015		Value at March 31, 2015		Income		Realized Gain (Loss)
BlackRock Liquidity Funds, TempFund, Institutional Class		49,141,411		—			47,503,620	1		1,637,791	$	1,637,791	$	7,375	$	3,191
BlackRock Liquidity Series, LLC, Money Market Series		—		576,157	2		—		$	576,157	$	576,157	$	76,249		—
iShares Gold Trust		946,100		1,314,000			2,260,100			—		—		—	$	(602,119	)

¹  Represents net shares sold.

²  Represents net shares purchased.

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 13

Consolidated Schedule of Investments (continued) BlackRock Flexible Equity Fund

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

(e) Security was purchased with the cash collateral from loaned securities. The Fund may withdraw up to 25% of its investment daily, although the manager of the BlackRock Liquidity Series, LLC, Money Market Series, in its sole discretion, may permit an investor to withdraw more than 25% on any one day.

• 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 the investment advisor. These definitions may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

• As of March 31, 2015, forward foreign currency exchange contracts outstanding were as follows:

Currency Purchased		Currency Sold			Counterparty	Settlement Date			Unrealized Appreciation (Depreciation)
CAD	5,341,000		USD	4,297,671	Citibank N.A.		4/22/15		$	(81,839	)
CAD	4,213,000		USD	3,368,420	Goldman Sachs Bank USA		4/22/15			(42,957	)
CAD	1,521,683		USD	1,217,605	State Street Bank and Trust Co.		4/22/15			(16,489	)
EUR	1,028,728		USD	1,181,138	Citibank N.A.		4/22/15			(74,663	)
EUR	1,069,857		USD	1,208,328	Deutsche Bank AG		4/22/15			(57,616	)
EUR	920,457		USD	1,042,708	TD Securities, Inc.		4/22/15			(52,687	)
JPY	1,090,227,000		USD	9,077,010	BNP Paribas S.A.		4/22/15			16,336
JPY	721,004,000		USD	6,027,000	Citibank N.A.		4/22/15			(13,263	)
JPY	2,239,247,000		USD	18,647,898	Citibank N.A.		4/22/15			29,174
JPY	637,901,000		USD	5,333,710	Standard Chartered Bank		4/22/15			(13,116	)
JPY	319,425,085		USD	2,687,999	The Bank of New York Mellon		4/22/15			(23,744	)
KRW	9,000,000,000		USD	8,186,283	Standard Chartered Bank		4/22/15			(80,317	)
KRW	2,419,143,024		USD	2,194,632	Standard Chartered Bank		4/22/15			(15,800	)
KRW	5,843,460,082		USD	5,369,759	UBS AG		4/22/15			(106,771	)
USD	9,223,664		CAD	11,075,683	TD Securities, Inc.		4/22/15			481,252
USD	144,610		EUR	131,425	Citibank N.A.		4/22/15	��		3,252
USD	3,334,688		EUR	2,887,616	HSBC Bank PLC		4/22/15			228,836
USD	42,167,238		JPY	4,949,033,730	HSBC Bank PLC		4/22/15			888,426
USD	484,642		JPY	58,770,355	The Bank of New York Mellon		4/22/15			(5,549	)
USD	15,955,084		KRW	17,262,603,106	Standard Chartered Bank		4/22/15			407,298
Total									$	1,469,763

• Fair Value Measurements — Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instruments and is not necessarily an indication of the risks associated with investing in those securities. The three levels of the fair value hierarchy are as follows:

• Level 1 — unadjusted quoted prices in active markets/exchanges for identical assets or liabilities that the Fund has the ability to access

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

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

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Fund’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. For information about the Fund’s policy regarding valuation of investments and derivative financial instruments, refer to Note 2 of the Notes to Financial Statements.

See Notes to Financial Statements.

14 BLACKROCK FUNDS MARCH 31, 2015

Consolidated Schedule of Investments (concluded) BlackRock Flexible Equity Fund

As of March 31, 2015, the following tables summarize the Fund’s investments and derivative financial instruments categorized in the disclosure hierarchy:

	Level 1		Level 2			Level 3	Total
Assets:
Investments:
Long-Term Investments:
Common Stocks1	$	548,618,665		—		—	$	548,618,665
Investment Companies		852,167		—		—		852,167
Short-Term Securities		1,637,791	$	576,157		—		2,213,948
Total	$	551,108,623	$	576,157		—	$	551,684,780
1     See above Schedule of Investments for values in each industry.
	Level 1		Level 2			Level 3	Total
Derivative Financial Instruments2
Assets:
Foreign currency exchange contracts		—	$	2,054,574		—	$	2,054,574
Liabilities:
Foreign currency exchange contracts		—		(584,811	)	—		(584,811	)
Total		—	$	1,469,763		—	$	1,469,763
2     Derivative financial instruments are forward foreign currency exchange contracts. Forward foreign currency exchange contracts are valued at the unrealized appreciation/ depreciation on the instrument.

The Fund may hold assets and/or liabilities in which the fair value approximates the carrying amount for financial statement purposes. As of March 31, 2015, collateral on securities loaned at value of $576,157 are categorized as Level 2 within the disclosure hierarchy.

During the six months ended March 31, 2015, there were no transfers between levels.

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 15

Schedule of Investments March 31, 2015 (Unaudited)	BlackRock Mid-Cap Growth Equity Portfolio
	(Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Air Freight & Logistics — 1.5%
XPO Logistics, Inc. (a)		145,174	$	6,601,062
Airlines — 2.2%
Spirit Airlines, Inc. (a)		121,874		9,428,173
Banks — 2.5%
First Republic Bank		113,411		6,474,634
SVB Financial Group (a)		35,304		4,485,020
				10,959,654
Beverages — 1.8%
Constellation Brands, Inc., Class A (a)		67,675		7,864,512
Biotechnology — 9.3%
BioMarin Pharmaceutical, Inc. (a)		56,825		7,081,532
Cellectis SA — ADR (a)		1,300		44,967
Intercept Pharmaceuticals, Inc. (a)		15,032		4,239,325
United Therapeutics Corp. (a)		103,808		17,900,132
Vertex Pharmaceuticals, Inc. (a)		94,887		11,193,819
				40,459,775
Capital Markets — 1.5%
Affiliated Managers Group, Inc. (a)		31,076		6,674,503
Chemicals — 1.7%
Platform Specialty Products Corp. (a)		291,302		7,474,809
Commercial Services & Supplies — 1.6%
KAR Auction Services, Inc.		189,419		7,184,663
Diversified Consumer Services — 1.8%
H&R Block, Inc.		248,977		7,984,692
Diversified Financial Services — 2.2%
Moody’s Corp.		92,437		9,594,961
Electrical Equipment — 1.5%
Acuity Brands, Inc.		37,672		6,334,924
Food & Staples Retailing — 2.2%
Sprouts Farmers Market, Inc. (a)		278,387		9,807,574
Food Products — 0.6%
Mead Johnson Nutrition Co.		24,464		2,459,366
Health Care Equipment & Supplies — 1.2%
The Cooper Cos., Inc.		27,112		5,081,331
Health Care Technology — 1.7%
athenahealth, Inc. (a)(b)		31,534		3,764,844
IMS Health Holdings, Inc. (a)		127,374		3,448,014
				7,212,858
Hotels, Restaurants & Leisure — 2.8%
Domino’s Pizza, Inc.		51,699		5,198,334
Restaurant Brands International, Inc.		184,961		7,104,352
				12,302,686
Household Durables — 1.9%
Jarden Corp. (a)		158,130		8,365,077
Internet & Catalog Retail — 13.9%
HSN, Inc.		84,291		5,751,175
Liberty TripAdvisor Holdings, Inc., Class A (a)		415,835		13,219,395
Liberty Ventures, Series A (a)		378,636		15,906,498
Netflix, Inc. (a)		34,786		14,494,978
Vipshop Holdings Ltd. — ADR (a)		382,997		11,275,432
				60,647,478
Internet Software & Services — 5.0%
58.com, Inc. — ADR (a)		47,332		2,502,916
CoStar Group, Inc. (a)		36,967		7,313,182
Hortonworks, Inc. (a)(b)		104,720		2,496,525
LinkedIn Corp., Class A (a)		37,359		9,334,520
				21,647,143

Common Stocks	Shares		Value
IT Services — 6.5%
Alliance Data Systems Corp. (a)		33,716	$	9,988,365
FleetCor Technologies, Inc. (a)		76,303		11,515,649
Vantiv, Inc., Class A (a)		185,907		7,008,694
				28,512,708
Media — 5.2%
Charter Communications, Inc., Class A (a)		37,516		7,244,715
The Madison Square Garden Co., Class A (a)		150,962		12,778,933
Schibsted ASA		46,887		2,711,242
				22,734,890
Multiline Retail — 2.7%
Dollar General Corp.		154,383		11,637,391
Oil, Gas & Consumable Fuels — 1.3%
Concho Resources, Inc. (a)		49,901		5,784,524
Pharmaceuticals — 5.5%
Catalent, Inc. (a)		262,842		8,187,528
Mallinckrodt PLC (a)		59,760		7,568,604
Perrigo Co. PLC		50,310		8,328,821
				24,084,953
Professional Services — 0.5%
TriNet Group, Inc. (a)		58,009		2,043,657
Software — 3.8%
Check Point Software Technologies Ltd. (a)		85,014		6,968,598
PTC, Inc. (a)		209,835		7,589,732
Splunk, Inc. (a)		36,246		2,145,763
				16,704,093
Specialty Retail — 3.9%
The Men’s Wearhouse, Inc.		142,133		7,419,343
Restoration Hardware Holdings, Inc. (a)		98,839		9,803,840
				17,223,183
Technology Hardware, Storage & Peripherals — 1.1%
SanDisk Corp.		78,959		5,023,372
Textiles, Apparel & Luxury Goods — 5.2%
Kate Spade & Co. (a)		261,036		8,715,992
lululemon athletica, inc. (a)		120,467		7,712,297
Under Armour, Inc., Class A (a)		76,467		6,174,710
				22,602,999
Trading Companies & Distributors — 0.8%
HD Supply Holdings, Inc. (a)		113,170		3,525,811
Wireless Telecommunication Services — 2.4%
SBA Communications Corp., Class A (a)		91,070		10,664,297
Total Common Stocks — 95.8%				418,627,119
Preferred Stocks
Internet Software & Services — 2.5%
Uber Technologies, Inc., Series D (Acquired 6/06/14, cost $5,000,911) (a)(c)		322,368		10,950,905
Software — 0.9%
Palantir Technologies, Inc., Series I (Acquired 2/07/14, cost $2,811,905) (a)(c)		458,712		4,077,950
Total Preferred Stocks — 3.4%				15,028,855

See Notes to Financial Statements.

16 BLACKROCK FUNDS MARCH 31, 2015

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

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 17.70)		81,252		—
Total Long-Term Investments (Cost — $321,175,040) — 99.2%			$	433,655,974
Short-Term Securities
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.06% (e)(f)		2,200,167		2,200,167

Short-Term Securities	Beneficial Interest (000)		Value
BlackRock Liquidity Series, LLC, Money Market Series, 0.22% (e)(f)(g)	$	2,144	$	2,144,391
Total Short-Term Securities (Cost — $4,344,558) — 1.0%				4,344,558
Total Investments (Cost — $325,519,598) — 100.2%				438,000,532
Liabilities in Excess of Other Assets — (0.2)%				(939,243	)
Net Assets — 100.0%			$	437,061,289

Notes to Schedule of Investments

(a) Non-income producing security.

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

(c) Restricted security as to resale. As of report date, the Fund held restricted securities with a current value of $15,028,855 and an original cost of $7,812,816 which was 3.4% of its net assets.

(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 of the warrants, if any.

(e) During the six months ended March 31, 2015, investments in issuers considered to be an affiliate of the Fund 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, 2014		Net Activity			Shares/ Beneficial Interest Held at March 31, 2015		Income
BlackRock Liquidity Funds, TempFund, Institutional Class		1,739,599		460,568			2,200,167	$	841
BlackRock Liquidity Series, LLC, Money Market Series	$	15,352,860	$	(13,208,469	)	$	2,144,391	$	33,275

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

(g) Security was purchased with the cash collateral from loaned securities. The Fund may withdraw up to 25% of its investment daily, although the manager of the BlackRock Liquidity Series, LLC, Money Market Series, in its sole discretion, may permit an investor to withdraw more than 25% on any one day.

• 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 the investment advisor. These definitions may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

• Fair Value Measurements — Various inputs are used in determining the fair value of investments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. 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. The three levels of the fair value hierarchy are as follows:

• Level 1 — unadjusted quoted prices in active markets/exchanges for identical assets or liabilities that the Fund has the ability to access

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

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

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Fund’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. For information about the Fund’s policy regarding valuation of investments, refer to Note 2 of the Notes to Financial Statements.

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 17

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

As of March 31, 2015, the following table summarizes the Fund’s investments categorized in the disclosure hierarchy:

	Level 1		Level 2			Level 3		Total
Assets:
Investments:
Long-Term Investments:
Common Stocks:
Air Freight & Logistics	$	6,601,062		—			—	$	6,601,062
Airlines		9,428,173		—			—		9,428,173
Banks		10,959,654		—			—		10,959,654
Beverages		7,864,512		—			—		7,864,512
Biotechnology		40,459,775		—			—		40,459,775
Capital Markets		6,674,503		—			—		6,674,503
Chemicals		7,474,809		—			—		7,474,809
Commercial Services & Supplies		7,184,663		—			—		7,184,663
Diversified Consumer Services		7,984,692		—			—		7,984,692
Diversified Financial Services		9,594,961		—			—		9,594,961
Electrical Equipment		6,334,924		—			—		6,334,924
Food & Staples Retailing		9,807,574		—			—		9,807,574
Food Products		2,459,366		—			—		2,459,366
Health Care Equipment & Supplies		5,081,331		—			—		5,081,331
Health Care Technology		7,212,858		—			—		7,212,858
Hotels, Restaurants & Leisure		12,302,686		—			—		12,302,686
Household Durables		8,365,077		—			—		8,365,077
Internet & Catalog Retail		60,647,478		—			—		60,647,478
Internet Software & Services		21,647,143		—			—		21,647,143
IT Services		28,512,708		—			—		28,512,708
Media		20,023,648	$	2,711,242			—		22,734,890
Multiline Retail		11,637,391		—			—		11,637,391
Oil, Gas & Consumable Fuels		5,784,524		—			—		5,784,524
Pharmaceuticals		24,084,953		—			—		24,084,953
Professional Services		2,043,657		—			—		2,043,657
Software		16,704,093		—			—		16,704,093
Specialty Retail		17,223,183		—			—		17,223,183
Technology Hardware, Storage & Peripherals		5,023,372		—			—		5,023,372
Textiles, Apparel & Luxury Goods		22,602,999		—			—		22,602,999
Trading Companies & Distributors		3,525,811		—			—		3,525,811
Wireless Telecommunication Services		10,664,297		—			—		10,664,297
Preferred Stocks:
Internet Software & Services		—		—		$	10,950,905		10,950,905
Software		—		—			4,077,950		4,077,950
Warrants		—		—			—		—
Short-Term Securities		2,200,167		2,144,391			—		4,344,558
Total	$	418,116,044	$	4,855,633		$	15,028,855	$	438,000,532
The Fund may hold assets and/or liabilities in which the fair value approximates the carrying amount for financial statement purposes. As of March 31, 2015, such assets and/or liabilities are categorized within the disclosure hierarchy as follows:
	Level 1		Level 2			Level 3		Total
Assets:
Foreign currency at value	$	1,355		—			—	$	1,355
Liabilities:
Collateral on securities loaned at value		—	$	(2,144,391	)		—		(2,144,391	)
Total	$	1,355	$	(2,144,391	)		—	$	(2,143,036	)

During the six months ended March 31, 2015, there were no transfers between Level 1 and Level 2.

See Notes to Financial Statements.

18 BLACKROCK FUNDS MARCH 31, 2015

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

A reconciliation of Level 3 investments is presented when the Fund had a significant amount of Level 3 investments at the beginning and/or end of the period in relation to net assets. The following table is a reconciliation of Level 3 investments for which significant unobservable inputs were used in determining fair value:

	Preferred Securities
Assets:
Opening balance, as of September 30, 2014	$	7,812,816
Transfers into Level 3		—
Transfers out of Level 3		—
Accrued discounts/premiums		—
Net realized gain (loss)		—
Net change in unrealized appreciation/depreciation1,2		7,216,039
Purchases		—
Sales		—
Closing balance, as of March 31, 2015	$	15,028,855
Net change in unrealized appreciation/depreciation on investments still held at March 31, 20152	$	7,216,039

¹  Included in the related net change in unrealized appreciation/depreciation in the Statements of Operations.

²  Any difference between Net change in unrealized appreciation/depreciation and Net change in unrealized appreciation/depreciation on investments still held at March 31, 2015 is generally due to investments no longer held or categorized as level 3 at period end.

The following table summarizes the valuation techniques used and unobservable inputs utilized by the BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) to determine the value of certain of the Fund’s Level 3 investments as of March 31, 2015.

	Value		Valuation Techniques	Unobservable Inputs	Range of Unobservable Inputs Utilized
Assets:
Preferred Stocks3	$	15,028,855	Probability-Weighted Expected Return Model	Years to IPO4		0.75-2.9
				IPO Exit Probability5		90.00% - 95.00%
				Discount Rate4		21.30% - 22.31%
				Margin5		20.00%
				Revenue Multiple5		10.0x-16.0x

³  For the period ended March 31, 2015, the valuation technique for certain investments classified as preferred stocks changed to a Probability-Weighted Expected Return Model. The investments were previously valued utilizing a market comparable company and option pricing model approach. A Probability-Weighted Expected Return Model was considered to be a more relevant measure of fair value for these investments which leverages the most recent equity raise pre-money valuation.

⁴  Decrease in unobservable input may result in a significant increase to value, while an increase in the unobservable input may result in a significant decrease to value.

⁵  Increase in unobservable input may result in a significant increase to value, while a decrease in the unobservable input may result in a significant decrease to value.

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 19

Schedule of Investments March 31, 2015 (Unaudited)	BlackRock Small Cap Growth Equity Portfolio
	(Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Aerospace & Defense — 0.7%
Ducommun, Inc. (a)		100,832	$	2,611,549
Moog, Inc., Class A (a)		6,073		455,779
Vectrus, Inc. (a)		99,653		2,540,155
				5,607,483
Airlines — 1.9%
American Airlines Group, Inc.		12,816		676,428
JetBlue Airways Corp. (a)		702,238		13,518,081
Virgin America, Inc. (a)		72,033		2,189,803
				16,384,312
Auto Components — 3.1%
Lear Corp.		2,217		245,688
Tenneco, Inc. (a)		241,345		13,858,030
Tower International, Inc. (a)		463,986		12,342,028
				26,445,746
Banks — 1.0%
CommunityOne Bancorp (a)		29,762		292,858
First Midwest Bancorp, Inc.		29,540		513,110
Glacier Bancorp, Inc.		29,657		745,874
Texas Capital Bancshares, Inc. (a)		110,708		5,385,944
Umpqua Holdings Corp.		75,351		1,294,530
				8,232,316
Biotechnology — 10.4%
ACADIA Pharmaceuticals, Inc. (a)		26,049		848,937
Acorda Therapeutics, Inc. (a)		86,189		2,868,370
Adamas Pharmaceuticals, Inc. (a)		33,856		592,141
Alder Biopharmaceuticals, Inc. (a)		65,719		1,896,650
Amicus Therapeutics, Inc. (a)		120,335		1,309,245
Anacor Pharmaceuticals, Inc. (a)		4,972		287,630
Ardelyx, Inc. (a)		40,556		530,878
Ariad Pharmaceuticals, Inc. (a)		104,827		863,774
Auspex Pharmaceuticals, Inc. (a)		9,376		940,132
BIND Therapeutics, Inc. (a)(b)		82,364		452,178
BioSpecifics Technologies Corp. (a)		46,664		1,826,896
Bluebird Bio, Inc. (a)		11,141		1,345,499
Celladon Corp. (a)		37,598		712,106
Celldex Therapeutics, Inc. (a)		33,552		935,094
Cepheid, Inc. (a)		40,654		2,313,213
China Biologic Products, Inc. (a)		18,188		1,737,136
Clovis Oncology, Inc. (a)		5,183		384,734
Coherus Biosciences, Inc. (a)		26,191		800,921
Concert Pharmaceuticals, Inc. (a)		104,828		1,587,620
Cytokinetics, Inc. (a)		173,037		1,173,191
Dyax Corp. (a)		222,551		3,728,842
Eleven Biotherapeutics, Inc. (a)		3,424		30,542
Emergent Biosolutions, Inc. (a)		60,436		1,738,139
Enanta Pharmaceuticals, Inc. (a)		62,276		1,906,891
Enzon Pharmaceuticals, Inc.		631,173		669,043
EPIRUS Biopharmaceuticals, Inc. (a)		63,827		571,252
Epizyme, Inc. (a)		33,386		626,989
Exact Sciences Corp. (a)		25,367		558,581
FibroGen, Inc. (a)		11,824		371,037
Five Prime Therapeutics, Inc. (a)		84,073		1,921,068
Halozyme Therapeutics, Inc. (a)		21,628		308,848
Harvard Apparatus Regenerative Technology, Inc. (a)		84,747		275,428
Hyperion Therapeutics, Inc. (a)		9,767		448,305
Immune Design Corp. (a)		49,806		1,051,405
Infinity Pharmaceuticals, Inc. (a)		147,161		2,057,311
Intrexon Corp. (a)		6,507		295,223
Ironwood Pharmaceuticals, Inc. (a)		28,876		462,016

Common Stocks	Shares		Value
Biotechnology (concluded)
Isis Pharmaceuticals, Inc. (a)		132,353	$	8,426,915
Kindred Biosciences, Inc. (a)		61,634		440,067
Ligand Pharmaceuticals, Inc., Class B (a)		39,739		3,064,274
Lion Biotechnologies, Inc. (a)		65,049		787,743
Loxo Oncology, Inc. (a)		17,257		214,850
Merrimack Pharmaceuticals, Inc. (a)		217,995		2,589,781
MiMedx Group, Inc. (a)		47,200		490,880
Momenta Pharmaceuticals, Inc. (a)		32,937		500,642
Neurocrine Biosciences, Inc. (a)		46,878		1,861,525
Novavax, Inc. (a)		64,410		532,671
OncoGenex Pharmaceuticals, Inc. (a)		154,513	��	332,203
Oncothyreon, Inc. (a)		136,379		222,298
Ophthotech Corp. (a)		4,645		216,132
OPKO Health, Inc. (a)		91,298		1,293,693
Orexigen Therapeutics, Inc. (a)		64,920		508,324
Osiris Therapeutics, Inc. (a)		6,594		115,922
PDL BioPharma, Inc.		376,335		2,647,517
Peregrine Pharmaceuticals, Inc. (a)(b)		282,657		381,587
Portola Pharmaceuticals, Inc. (a)		9,885		375,235
Prothena Corp. PLC (a)		49,524		1,888,845
PTC Therapeutics, Inc. (a)		2,890		175,857
Puma Biotechnology, Inc. (a)		15,692		3,705,038
Raptor Pharmaceutical Corp. (a)		28,820		313,273
Receptos, Inc. (a)		20,056		3,307,034
Retrophin, Inc. (a)		4,354		104,322
Rigel Pharmaceuticals, Inc. (a)		380,863		1,359,681
Sangamo Biosciences, Inc. (a)		113,676		1,782,440
Sorrento Therapeutics, Inc. (a)		40,323		466,134
Spark Therapeutics, Inc. (a)		3,369		261,097
Spectrum Pharmaceuticals, Inc. (a)		231,100		1,402,777
Synageva BioPharma Corp. (a)		8,402		819,447
Threshold Pharmaceuticals, Inc. (a)		47,898		194,466
Trevena, Inc. (a)		252,950		1,649,234
United Therapeutics Corp. (a)		3,360		579,382
Verastem, Inc. (a)		143,686		1,461,287
Versartis, Inc. (a)		22,975		422,051
Vitae Pharmaceuticals, Inc. (a)		73,909		865,474
Xencor, Inc. (a)		119,740		1,834,417
				88,021,780
Building Products — 0.3%
Continental Building Products, Inc. (a)		114,140		2,578,423
Capital Markets — 0.2%
Westwood Holdings Group, Inc.		25,521		1,538,916
Chemicals — 0.6%
OM Group, Inc.		18,146		544,924
PolyOne Corp.		69,193		2,584,359
Trinseo SA (a)		88,389		1,750,102
				4,879,385
Commercial Services & Supplies — 0.7%
ARC Document Solutions, Inc. (a)		146,509		1,352,278
Atento SA (a)		160,334		1,906,371
Deluxe Corp.		6,795		470,758
Quad Graphics, Inc.		14,177		325,787
SP Plus Corp. (a)		89,830		1,962,785
				6,017,979
Communications Equipment — 1.5%
Aruba Networks, Inc. (a)		96,608		2,365,930
Aviat Networks, Inc. (a)		201,039		239,236
Calix, Inc. (a)		295,492		2,479,178

See Notes to Financial Statements.

20 BLACKROCK FUNDS MARCH 31, 2015

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

Common Stocks	Shares		Value
Communications Equipment (concluded)
Plantronics, Inc.		19,708	$	1,043,539
Polycom, Inc. (a)		61,424		823,082
ShoreTel, Inc. (a)		457,298		3,118,772
Sonus Networks, Inc. (a)		286,620		2,258,566
				12,328,303
Consumer Finance — 0.0%
Consumer Portfolio Services, Inc. (a)		40,668		284,269
Containers & Packaging — 1.8%
Berry Plastics Group, Inc. (a)		146,393		5,297,963
Graphic Packaging Holding Co.		701,773		10,203,779
				15,501,742
Distributors — 1.3%
Core-Mark Holding Co., Inc.		171,474		11,029,208
Diversified Consumer Services — 1.3%
Collectors Universe, Inc.		72,917		1,645,007
K12, Inc. (a)		22,302		350,587
LifeLock, Inc. (a)		424,013		5,982,823
ServiceMaster Global Holdings, Inc. (a)		82,116		2,771,415
Steiner Leisure Ltd. (a)		10,791		511,493
				11,261,325
Diversified Financial Services — 0.2%
JG Wentworth Co. (a)		159,147		1,653,537
Diversified Telecommunication Services — 1.3%
IDT Corp, Class B		33,266		590,471
Inteliquent, Inc.		449,455		7,074,422
Intelsat SA (a)		46,960		563,520
Leap Wireless International, Inc. (a)		11,529		29,053
Premiere Global Services, Inc. (a)		207,480		1,983,509
Vonage Holdings Corp. (a)		145,171		712,790
				10,953,765
Electrical Equipment — 1.2%
EnerSys, Inc.		121,686		7,817,109
Polypore International, Inc. (a)		40,788		2,402,413
				10,219,522
Electronic Equipment, Instruments & Components — 2.4%
DTS, Inc. (a)		15,591		531,185
Electro Rent Corp.		28,044		318,019
Kimball Electronics, Inc. (a)		22,408		316,849
Methode Electronics, Inc.		34,603		1,627,725
Newport Corp. (a)		411,538		7,843,914
OSI Systems, Inc. (a)		61,075		4,535,429
RealD, Inc. (a)		375,674		4,804,870
				19,977,991
Energy Equipment & Services — 0.5%
C&J Energy Services Ltd. (a)		92,677		1,031,495
CHC Group Ltd. (a)		287,539		382,427
Matrix Service Co. (a)		66,059		1,159,996
Pacific Drilling SA (a)		311,100		1,210,179
				3,784,097
Food & Staples Retailing — 0.6%
SUPERVALU, Inc. (a)		440,658		5,124,853
Food Products — 1.5%
Cal-Maine Foods, Inc.		12,894		503,640
Landec Corp. (a)		13,484		188,102
Omega Protein Corp. (a)		111,816		1,530,761
Pilgrim’s Pride Corp. (b)		110,530		2,496,873
Sanderson Farms, Inc. (b)		98,906		7,877,863

Common Stocks	Shares		Value
Food Products (concluded)
Seaboard Corp. (a)		104	$	429,728
				13,026,967
Health Care Equipment & Supplies — 6.0%
Align Technology, Inc. (a)		84,427		4,540,906
Anika Therapeutics, Inc. (a)		127,363		5,243,535
Cyberonics, Inc. (a)		24,362		1,581,581
Dexcom, Inc. (a)		106,276		6,625,246
Greatbatch, Inc. (a)		6,723		388,926
ICU Medical, Inc. (a)		46,840		4,362,678
Natus Medical, Inc. (a)		21,248		838,659
Nevro Corp. (a)		25,255		1,210,472
Orthofix International NV (a)		17,581		630,982
RTI Surgical, Inc. (a)		38,703		191,193
STERIS Corp.		243,791		17,131,194
SurModics, Inc. (a)		67,577		1,759,029
Symmetry Surgical, Inc. (a)		176,135		1,291,070
Thoratec Corp. (a)		28,960		1,213,134
Zeltiq Aesthetics, Inc. (a)		115,661		3,565,829
				50,574,434
Health Care Providers & Services — 4.9%
Alliance HealthCare Services, Inc. (a)		26,038		577,523
AMN Healthcare Services, Inc. (a)		85,570		1,974,100
Centene Corp. (a)		81,490		5,760,528
Corvel Corp. (a)		71,464		2,459,076
Five Star Quality Care, Inc. (a)		153,062		679,595
Health Net, Inc. (a)		181,311		10,967,502
HealthSouth Corp.		166,384		7,380,794
Team Health Holdings, Inc. (a)		200,254		11,716,862
				41,515,980
Health Care Technology — 0.8%
Omnicell, Inc. (a)		181,289		6,363,244
Hotels, Restaurants & Leisure — 2.6%
Brinker International, Inc.		114,488		7,047,881
Isle of Capri Casinos, Inc. (a)		87,164		1,224,654
Jack in the Box, Inc.		142,534		13,671,861
				21,944,396
Household Durables — 0.2%
Zagg, Inc. (a)		194,396		1,685,413
Insurance — 0.1%
Maiden Holdings Ltd.		31,214		462,904
Internet & Catalog Retail — 0.3%
1-800-Flowers.com, Inc., Class A (a)		161,720		1,913,148
U.S. Auto Parts Network, Inc. (a)		78,258		169,820
				2,082,968
Internet Software & Services — 4.4%
Blucora, Inc. (a)		98,802		1,349,635
Carbonite, Inc. (a)		16,210		231,803
Constant Contact, Inc. (a)		185,427		7,085,166
LendingClub Corp. (Acquired 4/15/14, cost $1,161,150) (a)(c)		114,160		2,131,082
Limelight Networks, Inc. (a)		226,206		821,128
LivePerson, Inc. (a)		100,815		1,031,842
LogMeIn, Inc. (a)		289,826		16,227,358
Monster Worldwide, Inc. (a)		50,878		322,566
New Relic, Inc. (a)		1,305		45,283
NIC, Inc.		350,262		6,189,130
Spark Networks, Inc. (a)(b)		94,798		382,984
support.com, Inc. (a)		313,902		489,687
Travelzoo, Inc. (a)		103,506		997,798

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 21

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

Common Stocks	Shares		Value
Internet Software & Services (concluded)
Zix Corp. (a)		56,611	$	222,481
				37,527,943
IT Services — 2.4%
CSG Systems International, Inc.		64,416		1,957,602
The Dolan Co. (a)		14,888		298
Forrester Research, Inc.		8,536		313,954
Global Cash Access Holdings, Inc. (a)		410,065		3,124,695
Lionbridge Technologies, Inc. (a)		178,551		1,021,312
Science Applications International Corp.		18,988		975,034
Syntel, Inc. (a)		247,604		12,808,555
				20,201,450
Leisure Products — 1.3%
Brunswick Corp.		173,529		8,928,067
Nautilus, Inc. (a)		120,976		1,847,303
				10,775,370
Life Sciences Tools & Services — 0.4%
Harvard Bioscience, Inc. (a)		218,693		1,272,793
PRA Health Sciences, Inc. (a)		85,505		2,465,964
				3,738,757
Machinery — 3.7%
Blount International, Inc. (a)		476,707		6,139,986
Briggs & Stratton Corp.		27,207		558,832
Global Brass & Copper Holdings, Inc.		185,730		2,869,529
The Greenbrier Cos., Inc. (b)		102,848		5,965,184
Hyster-Yale Materials Handling, Inc.		44,296		3,246,454
John Bean Technologies Corp.		10,943		390,884
Luxfer Holdings PLC — ADR		518,214		6,928,521
Wabash National Corp. (a)		364,814		5,143,877
				31,243,267
Media — 0.5%
Ascent Capital Group, Inc., Class A (a)		26,443		1,052,696
Crown Media Holdings, Inc., Class A (a)		185,694		742,776
Tribune Publishing Co.		144,833		2,809,760
				4,605,232
Metals & Mining — 0.0%
Ryerson Holding Corp. (a)		3,705		23,601
Multiline Retail — 1.9%
Burlington Stores, Inc. (a)		271,723		16,145,781
Oil, Gas & Consumable Fuels — 1.0%
Bill Barrett Corp. (a)		85,648		710,878
Delek US Holdings, Inc.		4,256		169,176
Energy XXI Ltd. (b)		44,523		162,064
Evolution Petroleum Corp.		41,618		247,627
Jones Energy, Inc., Class A (a)		73,683		661,673
Northern Oil and Gas, Inc. (a)		68,976		531,805
Par Petroleum Corp. (a)		17,556		407,475
REX American Resources Corp. (a)		1,597		97,114
Rosetta Resources, Inc. (a)		225,028		3,829,977
Swift Energy Co. (a)(b)		87,545		189,097
W&T Offshore, Inc.		42,047		214,860
Whiting Petroleum Corp. (a)		43,306		1,338,155
				8,559,901
Paper & Forest Products — 1.5%
Boise Cascade Co. (a)		337,252		12,633,460
Pharmaceuticals — 2.4%
Actavis PLC (a)		7,330		1,173
Catalent, Inc. (a)		29,230		910,515
Furiex Pharmaceuticals, Inc. — CVR (a)		6,467		64,670

Common Stocks	Shares		Value
Pharmaceuticals (concluded)
Lannett Co., Inc. (a)		127,383	$	8,625,103
Phibro Animal Health Corp., Class A		24,563		869,776
Pozen, Inc. (a)		25,176		194,359
Prestige Brands Holdings, Inc. (a)		31,133		1,335,294
Sagent Pharmaceuticals, Inc. (a)		55,315		1,286,074
Sciclone Pharmaceuticals, Inc. (a)		175,294		1,553,105
Sucampo Pharmaceuticals, Inc., Class A (a)		365,546		5,687,896
				20,527,965
Professional Services — 3.2%
Insperity, Inc.		25,368		1,326,493
Kforce, Inc.		392,020		8,745,966
Korn/Ferry International		48,861		1,606,061
On Assignment, Inc. (a)		68,348		2,622,513
RPX Corp. (a)		657,800		9,465,742
TrueBlue, Inc. (a)		121,404		2,956,187
				26,722,962
Real Estate Investment Trusts (REITs) — 4.5%
Chatham Lodging Trust		37,726		1,109,522
Consolidated-Tomoka Land Co.		2,913		173,790
CoreSite Realty Corp.		7,609		370,406
DuPont Fabros Technology, Inc.		395,739		12,932,750
The Geo Group, Inc.		11,279		493,343
LaSalle Hotel Properties		135,256		5,256,048
Lexington Realty Trust		182,384		1,792,835
Pebblebrook Hotel Trust		23,401		1,089,785
PS Business Parks, Inc.		39,660		3,293,366
Re/Max Holdings, Inc., Class A		13,659		453,615
RLJ Lodging Trust		324,034		10,145,505
Strategic Hotels & Resorts, Inc. (a)		39,009		484,882
				37,595,847
Real Estate Management & Development — 0.9%
Forestar Group, Inc. (a)		186,993		2,948,880
Marcus & Millichap, Inc. (a)		130,831		4,903,546
				7,852,426
Road & Rail — 1.2%
Quality Distribution, Inc. (a)		19,046		196,745
Swift Transportation Co. (a)		390,935		10,172,129
				10,368,874
Semiconductors & Semiconductor Equipment — 6.2%
Alpha & Omega Semiconductor Ltd. (a)		24,742		220,451
Ambarella, Inc. (a)(b)		107,595		8,146,017
Amkor Technology, Inc. (a)		214,533		1,895,399
Cabot Microelectronics Corp. (a)		84,963		4,245,601
Cirrus Logic, Inc. (a)		101,943		3,390,624
Integrated Device Technology, Inc. (a)		416,215		8,332,624
Intermolecular, Inc. (a)		280,962		460,778
Lattice Semiconductor Corp. (a)		47,513		301,232
MaxLinear, Inc., Class A (a)		86,235		701,091
Monolithic Power Systems, Inc.		84,806		4,465,036
Pericom Semiconductor Corp.		44,136		682,784
Qorvo, Inc. (a)		122,382		9,753,845
Semtech Corp. (a)		12,917		344,173
Tessera Technologies, Inc.		236,222		9,515,022
				52,454,677
Software — 6.6%
Advent Software, Inc.		46,638		2,057,202
Aspen Technology, Inc. (a)		248,438		9,562,379
AVG Technologies NV (a)		500,389		10,833,422

See Notes to Financial Statements.

22 BLACKROCK FUNDS MARCH 31, 2015

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

Common Stocks	Shares		Value
Software (concluded)
ePlus, Inc. (a)		33,862	$	2,943,624
Infoblox, Inc. (a)		28,735		685,904
Manhattan Associates, Inc. (a)		338,991		17,156,334
Monotype Imaging Holdings, Inc.		11,861		387,143
Net1 UEPS Technologies, Inc. (a)		156,605		2,142,356
Progress Software Corp. (a)		25,507		693,025
QAD, Inc., Class A		21,862		529,060
Qlik Technologies, Inc. (a)		6,852		213,303
Qualys, Inc. (a)		10,596		492,502
SolarWinds, Inc. (a)		4,322		221,459
Vasco Data Security International, Inc. (a)(b)		129,450		2,788,353
Verint Systems, Inc. (a)		77,131		4,776,723
Viggle, Inc. (a)		16,470		11,776
				55,494,565
Specialty Retail — 2.0%
Aaron’s, Inc.		160,057		4,531,214
ANN, Inc. (a)		82,985		3,404,875
Build-A-Bear-Workshop, Inc. (a)		20,044		393,865
Haverty Furniture Cos., Inc.		53,247		1,324,785
Kirkland’s, Inc. (a)		93,888		2,229,840
Outerwall, Inc. (b)		66,852		4,420,254
Stage Stores, Inc.		40,796		935,044
				17,239,877
Technology Hardware, Storage & Peripherals — 0.7%
Avid Technology, Inc. (a)		187,810		2,798,369
Quantum Corp. (a)		1,946,591		3,114,546
				5,912,915
Textiles, Apparel & Luxury Goods — 2.9%
Deckers Outdoor Corp. (a)		93,120		6,785,654
Iconix Brand Group, Inc. (a)		179,379		6,039,691
Skechers U.S.A., Inc., Class A (a)		164,243		11,810,714
				24,636,059
Thrifts & Mortgage Finance — 1.2%
Anchor BanCorp Wisconsin, Inc. (a)		14,643		508,551
EverBank Financial Corp.		134,524		2,425,468
HomeStreet, Inc. (a)		189,528		3,472,153
Meta Financial Group, Inc.		66,804		2,654,123
MGIC Investment Corp. (a)		37,979		365,738
Walker & Dunlop, Inc. (a)		14,698		260,596
				9,686,629
Tobacco — 0.8%
Vector Group Ltd.		294,954		6,480,139
Trading Companies & Distributors — 0.8%
H&E Equipment Services, Inc.		38,964		973,710
Neff Corp., Class A (a)		21,888		230,700
Watsco, Inc.		44,345		5,574,167
Willis Lease Finance Corp. (a)		9,853		183,069
				6,961,646
Water Utilities — 0.1%
American States Water Co.		9,680		386,135
Total Common Stocks — 98.0%				827,256,736

Preferred Stocks	Shares		Value
Household Durables — 0.1%
AliphCom (Acquired 6/03/14, cost $749,991) (a)(c)		66,562	$	736,648
Software — 0.7%
Apigee Corp., Series H (Acquired 4/15/14, cost $303,400) (a)(c)		104,261		328,422
Illumio Inc., Series C (Acquired 3/10/15, cost $750,000) (a)(c)		46,673		750,000
MongoDB Series C (Acquired 12/19/13, cost $1,517,990) (a)(c)		60,511		1,372,995
MongoDB Series D (Acquired 12/19/13, cost $472,222) (a)(c)		18,824		420,716
MongoDB Series E (Acquired 12/19/13, cost $16,682) (a)(c)		665		14,477
Palantir Technologies, Inc., Series I (Acquired 2/06/14, cost $1,999,998) (a)(c)		326,264		2,900,487
				5,787,097
Total Preferred Stocks — 0.8%				6,523,745
Warrants (d)
Pharmaceuticals — 0.0%
Alexza Pharmaceuticals, Inc. (Issued/Exercisable 5/06/11, 1 Share for 1 Warrant, Expires 5/06/16, Strike Price USD 17.70)		1,000,249		—
Total Long-Term Investments (Cost — $723,089,641) — 98.8%				833,780,481
Short-Term Securities
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.06% (e)(f)		9,428,446		9,428,446
	Beneficial Interest (000)
BlackRock Liquidity Series, LLC, Money Market Series, 0.22% (e)(f)(g)	$	20,955		20,954,953
Total Short-Term Securities (Cost — $30,383,399) — 3.6%				30,383,399
Total Investments (Cost — $753,473,040) — 102.4%				864,163,880
Liabilities in Excess of Other Assets — (2.4)%				(19,960,050	)
Net Assets — 100.0%			$	844,203,830

Notes to Schedule of Investments

(a) Non-income producing security.

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

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 23

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

(c) Restricted security as to resale. As of report date, the Fund held restricted securities with a current value of $8,654,827 and an original cost of $6,971,433 which was 1.0% of its net assets.

(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 of the warrants, if any.

(e) During the six months ended March 31, 2015, investments in issuers considered to be an affiliate of the Fund 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, 2014		Net Activity			Shares/Beneficial Interest Held at March 31, 2015		Income
BlackRock Liquidity Funds, TempFund, Institutional Class		13,997,672		(4,569,226	)		9,428,446	$	2,508
BlackRock Liquidity Series, LLC, Money Market Series	$	10,214,730	$	10,740,223		$	20,954,953	$	1,192,992

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

(g) Security was purchased with the cash collateral from loaned securities. The Fund may withdraw up to 25% of its investment daily, although the manager of the BlackRock Liquidity Series, LLC, Money Market Series, in its sole discretion, may permit an investor to withdraw more than 25% on any one day.

• 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 the investment advisor. These definitions may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

• As of March 31, 2015, financial futures contracts outstanding were as follows:

Contracts Purchased		Issue	Exchange	Expiration		Notional Value		Unrealized Appreciation
	98	E-Mini Russell 2000 Futures	Intercontinental Exchange	June 2015	USD		12,239,220	$	149,175

• Fair Value Measurements — Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. 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. The three levels of the fair value hierarchy are as follows:

• Level 1 — unadjusted quoted prices in active markets/exchanges for identical assets or liabilities that the Fund has the ability to access

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

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

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Fund’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. For information about the Fund’s policy regarding valuation of investments and derivative financial instruments, refer to Note 2 of the Notes to Financial Statements.

As of March 31, 2015, the following tables summarize the Fund’s investments and derivative financial instruments categorized in the disclosure hierarchy:

	Level 1		Level 2		Level 3		Total
Assets:
Investments:
Long-Term Investments:
Common Stocks:
Aerospace & Defense	$	5,607,483		—		—	$	5,607,483
Airlines		16,384,312		—		—		16,384,312
Auto Components		26,445,746		—		—		26,445,746
Banks		8,232,316		—		—		8,232,316
Biotechnology		88,021,780		—		—		88,021,780
Building Products		2,578,423		—		—		2,578,423
Capital Markets		1,538,916		—		—		1,538,916
Chemicals		4,879,385		—		—		4,879,385
Commercial Services & Supplies		6,017,979		—		—		6,017,979
Communications Equipment		12,328,303		—		—		12,328,303
Consumer Finance		284,269		—		—		284,269
Containers & Packaging		15,501,742		—		—		15,501,742
Distributors		11,029,208		—		—		11,029,208
Diversified Consumer Services		11,261,325		—		—		11,261,325
Diversified Financial Services		1,653,537		—		—		1,653,537
Diversified Telecommunication Services		10,924,712		—	$	29,053		10,953,765
Electrical Equipment		10,219,522		—		—		10,219,522

See Notes to Financial Statements.

24 BLACKROCK FUNDS MARCH 31, 2015

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

	Level 1			Level 2				Level 3			Total
Electronic Equipment, Instruments & Components		$	19,977,991			—				—		$	19,977,991
Energy Equipment & Services			3,784,097			—				—			3,784,097
Food & Staples Retailing			5,124,853			—				—			5,124,853
Food Products			13,026,967			—				—			13,026,967
Health Care Equipment & Supplies			50,574,434			—				—			50,574,434
Health Care Providers & Services			41,515,980			—				—			41,515,980
Health Care Technology			6,363,244			—				—			6,363,244
Hotels, Restaurants & Leisure			21,944,396			—				—			21,944,396
Household Durables			1,685,413			—				—			1,685,413
Insurance			462,904			—				—			462,904
Internet & Catalog Retail			2,082,968			—				—			2,082,968
Internet Software & Services			35,396,861			$2,131,082				—			37,527,943
IT Services			20,201,152			—			$	298			20,201,450
Leisure Products			10,775,370			—				—			10,775,370
Life Sciences Tools & Services			3,738,757			—				—			3,738,757
Machinery			31,243,267			—				—			31,243,267
Media			4,605,232			—				—			4,605,232
Metals & Mining			23,601			—				—			23,601
Multiline Retail			16,145,781			—				—			16,145,781
Oil, Gas & Consumable Fuels			8,559,901			—				—			8,559,901
Paper & Forest Products			12,633,460			—				—			12,633,460
Pharmaceuticals			20,462,122			—				65,843			20,527,965
Professional Services			26,722,962			—				—			26,722,962
Real Estate Investment Trusts (REITs)			37,595,847			—				—			37,595,847
Real Estate Management & Development			7,852,426			—				—			7,852,426
Road & Rail			10,368,874			—				—			10,368,874
Semiconductors & Semiconductor Equipment			52,454,677			—				—			52,454,677
Software			55,482,789			—				11,776			55,494,565
Specialty Retail			17,239,877			—				—			17,239,877
Technology Hardware, Storage & Peripherals			5,912,915			—				—			5,912,915
Textiles, Apparel & Luxury Goods			24,636,059			—				—			24,636,059
Thrifts & Mortgage Finance			9,686,629			—				—			9,686,629
Tobacco			6,480,139			—				—			6,480,139
Trading Companies & Distributors			6,961,646			—				—			6,961,646
Water Utilities			386,135			—				—			386,135
Preferred Stocks:
Household Durables			—			—				736,648			736,648
Software			—			—				5,787,097			5,787,097
Warrants			—			—				—			—
Short-Term Securities			9,428,446		$	20,954,953				—			30,383,399
Total		$	834,447,130		$	23,086,035			$	6,630,715		$	864,163,880
	Level 1			Level 2				Level 3			Total
Derivative Financial Instruments1
Assets:
Equity contracts		$	149,175			—				—		$	149,175
1    Derivative financial instruments are financial futures contracts which are valued at the unrealized appreciation/depreciation on the instrument.
The Fund may hold assets and/or liabilities in which the fair value approximates the carrying amount for financial statement purposes. As of March 31, 2015, such assets and/or liabilities are categorized within the disclosure hierarchy as follows:
	Level 1			Level 2				Level 3			Total
Assets:
Cash pledged for financial futures contracts		$	537,000			—				—		$	537,000
Liabilities:
Collateral on securities loaned at value			—		$	(20,954,953	)			—			(20,954,953	)
Total		$	537,000		$	(20,954,953	)			—		$	(20,417,953	)

During the six months ended March 31, 2015, there were no transfers between levels.

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 25

Statements of Assets and Liabilities

March 31, 2015 (Unaudited)	BlackRock Flexible Equity Fund1			BlackRock Mid-Cap Growth Equity Portfolio			BlackRock Small Cap Growth Equity Portfolio
Assets
Investments at value — unaffiliated2,3	$	549,470,832		$	433,655,974		$	833,780,481
Investments at value — affiliated4		2,213,948			4,344,558			30,383,399
Cash pledged for financial futures contracts		—			—			537,000
Foreign currency at value5		—			1,355			—
Investments sold receivable		5,065,336			—			12,209,545
Unrealized appreciation on forward foreign currency exchange contracts		2,054,574			—			—
Capital shares sold receivable		156,989			2,272,783			707,633
Dividends receivable — unaffiliated		911,148			125,179			565,775
Dividends receivable — affiliated		1,016			204			499
Receivable from Manager		120,511			3,303			—
Securities lending income receivable — affiliated		1,240			3,155			262,151
Prepaid expenses		53,495			54,359			47,944
Total assets		560,049,089			440,460,870			878,494,427
Liabilities
Collateral on securities loaned at value		576,157			2,144,391			20,954,953
Variation margin payable on financial futures contracts		—			—			24,690
Investments purchased payable		—			—			10,412,252
Unrealized depreciation on forward foreign currency exchange contracts		584,811			—			—
Capital shares redeemed payable		1,217,826			451,222			1,726,588
Investment advisory fees payable		378,412			300,000			393,561
Transfer agent fees payable		429,556			273,351			429,823
Service and distribution fees payable		169,194			110,246			97,377
Officer’s and Trustees’ fees payable		5,424			3,339			6,310
Other affiliates payable		22,742			44,523			93,636
Other accrued expenses payable		98,954			72,509			151,407
Total liabilities		3,483,076			3,399,581			34,290,597
Net Assets	$	556,566,013		$	437,061,289		$	844,203,830
Net Assets Consist of
Paid-in capital	$	533,624,716		$	319,610,341		$	714,510,720
Undistributed (accumulated) net investment income (loss)		(5,373,907	)		(1,529,943	)		707,583
Accumulated net realized gain		12,054,694			6,500,131			18,145,512
Net unrealized appreciation/depreciation		16,260,510			112,480,760			110,840,015
Net Assets	$	556,566,013		$	437,061,289		$	844,203,830
1       Consolidated Statement of Assets and Liabilities.
2       Investments at cost — unaffiliated	$	534,656,902		$	321,175,040		$	723,089,641
3       Securities loaned at value	$	544,577		$	2,090,828		$	20,485,531
4       Investments at cost — affiliated	$	2,213,948		$	4,344,558		$	30,383,399
5       Foreign currency at cost	$	—		$	1,529			—

See Notes to Financial Statements.

26 BLACKROCK FUNDS MARCH 31, 2015

Statements of Assets and Liabilities (concluded)

March 31, 2015 (Unaudited)	BlackRock Flexible Equity Fund1		BlackRock Mid-Cap Growth Equity Portfolio		BlackRock Small Cap Growth Equity Portfolio
Net Asset Value
Institutional
Net assets	$	49,474,897	$	32,844,437	$	487,378,006
Shares outstanding2		3,842,164		1,828,485		25,027,989
Net asset value	$	12.88	$	17.96	$	19.47
Service
Net assets	$	175,797	$	2,002,404	$	21,356,229
Shares outstanding2		13,871		121,816		1,254,521
Net asset value	$	12.67	$	16.44	$	17.02
Investor A
Net assets	$	415,058,185	$	355,612,923	$	302,109,498
Shares outstanding2		33,457,210		22,488,818		19,191,233
Net asset value	$	12.41	$	15.81	$	15.74
Investor B
Net assets	$	5,546,755	$	2,982,528	$	729,955
Shares outstanding2		502,905		230,397		69,451
Net asset value	$	11.03	$	12.95	$	10.51
Investor C
Net assets	$	84,986,365	$	35,447,037	$	32,630,142
Shares outstanding2		7,796,051		2,758,394		3,167,370
Net asset value	$	10.90	$	12.85	$	10.30
Class R
Net assets	$	1,324,014	$	8,171,960		—
Shares outstanding2		103,541		522,048		—
Net asset value	$	12.79	$	15.65		—

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, 2015 27

Statements of Operations

Six Months Ended March 31, 2015 (Unaudited)	BlackRock Flexible Equity Fund1			BlackRock Mid-Cap Growth Equity Portfolio			BlackRock Small Cap Growth Equity Portfolio
Investment Income
Dividends — unaffiliated	$	3,322,297		$	1,295,810		$	3,516,253
Dividends — affiliated		7,375			841			2,508
Securities lending — affiliated — net		76,249			33,275			1,192,992
Foreign taxes withheld		(75,923	)		(2,497	)		(211	)
Total income		3,329,998			1,327,429			4,711,542
Expenses
Investment advisory		2,299,435			1,586,884			2,209,187
Service and distribution — class specific		1,010,390			599,707			548,079
Transfer agent — class specific		642,675			479,585			697,890
Administration		167,503			116,019			226,069
Administration — class specific		64,919			44,571			90,305
Professional		43,205			31,972			40,767
Registration		39,361			38,527			36,961
Custodian		33,112			15,112			59,585
Accounting services		31,900			23,484			41,942
Printing		19,927			14,072			22,954
Officer and Trustees		10,642			7,547			13,436
Miscellaneous		15,728			11,933			19,536
Recoupment of past waived and/or reimbursed fees — class specific		15			7,362			—
Total expenses		4,378,812			2,976,775			4,006,711
Less fees waived by the Manager		(18,262	)		(831	)		(2,661	)
Less administration fees waived — class specific		(64,911	)		(37,107	)		(91	)
Less transfer agent fees waived — class specific		(52,742	)		(51,253	)		—
Less transfer agent fees reimbursed — class specific		(395,484	)		(30,212	)		—
Total expenses after fees waived and reimbursed		3,847,413			2,857,372			4,003,959
Net investment income (loss)		(517,415	)		(1,529,943	)		707,583
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from:
Investments — unaffiliated		66,640,198			12,961,847			24,026,937
Investments — affiliated		(602,119	)		—			—
Capital gain distributions received from affiliated investment companies		3,191			—			—
Options written		(1,895,215	)		—			—
Financial futures contracts		(8,345,746	)		—			397,857
Swaps		(1,811,587	)		—			—
Foreign currency transactions		9,192,082			(54,943	)		—
		63,180,804			12,906,904			24,424,794
Net change in unrealized appreciation/depreciation on:
Investments — unaffiliated		(34,156,299	)		40,647,464			64,476,033
Investments — affiliated		452,280			—			—
Options written		(138,156	)		—			—
Financial futures contracts		(1,856,152	)		—			498,850
Swaps		505,315			—			—
Foreign currency translations		(3,910,738	)		(97	)		—
		(39,103,750	)		40,647,367			64,974,883
Net realized and unrealized gain		24,077,054			53,554,271			89,399,677
Net Increase in Net Assets Resulting from Operations	$	23,559,639		$	52,024,328		$	90,107,260

¹  Consolidated Statement of Operations.

See Notes to Financial Statements.

28 BLACKROCK FUNDS MARCH 31, 2015

Statements of Changes in Net Assets

	BlackRock Flexible Equity Fund1						BlackRock Mid-Cap Growth Equity Portfolio						BlackRock Small Cap Growth Equity Portfolio
Increase (Decrease) in Net Assets:	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30, 2014			Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30, 2014			Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30, 2014
Operations
Net investment income (loss)	$	(517,415	)	$	9,751,658		$	(1,529,943	)	$	(4,058,090	)	$	707,583		$	(3,740,286	)
Net realized gain		63,180,804			84,047,958			12,906,904			48,420,488			24,424,794			234,248,636
Net change in unrealized appreciation/depreciation		(39,103,750	)		(54,848,721	)		40,647,367			3,873,240			64,974,883			(120,565,561	)
Net increase in net assets resulting from operations		23,559,639			38,950,895			52,024,328			48,235,638			90,107,260			109,942,789
Distributions to Shareholders From2
Net investment income:
Institutional		(1,469,061	)		(973,756	)		—			—			—			—
Service		(4,373	)		(2,950	)		—			—			—			—
Investor A		(11,203,633	)		(5,945,499	)		—			—			—			—
Investor B		(130,864	)		(39,265	)		—			—			—			—
Investor C		(2,049,761	)		(580,645	)		—			—			—			—
Class R		(36,334	)		(7,904	)		—			—			—			—
Net realized gain:
Institutional		(6,558,090	)		(477,055	)		(3,190,419	)		(3,566,206	)		(99,594,343	)		(224,335,020	)
Service		(22,326	)		(2,055	)		(475,796	)		(359,600	)		(4,990,887	)		(8,970,316	)
Investor A		(55,240,666	)		(4,533,517	)		(36,956,433	)		(48,709,954	)		(71,147,923	)		(114,556,801	)
Investor B		(915,431	)		(84,318	)		(424,056	)		(773,466	)		(252,945	)		(545,137	)
Investor C		(12,781,606	)		(1,036,560	)		(4,319,606	)		(4,928,001	)		(10,799,606	)		(14,869,102	)
Class R		(190,598	)		(11,753	)		(935,237	)		(1,635,424	)		—			—
Decrease in net assets resulting from distributions to shareholders		(90,602,743	)		(13,695,277	)		(46,301,547	)		(59,972,651	)		(186,785,704	)		(363,276,376	)
Capital Share Transactions
Net increase (decrease) in net assets derived from capital share transactions		27,021,449			(121,269,351	)		36,016,376			63,142,862			146,257,756			(206,530,437	)
Net Assets
Total increase (decrease) in net assets		(40,021,655	)		(96,013,733	)		41,739,157			51,405,849			49,579,312			(459,864,024	)
Beginning of period		596,587,668			692,601,401			395,322,132			343,916,283			794,624,518			1,254,488,542
End of period	$	556,566,013		$	596,587,668		$	437,061,289		$	395,322,132		$	844,203,830		$	794,624,518
Undistributed (accumulated) net investment income (loss)	$	(5,373,907	)	$	10,037,534		$	(1,529,943	)		—		$	707,583			—

¹  Consolidated Statements of Changes in Net Assets.

²  Distributions for annual periods determined in accordance with federal income tax regulations.

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 29

Financial Highlights BlackRock Flexible Equity Fund

	Institutional
	Six Months Ended March 31, 2015 (Unaudited)1			Year Ended September 30,
				20141			20131			20121			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	14.51		$	14.04		$	12.53		$	9.81		$	10.53		$	9.34
Net investment income2		0.02			0.29			0.19			0.10			0.12			0.10
Net realized and unrealized gain (loss)		0.60			0.53			1.46			2.72			(0.74	)		1.16
Net increase (decrease) from investment operations		0.62			0.82			1.65			2.82			(0.62	)		1.26
Distributions from:3
Net investment income		(0.41	)		(0.21	)		(0.14	)		(0.10	)		(0.10	)		(0.07	)
Net realized gain		(1.84	)		(0.14	)		—			—			—			—
Total distributions		(2.25	)		(0.35	)		(0.14	)		(0.10	)		(0.10	)		(0.07	)
Net asset value, end of period	$	12.88		$	14.51		$	14.04		$	12.53		$	9.81		$	10.53
Total Return4
Based on net asset value		4.42	%5		5.76	%		13.36	%		28.90	%		(6.03	)%6		13.56	%
Ratios to Average Net Assets
Total expenses		1.11	%7,8		1.09	%7		1.15	%7		1.13	%		1.08	%		1.13	%
Total expenses excluding recoupment of past waived fees		1.11	%7,8		1.09	%7		1.15	%7		1.13	%		1.08	%		1.13	%
Total expenses after fees waived, reimbursed and paid indirectly		0.92	%7,8		0.96	%7		0.97	%7		0.97	%		0.97	%		0.97	%
Net investment income		0.24	%7,8		1.99	%7		1.48	%7		0.89	%		0.98	%		0.99	%
Supplemental Data
Net assets, end of period (000)	$	49,475		$	53,274		$	64,078		$	142,963		$	195,753		$	204,286
Portfolio turnover		131	%		102	%		119	%		156	%		137	%		123	%

¹ Consolidated Financial Highlights.

²  Based on average shares outstanding.

³  Distributions for annual periods determined in accordance with federal income tax regulations.

⁴  Where applicable, assumes the reinvestment of distributions.

⁵  Aggregate total return.

⁶  Includes proceeds received from a settlement of litigation, which had no impact on the Fund’s total return.

⁷  Excludes expenses incurred indirectly as a result of investments in underlying funds as follows:

	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012		2011		2010
Investments in underlying funds		0.01	%		0.01	%		0.03	%		—		—		—

⁸  Annualized.

See Notes to Financial Statements.

30 BLACKROCK FUNDS MARCH 31, 2015

Financial Highlights (continued) BlackRock Flexible Equity Fund

	Service
	Six Months Ended March 31, 2015 (Unaudited)1			Year Ended September 30,
				20141			20131			20121			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	14.29		$	13.81		$	12.30		$	9.63		$	10.33		$	9.17
Net investment income (loss)2		(0.01	)		0.23			0.14			0.06			0.08			0.04
Net realized and unrealized gain (loss)		0.59			0.54			1.44			2.68			(0.73	)		1.17
Net increase (decrease) from investment operations		0.58			0.77			1.58			2.74			(0.65	)		1.21
Distributions from:3
Net investment income		(0.36	)		(0.15	)		(0.07	)		(0.07	)		(0.05	)		(0.05	)
Net realized gain		(1.84	)		(0.14	)		—			—			—			—
Total distributions		(2.20	)		(0.29	)		(0.07	)		(0.07	)		(0.05	)		(0.05	)
Net asset value, end of period	$	12.67		$	14.29		$	13.81		$	12.30		$	9.63		$	10.33
Total Return4
Based on net asset value		4.17	%5		5.45	%		13.00	%		28.58	%		(6.38	)%6		13.20	%
Ratios to Average Net Assets
Total expenses		1.39	%7,8,9		1.30	%7		1.75	%7		1.95	%		1.49	%		1.31	%
Total expenses excluding recoupment of past waived fees		1.38	%7,9		1.30	%7		1.73	%7		1.95	%		1.49	%		1.31	%
Total expenses after fees waived, reimbursed and paid indirectly		1.23	%7,9		1.27	%7		1.29	%7		1.29	%		1.29	%		1.27	%
Net investment income (loss)		(0.08	)%7,9		1.60	%7		1.15	%7		0.56	%		0.65	%		0.37	%
Supplemental Data
Net assets, end of period (000)	$	176		$	211		$	421		$	674		$	1,025		$	737
Portfolio turnover		131	%		102	%		119	%		156	%		137	%		123	%

¹ Consolidated Financial Highlights.

²  Based on average shares outstanding.

³  Distributions for annual periods determined in accordance with federal income tax regulations.

⁴  Where applicable, assumes the reinvestment of distributions.

⁵  Aggregate total return.

⁶  Includes proceeds received from a settlement of litigation, which had no impact on the Fund’s total return.

⁷  Excludes expenses incurred indirectly as a result of investments in underlying funds as follows:

	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012		2011		2010
Investments in underlying funds		0.01	%		0.01	%		0.03	%		—		—		—

⁸  Includes recoupment of past waived and/or reimbursed fees. There was no financial impact to the expense ratio.

⁹  Annualized.

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 31

Financial Highlights (continued) BlackRock Flexible Equity Fund

	Investor A
	Six Months Ended March 31, 2015 (Unaudited)1			Year Ended September 30,
				20141			20131			20121			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	14.04		$	13.59		$	12.14		$	9.50		$	10.21		$	9.06
Net investment income (loss)2		(0.01	)		0.22			0.14			0.07			0.08			0.06
Net realized and unrealized gain (loss)		0.59			0.54			1.41			2.63			(0.72	)		1.13
Net increase (decrease) from investment operations		0.58			0.76			1.55			2.70			(0.64	)		1.19
Distributions from:3
Net investment income		(0.37	)		(0.17	)		(0.10	)		(0.06	)		(0.07	)		(0.04	)
Net realized gain		(1.84	)		(0.14	)		—			—			—			—
Total distributions		(2.21	)		(0.31	)		(0.10	)		(0.06	)		(0.07	)		(0.04	)
Net asset value, end of period	$	12.41		$	14.04		$	13.59		$	12.14		$	9.50		$	10.21
Total Return4
Based on net asset value		4.27	%5		5.46	%		12.92	%		28.54	%		(6.33	)%6		13.21	%
Ratios to Average Net Assets
Total expenses		1.43	%7,8		1.40	%7		1.43	%7		1.40	%		1.37	%		1.40	%
Total expenses excluding recoupment of past waived fees		1.43	%7,8		1.40	%7		1.43	%7		1.40	%		1.37	%		1.40	%
Total expenses after fees waived, reimbursed and paid indirectly		1.24	%7,8		1.27	%7		1.29	%7		1.29	%		1.29	%		1.29	%
Net investment income (loss)		(0.08	)%7,8		1.55	%7		1.11	%7		0.60	%		0.66	%		0.61	%
Supplemental Data
Net assets, end of period (000)	$	415,058		$	443,630		$	512,059		$	615,464		$	587,989		$	726,666
Portfolio turnover		131	%		102	%		119	%		156	%		137	%		123	%

¹  Consolidated Financial Highlights.

² Based on average shares outstanding.

³ Distributions for annual periods determined in accordance with federal income tax regulations.

⁴  Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

⁵  Aggregate total return.

⁶  Includes proceeds received from a settlement of litigation, which had no impact on the Fund’s total return.

⁷  Excludes expenses incurred indirectly as a result of investments in underlying funds as follows:

	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012		2011		2010
Investments in underlying funds		0.01	%		0.01	%		0.03	%		—		—		—

⁸  Annualized.

See Notes to Financial Statements.

32 BLACKROCK FUNDS MARCH 31, 2015

Financial Highlights (continued) BlackRock Flexible Equity Fund

	Investor B
	Six Months Ended March 31, 2015 (Unaudited)1			Year Ended September 30,
				20141			20131			20121			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	12.66		$	12.26		$	10.95		$	8.58		$	9.25		$	8.23
Net investment income (loss)2		(0.05	)		0.11			0.04			(0.02	)		(0.01	)		(0.02	)
Net realized and unrealized gain (loss)		0.52			0.48			1.28			2.39			(0.65	)		1.04
Net increase (decrease) from investment operations		0.47			0.59			1.32			2.37			(0.66	)		1.02
Distributions from:3
Net investment income		(0.26	)		(0.05	)		(0.01	)		—			(0.01	)		—
Net realized gain		(1.84	)		(0.14	)		—			—			—			—
Total distributions		(2.10	)		(0.19	)		(0.01	)		—			(0.01	)		—
Net asset value, end of period	$	11.03		$	12.66		$	12.26		$	10.95		$	8.58		$	9.25
Total Return4
Based on net asset value		3.82	%5		4.68	%		12.04	%		27.62	%		(7.17	)%6		12.39	%
Ratios to Average Net Assets
Total expenses		2.56	%7,8		2.41	%7		2.42	%7		2.31	%		2.13	%		2.22	%
Total expenses excluding recoupment of past waived fees		2.56	%7,8		2.41	%7		2.41	%7		2.30	%		2.12	%		2.20	%
Total expenses after fees waived, reimbursed and paid indirectly		2.01	%7,8		2.05	%7		2.06	%7		2.06	%		2.06	%		2.04	%
Net investment income (loss)		(0.87	)%7,8		0.82	%7		0.36	%7		(0.19	)%		(0.10	)%		(0.24	)%
Supplemental Data
Net assets, end of period (000)	$	5,547		$	7,122		$	11,918		$	17,465		$	26,233		$	42,239
Portfolio turnover		131	%		102	%		119	%		156	%		137	%		123	%

¹  Consolidated Financial Highlights.

²  Based on average shares outstanding.

³  Distributions for annual periods determined in accordance with federal income tax regulations.

⁴  Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

⁵  Aggregate total return.

⁶  Includes proceeds received from a settlement of litigation, which had no impact on the Fund’s total return.

⁷  Excludes expenses incurred indirectly as a result of investments in underlying funds as follows:

	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012		2011		2010
Investments in underlying funds		0.01	%		0.01	%		0.03	%		—		—		—

⁸  Annualized.

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 33

Financial Highlights (continued) BlackRock Flexible Equity Fund

	Investor C
	Six Months Ended March 31, 2015 (Unaudited)1			Year Ended September 30,
				20141			20131			20121			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	12.57		$	12.20		$	10.91		$	8.55		$	9.22		$	8.20
Net investment income (loss)2		(0.05	)		0.10			0.04			(0.02	)		(0.01	)		(0.01	)
Net realized and unrealized gain (loss)		0.52			0.48			1.27			2.38			(0.64	)		1.03
Net increase (decrease) from investment operations		0.47			0.58			1.31			2.36			(0.65	)		1.02
Distributions from:3
Net investment income		(0.30	)		(0.07	)		(0.02	)		—			(0.02	)		—
Net realized gain		(1.84	)		(0.14	)		—			—			—			—
Total distributions		(2.14	)		(0.21	)		(0.02	)		—			(0.02	)		—
Net asset value, end of period	$	10.90		$	12.57		$	12.20		$	10.91		$	8.55		$	9.22
Total Return4
Based on net asset value		3.79	%5		4.67	%		12.01	%		27.60	%		(7.11	)%6		12.44	%
Ratios to Average Net Assets
Total expenses		2.16	%7,8		2.14	%7		2.20	%7		2.18	%		2.16	%		2.22	%
Total expenses excluding recoupment of past waived fees		2.16	%7,8		2.14	%7		2.20	%7		2.18	%		2.16	%		2.22	%
Total expenses after fees waived, reimbursed and paid indirectly		2.01	%7,8		2.04	%7		2.06	%7		2.06	%		2.06	%		2.06	%
Net investment income (loss)		(0.85	)%7,8		0.78	%7		0.34	%7		(0.18	)%		(0.11	)%		(0.17	)%
Supplemental Data
Net assets, end of period (000)	$	84,986		$	90,904		$	103,097		$	115,242		$	112,520		$	148,923
Portfolio turnover		131	%		102	%		119	%		156	%		137	%		123	%

¹  Consolidated Financial Highlights.

²  Based on average shares outstanding.

³  Distributions for annual periods determined in accordance with federal income tax regulations.

⁴  Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

⁵  Aggregate total return.

⁶  Includes proceeds received from a settlement of litigation, which had no impact on the Fund’s total return.

⁷  Excludes expenses incurred indirectly as a result of investments in underlying funds as follows:

	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012		2011		2010
Investments in underlying funds		0.01	%		0.01	%		0.03	%		—		—		—

⁸  Annualized.

See Notes to Financial Statements.

34 BLACKROCK FUNDS MARCH 31, 2015

Financial Highlights (concluded) BlackRock Flexible Equity Fund

	Class R
	Six Months Ended March 31, 2015 (Unaudited)1			Year Ended September 30,												Period July 30, 20102 to September 30, 2010
				20141			20131			20121			2011
Per Share Operating Performance
Net asset value, beginning of period	$	14.41		$	13.94		$	12.46		$	9.75		$	10.51		$	10.24
Net investment income (loss)3		(0.03	)		0.19			0.10			0.03			0.04			0.00	4
Net realized and unrealized gain (loss)		0.60			0.53			1.45			2.71			(0.73	)		0.27
Net increase (decrease) from investment operations		0.57			0.72			1.55			2.74			(0.69	)		0.27
Distributions from:5
Net investment income		(0.35	)		(0.11	)		(0.07	)		(0.03	)		(0.07	)		—
Net realized gain		(1.84	)		(0.14	)		—			—			—			—
Total distributions		(2.19	)		(0.25	)		(0.07	)		(0.03	)	��	(0.07	)		—
Net asset value, end of period	$	12.79		$	14.41		$	13.94		$	12.46		$	9.75		$	10.51
Total Return6
Based on net asset value		4.05	%7		5.05	%		12.51	%		28.13	%		(6.66	)%8		13.17	%7
Ratios to Average Net Assets
Total expenses		1.66	%9,10		1.68	%9		1.78	%9		1.78	%		1.72	%		2.21	%10
Total expenses excluding recoupment of past waived fees		1.66	%9,10		1.67	%9		1.78	%9		1.78	%		1.70	%		2.21	%10
Total expenses after fees waived, reimbursed and paid indirectly		1.60	%9,10		1.63	%9		1.65	%9		1.65	%		1.65	%		1.65	%10
Net investment income (loss)		(0.44	)%9,10		1.30	%9		0.78	%9		0.25	%		0.31	%		0.08	%10
Supplemental Data
Net assets, end of period (000)	$	1,324		$	1,446		$	1,028		$	1,312		$	920		$	838
Portfolio turnover		131	%		102	%		119	%		156	%		137	%		123	%

¹  Consolidated Financial Highlights.

²  Commencement of operations.

³  Based on average shares outstanding.

⁴  Amount is less than $0.005 per share.

⁵  Distributions for annual periods determined in accordance with federal income tax regulations.

⁶  Where applicable, assumes the reinvestment of distributions.

⁷  Aggregate total return.

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

⁹  Excludes expenses incurred indirectly as a result of investments in underlying funds as follows:

	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012		2011		2010
Investments in underlying funds		0.01	%		0.01	%		0.03	%		—		—		—

¹⁰  Annualized.

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 35

Financial Highlights BlackRock Mid-Cap Growth Equity Portfolio

	Institutional																		Service
	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,															Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012			2011			2010						2014			2013			2012			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	17.67		$	18.22		$	13.58		$	11.10		$	11.18		$	10.27		$	16.34		$	17.05		$	12.77		$	10.49		$	10.60		$	9.78
Net investment income (loss)1		(0.04	)		(0.12	)		0.05			0.04			(0.05	)		(0.01	)		(0.07	)		(0.19	)		(0.02	)		(0.01	)		(0.10	)		(0.05	)
Net realized and unrealized gain (loss)		2.24			2.49			4.59			2.44			(0.03	)		0.92			2.06			2.31			4.30			2.29			(0.01	)		0.87
Net increase (decrease) from investment operations		2.20			2.37			4.64			2.48			(0.08	)		0.91			1.99			2.12			4.28			2.28			(0.11	)		0.82
Distributions from net realized gain2		(1.91	)		(2.92	)		—			—			—			—			(1.89	)		(2.83	)		—			—			—			—
Net asset value, end of period	$	17.96		$	17.67		$	18.22		$	13.58		$	11.10		$	11.18		$	16.44		$	16.34		$	17.05		$	12.77		$	10.49		$	10.60
Total Return3
Based on net asset value		14.16	%4		14.70	%		34.17	%		22.34	%		(0.72	)%5		8.86	%5		13.92	%4		14.11	%		33.52	%		21.74	%		(1.04	)%5		8.38	%5
Ratios to Average Net Assets
Total expenses		1.08	%6,7		1.11	%		1.13	%		1.11	%		1.17	%		1.15	%		1.49	%6,7		1.58	%		1.67	%		2.29	%		1.87	%		1.63	%
Total expenses excluding recoupment of past waived fees		1.06	%7		1.08	%		1.11	%		1.11	%		1.17	%		1.14	%		1.37	%7		1.33	%		1.51	%		2.29	%		1.87	%		1.62	%
Total expenses after fees waived, reimbursed and paid indirectly		1.08	%7		1.10	%		1.11	%		1.07	%		1.17	%		1.15	%		1.49	%7		1.58	%		1.58	%		1.58	%		1.58	%		1.58	%
Net investment income (loss)		(0.45	)%7		(0.68	)%		0.30	%		0.27	%		(0.38	)%		(0.09	)%		(0.92	)%7		(1.17	)%		(0.15	)%		(0.06	)%		(0.83	)%		(0.52	)%
Supplemental Data
Net assets, end of period (000)	$	32,844		$	33,448		$	21,485		$	18,526		$	19,348		$	24,421		$	2,002		$	3,838		$	2,065		$	1,865		$	714		$	330
Portfolio turnover		50	%		123	%		160	%		88	%		131	%		76	%		50	%		123	%		160	%		88	%		131	%		76	%

¹  Based on average shares outstanding.

²  Distributions for annual periods determined in accordance with federal income tax regulations.

³  Where applicable, assumes the reinvestment of distributions.

⁴  Aggregate total return.

⁵  Includes a payment received from a settlement of litigation, which impacted the Fund’s total return. Excluding the payment from a settlement of litigation, the Fund’s total return is as follows:

	Six Months Ended March 31, 2015 (Unaudited)		Year Ended September 30,
			2014		2013		2012		2011			2010
Institutional		—		—		—		—		(0.90	)%		8.47%
Service		—		—		—		—		(1.23	)%		7.98%

⁶  Includes recoupment of past waived and/or reimbursed fees. There was no financial impact to the expense ratio.

⁷  Annualized.

See Notes to Financial Statements.

36 BLACKROCK FUNDS MARCH 31, 2015

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

	Investor A																		Investor B
		Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,															Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012			2011			2010						2014			2013			2012			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	15.78		$	16.56		$	12.38		$	10.15		$	10.27		$	9.47		$	13.22		$	14.27		$	10.75		$	8.88		$	9.05		$	8.42
Net investment income (loss)1		(0.05	)		(0.16	)		0.00	2		(0.01	)		(0.09	)		(0.05	)		(0.09	)		(0.24	)		(0.08	)		(0.09	)		(0.16	)		(0.12	)
Net realized and unrealized gain (loss)		1.96			2.24			4.18			2.24			(0.03	)		0.85			1.61			1.90			3.60			1.96			(0.01	)		0.75
Net increase (decrease) from investment operations		1.91			2.08			4.18			2.23			(0.12	)		0.80			1.52			1.66			3.52			1.87			(0.17	)		0.63
Distributions from net realized gain3		(1.88	)		(2.86	)		—			—			—			—			(1.79	)		(2.71	)		—			—			—			—
Net asset value, end of period	$	15.81		$	15.78		$	16.56		$	12.38		$	10.15		$	10.27		$	12.95		$	13.22		$	14.27		$	10.75		$	8.88		$	9.05
Total Return4
Based on net asset value		13.96	%5		14.38	%		33.76	%		21.97	%		(1.17	)%6		8.45	%6		13.58	%5		13.47	%		32.74	%		21.06	%		(1.88	)%6		7.48	%6
Ratios to Average Net Assets
Total expenses		1.46	%7		1.48	%		1.55	%		1.55	%		1.59	%		1.58	%		2.79	%7		2.66	%		2.70	%		2.59	%		2.43	%		2.48	%
Total expenses excluding recoupment of past waived fees		1.46	%7		1.48	%		1.55	%		1.55	%		1.56	%		1.55	%		2.79	%7		2.66	%		2.70	%		2.59	%		2.42	%		2.47	%
Total expenses after fees waived, reimbursed and paid indirectly		1.39	%7		1.39	%		1.39	%		1.39	%		1.58	%		1.58	%		2.16	%7		2.16	%		2.16	%		2.16	%		2.39	%		2.38	%
Net investment income (loss)		(0.72	)%7		(1.01	)%		0.03	%		(0.06	)%		(0.79	)%		(0.51	)%		(1.50	)%7		(1.79	)%		(0.66	)%		(0.88	)%		(1.58	)%		(1.36	)%
Supplemental Data
Net assets, end of period (000)	$	355,613		$	315,762		$	282,726		$	237,748		$	232,924		$	180,501		$	2,983		$	3,313		$	4,330		$	5,123		$	7,596		$	8,209
Portfolio turnover		50	%		123	%		160	%		88	%		131	%		76	%		50	%		123	%		160	%		88	%		131	%		76	%

¹  Based on average shares outstanding.

²  Amount is less than $0.005 per share.

³  Distributions for annual periods determined in accordance with federal income tax regulations.

⁴ Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

⁵  Aggregate total return.

⁶  Includes a payment received from a settlement of litigation, which impacted the Fund’s total return. Excluding the payment from a settlement of litigation, the Fund’s total return is as follows:

	Six Months Ended March 31, 2015 (Unaudited)		Year Ended September 30,
			2014		2013		2012		2011			2010
Investor A		—		—		—		—		(1.36	)%		8.03%
Investor B		—		—		—		—		(2.10	)%		7.01%

⁷  Annualized.

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 37

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

	Investor C																		Class R
	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,															Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012			2011			2010						2014			2013			2012			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	13.16		$	14.28		$	10.75		$	8.89		$	9.05		$	8.41		$	15.63		$	16.44		$	12.32		$	10.13		$	10.25		$	9.46
Net investment loss1		(0.09	)		(0.23	)		(0.09	)		(0.08	)		(0.16	)		(0.11	)		(0.07	)		(0.20	)		(0.04	)		(0.03	)		(0.10	)		(0.04	)
Net realized and unrealized gain (loss)		1.60			1.88			3.62			1.94			(0.00	)2		0.75			1.95			2.22			4.16			2.22			(0.02	)		0.83
Net increase (decrease) from investment operations		1.51			1.65			3.53			1.86			(0.16	)		0.64			1.88			2.02			4.12			2.19			(0.12	)		0.79
Distributions from net realized gain3		(1.82	)		(2.77	)		—			—			—			—			(1.86	)		(2.83	)		—			—			—			—
Net asset value, end of period	$	12.85		$	13.16		$	14.28		$	10.75		$	8.89		$	9.05		$	15.65		$	15.63		$	16.44		$	12.32		$	10.13		$	10.25
Total Return4
Based on net asset value		13.57	%5		13.42	%		32.84	%		20.92	%		(1.77	)%6		7.61	%6		13.83	%5		14.03	%		33.44	%		21.62	%		(1.17	)%6		8.35	%6
Ratios to Average Net Assets
Total expenses		2.16	%7,8		2.17	%		2.23	%		2.31	%		2.34	%		2.33	%		1.74	%8		1.74	%		1.74	%		1.84	%		1.91	%		1.97	%
Total expenses excluding recoupment of past waived fees		2.14	%8		2.16	%		2.23	%		2.31	%		2.31	%		2.30	%		1.74	%8		1.74	%		1.74	%		1.84	%		1.91	%		1.97	%
Total expenses after fees waived, reimbursed and paid indirectly		2.16	%8		2.16	%		2.16	%		2.16	%		2.33	%		2.33	%		1.65	%8		1.65	%		1.65	%		1.65	%		1.65	%		1.65	%
Net investment income (loss)		(1.49	)%8		(1.77	)%		(0.75	)%		(0.81	)%		(1.54	)%		(1.26	)%		(0.98	)%8		(1.26	)%		(0.26	)%		(0.28	)%		(0.84	)%		(0.44	)%
Supplemental Data
Net assets, end of period (000)	$	35,447		$	31,257		$	23,959		$	18,774		$	16,615		$	12,578		$	8,172		$	7,704		$	9,352		$	6,663		$	5,227		$	4,138
Portfolio turnover		50	%		123	%		160	%		88	%		131	%		76	%		50	%		123	%		160	%		88	%		131	%		76	%

¹  Based on average shares outstanding.

²  Amount is greater than $(0.005) per share.

³  Distributions for annual periods determined in accordance with federal income tax regulations.

⁴  Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

⁵  Aggregate total return.

⁶  Includes a payment received from a settlement of litigation, which impacted the Fund’s total return. Excluding the payment from a settlement of litigation, the Fund’s total return is as follows:

	Six Months Ended March 31, 2015 (Unaudited)		Year Ended September 30,
			2014		2013		2012		2011			2010
Investor C		—		—		—		—		(1.99	)%		7.13%
Class R		—		—		—		—		(1.37	)%		7.93%

⁷  Includes recoupment of past waived and/or reimbursed fees. There was no financial impact to the expense ratio.

⁸  Annualized.

See Notes to Financial Statements.

38 BLACKROCK FUNDS MARCH 31, 2015

Financial Highlights BlackRock Small Cap Growth Equity Portfolio

	Institutional																		Service
		Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,															Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012			2011			2010						2014			2013			2012			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	22.28		$	29.86		$	26.67		$	20.09		$	20.42		$	18.66		$	20.05		$	27.81		$	25.01		$	18.93		$	19.29		$	17.67
Net investment income (loss)1		0.03			(0.06	)		0.01			0.04			(0.13	)		(0.12	)		0.00	2		(0.12	)		(0.06	)		(0.04	)		(0.18	)		(0.16	)
Net realized and unrealized gain (loss)		2.13			2.58			5.90			7.14			(0.20	)3		1.88	3		1.87			2.40			5.49			6.72			(0.18	)3		1.78	3
Net increase (decrease) from investment operations		2.16			2.52			5.91			7.18			(0.33	)		1.76			1.87			2.28			5.43			6.68			(0.36	)		1.62
Distributions from:4
Net investment income		—			—			(0.07	)		—			—			—			—			—			—			—			—			—
Net realized gain		(4.97	)		(10.10	)		(2.65	)		(0.60	)		—			—			(4.90	)		(10.04	)		(2.63	)		(0.60	)		—			—
Total distributions		(4.97	)		(10.10	)		(2.72	)		(0.60	)		—			—			(4.90	)		(10.04	)		(2.63	)		(0.60	)		—			—
Net asset value, end of period	$	19.47		$	22.28		$	29.86		$	26.67		$	20.09		$	20.42		$	17.02		$	20.05		$	27.81		$	25.01		$	18.93		$	19.29
Total Return5
Based on net asset value		11.82	%6		8.90	%		25.36	%		36.16	%		(1.62	)%7,8		9.43	%8		11.64	%6		8.62	%		24.96	%		35.72	%		(1.87	)%7,8		9.17	%8
Ratios to Average Net Assets
Total expenses		0.83	%9		0.87	%		0.82	%		0.82	%		0.80	%		0.83	%		1.15	%9		1.12	%		1.12	%		1.20	%		1.07	%		1.10	%
Total expenses excluding recoupment of past waived fees		0.83	%9		0.87	%		0.82	%		0.82	%		0.80	%		0.83	%		1.15	%9		1.12	%		1.12	%		1.20	%		1.07	%		1.10	%
Total expenses after fees waived, reimbursed and paid indirectly		0.83	%9		0.87	%		0.82	%		0.82	%		0.80	%		0.83	%		1.15	%9		1.12	%		1.12	%		1.17	%		1.07	%		1.10	%
Net investment income (loss)		0.34	%9		(0.24	)%		0.06	%		0.15	%		(0.55	)%		(0.59	)%		0.02	%9		(0.53	)%		(0.25	)%		(0.15	)%		(0.81	)%		(0.86	)%
Supplemental Data
Net assets, end of period (000)	$	487,378		$	454,928		$	862,261		$	979,582		$	931,857		$	806,461		$	21,356		$	23,621		$	24,792		$	29,281		$	23,683		$	47,917
Portfolio turnover		66	%		132	%		175	%		147	%		141	%		128	%		66	%		132	%		175	%		147	%		141	%		128	%

¹  Based on average shares outstanding.

²  Amount is less than $0.005 per share.

³  Includes redemption fees, which are less than $0.005 per share.

⁴  Distributions for annual periods determined in accordance with federal income tax regulations.

⁵  Where applicable, assumes the reinvestment of distributions.

⁶  Aggregate total return.

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

BLACKROCK FUNDS MARCH 31, 2015 39

Financial Highlights (continued) BlackRock Small Cap Growth Equity Portfolio

	Investor A																		Investor B
	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,															Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012			2011			2010						2014			2013			2012			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	18.91		$	26.75		$	24.17		$	18.31		$	18.69		$	17.14		$	14.15		$	22.34		$	20.50		$	15.75		$	16.20		$	15.00
Net investment income (loss)1		0.00	2		(0.12	)		(0.06	)		(0.04	)		(0.21	)		(0.18	)		(0.05	)		(0.22	)		(0.21	)		(0.21	)		(0.32	)		(0.30	)
Net realized and unrealized gain (loss)		1.74			2.31			5.27			6.50			(0.17	)3		1.73	3		1.19			1.90			4.41			5.56			(0.13	)3		1.50	3
Net increase (decrease) from investment operations		1.74			2.19			5.21			6.46			(0.38	)		1.55			1.14			1.68			4.20			5.35			(0.45	)		1.20
Distributions from net realized gain4		(4.91	)		(10.03	)		(2.63	)		(0.60	)		—			—			(4.78	)		(9.87	)		(2.36	)		(0.60	)		—			—
Net asset value, end of period	$	15.74		$	18.91		$	26.75		$	24.17		$	18.31		$	18.69		$	10.51		$	14.15		$	22.34		$	20.50		$	15.75		$	16.20
Total Return5
Based on net asset value		11.65	%6		8.60	%		24.91	%		35.73	%		(2.03	)%7,8		9.04	%8		11.12	%6		7.73	%		23.92	%		34.46	%		(2.78	)%7,8		8.00	%8
Ratios to Average Net Assets
Total expenses		1.15	%9		1.15	%		1.14	%		1.17	%		1.18	%		1.22	%		2.08	%9		1.99	%		1.98	%		2.07	%		1.96	%		2.19	%
Total expenses excluding recoupment of past waived fees		1.15	%9		1.15	%		1.14	%		1.17	%		1.18	%		1.22	%		2.08	%9		1.99	%		1.98	%		2.07	%		1.96	%		2.07	%
Total expenses after fees waived, reimbursed and paid indirectly		1.15	%9		1.15	%		1.14	%		1.17	%		1.18	%		1.22	%		2.08	%9		1.99	%		1.98	%		2.07	%		1.96	%		2.19	%
Net investment income (loss)		0.03	%9		(0.56	)%		(0.25	)%		(0.18	)%		(0.94	)%		(0.98	)%		(0.92	)%9		(1.39	)%		(1.08	)%		(1.12	)%		(1.72	)%		(1.94	)%
Supplemental Data
Net assets, end of period (000)	$	302,109		$	282,684		$	332,978		$	352,073		$	235,400		$	269,080		$	730		$	794		$	1,265		$	1,506		$	1,687		$	2,369
Portfolio turnover		66	%		132	%		175	%		147	%		141	%		128	%		66	%		132	%		175	%		147	%		141	%		128	%

¹  Based on average shares outstanding.

²  Amount is less than $0.005 per share.

³  Includes redemption fees, which are less than $0.005 per share.

⁴  Distributions for annual periods determined in accordance with federal income tax regulations.

⁵  Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

⁶  Aggregate total return.

⁷  Includes proceeds received from a settlement of litigation, which had no impact on the Fund’s total 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, 2015

Financial Highlights (concluded) BlackRock Small Cap Growth Equity Portfolio

	Investor C
	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	13.99		$	22.23		$	20.50		$	15.73		$	16.19		$	14.99
Net investment loss1		(0.04	)		(0.21	)		(0.21	)		(0.19	)		(0.35	)		(0.30	)
Net realized and unrealized gain (loss)		1.17			1.89			4.38			5.56			(0.11	)2		1.50	2
Net increase (decrease) from investment operations		1.13			1.68			4.17			5.37			(0.46	)		1.20
Distributions from net realized gain3		(4.82	)		(9.92	)		(2.44	)		(0.60	)		—			—
Net asset value, end of period	$	10.30		$	13.99		$	22.23		$	20.50		$	15.73		$	16.19
Total Return4
Based on net asset value		11.23	%5		7.73	%		23.91	%		34.63	%		(2.84	)%6,7		8.01	%7
Ratios to Average Net Assets
Total expenses		1.94	%8		1.93	%		1.95	%		1.99	%		2.08	%		2.19	%
Total expenses excluding recoupment of past waived fees		1.94	%8		1.93	%		1.95	%		1.99	%		2.05	%		2.13	%
Total expenses after fees waived, reimbursed and paid indirectly		1.94	%8		1.93	%		1.95	%		1.99	%		2.07	%		2.16	%
Net investment loss		(0.77	)%8		(1.33	)%		(1.06	)%		(0.99	)%		(1.83	)%		(1.92	)%
Supplemental Data
Net assets, end of period (000)	$	32,630		$	32,598		$	33,193		$	28,787		$	23,947		$	33,219
Portfolio turnover		66	%		132	%		175	%		147	%		141	%		128	%

¹  Based on average shares outstanding.

²  Includes redemption fees, which are less than $0.005 per share.

³  Distributions for annual periods determined in accordance with federal income tax regulations.

⁴  Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

⁵  Aggregate total 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. There was no impact to the return.

⁸  Annualized.

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 41

Notes to Financial Statements (Unaudited)

1. Organization:

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. The following are referred to herein collectively as the “Funds” or individually, a “Fund”:

Fund Name	Herein Referred To As	Diversification Classification
BlackRock Flexible Equity Fund	Flexible Equity	Diversified
BlackRock Mid-Cap Growth Equity Portfolio	Mid-Cap Growth Equity	Diversified
BlackRock Small Cap Growth Equity Portfolio	Small Cap Growth Equity	Diversified

Each Fund offers multiple classes of shares. All classes of shares have identical voting, dividend, liquidation and other rights and are subject to the same terms and conditions, except that certain classes bear expenses related to the shareholder servicing and distribution of such shares. Institutional Shares are sold only to certain eligible investors. Investor B Shares are only available through exchanges and distribution reinvestments by current holders and for purchase by certain employer-sponsored retirement plans. Class R Shares are available only to certain employer-sponsored retirement plans. Investor A and Investor C Shares are generally available through financial intermediaries. 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).

Share Class	Initial Sales Charge	CDSC	Conversion Privilege
Institutional, Service and Class R Shares	No	No	None
Investor A Shares	Yes	No1	None
Investor B Shares	No	Yes	To Investor A Shares after approximately 8 years
Investor C Shares	No	Yes	None

¹  Investor A Shares may be subject to a CDSC for certain redemptions where no initial sales charge was paid at the time of purchase.

The Funds, together with certain other registered investment companies advised by the Manager or its affiliates, are included in a complex of open-end funds referred to as the Equity-Liquidity Complex.

Basis of Consolidation: The accompanying consolidated financial statements of Flexible Equity include the account of BlackRock Flexible Equity Fund Subsidiary, Ltd. (the “Subsidiary”), which is a wholly owned subsidiary of Flexible Equity and primarily invests in commodity-related instruments. The Subsidiary enables Flexible Equity to hold these commodity-related instruments and satisfy regulated investment company tax requirements. Flexible Equity may invest up to 25% of its total assets in the Subsidiary. As of March 31, 2015, there were no net assets in the Subsidiary. Intercompany accounts and transactions, if any, have been eliminated. The Subsidiary is subject to the same investment policies and restrictions that apply to Flexible Equity, except that the Subsidiary may invest without limitation in commodity-related instruments.

2. Significant Accounting Policies:

The Funds’ financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. Each Fund is considered an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies. The following is a summary of significant accounting policies followed by the Funds:

Valuation: The Funds’ investments are valued at fair value as of the close of trading on the New York Stock Exchange (“NYSE”) (generally 4:00 p.m., Eastern time). U.S. 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 determine the fair values of 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”). The BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) is the committee formed by management to develop global pricing policies and procedures and to provide oversight of the pricing function for the Funds for all financial instruments.

Equity investments traded on a recognized securities exchange are valued at the official close price each day, if available. For equity investments traded on more than one exchange, the official close 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 may be valued at the last available bid (long positions) or ask (short positions) price. Participation notes are valued on the basis of last available bid prices or current market quotations provided by dealers or pricing services. 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. Investments in open-end registered investment companies are valued at NAV each business day.

42 BLACKROCK FUNDS MARCH 31, 2015

Notes to Financial Statements (continued)

Securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars using exchange rates determined as of the close of business on the NYSE. Forward 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 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.

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.

In the event that the application of these methods of valuation results in a price for an investment that 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 by the Global Valuation Committee, or its delegate, in accordance with a policy approved by the Board as reflecting fair value (“Fair Value Investments”). When determining the price for Fair Value Investments, the Global Valuation Committee, or its delegate, seeks to determine the price that each Fund might reasonably expect to receive or pay from the current sale or purchase of that asset or liability in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the Global Valuation Committee, or its delegate, deems relevant consistent with the principles of fair value measurement, which include the market approach, income approach and/or in the case of recent investments, the cost approach, as appropriate. The market approach generally consists of using comparable market transactions. The income approach generally is used to discount future cash flows to present value and is adjusted for liquidity as appropriate. These factors include but are not limited to: (i) attributes specific to the investment or asset; (ii) the principal market for the investment or asset; (iii) the customary participants in the principal market for the investment or asset; (iv) data assumptions by market participants for the investment or asset, if reasonably available; (v) quoted prices for similar investments or assets in active markets; and (vi) other factors, such as future cash flows, interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks, recovery rates, liquidation amounts and/or default rates. Due to the inherent uncertainty of valuations of such investments, the fair values may differ from the values that would have been used had an active market existed. The Global Valuation Committee, or its delegate, employs various methods for calibrating valuation approaches for investments where an active market does not exist, including regular due diligence of the Funds’ pricing vendors, regular reviews of key inputs and assumptions, transactional back-testing or disposition analysis to compare unrealized gains and losses to realized gains and losses, reviews of missing or stale prices and large movements in market values and reviews of any market related activity. The pricing of all Fair Value Investments is subsequently reported to the Board or a committee thereof on a quarterly basis.

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 (e.g., 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 Global Valuation Committee, or its delegate, 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: Each Funds’ books and records are maintained in U.S. dollars. Purchases and sales of investment securities are recorded at the rates of exchange prevailing on the respective dates of such transactions. Generally, when the U.S. dollar rises in value against a foreign currency, each Funds’ investments denominated in that currency will lose value because that currency is worth fewer U.S. dollars; the opposite effect occurs if the U.S. dollar falls in relative value.

Each 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 in 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. Each 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 generally treated as ordinary income for federal income tax purposes.

BLACKROCK FUNDS MARCH 31, 2015 43

Notes to Financial Statements (continued)

Segregation and Collateralization: In cases where a Fund enters into certain investments (e.g., financial futures contracts, forward foreign currency exchange contracts, options written, and swaps), that would be “senior securities” for 1940 Act purposes, the Fund may segregate or designate on its books and records cash or liquid securities having a market value at least equal to the amount of a Fund’s future obligations under such investments. Doing so allows the investment to be excluded from treatment as a “senior security.” Furthermore, if required by an exchange or counterparty agreement, the Fund may be required to deliver/deposit cash and/or securities to/with an exchange, or broker-dealer or custodian as collateral for certain investments or obligations.

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 date. 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, expenses and realized and unrealized gains and losses are allocated daily to each class based on its relative net assets.

Distributions: Distributions paid by the Funds are recorded on the ex-dividend date. The character and timing of distributions are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP.

Net income and realized gains from investments held by the Subsidiary are treated as ordinary income for tax purposes. Accordingly, the net investment income (loss) and realized gains (losses) reported in the Flexible Equity Fund’s financial statements presented under U.S. GAAP for such investments held by the Subsidiary may differ significantly from distributions. As such, any net gain will pass through to the Flexible Equity Fund as ordinary income for federal income tax purposes. If a net loss is realized by the Subsidiary in any taxable year, the loss will generally not be available to offset the Flexible Equity Fund’s ordinary income and/or capital gains for that year.

Recent Accounting Standard: In June 2014, the Financial Accounting Standards Board issued guidance to improve the financial reporting of reverse repurchase agreements and other similar transactions. The guidance will require expanded disclosure for entities that enter into reverse repurchase agreements and similar transactions accounted for as secured borrowings. It is effective for financial statements with fiscal years beginning on or after December 15, 2014 and for interim periods beginning after March 15, 2015. Management is evaluating the impact, if any, of this guidance on the Fund’s financial statement disclosures.

Other: Expenses directly related to a Fund or its classes are charged to that Fund or the applicable class. Other operating expenses shared by several funds are prorated among those funds on the basis of relative net assets or other appropriate methods. Expenses directly related to the Funds and other shared expenses prorated 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 their 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.

3. Securities and Other Investments:

Participation Notes: Flexible Equity may invest in participation notes (“P-Notes”). P-Notes are promissory notes issued by banks or broker-dealers that are designed to offer Flexible Equity 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 Flexible Equity 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, Flexible Equity 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 Flexible Equity 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. Flexible Equity 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 Flexible Equity since the P-Note generally is dependent on the liquidity in the local trading market for the underlying security.

Preferred Stock: The Funds 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

44 BLACKROCK FUNDS MARCH 31, 2015

Notes to Financial Statements (continued)

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.

Securities Lending: Each Fund may lend its securities to approved borrowers, such as brokers, dealers and other financial institutions. The borrower pledges and maintains with the Funds collateral consisting of cash, an irrevocable letter of credit issued by a bank, or securities issued or guaranteed by the U.S. Government. The initial collateral received by each Fund is required to have a value of at least 102% of the current value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% for all other securities. The collateral is maintained thereafter, at a value equal to at least 100% of the current market value of the securities on loan. The market value of the loaned securities is determined at the close of each business day of the Fund and any additional required collateral is delivered to the Fund on the next business day. During the term of the loan, each Fund is entitled to all distributions made on or in respect of the loaned securities. 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.

The market value of securities on loan and the value of the related collateral are shown separately in the Statements of Assets and Liabilities as a component of investments at value — unaffiliated, and collateral on securities loaned at value, respectively. As of March 31, 2015, any securities on loan were collateralized by cash. The cash collateral invested by the securities lending agent, BlackRock Investment Management, LLC (“BIM”), if any, is disclosed in the Schedules of Investments.

Securities lending transactions are entered into by the Funds under Master Securities Lending Agreements (each, an “MSLA”) which provide the right, in the event of default (including bankruptcy or insolvency), for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party or request additional collateral. In the event that a borrower defaults, each Fund, as lender, would offset the market value of the collateral received against the market value of the securities loaned. When the value of the collateral is greater than that of the market value of the securities loaned, the lender is left with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, the borrower can resell or re-pledge the loaned securities, and the Funds can reinvest cash collateral, or, upon an event of default, resell or re-pledge the collateral.

As of March 31, 2015, the following table is a summary of the Funds’ securities lending agreements by counterparty, which are subject to offset under an MSLA:

Flexible Equity
Counterparty	Securities Loaned at Value		Cash Collateral Received1			Net Amount
Goldman Sachs & Co.	$	544,577	$	(544,577	)		—

¹  Collateral with a value of $576,157 has been received in connection with securities lending agreements. Collateral received in excess of the value of securities loaned from the individual counterparty is not shown for financial reporting purposes.

Mid-Cap Growth Equity
Counterparty	Securities Loaned at Value		Cash Collateral Received1			Net Amount
Goldman Sachs & Co.	$	741,889	$	(741,889	)		—
JP Morgan Securities LLC		1,348,939		(1,348,939	)		—
Total	$	2,090,828	$	(2,090,828	)		—

¹  Collateral with a value of $2,144,391 has been received in connection with securities lending agreements. Collateral received in excess of the value of securities loaned from the individual counterparty is not shown for financial reporting purposes.

BLACKROCK FUNDS MARCH 31, 2015 45

Notes to Financial Statements (continued)

Small Cap Growth Equity
Counterparty	Securities Loaned at Value		Cash Collateral Received1			Net Amount
Barclays Capital Inc.	$	989,984	$	(989,984	)		—
BNP Paribas S.A.		522,000		(522,000	)		—
Citigroup Global Markets, Inc.		160,160		(160,160	)		—
Credit Suisse Securities (USA) LLC		3,779,973		(3,779,973	)		—
Deutsche Bank Securities, Inc.		2,188,179		(2,188,179	)		—
Goldman Sachs & Co.		1,918,046		(1,918,046	)		—
JP Morgan Securities LLC		1,620,893		(1,620,893	)		—
Merrill Lynch, Pierce, Fenner & Smith, Inc.		2,909,644		(2,909,644	)		—
Morgan Stanley		5,215,440		(5,215,440	)		—
UBS Securities LLC		1,181,212		(1,181,212	)		—
Total	$	20,485,531	$	(20,485,531	)		—

¹  Collateral with a value of $20,954,953 has been received in connection with securities lending agreements. Collateral received in excess of the value of securities loaned from the individual counterparty is not shown for financial reporting purposes.

The risks of securities lending include the risk that the borrower may not provide additional collateral when required or may not return the securities when due. To mitigate these risks, the Funds benefit from a borrower default indemnity provided by BIM. BIM’s indemnity allows for full replacement of the securities loaned if the collateral received does not cover the value on securities loaned in the event of borrower default. The Funds 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.

4. Derivative Financial Instruments:

The Funds engage in various portfolio investment strategies using derivative contracts both to increase the returns of the Funds and/or to economically manage their exposure to certain risks such as equity risk or foreign currency exchange rate risk. These contracts may be transacted on an exchange or OTC.

Financial Futures Contracts: Flexible Equity and Small Cap Growth Equity purchase and/or sell financial futures contracts and options on financial future contracts to gain exposure to, or economically hedge against, changes in the value of equity securities (equity risk). Financial futures contracts are agreements between the Funds and a 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.

Upon entering into a financial futures contract, Flexible Equity and Small Cap Growth Equity are required to deposit initial margin with the broker in the form of cash or securities in an amount that varies depending on a contract’s size and risk profile. The initial margin deposit must then be maintained at an established level over the life of the contract. Securities deposited as initial margin are designated on the Schedules of Investments and cash deposited, if any, is recorded on the Statements of Assets and Liabilities as cash pledged for financial futures contracts. Pursuant to the contract, Flexible Equity and Small Cap Growth Equity 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. Variation margin is recorded by Flexible Equity and Small Cap Growth Equity as unrealized appreciation or depreciation and, if applicable, as a receivable or payable for variation margin in the Statements of Assets and Liabilities.

When the contract is closed, Flexible Equity and Small Cap Growth Equity 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, interest or foreign currency exchange rates and the underlying assets.

Forward Foreign Currency Exchange Contracts: Flexible Equity enters into forward foreign currency exchange contracts as an economic hedge against either specific transactions or portfolio instruments or to obtain exposure to, or hedge exposure away from, foreign currencies (foreign currency exchange rate risk). A forward 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. Forward foreign currency exchange contracts, when used by Flexible Equity, help to manage the overall exposure to the currencies in which some of the investments held by Flexible Equity are denominated. The contract is marked-to-market daily and the change in market value is recorded by Flexible Equity as an unrealized gain or loss. When the contract is closed, Flexible Equity 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 forward foreign currency exchange contracts involves the risk that the value of a forward foreign currency exchange contract changes unfavorably due to movements in the value of the referenced foreign currencies.

Options: Flexible Equity purchases and writes call and put options to increase or decrease its 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

46 BLACKROCK FUNDS MARCH 31, 2015

Notes to Financial Statements (continued)

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.

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

For the six months ended March 31, 2015, transactions in options written for Flexible Equity were as follows:

	Calls						Puts
	Contracts			Premiums Received			Contracts			Premiums Received
Outstanding options, beginning of period		1,382		$	215,100			1,500		$	58,441
Options written		25,378			3,366,634			—			—
Options exercised		(6,187	)		(743,090	)		—			—
Options expired		(2,364	)		(267,904	)		—			—
Options closed		(18,209	)		(2,570,740	)		(1,500	)		(58,441	)
Outstanding options, end of period		—			—			—			—

Swaps: Flexible Equity enters into swap agreements in which the Fund and a counterparty agree either to make periodic net payments on a specified notional amount or a net payment upon termination. Swap agreements are privately negotiated in the OTC market and may be entered into as a bilateral contract (“OTC swaps”) or centrally cleared (“centrally cleared swaps”). Swaps are marked-to-market daily and changes in value are recorded as unrealized appreciation (depreciation).

For OTC swaps, any upfront premiums paid are recorded as assets and any upfront fees received are recorded as liabilities and are shown as swap premiums paid and swap premiums received, respectively, in the Statements of Assets and Liabilities and amortized over the term of the OTC swap. Payments received or made by the Fund for OTC swaps are recorded in the Statements of Operations as realized gains or losses, respectively. When an OTC 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 contract 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 Statements 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.

• Total return swaps — Flexible Equity 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). 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 (dividends or interest 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 Funds will receive a payment from or make a payment to the counterparty.

BLACKROCK FUNDS MARCH 31, 2015 47

Notes to Financial Statements (continued)

The following is a summary of the Funds’ derivative financial instruments categorized by risk exposure:

Fair Values of Derivative Financial Instruments as of March 31, 2015
		Value
		Flexible Equity				Small Cap Growth Equity
	Statements of Assets and Liabilities Location	Derivative Assets		Derivative Liabilities		Derivative Assets		Derivative Liabilities
Foreign currency exchange contracts	Unrealized appreciation/depreciation on forward foreign currency exchange contracts	$	2,054,574	$	584,811		—		—
Equity contracts	Net unrealized appreciation/depreciation1		—		—	$	149,175		—
Total		$	2,054,574	$	584,811	$	149,175		—

¹  Includes cumulative appreciation/depreciation on financial futures contracts and centrally cleared swaps, if any, as reported in the Schedules of Investments. Only current day’s variation margin is reported within the Statements of Assets and Liabilities.

The Effect of Derivative Financial Instruments in the Statements of Operations Six Months Ended March 31, 2015
	Flexible Equity			Small Cap Growth Equity		Flexible Equity			Small Cap Growth Equity
	Net Realized Gain (Loss) From					Net Change in Unrealized Appreciation/Depreciation on
Foreign currency exchange contracts:
Foreign currency transactions/translations	$	9,078,454			—	$	(3,892,285	)		—
Equity contracts:
Financial futures contracts		(8,345,746	)	$	397,857		(1,856,152	)	$	498,850
Swaps		(1,811,587	)		—		505,315			—
Options2		(5,466,451	)		—		431,968			—
Total	$	(6,545,330	)	$	397,857	$	(4,811,154	)	$	498,850

²  Options purchased are included in the net realized gain (loss) from investments — unaffiliated and net change in unrealized appreciation/depreciation on investments — unaffiliated.

For the six months ended March 31, 2015, the average quarterly balances of outstanding derivative financial instruments were as follows:

	Flexible Equity		Small Cap Growth Equity
Financial futures contracts:
Average notional value of contracts - long		—	$	10,262,025
Average notional value of contracts - short	$	28,141,334		—
Forward foreign currency exchange contracts:
Average amounts purchased - in USD	$	81,310,574		—
Average amounts sold - in USD	$	42,439,084		—
Options:
Average value of option contracts purchased	$	99,611		—
Average value of option contracts written	$	745,142		—
Total return swaps:
Average notional value	$	9,656,553		—

Counterparty Credit Risk: A derivative contract may suffer a mark-to-market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform under the contract.

A Fund’s risk of loss from counterparty credit risk on OTC derivatives is generally limited to the aggregate unrealized gain less the value of any collateral held by such Fund.

For OTC options purchased, each Fund bears the risk of loss of the amount of the premiums paid plus the positive change in market values net of any collateral held by such Fund should the counterparty fail to perform under the contracts. Options written by the Funds do not typically give rise to counterparty credit risk, as options written generally obligate the Funds, and not the counterparty, to perform.

With exchange-traded purchased options and futures, there is less counterparty credit risk to the Funds since the exchange or clearinghouse, as counterparty to such instruments, guarantees against a possible default. The clearinghouse stands between the buyer and the seller of the contract; therefore, the credit risk is limited to failure of the clearinghouse. While offset rights may exist under applicable law, a Fund does not have a contractual right of offset against a clearing broker or clearinghouse in the event of a default (including the bankruptcy or insolvency) of the clearing broker or clearinghouse. Additionally, credit risk exists in exchange-traded futures with respect to initial and variation margin that is held in a clearing broker’s customer accounts. While clearing brokers are required to segregate customer margin from their own assets, in the event that a clearing broker

48 BLACKROCK FUNDS MARCH 31, 2015

Notes to Financial Statements (continued)

becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the clearing broker for all its clients, typically the shortfall would be allocated on a pro rata basis across all the clearing broker’s customers, potentially resulting in losses to the Funds.

In order to better define its contractual rights and to secure rights that will help the Fund mitigate its counterparty risk, the Fund may enter into an International Swaps and Derivatives Association, Inc. Master Agreement (“ISDA Master Agreement”) or similar agreement with its counterparties. An ISDA Master Agreement is a bilateral agreement between each Fund and a counterparty that governs certain OTC derivatives and typically contains, among other things, collateral posting terms and netting provisions in the event of a default and/or termination event. Under an ISDA Master Agreement, each Fund may, under certain circumstances, offset with the counterparty certain derivative financial instruments’ payables and/or receivables with collateral held and/or posted and create one single net payment. The provisions of the ISDA Master Agreement typically permit a single net payment in the event of default including the bankruptcy or insolvency of the counterparty. Bankruptcy or insolvency laws of a particular jurisdiction may restrict or prohibit the right of offset in bankruptcy, insolvency or other events. In addition, certain ISDA Master Agreements allow counterparties 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.

Collateral Requirements: For derivatives traded under an ISDA Master Agreement, the collateral requirements are typically calculated by netting the mark-to-market amount for each transaction under such agreement and comparing that amount to the value of any collateral currently pledged by the Fund and the counterparty.

Cash collateral that has been pledged to cover obligations of the Funds and cash collateral received from the counterparty, if any, is reported separately on the Statements of Assets and Liabilities as cash pledged as collateral and cash received as collateral, respectively. Non-cash collateral pledged by the Funds, if any, is noted in the Schedule of Investments. Generally, the amount of collateral due from or to a party has to exceed a minimum transfer amount threshold (typically either $250,000 or $500,000) before a transfer is required, which is determined at the close of business of the Funds. Any additional required collateral is delivered to/pledged by the Funds on the next business day. Typically, the Funds and counterparties are not permitted to sell, re-pledge or use the collateral they receive. To the extent amounts due to the Funds from its counterparties are not fully collateralized, the Funds bear the risk of loss from counterparty non-performance. Likewise, to the extent the Funds have delivered collateral to a counterparty and stand ready to perform under the terms of its agreement with such counterparty, the Funds bear the risk of loss from a counterparty in the amount of the value of the collateral in the event the counterparty fails to return such collateral.

For financial reporting purposes, the Funds do not offset derivative assets and derivative liabilities that are subject to netting arrangements, if any, in the Statements of Assets and Liabilities.

As of March 31, 2015, the Funds’ derivative assets and liabilities (by type) were as follows:

	Flexible Equity				Small Cap Growth Equity
	Assets		Liabilities		Assets			Liabilities
Derivative Financial Instruments:
Financial futures contracts		—		—	$	149,175			—
Forward foreign currency exchange contracts	$	2,054,574	$	584,811		—			—
Total derivative assets and liabilities in the Statements of Assets and Liabilities	$	2,054,574	$	584,811	$	149,175			—
Derivatives not subject to a Master Netting Agreement or similar agreement (“MNA”)		—		—		(149,175	)		—
Total derivative assets and liabilities subject to an MNA	$	2,054,574	$	584,811		—			—

As of March 31, 2015, the following table presents the Funds’ derivative assets and liabilities by counterparty net of amounts available for offset under an MNA and net of the related collateral received and pledged by the Fund:

Flexible Equity
Counterparty	Derivative Assets Subject to an MNA by Counterparty		Derivatives Available for  Offset1			Non-cash Collateral Received		Cash Collateral Received		Net Amount of Derivative Assets2
BNP Paribas S.A.	$	16,336		—			—		—	$	16,336
Citibank N.A.		32,426	$	(32,426	)		—		—		—
HSBC Bank PLC		1,117,262		—			—		—		1,117,262
Standard Chartered Bank		407,298		(109,233	)		—		—		298,065
TD Securities, Inc.		481,252		(52,687	)		—		—		428,565
Total	$	2,054,574	$	(194,346	)		—		—	$	1,860,228

BLACKROCK FUNDS MARCH 31, 2015 49

Notes to Financial Statements (continued)

Counterparty	Derivative Liabilities Subject to an MNA by  Counterparty		Derivatives Available for Offset1			Non-cash Collateral Pledged		Cash Collateral Pledged		Net Amount of Derivative Liabilities3
The Bank of New York Mellon	$	29,293		—			—		—	$	29,293
Citibank N.A.		169,765	$	(32,426	)		—		—		137,339
Deutsche Bank AG		57,616		—			—		—		57,616
Goldman Sachs Bank USA		42,957		—			—		—		42,957
Standard Chartered Bank		109,233		(109,233	)		—		—		—
State Street Bank and Trust Co.		16,489		—			—		—		16,489
TD Securities, Inc.		52,687		(52,687	)		—		—		—
UBS AG		106,771		—			—		—		106,771
Total	$	584,811	$	(194,346	)		—		—	$	390,465

¹  The amount of derivatives available for offset is limited to the amount of derivative assets and/or liabilities that are subject to an MNA.

²  Net amount represents the net amount receivable from the counterparty in the event of default.

³  Net amount represents the net amount payable due to the counterparty in the event of default. Net amount may be offset further by the options written receivable/payable on the Statement of Assets and Liabilities.

5. Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. is the largest stockholder and an affiliate of BlackRock, Inc. (“BlackRock”) for 1940 Act purposes.

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 services. The Manager is responsible for the management of each Fund’s portfolio and provides the necessary personnel, facilities, equipment and certain other services 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:

	Flexible Equity and Mid-Cap Growth Equity			Small Cap Growth Equity
Average Daily Net Assets	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 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 the Manager in the Statements of Operations. For the six months ended March 31, 2015, the amounts waived were as follows:

Flexible Equity	$	12,504
Mid-Cap Growth Equity	$	831
Small Cap Growth Equity	$	2,661

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, Flexible Equity pays the Manager based on Flexible Equity’s net assets, which include the assets of the Subsidiary.

The Trust, on behalf of the Funds, entered into a Distribution Agreement and a 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, each 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 relevant share class 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 compensates 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.

50 BLACKROCK FUNDS MARCH 31, 2015

Notes to Financial Statements (continued)

For the six months ended March 31, 2015, the following table shows the class specific service and distribution fees borne directly by each class of each Fund:

	Service		Investor A		Investor B		Investor C		Class R		Total
Flexible Equity	$	236	$	534,810	$	31,745	$	439,855	$	3,744	$	1,010,390
Mid-Cap Growth Equity	$	3,498	$	401,174	$	15,448	$	160,235	$	19,352	$	599,707
Small Cap Growth Equity	$	26,423	$	358,000	$	3,756	$	159,900		—	$	548,079

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 asset-based fee or an annual fee per shareholder account, which will vary depending on share class and/or net assets. For the six months ended March 31, 2015, the Funds paid the following amounts to the affiliates of BlackRock in return for these services, which are included in transfer agent — class specific in the Statements of Operations:

Flexible Equity	$	491
Mid-Cap Growth Equity	$	1,515
Small Cap Growth Equity	$	117,234

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, 2015, 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:

	Institutional		Service		Investor A		Investor B		Investor C		Class R		Total
Flexible Equity	$	1,187	$	8	$	46,235	$	3,163	$	2,146	$	3	$	52,742
Mid-Cap Growth Equity	$	990	$	18	$	69,572	$	2,460	$	1,599	$	39	$	74,678
Small Cap Growth Equity	$	1,002	$	154	$	4,690	$	69	$	1,028		—	$	6,943

For the six months ended March 31, 2015, the following table shows the class specific transfer agent fees borne directly by each class of each Fund:

	Institutional		Service		Investor A		Investor B		Investor C		Class R		Total
Flexible Equity	$	41,524	$	167	$	485,421	$	19,552	$	94,390	$	1,621	$	642,675
Mid-Cap Growth Equity	$	16,426	$	2,246	$	406,676	$	12,863	$	30,358	$	11,016	$	479,585
Small Cap Growth Equity	$	334,292	$	22,858	$	299,813	$	1,481	$	39,446		—	$	697,890

Effective January 1, 2015, The Trust, on behalf of the Funds, entered into an Administration Agreement with the Manager, an indirect, wholly owned subsidiary of BlackRock, to provide administrative services. For these services, the Manager receives an administration fee computed daily and payable monthly, based on a percentage of the average daily net assets of the Funds. The administration fee, which is shown as administration in the Statement of Operations, is paid at the annual rates below:

Average Daily Net Assets	Administration Fee
First $500 Million		0.0425	%
$500 Million - $1 Billion		0.0400	%
$1 Billion - $2 Billion		0.0375	%
$2 Billion - $4 Billion		0.0350	%
$4 Billion - $13 Billion		0.0325	%
Greater than $13 Billion		0.0300	%

In addition, the Manager charges each of the share classes an administration fee, which is shown as administration — class specific in the Statement of Operations, at an annual rate of 0.02% of the average daily net assets of each respective class.

Prior to January 1, 2015, BNY Mellon Investment Servicing (US) Inc. (“BNYMIS”) and the Manager acted as co-administrators for the Funds. For these services, the co-administrators received an administration fee computed daily and payable monthly to each administrator pursuant to separate fee arrangements, based on a percentage of the average daily net assets of each Fund. The combined administration fee, which is shown as administration in the Statements of Operations, was paid at the following annual rates. In addition, each of the share classes is charged an administration fee, which is shown as administration — class specific in the Statements of Operations, based on the following percentages of average daily net assets of each respective class:

Average Daily Net Assets	Administration Fee			Administration Fee — Class Specific
First $500 Million		0.075	%		0.025	%
$500 Million - $1 Billion		0.065	%		0.015	%
Greater than $1 Billion		0.055	%		0.005	%

BLACKROCK FUNDS MARCH 31, 2015 51

Notes to Financial Statements (continued)

For the six months ended March 31, 2015, the Funds paid the following to the Manager in return for these services, which are included in administration and administration — class specific in the Statements of Operations:

Flexible Equity	$	199,136
Mid-Cap Growth Equity	$	137,669
Small Cap Growth Equity	$	274,852

For the six months ended March 31, 2015, the following table shows the class specific administration fees borne directly by each class of each Fund:

	Institutional		Service		Investor A		Investor B		Investor C		Class R		Total
Flexible Equity	$	5,817	$	21	$	48,271	$	720	$	9,922	$	168	$	64,919
Mid-Cap Growth Equity	$	3,416	$	326	$	36,014	$	349	$	3,596	$	870	$	44,571
Small Cap Growth Equity	$	52,067	$	2,383	$	32,168	$	85	$	3,602		—	$	90,305

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.

The Manager contractually and/or voluntarily agreed to waive and/or reimburse fees or expenses in order to limit expenses, excluding interest expense, dividend expense, tax expense, acquired fund fees and expenses and certain other fund expenses, which constitute extraordinary expenses not incurred in the ordinary course of the Funds’ business. The expense limitations as a percentage of average daily net assets are as follows:

	Flexible Equity						Mid-Cap Growth Equity			Small Cap Growth Equity
	Contractual1			Voluntary2			Contractual3			Contractual3
Institutional		0.97	%		0.92	%		1.11	%		1.02	%
Service		1.29	%		1.24	%		1.58	%		1.18	%4
Investor A		1.29	%		1.24	%		1.39	%		1.50	%
Investor B		2.06	%		2.01	%		2.16	%		2.28	%
Investor C		2.06	%		2.01	%		2.16	%		2.28	%
Class R		1.65	%5		1.60	%		1.65	%		1.72	%6

¹  The Manager has agreed not to reduce or discontinue this contractual waiver or reimbursement prior to February 1, 2016, except for Class R Shares which is prior to February 1, 2025, unless approved by the Board, including a majority of the independent Trustees.

²  The voluntary waiver or reimbursement, which became effective June 1, 2014, may be reduced or discontinued at any time.

³  The Manager has agreed not to reduce or discontinue this contractual waiver or reimbursement prior to February 1, 2016 unless approved by the Board, including a majority of the independent Trustees.

⁴  Prior to February 1, 2015, the contractual cap was 1.29%.

⁵  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.

⁶  There were no shares outstanding as of March 31, 2015.

These amounts waived or reimbursed are included in fees waived by the Manager, 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, 2015, the Manager waived $5,758 of investment advisory fees for Flexible Equity, which is included in fees waived by the Manager. Class specific expense waivers or reimbursements are as follows:

Administration Fees Waived	Institutional		Service		Investor A		Investor B		Investor C		Class R		Total
Flexible Equity	$	5,817	$	13	$	48,271	$	720	$	9,922	$	168	$	64,911
Mid-Cap Growth Equity		—	$	3	$	35,610	$	349	$	275	$	870	$	37,107
Small Cap Growth Equity		—	$	91		—		—		—		—	$	91
Transfer Agent Fees Waived		Institutional		Service		Investor A		Investor B		Investor C		Class R		Total
Flexible Equity	$	1,187	$	8	$	46,235	$	3,163	$	2,146	$	3	$	52,742
Mid-Cap Growth Equity		—		—	$	48,754	$	2,460		—	$	39	$	51,253
Transfer Agent Fees Reimbursed		Institutional		Service		Investor A		Investor B		Investor C		Class R		Total
Flexible Equity	$	40,150	$	121	$	288,410	$	13,506	$	53,033	$	264	$	395,484
Mid-Cap Growth Equity		—	$	5	$	20,895	$	6,856		—	$	2,456	$	30,212

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

52 BLACKROCK FUNDS MARCH 31, 2015

Notes to Financial Statements (continued)

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, 2015, the Manager recouped the following Fund level and class specific waivers and/or reimbursements previously recorded by the Funds:

	Institutional		Service		Investor C		Total
Flexible Equity		—	$	15		—	$	15
Mid-Cap Growth Equity	$	2,523	$	1,701	$	3,138	$	7,362

On March 31, 2015, the Fund level and class specific waivers and/or reimbursements subject to possible future recoupment under the expense limitation agreement are as follows:

	Expiring September 30,
	2015		2016		2017
Flexible Equity
Fund Level	$	4,185		—		—
Institutional	$	161,208	$	68,244	$	34,796
Service	$	2,162	$	51	$	110
Investor A	$	726,434	$	534,736	$	280,289
Investor B	$	50,744	$	33,683	$	15,862
Investor C	$	141,245	$	74,719	$	44,014
R Shares	$	1,533	$	563	$	275
Mid-Cap Growth Equity
Service		—		—	$	8
Investor A	$	387,828	$	282,293	$	105,259
Investor B	$	24,471	$	19,359	$	9,664
Investor C	$	10,988	$	4,164	$	276
R Shares	$	6,418	$	7,596	$	3,365

For the six months ended March 31, 2015, affiliates earned underwriting discounts, direct commissions and dealer concessions on sales of each Fund’s Investor A Shares as follows:

Flexible Equity	$	3,751
Mid-Cap Growth Equity	$	7,673
Small Cap Growth Equity	$	5,826

For the six months ended March 31, 2015, affiliates received CDSCs as follows:

	Investor A		Investor B		Investor C
Flexible Equity	$	12	$	148	$	1,463
Mid-Cap Growth Equity	$	195	$	79	$	1,499
Small Cap Growth Equity	$	484		—	$	1,628

The U.S. Securities and Exchange Commission has issued an exemptive order which permits BIM, an affiliate of the Manager, to serve as securities lending agent for the Funds, subject to applicable conditions. As securities lending agent, BIM bears all operational costs directly related to securities lending. The Funds are responsible for expenses in connection with the investment of cash collateral received for securities on loan (the “collateral investment expenses”). The cash collateral is invested in a private investment company managed by the Manager or its affiliates. However, BIM has agreed to cap the collateral investment expenses of the private investment company to an annual rate of 0.04%. The investment advisor to the private investment company will not charge any advisory fees with respect to shares purchased by the Funds.

Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment expenses. Each Fund retains a portion of securities lending income and remits a remaining portion to BIM as compensation for its services as securities lending agent. Pursuant to a securities lending agreement, BIM may lend securities only when the difference between the borrower rebate rate and the risk free rate exceeds a certain level (such securities, the “specials only securities”).

Pursuant to such agreement, each Fund retains 80% of securities lending income. In addition, commencing the business day following the date that the aggregate securities lending income earned across certain funds in the Equity-Liquidity Complex in a calendar year exceeds a specified threshold, each Fund, pursuant to the securities lending agreement, will retain for the remainder of the calendar year securities lending income in an amount equal to 85% of securities lending income.

BLACKROCK FUNDS MARCH 31, 2015 53

Notes to Financial Statements (continued)

The share of securities lending income earned by each Fund, if any, is shown as securities lending — affiliated — net in the Statements of Operations. For the six months ended March 31, 2015, each Fund paid BIM the following amounts for securities lending agent services:

Flexible Equity	$	14,153
Mid-Cap Growth Equity	$	6,286
Small Cap Growth Equity	$	264,570

Certain officers and/or trustees of the Trust are officers and/or directors of BlackRock or its affiliates. The Funds reimburse the Manager for a portion of the compensation paid to the Trust’s Chief Compliance Officer, which is included in officer and trustees in the Statements of Operations.

The Funds may purchase securities from, or sell securities to, an affiliated fund provided the affiliation is due solely to having a common investment advisor, common officers, or common trustees. For the six months ended March 31, 2015, Flexible Equity’s purchase and sale transactions with an affiliated fund in compliance with Rule 17a-7 under the 1940 Act were $17,172,283 and $5,877,528, respectively.

6. Purchases and Sales:

Purchases and sales of investments, excluding short-term securities, for the six months ended March 31, 2015, were as follows:

	Flexible Equity		Mid-Cap Growth Equity		Small Cap Growth Equity
Purchases	$	730,085,154	$	201,149,810	$	531,990,041
Sales	$	702,498,813	$	216,217,237	$	557,813,030

7. Income Tax Information:

It is the Funds’ policy to comply with the requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies, and to distribute substantially all of their taxable income to their shareholders. Therefore, no federal income tax provision is required.

The Funds file U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Funds’ U.S. federal tax returns remains open for each of the four years ended September 30, 2014. 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 has analyzed tax laws and regulations and their application to the Funds as of March 31, 2015, inclusive of the open tax return years, and does not believe that there are any uncertain tax positions that require recognition of a tax liability in the Funds’ financial statements.

As of September 30, 2014, the Flexible Equity Fund had a capital loss carryforward available to offset future realized capital gains of $47,020,050, all of which is due to expire September 30, 2017.

As of March 31, 2015, gross unrealized appreciation and depreciation based on cost for federal income tax purposes were as follows:

	Flexible Equity			Mid-Cap Growth Equity			Small Cap Growth Equity
Tax cost	$	538,543,784		$	326,034,390		$	760,102,039
Gross unrealized appreciation	$	26,571,964		$	114,886,919		$	140,844,001
Gross unrealized depreciation		(13,430,968	)		(2,920,777	)		(36,782,160	)
Net unrealized appreciation	$	13,140,996		$	111,966,142		$	104,061,841

8. Bank Borrowings:

The Trust, on behalf of the Funds, along with certain other funds managed by the Manager and its affiliates (“Participating Funds”), was a party to a 364-day, $1.1 billion credit agreement with a group of lenders, under which the Funds may borrow to fund shareholder redemptions. Excluding commitments designated for a certain individual fund, the Participating Funds, including the Fund, could borrow up to an aggregate commitment amount of $650 million, subject to asset coverage and other limitations as specified in the agreement. Effective November 25, 2014, the credit agreement was amended to an aggregate commitment amount of $2.1 billion, of which the Participating Funds, including the Fund, can borrow up to $1.6 billion at any time outstanding, subject to asset coverage and other limitations as specified in the agreement. The agreement terminates on April 23, 2015, unless otherwise extended to November 24, 2015 or renewed for a period of 364 days from April 23, 2015. The amended agreement has the following terms: a fee of 0.06% per annum on unused commitment amounts and interest at a rate equal to the higher of (a) one-month LIBOR (but, in any event, not less than 0.00%) on the date the loan is made plus 0.80% per annum or (b) the Fed Funds rate (but, in any event, not less than 0.00%) in effect from time to time plus 0.80% per annum on amounts borrowed. Participating Funds paid administration, legal and arrangement fees, which are included in miscellaneous expenses in the Statement of Operations, and along with commitment fees, were allocated among such funds based upon

54 BLACKROCK FUNDS MARCH 31, 2015

Notes to Financial Statements (continued)

portions of the aggregate commitment available to them and relative net assets of Participating Funds. During the six months ended March 31, 2015, the Funds did not borrow under the credit agreement.

9. Principal Risks:

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

As of March 31, 2015, Flexible Equity and Small Cap Growth Equity invested a significant portion of their assets in securities in the information technology and health care sectors. Mid-Cap Growth Equity invested a significant portion of its assets in securities in the consumer discretionary and information technology sectors. Changes in economic conditions affecting such sectors would have a greater impact on the respective Funds and could affect the value, income and/or liquidity of positions in such securities.

10. Capital Share Transactions:

Transactions in capital shares for each class were as follows:

	Six Months Ended March 31, 2015						Year Ended September 30, 2014
Flexible Equity	Shares			Amount			Shares			Amount
Institutional
Shares sold		195,452		$	2,645,063			1,242,439		$	18,462,322
Shares issued in reinvestment of distributions		571,422			7,302,784			88,986			1,337,911
Shares redeemed		(595,914	)		(7,942,014	)		(2,225,666	)		(32,833,176	)
Net increase (decrease)		170,960		$	2,005,833			(894,241	)	$	(13,032,943	)
Service
Shares sold		—			—			1,364		$	19,360
Shares issued in reinvestment of distributions		2,121		$	26,699			336			5,005
Shares redeemed		(3,004	)		(43,352	)		(17,425	)		(252,400	)
Net decrease		(883	)	$	(16,653	)		(15,725	)	$	(228,035	)
Investor A
Shares sold and automatic conversion of shares		777,828		$	10,197,631			1,663,646		$	23,801,164
Shares issued in reinvestment of distributions		5,268,169			64,956,765			698,720			10,236,797
Shares redeemed		(4,183,626	)		(55,001,580	)		(8,445,720	)		(121,467,554	)
Net increase (decrease)		1,862,371		$	20,152,816			(6,083,354	)	$	(87,429,593	)
Investor B
Shares sold		887		$	10,536			3,381		$	43,442
Shares issued in reinvestment of distributions		94,405			1,036,570			9,091			121,879
Shares redeemed and automatic conversion of shares		(154,965	)		(1,805,988	)		(421,887	)		(5,456,644	)
Net decrease		(59,673	)	$	(758,882	)		(409,415	)	$	(5,291,323	)

BLACKROCK FUNDS MARCH 31, 2015 55

Notes to Financial Statements (continued)

	Six Months Ended March 31, 2015						Year Ended September 30, 2014
Flexible Equity (concluded)	Shares			Amount			Shares			Amount
Investor C
Shares sold		145,741		$	1,724,831			265,044		$	3,408,878
Shares issued in reinvestment of distributions		1,323,125			14,355,983			117,219			1,558,290
Shares redeemed		(906,062	)		(10,486,190	)		(1,600,571	)		(20,645,886	)
Net increase (decrease)		562,804		$	5,594,624			(1,218,308	)	$	(15,678,718	)
Class R
Shares sold		10,954		$	148,085			53,477		$	784,618
Shares issued in reinvestment of distributions		17,840			226,931			1,295			19,657
Shares redeemed		(25,613	)		(331,305	)		(28,177	)		(413,014	)
Net increase		3,181		$	43,711			26,595		$	391,261
Total Net Increase (Decrease)		2,538,760		$	27,021,449			(8,594,448	)	$	(121,269,351	)
Mid-Cap Growth Equity
Institutional
Shares sold		478,585		$	8,371,788			1,196,508		$	21,091,745
Shares issued in reinvestment of distributions		185,953			2,891,571			194,583			3,105,529
Shares redeemed		(729,013	)		(12,334,031	)		(677,079	)		(11,709,016	)
Net increase (decrease)		(64,475	)	$	(1,070,672	)		714,012		$	12,488,258
Service
Shares sold		36,763		$	588,978			158,478		$	2,550,496
Shares issued in reinvestment of distributions		33,345			475,497			24,218			359,153
Shares redeemed		(183,110	)		(2,613,334	)		(68,930	)		(1,110,985	)
Net increase (decrease)		(113,002	)	$	(1,548,859	)		113,766		$	1,798,664
Investor A
Shares sold and automatic conversion of shares		1,629,216		$	24,897,260			2,620,664		$	41,081,622
Shares issued in reinvestment of distributions		2,641,817			36,192,894			3,329,313			47,575,801
Shares redeemed		(1,797,456	)		(26,948,741	)		(3,002,634	)		(46,763,780	)
Net increase		2,473,577		$	34,141,413			2,947,343		$	41,893,643
Investor B
Shares sold		1,598		$	20,297			14,015		$	189,102
Shares issued in reinvestment of distributions		37,360			419,930			63,066			759,319
Shares redeemed and automatic conversion of shares		(59,282	)		(719,407	)		(129,834	)		(1,701,598	)
Net decrease		(20,324	)	$	(279,180	)		(52,753	)	$	(753,177	)
Investor C
Shares sold		316,586		$	3,963,175			737,262		$	9,789,456
Shares issued in reinvestment of distributions		377,524			4,213,180			396,072			4,748,893
Shares redeemed		(310,731	)		(3,815,107	)		(436,380	)		(5,629,287	)
Net increase		383,379		$	4,361,248			696,954		$	8,909,062

56 BLACKROCK FUNDS MARCH 31, 2015

Notes to Financial Statements (concluded)

	Six Months Ended March 31, 2015						Year Ended September 30, 2014
Mid-Cap Growth Equity (concluded)	Shares			Amount			Shares			Amount
Class R
Shares sold		105,588		$	1,577,263			213,560		$	3,338,369
Shares issued in reinvestment of distributions		68,920			935,238			115,333			1,635,424
Shares redeemed		(145,406	)		(2,100,075	)		(404,806	)		(6,167,381	)
Net increase (decrease)		29,102		$	412,426			(75,913	)	$	(1,193,588	)
Total Net Increase		2,688,257		$	36,016,376			4,343,409		$	63,142,862
Small Cap Growth Equity
Institutional
Shares sold		1,822,865		$	35,926,624			8,656,098		$	211,371,164
Shares issued in reinvestment of distributions		5,535,087			98,413,836			9,997,391			219,842,574
Shares redeemed		(2,750,662	)		(54,556,283	)		(27,109,533	)		(690,162,339	)
Net increase (decrease)		4,607,290		$	79,784,177			(8,456,044	)	$	(258,948,601	)
Service
Shares sold		128,462		$	2,281,081			326,946		$	7,360,406
Shares issued in reinvestment of distributions		320,597			4,988,487			452,078			8,964,705
Shares redeemed		(372,662	)		(6,880,388	)		(492,363	)		(10,724,740	)
Net increase		76,397		$	389,180			286,661		$	5,600,371
Investor A
Shares sold and automatic conversion of shares		2,017,404		$	31,831,481			4,602,327		$	93,881,945
Shares issued in reinvestment of distributions		4,903,069			70,555,130			6,048,552			113,168,255
Shares redeemed		(2,678,458	)		(43,856,254	)		(8,147,736	)		(171,817,273	)
Net increase		4,242,015		$	58,530,357			2,503,143		$	35,232,927
Investor B
Shares sold		935		$	11,161			2,277		$	38,240
Shares issued in reinvestment of distributions		25,616			246,684			34,769			489,888
Shares redeemed and automatic conversion of shares		(13,241	)		(144,097	)		(37,519	)		(555,636	)
Net increase (decrease)		13,310		$	113,748			(473	)	$	(27,508	)
Investor C
Shares sold		224,841		$	2,456,563			411,912		$	6,591,150
Shares issued in reinvestment of distributions		1,120,241			10,575,042			1,031,671			14,371,093
Shares redeemed		(507,505	)		(5,591,311	)		(606,945	)		(9,349,869	)
Net increase		837,577		$	7,440,294			836,638		$	11,612,374
Total Net Increase (Decrease)		9,776,589		$	146,257,756			(4,830,075	)	$	(206,530,437	)

11. Subsequent Events:

Management’s evaluation of the impact of all subsequent events on the Funds’ financial statements was completed through the date the financial statements were issued and the following item was noted:

Effective April 23, 2015, the 364-day, $2.1 billion credit agreement to which the Funds are a party, was further amended to expire on April 21, 2016, unless otherwise extended or renewed.

BLACKROCK FUNDS MARCH 31, 2015 57

Officers and Trustees

Rodney D. Johnson, Chair of the Board and Trustee

David O. Beim, Trustee

Collette Chilton, Trustee

Frank J. Fabozzi, Trustee

Dr. Matina S. Horner, Trustee

Herbert I. London, Trustee

Ian A. MacKinnon, Trustee

Cynthia A. Montgomery, Trustee

Barbara G. Novick, Trustee

Joseph P. Platt, Trustee

Robert C. Robb, Jr., Trustee

Toby Rosenblatt, Trustee

Mark Stalnecker, Trustee

Kenneth L. Urish, Trustee

Frederick W. Winter, Trustee

John M. Perlowski, President and Chief Executive Officer

Jennifer McGovern, Vice President

Neal Andrews, Chief Financial Officer

Jay Fife, Treasurer

Charles Park, Chief Compliance Officer

Fernanda Piedra, Anti-Money Laundering Compliance Officer

Benjamin Archibald, Secretary

Effective December 31, 2014, Paul L. Audet and Henry Gabbay resigned as Trustees of the Trust and Ronald W. Forbes resigned as a Trustee of the Trust and Co-Chair of the Board. Effective January 1, 2015, Collette Chilton, Barbara G. Novick and Mark Stalnecker were appointed to serve as Trustees of the Trust.

Effective March 1, 2015, Charles Park resigned as Anti-Money Laundering Compliance Officer of the Trust and Fernanda Piedra became Anti-Money Laundering Compliance Officer of the Trust.

Investment Advisor and Administrator BlackRock Advisors, LLC Wilmington, DE 19809	Accounting Agent and Transfer Agent BNY Mellon Investment Servicing (US) Inc. Wilmington, DE 19809	Independent Registered Public Accounting Firm Deloitte & Touche LLP Philadelphia, PA 19103	Address of the Trust 100 Bellevue Parkway 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

58 BLACKROCK FUNDS MARCH 31, 2015

Additional Information

General Information

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 call 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 upon request and without charge (1) 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.

BlackRock’s 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. Visit http://www.blackrock.com for more information.

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 Plans

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.

BLACKROCK FUNDS MARCH 31, 2015 59

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.

60 BLACKROCK FUNDS MARCH 31, 2015

This report is intended for current holders. It is not authorized for use as an offer of sale or a solicitation of an offer to buy shares of the Funds unless preceded or accompanied by the Funds’ 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.

Eq-Midcap-3/15-SAR

MARCH 31, 2015        

  SEMI-ANNUAL REPORT (UNAUDITED)   BLACKROCK^®

BlackRock Funds^SM

„   BlackRock Global Opportunities Portfolio

„   BlackRock Health Sciences Opportunities Portfolio

„   BlackRock International Opportunities Portfolio

„   BlackRock Science & Technology Opportunities Portfolio

„   BlackRock U.S. Opportunities Portfolio

Not FDIC Insured ¡ May Lose Value ¡ No Bank Guarantee

Table of Contents

	Page
The Markets in Review	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	45
Statements of Operations	47
Statements of Changes in Net Assets	48
Financial Highlights	50
Notes to Financial Statements	77
Officers and Trustees	98
Additional Information	99

2 BLACKROCK FUNDS MARCH 31, 2015

The Markets in Review

Dear Shareholder,

Market volatility has remained low from a long-term perspective, but increased over the course of 2014 amid higher valuations in risk assets (such as equities and high yield bonds), geopolitical risks, uneven global economic growth and uncertainty around policy moves from the world’s largest central banks. As the U.S. Federal Reserve (the “Fed”) gradually reduced its bond buying program (which ultimately ended in October 2014), U.S. interest rates surprisingly trended lower and stock prices forged ahead despite high valuations on the back of a multi-year bull market. Geopolitical tensions intensified in Ukraine and the Middle East and oil prices became highly volatile in the middle of the summer, stoking worries about economic growth outside the United States. As the U.S. economy continued to show steady improvement, the stronger data caused concern among investors that the Fed would raise short-term rates sooner than previously anticipated. The U.S. dollar appreciated and global credit markets tightened, ultimately putting a strain on investor flows, and financial markets broadly weakened in the third quarter.

U.S. economic growth picked up considerably in the fourth quarter while the broader global economy showed signs of slowing. U.S. markets significantly outperformed international markets even as the European Central Bank (“ECB”) and the Bank of Japan eased monetary policy, which drove further strengthening in the U.S. dollar. Oil prices plummeted in the fourth quarter due to a global supply-and-demand imbalance, sparking a selloff in energy-related assets and stress in emerging markets. Fixed income investors piled into U.S. Treasuries as their persistently low yields became relatively attractive as compared to international sovereign debt.

Equity markets reversed in the first quarter of 2015 and U.S. stocks underperformed international markets, notably Europe and Japan, but also emerging markets. Investors had held high expectations for the U.S. economy, but after a harsh winter, first-quarter data disappointed and high valuations took their toll on U.S. stocks. Meanwhile, economic reports in Europe and Asia easily beat investors’ very low expectations for those economies, and accommodative policies from global central banks helped international equities rebound. The ECB’s asset purchase program (announced in January and commenced in March) was the largest in scale and effect on the markets. Overall, market volatility decreased in the first quarter as global risks abated, with a ceasefire in Ukraine and an improving outlook for Greece’s continued membership in the Eurozone.

At BlackRock, we believe investors need to think globally, extend their scope across a broad array of asset classes and be prepared to move freely as market conditions change over time. We encourage you to talk with your financial advisor and visit blackrock.com for further insight about investing in today’s markets.

Sincerely,

Rob Kapito

President, BlackRock Advisors, LLC

Rob Kapito

President, BlackRock Advisors, LLC

Total Returns as of March 31, 2015
	6-month	12-month
U.S. large cap equities (S&P 500® Index)	5.93%	12.73%
U.S. small cap equities (Russell 2000® Index)	14.46	8.21
International equities (MSCI Europe, Australasia, Far East Index)	1.13	(0.92)
Emerging market equities (MSCI Emerging Markets Index)	(2.37)	0.44
3-month Treasury bill (BofA Merrill Lynch 3-Month U.S. Treasury Bill Index)	0.01	0.03
U.S. Treasury securities (BofA Merrill Lynch 10-Year U.S. Treasury Index)	6.25	9.88
U.S. investment grade bonds (Barclays U.S. Aggregate Bond Index)	3.43	5.72
Tax-exempt municipal bonds (S&P Municipal Bond Index)	2.29	6.60
U.S. high yield bonds (Barclays U.S. Corporate High Yield 2% Issuer Capped Index)	1.50	2.00
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, 2015   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?

Ÿ For the six-month period ended March 31, 2015, the Fund outperformed the benchmark, the MSCI All Country World Index (“ACWI”).

  What factors influenced performance?

Ÿ Stock selection in the financials and industrials sectors were the primary positive contributors to relative performance. Within the financials sector, selection in the asset management & custody banks sub-industry was a notable contributor as shares of WisdomTree Investments, Inc. traded higher following a report that the firm’s assets under management had surpassed the $50 billion mark. Within industrials, shares of American Airlines Group, Inc. rallied after the stock was added to the S&P 500 Index. The company has also benefited along with other airlines from lower input costs caused by declining energy prices.

Ÿ Stock selection decisions in the energy sector pared back some of the relative gains. Within the oil & gas exploration & production sub-industry, shares of Lekoil Ltd. fell as the price of oil continued its downward trend. Also detracting from relative performance was selection in the information technology (“IT”) sector, as shares of LendingClub Corp. gradually fell over the period after posting strong short-term gains following its initial public offering.

  Describe recent portfolio activity.

Ÿ During the six-month period, the Fund increased its exposure to the IT, telecommunication services and consumer staples sectors, while reducing exposure to the energy, financials and industrials sectors. In regional terms, these shifts resulted in increased overweight exposures to emerging Asia and developed Europe, while reducing exposure to emerging Americas and Japan.

  Describe portfolio positioning at period end.

Ÿ Relative to the MSCI ACWI, the Fund ended the period overweight developed Europe and underweight both developed Americas and Asia. From a sector perspective, the Fund was most notably overweight in the IT and health care sectors, while its biggest underweights were to the materials and the consumer staples 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
Apple Inc.		2%
Citigroup, Inc.		2
Royal Dutch Shell PLC, A Shares - ADR		2
The Hartford Financial Services Group, Inc.		1
AIA Group Ltd.		1
Roper Industries, Inc.		1
The Hain Celestial Group, Inc.		1
Actavis PLC		1
Kennedy-Wilson Holdings, Inc.		1
BankUnited, Inc.		1

Geographic Allocation	Percent of Long-Term Investments
United States		53%
United Kingdom		10
Japan		5
France		4
Germany		3
Switzerland		3
China		3
India		2
Netherlands		2
Ireland		2
South Korea		2
Other1		11

¹ Includes holdings within countries that are 1% or less of long-term investments.

Please refer to the Schedule of Investments for such countries.

4 BLACKROCK FUNDS MARCH 31, 2015

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 and administration fees, if any. Institutional Shares do not have a sales charge.

²  Under normal market conditions, the Fund will invest at least 75% of its total assets in global equity securities of any market capitalization, selected for their 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 corporate bonds, U.S. government debt securities, non-U.S. government and supranational debt securities, asset-backed securities, mortgage-backed securities, emerging market debt securities and non-investment grade debt securities (high yield or junk bonds).

³  A free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. The MSCI ACWI consists of 46 country indexes comprising 23 developed and 23 emerging market country indexes.

⁴  Commencement of operations.

Performance Summary for the Period Ended March 31, 2015
		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	4.77%	1.76%	N/A	7.59%	N/A	5.53%	N/A
Investor A	4.63	1.53	(3.81)%	7.29	6.14%	5.24	4.62%
Investor B	4.12	0.64	(3.86)	6.37	6.06	4.55	4.55
Investor C	4.19	0.77	(0.24)	6.39	6.39	4.44	4.44
Class R	4.47	1.21	N/A	6.91	N/A	4.85	N/A
MSCI ACWI	2.73	5.42	N/A	8.99	N/A	5.18	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, 2014	Ending Account Value March 31, 2015	Expenses Paid During the Period7	Beginning Account Value October 1, 2014	Ending Account Value March 31, 2015	Expenses Paid During the Period7	Annualized Expense Ratio
Institutional	$1,000.00	$1,047.70	$  5.41	$1,000.00	$1,019.65	$  5.34	1.06%
Investor A	$1,000.00	$1,046.30	$  6.79	$1,000.00	$1,018.30	$  6.69	1.33%
Investor B	$1,000.00	$1,041.20	$11.09	$1,000.00	$1,014.06	$10.95	2.18%
Investor C	$1,000.00	$1,041.90	$10.89	$1,000.00	$1,014.26	$10.75	2.14%
Class R	$1,000.00	$1,044.70	$  8.77	$1,000.00	$1,016.36	$  8.65	1.72%

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 182/ 365 (to reflect the one-half year period shown).

⁸  Hypothetical 5% annual return before expenses is calculated by prorating the number of days in the most recent fiscal half year divided by 365.

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

BLACKROCK FUNDS MARCH 31, 2015 5

  Fund Summary as of March 31, 2015   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?

Ÿ For the six-month period ended March 31, 2015, the Fund outperformed its benchmark, the Russell 3000^® Health Care Index, as well as 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?

Ÿ Stock selection in the biotechnology and pharmaceutical industries made the strongest contribution to performance during the semi-annual period. Positioning in the medical equipment and supplies industry also marginally aided relative performance.

Ÿ In biotechnology, the Fund’s underweight position in Gilead Sciences, Inc., combined with overweight allocations in several holdings that appreciated following positive clinical developments added significant value. Notable holdings that benefited performance included Receptos, Inc., BioMarin Pharmaceutical, Inc., Alkermes PLC, Neurocrine Biosciences, Inc., Incyte Corp., Kite Pharma, Inc. and Spark Therapeutics, Inc.

Ÿ Within the pharmaceutical sub-sector, Eisai Co. Ltd. and Intra-Cellular Therapies, Inc. also rallied due to positive clinical developments. In addition, the Fund was underweight in several large benchmark components that lagged, such as Johnson & Johnson and Merck & Co., Inc. The Fund’s positions in several specialty pharmaceutical companies also aided relative performance.

Ÿ Given the Fund’s strong outperformance, there were only a handful of detractors during the period. An underweight allocation in the managed health care and health care services industries detracted from relative performance. Out-of-benchmark positions in several lagging non-U.S. pharmaceutical stocks such as Shire PLC, Roche Holding AG, AstraZeneca PLC, Bayer AG and Novartis AG were notable detractors.

  Describe recent portfolio activity.

Ÿ During the fourth quarter of 2014, the Fund increased its weighting in biotechnology and made a corresponding reduction in the pharmaceutical industry. Other industry weightings remained unchanged in aggregate. The weighting in biotechnology and pharmaceuticals remained consistent during the first quarter of 2015, and the Fund slightly increased its position in health care providers and services.

  Describe portfolio positioning at period end.

Ÿ The Fund continues to focus on innovative companies. The Fund’s largest industry allocations remain in biotechnology and pharmaceuticals, both of which are benefiting from the acceleration in new drug discovery and development, and in medical devices and supplies, where many companies are developing innovative products. Amid these broad trends, the Fund remained focused on the individual merits of each company’s respective pipeline or product opportunity, in keeping with its bottom-up, fundamental investment process.

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
Biogen Idec, Inc.	4%
Celgene Corp.	3
Actavis PLC	3
UnitedHealth Group, Inc.	3
Medtronic PLC	3
Amgen, Inc.	3
Bristol-Myers Squibb Co.	3
McKesson Corp.	3
Eli Lilly & Co.	3
Alexion Pharmaceuticals, Inc.	2

Industry Allocation	Percent of     Long-Term Investments
Biotechnology	30%
Pharmaceuticals	30
Health Care Equipment & Supplies	18
Health Care Providers & Services	17
Life Sciences Tools & Services	4
Health Care Technology	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 the investment advisor. These definitions may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

6 BLACKROCK FUNDS MARCH 31, 2015

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 and administration fees, if any. 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, primarily common stock, of companies in health sciences and related industries.

³  An unmanaged index that covers 500 leading companies and captures approximately 80% coverage of available market capitalization.

⁴  An unmanaged index that features companies involved in medical services or health care in the Russell 3000^® Index, which includes the largest 3,000 U.S. companies as determined by total market capitalization.

Performance Summary for the Period Ended March 31, 2015
		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	20.58%	34.88%	N/A	21.37%	N/A	16.74%	N/A
Service	20.42	34.51	N/A	21.01	N/A	16.40	N/A
Investor A	20.44	34.53	27.47%	21.02	19.72%	16.39	15.76%
Investor B	19.93	33.47	28.97	20.07	19.88	15.65	15.65
Investor C	20.00	33.58	32.58	20.15	20.15	15.54	15.54
Class R	20.25	34.13	N/A	20.56	N/A	15.89	N/A
S&P 500® Index	5.93	12.73	N/A	14.47	N/A	8.01	N/A
Russell 3000® Health Care Index	17.05	27.77	N/A	20.91	N/A	11.97	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 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, 2014	Ending Account Value March 31, 2015	Expenses Paid During the  Period6	Beginning Account Value October 1, 2014	Ending Account Value March 31 2015	Expenses Paid During the  Period6	Annualized Expense Ratio
Institutional	$1,000.00	$1,205.80	$  4.73	$1,000.00	$1,020.64	$4.33	0.86%
Service	$1,000.00	$1,204.20	$  6.32	$1,000.00	$1,019.20	$5.79	1.15%
Investor A	$1,000.00	$1,204.40	$  6.27	$1,000.00	$1,019.25	$5.74	1.14%
Investor B	$1,000.00	$1,199.30	$10.86	$1,000.00	$1,015.06	$9.95	1.98%
Investor C	$1,000.00	$1,200.00	$10.20	$1,000.00	$1,015.66	$9.35	1.86%
Class R	$1,000.00	$1,202.50	$  7.85	$1,000.00	$1,017.80	$7.19	1.43%

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 182/ 365 (to reflect the one-half year period shown).

⁷  Hypothetical 5% annual return before expenses is calculated by prorating the number of days in the most recent fiscal half year divided by 365.

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

BLACKROCK FUNDS MARCH 31, 2015 7

Fund Summary as of March 31, 2015 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?

Ÿ For the six-month period ended March 31, 2015, the Fund outperformed its benchmark, the MSCI All Country World Index (“ACWI”) Ex-U.S.

  What factors influenced performance?

Ÿ A positive contributor to relative performance was stock selection within the industrial machinery industry of the industrials sector, led by a position in FANUC Corp. Shares of the company traded higher after its announcement that it was initiating an investor relations department, a milestone for a Japanese company. Also, contributing to performance was selection within the airlines industry in industrials, after shares of Ryanair Holdings PLC rallied following a positive earnings reversion, an analyst upgrade and a decline in fuel prices.

Ÿ Detracting from performance was stock selection within the oil & gas exploration & production industry in the energy sector, led by shares of Lekoil Ltd., which fell as the price of oil continued its downward trend.

  Describe recent portfolio activity.

Ÿ During the six-month period, the Fund increased its exposure to the information technology, consumer discretionary and financials sectors, while reducing exposure to the energy, industrials and materials sectors. Regionally, these trades resulted in increased exposures to developed Europe and emerging Asia, while reducing exposure to Japan.

Ÿ During the time period, derivatives were used in the form of forward currency transactions to hedge currency exposure of holdings back to the exposure of the benchmark, with minimal impact on performance.

  Describe portfolio positioning at period end.

Ÿ Relative to the MSCI ACWI Ex-U.S., the Fund ended the period with overweight positions in developed Europe and the emerging Americas and an underweight position in Asia. On a sector basis, the Fund was most notably overweight in health care and consumer discretionary, while the most significant underweights were in materials 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    

Novartis AG, Registered Shares	3%
Roche Holding AG	3
AstraZeneca PLC	3
Teva Pharmaceutical Industries Ltd. - ADR	2
Liberty Global PLC, Series A	2
Royal Dutch Shell PLC, A Shares	2
Shire PLC - ADR	2
Imperial Tobacco Group PLC	2
AXA SA	2
Element Financial Corp.	2

Geographic Allocation Percent of     Long-Term Investments    

United Kingdom	21%
Switzerland	9
Japan	9
France	6
China	6
Ireland	6
Germany	6
Netherlands	5
India	4
Canada	4
South Korea	3
Italy	3
Israel	2
United States	2
Hong Kong	2
Belgium	2
Spain	2
Other1	8

¹ Includes holdings within countries that are 1% or less of long-term investments.

Please refer to the Schedule of Investments for such countries.

8 BLACKROCK FUNDS MARCH 31, 2015

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 and administration fees, if any. Institutional Shares do not have a sales charge.

²  Under normal market conditions, the Fund 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  A free float-adjusted market capitalization weighted index designed to measure the combined equity market performance of developed and emerging market countries, excluding the United States.

Performance Summary for the Period Ended March 31, 2015
		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	1.50%	(5.34)%	N/A	5.22%	N/A	7.40%	N/A
Service	1.38	(5.59)	N/A	4.81	N/A	7.02	N/A
Investor A	1.35	(5.64)	(10.59)%	4.92	3.79%	7.08	6.50%
Investor B	0.91	(6.38)	(10.04)	4.06	3.72	6.40	6.40
Investor C	0.99	(6.33)	(7.13)	4.13	4.13	6.27	6.27
MSCI ACWI Ex-U.S.	(0.51)	(1.01)	N/A	4.82	N/A	5.46	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, 2014	Ending Account Value March 31, 2015	Expenses Paid During the Period5	Beginning Account Value October 1, 2014	Ending Account Value March 31, 2015	Expenses Paid During the Period5	Annualized Expense Ratio
Institutional	$1,000.00	$1,015.00	$  5.98	$1,000.00	$1,019.00	$  5.99	1.19%
Service	$1,000.00	$1,013.80	$  7.33	$1,000.00	$1,017.65	$  7.34	1.46%
Investor A	$1,000.00	$1,013.50	$  7.58	$1,000.00	$1,017.40	$  7.59	1.51%
Investor B	$1,000.00	$1,009.10	$11.82	$1,000.00	$1,013.16	$11.85	2.36%
Investor C	$1,000.00	$1,009.90	$11.22	$1,000.00	$1,013.76	$11.25	2.24%

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 182/ 365 (to reflect the one-half year period shown).

⁶  Hypothetical 5% annual return before expenses is calculated by prorating the number of days in the most recent fiscal half year divided by 365.

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

BLACKROCK FUNDS MARCH 31, 2015 9

  Fund Summary as of March 31, 2015   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?

Ÿ For the six-month period ended March 31, 2015, the Fund outperformed its benchmark, the MSCI World Information Technology Index.

  What factors influenced performance?

Ÿ Stock selection in the systems software industry was the most significant positive contributor to relative return. In particular, the Fund’s underweight position in large benchmark constituent Microsoft Corp. led contributors for the period after the company reported weaker-than-expected PC sales. In addition, selection in the IT consulting & other services industry contributed to gains, led by a position in Luxoft Holding, Inc., which saw its shares appreciate over the period based on financial results that outperformed which shares appreciated after reporting strong financial results.

Ÿ The most significant detractor from the Fund’s performance relative to the benchmark was selection in the internet software & services industry, led by a position in LendingClub Corp., as investors became concerned that the company’s growth rate was already priced into its valuation

following the initial public offering. Selection in the consumer finance industry also detracted from performance, after shares of TrustBuddy International AB traded lower following slower-than-expected revenue growth for the quarter.

  Describe recent portfolio activity.

Ÿ During the six-month period, the Fund reduced its overweight exposure to software & services stocks. These proceeds were used in large part to help fund purchases within the semiconductors & semiconductor equipment and technology hardware & equipment groups.

  Describe portfolio positioning at period end.

Ÿ Relative to the MSCI World Information Technology Index, the Fund ended the period with its largest overweight in the internet software & services industry. This positioning reflects a focus on areas of secular growth and emerging technology including the shift to mobile payments, e-commerce acceleration, mobile monetization, social media and cloud computing.

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.	11%
Facebook, Inc., Class A	3
Tencent Holdings Ltd.	3
Visa, Inc., Class A	2
Google, Inc., Class A	2
Google, Inc., Class C	2
MasterCard, Inc., Class A	2
Uber Technologies, Inc., Series D	2
Samsung Electronics Co. Ltd.	2
Vipshop Holdings Ltd. - ADR	2

Industry Allocation Percent of     Long-Term Investments    

Internet Software & Services	27%
Software	15
Technology Hardware, Storage & Peripherals	14
IT Services	12
Semiconductors & Semiconductor Equipment	12
Internet & Catalog Retail	6
Electronic Equipment, Instruments & Components	3
Media	2
Communications Equipment	2
Real Estate Investment Trusts (REITs)	2
Household Durables	2
Other1	3

¹ Includes holdings within industries that are 1% or less of long-term investments. Please refer to the Schedule of Investments for such industries.

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 the investment advisor. These definitions may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

10 BLACKROCK FUNDS MARCH 31, 2015

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 and administration fees, if any. Institutional Shares do not have a sales charge.

²  Under normal market conditions, the Fund invests at least 80% of its net assets in equity securities issued by U.S. and non-U.S. 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 use of technology. The Fund may invest up to 25% of its net assets in emerging market countries.

³ An index that measures the performance of the technology sector in developed equity markets.

Performance Summary for the Period Ended March 31, 2015
		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	12.25%	12.88%	N/A	13.01%	N/A	11.06%	N/A
Service	12.10	12.67	N/A	12.78	N/A	10.74	N/A
Investor A	12.10	12.52	6.61%	12.61	11.40%	10.63	10.04%
Investor B	11.61	11.61	7.11	11.67	11.41	9.89	9.89
Investor C	11.55	11.56	10.56	11.64	11.64	9.67	9.67
Class R	11.88	12.20	N/A	12.30	N/A	10.29	N/A
MSCI World Information Technology Index	6.26	16.13	N/A	12.36	N/A	8.45	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, 2014	Ending Account Value March 31, 2015	Expenses Paid During the Period5	Beginning Account Value October 1, 2014	Ending Account Value March 31, 2015	Expenses Paid During the Period5	Annualized Expense Ratio
Institutional	$1,000.00	$1,122.50	$  6.83	$1,000.00	$1,018.50	$  6.49	1.29%
Service	$1,000.00	$1,121.00	$  8.14	$1,000.00	$1,017.25	$  7.75	1.54%
Investor A	$1,000.00	$1,121.00	$  8.51	$1,000.00	$1,016.90	$  8.10	1.61%
Investor B	$1,000.00	$1,116.10	$12.77	$1,000.00	$1,012.86	$12.14	2.42%
Investor C	$1,000.00	$1,115.60	$12.92	$1,000.00	$1,012.72	$12.29	2.45%
Class R	$1,000.00	$1,118.80	$  9.98	$1,000.00	$1,015.51	$  9.50	1.89%

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 182/ 365 (to reflect the one-half year period shown).

⁶  Hypothetical 5% annual return before expenses is calculated by prorating the number of days in the most recent fiscal half year divided by 365.

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

BLACKROCK FUNDS MARCH 31, 2015 11

  Fund Summary as of March 31, 2015   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?

Ÿ For the six-month period ended March 31, 2015, the Fund outperformed the benchmark, the Russell Midcap^® Index.

  What factors influenced performance?

Ÿ Stock selection within the industrials and health care sectors were the largest contributors to relative performance for the period. In industrials, performance was led by positioning in the airlines industry. In particular, shares of JetBlue Airways Corp. benefited as the company announced new cost cutting plans. Within health care, stock selection in the biotechnology segment had a positive impact on performance, led by a position in BioMarin Pharmaceutical, Inc., whose shares were bolstered by the continued positive expectations for favorable clinical data related to its drug pipeline.

Ÿ Conversely, stock selection within the oil & gas equipment & services industry of the energy sector detracted from relative performance. In particular, a position in U.S. Silica Holdings, Inc. was negatively impacted

by OPEC’s decision to maintain its current production levels, sending oil prices substantially lower over the period. Within the consumer discretionary sector, holdings in the apparel, accessories & luxury goods industry also detracted, after shares of Sequential Brands Group, Inc. traded lower as investors took profits following the stock’s significant outperformance in 2014.

  Describe recent portfolio activity.

Ÿ During the six-month period, the Fund increased its exposures to the information technology (“IT”), financials, and materials sectors, while reducing exposures to energy, consumer discretionary, and consumer staples.

  Describe portfolio positioning at period end.

Ÿ Relative to the Russell Midcap^® Index, the Fund ended the period with overweight positions in the IT, health care and materials sectors, while maintaining underweight allocations to the utilities, industrials and consumer staples 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    

Jarden Corp.	2%
Sequential Brands Group, Inc.	2
BankUnited, Inc.	1
The Hartford Financial Services Group, Inc.	1
Crown Holdings, Inc.	1
Snap-on, Inc.	1
Regions Financial Corp.	1
Mallinckrodt PLC	1
Roper Industries, Inc.	1
Kennedy-Wilson Holdings, Inc.	1

Sector Allocation Percent of    
Long-Term Investments    

Financials	20%
Information Technology	18
Consumer Discretionary	17
Health Care	15
Industrials	11
Materials	7
Consumer Staples	5
Energy	4
Utilities	2
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 the investment advisor. These definitions may not apply for purposes of this report, which may combine such sector sub-classifications for reporting ease.

12 BLACKROCK FUNDS MARCH 31, 2015

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 and administration fees, if any. Institutional Shares do not have a sales charge.

²  Under normal market conditions, the Fund invests at least 80% of its net assets in equity securities issued by U.S. emerging capitalization companies with relatively attractive earnings growth potential and valuation.

³  A market index measures the performance of the mid-cap segment of the U.S. 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, 2015

		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	12.16%	15.58%	N/A	14.40%	N/A	12.11%	N/A
Service	11.93	15.11	N/A	13.90	N/A	11.63	N/A
Investor A	11.93	15.10	9.06%	13.88	12.66%	11.59	10.99%
Investor B	11.50	14.22	9.91	12.99	12.74	10.92	10.92
Investor C	11.51	14.27	13.31	13.04	13.04	10.77	10.77
Russell Midcap® Index	10.13	13.68	N/A	16.16	N/A	10.02	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 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, 2014	Ending Account Value March 31, 2015	Expenses Paid During the  Period5	Beginning Account Value October 1, 2014	Ending Account Value March 31, 2015	Expenses Paid During the  Period5	Annualized Expense Ratio
Institutional	$1,000.00	$1,121.60	$  4.81	$1,000.00	$1,020.39	$  4.58	0.91%
Service	$1,000.00	$1,119.30	$  6.92	$1,000.00	$1,018.40	$  6.59	1.31%
Investor A	$1,000.00	$1,119.30	$  6.92	$1,000.00	$1,018.40	$  6.59	1.31%
Investor B	$1,000.00	$1,115.00	$11.07	$1,000.00	$1,014.46	$10.55	2.10%
Investor C	$1,000.00	$1,115.10	$10.92	$1,000.00	$1,014.61	$10.40	2.07%

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 182/ 365 (to reflect the one-half year period shown).

⁶  Hypothetical 5% annual return before expenses is calculated by prorating the number of days in the most recent fiscal half year divided by 365.

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

BLACKROCK FUNDS MARCH 31, 2015 13

About Fund Performance

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

Ÿ Service Shares are not subject to any sales charge. These shares are subject to a service fee of 0.25% per year (but no distribution fee) and are only available to certain eligible investors.

Ÿ Investor A Shares are subject to a maximum initial sales charge (front-end load) of 5.25% and a service fee of 0.25% per year (but no distribution fee). Certain redemptions of these shares may be subject to a contingent deferred sales charge (“CDSC”) where no initial sales charge was paid at the time of purchase. These shares are generally available through financial intermediaries.

Ÿ Investor B Shares are subject to a maximum CDSC of 4.50%, declining to 0% after six years. In addition, these shares are subject to a distribution fee of 0.75% per year and a service fee of 0.25% per year. These shares automatically convert to Investor A Shares after approximately eight years. (There is no initial sales charge for automatic share conversions.) On February 11, 2015, the Board of Trustees of the Trust (the “Board”) approved the conversion of all of the issued and outstanding Investor B Shares of BlackRock Global Opportunities Portfolio and BlackRock Science & Technology Opportunities Portfolio into Investor A Shares of each respective Fund, which will be effective on or about the close of business on June 23, 2015. All returns for periods greater than eight years reflect this conversion. These shares are only available through exchanges and distribution reinvestments by current holders and for purchase by certain employer-sponsored retirement plans.

Ÿ Investor C Shares are subject to a 1.00% CDSC if redeemed within one year of purchase. In addition, these shares are subject to a distribution fee of 0.75% per year and a service fee of 0.25% per year. These shares are generally available through financial intermediaries

Ÿ Class R Shares are not subject to any sales charge. These shares are subject to a distribution fee of 0.25% per year and a service fee of

0.25% per year. These shares are available only to certain employer-sponsored retirement 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 Share 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 the applicable Fund’s Institutional Shares (which have no distribution or service fees) restated to reflect Class R Share 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 the performance tables on the previous pages assume reinvestment of all 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. Distributions 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.

BlackRock Advisors, LLC (the “Manager”), the Funds’ investment advisor, has contractually agreed to waive and/or reimburse a portion of certain Funds’ expenses. Without such waiver and/or reimbursement, such Funds’ performance would have been lower. The Manager is under no obligation to continue waiving and/or reimbursing its fees after the applicable termination date of such agreement. See Note 5 of the Notes to Financial Statements for additional information on waivers and/or reimbursements.

14 BLACKROCK FUNDS MARCH 31, 2015

Disclosure of Expenses

Shareholders of the Funds may incur the following charges: (a) transactional expenses, such as sales charges; and (b) operating expenses, including investment advisory fees, administration 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, 2014 and held through March 31, 2015) are intended to assist shareholders both in calculating expenses based on an investment in each Fund and in comparing these expenses with similar costs of investing in other mutual funds.

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

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

The expenses shown in the expense examples are intended to highlight shareholders’ ongoing costs only and do not reflect any transactional expenses, such as sales charges, 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. Derivative financial instruments are used to obtain exposure to a security, index and/or market without owning or taking physical custody of securities or to manage equity, credit, interest rate, foreign currency exchange rate, commodity and/or other risks. Derivative financial instruments may give rise to a form of economic leverage. Derivative financial instruments also 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 limit the amount of appreciation a Fund can realize on an investment, and/or may result in lower distributions paid to shareholders. The Funds’ investments in these instruments are discussed in detail in the Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 15

Schedule of Investments March 31, 2015 (Unaudited)	BlackRock Global Opportunities Portfolio
	(Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Belgium — 1.0%
Anheuser-Busch InBev NV		26,518	$	3,239,569
Canada — 0.9%
Enbridge, Inc.		34,900		1,682,243
MEG Energy Corp. (a)		75,500		1,219,636
				2,901,879
China — 2.6%
Alibaba Group Holding Ltd. - ADR (a)		27,500		2,289,100
Baidu, Inc. - ADR (a)		12,600		2,625,840
Beijing Enterprises Water Group Ltd.		2,696,000		1,833,293
China Construction Bank Corp., H Shares		1,830,000		1,518,876
				8,267,109
France — 4.2%
AXA SA		83,700		2,106,652
Schneider Electric SE		36,612		2,849,090
Société Générale SA		43,200		2,085,775
Unibail-Rodamco SE		12,200		3,294,428
Vivendi SA		112,520		2,793,612
				13,129,557
Germany — 3.2%
Daimler AG, Registered Shares		35,400		3,399,616
Henkel AG & Co. KGaA		22,228		2,610,920
Infineon Technologies AG		181,133		2,154,918
Telefonica Deutschland Holding AG		335,500		1,929,261
				10,094,715
Hong Kong — 1.4%
AIA Group Ltd.		669,900		4,205,957
India — 1.9%
Bharti Infratel Ltd.		170,247		1,047,360
HDFC Bank Ltd.		146,997		2,826,747
ITC Ltd.		388,400		2,019,127
				5,893,234
Indonesia — 1.0%
Global Mediacom Tbk PT		9,238,700		1,234,710
Matahari Department Store Tbk PT		1,233,560		1,855,046
				3,089,756
Ireland — 1.7%
Green REIT PLC		1,460,039		2,568,357
Shire PLC - ADR		11,800		2,823,622
				5,391,979
Italy — 1.1%
Banca Generali SpA		74,372		2,331,965
Moncler SpA		58,600		982,389
				3,314,354

Common Stocks	Shares		Value
Japan — 5.0%
FANUC Corp.		10,800	$	2,357,789
Mitsubishi Estate Co. Ltd.		117,000		2,713,460
Nabtesco Corp.		92,000		2,657,809
Nintendo Co. Ltd.		7,400		1,085,764
Shinsei Bank Ltd.		1,367,000		2,718,059
SMC Corp.		6,000		1,786,583
SoftBank Corp.		41,500		2,416,937
				15,736,401
Mexico — 0.4%
Cemex SAB de CV - ADR (a)		117,360		1,111,399
Netherlands — 2.0%
Koninklijke Philips NV		49,700		1,409,982
Royal Dutch Shell PLC, A Shares - ADR		83,200		4,962,880
				6,372,862
New Zealand — 0.6%
Xero Ltd. (Acquired 10/15/13, cost $1,616,409) (a)(b)		106,300		1,915,229
Nigeria — 0.3%
Lekoil Ltd. (a)		2,787,800		971,820
Norway — 0.5%
Statoil ASA		94,600		1,672,661
Peru — 0.5%
Credicorp Ltd.		10,700		1,504,741
South Africa — 0.8%
Naspers Ltd., N Shares		16,600		2,546,291
South Korea — 1.7%
Samsung Electronics Co. Ltd.		2,400		3,112,208
SK Hynix, Inc.		54,600		2,230,226
				5,342,434
Spain — 1.3%
NH Hotel Group SA (a)		439,887		2,401,962
Sacyr SA (a)		414,100		1,737,657
				4,139,619
Sweden — 0.8%
Nordea Bank AB		207,719		2,530,117
Switzerland — 2.7%
Novartis AG, Registered Shares		36,600		3,612,438
Roche Holding AG		9,140		2,511,600
UBS Group AG (a)		121,272		2,273,985
				8,398,023
Taiwan — 1.0%
Hermes Microvision, Inc.		22,117		1,272,436

Portfolio Abbreviations
ADR	American Depositary Receipts	HKD	Hong Kong Dollar	REIT	Real Estate Investment Trust
AUD	Australian Dollar	JPY	Japanese Yen	SEK	Swedish Krona
CAD	Canadian Dollar	MLP	Master Limited Partnership	SGD	Singapore Dollar
CHF	Swiss Franc	MXN	Mexican Peso	TRY	Turkish Lira
DKK	Danish Krone	NOK	Norwegian Krone	USD	U.S. Dollar
EUR	Euro	NZD	New Zealand Dollar	ZAR	South African Rand
GBP	British Pound

See Notes to Financial Statements.

16 BLACKROCK FUNDS MARCH 31, 2015

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

Common Stocks	Shares		Value
Taiwan (concluded)
Largan Precision Co. Ltd.		20,000	$	1,719,360
				2,991,796
United Kingdom — 9.4%
AstraZeneca PLC		54,500		3,739,689
BAE Systems PLC		205,500		1,592,528
BP PLC		334,800		2,170,218
Crest Nicholson Holdings PLC		347,510		2,188,356
Delphi Automotive PLC		37,700		3,006,198
Diageo PLC		87,600		2,420,756
Kennedy Wilson Europe Real Estate PLC		85,758		1,398,069
Lloyds Banking Group PLC		1,474,100		1,708,677
Metro Bank PLC (Acquired 1/15/14, cost $1,748,929) (a)(b)		82,275		1,619,553
Nomad Holdings Ltd. (a)		167,843		1,888,234
Prudential PLC		96,800		2,402,124
SABMiller PLC		46,300		2,425,265
Vodafone Group PLC - ADR		86,935		2,841,036
				29,400,703
United States — 50.2%
Abbott Laboratories		71,900		3,331,127
Actavis PLC (a)		13,600		4,047,632
Adobe Systems, Inc. (a)		25,950		1,918,743
Altria Group, Inc.		63,400		3,171,268
Amazon.com, Inc. (a)		4,200		1,562,820
American Airlines Group, Inc.		55,200		2,913,456
Apple Inc.		58,895		7,328,305
Applied Materials, Inc.		72,200		1,628,832
Aramark		79,200		2,505,096
Autodesk, Inc. (a)		37,300		2,187,272
BankUnited, Inc.		115,488		3,781,077
Becton Dickinson & Co.		12,800		1,837,952
Best Buy Co., Inc.		49,917		1,886,363
Boston Scientific Corp. (a)		116,200		2,062,550
Bristol-Myers Squibb Co.		48,200		3,108,900
Charles River Laboratories International, Inc. (a)		39,300		3,116,097
Citigroup, Inc.		117,768		6,067,407
Comcast Corp., Class A		64,100		3,619,727
Concho Resources, Inc. (a)		18,600		2,156,112
Crown Holdings, Inc. (a)		52,300		2,825,246
Discover Financial Services		53,100		2,992,185
Eastman Chemical Co.		29,810		2,064,641
Eli Lilly & Co.		27,400		1,990,610
EOG Resources, Inc.		23,900		2,191,391
Facebook, Inc., Class A (a)		39,160		3,219,539
Finisar Corp. (a)		73,300		1,564,222
Google, Inc., Class A (a)		5,979		3,316,551
Google, Inc., Class C (a)		5,979		3,276,492
The Hain Celestial Group, Inc. (a)		63,612		4,074,349
The Hartford Financial Services Group, Inc.		106,300		4,445,466
Hortonworks, Inc. (a)(c)		23,654		563,911
Hortonworks, Inc. (Acquired 3/21/14, cost $3,133,876) (a)(b)		128,573		2,911,921
Inovalon Holdings, Inc., Class A (a)		47,700		1,441,017
JDS Uniphase Corp. (a)		117,100		1,536,352
Kennedy-Wilson Holdings, Inc.		154,800		4,046,472
Kinder Morgan, Inc.		77,100		3,242,826
Las Vegas Sands Corp.		19,890		1,094,746
LendingClub Corp. (a)		34,500		677,925
LendingClub Corp. (Acquired 12/12/14, cost $1,044,221) (a)(b)		102,664		1,916,480
Lowe’s Companies, Inc.		36,820		2,739,040
Macquarie Infrastructure Co. LLC		24,600		2,024,334
MasterCard, Inc., Class A		34,300		2,963,177
Medtronic PLC		24,429		1,905,218
Merck & Co., Inc.		48,200		2,770,536

Common Stocks	Shares			Value
United States (concluded)
Mondelez International, Inc., Class A		96,600		$	3,486,294
New Relic, Inc. (a)		13,600			471,920
New Relic, Inc. (Acquired 12/15/14, cost $2,154,165) (a)(b)		76,011			2,505,703
Platform Specialty Products Corp. (a)		122,100			3,133,086
Public Service Enterprise Group, Inc.		59,000			2,473,280
Ralph Lauren Corp.		9,900			1,301,850
Roper Industries, Inc.		24,340			4,186,480
Samsonite International SA		628,500			2,184,811
Sensata Technologies Holding NV (a)		22,700			1,304,115
St. Jude Medical, Inc.		23,200			1,517,280
Strategic Growth Bancorp (Acquired 3/10/14,cost $1,691,208) (a)(b)		135,840			1,437,187
U.S. Silica Holdings, Inc. (c)		39,400			1,403,034
United Parcel Service, Inc., Class B		29,200			2,830,648
United Rentals, Inc. (a)		12,347			1,125,552
UnitedHealth Group, Inc.		16,700			1,975,443
Valeant Pharmaceuticals International, Inc. (a)		15,200			3,019,024
WisdomTree Investments, Inc.		128,549			2,758,662
					157,139,752
Total Common Stocks — 96.2%					301,301,957
Preferred Stocks
India — 0.4%
Snapdeal.com, Series F (Acquired 5/07/14, cost $574,789) (a)(b)		81			968,000
Snapdeal.com, Series G (Acquired 10/29/14, cost $227,633) (a)(b)		27			322,667
					1,290,667
United States — 1.3%
Palantir Technologies, Inc., Series I (Acquired 2/07/14, cost $942,242) (a)(b)		153,710	��		1,366,482
Uber Technologies, Inc., Series D (Acquired 6/06/14, cost $1,176,386) (a)(b)		75,832			2,576,028
					3,942,510
Total Preferred Stocks — 1.7%					5,233,177
Warrants (d)
United Kingdom — 0.0%
Nomad Holdings Ltd. (issued 4/10/14, expiring 4/10/17, strike price $11.50)		167,843			67,976
Total Warrants — 0.0%					67,976
Total Long-Term Investments (Cost — $258,798,269) — 97.9%					306,603,110

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 17

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

Short-Term Securities	Shares		Value
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.06% (e)(f)		2,305,045	$	2,305,045
	Beneficial Interest (000)
BlackRock Liquidity Series, LLC, Money Market Series, 0.22% (e)(f)(g)		$  1,974		1,974,042
Total Short-Term Securities (Cost — $4,279,087) — 1.4%				4,279,087

	Value
Total Investments (Cost $263,077,356) — 99.3%	$	310,882,197
Other Assets Less Liabilities — 0.7%		2,170,407
Net Assets — 100.0%	$	313,052,604

Notes to Schedule of Investments

(a) Non-income producing security.

(b) Restricted security as to resale. As of report date, the Fund held restricted securities with a current value of $17,539,250 and an original cost of $14,309,858, which was 5.6% of its net assets.

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

(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 of the warrants, if any.

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

(f) During the six months ended March 31, 2015, investments in issuers considered to be affiliates of the Fund 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, 2014		Net Activity		Shares/ Beneficial Interest Held at March  31, 2015		Income
BlackRock Liquidity Funds, TempFund, Institutional Class		1,732,302		572,743		2,305,045	$	1,028
BlackRock Liquidity Series, LLC, Money Market Series		$1,198,277	$	775,765	$	1,974,042	$	41,286

(g) Security was purchased with the cash collateral from loaned securities. The Fund may withdraw up to 25% of its investment daily, although the manager of the BlackRock Liquidity Series, LLC, Money Market Series, in its sole discretion, may permit an investor to withdraw more than 25% on any one day.

Ÿ As of March 31, 2015, forward foreign currency exchange contracts outstanding were as follows:

Currency Purchased		Currency Sold			Counterparty	Settlement Date		Unrealized Appreciation (Depreciation)
AUD	3,696,000		USD	3,015,646	Morgan Stanley Capital Services LLC		4/22/15		$(204,371	)
CAD	92,000		USD	74,644	Bank of America N.A.		4/22/15		(2,026	)
CAD	270,000		USD	215,722	Goldman Sachs International		4/22/15		(2,602	)
CAD	470,000		USD	391,959	Morgan Stanley Capital Services LLC		4/22/15		(20,972	)
CHF	331,079		USD	358,599	BNP Paribas S.A.		4/22/15		(17,598	)
CHF	160,409		USD	188,750	Citibank N.A.		4/22/15		(23,533	)
CHF	1,386,370		USD	1,607,598	Royal Bank of Canada		4/22/15		(179,679	)
CHF	47,528		USD	47,297	The Bank of New York Mellon		4/22/15		1,655
CHF	61,854		USD	63,075	UBS AG		4/22/15		632
DKK	9,870,061		USD	1,542,865	Goldman Sachs International		4/22/15		(121,306	)
EUR	29,297		USD	33,978	BNP Paribas S.A.		4/22/15		(2,466	)
EUR	80,327		USD	85,202	BNP Paribas S.A.		4/22/15		1,196
EUR	158,789		USD	179,809	BNP Paribas S.A.		4/22/15		(9,019	)
EUR	467,054		USD	494,090	BNP Paribas S.A.		4/22/15		8,262
EUR	1,342,995		USD	1,520,774	BNP Paribas S.A.		4/22/15		(76,280	)
EUR	110,130		USD	120,800	Citibank N.A.		4/22/15		(2,347	)
EUR	124,650		USD	132,883	Citibank N.A.		4/22/15		1,188
EUR	411,130		USD	469,479	Citibank N.A.		4/22/15		(27,277	)
EUR	494,365		USD	570,464	Citibank N.A.		4/22/15		(38,736	)

See Notes to Financial Statements.

18 BLACKROCK FUNDS MARCH 31, 2015

  Schedule of Investments (continued) BlackRock Global Opportunities Portfolio

As of March 31, 2015, forward foreign currency exchange contracts outstanding were as follows: (concluded)

Currency Purchased		Currency Sold			Counterparty	Settlement Date		Unrealized Appreciation (Depreciation)
EUR	49,776		USD	54,153	Deutsche Bank AG		4/22/15		$     (615)
EUR	1,432,247		USD	1,558,180	Deutsche Bank AG		4/22/15		(17,689)
EUR	68,120		USD	73,725	State Street Bank and Trust Co.		4/22/15		(456)
EUR	237,503		USD	258,872	State Street Bank and Trust Co.		4/22/15		(3,419)
EUR	785,267		USD	884,294	TD Securities, Inc.		4/22/15		(39,679)
EUR	19,150		USD	20,870	The Bank of New York Mellon		4/22/15		(272)
EUR	32,604		USD	37,259	The Bank of New York Mellon		4/22/15		(2,191)
EUR	86,320		USD	92,602	The Bank of New York Mellon		4/22/15		363
EUR	457,585		USD	482,721	UBS AG		4/22/15		9,446
GBP	964,000		USD	1,444,602	Goldman Sachs International		4/22/15		(14,829)
GBP	728,000		USD	1,093,487	JPMorgan Chase Bank N.A.		4/22/15		(13,741)
GBP	135,000		USD	204,451	The Bank of New York Mellon		4/22/15		(4,224)
HKD	1,284,000		USD	165,651	Citibank N.A.		4/22/15		(41)
HKD	7,669,000		USD	989,042	HSBC Bank PLC		4/22/15		104
SEK	599,000		USD	73,346	The Bank of New York Mellon		4/22/15		(3,770)
SEK	11,988,044		USD	1,433,961	UBS AG		4/22/15		(41,499)
SGD	2,518,000		USD	1,893,031	TD Securities, Inc.		4/22/15		(59,212)
USD	512,042		CHF	472,694	TD Securities, Inc.		4/22/15		25,181
USD	1,659,756		EUR	1,457,000	Goldman Sachs International		4/22/15		92,641
USD	7,289,707		EUR	6,270,554	Goldman Sachs International		4/22/15		545,247
USD	1,484,377		EUR	1,300,360	Royal Bank of Canada		4/22/15		85,740
USD	1,561,282		EUR	1,384,605	State Street Bank and Trust Co.		4/22/15		72,033
USD	6,308,551		GBP	4,155,975	Morgan Stanley Capital Services LLC		4/22/15		144,544
USD	352,847		GBP	239,000	State Street Bank and Trust Co.		4/22/15		(1,630)
USD	485,974		GBP	328,000	State Street Bank and Trust Co.		4/22/15		(505)
USD	2,787,061		GBP	1,885,000	The Bank of New York Mellon		4/22/15		(8,710)
USD	4,818,851		GBP	3,233,000	UBS AG		4/22/15		23,771
USD	1,045,119		HKD	8,103,000	State Street Bank and Trust Co.		4/22/15		(4)
USD	761,504		NOK	5,856,000	Goldman Sachs International		4/22/15		35,052
USD	579,832		NOK	4,409,000	Morgan Stanley Capital Services LLC		4/22/15		32,885
USD	1,357,088		NZD	1,753,000	Morgan Stanley Capital Services LLC		4/22/15		49,522
USD	892,065		SEK	7,262,000	HSBC Bank PLC		4/22/15		48,553
Total									$237,317

Ÿ Fair Value Measurements — Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instruments and is not necessarily an indication of the risks associated with investing in those securities. The three levels of the fair value hierarchy are as follows:

Ÿ Level 1 – unadjusted quoted prices in active markets/exchanges for identical assets or liabilities that the Fund has the ability to access

Ÿ 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)

Ÿ 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. In accordance with the Fund’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. For information about the Fund’s policy regarding

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 19

  Schedule of Investments (continued) BlackRock Global Opportunities Portfolio

valuation of investments and derivative financial instruments, refer to Note 2 of the Notes to Financial Statements.

As of March 31, 2015, the following tables summarize the Fund’s investments and derivative financial instruments categorized in the disclosure hierarchy:

	Level 1		Level 2			Level 3		Total
Assets:
Investments:
Long-Term Investments:
Common Stocks:
Belgium		–	$	3,239,569			–	$	3,239,569
Canada	$	2,901,879		–			–		2,901,879
China		4,914,940		3,352,169			–		8,267,109
France		–		13,129,557			–		13,129,557
Germany		–		10,094,715			–		10,094,715
Hong Kong		–		4,205,957			–		4,205,957
India		1,047,360		4,845,874			–		5,893,234
Indonesia		–		3,089,756			–		3,089,756
Ireland		5,391,979		–			–		5,391,979
Italy		–		3,314,354			–		3,314,354
Japan		–		15,736,401			–		15,736,401
Mexico		1,111,399		–			–		1,111,399
Netherlands		4,962,880		1,409,982			–		6,372,862
New Zealand		1,915,229		–			–		1,915,229
Nigeria		971,820		–			–		971,820
Norway		–		1,672,661			–		1,672,661
Peru		1,504,741		–			–		1,504,741
South Africa		–		2,546,291			–		2,546,291
South Korea		–		5,342,434			–		5,342,434
Spain		–		4,139,619			–		4,139,619
Sweden		–		2,530,117			–		2,530,117
Switzerland		–		8,398,023			–		8,398,023
Taiwan		–		2,991,796			–		2,991,796
United Kingdom		7,245,303		20,535,847		$	1,619,553		29,400,703
United States		146,183,650		9,518,915			1,437,187		157,139,752
Preferred Stocks:
India		–		–			1,290,667		1,290,667
United States		–		–			3,942,510		3,942,510
Warrants		–		67,976			–		67,976
Short-Term Securities		2,305,045		1,974,042			–		4,279,087
Total	$	180,456,225	$	122,136,055		$	8,289,917	$	310,882,197
	Level 1		Level 2			Level 3		Total
Derivative Financial Instruments1
Assets:
Forward foreign currency exchange contracts		–	$	1,178,015			–	$	1,178,015
Liabilities:
Forward foreign currency exchange contracts		–		(940,698	)		–		(940,698	)
Total		–	$	237,317			–	$	237,317

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

See Notes to Financial Statements.

20 BLACKROCK FUNDS MARCH 31, 2015

Schedule of Investments (continued) BlackRock Global Opportunities Portfolio

The Fund may hold assets and/or liabilities in which the fair value approximates the carrying amount for financial statement purposes. As of March 31, 2015, such assets and/or liabilities are categorized within the disclosure hierarchy as follows:

	Level 1			Level 2				Level 3				Total
Assets:
Foreign currency at value		$	2,795,824			—				—			$	2,795,824
Liabilities:
Collateral on securities loaned at value			—		$	(1,974,042	)			—				(1,974,042	)
Total		$	2,795,824		$	(1,974,042	)			—			$	821,782
Transfers between Level 1 and Level 2 were as follows:
	Transfers into Level 1			Transfers out of Level 11				Transfers into Level 21				Transfers out of Level 2
Assets:
Long-Term Investments:
United Kingdom			—		$	(1,999,010	)		$	1,999,010				—
United States			—			(2,286,265	)			2,286,265				—
Total			—		$	(4,285,275	)		$	4,285,275				—
1    External pricing service used to reflect any significant market movements between the time the Fund valued such foreign securities and the earlier closing of foreign markets.
A reconciliation of Level 3 investments is presented when the Fund had a significant amount of Level 3 investments at the beginning and/or end of the period in relation to net assets. The following table is a reconciliation of Level 3 investments for which significant unobservable inputs were used in determining fair value:
				Common Stocks				Preferred Stocks				Total
Assets:
Opening Balance, as of September 30, 2014					$	3,494,697			$	8,839,486			$	12,334,183
Transfers into Level 3						—				—				—
Transfers out of Level 31						(6,359,757	)			—				(6,359,757	)
Other2						6,166,560				(6,166,560	)			—
Accrued discounts/premiums						—				—				—
Net realized gain (loss)						—				—				—
Net change in unrealized appreciation/depreciation3,4						(244,760	)			2,332,619				2,087,859
Purchases						—				227,632				227,632
Sales						—				—				—
Closing Balance, as of March 31, 2015					$	3,056,740			$	5,233,177			$	8,289,917
Net change in unrealized appreciation/depreciation on investments still held at March 31, 20154					$	(244,760	)		$	2,332,619			$	2,087,859

¹  As of September 30, 2014, the Fund used significant unobservable inputs in determining the value of certain investments. As of March 31, 2015, the Fund used observable inputs in determining the value of the same investments. As a result, investments with a beginning period value of $6,359,757 transferred from Level 3 to Level 2 in the disclosure hierarchy.

²  Certain Level 3 investments were re-classified between Common Stocks and Preferred Stocks.

³ Included in the related net change in unrealized appreciation/depreciation in the Statements of Operations.

⁴  Any difference between Net change in unrealized appreciation/depreciation and Net change in unrealized appreciation/depreciation on investments still held at March 31, 2015, is generally due to investments no longer held or categorized as Level 3 at period end.

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 21

Schedule of Investments (concluded) BlackRock Global Opportunities Portfolio

The following table summarizes the valuation techniques used and unobservable inputs utilized by the BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) to determine the value of certain of the Fund’s Level 3 investments as of March 31, 2015. The table does not include Level 3 investments with values based upon unadjusted third party pricing information in the amount of $1,437,187.

	Value		Valuation Techniques	Unobservable Inputs Utilized	Range of Unobservable Inputs Utilized
Assets:
Common Stocks	$	1,619,553	Market Comparable Companies	Price to Tangible Book Value Multiple1		1.8x
Preferred Stocks2		1,290,667	Probability-Weighted Expected Return Model	Years to IPO3		1.2-3.2
				IPO Exit Probability1		75.00%
				Discount Rate3		25.00%
				Revenue Multiple1		0.84x-1.87x
		3,942,510	Probability-Weighted Expected Return Model	Years to IPO3		0.75-2.9
				IPO Exit Probability1		90.00% - 95.00%
				Discount Rate3		21.30% - 22.31%
				Margin1		20.00%
				Revenue Multiple1		10.0x-16.0x
Total	$	6,852,730

¹ Increase in unobservable input may result in a significant increase to value, while a decrease in the unobservable input may result in a significant decrease to value.

²  For the period ended March 31, 2015, the valuation technique for certain investments classified as preferred stocks changed to a Probability-Weighted Expected Return Model. The investments were previously valued utilizing a market comparable company and option pricing model approach. A Probability-Weighted Expected Return Model was considered to be a more relevant measure of fair value for these investments which leverages the most recent equity raise pre-money valuation and/or secondary market transactions.

³  Decrease in unobservable input may result in a significant increase to value, while an increase in the unobservable input may result in a significant decrease to value.

See Notes to Financial Statements.

22 BLACKROCK FUNDS MARCH 31, 2015

Schedule of Investments March 31, 2015 (Unaudited)	BlackRock Health Sciences Opportunities Portfolio
	(Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Biotechnology — 29.4%
Acceleron Pharma, Inc. (a)		393,200	$	14,965,192
Actelion Ltd., Registered Shares		195,700		22,570,777
Agios Pharmaceuticals, Inc. (a)		332,546		31,359,088
Alder Biopharmaceuticals, Inc. (a)		495,700		14,305,902
Alexion Pharmaceuticals, Inc. (a)		751,517		130,237,896
Alkermes PLC (a)		872,700		53,208,519
Alnylam Pharmaceuticals, Inc. (a)		127,852		13,350,306
Amgen, Inc.		997,510		159,451,973
Anacor Pharmaceuticals, Inc. (a)		157,400		9,105,590
Aquinox Pharmaceuticals, Inc. (a)		92,500		793,650
Ascendis Pharma A/S — ADR (a)		123,600		2,144,460
BioCryst Pharmaceuticals, Inc. (a)		227,900		2,057,937
Biogen Idec, Inc. (a)		479,612		202,511,371
BioMarin Pharmaceutical, Inc. (a)		642,300		80,043,426
Bluebird Bio, Inc. (a)		42,600		5,144,802
Celgene Corp. (a)		1,569,538		180,936,341
Celldex Therapeutics, Inc. (a)		296,500		8,263,455
Cellectis SA — ADR (a)		148,900		5,150,451
Clovis Oncology, Inc. (a)		182,100		13,517,283
Conatus Pharmaceuticals, Inc. (a)		110,200		784,624
Dyax Corp. (a)		679,737		11,388,993
Genomic Health, Inc. (a)		406,800		12,427,740
Gilead Sciences, Inc. (a)		815,456		80,020,697
Incyte Corp. (a)		570,700		52,310,362
Infinity Pharmaceuticals, Inc. (a)		339,500		4,746,210
Intercept Pharmaceuticals, Inc. (a)		98,400		27,750,768
Isis Pharmaceuticals, Inc. (a)		974,067		62,018,846
Karyopharm Therapeutics, Inc. (a)		254,039		7,776,134
Medivation, Inc. (a)		414,600		53,512,422
Neurocrine Biosciences, Inc. (a)		611,738		24,292,116
Protalix BioTherapeutics, Inc. (a)(b)		1,155,326		2,056,480
PTC Therapeutics, Inc. (a)		334,100		20,329,985
Puma Biotechnology, Inc. (a)		126,300		29,820,693
Receptos, Inc. (a)		409,600		67,538,944
Regeneron Pharmaceuticals, Inc. (a)		166,722		75,271,649
SAGE Therapeutics, Inc. (a)		269,387		13,531,309
Sarepta Therapeutics, Inc. (a)(b)		545,100		7,238,928
Seattle Genetics, Inc. (a)(b)		202,818		7,169,616
Spark Therapeutics, Inc. (a)		144,000		11,160,000
Spark Therapeutics, Inc. (Acquired 2/04/15, cost $404,066, unrestricted issue on 2/04/15 was valued at $43.21 pershare) (a)(c)		250,972		18,477,813
Synageva BioPharma Corp. (a)		149,300		14,561,229
Ultragenyx Pharmaceutical, Inc. (a)		397,005		24,650,040
Vertex Pharmaceuticals, Inc. (a)		588,670		69,445,400
Zafgen, Inc. (a)		180,700		7,157,527
				1,654,556,944
Health Care Equipment & Supplies — 17.7%
Abbott Laboratories		2,785,300		129,042,949
Align Technology, Inc. (a)		164,800		8,863,768
AtriCure, Inc. (a)		335,881		6,882,202
Baxter International, Inc.		278,200		19,056,700
Becton Dickinson & Co.		588,792		84,544,643
Boston Scientific Corp. (a)		6,662,900		118,266,475
The Cooper Cos., Inc.		256,900		48,148,198
CR Bard, Inc.		153,600		25,704,960
DexCom, Inc. (a)		363,600		22,666,824
Edwards Lifesciences Corp. (a)		618,182		88,066,208
Endologix, Inc. (a)		317,738		5,423,788

Common Stocks	Shares		Value
Health Care Equipment & Supplies (concluded)
Insulet Corp. (a)		223,500	$	7,453,725
Intuitive Surgical, Inc. (a)		97,800		49,391,934
Masimo Corp. (a)		560,400		18,481,992
Medtronic PLC		2,184,723		170,386,547
PW Medtech Group Ltd. (a)		2,621,900		989,854
St. Jude Medical, Inc.		1,044,600		68,316,840
Stryker Corp.		1,051,000		96,954,750
Thoratec Corp. (a)		194,100		8,130,849
Zimmer Holdings, Inc.		142,600		16,758,352
				993,531,558
Health Care Providers & Services — 16.5%
Aetna, Inc.		386,723		41,197,601
AmerisourceBergen Corp.		322,200		36,624,474
Anthem, Inc.		681,400		105,214,974
Cardinal Health, Inc.		1,165,880		105,243,988
Cigna Corp.		824,900		106,775,056
Express Scripts Holding Co. (a)		441,547		38,313,033
HCA Holdings, Inc. (a)		800,448		60,217,703
HealthEquity, Inc. (a)		83,300		2,081,667
Humana, Inc.		230,000		40,944,600
McKesson Corp.		645,200		145,944,240
Premier, Inc., Class A (a)		141,700		5,325,086
UnitedHealth Group, Inc.		1,501,194		177,576,238
Universal Health Services, Inc., Class B		509,200		59,937,932
				925,396,592
Health Care Technology — 0.4%
Cerner Corp. (a)		277,900		20,358,954
Life Sciences Tools & Services — 3.8%
Agilent Technologies, Inc.		882,100		36,651,255
Charles River Laboratories International, Inc. (a)		817,900		64,851,291
Illumina, Inc. (a)		207,900		38,594,556
Thermo Fisher Scientific, Inc.		567,000		76,170,780
				216,267,882
Machinery — 0.2%
Pall Corp.		108,500		10,892,315
Pharmaceuticals — 29.3%
AbbVie, Inc.		1,453,200		85,070,328
Achaogen, Inc. (a)		183,711		1,793,019
Actavis PLC (a)		602,052		179,182,716
AstraZeneca PLC		1,069,500		73,387,103
Bayer AG, Registered Shares		297,600		44,525,512
Bristol-Myers Squibb Co.		2,377,800		153,368,100
Chugai Pharmaceutical Co. Ltd.		905,700		28,584,731
Dermira, Inc. (a)		146,100		2,242,635
Eli Lilly & Co.		1,918,300		139,364,495
Intra-Cellular Therapies, Inc. (a)		983,154		23,477,717
Jazz Pharmaceuticals PLC (a)		109,600		18,937,784
Johnson & Johnson		764,800		76,938,880
Mallinckrodt PLC (a)		616,100		78,029,065
Merck & Co., Inc.		1,883,800		108,280,824
Mylan NV (a)		1,020,000		60,537,000
Novartis AG, Registered Shares		862,300		85,109,431
Perrigo Co. PLC		440,700		72,957,885
Pfizer, Inc.		1,623,740		56,489,915
Phibro Animal Health Corp., Class A		325,700		11,533,037
Roche Holding AG		217,000		59,629,886
Shire PLC — ADR		261,300		62,526,477

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 23

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

Common Stocks	Shares		Value
Pharmaceuticals (concluded)
Tetraphase Pharmaceuticals, Inc. (a)		230,600	$	8,449,184
Teva Pharmaceutical Industries Ltd. — ADR		1,416,100		88,223,030
Valeant Pharmaceuticals International, Inc. (a)		537,100		106,678,802
Zoetis, Inc.		484,200		22,413,618
				1,647,731,174
Total Common Stocks — 97.3%				5,468,735,419
Preferred Stocks
Biotechnology — 0.2%
ProNAi Therapeutics, Inc., Series D (Acquired 4/15/14, cost $3,632,975) (a)(c)		5,189,964		3,632,975
Seres Health, Inc. (Acquired 11/24/14, cost $3,672,922) (a)(c)		301,970		5,435,460
Total Preferred Stocks — 0.2%				9,068,435
Total Long-Term Investments (Cost — $3,692,087,079) — 97.5%				5,477,803,854

Short-Term Securities	Shares		Value
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.06% (d)(e)		122,708,089	$	122,708,089
	Beneficial Interest (000)
BlackRock Liquidity Series, LLC, Money Market Series, 0.22% (d)(e)(f)	$	7,494		7,494,299
Total Short-Term Securities (Cost — $130,202,388) — 2.3%				130,202,388
Total Investments Before Options Written (Cost — $3,822,289,467) — 99.8%				5,608,006,242
Options Written
(Premiums Received — $339,405) — (0.0)%				(144,838	)
Total Investments Net of Options Written (Cost — $3,821,950,062) — 99.8%				5,607,861,404
Other Assets Less Liabilities — 0.2%				10,065,405
Net Assets — 100.0%			$	5,617,926,809

Notes to Schedule of Investments

(a) Non-income producing security.

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

(c) Restricted security as to resale. As of report date, the Fund held restricted securities with a current value of $27,546,248 and an original cost of $7,709,963, which was 0.5% of its net assets.

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

(e) During the six months ended March 31, 2015, investments in issuers considered to be affiliates of the Fund 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, 2014		Net Activity		Shares/ Beneficial Interest Held at March 31, 2015		Income		Realized Gain
BlackRock Liquidity Funds, TempFund, Institutional Class		115,300,758		7,407,331		122,708,089	$	29,999	$	7,875
BlackRock Liquidity Series, LLC, Money Market Series	$	4,824,791	$	2,669,508	$	7,494,299	$	51,703		—

(f) Security was purchased with the cash collateral from loaned securities. The Fund may withdraw up to 25% of its investment daily, although the manager of the BlackRock Liquidity Series, LLC, Money Market Series, in its sole discretion, may permit an investor to withdraw more than 25% on any one day.

Ÿ 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 the investment advisor. These definitions may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

See Notes to Financial Statements.

24 BLACKROCK FUNDS MARCH 31, 2015

Schedule of Investments (continued) BlackRock Health Sciences Opportunities Portfolio

Ÿ As of March 31, 2015, forward foreign currency exchange contracts outstanding were as follows:

Currency Purchased		Currency Sold			Counterparty	Settlement Date		Unrealized Appreciation (Depreciation)
CHF	51,430,772		USD	60,216,335	Deutsche Bank AG		4/22/15	$	(7,244,201	)
CHF	4,197,481		USD	4,390,900	JPMorgan Chase Bank N.A.		4/22/15		(67,622	)
EUR	12,537,126		USD	14,254,599	UBS AG		4/22/15		(769,962	)
USD	8,328,090		CHF	8,139,267	Deutsche Bank AG		4/22/15		(55,108	)
USD	4,468,423		CHF	4,222,557	Goldman Sachs Bank USA		4/22/15		119,318
USD	111,123,024		CHF	95,066,647	Morgan Stanley Capital Services LLC		4/22/15		13,207,263
USD	1,264,854		CHF	1,167,732	Royal Bank of Canada		4/22/15		62,125
USD	2,094,096		CHF	1,942,410	UBS AG		4/22/15		93,473
USD	918,095		EUR	812,300	Bank of America N.A.		4/22/15		44,405
USD	28,374,381		EUR	25,226,000	Deutsche Bank AG		4/22/15		1,241,890
USD	1,049,970		EUR	919,806	Royal Bank of Canada		4/22/15		60,648
USD	1,118,542		EUR	987,457	Royal Bank of Canada		4/22/15		56,456
USD	21,855,583		EUR	18,882,708	Royal Bank of Canada		4/22/15		1,545,787
USD	1,036,727		EUR	960,643	Royal Bank of Scotland PLC		4/22/15		3,481
USD	682,795		EUR	596,450	UBS AG		4/22/15		41,267
USD	1,372,856		GBP	892,000	Bank of America N.A.		4/22/15		49,870
USD	1,985,218		GBP	1,289,000	Morgan Stanley Capital Services LLC		4/22/15		73,415
USD	66,691,048		GBP	44,032,000	Morgan Stanley Capital Services LLC		4/22/15		1,384,216
Total								$	9,846,721

Ÿ As of March 31, 2015, exchange-traded options written were as follows:

Description	Put/ Call		Strike Price			Expiration Date		Contracts	Value
Alnylam Pharmaceuticals, Inc.		Put		USD	90.00		4/17/15	293	$	(17,580	)
Alnylam Pharmaceuticals, Inc.		Put		USD	95.00		4/17/15	293		(37,358	)
Synageva Biopharma Corp.		Put		USD	85.00		4/17/15	310		(31,000	)
Synageva Biopharma Corp.		Put		USD	90.00		4/17/15	310		(58,900	)
Total									$	(144,838	)

Ÿ Fair Value Measurements — Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instruments and is not necessarily an indication of the risks associated with investing in those securities. The three levels of the fair value hierarchy are as follows:

Ÿ Level 1 — unadjusted quoted prices in active markets/exchanges for identical assets or liabilities that the Fund has the ability to access

Ÿ 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)

Ÿ 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. In accordance with the Fund’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. For information about the Fund’s policy regarding valuation of investments and derivative financial instruments, refer to Note 2 of the Notes to Financial Statements.

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 25

Schedule of Investments (concluded) BlackRock Health Sciences Opportunities Portfolio

As of March 31, 2015, the following tables summarize the Fund’s investments and derivative financial instruments categorized in the disclosure hierarchy:

	Level 1				Level 2				Level 3			Total
Assets:
Investments:
Long-Term Investments:
Common Stocks:
Biotechnology		$	1,613,508,354			$	41,048,590				—		$	1,654,556,944
Health Care Equipment & Supplies			992,541,704				989,854				—			993,531,558
Health Care Providers & Services			925,396,592				—				—			925,396,592
Health Care Technology			20,358,954				—				—			20,358,954
Life Sciences Tools & Services			216,267,882				—				—			216,267,882
Machinery			10,892,315				—				—			10,892,315
Pharmaceuticals			1,356,494,511				291,236,663				—			1,647,731,174
Preferred Stocks:
Biotechnology			—				—			$	9,068,435			9,068,435
Short-Term Securities			122,708,089				7,494,299				—			130,202,388
Total		$	5,258,168,401			$	340,769,406			$	9,068,435		$	5,608,006,242
	Level 1				Level 2				Level 3			Total
Derivative Financial Instruments1
Assets:
Forward foreign currency exchange contracts			—			$	17,983,614				—		$	17,983,614
Liabilities:
Equity contracts		$	(144,838	)			—				—			(144,838	)
Forward foreign currency exchange contracts			—				(8,136,893	)			—			(8,136,893	)
Total		$	(144,838	)		$	9,846,721				—		$	9,701,883
1    Derivative financial instruments are forward foreign currency exchange contracts and options written. Forward foreign currency exchange contracts are valued at the unrealized appreciation/depreciation on the instrument and options written are shown at value.
The Fund may hold assets and/or liabilities in which the fair value approximates the carrying amount for financial statement purposes. As of March 31, 2015, such assets and/or liabilities are categorized within the disclosure hierarchy as follows:
	Level 1				Level 2				Level 3			Total
Assets:
Cash pledged as collateral for options written		$	11,387,775				—				—		$	11,387,775
Foreign currency at value			67,343,198				—				—			67,343,198
Liabilities:
Collateral on securities loaned at value			—			$	(7,494,299	)			—			(7,494,299	)
Total		$	78,730,973			$	(7,494,299	)			—		$	71,236,674

During the six months ended March 31, 2015, there were no transfers between levels.

See Notes to Financial Statements.

26 BLACKROCK FUNDS MARCH 31, 2015

Schedule of Investments March 31, 2015 (Unaudited)	BlackRock International Opportunities Portfolio
	(Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Belgium — 1.7%
Anheuser-Busch InBev NV		153,379	$	18,737,531
Canada — 3.9%
Element Financial Corp. (a)		1,424,100		19,249,609
Enbridge, Inc.		199,600		9,621,081
Gildan Activewear, Inc.		321,900		9,490,147
MEG Energy Corp. (a)		327,200		5,285,628
				43,646,465
China — 5.7%
Alibaba Group Holding Ltd. — ADR (a)		97,558		8,120,728
Baidu, Inc. — ADR (a)		64,650		13,473,060
Beijing Enterprises Water Group Ltd.		12,430,000		8,452,459
China Construction Bank Corp., H Shares		9,157,000		7,600,192
CSR Corp. Ltd., H Shares		7,350,000		9,708,164
Qunar Cayman Islands Ltd. — ADR (a)		157,900		6,513,375
Tencent Holdings Ltd.		589,400		11,192,657
				65,060,635
France — 6.1%
AXA SA		821,700		20,681,435
BNP Paribas SA		223,923		13,624,771
Dassault Aviation SA		1,338		1,619,434
Orange SA		821,800		13,197,696
Schneider Electric SE		117,234		9,122,971
Unibail-Rodamco SE		42,000		11,341,473
				69,587,780
Germany — 5.6%
Bayer AG, Registered Shares		89,300		13,360,646
Continental AG		40,700		9,584,669
Henkel AG & Co. KGaA, Preference		98,686		11,591,744
Infineon Technologies AG		806,244		9,591,792
SAP SE		169,400		12,243,739
Wacker Chemie AG		63,700		7,352,784
				63,725,374
Hong Kong — 2.2%
AIA Group Ltd.		2,733,700		17,163,496
Melco Crown Entertainment Ltd. — ADR		341,100		7,320,006
				24,483,502
India — 3.0%
Bharti Infratel Ltd.		618,886		3,807,388
HDFC Bank Ltd.		684,855		13,169,739
ITC Ltd.		1,288,500		6,698,365
Tata Motors Ltd. — ADR		224,300		10,106,958
				33,782,450
Indonesia — 1.1%
Global Mediacom Tbk PT		34,090,288		4,556,009
Matahari Department Store Tbk PT		5,623,171		8,456,209
				13,012,218
Ireland — 5.7%
Dalata Hotel Group PLC (a)		2,063,626		8,099,003
Green REIT PLC		5,393,585		9,487,866
Kingspan Group PLC		568,679		10,835,228
Ryanair Holdings PLC — ADR		206,784		13,806,968
Shire PLC — ADR		92,200		22,062,538
				64,291,603
Israel — 2.4%
Teva Pharmaceutical Industries Ltd. — ADR		437,700		27,268,710

Common Stocks	Shares		Value
Italy — 2.4%
Banca Generali SpA		482,800	$	15,138,393
UniCredit SpA		1,814,846		12,306,952
				27,445,345
Japan — 8.5%
Chugai Pharmaceutical Co. Ltd.		238,600		7,530,437
FANUC Corp.		42,800		9,343,831
Mitsubishi Estate Co. Ltd.		688,000		15,956,073
Nabtesco Corp.		462,100		13,349,713
ORIX Corp.		654,000		9,189,438
Shinsei Bank Ltd.		5,974,000		11,878,337
SMC Corp.		36,600		10,898,155
Toyota Motor Corp.		266,800		18,623,635
				96,769,619
Mexico — 0.6%
Cemex SAB de CV — ADR (a)		744,756		7,052,839
Netherlands — 4.5%
Aalberts Industries NV		339,505		10,685,010
ASML Holding NV		109,900		11,141,562
Koninklijke Philips NV		191,600		5,435,665
Royal Dutch Shell PLC, A Shares		782,500		23,348,670
				50,610,907
New Zealand — 1.3%
Xero Ltd. (a)		272,500		4,889,527
Xero Ltd. (Acquired 10/15/13, cost $8,211,297) (a)(b)		540,000		9,729,292
				14,618,819
Nigeria — 0.4%
Lekoil Ltd. (a)		13,810,100		4,814,164
Norway — 1.3%
Statoil ASA		828,700		14,652,584
Peru — 0.6%
Credicorp Ltd.		46,800		6,581,484
South Africa — 0.9%
Naspers Ltd., N Shares		67,300		10,323,215
South Korea — 2.8%
Coway Co. Ltd.		86,300		7,102,913
Samsung Electronics Co. Ltd.		12,737		16,516,748
SK Hynix, Inc.		184,100		7,519,865
				31,139,526
Spain — 1.6%
NH Hotel Group SA (a)		1,737,747		9,488,805
Sacyr SA (a)(c)		2,099,937		8,811,810
				18,300,615
Sweden — 1.3%
Nordea Bank AB		1,195,600		14,562,979
Switzerland — 8.6%
Actelion Ltd., Registered Shares		61,855		7,133,957
Adecco SA, Registered Shares		77,700		6,458,696
Novartis AG, Registered Shares		387,400		38,236,569
Roche Holding AG		108,814		29,901,228
UBS Group AG (a)		831,000		15,582,174
				97,312,624
Taiwan — 1.4%
Hermes Microvision, Inc.		167,510		9,637,189

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 27

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

Common Stocks	Shares		Value
Taiwan (concluded)
Largan Precision Co. Ltd.		70,000	$	6,017,759
				15,654,948
United Kingdom — 20.4%
ARM Holdings PLC		612,900		9,954,232
AstraZeneca PLC		415,800		28,531,424
BAE Systems PLC		1,510,300		11,704,110
BP PLC		1,699,000		11,013,145
Crest Nicholson Holdings PLC		1,570,922		9,892,481
Diageo PLC		319,500		8,829,129
Hargreaves Lansdown PLC		305,245		5,206,609
Imperial Tobacco Group PLC		500,100		21,937,419
Kennedy Wilson Europe Real Estate PLC		763,998		12,455,069
Liberty Global PLC, Series A (a)		454,300		23,382,821
Lloyds Banking Group PLC		11,858,300		13,745,337
Metro Bank PLC, (Acquired 1/15/14, cost $9,137,436) (a)(b)		429,853		8,461,495
Nomad Holdings Ltd. (a)		894,145		10,059,131
Prudential PLC		442,000		10,968,375
SABMiller PLC		346,500		18,150,202
Vodafone Group PLC		3,504,500		11,467,811
Whitbread PLC		189,800		14,737,888
				230,496,678
United States — 2.3%
Las Vegas Sands Corp.		102,500		5,641,600
Samsonite International SA		4,483,500		15,585,680
Sensata Technologies Holding NV (a)		80,800		4,641,960
				25,869,240
Total Common Stocks — 96.3%				1,089,801,854

Preferred Stocks	Shares		Value
India — 1.1%
Snapdeal.com, Series F (Acquired 5/07/14, cost $5,268,843) (a)(b)		749	$	8,951,012
Snapdeal.com, Series G (Acquired 10/29/14, cost $2,090,847) (a)(b)		248		2,963,753
Total Preferred Stocks — 1.1%				11,914,765
Warrants (d)
United Kingdom — 0.0%
Nomad Holdings Ltd. (issued 4/10/14, expiring 4/10/17, strike price $11.50)		894,145		362,129
Total Warrants — 0.0%				362,129
Total Long-Term Investments (Cost — $962,132,301) — 97.4%				1,102,078,748
Short-Term Securities
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.06% (e)(f)		5,797,795		5,797,795
Short-Term Securities	Beneficial Interest (000)
BlackRock Liquidity Series, LLC, Money Market Series, 0.22% (e)(f)(g)	$	1,431		1,430,717
Total Short-Term Securities (Cost — $7,228,512) — 0.6%				7,228,512
Total Investments (Cost — $969,360,813) — 98.0%				1,109,307,260
Other Assets Less Liabilities — 2.0%				22,650,670
Net Assets — 100.0%			$	1,131,957,930

Notes to Schedule of Investments

(a) Non-income producing security.

(b) Restricted security as to resale. As of report date, the Fund held restricted securities with a current value of $30,105,552 and an original cost of $24,708,423, which was 2.7% of its net assets.

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

(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 of the warrants, if any.

(e) During the six months ended March 31, 2015, investments in issuers considered to be affiliates of the Fund 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, 2014		Net Activity			Shares/ Beneficial Interest Held at March 31, 2015		Income
BlackRock Liquidity Funds, TempFund, Institutional Class		14,744,969		(8,947,174	)		5,797,795	$	2,254
BlackRock Liquidity Series, LLC, Money Market Series	$	18,399,705	$	(16,968,988	)	$	1,430,717	$	97,820

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

(g) Security was purchased with the cash collateral from loaned securities. The Fund may withdraw up to 25% of its investment daily, although the manager of the BlackRock Liquidity Series, LLC, Money Market Series, in its sole discretion, may permit an investor to withdraw more than 25% on any one day.

See Notes to Financial Statements.

28 BLACKROCK FUNDS MARCH 31, 2015

Schedule of Investments (continued) BlackRock International Opportunities Portfolio

Ÿ As of March 31, 2015, forward foreign currency exchange contracts outstanding were as follows:

Currency Purchased		Currency Sold		Counterparty	Settlement Date		Unrealized Appreciation (Depreciation)
AUD	40,880,000	USD	33,354,871	Morgan Stanley Capital Services LLC		4/22/15	$	(2,260,464	)
CAD	11,401,000	USD	9,250,229	Bank of America N.A.		4/22/15		(251,034	)
CAD	1,999,000	USD	1,574,420	Goldman Sachs International		4/22/15		3,458
CAD	10,533,000	USD	8,464,407	Goldman Sachs International		4/22/15		(150,353	)
CHF	23,673,753	USD	27,717,777	Deutsche Bank AG		4/22/15		(3,334,530	)
DKK	82,084,250	USD	12,831,218	Goldman Sachs International		4/22/15		(1,008,838	)
EUR	406,623	USD	431,299	BNP Paribas S.A.		4/22/15		6,055
EUR	2,140,434	USD	2,264,337	BNP Paribas S.A.		4/22/15		37,864
EUR	417,459	USD	481,719	Citibank N.A.		4/22/15		(32,710	)
EUR	825,105	USD	879,602	Citibank N.A.		4/22/15		7,862
EUR	1,879,365	USD	2,146,092	Citibank N.A.		4/22/15		(124,691	)
EUR	11,036,132	USD	12,006,506	Deutsche Bank AG		4/22/15		(136,302	)
EUR	1,379,605	USD	1,555,547	Goldman Sachs International		4/22/15		(71,675	)
EUR	6,126,056	USD	6,966,464	Goldman Sachs International		4/22/15		(377,423	)
EUR	1,523,622	USD	1,614,384	Royal Bank of Scotland PLC		4/22/15		24,388
EUR	7,303,530	USD	7,909,679	Royal Bank of Scotland PLC		4/22/15		(54,174	)
EUR	1,459,206	USD	1,550,319	State Street Bank and Trust Co.		4/22/15		19,169
EUR	1,572,119	USD	1,713,569	State Street Bank and Trust Co.		4/22/15		(22,634	)
EUR	3,933,608	USD	4,435,539	State Street Bank and Trust Co.		4/22/15		(204,643	)
EUR	5,514,866	USD	5,968,606	State Street Bank and Trust Co.		4/22/15		(36,946	)
EUR	64,992	USD	74,394	TD Securities, Inc.		4/22/15		(4,490	)
EUR	457,205	USD	498,257	The Bank of New York Mellon		4/22/15		(6,498	)
EUR	302,217	USD	318,819	UBS AG		4/22/15		6,239
EUR	1,761,878	USD	1,858,663	UBS AG		4/22/15		36,371
GBP	7,799,000	USD	11,742,011	Goldman Sachs International		4/22/15		(174,788	)
GBP	380,000	USD	573,934	Royal Bank of Scotland PLC		4/22/15		(10,330	)
GBP	2,416,000	USD	3,579,611	State Street Bank and Trust Co.		4/22/15		3,722
GBP	6,107,000	USD	9,194,101	State Street Bank and Trust Co.		4/22/15		(136,397	)
GBP	8,597,000	USD	13,229,506	State Street Bank and Trust Co.		4/22/15		(478,715	)
GBP	1,938,000	USD	2,948,936	TD Securities, Inc.		4/22/15		(74,558	)
GBP	3,568,000	USD	5,434,642	TD Securities, Inc.		4/22/15		(142,700	)
HKD	85,315,000	USD	10,999,942	The Bank of New York Mellon		4/22/15		3,964
JPY	1,229,424,000	USD	10,418,091	Goldman Sachs International		4/22/15		(163,733	)
JPY	5,001,944,880	USD	42,954,322	Goldman Sachs International		4/22/15		(1,234,190	)
JPY	305,858,000	USD	2,546,745	TD Securities, Inc.		4/22/15		4,350
JPY	315,081,000	USD	2,681,607	TD Securities, Inc.		4/22/15		(53,585	)
JPY	921,499,000	USD	7,738,669	The Bank of New York Mellon		4/22/15		(52,646	)
MXN	97,156,000	USD	6,594,681	BNP Paribas S.A.		4/22/15		(234,797	)
NOK	27,050,000	USD	3,367,621	Goldman Sachs International		4/22/15		(11,998	)
NOK	1,587,000	USD	206,820	The Bank of New York Mellon		4/22/15		(9,948	)
SEK	105,186,000	USD	12,921,065	HSBC Bank PLC		4/22/15		(703,266	)
SGD	21,429,000	USD	16,110,310	TD Securities, Inc.		4/22/15		(503,912	)
TRY	21,267,000	USD	9,015,826	Citibank N.A.		4/22/15		(885,256	)
USD	6,212,053	AUD	7,605,000	Bank of America N.A.		4/22/15		427,489
USD	319,453	CAD	383,058	Morgan Stanley Capital Services LLC		4/22/15		17,093
USD	2,233,113	CAD	2,800,000	TD Securities, Inc.		4/22/15		22,978
USD	6,274,390	CAD	7,774,000	UBS AG		4/22/15		138,108
USD	27,018,664	CHF	23,673,753	Goldman Sachs International		4/22/15		2,635,417
USD	3,656,579	EUR	3,223,468	Bank of America N.A.		4/22/15		189,493

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 29

Schedule of Investments (continued) BlackRock International Opportunities Portfolio

As of March 31, 2015, forward foreign currency exchange contracts outstanding were as follows: (concluded)

Currency Purchased		Currency Sold		Counterparty	Settlement Date		Unrealized Appreciation (Depreciation)
USD	10,922,013	EUR	9,458,000	Bank of America N.A.		4/22/15	$	749,211
USD	394,653	EUR	345,399	BNP Paribas S.A.		4/22/15		23,151
USD	1,982,346	EUR	1,741,645	Citibank N.A.		4/22/15		109,073
USD	43,346,959	EUR	37,286,744	Goldman Sachs International		4/22/15		3,242,215
USD	6,420,701	EUR	5,643,000	JPMorgan Chase Bank N.A.		4/22/15		351,223
USD	16,300,908	EUR	14,280,102	Royal Bank of Canada		4/22/15		941,566
USD	7,661,344	EUR	7,057,000	State Street Bank and Trust Co.		4/22/15		71,001
USD	749,417	EUR	658,689	TD Securities, Inc.		4/22/15		40,946
USD	2,875,009	EUR	2,515,811	The Bank of New York Mellon		4/22/15		169,061
USD	1,361,273	EUR	1,197,260	UBS AG		4/22/15		73,529
USD	6,595,067	GBP	4,461,000	BNP Paribas S.A.		4/22/15		(21,344	)
USD	425,240	GBP	290,000	Citibank N.A.		4/22/15		(4,879	)
USD	6,428,401	GBP	4,281,000	Deutsche Bank AG		4/22/15		78,961
USD	3,691,199	GBP	2,505,000	Morgan Stanley Capital Services LLC		4/22/15		(24,136	)
USD	56,580,463	GBP	37,274,324	Morgan Stanley Capital Services LLC		4/22/15		1,296,397
USD	6,687,292	GBP	4,459,000	State Street Bank and Trust Co.		4/22/15		73,848
USD	8,586,435	GBP	5,816,000	State Street Bank and Trust Co.		4/22/15		(39,668	)
USD	9,888,557	GBP	6,643,000	State Street Bank and Trust Co.		4/22/15		35,876
USD	3,243,979	GBP	2,157,000	TD Securities, Inc.		4/22/15		44,787
USD	7,640,406	GBP	5,126,000	UBS AG		4/22/15		37,689
USD	6,437,740	HKD	49,913,000	State Street Bank and Trust Co.		4/22/15		(25	)
USD	6,498,917	JPY	764,632,000	Barclays Bank PLC		4/22/15		121,288
USD	6,092,278	JPY	723,920,000	Deutsche Bank AG		4/22/15		54,219
USD	1,237,722	JPY	147,831,000	Goldman Sachs International		4/22/15		4,696
USD	3,714,250	NOK	29,036,000	Goldman Sachs International		4/22/15		112,259
USD	7,010,757	NOK	53,913,000	Goldman Sachs International		4/22/15		322,709
USD	2,723,726	NOK	20,711,000	Morgan Stanley Capital Services LLC		4/22/15		154,473
USD	12,008,646	NZD	15,512,000	Morgan Stanley Capital Services LLC		4/22/15		438,212
ZAR	23,596,000	USD	2,013,018	State Street Bank and Trust Co.		4/22/15		(75,050	)
ZAR	59,267,000	USD	5,056,177	State Street Bank and Trust Co.		4/22/15		(188,507	)
Total							$	(1,171,423	)

Ÿ Fair Value Measurements — Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instruments and is not necessarily an indication of the risks associated with investing in those securities. The three levels of the fair value hierarchy are as follows:

Ÿ Level 1 – unadjusted quoted prices in active markets/exchanges for identical assets or liabilities that the Fund has the ability to access

Ÿ 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)

Ÿ 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. In accordance with the Fund’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. For information about the Fund’s policy regarding valuation of investments and derivative financial instruments, refer to Note 2 of the Notes to Financial Statements.

See Notes to Financial Statements.

30 BLACKROCK FUNDS MARCH 31, 2015

Schedule of Investments (continued) BlackRock International Opportunities Portfolio

As of March 31, 2015, the following tables summarize the Fund’s investments and derivative financial instruments categorized in the disclosure hierarchy:

	Level 1			Level 2				Level 3			Total
Assets:
Investments:
Long-Term Investments:
Common Stocks:
Belgium			—		$	18,737,531				—		$	18,737,531
Canada		$	43,646,465			—				—			43,646,465
China			28,107,163			36,953,472				—			65,060,635
France			—			69,587,780				—			69,587,780
Germany			—			63,725,374				—			63,725,374
Hong Kong			7,320,006			17,163,496				—			24,483,502
India			13,914,346			19,868,104				—			33,782,450
Indonesia			—			13,012,218				—			13,012,218
Ireland			53,456,375			10,835,228				—			64,291,603
Israel			27,268,710			—				—			27,268,710
Italy			—			27,445,345				—			27,445,345
Japan			—			96,769,619				—			96,769,619
Mexico			7,052,839			—				—			7,052,839
Netherlands			—			50,610,907				—			50,610,907
New Zealand			9,729,292			4,889,527				—			14,618,819
Nigeria			4,814,164			—				—			4,814,164
Norway			—			14,652,584				—			14,652,584
Peru			6,581,484			—				—			6,581,484
South Africa			—			10,323,215				—			10,323,215
South Korea			—			31,139,526				—			31,139,526
Spain			—			18,300,615				—			18,300,615
Sweden			—			14,562,979				—			14,562,979
Switzerland			—			97,312,624				—			97,312,624
Taiwan			—			15,654,948				—			15,654,948
United Kingdom			35,837,890			186,197,293			$	8,461,495			230,496,678
United States			10,283,560			15,585,680				—			25,869,240
Preferred Stocks:
India			—			—				11,914,765			11,914,765
Warrants			—			362,129				—			362,129
Short-Term Securities			5,797,795			1,430,717				—			7,228,512
Total		$	253,810,089		$	835,120,911			$	20,376,260		$	1,109,307,260
	Level 1			Level 2				Level 3			Total
Derivative Financial Instruments1
Assets:
Forward foreign currency exchange contracts			—		$	12,130,410				—		$	12,130,410
Liabilities:
Forward foreign currency exchange contracts			—			(13,301,833	)			—			(13,301,833	)
Total			—		$	(1,171,423	)			—		$	(1,171,423	)
1    Derivative financial instruments are forward foreign currency exchange contracts, which are valued at the unrealized appreciation/depreciation on the instrument.

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 31

Schedule of Investments (concluded) BlackRock International Opportunities Portfolio

The Fund may hold assets and/or liabilities in which the fair value approximates the carrying amount for financial statement purposes. As of March 31, 2015, such assets and/or liabilities are categorized within the disclosure hierarchy as follows:

	Level 1			Level 2				Level 3			Total
Assets:
Foreign currency at value		$	111,499			—				—		$	111,499
Liabilities:
Collateral on securities loaned at value			—		$	(1,430,717	)			—			(1,430,717	)
Total		$	111,499		$	(1,430,717	)			—		$	(1,319,218	)
Transfers between Level 1 and Level 2 were as follows:
	Transfers into Level 1			Transfers out of Level 11				Transfers into Level 21			Transfers out of Level 2
Assets:
Long-Term Investments:
Ireland			—		$	(9,107,713	)		$	9,107,713			—
United Kingdom			—			(10,649,267	)			10,649,267			—
United States			—			(16,389,885	)			16,389,885			—
Total			—		$	(36,146,865	)		$	36,146,865			—
1    External pricing service used to reflect any significant market movements between the time the Fund valued such foreign securities and the earlier closing of foreign markets.
A reconciliation of Level 3 investments is presented when the Fund had a significant amount of Level 3 investments at the beginning and/or end of the period in relation to net assets. The following table is a reconciliation of Level 3 investments for which significant unobservable inputs were used in determining fair value:

	Common Stocks				Preferred Stocks			Total
Assets:
Opening Balance, as of September 30, 2014		$	9,066,043			$	5,125,544		$	14,191,587
Transfers into Level 3			—				—			—
Transfers out of Level 3			—				—			—
Accrued discounts/premiums			—				—			—
Net realized gain (loss)			—				—			—
Net change in unrealized appreciation/depreciation2,3			(604,548	)			4,698,375			4,093,827
Purchases			—				2,090,846			2,090,846
Sales			—				—			—
Closing Balance, as of March 31, 2015		$	8,461,495			$	11,914,765		$	20,376,260
Net change in unrealized appreciation/depreciation on investments still held at March 31, 20153		$	(604,548	)		$	4,698,375		$	4,093,827
2    Included in the related net change in unrealized appreciation/depreciation in the Statements of Operations.
3    Any difference between Net change in unrealized appreciation/depreciation and Net change in unrealized appreciation/depreciation on investments still held at March 31, 2015, is generally due to investments no longer held or categorized as Level 3 at period end.

The following table summarizes the valuation techniques used and unobservable inputs utilized by the BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) to determine the value of certain of the Fund’s Level 3 investments as of March 31, 2015.

	Value		Valuation Techniques	Unobservable Inputs	Range of Unobservable Inputs Utilized
Assets:
Common Stocks.	$	8,461,495	Market Comparable Companies	Price to Tangible Book Value Multiple4		1.8x
Preferred Stocks5		11,914,765	Probability-Weighted Expected Return Model	Years to IPO6		1.2-3.2
				IPO Exit Probability4		75.00%
				Discount Rate6		25.00%
				Revenue Multiple4		0.84x-1.87x
Total	$	20,376,260

⁴ Increase in unobservable input may result in a significant increase to value, while a decrease in the unobservable input may result in a significant decrease to value.

⁵  For the period ended March 31, 2015, the valuation technique for certain investments classified as preferred stocks changed to a Probability-Weighted Expected Return Model. The investments were previously valued utilizing a market comparable company and option pricing model approach. A Probability-Weighted Expected Return Model was considered to be a more relevant measure of fair value for these investments which leverages secondary market transactions.

⁶  Decrease in unobservable input may result in a significant increase to value, while an increase in the unobservable input may result in a significant decrease to value.

See Notes to Financial Statements.

32 BLACKROCK FUNDS MARCH 31, 2015

Schedule of Investments March 31, 2015 (Unaudited)	BlackRock Science & Technology Opportunities Portfolio
	(Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Commercial Services & Supplies — 0.4%
Atento SA (a)		83,800	$	996,382
Communications Equipment — 2.2%
Finisar Corp. (a)		122,300		2,609,882
JDS Uniphase Corp. (a)		198,400		2,603,008
				5,212,890
Consumer Finance — 0.2%
Trustbuddy AB (a)		6,696,207		474,293
Diversified Telecommunication Services — 0.6%
Link Net Tbk PT (a)		3,230,500		1,476,271
Electronic Equipment, Instruments & Components — 2.5%
Alps Electric Co. Ltd.		53,700		1,293,060
CDW Corp.		38,300		1,426,292
Largan Precision Co. Ltd.		22,000		1,891,296
PAX Global Technology Ltd. (a)		1,373,000		1,435,972
				6,046,620
Health Care Technology — 0.7%
Inovalon Holdings, Inc., Class A (a)(b)		52,600		1,589,046
Household Durables — 1.6%
Sony Corp. (a)		140,600		3,760,153
Internet & Catalog Retail — 5.2%
Amazon.com, Inc. (a)		8,700		3,237,270
Makemytrip Ltd. (a)		54,000		1,185,840
Netflix, Inc. (a)		3,800		1,583,422
Qunar Cayman Islands Ltd. — ADR (a)(b)		54,000		2,227,500
Vipshop Holdings Ltd. — ADR (a)(b)		139,900		4,118,656
				12,352,688
Internet Software & Services — 23.9%
58.com, Inc. — ADR (a)		57,000		3,014,160
Alibaba Group Holding Ltd. — ADR (a)(b)		30,600		2,547,144
Baidu, Inc. — ADR (a)		11,400		2,375,760
comScore, Inc. (a)(b)		37,100		1,899,520
Cvent, Inc. (a)		34,900		978,596
Facebook, Inc., Class A (a)		99,700		8,196,835
Google, Inc., Class A (a)		9,783		5,426,630
Google, Inc., Class C (a)(b)		9,783		5,361,084
Hortonworks, Inc. (a)		48,686		1,160,674
Hortonworks, Inc. (Acquired 3/21/14, cost $3,100,447) (a)(c)		127,202		2,880,871
LendingClub Corp. (a)(b)		61,600		1,210,440
LendingClub Corp. (Acquired 12/12/14, cost $1,804,420) (a)(c)		177,404		3,311,689
LinkedIn Corp., Class A (a)		9,300		2,323,698
New Relic, Inc. (a)		20,000		694,000
New Relic, Inc. (Acquired 12/15/14, cost $2,114,612) (a)(c)		74,616		2,459,716
Pandora Media, Inc. (a)		64,200		1,040,682
Tencent Holdings Ltd.		337,300		6,405,299
Twitter, Inc. (a)		39,300		1,968,144
Yelp, Inc. (a)		25,600		1,212,160
YY, Inc. — ADR (a)		21,500		1,172,933
Zillow Group, Inc., Class A (a)		15,400		1,544,620
				57,184,655
IT Services — 12.0%
Alliance Data Systems Corp. (a)		13,800		4,088,250
Cognizant Technology Solutions Corp., Class A (a)		37,800		2,358,342
Euronet Worldwide, Inc. (a)		66,175		3,887,781
Fidelity National Information Services, Inc.		40,838		2,779,434

Common Stocks	Shares		Value
IT Services (concluded)
Global Payments, Inc.		15,900	$	1,457,712
Jack Henry & Associates, Inc.		28,231		1,973,065
Luxoft Holding, Inc. (a)		31,800		1,645,332
MasterCard, Inc., Class A		60,100		5,192,039
Visa, Inc., Class A		83,500		5,461,735
				28,843,690
Media — 2.4%
Eros International PLC (a)		89,600		1,565,312
Naspers Ltd., N Shares		17,300		2,653,665
Rentrak Corp. (a)		28,400		1,577,904
				5,796,881
Professional Services — 0.2%
TechnoPro Holdings, Inc. (a)		24,400		579,814
Real Estate Investment Trusts (REITs) — 2.1%
Crown Castle International Corp. (b)		29,500		2,434,930
Digital Realty Trust, Inc. (b)		39,000		2,572,440
				5,007,370
Semiconductors & Semiconductor Equipment — 11.8%
ARM Holdings PLC		80,300		1,304,168
ASML Holding NV		18,000		1,824,824
Avago Technologies Ltd.		19,199		2,437,889
Broadcom Corp., Class A		34,500		1,493,677
Cavium, Inc. (a)(b)		28,400		2,011,288
Hermes Microvision, Inc.		43,206		2,485,729
Hua Hong Semiconductor Ltd. (a)(d)		702,000		871,088
Intersil Corp.		85,400		1,222,928
Lam Research Corp.		23,100		1,622,429
Maxim Integrated Products, Inc.		55,400		1,928,474
Microsemi Corp. (a)		46,800		1,656,720
Novatek Microelectronics Corp.		217,000		1,119,922
NXP Semiconductor NV (a)		28,965		2,906,927
Siliconware Precision Industries Co. Ltd.		897,000		1,486,213
SK Hynix, Inc.		39,500		1,613,442
SunEdison Semiconductor Ltd. (a)		39,800		1,027,636
Synaptics, Inc. (a)		14,300		1,162,661
				28,176,015
Software — 12.8%
Activision Blizzard, Inc.		65,700		1,493,033
Adobe Systems, Inc. (a)(b)		35,700		2,639,658
Autodesk, Inc. (a)		59,500		3,489,080
Globant SA (a)		81,076		1,707,460
Imperva, Inc. (a)		28,300		1,208,410
Nintendo Co. Ltd.		11,800		1,731,354
Oracle Corp.		89,300		3,853,295
Proofpoint, Inc. (a)(b)		56,610		3,352,444
salesforce.com, Inc. (a)		51,600		3,447,396
ServiceNow, Inc. (a)		40,880		3,220,526
Tableau Software, Inc., Class A (a)		17,650		1,632,978
Xero Ltd. (Acquired 10/15/13, cost $2,411,080) (a)(c)		158,560		2,856,809
				30,632,443
Technology Hardware, Storage & Peripherals — 13.6%
Apple Inc. (b)		212,359		26,423,830
Pegatron Corp.		659,000		1,778,012
Samsung Electronics Co. Ltd.		3,325		4,311,705
				32,513,547

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 33

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

Common Stocks	Shares		Value
Wireless Telecommunication Services — 1.2%
Bharti Infratel Ltd.		250,145	$	1,538,893
RingCentral, Inc., Class A (a)(b)		84,800		1,299,984
				2,838,877
Total Common Stocks — 93.4%				223,481,635
Preferred Stocks
Internet & Catalog Retail — 0.9%
Snapdeal.com, Series F (Acquired 5/07/14, cost $1,014,752) (a)(c)		143		1,708,938
Snapdeal.com, Series G (Acquired 10/29/14, cost $396,249) (a)(c)		47		561,679
				2,270,617
Internet Software & Services — 2.3%
Uber Technologies, Inc., Series D (Acquired 6/06/14, cost $2,000,004) (a)(c)		128,924		4,379,574
Zuora, Inc. (Acquired 1/16/15, cost $1,006,814) (a)(c)		265,000		1,029,578
				5,409,152
Software — 1.9%
Illumio, Inc., Series C (Acquired 3/11/15, cost $499,995) (a)(c)		31,115		499,995
MongoDB, Series C (Acquired 12/19/13, cost $1,512,773) (a)(c)		60,303		1,368,275
MongoDB, Series D (Acquired 12/19/13, cost $470,592) (a)(c)		18,759		419,264
MongoDB, Series E (Acquired 12/19/13, cost $16,632) (a)(c)		663		14,433
Palantir Technologies, Inc., Series I (Acquired 2/07/14, cost $1,500,011) (a)(c)		244,700		2,175,383
				4,477,350
Total Preferred Stocks — 5.1%				12,157,119
Total Long-Term Investments (Cost — $166,240,668) — 98.5%				235,638,754

Short-Term Securities	Shares		Value
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.06% (e)(f)		3,855,025	$	3,855,025
	Beneficial Interest (000)
BlackRock Liquidity Series, LLC, Money Market Series, 0.22% (e)(f)(g)	$	26		26,200
Total Short-Term Securities (Cost — $3,881,225) — 1.6%				3,881,225
Total Investments Before Options Written (Cost — $170,121,893) — 100.1%				239,519,979
Options Written
(Premiums Received — $256,144) — (0.1)%				(183,462	)
Total Investments Net of Options Written (Cost — $169,865,749)				239,336,517
Other Assets Less Liabilities — 0.0%				28,827
Net Assets — 100.0%			$	239,365,344

Notes to Schedule of Investments

(a) Non-income producing security.

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

(c) Restricted security as to resale. As of report date, the Fund held restricted securities with a current value of $23,666,204 and an original cost of $17,848,381, which was 9.9% of its net assets.

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

(e) During the six months ended March 31, 2015, investments in issuers considered to be affiliates of the Fund 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, 2014		Net Activity			Shares/ Beneficial Interest Held at March  31, 2015		Income
BlackRock Liquidity Funds, TempFund, Institutional Class		6,567,506		(2,712,481	)		3,855,025	$	993
BlackRock Liquidity Series, LLC, Money Market Series	$	1,494,487	$	(1,468,287	)	$	26,200	$	15,577

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

(g) Security was purchased with the cash collateral from loaned securities. The Fund may withdraw up to 25% of its investment daily, although the manager of the BlackRock Liquidity Series, LLC, Money Market Series, in its sole discretion, may permit an investor to withdraw more than 25% on any one day.

See Notes to Financial Statements.

34 BLACKROCK FUNDS MARCH 31, 2015

Schedule of Investments (continued) BlackRock Science & Technology Opportunities Portfolio

Ÿ 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 the investment advisor. These definitions may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

Ÿ As of March 31, 2015, forward foreign currency exchange contracts outstanding were as follows:

Currency Purchased		Currency Sold		Counterparty	Settlement Date		Unrealized Appreciation (Depreciation)
HKD	878,000	USD	113,213	Citibank N.A.		4/22/15	$	32
SEK	8,553,000	USD	1,050,652	HSBC Bank PLC		4/22/15		(57,185	)
USD	8,036,530	HKD	62,315,000	HSBC Bank PLC		4/22/15		(842	)
USD	2,314,714	NZD	2,990,000	Morgan Stanley Capital Services LLC		4/22/15		84,467
USD	231,301	ZAR	2,815,000	Goldman Sachs Bank USA		4/22/15		101
USD	1,548,043	ZAR	18,150,000	Goldman Sachs International		4/22/15		57,362
USD	320,592	ZAR	3,753,000	TD Securities, Inc.		4/22/15		12,354
Total							$	96,289

Ÿ As of March 31, 2015, exchange-traded options written were as follows:

Description	Put/ Call		Strike Price			Expiration Date		Contracts		Value
Apple Inc.		Call		USD	132.00		4/02/15		430	$	(1,290	)
Adobe Systems, Inc.		Call		USD	75.00		4/17/15		71		(5,538	)
Alibaba Group Holding Ltd. — ADR		Call		USD	90.00		4/17/15		156		(2,496	)
Cavium, Inc.		Call		USD	75.00		4/17/15		56		(4,900	)
Crown Castle International Corp.		Call		USD	87.50		4/17/15		56		(560	)
Inovalon Holdings, Inc., Class A		Call		USD	30.00		4/17/15		173		(25,085	)
LendingClub Corp.		Call		USD	23.00		4/17/15		305		(4,575	)
Qunar Cayman Islands Ltd. — ADR		Call		USD	40.00		4/17/15		108		(25,650	)
Vipshop Holdings Ltd. — ADR		Call		USD	30.00		4/17/15		284		(21,300	)
Apple Inc.		Call		USD	130.00		4/24/15		270		(30,240	)
comScore, Inc.		Call		USD	52.50		4/24/15		74		(6,290	)
Google, Inc., Class C		Call		USD	580.00		4/24/15		19		(10,735	)
Digital Realty Trust, Inc.		Call		USD	70.00		5/15/15		74		(3,885	)
Proofpoint, Inc.		Call		USD	65.00		5/15/15		186		(36,270	)
RingCentral, Inc., Class A		Call		USD	17.50		5/15/15		169		(4,648	)
Total										$	(183,462	)

Ÿ Fair Value Measurements — Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instruments and is not necessarily an indication of the risks associated with investing in those securities. The three levels of the fair value hierarchy are as follows:

Ÿ Level 1 – unadjusted quoted prices in active markets/exchanges for identical assets or liabilities that the Fund has the ability to access

Ÿ 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)

Ÿ 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)

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 35

Schedule of Investments (continued) BlackRock Science & Technology Opportunities Portfolio

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Fund’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. For information about the Fund’s policy regarding valuation of investments and derivative financial instruments, refer to Note 2 of the Notes to Financial Statements.

As of March 31, 2015, the following tables summarize the Fund’s investments and derivative financial instruments categorized in the disclosure hierarchy:

	Level 1			Level 2			Level 3		Total
Assets:
Investments:
Long-Term Investments:
Common Stocks:
Commercial Services & Supplies	$	996,382			—			—	$	996,382
Communications Equipment		5,212,890			—			—		5,212,890
Consumer Finance		474,293			—			—		474,293
Diversified Telecommunication Services		1,476,271			—			—		1,476,271
Electronic Equipment, Instruments & Components		1,426,292		$	4,620,328			—		6,046,620
Health Care Technology		1,589,046			—			—		1,589,046
Household Durables		—			3,760,153			—		3,760,153
Internet & Catalog Retail		12,352,688			—			—		12,352,688
Internet Software & Services		42,127,080			15,057,575			—		57,184,655
IT Services		28,843,690			—			—		28,843,690
Media		3,143,216			2,653,665			—		5,796,881
Professional Services		579,814			—			—		579,814
Real Estate Investment Trusts (REITs)		5,007,370			—			—		5,007,370
Semiconductors & Semiconductor Equipment		18,341,717			9,834,298			—		28,176,015
Software		28,901,089			1,731,354			—		30,632,443
Technology Hardware, Storage & Peripherals		26,423,830			6,089,717			—		32,513,547
Wireless Telecommunication Services		2,838,877			—			—		2,838,877
Preferred Stocks:
Internet & Catalog Retail		—			—		$	2,270,617		2,270,617
Internet Software & Services		—			—			5,409,152		5,409,152
Software		—			—			4,477,350		4,477,350
Short-Term Securities		3,855,025			26,200			—		3,881,225
Total	$	183,589,570		$	43,773,290		$	12,157,119	$	239,519,979
	Level 1			Level 2			Level 3		Total
Derivative Financial Instruments1
Assets:
Forward foreign currency exchange contracts		—		$	154,316			—	$	154,316
Liabilities:
Equity contracts	$	(177,172	)		(6,290	)		—		(183,462	)
Forward foreign currency exchange contracts		—			(58,027	)		—		(58,027	)
Total	$	(177,172	)	$	89,999			—	$	(87,173	)

¹  Derivative financial instruments are forward foreign currency exchange contracts and options written. Forward foreign currency exchange contracts are valued at the unrealized appreciation/depreciation on the instrument and options written are shown at value.

See Notes to Financial Statements.

36 BLACKROCK FUNDS MARCH 31, 2015

Schedule of Investments (continued) BlackRock Science & Technology Opportunities Portfolio

The Fund may hold assets and/or liabilities in which the fair value approximates the carrying amount for financial statement purposes. As of March 31, 2015, such assets and/or liabilities are categorized within the disclosure hierarchy as follows:

	Level 1		Level 2			Level 3		Total
Assets:
Cash pledged as collateral for options written	$	718,200		—			—	$	718,200
Foreign currency at value		546,693		—			—		546,693
Liabilities:
Collateral on securities loaned at value		—	$	(26,200	)		—		(26,200	)
Total	$	1,264,893	$	(26,200	)		—	$	1,238,693

Transfers between Level 1 and Level 2 were as follows:

	Transfers into Level 11		Transfers out of Level 1		Transfers into Level 2		Transfers out of Level 21
Assets:
Long-Term Investments:
Software	$	2,539,969		—		—	$	(2,539,969	)

¹  Systematic Fair Value Prices were not utilized at period end for these investments.

A reconciliation of Level 3 investments is presented when the Fund had a significant amount of Level 3 investments at the beginning and/or end of the period in relation to net assets. The following table is a reconciliation of Level 3 investments for which significant unobservable inputs were used in determining fair value:

	Common Stocks			Preferred Stocks			Total
Assets:
Opening Balance, as of September 30, 2014	$	153,848		$	13,297,420		$	13,451,268
Transfers into Level 3		—			—			—
Transfers out of Level 31		(7,066,453	)		—			(7,066,453	)
Other2		6,912,605			(6,912,605	)		—
Accrued discounts/premiums		—			—			—
Net realized gain (loss)		—			—			—
Net change in unrealized appreciation/depreciation3,4		—			3,869,246			3,869,246
Purchases		—			1,903,058			1,903,058
Sales		—			—			—
Closing Balance, as of March 31, 2015		—		$	12,157,119		$	12,157,119
Net change in unrealized appreciation/depreciation on investments still held at March 31, 20154		—		$	3,869,246		$	3,869,246

¹  As of September 30, 2014, the Fund used significant unobservable inputs in determining the value of certain investments. As of March 31, 2015, the Fund used observable inputs in determining the value of the same investments. As a result, investments with a beginning period value of $7,066,453 transferred from Level 3 to Level 2 in the disclosure hierarchy.

²  Certain Level 3 investments were re-classified between Common Stocks and Preferred Stocks.

³  Included in the related net change in unrealized appreciation/depreciation in the Statements of Operations.

⁴  Any difference between Net change in unrealized appreciation/depreciation and Net change in unrealized appreciation/depreciation on investments still held at March 31, 2015, is generally due to investments no longer held or categorized as Level 3 at period end.

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 37

Schedule of Investments (concluded) BlackRock Science & Technology Opportunities Portfolio

The following table summarizes the valuation techniques used and unobservable inputs utilized by the BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) to determine the value of certain of the Fund’s Level 3 investments as of March 31, 2015. The table does not include Level 3 investments with values based upon unadjusted third party pricing information in the amount of $499,995.

	Value		Valuation Techniques	Unobservable Inputs	Range of Unobservable Inputs Utilized
Assets:
Preferred Stocks1	$	2,270,617	Probability-Weighted Expected Return Model	Years to IPO2		1.2-3.2
				IPO Exit Probability3		75.00%
				Discount Rate2		25.00%
				Revenue Multiple3		0.84x-1.87x
		6,554,957	Probability-Weighted Expected Return Model	Years to IPO2		0.75-2.9
				IPO Exit Probability3		90.00% - 95.00%
				Discount Rate2		21.30% - 22.31%
				Margin3		20.00%
				Revenue Multiple3		10.0x-16.0x
		1,029,578	Probability-Weighted Expected Return Model	Years to IPO2		1-2
				IPO Exit Probability3		75.00%
				Discount Rate2		20.00%
				Revenue Multiple3		8.0x
				Merger and/or Acquisition Probability3		25.00%
		1,801,972	Market Comparable Companies	2016 Revenue Multiple3		11.0x
			Options Pricing Model	Years to IPO2		1-2
				Risk Free Rate2		0.31%
				Volatility3		30.00%
Total	$	11,657,124

¹  For the period ended March 31, 2015, the valuation technique for certain investments classified as preferred stocks changed to a Probability-Weighted Expected Return Model. The investments were previously valued utilizing a market comparable company and option pricing model approach. A Probability-Weighted Expected Return Model was considered to be a more relevant measure of fair value for these investments which leverages the most recent equity raise pre-money valuation and/or secondary market transactions.

²  Decrease in unobservable input may result in a significant increase to value, while an increase in the unobservable input may result in a significant decrease to value.

³  Increase in unobservable input may result in a significant increase to value, while a decrease in the unobservable input may result in a significant decrease to value.

See Notes to Financial Statements.

38 BLACKROCK FUNDS MARCH 31, 2015

Schedule of Investments March 31, 2015 (Unaudited)	BlackRock U.S. Opportunities Portfolio
	(Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Aerospace & Defense — 1.1%
B/E Aerospace, Inc.		143,624	$	9,137,359
Triumph Group, Inc.		154,024		9,198,313
				18,335,672
Airlines — 1.7%
American Airlines Group, Inc.		280,668		14,813,657
JetBlue Airways Corp. (a)		640,500		12,329,625
				27,143,282
Auto Components — 3.1%
Delphi Automotive PLC		242,300		19,321,002
Lear Corp.		146,960		16,286,107
Visteon Corp. (a)		150,300		14,488,920
				50,096,029
Automobiles — 0.3%
Tesla Motors, Inc. (a)		25,960		4,900,469
Banks — 4.5%
BankUnited, Inc.		710,780		23,270,937
Regions Financial Corp.		2,288,343		21,624,841
SunTrust Banks, Inc.		343,530		14,115,648
Western Alliance Bancorp (a)		444,286		13,168,637
				72,180,063
Beverages — 0.5%
Molson Coors Brewing Co., Class B		118,300		8,807,435
Biotechnology — 2.1%
BioMarin Pharmaceutical, Inc. (a)		44,615		5,559,921
Incyte Corp. (a)		132,000		12,099,120
Isis Pharmaceuticals, Inc. (a)		66,500		4,234,055
Receptos, Inc. (a)		35,800		5,903,062
Vertex Pharmaceuticals, Inc. (a)		46,600		5,497,402
				33,293,560
Capital Markets — 1.8%
Evercore Partners, Inc., Class A		189,200		9,774,072
WisdomTree Investments, Inc.		903,127		19,381,105
				29,155,177
Chemicals — 5.0%
Ashland, Inc.		110,500		14,067,755
Axalta Coating Systems Ltd. (a)		447,500		12,359,950
Cytec Industries, Inc.		212,780		11,498,631
Eastman Chemical Co.		174,900		12,113,574
Platform Specialty Products Corp. (a)		607,339		15,584,319
The Valspar Corp.		175,540		14,750,626
				80,374,855
Communications Equipment — 1.0%
Finisar Corp. (a)		365,000		7,789,100
JDS Uniphase Corp. (a)		583,200		7,651,584
				15,440,684
Consumer Finance — 0.9%
Discover Financial Services		262,900		14,814,415
Containers & Packaging — 1.4%
Crown Holdings, Inc. (a)		406,750		21,972,635
Electric Utilities — 1.6%
PPL Corp.		216,400		7,284,024
Xcel Energy, Inc.		559,400		19,472,714
				26,756,738
Electrical Equipment — 1.1%
Acuity Brands, Inc.		58,430		9,825,589
Sensata Technologies Holding NV (a)		145,400		8,353,230
				18,178,819

Common Stocks	Shares		Value
Electronic Equipment, Instruments & Components — 1.4%
Amphenol Corp., Class A	174,660	$	10,292,714
CDW Corp.	325,900		12,136,516
			22,429,230
Energy Equipment & Services — 0.4%
U.S. Silica Holdings, Inc. (b)	164,900		5,872,089
Food Products — 2.9%
The Hain Celestial Group, Inc. (a)	302,402		19,368,848
Hormel Foods Corp.	218,200		12,404,670
Pinnacle Foods, Inc.	374,200		15,271,102
			47,044,620
Health Care Equipment & Supplies — 2.8%
Boston Scientific Corp. (a)	549,700		9,757,175
The Cooper Cos., Inc.	61,170		11,464,481
Edwards Lifesciences Corp. (a)	118,300		16,853,018
Intuitive Surgical, Inc. (a)	15,000		7,575,450
			45,650,124
Health Care Providers & Services — 3.7%
AmerisourceBergen Corp.	74,200		8,434,314
Cardinal Health, Inc.	110,100		9,938,727
Cigna Corp.	89,647		11,603,908
HCA Holdings, Inc. (a)	127,560		9,596,339
Humana, Inc.	33,100		5,892,462
Universal Health Services, Inc., Class B	121,090		14,253,504
			59,719,254
Health Care Technology — 0.4%
Inovalon Holdings, Inc., Class A (a)	237,100		7,162,791
Hotels, Restaurants & Leisure — 1.8%
Aramark	327,500		10,358,825
Belmond Ltd., Class A (a)	823,405		10,111,413
ClubCorp Holdings, Inc.	418,100		8,094,416
			28,564,654
Household Durables — 2.4%
Jarden Corp. (a)	530,620		28,069,798
Toll Brothers, Inc. (a)	273,355		10,753,786
			38,823,584
Household Products — 0.9%
Energizer Holdings, Inc.	100,800		13,915,440
Independent Power and Renewable Electricity Producers — 0.5%
Pattern Energy Group, Inc.	310,899		8,804,660
Industrial Conglomerates — 1.3%
Roper Industries, Inc.	124,320		21,383,040
Insurance — 3.0%
Assured Guaranty Ltd.	491,900		12,981,241
The Hartford Financial Services Group, Inc.	541,000		22,624,620
Reinsurance Group of America, Inc.	147,320		13,728,751
			49,334,612
Internet & Catalog Retail — 0.7%
Liberty Interactive Corp., Class A (a)	383,000		11,179,770
Internet Software & Services — 4.4%
comScore, Inc. (a)	208,305		10,665,216
Hortonworks, Inc. (a)(b)	121,416		2,894,557
Hortonworks, Inc. (Acquired 3/21/14, cost $14,233,594) (a)(c)	583,961		13,225,549
LendingClub Corp. (a)	177,500		3,487,875
LendingClub Corp. (Acquired 12/12/14, cost $4,571,285) (a)(c)	449,432		8,389,772
LinkedIn Corp., Class A (a)	28,700		7,170,982
New Relic, Inc. (a)	70,000		2,429,000

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 39

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

Common Stocks	Shares		Value
Internet Software & Services (concluded)
New Relic, Inc. (Acquired 12/15/14, cost $9,551,576) (a)(c)		337,036	$	11,110,392
Pandora Media, Inc. (a)		440,800		7,145,368
Zillow Group, Inc., Class A (a)		51,400		5,155,420
				71,674,131
IT Services — 3.1%
Alliance Data Systems Corp. (a)		55,660		16,489,275
Euronet Worldwide, Inc. (a)		252,873		14,856,289
Fidelity National Information Services, Inc.		274,120		18,656,607
				50,002,171
Leisure Products — 0.4%
Performance Sports Group Ltd. (a)		325,200		6,341,400
Life Sciences Tools & Services — 2.7%
Agilent Technologies, Inc.		197,400		8,201,970
Charles River Laboratories International, Inc. (a)		209,400		16,603,326
Illumina, Inc. (a)		38,330		7,115,581
Thermo Fisher Scientific, Inc.		92,340		12,404,956
				44,325,833
Machinery — 2.9%
Crane Co.		126,500		7,894,865
Snap-on, Inc.		148,470		21,833,998
Stanley Black & Decker, Inc.		176,500		16,831,040
				46,559,903
Media — 2.8%
The E.W. Scripps Co., Class A (a)		250,400		7,121,376
Markit Ltd. (a)		326,500		8,782,850
Media General, Inc. (a)		112,663		1,857,813
Nexstar Broadcasting Group, Inc., Class A		146,900		8,405,618
Sirius XM Holdings, Inc. (a)		4,040,180		15,433,488
Tribune Media Co., Class A		74,000		4,499,940
				46,101,085
Metals & Mining — 0.6%
Constellium NV, Class A (a)		447,472		9,092,631
Oil, Gas & Consumable Fuels — 3.6%
Concho Resources, Inc. (a)		141,080		16,353,994
Diamondback Energy, Inc. (a)		86,500		6,646,660
GasLog Ltd.		334,900		6,503,758
GasLog Partners LP		285,000		7,011,000
MarkWest Energy Partners LP — MLP		103,000		6,808,300
Oasis Petroleum, Inc. (a)		363,300		5,166,126
Penn Virginia Corp. (a)		535,600		3,470,688
Targa Resources Partners LP — MLP		169,800		7,022,928
				58,983,454
Pharmaceuticals — 3.1%
Mallinckrodt PLC (a)		170,700		21,619,155
Mylan NV (a)		184,600		10,956,010
Perrigo Co. PLC		107,900		17,862,845
				50,438,010
Professional Services — 1.3%
Equifax, Inc.		220,460		20,502,780
Real Estate Investment Trusts (REITs) — 6.3%
Brixmor Property Group, Inc.		276,300		7,335,765
Hospitality Properties Trust		442,940		14,612,590
Host Hotels & Resorts, Inc.		647,300		13,062,514
InfraREIT, Inc.		481,100		13,754,649
Liberty Property Trust		298,800		10,667,160
RLJ Lodging Trust		459,850		14,397,903

Common Stocks	Shares		Value
Real Estate Investment Trusts (REITs) (concluded)
STAG Industrial, Inc.		576,000	$	13,547,520
Weyerhaeuser Co.		433,313		14,364,326
				101,742,427
Real Estate Management & Development — 1.3%
Kennedy-Wilson Holdings, Inc.		788,900		20,621,846
Semiconductors & Semiconductor Equipment — 4.4%
Applied Materials, Inc.		489,500		11,043,120
Avago Technologies Ltd.		134,818		17,119,190
Canadian Solar, Inc. (a)		180,400		6,023,556
Maxim Integrated Products, Inc.		338,706		11,790,356
NXP Semiconductor NV (a)		163,090		16,367,712
Synaptics, Inc. (a)		111,800		9,089,899
				71,433,833
Software — 2.2%
Autodesk, Inc. (a)		196,000		11,493,440
ServiceNow, Inc. (a)		152,300		11,998,194
Tableau Software, Inc., Class A (a)		138,900		12,851,028
				36,342,662
Specialty Retail — 2.6%
Best Buy Co., Inc.		250,200		9,455,058
Cabela’s, Inc. (a)		213,000		11,923,740
Genesco, Inc. (a)		109,990		7,834,588
L Brands, Inc.		132,600		12,502,854
				41,716,240
Textiles, Apparel & Luxury Goods — 2.9%
Kate Spade & Co. (a)		271,600		9,068,724
PVH Corp.		71,230		7,590,269
Ralph Lauren Corp.		43,400		5,707,100
Sequential Brands Group, Inc. (a)(d)		2,327,900		24,908,530
				47,274,623
Thrifts & Mortgage Finance — 1.0%
Essent Group Ltd. (a)		393,100		9,399,021
Strategic Growth Bancorp (Acquired 3/10/14,cost $7,599,729) (a)(c)		610,420		6,458,244
				15,857,265
Trading Companies & Distributors — 0.6%
United Rentals, Inc. (a)		114,075		10,399,077
Transportation Infrastructure — 1.0%
Macquarie Infrastructure Co. LLC		204,900		16,861,221
Wireless Telecommunication Services — 1.3%
SBA Communications Corp., Class A (a)		130,330		15,261,643
T-Mobile U.S., Inc. (a)		162,300		5,143,287
				20,404,930
Total Common Stocks — 96.8%				1,568,009,223
Investment Companies
Equity Funds — 0.7%
Vanguard REIT ETF		135,500		11,391,485

See Notes to Financial Statements.

40 BLACKROCK FUNDS MARCH 31, 2015

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

Preferred Stocks	Shares		Value
Internet Software & Services — 0.9%
Uber Technologies, Inc., Series D (Acquired 6/06/14, cost $5,217,970) (a)(c)		336,360	$	11,426,216
Zuora, Inc. (Acquired 1/16/15, cost $3,742,311) (a)(c)		985,000		3,826,922
				15,253,138
Software — 1.0%
MongoDB, Series C (Acquired 12/19/13, cost $7,974,602) (a)(c)		317,888		7,212,879
MongoDB, Series D (Acquired 12/19/13, cost $2,480,799) (a)(c)		98,891		2,210,214
MongoDB, Series E (Acquired 12/19/13, cost $87,676) (a)(c)		3,495		76,086
Palantir Technologies, Inc., Series I (Acquired 2/07/14, cost $4,300,011) (a)(c)		701,470		6,236,068
				15,735,247
Total Preferred Stocks — 1.9%				30,988,385
Total Long-Term Investments (Cost — $1,162,956,354) — 99.4%				1,610,389,093

Short-Term Securities	Shares		Value
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.06% (e)		2,372,653	$	2,372,653
	Beneficial Interest   (000)
BlackRock Liquidity Series, LLC, Money Market Series, 0.22% (e)(f)(g)	$	4,470		4,470,214
Total Short-Term Securities (Cost — $6,842,867) — 0.4%				6,842,867
Total Investments (Cost — $1,169,799,221) — 99.8%				1,617,231,960
Other Assets Less Liabilities — 0.2%				3,991,771
Net Assets — 100.0%			$	1,621,223,731

Notes to Schedule of Investments

(a) Non-income producing security.

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

(c) Restricted security as to resale. As of report date, the Fund held restricted securities with a current value of $70,172,342 and an original cost of $59,759,553, which was 4.3% of its net assets.

(d) During the six months ended March 31, 2015, investments in issuers (whereby the Fund held 5% or more of the companies’ outstanding securities) that were considered to be an affiliate 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, 2014		Shares Purchased	Shares Sold		Shares Held at March 31 2015		Value at March 31, 2015
Sequential Brands Group, Inc.		2,327,900	—		—		2,327,900	$	24,908,530

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

(f) During the six months ended March 31, 2015, investments in issuers considered to be affiliates of the Fund 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, 2014		Net Activity			Shares/ Beneficial Interest Held at March 31, 2015		Income		Realized Gain
BlackRock Liquidity Funds, TempFund, Institutional Class		73,708,080		(71,335,427	)		2,372,653	$	9,016	$	3,550
BlackRock Liquidity Series, LLC, Money Market Series	$	8,060,661	$	(3,590,447	)	$	4,470,214	$	85,508		—

(g) Security was purchased with the cash collateral from loaned securities. The Fund may withdraw up to 25% of its investment daily, although the manager of the BlackRock Liquidity Series, LLC, Money Market Series, in its sole discretion, may permit an investor to withdraw more than 25% on any one day.

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 41

Schedule of Investments (continued) BlackRock U.S. Opportunities Portfolio

Ÿ 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 the investment advisor. These definitions may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

Ÿ Fair Value Measurements — Various inputs are used in determining the fair value of investments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. 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. The three levels of the fair value hierarchy are as follows:

Ÿ Level 1 – unadjusted quoted prices in active markets/exchanges for identical assets or liabilities that the Fund has the ability to access

Ÿ 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)

Ÿ 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. In accordance with the Fund’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. For information about the Fund’s policy regarding valuation of investments, refer to Note 2 of the Notes to Financial Statements.

As of March 31, 2015, the following table summarizes the Fund’s investments categorized in the disclosure hierarchy:

	Level 1		Level 2		Level 3		Total
Assets:
Investments:
Long-Term Investments:
Common Stocks:
Aerospace & Defense	$	18,335,672		—		—	$	18,335,672
Airlines		27,143,282		—		—		27,143,282
Auto Components		50,096,029		—		—		50,096,029
Automobiles		4,900,469		—		—		4,900,469
Banks		72,180,063		—		—		72,180,063
Beverages		8,807,435		—		—		8,807,435
Biotechnology		33,293,560		—		—		33,293,560
Capital Markets		29,155,177		—		—		29,155,177
Chemicals		80,374,855		—		—		80,374,855
Communications Equipment		15,440,684		—		—		15,440,684
Consumer Finance		14,814,415		—		—		14,814,415
Containers & Packaging		21,972,635		—		—		21,972,635
Electric Utilities		26,756,738		—		—		26,756,738
Electrical Equipment		18,178,819		—		—		18,178,819
Electronic Equipment, Instruments & Components		22,429,230		—		—		22,429,230
Energy Equipment & Services		5,872,089		—		—		5,872,089
Food Products		47,044,620		—		—		47,044,620
Health Care Equipment & Supplies		45,650,124		—		—		45,650,124
Health Care Providers & Services		59,719,254		—		—		59,719,254
Health Care Technology		7,162,791		—		—		7,162,791
Hotels, Restaurants & Leisure		28,564,654		—		—		28,564,654
Household Durables		38,823,584		—		—		38,823,584
Household Products		13,915,440		—		—		13,915,440
Independent Power and Renewable Electricity Producers		8,804,660		—		—		8,804,660
Industrial Conglomerates		21,383,040		—		—		21,383,040
Insurance		49,334,612		—		—		49,334,612
Internet & Catalog Retail		11,179,770		—		—		11,179,770
Internet Software & Services		38,948,418	$	32,725,713		—		71,674,131
IT Services		50,002,171		—		—		50,002,171
Leisure Products		6,341,400		—		—		6,341,400
Life Sciences Tools & Services		44,325,833		—		—		44,325,833
Machinery		46,559,903		—		—		46,559,903
Media.		46,101,085		—		—		46,101,085
Metals & Mining		9,092,631		—		—		9,092,631
Oil, Gas & Consumable Fuels		58,983,454		—		—		58,983,454

See Notes to Financial Statements.

42 BLACKROCK FUNDS MARCH 31, 2015

Schedule of Investments (continued) BlackRock U.S. Opportunities Portfolio

	Level 1		Level 2		Level 3		Total
Pharmaceuticals	$	50,438,010		—		—	$	50,438,010
Professional Services		20,502,780		—		—		20,502,780
Real Estate Investment Trusts (REITs)		101,742,427		—		—		101,742,427
Real Estate Management & Development		20,621,846		—		—		20,621,846
Semiconductors & Semiconductor Equipment		71,433,833		—		—		71,433,833
Software		36,342,662		—		—		36,342,662
Specialty Retail		41,716,240		—		—		41,716,240
Textiles, Apparel & Luxury Goods		47,274,623		—		—		47,274,623
Thrifts & Mortgage Finance		9,399,021		—	$	6,458,244		15,857,265
Trading Companies & Distributors		10,399,077		—		—		10,399,077
Transportation Infrastructure		16,861,221		—		—		16,861,221
Wireless Telecommunication Services		20,404,930		—		—		20,404,930
Investment Companies		11,391,485		—		—		11,391,485
Preferred Stocks:
Internet Software & Services		—		—		15,253,138		15,253,138
Software		—		—		15,735,247		15,735,247
Short-Term Securities		2,372,653	$	4,470,214		—		6,842,867
Total	$	1,542,589,404	$	37,195,927	$	37,446,629	$	1,617,231,960

The Fund may hold assets and/or liabilities in which the fair value approximates the carrying amount for financial statement purposes. As of March 31, 2015, collateral on securities loaned at value of $4,470,214 is categorized as Level 2 within the disclosure hierarchy.

During the period ended March 31, 2015, there were no transfers between Level 1 and Level 2.

A reconciliation of Level 3 investments is presented when the Fund had a significant amount of Level 3 investments at the beginning and/or end of the period in relation to net assets. The following table is a reconciliation of Level 3 investments for which significant unobservable inputs were used in determining fair value:

	Common Stocks			Preferred Stocks			Total
Assets:
Opening Balance, as of September 30, 2014	$	7,756,059		$	47,325,756		$	55,081,815
Transfers into Level 3		—			—			—
Transfers out of Level 31		(28,476,941	)					(28,476,941	)
Other2		27,759,025			(27,759,025	)		—
Accrued discounts/premiums		—			—			—
Net realized gain (loss)		—			—			—
Net change in unrealized appreciation/depreciation3,4		(579,899	)		7,679,343			7,099,444
Purchases		—			3,742,311			3,742,311
Sales		—			—			—
Closing Balance, as of March 31, 2015	$	6,458,244		$	30,988,385		$	37,446,629
Net change in unrealized appreciation/depreciation on investments still held at March 31, 20154	$	(579,899	)	$	7,679,343		$	7,099,444

¹  As of September 30, 2014, the Fund used significant unobservable inputs in determining the value of certain investments. As of March 31, 2015, the Fund used observable inputs in determining the value of the same investments. As a result, investments with a beginning period value of $28,476,941 transferred from Level 3 to Level 2 in the disclosure hierarchy.

²  Certain Level 3 investments were re-classified between Common Stocks and Preferred Stocks.

³  Included in the related net change in unrealized appreciation/depreciation in the Statements of Operations.

⁴  Any difference between Net change in unrealized appreciation/depreciation and Net change in unrealized appreciation/depreciation on investments still held at March 31, 2015, is generally due to investments no longer held or categorized as Level 3 at period end.

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 43

Schedule of Investments (concluded) BlackRock U.S. Opportunities Portfolio

The following table summarizes the valuation techniques used and unobservable inputs utilized by the BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) to determine the value of certain of the Fund’s Level 3 investments as of March 31, 2015. The table does not include Level 3 investments with values based upon unadjusted third party pricing information in the amount of $6,458,244.

	Value		Valuation Techniques	Unobservable Inputs	Range of Unobservable Inputs Utilized
Assets:
Preferred Stocks1	$	17,662,284	Probability-Weighted Expected Return Model	Years to IPO2		0.75-2.9
				IPO Exit Probability3		90.00% - 95.00%
				Discount Rate2		21.30% - 22.31%
				Margin3		20.00%
				Revenue Multiple3		10.0x-16.0x
		3,826,922	Probability-Weighted Expected Return Model	Years to IPO2		1-2
				IPO Exit Probability3		75.00%
				Discount Rate2		20.00%
				Revenue Multiple3		8.0x
				Merger and/or Acquisition Probability3		25.00%
		9,499,179	Market Comparable Companies	2016 Revenue Multiple3		11.0x
			Options Pricing Model	Years to IPO2		1-2
				Risk Free Rate2		0.31%
				Volatility3		30.00%
Total	$	30,988,385

¹  For the period ended March 31, 2015, the valuation technique for certain investments classified as preferred stocks changed to a Probability-Weighted Expected Return Model. The investments were previously valued utilizing a market comparable company and option pricing model approach. A Probability-Weighted Expected Return Model was considered to be a more relevant measure of fair value for these investments which leverages the most recent equity raise pre-money valuation and secondary market transactions.

²  Decrease in unobservable input may result in a significant increase to value, while an increase in the unobservable input may result in a significant decrease to value.

³  Increase in unobservable input may result in a significant increase to value, while a decrease in the unobservable input may result in a significant decrease to value.

See Notes to Financial Statements.

44 BLACKROCK FUNDS MARCH 31, 2015

Statements of Assets and Liabilities

March 31, 2015 (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	$	306,603,110		$	5,477,803,854		$	1,102,078,748		$	235,638,754		$	1,610,389,093
Investments at value — affiliated3		4,279,087			130,202,388			7,228,512			3,881,225			6,842,867
Cash pledged as collateral for options written		—			11,387,775			—			718,200			—
Foreign currency at value4		2,795,824			67,343,198			111,499			546,693			—
Investments sold receivable		1,871,582			45,261,516			30,913,361			6,505,904			17,010,618
Options written receivable		—			—			—			85,989			—
Unrealized appreciation on forward foreign currency exchange contracts		1,178,015			17,983,614			12,130,410			154,316			—
Capital shares sold receivable		57,269			16,033,141			3,347,231			229,509			1,987,337
Dividends receivable — unaffiliated		592,997			5,172,478			3,417,712			73,961			2,201,637
Dividends receivable — affiliated		128			9,258			598			350			704
Receivable from Manager		60,815			—			113			116			220,716
Securities lending income receivable — affiliated		6,619			8,184			7,938			929			34,917
Prepaid expenses		44,812			151,210			56,902			57,834			65,397
Total assets		317,490,258			5,771,356,616			1,159,293,024			247,893,780			1,638,753,286
Liabilities
Options written at value5		—			144,838			—			183,462			—
Collateral on securities loaned at value		1,974,042			7,494,299			1,430,717			26,200			4,470,214
Deferred foreign capital gain tax payable		190,246			—			693,325			205,810			—
Investments purchased payable		486,602			119,910,833			2,561,716			7,135,916			7,430,348
Unrealized depreciation on forward foreign currency exchange contracts		940,698			8,136,893			13,301,833			58,027			—
Capital shares redeemed payable		251,405			11,058,648			7,077,835			383,133			2,772,699
Investment advisory fees payable		236,983			3,206,355			885,892			205,966			1,133,670
Service and distribution fees payable		87,666			1,584,579			214,368			62,771			297,901
Other affiliates payable		12,255			318,334			118,253			23,392			155,797
Officer’s and Trustees’ fees payable		3,104			20,345			14,842			2,054			11,821
Other accrued expenses payable		254,653			1,554,683			1,036,313			241,705			1,257,105
Total liabilities		4,437,654			153,429,807			27,335,094			8,528,436			17,529,555
Net Assets	$	313,052,604		$	5,617,926,809		$	1,131,957,930		$	239,365,344		$	1,621,223,731
Net Assets Consist of
Paid-in capital	$	356,546,565		$	3,466,076,635		$	1,016,853,690		$	183,518,665		$	1,102,422,320
Accumulated (distributions in excess of) net investment income (loss)		(3,170,662	)		(14,305,702	)		(19,429,189	)		(3,392,221	)		(893,647	)
Accumulated net realized gain (loss)		(88,153,156	)		370,899,893			(3,313,297	)		(10,128,102	)		72,262,319
Net unrealized appreciation/depreciation		47,829,857			1,795,255,983			137,846,726			69,367,002			447,432,739
Net Assets	$	313,052,604		$	5,617,926,809		$	1,131,957,930		$	239,365,344		$	1,621,223,731
1       Investments at cost — unaffiliated	$	258,798,269		$	3,692,087,079		$	962,132,301		$	166,240,668		$	1,162,956,354
2       Securities loaned at value	$	1,947,265		$	7,043,505		$	1,334,135		$	24,817		$	4,430,030
3       Investments at cost — affiliated	$	4,279,087		$	130,202,388		$	7,228,512		$	3,881,225		$	6,842,867
4       Foreign currency at cost	$	2,796,205		$	67,701,240		$	112,945		$	546,581			—
5       Premiums received		—		$	339,405			—		$	256,144			—

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 45

Statements of Assets and Liabilities (concluded)

March 31, 2015 (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	$	65,734,276	$	1,518,558,187	$	507,227,238	$	60,260,829	$	918,604,856
Shares outstanding1		4,501,621		26,918,256		14,847,158		3,736,812		22,198,818
Net asset value	$	14.60	$	56.41	$	34.16	$	16.13	$	41.38
Service
Net assets		—	$	35,983,372	$	25,367,726	$	1,393,929	$	32,154,117
Shares outstanding1		—		658,926		775,863		90,104		817,021
Net asset value		—	$	54.61	$	32.70	$	15.47	$	39.36
Investor A
Net assets	$	186,952,886	$	2,799,471,211	$	482,335,528	$	135,403,639	$	434,899,852
Shares outstanding1		12,921,126		51,415,274		14,923,428		8,916,047		11,386,805
Net asset value	$	14.47	$	54.45	$	32.32	$	15.19	$	38.19
Investor B
Net assets	$	1,440,974	$	19,826,452	$	2,416,864	$	989,721	$	10,182,222
Shares outstanding1		101,809		392,138		81,419		73,523		317,008
Net asset value	$	14.15	$	50.56	$	29.68	$	13.46	$	32.12
Investor C
Net assets	$	48,674,958	$	1,124,315,609	$	114,610,574	$	36,533,972	$	225,382,684
Shares outstanding1		3,472,663		22,614,806		3,912,870		2,722,473		7,016,993
Net asset value	$	14.02	$	49.72	$	29.29	$	13.42	$	32.12
Class R
Net assets	$	10,249,510	$	119,771,978		—	$	4,783,254		—
Shares outstanding1		710,976		2,221,411		—		309,565		—
Net asset value	$	14.42	$	53.92		—	$	15.45		—

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

See Notes to Financial Statements.

46 BLACKROCK FUNDS MARCH 31, 2015

Statements of Operations

Six Months Ended March 31, 2015 (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 — unaffiliated	$	2,206,405		$	26,276,127		$	11,500,033		$	732,386		$	8,358,961
Dividends — affiliated		1,028			29,999			2,254			993			9,016
Securities lending — affiliated — net		41,286			51,703			97,820			15,577			85,508
Foreign taxes withheld		(154,514	)		(861,274	)		(1,252,364	)		(7,170	)		—
Total income		2,094,205			25,496,555			10,347,743			741,786			8,453,485
Expenses
Investment advisory		1,407,102			16,624,030			6,466,851			1,008,795			8,406,976
Service and distribution — class specific		515,878			8,196,423			1,355,907			345,910			1,752,807
Transfer agent — class specific		244,129			2,489,053			1,266,077			273,897			1,192,085
Administration		92,243			1,127,235			355,523			65,476			406,289
Professional		47,948			42,022			50,741			35,256			46,833
Custodian		38,399			97,560			156,177			17,599			40,038
Administration — class specific		35,269			431,468			142,383			25,165			167,838
Registration		30,914			95,520			53,277			38,414			47,574
Accounting services		22,571			271,917			75,124			17,629			69,923
Printing		10,871			65,987			46,630			8,648			32,955
Officer and Trustees		6,626			60,968			24,017			5,076			23,844
Miscellaneous		15,051			39,624			28,303			11,938			18,241
Recoupment of past waived and/or reimbursed fees — class specific		—			—			1,675			23,422			9,265
Total expenses		2,467,001			29,541,807			10,022,685			1,877,225			12,214,668
Less fees waived by Manager		(15,202	)		(39,085	)		(656,842	)		(1,088	)		(2,022,413	)
Less administration fees waived — class specific		(35,269	)		—			(15,237	)		(6,821	)		(141,510	)
Less transfer agent fees waived — class specific		(7,408	)		—			(1,602	)		(1,645	)		(9,569	)
Less transfer agent fees reimbursed — class specific		(187,933	)		—			(1,676	)		(1,402	)		(662,870	)
Total expenses after fees waived and/or reimbursed		2,221,189			29,502,722			9,347,328			1,866,269			9,378,306
Net investment income (loss)		(126,984	)		(4,006,167	)		1,000,415			(1,124,483	)		(924,821	)
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from:
Investments		4,581,648			379,358,269			(6,735,398	)		7,849,149			83,301,733
Capital gain distributions received from affiliated investment companies		—			7,875			—			—			3,550
Options written		—			285,157			—			41,146			—
Foreign currency transactions		1,575,609			4,853,357			6,911,650			404,523			—
		6,157,257			384,504,658			176,252			8,294,818			83,305,283
Net change in unrealized appreciation/depreciation on:
Investments		8,443,528	1		510,198,146			13,598,949	1		18,445,291	1		94,439,285
Options written		—			194,567			—			72,682			—
Foreign currency translations		(781,514	)		(875,342	)		(9,895,874	)		(293,778	)		—
		7,662,014			509,517,371			3,703,075			18,224,195			94,439,285
Net realized and unrealized gain		13,819,271			894,022,029			3,879,327			26,519,013			177,744,568
Net Increase in Net Assets Resulting from Operations	$	13,692,287		$	890,015,862		$	4,879,742		$	25,394,530		$	176,819,747

¹  Net of ($190,246, $693,325 and $205,810) foreign capital gain tax for Global Opportunities, International Opportunities and Science & Technology Opportunities, respectively.

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 47

Statements of Changes in Net Assets

	BlackRock Global Opportunities Portfolio						BlackRock Health Sciences Opportunities Portfolio
Increase (Decrease) in Net Assets:	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30, 2014			Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30, 2014
Operations
Net investment income (loss)	$	(126,984	)	$	1,572,501		$	(4,006,167	)	$	(5,669,420	)
Net realized gain		6,157,257			31,453,698			384,504,658			356,507,986
Net change in unrealized appreciation/depreciation		7,662,014			(14,244,616	)		509,517,371			504,697,663
Net increase in net assets resulting from operations		13,692,287			18,781,583			890,015,862			855,536,229
Distributions to Shareholders From1
Net investment income:
Institutional		(1,182,326	)		—			(3,636,341	)		(2,684,586	)
Service		—			—			(7,864	)		(15,999	)
Investor A		(2,755,653	)		—			(969,029	)		(1,334,162	)
Investor C		(299,620	)		—			—			—
Class R		(109,637	)		—			—			—
Net realized gain:
Institutional		—			—			(81,656,297	)		(73,784,321	)
Service		—			—			(2,189,953	)		(2,296,130	)
Investor A		—			—			(152,909,044	)		(159,449,440	)
Investor B		—			—			(1,328,584	)		(3,350,382	)
Investor C		—			—			(61,611,824	)		(60,490,412	)
Class R		—			—			(5,828,156	)		(3,720,373	)
Decrease in net assets resulting from distributions to shareholders		(4,347,236	)		—			(310,137,092	)		(307,125,805	)
Capital Share Transactions
Net increase (decrease) in net assets derived from capital share transactions		(15,773,200	)		(38,945,315	)		893,295,462			517,643,012
Net Assets
Total increase (decrease) in net assets		(6,428,149	)		(20,163,732	)		1,473,174,232			1,066,053,436
Beginning of period		319,480,753			339,644,485			4,144,752,577			3,078,699,141
End of period	$	313,052,604		$	319,480,753		$	5,617,926,809		$	4,144,752,577
Undistributed (accumulated) net investment income (loss), end of period	$	(3,170,662	)	$	1,303,558		$	(14,305,702	)	$	(5,686,301	)

¹  Distributions for annual periods determined in accordance with federal income tax regulations.

See Notes to Financial Statements.

48 BLACKROCK FUNDS MARCH 31, 2015

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, 2015 (Unaudited)			Year Ended September 30, 2014			Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30, 2014			Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30, 2014
Operations
Net investment income (loss)	$	1,000,415		$	17,062,650		$	(1,124,483	)	$	(2,371,646	)	$	(924,821	)	$	(8,010,488	)
Net realized gain		176,252			116,647,309			8,294,818			24,040,750			83,305,283			294,616,993
Net change in unrealized appreciation/depreciation		3,703,075			(125,627,644	)		18,224,195			5,667,184			94,439,285			(50,830,763	)
Net increase in net assets resulting from operations		4,879,742			8,082,315			25,394,530			27,336,288			176,819,747			235,775,742
Distributions to Shareholders From1
Net investment income:
Institutional		(14,511,734	)		(1,532,662	)		—			—			—			—
Service		(656,317	)		(48,294	)		—			—			—			—
Investor A		(13,763,636	)		(919,073	)		—			—			—			—
Investor B		(46,718	)		—			—			—			—			—
Investor C		(2,388,654	)		—			—			—			—			—
Net realized gain:
Institutional		(58,313,799	)		(2,005,514	)		—			—			(119,058,466	)		(134,711,811	)
Service		(2,959,800	)		(101,390	)		—			—			(4,386,546	)		(31,011,668	)
Investor A		(62,289,732	)		(1,953,372	)		—			—			(63,008,538	)		(103,656,072	)
Investor B		(313,352	)		(14,262	)		—			—			(1,680,434	)		(2,930,164	)
Investor C		(14,061,426	)		(410,265	)		—			—			(34,791,331	)		(47,392,290	)
Decrease in net assets resulting from distributions to shareholders		(169,305,168	)		(6,984,832	)		—			—			(222,925,315	)		(319,702,005	)
Capital Share Transactions
Net increase (decrease) in net assets derived from capital share transactions		(264,289,686	)		(164,685,699	)		1,964,199			15,083,112			148,325,942			33,482,653
Net Assets
Total increase (decrease) in net assets		(428,715,112	)		(163,588,216	)		27,358,729			42,419,400			102,220,374			(50,443,610	)
Beginning of period		1,560,673,042			1,724,261,258			212,006,615			169,587,215			1,519,003,357			1,569,446,967
End of period	$	1,131,957,930		$	1,560,673,042		$	239,365,344		$	212,006,615		$	1,621,223,731		$	1,519,003,357
Undistributed (distributions in excess of) net investment income (loss), end of period	$	(19,429,189	)	$	10,937,455		$	(3,392,221	)	$	(2,267,738	)	$	(893,647	)	$	31,174

¹  Distributions for annual periods determined in accordance with federal income tax regulations.

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 49

Financial Highlights BlackRock Global Opportunities Portfolio

	Institutional
	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	14.19		$	13.42		$	11.11		$	9.32		$	10.52		$	10.13
Net investment income1		0.02			0.12			0.10			0.14			0.08			0.06
Net realized and unrealized gain (loss)		0.64			0.65			2.36			1.67			(1.20	)2		0.48	2
Net increase (decrease) from investment operations		0.66			0.77			2.46			1.81			(1.12	)		0.54
Distributions from net investment income3		(0.25	)		—			(0.15	)		(0.02	)		(0.08	)		(0.15	)
Net asset value, end of period	$	14.60		$	14.19		$	13.42		$	11.11		$	9.32		$	10.52
Total Return4
Based on net asset value		4.77	%5		5.74	%		22.40	%		19.45	%		(10.81	)%6		5.32	%6
Ratios to Average Net Assets
Total expenses		1.21	%7		1.20	%		1.22	%		1.25	%		1.53	%8		1.43	%8
Total expenses after fees waived and/or reimbursed and paid indirectly		1.06	%7		1.06	%		1.06	%		1.06	%		1.34	%		1.37	%
Net investment income		0.29	%7		0.82	%		0.83	%		1.35	%		0.68	%		0.64	%
Supplemental Data
Net assets, end of period (000)	$	65,734		$	61,601		$	63,182		$	54,448		$	58,793		$	21,699
Portfolio turnover rate		31	%		99	%		149	%		122	%		137	%		146	%

¹  Based on average shares outstanding.

²  Includes redemption fees, which are less than $0.005 per share.

³  Distributions for annual periods determined in accordance with federal income tax regulations.

⁴  Where applicable, assumes the reinvestment of distributions.

⁵  Aggregate total return.

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

⁷  Annualized.

⁸  Includes recoupment of past waived and/or reimbursed fees. Excluding the recoupment of past waived and/or reimbursed fees for the years ended September 30, 2011 and September 30, 2010 the ratio would have been 1.52% and 1.42%, respectively.

See Notes to Financial Statements.

50 BLACKROCK FUNDS MARCH 31, 2015

Financial Highlights (continued) BlackRock Global Opportunities Portfolio

	Investor A
	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	14.04		$	13.32		$	11.02		$	9.26		$	10.45		$	10.08
Net investment income1		0.00	2		0.08			0.07			0.11			0.05			0.03
Net realized and unrealized gain (loss)		0.64			0.64			2.35			1.66			(1.20	)3		0.46	3
Net increase (decrease) from investment operations		0.64			0.72			2.42			1.77			(1.15	)		0.49
Distributions from net investment income4		(0.21	)		—			(0.12	)		(0.01	)		(0.04	)		(0.12	)
Net asset value, end of period	$	14.47		$	14.04		$	13.32		$	11.02		$	9.26		$	10.45
Total Return5
Based on net asset value		4.63	%6		5.41	%		22.14	%		19.16	%		(11.11	)%7		4.92	%7
Ratios to Average Net Assets
Total expenses		1.49	%8		1.46	%		1.48	%		1.52	%		1.76	%9		1.72	%9
Total expenses after fees waived and/or reimbursed and paid indirectly		1.33	%8		1.33	%		1.33	%		1.33	%		1.61	%		1.67	%
Net investment income		0.01	%8		0.56	%		0.56	%		1.06	%		0.42	%		0.32	%
Supplemental Data
Net assets, end of period (000)	$	186,953		$	191,653		$	202,343		$	195,961		$	210,299		$	39,280
Portfolio turnover rate		31	%		99	%		149	%		122	%		137	%		146	%

¹  Based on average shares outstanding.

²  Amount is less than $0.005 per share.

³  Includes redemption fees, which are less than $0.005 per share.

⁴  Distributions for annual periods determined in accordance with federal income tax regulations.

⁵  Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

⁶  Aggregate total return.

⁷  Redemption fee of 2.00% is reflected in total return calculations. There was no impact to the return.

⁸  Annualized.

⁹  Includes recoupment of past waived and/or reimbursed fees. Excluding the recoupment of past waived and/or reimbursed fees for the years ended September 30, 2011 and September 30, 2010 the ratio would have been 1.74% and 1.70%, respectively.

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 51

Financial Highlights (continued) BlackRock Global Opportunities Portfolio

	Investor B
	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	13.59		$	12.99		$	10.75		$	9.10		$	10.31		$	9.93
Net investment income (loss)1		(0.06	)		(0.03	)		(0.03	)		0.02			(0.04	)		(0.04	)
Net realized and unrealized gain (loss)		0.62			0.63			2.28			1.63			(1.17	)2		0.45	2
Net increase (decrease) from investment operations		0.56			0.60			2.25			1.65			(1.21	)		0.41
Distributions from net investment income3		—			—			(0.01	)		—			—			(0.03	)
Net asset value, end of period	$	14.15		$	13.59		$	12.99		$	10.75		$	9.10		$	10.31
Total Return4
Based on net asset value		4.12	%5		4.62	%		20.95	%		18.13	%		(11.74	)%6		4.09	%6
Ratios to Average Net Assets
Total expenses		2.60	%7		2.21	%8		2.19	%8		2.21	%8		2.56	%8		2.45	%8
Total expenses after fees waived and/or reimbursed and paid indirectly		2.18	%7		2.18	%		2.18	%		2.18	%		2.42	%		2.43	%
Net investment income (loss)		(0.87	)%7		(0.24	)%		(0.29	)%		0.21	%		(0.39	)%		(0.44	)%
Supplemental Data
Net assets, end of period (000)	$	1,441		$	1,900		$	4,254		$	5,412		$	6,750		$	3,617
Portfolio turnover rate		31	%		99	%		149	%		122	%		137	%		146	%

¹  Based on average shares outstanding.

²  Includes redemption fees, which are less than $0.005 per share.

³  Distributions for annual periods determined in accordance with federal income tax regulations.

⁴  Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

⁵  Aggregate total return.

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

⁷  Annualized.

⁸  Includes recoupment of past waived and/or reimbursed fees. Excluding the recoupment of past waived and/or reimbursed fees for the years ended September 30, 2012 and September 30, 2011, the ratio would have been 2.20% and 2.53%, respectively. There was no financial impact to the expense ratios for the years ended September 30, 2014, September 30, 2013 and September 30, 2010.

See Notes to Financial Statements.

52 BLACKROCK FUNDS MARCH 31, 2015

Financial Highlights (continued) BlackRock Global Opportunities Portfolio

	Investor C
	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	13.54		$	12.94		$	10.71		$	9.06		$	10.27		$	9.91
Net investment income (loss)1		(0.05	)		(0.03	)		(0.03	)		0.03			(0.04	)		(0.04	)
Net realized and unrealized gain (loss)		0.61			0.63			2.28			1.62			(1.17	)2		0.45	2
Net increase (decrease) from investment operations		0.56			0.60			2.25			1.65			(1.21	)		0.41
Distributions from net investment income3		(0.08	)		—			(0.02	)		—			—			(0.05	)
Net asset value, end of period	$	14.02		$	13.54		$	12.94		$	10.71		$	9.06		$	10.27
Total Return4
Based on net asset value		4.19	%5		4.64	%		21.07	%		18.21	%		(11.78	)%6		4.13	%6
Ratios to Average Net Assets
Total expenses		2.28	%7		2.24	%		2.28	%		2.32	%		2.59	%8		2.49	%8
Total expenses after fees waived and/or reimbursed and paid indirectly		2.14	%7		2.14	%		2.14	%		2.14	%		2.42	%		2.44	%
Net investment income (loss)		(0.81	)%7		(0.25	)%		(0.25	)%		0.26	%		(0.38	)%		(0.40	)%
Supplemental Data
Net assets, end of period (000)	$	48,675		$	58,036		$	55,494		$	54,332		$	58,687		$	19,554
Portfolio turnover rate		31	%		99	%		149	%		122	%		137	%		146	%

¹  Based on average shares outstanding.

²  Includes redemption fees, which are less than $0.005 per share.

³  Distributions for annual periods determined in accordance with federal income tax regulations.

⁴  Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

⁵  Aggregate total return.

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

⁷  Annualized.

⁸  Includes recoupment of past waived and/or reimbursed fees. Excluding the recoupment of past waived and/or reimbursed fees for the year ended September 30, 2011 the ratio would have been 2.57% . There was no financial impact to the expense ratios for the year ended September 30, 2010.

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 53

Financial Highlights (concluded) BlackRock Global Opportunities Portfolio

	Class R
	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,									Period September 12, 20111 to September 30, 2011
				2014			2013			2012
Per Share Operating Performance
Net asset value, beginning of period	$	13.94		$	13.28		$	10.99		$	9.26		$	9.76
Net investment income (loss)2		(0.03	)		0.02			0.02			0.08			0.00	3
Net realized and unrealized gain (loss)		0.64			0.64			2.35			1.65			(0.50	)4
Net increase (decrease) from investment operations		0.61			0.66			2.37			1.73			(0.50	)
Distributions from net investment income5		(0.13	)		—			(0.08	)		(0.00	)6		—
Net asset value, end of period	$	14.42		$	13.94		$	13.28		$	10.99		$	9.26
Total Return7
Based on net asset value		4.47	%8		4.97	%		21.71	%		18.72	%		(4.83	)%8,9
Ratios to Average Net Assets
Total expenses		1.83	%10		1.81	%11		1.81	%11		1.80	%11		1.98	%10,11
Total expenses after fees waived and/or reimbursed and paid indirectly		1.72	%10		1.72	%		1.72	%		1.65	%		1.72	%10
Net investment income (loss)		(0.41	)%10		0.17	%		0.18	%		0.74	%		0.23	%10
Supplemental Data
Net assets, end of period (000)	$	10,250		$	12,483		$	14,371		$	14,704		$	14,891
Portfolio turnover rate		31	%		99	%		149	%		122	%		137	%

¹  Commencement of operations.

²  Based on average shares outstanding.

³  Amount is less than $0.005 per share.

⁴  Includes redemption fees, which are less than $0.005 per share.

⁵  Distributions for annual periods determined in accordance with federal income tax regulations.

⁶  Amount is greater than $(0.005) per share.

⁷  Where applicable, assumes the reinvestment of distributions.

⁸  Aggregate total return.

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

¹⁰  Annualized.

¹¹  Includes recoupment of past waived and/or reimbursed fees. Excluding the recoupment of past waived and/or reimbursed fees for the years ended September 30, 2013 and September 30, 2012, the ratio would have been 1.80% and 1.79%, respectively. There was no financial impact to the expense ratios for the year ended September 30, 2014 and the period ended September 30, 2011.

See Notes to Financial Statements.

54 BLACKROCK FUNDS MARCH 31, 2015

Financial Highlights BlackRock Health Sciences Opportunities Portfolio

	Institutional
	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	50.07		$	43.24		$	34.62		$	28.77		$	28.92		$	26.29
Net investment income1		0.05			0.09			0.20			0.15			0.02			0.06
Net realized and unrealized gain		9.86			10.94			10.82			7.26			1.23	2		2.57	2
Net increase from investment operations		9.91			11.03			11.02			7.41			1.25			2.63
Distributions from:3
Net investment income		(0.15	)		(0.15	)		(0.18	)		—			(0.05	)		—
Net realized gain		(3.42	)		(4.05	)		(2.22	)		(1.56	)		(1.35	)		—
Total distributions		(3.57	)		(4.20	)		(2.40	)		(1.56	)		(1.40	)		—
Net asset value, end of period	$	56.41		$	50.07		$	43.24		$	34.62		$	28.77		$	28.92
Total Return4
Based on net asset value		20.58	%5		27.74	%		34.07	%		27.06	%		4.41	%6		10.00	%6,7
Ratios to Average Net Assets
Total expenses		0.86	%8		0.91	%		0.94	%		0.98	%		1.00	%		1.00	%
Total expenses after fees waived and/or reimbursed and paid indirectly		0.86	%8		0.91	%		0.94	%		0.98	%		1.00	%		1.00	%
Net investment income		0.19	%8		0.20	%		0.54	%		0.47	%		0.07	%		0.21	%
Supplemental Data
Net assets, end of period (000)	$	1,518,558		$	1,141,938		$	748,148		$	473,193		$	362,292		$	232,697
Portfolio turnover rate		28	%		57	%		94	%		135	%		135	%		184	%

¹  Based on average shares outstanding.

²  Includes redemption fees, which are less than $0.005 per share.

³  Distributions for annual periods determined in accordance with federal income tax regulations.

⁴  Where applicable, assumes the reinvestment of distributions.

⁵  Aggregate 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 had no impact on the Fund’s total return.

⁸  Annualized.

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 55

Financial Highlights (continued) BlackRock Health Sciences Opportunities Portfolio

	Service
	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	48.51		$	42.02		$	33.72		$	28.05		$	28.22		$	25.74
Net investment income (loss)1		(0.03	)		(0.04	)		0.09			0.05			(0.07	)		(0.03	)
Net realized and unrealized gain		9.56			10.61			10.53			7.10			1.19	2		2.51	2
Net increase from investment operations		9.53			10.57			10.62			7.15			1.12			2.48
Distributions from:3
Net investment income		(0.01	)		(0.03	)		(0.10	)		—			—			—
Net realized gain		(3.42	)		(4.05	)		(2.22	)		(1.48	)		(1.29	)		—
Total distributions		(3.43	)		(4.08	)		(2.32	)		(1.48	)		(1.29	)		—
Net asset value, end of period	$	54.61		$	48.51		$	42.02		$	33.72		$	28.05		$	28.22
Total Return4
Based on net asset value		20.42	%5		27.36	%		33.68	%		26.73	%		4.04	%6		9.64	%6,7
Ratios to Average Net Assets
Total expenses		1.15	%8		1.21	%		1.23	%		1.28	%		1.32	%9		1.33	%
Total expenses after fees waived and/or reimbursed and paid indirectly		1.15	%8		1.20	%		1.23	%		1.28	%		1.31	%		1.32	%
Net investment income (loss)		(0.10	)%8		(0.08	)%		0.25	%		0.18	%		(0.24	)%		(0.12	)%
Supplemental Data
Net assets, end of period (000)	$	35,983		$	30,139		$	23,035		$	14,921		$	13,478		$	11,704
Portfolio turnover rate		28	%		57	%		94	%		135	%		135	%		184	%

¹  Based on average shares outstanding.

²  Includes redemption fees, which are less than $0.005 per share.

³  Distributions for annual periods determined in accordance with federal income tax regulations.

⁴  Where applicable, assumes the reinvestment of distributions.

⁵  Aggregate 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 had no impact on the Fund’s total return.

⁸  Annualized.

⁹  Includes recoupment of past waived and/or reimbursed fees. Excluding the recoupment of past waived and/or reimbursed fees for the year ended September 30, 2011 the ratio would have been 1.31%.

See Notes to Financial Statements.

56 BLACKROCK FUNDS MARCH 31, 2015

Financial Highlights (continued) BlackRock Health Sciences Opportunities Portfolio

	Investor A
	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	48.38		$	41.92		$	33.64		$	28.00		$	28.18		$	25.69
Net investment income (loss)1		(0.02	)		(0.03	)		0.09			0.05			(0.07	)		(0.03	)
Net realized and unrealized gain		9.53			10.57			10.51			7.07			1.19	2		2.52	2
Net increase from investment operations		9.51			10.54			10.60			7.12			1.12			2.49
Distributions from:3
Net investment income		(0.02	)		(0.03	)		(0.10	)		—			—			—
Net realized gain		(3.42	)		(4.05	)		(2.22	)		(1.48	)		(1.30	)		—
Total distributions		(3.44	)		(4.08	)		(2.32	)		(1.48	)		(1.30	)		—
Net asset value, end of period	$	54.45		$	48.38		$	41.92		$	33.64		$	28.00		$	28.18
Total Return4
Based on net asset value		20.44	%5		27.37	%		33.73	%		26.68	%		4.03	%6		9.69	%6,7
Ratios to Average Net Assets
Total expenses		1.14	%8		1.19	%		1.22	%		1.29	%		1.31	%		1.31	%
Total expenses after fees waived and/or reimbursed and paid indirectly		1.14	%8		1.19	%		1.21	%		1.28	%		1.31	%		1.31	%
Net investment income (loss)		(0.09	)%8		(0.07	)%		0.26	%		0.17	%		(0.24	)%		(0.11	)%
Supplemental Data
Net assets, end of period (000)	$	2,799,471		$	2,051,816		$	1,641,026		$	1,018,429		$	825,046		$	682,857
Portfolio turnover rate		28	%		57	%		94	%		135	%		135	%		184	%

¹  Based on average shares outstanding.

²  Includes redemption fees, which are less than $0.005 per share.

³  Distributions for annual periods determined in accordance with federal income tax regulations.

⁴  Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

⁵  Aggregate 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 had no impact on the Fund’s total return.

⁸  Annualized.

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 57

Financial Highlights (continued) BlackRock Health Sciences Opportunities Portfolio

	Investor B
	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	44.84		$	38.99		$	31.46		$	26.26		$	26.39		$	24.25
Net investment loss1		(0.23	)		(0.34	)		(0.17	)		(0.17	)		(0.28	)		(0.23	)
Net realized and unrealized gain		8.86			9.83			9.79			6.63			1.14	2		2.37	2
Net increase from investment operations		8.63			9.49			9.62			6.46			0.86			2.14
Distributions from:3
Net investment income		—			—			—			—			—			—
Net realized gain		(2.91	)		(3.64	)		(2.09	)		(1.26	)		(0.99	)		—
Total distributions		(2.91	)		(3.64	)		(2.09	)		(1.26	)		(0.99	)		—
Net asset value, end of period	$	50.56		$	44.84		$	38.99		$	31.46		$	26.26		$	26.39
Total Return4
Based on net asset value		19.93	%5		26.40	%		32.63	%		25.70	%		3.27	%6		8.82	%6,7
Ratios to Average Net Assets
Total expenses		1.98	%8		1.98	%		2.02	%		2.07	%		2.06	%		2.10	%
Total expenses after fees waived and/or reimbursed and paid indirectly		1.98	%8		1.98	%		2.02	%		2.07	%		2.06	%		2.09	%
Net investment loss		(0.95	)%8		(0.85	)%		(0.51	)%		(0.59	)%		(0.99	)%		(0.88	)%
Supplemental Data
Net assets, end of period (000)	$	19,826		$	23,321		$	39,048		$	40,452		$	46,180		$	47,855
Portfolio turnover rate		28	%		57	%		94	%		135	%		135	%		184	%

¹  Based on average shares outstanding.

²  Includes redemption fees, which are less than $0.005 per share.

³  Distributions for annual periods determined in accordance with federal income tax regulations.

⁴  Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

⁵  Aggregate 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 had no impact on the Fund’s total return.

⁸  Annualized.

See Notes to Financial Statements.

58 BLACKROCK FUNDS MARCH 31, 2015

Financial Highlights (continued) BlackRock Health Sciences Opportunities Portfolio

	Investor C
	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	44.36		$	38.77		$	31.34		$	26.18		$	26.37		$	24.22
Net investment loss1		(0.19	)		(0.32	)		(0.16	)		(0.16	)		(0.27	)		(0.21	)
Net realized and unrealized gain		8.72			9.74			9.74			6.62			1.14	2		2.36	2
Net increase from investment operations		8.53			9.42			9.58			6.46			0.87			2.15
Distributions from:3
Net investment income		—			—			(0.00	)4		—			—			—
Net realized gain		(3.17	)		(3.83	)		(2.15	)		(1.30	)		(1.06	)		—
Total distributions		(3.17	)		(3.83	)		(2.15	)		(1.30	)		(1.06	)		—
Net asset value, end of period	$	49.72		$	44.36		$	38.77		$	31.34		$	26.18		$	26.37
Total Return5
Based on net asset value		20.00	%6		26.46	%		32.71	%		25.80	%		3.32	%7		8.88	%7,8
Ratios to Average Net Assets
Total expenses		1.87	%9		1.91	%		1.95	%		2.01	%		2.02	%		2.04	%
Total expenses after fees waived and/or reimbursed and paid indirectly		1.86	%9		1.91	%		1.95	%		2.01	%		2.02	%		2.04	%
Net investment loss		(0.81	)%9		(0.80	)%		(0.48	)%		(0.55	)%		(0.95	)%		(0.83	)%
Supplemental Data
Net assets, end of period (000)	$	1,124,316		$	822,928		$	596,123		$	384,910		$	327,855		$	285,428
Portfolio turnover rate		28	%		57	%		94	%		135	%		135	%		184	%

¹  Based on average shares outstanding.

²  Includes redemption fees, which are less than $0.005 per share.

³  Distributions for annual periods determined in accordance with federal income tax regulations.

⁴  Amount is greater than $(0.005) per share.

⁵  Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

⁶  Aggregate total return.

⁷  Redemption fee of 2.00% is reflected in total return calculations. There was no impact to the return.

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

⁹  Annualized.

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 59

Financial Highlights (concluded) BlackRock Health Sciences Opportunities Portfolio

	Class R
	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,									Period September 12, 20111 to September 30, 2011
				2014			2013			2012
Per Share Operating Performance
Net asset value, beginning of period	$	47.94		$	41.62		$	33.46		$	28.00		$	28.19
Net investment loss2		(0.09	)		(0.17	)		(0.03	)		(0.07	)		(0.01	)
Net realized and unrealized gain (loss)		9.43			10.52			10.43			7.05			(0.18	)3
Net increase (decrease) from investment operations		9.34			10.35			10.40			6.98			(0.19	)
Distributions from:4
Net investment income		—			—			(0.02	)		—			—
Net realized gain		(3.36	)		(4.03	)		(2.22	)		(1.52	)		—
Total distributions		(3.36	)		(4.03	)		(2.24	)		(1.52	)		—
Net asset value, end of period	$	53.92		$	47.94		$	41.62		$	33.46		$	28.00
Total Return5
Based on net asset value		20.25	%6		27.05	%		33.21	%		26.17	%		(0.64	)%6,7
Ratios to Average Net Assets
Total expenses		1.43	%8		1.49	%		1.55	%9		1.70	%		1.75	%8
Total expenses after fees waived and/or reimbursed and paid indirectly		1.43	%8		1.49	%		1.55	%		1.68	%		1.75	%8
Net investment loss		(0.36	)%8		(0.38	)%		(0.09	)%		(0.24	)%		(0.82	)%8
Supplemental Data
Net assets, end of period (000)	$	119,772		$	74,611		$	31,319		$	14,613		$	9,580
Portfolio turnover rate		28	%		57	%		94	%		135	%		135	%

¹  Commencement of operations.

²  Based on average shares outstanding.

³  Includes redemption fees, which are less than $0.005 per share.

⁴  Distributions for annual periods determined in accordance with federal income tax regulations.

⁵  Where applicable, assumes the reinvestment of distributions.

⁶  Aggregate total return.

⁷  Redemption fee of 2.00% is reflected in total return calculations. There was no impact to the return.

⁸  Annualized.

⁹  Includes recoupment of past waived and/or reimbursed fees. Excluding the recoupment of past waived and/or reimbursed fees for the year ended September 30, 2013 the ratio would have been 1.54%.

See Notes to Financial Statements.

60 BLACKROCK FUNDS MARCH 31, 2015

Financial Highlights BlackRock International Opportunities Portfolio

	Institutional
	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	38.51		$	38.58		$	32.82		$	28.37		$	32.76		$	31.36
Net investment income1		0.07			0.48			0.48			0.56			0.49			0.28
Net realized and unrealized gain (loss)		0.21			(0.38	)		5.84			4.49			(4.52	)2		1.58	2
Net increase (decrease) from investment operations		0.28			0.10			6.32			5.05			(4.03	)		1.86
Distributions from:3
Net investment income		(0.92	)		(0.07	)		(0.56	)		(0.60	)		(0.36	)		(0.46	)
Net realized gain		(3.71	)		(0.10	)		—			—			—			—
Total distributions		(4.63	)		(0.17	)		(0.56	)		(0.60	)		(0.36	)		(0.46	)
Net asset value, end of period	$	34.16		$	38.51		$	38.58		$	32.82		$	28.37		$	32.76
Total Return4
Based on net asset value		1.50	%5		0.25	%		19.50	%		18.08	%		(12.50	)%6		5.99	%6
Ratios to Average Net Assets
Total expenses		1.29	%7		1.22	%		1.23	%		1.29	%		1.26	%		1.35	%8
Total expenses after fees waived and/or reimbursed and paid indirectly		1.19	%7		1.19	%		1.23	%		1.29	%		1.26	%		1.35	%
Net investment income		0.39	%7		1.19	%		1.34	%		1.83	%		1.41	%		0.91	%
Supplemental Data
Net assets, end of period (000)	$	507,227		$	730,062		$	775,659		$	798,205		$	792,695		$	802,167
Portfolio turnover rate		33	%		138	%		157	%		99	%		116	%		116	%

¹  Based on average shares outstanding.

²  Includes redemption fees, which are less than $0.005 per share.

³  Distributions for annual periods determined in accordance with federal income tax regulations.

⁴  Where applicable, assumes the reinvestment of distributions.

⁵  Aggregate total return.

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

⁷  Annualized.

⁸  Includes recoupment of past waived and/or reimbursed fees. Excluding the recoupment of past waived and/or reimbursed fees for the year ended September 30, 2010 the ratio would have been 1.34%

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 61

Financial Highlights (continued) BlackRock International Opportunities Portfolio

	Service
	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	37.01		$	37.16		$	31.62		$	27.34		$	31.58		$	30.26
Net investment income1		0.03			0.34			0.26			0.39			0.34			0.16
Net realized and unrealized gain (loss)		0.19			(0.34	)		5.67			4.33			(4.37	)2		1.53	2
Net increase (decrease) from investment operations		0.22			0.00			5.93			4.72			(4.03	)		1.69
Distributions from:3
Net investment income		(0.82	)		(0.05	)		(0.39	)		(0.44	)		(0.21	)		(0.37	)
Net realized gain		(3.71	)		(0.10	)		—			—			—			—
Total distributions		(4.53	)		(0.15	)		(0.39	)		(0.44	)		(0.21	)		(0.37	)
Net asset value, end of period	$	32.70		$	37.01		$	37.16		$	31.62		$	27.34		$	31.58
Total Return4
Based on net asset value		1.38	%5		(0.03	)%		18.93	%		17.48	%		(12.88	)%6		5.63	%6
Ratios to Average Net Assets
Total expenses		1.56	%7,8		1.51	%7		1.71	%7		1.90	%7		1.66	%7		1.72	%7
Total expenses after fees waived and/or reimbursed and paid indirectly		1.46	%8		1.48	%		1.71	%		1.80	%		1.65	%		1.72	%
Net investment income		0.17	%8		0.87	%		0.76	%		1.31	%		1.02	%		0.53	%
Supplemental Data
Net assets, end of period (000)	$	25,368		$	30,049		$	40,885		$	47,598		$	47,846		$	70,365
Portfolio turnover rate		33	%		138	%		157	%		99	%		116	%		116	%

¹  Based on average shares outstanding.

²  Includes redemption fees, which are less than $0.005 per share.

³  Distributions for annual periods determined in accordance with federal income tax regulations.

⁴  Where applicable, assumes the reinvestment of distributions.

⁵  Aggregate total return.

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

⁷  Includes recoupment of past waived and/or reimbursed fees. Excluding the recoupment of past waived and/or reimbursed fees for the years ended September 30, 2013 and September 30, 2010, the ratio would have been 1.60% and 1.69%, respectively. There was no financial impact to the expense ratios for the six months ended March 31, 2015, and the years ended September 30, 2014, September 30, 2012 and September 30, 2011.

⁸  Annualized.

See Notes to Financial Statements.

62 BLACKROCK FUNDS MARCH 31, 2015

Financial Highlights (continued) BlackRock International Opportunities Portfolio

	Investor A
	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	36.64		$	36.80		$	31.33		$	27.10		$	31.33		$	30.02
Net investment income1		0.01			0.33			0.35			0.45			0.39			0.21
Net realized and unrealized gain (loss)		0.20			(0.34	)		5.59			4.30			(4.34	)2		1.50	2
Net increase (decrease) from investment operations		0.21			(0.01	)		5.94			4.75			(3.95	)		1.71
Distributions from:3
Net investment income		(0.82	)		(0.05	)		(0.47	)		(0.52	)		(0.28	)		(0.40	)
Net realized gain		(3.71	)		(0.10	)		—			—			—			—
Total distributions		(4.53	)		(0.15	)		(0.47	)		(0.52	)		(0.28	)		(0.40	)
Net asset value, end of period	$	32.32		$	36.64		$	36.80		$	31.33		$	27.10		$	31.33
Total Return4
Based on net asset value		1.35	%5		(0.06	)%		19.16	%		17.74	%		(12.77	)%6		5.73	%6
Ratios to Average Net Assets
Total expenses		1.61	%7,8		1.53	%		1.52	%		1.57	%		1.54	%		1.59	%
Total expenses after fees waived and/or reimbursed and paid indirectly		1.51	%8		1.50	%		1.52	%		1.57	%		1.53	%		1.59	%
Net investment income		0.06	%8		0.86	%		1.02	%		1.52	%		1.16	%		0.72	%
Supplemental Data
Net assets, end of period (000)	$	482,336		$	662,683		$	753,074		$	692,445		$	703,201		$	794,034
Portfolio turnover rate		33	%		138	%		157	%		99	%		116	%		116	%

¹  Based on average shares outstanding.

²  Includes redemption fees, which are less than $0.005 per share.

³  Distributions for annual periods determined in accordance with federal income tax regulations.

⁴  Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

⁵  Aggregate total return.

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

⁷  Includes recoupment of past waived and/or reimbursed fees. There was no financial impact to the expense ratio for the six months ended March 31, 2015.

⁸  Annualized.

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 63

Financial Highlights (continued) BlackRock International Opportunities Portfolio

	Investor B
	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	33.89		$	34.27		$	29.15		$	25.18		$	29.10		$	27.83
Net investment income (loss)1		(0.11	)		(0.04	)		0.02			0.16			0.10			(0.05	)
Net realized and unrealized gain (loss)		0.16			(0.24	)		5.25			4.03			(4.01	)2		1.42	2
Net increase (decrease) from investment operations		0.05			(0.28	)		5.27			4.19			(3.91	)		1.37
Distributions from:3
Net investment income		(0.55	)		—			(0.15	)		(0.22	)		(0.01	)		(0.10	)
Net realized gain		(3.71	)		(0.10	)		—			—			—			—
Total distributions		(4.26	)		(0.10	)		(0.15	)		(0.22	)		(0.01	)		(0.10	)
Net asset value, end of period	$	29.68		$	33.89		$	34.27		$	29.15		$	25.18		$	29.10
Total Return4
Based on net asset value		0.91	%5		(0.84	)%		18.15	%		16.72	%		(13.45	)%6		4.92	%6
Ratios to Average Net Assets
Total expenses		2.57	%7		2.39	%		2.40	%		2.41	%		2.32	%		2.38	%
Total expenses after fees waived and/or reimbursed and paid indirectly		2.36	%7		2.29	%		2.40	%		2.41	%		2.32	%		2.38	%
Net investment income (loss)		(0.75	)%7		(0.12	)%		0.06	%		0.60	%		0.34	%		(0.18	)%
Supplemental Data
Net assets, end of period (000)	$	2,416		$	3,058		$	6,507		$	10,813		$	15,568		$	25,080
Portfolio turnover rate		33	%		138	%		157	%		99	%		116	%		116	%

¹  Based on average shares outstanding.

²  Includes redemption fees, which are less than $0.005 per share.

³  Distributions for annual periods determined in accordance with federal income tax regulations.

⁴  Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

⁵  Aggregate 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.

64 BLACKROCK FUNDS MARCH 31, 2015

Financial Highlights (concluded) BlackRock International Opportunities Portfolio

	Investor C
	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	33.56		$	33.93		$	28.91		$	24.98		$	28.92		$	27.74
Net investment income (loss)1		(0.09	)		0.04			0.07			0.20			0.11			(0.02	)
Net realized and unrealized gain (loss)		0.16			(0.31	)		5.17			3.98			(3.98	)2		1.39	2
Net increase (decrease) from investment operations		0.07			(0.27	)		5.24			4.18			(3.87	)		1.37
Distributions from:3
Net investment income		(0.63	)		—			(0.22	)		(0.25	)		(0.07	)		(0.19	)
Net realized gain		(3.71	)		(0.10	)		—			—			—			—
Total distributions		(4.34	)		(0.10	)		(0.22	)		(0.25	)		(0.07	)		(0.19	)
Net asset value, end of period	$	29.29		$	33.56		$	33.93		$	28.91		$	24.98		$	28.92
Total Return4
Based on net asset value		0.99	%5		(0.82	)%		18.25	%		16.83	%		(13.44	)%6		4.95	%6
Ratios to Average Net Assets
Total expenses		2.34	%7		2.27	%		2.30	%		2.34	%		2.31	%		2.36	%
Total expenses after fees waived and/or reimbursed and paid indirectly		2.24	%7		2.23	%		2.30	%		2.34	%		2.31	%		2.36	%
Net investment income (loss)		(0.60	)%7		0.11	%		0.24	%		0.73	%		0.37	%		(0.06	)%
Supplemental Data
Net assets, end of period (000)	$	114,611		$	134,821		$	148,136		$	148,910		$	169,481		$	224,958
Portfolio turnover rate		33	%		138	%		157	%		99	%		116	%		116	%

¹  Based on average shares outstanding.

²  Includes redemption fees, which are less than $0.005 per share.

³  Distributions for annual periods determined in accordance with federal income tax regulations.

⁴  Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

⁵  Aggregate 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.

BLACKROCK FUNDS MARCH 31, 2015 65

Financial Highlights BlackRock Science & Technology Opportunities Portfolio

	Institutional
	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	14.37		$	12.27		$	10.01		$	8.61		$	9.02		$	7.79
Net investment loss1		(0.05	)		(0.10	)		(0.03	)		(0.06	)		(0.06	)		(0.05	)
Net realized and unrealized gain (loss)		1.81			2.20			2.29			1.46			(0.35	)2		1.28	2
Net increase (decrease) from investment operations		1.76			2.10			2.26			1.40			(0.41	)		1.23
Net asset value, end of period	$	16.13		$	14.37		$	12.27		$	10.01		$	8.61		$	9.02
Total Return3
Based on net asset value		12.25	%4		17.11	%		22.58	%		16.26	%		(4.55	)%5		15.79	%5,6
Ratios to Average Net Assets
Total expenses		1.31	%7,8		1.36	%		1.50	%7		1.45	%7		1.46	%7		1.55	%7
Total expenses after fees waived and/or reimbursed and paid indirectly		1.29	%8		1.29	%		1.36	%		1.39	%		1.39	%		1.39	%
Net investment loss		(0.63	)%8		(0.74	)%		(0.34	)%		(0.63	)%		(0.60	)%		(0.59	)%
Supplemental Data
Net assets, end of period (000)	$	60,261		$	53,922		$	36,218		$	34,022		$	33,982		$	33,135
Portfolio turnover rate		38	%		99	%		86	%		320	%		103	%		97	%

¹  Based on average shares outstanding.

²  Includes redemption fees, which are less than $0.005 per share.

³  Where applicable, assumes the reinvestment of distributions.

⁴  Aggregate total 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 recoupment of past waived and/or reimbursed fees. Excluding the recoupment of past waived and/or reimbursed fees for the years ended September 30, 2013 and September 30, 2012, the ratio would have been 1.49% and 1.44%, respectively. There was no financial impact to the expense ratios for the six months ended March 31, 2015, and the years ended September 30, 2011 and September 30, 2010.

⁸  Annualized.

See Notes to Financial Statements.

66 BLACKROCK FUNDS MARCH 31, 2015

Financial Highlights (continued) BlackRock Science & Technology Opportunities Portfolio

	Service
	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	13.80		$	11.81		$	9.66		$	8.32		$	8.72		$	7.56
Net investment loss1		(0.06	)		(0.13	)		(0.05	)		(0.08	)		(0.07	)		(0.08	)
Net realized and unrealized gain (loss)		1.73			2.12			2.20			1.42			(0.33	)2		1.24	2
Net increase (decrease) from investment operations		1.67			1.99			2.15			1.34			(0.40	)		1.16
Net asset value, end of period	$	15.47		$	13.80		$	11.81		$	9.66		$	8.32		$	8.72
Total Return3
Based on net asset value		12.10	%4		16.85	%		22.26	%		16.11	%		(4.59	)%5		15.34	%5,6
Ratios to Average Net Assets
Total expenses		1.54	%7,8		1.50	%		1.56	%7		1.57	%7		1.55	%7		1.76	%7
Total expenses after fees waived and/or reimbursed and paid indirectly		1.54	%8		1.46	%		1.56	%		1.57	%		1.53	%		1.74	%
Net investment loss		(0.88	)%8		(0.93	)%		(0.54	)%		(0.81	)%		(0.74	)%		(0.94	)%
Supplemental Data
Net assets, end of period (000)	$	1,394		$	1,297		$	869		$	944		$	851		$	659
Portfolio turnover rate		38	%		99	%		86	%		320	%		103	%		97	%

¹  Based on average shares outstanding.

²  Includes redemption fees, which are less than $0.005 per share.

³  Where applicable, assumes the reinvestment of distributions.

⁴  Aggregate total 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 15.08%.

⁷  Includes recoupment of past waived and/or reimbursed fees. Excluding the recoupment of past waived and/or reimbursed fees for the six months ended March 31, 2015, and the years ended September 30, 2012, September 30, 2011 and September 30, 2010, the ratio would have been 1.47%, 1.56%, 1.54% and 1.67%, respectively. There was no financial impact to the expense ratios for the year ended September 30, 2013.

⁸  Annualized.

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 67

Financial Highlights (continued) BlackRock Science & Technology Opportunities Portfolio

	Investor A
	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	13.55		$	11.61		$	9.51		$	8.21		$	8.62		$	7.48
Net investment loss1		(0.07	)		(0.14	)		(0.06	)		(0.09	)		(0.09	)		(0.08	)
Net realized and unrealized gain (loss)		1.71			2.08			2.16			1.39			(0.32	)2		1.22	2
Net increase (decrease) from investment operations		1.64			1.94			2.10			1.30			(0.41	)		1.14
Net asset value, end of period	$	15.19		$	13.55		$	11.61		$	9.51		$	8.21		$	8.62
Total Return3
Based on net asset value		12.10	%4		16.71	%		22.08	%		15.84	%		(4.76	)%5		15.24	%5,6
Ratios to Average Net Assets
Total expenses		1.62	%7,8		1.64	%7		1.72	%7		1.72	%7		1.79	%7		1.82	%7
Total expenses after fees waived and/or reimbursed and paid indirectly		1.61	%8		1.61	%		1.70	%		1.71	%		1.78	%		1.79	%
Net investment loss		(0.95	)%8		(1.07	)%		(0.67	)%		(0.95	)%		(0.98	)%		(0.99	)%
Supplemental Data
Net assets, end of period (000)	$	135,404		$	118,814		$	97,437		$	106,466		$	106,632		$	105,577
Portfolio turnover rate		38	%		99	%		86	%		320	%		103	%		97	%

¹  Based on average shares outstanding.

²  Includes redemption fees, which are less than $0.005 per share.

³  Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

⁴  Aggregate total 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 recoupment of past waived and/or reimbursed fees. Excluding the recoupment of past waived and/or reimbursed fees for the six months ended March 31, 2015, and the years ended September 30, 2014, September 30, 2012, September 30, 2011 and September 30, 2010, the ratio would have been 1.59%, 1.63%, 1.70%, 1.71% and 1.81%, respectively. There was no financial impact to the expense ratios for the year ended September 30, 2013.

⁸  Annualized.

See Notes to Financial Statements.

68 BLACKROCK FUNDS MARCH 31, 2015

Financial Highlights (continued) BlackRock Science & Technology Opportunities Portfolio

	Investor B
	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	12.06		$	10.42		$	8.60		$	7.48		$	7.93		$	6.94
Net investment loss1		(0.11	)		(0.22	)		(0.13	)		(0.15	)		(0.16	)		(0.14	)
Net realized and unrealized gain (loss)		1.51			1.86			1.95			1.27			(0.29	)2		1.13	2
Net increase (decrease) from investment operations		1.40			1.64			1.82			1.12			(0.45	)		0.99
Net asset value, end of period	$	13.46		$	12.06		$	10.42		$	8.60		$	7.48		$	7.93
Total Return3
Based on net asset value		11.61	%4		15.74	%		21.16	%		14.97	%		(5.68	)%5		14.27	%5,6
Ratios to Average Net Assets
Total expenses		2.61	%7,8		2.42	%7		2.50	%7		2.52	%7		2.67	%7		2.70	%7
Total expenses after fees waived and/or reimbursed and paid indirectly		2.42	%8		2.41	%		2.49	%		2.52	%		2.66	%		2.69	%
Net investment loss		(1.76	)%8		(1.90	)%		(1.47	)%		(1.76	)%		(1.87	)%		(1.90	)%
Supplemental Data
Net assets, end of period (000)	$	990		$	1,585		$	2,275		$	2,645		$	3,130		$	4,390
Portfolio turnover rate		38	%		99	%		86	%		320	%		103	%		97	%

¹  Based on average shares outstanding.

²  Includes redemption fees, which are less than $0.005 per share.

³  Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

⁴  Aggregate total 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 13.98%.

⁷  Includes recoupment of past waived and/or reimbursed fees. Excluding the recoupment of past waived and/or reimbursed fees for the years ended September 30, 2011 and September 30, 2010, the ratio would have been 2.44% and 2.65%, respectively. There was no financial impact to the expense ratios for the six months ended March 31, 2015, and the years ended September 30, 2014, September 30, 2013 and September 30, 2012.

⁸  Annualized.

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 69

Financial Highlights (continued) BlackRock Science & Technology Opportunities Portfolio

	Investor C
	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	12.03		$	10.39		$	8.58		$	7.47		$	7.92		$	6.94
Net investment loss1		(0.11	)		(0.22	)		(0.14	)		(0.15	)		(0.16	)		(0.14	)
Net realized and unrealized gain (loss)		1.50			1.86			1.95			1.26			(0.29	)2		1.12	2
Net increase (decrease) from investment operations		1.39			1.64			1.81			1.11			(0.45	)		0.98
Net asset value, end of period	$	13.42		$	12.03		$	10.39		$	8.58		$	7.47		$	7.92
Total Return3
Based on net asset value		11.55	%4		15.78	%		21.10	%		14.86	%		(5.68	)%5		14.12	%5,6
Ratios to Average Net Assets
Total expenses		2.45	%7,8		2.46	%7		2.58	%7		2.60	%7		2.68	%7		2.73	%7
Total expenses after fees waived and/or reimbursed and paid indirectly		2.45	%8		2.44	%		2.57	%		2.60	%		2.67	%		2.71	%
Net investment loss		(1.79	)%8		(1.90	)%		(1.56	)%		(1.84	)%		(1.88	)%		(1.92	)%
Supplemental Data
Net assets, end of period (000)	$	36,534		$	32,194		$	28,234		$	26,543		$	27,651		$	27,053
Portfolio turnover rate		38	%		99	%		86	%		320	%		103	%		97	%

¹  Based on average shares outstanding.

²  Includes redemption fees, which are less than $0.005 per share.

³  Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

⁴  Aggregate total 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 13.83%.

⁷  Includes recoupment of past waived and/or reimbursed fees. Excluding the recoupment of past waived and/or reimbursed fees for the six months ended March 31, 2015, and the years ended September 30, 2014, September 30, 2012 and September 30, 2011, the ratio would have been 2.42%, 2.45%, 2.59%, and 2.59%, respectively. There was no financial impact to the expense ratios for the years ended September 30, 2013 and September 30, 2010.

⁸  Annualized.

See Notes to Financial Statements.

70 BLACKROCK FUNDS MARCH 31, 2015

Financial Highlights (concluded) BlackRock Science & Technology Opportunities Portfolio

	Class R
	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	13.81		$	11.86		$	9.74		$	8.43		$	8.88		$	7.72
Net investment loss1		(0.09	)		(0.18	)		(0.09	)		(0.12	)		(0.12	)		(0.11	)
Net realized and unrealized gain (loss)		1.73			2.13			2.21			1.43			(0.33	)2		1.27	2
Net increase (decrease) from investment operations		1.64			1.95			2.12			1.31			(0.45	)		1.16
Net asset value, end of period	$	15.45		$	13.81		$	11.86		$	9.74		$	8.43		$	8.88
Total Return3
Based on net asset value		11.88	%4		16.44	%		21.77	%		15.54	%		(5.07	)%5		15.03	%5,6
Ratios to Average Net Assets
Total expenses		1.90	%7,8		1.91	%7		1.97	%7		2.00	%7		2.00	%7		2.10	%7
Total expenses after fees waived and/or reimbursed and paid indirectly		1.89	%8		1.89	%		1.93	%		1.99	%		2.00	%		2.09	%
Net investment loss		(1.23	)%8		(1.35	)%		(0.92	)%		(1.23	)%		(1.21	)%		(1.29	)%
Supplemental Data
Net assets, end of period (000)	$	4,783		$	4,195		$	4,555		$	4,329		$	3,518		$	2,961
Portfolio turnover rate		38	%		99	%		86	%		320	%		103	%		97	%

¹  Based on average shares outstanding.

²  Includes redemption fees, which are less than $0.005 per share.

³ Where applicable, assumes the reinvestment of distributions.

⁴  Aggregate total 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 14.77%.

⁷  Includes recoupment of past waived and/or reimbursed fees. Excluding the recoupment of past waived and/or reimbursed fees for the six months ended March 31, 2015, and the years ended September 30, 2014 and September 30, 2012, the ratio would have been 1.85%, 1.89% and 1.99%, respectively. There was no financial impact to the expense ratios for the years ended September 30, 2013, September 30, 2011 and September 30, 2010.

⁸  Annualized.

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 71

Financial Highlights BlackRock U.S. Opportunities Portfolio

	Institutional
	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	42.91		$	45.82		$	36.42		$	33.86		$	36.94		$	32.20
Net investment income (loss)1		0.04			(0.07	)		0.11			0.19			0.05			0.04
Net realized and unrealized gain (loss)		4.61			6.49			10.41			6.31			(2.44	)2		4.77	2
Net increase (decrease) from investment operations		4.65			6.42			10.52			6.50			(2.39	)		4.81
Distributions from:3
Net investment income		—			—			(0.33	)		—			—			(0.07	)
Net realized gains		(6.18	)		(9.33	)		(0.79	)		(3.94	)		(0.69	)		—
Total distributions		(6.18	)		(9.33	)		(1.12	)		(3.94	)		(0.69	)		(0.07	)
Net asset value, end of period	$	41.38		$	42.91		$	45.82		$	36.42		$	33.86		$	36.94
Total Return4
Based on net asset value		12.16	%5		16.28	%		29.79	%		20.40	%		(6.75	)%6		14.96	%6,7
Ratios to Average Net Assets
Total expenses		1.33	%8		1.34	%9		1.37	%		1.30	%		1.36	%		1.30	%
Total expenses after fees waived and/or reimbursed and paid indirectly		0.91	%8		0.94	%		1.01	%		1.03	%		1.03	%		1.03	%
Net investment income (loss)		0.19	%8		(0.17	)%		0.28	%		0.52	%		0.12	%		0.13	%
Supplemental Data
Net assets, end of period (000)	$	918,605		$	732,297		$	676,540		$	1,294,928		$	1,905,254		$	1,588,509
Portfolio turnover rate		27	%		66	%		82	%		106	%		120	%		123	%

¹  Based on average shares outstanding.

²  Includes redemption fees, which are less than $0.005 per share.

³  Distributions for annual periods determined in accordance with federal income tax regulations.

⁴  Where applicable, assumes the reinvestment of distributions.

⁵  Aggregate 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 had no impact on the Fund’s total return.

⁸  Annualized.

⁹  Includes recoupment of past waived and/or reimbursed fees. There was no financial impact to the expense ratio.

See Notes to Financial Statements.

72 BLACKROCK FUNDS MARCH 31, 2015

Financial Highlights (continued) BlackRock U.S. Opportunities Portfolio

	Service
	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	40.51		$	43.72		$	34.71		$	32.44		$	35.40		$	30.93
Net investment income (loss)1		(0.07	)		(0.23	)		(0.09	)		0.02			(0.12	)		(0.11	)
Net realized and unrealized gain (loss)		4.41			6.16			9.98			6.03			(2.34	)2		4.58	2
Net increase (decrease) from investment operations		4.34			5.93			9.89			6.05			(2.46	)		4.47
Distributions from:3
Net investment income		—			—			(0.09	)		—			—			—
Net realized gains		(5.49	)		(9.14	)		(0.79	)		(3.78	)		(0.50	)		—
Total distributions		(5.49	)		(9.14	)		(0.88	)		(3.78	)		(0.50	)		—
Net asset value, end of period	$	39.36		$	40.51		$	43.72		$	34.71		$	32.44		$	35.40
Total Return4
Based on net asset value		11.93	%5		15.82	%		29.26	%		19.80	%		(7.16	)%6		14.45	%6,7
Ratios to Average Net Assets
Total expenses		1.69	%8		1.59	%9		1.61	%		1.62	%		1.57	%9		1.60	%9
Total expenses after fees waived and/or reimbursed and paid indirectly		1.31	%8		1.34	%		1.45	%		1.51	%		1.46	%		1.48	%
Net investment income (loss)		(0.34	)%8		(0.57	)%		(0.22	)%		0.05	%		(0.30	)%		(0.34	)%
Supplemental Data
Net assets, end of period (000)	$	32,154		$	140,498		$	155,414		$	159,939		$	183,604		$	235,926
Portfolio turnover rate		27	%		66	%		82	%		106	%		120	%		123	%

¹  Based on average shares outstanding.

²  Includes redemption fees, which are less than $0.005 per share.

³  Distributions for annual periods determined in accordance with federal income tax regulations.

⁴  Where applicable, assumes the reinvestment of distributions.

⁵  Aggregate 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 had no impact on the Fund’s total return.

⁸  Annualized.

⁹  Includes recoupment of past waived and/or reimbursed fees. There was no financial impact to the expense ratio.

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 73

Financial Highlights (continued) BlackRock U.S. Opportunities Portfolio

		Investor A
		Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
					2014			2013			2012			2011			2010
Per Share Operating Performance
Net asset value, beginning of period		$	39.96		$	43.23		$	34.30		$	32.08		$	35.02		$	30.61
Net investment income (loss)1			(0.04	)		(0.23	)		(0.09	)		0.01			(0.13	)		(0.12	)
Net realized and unrealized gain (loss)			4.27			6.09			9.86			5.97			(2.31	)2		4.53	2
Net increase (decrease) from investment operations			4.23			5.86			9.77			5.98			(2.44	)		4.41
Distributions from:3
Net investment income			—			—			(0.05	)		—			—			—
Net realized gains			(6.00	)		(9.13	)		(0.79	)		(3.76	)		(0.50	)		—
Total distributions	��		(6.00	)		(9.13	)		(0.84	)		(3.76	)		(0.50	)		—
Net asset value, end of period		$	38.19		$	39.96		$	43.23		$	34.30		$	32.08		$	35.02
Total Return4
Based on net asset value			11.93	%5		15.83	%		29.19	%		19.82	%		(7.19	)%6		14.41	%6,7
Ratios to Average Net Assets
Total expenses			1.63	%8,9		1.61	%8		1.63	%8		1.62	%8		1.59	%		1.64	%8
Total expenses after fees waived and/or reimbursed and paid indirectly			1.31	%9		1.34	%		1.47	%		1.51	%		1.49	%		1.51	%
Net investment income (loss)			(0.23	)%9		(0.58	)%		(0.23	)%		0.03	%		(0.34	)%		(0.37	)%
Supplemental Data
Net assets, end of period (000)		$	434,900		$	423,779		$	512,224		$	610,343		$	888,293		$	1,158,626
Portfolio turnover rate			27	%		66	%		82	%		106	%		120	%		123	%

¹  Based on average shares outstanding.

²  Includes redemption fees, which are less than $0.005 per share.

³  Distributions for annual periods determined in accordance with federal income tax regulations.

⁴  Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

⁵  Aggregate 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 had no impact on the Fund’s total return.

⁸  Includes recoupment of past waived and/or reimbursed fees. Excluding the recoupment of past waived and/or reimbursed fees for the six months ended March 31, 2015, and the year ended September 30, 2014, the ratio would have been 1.62% and 1.60%, respectively. There was no financial impact to the expense ratios for the years ended, September 30, 2013, September 30, 2012 and September 30, 2010.

⁹  Annualized.

See Notes to Financial Statements.

74 BLACKROCK FUNDS MARCH 31, 2015

Financial Highlights (continued) BlackRock U.S. Opportunities Portfolio

	Investor B
	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	34.37		$	38.39		$	30.72		$	29.11		$	31.96		$	28.16
Net investment loss1		(0.17	)		(0.48	)		(0.35	)		(0.23	)		(0.40	)		(0.35	)
Net realized and unrealized gain (loss)		3.62			5.31			8.79			5.39			(2.06	)2		4.15	2
Net increase (decrease) from investment operations		3.45			4.83			8.44			5.16			(2.46	)		3.80
Distributions from net realized gains3		(5.70	)		(8.85	)		(0.77	)		(3.55	)		(0.39	)		—
Net asset value, end of period	$	32.12		$	34.37		$	38.39		$	30.72		$	29.11		$	31.96
Total Return4
Based on net asset value		11.50	%5		14.90	%		28.19	%		18.87	%		(7.90	)%6		13.49	%6,7
Ratios to Average Net Assets
Total expenses		2.40	%8		2.39	%9		2.43	%9		2.42	%9		2.39	%9		2.44	%9
Total expenses after fees waived and/or reimbursed and paid indirectly		2.10	%8		2.14	%		2.26	%		2.30	%		2.28	%		2.30	%
Net investment loss		(1.03	)%8		(1.37	)%		(1.04	)%		(0.74	)%		(1.12	)%		(1.18	)%
Supplemental Data
Net assets, end of period (000)	$	10,182		$	10,935		$	13,107		$	12,833		$	15,047		$	20,255
Portfolio turnover rate		27	%		66	%		82	%		106	%		120	%		123	%

¹  Based on average shares outstanding.

²  Includes redemption fees, which are less than $0.005 per share.

³  Distributions for annual periods determined in accordance with federal income tax regulations.

⁴  Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

⁵  Aggregate 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 had no impact on the Fund’s total return.

⁸  Annualized.

⁹  Includes recoupment of past waived and/or reimbursed fees. Excluding the recoupment of past waived and/or reimbursed fees for the years ended September 30, 2014, September 30, 2013 and September 30, 2011, the ratio would have been 2.37%, 2.42% and 2.37%, respectively. There was no financial impact to the expense ratios for the six months ended March 31, 2015, and the years ended September 30, 2012 and September 30, 2010.

See Notes to Financial Statements.

BLACKROCK FUNDS MARCH 31, 2015 75

Financial Highlights (concluded) BlackRock U.S. Opportunities Portfolio

	Investor C
	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	34.43		$	38.44		$	30.75		$	29.11		$	31.95		$	28.14
Net investment loss1		(0.16	)		(0.46	)		(0.33	)		(0.21	)		(0.38	)		(0.33	)
Net realized and unrealized gain (loss)		3.62			5.32			8.79			5.39			(2.07	)2		4.14	2
Net increase (decrease) from investment operations		3.46			4.86			8.46			5.18			(2.45	)		3.81
Distributions from net realized gains3		(5.77	)		(8.87	)		(0.77	)		(3.54	)		(0.39	)		—
Net asset value, end of period	$	32.12		$	34.43		$	38.44		$	30.75		$	29.11		$	31.95
Total Return4
Based on net asset value		11.51	%5		14.97	%		28.22	%		18.94	%		(7.87	)%6		13.54	%6,7
Ratios to Average Net Assets
Total expenses		2.33	%8		2.33	%9		2.38	%		2.35	%		2.34	%9		2.39	%9
Total expenses after fees waived and/or reimbursed and paid indirectly		2.07	%8		2.09	%		2.22	%		2.25	%		2.24	%		2.27	%
Net investment loss		(0.98	)%8		(1.32	)%		(0.98	)%		(0.69	)%		(1.08	)%		(1.12	)%
Supplemental Data
Net assets, end of period (000)	$	225,383		$	211,493		$	212,162		$	226,350		$	282,586		$	334,958
Portfolio turnover rate		27	%		66	%		82	%		106	%		120	%		123	%

¹  Based on average shares outstanding.

²  Includes redemption fees, which are less than $0.005 per share.

³  Distributions for annual periods determined in accordance with federal income tax regulations.

⁴  Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

⁵  Aggregate 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 had no impact on the Fund’s total return.

⁸  Annualized.

⁹  Includes recoupment of past waived and/or reimbursed fees. Excluding the recoupment of past waived and/or reimbursed fees for the years ended September 30, 2014, September 30, 2011 and September 30, 2010, the ratio would have been 2.32%, 2.33% and 2.38%, respectively.

See Notes to Financial Statements.

76 BLACKROCK FUNDS MARCH 31, 2015

Notes to Financial Statements (Unaudited)

1. Organization:

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. The following are referred to herein collectively as the “Funds” or individually, a “Fund”:

Fund Name	Herein Referred To As	Diversification Classification
BlackRock Global Opportunities Portfolio	(“Global Opportunities”)	Diversified
BlackRock Health Sciences Opportunities Portfolio	(“Health Sciences Opportunities”)	Non-diversified
BlackRock International Opportunities Portfolio	(“International Opportunities”)	Diversified
BlackRock Science & Technology Opportunities Portfolio	(“Science & Technology Opportunities”)	Diversified
BlackRock U.S. Opportunities Portfolio	(“U.S. Opportunities”)	Diversified

Each Fund offers multiple classes of shares. All classes of shares have identical voting, dividend, liquidation and other rights and are subject to the same terms and conditions, except that certain classes bear expenses related to the shareholder servicing and distribution of such shares. Institutional and Service Shares are sold only to certain eligible investors. Investor B Shares are only available through exchanges and distribution reinvestments by current holders and for purchase by certain employer-sponsored retirement plans. Class R Shares are available only to certain employer-sponsored retirement plans. Investor A and Investor C Shares are generally available through financial intermediaries. 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).

Share Class	Initial Sales Charge	CDSC	Conversion Privilege
Institutional, Service and Class R Shares	No	No	None
Investor A Shares	Yes	No1	None
Investor B Shares	No	Yes	To Investor A Shares after approximately 8 years
Investor C Shares	No	Yes	None

¹  Investor A Shares may be subject to a CDSC where no initial sales charge was paid at the time of purchase.

The Funds, together with certain other registered investment companies advised by the Manager or its affiliates, are included in a complex of open-end funds referred to as the Equity-Liquidity Complex.

2. Significant Accounting Policies:

The Funds’ financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. Each Fund is considered an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies. The following is a summary of significant accounting policies followed by the Funds:

Valuation: The Funds’ investments are valued at fair value as of the close of trading on the New York Stock Exchange (“NYSE”)(generally 4:00 p.m., Eastern time). U.S. 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 determine the fair values of their financial instruments at market value using independent dealers or pricing services under policies approved by the Board. The BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) is the committee formed by management to develop global pricing policies and procedures and to provide oversight of the pricing function for the Funds for all financial instruments.

Equity investments traded on a recognized securities exchange are valued at the official close price each day, if available. For equity investments traded on more than one exchange, the official close 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 may be valued at the last available bid (long positions) or ask (short positions) price. Investments in open-end registered investment companies are valued at NAV each business day.

Securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars using exchange rates determined as of the close of business on the NYSE. Forward 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 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.

BLACKROCK FUNDS MARCH 31, 2015 77

Notes to Financial Statements (continued)

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.

In the event that the application of these methods of valuation results in a price for an investment that 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 by the Global Valuation Committee, or its delegate, in accordance with a policy approved by the Board as reflecting fair value (“Fair Value Investments”). When determining the price for Fair Value Investments, the Global Valuation Committee, or its delegate, seeks to determine the price that each Fund might reasonably expect to receive or pay from the current sale or purchase of that asset or liability in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the Global Valuation Committee, or its delegate, deems relevant consistent with the principles of fair value measurement, which include the market approach, income approach and/or in the case of recent investments, the cost approach, as appropriate. The market approach generally consists of using comparable market transactions. The income approach generally is used to discount future cash flows to present value and is adjusted for liquidity as appropriate. These factors include but are not limited to: (i) attributes specific to the investment or asset; (ii) the principal market for the investment or asset; (iii) the customary participants in the principal market for the investment or asset; (iv) data assumptions by market participants for the investment or asset, if reasonably available; (v) quoted prices for similar investments or assets in active markets; and (vi) other factors, such as future cash flows, interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks, recovery rates, liquidation amounts and/or default rates. Due to the inherent uncertainty of valuations of such investments, the fair values may differ from the values that would have been used had an active market existed. The Global Valuation Committee, or its delegate, employs various methods for calibrating valuation approaches for investments where an active market does not exist, including regular due diligence of the Funds’ pricing vendors, regular reviews of key inputs and assumptions, transactional back-testing or disposition analysis to compare unrealized gains and losses to realized gains and losses, reviews of missing or stale prices and large movements in market values and reviews of any market related activity. The pricing of all Fair Value Investments is subsequently reported to the Board or a committee thereof on a quarterly basis.

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 (e.g., 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 Investments and be valued at their fair value, as determined in good faith by the Global Valuation Committee, or its delegate, 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: Each Fund’s books and records are maintained in U.S. dollars. Purchases and sales of investment securities are recorded at the rates of exchange prevailing on the respective dates of such transactions. Generally, when the U.S. dollar rises in value against a foreign currency, each Fund’s investments denominated in that currency will lose value because that currency is worth fewer U.S. dollars; the opposite effect occurs if the U.S. dollar falls in relative value.

Each 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 in 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. Each 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 generally treated as ordinary income for federal income tax purposes.

Segregation and Collateralization: In cases where a Fund enters into certain investments (e.g., forward foreign currency exchange contracts and options written) that would be “senior securities” for 1940 Act purposes, a Fund may segregate or designate on its books and records cash or liquid securities having a market value at least equal to the amount of a Fund’s future obligations under such investments. Doing so allows the investment to be excluded from treatment as a “senior security.” Furthermore, if required by an exchange or counterparty agreement, the Funds may be required to deliver/deposit cash and/or securities to/with an exchange, or broker-dealer or custodian as collateral for certain investments or obligations.

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 date. 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

78 BLACKROCK FUNDS MARCH 31, 2015

Notes to Financial Statements (continued)

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, expenses and realized and unrealized gains and losses are allocated daily to each class based on its relative net assets.

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

Recent Accounting Standard: In June 2014, the Financial Accounting Standards Board issued guidance to improve the financial reporting of reverse repurchase agreements and other similar transactions. The guidance will require expanded disclosure for entities that enter into reverse repurchase agreements and similar transactions accounted for as secured borrowings. It is effective for financial statements with fiscal years beginning on or after December 15, 2014 and for interim periods beginning after March 15, 2015. Management is evaluating the impact, if any, 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 the applicable class. Other operating expenses shared by several funds are prorated among those funds on the basis of relative net assets or other appropriate methods. Expenses directly related to the Funds and other shared expenses prorated 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 their 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.

3. Securities and Other Investments:

Preferred Stock: Each 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.

Securities Lending: Each Fund may lend its securities to approved borrowers, such as brokers, dealers and other financial institutions. The borrower pledges and maintains with the Funds collateral consisting of cash, an irrevocable letter of credit issued by a bank, or securities issued or guaranteed by the U.S. Government. The initial collateral received by each Fund is required to have a value of at least 102% of the current value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% for all other securities. The collateral is maintained thereafter, at a value equal to at least 100% of the current market value of the securities on loan. The market value of the loaned securities is determined at the close of each business day of the Fund and any additional required collateral is delivered to the Fund on the next business day. During the term of the loan, each Fund is entitled to all distributions made on or in respect of the loaned securities. 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.

The market value of securities on loan and the value of the related collateral are shown separately in the Statements of Assets and Liabilities as a component of investments at value — unaffiliated, and collateral on securities loaned at value, respectively. As of March 31, 2015, any securities on loan were collateralized by cash. The cash collateral invested by the securities lending agent, BlackRock Investment Management, LLC (“BIM”), if any, is disclosed in the Schedules of Investments.

Securities lending transactions are entered into by the Funds under Master Securities Lending Agreements (each, an “MSLA”) which provide the right, in the event of default (including bankruptcy or insolvency), for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party or request additional collateral. In the event that a borrower defaults, each Fund, as lender, would offset the market value of the collateral received against the market value of the securities loaned. When the value of the collateral is greater than that of the market value of the securities loaned, the lender is left with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, the borrower can resell or re-pledge the loaned securities, and the Funds can reinvest cash collateral, or, upon an event of default, resell or re-pledge the collateral.

BLACKROCK FUNDS MARCH 31, 2015 79

Notes to Financial Statements (continued)

As of March 31, 2015 the following tables are a summary of the Funds’ securities lending agreements by counterparty which are subject to offset under an MSLA:

Global Opportunities
Counterparty	Securities Loaned at Value		Cash  Collateral Received1			Net Amount
Goldman Sachs & Co	$	1,385,514	$	(1,385,514	)		—
JP Morgan Securities LLC		558,261		(558,261	)		—
Morgan Stanley		3,490		(3,490	)		—
Total	$	1,947,265	$	(1,947,265	)		—
Health Sciences Opportunities
Counterparty	Securities Loaned at Value		Cash Collateral Received1			Net Amount
Credit Suisse Securities (USA) LLC	$	379,245	$	(379,245	)		—
Goldman Sachs & Co		3,878,744		(3,878,744	)		—
Merrill Lynch, Pierce, Fenner & Smith, Inc		1,324,016		(1,324,016	)		—
Morgan Stanley		1,461,500		(1,461,500	)		—
Total	$	7,043,505	$	(7,043,505	)		—
International Opportunities
Counterparty	Securities Loaned at Value		Cash Collateral Received1			Net Amount
Goldman Sachs & Co	$	1,334,135	$	(1,334,135	)		—
Science & Technology Opportunities
Counterparty	Securities Loaned at Value		Cash Collateral Received1			Net Amount
Merrill Lynch, Pierce, Fenner & Smith, Inc	$	24,817	$	(24,817	)		—
U.S. Opportunities
Counterparty	Securities Loaned at Value		Cash Collateral Received1			Net Amount
Goldman Sachs & Co	$	4,219,857	$	(4,219,857	)		—
Morgan Stanley		210,173		(210,173	)		—
Total	$	4,430,030	$	(4,430,030	)		—

¹  Collateral with a value of $1,974,042, $7,494,299, $1,430,717, $26,200 and $4,470,214 has been received in connection with securities lending agreements for Global Opportunities, Health Sciences Opportunities, International Opportunities, Science & Technology Opportunities and U.S. Opportunities, respectively. Collateral received in excess of the value of securities loaned from the individual counterparty is not shown for financial reporting purposes.

The risks of securities lending include the risk that the borrower may not provide additional collateral when required or may not return the securities when due. To mitigate these risks, the Funds benefit from a borrower default indemnity provided by BIM. BIM’s indemnity allows for full replacement of the securities loaned if the collateral received does not cover the value on the securities loaned in the event of borrower default. Each Fund 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.

4. Derivative Financial Instruments:

The Funds engage in various portfolio investment strategies using derivative contracts both to increase the returns of the Funds and/or to economically manage their exposure to certain risks such as equity risk or foreign currency exchange rate risk. These contracts may be transacted on an exchange or OTC.

80 BLACKROCK FUNDS MARCH 31, 2015

Notes to Financial Statements (continued)

Forward Foreign Currency Exchange Contracts: Certain Funds enter into forward foreign currency exchange contracts as an economic hedge against either specific transactions or portfolio instruments or to obtain exposure to, or hedge exposure away from, foreign currencies (foreign currency exchange rate risk). A forward 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. Forward 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 forward foreign currency exchange contracts involves the risk that the value of a forward foreign currency exchange contract changes unfavorably due to movements in the value of the referenced foreign currencies.

Options: Certain 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 (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 when it otherwise would not, or at a price different from the current market value.

For the six months ended March 31, 2015, transactions in options written were as follows:

	Health Sciences Opportunities
	Puts
	Contracts			Premiums Received
Outstanding options, beginning of period		—			—
Options written		2,736		$	624,562
Options expired		(1,530	)		(285,157	)
Outstanding options, end of period		1,206		$	339,405
	Science & Technology Opportunities
	Calls
	Contracts			Premiums Received
Outstanding options, beginning of period		—			—
Options written		2,967		$	314,897
Options closed		(536	)		(58,753	)
Outstanding options, end of period		2,431		$	256,144

As of March 31, 2015, the value of Science & Technology Opportunities securities subject to covered call options written was $17,064,741.

BLACKROCK FUNDS MARCH 31, 2015 81

Notes to Financial Statements (continued)

The following is a summary of the Funds’ derivative financial instruments categorized by risk exposure:

Fair Values of Derivative Financial Instruments as of March 31, 2015
		Global Opportunities				Health Sciences Opportunities
		Value
	Statements of Assets and Liabilities Location	Derivative Assets		Derivative Liabilities		Derivative Assets		Derivative Liabilities
Foreign currency exchange contracts	Unrealized appreciation/depreciation on forward foreign currency exchange contracts	$	1,178,015	$	940,698	$	17,983,614	$	8,136,893
Equity contracts	Options written at value		—		—		—		144,838
Total		$	1,178,015	$	940,698	$	17,983,614	$	8,281,731

Fair Values of Derivative Financial Instruments as of March 31, 2015
		International Opportunities				Science & Technology Opportunities
		Value
	Statements of Assets and Liabilities Location	Derivative Assets		Derivative Liabilities		Derivative Assets		Derivative Liabilities
Foreign currency exchange contracts	Unrealized appreciation/depreciation on forward foreign currency exchange contracts	$	12,130,410	$	13,301,833	$	154,316	$	58,027
Equity contracts	Options written at value		—		—		—		183,462
Total		$	12,130,410	$	13,301,833	$	154,316	$	241,489

The Effect of Derivative Financial Instruments in the Statements of Operations Six Months Ended March 31, 2015
	Net Realized Gain (Loss) from				Net Change in Unrealized Appreciation/Depreciation on
	Global Opportunities		Health Sciences Opportunities		Global Opportunities			Health Sciences Opportunities
Foreign currency exchange contracts:
Foreign currency transactions/translations	$	1,760,137	$	5,081,351	$	(772,843	)	$	(460,506	)
Equity contracts:
Options		—		285,157		—			194,567
Total	$	1,760,137	$	5,366,508	$	(772,843	)	$	(265,939	)

The Effect of Derivative Financial Instruments in the Statements of Operations Six Months Ended March 31, 2015
	Net Realized Gain (Loss) from				Net Change in Unrealized Appreciation/Depreciation on
	International Opportunities		Science &     Technology     Opportunities		International Opportunities			Science & Technology Opportunities
Foreign currency exchange contracts:
Foreign currency transactions/translations	$	7,508,920	$	361,748	$	(9,828,980	)	$	(357,053	)
Equity contracts:
Options		—		41,146		—			72,682
Total	$	7,508,920	$	402,894	$	(9,828,980	)	$	(284,371	)

For the six months ended March 31, 2015, the average quarterly balances of outstanding derivative financial instruments were as follows:
	Global Opportunities		Health Sciences Opportunities		International Opportunities		Science & Technology Opportunities
Forward foreign currency exchange contracts:
Average amounts purchased - in USD	$	31,217,559	$	241,284,843	$	351,255,505	$	13,016,287
Average amounts sold - in USD	$	23,594,510	$	53,111,463	$	360,518,316	$	2,119,038
Options:
Average notional value of option contracts written		—	$	72,419		—	$	91,731

Counterparty Credit Risk: A derivative contract may suffer a mark-to-market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform under the contract.

82 BLACKROCK FUNDS MARCH 31, 2015

Notes to Financial Statements (continued)

A Fund’s risk of loss from counterparty credit risk on OTC derivatives is generally limited to the aggregate unrealized gain less the value of any collateral held by such Fund. For OTC options purchased, each Fund bears the risk of loss of the amount of the premiums paid plus the positive change in market values net of any collateral held by such Fund should the counterparty fail to perform under the contracts. Options written by the Funds do not typically give rise to counterparty credit risk, as options written generally obligate the Funds, and not the counterparty, to perform.

With exchange-traded purchased options, there is less counterparty credit risk to the Funds since the exchange or clearinghouse, as counterparty to such instruments, guarantees against a possible default. The clearinghouse stands between the buyer and the seller of the contract; therefore, credit risk is limited to failure of the clearinghouse. While offset rights may exist under applicable law, the Funds do not have a contractual right of offset against a clearing broker or clearinghouse in the event of a default (including the bankruptcy or insolvency) of the clearing broker or clearinghouse.

In order to better define its contractual rights and to secure rights that will help the Funds mitigate their counterparty risk, a Fund may enter into an International Swaps and Derivatives Association, Inc. Master Agreement (“ISDA Master Agreement”) or similar agreement with its counterparties. An ISDA Master Agreement is a bilateral agreement between each Fund and a counterparty that governs certain OTC derivatives and typically contains, among other things, collateral posting terms and netting provisions in the event of a default and/or termination event. Under an ISDA Master Agreement, each Fund may, under certain circumstances, offset with the counterparty certain derivative financial instruments’ payables and/or receivables with collateral held and/or posted and create one single net payment. The provisions of the ISDA Master Agreement typically permit a single net payment in the event of default including the bankruptcy or insolvency of the counterparty. Bankruptcy or insolvency laws of a particular jurisdiction may restrict or prohibit the right of offset in bankruptcy, insolvency or other events. In addition, certain ISDA Master Agreements allow counterparties to terminate derivative contracts prior to maturity in the event a Fund’s net assets decline by a stated percentage or a Fund fails to meet the terms of its ISDA Master Agreements, which would cause a Fund to accelerate payment of any net liability owed to the counterparty.

Collateral Requirements: For derivatives traded under an ISDA Master Agreement, the collateral requirements are typically calculated by netting the mark-to-market amount for each transaction under such agreement and comparing that amount to the value of any collateral currently pledged by a Fund and the counterparty.

Cash collateral that has been pledged to cover obligations of the Funds and cash collateral received from the counterparty, if any, is reported separately on the Statements of Assets and Liabilities as cash pledged as collateral and cash received as collateral, respectively. Non-cash collateral pledged by the Fund, if any, is noted in the Schedules of Investments. Generally, the amount of collateral due from or to a party has to exceed a minimum transfer amount threshold (typically either $250,000 or $500,000) before a transfer is required, which is determined at the close of business of the Funds. Any additional required collateral is delivered to/pledged by the Funds on the next business day. Typically, the Funds and counterparties are not permitted to sell, re-pledge or use the collateral they receive. To the extent amounts due to the Funds from its counterparties are not fully collateralized, the Funds bear the risk of loss from counterparty non-performance. Likewise, to the extent the Funds have delivered collateral to a counterparty and stand ready to perform under the terms of its agreement with such counterparty, the Funds bear the risk of loss from a counterparty in the amount of the value of the collateral in the event the counterparty fails to return such collateral.

For financial reporting purposes, the Funds do not offset derivative assets and derivative liabilities that are subject to netting arrangements, if any, in the Statements of Assets and Liabilities.

As of March 31, 2015, the Funds’ derivative assets and liabilities (by type) are as follows:

	Global Opportunities				Health Sciences Opportunities
	Assets		Liabilities		Assets		Liabilities
Derivative Financial Instruments:
Forward foreign currency exchange contracts.		$1,178,015		$940,698		$17,983,614		$8,136,893
Options		—		—		—		144,838
Total derivative assets and liabilities in the Statements of Assets and Liabilities.		$1,178,015		$940,698		$17,983,614		$8,281,731
Derivatives not subject to a Master Netting Agreement or similar agreement (“MNA”)		—		—		—		(144,838	)
Total derivative assets and liabilities subject to an MNA		$1,178,015		$940,698		$17,983,614		$8,136,893

BLACKROCK FUNDS MARCH 31, 2015 83

Notes to Financial Statements (continued)

	International				Science & Technology
	Opportunities				Opportunities
	Assets		Liabilities		Assets		Liabilities
Derivative Financial Instruments:
Forward foreign currency exchange contracts.	$	12,130,410	$	13,301,833	$	154,316	$	58,027
Options		—		—		—		183,462
Total derivative assets and liabilities in the Statements of Assets and Liabilities	$	12,130,410	$	13,301,833	$	154,316	$	241,489
Derivatives not subject to an MNA		—		—		—		(183,462	)
Total derivative assets and liabilities subject to an MNA	$	12,130,410	$	13,301,833	$	154,316	$	58,027

As of March 31, 2015, the following tables present the Funds’ derivative assets and liabilities by counterparty net of amounts available for offset under an MNA and net of the related collateral received and pledged by the Funds:

Global Opportunities
Counterparty	Derivative Assets Subject to an MNA by Counterparty		Derivatives Available for  Offset1			Non-cash Collateral Received		Cash Collateral Received		Net Amount of Derivative Assets2
The Bank of New York Mellon	$	2,018	$	(2,018	)		—		—		—
BNP Paribas S.A		9,458		(9,458	)		—		—		—
Citibank N.A		1,188		(1,188	)		—		—		—
Goldman Sachs International		672,940		(138,737	)		—		—	$	534,203
HSBC Bank PLC		48,657		—			—		—		48,657
Morgan Stanley Capital Services LLC		226,951		(225,343	)		—		—		1,608
Royal Bank of Canada		85,740		(85,740	)		—		—		—
State Street Bank and Trust Co		72,033		(6,014	)		—		—		66,019
TD Securities, Inc		25,181		(25,181	)		—		—		—
UBS AG		33,849		(33,849	)		—		—		—
Total	$	1,178,015	$	(527,528	)		—		—	$	650,487
Counterparty	Derivative Liabilities Subject to an MNA by Counterparty		Derivatives Available for Offset1			Non-cash Collateral Pledged		Cash Collateral Pledged		Net Amount of Derivative Liabilities3
Bank of America N.A	$	2,026		—			—		—	$	2,026
The Bank of New York Mellon		19,167	$	(2,018	)		—		—		17,149
BNP Paribas S.A		105,363		(9,458	)		—		—		95,905
Citibank N.A		91,934		(1,188	)		—		—		90,746
Deutsche Bank AG		18,304		—			—		—		18,304
Goldman Sachs International		138,737		(138,737	)		—		—		—
JPMorgan Chase Bank N.A		13,741		—			—		—		13,741
Morgan Stanley Capital Services LLC		225,343		(225,343	)		—		—		—
Royal Bank of Canada		179,679		(85,740	)		—		—		93,939
State Street Bank and Trust Co		6,014		(6,014	)		—		—		—
TD Securities, Inc		98,891		(25,181	)		—		—		73,710
UBS AG		41,499		(33,849	)		—		—		7,650
Total	$	940,698	$	(527,528	)		—		—	$	413,170
Health Sciences Opportunities
Counterparty	Derivative Assets Subject to an MNA by Counterparty		Derivative Available for Offset1			Non-cash Collateral Received		Cash Collateral Received		Net Amount of Derivative Assets2
Bank of America N.A	$	94,275		—			—		—	$	94,275
Deutsche Bank AG		1,241,890	$	(1,241,890	)		—		—		—
Goldman Sachs Bank USA		119,318		—			—		—		119,318
Morgan Stanley Capital Services LLC		14,664,894		—			—		—		14,664,894
Royal Bank of Canada		1,725,016		—			—		—		1,725,016
Royal Bank of Scotland PLC		3,481		—			—		—		3,481
UBS AG		134,740		(134,740	)		—		—		—
Total	$	17,983,614	$	(1,376,630	)		—		—	$	16,606,984

84 BLACKROCK FUNDS MARCH 31, 2015

Notes to Financial Statements (continued)

Counterparty	Derivative Liabilities Subject to an MNA  by Counterparty		Derivative Available for Offset1			Non-cash Collateral Pledged		Cash Collateral Pledged		Net Amount of Derivative Liabilities3
Deutsche Bank AG	$	7,299,309	$	(1,241,890	)		—		—	$	6,057,419
JPMorgan Chase Bank N.A		67,622		—			—		—		67,622
UBS AG		769,962		(134,740	)		—		—		635,222
Total	$	8,136,893	$	(1,376,630	)		—		—	$	6,760,263
International Opportunities
Counterparty	Derivative Assets Subject to an MNA by Counterparty		Derivative Available for Offset1			Non-cash Collateral Received		Cash Collateral Received		Net Amount of Derivative Assets2
Bank of America N.A	$	1,366,193	$	(251,034	)		—		—	$	1,115,159
The Bank of New York Mellon		173,025		(69,092	)		—		—		103,933
Barclays Bank PLC		121,288		—			—		—		121,288
BNP Paribas S.A		67,070		(67,070	)		—		—		—
Citibank N.A		116,935		(116,935	)		—		—		—
Deutsche Bank AG		133,180		(133,180	)		—		—		—
Goldman Sachs International		6,320,754		(3,192,998	)		—		—		3,127,756
JPMorgan Chase Bank N.A		351,223		—			—		—		351,223
Morgan Stanley Capital Services LLC		1,906,175		(1,906,175	)		—		—		—
Royal Bank of Canada		941,566		—			—		—		941,566
Royal Bank of Scotland PLC		24,388		(24,388	)		—		—		—
State Street Bank and Trust Co		203,616		(203,616	)		—		—		—
TD Securities, Inc		113,061		(113,061	)		—		—		—
UBS AG		291,936		—			—		—		291,936
Total	$	12,130,410	$	(6,077,549	)		—		—	$	6,052,861
Counterparty	Derivative Liabilities Subject to an MNA by Counterparty		Derivative Available for Offset1			Non-cash Collateral Pledged		Cash Collateral Pledged		Net Amount of Derivative Liabilities3
Bank of America N.A	$	251,034	$	(251,034	)		—		—		—
The Bank of New York Mellon		69,092		(69,092	)		—		—		—
BNP Paribas S.A		256,141		(67,070	)		—		—	$	189,071
Citibank N.A		1,047,536		(116,935	)		—		—		930,601
Deutsche Bank AG		3,470,832		(133,180	)		—		—		3,337,652
Goldman Sachs International		3,192,998		(3,192,998	)		—		—		—
HSBC Bank PLC		703,266		—			—		—		703,266
Morgan Stanley Capital Services LLC		2,284,600		(1,906,175	)		—		—		378,425
Royal Bank of Scotland PLC		64,504		(24,388	)		—		—		40,116
State Street Bank and Trust Co		1,182,585		(203,616	)		—		—		978,969
TD Securities, Inc		779,245		(113,061	)		—		—		666,184
Total	$	13,301,833	$	(6,077,549	)		—		—	$	7,224,284
Science & Technology Opportunities
Counterparty	Derivative Assets Subject to an MNA by Counterparty		Derivative Available for Offset1			Non-cash Collateral Received		Cash Collateral Received		Net Amount of Derivative Assets2
Citibank N.A	$	32		—			—		—	$	32
Goldman Sachs Bank USA		101		—			—		—		101
Goldman Sachs International		57,362		—			—		—		57,362
Morgan Stanley Capital Services LLC		84,467		—			—		—		84,467
TD Securities, Inc		12,354		—			—		—		12,354
Total	$	154,316		—			—		—	$	154,316
Counterparty	Derivative Liabilities Subject to an MNA by Counterparty		Derivative Available for Offset1			Non-cash Collateral Pledged		Cash Collateral Pledged		Net Amount of Derivative Liabilities3
HSBC Bank PLC	$	58,027		—			—		—	$	58,027

¹  The amount of derivatives available for offset is limited to the amount of derivative assets and/or liabilities that are subject to an MNA.

²  Net amount represents the net amount receivable from the counterparty in the event of default.

³  Net amount represents the net amount payable due to the counterparty in the event of default.

5. Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. is the largest stockholder and an affiliate of BlackRock, Inc. (“BlackRock”) for 1940 Act purposes.

BLACKROCK FUNDS MARCH 31, 2015 85

Notes to Financial Statements (continued)

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 services. The Manager is responsible for the management of each Fund’s portfolio and provides the necessary personnel, facilities, equipment and certain other services 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	%

Effective June 1, 2014, the Manager has contractually agreed to waive 0.10% of International Opportunities investment advisory fee until February 1, 2016. For the six months ended March 31, 2015, the amount waived was $654,478.

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 the Manager in the Statements of Operations. For the six months ended March 31, 2015, the amounts waived were as follows:

Global Opportunities	$	1,078
Health Sciences Opportunities	$	39,085
International Opportunities	$	2,364
Science & Technology Opportunities	$	1,088
U.S. Opportunities	$	13,754

The Trust, on behalf of the Funds, entered into a Distribution Agreement and a 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, each 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 relevant share class of each Fund as follows:

	Service			Investor A			Investor B			Investor C			Class R
Service Fee		0.25	%		0.25	%		0.25	%		0.25	%		0.25	%
Distribution Fee		—			—			0.75	%		0.75	%		0.25	%

Pursuant to sub-agreements with BRIL, broker-dealers and BRIL provide shareholder servicing and distribution services to each Fund. The ongoing service and/or distribution fee compensates BRIL and each broker-dealer for providing shareholder servicing and/or distribution related servicesto Service, Investor A, Investor B, Investor C and Class R shareholders.

For the six months ended March 31, 2015, the following table shows the class specific service and distribution fees borne directly by each class of each Fund:

	Service		Investor A		Investor B		Investor C		Class R		Total
Global Opportunities		—	$	232,809	$	8,150	$	247,315	$	27,604	$	515,878
Health Sciences Opportunities	$	41,811	$	3,011,302	$	107,617	$	4,798,903	$	236,790	$	8,196,423
International Opportunities	$	34,978	$	703,954	$	13,292	$	603,683		—	$	1,355,907
Science & Technology Opportunities	$	1,672	$	157,912	$	5,385	$	170,067	$	10,874	$	345,910
U.S. Opportunities	$	86,194	$	537,749	$	51,993	$	1,076,871		—	$	1,752,807

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 asset-based fee or an annual fee per shareholder account, which will vary depending on share class and/or net assets. For the six months ended March 31, 2015, the Funds paid the following amounts to affiliates of BlackRock in return for these services, which are included in transfer agent — class specific in the Statements of Operations:

	Institutional		Service		Investor A		Investor C		Total
Health Sciences Opportunities	$	247	$	87	$	290	$	48	$	672
International Opportunities	$	101,964	$	1,115	$	6,369		—	$	109,448
Science & Technology Opportunities	$	6		—	$	2,101		—	$	2,107
U.S. Opportunities	$	43,217	$	53	$	4,834		—	$	48,104

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

86 BLACKROCK FUNDS MARCH 31, 2015

Notes to Financial Statements (continued)

the six months ended March 31, 2015, 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:

	Institutional		Service		Investor A		Investor B		Investor C		Class R		Total
Global Opportunities	$	1,849		—	$	4,501	$	280	$	747	$	31	$	7,408
Health Sciences Opportunities	$	7,888	$	92	$	35,001	$	1,622	$	9,000	$	446	$	54,049
International Opportunities	$	2,262	$	69	$	10,273	$	314	$	2,363		—	$	15,281
Science & Technology Opportunities	$	4,293	$	11	$	5,138	$	144	$	1,543	$	24	$	11,153
U.S. Opportunities	$	828	$	235	$	9,628	$	423	$	1,508		—	$	12,622

For the six months ended March 31, 2015, the following table shows the class specific transfer agent fees borne directly by each class of each Fund:

	Institutional		Service		Investor A		Investor B		Investor C		Class R		Total
Global Opportunities	$	38,790		—	$	141,416	$	4,172	$	46,191	$	13,560	$	244,129
Health Sciences Opportunities	$	548,125	$	19,620	$	1,409,678	$	21,080	$	422,175	$	68,375	$	2,489,053
International Opportunities	$	462,990	$	24,680	$	650,704	$	5,825	$	121,878		—	$	1,266,077
Science & Technology Opportunities	$	59,199	$	797	$	150,991	$	2,721	$	54,788	$	5,401	$	273,897
U.S. Opportunities	$	558,792	$	84,583	$	390,590	$	10,582	$	147,538		—	$	1,192,085

Effective January 1, 2015, the Trust, on behalf of the Funds, entered into an Administration Agreement with the Manager, an indirect, wholly-owned subsidiary of BlackRock, to provide administrative services. For these services, the Manager receives an administration fee computed daily and payable monthly, based on a percentage of the average daily net assets of the Funds. The administration fee, which is shown as administration in the Statements of Operations, is paid at the annual rates below.

Average Daily Net Assets	Administration Fee
First $500 Million.		0.0425	%
$500 Million - $1 Billion		0.0400	%
$1 Billion - $2 Billion		0.0375	%
$2 Billion - $4 Billion		0.0350	%
$4 Billion - $13 Billion		0.0325	%
Greater than $13 Billion		0.0300	%

In addition, the Manager charges each of the share classes an administration fee, which is shown as administration — class specific in the Statements of Operations, at an annual rate of 0.02% of the average daily net assets of each respective class.

Prior to January 1, 2015, BNY Mellon Investment Servicing (US) Inc. (“BNYMIS”) and the Manager acted as co-administrators for the Funds. For these services, the co-administrators received an administration fee computed daily and payable monthly to each administrator pursuant to separate fee arrangements, based on a percentage of the average daily net assets of each Fund. The combined administration fee, which is shown as administration in the Statements of Operations, was paid at the annual rates shown below. In addition, each of the share classes was charged an administration fee, which is shown as administration — class specific in the Statements of Operations, based on the following percentages of average daily net assets of each respective class:

Average Daily Net Assets	Administration Fee			Administration Fee — Class Specific
First $500 Million.		0.075	%		0.025	%
$500 Million - $1 Billion		0.065	%		0.015	%
Greater than $1 Billion		0.055	%		0.005	%

For the six months ended March 31, 2015, the Funds paid the following to the Manager in return for these services, which are included in administration and administration — class specific in the Statements of Operations:

Global Opportunities	$	104,265
Health Sciences Opportunities	$	1,314,847
International Opportunities	$	409,226
Science & Technology Opportunities	$	73,516
U.S. Opportunities	$	503,909

BLACKROCK FUNDS MARCH 31, 2015 87

Notes to Financial Statements (continued)

For the six months ended March 31, 2015, the following table shows the class specific administration fees borne directly by each class of each Fund:

	Institutional		Service		Investor A		Investor B		Investor C		Class R		Total
Global Opportunities	$	7,260		—	$	20,988	$	186	$	5,578	$	1,257	$	35,269
Health Sciences Opportunities	$	123,189	$	3,749	$	194,197	$	2,437	$	97,362	$	10,534	$	431,468
International Opportunities	$	64,066	$	3,171	$	61,173	$	303	$	13,670		—	$	142,383
Science & Technology Opportunities	$	6,409	$	151	$	14,177	$	122	$	3,817	$	489	$	25,165
U.S. Opportunities	$	85,741	$	8,229	$	48,464	$	1,175	$	24,229		—	$	167,838

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.

The Manager contractually agreed to waive and/or reimburse fees or expenses in order to limit expenses, excluding interest expense, dividend expense, tax expense, acquired fund fees and expenses and certain other fund expenses, which constitute extraordinary expenses not incurred in the ordinary course of the Funds’ business. The expense limitations as a percentage of average daily net assets are as follows:

	Global Opportunities			Health Sciences Opportunities			International Opportunities			Science & Technology Opportunities			U.S. Opportunities
Institutional		1.06	%		N/A			1.24	%		1.29	%		0.91	%
Service		1.70	%2		N/A			1.52	%		1.61	%		1.31	%
Investor A		1.33	%		N/A			1.52	%		1.61	%		1.31	%
Investor B		2.18	%		N/A			2.36	%		2.42	%		2.10	%
Investor C		2.14	%		N/A			2.29	%		2.49	%		2.07	%
Class R		1.72	%		1.81	%1		2.13	%2		1.89	%		2.19	%2

¹  The contractual expense limitation expired on January 31, 2015.

²  There were no shares outstanding as of March 31, 2015.

The Manager has agreed not to reduce or discontinue this contractual waiver or reimbursement prior to February 1, 2016, unless approved by the Board, including a majority of the independent Trustees.

These amounts waived or reimbursed, are included in fees waived by the Manager, 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, 2015, the amounts included in fees waived by the Manager were as follows:

Global Opportunities	$	14,124
U.S. Opportunities	$	2,008,659

Class specific expense waivers and reimbursements are as follows:

Administration Fees Waived	Institutional		Service		Investor A		Investor B		Investor C		Class R		Total
Global Opportunities	$	7,260		—	$	20,988	$	186	$	5,578	$	1,257	$	35,269
International Opportunities		—		—	$	14,934	$	303		—		—	$	15,237
Science & Technology Opportunities	$	3,785		—	$	2,835	$	106	$	16	$	79	$	6,821
U.S. Opportunities	$	85,741	$	8,229	$	41,608	$	1,098	$	4,834		—	$	141,510
Transfer Agent Fees Waived	Institutional		Service		Investor A		Investor B		Investor C		Class R		Total
Global Opportunities	$	1,849		—	$	4,501	$	280	$	747	$	31	$	7,408
International Opportunities		—		—	$	1,308	$	294		—		—	$	1,602
Science & Technology Opportunities	$	1,157		—	$	362	$	123		—	$	3	$	1,645
U.S. Opportunities	$	828	$	235	$	8,172	$	334		—		—	$	9,569
Transfer Agent Fees Reimbursed	Institutional		Service		Investor A		Investor B		Investor C		Class R		Total
Global Opportunities	$	36,717		—	$	117,852	$	2,897	$	25,971	$	4,496	$	187,933
International Opportunities		—		—	$	845	$	831		—		—	$	1,676
Science & Technology Opportunities	$	426		—	$	169	$	790		—	$	17	$	1,402
U.S. Opportunities	$	557,944	$	33,011	$	71,379	$	536		—		—	$	662,870

88 BLACKROCK FUNDS MARCH 31, 2015

Notes to Financial Statements (continued)

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, 2015, the Manager recouped the following Fund level and class specific waivers and/or reimbursements previously recorded by the Funds:

	Share Classes
	Institutional		Service		Investor A		Investor B		Investor C		Class R		Total
International Opportunities		—	$	213	$	1,462		—		—		—	$	1,675
Science & Technology Opportunities	$	472	$	449	$	16,815	$	10	$	4,669	$	1,007	$	23,422
U.S. Opportunities		—		—	$	4,586		—	$	4,679		—	$	9,265

On March 31, 2015, the Fund level and class specific waivers and/or reimbursements subject to possible future recoupment under the expense limitation agreement are as follows:

	Expiring September 30,
	2015		2016		2017
Global Opportunities
Fund Level	$	14,155	$	6,998	$	14,124
Institutional	$	91,262	$	86,621	$	45,826
Investor A	$	293,364	$	267,938	$	143,341
Investor B	$	359	$	858	$	3,363
Investor C	$	73,264	$	53,906	$	32,296
Class R	$	12,010	$	12,490	$	5,784
International Opportunities
Fund Level		—		—	$	654,478
Investor A		—		—	$	17,087
Investor B		—		—	$	1,428
Science & Technology Opportunities
Institutional	$	42,884	$	32,859	$	5,368
Investor A		—	$	21,780	$	3,366
Investor B		—	$	314	$	1,019
Investor C		—		—	$	16
Class R		—	$	420	$	99
U.S. Opportunities
Fund Level	$	2,794,164	$	3,593,356	$	2,008,659
Institutional	$	1,866,300	$	1,207,231	$	644,513
Service	$	414	$	38,565	$	41,475
Investor A	$	866	$	171,493	$	121,159
Investor B	$	180	$	2,743	$	1,968
Investor C		—	$	11,666	$	4,834

For the six months ended March 31, 2015, affiliates earned underwriting discounts, direct commissions and dealer concessions on sales of each Fund’s Investor A Shares as follows:

Global Opportunities	$	1,509
Health Sciences Opportunities	$	312,918
International Opportunities	$	13,200
Science & Technology Opportunities	$	8,428
U.S. Opportunities	$	21,689

BLACKROCK FUNDS MARCH 31, 2015 89

Notes to Financial Statements (continued)

For the six months ended March 31, 2015, affiliates received CDSCs as follows:

	Investor A		Investor B		Investor C
Global Opportunities	$	122	$	5	$	2,949
Health Sciences Opportunities	$	2,326	$	210	$	54,250
International Opportunities	$	2,922	$	74	$	8,273
Science & Technology Opportunities	$	112	$	7	$	1,974
U.S. Opportunities	$	2,572	$	473	$	2,749

The U.S. Securities and Exchange Commission has issued an exemptive order which permits BIM, an affiliate of the Manager, to serve as securities lending agent for the Funds, subject to applicable conditions. As securities lending agent, BIM bears all operational costs directly related to securities lending. The Funds are responsible for expenses in connection with the investment of cash collateral received for securities on loan (the “collateral investment expenses”). The cash collateral is invested in a private investment company managed by the Manager or its affiliates. However, BIM has agreed to cap the collateral investment expenses of the private investment company to an annual rate of 0.04%. The investment advisor to the private investment company will not charge any advisory fees with respect to shares purchased by the Funds.

Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment expenses. Each Fund retains a portion of securities lending income and remits a remaining portion to BIM as compensation for its services as securities lending agent. BIM may lend securities only when the difference between the borrower rebate rate and the risk free rate exceeds a certain level (such securities, the “specials only securities”).

Pursuant to such agreement, each Fund retains 80% of securities lending income. In addition, commencing the business day following the date that the aggregate securities lending income earned across certain funds in the Equity-Liquidity Complex in a calendar year exceeds a specified threshold, each Fund, pursuant to the securities lending agreement, will retain for the remainder of the calendar year securities lending income in an amount equal to 85% of securities lending income. The share of securities lending income earned by each Fund is shown as securities lending — affiliated — net in the Statements of Operations. For the six months ended March 31, 2015, each Fund paid BIM the following amounts for securities lending agent services:

Global Opportunities	$	7,899
Health Sciences Opportunities	$	11,167
International Opportunities	$	19,135
Science & Technology Opportunities	$	3,147
U.S. Opportunities	$	20,479

Certain officers and/or trustees of the Trust are officers and/or directors of BlackRock or its affiliates. The Funds reimburse the Manager for a portion of the compensation paid to the Trust’s Chief Compliance Officer, which is included in officer and trustees in the Statements of Operations.

The Funds may purchase securities from, or sell securities to, an affiliated fund provided the affiliation is due solely to having a common investment advisor, common officers, or common trustees. For the six months ended March 31, 2015, the purchase and sale transactions with an affiliated fund in compliance with Rule 17a-7 under the 1940 Act were as follows:

	Global Opportunities		Health Sciences Opportunities
Purchases		—	$	28,085,450
Sales	$	2,155,830	$	8,112,260

6. Purchases and Sales:

Purchases and sales of investments, excluding short-term securities, for the six months ended March 31, 2015, were as follows:

	Global Opportunities		Health Sciences Opportunities		International Opportunities		Science & Technology Opportunities		U.S. Opportunities
Purchases	$	96,492,632	$	1,864,828,161	$	427,327,513	$	91,884,122	$	421,843,093
Sales	$	118,791,160	$	1,346,630,777	$	853,013,535	$	85,629,706	$	470,975,443

90 BLACKROCK FUNDS MARCH 31, 2015

Notes to Financial Statements (continued)

7. Income Tax Information:

It is the Funds’ policy to comply with the requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies, and to distribute substantially all of their taxable income to their shareholders. Therefore, no federal income tax provision is required.

The Funds file U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Funds’ U.S. federal tax returns remains open for each of the four years ended September 30, 2014. 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 has analyzed tax laws and regulations and their application to the Funds as of March 31, 2015, inclusive of the open tax return years, and does not believe there are any uncertain tax positions that require recognition of a tax liability in the Funds’ financial statements.

As of September 30, 2014, 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		Science & Technology Opportunities
2015		—	$	12,880,909
2017	$	83,723,600		4,448,928
2018		9,946,168		—
2019		—		783,208
Total	$	93,669,768	$	18,113,045

As of March 31, 2015, gross unrealized appreciation and 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	$	265,807,836		$	3,829,519,668		$	984,340,149		$	170,431,768		$	1,170,549,140
Gross unrealized appreciation	$	54,504,028		$	1,792,821,009		$	159,752,130		$	72,693,909		$	470,945,897
Gross unrealized depreciation		(9,429,667	)		(14,334,435	)		(34,785,019	)		(3,605,698	)		(24,263,077	)
Net unrealized appreciation	$	45,074,361		$	1,778,486,574		$	124,967,111		$	69,088,211		$	446,682,820

8. Bank Borrowings:

The Trust, on behalf of the Funds, along with certain other funds managed by the Manager and its affiliates (“Participating Funds”), was a party to a 364-day, $1.1 billion credit agreement with a group of lenders, under which the Funds may borrow to fund shareholder redemptions. Excluding commitments designated for a certain individual fund, the Participating Funds, including the Funds, could borrow up to an aggregate commitment amount of $650 million, subject to asset coverage and other limitations as specified in the agreement. Effective November 25, 2014, the credit agreement was amended to an aggregate commitment amount of $2.1 billion, of which the Participating Funds, including the Funds, can borrow up to $1.6 billion at any time outstanding, subject to asset coverage and other limitations as specified in the agreement. The agreement terminates on April 23, 2015, unless otherwise extended to November 24, 2015 or renewed for a period of 364 days from April 23, 2015. The amended agreement has the following terms: a fee of 0.06% per annum on unused commitment amounts and interest at a rate equal to the higher of (a) one-month LIBOR (but, in any event, not less than 0.00%) on the date the loan is made plus 0.80% per annum or (b) the Fed Funds rate (but, in any event, not less than 0.00%) in effect from time to time plus 0.80% per annum on amounts borrowed. Participating Funds paid administration, legal and arrangement fees, which are included in miscellaneous expenses in the Statements of Operations, and along with commitment fees, were allocated among such funds based upon portions of the aggregate commitment available to them and relative net assets of Participating Funds. During the six months ended March 31, 2015, the Funds did not borrow under the credit agreement.

BLACKROCK FUNDS MARCH 31, 2015 91

Notes to Financial Statements (continued)

9. Principal Risks:

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, interest rate and price fluctuations. Similar to issuer credit risk, the Funds may be exposed to counterparty credit risk, or the risk that an entity with which the Funds have unsettled or open transactions may fail to or be unable to perform on its commitments. The Funds manage counterparty credit risk by entering into transactions only with counterparties that they believe have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Funds to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Funds’ exposure to market, issuer and counterparty credit risks with respect to these financial assets is generally approximated by their value recorded in the Statements of Assets and Liabilities, less any collateral held by the Funds.

Global Opportunities and International Opportunities invest a significant portion of their assets in securities of issuers located in Europe or with significant exposure to European issuers or countries. The European financial markets have recently experienced volatility and adverse trends due to concerns about economic downturns in, or rising government debt levels of, several European countries. These events may spread to other countries in Europe and may affect the value and liquidity of certain of Global Opportunities’ and International Opportunities’ investments.

As of March 31, 2015, Health Sciences Opportunities invested a significant portion of its assets in securities in the health care sector. Changes in economic conditions affecting such 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, 2015, Science & Technology Opportunities invested a significant portion of its assets in securities in the information technology sector. Changes in economic conditions affecting such sector would have a greater impact on Science & Technology Opportunities and could affect the value, income and/or liquidity of positions in such securities.

Global Opportunities and International Opportunities invest a substantial amount of their assets in issuers located in a single country or a limited number of countries. When a 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 United States. 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. Investment percentages in specific countries are presented in the Schedule of Investments.

As of March 31, 2015, the Funds listed below had the following industry classifications:

Industry	Global Opportunities			International Opportunities
Pharmaceuticals		9	%		15	%
Banks		9			9
Internet Software & Services		8			—
Oil, Gas & Consumable Fuels		7			6
Machinery		—			5
Other1		67			65

¹  All other industries held were each less than 5% of long-term investments.

92 BLACKROCK FUNDS MARCH 31, 2015

Notes to Financial Statements (continued)

10. Capital Share Transactions:

Transactions in capital shares for each class were as follows:

	Six Months Ended March 31, 2015						Year Ended September 30, 2014
Global Opportunities	Shares			Amount			Shares			Amount
Institutional
Shares sold		659,151		$	9,378,539			559,973		$	8,067,694
Shares issued in reinvestment of distributions		73,078			999,712			—			—
Shares redeemed		(570,316	)		(8,008,409	)		(927,126	)		(13,279,874	)
Net increase (decrease)		161,913		$	2,369,842			(367,153	)	$	(5,212,180	)
Investor A
Shares sold and automatic conversion of shares		375,276		$	5,247,459			1,174,324		$	16,846,920
Shares issued in reinvestment of distributions		173,048			2,348,269			—			—
Shares redeemed		(1,275,444	)		(17,864,810	)		(2,722,327	)		(38,978,663	)
Net decrease		(727,120	)	$	(10,269,082	)		(1,548,003	)	$	(22,131,743	)
Investor B
Shares sold		328		$	4,709			4,031		$	54,489
Shares redeemed and automatic conversion of shares		(38,360	)		(518,180	)		(191,601	)		(2,656,037	)
Net decrease		(38,032	)	$	(513,471	)		(187,570	)	$	(2,601,548	)
Investor C
Shares sold		80,095		$	1,078,910			253,192		$	3,506,834
Shares issued in reinvestment of distributions		19,855			261,485			—			—
Shares redeemed		(457,087	)		(6,181,066	)		(711,580	)		(9,849,263	)
Net decrease		(357,137	)	$	(4,840,671	)		(458,388	)	$	(6,342,429	)
Class R
Shares sold		87,564		$	1,224,702			255,598		$	3,633,694
Shares issued in reinvestment of distributions		8,103			109,637			—			—
Shares redeemed		(279,912	)		(3,854,157	)		(442,796	)		(6,291,109	)
Net decrease		(184,245	)	$	(2,519,818	)		(187,198	)	$	(2,657,415	)
Total Net Decrease		(1,144,621	)	$	(15,773,200	)		(2,748,312	)	$	(38,945,315	)

BLACKROCK FUNDS MARCH 31, 2015 93

Notes to Financial Statements (continued)

	Six Months Ended March 31, 2015						Year Ended September 30, 2014
Health Sciences Opportunities	Shares			Amount			Shares			Amount
Institutional
Shares sold		5,257,640		$	280,344,724			7,644,570		$	351,072,043
Shares issued in reinvestment of distributions		1,580,160			80,367,006			1,752,835			71,375,071
Shares redeemed		(2,726,866	)		(144,116,925	)		(3,893,043	)		(175,249,757	)
Net increase		4,110,934		$	216,594,805			5,504,362		$	247,197,357
Service
Shares sold		126,228		$	6,526,606			256,116		$	11,207,546
Shares issued in reinvestment of distributions		44,544			2,194,689			58,067			2,296,543
Shares redeemed		(133,093	)		(6,841,007	)		(241,136	)		(10,553,404	)
Net increase		37,679		$	1,880,288			73,047		$	2,950,685
Investor A
Shares sold and automatic conversion of shares		11,361,475		$	584,377,973			14,209,197		$	623,988,278
Shares issued in reinvestment of distributions		3,077,194			151,182,544			4,007,405			158,051,325
Shares redeemed		(5,430,620	)		(277,846,986	)		(14,958,299	)		(651,906,905	)
Net increase		9,008,049		$	457,713,531			3,258,303		$	130,132,698
Investor B
Shares sold		8,785		$	422,735			23,020		$	924,810
Shares issued in reinvestment of distributions		27,405			1,253,222			87,259			3,209,380
Shares redeemed and automatic conversion of shares		(164,086	)		(7,670,219	)		(591,665	)		(23,846,033	)
Net decrease		(127,896	)	$	(5,994,262	)		(481,386	)	$	(19,711,843	)
Investor C
Shares sold		4,132,563		$	195,112,794			4,155,253		$	168,011,937
Shares issued in reinvestment of distributions		1,315,606			59,149,656			1,589,322			57,803,090
Shares redeemed		(1,384,730	)		(64,933,720	)		(2,570,701	)		(103,456,988	)
Net increase		4,063,439		$	189,328,730			3,173,874		$	122,358,039
Class R
Shares sold		798,011		$	40,598,680			1,080,547		$	47,107,098
Shares issued in reinvestment of distributions		119,635			5,825,014			94,950			3,718,232
Shares redeemed		(252,722	)		(12,651,324	)		(371,441	)		(16,109,254	)
Net increase		664,924		$	33,772,370			804,056		$	34,716,076
Total Net Increase		17,757,129		$	893,295,462			12,332,256		$	517,643,012

94 BLACKROCK FUNDS MARCH 31, 2015

Notes to Financial Statements (continued)

		Six Months Ended March 31, 2015						Year Ended September 30, 2014
International Opportunities	Shares			Amount			Shares			Amount
Institutional
Shares sold		1,697,612		$	57,277,743			6,167,293		$	249,506,958
Shares issued in reinvestment of distributions		2,003,498			64,292,313			77,908			3,096,054
Shares redeemed		(7,811,584	)		(274,681,544	)		(7,391,101	)		(300,896,765	)
Net decrease		(4,110,474	)	$	(153,111,488	)		(1,145,900	)	$	(48,293,753	)
Service
Shares sold		160,431		$	5,372,384			198,084		$	7,714,316
Shares issued in reinvestment of distributions		116,696			3,586,080			3,882			148,540
Shares redeemed		(313,269	)		(10,246,966	)		(490,070	)		(19,061,712	)
Net decrease		(36,142	)	$	(1,288,502	)		(288,104	)	$	(11,198,856	)
Investor A
Shares sold and automatic conversion of shares		1,574,163		$	51,278,104			5,068,943		$	197,126,704
Shares issued in reinvestment of distributions		2,461,235			74,796,935			74,728			2,832,191
Shares redeemed		(7,198,520	)		(231,452,565	)		(7,519,102	)		(289,257,711	)
Net decrease		(3,163,122	)	$	(105,377,526	)		(2,375,431	)	$	(89,298,816	)
Investor B
Shares sold		1,218		$	40,075			3,750		$	135,739
Shares issued in reinvestment of distributions		12,504			349,877			389			13,713
Shares redeemed and automatic conversion of shares		(22,521	)		(670,111	)		(103,778	)		(3,745,813	)
Net decrease		(8,799	)	$	(280,159	)		(99,639	)	$	(3,596,361	)
Investor C
Shares sold		160,889		$	4,792,194			573,025		$	20,482,057
Shares issued in reinvestment of distributions		565,596			15,610,427			11,153			389,466
Shares redeemed		(830,492	)		(24,634,632	)		(933,331	)		(33,169,436	)
Net decrease		(104,007	)	$	(4,232,011	)		(349,153	)	$	(12,297,913	)
Total Net Decrease		(7,422,544	)	$	(264,289,686	)		(4,258,227	)	$	(164,685,699	)

BLACKROCK FUNDS MARCH 31, 2015 95

Notes to Financial Statements (continued)

		Six Months Ended March 31, 2015						Year Ended September 30, 2014
Science & Technology Opportunities	Shares			Amount			Shares			Amount
Institutional
Shares sold		433,391		$	6,625,000			1,532,531		$	21,948,213
Shares redeemed		(449,425	)		(6,885,238	)		(730,845	)		(10,315,532	)
Net increase (decrease)		(16,034	)	$	(260,238	)		801,686		$	11,632,681
Service
Shares sold		7,137		$	105,162			94,776		$	1,339,215
Shares redeemed		(11,022	)		(156,132	)		(74,410	)		(992,076	)
Net increase (decrease)		(3,885	)	$	(50,970	)		20,366		$	347,139
Investor A
Shares sold and automatic conversion of shares		963,539		$	13,964,345			3,095,255		$	41,547,658
Shares redeemed		(815,094	)		(11,717,917	)		(2,718,632	)		(35,844,015	)
Net increase		148,445		$	2,246,428			376,623		$	5,703,643
Investor B
Shares sold		1,394		$	17,364			44,407		$	502,217
Shares redeemed and automatic conversion of shares		(59,301	)		(723,593	)		(131,358	)		(1,547,200	)
Net decrease		(57,907	)	$	(706,229	)		(86,951	)	$	(1,044,983	)
Investor C
Shares sold		282,807		$	3,605,563			651,585		$	7,783,124
Shares redeemed		(237,384	)		(2,977,194	)		(691,770	)		(8,220,073	)
Net increase (decrease)		45,423		$	628,369			(40,185	)	$	(436,949	)
Class R
Shares sold		70,087		$	1,038,007			185,320		$	2,514,750
Shares redeemed		(64,319	)		(931,168	)		(265,410	)		(3,633,169	)
Net increase (decrease)		5,768		$	106,839			(80,090	)	$	(1,118,419	)
Total Net Increase		121,810		$	1,964,199			991,449		$	15,083,112

96 BLACKROCK FUNDS MARCH 31, 2015

Notes to Financial Statements (concluded)

	Six Months Ended March 31, 2015						Year Ended September 30, 2014
U.S. Opportunities	Shares			Amount			Shares			Amount
Institutional
Shares sold		4,861,724		$	206,238,647			4,156,486		$	181,387,913
Shares issued in reinvestment of distributions		2,949,945			111,832,341			3,132,585			120,980,318
Shares redeemed		(2,678,678	)		(109,574,482	)		(4,989,778	)		(215,505,257	)
Net increase		5,132,991		$	208,496,506			2,299,293		$	86,862,974
Service
Shares sold		38,608		$	1,488,434			51,647		$	2,099,262
Shares issued in reinvestment of distributions		120,784			4,360,312			846,209			30,945,870
Shares redeemed		(2,810,663	)		(117,319,557	)		(984,665	)		(39,784,451	)
Net decrease		(2,651,271	)	$	(111,470,811	)		(86,809	)	$	(6,739,319	)
Investor A
Shares sold and automatic conversion of shares		1,883,794		$	71,333,587			1,624,273		$	64,380,292
Shares issued in reinvestment of distributions		1,775,552			62,197,586			2,833,685			102,239,143
Shares redeemed		(2,876,969	)		(107,123,431	)		(5,701,512	)		(228,766,152	)
Net increase (decrease)		782,377		$	26,407,742			(1,243,554	)	$	(62,146,717	)
Investor B
Shares sold		2,553		$	83,240			7,754		$	256,750
Shares issued in reinvestment of distributions		55,908			1,650,948			91,556			2,859,297
Shares redeemed and automatic conversion of shares		(59,628	)		(1,926,742	)		(122,587	)		(4,173,014	)
Net decrease		(1,167	)	$	(192,554	)		(23,277	)	$	(1,056,967	)
Investor C
Shares sold		368,453		$	11,739,092			348,094		$	12,036,883
Shares issued in reinvestment of distributions		1,144,808			33,806,149			1,461,947			45,714,858
Shares redeemed		(639,147	)		(20,460,182	)		(1,186,064	)		(41,189,059	)
Net increase		874,114		$	25,085,059			623,977		$	16,562,682
Total Net Increase		4,137,044		$	148,325,942			1,569,630		$	33,482,653

11. Subsequent Events:

Management’s evaluation of the impact of all subsequent events on the Funds’ financial statements was completed through the date the financial statements were issued and the following item was noted:

Effective April 23, 2015, the 364-day, $2.1 billion credit agreement to which the Funds are a party, was further amended to expire on April 21, 2016, unless otherwise extended or renewed.

BLACKROCK FUNDS MARCH 31, 2015 97

Officers and Trustees

Rodney D. Johnson, Chair of the Board and Trustee

David O. Beim, Trustee

Collette Chilton, Trustee

Frank J. Fabozzi, Trustee

Dr. Matina S. Horner, Trustee

Herbert I. London, Trustee

Ian A. MacKinnon, Trustee

Cynthia A. Montgomery, Trustee

Barbara G. Novick, Trustee

Joseph P. Platt, Trustee

Robert C. Robb, Jr., Trustee

Toby Rosenblatt, Trustee

Mark Stalnecker, Trustee

Kenneth L. Urish, Trustee

Frederick W. Winter, Trustee

John M. Perlowski, President and Chief Executive Officer

Jennifer McGovern, Vice President

Neal Andrews, Chief Financial Officer

Jay Fife, Treasurer

Charles Park, Chief Compliance Officer

Fernanda Piedra, Anti-Money Laundering Compliance Officer

Benjamin Archibald, Secretary

Effective December 31, 2014, Paul L. Audet and Henry Gabbay resigned as Trustees of the Trust and Ronald W. Forbes resigned as a Trustee of the Trust and Co-Chair of the Board. Effective January 1, 2015, Collette Chilton, Barbara G. Novick and Mark Stalnecker were appointed to serve as Trustees of the Trust.

Effective March 1, 2015, Charles Park resigned as Anti-Money Laundering Compliance Officer of the Trust and Fernanda Piedra became Anti-Money Laundering Compliance Officer of the Trust.

Investment Advisor and Administrator BlackRock Advisors, LLC Wilmington, DE 19809	Accounting Agent and Transfer Agent BNY Mellon Investment Servicing (US) Inc. Wilmington, DE 19809	Independent Registered Public Accounting Firm Deloitte & Touche LLP Philadelphia, PA 19103	Address of the Trust 100 Bellevue Parkway 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

98 BLACKROCK FUNDS MARCH 31, 2015

Additional Information

General Information

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 call 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 upon request and without charge (1) 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.

BlackRock’s 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. Visit http://www.blackrock.com for more information.

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 Plans

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.

BLACKROCK FUNDS MARCH 31, 2015 99

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.

100 BLACKROCK FUNDS MARCH 31, 2015

This report is intended for current holders. It is not authorized for use as an offer of sale or a solicitation of an offer to buy shares of the Funds unless preceded or accompanied by the Funds’ 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.

Eq-Opps-3/15-SAR

MARCH 31, 2015        

  SEMI-ANNUAL REPORT (UNAUDITED)   BLACKROCK^®

BlackRock Managed Volatility Portfolio  of BlackRock Funds^SM

Not FDIC Insured ¡ May Lose Value ¡ No Bank Guarantee

Table of Contents

	Page
The Markets in Review	3
About Fund Performance	6
Disclosure of Expenses	6
Derivative Financial Instruments	7
Financial Statements:
Schedule of Investments	8
Statement of Assets and Liabilities	34
Statement of Operations	35
Statements of Changes in Net Assets	36
Financial Highlights	37
Notes to Financial Statements	40
Officers and Trustees	55
Additional Information	56

2 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015

The Markets in Review

Dear Shareholder,

Market volatility has remained low from a long-term perspective, but increased over the course of 2014 amid higher valuations in risk assets (such as equities and high yield bonds), geopolitical risks, uneven global economic growth and uncertainty around policy moves from the world’s largest central banks. As the U.S. Federal Reserve (the “Fed”) gradually reduced its bond buying program (which ultimately ended in October 2014), U.S. interest rates surprisingly trended lower and stock prices forged ahead despite high valuations on the back of a multi-year bull market. Geopolitical tensions intensified in Ukraine and the Middle East and oil prices became highly volatile in the middle of the summer, stoking worries about economic growth outside the United States. As the U.S. economy continued to show steady improvement, the stronger data caused concern among investors that the Fed would raise short-term rates sooner than previously anticipated. The U.S. dollar appreciated and global credit markets tightened, ultimately putting a strain on investor flows, and financial markets broadly weakened in the third quarter.

U.S. economic growth picked up considerably in the fourth quarter while the broader global economy showed signs of slowing. U.S. markets significantly outperformed international markets even as the European Central Bank (“ECB”) and the Bank of Japan eased monetary policy, which drove further strengthening in the U.S. dollar. Oil prices plummeted in the fourth quarter due to a global supply-and-demand imbalance, sparking a selloff in energy-related assets and stress in emerging markets. Fixed income investors piled into U.S. Treasuries as their persistently low yields became relatively attractive as compared to international sovereign debt.

Equity markets reversed in the first quarter of 2015 and U.S. stocks underperformed international markets, notably Europe and Japan, but also emerging markets. Investors had held high expectations for the U.S. economy, but after a harsh winter, first-quarter data disappointed and high valuations took their toll on U.S. stocks. Meanwhile, economic reports in Europe and Asia easily beat investors’ very low expectations for those economies, and accommodative policies from global central banks helped international equities rebound. The ECB’s asset purchase program (announced in January and commenced in March) was the largest in scale and effect on the markets. Overall, market volatility decreased in the first quarter as global risks abated, with a ceasefire in Ukraine and an improving outlook for Greece’s continued membership in the Eurozone.

At BlackRock, we believe investors need to think globally, extend their scope across a broad array of asset classes and be prepared to move freely as market conditions change over time. We encourage you to talk with your financial advisor and visit blackrock.com for further insight about investing in today’s markets.

Sincerely,

Rob Kapito

President, BlackRock Advisors, LLC

Rob Kapito

President, BlackRock Advisors, LLC

Total Returns as of March 31, 2015
	6-month			12-month
U.S. large cap equities (S&P 500® Index)		5.93	%		12.73	%
U.S. small cap equities (Russell 2000® Index)		14.46			8.21
International equities (MSCI Europe, Australasia, Far East Index)		1.13			(0.92	)
Emerging market equities (MSCI Emerging Markets Index)		(2.37	)		0.44
3-month Treasury bill (BofA Merrill Lynch 3-Month U.S. Treasury Bill Index)		0.01			0.03
U.S. Treasury securities (BofA Merrill Lynch 10-Year U.S. Treasury Index)		6.25			9.88
U.S. investment grade bonds (Barclays U.S. Aggregate Bond Index)		3.43			5.72
Tax-exempt municipal bonds (S&P Municipal Bond Index)		2.29			6.60
U.S. high yield bonds (Barclays U.S. Corporate High Yield 2% Issuer Capped Index)		1.50			2.00
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, 2015

Investment Objective

BlackRock Managed Volatility Portfolio’s (the “Fund”) investment objective is to seek total return.

Portfolio Management Commentary

How did the Fund perform?

Ÿ For the six-month period ended March 31, 2015, the Fund outperformed its reference benchmark (50% MSCI All Country World Index (“MSCI ACWI”)/50% Citigroup World Government Bond Index (hedged into USD) (“Citigroup WGBI (hedged into USD)”). The Fund is entirely unconstrained relative to the 50/50 benchmark and can deviate substantially in regards to risk and overall asset allocation. The Fund also outperformed its performance benchmark, the BofA Merrill Lynch 3-Month U.S. Treasury Bill Index, for the same six-month period.

What factors influenced performance?

Ÿ An overweight to equities relative to the reference benchmark contributed positively to the Fund’s performance, as equities broadly outperformed fixed income over the six-month period, supported by continued monetary easing outside the U.S. and stabilizing oil prices. The most significant contributors to performance included exposure to European and Japanese equities, both of which benefited from supportive policy measures and stronger economic data. Additionally, an underweight to the yen was a primary contributor to performance, as additional stimulus measures from the Bank of Japan weakened the yen and boosted equity markets. The Fund also benefited from sector overweights in information technology, consumer discretionary and health care.

Ÿ On a broad asset allocation level, a relatively high allocation to cash negatively impacted performance as markets rallied during the period. A Eurozone recovery theme, reflected in a European equity overweight position, detracted from performance in the fourth quarter of 2014 due to weak economic data, but rebounded in early 2015, supported by improving growth dynamics and positive sentiment with respect to European Central Bank (“ECB”) plans to purchase sovereign bonds. Within U.S. equities, exposure to energy detracted from performance given a sharp decline in oil prices over the period. Additionally, interest rate hedges detracted relative to the cash benchmark.

Describe recent portfolio activity.

Ÿ From a broad asset allocation perspective, the Fund remained overweight in equities relative to fixed income, consistent with the view that improving economic growth and easy global monetary policy could create a favorable backdrop for equities, particularly in the developed markets. The Fund shifted exposure toward international developed equities, most notably in Europe and Japan, where valuations were relatively attractive and accommodative monetary policies should support risk assets. In addition, data out of the Eurozone suggests stronger conditions for growth. Conversely, the Fund reduced its overweight in U.S. equities as leading economic indicators showed signs of softening growth, a stronger dollar provided a headwind to corporate earnings and the volatility in oil prices continues to negatively impact energy companies.

Ÿ Within fixed income, the Fund continued to hold a significant underweight in duration (lower sensitivity to interest rate movements) relative to the reference benchmark index given a more cautious view on the direction of interest rates.

Ÿ During the period, the Fund used derivatives in executing its investment strategy. The use of derivatives did not have a material impact on performance.

Describe portfolio positioning at period end.

Ÿ Compared to the reference benchmark, the Fund ended the period overweight in equities relative to fixed income, while continuing to hold an allocation to cash. While the Fund held an underweight to U.S. equities, the Fund favored developed market equities overall, and in particular leaned toward Europe and Japan. Additionally, the Fund had currency hedges and a reduced duration profile in anticipation of a gradual rise in U.S. interest rates, especially at the front-end of the curve.

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

Government of Japan	6	%
iShares 1-3 Year Credit Bond ETF	4
Fannie Mae Mortgage-Backed Securities	2
United Kingdom Gilt	2
LVMH Moet Hennessy Louis Vuitton SA	1
U.S. Treasury Notes	1
Freddie Mac Mortgage-Backed Securities	1
Ginnie Mae Mortgage-Backed Securities	1
Daimler AG, Registered Shares	1
Inditex SA	1

Portfolio Composition Percent of Long-Term  Investments

Common Stocks	57	%
Foreign Government Obligations	15
Corporate Bonds	12
U.S. Government Sponsored Agency Securities	5
Investment Companies	4
U.S. Treasury Obligations	3
Foreign Agency Obligations	2
Asset-Backed Securities	1
Non-Agency Mortgage-Backed Securities	1

4 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015

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 and administration fees, if any. 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 money market instruments.

³  An unmanaged index that tracks 3-month U.S. Treasury securities.

⁴  A free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. The MSCI ACWI consists of 46 country indexes comprising of 23 developed and 23 emerging market country indexes.

⁵  A market capitalization weighted bond index consisting of government bond markets of 23 countries, including the United States.

⁶  A customized weighted index is comprised of the returns of the 50% MSCI ACWI/50% Citigroup WGBI (hedged into USD).

Performance Summary for the Period Ended March 31, 2015
				Average Annual Total Returns7
				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		4.92	%		6.66	%		N/A			7.36	%		N/A			6.08	%		N/A
Service		4.77			6.28			N/A			7.04			N/A			5.77			N/A
Investor A		4.80			6.32			0.74	%		7.03			5.88	%		5.72			5.15	%
Investor B		4.24			5.28			0.84			6.09			5.77			5.04			5.04
Investor C		4.42			5.62			4.63			6.29			6.29			4.97			4.97
BofA Merrill Lynch 3-Month U.S. Treasury Bill Index		0.01			0.03			N/A			0.09			N/A			1.49			N/A
50% MSCI ACWI/50% Citigroup WGBI (hedged into USD)		3.83			6.96			N/A			7.07			N/A			5.98			N/A
MSCI ACWI		2.73			5.42			N/A			8.99			N/A			6.44			N/A
Citigroup WGBI (hedged into USD)		4.77			8.31			N/A			4.54			N/A			4.69			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 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			Hypothetical9
	Beginning Account Value October 1, 2014	Ending Account Value March 31, 2015	Expenses Paid During the Period8	Beginning Account Value October 1, 2014	Ending Account Value March 31, 2015	Expenses Paid During the Period8	Annualized Expense Ratio
Institutional	$1,000.00	$1,049.20	$4.04	$1,000.00	$1,020.99	$3.98	0.79%
Service	$1,000.00	$1,047.70	$5.97	$1,000.00	$1,019.10	$5.89	1.17%
Investor A	$1,000.00	$1,048.00	$5.67	$1,000.00	$1,019.40	$5.59	1.11%
Investor B	$1,000.00	$1,042.40	$10.90	$1,000.00	$1,014.26	$10.75	2.14%
Investor C	$1,000.00	$1,044.20	$9.17	$1,000.00	$1,015.96	$9.05	1.80%

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 182/365 (to reflect the one-half year period shown). The fees and expenses of the underlying funds in which the Fund invests are not included in the Fund’s annualized expense ratio.

⁹  Hypothetical 5% annual return before expenses is calculated by prorating the number of days in the most recent fiscal half year divided by 365.

See “Disclosure of Expenses” on page 6 for further information on how expenses were calculated.

BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015 5

About Fund Performance

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

Ÿ Service Shares are not subject to any sales charge. These shares are subject to a service fee of 0.25% per year (but no distribution fee) and are only available to certain eligible investors.

Ÿ Investor A Shares are subject to a maximum initial sales charge (front-end load) of 5.25% and a service fee of 0.25% per year (but no distribution fee). Certain redemptions of these shares may be subject to a contingent deferred sales charge (“CDSC”) where no initial sales charge was paid at the time of purchase. These shares are generally available through financial intermediaries.

Ÿ Investor B Shares are subject to a maximum CDSC of 4.50%, declining to 0% after six years. In addition, these shares are subject to a distribution fee of 0.75% per year and a service fee of 0.25% per year. These 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. These shares are only available through exchanges and distribution reinvestments by current holders and for purchase by certain employer-sponsored retirement plans.

Ÿ Investor C Shares are subject to a 1.00% CDSC if redeemed within one year of purchase. In addition, these shares are subject to a distribution

fee of 0.75% per year and a service fee of 0.25% per year. These shares are generally available through financial intermediaries.

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 table on the previous page assume reinvestment of all 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. Distributions 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.

BlackRock Advisors, LLC (the “Manager”), the Fund’s investment advisor, has contractually agreed to waive and/or reimburse 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 continue waiving and/or reimbursing its fees after the applicable termination date of such agreement. See Note 5 of the Notes to Financial Statements for additional information on waivers and/or reimbursements.

Disclosure of Expenses

Shareholders of the Fund may incur the following charges: (a) transactional expenses, such as sales charges; and (b) operating expenses, including investment advisory fees, administration 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, 2014 and held through March 31, 2015) 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 expense example 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 expense example 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 shareholder reports of other funds.

The expenses shown in the expense example are intended to highlight shareholders’ ongoing costs only and do not reflect any transactional expenses, such as sales charges, if any. Therefore, the hypothetical example is 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, 2015

Derivative Financial Instruments

The Fund may invest in various derivative financial instruments. Derivative financial instruments are used to obtain exposure to a security, index and/or market without owning or taking physical custody of securities or to manage equity, credit, interest rate, foreign currency exchange rate, commodity and/or other risks. Derivative financial instruments may give rise to a form of economic leverage. Derivative financial instruments also 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 limit the amount of appreciation the Fund can realize on an investment and/or may result in lower distributions paid to shareholders. The Fund’s investments in these instruments are discussed in detail in the Notes to Financial Statements.

BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015 7

Schedule of Investments March 31, 2015 (Unaudited)
	(Percentages shown are based on Net Assets)

Asset-Backed Securities (a)		Par   (000)		Value
Amortizing Residential Collateral Trust, Series 2002-BC5, Class M2, 1.96%, 7/25/32	USD		9	$	7,814
Asset-Backed European Securitisation Transaction S.r.l., Series 9, Class A, 0.74%, 12/10/28	EUR		215		232,019
Auto ABS, Series 2012-3, Class A, 3.25%, 9/27/24			382		411,229
Bumper Mortgage, Series 2014-6, Class A, 0.44%, 3/19/29			400		430,937
Driver GmbH, Series 12, Class A, 0.35%, 5/22/20			389		418,718
E-Carat PLC, Series 5, Class A, 0.91%, 4/18/23	GBP		500		741,760
Knollwood CDO Ltd., Series 2004-1A, Class C, 3.50% (3.50% Cash or PIK), 1/10/39 (b)(c)	USD		138		1
MOTOR PLC, Series 2015-1X, Class A2, 1.00%, 6/25/22	GBP		345		511,778
SMART Trust, Series 2014-2E, Class AE, 0.42%, 6/14/21	EUR		369		396,153
Sunrise S.r.l., Series 2014-1, Class A, 1.15%, 5/27/31			117		126,026
Turbo Finance PLC, Series 5, Class A, 0.98%, 8/20/21	GBP		420		623,779
Total Asset-Backed Securities — 0.5%					3,900,214
Common Stocks		Shares
Aerospace & Defense — 1.1%
Airbus Group NV			58,934		3,831,337
Finmeccanica SpA (d)			36,412		432,505
MTU Aero Engines AG			3,317		324,963
Safran SA			27,747		1,938,718
Thales SA			12,552		696,412
Zodiac Aerospace			17,843		590,361
					7,814,296
Air Freight & Logistics — 1.2%
Bollore SA			173,964		926,915
bpost SA			13,228		371,252
Deutsche Post AG, Registered Shares			142,175		4,429,429
Kintetsu World Express, Inc.			2,200		98,885
Oesterreichische Post AG			4,290		211,266
PostNL NV (d)			28,998		123,192

Common Stocks	Shares		Value
Air Freight & Logistics (concluded)
Royal Mail PLC		378,650	$	2,455,987
TNT Express NV		35,236		223,811
Yamato Holdings Co. Ltd.		9,100		209,743
				9,050,480
Airlines — 0.2%
ANA Holdings, Inc.		78,000		208,819
Deutsche Lufthansa AG, Registered Shares		31,366		439,206
International Consolidated Airlines Group SA (d)		125,213		1,121,891
				1,769,916
Auto Components — 1.6%
Aisin Seiki Co. Ltd.		5,400		195,779
Autoliv, Inc.		1,090		128,369
BorgWarner, Inc.		1,803		109,045
Brembo SpA		4,373		178,696
Bridgestone Corp.		8,700		348,347
Calsonic Kansei Corp.		11,000		72,796
Cie Generale des Etablissements Michelin		11,850		1,178,418
Continental AG		12,458		2,933,803
Cooper Tire & Rubber Co.		3,067		131,390
Dana Holding Corp.		4,484		94,881
Delphi Automotive PLC		2,348		187,230
Denso Corp.		8,500		387,475
Eagle Industry Co. Ltd.		3,200		64,640
ElringKlinger AG		4,002		119,982
Exedy Corp.		3,300		78,600
Faurecia		7,841		341,914
FCC Co. Ltd.		4,300		67,015
Gentex Corp.		5,289		96,789
The Goodyear Tire & Rubber Co.		4,945		133,911
Johnson Controls, Inc.		5,018		253,108
Koito Manufacturing Co. Ltd.		4,600		138,316
Leoni AG		2,067		130,567
Mitsuba Corp.		2,700		59,619
NGK Spark Plug Co. Ltd.		6,000		161,064
NHK Spring Co. Ltd.		8,900		92,588
Nifco, Inc.		2,900		99,967
Nippon Seiki Co. Ltd.		5,000		98,536
Nissin Kogyo Co. Ltd.		4,900		77,823
NOK Corp.		4,500		135,304
Nokian Renkaat OYJ		9,331		278,080
Pirelli & C. SpA		31,566		522,501
Plastic Omnium SA		9,451		249,075
Showa Corp.		6,300		63,592
Stanley Electric Co. Ltd.		5,200		117,376
Sumitomo Electric Industries Ltd.		14,600		191,383

Portfolio Abbreviations
ADR	American Depositary Receipts	GBP	British Pound	PIK	Payment-in-kind
AUD	Australian Dollar	ILS	Israeli Shekel	PLN	Polish Zloty
BRL	Brazilian Real	INR	Indian Rupee	REIT	Real Estate Investment Trust
CAD	Canadian Dollar	JPY	Japanese Yen	S&P	Standard & Poor’s
CDO	Collateralized Debt Obligation	KRW	Korean Won	SEK	Swedish Krona
CHF	Swiss Franc	LIBOR	London Interbank Offered Rate	SGD	Singapore Dollar
CZK	Czech Koruna	LP	Limited Partnership	TBA	To-be-announced
DKK	Danish Krone	MXN	Mexican Peso	THB	Thai Baht
ETF	Exchange Traded Fund	MYR	Malaysian Ringgit	TRY	Turkish Lira
EUR	Euro	NOK	Norwegian Krone	TWD	Taiwan New Dollar
EURIBOR	Euro Interbank Offer Rate	NZD	New Zealand Dollar	USD	U.S. Dollar
FTSE	Financial Times Stock Exchange	OTC	Over-the-counter	ZAR	South African Rand

See Notes to Financial Statements.

8 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015

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

Common Stocks	Shares		Value
Auto Components (concluded)
Sumitomo Rubber Industries Ltd.		6,500	$	119,817
Tenneco, Inc. (d)		1,900		109,098
Tokai Rika Co. Ltd.		4,500		104,291
Topre Corp.		4,600		71,813
Toyo Tire & Rubber Co. Ltd.		4,900		88,030
Toyoda Gosei Co. Ltd.		4,700		104,919
Toyota Industries Corp.		4,500		257,386
TPR Co. Ltd.		2,300		61,568
TRW Automotive Holdings Corp. (d)		1,071		112,294
TS Tech Co. Ltd.		3,200		86,289
Unipres Corp.		3,300		67,297
Valeo SA		4,915		733,095
The Yokohama Rubber Co. Ltd.		10,000		103,081
				11,536,957
Automobiles — 3.9%
Bayerische Motoren Werke AG		39,332		4,898,196
Daihatsu Motor Co. Ltd.		10,400		159,074
Daimler AG, Registered Shares		67,143		6,448,034
Fiat Chrysler Automobiles NV (d)		83,756		1,359,695
Ford Motor Co.		30,690		495,337
Fuji Heavy Industries Ltd.		10,400		345,241
General Motors Co.		13,126		492,225
Harley-Davidson, Inc.		4,879		296,350
Honda Motor Co. Ltd.		13,000		424,358
Isuzu Motors Ltd.		14,900		197,685
Mazda Motor Corp.		134,900		2,733,321
Mitsubishi Motors Corp.		21,200		191,155
Nissan Motor Co. Ltd.		33,700		342,748
Peugeot SA		49,901		834,122
Porsche Automobil Holding SE, Preference Shares		10,095		988,583
Renault SA		20,101		1,825,767
Suzuki Motor Corp.		9,600		288,328
Tesla Motors, Inc. (d)		2,443		461,165
Thor Industries, Inc.		3,341		211,185
Toyota Motor Corp.		12,900		900,468
Volkswagen AG		18,790		4,831,308
Yamaha Motor Co. Ltd.		6,800		163,816
				28,888,161
Banks — 1.2%
Aozora Bank Ltd.		40,000		141,782
The Bank of Yokohama Ltd.		25,000		146,416
The Chiba Bank Ltd.		19,000		139,252
The Chugoku Bank Ltd.		8,000		119,456
Fukuoka Financial Group, Inc.		26,000		133,705
The Gunma Bank Ltd.		16,000		108,088
The Hachijuni Bank Ltd.		17,000		119,869
The Hiroshima Bank Ltd.		20,000		107,787
Hokuhoku Financial Group, Inc.		52,000		115,912
ING Groep NV — CVA (d)		125,473		1,837,918
The Iyo Bank Ltd.		10,800		128,080
The Joyo Bank Ltd.		25,000		128,479
KBC Groep NV		25,839		1,596,904
The Keiyo Bank Ltd.		15,000		86,833
Mitsubishi UFJ Financial Group, Inc.		81,700		506,002
Mizuho Financial Group, Inc.		213,400		375,046
The Nishi-Nippon City Bank Ltd.		36,000		104,348
North Pacific Bank Ltd.		18,800		70,954
Resona Holdings, Inc.		41,700		206,947
Senshu Ikeda Holdings, Inc.		15,700		74,551
Seven Bank Ltd.		32,200		158,770
Shinsei Bank Ltd.		70,000		139,184
The Shizuoka Bank Ltd.		14,000		139,631
Société Générale SA		28,190		1,361,065

Common Stocks	Shares		Value
Banks (concluded)
Sumitomo Mitsui Financial Group, Inc.		10,900	$	417,520
Sumitomo Mitsui Trust Holdings, Inc.		57,000		236,782
Suruga Bank Ltd.		6,700		139,137
Yamaguchi Financial Group, Inc.		9,000		103,440
				8,943,858
Beverages — 0.4%
Asahi Group Holdings Ltd.		7,400		234,643
Brown-Forman Corp., Class B		1,742		157,390
The Coca-Cola Co.		13,304		539,477
Constellation Brands, Inc., Class A (d)		3,311		384,771
Dr Pepper Snapple Group, Inc.		4,790		375,919
Ito En Ltd.		4,500		97,073
Kirin Holdings Co. Ltd.		15,100		198,056
Monster Beverage Corp. (d)		4,101		567,558
PepsiCo, Inc.		6,908		660,543
				3,215,430
Biotechnology — 0.2%
Genmab A/S (d)		23,623		1,772,931
Building Products — 0.6%
Aica Kogyo Co. Ltd.		4,300		100,127
Asahi Glass Co. Ltd.		27,000		176,850
Bunka Shutter Co. Ltd.		7,000		57,891
Cie de Saint-Gobain		78,108		3,429,498
Daikin Industries Ltd.		4,200		280,787
LIXIL Group Corp.		7,100		168,027
Nichias Corp.		10,000		57,677
Sankyo Tateyama, Inc.		2,700		52,148
Sanwa Holdings Corp.		11,900		88,278
TOTO Ltd.		8,000		118,792
Wienerberger AG		7,642		121,945
				4,652,020
Capital Markets — 0.2%
Daiwa Securities Group, Inc.		30,000		236,157
Ichiyoshi Securities Co. Ltd.		4,900		53,021
Jafco Co. Ltd.		2,400		89,139
kabu.com Securities Co. Ltd.		12,700		83,305
Kyokuto Securities Co. Ltd.		3,400		50,070
Matsui Securities Co. Ltd.		9,300		84,369
Nomura Holdings, Inc.		43,500		255,503
Okasan Securities Group, Inc.		10,000		79,347
SBI Holdings, Inc.		9,200		111,369
Tokai Tokyo Financial Holdings, Inc.		12,200		93,981
				1,136,261
Chemicals — 1.1%
Air Water, Inc.		5,000		89,289
Akzo Nobel NV		25,805		1,951,099
Asahi Kasei Corp.		21,000		200,542
Daicel Corp.		10,300		122,771
Denki Kagaku Kogyo KK		22,000		86,673
DIC Corp.		29,000		84,316
Hitachi Chemical Co. Ltd.		6,200		132,392
JSR Corp.		8,000		138,537
Kansai Paint Co. Ltd.		7,000		127,398
Kuraray Co. Ltd.		11,000		148,937
Mitsubishi Chemical Holdings Corp.		31,100		180,538
Nihon Parkerizing Co. Ltd.		7,400		89,514
Nippon Kayaku Co. Ltd.		8,000		100,165
Nippon Paint Holdings Co. Ltd.		4,900		179,128
The Nippon Synthetic Chemical Industry Co. Ltd.		8,000		53,093
Nissan Chemical Industries Ltd.		5,200		107,457
Nitto Denko Corp.		3,300		220,354

See Notes to Financial Statements.

BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015 9

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

Common Stocks	Shares		Value
Chemicals (concluded)
NOF Corp.		11,000	$	81,599
OCI NV (d)		13,739		425,183
Shin-Etsu Chemical Co. Ltd.		5,400		352,556
Sumitomo Chemical Co. Ltd.		40,000		205,298
Syngenta AG, Registered Shares		6,585		2,237,113
Taiyo Holdings Co. Ltd.		2,400		84,324
Taiyo Nippon Sanso Corp.		10,000		136,078
Toray Industries, Inc.		26,000		217,620
Tosoh Corp.		21,000		105,777
Zeon Corp.		10,000		92,260
				7,950,011
Commercial Services & Supplies — 0.2%
Aeon Delight Co. Ltd.		3,000		71,724
Bilfinger SE		3,106		179,528
Dai Nippon Printing Co. Ltd.		19,000		184,550
Edenred		14,919		372,226
Park24 Co. Ltd.		4,900		100,253
Pilot Corp.		1,400		78,727
Secom Co. Ltd.		3,700		246,791
Societe BIC SA		3,052		434,819
Sohgo Security Services Co. Ltd.		4,000		136,115
				1,804,733
Communications Equipment — 0.0%
Hitachi Kokusai Electric, Inc.		6,000		80,380
Construction & Engineering — 1.1%
Abengoa SA, B Shares		50,524		183,090
ACS Actividades de Construccion y Servicios SA		20,245		716,555
Arcadis NV		5,529		177,563
Boskalis Westminster NV		7,897		389,231
Bouygues SA		21,746		853,653
Chiyoda Corp.		12,000		102,511
COMSYS Holdings Corp.		7,700		94,993
Eiffage SA		5,707		339,653
Ferrovial SA		48,235		1,025,571
Fomento de Construcciones y Contratas SA (d)		10,718		130,525
Hazama Ando Corp.		13,700		78,270
HOCHTIEF AG		4,679		354,046
JGC Corp.		7,000		139,003
Kajima Corp.		34,000		157,631
Kyowa Exeo Corp.		7,100		76,141
Maeda Road Construction Co. Ltd.		6,000		97,265
Nippo Corp.		5,000		82,419
Obayashi Corp.		24,000		155,569
Obrascon Huarte Lain SA		7,324		155,868
Orascom Construction Ltd. (d)		6,870		91,364
Outotec OYJ (e)		8,305		50,834
Sacyr SA (d)		32,259		135,366
Shimizu Corp.		25,000		169,020
Sumitomo Mitsui Construction Co. Ltd.		54,800		75,599
Taisei Corp.		28,000		158,040
Toshiba Plant Systems & Services Corp.		6,600		90,933
Vinci SA		36,099		2,062,462
				8,143,175
Construction Materials — 0.0%
Sumitomo Osaka Cement Co. Ltd.		27,000		82,941
Taiheiyo Cement Corp.		34,000		103,812
				186,753
Consumer Finance — 0.1%
Acom Co. Ltd. (d)		43,200		149,805
AEON Financial Service Co. Ltd.		4,900		123,608
Aiful Corp. (d)		25,000		88,668
Credit Saison Co. Ltd.		5,700		102,251

Common Stocks	Shares		Value
Consumer Finance (concluded)
Hitachi Capital Corp.		4,400	$	92,872
J Trust Co. Ltd.		9,700		83,564
Orient Corp. (d)		47,200		76,629
				717,397
Containers & Packaging — 0.0%
FP Corp.		2,400		87,036
Distributors — 0.1%
D’ieteren SA/NV		3,839		134,651
Genuine Parts Co.		4,155		387,204
LKQ Corp. (d)		10,234		261,581
Pool Corp.		2,662		185,701
				969,137
Diversified Consumer Services — 0.1%
Apollo Education Group, Inc. (d)		8,070		152,684
Benesse Holdings, Inc.		4,400		138,415
Bright Horizons Family Solutions, Inc. (d)		3,434		176,061
Graham Holdings Co., Class B		243		255,060
Service Corp. International		9,266		241,379
				963,599
Diversified Financial Services — 0.1%
Century Tokyo Leasing Corp.		3,200		97,479
Fuyo General Lease Co. Ltd.		1,800		72,318
IBJ Leasing Co. Ltd.		2,800		57,907
Japan Exchange Group, Inc.		4,900		141,869
Mitsubishi UFJ Lease & Finance Co. Ltd.		22,400		110,696
ORIX Corp.		18,000		252,920
Ricoh Leasing Co. Ltd.		2,000		59,350
				792,539
Diversified Telecommunication Services — 0.1%
Nippon Telegraph & Telephone Corp.		7,700		475,329
Electric Utilities — 0.1%
Tohoku Electric Power Co., Inc.		15,500		176,056
Tokyo Electric Power Co., Inc. (d)		42,900		162,374
				338,430
Electrical Equipment — 1.1%
Alstom SA (d)		20,873		642,284
AMETEK, Inc.		29,794		1,565,377
Fuji Electric Co. Ltd.		21,000		99,078
Gamesa Corp Tecnologica SA (d)		18,517		233,194
GS Yuasa Corp.		20,000		90,004
Legrand SA		16,685		903,786
Mitsubishi Electric Corp.		25,000		296,787
Nexans SA (d)		2,803		94,783
Nidec Corp.		4,400		292,080
OSRAM Licht AG		6,733		333,302
Prysmian SpA		13,572		279,716
Schneider Electric SE		40,785		3,173,827
SGL Carbon SE (d)(e)		6,296		102,242
				8,106,460
Electronic Equipment, Instruments & Components — 0.5%
Alps Electric Co. Ltd.		5,400		130,028
Anritsu Corp.		9,900		69,131
Enplas Corp.		1,600		63,994
Hamamatsu Photonics KK		4,800		144,682
Hirose Electric Co. Ltd.		1,155		148,707
Hitachi High-Technologies Corp.		4,000		121,729
Hitachi Ltd.		50,000		341,493
Horiba Ltd.		2,400		91,689
Hoya Corp.		6,500		260,223
Japan Aviation Electronics Industry Ltd.		4,000		96,591

See Notes to Financial Statements.

10 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015

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

Common Stocks	Shares		Value
Electronic Equipment, Instruments & Components (concluded)
Keyence Corp.		600	$	327,418
Kyocera Corp.		5,400		295,125
Murata Manufacturing Co. Ltd.		2,300		315,880
Oki Electric Industry Co. Ltd.		39,000		80,731
Omron Corp.		4,000		180,197
Shimadzu Corp.		11,000		122,506
Tabuchi Electric Co. Ltd.		4,300		49,134
TDK Corp.		3,100		219,503
Topcon Corp.		4,700		115,134
Yaskawa Electric Corp.		7,300		106,684
Yokogawa Electric Corp.		11,700		126,050
				3,406,629
Food & Staples Retailing — 1.2%
Aeon Co. Ltd.		18,800		206,225
Ain Pharmaciez, Inc.		1,900		75,257
Casey’s General Stores, Inc.		2,390		215,339
Cosmos Pharmaceutical Corp.		700		109,385
Costco Wholesale Corp.		4,442		672,941
CVS Health Corp.		11,727		1,210,344
FamilyMart Co. Ltd.		3,300		138,265
The Fresh Market, Inc. (d)		4,420		179,629
The Kroger Co.		8,968		687,487
Kusuri No Aoki Co. Ltd.		1,000		75,110
Lawson, Inc.		2,300		159,436
Matsumotokiyoshi Holdings Co. Ltd.		2,400		85,401
Mitsubishi Shokuhin Co. Ltd.		3,700		77,395
Rite Aid Corp. (d)		38,496		334,530
Seven & i Holdings Co. Ltd.		8,900		374,007
Sugi Holdings Co. Ltd.		2,400		118,695
Sundrug Co. Ltd.		2,200		114,196
Sysco Corp.		12,474		470,644
Tsuruha Holdings, Inc.		1,700		130,137
United Natural Foods, Inc. (d)		2,846		219,256
Valor Co. Ltd.		3,200		69,096
Walgreens Boots Alliance, Inc.		12,221		1,034,874
Wal-Mart Stores, Inc.		15,652		1,287,377
Welcia Holdings Co. Ltd.		2,200		82,142
Whole Foods Market, Inc.		8,824		459,554
				8,586,722
Food Products — 1.1%
Ajinomoto Co., Inc.		9,000		197,446
Archer-Daniels-Midland Co.		7,388		350,191
Bunge Ltd.		1,137		93,643
Calbee, Inc.		3,600		156,284
Campbell Soup Co.		6,838		318,309
ConAgra Foods, Inc.		10,917		398,798
Darling Ingredients, Inc. (d)		10,008		140,212
Dean Foods Co.		9,478		156,671
Ezaki Glico Co. Ltd.		3,300		133,409
Flowers Foods, Inc.		11,743		267,036
General Mills, Inc.		8,645		489,307
The Hain Celestial Group, Inc. (d)		3,043		194,904
The Hershey Co.		3,692		372,560
Hormel Foods Corp.		7,399		420,633
Ingredion, Inc.		1,969		153,228
Kellogg Co.		5,204		343,204
Keurig Green Mountain, Inc.		3,737		417,535
Kewpie Corp.		5,800		141,128
Kikkoman Corp.		5,000		158,546
Kraft Foods Group, Inc.		9,329		812,696
Lancaster Colony Corp.		2,019		192,148
Maruha Nichiro Corp.		4,000		56,428
McCormick & Co, Inc., Non-Voting Shares		2,675		206,269
MEIJI Holdings Co. Ltd.		1,400		170,534

Common Stocks	Shares		Value
Food Products (concluded)
Mondelez International, Inc., Class A		4,153	$	149,882
NH Foods Ltd.		6,000		138,262
Nichirei Corp.		16,000		89,636
Nissin Foods Holdings Co. Ltd.		3,600		176,926
Snyder’s-Lance, Inc.		5,369		171,593
Toyo Suisan Kaisha Ltd.		3,600		126,656
TreeHouse Foods, Inc. (d)		1,937		164,684
Tyson Foods, Inc., Class A		9,457		362,203
The WhiteWave Foods Co. (d)		6,678		296,103
Yakult Honsha Co. Ltd.		3,400		236,853
				8,253,917
Gas Utilities — 0.1%
Osaka Gas Co. Ltd.		41,000		171,453
Tokyo Gas Co. Ltd.		35,000		220,036
				391,489
Health Care Equipment & Supplies — 0.1%
Asahi Intecc Co. Ltd.		1,600		111,665
Nakanishi, Inc.		2,300		89,755
Nihon Kohden Corp.		4,000		108,797
Olympus Corp.		6,000		222,454
Sysmex Corp.		3,600		199,609
Terumo Corp.		7,400		194,938
				927,218
Health Care Providers & Services — 0.2%
Alfresa Holdings Corp.		8,000		112,731
Healthscope Ltd.		388,383		902,928
Medipal Holdings Corp.		9,100		118,611
Miraca Holdings, Inc.		2,100		96,543
Ship Healthcare Holdings, Inc.		3,200		73,051
				1,303,864
Health Care Technology — 0.0%
M3, Inc.		7,900		167,597
Hotels, Restaurants & Leisure — 1.7%
Accor SA		15,259		795,694
Autogrill SpA (d)		16,670		161,476
Brinker International, Inc.		3,702		227,895
Caesars Entertainment Corp. (d)		16,364		172,313
Carnival Corp.		6,961		333,014
The Cheesecake Factory, Inc.		3,406		168,018
Chipotle Mexican Grill, Inc. (d)		788		512,626
Cracker Barrel Old Country Store, Inc.		1,608		244,641
Darden Restaurants, Inc.		5,078		352,109
Domino’s Pizza, Inc.		2,258		227,042
GTECH SpA (e)		11,736		232,483
HIS Co. Ltd.		3,400		119,397
Jack in the Box, Inc.		2,328		223,302
Las Vegas Sands Corp.		28,450		1,565,888
Life Time Fitness, Inc. (d)		3,106		220,402
Marriott International, Inc., Class A		6,203		498,225
McDonald’s Corp.		3,665		357,118
Melia Hotels International SA		10,705		132,083
MGM Resorts International (d)		11,579		243,506
Oriental Land Co. Ltd.		4,000		302,873
Panera Bread Co., Class A (d)		1,372		219,513
Resorttrust, Inc.		4,400		114,657
Royal Caribbean Cruises Ltd.		3,276		268,141
Sands China Ltd.		444,000		1,836,044
Six Flags Entertainment Corp.		4,569		221,185
Sodexo SA		10,161		991,032
Starbucks Corp.		7,562		716,121
Starwood Hotels & Resorts Worldwide, Inc.		1,470		122,745
TUI AG		18,071		316,509

See Notes to Financial Statements.

BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015 11

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

Common Stocks	Shares		Value
Hotels, Restaurants & Leisure (concluded)
Vail Resorts, Inc.		2,415	$	249,759
The Wendy’s Co.		16,991		185,202
Wyndham Worldwide Corp.		3,082		278,829
Wynn Resorts Ltd.		848		106,746
Yum! Brands, Inc.		2,148		169,091
				12,885,679
Household Durables — 0.7%
Casio Computer Co. Ltd.		7,400		140,168
De’ Longhi		10,264		222,162
DR Horton, Inc.		12,966		369,272
Fujitsu General Ltd.		5,000		65,494
Garmin Ltd.		3,710		176,299
Haseko Corp.		10,800		105,202
Iida Group Holdings Co. Ltd.		10,200		126,893
Jarden Corp. (d)		4,312		228,105
Leggett & Platt, Inc.		4,601		212,060
Lennar Corp., Class A		6,501		336,817
MDC Holdings, Inc.		4,842		137,997
Misawa Homes Co. Ltd.		4,900		42,717
Mohawk Industries, Inc. (d)		1,898		352,554
Newell Rubbermaid, Inc.		6,453		252,119
Nikon Corp.		11,100		148,835
NVR, Inc. (d)		198		263,075
Panasonic Corp.		30,900		405,780
Pressance Corp.		1,600		50,808
PulteGroup, Inc.		14,412		320,379
Rinnai Corp.		1,700		125,989
SEB SA		3,448		248,681
Sekisui Chemical Co. Ltd.		11,000		142,725
Sekisui House Ltd.		12,300		178,596
Starts Corp., Inc.		4,100		62,314
Sumitomo Forestry Co. Ltd.		7,800		85,168
Toll Brothers, Inc. (d)		7,533		296,348
Whirlpool Corp.		1,126		227,520
				5,324,077
Household Products — 0.3%
The Clorox Co.		3,081		340,112
Colgate-Palmolive Co.		3,178		220,363
Energizer Holdings, Inc.		1,247		172,148
Kimberly-Clark Corp.		3,430		367,387
Pigeon Corp.		1,400		117,647
The Procter & Gamble Co.		7,548		618,483
Spectrum Brands Holdings, Inc.		1,519		136,042
Unicharm Corp.		9,800		256,564
				2,228,746
Independent Power and Renewable Electricity Producers — 0.0%
Electric Power Development Co. Ltd.		4,700		158,329
Industrial Conglomerates — 1.1%
Keihan Electric Railway Co. Ltd.		18,000		109,545
Koninklijke Philips NV		61,168		1,735,327
Rheinmetall AG		2,422		116,496
Siemens AG, Registered Shares (d)		57,760		6,246,959
Toshiba Corp.		58,000		243,024
				8,451,351
Insurance — 0.2%
The Dai-ichi Life Insurance Co. Ltd.		16,500		239,334
MS&AD Insurance Group Holdings, Inc.		8,300		232,367
Sompo Japan Nipponkoa Holdings, Inc.		6,900		214,510
Sony Financial Holdings, Inc.		8,300		133,514
T&D Holdings, Inc.		11,800		162,086
Tokio Marine Holdings, Inc.		7,800		294,425
				1,276,236

Common Stocks	Shares		Value
Internet & Catalog Retail — 0.6%
Amazon.com, Inc. (d)		2,085	$	775,829
Expedia, Inc.		2,520		237,208
Groupon, Inc. (d)		17,730		127,833
HSN, Inc.		3,501		238,873
Liberty Interactive Corp., Class A (d)		10,027		292,688
Liberty Ventures, Series A (d)		7,002		294,154
Netflix, Inc. (d)		1,142		475,860
The Priceline Group, Inc. (d)		264		307,336
Rakuten, Inc.		16,200		285,252
Start Today Co. Ltd.		4,200		110,565
TripAdvisor, Inc. (d)		15,067		1,253,122
Yoox SpA (d)		4,008		110,519
				4,509,239
Internet Software & Services — 0.1%
COOKPAD, Inc.		2,400		109,616
Dena Co. Ltd.		100		1,957
F@N Communications, Inc.		10,200		86,607
GMO internet, Inc.		5,600		68,798
Gree, Inc.		14,400		100,196
Kakaku.com, Inc.		7,600		126,112
Mixi, Inc.		3,200		129,357
Yahoo Japan Corp.		79,100		326,263
				948,906
IT Services — 0.2%
Fujitsu Ltd.		32,000		218,228
Itochu Techno-Solutions Corp.		5,000		103,721
NEC Networks & System Integration Corp.		4,100		82,492
Nomura Research Institute Ltd.		4,900		184,094
NS Solutions Corp.		3,200		98,578
NTT Data Corp.		4,900		212,819
Obic Co. Ltd.		3,300		139,938
Otsuka Corp.		2,800		119,322
SCSK Corp.		4,100		114,747
Transcosmos, Inc.		3,800		80,007
				1,353,946
Leisure Products — 0.2%
Bandai Namco Holdings, Inc.		7,600		147,927
Brunswick Corp.		2,896		148,999
Hasbro, Inc.		2,459		155,507
Heiwa Corp.		4,600		90,359
Mattel, Inc.		7,206		164,657
Polaris Industries, Inc.		1,719		242,551
Sega Sammy Holdings, Inc.		10,400		151,533
Shimano, Inc.		1,500		222,903
Universal Entertainment Corp.		4,500		73,525
Yamaha Corp.		7,100		123,983
				1,521,944
Machinery — 1.5%
Aalberts Industries NV		6,496		204,444
ANDRITZ AG		6,455		385,408
Cargotec OYJ, B Shares		3,597		124,375
CNH Industrial NV (d)		82,482		675,961
Construcciones y Auxiliar de Ferrocarriles SA		204		67,826
DMG MORI SEIKI AG		4,731		155,602
Duerr AG		2,113		232,047
Ebara Corp.		20,000		84,198
FANUC Corp.		1,900		414,796
GEA Group AG		12,950		622,522
Hino Motors Ltd.		10,500		149,400
Hitachi Construction Machinery Co. Ltd.		6,700		116,956
Hoshizaki Electric Co. Ltd.		2,300		149,359
IHI Corp.		35,000		163,651

See Notes to Financial Statements.

12 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015

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

Common Stocks	Shares		Value
Machinery (concluded)
JTEKT Corp.		9,400	$	146,560
Kawasaki Heavy Industries Ltd.		31,000		156,396
KION Group AG		5,959		243,628
Komatsu Ltd.		12,100		237,192
Kone OYJ, B Shares		28,113		1,246,534
Konecranes OYJ		4,020		126,674
Krones AG		1,976		205,137
Kubota Corp.		15,000		236,984
Makita Corp.		3,300		171,007
MAN SE		8,950		942,155
Metso OYJ		9,722		284,044
Minebea Co. Ltd.		9,000		141,556
Mitsubishi Heavy Industries Ltd.		44,000		242,100
Mitsui Engineering & Shipbuilding Co. Ltd.		50,000		85,249
Nabtesco Corp.		4,000		115,557
Nachi-Fujikoshi Corp.		15,000		82,130
Namura Shipbuilding Co. Ltd.		6,000		56,569
NGK Insulators Ltd.		7,000		149,146
NSK Ltd.		11,000		160,551
Obara Group, Inc.		1,500		84,700
OKUMA Corp.		9,000		83,461
OSG Corp.		4,600		89,458
Rational AG		721		241,002
SMC Corp.		900		267,987
Sumitomo Heavy Industries Ltd.		22,000		143,975
Tadano Ltd.		6,000		80,566
Takuma Co. Ltd.		8,000		62,662
THK Co. Ltd.		5,600		142,300
Tsubakimoto Chain Co.		10,000		83,285
Vallourec SA		9,759		238,192
Wartsila OYJ Abp		12,352		546,332
Zardoya Otis SA		26,499		342,001
				10,981,635
Marine — 0.0%
Kawasaki Kisen Kaisha Ltd.		44,000		118,151
Nippon Yusen KK		55,000		158,220
				276,371
Media — 3.9%
Altice SA (d)		14,517		1,574,202
AMC Networks, Inc., Class A (d)		3,335		255,594
Atresmedia Corp de Medios de Comunicacion SA		13,874		209,876
Avex Group Holdings, Inc.		3,900		62,208
Axel Springer SE		6,065		357,966
Cablevision Systems Corp., Class A		12,234		223,882
CBS Corp., Class B, Non-Voting Shares		9,125		553,249
Charter Communications, Inc., Class A (d)		2,787		538,198
Cinemark Holdings, Inc.		4,141		186,635
Comcast Corp., Class A		22,132		1,249,794
CTS Eventim AG & Co. KGaA		6,434		202,701
CyberAgent, Inc.		2,000		114,555
Daiichikosho Co. Ltd.		2,900		90,083
Dentsu, Inc.		4,500		192,504
DIRECTV (d)		6,887		586,084
Discovery Communications, Inc., Class A (d)		72,041		2,215,981
DISH Network Corp. (d)		6,054		424,143
DreamWorks Animation SKG, Inc., Class A (d)		7,495		181,379
Eutelsat Communications SA		14,149		469,338
Fuji Media Holdings, Inc.		9,100		128,987
Gannett Co., Inc.		8,135		301,646
Grupo Televisa SAB — ADR (d)		47,594		1,571,078
Hakuhodo DY Holdings, Inc.		12,400		131,828
Havas SA		26,002		197,387
The Interpublic Group of Cos., Inc.		8,871		196,227

Common Stocks	Shares		Value
Media (concluded)
JCDecaux SA		13,375	$	450,387
John Wiley & Sons, Inc., Class A		1,655		101,187
Kabel Deutschland Holding AG (d)		5,685		737,955
Kadokawa Dwango (d)		4,700		73,678
Lagardere SCA		8,749		262,954
Liberty Global PLC, Series A (d)		49,608		2,553,324
Lions Gate Entertainment Corp.		5,575		189,104
Live Nation Entertainment, Inc. (d)		6,552		165,307
The Madison Square Garden Co., Class A (d)		3,248		274,943
Mediaset Espana Comunicacion SA (d)		25,021		313,230
Mediaset SpA (d)		71,282		324,454
Meredith Corp.		3,031		169,039
Metropole Television SA		7,876		157,948
Morningstar, Inc.		1,992		149,221
The New York Times Co., Class A		11,497		158,199
Nippon Television Holdings, Inc.		8,900		148,144
NOS SGPS		31,268		226,608
Numericable-SFR SAS (d)		23,212		1,266,400
Publicis Groupe SA		14,080		1,086,361
Reed Elsevier NV		48,272		1,202,817
Regal Entertainment Group, Class A		8,814		201,312
RTL Group SA		9,914		953,329
Scripps Networks Interactive, Inc., Class A		4,324		296,453
SES SA, Receipt		21,421		759,376
Sinclair Broadcast Group, Inc., Class A		6,272		197,004
Sirius XM Holdings, Inc. (d)		131,782		503,407
Sky Deutschland AG (d)		58,806		427,502
Societe Television Francaise 1		13,835		244,277
Telenet Group Holding NV (d)		7,534		414,560
Time Warner Cable, Inc.		5,114		766,486
Time Warner, Inc.		8,630		728,717
Toho Co. Ltd.		5,200		127,144
Usen Corp. (d)		17,000		50,836
Viacom, Inc., Class B		6,261		427,626
Wolters Kluwer NV		18,288		597,186
				28,922,000
Metals & Mining — 0.2%
Asahi Holdings, Inc.		3,100		53,064
Dowa Holdings Co. Ltd.		10,000		85,408
Hitachi Metals Ltd.		10,000		153,266
JFE Holdings, Inc.		9,300		205,280
Kobe Steel Ltd.		80,000		147,553
Mitsubishi Materials Corp.		34,000		114,249
Mitsui Mining & Smelting Co. Ltd.		35,000		79,598
Nippon Steel & Sumitomo Metal Corp.		108,000		271,556
Sumitomo Metal Mining Co. Ltd.		11,000		160,773
				1,270,747
Multiline Retail — 0.8%
Big Lots, Inc.		3,404		163,494
Dillard’s, Inc., Class A		2,057		280,801
Dollar General Corp.		7,832		590,376
Dollar Tree, Inc. (d)		5,682		461,066
Don Quijote Holdings Co. Ltd.		1,700		138,190
Family Dollar Stores, Inc.		4,432		351,192
Isetan Mitsukoshi Holdings Ltd.		10,800		178,446
Izumi Co. Ltd.		2,600		95,149
J Front Retailing Co. Ltd.		8,300		130,299
J.C. Penney Co., Inc. (d)		20,422		171,749
Kohl’s Corp.		5,787		452,833
Macy’s, Inc.		8,424		546,802
Marui Group Co. Ltd.		11,300		128,049
Nordstrom, Inc.		5,630		452,202
Ryohin Keikaku Co. Ltd.		700		101,648

See Notes to Financial Statements.

BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015 13

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

Common Stocks	Shares		Value
Multiline Retail (concluded)
Sears Holdings Corp. (d)		5,671	$	234,666
Seria Co. Ltd.		2,100		75,967
Takashimaya Co. Ltd.		13,000		127,707
Target Corp.		10,418		855,005
				5,535,641
Oil, Gas & Consumable Fuels — 0.1%
Inpex Corp.		23,900		263,349
JX Holdings, Inc.		54,100		208,158
Longview Energy Co. (Acquired 8/13/04, cost $48,000) (d)(f)		3,200		5,632
Matador Resources Co. (Acquired 4/13/06, cost $8,451) (d)(f)		939		20,583
Nippon Gas Co. Ltd.		3,100		76,536
Showa Shell Sekiyu KK		14,400		131,523
				705,781
Paper & Forest Products — 0.0%
Ainsworth Lumber Co. Ltd. (d)		26,991		74,495
Ainsworth Lumber Co. Ltd. (b)(d)		19,432		53,545
Daio Paper Corp.		8,000		68,539
Oji Holdings Corp.		32,000		130,930
				327,509
Personal Products — 0.3%
Dr Ci:Labo Co. Ltd.		1,900		66,334
The Estee Lauder Cos., Inc., Class A		18,938		1,574,884
Kao Corp.		5,900		294,611
Kobayashi Pharmaceutical Co. Ltd.		1,700		121,652
Kose Corp.		2,500		137,879
Shiseido Co. Ltd.		10,100		179,175
				2,374,535
Pharmaceuticals — 1.8%
Astellas Pharma, Inc.		23,600		386,684
AstraZeneca PLC		52,568		3,607,119
Chugai Pharmaceutical Co. Ltd.		8,900		280,892
Daiichi Sankyo Co. Ltd.		12,700		201,814
Eisai Co. Ltd.		4,200		298,737
Hisamitsu Pharmaceutical Co., Inc.		3,100		127,321
Kaken Pharmaceutical Co. Ltd.		3,000		86,729
KYORIN Holdings, Inc.		4,000		95,626
Kyowa Hakko Kirin Co. Ltd.		103,000		1,342,586
Mitsubishi Tanabe Pharma Corp.		11,800		202,434
Mochida Pharmaceutical Co. Ltd.		1,300		85,347
Novo Nordisk A/S, Class B		32,146		1,716,075
Ono Pharmaceutical Co. Ltd.		2,500		282,110
Otsuka Holdings Co. Ltd.		8,900		278,425
Rohto Pharmaceutical Co. Ltd.		6,900		98,074
Santen Pharmaceutical Co. Ltd.		11,000		160,444
Sawai Pharmaceutical Co. Ltd.		1,500		88,827
Shionogi & Co. Ltd.		6,200		206,401
Shire PLC		19,075		1,520,711
Sumitomo Dainippon Pharma Co. Ltd.		13,200		156,344
Taisho Pharmaceutical Holdings Co. Ltd.		2,600		193,186
Takeda Pharmaceutical Co. Ltd.		8,300		414,319
Teva Pharmaceutical Industries Ltd. — ADR		26,980		1,680,854
Towa Pharmaceutical Co. Ltd.		1,100		62,885
Tsumura & Co.		3,100		76,558
				13,650,502
Professional Services — 0.6%
Bureau Veritas SA		30,060		644,927
Meitec Corp.		2,500		83,603
Nihon M&A Center, Inc.		3,000		103,382
Randstad Holding NV		11,715		710,160
Recruit Holdings Co. Ltd.		73,500		2,293,307

Common Stocks	Shares		Value
Professional Services (concluded)
Teleperformance		3,637	$	249,249
Temp Holdings Co. Ltd.		3,200		110,412
				4,195,040
Real Estate Management & Development — 0.3%
Aeon Mall Co. Ltd.		6,000		118,819
Daikyo, Inc.		52,000		78,369
Daito Trust Construction Co. Ltd.		1,700		189,832
Daiwa House Industry Co. Ltd.		10,200		201,045
Hulic Co. Ltd.		12,600		141,574
Leopalace21 Corp. (d)		16,900		88,466
Mitsubishi Estate Co. Ltd.		14,000		324,688
Mitsui Fudosan Co. Ltd.		10,000		293,680
Nomura Real Estate Holdings, Inc.		6,000		108,055
NTT Urban Development Corp.		11,900		118,867
Relo Holdings, Inc.		900		79,625
Sumitomo Real Estate Sales Co. Ltd.		3,100		84,211
Sumitomo Realty & Development Co. Ltd.		6,000		216,008
Takara Leben Co. Ltd.		11,800		63,195
Tokyo Tatemono Co. Ltd.		13,000		95,242
Tokyu Fudosan Holdings Corp.		17,500		119,360
				2,321,036
Road & Rail — 0.3%
Central Japan Railway Co.		1,700		307,223
East Japan Railway Co.		3,600		288,482
Hankyu Hanshin Holdings, Inc.		23,000		142,080
Keio Corp.		19,000		148,809
Keisei Electric Railway Co. Ltd.		8,000		99,292
Kintetsu Corp.		37,000		135,749
Nagoya Railroad Co. Ltd.		28,000		111,806
Nankai Electric Railway Co. Ltd.		23,000		95,019
Nippon Express Co. Ltd.		33,000		184,381
Nishi-Nippon Railroad Co. Ltd.		19,000		87,045
Odakyu Electric Railway Co. Ltd.		14,000		142,589
Sankyu, Inc.		18,000		78,294
Senko Co. Ltd.		10,000		64,788
Sotetsu Holdings, Inc.		17,000		78,744
Tobu Railway Co. Ltd.		26,000		123,181
Tokyu Corp.		24,000		148,483
West Japan Railway Co.		3,200		167,777
				2,403,742
Semiconductors & Semiconductor Equipment — 0.3%
Disco Corp.		1,100		112,234
MediaTek, Inc.		114,000		1,539,657
Nuflare Technology, Inc.		900		39,990
Sanken Electric Co. Ltd.		10,000		69,089
Shindengen Electric Manufacturing Co. Ltd.		11,000		54,849
Tokyo Electron Ltd.		3,900		270,519
				2,086,338
Software — 0.3%
GungHo Online Entertainment, Inc.		40,700		158,994
Nexon Co. Ltd.		14,600		155,477
Oracle Corp.		3,500		150,618
Trend Micro, Inc.		48,700		1,604,690
				2,069,779
Specialty Retail — 3.3%
Aaron’s, Inc. (d)		5,500		155,705
ABC-Mart, Inc.		2,200		128,668
Abercrombie & Fitch Co., Class A		4,505		99,290
Advance Auto Parts, Inc.		2,404		359,855
American Eagle Outfitters, Inc.		11,506		196,522
ANN, Inc. (d)		4,104		168,387

See Notes to Financial Statements.

14 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015

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

Common Stocks	Shares		Value
Specialty Retail (concluded)
AOKI Holdings, Inc.		5,900	$	83,391
Ascena Retail Group, Inc. (d)		12,945		187,832
AutoNation, Inc. (d)		4,685		301,386
AutoZone, Inc. (d)		820		559,371
Bed Bath & Beyond, Inc. (d)		5,496		421,955
Best Buy Co., Inc.		8,186		309,349
The Buckle, Inc.		3,670		187,500
Cabela’s, Inc. (d)		4,035		225,879
CarMax, Inc. (d)		6,572		453,534
Chico’s FAS, Inc.		9,883		174,830
CST Brands, Inc.		2,910		127,545
Dick’s Sporting Goods, Inc.		4,700		267,853
DSW, Inc., Class A		5,485		202,287
Fast Retailing Co. Ltd.		1,100		425,324
Foot Locker, Inc.		4,406		277,578
GameStop Corp., Class A		4,072		154,573
The Gap, Inc.		7,821		338,884
Genesco, Inc. (d)		2,159		153,786
GNC Holdings, Inc., Class A		5,133		251,876
Gulliver International Co. Ltd.		8,800		72,370
Hikari Tsushin, Inc.		1,500		97,148
The Home Depot, Inc.		12,208		1,386,951
Inditex SA		197,285		6,333,945
Kingfisher PLC		554,284		3,127,296
Komeri Co. Ltd.		3,000		70,647
K’s Holdings Corp.		2,700		87,311
L Brands, Inc.		5,537		522,084
Lowe’s Companies, Inc.		13,114		975,550
Lumber Liquidators Holdings, Inc. (d)		2,389		73,533
The Men’s Wearhouse, Inc.		2,747		143,393
Nitori Holdings Co. Ltd.		2,100		142,156
O’Reilly Automotive, Inc. (d)		2,440		527,626
Penske Automotive Group, Inc.		3,174		163,429
Pier 1 Imports, Inc.		9,025		126,169
Ross Stores, Inc.		5,353		563,992
Sally Beauty Holdings, Inc. (d)		6,355		218,421
Sanrio Co. Ltd.		3,700		98,837
Shimamura Co. Ltd.		1,200		111,145
Signet Jewelers Ltd.		2,558		355,025
Staples, Inc.		15,667		255,137
T-Gaia Corp.		4,300		56,879
Tiffany & Co.		2,406		211,752
The TJX Cos., Inc.		8,775		614,689
Tractor Supply Co.		4,546		386,683
Ulta Salon Cosmetics & Fragrance, Inc. (d)		2,417		364,604
United Arrows Ltd.		2,100		62,332
Urban Outfitters, Inc. (d)		5,735		261,803
USS Co. Ltd.		8,300		143,420
VT Holdings Co. Ltd.		11,400		49,926
Williams-Sonoma, Inc.		2,281		181,819
World Duty Free SpA (d)		16,520		177,645
Yamada Denki Co. Ltd.		32,600		134,245
				24,311,122
Technology Hardware, Storage & Peripherals — 0.2%
Brother Industries Ltd.		8,900		141,402
Canon, Inc.		12,400		438,728
Elecom Co. Ltd.		2,800		58,164
FUJIFILM Holdings Corp.		8,600		305,958
Konica Minolta, Inc.		16,200		164,176
NEC Corp.		58,000		170,371
Ricoh Co. Ltd.		15,100		164,189
Seiko Epson Corp.		9,200		162,944
Wacom Co. Ltd.		15,200		73,221
				1,679,153

Common Stocks	Shares		Value
Textiles, Apparel & Luxury Goods — 2.8%
adidas AG		15,236	$	1,203,080
Asics Corp.		5,500		149,668
Brunello Cucinelli SpA		4,380		77,096
Carter’s, Inc.		2,614		241,717
Christian Dior SE		12,554		2,362,876
Cie Financiere Richemont SA, Registered Shares		21,887		1,758,640
Coach, Inc.		6,484		268,632
Columbia Sportswear Co.		2,727		166,074
Deckers Outdoor Corp. (d)		1,867		136,048
Fossil Group, Inc. (d)		1,321		108,916
Gerry Weber International AG		2,961		102,171
Hanesbrands, Inc.		11,600		388,716
HUGO BOSS AG		4,678		568,336
Iconix Brand Group, Inc. (d)		3,149		106,027
Kering		8,609		1,680,633
lululemon athletica, inc. (d)		2,905		185,978
Luxottica Group SpA		29,964		1,897,784
LVMH Moet Hennessy Louis Vuitton SA		36,077		6,348,916
Moncler SpA		17,680		296,393
NIKE, Inc., Class B		4,173		418,677
PVH Corp.		2,161		230,276
Ralph Lauren Corp.		1,886		248,009
Salvatore Ferragamo SpA		11,814		377,998
Seiko Holdings Corp.		13,000		65,534
Steven Madden Ltd. (d)		4,396		167,048
Tod’s SpA		2,085		188,870
Under Armour, Inc., Class A (d)		5,049		407,707
VF Corp.		5,897		444,103
Wolverine World Wide, Inc.		4,656		155,743
				20,751,666
Tobacco — 0.3%
Imperial Tobacco Group PLC		37,203		1,631,949
Japan Tobacco, Inc.		13,700		433,124
				2,065,073
Trading Companies & Distributors — 0.4%
BayWa AG		2,320		90,763
Brenntag AG		9,507		567,990
ITOCHU Corp.		22,500		243,492
Iwatani Corp.		13,000		85,163
Kanamoto Co. Ltd.		2,400		69,079
Kanematsu Corp.		34,000		49,433
Kloeckner & Co. SE (d)		6,927		65,977
Marubeni Corp.		30,000		173,445
MISUMI Group, Inc.		3,200		128,964
Mitsubishi Corp.		15,700		315,473
Mitsui & Co. Ltd.		21,700		290,610
MonotaRO Co. Ltd.		2,900		105,033
Nippon Steel & Sumikin Bussan Corp.		17,000		58,709
Nishio Rent All Co. Ltd.		2,400		69,036
Rexel SA		18,850		355,430
Sojitz Corp.		64,000		106,992
Sumitomo Corp.		19,700		210,218
Toyota Tsusho Corp.		6,700		177,266
Yuasa Trading Co. Ltd.		2,500		52,280
				3,215,353
Transportation Infrastructure — 0.6%
Abertis Infraestructuras SA		60,429		1,092,224
Aeroports de Paris		6,490		775,709
Ansaldo STS SpA		12,911		130,815
Atlantia SpA		55,254		1,450,984
Fraport AG Frankfurt Airport Services Worldwide		6,003		358,569

See Notes to Financial Statements.

BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015 15

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

Common Stocks		Shares		Value
Transportation Infrastructure (concluded)
Groupe Eurotunnel SA, Registered Shares			34,682	$	497,200
Hamburger Hafen und Logistik AG			4,801		100,750
Societa Iniziative Autostradali e Servizi SpA			15,108		175,843
					4,582,094
Wireless Telecommunication Services — 0.6%
KDDI Corp.			18,900		426,999
NTT DOCOMO, Inc.			29,200		510,300
SoftBank Corp.			8,900		518,331
Vodafone Group PLC			940,770		3,078,491
					4,534,121
Total Common Stocks — 41.6%					309,350,416
Corporate Bonds		Par   (000)
Aerospace & Defense — 0.1%
Airbus Group Finance BV, 2.70%, 4/17/23 (b)	USD		500		502,184
Airlines — 0.0%
Ryanair Ltd., 1.88%, 6/17/21	EUR		200		226,144
Auto Components — 0.2%
AA Bond Co. Ltd., 5.50%, 7/31/22	GBP		200		299,645
Delphi Automotive PLC, 1.50%, 3/10/25	EUR		325		347,694
Faurecia, 3.13%, 6/15/22			375		404,528
Schaeffler Finance BV, 3.25%, 5/15/25			225		241,381
					1,293,248
Automobiles — 0.1%
Volkswagen International Finance NV, 2.00%, 1/14/20			400		459,982
Banks — 3.0%
Abbey National Treasury Services PLC:
4.25%, 4/12/21			500		664,108
5.25%, 2/16/29	GBP		200		399,181
Akbank TAS, 5.00%, 10/24/22	USD		200		200,900
Asian Development Bank, 2.35%, 6/21/27	JPY		20,000		204,289
Banca Monte dei Paschi di Siena SpA, 2.88%, 4/16/22	EUR		300		361,974
Banco Popular Espanol SA, 2.13%, 10/08/19			100		115,759
Bank of America Corp., 5.70%, 1/24/22	USD		600		701,543
Bank of Ireland:
1.25%, 4/09/20	EUR		150		160,432
10.00%, 12/19/22			100		147,345
Bankia SA, 4.00%, 5/22/24 (a)			400		437,023
Barclays Bank PLC, 6.00%, 1/14/21			100		132,521
CaixaBank SA, 2.63%, 3/21/24			200		252,734
Canadian Imperial Bank of Commerce, 2.60%, 7/02/15 (b)	USD		290		291,499
Carrefour Banque SA, 2.88%, 9/25/15	EUR		94		102,365
Cooperatieve Centrale Raiffeisen- Boerenleenbank BA, 2.50%, 5/26/26 (a)			225		250,652
Credit Agricole SA:
2.38%, 5/20/24			200		238,945
2.63%, 3/17/27			125		137,939
Danske Bank A/S:
3.88%, 5/18/16			500		559,984
3.88%, 10/04/23 (a)			300		350,102
2.75%, 5/19/26 (a)			100		113,873
Dexia Credit Local SA, 0.63%, 1/21/22			1,600		1,741,726
Heta Asset Resolution AG, 2.38%, 12/13/22			1,300		1,525,155
HSBC Bank Brasil SA — Banco Multiplo, 4.00%, 5/11/16 (b)	USD		680		690,200
ING Bank NV, 3.38%, 1/11/18	EUR		250		294,112

Corporate Bonds		Par   (000)		Value
Banks (concluded)
Intesa Sanpaolo SpA:
1.13%, 1/14/20	EUR		350	$	379,464
6.63%, 9/13/23			200		276,202
3.38%, 1/24/25			200		271,211
3.25%, 2/10/26			100		136,544
Intesa Sanpaolo Vita SpA, 5.35%, 9/18/18			100		121,902
JPMorgan Chase & Co., 1.38%, 9/16/21			525		581,836
KBC Groep NV, 2.38%, 11/25/24 (a)			600		665,902
KFW:
1.13%, 12/23/19	GBP		200		296,539
1.50%, 4/20/20	USD		5,200		5,197,228
Lloyds Bank PLC:
6.50%, 3/24/20	EUR		300		401,560
4.00%, 9/29/20			250		323,732
1.00%, 11/19/21			225		244,874
Macquarie Bank Ltd.:
2.50%, 9/18/18			200		229,254
2.60%, 6/24/19 (b)	USD		800		811,326
Nordea Bank AB, 4.88%, 5/13/21 (b)			800		877,201
The Royal Bank of Scotland PLC, 7.50%, 4/29/24	GBP		100		206,043
Société Générale SFH, 2.88%, 3/14/19	EUR		500		597,497
Swedbank AB, 3.00%, 12/05/22 (a)			384		436,376
UniCredit SpA, 3.00%, 1/31/24			180		233,210
Wells Fargo & Co., 5.38%, 11/02/43	USD		100		117,798
					22,480,060
Beverages — 0.1%
PepsiCo, Inc., 3.60%, 8/13/42			400		387,888
Biotechnology — 0.0%
Gilead Sciences, Inc., 4.50%, 2/01/45			300		331,325
Capital Markets — 0.4%
Credit Suisse AG, 1.00%, 3/12/19	EUR		525		581,877
Deutsche Bank AG:
2.75%, 2/17/25			300		331,060
4.50%, 4/01/25	USD		300		299,674
The Goldman Sachs Group, Inc., 5.75%, 1/24/22			700		817,151
Morgan Stanley, 3.75%, 2/25/23			650		680,770
UBS AG, 4.75%, 2/12/26 (a)	EUR		175		209,311
					2,919,843
Chemicals — 0.2%
Brenntag Finance BV, 5.50%, 7/19/18			400		493,310
LYB International Finance BV, 4.88%, 3/15/44	USD		100		107,415
Monsanto Co., 4.20%, 7/15/34			500		535,822
					1,136,547
Commercial Services & Supplies — 0.0%
Paprec Holding, 5.25%, 4/01/22	EUR		100		110,213
Pitney Bowes, Inc., 4.63%, 3/15/24	USD		200		209,790
					320,003
Construction & Engineering — 0.1%
ACS Actividades de Construccion y Servicios SA, 2.88%, 4/01/20	EUR		400		435,367
Consumer Finance — 0.0%
Ally Financial, Inc., 3.50%, 1/27/19	USD		139		137,263
Containers & Packaging — 0.0%
Smurfit Kappa Acquisitions, 2.75%, 2/01/25	EUR		150		164,532
Diversified Financial Services — 0.7%
American Honda Finance Corp., 1.88%, 9/04/19			500		571,556

See Notes to Financial Statements.

16 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015

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

Corporate Bonds		Par   (000)		Value
Diversified Financial Services (concluded)
APT Pipelines Ltd.:
1.38%, 3/22/22	EUR		200	$	215,544
2.00%, 3/22/27			375		405,215
AyT Cedulas Cajas X Fondo de Titulizacion, 3.75%, 6/30/25			200		267,637
Caisse Centrale du Credit Immobilier de France SA, 0.50%, 5/19/17			1,000		1,087,181
Cedulas TDA 6 Fondo de Titulizacion de Activos, 4.25%, 4/10/31			100		148,016
Fundacion Bancaria Caixa d’Estalvis i Pensions de Barcelona, 2.38%, 5/09/19			200		226,725
Imperial Tobacco Finance PLC, 3.38%, 2/26/26			170		212,365
JPMorgan Chase Bank, NA, 6.00%, 10/01/17	USD		445		492,546
LCR Finance PLC, 4.50%, 12/07/38	GBP		30		60,916
The NASDAQ OMX Group, Inc., 3.88%, 6/07/21	EUR		200		248,213
Nationwide Building Society:
3.13%, 4/03/17			100		113,643
4.13%, 3/20/23 (a)			150		173,957
1.25%, 3/03/25			700		761,313
Old Mutual PLC, 7.13%, 10/19/16	GBP		200		320,671
					5,305,498
Diversified Telecommunication Services — 0.2%
AT&T Inc., 4.80%, 6/15/44	USD		500		512,015
Sunrise Communications Holdings SA, 2.13%, 3/31/22	CHF		425		431,166
Verizon Communications, Inc.:
3.50%, 11/01/21	USD		240		250,869
6.40%, 2/15/38			200		249,315
6.55%, 9/15/43			150		195,324
					1,638,689
Electric Utilities — 0.2%
Alabama Power Co., 3.95%, 6/01/21			220		243,177
Berkshire Hathaway Energy Co., 6.50%, 9/15/37			150		203,069
Enel Finance International NV, 5.63%, 8/14/24	GBP		100		180,905
ESB Finance Ltd., 6.25%, 9/11/17	EUR		200		245,631
Georgia Power Co., 3.00%, 4/15/16	USD		390		399,682
PacifiCorp, 6.25%, 10/15/37			100		137,450
					1,409,914
Electrical Equipment — 0.0%
Vestas Wind Systems A/S, 2.75%, 3/11/22	EUR		275		293,105
Food & Staples Retailing — 0.1%
Wal-Mart Stores, Inc., 4.00%, 4/11/43	USD		500		530,369
WM Morrison Supermarkets PLC, 4.63%, 12/08/23	GBP		300		478,291
					1,008,660
Gas Utilities — 0.1%
Gas Natural Finance BV, 3.88%, 1/17/23	EUR		100		130,336
KeySpan Gas East Corp., 5.82%, 4/01/41 (b)	USD		185		245,287
Southern Gas Networks PLC, 2.50%, 2/03/25	GBP		150		220,206
					595,829
Health Care Equipment & Supplies — 0.2%
CareFusion Corp., 4.88%, 5/15/44	USD		150		166,270
Covidien International Finance SA, 3.20%, 6/15/22			500		519,243
Medtronic, Inc., 4.38%, 3/15/35 (b)			625		679,652
Mölnlycke Holding AB, 1.50%, 2/28/22	EUR		100		111,562
Stryker Corp., 4.38%, 5/15/44	USD		200		210,305
					1,687,032

Corporate Bonds		Par   (000)		Value
Health Care Providers & Services — 0.1%
Laboratory Corp. of America Holdings:
3.60%, 2/01/25	USD		300	$	301,224
4.70%, 2/01/45			100		102,930
McKesson Corp., 4.88%, 3/15/44			100		114,761
					518,915
Hotels, Restaurants & Leisure — 0.2%
Accor SA, 2.63%, 2/05/21	EUR		600		697,115
Merlin Entertainments PLC, 2.75%, 3/15/22			125		135,414
Wyndham Worldwide Corp.:
4.25%, 3/01/22	USD		330		344,395
3.90%, 3/01/23			200		203,860
					1,380,784
Household Durables — 0.0%
Indesit Co. SpA, 4.50%, 4/26/18	EUR		300		357,430
Independent Power and Renewable Electricity Producers — 0.1%
Comision Federal de Electricidad, 4.88%, 1/15/24	USD		200		213,000
Southern Electric Power Distribution PLC, 4.63%, 2/20/37	GBP		100		178,193
					391,193
Industrial Conglomerates — 0.1%
Smiths Group PLC, 4.13%, 5/05/17	EUR		500		575,638
Insurance — 0.3%
AIA Group Ltd., 3.13%, 3/13/23	USD		600		606,690
Allianz SE, 2.40%, 7/07/45 (a)	EUR		300		322,100
Aon PLC, 2.88%, 5/14/26			200		246,461
Aviva PLC, 6.13%, 11/14/36 (a)	GBP		100		173,820
NN Group NV:
1.00%, 3/18/22	EUR		275		294,187
4.63%, 4/08/44 (a)			200		241,902
Talanx AG, 3.13%, 2/13/23			100		124,772
					2,009,932
Internet & Catalog Retail — 0.1%
Expedia, Inc., 4.50%, 8/15/24	USD		300		303,203
The Priceline Group, Inc., 1.80%, 3/03/27	EUR		350		374,944
					678,147
Internet Software & Services — 0.1%
Alibaba Group Holding Ltd., 3.13%, 11/28/21 (b)	USD		450		453,173
Baidu, Inc.:
2.75%, 6/09/19			200		202,070
3.50%, 11/28/22			200		203,047
					858,290
IT Services — 0.1%
MasterCard Inc., 3.38%, 4/01/24			425		447,433
Life Sciences Tools & Services — 0.0%
Life Technologies Corp., 6.00%, 3/01/20			230		265,625
Media — 0.2%
Altice SA, 6.25%, 2/15/25	EUR		150		161,247
Sky PLC, 3.75%, 9/16/24 (b)	USD		425		439,384
Time Warner Cable, Inc.:
5.00%, 2/01/20			150		167,394
4.50%, 9/15/42			6		6,155
Unitymedia Hessen GmbH & Co. KG/Unitymedia NRW GmbH, 3.50%, 1/15/27	EUR		200		216,049
Virgin Media Finance PLC, 4.50%, 1/15/25			125		140,750
					1,130,979

See Notes to Financial Statements.

BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015 17

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

Corporate Bonds		Par   (000)		Value
Multi-Utilities — 0.1%
Centrica PLC, 6.38%, 3/10/22	GBP		100	$	185,069
Dominion Resources, Inc., 1.95%, 8/15/16	USD		305		308,622
					493,691
Oil, Gas & Consumable Fuels — 0.3%
Enterprise Products Operating LLC, Series L, 6.30%, 9/15/17			250		279,088
Kinder Morgan, Inc., 5.30%, 12/01/34			300		309,924
Orlen Capital AB, 2.50%, 6/30/21	EUR		100		111,281
Petroleos Mexicanos:
4.88%, 1/18/24	USD		400		423,400
5.63%, 1/23/46			229		232,435
Petronas Capital Ltd., 4.50%, 3/18/45			300		301,306
Vier Gas Transport GmbH, 3.13%, 7/10/23	EUR		150		189,640
					1,847,074
Paper & Forest Products — 0.0%
Metsa Board OYJ, 4.00%, 3/13/19			100		116,530
Pharmaceuticals — 0.2%
Actavis Funding SCS:
3.80%, 3/15/25	USD		150		154,805
4.55%, 3/15/35			150		156,348
4.75%, 3/15/45			75		79,714
Bayer U.S. Finance LLC, 3.00%, 10/08/21 (b)			275		284,518
Novartis Capital Corp., 4.40%, 5/06/44			300		345,512
VRX Escrow Corp., 4.50%, 5/15/23	EUR		350		378,688
					1,399,585
Professional Services — 0.1%
Experian Finance PLC, 4.75%, 11/23/18	GBP		400		659,730
Real Estate Investment Trusts (REITs) — 0.2%
American Tower Corp., 3.50%, 1/31/23	USD		500		495,619
Gecina SA, 1.75%, 7/30/21	EUR		200		225,243
Goodman Funding Pty. Ltd., 6.38%, 4/15/21 (b)	USD		400		469,213
Ventas Realty LP/Ventas Capital Corp., 4.75%, 6/01/21			135		149,037
WEA Finance LLC/Westfield UK & Europe Finance PLC:
2.70%, 9/17/19 (b)			200		202,458
4.75%, 9/17/44 (b)			200		217,674
					1,759,244
Real Estate Management & Development — 0.2%
Citycon OYJ, 3.75%, 6/24/20	EUR		547		661,472
Grand City Properties SA, 2.00%, 10/29/21			100		111,019
Tesco Property Finance 1 PLC, 7.62%, 7/13/39	GBP		330		598,092
					1,370,583
Road & Rail — 0.1%
National Express Group PLC, 6.63%, 6/17/20			400		707,521
Network Rail Infrastructure Finance PLC, 3.00%, 9/07/23			100		164,120
					871,641
Semiconductors & Semiconductor Equipment — 0.1%
ASML Holding NV, 3.38%, 9/19/23	EUR		200		255,485
Intel Corp., 4.25%, 12/15/42	USD		200		208,373
TSMC Global Ltd., 1.63%, 4/03/18 (b)			300		297,406
					761,264

Corporate Bonds		Par   (000)		Value
Software — 0.1%
Adobe Systems, Inc., 3.25%, 2/01/25	USD		400	$	404,295
Specialty Retail — 0.1%
Marks & Spencer PLC, 4.75%, 6/12/25	GBP		200		334,639
O’Reilly Automotive, Inc., 3.80%, 9/01/22	USD		500		522,329
					856,968
Technology Hardware, Storage & Peripherals — 0.0%
Seagate HDD Cayman, 4.75%, 1/01/25 (b)			250		258,873
Textiles, Apparel & Luxury Goods — 0.1%
LVMH Moet Hennessy Louis Vuitton SA, 1.63%, 6/29/17 (b)			800		808,002
Thrifts & Mortgage Finance — 0.0%
Achmea Bank NV, 2.75%, 2/18/21	EUR		150		177,196
Tobacco — 0.2%
Altria Group, Inc., 2.85%, 8/09/22	USD		800		795,299
BAT International Finance PLC, 2.00%, 3/13/45	EUR		150		161,111
Imperial Tobacco Finance PLC, 4.88%, 6/07/32	GBP		100		171,933
Philip Morris International, Inc., 3.88%, 8/21/42	USD		300		295,340
Reynolds American, Inc., 4.75%, 11/01/42			200		206,295
					1,629,978
Trading Companies & Distributors — 0.0%
Travis Perkins PLC, 4.38%, 9/15/21	GBP		200		311,497
Transportation Infrastructure — 0.1%
Brisa Concessao Rodoviaria SA, 3.88%, 4/01/21	EUR		100		122,034
Manchester Airport Group Funding PLC, 4.75%, 3/31/34	GBP		100		173,857
Silk Bidco AS, 7.50%, 2/01/22	EUR		200		222,576
Transurban Finance Co. Pty. Ltd, 1.88%, 9/16/24			475		540,594
					1,059,061
Wireless Telecommunication Services — 0.3%
Crown Castle Towers LLC, 6.11%, 1/15/40 (b)	USD		500		570,390
EE Finance PLC, 4.38%, 3/28/19	GBP		200		323,183
SK Telecom Co. Ltd., 2.13%, 5/01/18 (b)	USD		950		956,965
Telefonica Emisiones SAU, 4.71%, 1/20/20	EUR		100		127,241
					1,977,779
Total Corporate Bonds — 9.2%					68,110,470
Foreign Agency Obligations
Banco Nacional de Desenvolvimento Economico e Social, 5.75%, 9/26/23 (b)	USD		200		206,040
Caisse d’Amortissement de la Dette Sociale:
1.88%, 2/12/22 (b)			1,200		1,199,340
1.38%, 11/25/24	EUR		220		256,693
Canada Housing Trust No. 1:
2.75%, 6/15/16	CAD		400		323,761
3.35%, 12/15/20			250		220,668
2.55%, 3/15/25			140		118,164
CDP Financial, Inc., 3.15%, 7/24/24 (b)	USD		300		311,300
CNOOC Curtis Funding No. 1 Pty Ltd., 4.50%, 10/03/23 (b)			200		217,196

See Notes to Financial Statements.

18 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015

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

Foreign Agency Obligations		Par   (000)		Value
Development Bank of Japan (20 Year), 1.05%, 6/20/23	JPY		50,000	$	440,636
European Financial Stability Facility:
1.50%, 1/22/20	EUR		250		288,623
2.35%, 7/29/44			410		625,267
European Investment Bank:
1.25%, 5/15/18	USD		600		603,996
1.50%, 4/15/21	EUR		1,150		1,349,799
1.88%, 2/10/25	USD		1,568		1,545,488
2.15%, 1/18/27	JPY		20,000		199,840
3.88%, 6/08/37	GBP		100		188,398
FMS Wertmanagement AoeR, 0.63%, 1/30/17	USD		1,446		1,444,824
Hydro-Quebec:
8.40%, 1/15/22			405		549,795
5.00%, 2/15/50	CAD		100		115,922
Instituto de Credito Oficial, 4.75%, 4/30/20	EUR		200		259,036
Japan Bank for International Cooperation, 3.00%, 5/29/24	USD		200		212,718
Propertize BV, 0.50%, 2/27/17	EUR		500		543,241
SNCF Reseau, 5.25%, 12/07/28	GBP		60		118,802
Total Foreign Agency Obligations — 1.5%					11,339,547
Foreign Government Obligations
Australia — 0.4%
Commonwealth of Australia:
4.75%, 6/15/16	AUD		900		709,551
5.50%, 4/21/23			500		473,037
3.25%, 4/21/25			280		230,856
4.75%, 4/21/27			150		141,468
New South Wales Treasury Corp.:
6.00%, 2/01/18			400		338,658
6.00%, 5/01/30			50		52,002
Queensland Treasury Corp.:
6.25%, 2/21/20			400		360,476
4.75%, 7/21/25			100		88,865
Treasury Corp. of Victoria, 6.00%, 6/15/20			250		226,058
Western Australian Treasury Corp., 5.00%, 7/23/25			140		127,272
					2,748,243
Austria — 0.1%
Republic of Austria, 1.65%, 10/21/24	EUR		570		689,521
Belgium — 0.4%
Kingdom of Belgium:
3.50%, 6/28/17			550		640,053
2.60%, 6/22/24			920		1,189,811
0.80%, 6/22/25			400		445,316
3.75%, 6/22/45			200		365,832
					2,641,012
Brazil — 0.1%
Federative Republic of Brazil, 8.88%, 4/15/24	USD		300		396,000
Canada — 0.7%
Government of Canada:
1.75%, 3/01/19	CAD		900		742,142
8.00%, 6/01/27			370		504,451
4.00%, 6/01/41			490		544,666
Province of Alberta, 3.10%, 6/01/24			200		173,823
Province of British Columbia, 4.80%, 6/15/21			350		332,593
Province of Manitoba:
4.30%, 3/01/16			200		163,051
1.75%, 5/30/19	USD		490		495,673
3.30%, 6/02/24	CAD		140		122,806
Province of New Brunswick, 3.80%, 8/14/45			60		55,381

Foreign Government Obligations		Par   (000)		Value
Canada (concluded)
Province of Ontario:
4.30%, 3/08/17	CAD		600	$	505,411
6.20%, 6/02/31			400		467,222
3.50%, 6/02/43			200		178,046
Province of Quebec:
4.50%, 12/01/19			500		453,515
2.75%, 9/01/25			140		116,487
5.00%, 12/01/41			150		165,037
					5,020,304
Czech Republic — 0.0%
Czech Republic, 3.85%, 9/29/21	CZK		4,300		207,622
Denmark — 0.1%
Kingdom of Denmark:
4.00%, 11/15/19	DKK		3,200		550,304
4.50%, 11/15/39			540		146,905
					697,209
Finland — 0.1%
Republic of Finland:
1.13%, 9/15/18	EUR		20		22,440
0.63%, 9/15/20			400		438,739
					461,179
France — 0.6%
France Government Bond OAT:
1.75%, 11/25/24			1,700		2,055,329
2.50%, 5/25/30			550		737,126
3.25%, 5/25/45			1,160		1,932,743
					4,725,198
Germany — 0.2%
Federal Republic of Germany:
5.50%, 1/04/31			350		667,733
2.50%, 7/04/44			640		1,042,489
					1,710,222
Indonesia — 0.0%
Republic of Indonesia, 4.13%, 1/15/25	USD		308		316,085
Ireland — 0.3%
Republic of Ireland:
3.40%, 3/18/24	EUR		1,670		2,222,291
2.00%, 2/18/45			220		270,507
					2,492,798
Israel — 0.1%
State of Israel:
4.25%, 8/31/16	ILS		1,000		265,994
3.75%, 3/31/24			400		119,106
					385,100
Italy — 0.7%
Buoni Poliennali Del Tesoro:
1.15%, 5/15/17	EUR		1,250		1,371,122
2.15%, 12/15/21			2,350		2,732,648
3.25%, 9/01/46			700		952,743
					5,056,513
Ivory Coast — 0.0%
African Development Bank, 1.63%, 10/02/18	USD		100		101,521
Japan — 4.4%
Government of Japan (5 Year):
Series 102, 0.30%, 12/20/16	JPY		430,000		3,601,305
Series 105, 0.20%, 6/20/17			195,000		1,631,303
Series 113, 0.30%, 6/20/18			280,000		2,354,092

See Notes to Financial Statements.

BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015 19

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

Foreign Government Obligations		Par   (000)		Value
Japan (concluded)
Government of Japan (10 Year):
Series 300, 1.50%, 3/20/19	JPY		485,000	$	4,268,522
Series 309, 1.10%, 6/20/20			155,000		1,357,631
Series 313, 1.30%, 3/20/21			210,000		1,870,060
Series 323, 0.90%, 6/20/22			290,000		2,539,405
Series 325, 0.80%, 9/20/22			85,000		739,208
Government of Japan (20 Year):
Series 76, 1.90%, 3/20/25			75,000		718,202
Series 94, 2.10%, 3/20/27			370,000		3,645,559
Series 127, 1.90%, 3/20/31			82,000		794,771
Series 137, 1.70%, 6/20/32			237,000		2,216,033
Series 146, 1.70%, 9/20/33			140,000		1,299,351
Government of Japan (30 Year):
Series 26, 2.40%, 3/20/37			100,000		1,020,383
Series 36, 2.00%, 3/20/42			137,000		1,317,905
Series 42, 1.70%, 3/20/44			65,000		586,780
Government of Japan (40 Year), Series 5, 2.00%, 3/20/52			42,000		406,073
Japan Finance Organization for Municipalities:
2.00%, 5/09/16			100,000		851,068
2.38%, 2/13/25 (b)	USD		1,100		1,086,754
					32,304,405
Malaysia — 0.1%
Federation of Malaysia, 3.58%, 9/28/18	MYR		1,200		325,422
Mexico — 0.1%
United Mexican States:
6.50%, 6/09/22	MXN		7,500		513,965
7.75%, 5/29/31			1,000		74,875
8.30%, 8/15/31	USD		194		297,790
					886,630
Netherlands — 0.2%
Kingdom of the Netherlands:
0.50%, 4/15/17	EUR		400		436,209
1.25%, 1/15/19			450		508,765
1.75%, 7/15/23			220		266,437
5.50%, 1/15/28			100		175,475
					1,386,886
New Zealand — 0.0%
Government of New Zealand, 5.00%, 3/15/19	NZD		300		239,814
Norway — 0.0%
Kingdom of Norway, 2.00%, 5/24/23	NOK		800		104,087
Panama — 0.0%
Republic of Panama, 4.00%, 9/22/24	USD		200		209,500
Poland — 0.1%
Republic of Poland:
1.63%, 1/15/19	EUR		400		452,291
5.13%, 4/21/21	USD		200		229,760
5.00%, 3/23/22			250		287,188
					969,239
Singapore — 0.0%
Republic of Singapore, 2.25%, 6/01/21	SGD		350		257,371
South Africa — 0.1%
Republic of South Africa:
5.50%, 3/09/20	USD		100		109,687
7.00%, 2/28/31	ZAR		3,000		220,801
8.75%, 2/28/48			700		59,918
					390,406

Foreign Government Obligations		Par   (000)		Value
Spain — 0.6%
Kingdom of Spain:
2.10%, 4/30/17	EUR		600	$	671,529
3.80%, 4/30/24			1,000		1,320,150
1.60%, 4/30/25			930		1,035,826
5.15%, 10/31/28			1,020		1,581,010
					4,608,515
Sweden — 0.1%
Kingdom of Sweden:
3.75%, 8/12/17	SEK		6,000		763,837
3.50%, 6/01/22			1,000		143,286
2.50%, 5/12/25			540		75,412
					982,535
Thailand — 0.1%
Kingdom of Thailand:
3.45%, 3/08/19	THB		13,500		434,306
4.85%, 6/17/61			3,000		108,063
					542,369
Turkey — 0.0%
Republic of Turkey, 8.80%, 11/14/18	TRY		600		234,104
United Kingdom — 1.2%
United Kingdom Gilt:
1.75%, 1/22/17	GBP		1,500		2,278,269
3.75%, 9/07/19			200		332,028
3.75%, 9/07/21			250		427,291
5.00%, 3/07/25			800		1,557,961
4.25%, 6/07/32			650		1,268,326
4.50%, 12/07/42			990		2,134,053
4.25%, 12/07/55			320		725,766
3.50%, 7/22/68			100		203,892
					8,927,586
Total Foreign Government Obligations — 10.8%					80,017,396
Investment Companies — 3.2%		Shares
iShares 1-3 Year Credit Bond ETF (g)			221,827		23,409,403
Non-Agency Mortgage-Backed Securities		Par   (000)
Collateralized Mortgage Obligations — 0.4%
Fosse Master Issuer PLC, Series 2015-1X, Class A3, 0.82%, 10/18/54 (a)(h)	GBP		290		430,184
Granite Master Issuer PLC:
Series 2006-2, Class A4, 0.26%, 12/20/54 (a)	USD		410		408,299
Series 2007-1, Class 5A1, 0.73%, 12/20/54 (a)	GBP		124		183,606
Lanark Master Issuer PLC, Series 2014-2X, Class 1A, 0.45%, 12/22/54 (a)(h)	EUR		800		862,214
Silverstone Master Issuer PLC, Series 2015-1X, Class 1A, 0.91%, 1/21/70	GBP		445		661,478
Storm BV, Series 2014-2, Class A1, 0.32%, 3/22/51 (a)(h)	EUR		80		86,619
					2,632,400
Commercial Mortgage-Backed Securities — 0.1%
Banc of America Commercial Mortgage Trust, Series 2007-1, Class AMFX, 5.48%, 1/15/49 (a)	USD		30		31,263
COBALT CMBS Commercial Mortgage Trust, Series 2006-C1, Class A4, 5.22%, 8/15/48			286		300,390

See Notes to Financial Statements.

20 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015

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, 5.79%, 7/10/38 (a)	USD		170	$	173,991
JPMorgan Chase Commercial Mortgage Securities Trust, Series 2006-CB14, Class AM, 5.43%, 12/12/44 (a)			180		184,595
LB-UBS Commercial Mortgage Trust, Series 2007-C1, Class AM, 5.46%, 2/15/40			165		176,256
					866,495
Total Non-Agency Mortgage-Backed Securities — 0.5%					3,498,895
U.S. Government Sponsored Agency Securities
Agency Obligations — 0.2%
Fannie Mae, 6.63%, 11/15/30			200		301,019
Federal Home Loan Bank, 5.63%, 6/13/16			890		944,610
Small Business Administration Participation Certificates, Series 1997-20F, Class 1, 7.20%, 6/01/17			40		41,996
Tennessee Valley Authority, 5.25%, 9/15/39			145		189,863
					1,477,488
Collateralized Mortgage Obligations — 0.0%
Freddie Mac:
Series K712, Class A2, 1.87%, 11/25/19			180		181,944
Series K029, Class A2, 3.32%, 2/25/23			130		139,770
					321,714
Mortgage-Backed Securities — 3.3%
Fannie Mae Mortgage-Backed Securities:
2.50%, 4/01/30 (i)			640		657,300
3.00%, 4/01/30-4/01/45 (i)			2,380		2,446,665
3.50%, 4/01/30-4/01/45 (i)			2,850		3,003,272
4.00%, 4/01/30-4/01/45 (i)			2,240		2,390,236
4.50%, 4/01/45 (i)			950		1,036,391
5.00%, 4/01/45 (i)			540		600,455
5.50%, 4/01/45 (i)			390		439,420
6.00%, 4/01/45 (i)			340		387,866
Freddie Mac Mortgage-Backed Securities:
2.50%, 4/01/30 (i)			430		440,884
3.00%, 4/01/30-4/01/45 (i)			1,320		1,361,119
3.50%, 4/01/30-4/01/45 (i)			1,340		1,406,821
4.00%, 4/01/30-4/01/45 (i)			1,340		1,428,373
4.50%, 4/01/45 (i)			900		980,086
5.00%, 4/01/45 (i)			380		421,384
5.50%, 4/01/45 (i)			300		336,609
6.00%, 4/01/45 (i)			200		227,539
Ginnie Mae Mortgage-Backed Securities:
3.00%, 4/15/45 (i)			1,130		1,163,426
3.50%, 4/15/45 (i)			1,700		1,788,947
4.00%, 4/15/45 (i)			1,320		1,416,525
4.50%, 4/15/45 (i)			830		915,101
5.00%, 4/15/45 (i)			870		969,540
5.50%, 4/15/45 (i)			170		191,755
6.00%, 4/15/44 (i)			120		136,592
					24,146,306
Total U.S. Government Sponsored Agency Securities — 3.5%					25,945,508

U.S. Treasury Obligations	Par   (000)		Value
U.S. Treasury Bonds:
5.25%, 11/15/28	USD	500	$	682,539
5.38%, 2/15/31		1,000		1,420,938
5.00%, 5/15/37		570		828,460
4.38%, 5/15/41		950		1,294,821
3.00%, 5/15/42		1,068		1,165,122
3.38%, 5/15/44		500		585,742
U.S. Treasury Inflation Indexed Notes, 0.25%, 1/15/25		2,220		2,235,700
U.S. Treasury Notes:
0.88%, 7/15/17		4,000		4,020,000
1.00%, 6/30/19		2,380		2,355,829
2.50%, 5/15/24		500		525,234
Total U.S. Treasury Obligations — 2.0%				15,114,385
Total Long-Term Investments (Cost — $544,764,132) — 72.8%				540,686,234
Short-Term Securities	Shares
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.06% (g)(j)		211,570,778		211,570,778
	Beneficial Interest (000)
BlackRock Liquidity Series, LLC, Money Market Series, 0.22% (g)(j)(k)	$	345		344,954
Total Short-Term Securities (Cost — $211,915,732) — 28.5%				211,915,732
Options Purchased
(Cost — $24,441) — 0.0%				55,087
Total Investments Before Options Written (Cost — $756,704,305) — 101.3%				752,657,053
Options Written
(Premiums Received — $ 266,989) — (0.0)%				(291,931	)
Total Investments Net of Options Written — 101.3%				752,365,122
Liabilities in Excess of Other Assets — (1.3)%				(9,654,668	)
Net Assets — 100.0%			$	742,710,454

See Notes to Financial Statements.

BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015 21

Schedule of Investments (continued)

Notes to Schedule of Investments

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

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

(c) Represents a payment-in-kind security which may pay interest/dividends in additional par/shares and/or in cash. Rates shown are the current rate and possible payment rates.

(d) Non-income producing security.

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

(f) Restricted security as to resale. As of report date, the Fund held less than 0.01% of its net assets, with a current value of $26,215 and an original cost of $56,451 of its net assets.

(g) During the six months ended March 31, 2015, investments in issuers considered to be affiliates of the Fund 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, 2014		Shares/ Beneficial Interest Purchased			Shares/ Beneficial Interest Sold			Shares/ Beneficial Interest Held at March 31, 2015		Value at March 31, 2015		Income		Realized Gain
BlackRock Liquidity Funds, TempFund, Institutional Class		420,264,224		—			208,693,446	1		211,570,778	$	211,570,778	$	79,525	$	28,007
BlackRock Liquidity Series, LLC, Money Market Series		—	$	344,954	2		—		$	344,954	$	344,954	$	4,913		—
iShares 1-3 Year Credit Bond ETF		221,827		—			—			221,827	$	23,409,403	$	115,184		—

¹  Represents net shares sold.

²  Represents net beneficial interest purchased.

(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) Represents or includes a TBA transaction. As of March 31, 2015, unsettled TBA transactions were as follows:

Counterparty	Value		Unrealized Appreciation
Barclays Capital, Inc.	$	4,874,515	$	31,196
Citigroup Global Markets, Inc.	$	4,933,685	$	30,382
Deutsche Bank Securities, Inc.	$	2,418,939	$	13,107
Goldman Sachs & Co.	$	6,704,561	$	47,359
Merrill Lynch, Pierce, Fenner & Smith, Inc.	$	795,722	$	8,166
Morgan Stanley & Co. LLC	$	4,418,884	$	39,602

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

(k) Security was purchased with the cash collateral from loaned securities. The Fund may withdraw up to 25% of its investment daily, although the manager of the BlackRock Liquidity Series, LLC, Money Market Series, in its sole discretion, may permit an investor to withdraw more than 25% on any one day.

Ÿ 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 the investment advisor. These definitions may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

Ÿ As of March 31, 2015, financial futures contracts outstanding were as follows:

Contracts Long/ (Short)			Issue	Exchange	Expiration		Notional Value			Unrealized Appreciation (Depreciation)
	70		IBEX 35 Index	Madrid		April 2015		USD	8,648,427	$	390,306
	2,882		SGX CNX Nifty Index	Singapore		April 2015		USD	49,218,796		(754,366	)
	445		Australian Government Bonds (3 Year)	Sydney		June 2015		USD	38,180,889		174,776
	111		Australian Government Bonds (10 Year)	Sydney		June 2015		USD	11,216,745		193,559
	10		Canadian Government Bonds (10 Year)	Montreal		June 2015		USD	1,126,998		(688	)
	19		Euro-Bobl	Eurex		June 2015		USD	2,644,212		(77	)
	29		Euro-Schatz	Eurex		June 2015		USD	3,468,232		1,899
	80		FTSE/MIB Index	Milan		June 2015		USD	9,813,982		188,544
	9		Nikkei 225 Index	Osaka		June 2015		USD	1,441,531		42,918
	37		U.S. Treasury Notes (2 Year)	Chicago Board of Trade		June 2015		USD	8,108,781		(17,223	)
	137		U.S. Treasury Notes (5 Year)	Chicago Board of Trade		June 2015		USD	16,468,899		(109,789	)
	79		U.S. Treasury Notes (10 Year)	Chicago Board of Trade		June 2015		USD	10,183,594		(72,984	)
	(85	)	AUD Currency Futures	Chicago Mercantile		June 2015		USD	6,443,850		50,705
	(33	)	CHF Currency Futures	Chicago Mercantile		June 2015		USD	4,254,938		(143,869	)
	(91	)	EUR Currency Futures	Chicago Mercantile		June 2015		USD	12,232,675		(163,092	)
	(734	)	E-Mini S&P 500 Futures	Chicago Mercantile		June 2015		USD	75,631,360		275,165
	(22	)	Euro-Bund	Eurex		June 2015		USD	3,755,532		(7,528	)

See Notes to Financial Statements.

22 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015

Schedule of Investments (continued)

Ÿ As of March 31, 2015, financial futures contracts outstanding were as follows: (concluded)

Contracts Long/ (Short)			Issue	Exchange		Expiration			Notional Value		Unrealized Appreciation (Depreciation)
	(2	)	Euro-Buxl		Eurex		June 2015	USD		378,831	$	(24,471	)
	(156	)	FTSE 100 Index		London		June 2015	USD		15,566,904		103,281
	(168	)	GBP Currency Futures		Chicago Mercantile		June 2015	USD		15,578,850		64,697
	(19	)	Long Gilt British		NYSE Liffe		June 2015	USD		3,403,274		(6,175	)
	(94	)	JPY Currency Futures		Chicago Mercantile		June 2015	USD		9,806,550		(112,069	)
	(10	)	SEK Currency Futures		Chicago Mercantile		June 2015	USD		23,228		23
	(9	)	U.S. Treasury Bonds (30 Year)		Chicago Board of Trade		June 2015	USD		1,474,875		4,342
	(1,070	)	U.S. Treasury Notes (2 Year)		Chicago Board of Trade		June 2015	USD		234,497,187		(498,056	)
	(820	)	U.S. Treasury Notes (5 Year)		Chicago Board of Trade		June 2015	USD		98,572,970		(657,133	)
	(397	)	U.S. Treasury Notes (10 Year)		Chicago Board of Trade		June 2015	USD		51,175,781		(366,768	)
	(6	)	U.S. Ultra Treasury Bonds		Chicago Board of Trade		June 2015	USD		1,019,250		7,226
	Total										$	(1,436,847	)

Ÿ As of March 31, 2015, forward foreign currency exchange contracts outstanding were as follows:

Currency Purchased		Currency Sold			Counterparty	Settlement Date		Unrealized Appreciation (Depreciation)
BRL	690,000		USD	215,423	Deutsche Bank AG		4/02/15	$	658
BRL	840,000		USD	269,058	Deutsche Bank AG		4/02/15		(6,003	)
BRL	990,000		USD	303,216	Deutsche Bank AG		4/02/15		6,814
BRL	600,000		USD	190,900	Goldman Sachs International		4/02/15		(3,004	)
BRL	798,098		USD	277,103	JPMorgan Chase Bank N.A.		4/02/15		(27,170	)
BRL	501,902		USD	174,120	Morgan Stanley & Co. International PLC		4/02/15		(16,944	)
USD	35,971		BRL	114,128	Barclays Bank PLC		4/02/15		231
USD	430,179		BRL	1,300,000	Deutsche Bank AG		4/02/15		23,069
USD	71,942		BRL	227,799	Goldman Sachs International		4/02/15		605
USD	185,128		BRL	600,000	JPMorgan Chase Bank N.A.		4/02/15		(2,769	)
USD	600,939		BRL	1,920,000	JPMorgan Chase Bank N.A.		4/02/15		(331	)
USD	81,349		BRL	258,074	Morgan Stanley & Co. International PLC		4/02/15		530
AUD	3,640,000		USD	2,779,944	Westpac Banking Corp.		4/07/15		(8,725	)
CAD	6,893,436		USD	5,442,692	HSBC Bank PLC		4/07/15		(471	)
CHF	430,000		USD	442,790	HSBC Bank PLC		4/07/15		(182	)
CZK	4,700,000		USD	183,194	HSBC Bank PLC		4/07/15		161
DKK	4,400,000		USD	632,547	HSBC Bank PLC		4/07/15		829
EUR	13,265,000		USD	14,247,407	Deutsche Bank AG		4/07/15		17,123
EUR	13,265,000		USD	14,247,407	Goldman Sachs International		4/07/15		17,123
EUR	13,265,000		USD	14,247,468	Morgan Stanley & Co. International PLC		4/07/15		17,061
EUR	13,265,000		USD	14,247,459	UBS AG		4/07/15		17,071
GBP	2,995,000		USD	4,445,883	Deutsche Bank AG		4/07/15		(3,333	)
GBP	2,995,000		USD	4,445,898	Goldman Sachs International		4/07/15		(3,348	)
GBP	300,000		USD	463,514	JPMorgan Chase Bank N.A.		4/07/15		(18,518	)
GBP	2,990,000		USD	4,438,655	Morgan Stanley & Co. International PLC		4/07/15		(3,522	)
GBP	2,995,000		USD	4,445,868	UBS AG		4/07/15		(3,318	)
ILS	2,000,000		USD	502,940	HSBC Bank PLC		4/07/15		(342	)
JPY	965,900,000		USD	8,054,201	Deutsche Bank AG		4/07/15		229
JPY	965,900,000		USD	8,054,872	Goldman Sachs International		4/07/15		(442	)
JPY	965,900,000		USD	8,054,201	Morgan Stanley & Co. International PLC		4/07/15		229
JPY	965,900,000		USD	8,054,818	UBS AG		4/07/15		(388	)
MXN	10,150,000		USD	666,222	HSBC Bank PLC		4/07/15		(1,119	)
NOK	5,350,000		USD	663,846	HSBC Bank PLC		4/07/15		139
NZD	350,000		USD	262,342	Westpac Banking Corp.		4/07/15		(871	)

See Notes to Financial Statements.

BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015 23

Schedule of Investments (continued)

As of March 31, 2015, forward foreign currency exchange contracts outstanding were as follows: (continued)

Currency Purchased		Currency Sold			Counterparty	Settlement Date		Unrealized Appreciation (Depreciation)
SEK	11,400,000		USD	1,321,971	HSBC Bank PLC		4/07/15	$	1,882
SGD	400,000		USD	291,585	HSBC Bank PLC		4/07/15		(164	)
THB	19,200,000		USD	589,929	HSBC Bank PLC		4/07/15		(87	)
TRY	600,000		USD	231,080	HSBC Bank PLC		4/07/15		(684	)
USD	2,843,572		AUD	3,640,000	UBS AG		4/07/15		72,353
USD	373,203		CAD	470,000	Citibank N.A.		4/07/15		2,148
USD	5,141,443		CAD	6,423,436	UBS AG		4/07/15		70,277
USD	454,173		CHF	430,000	Deutsche Bank AG		4/07/15		11,565
USD	191,859		CZK	4,700,000	Deutsche Bank AG		4/07/15		8,504
USD	662,122		DKK	4,400,000	UBS AG		4/07/15		28,745
USD	271,559		EUR	250,000	Citibank N.A.		4/07/15		2,722
USD	14,452,197		EUR	12,880,000	Deutsche Bank AG		4/07/15		601,677
USD	850,252		EUR	800,000	Goldman Sachs International		4/07/15		(10,029	)
USD	561,041		EUR	500,000	JPMorgan Chase Bank N.A.		4/07/15		23,366
USD	14,441,182		EUR	12,870,000	JPMorgan Chase Bank N.A.		4/07/15		601,416
USD	14,452,326		EUR	12,880,000	Morgan Stanley & Co. International PLC		4/07/15		601,806
USD	14,452,339		EUR	12,880,000	UBS AG		4/07/15		601,819
USD	1,828,108		GBP	1,210,000	Citibank N.A.		4/07/15		33,288
USD	3,962,976		GBP	2,565,000	Deutsche Bank AG		4/07/15		158,255
USD	440,374		GBP	300,000	Goldman Sachs International		4/07/15		(4,623	)
USD	3,970,591		GBP	2,570,000	JPMorgan Chase Bank N.A.		4/07/15		158,453
USD	3,963,035		GBP	2,565,000	Morgan Stanley & Co. International PLC		4/07/15		158,314
USD	736,678		GBP	500,000	UBS AG		4/07/15		(4,983	)
USD	3,963,043		GBP	2,565,000	UBS AG		4/07/15		158,322
USD	501,637		ILS	2,000,000	Deutsche Bank AG		4/07/15		(961	)
USD	7,930,789		JPY	947,650,000	Deutsche Bank AG		4/07/15		28,542
USD	610,933		JPY	73,000,000	JPMorgan Chase Bank N.A.		4/07/15		2,202
USD	7,930,789		JPY	947,650,000	JPMorgan Chase Bank N.A.		4/07/15		28,542
USD	7,931,061		JPY	947,650,000	Morgan Stanley & Co. International PLC		4/07/15		28,814
USD	7,930,789		JPY	947,650,000	UBS AG		4/07/15		28,542
USD	106,396		MXN	1,650,000	Citibank N.A.		4/07/15		(1,724	)
USD	567,120		MXN	8,500,000	Deutsche Bank AG		4/07/15		10,137
USD	700,496		NOK	5,350,000	Deutsche Bank AG		4/07/15		36,511
USD	263,988		NZD	350,000	Deutsche Bank AG		4/07/15		2,516
USD	1,367,210		SEK	11,400,000	Deutsche Bank AG		4/07/15		43,356
USD	293,794		SGD	400,000	Deutsche Bank AG		4/07/15		2,373
USD	592,410		THB	19,200,000	Deutsche Bank AG		4/07/15		2,568
USD	228,753		TRY	600,000	Citibank N.A.		4/07/15		(1,644	)
USD	255,982		ZAR	3,000,000	UBS AG		4/07/15		8,944
ZAR	3,000,000		USD	247,399	HSBC Bank PLC		4/07/15		(361	)
AUD	2,220,000		USD	1,798,489	Deutsche Bank AG		4/16/15		(109,279	)
CAD	2,882,000		USD	2,410,755	Credit Suisse International		4/16/15		(135,728	)
BRL	1,920,000		USD	596,033	JPMorgan Chase Bank N.A.		5/05/15		(145	)
USD	456,355		BRL	1,490,000	JPMorgan Chase Bank N.A.		5/05/15		(6,078	)
EUR	420,000		USD	451,271	Citibank N.A.		5/06/15		557
SEK	3,200,000		USD	371,227	HSBC Bank PLC		5/06/15		547
USD	2,775,333		AUD	3,640,000	Westpac Banking Corp.		5/06/15		8,902
USD	5,440,497		CAD	6,893,436	HSBC Bank PLC		5/06/15		301
USD	443,276		CHF	430,000	HSBC Bank PLC		5/06/15		135

See Notes to Financial Statements.

24 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015

Schedule of Investments (continued)

As of March 31, 2015, forward foreign currency exchange contracts outstanding were as follows: (continued)

Currency Purchased		Currency Sold			Counterparty	Settlement Date		Unrealized Appreciation (Depreciation)
USD	183,251		CZK	4,700,000	HSBC Bank PLC		5/06/15	$	(179	)
USD	633,149		DKK	4,400,000	HSBC Bank PLC		5/06/15		(894	)
USD	14,252,779		EUR	13,265,000	Deutsche Bank AG		5/06/15		(17,463	)
USD	14,253,044		EUR	13,265,000	Goldman Sachs International		5/06/15		(17,198	)
USD	14,252,794		EUR	13,265,000	Morgan Stanley & Co. International PLC		5/06/15		(17,447	)
USD	14,252,528		EUR	13,265,000	UBS AG		5/06/15		(17,714	)
USD	4,445,149		GBP	2,995,000	Deutsche Bank AG		5/06/15		3,486
USD	4,445,104		GBP	2,995,000	Goldman Sachs International		5/06/15		3,441
USD	4,437,809		GBP	2,990,000	Morgan Stanley & Co. International PLC		5/06/15		3,561
USD	4,445,083		GBP	2,995,000	UBS AG		5/06/15		3,420
USD	502,883		ILS	2,000,000	HSBC Bank PLC		5/06/15		290
USD	664,909		MXN	10,150,000	HSBC Bank PLC		5/06/15		1,135
USD	663,236		NOK	5,350,000	HSBC Bank PLC		5/06/15		(177	)
USD	261,601		NZD	350,000	Westpac Banking Corp.		5/06/15		901
USD	1,322,496		SEK	11,400,000	HSBC Bank PLC		5/06/15		(1,950	)
USD	291,345		SGD	400,000	HSBC Bank PLC		5/06/15		136
USD	588,392		THB	19,200,000	HSBC Bank PLC		5/06/15		(661	)
USD	229,279		TRY	600,000	HSBC Bank PLC		5/06/15		757
USD	246,221		ZAR	3,000,000	HSBC Bank PLC		5/06/15		403
GBP	2,548,000		USD	3,746,363	Goldman Sachs International		5/07/15		32,362
JPY	25,000,000		USD	208,559	Barclays Bank PLC		5/07/15		3
USD	3,832,332		GBP	2,548,000	Citibank N.A.		5/07/15		53,607
USD	8,057,224		JPY	965,900,000	Deutsche Bank AG		5/07/15		(794	)
USD	8,057,862		JPY	965,900,000	Goldman Sachs International		5/07/15		(155	)
USD	8,057,392		JPY	965,900,000	Morgan Stanley & Co. International PLC		5/07/15		(626	)
USD	208,556		JPY	25,000,000	UBS AG		5/07/15		(6	)
USD	8,057,775		JPY	965,900,000	UBS AG		5/07/15		(243	)
AUD	270,000		USD	209,712	Bank of America N.A.		6/10/15		(4,895	)
AUD	550,000		USD	422,494	Bank of America N.A.		6/10/15		(5,273	)
AUD	134,000		USD	104,543	Barclays Bank PLC		6/10/15		(2,893	)
AUD	291,555		USD	222,267	Barclays Bank PLC		6/10/15		(1,099	)
AUD	269,000		USD	208,978	Citibank N.A.		6/10/15		(4,920	)
AUD	979,000		USD	748,246	Credit Suisse International		6/10/15		(5,594	)
AUD	124,505		USD	94,452	Goldman Sachs International		6/10/15		(5	)
AUD	44,000		USD	33,792	HSBC Bank PLC		6/10/15		(414	)
AUD	306,000		USD	240,749	JPMorgan Chase Bank N.A.		6/10/15		(8,623	)
AUD	404,000		USD	317,852	JPMorgan Chase Bank N.A.		6/10/15		(11,385	)
AUD	713,000		USD	542,600	JPMorgan Chase Bank N.A.		6/10/15		(1,731	)
AUD	81,495		USD	61,730	UBS AG		6/10/15		91
AUD	256,446		USD	195,501	UBS AG		6/10/15		(966	)
AUD	1,600,000		USD	1,230,336	UBS AG		6/10/15		(16,605	)
AUD	2,730,999		USD	2,100,029	UBS AG		6/10/15		(28,342	)
CAD	738,000		USD	582,187	Citibank N.A.		6/10/15		(62	)
CAD	94,000		USD	73,801	Royal Bank of Canada		6/10/15		345
EUR	65,690		PLN	270,000	Barclays Bank PLC		6/10/15		(377	)
EUR	176,234		PLN	730,000	Barclays Bank PLC		6/10/15		(2,497	)
EUR	175,595		PLN	730,000	Credit Suisse International		6/10/15		(3,184	)
EUR	246,662		PLN	1,020,000	Credit Suisse International		6/10/15		(3,039	)
EUR	243,000		USD	257,414	Barclays Bank PLC		6/10/15		4,127

See Notes to Financial Statements.

BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015 25

Schedule of Investments (continued)

As of March 31, 2015, forward foreign currency exchange contracts outstanding were as follows: (continued)

Currency Purchased			Currency Sold			Counterparty	Settlement Date		Unrealized Appreciation (Depreciation)
EUR	315,000			USD	346,261	Barclays Bank PLC		6/10/15	$	(7,226	)
EUR	190,000			USD	200,373	BNP Paribas S.A.		6/10/15		4,124
EUR	417,000			USD	454,578	Citibank N.A.		6/10/15		(5,761	)
EUR	760,000			USD	830,616	Citibank N.A.		6/10/15		(12,628	)
EUR	283,000	��		USD	307,921	Credit Suisse International		6/10/15		(3,328	)
EUR	343,000			USD	372,666	Credit Suisse International		6/10/15		(3,495	)
EUR	565,000			USD	598,618	Credit Suisse International		6/10/15		9,492
EUR	93,000			USD	98,593	Deutsche Bank AG		6/10/15		1,503
EUR	1,073,000			USD	1,166,957	Goldman Sachs International		6/10/15		(12,087	)
EUR	190,000			USD	200,068	HSBC Bank PLC		6/10/15		4,429
EUR	786,000			USD	854,852	HSBC Bank PLC		6/10/15		(8,880	)
EUR	190,000			USD	200,526	JPMorgan Chase Bank N.A.		6/10/15		3,971
EUR	423,000			USD	448,633	JPMorgan Chase Bank N.A.		6/10/15		6,642
EUR	1,070,000			USD	1,171,051	JPMorgan Chase Bank N.A.		6/10/15		(19,410	)
EUR	512,000			USD	563,064	Morgan Stanley & Co. International PLC		6/10/15		(11,998	)
EUR	900,000			USD	961,817	Morgan Stanley & Co. International PLC		6/10/15		6,853
EUR	925,000			USD	1,015,747	State Street Bank and Trust Co.		6/10/15		(20,169	)
EUR	216,000			USD	227,727	UBS AG		6/10/15		4,754
EUR	260,000			USD	280,584	UBS AG		6/10/15		(746	)
EUR	260,000			USD	282,632	UBS AG		6/10/15		(2,794	)
EUR	262,000			USD	278,498	UBS AG		6/10/15		3,493
GBP	61,000			USD	91,978	Barclays Bank PLC		6/10/15		(1,535	)
GBP	85,000			USD	128,293	Barclays Bank PLC		6/10/15		(2,266	)
GBP	170,000			USD	252,131	Barclays Bank PLC		6/10/15		(76	)
GBP	240,000			USD	354,708	Barclays Bank PLC		6/10/15		1,134
GBP	291,204			USD	431,417	Barclays Bank PLC		6/10/15		344
GBP	296,000			USD	441,885	Barclays Bank PLC		6/10/15		(3,013	)
GBP	563,193			USD	847,048	Barclays Bank PLC		6/10/15		(12,016	)
GBP	170,442			USD	252,418	Citibank N.A.		6/10/15		293
GBP	1,031,000			USD	1,529,824	Citibank N.A.		6/10/15		(1,185	)
GBP	170,000			USD	252,060	Credit Suisse International		6/10/15		(5	)
GBP	458,000			USD	680,037	Credit Suisse International		6/10/15		(972	)
GBP	511,000			USD	771,745	Credit Suisse International		6/10/15		(14,098	)
GBP	50,000			USD	74,465	Goldman Sachs International		6/10/15		(331	)
GBP	55,807			USD	83,944	Goldman Sachs International		6/10/15		(1,200	)
GBP	136,354			USD	201,905	Goldman Sachs International		6/10/15		263
GBP	192,000			USD	287,011	Goldman Sachs International		6/10/15		(2,337	)
GBP	163,000			USD	241,443	HSBC Bank PLC		6/10/15		233
GBP	282,000			USD	422,143	HSBC Bank PLC		6/10/15		(4,028	)
GBP	420,000			USD	634,570	HSBC Bank PLC		6/10/15		(11,847	)
GBP	455,000			USD	676,234	HSBC Bank PLC		6/10/15		(1,617	)
GBP	60,000			USD	88,778	JPMorgan Chase Bank N.A.		6/10/15		183
GBP	172,000			USD	255,639	UBS AG		6/10/15		(619	)
INR	17,100,000			USD	271,127	Credit Suisse International		6/10/15		(2,103	)
INR	12,100,000			USD	190,611	HSBC Bank PLC		6/10/15		(249	)
INR	13,500,000			USD	214,082	Morgan Stanley & Co. International PLC		6/10/15		(1,694	)
INR	16,900,000			USD	265,713	UBS AG		6/10/15		165
INR	19,300,000			USD	303,889	UBS AG		6/10/15		(254	)
JPY	24,915,000			USD	208,637	Bank of America N.A.		6/10/15		(693	)

See Notes to Financial Statements.

26 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015

Schedule of Investments (continued)

As of March 31, 2015, forward foreign currency exchange contracts outstanding were as follows: (continued)

Currency Purchased		Currency Sold			Counterparty	Settlement Date		Unrealized Appreciation (Depreciation)
JPY	24,915,000		USD	208,672	Bank of America N.A.		6/10/15	$	(728	)
JPY	27,250,000		USD	225,322	Bank of America N.A.		6/10/15		2,110
JPY	27,250,000		USD	225,565	Bank of America N.A.		6/10/15		1,867
JPY	39,500,000		USD	332,028	Bank of America N.A.		6/10/15		(2,355	)
JPY	42,400,000		USD	354,148	Bank of America N.A.		6/10/15		(271	)
JPY	9,200,000		USD	75,991	Barclays Bank PLC		6/10/15		794
JPY	13,800,000		USD	115,927	Barclays Bank PLC		6/10/15		(751	)
JPY	15,500,000		USD	129,355	Barclays Bank PLC		6/10/15		11
JPY	16,600,000		USD	137,434	Barclays Bank PLC		6/10/15		1,112
JPY	16,968,652		USD	140,190	Barclays Bank PLC		6/10/15		1,433
JPY	37,400,000		USD	314,518	Barclays Bank PLC		6/10/15		(2,372	)
JPY	25,670,000		USD	215,122	BNP Paribas S.A.		6/10/15		(877	)
JPY	40,200,000		USD	336,495	Citibank N.A.		6/10/15		(980	)
JPY	111,400,000		USD	935,817	Citibank N.A.		6/10/15		(6,056	)
JPY	41,481,392		USD	342,678	Credit Suisse International		6/10/15		3,532
JPY	7,500,000		USD	61,871	Goldman Sachs International		6/10/15		726
JPY	16,886,562		USD	139,579	Goldman Sachs International		6/10/15		1,359
JPY	27,149,956		USD	224,304	Goldman Sachs International		6/10/15		2,294
JPY	37,500,000		USD	309,353	Goldman Sachs International		6/10/15		3,628
JPY	6,500,000		USD	53,809	HSBC Bank PLC		6/10/15		441
JPY	6,513,438		USD	53,846	Morgan Stanley & Co. International PLC		6/10/15		516
JPY	15,900,000		USD	131,389	UBS AG		6/10/15		1,315
JPY	11,700,000		USD	98,148	Westpac Banking Corp.		6/10/15		(498	)
KRW	237,600,000		USD	214,247	Barclays Bank PLC		6/10/15		(578	)
KRW	299,300,000		USD	268,647	HSBC Bank PLC		6/10/15		508
KRW	299,500,000		USD	270,796	JPMorgan Chase Bank N.A.		6/10/15		(1,461	)
KRW	343,800,000		USD	305,654	JPMorgan Chase Bank N.A.		6/10/15		3,519
KRW	213,700,000		USD	189,703	Morgan Stanley & Co. International PLC		6/10/15		2,474
MXN	3,190,000		USD	212,064	Credit Suisse International		6/10/15		(3,952	)
MXN	4,060,000		USD	271,133	Credit Suisse International		6/10/15		(6,264	)
MXN	4,100,000		USD	263,395	Credit Suisse International		6/10/15		4,084
MXN	2,788,396		USD	180,224	Deutsche Bank AG		6/10/15		1,687
MXN	181,604		USD	11,740	Morgan Stanley & Co. International PLC		6/10/15		108
MXN	4,710,000		USD	306,333	Morgan Stanley & Co. International PLC		6/10/15		941
MYR	1,480,000		USD	399,568	JPMorgan Chase Bank N.A.		6/10/15		(2,421	)
NOK	130,123		USD	16,596	Barclays Bank PLC		6/10/15		(475	)
NOK	600,160		USD	73,538	Credit Suisse International		6/10/15		816
NOK	1,442,000		USD	179,165	Credit Suisse International		6/10/15		(514	)
NOK	1,580,000		USD	193,593	Credit Suisse International		6/10/15		2,154
NOK	2,160,000		USD	265,930	Credit Suisse International		6/10/15		1,674
NOK	2,195,000		USD	272,226	Credit Suisse International		6/10/15		(286	)
NOK	2,228,000		USD	275,094	Credit Suisse International		6/10/15		935
NOK	4,093,000		USD	501,525	Credit Suisse International		6/10/15		5,560
NOK	2,160,000		USD	266,791	Goldman Sachs International		6/10/15		813
NOK	128,000		USD	15,363	HSBC Bank PLC		6/10/15		495
NOK	765,000		USD	93,793	HSBC Bank PLC		6/10/15		983
NOK	1,880,000		USD	230,392	HSBC Bank PLC		6/10/15		2,523
NOK	1,707,000		USD	211,875	JPMorgan Chase Bank N.A.		6/10/15		(393	)
NOK	1,945,000		USD	247,103	JPMorgan Chase Bank N.A.		6/10/15		(6,136	)

See Notes to Financial Statements.

BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015 27

Schedule of Investments (continued)

As of March 31, 2015, forward foreign currency exchange contracts outstanding were as follows: (continued)

Currency Purchased		Currency Sold			Counterparty	Settlement Date		Unrealized Appreciation (Depreciation)
NOK	2,593,000		USD	318,648	JPMorgan Chase Bank N.A.		6/10/15	$	2,601
NOK	3,082,840		USD	377,397	JPMorgan Chase Bank N.A.		6/10/15		4,538
NOK	3,374,000		USD	414,430	JPMorgan Chase Bank N.A.		6/10/15		3,577
NOK	5,160,000		USD	632,577	JPMorgan Chase Bank N.A.		6/10/15		6,699
NOK	234,877		USD	29,948	UBS AG		6/10/15		(849	)
NOK	2,190,000		USD	276,875	UBS AG		6/10/15		(5,554	)
NZD	281,000		USD	205,855	Goldman Sachs International		6/10/15		2,760
PLN	730,000		EUR	175,976	Barclays Bank PLC		6/10/15		2,775
PLN	1,020,000		EUR	246,557	Barclays Bank PLC		6/10/15		3,153
PLN	810,000		EUR	196,243	Credit Suisse International		6/10/15		2,021
PLN	1,000,000		EUR	242,550	Credit Suisse International		6/10/15		2,200
PLN	1,200,000		EUR	289,500	Credit Suisse International		6/10/15		4,319
SEK	4,960,000		USD	587,148	Barclays Bank PLC		6/10/15		(10,566	)
SEK	5,235,000		USD	619,701	Barclays Bank PLC		6/10/15		(11,152	)
SEK	2,636,000		USD	305,386	Credit Suisse International		6/10/15		1,039
SEK	2,970,000		USD	344,773	Credit Suisse International		6/10/15		478
SEK	3,865,000		USD	457,224	Credit Suisse International		6/10/15		(7,932	)
SEK	4,961,000		USD	587,397	UBS AG		6/10/15		(10,700	)
SEK	5,231,000		USD	619,366	UBS AG		6/10/15		(11,282	)
TRY	39,102		USD	14,760	Barclays Bank PLC		6/10/15		9
TRY	445,225		USD	171,488	Barclays Bank PLC		6/10/15		(3,324	)
TRY	244,775		USD	94,213	Deutsche Bank AG		6/10/15		(1,760	)
TRY	470,898		USD	177,704	Deutsche Bank AG		6/10/15		157
TRY	560,000		USD	215,062	JPMorgan Chase Bank N.A.		6/10/15		(3,547	)
TRY	810,000		USD	305,603	Morgan Stanley & Co. International PLC		6/10/15		339
USD	653,901		AUD	847,000	Citibank N.A.		6/10/15		11,382
USD	56,468		AUD	72,871	Credit Suisse International		6/10/15		1,190
USD	71,320		AUD	91,000	Credit Suisse International		6/10/15		2,289
USD	84,392		AUD	109,000	Credit Suisse International		6/10/15		1,707
USD	370,936		AUD	485,000	Credit Suisse International		6/10/15		3,023
USD	32,802		AUD	42,336	Deutsche Bank AG		6/10/15		686
USD	62,314		AUD	80,209	Goldman Sachs International		6/10/15		1,470
USD	275,046		AUD	359,000	Goldman Sachs International		6/10/15		2,715
USD	375,781		AUD	490,000	Goldman Sachs International		6/10/15		4,076
USD	826,789		AUD	1,070,000	Goldman Sachs International		6/10/15		15,106
USD	1,297,984		AUD	1,702,000	Goldman Sachs International		6/10/15		6,878
USD	80,640		AUD	105,000	HSBC Bank PLC		6/10/15		989
USD	189,324		AUD	250,000	HSBC Bank PLC		6/10/15		(321	)
USD	159,298		AUD	205,000	JPMorgan Chase Bank N.A.		6/10/15		3,788
USD	422,114		AUD	550,000	JPMorgan Chase Bank N.A.		6/10/15		4,894
USD	8,201		AUD	10,584	Morgan Stanley & Co. International PLC		6/10/15		172
USD	279,660		AUD	369,638	UBS AG		6/10/15		(741	)
USD	40,046		AUD	52,000	Westpac Banking Corp.		6/10/15		600
USD	124,496		AUD	164,362	Westpac Banking Corp.		6/10/15		(186	)
USD	164,225		AUD	216,000	Westpac Banking Corp.		6/10/15		371
USD	832,259		AUD	1,075,000	Westpac Banking Corp.		6/10/15		16,783
USD	419,734		CAD	524,000	Barclays Bank PLC		6/10/15		6,410
USD	94,368		CAD	118,000	BNP Paribas S.A.		6/10/15		1,291
USD	123,958		CAD	155,000	BNP Paribas S.A.		6/10/15		1,696

See Notes to Financial Statements.

28 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015

Schedule of Investments (continued)

As of March 31, 2015, forward foreign currency exchange contracts outstanding were as follows: (continued)

Currency Purchased		Currency Sold			Counterparty	Settlement Date		Unrealized Appreciation (Depreciation)
USD	169,945		CAD	214,000	Citibank N.A.		6/10/15	$	1,145
USD	258,701		CAD	329,000	JPMorgan Chase Bank N.A.		6/10/15		(810	)
USD	1,227,883		CAD	1,547,000	UBS AG		6/10/15		7,629
USD	2,110,498		CAD	2,659,000	UBS AG		6/10/15		13,114
USD	1,265,252		EUR	1,177,000	Citibank N.A.		6/10/15		(1,554	)
USD	300,572		EUR	275,000	Credit Suisse International		6/10/15		4,590
USD	426,092		EUR	399,000	Credit Suisse International		6/10/15		(3,352	)
USD	461,493		EUR	430,000	Credit Suisse International		6/10/15		(1,316	)
USD	419,866		EUR	390,000	Deutsche Bank AG		6/10/15		109
USD	151,272		EUR	137,000	Goldman Sachs International		6/10/15		3,819
USD	201,019		EUR	184,863	Goldman Sachs International		6/10/15		2,051
USD	278,184		EUR	256,137	Goldman Sachs International		6/10/15		2,504
USD	373,035		EUR	343,000	Goldman Sachs International		6/10/15		3,864
USD	813,499		EUR	748,000	Goldman Sachs International		6/10/15		8,426
USD	421,939		EUR	393,000	HSBC Bank PLC		6/10/15		(1,047	)
USD	799,588		EUR	759,000	JPMorgan Chase Bank N.A.		6/10/15		(17,324	)
USD	306,575		EUR	285,000	Morgan Stanley & Co. International PLC		6/10/15		(170	)
USD	810,796		EUR	744,000	Morgan Stanley & Co. International PLC		6/10/15		10,029
USD	375,730		EUR	342,000	State Street Bank and Trust Co.		6/10/15		7,635
USD	71,452		EUR	66,000	UBS AG		6/10/15		416
USD	220,852		EUR	204,000	UBS AG		6/10/15		1,287
USD	14,831		GBP	10,000	Barclays Bank PLC		6/10/15		5
USD	67,815		GBP	45,775	Barclays Bank PLC		6/10/15		(54	)
USD	351,953		GBP	236,000	Barclays Bank PLC		6/10/15		2,041
USD	39,678		GBP	26,792	Citibank N.A.		6/10/15		(46	)
USD	19,275		GBP	13,000	Credit Suisse International		6/10/15		—
USD	101,464		GBP	68,000	Credit Suisse International		6/10/15		642
USD	129,749		GBP	87,000	Credit Suisse International		6/10/15		756
USD	31,738		GBP	21,434	Goldman Sachs International		6/10/15		(41	)
USD	141,684		GBP	96,000	Goldman Sachs International		6/10/15		(653	)
USD	147,001		GBP	99,000	Goldman Sachs International		6/10/15		216
USD	384,176		GBP	257,000	Goldman Sachs International		6/10/15		3,129
USD	436,996		GBP	294,333	Goldman Sachs International		6/10/15		597
USD	57,471		GBP	39,000	HSBC Bank PLC		6/10/15		(354	)
USD	78,849		GBP	53,000	HSBC Bank PLC		6/10/15		267
USD	128,299		GBP	85,000	HSBC Bank PLC		6/10/15		2,272
USD	140,181		GBP	93,000	HSBC Bank PLC		6/10/15		2,292
USD	205,278		GBP	136,000	HSBC Bank PLC		6/10/15		3,635
USD	237,889		GBP	160,000	HSBC Bank PLC		6/10/15		661
USD	1,420,345		GBP	941,000	HSBC Bank PLC		6/10/15		25,148
USD	243,282		GBP	164,000	JPMorgan Chase Bank N.A.		6/10/15		123
USD	1,289,289		GBP	867,000	JPMorgan Chase Bank N.A.		6/10/15		3,809
USD	1,052,382		GBP	705,000	State Street Bank and Trust Co.		6/10/15		7,096
USD	90,871		GBP	61,000	UBS AG		6/10/15		428
USD	208,798		GBP	140,667	UBS AG		6/10/15		234
USD	183,271		INR	11,700,000	HSBC Bank PLC		6/10/15		(798	)
USD	189,804		INR	12,100,000	HSBC Bank PLC		6/10/15		(558	)
USD	63,032		INR	4,000,000	Morgan Stanley & Co. International PLC		6/10/15		102
USD	265,348		INR	16,900,000	UBS AG		6/10/15		(530	)

See Notes to Financial Statements.

BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015 29

Schedule of Investments (continued)

As of March 31, 2015, forward foreign currency exchange contracts outstanding were as follows: (continued)

Currency Purchased		Currency Sold			Counterparty	Settlement Date		Unrealized Appreciation (Depreciation)
USD	180,286		JPY	21,700,000	Bank of America N.A.		6/10/15	$	(826	)
USD	113,263		JPY	13,605,836	Barclays Bank PLC		6/10/15		(294	)
USD	132,707		JPY	16,100,000	Barclays Bank PLC		6/10/15		(1,666	)
USD	237,049		JPY	28,476,909	Barclays Bank PLC		6/10/15		(624	)
USD	215,670		JPY	26,100,000	Citibank N.A.		6/10/15		(2,164	)
USD	68,620		JPY	8,238,215	Credit Suisse International		6/10/15		(137	)
USD	206,363		JPY	25,000,000	Credit Suisse International		6/10/15		(2,291	)
USD	413,423		JPY	49,900,000	Credit Suisse International		6/10/15		(3,049	)
USD	75,825		JPY	9,200,000	Goldman Sachs International		6/10/15		(959	)
USD	154,635		JPY	18,500,000	Goldman Sachs International		6/10/15		231
USD	194,381		JPY	23,200,000	Goldman Sachs International		6/10/15		750
USD	216,915		JPY	26,200,000	Goldman Sachs International		6/10/15		(1,755	)
USD	817,594		JPY	99,200,000	Goldman Sachs International		6/10/15		(10,344	)
USD	22,692		JPY	2,700,000	HSBC Bank PLC		6/10/15		157
USD	193,727		JPY	23,400,000	HSBC Bank PLC		6/10/15		(1,573	)
USD	309,632		JPY	37,400,000	HSBC Bank PLC		6/10/15		(2,514	)
USD	1,236,873		JPY	149,400,000	HSBC Bank PLC		6/10/15		(10,042	)
USD	1,241,899		JPY	148,800,000	JPMorgan Chase Bank N.A.		6/10/15		(8	)
USD	58,056		JPY	6,973,091	UBS AG		6/10/15		(143	)
USD	113,264		JPY	13,605,949	UBS AG		6/10/15		(293	)
USD	137,027		JPY	16,600,000	UBS AG		6/10/15		(1,519	)
USD	211,457		JPY	25,500,000	UBS AG		6/10/15		(1,370	)
USD	204,999		KRW	227,200,000	HSBC Bank PLC		6/10/15		682
USD	184,554		KRW	209,100,000	Morgan Stanley & Co. International PLC		6/10/15		(3,486	)
USD	189,711		KRW	213,700,000	Morgan Stanley & Co. International PLC		6/10/15		(2,466	)
USD	267,304		KRW	299,300,000	Morgan Stanley & Co. International PLC		6/10/15		(1,851	)
USD	189,897		MXN	2,970,000	Credit Suisse International		6/10/15		(3,862	)
USD	197,974		MXN	3,010,000	Morgan Stanley & Co. International PLC		6/10/15		1,606
USD	263,844		MXN	4,100,000	Morgan Stanley & Co. International PLC		6/10/15		(3,635	)
USD	184,216		MXN	2,860,000	UBS AG		6/10/15		(2,367	)
USD	323,319		MYR	1,200,000	BNP Paribas S.A.		6/10/15		1,308
USD	248,982		NOK	2,050,000	Credit Suisse International		6/10/15		(4,994	)
USD	305,373		NOK	2,511,000	Credit Suisse International		6/10/15		(5,717	)
USD	804,322		NOK	6,379,000	JPMorgan Chase Bank N.A.		6/10/15		14,023
USD	1,415,728		NOK	11,228,000	JPMorgan Chase Bank N.A.		6/10/15		24,683
USD	2,548		NZD	3,485	BNP Paribas S.A.		6/10/15		(39	)
USD	53,040		NZD	72,548	BNP Paribas S.A.		6/10/15		(820	)
USD	166,900		NZD	228,293	BNP Paribas S.A.		6/10/15		(2,585	)
USD	168,879		NZD	231,000	BNP Paribas S.A.		6/10/15		(2,615	)
USD	52,345		NZD	69,000	Credit Suisse International		6/10/15		1,120
USD	311,637		NZD	427,000	Credit Suisse International		6/10/15		(5,369	)
USD	682,558		NZD	930,000	Credit Suisse International		6/10/15		(7,875	)
USD	28,150		NZD	38,525	Goldman Sachs International		6/10/15		(450	)
USD	77,840		NZD	104,849	Goldman Sachs International		6/10/15		—
USD	585,989		NZD	801,941	Goldman Sachs International		6/10/15		(9,373	)
USD	69,784		NZD	94,151	UBS AG		6/10/15		(113	)
USD	5,103		NZD	6,990	Westpac Banking Corp.		6/10/15		(86	)
USD	106,232		NZD	145,511	Westpac Banking Corp.		6/10/15		(1,796	)
USD	310,518		NZD	425,000	Westpac Banking Corp.		6/10/15		(5,003	)

See Notes to Financial Statements.

30 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015

Schedule of Investments (continued)

Ÿ As of March 31, 2015, forward foreign currency exchange contracts outstanding were as follows: (concluded)

Currency Purchased		Currency Sold			Counterparty	Settlement Date		Unrealized Appreciation (Depreciation)
USD	139,842		SEK	1,207,791	Barclays Bank PLC		6/10/15	$	(559	)
USD	139,788		SEK	1,192,457	Credit Suisse International		6/10/15		1,169
USD	149,117		SEK	1,289,000	Credit Suisse International		6/10/15		(725	)
USD	177,792		SEK	1,536,000	Credit Suisse International		6/10/15		(762	)
USD	271,488		SEK	2,311,000	Credit Suisse International		6/10/15		2,843
USD	397,341		SEK	3,406,000	Credit Suisse International		6/10/15		1,407
USD	181,550		SEK	1,563,000	Goldman Sachs International		6/10/15		(143	)
USD	396,091		SEK	3,356,000	Goldman Sachs International		6/10/15		5,969
USD	233,435		SEK	2,015,000	HSBC Bank PLC		6/10/15		(801	)
USD	118,783		SEK	1,014,543	JPMorgan Chase Bank N.A.		6/10/15		846
USD	161,665		SEK	1,380,000	JPMorgan Chase Bank N.A.		6/10/15		1,246
USD	399,688		SEK	3,454,000	JPMorgan Chase Bank N.A.		6/10/15		(1,827	)
USD	404,086		SEK	3,560,000	JPMorgan Chase Bank N.A.		6/10/15		(9,750	)
USD	429,833		SEK	3,685,000	JPMorgan Chase Bank N.A.		6/10/15		1,466
USD	633,493		SEK	5,465,000	JPMorgan Chase Bank N.A.		6/10/15		(1,793	)
USD	1,089,413		SEK	9,250,000	JPMorgan Chase Bank N.A.		6/10/15		14,135
USD	222,581		SEK	1,923,209	UBS AG		6/10/15		(985	)
USD	188,804		TRY	510,000	Credit Suisse International		6/10/15		(3,826	)
USD	183,027		TRY	490,000	Royal Bank of Scotland PLC		6/10/15		(2,049	)
USD	324,174		TRY	860,000	Royal Bank of Scotland PLC		6/10/15		(653	)
USD	17,988,503		EUR	16,456,260	Citibank N.A.		6/24/15		272,836
USD	102,253,599		EUR	93,543,740	Citibank N.A.		6/24/15		1,550,905
USD	69,939,996		JPY	8,475,000,000	Standard Chartered Bank		6/24/15		(810,035	)
Total								$	4,179,029

Ÿ As of March 31, 2015, exchange-traded options purchased were as follows:

Description	Put/ Call		Strike Price			Expiration Date		Contracts		Value
Euro Dollar 2-Year Mid-Curve		Put		USD	97.75		6/12/15		54	$	41,175
Euro Dollar 2-Year Mid-Curve		Put		USD	96.75		6/12/15		53		13,912
Total										$	55,087

Ÿ As of March 31, 2015, exchange-traded options written were as follows:

Description	Put/ Call		Strike Price			Expiration Date		Contracts		Value
U.S. Treasury Notes (10 Year)		Call		USD	127.00		4/24/15		113	$	(229,531	)
U.S. Treasury Notes (10 Year)		Put		USD	127.00		4/24/15		114		(14,250	)
Euro Dollar 2-Year Mid-Curve		Put		USD	97.25		6/12/15		107		(48,150	)
Total										$	(291,931	)

Ÿ As of March 31, 2015, centrally cleared interest rate swaps outstanding were as follows:

Fixed Rate	Floating Rate	Clearinghouse	Effective Date			Expiration Date		Notional Amount (000)			Unrealized Depreciation
1.94%1	3-month LIBOR	Chicago Mercantile		6/30/15	2		12/31/21		USD	5,410	$	(39,204	)
0.64%1	6-month EURIBOR	Chicago Mercantile		6/10/15	2		2/15/24		EUR	3,130		(36,724	)
0.52%1	6-month EURIBOR	Chicago Mercantile		6/10/15	2		2/15/24		EUR	2,150		(974	)
Total											$	(76,902	)

¹  Fund pays the fixed rate and receives the floating rate.

²  Forward swap.

See Notes to Financial Statements.

BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015 31

Schedule of Investments (continued)

Ÿ As of March 31, 2015, centrally cleared credit default swaps — sold protection outstanding were as follows:

Index

Receive Fixed Rate

Clearinghouse

Expiration Date

Issuer Credit Rating1

Notional Amount (000)2

Unrealized Appreciation

iTraxx Europe Crossover Series 23 Version 1

5.00

%

InterContinental Exchange

6/20/20

B+

EUR

3,684

$

14,634

¹  Using S&P’s rating of the issuer of the underlying securities of the index, as applicable.

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

Ÿ As of March 31, 2015, OTC total return swaps outstanding were as follows:

Reference Entity	Fixed Notional Amount			Counterparty	Expiration Date	Contract Amount		Value			Premiums Paid (Received)		Unrealized Depreciation
TAIEX Futures Contracts April 2015	TWD	717,478,091	1	Deutsche Bank AG	4/15/15		374	$	(23,793	)		—	$	(23,793	)

¹  Fund receives the total return of the reference entity and pays the floating amount. Net payment made at termination.

Ÿ Fair Value Measurements — Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instruments and is not necessarily an indication of the risks associated with investing in those securities. The three levels of the fair value hierarchy are as follows:

Ÿ Level 1 — unadjusted quoted prices in active markets/exchanges for identical assets or liabilities that the Fund has the ability to access

Ÿ 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)

Ÿ 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. In accordance with the Fund’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. For information about the Fund’s policy regarding valuation of investments and derivative financial instruments, refer to Note 2 of the Notes to Financial Statements.

As of March 31, 2015, the following tables summarize the Fund’s investments and derivative financial instruments categorized in the disclosure hierarchy:

	Level 1			Level 2			Level 3			Total
Assets:
Investments:
Long-Term Investments:
Asset-Backed Securities			—		$	3,900,214			—		$	3,900,214
Common Stocks		$	84,251,709			225,093,075		$	5,632			309,350,416
Corporate Bonds			—			68,110,470			—			68,110,470
Foreign Agency Obligations			—			11,339,547			—			11,339,547
Foreign Government Obligations			—			80,017,396			—			80,017,396
Investment Companies			23,409,403			—			—			23,409,403
Non-Agency Mortgage-Backed Securities			—			3,498,895			—			3,498,895
U.S. Government Sponsored Agency Securities			—			25,945,508			—			25,945,508
U.S. Treasury Obligations			—			15,114,385			—			15,114,385
Short-Term Securities			211,570,778			344,954			—			211,915,732
Options Purchased:
Interest Rate Contracts			55,087			—			—			55,087
Total		$	319,286,977		$	433,364,444			$5,632		$	752,657,053

See Notes to Financial Statements.

32 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015

Schedule of Investments (concluded)

	Level 1				Level 2				Level 3		Total
Derivative Financial Instruments1
Assets:
Credit contracts			—			$	14,634			—		$	14,634
Equity contracts		$	1,000,214				—			—			1,000,214
Foreign currency exchange contracts			115,425				5,978,260			—			6,093,685
Interest rate contracts			381,802				—			—			381,802
Liabilities:
Equity contracts			(754,366	)			(23,793	)		—			(778,159	)
Foreign currency exchange contracts			(419,030	)			(1,799,231	)		—			(2,218,261	)
Interest rate contracts			(2,052,823	)			(76,902	)		—			(2,129,725	)
Total		$	(1,728,778	)		$	4,092,968			—		$	2,364,190
1    Derivative financial instruments are swaps, financial futures contracts, forward foreign currency exchange contracts and options written. Swaps, financial futures contracts and forward foreign currency exchange contracts are valued at the unrealized appreciation/depreciation on the instrument and options written are shown at value.
The Fund may hold assets and/or liabilities in which the fair value approximates the carrying amount for financial statement purposes. As of March 31, 2015, such assets and/or liabilities are categorized within the disclosure hierarchy as follows:
	Level 1				Level 2				Level 3		Total
Assets:
Cash pledged for financial futures contracts		$	12,358,000				—			—		$	12,358,000
Cash pledged for centrally cleared swaps			485,000				—			—			485,000
Foreign currency at value			6,153,754				—			—			6,153,754
Liabilities:
Bank overdraft			—			$	(1,276,381	)		—			(1,276,381	)
Collateral on securities loaned at value			—				(344,954	)		—			(344,954	)
Total		$	18,996,754			$	(1,621,335	)		—		$	17,375,419

During the six months ended March 31, 2015, there were no transfers between levels.

See Notes to Financial Statements.

BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015 33

Statement of Assets and Liabilities

March 31, 2015 (Unaudited)
Assets
Investments at value — unaffiliated (including securities loaned at value of $311,234) (cost — $521,400,879)	$	517,331,918
Investments at value — affiliated (cost — $235,303,426)		235,325,135
Cash pledged for financial futures contracts		12,358,000
Cash pledged for centrally cleared swaps		485,000
Foreign currency at value (cost — $6,121,339)		6,153,754
Variation margin receivable on centrally cleared swaps		4,614
Variation margin receivable on financial futures contracts		1,038,405
Investments sold receivable		172,792
Unrealized appreciation on forward foreign currency exchange contracts		5,978,260
Capital shares sold receivable		330,430
Interest receivable		1,362,558
Dividends receivable — unaffiliated		630,205
Dividends receivable — affiliated		15,165
Securities lending income receivable — affiliated		1,711
Receivable from Manager		94
Prepaid expenses		62,608
Total assets		781,250,649
Liabilities
Bank overdraft		1,276,381
Options written at value (premiums received — $266,989)		291,931
Collateral on securities loaned at value		344,954
Variation margin payable on financial futures contracts		646,926
Investments purchased payable		32,061,723
Unrealized depreciation on forward foreign currency exchange contracts		1,799,231
Unrealized depreciation on OTC swaps		23,793
Capital shares redeemed payable		945,029
Investment advisory fees payable		336,469
Service and distribution fees payable		140,282
Other affiliates payable		140,020
Officer’s and Trustees’ fees payable		5,020
Other accrued expenses payable		528,436
Total liabilities		38,540,195
Net Assets	$	742,710,454
Net Assets Consist of
Paid-in capital	$	700,636,486
Distributions in excess of net investment income		(7,157,135	)
Undistributed net realized gain		50,704,543
Net unrealized appreciation/depreciation		(1,473,440	)
Net Assets	$	742,710,454
Net Asset Value
Institutional — Based on net assets of $317,475,613 and 21,039,038 shares outstanding, unlimited number of shares authorized, $0.001 par value	$	15.09
Service — Based on net assets of $1,694,785 and 112,767 shares outstanding, unlimited number of shares authorized, $0.001 par value	$	15.03
Investor A — Based on net assets of $346,138,058 and 23,043,568 shares outstanding, unlimited number of shares authorized, $0.001 par value	$	15.02
Investor B — Based on net assets of $5,527,446 and 374,140 shares outstanding, unlimited number of shares authorized, $0.001 par value	$	14.77
Investor C — Based on net assets of $71,874,552 and 4,902,940 shares outstanding, unlimited number of shares authorized, $0.001 par value	$	14.66

See Notes to Financial Statements.

34 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015

Statement of Operations

Six Months Ended March 31, 2015 (Unaudited)
Investment Income
Interest	$	1,887,166
Dividends — unaffiliated		1,968,736
Dividends — affiliated		194,709
Securities lending — affiliated — net		4,913
Foreign taxes withheld		(117,329	)
Total income		3,938,195
Expenses
Investment advisory		2,037,998
Service and distribution — class specific		817,345
Transfer agent — class specific		587,662
Administration		211,297
Administration — class specific		83,646
Professional		61,582
Accounting services		48,485
Registration		46,014
Printing		30,845
Custodian		28,490
Officer and Trustees		12,492
Miscellaneous		37,480
Recoupment of past waived and/or reimbursed fees — class specific		4,099
Total expenses		4,007,435
Less fees waived by Manager		(115,467	)
Less administration fees waived — class specific		(693	)
Less transfer agent fees waived — class specific		(1,983	)
Less transfer agent fees reimbursed — class specific		(1,109	)
Total expenses after fees waived and/or reimbursed		3,888,183
Net investment income		50,012
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from:
Investments — unaffiliated		9,081,439
Capital gain distributions received from affiliated investment companies		28,007
Options written		19,285
Financial futures contracts		13,235,549
Swaps		145,048
Foreign currency transactions		28,245,560
		50,754,888
Net change in unrealized appreciation/depreciation on:
Investments — unaffiliated		(12,707,865	)
Investments — affiliated		55,456
Options written		(23,410	)
Financial futures contracts		(3,294,396	)
Swaps		995,300
Foreign currency translations		(1,663,717	)
		(16,638,632	)
Net realized and unrealized gain		34,116,256
Net Increase in Net Assets Resulting from Operations	$	34,166,268

See Notes to Financial Statements.

BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015 35

Statements of Changes in Net Assets

Increase in Net Assets:	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30, 2014
Operations
Net investment income	$	50,012		$	82,013
Net realized gain		50,754,888			53,147,382
Net change in unrealized appreciation/depreciation		(16,638,632	)		(9,681,308	)
Net increase in net assets resulting from operations		34,166,268			43,548,087
Distributions to Shareholders From1
Net investment income:
Institutional		(7,149,829	)		(2,940,379	)
Service		(31,675	)		(17,511	)
Investor A		(6,670,170	)		(3,753,926	)
Investor B		(61,710	)		(78,744	)
Investor C		(1,086,621	)		(649,050	)
Net realized gain:
Institutional		(16,489,741	)		(19,653,564	)
Service		(83,973	)		(140,882	)
Investor A		(17,397,558	)		(30,046,152	)
Investor B		(318,235	)		(927,559	)
Investor C		(3,827,246	)		(6,652,735	)
Decrease in net assets resulting from distributions to shareholders		(53,116,758	)		(64,860,502	)
Capital Share Transactions
Net increase (decrease) in net assets derived from capital share transactions		(14,294,554	)		194,193,414
Net Assets
Total increase (decrease) in net assets		(33,245,044	)		172,880,999
Beginning of period		775,955,498			603,074,499
End of period	$	742,710,454		$	775,955,498
Undistributed (distributions in excess of) net investment income, end of period	$	(7,157,135	)	$	7,792,858

¹ Distributions for annual periods determined in accordance with federal tax regulations.

See Notes to Financial Statements.

36 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015

Financial Highlights

	Institutional																		Service
	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,															Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012			2011			2010						2014			2013			2012			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	15.52		$	15.95		$	15.37		$	14.03		$	14.31		$	13.28		$	15.44		$	15.90		$	15.31		$	13.99		$	14.27		$	13.24
Net investment income (loss)1		0.02			0.04			0.19			0.23			0.29			0.29			(0.01	)		(0.01	)		0.15			0.19			0.25			0.25
Net realized and unrealized gain (loss)		0.70			1.04			1.19			1.68			(0.26	)		1.02			0.70			1.02			1.19			1.67			(0.26	)		1.03
Net increase (decrease) from investment operations		0.72			1.08			1.38			1.91			0.03			1.31			0.69			1.01			1.34			1.86			(0.01	)		1.28
Distributions from:2
Net investment income		(0.35	)		(0.20	)		(0.22	)		(0.26	)		(0.31	)		(0.28	)		(0.30	)		(0.16	)		(0.17	)		(0.23	)		(0.27	)		(0.25	)
Net realized gain		(0.80	)		(1.31	)		(0.58	)		(0.31	)		—			—			(0.80	)		(1.31	)		(0.58	)		(0.31	)		—			—
Total distributions		(1.15	)		(1.51	)		(0.80	)		(0.57	)		(0.31	)		(0.28	)		(1.10	)		(1.47	)		(0.75	)		(0.54	)		(0.27	)		(0.25	)
Net asset value, end of period	$	15.09		$	15.52		$	15.95		$	15.37		$	14.03		$	14.31		$	15.03		$	15.44		$	15.90		$	15.31		$	13.99		$	14.27
Total Return3
Based on net asset value		4.92	%4		7.02	%		9.35	%		13.89	%		0.06	%		9.99	%		4.77	%4		6.57	%		9.06	%		13.53	%		(0.21	)%		9.74	%
Ratios to Average Net Assets
Total expenses5		0.82	%6,7		0.85	%6		0.91	%6		0.95	%6		0.94	%		0.95	%		1.20	%7,8		1.21	%8		1.24	%8		1.27	%		1.24	%		1.27	%
Total expenses after fees waived and/or reimbursed and paid indirectly5		0.79	%7		0.82	%		0.87	%		0.90	%		0.90	%		0.91	%		1.17	%7		1.17	%		1.17	%		1.18	%		1.18	%		1.19	%
Total expenses after fees waived and/or reimbursed and paid indirectly and excluding interest expense5		0.79	%7		0.82	%		0.87	%		0.89	%		0.89	%		0.89	%		1.17	%7		1.17	%		1.17	%		1.17	%		1.17	%		1.17	%
Net investment income (loss)5		0.27	%7		0.28	%		1.22	%		1.59	%		1.91	%		2.09	%		(0.10	)%7		(0.04	)%		0.95	%		1.30	%		1.63	%		1.80	%
Supplemental Data
Net assets, end of period (000)	$	317,476		$	342,794		$	132,007		$	59,041		$	40,259		$	39,083		$	1,695		$	1,703		$	1,774		$	1,915		$	1,676		$	1,652
Portfolio turnover rate9		92	%		181	%		192	%		324	%		401	%		400	%		92	%		181	%		192	%		324	%		401	%		400	%

¹ Based on average shares outstanding.

² Distributions for annual periods determined in accordance with federal income tax regulations.

³ Where applicable, assumes the reinvestment of distributions.

⁴ Aggregate total return.

⁵ Excludes expenses incurred indirectly as a result of investments in underlying funds as follows:

	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012			2011		2010
Investments in underlying funds		0.10	%		0.11	%		0.10	%		0.05	%		—		—

⁶ Includes recoupment of past waived and/or reimbursed fees. Excluding the recoupment of past waived and/or reimbursed fees for the years ended September 30, 2013 and September 30, 2012, the ratio would have been 0.89% and 0.91%, respectively. There was no financial impact to the expense ratios for the six months ended March 31, 2015 and the year ended September 30, 2014.

⁷ Annualized.

⁸ Includes recoupment of past waived and/or reimbursed fees. Excluding the recoupment of past waived and/or reimbursed fees for the six months ended March 31, 2015 and the years ended September 30, 2014 and September 30, 2013, the ratios would have been 1.18%, 1.17% and 1.23%, respectively.

⁹ Includes mortgage dollar roll transactions (“MDRs”). Additional information regarding portfolio turnover rate is as follows:

	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012			2011			2010
Portfolio turnover rate (excluding MDRs)		92	%		181	%		192	%		254	%		236	%		302	%

See Notes to Financial Statements.

BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015 37

Financial Highlights (continued)

	Investor A																		Investor B
	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,															Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012			2011			2010						2014			2013			2012			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	15.43		$	15.89		$	15.30		$	13.98		$	14.26		$	13.23		$	15.12		$	15.69		$	15.10		$	13.83		$	14.10		$	13.08
Net investment income (loss)1		(0.00	)2		(0.00	)2		0.15			0.19			0.25			0.24			(0.08	)		(0.15	)		0.01			0.06			0.13			0.12
Net realized and unrealized gain (loss)		0.70			1.01			1.19			1.66			(0.26	)		1.03			0.68			1.00			1.16			1.65			(0.26	)		1.03
Net increase (decrease) from investment operations		0.70			1.01			1.34			1.85			(0.01	)		1.27			0.60			0.85			1.17			1.71			(0.13	)		1.15
Distributions from:3
Net investment income		(0.31	)		(0.16	)		(0.17	)		(0.22	)		(0.27	)		(0.24	)		(0.15	)		(0.11	)		(0.01	)		(0.13	)		(0.14	)		(0.13	)
Net realized gain		(0.80	)		(1.31	)		(0.58	)		(0.31	)		—			—			(0.80	)		(1.31	)		(0.57	)		(0.31	)		—			—
Total distributions		(1.11	)		(1.47	)		(0.75	)		(0.53	)		(0.27	)		(0.24	)		(0.95	)		(1.42	)		(0.58	)		(0.44	)		(0.14	)		(0.13	)
Net asset value, end of period	$	15.02		$	15.43		$	15.89		$	15.30		$	13.98		$	14.26		$	14.77		$	15.12		$	15.69		$	15.10		$	13.83		$	14.10
Total Return4
Based on net asset value		4.80	%5		6.58	%		9.09	%		13.51	%		(0.23	)%		9.70	%		4.24	%5		5.56	%		8.04	%		12.60	%		(1.01	)%		8.78	%
Ratios to Average Net Assets
Total expenses6		1.14	%7		1.16	%8		1.18	%		1.23	%		1.20	%		1.23	%8		2.30	%7		2.16	%9		2.10	%		2.08	%		2.00	%		2.04	%9
Total expenses after fees waived and/or reimbursed and paid indirectly6		1.11	%7		1.13	%		1.14	%		1.20	%		1.20	%		1.22	%		2.14	%7		2.13	%		2.06	%		2.06	%		2.00	%		2.04	%
Total expenses after fees waived and/or reimbursed and paid indirectly and excluding interest expense6		1.11	%7		1.13	%		1.14	%		1.19	%		1.19	%		1.20	%		2.14	%7		2.13	%		2.06	%		2.05	%		1.98	%		2.02	%
Net investment income (loss)6		(0.05	)%7		(0.00	)%		0.98	%		1.28	%		1.61	%		1.75	%		(1.10	)%7		(0.98	)%		0.08	%		0.45	%		0.84	%		0.91	%
Supplemental Data
Net assets, end of period (000)	$	346,138		$	350,131		$	374,715		$	390,209		$	370,916		$	385,511		$	5,527		$	6,861		$	12,730		$	19,077		$	31,595		$	49,315
Portfolio turnover rate10		92	%		181	%		192	%		324	%		401	%		400	%		92	%		181	%		192	%		324	%		401	%		400	%

¹  Based on average shares outstanding.

²  Amount is greater than $(0.005) per share.

³  Distributions for annual periods determined in accordance with federal income tax regulations.

⁴  Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

⁵  Aggregate total return.

⁶  Excludes expenses incurred indirectly as a result of investments in underlying funds as follows:

	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012			2011	2010
Investments in underlying funds		0.10	%		0.11	%		0.10	%		0.05	%	—	—
7    Annualized. 8    Includes recoupment of past waived and/or reimbursed fees. Excluding the recoupment of past waived and/or reimbursed fees for the years ended September 30, 2014 and September 30, 2010, the ratios would have been 1.15% and 1.22%, respectively. 9    Includes recoupment of past waived and/or reimbursed fees. Excluding the recoupment of past waived and/or reimbursed fees for the years ended September 30, 2014 and September 30, 2010, the ratios would have been 2.15% and 2.02%, respectively. 10   Includes mortgage dollar roll transactions (“MDRs”). Additional information regarding portfolio turnover rate is as follows:
	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012			2011	2010
Portfolio turnover rate (excluding MDRs)		92	%		181	%		192	%		254	%	236%	302%

See Notes to Financial Statements.

38 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015

Financial Highlights (concluded)

	Investor C
	Six Months Ended March 31, 2015 (Unaudited)			Year Ended September 30,
				2014			2013			2012			2011			2010
Per Share Operating Performance
Net asset value, beginning of period	$	15.06		$	15.60		$	15.02		$	13.76		$	14.04		$	13.04
Net investment income (loss)1		(0.05	)		(0.10	)		0.04			0.08			0.13			0.14
Net realized and unrealized gain (loss)		0.68			1.00			1.17			1.64			(0.25	)		1.02
Net increase (decrease) from investment operations		0.63			0.90			1.21			1.72			(0.12	)		1.16
Distributions from:2
Net investment income		(0.23	)		(0.13	)		(0.05	)		(0.15	)		(0.16	)		(0.16	)
Net realized gain		(0.80	)		(1.31	)		(0.58	)		(0.31	)		—			—
Total distributions		(1.03	)		(1.44	)		(0.63	)		(0.46	)		(0.16	)		(0.16	)
Net asset value, end of period	$	14.66		$	15.06		$	15.60		$	15.02		$	13.76		$	14.04
Total Return3
Based on net asset value		4.42	%4		5.91	%		8.29	%		12.75	%		(0.94	)%		8.86	%
Ratios to Average Net Assets
Total expenses5		1.83	%6		1.84	%7		1.88	%		1.93	%		1.93	%		1.94	%
Total expenses after fees waived and/or reimbursed and paid indirectly5		1.80	%6		1.81	%		1.83	%		1.90	%		1.93	%		1.94	%
Total expenses after fees waived and/or reimbursed and paid indirectly and excluding interest expense5		1.80	%6		1.81	%		1.83	%		1.90	%		1.92	%		1.92	%
Net investment income (loss)5		(0.73	)%6		(0.68	)%		0.28	%		0.58	%		0.89	%		1.05	%
Supplemental Data
Net assets, end of period (000)	$	71,875		$	74,467		$	81,850		$	86,947		$	81,644		$	84,367
Portfolio turnover rate8		92	%		181	%		192	%		324	%		401	%		400	%

¹ Based on average shares outstanding.

² Distributions for annual periods determined in accordance with federal income tax regulations.

³ Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

⁴ Aggregate total return.

⁵ Excludes expenses incurred indirectly as a result of investments in underlying funds as follows:

	Six Months Ended March 31, 2015 (Unaudited)	Year Ended September 30,
		2014	2013	2012	2011	2010
Investments in underlying funds	0.10%	0.11%	0.10%	0.05%	—	—

⁶ Annualized.

⁷ Includes recoupment of past waived and/or reimbursed fees. Excluding the recoupment of past waived and/or reimbursed fees for the year ended September 30, 2014 the ratio would have been 1.83%.

⁸ Includes mortgage dollar roll transactions (“MDRs”). Additional information regarding portfolio turnover rate is as follows:

	Six Months Ended March 31, 2015 (Unaudited)	Year Ended September 30,
		2014	2013	2012	2011	2010
Portfolio turnover rate (excluding MDRs)	92%	181%	192%	254%	236%	302%

See Notes to Financial Statements.

BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015 39

Notes to Financial Statements (Unaudited)

1. Organization:

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 (the “Fund”). The Fund is classified as diversified.

The Fund offers multiple classes of shares. All classes of shares have identical voting, dividend, liquidation and other rights and are subject to the same terms and conditions, except that certain classes bear expenses related to the shareholder servicing and distribution of such shares. Institutional and Service Shares are sold without a sales charge and only to certain eligible investors. Investor B Shares are only available through exchanges and distribution reinvestments by current holders and for purchase by certain employer-sponsored retirement plans. Investor A and Investor C Shares are generally available through financial intermediaries. 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).

Share Class	Initial Sales Charge	CDSC	Conversion Privilege
Institutional and Service Shares	No	No	None
Investor A Shares	Yes	No1	None
Investor B Shares	No	Yes	To Investor A Shares after approximately 8 years
Investor C Shares	No	Yes	None

¹ Investor A Shares may be subject to a CDSC where no initial sales charge was paid at the time of purchase.

The Fund, together with certain other registered investment companies advised by the Manager or its affiliates, is included in a complex of open-end funds referred to as the Equity-Liquidity Complex.

2. Significant Accounting Policies:

The Fund’s financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. The Fund is considered an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies. The following is a summary of significant accounting policies followed by the Fund:

Valuation: The Fund’s investments are valued at fair value as of the close of trading on the New York Stock Exchange (“NYSE”) (generally 4:00 p.m., Eastern time). U.S. 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 determines the fair values of 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”). The BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) is the committee formed by management to develop global pricing policies and procedures and to provide oversight of the pricing function for the Fund for all financial instruments.

Bond investments are valued on the basis of last available bid prices or current market quotations provided by dealers or pricing services. Floating rate loan interests are valued at the mean of the bid prices from one or more brokers or dealers as obtained from a pricing service. In determining the value of a particular investment, pricing services may use certain information with respect to transactions in such investments, quotations from dealers, pricing matrixes, market transactions in comparable investments, various relationships observed in the market between investments and calculated yield measures. 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. To-be-announced (“TBA”) commitments are valued on the basis of last available bid prices or current market quotations provided by pricing services. 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. Certain centrally cleared swaps are valued at the price determined by the relevant exchange or clearinghouse. Investments in open-end registered investment companies are valued at NAV each business day. The market value of the Fund’s investments in the Underlying Funds is based on the published NAV of each Underlying Fund computed as of the close of regular trading on the NYSE on days when the NYSE is open.

Equity investments traded on a recognized securities exchange are valued at the official close price each day, if available. For equity investments traded on more than one exchange, the official close 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 may be valued at the last available bid (long positions) or ask (short positions) price.

Securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars using exchange rates determined as of the close of business on the NYSE. Forward 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.

40 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015

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 and options on swaps (“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.

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.

In the event that the application of these methods of valuation results in a price for an investment that 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 by the Global Valuation Committee, or its delegate, in accordance with a policy approved by the Board as reflecting fair value (“Fair Value Investments”). When determining the price for Fair Value Investments, the Global Valuation Committee, or its delegate, seeks to determine the price that the Fund might reasonably expect to receive or pay from the current sale or purchase of that asset or liability in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the Global Valuation Committee, or its delegate, deems relevant consistent with the principles of fair value measurement, which include the market approach, income approach and/or in the case of recent investments, the cost approach, as appropriate. The market approach generally consists of using comparable market transactions. The income approach generally is used to discount future cash flows to present value and is adjusted for liquidity as appropriate. These factors include but are not limited to: (i) attributes specific to the investment or asset; (ii) the principal market for the investment or asset; (iii) the customary participants in the principal market for the investment or asset; (iv) data assumptions by market participants for the investment or asset, if reasonably available; (v) quoted prices for similar investments or assets in active markets; and (vi) other factors, such as future cash flows, interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks, recovery rates, liquidation amounts and/or default rates. Due to the inherent uncertainty of valuations of such investments, the fair values may differ from the values that would have been used had an active market existed. The Global Valuation Committee, or its delegate, employs various methods for calibrating valuation approaches for investments where an active market does not exist, including regular due diligence of the Fund’s pricing vendors, regular reviews of key inputs and assumptions, transactional back-testing or disposition analysis to compare unrealized gains and losses to realized gains and losses, reviews of missing or stale prices and large movements in market values and reviews of any market related activity. The pricing of all Fair Value Investments is subsequently reported to the Board or a committee thereof on a quarterly basis.

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 (e.g., 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 Investments and be valued at their fair value, as determined in good faith by the Global Valuation Committee, or its delegate, 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: The Fund’s books and records are maintained in U.S. dollars. Purchases and sales of investment securities are recorded at the rates of exchange prevailing on the respective dates of such transactions. Generally, when the U.S. dollar rises in value against a foreign currency, the Fund’s investments denominated in that currency will lose value because that currency is worth fewer U.S. dollars; the opposite effect occurs if the U.S. 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 in 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 generally treated as ordinary income for federal income tax purposes.

Segregation and Collateralization: In cases where the Fund enters into certain investments (e.g., financial futures contracts, forward foreign currency exchange contracts, options written and swaps) that would be “senior securities” for 1940 Act purposes, the Fund may segregate or designate on its books and records cash or liquid securities having a market value at least equal to the amount of the Fund’s future obligations under such investments. Doing so allows the investment to be excluded from treatment as a “senior security.” Furthermore, if required by an exchange or counterparty

BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015 41

Notes to Financial Statements (continued)

agreement, the Fund may be required to deliver/deposit cash and/or securities to/with an exchange, or broker-dealer or custodian as collateral for certain investments or obligations.

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 date. 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, expenses and realized and unrealized gains and losses are allocated daily to each class based on its relative net assets.

Distributions: Distributions paid by the Fund are recorded on the ex-dividend dates. The character and timing of distributions are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP.

Recent Accounting Standard: In June 2014, the Financial Accounting Standards Board issued guidance to improve the financial reporting of reverse repurchase agreements and other similar transactions. The guidance will require expanded disclosure for entities that enter into reverse repurchase agreements and similar transactions accounted for as secured borrowings. It is effective for financial statements with fiscal years beginning on or after December 15, 2014 and for interim periods beginning after March 15, 2015. Management is evaluating the impact, if any, 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 the applicable class. Other operating expenses shared by several funds are prorated among those funds on the basis of relative net assets or other appropriate methods. Expenses directly related to the Fund and other shared expenses prorated 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.

3. Securities and Other Investments:

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. In addition, the Fund may subsequently have to reinvest the proceeds at lower interest rates. 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 U.S. 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 U.S. Treasury.

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 an entity that 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

42 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015

Notes to Financial Statements (continued)

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.

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, U.S. 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 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 prepayments of principal, the Fund may not fully recoup its initial investment in IOs.

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.

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. When entering into TBA commitments, the Fund may 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.

In order to better define contractual rights and to secure rights that will help the Fund mitigate its counterparty risk, TBA commitments may be entered into by the Fund under Master Securities Forward Transaction Agreements (each, an “MSFTA”). An MSFTA typically contains, among other things, collateral posting terms and netting provisions in the event of default and/or termination event. The collateral requirements are typically calculated by netting the mark to market amount for each transaction under such agreement and comparing that amount to the value of the collateral currently pledged by the Fund and the counterparty. Cash collateral that has been pledged to cover the obligations of the Fund and cash collateral received from the counterparty, if any, is reported separately on the Statement of Assets and Liabilities as cash pledged as collateral for TBA commitments or cash received as collateral for TBA commitments, respectively. Non-cash collateral pledged by the Fund, if any, is noted in the Schedule of Investments. Typically, the Fund is permitted to sell, repledge or use the collateral it receives; however, the counterparty is not permitted to do so. To the extent amounts due to the Fund are not fully collateralized, contractually or otherwise, the Fund bears the risk of loss from counterparty non-performance.

Securities Lending: The Fund may lend its securities to approved borrowers, such as brokers, dealers and other financial institutions. The borrower pledges and maintains with the Fund collateral consisting of cash, an irrevocable letter of credit issued by a bank, or securities issued or guaranteed by the U.S. Government. The initial collateral received by the Fund is required to have a value of at least 102% of the current value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% for all other securities. The collateral is maintained thereafter, at a value equal to at least 100% of the current market value of the securities on loan. The market value of the loaned securities is determined at the close of each business day of the Fund and any additional required collateral is delivered to the Fund on the next business day. During the term of the loan, the Fund is entitled to all distributions made on or in respect of the loaned securities. 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.

The market value of securities on loan and the value of the related collateral are shown separately in the Statement of Assets and Liabilities as a component of investments at value — unaffiliated, and collateral on securities loaned at value, respectively. As of March 31, 2015, any securities on loan were collateralized by cash. The cash collateral invested by the securities lending agent, BlackRock Investment Management, LLC (“BIM”), if any, is disclosed in the Schedule of Investments.

BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015 43

Notes to Financial Statements (continued)

Securities lending transactions are entered into by the Fund under Master Securities Lending Agreements (each, an “MSLA”) which provide the right, in the event of default (including bankruptcy or insolvency), for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party or request additional collateral. In the event that a borrower defaults, the Fund, as lender, would offset the market value of the collateral received against the market value of the securities loaned. When the value of the collateral is greater than that of the market value of the securities loaned, the lender is left with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, the borrower can resell or re-pledge the loaned securities, and the Fund can reinvest cash collateral, or, upon an event of default, resell or re-pledge the collateral.

As of March 31, 2015, the following table is a summary of the Fund’s securities lending agreements by counterparty, which are subject to offset under an MSLA:

Counterparty	Securities Loaned at Value		Cash Collateral Received1			Net Amount
Deutsche Bank Securities, Inc.	$	32,478	$	(32,478	)	—
Merrill Lynch, Pierce, Fenner & Smith, Inc.		154,513		(154,513	)	—
Morgan Stanley		48,967		(48,967	)	—
UBS Securities LLC		75,276		(75,276	)	—
Total	$	311,234	$	(311,234	)	—

¹  Collateral with a value of $344,954 has been received in conjunction with securities lending agreements for the Fund. Collateral received in excess of the value of securities loaned from the individual counterparty is not shown for financial reporting purposes.

The risks of securities lending include the risk that the borrower may not provide additional collateral when required or may not return the securities when due. To mitigate these risks, the Fund benefits from a borrower default indemnity provided by BIM. BIM’s indemnity allows for full replacement of the securities loaned if the collateral received does not cover the value on the securities loaned in the event of borrower default. The Fund 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.

4. 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 manage its exposure to certain risks such as credit risk, equity risk, interest rate risk or foreign currency exchange rate risk. These contracts may be transacted on an exchange or OTC.

Financial Futures Contracts: The Fund invests in long and/or short positions in financial futures contracts and options on financial futures contracts to gain exposure to, or economically hedge against, changes in interest rates (interest rate risk), changes in the value of equity securities (equity risk) or foreign currencies (foreign currency exchange rate risk). Financial futures contracts are agreements between the Fund and a 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.

Upon entering into a financial futures contract, the Fund is required to deposit initial margin with the broker in the form of cash or securities in an amount that varies depending on a contract’s size and risk profile. The initial margin deposit must then be maintained at an established level over the life of the contract. Securities deposited as initial margin are designated on the Schedule of Investments and cash deposited, if any, is recorded on the Statement of Assets and Liabilities as cash pledged for financial futures contracts. 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. Variation margin is recorded by the Fund as unrealized appreciation or depreciation and, if applicable, as a receivable or payable for variation margin in the Statement of Assets and Liabilities.

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.

Forward Foreign Currency Exchange Contracts: The Fund enters into forward foreign currency exchange contracts as an economic hedge against either specific transactions or portfolio instruments or to obtain exposure to, or hedge exposure away from, foreign currencies (foreign currency exchange rate risk). A forward 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. Forward 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

44 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015

Notes to Financial Statements (continued)

time it was opened and the value at the time it was closed. The use of forward foreign currency exchange contracts involves the risk that the value of a forward foreign currency exchange contract changes unfavorably due to movements in the value of the referenced foreign currencies.

Options: The Fund purchases and writes call and put options to increase or decrease its exposure to underlying instruments (including equity risk and 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.

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 swaptions 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 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 (receipts from the foreign currency purchased). Such transactions may be effected with respect to hedges on non-U.S. 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 when it otherwise would not, or at a price different from the current market value.

For the six months ended March 31, 2015, transactions in options written were as follows:

	Calls						Puts
	Contracts			Premiums Received			Contracts			Premiums Received
Outstanding options, beginning of period		8		$	3,270			48		$	17,323
Options written		294			321,226			487			282,095
Options expired		—			—			(40	)		(10,569	)
Options closed		(189	)		(174,222	)		(274	)		(172,134	)
Outstanding options, end of period		113		$	150,274			221		$	116,715

Swaps: The Fund enters into swap agreements in which the Fund and a counterparty agree either to make periodic net payments on a specified notional amount or a net payment upon termination. Swap agreements are privately negotiated in the OTC market and may be entered into as a bilateral contract (“OTC swaps”) or centrally cleared (“centrally cleared swaps”). Swaps are marked-to-market daily and changes in value are recorded as unrealized appreciation (depreciation).

For OTC swaps, any upfront premiums paid are recorded as assets and any upfront fees received are recorded as liabilities and are shown as swap premiums paid and swap premiums received, respectively, in the Statement of Assets and Liabilities and amortized over the term of the OTC swap. Payments received or made by the Fund for OTC swaps are recorded in the Statement of Operations as realized gains or losses, respectively. When an OTC 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 contract is the premium received or paid.

In a centrally cleared swap, immediately following execution of the swap agreement, the swap agreement is novated to a central counterparty (the “CCP”) and the Fund’s counterparty on the swap agreement becomes the CCP. The Fund is required to interface with the CCP through a broker. Upon entering into a centrally cleared swap, the Fund is required to deposit initial margin with the broker in the form of cash or securities in an amount that varies depending on the size and risk profile of the particular swap. Securities deposited as initial margin are designated on the Schedule of Investments and cash deposited is recorded on the Statement of Assets and Liabilities as cash pledged for centrally cleared swaps. The daily change in valuation of centrally cleared swaps is recorded as a receivable or payable for variation margin in the Statement of Assets and Liabilities. Payments received from (paid to) the counterparty, including at termination, are recorded as realized gain (loss) in the Statement of Operations.

BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015 45

Notes to Financial Statements (continued)

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.

Ÿ 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 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 protection buyer pays fixed periodic payments to the seller in consideration for a guarantee from the protection 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 occur. As a buyer, if an underlying credit event occurs, the Fund will either (i) 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 (ii) 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.

Ÿ 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 or commodity prices) (equity risk, commodity price 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.

Ÿ 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, 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.

Ÿ Forward interest rate swaps — The Fund may enter into forward interest rate swaps and forward total return swaps. In a forward swap, the Fund and the counterparty agree to make either periodic net payments beginning on a specified future effective date or a net payment at termination, unless terminated earlier.

The following is a summary of the Fund’s derivative financial instruments categorized by risk exposure:

Fair Values of Derivative Financial Instruments as of March 31, 2015
		Value
	Statement of Assets and Liabilities Location	Derivative Assets		Derivative Liabilities
	Net unrealized appreciation/depreciation1 ;
	Investments at value — unaffiliated2 ;
Interest rate contracts	Options written at value	$	436,889	$	2,129,725
Foreign currency exchange contracts	Unrealized appreciation/depreciation on forward foreign currency exchange contacts;
	Net unrealized appreciation/depreciation1		6,093,685		2,218,261
Credit contracts	Net unrealized appreciation/depreciation1		14,634		—
	Net unrealized appreciation/depreciation1
Equity contracts	Net unrealized depreciation on OTC swaps		1,000,214		778,159
Total		$	7,545,422	$	5,126,145

¹  Includes cumulative appreciation/depreciation on financial futures contracts and centrally cleared swaps, if any, 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.

46 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015

Notes to Financial Statements (continued)

The Effect of Derivative Financial Instruments in the Statement of  Operations Six Months Ended March 31, 2015
		Net Realized Gain (Loss) from			Net Change in Unrealized Appreciation/Depreciation on
Interest rate contracts:
Financial futures contracts	$	(5,145,211	)	$	(1,273,775	)
Swaps		(314,762	)		(252,968	)
Options1		(46,283	)		(17,367	)
Foreign currency exchange contracts:
Financial futures contracts		4,369,748			(478,842	)
Foreign currency transactions/translations		27,922,698			(1,703,670	)
Credit contracts:
Swaps		(45,077	)		(11,090	)
Equity contracts:
Financial futures contracts		14,011,012			(1,541,779	)
Swaps		504,887			1,259,358
Total	$	41,257,012		$	(4,020,133	)

¹  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, 2015, the average quarterly balances of outstanding derivative financial instruments were as follows:

Financial futures contracts:
Average notional value of contracts - long	$	130,553,640
Average notional value of contracts - short	$	475,062,496
Forward foreign currency exchange contracts:
Average amounts purchased - in USD	$	417,957,273
Average amounts sold - in USD	$	157,760,388
Options:
Average notional value of option contracts purchased	$	27,544
Average notional value of option contracts written	$	145,966
Credit default swaps:
Average notional value - sell protection	$	1,980,603
Interest rate swaps:
Average notional value - pays fixed rate	$	10,843,649
Average notional value - receives fixed rate	$	1,433,913
Total return swaps:
Average notional amount	$	34,566,004

Counterparty Credit Risk: A derivative contract may suffer a mark-to-market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform under the contract.

The Fund’s risk of loss from counterparty credit risk on OTC derivatives is generally limited to the aggregate unrealized gain less the value of any collateral held by the Fund. For OTC options purchased, the Fund bears the risk of loss of the amount of the premiums paid plus the positive change in market values net of any collateral held by the Fund should the counterparty fail to perform under the contracts. Options written by the Fund do not typically give rise to counterparty credit risk, as options written generally obligate the Fund, and not the counterparty, to perform.

With exchange-traded purchased options and futures and centrally cleared swaps, there is less counterparty credit risk to the Fund since the exchange or clearinghouse, as counterparty to such instruments, guarantees against a possible default. The clearinghouse stands between the buyer and the seller of the contract; therefore, credit risk is limited to failure of the clearinghouse. While offset rights may exist under applicable law, the Fund does not have a contractual right of offset against a clearing broker or clearinghouse in the event of a default (including the bankruptcy or insolvency) of the clearing broker or clearinghouse. Additionally, credit risk exists in exchange-traded futures and centrally cleared swaps with respect to initial and variation margin that is held in a clearing broker’s customer accounts. While clearing brokers are required to segregate customer margin from their own assets, in the event that a clearing broker becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the clearing broker for all its clients, typically the shortfall would be allocated on a pro rata basis across all the clearing broker’s customers, potentially resulting in losses to the Fund.

In order to better define its contractual rights and to secure rights that will help the Fund mitigate its counterparty risk, the Fund may enter into an International Swaps and Derivatives Association, Inc. Master Agreement (“ISDA Master Agreement”) or similar agreement with its counterparties. An ISDA Master Agreement is a bilateral agreement between the Fund and a counterparty that governs certain OTC derivatives and typically contains, among other things, collateral posting terms and netting provisions in the event of a default and/or termination event. Under an ISDA Master Agreement, the Fund may, under certain circumstances, offset with the counterparty certain derivative financial instruments’ payables and/or receivables with collateral

BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015 47

Notes to Financial Statements (continued)

held and/or posted and create one single net payment. The provisions of the ISDA Master Agreement typically permit a single net payment in the event of default including the bankruptcy or insolvency of the counterparty. Bankruptcy or insolvency laws of a particular jurisdiction may restrict or prohibit the right of offset in bankruptcy, insolvency or other events. In addition, certain ISDA Master Agreements allow counterparties 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.

Collateral Requirements: For derivatives traded under an ISDA Master Agreement, the collateral requirements are typically calculated by netting the mark-to-market amount for each transaction under such agreement and comparing that amount to the value of any collateral currently pledged by the Fund and the counterparty.

Cash collateral that has been pledged to cover obligations of the Fund and cash collateral received from the counterparty, if any, is reported separately on the Statement of Assets and Liabilities as cash pledged as collateral and cash received as collateral, respectively. Non-cash collateral pledged by the Fund, if any, is noted in the Schedule of Investments. Generally, the amount of collateral due from or to a party has to exceed a minimum transfer amount threshold (typically either $250,000 or $500,000) before a transfer is required, which is determined at the close of business of the Fund. Any additional required collateral is delivered to/pledged by the Fund on the next business day. Typically, the Fund and counterparties are not permitted to sell, re-pledge or use the collateral they receive. To the extent amounts due to the Fund from its counterparties are not fully collateralized, the Fund bears the risk of loss from counterparty non-performance. Likewise, to the extent the Fund has delivered collateral to a counterparty and stands ready to perform under the terms of its agreement with such counterparty, the Fund bears the risk of loss from a counterparty in the amount of the value of the collateral in the event the counterparty fails to return such collateral.

For financial reporting purposes, the Fund does not offset derivative assets and derivative liabilities that are subject to netting arrangements, if any, in the Statement of Assets and Liabilities.

As of March 31, 2015, the Fund’s derivative assets and liabilities (by type) are as follows:

	Assets			Liabilities
Derivative Financial Instruments:
Financial futures contracts	$	1,038,405		$	646,926
Forward foreign currency exchange contracts		5,978,260			1,799,231
Options1		55,087			291,931
Swaps-Centrally cleared		4,614			—
Swaps-OTC		—			23,793
Total derivative assets and liabilities in the Statement of Assets and Liabilities	$	7,076,366		$	2,761,881
Derivatives not subject to a Master Netting Agreement or similar agreement (“MNA”)		(1,098,106	)		(938,857	)
Total derivative assets and liabilities subject to an MNA	$	5,978,260		$	1,823,024

¹  Includes options purchased at value which are included in Investments at value — unaffiliated in the Statement of Assets and Liabilities and reported in the Schedule of Investments.

As of March 31, 2015, the following tables present the Fund’s derivative assets and/or liabilities by counterparty net of amounts available for offset under an MNA and net of the related collateral received and pledged by the Fund:

Counterparty	Derivative Assets Subject to an MNA  by Counterparty		Derivatives Available for Offset1			Non-cash Collateral Received	Cash Collateral Received	Net Amount of Derivative Assets2
Bank of America N.A.	$	3,977	$	(3,977	)	—	—		—
Barclays Bank PLC		23,582		(23,582	)	—	—		—
BNP Paribas S.A.		8,419		(6,936	)	—	—	$	1,483
Citibank N.A.		1,928,883		(38,724	)	—	—		1,890,159
Credit Suisse International		59,040		(59,040	)	—	—		—
Deutsche Bank AG		961,525		(163,386	)	—	—		798,139
Goldman Sachs International		127,175		(78,477	)	—	—		48,698
HSBC Bank PLC		52,430		(52,314	)	—	—		116
JPMorgan Chase Bank N.A.		914,722		(141,630	)	—	—		773,092
Morgan Stanley & Co. International PLC		833,455		(63,839	)	—	—		769,616
Royal Bank of Canada		345		—		—	—		345
State Street Bank and Trust Co.		14,731		(14,731	)	—	—		—
UBS AG		1,022,419		(113,424	)	—	—		908,995
Westpac Banking Corp.		27,557		(17,165	)	—	—		10,392
	$	5,978,260	$	(777,225	)	—	—	$	5,201,035

48 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015

Notes to Financial Statements (continued)

Counterparty	Derivative Liabilities Subject to an MNA  by Counterparty		Derivatives Available for Offset1			Non-cash Collateral Pledged	Cash Collateral Pledged		Net Amount of Derivative Liabiities3
Bank of America N.A.	$	15,041	$	(3,977	)	—		—	$	11,064
Barclays Bank PLC		65,413		(23,582	)	—		—		41,831
BNP Paribas S.A.		6,936		(6,936	)	—		—		—
Citibank N.A.		38,724		(38,724	)	—		—		—
Credit Suisse International		233,769		(59,040	)	—		—		174,729
Deutsche Bank AG		163,386		(163,386	)	—		—		—
Goldman Sachs International		78,477		(78,477	)	—		—		—
HSBC Bank PLC		52,314		(52,314	)	—		—		—
JPMorgan Chase Bank N.A.		141,630		(141,630	)	—		—		—
Morgan Stanley & Co. International PLC		63,839		(63,839	)	—		—		—
Royal Bank of Scotland PLC		2,702		—		—		—		2,702
Standard Chartered Bank		810,035		—		—		—		810,035
State Street Bank and Trust Co.		20,169		(14,731	)	—		—		5,438
UBS AG		113,424		(113,424	)	—		—		—
Westpac Banking Corp.		17,165		(17,165	)	—		—		—
	$	1,823,024	$	(777,225	)	—		—	$	1,045,799

¹  The amount of derivatives available for offset is limited to the amount of derivative assets and/or liabilities that are subject to an MNA.

² Net amount represents the net amount receivable from the counterparty in the event of default.

³ Net amount represents the net amount payable due to the counterparty in the event of default.

5. Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. is the largest stockholder and an affiliate of BlackRock, Inc. (“BlackRock”) for 1940 Act purposes.

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 services. The Manager is responsible for the management of the Fund’s portfolio and provides the necessary personnel, facilities, equipment and certain other services 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 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. This amount is shown as fees waived by the Manager in the Statement of Operations. For the six months ended March 31, 2015, BlackRock waived $115,467. In addition, the Manager has contractually agreed to waive the management fee on assets estimated to be attributed to the Fund’s investments in other equity and fixed-income mutual funds managed by the Manager or its affiliates, if any.

The Manager entered into a sub-advisory agreement with BlackRock International Limited (“BIL”), BlackRock Asset Management North Asia Limited (“BNA”) and BlackRock (Singapore) Limited (“BSL”), each an affiliate of the Manager. The Manager pays BIL, BNA and BSL, for services they provide, a monthly fee that is a percentage of the investment advisory fees paid by the Fund to the Manager.

The Trust, on behalf of the Fund, entered into a Distribution Agreement and a 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 relevant share class of the Fund as follows:

	Service			Investor A			Investor B			Investor C
Service Fee		0.25	%		0.25	%		0.25	%		0.25	%
Distribution Fee		—			—			0.75	%		0.75	%

BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015 49

Notes to Financial Statements (continued)

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 compensates 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, 2015, the following table shows the class specific service and distribution fees borne directly by each class of the Fund:

Service		Investor A		Investor B		Investor C		Total
$	2,057	$	424,021	$	30,414	$	360,853	$	817,345

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 asset-based fee or an annual fee per shareholder account, which will vary depending on share class and/or net assets. For the six months ended March 31, 2015, the Fund paid the following amounts to affiliates of BlackRock in return for these services, which are included in transfer agent — class specific in the Statement of Operations:

Institutional	Service	Investor A	Total
$119,535	$1,343	$4,904	$125,782

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, 2015, 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:

Institutional	Service	Investor A	Investor B	Investor C	Total
$1,044	$74	$52,589	$3,080	$2,291	$59,078

For the six months ended March 31, 2015, the following table shows the class specific transfer agent fees borne directly by each class of the Fund:

Institutional	Service	Investor A	Investor B	Investor C	Total
$194,574	$1,893	$328,183	$18,163	$44,849	$587,662

Effective January 1, 2015, the Trust, on behalf of the Fund, entered into an Administration Agreement with the Manager, an indirect, wholly owned subsidiary of BlackRock, to provide administrative services. For these services, the Manager receives an administration fee computed daily and payable monthly, based on a percentage of the average daily net assets of the Fund. The administration fee, which is shown as administration in the Statement of Operations, is paid at the annual rates below.

Average Daily Net Assets	Administration Fee
First $500 Million		0.0425	%
$500 Million - $1 Billion		0.0400	%
$1 Billion - $2 Billion		0.0375	%
$2 Billion - $4 Billion		0.0350	%
$4 Billion - $13 Billion		0.0325	%
Greater than $13 Billion		0.0300	%

In addition, the Manager charges each of the share classes an administration fee, which is shown as administration — class specific in the Statement of Operations, at an annual rate of 0.02% of the average daily net assets of each respective class.

Prior to January 1, 2015, BNY Mellon Investment Servicing (US) Inc. (“BNYMIS”) and the Manager acted as co-administrators for the Fund. For these services, the co-administrators received an administration fee computed daily and payable monthly to each administrator pursuant to separate fee arrangements, based on a percentage of the average daily net assets of the Fund. The combined administration fee, which is shown as administration in the Statement of Operations, was paid at the annual rates below. In addition, each of the share classes was charged an administration fee, which is shown as administration — class specific in the Statement of Operations, based on the following percentages of average daily net assets of each respective class:

Average Daily Net Assets	Administration Fee			Administration Fee — Class Specific
First $500 Million		0.075	%		0.025	%
$500 Million - $1 Billion		0.065	%		0.015	%
Greater than $1 Billion		0.055	%		0.005	%

50 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015

Notes to Financial Statements (continued)

For the six months ended March 31, 2015, the Fund paid $244,348 to the Manager in return for these services, which is included in administration and administration — class specific in the Statement of Operations.

For the six months ended March 31, 2015, the following table shows the class specific administration fees borne directly by each class of the Fund:

Institutional		Service		Investor A		Investor B		Investor C		Total
$	36,407	$	185	$	38,227	$	691	$	8,136	$	83,646

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.

The Manager contractually agreed to waive and/or reimburse fees or expenses in order to limit expenses, excluding interest expense, dividend expense, tax expense, acquired fund fees and expenses and certain other fund expenses, which constitute extraordinary expenses not incurred in the ordinary course of the Fund’s business. The expense limitations as a percentage of average daily net assets are as follows:

Institutional			Service			Investor A			Investor B			Investor C
	0.89	%		1.17	%		1.37	%		2.14	%		2.14	%

The Manager has agreed not to reduce or discontinue this contractual waiver or reimbursement prior to February 1, 2016 unless approved by the Board, including a majority of the independent Trustees.

Class specific expense waivers or reimbursements are as follows:

	Service		Investor B		Total
Administration Fees Waived	$	4	$	689	$	693
Transfer Agent Fees Waived		—	$	1,983	$	1,983
Transfer Agent Fees Reimbursed		—	$	1,109	$	1,109

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.

For the six months ended March 31, 2015, the Manager recouped waivers and/or reimbursements previously recorded $3,940 and $159 for Institutional Shares and Service Shares, respectively.

On March 31, 2015, the Fund level and class specific waivers and/or reimbursements subject to possible future recoupment under the expense limitation agreement are as follows:

Expires September 30,	Service		Investor B
2015	$	398		—
2016	$	136	$	523
2017	$	4	$	3,781

For the six months ended March 31, 2015, affiliates earned underwriting discounts, direct commissions and dealer concessions on sales of the Fund’s Investor A Shares of $8,176.

For the six months ended March 31, 2015, affiliates received CDSCs as follows:

Investor A		Investor B		Investor C		Total
$	125	$	236	$	1,369	$	1,730

BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015 51

Notes to Financial Statements (continued)

The U.S. Securities and Exchange Commission has issued an exemptive order which permits BIM, an affiliate of the Manager, to serve as securities lending agent for the Fund, subject to applicable conditions. As securities lending agent, BIM bears all operational costs directly related to securities lending. The Fund is responsible for expenses in connection with the investment of cash collateral received for securities on loan (the “collateral investment expenses”). The cash collateral is invested in a private investment company managed by the Manager or its affiliates. However, BIM has agreed to cap the collateral investment expenses of the private investment company to an annual rate of 0.04%. The investment advisor to the private investment company will not charge any advisory fees with respect to shares purchased by the Fund.

Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment expenses. The Fund retains a portion of securities lending income and remits a remaining portion to BIM as compensation for its services as securities lending agent. BIM may lend securities only when the difference between the borrower rebate rate and the risk free rate exceeds a certain level (such securities, the “specials only securities”).

Pursuant to such agreement, the Fund retains 80% of securities lending income. In addition, commencing the business day following the date that the aggregate securities lending income earned across certain funds in the Equity-Liquidity Complex in a calendar year exceeds a specified threshold, the Fund, pursuant to the securities lending agreement, will retain for the remainder of the calendar year securities lending income in an amount equal to 85% of securities lending income. The share of securities lending income earned by the Fund is shown as securities lending — affiliated — net in the Statement of Operations. For the six months ended March 31, 2015, the Fund paid BIM $1,228 for securities lending agent services.

Certain officers and/or trustees of the Trust are officers and/or directors of BlackRock or its affiliates. The Fund reimburses the Manager for a portion of the compensation paid to the Trust’s Chief Compliance Officer, which is included in officer and trustees in the Statement of Operations.

6. Purchases and Sales:

For the six months ended March 31, 2015, purchases and sales of investments, including paydowns, TBA transactions and excluding short-term securities were as follows:

	Purchases		Sales
Non-U.S. Government Securities	$	564,485,761	$	391,955,557
U.S. Government Securities	$	4,179,738	$	242,453

7. Income Tax Information:

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 U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s U.S. federal tax returns remains open for each of the four years ended September 30, 2014. 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 has analyzed tax laws and regulations and their application to the Fund as of March 31, 2015, inclusive of the open tax return years, and does not believe there are any uncertain tax positions that require recognition of a tax liability in the Fund’s financial statements.

As of March 31, 2015, gross unrealized appreciation and depreciation based on cost for federal income tax purposes were as follows:

Tax cost	$	756,831,941
Gross unrealized appreciation	$	19,410,254
Gross unrealized depreciation		(23,585,142	)
Net unrealized depreciation	$	(4,174,888	)

8. Borrowings:

The Trust, on behalf of the Fund, along with certain other funds managed by the Manager and its affiliates (“Participating Funds”), was a party to a 364-day, $1.1 billion credit agreement with a group of lenders, under which the Fund may borrow to fund shareholder redemptions. Excluding commitments designated for a certain individual fund, the Participating Funds, including the Fund, could borrow up to an aggregate commitment amount of $650 million, subject to asset coverage and other limitations as specified in the agreement. Effective November 25, 2014, the credit agreement was amended to an aggregate commitment amount of $2.1 billion, of which the Participating Funds, including the Fund, can borrow up to $1.6 billion at any time outstanding, subject to asset coverage and other limitations as specified in the agreement. The agreement terminates on April 23, 2015, unless otherwise extended to November 24, 2015 or renewed for a period of 364 days from April 23, 2015. The amended agreement has the following terms: a fee of 0.06% per annum on unused commitment amounts and interest at a rate equal to the higher of (a) one-month LIBOR (but, in any event, not less than 0.00%) on the date the loan is made plus 0.80% per annum or (b) the Fed Funds rate (but, in any event, not less than 0.00%) in

52 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015

Notes to Financial Statements (continued)

effect from time to time plus 0.80% per annum on amounts borrowed. Participating Funds paid administration, legal and arrangement fees, which are included in miscellaneous expenses in the Statement of Operations, and along with commitment fees, were allocated among such funds based upon portions of the aggregate commitment available to them and relative net assets of Participating Funds. During the six months ended March 31, 2015, the Fund did not borrow under the credit agreement.

9. Principal Risks:

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, 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 Statement of Assets and Liabilities, less any collateral held by the Fund.

10. Capital Share Transactions:

Transactions in capital shares for each class were as follows:

	Six Months Ended March 31, 2015						Year Ended September 30, 2014
	Shares			Amount			Shares			Amount
Institutional
Shares sold		1,237,824		$	18,676,785			18,459,670		$	291,296,269
Shares issued in reinvestment of distributions		1,215,917			17,582,178			1,325,140			20,157,670
Shares redeemed		(3,508,650	)		(53,023,039	)		(5,967,622	)		(92,271,562	)
Net increase (decrease)		(1,054,909	)	$	(16,764,076	)		13,817,188		$	219,182,377
Service
Shares sold		543		$	8,235			3,606		$	57,541
Shares issued in reinvestment of distributions		7,737			111,490			10,118			153,456
Shares redeemed		(5,819	)		(88,615	)		(14,985	)		(235,818	)
Net increase (decrease)		2,461		$	31,110			(1,261	)	$	(24,821	)
Investor A
Shares sold and automatic conversion of shares		753,376		$	11,300,718			996,006		$	15,419,000
Shares issued in reinvestment of distributions		1,637,182			23,575,411			2,177,841			33,005,225
Shares redeemed		(2,032,925	)		(30,495,939	)		(4,075,561	)		(63,161,360	)
Net increase (decrease)		357,633		$	4,380,190			(901,714	)	$	(14,737,135	)
Investor B
Shares sold		1,939		$	32,216			5,115		$	78,672
Shares issued in reinvestment of distributions		26,047			369,876			65,575			980,348
Shares redeemed and automatic conversion of shares		(107,527	)		(1,578,886	)		(428,394	)		(6,529,169	)
Net decrease		(79,541	)	$	(1,176,794	)		(357,704	)	$	(5,470,149	)

BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015 53

Notes to Financial Statements (concluded)

	Six Months Ended March 31, 2015						Year Ended September 30, 2014
	Shares			Amount			Shares			Amount
Investor C
Shares sold		174,903		$	2,557,967			271,370		$	4,093,112
Shares issued in reinvestment of distributions		332,476			4,681,259			468,294			6,958,846
Shares redeemed		(549,465	)		(8,004,210	)		(1,042,063	)		(15,808,816	)
Net decrease		(42,086	)	$	(764,984	)		(302,399	)	$	(4,756,858	)
Total Net Increase (Decrease)		(816,442	)	$	(14,294,554	)		12,254,110		$	194,193,414

11. Subsequent Events:

Management’s evaluation of the impact of all subsequent events on the Fund’s financial statements was completed through the date the financial statements were issued and the following item was noted:

Effective April 23, 2015, the 364-day, $2.1 billion credit agreement to which the Fund is a party, was further amended to expire on April 21, 2016, unless otherwise extended or renewed.

54 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015

Officers and Trustees

Rodney D. Johnson, Chair of the Board and Trustee

David O. Beim, Trustee

Collette Chilton, Trustee

Frank J. Fabozzi, Trustee

Dr. Matina S. Horner, Trustee

Herbert I. London, Trustee

Ian A. MacKinnon, Trustee

Cynthia A. Montgomery, Trustee

Barbara G. Novick, Trustee

Joseph P. Platt, Trustee

Robert C. Robb, Jr., Trustee

Toby Rosenblatt, Trustee

Mark Stalnecker, Trustee

Kenneth L. Urish, Trustee

Frederick W. Winter, Trustee

John M. Perlowski, President and Chief Executive Officer

Jennifer McGovern, Vice President

Neal Andrews, Chief Financial Officer

Jay Fife, Treasurer

Charles Park, Chief Compliance Officer

Fernanda Piedra, Anti-Money Laundering Compliance Officer

Benjamin Archibald, Secretary

Effective December 31, 2014, Paul L. Audet and Henry Gabbay resigned as Trustees of the Trust and Ronald W. Forbes resigned as a Trustee of the Trust and Co-Chair of the Board. Effective January 1, 2015, Collette Chilton, Barbara G. Novick and Mark Stalnecker were appointed to serve as Trustees of the Trust.

Effective March 1, 2015, Charles Park resigned as Anti-Money Laundering Compliance Officer of the Trust and Fernanda Piedra became Anti-Money Laundering Compliance Officer of the Trust.

Investment Advisor and Administrator BlackRock Advisors, LLC Wilmington, DE 19809	Accounting Agent and Transfer Agent BNY Mellon Investment Servicing (US) Inc. Wilmington, DE 19809	Independent Registered Public Accounting Firm Deloitte & Touche LLP Philadelphia, PA 19103	Address of the Trust 100 Bellevue Parkway Wilmington, DE 19809
Sub-Advisors BlackRock International Limited Edinburgh, EH3 8BL United Kingdom BlackRock Asset Management North Asia Limited Hong Kong BlackRock (Singapore) Limited 079912 Singapore	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

BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015 55

Additional Information

General Information

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 call 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 upon request and without charge (1) 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 portfolio 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 Plans

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.

56 BLACKROCK MANAGED VOLATILITY PORTFOLIO MARCH 31, 2015

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, 2015 57

This report is intended for current holders. It is not authorized for use as an offer of sale or a solicitation of an offer to buy shares of the Fund unless preceded or accompanied 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.

MV-3/15-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 2, 2015

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 2, 2015
By:	/s/ Neal J. Andrews
	Neal J. Andrews
	Chief Financial Officer (principal financial officer) of
	BlackRock Funds

Date: June 2, 2015

3