N-Q 1 d22891dnq.htm BLACKROCK FUNDS BLACKROCK FUNDS

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED

MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number 811-05742

Name of Fund:  BlackRock Funds

BlackRock Disciplined Small Cap Core Fund

Fund Address:   100 Bellevue Parkway, Wilmington, DE 19809

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

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

Date of fiscal year end: 05/31/2016

Date of reporting period: 08/31/2015

Item 1 – Schedule of Investments

Schedule of Investments August 31, 2015 (Unaudited)      BlackRock Disciplined Small Cap Core Fund   
     (Percentages shown are based on Net Assets)   

 

Common Stocks    Shares      Value  

Aerospace & Defense — 0.2%

      

Vectrus, Inc. (a)

      708       $ 17,594   

Airlines — 1.5%

      

JetBlue Airways Corp. (a)

      6,160         137,491   

Auto Components — 2.0%

      

American Axle & Manufacturing Holdings, Inc. (a)

      951         19,210   

Lear Corp.

      190         19,530   

Modine Manufacturing Co. (a)

      1,079         9,582   

Tenneco, Inc. (a)

      1,772         83,373   

Tower International, Inc. (a)

      2,244         54,866   
     

 

 

  
                186,561   

Banks — 10.3%

      

BancorpSouth, Inc.

      842         20,006   

Cathay General Bancorp

      188         5,570   

Central Pacific Financial Corp.

      5,433         112,680   

Fidelity Southern Corp.

      7,249         139,869   

Financial Institutions, Inc.

      240         5,945   

First Busey Corp.

      10,260         65,664   

First Interstate BancSystem, Inc., Class A

      99         2,641   

First Midwest Bancorp, Inc.

      505         8,908   

German American Bancorp, Inc.

      124         3,594   

Glacier Bancorp, Inc.

      3,042         79,122   

Heritage Financial Corp.

      291         5,157   

Metro Bancorp, Inc.

      63         1,804   

Northrim BanCorp, Inc.

      140         3,805   

Seacoast Banking Corp. (a)

      8,077         125,678   

Sierra Bancorp

      365         6,205   

South State Corp.

      1,559         117,159   

Umpqua Holdings Corp.

      10,726         179,231   

Wintrust Financial Corp.

      1,447         73,797   
     

 

 

  
                956,835   

Beverages — 0.0%

      

Primo Water Corp. (a)

      569         3,699   

Biotechnology — 6.3%

      

ACADIA Pharmaceuticals, Inc. (a)

      107         3,919   

Acorda Therapeutics, Inc. (a)

      772         24,681   

Adamas Pharmaceuticals, Inc. (a)

      710         14,243   

Aduro Biotech, Inc. (a)

      647         12,526   

Alder Biopharmaceuticals, Inc. (a)

      269         10,424   

Alexion Pharmaceuticals, Inc. (a)

      38         6,543   

Anacor Pharmaceuticals, Inc. (a)

      142         18,518   

Ardelyx, Inc. (a)

      544         10,325   

BioSpecifics Technologies Corp. (a)

      380         18,871   

Cepheid, Inc. (a)

      134         6,531   

Cerulean Pharma, Inc. (a)

      2,745         11,062   

Chiasma, Inc. (a)

      196         5,088   

China Biologic Products, Inc. (a)

      154         14,605   

Cytokinetics, Inc. (a)

      2,791         19,314   

Dyax Corp. (a)

      1,234         28,407   

Eagle Pharmaceuticals, Inc. (a)

      273         21,444   

Emergent BioSolutions, Inc. (a)

      663         22,071   

Enanta Pharmaceuticals, Inc. (a)

      290         11,322   

Enzon Pharmaceuticals, Inc.

      8,722         8,635   

FibroGen, Inc. (a)

      942         23,079   

Five Prime Therapeutics, Inc. (a)

      845         16,114   

Genomic Health, Inc. (a)

      790         21,741   
Common Stocks    Shares      Value  

Biotechnology (concluded)

      

GlycoMimetics, Inc. (a)

      200       $ 1,402   

Halozyme Therapeutics, Inc. (a)

      686         11,978   

Histogenics Corp. (a)

      540         3,343   

Ignyta, Inc. (a)

      1,025         14,022   

Infinity Pharmaceuticals, Inc. (a)

      1,252         11,043   

Isis Pharmaceuticals, Inc. (a)

      303         15,205   

Ligand Pharmaceuticals, Inc. (a)

      282         25,927   

MiMedx Group, Inc. (a)

      1,575         15,293   

Momenta Pharmaceuticals, Inc. (a)

      1,214         23,685   

Neurocrine Biosciences, Inc. (a)

      145         6,725   

Novavax, Inc. (a)

      1,783         19,203   

OPKO Health, Inc. (a)(b)

      154         1,666   

PDL BioPharma, Inc.

      3,589         20,278   

Pfenex, Inc. (a)

      48         1,049   

Raptor Pharmaceutical Corp. (a)

      1,701         20,633   

Rigel Pharmaceuticals, Inc. (a)

      6,696         20,088   

Tobira Therapeutics, Inc. (a)

      737         8,881   

Trevena, Inc. (a)

      3,198         19,188   

Ultragenyx Pharmaceutical, Inc. (a)

      79         8,818   

United Therapeutics Corp. (a)

      87         13,104   
     

 

 

  
                590,994   

Building Products — 1.5%

      

Continental Building Products, Inc. (a)

      6,948         138,891   

Chemicals — 0.3%

      

Advanced Emissions Solutions, Inc. (a)

      2,836         26,261   

OM Group, Inc.

      163         5,461   
     

 

 

  
                31,722   

Commercial Services & Supplies — 3.4%

      

ABM Industries, Inc.

      88         2,817   

ARC Document Solutions, Inc. (a)

      12,028         79,866   

Interface, Inc.

      2,946         71,411   

Knoll, Inc.

      5,520         132,038   

Quad/Graphics, Inc.

      1,983         28,635   
     

 

 

  
                314,767   

Communications Equipment — 1.0%

      

Calix, Inc. (a)

      4,624         37,038   

Digi International, Inc. (a)

      394         4,035   

Lumentum Holdings, Inc. (a)

      1,284         25,346   

PC-Tel, Inc.

      4,058         22,197   
     

 

 

  
                88,616   

Consumer Finance — 0.9%

      

Consumer Portfolio Services, Inc. (a)

      7,414         42,482   

Everi Holdings, Inc. (a)

      8,222         42,508   
     

 

 

  
                84,990   

Containers & Packaging — 0.9%

      

Berry Plastics Group, Inc. (a)

      617         18,263   

Graphic Packaging Holding Co.

      4,742         66,862   
     

 

 

  
                85,125   

Distributors — 1.1%

      

Core-Mark Holding Co., Inc.

      1,637         98,400   

Diversified Consumer Services — 0.7%

      

Cambium Learning Group, Inc. (a)

      3,089         16,094   

Collectors Universe, Inc.

      991         18,502   
 
      Portfolio Abbreviations
CVR    Contingent Value Rights
REIT    Real Estate Investment Trust

 

 

     BLACKROCK FUNDS    AUGUST 31, 2015    1

Schedule of Investments (continued)      BlackRock Disciplined Small Cap Core Fund   
     (Percentages shown are based on Net Assets)   

 

Common Stocks    Shares      Value  

Diversified Consumer Services (concluded)

      

K12, Inc. (a)

      1,711       $ 22,619   

Steiner Leisure Ltd. (a)

      68         4,330   
     

 

 

  
                61,545   

Diversified Financial Services — 0.0%

      

Marlin Business Services Corp.

      164         2,250   

Diversified Telecommunication Services — 2.0%

      

Inteliquent, Inc.

      7,232         132,490   

Premiere Global Services, Inc. (a)

      5,125         55,247   
     

 

 

  
                187,737   

Electric Utilities — 0.6%

      

Cleco Corp.

      322         17,253   

Portland General Electric Co.

      1,141         39,410   
     

 

 

  
                56,663   

Electrical Equipment — 0.2%

      

SL Industries, Inc. (a)

      632         21,994   

Electronic Equipment, Instruments & Components — 2.4%

  

   

Multi-Fineline Electronix, Inc. (a)

      3,509         56,039   

OSI Systems, Inc. (a)

      772         56,387   

Radisys Corp. (a)

      29,189         79,978   

RealD, Inc. (a)

      217         2,042   

Rogers Corp. (a)

      37         2,059   

Vishay Precision Group, Inc. (a)

      2,192         24,528   
     

 

 

  
                221,033   

Energy Equipment & Services — 0.8%

      

Aspen Aerogels, Inc. (a)

      930         6,947   

Dawson Geophysical Co. (a)

      11,031         51,074   

PHI, Inc. (a)

      580         14,709   
     

 

 

  
                72,730   

Food & Staples Retailing — 1.0%

      

SUPERVALU, Inc. (a)

      10,896         89,783   

Food Products — 1.4%

      

Lancaster Colony Corp.

      821         77,855   

Pilgrim’s Pride Corp.

      992         20,807   

Seaboard Corp. (a)

      9         29,882   
     

 

 

  
                128,544   

Gas Utilities — 0.3%

      

Southwest Gas Corp.

      510         28,096   

Health Care Equipment & Supplies — 4.5%

      

Alphatec Holdings, Inc. (a)

      5,403         3,107   

ICU Medical, Inc. (a)

      141         16,006   

Masimo Corp. (a)

      2,981         121,118   

Merit Medical Systems, Inc. (a)

      2,999         68,227   

Orthofix International NV (a)

      311         11,656   

RTI Surgical, Inc. (a)

      12,653         80,726   

STERIS Corp.

      995         63,730   

Symmetry Surgical, Inc. (a)

      3,978         35,683   

Synergetics U.S.A., Inc. (a)

      717         3,047   

Thoratec Corp. (a)

      289         18,155   
     

 

 

  
                421,455   

Health Care Providers & Services — 4.3%

      

Alliance HealthCare Services, Inc. (a)

      2,762         39,552   

AMN Healthcare Services, Inc. (a)

      1,745         58,632   

Health Net, Inc. (a)

      811         51,953   

Surgical Care Affiliates, Inc. (a)

      2,111         77,157   

Team Health Holdings, Inc. (a)

      1,811         106,378   

VCA, Inc. (a)

      1,291         71,496   
     

 

 

  
                405,168   
Common Stocks    Shares      Value  

Hotels, Restaurants & Leisure — 4.3%

      

BFC Financial Corp., Class A (a)

      5,961       $ 19,671   

Brinker International, Inc.

      2,094         111,254   

Century Casinos, Inc. (a)

      248         1,443   

Eldorado Resorts, Inc. (a)

      4,861         45,791   

Intrawest Resorts Holdings, Inc. (a)

      7,809         70,203   

Isle of Capri Casinos, Inc. (a)

      2,995         55,288   

Jack in the Box, Inc.

      1,215         94,989   

Luby’s, Inc. (a)

      751         3,635   

Shake Shack, Inc., Class A (a)

      29         1,448   
     

 

 

  
                403,722   

Household Durables — 0.2%

      

ZAGG, Inc. (a)

      2,894         21,184   

Independent Power and Renewable Electricity Producers — 0.3%

  

Talen Energy Corp. (a)

      1,723         24,553   

Vivint Solar, Inc. (a)(b)

      111         1,381   
     

 

 

  
                25,934   

Insurance — 1.6%

      

American National Insurance Co.

      19         1,887   

Fidelity & Guaranty Life

      3,652         90,058   

Maiden Holdings Ltd.

      994         14,244   

National General Holdings Corp.

      592         10,851   

National Western Life Insurance Co., Class A

      67         15,237   

Symetra Financial Corp.

      399         12,557   

Universal Insurance Holdings, Inc.

      139         3,424   
     

 

 

  
                148,258   

Internet & Catalog Retail — 0.5%

      

HSN, Inc.

      379         23,047   

Liberty Ventures, Series A (a)

      384         15,256   

U.S. Auto Parts Network, Inc. (a)

      5,799         12,468   
     

 

 

  
                50,771   

Internet Software & Services — 3.9%

      

Constant Contact, Inc. (a)

      118         2,922   

Dealertrack Technologies, Inc. (a)

      292         18,326   

Demand Media, Inc. (a)

      7,287         34,322   

IntraLinks Holdings, Inc. (a)

      399         4,086   

Limelight Networks, Inc. (a)

      3,898         9,238   

LogMeIn, Inc. (a)

      2,625         163,643   

QuinStreet, Inc. (a)

      17,600         96,800   

Spark Networks, Inc. (a)

      5,342         17,201   

Support.com, Inc. (a)

      7,182         9,121   

Xactly Corp. (a)

      886         6,034   

XO Group, Inc. (a)

      435         6,373   
     

 

 

  
                368,066   

IT Services — 1.4%

      

Computer Task Group, Inc.

      3,682         24,706   

Higher One Holdings, Inc. (a)

      36,848         72,959   

Net 1 UEPS Technologies, Inc. (a)

      1,328         27,344   

PRGX Global, Inc. (a)

      426         1,538   
     

 

 

  
                126,547   

Leisure Products — 0.9%

      

Brunswick Corp.

      1,183         58,807   

Marine Products Corp.

      2,330         16,357   

Nautilus, Inc. (a)

      290         4,431   
     

 

 

  
                79,595   

Life Sciences Tools & Services — 1.3%

      

Cambrex Corp. (a)

      774         37,005   

INC Research Holdings, Inc., Class A (a)

      1,998         81,938   
     

 

 

  
                118,943   
 

 

 

2    BLACKROCK FUNDS    AUGUST 31, 2015     

Schedule of Investments (continued)      BlackRock Disciplined Small Cap Core Fund   
     (Percentages shown are based on Net Assets)   

 

Common Stocks    Shares      Value  

Machinery — 1.2%

      

ARC Group Worldwide, Inc. (a)

      207       $ 753   

Global Brass & Copper Holdings, Inc.

      3,310         65,008   

Jason Industries, Inc. (a)

      859         4,286   

Miller Industries, Inc.

      203         4,403   

Supreme Industries, Inc., Class A

      4,420         36,686   
     

 

 

  
                111,136   

Media — 1.0%

      

Crown Media Holdings, Inc., Class A (a)

      9,324         49,883   

Time, Inc.

      2,287         47,501   
     

 

 

  
                97,384   

Metals & Mining — 0.1%

      

Kaiser Aluminum Corp.

      100         8,358   

Multiline Retail — 0.5%

      

Burlington Stores, Inc. (a)

      880         46,719   

Oil, Gas & Consumable Fuels — 0.6%

      

Enviva Partners LP

      629         8,208   

Evolution Petroleum Corp.

      6,189         36,329   

Gener8 Maritime, Inc. (a)

      93         1,209   

Noble Energy, Inc.

      203         6,782   
     

 

 

  
                52,528   

Paper & Forest Products — 0.4%

      

Clearwater Paper Corp. (a)

      146         8,185   

Domtar Corp.

      682         27,423   
     

 

 

  
                35,608   

Pharmaceuticals — 1.8%

      

Cumberland Pharmaceuticals, Inc. (a)

      441         2,655   

Endo International PLC (a)

      56         4,312   

Furiex Pharmaceuticals, Inc. — CVR (a)

      11         110   

Prestige Brands Holdings, Inc. (a)

      2,245         104,437   

SciClone Pharmaceuticals, Inc. (a)

      1,359         10,682   

Sucampo Pharmaceuticals, Inc., Class A (a)

      1,688         45,340   
     

 

 

  
                167,536   

Professional Services — 2.8%

      

Kforce, Inc.

      1,379         36,943   

RPX Corp. (a)

      9,762         134,423   

TrueBlue, Inc. (a)

      2,373         56,952   

Volt Information Sciences, Inc. (a)

      2,280         20,383   

Willdan Group, Inc. (a)

      1,476         13,343   
     

 

 

  
                262,044   

Real Estate Investment Trusts (REITs) — 8.3%

      

Arbor Realty Trust, Inc.

      18,671         119,308   

Armada Hoffler Properties, Inc.

      268         2,675   

Chatham Lodging Trust

      1,619         37,156   

CIM Commercial Trust Corp.

      141         2,129   

DiamondRock Hospitality Co.

      6,824         80,250   

DuPont Fabros Technology, Inc.

      4,025         107,588   

Equity LifeStyle Properties, Inc.

      513         28,605   

Hersha Hospitality Trust

      2,663         65,084   

InfraREIT, Inc.

      2,649         74,649   

LaSalle Hotel Properties

      656         20,638   

Lexington Realty Trust

      3,701         29,867   

New Residential Investment Corp.

      1,000         14,160   

NorthStar Realty Finance Corp.

      644         9,048   

Pebblebrook Hotel Trust

      140         5,328   

PS Business Parks, Inc.

      782         57,055   

RLJ Lodging Trust

      4,327         119,166   

Summit Hotel Properties, Inc.

      192         2,329   
     

 

 

  
                775,035   
Common Stocks    Shares      Value  

Real Estate Management & Development — 1.7%

      

FRP Holdings, Inc. (a)

      95       $ 2,955   

Marcus & Millichap, Inc. (a)

      2,331         98,974   

RE/MAX Holdings, Inc., Class A

      1,566         57,441   
     

 

 

  
                159,370   

Road & Rail — 0.6%

      

Ryder System, Inc.

      641         52,543   

Semiconductors & Semiconductor Equipment — 2.1%

      

Cascade Microtech, Inc. (a)

      417         6,430   

Integrated Device Technology, Inc. (a)

      1,844         35,018   

IXYS Corp.

      944         11,130   

OmniVision Technologies, Inc. (a)

      310         7,409   

Pericom Semiconductor Corp.

      2,484         30,255   

Tessera Technologies, Inc.

      3,078         100,774   
     

 

 

  
                191,016   

Software — 3.6%

      

Aspen Technology, Inc. (a)

      1,458         55,214   

Barracuda Networks, Inc. (a)

      226         5,942   

Exa Corp. (a)

      5,390         59,236   

Manhattan Associates, Inc. (a)

      2,507         146,609   

Monotype Imaging Holdings, Inc.

      424         8,980   

Telenav, Inc. (a)

      1,828         12,924   

Upland Software, Inc. (a)

      3,152         24,806   

Verint Systems, Inc. (a)

      322         17,172   
     

 

 

  
                330,883   

Specialty Retail — 2.6%

      

Aaron’s, Inc. (a)

      1,719         64,720   

American Eagle Outfitters, Inc.

      4,236         72,097   

Citi Trends, Inc.

      1,317         34,782   

Haverty Furniture Cos., Inc.

      156         3,605   

hhgregg, Inc. (a)

      1,052         5,050   

Murphy U.S.A., Inc. (a)

      518         26,475   

Select Comfort Corp. (a)

      58         1,412   

Stage Stores, Inc.

      3,089         33,176   

Tilly’s, Inc., Class A (a)

      468         3,749   
     

 

 

  
                245,066   

Technology Hardware, Storage & Peripherals — 0.0%

      

Dot Hill Systems Corp. (a)

      326         3,152   

Textiles, Apparel & Luxury Goods — 2.5%

      

Culp, Inc.

      1,893         58,210   

Deckers Outdoor Corp. (a)

      805         51,834   

Skechers U.S.A., Inc., Class A (a)

      871         122,585   

Vince Holding Corp. (a)

      314         2,883   
     

 

 

  
                235,512   

Thrifts & Mortgage Finance — 3.5%

      

Anchor BanCorp Wisconsin, Inc. (a)

      850         34,773   

BankFinancial Corp.

      39         480   

Essent Group Ltd. (a)

      1,391         37,265   

EverBank Financial Corp.

      8,320         164,570   

Flagstar Bancorp, Inc. (a)

      253         5,143   

Meta Financial Group, Inc.

      31         1,346   

MGIC Investment Corp. (a)

      872         9,208   

Northwest Bancshares, Inc.

      4,917         63,134   

Radian Group, Inc.

      485         8,720   

Walker & Dunlop, Inc. (a)

      246         5,985   
     

 

 

  
                330,624   

Tobacco — 1.7%

      

Vector Group Ltd.

      6,688         159,375   

Trading Companies & Distributors — 0.7%

      

CAI International, Inc. (a)

      1,796         23,635   

Neff Corp., Class A (a)

      5,645         37,201   
 

 

 

     BLACKROCK FUNDS    AUGUST 31, 2015    3

Schedule of Investments (continued)      BlackRock Disciplined Small Cap Core Fund   
     (Percentages shown are based on Net Assets)   

 

Common Stocks    Shares      Value  

Trading Companies & Distributors (concluded)

      

Willis Lease Finance Corp. (a)

      198         $      3,317   
     

 

 

  
                64,153   

Water Utilities — 0.8%

      

California Water Service Group

      3,580         73,855   

Wireless Telecommunication Services — 0.0%

      

Leap Wireless International, Inc. — CVR (a)

      216         544   

Total Common Stocks — 98.5%

               9,178,144   
Other Interests (c)    Beneficial
Interest
(000)		      Value  

Professional Services — 0.0%

      

The Dolan Co., Escrow (a)

      $  2         39   

Total Other Interests — 0.0%

               39   

Total Long-Term Investments

(Cost — $8,919,471) — 98.5%

  

  

      9,178,183   
     
                  
Short-Term Securities    Shares      Value  

BlackRock Liquidity Funds, TempFund,
Institutional Class, 0.08% (d)(e)

      335,925         $  335,925   
      Beneficial
Interest
(000)		      Value  

BlackRock Liquidity Series, LLC, Money Market
Series, 0.23% (d)(e)(f)

      $  2         2,145   

Total Short-Term Securities

(Cost — $338,070) — 3.6%

               338,070   

Total Investments (Cost — $9,257,541*) — 102.1%

         9,516,253   

Liabilities in Excess of Other Assets — (2.1)%

         (192,677 ) 
     

 

 

  

Net Assets — 100.0%

         $9,323,576   
     

 

 

  
 
      Notes to Schedule of Investments

 

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

 

Tax cost

    $ 9,287,520   
  

 

 

  

Gross unrealized appreciation

    $ 761,261   

Gross unrealized depreciation

      (532,528 ) 
  

 

 

  

Net unrealized appreciation

    $ 228,733   
  

 

 

  

 

(a) Non-income producing security.

 

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

 

(c) Other interests represent beneficial interests in liquidation trusts and other reorganization or private entities.

 

(d) During the period ended August 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

May 31, 2015

     

Net

Activity

     

Shares/

Beneficial

Interest

Held at

August 31, 2015

      Income  

BlackRock Liquidity Funds, TempFund, Institutional Class

      161,872         174,053          335,925         $116   

BlackRock Liquidity Series, LLC, Money Market Series

      $129,625         $(127,480)         $      2,145         $605 1 

 

  1   

Represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

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

 

(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.

 

•  

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.

 

      Derivative Financial Instruments Outstanding as of August 31, 2015

 

Financial Futures Contracts

         

Contracts

Long

    Issue    Exchange    Expiration   

Notional

Value

    Unrealized
Appreciation

    1

    E-Mini Russell 2000 Futures    InterContinental Exchange    September 2015    $115,750    $367

 

 

4    BLACKROCK FUNDS    AUGUST 31, 2015     

Schedule of Investments (concluded)      BlackRock Disciplined Small Cap Core Fund   

 

      Fair Value Hierarchy as of August 31, 2015

Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a fair value hierarchy consisting of three broad levels for financial reporting purposes as follows:

 

  •  

Level 1 — unadjusted price quotations 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)

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 significant unobservable inputs used by the Global Valuation Committee in determining the price for Fair Valued Investments are typically categorized as Level 3.

Changes in valuation techniques may result in transfers into or out of an assigned level within the hierarchy. In accordance with the Fund’s policy, transfers between different levels of the fair value hierarchy are deemed to have occurred as of the beginning of the reporting period. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investments and derivative financial instruments and is not necessarily an indication of the risks associated with investing in those securities. For information about the Fund’s policy regarding valuation of investments and derivative financial instruments, refer to the Fund’s most recent financial statements as contained in its annual report.

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 Investments1

    $ 9,177,490         —       $ 693      $ 9,178,183   

Short-Term Securities

      335,925       $ 2,145         —        338,070   
  

 

 

  

Total

    $         9,513,415       $             2,145       $             693      $     9,516,253   
  

 

 

  
  

1     See above Schedule of Investments for values in each industry. Investments categorized as Level 3 are included in Pharmaceuticals, Wireless Telecommunications Services and Other Interests.

 

         

  
      Level 1      Level 2      Level 3     Total  

Derivative Financial Instruments2

           

Assets:

           

Equity contracts

    $                 367                         —                         —      $                 367   
          

2      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 reporting purposes. As of August 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

    $ 15,300         —           —      $ 15,300   

Liabilities:

           

Collateral on securities loaned at value

      —       $             (2,145)         —        (2,145 ) 

Total

    $             15,300       $             (2,145)                             —      $         13,155   
  

 

 

  
During the period ended August 31, 2015, there were no transfers between levels.        

 

 

     BLACKROCK FUNDS    AUGUST 31, 2015    5

Item 2 – Controls and Procedures

 

2(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.

2(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 registrant’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 3 – Exhibits

  Certifications – Attached hereto

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:   October 23, 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:   October 23, 2015
By:  

/s/ Neal J. Andrews

  
  Neal J. Andrews
  Chief Financial Officer (principal financial officer) of
  BlackRock Funds
Date:   October 23, 2015