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N-CSR 1 dncsr.htm BLACK ROCK FUNDS Black Rock Funds

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

All-Cap Energy & Resources Portfolio

Asset Allocation Portfolio

Aurora Portfolio

Capital Appreciation Portfolio

Energy & Resources Portfolio

Global Opportunities Portfolio

Health Sciences Opportunities Portfolio

International Opportunities Portfolio

Mid-Cap Growth Equity Portfolio

Mid-Cap Value Equity Portfolio

Science & Technology Opportunities Portfolio

Small Cap Core Equity Portfolio

Small Cap Growth Equity Portfolio

Small Cap Value Equity Portfolio

Small/Mid-Cap Growth Portfolio

U.S. Opportunities Portfolio

Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809

Name and address of agent for service: Anne F. Ackerley, Chief Executive Officer, BlackRock Funds, 40 East 52^nd Street, New York, NY 10022.

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

Date of fiscal year end: 09/30/2009

Date of reporting period: 09/30/2009


Item 1		–		Report to Stockholders

EQUITIES FIXED INCOME REAL ESTATE LIQUIDITY ALTERNATIVES BLACKROCK SOLUTIONS


BlackRock Funds^SM
ANNUAL REPORT \| SEPTEMBER 30, 2009

BlackRock All-Cap Energy & Resources Portfolio

BlackRock Aurora Portfolio

BlackRock Capital Appreciation Portfolio

BlackRock Energy & Resources Portfolio

NOT FDIC INSURED

MAY LOSE VALUE

NO BANK GUARANTEE

Table of Contents


		Page
Dear Shareholder		3
Annual Report:
Portfolio Summaries		4
About Portfolio Performance		12
Disclosure of Expenses		13
Derivative Financial Instruments		13
Financial Statements:
Schedules of Investments		14
Statements of Assets and Liabilities		24
Statements of Operations		26
Statements of Changes in Net Assets		27
Financial Highlights		29
Notes to Financial Statements		41
Report of Independent Registered Public Accounting Firm		52
Important Tax Information (Unaudited)		52
Disclosure of Investment Advisory Agreement		53
Officers and Trustees		57
Additional Information		60
Mutual Fund Family		62


2		ANNUAL REPORT		SEPTEMBER 30, 2009

Dear Shareholder

The past 12 months saw a seismic shift in market sentiment – from fear and pessimism during the worst economic decline and crisis of confidence in financial markets since The Great Depression, to exuberance and increasing optimism amid emerging signs of recovery. The period began on the heels of the infamous collapse of Lehman Brothers, which triggered an intensifying deterioration in global economic activity in the final months of 2008 and the early months of 2009 and resulted in massive government intervention (on a global scale) in the financial system and the economy. The tide turned dramatically in March 2009, however, on the back of new US government initiatives, as well as better-than-expected economic data and upside surprises in corporate earnings.

Not surprisingly, US equities endured extreme volatility in this environment – steep declines and heightened risk aversion in the early part of the reporting period gave way to an impressive seven-month rally that began in March. This rally has pushed all major indexes well into positive territory for 2009. Stocks did experience modest setbacks in June and then again in late September and early October, but the overall trajectory was up. The experience in international markets was similar to that in the United States. Prominent in the rally have been emerging markets, which were less affected by the global credit crunch and are experiencing faster economic growth rates when compared to the developed world.

In fixed income markets, the flight-to-safety premium in Treasury securities prevailed during the equity market downturn, but concerns about deficit spending, debt issuance, inflation and dollar weakness have kept Treasury yields range bound in recent months. At the same time, near-zero interest rates on risk-free assets, coupled with an improving macro environment, prompted many investors to reallocate money from cash investments into higher-yielding and riskier non-Treasury assets, bidding those prices higher. The high yield sector was the greatest beneficiary of this move, having decisively outpaced all other taxable asset classes since the start of 2009. Similarly, the municipal bond market is on pace for its best performance year ever in 2009, following one of its worst years in 2008. Investor demand remains strong while the Build America Bonds program has alleviated supply pressures, creating a highly favorable technical backdrop. Municipal bond mutual funds are seeing record inflows, reflecting the renewed investor interest in the asset class.


Total Returns as of September 30, 2009	6-month		12-month
US equities (S&P 500 Index)	34.02	%	(6.91	)%
Small cap US equities (Russell 2000 Index)	43.95		(9.55	)
International equities (MSCI Europe, Australasia, Far East Index)	49.85		3.23
US Treasury securities (BofA Merrill Lynch 10-Year US Treasury Index*)	(3.77	)	7.66
Taxable fixed income (Barclays Capital US Aggregate Bond Index)	5.59		10.56
Tax-exempt fixed income (Barclays Capital Municipal Bond Index)	9.38		14.85
High yield bonds (Barclays Capital US Corporate High Yield 2% Issuer Capped Index)	40.25		22.51

*	Formerly a Merrill Lynch index.

Past performance is no guarantee of future results. Index performance shown for illustrative purposes only. You cannot invest directly in an index.

The market environment has visibly improved since the beginning of the year, but a great deal of uncertainty and risk remain. Through periods of market turbulence, as ever, BlackRock’s full resources are dedicated to the management of our clients’ assets. For additional market perspective and investment insight, visit the most recent issue of our award-winning Shareholder^® magazine at www.blackrock.com/shareholdermagazine. We thank you for entrusting BlackRock with your investments, and we look forward to continuing to serve you in the months and years ahead.

Sincerely,

Rob Kapito

President, BlackRock Advisors, LLC

Announcement to Shareholders

On June 16, 2009, BlackRock, Inc. announced that it received written notice from Barclays PLC (“Barclays”) in which Barclays’ Board of Directors had accepted BlackRock’s offer to acquire Barclays Global Investors (“BGI”). At a special meeting held on August 6, 2009, BlackRock’s proposed purchase of BGI was approved by an overwhelming majority of Barclays’ voting shareholders, an important step toward closing the transaction. The combination of BlackRock and BGI will bring together market leaders in active and index strategies to create the preeminent asset management firm. The transaction is scheduled to be completed in the fourth quarter of 2009, subject to important fund shareholder and regulatory approvals.

THIS PAGE NOT PART OF YOUR FUND REPORT


						3


Portfolio Summary as of September 30, 2009		All-Cap Energy & Resources Portfolio

Portfolio Management Commentary

The Portfolio added a custom blended benchmark comprised of 70% of the Wilshire 5000 Modified Energy Cap Weighted Index and 30% of the MSCI All-Country World Energy Index.

How did the Portfolio perform?

•

During the 12-month period, the Institutional, Service and Investor A Shares outperformed their custom blended benchmark, which is comprised 70% of the Wilshire 5000 Modified Energy Cap Weighted Index and 30% of the MSCI All-Country World Energy Index. The Investor B and Investor C Shares underperformed the custom blended and sector benchmarks. Portfolio results underperformed that of the broad-market S&P 500 Index.

What factors influenced performance?

•

An overweight allocation to precious metals & minerals, especially gold and silver miners/producers, drove the Portfolio’s outperformance relative to its custom blended benchmark. The Portfolio was positioned to benefit from a weaker US dollar (USD), and these stocks outperformed as the USD declined and investors looked to store cash in “real” assets. Stock selection within the integrated oils segment also boosted return comparisons.

•

The primary detractor from performance for the period was an underweight in the storage & transportation subsector. These stocks tend to outperform in defensive markets, as many of them offer higher dividend yields than other energy stocks. We have avoided this segment for quite some time, and remain more aggressively positioned for an economic recovery and higher global energy prices.

Describe recent Portfolio activity.

•

During the annual period, we increased the Portfolio’s allocation to precious metals as we are positioned for a weaker USD. We sold some service and land-based drilling companies as rig counts declined substantially and look unlikely to increase back to previous highs.

Describe Portfolio positioning at period end.

•

At period end, the Portfolio remained overweight relative to its custom blended benchmark in natural gas exploration & production companies with exposure to emerging shale plays, coal producers and metals/ mining companies. The Portfolio was considerably underweight compared to the custom blended benchmark in the integrated oil & gas segment, as mega-cap, slower-growing companies with refining businesses, such as ExxonMobil Corp., are unattractive on a long-term basis due to fundamentals.

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
CONSOL Energy, Inc.	4	%
FMC Technologies, Inc.	3
Occidental Petroleum Corp.	3
Apache Corp.	3
Range Resources Corp.	3
Southwestern Energy Co.	3
Massey Energy Co.	3
Silver Wheaton Corp.	3
EOG Resources, Inc.	3
Transocean Ltd.	3

Industry Allocation	Percent of Long-Term Investments
Oil, Gas & Consumable Fuels	59	%
Energy Equipment & Services	24
Metals & Mining	11
Gas Utilities	4
Chemicals	2

For Portfolio compliance purposes, the Portfolio’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 Portfolio management. This definition may not apply for purposes of this report, which may combine industry sub-classifications for reporting ease.


4		ANNUAL REPORT		SEPTEMBER 30, 2009

All-Cap Energy & Resources Portfolio

Total Return Based on a $10,000 Investment

LOGO

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

2	Under normal market conditions, the Portfolio invests at least 80% of its total assets in 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).

This unmanaged total return Index covers 500 industrial, utility, transportation and financial companies of the US markets (mostly New York Stock Exchange (“NYSE”) issues) representing about 75% of NYSE market capitalization and 30% of NYSE issues. S&P 500 is a trademark of The McGraw-Hill Companies.

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

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

6	Commencement of operations.

Performance Summary for the Period Ended September 30, 2009


			Average Annual Total Returns⁷
			1 Year				Since Inception⁸
	6-Month Total Returns		w / o sales charge		w / sales charge		w / o sales charge		w / sales charge
Institutional	50.30	%	(7.53	)%	N/A		10.38	%	N/A
Service	50.00		(7.85	)	N/A		9.94		N/A
Investor A	50.00		(7.85	)	(12.70	)%	9.94		8.67	%
Investor B	49.50		(8.56	)	(11.96	)	9.13		8.81
Investor C	49.43		(8.54	)	(9.30	)	9.16		9.16
S&P 500 Index	34.02		(6.91	)	N/A		(0.84	)	N/A
70% Wilshire 5000 Modified Energy Cap Weighted Index / 30% MSCI All-Country World Energy Index	43.86		(8.42	)	N/A		9.05		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 Portfolio Performance” on page 12 for a detailed description of share classes, including any related sales charges and fees.

8	The Portfolio commenced operations on February 16, 2005.

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

Past performance is not indicative of future results.

Expense Example


	Actual						Hypothetical¹⁰
	Beginning Account Value April 1, 2009		Ending Account Value September 30, 2009		Expenses Paid During the Period⁹		Beginning Account Value April 1, 2009		Ending Account Value September 30, 2009		Expenses Paid During the Period⁹
Institutional	$	1,000.00	$	1,503.00	$	5.84	$	1,000.00	$	1,020.41	$	4.71
Service	$	1,000.00	$	1,500.00	$	8.46	$	1,000.00	$	1,018.30	$	6.83
Investor A	$	1,000.00	$	1,500.00	$	8.46	$	1,000.00	$	1,018.30	$	6.83
Investor B	$	1,000.00	$	1,495.00	$	12.95	$	1,000.00	$	1,014.69	$	10.45
Investor C	$	1,000.00	$	1,494.30	$	12.88	$	1,000.00	$	1,014.74	$	10.40

For each class of the Portfolio, expenses are equal to the annualized expense ratio for the class (0.93% for Institutional, 1.35% for Service, 1.35% for Investor A, 2.07% for Investor B and 2.06% for Investor C), multiplied by the average account value over the period, multiplied by 183/365 (to reflect the one-half year period shown).

10	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 13 for further information on how expenses were calculated.


		ANNUAL REPORT		SEPTEMBER 30, 2009		5


Portfolio Summary as of September 30, 2009		Aurora Portfolio

Portfolio Management Commentary

How did the Portfolio perform?

•

The Portfolio underperformed the benchmark Russell 2500 Value Index for the 12-month period.

What factors influenced performance?

•

Underperformance during the period was driven primarily by disappointing stock selection in consumer discretionary, industrials and information technology (IT). In consumer discretionary, weakness was most pronounced in the specialty retail; hotels, restaurants & leisure; and media sub-sectors. Key individual detractors included Collective Brands, Inc. and O’Reilly Automotive, Inc. Poor stock selection among aerospace & defense, road & rail shippers and electrical equipment makers weighed on return comparisons in the industrials sector. IT stocks significantly outperformed the broader market during the period, and against this backdrop, the Portfolio’s semiconductor-related holdings lagged their benchmark counterparts.

•

On the positive side, an underweight, paired with strong stock selection within the volatile financials sector, added value to performance. Mortgage and vehicle fleet management service provider PHH Corp., a significant position in the Portfolio, was the greatest individual contributor. Elsewhere in the sector, an underweight and stock selection among real estate investment trusts (REITs) and an underweight in commercial banks also benefited performance comparisons. An underweight and positive stock selection within the utilities sector also contributed to favorable results. Key areas of strength included gas and electric utilities.

Describe recent Portfolio activity.

•

During the annual period, we increased exposure in the Portfolio as we began to see tangible signs of stabilization and improvement in the economy. Allocations to materials, consumer discretionary and IT were increased, while weightings in consumer staples, health care and utilities were reduced.

•

In materials, we added primarily to the metals & mining and chemicals sub-sectors. In consumer discretionary, we built positions in the media, leisure equipment & products and specialty retail sub-sectors. In IT, we initiated positions in Fairchild Semiconductor, Inc. and Tech Data Corp., among others in the semiconductor and electronic equipment areas. Meanwhile, we pared exposure to food products names within the consumer staples sector. We also reduced exposure throughout health care, selling names such as Magellan Health Services, Inc. and DENTSPLY International, Inc.

Describe Portfolio positioning at period end.

•

Relative to the Russell 2500 Value Index, the Portfolio ended the period with a significant overweight in IT, primarily in the semiconductors & semiconductor equipment and electronic equipment, instruments & components sub-sectors; and consumer discretionary, notably hotels, restaurants & leisure and leisure equipment & products. The Portfolio also held a modest overweight in industrials, particularly machinery.

•

Conversely, the Portfolio was significantly underweight in financials, primarily REITs and insurance; and utilities, mainly gas utilities, electric utilities and multi-utilities.

Portfolio Information


Ten Largest Holdings	Percent of Long-Term Investments
PHH Corp.	3	%
MFA Financial, Inc.	2
The Hanover Insurance Group, Inc.	2
Hasbro, Inc.	2
Lender Processing Services, Inc.	2
Fairchild Semiconductor International, Inc.	2
Tech Data Corp.	2
Atlas Energy, Inc.	2
FMC Corp.	2
The GEO Group, Inc.	2

Sector Allocation	Percent of Long-Term Investments
Consumer Discretionary	20	%
Financials	19
Information Technology	17
Industrials	15
Materials	9
Energy	7
Health Care	7
Consumer Staples	3
Utilities	3

For Portfolio compliance purposes, the Portfolio’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 Portfolio management. This definition may not apply for purposes of this report, which may combine sector sub-classifications for reporting ease.


6		ANNUAL REPORT		SEPTEMBER 30, 2009

Aurora Portfolio

Total Return Based on a $10,000 Investment

LOGO

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

2	Under normal market conditions, the Portfolio invests at least 80% of its total assets in small- and mid-capitalization common and preferred stocks and securities convertible into common and preferred stocks.

3	An index composed of the Russell 2500 companies with lower price-to-book ratios and lower forecasted growth values.

Performance Summary for the Period Ended September 30, 2009


			Average Annual Total Returns⁴
			1 Year				5 Years				10 Years
	6-Month Total Returns		w / o sales charge		w / sales charge		w / o sales charge		w / sales charge		w / o sales charge		w / sales charge
Institutional	27.20	%	(17.70	)%	N/A		(2.23	)%	N/A		7.57	%	N/A
Investor A	26.95		(17.97	)	(22.28	)%	(2.58	)	(3.62	)%	7.17		6.60	%
Investor B	26.50		(18.65	)	(22.31	)	(3.31	)	(3.46	)	6.55		6.55
Investor C	26.39		(18.67	)	(19.48	)	(3.32	)	(3.32	)	6.39		6.39
Class R	26.75		(18.17	)	N/A		(2.74	)	N/A		6.97		N/A
Russell 2500 Value Index	45.80		(8.33	)	N/A		2.51		N/A		8.12		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 Portfolio Performance” on page 12 for a detailed description of share classes, including any related sales charges and fees.

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

Past performance is not indicative of future results.

Expense Example


	Actual						Hypothetical⁶
	Beginning Account Value April 1, 2009		Ending Account Value September 30, 2009		Expenses Paid During the Period⁵		Beginning Account Value April 1, 2009		Ending Account Value September 30, 2009		Expenses Paid During the Period⁵
Institutional	$	1,000.00	$	1,272.00	$	5.98	$	1,000.00	$	1,019.80	$	5.32
Investor A	$	1,000.00	$	1,269.50	$	8.25	$	1,000.00	$	1,017.80	$	7.33
Investor B	$	1,000.00	$	1,265.00	$	12.55	$	1,000.00	$	1,013.99	$	11.16
Investor C	$	1,000.00	$	1,263.90	$	12.54	$	1,000.00	$	1,013.99	$	11.16
Class R	$	1,000.00	$	1,267.50	$	9.27	$	1,000.00	$	1,016.90	$	8.24

For each class of the Portfolio, expenses are equal to the annualized expense ratio for the class (1.05% for Institutional, 1.45% for Investor A, 2.21% for Investor B, 2.21% for Investor C and 1.63% for Class R), multiplied by the average account value over the period, multiplied by 183/365 (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 13 for further information on how expenses were calculated.


		ANNUAL REPORT		SEPTEMBER 30, 2009		7


Portfolio Summary as of September 30, 2009		Capital Appreciation Portfolio

Portfolio Management Commentary

How did the Portfolio perform?

•

The Portfolio’s Institutional and Investor A Shares outperformed the benchmark Russell 1000 Growth Index for the 12- month period, while Investor B and Investor C Shares underperformed the index.

What factors influenced performance?

•

The 12-month period contained both a dramatic selloff and an equally-sharp market rally. These two extreme periods neutralized each other, with the benchmark Russell 1000 Growth Index declining 1.85% for the year.

•

Sector positioning accounted for the Portfolio’s outperformance during the period, with significant benefits coming from overweights in health care and consumer staples during the market decline, a consistent underweight in financials and a modest overweight in consumer discretionary. Stock selection in consumer discretionary, materials, industrials and information technology (IT) also added value. In consumer discretionary, investments in lower-priced retailers, such as Kohl’s Corp., Ross Stores, Inc. and Amazon.com, Inc., paid off as consumers became more price conscious during the recession.

•

In contrast, stock selection in energy and health care detracted from relative returns. In energy, investments in exploration and production companies underperformed significantly. Select holdings, including coal producer Massey Energy Co. and natural gas producer EOG Resources, Inc., significantly underperformed the benchmark’s allocation during the 12 months. In health care, the Portfolio missed out on significant upside by not holding Schering-Plough Corp., a large benchmark holding that was traded at a significant premium during the period. Two stocks the Portfolio did hold during the period. UnitedHealth Group, Inc. and Thermo Fisher Scientific, Inc., also contributed notably to underperformance within the sector.

Describe recent Portfolio activity.

•

During the annual period, we neutralized the defensive positioning that characterized the Portfolio for the majority of 2008 and gave the Portfolio a more opportunistic tilt. We accomplished this by significantly reducing investments in the defensive consumer staples and health care sectors, and increasing exposure to opportunistic investments in the more cyclical IT and consumer discretionary sectors.

Describe Portfolio positioning at period end.

•

At period end, the Portfolio’s largest overweights relative to the Russell 1000 Growth Index were in IT and industrials, while its most substantial underweight was in consumer staples.

Portfolio Information


Ten Largest Holdings	Percent of Long-Term Investments
Apple, Inc.	5	%
Google, Inc. - Class A	4
Microsoft Corp.	4
QUALCOMM, Inc.	4
Cisco Systems, Inc.	3
The Procter & Gamble Co.	3
The Coca-Cola Co.	3
Kohl’s Corp.	2
Danaher Corp.	2
Abbott Laboratories	2

Sector Allocation	Percent of Long-Term Investments
Information Technology	35	%
Health Care	17
Industrials	12
Consumer Staples	11
Consumer Discretionary	11
Financials	5
Energy	5
Materials	3
Telecommunication Services	1


8		ANNUAL REPORT		SEPTEMBER 30, 2009

Capital Appreciation Portfolio

Total Return Based on a $10,000 Investment

LOGO

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

2	Under normal market conditions, the Portfolio invests at least 80% of total assets in common and preferred stock and securities convertible into common and preferred stock of mid- and large-size companies.

3	An index composed of those Russell 1000 securities with greater-than-average growth orientation, generally having higher price-to-book and price-to-earnings ratios, lower dividend yields and higher forecasted growth values.

Performance Summary for the Period Ended September 30, 2009


			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	31.50	%	(1.18	)%	N/A		3.68	%	N/A		0.72	%	N/A
Investor A	31.18		(1.37	)	(6.56	)%	3.22		2.12	%	0.30		(0.23	)%
Investor B	30.53		(2.52	)	(6.90	)	2.41		2.05		(0.28	)	(0.28	)
Investor C	30.80		(2.29	)	(3.26	)	2.54		2.54		(0.38	)	(0.38	)
Russell 1000 Growth Index	32.58		(1.85	)	N/A		1.86		N/A		(2.56	)	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 Portfolio Performance” on page 12 for a detailed description of share classes, including any related sales charges and fees.

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

Past performance is not indicative of future results.

Expense Example


	Actual						Hypothetical⁶
	Beginning Account Value April 1, 2009		Ending Account Value September 30, 2009		Expenses Paid During the Period⁵		Beginning Account Value April 1, 2009		Ending Account Value September 30, 2009		Expenses Paid During the Period⁵
Institutional	$	1,000.00	$	1,315.00	$	4.12	$	1,000.00	$	1,021.51	$	3.60
Investor A	$	1,000.00	$	1,311.80	$	6.84	$	1,000.00	$	1,019.15	$	5.97
Investor B	$	1,000.00	$	1,305.30	$	12.25	$	1,000.00	$	1,014.44	$	10.71
Investor C	$	1,000.00	$	1,308.00	$	11.28	$	1,000.00	$	1,015.29	$	9.85

For each class of the Portfolio, expenses are equal to the annualized expense ratio for the class (0.71% for Institutional, 1.18% for Investor A, 2.12% for Investor B and 1.95% for Investor C), multiplied by the average account value over the period, multiplied by 183/365 (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 13 for further information on how expenses were calculated.


		ANNUAL REPORT		SEPTEMBER 30, 2009		9


Portfolio Summary as of September 30, 2009		Energy & Resources Portfolio

Portfolio Management Commentary

The Portfolio added a custom benchmark the Wilshire 5000 Modified Energy Equal Weighted Index.

How did the Portfolio perform?

•

During the 12-month period, the Portfolio’s Institutional shares outperformed its custom benchmark, the Wilshire 5000 Modified Energy Equal Weighted Index; Investor A shares performed in line with the index, while Investor B and Investor C shares trailed the index. The Portfolio underperformed the broad-market S&P 500 Index.

What factors influenced performance?

•

Elevated cash positions, due to inflows into the Portfolio in the first two months of 2009 when the market was in steep decline, generated positive relative performance for the year. Additionally, the Portfolio’s shale-play investments in the exploration & production sector outperformed due to their valuable acreage and low cost of production.

•

The primary detractor from Portfolio performance relative to the custom benchmark was an underweight in the storage & transportation subsector. These stocks tend to outperform in defensive markets, as many of them offer higher dividend yields than other energy stocks. We have avoided this segment for quite some time, and remain more aggressively positioned for an economic recovery and higher global energy prices.

Describe recent Portfolio activity.

•

During the annual period, we put cash to work as fund flows were positive, investing in our favorite sub-industries - coal & exploration and production. We also increased the Portfolio’s allocation to precious metals as we are positioned for a weaker US dollar. Meanwhile, we sold some service and land-based drilling companies as rig counts declined substantially and look unlikely to increase back to previous highs.

Describe Portfolio positioning at period end.

•

At period end, the Portfolio remains aggressively positioned from a sub-industry standpoint, leveraged to higher, long-term commodity prices. The Portfolio was overweight relative to the custom benchmark in coal producers, oil and natural gas exploration & production companies and metals/mining stocks.

Portfolio Information


Ten Largest Holdings	Percent of Long-Term Investments
Massey Energy Co.	6	%
Southwestern Energy Co.	6
CONSOL Energy, Inc.	5
PetroHawk Energy Corp.	5
Newfield Exploration Co.	4
Plains Exploration & Production Co.	4
Penn Virginia Corp.	4
Peabody Energy Corp.	4
Arch Coal, Inc.	3
Goodrich Petroleum Corp.	3

Industry Allocation	Percent of Long-Term Investments
Oil, Gas & Consumable Fuels	79	%
Metals & Mining	12
Energy Equipment & Services	7
Gas Utilities	1
Independent Power Producers & Energy Traders	1


10		ANNUAL REPORT		SEPTEMBER 30, 2009

Energy & Resources Portfolio

Total Return Based on a $10,000 Investment

LOGO

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

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

3	This unmanaged total return Index covers 500 industrial, utility, transportation and financial companies of the US markets (mostly NYSE issues) representing about 75% of NYSE market capitalization and 30% of NYSE issues. S&P 500 is a trademark of The McGraw-Hill Companies.

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

Performance Summary for the Period Ended September 30, 2009


			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	68.35	%	(7.64	)%	N/A		13.00	%	N/A		20.43	%	N/A
Investor A	68.06		(8.20	)	(13.02	)%	12.67		11.46	%	20.02		19.38	%
Investor B	67.39		(8.74	)	(11.18	)	11.85		11.72		19.37		19.37
Investor C	67.39		(8.68	)	(9.22	)	11.88		11.88		19.20		19.20
S&P 500 Index	34.02		(6.91	)	N/A		1.02		N/A		(0.15	)	N/A
Wilshire 5000 Modified Energy Equal Weighted Index	68.80		(8.17	)	N/A		12.07		N/A		16.66		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 Portfolio Performance” on page 12 for a detailed description of share classes, including any related sales charges and fees.

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

Past performance is not indicative of future results.

Expense Example


	Actual						Hypothetical⁷
	Beginning Account Value April 1, 2009		Ending Account Value September 30, 2009		Expenses Paid During the Period⁶		Beginning Account Value April 1, 2009		Ending Account Value September 30, 2009		Expenses Paid During the Period⁶
Institutional	$	1,000.00	$	1,683.50	$	6.53	$	1,000.00	$	1,020.21	$	4.91
Investor A	$	1,000.00	$	1,680.60	$	8.74	$	1,000.00	$	1,018.55	$	6.58
Investor B	$	1,000.00	$	1,673.90	$	13.88	$	1,000.00	$	1,014.69	$	10.45
Investor C	$	1,000.00	$	1,673.90	$	13.88	$	1,000.00	$	1,014.69	$	10.45

For each class of the Portfolio, expenses are equal to the annualized expense ratio for the class (0.97% for Institutional, 1.30% for Investor A, 2.07% Investor B and 2.07% for Investor C), multiplied by the average account value over the period, multiplied by 183/365 (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 13 for further information on how expenses were calculated.


		ANNUAL REPORT		SEPTEMBER 30, 2009		11

About Portfolio Performance

•

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

•

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

•

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

•

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

•

Class R Shares are not subject to any sales charge. Class R Shares are subject to a distribution fee of 0.25% per year and a service fee of 0.25% per year. Class R Shares are available only to certain retirement and other similar plans. Prior to October 2, 2006, Aurora Portfolio’s Class R Share performance results 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 portfolio distributions or the redemption of portfolio shares. Each Portfolio other than the BlackRock Capital Appreciation Portfolio may charge a 2% redemption fee for sales or exchanges of shares within 30 days of purchase or exchange. Performance data does not reflect this potential fee. Figures shown in each of the performance tables on the previous pages assume reinvestment of all dividends and distributions, if any, at net asset value on the payable date. Investment return and principal value of shares will fluctuate so that shares, when redeemed, may be worth more or less than their original cost.

Performance for the Aurora, Capital Appreciation and Energy & Resources Portfolios for the periods prior to January 31, 2005 is based on performance of certain former State Street Research mutual funds that reorganized with the Portfolios on that date.

The Portfolios’ investment advisor waived or reimbursed a portion of each Portfolio’s expenses. Without such waiver and reimbursement, a Portfolio’s performance would have been lower. BlackRock Advisors, LLC is under no obligation to waive or continue waiving its fees after February 1, 2010. Dividends paid to each class of shares will vary because of the different levels of service, distribution and transfer agency fees applicable to each class, which are deducted from the income available to be paid to shareholders.


12		ANNUAL REPORT		SEPTEMBER 30, 2009

Disclosure of Expenses

Shareholders of these Portfolios may incur the following charges: (a) expenses related to transactions, including sales charges, redemption fees and exchange fees; and (b) operating expenses, including advisory fees, service and distribution fees including 12b-1 fees, and other Portfolio expenses. The expense examples on the previous pages (which are based on a hypothetical investment of $1,000 invested on April 1, 2009 and held through September 30, 2009) are intended to assist shareholders both in calculating expenses based on an investment in a Portfolio and in comparing these expenses with similar costs of investing in other mutual funds.

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

The tables also provide information about hypothetical account values and hypothetical expenses based on a Portfolio’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 Portfolios and other funds, compare the 5% hypothetical example with the 5% hypothetical examples that appear in other funds’ shareholder reports.

The expenses shown in the tables are intended to highlight shareholders’ ongoing costs only and do not reflect any transactional expenses, such as sales charges, redemption fees or exchange fees. 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 Portfolios may invest in various derivative instruments, including foreign currency exchange contracts, as specified in Note 2 of the Notes to Financial Statements, which constitute forms of economic leverage. Such instruments are used to obtain exposure to a market without owning or taking physical custody of securities or to hedge market, equity and/or foreign currency exchange rate risks. Such derivative instruments involve risks, including the imperfect correlation between the value of a derivative instrument and the underlying asset, possible default of the other party to the transaction and illiquidity of the derivative instrument. The Portfolios’ ability to successfully use a derivative instrument depends on the investment advisor’s ability to accurately predict pertinent market movements, which cannot be assured. The use of derivative instruments may result in losses greater than if they had not been used, may require the Portfolios to sell or purchase portfolio securities at inopportune times or for distressed values, may limit the amount of appreciation the Portfolios can realize on an investment or may cause the Portfolios to hold a security that it might otherwise sell. The Portfolios’ investments in these instruments are discussed in detail in the Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		13


Schedule of Investments September 30, 2009		All-Cap Energy & Resources Portfolio
		(Percentages shown are based on Net Assets)


	Shares	Value
Common Stocks
Chemicals — 1.9%
Potash Corp. of Saskatchewan, Inc.(a)	139,000	$	12,557,260

Energy Equipment & Services — 22.3%
Cameron International Corp.(b)	219,330		8,295,061
Core Laboratories NV	153,350		15,808,851
ENSCO International, Inc.	107,538		4,574,667
FMC Technologies, Inc.(a)(b)	403,290		21,067,870
Halliburton Co.	521,700		14,148,504
Helmerich & Payne, Inc.	171,830		6,792,440
Noble Corp.	172,310		6,540,888
Oceaneering International, Inc.(b)	141,510		8,030,692
Pride International, Inc.(b)	237,580		7,231,935
Schlumberger Ltd.	204,480		12,187,008
Smith International, Inc.	169,340		4,860,058
Transocean Ltd.(b)	195,940		16,758,748
Unit Corp.(b)	119,440		4,926,900
Weatherford International Ltd.(b)	715,870		14,839,985

			146,063,607

Gas Utilities — 4.0%
EQT Corp.	362,010		15,421,626
Questar Corp.	280,230		10,525,439

			25,947,065

Metals & Mining — 10.4%
Agnico-Eagle Mines Ltd.	152,090		10,319,307
BHP Billiton Ltd. - ADR(a)	172,310		11,374,183
Eldorado Gold Corp.(b)	587,920		6,677,352
Goldcorp, Inc.	338,452		13,663,307
Silver Wheaton Corp.(b)	1,412,324		17,781,159
Teck Resources Ltd. - Class B(b)	311,390		8,579,839

			68,395,147

Oil, Gas & Consumable Fuels — 55.7%
Alpha Natural Resources, Inc.(b)	90,300		3,169,530
Apache Corp.	217,230		19,948,231
Arch Coal, Inc.(a)	343,600		7,603,868
Bill Barrett Corp.(b)	247,121		8,103,097
Cameco Corp.	79,070		2,198,146
Canadian Natural Resources Ltd.	178,540		11,996,103
CONSOL Energy, Inc.	543,530		24,518,638
Crescent Point Energy Corp.	381,770		12,908,116
Dana Petroleum Plc(b)	278,300		6,258,659
Denbury Resources, Inc.(b)	760,890		11,512,266
EnCana Corp.	241,360		13,904,749
EOG Resources, Inc.	210,070		17,542,946
Forest Oil Corp.(b)	329,290		6,444,205
Galleon Energy, Inc. - Class A(b)	741,894		4,344,721
Gasco Energy, Inc.(b)	1,525,000		747,250
Hess Corp.	131,070		7,007,002
Hugoton Royalty Trust	1		18
Massey Energy Co.	643,539		17,948,303
Newfield Exploration Co.(b)	266,600		11,346,496
Noble Energy, Inc.	179,100		11,813,436
Occidental Petroleum Corp.	265,150		20,787,760
Patriot Coal Corp.(a)(b)	64,116		754,004
Peabody Energy Corp.	421,790		15,699,024
PetroChina Co. Ltd. - ADR(a)	34,390		3,911,862
Petroleo Brasileiro SA - ADR(a)	263,140		12,078,126
Plains Exploration & Production Co.(b)	160,410		4,436,941
Premier Oil Plc(b)	111,137		2,153,243
Quicksilver Resources, Inc.(a)(b)	551,700		7,828,623
Range Resources Corp.	386,200		19,062,832
Southwestern Energy Co.(b)	444,600		18,975,528
StatoilHydro ASA	384,522		8,681,338
StatoilHydro ASA - ADR	162,240		3,656,890
Suncor Energy, Inc.	253,380		8,756,813
TriStar Oil & Gas Ltd.(b)	260,914		3,813,855
TriStar Oil & Gas Ltd. (acquired 7/28/05, cost $102,217)(b)(c)	6,000		87,704
Tullow Oil Plc	383,100		6,931,517
Whiting Petroleum Corp.(b)	285,530		16,440,817
XTO Energy, Inc.	264,771		10,940,337

			364,312,994

Total Long-Term Investments (Cost — $540,646,307) — 94.3%			617,276,073


	Shares/ Beneficial Interest
Short-Term Securities
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.22%(d)(e)	35,636,064		35,636,064
BlackRock Liquidity Series, LLC Money Market Series, 0.29%(d)(e)(f)	49,756,750		49,756,750

Total Short-Term Securities (Cost — $85,392,814) — 13.1%			85,392,814

*Total Investments (Cost — $626,039,121) — 107.4%**			702,668,887
Liabilities in Excess of Other Assets — (7.4)%			(48,225,249	)

Net Assets — 100.0%		$	654,443,638

*	The cost and unrealized appreciation (depreciation) of investments as of September 30, 2009, as computed for federal income tax purposes, were as follows:


Aggregate cost	$	628,584,620

Gross unrealized appreciation	$	139,178,895
Gross unrealized depreciation		(65,094,628	)

Net unrealized appreciation	$	74,084,267

Portfolio Abbreviations


To simplify the listings of portfolio holdings in each Portfolio’s Schedule of Investments, the names and descriptions of many of the securities have been abbreviated according to the following list.	ADR CAD USD	American Depositary Receipts Canadian Dollar US Dollar

See Notes to Financial Statements.


14		ANNUAL REPORT		SEPTEMBER 30, 2009


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

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

(b)	Non-income producing security.

(c)	Restricted security as to resale. As of report date the Portfolio held less than 0.1% of its net assets, with a current value of $87,704 and an original cost of $102,217 in these securities.

(d)	Investments in companies considered to be an affiliate of the Portfolio, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, were as follows:


Affiliate	Net Activity		Income
BlackRock Liquidity Funds, TempFund, Institutional Class	$	35,636,064	$	72,600
BlackRock Liquidity Series, LLC Money Market Series	$	7,958,750	$	101,511

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

(f)	Security purchased with the cash collateral from securities loans.

•

Fair Value Measurements – Various inputs are used in determining the fair value of investments, which are as follows:

•

Level 1 – price quotations in active markets/exchanges for identical assets and liabilities

•

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

•

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

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For information about the Portfolio’s policy regarding valuation of investments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.

The following table summarizes the inputs used as of September 30, 2009 in determining the fair valuation of the Portfolio’s investments:


	Valuation Inputs
	Level 1		Level 2		Level 3	Total
Investments in Securities:
Assets:
Long-Term Investments:
Chemicals	$	12,557,260		—	—	$	12,557,260
Energy Equipment & Services		146,063,607		—	—		146,063,607
Gas Utilities		25,947,065		—	—		25,947,065
Metals & Mining		68,395,147		—	—		68,395,147
Oil, Gas & Consumable Fuels		340,288,237	$	24,024,757	—		364,312,994
Short-Term Securities		35,636,064		49,756,750	—		85,392,814

Total	$	628,887,380	$	73,781,507	—	$	702,668,887

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		15


Schedule of Investments September 30, 2009		Aurora Portfolio
		(Percentages shown are based on Net Assets)


	Shares	Value
Common Stocks
Aerospace & Defense — 0.8%
Orbital Sciences Corp.(a)	252,677	$	3,782,575

Auto Components — 0.8%
Autoliv, Inc.	115,500		3,880,800

Automobiles — 0.9%
Thor Industries, Inc.	134,700		4,168,965

Capital Markets — 0.5%
Invesco Ltd.	94,900		2,159,924

Chemicals — 4.8%
Airgas, Inc.	49,300		2,384,641
Albemarle Corp.	162,200		5,612,120
FMC Corp.	152,800		8,595,000
Olin Corp.	373,200		6,508,608

			23,100,369

Commercial Banks — 6.4%
CVB Financial Corp.(b)	676,100		5,131,599
Glacier Bancorp, Inc.	132,703		1,982,583
KeyCorp	1,230,900		8,000,850
Sterling Bancshares, Inc.	962,600		7,036,606
TCF Financial Corp.(b)	510,200		6,653,008
United Bankshares, Inc.	103,129		2,020,297

			30,824,943

Commercial Services & Supplies — 2.2%
The Brink’s Co.	74,151		1,995,403
The GEO Group, Inc.(a)	410,700		8,283,819

			10,279,222

Communications Equipment — 2.7%
ADTRAN, Inc.	202,800		4,978,740
Arris Group, Inc.(a)	236,300		3,074,263
Polycom, Inc.(a)	188,600		5,045,050

			13,098,053

Construction & Engineering — 1.7%
Granite Construction, Inc.	126,500		3,913,910
KBR, Inc.	175,300		4,082,737

			7,996,647

Diversified Financial Services — 3.5%
NYSE Euronext	144,500		4,174,605
PHH Corp.(a)	633,116		12,561,021

			16,735,626

Electric Utilities — 0.7%
Unisource Energy Corp.	100,600		3,093,450

Electrical Equipment — 2.5%
AMETEK, Inc.	174,800		6,102,268
Regal-Beloit Corp.	127,700		5,837,167

			11,939,435

Electronic Equipment, Instruments & Components — 4.4%
Amphenol Corp. - Class A	142,300		5,361,864
Anixter International, Inc.(a)	167,900		6,734,469
Tech Data Corp.(a)	214,800		8,937,828

			21,034,161

Energy Equipment & Services — 2.0%
Core Laboratories NV	36,000		3,711,240
Oil States International, Inc.(a)	172,500		6,059,925

			9,771,165

Food & Staples Retailing — 1.8%
BJ’s Wholesale Club, Inc.(a)	137,900		4,994,738
Winn-Dixie Stores, Inc.(a)	270,700		3,551,584

			8,546,322

Food Products — 1.5%
Del Monte Foods Co.	221,000		2,559,180
TreeHouse Foods, Inc.(a)(b)	131,692		4,697,454

			7,256,634

Health Care Equipment & Supplies — 0.9%
The Cooper Cos., Inc.	146,100		4,343,553

Health Care Providers & Services — 5.9%
Amedisys, Inc.(a)	85,600		3,734,728
CIGNA Corp.	165,700		4,654,513
Coventry Health Care, Inc.(a)	124,200		2,479,032
LifePoint Hospitals, Inc.(a)	227,600		6,158,856
Lincare Holdings, Inc.(a)	150,900		4,715,625
MEDNAX, Inc.(a)	37,100		2,037,532
Psychiatric Solutions, Inc.(a)(b)	166,600		4,458,216

			28,238,502

Hotels, Restaurants & Leisure — 4.2%
Darden Restaurants, Inc.	67,565		2,305,994
Penn National Gaming, Inc.(a)	107,100		2,962,386
Scientific Games Corp. - Class A(a)	466,629		7,386,737
Sonic Corp.(a)	278,200		3,076,892
Wendy’s/Arby’s Group, Inc. - Class A	920,800		4,355,384

			20,087,393

Household Durables — 3.4%
Jarden Corp.	208,600		5,855,402
Newell Rubbermaid, Inc.	362,800		5,692,332
Snap-On, Inc.	129,500		4,501,420

			16,049,154

Industrial Conglomerates — 1.0%
Textron, Inc.	254,994		4,839,786

Insurance — 4.2%
The Hanover Insurance Group, Inc.	238,730		9,866,711
Navigators Group, Inc.(a)	64,300		3,536,500
Platinum Underwriters Holdings Ltd.	71,277		2,554,568
W.R. Berkley Corp.	171,900		4,345,632

			20,303,411

Internet Software & Services — 1.6%
SkillSoft Plc - ADR(a)	790,413		7,587,965

IT Services — 2.0%
Lender Processing Services, Inc.	252,100		9,622,657

Leisure Equipment & Products — 2.0%
Hasbro, Inc.	349,000		9,684,750

Machinery — 4.8%
Donaldson Co., Inc.	75,000		2,597,250
Kennametal, Inc.	162,694		4,003,899
Mueller Water Products, Inc. - Class A	414,200		2,269,816
Pentair, Inc.	249,600		7,368,192
Terex Corp.(a)	319,100		6,614,943

			22,854,100

Marine — 1.0%
Kirby Corp.(a)	135,400		4,985,428

See Notes to Financial Statements.


16		ANNUAL REPORT		SEPTEMBER 30, 2009


Schedule of Investments (continued)		Aurora Portfolio
		(Percentages shown are based on Net Assets)


	Shares	Value
Common Stocks
Media — 3.1%
Arbitron, Inc.	376,500	$	7,816,140
Cablevision Systems Corp. - Class A	117,200		2,783,500
Regal Entertainment Group - Class A	358,600		4,417,952

			15,017,592

Metals & Mining — 4.0%
Compass Minerals International, Inc.	73,700		4,541,394
Horsehead Holding Corp.(a)	426,400		4,997,408
Steel Dynamics, Inc.	331,300		5,082,142
Thompson Creek Metals Co., Inc.(a)(b)	354,900		4,283,643

			18,904,587

Multiline Retail — 0.6%
Saks, Inc.(a)	383,900		2,618,198

Multi-Utilities — 1.1%
CMS Energy Corp.	374,100		5,012,940

Oil, Gas & Consumable Fuels — 4.9%
Atlas Energy, Inc.	324,000		8,770,680
James River Coal Co.(a)	325,200		6,214,572
Newfield Exploration Co.(a)	145,100		6,175,456
Whiting Petroleum Corp.(a)	36,600		2,107,428

			23,268,136

Professional Services — 0.3%
FTI Consulting, Inc.(a)	35,800		1,525,438

Real Estate Investment Trusts (REITs) — 4.2%
Alexandria Real Estate Equities, Inc.(b)	46,500		2,527,275
Chimera Investment Corp.	635,000		2,425,700
DCT Industrial Trust, Inc.	640		3,270
MFA Financial, Inc.	1,304,600		10,384,616
Nationwide Health Properties, Inc.	157,000		4,865,430

			20,206,291

Road & Rail — 0.9%
Genesee & Wyoming, Inc. - Class A(a)	147,000		4,457,040

Semiconductors & Semiconductor Equipment — 5.4%
Analog Devices, Inc.	70,200		1,936,116
Fairchild Semiconductor International, Inc.(a)	876,500		8,966,595
Intersil Corp. - Class A	298,200		4,565,442
ON Semiconductor Corp.(a)	686,800		5,666,100
Verigy Ltd.(a)	414,500		4,816,490

			25,950,743

Software — 1.5%
Lawson Software, Inc.(a)	625,275		3,901,716
Novell, Inc.(a)	696,392		3,140,728

			7,042,444

Specialty Retail — 3.9%
The Children’s Place Retail Stores, Inc.(a)	134,200		4,020,632
Guess?, Inc.	198,400		7,348,736
O’Reilly Automotive, Inc.(a)	66,900		2,417,766
RadioShack Corp.	303,800		5,033,966

			18,821,100

Textiles, Apparel & Luxury Goods — 0.8%
Iconix Brand Group, Inc.(a)	306,900		3,827,043

Water Utilities — 1.0%
American Water Works Co., Inc.	244,800		4,881,312

Total Long-Term Investments (Cost — $423,313,833) — 99.9%			477,797,854


	Shares/ Beneficial Interest
Short-Term Securities
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.22%(c)(d)	8,513,191		8,513,191
BlackRock Liquidity Series, LLC Money Market Series, 0.29%(c)(d)(e)	28,603,600		28,603,600

Total Short-Term Securities (Cost — $37,116,791) — 7.7%			37,116,791

*Total Investments (Cost — $460,430,624) — 107.6%**			514,914,645
Liabilities in Excess of Other Assets — (7.6)%			(36,469,769	)

Net Assets — 100.0%		$	478,444,876

*	The cost and unrealized appreciation (depreciation) of investments as of September 30, 2009, as computed for federal income tax purposes, were as follows:


Aggregate cost	$	467,342,418

Gross unrealized appreciation	$	54,751,851
Gross unrealized depreciation		(7,179,624	)

Net unrealized appreciation	$	47,572,227

(a)	Non-income producing security.

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

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


Affiliate	Net Activity			Income
BlackRock Liquidity Funds, TempFund, Institutional Class	$	8,513,191		$	48,148
BlackRock Liquidity Series, LLC Money Market Series	$	(27,751,800	)	$	209,506

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

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

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		17


Schedule of Investments (concluded)		Aurora Portfolio

•

Fair Value Measurements – Various inputs are used in determining the fair value of investments, which are as follows:

•

Level 1 – price quotations in active markets/exchanges for identical assets and liabilities

•

The following table summarizes the inputs used as of September 30, 2009 in determining the fair valuation of the Portfolio’s investments:


Valuation Inputs	Investments in Securities
	Assets
Level 1 :
Long-Term Investments¹	$	477,797,854
Short-Term Securities		8,513,191

Total Level 1		486,311,045

Level 2 – Short-Term Securities		28,603,600
Level 3		—

Total	$	514,914,645

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

See Notes to Financial Statements.


18		ANNUAL REPORT		SEPTEMBER 30, 2009


Schedule of Investments September 30, 2009		Capital Appreciation Portfolio
		(Percentages shown are based on Net Assets)


	Shares	Value
Common Stocks
Air Freight & Logistics — 3.0%
C.H. Robinson Worldwide, Inc.	73,300	$	4,233,075
United Parcel Service, Inc. - Class B	137,400		7,758,978

			11,992,053

Airlines — 1.5%
Delta Air Lines, Inc.(a)	658,500		5,900,160

Beverages — 3.4%
The Coca-Cola Co.	184,154		9,889,070
PepsiCo, Inc.	61,424		3,603,132

			13,492,202

Biotechnology — 5.1%
Amgen, Inc.(a)	137,900		8,305,717
Celgene Corp.(a)	105,100		5,875,090
Genzyme Corp.(a)	102,800		5,831,844

			20,012,651

Capital Markets — 1.4%
The Goldman Sachs Group, Inc.	30,600		5,641,110

Chemicals — 0.8%
Ecolab, Inc.	71,900		3,323,937

Commercial Banks — 0.5%
Wells Fargo & Co.	70,000		1,972,600

Communications Equipment — 7.5%
Cisco Systems, Inc.(a)	518,921		12,215,400
Palm, Inc.(a)(b)	178,700		3,114,741
QUALCOMM, Inc.	321,023		14,439,615

			29,769,756

Computers & Peripherals — 9.6%
Apple, Inc.(a)	102,918		19,077,910
EMC Corp.(a)	211,300		3,600,552
Hewlett-Packard Co.	164,000		7,742,440
International Business Machines Corp.	29,100		3,480,651
NetApp, Inc.(a)	25,000		667,000
Seagate Technology	222,100		3,378,141

			37,946,694

Diversified Financial Services — 2.3%
CME Group, Inc.	15,620		4,813,928
JPMorgan Chase & Co.	93,200		4,084,024

			8,897,952

Energy Equipment & Services — 1.5%
Schlumberger Ltd.	39,317		2,343,293
Transocean Ltd.(a)	44,005		3,763,748

			6,107,041

Food & Staples Retailing — 2.1%
Wal-Mart Stores, Inc.	167,386		8,216,979

Health Care Equipment & Supplies — 3.7%
Boston Scientific Corp.(a)(b)	739,800		7,834,482
Zimmer Holdings, Inc.(a)	124,300		6,643,835

			14,478,317

Health Care Providers & Services — 2.1%
Medco Health Solutions, Inc.(a)	104,622		5,786,643
UnitedHealth Group, Inc.	51,600		1,292,064
WellPoint, Inc.(a)	29,900		1,416,064

			8,494,771

Health Care Technology — 1.0%
Cerner Corp.(a)(b)	53,700		4,016,760

Hotels, Restaurants & Leisure — 1.8%
Las Vegas Sands Corp.(a)(b)	99,400		1,673,896
Starbucks Corp.(a)	147,000		3,035,550
Starwood Hotels & Resorts Worldwide, Inc.	76,000		2,510,280

			7,219,726

Household Products — 3.0%
The Procter & Gamble Co.	206,386		11,953,877

Industrial Conglomerates — 2.1%
3M Co.	112,600		8,309,880

Insurance — 1.1%
MetLife, Inc.	109,600		4,172,472

Internet & Catalog Retail — 1.6%
Amazon.com, Inc.(a)(b)	68,940		6,436,238

Internet Software & Services — 4.6%
Baidu, Inc. - ADR(a)	7,100		2,776,455
Google, Inc. - Class A(a)	31,054		15,398,126

			18,174,581

Life Sciences Tools & Services — 0.7%
Covance, Inc.(a)	50,200		2,718,330

Machinery — 4.4%
Cummins, Inc.	95,200		4,265,912
Danaher Corp.	141,322		9,513,797
PACCAR, Inc.	100,300		3,782,313

			17,562,022

Media — 1.1%
CBS Corp. - Class B	354,500		4,271,725

Metals & Mining — 2.5%
Agnico-Eagle Mines Ltd.	59,400		4,030,290
Freeport-McMoRan Copper & Gold, Inc.	47,737		3,275,235
United States Steel Corp.	58,900		2,613,393

			9,918,918

Multiline Retail — 3.3%
JC Penney Co., Inc.	103,000		3,476,250
Kohl’s Corp.(a)	167,668		9,565,459

			13,041,709

Oil, Gas & Consumable Fuels — 3.0%
Exxon Mobil Corp.	58,000		3,979,380
PetroHawk Energy Corp.(a)	220,000		5,326,200
Range Resources Corp.	53,100		2,621,016

			11,926,596

Personal Products — 1.3%
Avon Products, Inc.	147,500		5,009,100

Pharmaceuticals — 4.3%
Abbott Laboratories	173,000		8,558,310
Pfizer, Inc.	271,400		4,491,670
Teva Pharmaceutical Industries Ltd. - ADR	76,600		3,872,896

			16,922,876

Professional Services — 0.5%
Manpower, Inc.	31,500		1,786,365

Semiconductors & Semiconductor Equipment — 5.1%
Broadcom Corp. - Class A(a)	183,727		5,638,581

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		19


Schedule of Investments (concluded)		Capital Appreciation Portfolio
		(Percentages shown are based on Net Assets)


	Shares	Value
Common Stocks
Semiconductors & Semiconductor Equipment (concluded)
Lam Research Corp.(a)	133,217	$	4,550,693
Micron Technology, Inc.(a)	331,200		2,715,840
NVIDIA Corp.(a)	221,400		3,327,642
PMC-Sierra, Inc.(a)	428,357		4,095,093

			20,327,849

Software — 7.6%
Activision Blizzard, Inc.(a)	224,100		2,776,599
Check Point Software Technologies(a)	176,900		5,015,115
Microsoft Corp.	587,242		15,203,695
Oracle Corp.	92,310		1,923,740
Salesforce.com, Inc.(a)	87,279		4,968,794

			29,887,943

Specialty Retail — 2.9%
CarMax, Inc.(a)	170,300		3,559,270
The Home Depot, Inc.	141,100		3,758,904
Ross Stores, Inc.	82,870		3,958,700

			11,276,874

Tobacco — 1.4%
Philip Morris International, Inc.	117,140		5,709,404

Wireless Telecommunication Services — 1.0%
American Tower Corp. - Class A(a)	113,638		4,136,423

Total Long-Term Investments (Cost — $322,161,411) — 98.8%			391,025,891


	Shares/ Beneficial Interest
Short-Term Securities
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.22%(c)(d)	8,129,215		8,129,215
BlackRock Liquidity Series, LLC Money Market Series, 0.29%(c)(d)(e)	17,936,500		17,936,500

Total Short-Term Securities (Cost — $26,065,715) — 6.6%			26,065,715

*Total Investments (Cost — $348,227,126) — 105.4%**			417,091,606
Liabilities in Excess of Other Assets — (5.4)%			(21,346,977	)

Net Assets — 100.0%		$	395,744,629

*	The cost and unrealized appreciation (depreciation) of investments as of September 30, 2009, as computed for federal income tax purposes, were as follows:


Aggregate cost	$	354,497,942

Gross unrealized appreciation	$	63,553,986
Gross unrealized depreciation		(960,322	)

Net unrealized appreciation	$	62,593,664

(a)	Non-income producing security.

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

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


Affiliate	Net Activity		Income
BlackRock Liquidity Funds, TempFund, Institutional Class	$	8,129,215	$	16,066
BlackRock Liquidity Series, LLC Money Market Series	$	8,176,150	$	9,190

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

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

•

Fair Value Measurements – Various inputs are used in determining the fair value of investments, which are as follows:

•

Level 1 – price quotations in active markets/exchanges for identical assets and liabilities

•

The following table summarizes the inputs used as of September 30, 2009 in determining the fair valuation of the Portfolio’s investments:


Valuation Inputs	Investments in Securities
	Assets
Level 1 :
Long-Term Investments¹	$	391,025,891
Short-Term Securities		8,129,215

Total Level 1		399,155,106

Level 2 – Short-Term Securities		17,936,500
Level 3		—

Total	$	417,091,606

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

See Notes to Financial Statements.


20		ANNUAL REPORT		SEPTEMBER 30, 2009


Schedule of Investments September 30, 2009		Energy & Resources Portfolio
		(Percentages shown are based on Net Assets)


	Shares	Value
Common Stocks
Auto Components — 0.4%
Westport Innovations, Inc.(a)	221,086	$	2,808,355
Westport Innovations, Inc. (acquired 9/15/04, cost $258,509)(a)(b)	53,057		673,964

			3,482,319

Capital Markets — 0.0%
Treasure Island Royalty Trust(a)	366,922		135,761

Commercial Services & Supplies — 0.3%
Alexco Resource Corp.(a)	967,683		2,508,385
Republic Resources, Inc.(a)	28,750		—

			2,508,385

Diversified Financial Services — 0.0%
Quest Capital Corp.	61,000		64,951

Electrical Equipment — 0.0%
ITM Power Plc(a)	525,200		218,827
Ocean Power Technologies, Inc.(a)	63,900		308,637

			527,464

Electronic Equipment, Instruments & Components — 0.1%
Opsens, Inc.(a)	1,000,000		653,809

Energy Equipment & Services — 6.7%
Baker Hughes, Inc.(c)	300,000		12,798,000
Complete Production Services, Inc.(a)	34,400		388,720
ENSCO International, Inc.	94,100		4,003,014
Halliburton Co.	490,726		13,308,489
Hercules Offshore, Inc.(a)	68,900		338,299
HSE Integrated Ltd.(a)	28,238		17,144
Key Energy Services, Inc.(a)	676,000		5,881,200
Leader Energy Services Ltd.(a)	151,368		12,017
National Oilwell Varco, Inc.(a)	43,270		1,866,235
Smith International, Inc.	200,000		5,740,000
Technicoil Corp.(a)	547,800		189,311
Technicoil Corp. (acquired 6/15/04, cost $548,935)(a)(b)	753,100		260,260
TransCanada Corp.	40,700		1,268,537
Weatherford International Ltd.(a)	754,396		15,638,629
Xtreme Coil Drilling Corp.(a)	230,900		1,207,715

			62,917,570

Gas Utilities — 1.2%
EQT Corp.	256,500		10,926,900

Independent Power Producers & Energy Traders — 0.6%
Calpine Corp.(a)	478,900		5,516,928
Dynegy, Inc. - Class A(a)	1,560		3,978

			5,520,906

Machinery — 0.0%
Railpower Technologies Corp.(a)	360,600		—

Metals & Mining — 11.1%
Archipelago Resources Plc(a)	2,247,400		915,884
Baja Mining Corp.(a)	3,654,800		2,321,267
BHP Billiton Ltd. - ADR(c)	300,000		19,803,000
Corriente Resources, Inc. - Class A(a)	982,800		6,223,681
Crosshair Exploration & Mining Corp.(a)	349,800		84,027
Crosshair Exploration & Mining Corp. (acquired 4/01/08, cost $248,613)(a)(b)	206,800		49,254
Eldorado Gold Corp.(a)	368,965		4,190,552
Erdene Gold, Inc. (acquired 4/10/07, cost $959,233)(a)(b)	1,100,000		282,539
European Goldfields Ltd.(a)	561,400		2,611,285
Freeport-McMoRan Copper & Gold, Inc.	300,000		20,583,000
Fronteer Development Group, Inc.(a)	500,000		2,157,568
Gold Reserve, Inc.(a)	123,948		107,835
Goldcorp, Inc.	4,600		184,662
Golden Star Resources Ltd.(a)(c)	789,408		2,691,206
Grande Cache Coal Corp.(a)	306,300		1,135,769
Helio Resource Corp.(a)	1,500,000		840,611
Kilo Goldmines Ltd.(a)	20,000		8,219
Kinross Gold Corp.	111,175		2,412,497
Linear Gold Corp.(a)	1,000,000		2,232,289
MAG Silver Corp.(a)	964,000		5,609,415
Minefinders Corp. Ltd.(a)(c)	250,000		2,435,000
Nevsun Resources Ltd.(a)	1,054,800		2,157,579
Northern Star Mining Corp.(a)	1,633,500		686,569
Oromin Explorations Ltd.(a)	1,850,000		1,486,013
Polymet Mining Corp.(a)	2,250,000		5,926,306
Q2 Gold Resources, Inc. (acquired 6/18/07, cost $0)(a)(b)	327,600		—
Rainy River Resources Ltd.(a)	699,500		1,470,018
Romarco Minerals, Inc.(a)	223,000		229,113
Selkirk Metals Corp.(a)	2,000,000		270,863
Sunridge Gold Corp.(a)	3,325,559		2,081,095
Vale SA - ADR(c)	300,000		6,939,000
Virginia Mines, Inc.(a)	216,350		1,012,388
West Timmins Mining, Inc.(a)	1,773,428		3,428,754
Western Canadian Coal Corp.(a)	360,400		972,826
X-Cal Resources Ltd.(a)	1,755,500		245,949

			103,786,033

Oil, Gas & Consumable Fuels — 77.0%
Advantage Oil & Gas Ltd. (acquired 6/26/09, cost $5,214,217)(a)(b)	1,000,000		6,363,424
Alpha Natural Resources, Inc.(a)	399,128		14,009,393
American Oil & Gas, Inc.(a)	224,088		441,453
Approach Resources, Inc.(a)	93,700		850,796
Arch Coal, Inc.(c)	1,324,400		29,308,972
Argosy Energy, Inc.(a)	3,422		4,091
Atlas Energy, Inc.	500,000		13,535,000
ATP Oil & Gas Corp.(a)	168,800		3,019,832
Baytex Energy Trust	421,948		9,300,867
Canadian Superior Energy, Inc.(a)	6,230,300		5,420,361
Canext Energy Ltd.(a)	207,829		79,587
Chesapeake Energy Corp.(c)	800,000		22,720,000
Cinch Energy Corp. (acquired 6/07/04 through 7/07/05, cost $1,418,282)(a)(b)	901,980		825,611
Clayton Williams Energy, Inc.(a)	319,421		9,620,961
Compton Petroleum Corp. (acquired 9/24/04, cost $727,951)(a)(b)	104,300		135,410
Comstock Resources, Inc.(a)	203,300		8,148,264
CONSOL Energy, Inc.	1,097,600		49,512,736
Continental Resources, Inc.(a)(c)	135,000		5,287,950
Corridor Resources, Inc.(a)	646,600		1,974,858
Crescent Point Energy Corp.	102,001		3,448,780
Crew Energy, Inc.(a)	880,537		7,114,039
Crew Energy, Inc. (acquired 6/24/98 through 10/19/98, cost $184,988)(a)(b)	191,300		1,545,551
Daylight Resources Trust	746,361		5,925,436
Delphi Energy Corp.(a)	955,200		1,257,957
Denbury Resources, Inc.(a)	595,200		9,005,376
Ember Resources, Inc.(a)	109,690		89,133
Energy XXI Bermuda Ltd.	553,900		858,545
EXCO Resources, Inc.(a)	1,268,800		23,713,872
Fairborne Energy Ltd.(a)	712,958		3,003,260
Forest Oil Corp.(a)	100,000		1,957,000

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		21


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


	Shares	Value
Common Stocks
Oil, Gas & Consumable Fuels (concluded)
Galleon Energy, Inc. - Class A(a)	2,160,382	$	12,651,749
Galleon Energy, Inc. - Class A (acquired 2/09/04, cost $346,401)(a)(b)	173,600		1,016,646
Gasco Energy, Inc.(a)	927,600		454,524
Gastar Exploration Ltd.(a)	211,060		1,017,309
GMX Resources, Inc.(a)(c)	530,789		8,338,695
Goodrich Petroleum Corp.(a)(c)	1,009,700		26,060,357
Heritage Oil Plc(a)	2,523,000		19,899,536
Highpine Oil & Gas Ltd.(a)	323,650		2,155,349
Iteration Energy Ltd.(a)	226,744		254,138
James River Coal Co.(a)	131,100		2,505,321
Longview Energy Co. (acquired 8/13/04, cost $1,281,000)(a)(b)	85,400		768,600
Lynden Energy Corp.(a)	200,400		59,896
Marathon Oil Corp.	6,447		205,659
Massey Energy Co.	1,944,840		54,241,588
Matador Resources Co. (acquired 10/14/03 through 4/13/06, cost $2,957,155)(a)(b)	513,393		6,099,109
MGM Energy Corp.(a)	15,084		1,902
Midnight Oil Exploration Ltd.(a)	550,300		513,987
Midnight Oil Exploration Ltd. (acquired 9/29/05, cost $1,971,489)(a)(b)	577,400		539,299
NAL Oil & Gas Trust	7,526		89,273
Newfield Exploration Co.(a)	959,310		40,828,234
Niko Resources Ltd. (acquired 5/02/03 through 11/10/03, cost $689,948)(a)(b)	39,000		3,050,717
Open Range Energy Corp.(a)	48,061		83,046
Pacific Rodera Energy, Inc.(a)	990,200		240,463
Pacific Rubiales Energy Corp.(a)	678,950		8,408,796
Pan Orient Energy Corp.(a)	1,167,100		5,232,410
Parallel Petroleum Corp.(a)	107,032		339,291
Paramount Resources Ltd. - Class A(a)	377,100		5,085,998
Patriot Coal Corp.(a)(c)	377,346		4,437,589
Peabody Energy Corp.	895,436		33,328,128
Pengrowth Energy Trust	25,486		269,702
Penn Virginia Corp.	1,608,300		36,846,153
Penn West Energy Trust	153,333		2,431,789
PetroHawk Energy Corp.(a)	1,856,500		44,945,865
Petrolifera Petroleum Ltd.(a)	892,415		900,208
Pioneer Natural Resources Co.(c)	209,200		7,591,868
Plains Exploration & Production Co.(a)	1,355,525		37,493,822
ProspEx Resources Ltd.(a)	1,504,120		1,657,742
Quest Resource Corp.(a)	112,000		66,080
Quicksilver Resources, Inc.(a)(c)	364,400		5,170,836
Range Resources Corp.	200,000		9,872,000
Ship Finance International Ltd.	27		332
Southwestern Energy Co.(a)	1,182,300		50,460,564
Stone Energy Corp.(a)	27,274		444,839
Tag Oil Ltd.(a)	39,600		20,343
Trafalgar Energy Ltd.(a)	21,717		34,888
Triex Minerals Corp.(a)	468,150		83,079
Trilogy Energy Trust	152,791		1,093,148
TriStar Oil & Gas Ltd.(a)	767,337		11,216,386
TriStar Oil & Gas Ltd. (acquired 12/06/02, cost $103,279)(a)(b)	34,400		502,835
True Energy Trust	188,332		188,218
Tullow Oil Plc	544,198		9,846,300
Ultra Petroleum Corp.(a)	278,100		13,615,776
Uranium One, Inc.(a)	1,005,765		2,414,249
UTS Energy Corp.(a)	1,349,400		2,180,416
Vero Energy, Inc.(a)	55,374		209,983
Vero Energy, Inc. (acquired 11/28/05, cost $68,972)(a)(b)	36,268		137,532
Warren Resources, Inc.(a)	222,282		657,955
West Energy Ltd.(a)	1,199,235		2,901,059
WesternZagros Resources Ltd.(a)	76,800		154,941

			719,795,032

Total Common Stocks — 97.4%			910,319,130

Warrants — 0.0%
Crosshair Exploration & Mining Corp. (issued/exercisable 4/04/08, 1 share for 1 warrant, expiring 10/04/09, strike price 1.80 CAD) (acquired 4/04/08, cost $2,005)(a)(b)	206,800		2

Total Long-Term Investments (Cost — $742,655,694) — 97.4%			910,319,132


	Shares/ Beneficial Interest
Short-Term Securities
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.22%(d)(e)	26,842,789		26,842,789
BlackRock Liquidity Series, LLC Money Market Series, 0.29%(d)(e)(f)	95,162,500		95,162,500

Total Short-Term Securities (Cost — $122,005,289) — 13.1%			122,005,289

*Total Investments (Cost — $864,660,983) — 110.5%**			1,032,324,421
Liabilities in Excess of Other Assets — (10.5)%			(97,925,846	)

Net Assets — 100.0%		$	934,398,575

*	The cost and unrealized appreciation (depreciation) of investments as of September 30, 2009, as computed for federal income tax purposes, were as follows:


Aggregate cost	$	888,215,154

Gross unrealized appreciation	$	267,991,112
Gross unrealized depreciation		(123,881,845	)

Net unrealized appreciation	$	144,109,267

(a)	Non-income producing security.

(b)	Restricted security as to resale. As of report date the Portfolio held 2.4% of its net assets, with a current value of $22,250,753 and an original cost of $16,980,977 in these securities.

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

(d)	Investments in companies considered to be an affiliate of the Portfolio, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, were as follows:


Affiliate	Net Activity		Income
BlackRock Liquidity Funds, TempFund, Institutional Class	$	26,842,789	$	128,134
BlackRock Liquidity Series, LLC Money Market Series	$	30,696,300	$	262,063

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

(f)	Security purchased with the cash collateral from securities loans.

See Notes to Financial Statements.


22		ANNUAL REPORT		SEPTEMBER 30, 2009


Schedule of Investments (concluded)		Energy & Resources Portfolio

•

Foreign currency exchange contracts as of September 30, 2009 were as follows:


Currency Purchased	Currency Sold		Counterparty	Settlement Date	Unrealized Appreciation
CAD 138,000	USD	128,492	Citibank, N.A.	10/02/09	$	402

•

Fair Value Measurements – Various inputs are used in determining the fair value of investments, which are as follows:

•

Level 1 – price quotations in active markets/exchanges for identical assets and liabilities

•

The following table summarizes the inputs used as of September 30, 2009 in determining the fair valuation of the Portfolio’s investments:


	Valuation Inputs
	Level 1		Level 2		Level 3		Total
Investments in Securities:
Assets:
Long-Term Investments:
Auto Components	$	3,482,319		—		—	$	3,482,319
Capital Markets		135,761		—		—		135,761
Commercial Services & Supplies		2,508,385		—		—		2,508,385
Diversified Financial Services		64,951		—		—		64,951
Electrical Equipment		308,637	$	218,827		—		527,464
Electrical Equipment, Instruments & Components		653,809		—		—		653,809
Energy Equipment & Services		62,917,570		—		—		62,917,570
Gas Utilities		10,926,900		—		—		10,926,900
Independent Power Producers & Energy Traders		5,520,906		—		—		5,520,906
Machinery		—		—		—		—
Metals & Mining	$	103,786,033		—		—	$	103,786,033
Oil, Gas & Consumable Fuels		676,742,335	$	29,821,565	$	13,231,132		719,795,032
Warrants		—		—		2		2
Short-Term Securities		26,842,789		95,162,500		—		122,005,289

Other Financial Instruments¹:
Assets:		—		402		—		402

Total	$	893,890,395	$	125,203,294	$	13,231,134	$	1,032,324,823

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

The following table is a reconciliation of Level 3 investments for the period ended September 30, 2009:


	Long-Term Investments
	Commercial Services & Supplies	Machinery	Oil, Gas & Consumable Fuels			Warrants			Total
Balance, as of September 30, 2008	—	—	$	9,731,750		$	1,282		$	9,733,032
Realized gain/loss	—	—		—			—			—
Change in unrealized appreciation/ depreciation²	—	—		(1,714,835	)		(1,280	)		(1,716,115	)
Net purchases/sales	—	—		5,214,217			—			5,214,217
Transfers in/out of Level 3	—	—		—			—			—

Balance, as of September 30, 2009	—	—	$	13,231,132		$	2		$	13,231,134

²	Represents the change in unrealized appreciation/depreciation on securities still held at September 30, 2009 which is included in the related net change in unrealized appreciation/depreciation on the Statements of Operations.

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		23

Statements of Assets and Liabilities


September 30, 2009	All-Cap Energy & Resources Portfolio			Aurora Portfolio			Capital Appreciation Portfolio			Energy & Resources Portfolio
Assets
Investments at value - unaffiliated^1,2	$	617,276,073		$	477,797,854		$	391,025,891		$	910,319,132
Investments at value - affiliated³		85,392,814			37,116,791			26,065,715			122,005,289
Foreign currency at value⁴		2,938			98			—			795
Unrealized appreciation on foreign currency exchange contracts		—			—			—			402
Investments sold receivable		—			2,049,788			1,708,146			—
Securities lending income receivable - affiliated		13,868			8,776			2,519			30,926
Capital shares sold receivable		2,840,159			181,238			1,027,370			2,353,643
Dividends and reclaims receivable		434,951			319,462			225,676			258,251
Receivable from advisor		—			—			9,580			—
Dividends receivable - affiliated		6,730			1,659			1,736			4,424
Prepaid expenses		66,698			59,408			19,155			79,747

Total assets		706,034,231			517,535,074			420,085,788			1,035,052,609

Liabilities
Collateral at value - securities loaned		49,756,750			28,603,600			17,936,500			95,162,500
Investments purchased payable		—			4,052,550			5,737,397			129,127
Capital shares redeemed payable		842,752			5,169,632			236,548			3,854,529
Investment advisory fees payable		472,634			459,083			175,808			685,222
Other affiliates payable		261,589			509,782			127,424			449,396
Service and distribution fees payable		158,293			197,432			64,564			257,249
Officer’s and Trustees’ fees payable		6,530			8,635			5,185			6,584
Other accrued expenses payable		92,045			89,484			57,733			109,427

Total liabilities		51,590,593			39,090,198			24,341,159			100,654,034

Net Assets	$	654,443,638		$	478,444,876		$	395,744,629		$	934,398,575

Net Assets Consist of
Paid-in capital	$	738,934,279		$	764,093,186		$	431,217,028		$	965,216,030
Undistributed (accumulated) net investment income (loss)		3,610,645			5,020,885			1,003,542			(15,362,311	)
Accumulated net realized loss		(164,732,478	)		(345,153,216	)		(105,340,421	)		(183,119,825	)
Net unrealized appreciation/depreciation		76,631,192			54,484,021			68,864,480			167,664,681

Net Assets	$	654,443,638		$	478,444,876		$	395,744,629		$	934,398,575

¹Investments at cost - unaffiliated	$	540,646,307		$	423,313,833		$	322,161,411		$	742,655,694
²Securities loaned at value	$	48,244,547		$	27,670,830		$	17,488,360		$	93,135,951
³Investments at cost - affiliated	$	85,392,814		$	37,116,791		$	26,065,715		$	122,005,289
⁴Foreign currency at cost	$	2,803		$	98			—		$	612

See Notes to Financial Statements.


24		ANNUAL REPORT		SEPTEMBER 30, 2009

Statements of Assets and Liabilities (concluded)


September 30, 2009	All-Cap Energy & Resources Portfolio		Aurora Portfolio		Capital Appreciation Portfolio		Energy & Resources Portfolio
Net Asset Value
Institutional
Net assets	$	328,433,653	$	47,963,777	$	192,614,118	$	134,186,943
Shares outstanding¹		26,357,078		2,990,762		12,780,262		4,115,057
Par value per share	$	0.001	$	0.001	$	0.001	$	0.001
Net asset value	$	12.46	$	16.04	$	15.07	$	32.61
Service
Net assets	$	3,426,029		—		—		—
Shares outstanding¹		280,016		—		—		—
Par value per share	$	0.001		—		—		—
Net asset value	$	12.24		—		—		—
Investor A
Net assets	$	178,364,178	$	319,656,461	$	169,865,020	$	636,437,481
Shares outstanding¹		14,578,014		21,823,613		11,807,933		22,195,893
Par value per share	$	0.001	$	0.001	$	0.001	$	0.001
Net asset value	$	12.24	$	14.65	$	14.39	$	28.67
Investor B
Net assets	$	30,873,186	$	44,974,092	$	10,279,411	$	34,218,427
Shares outstanding¹		2,607,141		3,877,576		780,514		1,587,171
Par value per share	$	0.001	$	0.001	$	0.001	$	0.001
Net asset value	$	11.84	$	11.60	$	13.17	$	21.56
Investor C
Net assets	$	113,346,592	$	64,812,314	$	22,986,080	$	129,555,724
Shares outstanding¹		9,565,098		5,591,030		1,735,429		6,023,571
Par value per share	$	0.001	$	0.001	$	0.001	$	0.001
Net asset value	$	11.85	$	11.59	$	13.25	$	21.51
Class R
Net assets		—	$	1,038,232		—		—
Shares outstanding¹		—		71,623		—		—
Par value per share		—	$	0.001		—		—
Net asset value		—	$	14.50		—		—

¹	Unlimited number of shares authorized.

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		25

Statements of Operations


Year Ended September 30, 2009	All-Cap Energy & Resources Portfolio			Aurora Portfolio			Capital Appreciation Portfolio			Energy & Resources Portfolio
Investment Income
Dividends and reclaims	$	6,319,173		$	7,117,718		$	3,201,180		$	4,902,948
Foreign taxes withheld		(489,138	)		(13,714	)		(11,983	)		(289,062	)
Securities lending - affiliated		101,511			209,506			9,190			262,063
Interest and dividends - affiliated		73,582			49,834			16,498			129,205
Interest		466			1,646			—			6,440

Total investment income		6,005,594			7,364,990			3,214,885			5,011,594

Expenses
Investment advisory		4,093,876			4,146,417			1,602,847			4,956,726
Service and distribution - class specific		1,529,753			1,984,132			548,167			2,359,766
Transfer agent - class specific		850,141			1,657,793			453,210			1,416,854
Administration		403,294			364,228			184,944			479,096
Printing		115,761			145,700			53,996			128,558
Administration - class specific		136,622			122,155			61,486			162,290
Registration		149,923			62,418			45,776			121,277
Custodian		77,147			42,883			29,913			55,372
Professional		63,602			57,414			66,078			75,437
Officer and Trustees		21,755			20,351			18,334			24,398
Miscellaneous		44,985			32,627			18,131			58,476
Recoupment of past waived fees - class specific		81,458			119,300			14,494			129,844

Total expenses		7,568,317			8,755,418			3,097,376			9,968,094
Less fees waived by advisor		(50,842	)		(5,800	)		(296,131	)		(14,716	)
Less administration fees waived - class specific		(88,193	)		(98,402	)		(29,934	)		(78,796	)
Less transfer agent fees waived - class specific		(58,573	)		(72,600	)		(6,419	)		(50,881	)
Less transfer agent fees reimbursed - class specific		(368,243	)		(768,368	)		(77,516	)		(447,904	)
Less fees paid indirectly		(2,470	)		(4,513	)		(1,218	)		(2,967	)

Total expenses after fees waived, reimbursed and paid indirectly		6,999,996			7,805,735			2,686,158			9,372,830

Net investment income (loss)		(994,402	)		(440,745	)		528,727			(4,361,236	)

Realized and Unrealized Gain (Loss)
Net realized gain (loss) from:
Investments		(165,469,883	)		(217,523,866	)		(52,852,702	)		(178,874,511	)
Litigation proceeds		—			1,810,856			488,373			284,029
Foreign currency transactions		(132,249	)		(68	)		—			512,602

		(165,602,132	)		(215,713,078	)		(52,364,329	)		(178,077,880	)

Net change in unrealized appreciation/depreciation on:
Investments		14,087,908			53,000,748			70,125,354			106,108,948
Foreign currency transactions		14,243			(1	)		—			(492,284	)

		14,102,151			53,000,747			70,125,354			105,616,664

Total realized and unrealized gain (loss)		(151,499,981	)		(162,712,331	)		17,761,025			(72,461,216	)

Net Increase (Decrease) in Net Assets Resulting from Operations	$	(152,494,383	)	$	(163,153,076	)	$	18,289,752		$	(76,822,452	)

See Notes to Financial Statements.


26		ANNUAL REPORT		SEPTEMBER 30, 2009

Statements of Changes in Net Assets


	All-Cap Energy & Resources Portfolio						Aurora Portfolio
	Year Ended September 30,						Year Ended September 30,
Increase (Decrease) in Net Assets:	2009			2008			2009			2008
Operations
Net investment income (loss)	$	(994,402	)	$	11,336,746		$	(440,745	)	$	(7,096,388	)
Net realized gain (loss)		(165,602,132	)		102,084,945			(215,713,078	)		(100,132,909	)
Net change in unrealized appreciation/depreciation		14,102,151			(269,024,429	)		53,000,747			(166,084,129	)

Net decrease in net assets resulting from operations		(152,494,383	)		(155,602,738	)		(163,153,076	)		(273,313,426	)

Dividends and Distributions to Shareholders From
Net investment income:
Institutional		—			(4,105,246	)		—			—
Service		—			(16,970	)		—			—
Investor A		—			(1,618,979	)		—			—
Investor B		—			(88,534	)		—			—
Investor C		—			(404,429	)		—			—
Tax return of capital:
Institutional		—			—			—			(1,127,041	)
Investor A		—			—			—			(6,120,894	)
Investor B		—			—			—			(2,063,828	)
Investor C		—			—			—			(1,733,899	)
Class R		—			—			—			(10,832	)
Net realized gain:
Institutional		(46,056,785	)		(14,094,817	)		—			(30,668,524	)
Service		(320,003	)		(71,355	)		—			—
Investor A		(21,057,088	)		(6,879,249	)		—			(162,487,528	)
Investor B		(3,991,135	)		(912,837	)		—			(52,727,334	)
Investor C		(13,578,949	)		(3,537,720	)		—			(44,412,046	)
Class R		—			—			—			(294,567	)

Decrease in net assets resulting from dividends and distributions to shareholders		(85,003,960	)		(31,730,136	)		—			(301,646,493	)

Capital Share Transactions
Net decrease in net assets derived from capital share transactions		(87,080,928	)		(46,293,225	)		(149,128,618	)		(137,141,667	)

Redemption Fees
Redemption fees		50,517			86,648			9,271			7,015

Net Assets
Total decrease in net assets		(324,528,754	)		(233,539,451	)		(312,272,423	)		(712,094,571	)
Beginning of year		978,972,392			1,212,511,843			790,717,299			1,502,811,870

End of year	$	654,443,638		$	978,972,392		$	478,444,876		$	790,717,299

Undistributed net investment income	$	3,610,645		$	4,738,481		$	5,020,885		$	5,461,698

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		27

Statements of Changes in Net Assets (concluded)


	Capital Appreciation Portfolio						Energy & Resources Portfolio
	Year Ended September 30,						Year Ended September 30,
Increase (Decrease) in Net Assets:	2009			2008			2009			2008
Operations
Net investment income (loss)	$	528,727		$	(217,917	)	$	(4,361,236	)	$	(7,675,740	)
Net realized gain (loss)		(52,364,329	)		9,419,750			(178,077,880	)		213,150,989
Net change in unrealized appreciation/depreciation		70,125,354			(56,576,048	)		105,616,664			(357,347,796	)

Net increase (decrease) in net assets resulting from operations		18,289,752			(47,374,215	)		(76,822,452	)		(151,872,547	)

Dividends and Distributions to Shareholders From
Net investment income:
Institutional		—			—			—			(777,499	)
Investor A		—			—			—			(21,815,192	)
Investor B		—			—			—			(2,184,581	)
Investor C		—			—			—			(4,465,841	)
Tax return of capital:
Net realized gain:
Institutional		—			—			(8,049,448	)		(2,796,071	)
Investor A		—			—			(118,212,244	)		(82,411,812	)
Investor B		—			—			(11,269,678	)		(10,490,630	)
Investor C		—			—			(30,833,705	)		(20,432,459	)

Decrease in net assets resulting from dividends and distributions to shareholders		—			—			(168,365,075	)		(145,374,085	)

Capital Share Transactions
Net increase in net assets derived from capital share transactions		142,586,366			16,036,638			198,931,044			329,664,238

Redemption Fees
Redemption fees		—			1,487			278,520			393,391

Net Assets
Total increase (decrease) in net assets		160,876,118			(31,336,090	)		(45,977,963	)		32,810,997
Beginning of year		234,868,511			266,204,601			980,376,538			947,565,541

End of year	$	395,744,629		$	234,868,511		$	934,398,575		$	980,376,538

Undistributed (accumulated) (distributions in excess of) net investment income (loss)	$	1,003,542		$	472,929		$	(15,362,311	)	$	(29,382,538	)

See Notes to Financial Statements.


28		ANNUAL REPORT		SEPTEMBER 30, 2009


Financial Highlights		All-Cap Energy & Resources Portfolio


	Institutional															Service
	Year Ended September 30,												Period February 16, 2005¹to			Year Ended September 30,												Period February 16, 2005¹to
	2009			2008			2007			2006			September 30, 2005			2009			2008			2007			2006			September 30, 2005
Per Share Operating Performance
Net asset value, beginning of period	$	16.20		$	19.40		$	13.85		$	13.56		$	10.00		$	16.01		$	19.19		$	13.75		$	13.52		$	10.00

Net investment income (loss)²		0.02			0.24			0.05			0.02			0.02			(0.03	)		0.12			(0.02	)		(0.02	)		0.03
Net realized and unrealized gain (loss)		(2.14	)		(2.90	)		5.90			0.26			3.54			(2.12	)		(2.83	)		5.86			0.24			3.49

Net increase (decrease) from investment operations		(2.12	)		(2.66	)		5.95			0.28			3.56			(2.15	)		(2.71	)		5.84			0.22			3.52

Dividends and distributions from:
Net investment income		—			(0.23	)		—			—			—			—			(0.16	)		—			—			—
Net realized gain		(1.62	)		(0.31	)		(0.40	)		—			—			(1.62	)		(0.31	)		(0.40	)		—			—

Total dividends and distributions		(1.62	)		(0.54	)		(0.40	)		—			—			(1.62	)		(0.47	)		(0.40	)		—			—

Redemption fees added to paid-in capital		0.00	³		0.00	³		0.00	³		0.01			0.00	³		0.00	³		0.00	³		0.00	³		0.01			0.00	³

Net asset value, end of period	$	12.46		$	16.20		$	19.40		$	13.85		$	13.56		$	12.24		$	16.01		$	19.19		$	13.75		$	13.52

Total Investment Return⁴
Based on net asset value		(7.53	)%⁵		(14.25	)%⁵		43.66	%⁵		2.14	%⁶		35.60	%^5,7		(7.85	)%⁵		(14.59	)%⁵		43.16	%⁵		1.70	%⁸		35.20	%^5,7

Ratios to Average Net Assets
Total expenses		0.98	%		0.89	%		0.93	%		1.01	%		1.54	%⁹		1.54	%		1.25	%		1.42	%		1.40	%		1.77	%⁹

Total expenses excluding recoupment of past waived fees		0.97	%		0.89	%		0.93	%		1.01	%		1.54	%⁹		1.47	%		1.25	%		1.42	%		1.40	%		1.77	%⁹

Total expenses after fees waived, reimbursed and paid indirectly		0.93	%		0.89	%		0.93	%		0.99	%		1.04	%⁹		1.35	%		1.25	%		1.33	%		1.34	%		1.34	%⁹

Net investment income (loss)		0.17	%		1.14	%		0.31	%		0.17	%		0.25	%⁹		(0.26	)%		0.56	%		(0.11	)%		(0.17	)%		0.01	%⁹

Supplemental Data
Net assets, end of period (000)	$	328,434		$	510,804		$	598,747		$	337,771		$	92,147		$	3,426		$	4,836		$	3,435		$	2,368		$	—	¹⁰

Portfolio turnover		22	%		38	%		31	%		41	%		12	%		22	%		38	%		31	%		41	%		12	%

1	Commencement of operations.

2	Based on average shares outstanding.

3	Less than $0.01 per share.

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

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

6	Redemption fee of 2.00% received by the Portfolio is reflected in total return calculations. The impact to the return from redemption fees received during the period was an increase of 0.08%.

7	Aggregate total investment return.

8	Redemption fee of 2.00% received by the Portfolio is reflected in total return calculations. The impact to the return from redemption fees received during the period was an increase of 0.07%.

9	Annualized.

10	Net assets end of period are less than $500.

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		29


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


	Investor A															Investor B
	Year Ended September 30,												Period February 16, 2005¹ to			Year Ended September 30,												Period February 16, 2005¹to
	2009			2008			2007			2006			September 30, 2005			2009			2008			2007			2006			September 30, 2005
Per Share Operating Performance
Net asset value, beginning of period	$	16.01		$	19.18		$	13.75		$	13.50		$	10.00		$	15.68		$	18.82		$	13.59		$	13.44		$	10.00

Net investment income (loss)²		(0.02	)		0.17			(0.02	)		(0.02	)		0.00	³		(0.09	)		0.01			(0.13	)		(0.12	)		(0.05	)
Net realized and unrealized gain (loss)		(2.13	)		(2.87	)		5.85			0.26			3.50			(2.13	)		(2.81	)		5.76			0.26			3.49

Net increase (decrease) from investment operations		(2.15	)		(2.70	)		5.83			0.24			3.50			(2.22	)		(2.80	)		5.63			0.14			3.44

Dividends and distributions from:
Net investment income		—			(0.16	)		—			—			—			—			(0.03	)		—			—			—
Net realized gain		(1.62	)		(0.31	)		(0.40	)		—			—			(1.62	)		(0.31	)		(0.40	)		—			—

Total dividends and distributions		(1.62	)		(0.47	)		(0.40	)		—			—			(1.62	)		(0.34	)		(0.40	)		—			—

Redemption fees added to paid-in capital		0.00	³		0.00	³		0.00	³		0.01			0.00	³		0.00	³		0.00	³		0.00	³		0.01			0.00	³

Net asset value, end of period	$	12.24		$	16.01		$	19.18		$	13.75		$	13.50		$	11.84		$	15.68		$	18.82		$	13.59		$	13.44

Total Investment Return⁴
Based on net asset value		(7.85	)%⁵		(14.55	)%⁵		43.09	%⁵		1.85	%⁶		35.00	%^5,7		(8.56	)%⁵		(15.23	)%⁵		42.11	%⁵		1.12	%⁸		34.40	%^5,7

Ratios to Average Net Assets
Total expenses		1.48	%		1.27	%		1.34	%		1.46	%		1.87	%⁹		2.35	%		2.09	%		2.23	%		2.13	%		2.49	%⁹

Total expenses excluding recoupment of past waived fees		1.45	%		1.27	%		1.34	%		1.46	%		1.87	%⁹		2.33	%		2.09	%		2.23	%		2.13	%		2.49	%⁹

Total expenses after fees waived, reimbursed and paid indirectly		1.34	%		1.26	%		1.31	%		1.34	%		1.34	%⁹		2.06	%		2.04	%		2.04	%		2.04	%		2.04	%⁹

Net investment income (loss)		(0.25	)%		0.81	%		(0.10	)%		(0.16	)%		0.01	%⁹		(0.95	)%		0.06	%		(0.82	)%		(0.86	)%		(0.64	)%⁹

Supplemental Data
Net assets, end of period (000)	$	178,364		$	267,422		$	347,598		$	248,557		$	87,949		$	30,873		$	42,399		$	55,538		$	43,477		$	16,019

Portfolio turnover		22	%		38	%		31	%		41	%		12	%		22	%		38	%		31	%		41	%		12	%

See Notes to Financial Statements.


30		ANNUAL REPORT		SEPTEMBER 30, 2009


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


	Investor C
	Year Ended September 30,												Period February 16, 2005¹to
	2009			2008			2007			2006			September 30, 2005
Per Share Operating Performance
Net asset value, beginning of period	$	15.69		$	18.84		$	13.60		$	13.46		$	10.00

Net investment income (loss)²		(0.09	)		0.02			(0.13	)		(0.12	)		(0.05	)
Net realized and unrealized gain (loss)		(2.13	)		(2.82	)		5.77			0.25			3.51

Net increase (decrease) from investment operations		(2.22	)		(2.80	)		5.64			0.13			3.46

Dividends and distributions from:
Net investment income		—			(0.04	)		—			—			—
Net realized gain		(1.62	)		(0.31	)		(0.40	)		—			—

Total dividends and distributions		(1.62	)		(0.35	)		(0.40	)		—			—

Redemption fees added to paid-in capital		0.00	³		0.00	³		0.00	³		0.01			0.00	³

Net asset value, end of period	$	11.85		$	15.69		$	18.84		$	13.60		$	13.46

Total Investment Return⁴
Based on net asset value		(8.54	)%⁵		(15.21	)%⁵		42.15	%⁵		1.04	%⁶		34.60	%^5,7

Ratios to Average Net Assets
Total expenses		2.23	%		2.02	%		2.12	%		2.09	%		2.48	%⁹

Total expenses excluding recoupment of past waived fees		2.21	%		2.02	%		2.12	%		2.09	%		2.48	%⁹

Total expenses after fees waived, reimbursed and paid indirectly		2.05	%		2.01	%		2.04	%		2.04	%		2.04	%⁹

Net investment income (loss)		(0.95	)%		0.08	%		(0.83	)%		(0.86	)%		(0.70	)%⁹

Supplemental Data
Net assets, end of period (000)	$	113,347		$	153,512		$	207,194		$	136,120		$	48,288

Portfolio turnover		22	%		38	%		31	%		41	%		12	%

1	Commencement of operations.

2	Based on average shares outstanding.

3	Less than $0.01 per share.

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

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

6	Redemption fee of 2.00% received by the Portfolio is reflected in total return calculations. The impact to the return from redemption fees received during the period was an increase of 0.07%.

7	Aggregate total investment return.

8	Redemption fee of 2.00% received by the Portfolio is reflected in total return calculations. The impact to the return from redemption fees received during the period was an increase of 0.08%.

9	Annualized.

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		31


Financial Highlights (continued)		Aurora Portfolio


	Institutional
	Year Ended September 30,
	2009			2008			2007			2006			2005
Per Share Operating Performance
Net asset value, beginning of year	$	19.49		$	30.87		$	37.15		$	43.43		$	40.71

Net investment income (loss)¹		0.06			(0.02	)		0.10			0.08			(0.04	)
Net realized and unrealized gain (loss)		(3.51	)		(5.34	)		4.82			1.13			6.60

Net increase (decrease) from investment operations		(3.45	)		(5.36	)		4.92			1.21			6.56

Dividends and distributions from:
Tax return of capital		—			(0.21	)		—			—			—
Net realized gain		—			(5.81	)		(11.20	)		(7.49	)		(3.84	)

Total dividends and distributions		—			(6.02	)		(11.20	)		(7.49	)		(3.84	)

Redemption fees added to paid-in capital²		0.00			0.00			0.00			0.00			0.00

Net asset value, end of year	$	16.04		$	19.49		$	30.87		$	37.15		$	43.43

Total Investment Return^3,4
Based on net asset value		(17.70	)%⁵		(21.60	)%⁶		14.86	%		3.40	%		16.62	%

Ratios to Average Net Assets
Total expenses		1.28	%		1.28	%		1.11	%		1.07	%		1.14	%

Total expenses excluding recoupment of past waived fees		1.25	%		1.28	%		1.11	%		1.07	%		1.14	%

Total expenses after fees waived, reimbursed and paid indirectly		1.05	%		1.05	%		1.01	%		1.06	%		1.14	%

Net investment income (loss)		0.46	%		(0.08	)%		0.32	%		0.22	%		(0.09	)%

Supplemental Data
Net assets, end of year (000)	$	47,964		$	81,400		$	169,479		$	153,103		$	165,837

Portfolio turnover		289	%		147	%		134	%		142	%		73	%

See Notes to Financial Statements.


32		ANNUAL REPORT		SEPTEMBER 30, 2009


Financial Highlights (continued)		Aurora Portfolio


	Investor A															Investor B
	Year Ended September 30,															Year Ended September 30,
	2009			2008			2007			2006			2005			2009			2008			2007			2006			2005
Per Share Operating Performance
Net asset value, beginning of year	$	17.86		$	28.75		$	35.39		$	41.88		$	39.49		$	14.26		$	24.06		$	31.48		$	38.32		$	36.67

Net investment income (loss)¹		0.01			(0.10	)		0.01			(0.05	)		(0.16	)		(0.07	)		(0.21	)		(0.19	)		(0.29	)		(0.40	)
Net realized and unrealized gain (loss)		(3.22	)		(4.91	)		4.55			1.05			6.39			(2.59	)		(3.92	)		3.97			0.94			5.89

Net increase (decrease) from investment operations		(3.21	)		(5.01	)		4.56			1.00			6.23			(2.66	)		(4.13	)		3.78			0.65			5.49

Dividends and distributions from:
Tax return of capital		—			(0.21	)		—			—			—			—			(0.21	)		—			—			—
Net realized gain		—			(5.67	)		(11.20	)		(7.49	)		(3.84	)		—			(5.46	)		(11.20	)		(7.49	)		(3.84	)

Total dividends and distributions		—			(5.88	)		(11.20	)		(7.49	)		(3.84	)		—			(5.67	)		(11.20	)		(7.49	)		(3.84	)

Redemption fees added to paid-in capital²		0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00

Net asset value, end of year	$	14.65		$	17.86		$	28.75		$	35.39		$	41.88		$	11.60		$	14.26		$	24.06		$	31.48		$	38.32

Total Investment Return^3,4
Based on net asset value		(17.97	)%⁷		(21.92	)%⁶		14.48	%		2.95	%		16.28	%		(18.65	)%⁸		(22.47	)%⁶		13.56	%		2.18	%		15.44	%

Ratios to Average Net Assets
Total expenses		1.60	%		1.45	%		1.40	%		1.56	%		1.47	%		2.56	%		2.32	%		2.24	%		2.23	%		2.15	%

Total expenses excluding recoupment of past waived fees		1.58	%		1.45	%		1.40	%		1.56	%		1.47	%		2.53	%		2.32	%		2.24	%		2.23	%		2.15	%

Total expenses after fees waived, reimbursed and paid indirectly		1.45	%		1.42	%		1.39	%		1.44	%		1.40	%		2.20	%		2.18	%		2.16	%		2.19	%		2.14	%

Net investment income (loss)		0.06	%		(0.44	)%		0.03	%		(0.15	)%		(0.36	)%		(0.66	)%		(1.21	)%		(0.75	)%		(0.90	)%		(1.10	)%

Supplemental Data
Net assets, end of year (000)	$	319,656		$	481,193		$	871,699		$	1,189,440		$	1,690,497		$	44,974		$	119,213		$	250,672		$	329,207		$	436,642

Portfolio turnover		289	%		147	%		134	%		142	%		73	%		289	%		147	%		134	%		142	%		73	%

1	Based on average shares outstanding.

2	Less than $0.01 per share.

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

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

5	Includes proceeds received from a settlement of litigation which impacted the Portfolio’s total return. Not including these proceeds the Portfolio’s total return would have been (17.96)%.

6	Payment from affiliate of $139,965 received by the Portfolio is reflected in total return calculations. There was no impact to the return.

7	Includes proceeds received from a settlement of litigation which impacted the Portfolio’s total return. Not including these proceeds the Portfolio’s total return would have been (18.25)%.

8	Includes proceeds received from a settlement of litigation which impacted the Portfolio’s total return. Not including these proceeds the Portfolio’s total return would have been (19.00)%.

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		33


Financial Highlights (continued)		Aurora Portfolio


	Investor C															Class R
	Year Ended September 30,															Year Ended September 30,						Period October 2, 2006¹to September 30, 2007
	2009			2008			2007			2006			2005			2009			2008			Period October 2, 2006¹to September 30, 2007
Per Share Operating Performance
Net asset value, beginning of period	$	14.25		$	24.07		$	31.47		$	38.32		$	36.67		$	17.72		$	28.70		$	35.21

Net investment loss²		(0.07	)		(0.21	)		(0.18	)		(0.29	)		(0.42	)		(0.01	)		(0.13	)		(0.16	)
Net realized and unrealized gain (loss)		(2.59	)		(3.93	)		3.98			0.93			5.91			(3.21	)		(4.83	)		4.85

Net increase (decrease) from investment operations		(2.66	)		(4.14	)		3.80			0.64			5.49			(3.22	)		(4.96	)		4.69

Dividends and distributions from:
Tax return of capital		—			(0.21	)		—			—			—			—			(0.21	)		—
Net realized gain		—			(5.47	)		(11.20	)		(7.49	)		(3.84	)		—			(5.81	)		(11.20	)

Total dividends and distributions		—			(5.68	)		(11.20	)		(7.49	)		(3.84	)		—			(6.02	)		(11.20	)

Redemption fees added to paid-in capital³		0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00

Net asset value, end of period	$	11.59		$	14.25		$	24.07		$	31.47		$	38.32		$	14.50		$	17.72		$	28.70

Total Investment Return^4,5
Based on net asset value		(18.67	)%⁶		(22.50	)%⁷		13.64	%		2.16	%		15.45	%		(18.17	)%⁸		(21.90	)%⁷		14.87	%⁹

Ratios to Average Net Assets
Total expenses		2.40	%		2.23	%		2.17	%		2.22	%		2.15	%		1.86	%		1.71	%		1.50	%¹⁰

Total expenses excluding recoupment of past waived fees		2.38	%		2.23	%		2.17	%		2.22	%		2.15	%		1.86	%		1.71	%		1.50	%¹⁰

Total expenses after fees waived, reimbursed and paid indirectly		2.20	%		2.17	%		2.13	%		2.19	%		2.14	%		1.62	%		1.58	%		1.50	%¹⁰

Net investment loss		(0.69	)%		(1.20	)%		(0.72	)%		(0.90	)%		(1.10	)%		(0.11	)%		(0.60	)%		(0.57	)%¹⁰

Supplemental Data
Net assets, end of period (000)	$	64,812		$	107,555		$	209,820		$	283,562		$	405,952		$	1,038		$	1,356		$	1,141

Portfolio turnover		289	%		147	%		134	%		142	%		73	%		289	%		147	%		134	%

1	Commencement of operations.

2	Based on average shares outstanding.

3	Less than $0.01 per share.

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

5	Redemption fee of 2.00% received by the Portfolio 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 Portfolio’s total return. Not including these proceeds the Portfolio’s total return would have been (19.02)%.

7	Payment from affiliate of $139,965 received by the Portfolio is reflected in total return calculations. There was no impact to the return.

8	Includes proceeds received from a settlement of litigation which impacted the Portfolio’s total return. Not including these proceeds the Portfolio’s total return would have been (18.45)%.

9	Aggregate total investment return.

10	Annualized.

See Notes to Financial Statements.


34		ANNUAL REPORT		SEPTEMBER 30, 2009


Financial Highlights (continued)		Capital Appreciation Portfolio


	Institutional
	Year Ended September 30,												Period November 1, 2004 to			Year Ended October 31, 2004
	2009			2008			2007			2006			September 30, 2005			Year Ended October 31, 2004
Per Share Operating Performance
Net asset value, beginning of period	$	15.25		$	18.21		$	14.91		$	14.19		$	12.78		$	12.17

Net investment income (loss)		0.07	¹		0.07	¹		0.06	¹		0.00	^1,2		0.05	¹		(0.04	)
Net realized and unrealized gain (loss)		(0.25	)		(3.03	)		3.24			0.72			1.36			0.65

Net increase (decrease) from investment operations		(0.18	)		(2.96	)		3.30			0.72			1.41			0.61

Redemption fees added to paid-in capital		0.00	²		0.00	²		—			0.00	²		0.00	²		—

Net asset value, end of period	$	15.07		$	15.25		$	18.21		$	14.91		$	14.19		$	12.78

Total Investment Return³
Based on net asset value		(1.18	)%^4,5		(16.26	)%⁵		22.13	%		5.07	%⁵		11.03	%^5,6,7		5.01	%

Ratios to Average Net Assets
Total expenses		0.92	%		0.85	%		0.88	%		1.00	%		1.15	%⁸		1.14	%

Total expenses after fees waived, reimbursed and paid indirectly		0.71	%		0.70	%		0.75	%		0.95	%		1.05	%⁸		1.14	%

Net investment income (loss)		0.59	%		0.42	%		0.38	%		0.00	%⁹		0.43	%⁸		(0.31	)%

Supplemental Data
Net assets, end of period (000)	$	192,614		$	77,323		$	71,072		$	48,146		$	52,154		$	52,399

Portfolio turnover		87	%		80	%		97	%		87	%		70	%		91	%

1	Based on average shares outstanding.

2	Less than $0.01 per share.

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

4	Includes proceeds received from a settlement of litigation which impacted the Portfolio’s total return. Not including these proceeds the Portfolio’s total return would have been (1.31)%.

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

6	The total return includes an increase of 0.08% related to payments made by the previous investment advisor prior to January 31, 2005.

7	Aggregate total investment return.

8	Annualized.

9	Less than 0.01%

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		35


Financial Highlights (continued)		Capital Appreciation Portfolio


	Investor A
	Year Ended September 30,												Period November 1, 2004 to			Year Ended October 31, 2004
	2009			2008			2007			2006			September 30, 2005			Year Ended October 31, 2004
Per Share Operating Performance
Net asset value, beginning of period	$	14.59		$	17.56		$	14.46		$	13.82		$	12.47		$	11.91

Net investment income (loss)		0.01	¹		(0.02	)¹		(0.02	)¹		(0.06	)¹		0.02	¹		(0.08	)
Net realized and unrealized gain (loss)		(0.21	)		(2.95	)		3.12			0.70			1.33			0.64

Net increase (decrease) from investment operations		(0.20	)		(2.97	)		3.10			0.64			1.35			0.56

Redemption fees added to paid-in capital		0.00	²		0.00	²		—			0.00	²		0.00	²		—

Net asset value, end of period	$	14.39		$	14.59		$	17.56		$	14.46		$	13.82		$	12.47

Total Investment Return³
Based on net asset value		(1.37	)%^4,5		(16.91	)%⁵		21.44	%		4.63	%⁵		10.83	%^5,6,7		4.70	%

Ratios to Average Net Assets
Total expenses		1.35	%		1.33	%		1.35	%		1.53	%		1.48	%⁸		1.44	%

Total expenses excluding recoupment of past waived fees		1.35	%		1.33	%		1.35	%		1.53	%		1.48	%⁸		1.44	%

Total expenses after fees waived, reimbursed and paid indirectly		1.23	%		1.23	%		1.28	%		1.35	%		1.31	%⁸		1.44	%

Net investment income (loss)		0.07	%		(0.10	)%		(0.16	)%		(0.40	)%		0.21	%⁸		(0.62	)%

Supplemental Data
Net assets, end of period (000)	$	169,865		$	125,521		$	131,712		$	112,737		$	120,371		$	99,435

Portfolio turnover		87	%		80	%		97	%		87	%		70	%		91	%


	Investor B
	Year Ended September 30,												Period November 1, 2004 to			Year Ended October 31, 2004
	2009			2008			2007			2006			September 30, 2005			Year Ended October 31, 2004
Per Share Operating Performance
Net asset value, beginning of period	$	13.51		$	16.34		$	13.56		$	13.06		$	11.86		$	11.41

Net investment loss		(0.08	)¹		(0.14	)¹		(0.14	)¹		(0.16	)¹		(0.06	)¹		(0.15	)
Net realized and unrealized gain (loss)		(0.26	)		(2.69	)		2.92			0.66			1.26			0.60

Net increase (decrease) from investment operations		(0.34	)		(2.83	)		2.78			0.50			1.20			0.45

Redemption fees added to paid-in capital		0.00	²		0.00	²		—			0.00	²		0.00	²		—

Net asset value, end of period	$	13.17		$	13.51		$	16.34		$	13.56		$	13.06		$	11.86

Total Investment Return³
Based on net asset value		(2.52	)%^5,9		(17.32	)%⁵		20.50	%		3.83	%⁵		10.12	%^5,7,10		3.94	%

Ratios to Average Net Assets
Total expenses		2.36	%		2.11	%		2.20	%		2.20	%		2.15	%⁸		2.14	%

Total expenses excluding recoupment of past waived fees		2.27	%		2.11	%		2.20	%		2.20	%		2.15	%⁸		2.14	%

Total expenses after fees waived, reimbursed and paid indirectly		2.11	%		2.00	%		2.07	%		2.10	%		2.05	%⁸		2.14	%

Net investment loss		(0.77	)%		(0.87	)%		(0.95	)%		(1.16	)%		(0.53	)%⁸		(1.31	)%

Supplemental Data
Net assets, end of period (000)	$	10,279		$	19,663		$	48,260		$	71,078		$	85,465		$	97,938

Portfolio turnover		87	%		80	%		97	%		87	%		70	%		91	%

See Notes to Financial Statements.


36		ANNUAL REPORT		SEPTEMBER 30, 2009


Financial Highlights (continued)		Capital Appreciation Portfolio


	Investor C
	Year Ended September 30,												Period November 1, 2004 to			Year Ended October 31,
	2009			2008			2007			2006			September 30, 2005			2004
Per Share Operating Performance
Net asset value, beginning of period	$	13.56		$	16.38		$	13.57		$	13.06		$	11.86		$	11.41

Net investment loss		(0.07	)¹		(0.11	)¹		(0.12	)¹		(0.15	)¹		(0.06	)¹		(0.15	)
Net realized and unrealized gain (loss)		(0.24	)		(2.71	)		2.93			0.66			1.26			0.60

Net increase (decrease) from investment operations		(0.31	)		(2.82	)		2.81			0.51			1.20			0.45

Redemption fees added to paid-in capital		0.00	²		0.00	²		—			0.00	²		0.00	²		—

Net asset value, end of period	$	13.25		$	13.56		$	16.38		$	13.57		$	13.06		$	11.86

Total Investment Return³
Based on net asset value		(2.29	)%^5,11		(17.22	)%⁵		20.71	%		3.91	%⁵		10.12	%^5,7,10		3.94	%

Ratios to Average Net Assets
Total expenses		2.04	%		1.96	%		1.99	%		2.10	%		2.15	%⁸		2.14	%

Total expenses after waivers, reimbursement and paid indirectly		1.92	%		1.85	%		1.92	%		2.04	%		2.05	%⁸		2.14	%

Net investment loss		(0.61	)%		(0.73	)%		(0.80	)%		(1.10	)%		(0.51	)%⁸		(1.30	)%

Supplemental Data
Net assets, end of period (000)	$	22,986		$	12,361		$	15,160		$	17,079		$	20,570		$	23,854

Portfolio turnover		87	%		80	%		97	%		87	%		70	%		91	%

1	Based on average shares outstanding.

2	Less than $0.01 per share.

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

4	Includes proceeds received from a settlement of litigation which impacted the Portfolio’s total return. Not including these proceeds the Portfolio’s total return would have been (1.51)%.

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

6	The total return includes an increase of 0.08% related to payments made by the previous investment advisor prior to January 31, 2005.

7	Aggregate total investment return.

8	Annualized.

9	Includes proceeds received from a settlement of litigation which impacted the Portfolio’s total return. Not including these proceeds the Portfolio’s total return would have been (2.67)%.

10	The total return includes an increase of 0.09% related to payments made by the previous investment advisor prior to January 31, 2005.

11	Includes proceeds received from a settlement of litigation which impacted the Portfolio’s total return. Not including these proceeds the Portfolio’s total return would have been (2.43)%.

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		37


Financial Highlights (continued)		Energy & Resources Portfolio


	Institutional
	Year Ended September 30,												Period March 1, 2005 to			Period July 1, 2004 to
	2009			2008			2007			2006			September 30, 2005			February 28, 2005
Per Share Operating Performance
Net asset value, beginning of period	$	51.31		$	63.42		$	68.57		$	79.62		$	58.80		$	41.25

Net investment income (loss)		(0.07	)¹		(0.13	)¹		(0.02	)¹		0.57	¹		0.15	¹		(0.08	)
Net realized and unrealized gain (loss)		(9.60	)		(2.78	)		14.26			(2.50	)		20.67			19.52

Net increase (decrease) from investment operations		(9.67	)		(2.91	)		14.24			(1.93	)		20.82			19.44

Dividends and distributions from:
Net investment income		—			(2.01	)		(0.81	)		(0.53	)		—			(0.34	)
Net realized gain		(9.04	)		(7.22	)		(18.58	)		(8.60	)		—			(1.55	)

Total dividends and distributions		(9.04	)		(9.23	)		(19.39	)		(9.13	)		—			(1.89	)

Redemption fees added to paid-in capital		0.01			0.03			0.00	²		0.01			0.00	²		—

Net asset value, end of period	$	32.61		$	51.31		$	63.42		$	68.57		$	79.62		$	58.80

Total Investment Return³
Based on net asset value		(7.64	)%^4,5		(6.77	)%⁶		23.55	%⁷		(2.89	)%⁵		35.41	%^7,8		47.95	%⁸

Ratios to Average Net Assets
Total expenses		1.00	%		0.92	%		1.07	%		1.02	%		1.18	%⁹		1.02	%⁹

Total expenses excluding recoupment of past waived fees		0.98	%		0.92	%		1.07	%		1.02	%		1.18	%⁹		1.02	%⁹

Total expenses after fees waived, reimbursed and paid indirectly		0.99	%		0.92	%		1.03	%		0.98	%		1.04	%⁹		1.01	%⁹

Net investment income (loss)		(0.25	)%		(0.18	)%		(0.03	)%		0.76	%		0.42	%⁹		(0.16	)%⁹

Supplemental Data
Net assets, end of period (000)	$	134,187		$	82,147		$	37,498		$	35,010		$	40,906		$	29,188

Portfolio turnover		25	%		32	%		15	%		27	%		9	%		22	%


	Investor A
	Year Ended September 30,												Period March 1, 2005 to			Period July 1, 2004 to
	2009			2008			2007			2006			September 30, 2005			February 28, 2005
Per Share Operating Performance
Net asset value, beginning of period	$	47.29		$	59.02		$	64.90		$	76.01		$	56.23		$	39.58

Net investment income (loss)		(0.13	)¹		(0.32	)¹		(0.16	)¹		0.32	¹		0.03	¹		(0.15	)
Net realized and unrealized gain (loss)		(9.46	)		(2.29	)		13.41			(2.36	)		19.75			18.69

Net increase (decrease) from investment operations		(9.59	)		(2.61	)		13.25			(2.04	)		19.78			18.54

Dividends and distributions from:
Net investment income		—			(1.92	)		(0.55	)		(0.48	)		—			(0.34	)
Net realized gain		(9.04	)		(7.22	)		(18.58	)		(8.60	)		—			(1.55	)

Total dividends and distributions		(9.04	)		(9.14	)		(19.13	)		(9.08	)		—			(1.89	)

Redemption fees added to paid-in capital		0.01			0.02			0.00	²		0.01			0.00	²		—

Net asset value, end of period	$	28.67		$	47.29		$	59.02		$	64.90		$	76.01		$	56.23

Total Investment Return³
Based on net asset value		(8.20	)%^6,10		(6.78	)%⁵		23.25	%⁷		(3.20	)%⁵		35.18	%^7,8		47.69	%⁸

Ratios to Average Net Assets
Total expenses		1.40	%		1.25	%		1.30	%		1.41	%		1.52	%⁹		1.38	%⁹

Total expenses excluding recoupment of past waived fees		1.38	%		1.25	%		1.30	%		1.41	%		1.52	%⁹		1.38	%⁹

Total expenses after fees waived, reimbursed and paid indirectly		1.31	%		1.25	%		1.29	%		1.30	%		1.34	%⁹		1.36	%⁹

Net investment income (loss)		(0.55	)%		(0.49	)%		(0.28	)%		0.44	%		0.10	%⁹		(0.52	)%⁹

Supplemental Data
Net assets, end of period (000)	$	636,437		$	689,646		$	685,590		$	683,417		$	877,120		$	676,234

Portfolio turnover		25	%		32	%		15	%		27	%		9	%		22	%

See Notes to Financial Statements.


38		ANNUAL REPORT		SEPTEMBER 30, 2009


Financial Highlights (continued)		Energy & Resources Portfolio


	Investor B
	Year Ended September 30,												Period March 1, 2005 to			Period July 1, 2004 to
	2009			2008			2007			2006			September 30, 2005			February 28, 2005
Per Share Operating Performance
Net asset value, beginning of period	$	39.68		$	50.87		$	58.19		$	69.43		$	51.58		$	36.52

Net investment loss		(0.22	)¹		(0.67	)¹		(0.50	)¹		(0.18	)¹		(0.19	)¹		(0.32	)
Net realized and unrealized gain (loss)		(8.87	)		(1.81	)		11.82			(2.09	)		18.04			17.18

Net increase (decrease) from investment operations		(9.09	)		(2.48	)		11.32			(2.27	)		17.85			16.86

Dividends and distributions from:
Net investment income		—			(1.51	)		(0.06	)		(0.38	)		—			(0.25	)
Net realized gain		(9.04	)		(7.22	)		(18.58	)		(8.60	)		—			(1.55	)

Total dividends and distributions		(9.04	)		(8.73	)		(18.64	)		(8.98	)		—			(1.80	)

Redemption fees added to paid-in capital		0.01			0.02			0.00	²		0.01			0.00	²		—

Net asset value, end of period	$	21.56		$	39.68		$	50.87		$	58.19		$	69.43		$	51.58

Total Investment Return³
Based on net asset value		(8.74	)%^11,12		(7.63	)%⁵		22.35	%⁷		(3.91	)%⁵		34.60	%^7,8		47.09	%⁸

Ratios to Average Net Assets
Total expenses		2.25	%		2.01	%		2.08	%		2.09	%		2.18	%⁹		2.02	%⁹

Total expenses excluding recoupment of past waived fees		2.23	%		2.01	%		2.08	%		2.09	%		2.18	%⁹		2.02	%⁹

Total expenses after fees waived, reimbursed and paid indirectly		2.05	%		2.00	%		2.03	%		2.02	%		2.04	%⁹		2.01	%⁹

Net investment loss		(1.28	)%		(1.24	)%		(1.01	)%		(0.27	)%		(0.60	)%⁹		(1.17	)%⁹

Supplemental Data
Net assets, end of period (000)	$	34,218		$	57,174		$	80,178		$	87,636		$	117,845		$	94,506

Portfolio turnover		25	%		32	%		15	%		27	%		9	%		22	%

1	Based on average shares outstanding.

2	Less than $0.01 per share.

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

4	Includes proceeds received from a settlement of litigation which impacted the Portfolio’s total return. Not including these proceeds the Portfolio’s total return would have been (7.66)%.

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

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

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

8	Aggregate total investment return.

9	Annualized.

10	Includes proceeds received from a settlement of litigation which impacted the Portfolio’s total return. Not including these proceeds the Portfolio’s total return would have been (8.23)%.

11	Includes proceeds received from a settlement of litigation which impacted the Portfolio’s total return. Not including these proceeds the Portfolio’s total return would have been (8.77)%.

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

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		39


Financial Highlights (concluded)		Energy & Resources Portfolio


	Investor C
	Year Ended September 30,												Period March 1, 2005 to			Period July 1, 2004 to
	2009			2008			2007			2006			September 30, 2005			February 28, 2005
Per Share Operating Performance
Net asset value, beginning of period	$	39.61		$	50.84		$	58.13		$	69.37		$	51.53		$	36.48

Net investment loss		(0.22	)¹		(0.66	)¹		(0.50	)¹		(0.17	)¹		(0.19	)¹		(0.30	)
Net realized and unrealized gain (loss)		(8.85	)		(1.79	)		11.83			(2.10	)		18.03			17.14

Net increase (decrease) from investment operations		(9.07	)		(2.45	)		11.33			(2.27	)		17.84			16.84

Dividends and distributions from:
Net investment income		—			(1.58	)		(0.04	)		(0.38	)		—			(0.24	)
Net realized gain		(9.04	)		(7.22	)		(18.58	)		(8.60	)		—			(1.55	)

Total dividends and distributions		(9.04	)		(8.80	)		(18.62	)		(8.98	)		—			(1.79	)

Redemption fees added to paid-in capital		0.01			0.02			0.00	²		0.01			0.00	²		—

Net asset value, end of period	$	21.51		$	39.61		$	50.84		$	58.13		$	69.37		$	51.53

Total Investment Return³
Based on net asset value		(8.68	)%^4,5		(7.57	)%⁶		22.36	%⁷		(3.92	)%⁸		34.62	%^7,9		47.01	%⁹

Ratios to Average Net Assets
Total expenses		2.16	%		1.96	%		2.02	%		2.05	%		2.17	%¹⁰		2.02	%¹⁰

Total expenses excluding recoupment of past waived fees		2.16	%		1.96	%		2.02	%		2.05	%		2.17	%¹⁰		2.02	%¹⁰

Total expenses after fees waived, reimbursed and paid indirectly		2.05	%		1.96	%		2.01	%		2.01	%		2.04	%¹⁰		2.01	%¹⁰

Net investment loss		(1.29	)%		(1.21	)%		(1.00	)%		(0.26	)%		(0.61	)%¹⁰		(1.17	)%¹⁰

Supplemental Data
Net assets, end of period (000)	$	129,556		$	151,409		$	144,300		$	147,723		$	201,265		$	169,871

Portfolio turnover		25	%		32	%		15	%		27	%		9	%		22	%

1	Based on average shares outstanding.

2	Less than $0.01 per share.

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

4	Includes proceeds received from a settlement of litigation which impacted the Portfolio’s total return. Not including these proceeds the Portfolio’s total return would have been (8.71)%.

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

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

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

8	Redemption fee of 2.00% received by the Portfolio is reflected in total return calculations. The impact to the return from redemption fees received during the period was an increase of 0.01%.

9	Aggregate total investment return.

10	Annualized.

See Notes to Financial Statements.


40		ANNUAL REPORT		SEPTEMBER 30, 2009

Notes to Financial Statements

1. Organization and Significant Accounting Policies:

BlackRock FundsSM (the “Fund”), a Massachusetts business trust, is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. As of September 30, 2009, the Fund had 27 registered portfolios, of which the BlackRock All-Cap Energy & Resources Portfolio (“All-Cap Energy & Resources”), BlackRock Aurora Portfolio (“Aurora”), BlackRock Capital Appreciation Portfolio (“Capital Appreciation”) and BlackRock Energy & Resources Portfolio (“Energy & Resources”) (collectively the “Portfolios”) are included in these financial statements. The Portfolios’ financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require the use of management accruals and estimates. Actual results may differ from these estimates. Each Portfolio offers multiple classes of shares. Institutional Shares are sold without a sales charge and only to certain eligible investors. Service Shares are sold without a sales charge. Investor A Shares are generally sold with a front-end sales charge. Shares of Investor B and Investor C may be subject to a contingent deferred sales charge. Class R Shares are sold without a sales charge and only to certain retirement and other similar plans. All classes of shares have identical voting, dividend, liquidation and other rights and the same terms and conditions, except that the Service, Investor A, Investor B, Investor C and Class R Shares bear certain expenses related to the service of such shares and Investor B, Investor C and Class R Shares also bear certain expenses related to the distribution of such shares. Investor B Shares automatically convert to Investor A Shares after approximately eight years. Investor B Shares of each Portfolio are only available for purchase through exchanges, dividend reinvestments or for purchase by certain qualified employee benefit plans. Each class has exclusive voting rights with respect to matters relating to its service and distribution expenditures (except that Investor B shareholders may vote on material changes to the Investor A distribution plan).

Fund Reorganization:

The Board of Trustees (the “Board”) of the Fund on behalf of Capital Appreciation and the shareholders of the PNC Equity Growth Fund, a series of the PNC Funds, Inc., approved a reorganization (the “Reorganization”), which was a tax-free event that took place on November 14, 2008.


Target Fund		Acquiring Portfolio
PNC Equity Growth Fund		Capital Appreciation

Under the agreement and plan of reorganization with respect to the Reorganization, PNC Equity Growth Fund Investor A Shares, Investor C Shares and Institutional Shares were exchanged for Capital Appreciation Investor A Shares and Institutional Shares. The conversion ratio for each Share class was as follows:


PNC Equity Growth Fund/ Capital Appreciation
Investor A/ Investor A		0.43269926
Investor C/ Investor A		0.41215351
Institutional/ Institutional		0.42252433

The net assets before and after the Reorganization and shares issued and redeemed in the Reorganization were as follows:


BlackRock Portfolio	Net Assets Combined After Reorganization as of November 14, 2008		Net Assets Prior to Reorganization as of November 14, 2008			Shares Issued			PNC Equity Growth Fund Shares Redeemed
Capital Appreciation	$	192,543,523	$	182,664,682			868,487			2,054,276

The net assets acquired were the following components:

PNC Fund	Paid In Capital		Accumulated Net Realized Loss			Net Unrealized Depreciation			Net Assets
PNC Equity Growth Fund	$	38,049,826	$	(22,837,903	)	$	(5,333,082	)	$	9,878,841

The following Portfolios of the Fund changed their names on February 2, 2009:


Former Name		New Name
BlackRock All-Cap Global Resources Portfolio		BlackRock All-Cap Energy & Resources Portfolio
BlackRock Global Resources Portfolio		BlackRock Energy & Resources Portfolio

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


		ANNUAL REPORT		SEPTEMBER 30, 2009		41

Notes to Financial Statements (continued)

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

Generally, trading in foreign securities is substantially completed each day at various times prior to the close of business on the New York Stock Exchange (“NYSE”). The values of such securities used in computing the net assets of a Portfolio are determined as of such times. Foreign currency exchange rates will be determined as of the close of business on the NYSE. Occasionally, events affecting the values of such securities and such exchange rates may occur between the times at which they are determined and the close of business on the NYSE that may not be reflected in the computation of the Portfolios’ net assets. If events (for example, a company announcement, market volatility or a natural disaster) occur during such periods that are expected to materially affect the value of such securities, those securities will be Fair Value Assets and be valued at their fair value as determined in good faith by the Board or by the investment advisor using a pricing service and/or procedures approved by the Board. Foreign currency exchange contracts are valued at the mid between the bid and ask prices. Interpolated values are derived when the settlement date of the contract is an interim date for which quotations are not available.

Foreign Currency Transactions: Foreign currency amounts are translated into United States dollars on the following basis: (i) market value of investment securities, assets and liabilities at the current rate of exchange; and (ii) purchases and sales of investment securities, income and expenses at the rates of exchange prevailing on the respective dates of such transactions.

The Portfolios report foreign currency related transactions as components of realized gains/losses for financial reporting purposes, whereas such components are treated as ordinary income for federal income tax purposes.

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

Investment Transactions and Investment Income: For financial reporting purposes, investment transactions are recorded on the dates the transactions are entered into (the trade dates). Realized gains and losses on investment transactions are determined on the identified cost basis. Dividend income is recorded on the ex-dividend dates. Dividends from foreign securities where the ex-dividend date may have passed are subsequently recorded when the Portfolios have determined the ex-dividend date. 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 is recognized on the accrual basis. Income, realized and unrealized gains and losses are allocated daily to each class based on its relative net assets.

Dividends and Distributions: Dividends and distributions, if any, paid by the Portfolios are recorded on the ex-dividend dates.

Securities Lending: The Portfolios may lend securities to financial institutions that provide cash as collateral which will be maintained at all times in an amount equal to at least 100% of the current market value of the loaned securities. The market value of the loaned securities is determined at the close of business of the Portfolios and any additional required collateral is delivered to the Portfolios on the next business day. The Portfolios typically receive income on the loaned securities but do not receive the income on the collateral. The Portfolios may invest the cash collateral and retain the amount earned on such investment, net of any amount rebated to the borrower. 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 Portfolios may pay reasonable lending agent, administrative and custodial fees in connection with their loans. In the event that the borrower defaults on its obligation to return borrowed securities because of insolvency or for any other reason, the Portfolios could experience delays and costs in gaining access to the collateral. The Portfolios also could suffer a loss if the value of an investment purchased with cash collateral falls below the market value of loaned securities or if the value of an investment purchased with cash collateral falls below the value of the original cash collateral received.

Income Taxes: It is the Portfolios’ policy to comply with the requirements of the Internal Revenue Code 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. Under the applicable foreign tax law, a withholding tax may be imposed on interest, dividends and capital gains at various rates.

The Portfolios file US federal and various state and local tax returns. No income tax returns are currently under examination. The statutes of limitations on each Portfolio’s US federal income tax returns remain open for each of the four years ended September 30, 2009. The statutes of limitations on each Portfolio’s state and local tax returns may remain open for an additional year depending upon the jurisdiction.


42		ANNUAL REPORT		SEPTEMBER 30, 2009

Notes to Financial Statements (continued)

Recent Accounting Standards: In June 2009, amended guidance was issued by the Financial Accounting Standards Board for transfers of financial assets. This guidance is intended to improve the relevance, representational faithfulness and comparability of the information that a reporting entity provides in its financial statements about a transfer of financial assets; the effects of a transfer on its financial position, financial performance, and cash flows; and a transferor’s continuing involvement, if any, in transferred financial assets. The amended guidance is effective for financial statements for fiscal years and interim periods beginning after November 15, 2009. Earlier application is prohibited. The recognition and measurement provisions of this guidance must be applied to transfers occurring on or after the effective date. Additionally, the enhanced disclosure provisions of the amended guidance should be applied to transfers that occurred both before and after the effective date of this guidance. The impact of this guidance on the Portfolios’ financial statements and disclosures, if any, is currently being assessed.

Other: Expenses directly related to a Portfolio or class are charged to that Portfolio or its classes. Other operating expenses shared by several funds are prorated among those funds on the basis of relative net assets or other appropriate methods. Other expenses of a Portfolio are allocated daily to each class based on its relative net assets.

2. Derivative Financial Instruments:

The Portfolios may engage in various portfolio investment strategies both to increase the returns of the Portfolios and to economically hedge, or protect, their exposure to foreign currency exchange rate risk. Losses may arise if the value of the contract decreases due to an unfavorable change in the price of the underlying currency or if the counterparty does not perform under the contract. The Portfolios may mitigate counterparty risk through master netting agreements included within an International Swaps and Derivatives Association, Inc. (“ISDA”) Master Agreement between a Portfolio and each of its counterparties. The ISDA Master Agreement allows each Portfolio to offset with its counterparty certain derivative financial instruments’ payables and/or receivables with collateral held with each counterparty. The amount of collateral moved to/from applicable counterparties is based upon minimum transfer amounts of up to $500,000. To the extent amounts due to the Portfolios from their counterparty are not fully collateralized contractually or otherwise, the Portfolios bear the risk of loss from counterparty non-performance. See Note 1 “Segregation and Collateralization” for additional information with respect to collateral practices.

The Portfolios’ maximum risk of loss from counterparty credit risk on over-the counter derivatives is generally the aggregate unrealized gain in excess of any collateral pledged by the counterparty to the Portfolios. Certain ISDA Master Agreements allow counterparties to over-the-counter derivatives to terminate derivative contracts prior to maturity in the event a Portfolio’s net assets decline by a stated percentage or a Portfolio fails to meet the terms of its ISDA Master Agreements, which would cause the Portfolio to accelerate payment of any net liability owed to the counterparty.

Foreign Currency Exchange Contracts: Certain Portfolios may enter into foreign currency exchange contracts as an economic hedge against either specific transactions or portfolio positions (foreign currency exchange rate risk). A foreign currency exchange contract is an agreement between two parties to buy and sell a currency at a set exchange rate on a future date. Foreign currency exchange contracts, when used by a Portfolio, help to manage the overall exposure to the currency backing some of the investments held by a Portfolio. The contract is marked-to-market daily and the change in market value is recorded by a Portfolio as an unrealized gain or loss. When the contract is closed, a Portfolio records a realized gain or loss equal to the difference between the value at the time it was opened and the value at the time it was closed. The use of foreign currency exchange contracts involves the risk that counterparties may not meet the terms of the agreement or unfavorable movements in the value of a foreign currency relative to the United States dollar.

Derivative Instruments Categorized by Risk Exposure:

Value of Derivative Instruments as of September 30, 2009*

Asset Derivatives

Statements of Assets and Liabilities

Location

Energy &
Resources

Foreign currency exchange contracts

Unrealized appreciation on foreign currency exchange contracts

402

*	For open derivative instruments as of September 30, 2009, see the Schedule of Investments, which is also indicative of activity for the year ended September 30, 2009.

The Effect of Derivative Instruments on the Statement of Operations

Year Ended September 30, 2009

Net Realized Gain (Loss) from


	All-Cap Energy & Resources		Energy & Resources
Foreign currency exchange contracts	$	25,380	$	632,022

Net Change in Unrealized Appreciation/Depreciation on


	Energy & Resources
Foreign currency exchange contracts	$	537

3. Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. (“PNC”) and Bank of America Corporation (“BAC”) are the largest stockholders of BlackRock, Inc. (“BlackRock”). BAC became a stockholder of BlackRock following its acquisition of Merrill Lynch & Co., Inc. (“Merrill Lynch”) on January 1, 2009. Prior to that date, both PNC and Merrill Lynch were considered affiliates of the Fund under the 1940 Act. Subsequent to the acquisition, PNC remains an affiliate, but due to the restructuring of Merrill Lynch’s ownership interest of BlackRock, BAC is not deemed to be an affiliate under the 1940 Act.

The Fund, on behalf of the Portfolios, entered into an Investment Advisory Agreement with BlackRock Advisors, LLC (the “Manager”), the


		ANNUAL REPORT		SEPTEMBER 30, 2009		43

Notes to Financial Statements (continued)

Portfolios’ investment advisor, an indirect, wholly owned subsidiary of BlackRock, to provide investment advisory and administration services.

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


Average Daily Net Assets	All-Cap Energy & Resources		Aurora		Capital Appreciation		Energy & Resources
First $1 Billion	0.750	%	0.850	%	0.650	%	0.750	%
$1 Billion - $2 Billion	0.700		0.800		0.600		0.700
$2 Billion - $3 Billion	0.675		0.750		0.575		0.675
Greater Than $3 Billion	0.650		0.700		0.550		0.650

The Manager contractually agreed to waive or reimburse fees or expenses, excluding interest expense, dividend expense, acquired fund fees and expenses and certain other fund expenses until February 1, 2010, in order to limit expenses. This agreement is reviewed annually by the Board. Prior to June 1, 2009, the expense limitations as a percentage of net assets were as follows:


Share Classes	All-Cap Energy & Resources		Aurora		Capital Appreciation		Energy & Resources
Institutional	0.93	%	1.05	%	0.70	%	1.04	%
Service	1.34	%	1.44	%¹	1.35	%¹	1.34	%¹
Investor A	1.34	%	1.44	%	1.35	%	1.34	%
Investor B	2.04	%	2.19	%	2.10	%	2.04	%
Investor C	2.04	%	2.19	%	2.10	%	2.04	%
Class R	1.78	%¹	1.60	%	1.94	%¹	1.88	%¹

¹	There were no shares outstanding as of September 30, 2009.

Effective June 1, 2009, the expense limitations as a percentage of net assets are as follows:


Share Classes	All-Cap Energy & Resources		Aurora		Capital Appreciation		Energy & Resources
Institutional	0.96	%	1.08	%	0.72	%	1.07	%
Service	1.38	%	1.48	%¹	1.39	%¹	1.38	%¹
Investor A	1.38	%	1.48	%	1.39	%	1.38	%
Investor B	2.10	%	2.26	%	2.16	%	2.10	%
Investor C	2.10	%	2.26	%	2.16	%	2.10	%
Class R	1.83	%¹	1.65	%	2.00	%¹	1.94	%¹

¹	There were no shares outstanding as of September 30, 2009.

The Manager has voluntarily agreed to waive its advisory fee by the amount of investment advisory fees the Portfolios pay to the Manager indirectly through its investment in affiliated money market funds. This amount is included in fees waived by advisor in the Statements of Operations.

The Fund, on behalf of the Portfolios, has entered into a Distribution Agreement and Distribution Plan with BlackRock Investments, LLC (“BRIL”), an affiliate of BlackRock. Pursuant to the Distribution Plan, in accordance with Rule 12b-1 under the 1940 Act, the Portfolios pay BRIL ongoing service and distribution fees. The fees are accrued daily and paid monthly at annual rates based upon the average daily net assets of the shares of each Portfolio 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, including Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S”), a wholly owned subsidiary of Merrill Lynch, and BRIL provide shareholder servicing and distribution services to each Portfolio. 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.

For the year ended September 30, 2009, affiliates, including Merrill Lynch from October 1, 2008 to December 31, 2008 (after which time Merrill Lynch was no longer considered an affiliate), earned underwriting discounts, direct commissions and dealer concessions on sales of the Portfolios’ Investor A Shares as follow:


All-Cap Energy & Resources	$	38,787
Aurora	$	6,110
Capital Appreciation	$	25,357
Energy & Resources	$	97,332

For the year ended September 30, 2009, affiliates, including Merrill Lynch from October 1, 2008 to December 31, 2008 (after which time Merrill Lynch was no longer considered an affiliate), received the following contingent deferred sales charges relating to transactions in Investor A, B and C Shares:


	Investor A		Investor B		Investor C
All-Cap Energy & Resources	$	31,032	$	130,054	$	42,682
Aurora	$	741	$	40,996	$	2,184
Capital Appreciation		—	$	17,467	$	7,457
Energy & Resources	$	37,850	$	53,723	$	60,832

In addition, MLPF&S received commissions on the execution of portfolio security transactions for the Portfolios for the period October 1, 2008 to December 31, 2008 (after which time MLPF&S was no longer considered an affiliate):


All-Cap Energy & Resources	$	6,195
Aurora	$	97,391
Capital Appreciation	$	3,240
Energy & Resources	$	75,122


44		ANNUAL REPORT		SEPTEMBER 30, 2009

Notes to Financial Statements (continued)

0.004% of the next $1.6 billion, and 0.003% of average daily gross assets in excess of $2 billion; plus per transaction charges and other miscellaneous fees incurred on behalf of each Portfolio.

PNC Global Investment Servicing (U.S.) Inc. (“PNCGIS”), an indirect, wholly owned subsidiary of PNC, serves as transfer and dividend disbursing agent. Each class of each Portfolio bears the costs of transfer agent fees associated with such respective class. Transfer agent fees borne by each class of each Portfolio are comprised of those fees charged for all shareholder communications, including mailing of shareholder reports, dividend and distribution notices, and proxy materials for shareholders meetings, as well as per account and per transaction fees related to servicing and maintenance of shareholder accounts, including the issuing, redeeming and transferring of shares of each class of each Portfolio, 12b-1 fee calculations, check writing, anti-money laundering services, and customer identification services.

Pursuant to written agreements, affiliates, including Merrill Lynch from October 1, 2008 to December 31, 2008 (after which time Merrill Lynch was no longer considered an affiliate), provide certain Portfolios with sub-accounting, recordkeeping, sub-transfer agency and other administrative services with respect to sub-accounts they service. For these services, these affiliates receive an annual fee per shareholder account which will vary depending on share class. For the year ended September 30, 2009, the Portfolios paid the following fees in return for these services, which are included in transfer agent — class specific in the Statements of Operations:


All-Cap Energy & Resources	$	26,458
Aurora	$	142,326
Capital Appreciation	$	56,990
Energy & Resources	$	38,200

The Manager maintains a call center, which is responsible for providing certain shareholder services to the Portfolios, such as responding to shareholder inquiries and processing transactions based upon instructions from shareholders with respect to the subscription and redemption of Portfolio shares. For the year ended September 30, 2009, each Portfolio reimbursed the Manager the following amounts for costs incurred in running the call center, which are included in transfer agent — class specific in the Statements of Operations.


	Share Classes
Call Center	Institutional		Service		Investor A		Investor B		Investor C		Class R		Total
All-Cap Energy & Resources	$	4,358	$	714	$	29,074	$	7,758	$	16,878		—	$	58,782
Aurora	$	399		—	$	62,495	$	8,725	$	7,377	$	45	$	79,041
Capital Appreciation	$	1,233		—	$	22,651	$	4,986	$	1,425		—	$	30,295
Energy & Resources	$	2,032		—	$	53,809	$	7,609	$	12,799		—	$	76,249

PNCGIS and the Manager act as co-administrators for the Portfolios. For these services, the co-administrators receive a combined administration fee computed daily and payable monthly, based on a percentage of the average daily net assets of each Portfolio. The combined administration fee is paid at the following annual rates: 0.075% of the first $500 million, 0.065% of the next $500 million and 0.055% of average daily net assets in excess of $1 billion. In addition, each of the share classes is charged an administration fee based on the following percentages of average daily net assets of each respective class: 0.025% of the first $500 million, 0.015% of the next $500 million and 0.005% of average daily net assets in excess of $1 billion. In addition, PNCGIS and the Manager may have, at their discretion, voluntarily waived all or any portion of their administration fees for a Portfolio or a share class.

The Portfolios have received an exemptive order from the SEC permitting them to lend portfolio securities to MLPF&S or its affiliates. Pursuant to that order, the Portfolios have retained BlackRock Investment Management, LLC (“BIM”), an affiliate of the Manager, as the securities lending agent for a fee based on a share of the returns on investment of cash collateral. BIM may, on behalf of the Portfolios, invest cash collateral received by the Portfolios for such loans, among other things, in a private investment company managed by the Manager or in registered money market funds advised by the Manager or its affiliates. The share of income earned by the Portfolios on such investments is shown as securities lending — affiliated on the Statements of Operations. The securities lending agent fees received by BIM were as follows:


All-Cap Energy & Resources	$	22,814
Aurora	$	48,026
Capital Appreciation	$	2,004
Energy & Resources	$	62,247

For the year ended September 30, 2009, the following charts show the various types of class specific expenses borne directly by each class of each Portfolio and any associated waivers or reimbursements of those expenses.


	Share Classes
Administration Fees	Institutional		Service		Investor A		Investor B		Investor C		Class R		Total
All-Cap Energy & Resources	$	69,988	$	611	$	37,085	$	6,463	$	22,475		—	$	136,622
Aurora	$	12,812		—	$	77,417	$	15,245	$	16,444	$	237	$	122,155
Capital Appreciation	$	26,770		—	$	27,862	$	2,852	$	4,002		—	$	61,486
Energy & Resources	$	16,614		—	$	114,927	$	7,398	$	23,351		—	$	162,290


		ANNUAL REPORT		SEPTEMBER 30, 2009		45

Notes to Financial Statements (continued)


	Share Classes
Administration Fees Waived	Institutional		Service		Investor A		Investor B		Investor C		Class R		Total
All-Cap Energy & Resources	$	41,289	$	413	$	23,028	$	5,377	$	18,086		—	$	88,193
Aurora	$	9,654		—	$	61,249	$	13,406	$	13,856	$	237	$	98,402
Capital Appreciation	$	26,770		—	$	802	$	2,362		—		—	$	29,934
Energy & Resources	$	2,730		—	$	53,473	$	6,104	$	16,489		—	$	78,796


	Share Classes
Service and Distribution Fees	Service		Investor A		Investor B		Investor C		Class R		Total
All-Cap Energy & Resources	$	6,078	$	367,620	$	258,473	$	897,582		—	$	1,529,753
Aurora		—	$	739,796	$	595,452	$	644,160	$	4,724	$	1,984,132
Capital Appreciation		—	$	277,730	$	111,202	$	159,235		—	$	548,167
Energy & Resources		—	$	1,137,121	$	293,642	$	929,003		—	$	2,359,766


	Share Classes
Transfer Agent Fees	Institutional		Service		Investor A		Investor B		Investor C		Class R		Total
All-Cap Energy & Resources	$	101,226	$	7,020	$	389,697	$	101,551	$	250,647		—	$	850,141
Aurora	$	116,993		—	$	971,566	$	319,996	$	246,007	$	3,231	$	1,657,793
Capital Appreciation	$	81,366		—	$	287,717	$	51,319	$	32,808		—	$	453,210
Energy & Resources	$	47,536		—	$	1,047,671	$	93,197	$	228,450		—	$	1,416,854


	Share Classes
Transfer Agent Fees Waived	Institutional		Service		Investor A		Investor B		Investor C		Class R		Total
All-Cap Energy & Resources	$	4,342	$	714	$	28,960	$	7,690	$	16,867		—	$	58,573
Aurora	$	248		—	$	56,363	$	8,725	$	7,219	$	45	$	72,600
Capital Appreciation	$	1,233		—	$	215	$	4,971		—		—	$	6,419
Energy & Resources	$	682		—	$	32,334	$	7,525	$	10,340		—	$	50,881


	Share Classes
Transfer Agent Fees Reimbursed	Institutional		Service		Investor A		Investor B		Investor C		Class R		Total
All-Cap Energy & Resources	$	48,371	$	3,444	$	140,698	$	58,670	$	117,060		—	$	368,243
Aurora	$	106,768		—	$	354,938	$	197,691	$	106,950	$	2,021	$	768,368
Capital Appreciation	$	69,514		—		—	$	8,002		—		—	$	77,516
Energy & Resources	$	4,527		—	$	330,582	$	42,541	$	70,254		—	$	447,904

If during a Portfolio’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 amount of fees waived or expenses reimbursed during those prior two fiscal years under the agreement provided that: (1) the Portfolio of which the share class is a part has more than $50 million in assets and (2) the Manager or an affiliate continues to serve as the Portfolio’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 year ended September 30, 2009, the Manager recouped the following waivers previously recorded by the Portfolios:

Recoupment of Past Waived Fees


Share Classes	All-Cap Energy & Resources		Aurora		Capital Appreciation		Energy & Resources
Institutional	$	7,250	$	15,010		—	$	14,720
Service		1,762		—		—		—
Investor A		53,777		74,058	$	3,817		107,242
Investor B		3,906		18,833		10,677		4,777
Investor C		14,763		11,399		—		3,105

Total	$	81,458	$	119,300	$	14,494	$	129,844

As of September 30, 2009, the amounts subject to possible future recoupment under the expense limitation agreement are as follows:


	Expiring September 30,
	2010		2011
All-Cap Energy & Resources	$	70,305	$	552,919
Aurora	$	842,238	$	939,370
Capital Appreciation	$	314,660	$	407,155
Energy & Resources	$	11,629	$	577,581


46		ANNUAL REPORT		SEPTEMBER 30, 2009

Notes to Financial Statements (continued)

The following waivers previously recorded by the Portfolios, which were subject to recoupment by the Manager, expired on September 30, 2009:


All-Cap Energy & Resources	$	247,569
Aurora	$	493,790
Capital Appreciation	$	235,544
Energy & Resources	$	45,521

The Portfolios may earn income on positive cash balances in demand deposit accounts that are maintained by PNCGIS on behalf of the Portfolios. The income earned for the year ended September 30, 2009, which is included in interest and dividends – affiliated in the Statements of Operations, were as follows:


All-Cap Energy & Resources	$	982
Aurora	$	1,686
Capital Appreciation	$	432
Energy & Resources	$	1,071

The Portfolios may also receive earnings credits related to cash balances with PNCGIS which are shown on the Statements of Operations as fees paid indirectly.

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

4. Investments:

Purchases and sales of investments, excluding short-term securities, for the year ended September 30, 2009, were as follows:


	Purchases		Sales
All-Cap Energy & Resources	$	121,983,429	$	325,769,381
Aurora	$	1,438,048,086	$	1,566,534,573
Capital Appreciation	$	347,365,891	$	217,332,885
Energy & Resources	$	213,575,688	$	164,862,586

Aurora, Capital Appreciation and Energy & Resources received proceeds from settlement of litigation where they were able to recover a portion of investment losses previously realized by such Portfolios. This amount is shown as litigation proceeds in the Statements of Operations.

5. Short-Term Borrowings:

The Portfolios, along with certain other funds managed by the Manager and its affiliates, are a party to a $500 million credit agreement with a group of lenders, which expires in November 2009 and was subsequently renewed until November 2010. The Portfolios may borrow under the credit agreement to fund shareholder redemptions and for other lawful purposes other than for leverage. Each Portfolio may borrow up to the maximum amount allowable under the Portfolio’s current Prospectus and Statement of Additional Information, subject to various other legal, regulatory or contractual limits. The Portfolios paid their pro rata share of a 0.02% upfront fee on the aggregate commitment amount based on their net assets as of October 31, 2008. The Portfolios pay a commitment fee of 0.08% per annum based on each Portfolio’s pro rata share of the unused portion of the credit agreement, which is included in miscellaneous in the Statements of Operations. Amounts borrowed under the credit agreement bear interest at a rate equal to, the higher of the (a) federal funds effective rate and (b) reserve adjusted one month LIBOR, plus, in each case, the higher of (i) 1.50% and (ii) 50% of the CDX index (as defined in the credit agreement). The Portfolios did not borrow under the credit agreement during the year ended September 30, 2009.

6. Income Tax Information:

Reclassifications: Accounting principles generally accepted in the United States of America require that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. These reclassifications have no effect on net assets or on net asset values per share. The following permanent differences as of September 30, 2009 attributable to net operating losses, non-deductible expenses, the sale of stock of passive foreign investment companies, the reclassification of distributions, limitations on the utilization of capital loss carryforwards and foreign currency transactions were reclassified to the following accounts:


	All-Cap Energy & Resources			Aurora			Capital Appreciation			Energy & Resources
Paid-in capital		—			—		$	(22,682,006	)	$	(17,274,632	)
Undistributed (accumulated) (distributions in excess of) net investment income (loss)	$	(133,434	)	$	(68	)	$	1,886		$	18,381,463
Accumulated net realized loss	$	133,434		$	68		$	22,680,120		$	(1,106,831	)

The tax character of distributions paid during the years ended September 30, 2009 and September 30, 2008 were as follows:


	All-Cap Energy & Resources		Aurora		Energy & Resources
Ordinary income
9/30/09	$	1,185		—		—
9/30/08	$	7,951,234	$	151,827,390	$	42,891,342
Long-term capital gain
9/30/09	$	85,002,775		—	$	168,365,075
9/30/08	$	23,778,902	$	138,762,609	$	102,482,743
Tax return of capital
9/30/08		—	$	11,056,494		—

Total distributions
9/30/09	$	85,003,960		—	$	168,365,075

9/30/08	$	31,730,136	$	301,646,493	$	145,374,085


		ANNUAL REPORT		SEPTEMBER 30, 2009		47

Notes to Financial Statements (continued)

As of September 30, 2009, the tax components of accumulated net losses were as follows:


	All-Cap Energy & Resources			Aurora			Capital Appreciation			Energy & Resources
Undistributed ordinary income	$	3,678,037		$	4,928,361		$	985,628			—
Capital loss carryforwards		(43,202,338	)		(192,963,017	)		(61,587,360	)	$	(21,722,097	)
Net unrealized gains (losses)*		(44,966,340	)		(97,613,654	)		25,129,333			(9,095,358	)

Total	$	(84,490,641	)	$	(285,648,310	)	$	(35,472,399	)	$	(30,817,455	)

The difference between book-basis and tax-basis net unrealized gain (losses) is attributable primarily to the tax deferral of losses on wash sales, the deferral of post-October capital and currency losses for tax purposes, the deferral of post-October losses on investments in passive foreign investment companies for tax purposes, investments in passive foreign investment companies, the difference between the book and tax treatment of certain stock lending transactions and the timing and recognition on partnership income.

As of September 30, 2009, the Portfolios had capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates:


Expires September 30,	All-Cap Energy & Resources		Aurora		Capital Appreciation		Energy & Resources
2010		—		—	$	32,425,507		—
2011		—		—		18,377,786		—
2017	$	43,202,338	$	192,963,017		10,784,067	$	21,722,097

Total	$	43,202,338	$	192,963,017	$	61,587,360	$	21,722,097

7. Concentration, Market and Credit Risk:

In the normal course of business, the Portfolios 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 (credit risk). The value of securities held by the Portfolios may decline in response to certain events, including those directly involving the issuers whose securities are owned by the Portfolios; 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 credit risk, the Portfolios may be exposed to counterparty risk or the risk that an entity with which the Portfolios have unsettled or open transactions may default. Financial assets, which potentially expose the Portfolios to credit and counterparty risks, consist principally of investments and cash due from counterparties. The extent of the Portfolios’ exposure to credit and counterparty risks with respect to these financial assets is approximated by their value recorded in the Portfolios’ Statements of Assets and Liabilities.

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

Aurora invests a significant portion of its assets in securities in the consumer discretionary sector. Changes in economic conditions affecting the consumer discretionary sector would have a greater impact on the Aurora, and could affect the value, income and/or liquidity of positions in such securities.

Capital Appreciation invests a significant portion of its assets in securities in the information technology sector. Changes in economic conditions affecting the information technology sector would have a greater impact on the Capital Appreciation, and could affect the value, income and/or liquidity of positions in such securities.

As of September 30, 2009, the Portfolios listed below had the following geographic allocations:


Geographic Allocations	All-Cap Energy & Resources		Energy Resources
United States	71	%	73	%
Canada	11		19
Switzerland	5		2
Netherlands	3		—
United Kingdom	2		3
Norway	2		—
Brazil	2		1
Australia	2		2
China	2		—

8. Capital Shares Transactions:

Transactions in capital shares for each class were as follows:


	Year Ended September 30, 2009					Year Ended September 30, 2008
All-Cap Energy & Resources	Shares		Amount			Shares		Amount
Institutional
Shares sold	6,816,039		$	66,330,383		9,052,749		$	188,696,516
Shares issued in reinvestment of dividends and distributions	5,705,653			45,759,161		838,728			16,866,827

Total issued	12,521,692			112,089,544		9,891,477			205,563,343
Shares redeemed	(17,695,712	)		(168,499,591	)	(9,226,778	)		(206,600,458	)

Net increase (decrease)	(5,174,020	)	$	(56,410,047	)	664,699		$	(1,037,115	)


48		ANNUAL REPORT		SEPTEMBER 30, 2009

Notes to Financial Statements (continued)


	Year Ended September 30, 2009					Year Ended September 30, 2008
All-Cap Energy & Resources (concluded)	Shares		Amount			Shares		Amount
Service
Shares sold	126,381		$	1,357,643		249,773		$	5,748,476
Shares issued in reinvestment of dividends and distributions	36,296			286,741		3,119			62,170

Total issued	162,677			1,644,384		252,892			5,810,646
Shares redeemed	(184,665	)		(1,761,798	)	(129,909	)		(2,707,905	)

Net increase (decrease)	(21,988	)	$	(117,414	)	122,983		$	3,102,741

Investor A
Shares sold and automatic conversion of shares	6,058,645		$	59,640,495		6,199,085		$	136,305,042
Shares issued in reinvestment of dividends and distributions	2,485,169			19,632,659		358,961			7,154,106

Total issued	8,543,814			79,273,154		6,558,046			143,459,148
Shares redeemed	(10,673,413	)		(103,741,777	)	(7,972,335	)		(165,962,206	)

Net decrease	(2,129,599	)	$	(24,468,623	)	(1,414,289	)	$	(22,503,058	)

Investor B
Shares sold	393,955		$	3,681,132		507,174		$	10,924,000
Shares issued in reinvestment of dividends and distributions	474,990			3,652,624		46,276			909,329

Total issued	868,945			7,333,756		553,450			11,833,329
Shares redeemed and automatic conversion of shares	(965,605	)		(9,019,109	)	(801,196	)		(16,092,877	)

Net decrease	(96,660	)	$	(1,685,353	)	(247,746	)	$	(4,259,548	)

Investor C
Shares sold	2,104,931		$	20,094,619		2,689,785		$	57,811,060
Shares issued in reinvestment of dividends and distributions	1,666,587			12,815,816		188,487			3,705,692

Total issued	3,771,518			32,910,435		2,878,272			61,516,752
Shares redeemed	(3,991,620	)		(37,309,926	)	(4,091,437	)		(83,112,997	)

Net decrease	(220,102	)	$	(4,399,491	)	(1,213,165	)	$	(21,596,245	)


Aurora
Institutional
Shares sold	1,494,330		$	20,882,726		2,074,486		$	47,704,495
Shares issued in reinvestment of distributions	—			—		1,230,662			30,781,548

Total issued	1,494,330			20,882,726		3,305,148			78,486,043
Shares redeemed	(2,680,292	)		(38,091,147	)	(4,618,681	)		(104,430,818	)

Net decrease	(1,185,962	)	$	(17,208,421	)	(1,313,533	)	$	(25,944,775	)

Investor A
Shares sold and automatic conversion of shares	4,283,420		$	53,250,940		3,833,437		$	80,386,960
Shares issued in reinvestment of distributions	—			—		7,085,729			162,351,816

Total issued	4,283,420			53,250,940		10,919,166			242,738,776
Shares redeemed	(9,396,270	)		(120,775,988	)	(14,304,737	)		(304,632,209	)

Net decrease	(5,112,850	)	$	(67,525,048	)	(3,385,571	)	$	(61,893,433	)


		ANNUAL REPORT		SEPTEMBER 30, 2009		49

Notes to Financial Statements (continued)


	Year Ended September 30, 2009					Year Ended September 30, 2008
Aurora (concluded)	Shares		Amount			Shares		Amount
Investor B
Shares sold	181,808		$	1,891,388		183,023		$	3,085,634
Shares issued in reinvestment of distributions	—			—		2,853,257			52,471,586

Total issued	181,808			1,891,388		3,036,280			55,557,220
Shares redeemed and automatic conversion of shares	(4,666,051	)		(46,312,237	)	(5,092,762	)		(87,545,343	)

Net decrease	(4,484,243	)	$	(44,420,849	)	(2,056,482	)	$	(31,988,123	)

Investor C
Shares sold	162,260		$	1,653,368		260,720		$	4,350,936
Shares issued in reinvestment of distributions	—			—		2,341,321			43,230,706

Total issued	162,260			1,653,368		2,602,041			47,581,642
Shares redeemed	(2,118,460	)		(21,560,019	)	(3,773,111	)		(65,758,800	)

Net decrease	(1,956,200	)	$	(19,906,651	)	(1,171,070	)	$	(18,177,158	)

Class R
Shares sold	21,464		$	269,050		48,891		$	1,086,944
Shares issued in reinvestment of distributions	—			—		12,133			281,248

Total issued	21,464			269,050		61,024			1,368,192
Shares redeemed	(26,344	)		(336,699	)	(24,289	)		(506,370	)

Net increase (decrease)	(4,880	)	$	(67,649	)	36,735		$	861,822


Capital Appreciation
Institutional
Shares issued from the reorganization	846,171		$	9,635,176		—			—
Shares sold	9,875,635			129,243,301		1,638,547		$	28,297,038

Total issued	10,721,806			138,878,477		1,638,547			28,297,038
Shares redeemed	(3,012,912	)		(38,201,163	)	(470,687	)		(8,322,488	)

Net increase	7,708,894		$	100,677,314		1,167,860		$	19,974,550

Investor A
Shares issued from the reorganization	22,316		$	243,665		—			—
Shares sold and automatic conversion of shares	5,958,884			72,327,030		3,197,945		$	53,739,514

Total issued	5,981,200			72,570,695		3,197,945			53,739,514
Shares redeemed	(2,775,465	)		(32,434,950	)	(2,095,586	)		(34,173,398	)

Net increase	3,205,735		$	40,135,745		1,102,359		$	19,566,116

Investor B
Shares sold	126,411		$	1,324,035		96,209		$	1,508,158
Shares redeemed and automatic conversion of shares	(801,392	)		(8,408,255	)	(1,594,178	)		(24,746,487	)

Net decrease	(674,981	)	$	(7,084,220	)	(1,497,969	)	$	(23,238,329	)

Investor C
Shares sold	1,351,275		$	14,481,411		195,339		$	2,936,249
Shares redeemed	(527,244	)		(5,623,884	)	(209,587	)		(3,201,948	)

Net increase (decrease)	824,031		$	8,857,527		(14,248	)	$	(265,699	)


50		ANNUAL REPORT		SEPTEMBER 30, 2009

Notes to Financial Statements (concluded)


	Year Ended September 30, 2009					Year Ended September 30, 2008
Energy & Resources	Shares		Amount			Shares		Amount
Institutional
Shares sold	4,463,637		$	109,578,802		1,839,333		$	136,929,369
Shares issued in reinvestment of dividends and distributions	380,846			7,594,159		44,166			2,677,415

Total issued	4,844,483			117,172,961		1,883,499			139,606,784
Shares redeemed	(2,330,268	)		(66,100,545	)	(873,950	)		(60,686,858	)

Net increase	2,514,215		$	51,072,416		1,009,549		$	78,919,926

Investor A
Shares sold and automatic conversion of shares	13,818,064		$	306,317,533		7,408,833		$	495,863,823
Shares issued in reinvestment of dividends and distributions	6,478,751			113,896,782		1,758,021			98,308,999

Total issued	20,296,815			420,214,315		9,166,854			594,172,822
Shares redeemed	(12,684,001	)		(298,301,116	)	(6,200,250	)		(394,977,968	)

Net increase	7,612,814		$	121,913,199		2,966,604		$	199,194,854

Investor B
Shares sold	243,394		$	4,023,536		256,247		$	14,709,333
Shares issued in reinvestment of dividends and distributions	785,430			10,446,300		237,561			11,255,907

Total issued	1,028,824			14,469,836		493,808			25,965,240
Shares redeemed and automatic conversion of shares	(882,642	)		(15,559,229	)	(628,938	)		(33,196,754	)

Net increase (decrease)	146,182		$	(1,089,393	)	(135,130	)	$	(7,231,514	)

Investor C
Shares sold	2,053,570		$	36,134,223		1,659,207		$	97,391,961
Shares issued in reinvestment of dividends and distributions	2,181,238			28,923,437		476,747			22,536,947

Total issued	4,234,808			65,057,660		2,135,954			119,928,908
Shares redeemed	(2,033,838	)		(38,022,838	)	(1,151,408	)		(61,147,936	)

Net increase	2,200,970		$	27,034,822		984,546		$	58,780,972

There is a 2% redemption fee on shares of certain Portfolios that are redeemed or exchanged within 30 days of purchase. The redemption fees are collected and retained by the Portfolio for the benefit of the remaining shareholders. The redemption fees are recorded as a credit to paid-in capital and are shown in the Statements of Changes in Net Assets.

9. Subsequent Events:

Management has evaluated the impact of all subsequent events on the Portfolios through November 25, 2009, the date the financial statements were issued, and has determined that there were no subsequent events requiring adjustment or disclosure in the financial statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		51

Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders of BlackRock Funds:

We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of BlackRock All-Cap Energy & Resources Portfolio (formerly BlackRock All-Cap Global Resources Portfolio), BlackRock Aurora Portfolio, BlackRock Capital Appreciation Portfolio, and BlackRock Energy & Resources Portfolio (formerly BlackRock Global Resources Portfolio) [four of the twenty-seven portfolios constituting the BlackRock Funds (the “Fund”) (collectively, the “Portfolios”)], as of September 30, 2009, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of September 30, 2009, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the Portfolios constituting the Fund as of September 30, 2009, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP

Philadelphia, Pennsylvania

November 25, 2009

Important Tax Information (Unaudited)

The Portfolios distributed Long-Term Capital Gains per share as follows:


	Payable Date	Long-Term Capital Gain
All-Cap Energy & Resources Portfolio	12/12/08	$	1.622436
Energy & Resources Portfolio	12/16/08	$	9.039050


52		ANNUAL REPORT		SEPTEMBER 30, 2009

Disclosure of Investment Advisory Agreement

The Board of Trustees (the “Board,” and the members of which are referred to as “Board Members”) of BlackRock Funds ^SM (the “Fund”) met on April 16, 2009 and May 21-22, 2009 to consider the approval of the Fund’s investment advisory agreement (the “Advisory Agreement”) with BlackRock Advisors, LLC (the “Manager” or “BlackRock”), the Fund’s investment advisor, on behalf of BlackRock All-Cap Energy & Resources Portfolio (“All-Cap Energy & Resources Portfolio”), BlackRock Aurora Portfolio (“Aurora Portfolio”), BlackRock Capital Appreciation Portfolio (“Capital Appreciation Portfolio”) and BlackRock Energy & Resources Portfolio (“Energy & Resources Portfolio,” each a “Portfolio,” and together with All-Cap Energy & Resources Portfolio, Aurora Portfolio and Capital Appreciation Portfolio, the “Portfolios”), each a series of the Fund.

Activities and Composition of the Board

The Board of the Fund consists of thirteen individuals, eleven of whom are not “interested persons” of the Fund as defined in the Investment Company Act of 1940, as amended (the “1940 Act”) (the “Independent Board Members”). The Board Members are responsible for the oversight of the operations of the Fund and perform the various duties imposed on the directors of investment companies by the 1940 Act. The Independent Board Members have retained independent legal counsel to assist them in connection with their duties. The Co-Chairs of the Board are each Independent Board Members. The Board has established five standing committees: an Audit Committee, a Governance and Nominating Committee, a Compliance Committee, a Performance Oversight and Contract Committee and an Executive Committee, each of which is composed of Independent Board Members (except for the Performance Oversight and Contract Committee and the Executive Committee, which each have one interested Board Member) and is chaired by Independent Board Members.

The Advisory Agreement

Pursuant to the 1940 Act, the Board is required to consider the continuation of the Advisory Agreement on an annual basis. In connection with this process, the Board assessed, among other things, the nature, scope and quality of the services provided to the Portfolios by the personnel of BlackRock and its affiliates, including investment management, administrative and shareholder services, oversight of fund accounting and custody, marketing services and assistance in meeting applicable legal and regulatory requirements.

Throughout the year, the Board, acting directly and through its committees, considers at each of its meetings factors that are relevant to its annual consideration of the renewal of the Advisory Agreement, including the services and support provided by BlackRock to the Portfolios and their shareholders. Among the matters the Board considered were: (a) investment performance for one-, three- and five-year periods, as applicable, against peer funds, and applicable benchmarks, if any, as well as senior management and portfolio managers’ analysis of the reasons for any out performance or underperformance against its peers; (b) fees, including advisory, administration, if applicable, and other amounts paid to BlackRock and its affiliates by the Portfolios for services, such as transfer agency, marketing and distribution, call center and fund accounting; (c) Portfolio operating expenses; (d) the resources devoted to and compliance reports relating to each Portfolio’s investment objective, policies and restrictions, (e) the Fund’s compliance with its Code of Ethics and compliance policies and procedures; (f) the nature, cost and character of non-investment management services provided by BlackRock and its affiliates; (g) BlackRock’s and other service providers’ internal controls; (h) BlackRock’s implementation of the proxy voting policies approved by the Board; (i) the use of brokerage commissions and execution quality; (j) BlackRock’s implementation of the Fund’s valuation and liquidity procedures; and (k) periodic updates on BlackRock’s business.

Board Considerations in Approving the Advisory Agreement

The Approval Process: Prior to the April 16, 2009 meeting, the Board requested and received materials specifically relating to the Advisory Agreement. The Board is engaged in an ongoing process with BlackRock to continuously review the nature and scope of the information provided to better assist its deliberations. The materials provided in connection with the April meeting included (a) information independently compiled and prepared by Lipper, Inc. (“Lipper”) on Portfolio fees and expenses, and the investment performance of each Portfolio as compared with a peer group of funds as determined by Lipper and, with respect to All-Cap Energy & Resources Portfolio and Energy & Resources Portfolio, a customized peer group selected by BlackRock (collectively, “Peers”); (b) information on the profitability of the Advisory Agreement to BlackRock and a discussion of fall-out benefits to BlackRock and its affiliates and significant shareholders; (c) a general analysis provided by BlackRock concerning investment advisory fees charged to other clients, such as institutional clients and closed-end funds, under similar investment mandates, as well as the performance of such other clients; (d) the impact of economies of scale; (e) a summary of aggregate amounts paid by each Portfolio to BlackRock; (f) sales and redemption data regarding each Portfolio’s shares; and (g) an internal comparison of management fees classified by Lipper, if applicable.

At an in-person meeting held on April 16, 2009, the Board reviewed materials relating to its consideration of the Advisory Agreement. As a result of the discussions that occurred during the April 16, 2009 meeting, the Board presented BlackRock with questions and requests for additional information and BlackRock responded to these requests with additional written information in advance of the May 21-22, 2009 Board meeting.


		ANNUAL REPORT		SEPTEMBER 30, 2009		53

Disclosure of Investment Advisory Agreement

the advisory fee and the cost of the services and profits to be realized by BlackRock and certain affiliates from the relationship with the Portfolios; (d) economies of scale; and (e) other factors.

The Board also considered other matters it deemed important to the approval process, such as payments made to BlackRock or its affiliates relating to the distribution of Portfolio shares, services related to the valuation and pricing of portfolio holdings of each Portfolio, direct and indirect benefits to BlackRock and its affiliates and significant shareholders from their relationship with the Portfolios and advice from independent legal counsel with respect to the review process and materials submitted for the Board’s review. The Board noted the willingness of BlackRock personnel to engage in open, candid discussions with the Board. The Board did not identify any particular information as controlling, and each Board Member may have attributed different weights to the various items considered.

A. Nature, Extent and Quality of the Services: The Board, including the Independent Board Members, reviewed the nature, extent and quality of services provided by BlackRock, including the investment advisory services and the resulting performance of each Portfolio. Throughout the year, the Board compared Portfolio performance to the performance of a comparable group of mutual funds, and the performance of a relevant benchmark, if any. The Board met with BlackRock’s senior management personnel responsible for investment operations, including the senior investment officers. The Board also reviewed the materials provided by each Portfolio’s portfolio management team discussing Portfolio performance and each Portfolio’s investment objective, strategies and outlook.

The Board considered, among other factors, the number, education and experience of BlackRock’s investment personnel generally and each Portfolio’s portfolio management team, investments by portfolio managers in the funds they manage, BlackRock’s portfolio trading capabilities, BlackRock’s use of technology, BlackRock’s commitment to compliance and BlackRock’s approach to training and retaining portfolio managers and other research, advisory and management personnel. The Board also reviewed a general description of BlackRock’s compensation structure with respect to each Portfolio’s portfolio management team and BlackRock’s ability to attract and retain high-quality talent.

In addition to advisory services, the Board considered the quality of the administrative and non-investment advisory services provided to each Portfolio. BlackRock and its affiliates and significant shareholders provide the Portfolios with certain administrative, transfer agency, shareholder and other services (in addition to any such services provided to the Portfolios by third parties) and officers and other personnel as are necessary for the operations of the Portfolios. In addition to investment advisory services, BlackRock and its affiliates provide the Portfolios with other services, including (i) preparing disclosure documents, such as the prospectus, the statement of additional information and periodic shareholder reports; (ii) assisting with daily accounting and pricing; (iii) overseeing and coordinating the activities of other service providers; (iv) organizing Board meetings and preparing the materials for such Board meetings; (v) providing legal and compliance support; and (vi) performing other administrative functions necessary for the operation of the Portfolios, such as tax reporting, fulfilling regulatory filing requirements, and call center services. The Board reviewed the structure and duties of BlackRock’s fund administration, accounting, legal and compliance departments and considered BlackRock’s policies and procedures for assuring compliance with applicable laws and regulations.

B. The Investment Performance of each Portfolio and BlackRock: The Board, including the Independent Board Members, also reviewed and considered the performance history of each Portfolio. In preparation for the April 16, 2009 meeting, the Board was provided with reports, independently prepared by Lipper, which included a comprehensive analysis of each Portfolio’s performance. The Board also reviewed a narrative and statistical analysis of the Lipper data that was prepared by BlackRock, which analyzed various factors that affect Lipper’s rankings. In connection with its review, the Board received and reviewed information regarding the investment performance of each Portfolio as compared to a representative group of similar funds as determined by Lipper and to all funds in the Portfolio’s applicable Lipper category and, with respect to All-Cap Energy & Resources Portfolio and Energy & Resources Portfolio, the customized peer group selected by BlackRock. The Board was provided with a description of the methodology used by Lipper to select peer funds. The Board regularly reviews the performance of each Portfolio throughout the year. The Board attaches more importance to performance over relatively long periods of time, typically three to five years.

The Board noted that All-Cap Energy & Resources Portfolio’s performance was below the median of its Customized Lipper Peer Group for the one- and three-year periods reported. The Board and BlackRock reviewed the reasons for the Portfolio’s underperformance during these periods. The Board was informed that, among other things, the Portfolio generally was more heavily weighted than its Peers in small cap firms, which in the difficult recent economic environment performed poorly relative to larger diversified companies with significant cash reserves. The Board also noted that the Portfolio’s performance since inception was above the median of its Customized Lipper Peer Group. The Board and BlackRock discussed BlackRock’s commitment to providing the resources necessary to assist the portfolio managers and to improve All-Cap Energy & Resources Portfolio’s performance.

The Board noted that Aurora Portfolio’s performance was below the median of its Lipper Performance Universe for the one-, three- and five-year periods reported. The Board and BlackRock reviewed the reasons for the Portfolio’s underperformance during these periods compared with its Peers. The Board was informed that, among other things, the underperformance was in large part attributable to the negative impact of poor stock selection, most notably within the consumer discretionary, information technology and materials sectors. The Board and BlackRock discussed BlackRock’s commitment to providing the resources necessary to assist the portfolio managers and to improve Aurora Portfolio’s performance.


54		ANNUAL REPORT		SEPTEMBER 30, 2009

Disclosure of Investment Advisory Agreement

The Board noted that, in general, Capital Appreciation Portfolio performed better than its Peers in that the Portfolio’s performance was at or above the median of its Performance Universe in each of the one-, three- and five-year periods reported.

The Board noted that Energy & Resources Portfolio’s performance was below the median of its Customized Lipper Peer Group for the one- and three-year periods reported. The Board and BlackRock reviewed the reasons for the Portfolio’s underperformance during these periods compared with its Peers. The Board was informed that, among other things, the three-year underperformance was in large part attributable to a period of relative underperformance for the Portfolio in 2006. BlackRock advised the Board that the Portfolio generally was more heavily weighted than its Peers in small cap firms, which in the difficult recent economic environment performed less well than larger diversified companies with significant cash reserves. The Board also noted that the Portfolio’s performance for the five-year period reported was above the median of its Customized Lipper Peer Group. The Board and BlackRock discussed BlackRock’s commitment to providing the resources necessary to assist the portfolio managers and to improve Energy & Resources Portfolio’s performance.

C. Consideration of the Advisory Fees and the Cost of the Services and Profits to be Realized by BlackRock and its Affiliates from their Relationship with the Portfolios: The Board, including the Independent Board Members, reviewed each Portfolio’s contractual advisory fee rates compared with the other funds in the Portfolio’s Lipper category. It also compared each Portfolio’s total expenses, as well as actual management fees, to those of other comparable funds. The Board considered the services provided and the fees charged by BlackRock to other types of clients with similar investment mandates, including separately managed institutional accounts.

The Board received and reviewed statements relating to BlackRock’s financial condition and profitability with respect to the services it provided the Portfolios. The Board was also provided with a profitability analysis that detailed the revenues earned and the expenses incurred by BlackRock for services provided to each Portfolio. The Board reviewed BlackRock’s profitability with respect to the Portfolios and other funds the Board currently oversees for the year ended December 31, 2008 compared to available aggregate profitability data provided for the year ended December 31, 2007. The Board reviewed BlackRock’s profitability with respect to other fund complexes managed by the Manager and/or its affiliates. The Board reviewed BlackRock’s assumptions and methodology of allocating expenses in the profitability analysis, noting the inherent limitations in allocating costs among various advisory products. The Board recognized that profitability may be affected by numerous factors including, among other things, fee waivers and expense reimbursements by the Manager, the types of funds managed, expense allocations and business mix, and therefore comparability of profitability is somewhat limited.

The Board noted that, in general, individual fund or product line profitability of other advisors is not publicly available. Nevertheless, to the extent such information is available, the Board considered BlackRock’s operating margin, in general, compared to the operating margin for leading investment management firms whose operations include advising open-end funds, among other product types. The comparison indicated that operating margins for BlackRock with respect to its registered funds are generally consistent with margins earned by similarly situated publicly traded competitors. In addition, the Board considered, among other things, certain third party data comparing BlackRock’s operating margin with that of other publicly-traded asset management firms, which concluded that larger asset bases do not, in themselves, translate to higher profit margins.

In addition, the Board considered the cost of the services provided to each Portfolio by BlackRock, and BlackRock’s and its affiliates’ profits relating to the management and distribution of the Portfolio and the other funds advised by BlackRock and its affiliates. As part of its analysis, the Board reviewed BlackRock’s methodology in allocating its costs to the management of each Portfolio. The Board also considered whether BlackRock has the financial resources necessary to attract and retain high quality investment management personnel to perform its obligations under the Advisory Agreement and to continue to provide the high quality of services that is expected by the Board.

The Board noted that All-Cap Energy & Resources Portfolio’s contractual advisory fees, which do not take into account any expense reimbursement or fee waivers, were lower than or equal to the median contractual advisory fees paid by its Peers. The Portfolio has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the size of the Portfolio increases, thereby allowing shareholders the potential to participate in economies of scale. The Board noted that BlackRock has contractually agreed to waive fees or reimburse expenses in order to limit the Portfolio’s total net expenses on a class basis.

The Board noted that, although Aurora Portfolio’s contractual advisory fees were above the median of its Peers, its actual total expenses were within 5% of the median. The Portfolio has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the size of the Portfolio increases, thereby allowing shareholders the potential to participate in economies of scale. The Board noted that BlackRock has contractually agreed to waive fees or reimburse expenses in order to limit the Portfolio’s total net expenses on a class basis.

The Board noted that Capital Appreciation Portfolio’s contractual advisory fees, which do not take into account any expense reimbursement or fee waivers, were lower than or equal to the median contractual advisory fees paid by its Peers. The Portfolio has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the size of the Portfolio increases, thereby allowing shareholders the potential to participate in economies of scale. The Board noted that BlackRock has contractually agreed to waive fees or reimburse expenses in order to limit the Portfolio’s total net expenses on a class basis.


		ANNUAL REPORT		SEPTEMBER 30, 2009		55

Disclosure of Investment Advisory Agreement

The Board noted that Energy & Resources Portfolio’s contractual advisory fees, which do not take into account any expense reimbursement or fee waivers, were lower than or equal to the median contractual advisory fees paid by its Peers. The Portfolio has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the size of the Portfolio increases, thereby allowing shareholders the potential to participate in economies of scale. The Board noted that BlackRock has contractually agreed to waive fees or reimburse expenses in order to limit the Portfolio’s total net expenses on a class basis.

D. Economies of Scale: The Board, including the Independent Board Members, considered the extent to which economies of scale might be realized as the assets of each Portfolio increase and whether there should be changes in the advisory fee rate or structure in order to enable the Portfolio to participate in these economies of scale, for example through the use of revised breakpoints in the advisory fee based upon the assets of the Portfolio. The Board considered that the funds in the BlackRock fund complex share some common resources and, as a result, an increase in the overall size of the complex could permit each fund to incur lower expenses than it would otherwise as a stand-alone entity. The Board also considered BlackRock’s overall operations and its efforts to expand the scale of, and improve the quality of, its operations.

E. Other Factors: The Board also took into account other ancillary or “fall-out” benefits that BlackRock or its affiliates and significant shareholders may derive from its relationship with the Portfolio, both tangible and intangible, such as BlackRock’s ability to leverage its investment professionals who manage other portfolios, an increase in BlackRock’s profile in the investment advisory community, and the engagement of BlackRock’s affiliates and significant shareholders as service providers to the Portfolios, including for administrative, transfer agency and distribution services. The Board also noted that BlackRock may use third party research obtained by soft dollars generated by certain mutual fund transactions to assist itself in managing all or a number of its other client accounts.

In connection with its consideration of the Advisory Agreement, the Board also received information regarding BlackRock’s brokerage and soft dollar practices. The Board received reports from BlackRock which included information on brokerage commissions and trade execution practices throughout the year.

Conclusion

The Board Members of the Fund present at the meeting, including the Independent Board Members present at the meeting, unanimously approved the continuation of the Advisory Agreement between the Manager and the Fund with respect to each Portfolio for a one-year term ending June 30, 2010. Based upon their evaluation of all these factors in their totality, the Board Members of the Fund present at the meeting, including the Independent Board Members present at the meeting, were satisfied that the terms of the Advisory Agreement were fair and reasonable and in the best interest of each Portfolio and its shareholders. In arriving at a decision to approve the Advisory Agreement, the Board did not identify any single factor or group of factors as all-important or controlling, but considered all factors together, and different Board Members may have attributed different weights to the various factors considered. The Independent Board Members were also assisted by the advice of independent legal counsel in making this determination. The contractual fee arrangements for each Portfolio reflect the results of several years of review by the Board Members and predecessor Board Members, and discussions between such Board Members (and predecessor Board Members) and BlackRock. Certain aspects of the arrangements may be the subject of more attention in some years than in others, and the Board Members’ conclusions may be based in part on their consideration of these arrangements in prior years.


56		ANNUAL REPORT		SEPTEMBER 30, 2009

Officers and Trustees


Name, Address, and Year of Birth	Position(s) Held with Fund	Length of Time Served as a Trustee²	Principal Occupation(s) During Past 5 Years	Number of BlackRock- Advised Registered Investment Companies (“RICs”) Consisting of Investment Portfolios (“Portfolios”) Overseen	Public Directorships
Non-Interested Trustees¹

Ronald W. Forbes 40 East 52nd Street New York, NY 10022 1940	Co-Chair of the Board and Trustee	Since 2007	Professor Emeritus of Finance, School of Business, State University of New York at Albany since 2000.	34 RICs consisting of 81 Portfolios	None

Rodney D. Johnson 40 East 52nd Street New York, NY 10022 1941	Co-Chair of the Board and Trustee	Since 2007	President, Fairmount Capital Advisors, Inc. since 1987; Director, Fox Chase Cancer Center since 2002; Member of the Archdiocesan Investment Committee of the Archdiocese of Philadelphia since 2003; Director, The Committee of Seventy (civic) since 2006.	34 RICs consisting of 81 Portfolios	None

David O. Beim 40 East 52nd Street New York, NY 10022 1940	Trustee	Since 2007	Professor of Finance and Economics at the Columbia University Graduate School of Business since 1991; Trustee, Phillips Exeter Academy since 2002; Chairman, Wave Hill Inc. (public garden and cultural center) from 1990 to 2006.	34 RICs consisting of 81 Portfolios	None

Dr. Matina Horner 40 East 52nd Street New York, NY 10022 1939	Trustee	Since 2004	Executive Vice President of Teachers Insurance and Annuity Association and College Retirement Equities Fund from 1989 to 2003.	34 RICs consisting of 81 Portfolios	NSTAR (electric and gas utility)

Herbert I. London 40 East 52nd Street New York, NY 10022 1939	Trustee	Since 2007	Professor Emeritus, New York University since 2005; John M. Olin Professor of Humanities, New York University from 1993 to 2005 and Professor thereof from 1980 to 2005; President, Hudson Institute (policy research organization) since 1997 and Trustee thereof since 1980; Chairman of the Board of Trustees for Grantham University since 2006; Director, InnoCentive, Inc. (strategic solutions company) since 2005; Director, Cerego, LLC (software development and design) since 2005.	34 RICs consisting of 81 Portfolios	AIMS Worldwide, Inc. (marketing)

Cynthia A. Montgomery 40 East 52nd Street New York, NY 10022 1952	Trustee	Since 2007	Professor, Harvard Business School since 1989; Director, Harvard Business School Publishing since 2005; Director, McLean Hospital since 2005.	34 RICs consisting of 81 Portfolios	Newell Rubbermaid, Inc. (manufacturing)

Joseph P. Platt, Jr. 40 East 52nd Street New York, NY 10022 1947	Trustee	Since 2007	Director, The West Penn Allegheny Health System (a not-for-profit health system) since 2008; Director, Jones and Brown (Canadian insurance broker) since 1998; General Partner, Thorn Partners, LP (private investment) since 1998; Partner, Amarna Corporation, LLC (private investment company) from 2002 to 2008.	34 RICs consisting of 81 Portfolios	Greenlight Capital Re, Ltd. (reinsurance company)

Robert C. Robb, Jr. 40 East 52nd Street New York, NY 10022 1945	Trustee	Since 2007	Partner, Lewis, Eckert, Robb and Company (management and financial consulting firm) since 1981.	34 RICs consisting of 81 Portfolios	None


		ANNUAL REPORT		SEPTEMBER 30, 2009		57

Officers and Trustees (continued)


Name, Address, and Year of Birth	Position(s) Held with Fund	Length of Time Served as a Trustee²	Principal Occupation(s) During Past 5 Years	Number of BlackRock- Advised Registered Investment Companies (“RICs”) Consisting of Investment Portfolios (“Portfolios”) Overseen	Public Directorships
Non-Interested Trustees¹(concluded)

Toby Rosenblatt 40 East 52nd Street New York, NY 10022 1938	Trustee	Since 2005	President, Founders Investments Ltd. (private investments) since 1999; Director, Forward Management, LLC since 2007; Director, The James Irvine Foundation (philanthropic foundation) since 1997; Trustee, State Street Research Mutual Funds from 1990 to 2005; Trustee, Metropolitan Series Funds, Inc. from 2001 to 2005.	34 RICs consisting of 81 Portfolios	A.P. Pharma, Inc. (specialty pharmaceuticals)

Kenneth L. Urish 40 East 52nd Street New York, NY 10022 1951	Trustee	Since 2007	Managing Partner, Urish Popeck & Co., LLC (certified public accountants and consultants) since 1976; Member of External Advisory Board, The Pennsylvania State University Accounting Department since 2001; Trustee, The Holy Family Foundation since 2001; Committee Member, Professional Ethics Committee of the Pennsylvania Institute of Certified Public Accountants since 2007; President and Trustee, Pittsburgh Catholic Publishing Associates from 2003 to 2008; Director, Inter-Tel from 2006 to 2007.	34 RICs consisting of 81 Portfolios	None

Frederick W. Winter 40 East 52nd Street New York, NY 10022 1945	Trustee	Since 2007	Professor and Dean Emeritus of the Joseph M. Katz School of Business, University of Pittsburgh since 2005 and Dean thereof from 1997 to 2005. Director, Alkon Corporation (pneumatics) since 1992; Director, Tippman Sports (recreation) since 2005; Director, Indotronix International (IT services) from 2004 to 2008.	34 RICs consisting of 81 Portfolios	None

1	Trustees serve until their resignation, removal or death, or until December 31 of the year in which they turn 72.

Date shown is the earliest date a person has served as a trustee for the Fund covered by this annual report. Following the combination of Merrill Lynch Investment Managers, L.P. (“MLIM”) and BlackRock, Inc. (“BlackRock”) in September 2006, the various legacy MLIM and legacy BlackRock fund boards were realigned and consolidated into three new fund boards in 2007. As a result, although the chart shows certain Trustees as joining the Fund’s board in 2007, each Trustee first became a member of the boards of other legacy MLIM or legacy BlackRock funds as follows: David O. Beim, 1998; Ronald W. Forbes, 1977; Matina Horner, 2004; Rodney D. Johnson, 1995; Herbert I. London, 1987; Cynthia A. Montgomery, 1994; Joseph P. Platt, 1999; Robert C. Robb, Jr., 1998; Toby Rosenblatt, 2005; Kenneth L. Urish, 1999 and Frederick W. Winter, 1999.


Interested Trustees³

Richard S. Davis 40 East 52nd Street New York, NY 10022 1945	Trustee	Since 2005	Managing Director, BlackRock, Inc. since 2005; Chief Executive Officer, State Street Research & Management Company from 2000 to 2005; Chairman of the Board of Trustees, State Street Research Mutual Funds from 2000 to 2005; Chairman, SSR Realty from 2000 to 2004.	172 RICs consisting of 283 Portfolios	None

Henry Gabbay 40 East 52nd Street New York, NY 10022 1947	Trustee	Since 2007	Consultant, BlackRock, Inc. from 2007 to 2008; Managing Director, BlackRock, Inc. from 1989 to 2007; Chief Administrative Officer, BlackRock Advisors, LLC from 1998 to 2007; President of BlackRock Funds and BlackRock Bond Allocation Target Shares from 2005 to 2007 and Treasurer of certain closed-end funds in the BlackRock fund complex from 1989 to 2006.	172 RICs consisting of 283 Portfolios	None

Mr. Davis is an “interested person,” as defined in the Investment Company Act of 1940, of the Fund based on his position with BlackRock, Inc. and its affiliates. Mr. Gabbay is an “interested person” of the Fund based on his former positions with BlackRock, Inc. and its affiliates as well as his ownership of BlackRock, Inc. and PNC securities. Trustees serve until their resignation, removal or death, or until December 31 of the year in which they turn 72.


58		ANNUAL REPORT		SEPTEMBER 30, 2009

Officers and Trustees (continued)


Name, Address, and Year of Birth	Position(s) Held with Fund	Length of Time Served	Principal Occupation(s) During Past 5 Years
Fund Officers¹

Anne F. Ackerley 40 East 52nd Street New York, NY 10022 1958	President and Chief Executive Officer	Since 2009	Managing Director of BlackRock, Inc. since 2000; Vice President of the BlackRock-advised funds from 2007 to 2009; Chief Operating Officer of BlackRock’s Global Client Group(GCG) since 2009; Chief Operating Officer of BlackRock’s U.S. Retail Group from 2006 to 2009; Head of BlackRock’s Mutual Fund Group from 2000 to 2006.

Richard Hoerner, CFA 40 East 52nd Street New York, NY 10022 1958	Vice President	Since 2009	Managing Director of BlackRock, Inc. since 2000; Co-head of BlackRock’s Cash Management Portfolio Management Group since 2002; Member of the Cash Management Group Executive Committee since 2005; Director of BlackRock, Inc. since 1998.

Jeffery Holland, CFA 40 East 52nd Street New York, NY 10022 1971	Vice President	Since 2009	Director of BlackRock, Inc. since 2006; Chief Operating Officer of BlackRock’s U.S. Retail Group since 2009; Co-head of Product Development and Management for BlackRock’s U.S. Retail Group from 2007 to 2009; Product Manager of Raymond James & Associates from 2003 to 2006.

Brendan Kyne 40 East 52nd Street New York, NY 10022 1977	Vice President	Since 2009	Director of BlackRock, Inc. since 2008; Head of Product Development and Management for BlackRock’s U.S. Retail Group since 2009, co-head thereof from 2007 to 2009; Vice President of BlackRock, Inc. from 2005 to 2008; Associate of BlackRock, Inc. from 2002 to 2004.

Simon Mendelson 40 East 52nd Street New York, NY 10022 1964	Vice President	Since 2009	Managing Director of BlackRock, Inc. since 2005; Chief Operating Officer and head of the Global Client Group for BlackRock’s Global Cash Management Business since 2007; Head of BlackRock’s Strategy and Development Group from 2005 to 2007; Partner of McKinsey & Co. from 1997 to 2005.

Brian Schmidt 40 East 52nd Street New York, NY 10022 1958	Vice President	Since 2009	Managing Director of BlackRock, Inc. since 2004; Various positions with U.S. Trust Company from 1991 to 2003 including Director from 2001 to 2003 and Senior Vice President from 1998 to 2003; Vice President, Chief Financial Officer and Treasurer of Excelsior Funds, Inc., Excelsior Tax-Exempt Funds, Inc. and Excelsior Funds Trust from 2001 to 2003.

Christopher Stavrakas, CFA 40 East 52nd Street New York, NY 10022 1959	Vice President	Since 2009	Managing Director of BlackRock, Inc. since 2006; Co-head of BlackRock’s Cash Management Portfolio Management Group since 2006; Senior Vice President, CIO, and Director of Liability Management for the Securities Lending Group at Mellon Bank from 1999 to 2006.

Neal J. Andrews 40 East 52nd Street New York, NY 10022 1966	Chief Financial Officer	Since 2007	Managing Director of BlackRock, Inc. since 2006; Senior Vice President and Line of Business Head of Fund Accounting and Administration at PNC Global Investment Servicing (U.S.) Inc. from 1992 to 2006.

Jay M. Fife 40 East 52nd Street New York, NY 10022 1970	Treasurer	Since 2007	Managing Director of BlackRock, Inc. since 2007 and Director in 2006; Assistant Treasurer of the Merrill Lynch Investment Managers, L.P. (“MLIM”) and Fund Asset Management, L.P. advised funds from 2005 to 2006; Director of MLIM Fund Services Group from 2001 to 2006.

Brian P. Kindelan 40 East 52nd Street New York, NY 10022 1959	Chief Compliance Officer	Since 2007	Chief Compliance Officer of the BlackRock-advised Funds since 2007; Managing Director and Senior Counsel of BlackRock, Inc. since 2005; Director and Senior Counsel of BlackRock Advisors, LLC from 2001 to 2004.

Howard B. Surloff 40 East 52nd Street New York, NY 10022 1965	Secretary	Since 2007	Managing Director of BlackRock, Inc. and General Counsel of U.S. Funds at BlackRock, Inc. since 2006; General Counsel (U.S.) of Goldman Sachs Asset Management, L.P. from 1993 to 2006.

1	Officers of the Fund serve at the pleasure of the Board.

Further information about the Fund’s Officers and Trustees is available in the Fund’s Statement of Additional Information, which can be obtained without charge by calling (800) 441-7762.


		ANNUAL REPORT		SEPTEMBER 30, 2009		59

Officers and Trustees (concluded)

Investment Advisor and Co-Administrator

BlackRock Advisors, LLC

Wilmington, DE 19809

Co-Administrator and Transfer Agent

PNC Global Investment

Servicing (U.S.) Inc.

Wilmington, DE 19809

Custodian

PFPC Trust Company

Philadelphia, PA 19153

Distributor

BlackRock Investments, LLC

New York, NY 10022

Legal Counsel

Sidley Austin LLP

New York, NY 10019

Independent Registered Public Accounting Firm

Deloitte & Touche LLP

Philadelphia, PA 19103

Address of the Portfolios

100 Bellevue Parkway

Wilmington, DE 19809

Effective July 31, 2009, Donald C. Burke, President and Chief Executive Officer of the Fund retired. The Fund’s Board wishes Mr. Burke well in his retirement.

Effective August 1, 2009, Anne F. Ackerley became President and Chief Executive Officer of the Fund and Jeffrey Holland and Brian Schmidt became Vice Presidents of the Fund.

Effective September 17, 2009, Richard Hoerner, Brendan Kyne, Simon Mendelson and Christopher Stavrakas became Vice Presidents of the Fund.

Additional Information

General Information

Electronic Delivery

Electronic copies of most financial reports and prospectuses are available on the Fund’s website or shareholders can sign up for e-mail notifications of quarterly statements, annual and semi-annual reports and prospectuses by enrolling in the Fund’s electronic delivery program.

To enroll:

Shareholders Who Hold Accounts with Investment Advisors, Banks or Brokerages:

Please contact your financial advisor. Please note that not all investment advisors, banks or brokerages may offer this service.

Shareholders Who Hold Accounts Directly With BlackRock

1)	Access the BlackRock website at

http://www.blackrock.com/edelivery

2)	Click on the applicable link and follow the steps to sign up

3)	Log into your account

Householding

The Fund will mail only one copy of shareholder documents, including prospectuses, annual and semi-annual reports and proxy statements, to shareholders with multiple accounts at the same address. This practice is commonly called “householding” and it is intended to reduce expenses and eliminate duplicate mailings of shareholder documents. Mailings of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact the Fund at (800) 441-7762.

Availability of Quarterly Portfolio Schedule

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 the operation of the Public Reference Room may be obtained by calling (202) 551-8090. The Fund’s Forms N-Q may also be obtained upon request and without charge by calling (800) 441-7762.

Availability of Proxy Voting Policies and Procedures

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available (1) without charge, upon request by calling (800) 441-7762; (2) at www.blackrock.com; and (3) on the Securities and Exchange Commission’s (the “SEC”) website at http://www.sec.gov.

Availability of Proxy Voting Record

Information about how the Fund voted proxies relating to securities held in the Fund’s portfolios during the most recent 12 month period ended June 30 is available, upon request and without charge (1) at www.blackrock.com, or by calling (800) 441-7762 and (2) on the SEC’s website at http://www.sec.gov.


60		ANNUAL REPORT		SEPTEMBER 30, 2009

Additional Information (concluded)

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 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 portfolios.

Systematic Withdrawal Plan

Investor Class shareholders can establish a systematic withdrawal plan and receive periodic payments of $50 or more from their BlackRock portfolios, as long as their account is at least $10,000.

Retirement Plans

Shareholders may make investments in conjunction with Traditional, Rollover, Roth, Coverdell, Simple IRA’s, SEP IRA’s and 403(b) Plans.

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.


		ANNUAL REPORT		SEPTEMBER 30, 2009		61

A World-Class Mutual Fund Family

BlackRock offers a diverse lineup of open-end mutual funds crossing all investment styles and managed by experts in equity, fixed income and tax-exempt investing.


Equity Funds

BlackRock All-Cap Energy & Resources Portfolio	BlackRock Global Opportunities Portfolio	BlackRock Mid-Cap Value Equity Portfolio
BlackRock Asset Allocation Portfolio†	BlackRock Global SmallCap Fund	BlackRock Mid Cap Value Opportunities Fund
BlackRock Aurora Portfolio	BlackRock Health Sciences Opportunities Portfolio	BlackRock Natural Resources Trust
BlackRock Balanced Capital Fund†	BlackRock Healthcare Fund	BlackRock Pacific Fund
BlackRock Basic Value Fund	BlackRock Index Equity Portfolio*	BlackRock Science & Technology Opportunities Portfolio
BlackRock Capital Appreciation Portfolio	BlackRock International Fund	BlackRock Small Cap Core Equity Portfolio
BlackRock Energy & Resources Portfolio	BlackRock International Diversification Fund	BlackRock Small Cap Growth Equity Portfolio
BlackRock Equity Dividend Fund	BlackRock International Index Fund	BlackRock Small Cap Growth Fund II
BlackRock EuroFund	BlackRock International Opportunities Portfolio	BlackRock Small Cap Index Fund
BlackRock Focus Growth Fund	BlackRock International Value Fund	BlackRock Small Cap Value Equity Portfolio
BlackRock Focus Value Fund	BlackRock Large Cap Core Fund	BlackRock Small/Mid-Cap Growth Portfolio
BlackRock Fundamental Growth Fund	BlackRock Large Cap Core Plus Fund	BlackRock S&P 500 Index Fund
BlackRock Global Allocation Fund†	BlackRock Large Cap Growth Fund	BlackRock U.S. Opportunities Portfolio
BlackRock Global Dynamic Equity Fund	BlackRock Large Cap Value Fund	BlackRock Utilities and Telecommunications Fund
BlackRock Global Emerging Markets Fund	BlackRock Latin America Fund	BlackRock Value Opportunities Fund
BlackRock Global Financial Services Fund	BlackRock Mid-Cap Growth Equity Portfolio
BlackRock Global Growth Fund

Fixed Income Funds

BlackRock Bond Portfolio	BlackRock Income Builder Portfolio	BlackRock Short-Term Bond Fund
BlackRock Emerging Market Debt Portfolio	BlackRock Inflation Protected Bond Portfolio	BlackRock Strategic Income Portfolio
BlackRock GNMA Portfolio	BlackRock Intermediate Government Bond Portfolio	BlackRock Total Return Fund
BlackRock Government Income Portfolio	BlackRock International Bond Portfolio	BlackRock Total Return Portfolio II
BlackRock High Income Fund	BlackRock Long Duration Bond Portfolio	BlackRock World Income Fund
BlackRock High Yield Bond Portfolio	BlackRock Low Duration Bond Portfolio
BlackRock Income Portfolio	BlackRock Managed Income Portfolio

Municipal Bond Funds

BlackRock AMT-Free Municipal Bond Portfolio	BlackRock Kentucky Municipal Bond Portfolio	BlackRock New York Municipal Bond Fund
BlackRock California Municipal Bond Fund	BlackRock Municipal Insured Fund	BlackRock Ohio Municipal Bond Portfolio
BlackRock Delaware Municipal Bond Portfolio	BlackRock National Municipal Fund	BlackRock Pennsylvania Municipal Bond Fund
BlackRock High Yield Municipal Fund	BlackRock New Jersey Municipal Bond Fund	BlackRock Short-Term Municipal Fund
BlackRock Intermediate Municipal Fund

Target Risk & Target Date Funds

BlackRock Prepared Portfolios	BlackRock Lifecycle Prepared Portfolios
Conservative Prepared Portfolio	Prepared Portfolio 2010	Prepared Portfolio 2030
Moderate Prepared Portfolio	Prepared Portfolio 2015	Prepared Portfolio 2035
Growth Prepared Portfolio	Prepared Portfolio 2020	Prepared Portfolio 2040
Aggressive Growth Prepared Portfolio	Prepared Portfolio 2025	Prepared Portfolio 2045
		Prepared Portfolio 2050

*	See the prospectus for information on specific limitations on investments in the fund.

†	Mixed asset fund.

BlackRock mutual funds are distributed by BlackRock Investments, LLC. You should consider the investment objectives, risks, charges and expenses of the funds under consideration carefully before investing. Each fund’s prospectus contains this and other information and is available at www.blackrock.com or by calling (800) 441-7762 or from your financial advisor. The prospectus should be read carefully before investing.


62		ANNUAL REPORT		SEPTEMBER 30, 2009

[THIS PAGE INTENTIONALLY LEFT BLANK.]

LOGO

This report is transmitted to shareholders only. It is not authorized for use as an offer of sale or a solicitation of an offer to buy shares of the Portfolios unless accompanied or preceded by the Portfolios’ current prospectus. Past performance results shown in this report should not be considered a representation of future performance. Investment returns and principal value of shares will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Statements and other information herein are as dated and are subject to change.

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




		EQUITY12-9/09-AR

EQUITIES FIXED INCOME REAL ESTATE LIQUIDITY ALTERNATIVES BLACKROCK SOLUTIONS


BlackRock Funds^SM
ANNUAL REPORT \| SEPTEMBER 30, 2009

BlackRock Small Cap Core Equity Portfolio

BlackRock Small Cap Growth Equity Portfolio

BlackRock Small Cap Value Equity Portfolio

NOT FDIC INSURED

MAY LOSE VALUE

NO BANK GUARANTEE

Table of Contents


		Page
Dear Shareholder		3
Annual Report:
Portfolio Summaries		4
About Portfolio Performance		10
Disclosure of Expenses		10
Financial Statements:		11
Schedules of Investments		11
Statements of Assets and Liabilities		20
Statements of Operations		22
Statements of Changes in Net Assets		23
Financial Highlights		24
Notes to Financial Statements		30
Report of Independent Registered Public Accounting Firm		39
Important Tax Information (Unaudited)		39
Disclosure of Investment Advisory Agreement		40
Officers and Trustees		44
Additional Information		47
Mutual Fund Family		49


2		ANNUAL REPORT		SEPTEMBER 30, 2009

Dear Shareholder

The past 12 months saw a seismic shift in market sentiment — from fear and pessimism during the worst economic decline and crisis of confidence in financial markets since The Great Depression, to exuberance and increasing optimism amid emerging signs of recovery. The period began on the heels of the infamous collapse of Lehman Brothers, which triggered an intensifying deterioration in global economic activity in the final months of 2008 and the early months of 2009 and resulted in massive government intervention (on a global scale) in the financial system and the economy. The tide turned dramatically in March 2009, however, on the back of new US government initiatives, as well as better-than-expected economic data and upside surprises in corporate earnings.

Not surprisingly, US equities endured extreme volatility in this environment — steep declines and heightened risk aversion in the early part of the reporting period gave way to an impressive seven-month rally that began in March. This rally has pushed all major indexes well into positive territory for 2009. Stocks did experience modest setbacks in June and then again in late September and early October, but the overall trajectory was up. The experience in international markets was similar to that in the United States. Prominent in the rally have been emerging markets, which were less affected by the global credit crunch and are experiencing faster economic growth rates when compared to the developed world.


Total Returns as of September 30, 2009	6-month		12-month
US equities (S&P 500 Index)	34.02	%	(6.91	)%
Small cap US equities (Russell 2000 Index)	43.95		(9.55	)
International equities (MSCI Europe, Australasia, Far East Index)	49.85		3.23
US Treasury securities (BofA Merrill Lynch 10-Year US Treasury Index*)	(3.77	)	7.66
Taxable fixed income (Barclays Capital US Aggregate Bond Index)	5.59		10.56
Tax-exempt fixed income (Barclays Capital Municipal Bond Index)	9.38		14.85
High yield bonds (Barclays Capital US Corporate High Yield 2% Issuer Capped Index)	40.25		22.51

*	Formerly a Merrill Lynch index.

Past performance is no guarantee of future results. Index performance shown for illustrative purposes only. You cannot invest directly in an index.

Sincerely,

Rob Kapito

President, BlackRock Advisors, LLC

Announcement to Shareholders

THIS PAGE NOT PART OF YOUR FUND REPORT


						3


Portfolio Summary as of September 30, 2009		Small Cap Core Equity Portfolio

Portfolio Management Commentary

How did the Portfolio perform?

•

The Portfolio underperformed the benchmark, Russell 2000 Index, for the 12-month period.

What factors influenced performance?

•

The Portfolio’s underperformance for the year was primarily due to relative weakness in industrials, health care and information technology (IT). Stock selection hampered results in industrials, as Huron Consulting Group, Inc. and motion control equipment maker Altra Holdings, Inc. were among the most notable individual detractors; both positions were eliminated during the period. Security selection also weighed on return comparisons in IT, as technology stocks significantly outperformed the broader market. Key sources of weakness included the software, IT services and internet-related areas. In health care, the Portfolio’s positions in health care providers and services outperformed their benchmark counterparts. However, these relative gains were overshadowed by disappointing results within the health care equipment & supplies and biotechnology sub-sectors.

•

On the positive side, stock selection and allocation benefited relative returns in materials, consumer discretionary and energy. In materials, an overweight among containers & packaging manufacturers and stock selection among specialty chemicals producers, including Solutia, Inc. and Hercules, Inc., added the greatest value. Outperformance in consumer discretionary was driven primarily by overweights and selection among specialty retailers and textiles, apparel & luxury goods makers. Starwood Hotels & Resorts Worldwide, Inc. and Wyndham Worldwide Corp. were also significant contributors. Relative strength in energy was attributable to an overweight and stock selection among energy exploration & production companies. Many of these names rallied sharply with underlying commodity prices as investor focus shifted toward global economic recovery and a corresponding pickup in energy demand.

Describe recent Portfolio activity.

•

The Portfolio maintained a more defensive posture as the economic recession intensified in late 2008 and early 2009. More recently, we positioned the Portfolio for a more favorable environment as we have seen tangible signs of stabilization and improvement in the global economy. The most notable changes within the Portfolio included increased exposure in consumer discretionary, particularly among media companies, auto component manufacturers and specialty retailers. New positions included Martha Stewart Living Omnimedia, Inc., Modine Manufacturing Co. and Buckle, Inc. Conversely, we reduced allocations in health care, primarily among health care providers and services, and eliminated exposure to the more defensive utilities sector.

Describe Portfolio positioning at period end.

•

At period end, the most notable weightings relative to the Russell 2000 Index included overweights in consumer discretionary (especially media, specialty retailers and auto component manufacturers) and materials (mainly metals & mining), and underweights in utilities, health care (namely biotechnology and pharmaceuticals), financials (within insurers) and IT (particularly IT services and electronic equipment).

Portfolio Information


Ten Largest Holdings	Percent of Long-Term Investments
MFA Financial, Inc.	3	%
KBW, Inc.	2
Starent Networks Corp.	2
The GEO Group, Inc.	2
MEDNAX, Inc.	2
Lumber Liquidators, Inc.	2
SkillSoft Plc – ADR	2
Whiting Petroleum Corp.	2
Jos. A. Bank Clothiers, Inc.	1
Chimera Investment Corp.	1

Sector Allocation	Percent of Long-Term Investments
Consumer Discretionary	20	%
Financials	19
Information Technology	18
Industrials	15
Health Care	13
Materials	6
Energy	6
Consumer Staples	3


4		ANNUAL REPORT		SEPTEMBER 30, 2009

Small Cap Core Equity Portfolio

Total Return Based on a $10,000 Investment

LOGO

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

2	The Portfolio normally invests at least 80% of its net assets in the equity securities of US small capitalization companies (market capitalizations between approximately $7.6 million and $3.2 billion as of December 31, 2008).

3	An index that measures the performance of the 2,000 smallest companies in the Russell 3000.

4	Commencement of operations.

Performance Summary for the Period Ended September 30, 2009


			Average Annual Total Returns⁵
	6-Month Total Returns		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	39.90	%	(13.56	)%	N/A		1.06	%	N/A		6.03	%	N/A
Service	39.69		(13.86	)	N/A		0.84		N/A		5.84		N/A
Investor A	39.58		(13.94	)	(18.44	)%	0.63		(0.45	)%	5.69		4.96	%
Investor B	39.05		(14.58	)	(18.42	)	(0.13	)	(0.49	)	5.07		5.07
Investor C	39.03		(14.67	)	(15.52	)	(0.13	)	(0.13	)	5.08		5.08
Russell 2000 Index	43.95		(9.55	)	N/A		2.41		N/A		4.13		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 Portfolio Performance” on page 10 for a detailed description of share classes, including any related sales charges and fees.

6	The Portfolio commenced operations on January 2, 2002.

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 April 1, 2009		Ending Account Value September 30, 2009		Expenses Paid During the Period⁷		Beginning Account Value April 1, 2009		Ending Account Value September 30, 2009		Expenses Paid During the Period⁷
Institutional	$	1,000.00	$	1,399.00	$	8.00	$	1,000.00	$	1,018.40	$	6.73
Service	$	1,000.00	$	1,396.90	$	9.73	$	1,000.00	$	1,016.95	$	8.19
Investor A	$	1,000.00	$	1,395.80	$	10.81	$	1,000.00	$	1,016.04	$	9.10
Investor B	$	1,000.00	$	1,390.50	$	15.34	$	1,000.00	$	1,012.23	$	12.91
Investor C	$	1,000.00	$	1,390.30	$	15.34	$	1,000.00	$	1,012.23	$	12.91

For each class of the Portfolio, expenses are equal to the annualized expense ratio for the class (1.33% for Institutional, 1.62% for Service, 1.80% for Investor A, 2.56% for Investor B and 2.56% for Investor C), multiplied by the average account value over the period, multiplied by 183/365 (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 10 for further information on how expenses were calculated.


		ANNUAL REPORT		SEPTEMBER 30, 2009		5


Portfolio Summary as of September 30, 2009		Small Cap Growth Equity Portfolio

Portfolio Management Commentary

How did the Portfolio perform?

•

The Portfolio underperformed the benchmark, Russell 2000 Growth Index, for the 12-month period.

What factors influenced performance?

•

Weak stock selection in both the health care and consumer discretionary sectors was the most significant detractor to performance relative to the Russell 2000 Growth Index. Within health care, Wright Medical Group, Inc. fell more than 40% as consumers delayed operations utilizing the company’s hip and knee replacement products. In the consumer discretionary sector, the Portfolio’s underweight in retail proved to be a headwind as the sector jumped more than 20% during the previous 12 months. Additionally, holding Ticketmaster disappointed, falling 35% after a noticeable slowdown in the company’s entertainment ticket processing business.

•

On the positive side, stock selection in the industrials sector was the most significant relative contributor for the annual period. Aircraft cabin parts manufacturer BE Aerospace, Inc. was up more than 27% during the period on strong backlog for its parts and services. Elsewhere in industrials, energy database provider IHS. Inc. rose close to 7% on continued strong financial results.

Describe recent Portfolio activity.

•

During the annual period, we decreased our weighting in the consumer staples sector, eliminating positions in Chattem and Green Mountain Coffee Roasters, Inc. after the holdings hit our price targets. We significantly reduced our underweight in the health care sector, adding new names MedAssets, Inc., Acorda Therapeutics, Inc. and Gen-Probe, Inc. among others.

Describe Portfolio positioning at period end.

•

At period end, the Portfolio’s most significant overweight relative to the Russell 2000 Growth Index was in the information technology sector, while its most significant underweight was in health care.

Portfolio Information


Ten Largest Holdings	Percent of Long-Term Investments
TiVo, Inc.	3	%
SkillSoft Plc - ADR	3
ExlService Holdings, Inc.	2
CKX, Inc.	2
SonicWALL, Inc.	2
Scientific Games Corp. - Class A	2
MSCI, Inc. - Class A	2
MEDNAX, Inc.	2
BE Aerospace, Inc.	2
Lincare Holdings, Inc.	2


Sector Allocation	Percent of Long-Term Investments
Information Technology	30	%
Health Care	23
Consumer Discretionary	16
Industrials	14
Financials	6
Energy	5
Consumer Staples	2
Materials	2
Telecommunication Services	2


6		ANNUAL REPORT		SEPTEMBER 30, 2009

Small Cap Growth Equity Portfolio

Total Return Based on a $10,000 Investment

LOGO

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

The Portfolio normally invests at least 80% of its net assets in equity securities issued by US small capitalization growth companies (market capitalizations between approximately $7.6 million and $3.2 billion as of December 31, 2008) which the portfolio management team believes offer superior prospects for growth.

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

Performance Summary for the Period Ended September 30, 2009


			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	43.65	%	(8.22	)%	N/A		5.15	%	N/A		1.83	%	N/A
Service	43.43		(8.45	)	N/A		4.89		N/A		1.57		N/A
Investor A	43.31		(8.64	)	(13.43	)%	4.78		3.66	%	1.41		0.87	%
Investor B	42.72		(9.42	)	(13.50	)	3.90		3.55		0.81		0.81
Investor C	42.63		(9.48	)	(10.39	)	3.87		3.87		0.62		0.62
Russell 2000 Growth Index	43.06		(6.32	)	N/A		2.91		N/A		1.10		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 Portfolio 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 April 1, 2009		Ending Account Value September 30, 2009		Expenses Paid During the Period⁵		Beginning Account Value April 1, 2009		Ending Account Value September 30, 2009		Expenses Paid During the Period⁵
Institutional	$	1,000.00	$	1,436.50	$	5.37	$	1,000.00	$	1,020.66	$	4.46
Service	$	1,000.00	$	1,434.30	$	6.65	$	1,000.00	$	1,019.60	$	5.52
Investor A	$	1,000.00	$	1,433.10	$	8.05	$	1,000.00	$	1,018.45	$	6.68
Investor B	$	1,000.00	$	1,427.20	$	13.33	$	1,000.00	$	1,014.09	$	11.06
Investor C	$	1,000.00	$	1,426.30	$	13.56	$	1,000.00	$	1,013.89	$	11.26

For each class of the Portfolio, expenses are equal to the annualized expense ratio for the class (0.88% for Institutional, 1.09% for Service, 1.32% for Investor A, 2.19% for Investor B and 2.23% for Investor C), multiplied by the average account value over the period, multiplied by 183/365 (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 10 for further information on how expenses were calculated.


		ANNUAL REPORT		SEPTEMBER 30, 2009		7


Portfolio Summary as of September 30, 2009		Small Cap Value Equity Portfolio

Portfolio Management Commentary

How did the Portfolio perform?

•

The Portfolio underperformed the benchmark, Russell 2000 Value Index, for the 12-month period.

What factors influenced performance?

•

Information Technology (IT) stocks significantly outperformed the broader market during the year. However, relative weakness in the semiconductor and semiconductor equipment, software and IT services areas led to underperformance within the sector. Notable detractors included Microsemi Corp., Novell Inc. and Convergys Corp. Disappointing stock selection also hampered returns in health care. Medical device maker Symmetry Medical, Inc. and contact lens manufacturer The Cooper Cos., Inc. were among the weakest performers within the sector. Although an overweight in consumer discretionary added value, the benefits were overshadowed by weak stock selection, particularly among specialty retailers and textiles, apparel & luxury goods names.

•

The bursting of the real estate bubble triggered violent price swings in financials stocks during the period. Positive stock selection in the diversified financial services, insurance, capital markets and real estate investment trusts REITs sub-sectors contributed to relative performance. Mortgage and vehicle fleet management services provider PHH Corp. and mortgage REIT MFA Financial, Inc. were among the standout contributors. Shares of each rallied late in the period on signs of stabilization in the housing market and a pickup in mortgage activity due to historically low rates. An overweight in energy also benefited return comparisons, as commodity prices rebounded on expectations that a global economic recovery would drive increased energy demand. Allocation and stock selection in telecommunication services added value as well.

Describe recent Portfolio activity.

•

During the annual period, we increased cyclical exposure in the Portfolio as we began to see tangible signs of stabilization and improvement in the economy. Allocations in industrials, consumer discretionary and energy were increased, while exposure to consumer staples and health care was reduced.

•

In industrials, we added primarily to the machinery sub-sector, initiating several new positions, including Terex Corp. In consumer discretionary, we established positions in auto components names, most notably Gentex Corp., and built a position in household durables manufacturer Jarden Corp. In energy, we increased exposure to exploration & production companies poised to benefit from rising commodity prices. We significantly reduced exposure in consumer staples by trimming and eliminating positions in the food products, food & staples retailing and personal products sub-sectors. In health care, we focused on reducing exposure to health care equipment & supplies companies.

Describe Portfolio positioning at period end.

•

Relative to the Russell 2000 Value Index, the Portfolio ended the period with a significant overweight in consumer discretionary (particularly specialty retailers and auto component manufacturers), and modest overweights in IT (primarily software companies) and consumer staples (notably food & staples retailers). Conversely, the Portfolio was significantly underweight in financials (mainly REITs, thrifts & mortgage trusts and insurance), and more moderately underweight in utilities (notably gas utilities and electric utilities).

Portfolio Information


Ten Largest Holdings	Percent of Long-Term Investments
PHH Corp.	3	%
The GEO Group, Inc.	2
Fairchild Semiconductor International, Inc.	2
The Hanover Insurance Group, Inc.	2
KBW, Inc.	2
Scientific Games Corp. - Class A	2
SkillSoft Plc - ADR	2
Oil States International, Inc.	2
Navigators Group, Inc.	2
Jarden Corp.	1


Sector Allocation	Percent of Long-Term Investments
Financials	22	%
Consumer Discretionary	21
Industrials	17
Information Technology	13
Materials	7
Health Care	6
Energy	6
Consumer Staples	4
Utilities	3
Telecommunication Services	1


8		ANNUAL REPORT		SEPTEMBER 30, 2009

Small Cap Value Equity Portfolio

Total Return Based on a $10,000 Investment

LOGO

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

2	The Portfolio normally invests at least 80% of its net assets in equity securities issued by US small capitalization value companies (market capitalizations between approximately $7.8 million and $3.2 billion as of December 31, 2008).

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

Performance Summary for the Period Ended September 30, 2009


			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
BlackRock	33.72	%	(16.49	)%	N/A		0.15	%	N/A		5.45	%	N/A
Institutional	33.66		(16.43	)	N/A		0.31		N/A		5.59		N/A
Service	33.53		(16.65	)	N/A		0.02		N/A		5.28		N/A
Investor A	33.54		(16.75	)	(21.10	)%	(0.07	)	(1.14	)%	5.16		4.59	%
Investor B	33.33		(17.27	)	(20.98	)	(0.77	)	(0.93	)	4.53		4.53
Investor C	32.91		(17.34	)	(18.16	)	(0.85	)	(0.85	)	4.36		4.36
Russell 2000 Value Index	44.79		(12.61	)	N/A		1.78		N/A		8.05		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 Portfolio 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 April 1, 2009		Ending Account Value September 30, 2009		Expenses Paid During Period⁵		Beginning Account Value April 1, 2009		Ending Account Value September 30, 2009		Expenses Paid During Period⁵
BlackRock	$	1,000.00	$	1,337.20	$	6.56	$	1,000.00	$	1,019.45	$	5.67
Institutional	$	1,000.00	$	1,336.60	$	5.80	$	1,000.00	$	1,020.10	$	5.01
Service	$	1,000.00	$	1,335.30	$	7.61	$	1,000.00	$	1,018.55	$	6.58
Investor A	$	1,000.00	$	1,335.40	$	8.31	$	1,000.00	$	1,017.95	$	7.18
Investor B	$	1,000.00	$	1,333.30	$	12.52	$	1,000.00	$	1,014.34	$	10.81
Investor C	$	1,000.00	$	1,329.10	$	12.96	$	1,000.00	$	1,013.94	$	11.21

For each class of the Portfolio, expenses are equal to the annualized expense ratio for the class (1.12% for BlackRock, 0.99% for Institutional, 1.30% for Service, 1.42% for Investor A, 2.14% for Investor B and 2.22% for Investor C), multiplied by the average account value over the period, multiplied by 183/365 (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 10 for further information on how expenses were calculated.


		ANNUAL REPORT		SEPTEMBER 30, 2009		9

About Portfolio Performance

•

BlackRock and Institutional Shares are not subject to any sales charge (front-end load) or deferred sales charge and are available only to eligible investors. These shares bear no ongoing distribution or service fees, except that the BlackRock share class of Small Cap Value Equity Portfolio is subject to a service fee of 0.25% per year (but no distribution fee). Prior to April 12, 2004, Small Cap Value Equity Portfolio’s BlackRock Share performance results are those of Institutional Shares (which have no distribution or service fees) restated to reflect BlackRock Share fees.

•

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

•

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

•

Investor C Shares are subject to a 1.00% contingent deferred sales charge if redeemed within one year of purchase. In addition, Investor C

Shares are subject to a distribution fee of 0.75% per year and a service fee of 0.25% per year.

Performance information reflects past performance and does not guarantee future results. Current performance may be lower or higher than the performance data quoted. Refer to www.blackrock.com/funds to obtain performance data current to the most recent month-end. Performance results do not reflect the deduction of taxes that a shareholder would pay on portfolio distributions or the redemption of portfolio shares. Each Portfolio may charge a 2% redemption fee for sales or exchanges of shares within 30 days of purchase or exchange. Performance data does not reflect this potential fee. Figures shown in each of the performance tables on the previous pages assume reinvestment of all dividends and distributions, if any, at net asset value on the payable 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.

Disclosure of Expenses


10		ANNUAL REPORT		SEPTEMBER 30, 2009


Schedule of Investments September 30, 2009		Small Cap Core Equity Portfolio
		(Percentages shown are based on Net Assets)


	Shares	Value
Common Stocks
Aerospace & Defense — 0.5%
BE Aerospace, Inc.(a)	19,600	$	394,744

Air Freight & Logistics — 1.1%
Forward Air Corp.	35,900		831,085

Auto Components — 2.8%
ArvinMeritor, Inc.	84,100		657,662
Gentex Corp.	54,000		764,100
Modine Manufacturing Co.	75,300		698,031

			2,119,793

Biotechnology — 1.1%
Dyax Corp.(a)	130,421		468,211
Martek Biosciences Corp.(a)	15,300		345,627

			813,838

Building Products — 1.0%
Simpson Manufacturing Co., Inc.	29,200		737,592

Capital Markets — 4.5%
Evercore Partners, Inc. — Class A	25,900		756,798
KBW, Inc.(a)	52,200		1,681,884
TradeStation Group, Inc.(a)	116,200		947,030

			3,385,712

Chemicals — 2.6%
Albemarle Corp.	11,100		384,060
Cytec Industries, Inc.	22,000		714,340
Solutia, Inc.(a)	77,800		900,924

			1,999,324

Commercial Banks — 7.4%
CoBiz Financial, Inc.	115,761		576,490
Columbia Banking System, Inc.	52,447		867,998
CVB Financial Corp.(b)	86,700		658,053
Glacier Bancorp, Inc.(b)	22,000		328,680
PacWest Bancorp	22,900		436,245
Prosperity Bancshares, Inc.	9,900		344,421
Sterling Bancshares, Inc.	107,100		782,901
Westamerica Bancorporation(b)	14,300		743,600
Wintrust Financial Corp.	30,100		841,596

			5,579,984

Commercial Services & Supplies — 3.4%
Clean Harbors, Inc.(a)	17,000		956,420
The GEO Group, Inc.(a)	71,680		1,445,785
Tetra Tech, Inc.(a)	5,600		148,568

			2,550,773

Communications Equipment — 5.1%
Arris Group, Inc.(a)	66,800		869,068
EMS Technologies, Inc.(a)	36,661		763,282
Polycom, Inc.(a)	28,300		757,025
Starent Networks Corp.(a)(b)	59,500		1,512,490

			3,901,865

Construction & Engineering — 1.2%
EMCOR Group, Inc.(a)	36,000		911,520

Containers & Packaging — 0.4%
AptarGroup, Inc.	7,800		291,408

Diversified Financial Services — 0.7%
PHH Corp.(a)	28,300		561,472

Diversified Telecommunication Services — 0.4%
Premiere Global Services, Inc.(a)	36,300		301,653

Electrical Equipment — 1.3%
GrafTech International Ltd.(a)	65,500		962,850

Electronic Equipment, Instruments & Components — 1.1%
TTM Technologies, Inc.(a)	71,500		820,105

Energy Equipment & Services — 0.9%
Oil States International, Inc.(a)	19,200		674,496

Food Products — 2.3%
Fresh Del Monte Produce, Inc.(a)	32,300		730,303
TreeHouse Foods, Inc.(a)	28,000		998,760

			1,729,063

Health Care Equipment & Supplies — 2.3%
ev3, Inc.(a)	49,800		613,038
NuVasive, Inc.(a)	16,600		693,216
Symmetry Medical, Inc.(a)	44,600		462,502

			1,768,756

Health Care Providers & Services — 5.6%
Amedisys, Inc.(a)(b)	14,000		610,820
Clarient, Inc.(a)	137,400		578,454
Health Net, Inc.(a)	49,100		756,140
HealthSouth Corp.(a)	22,100		345,644
MEDNAX, Inc.(a)	24,850		1,364,762
Psychiatric Solutions, Inc.(a)	21,100		564,636

			4,220,456

Health Care Technology — 2.2%
Phase Forward, Inc.(a)	63,100		885,924
Quality Systems, Inc.(b)	12,200		751,154

			1,637,078

Hotels, Restaurants & Leisure — 2.6%
Bally Technologies, Inc.(a)	22,700		870,999
Scientific Games Corp. — Class A(a)	56,600		895,978
Sonic Corp.(a)	21,900		242,214

			2,009,191

Household Durables — 0.9%
Snap-On, Inc.	19,200		667,392

Internet & Catalog Retail — 1.4%
Orbitz Worldwide, Inc.(a)	175,300		1,083,354

Internet Software & Services — 2.6%
LogMeIn, Inc.(a)	43,700		800,147
SkillSoft Plc - ADR(a)	126,408		1,213,517

			2,013,664

Portfolio Abbreviations


To simplify the listings of portfolio holdings in each Portfolio’s Schedule of Investments, the names and descriptions of many of the securities have been abbreviated according to the following list.		ADR American Depositary Receipts

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		11


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


	Shares	Value
Common Stocks
IT Services — 1.1%
Forrester Research, Inc.(a)	9,450	$	251,748
NCI, Inc. — Class A(a)	21,486		615,789

			867,537

Life Sciences Tools & Services — 1.3%
ICON Plc — ADR(a)	40,000		979,600

Machinery — 2.9%
Actuant Corp.—Class A	64,700		1,039,082
Blount International, Inc.(a)	84,000		795,480
Nordson Corp.	7,100		398,239

			2,232,801

Media — 3.9%
Arbitron, Inc.	41,800		867,768
Ascent Media Corp. — Class A(a)	38,100		975,360
Martha Stewart Living Omnimedia, Inc. - Class A(a)	50,100		313,626
Regal Entertainment Group — Class A	64,600		795,872

			2,952,626

Metals & Mining — 2.7%
Horsehead Holding Corp.(a)	84,100		985,652
Olympic Steel, Inc.	36,600		1,050,054

			2,035,706

Multiline Retail — 1.0%
Saks, Inc.(a)(b)	106,900		729,058

Oil, Gas & Consumable Fuels — 4.8%
Arena Resources, Inc.(a)	24,100		855,550
Brigham Exploration Co.(a)	20,200		183,416
James River Coal Co.(a)	40,600		775,866
Penn Virginia Corp.	28,000		641,480
Whiting Petroleum Corp.(a)	20,500		1,180,390

			3,636,702

Personal Products — 0.8%
Chattem, Inc.(a)	8,682		576,572

Real Estate Investment Trusts (REITs) — 4.9%
Chimera Investment Corp.	286,600		1,094,812
MFA Financial, Inc.	261,000		2,077,560
Redwood Trust, Inc.(b)	33,900		525,450

			3,697,822

Road & Rail — 1.1%
Landstar System, Inc.	19,800		753,588
Vitran Corp., Inc.(a)	9,397		84,761

			838,349

Semiconductors & Semiconductor Equipment — 4.0%
ATMI, Inc.(a)	52,500		952,875
Cymer, Inc.(a)	10,200		396,372
Fairchild Semiconductor International, Inc.(a)	87,800		898,194
Varian Semiconductor Equipment Associates, Inc.(a)	23,300		765,172

			3,012,613

Software — 4.2%
Actuate Corp.(a)	64,000		369,920
Blackboard, Inc.(a)	10,270		388,000
Concur Technologies, Inc.(a)	18,800		747,488
DemandTec, Inc.(a)	32,267		284,918
Lawson Software, Inc.(a)	120,950		754,728
Progress Software Corp.(a)	26,700		604,755

			3,149,809

Specialty Retail — 4.9%
The Buckle, Inc.(b)	26,700		911,538
Jos. A. Bank Clothiers, Inc.(a)	25,000		1,119,250
Lumber Liquidators, Inc.(a)	56,100		1,216,809
Sally Beauty Holdings, Inc.(a)(b)	65,250		463,927

			3,711,524

Textiles, Apparel & Luxury Goods — 2.3%
Iconix Brand Group, Inc.(a)	83,100		1,036,257
Movado Group, Inc.	47,100		684,363

			1,720,620

Thrifts & Mortgage Finance — 0.9%
First Niagara Financial Group, Inc.	54,700		674,451

Trading Companies & Distributors — 2.5%
Applied Industrial Technologies, Inc.	47,100		996,636
Beacon Roofing Supply, Inc.(a)	57,200		914,056

			1,910,692

Total Long-Term Investments
(Cost — $63,345,463) — 98.7%			74,693,650


	Shares/ Beneficial Interest
Short-Term Securities
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.22%(c)(d)	867,414		867,414
BlackRock Liquidity Series, LLC Money Market Series, 0.29%(c)(d)(e)	5,290,500		5,290,500

Total Short-Term Securities (Cost — $6,157,914) —8.1%			6,157,914

*Total Investments (Cost — $69,503,377) — 106.8%**			80,851,564
Liabilities in Excess of Other Assets — (6.8)%			(5,156,323	)

Net Assets — 100.0%		$	75,695,241

*	The cost and unrealized appreciation (depreciation) of investments as of September 30, 2009, as computed for federal income tax purposes, were as follows:



Aggregate cost	$	70,994,506

Gross unrealized appreciation	$	11,666,599
Gross unrealized depreciation		(1,809,541	)

Net unrealized appreciation	$	9,857,058

(a)	Non-income producing security.

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

See Notes to Financial Statements.


12		ANNUAL REPORT		SEPTEMBER 30, 2009


Schedule of Investments (concluded)		Small Cap Core Equity Portfolio

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


Affiliate	Net Activity			Income
BlackRock Liquidity Funds, TempFund, Institutional Class	$	867,414		$	4,607
BlackRock Liquidity Series, LLC Money Market Series	$	(3,236,300	)	$	50,970

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

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

•

Fair Value Measurements – Various inputs are used in determining the fair value of investments, which are as follows:

•

Level 1 – price quotations in active markets/exchanges for identical assets and liabilities

•

The following table summarizes the inputs used as of September 30, 2009 in determining the fair valuation of the Portfolio’s investments:


Valuation Inputs	Investments in Securities
	Assets
Level 1 :
Long-Term Investments¹	$	74,693,650
Short-Term Securities		867,414

Total Level 1		75,561,064

Level 2 - Short-Term Securities		5,290,500
Level 3		—

Total	$	80,851,564

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

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		13


Schedule of Investments September 30, 2009		Small Cap Growth Equity Portfolio
		(Percentages shown are based on Net Assets)


	Shares	Value
Common Stocks
Aerospace & Defense — 4.0%
Argon ST, Inc.(a)	508,838	$	9,693,364
BE Aerospace, Inc.(a)	967,260		19,480,616
Spirit AeroSystems Holdings, Inc. - Class A(a)	448,000		8,090,880
Stanley, Inc.(a)	103,400		2,659,448
TransDigm Group, Inc.(a)	135,600		6,754,236

			46,678,544

Air Freight & Logistics — 0.7%
Forward Air Corp.	328,600		7,607,090

Beverages — 1.1%
Heckmann Corp.(a)(b)	2,764,064		12,659,413

Biotechnology — 5.4%
Acorda Therapeutics, Inc.(a)	543,100		12,643,368
AMAG Pharmaceuticals, Inc.(a)(b)	138,100		6,032,208
Cubist Pharmaceuticals, Inc.(a)	276,300		5,581,260
Dendreon Corp.(a)(b)	339,200		9,494,208
InterMune, Inc.(a)	562,400		8,959,032
Martek Biosciences Corp.(a)	69,201		1,563,251
Onyx Pharmaceuticals, Inc.(a)	291,400		8,733,258
OSI Pharmaceuticals, Inc.(a)	283,000		9,989,900

			62,996,485

Building Products — 0.7%
Griffon Corp.(a)	789,460		7,949,862

Capital Markets — 2.1%
Greenhill & Co., Inc.(b)	115,200		10,319,616
Knight Capital Group, Inc. - Class A(a)	349,100		7,592,925
RiskMetrics Group, Inc.(a)	468,882		6,855,055

			24,767,596

Chemicals — 1.2%
Celanese Corp. - Series A	215,200		5,380,000
Intrepid Potash, Inc.(a)(b)	382,200		9,016,098

			14,396,098

Commercial Banks — 1.0%
PrivateBancorp, Inc.	494,200		12,088,132

Commercial Services & Supplies — 1.9%
Clean Harbors, Inc.(a)	158,500		8,917,210
SYKES Enterprises, Inc.(a)	633,397		13,187,326

			22,104,536

Communications Equipment — 2.1%
DG FastChannel, Inc.(a)	699,000		14,637,060
EMS Technologies, Inc.(a)	483,744		10,071,550

			24,708,610

Construction & Engineering — 1.2%
Chicago Bridge & Iron Co. NV	742,100		13,862,428

Containers & Packaging — 1.1%
BWAY Holding Co.(a)	255,750		4,733,932
Rock-Tenn Co. - Class A	183,832		8,660,326

			13,394,258

Diversified Consumer Services — 1.5%
DeVry, Inc.	207,481		11,477,849
Weight Watchers International, Inc.	222,800		6,113,632

			17,591,481

Diversified Financial Services — 1.8%
MSCI, Inc. - Class A(a)	692,100		20,500,002

Diversified Telecommunication Services — 1.7%
Cbeyond, Inc.(a)	841,346		13,570,911
Neutral Tandem, Inc.(a)(b)	262,008		5,963,302

			19,534,213

Electrical Equipment — 0.5%
Energy Conversion Devices, Inc.(a)(b)	504,300		5,839,794

Electronic Equipment, Instruments & Components — 1.3%
Cogent, Inc.(a)	1,494,825		15,097,732

Energy Equipment & Services — 1.0%
Superior Energy Services, Inc.(a)	503,577		11,340,554

Food Products — 1.3%
American Italian Pasta Co. - Class A(a)(b)	290,600		7,898,508
Smart Balance, Inc.(a)	1,282,048		7,871,775

			15,770,283

Health Care Equipment & Supplies — 7.1%
Gen-Probe, Inc.(a)	352,600		14,611,744
Hologic, Inc.(a)	870,780		14,228,545
Merit Medical Systems, Inc.(a)	620,820		10,758,811
NuVasive, Inc.(a)(b)	312,100		13,033,296
SonoSite, Inc.(a)(b)	606,854		16,057,357
ZOLL Medical Corp.(a)	672,977		14,482,465

			83,172,218

Health Care Providers & Services — 5.8%
Lincare Holdings, Inc.(a)	583,683		18,240,094
Magellan Health Services, Inc.(a)	416,500		12,936,490
MEDNAX, Inc.(a)	362,800		19,924,976
VCA Antech, Inc.(a)	612,400		16,467,436

			67,568,996

Health Care Technology — 1.3%
MedAssets, Inc.(a)	517,955		11,690,244
Omnicell, Inc.(a)	364,961		4,065,666

			15,755,910

Hotels, Restaurants & Leisure — 5.1%
Bally Technologies, Inc.(a)	355,000		13,621,350
The Cheesecake Factory, Inc.(a)	470,100		8,706,252
Domino’s Pizza, Inc.(a)	1,145,800		10,128,872
Jack in the Box, Inc.(a)	277,400		5,683,926
Scientific Games Corp. - Class A(a)	1,384,500		21,916,635

			60,057,035

Household Durables — 0.4%
iRobot Corp.(a)(b)	348,921		4,295,218

Insurance — 0.7%
Aspen Insurance Holdings Ltd.	325,400		8,613,338

Internet & Catalog Retail — 0.8%
Shutterfly, Inc.(a)	569,600		9,472,448

Internet Software & Services — 4.3%
comScore, Inc.(a)	710,953		12,804,264
GSI Commerce, Inc.(a)	192,800		3,722,968
SkillSoft Plc - ADR(a)	3,538,929		33,973,718

			50,500,950

See Notes to Financial Statements.


14		ANNUAL REPORT		SEPTEMBER 30, 2009


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


	Shares	Value
Common Stocks
IT Services — 6.7%
ExlService Holdings, Inc.(a)	1,666,019	$	24,757,042
Forrester Research, Inc.(a)	446,907		11,905,603
Gartner, Inc.(a)	567,400		10,366,398
Global Cash Access Holdings, Inc.(a)	2,035,000		14,875,850
SRA International, Inc. — Class A(a)	757,454		16,353,432

			78,258,325

Machinery — 1.0%
Kaydon Corp.	369,400		11,975,948

Media — 4.3%
CKX, Inc.(a)	3,570,152		23,955,720
DreamWorks Animation SKG, Inc. — Class A(a)	463,000		16,468,910
LodgeNet Interactive Corp.(a)	637,400		4,812,370
RHI Entertainment, Inc.(a)	1,447,957		4,604,503

			49,841,503

Oil, Gas & Consumable Fuels — 3.9%
Comstock Resources, Inc.(a)	204,910		8,212,793
EXCO Resources, Inc.(a)(b)	654,200		12,226,998
Massey Energy Co.	250,452		6,985,106
Plains Exploration & Production Co.(a)	648,100		17,926,446

			45,351,343

Pharmaceuticals — 3.1%
Auxilium Pharmaceuticals, Inc.(a)	175,100		5,990,171
Cadence Pharmaceuticals, Inc.(a)	274,300		3,033,758
Cypress Bioscience, Inc.(a)	720,403		5,885,692
Impax Laboratories, Inc.(a)	572,000		4,999,280
Medicis Pharmaceutical Corp. — Class A	741,800		15,837,430

			35,746,331

Professional Services — 3.9%
Diamond Management & Technology Consultants, Inc.	1,764,695		12,088,161
Heidrick & Struggles International, Inc.	121,400		2,823,764
IHS, Inc. — Class A(a)	208,171		10,643,783
Kforce, Inc.(a)	277,200		3,331,944
MPS Group, Inc.(a)	1,069,800		11,254,296
TrueBlue, Inc.(a)	416,400		5,858,748

			46,000,696

Real Estate Investment Trusts (REITs) — 0.5%
Franklin Street Properties Corp.	446,200		5,845,220

Semiconductors & Semiconductor Equipment — 6.0%
Entegris, Inc.(a)	975,800		4,830,210
FEI Co.(a)	568,300		14,008,595
Microsemi Corp.(a)	690,300		10,899,837
Monolithic Power Systems, Inc.(a)	501,007		11,748,614
ON Semiconductor Corp.(a)	1,861,000		15,353,250
Silicon Laboratories, Inc.(a)	276,100		12,799,996
Standard Microsystems Corp.(a)	5,992		139,074

			69,779,576

Software — 8.6%
Blackboard, Inc.(a)	416,052		15,718,445
DemandTec, Inc.(a)	1,344,545		11,872,332
i2 Technologies, Inc.	840,223		13,477,177
SonicWALL, Inc.(a)	2,801,633		23,533,717
Taleo Corp. — Class A(a)	32,004		724,570
TiVo, Inc.(a)	3,354,980		34,757,593

			100,083,834

Specialty Retail — 1.8%
Dick’s Sporting Goods, Inc.(a)	276,900		6,202,560
J. Crew Group, Inc.(a)(b)	166,900		5,978,358
The Wet Seal, Inc. — Class A(a)	2,333,100		8,819,118

			21,000,036

Textiles, Apparel & Luxury Goods — 1.3%
lululemon athletica, inc.(a)(b)	682,300		15,522,325

Total Long-Term Investments
(Cost — $979,127,125) — 98.2%			1,147,728,361

	Shares/ Beneficial Interest
Short-Term Securities
BlackRock Liquidity Funds, TempFund, Institutional Class,
0.22%(c)(d)	16,460,094		16,460,094
BlackRock Liquidity Series, LLC Money Market Series,
0.29%(c)(d)(e)	83,577,027		83,577,027

Total Short-Term Securities
(Cost — $100,037,121) — 8.5%			100,037,121

*Total Investments (Cost — $1,079,164,246) — 106.7%**			1,247,765,482
Liabilities in Excess of Other Assets — (6.7)%			(78,855,562	)

Net Assets — 100.0%		$	1,168,909,920

*	The cost and unrealized appreciation (depreciation) of investments as of September 30, 2009, as computed for federal income tax purposes, were as follows:


Aggregate cost	$	1,099,924,392

Gross unrealized appreciation	$	189,642,494
Gross unrealized depreciation		(41,801,404	)

Net unrealized appreciation	$	147,841,090

(a)	Non-income producing security.

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

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


Affiliate	Net Activity			Income
BlackRock Liquidity Funds, TempFund, Institutional Class	$	16,460,094		$	72,880
BlackRock Liquidity Series, LLC Money Market Series	$	(55,840,323	)	$	1,272,603

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

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

•

Fair Value Measurements – Various inputs are used in determining the fair value of investments, which are as follows:

•

Level 1 – price quotations in active markets/exchanges for identical assets and liabilities

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		15


Schedule of Investments (concluded)		Small Cap Growth Equity Portfolio

•

The following table summarizes the inputs used as of September 30, 2009 in determining the fair valuation of the Portfolio’s investments:


Valuation Inputs	Investments in Securities
	Assets
Level 1 :
Long-Term Investments¹	$	1,147,728,361
Short-Term Securities		16,460,094

Total Level 1		1,164,188,455

Level 2 - Short-Term Securities		83,577,027
Level 3		—

Total	$	1,247,765,482

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

See Notes to Financial Statements.


16		ANNUAL REPORT		SEPTEMBER 30, 2009


Schedule of Investments September 30, 2009		Small Cap Value Equity Portfolio
		(Percentages shown are based on Net Assets)


	Shares	Value
Common Stocks
Aerospace & Defense — 1.5%
Orbital Sciences Corp.(a)	19,300	$	288,921
Stanley, Inc.(a)	5,500		141,460

			430,381

Air Freight & Logistics — 0.5%
Hub Group, Inc. - Class A(a)	6,500		148,525

Auto Components — 2.9%
Dana Holding Corp.(a)	30,400		207,024
Federal Mogul Corp.(a)	12,400		149,668
Gentex Corp.	22,700		321,205
Modine Manufacturing Co.	17,300		160,371

			838,268

Building Products — 0.8%
Simpson Manufacturing Co., Inc.	9,000		227,340

Capital Markets — 2.4%
Evercore Partners, Inc. - Class A	7,300		213,306
KBW, Inc.(a)	15,100		486,522

			699,828

Chemicals — 3.5%
Koppers Holding, Inc.	4,700		139,355
Olin Corp.	22,100		385,424
Sensient Technologies Corp.	13,219		367,092
Solutia, Inc.(a)	10,800		125,064

			1,016,935

Commercial Banks — 8.9%
CVB Financial Corp.	43,100		327,129
Fulton Financial Corp.	19,600		144,256
Glacier Bancorp, Inc.	9,100		135,954
Independent Bank Corp.	6,600		146,058
Sterling Bancshares, Inc.	53,700		392,547
TCF Financial Corp.(b)	28,800		375,552
United Bankshares, Inc.(b)	11,119		217,821
Westamerica Bancorporation(b)	6,100		317,200
Wintrust Financial Corp.	7,600		212,496
Zions Bancorporation(b)	18,500		332,445

			2,601,458

Commercial Services & Supplies — 2.4%
The Brink’s Co.	2,900		78,039
The GEO Group, Inc.(a)	31,100		627,287

			705,326

Communications Equipment — 1.7%
ADTRAN, Inc.	9,000		220,950
Arris Group, Inc.(a)	20,700		269,307

			490,257

Construction & Engineering — 2.7%
Chicago Bridge & Iron Co. NV	14,300		267,124
Granite Construction, Inc.	10,500		324,870
Pike Electric Corp.(a)	17,200		206,056

			798,050

Construction Materials — 1.1%
Texas Industries, Inc.(b)	7,800		327,600

Diversified Consumer Services — 0.4%
Brink’s Home Security Holdings, Inc.(a)	3,500		107,765

Diversified Financial Services — 2.6%
PHH Corp.(a)	38,082		755,547

Diversified Telecommunication Services — 0.7%
Premiere Global Services, Inc.(a)	23,300		193,623

Electric Utilities — 0.9%
Unisource Energy Corp.	8,800		270,600

Electrical Equipment — 2.1%
Polypore International, Inc.(a)	22,900		295,639
Regal-Beloit Corp.	6,800		310,828

			606,467

Electronic Equipment, Instruments & Components — 2.3%
Anixter International, Inc.(a)	10,000		401,100
Tech Data Corp.(a)	6,800		282,948

			684,048

Energy Equipment & Services — 2.7%
Key Energy Services, Inc.(a)	18,000		156,600
Lufkin Industries, Inc.	3,100		164,858
Oil States International, Inc.(a)	13,500		474,255

			795,713

Food & Staples Retailing — 2.3%
BJ’s Wholesale Club, Inc.(a)	11,700		423,774
Winn-Dixie Stores, Inc.(a)	19,400		254,528

			678,302

Food Products — 0.7%
Chiquita Brands International, Inc.(a)	10,800		174,528
Lance, Inc.	1,600		41,312

			215,840

Gas Utilities — 0.7%
New Jersey Resources Corp.	5,900		214,229

Health Care Equipment & Supplies — 1.1%
The Cooper Cos., Inc.	10,600		315,138

Health Care Providers & Services — 3.6%
Amedisys, Inc.(a)	5,100		222,513
Health Net, Inc.(a)	11,400		175,560
HealthSouth Corp.(a)	9,000		140,760
LifePoint Hospitals, Inc.(a)	9,100		246,246
Psychiatric Solutions, Inc.(a)	9,900		264,924

			1,050,003

Health Care Technology — 0.8%
Phase Forward, Inc.(a)	17,500		245,700

Hotels, Restaurants & Leisure — 3.3%
Cracker Barrel Old Country Store, Inc.	6,300		216,720
Jack in the Box, Inc.(a)	13,200		270,468
Scientific Games Corp. - Class A(a)	30,501		482,831

			970,019

Household Durables — 2.3%
Jarden Corp.	15,400		432,278
Snap-On, Inc.	6,900		239,844

			672,122

Insurance — 3.7%
The Hanover Insurance Group, Inc.	12,209		504,598
Navigators Group, Inc.(a)	8,162		448,910

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		17


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


	Shares	Value
Common Stocks
Insurance (concluded)
Platinum Underwriters Holdings Ltd.	3,989	$	142,966

			1,096,474

Internet & Catalog Retail — 0.4%
Orbitz Worldwide, Inc.(a)	18,500		114,330

Internet Software & Services — 1.6%
SkillSoft Plc - ADR(a)	49,989		479,894

IT Services — 0.5%
CSG Systems International, Inc.(a)	10,100		161,701

Leisure Equipment & Products — 1.1%
Polaris Industries, Inc.	7,600		309,928

Machinery — 3.8%
Actuant Corp. - Class A	15,100		242,506
Kennametal, Inc.	9,400		231,334
Mueller Water Products, Inc. - Class A	46,700		255,916
Terex Corp.(a)	18,000		373,140

			1,102,896

Marine — 0.5%
Kirby Corp.(a)	3,600		132,552

Media — 1.4%
Arbitron, Inc.	19,200		398,592

Metals & Mining — 2.6%
Horsehead Holding Corp.(a)	27,200		318,784
Olympic Steel, Inc.	9,200		263,948
Thompson Creek Metals Co., Inc.(a)	14,800		178,636

			761,368

Multiline Retail — 0.5%
Saks, Inc.(a)	23,100		157,542

Multi-Utilities — 1.1%
Avista Corp.	16,500		333,630

Oil, Gas & Consumable Fuels — 3.1%
Brigham Exploration Co.(a)	11,700		106,236
Goodrich Petroleum Corp.(a)	8,700		224,547
James River Coal Co.(a)	18,700		357,357
St. Mary Land & Exploration Co.	6,900		223,974

			912,114

Personal Products — 0.8%
Chattem, Inc.(a)	3,400		225,794

Real Estate Investment Trusts (REITs) — 4.4%
BioMed Realty Trust, Inc.	17,800		245,640
Education Realty Trust, Inc.	31,600		187,388
MFA Financial, Inc.	52,800		420,288
Ramco-Gershenson Properties Trust	15,000		133,800
Redwood Trust, Inc.	7,800		120,900
U-Store-It Trust	30,400		190,000

			1,298,016

Road & Rail — 1.0%
Genesee & Wyoming, Inc. - Class A(a)	10,100		306,232
Semiconductors & Semiconductor Equipment — 3.1%
ATMI, Inc.(a)	10,000		181,500
Fairchild Semiconductor International, Inc.(a)	54,500		557,535
Verigy Ltd.(a)	13,700		159,194

			898,229

Software — 3.2%
Actuate Corp.(a)	19,400		112,132
Novell, Inc.(a)	69,800		314,798
Progress Software Corp.(a)	12,800		289,920
TIBCO Software, Inc.(a)	23,200		220,168

			937,018

Specialty Retail — 5.5%
The Buckle, Inc.(b)	4,900		167,286
The Children’s Place Retail Stores, Inc.(a)	10,800		323,568
Collective Brands, Inc.(a)	16,700		289,411
Genesco, Inc.(a)	10,800		259,956
Jos. A. Bank Clothiers, Inc.(a)	4,100		183,557
RadioShack Corp.	23,300		386,081

			1,609,859

Textiles, Apparel & Luxury Goods — 2.7%
Hanesbrands, Inc.(a)	14,000		299,600
Iconix Brand Group, Inc.(a)	18,300		228,201
Maidenform Brands, Inc.(a)	16,800		269,808

			797,609

Trading Companies & Distributors — 1.3%
Beacon Roofing Supply, Inc.(a)	24,300		388,314

Wireless Telecommunication Services — 0.5%
Syniverse Holdings, Inc.(a)	7,700		134,750

Total Long-Term Investments (Cost — $24,971,689) — 97.7%			28,615,926

	Shares/ Beneficial Interest
Short-Term Securities
BlackRock Liquidity Funds, TempFund, Institutional Class,
0.22%(c)(d)	567,610		567,610
BlackRock Liquidity Series, LLC Money Market Series,
0.29%(c)(d)(e)	1,481,000		1,481,000

Total Short-Term Securities (Cost — $2,048,610) — 7.0%			2,048,610

Total Investments (Cost — $27,020,299*) — 104.7%			30,664,536
Liabilities in Excess of Other Assets — (4.7)%			(1,386,806	)

Net Assets — 100.0%		$	29,277,730

*	The cost and unrealized appreciation (depreciation) of investments as of September 30, 2009, as computed for federal income tax purposes, were as follows:


Aggregate cost	$	27,650,140

Gross unrealized appreciation	$	3,337,577
Gross unrealized depreciation		(323,181	)

Net unrealized appreciation	$	3,014,396

(a)	Non-income producing security.

See Notes to Financial Statements.


18		ANNUAL REPORT		SEPTEMBER 30, 2009


Schedule of Investments (concluded)		Small Cap Value Equity Portfolio

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

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


Affiliate	Net Activity			Income
BlackRock Liquidity Funds, TempFund, Institutional Class	$	567,610		$	2,160
BlackRock Liquidity Series, LLC Money Market Series	$	(396,500	)	$	21,364

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

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

•

Fair Value Measurements – Various inputs are used in determining the fair value of investments, which are as follows:

•

Level 1 – price quotations in active markets/exchanges for identical assets and liabilities

•

The following table summarizes the inputs used as of September 30, 2009 in determining the fair valuation of the Portfolio’s investments:


Valuation Inputs	Investments in Securities
	Assets
Level 1 :
Long-Term Investments¹	$	28,615,926
Short-Term Securities		567,610

Total Level 1		29,183,536

Level 2 - Short-Term Securities		1,481,000
Level 3		—

Total	$	30,664,536

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

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		19

Statements of Assets and Liabilities


September 30, 2009	Small Cap Core Equity Portfolio			Small Cap Growth Equity Portfolio			Small Cap Value Equity Portfolio
Assets
Investments at value - unaffiliated^1,2	$	74,693,650		$	1,147,728,361		$	28,615,926
Investments at value - affiliated³		6,157,914			100,037,121			2,048,610
Investments sold receivable		747,335			30,768,470			894,705
Capital shares sold receivable		216,185			1,322,490			15,287
Dividends receivable		67,649			226,622			28,577
Securities lending income receivable - affiliated		7,264			44,465			5,249
Receivable from advisor		2,660			—			12,296
Dividends receivable - affiliated		189			5,135			122
Prepaid expenses		14,046			50,886			22,801

Total assets		81,906,892			1,280,183,550			31,643,573

Liabilities
Collateral at value - securities loaned		5,290,500			83,577,027			1,481,000
Investments purchased payable		562,831			24,421,765			781,325
Capital shares redeemed payable		181,167			2,021,060			44,800
Investment advisory fees payable		65,740			515,788			35
Other affiliates payable		50,745			525,938			16,342
Service and distribution fees payable		20,067			80,627			6,255
Officer’s and Trustees’ fees payable		4,647			7,375			4,598
Bank overdraft		—			3,379			—
Other accrued expenses payable		35,954			120,671			31,488

Total liabilities		6,211,651			111,273,630			2,365,843

Net Assets	$	75,695,241		$	1,168,909,920		$	29,277,730

Net Assets Consist of
Paid-in capital	$	102,195,872		$	1,648,048,924		$	43,673,596
Undistributed net investment income		21,303			311,353			47,290
Accumulated net realized loss		(37,870,121	)		(648,051,593	)		(18,087,393	)
Net unrealized appreciation/depreciation		11,348,187			168,601,236			3,644,237

Net Assets	$	75,695,241		$	1,168,909,920		$	29,277,730

¹Investments at cost - unaffiliated	$	63,345,463		$	979,127,125		$	24,971,689
²Securities loaned at value	$	5,097,600		$	80,604,959		$	1,409,970
³Investments at cost - affiliated	$	6,157,914		$	100,037,121		$	2,048,610

See Notes to Financial Statements.


20		ANNUAL REPORT		SEPTEMBER 30, 2009


Statements of Assets and Liabilities (concluded)


September 30, 2009	Small Cap Core Equity Portfolio		Small Cap Growth Equity Portfolio		Small Cap Value Equity Portfolio
Net Asset Value
BlackRock
Net assets		—		—	$	49,512
Shares outstanding¹		—		—		7,175
Par value per share		—		—	$	0.001
Net asset value		—		—	$	6.90
Institutional
Net assets	$	38,592,340	$	855,375,310	$	12,811,042
Shares outstanding¹		2,814,688		45,844,064		1,852,763
Par value per share	$	0.001	$	0.001	$	0.001
Net asset value	$	13.71	$	18.66	$	6.91
Service
Net assets	$	256,004	$	43,931,683	$	1,092,996
Shares outstanding¹		18,895		2,486,004		163,417
Par value per share	$	0.001	$	0.001	$	0.001
Net asset value	$	13.55	$	17.67	$	6.69
Investor A
Net assets	$	16,994,855	$	240,361,240	$	12,689,525
Shares outstanding¹		1,268,683		14,022,651		1,918,918
Par value per share	$	0.001	$	0.001	$	0.001
Net asset value	$	13.40	$	17.14	$	6.61
Investor B
Net assets	$	3,547,149	$	3,326,986	$	930,961
Shares outstanding¹		275,273		221,802		176,213
Par value per share	$	0.001	$	0.001	$	0.001
Net asset value	$	12.89	$	15.00	$	5.28
Investor C
Net assets	$	16,304,893	$	25,914,701	$	1,703,694
Shares outstanding¹		1,267,773		1,728,311		324,684
Par value per share	$	0.001	$	0.001	$	0.001
Net asset value	$	12.86	$	14.99	$	5.25

1	Unlimited number of shares authorized.

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		21

Statements of Operations


Year Ended September 30, 2009	Small Cap Core Equity Portfolio			Small Cap Growth Equity Portfolio			Small Cap Value Equity Portfolio
Investment Income
Dividends	$	766,028		$	2,119,367		$	452,036
Securities lending - affiliated		50,970			1,272,603			21,364
Interest and dividends - affiliated		4,823			73,480			2,195
Interest		902			6,530			80

Total income		822,723			3,471,980			475,675

Expenses
Investment advisory		663,831			4,751,264			153,217
Service and distribution - class specific		243,623			762,382			57,302
Transfer agent - class specific		216,944			2,033,795			77,317
Registration		52,541			82,805			57,046
Administration		49,787			610,630			20,893
Professional		46,342			62,759			65,353
Printing		24,688			215,454			25,649
Custodian		18,851			67,924			23,466
Administration - class specific		16,610			203,367			6,972
Officer and Trustees		16,279			26,569			15,741
Miscellaneous		13,963			33,299			14,936
Recoupment of past waived fees - class specific		8,276			8,094			—

Total expenses		1,371,735			8,858,342			517,892
Less fees waived by advisor		(24,468	)		(10,653	)		(105,881	)
Less administration fees waived		—			—			(3,428	)
Less administration fees waived - class specific		(16,081	)		(7,110	)		(4,951	)
Less transfer agent fees waived - class specific		(13,865	)		(4,768	)		(1,564	)
Less transfer agent fees reimbursed - class specific		(119,302	)		(20,418	)		(20,494	)
Less fees paid indirectly		(549	)		(1,801	)		(97	)
Less expenses reimbursed by advisor		—			—			(24,788	)

Total expenses after fees waived, reimbursed and paid indirectly		1,197,470			8,813,592			356,689

Net investment income (loss)		(374,747	)		(5,341,612	)		118,986

Realized and Unrealized Gain (Loss)
Net realized gain (loss) from:
Investments		(26,133,388	)		(194,567,889	)		(11,853,231	)
Litigation proceeds		—			846,304			—

		(26,133,388	)		(193,721,585	)		(11,853,231	)

Net change in unrealized appreciation/depreciation on investments		10,992,529			168,328,721			3,259,692

Total realized and unrealized loss		(15,140,859	)		(25,392,864	)		(8,593,539	)

Net Decrease in Net Assets Resulting from Operations	$	(15,515,606	)	$	(30,734,476	)	$	(8,474,553	)

See Notes to Financial Statements.


22		ANNUAL REPORT		SEPTEMBER 30, 2009

Statements of Changes in Net Assets


	Small Cap Core Equity Portfolio						Small Cap Growth Equity Portfolio						Small Cap Value Equity Portfolio
	Year Ended September 30,						Year Ended September 30,						Year Ended September 30,
Increase (Decrease) in Net Assets:	2009			2008			2009			2008			2009			2008
Operations
Net investment income (loss)	$	(374,747	)	$	(824,702	)	$	(5,341,612	)	$	73,105		$	118,986		$	128,517
Net realized gain (loss)		(26,133,388	)		(11,478,306	)		(193,721,585	)		23,710,054			(11,853,231	)		(5,732,363	)
Net change in unrealized appreciation/depreciation		10,992,529			(9,749,568	)		168,328,721			(161,736,801	)		3,259,692			(4,920,623	)

Net decrease in net assets resulting from operations		(15,515,606	)		(22,052,576	)		(30,734,476	)		(137,953,642	)		(8,474,553	)		(10,524,469	)

Dividends and Distributions to Shareholders From
Net investment income:
BlackRock		—			—			—			—			(11,359	)		—
Institutional		—			—			—			—			(74,533	)		(45,006	)
Service		—			—			—			—			(5,298	)		—
Investor A		—			—			—			—			(52,689	)		—
Investor B		—			—			—			—			(4,979	)		—
Investor C		—			—			—			—			(6,349	)		—
Tax return of capital:
BlackRock		—			—			—			—			—			(87,513	)
Institutional		—			—			—			—			—			(628,719	)
Service		—			—			—			—			—			(51,758	)
Investor A		—			—			—			—			—			(574,809	)
Investor B		—			—			—			—			—			(119,712	)
Investor C		—			—			—			—			—			(102,421	)
Net realized gain:
BlackRock		—			—			—			—			—			(472,617	)
Institutional		—			(2,956,776	)		—			—			—			(3,425,943	)
Service		—			(358,504	)		—			—			—			(280,468	)
Investor A		—			(2,250,029	)		—			—			—			(3,071,371	)
Investor B		—			(603,710	)		—			—			—			(607,482	)
Investor C		—			(2,458,205	)		—			—			—			(519,399	)

Decrease in net assets resulting from dividends and distributions to shareholders		—			(8,627,224	)		—			—			(155,207	)		(9,987,218	)

Capital Share Transactions
Net increase (decrease) in net assets derived from capital share transactions		(6,516,203	)		19,065,677			218,085,648			274,159,643			(6,443,414	)		(4,047,188	)

Redemption Fees
Redemption fees		14,507			7,309			91,702			85,371			280			394

Net Assets
Total increase (decrease) in net assets		(22,017,302	)		(11,606,814	)		187,442,874			136,291,372			(15,072,894	)		(24,558,481	)
Beginning of year		97,712,543			109,319,357			981,467,046			845,175,674			44,350,624			68,909,105

End of year	$	75,695,241		$	97,712,543		$	1,168,909,920		$	981,467,046		$	29,277,730		$	44,350,624

Undistributed net investment income	$	21,303		$	331,426		$	311,353		$	4,725,979		$	47,290		$	83,511

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		23


Financial Highlights		Small Cap Core Equity Portfolio


	Institutional															Service
	Year Ended September 30,															Year Ended September 30,
	2009			2008			2007			2006			2005			2009			2008			2007			2006			2005
Per Share Operating Performance
Net asset value, beginning of year	$	15.86		$	21.21		$	18.50		$	17.62		$	14.77		$	15.73		$	21.05		$	18.41		$	17.59		$	14.73

Net investment loss¹		(0.01	)		(0.05	)		(0.13	)		(0.12	)		(0.10	)		(0.07	)		(0.09	)		(0.18	)		(0.18	)		(0.13	)
Net realized and unrealized gain (loss)		(2.14	)		(3.63	)		3.15			1.30			3.06			(2.11	)		(3.61	)		3.13			1.30			3.10

Net increase (decrease) from investment operations		(2.15	)		(3.68	)		3.02			1.18			2.96			(2.18	)		(3.70	)		2.95			1.12			2.97

Distributions from net realized gain		—			(1.67	)		(0.31	)		(0.30	)		(0.11	)		—			(1.62	)		(0.31	)		(0.30	)		(0.11	)

Redemption fees added to paid-in capital²		0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00

Net asset value, end of year	$	13.71		$	15.86		$	21.21		$	18.50		$	17.62		$	13.55		$	15.73		$	21.05		$	18.41		$	17.59

Total Investment Return^3,4
Based on net asset value		(13.56	)%		(18.37	)%		16.46	%		6.81	%		20.10	%		(13.86	)%		(18.59	)%		16.15	%		6.47	%		20.22	%

Ratios to Average Net Assets
Total expenses		1.48	%		1.40	%		1.38	%		1.47	%		1.81	%		1.88	%		1.64	%		1.59	%		1.64	%		2.01	%

Total expenses excluding recoupment of past waived fees		1.48	%		1.40	%		1.38	%		1.47	%		1.81	%		1.81	%		1.64	%		1.59	%		1.64	%		2.01	%

Total expenses after fees waived, reimbursed and paid indirectly		1.32	%		1.30	%		1.30	%		1.30	%		1.30	%		1.60	%		1.58	%		1.57	%		1.60	%		1.60	%

Net investment loss		(0.07	)%		(0.26	)%		(0.62	)%		(0.68	)%		(0.59	)%		(0.61	)%		(0.51	)%		(0.88	)%		(0.99	)%		(0.80	)%

Supplemental Data
Net assets, end of year (000)	$	38,592		$	38,685		$	33,707		$	24,172		$	12,641		$	256		$	3,430		$	4,909		$	2,776		$	94

Portfolio turnover		158	%		103	%		103	%		111	%		118	%		158	%		103	%		103	%		111	%		118	%


	Investor A
	Year Ended September 30,
	2009			2008			2007			2006			2005
Per Share Operating Performance
Net asset value, beginning of year	$	15.57		$	20.86		$	18.27		$	17.49		$	14.71

Net investment loss¹		(0.06	)		(0.12	)		(0.21	)		(0.20	)		(0.17	)
Net realized and unrealized gain (loss)		(2.11	)		(3.58	)		3.11			1.28			3.06

Net increase (decrease) from investment operations		(2.17	)		(3.70	)		2.90			1.08			2.89

Distributions from net realized gain		—			(1.59	)		(0.31	)		(0.30	)		(0.11	)

Redemption fees added to paid-in capital²		0.00			0.00			0.00			0.00			0.00

Net asset value, end of year	$	13.40		$	15.57		$	20.86		$	18.27		$	17.49

Total Investment Return^3,4
Based on net asset value		(13.94	)%		(18.74	)%		16.00	%		6.28	%		19.71	%

Ratios to Average Net Assets
Total expenses		2.11	%		1.90	%		1.80	%		1.90	%		2.17	%

Total expenses excluding recoupment of past waived fees		2.09	%		1.90	%		1.80	%		1.90	%		2.17	%

Total expenses after fees waived, reimbursed and paid indirectly		1.78	%		1.76	%		1.74	%		1.73	%		1.71	%

Net investment loss		(0.54	)%		(0.69	)%		(1.06	)%		(1.11	)%		(1.01	)%

Supplemental Data
Net assets, end of year (000)	$	16,995		$	23,687		$	29,070		$	20,973		$	11,997

Portfolio turnover		158	%		103	%		103	%		111	%		118	%

See Notes to Financial Statements.


24		ANNUAL REPORT		SEPTEMBER 30, 2009


Financial Highlights (continued)		Small Cap Core Equity Portfolio


	Investor B
	Year Ended September 30,
	2009			2008			2007			2006			2005
Per Share Operating Performance
Net asset value, beginning of year	$	15.09		$	20.23		$	17.87		$	17.24		$	14.61

Net investment loss¹		(0.14	)		(0.24	)		(0.36	)		(0.33	)		(0.28	)
Net realized and unrealized gain (loss)		(2.06	)		(3.48	)		3.03			1.26			3.02

Net increase (decrease) from investment operations		(2.20	)		(3.72	)		2.67			0.93			2.74

Distributions from net realized gain		—			(1.42	)		(0.31	)		(0.30	)		(0.11	)

Redemption fees added to paid-in capital²		0.00			0.00			0.00			0.00			0.00

Net asset value, end of year	$	12.89		$	15.09		$	20.23		$	17.87		$	17.24

Total Investment Return^3,4
Based on net asset value		(14.58	)%		(19.36	)%		15.06	%		5.49	%		18.81	%

Ratios to Average Net Assets
Total expenses		2.81	%		2.60	%		2.57	%		2.55	%		2.81	%

Total expenses excluding recoupment of past waived fees		2.80	%		2.60	%		2.57	%		2.55	%		2.81	%

Total expenses after fees waived, reimbursed and paid indirectly		2.54	%		2.51	%		2.51	%		2.49	%		2.44	%

Net investment loss		(1.30	)%		(1.42	)%		(1.84	)%		(1.87	)%		(1.74	)%

Supplemental Data
Net assets, end of year (000)	$	3,547		$	5,724		$	8,956		$	8,326		$	6,303

Portfolio turnover		158	%		103	%		103	%		111	%		118	%


	Investor C
	Year Ended September 30,
	2009			2008			2007			2006			2005
Per Share Operating Performance
Net asset value, beginning of year	$	15.07		$	20.25		$	17.87		$	17.23		$	14.60

Net investment loss¹		(0.14	)		(0.24	)		(0.35	)		(0.32	)		(0.28	)
Net realized and unrealized gain (loss)		(2.07	)		(3.47	)		3.04			1.26			3.02

Net increase (decrease) from investment operations		(2.21	)		(3.71	)		2.69			0.94			2.74

Distributions from net realized gain		—			(1.47	)		(0.31	)		(0.30	)		(0.11	)

Redemption fees added to paid-in capital²		0.00			0.00			0.00			0.00			0.00

Net asset value, end of year	$	12.86		$	15.07		$	20.25		$	17.87		$	17.23

Total Investment Return^3,4
Based on net asset value		(14.67	)%		(19.34	)%		15.17	%		5.55	%		18.82	%

Ratios to Average Net Assets
Total expenses		2.90	%		2.60	%		2.54	%		2.48	%		2.80	%

Total expenses excluding recoupment of past waived fees		2.88	%		2.60	%		2.54	%		2.48	%		2.80	%

Total expenses after fees waived, reimbursed and paid indirectly		2.54	%		2.50	%		2.48	%		2.44	%		2.44	%

Net investment loss		(1.30	)%		(1.43	)%		(1.81	)%		(1.81	)%		(1.74	)%

Supplemental Data
Net assets, end of year (000)	$	16,305		$	26,187		$	32,677		$	26,151		$	17,266

Portfolio turnover		158	%		103	%		103	%		111	%		118	%

1	Based on average shares outstanding.

2	Less than $0.01 per share.

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

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

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		25


Financial Highlights (continued)		Small Cap Growth Equity Portfolio


	Institutional															Service
	Year Ended September 30,															Year Ended September 30,
	2009			2008			2007			2006			2005			2009			2008			2007			2006			2005
Per Share Operating Performance
Net asset value, beginning of year	$	20.33		$	23.71		$	19.26		$	17.29		$	14.52		$	19.30		$	22.58		$	18.38		$	16.54		$	13.92

Net investment income (loss)¹		(0.07	)		0.03			(0.07	)		(0.09	)		(0.06	)		(0.10	)		(0.03	)		(0.11	)		(0.13	)		(0.11	)
Net realized and unrealized gain (loss)		(1.60	)		(3.41	)		4.52			2.06			2.82			(1.53	)		(3.25	)		4.31			1.97			2.72

Net increase (decrease) from investment operations		(1.67	)		(3.38	)		4.45			1.97			2.76			(1.63	)		(3.28	)		4.20			1.84			2.61

Redemption fees added to paid-in capital		0.00	²		0.00	²		0.00	²		0.00	²		0.01			0.00	²		0.00	²		0.00	²		0.00	²		0.01

Net asset value, end of year	$	18.66		$	20.33		$	23.71		$	19.26		$	17.29		$	17.67		$	19.30		$	22.58		$	18.38		$	16.54

Total Investment Return³
Based on net asset value		(8.22	)%^4,5		(14.26	)%⁵		23.11	%⁵		11.39	%⁵		19.08	%⁶		(8.45	)%^5,7		(14.53	)%⁵		22.85	%⁵		11.12	%⁵		18.82	%⁶

Ratios to Average Net Assets
Total expenses		0.88	%		0.77	%		0.82	%		0.83	%		0.95	%		1.15	%		1.07	%		1.02	%		1.08	%		1.19	%

Total expenses excluding recoupment of past waived fees		0.88	%		0.77	%		0.82	%		0.83	%		0.95	%		1.14	%		1.07	%		1.02	%		1.08	%		1.19	%

Total expenses after fees waived, reimbursed and paid indirectly		0.88	%		0.77	%		0.82	%		0.83	%		0.94	%		1.11	%		1.07	%		1.02	%		1.08	%		1.19	%

Net investment income (loss)		(0.48	)%		0.15	%		(0.34	)%		(0.48	)%		(0.40	)%		(0.70	)%		(0.14	)%		(0.54	)%		(0.73	)%		(0.70	)%

Supplemental Data
Net assets, end of year (000)	$	855,375		$	699,761		$	587,586		$	426,000		$	357,857		$	43,932		$	40,514		$	35,945		$	26,422		$	24,491

Portfolio turnover		82	%		81	%		81	%		74	%		91	%		82	%		81	%		81	%		74	%		91	%


	Investor A															Investor B
	Year Ended September 30,															Year Ended September 30,
	2009			2008			2007			2006			2005			2009			2008			2007			2006			2005
Per Share Operating Performance
Net asset value, beginning of year	$	18.76		$	21.97		$	17.90		$	16.12		$	13.57		$	16.56		$	19.57		$	16.07		$	14.61		$	12.39

Net investment loss¹		(0.13	)		(0.05	)		(0.13	)		(0.14	)		(0.10	)		(0.21	)		(0.21	)		(0.26	)		(0.27	)		(0.20	)
Net realized and unrealized gain (loss)		(1.49	)		(3.16	)		4.20			1.92			2.64			(1.35	)		(2.80	)		3.76			1.73			2.41

Net increase (decrease) from investment operations		(1.62	)		(3.21	)		4.07			1.78			2.54			(1.56	)		(3.01	)		3.50			1.46			2.21

Redemption fees added to paid-in capital		0.00	²		0.00	²		0.00	²		0.00	²		0.01			0.00	²		0.00	²		0.00	²		0.00	²		0.01

Net asset value, end of year	$	17.14		$	18.76		$	21.97		$	17.90		$	16.12		$	15.00		$	16.56		$	19.57		$	16.07		$	14.61

Total Investment Return³
Based on net asset value		(8.64	)%^5,8		(14.61	)%⁵		22.74	%⁵		11.04	%⁵		18.79	%⁶		(9.42	)%^5,9		(15.38	)%⁵		21.78	%⁵		9.99	%⁵		17.92	%¹⁰

Ratios to Average Net Assets
Total expenses		1.33	%		1.16	%		1.12	%		1.25	%		1.29	%		2.30	%		2.08	%		2.02	%		2.30	%		1.94	%

Total expenses excluding recoupment of past waived fees		1.33	%		1.16	%		1.12	%		1.25	%		1.29	%		2.20	%		2.08	%		2.02	%		2.30	%		1.94	%

Total expenses after fees waived, reimbursed and paid indirectly		1.33	%		1.16	%		1.12	%		1.15	%		1.19	%		2.20	%		2.08	%		1.92	%		2.11	%		1.94	%

Net investment loss		(0.92	)%		(0.22	)%		(0.64	)%		(0.80	)%		(0.66	)%		(1.72	)%		(1.11	)%		(1.44	)%		(1.77	)%		(1.45	)%

Supplemental Data
Net assets, end of year (000)	$	240,361		$	211,065		$	189,575		$	176,250		$	160,374		$	3,327		$	5,721		$	10,222		$	10,649		$	15,516

Portfolio turnover		82	%		81	%		81	%		74	%		91	%		82	%		81	%		81	%		74	%		91	%

See Notes to Financial Statements.


26		ANNUAL REPORT		SEPTEMBER 30, 2009


Financial Highlights (continued)		Small Cap Growth Equity Portfolio


	Investor C
	Year Ended September 30,
	2009			2008			2007			2006			2005
Per Share Operating Performance
Net asset value, beginning of year	$	16.56		$	19.57		$	16.09		$	14.62		$	12.40

Net investment loss¹		(0.22	)		(0.21	)		(0.29	)		(0.26	)		(0.19	)
Net realized and unrealized gain (loss)		(1.35	)		(2.80	)		3.77			1.73			2.40

Net increase (decrease) from investment operations		(1.57	)		(3.01	)		3.48			1.47			2.21

Redemption fees added to paid-in capital		0.00	²		0.00	²		0.00	²		0.00	²		0.01

Net asset value, end of year	$	14.99		$	16.56		$	19.57		$	16.09		$	14.62

Total Investment Return³
Based on net asset value		(9.48	)%^5,11		(15.38	)%⁵		21.63	%⁵		10.05	%⁵		17.90	%¹⁰

Ratios to Average Net Assets
Total expenses		2.31	%		2.08	%		2.09	%		2.02	%		1.94	%

Total expenses excluding recoupment of past waived fees		2.29	%		2.08	%		2.09	%		2.02	%		1.94	%

Total expenses after fees waived, reimbursed and paid indirectly		2.22	%		2.08	%		2.04	%		2.02	%		1.94	%

Net investment loss		(1.81	)%		(1.14	)%		(1.56	)%		(1.68	)%		(1.41	)%

Supplemental Data
Net assets, end of year (000)	$	25,915		$	24,405		$	21,847		$	15,667		$	15,434

Portfolio turnover		82	%		81	%		81	%		74	%		91	%

1	Based on average shares outstanding.

2	Less than $0.01 per share.

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

4	Includes proceeds received from a settlement of litigation which impacted the Portfolio’s total return. Not including these proceeds the Portfolio’s total return would have been (8.26)%.

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

6	Redemption fee of 2.00% received by the Portfolio is reflected in total return calculations. The impact to the return from redemption fees received during the period was an increase of 0.07%.

7	Includes proceeds received from a settlement of litigation which impacted the Portfolio’s total return. Not including these proceeds the Portfolio’s total return would have been (8.50)%.

8	Includes proceeds received from a settlement of litigation which impacted the Portfolio’s total return. Not including these proceeds the Portfolio’s total return would have been (8.69)%.

9	Includes proceeds received from a settlement of litigation which impacted the Portfolio’s total return. Not including these proceeds the Portfolio’s total return would have been (9.48)%.

10	Redemption fee of 2.00% received by the Portfolio is reflected in total return calculations. The impact to the return from redemption fees received during the period was an increase of 0.08%.

11	Includes proceeds received from a settlement of litigation which impacted the Portfolio’s total return. Not including these proceeds the Portfolio’s total return would have been (9.54)%.

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		27


Financial Highlights (continued)		Small Cap Value Equity Portfolio


	BlackRock															Institutional
	Year Ended September 30,															Year Ended September 30,
	2009			2008			2007			2006			2005			2009			2008			2007			2006			2005
Per Share Operating Performance
Net asset value, beginning of year	$	8.31		$	11.83		$	13.46		$	15.16		$	15.23		$	8.32		$	11.86		$	13.49		$	15.17		$	15.22

Net investment income (loss)¹		0.06			0.03			0.04			(0.00	)²		0.02			0.04			0.05			0.07			0.03			0.04
Net realized and unrealized gain (loss)		(1.44	)		(1.75	)		1.27			1.21			2.90			(1.42	)		(1.75	)		1.28			1.21			2.90

Net increase (decrease) from investment operations		(1.38	)		(1.72	)		1.31			1.21			2.92			(1.38	)		(1.70	)		1.35			1.24			2.94

Dividends and distributions from:
Net investment income		(0.03	)		—			(0.29	)		(0.17	)		—			(0.03	)		(0.02	)		(0.33	)		(0.18	)		—
Tax return of capital		—			(0.29	)		—			—			—			—			(0.31	)		—			—			—
Net realized gain		—			(1.51	)		(2.65	)		(2.74	)		(2.99	)		—			(1.51	)		(2.65	)		(2.74	)		(2.99	)

Total dividends and distributions		(0.03	)		(1.80	)		(2.94	)		(2.91	)		(2.99	)		(0.03	)		(1.84	)		(2.98	)		(2.92	)		(2.99	)

Redemption fees added to paid-in capital²		0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00

Net asset value, end of year	$	6.90		$	8.31		$	11.83		$	13.46		$	15.16		$	6.91		$	8.32		$	11.86		$	13.49		$	15.17

Total Investment Return^3,4
Based on net asset value		(16.49	)%		(16.96	)%		9.90	%		9.61	%		20.60	%		(16.43	)%		(16.83	)%		10.20	%		9.81	%		20.77	%

Ratios to Average Net Assets
Total expenses		1.38	%		1.25	%		1.10	%		1.12	%		1.08	%		1.57	%		1.01	%		0.87	%		0.91	%		1.00	%

Total expenses after fees waived, reimbursed and paid indirectly		1.10	%		1.10	%		1.08	%		1.10	%		1.07	%		0.97	%		0.90	%		0.86	%		0.89	%		0.97	%

Net investment income (loss)		0.98	%		0.33	%		0.32	%		(0.01	)%		0.16	%		0.74	%		0.55	%		0.57	%		0.23	%		0.26	%

Supplemental Data
Net assets, end of year (000)	$	50		$	3,046		$	4,929		$	4,454		$	5,162		$	12,811		$	19,077		$	27,999		$	36,480		$	68,880

Portfolio turnover		235	%		159	%		108	%		123	%		133	%		235	%		159	%		108	%		123	%		133	%


	Service															Investor A
	Year Ended September 30,															Year Ended September 30,
	2009			2008			2007			2006			2005			2009			2008			2007			2006			2005
Per Share Operating Performance
Net asset value, beginning of year	$	8.07		$	11.57		$	13.21		$	14.95		$	15.07		$	7.98		$	11.45		$	13.11		$	14.86		$	15.00

Net investment income (loss)¹		0.02			0.02			0.04			(0.02	)		(0.00	)²		0.01			0.01			0.02			(0.03	)		(0.00	)²
Net realized and unrealized gain (loss)		(1.37	)		(1.71	)		1.25			1.19			2.87			(1.35	)		(1.69	)		1.24			1.19			2.85

Net increase (decrease) from investment operations		(1.35	)		(1.69	)		1.29			1.17			2.87			(1.34	)		(1.68	)		1.26			1.16			2.85

Dividends and distributions from:
Net investment income		(0.03	)		—			(0.28	)		(0.17	)		—			(0.03	)		—			(0.27	)		(0.17	)		—
Tax return of capital		—			(0.30	)		—			—			—			—			(0.28	)		—			—			—
Net realized gain		—			(1.51	)		(2.65	)		(2.74	)		(2.99	)		—			(1.51	)		(2.65	)		(2.74	)		(2.99	)

Total dividends and distributions		(0.03	)		(1.81	)		(2.93	)		(2.91	)		(2.99	)		(0.03	)		(1.79	)		(2.92	)		(2.91	)		(2.99	)

Redemption fees added to paid-in capital²		0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00

Net asset value, end of year	$	6.69		$	8.07		$	11.57		$	13.21		$	14.95		$	6.61		$	7.98		$	11.45		$	13.11		$	14.86

Total Investment Return^3,4
Based on net asset value		(16.65	)%		(17.15	)%		9.92	%		9.45	%		20.46	%		(16.75	)%		(17.23	)%		9.79	%		9.40	%		20.43	%

Ratios to Average Net Assets
Total expenses		1.97	%		1.40	%		1.12	%		1.32	%		1.25	%		1.96	%		1.44	%		1.24	%		1.40	%		1.35	%

Total expenses after fees waived, reimbursed and paid indirectly		1.28	%		1.26	%		1.10	%		1.27	%		1.24	%		1.43	%		1.32	%		1.23	%		1.29	%		1.24	%

Net investment income (loss)		0.41	%		0.19	%		0.34	%		(0.18	)%		(0.03	)%		0.26	%		0.12	%		0.17	%		(0.19	)%		(0.01	)%

Supplemental Data
Net assets, end of year (000)	$	1,093		$	1,546		$	2,143		$	3,852		$	3,405		$	12,690		$	16,490		$	25,737		$	27,943		$	31,889

Portfolio turnover		235	%		159	%		108	%		123	%		133	%		235	%		159	%		108	%		123	%		133	%

See Notes to Financial Statements.


28		ANNUAL REPORT		SEPTEMBER 30, 2009


Financial Highlights (concluded)		Small Cap Value Equity Portfolio


	Investor B															Investor C
	Year Ended September 30,															Year Ended September 30,
	2009			2008			2007			2006			2005			2009			2008			2007			2006			2005
Per Share Operating Performance
Net asset value, beginning of year	$	6.41		$	9.53		$	11.30		$	13.28		$	13.77		$	6.38		$	9.50		$	11.31		$	13.28		$	13.78

Net investment loss¹		(0.02	)		(0.05	)		(0.05	)		(0.12	)		(0.10	)		(0.02	)		(0.05	)		(0.06	)		(0.11	)		(0.10	)
Net realized and unrealized gain (loss)		(1.09	)		(1.36	)		1.07			1.03			2.60			(1.09	)		(1.36	)		1.05			1.03			2.59

Net increase (decrease) from investment operations		(1.11	)		(1.41	)		1.02			0.91			2.50			(1.11	)		(1.41	)		0.99			0.92			2.49

Dividends and distributions from:
Net investment income		(0.02	)		—			(0.14	)		(0.15	)		—			(0.02	)		—			(0.15	)		(0.15	)		—
Tax return of capital		—			(0.20	)		—			—			—			—			(0.20	)		—			—			—
Net realized gain		—			(1.51	)		(2.65	)		(2.74	)		(2.99	)		—			(1.51	)		(2.65	)		(2.74	)		(2.99	)

Total dividends and distributions		(0.02	)		(1.71	)		(2.79	)		(2.89	)		(2.99	)		(0.02	)		(1.71	)		(2.80	)		(2.89	)		(2.99	)

Redemption fees added to paid-in capital²		0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00

Net asset value, end of year	$	5.28		$	6.41		$	9.53		$	11.30		$	13.28		$	5.25		$	6.38		$	9.50		$	11.31		$	13.28

Total Investment Return^3,4
Based on net asset value		(17.27	)%		(17.79	)%		9.08	%		8.46	%		19.58	%		(17.34	)%		(17.87	)%		8.80	%		8.56	%		19.49	%

Ratios to Average Net Assets
Total expenses		2.93	%		2.31	%		2.08	%		2.23	%		2.00	%		2.83	%		2.28	%		2.05	%		2.11	%		2.00	%

Total expenses after fees waived, reimbursed and paid indirectly		2.17	%		2.12	%		1.92	%		2.12	%		2.00	%		2.20	%		2.16	%		2.04	%		2.10	%		2.00	%

Net investment loss		(0.43	)%		(0.63	)%		(0.48	)%		(1.01	)%		(0.76	)%		(0.51	)%		(0.70	)%		(0.64	)%		(1.00	)%		(0.76	)%

Supplemental Data
Net assets, end of year (000)	$	931		$	1,947		$	4,479		$	7,373		$	12,848		$	1,704		$	2,244		$	3,622		$	4,643		$	6,414

Portfolio turnover		235	%		159	%		108	%		123	%		133	%		235	%		159	%		108	%		123	%		133	%

1	Based on average shares outstanding.

2	Less than $0.01 per share.

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

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

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		29

Notes to Financial Statements

1. Organization and Significant Accounting Policies:

BlackRock Funds^SM (the “Fund”), a Massachusetts business trust, is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. As of September 30, 2009, the Fund had 27 registered portfolios, of which the BlackRock Small Cap Core Equity Portfolio (“Small Cap Core Equity”), BlackRock Small Cap Growth Equity Portfolio (“Small Cap Growth Equity”) and BlackRock Small Cap Value Equity Portfolio (“Small Cap Value Equity”) (collectively the “Portfolios”) are included in these financial statements. The Portfolios’ financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require the use of management accruals and estimates. Actual results may differ from these estimates. Each Portfolio offers multiple classes of shares. BlackRock and Institutional Shares are sold without a sales charge and only to certain eligible investors. Service Shares are sold without a sales charge. Investor A Shares are generally sold with a front-end sales charge. Shares of Investor B and Investor C may be subject to a contingent deferred sales charge. All classes of shares have identical voting, dividend, liquidation and other rights and the same terms and conditions, except that the BlackRock, Service, Investor A, Investor B and Investor C Shares bear certain expenses related to the service of such shares and Investor B and Investor C Shares also bear certain expenses related to the distribution of such shares. Investor B Shares automatically convert to Investor A Shares after approximately eight years. Investor B Shares of each Portfolio are only available for purchase through exchanges, dividend reinvestments or for purchase by certain qualified employee benefit plans. Each class has exclusive voting rights with respect to matters relating to its service and distribution expenditures (except that Investor B shareholders may vote on material changes to the Investor A distribution plan).

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

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

Dividends and Distributions: Dividends and distributions, if any, paid by the Portfolios are recorded on the ex-dividend dates.


30		ANNUAL REPORT		SEPTEMBER 30, 2009

Notes to Financial Statements (continued)

Recent Accounting Standards: In June 2009, amended guidance was issued by the Financial Accounting Standards Board for transfers of financial assets. This guidance is intended to improve the relevance, representational faithfulness and comparability of the information that a reporting entity provides in its financial statements about a transfer of financial assets; the effects of a transfer on its financial position, financial performance, and cash flows; and a transferor’s continuing involvement, if any, in transferred financial assets. The amended guidance is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2009. Earlier application is prohibited. The recognition and measurement provisions of this guidance must be applied to transfers occurring on or after the effective date. Additionally, the enhanced disclosure provisions of the amended guidance should be applied to transfers that occurred both before and after the effective date of this guidance. The impact of this guidance on the Portfolios’ financial statements and disclosures, if any, is currently being assessed.

Bank Overdraft: As of September 30, 2009, Small Cap Growth Equity recorded a bank overdraft resulting from the estimation of available cash. The overdraft balance incurs fees charged by the custodian which are included in custodian on the Statements of Operations.

2. Investment Advisory Agreement and Other Transactions with Affiliates:

The Fund, on behalf of the Portfolios, entered into an Investment Advisory Agreement with BlackRock Advisors, LLC (the “Manager”), the Portfolios’ investment advisor, an indirect, wholly owned subsidiary of BlackRock, to provide investment advisory and administration services.


Average Daily Net Assets	Small Cap Growth Equity and Small Cap Value Equity
First $1 Billion	0.550	%
$1 Billion - $2 Billion	0.500
$2 Billion - $3 Billion	0.475
Greater Than $3 Billion	0.450

Small Cap Core Equity pays an advisory fee at an annual rate of 1.00% of average daily net assets.


Share Classes	Small Cap Core Equity		Small Cap Growth Equity		Small Cap Value Equity
BlackRock	N/A		N/A		1.10	%
Institutional	1.30	%	0.99	%	0.97	%
Service	1.60	%	1.29	%	1.27	%
Investor A	1.77	%	1.46	%	1.44	%
Investor B	2.52	%	2.21	%	2.19	%
Investor C	2.52	%	2.21	%	2.19	%

Effective June 1, 2009, the expense limitations as a percentage of net assets are as follows:


Share Classes	Small Cap Core Equity		Small Cap Growth Equity		Small Cap Value Equity
BlackRock	N/A		N/A		1.13	%
Institutional	1.34	%	1.02	%	1.00	%
Service	1.65	%	1.29	%	1.31	%
Investor A	1.82	%	1.50	%	1.48	%
Investor B	2.60	%	2.28	%	2.26	%
Investor C	2.60	%	2.28	%	2.26	%

The Manager has voluntarily agreed to waive its advisory fee by the amount of investment advisory fees the Portfolios pay to the Manager


		ANNUAL REPORT		SEPTEMBER 30, 2009		31

Notes to Financial Statements (continued)

indirectly through its investment in affiliated money market funds. This amount is included in fees waived by advisor in the Statements of Operations.


	Service Fee		Distribution Fee
BlackRock	0.25	%	—
Service	0.25	%	—
Investor A	0.25	%	—
Investor B	0.25	%	0.75	%
Investor C	0.25	%	0.75	%

Pursuant to sub-agreements with BRIL, broker-dealers, including Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S”), a wholly owned subsidiary of Merrill Lynch, and BRIL provide shareholder servicing and distribution services to each Portfolio. The ongoing service and/or distribution fee compensates BRIL and each broker-dealer for providing shareholder servicing and/or distribution related services to BlackRock, Service, Investor A, Investor B and Investor C shareholders.


Small Cap Core Equity	$	5,468
Small Cap Growth Equity	$	13,200
Small Cap Value Equity	$	3,444

For the year ended September 30, 2009, affiliates, including Merrill Lynch from October 1, 2008 to December 31, 2008 (after which time Merrill Lynch was no longer considered an affiliate), received the following contingent deferred sales charges relating to transactions in Investor A, Investor B and Investor C Shares:


	Investor A		Investor B		Investor C
Small Cap Core Equity	$	454	$	8,625	$	5,330
Small Cap Growth Equity	$	4,269	$	6,456	$	9,047
Small Cap Value Equity		—	$	1,710	$	125

PFPC Trust Company, an indirect, wholly owned subsidiary of PNC, serves as custodian for each Portfolio. For these services, the custodian receives a fee computed daily and payable monthly, based on a percentage of the average daily gross assets of each Portfolio. The fee is paid at the following annual rates: 0.005% of the first $400 million, 0.004% of the next $1.6 billion, and 0.003% of average daily gross assets in excess of $2 billion; plus per transaction charges and other miscellaneous fees incurred on behalf of each Portfolio


Small Cap Core Equity	$	26,891
Small Cap Growth Equity	$	340,410
Small Cap Value Equity	$	25,277

Call Center


Share Classes	Small Cap Core Equity		Small Cap Growth Equity		Small Cap Value Equity
BlackRock		—		—	$	14
Institutional	$	1,416	$	16,898		214
Service		216		922		57
Investor A		7,730		21,263		1,489
Investor B		1,074		766		150
Investor C		3,438		4,900		287

Total	$	13,874	$	44,749	$	2,211


32		ANNUAL REPORT		SEPTEMBER 30, 2009

Notes to Financial Statements (continued)

million, 0.065% of the next $500 million and 0.055% of average daily net assets in excess of $1 billion. In addition, each of the share classes is charged an administration fee based on the following percentages of average daily net assets of each respective class: 0.025% of the first $500 million, 0.015% of the next $500 million and 0.005% of average daily net assets in excess of $1 billion. In addition, PNCGIS and the Manager may have, at their discretion, voluntarily waived all or any portion of their administration fees for a Portfolio or a share class.

The Portfolios have received an exemptive order from the Securities and Exchange Commission permitting them to lend portfolio securities to MLPF&S or its affiliates. Pursuant to that order, the Portfolios have retained BlackRock Investment Management, LLC (“BIM”), an affiliate of the Manager, as the securities lending agent for a fee based on a share of the returns on investment of cash collateral. BIM may, on behalf of the Portfolios, invest cash collateral received by the Portfolios for such loans, among other things, in a private investment company managed by the Manager or in registered money market funds advised by the Manager or its affiliates. The share of income earned by the Portfolios on such investments is shown as securities lending — affiliated on the Statements of Operations. The securities lending agent fees received by BIM were as follows:


Small Cap Core Equity	$	12,039
Small Cap Growth Equity	$	305,791
Small Cap Value Equity	$	5,284

Administration Fees


Share Classes	Small Cap Core Equity		Small Cap Growth Equity		Small Cap Value Equity
BlackRock		—		—	$	141
Institutional	$	7,408	$	143,970		3,108
Service		166		8,232		249
Investor A		3,940		45,311		2,834
Investor B		893		845		256
Investor C		4,203		5,009		384

Total	$	16,610	$	203,367	$	6,972

Administration Fees Waived


Share Classes	Small Cap Core Equity		Small Cap Growth Equity		Small Cap Value Equity
BlackRock		—		—	$	141
Institutional	$	7,408		—		2,383
Service		153	$	2,427		249
Investor A		3,704		1,046		1,615
Investor B		839		471		219
Investor C		3,977		3,166		344

Total	$	16,081	$	7,110	$	4,951

Service and Distribution Fees


Share Classes	Small Cap Core Equity		Small Cap Growth Equity		Small Cap Value Equity
BlackRock		—		—	$	1,369
Service	$	1,642	$	82,134		2,479
Investor A		39,181		446,616		28,096
Investor B		35,598		33,714		10,048
Investor C		167,202		199,918		15,310

Total	$	243,623	$	762,382	$	57,302

Transfer Agent Fees


Share Classes	Small Cap Core Equity		Small Cap Growth Equity		Small Cap Value Equity
BlackRock		—		—	$	191
Institutional	$	36,265	$	1,146,485		24,216
Service		1,553		63,487		3,338
Investor A		75,398		688,453		36,626
Investor B		15,782		16,890		6,106
Investor C		87,946		118,480		6,840

Total	$	216,944	$	2,033,795	$	77,317

Transfer Agent Fees Waived


Share Classes	Small Cap Core Equity		Small Cap Growth Equity		Small Cap Value Equity
BlackRock		—		—	$	14
Institutional	$	1,416		—		191
Service		212	$	289		57
Investor A		7,730		571		877
Investor B		1,069		672		144
Investor C		3,438		3,236		281

Total	$	13,865	$	4,768	$	1,564

Transfer Agent Fees Reimbursed


Share Classes	Small Cap Core Equity		Small Cap Growth Equity		Small Cap Value Equity
BlackRock		—		—	$	176
Institutional	$	30,166		—		12,476
Service		1,314	$	7,287		1,639
Investor A		34,668		76		2,010
Investor B		6,535		2,037		2,756
Investor C		46,619		11,018		1,437

Total	$	119,302	$	20,418	$	20,494

If during Portfolio’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 amount of fees waived or expenses reimbursed during those prior two fiscal years under the agreement provided that: (1) the Portfolio of which the share class is a part has more than $50 million in assets and (2) the Manager or an affiliate continues to serve as the Portfolio’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


		ANNUAL REPORT		SEPTEMBER 30, 2009		33

Notes to Financial Statements (continued)

effect at the time the Manager became entitled to receive such reimbursement, rather than subsequently changed expense limit for that share class.

For the year ended September 30, 2009, the Manager recouped the following waivers previously recorded by the Portfolios:

Recoupment of Past Waived Fees


Share Classes	Small Cap Core Equity		Small Cap Growth Equity
Service	$	474	$	1,023
Investor A		4,047		—
Investor B		566		3,184
Investor C		3,189		3,887

Total	$	8,276	$	8,094

As of September 30, 2009, the amounts subject to possible future recoupment under the expense limitation agreement are as follows:


	Expiring September 30,
	2010		2011
Small Cap Core Equity	$	115,624	$	173,105
Small Cap Growth Equity	$	289	$	22,298
Small Cap Value Equity	$	67,158	$	160,804

The following waivers previously recorded by the Portfolios, which were subject to recoupment by the Manager, expired on September 30, 2009:


Small Cap Core Equity	$	54,240
Small Cap Growth Equity	$	13,243
Small Cap Value Equity	$	16,201

The Portfolios may earn income on positive cash balances in demand deposit accounts that are maintained by PNCGIS on behalf of the Portfolios. The income earned for the year ended September 30, 2009, which is included in interest and dividends — affiliated in the Statements of Operations, were as follows:


Small Cap Core Equity	$	216
Small Cap Growth Equity	$	600
Small Cap Value Equity	$	35

The Portfolios may also receive earnings credits related to cash balances with PNCGIS which are shown on the Statements of Operations as fees paid indirectly.

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

3. Investments:

Purchases and sales of investments, excluding short-term securities, for the year ended September 30, 2009 were as follows:


	Purchases		Sales
Small Cap Core Equity	$	106,919,924	$	111,312,161
Small Cap Growth Equity	$	964,310,808	$	711,083,113
Small Cap Value Equity	$	66,804,738	$	73,370,708

SmallCap Growth Equity Portfolio received proceeds from settlement of litigation where it was able to recover a portion of investment losses previously realized by such Portfolio. This amount is shown as litigation proceeds in the Statements of Operations.

4. Short-Term Borrowings:

5. Income Tax Information:


	Small Cap Core Equity			Small Cap Growth Equity
Paid-in capital	$	(64,624	)	$	(261,737	)
Undistributed net investment income	$	64,624		$	926,986
Accumulated net realized loss	$	—		$	(665,249	)


34		ANNUAL REPORT		SEPTEMBER 30, 2009

Notes to Financial Statements (continued)

The tax character of distributions paid during the years ended September 30, 2009 and September 30, 2008 were as follows:


	Small Cap Core Equity		Small Cap Value Equity
Ordinary income
9/30/09		—	$	155,207
9/30/08	$	2,390,496	$	2,478,294
Net long-term capital gain
9/30/08	$	6,236,728	$	5,943,992
Tax return of capital
9/30/08		—	$	1,564,932

Total distributions
9/30/09		—	$	155,207

9/30/08	$	8,627,224	$	9,987,218

As of September 30, 2009, the tax components of accumulated net losses were as follows:


	Small Cap Core Equity			Small Cap Growth Equity			Small Cap Value Equity
Undistributed ordinary income		—			—		$	43,272
Capital loss carryforwards	$	(17,942,184	)	$	(461,700,184	)		(9,889,125	)
Net unrealized losses*		(8,558,447	)		(17,438,820	)		(4,550,013	)

Total	$	(26,500,631	)	$	(479,139,004	)	$	(14,395,866	)

*	The difference between book-basis and tax-basis net unrealized losses is attributable primarily to the tax deferral of losses on wash sales, the deferral of post October capital losses for tax purposes and the timing of recognition of partnership income.

As of September 30, 2009, the Portfolios had capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates:


Expiring September 30,	Small Cap Core Equity		Small Cap Growth Equity		Small Cap Value Equity
2010		—	$	337,418,276		—
2011		—		104,987,092		—
2016	$	461,113		—		—
2017		17,481,071		19,294,816	$	9,889,125

Total	$	17,942,184	$	461,700,184	$	9,889,125

6. Concentration, Market and Credit Risk:

Small Cap Core Equity invests a significant portion of its assets in securities in the consumer discretionary sector. Changes in economic conditions affecting the consumer discretionary sector would have a greater impact on Small Cap Core Equity, and could affect the value, income and/or liquidity of positions in such securities.

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

Small Cap Value Equity invests a significant portion of its assets in securities in the financials and consumer discretionary sectors. Changes in economic conditions affecting the financials and consumer discretionary sectors would have a greater impact on Small Cap Value Equity, and could affect the value, income and/or liquidity of positions in such securities.


		ANNUAL REPORT		SEPTEMBER 30, 2009		35

Notes to Financial Statements (continued)

7. Capital Shares Transactions:

Transactions in capital shares for each class were as follows:


	Year Ended September 30, 2009					Year Ended September 30, 2008
Small Cap Core Equity	Shares		Amount			Shares		Amount
Institutional
Shares sold	1,758,408		$	20,427,130		1,364,139		$	24,046,536
Shares issued in reinvestment of distributions	—			—		144,344			2,634,282

Total issued	1,758,408			20,427,130		1,508,483			26,680,818
Shares redeemed	(1,382,403	)		(15,970,494	)	(658,819	)		(11,358,761	)

Net increase	376,005		$	4,456,636		849,664		$	15,322,057

Service
Shares sold	1,875		$	24,788		53,494		$	929,891
Shares issued in reinvestment of distributions	—			—		7,809			141,645

Total issued	1,875			24,788		61,303			1,071,536
Shares redeemed	(201,071	)		(2,095,004	)	(76,420	)		(1,366,692	)

Net decrease	(199,196	)	$	(2,070,216	)	(15,117	)	$	(295,156	)

Investor A
Shares sold and automatic conversion of shares	548,033		$	6,184,360		741,357		$	12,871,654
Shares issued in reinvestment of distributions	—			—		114,910			2,066,087

Total issued	548,033			6,184,360		856,267			14,937,741
Shares redeemed	(800,480	)		(8,879,333	)	(728,662	)		(12,426,165	)

Net increase (decrease)	(252,447	)	$	(2,694,973	)	127,605		$	2,511,576

Investor B
Shares sold	20,422		$	221,427		52,890		$	887,951
Shares issued in reinvestment of distributions	—			—		32,803			575,046

Total issued	20,422			221,427		85,693			1,462,997
Shares redeemed and automatic conversion of shares	(124,419	)		(1,351,280	)	(149,045	)		(2,471,884	)

Net decrease	(103,997	)	$	(1,129,853	)	(63,352	)	$	(1,008,887	)

Investor C
Shares sold	335,644		$	3,600,054		531,601		$	9,067,924
Shares issued in reinvestment of distributions	—			—		132,853			2,323,753

Total issued	335,644			3,600,054		664,454			11,391,677
Shares redeemed	(805,955	)		(8,677,851	)	(540,356	)		(8,855,590	)

Net increase (decrease)	(470,311	)	$	(5,077,797	)	124,098		$	2,536,087


36		ANNUAL REPORT		SEPTEMBER 30, 2009

Notes to Financial Statements (continued)


	Year Ended September 30, 2009					Year Ended September 30, 2008
Small Cap Growth Equity	Shares		Amount			Shares		Amount
Institutional
Shares sold	21,900,414		$	327,652,184		26,210,280		$	592,523,628
Shares redeemed	(10,481,639	)		(154,571,251	)	(16,563,602	)		(387,167,186	)

Net increase	11,418,775		$	173,080,933		9,646,678		$	205,356,442

Service
Shares sold	771,911		$	11,226,147		759,940		$	16,295,030
Shares redeemed	(384,928	)		(5,379,054	)	(252,607	)		(5,415,418	)

Net increase	386,983		$	5,847,093		507,333		$	10,879,612

Investor A
Shares sold and automatic conversion of shares	8,308,265		$	113,395,899		6,747,731		$	141,983,947
Shares redeemed	(5,536,858	)		(76,034,812	)	(4,126,237	)		(87,664,687	)

Net increase	2,771,407		$	37,361,087		2,621,494		$	54,319,260

Investor B
Shares sold	51,310		$	629,797		94,630		$	1,807,045
Shares redeemed and automatic conversion of shares	(175,040	)		(2,092,414	)	(271,481	)		(4,962,057	)

Net decrease	(123,730	)	$	(1,462,617	)	(176,851	)	$	(3,155,012	)

Investor C
Shares sold	736,351		$	9,084,571		628,994		$	11,776,014
Shares redeemed	(481,958	)		(5,825,419	)	(271,495	)		(5,016,673	)

Net increase	254,393		$	3,259,152		357,499		$	6,759,341


Small Cap Value
BlackRock
Shares sold	443		$	3,471		170		$	1,553
Shares issued in reinvestment of dividends and distributions	2,088			11,359		56,693			560,132

Total issued	2,531			14,830		56,863			561,685
Shares redeemed	(361,911	)		(2,089,429	)	(106,923	)		(1,262,762	)

Net decrease	(359,380	)	$	(2,074,599	)	(50,060	)	$	(701,077	)

Institutional
Shares sold	199,410		$	1,154,686		700,118		$	6,837,512
Shares issued in reinvestment of dividends and distributions	1,998			10,869		94,195			930,649

Total issued	201,408			1,165,555		794,313			7,768,161
Shares redeemed	(641,641	)		(3,818,978	)	(862,808	)		(8,137,224	)

Net decrease	(440,233	)	$	(2,653,423	)	(68,495	)	$	(369,063	)


		ANNUAL REPORT		SEPTEMBER 30, 2009		37

Notes to Financial Statements (concluded)


	Year Ended September 30, 2009					Year Ended September 30, 2008
Small Cap Value Equity (concluded)	Shares		Amount			Shares		Amount
Service
Shares sold	7,688		$	42,242		28,830		$	270,508
Shares issued in reinvestment of dividends and distributions	487			2,567		17,734			170,431

Total issued	8,175			44,809		46,564			440,939
Shares redeemed	(36,353	)		(207,334	)	(40,279	)		(353,709	)

Net increase (decrease)	(28,178	)	$	(162,525	)	6,285		$	87,230

Investor A
Shares sold and automatic conversion of shares	271,418		$	1,531,366		201,643		$	1,757,564
Shares issued in reinvestment of dividends and distributions	9,940			51,887		378,470			3,599,258

Total issued	281,358			1,583,253		580,113			5,356,822
Shares redeemed	(428,152	)		(2,415,669	)	(762,411	)		(7,077,882	)

Net decrease	(146,794	)	$	(832,416	)	(182,298	)	$	(1,721,060	)

Investor B
Shares sold	12,246		$	55,012		9,284		$	69,936
Shares issued in reinvestment of dividends and distributions	1,112			4,659		89,449			687,867

Total issued	13,358			59,671		98,733			757,803
Shares redeemed and automatic conversion of shares	(140,934	)		(636,607	)	(264,918	)		(1,915,386	)

Net decrease	(127,576	)	$	(576,936	)	(166,185	)	$	(1,157,583	)

Investor C
Shares sold	106,398		$	457,763		10,417		$	76,592
Shares issued in reinvestment of dividends and distributions	1,425			5,940		75,079			575,118

Total issued	107,823			463,703		85,496			651,710
Shares redeemed	(134,687	)		(607,218	)	(115,083	)		(837,345	)

Net decrease	(26,864	)	$	(143,515	)	(29,587	)	$	(185,635	)

8. Subsequent Events:


38		ANNUAL REPORT		SEPTEMBER 30, 2009

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Trustees of BlackRock Funds:

We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of BlackRock Small Cap Core Equity Portfolio, BlackRock Small Cap Growth Equity Portfolio and BlackRock Small Cap Value Equity Portfolio [three of the twenty-seven portfolios constituting the BlackRock Funds (the “Fund”) (collectively, the “Portfolios”)], as of September 30, 2009, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the Portfolios constituting the Fund as of September 30, 2009, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP

Philadelphia, Pennsylvania

November 25, 2009

Important Tax Information (Unaudited)

The following information is provided with respect to the ordinary income distribution paid by Small Cap Value Equity Portfolio during the taxable year ended September 30, 2009:


	Payable Date	Qualified Dividend Income for Individuals		Dividends Qualifying for the Dividends Received Deduction for Corporations
Small Cap Value Equity Portfolio	12/05/08	100.00	%	100.00	%


		ANNUAL REPORT		SEPTEMBER 30, 2009		39

Disclosure of Investment Advisory Agreement

Activities and Composition of the Board

The Advisory Agreement

Board Considerations in Approving the Advisory Agreement

The Approval Process: Prior to the April 16, 2009 meeting, the Board requested and received materials specifically relating to the Advisory Agreement. The Board is engaged in an ongoing process with BlackRock to continuously review the nature and scope of the information provided to better assist its deliberations. The materials provided in connection with the April meeting included (a) information independently compiled and prepared by Lipper, Inc. (“Lipper”) on Portfolio fees and expenses, and the investment performance of each Portfolio as compared with a peer group of funds as determined by Lipper (collectively, “Peers”); (b) information on the profitability of the Advisory Agreement to BlackRock and a discussion of fall-out benefits to BlackRock and its affiliates and significant shareholders; (c) a general analysis provided by BlackRock concerning investment advisory fees charged to other clients, such as institutional clients and closed-end funds, under similar investment mandates, as well as the performance of such other clients; (d) the impact of economies of scale; (e) a summary of aggregate amounts paid by each Portfolio to BlackRock; (f) sales and redemption data regarding each Portfolio’s shares; and (g) an internal comparison of management fees classified by Lipper, if applicable.

At an in-person meeting held on May 21-22, 2009, the Board Members of the Fund present at the meeting, including the Independent Board Members present at the meeting, unanimously approved the continuation of the Advisory Agreement between the Manager and the Fund with respect to each Portfolio for a one-year term ending June 30, 2010. The Board considered all factors it believed relevant with respect to the Portfolios, including, among other factors: (a) the nature, extent and quality of the services provided by BlackRock; (b) the investment performance of each Portfolio and BlackRock portfolio management; (c) the advisory fee and the cost of the services and profits to be realized by BlackRock and certain affiliates from the relationship with the Portfolios; (d) economies of scale; and (e) other factors.


40		ANNUAL REPORT		SEPTEMBER 30, 2009

Disclosure of Investment Advisory Agreement

B. The Investment Performance of each Portfolio and BlackRock: The Board, including the Independent Board Members, also reviewed and considered the performance history of each Portfolio. In preparation for the April 16, 2009 meeting, the Board was provided with reports, independently prepared by Lipper, which included a comprehensive analysis of each Portfolio’s performance. The Board also reviewed a narrative and statistical analysis of the Lipper data that was prepared by BlackRock, which analyzed various factors that affect Lipper’s rankings. In connection with its review, the Board received and reviewed information regarding the investment performance of each Portfolio as compared to a representative group of similar funds as determined by Lipper and to all funds in the Portfolio’s applicable Lipper category. The Board was provided with a description of the methodology used by Lipper to select peer funds. The Board regularly reviews the performance of each Portfolio throughout the year. The Board attaches more importance to performance over relatively long periods of time, typically three to five years.

The Board noted that, in general, Small Cap Core Portfolio performed better than its Peers in that the Portfolio’s performance was at or above the median of its Lipper Performance Universe in two of the one-, three-and five-year periods reported.

The Board noted that, in general, Small Cap Growth Portfolio performed better than its Peers in that the Portfolio’s performance was at or above the median of its Lipper Performance Universe in each of the one-, three- and five-year periods reported.

The Board noted that Small Cap Value Portfolio’s performance was below the median of its Lipper Performance Universe for the one-, three-and five-year periods reported. The Board and BlackRock reviewed the reasons for the Portfolio’s underperformance during these periods compared with its Peers. The Board was informed that, among other things, the Portfolio’s underperformance relative to its Peers in each of the one-, three- and five-year periods was driven largely by the Portfolio’s underperformance in 2008 due to poor stock selection primarily in the information technology, consumer discretionary and energy sectors. The Board and BlackRock discussed BlackRock’s commitment to providing the resources necessary to assist the portfolio managers and to improve the Portfolio’s performance.


		ANNUAL REPORT		SEPTEMBER 30, 2009		41

Disclosure of Investment Advisory Agreement

Board Members, reviewed each Portfolio’s contractual advisory fee rates compared with the other funds in the Portfolio’s Lipper category. It also compared each Portfolio’s total expenses, as well as actual management fees, to those of other comparable funds. The Board considered the services provided and the fees charged by BlackRock to other types of clients with similar investment mandates, including separately managed institutional accounts.

The Board noted that Small Cap Core Portfolio’s contractual advisory fees were above the median of its Peers. The Board noted that BlackRock has contractually agreed to waive fees or reimburse expenses in order to limit the Portfolio’s total net expenses on a class basis.

The Board noted that Small Cap Growth Portfolio’s contractual advisory fees, which do not take into account any expense reimbursement or fee waivers, were lower than or equal to the median contractual advisory fees paid by its Peers. The Portfolio has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the size of the Portfolio increases, thereby allowing shareholders the potential to participate in economies of scale. The Board noted that BlackRock has contractually and/or voluntarily agreed to waive fees or reimburse expenses in order to limit the Portfolio’s total net expenses on a class basis.

The Board noted that Small Cap Value Portfolio’s contractual advisory fees, which do not take into account any expense reimbursement or fee waivers, were lower than or equal to the median contractual advisory fees paid by its Peers. The Portfolio has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the size of the Portfolio increases, thereby allowing shareholders the potential to participate in economies of scale. The Board noted that BlackRock has contractually agreed to waive fees or reimburse expenses in order to limit the Portfolio’s total net expenses on a class basis.

D. Economies of Scale: The Board, including the Independent Board Members, considered the extent to which economies of scale might be realized as the assets of each Portfolio increase and whether there should be changes in the advisory fee rate or structure in order to enable the Portfolio to participate in these economies of scale, for example through the use of breakpoints in the advisory fee based upon the assets of the Portfolio with respect to Small Cap Core Portfolio and revised breakpoints with respect to Small Cap Growth Portfolio and Small Cap Value Portfolio. The Board considered that the funds in the BlackRock fund complex share some common resources and, as a result, an increase in the overall size of the complex could permit each fund to incur lower expenses than it would otherwise as a stand-alone entity. The Board also considered BlackRock’s overall operations and its efforts to expand the scale of, and improve the quality of, its operations.

E. Other Factors: The Board also took into account other ancillary or “fall-out” benefits that BlackRock or its affiliates and significant shareholders may derive from its relationship with the Portfolios, both tangible and intangible, such as BlackRock’s ability to leverage its investment professionals who manage other portfolios, an increase in BlackRock’s profile in the investment advisory community, and the engagement of BlackRock’s affiliates and significant shareholders as service providers to the Portfolios, including for administrative, transfer agency and distribution services. The Board also noted that BlackRock may use third party research obtained by soft dollars generated by certain mutual fund transactions to assist itself in managing all or a number of its other client accounts.


42		ANNUAL REPORT		SEPTEMBER 30, 2009

Disclosure of Investment Advisory Agreement (concluded)

Conclusion


		ANNUAL REPORT		SEPTEMBER 30, 2009		43

Officers and Trustees


Name, Address, and Year of Birth	Position(s) Held with Fund	Length of Time Served as a Trustee²	Principal Occupation(s) During Past 5 Years	Number of BlackRock- Advised Registered Investment Companies (“RICs”) Consisting of Investment Portfolios (“Portfolios”) Overseen	Public Directorships
Non-Interested Trustees¹

Ronald W. Forbes 40 East 52nd Street New York, NY 10022 1940	Co-Chair of the Board and Trustee	Since 2007	Professor Emeritus of Finance, School of Business, State University of New York at Albany since 2000.	34 RICs consisting of 81 Portfolios	None

Rodney D. Johnson 40 East 52nd Street New York, NY 10022 1941	Co-Chair of the Board and Trustee	Since 2007	President, Fairmount Capital Advisors, Inc. since 1987; Director, Fox Chase Cancer Center since 2002; Member of the Archdiocesan Investment Committee of the Archdiocese of Philadelphia since 2003; Director, The Committee of Seventy (civic) since 2006.	34 RICs consisting of 81 Portfolios	None

David O. Beim 40 East 52nd Street New York, NY 10022 1940	Trustee	Since 2007	Professor of Finance and Economics at the Columbia University Graduate School of Business since 1991; Trustee, Phillips Exeter Academy since 2002; Chairman, Wave Hill Inc. (public garden and cultural center) from 1990 to 2006.	34 RICs consisting of 81 Portfolios	None

Dr. Matina Horner 40 East 52nd Street New York, NY 10022 1939	Trustee	Since 2004	Executive Vice President of Teachers Insurance and Annuity Association and College Retirement Equities Fund from 1989 to 2003.	34 RICs consisting of 81 Portfolios	NSTAR (electric and gas utility)

Herbert I. London 40 East 52nd Street New York, NY 10022 1939	Trustee	Since 2007	Professor Emeritus, New York University since 2005; John M. Olin Professor of Humanities, New York University from 1993 to 2005 and Professor thereof from 1980 to 2005; President, Hudson Institute (policy research organization) since 1997 and Trustee thereof since 1980; Chairman of the Board of Trustees for Grantham University since 2006; Director, InnoCentive, Inc. (strategic solutions company) since 2005; Director, Cerego, LLC (software development and design) since 2005.	34 RICs consisting of 81 Portfolios	AIMS Worldwide, Inc. (marketing)

Cynthia A. Montgomery 40 East 52nd Street New York, NY 10022 1952	Trustee	Since 2007	Professor, Harvard Business School since 1989; Director, Harvard Business School Publishing since 2005; Director, McLean Hospital since 2005.	34 RICs consisting of 81 Portfolios	Newell Rubbermaid, Inc. (manufacturing)

Joseph P. Platt, Jr. 40 East 52nd Street New York, NY 10022 1947	Trustee	Since 2007	Director, The West Penn Allegheny Health System (a not-for-profit health system) since 2008; Director, Jones and Brown (Canadian insurance broker) since 1998; General Partner, Thorn Partners, LP (private investment) since 1998; Partner, Amarna Corporation, LLC (private investment company) from 2002 to 2008.	34 RICs consisting of 81 Portfolios	Greenlight Capital Re, Ltd. (reinsurance company)

Robert C. Robb, Jr. 40 East 52nd Street New York, NY 10022 1945	Trustee	Since 2007	Partner, Lewis, Eckert, Robb and Company (management and financial consulting firm) since 1981.	34 RICs consisting of 81 Portfolios	None


44		ANNUAL REPORT		SEPTEMBER 30, 2009

Officers and Trustees (continued)


Name, Address, and Year of Birth	Position(s) Held with Fund	Length of Time Served as a Trustee²	Principal Occupation(s) During Past 5 Years	Number of BlackRock- Advised Registered Investment Companies (“RICs”) Consisting of Investment Portfolios (“Portfolios”) Overseen	Public Directorships
Non-Interested Trustees¹(concluded)

Toby Rosenblatt 40 East 52nd Street New York, NY 10022 1938	Trustee	Since 2005	President, Founders Investments Ltd. (private investments) since 1999; Director, Forward Management, LLC since 2007; Director, The James Irvine Foundation (philanthropic foundation) since 1997; Trustee, State Street Research Mutual Funds from 1990 to 2005; Trustee, Metropolitan Series Funds, Inc. from 2001 to 2005.	34 RICs consisting of 81 Portfolios	A.P. Pharma, Inc. (specialty pharmaceuticals)

Kenneth L. Urish 40 East 52nd Street New York, NY 10022 1951	Trustee	Since 2007	Managing Partner, Urish Popeck & Co., LLC (certified public accountants and consultants) since 1976; Member of External Advisory Board, The Pennsylvania State University Accounting Department since 2001; Trustee, The Holy Family Foundation since 2001; Committee Member, Professional Ethics Committee of the Pennsylvania Institute of Certified Public Accountants since 2007; President and Trustee, Pittsburgh Catholic Publishing Associates from 2003 to 2008; Director, Inter-Tel from 2006 to 2007.	34 RICs consisting of 81 Portfolios	None

Frederick W. Winter 40 East 52nd Street New York, NY 10022 1945	Trustee	Since 2007	Professor and Dean Emeritus of the Joseph M. Katz School of Business, University of Pittsburgh since 2005 and Dean thereof from 1997 to 2005. Director, Alkon Corporation (pneumatics) since 1992; Director, Tippman Sports (recreation) since 2005; Director, Indotronix International (IT services) from 2004 to 2008.	34 RICs consisting of 81 Portfolios	None

1	Trustees serve until their resignation, removal or death, or until December 31 of the year in which they turn 72.


Interested Trustees³

Richard S. Davis 40 East 52nd Street New York, NY 10022 1945	Trustee	Since 2005	Managing Director, BlackRock, Inc. since 2005; Chief Executive Officer, State Street Research & Management Company from 2000 to 2005; Chairman of the Board of Trustees, State Street Research Mutual Funds from 2000 to 2005; Chairman, SSR Realty from 2000 to 2004.	172 RICs consisting of 283 Portfolios	None

Henry Gabbay 40 East 52nd Street New York, NY 10022 1947	Trustee	Since 2007	Consultant, BlackRock, Inc. from 2007 to 2008; Managing Director, BlackRock, Inc. from 1989 to 2007; Chief Administrative Officer, BlackRock Advisors, LLC from 1998 to 2007; President of BlackRock Funds and BlackRock Bond Allocation Target Shares from 2005 to 2007 and Treasurer of certain closed-end funds in the BlackRock fund complex from 1989 to 2006.	172 RICs consisting of 283 Portfolios	None


		ANNUAL REPORT		SEPTEMBER 30, 2009		45

Officers and Trustees (continued)


Name, Address, and Year of Birth	Position(s) Held with Fund	Length of Time Served	Principal Occupation(s) During Past 5 Years
Fund Officers¹

Anne F. Ackerley 40 East 52nd Street New York, NY 10022 1962	President and Chief Executive Officer	Since 2009	Managing Director of BlackRock, Inc. since 2000; Vice President of the BlackRock-advised funds from 2007 to 2009; Chief Operating Officer of BlackRock’s Global Client Group (GCG) since 2009; Chief Operating Officer of BlackRock’s U.S. Retail Group from 2006 to 2009; Head of BlackRock’s Mutual Fund Group from 2000 to 2006.

Richard Hoerner, CFA 40 East 52nd Street New York, NY 10022 1958	Vice President	Since 2009	Managing Director of BlackRock, Inc. since 2000; Co-head of BlackRock’s Cash Management Portfolio Management Group since 2002; Member of the Cash Management Group Executive Committee since 2005; Director of BlackRock, Inc. since 1998.

Jeffery Holland, CFA 40 East 52nd Street New York, NY 10022 1971	Vice President	Since 2009	Director of BlackRock, Inc. since 2006; Chief Operating Officer of BlackRock’s U.S. Retail Group since 2009; Co-head of Product Development and Management for BlackRock’s U.S. Retail Group from 2007 to 2009; Product Manager of Raymond James & Associates from 2003 to 2006.

Brendan Kyne 40 East 52nd Street New York, NY 10022 1977	Vice President	Since 2009	Director of BlackRock, Inc. since 2008; Head of Product Development and Management for BlackRock’s U.S. Retail Group since 2009, co-head thereof from 2007 to 2009; Vice President of BlackRock, Inc. from 2005 to 2008; Associate of BlackRock, Inc. from 2002 to 2004.

Simon Mendelson 40 East 52nd Street New York, NY 10022 1964	Vice President	Since 2009	Managing Director of BlackRock, Inc. since 2005; Chief Operating Officer and head of the Global Client Group for BlackRock’s Global Cash Management Business since 2007; Head of BlackRock’s Strategy and Development Group from 2005 to 2007; Partner of McKinsey & Co. from 1997 to 2005.

Brian Schmidt 40 East 52nd Street New York, NY 10022 1958	Vice President	Since 2009	Managing Director of BlackRock, Inc. since 2004; Various positions with U.S. Trust Company from 1991 to 2003 including Director from 2001 to 2003 and Senior Vice President from 1998 to 2003; Vice President, Chief Financial Officer and Treasurer of Excelsior Funds, Inc., Excelsior Tax-Exempt Funds, Inc. and Excelsior Funds Trust from 2001 to 2003.

Christopher Stavrakas, CFA 40 East 52nd Street New York, NY 10022 1959	Vice President	Since 2009	Managing Director of BlackRock, Inc. since 2006; Co-head of BlackRock’s Cash Management Portfolio Management Group since 2006; Senior Vice President, CIO, and Director of Liability Management for the Securities Lending Group at Mellon Bank from 1999 to 2006.

Neal J. Andrews 40 East 52nd Street New York, NY 10022 1966	Chief Financial Officer	Since 2007	Managing Director of BlackRock, Inc. since 2006; Senior Vice President and Line of Business Head of Fund Accounting and Administration at PNC Global Investment Servicing (U.S.) Inc. from 1992 to 2006.

Jay M. Fife 40 East 52nd Street New York, NY 10022 1970	Treasurer	Since 2007	Managing Director of BlackRock, Inc. since 2007 and Director in 2006; Assistant Treasurer of the Merrill Lynch Investment Managers, L.P. (“MLIM”) and Fund Asset Management, L.P. advised funds from 2005 to 2006; Director of MLIM Fund Services Group from 2001 to 2006.

Brian P. Kindelan 40 East 52nd Street New York, NY 10022 1959	Chief Compliance Officer	Since 2007	Chief Compliance Officer of the BlackRock-advised Funds since 2007; Managing Director and Senior Counsel of BlackRock, Inc. since 2005; Director and Senior Counsel of BlackRock Advisors, LLC from 2001 to 2004.

Howard B. Surloff 40 East 52nd Street New York, NY 10022 1965	Secretary	Since 2007	Managing Director of BlackRock, Inc. and General Counsel of U.S. Funds at BlackRock, Inc. since 2006; General Counsel (U.S.) of Goldman Sachs Asset Management, L.P. from 1993 to 2006.

1	Officers of the Fund serve at the pleasure of the Board.

Further information about the Fund’s Officers and Trustees is available in the Fund’s Statement of Additional Information, which can be obtained without charge by calling (800) 441-7762.


46		ANNUAL REPORT		SEPTEMBER 30, 2009

Officers and Trustees (concluded)

Investment Advisor and Co-Administrator

BlackRock Advisors, LLC

Wilmington, DE 19809

Co-Administrator and Transfer Agent

PNC Global Investment

Servicing (U.S.) Inc.

Wilmington, DE 19809

Custodian

PFPC Trust Company

Philadelphia, PA 19153

Distributor

BlackRock Investments, LLC

New York, NY 10022

Legal Counsel

Sidley Austin LLP

New York, NY 10019

Independent Registered Public Accounting Firm

Deloitte & Touche LLP

Philadelphia, PA 19103

Address of the Portfolios

100 Bellevue Parkway

Wilmington, DE 19809

Effective July 31, 2009, Donald C. Burke, President and Chief Executive Officer of the Fund retired. The Fund’s Board wishes Mr. Burke well in his retirement.

Effective August 1, 2009, Anne F. Ackerley became President and Chief Executive Officer of the Fund and Jeffrey Holland and Brian Schmidt became Vice Presidents of the Fund.

Effective September 17, 2009, Richard Hoerner, Brendan Kyne, Simon Mendelson and Christopher Stavrakas became Vice Presidents of the Fund.

Additional Information

General Information

Electronic Delivery

To enroll:

Shareholders Who Hold Accounts with Investment Advisors, Banks or Brokerages:

Please contact your financial advisor. Please note that not all investment advisors, banks or brokerages may offer this service.

Shareholders Who Hold Accounts Directly With BlackRock

1)	Access the BlackRock website at

http://www.blackrock.com/ edelivery

2)	Click on the applicable link and follow the steps to sign up

3)	Log into your account

Householding

Availability of Quarterly Portfolio Schedule

Availability of Proxy Voting Policies and Procedures

Availability of Proxy Voting Record


		ANNUAL REPORT		SEPTEMBER 30, 2009		47

Additional Information (concluded)

Shareholder Privileges

Account Information

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 portfolios.

Systematic Withdrawal Plan

Investor Class shareholders can establish a systematic withdrawal plan and receive periodic payments of $50 or more from their BlackRock portfolios, as long as their account is at least $10,000.

Retirement Plans

Shareholders may make investments in conjunction with Traditional, Rollover, Roth, Coverdell, Simple IRA’s, SEP IRA’s and 403(b) Plans.

BlackRock Privacy Principles


48		ANNUAL REPORT		SEPTEMBER 30, 2009

A World-Class Mutual Fund Family

BlackRock offers a diverse lineup of open-end mutual funds crossing all investment styles and managed by experts in equity, fixed income and tax-exempt investing.


Equity Funds

BlackRock All-Cap Energy & Resources Portfolio	BlackRock Global Opportunities Portfolio	BlackRock Mid-Cap Value Equity Portfolio
BlackRock Asset Allocation Portfolio†	BlackRock Global SmallCap Fund	BlackRock Mid Cap Value Opportunities Fund
BlackRock Aurora Portfolio	BlackRock Health Sciences Opportunities Portfolio	BlackRock Natural Resources Trust
BlackRock Balanced Capital Fund†	BlackRock Healthcare Fund	BlackRock Pacific Fund
BlackRock Basic Value Fund	BlackRock Index Equity Portfolio*	BlackRock Science & Technology Opportunities Portfolio
BlackRock Capital Appreciation Portfolio	BlackRock International Fund
BlackRock Energy & Resources Portfolio	BlackRock International Diversification Fund	BlackRock Small Cap Core Equity Portfolio
BlackRock Equity Dividend Fund	BlackRock International Index Fund	BlackRock Small Cap Growth Equity Portfolio
BlackRock EuroFund	BlackRock International Opportunities Portfolio	BlackRock Small Cap Growth Fund II
BlackRock Focus Growth Fund	BlackRock International Value Fund	BlackRock Small Cap Index Fund
BlackRock Focus Value Fund	BlackRock Large Cap Core Fund	BlackRock Small Cap Value Equity Portfolio
BlackRock Fundamental Growth Fund	BlackRock Large Cap Core Plus Fund	BlackRock Small/Mid-Cap Growth Portfolio
BlackRock Global Allocation Fund†	BlackRock Large Cap Growth Fund	BlackRock S&P 500 Index Fund
BlackRock Global Dynamic Equity Fund	BlackRock Large Cap Value Fund	BlackRock U.S. Opportunities Portfolio
BlackRock Global Emerging Markets Fund	BlackRock Latin America Fund	BlackRock Utilities and Telecommunications Fund
BlackRock Global Financial Services Fund	BlackRock Mid-Cap Growth Equity Portfolio	BlackRock Value Opportunities Fund
BlackRock Global Growth Fund

Fixed Income Funds

BlackRock Bond Portfolio	BlackRock Income Builder Portfolio	BlackRock Short-Term Bond Fund
BlackRock Emerging Market Debt Portfolio	BlackRock Inflation Protected Bond Portfolio	BlackRock Strategic Income Portfolio
BlackRock GNMA Portfolio	BlackRock Intermediate Government Bond Portfolio	BlackRock Total Return Fund
BlackRock Government Income Portfolio		BlackRock Total Return Portfolio II
BlackRock High Income Fund	BlackRock International Bond Portfolio	BlackRock World Income Fund
BlackRock High Yield Bond Portfolio	BlackRock Long Duration Bond Portfolio
BlackRock Income Portfolio	BlackRock Low Duration Bond Portfolio
	BlackRock Managed Income Portfolio

Municipal Bond Funds

BlackRock AMT-Free Municipal Bond Portfolio	BlackRock Kentucky Municipal Bond Portfolio	BlackRock New York Municipal Bond Fund
BlackRock California Municipal Bond Fund	BlackRock Municipal Insured Fund	BlackRock Ohio Municipal Bond Portfolio
BlackRock Delaware Municipal Bond Portfolio	BlackRock National Municipal Fund	BlackRock Pennsylvania Municipal Bond Fund
BlackRock High Yield Municipal Fund	BlackRock New Jersey Municipal Bond Fund	BlackRock Short-Term Municipal Fund

BlackRock Intermediate Municipal Fund

Target Risk & Target Date Funds

BlackRock Prepared Portfolios	BlackRock Lifecycle Prepared Portfolios
Conservative Prepared Portfolio	Prepared Portfolio 2010	Prepared Portfolio 2030
Moderate Prepared Portfolio	Prepared Portfolio 2015	Prepared Portfolio 2035
Growth Prepared Portfolio	Prepared Portfolio 2020	Prepared Portfolio 2040
Aggressive Growth Prepared Portfolio	Prepared Portfolio 2025	Prepared Portfolio 2045
		Prepared Portfolio 2050

*	See the prospectus for information on specific limitations on investments in the fund.

†	Mixed asset fund.


		ANNUAL REPORT		SEPTEMBER 30, 2009		49

[THIS PAGE INTENTIONALLY LEFT BLANK.]

LOGO

EQUITY3-9/09-AR

EQUITIES FIXED INCOME REAL ESTATE LIQUIDITY ALTERNATIVES BLACKROCK SOLUTIONS


BlackRock Funds^SM
ANNUAL REPORT \| SEPTEMBER 30, 2009

BlackRock Mid-Cap Growth Equity Portfolio

BlackRock Mid-Cap Value Equity Portfolio

BlackRock Small/Mid-Cap Growth Portfolio

NOT FDIC INSURED

MAY LOSE VALUE

NO BANK GUARANTEE

Table of Contents


		Page
Dear Shareholder		3
Annual Report:
Portfolio Summaries		4
About Portfolio Performance		10
Disclosure of Expenses		11
Derivative Financial Instruments		11
Financial Statements:		12
Schedules of Investments		12
Statements of Assets and Liabilities		21
Statements of Operations		23
Statements of Changes in Net Assets		24
Financial Highlights		25
Notes to Financial Statements		34
Report of Independent Registered Public Accounting Firm		45
Important Tax Information (Unaudited)		45
Disclosure of Investment Advisory Agreement		46
Officers and Trustees		50
Additional Information		53
Mutual Fund Family		55


2		ANNUAL REPORT		SEPTEMBER 30, 2009

Dear Shareholder


Total Returns as of September 30, 2009	6-month		12-month
US equities (S&P 500 Index)	34.02	%	(6.91	)%
Small cap US equities (Russell 2000 Index)	43.95		(9.55	)
International equities (MSCI Europe, Australasia, Far East Index)	49.85		3.23
US Treasury securities (BofA Merrill Lynch 10-Year US Treasury Index*)	(3.77	)	7.66
Taxable fixed income (Barclays Capital US Aggregate Bond Index)	5.59		10.56
Tax-exempt fixed income (Barclays Capital Municipal Bond Index)	9.38		14.85
High yield bonds (Barclays Capital US Corporate High Yield 2% Issuer Capped Index)	40.25		22.51

*	Formerly a Merrill Lynch index.

Past performance is no guarantee of future results. Index performance shown for illustrative purposes only. You cannot invest directly in an index.

The market environment has visibly improved since the beginning of the year, but a great deal of uncertainty and risk remain. Through periods of market turbulence, as ever, BlackRock’s full resources are dedicated to the management of our clients’ assets. For additional market perspective and investment insight, visit the most recent issue of our award-winning Shareholder^® magazine at www.blackrock.com/shareholdermagazine. We thank you for entrusting BlackRock with your investments, and we look forward to continuing to serve you in the months and years ahead.

Sincerely,

Rob Kapito

President, BlackRock Advisors, LLC

Announcement to Shareholders

THIS PAGE NOT PART OF YOUR FUND REPORT


						3


Portfolio Summary as of September 30, 2009		Mid-Cap Growth Equity Portfolio

Portfolio Management Commentary

How did the Portfolio perform?

•

The Portfolio underperformed the benchmark, Russell Midcap Growth Index, for the 12-month period.

What factors influenced performance?

•

During the period, weak stock selection in both the consumer discretionary and materials sectors was the most significant detractor to performance relative to the Russell Midcap Growth Index. Within consumer discretionary, Scientific Games Corp. fell more than 30% as the company began to negotiate new contracts for its state lottery gaming business. Also within the consumer discretionary sector, high-end hotel operator Orient-Express Hotels Ltd. plunged over 80% as consumer traffic slowed significantly. In the materials sector, Century Aluminum Co. dropped over 65% as falling aluminum prices pushed the company near bankruptcy.

•

In contrast, stock selection in the industrials sector was the most significant contributor to relative performance. Oshkosh Corp. rocketed more than 140% as the company signed a number of new contracts with the US government for production of military vehicles. Aircraft cabin parts manufacturer BE Aerospace, Inc. also bounced off of previous lows, edging up more than 25% on continued strong backlog for its products.

Describe recent Portfolio activity.

•

During the annual period, we reduced our relative overweight in the information technology sector, eliminating positions in Foundry Networks, Inc. and Intersil Corp., among others.

Describe Portfolio positioning at period end.

•

At period end, the Portfolio’s most significant overweight relative to the Russell Midcap Growth Index was in the health care sector, while its most significant underweight was in consumer staples.

Portfolio Information


Ten Largest Holdings	Percent of Long-Term Investments
Amdocs Ltd.	3	%
MEDNAX, Inc.	2
Broadcom Corp. - Class A	2
Lender Processing Services, Inc.	2
Scientific Games Corp. - Class A	2
Adobe Systems, Inc.	2
BE Aerospace, Inc.	2
Amphenol Corp. - Class A	2
Medco Health Solutions, Inc.	2
Avon Products, Inc.	2


Sector Allocation	Percent of Long-Term Investments
Information Technology	25	%
Consumer Discretionary	17
Health Care	16
Industrials	15
Financials	9
Energy	7
Materials	5
Consumer Staples	4
Telecommunication Services	1
Exchange-Traded Funds	1


4		ANNUAL REPORT		SEPTEMBER 30, 2009

Mid-Cap Growth Equity Portfolio

Total Return Based on a $10,000 Investment

LOGO

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

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

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

Performance Summary for the Period Ended September 30, 2009


			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	43.24	%	(0.58	)%	N/A		3.48	%	N/A		1.42	%	N/A
Service	42.77		(0.91	)	N/A		3.20		N/A		1.13		N/A
Investor A	42.84		(0.94	)	(6.15	)%	3.04		1.93	%	0.95		0.41	%
Investor B	42.47		(1.64	)	(6.06	)	2.28		1.91		0.37		0.37
Investor C	42.30		(1.75	)	(2.74	)	2.26		2.26		0.21		0.21
Class R	42.69		(1.05	)	N/A		2.96		N/A		0.90		N/A
Russell Midcap Growth Index	41.89		(0.40	)	N/A		3.75		N/A		2.18		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 Portfolio 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 April 1, 2009		Ending Account Value September 30, 2009		Expenses Paid During the Period⁵		Beginning Account Value April 1, 2009		Ending Account Value September 30, 2009		Expenses Paid During the Period⁵
Institutional	$	1,000.00	$	1,432.40	$	7.07	$	1,000.00	$	1,019.25	$	5.87
Service	$	1,000.00	$	1,427.70	$	9.43	$	1,000.00	$	1,017.30	$	7.84
Investor A	$	1,000.00	$	1,428.40	$	9.80	$	1,000.00	$	1,017.00	$	8.14
Investor B	$	1,000.00	$	1,424.70	$	14.28	$	1,000.00	$	1,013.29	$	11.86
Investor C	$	1,000.00	$	1,423.00	$	14.21	$	1,000.00	$	1,013.34	$	11.81
Class R	$	1,000.00	$	1,426.90	$	9.98	$	1,000.00	$	1,016.85	$	8.29

For each class of the Portfolio, expenses are equal to the annualized expense ratio for the class (1.16% for Institutional, 1.55% for Service, 1.61% for Investor A, 2.35% for Investor B, 2.34% for Investor C and 1.64% for Class R), multiplied by the average account value over the period, multiplied by 183/365 (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.


		ANNUAL REPORT		SEPTEMBER 30, 2009		5


Portfolio Summary as of September 30, 2009		Mid-Cap Value Equity Portfolio

Portfolio Management Commentary

How did the Portfolio perform?

•

The Portfolio outperformed the benchmark, Russell Midcap Value Index, for the 12-month period.

What factors influenced performance?

•

After plummeting last year, commodity prices regained some ground in 2009 on expectations that a global economic recovery would drive increased energy demand. Strong stock selection among energy exploration & production companies was a key contributor to relative performance. Stock selection also benefited return comparisons in the more defensive utilities sector. In financials, stock prices were pressured amid turmoil stemming from the bursting of the real estate bubble. An underweight, particularly among real estate investment trusts (REITs) and banks, added value. Strong gains from futures and options exchange operator CME Group Inc. and online brokerage TD Ameritrade Holding Corp. also boosted relative results.

•

In contrast, disappointing stock selection in the industrials sector hampered performance comparisons. Railway shipper Norfolk Southern Corp. and diversified manufacturer Textron, Inc. were among the notable individual detractors. Stock selection in the health care sector, particularly among health care equipment makers, also weighed on relative results. In information technology (IT), an overweight added value as technology stocks significantly outperformed the broader market. However, these relative gains were overshadowed by poor stock selection. Key areas of weakness included the communications equipment and computer & peripheral sub-sectors.

•

The Portfolio’s cash position had a negative impact on relative performance, but it was not a primary detractor.

Describe recent Portfolio activity.

•

Despite the extremely volatile market environment, we remained focused on our investment process, attempting to take advantage of temporarily undervalued situations with the opportunity for fundamental improvement over the longer term.

•

Within the energy sector, we increased exposure to exploration & production names. New additions included Plains Exploration & Production Co. and Whiting Petroleum Corp. We also added to an allocation in industrials, establishing several new positions in the aerospace & defense and machinery sub-sectors.

•

Conversely, we reduced a weighting in the IT sector as technology stocks rebounded sharply from the market bottom in early March and valuations became less compelling. Uncertainty surrounding health care reform contributed to volatility in health care stocks during the period. We trimmed exposure in health care, primarily among health care providers & services and equipment and suppliers makers, but remained very modestly overweight in the sector at period-end.

Describe Portfolio positioning at period end.

•

At period end, the most notable sector weightings relative to the Russell Midcap Value Index included overweights in IT (in particular electronic equipment makers and Internet software & service providers) and consumer discretionary (most notably specialty retailers and auto components manufacturers), and underweights in financials (primarily REITs and insurers), telecommunication services and utilities.

Portfolio Information


Ten Largest Holdings	Percent of Long-Term Investments
The Hanover Insurance Group, Inc.	2	%
Newfield Exploration Co.	2
Chimera Investment Corp.	2
KeyCorp	2
Viacom, Inc. - Class B	1
PHH Corp.	1
Safeway, Inc.	1
Fidelity National Information Services, Inc.	1
Cablevision Systems Corp. - Class A	1
Plains Exploration & Production Co.	1


Sector Allocation	Percent of Long-Term Investments
Financials	25	%
Consumer Discretionary	15
Industrials	11
Utilities	10
Information Technology	10
Energy	9
Materials	8
Consumer Staples	7
Health Care	5


6		ANNUAL REPORT		SEPTEMBER 30, 2009


		Mid-Cap Value Equity Portfolio

Total Return Based on a $10,000 Investment

LOGO

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

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

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

Performance Summary for the Period Ended September 30, 2009


			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	42.81	%	(5.09	)%	N/A		3.87	%	N/A		8.22	%	N/A
Service	42.61		(5.36	)	N/A		3.61		N/A		7.92		N/A
Investor A	42.45		(5.32	)	(10.33	)%	3.59		2.47	%	7.91		7.32	%
Investor B	41.90		(6.12	)	(10.31	)	2.81		2.55		7.28		7.28
Investor C	41.87		(6.14	)	(7.07	)	2.79		2.79		7.13		7.13
Russell Midcap Value Index	49.51		(7.12	)	N/A		3.53		N/A		7.43		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 Portfolio 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 April 1, 2009		Ending Account Value September 30, 2009		Expenses Paid During the Period⁵		Beginning Account Value April 1, 2009		Ending Account Value September 30, 2009		Expenses Paid During the Period⁵
Institutional	$	1,000.00	$	1,428.10	$	5.84	$	1,000.00	$	1,020.26	$	4.86
Service	$	1,000.00	$	1,426.10	$	7.66	$	1,000.00	$	1,018.75	$	6.38
Investor A	$	1,000.00	$	1,424.50	$	7.78	$	1,000.00	$	1,018.65	$	6.48
Investor B	$	1,000.00	$	1,419.00	$	12.31	$	1,000.00	$	1,014.89	$	10.25
Investor C	$	1,000.00	$	1,418.70	$	12.37	$	1,000.00	$	1,014.84	$	10.30

For each class of the Portfolio, expenses are equal to the annualized expense ratio for the class (0.96% for Institutional, 1.26% for Service, 1.28% for Investor A, 2.03% for Investor B and 2.04% for Investor C), multiplied by the average account value over the period, multiplied by 183/365 (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.


		ANNUAL REPORT		SEPTEMBER 30, 2009		7


Portfolio Summary as of September 30, 2009		Small/Mid-Cap Growth Portfolio

Portfolio Management Commentary

How did the Portfolio perform?

•

The Portfolio underperformed the benchmark, Russell 2500 Growth Index, for the 12-month period.

What factors influenced performance?

•

Weak stock selection in both the health care and consumer discretionary sectors was the most significant detractor to performance relative to the Russell 2500 Growth Index. Within health care, Wright Medical Group, Inc. fell more than 40% as consumers delayed operations utilizing the company’s hip and knee replacement products. In consumer discretionary, the Portfolio’s underweight in retail proved to be a headwind as the sector jumped more than 20% during the previous 12 months. Additionally, holding Ticketmaster disappointed, falling 35% after a noticeable slowdown in the company’s entertainment ticket processing business.

•

On the positive side, stock selection in the financials and telecommunications services sectors was the most significant relative contributor for the annual period. Index provider MSCI, Inc. jumped over 20% on strong demand for the company’s risk analytic software business. In the telecommunications sector, holding Neutral Tandem, Inc. was up more than 20% on strong financial results.

Describe recent Portfolio activity.

•

During the annual period, we decreased our relative overweight in the information technology sector, eliminating positions in Wright Express, Corp., Foundry Networks, Inc. and TeleTech Holdings, Inc. We increased our weighting in the health care sector, adding new names MedAssets, Inc., Acorda Therapeutics, Inc. and Gen-Probe, Inc., among others.

Describe Portfolio positioning at period end.

•

At period end, the Portfolio’s most significant overweight relative to the Russell 2500 Growth Index was in the information technology sector, while its most significant underweight was in materials.

Portfolio Information


Ten Largest Holdings	Percent of Long-Term Investments
TiVo, Inc.	3	%
SkillSoft Plc - ADR	2
ExlService Holdings, Inc.	2
CKX, Inc.	2
Scientific Games Corp. - Class A	2
MSCI, Inc. - Class A	2
BE Aerospace, Inc.	2
SonoSite, Inc.	2
Plains Exploration & Production Co.	2
ON Semiconductor Corp.	2


Sector Allocation	Percent of Long-Term Investments
Information Technology	26	%
Health Care	22
Industrials	16
Consumer Discretionary	16
Financials	7
Energy	5
Consumer Staples	4
Materials	3
Telecommunication Services	1


8		ANNUAL REPORT		SEPTEMBER 30, 2009


		Small/Mid-Cap Growth Portfolio

Total Return Based on a $10,000 Investment

LOGO

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

2	Under normal market conditions, the Portfolio invests at least 80% of total assets in small-capitalization and mid-capitalization companies.

3	An index composed of the Russell 2500 companies with higher price-to-book ratios and higher forecasted growth values.

Performance Summary for the Period Ended September 30, 2009


			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	40.47	%	(8.02	)%	N/A		2.61	%	N/A		4.27	%	N/A
Investor A	40.14		(8.38	)	(13.18	)%	2.32		1.23	%	3.96		3.40	%
Investor B	39.64		(9.03	)	(13.13	)	1.54		1.24		3.37		3.37
Investor C	39.58		(9.02	)	(9.93	)	1.53		1.53		3.24		3.24
Class R	39.97		(8.61	)	N/A		2.04		N/A		3.66		N/A
Russell 2500 Growth Index	42.70		(3.08	)	N/A		3.74		N/A		2.63		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 Portfolio 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 April 1, 2009		Ending Account Value September 30, 2009		Expenses Paid During the Period⁵		Beginning Account Value April 1, 2009		Ending Account Value September 30, 2009		Expenses Paid During the Period⁵
Institutional	$	1,000.00	$	1,404.70	$	6.75	$	1,000.00	$	1,019.45	$	5.67
Investor A	$	1,000.00	$	1,401.40	$	8.31	$	1,000.00	$	1,018.15	$	6.98
Investor B	$	1,000.00	$	1,396.40	$	12.80	$	1,000.00	$	1,014.39	$	10.76
Investor C	$	1,000.00	$	1,395.80	$	12.85	$	1,000.00	$	1,014.34	$	10.81
Class R	$	1,000.00	$	1,399.70	$	10.05	$	1,000.00	$	1,016.70	$	8.44

For each class of the Portfolio, expenses are equal to the annualized expense ratio for the class (1.12% for Institutional, 1.38% for Investor A, 2.13% Investor B, 2.14% for Investor C and 1.67% for Class R), multiplied by the average account value over the period, multiplied by 183/365 (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.


		ANNUAL REPORT		SEPTEMBER 30, 2009		9

About Portfolio Performance

•

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

•

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

•

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

•

Class R Shares are not subject to any sales charge. Class R Shares are subject to a distribution fee of 0.25% per year and a service fee of 0.25% per year. Class R Shares are available only to certain retirement and other similar plans. Prior to October 2, 2006, Mid-Cap Growth Equity Portfolio’s and Small/Mid-Cap Growth Portfolio’s Class R Share performance results 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 portfolio distributions or the redemption of portfolio shares. Each Portfolio may charge a 2% redemption fee for sales or exchanges of shares within 30 days of purchase or exchange. Performance data does not reflect this potential fee. Figures shown in each of the performance tables on the previous pages assume reinvestment of all dividends and distributions, if any, at net asset value on the payable date. Investment return and principal value of shares will fluctuate so that shares, when redeemed, may be worth more or less than their original cost.

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


10		ANNUAL REPORT		SEPTEMBER 30, 2009

Disclosure of Expenses

Derivative Financial Instruments

The Portfolios may invest in various derivative instruments, including options, as specified in Note 2 of the Notes to Financial Statements, which constitute forms of economic leverage. Such instruments are used to obtain exposure to a market without owning or taking physical custody of securities or to hedge market and/or equity risks. Such derivative instruments involve risks, including the imperfect correlation between the value of a derivative instrument and the underlying asset, possible default of the other party to the transaction and illiquidity of the derivative instrument. The Portfolios’ ability to successfully use a derivative instrument depends on the investment advisor’s ability to accurately predict pertinent market movements, which cannot be assured. The use of derivative instruments may result in losses greater than if they had not been used, may require the Portfolios to sell or purchase portfolio securities at inopportune times or for distressed values, may limit the amount of appreciation the Portfolios can realize on an investment or may cause the Portfolios to hold a security that it might otherwise sell. The Portfolios’ investments in these instruments are discussed in detail in the Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		11


Schedule of Investments September 30, 2009		Mid-Cap Growth Equity Portfolio
		(Percentages shown are based on Net Assets)


	Shares	Value
Common Stocks
Aerospace & Defense — 4.9%
BE Aerospace, Inc.(a)	224,700	$	4,525,458
Goodrich Corp.	21,800		1,184,612
Precision Castparts Corp.	29,000		2,954,230
Spirit AeroSystems Holdings, Inc. - Class A(a)	159,800		2,885,988

			11,550,288

Biotechnology — 2.4%
Dendreon Corp.(a)	75,300		2,107,647
Myriad Genetics, Inc.(a)	39,700		1,087,780
OSI Pharmaceuticals, Inc.(a)	69,000		2,435,700

			5,631,127

Capital Markets — 3.4%
Greenhill & Co., Inc.(b)	21,600		1,934,928
Invesco Ltd.	170,407		3,878,463
Northern Trust Corp.	38,000		2,210,080

			8,023,471

Chemicals — 4.1%
Agrium, Inc.(a)(b)	82,700		4,117,633
Airgas, Inc.	39,600		1,915,452
Celanese Corp. - Series A	139,400		3,485,000

			9,518,085

Commercial Banks — 0.8%
KeyCorp	287,500		1,868,750

Commercial Services & Supplies — 0.7%
Iron Mountain, Inc.(a)	65,400		1,743,564

Communications Equipment — 1.7%
Harris Corp.	70,381		2,646,326
Juniper Networks, Inc.(a)	47,600		1,286,152

			3,932,478

Construction & Engineering — 1.6%
Quanta Services, Inc.(a)	167,900		3,715,627

Diversified Financial Services — 3.0%
CME Group, Inc.	8,500		2,619,615
MSCI, Inc. - Class A(a)	147,100		4,357,102

			6,976,717

Electrical Equipment — 1.2%
A123 Systems, Inc.(a)	11,500		245,180
AMETEK, Inc.	72,500		2,530,975

			2,776,155

Electronic Equipment, Instruments & Components — 2.5%
Amphenol Corp. - Class A	120,000		4,521,600
Cogent, Inc.(a)	128,100		1,293,810

			5,815,410

Energy Equipment & Services — 2.8%
Noble Corp.	101,000		3,833,960
Superior Energy Services, Inc.(a)	123,700		2,785,724

			6,619,684

Food Products — 0.8%
Dean Foods Co.(a)	111,000		1,974,690

Health Care Equipment & Supplies — 3.2%
Gen-Probe, Inc.(a)	50,900		2,109,296
Hologic, Inc.(a)	149,000		2,434,660
Inverness Medical Innovations, Inc.(a)	76,000		2,943,480

			7,487,436

Health Care Providers & Services — 6.6%
Lincare Holdings, Inc.(a)	117,900		3,684,375
Magellan Health Services, Inc.(a)	74,000		2,298,440
Medco Health Solutions, Inc.(a)	79,600		4,402,676
MEDNAX, Inc.(a)	92,400		5,074,608

			15,460,099

Hotels, Restaurants & Leisure — 4.0%
Bally Technologies, Inc.(a)	31,600		1,212,492
Darden Restaurants, Inc.	95,000		3,242,350
Scientific Games Corp. - Class A(a)	302,600		4,790,158

			9,245,000

Household Durables — 1.1%
NVR, Inc.(a)	3,900		2,485,743

Household Products — 1.3%
Church & Dwight Co., Inc.	51,800		2,939,132

Insurance — 1.0%
RenaissanceRe Holdings Ltd.	41,300		2,261,588

IT Services — 7.3%
Amdocs Ltd.(a)	219,300		5,894,784
Fidelity National Information Services, Inc.	46,000		1,173,460
Gartner, Inc.(a)	96,700		1,766,709
Genpact Ltd.(a)	180,200		2,216,460
Lender Processing Services, Inc.	125,900		4,805,603
TeleTech Holdings, Inc.(a)	65,700		1,120,842

			16,977,858

Machinery — 3.9%
Joy Global, Inc.	58,200		2,848,308
Oshkosh Corp.	101,400		3,136,302
Pentair, Inc.	102,900		3,037,608

			9,022,218

Media — 2.8%
CKX, Inc.(a)	353,000		2,368,630
DreamWorks Animation SKG, Inc. - Class A(a)	115,800		4,119,006

			6,487,636

Portfolio Abbreviations


To simplify the listings of portfolio holdings in each Portfolio’s Schedule of Investments, the names and descriptions of many of the securities have been abbreviated according to the following list.				ADR				American Depositary Receipts

See Notes to Financial Statements.


12		ANNUAL REPORT		SEPTEMBER 30, 2009


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


	Shares	Value
Common Stocks
Metals & Mining — 0.6%
Century Aluminum Co.(a)	147,757	$	1,381,528

Oil, Gas & Consumable Fuels — 4.5%
CONSOL Energy, Inc.	81,500		3,676,465
Plains Exploration & Production Co.(a)	90,700		2,508,762
Ultra Petroleum Corp.(a)	44,000		2,154,240
The Williams Cos., Inc.	122,000		2,180,140

			10,519,607

Personal Products — 1.9%
Avon Products, Inc.	129,300		4,391,028

Pharmaceuticals — 4.0%
Allergan, Inc.	34,400		1,952,544
Medicis Pharmaceutical Corp. - Class A	150,800		3,219,580
Shire Plc - ADR	80,256		4,196,586

			9,368,710

Professional Services — 2.5%
IHS, Inc. - Class A(a)	70,100		3,584,213
Manpower, Inc.	41,700		2,364,807

			5,949,020

Real Estate Investment Trusts (REITs) — 0.7%
Chimera Investment Corp.	439,000		1,676,980

Semiconductors & Semiconductor Equipment — 6.7%
Broadcom Corp. - Class A(a)	159,400		4,891,986
Lam Research Corp.(a)	127,000		4,338,320
ON Semiconductor Corp.(a)	248,000		2,046,000
PMC-Sierra, Inc.(a)	448,500		4,287,660

			15,563,966

Software — 6.1%
Adobe Systems, Inc.(a)	141,300		4,668,552
CA, Inc.	53,100		1,167,669
Intuit, Inc.(a)	85,500		2,436,750
Salesforce.com, Inc.(a)	44,400		2,527,692
TiVo, Inc.(a)	343,800		3,561,768

			14,362,431

Specialty Retail — 7.1%
American Eagle Outfitters, Inc.	150,800		2,542,488
Bed Bath & Beyond, Inc.(a)	92,200		3,461,188
GameStop Corp. - Class A(a)(b)	154,700		4,094,909
Staples, Inc.	129,500		3,006,990
TJX Cos., Inc.	95,600		3,551,540

			16,657,115

Textiles, Apparel & Luxury Goods — 1.3%
lululemon athletica, inc.(a)(b)	138,000		3,139,500

Wireless Telecommunication Services — 1.1%
American Tower Corp. - Class A(a)	73,900		2,689,960

Total Common Stocks — 97.6%			228,212,601

Exchange-Traded Funds — 1.0%
iShares Russell Midcap Growth Index Fund(b)	58,600		2,492,258

Total Long-Term Investments (Cost — $207,092,690) — 98.6%			230,704,859


	Shares/ Beneficial Interest
Short-Term Securities
BlackRock Liquidity Funds, TempFund, Institutional Class,
0.22%(c)(d)	4,749,350		4,749,350
BlackRock Liquidity Series, LLC Money Market Series,
0.29%(c)(d)(e)	14,598,852		14,598,852

Total Short-Term Securities (Cost — $19,348,202) — 8.3%			19,348,202

*Total Investments (Cost — $226,440,892) — 106.9%**			250,053,061
Liabilities in Excess of Other Assets — (6.9)%			(16,243,717	)

Net Assets — 100.0%		$	233,809,344

*	The cost and unrealized appreciation (depreciation) of investments as of September 30, 2009, as computed for federal income tax purposes, were as follows:


Aggregate cost	$	232,934,711

Gross unrealized appreciation	$	34,883,663
Gross unrealized depreciation		(17,765,313	)

Net unrealized appreciation	$	17,118,350

(a)	Non-income producing security.

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

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


Affiliate	Net Activity			Income
BlackRock Liquidity Funds, TempFund, Institutional Class	$	4,749,350		$	14,126
BlackRock Liquidity Series, LLC Money Market Series	$	(5,873,048	)	$	93,864

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

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

•

Fair Value Measurements – Various inputs are used in determining the fair value of investments, which are as follows:

•

Level 1 - price quotations in active markets/exchanges for identical assets and liabilities

•

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

•

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

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		13


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

The following table summarizes the inputs used as of September 30, 2009 in determining the fair valuation of the Portfolio’s investments:


Valuation Inputs	Investments in Securities
	Assets
Level 1 :
Long-Term Investments¹	$	230,704,859
Short-Term Securities		4,749,350

Total Level 1		235,454,209

Level 2 – Short-Term Securities		14,598,852
Level 3		—

Total	$	250,053,061

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

See Notes to Financial Statements.


14		ANNUAL REPORT		SEPTEMBER 30, 2009


Schedule of Investments September 30, 2009		Mid-Cap Value Equity Portfolio
		(Percentages shown are based on Net Assets)


	Shares	Value
Common Stocks
Aerospace & Defense — 2.2%
Honeywell International, Inc.	122,520	$	4,551,618
L-3 Communications Holdings, Inc.	66,700		5,357,344
Orbital Sciences Corp.(a)	365,300		5,468,541

			15,377,503

Auto Components — 1.4%
Autoliv, Inc.	78,600		2,640,960
Cooper Tire & Rubber Co.	248,400		4,366,872
Federal Mogul Corp.(a)	242,300		2,924,561

			9,932,393

Beverages — 1.6%
Constellation Brands, Inc. - Class A(a)	254,500		3,855,675
Molson Coors Brewing Co. - Class B	146,600		7,136,488

			10,992,163

Capital Markets — 2.9%
Freedom Pay, Inc.(a)	43,051		431
Invesco Ltd.	381,430		8,681,346
Morgan Stanley	195,600		6,040,128
TD Ameritrade Holding Corp.(a)	289,100		5,672,142

			20,394,047

Chemicals — 2.4%
Albemarle Corp.	261,600		9,051,360
FMC Corp.	131,250		7,382,812

			16,434,172

Commercial Banks — 4.0%
City National Corp.(b)	120,800		4,702,744
Fifth Third Bancorp	556,700		5,639,371
KeyCorp	1,565,750		10,177,375
Zions Bancorporation(b)	392,090		7,045,857

			27,565,347

Commercial Services & Supplies — 1.9%
Corrections Corp. of America(a)	260,900		5,909,385
Republic Services, Inc.	274,760		7,300,373

			13,209,758

Consumer Finance — 0.5%
SLM Corp.(a)	407,300		3,551,656

Containers & Packaging — 1.6%
Owens-Illinois, Inc.(a)	195,840		7,226,496
Pactiv Corp.(a)	148,500		3,868,425

			11,094,921

Diversified Consumer Services — 0.7%
H&R Block, Inc.	254,100		4,670,358

Diversified Financial Services — 2.6%
NYSE Euronext	283,600		8,193,204
PHH Corp.(a)	500,850		9,936,864

			18,130,068

Electric Utilities — 3.2%
American Electric Power Co., Inc.	202,470		6,274,545
Entergy Corp.	98,800		7,890,168
Northeast Utilities	357,950		8,497,733

			22,662,446

Electronic Equipment, Instruments & Components — 2.5%
Anixter International, Inc.(a)	172,575		6,921,983
Tech Data Corp.(a)	119,236		4,961,410
Tyco Electronics Ltd.	258,500		5,759,380

			17,642,773

Energy Equipment & Services — 2.0%
Noble Corp.	198,200		7,523,672
Weatherford International Ltd.(a)	298,300		6,183,759

			13,707,431

Food & Staples Retailing — 2.4%
The Kroger Co.	346,100		7,143,504
Safeway, Inc.	494,980		9,761,006

			16,904,510

Food Products — 2.1%
Del Monte Foods Co.	745,317		8,630,771
The J.M. Smucker Co.	110,600		5,862,906

			14,493,677

Gas Utilities — 2.1%
EQT Corp.	152,700		6,505,020
Questar Corp.	214,300		8,049,108

			14,554,128

Health Care Equipment & Supplies — 1.3%
The Cooper Cos., Inc.	188,676		5,609,337
Hologic, Inc.(a)	211,190		3,450,845

			9,060,182

Health Care Providers & Services — 3.0%
DaVita, Inc.(a)	59,700		3,381,408
MEDNAX, Inc.(a)	104,350		5,730,902
Universal Health Services, Inc. - Class B	80,200		4,966,786
WellPoint, Inc.(a)	145,200		6,876,672

			20,955,768

Hotels, Restaurants & Leisure — 2.1%
Bally Technologies, Inc.(a)	94,800		3,637,476
Burger King Holdings, Inc.(b)	142,700		2,510,093
Darden Restaurants, Inc.(b)	106,800		3,645,084
Scientific Games Corp. - Class A(a)	304,000		4,812,320

			14,604,973

Household Durables — 0.9%
The Stanley Works	141,000		6,019,290

Independent Power Producers & Energy Traders — 1.2%
NRG Energy, Inc.(a)(b)	288,890		8,143,809

Industrial Conglomerates — 0.8%
Textron, Inc.	305,900		5,805,982

Insurance — 8.4%
AXIS Capital Holdings Ltd.	231,030		6,972,485
The Hanover Insurance Group, Inc.	266,299		11,006,138
HCC Insurance Holdings, Inc.	336,600		9,206,010
Lincoln National Corp.	160,800		4,166,328
RenaissanceRe Holdings Ltd.	154,400		8,454,944
The Travelers Cos., Inc.	92,950		4,575,929
W.R. Berkley Corp.	303,000		7,659,840

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		15


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


	Shares	Value
Common Stocks
Insurance (concluded)
XL Capital Ltd. - Class A	392,550	$	6,853,923

			58,895,597

Internet & Catalog Retail — 0.4%
Expedia, Inc.(a)	131,100		3,139,845

Internet Software & Services — 1.1%
eBay, Inc.(a)	88,020		2,078,152
Yahoo!, Inc.(a)	317,000		5,645,770

			7,723,922

IT Services — 2.4%
Amdocs Ltd.(a)	175,014		4,704,376
Fidelity National Information Services, Inc.	382,150		9,748,647
Paychex, Inc.	79,500		2,309,475

			16,762,498

Leisure Equipment & Products — 1.0%
Mattel, Inc.	374,200		6,907,732

Life Sciences Tools & Services — 0.5%
Thermo Fisher Scientific, Inc.(a)	73,300		3,201,011

Machinery — 3.9%
AGCO Corp.(a)	203,500		5,622,705
Danaher Corp.	121,900		8,206,308
Eaton Corp.	100,000		5,659,000
Navistar International Corp.(a)	76,300		2,855,146
Parker Hannifin Corp.	98,900		5,126,976

			27,470,135

Media — 3.7%
Cablevision Systems Corp. - Class A	410,300		9,744,625
The Interpublic Group of Cos., Inc.(a)	763,200		5,739,264
Viacom, Inc. - Class B(a)	355,950		9,980,838

			25,464,727

Metals & Mining — 2.8%
Carpenter Technology Corp.	264,400		6,184,316
Compass Minerals International, Inc.	43,700		2,692,794
Freeport-McMoRan Copper & Gold, Inc.	24,400		1,674,084
Reliance Steel & Aluminum Co.	123,650		5,262,544
United States Steel Corp.(b)	76,700		3,403,179

			19,216,917

Multiline Retail — 1.6%
Macy’s, Inc.	401,650		7,346,179
Saks, Inc.(a)(b)	597,400		4,074,268

			11,420,447

Multi-Utilities — 3.5%
CMS Energy Corp.	618,600		8,289,240
PG&E Corp.	208,600		8,446,214
Wisconsin Energy Corp.	164,200		7,416,914

			24,152,368

Office Electronics — 0.5%
Xerox Corp.	489,400		3,787,956

Oil, Gas & Consumable Fuels — 7.2%
Cimarex Energy Co.	189,500		8,209,140
CONSOL Energy, Inc.	195,681		8,827,170
Newfield Exploration Co.(a)	247,900		10,550,624
Plains Exploration & Production Co.(a)	351,800		9,730,788
Southwestern Energy Co.(a)	104,580		4,463,474
Whiting Petroleum Corp.(a)	140,500		8,089,990

			49,871,186

Paper & Forest Products — 0.8%
Weyerhaeuser Co.	152,900		5,603,785

Personal Products — 0.8%
The Estee Lauder Cos., Inc. - Class A	157,500		5,840,100

Professional Services — 0.8%
Dun & Bradstreet Corp.	71,100		5,355,252

Real Estate Investment Trusts (REITs) — 3.8%
Alexandria Real Estate Equities, Inc.	102,600		5,576,310
Chimera Investment Corp.	2,689,310		10,273,164
MFA Financial, Inc.	1,133,800		9,025,048
Redwood Trust, Inc.(b)	109,400		1,695,700

			26,570,222

Real Estate Management & Development — 0.6%
Forestar Group, Inc.(a)	259,400		4,456,492

Road & Rail — 0.6%
Union Pacific Corp.	77,700		4,533,795

Semiconductors & Semiconductor Equipment — 1.5%
Micron Technology, Inc.(a)	700,060		5,740,492
ON Semiconductor Corp.(a)	561,600		4,633,200

			10,373,692

Software — 1.1%
Novell, Inc.(a)	935,500		4,219,105
Phase Metrics, Inc.(a)	108,409		2,168
Symantec Corp.(a)	210,850		3,472,700

			7,693,973

Specialty Retail — 3.0%
AnnTaylor Stores Corp.(a)	291,600		4,633,524
The Gap, Inc.	391,700		8,382,380
Limited Brands, Inc.	72,109		1,225,132
The Sherwin-Williams Co.	110,800		6,665,728

			20,906,764

Thrifts & Mortgage Finance — 1.7%
Astoria Financial Corp.	508,320		5,611,853
People’s United Financial, Inc.	408,800		6,360,928

			11,972,781

Total Long-Term Investments (Cost — $532,355,151) — 97.1%			677,228,552


	Shares/ Beneficial Interest
Short-Term Securities
BlackRock Liquidity Funds, TempFund, Institutional Class,
0.22%(c)(d)	17,587,901		17,587,901
BlackRock Liquidity Series, LLC Money Market Series,
0.29%(c)(d)(e)	32,244,900		32,244,900

Total Short-Term Securities (Cost — $49,832,801) — 7.1%			49,832,801

See Notes to Financial Statements.


16		ANNUAL REPORT		SEPTEMBER 30, 2009


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


		Value
Total Investments Before Outstanding Options Written (Cost — $582,187,952*) — 104.2%		$	727,061,353


	Contracts
Options Written
Exchange-Traded Call Options Written
Autoliv, Inc., Strike Price $40, Expires 10/17/09	400		(4,000	)
Constellation Brands, Inc. - Class A, Strike Price $17.50, Expires 10/17/09	1,400		(14,000	)
Cooper Tire & Rubber Co., Strike Price $20, Expires 10/17/09	1,000		(25,000	)
The Gap, Inc., Strike Price $24, Expires 10/17/09	1,200		(6,000	)
Tyco Electronics Ltd., Strike Price $25, Expires 10/17/09	800		(8,000	)

			(57,000	)

Exchange-Traded Put Options Written
AGCO Corp., Strike Price $25, Expires 10/17/09	200		(7,000	)
PHH Corp., Strike Price $17.50, Expires 10/17/09	350		(10,500	)
Scientific Games Corp. - Class A, Strike Price $15, Expires 10/17/09	300		(10,500	)

			(28,000	)

Total Options Written (Premiums Received — $ 144,960) — (0.0)%			(85,000	)

Total Investments Net of Outstanding Options Written — 104.2%			726,976,353
Liabilities in Excess of Other Assets — (4.2)%			(29,605,509	)

Net Assets — 100.0%		$	697,370,844

*	The cost and unrealized appreciation (depreciation) of investments as of September 30, 2009, as computed for federal income tax purposes, were as follows:


Aggregate cost	$	647,379,401

Gross unrealized appreciation	$	84,174,002
Gross unrealized depreciation		(4,492,050	)

Net unrealized appreciation	$	79,681,952

(a)	Non-income producing security.

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

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


Affiliate	Net Activity			Income
BlackRock Liquidity Funds, TempFund, Institutional Class	$	17,587,901		$	88,007
BlackRock Liquidity Series, LLC
Money Market Series	$	(8,143,650	)	$	129,584

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

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

•

Fair Value Measurements — Various inputs are used in determining the fair value of investments, which are as follows:

•

Level 1 – price quotations in active markets/exchanges for identical assets and liabilities

•

The following table summarizes the inputs used as of September 30, 2009 in determining the fair valuation of the Portfolio’s investments:


Valuation Inputs	Investments in Securities		Other Financial Instruments¹:
	Assets		Liabilities
Level 1 :
Long-Term Investments²	$	677,225,953		—
Short-Term Securities		17,587,901	$	(85,000	)

Total Level 1		694,813,854		(85,000	)

Level 2 — Short-Term Securities		32,244,900		—
Level 3 :
Long-Term Investments:
Capital Markets		431		—
Software		2,168		—

Total Level 3		2,599		—

Total	$	727,061,353	$	(85,000	)

1	Other financial instruments are options which are shown at market value.

2	See above Schedule of Investments for values in each industry excluding the industries in Level 3 within the table.

The following table is reconciliation of Level 3 investments for the year ended September 30, 2009:


	Long-Term Investments
	Capital Markets		Software		Total

Balance, as of September 30, 2008	$	431	$	2,168	$	2,599
Accrued discounts/premiums		—		—		—
Realized gain/loss		—		—		—
Change in unrealized appreciation/depreciation		—		—		—
Net purchases/sales		—		—		—
Transfers in/out of Level 3		—		—		—

Balance, as of September 30, 2009	$	431	$	2,168	$	2,599

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		17


Schedule of Investments September 30, 2009		Small/Mid-Cap Growth Portfolio
		(Percentages shown are based on Net Assets)


	Shares	Value
Common Stocks
Aerospace & Defense — 4.0%
Argon ST, Inc.(a)	63,211	$	1,204,170
BE Aerospace, Inc.(a)	120,900		2,434,926
Spirit AeroSystems Holdings, Inc. - Class A(a)	55,400		1,000,524
Stanley, Inc.(a)	12,800		329,216
TransDigm Group, Inc.(a)	16,200		806,922

			5,775,758

Air Freight & Logistics — 0.5%
Forward Air Corp.	31,600		731,540

Beverages — 1.0%
Heckmann Corp.(a)	316,700		1,450,486

Biotechnology — 5.7%
Acorda Therapeutics, Inc.(a)	62,700		1,459,656
AMAG Pharmaceuticals, Inc.(a)	16,100		703,248
Cubist Pharmaceuticals, Inc.(a)	34,300		692,860
Dendreon Corp.(a)	59,600		1,668,204
InterMune, Inc.(a)	90,700		1,444,851
Onyx Pharmaceuticals, Inc.(a)	21,300		638,361
OSI Pharmaceuticals, Inc.(a)	43,300		1,528,490

			8,135,670

Building Products — 0.7%
Griffon Corp.(a)	96,900		975,783

Capital Markets — 2.3%
Greenhill & Co., Inc.(b)	14,300		1,280,994
Invesco Ltd.	89,600		2,039,296

			3,320,290

Chemicals — 2.1%
Celanese Corp. - Series A	73,900		1,847,500
Intrepid Potash, Inc.(a)	47,800		1,127,602

			2,975,102

Commercial Banks — 0.9%
PrivateBancorp, Inc.	50,000		1,223,000

Commercial Services & Supplies — 1.9%
Clean Harbors, Inc.(a)	19,700		1,108,322
SYKES Enterprises, Inc.(a)	76,384		1,590,315

			2,698,637

Communications Equipment — 2.1%
DG FastChannel, Inc.(a)	82,300		1,723,362
Harris Corp.	34,200		1,285,920

			3,009,282

Construction & Engineering — 2.2%
Chicago Bridge & Iron Co. NV	95,200		1,778,336
Quanta Services, Inc.(a)	59,700		1,321,161

			3,099,497

Containers & Packaging — 0.7%
Rock-Tenn Co. - Class A	22,402		1,055,358

Diversified Consumer Services — 0.5%
Weight Watchers International, Inc.	26,600		729,904

Diversified Financial Services — 1.8%
MSCI, Inc. - Class A(a)	85,300		2,526,586

Diversified Telecommunication Services — 1.7%
Cbeyond, Inc.(a)	102,700		1,656,551
Neutral Tandem, Inc.(a)	32,400		737,424

			2,393,975

Electrical Equipment — 1.6%
A123 Systems, Inc.(a)	7,100		151,372
AMETEK, Inc.	41,000		1,431,310
Energy Conversion Devices, Inc.(a)(b)	61,300		709,854

			2,292,536

Electronic Equipment, Instruments & Components — 1.3%
Cogent, Inc.(a)	181,400		1,832,140

Energy Equipment & Services — 1.0%
Superior Energy Services, Inc.(a)	61,100		1,375,972

Food Products — 2.1%
American Italian Pasta Co. - Class A(a)	36,300		986,634
Dean Foods Co.(a)	54,400		967,776
Smart Balance, Inc.(a)	161,900		994,066

			2,948,476

Health Care Equipment & Supplies — 6.6%
Gen-Probe, Inc.(a)	44,200		1,831,648
Hologic, Inc.(a)	84,500		1,380,730
Inverness Medical Innovations, Inc.(a)	18,100		701,013
NuVasive, Inc.(a)	34,000		1,419,840
SonoSite, Inc.(a)	89,678		2,372,880
ZOLL Medical Corp.(a)	81,942		1,763,392

			9,469,503

Health Care Providers & Services — 5.2%
Lincare Holdings, Inc.(a)	67,900		2,121,875
Medco Health Solutions, Inc.(a)	33,000		1,825,230
MEDNAX, Inc.(a)	34,700		1,905,724
VCA Antech, Inc.(a)	57,100		1,535,419

			7,388,248

Health Care Technology — 1.0%
MedAssets, Inc.(a)	63,400		1,430,938

Hotels, Restaurants & Leisure — 5.2%
Bally Technologies, Inc.(a)	44,200		1,695,954
The Cheesecake Factory, Inc.(a)	54,700		1,013,044
Domino’s Pizza, Inc.(a)	140,800		1,244,672
Jack in the Box, Inc.(a)	34,700		711,003
Scientific Games Corp. - Class A(a)	171,500		2,714,845

			7,379,518

Household Products — 0.7%
Church & Dwight Co., Inc.	16,800		953,232

Insurance — 1.7%
Aspen Insurance Holdings Ltd.	39,500		1,045,565
RenaissanceRe Holdings Ltd.	25,300		1,385,428

			2,430,993

Internet & Catalog Retail — 0.8%
Shutterfly, Inc.(a)	67,600		1,124,188

Internet Software & Services — 3.5%
comScore, Inc.(a)	88,900		1,601,089
SkillSoft Plc - ADR(a)	350,998		3,369,581

			4,970,670

See Notes to Financial Statements.


18		ANNUAL REPORT		SEPTEMBER 30, 2009


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


	Shares	Value
Common Stocks
IT Services — 8.5%
Amdocs Ltd.(a)	70,975	$	1,907,808
ExlService Holdings, Inc.(a)	200,701		2,982,417
Forrester Research, Inc.(a)	45,151		1,202,822
Gartner, Inc.(a)	49,100		897,057
Genpact Ltd.(a)	116,400		1,431,720
Global Cash Access Holdings, Inc.(a)	231,700		1,693,727
SRA International, Inc. - Class A(a)	93,300		2,014,347

			12,129,898

Machinery — 2.6%
Joy Global, Inc.	25,000		1,223,500
Kaydon Corp.	34,731		1,125,979
Pentair, Inc.	46,800		1,381,536

			3,731,015

Media — 4.0%
CKX, Inc.(a)	443,100		2,973,201
DreamWorks Animation SKG, Inc. - Class A(a)	57,732		2,053,527
RHI Entertainment, Inc.(a)	211,715		673,254

			5,699,982

Oil, Gas & Consumable Fuels — 4.3%
CONSOL Energy, Inc.	25,900		1,168,349
EXCO Resources, Inc.(a)	80,400		1,502,676
Plains Exploration & Production Co.(a)	80,400		2,223,864
Ultra Petroleum Corp.(a)	26,000		1,272,960

			6,167,849

Pharmaceuticals — 3.7%
Auxilium Pharmaceuticals, Inc.(a)	21,600		738,936
Cypress Bioscience, Inc.(a)	81,400		665,038
Medicis Pharmaceutical Corp. - Class A	91,200		1,947,120
Shire Plc - ADR	35,976		1,881,185

			5,232,279

Professional Services — 2.3%
IHS, Inc. - Class A(a)	25,108		1,283,772
MPS Group, Inc.(a)	133,800		1,407,576
Robert Half International, Inc.	26,800		670,536

			3,361,884

Real Estate Investment Trusts (REITs) — 0.4%
Franklin Street Properties Corp.	43,900		575,090

Semiconductors & Semiconductor Equipment — 4.7%
FEI Co.(a)	68,800		1,695,920
Microsemi Corp.(a)	92,100		1,454,259
ON Semiconductor Corp.(a)	264,300		2,180,475
Silicon Laboratories, Inc.(a)	29,200		1,353,712

			6,684,366

Software — 6.1%
Blackboard, Inc.(a)	39,400		1,488,532
DemandTec, Inc.(a)	161,800		1,428,694
SonicWALL, Inc.(a)	216,900		1,821,960
TiVo, Inc.(a)	386,400		4,003,104

			8,742,290

Specialty Retail — 4.1%
American Eagle Outfitters, Inc.	92,400		1,557,864
Dick’s Sporting Goods, Inc.(a)	33,100		741,440
GameStop Corp. - Class A(a)	56,166		1,486,714
J. Crew Group, Inc.(a)	20,800		745,056
TJX Cos., Inc.	36,100		1,341,115

			5,872,189

Textiles, Apparel & Luxury Goods — 1.2%
lululemon athletica, inc.(a)(b)	77,400		1,760,850

Total Long-Term Investments (Cost — $127,740,595) — 100.7%			143,654,974


	Beneficial Interest
	Beneficial Interest
Short-Term Securities
BlackRock Liquidity Series, LLC Money Market Series, 0.29%(c)(d)(e)
(Cost — $3,171,500) — 2.2%	3,171,500		3,171,500
*Total Investments (Cost — $130,912,095) — 102.9%**			146,826,474
Liabilities in Excess of Other Assets — (2.9)%			(4,092,410	)

Net Assets — 100.0%		$	142,734,064

*	The cost and unrealized appreciation (depreciation) of investments as of September 30, 2009, as computed for federal income tax purposes, were as follows:


Aggregate cost	$	132,395,980

Gross unrealized appreciation	$	21,925,952
Gross unrealized depreciation		(7,495,458	)

Net unrealized appreciation	$	14,430,494

(a)	Non-income producing security.

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

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


Affiliate	Net Activity			Income
BlackRock Liquidity Funds, TempFund, Institutional Class		—		$	5,575
BlackRock Liquidity Series, LLC
Money Market Series	$	(8,407,550	)	$	120,940

(d)	Security purchased with the cash collateral from securities loans.

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

•

Fair Value Measurements – Various inputs are used in determining the fair value of investments, which are as follows:

•

Level 1 - price quotations in active markets/exchanges for identical assets and liabilities

•

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		19


Schedule of Investments (concluded)		Small/Mid-Cap Growth Portfolio

•

The following table summarizes the inputs used as of September 30, 2009 in determining the fair valuation of the Portfolio’s investments:


Valuation Inputs	Investments in Securities
	Assets
Level 1 – Long-Term Investments¹	$	143,654,974
Level 2 – Short-Term Securities		3,171,500
Level 3		—

Total	$	146,826,474

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

See Notes to Financial Statements.


20		ANNUAL REPORT		SEPTEMBER 30, 2009

Statements of Assets and Liabilities


September 30, 2009	Mid-Cap Growth Equity Portfolio			Mid-Cap Value Equity Portfolio			Small/Mid-Cap Growth Portfolio
Assets
Investments at value - unaffiliated^1,2	$	230,704,859		$	677,228,552		$	143,654,974
Investments at value - affiliated³		19,348,202			49,832,801			3,171,500
Cash collateral pledged for options written		—			1,640,625			—
Investments sold receivable		696,319			6,852,780			2,471,069
Dividends receivable		106,374			867,686			35,848
Capital shares sold receivable		31,161			939,288			86,998
Securities lending income receivable - affiliated		2,246			7,872			4,570
Dividends receivable - affiliated		937			5,116			163
Receivable from advisor		394			29,028			21,460
Prepaid expenses		30,599			45,974			26,178

Total assets		250,921,091			737,449,722			149,472,760

Liabilities
Options written at value⁴		—			85,000			—
Collateral at value - securities loaned		14,598,852			32,244,900			3,171,500
Investments purchased payable		1,879,570			3,712,024			729,145
Investment advisory fees payable		214,652			452,099			87,733
Other affiliates payable		175,109			466,802			148,656
Capital shares redeemed payable		125,429			2,800,252			1,074,712
Service and distribution fees payable		58,368			193,476			37,661
Officer’s and Trustees’ fees payable		5,083			6,764			4,870
Bank overdraft		—			—			1,440,587
Other accrued expenses payable		54,684			117,561			43,832

Total liabilities		17,111,747			40,078,878			6,738,696

Net Assets	$	233,809,344		$	697,370,844		$	142,734,064

Net Assets Consist of
Paid-in capital	$	371,783,379		$	878,828,304		$	167,192,357
Undistributed net investment income		28,483			2,191,410			21,685
Accumulated net realized loss		(161,614,687	)		(328,582,231	)		(40,394,357	)
Net unrealized appreciation/depreciation		23,612,169			144,933,361			15,914,379

Net Assets	$	233,809,344		$	697,370,844		$	142,734,064

¹Investments at cost - unaffiliated	$	207,092,690		$	532,355,151		$	127,740,595
²Securities loaned at value	$	14,065,110		$	30,642,944		$	3,008,420
³Investments at cost - affiliated	$	19,348,202		$	49,832,801		$	3,171,500
⁴Premiums received - options written		—		$	144,960			—

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		21

Statements of Assets and Liabilities (concluded)


September 30, 2009	Mid-Cap Growth Equity Portfolio		Mid-Cap Value Equity Portfolio		Small/Mid-Cap Growth Portfolio
Net Asset Value
Institutional
Net assets	$	25,571,963	$	165,710,324	$	12,178,400
Shares outstanding¹		2,490,131		17,741,123		1,125,015
Par value per share	$	0.001	$	0.001	$	0.001
Net asset value	$	10.27	$	9.34	$	10.83
Service
Net assets	$	359,795	$	2,560,859		—
Shares outstanding¹		36,788		279,327		—
Par value per share	$	0.001	$	0.001		—
Net asset value	$	9.78	$	9.17		—
Investor A
Net assets	$	181,158,929	$	395,762,577	$	112,434,689
Shares outstanding¹		19,130,913		43,675,836		11,143,209
Par value per share	$	0.001	$	0.001	$	0.001
Net asset value	$	9.47	$	9.06	$	10.09
Investor B
Net assets	$	11,978,079	$	41,196,107	$	6,568,366
Shares outstanding¹		1,423,279		5,006,453		767,330
Par value per share	$	0.001	$	0.001	$	0.001
Net asset value	$	8.42	$	8.23	$	8.56
Investor C
Net assets	$	12,417,751	$	92,140,977	$	8,738,754
Shares outstanding¹		1,475,822		11,232,605		1,019,580
Par value per share		0.001		0.001	$	0.001
Net asset value	$	8.41	$	8.20	$	8.57
Class R
Net assets	$	2,322,827		—	$	2,813,855
Shares outstanding¹		245,488		—		281,995
Par value per share	$	0.001		—	$	0.001
Net asset value	$	9.46		—	$	9.98

1	Unlimited number of shares authorized

See Notes to Financial Statements.


22		ANNUAL REPORT		SEPTEMBER 30, 2009

Statements of Operations


Year Ended September 30, 2009	Mid-Cap Growth Equity Portfolio			Mid-Cap Value Equity Portfolio			Small/Mid-Cap Growth Portfolio
Investment Income
Dividends	$	1,301,424		$	11,406,747		$	424,241
Foreign taxes withheld		(912	)		—			—
Securities lending - affiliated		93,864			129,584			120,940
Interest and dividends - affiliated		15,134			89,277			5,912
Interest		5,602			3,753			615

Total income		1,415,112			11,629,361			551,708

Expenses
Investment advisory		1,518,810			4,742,713			941,784
Transfer agent - class specific		834,233			1,738,560			585,242
Service and distribution - class specific		582,724			2,067,666			386,771
Administration		142,389			435,190			94,178
Registration		61,885			68,852			55,599
Printing		60,174			212,886			37,373
Administration - class specific		47,486			148,349			31,418
Professional		41,610			46,700			57,111
Officer and Trustees		17,550			22,207			16,850
Custodian		16,399			49,226			23,858
Miscellaneous		18,756			31,905			15,833
Recoupment of past waived fees - class specific		64,187			74			—

Total expenses		3,406,203			9,564,328			2,246,017
Less fees waived by advisor		(2,018	)		(63,598	)		(780	)
Less administration fees waived - class specific		(37,037	)		(142,751	)		(31,327	)
Less transfer agent fees waived - class specific		(59,420	)		(49,382	)		(10,611	)
Less transfer agent fees reimbursed - class specific		(203,118	)		(1,288,231	)		(411,392	)
Less fees paid indirectly		(2,765	)		(3,309	)		(889	)

Total expenses after fees waived, reimbursed and paid indirectly		3,101,845			8,017,057			1,791,018

Net investment income (loss)		(1,686,733	)		3,612,304			(1,239,310	)

Realized and Unrealized Gain (Loss)
Net realized gain (loss) from:
Investments		(37,632,107	)		(255,846,682	)		(34,898,264	)
Litigation proceeds		699,429			—			258,200

		(36,932,678	)		(255,846,682	)		(34,640,064	)

Net change in unrealized appreciation/depreciation on:
Investments		30,815,471			194,944,762			17,410,574
Options written		—			59,960			—

		30,815,471			195,004,722			17,410,574

Total realized and unrealized loss		(6,117,207	)		(60,841,960	)		(17,229,490	)

Net Decrease in Net Assets Resulting from Operations	$	(7,803,940	)	$	(57,229,656	)	$	(18,468,800	)

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		23

Statements of Changes in Net Assets


	Mid-Cap Growth Equity Portfolio						Mid-Cap Value Equity Portfolio						Small/Mid-Cap Growth Portfolio
	Year Ended September 30,						Year Ended September 30,						Year Ended September 30,
Increase (Decrease) in Net Assets:	2009			2008			2009			2008			2009			2,008
Operations
Net investment income (loss)	$	(1,686,733	)	$	(2,988,481	)	$	3,612,304		$	3,717,731		$	(1,239,310	)	$	(1,794,557	)
Net realized gain (loss)		(36,932,678	)		22,460,515			(255,846,682	)		(49,098,035	)		(34,640,064	)		724,275
Net change in unrealized appreciation/depreciation		30,815,471			(106,025,639	)		195,004,722			(174,716,820	)		17,410,574			(57,802,393	)

Net decrease in net assets resulting from operations		(7,803,940	)		(86,553,605	)		(57,229,656	)		(220,097,124	)		(18,468,800	)		(58,872,675	)

Dividends and Distributions to Shareholders From
Net investment income:
Institutional		—			—			(1,133,643	)		(484,718	)		—			—
Service		—			—			(15,870	)		(2,856	)		—			—
Investor A		—			—			(3,029,032	)		(431,750	)		—			—
Investor B		—			—			(358,215	)		—			—			—
Investor C		—			—			(649,056	)		—			—			—
Tax return of capital:
Institutional		—			—			—			(118,755	)		(24,231	)		—
Service		—			—			—			(2,975	)		—			—
Investor A		—			—			—			(574,416	)		(140,153	)		—
Investor B		—			—			—			(111,910	)		—			—
Investor C		—			—			—			(166,401	)		—			—
Class R		—			—			—			—			(1,194	)		—
Net realized gain:
Institutional		—			—			—			(15,654,461	)		—			(3,835,548	)
Service		—			—			—			(392,228	)		—			—
Investor A		—			—			—			(75,720,395	)		—			(36,072,316	)
Investor B		—			—			—			(13,884,159	)		—			(3,584,103	)
Investor C		—			—			—			(20,826,117	)		—			(3,000,370	)
Class R		—			—			—			—			—			(221,880	)

Decrease in net assets resulting from dividends and distributions to shareholders		—			—			(5,185,816	)		(128,371,141	)		(165,578	)		(46,714,217	)

Capital Share Transactions
Net increase (decrease) in net assets derived from capital share transactions		(15,545,849	)		(70,749,257	)		(40,652,448	)		74,762,087			(17,528,808	)		(591,809	)

Redemption Fees
Redemption fees		—			—			—			—			6,433			14,117

Net Assets
Total decrease in net assets		(23,349,789	)		(157,302,862	)		(103,067,920	)		(273,706,178	)		(36,156,753	)		(106,164,584	)
Beginning of year		257,159,133			414,461,995			800,438,764			1,074,144,942			178,890,817			285,055,401

End of year	$	233,809,344		$	257,159,133		$	697,370,844		$	800,438,764		$	142,734,064		$	178,890,817

Undistributed net investment income	$	28,483		$	1,081,118		$	2,191,410		$	3,944,454		$	21,685		$	436,973

See Notes to Financial Statements.


24		ANNUAL REPORT		SEPTEMBER 30, 2009


Financial Highlights		Mid-Cap Growth Equity Portfolio


	Institutional															Service
	Year Ended September 30,															Year Ended September 30,
	2009			2008			2007			2006			2005			2009			2008			2007			2006			2005
Per Share Operating Performance
Net asset value, beginning of year	$	10.33		$	13.49		$	10.70		$	10.44		$	8.76		$	9.87		$	12.92		$	10.27		$	10.07		$	8.46

Net investment loss¹		(0.04	)		(0.04	)		(0.07	)		(0.06	)		(0.07	)		(0.06	)		(0.07	)		(0.09	)		(0.11	)		(0.07	)
Net realized and unrealized gain (loss)		(0.02	)		(3.12	)		2.86			0.45			1.75			(0.03	)		(2.98	)		2.74			0.44			1.68

Net increase (decrease) from investment operations		(0.06	)		(3.16	)		2.79			0.39			1.68			(0.09	)		(3.05	)		2.65			0.33			1.61

Distributions from net realized gain		—			—			—			(0.13	)		—			—			—			—			(0.13	)		—

Redemption fees added to paid-in capital		—			—			0.00	²		0.00	²		0.00	²		—			—			0.00	²		0.00	²		0.00	²

Net asset value, end of year	$	10.27		$	10.33		$	13.49		$	10.70		$	10.44		$	9.78		$	9.87		$	12.92		$	10.27		$	10.07

Total Investment Return³
Based on net asset value		(0.58	)%⁴		(23.43	)%		26.08	%⁵		3.75	%⁵		19.18	%⁵		(0.91	)%⁶		(23.61	)%		25.80	%⁵		3.29	%⁵		19.03	%⁵

Ratios to Average Net Assets
Total expenses		1.20	%		1.07	%		1.06	%		1.15	%		1.41	%		1.65	%		1.29	%		1.32	%		2.02	%		1.60	%

Total expenses excluding recoupment of past waived fees		1.20	%		1.07	%		1.06	%		1.15	%		1.41	%		1.64	%		1.29	%		1.32	%		2.02	%		1.60	%

Total expenses after fees waived, reimbursed and paid indirectly		1.18	%		1.06	%		1.05	%		1.08	%		1.23	%		1.51	%		1.28	%		1.22	%		1.53	%		1.53	%

Net investment loss		(0.44	)%		(0.33	)%		(0.59	)%		(0.60	)%		(0.72	)%		(0.76	)%		(0.56	)%		(0.76	)%		(1.06	)%		(0.77	)%

Supplemental Data
Net assets, end of year (000)	$	25,572		$	26,468		$	75,577		$	75,111		$	75,407		$	360		$	459		$	714		$	757		$	1,136

Portfolio turnover		53	%		45	%		53	%		64	%		85	%		53	%		45	%		53	%		64	%		85	%

1	Based on average shares outstanding.

2	Less than $0.01 per share.

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

4	Includes proceeds received from a settlement of litigation which impacted the Portfolio’s total return. Not including these proceeds the Portfolio’s total return would have been (0.87)%.

5	Redemption fee of 2.00% received by the Portfolio 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 Portfolio’s total return. Not including these proceeds the Portfolio’s total return would have been (1.22)%.

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		25


Financial Highlights (continued)		Mid-Cap Growth Equity Portfolio


	Investor A															Investor B
	Year Ended September 30,															Year Ended September 30,
	2009			2008			2007			2006			2005			2009			2008			2007			2006			2005
Per Share Operating Performance
Net asset value, beginning of year	$	9.56		$	12.55		$	10.00		$	9.82		$	8.26		$	8.56		$	11.32		$	9.09		$	9.00		$	7.63

Net investment loss¹		(0.06	)		(0.10	)		(0.12	)		(0.11	)		(0.11	)		(0.10	)		(0.17	)		(0.18	)		(0.17	)		(0.15	)
Net realized and unrealized gain (loss)		(0.03	)		(2.89	)		2.67			0.42			1.67			(0.04	)		(2.59	)		2.41			0.39			1.52

Net increase (decrease) from investment operations		(0.09	)		(2.99	)		2.55			0.31			1.56			(0.14	)		(2.76	)		2.23			0.22			1.37

Distributions from net realized gain		—			—			—			(0.13	)		—			—			—			—			(0.13	)		—

Redemption fees added to paid-in capital		—			—			0.00	²		0.00	²		0.00	²		—			—			0.00	²		0.00	²		0.00	²

Net asset value, end of year	$	9.47		$	9.56		$	12.55		$	10.00		$	9.82		$	8.42		$	8.56		$	11.32		$	9.09		$	9.00

Total Investment Return³
Based on net asset value		(0.94	)%⁴		(23.83	)%		25.50	%⁵		3.16	%⁵		18.89	%⁵		(1.64	)%⁶		(24.38	)%		24.53	%⁵		2.44	%⁵		17.96	%⁵

Ratios to Average Net Assets
Total expenses		1.76	%		1.53	%		1.60	%		1.74	%		1.78	%		2.73	%		2.45	%		2.46	%		2.54	%		2.41	%

Total expenses excluding recoupment of past waived fees		1.72	%		1.53	%		1.60	%		1.74	%		1.78	%		2.64	%		2.45	%		2.46	%		2.54	%		2.41	%

Total expenses after fees waived, reimbursed and paid indirectly		1.59	%		1.53	%		1.57	%		1.58	%		1.58	%		2.34	%		2.31	%		2.25	%		2.33	%		2.33	%

Net investment loss		(0.85	)%		(0.81	)%		(1.11	)%		(1.11	)%		(1.14	)%		(1.57	)%		(1.58	)%		(1.79	)%		(1.86	)%		(1.82	)%

Supplemental Data
Net assets, end of year (000)	$	181,159		$	195,980		$	274,333		$	257,729		$	290,285		$	11,978		$	19,565		$	43,610		$	48,635		$	59,100

Portfolio turnover		53	%		45	%		53	%		64	%		85	%		53	%		45	%		53	%		64	%		85	%

See Notes to Financial Statements.


26		ANNUAL REPORT		SEPTEMBER 30, 2009


Financial Highlights (continued)		Mid-Cap Growth Equity Portfolio


	Investor C															Class R
	Year Ended September 30,															Year Ended September 30,						Period October 2, 2006⁷ to September 30, 2007
	2009			2008			2007			2006			2005			2009			2008			Period October 2, 2006⁷ to September 30, 2007
Per Share Operating Performance
Net asset value, beginning of period	$	8.56		$	11.32		$	9.09		$	9.00		$	7.63		$	9.56		$	12.55		$	9.92

Net investment loss¹		(0.11	)		(0.16	)		(0.19	)		(0.17	)		(0.15	)		(0.07	)		(0.10	)		(0.13	)
Net realized and unrealized gain (loss)		(0.04	)		(2.60	)		2.42			0.39			1.52			(0.03	)		(2.89	)		2.76

Net increase (decrease) from investment operations		(0.15	)		(2.76	)		2.23			0.22			1.37			(0.10	)		(2.99	)		2.63

Distributions from net realized gain		—			—			—			(0.13	)		—			—			—			—

Redemption fees added to paid-in capital		—			—			0.00	²		0.00	²		0.00	²		—			—			0.00	²

Net asset value, end of period	$	8.41		$	8.56		$	11.32		$	9.09		$	9.00		$	9.46		$	9.56		$	12.55

Total Investment Return³
Based on net asset value		(1.75	)%⁸		(24.38	)%		24.53	%⁵		2.44	%⁵		17.96	%⁵		(1.05	)%⁹		(23.83	)%		26.51	%^5,10

Ratios to Average Net Assets
Total expenses		2.46	%		2.25	%		2.31	%		2.37	%		2.41	%		2.04	%		1.73	%		1.63	%¹¹

Total expenses excluding recoupment of past waived fees		2.44	%		2.25	%		2.31	%		2.37	%		2.41	%		2.04	%		1.73	%		1.63	%¹¹

Total expenses after fees waived, reimbursed and paid indirectly		2.34	%		2.25	%		2.30	%		2.33	%		2.33	%		1.63	%		1.58	%		1.59	%¹¹

Net investment loss		(1.59	)%		(1.53	)%		(1.84	)%		(1.86	)%		(1.83	)%		(0.89	)%		(0.82	)%		(1.12	)%¹¹

Supplemental Data
Net assets, end of period (000)	$	12,418		$	13,964		$	20,203		$	18,047		$	20,748		$	2,323		$	723		$	25

Portfolio turnover		53	%		45	%		53	%		64	%		85	%		53	%		45	%		53	%

1	Based on average shares outstanding.

2	Less than $0.01 per share.

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

4	Includes proceeds received from a settlement of litigation which impacted the Portfolio’s total return. Not including these proceeds the Portfolio’s total return would have been (1.26)%.

5	Redemption fee of 2.00% received by the Portfolio 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 Portfolio’s total return. Not including these proceeds the Portfolio’s total return would have been (1.99)%.

7	Commencement of operations.

8	Includes proceeds received from a settlement of litigation which impacted the Portfolio’s total return. Not including these proceeds the Portfolio’s total return would have been (2.10)%.

9	Includes proceeds received from a settlement of litigation which impacted the Portfolio’s total return. Not including these proceeds the Portfolio’s total return would have been (1.36)%.

10	Aggregate total investment return.

11	Annualized.

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		27


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


	Institutional
	Year Ended September 30,												Period March 1, 2005 to September 30, 2005			Period July 1, 2004 to February 28, 2005
	2009			2008			2007			2006			Period March 1, 2005 to September 30, 2005			Period July 1, 2004 to February 28, 2005
Per Share Operating Performance
Net asset value, beginning of period	$	9.94		$	14.35		$	13.67		$	13.74		$	12.73		$	12.14

Net investment income		0.08	¹		0.10	¹		0.11	¹		0.12	¹		0.04	¹		0.11
Net realized and unrealized gain (loss)		(0.61	)		(2.77	)		2.38			1.23			0.97			1.44

Net increase (decrease) from investment operations		(0.53	)		(2.67	)		2.49			1.35			1.01			1.55

Dividends and distributions from:
Net investment income		(0.07	)		—			(0.15	)		(0.04	)		—			(0.15	)
Tax return of capital		—			(0.02	)		—			—			—			—
Net realized gain		—			(1.72	)		(1.66	)		(1.38	)		—			(0.81	)

Total dividends and distributions		(0.07	)		(1.74	)		(1.81	)		(1.42	)		—			(0.96	)

Redemption fees added to paid-in capital		—			—			0.00	²		0.00	²		0.00	²		—

Net asset value, end of period	$	9.34		$	9.94		$	14.35		$	13.67		$	13.74		$	12.73

Total Investment Return³
Based on net asset value		(5.09	)%		(20.74	)%		19.35	%⁴		10.77	%⁴		7.94	%^4,5		13.07	%⁵

Ratios to Average Net Assets
Total expenses		1.16	%		1.10	%		1.07	%		1.07	%		1.30	%⁶		1.09	%⁶

Total expenses after fees waived, reimbursed and paid indirectly		0.95	%		0.94	%		0.95	%		0.99	%		1.00	%⁶		0.99	%⁶

Net investment income		1.00	%		0.82	%		0.79	%		0.88	%		0.49	%⁶		1.18	%⁶

Supplemental Data
Net assets, end of period (000)	$	165,710		$	141,900		$	134,665		$	80,292		$	53,111		$	50,383

Portfolio turnover		181	%		117	%		202	%		153	%		60	%		53	%


	Service
	Year Ended September 30,												Period March 1, 2005 to September 30, 2005			Period January 28, 2005⁷to February 28, 2005
	2009			2008			2007			2006			Period March 1, 2005 to September 30, 2005			Period January 28, 2005⁷to February 28, 2005
Per Share Operating Performance
Net asset value, beginning of period	$	9.78		$	14.14		$	13.49		$	13.61		$	12.63		$	12.04

Net investment income (loss)		0.05	¹		0.06	¹		0.10	¹		0.08	¹		0.02	¹		(0.01	)
Net realized and unrealized gain (loss)		(0.60	)		(2.72	)		2.33			1.21			0.96			0.60

Net increase (decrease) from investment operations		(0.55	)		(2.66	)		2.43			1.29			0.98			0.59

Dividends and distributions from:
Net investment income		(0.06	)		—			(0.12	)		(0.03	)		—			—
Tax return of capital		—			(0.02	)		—			—			—			—
Net realized gain		—			(1.68	)		(1.66	)		(1.38	)		—			—

Total dividends and distributions		(0.06	)		(1.70	)		(1.78	)		(1.41	)		—			—

Redemption fees added to paid-in capital		—			—			0.00	²		0.00	²		0.00	²		—

Net asset value, end of period	$	9.17		$	9.78		$	14.14		$	13.49		$	13.61		$	12.63

Total Investment Return³
Based on net asset value		(5.36	)%		(20.95	)%		19.10	%⁴		10.45	%⁴		7.76	%^4,5		4.89	%⁵

Ratios to Average Net Assets
Total expenses		1.32	%		1.25	%		1.24	%		1.50	%		1.54	%⁶		1.49	%⁶

Total expenses excluding recoupment of past waived fees		1.32	%		1.25	%		1.24	%		1.50	%		1.54	%⁶		1.49	%⁶

Total expenses after fees waived, reimbursed and paid indirectly		1.26	%		1.23	%		1.20	%		1.25	%		1.25	%⁶		1.25	%⁶

Net investment income		0.69	%		0.54	%		0.68	%		0.61	%		0.20	%⁶		0.39	%⁶

Supplemental Data
Net assets, end of period (000)	$	2,561		$	2,431		$	3,716		$	3,130		$	889		$	1,374

Portfolio turnover		181	%		117	%		202	%		153	%		60	%		53	%

See Notes to Financial Statements.


28		ANNUAL REPORT		SEPTEMBER 30, 2009


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


	Investor A
	Year Ended September 30,												Period March 1, 2005 to September 30, 2005			Period July 1, 2004 to February 28, 2005
	2009			2008			2007			2006			Period March 1, 2005 to September 30, 2005			Period July 1, 2004 to February 28, 2005
Per Share Operating Performance
Net asset value, beginning of period	$	9.66		$	14.00		$	13.38		$	13.49		$	12.53		$	11.92

Net investment income		0.05	¹		0.06	¹		0.08	¹		0.08	¹		0.02	¹		0.07
Net realized and unrealized gain (loss)		(0.59	)		(2.70	)		2.32			1.21			0.94			1.45

Net increase from investment operations		(0.54	)		(2.64	)		2.40			1.29			0.96			1.52

Dividends and distributions from:
Net investment income		(0.06	)		—			(0.12	)		(0.02	)		—			(0.11	)
Tax return of capital		—			(0.02	)		—			—			—			—
Net realized gain		—			(1.68	)		(1.66	)		(1.38	)		—			(0.80	)

Total dividends and distributions		(0.06	)		(1.70	)		(1.78	)		(1.40	)		—			(0.91	)

Redemption fees added to paid-in capital		—			—			0.00	²		0.00	²		0.00	²		—

Net asset value, end of period	$	9.06		$	9.66		$	14.00		$	13.38		$	13.49		$	12.53

Total Investment Return³
Based on net asset value		(5.32	)%		(21.04	)%		19.02	%⁴		10.56	%⁴		7.66	%^4,5		12.98	%⁵

Ratios to Average Net Assets
Total expenses		1.51	%		1.43	%		1.40	%		1.56	%		1.64	%⁶		1.38	%⁶

Total expenses after fees waived, reimbursed and paid indirectly		1.26	%		1.25	%		1.25	%		1.25	%		1.25	%⁶		1.24	%⁶

Net investment income		0.70	%		0.53	%		0.61	%		0.62	%		0.24	%⁶		0.92	%⁶

Supplemental Data
Net assets, end of period (000)	$	395,763		$	470,265		$	642,264		$	497,964		$	500,479		$	448,237

Portfolio turnover		181	%		117	%		202	%		153	%		60	%		53	%

The performance prior to January 31, 2005 set forth in this table is the financial data of State Street Research Mid-Cap Value Fund, a series of a predecessor trust, State Street Research Equity Trust. BlackRock Funds acquired all of the assets and certain stated liabilities of State Street Research Mid-Cap Value Fund on January 28, 2005. The net asset values and other per share information listed have been restated to reflect the conversion ratios of 1.56483770 and 1.57950264 for Institutional and Investor A shares, respectively.

1	Based on average shares outstanding.

2	Less than $0.01 per share.

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

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

5	Aggregate total investment return.

6	Annualized.

7	Commencement of operations.

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		29


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


	Investor B
	Year Ended September 30,												Period March 1, 2005 to September 30, 2005			Period July 1, 2004 to February 28, 2005
	2009			2008			2007			2006			Period March 1, 2005 to September 30, 2005			Period July 1, 2004 to February 28, 2005
Per Share Operating Performance
Net asset value, beginning of period	$	8.84		$	12.92		$	12.46		$	12.73		$	11.87		$	11.28

Net investment loss		(0.00	)^1,2		(0.02	)²		(0.01	)²		(0.02	)²		(0.04	)²		(0.03	)
Net realized and unrealized gain (loss)		(0.56	)		(2.47	)		2.15			1.13			0.90			1.41

Net increase (decrease) from investment operations		(0.56	)		(2.49	)		2.14			1.11			0.86			1.38

Dividends and distributions from:
Net investment income		(0.05	)		—			(0.02	)		—			—			(0.01	)
Net realized gain		—			(1.59	)		(1.66	)		(1.38	)		—			(0.78	)

Total dividends and distributions		(0.05	)		(1.59	)		(1.68	)		(1.38	)		—			(0.79	)

Redemption fees added to paid-in capital		—			—			0.00	¹		0.00	¹		0.00	¹		—

Net asset value, end of period	$	8.23		$	8.84		$	12.92		$	12.46		$	12.73		$	11.87

Total Investment Return³
Based on net asset value		(6.12	)%		(21.53	)%		18.18	%⁴		9.63	%⁴		7.25	%^4,5		12.39	%⁵

Ratios to Average Net Assets
Total expenses		2.38	%		2.24	%		2.23	%		2.25	%		2.29	%⁶		2.09	%⁶

Total expenses after fees waived, reimbursed and paid indirectly		2.02	%		2.00	%		2.00	%		2.00	%		2.00	%⁶		1.99	%⁶

Net investment income (loss)		(0.04	)%		(0.21	)%		(0.09	)%		(0.13	)%		(0.52	)%⁶		0.20	%⁶

Supplemental Data
Net assets, end of period (000)	$	41,196		$	67,656		$	119,768		$	124,089		$	131,651		$	128,568

Portfolio turnover		181	%		117	%		202	%		153	%		60	%		53	%

See Notes to Financial Statements.


30		ANNUAL REPORT		SEPTEMBER 30, 2009


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


	Investor C
	Year Ended September 30,												Period March 1, 2005 to September 30, 2005			Period July 1, 2004 to February 28, 2005
	2009			2008			2007			2006			Period March 1, 2005 to September 30, 2005			Period July 1, 2004 to February 28, 2005
Per Share Operating Performance
Net asset value, beginning of period	$	8.81		$	12.90		$	12.46		$	12.73		$	11.87		$	11.28

Net investment loss		(0.00	)^1,2		(0.02	)²		(0.02	)²		(0.02	)²		(0.04	)²		(0.03	)
Net realized and unrealized gain (loss)		(0.56	)		(2.47	)		2.15			1.13			0.90			1.40

Net increase (decrease) from investment operations		(0.56	)		(2.49	)		2.13			1.11			0.86			1.37

Dividends and distributions from:
Net investment income		(0.05	)		—			(0.03	)		—			—			(0.01	)
Net realized gain		—			(1.60	)		(1.66	)		(1.38	)		—			(0.77	)

Total dividends and distributions		(0.05	)		(1.60	)		(1.69	)		(1.38	)		—			(0.78	)

Redemption fees added to paid-in capital		—			—			0.00	¹		0.00	¹		0.00	¹		—

Net asset value, end of period	$	8.20		$	8.81		$	12.90		$	12.46		$	12.73		$	11.87

Total Investment Return³
Based on net asset value		(6.14	)%		(21.56	)%		18.16	%⁴		9.63	%⁴		7.25	%^4,5		12.40	%⁵

Ratios to Average Net Assets
Total expenses		2.39	%		2.20	%		2.21	%		2.15	%		2.29	%⁶		2.09	%⁶

Total expenses after fees waived, reimbursed and paid indirectly		2.02	%		2.00	%		2.00	%		2.00	%		2.00	%⁶		1.99	%⁶

Net investment income (loss)		(0.06	)%		(0.22	)%		(0.14	)%		(0.13	)%		(0.50	)%⁶		0.19	%⁶

Supplemental Data
Net assets, end of period (000)	$	92,141		$	118,186		$	173,731		$	137,382		$	103,344		$	91,657

Portfolio turnover		181	%		117	%		202	%		153	%		60	%		53	%

The performance prior to January 31, 2005 set forth in this table is the financial data of State Street Research Mid-Cap Value Fund, a series of a predecessor trust, State Street Research Equity Trust. BlackRock Funds acquired all of the assets and certain stated liabilities of State Street Research Mid-Cap Value Fund on January 28, 2005. The net asset values and other per share information listed have been restated to reflect the conversion ratios of 1.62345461 and 1.63087248 for Investor B and Investor C shares, respectively.

1	Less than $0.01 per share.

2	Based on average shares outstanding.

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

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

5	Aggregate total investment return.

6	Annualized.

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		31


Financial Highlights (continued)		Small/Mid-Cap Growth Portfolio


	Institutional
	Year Ended September 30,
	2009			2008			2007			2006			2005
Per Share Operating Performance
Net asset value, beginning of year	$	11.80		$	18.24		$	15.51		$	15.16		$	12.49

Net investment loss¹		(0.06	)		(0.06	)		(0.12	)		(0.10	)		(0.17	)
Net realized and unrealized gain (loss)		(0.89	)		(3.49	)		3.68			1.09			2.84

Net increase (decrease) from investment operations		(0.95	)		(3.55	)		3.56			0.99			2.67

Dividends and distributions from:
Tax return of capital		(0.02	)		—			—			—			—
Net realized gain		—			(2.89	)		(0.83	)		(0.64	)		—

Total dividends and distributions		(0.02	)		(2.89	)		(0.83	)		(0.64	)		—

Redemption fees added to paid-in capital²		0.00			0.00			0.00			0.00			0.00

Net asset value, end of year	$	10.83		$	11.80		$	18.24		$	15.51		$	15.16

Total Investment Return^3,4
Based on net asset value		(8.02	)%⁵		(22.78	)%		23.74	%		6.63	%		21.38	%

Ratios to Average Net Assets
Total expenses		1.97	%		1.44	%		1.38	%		1.06	%		1.28	%

Total expenses after fees waived, reimbursed and paid indirectly		1.11	%		1.10	%		1.05	%		0.99	%		1.10	%

Net investment loss		(0.67	)%		(0.41	)%		(0.71	)%		(0.64	)%		(0.72	)%

Supplemental Data
Net assets, end of year (000)	$	12,178		$	17,019		$	26,976		$	23,866		$	20,133

Portfolio turnover		83	%		63	%		76	%		49	%		122	%


	Investor A															Investor B
	Year Ended September 30,															Year Ended September 30,
	2009			2008			2007			2006			2005			2009			2008			2007			2006			2005
Per Share Operating Performance
Net asset value, beginning of year	$	11.03		$	17.24		$	14.74		$	14.48		$	11.96		$	9.41		$	15.09		$	13.10		$	13.03		$	10.84

Net investment loss¹		(0.08	)		(0.09	)		(0.15	)		(0.15	)		(0.13	)		(0.12	)		(0.17	)		(0.24	)		(0.23	)		(0.19	)
Net realized and unrealized gain (loss)		(0.85	)		(3.26	)		3.48			1.05			2.65			(0.73	)		(2.80	)		3.06			0.94			2.38

Net increase (decrease) from investment operations		(0.93	)		(3.35	)		3.33			0.90			2.52			(0.85	)		(2.97	)		2.82			0.71			2.19

Dividends and Distributions from:
Tax return of capital		(0.01	)		—			—			—			—			—			—			—			—			—
Net realized gain		—			(2.86	)		(0.83	)		(0.64	)		—			—			(2.71	)		(0.83	)		(0.64	)		—

Total dividends and distributions		(0.01	)		(2.86	)		(0.83	)		(0.64	)		—			—			(2.71	)		(0.83	)		(0.64	)		—

Redemption fees added to paid-in capital²		0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00

Net asset value, end of year	$	10.09		$	11.03		$	17.24		$	14.74		$	14.48		$	8.56		$	9.41		$	15.09		$	13.10		$	13.03

Total Investment Return^3,4
Based on net asset value		(8.38	)%⁶		(22.93	)%		23.41	%		6.31	%		21.07	%		(9.03	)%⁷		(23.51	)%		22.40	%		5.52	%		20.20	%

Ratios to Average Net Assets
Total expenses		1.64	%		1.45	%		1.42	%		1.66	%		1.64	%		2.61	%		2.40	%		2.40	%		2.40	%		2.30	%

Total expenses after fees waived, reimbursed and paid indirectly		1.36	%		1.35	%		1.26	%		1.35	%		1.37	%*		2.11	%		2.10	%		2.09	%		2.10	%		2.10	%

Net investment loss		(0.93	)%		(0.66	)%		(0.92	)%		(1.00	)%		(0.87	)%		(1.67	)%		(1.40	)%		(1.75	)%		(1.75	)%		(1.58	)%

Supplemental Data
Net assets, end of year (000)	$	112,435		$	138,073		$	218,851		$	209,646		$	215,622		$	6,568		$	10,468		$	21,110		$	23,085		$	24,925

Portfolio turnover		83	%		63	%		76	%		49	%		122	%		83	%		63	%		76	%		49	%		122	%

See Notes to Financial Statements.


32		ANNUAL REPORT		SEPTEMBER 30, 2009


Financial Highlights (concluded)		Small/Mid-Cap Growth Portfolio


	Investor C															Class R
	Year Ended September 30,															Year Ended September 30,						Period October 2, 2006⁸to September 30, 2007
	2009			2008			2007			2006			2005			2009			2008			Period October 2, 2006⁸to September 30, 2007
Per Share Operating Performance
Net asset value, beginning of period	$	9.42		$	15.12		$	13.12		$	13.06		$	10.87		$	10.93		$	17.18		$	14.54

Net investment loss¹		(0.12	)		(0.17	)		(0.24	)		(0.23	)		(0.20	)		(0.10	)		(0.12	)		(0.20	)
Net realized and unrealized gain (loss)		(0.73	)		(2.80	)		3.07			0.93			2.39			(0.84	)		(3.23	)		3.67

Net increase (decrease) from investment operations		(0.85	)		(2.97	)		2.83			0.70			2.19			(0.94	)		(3.35	)		3.47

Dividends and distributions from:
Tax return of capital		—			—			—			—			—			(0.01	)		—			—
Net realized gain		—			(2.73	)		(0.83	)		(0.64	)		—			—			(2.90	)		(0.83	)

Total dividends and distributions		—			(2.73	)		(0.83	)		(0.64	)		—			(0.01	)		(2.90	)		(0.83	)

Redemption fees added to paid-in capital²		0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00

Net asset value, end of period	$	8.57		$	9.42		$	15.12		$	13.12		$	13.06		$	9.98		$	10.93		$	17.18

Total Investment Return^3,4
Based on net asset value		(9.02	)%⁹		(23.52	)%		22.44	%		5.43	%		20.15	%		(8.61	)%¹⁰		(23.08	)%		24.68	%¹¹

Ratios to Average Net Assets
Total expenses		2.51	%		2.25	%		2.23	%		2.30	%		2.32	%		2.34	%		2.07	%		1.81	%¹²

Total expenses after fees waived, reimbursed and paid indirectly		2.12	%		2.10	%		2.07	%		2.10	%		2.10	%		1.65	%		1.61	%		1.56	%¹²

Net investment loss		(1.68	)%		(1.41	)%		(1.73	)%		(1.75	)%		(1.60	)%		(1.22	)%		(0.93	)%		(1.22	)%¹²

Supplemental Data
Net assets, end of period (000)	$	8,739		$	11,427		$	17,047		$	17,041		$	20,963		$	2,814		$	1,903		$	1,071

Portfolio turnover		83	%		63	%		76	%		49	%		122	%		83	%		63	%		76	%

For the period October 1, 2004, through January 28, 2005, the expense ratio reflects the expenses of State Street Research Emerging Growth Fund prior to its reorganization with the Small/Mid-Cap Growth Portfolio on January 28, 2005. The expense ratio for the period October 1, 2004 through January 28, 2005 was 1.41%. The expense ratio of the Portfolio for the period January 29, 2005 through September 30, 2005 was 1.31%.

1	Based on average shares outstanding.

2	Less than $0.01 per share.

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

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

5	Includes proceeds received from a settlement of litigation which impacted the Portfolio’s total return. Not including these proceeds the Portfolio’s total return would have been (8.19)%.

6	Includes proceeds received from a settlement of litigation which impacted the Portfolio’s total return. Not including these proceeds the Portfolio’s total return would have been (8.56)%.

7	Includes proceeds received from a settlement of litigation which impacted the Portfolio’s total return. Not including these proceeds the Portfolio’s total return would have been (9.25)%.

8	Commencement of operations.

9	Includes proceeds received from a settlement of litigation which impacted the Portfolio’s total return. Not including these proceeds the Portfolio’s total return would have been (9.24)%.

10	Includes proceeds received from a settlement of litigation which impacted the Portfolio’s total return. Not including these proceeds the Portfolio’s total return would have been (8.79)%.

11	Aggregate total investment return.

12	Annualized.

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		33

Notes to Financial Statements

1. Organization and Significant Accounting Policies:

BlackRock Funds^SM (the “Fund”), a Massachusetts business trust, is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. As of September 30, 2009, the Fund had 27 registered portfolios, of which the BlackRock Mid-Cap Growth Equity Portfolio (“Mid-Cap Growth Equity”), BlackRock Mid-Cap Value Equity Portfolio (“Mid-Cap Value Equity”), and BlackRock Small/Mid-Cap Growth Portfolio (“Small/Mid-Cap Growth”) (collectively the “Portfolios”) are included in these financial statements. The Portfolios’ financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require the use of management accruals and estimates. Actual results may differ from these estimates. Each Portfolio offers multiple classes of shares. Institutional Shares are sold without a sales charge and only to certain eligible investors. Service Shares are sold without a sales charge. Investor A Shares are generally sold with a front-end sales charge. Shares of Investor B and Investor C may be subject to a contingent deferred sales charge. Class R Shares are sold without a sales charge and only to certain retirement and other similar plans. All classes of shares have identical voting, dividend, liquidation and other rights and the same terms and conditions, except that the Service, Investor A, Investor B, Investor C and Class R Shares bear certain expenses related to the service of such shares and Investor B, Investor C and Class R Shares also bear certain expenses related to the distribution of such shares. Investor B Shares automatically convert to Investor A Shares after approximately eight years. Investor B Shares of each Portfolio are only available for purchase through exchanges, dividend reinvestments or for purchase by certain qualified employee benefit plans. Each class has exclusive voting rights with respect to matters relating to its service and distribution expenditures (except that Investor B shareholders may vote on material changes to the Investor A distribution plan).

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

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

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

Investment Transactions and Investment Income: For financial reporting purposes, investment transactions are recorded on the dates the transactions are entered into (the trade dates). Realized gains and losses on investment transactions are determined on the identified cost basis. Dividend income is recorded on the ex-dividend dates. Dividends from foreign securities where the ex-dividend date may have passed are subsequently recorded when the Portfolio has determined the ex-dividend date. 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 is recognized on the accrual basis. Income, realized and unrealized gains and losses are allocated daily to each class based on its relative net assets.

Dividends and Distributions: Dividends and distributions, if any, paid by the Portfolios are recorded on the ex-dividend dates.


34		ANNUAL REPORT		SEPTEMBER 30, 2009

Notes to Financial Statements (continued)

value of the loaned securities. The market value of the loaned securities is determined at the close of business of the Portfolios and any additional required collateral is delivered to the Portfolios on the next business day. The Portfolios typically receive income on the loaned securities but do not receive the income on the collateral. The Portfolios may invest the cash collateral and retain the amount earned on such investment, net of any amount rebated to the borrower. 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 Portfolios may pay reasonable lending agent, administrative and custodial fees in connection with their loans. In the event that the borrower defaults on its obligation to return borrowed securities because of insolvency or for any other reason, the Portfolios could experience delays and costs in gaining access to the collateral. The Portfolios also could suffer a loss if the value of an investment purchased with cash collateral falls below the market value of loaned securities or if the value of an investment purchased with cash collateral falls below the value of the original cash collateral received.

Recent Accounting Standards: In June 2009, amended guidance was issued by the Financial Accounting Standards Board for transfers of financial assets. This guidance is intended to improve the relevance, representational faithfulness and comparability of the information that a reporting entity provides in their financial statements about a transfer of financial assets; the effects of a transfer on their financial position, financial performance, and cash flows; and a transferor’s continuing involvement, if any, in transferred financial assets. The amended guidance is effective for financial statements for fiscal years and interim periods beginning after November 15, 2009. Earlier application is prohibited. The recognition and measurement provisions of this guidance must be applied to transfers occurring on or after the effective date. Additionally, the enhanced disclosure provisions of the amended guidance should be applied to transfers that occurred both before and after the effective date of this guidance. The impact of this guidance on the Portfolios’ financial statements and disclosures, if any, is currently being assessed.

Bank Overdraft: As of September 30, 2009, Small/Mid-Cap Growth recorded a bank overdraft resulting from the estimation of available cash. The overdraft balance incurs fees charged by the custodian which are included in custodian on the Statements of Operations.

2. Derivative Financial Instruments:

The Portfolios may engage in various portfolio investment strategies both to increase the returns of the Portfolios and to economically hedge, or protect, their exposure to equity risk. Losses may arise if the value of the contract decreases due to an unfavorable change in the price of the underlying security or if the counterparty does not perform under the contract. The Portfolios may mitigate counterparty risk through master netting agreements included within an International Swaps and Derivatives Association, Inc. (“ISDA”) Master Agreement between a Portfolio and each of its counterparties. The ISDA Master Agreement allows each Portfolio to offset with its counterparty certain derivative financial instruments’ payables and/or receivables with collateral held with each counterparty. The amount of collateral moved to/from applicable counterparties is based upon minimum transfer amounts of up to $500,000. To the extent amounts due to the Portfolios from their counterparty are not fully collateralized contractually or otherwise, the Portfolios bear the risk of loss from counterparty non-performance. See Note 1 “Segregation and Collateralization” for additional information with respect to collateral practices.

The Portfolios’ maximum risk of loss from counterparty credit risk on over-the counter derivatives is generally the aggregate unrealized gain in excess of any collateral pledged by the counterparty to the Portfolios. For over-the-counter purchased options, the Portfolios bear the risk of loss in the amount of the premiums paid and change in market value of the options should the counterparty not perform under the contracts. Options written by the Portfolios do not give rise to counterparty credit risk, as options written obligate the Portfolios to perform and not the counterparty. Certain ISDA Master Agreements allow counterparties to over-the-counter derivatives to terminate derivative contracts prior to maturity in the event a Portfolio’s net assets decline by a stated percentage or a Portfolio fails to meet the terms of its ISDA Master Agreements, which would cause the Portfolio to accelerate payment of any net liability owed to the counterparty. Counterparty risk related to exchange-traded financial futures contracts and options is minimal because of the protection against defaults provided by the exchange on which they trade.


		ANNUAL REPORT		SEPTEMBER 30, 2009		35

Notes to Financial Statements (continued)

exercised), the underlying instrument at the exercise 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 price at any time or at a specified time during the option period. When a Portfolio purchases (writes) an option, an amount equal to the premium paid (received) by a Portfolio 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. 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 Portfolio enters into a closing transaction), a Portfolio 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 premium received or paid). When a Portfolio writes a call option, such option is “covered,” meaning that a Portfolio holds the underlying instrument subject to being called by the option counterparty, or cash in an amount sufficient to cover the obligation. When a Portfolio writes a put option, such option is covered by cash in an amount sufficient to cover the obligation.

In purchasing and writing options, a Portfolio bears the risk of an unfavorable change in the value of the underlying instrument or the risk that the Portfolio may not be able to enter into a closing transaction due to an illiquid market. Exercise of a written put option could result in a Portfolio purchasing or selling a security at a price different from the current market value. The Portfolios may execute transactions in both listed and over-the-counter options.

Derivative Instruments Categorized by Risk Exposure:

Value of Derivative Instruments as of September 30, 2009*

Liability Derivatives


	Statements of Assets and Liabilities Location	Mid-Cap Value Equity
Equity contracts	Options written at value	$	85,000

*	For open derivative instruments as of September 30, 2009, see the Schedule of Investments, which is also indicative of activity for the year ended September 30, 2009.

Net Change in Unrealized Appreciation/Depreciation on


	Mid-Cap Value Equity
Equity contracts:
Options	$	59,960

3. Investment Advisory Agreement and Other Transactions with Affiliates:


Average Daily Net Assets	Mid-Cap Growth Equity and Mid-Cap Value Equity		Small/Mid-Cap Growth
First $1 Billion	0.800	%	0.750	%
$1 Billion - $2 Billion	0.700		0.700
$2 Billion - $3 Billion	0.650		0.675
Greater Than $3 Billion	0.625		0.650


Share Classes	Mid-Cap Growth Equity		Mid-Cap Value Equity		Small/ Mid-Cap Growth
Institutional	1.23	%	0.94	%	1.10	%
Service	1.53	%	1.25	%	1.35	%¹
Investor A	1.58	%	1.25	%	1.35	%
Investor B	2.33	%	2.00	%	2.10	%
Investor C	2.33	%	2.00	%	2.10	%
Class R	1.60	%	1.98	%¹	1.63	%

1	There were no shares outstanding as of September 30, 2009.

Effective June 1, 2009 the expense limitations as a percentage of net assets are as follows:


Share Classes	Mid-Cap Growth Equity		Mid-Cap Value Equity		Small/ Mid-Cap Growth
Institutional	1.27	%	0.97	%	1.13	%
Service	1.58	%	1.29	%	1.39	%¹
Investor A	1.63	%	1.29	%	1.39	%
Investor B	2.40	%	2.06	%	2.16	%
Investor C	2.40	%	2.06	%	2.16	%
Class R	1.65	%	2.04	%¹	1.68	%

1	There were no shares outstanding as of September 30, 2009.


36		ANNUAL REPORT		SEPTEMBER 30, 2009

Notes to Financial Statements (continued)


	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	%


Mid-Cap Growth Equity	$	6,367
Mid-Cap Value Equity	$	10,171
Small/Mid-Cap Growth	$	2,444

For the year ended September 30, 2009, affiliates, including Merrill Lynch from October 1, 2008 to December 31, 2008 (after which time Merrill Lynch was no longer considered an affiliate), received the following contingent deferred sales charges relating to transactions in Investor A, Investor B and Investor C Shares:


	Investor A		Investor B		Investor C
Mid-Cap Growth Equity		—	$	17,262	$	1,357
Mid-Cap Value Equity	$	26,666	$	54,067	$	10,804
Small/Mid-Cap Growth		—	$	9,965	$	846

In addition, MLPF&S received commissions on the execution of portfolio security transactions for the Portfolios for the period October 1, 2008 to December 31, 2008, (after which time MLPF&S was no longer considered an affiliate):


Mid-Cap Value Equity		$	127,813


Mid-Cap Growth Equity	$	28,419
Mid-Cap Value Equity	$	123,309
Small/Mid-Cap Growth	$	64,597


		ANNUAL REPORT		SEPTEMBER 30, 2009		37

Notes to Financial Statements (continued)


Call Center
Share Classes	Mid-Cap Growth Equity		Mid-Cap Value Equity		Small/ Mid-Cap Growth
Institutional	$	933	$	1,693	$	179
Service		35		93		—
Investor A		56,449		32,441		9,757
Investor B		1,617		5,789		—
Investor C		2,221		9,423		640
Class R		18		—		36

Total	$	61,273	$	49,439	$	10,612


Mid-Cap Growth Equity	$	21,871
Mid-Cap Value Equity	$	28,260
Small/Mid-Cap Growth	$	28,286


Administration Fees
Share Classes	Mid-Cap Growth Equity		Mid-Cap Value Equity		Small/ Mid-Cap Growth
Institutional	$	5,198	$	32,235	$	3,182
Service		83		484		—
Investor A		36,543		84,918		24,293
Investor B		2,925		10,473		1,588
Investor C		2,515		20,239		1,880
Class R		222		—		475

Total	$	47,486	$	148,349	$	31,418

Administration Fees Waived
Share Classes	Mid-Cap Growth Equity		Mid-Cap Value Equity		Small/ Mid-Cap Growth
Institutional	$	1,231	$	32,235	$	3,182
Service		50		296		—
Investor A		31,249		80,119		24,293
Investor B		2,448		9,862		1,497
Investor C		1,837		20,239		1,880
Class R		222		—		475

Total	$	37,037	$	142,751	$	31,327

Service and Distribution Fees
Share Classes	Mid-Cap Growth Equity		Mid-Cap Value Equity		Small/ Mid-Cap Growth
Service	$	802	$	4,827		—
Investor A		361,526		838,820	$	240,736
Investor B		115,957		417,097		62,487
Investor C		100,005		806,922		74,050
Class R		4,434		—		9,498

Total	$	582,724	$	2,067,666	$	386,771

Transfer Agent Fees
Share Classes	Mid-Cap Growth Equity		Mid-Cap Value Equity		Small/ Mid-Cap Growth
Institutional	$	39,122	$	250,362	$	122,337
Service		1,265		1,957		—
Investor A		671,510		977,056		370,582
Investor B		74,180		170,257		38,673
Investor C		43,476		338,928		37,932
Class R		4,680		—		15,718

Total	$	834,233	$	1,738,560	$	585,242

Transfer Agent Fees Waived
Share Classes	Mid-Cap Growth Equity		Mid-Cap Value Equity		Small/ Mid-Cap Growth
Institutional	$	290	$	1,693	$	179
Service		25		79		—
Investor A		55,506		32,398		9,756
Investor B		1,617		5,789		—
Investor C		1,964		9,423		640
Class R		18		—		36

Total	$	59,420	$	49,382	$	10,611


38		ANNUAL REPORT		SEPTEMBER 30, 2009

Notes to Financial Statements (continued)


Transfer Agent Fees Reimbursed
Share Classes	Mid-Cap Growth Equity		Mid-Cap Value Equity		Small/ Mid-Cap Growth
Institutional	$	2,909	$	227,586	$	106,474
Service		357		724		—
Investor A		147,549		670,987		236,181
Investor B		40,527		130,305		29,818
Investor C		8,398		258,629		26,291
Class R		3,378		—		12,628

Total	$	203,118	$	1,288,231	$	411,392

If during a Portfolio’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 amount of fees waived or expenses reimbursed during those prior two fiscal years under the agreement provided that: (1) the Portfolio of which the share class is a part has more than $50 million in assets and (2) the Manager or an affiliate continues to serve as the Portfolio’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 year ended September 30, 2009, the Manager recouped the following waivers previously recorded by the Portfolios:


Recoupment of Past Waived Fees
Share Classes	Mid-Cap Growth Equity		Mid-Cap Value Equity
Institutional	$	664		—
Service		30	$	74
Investor A		52,147		—
Investor B		9,727		—
Investor C		1,619		—

Total	$	64,187	$	74

As of September 30, 2009, the amounts subject to possible future recoupment under the expense limitation agreement are as follows:


	Expiring September 30,
	2010		2011
Mid-Cap Growth Equity	$	49,525	$	299,576
Mid-Cap Value Equity	$	1,798,676	$	1,532,746
Small/Mid-Cap Growth	$	345,334	$	453,330

The following waivers previously recorded by the Portfolios, which were subject to recoupment by the Manager, expired on September 30, 2009:


Mid-Cap Growth Equity	$	120,499
Mid-Cap Value Equity	$	1,710,264
Small/Mid-Cap Growth	$	530,341

The Portfolios may earn income on positive cash balances in demand deposit accounts that are maintained by PNCGIS on behalf of the Portfolios. The income earned for the year ended September 30, 2009, which is included in interest and dividends — affiliated in the Statements of Operations, were as follows:


Mid-Cap Growth Equity	$	1,008
Mid-Cap Value Equity	$	1,270
Small/Mid-Cap Growth	$	337

The Portfolios may also receive earnings credits related to cash balances with PNCGIS which are shown on the Statements of Operations as fees paid indirectly.

4. Investments:

Purchases and sales of investments, excluding short-term securities, for the year ended September 30, 2009 were as follows:


	Purchases		Sales
Mid-Cap Growth Equity	$	101,177,072	$	113,640,400
Mid-Cap Value Equity	$	1,063,483,284	$	1,097,710,153
Small/Mid-Cap Growth	$	106,453,753	$	119,950,236

Mid-Cap Growth Equity and Small/Mid-Cap Growth received proceeds from settlement of litigation where they were able to recover a portion of investment losses previously realized by such Portfolios. This amount is shown as litigation proceeds in the Statements of Operations.

Options written transactions entered into during the year ended September 30, 2009 are summarized as follows:

Mid-Cap Value Equity


	Calls			Puts
	Contracts	Premiums Received		Contracts	Premiums Received
Options outstanding at beginning of year	—		—	—		—
Options written	4,800	$	122,060	850	$	22,900

Options outstanding at end of year	4,800	$	122,060	850	$	22,900

5. Short-Term Borrowings:


		ANNUAL REPORT		SEPTEMBER 30, 2009		39

Notes to Financial Statements (continued)

up to the maximum amount allowable under the Portfolio’s current Prospectus and Statement of Additional Information, subject to various other legal, regulatory or contractual limits. The Portfolios paid their pro rata share of a 0.02% upfront fee on the aggregate commitment amount based on their net assets as of October 31, 2008. The Portfolios pay a commitment fee of 0.08% per annum based on each Portfolio’s pro rata share of the unused portion of the credit agreement, which is included in miscellaneous in the Statements of Operations. Amounts borrowed under the credit agreement bear interest at a rate equal to, the higher of the (a) federal funds effective rate and (b) reserve adjusted one month LIBOR, plus, in each case, the higher of (i) 1.50% and (ii) 50% of the CDX index (as defined in the credit agreement). The Portfolios did not borrow under the credit agreement during the year ended September 30, 2009.

6. Income Tax Information:

Reclassifications: Accounting principles generally accepted in the United States of America require that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. These reclassifications have no effect on net assets or net asset values per share. The following permanent differences as of September 30, 2009 attributable to net operating losses, the expiration of capital loss carryforwards, the classifications of settlement proceeds and income recognized from pass-through entities were reclassified to the following accounts:


	Mid-Cap Growth Equity			Mid-Cap Value Equity			Small / Mid-Cap Growth
Paid-in capital	$	(21,066,468	)	$	(36,410	)	$	(597,967	)
Undistributed net investment income	$	634,098		$	(179,532	)	$	824,022
Accumulated net realized loss	$	20,432,370		$	215,942		$	(226,055	)

The tax character of distributions paid during the years ended September 30, 2009 and September 30, 2008 were as follows:


	Mid-Cap Value Equity		Small / Mid-Cap Growth
Ordinary income
9/30/09	$	5,185,816		—
9/30/08	$	91,037,317	$	5,624,473
Long-term capital gain
9/30/08	$	36,359,367	$	41,089,744
Tax return of capital
9/30/09		—	$	165,578
9/30/08	$	974,457		—

Total distributions
9/30/09	$	5,185,816	$	165,578

9/30/08	$	128,371,141	$	46,714,217

As of September 30, 2009, the tax components of accumulated net losses were as follows:


	Mid-Cap Growth Equity			Mid-Cap Value Equity			Small / Mid-Cap Growth
Undistributed ordinary income		—		$	2,119,418			—
Capital loss carryforwards	$	(119,434,271	)		(94,018,904	)	$	(8,644,509	)
Net unrealized losses*		(18,539,764	)		(89,557,974	)		(15,813,784	)

Total	$	(137,974,035	)	$	(181,457,460	)	$	(24,458,293	)

*	The difference between book-basis and tax-basis net unrealized losses is attributable primarily to the tax deferral of losses on wash sales, the deferral of post-October capital losses for tax purposes and the timing of recognition of partnership income.

As of September 30, 2009, the Portfolios had capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates:


Expiring September 30,	Mid-Cap Growth Equity		Mid-Cap Value Equity		Small / Mid-Cap Growth
2010	$	99,778,499		—		—
2011		16,297,623		—		—
2017		3,358,149	$	94,018,904	$	8,644,509

Total	$	119,434,271	$	94,018,904	$	8,644,509

7. Concentration, Market and Credit Risk:

Mid-Cap Growth Equity invests a significant portion of its assets in securities in the information technology sector. Changes in economic conditions affecting the information technology sector would have a greater impact on Mid-Cap Growth Equity, and could affect the value, income and/or liquidity of positions in such securities.


40		ANNUAL REPORT		SEPTEMBER 30, 2009

Notes to Financial Statements (continued)

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

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

8. Capital Shares Transactions:

Transactions in capital shares for each class were as follows:


	Year Ended September 30, 2009					Year Ended September 30, 2008
Mid-Cap Growth Equity	Shares		Amount			Shares		Amount

Institutional
Shares sold	1,163,071		$	9,242,027		1,151,861		$	14,981,239
Shares redeemed	(1,235,018	)		(9,965,239	)	(4,190,156	)		(52,159,710	)

Net decrease	(71,947	)	$	(723,212	)	(3,038,295	)	$	(37,178,471	)


Service
Shares sold	3,825		$	27,667		4,386		$	54,430
Shares redeemed	(13,568	)		(105,723	)	(13,091	)		(158,878	)

Net decrease	(9,743	)	$	(78,056	)	(8,705	)	$	(104,448	)


Investor A
Shares sold and automatic conversion of shares	1,484,196		$	10,902,981		1,732,544		$	20,409,145
Shares redeemed	(2,859,994	)		(20,691,046	)	(3,091,741	)		(36,638,821	)

Net decrease	(1,375,798	)	$	(9,788,065	)	(1,359,197	)	$	(16,229,676	)


Investor B
Shares sold	128,078		$	822,693		133,076		$	1,435,938
Shares redeemed and automatic conversion of shares	(990,583	)		(6,304,470	)	(1,698,317	)		(17,945,602	)

Net decrease	(862,505	)	$	(5,481,777	)	(1,565,241	)	$	(16,509,664	)


Investor C
Shares sold	229,847		$	1,555,736		193,942		$	2,062,581
Shares redeemed	(385,400	)		(2,473,072	)	(347,584	)		(3,707,473	)

Net decrease	(155,553	)	$	(917,336	)	(153,642	)	$	(1,644,892	)


		ANNUAL REPORT		SEPTEMBER 30, 2009		41

Notes to Financial Statements (continued)


	Year Ended September 30, 2009					Year Ended September 30, 2008
Mid-Cap Growth Equity (concluded)	Shares		Amount			Shares		Amount
Class R
Shares sold	209,373		$	1,750,711		116,909		$	1,398,648
Shares redeemed	(39,506	)		(308,114	)	(43,304	)		(480,754	)

Net increase	169,867		$	1,442,597		73,605		$	917,894


Mid-Cap Value Equity
Institutional
Shares sold	10,048,935		$	75,620,286		8,752,224		$	103,036,657
Shares issued in reinvestment of dividends and distributions	145,437			994,774		1,138,852			13,745,952

Total issued	10,194,372			76,615,060		9,891,076			116,782,609
Shares redeemed	(6,725,890	)		(49,417,003	)	(5,001,036	)		(60,377,528	)

Net increase	3,468,482		$	27,198,057		4,890,040		$	56,405,081


Service
Shares sold	56,513		$	442,216		40,136		$	472,967
Shares issued in reinvestment of dividends and distributions	2,305			15,491		31,430			374,020

Total issued	58,818			457,707		71,566			846,987
Shares redeemed	(28,095	)		(219,565	)	(85,690	)		(1,062,724	)

Net increase (decrease)	30,723		$	238,142		(14,124	)	$	(215,737	)


Investor A
Shares sold and automatic conversion of shares	12,079,416		$	86,772,872		16,797,599		$	192,499,463
Shares issued in reinvestment of dividends and distributions	430,408			2,857,896		6,308,452			74,187,436

Total issued	12,509,824			89,630,768		23,106,051			266,686,899
Shares redeemed	(17,497,004	)		(126,017,711	)	(20,326,790	)		(231,569,629	)

Net increase (decrease)	(4,987,180	)	$	(36,386,943	)	2,779,261		$	35,117,270


Investor B
Shares sold	167,209		$	1,079,007		289,786		$	3,122,722
Shares issued in reinvestment of dividends and distributions	56,009			339,972		1,233,901			13,350,825

Total issued	223,218			1,418,979		1,523,687			16,473,547
Shares redeemed and automatic conversion of shares	(2,874,133	)		(18,976,728	)	(3,135,066	)		(33,019,875	)

Net decrease	(2,650,915	)	$	(17,557,749	)	(1,611,379	)	$	(16,546,328	)


42		ANNUAL REPORT		SEPTEMBER 30, 2009

Notes to Financial Statements (continued)


	Year Ended September 30, 2009					Year Ended September 30, 2008
Mid-Cap Value Equity (concluded)	Shares		Amount			Shares		Amount
Investor C
Shares sold	1,815,483		$	11,964,738		2,382,590		$	25,347,779
Shares issued in reinvestment of dividends and distributions	101,409			613,484		1,839,018			19,843,040

Total issued	1,916,892			12,578,222		4,221,608			45,190,819
Shares redeemed	(4,098,780	)		(26,722,177	)	(4,270,696	)		(45,189,018	)

Net increase (decrease)	(2,181,888	)	$	(14,143,955	)	(49,088	)	$	1,801


Small/Mid-Cap Growth
Institutional
Shares sold	558,048		$	4,712,032		381,949		$	5,685,288
Shares issued in reinvestment of dividends and distributions	3,062			23,788		242,216			3,611,440

Total issued	561,110			4,735,820		624,165			9,296,728
Shares redeemed	(877,828	)		(7,967,317	)	(661,695	)		(10,305,119	)

Net decrease	(316,718	)	$	(3,231,497	)	(37,530	)	$	(1,008,391	)


Investor A
Shares sold and automatic conversion of shares	2,987,796		$	24,340,719		3,211,416		$	44,154,763
Shares issued in reinvestment of dividends and distributions	18,736			136,024		2,499,681			34,895,558

Total issued	3,006,532			24,476,743		5,711,097			79,050,321
Shares redeemed	(4,384,272	)		(35,972,568	)	(5,887,993	)		(77,983,235	)

Net increase (decrease)	(1,377,740	)	$	(11,495,825	)	(176,896	)	$	1,067,086


Investor B
Shares sold	52,647		$	357,763		54,581		$	640,182
Shares issued in reinvestment of dividends and distributions	—			—		281,240			3,369,265

Total issued	52,647			357,763		335,821			4,009,447
Shares redeemed and automatic conversion of shares	(397,913	)		(2,721,409	)	(622,199	)		(7,246,568	)

Net decrease	(345,266	)	$	(2,363,646	)	(286,378	)	$	(3,237,121	)


Investor C
Shares sold	219,231		$	1,529,380		246,547		$	2,833,038
Shares issued in reinvestment of dividends and distributions	—			—		231,789			2,781,470

Total issued	219,231			1,529,380		478,336			5,614,508
Shares redeemed	(412,304	)		(2,856,693	)	(392,905	)		(4,547,481	)

Net increase (decrease)	(193,073	)	$	(1,327,313	)	85,431		$	1,067,027


		ANNUAL REPORT		SEPTEMBER 30, 2009		43

Notes to Financial Statements (concluded)


	Year Ended September 30, 2009					Year Ended September 30, 2008
Small/Mid-Cap Growth (concluded)	Shares		Amount			Shares		Amount
Class R
Shares sold	189,436		$	1,558,929		132,367		$	1,779,872
Shares issued in reinvestment of dividends and distributions	166			1,195		16,009			221,879

Total issued	189,602			1,560,124		148,376			2,001,751
Shares redeemed	(81,806	)		(670,651	)	(36,514	)		(482,161	)

Net increase	107,796		$	889,473		111,862		$	1,519,590

9. Subsequent Events:


44		ANNUAL REPORT		SEPTEMBER 30, 2009

Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders of BlackRock Funds:

We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of BlackRock Mid-Cap Growth Equity Portfolio, BlackRock Mid-Cap Value Equity Portfolio and BlackRock Small/Mid-Cap Growth Portfolio [three of the twenty-seven portfolios constituting the BlackRock Funds (the “Fund”) (collectively, the “Portfolios”)], as of September 30, 2009, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

Deloitte & Touche LLP

Philadelphia, Pennsylvania

November 25, 2009

Important Tax Information (Unaudited)

The following information is provided with respect to the ordinary income distribution paid by the Mid-Cap Value Equity Portfolio during the taxable year ended September 30, 2009:


	Payable Date	Qualified Dividend Income for Individuals		Dividends Qualifying for the Dividends Received Deduction for Corporations
Mid-Cap Value Equity Portfolio	12/12/08	100.00	%	100.00	%


		ANNUAL REPORT		SEPTEMBER 30, 2009		45

Disclosure of Investment Advisory Agreement

The Board of Trustees (the “Board,” and the members of which are referred to as “Board Members”) of BlackRock Funds ^SM (the “Fund”) met on April 16, 2009 and May 21-22, 2009 to consider the approval of the Fund’s investment advisory agreement (the “Advisory Agreement”) with BlackRock Advisors, LLC (the “Manager” or “BlackRock”), the Fund’s investment advisor, on behalf of BlackRock Mid-Cap Growth Equity Portfolio (“Mid-Cap Growth Portfolio”), BlackRock Mid-Cap Value Equity Portfolio (“Mid-Cap Value Portfolio”) and BlackRock Small/Mid-Cap Growth Portfolio (“Small/Mid-Cap Growth Portfolio,” each a “Portfolio,” and together with Mid-Cap Growth Portfolio and Mid-Cap Value Portfolio, the “Portfolios”), each a series of the Fund.

Activities and Composition of the Board

The Advisory Agreement

Board Considerations in Approving the Advisory Agreement

The Approval Process: Prior to the April 16, 2009 meeting, the Board requested and received materials specifically relating to the Advisory Agreement. The Board is engaged in an ongoing process with BlackRock to continuously review the nature and scope of the information provided to better assist its deliberations. The materials provided in connection with the April meeting included (a) information independently compiled and prepared by Lipper, Inc. (“Lipper”) on Portfolio fees and expenses, and the investment performance of each Portfolio as compared with a peer group of funds as determined by Lipper (collectively, “Peers”); (b) information on the profitability of the Advisory Agreement to BlackRock and a discussion of fall-out benefits to BlackRock and its affiliates and significant shareholders; (c) a general analysis provided by BlackRock concerning investment advisory fees charged to other clients, such as institutional clients and closed-end funds, under similar investment mandates, as well as the performance of such other clients; (d) the impact of economies of scale; (e) a summary of aggregate amounts paid by each Portfolio to BlackRock; (f) sales and redemption data regarding each Portfolio’s shares; and (g) an internal comparison of management fees classified by Lipper, if applicable.


46		ANNUAL REPORT		SEPTEMBER 30, 2009

Disclosure of Investment Advisory Agreement

B. The Investment Performance of each Portfolio and BlackRock: The Board, including the Independent Board Members, also reviewed and considered the performance history of each Portfolio. In preparation for the April 16, 2009 meeting, the Board was provided with reports, independently prepared by Lipper, which included a comprehensive analysis of each Portfolio’s performance. The Board also reviewed a narrative and statistical analysis of the Lipper data that was prepared by BlackRock, which analyzed various factors that affect Lipper’s rankings. In connection with its review, the Board received and reviewed information regarding the investment performance of each Portfolio as compared to a representative group of similar funds as determined by Lipper and to all funds in the Portfolio’s applicable Lipper category. The Board was provided with a description of the methodology used by Lipper to select peer funds. The Board regularly reviews the performance of each Portfolio throughout the year. The Board attaches more importance to performance over relatively long periods of time, typically three to five years.

The Board noted that Mid-Cap Growth Portfolio’s performance was below the median of its Lipper Performance Universe for the one-, three-and five-year periods reported. The Board and BlackRock reviewed the reasons for the Portfolio’s underperformance during these periods compared with its Peers. The Board was informed that, among other things, disappointing results in 2008 along with underperformance in 2006 resulted in underperformance for the one- and three-year periods. The Board and BlackRock discussed BlackRock’s commitment to providing the resources necessary to assist the portfolio managers and to improve the Portfolio’s performance.

The Board noted that, in general, Mid-Cap Value Portfolio performed better than its Peers in that the Portfolio’s performance was at or above the median of its Lipper Performance Universe in two of the one-, three-and five-year periods reported.

The Board noted that Small/Mid-Cap Growth Portfolio’s performance was below the median of its Lipper Performance Universe for the one-and five-year periods reported. The Board and BlackRock reviewed the reasons for the Portfolio’s underperformance during these periods compared with its Peers. The Board was informed that, among other things, while the Portfolio is managed according to a small/mid-cap strategy, the Portfolio is classified in the Lipper Small Cap Growth Performance Universe. Since mid-caps were the worst performing asset class in 2008, the Portfolio’s relatively larger market cap bias disadvantaged the Portfolio’s performance in comparison with its Lipper


		ANNUAL REPORT		SEPTEMBER 30, 2009		47

Disclosure of Investment Advisory Agreement

Performance Universe. The Board also noted that the Portfolio’s performance for the three-year period was above the median of the Lipper Performance Universe. The Board and BlackRock discussed BlackRock’s commitment to providing the resources necessary to assist the portfolio managers and to improve the Portfolio’s performance.

The Board noted that Mid-Cap Growth Portfolio’s contractual advisory fees were above the median of its Peers. The Portfolio has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the size of the Portfolio increases, thereby allowing shareholders the potential to participate in economies of scale. The Board noted that BlackRock has contractually agreed to waive fees or reimburse expenses in order to limit the Portfolio’s total net expenses on a class basis.

The Board noted that, although Mid-Cap Value Portfolio’s contractual advisory fees were above the median of its Peers, its actual total expenses were lower than or equal to the median of its Peers. The Portfolio has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the size of the Portfolio increases, thereby allowing shareholders the potential to participate in economies of scale. The Board noted that BlackRock has contractually agreed to waive fees or reimburse expenses in order to limit the Portfolio’s total net expenses on a class basis.

The Board noted that Small/Mid-Cap Growth Portfolio’s contractual advisory fees, which do not take into account any expense reimbursement or fee waivers, were lower than or equal to the median contractual advisory fees paid by its Peers. The Portfolio has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the size of the Portfolio increases, thereby allowing shareholders the potential to participate in economies of scale. The Board noted that BlackRock has contractually agreed to waive fees or reimburse expenses in order to limit the Portfolio’s total net expenses on a class basis.


48		ANNUAL REPORT		SEPTEMBER 30, 2009

Disclosure of Investment Advisory Agreement (concluded)

E. Other Factors: The Board also took into account other ancillary or “fall-out” benefits that BlackRock or its affiliates and significant shareholders may derive from its relationship with the Portfolios, both tangible and intangible, such as BlackRock’s ability to leverage its investment professionals who manage other portfolios, an increase in BlackRock’s profile in the investment advisory community, and the engagement of BlackRock’s affiliates and significant shareholders as service providers to the Portfolios, including for administrative, transfer agency and distribution services. The Board also noted that BlackRock may use third party research obtained by soft dollars generated by certain mutual fund transactions to assist itself in managing all or a number of its other client accounts.

Conclusion


		ANNUAL REPORT		SEPTEMBER 30, 2009		49

Officers and Trustees


Name, Address, and Year of Birth	Position(s) Held with Fund	Length of Time Served as a Trustee²	Principal Occupation(s) During Past 5 Years	Number of BlackRock- Advised Registered Investment Companies (“RICs”) Consisting of Investment Portfolios (“Portfolios”) Overseen	Public Directorships
Non-Interested Trustees¹

Ronald W. Forbes 40 East 52nd Street New York, NY 10022 1940	Co-Chair of the Board and Trustee	Since 2007	Professor Emeritus of Finance, School of Business, State University of New York at Albany since 2000.	34 RICs consisting of 81 Portfolios	None

Rodney D. Johnson 40 East 52nd Street New York, NY 10022 1941	Co-Chair of the Board and Trustee	Since 2007	President, Fairmount Capital Advisors, Inc. since 1987; Director, Fox Chase Cancer Center since 2002; Member of the Archdiocesan Investment Committee of the Archdiocese of Philadelphia since 2003; Director, The Committee of Seventy (civic) since 2006.	34 RICs consisting of 81 Portfolios	None

David O. Beim 40 East 52nd Street New York, NY 10022 1940	Trustee	Since 2007	Professor of Finance and Economics at the Columbia University Graduate School of Business since 1991; Trustee, Phillips Exeter Academy since 2002; Chairman, Wave Hill Inc. (public garden and cultural center) from 1990 to 2006.	34 RICs consisting of 81 Portfolios	None

Dr. Matina Horner 40 East 52nd Street New York, NY 10022 1939	Trustee	Since 2004	Executive Vice President of Teachers Insurance and Annuity Association and College Retirement Equities Fund from 1989 to 2003.	34 RICs consisting of 81 Portfolios	NSTAR (electric and gas utility)

Herbert I. London 40 East 52nd Street New York, NY 10022 1939	Trustee	Since 2007	Professor Emeritus, New York University since 2005; John M. Olin Professor of Humanities, New York University from 1993 to 2005 and Professor thereof from 1980 to 2005; President, Hudson Institute (policy research organization) since 1997 and Trustee thereof since 1980; Chairman of the Board of Trustees for Grantham University since 2006; Director, InnoCentive, Inc. (strategic solutions company) since 2005; Director, Cerego, LLC (software development and design) since 2005.	34 RICs consisting of 81 Portfolios	AIMS Worldwide, Inc. (marketing)

Cynthia A. Montgomery 40 East 52nd Street New York, NY 10022 1952	Trustee	Since 2007	Professor, Harvard Business School since 1989; Director, Harvard Business School Publishing since 2005; Director, McLean Hospital since 2005.	34 RICs consisting of 81 Portfolios	Newell Rubbermaid, Inc. (manufacturing)

Joseph P. Platt, Jr. 40 East 52nd Street New York, NY 10022 1947	Trustee	Since 2007	Director, The West Penn Allegheny Health System (a not-for-profit health system) since 2008; Director, Jones and Brown (Canadian insurance broker) since 1998; General Partner, Thorn Partners, LP (private investment) since 1998; Partner, Amarna Corporation, LLC (private investment company) from 2002 to 2008.	34 RICs consisting of 81 Portfolios	Greenlight Capital Re, Ltd. (reinsurance company)

Robert C. Robb, Jr. 40 East 52nd Street New York, NY 10022 1945	Trustee	Since 2007	Partner, Lewis, Eckert, Robb and Company (management and financial consulting firm) since 1981.	34 RICs consisting of 81 Portfolios	None


50		ANNUAL REPORT		SEPTEMBER 30, 2009

Officers and Trustees (continued)


Name, Address, and Year of Birth	Position(s) Held with Fund	Length of Time Served as a Trustee²	Principal Occupation(s) During Past 5 Years	Number of BlackRock- Advised Registered Investment Companies (“RICs”) Consisting of Investment Portfolios (“Portfolios”) Overseen	Public Directorships
Non-Interested Trustees¹(concluded)

Toby Rosenblatt 40 East 52nd Street New York, NY 10022 1938	Trustee	Since 2005	President, Founders Investments Ltd. (private investments) since 1999; Director, Forward Management, LLC since 2007; Director, The James Irvine Foundation (philanthropic foundation) since 1997; Trustee, State Street Research Mutual Funds from 1990 to 2005; Trustee, Metropolitan Series Funds, Inc. from 2001 to 2005.	34 RICs consisting of 81 Portfolios	A.P. Pharma, Inc. (specialty pharmaceuticals)

Kenneth L. Urish 40 East 52nd Street New York, NY 10022 1951	Trustee	Since 2007	Managing Partner, Urish Popeck & Co., LLC (certified public accountants and consultants) since 1976; Member of External Advisory Board, The Pennsylvania State University Accounting Department since 2001; Trustee, The Holy Family Foundation since 2001; Committee Member, Professional Ethics Committee of the Pennsylvania Institute of Certified Public Accountants since 2007; President and Trustee, Pittsburgh Catholic Publishing Associates from 2003 to 2008; Director, Inter-Tel from 2006 to 2007.	34 RICs consisting of 81 Portfolios	None

Frederick W. Winter 40 East 52nd Street New York, NY 10022 1945	Trustee	Since 2007	Professor and Dean Emeritus of the Joseph M. Katz School of Business, University of Pittsburgh since 2005 and Dean thereof from 1997 to 2005. Director, Alkon Corporation (pneumatics) since 1992; Director, Tippman Sports (recreation) since 2005; Director, Indotronix International (IT services) from 2004 to 2008.	34 RICs consisting of 81 Portfolios	None

1	Trustees serve until their resignation, removal or death, or until December 31 of the year in which they turn 72.


Interested Trustees³

Richard S. Davis 40 East 52nd Street New York, NY 10022 1945	Trustee	Since 2005	Managing Director, BlackRock, Inc. since 2005; Chief Executive Officer, State Street Research & Management Company from 2000 to 2005; Chairman of the Board of Trustees, State Street Research Mutual Funds from 2000 to 2005; Chairman, SSR Realty from 2000 to 2004.	172 RICs consisting of 283 Portfolios	None

Henry Gabbay 40 East 52nd Street New York, NY 10022 1947	Trustee	Since 2007	Consultant, BlackRock, Inc. from 2007 to 2008; Managing Director, BlackRock, Inc. from 1989 to 2007; Chief Administrative Officer, BlackRock Advisors, LLC from 1998 to 2007; President of BlackRock Funds and BlackRock Bond Allocation Target Shares from 2005 to 2007 and Treasurer of certain closed-end funds in the BlackRock fund complex from 1989 to 2006.	172 RICs consisting of 283 Portfolios	None


		ANNUAL REPORT		SEPTEMBER 30, 2009		51

Officers and Trustees (continued)


Name, Address, and Year of Birth	Position(s) Held with Fund	Length of Time Served	Principal Occupation(s) During Past 5 Years
Fund Officers¹

Anne F. Ackerley 40 East 52nd Street New York, NY 10022 1962	President and Chief Executive Officer	Since 2009	Managing Director of BlackRock, Inc. since 2000; Vice President of the BlackRock-advised funds from 2007 to 2009; Chief Operating Officer of BlackRock’s Global Client Group (GCG) since 2009; Chief Operating Officer of BlackRock’s U.S. Retail Group from 2006 to 2009; Head of BlackRock’s Mutual Fund Group from 2000 to 2006.

Richard Hoerner, CFA 40 East 52nd Street New York, NY 10022 1958	Vice President	Since 2009	Managing Director of BlackRock, Inc. since 2000; Co-head of BlackRock’s Cash Management Portfolio Management Group since 2002; Member of the Cash Management Group Executive Committee since 2005; Director of BlackRock, Inc. since 1998.

Jeffery Holland, CFA 40 East 52nd Street New York, NY 10022 1971	Vice President	Since 2009	Director of BlackRock, Inc. since 2006; Chief Operating Officer of BlackRock’s U.S. Retail Group since 2009; Co-head of Product Development and Management for BlackRock’s U.S. Retail Group from 2007 to 2009; Product Manager of Raymond James & Associates from 2003 to 2006.

Brendan Kyne 40 East 52nd Street New York, NY 10022 1977	Vice President	Since 2009	Director of BlackRock, Inc. since 2008; Head of Product Development and Management for BlackRock’s U.S. Retail Group since 2009, co-head thereof from 2007 to 2009; Vice President of BlackRock, Inc. from 2005 to 2008; Associate of BlackRock, Inc. from 2002 to 2004.

Simon Mendelson 40 East 52nd Street New York, NY 10022 1964	Vice President	Since 2009	Managing Director of BlackRock, Inc. since 2005; Chief Operating Officer and head of the Global Client Group for BlackRock’s Global Cash Management Business since 2007; Head of BlackRock’s Strategy and Development Group from 2005 to 2007; Partner of McKinsey & Co. from 1997 to 2005.

Brian Schmidt 40 East 52nd Street New York, NY 10022 1958	Vice President	Since 2009	Managing Director of BlackRock, Inc. since 2004; Various positions with U.S. Trust Company from 1991 to 2003 including Director from 2001 to 2003 and Senior Vice President from 1998 to 2003; Vice President, Chief Financial Officer and Treasurer of Excelsior Funds, Inc., Excelsior Tax-Exempt Funds, Inc. and Excelsior Funds Trust from 2001 to 2003.

Christopher Stavrakos, CFA 40 East 52nd Street New York, NY 10022 1959	Vice President	Since 2009	Managing Director of BlackRock, Inc. since 2006; Co-head of BlackRock’s Cash Management Portfolio Management Group since 2006; Senior Vice President, CIO, and Director of Liability Management for the Securities Lending Group at Mellon Bank from 1999 to 2006.

Neal J. Andrews 40 East 52nd Street New York, NY 10022 1966	Chief Financial Officer	Since 2007	Managing Director of BlackRock, Inc. since 2006; Senior Vice President and Line of Business Head of Fund Accounting and Administration at PNC Global Investment Servicing (U.S.) Inc. from 1992 to 2006.

Jay M. Fife 40 East 52nd Street New York, NY 10022 1970	Treasurer	Since 2007	Managing Director of BlackRock, Inc. since 2007 and Director in 2006; Assistant Treasurer of the Merrill Lynch Investment Managers, L.P. (“MLIM”) and Fund Asset Management, L.P. advised funds from 2005 to 2006; Director of MLIM Fund Services Group from 2001 to 2006.

Brian P. Kindelan 40 East 52nd Street New York, NY 10022 1959	Chief Compliance Officer	Since 2007	Chief Compliance Officer of the BlackRock-advised Funds since 2007; Managing Director and Senior Counsel of BlackRock, Inc. since 2005; Director and Senior Counsel of BlackRock Advisors, LLC from 2001 to 2004.

Howard B. Surloff 40 East 52nd Street New York, NY 10022 1965	Secretary	Since 2007	Managing Director of BlackRock, Inc. and General Counsel of U.S. Funds at BlackRock, Inc. since 2006; General Counsel (U.S.) of Goldman Sachs Asset Management, L.P. from 1993 to 2006.

1	Officers of the Fund serve at the pleasure of the Board.

Further information about the Fund’s Officers and Trustees is available in the Fund’s Statement of Additional Information, which can be obtained without charge by calling (800) 441-7762.


52		ANNUAL REPORT		SEPTEMBER 30, 2009

Officers and Trustees (concluded)

Investment Advisor and Co-Administrator

BlackRock Advisors, LLC

Wilmington, DE 19809

Co-Administrator and Transfer Agent

PNC Global Investment

Servicing (U.S.) Inc.

Wilmington, DE 19809

Custodian

PFPC Trust Company

Philadelphia, PA 19153

Distributor

BlackRock Investments, LLC

New York, NY 10022

Legal Counsel

Sidley Austin LLP

New York, NY 10019

Independent Registered Public Accounting Firm

Deloitte & Touche LLP

Philadelphia, PA 19103

Address of the Portfolios

100 Bellevue Parkway

Wilmington, DE 19809

Effective July 31, 2009, Donald C. Burke, President and Chief Executive Officer of the Fund retired. The Fund’s Board wishes Mr. Burke well in his retirement.

Effective August 1, 2009, Anne F. Ackerley became President and Chief Executive Officer of the Fund and Jeffrey Holland and Brian Schmidt became Vice Presidents of the Fund.

Effective September 17, 2009, Richard Hoerner, Brendan Kyne, Simon Mendelson and Christopher Stavrakas became Vice Presidents of the Fund.

Additional Information

General Information

Electronic Delivery

To enroll:

Shareholders Who Hold Accounts with Investment Advisors, Banks or Brokerages:

Please contact your financial advisor. Please note that not all investment advisors, banks or brokerages may offer this service.

Shareholders Who Hold Accounts Directly With BlackRock

1)	Access the BlackRock website at

http://www.blackrock.com/ edelivery

2)	Click on the applicable link and follow the steps to sign up

3)	Log into your account

Householding

Availability of Quarterly Portfolio Schedule

Availability of Proxy Voting Policies and Procedures

Availability of Proxy Voting Record


		ANNUAL REPORT		SEPTEMBER 30, 2009		53

Additional Information (concluded)

Shareholder Privileges

Account Information

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 portfolios.

Systematic Withdrawal Plan

Investor Class shareholders can establish a systematic withdrawal plan and receive periodic payments of $50 or more from their BlackRock portfolios, as long as their account is at least $10,000.

Retirement Plans

Shareholders may make investments in conjunction with Traditional, Rollover, Roth, Coverdell, Simple IRA’s, SEP IRA’s and 403(b) Plans.

BlackRock Privacy Principles


54		ANNUAL REPORT		SEPTEMBER 30, 2009

A World-Class Mutual Fund Family

BlackRock offers a diverse lineup of open-end mutual funds crossing all investment styles and managed by experts in equity, fixed income and tax-exempt investing.


Equity Funds

BlackRock All-Cap Energy & Resources Portfolio	BlackRock Global Opportunities Portfolio	BlackRock Mid-Cap Value Equity Portfolio
BlackRock Asset Allocation Portfolio†	BlackRock Global SmallCap Fund	BlackRock Mid Cap Value Opportunities Fund
BlackRock Aurora Portfolio	BlackRock Health Sciences Opportunities Portfolio	BlackRock Natural Resources Trust
BlackRock Balanced Capital Fund†	BlackRock Healthcare Fund	BlackRock Pacific Fund
BlackRock Basic Value Fund	BlackRock Index Equity Portfolio*	BlackRock Science & Technology Opportunities Portfolio
BlackRock Capital Appreciation Portfolio	BlackRock International Fund	BlackRock Science & Technology Opportunities Portfolio
BlackRock Energy & Resources Portfolio	BlackRock International Diversification Fund	BlackRock Small Cap Core Equity Portfolio
BlackRock Equity Dividend Fund	BlackRock International Index Fund	BlackRock Small Cap Growth Equity Portfolio
BlackRock EuroFund	BlackRock International Opportunities Portfolio	BlackRock Small Cap Growth Fund II
BlackRock Focus Growth Fund	BlackRock International Value Fund	BlackRock Small Cap Index Fund
BlackRock Focus Value Fund	BlackRock Large Cap Core Fund	BlackRock Small Cap Value Equity Portfolio
BlackRock Fundamental Growth Fund	BlackRock Large Cap Core Plus Fund	BlackRock Small/Mid-Cap Growth Portfolio
BlackRock Global Allocation Fund†	BlackRock Large Cap Growth Fund	BlackRock S&P 500 Index Fund
BlackRock Global Dynamic Equity Fund	BlackRock Large Cap Value Fund	BlackRock U.S. Opportunities Portfolio
BlackRock Global Emerging Markets Fund	BlackRock Latin America Fund	BlackRock Utilities and Telecommunications Fund
BlackRock Global Financial Services Fund	BlackRock Mid-Cap Growth Equity Portfolio	BlackRock Value Opportunities Fund
BlackRock Global Growth Fund

Fixed Income Funds

BlackRock Bond Portfolio	BlackRock Income Builder Portfolio	BlackRock Short-Term Bond Fund
BlackRock Emerging Market Debt Portfolio	BlackRock Inflation Protected Bond Portfolio	BlackRock Strategic Income Portfolio
BlackRock GNMA Portfolio	BlackRock Intermediate Government Bond Portfolio	BlackRock Total Return Fund
BlackRock Government Income Portfolio	BlackRock Intermediate Government Bond Portfolio	BlackRock Total Return Portfolio II
BlackRock High Income Fund	BlackRock International Bond Portfolio	BlackRock World Income Fund
BlackRock High Yield Bond Portfolio	BlackRock Long Duration Bond Portfolio
BlackRock Income Portfolio	BlackRock Low Duration Bond Portfolio
	BlackRock Managed Income Portfolio

Municipal Bond Funds

BlackRock AMT-Free Municipal Bond Portfolio	BlackRock Kentucky Municipal Bond Portfolio	BlackRock New York Municipal Bond Fund
BlackRock California Municipal Bond Fund	BlackRock Municipal Insured Fund	BlackRock Ohio Municipal Bond Portfolio
BlackRock Delaware Municipal Bond Portfolio	BlackRock National Municipal Fund	BlackRock Pennsylvania Municipal Bond Fund
BlackRock High Yield Municipal Fund	BlackRock New Jersey Municipal Bond Fund	BlackRock Short-Term Municipal Fund
BlackRock Intermediate Municipal Fund

Target Risk & Target Date Funds

BlackRock Prepared Portfolios	BlackRock Lifecycle Prepared Portfolios
Conservative Prepared Portfolio	Prepared Portfolio 2010	Prepared Portfolio 2030
Moderate Prepared Portfolio	Prepared Portfolio 2015	Prepared Portfolio 2035
Growth Prepared Portfolio	Prepared Portfolio 2020	Prepared Portfolio 2040
Aggressive Growth Prepared Portfolio	Prepared Portfolio 2025	Prepared Portfolio 2045
		Prepared Portfolio 2050

*	See the prospectus for information on specific limitations on investments in the fund.

†	Mixed asset fund.


		ANNUAL REPORT		SEPTEMBER 30, 2009		55

LOGO

EQUITY4-9/09-AR


EQUITIES FIXED INCOME REAL ESTATE LIQUIDITY ALTERNATIVES BLACKROCK SOLUTIONS

BlackRock Funds^SM
ANNUAL REPORT \| SEPTEMBER 30, 2009

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
Dear Shareholder		3
Annual Report:
Portfolio Summaries		4
About Portfolio Performance		14
Disclosure of Expenses		15
Derivative Financial Instruments		15
Financial Statements:
Schedules of Investments		16
Statements of Assets and Liabilities		35
Statements of Operations		37
Statements of Changes in Net Assets		38
Financial Highlights		40
Notes to Financial Statements		54
Report of Independent Registered Public Accounting Firm		70
Important Tax Information (Unaudited)		70
Disclosure of Investment Advisory Agreement and Sub-Advisory Agreement		71
Officers and Trustees		75
Additional Information		78
Mutual Fund Family		80


2		ANNUAL REPORT		SEPTEMBER 30, 2009

Dear Shareholder


Total Returns as of September 30, 2009	6-month		12-month
US equities (S&P 500 Index)	34.02	%	(6.91	)%
Small cap US equities (Russell 2000 Index)	43.95		(9.55	)
International equities (MSCI Europe, Australasia, Far East Index)	49.85		3.23
US Treasury securities (BofA Merrill Lynch 10-Year US Treasury Index*)	(3.77	)	7.66
Taxable fixed income (Barclays Capital US Aggregate Bond Index)	5.59		10.56
Tax-exempt fixed income (Barclays Capital Municipal Bond Index)	9.38		14.85
High yield bonds (Barclays Capital US Corporate High Yield 2% Issuer Capped Index)	40.25		22.51

*	Formerly a Merrill Lynch index.

Past performance is no guarantee of future results. Index performance shown for illustrative purposes only. You cannot invest directly in an index.

Sincerely,

Rob Kapito

President, BlackRock Advisors, LLC

Announcement to Shareholders

THIS PAGE NOT PART OF YOUR FUND REPORT


						3


Portfolio Summary as of September 30, 2009		Global Opportunities Portfolio

Portfolio Management Commentary

How did the Portfolio perform?

•

The Portfolio’s Institutional and Investor A shares outperformed the benchmark S&P Global Broad Market Index (BMI) for the 12-month period, while Investor B and Investor C shares trailed the index.

What factors influenced performance?

•

Relative to the S&P Global BMI, the materials, health care and consumer discretionary sectors were areas of strongest performance. Within materials, the Portfolio benefited from overweighting gold miners, which led all of the materials sector’s sub-industry groups, in addition to good stock selection among metals & mining stocks, some of which nearly doubled off their lows in early March. In relation to health care, exposure to Genentech, Inc. and Amgen, Inc. within pharmaceuticals and medical and medical services, respectively, contributed meaningfully to returns; stock selection across pharmaceuticals was also additive. Lastly, consumer discretionary relative returns were solid, driven primarily by good stock selection in the retailing and media industries. From a regional perspective, positive effects were realized by overweighting emerging Asia, which outperformed, and underweighting Japan, which lagged over the annual period.

•

The biggest detractors from relative performance came from the information technology (IT), energy and utilities sectors. Stock selection across semiconductors and related services, which was strong on an absolute basis but underperformed benchmark comparisons, and computer hardware were areas of weakness in the sector. Elsewhere, results within the energy sector were hurt by weakness experienced in the fourth quarter of 2008, when we were overexposed to coal and oil & gas exploration and production companies, which experienced steep declines, and had too little exposure to integrated oil & gas names that proved to be more defensive. Regionally, our underweights in Europe, developed Asia and Latin America detracted over the year.

Describe recent Portfolio activity.

•

At the start of the period, we favored defensive names, only to begin cutting our exposure to them in the fourth quarter of 2008 as valuations for cyclical companies reached levels that warranted attention. At the same time, we began to add back to cyclical industries and financials in an effort to cover our existing underweights and maintain a more balanced portfolio. The goal was to be able to participate if markets began to normalize, knowing that defensives would lag in that environment. After the strong gains we experienced since March, we have pared back some exposure to areas like industrials, materials and IT, bringing those weights in line with a slight underweight to the benchmark. Geographically, we added back to European names during the year and have recently begun taking profits in our long-held overweight in emerging Asia.

Describe Portfolio positioning at period end.

•

At period end, the Portfolio is well-diversified with very modest sector, style, geographic and market risk exposures. While we would not bet against further recovery, we still believe caution is warranted as earnings visibility remains poor and economic recoveries from financial crises and global synchronous recessions have historically been weak.

Portfolio Information


Ten Largest Holdings	Percent of Long-Term Investments
Chevron Corp.	1	%
Novartis AG	1
Roche Holding AG	1
eBay, Inc.	1
Nestle SA	1
GlaxoSmithKline Plc	1
Pfizer, Inc.	1
Cisco Systems, Inc.	1
Kinross Gold Corp.	1
Hewlett-Packard Co.	1


Geographic Allocation	Percent of Long-Term Investments
United States	45	%
United Kingdom	7
Switzerland	6
Japan	5
France	5
Canada	4
Germany	3
Spain	2
China	2
Singapore	2
South Korea	2
Netherlands	2
India	2
Taiwan	2
Other¹	11

1	Other includes a 1% holding in each of the following countries: Hong Kong, Italy, Russia, Brazil, Luxembourg, South Africa, Israel, Belgium, Sweden, Mexico and New Zealand.


4		ANNUAL REPORT		SEPTEMBER 30, 2009

Global Opportunities Portfolio

Total Return Based on a $10,000 Investment

LOGO

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

The Portfolio will invest, under normal market conditions, at least 40% of its total assets in issuers located outside of the US. The Portfolio may invest up to 25% of its total assets in stocks of issuers in emerging market countries. The Portfolio may also invest up to 25% of its total assets in global fixed income securities, including emerging market debt.

The all-encompassing S&P Global index is known as the S&P Global Broad Market Index (BMI). The BMI measures the performance of the entire universe of investable securities greater than USD 100 million. The BMI is segmented into two size components: the Primary Market Index (PMI) and the Extended Market Index (EMI). The PMI defines the large-cap universe, representing the top 80% of BMI market capitalization for each listed country. The EMI defines the small-cap universe for each country, representing the remaining 20%.

4	Commencement of operations.

Performance Summary for the Period Ended September 30, 2009


			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	44.71	%	1.78	%	N/A		2.03	%	N/A
Investor A	45.04		1.61		(3.73	)%	1.77		0.29	%
Investor B	45.39		1.02		(3.48	)	1.07		0.27
Investor C	45.31		0.92		(0.08	)	1.03		1.03
S&P Global Broad Market Index (BMI)	47.05		1.53		N/A		(0.51	)	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 Portfolio Performance” on page 14 for a detailed description of share classes, including any related sales charges and fees.

6	The Portfolio 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 April 1, 2009		Ending Account Value September 30, 2009		Expenses Paid During the Period⁷		Beginning Account Value April 1, 2009		Ending Account Value September 30, 2009		Expenses Paid During the Period⁷
Institutional	$	1,000.00	$	1,447.10	$	8.40	$	1,000.00	$	1,018.20	$	6.93
Investor A	$	1,000.00	$	1,450.40	$	10.32	$	1,000.00	$	1,016.65	$	8.49
Investor B	$	1,000.00	$	1,453.90	$	15.01	$	1,000.00	$	1,012.84	$	12.31
Investor C	$	1,000.00	$	1,453.10	$	15.00	$	1,000.00	$	1,012.84	$	12.31

For each class of the Portfolio, expenses are equal to the annualized expense ratio for the class (1.37% for Institutional, 1.68% for Investor A, 2.44% for Investor B and 2.44% for Investor C), multiplied by the average account value over the period, multiplied by 183/365 (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.


		ANNUAL REPORT		SEPTEMBER 30, 2009		5


Portfolio Summary as of September 30, 2009		Health Sciences Opportunities Portfolio

Portfolio Management Commentary

How did the Portfolio perform?

•

The Portfolio outperformed the broad market S&P 500 Index and its sector benchmark, the Russell 3000 Health Care Index, for the 12-month period.

What factors influenced performance?

•

Relative to the Russell 3000 Health Care Index, outperformance was the result of both stock selection and industry allocation effects. Results within the medical devices & supplies sub-sector compared most favorably due to strong stock selection among equipment and life science holdings. Overweighting biotechnology relative to the benchmark also contributed during the period and benefited most notably from our exposure to Amgen, Inc., Alexion Pharmaceutical, Inc. and Genentech, Inc. Within the health care services sub-sector, our exposure to pharmacy benefit managers and drug distributors, and an underweight in facilities, aided results.

•

Despite good relative performance within the sub-sector, our underweight versus the benchmark’s 25% pharmaceuticals weight dampened results. Managed care stocks also detracted. Among health care supplies positions, Alcon, Inc. had the most significant negative impact due to weakness towards the end of 2008, although it recovered meaningfully later in the reporting period. Finally, our overweight in equipment & supplies hurt comparisons.

Describe recent Portfolio activity.

•

Trading activity during the reporting period was largely the result of company specific decisions. We added to health care services, life sciences tools & services, health care technology and large-cap pharmaceutical names. Selling was most prominent among health care equipment and supplies and biotechnology sub-sectors.

Describe Portfolio positioning at period end.

•

At period end, the Portfolio was overweight relative to the Russell 3000 Health Care Index in medical devices & supplies and biotechnology, and underweight in health care providers and services and pharmaceuticals.

•

The outlook for health care is still constrained by the uncertainty of health care reform in terms of coverage and cost. While most industries are likely to be hit with fees and pay-fors, there are also likely to be some winners relative to those affected most negatively. Those companies that win will likely benefit from volume increases through broader coverage of the uninsured population, or be able to offset fees and reimbursement cuts by passing through price increases or cutting costs. At this time, the legislative outlook is still not clear and there are a lot of questions yet to be answered.

Portfolio Information


Ten Largest Holdings	Percent of Long-Term Investments
Alcon, Inc.	4	%
Pfizer, Inc.	4
Roche Holding AG	3
Amgen, Inc.	3
Johnson & Johnson	3
Bristol-Myers Squibb Co.	3
Novartis AG	3
Abbott Laboratories	3
Covidien Plc	2
WellPoint, Inc.	2


Industry Allocation	Percent of Long-Term Investments
Pharmaceuticals	28	%
Health Care Equipment & Supplies	25
Biotechnology	18
Health Care Providers & Services	14
Life Sciences Tools & Services	10
Health Care Technology	3
Food & Staples Retailing	2


6		ANNUAL REPORT		SEPTEMBER 30, 2009

Health Sciences Opportunities Portfolio

Total Return Based on a $10,000 Investment

LOGO

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

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

3	This unmanaged index covers 500 industrial, utility, transportation and financial companies of the US markets (mostly New York Stock Exchange (the “NYSE”) issues) representing about 75% of NYSE market capitalization and 30% of NYSE issues. S&P 500 is a trademark of The McGraw-Hill Companies.

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

5	Commencement of operations.

Performance Summary for the Period Ended September 30, 2009


			Average Annual Total Returns⁶
			1 Year				5 Years				Since Inception⁷
	6-Month Total Returns		w / o sales charge		w / sales charge		w / o sales charge		w / sales charge		w / o sales charge		w / sales charge
Institutional	23.72	%	1.91	%	N/A		10.41	%	N/A		14.43	%	N/A
Service	23.57		1.59		N/A		10.12		N/A		14.12		N/A
Investor A	23.51		1.57		(3.77	)%	10.06		8.87	%	14.09		13.47	%
Investor B	22.97		0.73		(3.36	)	9.19		8.90		13.37		13.37
Investor C	23.07		0.81		(0.10	)	9.28		9.28		13.30		13.30
S&P 500 Index	34.02		(6.91	)	N/A		1.02		N/A		(1.31	)	N/A
Russell 3000 Health Care Index	21.31		(2.92	)	N/A		1.98		N/A		2.19		N/A

6	Assuming maximum sales charges, if any. Average annual total returns with and without sales charges reflect reductions for distribution and service fees. See “About Portfolio Performance” on page 14 for a detailed description of share classes, including any related sales charges and fees.

7	The Portfolio commenced operations on December 21, 1999.

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 April 1, 2009		Ending Account Value September 30, 2009		Expenses Paid During the Period⁸		Beginning Account Value April 1, 2009		Ending Account Value September 30, 2009		Expenses Paid During the Period⁸
Institutional	$	1,000.00	$	1,237.20	$	5.78	$	1,000.00	$	1,019.90	$	5.22
Service	$	1,000.00	$	1,235.70	$	7.57	$	1,000.00	$	1,018.30	$	6.83
Investor A	$	1,000.00	$	1,235.10	$	7.34	$	1,000.00	$	1,018.50	$	6.63
Investor B	$	1,000.00	$	1,229.70	$	12.24	$	1,000.00	$	1,014.09	$	11.06
Investor C	$	1,000.00	$	1,230.70	$	11.58	$	1,000.00	$	1,014.69	$	10.45

For each class of the Portfolio, expenses are equal to the annualized expense ratio for the class (1.03% for Institutional, 1.35% for Service, 1.31% for Investor A, 2.19% for Investor B and 2.07% for Investor C), multiplied by the average account value over the period, multiplied by 183/365 (to reflect the one-half year period shown).

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 15 for further information on how expenses were calculated.


		ANNUAL REPORT		SEPTEMBER 30, 2009		7


Portfolio Summary as of September 30, 2009		International Opportunities Portfolio

Portfolio Management Commentary

How did the Portfolio perform?

•

The Portfolio underperformed the benchmark S&P Global Ex-US Broad Market Index (BMI) for the 12-month period.

What factors influenced performance?

•

Relative to the S&P Global Ex-US BMI, performance was weakest in the information technology sector, both from allocation and stock selection effects. Our positioning in the home entertainment software, computer hardware, electronic components and electronic equipment & instruments groups hindered results most significantly. We also struggled in telecommunication services, where our underweight in the sector last fall and underperformance relative to the benchmark detracted. In the energy sector, weakness was the result of our exposure to higher-beta drilling and exploration and production names in the fall of 2008, when these firms suffered steep declines as energy prices fell. Stock selection within utilities also detracted, as did our cash position. Regionally, our underweights in Latin America and developed Asia ex-Japan detracted.

•

Stock selection was generally strong for the period, particularly within the materials, financials, consumer discretionary and consumer staples sectors. An overweight in gold miners and good selection among metal & mining stocks drove favorable comparisons in the materials sector. Financials results were aided by our underweight in banks during the worst of their declines, and taking action to neutralize that bet during the spring, which allowed us to participate as those stocks re-rated higher. We also generated solid returns among insurance holdings. In the consumer sectors, strength was mainly the result of strong stock selection in the media, retailing and food, beverage & tobacco industries. Regionally, our overweight in emerging Asia and underweight in Japan boosted return comparisons.

Describe recent Portfolio activity.

•

At the start of the period, we favored defensive names and had more cash in the Portfolio than normal. During the fourth quarter of 2008, we began repositioning the Portfolio as valuations for cyclical companies reached levels that warranted attention. Our aim was to maintain a balanced portfolio that would be able to participate if markets began to normalize, knowing that defensives would lag in that environment. Since that time, the Portfolio has been modestly geared towards global economic expansion, emphasizing stock selection to generate alpha.

Describe Portfolio positioning at period end.

•

Portfolio Information


Ten Largest Holdings	Percent of Long-Term Investments
Nestle SA	1	%
HSBC Holdings Plc	1
GlaxoSmithKline Plc	1
Roche Holding AG	1
MAN SE	1
Novartis AG	1
Samsung Electronics Co. Ltd.	1
Total SA	1
Aegon NV	1
EnCana Corp.	1


Geographic Allocation	Percent of Long-Term Investments
United Kingdom	14	%
Japan	12
Canada	10
France	8
Switzerland	7
Germany	5
South Korea	4
Hong Kong	4
Taiwan	4
Italy	3
Netherlands	3
China	2
India	2
Singapore	2
Spain	2
Russia	2
Australia	2
Luxembourg	2
Brazil	2
Other¹	10

1	Other includes a 1% holding in each of the following countries: Denmark, Belgium, United States, Malaysia, Israel, South Africa, Indonesia, New Zealand, Sweden and Finland.


8		ANNUAL REPORT		SEPTEMBER 30, 2009

International Opportunities Portfolio

Total Return Based on a $10,000 Investment

LOGO

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

2	The Portfolio under normal market conditions, invests at least 80% of its net assets in equity securities issued by international companies of any market capitalization.

3	S&P Global Ex-US Broad Market Index (BMI) is an available market capitalization weighted equity index made up of 52 global developed and emerging markets, not including the US. The BMI is segmented into two size components: the S&P LargeMidCap Index and the S&P SmallCap Index.

Performance Summary for the Period Ended September 30, 2009


			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	50.41	%	6.99	%	N/A		13.32	%	N/A		14.58	%	N/A
Service	50.17		6.70		N/A		12.99		N/A		14.22		N/A
Investor A	50.25		6.73		1.12	%	12.97		11.75	%	14.14		13.53	%
Investor B	49.70		5.86		1.36		12.10		11.84		13.46		13.46
Investor C	49.62		5.84		4.84		12.12		12.12		13.29		13.29
S&P Global Ex-US Broad Market Index (BMI)	55.12		7.93		N/A		8.97		N/A		5.16		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 Portfolio 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 April 1, 2009		Ending Account Value September 30, 2009		Expenses Paid During the Period⁵		Beginning Account Value April 1, 2009		Ending Account Value September 30, 2009		Expenses Paid During the Period⁵
Institutional	$	1,000.00	$	1,504.10	$	9.04	$	1,000.00	$	1,017.85	$	7.28
Service	$	1,000.00	$	1,501.70	$	10.47	$	1,000.00	$	1,016.70	$	8.44
Investor A	$	1,000.00	$	1,502.50	$	9.97	$	1,000.00	$	1,017.10	$	8.04
Investor B	$	1,000.00	$	1,497.00	$	14.71	$	1,000.00	$	1,013.29	$	11.86
Investor C	$	1,000.00	$	1,496.20	$	15.02	$	1,000.00	$	1,013.04	$	12.11

For each class of the Portfolio, expenses are equal to the annualized expense ratio for the class (1.44% for Institutional, 1.67% for Service, 1.59% for Investor A, 2.35% for Investor B and 2.40% for Investor C), multiplied by the average account value over the period, multiplied by 183/365 (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.


		ANNUAL REPORT		SEPTEMBER 30, 2009		9


Portfolio Summary as of September 30, 2009		Science & Technology Opportunities Portfolio

Portfolio Management Commentary

How did the Portfolio perform?

•

The Portfolio outperformed the benchmark NYSE Arca Tech 100 Index for the 12-month period.

What factors influenced performance?

•

Several factors helped drive outperformance, with both stock selection and allocation effects contributing positively. Our overweight relative to the NYSE Arca Tech 100 Index in information technology (IT) aided results. Additionally, our overweight in and stock selection among semiconductors led results as several holdings appreciated significantly, including Micron Technology, Inc., Marvell Technology Group Ltd. and NetLogic Microsystems, Inc. Another area of strength in IT came from our application software sub-industry exposure, where a combination of good positioning and underweighting an otherwise weak group yielded favorable results. Outside of IT, the biggest contributors were our underweights in health care and industrials relative to the benchmark, as technology shares outperformed during the period.

•

The most notable detractor from performance came from weak stock selection with the technology hardware & equipment sub-sector. This was due to performance within the communications equipment and computers & peripherals sub-sector industries that lagged benchmark results. Additionally, we experienced negative effects from the computer equipment sub-sector, which was a strong performer during the period, but our underweight in and positioning among these companies hurt comparisons.

Describe recent Portfolio activity.

•

Portfolio activity during the annual period resulted in a shift away from the more defensive health care sector and into more cyclically geared IT companies. Most of our trims in health care took place between February and March 2009, and centered on the health care equipment & supplies and biotechnology sub-sector. Proceeds, as a result, were used to purchase names across IT, particularly semiconductor and application software names. Outside of IT and health care, we exited our aerospace & defense holdings in the industrials sector.

Describe Portfolio positioning at period end.

•

Recent industry data continues to point towards a recovery in technology demand, particularly in consumer-related products, and stabilization in the supply chain across the IT sector. While much of the industry went through a vicious de-stocking phase following the collapse in the credit markets late last year, it is encouraging to us to see that inventory levels are returning to normal. While we expect companies to again spend on IT infrastructure, this process could be delayed a few more quarters as most corporate management teams remain cautious. As a result, we continue to maintain a well-diversified portfolio, with our largest bets coming through our overweights in semiconductors, internet software & services and software sub-industries, while maintaining an underweight in computer equipment.

Portfolio Information


Ten Largest Holdings	Percent of Long-Term Investments
Apple, Inc.	5	%
Intel Corp.	3
International Business Machines Corp.	3
Hewlett-Packard Co.	3
Cisco Systems, Inc.	3
Microsoft Corp.	3
QUALCOMM, Inc.	3
Google, Inc. – Class A	2
Oracle Corp.	2
Texas Instruments, Inc.	2


Industry Allocation	Percent of Long-Term Investments
Semiconductors & Semiconductor Equipment	23	%
Software	20
Computers & Peripherals	17
Communications Equipment	12
Internet Software & Services	8
Electronic Equipment, Instruments & Components	5
IT Services	3
Diversified Telecommunication Services	3
Health Care Equipment & Supplies	2
Biotechnology	2
Other¹	5

1	Other includes a 1% holding in each of the following industries: Internet & Catalog Retail, Wireless Telecommunication Services, Pharmaceuticals, Building Products and Office Electronics.


10		ANNUAL REPORT		SEPTEMBER 30, 2009

Science & Technology Opportunities Portfolio

Total Return Based on a $10,000 Investment

LOGO

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

2	The Portfolio will invest primarily in equity securities of US and non-US companies in all capitalization ranges selected for their rapid and sustainable growth potential from the development, advancement and use of science and/or technology.

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

4	Commencement of operations.

Performance Summary for the Period Ended September 30, 2009


			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	41.64	%	11.60	%	N/A		7.56	%	N/A		(2.63	)%	N/A
Service	41.31		11.18		N/A		7.16		N/A		(2.94	)	N/A
Investor A	41.40		11.14		5.35	%	7.09		5.96	%	(3.05	)	(3.60	)%
Investor B	40.77		10.16		5.66		6.23		5.91		(3.69	)	(3.69	)
Investor C	40.77		10.33		9.33		6.23		6.23		(3.82	)	(3.82	)
Class R	41.13		10.76		N/A		6.71		N/A		(3.39	)	N/A
NYSE Arca Tech 100 Index	35.47		6.30		N/A		4.58		N/A		(1.81	)	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 Portfolio Performance” on page 14 for a detailed description of share classes, including any related sales charges and fees.

6	The Portfolio commenced operations on May 15, 2000.

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 April 1, 2009		Ending Account Value September 30, 2009		Expenses Paid During the Period⁷		Beginning Account Value April 1, 2009		Ending Account Value September 30, 2009		Expenses Paid During the Period⁷
Institutional	$	1,000.00	$	1,416.40	$	8.36	$	1,000.00	$	1,018.15	$	6.98
Service	$	1,000.00	$	1,413.10	$	10.71	$	1,000.00	$	1,016.19	$	8.95
Investor A	$	1,000.00	$	1,414.00	$	10.83	$	1,000.00	$	1,016.09	$	9.05
Investor B	$	1,000.00	$	1,407.70	$	15.99	$	1,000.00	$	1,011.78	$	13.36
Investor C	$	1,000.00	$	1,407.70	$	16.36	$	1,000.00	$	1,011.48	$	13.67
Class R	$	1,000.00	$	1,411.30	$	12.81	$	1,000.00	$	1,014.44	$	10.71

For each class of the Portfolio, expenses are equal to the annualized expense ratio for the class (1.38% for Institutional, 1.77% for Service, 1.79% for Investor A, 2.65% for Investor B, 2.71% for Investor C and 2.12% for Class R), multiplied by the average account value over the period, multiplied by 183/365 (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.


		ANNUAL REPORT		SEPTEMBER 30, 2009		11


Portfolio Summary as of September 30, 2009		U.S. Opportunities Portfolio

Portfolio Management Commentary

How did the Portfolio perform?

•

The Portfolio outperformed the benchmark S&P US Mid Small Cap Index for the 12-month period.

What factors influenced performance?

•

Outperformance was mainly the result of strong stock selection, particularly within the consumer discretionary, materials and financials sectors. Solid picks in the consumer discretionary sector aided relative returns throughout the period and came from a variety of sources — namely, positioning in industries such as education services, auto parts & tires, cable & broadcasting and retailing. Within the materials sector, an overweight in gold miners and good results from select chemical and paper and forest products companies aided results. Good selection among asset managers, insurers and real estate companies fueled favorable results in the financials sector. Finally, our health care providers and services and drug distributor exposures in the health care sector contributed to the outperformance.

•

Performance within the consumer staples sector was the biggest detractor for the period. This was due to weak stock selection among food and staples retailers and packaged food & meat holdings. Our commercial bank positioning also detracted once the market bottomed in March, as we focused on less troubled names that we believed would see earnings growth sooner than their lower quality peers. However, those names we avoided led the group as the market rewarded risk and the cheapest stocks meaningfully outperformed. We also had unfavorable results among our capital goods industry groups within the industrials sector. Finally, our underweight in information technology, particularly software and hardware, hurt relative performance.

Describe recent Portfolio activity.

•

At the start of the period, we favored defensive names due to the greater earnings stability those companies had during a stressed economic environment. During the fourth quarter of 2008, we began repositioning the Portfolio as valuations for cyclical companies reached levels that warranted attention. Our aim was to maintain a balanced portfolio that would be able to participate if markets began to normalize, knowing that defensives would lag in that environment. Since that time, the Portfolio has been modestly geared towards global economic expansion, emphasizing stock selection to generate alpha.

Describe Portfolio positioning at period end.

•

Portfolio Information


Ten Largest Holdings	Percent of Long-Term Investments
Vertex Pharmaceuticals, Inc.	1	%
DPL, Inc.	1
Airgas, Inc.	1
Foster Wheeler AG	1
Express Scripts, Inc.	1
Ingersoll-Rand Plc	1
Sybase, Inc.	1
Solutia, Inc.	1
Patterson-UTI Energy, Inc.	1
Nabors Industries Ltd.	1


Sector Allocation	Percent of Long-Term Investments
Information Technology	19	%
Financials	18
Consumer Discretionary	16
Industrials	12
Health Care	10
Energy	7
Materials	6
Utilities	5
Consumer Staples	5
Telecommunication Services	2


12		ANNUAL REPORT		SEPTEMBER 30, 2009

U.S. Opportunities Portfolio

Total Return Based on a $10,000 Investment

LOGO

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

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

3	An unmanaged index comprised of smaller-capitalization US stocks representing the bottom 30% of available market capital, with a minimum market capitalization of at least $100 million.

Performance Summary for the Period Ended September 30, 2009


			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	41.85	%	1.63	%	N/A		9.63	%	N/A		7.28	%	N/A
Service	41.49		1.14		N/A		9.19		N/A		6.89		N/A
Investor A	41.45		1.06		(4.26	)%	9.13		7.95	%	6.79		6.22	%
Investor B	40.94		0.36		(4.14	)	8.34		8.04		6.16		6.16
Investor C	40.91		0.36		(0.64	)	8.34		8.34		6.00		6.00
S&P US Mid Small Cap Index	46.41		(5.56	)	N/A		3.35		N/A		6.35		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 Portfolio 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 April 1, 2009		Ending Account Value September 30, 2009		Expenses Paid During the Period⁵		Beginning Account Value April 1, 2009		Ending Account Value September 30, 2009		Expenses Paid During the Period⁵
Institutional	$	1,000.00	$	1,418.50	$	6.18	$	1,000.00	$	1,019.95	$	5.16
Service	$	1,000.00	$	1,414.90	$	9.14	$	1,000.00	$	1,017.50	$	7.64
Investor A	$	1,000.00	$	1,414.50	$	9.56	$	1,000.00	$	1,017.15	$	7.99
Investor B	$	1,000.00	$	1,409.40	$	13.83	$	1,000.00	$	1,013.59	$	11.56
Investor C	$	1,000.00	$	1,409.10	$	13.89	$	1,000.00	$	1,013.54	$	11.61

For each class of the Portfolio, expenses are equal to the annualized expense ratio for the class (1.02% for Institutional, 1.51% for Service, 1.58% for Investor A, 2.29% for Investor B and 2.30% for Investor C), multiplied by the average account value over the period, multiplied by 183/365 (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.


		ANNUAL REPORT		SEPTEMBER 30, 2009		13

About Portfolio Performance

•

Institutional Shares are not subject to any sales charge. Institutional Shares bear no ongoing distribution or service fees and are available only to eligible investors. Prior to October 16, 2000, Health Sciences Opportunities Portfolio’s Institutional Share performance results are those of Investor A Shares restated to reflect Institutional Share fees.

•

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

•

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

•

Investor C Shares are subject to a 1.00% contingent deferred sales charge if redeemed within one year of purchase. In addition, Investor C Shares are subject to a distribution fee of 0.75% per year and a service fee of 0.25% per year. Prior to October 16, 2000, Health Sciences Opportunities Portfolio’s Investor C Share performance results are those of Investor A Shares restated to reflect Investor C Share fees.

•

Class R Shares are not subject to any sales charge. Class R Shares are subject to a distribution fee of 0.25% per year and a service fee of 0.25% per year. Class R Shares are available only to certain retirement and other similar plans. Prior to September 8, 2008, Science & Technology Opportunities Portfolio’s Class R Share performance results are those of Institutional Shares 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 portfolio distributions or the redemption of portfolio shares. Each Portfolio may charge a 2% redemption fee for sales or exchanges of shares within 30 days of purchase or exchange. Performance data does not reflect this potential fee. Figures shown in each of the performance tables on the previous pages assume reinvestment of all dividends and distributions, if any, at net asset value on the payable date. Investment return and principal value of shares will fluctuate so that shares, when redeemed, may be worth more or less than their original cost.

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


14		ANNUAL REPORT		SEPTEMBER 30, 2009

Disclosure of Expenses

Derivative Financial Instruments

The Portfolios may invest in various derivative instruments, including financial futures contracts, foreign currency exchange contracts and options, as specified in Note 2 of the Notes to Financial Statements, which constitute forms of economic leverage. Such instruments are used to obtain exposure to a market without owning or taking physical custody of securities or to hedge market, equity and/or foreign currency exchange rate risks. Such derivative instruments involve risks, including the imperfect correlation between the value of a derivative instrument and the underlying asset, possible default of the other party to the transaction and illiquidity of the derivative instrument. A Portfolio’s ability to successfully use a derivative instrument depends on the investment advisor’s ability to accurately predict pertinent market movements, which cannot be assured. The use of derivative instruments may result in losses greater than if they had not been used, may require the Portfolios to sell or purchase portfolio securities at inopportune times or for distressed values, may limit the amount of appreciation the Portfolios can realize on an investment or may cause the Portfolios to hold a security that it might otherwise sell. The Portfolios’ investments in these instruments are discussed in detail in the Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		15


Schedule of Investments September 30, 2009		Global Opportunities Portfolio
		(Percentages shown are based on Net Assets)


Common Stocks	Shares	Value
Belgium — 0.6%
Anheuser-Busch InBev NV	10,300	$	472,442

Brazil — 0.9%
Banco Bradesco SA - ADR	13,900		276,471
BM&FBOVESPA SA	23,542		173,947
Itau UniBanco Holding SA - ADR	13,765		277,365

			727,783

Canada — 4.0%
Canadian Natural Resources Ltd.	5,000		337,645
Canadian Oil Sands Trust	10,600		304,441
EnCana Corp.	8,600		498,015
Kinross Gold Corp.	31,000		675,506
Royal Bank of Canada	5,300		284,888
Suncor Energy, Inc.	14,100		492,542
The Toronto-Dominion Bank	5,100		329,870
TransCanada Corp.	11,700		364,665

			3,287,572

Cayman Islands — 0.4%
Herbalife Ltd.	9,700		317,578

China — 1.8%
AirMedia Group, Inc. - ADR(a)	14,900		109,515
China Construction Bank Corp. - Class H	275,800		219,383
China Railway Construction Corp. Ltd. - Class H	199,000		263,676
Focus Media Holding Ltd. - ADR(a)	19,500		215,280
Industrial & Commercial Bank of China - Class H	308,000		230,994
Noah Education Holdings Ltd. - ADR	9,800		49,000
Sina Corp.(a)	11,000		417,560

			1,505,408

Denmark — 0.3%
Novo Nordisk A/S - Class B	3,400		213,840

Finland — 0.5%
Fortum Oyj	14,700		377,731

France — 4.8%
Air France-KLM(a)	31,400		572,737
AXA SA	16,700		453,323
BNP Paribas	4,800		385,212
Compagnie de Saint-Gobain	11,200		585,256
France Telecom SA	10,400		277,337
PPR	3,600		463,166
Société Generale	3,600		291,194
Total SA	6,200		368,528
Unibail-Rodamco SE	1,100		229,080
Vivendi	12,200		379,156

			4,004,989

Germany — 2.9%
Allianz SE	1,400		174,657
Bayerische Motoren Werke AG	8,600		414,000
Deutsche Boerse AG	3,500		285,521
MAN SE	6,900		566,757
RWE AG	5,700		528,707
SAP AG - ADR	8,000		390,960

			2,360,602

Hong Kong — 1.1%
China Mobile Ltd.	22,800		223,309
China Unicom Hong Kong Ltd.	170,600		241,759
New World Development Ltd.	112,600		241,197
Wing Hang Bank Ltd.	22,500		220,608

			926,873

India — 1.4%
Bharti Airtel Ltd.	60,600		519,323
Punjab National Bank Ltd.	16,300		251,682
Sterlite Industries India Ltd. - ADR	25,600		408,832

			1,179,837

Indonesia — 0.3%
Bank Negara Indonesia Persero Tbk PT	1,289,600		281,663

Ireland — 0.2%
Covidien Plc	4,700		203,322

Israel — 0.7%
Teva Pharmaceutical Industries Ltd. - ADR	11,400		576,384

Italy — 1.1%
A2A SpA	136,800		269,379
Fiat SpA(a)	31,500		406,386
Intesa Sanpaolo SpA(a)	54,400		241,368

			917,133

Japan — 5.0%
Amada Co. Ltd.	74,800		502,225
Fujitsu Ltd.	28,500		185,891
Honda Motor Co. Ltd.	10,100		306,735
ITOCHU Corp.	97,500		642,890
Kawasaki Kisen Kaisha Ltd.(a)	87,000		321,267
Kenedix Realty Investment Corp.	30		112,285
Mitsubishi Estate Co. Ltd.	6,100		95,427
Mitsui & Co. Ltd.	40,900		532,097
Mitsui Fudosan Co. Ltd.	6,000		101,031
Nippon Residential Investment Corp.	40		102,650
Nippon Steel Corp.	76,500		278,485
Sumitomo Mitsui Financial Group, Inc.	5,100		176,778
Toyo Suisan Kaisha Ltd.	14,200		384,216
Toyota Motor Corp.	10,200		405,659

			4,147,636

Luxembourg — 0.8%
ArcelorMittal	10,800		402,704

Portfolio Abbreviations


To simplify the listings of portfolio holdings in each Portfolio’s Schedule of Investments, the names and descriptions of many of the securities have been abbreviated according to the following list.	ADR	American Depositary Receipts	GDR	Global Depositary Receipts
	AUD	Australian Dollar	HKD	Hong Kong Dollar
	CAD	Canadian Dollar	JPY	Japanese Yen
	CHF	Swiss Francs	NOK	Norwegian Krone
	CZK	Czechoslovakian Krone	NZD	New Zealand Dollar
	DKK	Danish Krone	SEK	Swedish Krona
	EUR	Euro	SGD	Singapore Dollar
	GBP	British Pound	USD	US Dollar

See Notes to Financial Statements.


16		ANNUAL REPORT		SEPTEMBER 30, 2009


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


Common Stocks	Shares	Value
Luxembourg (concluded)
Millicom International Cellular SA(a)	3,700	$	269,138

			671,842

Malaysia — 0.3%
CIMB Group Holdings Berhad	74,000		236,743

Mexico — 0.5%
Fomento Economico Mexicano SAB de CV - ADR	10,800		410,940

Netherlands — 1.6%
Aegon NV(a)	74,800		639,630
Corio NV	3,700		255,739
Randstad Holding NV(a)	10,700		463,529

			1,358,898

New Zealand — 0.5%
Telecom Corp. of New Zealand Ltd.	207,400		397,949

Russia — 1.1%
Lukoil OAO - ADR	9,900		543,015
Vimpel-Communications - ADR(a)	18,000		336,600

			879,615

Singapore — 1.8%
CapitaLand Ltd.	79,500		208,456
DBS Group Holdings Ltd.	24,000		225,272
Singapore Telecommunications Ltd.	160,400		368,587
United Overseas Bank Ltd.	24,300		288,190
Wilmar International Ltd.	92,700		412,939

			1,503,444

South Africa — 0.7%
Naspers Ltd. - N Shares	17,000		581,936

South Korea — 1.8%
GS Engineering & Construction Corp.	6,100		474,845
Korea Zinc Co. Ltd.	2,700		400,229
Samsung Electronics Co. Ltd.	900		621,351

			1,496,425

Spain — 1.9%
Banco Bilbao Vizcaya Argentaria SA	20,100		358,072
Banco Santander SA	17,400		281,088
Inditex SA	8,900		511,785
Telefonica SA	15,700		434,374

			1,585,319

Sweden — 0.5%
Nordea Bank AB	41,700		421,537

Switzerland — 5.8%
Alcon, Inc.	3,300		457,611
Nestle SA	17,800		759,894
Novartis AG	16,500		828,808
Roche Holding AG	5,100		824,612
Swiss Reinsurance Co. Ltd.	6,800		308,329
Transocean Ltd.(a)	4,700		401,991
Tyco International Ltd.	11,200		386,176
UBS AG(a)	7,400		135,678
Xstrata Plc(a)	29,100		429,157
Zurich Financial Services AG	1,100		262,290

			4,794,546

Taiwan — 1.4%
ASUSTeK Computer, Inc.	287,522		491,794
Chang Hwa Commercial Bank	312,600		142,854
Mega Financial Holding Co. Ltd.	446,900		281,690
Siliconware Precision Industries Co. - ADR	37,400		268,532

			1,184,870

Thailand — 0.2%
Bangkok Bank Public Co. Ltd.	49,300		175,144

United Kingdom — 7.0%
Aviva Plc	48,800		350,821
Barclays Plc(a)	50,300		298,096
BG Group Plc	26,100		454,899
GlaxoSmithKline Plc	38,300		755,161
HSBC Holdings Plc	44,400		508,405
Imperial Tobacco Group Plc	19,000		550,436
Legal & General Group Plc	214,700		302,803
Persimmon Plc(a)	25,900		189,622
Prudential Plc	38,900		374,914
Standard Chartered Plc	10,500		259,365
Tesco Plc	88,000		563,348
Unilever Plc	15,300		437,182
Vodafone Group Plc - ADR	15,900		357,750
WPP Plc	45,500		391,341

			5,794,143

United States — 43.2%
Abbott Laboratories	8,300		410,601
AK Steel Holding Corp.	18,800		370,924
Alcoa, Inc.	46,100		604,832
Alpha Natural Resources, Inc.(a)	12,700		445,770
American Electric Power Co., Inc.	12,200		378,078
Ameriprise Financial, Inc.	12,900		468,657
Amgen, Inc.(a)	6,800		409,564
Analog Devices, Inc.	13,900		383,362
Apache Corp.	4,500		413,235
Apple, Inc.(a)	2,800		519,036
Applied Materials, Inc.	29,100		389,940
Boston Properties, Inc.	2,600		170,430
Bristol-Myers Squibb Co.	21,500		484,180
Bunge Ltd.	5,800		363,138
CBS Corp. - Class B	36,100		435,005
Celanese Corp. - Series A	14,200		355,000
Celgene Corp.(a)	4,000		223,600
The Charles Schwab Corp.	17,200		329,380
Chesapeake Energy Corp.	13,100		372,040
Chevron Corp.	12,300		866,289
Cisco Systems, Inc.(a)	28,800		677,952
Citigroup, Inc.	71,000		343,640
ConAgra Foods, Inc.	12,600		273,168
CONSOL Energy, Inc.	9,900		446,589
Dominion Resources, Inc.	10,100		348,450
eBay, Inc.(a)	34,400		812,184
Energizer Holdings, Inc.(a)	5,600		371,504
EOG Resources, Inc.	7,300		609,623
Federal Realty Investment Trust	3,700		227,069
General Electric Co.	36,900		605,898
General Mills, Inc.	6,800		437,784
Gilead Sciences, Inc.(a)	8,800		409,904
Google, Inc. - Class A(a)	1,000		495,850
Halliburton Co.	16,200		439,344
The Hartford Financial Services Group, Inc.	9,000		238,500
Helmerich & Payne, Inc.	9,200		363,676
Hewlett-Packard Co.	14,300		675,103
Hudson City Bancorp, Inc.	16,400		215,660
Intel Corp.	23,400		457,938
International Business Machines Corp.	4,600		550,206

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		17


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


Common Stocks	Shares	Value
United States (concluded)
Invesco Ltd.	18,300	$	416,508
Johnson & Johnson	5,800		353,162
JPMorgan Chase & Co.	5,900		258,538
KLA-Tencor Corp.	15,100		541,486
Kohl’s Corp.(a)	11,000		627,550
Las Vegas Sands Corp.(a)	14,000		235,760
LaSalle Hotel Properties	14,400		283,104
Lincoln National Corp.	16,000		414,560
Mack-Cali Realty Corp.	7,000		226,310
Macy’s, Inc.	18,700		342,023
Manpower, Inc.	6,300		357,273
Marathon Oil Corp.	19,300		615,670
Medco Health Solutions, Inc.(a)	5,800		320,798
Medtronic, Inc.	7,600		279,680
MetLife, Inc.	10,100		384,507
Microsoft Corp.	22,400		579,936
Monster Worldwide, Inc.(a)	28,100		491,188
Morgan Stanley	13,200		407,616
Newmont Mining Corp.	11,200		493,024
NII Holdings, Inc.(a)	10,700		320,786
NIKE, Inc. - Class B	6,500		420,550
Oracle Corp.	16,700		348,028
People’s United Financial, Inc.	12,500		194,500
PepsiCo, Inc.	9,300		545,538
Pfizer, Inc.	45,300		749,715
Piper Jaffray Cos.(a)	4,200		200,424
Prudential Financial, Inc.	7,500		374,325
QUALCOMM, Inc.	7,800		350,844
Ralcorp Holdings, Inc.(a)	6,100		356,667
Sempra Energy	2,400		119,544
SPX Corp.	9,400		575,938
State Street Corp.	4,800		252,480
Stryker Corp.	8,900		404,327
SunTrust Banks, Inc.	13,700		308,935
T. Rowe Price Group, Inc.	6,300		287,910
Texas Instruments, Inc.	20,100		476,169
The Travelers Cos., Inc.	9,000		443,070
U.S. Bancorp	7,500		163,950
United States Steel Corp.	10,100		448,137
Urban Outfitters, Inc.(a)	14,500		437,465
Virgin Media, Inc.	30,500		424,560
Wabtec Corp.	10,500		394,065
The Walt Disney Co.	17,300		475,058
WellPoint, Inc.(a)	3,700		175,232
Wells Fargo & Co.	13,400		377,612
Weyerhaeuser Co.	10,700		392,155
XTO Energy, Inc.	10,800		446,256
Yum! Brands, Inc.	8,400		283,584

			35,769,620

Total Common Stocks (Cost — $69,799,911) — 95.1%			78,763,764

Rights — 0.0%
BNP Paribas, Expiring 10/13/09(a)	4,800		10,396

Total Long-Term Investments (Cost — $69,799,911) — 95.1%			78,774,160

Short-Term Securities
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.22% (b)(c) (Cost — $2,555,283) — 3.1%	2,555,283		2,555,283

Total Investments (Cost — $72,355,194*) — 98.2%			81,329,443
Other Assets in Excess of Liabilities — 1.8%			1,449,290

Net Assets — 100.0%		$	82,778,733

*	The cost and unrealized appreciation (depreciation) of investments as of September 30, 2009, as computed for federal income tax purposes, were as follows:


Aggregate cost	$	73,564,583

Gross unrealized appreciation	$	9,831,557
Gross unrealized depreciation		(2,066,697	)

Net unrealized appreciation	$	7,764,860

(a)	Non-income producing security.

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

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

•

Foreign currency exchange contracts as of September 30, 2009 were as follows:


Currency Purchased		Currency Sold		Counterparty	Settlement Date	Unrealized Appreciation (Depreciation)
CAD	107,000	USD	98,183	Citibank, N.A.	10/01/09	$	1,756
CHF	61,000	USD	58,688	Citibank, N.A.	10/01/09		176
CAD	83,000	USD	77,296	Barclays Bank, Plc	10/02/09		227
USD	55,329	CHF	57,000	Barclays Bank, Plc	10/02/09		(326	)
USD	89,229	CAD	95,000	Barclays Bank, Plc	10/09/09		497
AUD	633,000	USD	550,776	Citibank, N.A.	10/28/09		6,391
AUD	250,000	USD	207,742	UBS Securities, Inc.	10/28/09		12,308
AUD	870,000	USD	750,549	Citibank, N.A.	10/28/09		15,226
AUD	2,044,000	USD	1,683,070	Citibank, N.A.	10/28/09		116,060
CAD	119,000	USD	110,763	Citibank, N.A.	10/28/09		390
CAD	230,000	USD	212,908	Deutsche Bank AG	10/28/09		1,925
CAD	474,000	USD	431,564	Deutsche Bank AG	10/28/09		11,178
DKK	1,284,000	USD	244,847	Citibank, N.A.	10/28/09		7,447
EUR	2,230,000	USD	3,168,852	Barclays Bank, Plc	10/28/09		94,368
GBP	335,000	USD	552,327	Deutsche Bank AG	10/28/09		(17,016	)

See Notes to Financial Statements.


18		ANNUAL REPORT		SEPTEMBER 30, 2009


Schedule of Investments (continued)		Global Opportunities Portfolio


Currency Purchased		Currency Sold		Counterparty	Settlement Date	Unrealized Appreciation (Depreciation)
GBP	232,000	USD	383,112	Citibank, N.A.	10/28/09	$	(12,389	)
GBP	204,000	USD	334,751	Deutsche Bank AG	10/28/09		(8,771	)
HKD	3,192,000	USD	412,036	Barclays Bank, Plc	10/28/09		(96	)
JPY	26,207,000	USD	289,466	Deutsche Bank AG	10/28/09		2,540
JPY	15,363,000	USD	168,272	Deutsche Bank AG	10/28/09		2,907
JPY	14,581,000	USD	158,279	Deutsche Bank AG	10/28/09		4,187
JPY	20,349,000	USD	221,032	Deutsche Bank AG	10/28/09		5,703
JPY	100,000,000	USD	1,107,983	Citibank, N.A.	10/28/09		6,247
JPY	23,745,000	USD	255,674	Deutsche Bank AG	10/28/09		8,900
JPY	112,601,000	USD	1,195,340	Citibank, N.A.	10/28/09		59,295
NOK	1,203,000	USD	207,720	UBS Securities, Inc.	10/28/09		374
NOK	1,491,000	USD	257,141	Citibank, N.A.	10/28/09		773
NOK	1,302,000	USD	215,821	Citibank, N.A.	10/28/09		9,398
SEK	4,531,000	USD	633,693	Deutsche Bank AG	10/28/09		16,385
USD	565,393	AUD	655,000	Citibank, N.A.	10/28/09		(11,139	)
USD	178,350	CAD	194,000	Citibank, N.A.	10/28/09		(2,857	)
USD	157,102	CAD	171,000	Deutsche Bank AG	10/28/09		(2,622	)
USD	98,185	CAD	107,000	Citibank, N.A.	10/28/09		(1,759	)
USD	152,495	CAD	164,000	Citibank, N.A.	10/28/09		(690	)
USD	77,297	CAD	83,000	Barclays Bank, Plc	10/28/09		(230	)
USD	295,783	CHF	315,500	Citibank, N.A.	10/28/09		(8,738	)
USD	112,107	CHF	119,000	Citibank, N.A.	10/28/09		(2,752	)
USD	52,528	CHF	56,000	Citibank, N.A.	10/28/09		(1,523	)
USD	55,339	CHF	57,000	Barclays Bank, Plc	10/28/09		322
USD	277,487	EUR	194,500	Citibank, N.A.	10/28/09		(7,130	)
USD	198,628	EUR	139,000	Deutsche Bank AG	10/28/09		(4,775	)
USD	1,633,971	EUR	1,115,000	Citibank, N.A.	10/28/09		(2,361	)
USD	81,258	EUR	57,000	Citibank, N.A.	10/28/09		(2,152	)
USD	291,871	EUR	200,000	Citibank, N.A.	10/28/09		(795	)
USD	647,705	EUR	442,000	Deutsche Bank AG	10/28/09		914
USD	168,674	EUR	114,000	Deustche Bank AG	10/28/09		1,854
USD	946,254	EUR	642,000	Citibank, N.A.	10/28/09		6,797
USD	239,297	GBP	147,000	Citibank, N.A.	10/28/09		4,399
USD	112,287	JPY	10,420,000	UBS Securities, Inc.	10/28/09		(3,816	)
USD	95,367	JPY	8,825,000	Citibank, N.A.	10/28/09		(2,964	)
USD	84,363	JPY	7,746,000	Citibank, N.A.	10/28/09		(1,945	)
USD	65,182	JPY	6,014,000	Citibank, N.A.	10/28/09		(1,828	)
USD	83,354	NZD	124,000	Citibank, N.A.	10/28/09		(6,024	)
USD	584,911	SGD	846,000	Citibank, N.A.	10/28/09		(15,529	)

Total						$	278,717

•

Fair Value Measurements - Various inputs are used in determining the fair value of investments, which are as follows:

•

Level 1 – price quotations in active markets/exchanges for identical assets and liabilities

•

The following table summarizes the inputs used as of September 30, 2009 in determining the fair valuation of the Portfolio’s investments:


	Valuation Inputs
	Level 1		Level 2		Level 3	Total
Investments in Securities:
Assets:
Long-Term Investments:
Belgium		—	$	472,442	—	$	472,442
Brazil	$	727,783		—	—		727,783
Canada		3,287,572		—	—		3,287,572
Cayman Islands		317,578		—	—		317,578
China		791,355		714,053	—		1,505,408
Denmark		—		213,840	—		213,840
Finland		—		377,731	—		377,731
France		—		4,004,989	—		4,004,989
Germany		390,960		1,969,642	—		2,360,602
Hong Kong		—		926,873	—		926,873
India		408,832		771,005	—		1,179,837
Indonesia		—		281,663	—		281,663
Ireland		203,322		—	—		203,322
Israel		576,384		—	—		576,384
Italy		—		917,133	—		917,133
Japan		405,659		3,741,977	—		4,147,636
Luxembourg		269,138		402,704	—		671,842
Malaysia		—		236,743	—		236,743
Mexico		410,940		—	—		410,940
Netherlands		—		1,358,898	—		1,358,898
New Zealand		—		397,949	—		397,949

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		19


Schedule of Investments (concluded)		Global Opportunities Portfolio


	Valuation Inputs
	Level 1		Level 2			Level 3	Total
Russia	$	879,615		—		—	$	879,615
Singapore		—	$	1,503,444		—		1,503,444
South Africa		—		581,936		—		581,936
South Korea		—		1,496,425		—		1,496,425
Spain		—		1,585,319		—		1,585,319
Sweden		—		421,537		—		421,537
Switzerland		1,245,778		3,548,768		—		4,794,546
Taiwan		268,532		916,338		—		1,184,870
Thailand		—		175,144		—		175,144
United Kingdom		357,750		5,436,393		—		5,794,143
United States		35,769,620		—		—		35,769,620
Rights		10,396		—		—		10,396
Short-Term Securities		2,555,283		—		—		2,555,283
Other Financial Instruments¹ :
Assets:		—		398,944		—		398,944
Liabilities:		—		(120,227	)	—		(120,227	)

Total	$	48,876,497	$	32,731,663		—	$	81,608,160

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

See Notes to Financial Statements.


20		ANNUAL REPORT		SEPTEMBER 30, 2009


Schedule of Investments September 30, 2009		Health Sciences Opportunities Portfolio
		(Percentages shown are based on Net Assets)


Common Stocks	Shares	Value
Biotechnology — 17.6%
3SBio, Inc. - ADR(a)	158,900	$	1,747,900
Abraxis Bioscience, Inc.(a)	24,200		880,396
Alexion Pharmaceuticals, Inc.(a)	366,300		16,315,002
Amgen, Inc.(a)	479,310		28,868,841
Amylin Pharmaceuticals, Inc.(a)(b)	1,060,200		14,514,138
ARIAD Pharmaceuticals, Inc.(a)	117,500		260,850
BioMarin Pharmaceutical, Inc.(a)(b)	487,409		8,812,355
Celera Corp.(a)	1,005,980		6,267,255
Celgene Corp.(a)	286,100		15,992,990
Dendreon Corp.(a)(b)	784,000		21,944,160
Gilead Sciences, Inc.(a)	366,200		17,057,596
Human Genome Sciences, Inc.(a)(b)	166,200		3,127,884
Immunogen, Inc.(a)	79,300		643,123
Incyte Corp.(a)(b)	190,400		1,285,200
Medivation, Inc.(a)	171,100		4,643,654
Momenta Pharmaceuticals, Inc.(a)	51,100		542,171
Nanosphere, Inc.(a)	87,100		623,636
Pharmasset, Inc.(a)	78,300		1,655,262
Talecris Biotherapeutics Holdings Corp.(a)	253,600		4,818,400
Vertex Pharmaceuticals, Inc.(a)	558,520		21,167,908

			171,168,721

Food & Staples Retailing — 1.9%
CVS Caremark Corp.	506,480		18,101,595

Health Care Equipment & Supplies — 24.6%
Alcon, Inc.	293,250		40,664,978
Beckman Coulter, Inc.	81,430		5,613,784
C.R. Bard, Inc.	96,100		7,554,421
CareFusion Corp.(a)	115,300		2,513,540
Cie Generale d’Optique Essilor International SA	225,100		12,853,771
The Cooper Cos., Inc.	288,400		8,574,132
Covidien Plc	535,770		23,177,410
DENTSPLY International, Inc.(b)	281,800		9,733,372
DiaSorin SpA	243,900		8,200,938
Edwards Lifesciences Corp.(a)	72,200		5,047,502
Elekta AB - B Shares	312,600		6,066,465
Gen-Probe, Inc.(a)	67,600		2,801,344
Given Imaging Ltd.	75,200		1,121,232
Hill-Rom Holdings, Inc.	471,200		10,262,736
Medtronic, Inc.	432,860		15,929,248
Mindray Medical International Ltd. - ADR(b)	245,800		8,022,912
Smith & Nephew Plc	970,100		8,712,057
Sonova Holding AG	145,200		14,691,617
Stryker Corp.	206,100		9,363,123
Varian Medical Systems, Inc.(a)	265,800		11,198,154
Wright Medical Group, Inc.(a)	298,400		5,329,424
Zimmer Holdings, Inc.(a)	364,900		19,503,905
ZOLL Medical Corp.(a)	118,573		2,551,691

			239,487,756

Health Care Providers & Services — 14.3%
Aetna, Inc.	266,500		7,416,695
AmerisourceBergen Corp.	89,100		1,994,058
Coventry Health Care, Inc.(a)	482,000		9,620,720
DaVita, Inc.(a)	140,480		7,956,787
Express Scripts, Inc.(a)	211,210		16,385,672
Fresenius Medical Care AG & Co. KGaA	109,200		5,431,478
Henry Schein, Inc.(a)	293,300		16,105,103
McKesson Corp.	217,030		12,924,136
Medco Health Solutions, Inc.(a)	347,050		19,195,336
Patterson Cos., Inc.(a)(b)	72,400		1,972,900
UnitedHealth Group, Inc.	338,400		8,473,536
VCA Antech, Inc.(a)	309,300		8,317,077
WellPoint, Inc.(a)	483,600		22,903,296

			138,696,794

Health Care Technology — 2.6%
Allscripts-Misys Healthcare Solutions, Inc.(b)	523,800		10,617,426
Cerner Corp.(a)(b)	178,300		13,336,840
SXC Health Solutions Corp.(a)	39,800		1,862,242

			25,816,508

Life Sciences Tools & Services — 9.7%
Gerresheimer AG	110,900		3,484,343
Life Technologies Corp.(a)	275,800		12,838,490
Millipore Corp.(a)	192,000		13,503,360
PerkinElmer, Inc.	1,044,800		20,101,952
QIAGEN NV(a)(b)	924,010		19,662,933
Tecan Group AG	151,100		9,363,095
Thermo Fisher Scientific, Inc.(a)	344,700		15,053,049

			94,007,222

Pharmaceuticals — 27.5%
Abbott Laboratories	492,390		24,358,533
Allergan, Inc.	298,600		16,948,536
ARYx Therapeutics, Inc.(a)	122,000		381,860
Auxilium Pharmaceuticals, Inc.(a)(b)	126,600		4,330,986
BioForm Medical, Inc.(a)	79,600		284,968
Bristol-Myers Squibb Co.	1,142,400		25,726,848
Cypress Bioscience, Inc.(a)	20,300		165,851
GlaxoSmithKline Plc	1,024,300		20,196,125
Johnson & Johnson	433,040		26,367,806
MAP Pharmaceuticals, Inc.(a)	76,500		800,190
Merck & Co., Inc.(b)	649,100		20,531,033
Mylan, Inc.(a)(b)	311,000		4,979,110
Novartis AG	489,700		24,598,014
Novartis AG - ADR	120,540		6,072,805
Novo Nordisk A/S - Class B	98,100		6,169,902
Pfizer, Inc.	2,197,240		36,364,322
Roche Holding AG	188,300		30,445,980
Shire Plc - ADR	139,800		7,310,142
Teva Pharmaceutical Industries Ltd. - ADR	214,660		10,853,210

			266,886,221

Total Long-Term Investments (Cost — $810,341,880) — 98.2%			954,164,817


	Shares/ Beneficial Interest
Short-Term Securities
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.22%(c)(d)	12,271,017		12,271,017
BlackRock Liquidity Series, LLC Money Market Series, 0.29%(c)(d)(e)	113,924,650		113,924,650

Total Short-Term Securities (Cost — $126,195,667) — 13.0%			126,195,667

Total Investments (Cost — $936,537,547*) — 111.2%			1,080,360,484
Liabilities in Excess of Other Assets — (11.2)%			(109,194,575	)

Net Assets — 100.0%		$	971,165,909

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		21


Schedule of Investments (concluded)		Health Sciences Opportunities Portfolio

*	The cost and unrealized appreciation (depreciation) of investments as of September 30, 2009, as computed for federal income tax purposes, were as follows:


Aggregate cost	$	948,823,492

Gross unrealized appreciation	$	142,025,443
Gross unrealized depreciation		(10,488,451	)

Net unrealized appreciation	$	131,536,992

(a)	Non-income producing security.

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

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

(d)	Investments in companies considered to be an affiliate of the Portfolio, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, were as follows:


Affiliate	Net Activity			Income
BlackRock Liquidity Funds, TempFund, Institutional Class	$	(17,728,983	)	$	352,035
BlackRock Liquidity Series, LLC Money Market Series	$	35,762,550		$	214,582

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

•

Foreign currency exchange contracts as of September 30, 2009 were as follows:


Currency Purchased		Currency Sold		Counterparty	Settlement Date	Unrealized Appreciation (Depreciation)
CHF	6,830,000	USD	6,629,781	Barclays Bank, Plc	10/02/09	$	(39,025	)
USD	52,637,207	CHF	56,116,000	Citibank, N.A.	10/28/09		(1,526,014	)
USD	1,591,238	CHF	1,656,000	Citibank, N.A.	10/28/09		(7,135	)
USD	13,365,436	CHF	13,850,000	Citibank, N.A.	10/28/09		(2,598	)
USD	6,630,946	CHF	6,830,000	Barclays Bank, Plc	10/28/09		38,623
USD	2,963,622	DKK	15,542,000	Citibank, N.A.	10/28/09		(90,231	)
USD	26,707,884	EUR	18,795,000	Barclays Bank, Plc	10/28/09		(795,358	)
USD	328,449	EUR	225,000	Citibank, N.A.	10/28/09		(800	)
USD	175,396	EUR	119,000	Citibank, N.A.	10/28/09		1,260
USD	755,271	GBP	456,000	Citibank, N.A.	10/28/09		26,609
USD	4,430,549	GBP	2,665,000	Citibank, N.A.	10/28/09		172,029
USD	23,655,192	GBP	14,345,000	Citibank, N.A.	10/28/09		732,685
USD	4,416,269	SEK	31,556,000	Citibank, N.A.	10/28/09		(111,179	)
USD	149,067	SEK	1,043,000	Citibank, N.A.	10/28/09		(576	)
USD	1,251,952	EUR	857,000	Citibank, N.A.	10/29/09		(2,119	)

Total						$	(1,603,829	)

•

Fair Value Measurements - Various inputs are used in determining the fair value of investments, which are as follows:

•

Level 1 – price quotations in active markets/exchanges for identical assets and liabilities

•

The following table summarizes the inputs used as of September 30, 2009 in determining the fair valuation of the Portfolio’s investments:


	Valuation Inputs
	Level 1		Level 2			Level 3	Total
Investments in Securities:
Assets:
Long-Term Investments:
Biotechnology	$	171,168,721		—		—	$	171,168,721
Food & Staples Retailing		18,101,595		—		—		18,101,595
Health Care Equipment & Supplies		188,962,908	$	50,524,848		—		239,487,756
Health Care Providers & Services		133,265,316		5,431,478		—		138,696,794
Health Care Technology		25,816,508		—		—		25,816,508
Life Sciences Tools & Services		81,159,784		12,847,438		—		94,007,222
Pharmaceuticals		185,476,200		81,410,021		—		266,886,221
Short-Term Securities		12,271,017		113,924,650		—		126,195,667
Other Financial Instruments¹:
Assets:		—		971,206		—		971,206
Liabilities:		—		(2,575,035	)	—		(2,575,035	)

Total	$	816,222,049	$	262,534,606		—	$	1,078,756,655

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

See Notes to Financial Statements.


22		ANNUAL REPORT		SEPTEMBER 30, 2009


Schedule of Investments September 30, 2009		International Opportunities Portfolio
		(Percentages shown are based on Net Assets)


Common Stocks	Shares	Value
Australia — 1.8%
Australia & New Zealand Banking Group Ltd.	362,200	$	7,758,605
Commonwealth Bank of Australia	157,600		7,159,206
National Australia Bank Ltd.	275,700		7,460,578
Santos Ltd.	397,700		5,321,241

			27,699,630

Austria — 0.3%
Erste Group Bank AG	103,000		4,631,147

Belgium — 1.1%
Anheuser-Busch InBev NV	187,600		8,604,872
Umicore	279,200		8,389,732

			16,994,604

Bermuda — 0.2%
Catlin Group Ltd.	471,900		2,653,282

Brazil — 1.6%
Banco Bradesco SA - Preference Shares	258,600		5,160,030
BM&FBOVESPA SA	474,500		3,505,986
Companhia Energetica de Minas Gerais - CEMIG - ADR(a)	348,805		5,301,836
Hypermarcas SA(b)	384,800		7,602,168
Itau Unibanco Holding SA	192,790		3,895,847

			25,465,867

Canada — 9.4%
Advantage Oil & Gas Ltd.	944,000		6,674,525
Bank of Nova Scotia	142,600		6,509,001
Barrick Gold Corp.	189,900		7,190,535
Canadian Natural Resources Ltd.	177,200		11,966,151
Canadian Oil Sands Trust	445,800		12,803,764
Eldorado Gold Corp.(b)	1,116,300		12,678,474
EnCana Corp.	225,300		13,046,841
Ensign Energy Services, Inc.	263,800		4,001,412
Goldcorp, Inc.	244,000		9,795,096
Kinross Gold Corp.	453,200		9,875,455
Progress Energy Resources Corp.	656,600		8,475,423
Royal Bank of Canada	125,700		6,756,676
Suncor Energy, Inc.	276,400		9,655,219
Talisman Energy, Inc.	560,100		9,746,101
The Toronto-Dominion Bank	108,200		6,998,412
TransCanada Corp.	222,900		6,947,343
Trican Well Service Ltd.	424,500		5,511,185

			148,631,613

China — 2.3%
AirMedia Group, Inc. - ADR(b)	282,200		2,074,170
China Construction Bank Corp. - Class H	8,851,700		7,041,035
China Life Insurance Co. Ltd. - Class H	1,330,800		5,805,811
China Railway Construction Corp. Ltd. - Class H	2,832,600		3,753,206
Focus Media Holding Ltd. - ADR(a)(b)	348,700		3,849,648
Industrial & Commercial Bank of China - Class H	9,912,700		7,434,330
NetEase.com, Inc. - ADR(a)(b)	111,600		5,097,888
Noah Education Holdings Ltd. - ADR	179,030		895,150

			35,951,238

Denmark — 1.3%
A.P. Moller - Maersk A/S	1,200		8,308,745
Novo Nordisk A/S - Class B	65,300		4,106,979
TrygVesta A/S	95,200		7,308,519

			19,724,243

Finland — 0.5%
Fortum Oyj	288,700		7,418,438

France — 7.6%
AXA SA	344,600		9,354,192
BNP Paribas	86,700		6,957,895
Cap Gemini SA	148,800		7,820,287
Compagnie de Saint-Gobain	217,300		11,355,004
Compagnie Generale des Etablissements Michelin - Class B	91,300		7,189,483
Credit Agricole SA	125,600		2,636,961
Eramet SA	33,500		11,664,254
France Telecom SA	182,900		4,877,403
GDF SUEZ	181,700		8,089,797
Lafarge SA	112,500		10,087,730
PPR	62,000		7,976,758
Sanofi-Aventis SA	105,900		7,771,724
Société Generale	76,400		6,179,786
Total SA	236,900		14,081,328
Unibail-Rodamco SE	18,600		3,873,539

			119,916,141

Germany — 4.6%
Allianz SE	37,200		4,640,875
Bayerische Motoren Werke AG	223,000		10,735,110
Deutsche Bank AG	59,100		4,514,555
Deutsche Boerse AG	42,300		3,450,729
Fresenius Medical Care AG & Co. KGaA	4,900		243,720
Gerry Weber International AG	188,432		6,248,657
MAN SE	195,800		16,082,755
RWE AG	110,900		10,286,598
Salzgitter AG	56,300		5,376,851
SAP AG - ADR	156,600		7,653,042
Software AG	42,374		3,590,419

			72,823,311

Hong Kong — 3.9%
China Mobile Ltd.	667,400		6,536,678
China Resources Power Holdings Co. Ltd.	3,110,000		7,201,997
China Unicom Hong Kong Ltd.	2,406,400		3,410,143
Hang Seng Bank Ltd.	284,000		4,077,299
Hong Kong Exchanges & Clearing Ltd.	369,000		6,657,309
Huabao International Holdings Ltd.	6,295,600		6,745,356
New World Development Ltd.	3,779,400		8,095,742
REXLot Holdings Ltd.(b)	38,269,100		3,398,022
Sun Hung Kai Properties Ltd.	548,300		8,053,669
Wheelock & Co. Ltd.	1,019,900		3,332,755
Wing Hang Bank Ltd.	475,400		4,661,198

			62,170,168

India — 2.0%
Bharti Airtel Ltd.	1,105,714		9,570,244
HDFC Bank Ltd.	173,000		5,900,018
State Bank of India Ltd.	149,700		6,571,570
Sterlite Industries India Ltd. - ADR	621,200		9,920,564

			31,962,396

Indonesia — 0.5%
Bank Negara Indonesia Persero Tbk PT	39,451,300		8,616,609

Ireland — 0.4%
Covidien Plc	163,200		7,060,032

Israel — 0.7%
Teva Pharmaceutical Industries Ltd. - ADR	232,400		11,750,144

Italy — 3.1%
Assicurazioni Generali SpA	114,936		3,155,599
Benetton Group SpA	488,900		4,962,793

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		23


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


Common Stocks	Shares	Value
Italy (concluded)
Enel SpA	1,154,000	$	7,340,170
Fiat SpA(b)	605,800		7,815,510
Intesa Sanpaolo SpA(b)	1,906,800		8,460,312
Parmalat SpA	1,473,600		4,081,535
UniCredit SpA(b)	2,348,559		9,217,833
Unione di Banche Italiane ScpA	294,000		4,522,638

			49,556,390

Japan — 12.1%
Air Water, Inc.	509,400		5,850,798
Amada Co. Ltd.	1,456,900		9,781,983
The Chiba Bank Ltd.	754,600		4,657,559
Da Office Investment Corp.	600		1,965,344
Fujitsu Ltd.	603,800		3,938,270
Hitachi High-Technologies Corp.	188,700		3,935,991
Honda Motor Co. Ltd.	180,800		5,490,853
Hosiden Corp.	186,200		2,510,545
INPEX Corp.	1,000		8,483,751
ITOCHU Corp.	1,899,700		12,526,139
Japan Prime Realty Investment Corp.	700		1,695,494
Kamigumi Co. Ltd.	646,800		5,274,282
Kenedix Realty Investment Corp.	500		1,871,421
Kureha Corp.	450,700		2,768,327
Marubeni Corp.	2,245,100		11,276,048
Matsui Securities Co. Ltd.	416,200		3,381,708
Mitsubishi Estate Co. Ltd.	91,400		1,429,844
Mitsui Chemicals, Inc.	1,654,200		5,871,600
Mitsui Fudosan Co. Ltd.	91,500		1,540,717
Mizuho Securities Co. Ltd.	1,525,600		5,530,552
Nikon Corp.	266,300		4,850,267
Nippon Express Co. Ltd.	1,055,700		4,285,077
Nippon Steel Corp.	1,460,700		5,317,421
NSK Ltd.	1,814,000		11,210,368
Panasonic Corp.	477,400		6,986,300
Seino Holdings Corp.	649,700		5,616,522
Shimano, Inc.	152,500		6,558,921
Sumitomo Mitsui Financial Group, Inc.	106,400		3,688,069
Toyo Seikan Kaisha Ltd.	88,400		1,692,521
Toyo Suisan Kaisha Ltd.	317,000		8,577,218
Toyota Motor Corp.	192,300		7,647,869
West Japan Railway Co.	1,900		7,190,688
Yamato Kogyo Co. Ltd.	198,200		5,552,234
Zeon Corp.	2,534,600		11,587,228

			190,541,929

Luxembourg — 1.7%
ArcelorMittal	307,100		11,450,949
Millicom International Cellular SA(b)	107,300		7,805,002
SES SA	355,900		8,081,206

			27,337,157

Malaysia — 0.8%
AMMB Holdings Berhad	4,153,000		5,097,292
CIMB Group Holdings Berhad	2,469,400		7,900,189

			12,997,481

Mexico — 0.4%
Fomento Economico Mexicano SAB de CV - ADR	185,000		7,039,250

Netherlands — 3.1%
Aegon NV(b)	1,559,500		13,335,601
ASML Holding NV	277,300		8,199,761
Corio NV	29,700		2,052,824
Heineken NV	180,800		8,382,770
Qiagen NV(b)	300,400		6,365,145
Randstad Holding NV(b)	200,700		8,694,420
Wereldhave NV	13,600		1,342,031

			48,372,552

New Zealand — 0.5%
Telecom Corp. of New Zealand Ltd.	3,988,800		7,653,518

Norway — 0.4%
Yara International ASA	195,900		6,193,042

Papua New Guinea — 0.4%
Oil Search Ltd.	1,243,900		7,056,787

Philippines — 0.3%
Philippine Long Distance Telephone Co. - ADR	99,000		5,088,600

Russia — 1.8%
Lukoil OAO - ADR	193,800		10,629,930
Rosneft Oil Co. - GDR(b)	1,545,100		11,742,760
Vimpel-Communications - ADR(b)	301,300		5,634,310

			28,007,000

Singapore — 2.0%
CapitaLand Ltd.	1,554,400		4,075,767
DBS Group Holdings Ltd.	592,000		5,556,702
Singapore Telecommunications Ltd.	3,206,600		7,368,524
United Overseas Bank Ltd.	466,600		5,533,719
Wilmar International Ltd.	2,093,900		9,327,445

			31,862,157

South Africa — 0.7%
Naspers Ltd. - N Shares	303,700		10,396,109

South Korea — 4.0%
GS Engineering & Construction Corp.	110,600		8,609,483
Hyundai Development Co.	188,700		6,822,926
Korea Electric Power Corp.(b)	325,400		9,906,368
Korea Zinc Co. Ltd.	60,900		9,027,384
Korean Air Lines Co. Ltd.(b)	229,800		9,331,749
LG Electronics, Inc.	49,000		5,202,735
Samsung Electronics Co. Ltd.	21,500		14,843,377

			63,744,022

Spain — 1.9%
Banco Bilbao Vizcaya Argentaria SA	382,602		6,815,878
Banco Santander SA	313,400		5,062,816
Inditex SA	127,900		7,354,750
Telefonica SA	392,600		10,862,119

			30,095,563

Sweden — 0.5%
Nordea Bank AB	745,200		7,533,085

Switzerland — 7.1%
Alcon, Inc.	60,600		8,403,402
Credit Suisse Group AG	152,500		8,484,773
Julius Baer Holding AG	151,200		7,583,474
Nestle SA	428,700		18,301,486
Novartis AG	315,400		15,842,789
Roche Holding AG	100,500		16,249,713
Sonova Holding AG	71,000		7,183,917
Swiss Reinsurance Co. Ltd.	132,100		5,989,734
UBS AG(b)	579,700		10,628,750
Xstrata Plc(b)	521,600		7,692,379

See Notes to Financial Statements.


24		ANNUAL REPORT		SEPTEMBER 30, 2009


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


Common Stocks	Shares	Value
Switzerland (concluded)
Zurich Financial Services AG	21,200	$	5,055,053

			111,415,470

Taiwan — 3.7%
ASUSTeK Computer, Inc.	4,847,415		8,291,305
AU Optronics Corp. - ADR(a)	772,058		7,473,522
China Airlines Ltd.(b)	20,172,415		6,732,380
Chunghwa Telecom Co. Ltd. - ADR(a)	363,760		6,562,230
Mega Financial Holding Co. Ltd.	7,740,300		4,878,864
Polaris Securities Co. Ltd.(b)	7,738,704		4,540,090
Siliconware Precision Industries Co. - ADR(a)	1,028,900		7,387,502
Taishin Financial Holdings Co. Ltd.(b)	8		4
Taiwan Semiconductor Manufacturing Co. Ltd. - ADR(a)	727,800		7,976,688
Yuanta Financial Holding Co. Ltd.	5,780,500		4,260,021

			58,102,606

Thailand — 0.2%
Bangkok Bank Public Co. Ltd.	1,046,800		3,723,860

United Kingdom — 13.5%
Aberdeen Asset Management Plc	695,400		1,672,126
Anglo American Plc(b)	274,900		8,772,217
ARM Holdings Plc	3,363,400		7,746,813
Aviva Plc	881,000		6,333,475
Barclays Plc(b)	1,797,500		10,652,630
BG Group Plc	682,000		11,886,627
British Airways Plc(b)	2,872,700		10,161,256
Britvic Plc	1,451,100		8,184,880
Dana Petroleum Plc(b)	188,500		4,239,156
Domino’s Pizza UK & IRL Plc	1,507,400		7,042,516
GlaxoSmithKline Plc	828,800		16,341,451
Hays Plc	2,573,500		4,286,285
HSBC Holdings Plc	1,500,099		17,176,964
ICAP Plc	403,100		2,732,254
Imperial Tobacco Group Plc	344,150		9,970,138
Inchcape Plc(b)	16,820,900		7,573,115
InterContinental Hotels Group Plc	367,704		4,771,562
Legal & General Group Plc	4,216,900		5,947,317
Next Plc	268,600		7,707,991
Persimmon Plc(b)	739,100		5,411,191
Prudential Plc	685,900		6,610,625
Rightmove Plc	688,259		6,114,622
Standard Chartered Plc	227,000		5,607,235
Tesco Plc	1,090,300		6,979,760
Unilever Plc	343,600		9,818,020
Vodafone Group Plc	3,048,000		6,847,196
Vodafone Group Plc - ADR(a)	211,300		4,754,250
WPP Plc	891,400		7,666,840

			213,008,512

United States — 1.0%
NII Holdings, Inc.(b)	280,700		8,415,386
Virgin Media, Inc.	582,300		8,105,616

			16,521,002

Total Common Stocks — 97.4%			1,539,714,955

Rights — 0.0%
BNP Paribas, Expiring 10/13/09 (b)	86,700		187,772

Warrant — 0.0%
Unione di Banche Italiane ScpA (issued/exercisable 5/18/09, 1 share for 20 warrants, expiring 6/30/11, strike price 12.30 EUR)(b)	261,800		31,185

Total Long-Term Investments (Cost — $1,302,428,070) — 97.4%			1,539,933,912


	Shares/ Beneficial Interest
Short-Term Securities
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.22%(c)(d)	46,629,861		46,629,861
BlackRock Liquidity Series, LLC Money Market Series, 0.29%(c)(d)(e)	28,573,500		28,573,500

Total Short-Term Securities (Cost — $75,203,361) — 4.8%			75,203,361

Total Investments (Cost — $1,377,631,431*) — 102.2%			1,615,137,273
Liabilities in Excess of Other Assets — (2.2)%			(34,000,260	)

Net Assets — 100.0%		$	1,581,137,013

*	The cost and unrealized appreciation (depreciation) of investments as of September 30, 2009, as computed for federal income tax purposes, were as follows:


Aggregate cost	$	1,392,854,276

Gross unrealized appreciation	$	247,226,968
Gross unrealized depreciation		(24,943,971	)

Net unrealized appreciation	$	222,282,997

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

(b)	Non-income producing security.

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


Affiliate	Net Activity		Income
BlackRock Liquidity Funds, TempFund, Institutional Class	$	16,629,861	$	564,101
BlackRock Liquidity Series, LLC Money Market Series	$	16,762,400	$	49,335

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

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

•

Foreign currency exchange contracts as of September 30, 2009 were as follows:


Currency Purchased		Currency Sold		Counterparty	Settlement Date	Unrealized Appreciation (Depreciation)
CAD	388,000	USD	356,028	Citibank, N.A.	10/01/09	$	6,368
CAD	1,312,000	USD	1,221,829	Barclays Bank, Plc	10/02/09		3,595
CHF	1,629,000	USD	1,581,246	Barclays Bank, Plc	10/02/09		(9,308	)
DKK	10,862,000	USD	2,140,422	Citibank, N.A.	10/02/09		(5,196	)
EUR	1,734,000	USD	2,528,172	Citibank, N.A.	10/02/09		9,291
GBP	3,338,000	USD	5,345,139	Barclays Bank, Plc	10/02/09		(10,485	)

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		25


Schedule of Investments (continued)		International Opportunities Portfolio


Currency Purchased		Currency Sold		Counterparty	Settlement Date	Unrealized Appreciation (Depreciation)
DKK	3,118,000	USD	613,391	Citibank, N.A.	10/05/09	$	(462	)
EUR	5,574,000	USD	8,161,991	Barclays Bank, Plc	10/05/09		(5,236	)
AUD	2,165,000	USD	1,865,927	Citibank, N.A.	10/09/09		42,644
CZK	98,352,000	USD	5,764,659	Citibank, N.A.	10/09/09		(64,469	)
EUR	1,954,000	USD	2,885,275	Citibank, N.A.	10/09/09		(25,893	)
USD	3,460,592	CAD	3,766,000	Citibank, N.A.	10/09/09		(56,950	)
USD	7,966,837	CAD	8,560,000	Citibank, N.A.	10/09/09		(28,427	)
USD	930,535	CAD	991,000	Citibank, N.A.	10/09/09		4,915
USD	15,427,258	CAD	16,425,000	Barclays Bank, Plc	10/09/09		85,877
USD	4,279,322	CZK	74,628,000	Citibank, N.A.	10/09/09		(45,895	)
USD	6,194,684	DKK	31,613,000	Citibank, N.A.	10/09/09		(18,837	)
AUD	2,361,000	USD	2,084,055	Citibank, N.A.	10/28/09		(1,181	)
AUD	11,618,000	USD	10,108,880	Citibank, N.A.	10/28/09		117,291
AUD	7,600,000	USD	6,524,372	Deutsche Bank AG	10/28/09		165,153
AUD	5,324,000	USD	4,423,179	UBS AG	10/28/09		263,009
AUD	32,510,000	USD	28,046,377	Citibank, N.A.	10/28/09		568,944
AUD	12,985,000	USD	10,790,145	UBS AG	10/28/09		639,259
AUD	30,000,000	USD	24,702,600	Citibank, N.A.	10/28/09		1,703,418
CAD	1,264,000	USD	1,182,071	Deutsche Bank AG	10/28/09		(1,424	)
CAD	14,683,000	USD	13,368,478	Deutsche Bank AG	10/28/09		346,267
DKK	3,495,000	USD	666,464	Citibank, N.A.	10/28/09		20,270
EUR	30,515,000	USD	44,718,053	Citibank, N.A.	10/28/09		(64,613	)
EUR	10,000,000	USD	14,569,900	Goldman Sachs Bank USA	10/28/09		63,375
EUR	74,520,000	USD	105,893,668	Barclays Bank, Plc	10/28/09		3,153,501
GBP	10,130,000	USD	16,762,314	Bank of New York	10/28/09		(575,141	)
GBP	6,264,000	USD	10,278,829	Deutsche Bank AG	10/28/09		(269,308	)
GBP	3,800,000	USD	6,275,115	Citibank, N.A.	10/28/09		(202,928	)
HKD	117,973,000	USD	15,227,146	Citibank, N.A.	10/28/09		(2,265	)
HKD	749,000	USD	96,660	Citibank, N.A.	10/28/09		1
JPY	62,959,000	USD	698,283	Citibank, N.A.	10/28/09		3,225
JPY	35,253,000	USD	379,587	Deutsche Bank AG	10/28/09		13,213
JPY	477,297,000	USD	5,271,926	Deutsche Bank AG	10/28/09		46,261
JPY	1,500,000,000	USD	16,619,744	Citibank, N.A.	10/28/09		93,710
JPY	735,538,000	USD	8,056,408	Deutsche Bank AG	10/28/09		139,178
JPY	754,728,000	USD	8,197,889	Deutsche Bank AG	10/28/09		211,518
JPY	1,095,829,000	USD	11,895,372	Deutsche Bank AG	10/28/09		314,686
NOK	15,689,000	USD	2,708,998	UBS AG	10/28/09		4,875
NOK	19,195,000	USD	3,310,413	Citibank, N.A.	10/28/09		9,926
NOK	15,909,000	USD	2,637,095	Citibank, N.A.	10/28/09		114,833
SEK	143,489,000	USD	20,067,971	Deutsche Bank AG	10/28/09		518,890
USD	30,423,308	AUD	35,245,000	Citibank, N.A.	10/28/09		(599,362	)
USD	1,352,468	AUD	1,617,000	Citibank, N.A.	10/28/09		(70,816	)
USD	2,079,788	AUD	2,361,000	Citibank, N.A.	10/28/09		1,635
USD	3,809,161	CAD	4,202,000	Citibank, N.A.	10/28/09		(115,742	)
USD	10,367,778	CAD	11,200,000	Citibank, N.A.	10/28/09		(93,649	)
USD	3,300,979	CAD	3,593,000	Deutsche Bank AG	10/28/09		(55,084	)
USD	4,061,046	CAD	4,397,000	Citibank, N.A.	10/28/09		(45,998	)
USD	889,910	CAD	968,000	Citibank, N.A.	10/28/09		(14,257	)
USD	356,035	CAD	388,000	Citibank, N.A.	10/28/09		(6,379	)
USD	1,221,853	CAD	1,312,000	Barclays Bank, Plc	10/28/09		(3,629	)
USD	830,874	CAD	891,000	Citibank, N.A.	10/28/09		(1,370	)
USD	12,161,262	CHF	12,965,000	Citibank, N.A.	10/28/09		(352,569	)
USD	3,013,929	CHF	3,200,000	Citibank, N.A.	10/28/09		(74,714	)
USD	1,581,524	CHF	1,629,000	Barclays Bank, Plc	10/28/09		9,212
USD	2,560,902	DKK	13,329,000	Citibank, N.A.	10/28/09		(58,117	)
USD	613,165	DKK	3,118,000	Citibank, N.A.	10/28/09		508
USD	2,139,508	DKK	10,862,000	Citibank, N.A.	10/28/09		5,230
USD	10,326,546	EUR	7,236,000	Citibank, N.A.	10/28/09		(262,092	)
USD	5,241,578	EUR	3,674,000	Citibank, N.A.	10/28/09		(134,687	)
USD	4,513,389	EUR	3,166,000	Citibank, N.A.	10/28/09		(119,506	)
USD	29,176,886	EUR	19,993,000	Citibank, N.A.	10/28/09		(79,422	)
USD	7,735,337	EUR	5,299,000	Citibank, N.A.	10/28/09		(18,835	)
USD	589,089	EUR	402,000	Deutsche Bank AG	10/28/09		831
USD	8,161,857	EUR	5,574,000	Barclays Bank, Plc	10/28/09		5,269
USD	10,059,470	EUR	6,825,000	Citibank, N.A.	10/28/09		72,259
USD	2,392,687	GBP	1,501,500	Citibank, N.A.	10/28/09		(6,626	)
USD	5,344,485	GBP	3,338,000	Barclays Bank, Plc	10/28/09		10,548
USD	2,485,754	GBP	1,527,000	Citibank, N.A.	10/28/09		45,694
USD	5,687,470	GBP	3,449,000	Citibank, N.A.	10/28/09		176,161
USD	8,425,229	GBP	5,155,000	Citibank, N.A.	10/28/09		187,828
USD	7,048,979	GBP	4,240,000	Citibank, N.A.	10/28/09		273,696
USD	1,629,886	HKD	12,628,000	Deutsche Bank AG	10/28/09		193
USD	21,464,844	HKD	166,286,000	Barclays Bank, Plc	10/28/09		4,980
USD	5,426,529	JPY	511,179,000	Citibank, N.A.	10/28/09		(269,182	)
USD	7,055,249	JPY	652,873,000	Citibank, N.A.	10/28/09		(219,259	)
USD	420	JPY	39,000	UBS AG	10/28/09		(15	)
USD	2,995,615	NOK	17,740,000	Deutsche Bank AG	10/28/09		(73,039	)
USD	900,765	NOK	5,451,000	Citibank, N.A.	10/28/09		(42,145	)
USD	1,519,199	NZD	2,260,000	Citibank, N.A.	10/28/09		(109,787	)
USD	11,194,899	SGD	16,192,000	Citibank, N.A.	10/28/09		(297,213	)

Total						$	4,946,025

See Notes to Financial Statements.


26		ANNUAL REPORT		SEPTEMBER 30, 2009


Schedule of Investments (concluded)		International Opportunities Portfolio

•

Fair Value Measurements - Various inputs are used in determining the fair value of investments, which are as follows:

•

Level 1 – price quotations in active markets/exchanges for identical assets and liabilities

•

The following table summarizes the inputs used as of September 30, 2009 in determining the fair valuation of the Portfolio’s investments:


	Valuation Inputs
	Level 1		Level 2			Level 3	Total
Investments in Securities:
Assets:
Long-Term Investments:
Australia		—	$	27,699,630		—	$	27,699,630
Austria		—		4,631,147		—		4,631,147
Belgium		—		16,994,604		—		16,994,604
Bermuda		—		2,653,282		—		2,653,282
Brazil	$	25,465,867		—		—		25,465,867
Canada		148,631,613		—		—		148,631,613
China		11,916,856		24,034,382		—		35,951,238
Denmark		—		19,724,243		—		19,724,243
Finland		—		7,418,438		—		7,418,438
France		—		119,916,141		—		119,916,141
Germany		7,653,042		65,170,269		—		72,823,311
Hong Kong		—		62,170,168		—		62,170,168
India		9,920,564		22,041,832		—		31,962,396
Indonesia		—		8,616,609		—		8,616,609
Ireland		7,060,032		—		—		7,060,032
Israel		11,750,144		—		—		11,750,144
Italy		—		49,556,390		—		49,556,390
Japan		7,647,869		182,894,060		—		190,541,929
Luxembourg		7,805,002		19,532,155		—		27,337,157
Malaysia		—		12,997,481		—		12,997,481
Mexico		7,039,250		—		—		7,039,250
Netherlands		8,199,761		40,172,791		—		48,372,552
New Zealand		—		7,653,518		—		7,653,518
Norway		—		6,193,042		—		6,193,042
Papua New Guinea		—		7,056,787		—		7,056,787
Philippines		5,088,600		—		—		5,088,600
Russia		28,007,000		—		—		28,007,000
Singapore		—		31,862,157		—		31,862,157
South Africa		—		10,396,109		—		10,396,109
South Korea		—		63,744,022		—		63,744,022
Spain		—		30,095,563		—		30,095,563
Sweden		—		7,533,085		—		7,533,085
Switzerland		8,403,402		103,012,068		—		111,415,470
Taiwan		29,399,942		28,702,664		—		58,102,606
Thailand		—		3,723,860		—		3,723,860
United Kingdom		4,754,250		208,254,262		—		213,008,512
United States		16,521,002		—		—		16,521,002
Rights		187,772		—		—		187,772
Warrants		31,185		—		—		31,185
Short-Term Securities		46,629,861		28,573,500		—		75,203,361
Other Financial Instruments¹ :
Assets:		—		9,457,537		—		9,457,537
Liabilities:		—		(4,511,512	)	—		(4,511,512	)

Total	$	392,113,014	$	1,227,970,284		—	$	1,620,083,298

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

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		27


Schedule of Investments September 30, 2009		Science & Technology Opportunities Portfolio
		(Percentages shown are based on Net Assets)


Common Stocks	Shares	Value
Biotechnology — 1.6%
Amgen, Inc.(a)	15,100	$	909,473
Gilead Sciences, Inc.(a)	15,100		703,358
Vertex Pharmaceuticals, Inc.(a)	19,300		731,470

			2,344,301

Building Products — 0.5%
Asahi Glass Co. Ltd.	85,800		691,533

Communications Equipment — 11.6%
ADTRAN, Inc.	22,800		559,740
Anaren, Inc.(a)	15,600		265,200
Ciena Corp.(a)	35,700		581,196
Cisco Systems, Inc.(a)	162,400		3,822,896
F5 Networks, Inc.(a)	21,700		859,971
Juniper Networks, Inc.(a)	63,500		1,715,770
Motorola, Inc.	137,500		1,181,125
Nokia Oyj - ADR	45,300		662,286
Polycom, Inc.(a)	28,500		762,375
QUALCOMM, Inc.	79,300		3,566,914
Research In Motion Ltd.(a)	11,800		797,090
Riverbed Technology, Inc.(a)	31,800		698,328
Starent Networks Corp.(a)	17,500		444,850
Tellabs, Inc.(a)	73,600		509,312

			16,427,053

Computers & Peripherals — 16.3%
Apple, Inc.(a)	38,600		7,155,282
ASUSTeK Computer, Inc.	451,953		773,047
EMC Corp.(a)	133,500		2,274,840
Fujitsu Ltd.	52,000		339,169
Hewlett-Packard Co.	84,300		3,979,803
International Business Machines Corp.	33,300		3,983,013
NetApp, Inc.(a)(b)	48,500		1,293,980
QLogic Corp.(a)	23,300		400,760
SanDisk Corp.(a)	37,100		805,070
Seagate Technology	36,400		553,644
Teradata Corp.(a)	25,600		704,512
Western Digital Corp.(a)	25,600		935,168

			23,198,288

Diversified Telecommunication Services — 2.6%
AT&T, Inc.	37,500		1,012,875
Portugal Telecom SGPS SA	43,700		464,302
Verizon Communications, Inc.	30,600		926,262
Vimpel-Communications - ADR (a)	65,600		1,226,720

			3,630,159

Electrical Equipment — 0.1%
A123 Systems, Inc.(a)	10,000		212,968

Electronic Equipment, Instruments & Components — 5.3%
Agilent Technologies, Inc.(a)	24,800		690,184
Amphenol Corp. - Class A	19,500		734,760
Arrow Electronics, Inc.(a)	34,400		968,360
AU Optronics Corp. - ADR	67,156		650,070
Celestica, Inc.(a)	51,500		488,220
Corning, Inc.	59,100		904,821
Hollysys Automation Technologies Ltd. (a)	102,000		967,980
Nidec Corp.	10,900		882,419
TTM Technologies, Inc.(a)	67,300		771,931
Vishay Intertechnology, Inc.(a)	50,200		396,580

			7,455,325

Health Care Equipment & Supplies — 2.3%
Alcon, Inc.	7,700		1,067,759
Boston Scientific Corp.(a)	60,400		639,636
Covidien Plc	6,700		289,842
Medtronic, Inc.	36,000		1,324,800

			3,322,037

Household Durables — 0.4%
Panasonic Corp.	42,200		617,557

Internet & Catalog Retail — 1.2%
Amazon.com, Inc.(a)	9,100		849,576
priceline.com, Inc.(a)(b)	5,200		862,264

			1,711,840

Internet Software & Services — 7.9%
Baidu, Inc. - ADR(a)	2,100		821,205
Digital River, Inc.(a)	20,000		806,400
eBay, Inc.(a)	89,200		2,106,012
Google, Inc. - Class A(a)	6,400		3,173,440
NetEase.com, Inc. - ADR(a)	14,700		671,496
Open Text Corp.(a)	27,200		1,015,376
Sina Corp.(a)	18,200		690,872
Yahoo!, Inc.(a)	112,300		2,000,063

			11,284,864

IT Services — 3.1%
Accenture Plc - Class A	27,200		1,013,744
Automatic Data Processing, Inc.	26,100		1,025,730
Cognizant Technology Solutions Corp.(a)	18,400		711,344
Computer Sciences Corp.(a)	16,500		869,715
The Western Union Co.	42,500		804,100

			4,424,633

Office Electronics — 0.5%
Konica Minolta Holdings, Inc.	70,400		664,400

Pharmaceuticals — 0.7%
Wyeth	20,100		976,458

Semiconductors & Semiconductor Equipment — 22.7%
Advanced Semiconductor Engineering, Inc.	500,100		414,155
Altera Corp.	34,000		697,340
Analog Devices, Inc.	38,200		1,053,556
Applied Materials, Inc.	135,300		1,813,020
ARM Holdings Plc	248,900		573,283
ASM Pacific Technology Ltd.	103,100		728,633
ASML Holding NV	40,600		1,200,542
Atheros Communications, Inc.(a)	32,300		856,919
Avago Technologies Ltd.(a)	20,900		356,763
Broadcom Corp. - Class A(a)	72,200		2,215,818
Cavium Networks, Inc.(a)	29,100		624,777
Disco Corp.	11,100		738,021
Fairchild Semiconductor International, Inc.(a)	72,900		745,767
Intel Corp.	217,200		4,250,604
KLA-Tencor Corp.	47,800		1,714,108
Lam Research Corp.(a)	52,200		1,783,152
Marvell Technology Group Ltd.(a)	106,000		1,716,140
MEMC Electronic Materials, Inc.(a)	45,600		758,328
Micron Technology, Inc.(a)	89,000		729,800
Netlogic Microsystems, Inc.(a)	16,900		760,500
Novellus Systems, Inc.(a)	47,900		1,004,942
NVIDIA Corp.(a)	32,500		488,475
PMC-Sierra, Inc.(a)	81,100		775,316
Samsung Electronics Co. Ltd.	1,700		1,173,662
Siliconware Precision Industries Co. - ADR	89,600		643,328
Teradyne, Inc.(a)	84,700		783,475

See Notes to Financial Statements.


28		ANNUAL REPORT		SEPTEMBER 30, 2009


Schedule of Investments (continued)		Science & Technology Opportunities Portfolio
		(Percentages shown are based on Net Assets)


	Shares	Value
Common Stocks
Semiconductors & Semiconductor Equipment (concluded)
Texas Instruments, Inc.	109,900	$	2,603,531

Xilinx, Inc.	41,900		981,298

			32,185,253
Software — 19.4%
Adobe Systems, Inc.(a)	53,600		1,770,944
ArcSight, Inc.(a)	17,600		423,632
Ariba, Inc.(a)	69,100		801,560
AsiaInfo Holdings, Inc.(a)	38,200		762,854
Autodesk, Inc.(a)	34,600		823,480
BMC Software, Inc.(a)	33,400		1,253,502
CA, Inc.	46,100		1,013,739
Check Point Software Technologies(a)	52,000		1,474,200
Citrix Systems, Inc.(a)	43,100		1,690,813
Electronic Arts, Inc.(a)	27,500		523,875
Intuit, Inc.(a)	21,000		598,500
Manhattan Associates, Inc.(a)	13,100		264,620
McAfee, Inc.(a)	39,900		1,747,221
Microsoft Corp.	138,700		3,590,943
Oracle Corp.	134,200		2,796,728
Perfect World Co. Ltd - ADR(a)	10,500		505,050
Progress Software Corp.(a)	32,700		740,655
Red Hat, Inc.(a)	36,800		1,017,152
SAP AG - ADR	14,100		689,067
Software AG	3,900		330,454
Sybase, Inc.(a)	38,000		1,478,200
Symantec Corp.(a)	67,500		1,111,725
Synopsys, Inc.(a)	37,600		842,992
Taleo Corp. - Class A(a)	16,000		362,240
VMware, Inc. - Class A(a)	21,400		859,638

			27,473,784

Wireless Telecommunication Services — 1.2%
American Tower Corp. - Class A(a)	22,800		829,920
Bharti Airtel Ltd.	17,600		152,676
Millicom International Cellular SA(a)	9,800		712,852

			1,695,448

Total Long-Term Investments (Cost — $119,581,549) — 97.4%			138,315,901


	Shares/ Beneficial Interest
Short-Term Securities
BlackRock Liquidity Funds, TempFund, Institutional Class,
0.22%(c)(d)	4,712,245		4,712,245
BlackRock Liquidity Series, LLC Money Market Series,
0.29%(c)(d)(e)	1,019,600		1,019,600

Total Short-Term Securities (Cost — $5,731,845) — 4.1%			5,731,845

Total Investments *(Cost — $125,313,394) — 101.5%**			144,047,746
Liabilities in Excess of Other Assets — (1.5)%			(2,091,018	)

Net Assets — 100.0%		$	141,956,728

*	The cost and unrealized appreciation (depreciation) of investments as of September 30, 2009, as computed for federal income tax purposes, were as follows:


Aggregate cost	$	131,333,033

Gross unrealized appreciation	$	17,013,152
Gross unrealized depreciation		(4,298,439	)

Net unrealized appreciation	$	12,714,713

(a)	Non-income producing security.

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

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


Affiliate	Net Activity		Income
BlackRock Liquidity Funds, TempFund, Institutional Class	$	4,712,245	$	14,186
BlackRock Liquidity Series, LLC Money Market Series	$	615,100	$	13,285

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

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

•

Foreign currency exchange contracts as of September 30, 2009 were as follows:


Currency Purchased		Currency Sold		Counterparty	Settlement Date	Unrealized Appreciation (Depreciation)
JPY	33,756,000	USD	374,011	Citibank, N.A.	10/28/09	$	2,109
USD	642,297	EUR	452,000	Barclays Bank, Plc	10/28/09		(19,128	)
USD	407,308	GBP	247,000	Citibank, N.A.	10/28/09		12,616
USD	79,516	HKD	616,000	Barclays Bank, Plc	10/28/09		18
USD	2,656,327	JPY	250,226,000	Citibank, N.A.	10/28/09		(131,767	)
USD	680,375	JPY	62,870,000	Citibank, N.A.	10/28/09		(20,141	)
USD	277,780	JPY	26,013,500	Citibank, N.A.	10/28/09		(12,070	)
USD	255,365	JPY	23,728,000	UBS AG	10/28/09		(9,020	)

Total						$	(177,383	)

•

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		29


Schedule of Investments (concluded)		Science & Technology Opportunities Portfolio

•

Fair Value Measurements – Various inputs are used in determining the fair value of investments, which are as follows:

•

Level 1 – price quotations in active markets/exchanges for identical assets and liabilities

•

The following table summarizes the inputs used as of September 30, 2009 in determining the fair valuation of the Portfolio’s investments:


	Valuation Inputs
	Level 1		Level 2			Level 3	Total
Investments in Securities:
Assets:
Long-Term Investments:
Biotechnology	$	2,344,301		—		—	$	2,344,301
Building Products		—	$	691,533		—		691,533
Communications Equipment		16,427,053		—		—		16,427,053
Computers & Peripherals		22,086,072		1,112,216		—		23,198,288
Diversified Telecommunication Services		3,165,857		464,302		—		3,630,159
Electrical Equipment		212,968		—		—		212,968
Electronic Equipment, Instruments & Components		6,572,906		882,419		—		7,455,325
Health Care Equipment & Supplies		3,322,037		—		—		3,322,037
Household Durables		—		617,557		—		617,557
Internet & Catalog Retail		1,711,840		—		—		1,711,840
Internet Software & Services		11,284,864		—		—		11,284,864
IT Services		4,424,633		—		—		4,424,633
Office Electronics		—		664,400		—		664,400
Pharmaceuticals		976,458		—		—		976,458
Semiconductors & Semiconductor Equipment		28,557,499		3,627,754		—		32,185,253
Software		27,143,330		330,454		—		27,473,784
Wireless Telecommunication Services		1,542,772		152,676		—		1,695,448
Short-Term Securities		4,712,245	$	1,019,600		—		5,731,845
Other Financial Instruments¹:
Assets:		—		14,743		—		14,743
Liabilities:		—		(192,126	)	—		(192,126	)

Total	$	134,484,835	$	9,385,528		—	$	143,870,363

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

See Notes to Financial Statements.


30		ANNUAL REPORT		SEPTEMBER 30, 2009


Schedule of Investments September 30, 2009		U.S. Opportunities Portfolio
		(Percentages shown are based on Net Assets)


	Shares	Value
Common Stocks
Air Freight & Logistics — 0.9%
Atlas Air Worldwide Holdings, Inc.(a)	430,400	$	13,759,888
UTi Worldwide, Inc.	359,300		5,202,664

			18,962,552

Airlines — 0.6%
US Airways Group, Inc. (a)(b)	2,824,700		13,276,090

Auto Components — 1.2%
The Goodyear Tire & Rubber Co.(a)	861,800		14,676,454
Tenneco, Inc.(a)	504,900		6,583,896
TRW Automotive Holdings Corp.(a)	259,600		4,348,300

			25,608,650

Biotechnology — 1.8%
Amylin Pharmaceuticals, Inc.(a)	700,700		9,592,583
Celera Corp.(a)	98,900		616,147
Dendreon Corp.(a)(b)	203,900		5,707,161
Vertex Pharmaceuticals, Inc.(a)	642,500		24,350,750

			40,266,641

Capital Markets — 2.9%
Ameriprise Financial, Inc.	374,500		13,605,585
Greenhill & Co., Inc.(b)	85,600		7,668,048
Invesco Ltd.	482,200		10,974,872
State Street Corp.	142,100		7,474,460
Stifel Financial Corp.(a)	205,200		11,265,480
TD Ameritrade Holding Corp.(a)	674,500		13,233,690

			64,222,135

Chemicals — 2.5%
Airgas, Inc.	428,700		20,736,219
Celanese Corp. - Series A	609,000		15,225,000
Solutia, Inc.(a)	1,603,100		18,563,898

			54,525,117

Commercial Banks — 2.5%
Comerica, Inc.(b)	327,900		9,728,793
Fifth Third Bancorp	1,065,900		10,797,567
First Horizon National Corp.(a)(b)	410,115		5,425,821
Iberiabank Corp.	171,900		7,831,764
Signature Bank(a)	259,400		7,522,600
SunTrust Banks, Inc.(b)	453,800		10,233,190
Texas Capital Bancshares, Inc.(a)	253,200		4,263,888

			55,803,623

Commercial Services & Supplies — 0.4%
The GEO Group, Inc.(a)	463,200		9,342,744

Communications Equipment — 3.1%
ADTRAN, Inc.	242,100		5,943,555
Ciena Corp.(a)(b)	549,400		8,944,232
F5 Networks, Inc.(a)	278,600		11,040,918
Juniper Networks, Inc.(a)(b)	507,500		13,712,650
Starent Networks Corp.(a)(b)	280,100		7,120,142
Tekelec(a)	741,200		12,177,916
Tellabs, Inc.(a)	1,223,000		8,463,160

			67,402,573

Computers & Peripherals — 0.8%
Western Digital Corp.(a)	460,700		16,829,371

Construction & Engineering — 0.9%
Foster Wheeler AG(a)	629,000		20,071,390

Containers & Packaging — 0.7%
Crown Holdings, Inc.(a)	549,700		14,951,840

Diversified Consumer Services — 0.7%
Apollo Group, Inc. - Class A(a)	98,800		7,278,596
ITT Educational Services, Inc.(a)	67,900		7,496,839

			14,775,435

Electric Utilities — 2.8%
Allegheny Energy, Inc.	474,500		12,583,740
DPL, Inc.	796,800		20,796,480
Northeast Utilities	358,300		8,506,042
NV Energy, Inc.	803,000		9,306,770
Portland General Electric Co.	488,000		9,623,360

			60,816,392

Electrical Equipment — 1.5%
A123 Systems, Inc.(a)	155,000		3,304,600
AMETEK, Inc.	480,100		16,760,291
Baldor Electric Co.	450,500		12,316,670

			32,381,561

Electronic Equipment, Instruments & Components — 2.3%
Amphenol Corp. - Class A	305,200		11,499,936
Avnet, Inc.(a)	395,300		10,265,941
Jabil Circuit, Inc.	892,400		11,967,084
Plexus Corp.(a)	364,300		9,595,662
Vishay Intertechnology, Inc.(a)	839,000		6,628,100

			49,956,723

Energy Equipment & Services — 2.7%
Complete Production Services, Inc.(a)	502,000		5,672,600
Helmerich & Payne, Inc.(b)	308,900		12,210,817
Key Energy Services, Inc.(a)	644,500		5,607,150
Nabors Industries Ltd.(a)	833,400		17,418,060
Patterson-UTI Energy, Inc.	1,191,000		17,984,100

			58,892,727

Food & Staples Retailing — 0.5%
SUPERVALU, Inc.	698,000		10,511,880

Food Products — 3.2%
Bunge Ltd.(b)	160,700		10,061,427
ConAgra Foods, Inc.	343,400		7,444,912
Flowers Foods, Inc.	413,900		10,881,431
The J.M. Smucker Co.	163,900		8,688,339
McCormick & Co., Inc.	286,300		9,717,022
Ralcorp Holdings, Inc.(a)	148,300		8,671,101
Smithfield Foods, Inc.(a)(b)	525,000		7,245,000
TreeHouse Foods, Inc.(a)(b)	188,600		6,727,362

			69,436,594

Gas Utilities — 0.4%
AGL Resources, Inc.	240,800		8,493,016

Health Care Equipment & Supplies — 2.1%
C.R. Bard, Inc.	129,700		10,195,717
CareFusion Corp.(a)	250,800		5,467,440
The Cooper Cos., Inc.	376,900		11,205,237
DENTSPLY International, Inc.(b)	179,100		6,186,114
Gen-Probe, Inc.(a)	107,544		4,456,623
Hill-Rom Holdings, Inc.	123,500		2,689,830
Zimmer Holdings, Inc.(a)	105,000		5,612,250

			45,813,211

Health Care Providers & Services — 2.2%
AmerisourceBergen Corp.	199,700		4,469,286
Coventry Health Care, Inc.(a)	353,900		7,063,844
DaVita, Inc.(a)	102,600		5,811,264

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		31


Schedule of Investments (continued)		U.S. Opportunities Portfolio
		(Percentages shown are based on Net Assets)


	Shares	Value
Common Stocks
Health Care Providers & Services (concluded)
Express Scripts, Inc.(a)	247,100	$	19,170,018
Henry Schein, Inc.(a)	210,000		11,531,100

			48,045,512

Health Care Technology — 0.9%
Allscripts-Misys Healthcare Solutions, Inc.(b)	527,100		10,684,317
Cerner Corp.(a)(b)	109,200		8,168,160

			18,852,477

Hotels, Restaurants & Leisure — 0.7%
Las Vegas Sands Corp.(a)(b)	572,200		9,635,848
Life Time Fitness, Inc.(a)(b)	243,600		6,832,980

			16,468,828

Household Durables — 2.1%
Fortune Brands, Inc.(b)	350,600		15,068,788
Jarden Corp.(b)	585,000		16,420,950
Whirlpool Corp.(b)	223,300		15,622,068

			47,111,806

Household Products — 0.5%
Energizer Holdings, Inc.(a)	159,800		10,601,132

Independent Power Producers & Energy Traders — 0.9%
Calpine Corp.(a)	908,000		10,460,160
RRI Energy, Inc.(a)	1,454,400		10,384,416

			20,844,576

Insurance — 5.0%
Allied World Assurance Co. Holdings Ltd.	129,700		6,216,521
AXIS Capital Holdings Ltd.	234,800		7,086,264
Cincinnati Financial Corp.	185,400		4,818,546
The Hanover Insurance Group, Inc.	217,500		8,989,275
The Hartford Financial Services Group, Inc.	239,100		6,336,150
Lincoln National Corp.	420,200		10,887,382
Principal Financial Group, Inc.	472,800		12,949,992
Protective Life Corp.	602,800		12,911,976
Prudential Financial, Inc.	273,600		13,655,376
Reinsurance Group of America, Inc.	211,600		9,437,360
RenaissanceRe Holdings Ltd.	111,200		6,089,312
XL Capital Ltd. - Class A	553,900		9,671,094

			109,049,248

Internet & Catalog Retail — 0.6%
priceline.com, Inc.(a)(b)	82,300		13,646,986

Internet Software & Services — 0.6%
Digital River, Inc.(a)	327,500		13,204,800

IT Services — 0.6%
Global Payments, Inc.	265,600		12,403,520

Life Sciences Tools & Services — 2.0%
Life Technologies Corp.(a)	233,300		10,860,115
Millipore Corp.(a)	98,800		6,948,604
PerkinElmer, Inc.	197,600		3,801,824
QIAGEN NV(a)(b)	778,200		16,560,096
Thermo Fisher Scientific, Inc.(a)	161,200		7,039,604

			45,210,243

Machinery — 3.7%
Cummins, Inc.	294,900		13,214,469
Harsco Corp.	320,400		11,345,364
Ingersoll-Rand Plc	620,100		19,018,467
Parker Hannifin Corp.	237,300		12,301,632
SPX Corp.	247,000		15,133,690
Wabtec Corp.	290,400		10,898,712

			81,912,334

Marine — 0.7%
Kirby Corp.(a)	415,400		15,295,028

Media — 2.0%
CBS Corp. - Class B	1,000,700		12,058,435
Liberty Media Corp. - Entertainment - Series A(a)	531,200		16,525,632
Lions Gate Entertainment Corp.(a)	815,400		5,022,864
Marvel Entertainment, Inc.(a)	233,800		11,601,156

			45,208,087

Metals & Mining — 2.1%
AK Steel Holding Corp.	850,200		16,774,446
Royal Gold, Inc. (b)	281,800		12,850,080
United States Steel Corp.(b)	354,100		15,711,417

			45,335,943

Multiline Retail — 1.7%
Macy’s, Inc.(b)	824,700		15,083,763
Nordstrom, Inc.(b)	289,500		8,841,330
Saks, Inc.(a)(b)	1,923,000		13,114,860

			37,039,953

Multi-Utilities — 1.1%
Alliant Energy Corp.	309,000		8,605,650
CMS Energy Corp.	600,900		8,052,060
Wisconsin Energy Corp.	166,800		7,534,356

			24,192,066

Oil, Gas & Consumable Fuels — 3.9%
Alpha Natural Resources, Inc.(a)	379,800		13,330,980
CONSOL Energy, Inc.	265,800		11,990,238
Forest Oil Corp.(a)	829,900		16,241,143
Mariner Energy, Inc.(a)	653,800		9,270,884
SandRidge Energy, Inc.(a)	1,187,800		15,393,888
Sunoco, Inc.	317,400		9,030,030
Ultra Petroleum Corp.(a)	215,600		10,555,776

			85,812,939

Paper & Forest Products — 0.6%
Domtar Corp.(a)	352,500		12,415,050

Personal Products — 0.4%
Herbalife Ltd.	270,400		8,852,896

Pharmaceuticals — 0.2%
Mylan, Inc.(a)(b)	349,200		5,590,692

Professional Services — 1.5%
Manpower, Inc.	168,300		9,544,293
Monster Worldwide, Inc.(a)(b)	767,700		13,419,396
Watson Wyatt Worldwide, Inc. - Class A	220,135		9,589,081

			32,552,770

Real Estate Investment Trusts (REITs) — 5.0%
AMB Property Corp.	210,000		4,819,500
Boston Properties, Inc.	181,900		11,923,545
Federal Realty Investment Trust	106,800		6,554,316
Health Care REIT, Inc.(b)	129,700		5,398,114
Hospitality Properties Trust	619,800		12,625,326
LaSalle Hotel Properties	667,300		13,119,118
Mack-Cali Realty Corp.	339,900		10,988,967
Rayonier, Inc.	222,300		9,094,293
SL Green Realty Corp.(b)	321,800		14,110,930

See Notes to Financial Statements.


32		ANNUAL REPORT		SEPTEMBER 30, 2009


Schedule of Investments (continued)		U.S. Opportunities Portfolio
		(Percentages shown are based on Net Assets)


	Shares	Value
Common Stocks
Real Estate Investment Trusts (REITs) (concluded)
Taubman Centers, Inc.(b)	368,800	$	13,306,304
Washington Real Estate Investment Trust	309,300		8,907,840

			110,848,253

Real Estate Management & Development — 0.9%
CB Richard Ellis Group, Inc. - Class A(a)	1,000,400		11,744,696
Jones Lang LaSalle, Inc.	189,600		8,981,352

			20,726,048

Road & Rail — 0.9%
Kansas City Southern(a)	467,400		12,381,426
Knight Transportation, Inc.(b)	488,000		8,188,640

			20,570,066

Semiconductors & Semiconductor Equipment — 4.9%
Analog Devices, Inc.	440,300		12,143,474
Avago Technologies Ltd.(a)	332,700		5,679,189
Cavium Networks, Inc.(a)(b)	160,700		3,450,229
International Rectifier Corp.(a)	514,200		10,021,758
Lam Research Corp.(a)	403,200		13,773,312
Microchip Technology, Inc.(b)	221,000		5,856,500
Netlogic Microsystems, Inc.(a)(b)	270,200		12,159,000
Novellus Systems, Inc.(a)	691,800		14,513,964
NVIDIA Corp.(a)	502,200		7,548,066
PMC-Sierra, Inc.(a)	1,130,400		10,806,624
Teradyne, Inc.(a)	1,321,900		12,227,575

			108,179,691

Software — 5.4%
Advent Software, Inc.(a)(b)	166,800		6,713,700
Ariba, Inc.(a)	834,700		9,682,520
Autodesk, Inc.(a)	556,400		13,242,320
BMC Software, Inc.(a)	240,800		9,037,224
Citrix Systems, Inc.(a)	426,200		16,719,826
McAfee, Inc.(a)	225,900		9,892,161
Red Hat, Inc.(a)	208,800		5,771,232
Rovi Corp.(a)	302,700		10,170,720
Solera Holdings, Inc.	329,100		10,238,301
Sybase, Inc.(a)	481,800		18,742,020
TIBCO Software, Inc.(a)	885,000		8,398,650

			118,608,674

Specialty Retail — 4.7%
American Eagle Outfitters, Inc.	483,600		8,153,496
Chico’s FAS, Inc.(a)	888,300		11,547,900
Dick’s Sporting Goods, Inc.(a)	673,300		15,081,920
GameStop Corp. - Class A(a)	418,500		11,077,695
Guess?, Inc.	370,600		13,727,024
J. Crew Group, Inc.(a)(b)	265,600		9,513,792
Penske Auto Group, Inc.(b)	479,400		9,194,892
Ross Stores, Inc.	277,900		13,275,283
Urban Outfitters, Inc.(a)	381,600		11,512,872

			103,084,874

Textiles, Apparel & Luxury Goods — 1.4%
Deckers Outdoor Corp. (a)	160,700		13,635,395
VF Corp.	234,800		17,006,564

			30,641,959

Thrifts & Mortgage Finance — 1.0%
First Niagara Financial Group, Inc.	488,000		6,017,040
Hudson City Bancorp, Inc.(b)	611,500		8,041,225
People’s United Financial, Inc.	586,800		9,130,608

			23,188,873

Tobacco — 0.6%
Lorillard, Inc.	172,900		12,846,470

Wireless Telecommunication Services — 1.8%
American Tower Corp. - Class A(a)	362,400		13,191,360
NII Holdings, Inc.(a)	290,800		8,718,184
NTELOS Holdings Corp.	364,300		6,433,538
SBA Communications Corp. - Class A(a)(b)	407,600		11,017,428

			39,360,510

Total Long-Term Investments (Cost — $1,717,170,490) — 95.1%			2,090,042,569


	Shares/ Beneficial Interest
Short-Term Securities
BlackRock Liquidity Funds, TempFund, Institutional Class,
0.22%(c)(d)	78,711,607		78,711,607
BlackRock Liquidity Series, LLC Money Market Series,
0.29%(c)(d)(e)	300,174,546		300,174,546

Total Short-Term Securities (Cost — $378,886,153) — 17.3%			378,886,153

*Total Investments (Cost — $2,096,056,643) — 112.4%**			2,468,928,722
Liabilities in Excess of Other Assets — (12.4)%			(271,551,596	)

Net Assets — 100.0%		$	2,197,377,126

*	The cost and unrealized appreciation (depreciation) of investments as of September 30, 2009, as computed for federal income tax purposes, were as follows:


Aggregate cost	$	2,122,421,226

Gross unrealized appreciation	$	356,164,453
Gross unrealized depreciation		(9,656,957	)

Net unrealized appreciation	$	346,507,496

(a)	Non-income producing security.

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

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


Affiliate	Net Activity		Income
BlackRock Liquidity Funds, TempFund, Institutional Class	$	48,711,607	$	891,987
BlackRock Liquidity Series, LLC Money Market Series	$	220,813,046	$	927,753

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

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

•

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		33


Schedule of Investments (concluded)		U.S. Opportunities Portfolio

•

Fair Value Measurements – Various inputs are used in determining the fair value of investments, which are as follows:

•

Level 1 – price quotations in active markets/exchanges for identical assets and liabilities

•

The following table summarizes the inputs used as of September 30, 2009 in determining the fair valuation of the Portfolio’s investments:


Valuation Inputs	Investments in Securities
	Assets
Level 1:
Long-Term Investments¹	$	2,090,042,569
Short-Term Securities		78,711,607

Total Level 1		2,168,754,176

Level 2 - Short-Term Securities		300,174,546
Level 3		—

Total	$	2,468,928,722

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

See Notes to Financial Statements.


34		ANNUAL REPORT		SEPTEMBER 30, 2009

Statements of Assets and Liabilities


September 30, 2009	Global Opportunities Portfolio			Health Sciences Opportunities Portfolio			International Opportunities Portfolio			Science & Technology Opportunities Portfolio			U.S. Opportunities Portfolio
Assets
Investments at value - unaffiliated^1,2	$	78,774,160		$	954,164,817		$	1,539,933,912		$	138,315,901		$	2,090,042,569
Investments at value - affiliated³		2,555,283			126,195,667			75,203,361			5,731,845			378,886,153
Foreign currency at value⁴		654,247			78,669			14,804,861			561,647			—
Unrealized appreciation on foreign currency exchange contracts		398,944			971,206			9,457,537			14,743			—
Investments sold receivable		1,899,978			55,780,331			20,143,047			1,732,093			49,527,987
Capital shares sold receivable		386,842			2,714,172			11,280,824			156,043			11,270,334
Dividends and reclaims receivable		155,547			1,533,977			2,814,351			49,640			1,081,076
Dividends receivable - affiliated		413			5,312			6,130			720			16,436
Receivable from advisor		—			—			—			13,519			210,667
Securities lending income receivable - affiliated		—			23,265			12,158			3,376			47,991
Prepaid expenses		12,149			73,904			108,311			27,588			62,768

Total assets		84,837,563			1,141,541,320			1,673,764,492			146,607,115			2,531,145,981

Liabilities
Collateral at value - securities loaned		—			113,924,650			28,573,500			1,019,600			300,174,546
Investments purchased payable		1,661,628			50,105,062			47,030,430			2,920,005			27,068,728
Unrealized depreciation on foreign currency exchange contracts		120,227			2,575,035			4,511,512			192,126			—
Other affiliates payable		84,631			539,000			806,414			154,678			925,197
Capital shares redeemed payable		60,934			2,104,495			9,921,309			145,901			3,381,707
Investment advisory fees payable		59,963			641,271			1,252,710			108,111			1,593,380
Service and distribution fees payable		25,592			355,417			314,128			42,433			412,157
Officer’s and Trustees’ fees payable		4,634			7,706			8,038			4,776			8,290
Other accrued expenses payable		41,221			122,775			209,438			62,757			204,850

Total liabilities		2,058,830			170,375,411			92,627,479			4,650,387			333,768,855

Net Assets	$	82,778,733		$	971,165,909		$	1,581,137,013		$	141,956,728		$	2,197,377,126

Net Assets Consist of
Paid-in capital	$	101,345,611		$	902,960,265		$	1,650,988,760		$	215,424,599		$	2,110,058,063
Undistributed (accumulated) net investment income (loss)		519,706			940,346			13,931,969			(313,316	)		2,687,424
Accumulated net realized loss		(28,358,386	)		(74,953,346	)		(326,617,133	)		(91,724,567	)		(288,240,440	)
Net unrealized appreciation/depreciation		9,271,802			142,218,644			242,833,417			18,570,012			372,872,079

Net Assets	$	82,778,733		$	971,165,909		$	1,581,137,013		$	141,956,728		$	2,197,377,126

¹Investments at cost - unaffiliated	$	69,799,911		$	810,341,880		$	1,302,428,070		$	119,581,549		$	1,717,170,490
²Securities loaned at value		—		$	111,293,482		$	27,522,840		$	1,006,984		$	291,005,827
³Investments at cost - affiliated	$	2,555,283		$	126,195,667		$	75,203,361		$	5,731,845		$	378,886,153
⁴Foreign currency at cost	$	636,489		$	79,094		$	14,397,782		$	549,029			—

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		35

Statements of Assets and Liabilities (concluded)


September 30, 2009	Global Opportunities Portfolio		Health Sciences Opportunities Portfolio		International Opportunities Portfolio		Science & Technology Opportunities Portfolio		U.S. Opportunities Portfolio
Net Asset Value
Institutional
Net assets	$	16,970,707	$	171,607,191	$	673,419,895	$	27,012,514	$	890,264,088
Shares outstanding¹		1,674,670		6,527,219		21,474,793		3,467,608		27,646,215
Par value per share	$	0.001	$	0.001	$	0.001	$	0.001	$	0.001
Net asset value	$	10.13	$	26.29	$	31.36	$	7.79	$	32.20
Service
Net assets		—	$	8,109,774	$	83,093,456	$	192,967	$	191,317,636
Shares outstanding¹		—		315,116		2,745,753		25,524		6,184,843
Par value per share		—	$	0.001	$	0.001	$	0.001	$	0.001
Net asset value		—	$	25.74	$	30.26	$	7.56	$	30.93
Investor A
Net assets	$	45,109,796	$	478,273,430	$	604,283,372	$	83,734,066	$	855,127,004
Shares outstanding¹		4,477,088		18,614,877		20,132,171		11,196,914		27,934,825
Par value per share	$	0.001	$	0.001	$	0.001	$	0.001	$	0.001
Net asset value	$	10.08	$	25.69	$	30.02	$	7.48	$	30.61
Investor B
Net assets	$	4,350,674	$	57,835,398	$	33,094,097	$	6,538,211	$	21,849,166
Shares outstanding¹		438,319		2,384,726		1,189,176		942,286		775,797
Par value per share	$	0.001	$	0.001	$	0.001	$	0.001	$	0.001
Net asset value	$	9.93	$	24.25	$	27.83	$	6.94	$	28.16
Investor C
Net assets	$	16,347,556	$	255,340,116	$	187,246,193	$	22,575,426	$	238,819,232
Shares outstanding¹		1,649,225		10,540,824		6,749,826		3,255,154		8,486,112
Par value per share	$	0.001	$	0.001	$	0.001	$	0.001	$	0.001
Net asset value	$	9.91	$	24.22	$	27.74	$	6.94	$	28.14
Class R
Net assets		—		—		—	$	1,903,544		—
Shares outstanding¹		—		—		—		246,576		—
Par value per share		—		—		—	$	0.001		—
Net asset value		—		—		—	$	7.72		—

1	Unlimited number of shares authorized.

See Notes to Financial Statements.


36		ANNUAL REPORT		SEPTEMBER 30, 2009

Statements of Operations


Year Ended September 30, 2009	Global Opportunities Portfolio			Health Sciences Opportunities Portfolio			International Opportunities Portfolio			Science & Technology Opportunities Portfolio			U.S. Opportunities Portfolio
Investment Income
Dividends and reclaims	$	1,448,615		$	12,275,481		$	31,540,606		$	1,252,619		$	16,640,826
Foreign taxes withheld		(89,220	)		(648,490	)		(2,601,346	)		(52,605	)		(1,311	)
Interest and dividends - affiliated		6,474			353,384			565,367			14,680			893,364
Interest		1,616			19,915			53,036			4,144			58,780
Securities lending - affiliated		—			214,582			49,335			13,285			927,753

Total income		1,367,485			12,214,872			29,606,998			1,232,123			18,519,412

Expenses
Investment advisory		577,150			6,581,202			10,445,751			1,016,746			14,370,178
Service and distribution - class specific		242,752			4,037,889			2,853,996			407,113			3,353,285
Transfer agent - class specific		117,571			1,682,210			2,740,870			829,960			2,932,769
Custodian		68,112			78,572			413,400			24,188			86,480
Professional		59,953			54,581			86,258			73,252			71,971
Administration		48,096			620,228			720,722			84,729			874,286
Registration		43,736			84,017			128,290			69,380			165,935
Printing		18,038			237,151			367,409			102,627			450,077
Officer and Trustees		16,213			25,965			27,968			16,669			32,606
Administration - class specific		16,030			219,633			259,395			28,255			314,091
Miscellaneous		32,163			56,156			88,177			19,521			39,354
Recoupment of past waived fees - class specific		3,514			51,232			14,518			8,779			54,900

Total expenses		1,243,328			13,728,836			18,146,754			2,681,219			22,745,932
Less fees waived by advisor		(20,727	)		(27,548	)		(46,671	)		(5,106	)		(2,681,258	)
Less administration fees waived - class specific		(13,726	)		—			(40,725	)		(27,653	)		(144,273	)
Less transfer agent fees waived - class specific		(8,162	)		—			(5,222	)		(16,923	)		(24,856	)
Less transfer agent fees reimbursed - class specific		(58,670	)		—			(76,474	)		(507,193	)		(794,697	)
Less fees paid indirectly		(320	)		(3,763	)		(3,531	)		(819	)		(4,776	)

Total expenses after fees waived, reimbursed and paid indirectly		1,141,723			13,697,525			17,974,131			2,123,525			19,096,072

Net investment income (loss)		225,762			(1,482,653	)		11,632,867			(891,402	)		(576,660	)

Realized and Unrealized Gain (Loss)
Net realized gain (loss) from:
Investments		(24,100,405	)		(77,967,235	)		(281,190,713	)		(31,598,560	)		(194,609,446	)
Litigation proceeds		—			—			—			3,505,404			—
Options written		4,200			4,915,277			—			—			367,922
Financial futures contracts		(1,441,339	)		—			(34,974,536	)		—			(22,692,734	)
Foreign currency transactions		(880,384	)		3,975,454			(16,248,870	)		(480,245	)		—

		(26,417,928	)		(69,076,504	)		(332,414,119	)		(28,573,401	)		(216,934,258	)

Net change in unrealized appreciation/depreciation on:
Investments		18,756,169			58,173,483			393,067,236			37,121,657			444,057,461
Financial futures contracts		318,710			—			3,128,731			—			2,552,732
Foreign currency transactions		1,720,167			(6,689,020	)		26,050,004			(239,793	)		—

		20,795,046			51,484,463			422,245,971			36,881,864			446,610,193

Total realized and unrealized gain (loss)		(5,622,882	)		(17,592,041	)		89,831,852			8,308,463			229,675,935

Net Increase (Decrease) in Net Assets Resulting from Operations	$	(5,397,120	)	$	(19,074,694	)	$	101,464,719		$	7,417,061		$	229,099,275

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		37

Statements of Changes in Net Assets


	Global Opportunities Portfolio						Health Sciences Opportunities Portfolio
	Year Ended September 30,						Year Ended September 30,
Increase (Decrease) in Net Assets:	2009			2008			2009			2008
Operations
Net investment income (loss)	$	225,762		$	462,173		$	(1,482,653	)	$	(3,279,561	)
Net realized gain (loss)		(26,417,928	)		(361,669	)		(69,076,504	)		94,473,824
Net change in unrealized appreciation/depreciation		20,795,046			(27,365,968	)		51,484,463			(122,613,081	)

Net increase (decrease) in net assets resulting from operations		(5,397,120	)		(27,265,464	)		(19,074,694	)		(31,418,818	)

Dividends and Distributions to Shareholders From
Net investment income:
Institutional		(13,294	)		(516,368	)		—			—
Service		—			—			—			—
Investor A		—			(438,794	)		—			—
Investor B		—			(18,976	)		—			—
Investor C		—			(63,696	)		—			—
Net realized gain:
Institutional		—			(1,500,686	)		(14,779,840	)		(6,907,979	)
Service		—			—			(476,833	)		(294,520	)
Investor A		—			(1,612,774	)		(41,129,678	)		(26,251,005	)
Investor B		—			(310,579	)		(5,993,765	)		(2,732,260	)
Investor C		—			(756,979	)		(22,988,455	)		(11,313,900	)

Decrease in net assets resulting from dividends and distributions to shareholders		(13,294	)		(5,218,852	)		(85,368,571	)		(47,499,664	)

Capital Share Transactions
Net increase (decrease) in net assets derived from capital share transactions		(9,707,472	)		28,333,404			(66,392,638	)		(116,325,620	)

Redemption Fees
Redemption fees		3,529			8,217			77,958			38,516

Net Assets
Total increase (decrease) in net assets		(15,114,357	)		(4,142,695	)		(170,757,945	)		(195,205,586	)
Beginning of year		97,893,090			102,035,785			1,141,923,854			1,337,129,440

End of year	$	82,778,733		$	97,893,090		$	971,165,909		$	1,141,923,854

Undistributed (accumulated) net investment income (loss)	$	519,706		$	1,176,292		$	940,346		$	(1,551,010	)

See Notes to Financial Statements.


38		ANNUAL REPORT		SEPTEMBER 30, 2009


International Opportunities Portfolio					Science & Technology Opportunities Portfolio						U.S. Opportunities Portfolio
Year Ended September 30,					Year Ended September 30,						Year Ended September 30,
2009		2008			2009			2008			2009			2008

$	11,632,867	$	11,548,174		$	(891,402	)	$	(524,742	)	$	(576,660	)	$	(1,731,225	)
	(332,414,119)		38,698,096			(28,573,401	)		(677,640	)		(216,934,258	)		(11,717,699	)
	422,245,971		(598,796,282	)		36,881,864			(18,195,547	)		446,610,193			(147,024,317	)

	101,464,719		(548,550,012	)		7,417,061			(19,397,929	)		229,099,275			(160,473,241	)



	(1,523,480)		(11,844,156	)		—			—			(60,616	)		—
	—		(3,649,556	)		—			—			—			—
	(153,036)		(11,746,350	)		—			—			—			—
	—		(1,437,329	)		—			—			—			—
	—		(3,891,839	)		—			—			—			—

	—		(70,893,490	)		—			—			—			—
	—		(25,020,162	)		—			—			—			—
	—		(81,040,060	)		—			—			—			—
	—		(15,320,494	)		—			—			—			—
	—		(39,325,420	)		—			—			—			—

	(1,676,516)		(264,168,856	)		—			—			(60,616	)		—


	246,733,614		468,735,342			(15,961,598	)		127,894,166			897,895,586			675,253,305


	121,554		105,456			11,427			4,608			318,611			64,821


	346,643,371		(343,878,070	)		(8,533,110	)		108,500,845			1,127,252,856			514,844,885
	1,234,493,642		1,578,371,712			150,489,838			41,988,993			1,070,124,270			555,279,385

	$1,581,137,013	$	1,234,493,642		$	141,956,728		$	150,489,838		$	2,197,377,126		$	1,070,124,270

	$13,931,969	$	20,287,873		$	(313,316	)	$	(147,701	)	$	2,687,424		$	2,847,147

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		39


Financial Highlights		Global Opportunities Portfolio


	Institutional
	Year Ended September 30,									Period January 31, 2006¹to September 30, 2006
	2009			2008			2007			Period January 31, 2006¹to September 30, 2006
Per Share Operating Performance
Net asset value, beginning of period	$	9.96		$	13.31		$	10.10		$	10.00

Net investment income²		0.06			0.09			0.09			0.08
Net realized and unrealized gain (loss)		0.12			(2.77	)		3.21			0.01

Net increase (decrease) from investment operations		0.18			(2.68	)		3.30			0.09

Dividends and distributions from:
Net investment income		(0.01	)		(0.17	)		(0.09	)		—
Net realized gain		—			(0.50	)		—			—

Total dividends and distributions		(0.01	)		(0.67	)		(0.09	)		—

Redemption fees added to paid-in capital		0.00	³		0.00	³		0.00	³		0.01

Net asset value, end of period	$	10.13		$	9.96		$	13.31		$	10.10

Total Investment Return⁴
Based on net asset value		1.78	%⁵		(21.16	)%⁵		32.81	%⁵		1.00	%^6,7

Ratios to Average Net Assets
Total expenses		1.50	%		1.33	%		1.32	%		2.25	%⁸

Total expenses excluding recoupment of past waived fees		1.49	%		1.33	%		1.32	%		2.25	%⁸

Total expenses after fees waived, reimbursed and paid indirectly		1.36	%		1.32	%		1.29	%		1.35	%⁸

Net investment income		0.70	%		0.77	%		0.78	%		1.13	%⁸

Supplemental Data
Net assets, end of period (000)	$	16,971		$	36,625		$	35,679		$	9,099

Portfolio turnover		190	%		181	%		107	%		110	%


	Investor A												Investor B
	Year Ended September 30,									Period January 31, 2006¹to September 30, 2006			Year Ended September 30,									Period January 31, 2006¹to September 30, 2006
	2009			2008			2007			Period January 31, 2006¹to September 30, 2006			2009			2008			2007			Period January 31, 2006¹to September 30, 2006
Per Share Operating Performance
Net asset value, beginning of period	$	9.92		$	13.27		$	10.08		$	10.00		$	9.83		$	13.16		$	10.03		$	10.00

Net investment income (loss)²		0.04			0.06			0.04			0.05			(0.02	)		(0.04	)		(0.04	)		0.00	³
Net realized and unrealized gain (loss)		0.12			(2.77	)		3.22			0.02			0.12			(2.76	)		3.22			0.02

Net increase (decrease) from investment operations		0.16			(2.71	)		3.26			0.07			0.10			(2.80	)		3.18			0.02

Dividends and distributions from:
Net investment income		—			(0.14	)		(0.07	)		—			—			(0.03	)		(0.05	)		—
Net realized gain		—			(0.50	)		—			—			—			(0.50	)		—			—

Total dividends and distributions		—			(0.64	)		(0.07	)		—			—			(0.53	)		(0.05	)		—

Redemption fees added to paid-in capital		0.00	³		0.00	³		0.00	³		0.01			0.00	³		0.00	³		0.00	³		0.01

Net asset value, end of period	$	10.08		$	9.92		$	13.27		$	10.08		$	9.93		$	9.83		$	13.16		$	10.03

Total Investment Return⁴
Based on net asset value		1.61	%⁵		(21.44	)%⁵		32.51	%⁵		0.80	%^6,7		1.02	%⁵		(22.13	)%⁵		31.79	%⁵		0.30	%^6,7

Ratios to Average Net Assets
Total expenses		1.81	%		1.60	%		1.68	%		2.84	%⁸		2.65	%		2.37	%		3.06	%		4.95	%⁸

Total expenses excluding recoupment of past waived fees		1.80	%		1.60	%		1.68	%		2.84	%⁸		2.63	%		2.37	%		3.06	%		4.95	%⁸

Total expenses after fees waived, reimbursed and paid indirectly		1.66	%		1.60	%		1.56	%		1.65	%⁸		2.42	%		2.36	%		2.33	%		2.40	%⁸

Net investment income (loss)		0.49	%		0.49	%		0.36	%		0.70	%⁸		(0.25	)%		(0.30	)%		(0.39	)%		(0.05	)%⁸

Supplemental Data
Net assets, end of period (000)	$	45,110		$	37,529		$	40,467		$	23,097		$	4,351		$	5,665		$	7,673		$	4,907

Portfolio turnover		190	%		181	%		107	%		110	%		190	%		181	%		107	%		110	%

See Notes to Financial Statements.


40		ANNUAL REPORT		SEPTEMBER 30, 2009


Financial Highlights (continued)		Global Opportunities Portfolio


	Investor C
	Year Ended September 30,									Period January 31, 2006¹to September 30, 2006
	2009			2008			2007			Period January 31, 2006¹to September 30, 2006
Per Share Operating Performance
Net asset value, beginning of period	$	9.82		$	13.16		$	10.03		$	10.00

Net investment income (loss)²		(0.02	)		(0.03	)		(0.05	)		0.00	³
Net realized and unrealized gain (loss)		0.11			(2.77	)		3.23			0.02

Net increase (decrease) from investment operations		0.09			(2.80	)		3.18			0.02

Dividends and distributions from:
Net investment income		—			(0.04	)		(0.05	)		—
Net realized gain		—			(0.50	)		—			—

Total dividends and distributions		—			(0.54	)		(0.05	)		—

Redemption fees added to paid-in capital		0.00	³		0.00	³		0.00	³		0.01

Net asset value, end of period	$	9.91		$	9.82		$	13.16		$	10.03

Total Investment Return⁴
Based on net asset value		0.92	%⁵		(22.14	)%⁵		31.76	%⁵		0.30	%^6,7

Ratios to Average Net Assets
Total expenses		2.62	%		2.38	%		2.42	%		3.38	%⁸

Total expenses after fees waived, reimbursed and paid indirectly		2.42	%		2.37	%		2.35	%		2.40	%⁸

Net investment loss		(0.26	)%		(0.26	)%		(0.40	)%		(0.01	)%⁸

Supplemental Data
Net assets, end of period (000)	$	16,348		$	18,074		$	18,217		$	10,012

Portfolio turnover		190	%		181	%		107	%		110	%

1	Commencement of operations.

2	Based on average shares outstanding.

3	Less than $0.01 per share.

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

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

6	Redemption fee of 2.00% received by the Portfolio is reflected in total return calculations. The impact to the return from redemption fees received during the period was an increase of 0.10%.

7	Aggregate total investment return.

8	Annualized.

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		41


Financial Highlights (continued)		Health Sciences Opportunities Portfolio


	Institutional
	Year Ended September 30,												Period March 1, 2005 to September 30, 2005			Year Ended February 28,
	2009			2008			2007			2006			Period March 1, 2005 to September 30, 2005			2005
Per Share Operating Performance
Net asset value, beginning of period	$	28.77		$	30.41		$	26.18		$	24.45		$	20.50		$	21.15

Net investment income (loss)		0.08	¹		0.08	¹		0.06	¹		0.04	¹		(0.06	)¹		(0.15	)
Net realized and unrealized gain (loss)		(0.14	)		(0.49	)		4.52			2.30			4.02			0.57

Net increase (decrease) from investment operations		(0.06	)		(0.41	)		4.58			2.34			3.96			0.42

Distributions from net realized gain		(2.42	)		(1.23	)		(0.35	)		(0.62	)		(0.01	)		(1.07	)

Redemption fees added to paid-in capital		0.00	²		0.00	²		0.00	²		0.01			0.00	²		—

Net asset value, end of period	$	26.29		$	28.77		$	30.41		$	26.18		$	24.45		$	20.50

Total Investment Return³
Based on net asset value		1.91	%⁴		(1.64	)%⁴		17.68	%⁴		9.77	%⁵		19.32	%^4,6		1.84	%

Ratios to Average Net Assets
Total expenses		1.03	%		1.00	%		1.02	%		1.01	%		1.37	%⁷		1.37	%

Total expenses after fees waived, reimbursed and paid indirectly		1.03	%		1.00	%		1.02	%		1.01	%		1.25	%⁷		1.25	%

Net investment income (loss)		0.36	%		0.28	%		0.21	%		0.17	%		(0.47	)%⁷		(0.59	)%

Supplemental Data
Net assets, end of period (000)	$	171,607		$	185,933		$	172,902		$	112,563		$	31,229		$	4,262

Portfolio turnover		153	%		91	%		98	%		157	%		77	%		173	%


	Service
	Year Ended September 30,												Period March 1, 2005 to September 30, 2005			Period January 28, 2005⁸ to February 28, 2005
	2009			2008			2007			2006			Period March 1, 2005 to September 30, 2005
Per Share Operating Performance
Net asset value, beginning of period	$	28.20		$	29.85		$	25.78		$	24.15		$	20.24		$	20.30

Net investment income (loss)		0.01	¹		(0.02	)¹		(0.02	)¹		(0.03	)¹		(0.12	)¹		(0.01	)
Net realized and unrealized gain (loss)		(0.14	)		(0.49	)		4.44			2.27			4.04			(0.05	)

Net increase (decrease) from investment operations		(0.13	)		(0.51	)		4.42			2.24			3.92			(0.06	)

Distributions from net realized gain		(2.33	)		(1.14	)		(0.35	)		(0.62	)		(0.01	)		—

Redemption fees added to paid-in capital		0.00	²		0.00	²		0.00	²		0.01			0.00	²		—

Net asset value, end of period	$	25.74		$	28.20		$	29.85		$	25.78		$	24.15		$	20.24

Total Investment Return³
Based on net asset value		1.59	%⁴		(1.98	)%⁴		17.33	%⁴		9.47	%⁵		19.37	%^4,6		(0.30	)%⁶

Ratios to Average Net Assets
Total expenses		1.37	%		1.35	%		1.32	%		1.34	%		1.64	%⁷		0.82	%⁷

Total expenses excluding recoupment of past waived fees		1.35	%		1.35	%		1.32	%		1.34	%		1.64	%⁷		0.82	%⁷

Total expenses after fees waived, reimbursed and paid indirectly		1.36	%		1.35	%		1.30	%		1.34	%		1.55	%⁷		0.82	%⁷

Net investment income (loss)		0.03	%		(0.06	)%		(0.08	)%		(0.12	)%		(0.90	)%⁷		(0.70	)%⁷

Supplemental Data
Net assets, end of period (000)	$	8,110		$	5,764		$	7,806		$	4,347		$	66		$	—	⁹

Portfolio turnover		153	%		91	%		98	%		157	%		77	%		173	%

See Notes to Financial Statements.


42		ANNUAL REPORT		SEPTEMBER 30, 2009


Financial Highlights (continued)		Health Sciences Opportunities Portfolio


	Investor A
	Year Ended September 30,												Period March 1, 2005 to September 30, 2005			Year Ended February 28,
	2009			2008			2007			2006			Period March 1, 2005 to September 30, 2005			2005
Per Share Operating Performance
Net asset value, beginning of period	$	28.14		$	29.77		$	25.72		$	24.11		$	20.24		$	20.96

Net investment income (loss)		0.01	¹		(0.02	)¹		(0.03	)¹		(0.05	)¹		(0.09	)¹		(0.17	)
Net realized and unrealized gain (loss)		(0.15	)		(0.49	)		4.43			2.27			3.97			0.52

Net increase (decrease) from investment operations		(0.14	)		(0.51	)		4.40			2.22			3.88			0.35

Distributions from net realized gain		(2.31	)		(1.12	)		(0.35	)		(0.62	)		(0.01	)		(1.07	)

Redemption fees added to paid-in capital		0.00	²		0.00	²		0.00	²		0.01			0.00	²		—

Net asset value, end of period	$	25.69		$	28.14		$	29.77		$	25.72		$	24.11		$	20.24

Total Investment Return³
Based on net asset value		1.57	%⁴		(1.97	)%⁴		17.29	%⁴		9.40	%⁵		19.17	%^4,6		1.52	%

Ratios to Average Net Assets
Total expenses		1.37	%		1.35	%		1.35	%		1.45	%		1.69	%⁷		1.73	%

Total expenses excluding recoupment of past waived fees		1.37	%		1.35	%		1.35	%		1.45	%		1.69	%⁷		1.73	%

Total expenses after fees waived, reimbursed and paid indirectly		1.37	%		1.35	%		1.35	%		1.34	%		1.55	%⁷		1.58	%

Net investment income (loss)		0.02	%		(0.06	)%		(0.13	)%		(0.19	)%		(0.68	)%⁷		(0.90	)%

Supplemental Data
Net assets, end of period (000)	$	478,273		$	564,943		$	697,451		$	434,360		$	186,545		$	76,550

Portfolio turnover		153	%		91	%		98	%		157	%		77	%		173	%

1	Based on average shares outstanding.

2	Less than $0.01 per share.

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

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

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

6	Aggregate total investment return.

7	Annualized.

8	Commencement of operations.

9	Net assets end of period are less than $500.

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		43


Financial Highlights (continued)		Health Sciences Opportunities Portfolio


	Investor B
	Year Ended September 30,												Period March 1, 2005 to September 30, 2005			Year Ended February 28,
	2009			2008			2007			2006			Period March 1, 2005 to September 30, 2005			2005
Per Share Operating Performance
Net asset value, beginning of period	$	26.73		$	28.28		$	24.65		$	23.31		$	19.65		$	20.52

Net investment loss		(0.17	)¹		(0.23	)¹		(0.25	)¹		(0.24	)¹		(0.17	)¹		(0.28	)
Net realized and unrealized gain (loss)		(0.16	)		(0.49	)		4.23			2.19			3.84			0.48

Net increase (decrease) from investment operations		(0.33	)		(0.72	)		3.98			1.95			3.67			0.20

Distributions from net realized gain		(2.15	)		(0.83	)		(0.35	)		(0.62	)		(0.01	)		(1.07	)

Redemption fees added to paid-in capital		0.00	²		0.00	²		0.00	²		0.01			0.00	²		—

Net asset value, end of period	$	24.25		$	26.73		$	28.28		$	24.65		$	23.31		$	19.65

Total Investment Return³
Based on net asset value		0.73	%⁴		(2.78	)%⁴		16.33	%⁴		8.54	%⁵		18.68	%^4,6		0.80	%

Ratios to Average Net Assets
Total expenses		2.20	%		2.14	%		2.22	%		2.16	%		2.33	%⁷		2.39	%

Total expenses excluding recoupment of past waived fees		2.17	%		2.14	%		2.22	%		2.16	%		2.33	%⁷		2.39	%

Total expenses after fees waived, reimbursed and paid indirectly		2.20	%		2.14	%		2.19	%		2.16	%		2.25	%⁷		2.25	%

Net investment loss		(0.80	)%		(0.85	)%		(0.96	)%		(1.02	)%		(1.35	)%⁷		(1.58	)%

Supplemental Data
Net assets, end of period (000)	$	57,835		$	80,269		$	95,231		$	78,902		$	45,073		$	29,495

Portfolio turnover		153	%		91	%		98	%		157	%		77	%		173	%

See Notes to Financial Statements.


44		ANNUAL REPORT		SEPTEMBER 30, 2009


Financial Highlights (continued)		Health Sciences Opportunities Portfolio


	Investor C
	Year Ended September 30,												Period March 1, 2005 to September 30, 2005			Year Ended February 28,
	2009			2008			2007			2006			Period March 1, 2005 to September 30, 2005			2005
Per Share Operating Performance
Net asset value, beginning of period	$	26.70		$	28.27		$	24.62		$	23.26		$	19.61		$	20.47

Net investment loss		(0.15	)¹		(0.21	)¹		(0.23	)¹		(0.21	)¹		(0.18	)¹		(0.22	)
Net realized and unrealized gain (loss)		(0.16	)		(0.47	)		4.23			2.18			3.84			0.43

Net increase (decrease) from investment operations		(0.31	)		(0.68	)		4.00			1.97			3.66			0.21

Distributions from net realized gain		(2.17	)		(0.89	)		(0.35	)		(0.62	)		(0.01	)		(1.07	)

Redemption fees added to paid-in capital		0.00	²		0.00	²		0.00	²		0.01			0.00	²		—

Net asset value, end of period	$	24.22		$	26.70		$	28.27		$	24.62		$	23.26		$	19.61

Total Investment Return³
Based on net asset value		0.81	%⁴		(2.66	)%⁴		16.43	%⁴		8.65	%⁵		18.67	%^4,6		0.86	%

Ratios to Average Net Assets
Total expenses		2.09	%		2.05	%		2.12	%		2.04	%		2.32	%⁷		2.41	%

Total expenses excluding recoupment of past waived fees		2.09	%		2.05	%		2.12	%		2.04	%		2.32	%⁷		2.41	%

Total expenses after fees waived, reimbursed and paid indirectly		2.09	%		2.05	%		2.11	%		2.04	%		2.25	%⁷		2.25	%

Net investment loss		(0.70	)%		(0.76	)%		(0.89	)%		(0.87	)%		(1.41	)%⁷		(1.56	)%

Supplemental Data
Net assets, end of period (000)	$	255,340		$	305,015		$	363,739		$	254,724		$	84,431		$	25,248

Portfolio turnover		153	%		91	%		98	%		157	%		77	%		173	%

1	Based on average shares outstanding.

2	Less than $0.01 per share.

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

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

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

6	Aggregate total investment return.

7	Annualized.

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		45


Financial Highlights (continued)		International Opportunities Portfolio


	Institutional															Service
	Year Ended September 30,															Year Ended September 30,
	2009			2008			2007			2006			2005			2009			2008			2007			2006			2005
Per Share Operating Performance
Net asset value, beginning of year	$	29.44		$	51.08		$	42.16		$	34.34		$	24.44		$	28.36		$	49.52		$	41.06		$	33.55		$	23.93

Net investment income¹		0.34			0.47			0.48			0.37			0.53			0.27			0.28			0.32			0.29			0.44
Net realized and unrealized gain (loss)		1.68			(13.66	)		14.98			8.57			9.68			1.63			(13.14	)		14.58			8.32			9.45

Net increase (decrease) from investment operations		2.02			(13.19	)		15.46			8.94			10.21			1.90			(12.86	)		14.90			8.61			9.89

Dividends and distributions from:
Net investment income		(0.10	)		(1.21	)		(0.71	)		(0.37	)		(0.32	)		—			(1.06	)		(0.61	)		(0.35	)		(0.28	)
Net realized gain		—			(7.24	)		(5.83	)		(0.76	)		—			—			(7.24	)		(5.83	)		(0.76	)		—

Total dividends and distributions		(0.10	)		(8.45	)		(6.54	)		(1.13	)		(0.32	)		—			(8.30	)		(6.44	)		(1.11	)		(0.28	)

Redemption fees added to paid-in capital		0.00	²		0.00	²		0.00	²		0.01			0.01			0.00	²		0.00	²		0.00	²		0.01			0.01

Net asset value, end of year	$	31.36		$	29.44		$	51.08		$	42.16		$	34.34		$	30.26		$	28.36		$	49.52		$	41.06		$	33.55

Total Investment Return³
Based on net asset value		6.99	%⁴		(30.87	)%^4,5		40.42	%⁴		26.64	%⁶		42.13	%⁷		6.70	%⁴		(31.10	)%^4,5		40.00	%⁴		26.30	%⁶		41.65	%⁷

Ratios to Average Net Assets
Total expenses		1.45	%		1.25	%		1.25	%		1.33	%		1.51	%		1.75	%		1.58	%		1.59	%		1.58	%		1.76	%

Total expenses excluding recoupment of past waived fees		1.45	%		1.25	%		1.25	%		1.33	%		1.51	%		1.73	%		1.58	%		1.59	%		1.58	%		1.76	%

Total expenses after fees waived, reimbursed and paid indirectly		1.43	%		1.25	%		1.25	%		1.33	%		1.45	%		1.70	%		1.58	%		1.58	%		1.57	%		1.74	%

Net investment income		1.36	%		1.18	%		1.06	%		0.91	%		1.81	%		1.13	%		0.72	%		0.73	%		0.73	%		1.52	%

Supplemental Data
Net assets, end of year (000)	$	673,420		$	450,605		$	492,444		$	336,000		$	216,070		$	83,093		$	64,368		$	172,135		$	128,879		$	44,308

Portfolio turnover		143	%		138	%		77	%		91	%		86	%		143	%		138	%		77	%		91	%		86	%

See Notes to Financial Statements.


46		ANNUAL REPORT		SEPTEMBER 30, 2009


Financial Highlights (continued)		International Opportunities Portfolio


	Investor A
	Year Ended September 30,
	2009			2008			2007			2006			2005
Per Share Operating Performance
Net asset value, beginning of year	$	28.14		$	49.19		$	40.81		$	33.36		$	23.78

Net investment income¹		0.27			0.33			0.30			0.23			0.44
Net realized and unrealized gain (loss)		1.62			(13.09	)		14.49			8.32			9.38

Net increase (decrease) from investment operations		1.89			(12.76	)		14.79			8.55			9.82

Dividends and distributions from:
Net investment income		(0.01	)		(1.05	)		(0.58	)		(0.35	)		(0.25	)

Net realized gain		—			(7.24	)		(5.83	)		(0.76	)		—

Total dividends and distributions		(0.01	)		(8.29	)		(6.41	)		(1.11	)		(0.25	)

Redemption fees added to paid-in capital		0.00	²		0.00	²		0.00	²		0.01			0.01

Net asset value, end of year	$	30.02		$	28.14		$	49.19		$	40.81		$	33.36

Total Investment Return³
Based on net asset value		6.73	%⁴		(31.09	)%^4,5		39.98	%⁴		26.24	%⁶		41.60	%⁸

Ratios to Average Net Assets
Total expenses		1.68	%		1.58	%		1.60	%		1.74	%		1.86	%

Total expenses after fees waived, reimbursed and paid indirectly		1.68	%		1.58	%		1.60	%		1.63	%		1.75	%

Net investment income		1.15	%		0.87	%		0.69	%		0.62	%		1.53	%

Supplemental Data
Net assets, end of year (000)	$	604,283		$	482,526		$	555,189		$	407,282		$	253,710

Portfolio turnover		143	%		138	%		77	%		91	%		86	%

1	Based on average shares outstanding.

2	Less than $0.01 per share.

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

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

5	Payment from affiliate of $112,880 received by the Portfolio is reflected in total return calculations. There was no impact to the return.

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

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

8	Redemption fee of 2.00% received by the Portfolio is reflected in total return calculations. The impact to the return from redemption fees received during the period was an increase of 0.05%.

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		47


Financial Highlights (continued)		International Opportunities Portfolio


	Investor B
	Year Ended September 30,
	2009			2008			2007			2006			2005
Per Share Operating Performance
Net asset value, beginning of year	$	26.29		$	46.43		$	38.81		$	31.97		$	22.80

Net investment income (loss)¹		0.09			(0.06	)		(0.04	)		(0.07	)		0.18
Net realized and unrealized gain (loss)		1.45			(12.16	)		13.74			7.95			9.05

Net increase (decrease) from investment operations		1.54			(12.22	)		13.70			7.88			9.23

Dividends and distributions from:
Net investment income		—			(0.68	)		(0.25	)		(0.29	)		(0.07	)
Net realized gain		—			(7.24	)		(5.83	)		(0.76	)		—

Total dividends and distributions		—			(7.92	)		(6.08	)		(1.05	)		(0.07	)

Redemption fees added to paid-in capital		0.00	²		0.00	²		0.00	²		0.01			0.01

Net asset value, end of year	$	27.83		$	26.29		$	46.43		$	38.81		$	31.97

Total Investment Return³
Based on net asset value		5.86	%⁴		(31.63	)%^4,5		38.89	%⁴		25.24	%⁶		40.58	%⁷

Ratios to Average Net Assets
Total expenses		2.49	%		2.35	%		2.37	%		2.43	%		2.51	%

Total expenses after fees waived, reimbursed and paid indirectly		2.49	%		2.35	%		2.37	%		2.43	%		2.50	%

Net investment income (loss)		0.41	%		(0.15	)%		(0.10	)%		(0.22	)%		0.68	%

Supplemental Data
Net assets, end of year (000)	$	33,094		$	42,927		$	102,624		$	91,605		$	73,946

Portfolio turnover		143	%		138	%		77	%		91	%		86	%

See Notes to Financial Statements.


48		ANNUAL REPORT		SEPTEMBER 30, 2009


Financial Highlights (continued)		International Opportunities Portfolio


	Investor C
	Year Ended September 30,
	2009			2008			2007			2006			2005
Per Share Operating Performance
Net asset value, beginning of year	$	26.21		$	46.34		$	38.78		$	31.93		$	22.80

Net investment income (loss)¹		0.08			0.03			(0.03	)		(0.04	)		0.21
Net realized and unrealized gain (loss)		1.45			(12.20	)		13.71			7.93			9.01

Net increase (decrease) from investment operations		1.53			(12.17	)		13.68			7.89			9.22

Dividends and distributions from:
Net investment income		—			(0.72	)		(0.29	)		(0.29	)		(0.10	)
Net realized gain		—			(7.24	)		(5.83	)		(0.76	)		—

Total dividends and distributions		—			(7.96	)		(6.12	)		(1.05	)		(0.10	)

Redemption fees added to paid-in capital		0.00	²		0.00	²		0.00	²		0.01			0.01

Net asset value, end of year	$	27.74		$	26.21		$	46.34		$	38.78		$	31.93

Total Investment Return³
Based on net asset value		5.84	%⁴		(31.61	)%^4,5		38.91	%⁴		25.33	%⁶		40.60	%⁸

Ratios to Average Net Assets
Total expenses		2.49	%		2.32	%		2.36	%		2.37	%		2.51	%

Total expenses after fees waived, reimbursed and paid indirectly		2.48	%		2.32	%		2.36	%		2.37	%		2.50	%

Net investment income (loss)		0.38	%		0.08	%		(0.08	)%		(0.13	)%		0.75	%

Supplemental Data
Net assets, end of year (000)	$	187,246		$	194,068		$	255,980		$	205,958		$	130,138

Portfolio turnover		143	%		138	%		77	%		91	%		86	%

1	Based on average shares outstanding.

2	Less than $0.01 per share.

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

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

5	Payment from affiliate of $112,880 received by the Portfolio is reflected in total return calculations. There was no impact to the return.

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

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

8	Redemption fee of 2.00% received by the Portfolio is reflected in total return calculations. The impact to the return from redemption fees received during the period was an increase of 0.05%.

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		49


Financial Highlights (continued)		Science & Technology Opportunities Portfolio


	Institutional															Service
	Year Ended September 30,															Year Ended September 30,
	2009			2008			2007			2006			2005			2009			2008			2007			2006			2005
Per Share Operating Performance
Net asset value, beginning of year	$	6.98		$	9.03		$	7.20		$	6.61		$	5.42		$	6.80		$	8.83		$	7.07		$	6.51		$	5.35

Net investment loss¹		(0.02	)		(0.05	)		(0.03	)		(0.03	)		(0.04	)		(0.04	)		(0.06	)		(0.07	)		(0.05	)		(0.06	)
Net realized and unrealized gain (loss)		0.83			(2.00	)		1.86			0.61			1.23			0.80			(1.97	)		1.83			0.60			1.22

Net increase (decrease) from investment operations		0.81			(2.05	)		1.83			0.58			1.19			0.76			(2.03	)		1.76			0.55			1.16

Redemption fees added to paid-in capital		0.00	²		0.00	²		0.00	²		0.01			0.00	²		0.00	²		0.00	²		0.00	²		0.01			0.00	²

Net asset value, end of year	$	7.79		$	6.98		$	9.03		$	7.20		$	6.61		$	7.56		$	6.80		$	8.83		$	7.07		$	6.51

Total Investment Return³
Based on net asset value		11.60	%^4,5		(22.70	)%⁴		25.42	%⁴		8.93	%⁶		21.96	%⁴		11.18	%^4,7		(22.99	)%⁴		24.89	%⁴		8.60	%⁶		21.68	%⁴

Ratios to Average Net Assets
Total expenses		1.90	%		1.70	%		1.91	%		1.79	%		1.98	%		1.96	%		2.01	%		2.30	%		2.06	%		2.27	%

Total expenses after fees waived, reimbursed and paid indirectly		1.36	%		1.35	%		1.35	%		1.38	%		1.43	%		1.75	%		1.73	%		1.73	%		1.73	%		1.73	%

Net investment loss		(0.27	)%		(0.55	)%		(0.44	)%		(0.45	)%		(0.73	)%		(0.71	)%		(0.75	)%		(0.85	)%		(0.79	)%		(1.04	)%

Supplemental Data
Net assets, end of year (000)	$	27,013		$	42,886		$	1,449		$	1,262		$	847		$	193		$	106		$	123		$	148		$	116

Portfolio turnover		158	%		89	%		92	%		132	%		113	%		158	%		89	%		92	%		132	%		113	%


	Investor A															Investor B
	Year Ended September 30,															Year Ended September 30,
	2009			2008			2007			2006			2005			2009			2008			2007			2006			2005
Per Share Operating Performance
Net asset value, beginning of year	$	6.73		$	8.74		$	7.00		$	6.45		$	5.31		$	6.30		$	8.26		$	6.66		$	6.19		$	5.13

Net investment loss¹		(0.04	)		(0.06	)		(0.06	)		(0.06	)		(0.07	)		(0.08	)		(0.13	)		(0.12	)		(0.11	)		(0.11	)
Net realized and unrealized gain (loss)		0.79			(1.95	)		1.80			0.60			1.21			0.72			(1.83	)		1.72			0.57			1.17

Net increase (decrease) from investment operations		0.75			(2.01	)		1.74			0.54			1.14			0.64			(1.96	)		1.60			0.46			1.06

Redemption fees added to paid-in capital		0.00	²		0.00	²		0.00	²		0.01			0.00	²		0.00	²		0.00	²		0.00	²		0.01			0.00	²

Net asset value, end of year	$	7.48		$	6.73		$	8.74		$	7.00		$	6.45		$	6.94		$	6.30		$	8.26		$	6.66		$	6.19

Total Investment Return³
Based on net asset value		11.14	%^4,8		(23.00	)%⁴		24.86	%⁴		8.53	%⁹		21.47	%⁴		10.16	%^4,10		(23.73	)%⁴		24.02	%⁴		7.59	%⁹		20.66	%⁴

Ratios to Average Net Assets
Total expenses		2.24	%		2.04	%		2.16	%		2.27	%		2.35	%		3.13	%		2.96	%		3.01	%		3.06	%		3.00	%

Total expenses excluding recoupment of past waived fees		2.24	%		2.04	%		2.16	%		2.27	%		2.35	%		3.00	%		2.96	%		3.01	%		3.06	%		3.00	%

Total expenses after fees waived, reimbursed and paid indirectly		1.77	%		1.75	%		1.73	%		1.77	%		1.84	%		2.65	%		2.65	%		2.50	%		2.63	%		2.59	%

Net investment loss		(0.68	)%		(0.77	)%		(0.80	)%		(0.83	)%		(1.16	)%		(1.53	)%		(1.70	)%		(1.59	)%		(1.73	)%		(1.91	)%

Supplemental Data
Net assets, end of year (000)	$	83,734		$	72,659		$	21,632		$	13,040		$	9,688		$	6,538		$	11,473		$	9,030		$	10,439		$	10,998

Portfolio turnover		158	%		89	%		92	%		132	%		113	%		158	%		89	%		92	%		132	%		113	%

See Notes to Financial Statements.


50		ANNUAL REPORT		SEPTEMBER 30, 2009


Financial Highlights (continued)		Science & Technology Opportunities Portfolio


	Investor C															Class R
	Year Ended September 30,															Year Ended September 30,			Period September 8, 2008¹¹to September 30, 2008
	2009			2008			2007			2006			2005			2009			Period September 8, 2008¹¹to September 30, 2008
Per Share Operating Performance
Net asset value, beginning of period	$	6.29		$	8.25		$	6.66		$	6.19		$	5.14		$	6.97		$	7.38

Net investment loss¹		(0.09	)		(0.13	)		(0.12	)		(0.11	)		(0.11	)		(0.06	)		(0.01	)
Net realized and unrealized gain (loss)		0.74			(1.83	)		1.71			0.57			1.16			0.81			(0.40	)

Net increase (decrease) from investment operations		0.65			(1.96	)		1.59			0.46			1.05			0.75			(0.41	)

Redemption fees added to paid-in capital		0.00	²		0.00	²		0.00	²		0.01			0.00	²		0.00	²		0.00	²

Net asset value, end of period	$	6.94		$	6.29		$	8.25		$	6.66		$	6.19		$	7.72		$	6.97

Total Investment Return³
Based on net asset value		10.33	%^4,12		(23.76	)%⁴		23.87	%⁴		7.59	%⁹		20.43	%⁴		10.76	%^4,13		(5.56	)%^4,14

Ratios to Average Net Assets
Total expenses		3.23	%		2.73	%		2.88	%		2.84	%		3.00	%		2.42	%		2.36	%¹⁵

Total expenses after fees waived, reimbursed and paid indirectly		2.68	%		2.62	%		2.61	%		2.62	%		2.59	%		2.13	%		2.13	%¹⁵

Net investment loss		(1.59	)%		(1.67	)%		(1.69	)%		(1.67	)%		(1.91	)%		(1.04	)%		(1.49	)%¹⁵

Supplemental Data
Net assets, end of period (000)	$	22,575		$	22,003		$	9,755		$	6,511		$	2,794		$	1,904		$	1,362

Portfolio turnover		158	%		89	%		92	%		132	%		113	%		158	%		89	%

1	Based on average shares outstanding.

2	Less than $0.01 per share.

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

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

5	Includes proceeds received from a settlement of litigation which impacted the Portfolio’s total return. Not including these proceeds the Portfolio’s total return would have been 9.03%.

6	Redemption fee of 2.00% received by the Portfolio is reflected in total return calculations. The impact to the return from redemption fees received during the period was an increase of 0.15%.

7	Includes proceeds received from a settlement of litigation which impacted the Portfolio’s total return. Not including these proceeds the Portfolio’s total return would have been 8.53%.

8	Includes proceeds received from a settlement of litigation which impacted the Portfolio’s total return. Not including these proceeds the Portfolio’s total return would have been 8.47%.

9	Redemption fee of 2.00% received by the Portfolio is reflected in total return calculations. The impact to the return from redemption fees received during the period was an increase of 0.16%.

10	Includes proceeds received from a settlement of litigation which impacted the Portfolio’s total return. Not including these proceeds the Portfolio’s total return would have been 7.30%.

11	Commencement of operations.

12	Includes proceeds received from a settlement of litigation which impacted the Portfolio’s total return. Not including these proceeds the Portfolio’s total return would have been 7.47%.

13	Includes proceeds received from a settlement of litigation which impacted the Portfolio’s total return. Not including these proceeds the Portfolio’s total return would have been 8.18%.

14	Aggregate total investment return.

15	Annualized.

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		51


Financial Highlights (continued)		U.S. Opportunities Portfolio


	Institutional															Service
	Year Ended September 30,															Year Ended September 30,
	2009			2008			2007			2006			2005			2009			2008			2007			2006			2005
Per Share Operating Performance
Net asset value, beginning of year	$	31.69		$	37.05		$	29.07		$	25.56		$	20.34		$	30.58		$	35.89		$	28.28		$	24.96		$	19.93

Net investment income (loss)¹		0.09			0.09			0.03			0.04			(0.15	)		(0.01	)		(0.06	)		(0.09	)		(0.07	)		(0.21	)
Net realized and unrealized gain (loss)		0.42			(5.45	)		7.95			3.46			5.37			0.35			(5.25	)		7.70			3.38			5.24

Net increase (decrease) from investment operations		0.51			(5.36	)		7.98			3.50			5.22			0.34			(5.31	)		7.61			3.31			5.03

Dividends from net investment income		(0.01	)		—			—			—			—			—			—			—			—			—

Redemption fees added to paid-in capital		0.01			0.00	²		0.00	²		0.01			0.00	²		0.01			0.00	²		0.00	²		0.01			0.00	²

Net asset value, end of year	$	32.20		$	31.69		$	37.05		$	29.07		$	25.56		$	30.93		$	30.58		$	35.89		$	28.28		$	24.96

Total Investment Return³
Based on net asset value		1.63	%⁴		(14.47	)%⁵		27.45	%⁵		13.73	%⁶		25.66	%⁵		1.14	%⁴		(14.80	)%⁵		26.91	%⁵		13.30	%⁶		25.24	%⁵

Ratios to Average Net Assets
Total expenses		1.40	%		1.42	%		1.42	%		1.49	%		1.73	%		1.71	%		1.68	%		1.69	%		1.85	%		1.97	%

Total expenses excluding recoupment of past waived fees		1.40	%		1.42	%		1.42	%		1.49	%		1.73	%		1.70	%		1.68	%		1.69	%		1.85	%		1.97	%

Total expenses after fees waived, reimbursed and paid indirectly		1.01	%		1.00	%		1.01	%		1.19	%		1.60	%		1.49	%		1.43	%		1.40	%		1.57	%		1.90	%

Net investment income (loss)		0.36	%		0.26	%		0.09	%		0.15	%		(0.65	)%		(0.06	)%		(0.17	)%		(0.28	)%		(0.25	)%		(0.96	)%

Supplemental Data
Net assets, end of year (000)	$	890,264		$	298,166		$	158,094		$	20,548		$	6,390		$	191,318		$	109,679		$	43,763		$	1,527		$	472

Portfolio turnover		166	%		164	%		106	%		120	%		94	%		166	%		164	%		106	%		120	%		94	%


	Investor A															Investor B
	Year Ended September 30,															Year Ended September 30,
	2009			2008			2007			2006			2005			2009			2008			2007			2006			2005
Per Share Operating Performance
Net asset value, beginning of year	$	30.29		$	35.57		$	28.03		$	24.76		$	19.78		$	28.06		$	33.20		$	26.37		$	23.45		$	18.87

Net investment loss¹		(0.04	)		(0.08	)		(0.10	)		(0.10	)		(0.22	)		(0.17	)		(0.31	)		(0.32	)		(0.29	)		(0.37	)
Net realized and unrealized gain (loss)		0.35			(5.20	)		7.64			3.36			5.20			0.26			(4.83	)		7.15			3.20			4.95

Net increase (decrease) from investment operations		0.31			(5.28	)		7.54			3.26			4.98			0.09			(5.14	)		6.83			2.91			4.58

Redemption fees added to paid-in capital		0.01			0.00	²		0.00	²		0.01			0.00	²		0.01			0.00	²		0.00	²		0.01			0.00	²

Net asset value, end of year	$	30.61		$	30.29		$	35.57		$	28.03		$	24.76		$	28.16		$	28.06		$	33.20		$	26.37		$	23.45

Total Investment Return³
Based on net asset value		1.06	%⁶		(14.84	)%⁵		26.90	%⁵		13.21	%⁶		25.18	%⁵		0.36	%⁶		(15.48	)%⁵		25.90	%⁵		12.45	%⁶		24.27	%⁵

Ratios to Average Net Assets
Total expenses		1.76	%		1.73	%		1.77	%		1.95	%		2.08	%		2.59	%		2.56	%		2.56	%		2.68	%		2.73	%

Total expenses excluding recoupment of past waived fees		1.75	%		1.73	%		1.77	%		1.95	%		2.08	%		2.59	%		2.56	%		2.56	%		2.68	%		2.73	%

Total expenses after fees waived, reimbursed and paid indirectly		1.56	%		1.48	%		1.48	%		1.66	%		1.97	%		2.27	%		2.22	%		2.23	%		2.40	%		2.72	%

Net investment loss		(0.15	)%		(0.22	)%		(0.32	)%		(0.35	)%		(1.02	)%		(0.77	)%		(0.95	)%		(1.06	)%		(1.13	)%		(1.77	)%

Supplemental Data
Net assets, end of year (000)	$	855,127		$	495,656		$	228,668		$	96,194		$	31,277		$	21,849		$	20,998		$	35,928		$	36,093		$	37,132

Portfolio turnover		166	%		164	%		106	%		120	%		94	%		166	%		164	%		106	%		120	%		94	%

See Notes to Financial Statements.


52		ANNUAL REPORT		SEPTEMBER 30, 2009


Financial Highlights (concluded)		U.S. Opportunities Portfolio


	Investor C
	Year Ended September 30,
	2009			2008			2007			2006			2005
Per Share Operating Performance
Net asset value, beginning of year	$	28.04		$	33.18		$	26.34		$	23.43		$	18.85

Net investment loss¹		(0.19	)		(0.30	)		(0.32	)		(0.28	)		(0.37	)
Net realized and unrealized gain (loss)		0.28			(4.84	)		7.16			3.18			4.95

Net increase (decrease) from investment operations		0.09			(5.14	)		6.84			2.90			4.58

Redemption fees added to paid-in capital		0.01			0.00	²		0.00	²		0.01			0.00	²

Net asset value, end of year	$	28.14		$	28.04		$	33.18		$	26.34		$	23.43

Total Investment Return³
Based on net asset value		0.36	%⁶		(15.49	)%⁵		25.97	%⁵		12.42	%⁶		24.30	%⁵

Ratios to Average Net Assets
Total expenses		2.52	%		2.46	%		2.51	%		2.60	%		2.73	%

Total expenses after fees waived, reimbursed and paid indirectly		2.28	%		2.21	%		2.20	%		2.37	%		2.72	%

Net investment loss		(0.85	)%		(0.95	)%		(1.04	)%		(1.07	)%		(1.77	)%

Supplemental Data
Net assets, end of year (000)	$	238,819		$	145,626		$	88,826		$	39,427		$	20,774

Portfolio turnover		166	%		164	%		106	%		120	%		94	%

1	Based on average shares outstanding.

2	Less than $0.01 per share.

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

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

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

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

See Notes to Financial Statements.


		ANNUAL REPORT		SEPTEMBER 30, 2009		53

Notes to Financial Statements

1. Organization and Significant Accounting Policies:

BlackRock Funds^SM (the “Fund”), a Massachusetts business trust, is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. As of September 30, 2009, the Fund had 27 registered portfolios, of which the BlackRock Global Opportunities Portfolio (“Global Opportunities”), BlackRock Health Sciences Opportunities Portfolio (“Health Sciences Opportunities”), BlackRock International Opportunities Portfolio (“International Opportunities”), BlackRock Science & Technology Opportunities Portfolio (“Science & Technology Opportunities”) and BlackRock U.S. Opportunities Portfolio (“U.S. Opportunities”) (collectively the “Portfolios”) are included in these financial statements. The Portfolios’ financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require the use of management accruals and estimates. Actual results may differ from these estimates. Each Portfolio offers multiple classes of shares. Institutional Shares are sold without a sales charge and only to certain eligible investors. Service Shares are sold without a sales charge. Investor A Shares are generally sold with a front-end sales charge. Shares of Investor B and Investor C may be subject to a contingent deferred sales charge. Class R Shares are sold without a sales charge and only to certain retirement and other similar plans. All classes of shares have identical voting, dividend, liquidation and other rights and the same terms and conditions, except that the Service, Investor A, Investor B, Investor C and Class R Shares bear certain expenses related to the service of such shares and Investor B, Investor C and Class R Shares also bear certain expenses related to the distribution of such shares. Investor B Shares automatically convert to Investor A Shares after approximately eight years. Investor B Shares of each Portfolio are only available for purchase through exchanges, dividend reinvestments or for purchase by certain qualified employee benefit plans. Each class has exclusive voting rights with respect to matters relating to its service and distribution expenditures (except that Investor B shareholders may vote on material changes to the Investor A distribution plan).

Fund Reorganization:

The Board of Trustees (the “Board”) of Science & Technology Opportunities and shareholders of the below BlackRock Fund approved a reorganization with BlackRock Technology Fund, Inc. (the “Reorganization”), as indicated below. The Reorganization was a tax-free event and took place on September 15, 2008.


Target Fund		Acquiring Portfolio
BlackRock Technology Fund, Inc.		Science & Technology Opportunities

Under the agreement and plan of reorganization with respect to the Reorganization, BlackRock Technology Fund, Inc. Investor A Shares, Investor B Shares, Investor C Shares, Institutional Shares and Class R Shares were exchanged for Science & Technology Opportunities Investor A Shares, Investor B Shares, Investor C Shares, Institutional Shares and Class R Shares, respectively. The conversion ratio for each Share class was as follows:


Science & Technology Opportunities
Investor A		0.89302835
Investor B		0.87637176
Investor C		0.87439671
Institutional		0.88413428
Class R		0.83033708

The net assets before and after the Reorganization and shares issued and redeemed in the Reorganization were as follows:


BlackRock Portfolio	Net Assets Combined After Reorganization as of September 15, 2008		Net Assets Prior to Reorganization as of September 15, 2008			Shares Issued			BlackRock Technology Fund, Inc. Shares Redeemed
Science & Technology Opportunities	$	172,438,131	$	41,095,813			18,216,414			20,570,019

The net assets acquired were the following components:

BlackRock Fund	Paid In Capital		Accumulated Net Realized Loss			Net Unrealized Depreciation			Net Assets
BlackRock Technology Fund, Inc.	$	1,344,537,764	$	(1,204,274,389	)	$	(8,921,057	)	$	131,342,318

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


54		ANNUAL REPORT		SEPTEMBER 30, 2009

Notes to Financial Statements (continued)

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

Generally, trading in foreign securities is substantially completed each day at various times prior to the close of business on the New York Stock Exchange (“NYSE”). The values of such securities used in computing the net assets of a Portfolio are determined as of such times. Foreign currency exchange rates will be determined as of the close of business on the NYSE. Occasionally, events affecting the values of such securities and such exchange rates may occur between the times at which they are determined and the close of business on the NYSE that may not be reflected in the computation of the Portfolio’s net assets. If events (for example, a company announcement, market volatility or a natural disaster) occur during such periods that are expected to materially affect the value of such securities, those securities will be Fair Value Assets and be valued at their fair value as determined in good faith by the Board or by the investment advisor using a pricing service and/or procedures approved by the Board. Foreign currency exchange contracts are valued at the mid between the bid and ask prices. Interpolated values are derived when the settlement date of the contract is an interim date for which quotations are not available.

Preferred Stock: The Portfolios may invest in preferred stocks. 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.

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

Investment Transactions and Investment Income: For financial reporting purposes, investment transactions are recorded on the dates the transactions are entered into (the trade dates). Realized gains and losses on investment transactions are determined on the identified cost basis. Dividend income is recorded on the ex-dividend dates. Dividends from foreign securities where the ex-dividend date may have passed are subsequently recorded when the Portfolio has determined the ex-dividend date. 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 is recognized on the accrual basis. Income, realized and unrealized gains and losses are allocated daily to each class based on its relative net assets.

Dividends and Distributions: Dividends and distributions paid, if any, by the Portfolios are recorded on the ex-dividend dates.


		ANNUAL REPORT		SEPTEMBER 30, 2009		55

Notes to Financial Statements (continued)

any amount rebated to the borrower. 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 Portfolios may pay reasonable lending agent, administrative and custodial fees in connection with their loans. In the event that the borrower defaults on its obligation to return borrowed securities because of insolvency or for any other reason, the Portfolios could experience delays and costs in gaining access to the collateral. The Portfolios also could suffer a loss if the value of an investment purchased with cash collateral falls below the market value of loaned securities or if the value of an investment purchased with cash collateral falls below the value of the original cash collateral received.

The Portfolios file US federal and various state and local tax returns. No income tax returns are currently under examination. The statutes of limitations on Health Sciences Opportunities, International Opportunities, Science & Technology Opportunities and U.S. Opportunities Portfolios’ US federal income tax returns remain open for each of the four years ended September 30, 2009. The statutes of limitations on Global Opportunities’ US federal income tax returns remain open for the period ended September 30, 2006 and for each of the three years ended September 30, 2009. The statutes of limitations on each Portfolio’s state and local tax returns may remain open for an additional year depending upon the jurisdiction.

2. Derivative Financial Instruments:

The Portfolios may engage in various portfolio investment strategies both to increase the returns of the Portfolios and to economically hedge, or protect, their exposure to certain risks such as equity risk and foreign currency exchange rate risk. Losses may arise if the value of the contract decreases due to an unfavorable change in the price of the underlying currency or if the counterparty does not perform under the contract. The Portfolios may mitigate counterparty risk through master netting agreements included within an International Swaps and Derivatives Association, Inc. (“ISDA”) Master Agreement between a Portfolio and each of its counterparties. The ISDA Master Agreement allows each Portfolio to offset with its counterparty certain derivative financial instruments’ payables and/or receivables with collateral held with each counterparty. The amount of collateral moved to/from applicable counterparties is based upon minimum transfer amounts of up to $500,000. To the extent amounts due to the Portfolios from their counterparty are not fully collateralized contractually or otherwise, the Portfolios bear the risk of loss from counterparty non-performance. See Note 1 “Segregation and Collateralization” for additional information with respect to collateral practices.

The Portfolios’ maximum risk of loss from counterparty credit risk on over-the counter derivatives is generally the aggregate unrealized gain in excess of any collateral pledged by the counterparty to the Portfolios. For over-the-counter purchased options, the Portfolios bear the risk of loss in the amount of the premiums paid and change in market value of the options should the counterparty not perform under the contracts. Options written by the Portfolios do not give rise to counterparty credit risk, as options written obligate the Portfolios to perform and not the counterparty. Certain ISDA Master Agreements allow counterparties to over-the-counter derivatives to terminate derivative contracts prior to maturity in the event a Portfolio’s net assets decline by a stated percentage or a Portfolio fails to meet the terms of its ISDA Master Agreements, which would cause the Portfolio to accelerate payment of any net liability owed to the counterparty. Counterparty risk related to exchange-traded financial futures contracts and options is minimal because of the protection against defaults provided by the exchange on which they trade.

Financial Futures Contracts: Certain Portfolios may purchase or sell financial futures contracts and options on financial futures contracts to gain exposure to, or economically hedge against, changes in the value of equity securities (equity risk) or foreign currencies (foreign currency exchange rate risk). Financial futures contracts are contracts for delayed delivery of securities or currencies at a specific future date and at a specific price or yield. Pursuant to the contract, the Portfolios 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 margin variation and are recognized by the Portfolios as unrealized gains or losses. When the contract is closed, the Portfolios 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 transactions involves the risk of an imperfect correlation in the movements in the price of financial futures contracts and the underlying assets.


56		ANNUAL REPORT		SEPTEMBER 30, 2009

Notes to Financial Statements (continued)

Foreign Currency Exchange Contracts: Certain Portfolios may enter into foreign currency exchange contracts as an economic hedge against either specific transactions or portfolio positions (foreign currency exchange rate risk). A foreign currency exchange contract is an agreement between two parties to buy and sell a currency at a set exchange rate on a future date. Foreign currency exchange contracts, when used by a Portfolio, help to manage the overall exposure to the currency backing some of the investments held by a Portfolio. The contract is marked-to-market daily and the change in market value is recorded by a Portfolio as an unrealized gain or loss. When the contract is closed, a Portfolio records a realized gain or loss equal to the difference between the value at the time it was opened and the value at the time it was closed. The use of foreign currency exchange contracts involves the risk that counterparties may not meet the terms of the agreement or unfavorable movements in the value of a foreign currency relative to the United States dollar.

Options: Certain Portfolios may purchase and write call and put options to increase or decrease their exposure to underlying instruments (equity risk). A call option gives the purchaser of the option the right (but not the obligation) to buy, and obligates the seller to sell (when the option is exercised), the underlying instrument at the exercise 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 price at any time or at a specified time during the option period. When a Portfolio purchases (writes) an option, an amount equal to the premium paid (received) by a Portfolio 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 Portfolio enters into a closing transaction), a Portfolio 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 premium received or paid). When a Portfolio writes a call option, such option is “covered,” meaning that a Portfolio holds the underlying instrument subject to being called by the option counterparty, or cash in an amount sufficient to cover the obligation. When a Portfolio writes a put option, such option is covered by cash in an amount sufficient to cover the obligation.

Derivative Instruments Categorized by Risk Exposure*:


	Value of Derivative Instruments as of September 30, 2009**
	Asset Derivatives
	Statements of Assets and Liabilities Location	Global Opportunities		Health Sciences Opportunities		International Opportunities		Science & Technology Opportunities
Foreign currency exchange contracts	Unrealized appreciation on foreign currency exchange contracts	$	398,944	$	971,206	$	9,457,537	$	14,743

	Liability Derivatives
	Statements of Assets and Liabilities Location	Global Opportunities		Health Sciences Opportunities		International Opportunities		Science & Technology Opportunities
Foreign currency exchange contracts	Unrealized depreciation on foreign currency exchange contracts	$	120,227	$	2,575,035	$	4,511,512	$	192,126

*	As of September 30, 2009 there were no financial futures contracts or options outstanding. During the year ended September 30, 2009, the Portfolio had limited activity in these transactions.

**	For open derivative instruments as of September 30, 2009, see the Schedule of Investments, which is also indicative of activity for the year ended September 30, 2009.


	The Effect of Derivative Instruments on the Statement of Operations Year Ended September 30, 2009
	Net Realized Gain (Loss) from
	Global Opportunities			Health Sciences Opportunities		International Opportunities			Science & Technology Opportunities			U.S. Opportunities
Foreign currency exchange contracts:
Foreign currency exchange contracts	$	(635,149	)	$	1,858,451	$	(20,821,264	)	$	(248,287	)		—
Equity contracts:
Financial futures contracts		(1,441,339	)		—		(34,974,536	)		—		$	(22,692,734	)
Options		4,200			4,915,277		—			—			367,922

Total	$	(2,072,288	)	$	6,773,728	$	(55,795,800	)	$	(248,287	)	$	(22,324,812	)


		ANNUAL REPORT		SEPTEMBER 30, 2009		57

Notes to Financial Statements (continued)


	Net Change in Unrealized Appreciation/Depreciation on
	Global Opportunities		Health Sciences Opportunities			International Opportunities		Science & Technology Opportunities			U.S. Opportunities
Foreign currency exchange contracts:
Foreign currency exchange contracts	$	1,697,768	$	(6,696,509	)	$	25,280,849	$	(252,536	)		—
Equity contracts:
Financial futures contracts		318,710		—			3,128,731		—		$	2,552,732

Total	$	2,016,478	$	(6,696,509	)	$	28,409,580	$	(252,536	)	$	2,552,732

3. Investment Advisory Agreements and Other Transactions with Affiliates:


	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


	Share Classes
	Institutional		Service		Investor A		Investor B		Investor C		Class R
Global Opportunities	1.35	%	1.65	%¹	1.65	%	2.40	%	2.40	%	3.59	%¹
Health Sciences Opportunities	1.25	%	1.55	%	1.55	%	2.25	%	2.25	%	1.81	%¹
International Opportunities	1.45	%	1.75	%	1.92	%	2.67	%	2.67	%	2.12	%¹
Science & Technology Opportunities	1.35	%	1.73	%	1.75	%	2.65	%	2.65	%	2.57	%
U.S. Opportunities	1.00	%	1.60	%	1.60	%	2.25	%	2.25	%	2.32	%¹

¹	There were no shares outstanding as of September 30, 2009.

Effective June 1, 2009, the expense limitations as a percentage of net assets are as follows:


	Share Classes
	Institutional		Service		Investor A		Investor B		Investor C		Class R
Global Opportunities	1.39	%	1.70	%¹	1.70	%	2.47	%	2.47	%	3.70	%¹
Health Sciences Opportunities	1.25	%	1.55	%	1.55	%	2.25	%	2.25	%	1.81	%¹
International Opportunities	1.49	%	1.80	%	1.98	%	2.75	%	2.75	%	2.18	%¹
Science & Technology Opportunities	1.39	%	1.78	%	1.80	%	2.73	%	2.73	%	2.57	%
U.S. Opportunities	1.03	%	1.65	%	1.65	%	2.32	%	2.32	%	2.39	%¹

¹	There were no shares outstanding as of September 30, 2009.


58		ANNUAL REPORT		SEPTEMBER 30, 2009

Notes to Financial Statements (continued)

The Manager has entered into separate sub-advisory agreements with BlackRock Financial Management, Inc. (“BFM”), an affiliate of the Manager, to serve as sub-advisor for a portion of the assets of Global Opportunities and BlackRock International, Ltd. (“BIL”), an affiliate of the Manager, to serve as sub-advisor for International Opportunities.

The Manager pays BFM and BIL for services they provide a monthly fee that is a percentage of the investment advisory fees paid by the applicable Portfolio to the Manager.


	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	%


Global Opportunities	$	4,159
Health Sciences Opportunities	$	52,180
International Opportunities	$	93,000
Science & Technology Opportunities	$	12,087
U.S. Opportunities	$	132,304

For the year ended September 30, 2009, affiliates, including Merrill Lynch from October 1, 2008 to December 31, 2008 (after which time Merrill Lynch was no longer considered an affiliate), received the following contingent deferred sales charges relating to transactions in Investor A, Investor B and Investor C Shares:


	Investor A		Investor B		Investor C
Global Opportunities	$	1,989	$	21,800	$	6,114
Health Sciences Opportunities	$	5,045	$	175,380	$	29,888
International Opportunities	$	22,412	$	108,097	$	68,928
Science & Technology Opportunities	$	235	$	8,200	$	3,305
U.S. Opportunities	$	4,683	$	49,492	$	91,821


Global Opportunities	$	4,473
Health Sciences Opportunities	$	14,892
Science & Technology Opportunities	$	8,460
U.S. Opportunities	$	38,457

PFPC Trust Company, an indirect wholly-owned subsidiary of PNC, serves as custodian for each Portfolio. For these services, the custodian receives a fee computed daily and payable monthly, based on a percentage of the average daily gross assets of each Portfolio. The fee is paid at the following annual rates: 0.005% of the first $400 million, 0.004% of the next $1.6 billion, and 0.003% of average daily gross assets in excess of $2 billion; plus per transaction charges and other miscellaneous fees incurred on behalf of each Portfolio.


		ANNUAL REPORT		SEPTEMBER 30, 2009		59

Notes to Financial Statements (continued)


Global Opportunities	$	10,651
Health Sciences Opportunities	$	86,611
International Opportunities	$	215,224
Science & Technology Opportunities	$	197,674
U.S. Opportunities	$	191,699


	Share Classes
Call Center	Institutional		Service		Investor A		Investor B		Investor C		Class R		Total
Global Opportunities	$	859		—	$	4,637	$	1,112	$	1,661		—	$	8,269
Health Sciences Opportunities	$	5,135	$	718	$	54,238	$	11,348	$	21,052		—	$	92,491
International Opportunities	$	11,604	$	3,002	$	53,787	$	5,259	$	15,310		—	$	88,962
Science & Technology Opportunities	$	4,507	$	23	$	9,121		—	$	3,241	$	38	$	16,930
U.S. Opportunities	$	15,977	$	5,454	$	88,956	$	2,444	$	17,928		—	$	130,759


Health Sciences Opportunities	$	49,446
International Opportunities	$	10,348
Science & Technology Opportunities	$	3,269
U.S. Opportunities	$	226,695


	Share Classes
Administration Fees	Institutional		Service		Investor A		Investor B		Investor C		Class R		Total
Global Opportunities	$	4,270		—	$	7,562	$	970	$	3,228		—	$	16,030
Health Sciences Opportunities	$	37,522	$	1,475	$	106,313	$	14,778	$	59,545		—	$	219,633
International Opportunities	$	101,593	$	14,233	$	101,053	$	7,282	$	35,234		—	$	259,395
Science & Technology Opportunities	$	6,042	$	21	$	15,805	$	1,719	$	4,314	$	354	$	28,255
U.S. Opportunities	$	114,042	$	32,209	$	125,203	$	4,370	$	38,267		—	$	314,091


60		ANNUAL REPORT		SEPTEMBER 30, 2009

Notes to Financial Statements (continued)


	Share Classes
Administration Fees Waived	Institutional		Service		Investor A		Investor B		Investor C		Class R		Total
Global Opportunities	$	3,327		—	$	6,675	$	786	$	2,938		—	$	13,726
International Opportunities	$	34,672	$	4,931		—	$	589	$	533		—	$	40,725
Science & Technology Opportunities	$	6,042	$	19	$	15,805	$	1,122	$	4,314	$	351	$	27,653
U.S. Opportunities	$	114,042	$	2,606	$	582	$	4,070	$	22,973		—	$	144,273

			Share Classes
Service and Distribution Fees			Service		Investor A		Investor B		Investor C		Class R		Total
Global Opportunities				—	$	75,098	$	38,679	$	128,975		—	$	242,752
Health Sciences Opportunities			$	14,724	$	1,058,143	$	589,493	$	2,375,529		—	$	4,037,889
International Opportunities			$	141,347	$	1,015,759	$	290,368	$	1,406,522		—	$	2,853,996
Science & Technology Opportunities			$	210	$	158,302	$	68,852	$	172,696	$	7,053	$	407,113
U.S. Opportunities			$	322,168	$	1,327,063	$	174,411	$	1,529,643		—	$	3,353,285

	Share Classes
Transfer Agent Fees	Institutional		Service		Investor A		Investor B		Investor C		Class R		Total
Global Opportunities	$	24,821		—	$	54,924	$	9,258	$	28,568		—	$	117,571
Health Sciences Opportunities	$	186,181	$	11,464	$	897,996	$	154,898	$	431,671		—	$	1,682,210
International Opportunities	$	1,092,469	$	164,470	$	989,117	$	85,196	$	409,618		—	$	2,740,870
Science & Technology Opportunities	$	156,531	$	355	$	448,837	$	50,915	$	164,170	$	9,152	$	829,960
U.S. Opportunities	$	762,692	$	272,292	$	1,402,021	$	61,630	$	434,134		—	$	2,932,769

	Share Classes
Transfer Agent Fees Waived	Institutional		Service		Investor A		Investor B		Investor C		Class R		Total
Global Opportunities	$	841		—	$	4,590	$	1,087	$	1,644		—	$	8,162
International Opportunities	$	3,536	$	1,633		—	$	53		—		—	$	5,222
Science & Technology Opportunities	$	4,507	$	17	$	9,121		—	$	3,241	$	37	$	16,923
U.S. Opportunities	$	15,977	$	138		—	$	2,444	$	6,297		—	$	24,856

	Share Classes
Transfer Agent Fees Reimbursed	Institutional		Service		Investor A		Investor B		Investor C		Class R		Total
Global Opportunities	$	15,341		—	$	21,712	$	5,725	$	15,892		—	$	58,670
International Opportunities	$	53,811	$	22,663		—		—		—		—	$	76,474
Science & Technology Opportunities	$	118,836	$	130	$	266,933	$	31,652	$	85,943	$	3,699	$	507,193
U.S. Opportunities	$	746,221	$	11,075		—	$	13,776	$	23,625		—	$	794,697


		ANNUAL REPORT		SEPTEMBER 30, 2009		61

Notes to Financial Statements (continued)

For the year ended September 30, 2009, the Manager recouped the following waivers previously recorded by the Portfolios:


	Share Classes
Recoupment of Past Waived Fees	Institutional		Service		Investor A		Investor B		Investor C		Total
Global Opportunities	$	847		—	$	1,881	$	786		—	$	3,514
Health Sciences Opportunities		—	$	1,193	$	15,873	$	20,937	$	13,229	$	51,232
International Opportunities		—	$	14,518		—		—		—	$	14,518
Science & Technology Opportunities		—		—		—	$	8,779		—	$	8,779
U.S. Opportunities		—	$	3,665	$	51,036	$	199		—	$	54,900

As of September 30, 2009, the amounts subject to possible future recoupment under the expense limitation agreement are as follows:


	Expiring September 30,
	2010		2011
Global Opportunities	$	12,191	$	100,333
International Opportunities		—	$	122,420
Science & Technology Opportunities	$	128,463	$	549,212
U.S. Opportunities	$	2,331,319	$	3,555,539

The following waivers previously recorded by the Portfolios, which were subject to recoupment by the Manager, expired on September 30, 2009:


Global Opportunities	$	92,610
Science & Technology Opportunities	$	133,950
U.S. Opportunities	$	1,143,012

The Portfolios may earn income on positive cash balances in demand deposit accounts that are maintained by PNCGIS on behalf of the Portfolios. The income earned for the year ended September 30, 2009, which is included in interest and dividends — affiliated in the Statements of Operations, were as follows:


Global Opportunities	$	122
Health Sciences Opportunities	$	1,349
International Opportunities	$	1,266
Science & Technology Opportunities	$	494
U.S. Opportunities	$	1,377

The Portfolios may also receive earnings credits related to cash balances with PNCGIS which are shown on the Statements of Operations as fees paid indirectly.

4. Investments:

Purchases and sales of investments, excluding short-term securities, for the year ended September 30, 2009 were as follows:


	Purchases		Sales
Global Opportunities	$	121,112,022	$	125,097,538
Health Sciences Opportunities	$	1,298,451,196	$	1,340,276,514
International Opportunities	$	1,767,128,345	$	1,419,012,512
Science & Technology Opportunities	$	176,306,225	$	187,456,358
U.S. Opportunities	$	2,928,616,303	$	2,020,533,790

Options written transactions entered into during the year ended September 30, 2009 are summarized as follows:


	Global Opportunities
	Calls					Puts
	Contracts		Premiums Received			Contracts		Premiums Received
Options outstanding at beginning of year	—			—		—			—
Options written	50		$	4,550		50		$	4,200
Options expired	—			—		(50	)		(4,200	)
Options exercised	(50	)		(4,550	)	—			—

Options outstanding at end of year	—			—		—			—

	Health Sciences Opportunities
	Calls					Puts
	Contracts		Premiums Received			Contracts		Premiums Received
Options outstanding at beginning of year	—			—		—			—
Options written	207,647		$	6,104,656		26,645		$	3,818,072
Options expired	(17,706	)		(3,118,758	)	(9,629	)		(1,259,705	)
Options closed	(185,081	)		(2,154,270	)	(9,296	)		(1,238,141	)
Options exercised	(4,860	)		(831,628	)	(7,720	)		(1,320,226	)

Options outstanding at end of year	—			—		—			—


62		ANNUAL REPORT		SEPTEMBER 30, 2009

Notes to Financial Statements (continued)


	U.S. Opportunities
	Calls
	Contracts		Premiums Received
Options outstanding at beginning of year	—			—
Options written	2,117		$	476,818
Options expired	(1,461	)		(335,945	)
Options closed	(656	)		(140,873	)

Options outstanding at end of year	—			—

Science & Technology Opportunities received proceeds from settlement of litigation where it was able to recover a portion of investment losses previously realized by such Portfolio. This amount is shown as litigation proceeds in the Statements of Operations.

5. Short-Term Borrowings:

6. Income Tax Information:

Reclassifications: Accounting principles generally accepted in the United States of America require that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. These reclassifications have no effect on net assets or net asset value per share. The following permanent differences as of September 30, 2009 attributable to net operating losses, foreign taxes paid, foreign currency transactions, the expiration of capital loss carryforwards, the reclassification of distributions, the sale of stock of passive foreign investment companies, the classification of settlement proceeds and income recognized from pass-through entities were reclassified to the following accounts:


	Global Opportunities			Health Sciences Opportunities			International Opportunities			Science & Technology Opportunities			U.S. Opportunities
Paid-in capital	$	(721	)		—			—		$	(228,386,291	)	$	(7,629	)
Undistributed (distributions in excess of) net investment income	$	(869,054	)	$	3,974,009		$	(16,312,255	)	$	725,787		$	477,553
Accumulated net realized loss	$	869,775		$	(3,974,009	)	$	16,312,255		$	227,660,504		$	(469,924	)

The tax character of distributions paid during the years ended September 30, 2009 and September 30, 2008 were as follows:


	Global Opportunities		Health Sciences Opportunities		International Opportunities		U.S. Opportunities
Ordinary income
9/30/09	$	13,294	$	24,616,410	$	1,676,516	$	60,616
9/30/08	$	4,547,266	$	27,000,243	$	88,093,441		—
Long-term capital gain
9/30/09		—	$	60,752,161		—		—
9/30/08	$	671,586	$	20,499,421	$	176,075,415		—

Total distributions
9/30/09	$	13,294	$	85,368,571	$	1,676,516	$	60,616
9/30/08	$	5,218,852	$	47,499,664	$	264,168,856		—

As of September 30, 2009, the tax components of accumulated net earnings (losses) were as follows:


	Global Opportunities			Health Sciences Opportunities			International Opportunities			Science & Technology Opportunities			U.S. Opportunities
Undistributed ordinary income	$	843,220			—		$	19,711,236			—		$	2,096,451
Capital loss carryforwards		(15,145,783	)	$	(9,891,979	)		(140,138,718	)	$	(66,931,408	)		(183,442,968	)
Net unrealized gains (losses)*		(4,264,315	)		78,097,623			50,575,735			(6,536,463	)		268,665,580

Total	$	(18,566,878	)	$	68,205,644		$	(69,851,747	)	$	(73,467,871	)	$	87,319,063

The difference between book-basis and tax-basis unrealized gains (losses) is attributable primarily to the tax deferral of losses on wash sales, the realization for tax purposes of unrealized gains (losses) on certain futures and foreign currency exchange contracts, the deferral of post-October currency and capital losses for tax purposes, unamortized organization costs for tax purposes, the deferral of losses on straddles for tax purposes, the timing of recognition of income from partnerships and investments in passive foreign investment companies.


		ANNUAL REPORT		SEPTEMBER 30, 2009		63

Notes to Financial Statements (continued)

As of September 30, 2009, the Portfolios had capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates:


Expiring September 30,	Global Opportunities		Health Sciences Opportunities		International Opportunities		Science & Technology Opportunities		U.S. Opportunities
2010		—		—		—	$	7,544,799	$	36,277,437
2011		—		—		—		—		16,513,511
2015		—		—		—		54,937,681		—
2017	$	15,145,783	$	9,891,979	$	140,138,718		4,448,928		130,652,020

Total	$	15,145,783	$	9,891,979	$	140,138,718	$	66,931,408	$	183,442,968

7. Concentration, Market and Credit Risk:

Health Sciences Opportunities invests a significant portion of its assets in securities in the health care sector. Changes in economic conditions affecting the health care sector would have a greater impact on Health Sciences Opportunities, and could affect the value, income and/or liquidity of positions in such securities.

Science & Technology Opportunities invests a significant portion of its assets in securities in the information technology sector. Changes in economic conditions affecting the information technology sector would have a greater impact on Science & Technology Opportunities, and could affect the value, income and/or liquidity of positions in such securities.

Global Opportunities and International Opportunities invest from time to time a substantial amount of their assets in issuers located in a single country or a limited number of countries. When such Portfolios concentrate their investments in this manner, they assume the risk that economic, political and social conditions in those countries may have a significant impact on their investment performance.

As of September 30, 2009, the Portfolios listed below had the following industry classifications:


Industry	Global Opportunities		International Opportunities
Commercial Banks	10	%	15	%
Oil, Gas & Consumable Fuels	9		9
Pharmaceuticals	7		5
Insurance	6		5
Metals & Mining	6		7
Other*	62		59

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

8. Capital Shares Transactions:

Transactions in capital shares for each class were as follows:


	Year Ended September 30, 2009					Year Ended September 30, 2008
Global Opportunities	Shares		Amount			Shares		Amount
Institutional
Shares sold	627,843		$	5,231,526		1,871,396		$	22,994,920
Shares issued in reinvestment of dividends and distributions	1,598			12,017		52,175			655,316

Total issued	629,441			5,243,543		1,923,571			23,650,236
Shares redeemed	(2,631,230	)		(19,186,438	)	(927,987	)		(10,862,583	)

Net increase (decrease)	(2,001,789	)	$	(13,942,895	)	995,584		$	12,787,653


64		ANNUAL REPORT		SEPTEMBER 30, 2009

Notes to Financial Statements (continued)


	Year Ended September 30, 2009					Year Ended September 30, 2008
Global Opportunities (concluded)	Shares		Amount			Shares		Amount
Investor A
Shares sold and automatic conversion of shares	2,609,963		$	21,237,953		2,077,064		$	24,760,185
Shares issued in reinvestment of dividends and distributions	—			—		138,763			1,741,483

Total issued	2,609,963			21,237,953		2,215,827			26,501,668
Shares redeemed	(1,915,013	)		(14,809,927	)	(1,483,646	)		(16,792,204	)

Net increase	694,950		$	6,428,026		732,181		$	9,709,464

Investor B
Shares sold	37,710		$	296,560		129,011		$	1,612,083
Shares issued in reinvestment of dividends and distributions	—			—		17,440			218,352

Total issued	37,710			296,560		146,451			1,830,435
Shares redeemed and automatic conversion of shares	(175,892	)		(1,338,362	)	(153,153	)		(1,781,665	)

Net increase (decrease)	(138,182	)	$	(1,041,802	)	(6,702	)	$	48,770

Investor C
Shares sold	685,206		$	5,556,850		902,717		$	11,026,553
Shares issued in reinvestment of dividends and distributions	—			—		41,450			518,953

Total issued	685,206			5,556,850		944,167			11,545,506
Shares redeemed	(876,684	)		(6,707,651	)	(487,805	)		(5,757,989	)

Net increase (decrease)	(191,478	)	$	(1,150,801	)	456,362		$	5,787,517


Health Sciences Opportunities
Institutional
Shares sold	3,282,447		$	76,446,905		2,360,582		$	71,114,202
Shares issued in reinvestment of dividends and distributions	654,857			13,743,792		206,270			6,381,988

Total issued	3,937,304			90,190,697		2,566,852			77,496,190
Shares redeemed	(3,872,581	)		(88,583,362	)	(1,789,484	)		(52,047,635	)

Net increase	64,723		$	1,607,335		777,368		$	25,448,555

Service
Shares sold	201,025		$	4,568,218		68,625		$	1,990,269
Shares issued in reinvestment of dividends and distributions	22,209			457,497		9,591			291,761

Total issued	223,234			5,025,715		78,216			2,282,030
Shares redeemed	(112,484	)		(2,592,486	)	(135,331	)		(3,869,823	)

Net increase (decrease)	110,750		$	2,433,229		(57,115	)	$	(1,587,793	)


		ANNUAL REPORT		SEPTEMBER 30, 2009		65

Notes to Financial Statements (continued)


	Year Ended September 30, 2009					Year Ended September 30, 2008
Health Sciences Opportunities (concluded)	Shares		Amount			Shares		Amount
Investor A
Shares sold and automatic conversion of shares	6,386,361		$	143,478,445		3,866,195		$	112,836,542
Shares issued in reinvestment of dividends and distributions	1,779,579			36,587,917		774,671			23,511,250

Total issued	8,165,940			180,066,362		4,640,866			136,347,792
Shares redeemed	(9,626,201	)		(215,452,894	)	(7,991,237	)		(229,010,671	)

Net decrease	(1,460,261	)	$	(35,386,532	)	(3,350,371	)	$	(92,662,879	)

Investor B
Shares sold	191,893		$	3,972,396		134,108		$	3,724,930
Shares issued in reinvestment of dividends and distributions	288,268			5,632,774		88,135			2,556,802

Total issued	480,161			9,605,170		222,243			6,281,732
Shares redeemed and automatic conversion of shares	(1,098,016	)		(23,289,909	)	(587,431	)		(16,148,103	)

Net decrease	(617,855	)	$	(13,684,739	)	(365,188	)	$	(9,866,371	)

Investor C
Shares sold	1,626,343		$	34,422,322		837,443		$	23,392,641
Shares issued in reinvestment of dividends and distributions	1,084,302			21,143,010		362,228			10,486,508

Total issued	2,710,645			55,565,332		1,199,671			33,879,149
Shares redeemed	(3,595,296	)		(76,927,263	)	(2,642,187	)		(71,536,281	)

Net decrease	(884,651	)	$	(21,361,931	)	(1,442,516	)	$	(37,657,132	)


International Opportunities
Institutional
Shares sold	13,721,573		$	350,351,562		8,315,655		$	319,379,089
Shares issued in reinvestment of dividends and distributions	44,657			1,008,792		1,290,442			54,624,699

Total issued	13,766,230			351,360,354		9,606,097			374,003,788
Shares redeemed	(7,596,872	)		(176,325,353	)	(3,940,492	)		(148,720,827	)

Net increase	6,169,358		$	175,035,001		5,665,605		$	225,282,961

Service
Shares sold	1,706,214		$	40,288,301		924,653		$	34,809,315
Shares issued in reinvestment of dividends and distributions	—			—		664,200			27,165,771

Total issued	1,706,214			40,288,301		1,588,853			61,975,086
Shares redeemed	(1,229,774	)		(28,653,621	)	(2,795,756	)		(98,602,667	)

Net increase (decrease)	476,440		$	11,634,680		(1,206,903	)	$	(36,627,581	)


66		ANNUAL REPORT		SEPTEMBER 30, 2009

Notes to Financial Statements (continued)


	Year Ended September 30, 2009					Year Ended September 30, 2008
International Opportunities (concluded)	Shares		Amount			Shares		Amount
Investor A
Shares sold and automatic conversion of shares	12,076,484		$	286,846,202		8,805,941		$	329,503,186
Shares issued in reinvestment of dividends and distributions	6,522			141,330		2,080,883			84,442,326

Total issued	12,083,006			286,987,532		10,886,824			413,945,512
Shares redeemed	(9,095,184	)		(208,764,465	)	(5,029,800	)		(185,085,966	)

Net increase	2,987,822		$	78,223,067		5,857,024		$	228,859,546

Investor B
Shares sold	137,264		$	2,940,424		211,829		$	7,530,494
Shares issued in reinvestment of dividends and distributions	—			—		403,239			15,379,610

Total issued	137,264			2,940,424		615,068			22,910,104
Shares redeemed and automatic conversion of shares	(580,947	)		(12,201,255	)	(1,192,608	)		(42,182,227	)

Net decrease	(443,683	)	$	(9,260,831	)	(577,540	)	$	(19,272,123	)

Investor C
Shares sold	2,002,956		$	46,032,123		2,674,323		$	93,386,640
Shares issued in reinvestment of dividends and distributions	—			—		1,055,533			40,132,456

Total issued	2,002,956			46,032,123		3,729,856			133,519,096
Shares redeemed	(2,657,870	)		(54,930,426	)	(1,849,406	)		(63,026,557	)

Net increase (decrease)	(654,914	)	$	(8,898,303	)	1,880,450		$	70,492,539


Science & Technology Opportunities
Institutional
Shares issued from the reorganization	—			—		5,985,171		$	44,785,989
Shares sold	521,018		$	3,265,366		200,203			1,729,191

Total issued	521,018			3,265,366		6,185,374			46,515,180
Shares redeemed	(3,200,745	)		(17,249,776	)	(198,473	)		(1,555,290	)

Net increase (decrease)	(2,679,727	)	$	(13,984,410	)	5,986,901		$	44,959,890

Service
Shares sold	17,786		$	125,887		7,103		$	61,566
Shares redeemed	(7,880	)		(45,584	)	(5,386	)		(41,218	)

Net increase	9,906		$	80,303		1,717		$	20,348

Investor A
Shares issued from the reorganization	—			—		8,192,933		$	59,135,218
Shares sold and automatic conversion of shares	2,913,918		$	17,555,649		2,789,422			21,786,402

Total issued	2,913,918			17,555,649		10,982,355			80,921,620
Shares redeemed	(2,521,352	)		(14,409,211	)	(2,652,055	)		(19,857,422	)

Net increase	392,566		$	3,146,438		8,330,300		$	61,064,198


		ANNUAL REPORT		SEPTEMBER 30, 2009		67

Notes to Financial Statements (continued)


	Year Ended September 30, 2009					Year Ended September 30, 2008
Science & Technology Opportunities (concluded)	Shares		Amount			Shares		Amount
Investor B
Shares issued from the reorganization	—			—		1,380,801		$	9,336,277
Shares sold	203,386		$	1,128,893		153,054			1,159,204

Total issued	203,386			1,128,893		1,533,855			10,495,481
Shares redeemed and automatic conversion of shares	(1,082,094	)		(5,711,283	)	(806,074	)		(5,864,330	)

Net increase (decrease)	(878,708	)	$	(4,582,390	)	727,781		$	4,631,151

Investor C
Shares issued from the reorganization	—			—		2,471,268		$	16,692,503
Shares sold	732,718		$	4,266,648		288,948			2,212,142

Total issued	732,718			4,266,648		2,760,216			18,904,645
Shares redeemed	(976,877	)		(5,207,448	)	(443,267	)		(3,147,730	)

Net increase (decrease)	(244,159	)	$	(940,800	)	2,316,949		$	15,756,915

Class R
Shares issued from the reorganization	—			—		186,241		$	1,392,331
Shares sold	127,077		$	784,567		12,787			94,885

Total issued	127,077			784,567		199,028			1,487,216
Shares redeemed	(75,992	)		(465,306	)	(3,537	)		(25,552	)

Net increase	51,085		$	319,261		195,491		$	1,461,664


U.S. Opportunities
Institutional
Shares sold	24,766,679		$	644,372,202		6,527,636		$	232,856,375
Shares issued in reinvestment of dividends	1,748			37,968		—			—

Total issued	24,768,427			644,410,170		6,527,636			232,856,375
Shares redeemed	(6,530,352	)		(168,767,220	)	(1,386,445	)		(48,859,106	)

Net increase	18,238,075		$	475,642,950		5,141,191		$	183,997,269

Service
Shares sold	4,504,373		$	107,437,507		3,094,115		$	107,890,871
Shares redeemed	(1,905,741	)		(45,091,897	)	(727,325	)		(24,788,342	)

Net increase	2,598,632		$	62,345,610		2,366,790		$	83,102,529

Investor A
Shares sold and automatic conversion of shares	21,037,273		$	512,086,999		12,405,934		$	421,435,122
Shares redeemed	(9,468,584	)		(228,671,571	)	(2,468,662	)		(83,100,583	)

Net increase	11,568,689		$	283,415,428		9,937,272		$	338,334,539


68		ANNUAL REPORT		SEPTEMBER 30, 2009

Notes to Financial Statements (concluded)


	Year Ended September 30, 2009					Year Ended September 30, 2008
U.S. Opportunities (concluded)	Shares		Amount			Shares		Amount
Investor B
Shares sold	290,275		$	6,365,540		309,367		$	9,956,416
Shares redeemed and automatic conversion of shares	(262,791	)		(5,701,426	)	(643,101	)		(20,686,509	)

Net increase (decrease)	27,484		$	664,114		(333,734	)	$	(10,730,093	)

Investor C
Shares sold	5,102,977		$	115,703,095		3,202,904		$	102,028,096
Shares redeemed	(1,809,799	)		(39,875,611	)	(687,264	)		(21,479,035	)

Net increase	3,293,178		$	75,827,484		2,515,640		$	80,549,061

9. Subsequent Events:


		ANNUAL REPORT		SEPTEMBER 30, 2009		69

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Trustees of BlackRock Funds:

We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of the BlackRock Global Opportunities Portfolio, BlackRock Health Sciences Opportunities Portfolio, BlackRock International Opportunities Portfolio, BlackRock Science & Technology Opportunities Portfolio and BlackRock U.S. Opportunities Portfolio [five of the twenty-seven portfolios constituting the BlackRock Funds (the “Fund”) (collectively, the “Portfolios”)], as of September 30, 2009, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

Deloitte & Touche LLP

Philadelphia, Pennsylvania

November 25, 2009

Important Tax Information (Unaudited)

The following information is provided with respect to the ordinary income distributions paid by the Portfolios for the taxable year ended September 30, 2009:


	Payable Date	Qualified Dividend Income for Individuals*		Dividends Qualifying for the Dividends Received Deduction for Corporations*		Short-term Capital Gain Dividends for Non U.S. Residents**		Foreign Source Income		Foreign Taxes Paid Per Share***
Global Opportunities Portfolio	12/16/08	100.00	%	100.00	%	—		—			—
Health Sciences Opportunities Portfolio	12/12/08	36.01	%	29.92	%	100.00	%	—			—
International Opportunities Portfolio	12/16/08	100.00	%	—		—		100.00	%	$	0.090095
U.S. Opportunities Portfolio	12/05/08	100.00	%	100.00	%	—		—			—

*	The Portfolios hereby designate the percentage indicated above or the maximum amount allowable by law.

**	Represents the portion of the taxable ordinary income dividends eligible for exemption from U.S. withholding tax for nonresident aliens and foreign corporations.

***

The foreign taxes paid represent taxes incurred by the Portfolio on income received by the Portfolio from foreign sources. Foreign taxes paid may be included in taxable income with an offsetting deduction from gross income or may be taken as a credit for taxes paid to foreign governments. You should consult your tax advisor regarding the appropriate treatment of foreign taxes paid.

Additionally, the Portfolios distributed Long-Term Capital Gains per share as follows:


	Payable Date	Long-Term Capital Gain
Health Sciences Opportunities Portfolio	12/12/08	$	1.621707


70		ANNUAL REPORT		SEPTEMBER 30, 2009

Disclosure of Investment Advisory Agreement and Sub-Advisory Agreement

The Board of Trustees (the “Board,” and the members of which are referred to as “Board Members”) of BlackRock FundsSM (the “Fund”) met on April 16, 2009 and May 21-22, 2009 to consider the approval of the Fund’s investment advisory agreement (the “Advisory Agreement”) with BlackRock Advisors, LLC (the “Manager”), the Fund’s investment advisor, on behalf of BlackRock Global Opportunities Portfolio (“Global Opportunities Portfolio”), BlackRock Health Sciences Opportunities Portfolio (“Health Sciences Opportunities Portfolio”), BlackRock International Opportunities Portfolio (“International Opportunities Portfolio”), BlackRock Science & Technology Opportunities Portfolio (“Science & Technology Opportunities Portfolio”) and BlackRock U.S. Opportunities Portfolio (“U.S. Opportunities Portfolio,” each a “Portfolio,” and together with Global Opportunities Portfolio, Health Sciences Opportunities Portfolio, International Opportunities Portfolio and Science & Technology Opportunities Portfolio, the “Portfolios”), each a series of the Fund. The Board also considered the approval of the sub-advisory agreement between the Manager and BlackRock Financial Management, Inc. (“BFM”) with respect to Global Opportunities Portfolio and the sub-advisory agreement between the Manager and BlackRock International Limited (“BIL,” and together with BFM, the “Sub-Advisors”) with respect to International Opportunities Portfolio (each, a “Sub-Advisory Agreement” and together, the “Sub-Advisory Agreements”). The Manager and the Sub-Advisors are referred to herein as “BlackRock.” The Advisory Agreement and the Sub-Advisory Agreements are referred to herein as the “Agreements.”

Activities and Composition of the Board

The Agreements

Pursuant to the 1940 Act, the Board is required to consider the continuation of the Agreements on an annual basis. In connection with this process, the Board assessed, among other things, the nature, scope and quality of the services provided to the Portfolios by the personnel of BlackRock and its affiliates, including investment management, administrative and shareholder services, oversight of fund accounting and custody, marketing services and assistance in meeting applicable legal and regulatory requirements.

Throughout the year, the Board, acting directly and through its committees, considers at each of its meetings factors that are relevant to its annual consideration of the renewal of the Agreements, including the services and support provided by BlackRock to the Portfolios and their shareholders. Among the matters the Board considered were: (a) investment performance for one-, three- and five-year periods, as applicable, against peer funds, and applicable benchmarks, if any, as well as senior management and portfolio managers’ analysis of the reasons for any out performance or underperformance against its peers; (b) fees, including advisory, administration, if applicable, and other amounts paid to BlackRock and its affiliates by the Portfolios for services, such as transfer agency, marketing and distribution, call center and fund accounting; (c) Portfolio operating expenses; (d) the resources devoted to and compliance reports relating to each Portfolio’s investment objective, policies and restrictions, (e) the Fund’s compliance with its Code of Ethics and compliance policies and procedures; (f) the nature, cost and character of non-investment management services provided by BlackRock and its affiliates; (g) BlackRock’s and other service providers’ internal controls; (h) BlackRock’s implementation of the proxy voting policies approved by the Board; (i) the use of brokerage commissions and execution quality; (j) BlackRock’s implementation of the Fund’s valuation and liquidity procedures; and (k) periodic updates on BlackRock’s business.

Board Considerations in Approving the Agreements

The Approval Process: Prior to the April 16, 2009 meeting, the Board requested and received materials specifically relating to the Agreements. The Board is engaged in an ongoing process with BlackRock to continuously review the nature and scope of the information provided to better assist its deliberations. The materials provided in connection with the April meeting included (a) information independently compiled and prepared by Lipper, Inc. (“Lipper”) on Portfolio fees and expenses, and the investment performance of each Portfolio as compared with a peer group of funds as determined by Lipper and, with respect to each Portfolio except U.S. Opportunities Portfolio, a customized peer group selected by BlackRock (collectively, “Peers”); (b) information on the profitability of the Agreements to BlackRock and a discussion of fall-out benefits to BlackRock and its affiliates and significant shareholders; (c) a general analysis provided by BlackRock concerning investment advisory fees charged to other clients, such as institutional clients and closed-end funds, under similar investment mandates, as well as the performance of such other clients; (d) the impact of economies of scale; (e) a summary of aggregate amounts paid by each Portfolio to BlackRock; (f) sales and redemption data regarding each Portfolio’s shares; and (g) an internal comparison of management fees classified by Lipper, if applicable.

At an in-person meeting held on April 16, 2009, the Board reviewed materials relating to its consideration of the Agreements. As a result of the discussions that occurred during the April 16, 2009 meeting, the Board presented BlackRock with questions and requests for additional information and BlackRock responded to these requests with additional written information in advance of the May 21-22, 2009 Board meeting.


		ANNUAL REPORT		SEPTEMBER 30, 2009		71

Disclosure of Investment Advisory Agreement and Sub-Advisory Agreement (continued)

At an in-person meeting held on May 21-22, 2009, the Board Members of the Fund present at the meeting, including the Independent Board Members present at the meeting, unanimously approved the continuation of the Advisory Agreement between the Manager and the Fund with respect to each Portfolio for a one-year term ending June 30, 2010, the continuation of the Sub-Advisory Agreement between the Manager and BFM with respect to Global Opportunities Portfolio for a one-year term ending June 30, 2010 and the continuation of the Sub-Advisory Agreement between the Manager and BIL with respect to International Opportunities Portfolio for a one-year term ending June 30, 2010. The Board considered all factors it believed relevant with respect to the Portfolios, including, among other factors: (a) the nature, extent and quality of the services provided by BlackRock; (b) the investment performance of each Portfolio and BlackRock portfolio management; (c) the advisory fee and the cost of the services and profits to be realized by BlackRock and certain affiliates from the relationship with the Portfolios; (d) economies of scale; and (e) other factors.

B. The Investment Performance of the Portfolios and BlackRock: The Board, including the Independent Board Members, also reviewed and considered the performance history of each Portfolio. In preparation for the April 16, 2009 meeting, the Board was provided with reports, independently prepared by Lipper, which included a comprehensive analysis of each Portfolio’s performance. The Board also reviewed a narrative and statistical analysis of the Lipper data that was prepared by BlackRock, which analyzed various factors that affect Lipper’s rankings. In connection with its review, the Board received and reviewed information regarding the investment performance of each Portfolio as compared to a representative group of similar funds as determined by Lipper and to all funds in the Portfolio’s applicable Lipper category and, with respect to each Portfolio except U.S. Opportunities Portfolio, the customized peer group selected by BlackRock. The Board was provided with a description of the methodology used by Lipper to select peer funds. The Board regularly reviews the performance of each Portfolio throughout the year. The Board attaches more importance to performance over relatively long periods of time, typically three to five years.

The Board noted that, in general, Global Opportunities Portfolio performed better than its Peers in that the Portfolio’s performance was at or above the median of its Customized Lipper Peer Group in both the one-year and since-inception periods reported.

The Board noted that, in general, Health Sciences Opportunities Portfolio performed better than its Peers in that the Portfolio’s performance was at or above the median of its Customized Lipper Peer Group in each of the one-, three- and five-year periods reported.

The Board noted that, in general, International Opportunities Portfolio performed better than its Peers in that the Portfolio’s performance was at or above the median of its Customized Lipper Peer Group in each of the one-, three- and five-year periods reported.


72		ANNUAL REPORT		SEPTEMBER 30, 2009

Disclosure of Investment Advisory Agreement and Sub-Advisory Agreement (continued)

The Board noted that, in general, Science & Technology Opportunities Portfolio performed better than its Peers in that the Portfolio’s performance was at or above the median of its Customized Lipper Peer Group in each of the one-, three- and five-year periods reported.

The Board noted that, in general, U.S. Opportunities Portfolio performed better than its Peers in that the Portfolio’s performance was at or above the median of its Lipper Performance Universe in each of the one-, three- and five-year periods reported.

C. Consideration of the Advisory Fees and the Cost of the Services and Profits to Be Realized by BlackRock and its Affiliates from the Relationship with Each Portfolio: The Board, including the Independent Board Members, reviewed each Portfolio’s contractual advisory fee rates compared with the other funds in the Portfolio’s Lipper category. It also compared each Portfolio’s total expenses, as well as actual management fees, to those of other comparable funds. The Board considered the services provided and the fees charged by BlackRock to other types of clients with similar investment mandates, including separately managed institutional accounts.

In addition, the Board considered the cost of the services provided to each Portfolio by BlackRock, and BlackRock’s and its affiliates’ profits relating to the management and distribution of the Portfolio and the other funds advised by BlackRock and its affiliates. As part of its analysis, the Board reviewed BlackRock’s methodology in allocating its costs to the management of each Portfolio. The Board also considered whether BlackRock has the financial resources necessary to attract and retain high quality investment management personnel to perform its obligations under the Agreements and to continue to provide the high quality of services that is expected by the Board.

The Board noted that Global Opportunities Portfolio’s contractual advisory fees, which do not take into account any expense reimbursement or fee waivers, were lower than or equal to the median contractual advisory fees paid by its Peers. The Portfolio has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the size of the Portfolio increases, thereby allowing shareholders the potential to participate in economies of scale. The Board noted that BlackRock has contractually agreed to waive fees or reimburse expenses in order to limit the Portfolio’s total net expenses on a class basis.

The Board noted that, although Health Sciences Opportunities Portfolio’s contractual advisory fees, which do not take into account any expense reimbursement or fee waivers, were above the median of its Peers, such fees were within 5% of the median amount. The Portfolio has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the size of the Portfolio increases, thereby allowing shareholders the potential to participate in economies of scale. The Board noted that BlackRock has contractually agreed to waive fees or reimburse expenses in order to limit the Portfolio’s total net expenses on a class basis.

The Board noted that, although International Opportunities Portfolio’s contractual advisory fees, which do not take into account any expense reimbursement or fee waivers, were above the median of its Peers, such fees were within 5% of the median amount. The Portfolio has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the size of the Portfolio increases, thereby allowing shareholders the potential to participate in economies of scale. The Board noted that BlackRock has contractually agreed to waive fees or reimburse expenses in order to limit the Portfolio’s total net expenses on a class basis.

The Board noted that Science & Technology Opportunities Portfolio’s contractual advisory fees, which do not take into account any expense reimbursement or fee waivers, were lower than or equal to the median contractual advisory fees paid by the its Peers. The Portfolio has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the size of the Portfolio increases, thereby allowing shareholders the potential to participate in economies of scale. The


		ANNUAL REPORT		SEPTEMBER 30, 2009		73

Disclosure of Investment Advisory Agreement and Sub-Advisory Agreement (concluded)

Board noted that BlackRock has contractually and/or voluntarily agreed to waive fees or reimburse expenses in order to limit the Portfolio’s total net expenses on a class basis.

The Board noted that U.S. Opportunities Portfolio’s contractual advisory fees were above the median of its Peers. The Portfolio has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the size of the Portfolio increases, thereby allowing shareholders the potential to participate in economies of scale. The Board noted that BlackRock has contractually agreed to waive fees or reimburse expenses in order to limit the Portfolio’s total net expenses on a class basis.

E. Other Factors: The Board also took into account other ancillary or “fall-out” benefits that BlackRock or its affiliates and significant shareholders may derive from its relationship with the Portfolios, both tangible and intangible, such as BlackRock’s ability to leverage its investment professionals who manage other portfolios, an increase in BlackRock’s profile in the investment advisory community, and the engagement of BlackRock’s affiliates and significant shareholders as service providers to the Portfolios, including for administrative, transfer agency and distribution services. The Board also noted that BlackRock may use third party research obtained by soft dollars generated by certain mutual fund transactions to assist itself in managing all or a number of its other client accounts.

In connection with its consideration of the Agreements, the Board also received information regarding BlackRock’s brokerage and soft dollar practices. The Board received reports from BlackRock which included information on brokerage commissions and trade execution practices throughout the year.

Conclusion

The Board Members of the Fund present at the meeting, including the Independent Board Members present at the meeting, unanimously approved the continuation of the Advisory Agreement between the Manager and the Fund with respect to each Portfolio for a one-year term ending June 30, 2010, the continuation of the Sub-Advisory Agreement between the Manager and BFM with respect to Global Opportunities Portfolio for a one-year term ending June 30, 2010 and the continuation of the Sub-Advisory Agreement between the Manager and BIL with respect to International Opportunities Portfolio for a one-year term ending June 30, 2010. Based upon their evaluation of all these factors in their totality, the Board Members of the Fund present at the meeting, including the Independent Board Members present at the meeting, were satisfied that the terms of the Agreements were fair and reasonable and in the best interest of each Portfolio and its shareholders. In arriving at a decision to approve the Agreements, the Board did not identify any single factor or group of factors as all-important or controlling, but considered all factors together, and different Board Members may have attributed different weights to the various factors considered. The Independent Board Members were also assisted by the advice of independent legal counsel in making this determination. The contractual fee arrangements for each Portfolio reflect the results of several years of review by the Board Members and predecessor Board Members, and discussions between such Board Members (and predecessor Board Members) and BlackRock. Certain aspects of the arrangements may be the subject of more attention in some years than in others, and the Board Members’ conclusions may be based in part on their consideration of these arrangements in prior years.


74		ANNUAL REPORT		SEPTEMBER 30, 2009

Officers and Trustees


Name, Address, and Year of Birth	Position(s) Held with Fund	Length of Time Served as a Trustee²	Principal Occupation(s) During Past 5 Years	Number of BlackRock- Advised Registered Investment Companies (“RICs”) Consisting of Investment Portfolios (“Portfolios”) Overseen	Public Directorships
Non-Interested Trustees¹

Ronald W. Forbes 40 East 52nd Street New York, NY 10022 1940	Co-Chair of the Board and Trustee	Since 2007	Professor Emeritus of Finance, School of Business, State University of New York at Albany since 2000.	34 RICs consisting of 81 Portfolios	None

Rodney D. Johnson 40 East 52nd Street New York, NY 10022 1941	Co-Chair of the Board and Trustee	Since 2007	President, Fairmount Capital Advisors, Inc. since 1987; Director, Fox Chase Cancer Center since 2002; Member of the Archdiocesan Investment Committee of the Archdiocese of Philadelphia since 2003; Director, The Committee of Seventy (civic) since 2006.	34 RICs consisting of 81 Portfolios	None

David O. Beim 40 East 52nd Street New York, NY 10022 1940	Trustee	Since 2007	Professor of Finance and Economics at the Columbia University Graduate School of Business since 1991; Trustee, Phillips Exeter Academy since 2002; Chairman, Wave Hill Inc. (public garden and cultural center) from 1990 to 2006.	34 RICs consisting of 81 Portfolios	None

Dr. Matina Horner 40 East 52nd Street New York, NY 10022 1939	Trustee	Since 2004	Executive Vice President of Teachers Insurance and Annuity Association and College Retirement Equities Fund from 1989 to 2003.	34 RICs consisting of 81 Portfolios	NSTAR (electric and gas utility)

Herbert I. London 40 East 52nd Street New York, NY 10022 1939	Trustee	Since 2007	Professor Emeritus, New York University since 2005; John M. Olin Professor of Humanities, New York University from 1993 to 2005 and Professor thereof from 1980 to 2005; President, Hudson Institute (policy research organization) since 1997 and Trustee thereof since 1980; Chairman of the Board of Trustees for Grantham University since 2006; Director, InnoCentive, Inc. (strategic solutions company) since 2005; Director, Cerego, LLC (software development and design) since 2005.	34 RICs consisting of 81 Portfolios	AIMS Worldwide, Inc. (marketing)

Cynthia A. Montgomery 40 East 52nd Street New York, NY 10022 1952	Trustee	Since 2007	Professor, Harvard Business School since 1989; Director, Harvard Business School Publishing since 2005; Director, McLean Hospital since 2005.	34 RICs consisting of 81 Portfolios	Newell Rubbermaid, Inc. (manufacturing)

Joseph P. Platt, Jr. 40 East 52nd Street New York, NY 10022 1947	Trustee	Since 2007	Director, The West Penn Allegheny Health System (a not-for-profit health system) since 2008; Director, Jones and Brown (Canadian insurance broker) since 1998; General Partner, Thorn Partners, LP (private investment) since 1998; Partner, Amarna Corporation, LLC (private investment company) from 2002 to 2008.	34 RICs consisting of 81 Portfolios	Greenlight Capital Re, Ltd. (reinsurance company)

Robert C. Robb, Jr. 40 East 52nd Street New York, NY 10022 1945	Trustee	Since 2007	Partner, Lewis, Eckert, Robb and Company (management and financial consulting firm) since 1981.	34 RICs consisting of 81 Portfolios	None


		ANNUAL REPORT		SEPTEMBER 30, 2009		75


Officers and Trustees (continued)


Name, Address, and Year of Birth	Position(s) Held with Fund	Length of Time Served as a Trustee²	Principal Occupation(s) During Past 5 Years	Number of BlackRock- Advised Registered Investment Companies (“RICs”) Consisting of Investment Portfolios (“Portfolios”) Overseen	Public Directorships
Non-Interested Trustees¹(concluded)

Toby Rosenblatt 40 East 52nd Street New York, NY 10022 1938	Trustee	Since 2005	President, Founders Investments Ltd. (private investments) since 1999; Director, Forward Management, LLC since 2007; Director, The James Irvine Foundation (philanthropic foundation) since 1997; Trustee, State Street Research Mutual Funds from 1990 to 2005; Trustee, Metropolitan Series Funds, Inc. from 2001 to 2005.	34 RICs consisting of 81 Portfolios	A.P. Pharma, Inc. (specialty pharmaceuticals)

Kenneth L. Urish 40 East 52nd Street New York, NY 10022 1951	Trustee	Since 2007	Managing Partner, Urish Popeck & Co., LLC (certified public accountants and consultants) since 1976; Member of External Advisory Board, The Pennsylvania State University Accounting Department since 2001; Trustee, The Holy Family Foundation since 2001; Committee Member, Professional Ethics Committee of the Pennsylvania Institute of Certified Public Accountants since 2007; President and Trustee, Pittsburgh Catholic Publishing Associates from 2003 to 2008; Director, Inter-Tel from 2006 to 2007.	34 RICs consisting of 81 Portfolios	None

Frederick W. Winter 40 East 52nd Street New York, NY 10022 1945	Trustee	Since 2007	Professor and Dean Emeritus of the Joseph M. Katz School of Business, University of Pittsburgh since 2005 and Dean thereof from 1997 to 2005. Director, Alkon Corporation (pneumatics) since 1992; Director, Tippman Sports (recreation) since 2005; Director, Indotronix International (IT services) from 2004 to 2008.	34 RICs consisting of 81 Portfolios	None

1	Trustees serve until their resignation, removal or death, or until December 31 of the year in which they turn 72.


Interested Trustees³

Richard S. Davis 40 East 52nd Street New York, NY 10022 1945	Trustee	Since 2005	Managing Director, BlackRock, Inc. since 2005; Chief Executive Officer, State Street Research & Management Company from 2000 to 2005; Chairman of the Board of Trustees, State Street Research Mutual Funds from 2000 to 2005; Chairman, SSR Realty from 2000 to 2004.	172 RICs consisting of 283 Portfolios	None

Henry Gabbay 40 East 52nd Street New York, NY 10022 1947	Trustee	Since 2007	Consultant, BlackRock, Inc. from 2007 to 2008; Managing Director, BlackRock, Inc. from 1989 to 2007; Chief Administrative Officer, BlackRock Advisors, LLC from 1998 to 2007; President of BlackRock Funds and BlackRock Bond Allocation Target Shares from 2005 to 2007 and Treasurer of certain closed-end funds in the BlackRock fund complex from 1989 to 2006.	172 RICs consisting of 283 Portfolios	None


76		ANNUAL REPORT		SEPTEMBER 30, 2009

Officers and Trustees (continued)


Name, Address, and Year of Birth	Position(s) Held with Fund	Length of Time Served	Principal Occupation(s) During Past 5 Years
Fund Officers¹

Anne F. Ackerley 40 East 52nd Street New York, NY 10022 1962	President and Chief Executive Officer	Since 2009	Managing Director of BlackRock, Inc. since 2000; Vice President of the BlackRock-advised funds from 2007 to 2009; Chief Operating Officer of BlackRock’s Global Client Group (GCG) since 2009; Chief Operating Officer of BlackRock’s U.S. Retail Group from 2006 to 2009; Head of BlackRock’s Mutual Fund Group from 2000 to 2006.

Richard Hoerner, CFA 40 East 52nd Street New York, NY 10022 1958	Vice President	Since 2009	Managing Director of BlackRock, Inc. since 2000; Co-head of BlackRock’s Cash Management Portfolio Management Group since 2002; Member of the Cash Management Group Executive Committee since 2005; Director of BlackRock, Inc. since 1998.

Jeffery Holland, CFA 40 East 52nd Street New York, NY 10022 1971	Vice President	Since 2009	Director of BlackRock, Inc. since 2006; Chief Operating Officer of BlackRock’s U.S. Retail Group since 2009; Co-head of Product Development and Management for BlackRock’s U.S. Retail Group from 2007 to 2009; Product Manager of Raymond James & Associates from 2003 to 2006.

Brendan Kyne 40 East 52nd Street New York, NY 10022 1977	Vice President	Since 2009	Director of BlackRock, Inc. since 2008; Head of Product Development and Management for BlackRock’s U.S. Retail Group since 2009, co-head thereof from 2007 to 2009; Vice President of BlackRock, Inc. from 2005 to 2008; Associate of BlackRock, Inc. from 2002 to 2004.

Simon Mendelson 40 East 52nd Street New York, NY 10022 1964	Vice President	Since 2009	Managing Director of BlackRock, Inc. since 2005; Chief Operating Officer and head of the Global Client Group for BlackRock’s Global Cash Management Business since 2007; Head of BlackRock’s Strategy and Development Group from 2005 to 2007; Partner of McKinsey & Co. from 1997 to 2005.

Brian Schmidt 40 East 52nd Street New York, NY 10022 1958	Vice President	Since 2009	Managing Director of BlackRock, Inc. since 2004; Various positions with U.S. Trust Company from 1991 to 2003 including Director from 2001 to 2003 and Senior Vice President from 1998 to 2003; Vice President, Chief Financial Officer and Treasurer of Excelsior Funds, Inc., Excelsior Tax-Exempt Funds, Inc. and Excelsior Funds Trust from 2001 to 2003.

Christopher Stavrakos, CFA 40 East 52nd Street New York, NY 10022 1959	Vice President	Since 2009	Managing Director of BlackRock, Inc. since 2006; Co-head of BlackRock’s Cash Management Portfolio Management Group since 2006; Senior Vice President, CIO, and Director of Liability Management for the Securities Lending Group at Mellon Bank from 1999 to 2006.

Neal J. Andrews 40 East 52nd Street New York, NY 10022 1966	Chief Financial Officer	Since 2007	Managing Director of BlackRock, Inc. since 2006; Senior Vice President and Line of Business Head of Fund Accounting and Administration at PNC Global Investment Servicing (U.S.) Inc. from 1992 to 2006.

Jay M. Fife 40 East 52nd Street New York, NY 10022 1970	Treasurer	Since 2007	Managing Director of BlackRock, Inc. since 2007 and Director in 2006; Assistant Treasurer of the Merrill Lynch Investment Managers, L.P. (“MLIM”) and Fund Asset Management, L.P. advised funds from 2005 to 2006; Director of MLIM Fund Services Group from 2001 to 2006.

Brian P. Kindelan 40 East 52nd Street New York, NY 10022 1959	Chief Compliance Officer	Since 2007	Chief Compliance Officer of the BlackRock-advised Funds since 2007; Managing Director and Senior Counsel of BlackRock, Inc. since 2005; Director and Senior Counsel of BlackRock Advisors, LLC from 2001 to 2004.

Howard B. Surloff 40 East 52nd Street New York, NY 10022 1965	Secretary	Since 2007	Managing Director of BlackRock, Inc. and General Counsel of U.S. Funds at BlackRock, Inc. since 2006; General Counsel (U.S.) of Goldman Sachs Asset Management, L.P. from 1993 to 2006.

1	Officers of the Fund serve at the pleasure of the Board.

Further information about the Fund’s Officers and Trustees is available in the Fund’s Statement of Additional Information, which can be obtained without charge by calling (800) 441-7762.


		ANNUAL REPORT		SEPTEMBER 30, 2009		77

Officers and Trustees (concluded)

Investment Advisor and Co-Administrator

BlackRock Advisors, LLC

Wilmington, DE 19809

Custodian

PFPC Trust Company

Philadelphia, PA 19153

Address of the Portfolios

100 Bellevue Parkway

Wilmington, DE 19809

Sub-Advisor - Global Opportunities Portfolio

BlackRock Financial

Management, Inc.

New York, NY 10022

Distributor

BlackRock Investments, LLC

New York, NY 10022

Sub-Advisor - International Opportunities Portfolio

BlackRock International, Ltd.

Edinburgh, Scotland EH3 8JB

Legal Counsel

Sidley Austin LLP

New York, NY 10019

Co-Administrator and Transfer Agent

PNC Global Investment

Servicing (U.S.) Inc.

Wilmington, DE 19809

Independent Registered Public Accounting Firm

Deloitte & Touche LLP

Philadelphia, PA 19103

Effective July 31, 2009, Donald C. Burke, President and Chief Executive Officer of the Fund retired. The Fund’s Board wishes Mr. Burke well in his retirement.

Effective August 1, 2009, Anne F. Ackerley became President and Chief Executive Officer of the Fund and Jeffrey Holland and Brian Schmidt became Vice Presidents of the Fund.

Effective September 17, 2009, Richard Hoerner, Brendan Kyne, Simon Mendelson and Christopher Stavrakos became Vice Presidents of the Fund.

Additional Information

General Information

Electronic Delivery

To enroll:

Shareholders Who Hold Accounts with Investment Advisors, Banks or Brokerages:

Please contact your financial advisor. Please note that not all investment advisors, banks or brokerages may offer this service.

Shareholders Who Hold Accounts Directly With BlackRock

1)	Access the BlackRock website at

http://www.blackrock.com/edelivery

2)	Click on the applicable link and follow the steps to sign up

3)	Log into your account

Householding

Availability of Quarterly Portfolio Schedule

Availability of Proxy Voting Policies and Procedures

Availability of Proxy Voting Record


78		ANNUAL REPORT		SEPTEMBER 30, 2009


Additional Information (concluded)

Shareholder Privileges

Account Information

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 portfolios.

Systematic Withdrawal Plan

Investor Class shareholders can establish a systematic withdrawal plan and receive periodic payments of $50 or more from their BlackRock portfolios, as long as their account is at least $10,000.

Retirement Plans

Shareholders may make investments in conjunction with Traditional, Rollover, Roth, Coverdell, Simple IRA’s, SEP IRA’s and 403(b) Plans.

BlackRock Privacy Principles


		ANNUAL REPORT		SEPTEMBER 30, 2009		79

A World-Class Mutual Fund Family

BlackRock offers a diverse lineup of open-end mutual funds crossing all investment styles and managed by experts in equity, fixed income and tax-exempt investing.


Equity Funds

BlackRock All-Cap Energy & Resources Portfolio	BlackRock Global Opportunities Portfolio	BlackRock Mid-Cap Value Equity Portfolio
BlackRock Asset Allocation Portfolio†	BlackRock Global SmallCap Fund	BlackRock Mid Cap Value Opportunities Fund
BlackRock Aurora Portfolio	BlackRock Health Sciences Opportunities Portfolio	BlackRock Natural Resources Trust
BlackRock Balanced Capital Fund†	BlackRock Healthcare Fund	BlackRock Pacific Fund
BlackRock Basic Value Fund	BlackRock Index Equity Portfolio*	BlackRock Science & Technology Opportunities Portfolio
BlackRock Capital Appreciation Portfolio	BlackRock International Fund	BlackRock Science & Technology Opportunities Portfolio
BlackRock Energy & Resources Portfolio	BlackRock International Diversification Fund	BlackRock Small Cap Core Equity Portfolio
BlackRock Equity Dividend Fund	BlackRock International Index Fund	BlackRock Small Cap Growth Equity Portfolio
BlackRock EuroFund	BlackRock International Opportunities Portfolio	BlackRock Small Cap Growth Fund II
BlackRock Focus Growth Fund	BlackRock International Value Fund	BlackRock Small Cap Index Fund
BlackRock Focus Value Fund	BlackRock Large Cap Core Fund	BlackRock Small Cap Value Equity Portfolio
BlackRock Fundamental Growth Fund	BlackRock Large Cap Core Plus Fund	BlackRock Small/Mid-Cap Growth Portfolio
BlackRock Global Allocation Fund†	BlackRock Large Cap Growth Fund	BlackRock S&P 500 Index Fund
BlackRock Global Dynamic Equity Fund	BlackRock Large Cap Value Fund	BlackRock U.S. Opportunities Portfolio
BlackRock Global Emerging Markets Fund	BlackRock Latin America Fund	BlackRock Utilities and Telecommunications Fund
BlackRock Global Financial Services Fund	BlackRock Mid-Cap Growth Equity Portfolio	BlackRock Value Opportunities Fund
BlackRock Global Growth Fund

Fixed Income Funds

BlackRock Bond Portfolio	BlackRock Income Builder Portfolio	BlackRock Short-Term Bond Fund
BlackRock Emerging Market Debt Portfolio	BlackRock Inflation Protected Bond Portfolio	BlackRock Strategic Income Portfolio
BlackRock GNMA Portfolio	BlackRock Intermediate Government Bond Portfolio	BlackRock Total Return Fund BlackRock Total Return Portfolio II
BlackRock Government Income Portfolio	BlackRock International Bond Portfolio	BlackRock World Income Fund
BlackRock High Income Fund	BlackRock Long Duration Bond Portfolio
BlackRock High Yield Bond Portfolio	BlackRock Low Duration Bond Portfolio
BlackRock Income Portfolio	BlackRock Managed Income Portfolio

Municipal Bond Funds

BlackRock AMT-Free Municipal Bond Portfolio	BlackRock Kentucky Municipal Bond Portfolio	BlackRock New York Municipal Bond Fund
BlackRock California Municipal Bond Fund	BlackRock Municipal Insured Fund	BlackRock Ohio Municipal Bond Portfolio
BlackRock Delaware Municipal Bond Portfolio	BlackRock National Municipal Fund	BlackRock Pennsylvania Municipal Bond Fund
BlackRock High Yield Municipal Fund	BlackRock New Jersey Municipal Bond Fund	BlackRock Short-Term Municipal Fund
BlackRock Intermediate Municipal Fund

Target Risk & Target Date Funds

BlackRock Prepared Portfolios	BlackRock Lifecycle Prepared Portfolios
Conservative Prepared Portfolio	Prepared Portfolio 2010	Prepared Portfolio 2030
Moderate Prepared Portfolio	Prepared Portfolio 2015	Prepared Portfolio 2035
Growth Prepared Portfolio	Prepared Portfolio 2020	Prepared Portfolio 2040
Aggressive Growth Prepared Portfolio	Prepared Portfolio 2025	Prepared Portfolio 2045
		Prepared Portfolio 2050

*	See the prospectus for information on specific limitations on investments in the fund.

†	Mixed asset fund.


80		ANNUAL REPORT		SEPTEMBER 30, 2009

[THIS PAGE INTENTIONALLY LEFT BLANK.]

LOGO

EQUITY5-9/09-AR

EQUITIES FIXED INCOME REAL ESTATE LIQUIDITY ALTERNATIVES BLACKROCK SOLUTIONS



BlackRock Asset Allocation Portfolio of BlackRock Funds^SM
ANNUAL REPORT \| SEPTEMBER 30, 2009

NOT FDIC INSURED

MAY LOSE VALUE

NO BANK GUARANTEE

Table of Contents


		Page
Dear Shareholder		3
Annual Report:
Portfolio Summary		4
About Portfolio Performance		6
Disclosure of Expenses		6
The Benefits and Risks of Leveraging		7
Derivative Financial Instruments		7
Financial Statements:
Summary Schedule of Investments		8
Statement of Assets and Liabilities		22
Statement of Operations		23
Statements of Changes in Net Assets		24
Financial Highlights		25
Notes to Financial Statements		29
Report of Independent Registered Public Accounting Firm		40
Important Tax Information (Unaudited)		40
Disclosure of Investment Advisory Agreement and Sub-Advisory Agreement		41
Officers and Trustees		45
Additional Information		48
Mutual Fund Family		50


2		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009

Dear Shareholder


Total Returns as of September 30, 2009	6-month		12-month
US equities (S&P 500 Index)	34.02	%	(6.91	)%
Small cap US equities (Russell 2000 Index)	43.95		(9.55	)
International equities (MSCI Europe, Australasia, Far East Index)	49.85		3.23
US Treasury securities (BofA Merrill Lynch 10-Year US Treasury Index*)	(3.77	)	7.66
Taxable fixed income (Barclays Capital US Aggregate Bond Index)	5.59		10.56
Tax-exempt fixed income (Barclays Capital Municipal Bond Index)	9.38		14.85
High yield bonds (Barclays Capital US Corporate High Yield 2% Issuer Capped Index)	40.25		22.51

*	Formerly a Merrill Lynch index.

Past performance is no guarantee of future results. Index performance shown for illustrative purposes only. You cannot invest directly in an index.

Sincerely,

Rob Kapito

President, BlackRock Advisors, LLC

Announcement to Shareholders

THIS PAGE NOT PART OF YOUR FUND REPORT


						3

Portfolio Summary as of September 30, 2009

Portfolio Management Commentary

How did the Portfolio perform?

•

For the 12-month period, the Portfolio outperformed its benchmark, a 60%/40% composite of the S&P 500 Index and the Barclays Capital US Aggregate Bond Index, respectively. The Portfolio also outperformed the broad-market S&P 500 index. The Portfolio underperformed the Barclays Capital US Aggregate Bond Index.

What factors influenced performance?

•

Allocation decisions, particularly among sub-asset classes, added strongly to performance over the course of the year. Broad allocation decisions among stocks, bonds and cash, along with aggregate underlying manager performance were additive as well. The Portfolio’s allocation to non-US equities was particularly strong, and its international small-mid cap allocation was the strongest. In this sleeve, strong stock selection was led by positioning within the materials and consumer discretionary sectors. From a regional perspective, allocation decisions in Japan and good stock selection in Europe were also positive factors. Other contributors included the Portfolio’s large-cap international and US large-cap growth allocations.

•

The biggest detractors from performance for the year were the Portfolio’s US large-cap value and energy allocations. In the large-cap value sleeve, strong returns from early 2009 turned by March as market favor went against quality names. In particular, names in the industrials and materials sectors detracted from performance. The energy sector within the Portfolio was a strong performer in the first three quarters of 2009, but this was overshadowed by its negative effect in the fourth quarter of 2008. Particularly in October 2008, energy suffered immensely along with most cyclical sectors. The smaller-cap names in this sleeve tend to suffer during economic contraction when demand for energy wanes. This effect was compounded because the credit crisis left these smaller-cap companies struggling for access to capital.

Describe recent Portfolio activity.

•

At the end of 2008, we added equity exposure via European large-cap equities and US large-cap equities in order to reduce the Portfolio’s equity underweight caused by market action, and to bring the Portfolio closer to a neutral equity stance.

•

In the first quarter of 2009, we moved the Portfolio from a slight equity overweight to flat equity exposure by reducing European large-cap equity exposure.

•

Late in the second quarter of 2009, we took some profits from the Portfolio’s small-cap equity positions by selling its small-cap core and mid-cap core strategies, which was approximately 5% of its total assets. We subsequently increased the Portfolio’s position in the US large-cap value strategy.

•

There were no major allocation changes in the third quarter of 2009.

Describe Portfolio positioning at period end.

•

The Portfolio ended the period with an overweight relative to the blended benchmark in equities and an underweight in fixed income. At period end, the Portfolio’s cash position was approximately 6% of net assets. When appropriate, we equitize the cash sleeve using broad-market index futures as a way to increase its overall equity position. Cash contributed positively to performance over the 12-month period.

•

As it becomes more apparent that we are in the midst of an economic recovery, we find ourselves asking how much of the recovery is based on fundamentals, and how much of it is based on the side effects of accommodative policy. The question that remains to be answered is whether liquidity-driven asset price reflation will outpace growth, due to fundamentals. While we wait for more evidence of a self-sustained recovery, we believe that stocks are increasingly more attractive over credit and remain committed to growth-sensitive risk assets across the Portfolio.

Portfolio Information


Ten Largest Holdings	Percent of Long-Term Investments
Fannie Mae	12	%
U.S. Treasury Notes/Strips	6
Freddie Mac	2
General Electric Co.	1
Ginnie Mae	1
Morgan Stanley	1
Credit Suisse Group	1
JPMorgan Chase & Co.	1
The Bear Stearns Cos., Inc.	1
Wells Fargo & Co.	1


Portfolio Composition	Percent of Long-Term Investments
Common Stocks	56	%
U.S. Government Sponsored Agency Securities	17
Corporate Bonds	7
Non-Agency Mortgage-Backed Securities	7
U.S. Treasury Obligations	7
Asset-Backed Securities	2
Foreign Government Obligations	1
Taxable Municipal Bonds	1
Preferred Securities	1
Foreign Agency Obligations	1


4		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009

Total Return Based on a $10,000 Investment

LOGO

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

2	The Portfolio uses an asset allocation strategy, investing varying percentages of its portfolio in three major categories: stocks, bonds and, to a lesser extent, money market instruments.

3	This unmanaged total return Index covers 500 industrial, utility, transportation and financial companies of the US markets (mostly New York Stock Exchange (the “NYSE”) issues) representing about 75% of NYSE market capitalization and 30% of NYSE issues.

4	This unmanaged market-weighted Index is comprised of investment grade corporate bonds (rated BBB or better), mortgages and US Treasury and government agency issues with at least one year to maturity.

Performance Summary for the Period Ended September 30, 2009


			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	29.07	%	6.15	%	N/A		4.55	%	N/A		5.65	%	N/A
Service	28.96		5.83		N/A		4.28		N/A		5.40		N/A
Investor A	28.83		5.66		0.08	%	4.16		3.03	%	5.29		4.73	%
Investor B	28.42		4.93		0.43		3.35		3.03		4.69		4.69
Investor C	28.47		4.99		3.99		3.42		3.42		4.54		4.54
60% S&P 500 Index/40% Barclays Capital US Aggregate Bond Index	22.04		0.63		N/A		2.95		N/A		2.74		N/A
S&P 500 Index	34.02		(6.91	)	N/A		1.02		N/A		(0.15	)	N/A
Barclays Capital US Aggregate Bond Index	5.59		10.56		N/A		5.13		N/A		6.30		N/A

5	Assuming maximum sales charge, if any. Average annual total returns with and without sales charges reflect reductions for distribution and service fees. See “About Portfolio 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						Hypothetical⁷
	Beginning Account Value April 1, 2009		Ending Account Value September 30, 2009		Expenses Paid During the Period⁶		Beginning Account Value April 1, 2009		Ending Account Value September 30, 2009		Expenses Paid During the Period⁶
Institutional	$	1,000.00	$	1,290.70	$	5.00	$	1,000.00	$	1,020.71	$	4.41
Service	$	1,000.00	$	1,289.60	$	6.43	$	1,000.00	$	1,019.45	$	5.67
Investor A	$	1,000.00	$	1,288.30	$	7.06	$	1,000.00	$	1,018.90	$	6.23
Investor B	$	1,000.00	$	1,284.20	$	11.40	$	1,000.00	$	1,015.09	$	10.05
Investor C	$	1,000.00	$	1,284.70	$	11.28	$	1,000.00	$	1,015.19	$	9.95

For each class of the Portfolio, expenses are equal to the annualized expense ratio for the class (0.87% for Institutional, 1.12% for Service, 1.23% for Investor A, 1.99% for Investor B and 1.97% for Investor C), multiplied by the average account value over the period, multiplied by 183/365 (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 6 for further information on how expenses were calculated.


		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009		5

About Portfolio Performance

•

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

•

Service Shares are not subject to any sales charge (front-end load) or deferred sales charge. Service Shares are subject to a service fee of 0.25% per year (but no distribution fee). Prior to January 28, 2005, Service Share performance results are those of Institutional Shares (which have no distribution or service fees) restated to reflect Service Share fees.

•

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

•

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

•

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 portfolio distributions or the redemption of portfolio shares. Performance data does not reflect this potential fee. Figures shown in the performance tables on the previous pages assume reinvestment of all dividends and capital gain distributions, if any, at net asset value on the payable date. Investment return and principal value of shares will fluctuate so that shares, when redeemed, may be worth more or less than their original cost.

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

The Portfolio’s investment advisor waived or reimbursed a portion of the Portfolio’s expenses. Without such waiver and reimbursement, the Portfolio’s performance would have been lower. BlackRock Advisors, LLC is under no obligation to waive or continue waiving its fees after February 1, 2010. Dividends paid to each class of shares will vary because of the different levels of service, distribution and transfer agency fees applicable to each class, which are deducted from the income available to be paid to shareholders.

Disclosure of Expenses

Shareholders of the Portfolio may incur the following charges: (a) expenses related to transactions, including sales charges and (b) operating expenses including advisory fees, service and distribution fees including 12b-1 fees, and other Portfolio expenses. The expense example on the previous page (which is based on a hypothetical investment of $1,000 invested on April 1, 2009 and held through September 30, 2009) is intended to assist shareholders both in calculating expenses based on an investment in the Portfolio and in comparing these expenses with similar costs of investing in other mutual funds.

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

The table also provides information about hypothetical account values and hypothetical expenses based on the Portfolio’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 Portfolio and other funds, compare the 5% hypothetical example with the 5% hypothetical examples that appear in other funds’ shareholder reports.

The expenses shown in the table are intended to highlight shareholders’ ongoing costs only and do not reflect any transactional expenses, such as sales charges. Therefore, the hypothetical examples are useful in comparing ongoing expenses only, and will not help shareholders determine the relative total expenses of owning different funds. If these transactional expenses were included, shareholder expenses would have been higher.


6		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009

The Benefits and Risks of Leveraging

The Portfolio may utilize leverage to seek to enhance its yield and net asset values (“NAVs”). However, these objectives cannot be achieved in all interest rate environments.

The Portfolio may utilize leverage through entering into reverse repurchase agreements and dollar rolls. In general, the concept of leveraging is based on the premise that the cost of assets to be obtained from leverage will be based on short-term interest rates, which normally will be lower than the income earned by the Portfolio on its longer-term portfolio investments. To the extent that the total assets of the Portfolio (including the assets obtained through leverage) are invested in higher-yielding portfolio investments, the Portfolio’s shareholders will benefit from the incremental net income.

Furthermore, the value of the Portfolio’s investments generally varies inversely with the direction of long-term interest rates, although other factors can influence the value of portfolio investments. Changes in interest rates can influence the Portfolio’s NAV positively or negatively in addition to the impact on the Portfolio’s performance from leverage.

The use of leverage may enhance opportunities for increased income to the Portfolio and shareholders, but as described above, it also creates risks as short- or long-term interest rates fluctuate. Leverage also will generally cause greater changes in the Portfolio’s NAV and dividend rate than a comparable portfolio without leverage. If the income derived from securities purchased with assets received from leverage exceeds the cost of leverage, the Portfolio’s net income will be greater than if leverage had not been used. Conversely, if the income from the securities purchased is not sufficient to cover the cost of leverage, the Portfolio’s net income will be less than if leverage had not been used, and therefore the amount available for distribution to shareholders will be reduced. The Portfolio may be required to sell portfolio securities at inopportune times or at distressed values in order to comply with regulatory requirements applicable to the use of leverage or as required by the terms of leverage instruments which may cause the Portfolio to incur losses. The use of leverage may limit the Portfolio’s ability to invest in certain types of securities or use certain types of hedging strategies. The Portfolio will incur expenses in connection with the use of leverage, all of which are borne by Portfolio shareholders and may reduce investment income.

Derivative Financial Instruments

The Portfolio may invest in various derivative instruments, including financial futures contracts, foreign currency exchange contracts, options and swaps, as specified in Note 2 of the Notes to Financial Statements, which constitute forms of economic leverage. Such instruments are used to obtain exposure to a market without owning or taking physical custody of securities or to hedge market, equity, credit, interest rate and/or foreign currency exchange rate risks. Such derivative instruments involve risks, including the imperfect correlation between the value of a derivative instrument and the underlying asset, possible default of the other party to the transaction and illiquidity of the derivative instrument. The Portfolio’s ability to successfully use a derivative instrument depends on the investment advisor’s ability to accurately predict pertinent market movements, which cannot be assured. The use of derivative instruments may result in losses greater than if they had not been used, may require the Portfolio to sell or purchase portfolio securities at inopportune times or for distressed values, may limit the amount of appreciation the Portfolio can realize on an investment or may cause the Portfolio to hold a security that it might otherwise sell. The Portfolio’s investments in these instruments are discussed in detail in the Notes to Financial Statements.


		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009		7

Summary Schedule of Investments September 30, 2009

This summary schedule of investments is presented to help investors focus on the Portfolio’s principal holdings. It includes the Portfolio’s 50 largest holdings, each investment of any issuer that exceeds 1% of the Portfolio’s net assets and affiliated issues. “Other Securities” represent all issues not required to be disclosed under the rules adopted by the Securities and Exchange Commission. A complete schedule of investments is available without charge, upon request, by calling 800-441-7762 or on the Securities and Exchange Commission’s website at http://www.sec.gov.


	Par (000)		Value		Percentages of Net Assets
Asset-Backed Securities
Bank of America Auto Trust,
Series 2009-2A, Class A3, 2.13%, 9/15/13(a)	$	1,430	$	1,432,480	0.3	%
Chase Issuance Trust,
Series 2009-A7, Class A7, 0.69%, 9/17/12(b)		1,725		1,725,133	0.3	%
Countrywide Asset-Backed Certificates:
Series 2002-2, Class M2, 1.97%, 12/25/31(b)		2		861	0.0	%
Series 2003-3, Class M6, 3.15%, 7/25/32(b)		3		343	0.0	%
Series 2003-BCI, Class M2, 3.25%, 9/25/32(b)		35		4,372	0.0	%
Series 2003-2, Class M2, 2.72%, 3/26/33(b)		123		33,058	0.0	%
Series 2006-18, Class 2A1, 0.30%, 3/25/37(b)		154		152,585	0.0	%
SLM Student Loan Trust:
Series 2008-5, Class A2, 1.60%, 10/25/16(b)		1,720		1,748,186	0.3	%
Series 2008-5, Class A3, 1.80%, 1/25/18(b)		440		450,628	0.1	%
Series 2005-4, Class A2, 0.58%, 4/26/21(b)		475		470,832	0.1	%
Series 2008-5, Class A4, 2.20%, 7/25/23(b)		1,170		1,212,025	0.2	%
Other Securities				5,574,535	1.1	%

Total Asset-Backed Securities				12,805,038	2.4	%



Preferred Securities
Capital Trusts
Commercial Banks
Other Securities				306,250	0.1	%
Diversified Financial Services
Credit Suisse/Guernsey, 5.86%(b)(c)(d)		530		402,800	0.1	%
General Electric Capital Corp., 6.38%, 11/15/67(b)		360		297,900	0.1	%
Goldman Sachs Capital II, 5.79%(b)(d)		300		216,000	0.0	%
JPMorgan Chase & Co., 7.90%(b)(d)		195		187,233	0.0	%
JPMorgan Chase Capital XXV, 6.80%, 10/01/37		1,150		1,157,321	0.2	%
Other Securities				11	0.0	%

				2,261,265	0.4	%


	Shares
Capital Trusts
Insurance
Other Securities				753,556	0.1	%

Total Preferred Securities				3,321,071	0.6	%

Collateralized Debt Obligations
Other Securities				—	0.0	%

Common Stocks
Aerospace & Defense
Other Securities				3,703,880	0.7	%

Air Freight & Logistics
United Parcel Service, Inc. - Class B		26,925		1,520,455	0.3	%
Other Securities				821,345	0.1	%

				2,341,800	0.4	%

Airlines
Other Securities				2,340,406	0.4	%

Auto Components
Westport Innovations, Inc. (acquired 9/15/04, cost $10,162)(e)(f)		2,086		26,494	0.0	%
Other Securities				2,403,721	0.5	%

				2,430,215	0.5	%

Automobiles
Other Securities				1,434,748	0.3	%

Beverages
The Coca-Cola Co.		37,323		2,004,245	0.4	%
Other Securities				2,540,161	0.5	%

				4,544,406	0.9	%

Biotechnology
Amgen, Inc.(e)		37,700		2,270,671	0.4	%
Other Securities				3,027,357	0.6	%

				5,298,028	1.0	%

Building Products
Other Securities				1,124,632	0.2	%

Capital Markets
The Goldman Sachs Group, Inc.		14,875		2,742,206	0.5	%
Morgan Stanley		13,975		431,548	0.1	%
Other Securities				4,965,251	0.9	%

				8,139,005	1.5	%

Chemicals
Other Securities				8,106,014	1.5	%

Commercial Banks
HSBC Holdings Plc		139,659		1,599,173	0.3	%
Wells Fargo & Co.		36,050		1,015,889	0.2	%

See Notes to Financial Statements.


8		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009

Summary Schedule of Investments (continued)


	Shares	Value		Percentages of Net Assets
Common Stocks
Other Securities		$	8,200,008	1.5	%

			10,815,070	2.0	%

Commercial Services & Supplies
Other Securities			2,371,207	0.4	%

Communications Equipment
Cisco Systems, Inc.(e)	105,591		2,485,612	0.5	%
QUALCOMM, Inc.	65,522		2,947,180	0.5	%
Other Securities			2,700,074	0.5	%

			8,132,866	1.5	%

Computers & Peripherals
Apple, Inc.(e)	21,734		4,028,832	0.8	%
Hewlett-Packard Co.	37,525		1,771,555	0.3	%
International Business Machines Corp.	12,475		1,492,135	0.3	%
Other Securities			2,748,260	0.5	%

			10,040,782	1.9	%

Construction & Engineering
Other Securities			2,043,516	0.4	%

Construction Materials
Other Securities			1,021,137	0.2	%

Consumer Finance
SLM Corp.(e)	16,600		144,752	0.0	%
Other Securities			196,789	0.1	%

			341,541	0.1	%

Containers & Packaging
Other Securities			1,942,221	0.4	%

Distributors
Other Securities			246,361	0.0	%

Diversified Consumer Services
Other Securities			501,730	0.1	%

Diversified Financial Services
Bank of America Corp.	47,950		811,314	0.2	%
Citigroup, Inc.	41,400		200,376	0.0	%
JPMorgan Chase & Co.	50,225		2,200,859	0.4	%
Other Securities			3,749,522	0.7	%

			6,962,071	1.3	%

Diversified Telecommunication Services
AT&T, Inc.	33,042		892,464	0.2	%
Verizon Communications, Inc.	57,044		1,726,722	0.3	%
Other Securities			3,616,722	0.7	%

			6,235,908	1.2	%

Electric Utilities
Other Securities			2,372,575	0.4	%

Electrical Equipment
Other Securities			1,431,355	0.3	%

Electronic Equipment, Instruments & Components
Other Securities			3,826,235	0.7	%

Energy Equipment & Services
Schlumberger Ltd.	28,347		1,689,481	0.3	%
Technicoil Corp. (acquired 6/15/04, cost $24,418)(e)(f)	33,500		11,577	0.0	%
Other Securities			10,299,083	1.9	%

			12,000,141	2.2	%

Food & Staples Retailing
Wal-Mart Stores, Inc.	35,786		1,756,735	0.3	%
Other Securities			2,046,824	0.4	%

			3,803,559	0.7	%

Food Products
Nestle SA	37,015		1,580,195	0.3	%
Other Securities			4,106,809	0.8	%

			5,687,004	1.1	%

Gas Utilities
Other Securities			1,443,027	0.3	%

Health Care Equipment & Supplies
Other Securities			7,171,544	1.3	%

Health Care Providers & Services
Other Securities			10,148,748	1.9	%

Health Care Technology
Other Securities			1,254,092	0.2	%

Hotels, Restaurants & Leisure
Other Securities			5,954,644	1.1	%

Household Durables
Other Securities			1,336,892	0.3	%

Household Products
The Procter & Gamble Co.	44,780		2,593,657	0.5	%
Other Securities			1,126,034	0.2	%

			3,719,691	0.7	%

Independent Power Producers & Energy Traders
Other Securities			3,552,917	0.7	%

Industrial Conglomerates
3M Co.	23,200		1,712,160	0.3	%
General Electric Co.	79,375		1,303,338	0.2	%
Other Securities			1,426,173	0.3	%

			4,441,671	0.8	%

Insurance
Other Securities			13,131,585	2.5	%

Internet & Catalog Retail
Other Securities			1,842,538	0.3	%

Internet Software & Services
Google, Inc. - Class A(e)	6,022		2,986,009	0.6	%
Other Securities			2,405,773	0.4	%

			5,391,782	1.0	%

IT Services
Other Securities			4,294,517	0.8	%

Leisure Equipment & Products
Other Securities			554,102	0.1	%

Life Sciences Tools & Services
Other Securities			1,451,331	0.3	%

Machinery
Danaher Corp.	30,100		2,026,332	0.4	%

See Notes to Financial Statements.


		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009		9


Summary Schedule of Investments (continued)


	Shares		Value		Percentages of Net Assets
Common Stocks
Machinery (concluded)
Other Securities			$	6,322,105	1.2	%

				8,348,437	1.6	%

Marine
Other Securities				227,525	0.0	%

Media
Other Securities				6,192,494	1.2	%

Metals & Mining
Crosshair Exploration & Mining Corp. (acquired 4/01/08, cost $6,372)(e)(f)		5,300		1,262	0.0	%
Other Securities				9,648,182	1.8	%

				9,649,444	1.8	%

Multiline Retail
Kohl’s Corp.(e)		34,302		1,956,929	0.4	%
Other Securities				2,357,293	0.4	%

				4,314,222	0.8	%

Multi-Utilities
Other Securities				2,800,493	0.5	%

Office Electronics
Other Securities				1,296,306	0.2	%

Oil, Gas & Consumable Fuels
Cinch Energy Corp. (acquired 6/07/04 through 7/07/05, cost $63,400)(e)(f)		40,320		36,906	0.0	%
ConocoPhillips		31,300		1,413,508	0.3	%
CONSOL Energy, Inc.		34,989		1,578,354	0.3	%
Crew Energy, Inc. (acquired 5/12/04, cost $36,232)(e)(f)		9,400		75,945	0.0	%
Exxon Mobil Corp.		46,700		3,204,087	0.6	%
Galleon Energy, Inc. - Class A (acquired 2/09/04, cost $12,571)(e)(f)		6,300		36,894	0.0	%
Longview Energy Co. (acquired 8/13/04, cost $48,000)(e)(f)		3,200		28,800	0.0	%
Matador Resources Co. (acquired 10/14/03 through 4/13/06, cost $62,950)(e)(f)		8,685		103,178	0.0	%
Midnight Oil Exploration Ltd. (acquired 9/29/05, cost $39,607)(e)(f)		11,600		10,835	0.0	%
PetroHawk Energy Corp.(e)		69,500		1,682,595	0.3	%
Plains Exploration & Production Co.(e)		57,025		1,577,312	0.3	%
TriStar Oil & Gas Ltd. (acquired 11/24/08, cost $5,747)(e)(f)		700		10,232	0.0	%
Vero Energy, Inc. (acquired 11/28/05, cost $3,345)(e)(f)		1,759		6,670	0.0	%
Other Securities				23,004,999	4.3	%

				32,770,315	6.1	%

Paper & Forest Products
Other Securities				1,138,730	0.2	%

Personal Products
Other Securities				1,436,100	0.3	%

Pharmaceuticals
Abbott Laboratories		30,900		1,528,623	0.3	%
Pfizer, Inc.		79,400		1,314,070	0.2	%
Other Securities				10,438,764	2.0	%

				13,281,457	2.5	%

Professional Services
Other Securities				2,368,871	0.4	%

Real Estate Investment Trusts (REITs)
Other Securities				3,534,374	0.7	%

Real Estate Management & Development
Other Securities				2,225,534	0.4	%

Road & Rail
Other Securities				2,723,999	0.5	%

Semiconductors & Semiconductor Equipment
Other Securities				8,511,776	1.6	%

Software
Microsoft Corp.		127,400		3,298,386	0.6	%
Other Securities				7,276,638	1.4	%

				10,575,024	2.0	%

Specialty Retail
Other Securities				7,625,913	1.4	%

Textiles, Apparel & Luxury Goods
Other Securities				1,216,566	0.2	%

Thrifts & Mortgage Finance
Other Securities				613,418	0.1	%

Tobacco
Philip Morris International, Inc.		25,801		1,257,541	0.3	%
Other Securities				1,684,912	0.3	%

				2,942,453	0.6	%

Trading Companies & Distributors
Other Securities				1,308,755	0.2	%

Transportation Infrastructure
Other Securities				1,414,593	0.3	%

Water Utilities
Other Securities				249,991	0.1	%

Wireless Telecommunication Services
Other Securities				3,085,322	0.6	%

Total Common Stocks				314,779,606	58.9	%


	Par (000)
Corporate Bonds
Aerospace & Defense
Other Securities				35,350	0.0	%

Auto Components
Other Securities				188,463	0.0	%

Capital Markets
The Goldman Sachs Group, Inc., 5.25%, 10/15/13	$	310		329,101	0.1	%

See Notes to Financial Statements.


10		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009


Summary Schedule of Investments (continued)


	Par (000)		Value		Percentages of Net Assets
Corporate Bonds
Capital Markets (concluded)
Morgan Stanley:
0.79%, 1/09/12(b)	$	925	$	900,264	0.2	%
5.55%, 4/27/17		115		114,564	0.0	%
5.63%, 9/23/19		700		688,309	0.1	%
Other Securities				19	0.0	%

				2,032,257	0.4	%

Chemicals
Other Securities				624,675	0.1	%

Commercial Banks
JPMorgan Chase Bank, N.A.,
6.00%, 7/05/17		425		446,395	0.1	%
Other Securities				34,593	0.0	%

				480,988	0.1	%

Commercial Services & Supplies
Other Securities				24,605	0.0	%

Containers & Packaging
Other Securities				544,275	0.1	%

Diversified Financial Services
General Electric Capital Corp.:
5.00%, 12/01/10		300		310,089	0.1	%
6.75%, 3/15/32		50		51,046	0.0	%
6.15%, 8/07/37		360		341,631	0.1	%
JPMorgan Chase & Co.,
5.60%, 6/01/11		550		583,456	0.1	%
Other Securities				2,806,423	0.5	%

				4,092,645	0.8	%

Diversified Telecommunication Services
AT&T, Inc.:
5.50%, 2/01/18		250		260,844	0.0	%
6.50%, 9/01/37		800		859,606	0.2	%
Verizon Communications, Inc.:
8.75%, 11/01/18		1,050		1,311,712	0.2	%
6.35%, 4/01/19		300		331,280	0.1	%
Verizon Maryland, Inc.,
5.13%, 6/15/33		10		8,510	0.0	%
Other Securities				1,912,055	0.4	%

				4,684,007	0.9	%

Electric Utilities
Other Securities				1,925,579	0.4	%

Food & Staples Retailing
Other Securities				44,000	0.0	%

Food Products
Other Securities				1,586,045	0.3	%

Gas Utilities
Other Securities				139,235	0.0	%

Health Care Equipment & Supplies
Other Securities				352,762	0.1	%

Health Care Providers & Services
Other Securities				213,900	0.0	%

Hotels, Restaurants & Leisure
Other Securities				524,120	0.1	%

Household Durables
Other Securities				2,160,826	0.4	%

Independent Power Producers & Energy Traders
Other Securities				183,825	0.0	%

Insurance
Other Securities				3,121,852	0.6	%

Internet & Catalog Retail
Other Securities				1,164,450	0.2	%

Media
Other Securities				3,090,394	0.6	%

Metals & Mining
Other Securities				10,475	0.0	%

Multiline Retail
Other Securities				410,643	0.1	%

Oil, Gas & Consumable Fuels
ConocoPhillips, 4.60%, 1/15/15	$	1,045		1,115,322	0.2	%
Other Securities				2,829,742	0.5	%

				3,945,064	0.7	%

Paper & Forest Products
Other Securities				143,064	0.0	%

Pharmaceuticals
Pfizer, Inc., 5.35%, 3/15/15(g)		1,190		1,317,696	0.3	%
Other Securities				2,297,322	0.4	%

				3,615,018	0.7	%

Real Estate Investment Trusts (REITs)
Other Securities				96,600	0.0	%

Software
Other Securities				1,263,543	0.2	%

Specialty Retail
Other Securities				80,800	0.0	%

Tobacco
Philip Morris International, Inc., 6.88%, 3/17/14		275		314,150	0.1	%

Wireless Telecommunication Services
Cellco Partnership/Verizon Wireless Capital LLC, 3.75%, 5/20/11(a)		1,620		1,671,398	0.3	%
Other Securities				1,940,371	0.4	%

				3,611,769	0.7	%

Total Corporate Bonds				40,705,379	7.6	%

Exchange-Traded Funds
Other Securities				248,570	0.1	%

Foreign Agency Obligations
Other Securities				2,920,012	0.6	%

See Notes to Financial Statements.


		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009		11


Summary Schedule of Investments (continued)


	Par (000)		Value		Percentages of Net Assets
Foreign Government Obligations
Argentina
Other Securities			$	55,527	0.0	%

Brazil
Other Securities				1,172,370	0.2	%

Canada
Other Securities				708,368	0.1	%

Colombia
Other Securities				271,200	0.1	%

El Salvador
Other Securities				55,000	0.0	%

Indonesia
Other Securities				220,050	0.1	%

Israel
Other Securities				198,622	0.0	%

Mexico
Other Securities				373,007	0.1	%

Panama
Other Securities				125,400	0.0	%

Peru
Other Securities				124,775	0.0	%

Philippines
Other Securities				431,975	0.1	%

Russia
Other Securities				204,093	0.0	%

Tunisia
Other Securities				467,500	0.1	%

Turkey
Other Securities				558,514	0.1	%

Ukraine
Other Securities				78,000	0.0	%

United Kingdom
Other Securities				454,458	0.1	%

Uruguay
Other Securities				174,075	0.0	%

Venezuela
Other Securities				416,000	0.1	%

Total Foreign Government Obligations				6,088,934	1.1	%

Non-Agency Mortgage-Backed Securities
Collateralized Mortgage Obligations Banc of America Alternative Loan Trust, Series 2004-6, Class 4A1, 5.00%, 7/25/19	$	138		130,841	0.0	%
Bear Stearns Adjustable Rate Mortgage Trust, Series 2005-4, Class 3A1, 5.37%, 8/25/35(b)		3,589		3,010,386	0.6	%
Countrywide Alternative Loan Trust, Series 2005-21CB, Class A17, 6.00%, 6/25/35		1,114		1,008,017	0.2	%
Countrywide Home Loan Mortgage Pass-Through Trust:
Series 2003-27, Class M, 4.06%, 6/25/33(b)		487		46,641	0.0	%
Series 2003-56, Class 4A1, 4.90%, 12/25/33(b)		1,016		977,870	0.2	%
Series 2003-58, Class B1, 4.69%, 2/19/34(b)		119		33,687	0.0	%
Series 2007-J3, Class A10, 6.00%, 7/25/37(b)		898		769,420	0.2	%
Series 2006-OA5, Class 3A1, 0.45%, 4/25/46(b)		409		190,742	0.0	%
Credit Suisse Mortgage Capital Certificates,
Series 2006-8, Class 3A1, 6.00%, 10/25/21		232		154,467	0.0	%
JPMorgan Mortgage Trust:
Series 2007-S1, Class 1A2, 5.50%, 3/25/22		122		103,494	0.0	%
Series 2006-S2, Class 2A2, 5.88%, 7/25/36		116		106,408	0.0	%
WaMu Mortgage Pass-Through Certificates:
Series 2003-AR3, Class B2, 3.57%, 4/25/33(b)		42		16,154	0.0	%
Series 2003-AR5, Class B2, 2.91%, 6/25/33(b)		146		42,848	0.0	%
Series 2003-AR8, Class B1, 2.85%, 8/25/33(b)		172		37,746	0.0	%
Series 2004-AR1, Class B1, 3.71%, 3/25/34(b)		738		213,130	0.0	%
Series 2004-AR3, Class B1, 3.13%, 6/25/34(b)		189		95,862	0.0	%
Series 2006-AR18, Class 1A1, 5.28%, 1/25/37(b)		797		527,375	0.1	%
Series 2007-HY7, Class 4A1, 5.84%, 7/25/37(b)		1,308		869,746	0.2	%
Series 2007-OA4, Class 1A, 1.67%, 5/25/47(b)		258		134,809	0.0	%
Series 2007-OA5, Class 1A, 1.65%, 6/25/47(b)		215		115,621	0.0	%
Wells Fargo Mortgage Backed Securities Trust:
Series 2005-AR15, Class 2A1, 5.11%, 9/25/35(b)		1,607		1,469,227	0.3	%

See Notes to Financial Statements.


12		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009


Summary Schedule of Investments (continued)


	Par (000)		Value		Percentages of Net Assets
Non-Agency Mortgage-Backed Securities
Collateralized Mortgage Obligations (concluded)
Series 2006-AR2, Class 2A5, 5.03%, 3/25/36(b)	$	1,773	$	1,321,250	0.3	%
Series 2006-AR12, Class 2A1, 6.10%, 9/25/36(b)		316		249,710	0.1	%
Series 2006-AR17, Class A1, 5.33%, 10/25/36(b)		527		399,280	0.1	%
Other Securities				3,967,848	0.7	%

				15,992,579	3.0	%

Commercial Mortgage-Backed Securities
Bank of America-First Union National Bank Commercial Mortgage, Series 2001-3, Class A2, 5.46%, 4/11/37		1,375		1,432,742	0.3	%
Bear Stearns Commercial Mortgage Securities:
Series 2000-WF2, Class A2, 7.32%, 10/15/32(b)		421		432,222	0.1	%
Series 2002-TOP6, Class A1, 5.92%, 10/15/36		185		189,564	0.0	%
Series 2003-T12, Class A4, 4.68%, 8/13/39(b)		1,025		1,022,562	0.2	%
CS First Boston Mortgage Securities Corp.:
Series 2002-CP5, Class A2, 4.94%, 12/15/35		1,010		1,045,483	0.2	%
Series 2001-CP4, Class D, 6.61%, 12/15/35		1,450		1,444,000	0.3	%
Series 2002-CKS4, Class A2, 5.18%, 11/15/36		1,090		1,123,193	0.2	%
Series 2002-CKN2, Class A3, 6.13%, 4/15/37		1,000		1,056,701	0.2	%
Series 2003-C3, Class A5, 3.94%, 5/15/38		1,020		1,003,914	0.2	%
First Union National Bank Commercial Mortgage:
Series 2001-C4, Class A2, 6.22%, 12/12/33		1,140		1,195,434	0.2	%
Series 2001-C2, Class A2, 6.66%, 1/12/43		923		965,578	0.2	%
GE Business Loan Trust:
Series 2003-1, Class A, 0.67%, 4/15/31(a)(b)		129		93,032	0.0	%
Series 2003-1, Class B, 1.54%, 4/15/31(a)(b)		86		38,763	0.0	%
Series 2003-2A, Class B, 1.24%, 11/15/31(a)(b)		554		373,628	0.1	%
Series 2004-1, Class B, 0.94%, 5/15/32(a)(b)		131		50,747	0.0	%
JPMorgan Chase Commercial Mortgage Securities Corp., Series 2007-LD11, Class A2, 5.99%, 6/15/49(b)		1,220		1,223,133	0.2	%
Morgan Stanley Capital I:
Series 2001-TOP1, Class A4, 6.66%, 2/15/33		821		849,439	0.2	%
Series 2002-TOP7, Class A1, 5.38%, 1/15/39		70		71,174	0.0	%
Series 2003-IQ4, Class A2, 4.07%, 5/15/40		1,025		1,008,024	0.2	%
Series 2005-HQ6, Class A4A, 4.99%, 8/13/42		2,405		2,340,296	0.4	%
Other Securities				6,451,236	1.2	%

				23,410,865	4.4	%

Interest Only Collateralized Mortgage Obligations
WaMu Commercial Mortgage Securities Trust, Series 2005-C1A, Class X, 2.06%, 5/25/36(a)(b)		4,422		137,073	0.0	%
Other Securities				6,529	0.0	%

				143,602	0.0	%

Principal Only Collateralized Mortgage Obligations
Other Securities				37,196	0.0	%

Total Non-Agency Mortgage-Backed Securities				39,584,242	7.4	%

Taxable Municipal Bonds
State of California Various Purpose GO, 5.45%, 4/01/15		1,450		1,531,591	0.3	%
Other Securities				2,008,048	0.4	%

Total Taxable Municipal Bonds				3,539,639	0.7	%

U.S. Government Sponsored Agency Securities
Agency Obligations
Federal Home Loan Bank:
5.63%, 6/13/16		890		898,276	0.2	%
5.38%, 5/15/19		2,005		2,198,807	0.4	%
Freddie Mac:
1.75%, 6/15/12		600		603,167	0.1	%
5.25%, 4/18/16		760		847,718	0.1	%
Other Securities				1,458,586	0.3	%

				6,006,554	1.1	%

See Notes to Financial Statements.


		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009		13


Summary Schedule of Investments (continued)


	Par (000)		Value		Percentages of Net Assets
U.S. Government Sponsored Agency Securities
Collateralized Mortgage Obligations
Fannie Mae:
Series 2004-88, Class HA, 6.50%, 7/25/34	$	31	$	33,445	0.0	%
Series 2007-108, Class AN, 8.83%, 11/25/37(b)		682		749,742	0.2	%
Freddie Mac, Series 2864, Class NA, 5.50%, 1/15/31		85		89,983	0.0	%

				873,170	0.2	%

Federal Deposit Insurance Corporation Guaranteed
Citibank, N.A., 1.38%, 8/10/11		2,700		2,709,655	0.5	%
Citigroup Funding, Inc.:
2.13%, 7/12/12		755		763,334	0.1	%
1.88%, 10/22/12		1,500		1,502,906	0.3	%
General Electric Capital Corp.:
2.25%, 3/12/12		950		967,156	0.2	%
2.00%, 9/28/12		950		955,294	0.2	%
2.13%, 12/21/12		2,060		2,078,711	0.4	%
2.63%, 12/28/12		1,250		1,280,689	0.2	%

				10,257,745	1.9	%

Interest Only Collateralized Mortgage Obligations
Fannie Mae, Series 2003-T1, Class R, 0.65%, 11/25/12(b)		6,294		95,034	0.0	%
Ginnie Mae, Series 2009-26, Class SC, 6.16%, 1/16/38(b)		1,637		158,528	0.0	%

				253,562	0.0	%

Mortgage-Backed Securities
Fannie Mae Mortgage-Backed Securities:
7.00%, 8/01/14-1/01/16		104		110,932	0.0	%
5.50%, 4/01/17-2/01/35		324		341,803	0.1	%
5.00%, 1/01/23		1,041		1,093,933	0.2	%
5.00%, 2/01/24		2,974		3,124,626	0.6	%
4.50%, 10/01/24(h)		1,400		1,449,000	0.3	%
5.00%, 10/01/24(h)		2,600		2,725,125	0.5	%
5.50%, 10/01/24(h)		700		740,031	0.1	%
6.00%, 10/01/24(h)		100		106,500	0.0	%
7.50%, 10/01/25(i)		—		4	0.0	%
6.00%, 3/01/34		3,202		3,407,828	0.6	%
4.19%, 12/01/34(b)		694		706,525	0.1	%
5.50%, 2/01/35(g)		4,679		4,922,530	0.9	%
6.00%, 9/01/11-8/01/37		3,098		3,289,285	0.6	%
6.00%, 11/01/37		1,691		1,788,105	0.3	%
5.50%, 9/01/38		3,727		3,903,965	0.7	%
4.50%, 4/01/39-9/01/39		5,945		6,029,643	1.2	%
4.00%, 10/01/24-10/01/39(h)		1,800		1,808,875	0.4	%
4.50%, 10/01/39(h)		13,700		13,871,250	2.6	%
5.00%, 10/01/39(h)		4,000		4,130,000	0.8	%
5.50%, 10/01/39(h)		4,500		4,706,719	0.9	%
6.00%, 10/01/39(h)		6,500		6,855,469	1.3	%
6.50%, 11/01/39(h)		1,500		1,595,156	0.3	%
Freddie Mac Mortgage-Backed Securities:
4.00%, 5/01/10		47		47,197	0.0	%
6.00%, 4/01/13-6/01/16		59		62,727	0.0	%
5.00%, 2/01/22-4/01/22		948		999,527	0.1	%
9.50%, 12/01/22		133		152,643	0.0	%
8.00%, 2/01/23-8/01/27		16		17,942	0.0	%
5.00%, 10/01/24-10/01/39(h)		1,400		1,464,156	0.3	%
6.00%, 10/01/24(h)		300		319,312	0.1	%
5.50%, 8/01/33		24		25,319	0.0	%
5.05%, 12/01/35-4/01/38(b)		1,340		1,398,240	0.3	%
5.50%, 10/01/39(h)		2,400		2,511,750	0.5	%
Ginnie Mae Mortgage-Backed Securities:
7.50%, 12/15/10		8		7,702	0.0	%
5.50%, 4/15/33-8/15/33		414		438,059	0.1	%
5.00%, 10/20/33		883		919,451	0.2	%
2.75%, 5/20/34(b)		108		108,212	0.0	%
5.00%, 10/01/39(h)		3,200		3,311,000	0.6	%
6.00%, 10/01/39(h)		1,400		1,477,437	0.3	%

				79,967,978	15.0	%

Total U.S. Government Sponsored Agency Securities				97,359,009	18.2	%

U.S. Treasury Obligations
U.S. Treasury Bonds:
5.25%, 2/15/29		1,300		1,509,422	0.3	%
4.25%, 5/15/39(j)		870		900,042	0.2	%
U.S. Treasury Notes:
1.00%, 9/30/11		575		575,449	0.1	%
1.38%, 9/15/12		3,855		3,848,374	0.7	%
2.38%, 8/31/14		4,455		4,471,706	0.8	%
2.38%, 9/30/14(k)		7,055		7,073,202	1.3	%
3.25%, 7/31/16(k)		3,995		4,088,635	0.8	%
3.00%, 9/30/16(k)		10,800		10,843,027	2.0	%
3.63%, 8/15/19(k)		1,310		1,344,592	0.3	%

See Notes to Financial Statements.


14		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009


Summary Schedule of Investments (continued)


	Par (000)		Value			Percentages of Net Assets
U.S. Treasury Obligations
U.S. Treasury Strips, 3.88%, 8/15/20(l)	$	3,240	$	2,133,971		0.4	%

Total U.S. Treasury Obligations				36,788,420		6.9	%

Warrants
Crosshair Exploration & Mining Corp. (issued/exercisable 4/04/08, 1 share for 1 warrant, expiring 10/04/09, strike price 1.80 CAD) (acquired 4/04/08, cost $51)(e)(f)		5,300		—		0.0	%
Other Securities				1,024		0.0	%

Total Warrants				1,024		0.0	%

Total Long-Term Investments (Cost — $503,706,201)				558,140,944		104.5	%


	Shares/ Beneficial Interest
Short-Term Securities
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.22%(m)(n)		32,630,899		32,630,899		6.1	%
BlackRock Liquidity Series, LLC Money Market Series, 0.29%(m)(n)(o)		1,248,500		1,248,500		0.2	%

Total Short-Term Securities (Cost — $33,879,399)				33,879,399		6.3	%

Options Purchased
Over-the-Counter Call Swaptions Purchased
Other Securities				421,307		0.1	%

Over-the-Counter Put Swaptions Purchased
Other Securities				813,876		0.1	%

Total Options Purchased (Cost — $1,668,303)				1,235,183		0.2	%

Total Investments Before TBA Sale Commitments and Outstanding Options Written (Cost — $539,253,903*)				593,255,526		111.0	%


	Par (000)
TBA Sale Commitments(h)
Fannie Mae Mortgage-Backed Securities:
5.00%, 10/01/24- 11/01/24	$	3,600		(3,771,533	)	(0.7	)%
4.50%, 10/01/39		1,900		(1,923,750	)	(0.4	)%
5.50%, 10/01/39		6,127		(6,408,197	)	(1.2	)%
6.00%, 10/01/39		14,114		(14,885,778	)	(2.8	)%
Freddie Mac Mortgage-Backed Securities, 5.00%, 10/01/24		2,000		(2,098,750	)	(0.4	)%
Ginnie Mae Mortgage-Backed Securities:
5.00%, 10/01/39		800		(826,752	)	(0.1	)%
6.00%, 10/01/39		1,400		(1,477,437	)	(0.3	)%

Total TBA Sale Commitments (Proceeds — $31,137,193)				(31,392,197	)	(5.9	)%


	Contracts (p)
Options Written
Over-the-Counter Call Swaptions Written
Pay a fixed rate of 3.140% and receive a floating rate based on 3-month LIBOR, expiring April 2010, Broker, Barclays Bank Plc		150		(20,444	)	(0.0	)%
Pay a fixed rate of 3.330% and receive a floating rate based on 3-month LIBOR, expiring March 2010, Broker, Citibank, N.A.		210		(38,683	)	(0.0	)%
Pay a fixed rate of 3.500% and receive a floating rate based on 3-month LIBOR, expiring January 2010, Broker, Deutsche Bank AG		400		(86,651	)	(0.0	)%
Pay a fixed rate of 3.580% and receive a floating rate based on 3-month LIBOR, expiring January 2010, Broker, Deutsche Bank AG		560		(139,290	)	(0.0	)%
Pay a fixed rate of 3.650% and receive a floating rate based on 3-month LIBOR, expiring March 2010, Broker, Citibank, N.A.		460		(147,688	)	(0.0	)%
Pay a fixed rate of 3.800% and receive a floating rate based on 3-month LIBOR, expiring February 2010, Broker, Credit Suisse International		440		(167,040	)	(0.0	)%
Pay a fixed rate of 3.800% and receive a floating rate based on 3-month LIBOR, expiring May 2010, Broker, Morgan Stanley Capital Services, Inc.		300		(121,688	)	(0.0	)%
Pay a fixed rate of 3.880% and receive a floating rate based on 3-month LIBOR, expiring March 2010, Broker, Citibank N.A.		260		(112,524	)	(0.0	)%
Pay a fixed rate of 3.900% and receive a floating rate based on 3-month LIBOR, expiring March 2010, Broker, Bank of America, N.A.		360		(158,384	)	(0.0	)%

See Notes to Financial Statements.


		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009		15


Summary Schedule of Investments (continued)


	Contracts (p)	Value			Percentages of Net Assets
Options Written
Over-the-Counter Call Swaptions Written (concluded)
Pay a fixed rate of 3.960% and receive a floating rate based on 3-month LIBOR, expiring March 2010, Broker, Citibank N.A.	230	$	(109,653	)	(0.0	)%
Pay a fixed rate of 4.065% and receive a floating rate based on 3-month LIBOR, expiring September 2010, Broker, Citibank N.A.	310		(169,702	)	(0.0	)%
Pay a fixed rate of 4.080% and receive a floating rate based on 3-month LIBOR, expiring September 2010, Broker, Deutsche Bank AG	460		(255,316	)	(0.1	)%
Pay a fixed rate of 4.123% and receive a floating rate based on 3-month LIBOR, expiring August 2010, Broker, Morgan Stanley Capital Services, Inc.	160		(92,310	)	(0.0	)%
Pay a fixed rate of 4.125% and receive a floating rate based on 3-month LIBOR, expiring September 2010, Broker, Citibank, N.A.	320		(185,453	)	(0.1	)%
Pay a fixed rate of 4.800% and receive a floating rate based on 3-month LIBOR, expiring June 2010, Broker, Citibank, N.A.	280		(281,840	)	(0.1	)%
Pay a fixed rate of 4.870% and receive a floating rate based on 3-month LIBOR, expiring February 2010, Broker, Deutsche Bank AG	570		(628,813	)	(0.1	)%
Pay a fixed rate of 5.400% and receive a floating rate based on 3-month LIBOR, expiring December 2010, Broker, UBS AG	260		(351,753	)	(0.1	)%
Pay a fixed rate of 5.485% and receive a floating rate based on 3-month LIBOR, expiring October 2009, Broker, JPMorgan Chase Bank, N.A.	140		(239,998	)	(0.1	)%
Pay a fixed rate of 5.670% and receive a floating rate based on 3-month LIBOR, expiring January 2010, Broker, Citibank, N.A.	50		(89,428	)	(0.0	)%

			(3,396,658	)	(0.6	)%

Over-the-Counter Put Swaptions Written
Receive a fixed rate of 3.140% and pay a floating rate based on 3-month LIBOR, expiring April 2010, Broker, Barclays Bank Plc	150		(90,519	)	(0.0	)%
Receive a fixed rate of 3.330% and pay a floating rate based on 3-month LIBOR, expiring March 2010, Broker, Citibank, N.A.	210		(97,213	)	(0.0	)%
Receive a fixed rate of 3.650% and pay a floating rate based on 3-month LIBOR, expiring March 2010, Broker, Citibank, N.A.	460		(160,893	)	(0.1	)%
Receive a fixed rate of 3.880% and pay a floating rate based on 3-month LIBOR, expiring March 2010, Broker, Citibank, N.A.	260		(67,552	)	(0.0	)%
Receive a fixed rate of 3.900% and pay a floating rate based on 3-month LIBOR, expiring March 2010, Broker, Bank of America, N.A.	360		(85,071	)	(0.0	)%
Receive a fixed rate of 3.960% and pay a floating rate based on 3-month LIBOR, expiring March 2010, Broker, Citibank, N.A.	230		(54,288	)	(0.0	)%
Receive a fixed rate of 4.000% and pay a floating rate based on 3-month LIBOR, expiring January 2010, Broker, Deutsche Bank AG	400		(51,933	)	(0.0	)%
Receive a fixed rate of 4.065% and pay a floating rate based on 3-month LIBOR, expiring September 2010, Broker, Citibank, N.A.	310		(123,812	)	(0.1	)%
Receive a fixed rate of 4.080% and pay a floating rate based on 3-month LIBOR, expiring January 2010, Broker, Deutsche Bank AG	560		(61,374	)	(0.0	)%
Receive a fixed rate of 4.080% and pay a floating rated based on 3-month LIBOR, expiring September 2010, Broker, Deutsche Bank AG	460		(181,840	)	(0.1	)%
Receive a fixed rate of 4.123% and pay a floating rate based on 3-month LIBOR, expiring August 2010, Broker, Morgan Stanley Capital Services, Inc.	160		(57,268	)	(0.0	)%

See Notes to Financial Statements.


16		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009


Summary Schedule of Investments (continued)


	Contracts (p)	Value			Percentages of Net Assets
Options Written
Over-the-Counter Put Swaptions Written (concluded)
Receive a fixed rate of 4.125% and pay a floating rate based on 3-month LIBOR, expiring September 2010, Broker, Citibank, N.A.	320	$	(117,321	)	(0.0	)%
Receive a fixed rate of 4.400% and pay a floating rate based on 3-month LIBOR, expiring February 2010, Broker, Credit Suisse International	440		(44,560	)	(0.0	)%
Receive a fixed rate of 4.500% and pay a floating rate based on 3-month LIBOR, expiring March 2010, Broker, Barclays Bank, Plc	190		(59,960	)	(0.0	)%
Receive a fixed rate of 4.500% and pay a floating rate based on 3-month LIBOR, expiring May 2010, Broker, Morgan Stanley Capital Services, Inc.	300		(55,423	)	(0.0	)%
Receive a fixed rate of 4.800% and pay a floating rate based on 3-month LIBOR, expiring June 2010, Broker, Citibank, N.A.	280		(40,615	)	(0.0	)%
Receive a fixed rate of 4.870% and pay a floating rate based on 3-month LIBOR, expiring February 2010, Broker, Deutsche Bank AG	570		(22,416	)	(0.0	)%
Receive a fixed rate of 5.400% and pay a floating rate based on 3-month LIBOR, expiring December 2010, Broker, UBS AG	260		(44,596	)	(0.0	)%
Receive a fixed rate of 5.485% and pay a floating rate based on 3-month LIBOR, expiring October 2009, Broker, JPMorgan Chase Bank, N.A.	140		—		(0.0	)%
Receive a fixed rate of 5.500% and pay a floating rate based on 3-month LIBOR, expiring March 2010, Broker, Royal Bank of Scotland, Plc	830		(21,548	)	(0.0	)%
Receive a fixed rate of 5.670% and pay a floating rate based on 3-month LIBOR, expiring January 2010, Broker, Citibank, N.A.	50		(159	)	(0.0	)%

			(1,438,361	)	(0.3	)%

Total Options Written (Premiums Received — $4,748,125)			(4,835,019	)	(0.9	)%

Total Investments Net of TBA Sale Commitments and Outstanding Options Written			557,028,310		104.2	%
Liabilities in Excess of Other Assets			(22,680,461	)	(4.2	)%

Net Assets		$	534,347,849		100.0	%

*	The cost and unrealized appreciation (depreciation) of investments as of September 30, 2009, as computed for federal income tax purposes, were as follows:


Aggregate cost	$	549,625,254

Gross unrealized appreciation	$	62,122,786
Gross unrealized depreciation		(18,492,514	)

Net unrealized appreciation	$	43,630,272

(a)	Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration to qualified institutional investors.

(b)	Variable rate security. Rate shown is as of report date.

(c)	US dollar denominated security issued by foreign domiciled entity.

(d)	Security is perpetual in nature and has no stated maturity date.

(e)	Non-income producing security.

(f)	Restricted security as to resale. As of report date the Portfolio held 0.1% of its net assets, with a current value of $348,793 and an original cost of $312,855 in these securities.

(g)	Security, or a portion thereof, has been pledged as collateral for swap contracts.

(h)	Represents or includes a to-be-announced (“TBA”) transaction. Unsettled TBA transactions as of report date were as follows:


Counterparty	Value			Unrealized Appreciation (Depreciation)
Bank of America, N.A.	$	(1,923,750	)	$	(20,781	)
Barclays Bank, Plc	$	(2,098,750	)	$	(19,375	)
BNP Paribas	$	527,344		$	1,250
Citibank, N.A.	$	4,514,937		$	27,859
Credit Suisse International	$	10,301,181		$	79,621
Deutsche Bank AG	$	4,989,248		$	15,740
Goldman Sachs Bank USA	$	4,384,311		$	46,077
JPMorgan Chase Bank, N.A.	$	3,207,406		$	21,422
Morgan Stanley Capital Services, Inc.	$	(8,222,344	)	$	(137,840	)

(i)	Par is less than $500.

(j)	All or a portion of security pledged as collateral in connection with open financial futures contracts.

(k)	Security, or a portion thereof, subject to mortgage dollar roll transactions.

(l)	Represents a zero-coupon bond. Rate shown reflects the current yield as of report date.

See Notes to Financial Statements.


		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009		17


Summary Schedule of Investments (continued)

(m)	Investments in companies considered to be an affiliate of the Portfolio, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, were as follows:


Affiliate	Net Activity			Income
BlackRock Liquidity Funds, TempFund, Institutional Class	$	32,630,899		$	132,710
BlackRock Liquidity Series, LLC Money Market Series	$	(221,400	)	$	27,721

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

(o)	Security purchased with the cash collateral from securities loans.

(p)	One contract represents a notional amount of $10,000.

•

Foreign currency exchange contracts as of September 30, 2009 were as follows:


Currency Purchased		Currency Sold		Counterparty	Settlement Date	Unrealized Appreciation (Depreciation)
CAD	82,000	USD	75,243	Citibank, N.A.	10/01/09	$	1,346
USD	405,540	JPY	36,336,375	State Street Bank & Trust Co.	10/01/09		745
BRL	687,981	USD	365,500	Royal Bank of Scotland	10/02/09		22,718
EUR	65,000	USD	94,770	Citibank, N.A.	10/02/09		348
EUR	69,289	USD	100,926	State Street Bank & Trust Co.	10/02/09		468
USD	365,500	BRL	654,245	Royal Bank of Scotland	10/02/09		(3,968	)
AUD	1,305,000	USD	1,074,563	Citibank, N.A.	10/28/09		74,099
AUD	400,000	USD	343,388	Deutsche Bank AG	10/28/09		8,692
AUD	204,000	USD	169,483	UBS AG	10/28/09		10,078
AUD	250,000	USD	207,742	UBS AG	10/28/09		12,308
CAD	100,000	USD	93,518	Deutsche Bank AG	10/28/09		(113	)
CAD	958,000	USD	872,233	Deutsche Bank AG	10/28/09		22,592
CHF	1,125,000	USD	1,058,770	Citibank, N.A.	10/28/09		27,081
DKK	1,678,000	USD	319,979	Citibank, N.A.	10/28/09		9,732
EUR	938,000	USD	1,332,907	Barclays Bank, Plc	10/28/09		39,694
GBP	42,000	USD	69,357	Citibank, N.A.	10/28/09		(2,243	)
GBP	103,000	USD	169,017	Deutsche Bank AG	10/28/09		(4,428	)
HKD	1,322,000	USD	170,635	Citibank, N.A.	10/28/09		(25	)
HKD	1,085,000	USD	140,022	Citibank, N.A.	10/28/09		1
JPY	2,383,000	USD	26,430	Citibank, N.A.	10/28/09		122
JPY	14,558,000	USD	161,300	Citibank, N.A.	10/28/09		909
JPY	50,482,000	USD	535,902	Citibank, N.A.	10/28/09		26,583
JPY	5,399,000	USD	59,136	Deutsche Bank AG	10/28/09		1,022
JPY	3,633,000	USD	39,437	Deutsche Bank AG	10/28/09		1,043
JPY	13,852,000	USD	153,001	Deutsche Bank AG	10/28/09		1,343
JPY	4,949,000	USD	53,756	Deutsche Bank AG	10/28/09		1,387
JPY	28,594,000	USD	307,886	Deutsche Bank AG	10/28/09		10,717
NOK	589,000	USD	101,580	Citibank, N.A.	10/28/09		305
NOK	470,000	USD	81,154	UBS AG	10/28/09		146
SEK	1,603,000	USD	220,174	Citibank, N.A.	10/28/09		9,814
SEK	5,374,000	USD	751,593	Deutsche Bank AG	10/28/09		19,434
USD	12,107	CAD	13,000	Barclays Bank, Plc	10/28/09		—
USD	75,244	CAD	82,000	Citibank, N.A.	10/28/09		(1,348	)
USD	51,942	CAD	56,500	Citibank, N.A.	10/28/09		(832	)
USD	46,881	CAD	51,000	Citibank, N.A.	10/28/09		(756	)
USD	368,345	CAD	395,000	Citibank, N.A.	10/28/09		(607	)
USD	228,427	EUR	156,000	Barclays Bank, Plc	10/28/09		—
USD	52,073	EUR	36,500	Citibank, N.A.	10/28/09		(1,338	)
USD	251,081	EUR	172,000	Citibank, N.A.	10/28/09		(611	)
USD	21,914	EUR	15,000	Citibank, N.A.	10/28/09		(36	)
USD	112,018	EUR	76,000	Citibank, N.A.	10/28/09		805
USD	249,117	EUR	170,000	Deutsche Bank AG	10/28/09		352
USD	100,612	EUR	68,000	Deutsche Bank AG	10/28/09		1,106
USD	433,111	GBP	265,000	Citibank, N.A.	10/28/09		9,656
USD	959,452	GBP	587,000	Citibank, N.A.	10/28/09		21,458
USD	1,347,249	GBP	817,000	Citibank, N.A.	10/28/09		41,729
USD	866,153	HKD	6,710,000	Barclays Bank, Plc	10/28/09		201
USD	478,232	JPY	44,150,000	Citibank, N.A.	10/28/09		(13,701	)
USD	462,421	JPY	42,730,000	Citibank, N.A.	10/28/09		(13,689	)
USD	344,872	NOK	2,087,000	Citibank, N.A.	10/28/09		(16,136	)
USD	92,199	NOK	546,000	Deutsche Bank AG	10/28/09		(2,248	)
USD	217,124	NZD	323,000	Citibank, N.A.	10/28/09		(15,691	)
USD	283,225	SEK	1,969,500	Citibank, N.A.	10/28/09		654
USD	289,690	SGD	419,000	Citibank, N.A.	10/28/09		(7,691	)
USD	65,979	ZAR	523,000	Citibank, N.A.	10/28/09		(3,264	)
USD	11,872	ZAR	95,000	Deutsche Bank AG	10/28/09		(705	)
BRL	657,754	USD	365,500	Royal Bank of Scotland	11/04/09		3,708

Total						$	292,966

•

Financial futures contracts purchased as of September 30, 2009 were as follows:


Contracts	Issue	Exchange	Expiration Date	Face Value		Unrealized Appreciation
4	United Kingdom Gilt	London	December 2009	$	757,911	$	5,705
	ICE E-mini Russell
180	2000 Index	New York	December 2009	$	10,854,000		223,200
167	S&P 500 Index	Chicago	December 2009	$	43,958,575		414,972
	U.S. Treasury
36	Bonds	Chicago	December 2009	$	4,369,500		94,131
	U.S. Treasury Notes
116	(5 Year)	Chicago	December 2009	$	13,466,875		63,577

Total						$	801,585

See Notes to Financial Statements.


18		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009


Summary Schedule of Investments (continued)

•

Financial futures contracts sold as of September 30, 2009 were as follows:


Contracts	Issue	Exchange	Expiration Date	Face Value		Unrealized Depreciation
50	U.S. Treasury Notes (2 Year)	Chicago	December 2009	$	10,848,438	$	(16,606	)
87	U.S. Treasury Notes (10 Year)	Chicago	December 2009		10,294,547		(94,508	)

Total						$	(111,114	)

•

Interest rate swaps outstanding as of September 30, 2009 were as follows:

Fixed

Rate

Floating

Rate

Counterparty

Expiration

Notional
Amount
(000)

Unrealized
Appreciation
(Depreciation)

4.05%(a)

3-month LIBOR

Barclays Bank, Plc

December 2009

USD

2,600

50,978

1.81%(b)

3-month LIBOR

Citibank, N.A.

March 2012

USD

4,000

(20,723

)

2.25%(b)

3-month LIBOR

Deutsche Bank AG

December 2012

USD

2,220

(19,386

)

2.80%(b)

3-month LIBOR

Morgan Stanley Capital Services, Inc.

September 2014

USD

1,200

(11,933

)

3.41%(a)

3-month LIBOR

Deutsche Bank AG

May 2019

USD

6,900

80,334

3.68%(a)

3-month LIBOR

Deutsche Bank AG

August 2019

USD

4,200

97,956

3.50%(a)

3-month LIBOR

Citibank, N.A.

September 2019

USD

1,200

7,638

3.50%(a)

3-month LIBOR

Bank of America, N.A.

September 2019

USD

2,800

15,532

3.47%(a)

3-month LIBOR

Royal Bank of Scotland, Plc

September 2019

USD

3,600

9,369

3.43%(b)

3-month LIBOR

Deutsche Bank AG

October 2019

USD

1,000

2,238

4.42%(c)

3-month LIBOR

JPMorgan Chase Bank, N.A.

August 2020

USD

2,325

(130,875

)

4.24%(c)

3-month LIBOR

JPMorgan Chase Bank, N.A.

August 2020

USD

705

(31,485

)

5.41%(a)

3-month LIBOR

JPMorgan Chase Bank, N.A.

August 2022

USD

1,130

213,966

4.35%(b)

3-month LIBOR

JPMorgan Chase Bank, N.A.

July 2039

USD

1,700

(140,225

)

4.06%(a)

3-month LIBOR

Morgan Stanley Capital Services, Inc.

September 2039

USD

400

9,421

3.50%(b)

3-month LIBOR

Barclays Bank, Plc

March 2040

USD

500

45,838

Total

178,643

(a)	Portfolio pays floating interest rate and receives fixed rate.

(b)	Portfolio pays fixed interest rate and receives floating rate.

(c)	Portfolio pays fixed interest rate and receives floating rate at expiration date.

•

Credit default swaps on single-name issues - buy protection outstanding as of September 30, 2009 were as follows:


Issuer	Pay Fixed Rate	Counterparty	Expiration	Notional Amount (000)	Unrealized Appreciation (Depreciation)
Centex Corp.	6.92%	JPMorgan Chase Bank, N.A.	December 2010	265	$	(21,363	)
Knight, Inc.	1.80%	Credit Suisse International	January 2011	365		(2,197	)
KB Home	4.90%	JPMorgan Chase Bank, N.A.	September 2011	460		(26,225	)
iStar Financial, Inc.	5.00%	Morgan Stanley Capital Services, Inc.	September 2011	140		1,097
Wendy’s/Arby’s Group, Inc.	2.90%	JPMorgan Chase Bank, N.A.	December 2011	360		(11,049	)
NOVA Chemicals Corp.	5.00%	Citibank, N.A.	March 2012	25		(908	)
Westvaco Corp.	1.20%	Deutsche Bank AG	June 2012	410		(6,590	)
NOVA Chemicals Corp.	5.00%	JPMorgan Chase Bank, N.A.	June 2012	35		(883	)
Ryland Group, Inc.	4.51%	JPMorgan Chase Bank, N.A.	June 2012	165		(13,097	)
Macy’s, Inc.	7.50%	Morgan Stanley Capital Services, Inc.	June 2012	335		(43,270	)
Knight, Inc.	1.00%	Morgan Stanley Capital Services, Inc.	September 2012	115		219
Belo Corp.	5.00%	Barclays Bank, Plc	June 2013	120		(18,858	)
D.R. Horton, Inc.	5.04%	JPMorgan Chase Bank, N.A.	June 2013	525		(63,523	)

See Notes to Financial Statements.


		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009		19


Summary Schedule of Investments (continued)


Issuer	Pay Fixed Rate	Counterparty	Expiration	Notional Amount (000)	Unrealized Appreciation (Depreciation)
Expedia, Inc.	5.00%	Citibank, N.A.	September 2013	380	$	(53,720	)
Expedia, Inc.	5.18%	Goldman Sachs Bank USA	September 2013	175		(25,932	)
Centex Corp.	4.37%	Deutsche Bank AG	December 2013	575		(85,379	)
NOVA Chemicals Corp.	5.00%	Goldman Sachs Bank USA	December 2013	200		(14,084	)
Centex Corp.	4.40%	JPMorgan Chase Bank, N.A.	December 2013	330		(49,563	)
Tyson Foods, Inc.	4.10%	Barclays Bank, Plc	March 2014	445		(39,604	)
Hertz Global Holdings, Inc.	5.00%	Goldman Sachs Bank USA	March 2014	80		(28,889	)
Toll Brothers, Inc.	2.00%	JPMorgan Chase Bank, N.A.	March 2014	155		(5,468	)
D.R. Horton, Inc.	5.07%	JPMorgan Chase Bank, N.A.	September 2014	155		(23,414	)
Macy’s, Inc.	1.00%	Morgan Stanley Capital Services, Inc.	September 2014	90		2,550
Huntsman Corp.	5.00%	Goldman Sachs Bank USA	December 2014	335		(127,286	)
TXU Corp.	5.00%	JPMorgan Chase Bank, N.A.	December 2014	125		(19,379	)
Energy Future Holdings Corp.	5.00%	Morgan Stanley Capital Services, Inc.	December 2014	680		(92,671	)
Huntsman corp.	5.00%	Goldman Sachs Bank USA	March 2015	85		(25,963	)
Pulte Homes, Inc.	3.00%	JPMorgan Chase Bank, N.A.	March 2015	185		(13,475	)
Lennar Corp.	5.86%	JPMorgan Chase Bank, N.A.	June 2015	250		(41,012	)
First Data Corp.	5.00%	Barclays Bank, Plc	December 2015	320		(63,268	)
First Data Corp.	5.00%	Credit Suisse International	December 2015	130		(25,703	)
First Data Corp.	5.00%	Goldman Sachs Bank USA	December 2015	85		(16,381	)
First Data Corp.	5.00%	JPMorgan Chase Bank, N.A.	December 2015	165		(32,623	)
Sabre Holdings Corp.	5.00%	JPMorgan Chase Bank, N.A.	March 2016	690		(314,126	)

Total					$	(1,302,037	)

•

Credit default swaps on traded indexes - buy protection outstanding as of September 30, 2009 were as follows:

Index

Pay
Fixed
Rate

Counterparty

Expiration

Notional
Amount
(000)

Unrealized
Appreciation

Dow Jones North America High Yield Index Series 13 Volume 1

5.00%

Credit Suisse International

December

2014

USD

1,875

$18,818

•

For Portfolio compliance purposes, the Portfolio’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 Portfolio management. This definition may not apply for purposes of this report, which may combine industry sub-classifications for reporting ease.

•

Portfolio Abbreviations:


AUD	Australian Dollar	JPY	Japanese Yen
BRL	Brazilian Real	LIBOR	London InterBank Offered Rate
CAD	Canadian Dollar	NOK	Norwegian Krone
CHF	Swiss Francs	NZD	New Zealand Dollar
DKK	Danish Krone	SEK	Swedish Krona
EUR	Euro	SGD	Singapore Dollar
GBP	British Pound	TBA	To-Be-Announced
GO	General Obligation	USD	US Dollar
HKD	Hong Kong Dollar	ZAR	South African Rand

•

Fair Value Measurements – Various inputs are used in determining the fair value of investments, which are as follows:

•

Level 1 – price quotations in active markets/exchanges for identical assets and liabilities

•

See Notes to Financial Statements.


20		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009


Summary Schedule of Investments (concluded)

The following table summarizes the inputs used as of September 30, 2009 in determining the fair valuation of the Portfolio’s investments:


	Valuation Inputs
	Level 1			Level 2			Level 3			Total
Investments in Securities:
Assets:
Asset-Backed Securities		—		$	12,804,770		$	268		$	12,805,038
Preferred Securities		—			3,321,071			—			3,321,071
Common Stocks	$	233,520,915			81,057,703			200,988			314,779,606
Corporate Bonds		—			40,705,379			—			40,705,379
Exchange-Traded Funds		248,570			—			—			248,570
Foreign Agency Obligations		—			2,920,012			—			2,920,012
Foreign Government Obligations		—			6,088,934			—			6,088,934
Non-Agency Mortgage-Backed Securities		—			39,499,856			84,386			39,584,242
Taxable Municipal Bonds		—			3,539,639			—			3,539,639
U.S. Government Sponsored Agency Securities		—			97,359,009			—			97,359,009
U.S. Treasury Obligations		—			36,788,420			—			36,788,420
Warrants		1,024			—			—			1,024
Short-Term Securities		32,630,899			1,248,500			—			33,879,399
TBA Sale Commitments:		—			(31,392,197	)		—			(31,392,197	)
Other Financial Instruments¹:
Assets:		801,585			2,173,533			—			2,975,118
Liabilities:		(111,114	)		(6,422,619	)		(162,360	)		(6,696,093	)

Total	$	267,091,879		$	289,692,010		$	123,282		$	556,907,171

Other financial instruments are options, foreign currency exchange contracts, financial futures contracts and swaps. Foreign currency exchange contracts, financial futures contracts and swaps are valued at the unrealized appreciation/depreciation on the instrument and options are shown at market value.

The following table is a reconciliation of Level 3 investments for which significant unobservable inputs were used to determine fair value:


	Asset-Backed Securities			Common Stocks			Non-Agency Mortgage-Backed Securities			Total
Balance, as of September 30, 2008	$	4,365		$	216,001		$	89,693		$	310,059
Accrued discounts/premiums		2,970			—			(135	)		2,835
Realized gain/loss		—			—			(433	)		(433	)
Change in unrealized appreciation/depreciation²		332			(128,996	)		(261,691	)		(390,355	)
Net purchases/sales.		—			113,983			(39,785	)		74,198
Transfers in/out of Level 3		(7,399	)		—			296,737			289,338

Balance, as of September 30, 2009	$	268		$	200,988		$	84,386		$	285,642


	Warrants			Other Financial Instruments²			Total
Balance, as of September 30, 2008	$	33		$	(818	)	$	(785	)
Accrued discounts/premiums		—			—			—
Realized gain/loss		—			(178,850	)		(178,850	)
Change in unrealized appreciation/depreciation³		(33	)		17,308			17,275
Net purchases/sales		—			—			—
Transfers in/out of Level 3		—			—			—

Balance, as of September 30, 2009		—		$	(162,360	)	$	(162,360	)

2	Other financial instruments are swaps.

3	The change in unrealized appreciation/depreciation on securities still held at September 30, 2009 was $(553,079), which is included in the related net change in unrealized appreciation/depreciation on the Statement of Operations.

See Notes to Financial Statements.


		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009		21

Statement of Assets and Liabilities


September 30, 2009
Assets
Investments at value - unaffiliated (including securities loaned of $1,198,280) (cost - $505,374,504)	$	559,376,127
Investments at value - affiliated (cost - $33,879,399)		33,879,399
Foreign currency at value (cost - $759,946)		778,767
Cash		832,010
Cash pledged as collateral in connection with financial futures contracts		5,551,000
Swap premium paid		1,292,028
TBA sale commitments receivable		31,137,193
Investments sold receivable		17,425,789
Interest receivable		8,584,288
Capital shares sold receivable		817,539
Unrealized appreciation on swaps		555,954
Dividends and reclaims receivable		493,420
Unrealized appreciation on foreign currency exchange contracts		382,396
Principal paydown receivable		11,366
Dividends receivable - affiliated		7,622
Margin variation receivable		4,981
Securities lending income receivable - affiliated		494
Receivable from advisor		380
Prepaid expenses		51,717

Total assets		661,182,470

Liabilities
Investments purchased payable		67,545,275
TBA sale commitments at value (proceeds $31,137,193)		31,392,197
Payable for treasury rolls		18,576,923
Options written at value (premiums received $4,748,125)		4,835,019
Unrealized depreciation on swaps		1,660,530
Collateral at value - securities loaned		1,248,500
Capital shares redeemed payable		356,590
Other affiliates payable		315,463
Investment advisory fees payable		251,722
Service and distribution fees payable		191,429
Margin variation payable		159,718
Unrealized depreciation on foreign currency exchange contracts		89,430
Interest expense payable		66,586
Officer’s and Trustees’ fees payable		6,288
Other accrued expenses payable		138,951

Total liabilities		126,834,621

Net Assets	$	534,347,849

Net Assets Consist of
Paid-in capital	$	556,579,381
Undistributed net investment income		1,960,610
Accumulated net realized loss		(77,078,212	)
Net unrealized appreciation/depreciation		52,886,070

Net Assets	$	534,347,849

Net Asset Value
Institutional - Based on net assets of $29,126,879 and 2,193,537 shares outstanding, unlimited number of shares authorized, $0.001 par value	$	13.28

Service - Based on net assets of $1,472,284 and 111,169 shares outstanding, unlimited number of shares authorized, $0.001 par value	$	13.24

Investor A - Based on net assets of $361,751,384 and 27,336,834 shares outstanding, unlimited number of shares authorized, $0.001 par value	$	13.23

Investor B - Based on net assets of $69,933,956 and 5,346,433 shares outstanding, unlimited number of shares authorized, $0.001 par value	$	13.08

Investor C - Based on net assets of $72,063,346 and 5,527,103 shares outstanding, unlimited number of shares authorized, $0.001 par value	$	13.04

See Notes to Financial Statements.


22		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009

Statement of Operations


Year Ended September 30, 2009
Investment Income
Interest	$	10,546,803
Dividends and reclaims		5,467,372
Foreign taxes withheld		(183,688	)
Securities lending - affiliated		27,721
Interest and dividends - affiliated		133,799

Total income		15,992,007

Expenses
Investment advisory		2,662,158
Service and distribution - class specific		2,155,239
Transfer agent - class specific		985,539
Administration		362,403
Custodian		300,711
Professional		128,889
Administration - class specific		121,123
Printing		108,422
Registration		63,572
Officer and Trustees		21,319
Miscellaneous		163,816
Recoupment of past waived fees - class specific		15,901

Total expenses excluding interest expense		7,089,092
Interest expense		12,711

Total expenses		7,101,803
Less fees waived by advisor		(19,573	)
Less administration fees waived - class specific		(23,965	)
Less transfer agent fees waived - class specific		(11,457	)
Less transfer agent fees reimbursed - class specific		(16,932	)
Less fees paid indirectly		(2,968	)

Total expenses after fees waived, reimbursed and paid indirectly		7,026,908

Net investment income		8,965,099

Realized and Unrealized Gain (Loss)
Net realized gain (loss) from:
Investments		(78,548,175	)
Litigation proceeds		1,182,856
Options written		(168,787	)
Financial futures contracts and swaps		9,968,810
Foreign currency transactions		(744,069	)

		(68,309,365	)

Net change in unrealized appreciation/depreciation on:
Investments		76,061,269
Options written		(5,295	)
Financial futures contracts and swaps		(339,803	)
Foreign currency transactions		503,790

		76,219,961

Total realized and unrealized gain		7,910,596

Net Increase in Net Assets Resulting from Operations	$	16,875,695

See Notes to Financial Statements.


		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009		23

Statements of Changes in Net Assets


	Year Ended September 30,
Increase (Decrease) in Net Assets:	2009			2008
Operations
Net investment income	$	8,965,099		$	11,490,444
Net realized gain (loss)		(68,309,365	)		17,204,510
Net change in unrealized appreciation/depreciation		76,219,961			(145,090,790	)

Net increase (decrease) in net assets resulting from operations		16,875,695			(116,395,836	)

Dividends and Distributions to Shareholders From
Net investment income:
Institutional		(440,877	)		(671,005	)
Service		(21,097	)		(43,165	)
Investor A		(4,525,741	)		(9,616,809	)
Investor B		(371,592	)		(1,647,905	)
Investor C		(430,792	)		(1,059,761	)
Net realized gain:
Institutional		(406,332	)		(2,001,331	)
Service		(21,686	)		(175,568	)
Investor A		(5,466,565	)		(38,125,135	)
Investor B		(1,298,809	)		(11,393,688	)
Investor C		(1,188,380	)		(6,488,172	)

Decrease in net assets resulting from dividends and distributions to shareholders		(14,171,871	)		(71,222,539	)

Capital Share Transactions
Net decrease in net assets derived from capital share transactions		(50,336,591	)		(11,398,230	)

Net Assets
Total decrease in net assets		(47,632,767	)		(199,016,605	)
Beginning of year		581,980,616			780,997,221

End of year	$	534,347,849		$	581,980,616

Undistributed (distributions in excess of) net investment income	$	1,960,610		$	(1,079,820	)

See Notes to Financial Statements.


24		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009

Financial Highlights


	Institutional^*
	Year Ended September 30,												Period March 1, 2005 to September 30, 2005			Period April 1, 2004 to February 28, 2005
	2009			2008			2007			2006			Period March 1, 2005 to September 30, 2005			Period April 1, 2004 to February 28, 2005
Per Share Operating Performance
Net asset value, beginning of period	$	12.96		$	17.07		$	15.53		$	15.51		$	14.99		$	14.91

Net investment income		0.27	¹		0.33	¹		0.33	¹		0.31	¹		0.17	¹		0.20
Net realized and unrealized gain (loss)		0.45			(2.76	)		2.08			0.66			0.52			0.82

Net increase (decrease) from investment operations		0.72			(2.43	)		2.41			0.97			0.69			1.02

Dividends and distributions from:
Net investment income		(0.21	)		(0.38	)		(0.24	)		(0.30	)		(0.17	)		(0.40	)
Net realized gain		(0.19	)		(1.30	)		(0.63	)		(0.65	)		—			(0.54	)

Total dividends and distributions		(0.40	)		(1.68	)		(0.87	)		(0.95	)		(0.17	)		(0.94	)

Redemption fees added to paid-in capital		—			—			0.00	²		0.00	²		0.00	²		—

Net asset value, end of period	$	13.28		$	12.96		$	17.07		$	15.53		$	15.51		$	14.99

Total Investment Return³
Based on net asset value		6.15	%⁴		(15.81	)%		16.04	%⁵		6.53	%⁵		4.66	%^5,6		7.17	%⁶

Ratios to Average Net Assets
Total expenses		0.95	%		0.94	%		0.93	%		0.91	%		1.11	%⁷		1.05	%⁷

Total expenses excluding recoupment of past waived fees		0.95	%		0.94	%		0.93	%		0.91	%		1.11	%⁷		1.05	%⁷

Total expenses after fees waived, reimbursed and paid indirectly		0.88	%		0.89	%⁸		0.86	%		0.83	%		0.86	%⁷		1.03	%⁷

Net investment income		2.43	%		2.20	%		2.03	%		2.04	%		1.90	%⁷		1.71	%⁷

Supplemental Data
Net assets, end of period (000)	$	29,127		$	23,083		$	34,720		$	32,545		$	29,752		$	31,328

Portfolio turnover		354	%⁹		391	%¹⁰		93	%		136	%		90	%		101	%

The performance prior to January 31, 2005 set forth in this table is the financial data of the State Street Research Asset Allocation Fund, a series of a predecessor trust, the State Street Research Income Trust. BlackRock Funds acquired all of the assets and certain stated liabilities of State Street Research Asset Allocation Fund on January 28, 2005. The net asset values and other per share information listed have been restated to reflect the conversion ratio of 0.71889936 for Institutional shares.

1	Based on average shares outstanding.

2	Less than $0.01 per share.

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

4	Includes proceeds received from a settlement of litigation which impacted the Portfolio’s total return. Not including these proceeds the Portfolio’s total return would have been 5.92%.

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

6	Aggregate total investment return.

7	Annualized.

8	The Portfolio incurred interest expense during the year. If interest expense had not been incurred, the ratio would have been 0.85% for Institutional shares.

9	Includes mortgage dollar roll transactions; excluding these transactions the portfolio turnover would have been 227%.

10	Includes TBA transactions, excluding these transactions, the portfolio turnover would have been 121%.

See Notes to Financial Statements.


		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009		25


Financial Highlights (continued)


	Service
	Year Ended September 30,												Period March 1, 2005 to September 30, 2005			Period January 28, 2005¹ to February 28, 2005
	2009			2008			2007			2006			Period March 1, 2005 to September 30, 2005			Period January 28, 2005¹ to February 28, 2005
Per Share Operating Performance
Net asset value, beginning of period	$	12.93		$	17.03		$	15.51		$	15.49		$	14.97		$	14.63

Net investment income		0.24	²		0.30	²		0.29	²		0.27	²		0.14	²		0.01
Net realized and unrealized gain (loss)		0.44			(2.76	)		2.08			0.65			0.52			0.33

Net increase (decrease) from investment operations		0.68			(2.46	)		2.37			0.92			0.66			0.34

Dividends and distributions from:
Net investment income		(0.18	)		(0.34	)		(0.22	)		(0.25	)		(0.14	)		—
Net realized gain		(0.19	)		(1.30	)		(0.63	)		(0.65	)		—			—

Total dividends and distributions		(0.37	)		(1.64	)		(0.85	)		(0.90	)		(0.14	)		—

Redemption fees added to paid-in capital		—			—			0.00	³		0.00	³		0.00	³		—

Net asset value, end of period	$	13.24		$	12.93		$	17.03		$	15.51		$	15.49		$	14.97

Total Investment Return⁴
Based on net asset value		5.83	%⁵		(16.00	)%		15.74	%⁶		6.24	%⁶		4.44	%^6,7		2.32	%⁷

Ratios to Average Net Assets
Total expenses		1.18	%		1.11	%		1.31	%		1.17	%		1.36	%⁸		1.26	%⁸

Total expenses excluding recoupment of past waived fees		1.15	%		1.11	%		1.31	%		1.17	%		1.36	%⁸		1.26	%⁸

Total expenses after fees waived, reimbursed and paid indirectly		1.14	%		1.11	%⁹		1.10	%		1.11	%		1.16	%⁸		1.16	%⁸

Net investment income (loss)		2.17	%		1.96	%		1.80	%		1.76	%		1.60	%⁸		(0.17	)%⁸

Supplemental Data
Net assets, end of period (000)	$	1,472		$	1,552		$	2,325		$	2,201		$	2,171		$	2,171

Portfolio turnover		354	%¹⁰		391	%¹¹		93	%		136	%		90	%		101	%


	Investor A^*
	Year Ended September 30,												Period March 1, 2005 to September 30, 2005			Period April 1, 2004 to February 28, 2005
	2009			2008			2007			2006			Period March 1, 2005 to September 30, 2005			Period April 1, 2004 to February 28, 2005
Per Share Operating Performance
Net asset value, beginning of period	$	12.92		$	17.01		$	15.50		$	15.48		$	14.95		$	14.89

Net investment income		0.23	²		0.28	²		0.27	²		0.25	²		0.13	²		0.18
Net realized and unrealized gain (loss)		0.43			(2.75	)		2.07			0.66			0.53			0.80

Net increase (decrease) from investment operations		0.66			(2.47	)		2.34			0.91			0.66			0.98

Dividends and distributions from:
Net investment income		(0.16	)		(0.32	)		(0.20	)		(0.24	)		(0.13	)		(0.38	)
Net realized gain		(0.19	)		(1.30	)		(0.63	)		(0.65	)		—			(0.54	)

Total dividends and distributions		(0.35	)		(1.62	)		(0.83	)		(0.89	)		(0.13	)		(0.92	)

Redemption fees added to paid-in capital		—			—			0.00	³		0.00	³		0.00	³		—

Net asset value, end of period	$	13.23		$	12.92		$	17.01		$	15.50		$	15.48		$	14.95

Total Investment Return⁴
Based on net asset value		5.66	%¹²		(16.05	)%		15.58	%⁶		6.12	%⁶		4.44	%^6,7		6.78	%⁷

Ratios to Average Net Assets
Total expenses		1.27	%		1.24	%		1.21	%		1.36	%		1.46	%⁸		1.32	%⁸

Total expenses excluding recoupment of past waived fees		1.27	%		1.24	%		1.21	%		1.36	%		1.46	%⁸		1.32	%⁸

Total expenses after fees waived, reimbursed and paid indirectly		1.26	%		1.24	%⁹		1.21	%		1.23	%		1.25	%⁸		1.24	%⁸

Net investment income		2.04	%		1.84	%		1.68	%		1.63	%		1.51	%⁸		1.55	%⁸

Supplemental Data
Net assets, end of period (000)	$	361,751		$	390,051		$	506,537		$	482,284		$	491,557		$	526,929

Portfolio turnover		354	%¹⁰		391	%¹¹		93	%		136	%		90	%		101	%

See Notes to Financial Statements.


26		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009


Financial Highlights (continued)


	Investor B^*
	Year Ended September 30,												Period March 1, 2005 to September 30, 2005			Period April 1, 2004 to February 28, 2005
	2009			2008			2007			2006			Period March 1, 2005 to September 30, 2005			Period April 1, 2004 to February 28, 2005
Per Share Operating Performance
Net asset value, beginning of period	$	12.75		$	16.83		$	15.35		$	15.34		$	14.81		$	14.74

Net investment income		0.14	²		0.16	²		0.14	²		0.13	²		0.07	²		0.08
Net realized and unrealized gain (loss)		0.43			(2.75	)		2.07			0.65			0.51			0.81

Net increase (decrease) from investment operations		0.57			(2.59	)		2.21			0.78			0.58			0.89

Dividends and distributions from:
Net investment income		(0.05	)		(0.19	)		(0.10	)		(0.12	)		(0.05	)		(0.28	)
Net realized gain		(0.19	)		(1.30	)		(0.63	)		(0.65	)		—			(0.54	)

Total dividends and distributions		(0.24	)		(1.49	)		(0.73	)		(0.77	)		(0.05	)		(0.82	)

Redemption fees added to paid-in capital		—			—			0.00	³		0.00	³		0.00	³		—

Net asset value, end of period	$	13.08		$	12.75		$	16.83		$	15.35		$	15.34		$	14.81

Total Investment Return⁴
Based on net asset value		4.93	%¹³		(16.89	)%		14.81	%⁶		5.30	%⁶		3.94	%^6,7		6.20	%⁷

Ratios to Average Net Assets
Total expenses		2.07	%		2.02	%		2.01	%		2.03	%		2.11	%⁸		2.04	%⁸

Total expenses excluding recoupment of past waived fees		2.06	%		2.02	%		2.01	%		2.03	%		2.11	%⁸		2.04	%⁸

Total expenses after fees waived, reimbursed and paid indirectly		2.04	%		2.02	%⁹		2.01	%		2.00	%		2.01	%⁸		2.04	%⁸

Net investment income		1.27	%		1.06	%		0.89	%		0.86	%		0.75	%⁸		0.73	%⁸

Supplemental Data
Net assets, end of period (000)	$	69,934		$	97,710		$	152,820		$	175,826		$	181,583		$	187,689

Portfolio turnover		354	%¹⁰		391	%¹¹		93	%		136	%		90	%		101	%

1	Commencement of operations.

2	Based on average shares outstanding.

3	Less than $0.01 per share.

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

5	Includes proceeds received from a settlement of litigation which impacted the Portfolio’s total return. Not including these proceeds the Portfolio’s total return would have been 5.60%.

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

7	Aggregate total investment return.

8	Annualized.

9	The Portfolio incurred interest expense during the year. If interest expense had not been incurred, the ratio would have been 1.07%, 1.20% and 1.97% for Service, Investor A and Investor B shares, respectively.

10	Includes mortgage dollar roll transactions; excluding these transactions the portfolio turnover would have been 227%.

11	Includes TBA transactions, excluding these transactions, the portfolio turnover would have been 121%.

12	Includes proceeds received from a settlement of litigation which impacted the Portfolio’s total return. Not including these proceeds the Portfolio’s total return would have been 5.42%.

13	Includes proceeds received from a settlement of litigation which impacted the Portfolio’s total return. Not including these proceeds the Portfolio’s total return would have been 4.69%.

See Notes to Financial Statements.


		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009		27

Financial Highlights (concluded)


	Investor C^*
	Year Ended September 30,												Period March 1, 2005 to September 30, 2005			Period April 1, 2004 to February 28, 2005
	2009			2008			2007			2006			Period March 1, 2005 to September 30, 2005			Period April 1, 2004 to February 28, 2005
Per Share Operating Performance
Net asset value, beginning of period	$	12.73		$	16.78		$	15.34		$	15.33		$	14.81		$	14.74

Net investment income		0.15	¹		0.17	¹		0.15	¹		0.15	¹		0.06	¹		0.08
Net realized and unrealized gain (loss)		0.43			(2.71	)		2.04			0.65			0.52			0.81

Net increase (decrease) from investment operations		0.58			(2.54	)		2.19			0.80			0.58			0.89

Dividends and distributions from:
Net investment income		(0.08	)		(0.21	)		(0.12	)		(0.14	)		(0.06	)		(0.28	)
Net realized gain		(0.19	)		(1.30	)		(0.63	)		(0.65	)		—			(0.54	)

Total dividends and distributions		(0.27	)		(1.51	)		(0.75	)		(0.79	)		(0.06	)		(0.82	)

Redemption fees added to paid-in capital		—			—			0.00	²		0.00	²		0.00	²		—

Net asset value, end of period	$	13.04		$	12.73		$	16.78		$	15.34		$	15.33		$	14.81

Total Investment Return³
Based on net asset value		4.99	%⁴		(16.66	)%		14.68	%⁵		5.42	%⁵		3.90	%^5,6		6.20	%⁶

Ratios to Average Net Assets
Total expenses		1.98	%		1.94	%		1.95	%		1.94	%		2.11	%⁷		2.04	%⁷

Total expenses excluding recoupment of past waived fees		1.97	%		1.94	%		1.95	%		1.94	%		2.11	%⁷		2.04	%⁷

Total expenses after fees waived, reimbursed and paid indirectly		1.98	%		1.94	%⁸		1.94	%		1.91	%		2.00	%⁷		2.04	%⁷

Net investment income		1.32	%		1.14	%		0.96	%		0.97	%		0.75	%⁷		0.76	%⁷

Supplemental Data
Net assets, end of period (000)	$	72,063		$	69,584		$	84,596		$	80,286		$	67,371		$	65,357

Portfolio turnover		354	%⁹		391	%¹⁰		93	%		136	%		90	%		101	%

1	Based on average shares outstanding.

2	Less than $0.01 per share.

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

4	Includes proceeds received from a settlement of litigation which impacted the Portfolio’s total return. Not including these proceeds the Portfolio’s total return would have been 4.75%.

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

6	Aggregate total investment return.

7	Annualized.

8	The Portfolio incurred interest expense during the year. If interest expense had not been incurred, the ratio would have been 1.90% for Investor C shares.

9	Includes mortgage dollar roll transactions; excluding these transactions the portfolio turnover would have been 227%.

10	Includes TBA transactions, excluding these transactions, the portfolio turnover would have been 121%.

See Notes to Financial Statements.


28		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009

Notes to Financial Statements

1. Organization and Significant Accounting Policies:

BlackRock Funds^SM (the “Fund”), a Massachusetts business trust, is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. As of September 30, 2009, the Fund had 27 registered portfolios. These financial statements relate to the Fund’s BlackRock Asset Allocation Portfolio (the “Portfolio”). The Portfolio’s financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require the use of management accruals and estimates. Actual results may differ from these estimates. The Portfolio offers multiple classes of shares. Institutional Shares are sold without a sales charge and only to certain eligible investors. Service Shares are sold without a sales charge. Investor A Shares are generally sold with a front-end sales charge. Shares of Investor B and Investor C may be subject to a contingent deferred sales charge. All classes of shares have identical voting, dividend, liquidation and other rights and the same terms and conditions, except that the Service, Investor A, Investor B and Investor C Shares bear certain expenses related to the service of such shares and Investor B and Investor C Shares also bear certain expenses related to the distribution of such shares. Investor B Shares automatically convert to Investor A Shares after approximately eight years. Investor B Shares of the Portfolio are only available for purchase through exchanges, dividend reinvestments or for purchase by certain qualified employee benefit plans. Each class has exclusive voting rights with respect to matters relating to its service and distribution expenditures (except that Investor B shareholders may vote on material changes to the Investor A distribution plan).

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

Valuation: Equity investments traded on a recognized securities exchange or the NASDAQ Global Market System are valued at the last reported sale price that day or the NASDAQ official closing price, if applicable. For equity investments traded on more than one exchange, the last reported sale price on the exchange where the stock is primarily traded is used. Equity investments traded on a recognized exchange for which there were no sales on that day are valued at the last available bid price. If no bid price is available, the prior day’s price will be used, unless it is determined that such prior day’s price no longer reflects the fair value of the security. The Portfolio values its bond investments on the basis of last available bid price or current market quotations provided by dealers or pricing services selected under the supervision of the Fund’s Board of Trustees (the “Board”). 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 and information with respect to various relationships observed in the market between investments, and calculated yield measures based on valuation technology commonly employed in the market for such investments. The fair values of asset-backed and mortgage-backed securities are estimated based on models. The models consider estimated cash flows of each tranche of the security, establish a benchmark yield and develop an estimated tranche specific spread to the benchmark yield based on the unique attributes of the tranche. Financial futures contracts traded on exchanges are valued at their last sale price. Swap agreements are valued by utilizing quotes received daily by the Portfolio’s pricing service or through brokers which are derived using daily swap curves and trades of underlying securities. To-be-announced (“TBA”) commitments are valued at the current market value of the underlying securities. Short-term securities with maturities less than 60 days may be valued at amortized cost, which approximates fair value. Investments in open-end investment companies are valued at net asset value each business day. The Portfolio values its investment in the Money Market Series of BlackRock Liquidity Series, LLC at fair value, which is ordinarily based on its pro rata ownership in the net assets of the underlying fund.

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 such prior day’s price no longer reflects the fair value of the option. Over-the-counter options and swaptions are valued by an independent pricing service using a mathematical model which incorporates a number of market data factors, such as the trades and prices of the underlying securities.

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

Generally, trading in foreign securities is substantially completed each day at various times prior to the close of business on the New York Stock Exchange (“NYSE”). The values of such securities used in computing the net assets of the Portfolio are determined as of such times. Foreign currency exchange rates will be determined as of the close of business on the NYSE. Occasionally, events affecting the values of such securities and such exchange rates may occur between the times at which they are determined and the close of business on the NYSE that may not be reflected in the computation of the Portfolio’s net assets. If events (for example, a company announcement, market volatility or a natural disaster) occur during such periods that are expected to materially affect the value of such securities, those securities will be Fair Value Assets and be valued at their fair value as determined in good faith by the Board or by the investment advisor using a pricing service and/or


		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009		29


Notes to Financial Statements (continued)

procedures approved by the Board. Foreign currency exchange contracts are valued at the mid between the bid and ask prices. Interpolated values are derived when the settlement date of the contract is an interim date for which quotations are not available.

The Portfolio is not obligated for costs associated with the registration of restricted securities.

The Portfolio reports foreign currency related transactions as components of realized gains/losses for financial reporting purposes, whereas such components are treated as ordinary income for federal income tax purposes.

Asset-Backed and Mortgage-Backed Securities: The Portfolio 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 rate feature will have the effect of shortening the maturity of the security. If the Portfolio 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 Portfolio may purchase certain mortgage pass-through securities. There are a number of important differences among the agencies and instrumentalities of the US Government that issue mortgage-related securities and among the securities that they issue. For example, mortgage-related securities guaranteed by the Government National Mortgage Association (“GNMA”), which are guaranteed as to the timely payment of principal and interest by GNMA, and such guarantee is backed by the full faith and credit of the United States. However, mortgage-related securities issued by the Federal Home Loan Mortgage Corporation (“FHLMC”) and Federal National Mortgage Association (“FNMA”) including FNMA guaranteed Mortgage Pass-Through Certificates are solely the obligations of the FHLMC and FNMA, are not backed by or entitled to the full faith and credit of the United States but are supported by the right of the issuer to borrow from the Treasury.

The Portfolio invests a significant portion of its assets in securities backed by commercial or residential mortgage loans or in issuers that hold mortgage and other asset-backed securities. Changes in economic conditions, including delinquencies and/or defaults on assets underlying these securities, can affect the value, income and/or liquidity of such positions.

Multiple Class Pass-Through Securities: The Portfolio may invest in multiple class pass-through securities, including collateralized mortgage obligations and commercial mortgage backed securities. These multiple class securities may be issued by GNMA, US Government agencies or instrumentalities or by trusts formed by private originators of, or investors in, mortgage loans. In general, these securities are debt obligations of a legal entity that are collateralized by, and multiple class pass-through securities that represent direct ownership interests in, a pool of residential or commercial mortgage loans or mortgage pass-through securities, the payments on which are used to make payments on the multiple class pass-through securities. The markets for multiple class pass-through securities may be more illiquid than those of other securities.

Classes of multiple class pass-through securities 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 investment 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 pre-payments of principal, the Portfolio may not fully recoup its initial investments in IOs.

Capital Trusts: These securities are typically issued by corporations, generally in the form of interest-bearing notes with preferred securities characteristics, or by an affiliated business trust of a corporation, generally in the form of beneficial interests in subordinated debentures or similarly structured securities. The securities can be structured as either fixed or adjustable coupon securities that can have either a perpetual or stated maturity date. Interest can be deferred without creating an event of default or acceleration, although maturity cannot take place unless all cumulative payment obligations have been met. The deferral of payments does not affect the purchase or sale of these securities in the open market. These securities can have a rating that is slightly below that of the issuing company’s senior debt securities.


30		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009


Notes to Financial Statements (continued)

Preferred Stock: The Portfolio may invest in preferred stocks. Preferred stock has a preference over common stock in liquidation (and generally in receiving dividends as well), but is subordinated to the liabilities of the issuer in all respects. As a general rule, the market value of preferred stock with a fixed dividend rate and no conversion element varies inversely with interest rates and perceived credit risk, while the market price of convertible preferred stock generally also reflects some element of conversion value. Because preferred stock is junior to debt securities and other obligations of the issuer, deterioration in the credit quality of the issuer will cause greater changes in the value of a preferred stock than in a more senior debt security with similar stated yield characteristics. Unlike interest payments on debt securities, preferred stock dividends are payable only if declared by the issuer’s board of directors. Preferred stock also may be subject to optional or mandatory redemption provisions.

Collateralized Debt Obligations: The Portfolio may invest in collateralized debt obligations (“CDOs”), which include collateralized bond obligations (“CBOs”) and collateralized loan obligations (“CLOs”). CBOs and CLOs are types of asset-backed securities. A CDO is a bankruptcy remote entity which is backed by a diversified pool of debt securities (CBOs) or syndicated bank loans (CLOs). The cash flows of the CDO can be split into multiple segments, called “tranches”, which will vary in risk profile and yield. The riskiest segment is the subordinated or “equity” tranche. This tranche bears the greatest risk of defaults from the underlying assets in the CDO and serves to protect the other, more senior, tranches from default in all but the most severe circumstances. Since it is shielded from defaults by the more junior tranches, a “senior” tranche will typically have higher credit ratings and lower yields than their underlying securities, and often receive investment grade ratings from one or more of the nationally recognized rating agencies. Despite the protection from the more junior tranches, senior tranches can experience substantial losses due to actual defaults, increased sensitivity to future defaults and the disappearance of one or more protecting tranches as a result of changes in the credit profile of the underlying pool of assets.

Forward Commitments and When-Issued Delayed Delivery Securities: The Portfolio 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 Portfolio 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 Portfolio may be required to pay more at settlement than the security is worth. In addition, the purchaser is not entitled to any of the interest earned prior to settlement. When purchasing a security on a delayed-delivery basis, the Portfolio 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 Portfolio’s maximum amount of loss is the unrealized gain of the commitment, which is shown on the Summary Schedule of Investments, if any.

Inflation-Indexed Bonds: Inflation-indexed bonds are fixed income securities whose principal value is periodically adjusted according to the rate of inflation. If the index measuring inflation falls, the principal value of inflation-indexed bonds will be adjusted downward, and consequently the interest payable on these securities (calculated with respect to a smaller principal amount) will be reduced. Repayment of the original bond principal upon maturity (as adjusted for inflation) is guaranteed in the case of US Treasury inflation-indexed bonds. For bonds that do not provide a similar guarantee, the adjusted principal value of the bond repaid at maturity may be less than the original principal.

Mortgage Dollar Roll Transactions: The Portfolio may sell mortgage-backed securities and simultaneously contract to repurchase substantially similar (same type, coupon and maturity) securities on a specific future date at an agreed upon price. During the period between the sale and repurchase, the Portfolio will not be entitled to receive interest and principal payments on the securities sold. The Portfolio accounts for dollar roll transactions as purchases and sales and realizes gains and losses on these transactions. Mortgage dollar rolls involve the risk that the market value of the securities that the Portfolio is required to purchase may decline below the agreed upon repurchase price of those securities.

Treasury Roll Transactions: A treasury roll transaction involves the sale of a Treasury security, with an agreement to repurchase the same security at an agreed upon price and date. Treasury rolls constitute a borrowing and the difference between the sale and repurchase price represents interest expense at an agreed upon rate. Whether such a transaction produces a positive impact on performance depends upon whether the income and gains on the securities purchased with the proceeds received from the sale of the security exceeds the interest expense incurred by the Portfolio. Treasury rolls are not considered purchases and sales and any gains or losses incurred on the treasury rolls will be deferred until the treasury securities are disposed.

Treasury roll transactions involve the risk that the market value of the securities that the Portfolio is required to purchase may decline below the agreed upon purchase price of those securities. If investment performance of securities purchased with proceeds from these transactions does not exceed the income, capital appreciation and gain or loss that would have been realized on the securities sold as part of the treasury roll, the use of this technique will adversely impact the investment performance of the Portfolio.

TBA Commitments: The Portfolio may enter into TBA commitments to purchase or sell mortgage-backed securities for a fixed price at a future date. TBA commitments are considered securities in themselves and involve a risk of loss if the value of the security to be purchased or sold declines or increases prior to settlement date, which is in addition to the risk of decline in the value of the Portfolio’s other assets.

Zero-Coupon Bonds: The Portfolio may invest in zero-coupon bonds, which are normally issued at a significant discount from face value and


		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009		31


Notes to Financial Statements (continued)

do not provide for periodic interest payments. Zero-coupon bonds may experience greater volatility in market value than similar maturity debt obligations which provide for regular interest payments.

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

Investment Transactions and Investment Income: For financial reporting purposes, investment transactions are recorded on the dates the transactions are entered into (the trade dates). Realized gains and losses on investment transactions are determined on the identified cost basis. Dividend income is recorded on the ex-dividend dates. Dividends from foreign securities where the ex-dividend date may have passed are subsequently recorded when the Portfolio has determined the ex-dividend date. 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 is recognized on the accrual basis. The Portfolio amortizes all premiums and discounts on debt securities. Income, realized and unrealized gains and losses are allocated daily to each class based on its relative net assets.

Dividends and Distributions: Dividends and distributions of capital gains paid by the Portfolio are recorded on the ex-dividend dates.

Securities Lending: The Portfolio may lend securities to financial institutions that provide cash as collateral, which will be maintained at all times in an amount equal to at least 100% of the current market value of the loaned securities. The market value of the loaned securities is determined at the close of business of the Portfolio and any additional required collateral is delivered to the Portfolio on the next business day. The Portfolio typically receives income on the loaned securities but does not receive income on the collateral. The Portfolio may invest the cash collateral and retain the amount earned on such investment, net of any amount rebated to the borrower. 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 Portfolio may pay reasonable lending agent, administrative and custodial fees in connection with its loans. In the event that the borrower defaults on its obligation to return borrowed securities because of insolvency or for any other reason, the Portfolio could experience delays and costs in gaining access to the collateral. The Portfolio also could suffer a loss if the value of an investment purchased with cash collateral falls below the market value of loaned securities or if the value of an investment purchased with cash collateral falls below the value of the original cash collateral received.

Income Taxes: It is the Portfolio’s policy to comply with the requirements of the Internal Revenue Code 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. Under the applicable foreign tax law, a withholding tax may be imposed on interest, dividends and capital gains at various rates.

The Portfolio files US federal and various state and local tax returns. No income tax returns are currently under examination. The statutes of limitations on the Portfolio’s US federal income tax returns remain open for each of the four years ended September 30, 2009. The statutes of limitations on the Portfolio’s state and local tax returns may remain open for an additional year depending upon the jurisdiction.

Recent Accounting Standards: In June 2009, amended guidance was issued by the Financial Accounting Standards Board for transfers of financial assets. This guidance is intended to improve the relevance, representational faithfulness and comparability of the information that a reporting entity provides in its financial statements about a transfer of financial assets; the effects of a transfer on its financial position, financial performance, and cash flows; and a transferor’s continuing involvement, if any, in transferred financial assets. The amended guidance is effective for financial statements for fiscal years and interim periods beginning after November 15, 2009. Earlier application is prohibited. The recognition and measurement provisions of this guidance must be applied to transfers occurring on or after the effective date. Additionally, the enhanced disclosure provisions of the amended guidance should be applied to transfers that occurred both before and after the effective date of this guidance. The impact of this guidance on the Portfolio’s financial statements and disclosures, if any, is currently being assessed.

Other: Expenses directly related to the Portfolio or its classes are charged to the Portfolio or its classes. Other operating expenses shared by several funds are prorated among those funds on the basis of relative net assets or other appropriate methods. Other expenses of the Portfolio are allocated daily to each class based on its relative net assets.

2. Derivative Financial Instruments:

The Portfolio may engage in various portfolio investment strategies both to increase the returns of the Portfolio and to economically hedge, or protect, its exposure to certain risks such as credit risk, equity risk, interest rate risk and foreign currency exchange rate risk. Losses may arise if the value of the contract decreases due to an unfavorable change in the price of the underlying instrument or if the counterparty does not perform under the contract. The Portfolio may mitigate counterparty risk through master netting agreements included within an International Swaps and Derivatives Association, Inc. (“ISDA”) Master Agreement between the Portfolio and each of its counterparties. The


32		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009


Notes to Financial Statements (continued)

ISDA Master Agreement allows the Portfolio to offset with its counterparty certain derivative financial instruments’ payables and/or receivables with collateral held with each counterparty. The amount of collateral moved to/from applicable counterparties is based upon minimum transfer amounts of up to $500,000. To the extent amounts due to the Portfolio from its counterparties are not fully collateralized contractually or otherwise, the Portfolio bears the risk of loss from counterparty non-performance. See Note 1 “Segregation and Collateralization” for additional information with respect to collateral practices.

The Portfolio’s maximum risk of loss from counterparty credit risk on over-the-counter derivatives is generally the aggregate unrealized gain in excess of any collateral pledged by the counterparty to the Portfolio. For over-the-counter purchased options, the Portfolio bears the risk of loss in the amount of the premiums paid and change in market value of the options should the counterparty not perform under the contracts. Options written by the Portfolio do not give rise to counterparty credit risk, as written options obligate the Portfolio to perform and not the counterparty. Certain ISDA Master Agreements allow counterparties to over-the-counter derivatives to terminate derivative contracts prior to maturity in the event the Portfolio’s net assets decline by a stated percentage or the Portfolio fails to meet the terms of its ISDA Master Agreements, which would cause the Portfolio to accelerate payment of any net liability owed to the counterparty. Counterparty risk related to exchange-traded financial futures contracts and options is minimal because of the protection against defaults provided by the exchange on which they trade.

Financial Futures Contracts: The Portfolio may purchase or sell financial futures contracts and options on financial futures contracts to gain exposure to, or economically hedge against, changes in the value of equity securities (equity risk), interest rates (interest rate risk) or foreign currencies (foreign currency exchange rate risk). Financial futures contracts are contracts for delayed delivery of securities or currencies at a specific future date and at a specific price or yield. Pursuant to the contract, the Portfolio 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 margin variation and are recognized by the Portfolio as unrealized gains or losses. When the contract is closed, the Portfolio 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 rates and the underlying assets.

Foreign Currency Exchange Contracts: The Portfolio may enter into foreign currency exchange contracts as an economic hedge against either specific transactions or portfolio positions (foreign currency exchange rate risk). A foreign currency exchange contract is an agreement between two parties to buy and sell a currency at a set exchange rate on a future date. Foreign currency exchange contracts, when used by the Portfolio, help to manage the overall exposure to the currency backing some of the investments held by the Portfolio. The contract is marked-to-market daily and the change in market value is recorded by the Portfolio as an unrealized gain or loss. When the contract is closed, the Portfolio records a realized gain or loss equal to the difference between the value at the time it was opened and the value at the time it was closed. The use of foreign currency exchange contracts involves the risk that counterparties may not meet the terms of the agreement or unfavorable movements in the value of a currency relative to the United States dollar.

Options: The Portfolio may purchase and write call and put options to increase or decrease its exposure to underlying instruments (interest rate risk). A call option gives the purchaser of the option the right (but not the obligation) to buy, and obligates the seller to sell (when the option is exercised), the underlying instrument at the exercise 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 price at any time or at a specified time during the option period. When the Portfolio purchases (writes) an option, an amount equal to the premium paid (received) by the Portfolio 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 Portfolio enters into a closing transaction), the Portfolio 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 premium received or paid). When the Portfolio writes a call option, such option is “covered,” meaning that the Portfolio holds the underlying instrument subject to being called by the option counterparty, or cash in an amount sufficient to cover the obligation. When the Portfolio writes a put option, such option is covered by cash in an amount sufficient to cover the obligation.

Options on swaps (swaptions) are similar to options on securities except that instead of selling or purchasing the right to buy or sell a security, the writer or purchaser of the swaption is granting or buying the right to enter into a previously agreed upon interest rate swap agreement at any time before the expiration of the option.

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


		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009		33


Notes to Financial Statements (continued)

Swaps: The Portfolio may enter into swap agreements, in which the Portfolio and a counterparty agree to make periodic net payments on a specified notional amount. These periodic payments received or made by the Portfolio are recorded in the Statement of Operations as realized gains or losses, respectively. Swaps are marked-to-market daily and changes in value are recorded as unrealized appreciation (depreciation). When the swap is terminated, the Portfolio will record a realized gain or loss equal to the difference between the proceeds from (or cost of) the closing transaction and the Portfolio’s basis in the contract, if any. Swap transactions involve, to varying degrees, elements of interest rate, credit and market risk in excess of the amounts recognized on the Statement of Assets & Liabilities. Such risks involve the possibility that there will be no liquid market for these agreements, that the counterparty to the agreements may default on its obligation to perform or disagree as to the meaning of the contractual terms in the agreements, and that there may be unfavorable changes in interest rates and/or market values associated with these transactions.

•

Credit default swaps — The Portfolio may enter 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 Portfolio enters into credit default agreements to provide a measure of protection against the default of an issuer (as buyer of protection) and/or gain credit exposure to an issuer to which it is not otherwise exposed (as seller of protection). The Portfolio may either buy or sell (write) credit default swaps on single-name issuers (corporate or sovereign) or traded indexes. Credit default swaps on single-name issuers are agreements in which the buyer pays fixed periodic payments to the seller in consideration for a guarantee from the seller to make a specific payment should a negative credit event take place (e.g., bankruptcy, failure to pay, obligation accelerators, repudiation, moratorium or restructuring). Credit default swaps on traded indexes are agreements in which the buyer pays fixed periodic payments to the seller in consideration for a guarantee from the seller to make a specific payment should a write-down, principal or interest shortfall or default of all or individual underlying securities included in the index occurs. As a buyer, if an underlying credit event occurs, the Portfolio will either receive from the seller an amount equal to the notional amount of the swap and deliver the referenced security or underlying securities comprising of an index or receive a net settlement of cash equal to the notional amount of the swap less the recovery value of the security or underlying securities comprising an index. As a seller (writer), if an underlying credit event occurs, the Portfolio 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 an 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 an index.

•

Interest rate swaps — The Portfolio may enter into interest rate swaps 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 floating rate of interest on a notional principal amount and receives a fixed rate of interest on the same notional principal amount for a specified period of time. In more complex swaps, the notional principal amount may decline (or amortize) over time.

Derivative Instruments Categorized by Risk Exposure:


Value of Derivative Instruments as of September 30, 2009*
Asset Derivatives
	Statement of Assets and Liabilities Location
Interest rate contracts**	Net unrealized appreciation/depreciation	$	163,413
	Unrealized appreciation on swaps		533,270
	Investment at value - unaffiliated		1,235,183
Foreign currency exchange contracts	Unrealized appreciation on foreign currency exchange contracts		382,396
Credit contracts	Unrealized appreciation on swaps		22,684
Equity contracts**	Net unrealized appreciation/depreciation		638,172

Total		$	2,975,118


Liability Derivatives
	Statement of Assets and Liabilities Location
Interest rate contracts**	Net unrealized appreciation/depreciation	$	111,114
	Options written — at value		4,835,019
	Unrealized depreciation on swaps		354,627
Foreign currency exchange contracts	Unrealized depreciation on foreign currency exchange contracts		89,430
Credit contracts	Unrealized depreciation on swaps		1,305,903

Total		$	6,696,093

*	For open derivative instruments as of September 30, 2009, see the Summary Schedule of Investments, which is also indicative of activity for the year ended September 30, 2009.

**	Includes cumulative appreciation/depreciation of financial futures contracts as reported in the Summary Schedule of Investments. Only current day’s margin variation is reported within the Statement of Assets and Liabilities.


34		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009


Notes to Financial Statements (continued)


The Effect of Derivative Instruments on the Statement of Operations Year Ended September 30, 2009
Net Realized Gain (Loss) from
Credit contracts:
Swaps	$	(499,086	)
Equity contracts:
Financial futures contracts		8,994,154
Foreign currency exchange contracts:
Foreign currency exchange contracts		1,382,678
Interest rate contracts:
Financial futures contracts		1,566,579
Options***		1,977,328
Swaps		(92,837	)

Total	$	13,328,816


Net Change in Unrealized Appreciation/Depreciation on
Credit contracts:
Swaps	$	(1,282,401	)
Equity contracts:
Financial futures contracts		595,572
Foreign currency exchange contracts:
Foreign currency exchange contracts		409,715
Interest rate contracts:
Financial futures contracts		483,657
Options***		(698,234	)
Swaps		(136,631	)

Total	$	(628,322	)

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

3. Investment Advisory Agreements and Other Transactions with Affiliates:

The Fund, on behalf of the Portfolio, entered into an Investment Advisory Agreement with BlackRock Advisors, LLC (the “Manager”), the Portfolio’s investment advisor, an indirect, wholly owned subsidiary of BlackRock, to provide investment advisory and administration services.

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


Average Daily Net Assets
First $1 Billion	0.550	%
$1 Billion - $2 Billion	0.500
$2 Billion - $3 Billion	0.475
Greater Than $3 Billion	0.450


Share Classes
Institutional	Service	Investor A	Investor B	Investor C
0.86%	1.16%	1.33%	2.08%	2.08%

Effective June 1, 2009, the expense limitations as a percentage of net assets are as follows:


Share Classes
Institutional	Service	Investor A	Investor B	Investor C
0.89%	1.17%	1.37%	2.14%	2.14%

The Manager has voluntarily agreed to waive its advisory fee by the amount of investment advisory fees the Portfolio pays to the Manager indirectly through its investment in affiliated money market funds. This amount is included in fees waived by advisor in the Statement of Operations.

The Manager has entered into a separate sub-advisory agreement with BlackRock Financial Management, Inc. (“BFM”), an affiliate of the Manager, under which the Manager pays BFM, for services it provides, a monthly fee that is a percentage of the investment advisory fees paid by the Portfolio to the Manager.

The Fund, on behalf of the Portfolio, has entered into a Distribution Agreement and Distribution Plan with BlackRock Investments, LLC (“BRIL”), an affiliate of BlackRock. Pursuant to the Distribution Plan, in accordance with Rule 12b-1 under the 1940 Act, the Portfolio pays BRIL ongoing service and distribution fees. The fees are accrued daily and paid monthly at annual rates based upon the average daily net assets of the shares of the Portfolio as follows:


	Service Fee		Distribution Fee
Service	0.25	%	—
Investor A	0.25	%	—
Investor B	0.25	%	0.75	%
Investor C	0.25	%	0.75	%

Pursuant to sub-agreements with BRIL, broker-dealers, including Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S”), a wholly owned subsidiary of Merrill Lynch, and BRIL provide shareholder servicing and distribution services to the Portfolio. 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.


		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009		35


Notes to Financial Statements (continued)

For the year ended September 30, 2009, affiliates, including Merrill Lynch from October 1, 2008 to December 31, 2008 (after which time Merrill Lynch was no longer considered an affiliate), received contingent deferred sales charges relating to transactions in Investor A, Investor B, and Investor C Shares of $7,613, $124,448 and $15,208 respectively.

In addition, MLPF&S received $7,204 in commissions on the execution of portfolio security transactions for the Portfolio for the period October 1, 2008 to December 31, 2008 (after which time MLPF&S was no longer considered an affiliate).

PFPC Trust Company, an indirect, wholly owned subsidiary of PNC, serves as custodian for the Portfolio. For these services, the custodian receives a fee computed daily and payable monthly, based on a percentage of the average daily gross assets of the Portfolio. The fee is paid at the following annual rates: 0.005% of the first $400 million, 0.004% of the next $1.6 billion, and 0.003% of average daily gross assets in excess of $2 billion; plus per transaction charges and other miscellaneous fees incurred on behalf of the Portfolio.

PNC Global Investment Servicing (U.S.) Inc. (“PNCGIS”), an indirect, wholly owned subsidiary of PNC, serves as transfer and dividend disbursing agent. Each class of the Portfolio bears the costs of transfer agent fees associated with such respective class. Transfer agent fees borne by each class of the Portfolio are comprised of those fees charged for all shareholder communications, including mailing of shareholder reports, dividend and distribution notices, and proxy materials for shareholders meetings, as well as per account and per transaction fees related to servicing and maintenance of shareholder accounts, including the issuing, redeeming and transferring of shares of each class of the Portfolio, 12b-1 fee calculations, check writing, anti-money laundering services, and customer identification services.

Pursuant to written agreements, affiliates, including Merrill Lynch from October 1, 2008 to December 31, 2008 (after which time Merrill Lynch was no longer considered an affiliate), provide the Portfolio with sub-accounting, recordkeeping, sub-transfer agency and other administrative services with respect to sub-accounts they service. For these services, these affiliates receive an annual fee per shareholder account which will vary depending on share class. For the year ended September 30, 2009, the Portfolio paid $34,727 in return for these services, which are included in transfer agent — class specific in the Statement of Operations.

The Manager maintains a call center, which is responsible for providing certain shareholder services to the Portfolio, such as responding to shareholder inquiries and processing transactions based upon instructions from shareholders with respect to the subscription and redemption of Portfolio shares. For the year ended September 30, 2009, the Portfolio reimbursed the Manager the following amounts for costs incurred in running the call center, which are included in transfer agent — class specific in the Statement of Operations.


Share Classes
Institutional	Service	Investor A	Investor B	Investor C	Total
$795	$86	$51,800	$14,734	$5,989	$73,404

PNCGIS and the Manager act as co-administrators for the Portfolio. For these services, the co-administrators receive a combined administration fee computed daily and payable monthly, based on a percentage of the average daily net assets of the Portfolio. The combined administration fee is paid at the following annual rates: 0.075% of the first $500 million, 0.065% of the next $500 million and 0.055% of average daily net assets in excess of $1 billion. In addition, each of the share classes is charged an administration fee based on the following percentages of average daily net assets of each respective class 0.025% of the first $500 million, 0.015% of the next $500 million and 0.005% of average daily net assets in excess of $1 billion. In addition, PNCGIS and the Manager may have, at their discretion, voluntarily waived all or any portion of their administration fees for the Portfolio or a share class.

The Portfolio has received an exemptive order from the SEC permitting it to lend portfolio securities to MLPF&S or its affiliates. Pursuant to that order, the Portfolio has retained BlackRock Investment Management, LLC (“BIM”), an affiliate of the Manager, as the securities lending agent for a fee based on a share of the returns on investment of cash collateral. BIM may, on behalf of the Portfolio, invest cash collateral received by the Portfolio for such loans, among other things, in a private investment company managed by the Manager or in registered money market funds advised by the Manager or its affiliates. The share of income earned by the Portfolio on such investments is shown as securities lending — affiliated on the Statement of Operations. For the year ended September 30, 2009, BIM received $6,615 in securities lending agent fees.

For the year ended September 30, 2009, the following chart shows the various types of class specific expenses borne directly by each class of the Portfolio and any associated waivers or reimbursements of those expenses.


	Share Classes
	Institutional			Service			Investor A			Investor B			Investor C		Total
Administration Fees	$	6,260		$	327		$	80,379		$	17,623		$	16,534	$	121,123
Administration Fees Waived	$	(5,411	)	$	(81	)	$	(12,395	)	$	(6,078	)		—	$	(23,965	)
Service and Distribution Fees		—		$	3,262		$	795,308		$	698,649		$	658,020	$	2,155,239
Transfer Agent Fees	$	32,802		$	1,161		$	668,336		$	180,153		$	103,087	$	985,539
Transfer Agent Fees Waived	$	(772	)	$	(25	)	$	(5,309	)	$	(5,351	)		—	$	(11,457	)
Transfer Agent Fees Reimbursed	$	(11,167	)	$	(406	)	$	(1,124	)	$	(4,235	)		—	$	(16,932	)


36		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009


Notes to Financial Statements (continued)

If during the Portfolio’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 amount of fees waived or expenses reimbursed during the prior two fiscal years under the agreement provided that: (1) the Portfolio has more than $50 million in assets and (2) the Manager or an affiliate continues to serve as the Portfolio’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 year ended September 30, 2009, the Manager recouped the following waivers previously recorded by the Portfolio:


Share Classes
Institutional	Service	Investor A	Investor B	Investor C	Total
$1,147	$349	$566	$3,703	$10,136	$15,901

As of September 30, 2009, the amounts subject to possible future recoupment under the expense limitation agreement are as follows:


Expiring September 30,
2010		2011
$14,285		$52,224

Waivers of $28,466 previously recorded by the Portfolio, which were subject to recoupment by the Manager, expired on September 30, 2009.

The Portfolio may earn income on positive cash balances in demand deposit accounts that are maintained by PNCGIS on behalf of the Portfolio. The income earned for the year ended September 30, 2009, was $1,089, which is included in interest and dividends -affiliated in the Statement of Operations.

The Portfolio may also receive earnings credits related to cash balances with PNCGIS which are shown on the Statement of Operations as fees paid indirectly.

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

4. Investments:

Purchases and sales of investments including paydowns, mortgage dollar roll and TBA transactions excluding short-term and US government securities, for the year ended September 30, 2009 were $1,272,409,490 and $1,333,779,257, respectively.

Purchases and sales of US government securities for the year ended September 30, 2009 were $327,173,228 and $290,948,641, respectively.

Purchases and sales of mortgage dollar rolls for the year ended September 30, 2009 were $571,837,914 and $572,237,153, respectively.

Written options transactions during the year ended September 30, 2009 are summarized as follows:


	Calls					Puts
	Contracts		Premiums Received			Contracts		Premiums Received
Options outstanding at beginning of year	2,420		$	953,540		5,100		$	1,143,160
Options written	9,060			3,948,927		10,187			4,105,293
Options expired	—			—		(3,084	)		(242,796	)
Options closed	(5,560	)		(2,580,510	)	(5,263	)		(2,579,489	)

Options outstanding at end of year	5,920		$	2,321,957		6,940		$	2,426,168

The Portfolio received proceeds from settlement of litigation where it was able to recover a portion of investment losses previously realized by the Portfolio. This amount is shown as litigation proceeds in the Statement of Operations.

5. Borrowings:

For the year ended September 30, 2009, the average amount of borrowings was approximately $4,890,767 and the daily weighted average interest rates in treasury rolls was 3.82%.

6. Short-Term Borrowings:

The Portfolio, along with certain other funds managed by the Manager and its affiliates, is a party to a $500 million credit agreement with a group of lenders, which expires in November 2009 and was subsequently renewed until November 2010. The Portfolio may borrow under the credit agreement to fund shareholder redemptions and for other lawful purposes other than for leverage. The Portfolio may borrow up to the maximum amount allowable under the Portfolio’s current Prospectus and Statement of Additional Information, subject to various other legal, regulatory or contractual limits. The Portfolio paid its pro rata share of a 0.02% upfront fee on the aggregate commitment amount based on its net assets as of October 31, 2008. The Portfolio pays a commitment fee of 0.08% per annum based on the Portfolio’s pro rata share of the unused portion of the credit agreement, which is included in miscellaneous in the Statement of Operations. Amounts borrowed under the credit agreement bear interest at a rate equal to, the higher of the (a) federal funds effective rate and (b) reserve adjusted one month LIBOR, plus, in each case, the higher of (i) 1.50% and (ii) 50% of the


		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009		37


Notes to Financial Statements (continued)

CDX index (as defined in the credit agreement). The Portfolio did not borrow under the credit agreement during the year ended September 30, 2009.

7. Income Tax Information:

Reclassifications: Accounting principles generally accepted in the United States of America require that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. These reclassifications have no effect on net assets or net asset value per share. The following permanent differences as of September 30, 2009 attributable to foreign currency transactions, amortization methods on fixed income securities, sale of stock in passive foreign investment companies, income recognized from pass-through entities, net paydown gains, the accounting for swap agreements and the classification of settlement proceeds were reclassified to the following accounts:


Paid-in capital	$	(2,250	)
Undistributed net investment income	$	(134,570	)
Accumulated net realized loss	$	136,820

The tax character of distributions paid during the years ended September 30, 2009 and September 30, 2008 were as follows:


Ordinary income
9/30/09	$	5,790,110
9/30/08	$	22,237,194
Net long-term capital gain
9/30/09	$	8,381,761
9/30/08	$	48,985,345

Total distributions
9/30/09	$	14,171,871

9/30/08	$	71,222,539

As of September 30, 2009, the tax components of accumulated net losses were as follows:


Undistributed ordinary income	$	2,671,749
Capital loss carryforwards		(15,083,634	)
Net unrealized losses*		(9,819,647	)

Total	$	(22,231,532	)

The difference between book-basis and tax-basis net unrealized losses is attributable primarily to the tax deferral of losses on wash sales, the realization for tax purposes of unrealized gains (losses) on certain futures and foreign currency exchange contracts, the accrual of income on securities in default, the realization for tax purposes of unrealized gains on investments in passive foreign investment companies, the timing and recognition of partnership income, the accounting for swap agreements and the deferral of post-October capital losses for tax purposes.

As of September 30, 2009, the Portfolio had capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates:


Expires September 30,
2010	$	2,685,812
2017		12,397,822

Total	$	15,083,634

8. Market and Credit Risk:

In the normal course of business, the Portfolio 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 (credit risk). The value of securities held by the Portfolio may decline in response to certain events, including those directly involving the issuers whose securities are owned by the Portfolio; 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 credit risk, the Portfolio may be exposed to counterparty risk or the risk that an entity with which the Portfolio has unsettled or open transactions may default. Financial assets, which potentially expose the Portfolio to credit and counterparty risks, consist principally of investments and cash due from counterparties. The extent of the Portfolio’s exposure to credit and counterparty risks with respect to these financial assets is approximated by their value recorded in the Portfolio’s Statement of Assets and Liabilities.


38		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009


Notes to Financial Statements (concluded)

9. Capital Shares Transactions:

Transactions in capital shares for each class were as follows:


	Year Ended September 30, 2009					Year Ended September 30, 2008
	Shares		Amount			Shares		Amount
Institutional
Shares sold	1,568,005		$	17,415,761		719,701		$	10,781,671
Shares issued in reinvestment of dividends and distributions	60,683			676,921		116,442			1,821,085

Total issued	1,628,688			18,092,682		836,143			12,602,756
Shares redeemed	(1,216,027	)		(13,381,936	)	(1,089,350	)		(17,388,674	)

Net increase (decrease)	412,661		$	4,710,746		(253,207	)	$	(4,785,918	)

Service
Shares sold	7,630		$	87,467		15,761		$	240,679
Shares issued in reinvestment of dividends and distributions	1,463			16,925		2,025			31,561

Total issued	9,093			104,392		17,786			272,240
Shares redeemed	(17,967	)		(204,021	)	(34,266	)		(509,908	)

Net decrease	(8,874	)	$	(99,629	)	(16,480	)	$	(237,668	)

Investor A
Shares sold and automatic conversion of shares	5,331,563		$	58,978,737		3,270,332		$	48,680,010
Shares issued in reinvestment of dividends and distributions	875,104			9,562,047		2,930,518			45,682,395

Total issued	6,206,667			68,540,784		6,200,850			94,362,405
Shares redeemed	(9,068,937	)		(99,318,802	)	(5,775,786	)		(86,718,679	)

Net increase (decrease)	(2,862,270	)	$	(30,778,018	)	425,064		$	7,643,726

Investor B
Shares sold	382,013		$	4,151,296		529,002		$	7,998,032
Shares issued in reinvestment of dividends and distributions	148,206			1,551,025		789,550			12,215,796

Total issued	530,219			5,702,321		1,318,552			20,213,828
Shares redeemed and automatic conversion of shares	(2,844,557	)		(30,909,977	)	(2,736,738	)		(40,629,040	)

Net decrease	(2,314,338	)	$	(25,207,656	)	(1,418,186	)	$	(20,415,212	)

Investor C
Shares sold	3,873,289		$	41,842,695		1,208,908		$	17,588,746
Shares issued in reinvestment of dividends and distributions	143,186			1,507,320		448,828			6,911,581

Total issued	4,016,475			43,350,015		1,657,736			24,500,327
Shares redeemed	(3,955,079	)		(42,312,049	)	(1,232,015	)		(18,103,485	)

Net increase	61,396		$	1,037,966		425,721		$	6,396,842

10. Subsequent Events:

Management has evaluated the impact of all subsequent events on the Portfolio through November 25, 2009, the date the financial statements were issued, and has determined that there were no subsequent events requiring adjustment or disclosure in the financial statements.


		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009		39

Report of Independent Registered Public Accounting Firm

To the Board of Trustees of BlackRock Funds and Shareholders of Asset Allocation Portfolio:

We have audited the accompanying statement of assets and liabilities, including the summary schedule of investments, of the BlackRock Asset Allocation Portfolio (the “Portfolio”) [one of the twenty-seven portfolios constituting the BlackRock Funds (the “Fund”)] as of September 30, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the BlackRock Asset Allocation Portfolio of the BlackRock Funds as of September 30, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP

Philadelphia, Pennsylvania

November 25, 2009

Important Tax Information (Unaudited)

The following information is provided with respect to the ordinary income distributions paid by BlackRock Asset Allocation Portfolio during the taxable year ended September 30, 2009:


Record Date	10/22/2008		12/12/2008		7/22/2009
Payable Date	10/24/2008		12/16/2008		7/24/2009
Qualified Dividend Income for Individuals*	100.00	%	100.00	%	87.48	%
Dividends Qualifying for the Dividends Received Deduction for Corporations*	84.67	%	84.67	%	53.49	%
Interest-Related Dividends**	57.80	%	57.80	%	100.00	%

Federal Obligation Interest*** 7.00%.

*	The Portfolio hereby designates the percentage indicated or the maximum amount allowable by law.

**	Represents the portion of the taxable ordinary income dividends eligible for exemption from U.S. withholding tax for nonresident aliens and foreign corporations.

***	The law varies in each state as to whether and what percentage of dividend income attributable to Federal obligations is exempt from state income tax. We recommend that you consult your tax advisor to determine if any portion of the dividends you received is exempt from state income taxes.

Additionally, the Portfolio distributed long-term capital gains of $0.185742 per share to shareholders of record on December 12, 2008.


40		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009

Disclosure of Investment Advisory Agreement and Sub-Advisory Agreement

The Board of Trustees (the “Board,” and the members of which are referred to as “Board Members”) of BlackRock Funds^SM (the “Fund”) met on April 16, 2009 and May 21-22, 2009 to consider the approval of the Fund’s investment advisory agreement (the “Advisory Agreement”) with BlackRock Advisors, LLC (the “Manager”), the Fund’s investment advisor, on behalf of BlackRock Asset Allocation Portfolio (the “Portfolio”), a series of the Fund. The Board also considered the approval of the sub-advisory agreement (the “Sub-Advisory Agreement”) between the Manager and BlackRock Financial Management, Inc. (the “Sub-Advisor”) with respect to the Portfolio. The Manager and the Sub-Advisor are referred to herein as “BlackRock.” The Advisory Agreement and the Sub-Advisory Agreement are referred to herein as the “Agreements.”

Activities and Composition of the Board

The Agreements

Pursuant to the 1940 Act, the Board is required to consider the continuation of the Agreements on an annual basis. In connection with this process, the Board assessed, among other things, the nature, scope and quality of the services provided to the Portfolio by the personnel of BlackRock and its affiliates, including investment management, administrative and shareholder services, oversight of fund accounting and custody, marketing services and assistance in meeting applicable legal and regulatory requirements.

Throughout the year, the Board, acting directly and through its committees, considers at each of its meetings factors that are relevant to its annual consideration of the renewal of the Agreements, including the services and support provided by BlackRock to the Portfolio and its shareholders. Among the matters the Board considered were: (a) investment performance for one-, three- and five-year periods, as applicable, against peer funds, and applicable benchmarks, if any, as well as senior management and portfolio managers’ analysis of the reasons for any out performance or underperformance against its peers; (b) fees, including advisory, administration, if applicable, and other amounts paid to BlackRock and its affiliates by the Portfolio for services, such as transfer agency, marketing and distribution, call center and fund accounting; (c) Portfolio operating expenses; (d) the resources devoted to and compliance reports relating to the Portfolio’s investment objective, policies and restrictions, (e) the Fund’s compliance with its Code of Ethics and compliance policies and procedures; (f) the nature, cost and character of non-investment management services provided by BlackRock and its affiliates; (g) BlackRock’s and other service providers’ internal controls; (h) BlackRock’s implementation of the proxy voting policies approved by the Board; (i) the use of brokerage commissions and execution quality; (j) BlackRock’s implementation of the Fund’s valuation and liquidity procedures; and (k) periodic updates on BlackRock’s business.

Board Considerations in Approving the Agreements

The Approval Process: Prior to the April 16, 2009 meeting, the Board requested and received materials specifically relating to the Agreements. The Board is engaged in an ongoing process with BlackRock to continuously review the nature and scope of the information provided to better assist its deliberations. The materials provided in connection with the April meeting included (a) information independently compiled and prepared by Lipper, Inc. (“Lipper”) on Portfolio fees and expenses, and the investment performance of the Portfolio as compared with a peer group of funds as determined by Lipper (collectively, “Peers”); (b) information on the profitability of the Agreements to BlackRock and a discussion of fall-out benefits to BlackRock and its affiliates and significant shareholders; (c) a general analysis provided by BlackRock concerning investment advisory fees charged to other clients, such as institutional clients and closed-end funds, under similar investment mandates, as well as the performance of such other clients; (d) the impact of economies of scale; (e) a summary of aggregate amounts paid by the Portfolio to BlackRock; (f) sales and redemption data regarding the Portfolio’s shares; and (g) an internal comparison of management fees classified by Lipper, if applicable.


		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009		41


Disclosure of Investment Advisory Agreement and Sub-Advisory Agreement (continued)

of the services and profits to be realized by BlackRock and certain affiliates from the relationship with the Portfolio; (d) economies of scale; and (e) other factors.

The Board also considered other matters it deemed important to the approval process, such as payments made to BlackRock or its affiliates relating to the distribution of Portfolio shares, services related to the valuation and pricing of portfolio holdings of the Portfolio, direct and indirect benefits to BlackRock and its affiliates and significant shareholders from their relationship with the Portfolio and advice from independent legal counsel with respect to the review process and materials submitted for the Board’s review. The Board noted the willingness of BlackRock personnel to engage in open, candid discussions with the Board. The Board did not identify any particular information as controlling, and each Board Member may have attributed different weights to the various items considered.

A. Nature, Extent and Quality of the Services: The Board, including the Independent Board Members, reviewed the nature, extent and quality of services provided by BlackRock, including the investment advisory services and the resulting performance of the Portfolio. Throughout the year, the Board compared Portfolio performance to the performance of a comparable group of mutual funds, and the performance of a relevant benchmark, if any. The Board met with BlackRock’s senior management personnel responsible for investment operations, including the senior investment officers. The Board also reviewed the materials provided by the Portfolio’s portfolio management team discussing Portfolio performance and the Portfolio’s investment objective, strategies and outlook.

The Board considered, among other factors, the number, education and experience of BlackRock’s investment personnel generally and the Portfolio’s portfolio management team, investments by portfolio managers in the funds they manage, BlackRock’s portfolio trading capabilities, BlackRock’s use of technology, BlackRock’s commitment to compliance and BlackRock’s approach to training and retaining portfolio managers and other research, advisory and management personnel. The Board also reviewed a general description of BlackRock’s compensation structure with respect to the Portfolio’s portfolio management team and BlackRock’s ability to attract and retain high-quality talent.

In addition to advisory services, the Board considered the quality of the administrative and non-investment advisory services provided to the Portfolio. BlackRock and its affiliates and significant shareholders provide the Portfolio with certain administrative, transfer agency, shareholder and other services (in addition to any such services provided to the Portfolio by third parties) and officers and other personnel as are necessary for the operations of the Portfolio. In addition to investment advisory services, BlackRock and its affiliates provide the Portfolio with other services, including (i) preparing disclosure documents, such as the prospectus, the statement of additional information and periodic shareholder reports; (ii) assisting with daily accounting and pricing; (iii) overseeing and coordinating the activities of other service providers; (iv) organizing Board meetings and preparing the materials for such Board meetings; (v) providing legal and compliance support; and (vi) performing other administrative functions necessary for the operation of the Portfolio, such as tax reporting, fulfilling regulatory filing requirements, and call center services. The Board reviewed the structure and duties of BlackRock’s fund administration, accounting, legal and compliance departments and considered BlackRock’s policies and procedures for assuring compliance with applicable laws and regulations.

B. The Investment Performance of the Fund and BlackRock: The Board, including the Independent Board Members, also reviewed and considered the performance history of the Portfolio. In preparation for the April 16, 2009 meeting, the Board was provided with reports, independently prepared by Lipper, which included a comprehensive analysis of the Portfolio’s performance. The Board also reviewed a narrative and statistical analysis of the Lipper data that was prepared by BlackRock, which analyzed various factors that affect Lipper’s rankings. In connection with its review, the Board received and reviewed information regarding the investment performance of the Portfolio as compared to a representative group of similar funds as determined by Lipper and to all funds in the Portfolio’s applicable Lipper category. The Board was provided with a description of the methodology used by Lipper to select peer funds. The Board regularly reviews the performance of the Portfolio throughout the year. The Board attaches more importance to performance over relatively long periods of time, typically three to five years.

The Board noted that the Portfolio’s performance was below the median of its Lipper Performance Universe for the one-, three- and five-year periods reported. The Board and BlackRock reviewed the reasons for the Portfolio’s underperformance during these periods compared with its Peers. The Board was informed that, among other things, the Portfolio’s fixed income allocation and its exposure to international equities were negative factors in the Portfolio’s performance in 2008 and also impacted longer-term performance over the three- and five-year periods.

The Board and BlackRock discussed BlackRock’s commitment to providing the resources necessary to assist the portfolio managers and to improve the Portfolio’s performance.

C. Consideration of the Advisory Fees and the Cost of the Services and Profits to be Realized by BlackRock and its Affiliates from their Relationship with the Fund: The Board, including the Independent Board Members, reviewed the Portfolio’s contractual advisory fee rates compared with the other funds in the Portfolio’s Lipper category. It also compared the Portfolio’s total expenses, as well as actual management fees, to those of other comparable funds. The Board considered the services provided and the fees charged by BlackRock to other types of clients with similar investment mandates, including separately managed institutional accounts.


42		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009


Disclosure of Investment Advisory Agreement and Sub-Advisory Agreement (continued)

The Board received and reviewed statements relating to BlackRock’s financial condition and profitability with respect to the services it provided the Portfolio. The Board was also provided with a profitability analysis that detailed the revenues earned and the expenses incurred by BlackRock for services provided to the Portfolio. The Board reviewed BlackRock’s profitability with respect to the Portfolio and other funds the Board currently oversees for the year ended December 31, 2008 compared to available aggregate profitability data provided for the year ended December 31, 2007. The Board reviewed BlackRock’s profitability with respect to other fund complexes managed by the Manager and/or its affiliates. The Board reviewed BlackRock’s assumptions and methodology of allocating expenses in the profitability analysis, noting the inherent limitations in allocating costs among various advisory products. The Board recognized that profitability may be affected by numerous factors including, among other things, fee waivers and expense reimbursements by the Manager, the types of funds managed, expense allocations and business mix, and therefore comparability of profitability is somewhat limited.

In addition, the Board considered the cost of the services provided to the Portfolio by BlackRock, and BlackRock’s and its affiliates’ profits relating to the management and distribution of the Portfolio and the other funds advised by BlackRock and its affiliates. As part of its analysis, the Board reviewed BlackRock’s methodology in allocating its costs to the management of the Portfolio. The Board also considered whether BlackRock has the financial resources necessary to attract and retain high quality investment management personnel to perform its obligations under the Agreements and to continue to provide the high quality of services that is expected by the Board.

The Board noted that the Portfolio’s contractual advisory fees, which do not take into account any expense reimbursement or fee waivers, were lower than or equal to the median contractual advisory fees paid by the Portfolio’s Peers. The Portfolio has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the size of the Portfolio increases, thereby allowing shareholders the potential to participate in economies of scale. The Board noted that BlackRock has contractually agreed to waive fees or reimburse expenses in order to limit the Portfolio’s total net expenses on a class basis.

D. Economies of Scale: The Board, including the Independent Board Members, considered the extent to which economies of scale might be realized as the assets of the Portfolio increase and whether there should be changes in the advisory fee rate or structure in order to enable the Portfolio to participate in these economies of scale, for example through the use of revised breakpoints in the advisory fee based upon the assets of the Portfolio. The Board considered that the funds in the BlackRock fund complex share some common resources and, as a result, an increase in the overall size of the complex could permit each fund to incur lower expenses than it would otherwise as a stand-alone entity. The Board also considered BlackRock’s overall operations and its efforts to expand the scale of, and improve the quality of, its operations.

E. Other Factors: The Board also took into account other ancillary or “fall-out” benefits that BlackRock or its affiliates and significant shareholders may derive from its relationship with the Portfolio, both tangible and intangible, such as BlackRock’s ability to leverage its investment professionals who manage other portfolios, an increase in BlackRock’s profile in the investment advisory community, and the engagement of BlackRock’s affiliates and significant shareholders as service providers to the Portfolio, including for administrative, transfer agency and distribution services. The Board also noted that BlackRock may use third party research obtained by soft dollars generated by certain mutual fund transactions to assist itself in managing all or a number of its other client accounts.

Conclusion

The Board Members of the Fund present at the meeting, including the Independent Board Members present at the meeting, unanimously approved the continuation of the Advisory Agreement between the Manager and the Fund with respect to the Portfolio for a one-year term ending June 30, 2010 and the Sub-Advisory Agreement between the Manager and Sub-Advisor with respect to the Portfolio for a one-year term ending June 30, 2010. Based upon their evaluation of all these factors in their totality, the Board Members of the Fund present at the meeting, including the Independent Board Members present at the meeting, were satisfied that the terms of the Agreements were fair and reasonable and in the best interest of the Portfolio and its shareholders. In arriving at a decision to approve the Agreements, the Board did not identify any single factor or group of factors as all-important or controlling, but considered all factors together, and different Board Members may have attributed different weights to the various factors considered. The Independent Board Members were also assisted by the advice of independent legal counsel in making this determination. The contractual fee arrangements for the Portfolio reflect the results of several years of review by the Board Members and predecessor Board


		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009		43


Disclosure of Investment Advisory Agreement and Sub-Advisory Agreement (concluded)

Members, and discussions between such Board Members (and predecessor Board Members) and BlackRock. Certain aspects of the arrangements may be the subject of more attention in some years than in others, and the Board Members’ conclusions may be based in part on their consideration of these arrangements in prior years.


44		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009

Officers and Trustees


Name, Address, and Year of Birth	Position(s) Held with Fund	Length of Time Served as a Trustee²	Principal Occupation(s) During Past 5 Years	Number of BlackRock- Advised Registered Investment Companies (“RICs”) Consisting of Investment Portfolios (“Portfolios”) Overseen	Public Directorships
Non-Interested Trustees¹

Ronald W. Forbes 40 East 52nd Street New York, NY 10022 1940	Co-Chair of the Board and Trustee	Since 2007	Professor Emeritus of Finance, School of Business, State University of New York at Albany since 2000.	34 RICs consisting of 81 Portfolios	None

Rodney D. Johnson 40 East 52nd Street New York, NY 10022 1941	Co-Chair of the Board and Trustee	Since 2007	President, Fairmount Capital Advisors, Inc. since 1987; Director, Fox Chase Cancer Center since 2002; Member of the Archdiocesan Investment Committee of the Archdiocese of Philadelphia since 2003; Director, The Committee of Seventy (civic) since 2006.	34 RICs consisting of 81 Portfolios	None

David O. Beim 40 East 52nd Street New York, NY 10022 1940	Trustee	Since 2007	Professor of Finance and Economics at the Columbia University Graduate School of Business since 1991; Trustee, Phillips Exeter Academy since 2002; Chairman, Wave Hill Inc. (public garden and cultural center) from 1990 to 2006.	34 RICs consisting of 81 Portfolios	None

Dr. Matina Horner 40 East 52nd Street New York, NY 10022 1939	Trustee	Since 2004	Executive Vice President of Teachers Insurance and Annuity Association and College Retirement Equities Fund from 1989 to 2003.	34 RICs consisting of 81 Portfolios	NSTAR (electric and gas utility)

Herbert I. London 40 East 52nd Street New York, NY 10022 1939	Trustee	Since 2007	Professor Emeritus, New York University since 2005; John M. Olin Professor of Humanities, New York University from 1993 to 2005 and Professor thereof from 1980 to 2005; President, Hudson Institute (policy research organization) since 1997 and Trustee thereof since 1980; Chairman of the Board of Trustees for Grantham University since 2006; Director, InnoCentive, Inc. (strategic solutions company) since 2005; Director, Cerego, LLC (software development and design) since 2005.	34 RICs consisting of 81 Portfolios	AIMS Worldwide, Inc. (marketing)

Cynthia A. Montgomery 40 East 52nd Street New York, NY 10022 1952	Trustee	Since 2007	Professor, Harvard Business School since 1989; Director, Harvard Business School Publishing since 2005; Director, McLean Hospital since 2005.	34 RICs consisting of 81 Portfolios	Newell Rubbermaid, Inc. (manufacturing)

Joseph P. Platt, Jr. 40 East 52nd Street New York, NY 10022 1947	Trustee	Since 2007	Director, The West Penn Allegheny Health System (a not-for-profit health system) since 2008; Director, Jones and Brown (Canadian insurance broker) since 1998; General Partner, Thorn Partners, LP (private investment) since 1998; Partner, Amarna Corporation, LLC (private investment company) from 2002 to 2008.	34 RICs consisting of 81 Portfolios	Greenlight Capital Re, Ltd. (reinsurance company)

Robert C. Robb, Jr. 40 East 52nd Street New York, NY 10022 1945	Trustee	Since 2007	Partner, Lewis, Eckert, Robb and Company (management and financial consulting firm) since 1981.	34 RICs consisting of 81 Portfolios	None


		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009		45


Officers and Trustees (continued)


Name, Address, and Year of Birth	Position(s) Held with Fund	Length of Time Served as a Trustee²	Principal Occupation(s) During Past 5 Years	Number of BlackRock- Advised Registered Investment Companies (“RICs”) Consisting of Investment Portfolios (“Portfolios”) Overseen	Public Directorships
Non-Interested Trustees¹(concluded)

Toby Rosenblatt 40 East 52nd Street New York, NY 10022 1938	Trustee	Since 2005	President, Founders Investments Ltd. (private investments) since 1999; Director, Forward Management, LLC since 2007; Director, The James Irvine Foundation (philanthropic foundation) since 1997; Trustee, State Street Research Mutual Funds from 1990 to 2005; Trustee, Metropolitan Series Funds, Inc. from 2001 to 2005.	34 RICs consisting of 81 Portfolios	A.P. Pharma, Inc. (specialty pharmaceuticals)

Kenneth L. Urish 40 East 52nd Street New York, NY 10022 1951	Trustee	Since 2007	Managing Partner, Urish Popeck & Co., LLC (certified public accountants and consultants) since 1976; Member of External Advisory Board, The Pennsylvania State University Accounting Department since 2001; Trustee, The Holy Family Foundation since 2001; Committee Member, Professional Ethics Committee of the Pennsylvania Institute of Certified Public Accountants since 2007; President and Trustee, Pittsburgh Catholic Publishing Associates from 2003 to 2008; Director, Inter-Tel from 2006 to 2007.	34 RICs consisting of 81 Portfolios	None

Frederick W. Winter 40 East 52nd Street New York, NY 10022 1945	Trustee	Since 2007	Professor and Dean Emeritus of the Joseph M. Katz School of Business, University of Pittsburgh since 2005 and Dean thereof from 1997 to 2005. Director, Alkon Corporation (pneumatics) since 1992; Director, Tippman Sports (recreation) since 2005; Director, Indotronix International (IT services) from 2004 to 2008.	34 RICs consisting of 81 Portfolios	None

1	Trustees serve until their resignation, removal or death, or until December 31 of the year in which they turn 72.

Date shown is the earliest date a person has served as a trustee for the Fund covered by this annual report. Following the combination of Merrill Lynch Investment Managers, L.P. (“MLIM”) and BlackRock, Inc. (“BlackRock”) in September 2006, the various legacy MLIM and legacy BlackRock Fund boards were realigned and consolidated into three new fund boards in 2007. As a result, although the chart shows certain Trustees as joining the Fund’s board in 2007, each Trustee first became a member of the boards of other legacy MLIM or legacy BlackRock funds as follows: David O. Beim, 1998; Ronald W. Forbes, 1977; Matina Horner, 2004; Rodney D. Johnson, 1995; Herbert I. London, 1987; Cynthia A. Montgomery, 1994; Joseph P. Platt, 1999; Robert C. Robb, Jr., 1998; Toby Rosenblatt, 2005; Kenneth L. Urish, 1999 and Frederick W. Winter, 1999.


Interested Trustees³

Richard S. Davis 40 East 52nd Street New York, NY 10022 1945	Trustee	Since 2005	Managing Director, BlackRock, Inc. since 2005; Chief Executive Officer, State Street Research & Management Company from 2000 to 2005; Chairman of the Board of Trustees, State Street Research Mutual Funds from 2000 to 2005; Chairman, SSR Realty from 2000 to 2004.	172 RICs consisting of 283 Portfolios	None

Henry Gabbay 40 East 52nd Street New York, NY 10022 1947	Trustee	Since 2007	Consultant, BlackRock, Inc. from 2007 to 2008; Managing Director, BlackRock, Inc. from 1989 to 2007; Chief Administrative Officer, BlackRock Advisors, LLC from 1998 to 2007; President of BlackRock Funds and BlackRock Bond Allocation Target Shares from 2005 to 2007 and Treasurer of certain closed-end funds in the BlackRock fund complex from 1989 to 2006.	172 RICs consisting of 283 Portfolios	None


46		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009


Officers and Trustees (continued)


Name, Address, and Year of Birth	Position(s) Held with Fund	Length of Time Served	Principal Occupation(s) During Past 5 Years
Fund Officers¹

Anne F. Ackerley 40 East 52nd Street New York, NY 10022 1962	President and Chief Executive Officer	Since 2009	Managing Director of BlackRock, Inc. since 2000; Vice President of the BlackRock-advised funds from 2007 to 2009; Chief Operating Officer of BlackRock’s Global Client Group (GCG) since 2009; Chief Operating Officer of BlackRock’s U.S. Retail Group from 2006 to 2009; Head of BlackRock’s Mutual Fund Group from 2000 to 2006.

Richard Hoerner, CFA 40 East 52nd Street New York, NY 10022 1958	Vice President	Since 2009	Managing Director of BlackRock, Inc. since 2000; Co-head of BlackRock’s Cash Management Portfolio Management Group since 2002; Member of the Cash Management Group Executive Committee since 2005; Director of BlackRock, Inc. since 1998.

Jeffery Holland, CFA 40 East 52nd Street New York, NY 10022 1971	Vice President	Since 2009	Director of BlackRock, Inc. since 2006; Chief Operating Officer of BlackRock’s U.S. Retail Group since 2009; Co-head of Product Development and Management for BlackRock’s U.S. Retail Group from 2007 to 2009; Product Manager of Raymond James & Associates from 2003 to 2006.

Brendan Kyne 40 East 52nd Street New York, NY 10022 1977	Vice President	Since 2009	Director of BlackRock, Inc. since 2008; Head of Product Development and Management for BlackRock’s U.S. Retail Group since 2009, co-head thereof from 2007 to 2009; Vice President of BlackRock, Inc. from 2005 to 2008; Associate of BlackRock, Inc. from 2002 to 2004.

Simon Mendelson 40 East 52nd Street New York, NY 10022 1964	Vice President	Since 2009	Managing Director of BlackRock, Inc. since 2004; Various positions with U.S. Trust Company from 1991 to 2003 including Director from 2001 to 2003 and Senior Vice President from 1998 to 2003; Vice President, Chief Financial Officer and Treasurer of Excelsior Funds, Inc., Excelsior Tax-Exempt Funds, Inc. and Excelsior Funds Trust from 2001 to 2003.

Brian Schmidt 40 East 52nd Street New York, NY 10022 1958	Vice President	Since 2009	Managing Director of BlackRock, Inc. since 2005; Chief Operating Officer and head of the Global Client Group for BlackRock’s Global Cash Management Business since 2007; Head of BlackRock’s Strategy and Development Group from 2005 to 2007; Partner of McKinsey & Co. from 1997 to 2005.

Christopher Stavrakos, CFA 40 East 52nd Street New York, NY 10022 1959	Vice President	Since 2009	Managing Director of BlackRock, Inc. since 2006; Co-head of BlackRock’s Cash Management Portfolio Management Group since 2006; Senior Vice President, CIO, and Director of Liability Management for the Securities Lending Group at Mellon Bank from 1999 to 2006.

Neal J. Andrews 40 East 52nd Street New York, NY 10022 1966	Chief Financial Officer	Since 2007	Managing Director of BlackRock, Inc. since 2006; Senior Vice President and Line of Business Head of Fund Accounting and Administration at PNC Global Investment Servicing (U.S.) Inc. from 1992 to 2006.

Jay M. Fife 40 East 52nd Street New York, NY 10022 1970	Treasurer	Since 2007	Managing Director of BlackRock, Inc. since 2007 and Director in 2006; Assistant Treasurer of the Merrill Lynch Investment Managers, L.P. (“MLIM”) and Fund Asset Management, L.P. advised funds from 2005 to 2006; Director of MLIM Fund Services Group from 2001 to 2006.

Brian P. Kindelan 40 East 52nd Street New York, NY 10022 1959	Chief Compliance Officer	Since 2007	Chief Compliance Officer of the BlackRock-advised Funds since 2007; Managing Director and Senior Counsel of BlackRock, Inc. since 2005; Director and Senior Counsel of BlackRock Advisors, LLC from 2001 to 2004.

Howard B. Surloff 40 East 52nd Street New York, NY 10022 1965	Secretary	Since 2007	Managing Director of BlackRock, Inc. and General Counsel of U.S. Funds at BlackRock, Inc. since 2006; General Counsel (U.S.) of Goldman Sachs Asset Management, L.P. from 1993 to 2006.

1	Officers of the Fund serve at the pleasure of the Board.

Further information about the Fund’s Officers and Trustees is available in the Fund’s Statement of Additional Information, which can be obtained without charge by calling (800) 441-7762.


		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009		47

Officers and Trustees (concluded)

Investment Advisor and Co-Administrator

BlackRock Advisors, LLC

Wilmington, DE 19809

Sub-Advisor

BlackRock Financial

Management, Inc.

New York, NY 10022

Co-Administrator and Transfer Agent

PNC Global Investment

Servicing (U.S.), Inc.

Wilmington, DE 19809

Custodian

PFPC Trust Company

Philadelphia, PA 19153

Distributor

BlackRock Investments, LLC

New York, NY 10022

Legal Counsel

Sidley Austin LLP

New York, NY 10019

Independent Registered Public Accounting Firm

Deloitte & Touche LLP

Philadelphia, PA 19103

Address of the Portfolio

100 Bellevue Parkway

Wilmington, DE 19809

Effective July 31, 2009, Donald C. Burke, President and Chief Executive Officer of the Fund retired. The Fund’s Board wishes Mr. Burke well in his retirement.

Effective August 1, 2009, Anne F. Ackerley became President and Chief Executive Officer of the Fund and Jeffrey Holland and Brian Schmidt became Vice Presidents of the Fund.

Effective September 17, 2009, Richard Hoerner, Brendan Kyne, Simon Mendelson, and Christopher Stavrakos became Vice President of the Fund.

Additional Information

General Information

Electronic Delivery

To enroll:

Shareholders Who Hold Accounts with Investment Advisors, Banks or Brokerages:

Please contact your financial advisor. Please note that not all investment advisors, banks or brokerages may offer this service.

Shareholders Who Hold Accounts Directly With BlackRock

1)	Access the BlackRock website at

http://www.blackrock.com/edelivery

2)	Click on the applicable link and follow the steps to sign up

3)	Log into your account

Householding

Availability of Quarterly Portfolio Schedule

Availability of Proxy Voting Policies and Procedures

Availability of Proxy Voting Record


48		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009

Additional Information (concluded)

Shareholder Privileges

Account Information

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 portfolios.

Systematic Withdrawal Plan

Investor Class shareholders can establish a systematic withdrawal plan and receive periodic payments of $50 or more from their BlackRock portfolios, as long as their account is at least $10,000.

Retirement Plans

Shareholders may make investments in conjunction with Traditional, Rollover, Roth, Coverdell, Simple IRA’s, SEP IRA’s and 403(b) Plans.

BlackRock Privacy Principles


		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009		49

A World-Class Mutual Fund Family

BlackRock offers a diverse lineup of open-end mutual funds crossing all investment styles and managed by experts in equity, fixed income and tax-exempt investing.


Equity Funds

BlackRock All-Cap Energy & Resources Portfolio	BlackRock Global Opportunities Portfolio	BlackRock Mid-Cap Value Equity Portfolio
BlackRock Asset Allocation Portfolio†	BlackRock Global SmallCap Fund	BlackRock Mid Cap Value Opportunities Fund
BlackRock Aurora Portfolio	BlackRock Health Sciences Opportunities Portfolio	BlackRock Natural Resources Trust
BlackRock Balanced Capital Fund†	BlackRock Healthcare Fund	BlackRock Pacific Fund
BlackRock Basic Value Fund	BlackRock Index Equity Portfolio*	BlackRock Science & Technology Opportunities Portfolio
BlackRock Capital Appreciation Portfolio	BlackRock International Fund	BlackRock Science & Technology Opportunities Portfolio
BlackRock Energy & Resources Portfolio	BlackRock International Diversification Fund	BlackRock Small Cap Core Equity Portfolio
BlackRock Equity Dividend Fund	BlackRock International Index Fund	BlackRock Small Cap Growth Equity Portfolio
BlackRock EuroFund	BlackRock International Opportunities Portfolio	BlackRock Small Cap Growth Fund II
BlackRock Focus Growth Fund	BlackRock International Value Fund	BlackRock Small Cap Index Fund
BlackRock Focus Value Fund	BlackRock Large Cap Core Fund	BlackRock Small Cap Value Equity Portfolio
BlackRock Fundamental Growth Fund	BlackRock Large Cap Core Plus Fund	BlackRock Small/Mid-Cap Growth Portfolio
BlackRock Global Allocation Fund†	BlackRock Large Cap Growth Fund	BlackRock S&P 500 Index Fund
BlackRock Global Dynamic Equity Fund	BlackRock Large Cap Value Fund	BlackRock U.S. Opportunities Portfolio
BlackRock Global Emerging Markets Fund	BlackRock Latin America Fund	BlackRock Utilities and Telecommunications Fund
BlackRock Global Financial Services Fund	BlackRock Mid-Cap Growth Equity Portfolio	BlackRock Value Opportunities Fund
BlackRock Global Growth Fund

Fixed Income Funds

BlackRock Bond Portfolio	BlackRock Income Builder Portfolio	BlackRock Short-Term Bond Fund
BlackRock Emerging Market Debt Portfolio	BlackRock Inflation Protected Bond Portfolio	BlackRock Strategic Income Portfolio
BlackRock GNMA Portfolio	BlackRock Intermediate Government	BlackRock Total Return Fund
BlackRock Government Income Portfolio	Bond Portfolio	BlackRock Total Return Portfolio II
BlackRock High Income Fund	BlackRock International Bond Portfolio	BlackRock World Income Fund
BlackRock High Yield Bond Portfolio	BlackRock Long Duration Bond Portfolio
BlackRock Income Portfolio	BlackRock Low Duration Bond Portfolio
	BlackRock Managed Income Portfolio

Municipal Bond Funds

BlackRock AMT-Free Municipal Bond Portfolio	BlackRock Kentucky Municipal Bond Portfolio	BlackRock New York Municipal Bond Fund
BlackRock California Municipal Bond Fund	BlackRock Municipal Insured Fund	BlackRock Ohio Municipal Bond Portfolio
BlackRock Delaware Municipal Bond Portfolio	BlackRock National Municipal Fund	BlackRock Pennsylvania Municipal Bond Fund
BlackRock High Yield Municipal Fund	BlackRock New Jersey Municipal Bond Fund	BlackRock Short-Term Municipal Fund
BlackRock Intermediate Municipal Fund

Target Risk & Target Date Funds

BlackRock Prepared Portfolios	BlackRock Lifecycle Prepared Portfolios
Conservative Prepared Portfolio	Prepared Portfolio 2010	Prepared Portfolio 2030
Moderate Prepared Portfolio	Prepared Portfolio 2015	Prepared Portfolio 2035
Growth Prepared Portfolio	Prepared Portfolio 2020	Prepared Portfolio 2040
Aggressive Growth Prepared Portfolio	Prepared Portfolio 2025	Prepared Portfolio 2045
		Prepared Portfolio 2050

*	See the prospectus for information on specific limitations on investments in the fund.

†	Mixed asset fund.


50		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009

[THIS PAGE INTENTIONALLY LEFT BLANK.]

LOGO

This report is transmitted to shareholders only. It is not authorized for use as an offer of sale or a solicitation of an offer to buy shares of the Portfolio unless accompanied or preceded by that Portfolio’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.

LOGO

AA-9/09-AR


Item 2	–	Code of Ethics – The registrant (or the “Fund”) has adopted a code of ethics, as of the end of the period covered by this report, applicable to the registrant’s principal executive officer, principal financial officer and principal accounting officer, or persons performing similar functions. During the period covered by this report, there have been no amendments to or waivers granted under the code of ethics. A copy of the code of ethics is available without charge at www.blackrock.com.

Item 3	–	Audit Committee Financial Expert – The registrant’s board of directors or trustees, as applicable (the “board of directors”) has determined that (i) the registrant has the following audit committee financial expert serving on its audit committee and (ii) each audit committee financial expert is independent:

		Kenneth L. Urish

		Under applicable securities laws, a person determined to be an audit committee financial expert will not be deemed an “expert” for any purpose, including without limitation for the purposes of Section 11 of the Securities Act of 1933, as a result of being designated or identified as an audit committee financial expert. The designation or identification as an audit committee financial expert does not impose on such person any duties, obligations, or liabilities greater than the duties, obligations, and liabilities imposed on such person as a member of the audit committee and board of directors in the absence of such designation or identification.

Item 4	–	Principal Accountant Fees and Services


	(a) Audit Fees				(b) Audit-Related Fees¹				(c) Tax Fees²				(d) All Other Fees³
Entity Name	Current Fiscal Year End		Previous Fiscal Year End		Current Fiscal Year End		Previous Fiscal Year End		Current Fiscal Year End		Previous Fiscal Year End		Current Fiscal Year End		Previous Fiscal Year End
All-Cap Energy & Resources Portfolio	$	20,000	$	19,800	$	0	$	0	$	6,100	$	6,100	$	1,028	$	1,049
Asset Allocation Portfolio	$	64,200	$	63,500	$	0	$	0	$	6,595	$	6,909	$	1,028	$	1,049
Aurora Portfolio	$	20,600	$	20,400	$	0	$	0	$	6,100	$	6,100	$	1,028	$	1,049
Capital Appreciation Portfolio	$	17,000	$	16,800	$	0	$	0	$	6,100	$	6,100	$	1,028	$	1,049
Energy & Resources Portfolio	$	24,900	$	24,700	$	0	$	0	$	6,100	$	6,100	$	1,028	$	1,049
Global Opportunities Portfolio	$	22,400	$	22,200	$	0	$	0	$	6,235	$	6,100	$	1,028	$	1,049
Health Sciences Opportunities Portfolio	$	18,200	$	18,000	$	0	$	0	$	6,100	$	6,802	$	1,028	$	1,049
International Opportunities Portfolio	$	22,400	$	22,200	$	0	$	0	$	7,358	$	11,038	$	1,028	$	1,049
Mid-Cap Growth Equity Portfolio	$	18,200	$	18,000	$	0	$	0	$	6,100	$	6,100	$	1,028	$	1,049
Mid-Cap Value Equity Portfolio	$	18,200	$	18,000	$	0	$	0	$	6,100	$	6,100	$	1,028	$	1,049
Science & Technology Opportunities Portfolio	$	22,400	$	22,200	$	0	$	0	$	6,190	$	8,667	$	1,028	$	1,049
Small Cap Core Equity Portfolio	$	18,200	$	18,000	$	0	$	0	$	6,100	$	6,100	$	1,028	$	1,049
Small Cap Growth Equity Portfolio	$	20,600	$	20,400	$	0	$	0	$	6,100	$	6,100	$	1,028	$	1,049
Small Cap Value Equity Portfolio	$	18,200	$	18,000	$	0	$	0	$	6,100	$	6,100	$	1,028	$	1,049
Small/Mid-Cap Growth Portfolio	$	18,200	$	18,000	$	0	$	0	$	6,100	$	6,100	$	1,028	$	1,049
U.S. Opportunities Portfolio	$	20,600	$	20,400	$	0	$	0	$	6,100	$	6,100	$	1,028	$	1,049

1	The nature of the services include assurance and related services reasonably related to the performance of the audit of financial statements not included in Audit Fees.

2	The nature of the services include tax compliance, tax advice and tax planning.

3	The nature of the services include a review of compliance procedures and attestation thereto.

(e)(1) Audit Committee Pre-Approval Policies and Procedures:

The registrant’s audit committee (the “Committee”) has adopted policies and procedures with regard to the pre-approval of services. Audit, audit-related and tax compliance services provided to the registrant on an annual basis require specific pre-approval by the Committee. The Committee also must approve other non-audit services provided to the registrant and those non-audit services provided to the registrant’s affiliated service providers that relate directly to the operations and the financial reporting of the registrant. Certain of these non-audit services that the Committee believes are a) consistent with the SEC’s auditor independence rules and b) routine and recurring services that will not impair the independence of the independent accountants may be approved by the Committee without consideration on a specific case-by-case basis (“general pre-approval”). The term of any general pre-approval is 12 months from the date of the pre-approval, unless the Committee provides for a different period. Tax or other non-audit services provided to the registrant which have a direct impact on the operation or financial reporting of the registrant will only be deemed pre-approved provided that any individual project does not exceed $10,000 attributable to the registrant or $50,000 for all of the registrants the Committee oversees. For this purpose, multiple projects will be aggregated to determine if they exceed the previously mentioned cost levels.

Any proposed services exceeding the pre-approved cost levels will require specific pre-approval by the Committee, as will any other services not subject to general pre-approval (e.g., unanticipated but permissible services). The Committee is informed of each service approved subject to general pre-approval at the next regularly scheduled in-person board meeting. At this meeting, an analysis of such services is presented to the Committee for ratification. The Committee may delegate to one or more of its members the authority to approve the provision of and fees for any specific engagement of permitted non-audit services, including services exceeding pre-approved cost levels.

(e)(2) None of the services described in each of Items 4(b) through (d) were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

(f) Not Applicable

(g) Affiliates’ Aggregate Non-Audit Fees:


Entity Name	Current Fiscal Year End		Previous Fiscal Year End
All-Cap Energy & Resources Portfolio	$	414,628	$	412,149
Asset Allocation Portfolio	$	415,123	$	412,958
Aurora Portfolio	$	414,628	$	412,149
Capital Appreciation Portfolio	$	414,628	$	412,149
Energy & Resources Portfolio	$	414,628	$	412,149
Global Opportunities Portfolio	$	414,763	$	412,149
Health Sciences Opportunities Portfolio	$	414,628	$	412,851
International Opportunities Portfolio	$	415,886	$	417,087
Mid-Cap Growth Equity Portfolio	$	414,628	$	412,149
Mid-Cap Value Equity Portfolio	$	414,628	$	412,149
Science & Technology Opportunities Portfolio	$	414,718	$	414,716
Small Cap Core Equity Portfolio	$	414,628	$	412,149
Small Cap Growth Equity Portfolio	$	414,628	$	412,149
Small Cap Value Equity Portfolio	$	414,628	$	412,149
Small/Mid-Cap Growth Portfolio	$	414,628	$	412,149
U.S. Opportunities Portfolio	$	414,628	$	412,149

(h) The registrant’s audit committee has considered and determined that the provision of non-audit services that were rendered to the registrant’s investment adviser (not including any non-affiliated sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by the registrant’s investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence.

Regulation S-X Rule 2-01(c)(7)(ii) – $407,500, 0%


Item 5	–	Audit Committee of Listed Registrants – Not Applicable

Item 6	–	Investments

		(a) Asset Allocation Portfolio – Schedule of Investments


Schedule of Investments September 30, 2009		(Percentages shown are based on Net Assets)


	Par (000)		Value
Asset-Backed Securities
American Express Issuance Trust, Series 2008-2, Class A, 4.02%, 1/18/11	USD	1,420	$	1,434,772
AmeriCredit Automobile Receivables Trust, Series 2008-2, Class A2, 4.25%, 8/06/12(a)		863		882,837
Amortizing Residential Collateral Trust, Series 2002-BC5, Class M2, 2.05%, 7/25/32(a)		22		7,667
Bank of America Auto Trust, Series 2009-2A, Class A3, 2.13%, 9/15/13(b)		1,430		1,432,480
Carrington Mortgage Loan Trust, Series 2006-NC4, Class A1, 0.30%, 10/25/36(a)		184		176,434
Centex Home Equity Loan Trust:
Series 2002-A, Class MF2, 6.54%, 1/25/32(a)		185		18,219
Series 2003-B, Class M3, 3.34%, 6/25/33(a)		137		12,585
Chase Issuance Trust, Series 2009-A7, Class A7, 0.69%, 9/17/12(a)		1,725		1,725,133
Conseco Financial Corp.:
Series 1996-6, Class A6, 7.95%, 9/15/27		274		271,994
Series 1996-7, Class A6, 7.65%, 10/15/27(a)		120		119,156
Countrywide Asset-Backed Certificates:
Series 2002-2, Class M2, 1.97%, 12/25/31(a)		2		861
Series 2003-3, Class M6, 3.15%, 7/25/32(a)		3		344
Series 2003-BCI, Class M2, 3.25%, 9/25/32(a)		35		4,372
Series 2003-2, Class M2, 2.72%, 3/26/33(a)		123		33,058
Series 2006-18, Class 2A1, 0.30%, 3/25/37(a)		154		152,585
Credit-Based Asset Servicing and Securitization LLC, Series 2004-CB4, Class M1, 5.77%, 5/25/35(a)		122		83,320
Harley-Davidson Motorcycle Trust, Series 2005-2, Class A2, 4.07%, 2/15/12		332		336,441
Home Equity Asset Trust, Series 2007-2, Class 2A1, 0.36%, 7/25/37(a)		226		211,820
Lehman XS Trust, Series 2005-5N, Class 3A2, 0.61%, 11/25/35(a)		522		141,574
Long Beach Mortgage Loan Trust:
Series 2003-4, Class M5A, 6.25%, 8/25/33(a)		36		3,076
Series 2004-1, Class M5, 1.35%, 2/25/34(a)		98		39,079
Massachusetts RRB Special Purpose Trust, Series 2001-1, Class A, 6.53%, 6/01/15		603		659,953
Nissan Auto Receivables Owner Trust, Series 2009-A, Class A2, 2.94%, 7/15/11		1,060		1,073,399
Option One Mortgage Loan Trust:
Series 2002-6, Class M1, 1.37%, 11/25/32(a)		16		7,299
Series 2002-6, Class M2, 2.80%, 11/25/32(a)		35		6,113
Series 2003-4, Class A2, 0.89%, 7/25/33(a)		78		53,340
Series 2003-4, Class M5A, 5.87%, 7/25/33(a)		24		1,999
Series 2003-5, Class M4, 3.15%, 8/25/33(a)		25		2,294
Residential Asset Mortgage Products, Inc., Series 2003-RZ2, Class M3, 5.50%, 4/25/33(c)		55		12,902
Residential Asset Securities Corp., Series 2002-KS4, Class AIIB, 0.75%, 7/25/32(a)		34		16,161
SLM Student Loan Trust:
Series 2008-5, Class A2, 1.60%, 10/25/16(a)		1,720		1,748,186
Series 2008-5, Class A3, 1.80%, 1/25/18(a)		440		450,628
Series 2005-4, Class A2, 0.58%, 4/26/21(a)		475		470,832
Series 2008-5, Class A4, 2.20%, 7/25/23(a)		1,170		1,212,026
Structured Asset Investment Loan Trust, Series 2003-BC3, Class M2, 3.17%, 4/25/33(a)		11		1,831
Structured Asset Receivables Trust Certificates, Series 2003-2A, 0.90%, 1/21/10(a)(b)(d)		—		268

Total Asset-Backed Securities — 2.4%				12,805,038

Preferred Securities
Capital Trusts
Commercial Banks — 0.1%
Barclays Bank Plc, 7.43%(a)(b)(e)(f)		350		306,250

Diversified Financial Services — 0.4%
Credit Suisse/Guernsey, 5.86%(a)(e)(f)		530		402,800
General Electric Capital Corp., 6.38%, 11/15/67(a)		360		297,900
Goldman Sachs Capital II, 5.79%(a)(f)		300		216,000
JPMorgan Chase & Co., 7.90%(a)(f)		195		187,233
JPMorgan Chase Capital XXV, 6.80%, 10/01/37		1,150		1,157,321
Lehman Brothers Holdings Capital Trust VII, 5.86%(a)(f)(g)(h)		110		11

				2,261,265

Insurance — 0.1%
Chubb Corp., 6.38%, 3/29/67(a)		175		157,500
MetLife, Inc., 6.40%, 12/15/36		390		329,550
The Progressive Corp., 6.70%, 6/15/37(a)		310		266,506

				753,556

Total Preferred Securities — 0.6%				3,321,071

Portfolio Abbreviations


To simplify the listings of portfolio holdings in the Schedule of Investments, the names and descriptions of many of the securities have been abbreviated to the following list.	ADR	American Depositary Receipts	JPY	Japanese Yen
	AUD	Australian Dollar	LIBOR	London InterBank Offered Rate
	BRL	Brazilian Real	NOK	Norwegian Krone
	CAD	Canadian Dollar	NZD	New Zealand Dollar
	CHF	Swiss Francs	RB	Revenue Bonds
	DKK	Danish Krone	SEK	Swedish Krona
	EUR	Euro	SGD	Singapore Dollar
	GBP	British Pound	TBA	To-Be-Announced
	GO	General Obligation	USD	US Dollar
	HKD	Hong Kong Dollar	ZAR	South African Rand

See Notes to Financial Statements.


		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009		1


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


	Par (000)		Value
Collateralized Debt Obligations — 0.0%
Knollwood Ltd., Series 2004-1A, Class C, 3.75%, 1/10/39(a)(b)	USD	113	$	—


	Shares
Common Stocks
Aerospace & Defense — 0.7%
Argon ST, Inc.(h)		4,342		82,715
BE Aerospace, Inc.(h)		23,800		479,332
Goodrich Corp.		4,325		235,020
Honeywell International, Inc.		5,000		185,750
L-3 Communications Holdings, Inc.		3,850		309,232
Lockheed Martin Corp.		3,125		244,000
Meggitt Plc		101,500		378,551
Northrop Grumman Corp.		18,800		972,900
Orbital Sciences Corp.(h)		14,900		223,053
Precision Castparts Corp.		2,400		244,488
Spirit AeroSystems Holdings, Inc. - Class A(h)		15,000		270,900
Stanley, Inc.(h)		900		23,148
TransDigm Group, Inc.(h)		1,100		54,791

				3,703,880

Air Freight & Logistics — 0.4%
C.H. Robinson Worldwide, Inc.		13,100		756,525
Forward Air Corp.		2,800		64,820
United Parcel Service, Inc. - Class B		26,925		1,520,455

				2,341,800

Airlines — 0.4%
Air France-KLM(h)		18,500		337,440
China Airlines Ltd.(h)		626,244		209,004
Delta Air Lines, Inc.(h)		117,600		1,053,696
easyJet Plc(h)		81,837		496,617
Korean Air Lines Co. Ltd.(h)		6,000		243,649

				2,340,406

Auto Components — 0.5%
Aisin Seiki Co. Ltd.		10,800		262,312
Autoliv, Inc.		3,200		107,520
Bridgestone Corp.		48,300		863,825
Compagnie Generale des Etablissements Michelin - Class B		3,900		307,108
Cooper Tire & Rubber Co.		10,100		177,558
Federal Mogul Corp.(h)		9,900		119,493
Hyundai Mobis		2,400		336,531
Westport Innovations, Inc.(h)		18,057		229,374
Westport Innovations, Inc. (acquired 9/15/04, cost $10,162)(h)(i)		2,086		26,494

				2,430,215

Automobiles — 0.3%
Astra International Tbk PT		134,500		461,315
Ford Motor Co.(h)		19,175		138,252
Toyota Motor Corp.		21,000		835,181

				1,434,748

Beverages — 0.9%
Britvic Plc		45,900		258,897
The Coca-Cola Co.		37,323		2,004,245
Coca-Cola Enterprises, Inc.		31,350		671,203
Constellation Brands, Inc. - Class A(h)		20,860		316,029
Heckmann Corp.(h)		23,600		108,088
Molson Coors Brewing Co. - Class B		5,950		289,646
Pepsi Bottling Group, Inc.		2,100		76,524
PepsiCo, Inc.		13,975		819,774

				4,544,406

Biotechnology — 1.0%
Acorda Therapeutics, Inc.(h)		4,700		109,416
AMAG Pharmaceuticals, Inc.(h)		1,200		52,416
Amgen, Inc.(h)		37,700		2,270,671
Celgene Corp.(h)		18,800		1,050,920
Cubist Pharmaceuticals, Inc.(h)		2,300		46,460
Dendreon Corp.(h)		8,200		229,518
Genzyme Corp.(h)		18,400		1,043,832
InterMune, Inc.(h)		4,700		74,871
Martek Biosciences Corp.(h)		625		14,119
Myriad Genetics, Inc.(h)		2,800		76,720
Onyx Pharmaceuticals, Inc.(h)		2,500		74,925
OSI Pharmaceuticals, Inc.(h)		7,200		254,160

				5,298,028

Building Products — 0.2%
Asahi Glass Co. Ltd.		38,200		307,885
Griffon Corp.(h)		6,800		68,476
KCC Corp.		900		269,503
Wienerberger AG(h)		23,100		478,768

				1,124,632

Capital Markets — 1.5%
Aberdeen Asset Management Plc		42,000		100,991
Daishin Securities Co. Ltd.		8,900		121,824
F&C Asset Management Plc		107,100		133,156
Franklin Resources, Inc.		1,325		133,295
The Goldman Sachs Group, Inc.		14,875		2,742,206
Greenhill & Co., Inc.		2,500		223,950
ICAP Plc		17,900		121,328
Invesco Ltd.		27,288		621,075
Jefferies Group, Inc.(h)		5,525		150,446
Knight Capital Group, Inc. - Class A(h)		3,000		65,250
Matsui Securities Co. Ltd.		10,500		85,315
Mizuho Securities Co. Ltd.		74,400		269,712
Morgan Stanley		13,975		431,548
NGP Capital Resources Co.		2,700		19,602
Nomura Holdings, Inc.		105,100		644,249
Northern Trust Corp.		2,600		151,216
Polaris Securities Co. Ltd.(h)		126,912		74,456
RiskMetrics Group, Inc.(h)		1,525		22,295
Schroders Plc		9,800		171,518
State Street Corp.		4,550		239,330
TD Ameritrade Holding Corp.(h)		11,760		230,731
Treasure Island Royalty Trust(h)		217,129		80,338
UBS AG(h)		61,024		1,118,870
Yuanta Financial Holding Co. Ltd.		252,800		186,304

				8,139,005

Chemicals — 1.5%
Agrium, Inc.(h)		5,750		286,292
Air Water, Inc.		80,600		925,744
Airgas, Inc.		2,450		118,506
Albemarle Corp.		10,300		356,380
Celanese Corp. - Series A		11,500		287,500
CF Industries Holdings, Inc.		2,400		206,952
The Dow Chemical Co.		15,225		396,916

See Notes to Financial Statements.


2		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009


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


	Shares	Value
Common Stocks
Chemicals (concluded)
Ecolab, Inc.	12,600	$	582,498
FMC Corp.	5,350		300,937
Hanwha Corp.	7,000		254,605
Huabao International Holdings Ltd.	204,000		218,574
Intrepid Potash, Inc.(h)	3,225		76,078
Kureha Corp.	13,900		85,378
Lanxess AG	8,400		288,917
The Lubrizol Corp.	10,900		778,914
Methanex Corp.	15,200		264,774
Mitsui Chemicals, Inc.	53,200		188,834
Nifco, Inc.	8,700		173,374
Shin-Etsu Chemical Co. Ltd.	14,000		858,875
Syngenta AG	2,786		640,238
Umicore	8,800		264,433
Yara International ASA	6,000		189,680
Zeon Corp.	79,100		361,615

			8,106,014

Commercial Banks — 2.0%
Banco de Sabadell SA	24,900		184,387
Bangkok Bank Public Co. Ltd.	32,200		113,132
Bank Central Asia Tbk PT	982,000		467,561
Bank Negara Indonesia Persero Tbk PT	759,900		165,971
The Bank of Yokohama Ltd.	26,000		126,990
The Chiba Bank Ltd.	21,900		135,172
China Construction Bank Corp. - Class H	506,000		402,495
City National Corp.	4,900		190,757
Credit Agricole SA	57,595		1,209,202
DBS Group Holdings Ltd.	132,660		1,245,189
Erste Group Bank AG	3,100		139,384
Fifth Third Bancorp	30,750		311,497
HSBC Holdings Plc	139,659		1,599,173
Itau UniBanco Holding SA - ADR	24,025		484,104
KeyCorp	83,600		543,400
Mega Financial Holding Co. Ltd.	264,400		166,656
National Bank of Canada	3,600		200,200
PrivateBancorp, Inc.	4,200		102,732
Standard Chartered Plc	38,533		951,822
U.S. Bancorp	3,950		86,347
Union Bank of India	42,400		198,926
Unione di Banche Italiane ScpA	8,600		132,295
United Overseas Bank Ltd.	19,200		227,706
Wells Fargo & Co.	36,050		1,015,889
Wing Hang Bank Ltd.	13,000		127,462
Zions Bancorporation(j)	15,950		286,621

			10,815,070

Commercial Services & Supplies — 0.4%
Alexco Resource Corp.(h)	17,322		44,882
Clean Harbors, Inc.(h)	1,400		78,764
Corrections Corp. of America(h)	10,600		240,090
Iron Mountain, Inc.(h)	4,550		121,303
Mitie Group Plc	53,900		217,784
Rentokil Initial Plc(h)	452,026		825,034
Republic Services, Inc.	17,162		455,994
RPS Group Plc	76,100		273,929
SYKES Enterprises, Inc.(h)	5,448		113,427

			2,371,207

Communications Equipment — 1.5%
Alcatel-Lucent - ADR(h)	56,800		255,032
Cisco Systems, Inc.(h)	105,591		2,485,612
DG FastChannel, Inc.(h)	5,900		123,546
EMS Technologies, Inc.(h)	4,175		86,923
Harris Corp.	4,871		183,150
Juniper Networks, Inc.(h)	3,300		89,166
Nokia Oyj	56,141		823,432
Palm, Inc.(h)(j)	32,100		559,503
QUALCOMM, Inc.	65,522		2,947,180
Telefonaktiebolaget LM Ericsson - B Shares	57,553		579,322

			8,132,866

Computers & Peripherals — 1.9%
Apple, Inc.(h)	21,734		4,028,832
EMC Corp.(h)	37,800		644,112
Hewlett-Packard Co.	37,525		1,771,555
International Business Machines Corp.	12,475		1,492,135
NetApp, Inc.(h)	4,500		120,060
Seagate Technology	39,700		603,837
Teradata Corp.(h)	18,800		517,376
Western Digital Corp.(h)	23,621		862,875

			10,040,782

Construction & Engineering — 0.4%
Chicago Bridge & Iron Co. NV	6,300		117,684
Fluor Corp.	2,500		127,125
GS Engineering & Construction Corp.	3,600		280,236
Hyundai Development Co.	6,100		220,561
KBR, Inc.	24,400		568,276
Koninklijke Boskalis Westminster NV	4,300		147,409
Quanta Services, Inc.(h)	11,600		256,708
The Shaw Group, Inc.(h)	5,200		166,868
Skanska AB - B Shares	10,800		158,649

			2,043,516

Construction Materials — 0.2%
Fletcher Building Ltd.	80,258		482,223
HeidelbergCement AG	8,331		538,914

			1,021,137

Consumer Finance — 0.1%
Discover Financial Services	12,125		196,789
SLM Corp.(h)	16,600		144,752

			341,541

Containers & Packaging — 0.4%
Ball Corp.	6,500		319,800
Bemis Co., Inc.	10,200		264,282
BWAY Holding Co.(h)	2,100		38,871
Huhtamaki Oyj	17,800		227,203
Owens-Illinois, Inc.(h)	7,920		292,248
Pactiv Corp.(h)	25,900		674,695
Rock-Tenn Co. - Class A	1,518		71,513
Toyo Seikan Kaisha Ltd.	2,800		53,609

			1,942,221

Distributors — 0.0%
Inchcape Plc(h)	547,200		246,361

Diversified Consumer Services — 0.1%
Apollo Group, Inc. - Class A(h)	1,425		104,980
DeVry, Inc.	1,777		98,303
H&R Block, Inc.	10,300		189,314
Noah Education Holdings Ltd. - ADR	6,200		31,000

See Notes to Financial Statements.


		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009		3


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


	Shares	Value
Common Stocks
Diversified Consumer Services (concluded)
Service Corp. International	4,100	$	28,741
Weight Watchers International, Inc.	1,800		49,392

			501,730

Diversified Financial Services — 1.3%
Bank of America Corp.	47,950		811,314
Citigroup, Inc.	41,400		200,376
CME Group, Inc.	3,400		1,047,846
Deutsche Boerse AG	2,100		171,313
Hong Kong Exchanges & Clearing Ltd.	13,600		245,364
Investor AB - B Shares	42,070		770,210
JPMorgan Chase & Co.	50,225		2,200,859
London Stock Exchange Group Plc	11,300		155,118
MSCI, Inc. - Class A(h)	16,075		476,141
NYSE Euronext	11,500		332,235
PHH Corp.(h)	20,400		404,736
Pohjola Bank Plc	12,800		146,559

			6,962,071

Diversified Telecommunication Services — 1.2%
AT&T, Inc.	33,042		892,464
BT Group Plc	318,347		663,468
Cbeyond, Inc.(h)	7,200		116,136
CenturyTel, Inc.	23,120		776,832
Koninklijke KPN NV	52,996		880,369
Neutral Tandem, Inc.(h)	2,225		50,641
Portugal Telecom SGPS SA	14,900		158,309
Qwest Communications International, Inc.	146,100		556,641
Telecom Corp. of New Zealand Ltd.	121,400		232,936
Verizon Communications, Inc.	57,044		1,726,722
Vimpel-Communications - ADR(h)	9,700		181,390

			6,235,908

Electric Utilities — 0.4%
American Electric Power Co., Inc.	8,250		255,667
Cheung Kong Infrastructure Holdings Ltd.	56,100		200,123
Companhia Energetica de Minas Gerais - CEMIG - ADR	16,191		246,103
E.ON AG	19,551		827,504
Edison International	6,000		201,480
Entergy Corp.	3,710		296,281
Northeast Utilities	14,550		345,417

			2,372,575

Electrical Equipment — 0.3%
A123 Systems, Inc.(h)	800		17,056
Alstom SA	8,850		648,103
AMETEK, Inc.	5,000		174,550
Cooper Industries Plc - Class A	5,700		214,149
Energy Conversion Devices, Inc.(h)(j)	4,325		50,083
ITM Power Plc(h)	12,000		5,000
Ocean Power Technologies, Inc.(h)	1,000		4,830
Thomas & Betts Corp.(h)	3,500		105,280
Tognum AG	12,400		212,304

			1,431,355

Electronic Equipment, Instruments & Components — 0.7%
Amphenol Corp. - Class A	8,400		316,512
Anixter International, Inc.(h)	7,029		281,933
Arrow Electronics, Inc.(h)	5,925		166,789
AU Optronics Corp. - ADR	22,969		222,340
Celestica, Inc.(h)	32,200		305,256
Cogent, Inc.(h)	21,525		217,402
Hollysys Automation Technologies Ltd.(h)	34,400		326,456
Hosiden Corp.	6,000		80,898
Ingram Micro, Inc. - Class A(h)	20,000		337,000
Nidec Corp.	3,200		259,059
Tech Data Corp.(h)	17,390		723,598
Tyco Electronics Ltd.	10,500		233,940
Venture Corp Ltd.	30,000		190,781
Wasion Group Holdings Ltd.	186,800		164,271

			3,826,235

Energy Equipment & Services — 2.2%
Atwood Oceanics, Inc.(h)	400		14,108
Baker Hughes, Inc.	15,300		652,698
Complete Production Services, Inc.(h)	900		10,170
ENSCO International, Inc.	13,575		577,480
Ensign Energy Services, Inc.	17,300		262,412
Halliburton Co.	22,730		616,438
Helix Energy Solutions Group, Inc.(h)	22,200		332,556
Hercules Offshore, Inc.(h)	1,400		6,874
HSE Integrated Ltd.(h)	561		341
Key Energy Services, Inc.(h)	10,800		93,960
Leader Energy Services Ltd.(h)	5,319		422
Nabors Industries Ltd.(h)	34,575		722,617
National Oilwell Varco, Inc.(h)	17,799		767,671
Noble Corp.	14,510		550,800
Oil States International, Inc.(h)	16,400		576,132
Patterson-UTI Energy, Inc.	36,900		557,190
Precision Drilling Trust	3,771		25,002
Pride International, Inc.(h)	18,600		566,184
Rowan Cos., Inc.	24,400		562,908
Schlumberger Ltd.	28,347		1,689,481
SEACOR Holdings, Inc.(h)	4,300		351,009
Smith International, Inc.	13,400		384,580
Superior Energy Services, Inc.(h)	12,805		288,369
Technicoil Corp.(h)	12,900		4,458
Technicoil Corp. (acquired 6/15/04, cost $24,418)(h)(i)	33,500		11,577
Tidewater, Inc.	12,000		565,080
TransCanada Corp.	700		21,818
Transocean Ltd.(h)	9,156		783,113
Trican Well Service Ltd.	32,900		427,133
Weatherford International Ltd.(h)	26,650		552,454
Xtreme Coil Drilling Corp.(h)	4,800		25,106

			12,000,141

Food & Staples Retailing — 0.7%
CVS Caremark Corp.	7,500		268,050
The Kroger Co.	14,100		291,024
Safeway, Inc.	20,180		397,950
Tesco Plc	112,521		720,324
Wal-Mart Stores, Inc.	35,786		1,756,735
Whole Foods Market, Inc.(h)	5,200		158,548
Wumart Stores, Inc. - H Shares	142,100		210,928

			3,803,559

Food Products — 1.1%
American Italian Pasta Co. - Class A(h)	2,400		65,232
Archer-Daniels-Midland Co.	16,000		467,520
Associated British Foods Plc	55,587		754,055
Barry Callebaut AG(h)	200		118,648

See Notes to Financial Statements.


4		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009


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


	Shares	Value
Common Stocks
Food Products (concluded)
ConAgra Foods, Inc.	8,400	$	182,112
Dean Foods Co.(h)	12,100		215,259
Del Monte Foods Co.	63,096		730,652
The J.M. Smucker Co.	4,500		238,545
Nestle SA	37,015		1,580,195
Nong Shim Co. Ltd.	1,100		237,510
Nutreco Holding NV	5,100		248,562
Parmalat SpA	73,200		202,747
Smart Balance, Inc.(h)	10,900		66,926
Toyo Suisan Kaisha Ltd.	7,900		213,754
Tyson Foods, Inc. - Class A	9,425		119,038
Viscofan SA	10,100		246,249

			5,687,004

Gas Utilities — 0.3%
Atmos Energy Corp.	11,325		319,138
EQT Corp.	10,170		433,242
Questar Corp.	8,580		322,265
UGI Corp.	14,700		368,382

			1,443,027

Health Care Equipment & Supplies — 1.3%
Baxter International, Inc.	3,725		212,362
Boston Scientific Corp.(h)	132,200		1,399,998
Cie Generale d’Optique Essilor International SA	13,895		793,439
The Cooper Cos., Inc.	7,698		228,862
Covidien Plc	2,900		125,454
DiaSorin SpA	6,900		232,007
Gen-Probe, Inc.(h)	6,500		269,360
Hologic, Inc.(h)	26,100		426,474
Hospira, Inc.(h)	3,450		153,870
Inverness Medical Innovations, Inc.(h)	5,300		205,269
Kinetic Concepts, Inc.(h)	16,500		610,170
Merit Medical Systems, Inc.(h)	5,225		90,549
Mindray Medical International Ltd. - ADR	3,700		120,768
NuVasive, Inc.(h)	2,600		108,576
Smith & Nephew Plc	27,400		246,068
SonoSite, Inc.(h)	5,225		138,253
Sonova Holding AG	3,400		344,019
Straumann Holding AG	600		155,716
Zimmer Holdings, Inc.(h)	22,200		1,186,590
ZOLL Medical Corp.(h)	5,750		123,740

			7,171,544

Health Care Providers & Services — 1.9%
Aetna, Inc.	20,300		564,949
AmerisourceBergen Corp.	25,800		577,404
Community Health Systems, Inc.(h)	16,600		530,038
Coventry Health Care, Inc.(h)	22,500		449,100
DaVita, Inc.(h)	2,400		135,936
Fresenius Medical Care AG & Co. KGaA	2,300		114,399
Health Net, Inc.(h)	3,600		55,440
Humana, Inc.(h)	15,300		570,690
Lincare Holdings, Inc.(h)	30,400		950,000
Magellan Health Services, Inc.(h)	8,700		270,222
McKesson Corp.	12,925		769,684
Medco Health Solutions, Inc.(h)	24,170		1,336,843
MEDNAX, Inc.(h)	13,680		751,305
UnitedHealth Group, Inc.	49,975		1,251,374
Universal Health Services, Inc. - Class B	7,575		469,120
VCA Antech, Inc.(h)	5,200		139,828
WellPoint, Inc.(h)	25,600		1,212,416

			10,148,748

Health Care Technology — 0.2%
Cerner Corp.(h)	9,600		718,080
IMS Health, Inc.	26,200		402,170
MedAssets, Inc.(h)	4,400		99,308
Omnicell, Inc.(h)	3,100		34,534

			1,254,092

Hotels, Restaurants & Leisure — 1.1%
Bally Technologies, Inc.(h)	9,100		349,167
Brinker International, Inc.	6,950		109,323
Burger King Holdings, Inc.	5,800		102,022
The Cheesecake Factory, Inc.(h)	4,000		74,080
Darden Restaurants, Inc.	12,375		422,359
Domino’s Pizza UK & IRL Plc	51,100		238,737
Domino’s Pizza, Inc.(h)	9,700		85,748
Fu Ji Food & Catering Services Holdings Ltd.(h)	208,300		67,999
Greene King Plc	27,440		185,255
Home Inns & Hotels Management, Inc. - ADR(h)	9,500		283,575
InterContinental Hotels Group Plc	19,718		255,873
Jack in the Box, Inc.(h)	2,300		47,127
Las Vegas Sands Corp.(h)(j)	17,800		299,752
McDonald’s Corp.	6,325		360,968
PartyGaming Plc(h)	33,000		142,946
REXLot Holdings Ltd.(h)	2,866,500		254,525
Scientific Games Corp. - Class A(h)	44,900		710,767
Sodexo	4,800		288,304
Starbucks Corp.(h)	26,300		543,095
Starwood Hotels & Resorts Worldwide, Inc.	13,600		449,208
Whitbread Plc	8,800		171,518
William Hill Plc	93,600		264,232
Wyndham Worldwide Corp.	15,200		248,064

			5,954,644

Household Durables — 0.3%
Garmin Ltd.	5,700		215,118
iRobot Corp.(h)	2,774		34,148
KB Home	6,825		113,363
Newell Rubbermaid, Inc.	15,575		244,372
NVR, Inc.(h)	400		254,948
Persimmon Plc(h)	15,600		114,213
The Stanley Works	8,450		360,730

			1,336,892

Household Products — 0.7%
Church & Dwight Co., Inc.	3,600		204,264
Colgate-Palmolive Co.	1,275		97,257
Hypermarcas SA(h)	16,500		325,976
Kimberly-Clark Corp.	3,450		203,481
McBride Plc	96,300		295,055
The Procter & Gamble Co.	44,780		2,593,658

			3,719,691

Independent Power Producers & Energy Traders — 0.7%
The AES Corp.(h)	55,411		821,191
Calpine Corp.(h)	10,100		116,352
Constellation Energy Group, Inc.	5,775		186,937
Dynegy, Inc. - Class A(h)	179,100		456,705
International Power Plc	75,000		346,976

See Notes to Financial Statements.


		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009		5


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


	Shares	Value
Common Stocks
Independent Power Producers & Energy Traders (concluded)
Mirant Corp.(h)	31,400	$	515,902
NRG Energy, Inc.(h)	39,335		1,108,854

			3,552,917

Industrial Conglomerates — 0.8%
3M Co.	23,200		1,712,160
Carlisle Cos., Inc.	2,800		94,948
General Electric Co.	79,375		1,303,337
Keppel Corp. Ltd.	134,000		765,653
Smiths Group Plc	14,300		203,681
Textron, Inc.	12,300		233,454
Tyco International Ltd.	3,725		128,438

			4,441,671

Insurance — 2.5%
ACE Ltd.(h)	2,825		151,024
Aegon NV(h)	43,900		375,398
AFLAC, Inc.	2,925		125,015
Allianz SE	8,402		1,048,189
Allied World Assurance Co. Holdings Ltd.	9,700		464,921
American Financial Group, Inc.	20,700		527,850
Amlin Plc	11,600		71,217
Aspen Insurance Holdings Ltd.	2,800		74,116
Aviva Plc	26,700		191,945
AXIS Capital Holdings Ltd.	14,010		422,822
Catlin Group Ltd.	15,320		86,137
Chubb Corp.	13,900		700,699
Endurance Specialty Holdings Ltd.	9,500		346,465
Everest Re Group Ltd.	2,700		236,790
The Hanover Insurance Group, Inc.	10,787		445,827
The Hartford Financial Services Group, Inc.	6,050		160,325
HCC Insurance Holdings, Inc.	34,610		946,584
Legal & General Group Plc	158,600		223,682
Lincoln National Corp.	6,500		168,415
MetLife, Inc.	19,600		746,172
PartnerRe Ltd.	7,600		584,744
PICC Property & Casualty Co. Ltd. - H Shares(h)	215,600		147,589
Prudential Financial, Inc.	2,115		105,560
Prudential Plc	99,516		959,124
RenaissanceRe Holdings Ltd.	18,850		1,032,226
StanCorp Financial Group, Inc.	900		36,333
Standard Life Plc	20,000		70,197
Swiss Reinsurance Co. Ltd.	8,000		362,739
The Travelers Cos., Inc.	19,875		978,446
Unum Group	34,950		749,328
W.R. Berkley Corp.	12,390		313,219
XL Capital Ltd. - Class A	15,950		278,487

			13,131,585

Internet & Catalog Retail — 0.3%
Amazon.com, Inc.(h)	15,150		1,414,404
Expedia, Inc.(h)	5,300		126,935
priceline.com, Inc.(h)	1,325		219,712
Shutterfly, Inc.(h)	4,900		81,487

			1,842,538

Internet Software & Services — 1.0%
Baidu, Inc. - ADR(h)	1,300		508,365
comScore, Inc.(h)	6,131		110,419
eBay, Inc.(h)	6,525		154,055
Google, Inc. - Class A(h)	6,022		2,986,009
GSI Commerce, Inc.(h)	1,600		30,896
NetEase.com, Inc. - ADR(h)	4,500		205,560
Open Text Corp.(h)	6,200		231,446
Sina Corp.(h)	5,500		208,780
SkillSoft Plc - ADR(h)	30,200		289,920
Tencent Holdings Ltd.	26,900		436,583
Yahoo!, Inc.(h)	12,900		229,749

			5,391,782

IT Services — 0.8%
Amdocs Ltd.(h)	21,467		577,033
Broadridge Financial Solutions, Inc.	14,125		283,913
Cap Gemini SA	4,600		241,756
Computer Sciences Corp.(h)	14,700		774,837
Dimension Data Holdings Plc	143,200		144,942
ExlService Holdings, Inc.(h)	14,298		212,468
Fidelity National Information Services, Inc.	18,600		474,486
Forrester Research, Inc.(h)	3,700		98,568
Gartner, Inc.(h)	11,600		211,932
Genpact Ltd.(h)	12,500		153,750
Global Cash Access Holdings, Inc.(h)	17,100		125,001
Lender Processing Services, Inc.	14,000		534,380
Mastercard, Inc. - Class A	750		151,612
Paychex, Inc.	3,200		92,960
SRA International, Inc. - Class A(h)	6,450		139,256
TeleTech Holdings, Inc.(h)	4,550		77,623

			4,294,517

Leisure Equipment & Products — 0.1%
Mattel, Inc.	18,600		343,356
Shimano, Inc.	4,900		210,746

			554,102

Life Sciences Tools & Services — 0.3%
Covance, Inc.(h)	9,000		487,350
Gerresheimer AG	3,800		119,391
Life Technologies Corp.(h)	3,150		146,633
Lonza Group AG	1,700		185,547
Qiagen NV(h)	18,000		381,400
Thermo Fisher Scientific, Inc.(h)	3,000		131,010

			1,451,331

Machinery — 1.6%
AGCO Corp.(h)	8,300		229,329
Amada Co. Ltd.	44,900		301,470
Cummins, Inc.	17,000		761,770
Danaher Corp.	30,100		2,026,332
Eaton Corp.	4,050		229,189
GEA Group AG	32,100		667,074
Joy Global, Inc.	7,025		343,804
Kaydon Corp.	3,125		101,312
MAN SE	5,900		484,618
Metso Oyj	15,600		439,789
Nabtesco Corp.	30,800		366,229
Navistar International Corp.(h)	3,100		116,002
NSK Ltd.	56,000		346,075
Oshkosh Corp.	20,700		640,251
PACCAR, Inc.	17,900		675,009
Parker Hannifin Corp.	4,000		207,360
Pentair, Inc.	7,000		206,640
Railpower Technologies Corp.(h)	17,600		—

See Notes to Financial Statements.


6		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009


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


	Shares	Value
Common Stocks
Machinery (concluded)
Timken Co.	8,800	$	206,184

			8,348,437

Marine — 0.0%
Hanjin Shipping Co. Ltd.	13,100		227,525

Media — 1.2%
AirMedia Group, Inc. - ADR(h)	9,300		68,355
Cablevision Systems Corp. - Class A	16,600		394,250
CBS Corp. - Class B	63,300		762,765
CKX, Inc.(h)	61,350		411,658
Comcast Corp. - Class A	9,075		153,277
DreamWorks Animation SKG, Inc. - Class A(h)	11,950		425,062
Focus Media Holding Ltd. - ADR(h)	11,000		121,440
The Interpublic Group of Cos., Inc.(h)	31,100		233,872
LodgeNet Interactive Corp.(h)	5,400		40,770
Naspers Ltd. - N Shares	10,200		349,161
Reed Elsevier NV	10,400		118,106
RHI Entertainment, Inc.(h)	14,926		47,465
Rightmove Plc	21,200		188,345
SES SA	56,655		1,285,690
Time Warner Cable, Inc.	1,771		76,313
Time Warner, Inc.	11,208		322,566
Viacom, Inc. - Class B(h)	14,450		405,178
Virgin Media, Inc.	17,600		244,992
Wolters Kluwer NV	9,600		205,665
Woongjin Thinkbig Co. Ltd.	17,370		337,564

			6,192,494

Metals & Mining — 1.8%
Agnico-Eagle Mines Ltd.	15,600		1,057,369
Archipelago Resources Plc(h)	78,900		32,154
Baja Mining Corp.(h)	59,300		37,663
BHP Billiton Ltd.	44,791		1,477,230
Carpenter Technology Corp.	10,800		252,612
Century Aluminum Co.(h)	9,734		91,013
Commercial Metals Co.	8,800		157,520
Compass Minerals International, Inc.	1,800		110,916
Crosshair Exploration & Mining Corp.(h)	5,600		1,334
Crosshair Exploration & Mining Corp. (acquired 4/01/08, cost $6,372)(h)(i)	5,300		1,262
Eldorado Gold Corp.(h)	43,162		490,216
Eramet SA	1,300		452,643
European Goldfields Ltd.(h)	12,100		56,282
Freeport-McMoRan Copper & Gold, Inc.	13,132		900,986
Gold Reserve, Inc.(h)	26,280		22,864
Grande Cache Coal Corp.(h)	6,600		24,473
International Ferro Metals Ltd.(h)	248,400		209,720
Kinross Gold Corp.	31,035		674,256
Merafe Resources Ltd.(h)	954,500		206,395
Minefinders Corp. Ltd.(h)	40,000		389,600
Newcrest Mining Ltd.	19,807		557,433
Newmont Mining Corp.	1,675		73,733
Reliance Steel & Aluminum Co.	4,990		212,374
Salzgitter AG	3,000		286,511
Silvercorp Metals Inc	54,000		257,227
Sims Metal Management Ltd.	8,400		168,090
Steel Dynamics, Inc.	7,175		110,064
Sunridge Gold Corp.(h)	146,757		91,839
Teck Cominco Ltd. - Class B(h)	1		28
ThyssenKrupp AG	9,500		324,905
United States Steel Corp.	13,600		603,432
West Timmins Mining, Inc.(h)	24,272		46,928
Western Canadian Coal Corp.(h)	7,800		21,054
Yamato Kogyo Co. Ltd.	8,900		249,318

			9,649,444

Multiline Retail — 0.8%
Golden Eagle Retail Group Ltd.	148,700		249,564
JC Penney Co., Inc.	18,400		621,000
Kohl’s Corp.(h)	34,302		1,956,929
Macy’s, Inc.	28,975		529,953
Mothercare Plc	18,800		169,601
Next Plc	8,300		238,184
PPR	1,700		218,718
Saks, Inc.(h)	24,300		165,726
Target Corp.	3,525		164,547

			4,314,222

Multi-Utilities — 0.5%
A2A SpA	107,700		212,077
Ameren Corp.	4,750		120,080
CenterPoint Energy, Inc.	13,925		173,088
CMS Energy Corp.	66,500		891,100
DTE Energy Co.	5,925		208,204
NiSource, Inc.	39,600		550,044
PG&E Corp.	8,500		344,165
Wisconsin Energy Corp.	6,680		301,735

			2,800,493

Office Electronics — 0.2%
Canon, Inc.	28,500		1,141,893
Xerox Corp.	19,950		154,413

			1,296,306

Oil, Gas & Consumable Fuels — 6.1%
Advantage Oil & Gas Ltd.	55,100		389,583
Alpha Natural Resources, Inc.(h)	6,937		243,489
American Oil & Gas, Inc.(h)	5,947		11,716
Anadarko Petroleum Corp.	12,800		802,944
Apache Corp.	1,650		151,520
Approach Resources, Inc.(h)	1,700		15,436
Arch Coal, Inc.	31,700		701,521
Argosy Energy, Inc.(h)	1,240		1,482
Atlas Energy, Inc.	10,000		270,700
ATP Oil & Gas Corp.(h)(j)	4,300		76,927
BG Group Plc	43,149		752,047
Birchcliff Energy Ltd.(h)	13,100		100,943
Cairn Energy Plc(h)	14,566		651,038
Canadian Superior Energy, Inc.(h)	57,300		49,851
Canext Energy Ltd.(h)	4,020		1,539
Chesapeake Energy Corp.	8,325		236,430
Chevron Corp.	12,300		866,289
Cimarex Energy Co.	7,500		324,900
Cinch Energy Corp. (acquired 6/07/04 through 7/07/05, cost $63,400)(h)(i)	40,320		36,906
Clayton Williams Energy, Inc.(h)	19,123		575,985
Compton Petroleum Corp.(h)	3,800		4,933
Comstock Resources, Inc.(h)	3,083		123,567
ConocoPhillips	31,300		1,413,508
CONSOL Energy, Inc.	34,989		1,578,354
Crescent Point Energy Corp.	1,800		60,860
Crew Energy, Inc.(h)	30,300		244,799

See Notes to Financial Statements.


		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009		7


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


	Shares	Value
Common Stocks
Oil, Gas & Consumable Fuels (concluded)
Crew Energy, Inc. (acquired 5/12/04, cost $36,232)(h)(i)	9,400	$	75,945
Dana Petroleum Plc(h)	7,700		173,164
Daylight Resources Trust	43,410		344,636
Delphi Energy Corp.(h)	24,700		32,529
Devon Energy Corp.	2,550		171,692
El Paso Corp.	54,900		566,568
Ember Resources, Inc.(h)	4,855		3,945
Energy XXI Bermuda Ltd.	13,100		20,305
EXCO Resources, Inc.(h)	21,100		394,359
Exxon Mobil Corp.	46,700		3,204,087
Fairborne Energy Ltd.(h)	16,182		68,165
Frontier Oil Corp.	30,300		421,776
Galleon Energy, Inc. - Class A(h)	72,317		423,507
Galleon Energy, Inc. - Class A (acquired 2/09/04, cost $12,571)(h)(i)	6,300		36,894
Gasco Energy, Inc.(h)	19,600		9,604
Gastar Exploration Ltd.(h)	3,180		15,328
GMX Resources, Inc.(h)	8,612		135,295
Goodrich Petroleum Corp.(h)	18,400		474,904
Heritage Oil Plc(h)	40,000		315,490
Highpine Oil & Gas Ltd.(h)	8,993		59,889
Iteration Energy Ltd.(h)	4,021		4,507
James River Coal Co.(h)	2,300		43,953
Longview Energy Co. (acquired 8/13/04, cost $48,000)(h)(i)	3,200		28,800
Lynden Energy Corp.(h)	3,500		1,046
Marathon Oil Corp.	32,551		1,038,377
Massey Energy Co.	38,388		1,070,641
Matador Resources Co. (acquired 10/14/03 through 4/13/06, cost $62,950)(h)(i)	8,685		103,178
Midnight Oil Exploration Ltd.(h)	69,600		65,007
Midnight Oil Exploration Ltd. (acquired 9/29/05, cost $39,607)(h)(i)	11,600		10,835
Murphy Oil Corp.	10,500		604,485
NAL Oil & Gas Trust	396		4,697
Newfield Exploration Co.(h)	9,885		420,706
Niko Resources Ltd.	2,000		156,447
Occidental Petroleum Corp.	2,850		223,440
Oil Search Ltd.	27,700		157,145
Open Range Energy Corp.(h)	1,975		3,413
Pacific Rodera Energy, Inc.(h)	37,300		9,058
Pacific Rubiales Energy Corp.(h)	12,466		154,391
Pan Orient Energy Corp.(h)	25,700		115,220
Parallel Petroleum Corp.(h)	4,879		15,466
Patriot Coal Corp.(h)	2,798		32,905
Peabody Energy Corp.	26,498		986,256
Pengrowth Energy Trust	2,877		30,445
Penn Virginia Corp.	30,000		687,300
Penn West Energy Trust	10,319		163,654
PetroHawk Energy Corp.(h)	69,500		1,682,595
Petrolifera Petroleum Ltd.(h)	30,150		30,413
Plains Exploration & Production Co.(h)	57,025		1,577,312
Progress Energy Resources Corp.	21,500		277,523
ProspEx Resources Ltd.(h)	43,140		47,546
Quest Resource Corp.(h)	2,500		1,475
Quicksilver Resources, Inc.(h)	10,200		144,738
Range Resources Corp.	23,500		1,159,960
Santos Ltd.	13,000		173,941
Southern Union Co.	18,800		390,852
Southwestern Energy Co.(h)	4,220		180,110
Stone Energy Corp.(h)	561		9,150
Tag Oil Ltd.	800		411
Teekay Corp.	1,500		32,805
Tesoro Corp.	39,100		585,718
Total SA	16,079		955,735
Trafalgar Energy Ltd.(h)	841		1,351
Triex Minerals Corp.(h)	9,900		1,757
TriStar Oil & Gas Ltd.(h)	11,885		173,727
TriStar Oil & Gas Ltd. (acquired 11/24/08, cost $5,747)(h)(i)	700		10,232
True Energy Trust	11,382		11,375
Tullow Oil Plc	42,403		767,207
Ultra Petroleum Corp.(h)	8,800		430,848
Uranium One, Inc.(h)	25,970		62,339
UTS Energy Corp.(h)	28,500		46,051
Valero Energy Corp.	29,100		564,249
Vero Energy, Inc.(h)	2,687		10,190
Vero Energy, Inc. (acquired 11/28/05, cost $3,345)(h)(i)	1,759		6,670
Warren Resources, Inc.(h)	4,034		11,941
West Energy Ltd.(h)	9,543		23,085
WesternZagros Resources Ltd.(h)	1,800		3,631
Whiting Petroleum Corp.(h)	5,700		328,206
The Williams Cos., Inc.	8,200		146,534
XTO Energy, Inc.	3,725		153,917

			32,770,315

Paper & Forest Products — 0.2%
Ainsworth Lumber Co. Ltd.(b)(e)(h)	36,747		82,717
International Paper Co.	35,275		784,163
MeadWestvaco Corp.	2,000		44,620
Weyerhaeuser Co.	6,200		227,230

			1,138,730

Personal Products — 0.3%
Avon Products, Inc.	35,300		1,198,788
The Estee Lauder Cos., Inc. - Class A	6,400		237,312

			1,436,100

Pharmaceuticals — 2.5%
Abbott Laboratories	30,900		1,528,623
Allergan, Inc.	2,400		136,224
Auxilium Pharmaceuticals, Inc.(h)	1,500		51,315
Bayer AG	12,051		834,146
Bristol-Myers Squibb Co.	17,000		382,840
Cadence Pharmaceuticals, Inc.(h)	2,300		25,438
Cypress Bioscience, Inc.(h)	6,000		49,020
Eli Lilly & Co.	5,575		184,142
Endo Pharmaceuticals Holdings, Inc.(h)	32,375		732,646
Forest Laboratories, Inc.(h)	20,800		612,352
GlaxoSmithKline Plc	48,951		965,167
Impax Laboratories, Inc.(h)	4,900		42,826
Johnson & Johnson	6,475		394,263
King Pharmaceuticals, Inc.(h)	14,975		161,281
Medicis Pharmaceutical Corp. - Class A	16,700		356,545
Novartis AG	26,232		1,317,654
Pfizer, Inc.	79,400		1,314,070
Roche Holding AG	7,893		1,276,209
Schering-Plough Corp.	8,425		238,006
Seperacor, Inc.(h)	8,050		184,345
Shire Plc - ADR	5,550		290,209
Teva Pharmaceutical Industries Ltd. - ADR	13,700		692,672
Watson Pharmaceuticals, Inc.(h)	14,900		545,936

See Notes to Financial Statements.


8		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009


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


	Shares	Value
Common Stocks
Pharmaceuticals (concluded)
Wyeth	19,875	$	965,528

			13,281,457

Professional Services — 0.4%
Diamond Management & Technology Consultants, Inc.	17,094		117,094
Dun & Bradstreet Corp.	2,900		218,428
Hays Plc	87,700		146,069
Heidrick & Struggles International, Inc.	1,000		23,260
IHS, Inc. - Class A(h)	6,525		333,623
Kforce, Inc. - Class A(h)	2,300		27,646
Manpower, Inc.	19,200		1,088,832
MPS Group, Inc.(h)	9,000		94,680
Randstad Holding NV(h)	6,200		268,587
TrueBlue, Inc.(h)	3,600		50,652

			2,368,871

Real Estate Investment Trusts (REITs) — 0.7%
Alexandria Real Estate Equities, Inc.	4,200		228,270
Annaly Capital Management, Inc.	6,025		109,293
CFS Retail Property Trust	33,000		58,267
Champion REIT	395,800		164,516
Chimera Investment Corp.	139,700		533,654
Corio NV	1,300		89,854
Eurocommercial Properties NV	2,000		79,297
Fonciere Des Regions	2,300		268,279
Franklin Street Properties Corp.	3,800		49,780
Hammerson Plc	31,700		200,050
Kenedix Realty Investment Corp.	75		280,713
MFA Financial, Inc.	46,200		367,752
Public Storage	1,075		80,883
Redwood Trust, Inc.	4,500		69,750
Segro Plc	40,750		240,033
Simon Property Group, Inc.	2,183		151,552
Suntec Real Estate Investment Trust	212,500		159,059
Unibail-Rodamco SE	1,700		354,033
Wereldhave NV	500		49,339

			3,534,374

Real Estate Management & Development — 0.4%
Castellum AB	5,700		55,355
Forestar Group, Inc.(h)	10,600		182,108
Goldcrest Co. Ltd.	5,300		159,804
Hang Lung Properties Ltd.	116,000		424,699
Henderson Land Development Co. Ltd.	91,000		596,008
New World Development Ltd.	112,100		240,126
PSP Swiss Property AG(h)	1,500		86,890
Sino-Ocean Land Holdings Ltd.	126,000		113,589
Tokyo Tatemono Co. Ltd.	33,000		160,761
Wheelock & Co. Ltd.	63,100		206,194

			2,225,534

Road & Rail — 0.5%
Burlington Northern Santa Fe Corp.	1,975		157,664
Con-way, Inc.	4,500		172,440
CSX Corp.	8,150		341,159
East Japan Railway Co.	11,400		821,929
Firstgroup Plc	60,100		398,218
Nippon Express Co. Ltd.	34,900		141,659
Ryder System, Inc.	1,800		70,308
Seino Holdings Corp.	24,600		212,662
Union Pacific Corp.	3,100		180,885
West Japan Railway Co.	60		227,075

			2,723,999

Semiconductors & Semiconductor Equipment — 1.6%
Advanced Semiconductor Engineering, Inc.	189,100		156,602
ARM Holdings Plc	71,600		164,914
ASML Holding NV	8,300		245,431
Broadcom Corp. - Class A(h)	43,700		1,341,153
Disco Corp.	3,200		212,763
Entegris, Inc.(h)	8,200		40,590
FEI Co.(h)	4,800		118,320
Intel Corp.	15,125		295,996
Lam Research Corp.(h)	32,482		1,109,585
Micron Technology, Inc.(h)	87,730		719,386
Microsemi Corp.(h)	5,925		93,556
Monolithic Power Systems, Inc.(h)	4,300		100,835
NVIDIA Corp.(h)	39,500		593,685
ON Semiconductor Corp.(h)	55,600		458,700
PMC-Sierra, Inc.(h)	107,120		1,024,067
Samsung Electronics Co. Ltd.	1,007		695,222
Silicon Laboratories, Inc.(h)	2,300		106,628
Siliconware Precision Industries Co. - ADR	22,600		162,268
Standard Microsystems Corp.(h)	50		1,160
STMicroelectronics NV	28,000		264,040
Texas Instruments, Inc.	15,275		361,865
United Microelectronics Corp.(h)	500,400		245,010

			8,511,776

Software — 2.0%
Activision Blizzard, Inc.(h)	40,000		495,600
Adobe Systems, Inc.(h)	9,300		307,272
Autonomy Corp. Plc(h)	27,906		728,632
Blackboard, Inc.(h)	3,664		138,426
BMC Software, Inc.(h)	6,050		227,057
CA, Inc.	35,350		777,347
Check Point Software Technologies(h)	40,500		1,148,175
DemandTec, Inc.(h)	11,300		99,779
Intuit, Inc.(h)	5,950		169,575
Micro Focus International Plc	46,700		265,973
Microsoft Corp.	127,400		3,298,386
Novell, Inc.(h)	38,000		171,380
Oracle Corp.	29,175		608,007
Perfect World Co. Ltd - ADR(h)	3,600		173,160
Phase Metrics, Inc.(h)	50,574		1,011
Salesforce.com, Inc.(h)	18,669		1,062,826
SonicWALL, Inc.(h)	25,100		210,840
Symantec Corp.(h)	8,550		140,819
Taleo Corp. - Class A(h)	200		4,528
TiVo, Inc.(h)	52,725		546,231

			10,575,024

Specialty Retail — 1.4%
American Eagle Outfitters, Inc.	10,500		177,030
AnnTaylor Stores Corp.(h)	11,900		189,091
Barnes & Noble, Inc.(j)	14,000		311,080
Bed Bath & Beyond, Inc.(h)	6,300		236,502
CarMax, Inc.(h)	30,400		635,360
Dick’s Sporting Goods, Inc.(h)	2,300		51,520
Esprit Holdings Ltd.	75,600		506,563
GameStop Corp. - Class A(h)	10,850		287,199
The Gap, Inc.	46,225		989,215

See Notes to Financial Statements.


		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009		9


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


	Shares	Value
Common Stocks
Specialty Retail (concluded)
The Home Depot, Inc.	37,300	$	993,672
J. Crew Group, Inc.(h)	1,400		50,148
JUMBO SA	18,400		243,322
Limited Brands, Inc.	26,100		443,439
RadioShack Corp.	33,800		560,066
Ross Stores, Inc.	14,779		705,993
The Sherwin-Williams Co.	4,540		273,126
Shimachu Co. Ltd.	9,800		256,343
Staples, Inc.	9,000		208,980
TJX Cos., Inc.	11,650		432,798
The Wet Seal, Inc. - Class A(h)	19,700		74,466

			7,625,913

Textiles, Apparel & Luxury Goods — 0.2%
Anta Sports Products Ltd.	161,300		199,433
ASICS Corp.	25,800		239,474
Benetton Group SpA	15,000		152,264
Gerry Weber International AG	8,310		275,571
Hanesbrands, Inc.(h)	2		43
lululemon athletica, inc.(h)	15,375		349,781

			1,216,566

Thrifts & Mortgage Finance — 0.1%
Astoria Financial Corp.	20,740		228,970
Hudson City Bancorp, Inc.	9,475		124,596
People’s United Financial, Inc.	16,700		259,852

			613,418

Tobacco — 0.6%
Altria Group, Inc.	9,450		168,304
Lorillard, Inc.	7,200		534,960
Philip Morris International, Inc.	25,801		1,257,541
Reynolds American, Inc.	15,625		695,625
Swedish Match AB	14,200		286,023

			2,942,453

Trading Companies & Distributors — 0.2%
ITOCHU Corp.	57,700		380,459
Mitsui & Co. Ltd.	59,400		772,776
WESCO International, Inc.(h)	5,400		155,520

			1,308,755

Transportation Infrastructure — 0.3%
COSCO Pacific Ltd.	239,000		341,223
Kamigumi Co. Ltd.	34,900		284,590
Shenzhen Expressway Co. Ltd. - H Shares	923,200		451,776
Zhejiang Expressway Co. Ltd. - H Shares	385,700		337,004

			1,414,593

Water Utilities — 0.1%
Guangdong Investment Ltd.	508,900		249,991

Wireless Telecommunication Services — 0.6%
American Tower Corp. - Class A(h)	25,350		922,740
KDDI Corp.	106		596,359
Millicom International Cellular SA(h)	2,600		189,124
MTN Group Ltd.	26,870		438,349
NII Holdings, Inc.(h)	6,400		191,872
Philippine Long Distance Telephone Co. - ADR	3,500		179,900
Sprint Nextel Corp.(h)	11,550		45,623
Vodafone Group Plc	232,079		521,355

			3,085,322

Total Common Stocks — 58.9%			314,779,606


	Par (000)
Corporate Bonds
Aerospace & Defense — 0.0%
L-3 Communications Corp., Series B, 6.38%, 10/15/15	USD 35		35,350

Auto Components — 0.0%
The Goodyear Tire & Rubber Co., 8.63%, 12/01/11	125		129,063
Lear Corp., Series B, 8.75%, 12/01/16(g)(h)	90		59,400

			188,463

Capital Markets — 0.4%
The Goldman Sachs Group, Inc., 5.25%, 10/15/13	310		329,101
Lehman Brothers Holdings, Inc., 6.75%, 12/28/17(g)(h)	190		19
Morgan Stanley:
0.79%, 1/09/12(a)	925		900,264
5.55%, 4/27/17	115		114,564
5.63%, 9/23/19	700		688,309

			2,032,257

Chemicals — 0.1%
Huntsman International LLC:
7.88%, 11/15/14	335		312,388
7.38%, 1/01/15	85		77,137
NOVA Chemicals Corp.:
6.50%, 1/15/12(e)	60		58,650
4.54%, 11/15/13(a)(e)	200		176,500

			624,675

Commercial Banks — 0.1%
Banco Central de la Republica Dominicana,
9.04%, 1/23/18(e)	33		34,593
JPMorgan Chase Bank, N.A., 6.00%, 7/05/17	425		446,395

			480,988

Commercial Services & Supplies — 0.0%
Aleris International, Inc., 9.00%, 12/15/14(g)(h)	230		230
RBS Global, Inc./Rexnord LLC, 8.88%, 9/01/16	30		24,375

			24,605

Containers & Packaging — 0.1%
Ball Corp.:
7.13%, 9/01/16	140		142,800
7.38%, 9/01/19	140		142,100
Rock-Tenn Co., 8.20%, 8/15/11	250		259,375

			544,275

Diversified Financial Services — 0.8%
Atlantic Marine Corp. Communities LLC, 5.34%, 12/01/50(b)	175		121,028

See Notes to Financial Statements.


10		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009


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


	Par (000)		Value
Corporate Bonds
Diversified Financial Services (concluded)
BP Capital Markets Plc, 3.13%, 3/10/12(e)	USD	775	$	800,633
CIT Group, Inc.:
4.25%, 2/01/10		45		32,443
4.75%, 12/15/10		50		34,541
5.80%, 7/28/11		60		40,807
5.40%, 2/13/12		45		29,535
Ford Capital BV, 9.50%, 6/01/10(e)		390		397,800
Ford Motor Credit Co. LLC:
9.75%, 9/15/10		135		137,955
8.63%, 11/01/10		250		252,898
7.80%, 6/01/12		225		217,452
General Electric Capital Corp.:
5.00%, 12/01/10		300		310,089
6.75%, 3/15/32		50		51,046
6.15%, 8/07/37		360		341,631
Icahn Enterprises LP/Icahn Enterprises Finance Corp., 7.13%, 2/15/13		420		404,250
JPMorgan Chase & Co., 5.60%, 6/01/11		550		583,456
Leucadia National Corp., 7.13%, 3/15/17		200		192,000
NSG Holdings LLC/NSG Holdings, Inc., 7.75%, 12/15/25(b)		140		125,300
Ohana Military Communities LLC, 6.19%, 4/01/49(b)		25		19,781

				4,092,645

Diversified Telecommunication Services — 0.9%
AT&T, Inc.:
5.50%, 2/01/18		250		260,844
6.50%, 9/01/37		800		859,606
Cincinnati Bell, Inc., 7.25%, 7/15/13		520		527,800
Qwest Communications International, Inc.:
7.50%, 2/15/14		280		276,500
Series B, 7.50%, 2/15/14		30		29,625
Qwest Corp.:
8.88%, 3/15/12		60		63,150
3.55%, 6/15/13(a)		75		70,125
Telecom Italia Capital SA, 4.95%, 9/30/14(e)		475		491,522
Telefonica Emisiones SAU:
6.42%, 6/20/16(e)		150		168,460
7.05%, 6/20/36(e)		150		177,511
Verizon Communications, Inc.:
8.75%, 11/01/18		1,050		1,311,712
6.35%, 4/01/19		300		331,280
Verizon Maryland, Inc., 5.13%, 6/15/33		10		8,510
Windstream Corp., 8.63%, 8/01/16		105		107,362

				4,684,007

Electric Utilities — 0.4%
AES Eastern Energy LP, Series 1999-A, 9.00%, 1/02/17		194		187,758
Florida Power & Light Co.:
5.63%, 4/01/34		150		162,065
5.95%, 2/01/38		225		255,352
Florida Power Corp., 6.40%, 6/15/38		150		177,448
MidAmerican Energy Holdings Co., 6.50%, 9/15/37		250		283,165
PacifiCorp, 6.25%, 10/15/37		200		230,833
Texas Competitive Electric Holdings Co. LLC, 10.50%, 11/01/16(k)		116		79,588
TXU Corp., Series P, 5.55%, 11/15/14		805		549,370

				1,925,579

Food & Staples Retailing — 0.0%
Rite Aid Corp., 7.50%, 3/01/17		50		44,000

Food Products — 0.3%
Kraft Foods, Inc.:
6.50%, 8/11/17		535		578,735
6.13%, 2/01/18		475		503,348
Tyson Foods, Inc., 10.50%, 3/01/14		445		503,962

				1,586,045

Gas Utilities — 0.0%
Dominion Resources, Inc., 5.00%, 3/01/14		20		21,072
Knight, Inc., 6.50%, 9/01/12		115		118,163

				139,235

Health Care Equipment & Supplies — 0.1%
DJO Finance LLC/DJO Finance Corp., 10.88%, 11/15/14		345		352,762

Health Care Providers & Services — 0.0%
Health Management Associates, Inc., 6.13%, 4/15/16		230		213,900

Hotels, Restaurants & Leisure — 0.1%
Harrah’s Operating Co., Inc., 10.00%, 12/15/18(b)		61		48,495
Seneca Gaming Corp., 7.25%, 5/01/12		125		115,625
Wendy’s International, Inc., 6.25%, 11/15/11		360		360,000

				524,120

Household Durables — 0.4%
Centex Corp., 5.13%, 10/01/13		661		657,695
D.R. Horton, Inc.:
6.88%, 5/01/13		525		535,500
5.63%, 9/15/14		155		149,575
KB Home, 6.38%, 8/15/11		96		96,960
Lennar Corp., Series B, 5.60%, 5/31/15		250		230,625
Pulte Homes, Inc., 5.20%, 2/15/15		185		175,750
Ryland Group, Inc., 5.38%, 5/15/12		165		165,000
Toll Brothers Finance Corp., 4.95%, 3/15/14		155		149,721

				2,160,826

Independent Power Producers & Energy Traders — 0.0%
NRG Energy, Inc., 7.38%, 2/01/16		190		183,825

Insurance — 0.6%
Berkshire Hathaway Finance Corp., 4.75%, 5/15/12		355		380,079
Hartford Life Global Funding Trusts, 0.48%, 6/16/14(a)		950		707,347
Metropolitan Life Global Funding I:
2.88%, 9/17/12(b)		225		224,065
5.13%, 4/10/13(b)		850		881,304
5.13%, 6/10/14(b)		300		313,407
Prudential Financial, Inc., 4.75%, 9/17/15		620		615,650

				3,121,852

Internet & Catalog Retail — 0.2%
Expedia, Inc., 7.46%, 8/15/18		555		588,300
Sabre Holdings Corp., 8.35%, 3/15/16		690		576,150

				1,164,450

Media — 0.6%
Belo Corp., 6.75%, 5/30/13		120		112,650

See Notes to Financial Statements.


		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009		11


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


	Par (000)		Value
Corporate Bonds
Media (concluded)
Cengage Learning Acquisitions, Inc., 10.50%, 1/15/15(b)	USD	310	$	292,950
Comcast Cable Holdings LLC, 7.88%, 8/01/13		2		2,270
Comcast Corp.:
6.50%, 1/15/17		710		779,273
7.05%, 3/15/33		115		130,417
6.95%, 8/15/37		145		161,843
Cox Communications, Inc., 8.38%, 3/01/39(b)		375		462,591
News America Holdings, Inc., 7.75%, 1/20/24		25		26,292
News America, Inc.:
7.28%, 6/30/28		35		35,778
6.20%, 12/15/34		100		98,388
Shaw Communications, Inc., 7.20%, 12/15/11(e)		175		186,375
TCI Communications, Inc.:
7.88%, 2/15/26		5		5,853
7.13%, 2/15/28		35		37,833
Time Warner Cable, Inc., 6.20%, 7/01/13		460		501,123
Time Warner, Inc.:
7.57%, 2/01/24		30		32,610
7.63%, 4/15/31		200		224,148

				3,090,394

Metals & Mining — 0.0%
ArcelorMittal USA Partnership, 9.75%, 4/01/14(e)		10		10,475

Multiline Retail — 0.1%
Macy’s Retail Holdings, Inc.:
5.35%, 3/15/12		335		326,084
5.75%, 7/15/14		90		84,559

				410,643

Oil, Gas & Consumable Fuels — 0.7%
Arch Western Finance LLC, 6.75%, 7/01/13(a)		400		393,500
Cenovus Energy, Inc., 6.75%, 11/15/39(b)(e)		300		323,260
ConocoPhillips, 4.60%, 1/15/15		1,045		1,115,322
Enterprise Products Operating LLC, 6.13%, 10/15/39		225		227,329
EXCO Resources, Inc., 7.25%, 1/15/11		65		64,431
Forest Oil Corp., 7.25%, 6/15/19		130		121,550
Kinder Morgan Finance Co. ULC, 5.35%, 1/05/11(e)		365		366,825
OPTI Canada, Inc., 8.25%, 12/15/14(e)		175		135,625
Shell International Finance BV, 4.00%, 3/21/14(e)		875		919,114
XTO Energy, Inc., 6.75%, 8/01/37		250		278,108

				3,945,064

Paper & Forest Products — 0.0%
Ainsworth Lumber Co. Ltd., 11.00%, 7/29/15(b)(e)(k)		149		82,164
Catalyst Paper Corp., Series D, 8.63%, 6/15/11(e)		50		34,500
NewPage Corp., 10.00%, 5/01/12		40		26,400

				143,064

Pharmaceuticals — 0.7%
Bristol-Myers Squibb Co., 6.88%, 8/01/97		25		29,104
Eli Lilly & Co., 3.55%, 3/06/12		370		387,468
GlaxoSmithKline Capital, Inc., 4.85%, 5/15/13		400		429,733
Merck & Co., Inc., 4.38%, 2/15/13		410		428,298
Pfizer, Inc., 5.35%, 3/15/15(l)		1,190		1,317,695
Roche Holding, Inc.:
2.39%, 2/25/11(a)(b)		180		184,886
5.00%, 3/01/14(b)		775		837,834

				3,615,018

Real Estate Investment Trusts (REITs) — 0.0%
iStar Financial, Inc., 5.65%, 9/15/11		140		96,600

Software — 0.2%
First Data Corp., 9.88%, 9/24/15		700		646,625
Oracle Corp., 4.95%, 4/15/13		570		616,918

				1,263,543

Specialty Retail — 0.0%
The Hertz Corp., 8.88%, 1/01/14		80		80,800

Tobacco — 0.1%
Philip Morris International, Inc., 6.88%, 3/17/14		275		314,150

Wireless Telecommunication Services — 0.7%
America Movil SAB de CV, 6.38%, 3/01/35(e)		75		78,147
American Tower Corp., 7.13%, 10/15/12		230		233,450
Cellco Partnership/Verizon Wireless Capital LLC, 3.75%, 5/20/11(b)		1,620		1,671,398
Rogers Communications, Inc., 7.50%, 3/15/15(e)		500		576,415
Vodafone Group Plc:
7.75%, 2/15/10(e)		125		128,125
4.15%, 6/10/14(e)		900		924,234

				3,611,769

Total Corporate Bonds — 7.6%				40,705,379


	Shares
Exchange-Traded Funds
iShares Russell 2000 Value Index Fund		1,463		82,703
iShares Russell Midcap Growth Index Fund		3,900		165,867

Total Exchange-Traded Funds — 0.1%				248,570


	Par (000)
Foreign Agency Obligations
Eksportfinans ASA, 5.50%, 5/25/16(e)		575		621,100
Gazprom Capital:
9.63%, 3/01/13(b)(e)		200		223,000
9.63%, 3/01/13(e)		680		758,268
Japan Finance Corp., 2.00%, 6/24/11(e)		470		476,008
Landwirtschaftliche Rentenbank:
5.25%, 7/02/12(e)		210		228,848
4.38%, 1/15/13(e)		135		143,296
4.13%, 7/15/13(e)		60		63,226
4.00%, 2/02/15(e)		125		130,039
The Royal Bank of Scotland Plc, 2.63%, 5/11/12(b)		160		162,377
VTB Capital SA, 7.50%, 10/12/11(e)		110		113,850

Total Foreign Agency Obligations — 0.6%				2,920,012

See Notes to Financial Statements.


12		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009


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


	Par (000)		Value
Foreign Government Obligations
Argentina — 0.0%
Republic of Argentina:
8.28%, 12/31/33(e)	USD	38	$	25,377
2.50%, 12/31/38(c)(e)		90		30,150

				55,527

Brazil — 0.2%
Federal Republic of Brazil:
8.25%, 1/20/34(e)		170		224,145
11.00%, 8/17/40(e)		705		948,225

				1,172,370

Canada — 0.1%
Province of Ontario Canada, 4.10%, 6/16/14(e)		670		708,368

Colombia — 0.1%
Republic of Colombia, 7.38%, 9/18/37(e)		240		271,200

El Salvador — 0.0%
Republic of El Salvador, 7.65%, 6/15/35(b)(e)		55		55,000

Indonesia — 0.1%
Republic of Indonesia:
6.63%, 2/17/37(b)(e)		100		98,500
7.75%, 1/17/38(e)		110		121,550

				220,050

Israel — 0.0%
Israel Government AID Bond:
5.50%, 4/26/24(e)		100		107,716
5.50%, 9/18/33(e)		85		90,906

				198,622

Mexico — 0.1%
United Mexican States:
8.30%, 8/15/31(e)		194		248,320
6.05%, 1/11/40(e)		125		124,687

				373,007

Panama — 0.0%
Republic of Panama, 8.88%, 9/30/27(e)		95		125,400

Peru — 0.0%
Republic of Peru, 6.55%, 3/14/37(e)		115		124,775

Philippines — 0.1%
Republic of Philippines, 9.00%, 2/15/13(e)		370		431,975

Russia — 0.0%
Russia Federation, 7.50%, 3/31/30(c)(e)		188		204,093

Tunisia — 0.1%
Banque Centrale de Tunisie, 7.38%, 4/25/12(e)		425		467,500

Turkey — 0.1%
Republic of Turkey, 6.75%, 4/03/18(e)		530		558,514

Ukraine — 0.0%
Ukraine Government, 6.58%, 11/21/16(b)(e)		100		78,000

United Kingdom — 0.1%
United Kingdom Treasury Bonds, 4.25%, 12/07/49	GBP	275		454,458
Uruguay — 0.0%
Republica Orient Uruguay, 7.63%, 3/21/36(e)	USD	165		174,075

Venezuela — 0.1%
Republic of Venezuela:
8.50%, 10/08/14(e)		200		178,000
9.25%, 9/15/27(e)		200		161,000
9.38%, 1/13/34(e)		100		77,000

				416,000

Total Foreign Government Obligations — 1.1%				6,088,934


Non-Agency Mortgage-Backed Securities
Collateralized Mortgage Obligations — 3.0%
Banc of America Alternative Loan Trust,
Series 2004-6, Class 4A1, 5.00%, 7/25/19		138		130,841
Bear Stearns Adjustable Rate Mortgage Trust,
Series 2005-4, Class 3A1, 5.37%, 8/25/35(a)		3,589		3,010,386
CitiMortgage Alternative Loan Trust,
Series 2007-A8, Class A1, 6.00%, 10/25/37		1,115		841,954
Countrywide Alternative Loan Trust,
Series 2005-21CB, Class A17, 6.00%, 6/25/35		1,114		1,008,017
Countrywide Home Loan Mortgage Pass-Through Trust:
Series 2003-27, Class M, 4.06%, 6/25/33(a)		487		46,641
Series 2003-56, Class 4A1, 4.90%, 12/25/33(a)		1,016		977,870
Series 2003-58, Class B1, 4.69%, 2/19/34(a)		119		33,687
Series 2007-J3, Class A10, 6.00%, 7/25/37(a)		898		769,420
Series 2006-OA5, Class 3A1, 0.45%, 4/25/46(a)		409		190,742
Credit Suisse Mortgage Capital Certificates,
Series 2006-8, Class 3A1, 6.00%, 10/25/21		232		154,467
First Horizon Asset Securities, Inc.,
Series 2005-AR3, Class 3A1, 5.50%, 8/25/35(a)		163		147,677
Harborview Mortgage Loan Trust, Series 2005-10,
Class 2A1A, 0.56%, 11/19/35(a)		623		357,293
Homebanc Mortgage Trust, Series 2006-2,
Class A1, 0.43%, 12/25/36(a)		486		234,588
Impac Commercial Mortgage Backed Trust:
Series 2004-5, Class 1A1, 0.61%, 10/25/34(a)		73		51,181
Series 2004-7, Class 1A1, 0.99%, 11/25/34(a)		184		121,041
Series 2004-7, Class M4, 2.05%, 11/25/34(a)		60		12,083
JPMorgan Mortgage Trust:
Series 2007-S1, Class 1A2, 5.50%, 3/25/22		122		103,494
Series 2006-S2, Class 2A2, 5.88%, 7/25/36		116		106,408
MASTR Alternative Loans Trust, Series 2004-4,
Class 1A1, 5.50%, 5/25/34		103		95,605
Residential Accredit Loans, Inc., Series 2006-QO2,
Class A1, 0.47%, 2/25/46(a)		297		137,485
Residential Funding Mortgage Securities I,
Series 2004-S9, Class2A1, 4.75%, 12/25/19		1,232		1,114,253
Structured Adjustable Rate Mortgage Loan Trust,
Series 2007-3, Class 2A1, 5.73%, 4/25/47(a)		1,219		835,507
Structured Asset Securities Corp.:
Series 2001-21A, Class B2, 3.54%, 1/25/32(a)		5		2,667

See Notes to Financial Statements.


		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009		13


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


	Par (000)		Value
Non-Agency Mortgage-Backed Securities
Collateralized Mortgage Obligations (continued)
Series 2003-2A, Class B2II, 4.42%, 2/25/33(a)	USD	52	$	16,515
WaMu Mortgage Pass-Through Certificates:
Series 2003-AR3, Class B2, 3.57%, 4/25/33(a)		42		16,154
Series 2003-AR5, Class B2, 2.91%, 6/25/33(a)		146		42,848
Series 2003-AR8, Class B1, 2.85%, 8/25/33(a)		172		37,745
Series 2004-AR1, Class B1, 3.71%, 3/25/34(a)		738		213,130
Series 2004-AR3, Class B1, 3.13%, 6/25/34(a)		189		95,862
Series 2006-AR18, Class 1A1, 5.28%, 1/25/37(a)		797		527,375
Series 2007-HY7, Class 4A1, 5.84%, 7/25/37(a)		1,308		869,746
Series 2007-OA4, Class 1A, 1.67%, 5/25/47(a)		258		134,809
Series 2007-OA5, Class 1A, 1.65%, 6/25/47(a)		215		115,621
Wells Fargo Mortgage Backed Securities Trust:
Series 2005-AR15, Class 2A1, 5.11%, 9/25/35(a)		1,607		1,469,227
Series 2006-AR2, Class 2A5, 5.03%, 3/25/36(a)		1,773		1,321,250
Series 2006-AR12, Class 2A1, 6.10%, 9/25/36(a)		316		249,710
Series 2006-AR17, Class A1, 5.33%, 10/25/36(a)		527		399,280

				15,992,579

Commercial Mortgage-Backed Securities — 4.4%
Bank of America-First Union National Bank Commercial Mortgage, Series 2001-3, Class A2,
5.46%, 4/11/37		1,375		1,432,742
Bear Stearns Commercial Mortgage Securities:
Series 2000-WF2, Class A2, 7.32%, 10/15/32(a)		421		432,222
Series 2002-TOP6, Class A1, 5.92%, 10/15/36		185		189,565
Series 2003-T12, Class A4, 4.68%, 8/13/39(a)		1,025		1,022,562
CDC Commercial Mortgage Trust, Series 2002-FX1, Class A1,
5.25%, 5/15/19		307		309,836
Citigroup/Deutsche Bank Commercial Mortgage Trust, Series 2007-CD4, Class A4,
5.32%, 12/11/49		68		56,434
Commercial Mortgage Acceptance Corp., Series 1998-C2, Class E,
7.49%, 6/10/10(a)		930		935,386
Commercial Mortgage Pass-Through Certificates, Series 2004-LB3A, Class A3,
5.09%, 7/10/37(a)		515		506,001
CS First Boston Mortgage Securities Corp.:
Series 2002-CP5, Class A2, 4.94%, 12/15/35		1,010		1,045,483
Series 2001-CP4, Class D, 6.61%, 12/15/35		1,450		1,444,000
Series 2002-CKS4, Class A2, 5.18%, 11/15/36		1,090		1,123,193
Series 2002-CKN2, Class A3, 6.13%, 4/15/37		1,000		1,056,701
Series 2003-C3, Class A5, 3.94%, 5/15/38		1,020		1,003,914
First Union National Bank Commercial Mortgage:
Series 2001-C4, Class A2, 6.22%, 12/12/33		1,140		1,195,434
Series 2001-C2, Class A2, 6.66%, 1/12/43		923		965,578
GE Business Loan Trust:
Series 2003-1, Class A, 0.67%, 4/15/31(a)(b)		129		93,032
Series 2003-1, Class B, 1.54%, 4/15/31(a)(b)		86		38,763
Series 2003-2A, Class B, 1.24%, 11/15/31(a)(b)		554		373,628
Series 2004-1, Class B, 0.94%, 5/15/32(a)(b)		131		50,747
GMAC Commercial Mortgage Securities, Inc., Series 2000-C3, Class A2, 6.96%, 9/15/35		1,256		1,305,153
JPMorgan Chase Commercial Mortgage Securities Corp., Series 2007-LD11, Class A2,
5.99%, 6/15/49(a)		1,220		1,223,133
LB Commercial Conduit Mortgage Trust, Series 1999-C2, Class E,
7.47%, 10/15/32		125		124,939
LB-UBS Commercial Mortgage Trust:
Series 2001-WM, Class A1, 6.16%, 7/14/11(b)		310		320,732
Series 2001-C7, Class A4, 5.93%, 12/15/25		330		341,315
Morgan Stanley Capital I:
Series 2001-TOP1, Class A4, 6.66%, 2/15/33		821		849,439
Series 2002-TOP7, Class A1, 5.38%, 1/15/39		70		71,174
Series 2003-IQ4, Class A2, 4.07%, 5/15/40		1,025		1,008,024
Series 2005-HQ6, Class A4A, 4.99%, 8/13/42		2,405		2,340,296
Salomon Brothers Mortgage Securities VII, Inc., Series 2000-C3, Class A2,
6.59%, 11/18/10		1,141		1,169,002
Wachovia Bank Commercial Mortgage Trust:
Series 2007-C33, Class A4, 6.10%, 7/15/17(a)		1,080		889,292
Series 2005-C21, Class A3, 5.38%, 10/15/44(a)		490		493,145

				23,410,865

Interest Only Collateralized Mortgage Obligations — 0.0%
Salomon Brothers Mortgage Securities VI, Inc.:
Series 1987-1, 11.00%, 2/17/17		21		3,380
Series 1987-2, 11.00%, 3/06/17		16		3,128
Structured Asset Securities Corp., Series 1996-CFL, Class X1,
2.17%, 2/25/28(a)		449		21
WaMu Commercial Mortgage Securities Trust, Series 2005-C1A, Class X,
2.06%, 5/25/36(a)(b)		4,422		137,073

				143,602

Principal Only Collateralized Mortgage Obligations — 0.0%
Salomon Brothers Mortgage Securities VI, Inc.:
Series 1987-1, 3.44%, 2/17/17(m)		23		21,553

See Notes to Financial Statements.


14		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009


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


	Par (000)		Value
Non-Agency Mortgage-Backed Securities
Principal Only Collateralized Mortgage Obligations (continued)
Series 1987-2, 3.64%, 3/06/17(m)	USD	16	$	15,643

				37,196

Total Non-Agency Mortgage-Backed Securities — 7.4%				39,584,242

Taxable Municipal Bonds
The Board of Trustees of The Leland Stanford Junior University, 4.25%, 5/01/16		275		285,862
Metropolitan Transportation Authority New York RB, 7.34%, 11/15/39		395		490,870
New York State Dormitory Authority RB, Series F, 5.63%, 3/15/39		275		289,416
Port Authority of New York & New Jersey RB, 6.04%, 12/01/29		205		226,338
State of California Various Purpose GO, 5.45%, 4/01/15		1,450		1,531,592
State of Texas GO, 5.52%, 4/01/39		675		715,561

Total Taxable Municipal Bonds — 0.7%				3,539,639

U.S. Government Sponsored Agency Securities
Agency Obligations — 1.1%
Federal Home Loan Bank:
5.63%, 6/13/16		890		898,276
5.38%, 5/15/19		2,005		2,198,807
Freddie Mac:
1.75%, 6/15/12		600		603,167
5.25%, 4/18/16		760		847,718
Resolution Funding Corp.:
11.69%, 7/15/18(m)		150		106,047
11.55%, 10/15/18(m)		150		104,667
Small Business Administration Participation Certificates, Series 1997-20F, Class 1,
7.20%, 6/01/17		277		303,537
Tennessee Valley Authority, 5.25%, 9/15/39		895		944,335

				6,006,554

Collateralized Mortgage Obligations — 0.2%
Fannie Mae:
Series 2004-88, Class HA, 6.50%, 7/25/34		31		33,445
Series 2007-108, Class AN, 8.83%, 11/25/37(a)		682		749,742
Freddie Mac, Series 2864, Class NA,
5.50%, 1/15/31		85		89,983

				873,170

Federal Deposit Insurance Corporation Guaranteed — 1.9%
Citibank, N.A., 1.38%, 8/10/11		2,700		2,709,655
Citigroup Funding, Inc.:
2.13%, 7/12/12		755		763,334
1.88%, 10/22/12		1,500		1,502,906
General Electric Capital Corp.:
2.25%, 3/12/12		950		967,156
2.00%, 9/28/12		950		955,294
2.13%, 12/21/12		2,060		2,078,711
2.63%, 12/28/12		1,250		1,280,689

				10,257,745

U.S. Government Sponsored Agency Securities
Interest Only Collateralized Mortgage Obligations — 0.0%
Fannie Mae, Series 2003-T1, Class R,
0.65%, 11/25/12(a)		6,294		95,034
Ginnie Mae, Series 2009-26, Class SC,
6.16%, 1/16/38(a)		1,637		158,528

				253,562

Mortgage-Backed Securities — 15.0%
Fannie Mae Mortgage-Backed Securities:
6.00%, 9/01/11-11/01/37		7,991		8,485,218
7.00%, 8/01/14-1/01/16		104		110,932
5.50%, 4/01/17-9/01/38(l)		8,730		9,168,298
5.00%, 1/01/23-2/01/24		4,015		4,218,559
4.00%, 10/01/24-10/01/39(n)		1,800		1,808,875
4.50%, 10/01/24-10/01/39(n)		15,100		15,320,250
5.00%, 10/01/24-10/01/39(n)		6,600		6,855,125
5.50%, 10/01/24-10/01/39(n)		5,200		5,446,750
6.00%, 10/01/24-10/01/39(n)		6,600		6,961,969
7.50%, 10/01/25(d)		—		4
4.19%, 12/01/34(a)		694		706,525
4.50%, 4/01/39-9/01/39		5,945		6,029,643
6.50%, 11/01/39(n)		1,500		1,595,156
Freddie Mac Mortgage-Backed Securities:
4.00%, 5/01/10		47		47,197
6.00%, 4/01/13-6/01/16		59		62,727
5.00%, 2/01/22-4/01/22		948		999,527
9.50%, 12/01/22		133		152,643
8.00%, 2/01/23-8/01/27		16		17,942
5.00%, 10/01/24-10/01/39(n)		1,400		1,464,156
6.00%, 10/01/24(n)		300		319,312
5.50%, 8/01/33		24		25,319
5.05%, 12/01/35-4/01/38(a)		1,340		1,398,240
5.50%, 10/01/39(n)		2,400		2,511,750
Ginnie Mae Mortgage-Backed Securities:
7.50%, 12/15/10		8		7,702
5.50%, 4/15/33-8/15/33		414		438,059
5.00%, 10/20/33		883		919,451
2.75%, 5/20/34(a)		108		108,212
5.00%, 10/01/39(n)		3,200		3,311,000
6.00%, 10/01/39(n)		1,400		1,477,437

				79,967,978

Total U.S. Government Sponsored Agency Securities — 18.2%				97,359,009

U.S. Treasury Obligations
U.S. Treasury Bonds:
5.25%, 2/15/29		1,300		1,509,422
4.25%, 5/15/39(o)		870		900,042
U.S. Treasury Notes:
1.00%, 9/30/11		575		575,449
1.38%, 9/15/12		3,855		3,848,374
2.38%, 8/31/14		4,455		4,471,706
2.38%, 9/30/14(p)		7,055		7,073,202
3.25%, 7/31/16(p)		3,995		4,088,635
3.00%, 9/30/16(p)		10,800		10,843,027
3.63%, 8/15/19(p)		1,310		1,344,592
U.S. Treasury Strips, 3.88%, 8/15/20(m)		3,240		2,133,971

Total U.S. Treasury Obligations — 6.9%				36,788,420

See Notes to Financial Statements.


		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009		15


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


	Shares	Value
Warrants
Crosshair Exploration & Mining Corp. (issued/exercisable 4/04/08, 1 share for 1warrant, expiring 10/04/09, strike price 1.80 CAD)(acquired 4/04/08, cost $51)(h)(i)	5,300	$	—
Unione di Banche Italiane ScpA (issued/exercisable 5/18/09, 1 share for 20warrants, expiring 6/30/11, strike price 12.30 EUR)(h)	8,600		1,024

Total Warrants — 0.0%			1,024

Total Long-Term Investments (Cost — $503,706,201) — 104.5%			558,140,944


	Shares/ Beneficial Interest
Short-Term Securities
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.22%(q)(r)	32,630,899		32,630,899
BlackRock Liquidity Series, LLC Money Market Series, 0.29%(q)(r)(s)	1,248,500		1,248,500

Total Short-Term Securities (Cost — $33,879,399) — 6.3%			33,879,399


	Contracts(t)
Options Purchased
Over-the-Counter Call Swaptions Purchased
Receive a fixed rate of 1.915% and pay a floatingrate based on 3-month LIBOR, expiring September 2010, Broker, Morgan Stanley Capital Services, Inc.	1,350		71,749
Receive a fixed rate of 1.945% and pay a floatingrate based on 3-month LIBOR, expiring September 2010, Broker, Citibank, N.A.	1,350		74,074
Receive a fixed rate of 2.250% and pay a floatingrate based on 3-month LIBOR, expiring October 2009, Broker, JPMorgan Chase Bank, N.A.	430		6
Receive a fixed rate of 2.370% and pay a floatingrate based on 3-month LIBOR, expiring November 2009, Broker, Goldman Sachs Bank USA	430		149
Receive a fixed rate of 2.500% and pay a floatingrate based on 3-month LIBOR, expiring March 2010, Broker, Barclays Bank, Plc	190		2,170
Receive a fixed rate of 2.500% and pay a floatingrate based on 3-month LIBOR, expiring November 2009, Broker, JPMorgan Chase Bank, N.A.	330		165
Receive a fixed rate of 2.750% and pay a floatingrate based on 3-month LIBOR, expiring December 2009, Broker, Morgan Stanley Capital Services, Inc.	670		28,818
Receive a fixed rate of 2.750% and pay a floatingrate based on 3-month LIBOR, expiring November 2009, Broker, Morgan Stanley Capital Services, Inc.	880		29,431
Receive a fixed rate of 3.120% and pay a floatingrate based on 3-month LIBOR, expiring October 2009, Broker, Barclays Bank, Plc	560		8,766
Receive a fixed rate of 3.404% and pay a floatingrate based on 3-month LIBOR, expiring April 2010, Broker, Deutsche Bank AG	490		109,378
Receive a fixed rate of 3.710% and pay a floatingrate based on 3-month LIBOR, expiring April 2011, Broker, JPMorgan Chase Bank, N.A.	240		96,601

			421,307

Over-the-Counter Put Swaptions Purchased
Pay a fixed rate of 1.915% and receive a floatingrate based on 3-month LIBOR, expiring September 2010, Broker, Morgan Stanley Capital Services, Inc.	1,350		69,232
Pay a fixed rate of 1.945% and receive a floatingrate based on 3-month LIBOR, expiring September 2010, Broker, Citibank, N.A.	1,350		68,112
Pay a fixed rate of 3.120% and receive a floatingrate based on 3-month LIBOR, expiring October 2009, Broker, Barclays Bank, Plc	560		184,225
Pay a fixed rate of 3.404% and receive a floatingrate based on 3-month LIBOR, expiring April 2010, Broker, Deutsche Bank AG	490		231,529
Pay a fixed rate of 3.710% and receive a floatingrate based on 3-month LIBOR, expiring April 2011, Broker, JPMorgan Chase Bank, N.A.	240		165,765
Pay a fixed rate of 4.500% and receive a floatingrate based on 3-month LIBOR, expiring March 2010, Broker, Royal Bank of Scotland, Plc	830		95,013

			813,876

Total Options Purchased (Cost — $1,668,303) — 0.2%			1,235,183

Total Investments Before TBA Sale Commitmentsand Outstanding Options Written (Cost — $539,253,903*) — 111.0%			593,255,526


	Par (000)
TBA Sale Commitments(n)
Fannie Mae Mortgage-Backed Securities:
5.00%, 10/01/24-11/01/24	3,600		(3,771,533	)
4.50%, 10/01/39	1,900		(1,923,750	)
5.50%, 10/01/39	6,127		(6,408,197	)
6.00%, 10/01/39	14,114		(14,885,778	)
Freddie Mac Mortgage-Backed Securities,
5.00%, 10/01/24	2,000		(2,098,750	)
Ginnie Mae Mortgage-Backed Securities:
5.00%, 10/01/39	800		(826,752	)
6.00%, 10/01/39	1,400		(1,477,437	)

Total TBA Sale Commitments (Proceeds — $31,137,193) — (5.9)%			(31,392,197	)


	Contracts(t)
Options Written
Over-the-Counter Call Swaptions Written
Pay a fixed rate of 3.140% and receive a floatingrate based on 3-month LIBOR, expiring April 2010, Broker, Barclays Bank Plc	150		(20,444	)
Pay a fixed rate of 3.330% and receive a floatingrate based on 3-month LIBOR, expiring March 2010, Broker, Citibank, N.A.	210		(38,683	)

See Notes to Financial Statements.


16		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009


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


	Contracts(t)	Value
Options Written
Over-the-Counter Call Swaptions Written (concluded)
Pay a fixed rate of 3.500% and receive a floating rate based on 3-month LIBOR, expiring January 2010, Broker, Deutsche Bank AG	400	$	(86,651	)
Pay a fixed rate of 3.580% and receive a floating rate based on 3-month LIBOR, expiring January 2010, Broker, Deutsche Bank AG	560		(139,290	)
Pay a fixed rate of 3.650% and receive a floating rate based on 3-month LIBOR, expiring March 2010, Broker, Citibank, N.A.	460		(147,688	)
Pay a fixed rate of 3.800% and receive a floating rate based on 3-month LIBOR, expiring February 2010, Broker, Credit Suisse International	440		(167,040	)
Pay a fixed rate of 3.800% and receive a floating rate based on 3-month LIBOR, expiring May 2010, Broker, Morgan Stanley Capital Services, Inc.	300		(121,688	)
Pay a fixed rate of 3.880% and receive a floating rate based on 3-month LIBOR, expiring March 2010, Broker, Citibank N.A.	260		(112,524	)
Pay a fixed rate of 3.900% and receive a floating rate based on 3-month LIBOR, expiring March 2010, Broker, Bank of America, N.A.	360		(158,384	)
Pay a fixed rate of 3.960% and receive a floating rate based on 3-month LIBOR, expiring March 2010, Broker, Citibank N.A.	230		(109,653	)
Pay a fixed rate of 4.065% and receive a floating rate based on 3-month LIBOR, expiring September 2010, Broker, Citibank N.A.	310		(169,702	)
Pay a fixed rate of 4.080% and receive a floating rate based on 3-month LIBOR, expiring September 2010, Broker, Deutsche Bank AG	460		(255,316	)
Pay a fixed rate of 4.123% and receive a floating rate based on 3-month LIBOR, expiring August 2010, Broker, Morgan Stanley Capital Services, Inc.	160		(92,310	)
Pay a fixed rate of 4.125% and receive a floating rate based on 3-month LIBOR, expiring September 2010, Broker, Citibank, N.A.	320		(185,453	)
Pay a fixed rate of 4.800% and receive a floating rate based on 3-month LIBOR, expiring June 2010, Broker, Citibank, N.A.	280		(281,840	)
Pay a fixed rate of 4.870% and receive a floating rate based on 3-month LIBOR, expiring February 2010, Broker, Deutsche Bank AG	570		(628,813	)
Pay a fixed rate of 5.400% and receive a floating rate based on 3-month LIBOR, expiring December 2010, Broker, UBS AG	260		(351,753	)
Pay a fixed rate of 5.485% and receive a floating rate based on 3-month LIBOR, expiring October 2009, Broker, JPMorgan Chase Bank, N.A.	140		(239,998	)
Pay a fixed rate of 5.670% and receive a floating rate based on 3-month LIBOR, expiring January 2010, Broker, Citibank, N.A.	50		(89,428	)

			(3,396,658	)

Over-the-Counter Put Swaptions Written
Receive a fixed rate of 3.140% and pay a floating rate based on 3-month LIBOR, expiring April 2010, Broker, Barclays Bank Plc	150		(90,519	)
Receive a fixed rate of 3.330% and pay a floating rate based on 3-month LIBOR, expiring March 2010, Broker, Citibank, N.A.	210		(97,213	)
Receive a fixed rate of 3.650% and pay a floating rate based on 3-month LIBOR, expiring March 2010, Broker, Citibank, N.A.	460		(160,893	)
Receive a fixed rate of 3.880% and pay a floating rate based on 3-month LIBOR, expiring March 2010, Broker, Citibank, N.A.	260		(67,552	)
Receive a fixed rate of 3.900% and pay a floating rate based on 3-month LIBOR, expiring March 2010, Broker, Bank of America, N.A.	360		(85,071	)
Receive a fixed rate of 3.960% and pay a floating rate based on 3-month LIBOR, expiring March 2010, Broker, Citibank, N.A.	230		(54,288	)
Receive a fixed rate of 4.000% and pay a floating rate based on 3-month LIBOR, expiring January 2010, Broker, Deutsche Bank AG	400		(51,933	)
Receive a fixed rate of 4.065% and pay a floating rate based on 3-month LIBOR, expiring September 2010, Broker, Citibank, N.A.	310		(123,812	)
Receive a fixed rate of 4.080% and pay a floating rate based on 3-month LIBOR, expiring January 2010, Broker, Deutsche Bank AG	560		(61,374	)
Receive a fixed rate of 4.080% and pay a floating rated based on 3-month LIBOR, expiring September 2010, Broker, Deutsche Bank AG	460		(181,840	)
Receive a fixed rate of 4.123% and pay a floating rate based on 3-month LIBOR, expiring August 2010, Broker, Morgan Stanley Capital Services, Inc.	160		(57,268	)
Receive a fixed rate of 4.125% and pay a floating rate based on 3-month LIBOR, expiring September 2010, Broker, Citibank, N.A.	320		(117,321	)
Receive a fixed rate of 4.400% and pay a floating rate based on 3-month LIBOR, expiring February 2010, Broker, Credit Suisse International	440		(44,560	)
Receive a fixed rate of 4.500% and pay a floating rate based on 3-month LIBOR, expiring March 2010, Broker, Barclays Bank, Plc	190		(59,960	)
Receive a fixed rate of 4.500% and pay a floating rate based on 3-month LIBOR, expiring May 2010, Broker, Morgan Stanley Capital Services, Inc.	300		(55,423	)
Receive a fixed rate of 4.800% and pay a floating rate based on 3-month LIBOR, expiring June
2010, Broker, Citibank, N.A.	280		(40,615	)
Receive a fixed rate of 4.870% and pay a floating rate based on 3-month LIBOR, expiring February 2010, Broker, Deutsche Bank AG	570		(22,416	)
Receive a fixed rate of 5.400% and pay a floating rate based on 3-month LIBOR, expiring December 2010, Broker, UBS AG	260		(44,596	)
Receive a fixed rate of 5.485% and pay a floating rate based on 3-month LIBOR, expiring October 2009, Broker, JPMorgan Chase Bank, N.A.	140		—
Receive a fixed rate of 5.500% and pay a floating rate based on 3-month LIBOR, expiring March 2010, Broker, Royal Bank of Scotland, Plc	830		(21,548	)

See Notes to Financial Statements.


		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009		17


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


	Contracts(t)	Value
Options Written
Over-the-Counter Put Swaptions Written (concluded)
Receive a fixed rate of 5.670% and pay a floating rate based on 3-month LIBOR, expiring January 2010, Broker, Citibank, N.A.	50	$	(159	)

			(1,438,361	)

Total Options Written (Premiums Received — $4,748,125) — (0.9)%			(4,835,019	)

Total Investments Net of TBA Sale Commitments and Outstanding Options Written — 104.2%			557,028,310
Liabilities in Excess of Other Assets — (4.2)%			(22,680,461	)

Net Assets — 100.0%		$	534,347,849

*	The cost and unrealized appreciation (depreciation) of investments as of September 30, 2009, as computed for federal income tax purposes, were as follows:


Aggregate cost	$	549,625,254

Gross unrealized appreciation	$	62,122,786
Gross unrealized depreciation		(18,492,514	)

Net unrealized appreciation	$	43,630,272

(a)	Variable rate security. Rate shown is as of report date.

(b)	Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration to qualified institutional investors.

(c)	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.

(d)	Par is less than $500.

(e)	US dollar denominated security issued by foreign domiciled entity.

(f)	Security is perpetual in nature and has no stated maturity date.

(g)	Issuer filed for bankruptcy and/or is in default of interest payments.

(h)	Non-income producing security.

(i)	Restricted security as to resale. As of report date the Portfolio held 0.1% of its net assets, with a current value of $348,793 and an original cost of $312,855 in these securities.

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

(k)	Represents a payment-in-kind security which may pay interest/dividends in additional face/shares.

(l)	Security, or a portion thereof, has been pledged as collateral for swap contracts.

(m)	Represents a zero-coupon bond. Rate shown reflects the current yield as of report date.

(n)	Represents or includes a to-be-announced (“TBA”) transaction. Unsettled TBA transactions as of report date were as follows:


Counterparty	Value	Unrealized Appreciation (Depreciation)
Bank of America, N.A.	$(1,923,750)	$(20,781)
Barclays Bank, Plc	$(2,098,750)	$(19,375)
BNP Paribas	$527,344	$1,250
Citibank, N.A.	$4,514,937	$27,859
Credit Suisse International	$10,301,181	$79,621
Deutsche Bank AG	$4,989,248	$15,740
Goldman Sachs Bank USA	$4,384,311	$46,077
JPMorgan Chase Bank, N.A.	$3,207,406	$21,422
Morgan Stanley Capital Services, Inc.	$(8,222,344)	$(137,840)

(o)	All or a portion of security pledged as collateral in connection with open financial futures contracts.

(p)	Security, or a portion thereof, subject to mortgage dollar roll transactions.

(q)	Investments in companies considered to be an affiliate of the Portfolio, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, were as follows:


Affiliate	Net Activity			Income
BlackRock Liquidity Funds, TempFund, Institutional Class	$	32,630,899		$	132,710
BlackRock Liquidity Series, LLC Money Market Series	$	(221,400	)	$	27,721

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

(s)	Security purchased with the cash collateral from securities loans.

(t)	One contract represents a notional amount of $10,000.

•

Foreign currency exchange contracts as of September 30, 2009 were as follows:


Currency Purchased		Currency Sold		Counterparty	Settlement Date	Unrealized Appreciation (Depreciation)
CAD	82,000	USD	75,243	Citibank, N.A.	10/01/09	$	1,346
USD	405,540	JPY	36,336,375	State Street Bank & Trust Co.	10/01/09		745
BRL	687,981	USD	365,500	Royal Bank of Scotland	10/02/09		22,718
EUR	65,000	USD	94,770	Citibank, N.A.	10/02/09		348
EUR	69,289	USD	100,926	State Street Bank & Trust Co.	10/02/09		468
USD	365,500	BRL	654,245	Royal Bank of Scotland	10/02/09		(3,968	)
AUD	1,305,000	USD	1,074,563	Citibank, N.A.	10/28/09		74,099
AUD	400,000	USD	343,388	Deutsche Bank AG	10/28/09		8,692
AUD	204,000	USD	169,483	UBS AG	10/28/09		10,078
AUD	250,000	USD	207,742	UBS AG	10/28/09		12,308
CAD	100,000	USD	93,518	Deutsche Bank AG	10/28/09		(113	)
CAD	958,000	USD	872,233	Deutsche Bank AG	10/28/09		22,592
CHF	1,125,000	USD	1,058,770	Citibank, N.A.	10/28/09		27,081
DKK	1,678,000	USD	319,979	Citibank, N.A.	10/28/09		9,732
EUR	938,000	USD	1,332,907	Barclays Bank, Plc	10/28/09		39,694

See Notes to Financial Statements.


18		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009


Schedule of Investments (continued)


Currency Purchased		Currency Sold		Counterparty	Settlement Date	Unrealized Appreciation (Depreciation)
GBP	42,000	USD	69,357	Citibank, N.A.	10/28/09	$	(2,243	)
GBP	103,000	USD	169,017	Deutsche Bank AG	10/28/09		(4,428	)
HKD	1,322,000	USD	170,635	Citibank, N.A.	10/28/09		(25	)
HKD	1,085,000	USD	140,022	Citibank, N.A.	10/28/09		1
JPY	2,383,000	USD	26,430	Citibank, N.A.	10/28/09		122
JPY	14,558,000	USD	161,300	Citibank, N.A.	10/28/09		909
JPY	50,482,000	USD	535,902	Citibank, N.A.	10/28/09		26,583
JPY	5,399,000	USD	59,136	Deutsche Bank AG	10/28/09		1,022
JPY	3,633,000	USD	39,437	Deutsche Bank AG	10/28/09		1,043
JPY	13,852,000	USD	153,001	Deutsche Bank AG	10/28/09		1,343
JPY	4,949,000	USD	53,756	Deutsche Bank AG	10/28/09		1,387
JPY	28,594,000	USD	307,886	Deutsche Bank AG	10/28/09		10,717
NOK	589,000	USD	101,580	Citibank, N.A.	10/28/09		305
NOK	470,000	USD	81,154	UBS AG	10/28/09		146
SEK	1,603,000	USD	220,174	Citibank, N.A.	10/28/09		9,814
SEK	5,374,000	USD	751,593	Deutsche Bank AG	10/28/09		19,434
USD	12,107	CAD	13,000	Barclays Bank, Plc	10/28/09		—
USD	75,244	CAD	82,000	Citibank, N.A.	10/28/09		(1,348	)
USD	51,942	CAD	56,500	Citibank, N.A.	10/28/09		(832	)
USD	46,881	CAD	51,000	Citibank, N.A.	10/28/09		(756	)
USD	368,345	CAD	395,000	Citibank, N.A.	10/28/09		(607	)
USD	228,427	EUR	156,000	Barclays Bank, Plc	10/28/09		—
USD	52,073	EUR	36,500	Citibank, N.A.	10/28/09		(1,338	)
USD	251,081	EUR	172,000	Citibank, N.A.	10/28/09		(611	)
USD	21,914	EUR	15,000	Citibank, N.A.	10/28/09		(36	)
USD	112,018	EUR	76,000	Citibank, N.A.	10/28/09		805
USD	249,117	EUR	170,000	Deutsche Bank AG	10/28/09		352
USD	100,612	EUR	68,000	Deutsche Bank AG	10/28/09		1,106
USD	433,111	GBP	265,000	Citibank, N.A.	10/28/09		9,656
USD	959,452	GBP	587,000	Citibank, N.A.	10/28/09		21,458
USD	1,347,249	GBP	817,000	Citibank, N.A.	10/28/09		41,729
USD	866,153	HKD	6,710,000	Barclays Bank, Plc	10/28/09		201
USD	478,232	JPY	44,150,000	Citibank, N.A.	10/28/09		(13,701	)
USD	462,421	JPY	42,730,000	Citibank, N.A.	10/28/09		(13,689	)
USD	344,872	NOK	2,087,000	Citibank, N.A.	10/28/09		(16,136	)
USD	92,199	NOK	546,000	Deutsche Bank AG	10/28/09		(2,248	)
USD	217,124	NZD	323,000	Citibank, N.A.	10/28/09		(15,691	)
USD	283,225	SEK	1,969,500	Citibank, N.A.	10/28/09		654
USD	289,690	SGD	419,000	Citibank, N.A.	10/28/09		(7,691	)
USD	65,979	ZAR	523,000	Citibank, N.A.	10/28/09		(3,264	)
USD	11,872	ZAR	95,000	Deutsche Bank AG	10/28/09		(705	)
BRL	657,754	USD	365,500	Royal Bank of Scotland	11/04/09		3,708

Total						$	292,966

•

Financial futures contracts purchased as of September 30, 2009 were as follows:


Contracts	Issue	Exchange	Expiration Date	Face Value		Unrealized Appreciation
4	United Kingdom Gilt	London	December 2009	$	757,911	$	5,705
180	ICE E-mini Russell 2000 Index	New York	December 2009	$	10,854,000		223,200
167	S&P 500 Index	Chicago	December 2009	$	43,958,575		414,972
36	U.S. Treasury Bonds	Chicago	December 2009	$	4,369,500		94,131
116	U.S. Treasury Notes (5 Year)	Chicago	December 2009	$	13,466,875		63,577

Total						$	801,585

•

Financial futures contracts sold as of September 30, 2009 were as follows:


Contracts	Issue	Exchange	Expiration Date	Face Value	Unrealized Depreciation
50	U.S. Treasury Notes (2 Year)	Chicago	December 2009	$10,848,438	$	(16,606	)
87	U.S. Treasury Notes (10 Year)	Chicago	December 2009	$10,294,547		(94,508	)

Total					$	(111,114	)

•

Interest rate swaps outstanding as of September 30, 2009 were as follows:

Fixed Rate

Floating

Rate

Counterparty

Expiration

Notional
Amount
(000)

Unrealized
Appreciation
(Depreciation)

4.05%(a)

3-month LIBOR

Barclays Bank, Plc

December 2009

USD

2,600

50,978

1.81%(b)

3-month LIBOR

Citibank, N.A.

March 2012

USD

4,000

(20,723

)

2.25%(b)

3-month LIBOR

Deutsche Bank AG

December 2012

USD

2,220

(19,386

)

2.80%(b)

3-month LIBOR

Morgan Stanley Capital Services, Inc.

September 2014

USD

1,200

(11,933

)

3.41%(a)

3-month LIBOR

Deutsche Bank AG

May 2019

USD

6,900

80,334

See Notes to Financial Statements.


		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009		19


Schedule of Investments (continued)

Fixed

Rate

Floating

Rate

Counterparty

Expiration

Notional
Amount
(000)

Unrealized
Appreciation
(Depreciation)

3.68%(a)

3-month LIBOR

Deutsche Bank AG

August 2019

USD

4,200

97,956

3.50%(a)

3-month LIBOR

Citibank, N.A.

September 2019

USD

1,200

7,638

3.50%(a)

3-month LIBOR

Bank of America, N.A.

September 2019

USD

2,800

15,532

3.47%(a)

3-month LIBOR

Royal Bank of Scotland, Plc

September 2019

USD

3,600

9,369

3.43%(b)

3-month LIBOR

Deutsche Bank AG

October 2019

USD

1,000

2,238

4.42%(c)

3-month LIBOR

JPMorgan Chase Bank, N.A.

August 2020

USD

2,325

(130,875

)

4.24%(c)

3-month LIBOR

JPMorgan Chase Bank, N.A.

August 2020

USD

705

(31,485

)

5.41%(a)

3-month LIBOR

JPMorgan Chase Bank, N.A.

August 2022

USD

1,130

213,966

4.35%(b)

3-month LIBOR

JPMorgan Chase Bank, N.A.

July 2039

USD

1,700

(140,225

)

4.06%(a)

3-month LIBOR

Morgan Stanley Capital Services, Inc.

September 2039

USD

400

9,421

3.50%(b)

3-month LIBOR

Barclays Bank, Plc

March 2040

USD

500

45,838

Total

178,643

(a)	Portfolio pays floating interest rate and receives fixed rate.

(b)	Portfolio pays fixed interest rate and receives floating rate.

(c)	Portfolio pays fixed interest rate and receives floating rate at expiration date.

•

Credit default swaps on single-name issues - buy protection outstanding as of September 30, 2009 were as follows:


Issuer	Pay Fixed Rate		Counterparty	Expiration	Notional Amount (000)	Unrealized Appreciation (Depreciation)
Centex Corp.	6.92	%	JPMorgan Chase Bank, N.A.	December 2010	265	$	(21,363	)
Knight, Inc.	1.80	%	Credit Suisse International	January 2011	365		(2,197	)
KB Home	4.90	%	JPMorgan Chase Bank, N.A.	September 2011	460		(26,225	)
iStar Financial, Inc.	5.00	%	Morgan Stanley Capital Services, Inc.	September 2011	140		1,097
Wendy’s/Arby’s Group, Inc.	2.90	%	JPMorgan Chase Bank, N.A.	December 2011	360		(11,049	)
NOVA Chemicals Corp.	5.00	%	Citibank, N.A.	March 2012	25		(908	)
Westvaco Corp.	1.20	%	Deutsche Bank AG	June 2012	410		(6,590	)
NOVA Chemicals Corp.	5.00	%	JPMorgan Chase Bank, N.A.	June 2012	35		(883	)
Ryland Group, Inc.	4.51	%	JPMorgan Chase Bank, N.A.	June 2012	165		(13,097	)
Macy’s, Inc.	7.50	%	Morgan Stanley Capital Services, Inc.	June 2012	335		(43,270	)
Knight, Inc.	1.00	%	Morgan Stanley Capital Services, Inc.	September 2012	115		219
Belo Corp.	5.00	%	Barclays Bank, Plc	June 2013	120		(18,858	)
D.R. Horton, Inc.	5.04	%	JPMorgan Chase Bank, N.A.	June 2013	525		(63,523	)
Expedia, Inc.	5.00	%	Citibank, N.A.	September 2013	380		(53,720	)
Expedia, Inc.	5.18	%	Goldman Sachs Bank USA	September 2013	175		(25,932	)
Centex Corp.	4.37	%	Deutsche Bank AG	December 2013	575		(85,379	)
NOVA Chemicals Corp.	5.00	%	Goldman Sachs Bank USA	December 2013	200		(14,084	)
Centex Corp.	4.40	%	JPMorgan Chase Bank, N.A.	December 2013	330		(49,563	)
Tyson Foods, Inc.	4.10	%	Barclays Bank, Plc	March 2014	445		(39,604	)
Hertz Global Holdings, Inc.	5.00	%	Goldman Sachs Bank USA	March 2014	80		(28,889	)
Toll Brothers, Inc.	2.00	%	JPMorgan Chase Bank, N.A.	March 2014	155		(5,468	)
D.R. Horton, Inc.	5.07	%	JPMorgan Chase Bank, N.A.	September 2014	155		(23,414	)

See Notes to Financial Statements.


20		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009


Schedule of Investments (continued)


Issuer	Pay Fixed Rate		Counterparty	Expiration	Notional Amount (000)	Unrealized Appreciation (Depreciation)
Macy’s, Inc.	1.00	%	Morgan Stanley Capital Services, Inc.	September 2014	90	$	2,550
Huntsman Corp.	5.00	%	Goldman Sachs Bank USA	December 2014	335		(127,286	)
TXU Corp.	5.00	%	JPMorgan Chase Bank, N.A.	December 2014	125		(19,379	)
Energy Future Holdings Corp.	5.00	%	Morgan Stanley Capital Services, Inc.	December 2014	680		(92,671	)
Huntsman Corp.	5.00	%	Goldman Sachs Bank USA	March 2015	85		(25,963	)
Pulte Homes, Inc.	3.00	%	JPMorgan Chase Bank, N.A.	March 2015	185		(13,475	)
Lennar Corp.	5.86	%	JPMorgan Chase Bank, N.A.	June 2015	250		(41,012	)
First Data Corp.	5.00	%	Barclays Bank, Plc	December 2015	320		(63,268	)
First Data Corp.	5.00	%	Credit Suisse International	December 2015	130		(25,703	)
First Data Corp.	5.00	%	Goldman Sachs Bank USA	December 2015	85		(16,381	)
First Data Corp.	5.00	%	JPMorgan Chase Bank, N.A.	December 2015	165		(32,623	)
Sabre Holdings Corp.	5.00	%	JPMorgan Chase Bank, N.A.	March 2016	690		(314,126	)

Total						$	(1,302,037	)

•

Credit default swaps on traded indexes - buy protection outstanding as of September 30, 2009 were as follows:

Index

Pay
Fixed
Rate

Counterparty

Expiration

Notional
Amount
(000)

Unrealized
Appreciation

Dow Jones North America High Yield Index Series 13 Volume 1

5.00

Credit Suisse International

December 2014

USD

1,875

18,818

•

For Portfolio compliance purposes, the Portfolio’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 Portfolio management. This definition may not apply for purposes of this report, which may combine industry sub-classifications for reporting ease.

•

Fair Value Measurement – Various inputs are used in determining the fair value of investments, which are as follows:

•

Level 1 – price quotations in active markets/exchanges for identical assets and liabilities

•

The following table summarizes the inputs used as of September 30, 2009 in determining the fair valuation of the Portfolio’s investments:


	Valuation Inputs
	Level 1		Level 2		Level 3		Total
Investments in Securities:
Assets:
Asset-Backed Securities		—	$	12,804,770	$	268	$	12,805,038
Preferred Securities		—		3,321,071		—		3,321,071
Common Stocks	$	233,520,915		81,057,703		200,988		314,779,606
Corporate Bonds		—		40,705,379		—		40,705,379
Exchange-Traded Funds		248,570		—		—		248,570
Foreign Agency Obligations		—	$	2,920,012		—		2,920,012
Foreign Government Obligations		—		6,088,934		—		6,088,934
Non-Agency Mortgage-Backed Securities		—		39,499,856	$	84,386		39,584,242
Taxable Municipal Bonds		—		3,539,639		—		3,539,639
U.S. Government Sponsored Agency Securities		—		97,359,009		—		97,359,009
U.S. Treasury Obligations		—		36,788,420		—		36,788,420

See Notes to Financial Statements.


		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009		21

Schedule of Investments (concluded)


	Valuation Inputs
	Level 1			Level 2			Level 3			Total
Warrants	$	1,024			—			—		$	1,024
Short-Term Securities		32,630,899			1,248,500			—			33,879,399
TBA Sale Commitments:		—			(31,392,197	)		—			(31,392,197	)
Other Financial Instruments¹:
Assets:		801,585			2,173,533			—			2,975,118
Liabilities:		(111,114	)		(6,422,619	)		(162,360	)		(6,696,093	)

Total	$	267,091,879		$	289,692,010		$	123,282		$	556,907,171

Other financial instruments are options, foreign currency exchange contracts, financial futures contracts and swaps. Foreign currency exchange contracts, financial futures contracts and swaps are valued at the unrealized appreciation/ depreciation on the instrument and options are shown at market value.

The following table is a reconciliation of Level 3 investments for which significant unobservable inputs were used to determine fair value:


	Asset-Backed Securities			Common Stocks			Non-Agency Mortgage-Backed Securities			Total
Balance, as of September 30, 2008	$	4,365		$	216,001		$	89,693		$	310,059
Accrued discounts/premiums		2,970			—			(135	)		2,835
Realized gain/loss		—			—			(433	)		(433	)
Change in unrealized appreciation/depreciation²		332			(128,996	)		(261,691	)		(390,355	)
Net purchases/sales		—			113,983			(39,785	)		74,198
Transfers in/out of Level 3		(7,399	)		—			296,737			(7,399	)

Balance, as of September 30, 2009	$	268		$	200,988		$	84,386		$	285,642


	Warrants			Other Financial Instruments²			Total
Balance, as of September 30, 2008	$	33		$	(818	)	$	(785	)
Accrued discounts/premiums		—			—			—
Realized gain/loss		—			(178,850	)		(178,850	)
Change in unrealized appreciation/depreciation³		(33	)		17,308			17,275
Net purchases/sales		—			—			—
Transfers in/out of Level 3		—			—			—

Balance, as of September 30, 2009		—		$	(162,360	)	$	(162,360	)

2	Other financial instruments are swaps.

3	The change in unrealized appreciation/depreciation on securities still held at September 30, 2009 was $(553,079), which is included in the related net change in unrealized appreciation/depreciation on the Statement of Operations.

See Notes to Financial Statements.


22		BLACKROCK ASSET ALLOCATION PORTFOLIO		SEPTEMBER 30, 2009


		(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 – The registrant’s Nominating and Governance Committee will consider nominees to the board of directors recommended by shareholders when a vacancy becomes available. Shareholders who wish to recommend a nominee should send nominations which include biographical information and set forth the qualifications of the proposed nominee to the registrant’s Secretary. There have been no material changes to these procedures.

Item 11	–	Controls and Procedures

		11(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 15(d)-15(b) under the Securities Exchange Act of 1934, as amended.

		11(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

		12(a)(1) – Code of Ethics – See Item 2

		12(a)(2) – Certifications – Attached hereto

		12(a)(3) – Not Applicable

		12(b) – 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.

Date: November 20, 2009

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.

Date: November 20, 2009

Date: November 20, 2009