N-Q 1 d23674dnq.htm BLACKROCK FUNDS BLACKROCK FUNDS

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED

MANAGEMENT INVESTMENT COMPANY

Investment Company Act file numbers: 811-05742

Name of Fund:  BlackRock Funds

                                        BlackRock Developed Real Estate Index Fund

Fund Address:    100 Bellevue Parkway, Wilmington, DE 19809

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

             East 52nd Street, New York, NY 10055

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

Date of fiscal year end: 01/31/2016

Date of reporting period: 10/31/2015

Item 1 – Schedule of Investments

Schedule of Investments October 31, 2015 (Unaudited)

   

BlackRock Developed Real Estate Index Fund

(Percentages shown are based on Net Assets)

 

Common Stocks    Shares     Value  

Hotels, Restaurants & Leisure — 0.3%

  

Ryman Hospitality Properties, Inc.

      237      $ 12,466   

Real Estate Investment Trusts (REITs) — 76.7%

  

Acadia Realty Trust

      259        8,518   

Advance Residence Investment Corp.

      6        12,802   

Alexandria Real Estate Equities, Inc.

      294        26,384   

Allied Properties Real Estate Investment Trust

      435        11,936   

American Assets Trust, Inc.

      144        6,071   

American Campus Communities, Inc.

      482        19,555   

American Homes 4 Rent, Class A

      710        11,715   

Apartment Investment & Management Co., Class A

      630        24,690   

Ascendas Real Estate Investment Trust

      9,900        16,855   

AvalonBay Communities, Inc.

      493        86,191   

Beni Stabili SpA SIIQ

      4,020        3,303   

Big Yellow Group PLC

      846        9,766   

BioMed Realty Trust, Inc.

      865        20,250   

Boardwalk REIT

      225        9,244   

Boston Properties, Inc.

      556        69,973   

Brandywine Realty Trust

      942        12,717   

British Land Co. PLC

      4,073        54,557   

Brixmor Property Group, Inc.

      731        18,728   

Camden Property Trust

      333        24,572   

Canadian Apartment Properties REIT

      579        11,920   

Canadian REIT

      407        13,256   

CapitaLand Commercial Trust Ltd

      12,400        12,444   

Capitaland Mall Trust

      12,800        18,047   

Care Capital Properties, Inc.

      318        10,478   

CBL & Associates Properties, Inc.

      700        10,206   

Chambers Street Properties

      1,320        9,346   

Champion REIT

      9,000        4,705   

Chesapeake Lodging Trust

      320        8,813   

Cofinimmo SA

      166        18,499   

Columbia Property Trust, Inc.

      568        14,109   

Cominar Real Estate Investment Trust

      1,116        13,126   

Corporate Office Properties Trust

      358        8,234   

Cousins Properties, Inc.

      833        8,363   

CubeSmart

      662        18,417   

DCT Industrial Trust, Inc.

      390        14,477   

DDR Corp.

      1,276        21,437   

Derwent London PLC

      430        25,681   

Dexus Property Group

      4,127        22,655   

DiamondRock Hospitality Co.

      935        10,921   

Digital Realty Trust, Inc.

      521        38,533   

Douglas Emmett, Inc.

      518        15,825   

Dream Office Real Estate Investment Trust

      674        10,819   
Common Stocks    Shares     Value  

Real Estate Investment Trusts (REITs) (continued)

     

Duke Realty Corp.

      1,288      $ 26,662   

DuPont Fabros Technology, Inc.

      322        10,333   

EastGroup Properties, Inc.

      123        6,908   

Education Realty Trust, Inc.

      298        10,701   

Empire State Realty Trust, Inc., Class A

      300        5,346   

EPR Properties

      200        11,362   

Equity Commonwealth (a)

      556        15,963   

Equity Lifestyle Properties, Inc.

      325        19,656   

Equity One, Inc.

      352        9,356   

Equity Residential

      1,343        103,841   

Essex Property Trust, Inc.

      243        53,567   

Eurocommercial Properties NV CVA

      200        9,538   

Extra Space Storage, Inc.

      415        32,885   

Federal Realty Investment Trust

      263        37,738   

Federation Centres Ltd.

      13,368        27,615   

First Industrial Realty Trust, Inc.

      480        10,406   

Fonciere Des Regions

      150        14,119   

Fortune Real Estate Investment Trust

      5,000        5,206   

Frontier Real Estate Investment Corp.

      2        8,092   

Gaming and Leisure Properties, Inc.

      394        11,493   

Gecina SA

      157        20,024   

General Growth Properties, Inc.

      1,868        54,079   

GLP J-REIT

      10        9,951   

Goodman Group

      7,007        30,063   

Government Properties Income Trust

      165        2,686   

GPT Group

      7,335        24,842   

Great Portland Estates PLC

      1,598        21,885   

H&R Real Estate Investment Trust

      1,291        20,714   

Hammerson PLC

      3,312        32,450   

HCP, Inc.

      1,773        65,956   

Healthcare Realty Trust, Inc.

      381        10,043   

Healthcare Trust of America, Inc., Class A

      587        15,444   

Hibernia REIT PLC

      2,490        3,685   

Highwoods Properties, Inc.

      407        17,684   

Hospitality Properties Trust

      566        15,191   

Host Hotels & Resorts, Inc.

      2,712        46,999   

Hudson Pacific Properties, Inc.

      361        10,314   

ICADE

      150        11,085   

Industrial & Infrastructure Fund Investment Corp.

      1        4,528   

Intu Properties PLC

      4,390        23,369   

Investa Office Fund

      2,000        5,724   

Invincible Investment Corp.

      3        1,779   

Japan Hotel REIT Investment Corp.

      14        9,724   

Japan Prime Realty Investment Corp.

      3        9,765   
 

 

                
   BLACKROCK DEVELOPED REAL ESTATE INDEX FUND    OCTOBER 31, 2015    1

Schedule of Investments (continued)

   

BlackRock Developed Real Estate Index Fund

 

Common Stocks    Shares     Value  

Real Estate Investment Trusts (REITs) (continued)

  

Japan Real Estate Investment Corp.

      5      $ 23,112   

Japan Retail Fund Investment Corp.

      10        19,368   

Kenedix Office Investment Corp.

      1        4,584   

Kilroy Realty Corp.

      344        22,649   

Kimco Realty Corp.

      1,521        40,717   

Kite Realty Group Trust

      416        10,987   

Kiwi Property Group Ltd.

      4,768        4,384   

Klepierre

      718        34,004   

Land Securities Group PLC

      3,119        64,257   

LaSalle Hotel Properties

      466        13,705   

Lexington Realty Trust

      700        6,188   

Liberty Property Trust

      618        21,024   

Link REIT

      8,500        50,785   

LondonMetric Property PLC

      5,164        13,449   

LTC Properties, Inc.

      100        4,285   

Macerich Co.

      585        49,573   

Mack-Cali Realty Corp.

      458        9,966   

Medical Properties Trust, Inc.

      983        11,108   

Merlin Properties Socimi SA

      1,682        21,554   

Mid-America Apartment Communities, Inc.

      299        25,472   

Mirvac Group

      15,883        20,302   

Mori Hills REIT Investment Corp.

      5        6,186   

Mori Trust Sogo REIT, Inc.

      5        8,846   

National Health Investors, Inc.

      190        11,161   

National Retail Properties, Inc.

      562        21,356   

New York REIT, Inc.

      801        9,131   

Nippon Accommodations Fund, Inc.

      2        6,900   

Nippon Building Fund, Inc.

      5        23,746   

Nippon Prologis REIT, Inc.

      6        10,551   

Nomura Real Estate Master Fund, Inc. (a)

      15        19,006   

NSI NV

      491        2,136   

Omega Healthcare Investors, Inc.

      652        22,507   

Orix JREIT, Inc.

      10        13,462   

Paramount Group, Inc.

      642        11,408   

Parkway Properties, Inc.

      300        5,019   

Pebblebrook Hotel Trust

      307        10,493   

Pennsylvania Real Estate Investment Trust

      300        6,744   

Piedmont Office Realty Trust, Inc., Class A

      768        14,884   

Post Properties, Inc.

      246        14,696   

Prologis, Inc.

      1,901        81,230   

PS Business Parks, Inc.

      80        6,863   

Public Storage

      535        122,761   

Realty Income Corp.

      899        44,464   

Regency Centers Corp.

      347        23,582   

Retail Opportunity Investments Corp.

      567        10,280   
Common Stocks    Shares     Value  

Real Estate Investment Trusts (REITs) (continued)

  

Retail Properties of America, Inc., Class A

      1,109      $ 16,602   

RioCan Real Estate Investment Trust

      1,371        26,736   

RLJ Lodging Trust

      563        14,126   

Sabra Health Care REIT, Inc.

      335        7,598   

Scentre Group

      20,252        59,402   

Segro PLC

      3,386        23,455   

Senior Housing Properties Trust

      898        13,641   

Shaftesbury PLC

      1,308        18,933   

Simon Property Group, Inc.

      1,156        232,888   

SL Green Realty Corp.

      369        43,771   

Smart Real Estate Investment Trust

      585        13,896   

Sovran Self Storage, Inc.

      155        15,480   

Spirit Realty Capital, Inc.

      1,873        19,067   

Stockland

      9,000        25,830   

Strategic Hotels & Resorts, Inc. (a)

      1,136        16,018   

Sun Communities, Inc.

      223        14,945   

Sunstone Hotel Investors, Inc.

      932        13,477   

Suntec Real Estate Investment Trust

      13,100        15,387   

Tanger Factory Outlet Centers, Inc.

      463        16,182   

Taubman Centers, Inc.

      116        8,930   

UDR, Inc.

      950        32,737   

Unibail-Rodamco SE

      366        101,869   

United Urban Investment Corp.

      11        15,261   

Urban Edge Properties

      172        4,083   

Vastned Retail NV

      32        1,552   

Ventas, Inc.

      1,272        68,332   

VEREIT, Inc.

      3,347        27,646   

Vornado Realty Trust

      626        62,944   

Warehouses De Pauw CVA

      50        4,093   

Washington Real Estate Investment Trust

      259        6,996   

Weingarten Realty Investors

      474        16,950   

Welltower, Inc.

      1,348        87,445   

Wereldhave NV

      100        6,234   

Westfield Corp.

      7,614        55,240   

Workspace Group PLC

      638        9,397   

WP Carey, Inc.

      383        24,271   

WP GLIMCHER, Inc.

      936        10,876   

Xenia Hotels & Resorts, Inc.

      505        8,757   
    

 

 

  
        3,826,841   

Real Estate Management & Development — 20.9%

  

Aeon Mall Co. Ltd.

      500        8,364   

Allreal Holding AG (a)

      36        4,771   

Azrieli Group

      180        7,054   

BUWOG AG (a)

      191        4,061   

CA Immobilien Anlagen AG (a)

      277        5,433   

Capital & Counties Properties PLC

      2,791        19,101   

CapitaLand Ltd.

      10,400        22,941   
 

 

                
2    BLACKROCK DEVELOPED REAL ESTATE INDEX FUND    OCTOBER 31, 2015   

Schedule of Investments (continued)

   

BlackRock Developed Real Estate Index Fund

 

Common Stocks   

Shares

     Value  

Real Estate Management & Development (continued)

       

Castellum AB

        989      $ 14,803   

Cheung Kong Property Holdings Ltd.

        10,000        69,971   

Citycon OYJ (a)

        1,477        3,887   

Deutsche Euroshop AG

        200        9,643   

Deutsche Wohnen AG, Bearer Shares

        1,401        39,493   

F&C Commercial Property Trust, Ltd.

        1,956        4,297   

Fabege AB

        768        12,201   

Fastighets AB Balder (a)

        428        8,622   

Forest City Enterprises, Inc., Class A (a)

        907        20,045   

Grainger PLC

        2,811        10,774   

Grand City Properties SA

        545        10,876   

Hang Lung Properties Ltd.

        9,000        22,021   

Henderson Land Development Co. Ltd.

        4,000        25,547   

Hispania Activos Inmobiliarios SA (a)

        256        3,849   

Hongkong Land Holdings Ltd.

        4,500        33,742   

Hufvudstaden AB, — A Shares

        873        12,335   

Hulic Co. Ltd.

        1,400        13,076   

Hysan Development Co. Ltd.

        3,000        13,307   

Kerry Properties Ltd.

        3,000        8,880   

LEG Immobilien AG (a)

        298        23,758   

Mitsubishi Estate Co. Ltd.

        5,000        107,232   

Mitsui Fudosan Co. Ltd.

        4,000        108,855   

Mobimo Holding AG (a)

        23        4,960   

New World Development Co. Ltd.

        22,000        23,465   

Nomura Real Estate Holdings, Inc.

        600        12,821   

PSP Swiss Property AG, Registered Shares (a)

        205        17,833   

Sino Land Co. Ltd.

        12,000        18,522   

Sponda OYJ

        911        3,870   
Common Stocks   

Shares

     Value  

Real Estate Management & Development (continued)

       

Sumitomo Realty & Development Co. Ltd.

        2,000      $ 65,857   

Sun Hung Kai Properties Ltd.

        6,000        80,147   

Swire Properties Ltd.

        4,600        13,808   

Swiss Prime Site AG, Registered Shares (a)

        237        18,107   

Tokyo Tatemono Co. Ltd.

        900        11,183   

The UNITE Group PLC

        1,073        10,981   

UOL Group Ltd.

        2,600        12,134   

Vonovia SE

        1,844        61,468   

Wallenstam AB, — B Shares

        1,265        11,204   

Wharf Holdings Ltd.

        5,000        29,752   
      

 

 

  
                   1,045,051   
Total Long-Term Investments
(Cost — $4,902,995) — 97.9%		                  4,884,358   
      
                      
Short-Term Securities                     

FFI Premier Institutional Fund, 0.07% (b)(c)

          44,607        44,607   
Total Short-Term Securities
(Cost — $44,607) — 0.9%		                  44,607   
Total Investments (Cost — $4,947,602*) — 98.8%          4,928,965   
Other Assets Less Liabilities — 1.2%          61,084   
      

 

 

  
Net Assets — 100.0%        $ 4,990,049   
      

 

 

  

 

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

 

Tax cost

       $ 4,947,602   
     

 

 

  

Gross unrealized appreciation

       $ 111,139   

Gross unrealized depreciation

         (129,776 ) 
     

 

 

  

Net unrealized depreciation

       $ (18,637 ) 
     

 

 

  
 
Notes to Schedule of Investments

 

(a)   Non-income producing security.

 

(b)   During the period ended October 31, 2015, investments in issuers considered to be an affiliate of the Fund for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliate      Net
Activity		        Shares Held
at October 31,
2015		        Income  

FFI Premier Institutional Fund

        44,607           44,607         $ 56   

 

(c)   Represents the current yield as of period end.

 

                
   BLACKROCK DEVELOPED REAL ESTATE INDEX FUND    OCTOBER 31, 2015    3

Schedule of Investments (continued)

   

BlackRock Developed Real Estate Index Fund

 

Portfolio Abbreviations

 

REIT    Real Estate Investment Trust
USD    U.S. Dollar

 

Derivative Financial Instruments Outstanding as of Period End

 

Financial Futures Contracts  
Contracts
Long		     Issue   Expiration   Notional
Value		   Unrealized
Appreciation		  
  3      Dow Jones U.S. Real Estate   December 2015   $88,230   $ 2,435   

 

Fair Value Hierarchy as of Period End

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

 

  •  

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

 

  •  

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

 

  •  

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

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The significant unobservable inputs used by the Global Valuation Committee in determining the price for Fair Valued Investments are typically categorized as level 3.

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

The following tables summarize the Fund’s investments and derivative financial instruments categorized in the disclosure hierarchy:

 

     Level 1        Level 2        Level 3        Total  

Assets:

                 
Investments:                 
Common Stocks:                 

Hotels, Restaurants & Leisure

   $ 12,466           —           —         $ 12,466   

Real Estate Investment Trusts (REITs)

     2,693,489         $ 1,133,352           —           3,826,841   

Real Estate Management & Development

     34,546           1,010,505           —           1,045,051   

Short-Term Investments

     44,607           —           —           44,607   
 

 

 

  

Total

   $ 2,785,108         $ 2,143,857           —         $ 4,928,965   
 

 

 

  

 

                
4    BLACKROCK DEVELOPED REAL ESTATE INDEX FUND    OCTOBER 31, 2015   

Schedule of Investments (concluded)

   

BlackRock Developed Real Estate Index Fund

 

 

     Level 1        Level 2      Level 3      Total  
Derivative Financial Instruments1                 

Assets:

                 

Equity contracts

   $ 2,435         —      —      $ 2,435   

1   Derivative financial instruments are financial futures contracts, which are valued at the unrealized appreciation (depreciation) on the instrument.

      

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

 

     Level 1        Level 2      Level 3      Total  

Assets:

                 

Cash pledged for financial futures contracts

   $ 5,000         —      —      $ 5,000   

Foreign currency at value

     35,413         —      —        35,413   
 

 

 

  

Total

   $ 40,413         —      —      $ 40,413   
 

 

 

  

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

 

                
   BLACKROCK DEVELOPED REAL ESTATE INDEX FUND    OCTOBER 31, 2015    5

Item 2 – Controls and Procedures

 

2(a) – The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”)) are effective as of a date within 90 days of the filing of this report based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rule 15d-15(b) under the Securities Exchange Act of 1934, as amended.

 

2(b) – There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the registrant’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 3 – Exhibits

Certifications – Attached hereto

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

     BlackRock Funds

 

By:      

/s/ John M. Perlowski

   
  John M. Perlowski   
 

Chief Executive Officer (principal executive officer) of

BlackRock Funds

 

     Date: December 22, 2015

 

     Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

By:      

/s/ John M. Perlowski

   
  John M. Perlowski   
 

Chief Executive Officer (principal executive officer) of

BlackRock Funds

 

     Date: December 22, 2015

 

By:      

/s/ Neal J. Andrews

   
  Neal J. Andrews   
 

Chief Financial Officer (principal financial officer) of

BlackRock Funds

 

     Date: December 22, 2015