497 1 d356424d497.htm BLACKROCK FUNDS BLACKROCK FUNDS

BLACKROCK FUNDSSM

BlackRock Multifactor USA Index Fund and BlackRock Multifactor International Index Fund

(the “Funds”)

Supplement dated March 16, 2017 to the Summary Prospectuses and Prospectuses of the Funds, dated November 28, 2016

Effective immediately, BlackRock (as defined below) has agreed contractually to: (i) reduce its management fee for BlackRock Multifactor USA Index Fund; and (ii) cap net expenses of the Funds at lower levels for the Funds’ Institutional Shares and Class K Shares. To achieve these expense caps, BlackRock has agreed to waive and/or reimburse fees or expenses if the Funds’ annual fund operating expenses, excluding certain expenses described in the prospectus, exceed a certain limit for the Funds’ Institutional Shares and Class K Shares. In addition, BlackRock may recoup some of the waivers and reimbursements to the Funds in the following two fiscal years. Accordingly, effective immediately, the Funds’ Summary Prospectuses and Prospectuses are amended as follows:

The section of the BlackRock Multifactor USA Index Fund Institutional Shares Summary Prospectus entitled “Key Facts About BlackRock Multifactor USA Index Fund—Fees and Expenses of the Fund” and the section of the Institutional Shares Prospectus entitled “Fund Overview—Key Facts About BlackRock Multifactor USA Index Fund—Fees and Expenses of the Fund” are deleted in their entirety and replaced with the following:

Fees and Expenses of the Fund

 

This table describes the fees and expenses that you may pay if you buy and hold Institutional Shares of the Fund.

 

Annual Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your investment)
   Institutional
Shares
 

Management Fee1,2,3

     0.20

Distribution and/or Service (12b-1) Fees

     None  

Other Expenses2,4

     0.19

Total Annual Fund Operating Expenses2

     0.39

Fee Waivers and/or Expense Reimbursements3,5

     (0.14 )% 

Total Annual Fund Operating Expenses After Fee Waivers and/or Expense Reimbursements3,5

     0.25

 

1  Management Fee has been restated to reflect current fees.
2  Total Annual Fund Operating Expenses do not correlate to the ratio of expenses to average net assets given in the Fund’s most recent annual report, which does not include the restatement of Management Fee or estimation of Other Expenses to reflect current fees.
3  As described in the “Management of the Funds” section of the Fund’s prospectus beginning on page 45, BlackRock Advisors, LLC (“BlackRock”) has contractually agreed to waive the management fee with respect to any portion of the Fund’s assets estimated to be attributable to investments in other equity and fixed-income mutual funds and exchange-traded funds managed by BlackRock or its affiliates that have a contractual management fee, through November 30, 2017. The contractual agreement may be terminated upon 90 days’ notice by a majority of the non-interested trustees of the Trust or by a vote of a majority of the outstanding voting securities of the Fund.
4  Other Expenses are based on estimated amounts for the current fiscal year.
5  As described in the “Management of the Funds” section of the Fund’s prospectus beginning on page 45, BlackRock has contractually agreed to waive and/or reimburse fees or expenses in order to limit Total Annual Fund Operating Expenses After Fee Waivers and/or Expense Reimbursements (excluding Dividend Expense, Interest Expense, Acquired Fund Fees and Expenses and certain other Fund expenses) to 0.25% of average daily net assets through November 30, 2018. The Fund may have to repay some of these waivers and/or reimbursements to BlackRock in the following two years. The contractual agreement may be terminated upon 90 days’ notice by a majority of the non-interested trustees of the Trust or by a vote of a majority of the outstanding voting securities of the Fund.


Example:

This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

 

      1 Year      3 Years  

Institutional Shares

   $ 26      $ 111  

Portfolio Turnover:

The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the Example, affect the Fund’s performance. For the period July 13, 2016 (commencement of operations of the Fund) to July 31, 2016, the Fund’s portfolio turnover rate was less than 0.50% of the average value of its portfolio.

The section of the BlackRock Multifactor International Index Fund Institutional Shares Summary Prospectus entitled “Key Facts About BlackRock Multifactor International Index Fund—Fees and Expenses of the Fund” and the section of the Institutional Shares Prospectus entitled “Fund Overview—Key Facts About BlackRock Multifactor International Index Fund—Fees and Expenses of the Fund” are deleted in their entirety and replaced with the following:

Fees and Expenses of the Fund

 

This table describes the fees and expenses that you may pay if you buy and hold Institutional Shares of the Fund.

 

Annual Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your investment)
   Institutional
Shares
 

Management Fee1

     0.30

Distribution and/or Service (12b-1) Fees

     None  

Other Expenses2,3

     0.21

Total Annual Fund Operating Expenses3

     0.51

Fee Waivers and/or Expense Reimbursements1,4

     (0.16 )% 

Total Annual Fund Operating Expenses After Fee Waivers and/or Expense Reimbursements1,4

     0.35

 

1  As described in the “Management of the Funds” section of the Fund’s prospectus beginning on page 45, BlackRock Advisors, LLC (“BlackRock”) has contractually agreed to waive the management fee with respect to any portion of the Fund’s assets estimated to be attributable to investments in other equity and fixed-income mutual funds and exchange-traded funds managed by BlackRock or its affiliates that have a contractual management fee, through November 30, 2017. The contractual agreement may be terminated upon 90 days’ notice by a majority of the non-interested trustees of the Trust or by a vote of a majority of the outstanding voting securities of the Fund.
2  Other Expenses are based on estimated amounts for the current fiscal year.
3  Total Annual Fund Operating Expenses do not correlate to the ratio of expenses to average net assets given in the Fund’s most recent annual report, which does not include the estimation of Other Expenses.
4  As described in the “Management of the Funds” section of the Fund’s prospectus beginning on page 45, BlackRock has contractually agreed to waive and/or reimburse fees or expenses in order to limit Total Annual Fund Operating Expenses After Fee Waivers and/or Expense Reimbursements (excluding Dividend Expense, Interest Expense, Acquired Fund Fees and Expenses and certain other Fund expenses) to 0.35% of average daily net assets through November 30, 2018. The Fund may have to repay some of these waivers and/or reimbursements to BlackRock in the following two years. The contractual agreement may be terminated upon 90 days’ notice by a majority of the non-interested trustees of the Trust or by a vote of a majority of the outstanding voting securities of the Fund.

 

2


Example:

This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

 

      1 Year      3 Years  

Institutional Shares

   $ 36      $ 147  

Portfolio Turnover:

The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the Example, affect the Fund’s performance. For the period July 13, 2016 (commencement of operations of the Fund) to July 31, 2016, the Fund’s portfolio turnover rate was 0% of the average value of its portfolio.

The first and second paragraphs of the section of the Institutional Shares Prospectus entitled “Management of the Funds—BlackRock—Multifactor USA Index Fund” is deleted in its entirety and replaced with the following:

With respect to Multifactor USA Index Fund, effective March 16, 2017, BlackRock is entitled to a management fee at the annual rate of 0.20% of the Fund’s average daily net assets. Prior to March 16, 2017, BlackRock was entitled to a management fee at the annual rate of 0.21% of the Fund’s average daily net assets.

With respect to Multifactor USA Index Fund, BlackRock has contractually agreed to waive and/or reimburse fees or expenses in order to limit Total Annual Fund Operating Expenses to the amount noted in the table below.

 

      Contractual Cap1 on
Total Annual Fund
Operating Expenses2
(excluding Dividend
Expense, Interest
Expense, Acquired Fund
Fees and Expenses and
certain other
Fund expenses)
 

Institutional Shares

     0.25

 

1  The contractual cap is in effect through November 30, 2018. The contractual agreement may be terminated upon 90 days’ notice by a majority of the non-interested trustees of the Trust or by a vote of a majority of the outstanding voting securities of the Fund.
2  As a percentage of average daily net assets.

 

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The second paragraph of the section of the Institutional Shares Prospectus entitled “Management of the Funds—BlackRock—Multifactor International Index Fund” is deleted in its entirety and replaced with the following:

With respect to Multifactor International Index Fund, BlackRock has contractually agreed to waive and/or reimburse fees or expenses in order to limit Total Annual Fund Operating Expenses to the amount noted in the table below.

 

      Contractual Cap1 on
Total Annual Fund
Operating Expenses2
(excluding Dividend
Expense, Interest
Expense, Acquired Fund
Fees and Expenses and
certain other
Fund expenses)
 

Institutional Shares

     0.35

 

1  The contractual cap is in effect through November 30, 2018. The contractual agreement may be terminated upon 90 days’ notice by a majority of the non-interested trustees of the Trust or by a vote of a majority of the outstanding voting securities of the Fund.
2  As a percentage of average daily net assets.

The section of the BlackRock Multifactor USA Index Fund Class K Shares Summary Prospectus entitled “Key Facts About BlackRock Multifactor USA Index Fund—Fees and Expenses of the Fund” and the section of the Class K Shares Prospectus entitled “Fund Overview—Key Facts About BlackRock Multifactor USA Index Fund—Fees and Expenses of the Fund” are deleted in their entirety and replaced with the following:

Fees and Expenses of the Fund

 

This table describes the fees and expenses that you may pay if you buy and hold Class K Shares of the Fund.

 

Annual Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your investment)
   Class K
Shares
 

Management Fee1,2,3

     0.20

Distribution and/or Service (12b-1) Fees

     None  

Other Expenses2,4

     0.13

Total Annual Fund Operating Expenses2

     0.33

Fee Waivers and/or Expense Reimbursements3,5

     (0.13 )% 

Total Annual Fund Operating Expenses After Fee Waivers and/or Expense Reimbursements3,5

     0.20

 

1  Management Fee has been restated to reflect current fees.
2  Total Annual Fund Operating Expenses do not correlate to the ratio of expenses to average net assets given in the Fund’s most recent annual report, which does not include the restatement of Management Fee or the estimation of Other Expenses to reflect current fees.
3  As described in the “Management of the Funds” section of the Fund’s prospectus beginning on page 44, BlackRock Advisors, LLC (“BlackRock”) has contractually agreed to waive the management fee with respect to any portion of the Fund’s assets estimated to be attributable to investments in other equity and fixed-income mutual funds and exchange-traded funds managed by BlackRock or its affiliates that have a contractual management fee, through November 30, 2017. The contractual agreement may be terminated upon 90 days’ notice by a majority of the non-interested trustees of the Trust or by a vote of a majority of the outstanding voting securities of the Fund.
4  Other Expenses are based on estimated amounts for the current fiscal year.
5 

As described in the “Management of the Funds” section of the Fund’s prospectus beginning on page 44, BlackRock has contractually agreed to waive and/or reimburse fees or expenses in order to limit Total Annual Fund Operating Expenses After Fee Waivers and/or

 

4


  Expense Reimbursements (excluding Dividend Expense, Interest Expense, Acquired Fund Fees and Expenses and certain other Fund expenses) to 0.20% of average daily net assets through November 30, 2018. The Fund may have to repay some of these waivers and/or reimbursements to BlackRock in the following two years. The contractual agreement may be terminated upon 90 days’ notice by a majority of the non-interested trustees of the Trust or by a vote of a majority of the outstanding voting securities of the Fund.

Example:

This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

 

      1 Year      3 Years  

Class K Shares

   $ 20      $ 93  

Portfolio Turnover:

The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the Example, affect the Fund’s performance. For the period July 13, 2016 (commencement of operations of the Fund) to July 31, 2016, the Fund’s portfolio turnover rate was less than 0.50% of the average value of its portfolio.

The section of the BlackRock Multifactor International Index Fund Class K Shares Summary Prospectus entitled “Key Facts About BlackRock Multifactor International Index Fund—Fees and Expenses of the Fund” and the section of the Class K Shares Prospectus entitled “Fund Overview—Key Facts About BlackRock Multifactor International Index Fund—Fees and Expenses of the Fund” are deleted in their entirety and replaced with the following:

Fees and Expenses of the Fund

 

This table describes the fees and expenses that you may pay if you buy and hold Class K Shares of the Fund.

 

Annual Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your investment)
   Class K
Shares
 

Management Fee1

     0.30

Distribution and/or Service (12b-1) Fees

     None  

Other Expenses2,3

     0.15

Total Annual Fund Operating Expenses3

     0.45

Fee Waivers and/or Expense Reimbursements1,4

     (0.15 )% 

Total Annual Fund Operating Expenses After Fee Waivers and/or Expense Reimbursements1,4

     0.30

 

1  As described in the “Management of the Funds” section of the Fund’s prospectus beginning on page 44, BlackRock Advisors, LLC (“BlackRock”) has contractually agreed to waive the management fee with respect to any portion of the Fund’s assets estimated to be attributable to investments in other equity and fixed-income mutual funds and exchange-traded funds managed by BlackRock or its affiliates that have a contractual management fee, through November 30, 2017. The contractual agreement may be terminated upon 90 days’ notice by a majority of the non-interested trustees of the Trust or by a vote of a majority of the outstanding voting securities of the Fund.
2  Other Expenses are based on estimated amounts for the current fiscal year.
3  Total Annual Fund Operating Expenses do not correlate to the ratio of expenses to average net assets given in the Fund’s most recent annual report, which does not include the estimation of Other Expenses.

 

5


4  As described in the “Management of the Funds” section of the Fund’s prospectus beginning on page 44, BlackRock has contractually agreed to waive and/or reimburse fees or expenses in order to limit Total Annual Fund Operating Expenses After Fee Waivers and/or Expense Reimbursements (excluding Dividend Expense, Interest Expense, Acquired Fund Fees and Expenses and certain other Fund expenses) to 0.30% of average daily net assets through November 30, 2018. The Fund may have to repay some of these waivers and/or reimbursements to BlackRock in the following two years. The contractual agreement may be terminated upon 90 days’ notice by a majority of the non-interested trustees of the Trust or by a vote of a majority of the outstanding voting securities of the Fund.

Example:

This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

 

      1 Year      3 Years  

Class K Shares

   $ 31      $ 129  

Portfolio Turnover:

The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the Example, affect the Fund’s performance. For the period July 13, 2016 (commencement of operations of the Fund) to July 31, 2016, the Fund’s portfolio turnover rate was 0% of the average value of its portfolio.

The first and second paragraphs of the section of the Class K Shares Prospectus entitled “Management of the Funds—BlackRock—Multifactor USA Index Fund” is deleted in its entirety and replaced with the following:

With respect to Multifactor USA Index Fund, effective March 16, 2017, BlackRock is entitled to a management fee at the annual rate of 0.20% of the Fund’s average daily net assets. Prior to March 16, 2017, BlackRock was entitled to a management fee at the annual rate of 0.21% of the Fund’s average daily net assets.

With respect to Multifactor USA Index Fund, BlackRock has contractually agreed to waive and/or reimburse fees or expenses in order to limit Total Annual Fund Operating Expenses to the amount noted in the table below.

 

      Contractual Cap1 on
Total Annual Fund
Operating Expenses2
(excluding Dividend
Expense, Interest
Expense, Acquired Fund
Fees and Expenses and
certain other
Fund expenses)
 

Class K Shares

     0.20

 

1  The contractual cap is in effect through November 30, 2018. The contractual agreement may be terminated upon 90 days’ notice by a majority of the non-interested trustees of the Trust or by a vote of a majority of the outstanding voting securities of the Fund.
2  As a percentage of average daily net assets.

 

6


The second paragraph of the section of the Class K Shares Prospectus entitled “Management of the Funds—BlackRock—Multifactor International Index Fund” is deleted in its entirety and replaced with the following:

With respect to Multifactor International Index Fund, BlackRock has contractually agreed to waive and/or reimburse fees or expenses in order to limit Total Annual Fund Operating Expenses to the amount noted in the table below.

 

      Contractual Cap1 on
Total Annual Fund
Operating Expenses2
(excluding Dividend
Expense, Interest
Expense, Acquired Fund
Fees and Expenses and
certain other
Fund expenses)
 

Class K Shares

     0.30

 

1  The contractual cap is in effect through November 30, 2018. The contractual agreement may be terminated upon 90 days’ notice by a majority of the non-interested trustees of the Trust or by a vote of a majority of the outstanding voting securities of the Fund.
2  As a percentage of average daily net assets.

Shareholders should retain this Supplement for future reference.

ALLPR-MF-0317SUP

 

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