N-CSR 1 d192098dncsr.htm BLACKROCK FUNDS BLACKROCK 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 FundsSM
       BlackRock Advantage International Fund
       BlackRock Advantage Large Cap Growth Fund
       BlackRock Advantage Small Cap Core Fund
       BlackRock Energy Opportunities Fund
       BlackRock High Equity Income Fund
       BlackRock International Dividend Fund

 

Fund Address:   100 Bellevue Parkway, Wilmington, DE 19809

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

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

Date of fiscal year end: 05/31/2021

Date of reporting period: 05/31/2021

 

Item 1 – Report to Stockholders

(a) The Report to Shareholders is attached herewith.

 

LOGO

  MAY 31, 2021

 

  

2021 Annual Report

 

 

BlackRock FundsSM

·   BlackRock Advantage International Fund

·   BlackRock Advantage Large Cap Growth Fund

·   BlackRock Advantage Small Cap Core Fund

 

 

 

 

 

 

 

 

Not FDIC Insured • May Lose Value • No Bank Guarantee

 

The Markets in Review

Dear Shareholder,

The 12-month reporting period as of May 31, 2021 was a remarkable period of adaptation and recovery, as the global economy dealt with the implications of the coronavirus (or “COVID-19”) pandemic. The United States, along with most of the world, began the reporting period in a severe recession, prompted by pandemic-related restrictions that disrupted many aspects of daily life. However, easing restrictions and robust government intervention led to a strong rebound, and the economy grew at a significant pace for most of the reporting period, recovering much of the output lost at the beginning of the pandemic.

Equity prices rose with the broader economy, as investors became increasingly optimistic about the economic outlook. Stocks rose through the summer of 2020, fed by strong fiscal and monetary support and positive economic indicators. The implementation of mass vaccination campaigns and passage of an additional $1.9 trillion of fiscal stimulus further boosted stocks, and many equity indices neared or surpassed all-time highs late in the reporting period. In the United States, both large- and small-capitalization stocks posted a significant advance. International equities also gained, as both developed countries and emerging markets rebounded substantially.

The 10-year U.S. Treasury yield (which is inversely related to bond prices) had fallen sharply prior to the beginning of the reporting period, which meant bonds were priced for extreme risk avoidance and economic disruption. Despite expectations of doom and gloom, the economy expanded rapidly, stoking inflation concerns late in the reporting period, which led to higher yields and a negative overall return for most U.S. Treasuries. In the corporate bond market, support from the U.S. Federal Reserve (the “Fed”) assuaged credit concerns and led to substantial returns for high-yield corporate bonds, although investment-grade corporates declined slightly.

The Fed remained committed to accommodative monetary policy by maintaining near zero interest rates and by announcing that inflation could exceed its 2% target for a sustained period without triggering a rate increase. To stabilize credit markets, the Fed also continued purchasing significant quantities of bonds, as did other influential central banks around the world, including the European Central Bank and the Bank of Japan.

Looking ahead, while coronavirus-related disruptions have clearly hindered worldwide economic growth, we believe that the global expansion will continue to accelerate as vaccination efforts ramp up and pent-up consumer demand leads to higher spending. While we expect inflation to increase somewhat as the expansion continues, we believe the recent uptick owes more to temporary supply disruptions than a lasting change in fundamentals. The change in Fed policy also means that moderate inflation is less likely to be followed by interest rate hikes that could threaten the economic expansion.

Overall, we favor a positive stance toward risk, with an overweight in equities. We see U.S. and Asian equities outside of Japan benefiting from structural growth trends in technology, while emerging markets should be particularly helped by a vaccine-led economic expansion and more stable U.S. trade policy. While we are underweight long-term on credit, global high-yield and Asian bonds present attractive opportunities, as do emerging market bonds denominated in local currencies. We believe that international diversification and a focus on sustainability can help provide portfolio resilience, and the disruption created by the coronavirus appears to be accelerating the shift toward sustainable investments.

In this environment, our view is that investors need to think globally, extend their scope across a broad array of asset classes, and be nimble as market conditions change. We encourage you to talk with your financial advisor and visit blackrock.com for further insight about investing in today’s markets.

Sincerely,

 

LOGO

Rob Kapito

President, BlackRock Advisors, LLC

LOGO

Rob Kapito

President, BlackRock Advisors, LLC

 

Total Returns as of May 31, 2021
     
      6-Month      12-Month  
   

U.S. large cap equities (S&P 500® Index)

     16.95%     40.32%
   

U.S. small cap equities (Russell 2000® Index)

   25.28    64.56 
   

International equities (MSCI Europe, Australasia, Far East Index)

   15.19    38.41 
   

Emerging market equities (MSCI Emerging Markets Index)

   15.15    51.00 
   

3-month Treasury bills (ICE BofA 3-Month U.S. Treasury Bill Index)

     0.04      0.11 
   

U.S. Treasury securities (ICE BofA 10-Year U.S. Treasury Index)

    (6.07)    (7.30)
   

U.S. investment grade bonds (Bloomberg Barclays U.S. Aggregate Bond Index)

    (2.16)    (0.40)
   

Tax-exempt municipal bonds (S&P Municipal Bond Index)

     1.54      4.70 
   

U.S. high yield bonds (Bloomberg Barclays U.S. Corporate High Yield 2% Issuer Capped Index)

     4.18    14.90 

Past performance is not an indication of future results. Index performance is shown for illustrative purposes only. You cannot invest directly in an index.

 

 

 

2  

T H I S   P A G E   I S   N O T  P A R T   O F   Y O U R   F U N D  R E P O R T

Table of Contents

 

     Page

The Markets in Review

  2

Annual Report:

  

Fund Summary

   4

About Fund Performance

   15

Disclosure of Expenses

   15

Derivative Financial Instruments

   16

Financial Statements:

  

Schedules of Investments

   17

Statements of Assets and Liabilities

   39

Statements of Operations

   41

Statements of Changes in Net Assets

   42

Financial Highlights

   45

Notes to Financial Statements

   60

Report of Independent Registered Public Accounting Firm

   74

Important Tax Information

   75

Disclosure of Investment Advisory Agreement

   76

Trustee and Officer Information

   79

Additional Information

   83

Glossary of Terms Used in this Report

   85

 

 

 

 

LOGO

 

 

  3

Fund Summary as of May 31, 2021    BlackRock Advantage International Fund

 

Investment Objective

BlackRock Advantage International Fund’s (the “Fund”) investment objective is to provide long-term capital appreciation.

Portfolio Management Commentary

How did the Fund perform?

For the 12-month period ended May 31, 2021, all of the Fund’s share classes outperformed its benchmark, the MSCI EAFE® Index, except for Investor C Shares, which underperformed the benchmark.

What factors influenced performance?

The Fund performed well against the changeable market backdrop. Global equities performed well overall, hitting new highs in the second half of 2020 amid accommodative policy support and improving macro data. However, the rise belies the volatility observed within market leadership. Notably, after the better-than-expected vaccine efficacy news, momentum styles, which had driven market gains to that point, experienced the sharpest drawdown since the Global Financial Crisis. As investors brought forward expectations of a robust economic recovery due to vaccine development, they increasingly sought out contrarian opportunities. Later in the period, global equities delivered strong gains again as a strong reflationary tone prevailed in early 2021 and investors continued to expect a robust economic recovery. This outlook was bolstered by accelerated, albeit uneven across geographies, vaccine distribution, and sustained policy support. This ultimately benefited reflationary trades, especially energy and financials stocks, with value outperforming growth and momentum. The period also saw the emergence of volatility around “smart money” hedge fund positions, notably in January as several common short positions ran against strong retail trading.

Capturing reflationary themes became a dominant driver of outperformance in the portfolio for 2021. This was highlighted through the portfolio’s fundamental insights, which performed well amid the market style shift. In particular, traditional fundamental measures that evaluate balance sheet information aided the Fund’s returns. Earlier in the period, sentiment-based insights were able to correctly position the portfolio as economies began to reopen. Faster-moving measures that capture internet search trends, credit card transactions and mobile application usage all performed well amid this market trend, helping to motivate an overweight to retail names that performed well given the broader reopening theme. Interestingly, insights related to environmental, social and governance (“ESG”) factors were the top performing during the period, despite the sharp reflationary tone. Specifically, an insight that seeks to identify companies likely to benefit from the European Union’s sustainability-focused fiscal package was a top contributor.

Despite broad-based outperformance, select dynamic insights detracted from the Fund’s returns in the period. A dynamic signal that seeks to combine data optimally was a top detractor for the period, motivating an underweight to the metals & mining sector, which benefited from the style leadership shift in early 2021. Additionally, an insight that helps to time preferences for companies based on balance sheet leverage ran against the market rotation toward risk against the reflationary backdrop. Elsewhere, macro thematic positioning struggled in the period. In particular, an underweight stance to U.K. equities weighed on performance as the United Kingdom rolled out COVID-19 vaccines quickly and reopened faster than other economies in Europe.

Describe recent portfolio activity.

Over the course of the period, the portfolio maintained a balanced allocation of risk across all major return drivers. There were, however, several new signals added within the stock selection group of insights. The Fund built upon its alternative data capabilities by adding an insight that captures brand sentiment around retail names. Additionally, given the dynamism of the current environment, the Fund instituted enhanced signal constructs to best identify emerging trends, such as sentiment around vaccine distribution and the impact on economic reopening.

Describe portfolio positioning at period end.

At period end, the Fund’s positioning with respect to sector allocation was largely neutral relative to the MSCI EAFE® Index. The Fund was slightly overweight in industrials and consumer discretionary and slightly underweight in health care and utilities.

The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results.

 

 

4  

2 0 2 1   B L A C K R O C K   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S

Fund Summary as of May 31, 2021  (continued)    BlackRock Advantage International Fund

 

TOTAL RETURN BASED ON A $10,000 INVESTMENT

 

LOGO

 

  (a) 

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

 
  (b) 

Under normal circumstances, the Fund seeks to invest at least 80% of its net assets plus the amount of any borrowings for investment purposes in non-U.S. equity securities and equity-like instruments of companies that are components of, or have characteristics similar to, the companies included in the MSCI EAFE® Index and derivatives that are tied economically to securities of the MSCI EAFE® Index. The Fund’s total returns prior to June 12, 2017 are the returns of the Fund when it followed different investments strategies under the name BlackRock Global Opportunities Portfolio.

 
  (c) 

A free-float adjusted, market capitalization weighted index designed to measure equity performance of developed markets, excluding the United States and Canada.

 

Performance Summary for the Period Ended May 31, 2021

 

                Average Annual Total Returns(a)(b)  
                1 Year     5 Years     10 Years  
            6-Month
Total
Returns		     Without
Sales
Charge		     With
Sales
Charge		     Without
Sales
Charge		     With
Sales
Charge		     Without
Sales
Charge		     With
Sales
Charge		  

Institutional

       16.83 %      39.57 %      N/A       9.76 %      N/A       6.74 %      N/A  

Investor A

       16.70       39.21       31.91 %      9.48       8.31 %      6.45       5.88 % 

Investor C

       16.24       38.21       37.21       8.67       8.67       5.78       5.78  

Class K

       16.86       39.64       N/A       9.79       N/A       6.75       N/A  

Class R

                        16.56       38.91       N/A       9.18       N/A       6.11       N/A  

MSCI EAFE® Index

             15.19       38.41       N/A       9.77       N/A       5.88       N/A  

 

  (a) 

Assuming maximum sales charges, if any. Average annual total returns with and without sales charges reflect reductions for distribution and service fees. See “About Fund Performance” for a detailed description of share classes, including any related sales charges and fees, and how performance was calculated for certain share classes.

 
  (b) 

Under normal circumstances, the Fund seeks to invest at least 80% of its net assets plus the amount of any borrowings for investment purposes in non-U.S. equity securities and equity-like instruments of companies that are components of, or have characteristics similar to, the companies included in the MSCI EAFE® Index and derivatives that are tied economically to securities of the MSCI EAFE® Index. The Fund’s total returns prior to June 12, 2017 are the returns of the Fund when it followed different investments strategies under the name BlackRock Global Opportunities Portfolio.

 

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

Past performance is not an indication of future results.

Performance results may include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles.

 

 

F U N D   S U M M A R Y

   5

Fund Summary as of May 31, 2021  (continued)    BlackRock Advantage International Fund

 

Expense Example

 

    Actual           Hypothetical(a)           
 

 

 

      

 

 

       
     

 Beginning
Account Value
(12/01/20)		  
 
 		     

 Ending
Account Value
(05/31/21)		  
 
 		     

 Expenses
Paid During
the Period		  
 
(b) 		            

 Beginning
Account Value
(12/01/20)		  
 
 		     

 Ending
Account Value
(05/31/21)		  
 
 		     

 Expenses
Paid During
the Period		  
 
(b) 		       

 Annualized
Expense
Ratio 		 
 
 

Institutional

     $   1,000.00        $   1,168.30            $   2.70         $   1,000.00        $   1,022.44        $   2.52          0.50 % 

Investor A

     1,000.00        1,167.00        4.05         1,000.00        1,021.19        3.78          0.75  

Investor C

     1,000.00        1,162.40        8.09         1,000.00        1,017.45        7.54          1.50  

Class K

     1,000.00        1,168.60        2.43         1,000.00        1,022.69        2.27          0.45  

Class R

     1,000.00        1,165.60        5.40               1,000.00        1,019.95        5.04          1.00  

 

  (a) 

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

 
  (b) 

For each class of the Fund, expenses are equal to the annualized expense ratio for the class, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period shown).

 

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

 

 

6  

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Fund Summary as of May 31, 2021  (continued)    BlackRock Advantage International Fund

 

Portfolio Information

 

TEN LARGEST HOLDINGS

 

 

   
Security(a)   Percent of
Net Assets		  

Novo Nordisk A/S, Class B

     2 % 

Siemens AG, Registered Shares

     1  

Nestlé SA, Registered Shares

     1  

LVMH Moet Hennessy Louis Vuitton SE

     1  

Keyence Corp.

     1  

British American Tobacco PLC

     1  

ASML Holding NV

     1  

Kering SA

     1  

BNP Paribas SA

     1  

Recruit Holdings Co. Ltd.

     1  

GEOGRAPHIC ALLOCATION

 

 

   
Country   Percent of
Net Assets		  

Japan

     23 % 

United Kingdom

     12  

France

     12  

Germany

     9  

Switzerland

     8  

Australia

     7  

Netherlands

     6  

Sweden

     4  

Denmark

     3  

United States

     3  

Hong Kong

     3  

Finland

     2  

China

     1  

Spain

     1  

Israel

     1  

Italy

     1  

Singapore

     1  

Belgium

     1  

Ireland

     1  

Other Assets Less Liabilities

     1  
 

 

(a) 

Excludes short-term securities.

 

 

F U N D   S U M M A R Y

   7

Fund Summary as of May 31, 2021      BlackRock Advantage Large Cap Growth Fund

 

Investment Objective

BlackRock Advantage Large Cap Growth Fund’s (the “Fund”) investment objective is to seek long-term capital appreciation.

Portfolio Management Commentary

How did the Fund perform?

For the 12-month period ended May 31, 2021, the Fund underperformed its benchmark, the Russell 1000® Growth Index.

What factors influenced performance?

The Fund struggled to keep pace against the backdrop of sharp market rotations and underperformed in the 12-month period. The period began with the early stages of economic reopening before heading into a more turbulent fall. Markets struggled in October 2020, as investor attention shifted away from earnings results and instead focused on macro headlines. The impending U.S. election, COVID-19 virus trends and expectations for future fiscal policy became the dominant themes. However, in November 2020 the market experienced a sharp rotation after the announcement of strong efficacy data from vaccine developers. This motivated a robust cyclical rally given stronger economic recovery expectations. The subsequent rotation out of momentum styles, which had led the market to that point in 2020, was one of the strongest on record as investors moved toward previous market laggards. This trend accelerated in 2021 as the reflation rally gathered steam. The prospect of additional fiscal policy support after the Georgia senate election results and aggressive vaccine distribution led to a strong investor preference for cyclicality and valuation-based exposures amid more robust economic reopening.

A feature within the large cap growth market during much of the period was the concentration of performance leadership within the benchmark index to a handful of securities. Ultimately, this became the primary driver of the Fund’s relative underperformance. As the Fund’s mandate takes a very risk-aware, diversified approach, the concentration of returns around a relatively small number of securities ran against the Fund’s discipline. This led to underweight positions across those names in aggregate, which weighed on performance.

The portfolio struggled primarily across the second half of 2020 amid the sizable momentum rotation, which prompted a reversal of dominant market trends at that time. This adversely impacted insights that captured COVID-related themes such as vaccine development. Importantly, these insights had been some of the strongest performing until that time. Additionally, a style-timing insight that took a more conservative stance toward momentum was a top detractor in the period. Despite the challenging performance after positive vaccine news in November 2020, performance for the generic momentum style was strong throughout 2020. Other macro thematic measures that look toward job hiring and construction activity lagged given the broader reopening theme, as these insights motivated an underweight to retail names.

Performance improved in 2021, led by fundamental measures. Insights that evaluate attractively priced growth companies performed well supported by the reflationary tone. Other stability related insights, such as those with a preference for high earnings yield, also provided ballast against the changeable market backdrop. Interestingly, insights related to environmental, social and governance (“ESG”) factors were also top performing measures during the period, despite the sharp reflationary tone. Namely, an insight that looks to capture investor flows into ESG-related positions was one of the best-performing insights as it was able to follow the broader sustainability market trend.

Describe recent portfolio activity.

Over the course of the period, the portfolio maintained a balanced allocation of risk across all major return drivers. There were, however, several new signals added within the stock selection group of insights. The Fund built upon its alternative data capabilities by adding an insight that captures brand sentiment around retail names. Additionally, given the dynamism of the current environment, the Fund has instituted enhanced signal constructs to best identify emerging trends, such as sentiment around vaccine distribution and the impact on economic reopening.

Describe portfolio positioning at period end.

Relative to the Russell 1000® Growth Index, the Fund was positioned essentially neutrally from a sector perspective. The Fund had slight overweight positions in the energy and industrials sectors and slight underweight positions in the health care and communication services sectors.

The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results.

 

 

8  

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Fund Summary as of May 31, 2021  (continued)    BlackRock Advantage Large Cap Growth Fund

 

TOTAL RETURN BASED ON A $10,000 INVESTMENT

 

LOGO

 

  (a) 

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

 
  (b) 

Under normal circumstances, the Fund seeks to invest at least 80% of its net assets plus the amount of any borrowings for investment purposes in large cap equity securities of U.S. issuers and derivatives that have similar economic characteristics to such securities. The Fund’s total returns prior to June 12, 2017 are the returns of the Fund when it followed different investment strategies under the name BlackRock Flexible Equity Fund.

 
  (c) 

An unmanaged index that measures the performance of the large-cap growth segment of the U.S. equity universe and consists of those Russell 1000® securities with higher price-to-book ratios and higher forecasted growth values.

 

Performance Summary for the Period Ended May 31, 2021

 

              Average Annual Total Returns(a)(b)  
     

 

 

  
              1 Year     5 Years     10 Years  
     

 

 

    

 

 

    

 

 

  
         

6-Month
Total

Returns

     Without
Sales
Charge		     With
Sales
Charge		     Without
Sales
Charge		     With
Sales
Charge		     Without
Sales
Charge		     With
Sales
Charge		  

Institutional

       11.70 %      37.54 %      N/A       20.83 %      N/A       12.09 %      N/A  

Service

       11.58       37.20       N/A       20.50       N/A       11.77       N/A  

Investor A

       11.62       37.28       30.07 %      20.52       19.22 %      11.77       11.17 % 

Investor C

       11.15       36.25       35.25       19.60       19.60       11.08       11.08  

Class K

       11.73       37.60       N/A       20.75       N/A       11.88       N/A  

Class R

  

            

     11.47       36.93       N/A       20.18       N/A       11.42       N/A  

Russell 1000® Growth Index

         11.21       39.92       N/A       22.07       N/A       16.98       N/A  

 

  (a) 

Assuming maximum sales charges, if any. Average annual total returns with and without sales charges reflect reductions for distribution and service fees. See “About Fund Performance” for a detailed description of share classes, including any related sales charges and fees, and how performance was calculated for certain share classes.

 
  (b) 

Under normal circumstances, the Fund seeks to invest at least 80% of its net assets plus the amount of any borrowings for investment purposes in large cap equity securities of U.S. issuers and derivatives that have similar economic characteristics to such securities. The Fund’s total returns prior to June 12, 2017 are the returns of the Fund when it followed different investment strategies under the name BlackRock Flexible Equity Fund.

 

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

Past performance is not an indication of future results.

Performance results may include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles.

 

 

F U N D   S U M M A R Y

   9

Fund Summary as of May 31, 2021  (continued)    BlackRock Advantage Large Cap Growth Fund

 

Expense Example

 

    Actual           Hypothetical(a)           
 

 

 

      

 

 

       
     

 Beginning
Account Value
(12/01/20) 		 
 
 		     

 Ending
Account Value
(05/31/21) 		 
 
 		     

 Expenses
Paid During
the Period		  
 
(b) 		            

 Beginning
Account Value
(12/01/20) 		 
 
 		     

 Ending
Account Value
(05/31/21) 		 
 
 		     

 Expenses
Paid During
the Period		  
 
(b) 		       

 Annualized
Expense
Ratio 		 
 
 

Institutional

     $   1,000.00        $   1,117.00        $   3.27         $   1,000.00        $   1,021.84        $   3.13          0.62 % 

Service

     1,000.00        1,115.80        4.59         1,000.00        1,020.59        4.38          0.87  

Investor A

     1,000.00        1,116.20        4.59         1,000.00        1,020.59        4.38          0.87  

Investor C

     1,000.00        1,111.50        8.53         1,000.00        1,016.85        8.15          1.62  

Class K

     1,000.00        1,117.30        3.01         1,000.00        1,022.09        2.87          0.57  

Class R

     1,000.00        1,114.70        5.90               1,000.00        1,019.35        5.64          1.12  

 

  (a)

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

 
  (b) 

For each class of the Fund, expenses are equal to the annualized expense ratio for the class, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period shown).

 

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

 

 

10  

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Fund Summary as of May 31, 2021  (continued)    BlackRock Advantage Large Cap Growth Fund

 

Portfolio Information

 

TEN LARGEST HOLDINGS

 

   
Security(a)   Percent of
Net Assets		  

Apple Inc.

     10 % 

Microsoft Corp.

     8  

Amazon.com, Inc.

     7  

Facebook, Inc., Class A

     4  

Alphabet, Inc., Class C

     3  

Adobe, Inc.

     3  

Tesla, Inc.

     2  

Visa, Inc., Class A

     2  

Alphabet, Inc., Class A

     2  

PayPal Holdings, Inc.

     2  
SECTOR ALLOCATION

 

   
Sector(b)  

Percent of

Net Assets

  

Information Technology

     44 % 

Consumer Discretionary

     16  

Health Care

     13  

Communication Services

     11  

Industrials

     6  

Consumer Staples

     5  

Financials

     2  

Energy

     1  

Real Estate

     1  

Short-Term Securities

     1  
 
(a) 

Excludes short-term securities.

(b) 

For Fund compliance purposes, the Fund’s sector classifications refer to one or more of the sector sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by the investment adviser. These definitions may not apply for purposes of this report, which may combine such sector sub-classifications for reporting ease.

 

 

F U N D   S U M M A R Y

   11

Fund Summary as of May 31, 2021    BlackRock Advantage Small Cap Core Fund

 

Investment Objective

BlackRock Advantage Small Cap Core Fund’s (the “Fund”) investment objective is to seek capital appreciation over the long term.

Portfolio Management Commentary

How did the Fund perform?

For the 12-month period ended May 31, 2021, the Fund underperformed its benchmark, the Russell 2000® Index.

What factors influenced performance?

The Fund’s performance was challenged against the backdrop of sharp market rotations. The period began with the early stages of economic reopening before heading into a more turbulent fall. Markets struggled in October 2020, as investor attention shifted away from earnings results and instead focused on macro headlines. The impending U.S. election, COVID-19 virus trends and expectations for future fiscal policy became the dominant themes. However, in November 2020 the market experienced a sharp rotation after the announcement of strong efficacy data from vaccine developers. This motivated a robust cyclical rally given stronger economic recovery expectations. The subsequent rotation out of momentum styles, which had led the market to that point in 2020, was one of the strongest on record as investors moved toward previous market laggards. This trend accelerated in 2021 as the reflation rally gathered steam. The prospect of additional fiscal policy support after the Georgia senate election results and aggressive vaccine distribution led to a strong investor preference for cyclicality and valuation-based exposures amid more robust economic reopening.

A distinct theme that emerged later in the period concerned the overall sentiment of retail investors. Specifically, so-called “meme” stocks experienced unprecedented levels of price volatility, most notably GameStop. The majority of the Fund’s underperformance was attributable to underweight positions across those names, which experienced sharply rising share prices driven by retail traders. While the Fund was underweight to GameStop due to weak expectations across company fundamentals, investor demand for the stock created a frenzy, which drove the name into a top ten constituent within the benchmark index. While the Fund ultimately increased exposure to GameStop to reduce the underweight relative to the benchmark, it remained underweight as the realized risk of the stock ran against the Fund’s risk-managed approach. Overall, this positioning weighed on the Fund’s valuation-based measures as the stock had been a deep value name entering 2021, resulting in losses across that signal composite.

Elsewhere, more defensively oriented traditional quality insights struggled during the fall of 2020. In September and October, these measures had coalesced around key persistent market drivers during the COVID-induced lockdown such as working from home, vaccine development and the shift to online shopping. Many of these themes began to reverse in September amid the technology selloff as investors took profits heading into the election. Overall, signals that prefer stocks with lower volatility and balance sheet strength lagged, with noted weakness across biotechnology stocks.

Despite the overall underperformance, parts of the stock selection model added to relative performance during the period. This was highlighted by persistent strength from measures related to environmental, social and governance (“ESG”) factors. Notably, an insight that looks to capture investor flows into ESG-related positions was one of the top performers as it successfully captured the increased preference for the discipline. Employee-based insights, such as looking at employer-provided benefits, also displayed strength in 2021. This insight correctly captured the reopening market theme across retail stocks. Finally, trend-based measures performed well as they successfully captured emerging reflationary themes. These include insights that looked at vaccine distribution, hiring activity and company linkages, which were additive across consumer discretionary, energy and industrials stocks, respectively.

Describe recent portfolio activity.

Over the course of the period, the portfolio maintained a balanced allocation of risk across all major return drivers. There were, however, several new signals added within the stock selection group of insights. In this vein, the Fund built upon its alternative data capabilities by adding an insight that captures brand sentiment around retail names. Additionally, given the dynamism of the current environment, the Fund has instituted enhanced signal constructs to best identify emerging trends, such as sentiment around vaccine distribution and the impact on economic reopening. Finally, given the increasing importance of retail investor sentiment within the market, new insights were developed to help capture those trends.

Describe Fund positioning at period end.

Relative to the Russell 2000® Index, the Fund remained largely sector neutral at period end. The Fund ended the period with slight overweight positions in information technology and industrials, and slight underweights in health care and real estate stocks.

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.

 

 

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Fund Summary as of May 31, 2021  (continued)    BlackRock Advantage Small Cap Core Fund

 

TOTAL RETURN BASED ON A $10,000 INVESTMENT

 

LOGO

The Fund commenced operations on March 14, 2013.

  (a) 

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

 
  (b) 

Under normal circumstances, the Fund seeks to invest at least 80% of its net assets plus any borrowings for investment purposes in equity securities or other financial instruments that are components of, or have market capitalizations similar to, the securities included in the Russell 2000® Index.

 
  (c) 

An unmanaged index that is a subset of the Russell 3000® Index representing approximately 10% of the total market capitalization of that index. It includes approximately 2,000 of the smallest securities based on a combination of their market cap and current index membership.

 

Performance Summary for the Period Ended May 31, 2021

 

                Average Annual Total Returns(a)  
                1 Year     5 Years     Since Inception(b)  
           

6-Month

Total

Returns

    

Without

Sales
Charge

     With
Sales
Charge		     Without
Sales
Charge		     With
Sales
Charge		     Without
Sales
Charge		     With
Sales
Charge		  

Institutional

       25.47 %      62.61 %      N/A       17.14 %      N/A       13.85 %      N/A  

Investor A

       25.23       62.05       53.55 %      16.83       15.58 %      13.55       12.81 % 

Investor C

       24.84       60.90       59.90       15.95       15.95       12.71       12.71  

Class K

                        25.48       62.63       N/A       17.17       N/A       13.87       N/A  

Russell 2000® Index

             25.28       64.56       N/A       16.01       N/A       12.65       N/A  

 

  (a) 

Assuming maximum sales charges, if any. Average annual total returns with and without sales charges reflect reductions for distribution and service fees. See “About Fund Performance” for a detailed description of share classes, including any related sales charges and fees, and how performance was calculated for certain share classes.

 

 

  (b) 

The Fund commenced operations on March 14, 2013.

 

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

Past performance is not an indication of future results.

Performance results may include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles.

Expense Example

 

    Actual           Hypothetical(a)           
     

 Beginning

Account Value

(12/01/20)

 

 

 

     

 Ending

Account Value

(05/31/21)

 

 

 

     

 Expenses

Paid During

the Period

  

 

(b) 

            

 Beginning

Account Value

(12/01/20)

 

 

 

     

 Ending

Account Value

(05/31/21)

  

 

 

     

 Expenses

Paid During

the Period

  

 

(b) 

       

 Annualized

Expense

Ratio

 

 

 

Institutional

     $  1,000.00        $  1,254.70        $  2.81         $  1,000.00        $  1,022.44        $  2.52          0.50 % 

Investor A

     1,000.00        1,252.30        4.21         1,000.00        1,021.19        3.78          0.75  

Investor C

     1,000.00        1,248.40        8.41         1,000.00        1,017.45        7.54          1.50  

Class K

     1,000.00        1,254.80        2.53               1,000.00        1,022.69        2.27          0.45  

 

  (a) 

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

 
  (b) 

For each class of the Fund, expenses are equal to the annualized expense ratio for the class, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period shown).

 

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

 

 

F U N D   S U M M A R Y

   13

Fund Summary as of May 31, 2021  (continued)    BlackRock Advantage Small Cap Core Fund

 

Portfolio Information

 

TEN LARGEST HOLDINGS

 

   
Security(a)  

Percent of

Net Assets

  

Southwest Gas Holdings, Inc.

     1 % 

MDC Holdings, Inc.

     1  

Silicon Laboratories, Inc.

     1  

Stifel Financial Corp.

     1  

SiteOne Landscape Supply, Inc.

     1  

HB Fuller Co

     1  

Builders FirstSource, Inc.

     1  

First Interstate BancSystem, Inc., Class A

     1  

Lithia Motors, Inc., Class A

     1  

International Game Technology PLC

     1  
SECTOR ALLOCATION

 

   
Sector(b)  

Percent of

Net Assets

  

Health Care

     17 % 

Industrials

     16  

Financials

     16  

Consumer Discretionary

     15  

Information Technology

     14  

Materials

     6  

Real Estate

     5  

Energy

     3  

Consumer Staples

     3  

Utilities

     2  

Communication Services

     2  

Short-Term Securities

     5  

Liabilities in Excess of Other Assets

     (4 ) 
 
(a) 

Excludes short-term securities.

 
(b) 

For Fund compliance purposes, the Fund’s sector classifications refer to one or more of the sector sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by the investment adviser. These definitions may not apply for purposes of this report, which may combine such sector sub-classifications for reporting ease.

 

 

 

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About Fund Performance

 

Institutional and Class K Shares are not subject to any sales charge. These shares bear no ongoing distribution or service fees and are available only to certain eligible investors. BlackRock Advantage International Fund’s Class K Shares performance shown prior to the Class K Shares inception date of January 25, 2018 is that of Institutional Shares. BlackRock Advantage Large Cap Growth Fund’s Class K Shares performance shown prior to the Class K Shares inception date of January 25, 2018 is that of Investor AShares. BlackRock Advantage Small Cap Core Fund’s Class K Shares performance shown prior to the Class K Shares inception date of March 28, 2016 is that of Institutional Shares. The performance of each Fund’s Class K Shares would be substantially similar to Investor A Shares or Institutional Shares, as applicable, because Investor A Shares or Institutional Shares, as applicable, of a Fund invest in the same portfolio of securities and performance would only differ to the extent that Class K Shares and Investor A Shares or Institutional Shares, as applicable, have different expenses. The actual returns of Class K Shares would have been higher than those of Investor A Shares or Institutional Shares, as applicable, because Class K Shares have lower expenses than Investor A Shares and Institutional Shares.

Service Shares (available only in BlackRock Advantage Large Cap Growth Fund) are not subject to any sales charge. These shares are subject to a service fee of 0.25% per year (but no distribution fee) and are only available to certain eligible investors. Effective on or about the close of business on July 6, 2021, BlackRock Advantage Large Cap Growth Fund’s Service Shares will be converted into Investor A Shares.

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

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

Class R Shares (available only in BlackRock Advantage International Fund and BlackRock Advantage Large Cap Growth Fund) are not subject to any sales charge. These shares are subject to a distribution fee of 0.25% per year and a service fee of 0.25% per year. These shares are available only to certain employer-sponsored retirement plans. BlackRock Advantage International Fund’s Class R Shares performance shown prior to the Class R Shares inception date of September 12, 2011 is that of Institutional Shares (which have no distribution or service fees) and was restated to reflect Class R Shares fees.

Past performance is not an indication of future results. Financial markets have experienced extreme volatility and trading in many instruments has been disrupted. These circumstances may continue for an extended period of time, and may continue to affect adversely the value and liquidity of the fund’s investments. As a result, current performance may be lower or higher than the performance data quoted. Refer to blackrock.com to obtain performance data current to the most recent month-end. Performance results do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Figures shown in the performance tables on the previous pages assume reinvestment of all distributions, if any, at net asset value (“NAV”) on the ex-dividend date or payable date, as applicable. Investment return and principal value of shares will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Distributions paid to each class of shares will vary because of the different levels of service, distribution and transfer agency fees applicable to each class, which are deducted from the income available to be paid to shareholders.

BlackRock Advisors, LLC (the “Manager”), each Fund’s investment adviser, has contractually and/or voluntarily agreed to waive and/or reimburse a portion of each Fund’s expenses. Without such waiver(s) and/or reimbursement(s), each Fund’s performance would have been lower. With respect to each Fund’s voluntary waiver(s), if any, the Manager is under no obligation to waive and/or reimburse or to continue waiving and/or reimbursing its fees and such voluntary waiver(s) may be reduced or discontinued at any time. With respect to each Fund’s contractual waiver(s), if any, the Manager is under no obligation to continue waiving and/or reimbursing its fees after the applicable termination date of such agreement. See the Notes to Financial Statements for additional information on waivers and/or reimbursements.

Disclosure of Expenses

Shareholders of each Fund may incur the following charges: (a) transactional expenses, such as sales charges; and (b) operating expenses, including investment advisory fees, administration fees, service and distribution fees, including 12b-1 fees, acquired fund fees and expenses and other fund expenses. The expense examples shown (which are based on a hypothetical investment of $1,000 invested on December 1, 2020 and held through May 31, 2021) are intended to assist shareholders both in calculating expenses based on an investment in each Fund and in comparing these expenses with similar costs of investing in other mutual funds.

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

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

The expenses shown in the expense examples are intended to highlight shareholders’ ongoing costs only and do not reflect transactional expenses, such as sales charges, if any. Therefore, the hypothetical examples are useful in comparing ongoing expenses only, and will not help shareholders determine the relative total expenses of owning different funds. If these transactional expenses were included, shareholder expenses would have been higher.

 

 

A B O U T   F U N D   P E R F O R M A N C E

   15

Derivative Financial Instruments

 

The Funds may invest in various derivative financial instruments. These instruments are used to obtain exposure to a security, commodity, index, market and/or other assets without owning or taking physical custody of securities, commodities and/or other referenced assets or to manage market, equity, credit, interest rate, foreign currency exchange rate, commodity and/or other risks. Derivative financial instruments may give rise to a form of economic leverage and involve risks, including the imperfect correlation between the value of a derivative financial instrument and the underlying asset, possible default of the counterparty to the transaction or illiquidity of the instrument. The Funds’ successful use of a derivative financial instrument depends on the investment adviser’s ability to predict pertinent market movements accurately, which cannot be assured. The use of these instruments may result in losses greater than if they had not been used, may limit the amount of appreciation a Fund can realize on an investment and/or may result in lower distributions paid to shareholders. The Funds’ investments in these instruments, if any, are discussed in detail in the Notes to Financial Statements.

 

 

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Schedule of Investments

May 31, 2021

   

BlackRock Advantage International Fund

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

 

Australia — 7.3%

 

AGL Energy Ltd.

     51,841     $ 325,126  

Altium Ltd.

     8,956       195,051  

Alumina Ltd.

     265,694       350,906  

Appen Ltd.

     18,314       189,100  

Aristocrat Leisure Ltd.

     258,838       8,171,928  

ASX Ltd.

     1,601       94,185  

Aurizon Holdings Ltd.

     116,512       325,189  

Bendigo & Adelaide Bank Ltd.

     247,044       1,970,672  

BHP Group Ltd.

     320,057       11,805,081  

BHP Group PLC

     108,119       3,267,038  

BlueScope Steel Ltd.

     17,486       285,785  

Brambles Ltd.

     6,299       52,556  

carsales.com Ltd.

     64,765       962,417  

Challenger Ltd.

     47,026       188,961  

Cochlear Ltd.

     11,923       2,086,897  

Commonwealth Bank of Australia

     117,185       9,003,302  

Computershare Ltd.

     27,919       337,868  

CSL Ltd.

     27,462       6,146,824  

Domain Holdings Australia Ltd.(a)

    17,688       66,980  

Downer EDI Ltd.

     959       4,110  

Ensogo Ltd.(a)(b)

    122,284       1  

Glencore PLC

     777,912       3,543,470  

Goodman Group

     107,701       1,613,328  

Iluka Resources Ltd.

     370,426       2,201,969  

IOOF Holdings Ltd.

     491,734       1,495,431  

Magellan Financial Group Ltd.

     7,830       288,520  

Medibank Pvt Ltd.

     1,807,024       4,360,442  

Mineral Resources Ltd.

     13,688       478,481  

Mirvac Group

     43,178       92,721  

Platinum Asset Management Ltd.

     45       160  

Qantas Airways Ltd.(a)

    545,791       1,977,881  

REA Group Ltd.

     52,853       6,662,461  

Rio Tinto Ltd.

     6,063       578,145  

Rio Tinto PLC

     35,572       3,063,019  

Scentre Group

     2,138,661       4,475,072  

SEEK Ltd.

     80,450       1,892,081  

South32 Ltd.

     64,377       147,694  

Stockland

     177,438       637,702  

Tabcorp Holdings Ltd.

     121,269       476,530  

Technology One Ltd.

     19,192       136,195  

Treasury Wine Estates Ltd.

     90,547       811,950  

Westpac Banking Corp.

     239,068       4,861,258  

WiseTech Global Ltd.

     56,127       1,218,594  
   

 

 

  
      86,843,081  
Austria — 0.2%  

Raiffeisen Bank International AG

     113,567       2,704,886  
   

 

 

  
Belgium — 0.8%  

Ageas SA

     729       47,698  

Anheuser-Busch InBev SA

     117,957       8,880,498  

UCB SA

     661       61,844  
   

 

 

  
        8,990,040  
China — 1.3%  

BOC Hong Kong Holdings Ltd.

     1,145,000       4,135,641  

Budweiser Brewing Co. APAC Ltd.(c)

    72,000       244,204  

Prosus NV

     81,881       8,503,447  

Yangzijiang Shipbuilding Holdings Ltd.

     1,781,800       2,019,928  
   

 

 

  
      14,903,220  
Denmark — 3.3%  

AP Moller - Maersk A/S, Class A

     738       1,950,797  
Security   Shares     Value  
Denmark (continued)  

AP Moller - Maersk A/S, Class B

     2,179     $ 6,018,986  

Chr Hansen Holding A/S

     39,451       3,541,529  

Coloplast A/S, Class B

     19,176       3,026,956  

Genmab A/S(a)

    3,506       1,418,345  

GN Store Nord AS

     34,574       2,935,108  

Netcompany Group A/S(c)

    6,185       717,630  

Novo Nordisk A/S, Class B

     234,806       18,578,507  

Pandora A/S

     464       62,747  

SimCorp A/S

     5,812       788,999  
   

 

 

  
      39,039,604  
Finland — 1.7%  

Kone Oyj, Class B

     106,261       8,594,995  

Nokia Oyj(a)

    1       5  

Nordea Bank Abp

     992,262       10,643,816  

Sampo Oyj, A Shares

     7,335       341,804  

TietoEVRY Oyj

     7,067       228,439  

UPM-Kymmene Oyj

     23,925       912,000  
   

 

 

  
      20,721,059  
France — 11.7%            

Air France-KLM(a)

    124,724       706,241  

Air Liquide SA

     1,145       194,735  

ALD SA(c)

    19       292  

Amundi SA(c)

    63,137       5,613,500  

Arkema SA

     201       26,493  

Atos SE

     67,843       4,550,263  

AXA SA

     234,839       6,486,351  

BNP Paribas SA

     205,318       14,032,378  

Casino Guichard Perrachon SA(a)

    60,740       1,961,207  

CNP Assurances

     80,286       1,456,526  

Credit Agricole SA

     153,778       2,295,501  

Dassault Systemes SE

     38,215       8,798,616  

Engie SA

     321,912       4,783,196  

Eutelsat Communications SA

     5,742       73,080  

Hermes International

     8,794       12,395,736  

Kering SA

     15,406       14,100,565  

Klepierre SA

     4,099       118,551  

Legrand SA

     13,846       1,450,495  

L’Oreal SA

     10,852       4,888,907  

LVMH Moet Hennessy Louis Vuitton SE

     19,251       15,351,638  

Natixis SA(a)

    25,917       128,597  

Orange SA

     15,494       197,275  

Pernod Ricard SA

     31,764       6,998,927  

Remy Cointreau SA

     296       61,851  

Renault SA(a)

    959       39,701  

Rexel SA

     400,190       8,166,673  

Rubis SCA

     20,870       1,009,477  

Sanofi

     9,716       1,033,533  

Schneider Electric SE

     80,505       12,740,829  

SCOR SE(a)

    50,989       1,658,747  

Société Générale SA

     23,678       759,338  

Sodexo SA(a)

    16,374       1,586,278  

TOTAL SE

     35,812       1,660,661  

Unibail-Rodamco-Westfield(a)

    9,549       831,537  

Valeo SA

     56,245       1,840,932  
   

 

 

  
        137,998,627  
Germany — 8.5%            

adidas AG

     14,012       5,112,850  

Allianz SE, Registered Shares

     1,221       321,771  

Aroundtown SA

     211,978       1,780,272  

Aurubis AG

     6,599       631,066  

BASF SE

     17,293       1,410,023  
 

 

 

S C H E D U L E S   O F   I N V E S T M E N T S

   17

Schedule of Investments   (continued)

May 31, 2021

   

BlackRock Advantage International Fund

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Germany (continued)  

Bayer AG, Registered Shares

     29,386     $ 1,850,024  

Bayerische Motoren Werke AG

     6,886       730,304  

Bayerische Motoren Werke AG, Preference Shares

     1,081       97,929  

Beiersdorf AG

     51,181       6,061,370  

Continental AG(a)

    1,507       222,843  

Daimler AG, Registered Shares

     101,816       9,488,050  

Deutsche Boerse AG

     21,906       3,581,677  

Deutsche Post AG, Registered Shares

     197,491       13,478,101  

DWS Group GmbH & Co. KGaA(c)

    6,581       314,293  

E.ON SE

     721,098       8,718,302  

Evonik Industries AG

     18,571       664,276  

Freenet AG

     14,962       411,529  

Fresenius Medical Care AG & Co. KGaA

     932       74,491  

Hannover Rueck SE

     9,466       1,656,646  

HelloFresh SE(a)

    44,766       4,092,463  

Henkel AG & Co. KGaA

     6,914       682,717  

Henkel AG & Co. KGaA, Preference Shares

     43,648       5,007,617  

Nemetschek SE

     5,507       407,250  

Rheinmetall AG

     8,956       929,933  

SAP SE

     36,678       5,092,205  

Schaeffler AG, Preference Shares

     163,050       1,530,312  

Scout24 AG(c)

    22,960       1,864,949  

Siemens AG, Registered Shares

     106,888       17,341,289  

thyssenkrupp AG(a)

    25       296  

Volkswagen AG

     601       214,372  

Volkswagen AG, Preference Shares

     10,036       2,803,943  

Vonovia SE

     7,578       473,945  

Zalando SE(a)(c)

    29,666       3,171,532  
   

 

 

  
      100,218,640  
Hong Kong — 3.0%  

AIA Group Ltd.

     953,200       12,160,969  

ASM Pacific Technology Ltd.

     24,000       316,715  

Cathay Pacific Airways Ltd.(a)

    473,000       406,246  

CK Asset Holdings Ltd.

     291,500       1,928,215  

Dah Sing Financial Holdings Ltd.

     17,600       62,638  

Haitong International Securities Group Ltd.

     147,000       44,825  

Henderson Land Development Co. Ltd.

     143,420       684,817  

Hongkong Land Holdings Ltd.

     87,400       428,059  

Kerry Properties Ltd.

     590,000       1,897,644  

Link REIT

     259,800       2,471,454  

MTR Corp. Ltd.

     341,500       1,897,974  

New World Development Co. Ltd.

     258,000       1,389,078  

NWS Holdings Ltd.

     268,000       301,210  

Sun Hung Kai Properties Ltd.

     156,500       2,401,504  

Swire Properties Ltd.

     1,044,600       3,073,097  

Techtronic Industries Co. Ltd.

     227,000       4,180,572  

WH Group Ltd.(c)

    330,500       281,947  

Wharf Real Estate Investment Co. Ltd.

     190,000       1,111,654  
   

 

 

  
        35,038,618  
India — 0.0%  

Jasper Infotech Private Ltd. (Acquired 05/07/14, cost $ 804,375)(a)(b)(d)

    1,080       178,060  
   

 

 

  
Ireland — 0.4%  

AIB Group PLC(a)

    27,038       90,095  

CRH PLC

     3,199       166,440  

Flutter Entertainment PLC(a)

    7,783       1,447,371  

Kerry Group PLC, Class A

     6,041       816,740  

Kingspan Group PLC

     15,338       1,440,782  

Smurfit Kappa Group PLC

     7,924       420,875  
   

 

 

  
      4,382,303  
Security   Shares     Value  
Israel — 1.0%  

Bank Hapoalim BM(a)

    355,171     $ 3,012,742  

Bank Leumi Le-Israel BM(a)

    7,123       55,683  

First International Bank Of Israel Ltd.(a)

    5,377       171,291  

ICL Group Ltd.

     22,619       163,922  

Israel Discount Bank Ltd., Class A(a)

    379,094       1,883,320  

Mizrahi Tefahot Bank Ltd.(a)

    5,889       175,450  

Nice Ltd.(a)(e)

    19,099       4,174,171  

Plus500 Ltd.

     1,851       39,694  

Teva Pharmaceutical Industries Ltd.(a)

    216,617       2,291,547  
   

 

 

  
      11,967,820  
Italy — 0.9%  

Amplifon SpA

     4,017       191,406  

Assicurazioni Generali SpA

     97,789       2,011,302  

Banca Generali SpA(a)

    14,454       591,154  

Hera SpA

     15,953       68,102  

Interpump Group SpA

     455       26,025  

Intesa Sanpaolo SpA

     447,941       1,323,737  

Leonardo SpA(a)

    162,814       1,416,366  

Mediaset SpA(a)

    11       40  

Mediobanca Banca di Credito Finanziario SpA(a)

    163,179       1,948,154  

Pirelli & C SpA(a)(c)

    256,475       1,523,909  

Telecom Italia SpA

     518,108       277,961  

Unipol Gruppo SpA

     293,782       1,645,860  
   

 

 

  
        11,024,016  
Japan — 23.2%  

Advantest Corp.

     1,400       126,752  

Aisin Corp.

     52,900       2,323,075  

Alfresa Holdings Corp.

     4,900       75,866  

Alps Alpine Co. Ltd.

     137,000       1,473,573  

Amada Co. Ltd.

     96,600       1,028,846  

ANA Holdings, Inc.(a)

    2,500       60,889  

Asahi Kasei Corp.

     138,200       1,526,481  

Asics Corp.

     6,900       165,701  

Astellas Pharma, Inc.

     212,900       3,500,523  

Bandai Namco Holdings, Inc.

     26,500       1,900,043  

Benesse Holdings, Inc.

     84,100       1,935,387  

Bridgestone Corp.

     93,500       4,116,346  

Canon Marketing Japan, Inc.

     1,200       28,074  

Canon, Inc.

     220,290       5,165,787  

Casio Computer Co. Ltd.

     39,800       692,158  

Credit Saison Co. Ltd.

     10,700       132,168  

Dai Nippon Printing Co. Ltd.

     8,000       172,785  

Dai-ichi Life Holdings, Inc.

     12,600       257,487  

Daikin Industries Ltd.

     3,900       770,932  

Daito Trust Construction Co. Ltd.

     1,300       137,305  

Daiwa House Industry Co. Ltd.

     83,000       2,436,465  

Denso Corp.

     32,500       2,233,591  

DIC Corp.

     36,900       944,740  

Dip Corp.

     13,600       403,440  

Disco Corp.

     4,700       1,446,844  

Ebara Corp.

     2,400       118,732  

Eisai Co. Ltd.

     11,000       740,864  

Electric Power Development Co. Ltd.

     12,000       169,609  

FANUC Corp.

     31,000       7,460,803  

Fast Retailing Co. Ltd.

     9,500       7,757,870  

FUJIFILM Holdings Corp.

     66,300       4,634,380  

Fuyo General Lease Co. Ltd.

     900       59,770  

GMO internet, Inc.

     7,700       207,929  

Haseko Corp.

     4,100       57,579  

Honda Motor Co. Ltd.

     6,900       211,723  

Hoya Corp.

     400       52,663  

Idemitsu Kosan Co. Ltd.

     20,500       485,396  
 

 

 

18  

2 0 2 1   B L A C K R O C K   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S

Schedule of Investments   (continued)

May 31, 2021

   

BlackRock Advantage International Fund

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Japan (continued)  

Inpex Corp.

     191,200     $ 1,318,423  

Isuzu Motors Ltd.

     27,100       357,680  

Itoham Yonekyu Holdings, Inc.

     14,700       95,300  

Japan Airlines Co. Ltd.(a)

    1,500       34,337  

Japan Post Bank Co. Ltd.

     53,500       455,921  

Japan Post Holdings Co. Ltd.

     525,200       4,374,400  

Japan Tobacco, Inc.

     264,800       5,239,400  

Kakaku.com, Inc.

     9,400       286,862  

Kamigumi Co. Ltd.

     1,400       27,781  

Kandenko Co. Ltd.

     19,900       164,947  

Kansai Paint Co. Ltd.

     6,100       164,926  

KDDI Corp.

     133,500       4,534,228  

Keyence Corp.

     30,800           15,207,703  

Kinden Corp.

     1,600       26,972  

Kirin Holdings Co. Ltd.

     504,900       10,207,126  

Koito Manufacturing Co. Ltd.

     7,200       469,878  

Komatsu Ltd.

     26,400       775,886  

Konica Minolta, Inc.

     192,300       1,052,093  

Kose Corp.

     6,100       958,370  

Kubota Corp.

     66,300       1,512,284  

Kyoritsu Maintenance Co. Ltd.

     2,800       94,141  

Kyowa Exeo Corp.

     10,500       258,678  

Lawson, Inc.

     1,900       85,783  

Lintec Corp.

     31,000       686,847  

M3, Inc.

     16,100       1,091,884  

Maeda Corp.

     40,300       352,504  

Mitsubishi Chemical Holdings Corp.

     45,800       367,633  

Mitsubishi Corp.

     109,300       2,985,604  

Mitsubishi Estate Co. Ltd.

     7,300       118,629  

Mitsubishi HC Capital, Inc.

     572,400       3,193,579  

Mitsubishi Heavy Industries Ltd.

     34,900       1,059,259  

Mitsubishi Materials Corp.

     33,100       703,287  

Mitsui & Co. Ltd.

     35,400       783,059  

Mitsui Mining & Smelting Co. Ltd.

     1,300       38,561  

Morinaga & Co. Ltd.

     12,200       377,010  

MS&AD Insurance Group Holdings, Inc.

     128,900       3,944,985  

Murata Manufacturing Co. Ltd.

     34,000       2,578,188  

Nexon Co. Ltd.

     100,600       2,372,997  

NGK Spark Plug Co. Ltd.

     37,900       597,753  

Nidec Corp.

     52,000       5,976,918  

Nihon M&A Center, Inc.

     8,400       200,936  

Nihon Unisys Ltd.

     5,500       159,379  

Nikon Corp.

     157,700       1,619,450  

Nintendo Co. Ltd.

     8,400       5,198,768  

Nippon Paint Holdings Co. Ltd.

     194,200       2,820,939  

Nippon Shinyaku Co. Ltd.

     4,900       351,001  

Nippon Telegraph & Telephone Corp.

     330,200       8,844,686  

Nippon Yusen KK

     20,200       835,517  

Nissan Motor Co. Ltd.(a)

    33,200       163,682  

Nomura Holdings, Inc.

     688,400       3,782,310  

Nomura Research Institute Ltd.

     25,000       797,155  

Obayashi Corp.

     45,700       385,653  

Obic Co. Ltd.

     2,800       524,861  

Omron Corp.

     14,300       1,129,916  

Oracle Corp. Japan(a)

    1,800       163,909  

Oriental Land Co. Ltd.

     5,400       806,035  

Otsuka Corp.

     14,600       781,574  

Persol Holdings Co. Ltd.

     18,200       346,017  

Pigeon Corp.

     15,100       425,766  

Recruit Holdings Co. Ltd.

     270,100       13,780,543  

Relo Group, Inc.

     6,500       132,281  

Resona Holdings, Inc.

     155,900       667,393  
Security   Shares     Value  
Japan (continued)  

Resorttrust, Inc.

     10,100     $ 160,114  

Ricoh Co. Ltd.

     314,700       3,737,946  

Sanwa Holdings Corp.

     7,700       93,525  

Sawai Group Holdings Co. Ltd.

     5,600       244,837  

SCREEN Holdings Co. Ltd.

     8,900       850,632  

SCSK Corp.

     1,800       104,491  

Secom Co. Ltd.

     1,400       109,676  

Sekisui House Ltd.

     12,300       256,363  

Seven Bank Ltd.

     14,000       29,098  

Shimadzu Corp.

     2,600       91,247  

Shimano, Inc.

     7,000       1,586,184  

Shimizu Corp.

     13,500       110,794  

Shin-Etsu Chemical Co. Ltd.

     300       51,833  

Shinsei Bank Ltd.

     22,200       345,606  

Shiseido Co. Ltd.

     29,700       2,152,027  

SMC Corp.

     10,100       6,053,101  

SoftBank Corp.

     189,500       2,437,314  

SoftBank Group Corp.

     103,600       7,823,428  

Sompo Holdings, Inc.

     14,400       580,459  

Sony Group Corp.

     11,700       1,154,884  

Subaru Corp.

     137,800       2,684,786  

Sumitomo Chemical Co. Ltd.

     1,759,200       9,663,286  

Sumitomo Corp.

     19,600       274,234  

Sumitomo Forestry Co. Ltd.

     2,600       52,748  

Sumitomo Heavy Industries Ltd.

     3,300       102,309  

Sumitomo Metal Mining Co. Ltd.

     5,900       265,844  

Sumitomo Mitsui Financial Group, Inc.

     325,500       11,779,424  

Sumitomo Rubber Industries Ltd.

     457,600       5,925,956  

Suntory Beverage & Food Ltd.

     59,000       2,174,122  

Sysmex Corp.

     11,700       1,195,137  

T&D Holdings, Inc.

     37,700       514,548  

Taiheiyo Cement Corp.

     1,700       39,226  

Taisei Corp.

     13,500       472,178  

Takeda Pharmaceutical Co. Ltd.

     299,300       10,180,968  

Tokio Marine Holdings, Inc.

     126,400       5,994,708  

Tokyo Electron Ltd.

     17,400       7,750,219  

Tokyo Gas Co. Ltd.

     12,200       241,821  

Toshiba Corp.

     25,600       1,077,808  

Toyoda Gosei Co. Ltd.

     13,600       346,840  

Toyota Motor Corp.

     55,500       4,626,132  

Trend Micro, Inc.

     5,300       268,775  

Unicharm Corp.

     39,900       1,578,560  

Welcia Holdings Co. Ltd.

     63,900       1,954,167  

Yakult Honsha Co. Ltd.

     6,100       330,339  

Yamada Holdings Co. Ltd.

     230,600       1,122,183  

Yaskawa Electric Corp.

     18,600       905,730  

Yokohama Rubber Co. Ltd.

     7,400       149,394  

Z Holdings Corp.

     223,900       1,054,097  
   

 

 

  
        274,561,261  
Luxembourg — 0.2%  

RTL Group SA

     32,616       1,941,617  

SES SA

     29,945       258,580  
   

 

 

  
      2,200,197  
Netherlands — 6.1%  

ABN AMRO Group NV, CVA(a)(c)

    12,435       166,118  

Adyen NV(a)(c)

    2,150       4,970,535  

Aegon NV

     1,342,541       6,333,328  

Akzo Nobel NV

     2,575       331,634  

Argenx SE(a)

    821       226,627  

ASML Holding NV

     21,669       14,501,852  

EXOR NV

     1,883       161,701  

Flow Traders(c)

    27,994       1,224,637  
 

 

 

S C H E D U L E S   O F   I N V E S T M E N T S

   19

Schedule of Investments   (continued)

May 31, 2021

   

BlackRock Advantage International Fund

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Netherlands (continued)  

Heineken NV

     2,727     $ 325,563  

JDE Peet’s NV(a)

    13,274       523,620  

Koninklijke Ahold Delhaize NV

     156,910       4,533,682  

Koninklijke Philips NV

     58,017       3,265,390  

NN Group NV

     85,302       4,332,299  

PostNL NV

     185,098       1,088,982  

Randstad NV

     115,863       9,030,876  

Royal Dutch Shell PLC, A Shares

     514,642       9,823,746  

Royal Dutch Shell PLC, B Shares

     498,587       9,066,304  

Signify NV(c)

    36,504       2,266,220  
   

 

 

  
          72,173,114  
New Zealand — 0.3%  

a2 Milk Co. Ltd.(a)

    156,729       667,464  

Air New Zealand Ltd.(a)

    8,210       9,971  

Fisher & Paykel Healthcare Corp. Ltd.

     66,547       1,440,779  

Spark New Zealand Ltd.

     13,054       43,017  

Xero Ltd.(a)

    17,597       1,796,380  
   

 

 

  
      3,957,611  
Norway — 0.1%  

DNB ASA

     32,446       717,762  

Tomra Systems ASA

     9       463  
   

 

 

  
      718,225  
Singapore — 0.8%  

DBS Group Holdings Ltd.

     118,700       2,692,913  

Jardine Cycle & Carriage Ltd.

     249,100       4,143,691  

Oversea-Chinese Banking Corp. Ltd.

     53,700       501,728  

Singapore Airlines Ltd.(a)

    133,200       501,602  

United Overseas Bank Ltd.

     77,800       1,532,983  

Venture Corp. Ltd.

     5,800       83,438  
   

 

 

  
      9,456,355  
South Africa — 0.3%  

Anglo American PLC

     70,863       3,148,172  
   

 

 

  
Spain — 1.2%  

Acciona SA

     3,681       622,196  

Banco Bilbao Vizcaya Argentaria SA

     356,149       2,238,791  

Banco de Sabadell SA(a)

    57,738       44,297  

Banco Santander SA

     252,239       1,057,113  

CaixaBank SA

     140,057       480,855  

Endesa SA

     29,364       801,012  

Grifols SA

     2,057       57,438  

Iberdrola SA

     426,851       5,739,827  

Mediaset Espana Comunicacion SA(a)

    24       170  

Naturgy Energy Group SA

     26,631       698,132  

Repsol SA

     118,877       1,589,532  

Telefonica SA

     79,940       393,224  
   

 

 

  
        13,722,587  
Sweden — 4.0%  

Assa Abloy AB, Class B

     239,343       7,363,367  

Atlas Copco AB, A Shares

     123,482       7,491,326  

Atlas Copco AB, B Shares

     67,673       3,493,820  

Elekta AB, B Shares

     17,048       250,900  

Epiroc AB, B Shares(a)

    5,721       2,070  

Epiroc AB, Class B

     5,721       114,075  

EQT AB

     5,424       196,421  

Evolution AB(c)

    19,645       3,762,938  

Hennes & Mauritz AB, B Shares(a)

    39,939       1,020,999  

Hexagon AB, B Shares

     15,358       218,918  

Intrum AB

     2,526       88,061  

Investor AB, B Shares

     28,132       650,288  

Kinnevik AB, B Shares(a)

    86,366       1,645,622  
Security   Shares     Value  
Sweden (continued)  

Kinnevik AB, Class B

     86,366     $ 3,299,735  

L E Lundbergforetagen AB, B Shares

     30,127       1,895,093  

Loomis AB

     1,480       46,809  

Pandox AB(a)

    40,834       730,722  

Saab AB, Class B

     108,324       3,135,731  

Samhallsbyggnadsbolaget i Norden AB

     139,296       608,512  

SKF AB, B Shares

     57,666       1,558,087  

Swedish Match AB

     218,954       2,030,808  

Telefonaktiebolaget LM Ericsson, B Shares

     621,633       8,246,338  

Trelleborg AB, B Shares

     2,858       73,595  
   

 

 

  
      47,924,235  
Switzerland — 7.8%            

Adecco Group AG, Registered Shares

     88,529       6,099,798  

Cie Financiere Richemont SA, Registered Shares

     111,753       13,633,319  

Credit Suisse Group AG, Registered Shares

     66,806       728,195  

Givaudan SA, Registered Shares

     2,686       11,988,319  

Holcim Ltd.

     1,075       63,927  

Kuehne + Nagel International AG, Registered Shares

     5,431       1,833,381  

Landis+Gyr Group AG

     2,058       151,086  

Nestlé SA, Registered Shares

     133,367       16,419,113  

Novartis AG, Registered Shares

     81,355       7,141,471  

Roche Holding AG

     35,005       12,175,169  

Roche Holding AG

     7,375       2,764,502  

Sika AG, Registered Shares

     38,481       12,383,559  

Sonova Holding AG, Registered Shares(a)

    936       332,890  

Straumann Holding AG, Registered Shares

     515       806,085  

Sulzer AG, Registered Shares

     2       255  

Swatch Group AG

     407       147,503  

Swatch Group AG, Registered Shares

     1,644       114,008  

Swiss Life Holding AG, Registered Shares

     75       38,908  

Swiss Re AG

     23,403       2,249,258  

Tecan Group AG, Registered Shares

     1,278       635,272  

UBS Group AG, Registered Shares

     151,431       2,457,090  
   

 

 

  
          92,163,108  
United Kingdom — 11.9%            

3i Group PLC

     38,944       684,583  

Abcam PLC(a)

    12,220       245,970  

ASOS PLC(a)

    707       48,945  

AstraZeneca PLC

     120,305       13,722,942  

Auto Trader Group PLC(a)(c)

    19,756       157,131  

Aviva PLC

     199,568       1,163,758  

Babcock International Group PLC(a)

    112,762       477,977  

Barclays PLC

     81,877       212,912  

Barratt Developments PLC

     31,500       336,390  

Bellway PLC

     19,238       975,604  

BP PLC

     1,552,353       6,778,020  

British American Tobacco PLC

     383,898       14,810,316  

British Land Co. PLC

     15,406       111,323  

BT Group PLC(a)

    124       307  

Burberry Group PLC(a)

    73,127       2,213,059  

Centrica PLC(a)

    397,166       307,822  

Close Brothers Group PLC

     15       349  

Compass Group PLC(a)

    59,566       1,353,108  

Diageo PLC

     130,830       6,316,256  

Direct Line Insurance Group PLC

     194,648       823,764  

Dunelm Group PLC

     98,961       2,060,965  

Entain PLC(a)

    14,063       328,593  

Experian PLC

     120,997       4,642,738  

GlaxoSmithKline PLC

     120,483       2,301,771  

Greggs PLC(a)

    10,258       363,064  

Halma PLC

     6,473       239,004  
 

 

 

20  

2 0 2 1   B L A C K R O C K   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S

Schedule of Investments   (continued)

May 31, 2021

   

BlackRock Advantage International Fund

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
United Kingdom (continued)            

HomeServe PLC

     35,383     $ 468,639  

Howden Joinery Group PLC

     200,682       2,268,844  

HSBC Holdings PLC

     1,598,132       10,345,850  

IG Group Holdings PLC

     9,456       114,942  

Imperial Brands PLC

     141,407       3,210,633  

InterContinental Hotels Group PLC(a)

    4,501       313,007  

ITV PLC(a)

    379,247       686,818  

J Sainsbury PLC

     663,753       2,499,279  

JD Sports Fashion PLC(a)

    209,227       2,799,578  

JET2 PLC(a)

    80,568       1,543,609  

Johnson Matthey PLC

     38,228       1,647,871  

Kingfisher PLC(a)

    939,986       4,771,253  

Lloyds Banking Group PLC

     13,175,934       9,317,896  

Marks & Spencer Group PLC(a)

    457,256       1,066,728  

Meggitt PLC(a)

    59,832       429,250  

Micro Focus International PLC

     565,804       4,156,273  

Natwest Group PLC

     12,752       37,351  

Prudential PLC

     109,220       2,327,773  

Redrow PLC

     50,333       484,509  

RELX PLC

     92,329       2,402,504  

Rentokil Initial PLC

     16,677       111,854  

Rightmove PLC

     707,491       6,043,278  

Royal Mail PLC(a)

    407,829       3,338,429  

Smith & Nephew PLC

     7,681       167,342  

Smiths Group PLC

     144,775       3,177,001  

SSE PLC

     73,935       1,615,035  

Standard Chartered PLC

     248,234       1,786,514  

Subsea 7 SA

     39       380  

Tate & Lyle PLC

     11,587       126,126  

Taylor Wimpey PLC

     108,306       261,875  

Tesco PLC

     749,403       2,374,937  

Travis Perkins PLC(a)

    38,926       905,572  

Unilever PLC

     109,588       6,575,375  

Vistry Group PLC

     15,199       284,935  

Whitbread PLC(a)

    13,263       596,989  

Wm Morrison Supermarkets PLC

     895,437       2,249,344  
   

 

 

  
      141,184,264  
United States — 0.3%            

Ferguson PLC

     7,309       992,891  

James Hardie Industries PLC

     28,895       957,640  

Palantir Technologies, Inc., Class A(a)

    4       92  

Stellantis NV

     107,937       2,146,290  
   

 

 

  
      4,096,913  
   

 

 

  

Total Common Stocks — 96.3%
(Cost: $953,849,048)

       1,139,316,016  
   

 

 

  
Security   Shares     Value  

Rights

 

Singapore — 0.0%

 

Singapore Airlines Ltd. (Expires 06/16/21, Strike Price SGD 4.84)(a)(b)

    240,559     $ 2  
   

 

 

  

Total Rights — 0.0%
(Cost: $ —)

       2  
   

 

 

  

Total Long-Term Investments — 96.3% (Cost: $953,849,048)

       1,139,316,018  
   

 

 

  

Short-Term Securities(f)(g)

 

Money Market Funds — 2.6%

 

BlackRock Liquidity Funds, T-Fund, Institutional Class, 0.01%

     31,337,962       31,337,962  

SL Liquidity Series, LLC, Money Market Series, 0.12%(h)

    125,005       125,042  
   

 

 

  

Total Short-Term Securities — 2.6% (Cost: $31,463,004)

       31,463,004  
   

 

 

  

Total Investments — 98.9%
(Cost: $985,312,052)

       1,170,779,022  

Other Assets Less Liabilities — 1.1%

       12,487,486  
   

 

 

  

Net Assets — 100.0%

     $   1,183,266,508  
   

 

 

  

 

(a)

Non-income producing security.

(b) 

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

(c) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

(d) 

Restricted security as to resale, excluding 144A securities. The Fund held restricted securities with a current value of $178,060, representing 0.0% of its net assets as of period end, and an original cost of $804,375.

(e) 

All or a portion of this security is on loan.

(f) 

Affiliate of the Fund.

(g) 

Annualized 7-day yield as of period end.

(h) 

All or a portion of this security was purchased with the cash collateral from loaned securities.

 

 

 

S C H E D U L E S   O F   I N V E S T M E N T S

   21

Schedule of Investments   (continued)

May 31, 2021

   

BlackRock Advantage International Fund

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the period ended May 31, 2021 for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

 

 

    
    Affiliated Issuer    Value at
05/31/20 		    

Purchases

at Cost

     Proceeds
from Sale		    

Net

Realized
Gain (Loss)

     Change in
Unrealized
Appreciation
(Depreciation)		      Value at
05/31/21 		     Shares
Held at
05/31/21 		     Income     

Capital

Gain
Distributions
from Underlying
Funds

       
 

 

    

    

  

BlackRock Liquidity Funds, T-Fund, Institutional Class

    $  22,359,927      $   8,978,035(a )       $ —        $ —        $ —      $ 31,337,962        31,337,962      $ 9,659         $ —             
 

SL Liquidity Series, LLC, Money Market Series

      96,216        35,907(a )        —          (6,770 )         (311 )       125,042        125,005        105,634(b )          —    
               

 

 

       

 

 

     

 

 

        

 

 

        

 

 

    
                         $   (6,770 )                $   (311 )     $   31,463,004         $   115,293                      $  —    
               

 

 

       

 

 

     

 

 

        

 

 

        

 

 

    

 

  (a) 

Represents net amount purchased (sold).

 
  (b) 

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

Futures Contracts    

 

         
Description    Number of
Contracts 		               Expiration
Date 		            Notional
Amount
(000) 		    Value/
Unrealized
Appreciation
        (Depreciation)		  

Long Contracts

                

MSCI EAFE Index

      330          06/18/21              $   38,561              $   1,528,183  
               

 

 

  

Derivative Financial Instruments Categorized by Risk Exposure

As of period end, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:

 

               
      Commodity
Contracts 		    Credit
Contracts		      Equity
Contracts 		     Foreign
Currency
Exchange
Contracts		     

Interest

Rate
Contracts

      Other
Contracts		      Total  

Assets — Derivative Financial Instruments

                                         

Futures contracts

                                         

Unrealized appreciation(a)

               $  —           $  —      $   1,528,183                  $  —                  $  —                  $  —                  $   1,528,183  
     

 

 

          

 

 

     

 

 

        

 

 

        

 

 

        

 

 

        

 

 

  

 

  (a) 

Net cumulative unrealized appreciation (depreciation) on futures contracts, if any, are reported in the Schedule of Investments. In the Statement of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

For the period ended May 31, 2021, the effect of derivative financial instruments in the Statement of Operations was as follows:

 

                   
      Commodity
Contracts 		    Credit
  Contracts		           

Equity

Contracts

    Foreign
Currency
Exchange
Contracts		      Interest
Rate
Contracts		      Other
Contracts		              Total  

Net Realized Gain (Loss) from

                                               

Futures contracts

                $ —                 $ —       $   10,985,090                 $ —                  $ —                  $ —         $   10,985,090  
     

 

 

       

 

 

      

 

 

       

 

 

        

 

 

        

 

 

        

 

 

  

Net Change in Unrealized Appreciation (Depreciation) on

                                               

Futures contracts

       $ —        $ —       $ (443,180 )       $ —         $ —         $ —         $ (443,180 ) 
     

 

 

       

 

 

      

 

 

       

 

 

        

 

 

        

 

 

        

 

 

  

Average Quarterly Balances of Outstanding Derivative Financial Instruments    

 

   

Futures contracts

   

Average notional value of contracts — long

    $ 33,747,540  

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.    

 

 

 

22  

2 0 2 1   B L A C K R O C K   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S

Schedule of Investments   (continued)

May 31, 2021

   

BlackRock Advantage International Fund

 

Fair Value Hierarchy as of Period End

Various inputs are used in determining the fair value of financial instruments. For a description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

The following table summarizes the Fund’s financial instruments categorized in the fair value hierarchy. The breakdown of the Fund’s financial instruments into major categories is disclosed in the Schedule of Investments above.

 

 

  
     Level 1        Level 2        Level 3        Total  

 

  

Assets

                  

Investments

                  

Long-Term Investments

                  

Common Stocks

                  

Australia

    $ —        $ 86,843,080        $ 1        $ 86,843,081  

Austria

      —          2,704,886          —          2,704,886  

Belgium

      —          8,990,040          —          8,990,040  

China

      —          14,903,220          —          14,903,220  

Denmark

      18,578,507          20,461,097          —          39,039,604  

Finland

      —          20,721,059          —          20,721,059  

France

      —          137,998,627          —          137,998,627  

Germany

      —          100,218,640          —          100,218,640  

Hong Kong

      —          35,038,618          —          35,038,618  

India

      —          —          178,060          178,060  

Ireland

      —          4,382,303          —          4,382,303  

Israel

      —          11,967,820          —          11,967,820  

Italy

      —          11,024,016          —          11,024,016  

Japan

      —          274,561,261          —          274,561,261  

Luxembourg

      —          2,200,197          —          2,200,197  

Netherlands

      1,224,637          70,948,477          —          72,173,114  

New Zealand

      —          3,957,611          —          3,957,611  

Norway

      —          718,225          —          718,225  

Singapore

      —          9,456,355          —          9,456,355  

South Africa

      —          3,148,172          —          3,148,172  

Spain

      170          13,722,417          —          13,722,587  

Sweden

      1,866,610          46,057,625          —          47,924,235  

Switzerland

      —          92,163,108          —          92,163,108  

United Kingdom

      245,970          140,938,294          —          141,184,264  

United States

      92          4,096,821          —          4,096,913  

Rights

      —          —          2          2  

Short-Term Securities

                  

Money Market Funds

      31,337,962          —          —          31,337,962  
  

 

 

       

 

 

       

 

 

       

 

 

  
   $   53,253,948        $   1,117,221,969        $   178,063          1,170,653,980  
  

 

 

       

 

 

       

 

 

       

 

 

  

Investments valued at NAV(a)

                    125,042  
                 

 

 

  
                  $   1,170,779,022  
                 

 

 

  

Derivative Financial Instruments(b)

                 

Assets

                  

Equity Contracts

    $ 1,528,183        $ —        $ —        $ 1,528,183  
  

 

 

       

 

 

       

 

 

       

 

 

  

 

  (a) 

Certain investments of the Fund were fair valued using NAV per share as no quoted market value is available and therefore have been excluded from the fair value hierarchy.

 
  (b) 

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

 

See notes to financial statements.

 

 

S C H E D U L E S   O F   I N V E S T M E N T S

   23

Schedule of Investments

May 31, 2021

   

BlackRock Advantage Large Cap Growth Fund

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

    

Aerospace & Defense — 0.5%

    

Lockheed Martin Corp.

     12,777     $ 4,883,369  
   

 

 

  
Air Freight & Logistics — 1.3%            

CH Robinson Worldwide, Inc.

     18,885       1,832,223  

Expeditors International of Washington, Inc.

     91,758       11,533,063  
   

 

 

  
      13,365,286  
Auto Components — 0.5%            

BorgWarner, Inc.

     93,383       4,789,614  
   

 

 

  
Automobiles — 2.3%            

Tesla, Inc.(a)

    38,656       24,168,504  
   

 

 

  
Beverages — 0.9%            

Boston Beer Co., Inc., Class A(a)

    146       154,491  

Coca-Cola Co.

     13,088       723,636  

PepsiCo, Inc.

     59,811       8,848,439  
   

 

 

  
      9,726,566  
Biotechnology — 2.4%            

AbbVie, Inc.

     9,963       1,127,812  

Amgen, Inc.

     23,917       5,690,811  

BioMarin Pharmaceutical, Inc.(a)

    9,846       761,096  

Gilead Sciences, Inc.

     54,600       3,609,606  

Moderna, Inc.(a)

    10,538       1,949,635  

Regeneron Pharmaceuticals, Inc.(a)

    2,149       1,079,722  

Vertex Pharmaceuticals, Inc.(a)

    54,373       11,343,839  
   

 

 

  
          25,562,521  
Building Products — 1.0%            

Allegion PLC

     10,403       1,461,414  

Carrier Global Corp.

     53,424       2,453,764  

Trane Technologies PLC

     37,486       6,987,390  
   

 

 

  
      10,902,568  
Capital Markets — 1.3%            

Charles Schwab Corp.

     1,883       139,060  

Morgan Stanley

         140,842       12,809,580  

Morningstar, Inc.

     977       230,562  
   

 

 

  
      13,179,202  
Chemicals — 0.1%            

Cabot Corp.

     1       63  

Sherwin-Williams Co.

     4,254       1,206,137  
   

 

 

  
      1,206,200  
Commercial Services & Supplies — 1.2%  

Cintas Corp.

     1,701       601,372  

Copart, Inc.(a)

    72,335       9,331,938  

Driven Brands Holdings, Inc.(a)

    10,273       304,286  

IAA, Inc.(a)

    48,595       2,768,457  
   

 

 

  
      13,006,053  
Construction & Engineering — 0.1%  

Quanta Services, Inc.

     13,243       1,262,720  
   

 

 

  
Containers & Packaging — 0.2%  

Crown Holdings, Inc.

     24,105       2,488,600  
   

 

 

  
Distributors — 0.7%            

Genuine Parts Co.

     15,044       1,972,569  

Pool Corp.

     11,239       4,906,386  
   

 

 

  
      6,878,955  
Diversified Consumer Services — 0.2%  

Bright Horizons Family Solutions, Inc.(a)

    4,027       556,652  
Security   Shares     Value  
Diversified Consumer Services (continued)  

Chegg, Inc.(a)

    8,297     $ 638,122  

Terminix Global Holdings, Inc.(a)

    17,137       845,540  
   

 

 

  
      2,040,314  
Diversified Financial Services — 0.6%  

Voya Financial, Inc.

     99,653       6,529,265  
   

 

 

  
Electric Utilities — 0.1%            

Eversource Energy

     14,175       1,150,868  
   

 

 

  
Electronic Equipment, Instruments & Components — 0.3%  

Flex Ltd.(a)

    96,821       1,768,920  

Zebra Technologies Corp., Class A(a)

    2,598       1,291,336  
   

 

 

  
      3,060,256  
Energy Equipment & Services — 0.7%            

Schlumberger NV

     233,463       7,314,396  
   

 

 

  
Entertainment — 2.3%            

Activision Blizzard, Inc.

     2,461       239,332  

Electronic Arts, Inc.

     3,384       483,675  

Lions Gate Entertainment Corp., Class B(a)

    45,214       785,819  

Live Nation Entertainment, Inc.(a)

    7,819       704,570  

Netflix, Inc.(a)

    16,406       8,249,101  

Roku, Inc.(a)

    11,363       3,939,666  

Spotify Technology SA(a)

    19,474       4,704,334  

Take-Two Interactive Software, Inc.(a)

    11,323       2,101,096  

Walt Disney Co.(a)

    8,565       1,530,137  

Zynga, Inc., Class A(a)

        166,203       1,801,641  
   

 

 

  
          24,539,371  
Equity Real Estate Investment Trusts (REITs) — 0.9%  

Equinix, Inc.

     11,913       8,776,546  

Prologis, Inc.

     3,954       465,939  
   

 

 

  
      9,242,485  
Food & Staples Retailing — 1.9%            

Costco Wholesale Corp.

     52,197       19,744,559  
   

 

 

  
Food Products — 1.1%            

Hershey Co.

     34,971       6,051,732  

Kellogg Co.

     34,829       2,280,951  

McCormick & Co., Inc.

     32,212       2,868,801  
   

 

 

  
      11,201,484  
Gas Utilities — 0.0%            

Atmos Energy Corp.

     1,279       126,838  
   

 

 

  
Health Care Equipment & Supplies — 3.1%  

ABIOMED, Inc.(a)

    579       164,772  

Align Technology, Inc.(a)

    15,459       9,123,129  

Dexcom, Inc.(a)

    15,563       5,748,817  

Edwards Lifesciences Corp.(a)

    12,557       1,204,216  

IDEXX Laboratories, Inc.(a)

    21,981       12,267,816  

Insulet Corp.(a)

    11,313       3,050,777  

West Pharmaceutical Services, Inc.

     1,779       618,220  
   

 

 

  
      32,177,747  
Health Care Providers & Services — 2.5%  

AmerisourceBergen Corp.

     30,846       3,539,270  

Anthem, Inc.

     4,924       1,960,835  

Cardinal Health, Inc.

     11,351       636,451  

McKesson Corp.

     33,120       6,371,957  

UnitedHealth Group, Inc.

     32,722       13,478,846  
   

 

 

  
      25,987,359  
Health Care Technology — 0.0%            

Cerner Corp.

     5,150       402,988  
   

 

 

  
 

 

 

24  

2 0 2 1   B L A C K R O C K   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S

Schedule of Investments   (continued)

May 31, 2021

   

BlackRock Advantage Large Cap Growth Fund

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Hotels, Restaurants & Leisure — 2.6%

 

Aramark

     11,970     $ 447,080  

Chipotle Mexican Grill, Inc.(a)

    6,675       9,157,967  

International Game Technology PLC(a)

    47,724       1,157,784  

MGM Resorts International

     52,545       2,252,604  

Travel + Leisure Co.

     50,243       3,273,332  

Vail Resorts, Inc.(a)

    1,823       595,902  

Wendy’s Co.

     209,533       4,865,356  

Wyndham Hotels & Resorts, Inc.

     65,122       4,888,057  

Wynn Resorts Ltd.(a)

    4,274       563,612  
   

 

 

  
          27,201,694  
Household Durables — 0.1%            

iRobot Corp.(a)

    10,083       985,109  
   

 

 

  
Household Products — 0.7%            

Colgate-Palmolive Co.

     91,556       7,670,562  
   

 

 

  
Independent Power and Renewable Electricity Producers — 0.0%  

Sunnova Energy International, Inc.(a)

    17,279       504,547  
   

 

 

  
Industrial Conglomerates — 0.4%            

Roper Technologies, Inc.

     8,223       3,700,432  
   

 

 

  
Insurance — 0.3%            

Marsh & McLennan Cos., Inc.

     3,631       502,349  

Progressive Corp.

     27,443       2,719,052  
   

 

 

  
      3,221,401  
Interactive Media & Services — 8.9%  

Alphabet, Inc., Class A

     9,648       22,738,889  

Alphabet, Inc., Class C(a)

    12,054       29,068,944  

Facebook, Inc., Class A

         125,206       41,158,968  

Twitter, Inc.(a)

    3,470       201,260  
   

 

 

  
      93,168,061  
Internet & Direct Marketing Retail — 6.8%  

Amazon.com, Inc.

     21,415       69,022,044  

Etsy, Inc.(a)

    12,507       2,060,278  
   

 

 

  
      71,082,322  
IT Services — 9.4%            

Accenture PLC, Class A

     56,530       15,950,505  

Automatic Data Processing, Inc.

     47,708       9,351,722  

Fiserv, Inc.(a)

    64,997       7,487,654  

GoDaddy, Inc., Class A(a)

    16,518       1,337,297  

Mastercard, Inc., Class A

     47,370       17,080,675  

PayPal Holdings, Inc.(a)

    84,008       21,843,760  

Square, Inc., Class A(a)

    8,788       1,955,506  

Visa, Inc., Class A

     103,367       23,495,319  
   

 

 

  
      98,502,438  
Life Sciences Tools & Services — 1.8%  

Agilent Technologies, Inc.

     57,650       7,963,195  

Bio-Rad Laboratories, Inc., Class A(a)

    3,663       2,206,481  

Bruker Corp.

     65,094       4,520,127  

Illumina, Inc.(a)

    562       227,970  

Mettler-Toledo International, Inc.(a)

    91       118,386  

PPD, Inc.(a)

    15,113       697,012  

Repligen Corp.(a)

    2,192       400,281  

Sotera Health Co.(a)

    23,539       567,290  

Thermo Fisher Scientific, Inc.

     4,846       2,275,197  
   

 

 

  
      18,975,939  
Machinery — 0.6%            

Deere & Co.

     13,604       4,912,405  

Xylem, Inc.

     9,334       1,102,532  
   

 

 

  
      6,014,937  
Security   Shares     Value  
Media — 0.1%            

Discovery, Inc., Class A(a)

    7,824     $ 251,228  

New York Times Co., Class A

     18,140       776,755  
   

 

 

  
      1,027,983  
Multiline Retail — 0.7%            

Target Corp.

     32,426       7,358,108  
   

 

 

  
Oil, Gas & Consumable Fuels — 0.3%  

Antero Midstream Corp.

         49,786       477,945  

Cheniere Energy, Inc.(a)

    16,241       1,378,861  

Hess Corp.

     3,102       260,010  

Kinder Morgan, Inc.

     30,732       563,625  

Phillips 66

     6,997       589,287  
   

 

 

  
      3,269,728  
Personal Products — 0.2%            

Herbalife Nutrition Ltd.(a)

    44,161       2,321,544  
   

 

 

  
Pharmaceuticals — 2.7%            

Bristol-Myers Squibb Co.

     149,004       9,792,543  

Johnson & Johnson

     86,038       14,561,931  

Zoetis, Inc.

     22,882       4,042,792  
   

 

 

  
          28,397,266  
Professional Services — 0.2%  

Booz Allen Hamilton Holding Corp.

     8,089       686,999  

IHS Markit Ltd.

     14,118       1,486,766  
   

 

 

  
      2,173,765  
Real Estate Management & Development — 0.1%  

CBRE Group, Inc., Class A(a)

    11,492       1,008,768  
   

 

 

  
Road & Rail — 0.2%            

Landstar System, Inc.

     13,293       2,266,456  

Schneider National, Inc., Class B

     10,144       248,427  
   

 

 

  
      2,514,883  
Semiconductors & Semiconductor Equipment — 6.2%  

Advanced Micro Devices, Inc.(a)

    106,259       8,509,221  

Applied Materials, Inc.

     116,140       16,042,418  

CMC Materials, Inc.

     1       154  

Intel Corp.

     146,222       8,352,201  

NVIDIA Corp.

     23,253       15,109,335  

QUALCOMM, Inc.

     125,743       16,917,463  

Xilinx, Inc.

     5,224       663,448  
   

 

 

  
      65,594,240  
Software — 17.6%            

Adobe, Inc.(a)

    52,529       26,505,083  

Autodesk, Inc.(a)

    10,362       2,962,081  

Cadence Design Systems, Inc.(a)

    44,710       5,677,723  

DocuSign, Inc.(a)

    5,511       1,111,128  

FreedomPay, Inc.(a)(b)

    43,051       0  

HubSpot, Inc.(a)

    8,839       4,458,215  

Intuit, Inc.

     43,490       19,096,024  

Microsoft Corp.

     345,660       86,304,389  

PTC, Inc.(a)

    62,576       8,393,945  

salesforce.com, Inc.(a)

    8,300       1,976,230  

ServiceNow, Inc.(a)

    21,097       9,997,446  

Slack Technologies, Inc., Class A(a)

    7,565       333,163  

Splunk, Inc.(a)

    23,030       2,791,236  

UiPath, Inc., Class A(a)(c)

    15,893       1,268,579  

VMware, Inc., Class A(a)

    35,258       5,566,886  

Workday, Inc., Class A(a)

    19,479       4,455,237  

Zendesk, Inc.(a)

    24,048       3,286,400  

Zoom Video Communications, Inc., Class A(a)

    901       298,708  
   

 

 

  
      184,482,473  
 

 

 

S C H E D U L E S   O F   I N V E S T M E N T S

   25

Schedule of Investments   (continued)

May 31, 2021

   

BlackRock Advantage Large Cap Growth Fund

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

 

  
Specialty Retail — 1.3%            

Home Depot, Inc.

     11,747     $ 3,746,236  

Lithia Motors, Inc., Class A

     1,939       682,508  

Lowe’s Cos., Inc.

     37,136       7,235,207  

TJX Cos., Inc.

     25,567       1,726,795  
   

 

 

  
      13,390,746  
Technology Hardware, Storage & Peripherals — 10.6%  

Apple Inc.

     804,418       100,238,527  

Dell Technologies, Inc., Class C(a)

    60,135       5,931,716  

Hewlett Packard Enterprise Co.

     243,082       3,879,589  

NetApp, Inc.

     13,456       1,041,091  
   

 

 

  
          111,090,923  
Textiles, Apparel & Luxury Goods — 0.7%            

NIKE, Inc., Class B

     50,685       6,916,475  
   

 

 

  
Thrifts & Mortgage Finance — 0.0%            

Essent Group Ltd.

     10,573       505,812  
   

 

 

  
Trading Companies & Distributors — 0.3%            

SiteOne Landscape Supply, Inc.(a)

    10,616       1,826,377  

WW Grainger, Inc.

     2,468       1,140,611  
   

 

 

  
      2,966,988  
   

 

 

  

Total Long-Term Investments — 99.0%
(Cost: $661,097,625)

 

     1,038,985,232  
   

 

 

  
Security   Shares     Value  

 

  

Short-Term Securities(d)(e)

 

Money Market Funds — 1.1%

 

BlackRock Liquidity Funds, T-Fund, Institutional Class, 0.01%

     10,090,174     $ 10,090,174  

SL Liquidity Series, LLC, Money Market Series, 0.12%(f)

     1,340,921       1,341,323  
   

 

 

  

Total Short-Term Securities — 1.1%
(Cost: $11,431,497)

 

     11,431,497  
   

 

 

  

Total Investments — 100.1%
(Cost: $672,529,122)

 

     1,050,416,729  

Liabilities in Excess of Other Assets — (0.1)%

 

     (1,044,618 ) 
   

 

 

  

Net Assets — 100.0%

 

   $   1,049,372,111  
   

 

 

  

 

(a) 

Non-income producing security.

(b) 

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

(c) 

All or a portion of this security is on loan.

(d) 

Affiliate of the Fund.

(e) 

Annualized 7-day yield as of period end.

(f) 

All or a portion of this security was purchased with the cash collateral from loaned securities.

 

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the period ended May 31, 2021 for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

                   
    Affiliated Issuer     Value at
05/31/20 		       Purchases
at Cost 		     Proceeds
from Sale 		   

Net

Realized 

Gain (Loss)

     Change in
Unrealized
Appreciation
    (Depreciation)		      Value at
05/31/21 		     Shares
Held at
05/31/21 		     Income    

Capital

Gain
Distributions
from Underlying
Funds

       

    

  

BlackRock Liquidity Funds, T-Fund, Institutional Class

    $  24,850,774        $ —      $   (14,760,600 )(a)               $ —                $ —      $ 10,090,174        10,090,174      $ 11,075                    $  —           
 

SL Liquidity Series, LLC, Money Market Series

      2,793,823        —        (1,447,996 )(a)        (3,350 )        (1,154 )       1,341,323        1,340,921        85,648(b )        —    
              

 

 

      

 

 

     

 

 

        

 

 

      

 

 

    
               $   (3,350 )      $   (1,154 )     $   11,431,497         $   96,723       $  —    
              

 

 

      

 

 

     

 

 

        

 

 

      

 

 

    

 

  (a) 

Represents net amount purchased (sold).

 
  (b) 

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

For Fund compliance purposes, the Fund’s industry classifications refer to one or more of the industry sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by the investment adviser. These definitions may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

Derivative Financial Instruments Outstanding as of Period End

Futures Contracts    

 

               
Description                          

Number of

Contracts

    

        Expiration

Date

    

            Notional

Amount

(000)

    

Value/

Unrealized
Appreciation
(Depreciation)

 

Long Contracts

                                        

NASDAQ 100 E-Mini Index

              43        06/18/21        $  11,770         $   81,775  
                      

 

 

  

 

 

26  

2 0 2 1   B L A C K R O C K   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S

Schedule of Investments   (continued)

May 31, 2021

   

BlackRock Advantage Large Cap Growth Fund

 

Derivative Financial Instruments Categorized by Risk Exposure

As of period end, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:

 

               
      Commodity
Contracts		          Credit
Contracts		     Equity
    Contracts		   Foreign
Currency
    Exchange
Contracts		    Interest
Rate
    Contracts		     Other
    Contracts		   Total  

Assets — Derivative Financial Instruments

                                                                                           

    

   

Futures contracts

                                      

Unrealized appreciation(a)

     $   —         $   —       $  81,775     $  —      $   —       $  —      $   81,775  
    

 

 

        

 

 

      

 

    

 

     

 

 

      

 

     

 

 

  

 

  (a) 

Net cumulative unrealized appreciation (depreciation) on futures contracts, if any, are reported in the Schedule of Investments. In the Statement of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

For the period ended May 31, 2021, the effect of derivative financial instruments in the Statement of Operations was as follows:

 

               
      Commodity
Contracts		      Credit
    Contracts		     Equity
    Contracts		   Foreign
Currency
Exchange
    Contracts		    Interest
Rate
    Contracts		     Other
    Contracts		       Total  

Net Realized Gain (Loss) from

                                                                                               

    

   

Futures contracts

      $  —         $  —            $  11,937,941     $ —      $  —       $ —      $   11,937,941  
    

 

 

        

 

 

      

 

    

 

     

 

 

      

 

     

 

 

  

Net Change in Unrealized Appreciation (Depreciation) on

                                 

Futures contracts

      $  —         $  —       $  (1,526,893)     $ —      $  —       $ —      $ (1,526,893 ) 
    

 

 

        

 

 

      

 

    

 

     

 

 

      

 

     

 

 

  

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

   

Futures contracts

   

Average notional value of contracts — long

    $ 28,121,205  

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

Fair Value Hierarchy as of Period End

Various inputs are used in determining the fair value of financial instruments. For a description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

The following table summarizes the Fund’s financial instruments categorized in the fair value hierarchy. The breakdown of the Fund’s financial instruments into major categories is disclosed in the Schedule of Investments above.

 

 

  
     Level 1     Level 2   Level 3          Total  

 

  

Assets

                  

Investments

                       

Long-Term Investments

                      

Common Stocks

    $   1,038,985,232                                $  —                          $  —        $ 1,038,985,232  

Short-Term Securities

                  

Money Market Funds

      10,090,174       —     —          10,090,174  
  

 

 

      

 

    

 

       

 

 

  
   $   1,049,075,406       $  —     $  —          1,049,075,406  
  

 

 

      

 

    

 

       

 

 

  

Investments valued at NAV(a)

                    1,341,323  
                 

 

 

  
                  $   1,050,416,729  
                 

 

 

  

Derivative Financial Instruments(b)

                 

Assets

                  

Equity Contracts

    $ 81,775       $  —     $  —        $ 81,775  
  

 

 

      

 

    

 

       

 

 

  

 

  (a) 

Certain investments of the Fund were fair valued using NAV per share as no quoted market value is available and therefore have been excluded from the fair value hierarchy.

 
  (b) 

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

 

See notes to financial statements.

 

 

S C H E D U L E S   O F   I N V E S T M E N T S

   27

Schedule of Investments   

May 31, 2021

   

BlackRock Advantage Small Cap Core Fund

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

 

Aerospace & Defense — 0.5%

 

Aerojet Rocketdyne Holdings, Inc.(a)

    149,080     $ 7,222,926  

Astronics Corp.(a)

    71,267       1,208,688  

HEICO Corp., Class A

     8,358       1,107,101  

Mercury Systems, Inc.(a)

    27,552       1,803,278  

Moog, Inc., Class A

     52,154       4,704,291  

PAE, Inc.(a)

    483,048       3,922,350  
   

 

 

  
          19,968,634  
Air Freight & Logistics — 0.8%  

Echo Global Logistics, Inc.(a)

    314,298       10,736,420  

Forward Air Corp.

     89,923       8,712,639  

Hub Group, Inc., Class A(a)

    235,465       16,437,812  

Radiant Logistics, Inc.(a)(b)

    23,831       183,260  
   

 

 

  
      36,070,131  
Airlines — 0.7%            

Hawaiian Holdings, Inc.(a)

    186,463       4,810,745  

Mesa Air Group, Inc.(a)

    93,800       911,736  

Spirit Airlines, Inc.(a)

    688,142       24,573,551  
   

 

 

  
      30,296,032  
Auto Components — 1.3%            

Cooper-Standard Holdings, Inc.(a)

    94,509       2,812,588  

Dana, Inc.

     213,870       5,802,293  

Fox Factory Holding Corp.(a)

    63,395       9,856,654  

Gentherm, Inc.(a)

    13,490       978,430  

Goodyear Tire & Rubber Co.(a)

    379,937       7,534,151  

LCI Industries

     132,792       19,792,647  

Modine Manufacturing Co.(a)

    68,476       1,204,493  

Tenneco, Inc., Class A(a)

    62,472       979,561  

Visteon Corp.(a)(b)

    65,091       7,971,044  
   

 

 

  
      56,931,861  
Automobiles — 0.2%  

Winnebago Industries, Inc.

     96,655       7,148,604  
   

 

 

  
Banks — 7.4%  

ACNB Corp.

     12,045       346,896  

BancFirst Corp.

     98,537       6,796,097  

Bancorp, Inc.(a)(b)

    190,539       4,618,665  

BancorpSouth Bank

     281,062       8,594,876  

Bank of Commerce Holdings

     50,450       744,138  

BankFinancial Corp.

     44,805       495,095  

Bankwell Financial Group, Inc.

     5,740       163,934  

Banner Corp.

     66,782       3,908,751  

Berkshire Hills Bancorp, Inc.

     122,115       3,388,691  

Cadence BanCorp.

     113,536       2,540,936  

Capital City Bank Group, Inc.

     152,064       4,075,315  

Capstar Financial Holdings, Inc.

     52,415       1,147,364  

Carter Bankshares, Inc.(a)

    27,570       429,265  

Cathay General Bancorp

     124,319       5,181,616  

CIT Group, Inc.

     146,931       7,784,404  

Community Bankers Trust Corp.

     7,421       65,602  

Community Trust Bancorp, Inc.

     57,688       2,548,656  

Customers Bancorp, Inc.(a)

    15,485       586,107  

CVB Financial Corp.

     52,316       1,160,369  

Dime Community Bancshares, Inc.

     14,196       492,743  

Equity Bancshares, Inc., Class A(a)

    9,099       298,993  

Farmers National Banc Corp.

     23,979       417,235  

Financial Institutions, Inc.

     25,507       819,540  

First BanCorp.

     149,870       1,916,837  

First Busey Corp.

     37,455       1,003,419  

First Commonwealth Financial Corp.

     74,596       1,130,129  

First Community Bankshares, Inc.

     72,835       2,269,539  
Security   Shares      Value  
Banks (continued)  

First Financial Bankshares, Inc.

     20,147      $ 1,014,401  

First Financial Corp.

     30,813        1,398,294  

First Financial Northwest, Inc.

     135,787        1,974,343  

First Horizon Corp.

     188,347        3,591,777  

First Interstate BancSystem, Inc., Class A

     772,367        36,355,315  

First United Corp.

     33,701        612,684  

Fulton Financial Corp.

     605,946        10,501,044  

Glacier Bancorp, Inc.

     190,279        11,083,752  

Hancock Whitney Corp.

     221,666        10,974,684  

HBT Financial, Inc.

     160,708        2,923,279  

Heartland Financial USA, Inc.

     405,955        20,196,261  

Heritage Commerce Corp.

     238,566        2,829,393  

Independent Bank Corp.

     106,798        2,488,393  

Independent Bank Group, Inc.

     12,163        957,836  

International Bancshares Corp.

     18,441        855,662  

Investors Bancorp, Inc.

     1,609,306        23,946,473  

Lakeland Bancorp, Inc.

     118,103        2,245,138  

Lakeland Financial Corp.

     15,701        968,909  

Level One Bancorp, Inc.

     37,756        1,046,219  

Macatawa Bank Corp.

     4,906        47,098  

Mercantile Bank Corp.

     60,215        1,944,945  

Mid Penn Bancorp, Inc.

     90,600        2,554,920  

Midland States Bancorp, Inc.

     96,471        2,687,682  

National Bank Holdings Corp., Class A

     1,412        55,915  

Northrim BanCorp, Inc.

     90,983        3,962,310  

OceanFirst Financial Corp.

     356,542        7,883,144  

Pacific Mercantile Bancorp(a)

    195,021        1,661,579  

Peapack-Gladstone Financial Corp.

     101,902        3,385,184  

Preferred Bank/Los Angeles CA

     11,314        772,633  

Primis Financial Corp.

     58,302        858,788  

QCR Holdings, Inc.

     7,200        344,232  

Republic Bancorp, Inc., Class A

     38,426        1,784,888  

Republic First Bancorp, Inc.(a)

    1,430,466        5,893,520  

Sandy Spring Bancorp, Inc.

     323,172        15,014,571  

Sierra Bancorp

     94,257        2,612,804  

Simmons First National Corp., Class A

     28,041        855,251  

SmartFinancial, Inc.

     38,659        937,481  

South Plains Financial, Inc.

     45,542        1,068,415  

South State Corp.

     75,347        6,691,567  

Synovus Financial Corp.

     36,472        1,791,505  

Texas Capital Bancshares, Inc.(a)

    183,180        12,617,438  

TriCo Bancshares

     24,011        1,151,327  

TriState Capital Holdings, Inc.(a)(b)

    336,042        7,725,606  

UMB Financial Corp.

     14,038        1,357,615  

United Community Banks, Inc.

     108,070        3,737,061  

United Security Bancshares

     1,880        15,980  

Univest Financial Corp.

     107,183        3,125,456  

Washington Trust Bancorp, Inc.

     70,219        3,861,343  

WesBanco, Inc.

     475,071        18,489,763  

Wintrust Financial Corp.

     31,144        2,504,601  
    

 

 

  
       316,283,691  
Biotechnology — 7.5%  

89bio, Inc.(a)

    41,155        777,829  

ACADIA Pharmaceuticals, Inc.(a)

    44,793        1,000,676  

Adverum Biotechnologies, Inc.(a)

    344,143        1,190,735  

Agenus, Inc.(a)

    520,031        2,215,332  

Akebia Therapeutics, Inc.(a)(b)

    263,155        923,674  

Akero Therapeutics, Inc.(a)

    49,183        1,287,611  

Alector, Inc.(a)(b)

    265,993        4,734,675  

Allakos, Inc.(a)

    5,570        565,021  

Allogene Therapeutics, Inc.(a)(b)

    79,052        2,031,636  

Allovir, Inc.(a)

    17,276        404,949  
 

 

 

28  

2 0 2 1   B L A C K R O C K   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S

Schedule of Investments  (continued)

May 31, 2021

   

BlackRock Advantage Small Cap Core Fund

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Biotechnology (continued)  

Amicus Therapeutics, Inc.(a)

    177,173     $     1,640,622  

Anika Therapeutics, Inc.(a)

    27,944       1,303,588  

Apellis Pharmaceuticals, Inc.(a)

    15,313       861,816  

Applied Therapeutics, Inc.(a)

    9,204       176,993  

Aptinyx, Inc.(a)(b)

    180,087       457,421  

Arcus Biosciences, Inc.(a)

    116,990       2,903,692  

Arcutis Biotherapeutics, Inc.(a)

    55,743       1,468,828  

Arena Pharmaceuticals, Inc.(a)

    8,484       518,457  

Arrowhead Pharmaceuticals, Inc.(a)

    73,831       5,360,131  

Assembly Biosciences, Inc.(a)(b)

    28,778       114,249  

Atara Biotherapeutics, Inc.(a)

    369,280       5,007,437  

Athenex, Inc.(a)

    169,138       793,257  

Athersys, Inc.(a)(b)

    318,623       532,100  

Avidity Biosciences, Inc.(a)

    85,805       2,037,011  

Avrobio, Inc.(a)

    175,280       1,575,767  

Beyondspring, Inc.(a)

    14,359       148,903  

BioAtla, Inc.(a)(b)

    42,789       1,842,066  

BioCryst Pharmaceuticals, Inc.(a)

    278,246       4,387,939  

Biohaven Pharmaceutical Holding Co. Ltd.(a)

    9,409       818,583  

Bioxcel Therapeutics, Inc.(a)

    37,906       1,252,035  

Black Diamond Therapeutics, Inc.(a)

    179,513       2,355,211  

Blueprint Medicines Corp.(a)(b)

    31,468       2,874,602  

Bridgebio Pharma, Inc.(a)(b)

    163,880       9,701,696  

Brooklyn ImmunoTherapeutics, Inc.(a)(b)

    71,644       1,031,674  

C4 Therapeutics, Inc.(a)

    25,677       948,765  

Calithera Biosciences, Inc.(a)

    116,699       266,074  

CareDx, Inc.(a)(b)

    7,029       565,132  

ChemoCentryx, Inc.(a)

    45,911       465,997  

Clovis Oncology, Inc.(a)

    156,119       800,890  

Coherus Biosciences, Inc.(a)

    584,153       7,687,453  

Crinetics Pharmaceuticals, Inc.(a)

    27,426       481,326  

Cue Biopharma, Inc.(a)

    57,322       821,997  

Deciphera Pharmaceuticals, Inc.(a)(b)

    99,732       3,364,958  

Denali Therapeutics, Inc.(a)

    38,606       2,454,956  

Dynavax Technologies Corp.(a)(b)

    130,286       1,068,345  

Dyne Therapeutics, Inc.(a)

    63,241       1,208,536  

Editas Medicine, Inc.(a)(b)

    110,798       3,761,592  

Emergent BioSolutions, Inc.(a)

    146,380       8,877,947  

Enanta Pharmaceuticals, Inc.(a)

    85,655       4,167,972  

Epizyme, Inc.(a)

    72,971       600,551  

Fate Therapeutics, Inc.(a)

    55,814       4,275,352  

FibroGen, Inc.(a)(b)

    177,281       3,767,221  

Flexion Therapeutics, Inc.(a)

    188,752       1,579,854  

Frequency Therapeutics, Inc.(a)

    98,963       875,823  

G1 Therapeutics, Inc.(a)

    152,110       3,303,829  

Gossamer Bio, Inc.(a)

    155,693       1,318,720  

Halozyme Therapeutics, Inc.(a)

    209,989       8,695,644  

Harpoon Therapeutics, Inc.(a)

    102,679       2,117,241  

Heron Therapeutics, Inc.(a)(b)

    289,136       3,836,835  

Homology Medicines, Inc.(a)

    25,471       169,127  

IGM Biosciences, Inc.(a)

    5,512       411,471  

Inovio Pharmaceuticals, Inc.(a)(b)

    552,443       4,170,945  

Inozyme Pharma, Inc.(a)

    21,346       349,221  

Insmed, Inc.(a)(b)

    154,480       3,800,208  

Intellia Therapeutics, Inc.(a)

    15,866       1,188,998  

Intercept Pharmaceuticals, Inc.(a)

    98,270       1,634,230  

Invitae Corp.(a)

    281,371       8,097,857  

iTeos Therapeutics, Inc.(a)

    11,328       232,677  

Kadmon Holdings, Inc.(a)

    2,358       9,055  

Karuna Therapeutics, Inc.(a)(b)

    15,986       1,787,555  

Karyopharm Therapeutics, Inc.(a)

    979,756       9,092,136  

Kiniksa Pharmaceuticals Ltd., Class A(a)

    30,110       410,399  
Security   Shares     Value  
Biotechnology (continued)  

Kodiak Sciences, Inc.(a)

    7,394     $ 618,286  

Kymera Therapeutics, Inc.(a)

    31,482       1,513,969  

Ligand Pharmaceuticals, Inc.(a)

    11,321       1,332,482  

MacroGenics, Inc.(a)

    249,661       8,036,588  

Madrigal Pharmaceuticals, Inc.(a)

    34,040       3,822,692  

Magenta Therapeutics, Inc.(a)

    24,900       307,515  

MannKind Corp.(a)

    470,659       2,080,313  

Mirati Therapeutics, Inc.(a)(b)

    66,301         10,485,503  

Mirum Pharmaceuticals, Inc.(a)

    64,305       1,063,605  

Myriad Genetics, Inc.(a)

    144,301       4,134,224  

Natera, Inc.(a)

    205,983       19,391,240  

NextCure, Inc.(a)

    285,934       2,244,582  

Novavax, Inc.(a)(b)

    101,476       14,979,887  

OPKO Health, Inc.(a)

    818,109       3,125,176  

Organogenesis Holdings, Inc.(a)

    24,556       437,833  

Oyster Point Pharma, Inc.(a)(b)

    123,447       2,212,170  

Passage Bio, Inc.(a)

    162,706       2,155,854  

Poseida Therapeutics, Inc.(a)(b)

    166,202       1,404,407  

Precision BioSciences, Inc.(a)

    25,758       271,232  

PTC Therapeutics, Inc.(a)

    51,582       2,025,625  

Puma Biotechnology, Inc.(a)

    84,684       893,416  

Radius Health, Inc.(a)(b)

    61,564       1,187,570  

REGENXBIO, Inc.(a)

    57,476       2,027,179  

Relay Therapeutics, Inc.(a)(b)

    114,535       3,678,864  

Replimune Group, Inc.(a)

    14,810       577,146  

REVOLUTION Medicines, Inc.(a)

    46,662       1,395,660  

Rigel Pharmaceuticals, Inc.(a)(b)

    785,009       2,920,233  

Seres Therapeutics, Inc.(a)(b)

    204,304       4,312,857  

Solid Biosciences, Inc.(a)

    93,566       355,551  

Sorrento Therapeutics, Inc.(a)(b)

    541,007       4,068,373  

Spectrum Pharmaceuticals, Inc.(a)

    1,284,257       4,430,687  

SpringWorks Therapeutics, Inc.(a)

    15,305       1,247,970  

Sutro Biopharma, Inc.(a)

    142,383       2,649,748  

Taysha Gene Therapies, Inc.(a)(b)

    28,653       644,692  

TCR2 Therapeutics, Inc.(a)

    15,227       291,597  

TG Therapeutics, Inc.(a)(b)

    61,673       2,150,538  

Travere Therapeutics, Inc.(a)

    156,537       2,374,666  

Turning Point Therapeutics, Inc.(a)

    38,895       2,574,071  

Twist Bioscience Corp.(a)

    75,056       8,054,259  

Ultragenyx Pharmaceutical, Inc.(a)(b)

    118,589       12,061,687  

UroGen Pharma Ltd.(a)

    45,934       809,357  

Veracyte, Inc.(a)

    216,681       8,461,393  

Vir Biotechnology, Inc.(a)

    79,204       3,319,440  

Xencor, Inc.(a)

    41,861       1,609,974  

Y-mAbs Therapeutics, Inc.(a)

    56,060       2,008,630  
   

 

 

  
      318,711,846  
Building Products — 1.8%  

Advanced Drainage Systems, Inc.

     69,539       7,887,113  

Builders FirstSource, Inc.(a)(b)

    830,192       36,976,752  

Cornerstone Building Brands, Inc.(a)

    40,251       682,657  

Gibraltar Industries, Inc.(a)

    47,286       3,756,873  

Griffon Corp.

     22,813       599,754  

JELD-WEN Holding, Inc.(a)

    143,320       4,014,393  

Masonite International Corp.(a)

    12,716       1,520,198  

Resideo Technologies, Inc.(a)

    229,114       6,850,508  

Trex Co., Inc.(a)

    109,608       10,676,915  

UFP Industries, Inc.

     53,323       4,240,245  
   

 

 

  
      77,205,408  
Capital Markets — 3.2%  

Artisan Partners Asset Management, Inc., Class A

     115,503       5,899,893  

AssetMark Financial Holdings, Inc.(a)

    372,016       9,694,737  

B Riley Financial, Inc.

     104,315       7,681,756  
 

 

 

S C H E D U L E S   O F   I N V E S T M E N T S

   29

Schedule of Investments   (continued)

May 31, 2021

   

BlackRock Advantage Small Cap Core Fund

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Capital Markets (continued)  

Cohen & Steers, Inc.

     182,328     $ 13,333,647  

Cowen, Inc., Class A

     189,072       7,436,202  

Donnelley Financial Solutions, Inc.(a)

    102,909       3,067,717  

Hamilton Lane, Inc., Class A

     220,449       19,921,976  

Houlihan Lokey, Inc.

     194,048       14,532,255  

Oppenheimer Holdings, Inc., Class A

     31,995       1,598,790  

Stifel Financial Corp.

     623,486       43,195,110  

Virtus Investment Partners, Inc.

     36,622       10,299,205  

WisdomTree Investments, Inc.

     227,971       1,527,406  
   

 

 

  
          138,188,694  
Chemicals — 2.2%  

Amyris, Inc.(a)

    55,399       788,328  

Avient Corp.

     363,492       18,894,314  

Balchem Corp.

     40,983       5,368,773  

HB Fuller Co.

     549,954       38,012,820  

Innospec, Inc.

     29,510       2,983,756  

Kronos Worldwide, Inc.

     41,099       667,448  

Livent Corp.(a)

    427,003       8,330,829  

PQ Group Holdings, Inc.

     49,327       806,003  

Stepan Co.

     27,850       3,750,281  

Trinseo SA

     189,226       12,288,336  
   

 

 

  
      91,890,888  
Commercial Services & Supplies — 2.3%  

ABM Industries, Inc.

     307,031       15,317,777  

ACCO Brands Corp.

     807,931       7,360,251  

BrightView Holdings, Inc.(a)

    187,684       3,256,317  

Brink’s Co.

     105,256       7,937,355  

CECO Environmental Corp.(a)

    8,000       61,040  

Cimpress PLC(a)

    39,775       3,950,055  

Deluxe Corp.

     108,949       4,963,717  

Ennis, Inc.

     42,219       884,910  

Herman Miller, Inc.

     275,889       13,187,494  

KAR Auction Services, Inc.(a)

    239,974       4,305,134  

Kimball International, Inc., Class B

     474,368       6,318,582  

Knoll, Inc.

     47,732       1,241,032  

Matthews International Corp., Class A

     134,790       5,266,245  

McGrath RentCorp

     128,020       10,975,155  

RR Donnelley & Sons Co.(a)

    470,346       3,014,918  

Steelcase, Inc., Class A

     341,602       4,942,981  

Tetra Tech, Inc.

     50,081       5,983,177  
   

 

 

  
      98,966,140  
Communications Equipment — 0.3%  

Calix, Inc.(a)

    190,260       8,430,421  

Casa Systems, Inc.(a)

    103,122       895,099  

Ciena Corp.(a)

    38,984       2,061,084  

Extreme Networks, Inc.(a)

    62,725       717,574  

TESSCO Technologies, Inc.(a)

    77,324       575,290  
   

 

 

  
      12,679,468  
Construction & Engineering — 2.2%  

Ameresco, Inc., Class A(a)

    89,870       4,831,411  

EMCOR Group, Inc.

     231,844       29,237,847  

Fluor Corp.(a)

    114,392       2,116,252  

MasTec, Inc.(a)(b)

    201,612       23,453,524  

Matrix Service Co.(a)

    50,835       554,101  

MYR Group, Inc.(a)

    86,239       7,506,243  

Primoris Services Corp.

     344,943       10,965,738  

Tutor Perini Corp.(a)

    151,703       2,348,362  

WillScot Mobile Mini Holdings Corp.(a)(b)

    441,114       12,792,306  
   

 

 

  
      93,805,784  
Security   Shares      Value  
Construction Materials — 0.5%  

Forterra, Inc.(a)

    59,662      $ 1,394,897  

Summit Materials, Inc., Class A(a)

    268,844        9,361,148  

U.S. Concrete, Inc.(a)

    168,015        9,575,175  
    

 

 

  
       20,331,220  
Consumer Finance — 0.8%  

Encore Capital Group, Inc.(a)

    104,644        4,843,971  

FirstCash, Inc.

     48,528        3,868,652  

LendingClub Corp.(a)

    91,636        1,400,198  

PRA Group, Inc.(a)

    61,300        2,386,409  

PROG Holdings, Inc.

     319,742        16,856,798  

Regional Management Corp.

     63,050        2,946,957  
    

 

 

  
           32,302,985  
Containers & Packaging — 0.0%  

Ranpak Holdings Corp.(a)

    42,697        942,750  
    

 

 

  
Diversified Consumer Services — 0.2%  

Perdoceo Education Corp.(a)

    164,454        2,004,694  

Strategic Education, Inc.

     100,408        7,112,903  
    

 

 

  
       9,117,597  
Diversified Financial Services — 0.3%  

Cannae Holdings, Inc.(a)

    302,910        10,859,324  
    

 

 

  
Diversified Telecommunication Services — 0.3%  

ATN International, Inc.

     2,906        137,367  

Liberty Latin America Ltd., Class C(a)

    310,363        4,463,020  

Ooma, Inc.(a)

    56,956        1,105,516  

Radius Global Infrastructure, Inc.,
Class A(a)(b)

    308,480        4,935,680  
    

 

 

  
       10,641,583  
Electric Utilities — 0.2%  

PNM Resources, Inc.

     82,074        4,031,475  

Portland General Electric Co.

     128,906        6,179,754  
    

 

 

  
       10,211,229  
Electrical Equipment — 1.1%  

Bloom Energy Corp., Class A(a)

    157,643        3,810,231  

EnerSys

     8,164        769,375  

Generac Holdings, Inc.(a)(b)

    38,066        12,513,056  

LSI Industries, Inc.

     73,401        682,629  

Plug Power, Inc.(a)(b)

    453,506        13,922,634  

Sunrun, Inc.(a)(b)

    283,612        12,683,129  

TPI Composites, Inc.(a)

    87,525        4,227,458  
    

 

 

  
       48,608,512  
Electronic Equipment, Instruments & Components — 2.4%  

Benchmark Electronics, Inc.

     119,697        3,704,622  

ePlus, Inc.(a)

    104,945        9,924,649  

FARO Technologies, Inc.(a)

    130,581        9,878,453  

II-VI, Inc.(a)

    14,820        998,423  

Insight Enterprises, Inc.(a)(b)

    120,669        12,607,497  

Itron, Inc.(a)

    45,593        4,347,292  

Knowles Corp.(a)

    686,469        14,100,073  

Methode Electronics, Inc.

     166,020        8,032,048  

Novanta, Inc.(a)

    6,501        903,444  

OSI Systems, Inc.(a)

    199,936        19,265,833  

PAR Technology Corp.(a)(b)

    81,028        5,425,635  

PC Connection, Inc.

     184,930        9,022,735  

ScanSource, Inc.(a)

    141,789        4,328,818  
    

 

 

  
       102,539,522  
Energy Equipment & Services — 0.9%  

Archrock, Inc.

     564,003        5,188,828  

Cactus, Inc., Class A

     156,112        5,470,164  

ChampionX Corp.(a)

    467,435        12,387,027  
 

 

 

30  

2 0 2 1   B L A C K R O C K   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S

Schedule of Investments   (continued)

May 31, 2021

   

BlackRock Advantage Small Cap Core Fund

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Energy Equipment & Services (continued)  

Dril-Quip, Inc., Class A(a)

    22,441     $ 752,447  

Helix Energy Solutions Group, Inc.(a)

    187,695       981,645  

Liberty Oilfield Services, Inc., Class A(a)

    140,431       2,100,848  

Natural Gas Services Group, Inc.(a)

    4,900       50,617  

Oceaneering International, Inc.(a)

    423,961       6,049,923  

Oil States International, Inc.(a)

    114,907       738,852  

Patterson-UTI Energy, Inc.

     224,015       1,875,006  

Solaris Oilfield Infrastructure, Inc., Class A

     141,390       1,412,486  
   

 

 

  
      37,007,843  
Entertainment — 0.9%  

AMC Entertainment Holdings, Inc., Class A(a)(b)

    448,021       11,702,308  

Cinemark Holdings, Inc.(a)

    851,738       19,300,383  

Eros STX Global Corp.(a)

    2,140,859       2,569,031  

Gaia, Inc.(a)

    37,818       439,067  

IMAX Corp.(a)

    82,606       1,785,116  

Marcus Corp.(a)

    106,617       2,250,685  
   

 

 

  
      38,046,590  
Equity Real Estate Investment Trusts (REITs) — 3.2%  

Acadia Realty Trust

     657,850       14,275,345  

Alexander & Baldwin, Inc.

     152,180       2,923,378  

Apartment Investment and Management Co., Class A

     1,279,988       9,023,915  

Armada Hoffler Properties, Inc.

     181,350       2,406,514  

Braemar Hotels & Resorts, Inc.(a)

    887,628       5,458,912  

Broadstone Net Lease, Inc.

     97,742       2,134,685  

CareTrust REIT, Inc.

     62,797       1,461,914  

City Office REIT, Inc.

     344,605       3,983,634  

Colony Capital, Inc.(a)

    1,089,678       7,486,088  

CorePoint Lodging, Inc.(a)

    425,197       4,460,317  

DiamondRock Hospitality Co.(a)

    345,470       3,344,150  

Easterly Government Properties, Inc.

     31,207       646,921  

Essential Properties Realty Trust, Inc.

     50,903       1,303,117  

First Industrial Realty Trust, Inc.

     160,197       8,112,376  

Four Corners Property Trust, Inc.

     357,497       9,924,117  

Gladstone Land Corp.

     29,993       693,738  

Global Net Lease, Inc.

     163,078       3,186,544  

Macerich Co.

     515,997       8,209,512  

National Storage Affiliates Trust

     235,617       10,861,944  

NexPoint Residential Trust, Inc.

     100,202       5,194,472  

Plymouth Industrial REIT, Inc.

     128,365       2,456,906  

QTS Realty Trust, Inc., Class A

     129,001       8,176,083  

Retail Properties of America, Inc., Class A

     129,027       1,554,775  

Retail Value, Inc.

     240,510       4,223,356  

RPT Realty

     82,590       1,053,023  

Ryman Hospitality Properties, Inc.(a)

    41,323       3,095,506  

Seritage Growth Properties, Class A(a)

    92,313       1,558,243  

SITE Centers Corp.

     377,671       5,653,735  

Terreno Realty Corp.

     74,925       4,766,728  

Washington Real Estate Investment Trust

     30,277       716,051  
   

 

 

  
        138,345,999  
Food & Staples Retailing — 1.0%  

Andersons, Inc.

     59,645       1,853,767  

BJ’s Wholesale Club Holdings, Inc.(a)

    95,666       4,284,880  

Chefs’ Warehouse, Inc.(a)(b)

    95,291       2,931,151  

Performance Food Group Co.(a)

    437,637       21,938,743  

PriceSmart, Inc.

     58,892       5,200,164  

Rite Aid Corp.(a)(b)

    119,823       2,189,166  

SpartanNash Co.

     45,403       952,101  

Weis Markets, Inc.

     64,481       3,280,793  
   

 

 

  
      42,630,765  
Security   Shares      Value  
Food Products — 1.3%  

Darling Ingredients, Inc.(a)

    141,662      $ 9,698,180  

Freshpet, Inc.(a)(b)

    92,667        16,385,379  

Hostess Brands, Inc.(a)

    597,091        9,362,387  

John B. Sanfilippo & Son, Inc.

     24,239        2,261,741  

Sanderson Farms, Inc.

     15,242        2,480,635  

Seneca Foods Corp., Class A(a)

    75,494        3,490,843  

Simply Good Foods Co(a)

    40,103        1,384,757  

Vital Farms, Inc.(a)

    416,790        8,873,459  
    

 

 

  
       53,937,381  
Gas Utilities — 1.3%  

New Jersey Resources Corp.

     249,740        10,668,893  

Southwest Gas Holdings, Inc.

     706,972        46,667,222  
    

 

 

  
       57,336,115  
Health Care Equipment & Supplies — 3.6%  

Accuray, Inc.(a)

    385,489        1,642,183  

Alphatec Holdings, Inc.(a)

    68,596        994,642  

AtriCure, Inc.(a)

    50,754        3,792,846  

Atrion Corp.

     5,349        3,321,729  

Axonics, Inc.(a)

    11,202        646,243  

Cantel Medical Corp.(a)

    103,199        8,393,175  

Cardiovascular Systems, Inc.(a)

    135,004        5,290,807  

Cerus Corp.(a)(b)

    191,832        1,110,707  

CONMED Corp.

     38,835        5,347,191  

CryoLife, Inc.(a)

    170,018        4,898,219  

CryoPort, Inc.(a)(b)

    19,020        1,063,598  

Globus Medical, Inc., Class A(a)

    72,164        5,200,138  

Heska Corp.(a)

    73,528        14,569,573  

Inogen, Inc.(a)

    30,940        1,912,401  

Integer Holdings Corp.(a)

    62,731        5,675,274  

Intersect ENT, Inc.(a)

    84,641        1,493,914  

LeMaitre Vascular, Inc.

     105,711        5,413,460  

LivaNova PLC(a)

    80,553        6,729,398  

Meridian Bioscience, Inc.(a)

    46,865        972,917  

Mesa Laboratories, Inc.

     24,407        6,005,586  

Natus Medical, Inc.(a)

    194,935        5,224,258  

Neogen Corp.(a)

    51,798        4,781,473  

Nevro Corp.(a)

    176,004        26,523,803  

Novocure Ltd.(a)

    5,215        1,063,860  

NuVasive, Inc.(a)

    35,692        2,434,194  

OraSure Technologies, Inc.(a)

    744,488        7,154,530  

Orthofix Medical, Inc.(a)

    3,855        156,899  

SeaSpine Holdings Corp.(a)

    31,050        632,799  

Shockwave Medical, Inc.(a)

    23,912        4,301,769  

SI-BONE, Inc.(a)

    3,227        97,359  

Silk Road Medical, Inc.(a)

    77,227        3,751,688  

STAAR Surgical Co.(a)

    31,063        4,536,130  

Tactile Systems Technology, Inc.(a)

    133,666        7,187,221  

Varex Imaging Corp.(a)

    62,205        1,560,723  
    

 

 

  
         153,880,707  
Health Care Providers & Services — 1.9%  

1Life Healthcare, Inc.(a)

    192,075        7,106,775  

AMN Healthcare Services, Inc.(a)

    85,643        7,596,534  

Apria, Inc.(a)

    24,869        757,261  

CorVel Corp.(a)

    24,268        3,023,793  

Covetrus, Inc.(a)

    49,135        1,363,005  

Hanger, Inc.(a)

    40,907        1,056,628  

Innovage Holding Corp.(a)

    91,008        1,947,571  

LHC Group, Inc.(a)

    36,608        7,206,285  

Magellan Health, Inc.(a)

    29,868        2,813,267  

Option Care Health, Inc.(a)

    70,735        1,297,280  

Owens & Minor, Inc.

     98,645        4,410,418  
 

 

 

S C H E D U L E S   O F   I N V E S T M E N T S

   31

Schedule of Investments   (continued)

May 31, 2021

   

BlackRock Advantage Small Cap Core Fund

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Health Care Providers & Services (continued)  

Patterson Cos., Inc.

     389,744     $ 12,682,270  

PetIQ, Inc.(a)

    86,771       3,566,288  

Privia Health Group, Inc.(a)(b)

    109,746       3,591,987  

R1 RCM, Inc.(a)

    58,582       1,356,173  

Select Medical Holdings Corp.

     186,745       7,482,872  

Tenet Healthcare Corp.(a)

    97,159       6,500,909  

Triple-S Management Corp., Class B(a)

    30,484       771,245  

U.S. Physical Therapy, Inc.

     54,996       6,399,334  

Viemed Healthcare, Inc.(a)

    109,897       858,295  
   

 

 

  
      81,788,190  
Health Care Technology — 1.6%  

Allscripts Healthcare Solutions, Inc.(a)(b)

    799,250       13,898,958  

Castlight Health, Inc., Class B(a)

    47,000       85,540  

Evolent Health, Inc., Class A(a)(b)

    79,533       1,545,326  

Health Catalyst, Inc.(a)(b)

    48,666       2,612,878  

Inovalon Holdings, Inc., Class A(a)

    388,872       12,195,026  

Inspire Medical Systems, Inc.(a)

    20,562       3,995,197  

NextGen Healthcare, Inc.(a)

    32,689       536,753  

Omnicell, Inc.(a)

    101,328       14,084,592  

Phreesia, Inc.(a)

    193,548       9,580,626  

Tabula Rasa HealthCare, Inc.(a)

    27,053       1,168,960  

Teladoc Health, Inc.(a)

    17,126       2,578,833  

Vocera Communications, Inc.(a)

    207,778       7,006,274  
   

 

 

  
      69,288,963  
Hotels, Restaurants & Leisure — 4.3%  

Accel Entertainment, Inc.(a)(b)

    233,223       3,059,886  

Caesars Entertainment, Inc.(a)(b)

    214,889       23,089,823  

Cheesecake Factory, Inc.(a)

    228,657       13,449,605  

Churchill Downs, Inc.

     51,080       10,191,992  

Chuy’s Holdings, Inc.(a)

    34,295       1,421,528  

Cracker Barrel Old Country Store, Inc.

     39,236       6,188,302  

Dave & Buster’s Entertainment, Inc.(a)

    78,703       3,327,563  

Dine Brands Global, Inc.(a)

    103,610       9,837,769  

Hilton Grand Vacations, Inc.(a)

    74,594       3,411,184  

International Game Technology PLC(a)

    1,329,735       32,259,371  

Jack in the Box, Inc.

     41,028       4,660,781  

Marriott Vacations Worldwide Corp.(a)

    46,563       8,022,339  

Penn National Gaming, Inc.(a)

    236,064       19,350,166  

PlayAGS, Inc.(a)

    112,983       1,150,167  

Scientific Games Corp.(a)

    25,848       1,875,014  

SeaWorld Entertainment, Inc.(a)

    293,876       15,995,671  

Shake Shack, Inc., Class A(a)

    107,678       10,119,578  

Texas Roadhouse, Inc.

     26,645       2,683,418  

Wingstop, Inc.

     96,945       13,832,112  
   

 

 

  
      183,926,269  
Household Durables — 2.2%  

Ethan Allen Interiors, Inc.

     78,202       2,257,692  

GoPro, Inc., Class A(a)

    79,259       889,286  

Green Brick Partners, Inc.(a)

    195,076       4,553,074  

Hooker Furniture Corp.

     38,792       1,390,693  

iRobot Corp.(a)(b)

    132,705       12,965,278  

KB Home

     173,125       8,103,981  

LGI Homes, Inc.(a)(b)

    38,099       6,888,680  

Lovesac Co.(a)

    10,585       878,767  

M/I Homes, Inc.(a)

    19,723       1,390,866  

MDC Holdings, Inc.

     761,712       44,141,210  

Meritage Homes Corp.(a)

    43,722       4,707,548  

Sonos, Inc.(a)

    119,560       4,423,720  
   

 

 

  
      92,590,795  
Household Products — 0.3%  

Central Garden & Pet Co., Class A(a)

    274,867       13,867,040  
   

 

 

  
Security   Shares      Value  
Independent Power and Renewable Electricity Producers — 0.5%  

Brookfield Renewable Corp., Class A

     224,308      $ 9,582,438  

Clearway Energy, Inc., Class A

     185,597        4,664,053  

Ormat Technologies, Inc.

     29,168        2,014,050  

Sunnova Energy International, Inc.(a)(b)

    244,201        7,130,669  
    

 

 

  
       23,391,210  
Insurance — 0.8%  

Argo Group International Holdings Ltd.

     16,109        864,087  

Donegal Group, Inc., Class A

     91,016        1,391,635  

eHealth, Inc.(a)

    57,016        3,720,294  

Enstar Group Ltd.(a)

    3,320        842,915  

Genworth Financial, Inc., Class A(a)

    743,011        3,120,646  

Heritage Insurance Holdings, Inc.

     207,168        1,725,709  

Kinsale Capital Group, Inc.

     14,387        2,394,860  

Protective Insurance Corp., Class B

     22,275        519,008  

RLI Corp.

     35,922        3,789,053  

Selectquote, Inc.(a)

    82,640        1,679,245  

Trupanion, Inc.(a)

    163,514        14,744,057  

Universal Insurance Holdings, Inc.

     29,194        411,635  
    

 

 

  
       35,203,144  
Interactive Media & Services — 0.1%  

Bumble, Inc., Class A(a)

    36,473        1,740,492  

Cars.com, Inc.(a)

    39,745        580,674  

EverQuote, Inc., Class A(a)

    25,901        816,659  

TrueCar, Inc.(a)

    158,931        939,282  
    

 

 

  
       4,077,107  
Internet & Direct Marketing Retail — 0.9%  

1-800-Flowers.com, Inc., Class A(a)

    303,107        9,235,670  

Lands’ End, Inc.(a)

    68,427        1,752,415  

Overstock.com, Inc.(a)(b)

    132,506        11,319,988  

RealReal, Inc.(a)

    110,827        1,936,148  

Stamps.com, Inc.(a)

    41,208        7,733,917  

Stitch Fix, Inc., Class A(a)

    90,523        4,839,360  
    

 

 

  
       36,817,498  
IT Services — 1.3%  

BM Technologies, Inc.(a)

    2,644        31,887  

Cardtronics PLC, Class A(a)

    39,587        1,541,122  

Conduent, Inc.(a)

    1,468,816        11,133,625  

CSG Systems International, Inc.

     124,354        5,476,550  

Grid Dynamics Holdings, Inc.(a)

    88,783        1,364,595  

Hackett Group, Inc.

     153,271        2,729,756  

International Money Express, Inc.(a)

    78,670        1,201,291  

Limelight Networks, Inc.(a)

    327,420        1,015,002  

LiveRamp Holdings, Inc.(a)

    80,175        4,027,992  

Maximus, Inc.

     219,703        20,359,877  

Paymentus Holdings, Inc., Class A(a)

    140,056        4,271,708  

Verra Mobility Corp.(a)(b)

    113,936        1,623,588  
    

 

 

  
       54,776,993  
Leisure Products — 0.2%  

Malibu Boats, Inc., Class A(a)(b)

    71,361        5,596,130  

YETI Holdings, Inc.(a)(b)

    16,196        1,418,769  
    

 

 

  
       7,014,899  
Life Sciences Tools & Services — 1.6%  

Codexis, Inc.(a)(b)

    304,486        6,241,963  

Luminex Corp.

     157,348        5,804,568  

Medpace Holdings, Inc.(a)

    88,752        14,826,909  

NanoString Technologies, Inc.(a)

    167,863        9,314,718  

NeoGenomics, Inc.(a)(b)

    365,731        15,005,943  

Pacific Biosciences of California, Inc.(a)

    235,282        6,364,378  

Personalis, Inc.(a)

    252,836        5,686,282  

Quanterix Corp.(a)

    40,410        2,080,711  
 

 

 

32  

2 0 2 1   B L A C K R O C K   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S

Schedule of Investments   (continued)

May 31, 2021

   

BlackRock Advantage Small Cap Core Fund

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Life Sciences Tools & Services (continued)            

Repligen Corp.(a)

    17,499     $ 3,195,492  

Seer, Inc.(a)(b)

    16,943       501,174  
   

 

 

  
      69,022,138  
Machinery — 2.6%            

Altra Industrial Motion Corp.

     260,131       17,088,005  

Chart Industries, Inc.(a)

    46,794       6,829,116  

CIRCOR International, Inc.(a)(b)

    19,570       736,419  

ESCO Technologies, Inc.

     132,266       12,517,654  

Evoqua Water Technologies Corp.(a)

    100,324       3,122,083  

Franklin Electric Co., Inc.

     276,449       23,191,307  

Gates Industrial Corp. PLC(a)

    73,122       1,327,896  

Hillenbrand, Inc.

     41,477       1,891,351  

Hyster-Yale Materials Handling, Inc.

     22,163       1,675,301  

John Bean Technologies Corp.

     75,225       10,834,657  

Kennametal, Inc.

     118,232       4,434,882  

Manitowoc Co., Inc.(a)

    372,550       9,619,241  

Meritor, Inc.(a)

    41,112       1,068,912  

Proto Labs, Inc.(a)(b)

    33,371       2,983,034  

Wabash National Corp.

     122,802       1,958,692  

Welbilt, Inc.(a)

    405,016       10,007,945  
   

 

 

  
      109,286,495  
Media — 0.9%            

Cardlytics, Inc.(a)

    75,619       8,057,204  

comScore, Inc.(a)

    151,550       606,200  

Entravision Communications Corp., Class A

     337,759       1,577,334  

EW Scripps Co, Class A

     70,665       1,498,805  

iHeartMedia, Inc., Class A(a)

    581,127       13,487,958  

Magnite, Inc.(a)

    90,954       2,701,334  

Meredith Corp.(a)

    96,425       3,247,594  

Scholastic Corp.

     27,455       924,684  

Sinclair Broadcast Group, Inc., Class A

     80,275       2,704,465  

TEGNA, Inc.

     238,480       4,624,127  
   

 

 

  
      39,429,705  
Metals & Mining — 2.2%            

Caledonia Mining Corp. PLC

     1,611       23,714  

Cleveland-Cliffs, Inc.(b)

    805,697       16,210,624  

Commercial Metals Co.

     432,576       13,613,167  

Materion Corp.

     87,679       6,913,489  

Novagold Resources, Inc.(a)(b)

    589,150       6,044,679  

Olympic Steel, Inc.

     37,790       1,350,993  

Ryerson Holding Corp.(a)

    123,041       2,037,559  

Schnitzer Steel Industries, Inc., Class A

     351,375       19,142,910  

United States Steel Corp.

     604,494       15,674,529  

Worthington Industries, Inc.

     205,128       13,614,345  
   

 

 

  
      94,626,009  
Mortgage Real Estate Investment Trusts (REITs) — 0.7%  

Arbor Realty Trust, Inc.

     625,203       11,403,703  

Blackstone Mortgage Trust, Inc., Class A

     79,288       2,539,595  

Ellington Financial, Inc.

     624,213       11,785,142  

Granite Point Mortgage Trust, Inc.

     108,098       1,554,449  

Great Ajax Corp.

     58,793       740,792  

KKR Real Estate Finance Trust, Inc.

     54,251       1,159,886  

Ladder Capital Corp.

     104,639       1,224,276  

Two Harbors Investment Corp.

     172,974       1,243,683  
   

 

 

  
      31,651,526  
Multiline Retail — 0.3%            

Big Lots, Inc.

     93,004       5,667,664  

Dillard’s, Inc., Class A

     44,967       5,931,597  

Franchise Group, Inc.

     81,510       3,010,979  
   

 

 

  
      14,610,240  
Security   Shares     Value  
Multi-Utilities — 0.1%            

NorthWestern Corp.

     84,472     $ 5,351,301  
   

 

 

  
Oil, Gas & Consumable Fuels — 2.2%            

Antero Resources Corp.(a)

    275,031       3,550,650  

Ardmore Shipping Corp.(a)

    47,834       214,775  

Brigham Minerals, Inc., Class A

     692,644       12,564,562  

Clean Energy Fuels Corp.(a)

    35,032       277,453  

CNX Resources Corp.(a)(b)

    175,734       2,393,497  

CVR Energy, Inc.

     401,042       8,321,622  

Delek U.S. Holdings, Inc.

     562,352       12,534,826  

Evolution Petroleum Corp.

     294,742       1,087,598  

Green Plains, Inc.(a)

    102,505       3,268,884  

Laredo Petroleum, Inc.(a)

    59,464       3,339,498  

Magnolia Oil & Gas Corp., Class A(a)(b)

    540,864       6,987,963  

Matador Resources Co.

     91,022       2,788,914  

Nordic American Tankers Ltd.

     370,840       1,290,523  

Ovintiv, Inc.

     65,165       1,735,344  

Par Pacific Holdings, Inc.(a)

    373,428       5,198,118  

PBF Energy, Inc., Class A(a)

    620,854       10,020,584  

PDC Energy, Inc.(a)(b)

    108,681       4,588,512  

REX American Resources Corp.(a)

    4,297       412,641  

Scorpio Tankers, Inc.

     364,173       8,150,192  

SM Energy Co.

     27,944       556,086  

Talos Energy, Inc.(a)(b)

    189,908       2,692,895  

W&T Offshore, Inc.(a)

    195,256       730,257  

World Fuel Services Corp.

     55,677       1,710,954  
   

 

 

  
      94,416,348  
Paper & Forest Products — 0.9%            

Boise Cascade Co.

     94,724       6,250,837  

Domtar Corp.(a)

    50,974       2,764,320  

Louisiana-Pacific Corp.

     417,651       28,070,324  

Neenah, Inc.

     18,334       970,418  
   

 

 

  
      38,055,899  
Personal Products — 0.0%            

USANA Health Sciences, Inc.(a)

    18,749       1,982,519  
   

 

 

  
Pharmaceuticals — 0.6%            

Amphastar Pharmaceuticals, Inc.(a)

    242,354       4,585,338  

Arvinas, Inc.(a)

    35,710       2,597,545  

Athira Pharma, Inc.(a)

    28,008       558,480  

BioDelivery Sciences International, Inc.(a)

    190,382       672,048  

Collegium Pharmaceutical, Inc.(a)(b)

    18,972       453,241  

Endo International PLC(a)

    340,825       2,000,643  

Harmony Biosciences Holdings, Inc.(a)

    22,044       704,526  

KemPharm, Inc.(a)

    47,744       488,899  

NGM Biopharmaceuticals, Inc.(a)

    71,952       1,083,597  

Phibro Animal Health Corp., Class A

     10,975       309,385  

Prestige Consumer Healthcare, Inc.(a)(b)

    95,457       4,760,441  

Provention Bio, Inc.(a)

    37,220       283,244  

Relmada Therapeutics, Inc.(a)

    26,749       925,248  

Supernus Pharmaceuticals, Inc.(a)

    31,804       949,349  

Theravance Biopharma, Inc.(a)(b)

    84,992       1,468,662  

Zogenix, Inc.(a)

    188,445       3,307,210  
   

 

 

  
      25,147,856  
Professional Services — 1.7%            

ASGN, Inc.(a)

    140,747       14,509,608  

Forrester Research, Inc.(a)

    50,993       2,188,110  

Franklin Covey Co.(a)

    109,651       3,399,181  

Heidrick & Struggles International, Inc.

     19,922       857,443  

Insperity, Inc.

     116,212       10,713,584  

KBR, Inc.

     147,072       5,991,713  

Kelly Services, Inc., Class A(a)

    144,037       3,697,430  
 

 

 

S C H E D U L E S   O F   I N V E S T M E N T S

   33

Schedule of Investments   (continued)

May 31, 2021

   

BlackRock Advantage Small Cap Core Fund

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Professional Services (continued)            

Kforce, Inc.

     143,244     $ 8,982,831  

ManTech International Corp., Class A

     32,259       2,806,856  

TriNet Group, Inc.(a)

    233,694       17,606,506  
   

 

 

  
      70,753,262  
Real Estate Management & Development — 1.8%  

Cushman & Wakefield PLC(a)

    119,416       2,270,098  

FRP Holdings, Inc.(a)

    34,501       1,977,942  

Kennedy-Wilson Holdings, Inc.

     418,687       8,306,750  

Marcus & Millichap, Inc.(a)

    570,823       22,433,344  

Newmark Group, Inc., Class A

     1,076,615       13,888,334  

RE/MAX Holdings, Inc., Class A

     177,526       6,215,185  

Realogy Holdings Corp.(a)

    818,647       14,498,239  

Redfin Corp.(a)(b)

    49,258       2,907,700  

RMR Group, Inc., Class A

     73,760       2,885,491  
   

 

 

  
      75,383,083  
Road & Rail — 0.8%            

Covenant Logistics Group, Inc.(a)

    150,429       3,386,157  

Marten Transport Ltd.

     143,254       2,443,913  

Universal Logistics Holdings, Inc.

     64,379       1,609,475  

Werner Enterprises, Inc.

     545,534       26,180,177  
   

 

 

  
      33,619,722  
Semiconductors & Semiconductor Equipment — 3.7%  

Brooks Automation, Inc.

     111,423       11,375,174  

Cirrus Logic, Inc.(a)

    158,548       12,377,842  

CMC Materials, Inc.

     30,658       4,731,449  

Ichor Holdings Ltd.(a)

    269,165       15,143,223  

Lattice Semiconductor Corp.(a)(b)

    373,790       19,837,035  

Maxeon Solar Technologies Ltd.(a)

    37,964       592,998  

MaxLinear, Inc.(a)

    33,624       1,278,384  

Onto Innovation, Inc.(a)

    14,870       1,067,220  

Power Integrations, Inc.

     298,661       24,546,948  

Rambus, Inc.(a)

    34,909       682,820  

Silicon Laboratories, Inc.(a)

    320,987       43,833,985  

SunPower Corp.(a)

    49,704       1,162,577  

Synaptics, Inc.(a)

    116,888       14,766,461  

Ultra Clean Holdings, Inc.(a)

    92,715       5,222,636  
   

 

 

  
      156,618,752  
Software — 5.6%            

8x8, Inc.(a)

    263,743       6,211,148  

A10 Networks, Inc.(a)

    72,706       707,429  

ACI Worldwide, Inc.(a)

    412,403       15,778,539  

Alarm.com Holdings, Inc.(a)

    47,359       3,877,755  

Alkami Technology, Inc.(a)(b)

    18,131       603,218  

Altair Engineering, Inc., Class A(a)

    63,602       4,284,867  

Appian Corp.(a)

    70,067       6,339,662  

Avaya Holdings Corp.(a)

    77,639       2,226,687  

Benefitfocus, Inc.(a)

    85,974       1,271,555  

Blackline, Inc.(a)

    31,099       3,233,363  

Bottomline Technologies DE, Inc.(a)

    115,240       4,307,671  

Box, Inc., Class A(a)

    752,024       17,529,679  

Cerence, Inc.(a)

    48,280       4,592,876  

Cloudera, Inc.(a)

    332,774       4,279,474  

CommVault Systems, Inc.(a)

    167,918       12,790,314  

Cornerstone OnDemand, Inc.(a)

    42,036       1,848,323  

Domo, Inc., Class B(a)

    32,866       2,185,589  

Envestnet, Inc.(a)

    82,199       5,915,862  

Five9, Inc.(a)

    11,972       2,120,241  

J2 Global, Inc.(a)(b)

    15,456       1,924,736  

LivePerson, Inc.(a)(b)

    108,145       5,942,568  

Mimecast Ltd.(a)

    103,862       5,192,061  

Model N, Inc.(a)

    48,114       1,716,226  
Security   Shares     Value  
Software (continued)            

Olo, Inc., Class A(a)

    57,243     $ 1,937,676  

ON24, Inc.(a)

    36,883       1,186,895  

Paylocity Holding Corp.(a)

    18,354       3,117,060  

Ping Identity Holding Corp.(a)

    61,860       1,491,445  

Procore Technologies, Inc.(a)

    30,642       2,648,082  

Progress Software Corp.

     242,755       10,819,590  

PROS Holdings, Inc.(a)(b)

    187,075       8,300,518  

Q2 Holdings, Inc.(a)(b)

    31,550       2,995,042  

QAD, Inc., Class A

     63,840       4,562,006  

Rapid7, Inc.(a)(b)

    134,352       11,238,545  

RingCentral, Inc., Class A(a)

    15,724       4,127,078  

Sailpoint Technologies Holdings, Inc.(a)(b)

    149,148       6,939,856  

Sprout Social, Inc., Class A(a)

    187,977       13,049,363  

SPS Commerce, Inc.(a)

    50,994       4,786,297  

Sumo Logic, Inc.(a)

    18,337       344,736  

SVMK, Inc.(a)

    29,383       571,499  

Tenable Holdings, Inc.(a)

    225,589       9,429,620  

Varonis Systems, Inc.(a)

    471,715       22,783,834  

Verint Systems, Inc.(a)

    105,188       4,850,219  

Yext, Inc.(a)

    452,541       6,548,268  

Zuora, Inc., Class A(a)

    81,565       1,261,811  
   

 

 

  
      237,869,283  
Specialty Retail — 4.1%            

Aaron’s Co., Inc.

     80,039       2,879,003  

American Eagle Outfitters, Inc.

     769,319       27,256,972  

America’s Car-Mart, Inc.(a)

    14,989       2,464,042  

Asbury Automotive Group, Inc.(a)

    33,646       6,671,665  

At Home Group, Inc.(a)

    79,703       2,992,051  

Bed Bath & Beyond, Inc.(a)

    159,370       4,460,766  

Buckle, Inc.

     63,203       2,662,110  

Camping World Holdings, Inc., Class A

     159,075       7,061,339  

Conn’s, Inc.(a)

    71,531       1,658,804  

Designer Brands, Inc., Class A(a)

    196,062       3,429,124  

GameStop Corp., Class A(a)(b)

    53,327       11,838,594  

Group 1 Automotive, Inc.

     54,113       8,629,941  

Guess?, Inc.

     17,993       528,455  

Haverty Furniture Cos., Inc.

     23,868       1,096,496  

Hibbett Sports, Inc.(a)

    25,952       2,199,692  

Lithia Motors, Inc., Class A

     94,407       33,230,320  

MarineMax, Inc.(a)(b)

    234,403       12,055,346  

National Vision Holdings, Inc.(a)

    21,481       1,066,961  

Rent-A-Center, Inc.

     208,688       12,899,005  

Shoe Carnival, Inc.

     46,178       3,117,477  

Signet Jewelers Ltd.(a)

    138,218       8,373,247  

Sleep Number Corp.(a)

    29,960       3,340,240  

Sonic Automotive, Inc., Class A

     31,835       1,535,402  

Tilly’s, Inc., Class A(a)

    127,733       1,744,833  

Urban Outfitters, Inc.(a)

    276,883       10,842,738  

Zumiez, Inc.(a)

    60,072       2,632,355  
   

 

 

  
      176,666,978  
Technology Hardware, Storage & Peripherals — 0.1%  

3D Systems Corp.(a)

    34,523       1,015,321  

Super Micro Computer, Inc.(a)

    19,305       670,656  

Turtle Beach Corp.(a)

    24,697       817,471  
   

 

 

  
      2,503,448  
Textiles, Apparel & Luxury Goods — 1.6%            

Crocs, Inc.(a)

    244,765       24,780,009  

Culp, Inc.

     48,129       785,465  

Deckers Outdoor Corp.(a)

    62,311       20,901,602  

Fossil Group, Inc.(a)(b)

    108,726       1,535,211  

G-III Apparel Group Ltd.(a)

    145,806       4,817,430  
 

 

 

34  

2 0 2 1   B L A C K R O C K   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S

Schedule of Investments   (continued)

May 31, 2021

   

BlackRock Advantage Small Cap Core Fund

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Textiles, Apparel & Luxury Goods (continued)  

Kontoor Brands, Inc.

     31,682     $ 2,028,282  

Oxford Industries, Inc.

     91,680       8,778,360  

Steven Madden Ltd.

     115,998       4,802,317  

Unifi, Inc.(a)

    9,600       264,288  

Vera Bradley, Inc.(a)

    105,528       1,211,461  
   

 

 

  
      69,904,425  
Thrifts & Mortgage Finance — 2.7%            

Essent Group Ltd.

     399,865       19,129,542  

Federal Agricultural Mortgage Corp., Class C

     94,150       9,552,459  

Flagstar Bancorp, Inc.

     77,857       3,565,851  

Merchants Bancorp

     113,222       4,862,885  

Mr Cooper Group, Inc.(a)

    192,501       6,658,609  

NMI Holdings, Inc., Class A(a)

    139,238       3,368,167  

Northwest Bancshares, Inc.

     132,939       1,882,416  

PennyMac Financial Services, Inc.

     66,217       4,145,846  

Premier Financial Corp.

     121,778       3,714,229  

Provident Bancorp, Inc.

     49,769       840,101  

Provident Financial Services, Inc.

     38,343       968,544  

Radian Group, Inc.

     399,345       9,324,706  

Riverview Bancorp, Inc.

     251,464       1,727,558  

Southern Missouri Bancorp, Inc.

     20,688       914,410  

TFS Financial Corp.

     725,073       16,067,618  

Walker & Dunlop, Inc.

     123,438       12,533,894  

Washington Federal, Inc.

     386,252       12,877,642  

WSFS Financial Corp.

     19,607       1,043,288  
   

 

 

  
      113,177,765  
Trading Companies & Distributors — 2.1%            

Applied Industrial Technologies, Inc.

     160,729       15,745,013  

GMS, Inc.(a)

    17,884       818,908  

H&E Equipment Services, Inc.

     98,976       3,701,702  

Herc Holdings, Inc.(a)

    116,535       13,403,856  

MRC Global, Inc.(a)

    66,455       713,727  

SiteOne Landscape Supply, Inc.(a)(b)

    229,899       39,551,824  

Triton International Ltd.

     215,191       11,674,112  

Veritiv Corp.(a)

    21,104       1,296,208  

WESCO International, Inc.(a)(b)

    10,481       1,116,960  
   

 

 

  
      88,022,310  
Wireless Telecommunication Services — 0.0%  

Spok Holdings, Inc.

     6,677       77,921  
   

 

 

  

Total Common Stocks — 98.8%
(Cost: $3,398,176,245)

 

     4,215,806,396  
   

 

 

  

Preferred Securities

    

Preferred Stocks — 0.0%

    

Trading Companies & Distributors — 0.0%

    

WESCO International, Inc., Series A,
10.63%(c)(d)

    14,500       455,880  
   

 

 

  

Total Preferred Securities — 0.0%
(Cost: $384,250)

 

     455,880  
   

 

 

  
Security   Shares     Value  

Rights

    

Biotechnology — 0.0%

    

Alder Biopharmaceuticals, Inc., CVR(a)(e)

    38,614     $ 33,981  
   

 

 

  

Household Durables — 0.0%

    

ZAGG, Inc., CVR(a)(b)

    122,846       11,056  
   

 

 

  

Total Rights — 0.0%
(Cost: $ —)

       45,037  
   

 

 

  

Total Long-Term Investments — 98.8%
(Cost: $3,398,560,495)

 

     4,216,307,313  
   

 

 

  

Short-Term Securities(f)(g)

   

Money Market Funds — 5.2%

    

BlackRock Liquidity Funds, T-Fund, Institutional Class, 0.01%

     51,282,606       51,282,606  

SL Liquidity Series, LLC, Money Market Series, 0.12%(h)

    170,580,430       170,631,604  
   

 

 

  

Total Short-Term Securities — 5.2%
(Cost: $221,888,281)

 

     221,914,210  
   

 

 

  

Total Investments — 104.0%
(Cost: $3,620,448,776)

 

     4,438,221,523  

Liabilities in Excess of Other Assets — (4.0)%

 

     (171,780,673 ) 
   

 

 

  

Net Assets — 100.0%

     $   4,266,440,850  
   

 

 

  

 

(a) 

Non-income producing security.

(b) 

All or a portion of this security is on loan.

(c) 

Perpetual security with no stated maturity date.

(d) 

Variable rate security. Interest rate resets periodically. The rate shown is the effective interest rate as of period end. Security description also includes the reference rate and spread if published and available.

(e) 

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

(f) 

Affiliate of the Fund.

(g) 

Annualized 7-day yield as of period end.

(h) 

All or a portion of this security was purchased with the cash collateral from loaned securities.

 

 

 

S C H E D U L E S   O F   I N V E S T M E N T S

   35

Schedule of Investments   (continued)

May 31, 2021

   

BlackRock Advantage Small Cap Core Fund

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended May 31, 2021 for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

                   
    Affiliated Issuer   

Value at

05/31/20

    

Purchases  

at Cost   

      Proceeds
from Sale		    

Net

Realized

Gain (Loss)

    

Change in

Unrealized

Appreciation

(Depreciation)

     

Value at

05/31/21

    

Shares

Held at

05/31/21

     Income     

Capital

Gain

Distributions

from Underlying

Funds

     

    

  

BlackRock Liquidity Funds, T-Fund, Institutional Class

    $  43,962,860      $ 7,319,746(a )       $ —        $           —        $           —      $ 51,282,606        51,282,606      $ 29,650         $ —    
 

SL Liquidity Series, LLC, Money Market Series

      62,801,371          107,888,768(a )       —          (19,866 )         (38,669 )       170,631,604        170,580,430        1,226,298 (b)          —         
               

 

 

       

 

 

     

 

 

        

 

 

        

 

 

    
                         $   (19,866 )                $ (38,669 )     $   221,914,210         $   1,255,948                      $ —    
               

 

 

       

 

 

     

 

 

        

 

 

        

 

 

    

 

  (a) 

Represents net amount purchased (sold).

 
  (b) 

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

For Fund compliance purposes, the Fund’s industry classifications refer to one or more of the industry sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by the investment adviser. These definitions may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

Derivative Financial Instruments Outstanding as of Period End

Futures Contracts

 

         
Description   

Number of

Contracts

    

        Expiration

Date

   

Notional

Amount

(000)

   

Value/

Unrealized

Appreciation

(Depreciation)

  

Long Contracts

                     

Russell 2000 E-Mini Index

      412        06/18/21              $   46,733       $   1,147,910  
             

 

 

  

Derivative Financial Instruments Categorized by Risk Exposure

As of period end, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:

 

               
     

Commodity

Contracts

    

Credit

Contracts

       

Equity

Contracts

    

Foreign

Currency

Exchange

Contracts

     

Interest

Rate

Contracts

     

Other

Contracts

        Total  

Assets — Derivative Financial Instruments

                                       

Futures contracts

                                                                  

Unrealized appreciation(a)

               $  —        $  —        $   1,147,910         $  —                  $  —         $  —        $   1,147,910  
     

 

 

       

 

 

       

 

 

        

 

 

        

 

 

        

 

 

       

 

 

  

 

  (a) 

Net cumulative unrealized appreciation (depreciation) on futures contracts, if any, are reported in the Schedule of Investments. In the Statement of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

For the year ended May 31, 2021, the effect of derivative financial instruments in the Statement of Operations was as follows:

 

               
     

Commodity

Contracts

    

Credit

Contracts

       

Equity

Contracts

    

Foreign

Currency

Exchange

Contracts

     

Interest

Rate

Contracts

     

Other

Contracts

        Total  

Net Realized Gain (Loss) from

                                        

Futures contracts

       $  —         $  —        $  43,253,997         $  —         $  —         $  —        $  43,253,997  
     

 

 

        

 

 

       

 

 

        

 

 

        

 

 

        

 

 

       

 

 

  

Net Change in Unrealized Appreciation (Depreciation) on

                                                                                     

Futures contracts

       $  —         $  —        $ (709,790 )        $  —         $  —         $  —        $ (709,790 ) 
     

 

 

        

 

 

       

 

 

        

 

 

        

 

 

        

 

 

       

 

 

  

 

 

36  

2 0 2 1   B L A C K R O C K   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S

Schedule of Investments   (continued)

May 31, 2021

   

BlackRock Advantage Small Cap Core Fund

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

 

  

Futures contracts

   

Average notional value of contracts — long

    $ 72,824,834   

 

  

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

Fair Value Hierarchy as of Period End

Various inputs are used in determining the fair value of financial instruments. For a description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

The following table summarizes the Fund’s financial instruments categorized in the fair value hierarchy. The breakdown of the Fund’s financial instruments into major categories is disclosed in the Schedule of Investments above.

 

 

  
     Level 1    

     Level 2

    

     Level 3

        Total  

 

  

Assets

                               

Investments

                      

Long-Term Investments

                      

Common Stocks

                      

Aerospace & Defense

    $ 19,968,634                   $ —                    $ —            $ 19,968,634  

Air Freight & Logistics

      36,070,131            —            —          36,070,131  

Airlines

      30,296,032            —            —          30,296,032  

Auto Components

      56,931,861            —            —          56,931,861  

Automobiles

      7,148,604            —            —          7,148,604  

Banks

      316,283,691            —            —          316,283,691  

Biotechnology

      318,711,846            —            —          318,711,846  

Building Products

      77,205,408            —            —          77,205,408  

Capital Markets

      138,188,694            —            —          138,188,694  

Chemicals

      91,890,888            —            —          91,890,888  

Commercial Services & Supplies

      98,966,140            —            —          98,966,140  

Communications Equipment

      12,679,468            —            —          12,679,468  

Construction & Engineering

      93,805,784            —            —          93,805,784  

Construction Materials

      20,331,220            —            —          20,331,220  

Consumer Finance

      32,302,985            —            —          32,302,985  

Containers & Packaging

      942,750            —            —          942,750  

Diversified Consumer Services

      9,117,597            —            —          9,117,597  

Diversified Financial Services

      10,859,324            —            —          10,859,324  

Diversified Telecommunication Services

      10,641,583            —            —          10,641,583  

Electric Utilities

      10,211,229            —            —          10,211,229  

Electrical Equipment

      48,608,512            —            —          48,608,512  

Electronic Equipment, Instruments & Components

      102,539,522            —            —          102,539,522  

Energy Equipment & Services

      37,007,843            —            —          37,007,843  

Entertainment

      38,046,590            —            —          38,046,590  

Equity Real Estate Investment Trusts (REITs)

      138,345,999            —            —          138,345,999  

Food & Staples Retailing

      42,630,765            —            —          42,630,765  

Food Products

      53,937,381            —            —          53,937,381  

Gas Utilities

      57,336,115            —            —          57,336,115  

Health Care Equipment & Supplies

      153,880,707            —            —          153,880,707  

Health Care Providers & Services

      81,788,190            —            —          81,788,190  

Health Care Technology

      69,288,963            —            —          69,288,963  

Hotels, Restaurants & Leisure

      183,926,269            —            —          183,926,269  

Household Durables

      92,590,795            —            —          92,590,795  

Household Products

      13,867,040            —            —          13,867,040  

Independent Power and Renewable Electricity Producers

      23,391,210            —            —          23,391,210  

Insurance

      35,203,144            —            —          35,203,144  

Interactive Media & Services

      4,077,107            —            —          4,077,107  

Internet & Direct Marketing Retail

      36,817,498            —            —          36,817,498  

IT Services

      54,745,106              31,887            —          54,776,993  

Leisure Products

      7,014,899            —            —          7,014,899  

Life Sciences Tools & Services

      69,022,138            —            —          69,022,138  

Machinery

      109,286,495            —            —          109,286,495  

Media

      39,429,705            —            —          39,429,705  

Metals & Mining

      94,626,009            —            —          94,626,009  

Mortgage Real Estate Investment Trusts (REITs)

      31,651,526            —            —          31,651,526  

Multiline Retail

      14,610,240            —            —          14,610,240  

Multi-Utilities

      5,351,301            —            —          5,351,301  

 

 

S C H E D U L E S   O F   I N V E S T M E N T S

   37

Schedule of Investments  (continued)

May 31, 2021

   

BlackRock Advantage Small Cap Core Fund

 

 

  
     Level 1          Level 2    

     Level 3

        Total  

 

  

Common Stocks (continued)

                      

Oil, Gas & Consumable Fuels

    $ 94,416,348                   $ —                   $ —        $ 94,416,348  

Paper & Forest Products

      38,055,899            —            —          38,055,899  

Personal Products

      1,982,519            —            —          1,982,519  

Pharmaceuticals

      25,147,856            —            —          25,147,856  

Professional Services

      70,753,262            —            —          70,753,262  

Real Estate Management & Development

      75,383,083            —            —          75,383,083  

Road & Rail

      33,619,722            —            —          33,619,722  

Semiconductors & Semiconductor Equipment

      156,618,752            —            —          156,618,752  

Software

      237,869,283            —            —          237,869,283  

Specialty Retail

      176,666,978            —            —          176,666,978  

Technology Hardware, Storage & Peripherals

      2,503,448            —            —          2,503,448  

Textiles, Apparel & Luxury Goods

      69,904,425            —            —          69,904,425  

Thrifts & Mortgage Finance

      113,177,765            —            —          113,177,765  

Trading Companies & Distributors

      88,022,310            —            —          88,022,310  

Wireless Telecommunication Services

      77,921            —            —          77,921  

Preferred Securities

      455,880            —            —          455,880  

Rights

      —            11,056            33,981          45,037  

Short-Term Securities

                      

Money Market Funds

      51,282,606            —            —          51,282,606  
  

 

 

         

 

 

         

 

 

       

 

 

  
   $   4,267,512,995          $   42,943          $   33,981          4,267,589,919  
  

 

 

         

 

 

         

 

 

       

 

 

  

Investments valued at NAV(a)

                        170,631,604  
                     

 

 

  
                      $   4,438,221,523  
                     

 

 

  

Derivative Financial Instruments(b)

                     

Assets

                      

Equity Contracts

    $ 1,147,910          $ —          $ —        $ 1,147,910  
  

 

 

         

 

 

         

 

 

       

 

 

  

 

  (a) 

Certain investments of the Fund were fair valued using NAV per share as no quoted market value is available and therefore have been excluded from the fair value hierarchy.

 
  (b) 

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

 

See notes to financial statements.

 

 

38  

2 0 2 1   B L A C K R O C K   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S

Statements of Assets and Liabilities  

May 31, 2021

 

    

BlackRock

Advantage

International

Fund

    

BlackRock

Advantage

Large Cap

Growth Fund

    

BlackRock

Advantage

Small Cap

Core Fund

  

ASSETS

      

Investments at value — unaffiliated(a)(b)

  $ 1,139,316,018     $ 1,038,985,232     $ 4,216,307,313    

Investments at value — affiliated(c)

    31,463,004       11,431,497       221,914,210  

Cash pledged for futures contracts

     2,369,000       615,000       2,791,000  

Foreign currency, at value(d)

    4,563,746       88,730       —  

Receivables:

      

Investments sold

     12,706,362       9,133,275       20,375,333  

Securities lending income — affiliated

     272       4,357       220,596  

Capital shares sold

     325,838       292,478       8,876,777  

Dividends — affiliated

     285       102       543  

Dividends — unaffiliated

     6,113,158       754,979       2,503,444  

From the Manager

     98,772       89,591       117,075  

Variation margin on futures contracts

     63,593       15,496       —  

Prepaid expenses

     49,674       46,588       120,938  
 

 

 

    

 

 

    

 

 

  

Total assets

     1,197,069,722       1,061,457,325       4,473,227,229  
 

 

 

    

 

 

    

 

 

  

LIABILITIES

      

Collateral on securities loaned, at value

     130,384       1,341,324       170,625,753  

Payables:

      

Investments purchased

     12,288,648       8,881,490       30,905,488  

Administration fees

     40,306       36,399       130,665  

Capital shares redeemed

     423,626       875,708       2,962,933  

Investment advisory fees

     201,996       432,669       1,377,960  

Trustees’ and Officer’s fees

     3,073       2,976       4,557  

Other accrued expenses

     492,515       310,064       555,245  

Other affiliate fees

     122,234       729       51,584  

Service and distribution fees

     100,432       203,855       120,573  

Variation margin on futures contracts

     —       —       51,621  
 

 

 

    

 

 

    

 

 

  

Total liabilities

     13,803,214       12,085,214       206,786,379  
 

 

 

    

 

 

    

 

 

  

NET ASSETS

   $  1,183,266,508     $   1,049,372,111     $  4,266,440,850  
 

 

 

    

 

 

    

 

 

  

NET ASSETS CONSIST OF

      

Paid-in capital

   $ 969,142,257     $ 594,816,601     $ 3,262,456,399  

Accumulated earnings

     214,124,251       454,555,510       1,003,984,451  
 

 

 

    

 

 

    

 

 

  

NET ASSETS

   $ 1,183,266,508     $  1,049,372,111     $ 4,266,440,850  
 

 

 

    

 

 

    

 

 

  

(a) Investments, at cost — unaffiliated

   $ 953,849,048     $ 661,097,625     $ 3,398,560,495  

(b) Securities loaned, at value

   $ 121,282     $ 1,255,888     $ 165,096,975  

(c)  Investments, at cost — affiliated

   $ 31,463,004     $ 11,431,497     $ 221,888,281  

(d) Foreign currency, at cost

   $ 4,552,242       $ 84,253       $ —  

 

 

F I N A N C I A L   S T A T E M E N T S

   39

Statements of Assets and Liabilities   (continued)

May 31, 2021

 

    

BlackRock

Advantage

International

Fund

    

BlackRock

Advantage

Large Cap

Growth Fund

    

BlackRock

Advantage

Small Cap

Core Fund

  

NET ASSET VALUE

      
Institutional                  

Net assets

   $ 616,648,814     $ 125,060,963     $   2,802,144,878    
 

 

 

    

 

 

    

 

 

  

Shares outstanding

     30,999,038       5,359,680       135,267,734  
 

 

 

    

 

 

    

 

 

  

Net asset value

   $ 19.89     $ 23.33     $ 20.72  
 

 

 

    

 

 

    

 

 

  

Shares authorized

     Unlimited       Unlimited       Unlimited  
 

 

 

    

 

 

    

 

 

  

Par value

   $ 0.001     $ 0.001     $ 0.001  
 

 

 

    

 

 

    

 

 

  
Service                  

Net assets

     N/A     $ 248,888       N/A  
 

 

 

    

 

 

    

 

 

  

Shares outstanding

     N/A       10,882       N/A  
 

 

 

    

 

 

    

 

 

  

Net asset value

     N/A     $ 22.87       N/A  
 

 

 

    

 

 

    

 

 

  

Shares authorized

     N/A       Unlimited       N/A  
 

 

 

    

 

 

    

 

 

  

Par value

     N/A     $ 0.001       N/A  
 

 

 

    

 

 

    

 

 

  
Investor A                  

Net assets

   $   456,083,307     $   909,343,918     $ 530,664,052  
 

 

 

    

 

 

    

 

 

  

Shares outstanding

     23,204,506       41,099,464       25,783,627  
 

 

 

    

 

 

    

 

 

  

Net asset value

   $ 19.65     $ 22.13     $ 20.58  
 

 

 

    

 

 

    

 

 

  

Shares authorized

     Unlimited       Unlimited       Unlimited  
 

 

 

    

 

 

    

 

 

  

Par value

   $ 0.001     $ 0.001     $ 0.001  
 

 

 

    

 

 

    

 

 

  
Investor C                  

Net assets

   $ 3,664,378     $ 12,989,406     $ 12,879,917  
 

 

 

    

 

 

    

 

 

  

Shares outstanding

     191,669       705,254       641,566  
 

 

 

    

 

 

    

 

 

  

Net asset value

   $ 19.12     $ 18.42     $ 20.08  
 

 

 

    

 

 

    

 

 

  

Shares authorized

     Unlimited       Unlimited       Unlimited  
 

 

 

    

 

 

    

 

 

  

Par value

   $ 0.001     $ 0.001     $ 0.001  
 

 

 

    

 

 

    

 

 

  
Class K                  

Net assets

   $ 103,453,707     $ 1,151,672     $ 920,752,003  
 

 

 

    

 

 

    

 

 

  

Shares outstanding

     5,200,035       49,360       44,412,353  
 

 

 

    

 

 

    

 

 

  

Net asset value

   $ 19.89     $ 23.33     $ 20.73  
 

 

 

    

 

 

    

 

 

  

Shares authorized

     Unlimited       Unlimited       Unlimited  
 

 

 

    

 

 

    

 

 

  

Par value

   $ 0.001     $ 0.001     $ 0.001  
 

 

 

    

 

 

    

 

 

  
Class R                  

Net assets

   $ 3,416,302     $ 577,264       N/A  
 

 

 

    

 

 

    

 

 

  

Shares outstanding

     173,636       24,918       N/A  
 

 

 

    

 

 

    

 

 

  

Net asset value

   $ 19.68     $ 23.17       N/A  
 

 

 

    

 

 

    

 

 

  

Shares authorized

     Unlimited         Unlimited         N/A  
 

 

 

    

 

 

    

 

 

  

Par value

   $ 0.001     $ 0.001       N/A  
 

 

 

    

 

 

    

 

 

  

See notes to financial statements.

 

 

40  

2 0 2 1   B L A C K R O C K   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S

Statements of Operations

 

    

BlackRock
Advantage
International

Fund

    

BlackRock
Advantage

Large Cap

Growth Fund

    

BlackRock

Advantage

Small Cap

Core Fund

  

INVESTMENT INCOME

      

Dividends — unaffiliated

   $ 27,116,570     $ 7,802,592     $ 28,431,090  

Dividends — affiliated

     9,659       11,075       29,650  

Securities lending income — affiliated — net

     105,634       85,648       1,226,298  

Non-cash dividends — unaffiliated

     3,312,619       —       —  

Foreign taxes withheld

     (2,651,130 )      —       (50,862 ) 
 

 

 

    

 

 

    

 

 

  

Total investment income

     27,893,352       7,899,315       29,636,176  
 

 

 

    

 

 

    

 

 

  

EXPENSES

      

Investment advisory

     4,579,021       5,426,558       11,010,459  

Transfer agent — class specific

     1,630,778       1,536,336       2,054,429  

Service and distribution — class specific

     1,078,734       2,207,456       1,026,394  

Custodian

     663,748       40,160       76,934  

Administration

     419,610       393,272       977,414  

Administration — class specific

     204,189       190,539       510,177  

Registration

     116,499       97,918       250,021  

Accounting services

     92,151       88,442       174,948  

Professional

     90,333       93,703       103,294  

Printing and postage

     38,205       23,603       45,645  

Trustees and Officer

     11,848       11,942       15,656  

Miscellaneous

     116,294       25,118       45,324  
 

 

 

    

 

 

    

 

 

  

Total expenses

     9,041,410       10,135,047       16,290,695  

Less:

      

Fees waived and/or reimbursed by the Manager

     (1,533,140 )      (772,062 )      (1,193,288 ) 

Administration fees waived — class specific

     (204,189 )      (190,539 )      (510,177 ) 

Transfer agent fees waived and/or reimbursed — class specific

     (1,150,914 )      (1,057,998 )      (1,025,822 ) 
 

 

 

    

 

 

    

 

 

  

Total expenses after fees waived and/or reimbursed

     6,153,167       8,114,448       13,561,408  
 

 

 

    

 

 

    

 

 

  

Net investment income (loss)

     21,740,185       (215,133 )      16,074,768  
 

 

 

    

 

 

    

 

 

  

REALIZED AND UNREALIZED GAIN (LOSS)

      

Net realized gain (loss) from:

      

Investments — unaffiliated

     153,589,822       131,529,442       231,050,823  

Investments — affiliated

     (6,770 )      (3,350 )      (19,866 ) 

Futures contracts

     10,985,090       11,937,941       43,253,997  

Foreign currency transactions

     758,395       52       —  
 

 

 

    

 

 

    

 

 

  
    165,326,537       143,464,085       274,284,954  
 

 

 

    

 

 

    

 

 

  

Net change in unrealized appreciation (depreciation) on:

      

Investments — unaffiliated

     150,342,506       150,977,852       825,274,427  

Investments — affiliated

     (311 )      (1,154 )      (38,669 ) 

Futures contracts

     (443,180 )      (1,526,893 )      (709,790 ) 

Foreign currency translations

     78,704       8,105       —  
 

 

 

    

 

 

    

 

 

  
    149,977,719       149,457,910       824,525,968  
 

 

 

    

 

 

    

 

 

  

Net realized and unrealized gain

     315,304,256       292,921,995       1,098,810,922  
 

 

 

    

 

 

    

 

 

  

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

   $  337,044,441     $  292,706,862     $  1,114,885,690  
 

 

 

    

 

 

    

 

 

  

See notes to financial statements.

 

 

F I N A N C I A L   S T A T E M E N T S

   41

Statements of Changes in Net Assets

 

    BlackRock Advantage International Fund  
     Year Ended
05/31/21		    

Period from

10/01/19

to 05/31/20

     Year Ended
09/30/19		  

INCREASE (DECREASE) IN NET ASSETS

      

OPERATIONS

      

Net investment income

   $ 21,740,185     $ 12,306,457     $ 21,422,769  

Net realized gain (loss)

     165,326,537       (87,278,149 )      (49,752,955 ) 

Net change in unrealized appreciation (depreciation)

     149,977,719       8,204,938       15,989,735  
 

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets resulting from operations

     337,044,441       (66,766,754 )      (12,340,451 ) 
 

 

 

    

 

 

    

 

 

  

DISTRIBUTIONS TO SHAREHOLDERS(a)

     

Institutional

     (9,738,597 )      (12,598,153 )      (10,162,498 ) 

Investor A

     (6,489,037 )      (11,082,568 )      (7,937,835 ) 

Investor C

     (48,692 )      (158,038 )      (88,346 ) 

Class K

     (915,693 )      (1,303,076 )      (224,376 ) 

Class R

     (42,375 )      (116,369 )      (128,026 ) 
 

 

 

    

 

 

    

 

 

  

Decrease in net assets resulting from distributions to shareholders

     (17,234,394 )      (25,258,204 )      (18,541,081 ) 
 

 

 

    

 

 

    

 

 

  

CAPITAL SHARE TRANSACTIONS

      

Net increase (decrease) in net assets derived from capital share transactions

     (33,474,739 )      78,972,558       196,132,910  
 

 

 

    

 

 

    

 

 

  

NET ASSETS

      

Total increase (decrease) in net assets

     286,335,308       (13,052,400 )      165,251,378  

Beginning of period

     896,931,200       909,983,600       744,732,222  
 

 

 

    

 

 

    

 

 

  

End of period

   $   1,183,266,508     $   896,931,200     $   909,983,600  
 

 

 

    

 

 

    

 

 

  

 

(a) 

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

See notes to financial statements.

 

 

42  

2 0 2 1   B L A C K R O C K   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S

Statements of Changes in Net Assets  (continued)

 

    BlackRock Advantage Large Cap Growth Fund  
    

Year Ended

05/31/21

    

Period from

10/01/19

to 05/31/20

    

Year Ended

09/30/19

  

INCREASE (DECREASE) IN NET ASSETS

      

OPERATIONS

      

Net investment income (loss)

   $ (215,133 )    $ 2,107,091     $ 4,508,395  

Net realized gain

     143,464,085       9,221,905       23,288,382  

Net change in unrealized appreciation (depreciation)

     149,457,910       99,325,297       (25,417,065 ) 
 

 

 

    

 

 

    

 

 

  

Net increase in net assets resulting from operations

     292,706,862       110,654,293       2,379,712  
 

 

 

    

 

 

    

 

 

  

DISTRIBUTIONS TO SHAREHOLDERS(a)

     

Institutional

     (7,398,742 )      (3,224,617 )      (5,518,754 ) 

Service

     (14,155 )      (8,241 )      (11,470 ) 

Investor A

     (58,840,915 )      (28,134,627 )      (54,769,508 ) 

Investor C

     (1,130,458 )      (647,015 )      (1,425,491 ) 

Class K

     (69,077 )      (43,395 )      (44,757 ) 

Class R

     (33,436 )      (30,985 )      (108,589 ) 
 

 

 

    

 

 

    

 

 

  

Decrease in net assets resulting from distributions to shareholders

     (67,486,783 )      (32,088,880 )      (61,878,569 ) 
 

 

 

    

 

 

    

 

 

  

CAPITAL SHARE TRANSACTIONS

      

Net increase (decrease) in net assets derived from capital share transactions

     5,020,695       (55,560,322 )      (1,592,425 ) 
 

 

 

    

 

 

    

 

 

  

NET ASSETS

      

Total increase (decrease) in net assets

     230,240,774       23,005,091       (61,091,282 ) 

Beginning of period

     819,131,337       796,126,246       857,217,528  
 

 

 

    

 

 

    

 

 

  

End of period

   $   1,049,372,111     $   819,131,337     $   796,126,246  
 

 

 

    

 

 

    

 

 

  

 

(a) 

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

See notes to financial statements.

 

 

F I N A N C I A L   S T A T E M E N T S

   43

Statements of Changes in Net Assets   (continued)

 

    BlackRock Advantage Small Cap Core Fund  
    Year Ended May 31,  
     2021     2020  

INCREASE (DECREASE) IN NET ASSETS

    

OPERATIONS

    

Net investment income

   $ 16,074,768     $ 10,123,877  

Net realized gain (loss)

     274,284,954       (11,997,079 ) 

Net change in unrealized appreciation (depreciation)

     824,525,968       11,969,332  
 

 

 

    

 

 

  

Net increase in net assets resulting from operations

     1,114,885,690       10,096,130  
 

 

 

    

 

 

  

DISTRIBUTIONS TO SHAREHOLDERS(a)

   

Institutional

     (38,083,252 )      (6,389,241 ) 

Investor A

     (9,371,577 )      (1,849,729 ) 

Investor C

     (142,084 )      (6,537 ) 

Class K

     (13,303,758 )      (1,008,409 ) 
 

 

 

    

 

 

  

Decrease in net assets resulting from distributions to shareholders

     (60,900,671 )      (9,253,916 ) 
 

 

 

    

 

 

  

CAPITAL SHARE TRANSACTIONS

    

Net increase in net assets derived from capital share transactions

     1,892,937,381       457,591,723  
 

 

 

    

 

 

  

NET ASSETS

    

Total increase in net assets

     2,946,922,400       458,433,937  

Beginning of year

     1,319,518,450       861,084,513  
 

 

 

    

 

 

  

End of year

   $   4,266,440,850     $   1,319,518,450  
 

 

 

    

 

 

  

 

(a) 

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

See notes to financial statements.

 

 

44  

2 0 2 1   B L A C K R O C K   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S

Financial Highlights

(For a share outstanding throughout each period)

 

    BlackRock Advantage International Fund  
    Institutional  
                Period from                          
          Year Ended     10/01/19     Year Ended September 30,  
            05/31/21     to 05/31/20     2019     2018     2017     2016  

Net asset value, beginning of period

     $ 14.52     $ 16.12     $ 16.97     $ 16.77     $ 14.50     $ 13.34  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income(a)

      0.38       0.22       0.44       0.45       0.19       0.09  

Net realized and unrealized gain (loss)

       5.30       (1.37 )      (0.90 )      (0.12 )      2.37       1.18  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) from investment operations

       5.68       (1.15 )      (0.46 )      0.33       2.56       1.27  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Distributions from net investment income(b)

      (0.31 )      (0.45 )      (0.39 )      (0.13 )      (0.29 )      (0.11 ) 
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net asset value, end of period

     $ 19.89     $ 14.52     $ 16.12     $ 16.97     $ 16.77     $ 14.50  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Return(c)

             

Based on net asset value

       39.57 %        (7.45 )%(d)      (2.52 )%      1.94 %(e)       17.99 %      9.60 % 
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Ratios to Average Net Assets

              

Total expenses

       0.78 %      0.82 %(f)       0.88 %      0.86 %      1.10 %      1.21 % 
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total expenses after fees waived and/or reimbursed

       0.50 %      0.50 %(f)       0.59 %      0.64 %      0.86 %      1.06 % 
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income

       2.21 %      2.17 %(f)       2.78 %      2.61 %      1.20 %      0.68 % 
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Supplemental Data

              

Net assets, end of period (000)

     $   616,649     $   477,944     $   446,831     $   403,149     $   116,595     $   52,490  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Portfolio turnover rate

       247 %      131 %      140 %      106 %      177 %      67 % 
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

(a) 

Based on average shares outstanding.

(b) 

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

(c) 

Where applicable, assumes the reinvestment of distributions.

(d) 

Aggregate total return.

(e) 

Includes the litigation settlement amount. Excluding this amount, the Fund’s total return is 1.82%

(f) 

Annualized.

See notes to financial statements.

 

 

F I N A N C I A L   H I G H L I G H T S

   45

Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

         BlackRock Advantage International Fund (continued)  
         Investor A  
    

Year Ended

05/31/21

           

Period from

10/01/19

to 05/31/20

     Year Ended September 30,  
  2019     2018     2017      2016  

Net asset value, beginning of period

          $ 14.35       $ 15.93        $ 16.78     $ 16.60     $ 14.35      $ 13.20  
   

 

 

      

 

 

       

 

 

    

 

 

    

 

 

     

 

 

  

Net investment income(a)

      0.33         0.19          0.40       0.38       0.12        0.06  

Net realized and unrealized gain (loss)

       5.24         (1.35 )         (0.90 )      (0.10 )      2.38        1.16  
   

 

 

      

 

 

       

 

 

    

 

 

    

 

 

     

 

 

  

Net increase (decrease) from investment operations

       5.57         (1.16 )         (0.50 )      0.28       2.50        1.22  
   

 

 

      

 

 

       

 

 

    

 

 

    

 

 

     

 

 

  

Distributions from net investment income(b)

      (0.27 )        (0.42 )         (0.35 )      (0.10 )      (0.25 )       (0.07 ) 
   

 

 

      

 

 

       

 

 

    

 

 

    

 

 

     

 

 

  

Net asset value, end of period

     $ 19.65       $ 14.35        $ 15.93     $ 16.78     $ 16.60      $ 14.35  
   

 

 

      

 

 

       

 

 

    

 

 

    

 

 

     

 

 

  

Total Return(c)

                   

Based on net asset value

       39.21 %        (7.61 )%(d)          (2.77 )%        1.68 %(e)       17.71 %       9.30 % 
   

 

 

      

 

 

       

 

 

    

 

 

    

 

 

     

 

 

  

Ratios to Average Net Assets

                    

Total expenses

       1.05 %        1.08 %(f)          1.16 %      1.15 %      1.42 %       1.49 % 
   

 

 

      

 

 

       

 

 

    

 

 

    

 

 

     

 

 

  

Total expenses after fees waived and/or reimbursed

       0.75 %        0.75 %(f)          0.84 %      0.89 %      1.19 %       1.33 % 
   

 

 

      

 

 

       

 

 

    

 

 

    

 

 

     

 

 

  

Net investment income

       1.95 %        1.85 %(f)          2.56 %      2.20 %      0.82 %       0.46 % 
   

 

 

      

 

 

       

 

 

    

 

 

    

 

 

     

 

 

  

Supplemental Data

                    

Net assets, end of period (000)

     $   456,083       $   366,411        $   404,739     $   302,725     $   169,806      $   153,886  
   

 

 

      

 

 

       

 

 

    

 

 

    

 

 

     

 

 

  

Portfolio turnover rate

       247 %        131 %         140 %      106 %      177 %       67 % 
   

 

 

      

 

 

       

 

 

    

 

 

    

 

 

     

 

 

  

 

(a) 

Based on average shares outstanding.

(b) 

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

(c) 

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

(d) 

Aggregate total return.

(e) 

Includes the litigation settlement amount. Excluding this amount, the Fund’s total return is 1.56%

(f) 

Annualized.

See notes to financial statements.

 

 

46  

2 0 2 1   B L A C K R O C K   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S

Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

         BlackRock Advantage International Fund (continued)  
         Investor C  
     Year Ended    

Period from

10/01/19

     Year Ended September 30,  
  05/31/21     to 05/31/20     2019     2018     2017     2016  

Net asset value, beginning of period

  

    

   $ 13.95       $  15.43                $ 16.11     $ 15.96     $ 13.81     $ 12.74  
   

 

 

      

 

 

      

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income (loss)(a)

      0.16         0.10         0.23       0.23       (0.01 )      (0.05 ) 

Net realized and unrealized gain (loss)

       5.14         (1.31 )        (0.80 )      (0.08 )      2.29       1.12  
   

 

 

      

 

 

      

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) from investment operations

       5.30         (1.21 )        (0.57 )      0.15       2.28       1.07  
   

 

 

      

 

 

      

 

 

    

 

 

    

 

 

    

 

 

  

Distributions from net investment income(b)

      (0.13 )        (0.27 )        (0.11 )      —       (0.13 )      (0.00 )(c)  
   

 

 

      

 

 

      

 

 

    

 

 

    

 

 

    

 

 

  

Net asset value, end of period

     $ 19.12       $  13.95       $   15.43     $ 16.11     $ 15.96     $ 13.81  
   

 

 

      

 

 

      

 

 

    

 

 

    

 

 

    

 

 

  

Total Return(d)

                 

Based on net asset value

       38.21 %        (8.05 )%(e)        (3.51 )%      0.94 %(f)      16.70 %      8.44 % 
   

 

 

      

 

 

      

 

 

    

 

 

    

 

 

    

 

 

  

Ratios to Average Net Assets

                  

Total expenses

       1.88 %        1.84 %(g)        1.88 %      1.89 %      2.22 %(h)      2.27 %(h) 
   

 

 

      

 

 

      

 

 

    

 

 

    

 

 

    

 

 

  

Total expenses after fees waived and/or reimbursed

       1.50 %        1.50 %(g)        1.59 %      1.64 %      2.03 %      2.14 % 
   

 

 

      

 

 

      

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income (loss)

       0.98 %        1.04 %(g)        1.52 %      1.39 %      (0.05 )%      (0.35 )% 
   

 

 

      

 

 

      

 

 

    

 

 

    

 

 

    

 

 

  

Supplemental Data

                  

Net assets, end of period (000)

     $   3,664                $   6,193       $   9,448     $   23,111     $   24,717     $   43,218  
   

 

 

      

 

 

      

 

 

    

 

 

    

 

 

    

 

 

  

Portfolio turnover rate

       247 %        131 %        140 %      106 %      177 %      67 % 
   

 

 

      

 

 

      

 

 

    

 

 

    

 

 

    

 

 

  

 

(a) 

Based on average shares outstanding.

(b) 

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

(c) 

Amount is greater than $(0.005) per share.

(d) 

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

(e) 

Aggregate total return.

(f) 

Includes the litigation settlement amount. Excluding this amount, the Fund’s total return is 0.81%

(g) 

Annualized.

(h) 

Includes recoupment of past waived and/or reimbursed fees with no financial impact to the expense ratios.

See notes to financial statements.

 

 

F I N A N C I A L   H I G H L I G H T S

   47

Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

              BlackRock Advantage International Fund (continued)  
              Class K  
                        Period from            Period from  
   

Year Ended

05/31/21

 

 

            

 10/01/19

to 05/31/20

  

 

    

 Year Ended

09/30/19

  

 

     

 01/25/18

to 09/30/18

 (a) 

 

Net asset value, beginning of period

    

  

   $ 14.52       $ 16.12     $ 16.98      $ 18.33  
     

 

 

      

 

 

    

 

 

     

 

 

  

Net investment income(b)

        0.46         0.23       0.56        0.39  

Net realized and unrealized gain (loss)

         5.23         (1.37 )      (1.03 )       (1.74 ) 
     

 

 

      

 

 

    

 

 

     

 

 

  

Net increase (decrease) from investment operations

         5.69         (1.14 )      (0.47 )       (1.35 ) 
     

 

 

      

 

 

    

 

 

     

 

 

  

Distributions from net investment income(c)

        (0.32 )        (0.46 )      (0.39 )       —  
     

 

 

      

 

 

    

 

 

     

 

 

  

Net asset value, end of period

       $ 19.89       $ 14.52     $ 16.12      $ 16.98  
     

 

 

      

 

 

    

 

 

     

 

 

  

Total Return(d)

              

Based on net asset value

         39.64 %        (7.40 )%(e)      (2.53 )%       (7.37 )%(e)(f) 
     

 

 

      

 

 

    

 

 

     

 

 

  

Ratios to Average Net Assets

               

Total expenses

         0.63 %        0.65 %(g)      0.75 %       0.80 %(g) 
     

 

 

      

 

 

    

 

 

     

 

 

  

Total expenses after fees waived and/or reimbursed

         0.45 %        0.45 %(g)      0.54 %       0.59 %(g) 
     

 

 

      

 

 

    

 

 

     

 

 

  

Net investment income

         2.65 %        2.20 %(g)      3.59 %       3.33 %(g) 
     

 

 

      

 

 

    

 

 

     

 

 

  

Supplemental Data

               

Net assets, end of period (000)

       $   103,454       $ 43,073     $ 43,721      $ 8,175  
     

 

 

      

 

 

    

 

 

     

 

 

  

Portfolio turnover rate

         247 %        131 %      140 %       106 %(h) 
     

 

 

      

 

 

    

 

 

     

 

 

  

 

(a) 

Commencement of operations.

(b) 

Based on average shares outstanding.

(c) 

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

(d) 

Where applicable, assumes the reinvestment of distributions.

(e) 

Aggregate total return.

(f) 

Includes the litigation settlement amount. Excluding this amount, the Fund’s total return is (7.42)%

(g) 

Annualized.

(h) 

Portfolio turnover is representative of the Fund for the entire year.

See notes to financial statements.

 

 

48  

2 0 2 1   B L A C K R O C K   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S

Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

           BlackRock Advantage International Fund (continued)  
           Class R  
     Year Ended    

Period from

10/01/19

     Year Ended September 30,  
  05/31/21     to 05/31/20     2019      2018     2017     2016  

Net asset value, beginning of period

     $ 14.36       $ 15.91        $   16.74      $   16.53     $   14.29     $   13.12  
   

 

 

      

 

 

       

 

 

     

 

 

    

 

 

    

 

 

  

Net investment income(a)

      0.28         0.15          0.34        0.32       0.07       0.01  

Net realized and unrealized gain (loss)

       5.26         (1.34 )         (0.88 )       (0.08 )      2.36       1.16  
   

 

 

      

 

 

       

 

 

     

 

 

    

 

 

    

 

 

  

Net increase (decrease) from investment operations

       5.54         (1.19 )         (0.54 )       0.24       2.43       1.17  
   

 

 

      

 

 

       

 

 

     

 

 

    

 

 

    

 

 

  

Distributions from net investment income(b)

      (0.22 )        (0.36 )         (0.29 )       (0.03 )      (0.19 )      (0.00 )(c) 
   

 

 

      

 

 

       

 

 

     

 

 

    

 

 

    

 

 

  

Net asset value, end of period

     $ 19.68       $ 14.36        $ 15.91      $ 16.74     $ 16.53     $ 14.29  
   

 

 

      

 

 

       

 

 

     

 

 

    

 

 

    

 

 

  

Total Return(d)

                   

Based on net asset value

       38.91 %        (7.75 )%(e)         (3.04 )%       1.44 %(f)      17.26 %      8.96 % 
   

 

 

      

 

 

       

 

 

     

 

 

    

 

 

    

 

 

  

Ratios to Average Net Assets

                    

Total expenses

       1.36 %        1.37 %(g)         1.44 %       1.45 %      1.75 %(h)      1.83 %(h) 
   

 

 

      

 

 

       

 

 

     

 

 

    

 

 

    

 

 

  

Total expenses after fees waived and/or reimbursed

       1.00 %        1.00 %(g)         1.09 %       1.14 %      1.55 %      1.72 % 
   

 

 

      

 

 

       

 

 

     

 

 

    

 

 

    

 

 

  

Net investment income

       1.67 %        1.47 %(g)         2.20 %       1.91 %      0.46 %      0.08 % 
   

 

 

      

 

 

       

 

 

     

 

 

    

 

 

    

 

 

  

Supplemental Data

                    

Net assets, end of period (000)

     $ 3,416       $ 3,310        $ 5,244      $ 7,572     $ 7,551     $ 8,343  
   

 

 

      

 

 

       

 

 

     

 

 

    

 

 

    

 

 

  

Portfolio turnover rate

       247 %        131 %         140 %       106 %      177 %      67 % 
   

 

 

      

 

 

       

 

 

     

 

 

    

 

 

    

 

 

  

 

(a) 

Based on average shares outstanding.

(b) 

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

(c) 

Amount is greater than $(0.005) per share.

(d) 

Where applicable, assumes the reinvestment of distributions.

(e) 

Aggregate total return.

(f) 

Includes the litigation settlement amount. Excluding this amount, the Fund’s total return is 1.26%

(g) 

Annualized.

(h) 

Includes recoupment of past waived and/or reimbursed fees with no financial impact to the expense ratios.

See notes to financial statements.

 

 

F I N A N C I A L   H I G H L I G H T S

   49

Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

         BlackRock Advantage Large Cap Growth Fund  
         Institutional  
    

Year Ended

    

Period from

10/01/19

     Year Ended September 30,  
  05/31/21

 

   to 05/31/20

 

     2019       2018       2017 (a)       2016 (a)  

Net asset value, beginning of period

        $ 18.23       $ 16.49        $ 17.89     $ 15.20     $ 12.32     $ 12.07  
   

 

 

      

 

 

       

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income(b)

      0.04         0.07          0.13       0.13       0.12       0.10  

Net realized and unrealized gain (loss)

       6.59         2.40          (0.22 )      3.52       2.87       1.06  
   

 

 

      

 

 

       

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) from investment operations

       6.63         2.47          (0.09 )      3.65       2.99       1.16  
   

 

 

      

 

 

       

 

 

    

 

 

    

 

 

    

 

 

  

Distributions(c)

                  

From net investment income

       (0.07 )        (0.14 )         (0.13 )      (0.08 )      (0.11 )      (0.07 ) 

From net realized gain

       (1.46 )        (0.59 )         (1.18 )      (0.88 )      —       (0.84 ) 
   

 

 

      

 

 

       

 

 

    

 

 

    

 

 

    

 

 

  

Total distributions

       (1.53 )        (0.73 )         (1.31 )      (0.96 )      (0.11 )      (0.91 ) 
   

 

 

      

 

 

       

 

 

    

 

 

    

 

 

    

 

 

  

Net asset value, end of period

     $ 23.33       $ 18.23        $ 16.49     $ 17.89     $ 15.20     $ 12.32  
   

 

 

      

 

 

       

 

 

    

 

 

    

 

 

    

 

 

  

Total Return(d)

                  

Based on net asset value

       37.54 %        15.34 %(e)         0.41 %        25.31 %        24.43 %        9.75 % 
   

 

 

      

 

 

       

 

 

    

 

 

    

 

 

    

 

 

  

Ratios to Average Net Assets

                      

Total expenses

       0.83 %        0.86 %(f)         0.87 %      0.86 %      1.10 %      1.14 % 
   

 

 

      

 

 

       

 

 

    

 

 

    

 

 

    

 

 

  

Total expenses after fees waived and/or reimbursed

       0.62 %        0.62 %(f)         0.62 %      0.62 %      0.84 %      0.92 % 
   

 

 

      

 

 

       

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income

       0.21 %        0.65 %(f)         0.82 %      0.83 %      0.91 %      0.86 % 
   

 

 

      

 

 

       

 

 

    

 

 

    

 

 

    

 

 

  

Supplemental Data

                   

Net assets, end of period (000)

     $   125,061       $   89,737        $   79,564     $   74,886     $   36,574     $   37,417  
   

 

 

      

 

 

       

 

 

    

 

 

    

 

 

    

 

 

  

Portfolio turnover rate

       134 %        70 %         154 %      162 %      130 %      36 % 
   

 

 

      

 

 

       

 

 

    

 

 

    

 

 

    

 

 

  

 

(a) 

Consolidated Financial Highlights.

(b) 

Based on average shares outstanding.

(c) 

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

(d) 

Where applicable, assumes the reinvestment of distributions.

(e) 

Aggregate total return.

(f) 

Annualized.

See notes to financial statements.

 

 

50  

2 0 2 1   B L A C K R O C K   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S

Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

    BlackRock Advantage Large Cap Growth Fund (continued)  
    Service  
    Year Ended           Period from
10/01/19		     Year Ended September 30,  
      05/31/21             to 05/31/20

 

             2019       2018       2017 (a)       2016 (a)  

Net asset value, beginning of period

            $   17.89         $   16.18       $   17.57       $   14.95       $   12.12       $   11.86  
   

 

 

        

 

 

      

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income (loss)(b)

      (0.01 )          0.04         0.09       0.09       0.08       0.06  

Net realized and unrealized gain (loss)

       6.46           2.36         (0.22 )      3.46       2.82       1.05  
   

 

 

        

 

 

      

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) from investment operations

       6.45           2.40         (0.13 )      3.55       2.90       1.11  
   

 

 

        

 

 

      

 

 

    

 

 

    

 

 

    

 

 

  

Distributions(c)

                   

From net investment income

       (0.01 )          (0.10 )        (0.08 )      (0.05 )      (0.07 )      (0.01 ) 

From net realized gain

       (1.46 )          (0.59 )        (1.18 )      (0.88 )      —       (0.84 ) 
   

 

 

        

 

 

      

 

 

    

 

 

    

 

 

    

 

 

  

Total distributions

       (1.47 )          (0.69 )        (1.26 )      (0.93 )      (0.07 )      (0.85 ) 
   

 

 

        

 

 

      

 

 

    

 

 

    

 

 

    

 

 

  

Net asset value, end of period

     $ 22.87         $ 17.89       $ 16.18     $ 17.57     $ 14.95     $ 12.12  
   

 

 

        

 

 

      

 

 

    

 

 

    

 

 

    

 

 

  

Total Return(d)

                   

Based on net asset value

       37.20 %          15.19 %(e)        0.15 %        24.96 %        24.03 %        9.44 % 
   

 

 

        

 

 

      

 

 

    

 

 

    

 

 

    

 

 

  

Ratios to Average Net Assets

                    

Total expenses(f)

      1.10 %          1.06 %(g)        0.98 %      1.03 %      1.24 %      1.26 % 
   

 

 

        

 

 

      

 

 

    

 

 

    

 

 

    

 

 

  

Total expenses after fees waived and/or reimbursed

       0.87 %          0.87 %(g)        0.87 %      0.87 %      1.11 %      1.24 % 
   

 

 

        

 

 

      

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income (loss)

       (0.03 )%          0.39 %(g)        0.57 %      0.55 %      0.59 %      0.54 % 
   

 

 

        

 

 

      

 

 

    

 

 

    

 

 

    

 

 

  

Supplemental Data

                    

Net assets, end of period (000)

     $ 249         $ 253       $ 198     $ 160     $ 189     $ 119  
   

 

 

        

 

 

      

 

 

    

 

 

    

 

 

    

 

 

  

Portfolio turnover rate

       134 %          70 %        154 %      162 %      130 %      36 % 
   

 

 

        

 

 

      

 

 

    

 

 

    

 

 

    

 

 

  

 

(a) 

Consolidated Financial Highlights.

(b) 

Based on average shares outstanding.

(c) 

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

(d) 

Where applicable, assumes the reinvestment of distributions.

(e) 

Aggregate total return.

(f) 

Includes recoupment of past waived and/or reimbursed fees. Excluding the recoupment of past waived and/or reimbursed fees, the ratios were as follows:

 

           
    Year Ended      
 Period from
10/01/19		  
 		     Year Ended September 30,

 

      05/31/21               to 5/31/20                   2019               2018                2017 (a)      2016 (a) 

Expense ratios

                      N/A                          N/A                 0.97 %              N/A                 N/A              1.21 % 
   

 

 

        

 

 

        

 

 

      

 

 

       

 

 

    

 

 

  

 

(g) 

Annualized.

See notes to financial statements.

 

 

F I N A N C I A L   H I G H L I G H T S

   51

Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

    BlackRock Advantage Large Cap Growth Fund (continued)  
    Investor A  
 

 

Year Ended
05/31/21

 
 

    

 Period from
10/01/19

to 05/31/20

  
 

 

     Year Ended September 30,  
      2019       2018       2017 (a)       2016 (a) 
                   

Net asset value, beginning of period

     $ 17.35       $ 15.71       $ 17.11       $ 14.59       $ 11.83       $ 11.61  
   

 

 

      

 

 

      

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income (loss)(b)

             (0.01 )        0.04         0.09       0.09       0.08       0.06  

Net realized and unrealized gain (loss)

       6.27         2.28         (0.22 )      3.37       2.75       1.02  
   

 

 

      

 

 

      

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) from investment operations

       6.26         2.32         (0.13 )      3.46       2.83       1.08  
   

 

 

      

 

 

      

 

 

    

 

 

    

 

 

    

 

 

  

Distributions(c)

                 

From net investment income

       (0.02 )        (0.09 )        (0.09 )      (0.06 )      (0.07 )      (0.02 ) 

From net realized gain

       (1.46 )        (0.59 )        (1.18 )      (0.88 )      —       (0.84 ) 
   

 

 

      

 

 

      

 

 

    

 

 

    

 

 

    

 

 

  

Total distributions

       (1.48 )        (0.68 )        (1.27 )      (0.94 )      (0.07 )      (0.86 ) 
   

 

 

      

 

 

      

 

 

    

 

 

    

 

 

    

 

 

  

Net asset value, end of period

     $ 22.13       $ 17.35       $ 15.71     $ 17.11     $ 14.59     $ 11.83  
   

 

 

      

 

 

      

 

 

    

 

 

    

 

 

    

 

 

  

Total Return(d)

                 

Based on net asset value

       37.28 %        15.16 %(e)        0.15 %        24.98 %        24.03 %        9.39 % 
   

 

 

      

 

 

      

 

 

    

 

 

    

 

 

    

 

 

  

Ratios to Average Net Assets

                  

Total expenses

       1.08 %        1.12 %(f)         1.12 %      1.12 %      1.35 %      1.42 % 
   

 

 

      

 

 

      

 

 

    

 

 

    

 

 

    

 

 

  

Total expenses after fees waived and/or reimbursed

       0.87 %        0.87 %(f)         0.87 %      0.87 %      1.13 %      1.24 % 
   

 

 

      

 

 

      

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income (loss)

       (0.04 )%        0.40 %(f)         0.57 %      0.58 %      0.60 %      0.54 % 
   

 

 

      

 

 

      

 

 

    

 

 

    

 

 

    

 

 

  

Supplemental Data

                  

Net assets, end of period (000)

     $   909,344       $   713,162       $  699,247     $  730,996     $   351,398     $   323,297  
   

 

 

      

 

 

      

 

 

    

 

 

    

 

 

    

 

 

  

Portfolio turnover rate

       134 %        70 %        154 %      162 %      130 %      36 % 
   

 

 

      

 

 

      

 

 

    

 

 

    

 

 

    

 

 

  

 

(a) 

Consolidated Financial Highlights.

(b) 

Based on average shares outstanding.

(c) 

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

(d) 

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

(e) 

Aggregate total return.

(f) 

Annualized.

See notes to financial statements.

 

 

52  

2 0 2 1   B L A C K R O C K   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S

Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

    BlackRock Advantage Large Cap Growth Fund (continued)  
    Investor C  
    Year Ended
05/31/21		    

Period from
10/01/19

to 05/31/20

             Year Ended September 30,  
       2019       2018       2017 (a)       2016 (a)  
                   

Net asset value, beginning of period

            $ 14.67       $ 13.35        $ 14.55       $ 12.53       $  10.19       $ 10.16  
   

 

 

      

 

 

       

 

 

    

 

 

    

 

 

    

 

 

  

Net investment loss(b)

      (0.13 )        (0.03 )         (0.03 )      (0.03 )      (0.02 )      (0.02 ) 

Net realized and unrealized gain (loss)

       5.27         1.93          (0.17 )      2.89       2.36       0.89  
   

 

 

      

 

 

       

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) from investment operations

       5.14         1.90          (0.20 )      2.86       2.34       0.87  
   

 

 

      

 

 

       

 

 

    

 

 

    

 

 

    

 

 

  

Distributions from net realized gain(c)

      (1.39 )        (0.58 )         (1.00 )      (0.84 )      —       (0.84 ) 
   

 

 

      

 

 

       

 

 

    

 

 

    

 

 

    

 

 

  

Net asset value, end of period

     $ 18.42       $ 14.67        $ 13.35     $ 14.55     $ 12.53     $ 10.19  
   

 

 

      

 

 

       

 

 

    

 

 

    

 

 

    

 

 

  

Total Return(d)

                  

Based on net asset value

       36.25 %        14.56 %(e)         (0.59 )%        24.09 %        22.96 %        8.63 % 
   

 

 

      

 

 

       

 

 

    

 

 

    

 

 

    

 

 

  

Ratios to Average Net Assets

                   

Total expenses

       1.84 %              1.83 %(f)         1.85 %      1.87 %      2.12 %      2.17 % 
   

 

 

      

 

 

       

 

 

    

 

 

    

 

 

    

 

 

  

Total expenses after fees waived and/or reimbursed

       1.62 %        1.62 %(f)         1.62 %      1.62 %      1.91 %      2.01 % 
   

 

 

      

 

 

       

 

 

    

 

 

    

 

 

    

 

 

  

Net investment loss

       (0.78 )%        (0.35 )%(f)         (0.22 )%      (0.19 )%      (0.16 )%      (0.23 )% 
   

 

 

      

 

 

       

 

 

    

 

 

    

 

 

    

 

 

  

Supplemental Data

                   

Net assets, end of period (000)

     $   12,989       $   14,728        $   15,277     $   48,702     $   46,804     $   63,586  
   

 

 

      

 

 

       

 

 

    

 

 

    

 

 

    

 

 

  

Portfolio turnover rate

       134 %        70 %         154 %      162 %      130 %      36 % 
   

 

 

      

 

 

       

 

 

    

 

 

    

 

 

    

 

 

  

 

(a) 

Consolidated Financial Highlights.

(b) 

Based on average shares outstanding.

(c) 

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

(d)

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

(e) 

Aggregate total return.

(f) 

Annualized.

See notes to financial statements.

 

 

F I N A N C I A L   H I G H L I G H T S

   53

Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

    BlackRock Advantage Large Cap Growth Fund (continued)  
    Class K  
   
 Year Ended
05/31/21		  
 		    

 Period from
10/01/19

to 05/31/20

  
 

 

    
 Year Ended
09/30/19		  
 		       

 Period from
01/25/18

to 09/30/18

  
(a)  

 

                 

Net asset value, beginning of period

     $   18.23       $   16.49       $   17.89        $   16.37  
   

 

 

      

 

 

      

 

 

       

 

 

  

Net investment income(b)

      0.05                0.08         0.14                 0.11  

Net realized and unrealized gain (loss)

       6.59         2.40         (0.23 )         1.41  
   

 

 

      

 

 

      

 

 

       

 

 

  

Net increase (decrease) from investment operations

               6.64         2.48         (0.09 )         1.52  
   

 

 

      

 

 

      

 

 

       

 

 

  

Distributions(c)

                

From net investment income

       (0.08 )        (0.15 )        (0.13 )         —  

From net realized gain

       (1.46 )        (0.59 )        (1.18 )         —  
   

 

 

      

 

 

      

 

 

       

 

 

  

Total distributions

       (1.54 )        (0.74 )        (1.31 )         —  
   

 

 

      

 

 

      

 

 

       

 

 

  

Net asset value, end of period

     $ 23.33       $ 18.23       $ 16.49        $ 17.89  
   

 

 

      

 

 

      

 

 

       

 

 

  

Total Return(d)

                

Based on net asset value

       37.60 %        15.40 %(e)        0.47 %         9.29 %(e) 
   

 

 

      

 

 

      

 

 

       

 

 

  

Ratios to Average Net Assets

                 

Total expenses

       0.69 %        0.70 %(f)        0.71 %         0.72 %(f) 
   

 

 

      

 

 

      

 

 

       

 

 

  

Total expenses after fees waived and/or reimbursed

       0.57 %        0.57 %(f)        0.57 %         0.57 %(f) 
   

 

 

      

 

 

      

 

 

       

 

 

  

Net investment income

       0.25 %        0.72 %(f)        0.85 %         0.93 %(f) 
   

 

 

      

 

 

      

 

 

       

 

 

  

Supplemental Data

                 

Net assets, end of period (000)

     $ 1,152       $ 715       $ 973        $ 609  
   

 

 

      

 

 

      

 

 

       

 

 

  

Portfolio turnover rate

       134 %        70 %        154 %         162 %(g) 
   

 

 

      

 

 

      

 

 

       

 

 

  

 

(a)

Commencement of operations.

(b) 

Based on average shares outstanding.

(c) 

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

(d)

Where applicable, assumes the reinvestment of distributions.

(e) 

Aggregate total return.

(f)

Annualized.

(g)

Portfolio turnover is representative of the Fund for the entire year.

See notes to financial statements.

 

 

54  

2 0 2 1   B L A C K R O C K   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S

Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

    BlackRock Advantage Large Cap Growth Fund (continued)  
    Class R  
   
 Year Ended
05/31/21		  
 		    

 Period from
10/01/19

to 05/31/20

  

 

             Year Ended September 30,  
      2019       2018        2017 (a)        2016 (a)  
                   

Net asset value, beginning of period

             $   18.10       $    16.32       $   17.69       $   15.01        $   12.17        $   11.94  
   

 

 

      

 

 

      

 

 

    

 

 

     

 

 

     

 

 

  

Net investment income (loss)(b)

      (0.06 )        0.02         0.05       0.05        0.04        0.02  

Net realized and unrealized gain (loss)

       6.55         2.38         (0.23 )      3.49        2.84        1.05  
   

 

 

      

 

 

      

 

 

    

 

 

     

 

 

     

 

 

  

Net increase (decrease) from investment operations

       6.49         2.40         (0.18 )      3.54        2.88        1.07  
   

 

 

      

 

 

      

 

 

    

 

 

     

 

 

     

 

 

  

Distributions(c)

                   

From net investment income

       —         (0.03 )        (0.01 )      —        (0.04 )       —  

From net realized gain

       (1.42 )        (0.59 )        (1.18 )      (0.86 )       —        (0.84 ) 
   

 

 

      

 

 

      

 

 

    

 

 

     

 

 

     

 

 

  

Total distributions

       (1.42 )        (0.62 )        (1.19 )      (0.86 )       (0.04 )       (0.84 ) 
   

 

 

      

 

 

      

 

 

    

 

 

     

 

 

     

 

 

  

Net asset value, end of period

     $ 23.17       $ 18.10       $ 16.32     $ 17.69      $ 15.01      $ 12.17  
   

 

 

      

 

 

      

 

 

    

 

 

     

 

 

     

 

 

  

Total Return(d)

                   

Based on net asset value

       36.93 %        14.99 %(e)        (0.15 )%       24. 68 %       23.68 %        9.04 % 
   

 

 

      

 

 

      

 

 

    

 

 

     

 

 

     

 

 

  

Ratios to Average Net Assets

                    

Total expenses

       1.36 %        1.46 %(f)        1.42 %      1.40 %       1.66 %       1.74 % 
   

 

 

      

 

 

      

 

 

    

 

 

     

 

 

     

 

 

  

Total expenses after fees waived and/or reimbursed

       1.12 %        1.12 %(f)        1.12 %      1.12 %       1.45 %       1.60 % 
   

 

 

      

 

 

      

 

 

    

 

 

     

 

 

     

 

 

  

Net investment income (loss)

       (0.30 )%        0.16 %(f)        0.33 %      0.30 %       0.28 %       0.20 % 
   

 

 

      

 

 

      

 

 

    

 

 

     

 

 

     

 

 

  

Supplemental Data

                    

Net assets, end of period (000)

     $ 577       $ 536       $ 867     $ 1,864      $ 2,332      $ 1,875  
   

 

 

      

 

 

      

 

 

    

 

 

     

 

 

     

 

 

  

Portfolio turnover rate

       134 %        70 %        154 %      162 %       130 %       36 % 
   

 

 

      

 

 

      

 

 

    

 

 

     

 

 

     

 

 

  

 

(a) 

Consolidated Financial Highlights.

(b) 

Based on average shares outstanding.

(c) 

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

(d) 

Where applicable, assumes the reinvestment of distributions.

(e) 

Aggregate total return.

(f)

Annualized.

See notes to financial statements.

 

 

F I N A N C I A L   H I G H L I G H T S

   55

Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

         BlackRock Advantage Small Cap Core Fund  
         Institutional  
         Year Ended May 31,  
     2021            2020      2019      2018      2017  

Net asset value, beginning of year

     $ 13.09       $ 13.13      $ 14.80      $ 12.70      $ 10.59  
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Net investment income(a)

      0.12         0.14        0.13        0.11        0.10  

Net realized and unrealized gain (loss)

  

  

     7.97         (0.05 )       (1.13 )       2.37        2.10  
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Net increase (decrease) from investment operations

       8.09         0.09        (1.00 )       2.48        2.20  
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Distributions(b)

                

From net investment income

       (0.10 )        (0.13 )       (0.11 )       (0.09 )       (0.06 ) 

From net realized gain

       (0.36 )        (0.00 )(c)        (0.56 )       (0.29 )       (0.03 ) 
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Total distributions

       (0.46 )        (0.13 )       (0.67 )       (0.38 )       (0.09 ) 
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Net asset value, end of year

     $ 20.72       $ 13.09      $ 13.13      $ 14.80      $ 12.70  
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Total Return(d)

                

Based on net asset value

       62.61 %        0.61 %       (6.89 )%       19.82 %       20.84 % 
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Ratios to Average Net Assets

                 

Total expenses

       0.60 %(e)         0.64 %       0.70 %       0.66 %       1.05 % 
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Total expenses after fees waived and/or reimbursed

       0.50 %(e)         0.50 %       0.49 %       0.50 %       0.54 % 
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Net investment income

       0.65 %(e)         0.99 %       0.95 %       0.83 %       0.78 % 
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Supplemental Data

                 

Net assets, end of year (000)

     $   2,802,145       $   847,753      $   551,833      $   356,274      $   56,603  
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Portfolio turnover rate

       63 %        101 %       100 %       104 %       127 % 
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

 

(a) 

Based on average shares outstanding.

(b) 

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

(c) 

Amount is greater than $(0.005) per share.

(d) 

Where applicable, assumes the reinvestment of distributions.

(e) 

Excludes expenses incurred indirectly as a result of investments in underlying funds of 0.01%

See notes to financial statements.

 

 

56  

2 0 2 1   B L A C K R O C K   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S

Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

           BlackRock Advantage Small Cap Core Fund (continued)  
           Investor A  
           Year Ended May 31,  
     2021            2020      2019      2018      2017  

Net asset value, beginning of year

            $ 13.02       $ 13.05      $ 14.73      $ 12.66      $   10.56  
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Net investment income(a)

      0.08         0.10        0.09        0.09        0.06  

Net realized and unrealized gain (loss)

       7.91         (0.03 )       (1.13 )       2.34        2.10  
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Net increase (decrease) from investment operations

       7.99         0.07        (1.04 )       2.43        2.16  
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Distributions(b)

                

From net investment income

       (0.07 )        (0.10 )       (0.08 )       (0.07 )       (0.03 ) 

From net realized gain

       (0.36 )        (0.00 )(c)        (0.56 )       (0.29 )       (0.03 ) 
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Total distributions

       (0.43 )        (0.10 )       (0.64 )       (0.36 )       (0.06 ) 
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Net asset value, end of year

     $ 20.58       $ 13.02      $ 13.05      $ 14.73      $   12.66  
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Total Return(d)

                

Based on net asset value

       62.05 %        0.45 %       (7.16 )%       19.51 %       20.51 % 
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Ratios to Average Net Assets

                 

Total expenses

       0.95 %(e)         1.01 %       1.03 %       1.08 %       1.39 % 
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Total expenses after fees waived and/or reimbursed

       0.75 %(e)         0.75 %       0.75 %       0.75 %       0.83 % 
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Net investment income

       0.45 %(e)         0.75 %       0.69 %       0.64 %       0.51 % 
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Supplemental Data

                 

Net assets, end of year (000)

     $   530,664       $   277,926      $   248,574      $   79,515      $   6,389  
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Portfolio turnover rate

       63 %        101 %       100 %       104 %       127 % 
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

 

(a) 

Based on average shares outstanding.

(b) 

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

(c)

Amount is greater than $(0.005) per share.

(d) 

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

(e)

Excludes expenses incurred indirectly as a result of investments in underlying funds of 0.01%

See notes to financial statements.

 

 

F I N A N C I A L   H I G H L I G H T S

   57

Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

         BlackRock Advantage Small Cap Core Fund (continued)  
         Investor C  
         Year Ended May 31,  
     2021            2020      2019      2018      2017  

Net asset value, beginning of year

       $ 12.74       $   12.80      $   14.48      $   12.44      $   10.44  
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Net investment income (loss)(a)

      (0.05 )        0.00 (b)        (0.01 )       (0.02 )       (0.03 ) 

Net realized and unrealized gain (loss)

       7.74         (0.04 )       (1.10 )       2.31        2.06  
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Net increase (decrease) from investment operations

       7.69         (0.04 )       (1.11 )       2.29        2.03  
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Distributions(c)

                

From net investment income

       —         (0.02 )       (0.01 )       —        —  

From net realized gain

       (0.35 )        (0.00 )(d)       (0.56 )       (0.25 )       (0.03 ) 
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Total distributions

       (0.35 )        (0.02 )       (0.57 )       (0.25 )       (0.03 ) 
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Net asset value, end of year

     $ 20.08       $ 12.74      $ 12.80      $ 14.48      $ 12.44  
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Total Return(e)

                

Based on net asset value

       60.90 %        (0.33 )%       (7.83 )%       18.65 %       19.47 % 
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Ratios to Average Net Assets

                 

Total expenses

       1.70 %(f)        1.71 %       1.81 %       1.94 %       2.22 % 
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Total expenses after fees waived and/or reimbursed

       1.50 %(f)        1.50 %       1.50 %       1.50 %       1.57 % 
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Net investment income (loss)

       (0.32 )%(f)        0.01 %       (0.06 )%       (0.16 )%       (0.25 )% 
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Supplemental Data

                 

Net assets, end of year (000)

     $   12,880       $ 4,955      $ 4,363      $ 1,373      $ 764  
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Portfolio turnover rate

       63 %        101 %       100 %       104 %       127 % 
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

 

(a)

Based on average shares outstanding.

(b) 

Amount is less than $0.005 per share.

(c) 

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

(d) 

Amount is greater than $(0.005) per share.

(e) 

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

(f) 

Excludes expenses incurred indirectly as a result of investments in underlying funds of 0.01%

See notes to financial statements.

 

 

58  

2 0 2 1   B L A C K R O C K   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S

Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

         BlackRock Advantage Small Cap Core Fund (continued)  
         Class K  
         Year Ended May 31,  
     2021            2020      2019      2018      2017  

Net asset value, beginning of year

       $ 13.10       $ 13.13      $ 14.81      $ 12.70      $ 10.60  
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Net investment income(a)

      0.13         0.14        0.14        0.12        0.12  

Net realized and unrealized gain (loss)

       7.97         (0.03 )       (1.15 )       2.37        2.07  
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Net increase (decrease) from investment operations

       8.10         0.11        (1.01 )       2.49        2.19  
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Distributions(b)

                

From net investment income

       (0.11 )        (0.14 )       (0.11 )       (0.09 )       (0.06 ) 

From net realized gain

       (0.36 )        (0.00 )(c)        (0.56 )       (0.29 )       (0.03 ) 
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Total distributions

       (0.47 )        (0.14 )       (0.67 )       (0.38 )       (0.09 ) 
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Net asset value, end of year

     $ 20.73       $ 13.10      $ 13.13      $ 14.81      $ 12.70  
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Total Return(d)

                

Based on net asset value

       62.63 %        0.73 %       (6.93 )%       19.94 %       20.74 % 
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Ratios to Average Net Assets

                 

Total expenses

       0.52 %(e)         0.56 %       0.61 %       0.65 %       1.62 % 
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Total expenses after fees waived and/or reimbursed

       0.45 %(e)         0.45 %       0.45 %       0.45 %       0.45 % 
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Net investment income

       0.71 %(e)         0.99 %       1.00 %       0.90 %       0.95 % 
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Supplemental Data

                 

Net assets, end of year (000)

     $   920,752       $   188,885      $   56,316      $   68,375      $   58,557  
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Portfolio turnover rate

       63 %        101 %       100 %       104 %       127 % 
   

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

 

(a) 

Based on average shares outstanding.

(b) 

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

(c) 

Amount is greater than $(0.005) per share.

(d) 

Where applicable, assumes the reinvestment of distributions.

(e) 

Excludes expenses incurred indirectly as a result of investments in underlying funds of 0.01%

See notes to financial statements.

 

 

F I N A N C I A L   H I G H L I G H T S

   59

Notes to Financial Statements  

 

1.

ORGANIZATION

BlackRock FundsSM (the “Trust”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Trust is organized as a Massachusetts business trust. The following, each of which is a series of the Trust, are referred to herein collectively as the “Funds” or individually as a “Fund”:

 

     
Fund Name   Herein Referred To As       Diversification Classification

BlackRock Advantage International Fund

   Advantage International       Diversified

BlackRock Advantage Large Cap Growth Fund

   Advantage Large Cap Growth       Diversified

BlackRock Advantage Small Cap Core Fund

   Advantage Small Cap Core       Diversified

Each Fund offers multiple classes of shares. All classes of shares have identical voting, dividend, liquidation and other rights and are subject to the same terms and conditions, except that certain classes bear expenses related to the shareholder servicing and distribution of such shares. Institutional, Service and Class K Shares are sold only to certain eligible investors. Service, Investor A, Investor C and Class R Shares bear certain expenses related to shareholder servicing of such shares, and Investor C and Class R Shares also bear certain expenses related to the distribution of such shares. Investor A and Investor C Shares are generally available through financial intermediaries. Class R Shares are sold only to certain employer-sponsored retirement plans. Each class has exclusive voting rights with respect to matters relating to its shareholder servicing and distribution expenditures (except that Investor C shareholders may vote on material changes to the Investor A Shares distribution and service plan).

 

       
Share Class   Initial Sales Charge      CDSC       Conversion Privilege

Institutional, Service, Class K and Class R Shares

   No      No       None

Investor A Shares

   Yes      No(a)    None

Investor C Shares

   No      Yes(b)     To Investor A Shares after approximately 8 years

 

  (a) 

Investor A Shares may be subject to a contingent deferred sales charge (“CDSC”) for certain redemptions where no initial sales charge was paid at the time of purchase.

 
  (b) 

A CDSC of 1.00% is assessed on certain redemptions of Investor C Shares made within one year after purchase.

 

Effective on or about the close of business on July 6, 2021, Advantage Large Cap Growth’s Service Shares will be converted into Investor A Shares.

The Funds, together with certain other registered investment companies advised by BlackRock Advisors, LLC (the “Manager”) or its affiliates, are included in a complex of equity, multi-asset, index and money market funds referred to as the BlackRock Multi-Asset Complex.

Prior Year Reorganization: The Board of Trustees of the Trust (the “Board”) on behalf of Advantage International (the “Acquiring Fund”) and the Board of Trustees of State Farm Mutual Fund Trust on behalf of State Farm International Equity Fund (the “Target Fund”) and shareholders approved the reorganization of the Target Fund into the Acquiring Fund . As a result, the Acquiring Fund acquired all of the assets and assumed certain of the liabilities of the Target Fund in exchange for an equal aggregate value of newly-issued shares of the Acquiring Fund.

Each shareholder of the Target Fund received shares of the Acquiring Fund in an amount equal to the aggregate net asset value (“NAV”) of such shareholder’s Target Fund shares, as determined at the close of business on November 16, 2018, less the costs of the Target Fund’s reorganization.

The reorganization was accomplished by a tax-free exchange of shares of the Acquiring Fund in the following amounts and at the following conversion ratios:

 

         
Target Fund’s Share Class  

Shares Prior to

Reorganization

      Conversion Ratio     

Acquiring Fund’s

Share Class

    

Shares of

Acquiring

Fund

 

Class A

     2,038,749         0.72388825         Investor A         1,475,826  

Class B

     30,592        0.72323294        Investor A        22,125  

Institutional

     1,548,107        0.72329278        Institutional        1,119,735  

Class R-1

     71,547        0.71993693        Investor A        51,509  

Class R-2

     324,627        0.72254519        Investor A        234,558  

Class R-3

     99,013        0.72435088        Institutional        71,720  

Legacy Class B

     19,795        0.74049155        Investor A        14,658  

Premier

     2,955,714        0.73171950        Investor A        2,162,754  

The Target Fund’s net assets and composition of net assets on November 16, 2018, the valuation date of the reorganization, were as follows:

 

 

  
    Amounts  

 

  

Net assets

   $   79,635,612  
 

 

 

  

Paid-in capital

   $ 80,326,765  

Accumulated loss

     (691,153 ) 

 

  

For financial reporting purposes, assets received and shares issued by the Acquiring Fund were recorded at fair value. However, the cost basis of the investments received from the Target Fund was carried forward to align ongoing reporting of the Acquiring Fund’s realized and unrealized gains and losses with amounts distributable to shareholders for tax purposes.

 

 

60  

2 0 2 1   B L A C K R O C K   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S

Notes to Financial Statements  (continued)

 

The net assets of the Acquiring Fund before the reorganization were $702,389,703.The aggregate net assets of the Acquiring Fund immediately after the reorganization amounted to $782,025,315. The Target Fund’s fair value and cost of financial instruments prior to the reorganization were as follows:

 

 

  
Target Fund    Fair Value of
Investments		      Cost of
Investments		  

 

  

State Farm International Equity Fund

    $ 77,948,036      $ 77,740,666  

 

  

The purpose of the transaction was to combine the assets of the Target Fund with the assets of the Acquiring Fund. The reorganization was a tax-free event and was effective on November 19, 2018.

Assuming the reorganization had been completed on October 1, 2018, the beginning of the fiscal reporting period of the Acquiring Fund, the pro forma results of operations for the year ended September 30, 2019, are as follows:

 

•  

Net investment income: $21,454,038.

 

•  

Net realized and change in unrealized loss on investments: $(41,599,331).

 

•  

Net decrease in net assets resulting from operations: $(20,145,293).

Because the combined investment portfolios have been managed as a single integrated portfolio since the reorganization was completed, it is not practicable to separate the amounts of revenue and earnings of the Target Fund that have been included in the Acquiring Fund’s Statements of Operations since November 19, 2018.

Reorganization costs incurred by the Acquiring Fund in connection with the reorganization were expensed by the Acquiring Fund.

 

2.

SIGNIFICANT ACCOUNTING POLICIES

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

Investment Transactions and Income Recognition: For financial reporting purposes, investment transactions are recorded on the dates the transactions are executed. Realized gains and losses on investment transactions are determined using the specific identification method. Dividend income and capital gain distributions, if any, are recorded on the ex-dividend dates. Non-cash dividends, if any, are recorded on the ex-dividend dates at fair value. Dividends from foreign securities where the ex-dividend dates may have passed are subsequently recorded when the Funds are informed of the ex-dividend dates. Under the applicable foreign tax laws, a withholding tax at various rates may be imposed on capital gains, dividends and interest. Upon notification from issuers, a portion of the dividend income received from a real estate investment trust may be redesignated as a reduction of cost of the related investment and/or realized gain. Income, expenses and realized and unrealized gains and losses are allocated daily to each class based on its relative net assets.

Foreign Currency Translation: Each Fund’s books and records are maintained in U.S. dollars. Securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars using exchange rates determined as of the close of trading on the New York Stock Exchange (“NYSE”). Purchases and sales of investments are recorded at the rates of exchange prevailing on the respective dates of such transactions. Generally, when the U.S. dollar rises in value against a foreign currency, the investments denominated in that currency will lose value; the opposite effect occurs if the U.S. dollar falls in relative value.

Each Fund does not isolate the effect of fluctuations in foreign exchange rates from the effect of fluctuations in the market prices of investments for financial reporting purposes. Accordingly, the effects of changes in exchange rates on investments are not segregated in the Statements of Operations from the effects of changes in market prices of those investments, but are included as a component of net realized and unrealized gain (loss) from investments. Each Fund reports realized currency gains (losses) on foreign currency related transactions as components of net realized gain (loss) for financial reporting purposes, whereas such components are generally treated as ordinary income for U.S. federal income tax purposes.

ForeignTaxes: The Funds may be subject to foreign taxes (a portion of which may be reclaimable) on income, stock dividends, capital gains on investments, or certain foreign currency transactions. All foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates that exist in the foreign jurisdictions in which each Fund invests. These foreign taxes, if any, are paid by each Fund and are reflected in its Statements of Operations as follows: foreign taxes withheld at source are presented as a reduction of income, foreign taxes on securities lending income are presented as a reduction of securities lending income, foreign taxes on stock dividends are presented as “Foreign taxes withheld”, and foreign taxes on capital gains from sales of investments and foreign taxes on foreign currency transactions are included in their respective net realized gain (loss) categories. Foreign taxes payable or deferred as of May 31, 2021, if any, are disclosed in the Statements of Assets and Liabilities.

The Funds file withholding tax reclaims in certain jurisdictions to recover a portion of amounts previously withheld. The Funds may record a reclaim receivable based on collectability, which includes factors such as the jurisdiction’s applicable laws, payment history and market convention. The Statements of Operations include tax reclaims recorded as well as professional and other fees, if any, associated with recovery of foreign withholding taxes.

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

 

 

N O T E S   T O   F I N A N C I A L   S T A T E M E N T S

   61

Notes to Financial Statements  (continued)

 

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

Indemnifications: In the normal course of business, a Fund enters into contracts that contain a variety of representations that provide general indemnification. A Fund’s maximum exposure under these arrangements is unknown because it involves future potential claims against a Fund, which cannot be predicted with any certainty.

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

The Funds have an arrangement with their custodian whereby credits are earned on uninvested cash balances, which could be used to reduce custody fees and/or overdraft charges. The Funds may incur charges on overdrafts, subject to certain conditions.

 

3.

INVESTMENT VALUATION AND FAIR VALUE MEASUREMENTS

Investment Valuation Policies: Each Fund’s investments are valued at fair value (also referred to as “market value” within the financial statements) each day that the Fund is open for business and, for financial reporting purposes, as of the report date. U.S. GAAP defines fair value as the price a fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. Each Fund determines the fair values of its financial instruments using various independent dealers or pricing services under policies approved by the Board. If a security’s market price is not readily available or does not otherwise accurately represent the fair value of the security, the security will be valued in accordance with a policy approved by the Board as reflecting fair value. The BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) is the committee formed by management to develop global pricing policies and procedures and to oversee the pricing function for all financial instruments.

Fair Value Inputs and Methodologies: The following methods and inputs are used to establish the fair value of each Fund’s assets and liabilities:

 

  •  

Equity investments traded on a recognized securities exchange are valued at that day’s official closing price, as applicable, on the exchange where the stock is primarily traded. Equity investments traded on a recognized exchange for which there were no sales on that day may be valued at the last available bid (long positions) or ask (short positions) price.

Generally, trading in foreign instruments is substantially completed each day at various times prior to the close of trading on the NYSE. Occasionally, events affecting the values of such instruments may occur between the foreign market close and the close of trading on the NYSE that may not be reflected in the computation of the Funds’ net assets. Each business day, the Funds use a pricing service to assist with the valuation of certain foreign exchange-traded equity securities and foreign exchange-traded and over-the-counter (“OTC”) options (the “Systematic Fair Value Price”). Using current market factors, the Systematic Fair Value Price is designed to value such foreign securities and foreign options at fair value as of the close of trading on the NYSE, which follows the close of the local markets.

 

  •  

Investments in open-end U.S. mutual funds (including money market funds) are valued at that day’s published NAV.

 

  •  

The Funds value their investment in SL Liquidity Series, LLC, Money Market Series (the “Money Market Series”) at fair value, which is ordinarily based upon their pro rata ownership in the underlying fund’s net assets.

 

  •  

Futures contracts are valued based on that day’s last reported settlement or trade price on the exchange where the contract is traded.

If events (e.g., a market closure, market volatility, company announcement or a natural disaster) occur that are expected to materially affect the value of such investment, or in the event that application of these methods of valuation results in a price for an investment that is deemed not to be representative of the market value of such investment, or if a price is not available, the investment will be valued by the Global Valuation Committee, or its delegate, in accordance with a policy approved by the Board as reflecting fair value (“Fair Valued Investments”). The fair valuation approaches that may be used by the Global Valuation Committee include market approach, income approach and cost approach. Valuation techniques such as discounted cash flow, use of market comparables and matrix pricing are types of valuation approaches and are typically used in determining fair value. When determining the price for Fair Valued Investments, the Global Valuation Committee, or its delegate, seeks to determine the price that each Fund might reasonably expect to receive or pay from the current sale or purchase of that asset or liability in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the Global Valuation Committee, or its delegate, deems relevant and consistent with the principles of fair value measurement. The pricing of all Fair Valued Investments is subsequently reported to the Board or a committee thereof on a quarterly basis.

 

 

62  

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Notes to Financial Statements  (continued)

 

For investments in equity or debt issued by privately held companies or funds (“Private Company” or collectively, the “Private Companies”) and other Fair Valued Investments, the fair valuation approaches that are used by the Global Valuation Committee and third party pricing services utilize one or a combination of, but not limited to, the following inputs.

 

 
Standard Inputs Generally Considered By Third Party Pricing Services

Market approach

    (i)     

recent market transactions, including subsequent rounds of financing, in the underlying investment or comparable issuers;

   (ii)    

recapitalizations and other transactions across the capital structure; and

     (iii)      

market multiples of comparable issuers.

Income approach

    (i)     

future cash flows discounted to present and adjusted as appropriate for liquidity, credit, and/or market risks;

   (ii)    

quoted prices for similar investments or assets in active markets; and

     (iii)      

other risk factors, such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks, recovery rates, liquidation amounts and/or default rates.

Cost approach

    (i)     

audited or unaudited financial statements, investor communications and financial or operational metrics issued by the Private Company;

   (ii)    

changes in the valuation of relevant indices or publicly traded companies comparable to the Private Company;

   (iii)      

relevant news and other public sources; and

     (iv)      

known secondary market transactions in the Private Company’s interests and merger or acquisition activity in companies comparable to the Private Company.

Investments in series of preferred stock issued by Private Companies are typically valued utilizing market approach in determining the enterprise value of the company. Such investments often contain rights and preferences that differ from other series of preferred and common stock of the same issuer. Enterprise valuation techniques such as an option pricing model (“OPM”), a probability weighted expected return model (“PWERM”), current value method or a hybrid of those techniques are used, as deemed appropriate under the circumstances. The use of these valuation techniques involve a determination of the exit scenarios of the investment in order to appropriately allocate the enterprise value of the company among the various parts of its capital structure.

The Private Companies are not subject to the public company disclosure, timing, and reporting standards applicable to other investments held by a Fund. Typically, the most recently available information by a Private Company is as of a date that is earlier than the date a Fund is calculating its NAV. This factor may result in a difference between the value of the investment and the price a Fund could receive upon the sale of the investment.

Fair Value Hierarchy: Various inputs are used in determining the fair value of 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 each 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); and

 

  •  

Level 3 – Unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Global Valuation Committee’s assumptions used in determining the fair value of 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. Investments classified within Level 3 have significant unobservable inputs used by the Global Valuation Committee in determining the price for Fair Valued Investments. Level 3 investments include equity or debt issued by Private Companies that may not have a secondary market and/or may have a limited number of investors. The categorization of a value determined for financial instruments is based on the pricing transparency of the financial instruments and is not necessarily an indication of the risks associated with investing in those securities.

As of May 31, 2021, certain investments of the Funds were fair valued using NAV per share as no quoted market value is available and therefore have been excluded from the fair value hierarchy.

 

4.

SECURITIES AND OTHER INVESTMENTS

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.

Securities Lending: The Funds may lend their securities to approved borrowers, such as brokers, dealers and other financial institutions. The borrower pledges and maintains with the Funds collateral consisting of cash, an irrevocable letter of credit issued by a bank, or securities issued or guaranteed by the U.S. Government. The initial collateral received by each Fund is required to have a value of at least 102% of the current value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% for all other securities. The collateral is maintained thereafter at a value equal to at least 100% of the current market value of the securities on loan. The market value of

 

 

N O T E S   T O   F I N A N C I A L   S T A T E M E N T S

   63

Notes to Financial Statements  (continued)

 

the loaned securities is determined at the close of each business day of the Fund and any additional required collateral is delivered to the Fund, or excess collateral returned by the Fund, on the next business day. During the term of the loan, the Funds are entitled to all distributions made on or in respect of the loaned securities, but do not receive interest income on securities received as collateral. 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.

As of period end, any securities on loan were collateralized by cash and/or U.S. Government obligations. Cash collateral invested by the securities lending agent, BlackRock Investment Management, LLC (“BIM”), if any, is disclosed in the Schedules of Investments. Any non-cash collateral received cannot be sold, re-invested or pledged by the Fund, except in the event of borrower default. The securities on loan, if any, are disclosed in the Funds’ Schedules of Investments. The market value of any securities on loan and the value of any related collateral are shown separately in the Statements of Assets and Liabilities as a component of investments at value – unaffiliated and collateral on securities loaned at value, respectively.

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

As of period end, the following table is a summary of the Funds’ securities on loan by counterparty which are subject to offset under an MSLA:

 

 

  
     Securities     Cash            Net  
Fund Name/Counterparty    Loaned at Value     Collateral Received(a)        Amount  

 

  

Advantage International

                  

Morgan Stanley & Co. LLC

       $ 121,282       $ (121,282 )          $  —  
     

 

 

      

 

 

          

 

 

  

Advantage Large Cap Growth

                               

Citigroup Global Markets, Inc.

       $ 1,255,888       $ (1,255,888 )          $ —  
     

 

 

      

 

 

          

 

 

  

Advantage Small Cap Core(b)

                 

Barclays Capital, Inc.

       $ 15,719,575       $ (15,719,575 )          $ —  

BofA Securities, Inc.

         3,656,800         (3,656,800 )            —  

Citigroup Global Markets, Inc.

         32,992,461         (32,992,461 )            —  

Credit Suisse Securities (USA) LLC

         3,376,738         (3,376,738 )            —  

Deutsche Bank Securities, Inc.

         4,957,904         (4,957,904 )            —  

J.P. Morgan Securities LLC

         51,806,311         (51,806,311 )            —  

Jefferies LLC

         1,398,600         (1,398,600 )            —  

Morgan Stanley & Co. LLC

         28,011,127         (28,011,127 )            —  

National Financial Services LLC

         5,617,518         (5,617,518 )            —  

State Street Bank & Trust Co

         11,436,132         (11,436,132 )            —  

TD Prime Services LLC

         6,123,809         (6,123,809 )            —  
     

 

 

      

 

 

          

 

 

  
             $   165,096,975              $   (165,096,975 )                 $ —  
     

 

 

      

 

 

          

 

 

  

 

  (a) 

Collateral received in excess of the market value of securities on loan is not presented in this table. The total cash collateral received by each Fund is disclosed in the Funds’ Statements of Assets and Liabilities.

 
  (b) 

Securities loaned with a value of $117,723 have been sold and are pending settlement as of May 31, 2021.

 

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

 

5.

DERIVATIVE FINANCIAL INSTRUMENTS

The Funds engage in various portfolio investment strategies using derivative contracts both to increase the returns of the Funds and/or to manage their exposure to certain risks such as credit risk, equity risk, interest rate risk, foreign currency exchange rate risk, commodity price risk or other risks (e.g., inflation risk). Derivative financial instruments categorized by risk exposure are included in the Schedules of Investments. These contracts may be transacted on an exchange or OTC.

Futures Contracts: Futures contracts are purchased or sold to gain exposure to, or manage exposure to, changes in interest rates (interest rate risk) and changes in the value of equity securities (equity risk) or foreign currencies (foreign currency exchange rate risk).

Futures contracts are exchange-traded agreements between the Funds and a counterparty to buy or sell a specific quantity of an underlying instrument at a specified price and on a specified date. Depending on the terms of a contract, it is settled either through physical delivery of the underlying instrument on the settlement date or by payment of a cash amount on the settlement date. Upon entering into a futures contract, the Funds are required to deposit initial margin with the broker in the form of cash or securities in an amount that varies depending on a contract’s size and risk profile. The initial margin deposit must then be maintained at an established level over the life of the contract. Amounts pledged, which are considered restricted, are included in cash pledged for futures contracts in the Statements of Assets and Liabilities.

 

 

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Notes to Financial Statements  (continued)

 

Securities deposited as initial margin are designated in the Schedules of Investments and cash deposited, if any, are shown as cash pledged for futures contracts in the Statements of Assets and Liabilities. Pursuant to the contract, the Funds agree to receive from or pay to the broker an amount of cash equal to the daily fluctuation in market value of the contract (“variation margin”). Variation margin is recorded as unrealized appreciation (depreciation) and, if any, shown as variation margin receivable (or payable) on futures contracts in the Statements of Assets and Liabilities. When the contract is closed, a realized gain or loss is recorded in the Statements of Operations equal to the difference between the notional amount of the contract at the time it was opened and the notional amount at the time it was closed. The use of futures contracts involves the risk of an imperfect correlation in the movements in the price of futures contracts and interest rates, foreign currency exchange rates or underlying assets.

 

6.

INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Advisory: The Trust, on behalf of the Funds, entered into an Investment Advisory Agreement with the Manager, the Funds’ investment adviser and an indirect, wholly-owned subsidiary of BlackRock, Inc. (“BlackRock”), to provide investment advisory services. The Manager is responsible for the management of each Fund’s portfolio and provides the personnel, facilities, equipment and certain other services necessary to the operations of each Fund.

For such services, each Fund pays the Manager a monthly fee at an annual rate equal to the following percentages of the average daily value of each Fund’s net assets:

 

   
     Investment Advisory Fees  
Average Daily Net Assets   

Advantage

International

    

Advantage Large

Cap Growth

   

Advantage Small

Cap Core

 

First $1 billion

      0.45 %      0.57 %      0.45 % 

$1 billion - $3 billion

      0.42       0.54       0.42  

$3 billion - $5 billion

      0.41       0.51       0.41  

$5 billion - $10 billion

      0.39       0.50       0.39  

Greater than $10 billion

      0.38       0.48       0.38  

Service and Distribution Fees: The Trust, on behalf of the Funds, entered into a Distribution Agreement and a Distribution and Service Plan with BlackRock Investments, LLC (“BRIL”), an affiliate of the Manager. Pursuant to the Distribution and Service Plan and in accordance with Rule 12b-1 under the 1940 Act, each Fund pays BRIL ongoing service and distribution fees. The fees are accrued daily and paid monthly at annual rates based upon the average daily net assets of the relevant share class of each Fund as follows:

 

       
     Advantage International      Advantage Large Cap Growth      Advantage Small Cap Core  
Share Class    Service Fees      Distribution Fees      Service Fees      Distribution Fees      Service Fees      Distribution Fees  

Service

      N/A        N/A        0.25 %       N/A        N/A        N/A  

Investor A

      0.25 %       N/A        0.25        N/A        0.25 %       N/A  

Investor C

      0.25        0.75 %       0.25        0.75 %       0.25        0.75 % 

Class R

      0.25        0.25        0.25        0.25        N/A        N/A  

BRIL and broker-dealers, pursuant to sub-agreements with BRIL, provide shareholder servicing and distribution services to the Funds. The ongoing service and/or distribution fee compensates BRIL and each broker-dealer for providing shareholder servicing and/or distribution related services to shareholders.

For the year ended May 31, 2021, the following table shows the class specific service and distribution fees borne directly by each share class of each Fund:    

 

 

  
Fund Name    Service      Investor A      Investor C      Class R      Total  

 

  

Advantage International

      $ —      $   1,015,477        $ 47,203        $   16,054        $   1,078,734  

Advantage Large Cap Growth

       529          2,069,350          134,949        2,628        2,207,456  

Advantage Small Cap Core

      —        950,247        76,147        —        1,026,394  

 

  

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

 

   
Average Daily Net Assets    Administration Fees  

First $500 million

      0.0425 % 

$500 million - $1 billion

      0.0400  

$1 billion - $2 billion

      0.0375  

$2 billion - $4 billion

      0.0350  

$4 billion - $13 billion

      0.0325  

Greater than $13 billion

      0.0300  

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

 

 

N O T E S   T O   F I N A N C I A L   S T A T E M E N T S

   65

Notes to Financial Statements  (continued)

 

For the year ended May 31, 2021, the following table shows the class specific administration fees borne directly by each share class of each Fund:

 

 

  
Fund Name    Institutional      Service      Investor A      Investor C      Class K      Class R      Total  

 

  

Advantage International

    $ 108,759         $ —      $ 81,314         $ 947      $ 12,526         $ 643      $   204,189  

Advantage Large Cap Growth

      21,820           42        165,666                  2,707        199           105        190,539  

Advantage Small Cap Core

      332,380           —        75,990           1,521        100,286           —        510,177  

 

  

Transfer Agent: Pursuant to written agreements, certain financial intermediaries, some of which may be affiliates, provide the Funds with sub-accounting, recordkeeping, sub-transfer agency and other administrative services with respect to servicing of underlying investor accounts. For these services, these entities receive an asset-based fee or an annual fee per shareholder account, which will vary depending on share class and/or net assets. For the year ended May 31, 2021, the Funds paid the following amounts to affiliates of BlackRock in return for these services, which are included in transfer agent — class specific in the Statements of Operations:

 

 

  
Fund Name    Institutional      Total  

 

  

Advantage International

       $   566,233      $   566,233  

Advantage Small Cap Core

         201,565        201,565  

 

  

The Manager maintains a call center that is responsible for providing certain shareholder services to the Funds. Shareholder services include responding to inquiries and processing purchases and sales based upon instructions from shareholders. For the year ended May 31, 2021, each Fund reimbursed the Manager the following amounts for costs incurred in running the call center, which are included in transfer agent — class specific in the Statements of Operations:

 

 

  
Fund Name    Institutional      Service      Investor A      Investor C      Class K      Class R      Total  

 

  

Advantage International

       $ 5,695         $ —         $ 15,389         $ 1,666         $ 123         $ 72      $   22,945  

Advantage Large Cap Growth

         2,156           17           86,833           2,632           20           24        91,682  

Advantage Small Cap Core

         5,058           —           13,322           3,640           956           —        22,976  

 

  

For the year ended May 31, 2021, the following table shows the class specific transfer agent fees borne directly by each share class of each Fund:    

 

 

  
Fund Name    Institutional      Service      Investor A      Investor C      Class K      Class R      Total  

 

  

Advantage International

    $ 859,375        $ —      $ 747,717      $ 12,339      $ 3,718      $ 7,629      $   1,630,778  

Advantage Large Cap Growth

      172,312        385        1,339,958        22,488        216        977        1,536,336  

Advantage Small Cap Core

      1,319,764        —        700,097        13,754        20,814        —        2,054,429  

 

  

Other Fees: For the year ended May 31, 2021, affiliates earned underwriting discounts, direct commissions and dealer concessions on sales of each Fund’s Investor A Shares as follows:

 

 

  
Fund Name    Amounts  

 

  

Advantage International

    $ 5,653  

Advantage Large Cap Growth

      10,941  

Advantage Small Cap Core

      38,534  

 

  

For the year ended May 31, 2021, affiliates received CDSCs as follows:

 

 

  
Share Class  

Advantage
International

     Advantage
Large Cap
Growth 		    

Advantage
Small Cap

Core

 

 

  

Investor A

      $ 2,874        $ 1,271         $ 3,595  

Investor C

        2,376          766           1,837  
    

 

 

       

 

 

        

 

 

  
     $  5,250        $  2,037         $  5,432  
    

 

 

       

 

 

        

 

 

  

Expense Limitations, Waivers and Reimbursements: With respect to each Fund, the Manager contractually agreed to waive its investment advisory fees by the amount of investment advisory fees each Fund pays to the Manager indirectly through its investment in affiliated money market funds (the “affiliated money market fund waiver”) through September 30, 2021. The contractual agreement may be terminated upon 90 days’ notice by a majority of the trustees who are not “interested persons” of the Trust, as defined in the 1940 Act (“Independent Trustees”), or by a vote of a majority of the outstanding voting securities of a Fund. The amount of waivers and/or reimbursements of fees and expenses made pursuant to the expense limitation described below will be reduced by the amount of the affiliated money market fund waiver. These amounts are included in fees waived and/or reimbursed by the Manager in the Statements of Operations. For the year ended May 31, 2021, the amounts waived were as follows:

 

 

  
Fund Name    Amounts Waived  

 

  

Advantage International

       $ 15,348  

Advantage Large Cap Growth

         17,005  

Advantage Small Cap Core

                      52,318  

 

  

The Manager has contractually agreed to waive its investment advisory fee with respect to any portion of each Fund’s assets invested in affiliated equity and fixed-income mutual funds and affiliated exchange-traded funds that have a contractual management fee through September 30, 2021. The contractual agreement may be terminated upon 90 days’ notice by a majority of the Independent Trustees or by a vote of a majority of the outstanding voting securities of a Fund. For the year ended ended May 31, 2021, there were no fees waived by the Manager pursuant to this arrangement.

 

 

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Notes to Financial Statements  (continued)

 

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

 

             
Fund Name    Institutional      Service      Investor A      Investor C      Class K      Class R  

Advantage International

      0.50 %       N/A        0.75 %       1.50 %       0.45 %       1.00 % 

Advantage Large Cap Growth

      0.62        0.87        0.87        1.62        0.57        1.12  

Advantage Small Cap Core

      0.50        N/A        0.75        1.50        0.45        N/A  

The Manager has agreed not to reduce or discontinue these contractual expense limitations through September 30, 2021 (or September 30, 2031 with respect to Advantage Large Cap Growth Class R Shares), unless approved by the Board, including a majority of the Independent Trustees or by a vote of a majority of the outstanding voting securities of a Fund.

For the year ended May 31, 2021, the Manager waived and/or reimbursed investment advisory fees, which is included in fees waived and/or reimbursed by the Manager in the Statements of Operations, as follows:

 

 

  
Fund Name    Amounts Waived  

 

  

Advantage International

                  $   1,517,792  

Advantage Large Cap Growth

         755,057  

Advantage Small Cap Core

         1,140,970  

 

  

In addition, these amounts waived and/or reimbursed by the Manager are included in administration fees waived — class specific and transfer agent fees waived and/or reimbursed — class specific, respectively, in the Statements of Operations. For the year ended May 31, 2021, class specific expense waivers and/or reimbursements were as follows:

 

 

  
     Administration Fees Waived  
  

 

 

  
Fund Name    Institutional      Service      Investor A      Investor C      Class K      Class R      Total  

 

  

Advantage International

    $ 108,759         $ —      $ 81,314          $ 947      $ 12,526         $ 643      $ 204,189  

Advantage Large Cap Growth

      21,820           42        165,666           2,707        199           105        190,539  

Advantage Small Cap Core

      332,380           —        75,990           1,521        100,286           —        510,177  

 

  

 

  
     Transfer Agent Fees Waived and/or Reimbursed  
  

 

 

  
Fund Name    Institutional      Service      Investor A      Investor C      Class K      Class R      Total  

 

  

Advantage International

    $ 587,467         $ —      $ 543,865         $ 9,855      $ 3,718      $ 6,009      $ 1,150,914  

Advantage Large Cap Growth

      117,658           279        923,789           15,347        215        710        1,057,998  

Advantage Small Cap Core

      486,459           —        508,819           9,730        20,814        —        1,025,822  

 

  

Securities Lending: The U.S. Securities and Exchange Commission (“SEC”) has issued an exemptive order which permits BIM, an affiliate of the Manager, to serve as securities lending agent for the Funds, subject to applicable conditions. As securities lending agent, BIM bears all operational costs directly related to securities lending. The Funds are responsible for expenses in connection with the investment of cash collateral received for securities on loan (the “collateral investment expenses”). The cash collateral is invested in a private investment company, Money Market Series, managed by the Manager or its affiliates. However, BIM has agreed to cap the collateral investment expenses of the Money Market Series to an annual rate of 0.04%. The investment adviser to the Money Market Series will not charge any advisory fees with respect to shares purchased by the Funds. The Money Market Series may, under certain circumstances, impose a liquidity fee of up to 2% of the value withdrawn or temporarily restrict withdrawals for up to 10 business days during a 90 day period, in the event that the private investment company’s weekly liquid assets fall below certain thresholds. The Money Market Series seeks current income consistent with maintaining liquidity and preserving capital. Although the Money Market Series is not registered under the 1940 Act, its investments may follow the parameters of investments by a money market fund that is subject to Rule 2a-7 under the 1940 Act.

Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment expenses. Each Fund retains a portion of securities lending income and remits a remaining portion to BIM as compensation for its services as securities lending agent.

Pursuant to the current securities lending agreement, Advantage Large Cap Growth and Advantage Small Cap Core retains 77% of securities lending income (which excludes collateral investment expenses), and this amount retained can never be less than 70% of the total of securities lending income plus the collateral investment expenses. Pursuant to the current securities lending agreement, Advantage International retains 82% of securities lending income (which excludes collateral investment expenses), and this amount retained can never be less than 70% of the total of securities lending income plus the collateral investment expenses.

In addition, commencing the business day following the date that the aggregate securities lending income earned across the BlackRock Multi-Asset Complex in a calendar year exceeds a specified threshold, Advantage Large Cap Growth and Advantage Small Cap Core, pursuant to the securities lending agreement, will retain for the remainder of that calendar year securities lending income in an amount equal to 81% of securities lending income (which excludes collateral investment expenses), and this amount retained can never be less than 70% of the total of securities lending income plus the collateral investment expenses. Advantage International, pursuant to the securities lending agreement, will retain for the remainder of that calendar year securities lending income in an amount equal to 85% of securities lending income (which excludes collateral investment expenses), and this amount retained can never be less than 70% of the total of securities lending income plus the collateral investment expenses.

 

 

N O T E S   T O   F I N A N C I A L   S T A T E M E N T S

   67

Notes to Financial Statements  (continued)

 

Prior to January 1, 2021, Advantage Large Cap Growth and Advantage Small Cap Core retained 75% of securities lending income (which excluded collateral investment expenses) and the amount retained could never be less than 70% of the total of securities lending income plus the collateral investment expenses. In addition, commencing the business day following the date that the aggregate securities lending income earned across the BlackRock Multi-Asset Complex in a calendar year exceeded a specified threshold, the Fund would retain for the remainder of that calendar year 80% of securities lending income (which excluded collateral investment expenses), and the amount retained could never be less than 70% of the total of securities lending income plus the collateral investment expenses.

The share of securities lending income earned by each Fund is shown as securities lending income — affiliated — net in the Statements of Operations. For the year ended May 31, 2021, each Fund paid BIM the following amounts for securities lending agent services:

 

 

  
Fund Name    Amounts  

 

  

Advantage International

       $ 20,309  

Advantage Large Cap Growth

         23,873  

Advantage Small Cap Core

         337,678  

 

  

Interfund Lending: In accordance with an exemptive order (the “Order”) from the SEC, Advantage International and Advantage Small Cap Core may participate in a joint lending and borrowing facility for temporary purposes (the “Interfund Lending Program”), subject to compliance with the terms and conditions of the Order, and to the extent permitted by each Fund’s investment policies and restrictions. Advantage International is currently permitted to borrow under the Interfund Lending Program. In addition, Advantage Small Cap Core is currently permitted to borrow and lend under the Interfund Lending Program.

A lending BlackRock fund may lend in aggregate up to 15% of its net assets, but may not lend more than 5% of its net assets to any one borrowing fund through the Interfund Lending Program. A borrowing BlackRock fund may not borrow through the Interfund Lending Program or from any other source more than 33 1/3% of its total assets (or any lower threshold provided for by the fund’s investment restrictions). If a borrowing BlackRock fund’s total outstanding borrowings exceed 10% of its total assets, each of its outstanding interfund loans will be subject to collateralization of at least 102% of the outstanding principal value of the loan. All interfund loans are for temporary or emergency purposes and the interest rate to be charged will be the average of the highest current overnight repurchase agreement rate available to a lending fund and the bank loan rate, as calculated according to a formula established by the Board.

During the year ended May 31, 2021, Advantage International and Advantage Small Cap Core did not participate in the Interfund Lending Program.

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

 

7.

PURCHASES AND SALES

For the year ended May 31, 2021, purchases and sales of investments, excluding short-term investments, were as follows:

 

 

  
Fund Name    Purchases      Sales  

 

  

Advantage International

    $   2,401,390,693      $   2,426,402,587  

Advantage Large Cap Growth

      1,228,934,516        1,263,365,779  

Advantage Small Cap Core

      3,455,820,759        1,553,294,861  

 

  

 

8.

INCOME TAX INFORMATION

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

Each Fund files U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on each Fund’s U.S. federal tax returns generally remains open for a period of three fiscal years after they are filed. The statutes of limitations on each Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction.

Management has analyzed tax laws and regulations and their application to the Funds as of May 31, 2021, inclusive of the open tax return years, and does not believe that there are any uncertain tax positions that require recognition of a tax liability in the Funds’ financial statements.

U.S. GAAP requires 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 NAVs per share. As of period end, the following permanent differences attributable to the certain deemed distributions were reclassified to the following accounts:

 

 

  
    

Advantage

Small Cap

Core

 

 

  

Paid-in capital

       $ 17,228,514  

Accumulated earnings (loss)

         (17,228,514 ) 

 

  

 

 

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Notes to Financial Statements  (continued)

 

The tax character of distributions paid was as follows:    

 

         
          Advantage     Advantage
Large Cap		     Advantage
Small Cap		  
      Period       International       Growth       Core (a)  

Ordinary income

     05/31/21     $ 17,234,394     $ 18,919,073     $ 68,728,891  
    05/31/20       25,258,204       9,531,500       9,116,585  
    09/30/19       18,541,081       51,815,343       —  

Long-term capital gains(b)

    05/31/21       —       48,567,710       9,400,294  
    05/31/20       —       22,557,380       137,331  
    09/30/19       —       10,063,226       —  
   

 

 

    

 

 

    

 

 

  

Total

     05/31/21     $ 17,234,394     $ 67,486,783     $   78,129,185  
   

 

 

    

 

 

    

 

 

  
    05/31/20     $ 25,258,204     $ 32,088,880     $ 9,253,916      
   

 

 

    

 

 

    

 

 

  
    09/30/19         $   18,541,081         $   61,878,569         $ —  
   

 

 

    

 

 

    

 

 

  
                                 

 

  (a) 

Distribution amounts may include a portion of the proceeds from redeemed shares.

 
  (b) 

The Funds designate these amounts paid during the fiscal year ended May 31, 2021 as capital gain dividends, subject to a long-term capital gains tax rate of not greater than 20%.

 

As of period end, the tax components of accumulated earnings were as follows:

 

 

  
     Advantage
International 		     Advantage
Large Cap
Growth 		     Advantage
Small Cap Core 		 

 

  

Undistributed ordinary income

    $ 49,266,769      $ 47,751,600      $ 152,810,957  

Undistributed long-term capital gains

      —        32,659,431        61,898,574  

Net unrealized gains(a)

     164,857,482        374,144,479        789,274,920  
  

 

 

     

 

 

     

 

 

  
   $   214,124,251      $   454,555,510      $   1,003,984,451  
  

 

 

     

 

 

     

 

 

  

 

  

 

  (a) 

The differences between book-basis and tax-basis net unrealized gains were attributable primarily to the tax deferral of losses on wash sales, the realization for tax purposes of unrealized gains on investments in passive foreign investment companies, the realization for tax purposes of unrealized gains/losses on certain futures contracts and foreign currency contracts and the timing and recognition of partnership income.

 

During the year ended May 31, 2021, Advantage International Fund utilized $115,875,228 of its respective capital loss carryforward.

As of May 31, 2021, gross unrealized appreciation and depreciation based on cost of investments (including short positions and derivatives, if any) for U.S. federal income tax purposes were as follows:

 

 

  
     Advantage
International 		     Advantage
Large Cap
Growth 		     Advantage
Small Cap Core 		 

 

  

Tax cost

    $   1,006,062,956        $ 676,280,896        $   3,649,071,773  
  

 

 

     

 

 

     

 

 

  

Gross unrealized appreciation

    $ 175,547,520      $ 377,384,772      $ 900,769,367    

Gross unrealized depreciation

      (10,827,688 )       (3,248,939 )       (111,619,617 ) 
  

 

 

     

 

 

     

 

 

  

Net unrealized appreciation (depreciation)

    $ 164,719,832      $   374,135,833      $ 789,149,750  
  

 

 

     

 

 

     

 

 

  

 

9.

BANK BORROWINGS

The Trust, on behalf of the Funds, along with certain other funds managed by the Manager and its affiliates (“Participating Funds”), is a party to a 364-day, $2.25 billion credit agreement with a group of lenders. Under this agreement, the Funds may borrow to fund shareholder redemptions. Excluding commitments designated for certain individual funds, the Participating Funds, including the Funds, can borrow up to an aggregate commitment amount of $1.75 billion at any time outstanding, subject to asset coverage and other limitations as specified in the agreement. The credit agreement has the following terms: a fee of 0.10% per annum on unused commitment amounts and interest at a rate equal to the higher of (a) one-month LIBOR (but, in any event, not less than 0.00%) on the date the loan is made plus 0.80% per annum or (b) the Fed Funds rate (but, in any event, not less than 0.00%) in effect from time to time plus 0.80% per annum on amounts borrowed. The agreement expires in April 2022 unless extended or renewed. These fees were allocated among such funds based upon portions of the aggregate commitment available to them and relative net assets of Participating Funds. During the year ended May 31, 2021, the Funds did not borrow under the credit agreement.

 

10.

PRINCIPAL RISKS

In the normal course of business, the Funds invest in securities or other instruments and may enter into certain transactions, and such activities subject each Fund to various risks, including among others, fluctuations in the market (market risk) or failure of an issuer to meet all of its obligations. The value of securities or other instruments may also be affected by various factors, including, without limitation: (i) the general economy; (ii) the overall market as well as local, regional or global political and/or social instability;

 

 

N O T E S   T O   F I N A N C I A L   S T A T E M E N T S

   69

Notes to Financial Statements  (continued)

 

(iii) regulation, taxation or international tax treaties between various countries; or (iv) currency, interest rate and price fluctuations. Local, regional or global events such as war, acts of terrorism, the spread of infectious illness or other public health issues, recessions, or other events could have a significant impact on the Funds and their investments. Each Fund’s prospectus provides details of the risks to which each Fund is subject.

The Funds may be exposed to additional risks when reinvesting cash collateral in money market funds that do not seek to maintain a stable NAV per share of $1.00, which may be subject to redemption gates or liquidity fees under certain circumstances.

Market Risk: An outbreak of respiratory disease caused by a novel coronavirus has developed into a global pandemic and has resulted in closing borders, quarantines, disruptions to supply chains and customer activity, as well as general concern and uncertainty. The impact of this pandemic, and other global health crises that may arise in the future, could affect the economies of many nations, individual companies and the market in general in ways that cannot necessarily be foreseen at the present time. This pandemic may result in substantial market volatility and may adversely impact the prices and liquidity of a fund’s investments. The duration of this pandemic and its effects cannot be determined with certainty.

Valuation Risk: The market values of equities, such as common stocks and preferred securities or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company. They may also decline due to factors which affect a particular industry or industries. A Fund may invest in illiquid investments. An illiquid investment is any investment that a Fund reasonably expects cannot be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment. A Fund may experience difficulty in selling illiquid investments in a timely manner at the price that it believes the investments are worth. Prices may fluctuate widely over short or extended periods in response to company, market or economic news. Markets also tend to move in cycles, with periods of rising and falling prices. This volatility may cause each Fund’s NAV to experience significant increases or decreases over short periods of time. If there is a general decline in the securities and other markets, the NAV of a Fund may lose value, regardless of the individual results of the securities and other instruments in which a Fund invests.

The price a Fund could receive upon the sale of any particular portfolio investment may differ from a Fund’s valuation of the investment, particularly for securities that trade in thin or volatile markets or that are valued using a fair valuation technique or a price provided by an independent pricing service. Changes to significant unobservable inputs and assumptions (i.e., publicly traded company multiples, growth rate, time to exit) due to the lack of observable inputs may significantly impact the resulting fair value and therefore a Fund’s results of operations. As a result, the price received upon the sale of an investment may be less than the value ascribed by a Fund, and a Fund could realize a greater than expected loss or lesser than expected gain upon the sale of the investment. A Fund’s ability to value its investments may also be impacted by technological issues and/or errors by pricing services or other third party service providers.

Counterparty Credit Risk: The Funds may be exposed to counterparty credit risk, or the risk that an entity may fail to or be unable to perform on its commitments related to unsettled or open transactions, including making timely interest and/or principal payments or otherwise honoring its obligations. The Funds manage counterparty credit risk by entering into transactions only with counterparties that the Manager believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Funds to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Fund’s exposure to market, issuer and counterparty credit risks with respect to these financial assets is approximately their value recorded in the Statements of Assets and Liabilities, less any collateral held by the Funds.

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

With exchange-traded futures, there is less counterparty credit risk to the Funds since the exchange or clearinghouse, as counterparty to such instruments, guarantees against a possible default. The clearinghouse stands between the buyer and the seller of the contract; therefore, credit risk is limited to failure of the clearinghouse. While offset rights may exist under applicable law, a Fund does not have a contractual right of offset against a clearing broker or clearinghouse in the event of a default (including the bankruptcy or insolvency). Additionally, credit risk exists in exchange-traded futures with respect to initial and variation margin that is held in a clearing broker’s customer accounts. While clearing brokers are required to segregate customer margin from their own assets, in the event that a clearing broker becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the clearing broker for all its clients, typically the shortfall would be allocated on a pro rata basis across all the clearing broker’s customers, potentially resulting in losses to the Funds.

Concentration Risk: A diversified portfolio, where this is appropriate and consistent with a fund’s objectives, minimizes the risk that a price change of a particular investment will have a material impact on the NAV of a fund. The investment concentrations within each Fund’s portfolio are disclosed in its Schedule of Investments.

Certain Funds invest a significant portion of their assets in securities within a single or limited number of market sectors. When a Fund concentrates its investments in this manner, it assumes the risk that economic, regulatory, political and social conditions affecting such sectors may have a significant impact on the Fund and could affect the income from, or the value or liquidity of, the Fund’s portfolio. Investment percentages in specific sectors are presented in the Schedules of Investments.

Advantage International invests a significant portion of its assets in securities of issuers located in Europe or with significant exposure to European issuers or countries. The European financial markets have recently experienced volatility and adverse trends due to concerns about economic downturns in, or rising government debt levels of, several European countries. These events may spread to other countries in Europe and may affect the value and liquidity of certain of the Fund’s investments.

Responses to the financial problems by European governments, central banks and others, including austerity measures and reforms, may not work, may result in social unrest and may limit future growth and economic recovery or have other unintended consequences. Further defaults or restructurings by governments and others of their debt could have additional adverse effects on economies, financial markets and asset valuations around the world. In addition, the United Kingdom has withdrawn from the European Union, and one or more other countries may withdraw from the European Union and/or abandon the Euro, the common currency of the European Union. The impact of these actions, especially if they occur in a disorderly fashion, is not clear but could be significant and far reaching.

 

 

70  

2 0 2 1   B L A C K R O C K   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S

Notes to Financial Statements  (continued)

 

Advantage International invests a significant portion of its assets in securities of issuers located in Asia or with significant exposure to Asian issuers or countries. The Asian financial markets have recently experienced volatility and adverse trends due to concerns in several Asian countries regarding monetary policy, government intervention in the markets, rising government debt levels or economic downturns. These events may spread to other countries in Asia and may affect the value and liquidity of certain of the Fund’s investments.

LIBOR Transition Risk: The United Kingdom’s Financial Conduct Authority announced a phase out of the London Interbank Offered Rate (“LIBOR”). Although many LIBOR rates will be phased out by the end of 2021, a selection of widely used USD LIBOR rates will continue to be published through June 2023 in order to assist with the transition. The Funds may be exposed to financial instruments tied to LIBOR to determine payment obligations, financing terms, hedging strategies or investment value. The transition process away from LIBOR might lead to increased volatility and illiquidity in markets for, and reduce the effectiveness of new hedges placed against, instruments whose terms currently include LIBOR. The ultimate effect of the LIBOR transition process on the Funds is uncertain.

 

11.

CAPITAL SHARE TRANSACTIONS

Transactions in capital shares for each class were as follows:

 

       
       Year Ended 05/31/21      Period from
10/01/19 to 05/31/20		      Year Ended 09/30/19  
Fund Name/Share Class      Shares      Amounts      Shares      Amounts      Shares      Amounts  

Advantage International

                    

Institutional

                    

Shares sold

        4,418,893      $ 75,694,033        10,053,656      $ 149,989,026        7,187,213      $ 112,138,877  

Shares issued in reinvestment of distributions

        588,425        9,609,172        752,851        12,406,978        679,659        10,004,600  

Shares issued in reorganization(a)

       —        —        —        —        1,191,455        18,579,616  

Shares redeemed

        (6,928,355 )       (117,200,787 )       (5,606,234 )       (84,809,969 )       (5,091,175 )       (79,480,738 ) 
    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
       (1,921,037 )     $ (31,897,582 )       5,200,273      $ 77,586,035        3,967,152      $ 61,242,355  
    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Investor A

                    

Shares sold and automatic conversion of shares

        2,612,796      $ 44,063,358        7,354,726      $ 109,718,575        7,413,242      $ 114,556,452  

Shares issued in reinvestment of distributions

        378,577        6,105,755        641,324        10,459,991        506,134        7,379,502  

Shares issued in reorganization(a)

       —        —        —        —        3,961,430        61,055,996  

Shares redeemed

        (5,322,583 )       (88,079,685 )       (7,868,559 )       (118,716,806 )       (4,512,726 )       (69,568,154 ) 
    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
       (2,331,210 )     $ (37,910,572 )       127,491      $ 1,461,760        7,368,080      $   113,423,796  
    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Investor C

                    

Shares sold

        24,076      $ 395,881        35,703      $ 520,481        104,380      $ 1,581,801  

Shares issued in reinvestment of distributions

        3,050        47,061        9,703        154,382        6,077        86,360  

Shares redeemed and automatic conversion of shares

        (279,526 )       (4,502,352 )       (213,615 )       (3,108,992 )       (932,769 )       (14,025,339 ) 
    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
       (252,400 )     $ (4,059,410 )       (168,209 )     $ (2,434,129 )       (822,312 )     $ (12,357,178 ) 
    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Class K

                    

Shares sold

        2,866,712      $ 52,229,496        839,709      $ 12,679,206        2,442,351      $ 39,126,033  

Shares issued in reinvestment of distributions

        56,053        915,693        78,765        1,298,043        14,952        220,087  

Shares redeemed

        (689,214 )       (11,849,959 )       (663,551 )       (10,063,996 )       (227,253 )       (3,579,204 ) 
    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
       2,233,551      $ 41,295,230        254,923      $ 3,913,253        2,230,050      $ 35,766,916  
    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Class R

                    

Shares sold

        55,185      $ 916,332        43,569      $ 623,878        74,667      $ 1,148,306  

Shares issued in reinvestment of distributions

        2,631        42,375        7,122        116,369        8,775        128,026  

Shares redeemed

        (114,704 )       (1,861,112 )       (149,798 )       (2,294,608 )       (206,197 )       (3,219,311 ) 
    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
       (56,888 )     $ (902,405 )       (99,107 )     $ (1,554,361 )       (122,755 )     $ (1,942,979 ) 
    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
       (2,327,984 )     $ (33,474,739 )       5,315,371      $ 78,972,558        12,620,215      $ 196,132,910  
    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Advantage Large Cap Growth

                    

Institutional

                    

Shares sold

        1,461,480      $ 30,690,873        1,664,670      $ 28,270,459        1,417,588      $ 22,049,536  

Shares issued in reinvestment of distributions

        349,606        7,263,426        187,678        3,149,241        368,193        5,382,985  

Shares redeemed

        (1,374,733 )       (28,731,360 )       (1,755,297 )       (29,497,286 )       (1,146,041 )       (18,321,402 ) 
    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
       436,353      $ 9,222,939        97,051      $ 1,922,414        639,740      $ 9,111,119  
    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

 

N O T E S   T O   F I N A N C I A L   S T A T E M E N T S

   71

Notes to Financial Statements  (continued)

 

       
    Year Ended 05/31/21      Period from
10/01/19 to 05/31/20		      Year Ended 09/30/19  
Fund Name/Share Class   Shares      Amounts      Shares      Amounts      Shares      Amounts  

Advantage Large Cap Growth (continued)

                 

Service

                 

Shares sold

     910      $ 20,367        2,000      $ 30,700        5,103      $ 72,800  

Shares issued in reinvestment of distributions

     693        14,155        500        8,241        798        11,470  

Shares redeemed

     (4,884 )       (90,744 )       (599 )       (9,940 )       (2,748 )       (38,251 ) 
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
    (3,281 )     $ (56,222 )       1,901      $ 29,001        3,153      $ 46,019  
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Investor A

                 

Shares sold and automatic conversion of shares

     4,204,268      $ 84,126,461        4,446,628      $ 70,607,642        6,662,252      $ 98,680,539  

Shares issued in reinvestment of distributions

     2,931,766        57,897,081        1,731,744        27,690,590        3,864,428        53,947,453  

Shares redeemed

     (7,138,589 )       (141,394,298 )       (9,579,253 )       (153,256,890 )       (8,739,543 )       (133,123,440 ) 
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
    (2,555 )     $ 629,244        (3,400,881 )     $ (54,958,658 )       1,787,137      $ 19,504,552  
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Investor C

                 

Shares sold

     115,840      $ 1,976,790        106,476      $ 1,432,407        184,277      $ 1,733,438  

Shares issued in reinvestment of distributions

     67,831        1,118,035        47,034        638,252        70,938        1,408,299  

Shares redeemed

     (482,173 )       (7,987,888 )       —        —        —        —  

Shares redeemed and automatic conversion of shares

     —        —        (294,141 )       (3,931,007 )       (2,457,686 )       (32,944,701 ) 
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
    (298,502 )     $ (4,893,063 )       (140,631 )     $ (1,860,348 )       (2,202,471 )     $ (29,802,964 ) 
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Class K

                 

Shares sold

     12,572      $ 271,639        7,318      $ 111,250            25,965      $ 399,000  

Shares issued in reinvestment of distributions

     2,409        50,244        2,052            34,414        1,964        28,695  

Shares redeemed

     (4,868 )       (105,833 )       (29,155 )       (438,862 )       (2,941 )       (48,101 ) 
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
    10,113          $ 216,050            (19,785 )     $ (293,198 )       24,988          $ 379,594      
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Class R

                 

Shares sold

     8,442      $ 172,132        12,423      $ 196,016        13,537      $ 208,300  

Shares issued in reinvestment of distributions

     1,626        33,436        1,855        30,985        7,473        108,590  

Shares redeemed

     (14,754 )       (303,821 )       (37,771 )       (626,534 )       (73,310 )       (1,147,635 ) 
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
    (4,686 )     $ (98,253 )       (23,493 )     $ (399,533 )       (52,300 )     $ (830,745 ) 
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
    137,442      $ 5,020,695        (3,485,838 )     $ (55,560,322 )       200,247      $ (1,592,425 ) 
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
                
         
    Year Ended 05/31/21      Year Ended 05/31/20                
     Shares      Amounts      Shares      Amounts                  

Advantage Small Cap Core

                 

Institutional

                 

Shares sold

     95,126,663      $  1,715,369,624        40,948,676      $  521,146,487        

Shares issued in reinvestment of distributions

     2,243,133        38,062,870        431,317        6,386,298        

Shares redeemed

     (26,844,843 )       (470,870,066 )       (18,677,824 )       (236,251,203 )       
 

 

 

     

 

 

     

 

 

     

 

 

        
    70,524,953      $  1,282,562,428        22,702,169      $  291,281,582        
 

 

 

     

 

 

     

 

 

     

 

 

        

Investor A

                 

Shares sold and automatic conversion of shares

     11,731,048      $ 215,365,974        7,452,876      $ 95,188,119        

Shares issued in reinvestment of distributions

     552,682        9,366,268        125,295        1,848,839        

Shares redeemed

     (7,853,782 )       (138,001,515 )       (5,273,975 )       (72,027,825 )       
 

 

 

     

 

 

     

 

 

     

 

 

        
    4,429,948      $ 86,730,727        2,304,196      $ 25,009,133        
 

 

 

     

 

 

     

 

 

     

 

 

        

 

 

72  

2 0 2 1   B L A C K R O C K   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S

Notes to Financial Statements  (continued)

 

         
       Year Ended 05/31/21      Year Ended 05/31/20                                                 
Fund Name/Share Class      Shares      Amounts      Shares      Amounts                 

Advantage Small Cap Core (continued)

                   

Investor C

                   

Shares sold

        344,270      $ 6,419,970        194,007      $ 2,542,061       

Shares issued in reinvestment of distributions

        8,469        141,691        445        6,537       

Shares redeemed and automatic conversion of shares

        (100,236 )       (1,695,653 )       (146,329 )       (1,866,475 )      
    

 

 

     

 

 

     

 

 

     

 

 

       
       252,503      $ 4,866,008        48,123      $ 682,123       
    

 

 

     

 

 

     

 

 

     

 

 

       

Class K

                   

Shares sold

        35,035,616      $ 609,698,614        17,939,631      $  258,512,762       

Shares issued in reinvestment of distributions

        780,524        13,303,758        67,762        1,006,554       

Shares redeemed

        (5,819,626 )       (104,224,154 )       (7,879,299 )       (118,900,431 )      
    

 

 

     

 

 

     

 

 

     

 

 

       
       29,996,514      $   518,778,218        10,128,094      $  140,618,885       
    

 

 

     

 

 

     

 

 

     

 

 

       
       105,203,918      $   1,892,937,381        35,182,582      $  457,591,723       
    

 

 

     

 

 

     

 

 

     

 

 

       

 

  (a) 

See Note 1 regarding the reorganization.

 

As of May 31, 2021, BlackRock Financial Management, Inc., an affiliate of the Funds, owned 12,217 Class K Shares of Advantage Large Cap Growth.

 

12.

SUBSEQUENT EVENTS

Management has evaluated the impact of all subsequent events on the Funds through the date the financial statements were issued and has determined that there were no subsequent events requiring adjustment or additional disclosure in the financial statements.

 

 

N O T E S   T O   F I N A N C I A L   S T A T E M E N T S

   73

Report of Independent Registered Public Accounting Firm

 

To the Shareholders of BlackRock Advantage International Fund, BlackRock Advantage Large Cap Growth Fund, and BlackRock Advantage Small Cap Core Fund and the Board of Trustees of BlackRock FundsSM:

Opinion on the Financial Statements and Financial Highlights

We have audited the accompanying statements of assets and liabilities of BlackRock Advantage International Fund, BlackRock Advantage Large Cap Growth Fund, and BlackRock Advantage Small Cap Core Fund of BlackRock FundsSM (the “Funds”), including the schedules of investments, as of May 31, 2021, the related statements of operations for the year then ended, the statements of changes in net assets and the financial highlights for the periods indicated in the table below, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Funds as of May 31, 2021, and the results of their operations for the year then ended, the changes in their net assets and the financial highlights for the periods indicated in the table below, in conformity with accounting principles generally accepted in the United States of America.

 

Fund   Statements of Changes in Net Assets   Financial Highlights
     

BlackRock Advantage International Fund

   For the year ended May 31, 2021, for the period from October 1, 2019 through May 31, 2020, and for the year ended September 30, 2019   For the year ended May 31, 2021, for the period from October 1, 2019 through May 31, 2020, and for each of the four years in the period ended September 30, 2019
     

BlackRock Advantage Large Cap Growth Fund

   For the year ended May 31, 2021, for the period from October 1, 2019 through May 31, 2020, and for the year ended September 30, 2019   For the year ended May 31, 2021, for the period from October 1, 2019 through May 31, 2020, and for each of the four years in the period ended September 30, 2019
     

BlackRock Advantage Small Cap Core Fund

   For each of the two years in the period ended May 31, 2021   For each of the five years in the period ended May 31, 2021

Basis for Opinion

These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. 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, whether due to error or fraud. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of May 31, 2021, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

Deloitte & Touche LLP

Boston, Massachusetts

July 21, 2021

We have served as the auditor of one or more BlackRock investment companies since 1992.

 

 

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Important Tax Information (unaudited)

 

The following maximum amounts are hereby designated as qualified dividend income for individuals for the fiscal year ended May 31, 2021:

 

 

  
Fund Name   

                             

     

Qualified Dividend

Income

 

 

  

Advantage International

         $  25,991,445  

Advantage Large Cap Growth

         7,182,559  

Advantage Small Cap Core

         25,233,442  

 

  

The following maximum amounts are hereby designated as qualified business income for individuals for the fiscal year ended May 31,2021:

 

 

  
Fund Name   

                             

     

Qualified Business

Income

 

 

  

Advantage Large Cap Growth

         $  302,141  

Advantage Small Cap Core

         1,778,007  

 

  

For the fiscal year ended May 31, 2021, the Funds passed through to their shareholders foreign source income earned and foreign taxes paid by the underlying funds:

 

 

  
Fund Name   

Foreign Source

Income Earned 

     

Foreign Taxes

Paid

 

 

  

Advantage International

      $23,670,782        $  2,333,777  

 

  

For corporate shareholders, the percentage of ordinary income distributions paid during the fiscal year ended May 31, 2021 that qualified for the dividends-received deduction were as follows:

 

 

  
Fund Name   

        

     

Dividends-Received   

Deduction   

  

 

  

Advantage Large Cap Growth

         27.34%  

Advantage Small Cap Core

         26.26     

 

  

For the fiscal year ended May 31, 2021, the Funds hereby designate the following maximum amounts allowable as interest-related and qualified short-term gains eligible for exemption from U.S. withholding tax for nonresident aliens and foreign corporations:

 

 

  
Fund Name   

                                 

     

Short-Term

    Capital Gain

Dividends

 

 

  

Advantage Large Cap Growth

         $  17,730,503  

Advantage Small Cap Core

         44,122,180  

 

  

 

 

I M P O R T A N T   T A X   I N F O R M A T I O N

   75

Disclosure of Investment Advisory Agreement

 

The Board of Trustees (the “Board,” the members of which are referred to as “Board Members”) of BlackRock Funds (the “Trust”) met on April 7, 2021 (the “April Meeting”) and May 10-12, 2021 (the “May Meeting”) to consider the approval to continue the investment advisory agreement (the “Agreement”) between the Trust, on behalf of BlackRock Advantage International Fund (“Advantage International Fund”), BlackRock Advantage Large Cap Growth Fund (“Advantage Large Cap Growth Fund”) and BlackRock Advantage Small Cap Core Fund (“Advantage Small Cap Core Fund,” and together with Advantage International Fund and Advantage Large Cap Growth Fund, the “Funds”), and BlackRock Advisors, LLC (the “Manager” or “BlackRock”), each Fund’s investment advisor.

The Approval Process

Consistent with the requirements of the Investment Company Act of 1940 (the “1940 Act”), the Board considers the approval of the continuation of the Agreement for each Fund on an annual basis. The Board members whom are not “interested persons” of the Trust, as defined in the 1940 Act, are considered independent Board members (the “Independent Board Members”). The Board’s consideration entailed a year-long deliberative process during which the Board and its committees assessed BlackRock’s various services to each Fund, including through the review of written materials and oral presentations, and the review of additional information provided in response to requests from the Independent Board Members. The Board had four quarterly meetings per year, each typically extending for two days, as well as additional ad hoc meetings and executive sessions throughout the year, as needed. The committees of the Board similarly met throughout the year. The Board also had a fifth one-day meeting to consider specific information surrounding the renewal of the Agreement. In particular, the Board assessed, among other things, the nature, extent and quality of the services provided to the Fund by BlackRock, BlackRock’s personnel and affiliates, including (as applicable): investment management services; accounting oversight; administrative and shareholder services; oversight of the Fund’s service providers; risk management and oversight; and legal, regulatory and compliance services. Throughout the year, including during the contract renewal process, the Independent Board Members were advised by independent legal counsel, and met with independent legal counsel in various executive sessions outside of the presence of BlackRock’s management.

During the year, the Board, acting directly and through its committees, considered information that was relevant to its annual consideration of the renewal of the Agreement, including the services and support provided by BlackRock to the Fund and its shareholders. BlackRock also furnished additional information to the Board in response to specific questions from the Board. Among the matters the Board considered were: (a) investment performance for one-year, three-year, five-year, and/or since inception periods, as applicable, against peer funds, an applicable benchmark, and other performance metrics, as applicable, as well as BlackRock senior management’s and portfolio managers’ analyses of the reasons for any outperformance or underperformance relative to its peers, benchmarks, and other performance metrics, as applicable; (b) fees, including advisory, administration, if applicable, and other amounts paid to BlackRock and its affiliates by the Fund for services; (c) Fund operating expenses and how BlackRock allocates expenses to the Fund; (d) the resources devoted to risk oversight of, and compliance reports relating to, implementation of the Fund’s investment objective, policies and restrictions, and meeting regulatory requirements; (e) BlackRock’s and the Trust’s adherence to applicable compliance policies and procedures; (f) the nature, character and scope of non-investment management services provided by BlackRock and its affiliates and the estimated cost of such services, as available; (g) BlackRock’s and other service providers’ internal controls and risk and compliance oversight mechanisms; (h) BlackRock’s implementation of the proxy voting policies approved by the Board; (i) the use of brokerage commissions and execution quality of portfolio transactions; (j) BlackRock’s implementation of the Fund’s valuation and liquidity procedures; (k) an analysis of management fees paid to BlackRock for products with similar investment mandates across the open-end fund, exchange-traded fund (“ETF”), closed-end fund, sub-advised mutual fund, separately managed account, collective investment trust, and institutional separate account product channels, as applicable, and the similarities and differences between these products and the services provided as compared to the Fund; (l) BlackRock’s compensation methodology for its investment professionals and the incentives and accountability it creates, along with investment professionals’ investments in the fund(s) they manage; and (m) periodic updates on BlackRock’s business.

Prior to and in preparation for the April Meeting, the Board received and reviewed materials specifically relating to the renewal of the Agreement. The Independent Board Members continuously engaged in a process with their independent legal counsel and BlackRock to review the nature and scope of the information provided to the Board to better assist its deliberations. The materials provided in connection with the April Meeting included, among other things: (a) information independently compiled and prepared by Broadridge Financial Solutions, Inc. (“Broadridge”), based on either a Lipper classification or Morningstar category, regarding each Fund’s fees and expenses as compared with a peer group of funds as determined by Broadridge (“Expense Peers”) and the investment performance of each Fund as compared with a peer group of funds (“Performance Peers”); (b) information on the composition of the Expense Peers and Performance Peers and a description of Broadridge’s methodology; (c) information on the estimated profits realized by BlackRock and its affiliates pursuant to the Agreement and a discussion of fall-out benefits to BlackRock and its affiliates; (d) a general analysis provided by BlackRock concerning investment management fees received in connection with other types of investment products, such as institutional accounts, sub-advised mutual funds, ETFs, closed-end funds, open-end funds, and separately managed accounts under similar investment mandates, as well as the performance of such other products, as applicable; (e) a review of non-management fees; (f) the existence, impact and sharing of potential economies of scale, if any, with the Funds; (g) a summary of aggregate amounts paid by each Fund to BlackRock; (h) sales and redemption data regarding each Fund’s shares; and (i) various additional information requested by the Board as appropriate regarding BlackRock’s and the Funds’ operations.

At the April Meeting, the Board reviewed materials relating to its consideration of the Agreement. As a result of the discussions that occurred during the April Meeting, and as a culmination of the Board’s year-long deliberative process, the Board presented BlackRock with questions and requests for additional information. BlackRock responded to these questions and requests with additional written information in advance of the May Meeting.

At the May Meeting, the Board concluded its assessment of, among other things: (a) the nature, extent and quality of the services provided by BlackRock; (b) the investment performance of each Fund as compared to its Performance Peers and to other metrics, as applicable; (c) the advisory fee and the estimated cost of the services and estimated profits realized by BlackRock and its affiliates from their relationship with the Funds; (d) each Fund’s fees and expenses compared to its Expense Peers; (e) the existence and sharing of potential economies of scale; (f) any fall-out benefits to BlackRock and its affiliates as a result of BlackRock’s relationship with the Funds; and (g) other factors deemed relevant by the Board Members.

The Board also considered other matters it deemed important to the approval process, such as other payments made to BlackRock or its affiliates relating to securities lending and cash management, and BlackRock’s services related to the valuation and pricing of Fund portfolio holdings. The Board noted the willingness of BlackRock’s personnel to engage in open, candid discussions with the Board. The members of the Board gave attention to all of the information that was furnished, and each Board Member placed varying degrees of importance on the various pieces of information that were provided to them. The Board evaluated the information available to it on a fund by fund basis. The following paragraphs provide more information about some of the primary factors that were relevant to the Board’s decision. The Board Members did not identify any particular information, or any single factor as determinative, and each Board Member may have attributed different weights to the various items and factors considered.

 

 

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Disclosure of Investment Advisory Agreement   (continued)

 

A. Nature, Extent and Quality of the Services Provided by BlackRock

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 Fund. Throughout the year, the Board compared each Fund’s performance to the performance of a comparable group of mutual funds, relevant benchmark, and performance metrics, as applicable. The Board met with BlackRock’s senior management personnel responsible for investment activities, including the senior investment officers. The Board also reviewed the materials provided by each Fund’s portfolio management team discussing the Fund’s performance, investment strategies and outlook.

The Board considered, among other factors, with respect to BlackRock: the number, education and experience of investment personnel generally and each Fund’s portfolio management team; research capabilities; investments by portfolio managers in the funds they manage; portfolio trading capabilities; use of technology; commitment to compliance; credit analysis capabilities; risk analysis and oversight capabilities; and the approach to training and retaining portfolio managers and other research, advisory and management personnel. The Board also considered BlackRock’s overall risk management program, including the continued efforts of BlackRock and its affiliates to address cybersecurity risks and the role of BlackRock’s Risk & Quantitative Analysis Group. The Board engaged in a review of BlackRock’s compensation structure with respect to each Fund’s portfolio management team and BlackRock’s ability to attract and retain high-quality talent and create performance incentives.

In addition to investment advisory services, the Board considered the nature and quality of the administrative and other non-investment advisory services provided to each Fund. BlackRock and its affiliates provide the Funds with certain administrative, shareholder and other services (in addition to any such services provided to the Funds by third-parties) and officers and other personnel as are necessary for the operations of the Funds. In particular, BlackRock and its affiliates provide the Funds with administrative services including, among others: (i) responsibility for disclosure documents, such as the prospectus, the summary prospectus (as applicable), the statement of additional information and periodic shareholder reports; (ii) oversight of daily accounting and pricing; (iii) responsibility for periodic filings with regulators; (iv) overseeing and coordinating the activities of third-party service providers, including, among others, each Fund’s custodian, fund accountant, transfer agent, and auditor; (v) organizing Board meetings and preparing the materials for such Board meetings; (vi) providing legal and compliance support; (vii) furnishing analytical and other support to assist the Board in its consideration of strategic issues such as the merger, consolidation or repurposing of certain open-end funds; and (viii) performing or managing administrative functions necessary for the operation of the Funds, such as tax reporting, expense management, fulfilling regulatory filing requirements, overseeing each Fund’s distribution partners, and shareholder call center and other services. The Board reviewed the structure and duties of BlackRock’s fund administration, shareholder services, and legal and compliance departments and considered BlackRock’s policies and procedures for assuring compliance with applicable laws and regulations. The Board considered the operation of BlackRock’s business continuity plans, including in light of the ongoing COVID-19 pandemic.

B. The Investment Performance of the Funds and BlackRock

The Board, including the Independent Board Members, reviewed and considered the performance history of each Fund throughout the year and at the April Meeting. In preparation for the April Meeting, the Board was provided with reports independently prepared by Broadridge, which included an analysis of each Fund’s performance as of December 31, 2020, as compared to its Performance Peers. Broadridge ranks funds in quartiles, ranging from first to fourth, where first is the most desirable quartile position and fourth is the least desirable. In connection with its review, with respect to each Fund, the Board received and reviewed information regarding the investment performance of the Fund as compared to its Performance Peers. The Board and its Performance Oversight Committee regularly review, and meet with Fund management to discuss, the performance of each Fund throughout the year.

In evaluating performance, the Board focused particular attention on funds with less favorable performance records. The Board also noted that while it found the data provided by Broadridge generally useful, it recognized the limitations of such data, including in particular, that notable differences may exist between a fund and its Performance Peers (for example, the investment objectives and strategies). Further, the Board recognized that the performance data reflects a snapshot of a period as of a particular date and that selecting a different performance period could produce significantly different results. The Board also acknowledged that long-term performance could be impacted by even one period of significant outperformance or underperformance, and that a single investment theme could have the ability to disproportionately affect long-term performance.

The Board noted that for each of the one-, three- and five-year periods reported, Advantage Small Cap Core Fund ranked in the first quartiles against its Performance Peers.

The Board noted that for the one-, three- and five-year periods reported, Advantage Large Cap Growth Fund ranked in the second, third and second quartiles, respectively, against its Performance Peers. The Board and BlackRock reviewed the Fund’s underperformance relative to its Performance Peers during the applicable period.

The Board noted that for each of the one-, three- and five-year periods reported, Advantage International Fund ranked in the third quartile against its Performance Peers. The Board and BlackRock reviewed the Fund’s underperformance relative to its Performance Peers during the applicable periods.

C. Consideration of the Advisory/Management Fees and the Estimated Cost of the Services and Estimated Profits Realized by BlackRock and its Affiliates from their Relationship with the Funds

The Board, including the Independent Board Members, reviewed each Fund’s contractual management fee rate compared with those of its Expense Peers. The contractual management fee rate represents a combination of the advisory fee and any administrative fees, before taking into account any reimbursements or fee waivers. The Board also compared each Fund’s total expense ratio, as well as its actual management fee rate, to those of its Expense Peers. The total expense ratio represents a fund’s total net operating expenses, including any 12b-1 or non-12b-1 service fees. The total expense ratio gives effect to any expense reimbursements or fee waivers, and the actual management fee rate gives effect to any management fee reimbursements or waivers. The Board considered the services provided and the fees charged by BlackRock and its affiliates to other types of clients with similar investment mandates, as applicable, including institutional accounts and sub-advised mutual funds (including mutual funds sponsored by third parties).

 

 

D I S C L O S U R E   O F   I N V E S T M E N T   A D V I S O R Y   A G R E E M E N T

   77

Disclosure of Investment Advisory Agreement   (continued)

 

The Board received and reviewed statements relating to BlackRock’s financial condition. The Board reviewed BlackRock’s profitability methodology and was also provided with an estimated profitability analysis that detailed the revenues earned and the expenses incurred by BlackRock for services provided to each Fund. The Board reviewed BlackRock’s estimated profitability with respect to each Fund and other funds the Board currently oversees for the year ended December 31, 2020 compared to available aggregate estimated profitability data provided for the prior two years. The Board reviewed BlackRock’s estimated profitability with respect to certain other U.S. fund complexes managed by the Manager and/or its affiliates. The Board reviewed BlackRock’s assumptions and methodology of allocating expenses in the estimated 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, precision of expense allocations and business mix. The Board thus recognized that calculating and comparing profitability at the individual fund level is difficult.

The Board noted that, in general, individual fund or product line profitability of other advisors is not publicly available. The Board reviewed BlackRock’s overall operating margin, in general, compared to that of certain other publicly-traded asset management firms. The Board considered the differences between BlackRock and these other firms, including the contribution of technology at BlackRock, BlackRock’s expense management, and the relative product mix.

The Board considered whether BlackRock has the financial resources necessary to attract and retain high quality investment management personnel to perform its obligations under the Agreement and to continue to provide the high quality of services that is expected by the Board. The Board further considered factors including but not limited to BlackRock’s commitment of time, assumption of risk, and liability profile in servicing the Funds, including in contrast to what is required of BlackRock with respect to other products with similar investment mandates across the open-end fund, ETF, closed-end fund, sub-advised mutual fund, separately managed account, collective investment trust, and institutional separate account product channels, as applicable.

The Board noted that each Fund’s contractual management fee rate ranked in the first quartile, and that the actual management fee rate and total expense ratio each ranked in the first quartile relative to the Fund’s Expense Peers.

The Board also noted that each Fund has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the size of the Fund increases above certain contractually specified levels. The Board noted that if the size of a Fund were to decrease, the Fund could lose the benefit of one or more breakpoints. The Board further noted that BlackRock and the Board have contractually agreed to a cap on each Fund’s total expenses as a percentage of the Fund’s average daily net assets on a class-by-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 Funds increase, including the existence of fee waivers and/or expense caps, as applicable, noting that any contractual fee waivers and contractual expense caps had been approved by the Board. In its consideration, the Board further considered the continuation and/or implementation of fee waivers and/or expense caps, as applicable. The Board also considered the extent to which the Funds benefit from such economies of scale in a variety of ways and whether there should be changes in the advisory fee rate or breakpoint structure in order to enable the Funds to more fully participate in these economies of scale. The Board considered each Fund’s asset levels and whether the current fee schedule was appropriate.

E. Other Factors Deemed Relevant by the Board Members

The Board, including the Independent Board Members, also took into account other ancillary or “fall-out” benefits that BlackRock or its affiliates may derive from BlackRock’s respective relationships with the Funds, both tangible and intangible, such as BlackRock’s ability to leverage its investment professionals who manage other portfolios and its risk management personnel, an increase in BlackRock’s profile in the investment advisory community, and the engagement of BlackRock’s affiliates as service providers to the Funds, including for administrative, distribution, securities lending and cash management services. The Board also considered BlackRock’s overall operations and its efforts to expand the scale of, and improve the quality of, its operations. The Board also noted that, subject to applicable law, BlackRock may use and benefit from third-party research obtained by soft dollars generated by certain registered fund transactions to assist in managing all or a number of its other client accounts.

In connection with its consideration of the 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.

The Board noted the competitive nature of the open-end fund marketplace, and that shareholders are able to redeem their Fund shares if they believe that the pertinent Fund’s fees and expenses are too high or if they are dissatisfied with the performance of the Fund.

Conclusion

The Board, including the Independent Board Members, unanimously approved the Agreement between the Manager and the Trust, on behalf of each Fund, for a one-year term ending June 30, 2022. Based upon its evaluation of all of the aforementioned factors in their totality, as well as other information, the Board, including the Independent Board Members, was satisfied that the terms of the Agreement were fair and reasonable and, in the best interest of each Fund and its shareholders. In arriving at its decision to approve the 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.

 

 

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Trustee and Officer Information  

 

          Independent Trustees(a)          
         

Name

Year of Birth(b)

  

Position(s) Held

(Length of

Service)(c)

   Principal Occupation(s) During Past Five Years   

Number of BlackRock-Advised

Registered Investment Companies

(“RICs”) Consisting of Investment

Portfolios (“Portfolios”) Overseen

   

Public Company
and Other

Investment

Company

Directorships

Held During

Past Five Years

Mark Stalnecker

1951

   

Chair of the

Board (Since

2019) and

Trustee

(Since 2015)

   

Chief Investment Officer, University of Delaware from 1999 to 2013; Trustee and Chair of the Finance and Investment Committees, Winterthur Museum and Country Estate from 2005 to 2016; Member of the Investment Committee, Delaware Public Employees’ Retirement System since 2002; Member of the Investment Committee, Christiana Care Health System from 2009 to 2017; Member of the Investment Committee, Delaware Community Foundation from 2013 to 2014; Director and Chair of the Audit Committee, SEI Private Trust Co. from 2001 to 2014.

   

30 RICs consisting of

152 Portfolios

    None

Bruce R. Bond

1946

   

Trustee

(Since 2019)

   

Board Member, Amsphere Limited (software) since 2018; Trustee and Member of the Governance Committee, State Street Research Mutual Funds from 1997 to 2005; Board Member of Governance, Audit and Finance Committee, Avaya Inc. (computer equipment) from 2003 to 2007.

   

30 RICs consisting of

152 Portfolios

    None

Susan J. Carter

1956

   

Trustee

(Since 2016)

   

Director, Pacific Pension Institute from 2014 to 2018; Advisory Board Member, Center for Private Equity and Entrepreneurship at Tuck School of Business since 1997; Senior Advisor, Commonfund Capital, Inc. (“CCI”) (investment adviser) in 2015; Chief Executive Officer, CCI from 2013 to 2014; President & Chief Executive Officer, CCI from 1997 to 2013; Advisory Board Member, Girls Who Invest from 2015 to 2018 and Board Member thereof since 2018; Advisory Board Member, Bridges Fund Management since 2016; Trustee, Financial Accounting Foundation since 2017; Practitioner Advisory Board Member, Private Capital Research Institute (“PCRI”) since 2017; Lecturer in the Practice of Management, Yale School of Management since 2019; Advisor to Finance Committee, Altman Foundation since 2020.

   

30 RICs consisting of

152 Portfolios

    None

Collette Chilton

1958

   

Trustee

(Since 2015)

   

Chief Investment Officer, Williams College since 2006; Chief Investment Officer, Lucent Asset Management Corporation from 1998 to 2006; Director, Boys and Girls Club of Boston since 2017; Director, B1 Capital since 2018; Director, David and Lucile Packard Foundation since 2020.

   

30 RICs consisting of

152 Portfolios

    None

Neil A. Cotty

1954

   

Trustee

(Since 2016)

   

Bank of America Corporation from 1996 to 2015, serving in various senior finance leadership roles, including Chief Accounting Officer, from 2009 to 2015, Chief Financial Officer of Global Banking, Markets and Wealth Management from 2008 to 2009, Chief Accounting Officer from 2004 to 2008, Chief Financial Officer of Consumer Bank from 2003 to 2004, Chief Financial Officer of Global Corporate Investment Bank from 1999 to 2002.

   

30 RICs consisting of

152 Portfolios

    None

Lena G. Goldberg

1949

   

Trustee

(Since 2019)

   

Senior Lecturer, Harvard Business School, since 2008; Director, Charles Stark Draper Laboratory, Inc. since 2013; FMR LLC/Fidelity Investments (financial services) from 1996 to 2008, serving in various senior roles including Executive Vice President - Strategic Corporate Initiatives and Executive Vice President and General Counsel; Partner, Sullivan & Worcester LLP from 1985 to 1996 and Associate thereof from 1979 to 1985.

   

30 RICs consisting of

152 Portfolios

    None

Henry R. Keizer

1956

   

Trustee

(Since 2019)

   

Director, Park Indemnity Ltd. (captive insurer) since 2010; Director, MUFG Americas Holdings Corporation and MUFG Union Bank, N.A. (financial and bank holding company) from 2014 to 2016; Director, American Institute of Certified Public Accountants from 2009 to 2011; Director, KPMG LLP (audit, tax and advisory services) from 2004 to 2005 and 2010 to 2012; Director, KPMG International in 2012, Deputy Chairman and Chief Operating Officer thereof from 2010 to 2012 and U.S. Vice Chairman of Audit thereof from 2005 to 2010; Global Head of Audit, KPMGI (consortium of KPMG firms) from 2006 to 2010; Director, YMCA of Greater New York from 2006 to 2010.

   

30 RICs consisting of

152 Portfolios

    Hertz Global Holdings (car rental); Sealed Air Corp. (packaging); Montpelier Re Holdings, Ltd. (publicly held property and casualty reinsurance) from 2013 until 2015; WABCO (commercial vehicle safety systems) from 2015 to 2020.

 

 

T R U S T E E   A N D   O F F I C E R   I N F O R M A T I O N

   79

Trustee and Officer Information   (continued)

 

          Independent Trustees(a)          
         

Name

Year of Birth(b)

  

Position(s) Held

(Length of

Service)(c)

   Principal Occupation(s) During Past Five Years   

Number of BlackRock-Advised

Registered Investment Companies

(“RICs”) Consisting of Investment

Portfolios (“Portfolios”) Overseen

   

Public Company

and Other

Investment

Company

Directorships

Held During

Past Five Years

Cynthia A. Montgomery

1952

   

Trustee

(Since 2007)

   

Professor, Harvard Business School since 1989.

   

30 RICs consisting of

152 Portfolios

    Newell Rubbermaid, Inc. (manufacturing) from 1995 to 2016.

Donald C. Opatrny

1952

   

Trustee

(Since 2019)

   

Trustee, Vice Chair, Member of the Executive Committee and Chair of the Investment Committee, Cornell University from 2004 to 2019; President, Trustee and Member of the Investment Committee, The Aldrich Contemporary Art Museum from 2007 to 2014; Member of the Board and Investment Committee, University School from 2007 to 2018; Member of the Investment Committee, Mellon Foundation from 2009 to 2015;Trustee, Artstor (a Mellon Foundation affiliate) from 2010 to 2015; President and Trustee, the Center for the Arts, Jackson Hole from 2011 to 2018; Director, Athena Capital Advisors LLC (investment management firm) since 2013; Trustee and Chair of the Investment Committee, Community Foundation of Jackson Hole since 2014; Member of Affordable Housing Supply Board of Jackson, Wyoming since 2017; Member, Investment Funds Committee, State of Wyoming since 2017; Trustee, Phoenix Art Museum since 2018; Trustee, Arizona Community Foundation and Member of Investment Committee since 2020.

   

30 RICs consisting of

152 Portfolios

    None

Joseph P. Platt

1947

   

Trustee

(Since 2007)

   

General Partner, Thorn Partners, LP (private investments) since 1998; Director, WQED Multi-Media (public broadcasting not-for-profit) since 2001; Chair, Basic Health International (non-profit) since 2015.

   

30 RICs consisting of

152 Portfolios

    Greenlight Capital Re, Ltd. (reinsurance company); Consol Energy Inc.

Kenneth L. Urish

1951

   

Trustee

(Since 2007)

   

Managing Partner, Urish Popeck & Co., LLC (certified public accountants and consultants) since 1976; Past-Chairman of the Professional Ethics Committee of the Pennsylvania Institute of Certified Public Accountants and Committee Member thereof since 2007; Member of External Advisory Board, The Pennsylvania State University Accounting Department since founding in 2001; Principal, UP Strategic Wealth Investment Advisors, LLC since 2013; Trustee, The Holy Family Institute from 2001 to 2010; President and Trustee, Pittsburgh Catholic Publishing Associates from 2003 to 2008; Director, Inter-Tel from 2006 to 2007; Member, Advisory Board, ESG Competent Boards since 2020.

   

30 RICs consisting of

152 Portfolios

    None

Claire A. Walton

1957

   

Trustee

(Since 2016)

   

Chief Operating Officer and Chief Financial Officer of Liberty Square Asset Management, LP from 1998 to 2015; General Partner of Neon Liberty Capital Management, LLC since 2003; Director, Boston Hedge Fund Group from 2009 to 2018; Director, Woodstock Ski Runners since 2013; Director, Massachusetts Council on Economic Education from 2013 to 2015.

   

30 RICs consisting of

152 Portfolios

    None

 

 

80  

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Trustee and Officer Information   (continued)

 

Interested Trustees(a)(d)
         

Name

Year of Birth(b)

  

Position(s) Held

(Length of

Service)(c)

   Principal Occupation(s) During Past Five Years   

Number of BlackRock-Advised

Registered Investment Companies

(“RICs”) Consisting of Investment

Portfolios (“Portfolios”) Overseen

   

Public Company

and Other

Investment

Company

Directorships

Held During Past
Five Years

Robert Fairbairn

1965

   

Trustee

(Since 2018)

   

Vice Chairman of BlackRock, Inc. since 2019; Member of BlackRock’s Global Executive and Global Operating Committees; Co-Chair of BlackRock’s Human Capital Committee; Senior Managing Director of BlackRock, Inc. from 2010 to 2019; oversaw BlackRock’s Strategic Partner Program and Strategic Product Management Group from 2012 to 2019; Member of the Board of Managers of BlackRock Investments, LLC from 2011 to 2018; Global Head of BlackRock’s Retail and iShares® businesses from 2012 to 2016.

   

103 RICs consisting of

251 Portfolios

    None

John M. Perlowski(e)

1964

   

Trustee (Since

2015), President,

and Chief

Executive Officer

(Since 2010)

   

Managing Director of BlackRock, Inc. since 2009; Head of BlackRock Global Accounting and Product Services since 2009; Advisory Director of Family Resource Network (charitable foundation) since 2009.

   

105 RICs consisting of

253 Portfolios

    None

 

(a) 

The address of each Trustee is c/o BlackRock, Inc., 55 East 52nd Street, New York, New York 10055.

 

(b) 

Independent Trustees serve until their resignation, retirement, removal or death, or until December 31 of the year in which they turn 75. The Board may determine to extend the terms of Independent Trustees on a case-by-case basis, as appropriate.

 

(c) 

Following the combination of Merrill Lynch Investment Managers, L.P. (“MLIM”) and BlackRock, Inc. in September 2006, the various legacy MLIM and legacy BlackRock fund boards were realigned and consolidated into three new fund boards in 2007. Furthermore, effective January 1, 2019, three BlackRock Fund Complexes were realigned and consolidated into two BlackRock Fund Complexes. As a result, although the chart shows the year that each Independent Trustee joined the Board, certain Independent Trustees first became members of the boards of other BlackRock-advised Funds, legacy MLIM funds or legacy BlackRock funds as follows: Bruce R. Bond, 2005; Cynthia A. Montgomery, 1994; Joseph P. Platt, 1999; Kenneth L. Urish, 1999; Lena G. Goldberg, 2016; Henry R. Keizer, 2016; Donald C. Opatrny, 2015.

 

(d) 

Mr. Fairbairn and Mr. Perlowski are both “interested persons,” as defined in the 1940 Act, of the Trust based on their positions with BlackRock, Inc. and its affiliates. Mr. Fairbairn and Mr. Perlowski are also board members of the BlackRock Fixed-Income Complex.

 

(e) 

Mr. Perlowski is also a trustee of the BlackRock Credit Strategies Fund and BlackRock Private Investments Fund.

 

 

T R U S T E E   A N D   O F F I C E R   I N F O R M A T I O N

   81

Trustee and Officer Information   (continued)

 

Officers Who Are Not Trustees(a)
     

Name

Year of Birth(b)

  

Position(s) Held

(Length of

Service)

    Principal Occupation(s) During Past Five Years

Thomas Callahan

1968

   

Vice President

(Since 2016)

   

Managing Director of BlackRock, Inc. since 2013; Member of the Board of Managers of BlackRock Investments, LLC (principal underwriter) since 2019 and Managing Director thereof since 2017; Head of BlackRock’s Global Cash Management Business since 2016; Co-Head of the Global Cash Management Business from 2014 to 2016; Deputy Head of the Global Cash Management Business from 2013 to 2014; Member of the Cash Management Group Executive Committee since 2013; Chief Executive Officer of NYSE Liffe U.S. from 2008 to 2013.

Jennifer McGovern

1977

  

Vice President

(Since 2014)

   

Managing Director of BlackRock, Inc. since 2016; Director of BlackRock, Inc. from 2011 to 2015; Head of Americas Product Development and Governance for BlackRock’s Global Product Group since 2019; Head of Product Structure and Oversight for BlackRock’s U.S. Wealth Advisory Group from 2013 to 2019.

Trent Walker

1974

   

Chief Financial Officer

(Since 2021)

   

Managing Director of BlackRock, Inc. since September 2019; Executive Vice President of PIMCO from 2016 to 2019; Senior Vice President of PIMCO from 2008 to 2015; Treasurer from 2013 to 2019 and Assistant Treasurer from 2007 to 2017 of PIMCO Funds, PIMCO Variable Insurance Trust, PIMCO ETF Trust, PIMCO Equity Series, PIMCO Equity Series VIT, PIMCO Managed Accounts Trust, 2 PIMCO-sponsored interval funds and 21 PIMCO-sponsored closed-end funds.

Jay M. Fife

1970

   

Treasurer

(Since 2007)

   

Managing Director of BlackRock, Inc. since 2007.

Charles Park

1967

   

Chief Compliance Officer

(Since 2014)

   

Anti-Money Laundering Compliance Officer for certain BlackRock-advised Funds from 2014 to 2015; Chief Compliance Officer of BlackRock Advisors, LLC and the BlackRock-advised Funds in the BlackRock Multi-Asset Complex and the BlackRock Fixed-Income Complex since 2014; Principal of and Chief Compliance Officer for iShares® Delaware Trust Sponsor LLC since 2012 and BlackRock Fund Advisors (“BFA”) since 2006; Chief Compliance Officer for the BFA-advised iShares® exchange traded funds since 2006; Chief Compliance Officer for BlackRock Asset Management International Inc. since 2012.

Lisa Belle

1968

   

Anti-Money Laundering Compliance Officer

(Since 2019)

   

Managing Director of BlackRock, Inc. since 2019; Global Financial Crime Head of Asset and Wealth Management of JP Morgan from 2013 to 2019; Managing Director of RBS Securities from 2012 to 2013; Head of Financial Crimes for Barclays Wealth Americas from 2010 to 2012.

Janey Ahn

1975

   

Secretary

(Since 2019)

   

Managing Director of BlackRock, Inc. since 2018; Director of BlackRock, Inc. from 2009 to 2017.

 

(a) 

The address of each Officer is c/o BlackRock, Inc., 55 East 52nd Street, New York, New York 10055.

 

(b) 

Officers of the Trust serve at the pleasure of the Board.

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

 

Neal J. Andrews retired as the Chief Financial Officer effective December 31, 2020, and Trent Walker was elected as the Chief Financial Officer effective January 1, 2021.

 

 

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Additional Information  

 

Regulation Regarding Derivatives

On October 28, 2020, the Securities and Exchange Commission (the “SEC”) adopted new regulations governing the use of derivatives by registered investment companies (“Rule 18f-4”). The Funds will be required to implement and comply with Rule 18f-4 by August 19, 2022. Once implemented, Rule 18f-4 will impose limits on the amount of derivatives a fund can enter into, eliminate the asset segregation framework currently used by funds to comply with Section 18 of the 1940 Act, treat derivatives as senior securities and require funds whose use of derivatives is more than a limited specified exposure amount to establish and maintain a comprehensive derivatives risk management program and appoint a derivatives risk manager.

General Information

Quarterly performance, semi-annual and annual reports, current net asset value and other information regarding the Funds may be found on BlackRock’s website, which can be accessed at blackrock.com. Any reference to BlackRock’s website in this report is intended to allow investors public access to information regarding the Funds and does not, and is not intended to, incorporate BlackRock’s website in this report.

Householding

The Funds will mail only one copy of shareholder documents, including prospectuses, annual and semi-annual reports, Rule 30e-3 notices and proxy statements, to shareholders with multiple accounts at the same address. This practice is commonly called “householding” and is intended to reduce expenses and eliminate duplicate mailings of shareholder documents. Mailings of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please call the Funds at (800) 441-7762.

Availability of Quarterly Schedule of Investments

The Funds file their complete schedules of portfolio holdings with the SEC for the first and third quarters of each fiscal year as an exhibit to their reports on Form N-PORT. The Funds’ Forms N-PORT are available on the SEC’s website at sec.gov. Additionally, each Fund makes its portfolio holdings for the first and third quarters of each fiscal year available at blackrock.com/fundreports.

Availability of Proxy Voting Policies, Procedures and Voting Records

A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities and information about how the Funds voted proxies relating to securities held in the Funds’ portfolios during the most recent 12-month period ended June 30 is available without charge, upon request (1) by calling (800) 441-7762; (2) on the BlackRock website at blackrock.com; and (3) on the SEC’s website at sec.gov.

BlackRock’s Mutual Fund Family

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

Shareholder Privileges

Account Information

Call us at (800) 441-7762 from 8:00 AM to 6:00 PM ET on any business day to get information about your account balances, recent transactions and share prices. You can also visit blackrock.com for more 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 funds.

Systematic Withdrawal Plans

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

Retirement Plans

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

 

 

A D D I T I O N A L   I N F O R M A T I O N

   83

Additional Information  (continued)

 

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.

Fund and Service Providers

 

Investment Adviser and Administrator

BlackRock Advisors, LLC

Wilmington, DE 19809

Accounting Agent and Transfer Agent

BNY Mellon Investment Servicing (US) Inc.

Wilmington, DE 19809

Custodian

The Bank of New York Mellon

New York, NY 10286

Independent Registered Public Accounting Firm

Deloitte & Touche LLP

Boston, MA 02116

Distributor

BlackRock Investments, LLC

New York, NY 10022

Legal Counsel

Sidley Austin LLP

New York, NY 10019

Address of the Trust

100 Bellevue Parkway

Wilmington, DE 19809

 

 

 

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Glossary of Terms Used in this Report

 

Portfolio Abbreviation
CVR    Contingent Value Rights
REIT    Real Estate Investment Trust

 

 

G L O S S A R Y   O F   T E R M S   U S E D   I N   T H I S   R E P O R T

   85

 

 

 

 

 

 

Want to know more?

blackrock.com | 800-441-7762

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

SC2-5/21-AR

 

 

LOGO

   LOGO

 

LOGO

  MAY 31, 2021

 

  

2021 Annual Report

 

 

BlackRock FundsSM

 

🌑  

BlackRock Energy Opportunities Fund

 

🌑  

BlackRock High Equity Income Fund

 

🌑  

BlackRock International Dividend Fund

 

 

 

 

 

 

 

Not FDIC Insured • May Lose Value • No Bank Guarantee    

 

The Markets in Review

Dear Shareholder,

The 12-month reporting period as of May 31, 2021 was a remarkable period of adaptation and recovery, as the global economy dealt with the implications of the coronavirus (or “COVID-19”) pandemic. The United States, along with most of the world, began the reporting period in a severe recession, prompted by pandemic-related restrictions that disrupted many aspects of daily life. However, easing restrictions and robust government intervention led to a strong rebound, and the economy grew at a significant pace for most of the reporting period, recovering much of the output lost at the beginning of the pandemic.

Equity prices rose with the broader economy, as investors became increasingly optimistic about the economic outlook. Stocks rose through the summer of 2020, fed by strong fiscal and monetary support and positive economic indicators. The implementation of mass vaccination campaigns and passage of an additional $1.9 trillion of fiscal stimulus further boosted stocks, and many equity indices neared or surpassed all-time highs late in the reporting period. In the United States, both large- and small-capitalization stocks posted a significant advance. International equities also gained, as both developed countries and emerging markets rebounded substantially.

The 10-year U.S. Treasury yield (which is inversely related to bond prices) had fallen sharply prior to the beginning of the reporting period, which meant bonds were priced for extreme risk avoidance and economic disruption. Despite expectations of doom and gloom, the economy expanded rapidly, stoking inflation concerns late in the reporting period, which led to higher yields and a negative overall return for most U.S. Treasuries. In the corporate bond market, support from the U.S. Federal Reserve (the “Fed”) assuaged credit concerns and led to substantial returns for high-yield corporate bonds, although investment-grade corporates declined slightly.

The Fed remained committed to accommodative monetary policy by maintaining near zero interest rates and by announcing that inflation could exceed its 2% target for a sustained period without triggering a rate increase. To stabilize credit markets, the Fed also continued purchasing significant quantities of bonds, as did other influential central banks around the world, including the European Central Bank and the Bank of Japan.

Looking ahead, while coronavirus-related disruptions have clearly hindered worldwide economic growth, we believe that the global expansion will continue to accelerate as vaccination efforts ramp up and pent-up consumer demand leads to higher spending. While we expect inflation to increase somewhat as the expansion continues, we believe the recent uptick owes more to temporary supply disruptions than a lasting change in fundamentals. The change in Fed policy also means that moderate inflation is less likely to be followed by interest rate hikes that could threaten the economic expansion.

Overall, we favor a positive stance toward risk, with an overweight in equities. We see U.S. and Asian equities outside of Japan benefiting from structural growth trends in technology, while emerging markets should be particularly helped by a vaccine-led economic expansion and more stable U.S. trade policy. While we are underweight long-term on credit, global high-yield and Asian bonds present attractive opportunities, as do emerging market bonds denominated in local currencies. We believe that international diversification and a focus on sustainability can help provide portfolio resilience, and the disruption created by the coronavirus appears to be accelerating the shift toward sustainable investments.

In this environment, our view is that investors need to think globally, extend their scope across a broad array of asset classes, and be nimble as market conditions change. We encourage you to talk with your financial advisor and visit blackrock.com for further insight about investing in today’s markets.

Sincerely,

 

LOGO

Rob Kapito

President, BlackRock Advisors, LLC

LOGO

Rob Kapito

President, BlackRock Advisors, LLC

 

Total Returns as of May 31, 2021
     
     6-Month    12-Month  
   

U.S. large cap equities
(S&P 500® Index)

   16.95%   40.32%
   

U.S. small cap equities
(Russell 2000® Index)

   25.28     64.56  
   

International equities (MSCI Europe, Australasia, Far East Index)

   15.19     38.41  
   

Emerging market equities (MSCI Emerging Markets Index)

   15.15     51.00  
   

3-month Treasury bills
(ICE BofA 3-Month U.S. Treasury Bill Index)

   0.04   0.11
   

U.S. Treasury securities
(ICE BofA 10-Year U.S. Treasury Index)

   (6.07)   (7.30)
   

U.S. investment grade bonds (Bloomberg Barclays U.S. Aggregate Bond Index)

   (2.16)   (0.40)
   

Tax-exempt municipal bonds (S&P Municipal Bond Index)

   1.54   4.70
   

U.S. high yield bonds (Bloomberg Barclays U.S. Corporate High Yield 2% Issuer Capped Index)

   4.18   14.90  

Past performance is not an indication of future results. Index performance is shown for illustrative purposes only. You cannot invest directly in an index.

 

 

 

2  

T H I S   P A G E   I S   N O T   P A R T   O F   Y O U R   F U N D   R E P O R T

Table of Contents

 

      Page

The Markets in Review

   2

Annual Report:

   

Fund Summary

    4

About Fund Performance

    13

Disclosure of Expenses

    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

    30

Notes to Financial Statements

    44

Report of Independent Registered Public Accounting Firm

    57

Important Tax Information

    58

Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements

    59

Trustee and Officer Information

    63

Additional Information

    67

Glossary of Terms Used in this Report

    69

 

 

 

LOGO

 

 

  3

Fund Summary as of May 31, 2021      BlackRock Energy Opportunities Fund

 

Investment Objective

BlackRock Energy Opportunities Fund’s (the “Fund”) investment objective is to provide long-term growth of capital.

Portfolio Management Commentary

How did the Fund perform?

For the 12-month period ended May 31, 2021, the Fund underperformed its benchmark, the MSCI World Energy Index.

What factors influenced performance?

Energy stocks delivered strong returns in the annual period. After falling sharply in early 2020 due to concerns about the potential impact of COVID-19 on energy demand, oil prices and the related equities continued to trend lower through the end of October 2020. The outlook changed considerably in early November 2020, however, when the release of a vaccine for the coronavirus provided a path to a re-opening of the global economy. Energy stocks responded in kind, staging an impressive rally that allowed the MSCI World Energy Index to recapture its earlier losses and finish the period with a gain.

While the Fund delivered a robust absolute return, it did not keep pace with the benchmark. The Fund’s overweight position in the exploration and production (“E&P”) sub-sector contributed to relative performance, as did stock selection within the refining and marketing category. On the other hand, an underweight in the integrated sub-sector detracted from Fund performance.

Among individual holdings, an out-of-benchmark position in Petroleo Brasileiro SA (Petrobras) was the largest detractor from relative performance. Shares of the Brazilian state-owned integrated oil producer declined following an unexpected change in its chief executive officer, which the market saw as the first step in deeper government influence in its longer-term strategy. CNOOC Ltd. also lagged after the United States cited a number of companies for their links to the Chinese military. An underweight position in Occidental Petroleum Corp. detracted from relative performance as well.

An underweight in Exxon Mobil Corp., a large index component that did not keep pace with its sector peers, was the largest contributor to relative performance. Positions in E&P stocks that benefited from the oil price recovery, including Hess Corp. and Pioneer Natural Resources Co., also contributed positively.

Describe recent portfolio activity.

Early in the period, the investment adviser sought to capitalize on the energy sector’s weak performance by purchasing what it believed were higher-quality, financially strong companies trading near historically low valuations. It primarily added to existing positions in large-cap international companies that it saw as being in the best position to take advantage of an eventual recovery.

As the reporting period progressed, the investment adviser added E&P stocks that were delivering operational results, which were in line with, or ahead of, expectations. It also increased the Fund’s weighting in refining stocks to capitalize on an anticipated boost in gasoline demand stemming from the re-opening. The investment adviser funded these new purchases by reducing the portfolio’s holdings in the more defensive distribution industry.

Describe portfolio positioning at period end.

The Fund was overweight in the exploration and production industry, and it was underweight in the integrated, distribution, oil services and refining/marketing industries. The investment adviser maintained a bias toward higher-quality oil producers that it believes will gain the largest benefit from continued strength in oil prices. In contrast, the investment adviser tilted away from the oil services sub-sector, where many companies are likely to continue to face headwinds from industry overcapacity.

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.

 

 

4  

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Fund Summary as of May 31, 2021  (continued)    BlackRock Energy Opportunities Fund

 

TOTAL RETURN BASED ON A $10,000 INVESTMENT

 

LOGO

 

  (a) 

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

 

 

  (b) 

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

 

 

  (c) 

The MSCI World Energy Index is designed to capture the large and mid-cap segments across developed markets countries.

 

Performance Summary for the Period Ended May 31, 2021

 

                Average Annual Total Returns(a)  
     

 

 

  
                1 Year           5 Years           10 Years  
     

 

 

      

 

 

      

 

 

  
    

6-Month

Total

Returns

           

Without

Sales

Charge

    

With

Sales

Charge

           

Without

Sales

Charge

    

With

Sales

Charge

           

Without

Sales

Charge

    

With

Sales

Charge

  

Institutional

     30.70 %        33.50 %      N/A         (0.97 )%      N/A         (5.11 )%      N/A  

Service

     30.30         32.90       N/A         (1.38 )      N/A         (5.49 )      N/A  

Investor A

     30.35         33.00       26.02 %        (1.38 )      (2.44 )%        (5.51 )      (6.01 )% 

Investor C

     29.78         31.89       30.89         (2.10 )      (2.10 )        (6.05 )      (6.05 ) 

MSCI World Energy Index

     33.27               35.43       N/A               (0.31 )      N/A               (2.06 )      N/A  

 

  (a) 

Assuming maximum sales charges, if any. Average annual total returns with and without sales charges reflect reductions for distribution and service fees. See “About Fund Performance” 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 an indication of future results.

Performance results may include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles.

Expense Example

 

    Actual           Hypothetical  
 

 

 

      

 

 

    
     

 Beginning

Account Value

(12/01/20)

 

 

 

    

 Ending

Account Value

(05/31/21)

 

 

 

    

 Expenses

Paid During

the Period

  

 

(a) 

            


 Beginning

Account Value
(12/01/20)

 

 
 

    

 Ending

Account Value

(05/31/21)

 

 

 

    

 Expenses

Paid During

the Period

  

 

(a) 

    

 Annualized

Expense

Ratio

 

 

 

Institutional

     $ 1,000.00       $ 1,307.00       $  5.23         $ 1,000.00       $ 1,020.39       $  4.58       0.91 % 

Service

     1,000.00       1,303.00       7.58         1,000.00       1,018.35       6.64       1.32  

Investor A

     1,000.00       1,303.50       7.58         1,000.00       1,018.35       6.64       1.32  

Investor C

     1,000.00       1,297.80       11.69               1,000.00       1,014.76       10.25       2.04  

 

  (a) 

For each class of the Fund, expenses are equal to the annualized expense ratio for the class, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period shown).

 

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

 

 

F U N D   S U M M A R Y

   5

Fund Summary as of May 31, 2021  (continued)    BlackRock Energy Opportunities Fund

 

Portfolio Information

 

TEN LARGEST HOLDINGS

 

   
Security(a)  

Percent of

Net Assets

  

Chevron Corp.

     13 % 

Royal Dutch Shell PLC, B Shares

     10  

TOTAL SE

     8  

Exxon Mobil Corp.

     7  

ConocoPhillips

     7  

Canadian Natural Resources Ltd.

     4  

Suncor Energy, Inc.

     4  

Pioneer Natural Resources Co.

     4  

Hess Corp.

     4  

Valero Energy Corp.

     4  

INDUSTRY ALLOCATION

 

   
Industry(b)  

Percent of

Net Assets

  

Oil, Gas & Consumable Fuels

     96 % 

Energy Equipment & Services

     2  

Short-Term Securities

     1  

Other Assets

     1  
 

 

(a) 

Excludes short-term securities.

(b) 

For Fund compliance purposes, the Fund’s industry classifications refer to one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by the investment adviser. These definitions may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

 

 

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Fund Summary as of May 31, 2021    BlackRock High Equity Income Fund

 

Investment Objective

BlackRock High Equity Income Fund’s (the “Fund”) investment objective is to seek high current income while maintaining prospects for capital appreciation.

Portfolio Management Commentary

How did the Fund perform?

For the 12-month period ended May 31, 2021, the Fund underperformed its benchmark, the Russell 1000® Value Index.

What factors influenced performance?

The largest detractor from the Fund’s relative performance came from investment decisions in the communication services sector. Notably, an overweight allocation to the diversified telecommunication (“telecom”) services industry hurt relative returns, as did an underweight allocation to interactive media & services that resulted from a lack of dividend-paying stocks in the industry. Stock selection in the wireless telecom services industry also weighed on results in the sector. Elsewhere, among utilities, stock selection in the electric utilities industry held back relative performance. Other meaningful detractors during the period included stock selection and an overweight allocation to health care stocks and an underweight allocation to industrials. Lastly, the use of equity-linked notes enhanced portfolio yield but detracted from relative performance during the period.

Conversely, the largest contribution to the Fund’s performance at the sector level came from investment decisions in the information technology sector. In particular, strong stock selection in the software industry and a combination of stock selection and an underweight allocation to semiconductors & semiconductor equipment companies boosted relative returns. Within the consumer discretionary sector, an overweight allocation to automobiles and a combination of stock selection and an underweight allocation to household durables proved beneficial. Other modest contributors included the Fund’s underweight allocation to real estate and overweight allocation to the energy sector.

Describe recent portfolio activity.

The Fund increased its exposure to the financials and industrials sectors during the period. Conversely, the Fund reduced its exposure to the energy and communication services sectors.

Describe portfolio positioning at period end.

The Fund ended the period with its largest absolute allocations in the financials, health care and consumer staples sectors. Relative to the benchmark, the Fund’s largest overweight positions were in financials, health care and consumer staples, while the largest relative underweights were in the industrials, materials and real estate sectors.

The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results.

 

 

F U N D   S U M M A R Y

   7

Fund Summary as of May 31, 2021  (continued)    BlackRock High Equity Income Fund

 

TOTAL RETURN BASED ON A $10,000 INVESTMENT

 

LOGO

 

  (a) 

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

 
  (b) 

Under normal circumstances, the Fund will invest at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in equity securities and equity-related instruments, including equity-linked notes. The Fund may invest in securities of companies with any market capitalization, but will generally focus on large cap securities. The Fund’s total returns prior to June 12, 2017 are the returns of the Fund when it followed different investment strategies under the name BlackRock U.S. Opportunities Portfolio.

 
  (c) 

Russell 1000® Value Index measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000® companies with lower price-to-book ratios and lower expected growth values.

 

Performance Summary for the Period Ended May 31, 2021

 

          Average Annual Total Returns(a)(b)  
   

 

 

  
          1 Year           5 Years           10 Years  
   

 

 

      

 

 

      

 

 

  
    

6-Month

Total

Returns

    

Without

Sales

Charge

    

With

Sales

Charge

             

Without

Sales

Charge

    

With

Sales

Charge

             

Without

Sales

Charge

    

With

Sales

Charge

  

Institutional

     20.62 %      40.81 %      N/A         11.26 %      N/A         9.50 %      N/A  

Service

     20.52       40.46       N/A         10.97       N/A         9.13       N/A  

Investor A

     20.45       40.44       33.07 %        10.97       9.78 %        9.12       8.53 % 

Investor C

     20.02       39.41       38.41         10.15       10.15         8.47       8.47  

Class K

     20.70       40.93       N/A         11.28       N/A         9.51       N/A  

Russell 1000® Value Index

     22.94       44.38       N/A               12.33       N/A               11.51       N/A  

 

  (a) 

Assuming maximum sales charges, if any. Average annual total returns with and without sales charges reflect reductions for distribution and service fees. See “About Fund Performance” for a detailed description of share classes, including any related sales charges and fees, and how performance was calculated for certain share classes.

 
  (b) 

Under normal circumstances, the Fund will invest at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in equity securities and equity-related instruments, including equity-linked notes. The Fund may invest in securities of companies with any market capitalization, but will generally focus on large cap securities. The Fund’s total returns prior to June 12, 2017, are the returns of the Fund when it followed different investment strategies under the name BlackRock U.S. Opportunities Portfolio.

 

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

Past performance is not an indication of future results.

Performance results may include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles.

 

 

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Fund Summary as of May 31, 2021  (continued)    BlackRock High Equity Income Fund

 

Expense Example

 

    Actual           Hypothetical(a)                 
 

 

 

    

 

 

         
     

 Beginning
Account Value
(12/01/20) 		 
 
 		     

 Ending
Account Value
(05/31/21) 		 
 
 		     

 Expenses

Paid During

the Period

  

 

(b) 

            

 Beginning
Account Value
(12/01/20) 		 
 
 		     

 Ending
Account Value
(05/31/21) 		 
 
 		     

Expenses
Paid During

the Period

  
 

(b) 

               

 Annualized

Expense

Ratio

 

 

 

Institutional

     $  1,000.00        $  1,206.20        $4.68         $  1,000.00        $  1,020.71        $  4.29            0.85 % 

Service

     1,000.00        1,205.20        6.08         1,000.00        1,019.45        5.57            1.10  

Investor A

     1,000.00        1,204.50        6.08         1,000.00        1,019.45        5.57            1.10  

Investor C

     1,000.00        1,200.20          10.20         1,000.00        1,015.71        9.35            1.85  
Class K     1,000.00        1,207.00        4.43               1,000.00        1,020.94        4.05                  0.80  

 

  (a) 

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

 
  (b) 

For each class of the Fund, expenses are equal to the annualized expense ratio for the class, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period shown).

 

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

Portfolio Information

 

TEN LARGEST HOLDINGS

 

   
Security(a)  

Percent of

Net Assets

  

BAE Systems PLC

     3 % 

Wells Fargo & Co.

     2  

Cisco Systems, Inc.

     2  

Apollo Global Management, Inc.

     2  

General Motors Co.

     2  

AT&T Inc.

     2  

Raytheon Technologies Corp.

     2  

Vodafone Group PLC

     2  

BP PLC

     2  

British American Tobacco PLC

     2  

SECTOR ALLOCATION

 

   
Sector(b)  

Percent of

Net Assets

  

Financials

     29 % 

Health Care

     18  

Consumer Staples

     11  

Information Technology

     9  

Communication Services

     7  

Utilities

     7  

Industrials

     7  

Energy

     7  

Consumer Discretionary

     5  

Real Estate

     1  

Materials

     1  

Short-Term Securities

     2  

Liabilities in Excess of Other Assets

     (4 ) 
 

 

(a) 

Excludes short-term securities.

(b) 

For Fund compliance purposes, the Fund’s sector classifications refer to one or more of the sector sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by the investment adviser. These definitions may not apply for purposes of this report, which may combine such sector sub-classifications for reporting ease.

 

 

F U N D   S U M M A R Y

   9

Fund Summary as of May 31, 2021    BlackRock International Dividend Fund

 

Investment Objective

BlackRock International Dividend Fund’s (the “Fund”) investment objective is to seek long-term total return and current income.

Portfolio Management Commentary

How did the Fund perform?

For the 12-month period ended May 31, 2021, the Fund underperformed its benchmark, the MSCI All Country World Index (“ACWI”) ex USA.

What factors influenced performance?

During the period, the Fund’s overweight exposures to the consumer staples and health care sectors were the largest detractors from returns as investors favored more cyclical sectors. An underweight to materials sector also detracted. At the individual security level, overweight positions to U.K. cigarette and tobacco producer British American Tobacco PLC, French pharmaceutical developer Sanofi and U.K. household products manufacturer Reckitt Benckiser Group PLC detracted most from relative performance as these and other defensive stocks lagged during the second half of the period in part because of positive vaccine news. Shares of British American Tobacco sold off during the third quarter of 2020 as U.K.-listed dividend stocks were out of favor. A merger announcement weighed on Sanofi’s share price. Lastly, investors have become increasingly cautious regarding the outlook for Reckitt Benckiser as the company’s hygiene business has continued to deliver the majority of its sales growth, while its health and nutrition divisions reported falling sales over multiple quarters.

Conversely, the largest contribution to relative performance came from an underweight to the utilities sector. Security selection within financials and a lack of exposure to energy also added to relative performance. The largest individual contributors to relative returns came from the Fund’s positions in Spanish bank Bankinter SA, Taiwan Semiconductor Manufacturing Company Ltd. (TSMC) and German package delivery firm Deutsche Post AG. Shares of Bankinter benefited from investor rotation among names positioned to benefit from the yield curve steepening that occurred during the first quarter of 2021. TSMC performed well as the company reported 25% net revenue growth based on strong demand for its 5-nanometer chips. Finally, Deutsche Post reported strong financial results for the third quarter of 2020, with revenue growth accelerating meaningfully.

Describe recent portfolio activity.

The Fund’s investment adviser was especially active in adjusting the portfolio during the second half of the period due to COVID-19 impacts. An overweight to financials was increased as the Fund added to a number of existing positions across bank and insurance stocks. In addition, the Fund’s overweight to information technology (“IT”) was increased through the initiation of positions in Spanish travel transaction processor Amadeus IT Group SA, U.S. credit card company Visa, Inc. and TSMC. The Fund also increased its position sizes within IT, most notably across the IT services sub-sector. In contrast, exposure to health care was reduced across pharmaceuticals and health care providers & services stocks. Lastly, exposure to communication services was decreased by exiting Rogers Communications, Inc. and Tele2 AB, and trimming the Fund’s position in TELUS Corp. (Canada).

Describe portfolio positioning at period end.

At period end, the Fund was overweight in the health care and consumer staples sectors. The Fund had no exposure to energy or real estate, and limited exposure to utilities stocks. Regionally, the Fund was overweight the United Kingdom, France and the United States.

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.

 

 

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Fund Summary as of May 31, 2021  (continued)    BlackRock International Dividend Fund

 

TOTAL RETURN BASED ON A $10,000 INVESTMENT

 

LOGO

 

  (a) 

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

 
  (b) 

Under normal circumstances, the Fund will invest at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in dividend-paying equity securities issued by foreign companies of any market capitalization and derivatives that have similar economic characteristics to such securities. The Fund’s total returns prior to June 12, 2017 are the returns of the Fund when it followed different investment strategies under the name BlackRock International Opportunities Portfolio.

 
  (c) 

The MSCI ACWI ex USA. is a free float-adjusted market capitalization weighted index designed to measure the combined equity market performance of developed and emerging market countries, excluding the United States.

 

Performance Summary for the Period Ended May 31, 2021

 

          Average Annual Total Returns(a)(b)  
   

 

 

  
          1 Year     5 Years     10 Years  
   

 

 

    

 

 

    

 

 

  
    

6-Month

Total

Returns

    

Without

Sales

Charge

    

With

Sales

Charge

    

Without

Sales

Charge

    

With

Sales

Charge

    

Without

Sales

Charge

    

With

Sales

Charge

  

Institutional

     13.96 %      30.98 %      N/A       9.09 %      N/A       4.79 %      N/A  

Service

     13.77       30.64       N/A       8.80       N/A       4.45       N/A  

Investor A

     13.81       30.67       23.80 %      8.80       7.63 %      4.49       3.93 % 

Investor C

     13.39       29.70       28.70       7.99       7.99       3.87       3.87  

Class K

     13.95       31.04       N/A       9.12       N/A       4.81       N/A  

MSCI All Country World Index ex USA

     15.81       42.78       N/A       10.88       N/A       5.36       N/A  

 

  (a) 

Assuming maximum sales charges, if any. Average annual total returns with and without sales charges reflect reductions for distribution and service fees. See “About Fund Performance” for a detailed description of share classes, including any related sales charges and fees, and how performance was calculated for certain share classes.

 
  (b) 

Under normal circumstances, the Fund will invest at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in dividend-paying equity securities issued by foreign companies of any market capitalization and derivatives that have similar economic characteristics to such securities. The Fund’s total returns prior to June 12, 2017 are the returns of the Fund when it followed different investment strategies under the name BlackRock International Opportunities Portfolio.

 

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

Past performance is not an indication of future results.

Performance results may include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles.

 

 

F U N D   S U M M A R Y

   11

Fund Summary as of May 31, 2021  (continued)    BlackRock International Dividend Fund

 

Expense Example

 

    Actual          Hypothetical(a)         
 

 

 

       

 

 

     
     

 Beginning

Account Value

(12/01/20)

 

 

 

     

 Ending

Account Value

(05/31/21)

 

 

 

     

 Expenses

Paid During

the Period

  

 

(b) 

         

 Beginning

Account Value

(12/01/20)

 

 

 

     

 Ending

Account Value

(05/31/21)

 

 

 

     

 Expenses

Paid During

the Period

  

 

(b) 

     

 Annualized

Expense

Ratio

 

 

 

Institutional

     $  1,000.00        $  1,139.60        $  4.48             $  1,000.00        $  1,020.74        $  4.23        0.84 % 

Service

     1,000.00        1,137.70        5.81          1,000.00        1,019.50        5.49        1.09  

Investor A

     1,000.00        1,138.10        5.81          1,000.00        1,019.50        5.49        1.09  

Investor C

     1,000.00        1,133.90        9.79          1,000.00        1,015.76        9.25        1.84  

Class K

     1,000.00        1,139.50        4.21            1,000.00        1,020.99        3.98        0.79  

 

  (a) 

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

 
  (b) 

For each class of the Fund, expenses are equal to the annualized expense ratio for the class, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period shown).

 

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

Portfolio Information

 

TEN LARGEST HOLDINGS

 

   
Security(a)  

Percent of   

Net Assets   

Sanofi

   5%

Reckitt Benckiser Group PLC

   5   

Diageo PLC

   5   

Taiwan Semiconductor Manufacturing Co. Ltd.

   5   

Ferguson PLC

   4   

TELUS Corp.

   4   

Amadeus IT Group SA

   4   

RELX PLC

   4   

Prudential PLC

   4   

Unilever PLC

   4   

GEOGRAPHIC ALLOCATION

 

   
Country  

Percent of   

Net Assets   

United Kingdom

   29%

France

   17   

United States

   14   

China

   8   

Spain

   6   

Taiwan

   5   

Canada

   4   

Singapore

   4   

India

   4   

Denmark

   3   

Netherlands

   3   

Australia

   2   

Mexico

   1   
 
(a)

Excludes short-term securities.

 

 

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About Fund Performance

 

Institutional and Class K Shares (Class K Shares are available only for BlackRock High Equity Income Fund and BlackRock International Dividend Fund) are not subject to any sales charge. These shares bear no ongoing distribution or service fees and are available only to certain eligible investors. BlackRock High Equity Income Fund’s Class K Shares performance shown prior to the Class K Shares inception date of April 21, 2020 is that of Institutional Shares. BlackRock International Dividend Fund’s Class K Shares performance shown prior to the Class K Shares inception date of January 25, 2018 is that of Institutional Shares. The performance of each Fund’s Class K Shares would be substantially similar to Institutional Shares, because the share classes of a Fund invest in the same portfolio of securities and performance would only differ to the extent that Class K Shares and Institutional Shares have different expenses. The actual returns of Class K Shares would have been higher than those of Institutional Shares because Class K Shares have lower expenses than Institutional Shares.

Service Shares are not subject to any sales charge. These shares are subject to a service fee of 0.25% per year (but no distribution fee) and are only available to certain eligible investors. Effective on or about the close of business on July 6, 2021, BlackRock Energy Opportunities Fund and BlackRock International Dividend Fund’s Service Shares will be converted into Investor A Shares. Effective on or about the close of business on August 18, 2021, BlackRock High Equity Income Fund’s Service Shares will be converted into Investor A Shares.

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

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

Past performance is not an indication of future results. Financial markets have experienced extreme volatility and trading in many instruments has been disrupted. These circumstances may continue for an extended period of time, and may continue to affect adversely the value and liquidity of the fund’s investments. As a result, current performance may be lower or higher than the performance data quoted. Refer to blackrock.com to obtain performance data current to the most recent month-end. Performance results do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Figures shown in the performance tables on the previous pages assume reinvestment of all distributions, if any, at net asset value (“NAV”) on the ex-dividend date or payable date, as applicable. Investment return and principal value of shares will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Distributions paid to each class of shares will vary because of the different levels of service, distribution and transfer agency fees applicable to each class, which are deducted from the income available to be paid to shareholders.

BlackRock Advisors, LLC (the “Manager”), each Fund’s investment adviser, has contractually and/or voluntarily agreed to waive and/or reimburse a portion of each Fund’s expenses. Without such waivers and/or reimbursements, each Fund’s performance would have been lower. With respect to each Fund’s voluntary waivers, if any, the Manager is under no obligation to waive and/or reimburse or to continue waiving and/or reimbursing its fees and such voluntary waivers may be reduced or discontinued at any time. With respect to each Fund’s contractual waivers, if any, the Manager is under no obligation to continue waiving and/or reimbursing its fees after the applicable termination date of such agreement. See the Notes of the Notes to Financial Statements for additional information on waivers and/or reimbursements.

Disclosure of Expenses

Shareholders of each Fund may incur the following charges: (a) transactional expenses, such as sales charges; and (b) operating expenses, including investment advisory fees, administration fees, service and distribution fees, including 12b-1 fees, acquired fund fees and expenses and other fund expenses. The expense examples shown (which are based on a hypothetical investment of $1,000 invested on December 1, 2020 and held through May 31, 2021) are intended to assist shareholders both in calculating expenses based on an investment in each Fund and in comparing these expenses with similar costs of investing in other mutual funds.

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

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

The expenses shown in the expense examples are intended to highlight shareholders’ ongoing costs only and do not reflect transactional expenses, such as sales charges, if any. Therefore, the hypothetical examples are useful in comparing ongoing expenses only, and will not help shareholders determine the relative total expenses of owning different funds. If these transactional expenses were included, shareholder expenses would have been higher.

 

 

A B O U T   F U N D   P E R F O R M A N C E

   13

Schedule of Investments  

May 31, 2021

   

BlackRock Energy Opportunities Fund

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

 

Energy Equipment & Services — 2.0%  

Baker Hughes Co.

     139,155     $ 3,395,382  

Poseidon Concepts Corp.(a)

    35,081       25  
   

 

 

  
      3,395,407  
Food Products — 0.7%  

Darling Ingredients, Inc.(a)

    17,309       1,184,974  
   

 

 

  
Oil, Gas & Consumable Fuels — 95.9%  

Aker BP ASA

     92,149       2,699,873  

ARC Resources Ltd.

     290,685       2,235,298  

BP PLC

     984,877       4,300,257  

Cairn Energy PLC

     567,217       1,307,760  

Canadian Natural Resources Ltd.

     213,619       7,490,192  

Chevron Corp.

     213,666           22,176,394  

CNOOC Ltd.

     1,489,000       1,614,732  

ConocoPhillips

     202,367       11,279,937  

Devon Energy Corp.

     171,045       4,542,955  

EOG Resources, Inc.

     27,394       2,200,834  

Equinor ASA

     196,537       4,236,224  

Exxon Mobil Corp.

     195,609       11,417,697  

Hess Corp.

     73,913       6,195,388  

Kinder Morgan, Inc.

     236,440       4,336,310  

Kosmos Energy Ltd.(a)

    507,537       1,613,968  

Longview Energy Co. (Acquired 08/13/04,
cost $1,143,119)(a)(b)(c)

    85,400       1  

LUKOIL PJSC, ADR

     21,148       1,721,394  

Marathon Petroleum Corp.

     94,942       5,867,416  

Oil Search Ltd.

     371,752       1,040,984  

Pioneer Natural Resources Co.

     41,324       6,289,100  

Royal Dutch Shell PLC, B Shares

     896,339       16,299,024  

Santos Ltd.

     477,670       2,489,206  
Security   Shares     Value  
Oil, Gas & Consumable Fuels (continued)            

Suncor Energy, Inc.

     288,657     $ 6,704,507  

TC Energy Corp.

     103,519       5,220,079  

TOTAL SE

     301,979       14,003,260  

Tourmaline Oil Corp.

     97,077       2,366,458  

Valero Energy Corp.

     76,084       6,117,154  

Williams Cos., Inc.

     181,610       4,783,607  
   

 

 

  
      160,550,009  
   

 

 

  

Total Long-Term Investments — 98.6%
(Cost: $133,760,772)

 

     165,130,390  
   

 

 

  

Short-Term Securities(d)(e)

 

Money Market Funds — 0.8%  

BlackRock Liquidity Funds, T-Fund, Institutional Class, 0.01%

     1,311,781       1,311,781  
   

 

 

  

Total Short-Term Securities — 0.8%
(Cost: $1,311,781)

 

     1,311,781  
   

 

 

  

Total Investments — 99.4%
(Cost: $135,072,553)

 

     166,442,171  

Other Assets Less Liabilities — 0.6%

 

     1,020,508  
   

 

 

  

Net Assets — 100.0%

 

   $   167,462,679  
   

 

 

  

 

(a) 

Non-income producing security.

(b) 

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

(c) 

Restricted security as to resale, excluding 144A securities. The Fund held restricted securities with a current value of $1, representing 0.0% of its net assets as of period end, and an original cost of $1,143,119.

(d) 

Affiliate of the Fund.

(e) 

Annualized 7-day yield as of period end.

 

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended May 31, 2021 for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

                   
Affiliated Issuer  

Value at

05/31/20

   

    Purchases

at Cost

   

Proceeds

from Sale

   

Net

Realized

Gain (Loss)

    

Change in

Unrealized

Appreciation

(Depreciation)

     

Value at

05/31/21

   

Shares

Held at

05/31/21

    Income    

Capital

Gain

Distributions

from Underlying

Funds

 

BlackRock Liquidity Funds, T-Fund,
Institutional Class

   $   4,933,763       $  —       $  (3,621,982 )(a)                   $   —                    $ —      $ 1,311,781       1,311,781     $ 1,283                    $ —  

SL Liquidity Series, LLC, Money
Market Series(b)

    —       66 (a)      —         (66 )        —        —       —       14 (c)         —  
         

 

 

      

 

 

     

 

 

      

 

 

      

 

 

  
          $   (66 )      $ —      $ 1,311,781       $ 1,297       $ —  
         

 

 

      

 

 

     

 

 

      

 

 

      

 

 

  

 

  (a) 

Represents net amount purchased (sold).

 
  (b) 

As of period end, the entity is no longer held.

 
  (c) 

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

For Fund compliance purposes, the Fund’s industry classifications refer to one or more of the industry sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by the investment adviser. These definitions may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

 

 

14  

2 0 2 1   B L A C K R O C K   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S

Schedule of Investments  (continued)

May 31, 2021

    BlackRock Energy Opportunities Fund

 

Fair Value Hierarchy as of Period End

Various inputs are used in determining the fair value of financial instruments. For a description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

The following table summarizes the Fund’s financial instruments categorized in the fair value hierarchy. The breakdown of the Fund’s financial instruments into major categories is disclosed in the Schedule of Investments above.

 

         
      Level 1        Level 2     Level 3        Total  

Assets

                 

Investments

                 

Long-Term Investments

                 

Common Stocks

                 

Energy Equipment & Services

    $ 3,395,382        $ 25       $   —        $ 3,395,407  

Food Products

      1,184,974          —                          —          1,184,974  

Oil, Gas & Consumable Fuels

      110,837,294          49,712,714         1          160,550,009  

Short-Term Securities

                 

Money Market Funds

      1,311,781          —         —          1,311,781  
  

 

 

       

 

 

      

 

 

       

 

 

  
   $   116,729,431        $   49,712,739       $   1        $   166,442,171  
  

 

 

       

 

 

      

 

 

       

 

 

  

See notes to financial statements.

 

 

S C H E D U L E S   O F   I N V E S T M E N T S

   15

Schedule of Investments

May 31, 2021

   

BlackRock High Equity Income Fund

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

    
Aerospace & Defense — 4.5%            

BAE Systems PLC

     1,793,629     $ 13,363,534  

Huntington Ingalls Industries, Inc.

     8,352       1,805,786  

Raytheon Technologies Corp.

     93,753       8,316,828  
   

 

 

  
      23,486,148  
Automobiles — 2.0%            

General Motors Co.(a)

    172,100       10,207,251  
   

 

 

  
Banks — 5.0%            

Citigroup, Inc.

     64,876       5,106,390  

Comerica, Inc.

     55,182       4,331,235  

U.S. Bancorp

     60,406       3,671,477  

Wells Fargo & Co.

     271,636       12,690,833  
   

 

 

  
      25,799,935  
Beverages — 1.0%            

Coca-Cola Co.

     89,928       4,972,119  
   

 

 

  
Biotechnology — 0.9%            

Acerta Pharma BV, Series B (Acquired 05/06/15, cost $1,815,300)(a)(b)(c)

    31,555,035       4,445,158  
   

 

 

  
Capital Markets — 3.6%            

Apollo Global Management, Inc.

     187,795       10,768,165  

Intercontinental Exchange, Inc.

     33,678       3,801,573  

Morgan Stanley

     47,349       4,306,391  
   

 

 

  
      18,876,129  
Chemicals — 0.5%            

Corteva, Inc.

     52,655       2,395,803  
   

 

 

  
Communications Equipment — 2.2%  

Cisco Systems, Inc.

     214,092       11,325,467  
   

 

 

  
Consumer Finance — 1.0%            

Capital One Financial Corp.

     31,356       5,041,418  
   

 

 

  
Diversified Financial Services — 0.8%            

Equitable Holdings, Inc.

     127,814       4,058,095  
   

 

 

  
Diversified Telecommunication Services — 3.1%  

AT&T Inc.

     284,729       8,379,575  

Verizon Communications, Inc.

     134,568       7,601,746  
   

 

 

  
      15,981,321  
Electric Utilities — 2.3%            

American Electric Power Co., Inc.

     38,897       3,345,142  

Edison International

     72,742       4,064,095  

FirstEnergy Corp.

     36,137       1,369,954  

Southern Co.

     46,322       2,960,902  
   

 

 

  
      11,740,093  
Equity Real Estate Investment Trusts (REITs) — 0.7%  

PotlatchDeltic Corp.

     31,983       1,925,377  

Rayonier, Inc.

     51,123       1,952,387  
   

 

 

  
      3,877,764  
Food Products — 1.3%            

Danone SA

     69,607       4,962,187  

Kraft Heinz Co.

     37,594       1,638,722  
   

 

 

  
      6,600,909  
Health Care Equipment & Supplies — 2.0%  

Medtronic PLC

     48,425       6,130,121  

Zimmer Biomet Holdings, Inc.

     24,850       4,183,000  
   

 

 

  
        10,313,121  
Health Care Providers & Services — 3.8%  

Anthem, Inc.

     14,682       5,846,666  
Security   Shares     Value  
Health Care Providers & Services (continued)  

Cardinal Health, Inc.

     36,798     $ 2,063,264  

CVS Health Corp.

     86,061       7,439,113  

Quest Diagnostics, Inc.

     12,983       1,709,471  

UnitedHealth Group, Inc.

     5,878       2,421,266  
   

 

 

  
      19,479,780  
Household Products — 1.3%            

Kimberly-Clark Corp.

     51,250       6,694,787  
   

 

 

  
Industrial Conglomerates — 0.0%  

Siemens AG, Registered Shares

     1,276       207,016  
   

 

 

  
Insurance — 7.7%            

American International Group, Inc.

     144,874       7,655,142  

Arthur J. Gallagher & Co.

     22,804       3,343,295  

CNA Financial Corp.

     56,319       2,692,611  

Fidelity National Financial, Inc.

     103,267       4,852,516  

MetLife, Inc.

     78,606       5,137,688  

Prudential Financial, Inc.

     56,125       6,003,691  

Prudential PLC

     243,610       5,191,988  

Swiss Re AG

     55,263       5,311,317  
   

 

 

  
      40,188,248  
IT Services — 1.8%            

Cognizant Technology Solutions Corp., Class A

     82,140       5,877,938  

Fidelity National Information Services, Inc.

     22,202       3,307,654  
   

 

 

  
      9,185,592  
Machinery — 0.2%            

Stanley Black & Decker, Inc.

     5,310       1,151,208  
   

 

 

  
Multiline Retail — 0.7%            

Dollar General Corp.

     17,331       3,517,500  
   

 

 

  
Multi-Utilities — 2.1%            

Ameren Corp.

     36,412       3,065,890  

Consolidated Edison, Inc.

     28,093       2,169,903  

NiSource, Inc.

     72,941       1,859,996  

Public Service Enterprise Group, Inc.

     64,306       3,994,689  
   

 

 

  
      11,090,478  
Oil, Gas & Consumable Fuels — 4.3%  

BP PLC

     1,845,102       8,056,246  

ConocoPhillips

     73,501       4,096,946  

Marathon Petroleum Corp.

     85,037       5,255,287  

Williams Cos., Inc.

     184,500       4,859,730  
   

 

 

  
      22,268,209  
Personal Products — 1.3%            

Unilever PLC, ADR

     116,650       6,995,500  
   

 

 

  
Pharmaceuticals — 5.5%            

AstraZeneca PLC

     56,824       6,481,796  

Bayer AG, Registered Shares

     106,799       6,723,633  

Johnson & Johnson

     26,732       4,524,391  

Pfizer, Inc.

     96,441       3,735,160  

Sanofi

     67,768       7,208,772  
   

 

 

  
        28,673,752  
Professional Services — 0.3%            

Robert Half International, Inc.

     20,049       1,780,151  
   

 

 

  
Software — 1.1%            

SS&C Technologies Holdings, Inc.

     80,380       5,937,671  
   

 

 

  
Specialty Retail — 0.3%            

Ross Stores, Inc.

     12,526       1,583,161  
   

 

 

  
Technology Hardware, Storage & Peripherals — 0.9%  

Samsung Electronics Co. Ltd., GDR

     2,586       4,672,684  
   

 

 

  
 

 

 

16  

2 0 2 1   B L A C K R O C K   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S

Schedule of Investments  (continued)

May 31, 2021

   

BlackRock High Equity Income Fund

(Percentages shown are based on Net Assets)

 

Security         

    

Shares

     Value  
Textiles, Apparel & Luxury Goods — 1.0%  

Gildan Activewear, Inc.

       146,830     $ 5,309,373  
   

 

 

  
Tobacco — 2.5%                  

Altria Group, Inc.

       100,272       4,935,388  

British American Tobacco PLC

       202,910       7,828,020  
   

 

 

  
          12,763,408  
Wireless Telecommunication Services — 1.6%  

Vodafone Group PLC

       4,461,178       8,087,917  
   

 

 

  

Total Common Stocks — 67.3%
(Cost: $284,425,499)

 

     348,707,166  
   

 

 

  
           

Par

(000)

         

Equity-Linked Notes

      
Aerospace & Defense — 0.7%                  

CIBC World Markets Corp. (Raytheon Technologies Corp.) 17.45% 06/14/21

     USD       32,300       2,770,659  

SG Americas Securities LLC (Huntington Ingalls Industries, Inc.) 20.33% 07/15/21(b)

      4,400       943,228  
   

 

 

  
        3,713,887  
Automobiles — 1.0%                  

Citigroup Global Markets, Inc. (General Motors Co.) 23.04% 06/07/21(b)

      87,500       5,159,875  
   

 

 

  
Banks — 3.2%                  

Barclays Capital, Inc. (Citigroup, Inc.) 18.10% 07/15/21

       34,800       2,732,148  

JP Morgan Securities LLC (Comerica, Inc.) 20.94% 07/15/21

       29,700       2,287,770  

RBC Capital Markets LLC (Wells Fargo & Co.) 25.85% 06/07/21

 

     141,900       6,660,400  

TD Securities (USA) LLC (U.S. Bancorp) 14.76% 06/25/21

       76,400       4,657,819  
   

 

 

  
        16,338,137  
Beverages — 0.5%                  

TD Securities, Inc. (Coca-Cola Co.) 17.54% 06/18/21

       45,700       2,478,055  
   

 

 

  
Capital Markets — 1.6%                  

Barclays Capital, Inc. (Apollo Global Management, Inc.) 22.28% 06/25/21

       60,000       3,425,557  

JP Morgan Securities LLC (Morgan Stanley) 16.13% 07/06/21(b)

 

     25,100       2,248,807  

SG Americas Securities LLC (Intercontinental Exchange, Inc.) 8.90% 06/01/21

       7,000       784,731  

SG Americas Securities LLC (Intercontinental Exchange, Inc.) 10.89% 07/12/21

       18,000       2,016,360  
   

 

 

  
        8,475,455  
Chemicals — 0.5%                  

BMO Capital Markets Corp. (Corteva, Inc.) 20.15% 07/01/21

       58,400       2,684,434  
   

 

 

  
Communications Equipment — 1.2%  

BMO Capital Markets Corp. (Cisco Systems, Inc.) 11.59% 07/06/21(b)

      113,500       6,026,169  
   

 

 

  
Consumer Finance — 0.5%                  

Goldman Sachs & Co. LLC (Capital One Financial Corp.) 18.80% 07/08/21(b)

      16,800       2,684,640  
   

 

 

  
Security          Par
(000) 		    Value  
Diversified Financial Services — 0.7%  

Citigroup Global Markets, Inc. (Equitable Holdings, Inc.) 17.29% 07/08/21(b)

    USD       68,700     $ 2,221,071  

RBC Capital Markets LLC (Blackstone Group, Inc.) 22.46% 06/07/21

       17,200       1,562,424  
   

 

 

  
            3,783,495  
Diversified Telecommunication Services — 1.6%  

BMO Capital Markets Corp. (Verizon Communications, Inc.)
10.93% 07/06/21(b)

      119,500       6,754,738  

JP Morgan Securities LLC (AT&T Inc.) 7.58% 06/14/21

       56,600       1,671,863  
   

 

 

  
        8,426,601  
Electric Utilities — 1.2%                  

BMO Capital Markets Corp. (Edison International) 20.41% 07/06/21(b)

      38,600       2,182,714  

Goldman Sachs & Co. LLC (Southern Co.) 18.02% 07/01/21

       13,900       902,469  

SG Americas Securities LLC (American Electric Power Co., Inc.) 13.10% 06/01/21

       10,100       865,003  

SG Americas Securities LLC (American Electric Power Co., Inc.) 10.07% 07/12/21

       20,900       1,787,995  

SG Americas Securities LLC (PPL Corp.) 10.36% 06/01/21

       15,900       462,290  
   

 

 

  
        6,200,471  
Equity Real Estate Investment Trusts (REITs) — 0.4%  

RBC Capital Markets LLC (PotlatchDeltic Corp.) 21.61% 06/18/21

       16,200       970,130  

RBC Capital Markets LLC (Rayonier, Inc.) 17.57% 06/18/21

       26,000       965,520  
   

 

 

  
        1,935,650  
Food Products — 1.0%                  

BOFA Securities, Inc. (Kraft Heinz Co.) 17.90% 06/25/21

       64,900       2,807,942  

Credit Suisse Securities (USA) LLC (Danone SA) 28.20% 06/10/21

     EUR       35,400       2,522,528  
   

 

 

  
        5,330,470  
Health Care Equipment & Supplies — 1.0%  

BOFA Securities, Inc. (Medtronic PLC) 19.62% 06/18/21

     USD       24,600       3,112,660  

RBC Capital Markets LLC (Zimmer Biomet Holdings, Inc.) 18.95% 06/18/21

       12,500       2,127,458  
   

 

 

  
        5,240,118  
Health Care Providers & Services — 1.9%  

BNP Paribas Securities Corporation (Cardinal Health, Inc.)
17.58% 07/08/21(b)

      19,800       1,102,860  

BOFA Securities, Inc. (Anthem, Inc.) 24.74% 06/07/21

       7,700       3,003,237  

Goldman Sachs & Co. LLC (UnitedHealth Group, Inc.) 15.70% 07/01/21

       3,100       1,283,709  

JP Morgan Securities LLC (CVS Health Corp.) 13.34% 06/14/21

       43,800       3,440,417  

JP Morgan Securities LLC (Quest Diagnostics, Inc.) 22.45% 07/15/21

       6,900       902,865  
   

 

 

  
        9,733,088  
Household Products — 0.3%                  

Credit Suisse Securities (USA) LLC (Kimberly-Clark Corp.) 24.99% 06/07/21

       11,400       1,486,019  
   

 

 

  
Industrial Conglomerates — 0.5%                  

HSBC Securities (USA), Inc. (Siemens AG) 13.00% 06/04/21

     EUR       16,400       2,660,182  
   

 

 

  
 

 

 

S C H E D U L E S   O F   I N V E S T M E N T S

   17

Schedule of Investments  (continued)

May 31, 2021

   

BlackRock High Equity Income Fund

(Percentages shown are based on Net Assets)

 

Security          Par
(000) 		    Value  
Insurance — 4.9%                  

BNP Paribas Securities Corporation (CNA Financial Corp.) 19.21% 07/08/21(b)

    USD       30,300     $ 1,426,524  

BNP Paribas Securities Corporation (MetLife, Inc.) 18.04% 07/01/21

       41,600       2,724,447  

BOFA Securities, Inc. (American International Group, Inc.) 21.83% 06/25/21

       115,105       5,824,695  

Citigroup Global Markets, Inc. (Fidelity National Financial, Inc.) 18.33% 06/01/21

       56,600       2,516,274  

Credit Suisse Securities (USA) LLC (Fidelity National Financial, Inc.) 14.35% 07/12/21

       55,600       2,590,960  

SG Americas Securities LLC (Arthur J. Gallagher & Co.) 11.51% 06/01/21

       18,200       2,443,259  

SG Americas Securities LLC (Arthur J. Gallagher & Co.) 13.88% 07/12/21

       12,200       1,786,924  

SG Americas Securities LLC (Prudential Financial, Inc.) 19.55% 06/01/21

       29,800       2,944,237  

SG Americas Securities LLC (Prudential Financial, Inc.) 15.66% 07/12/21

       30,200       3,217,417  
   

 

 

  
          25,474,737  
IT Services — 0.7%                  

BMO Capital Markets Corp. (Fidelity National Information Services, Inc.) 14.58% 06/14/21

       11,300       1,681,505  

BNP Paribas Securities Corporation (Cognizant Technology Solutions Corp.) 19.34% 07/01/21(b)

      24,200       1,721,104  
   

 

 

  
        3,402,609  
Machinery — 0.1%                  

Goldman Sachs & Co. LLC (Stanley Black & Decker, Inc.) 21.79% 07/01/21

       2,800       606,259  
   

 

 

  
Multiline Retail — 0.4%                  

Goldman Sachs & Co. LLC (Dollar General Corp.) 15.66% 07/12/21

       9,300       1,900,827  
   

 

 

  
Multi-Utilities — 1.4%                  

Goldman Sachs & Co. LLC (NiSource, Inc.) 13.80% 07/06/21(b)

      38,700       983,367  

RBC Capital Markets LLC (Consolidated Edison, Inc.) 15.34% 06/14/21

       14,200       1,100,964  

SG Americas Securities LLC (Ameren Corp.) 9.99% 06/01/21

       19,300       1,616,128  

SG Americas Securities LLC (Ameren Corp.) 16.18% 07/12/21

       19,300       1,614,831  

TD Securities, Inc. (Public Service Enterprise Group, Inc.) 19.17% 06/18/21

       32,700       2,024,932  
   

 

 

  
        7,340,222  
Oil, Gas & Consumable Fuels — 2.3%  

Credit Suisse Securities (USA) LLC (BP PLC) 18.30% 06/04/21

     GBP       624,900       2,720,027  

JP Morgan Securities LLC (ConocoPhillips) 21.72% 07/01/21

     USD       38,900       2,171,586  

SG Americas Securities LLC (Kinder Morgan, Inc.) 22.55% 06/01/21

       71,100       1,266,163  

TD Securities (USA) LLC (Marathon Petroleum Corp.) 34.59% 06/25/21

       55,600       3,419,035  

TD Securities (USA) LLC (Williams Cos., Inc.) 22.16% 06/25/21

       96,300       2,471,301  
   

 

 

  
        12,048,112  
Security         

Par

(000)

    Value  
Personal Products — 1.4%                  

Citigroup Global Markets, Inc. (Unilever PLC) 12.99% 06/01/21

     USD       60,700     $ 3,582,427  

SG Americas Securities LLC (Unilever PLC) 9.22% 07/12/21

       62,700       3,735,842  
   

 

 

  
        7,318,269  
Pharmaceuticals — 2.8%                  

Credit Suisse Securities (USA) LLC (Sanofi) 28.25% 06/10/21

     EUR       34,500       3,631,986  

Goldman Sachs & Co. LLC (Pfizer, Inc.) 11.23% 07/06/21(b)

    USD       51,100       1,992,389  

JP Morgan Securities LLC (Johnson & Johnson) 12.89% 06/14/21

       13,500       2,266,362  

RBC Capital Markets LLC (AstraZeneca PLC) 12.41% 06/04/21

     GBP       28,800       3,062,166  

RBC Capital Markets LLC (Bayer AG) 41.43% 06/10/21

     EUR       54,300       3,452,084  
   

 

 

  
          14,404,987  
Professional Services — 0.2%                  

JP Morgan Securities LLC (Robert Half International, Inc.) 18.72% 07/15/21

     USD       10,700       940,770  
   

 

 

  
Road & Rail — 0.2%                  

BOFA Securities, Inc. (Union Pacific Corp.) 24.95% 06/07/21

       3,800       842,467  
   

 

 

  
Software — 0.5%                  

JP Morgan Securities LLC (Open Text Corp.) 16.61% 06/14/21

       22,200       1,046,153  

JP Morgan Securities LLC (SS&C Technologies Holdings, Inc.) 15.44% 06/14/21

       23,100       1,712,774  
   

 

 

  
        2,758,927  
Specialty Retail — 0.2%                  

JP Morgan Securities LLC (Ross Stores, Inc.) 21.80% 07/15/21

       6,600       817,542  
   

 

 

  
Technology Hardware, Storage & Peripherals — 0.4%  

HSBC Bank USA N.A. (Samsung Electronics Co. Ltd.) 18.10% 06/10/21

       1,200       2,172,049  
   

 

 

  
Tobacco — 0.7%                  

BOFA Securities, Inc. (Altria Group, Inc.) 22.73% 06/07/21

       51,000       2,448,639  

RBC Capital Markets LLC (British American Tobacco PLC) 12.52% 06/04/21

     GBP       34,600       1,336,008  
   

 

 

  
        3,784,647  
Wireless Telecommunication Services — 0.8%  

Credit Suisse Securities (USA) LLC (Vodafone Group PLC) 15.55% 06/10/21

       2,270,800       4,140,685  
   

 

 

  

Total Equity-Linked Notes — 34.8%
(Cost: $178,635,568)

 

     180,309,855  
   

 

 

  

Total Long-Term Investments — 102.1%
(Cost: $463,061,067)

 

     529,017,021  
   

 

 

  
 

 

 

18  

2 0 2 1   B L A C K R O C K   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S

Schedule of Investments  (continued)

May 31, 2021

   

BlackRock High Equity Income Fund

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

 

  

Short-Term Securities(d)(e)

   
Money Market Funds — 2.3%            

BlackRock Liquidity Funds, T-Fund, Institutional Class, 0.01%

     11,867,334     $ 11,867,334  
   

 

 

  

Total Short-Term Securities — 2.3%
(Cost: $11,867,334)

 

     11,867,334  
   

 

 

  

Total Investments — 104.4%
(Cost: $474,928,401)

 

     540,884,355  

Liabilities in Excess of Other Assets — (4.4)%

 

     (22,842,759 ) 
   

 

 

  

Net Assets — 100.0%

     $   518,041,596  
   

 

 

  

 

(a) 

Non-income producing security.

(b) 

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

(c) 

Restricted security as to resale, excluding 144A securities. The Fund held restricted securities with a current value of $4,445,158, representing 0.9% of its net assets as of period end, and an original cost of $1,815,300.

(d) 

Affiliate of the Fund.

(e) 

Annualized 7-day yield as of period end.

    

 

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended May 31, 2021 for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

                   
Affiliated Issuer   Value at
05/31/20 		    Purchases
at Cost 		    Proceeds
from Sale		     Net
Realized
Gain (Loss)		     Change in
Unrealized
Appreciation
(Depreciation)		     Value at
05/31/21 		    Shares
Held at
05/31/21 		    Income    

Capital

Gain
Distributions
from Underlying
Funds

 

BlackRock Liquidity Funds, T-Fund,

                        

Institutional Class

   $  529,567     $  11,337,767 (a)    $ —       $ —                    $ —     $  11,867,334       11,867,334     $ 3,529                    $ —  

SL Liquidity Series, LLC, Money

                        

Market Series(b)

    939,602       —       (939,474 )(a)                 (13 )        (115 )      —       —       1,581 (c)        —  
         

 

 

      

 

 

    

 

 

      

 

 

      

 

 

  
          $ (13 )      $ (115 )    $  11,867,334       $ 5,110       $ —  
         

 

 

      

 

 

    

 

 

      

 

 

      

 

 

  

 

  (a) 

Represents net amount purchased (sold).

 
  (b) 

As of period end, the entity is no longer held.

 
  (c) 

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

For Fund compliance purposes, the Fund’s industry classifications refer to one or more of the industry sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by the investment adviser. These definitions may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

Fair Value Hierarchy as of Period End

Various inputs are used in determining the fair value of financial instruments. For a description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

The following table summarizes the Fund’s financial instruments categorized in the disclosure hierarchy. The breakdown of the Fund’s financial instruments into major categories is disclosed in the Schedule of Investments above.

 

 

  
     Level 1        Level 2                 Level 3        Total  

 

  

Assets

                  

Investments

                  

Long-Term Investments

                  

Common Stocks

                  

Aerospace & Defense

      $   10,122,614          $   13,363,534          $  —            $  23,486,148  

Automobiles

      10,207,251          —          —          10,207,251  

Banks

      25,799,935          —          —          25,799,935  

Beverages

      4,972,119          —          —          4,972,119  

 

 

S C H E D U L E S   O F   I N V E S T M E N T S

   19

Schedule of Investments  (continued)

May 31, 2021

    BlackRock High Equity Income Fund

 

 

  
     Level 1        Level 2        Level 3        Total  

 

  

Common Stocks (continued)

                  

Biotechnology

    $ —        $ —        $ 4,445,158        $ 4,445,158  

Capital Markets

      18,876,129          —          —          18,876,129  

Chemicals

      2,395,803          —          —          2,395,803  

Communications Equipment

      11,325,467          —          —          11,325,467  

Consumer Finance

      5,041,418          —          —          5,041,418  

Diversified Financial Services

      4,058,095          —          —          4,058,095  

Diversified Telecommunication Services

      15,981,321          —          —          15,981,321  

Electric Utilities

      11,740,093          —          —          11,740,093  

Equity Real Estate Investment Trusts (REITs)

      3,877,764          —          —          3,877,764  

Food Products

      1,638,722          4,962,187          —          6,600,909  

Health Care Equipment & Supplies

      10,313,121          —          —          10,313,121  

Health Care Providers & Services

      19,479,780          —          —          19,479,780  

Household Products

      6,694,787          —          —          6,694,787  

Industrial Conglomerates

      —          207,016          —          207,016  

Insurance

      29,684,943          10,503,305          —          40,188,248  

IT Services

      9,185,592          —          —          9,185,592  

Machinery

      1,151,208          —          —          1,151,208  

Multiline Retail

      3,517,500          —          —          3,517,500  

Multi-Utilities

      11,090,478          —          —          11,090,478  

Oil, Gas & Consumable Fuels

      14,211,963          8,056,246          —          22,268,209  

Personal Products

      6,995,500          —          —          6,995,500  

Pharmaceuticals

      8,259,551          20,414,201          —          28,673,752  

Professional Services

      1,780,151          —          —          1,780,151  

Software

      5,937,671          —          —          5,937,671  

Specialty Retail

      1,583,161          —          —          1,583,161  

Technology Hardware, Storage & Peripherals

      —          4,672,684          —          4,672,684  

Textiles, Apparel & Luxury Goods

      5,309,373          —          —          5,309,373  

Tobacco

      4,935,388          7,828,020          —          12,763,408  

Wireless Telecommunication Services

      —          8,087,917          —          8,087,917  

Equity-Linked Notes

      —          144,862,369          35,447,486          180,309,855  

Short-Term Securities

                  

Money Market Funds

      11,867,334          —          —          11,867,334  
  

 

 

       

 

 

       

 

 

       

 

 

  
   $   278,034,232        $   222,957,479        $   39,892,644        $   540,884,355  
  

 

 

       

 

 

       

 

 

       

 

 

  

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

 

 

  
     Common
Stocks 		       Preferred
Stocks 		       Equity-Linked
Notes 		       Total  

 

  
Assets                                  

Opening Balance, as of May 31, 2020

    $ 4,152,327        $   4,566,570        $ —        $ 8,718,897  

Transfers into Level 3

      —          —          —          —  

Transfers out of Level 3

      —          (4,566,570 )         —          (4,566,570 ) 

Accrued discounts/premiums

      —          —          —          —  

Net realized gain (loss)

      —          —          —          —  

Net change in unrealized appreciation (depreciation)(a)(b)

     292,831          —          129,523          422,354  

Purchases

      —          —          35,317,963          35,317,963  

Sales

      —          —          —          —  
  

 

 

       

 

 

       

 

 

       

 

 

  

Closing Balance, as of May 31, 2021

    $   4,445,158        $ —        $ 35,447,486        $   39,892,644  
  

 

 

       

 

 

       

 

 

       

 

 

  

Net change in unrealized appreciation (depreciation) on investments still held at May 31, 2021(b)

   $ 292,831        $ —        $ 129,523        $ 422,354  
  

 

 

       

 

 

       

 

 

       

 

 

  

 

  (a) 

Included in the related net change in unrealized appreciation (depreciation) in the Statements of Operations.

 
  (b) 

Any difference between net change in unrealized appreciation (depreciation) and net change in unrealized appreciation (depreciation) on investments still held at May 31, 2021, is generally due to investments no longer held or categorized as Level 3 at period end.

 

See notes to financial statements.

 

 

20  

2 0 2 1   B L A C K R O C K   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S

Schedule of Investments  

May 31, 2021

   

BlackRock International Dividend Fund

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

    

Australia — 1.9%

    

Ansell Ltd.

     145,182     $ 4,624,317  
   

 

 

  
Canada — 4.4%            

TELUS Corp.

     476,531       10,689,504  
   

 

 

  
China — 5.9%            

China Feihe Ltd.(a)

    3,167,000       8,858,999  

ENN Energy Holdings Ltd.

     304,100       5,582,174  
   

 

 

  
      14,441,173  
Denmark — 3.4%            

Novo Nordisk A/S, Class B

     105,158       8,320,395  
   

 

 

  
France — 16.6%            

Air Liquide SA

     20,809       3,539,077  

EssilorLuxottica SA

     55,076       9,557,017  

LVMH Moet Hennessy Louis Vuitton SE

     10,707       8,538,257  

Sanofi

     113,639       12,088,267  

Schneider Electric SE

     43,905       6,948,464  
   

 

 

  
          40,671,082  
India — 3.8%            

HDFC Bank Ltd.(b)

    373,955       7,794,881  

Jasper Infotech Private Ltd. (Acquired 05/07/14, cost $7,423,816)(b)(c)(d)

    9,970       1,643,754  
   

 

 

  
      9,438,635  
Mexico — 0.8%            

Wal-Mart de Mexico SAB de CV

     637,100       2,092,918  
   

 

 

  
Netherlands — 3.0%            

Koninklijke Philips NV

     128,751       7,246,536  
   

 

 

  
Singapore — 4.3%            

DBS Group Holdings Ltd.

     213,400       4,841,344  

United Overseas Bank Ltd.

     284,000       5,595,981  
   

 

 

  
      10,437,325  
Spain — 6.0%            

Amadeus IT Group SA(b)

    139,717       10,557,312  

Bankinter SA

     713,293       4,092,752  
   

 

 

  
      14,650,064  
Taiwan — 4.5%            

Taiwan Semiconductor Manufacturing Co. Ltd.

     512,000       11,076,051  
   

 

 

  
United Kingdom — 28.9%            

AstraZeneca PLC

     85,018       9,697,827  

BAE Systems PLC

     913,899       6,809,056  

Diageo PLC

     233,828       11,288,828  

Prudential PLC

     488,230       10,405,501  

Reckitt Benckiser Group PLC

     132,056       11,935,307  
Security   Shares     Value  
United Kingdom (continued)            

RELX PLC

     400,501     $ 10,482,899  

Unilever PLC

     173,210       10,392,750  
   

 

 

  
      71,012,168  
United States — 13.0%            

Estee Lauder Cos., Inc., Class A

     28,139       8,625,166  

Ferguson PLC

     80,163       10,889,749  

Otis Worldwide Corp.

     69,519       5,445,423  

Visa, Inc., Class A

     30,959       7,036,981  
   

 

 

  
      31,997,319  
   

 

 

  

Total Common Stocks — 96.5%
(Cost: $194,570,312)

       236,697,487  
   

 

 

  

Preferred Securities

    
Preferred Stocks — 2.0%            
China — 2.0%            

Xiaoju Kuaizhi, Inc., Series A-17 (Acquired 07/28/15, cost $2,770,046)(b)(c)(d)

    101,000       5,051,010  
   

 

 

  

Total Preferred Securities — 2.0%
(Cost: $2,770,046)

 

     5,051,010  
   

 

 

  

Total Long-Term Investments — 98.5%
(Cost: $197,340,358)

 

     241,748,497  
   

 

 

  

Short-Term Securities(e)(f)

   
Money Market Funds — 1.3%            

BlackRock Liquidity Funds, T-Fund, Institutional Class, 0.01%

     3,151,672       3,151,672  
   

 

 

  

Total Short-Term Securities — 1.3%
(Cost: $3,151,672)

       3,151,672  
   

 

 

  

Total Investments — 99.8%
(Cost: $200,492,030)

 

     244,900,169  

Other Assets Less Liabilities — 0.2%

 

     401,456  
   

 

 

  

Net Assets — 100.0%

     $ 245,301,625  
   

 

 

  

 

(a) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

 

(b) 

Non-income producing security.

 

(c) 

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

 

(d) 

Restricted security as to resale, excluding 144A securities. The Fund held restricted securities with a current value of $6,694,764, representing 2.7% of its net assets as of period end, and an original cost of $10,193,862.

 

(e) 

Affiliate of the Fund.

 

(f) 

Annualized 7-day yield as of period end.

 

 

 

S C H E D U L E S   O F   I N V E S T M E N T S

   21

Schedule of Investments  (continued)

May 31, 2021

   

BlackRock International Dividend Fund

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended May 31, 2021 for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

 

 

    
    Affiliated Issuer   

Value at

05/31/20

     Purchases
at Cost 		    

Proceeds

from Sale

     

Net

Realized

Gain (Loss)

     

Change in

Unrealized

Appreciation

(Depreciation)

     

Value at

05/31/21

    

Shares

Held at

05/31/21

     Income     

Capital

Gain

Distributions

from Underlying

Funds

       
 

 

    

    

  

BlackRock Liquidity Funds, T-Fund, Institutional Class

    $   2,002,612      $   1,149,060 (a)       $  —                    $ —                    $ —      $   3,151,672        3,151,672      $ 339                    $ —             
                

 

 

        

 

 

     

 

 

        

 

 

        

 

 

    

 

  (a) 

Represents net amount purchased (sold).

 

Fair Value Hierarchy as of Period End

Various inputs are used in determining the fair value of financial instruments. For a description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

The following table summarizes the Fund’s financial instruments categorized in the fair value hierarchy. The breakdown of the Fund’s financial instruments into major categories is disclosed in the Schedule of Investments above.

 

 

  
     Level 1        Level 2        Level 3        Total  

 

  

Assets

                  

Investments

                  

Long-Term Investments

                  

Common Stocks

                  

Australia

    $ —        $ 4,624,317        $ —        $ 4,624,317  

Canada

      10,689,504          —          —          10,689,504  

China

      —          14,441,173          —          14,441,173  

Denmark

      8,320,395          —          —          8,320,395  

France

      —          40,671,082          —          40,671,082  

India

      —          7,794,881          1,643,754          9,438,635  

Mexico

      2,092,918          —          —          2,092,918  

Netherlands

      —          7,246,536          —          7,246,536  

Singapore

      —          10,437,325          —          10,437,325  

Spain

      —          14,650,064          —          14,650,064  

Taiwan

      —          11,076,051          —          11,076,051  

United Kingdom

      —          71,012,168          —          71,012,168  

United States

      21,107,570          10,889,749          —          31,997,319  

Preferred Securities

      —          —          5,051,010          5,051,010  

Short-Term Securities

                  

Money Market Funds

      3,151,672          —          —          3,151,672  
  

 

 

       

 

 

       

 

 

       

 

 

  
   $   45,362,059        $   192,843,346        $   6,694,764        $   244,900,169  
  

 

 

       

 

 

       

 

 

       

 

 

  

 

 

22  

2 0 2 1   B L A C K R O C K   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S

Schedule of Investments  (continued)

May 31, 2021

   

BlackRock International Dividend Fund

 

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

 

 

  
    

Common

Stocks

      

Preferred

Stocks

       Total  

 

  

Assets

             

Opening Balance, as of May 31, 2020

    $ 2,094,797        $ 5,139,890        $ 7,234,687  

Transfers into Level 3

      —          —          —  

Transfers out of Level 3

      —          —          —  

Net realized gain (loss)

      —          —          —  

Net change in unrealized appreciation (depreciation)(a)(b)

     (451,043 )         (88,880 )         (539,923 ) 

Purchases

      —          —          —  

Sales

      —          —          —  
  

 

 

       

 

 

       

 

 

  

Closing Balance, as of May 31, 2021

    $   1,643,754        $   5,051,010        $   6,694,764  
  

 

 

       

 

 

       

 

 

  

Net change in unrealized appreciation (depreciation) on investments still held at May 31, 2021(b)

   $ (451,043 )       $ (88,880 )       $ (539,923 ) 
  

 

 

       

 

 

       

 

 

  

 

  (a) 

Included in the related net change in unrealized appreciation (depreciation) in the Statements of Operations.

 

 

  (b) 

Any difference between net change in unrealized appreciation (depreciation) and net change in unrealized appreciation (depreciation) on investments still held at May 31, 2021, is generally due to investments no longer held or categorized as Level 3 at period end.

 

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

 

 

  
     Value        Valuation Approach       

Unobservable

Inputs

      

Range of

Unobservable Inputs

Utilized(a)

 

 

  

Assets

                  

Common Stocks

    $ 1,643,754          Market          Revenue Multiple          7.25x  

Preferred Securities(b)

     5,051,010          Market          Recent Transactions          —  
  

 

 

                 
   $ 6,694,764                 
  

 

 

                 

 

  (a) 

A significant change in unobservable input would have resulted in a correlated (inverse) significant change to value.

 

 

  (b) 

For the period ended May 31, 2021, the valuation technique for investments classified as Preferred Stocks amounting to $5,051,010 changed to Transaction Price Approach. The investments were previously valued utilizing Current Value Method. The change was due to consideration of the information that was available at the time the investments were valued.

 

See notes to financial statements.

 

 

S C H E D U L E S   O F   I N V E S T M E N T S

   23

Statements of Assets and Liabilities  

May 31, 2021

 

    

BlackRock

Energy

Opportunities

Fund

    

BlackRock

High Equity Income

Fund

       

BlackRock

International

Dividend

Fund

     

ASSETS

              

Investments at value — unaffiliated(a)

  $ 165,130,390        $ 529,017,021        $ 241,748,497           

Investments at value — affiliated(b)

    1,311,781          11,867,334          3,151,672    

Cash

     31,997          3,520          —    

Foreign currency, at value(c)

    16,900          —          —    

Receivables:

              

Investments sold

     364,026                   4,578,459          —    

Capital shares sold

     278,336          856,878          153,543    

Dividends — affiliated

     17          225          5    

Dividends — unaffiliated

     1,017,338          1,396,385          2,064,882    

Interest — unaffiliated

     —          1,102,218          —    

From the Manager

     19,580          35,118          21,389    

Prepaid expenses

     42,811          68,546          36,299    
 

 

 

       

 

 

       

 

 

 

  

Total assets

     168,213,176          548,925,704          247,176,287    
 

 

 

       

 

 

       

 

 

 

  

LIABILITIES

              

Payables:

              

Investments purchased

     135,698          28,825,228          1,162,385    

Administration fees

     6,082          18,390          8,703    

Capital shares redeemed

     205,398          999,183          206,484    

Deferred foreign capital gain tax

     —          —          121,909    

Income dividend distributions

     —          339,300          —    

Investment advisory fees

     104,067          308,628          131,149    

Trustees’ and Officer’s fees

     2,165          2,456          2,357    

Other accrued expenses

     54,726          102,019          56,122    

Other affiliate fees

     7,303          779          6,546    

Professional fees

     40,010          80,587          43,765    

Service and distribution fees

     32,971          65,641          33,632    

Transfer agent fees

     162,077          141,897          101,610    
 

 

 

       

 

 

       

 

 

 

  

Total liabilities

     750,497          30,884,108          1,874,662    
 

 

 

       

 

 

       

 

 

 

  

NET ASSETS

   $ 167,462,679        $ 518,041,596        $ 245,301,625    
 

 

 

       

 

 

       

 

 

 

  

NET ASSETS CONSIST OF

              

Paid-in capital

   $ 473,250,709        $ 461,891,694        $ 195,500,109    

Accumulated earnings (loss)

     (305,788,030 )         56,149,902          49,801,516    
 

 

 

       

 

 

       

 

 

 

  

NET ASSETS

   $ 167,462,679        $ 518,041,596        $  245,301,625    
 

 

 

       

 

 

       

 

 

 

  

(a) Investments, at cost — unaffiliated

   $ 133,760,772        $  463,061,067        $ 197,340,358    

(b) Investments, at cost — affiliated

   $ 1,311,781        $ 11,867,334        $ 3,151,672    

(c)  Foreign currency, at cost

   $ 17,049        $ —        $ —    

 

 

24  

2 0 2 1   B L A C K R O C K   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S

Statements of Assets and Liabilities  (continued)

May 31, 2021

 

    

BlackRock

Energy

Opportunities

Fund

    

BlackRock

High Equity Income

Fund

       

BlackRock

International

Dividend

Fund

         

NET ASSET VALUE

             
Institutional                                 

Net assets

   $ 52,377,069                $  277,652,592        $ 101,899,267    
 

 

 

      

 

 

       

 

 

    

Shares outstanding

     6,125,319         9,256,646          2,802,830    
 

 

 

      

 

 

       

 

 

    

Net asset value

   $ 8.55       $ 29.99        $ 36.36    
 

 

 

      

 

 

       

 

 

    

Shares authorized

     Unlimited         Unlimited          Unlimited    
 

 

 

      

 

 

       

 

 

    

Par value

   $ 0.001       $ 0.001        $ 0.001    
 

 

 

      

 

 

       

 

 

    
Service                                 

Net assets

   $ 528,918       $ 9,443,737        $ 3,782,392    
 

 

 

      

 

 

       

 

 

    

Shares outstanding

     63,243         351,114          110,099    
 

 

 

      

 

 

       

 

 

    

Net asset value

   $ 8.36       $ 26.90        $ 34.35    
 

 

 

      

 

 

       

 

 

    

Shares authorized

     Unlimited         Unlimited          Unlimited    
 

 

 

      

 

 

       

 

 

    

Par value

   $ 0.001       $ 0.001        $ 0.001    
 

 

 

      

 

 

       

 

 

    
Investor A                                 

Net assets

   $  103,857,659       $ 208,207,013        $  128,076,779    
 

 

 

      

 

 

       

 

 

    

Shares outstanding

     12,497,156         8,274,281          3,791,873    
 

 

 

      

 

 

       

 

 

    

Net asset value

   $ 8.31       $ 25.16        $ 33.78    
 

 

 

      

 

 

       

 

 

    

Shares authorized

     Unlimited         Unlimited          Unlimited    
 

 

 

      

 

 

       

 

 

    

Par value

   $ 0.001       $ 0.001        $ 0.001    
 

 

 

      

 

 

       

 

 

    
Investor C                                 

Net assets

   $   10,699,033       $ 22,379,294        $ 5,607,361    
 

 

 

      

 

 

       

 

 

    

Shares outstanding

     1,335,106         1,421,081          191,172    
 

 

 

      

 

 

       

 

 

    

Net asset value

   $ 8.01       $ 15.75        $ 29.33    
 

 

 

      

 

 

       

 

 

    

Shares authorized

     Unlimited         Unlimited          Unlimited    
 

 

 

      

 

 

       

 

 

    

Par value

   $ 0.001       $ 0.001        $ 0.001    
 

 

 

      

 

 

       

 

 

    
Class K                                 

Net assets

     N/A       $ 358,960        $ 5,935,826    
 

 

 

      

 

 

       

 

 

    

Shares outstanding

     N/A         11,967          163,243    
 

 

 

      

 

 

       

 

 

    

Net asset value

     N/A       $ 30.00        $ 36.36    
 

 

 

      

 

 

       

 

 

    

Shares authorized

     N/A         Unlimited          Unlimited    
 

 

 

      

 

 

       

 

 

    

Par value

     N/A       $ 0.001        $ 0.001    
 

 

 

      

 

 

       

 

 

    

See notes to financial statements.

 

 

F I N A N C I A L   S T A T E M E N T S

   25

Statements of Operations

 

    

BlackRock

Energy

Opportunities

Fund

    

BlackRock

High Equity Income

Fund

            

BlackRock

International

Dividend

Fund

  

INVESTMENT INCOME

            

Dividends — unaffiliated

   $ 6,519,442                 $ 10,379,366               $ 6,505,480  

Dividends — affiliated

     1,283          3,529          339  

Interest — unaffiliated

     —          18,999,685          —  

Securities lending income — affiliated — net

     14          1,581          —  

Non-cash dividends — unaffiliated

     —          —          1,427,444  

Foreign taxes withheld

     (422,579 )         (313,634 )         (489,895 ) 
 

 

 

       

 

 

       

 

 

  

Total investment income

     6,098,160          29,070,527          7,443,368  
 

 

 

       

 

 

       

 

 

  

EXPENSES

            

Investment advisory

     986,256          3,036,515          1,709,898  

Transfer agent — class specific

     420,374          565,072          357,939  

Service and distribution — class specific

     295,083          676,976          366,787  

Professional

     116,615          99,113          76,691  

Registration

     113,156          85,975          91,367  

Printing and postage

     60,908          28,721          30,849  

Administration

     55,888          159,299          91,988  

Custodian

     43,935          43,114          45,254  

Accounting services

     43,664          56,887          48,303  

Administration — class specific

     26,292          74,831          43,296  

Trustees and Officer

     9,304          9,876          9,634  

Offering

     —          78,122          —  

Miscellaneous

     13,473          23,528          26,403  
 

 

 

       

 

 

       

 

 

  

Total expenses

     2,184,948          4,938,029          2,898,409  

Less:

            

Fees waived and/or reimbursed by the Manager

     (246,480 )         (627,762 )         (420,479 ) 

Administration fees waived — class specific

     (26,292 )         (74,558 )         (43,296 ) 

Transfer agent fees waived and/or reimbursed — class specific

     (279,143 )         (374,727 )         (251,794 ) 
 

 

 

       

 

 

       

 

 

  

Total expenses after fees waived and/or reimbursed

     1,633,033          3,860,982          2,182,840  
 

 

 

       

 

 

       

 

 

  

Net investment income

     4,465,127          25,209,545          5,260,528  
 

 

 

       

 

 

       

 

 

  

REALIZED AND UNREALIZED GAIN (LOSS)

            

Net realized gain (loss) from:

            

Investments — unaffiliated

     (21,250,931 )         32,051,856          16,521,040  

Investments — affiliated

     (66 )         (13 )         —  

Foreign currency transactions

     (9,239 )         (243,587 )         52,579  
 

 

 

       

 

 

       

 

 

  
    (21,260,236 )         31,808,256          16,573,619  
 

 

 

       

 

 

       

 

 

  

Net change in unrealized appreciation (depreciation) on:

            

Investments — unaffiliated

     55,035,663          72,705,564          36,104,174 (a) 

Investments — affiliated

     —          (115 )         —  

Foreign currency translations

     4,203          20,815          83,893  
 

 

 

       

 

 

       

 

 

  
    55,039,866          72,726,264          36,188,067  
 

 

 

       

 

 

       

 

 

  

Net realized and unrealized gain

     33,779,630          104,534,520          52,761,686  
 

 

 

       

 

 

       

 

 

  

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

   $ 38,244,757        $  129,744,065        $  58,022,214  
 

 

 

       

 

 

       

 

 

  

 

(a)

Net of $(121,909) foreign capital gain tax.

See notes to financial statements.

 

 

26  

2 0 2 1   B L A C K R O C K   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S

Statements of Changes in Net Assets

 

    BlackRock Energy Opportunities Fund  
     Year Ended
05/31/21		    

Period from
10/01/19

to 05/31/20

    

Year Ended

09/30/19

  

INCREASE (DECREASE) IN NET ASSETS

      

OPERATIONS

      

Net investment income

   $ 4,465,127     $ 2,325,284     $ 1,667,707  

Net realized loss

     (21,260,236 )      (16,835,624 )      (2,066,863 ) 

Net change in unrealized appreciation (depreciation)

     55,039,866       (29,543,343 )      (15,753,878 ) 
 

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets resulting from operations

     38,244,757       (44,053,683 )      (16,153,034 ) 
 

 

 

    

 

 

    

 

 

  

DISTRIBUTIONS TO SHAREHOLDERS(a)

     

Institutional

     (1,396,143 )      (816,189 )      (495,974 ) 

Service

     (10,044 )      (13,464 )      (12,604 ) 

Investor A

     (2,563,626 )      (914,901 )      (998,577 ) 

Investor C

     (271,498 )      (141,501 )      (71,490 ) 
 

 

 

    

 

 

    

 

 

  

Decrease in net assets resulting from distributions to shareholders

     (4,241,311 )      (1,886,055 )      (1,578,645 ) 
 

 

 

    

 

 

    

 

 

  

CAPITAL SHARE TRANSACTIONS

      

Net increase (decrease) in net assets derived from capital share transactions

     10,479,845       102,761,416       (2,487,880 ) 
 

 

 

    

 

 

    

 

 

  

NET ASSETS

      

Total increase (decrease) in net assets

     44,483,291       56,821,678       (20,219,559 ) 

Beginning of period

     122,979,388       66,157,710       86,377,269  
 

 

 

    

 

 

    

 

 

  

End of period

   $  167,462,679     $  122,979,388     $ 66,157,710  
 

 

 

    

 

 

    

 

 

  

 

(a) 

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

See notes to financial statements.

 

 

F I N A N C I A L   S T A T E M E N T S

   27

Statements of Changes in Net Assets  (continued)

 

    BlackRock High Equity Income Fund  
     Year Ended
05/31/21		    

Period from

10/01/19

to 05/31/20

    

Year Ended

09/30/19

  

INCREASE (DECREASE) IN NET ASSETS

      

OPERATIONS

      

Net investment income

   $ 25,209,545     $ 13,688,946     $ 20,175,928  

Net realized gain (loss)

     31,808,256       (24,514,750 )      (6,503,553 ) 

Net change in unrealized appreciation (depreciation)

     72,726,264       (31,402,895 )      (11,344,379 ) 
 

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets resulting from operations

     129,744,065       (42,228,699 )      2,327,996  
 

 

 

    

 

 

    

 

 

  

DISTRIBUTIONS TO SHAREHOLDERS(a)

     

Institutional

     (11,401,673 )      (6,556,434 )      (14,273,425 ) 

Service

     (560,226 )      (459,139 )      (938,768 ) 

Investor A

     (12,045,159 )      (9,928,356 )      (19,307,342 ) 

Investor C

     (1,190,563 )      (2,032,197 )      (7,759,253 ) 

Class K

     (21,194 )      (2,364 )      —  
 

 

 

    

 

 

    

 

 

  

Decrease in net assets resulting from distributions to shareholders

     (25,218,815 )      (18,978,490 )      (42,278,788 ) 
 

 

 

    

 

 

    

 

 

  

CAPITAL SHARE TRANSACTIONS

      

Net increase (decrease) in net assets derived from capital share transactions

     79,873,208       (18,173,074 )      (115,715,731 ) 
 

 

 

    

 

 

    

 

 

  

NET ASSETS

      

Total increase (decrease) in net assets

     184,398,458       (79,380,263 )      (155,666,523 ) 

Beginning of period

     333,643,138       413,023,401       568,689,924  
 

 

 

    

 

 

    

 

 

  

End of period

   $  518,041,596     $  333,643,138     $ 413,023,401  
 

 

 

    

 

 

    

 

 

  

 

(a) 

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

See notes to financial statements.

 

 

28  

2 0 2 1   B L A C K R O C K   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S

Statements of Changes in Net Assets  (continued)

 

    BlackRock International Dividend Fund  
    

Year Ended

05/31/21

    

Period from

10/01/19

to 05/31/20

    

Year Ended

09/30/19

  

INCREASE (DECREASE) IN NET ASSETS

      

OPERATIONS

      

Net investment income

   $ 5,260,528     $ 2,845,021     $ 5,666,032  

Net realized gain (loss)

     16,573,619       (11,478,140 )      (1,208,872 ) 

Net change in unrealized appreciation (depreciation)

     36,188,067       9,420,449       1,987,148  
 

 

 

    

 

 

    

 

 

  

Net increase in net assets resulting from operations

     58,022,214       787,330       6,444,308  
 

 

 

    

 

 

    

 

 

  

DISTRIBUTIONS TO SHAREHOLDERS(a)

     

Institutional

     (1,390,588 )      (1,285,194 )      (4,812,078 ) 

Service

     (55,023 )      (48,355 )      (201,787 ) 

Investor A

     (1,737,743 )      (1,779,666 )      (7,373,881 ) 

Investor C

     (87,622 )      (150,614 )      (1,251,082 ) 

Class K

     (81,044 )      (60,650 )      (190,815 ) 
 

 

 

    

 

 

    

 

 

  

Decrease in net assets resulting from distributions to shareholders

     (3,352,020 )      (3,324,479 )      (13,829,643 ) 
 

 

 

    

 

 

    

 

 

  

CAPITAL SHARE TRANSACTIONS

      

Net decrease in net assets derived from capital share transactions

     (1,214,166 )      (36,475,196 )      (49,101,794 ) 
 

 

 

    

 

 

    

 

 

  

NET ASSETS

      

Total increase (decrease) in net assets

     53,456,028       (39,012,345 )      (56,487,129 ) 

Beginning of period

     191,845,597       230,857,942       287,345,071  
 

 

 

    

 

 

    

 

 

  

End of period

   $  245,301,625     $  191,845,597     $  230,857,942  
 

 

 

    

 

 

    

 

 

  

 

(a) 

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

See notes to financial statements.

 

 

F I N A N C I A L   S T A T E M E N T S

   29

Financial Highlights

(For a share outstanding throughout each period)

 

    BlackRock Energy Opportunities Fund  
    Institutional  
                 Period from     Year Ended September 30,  
    Year Ended      10/01/19  
          05/31/21      to 05/31/20     2019     2018      2017     2016  
               

Net asset value, beginning of period

     $ 6.64      $ 9.66     $ 12.34     $ 11.13      $ 11.06     $ 9.91  
   

 

 

     

 

 

    

 

 

    

 

 

     

 

 

    

 

 

  

Net investment income(a)

      0.26        0.21       0.29       0.23        0.31 (b)       0.22  

Net realized and unrealized gain (loss)

       1.90        (2.93 )      (2.66 )      1.30        0.04       1.17  
   

 

 

     

 

 

    

 

 

    

 

 

     

 

 

    

 

 

  

Net increase (decrease) from investment operations

       2.16        (2.72 )      (2.37 )      1.53        0.35       1.39  
   

 

 

     

 

 

    

 

 

    

 

 

     

 

 

    

 

 

  

Distributions from net investment income(c)

      (0.25 )       (0.30 )      (0.31 )      (0.32 )       (0.28 )      (0.24 ) 
   

 

 

     

 

 

    

 

 

    

 

 

     

 

 

    

 

 

  

Net asset value, end of period

     $ 8.55      $ 6.64     $ 9.66     $ 12.34      $ 11.13     $ 11.06  
   

 

 

     

 

 

    

 

 

    

 

 

     

 

 

    

 

 

  

Total Return(d)

               

Based on net asset value

       33.50 %       (29.02 )%(e)      (19.24 )%      14.08 %       2.98 %      14.33 % 
   

 

 

     

 

 

    

 

 

    

 

 

     

 

 

    

 

 

  

Ratios to Average Net Assets

                

Total expenses

       1.33 %       1.40 %(f)(g)      1.30 %      1.29 %       1.25 %      1.18 % 
   

 

 

     

 

 

    

 

 

    

 

 

     

 

 

    

 

 

  

Total expenses after fees waived and/or reimbursed

       0.91 %       0.91 %(f)(g)      0.91 %      0.92 %       0.91 %      0.95 % 
   

 

 

     

 

 

    

 

 

    

 

 

     

 

 

    

 

 

  

Net investment income

       3.75 %       3.89 %(f)      2.91 %      1.97 %       2.89 %(b)      2.16 % 
   

 

 

     

 

 

    

 

 

    

 

 

     

 

 

    

 

 

  

Supplemental Data

                

Net assets, end of period (000)

     $  52,377      $ 38,779     $  23,579     $  22,255      $  18,703     $  25,123  
   

 

 

     

 

 

    

 

 

    

 

 

     

 

 

    

 

 

  

Portfolio turnover rate

       79 %       39 %      37 %      37 %       14 %      66 % 
   

 

 

     

 

 

    

 

 

    

 

 

     

 

 

    

 

 

  

 

(a) 

Based on average shares outstanding.

(b) 

Net investment income per share and the ratio of net investment income to average net assets includes $0.10 per share and 0.92%, respectively, resulting from a special dividend.

(c) 

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

(d) 

Where applicable, assumes the reinvestment of distributions.

(e)

Aggregate total return.

(f)

Annualized.

(g) 

Reorganization, Audit and Printing costs were not annualized in the calculation of the expense ratios. If these expenses were annualized, the total expenses and total expenses after fees waived and/or reimbursed would have been 1.47% and 0.91%, respectively.

See notes to financial statements.

 

 

30  

2 0 2 1   B L A C K R O C K   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S

Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

    BlackRock Energy Opportunities Fund (continued)  
    Service  
   

Year Ended

05/31/21

     

 

Period from

10/01/19

to 05/31/20

     Year Ended September 30,  
        2019      2018      2017     2016  
                 

Net asset value, beginning of period

     $ 6.50      $ 9.44       $     12.05      $     10.88      $     10.81     $     9.65  
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

    

 

 

  

Net investment income(a)

               0.23        0.17         0.23        0.17        0.25 (b)       0.17  

Net realized and unrealized gain (loss)

       1.85        (2.85 )        (2.59 )       1.28        0.04       1.14  
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

    

 

 

  

Net increase (decrease) from investment operations

       2.08        (2.68 )        (2.36 )       1.45        0.29       1.31  
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

    

 

 

  

Distributions from net investment income(c)

      (0.22 )       (0.26 )        (0.25 )       (0.28 )       (0.22 )      (0.15 ) 
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

    

 

 

  

Net asset value, end of period

     $ 8.36      $ 6.50       $ 9.44      $ 12.05      $ 10.88     $ 10.81  
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

    

 

 

  

Total Return(d)

                  

Based on net asset value

       32.90 %       (29.17 )%(e)        (19.63 )%       13.63 %       2.58 %      13.77 % 
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

    

 

 

  

Ratios to Average Net Assets

                   

Total expenses(f)

      1.60 %       1.70 %(g)(h)        1.57 %       1.55 %       1.50 %      1.51 % 
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

    

 

 

  

Total expenses after fees waived and/or reimbursed

       1.32 %       1.32 %(g)(h)        1.33 %       1.34 %       1.33 %      1.36 % 
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

    

 

 

  

Net investment income

       3.26 %       3.11 %(g)        2.34 %       1.51 %       2.35 %(b)      1.67 % 
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

    

 

 

  

Supplemental Data

                   

Net assets, end of period (000)

     $ 529      $ 315       $     451      $     599      $     628     $     787  
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

    

 

 

  

Portfolio turnover rate

       79 %       39 %        37 %       37 %       14 %      66 % 
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

    

 

 

  

 

(a) 

Based on average shares outstanding.

(b) 

Net investment income per share and the ratio of net investment income to average net assets includes $0.10 per share and 0.92%, respectively, resulting from a special dividend.

(c) 

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

(d) 

Where applicable, assumes the reinvestment of distributions.

(e) 

Aggregate total return.

(f) 

Includes recoupment of past waived and/or reimbursed fees. Excluding the recoupment of past waived and/or reimbursed fees, the ratios were as follows:

 

       
    

Year Ended

05/31/21

     

  Period from

10/01/19

to 5/31/20

    

Year Ended September 30,

 

  
 
    

 

            2019

    

 

            2018

     

 

            2017

     

 

            2016

  

Expense ratios

              N/A                1.70 %              1.55 %              N/A                N/A                N/A  

 

(g) 

Annualized.

(h) 

Reorganization, Audit and Printing costs were not annualized in the calculation of the expense ratios. If these expenses were annualized, the total expenses and total expenses after fees waived and/or reimbursed would have been 1.79% and 1.32%, respectively.

See notes to financial statements.

 

 

F I N A N C I A L   H I G H L I G H T S

   31

Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

    BlackRock Energy Opportunities Fund (continued)  
    Investor A  
     

 

    

Year Ended

05/31/21

     

 

Period from

10/01/19

to 05/31/20

     Year Ended September 30,  
              2019      2018      2017     2016  
                 

Net asset value, beginning of period

     $ 6.46      $ 9.39       $ 11.99      $ 10.83      $ 10.76     $ 9.63  
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

    

 

 

  

Net investment income(a)

      0.23        0.18         0.24        0.17        0.26 (b)       0.17  

Net realized and unrealized gain (loss)

       1.84        (2.85 )        (2.59 )       1.27        0.03       1.14  
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

    

 

 

  

Net increase (decrease) from investment operations

       2.07        (2.67 )        (2.35 )       1.44        0.29       1.31  
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

    

 

 

  

Distributions from net investment income(c)

      (0.22 )       (0.26 )        (0.25 )       (0.28 )       (0.22 )      (0.18 ) 
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

    

 

 

  

Net asset value, end of period

              $ 8.31      $ 6.46       $ 9.39      $ 11.99      $ 10.83     $ 10.76  
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

    

 

 

  

Total Return(d)

                  

Based on net asset value

       33.00 %       (29.23 )%(e)        (19.61 )%       13.59 %       2.57 %      13.88 % 
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

    

 

 

  

Ratios to Average Net Assets

                   

Total expenses

       1.73 %       1.94 %(f)(g)        1.66 %       1.65 %       1.60 %      1.55 % 
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

    

 

 

  

Total expenses after fees waived and/or reimbursed

       1.32 %       1.32 %(f)(g)        1.33 %       1.34 %       1.33 %      1.36 % 
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

    

 

 

  

Net investment income

       3.30 %       3.65 %(f)        2.44 %       1.52 %       2.42 %(b)      1.72 % 
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

    

 

 

  

Supplemental Data

                   

Net assets, end of period (000)

     $ 103,858      $ 72,733       $   34,574      $   41,644      $   43,765     $   59,065  
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

    

 

 

  

Portfolio turnover rate

       79 %       39 %        37 %       37 %       14 %      66 % 
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

    

 

 

  

 

(a) 

Based on average shares outstanding.

(b) 

Net investment income per share and the ratio of net investment income to average net assets includes $0.10 per share and 0.92%, respectively, resulting from a special dividend.

(c) 

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

(d) 

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

(e) 

Aggregate total return.

(f) 

Annualized.

(g) 

Reorganization, Audit and Printing costs were not annualized in the calculation of the expense ratios. If these expenses were annualized, the total expenses and total expenses after fees waived and/or reimbursed would have been 2.00% and 1.32%, respectively.

See notes to financial statements.

 

 

32  

2 0 2 1   B L A C K R O C K   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S

Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

    BlackRock Energy Opportunities Fund (continued)  
    Investor C  
   

Year Ended

05/31/21

     

 

Period from

10/01/19

to 05/31/20

     Year Ended September 30,  
        2019      2018      2017     2016  
                 

Net asset value, beginning of period

     $ 6.24      $ 9.03       $ 11.39      $ 10.30      $ 10.23     $ 9.14  
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

    

 

 

  

Net investment income(a)

               0.17        0.14         0.14        0.09        0.17 (b)       0.09  

Net realized and unrealized gain (loss)

       1.77        (2.75 )        (2.44 )       1.22        0.03       1.08  
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

    

 

 

  

Net increase (decrease) from investment operations

       1.94        (2.61 )        (2.30 )       1.31        0.20       1.17  
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

    

 

 

  

Distributions from net investment income(c)

      (0.17 )       (0.18 )        (0.06 )       (0.22 )       (0.13 )      (0.08 ) 
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

    

 

 

  

Net asset value, end of period

     $ 8.01      $ 6.24       $ 9.03      $ 11.39      $ 10.30     $ 10.23  
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

    

 

 

  

Total Return(d)

                  

Based on net asset value

       31.89 %       (29.51 )%(e)        (20.21 )%       12.90 %       1.84 %      12.91 % 
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

    

 

 

  

Ratios to Average Net Assets

                   

Total expenses(f)

      2.53 %       2.61 %(g)(h)        2.35 %       2.36 %       2.32 %      2.28 % 
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

    

 

 

  

Total expenses after fees waived and/or reimbursed

       2.04 %       2.04 %(g)(h)        2.05 %       2.06 %       2.05 %      2.09 % 
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

    

 

 

  

Net investment income

       2.60 %       2.77 %(g)        1.48 %       0.80 %       1.66 %(b)      1.00 % 
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

    

 

 

  

Supplemental Data

                   

Net assets, end of period (000)

     $  10,699      $ 11,152       $     7,554      $   21,878      $   23,996     $ 31,847  
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

    

 

 

  

Portfolio turnover rate

       79 %       39 %        37 %       37 %       14 %      66 % 
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

    

 

 

  

 

(a) 

Based on average shares outstanding.

(b) 

Net investment income per share and the ratio of net investment income to average net assets includes $0.10 per share and 0.92%, respectively, resulting from a special dividend.

(c) 

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

(d) 

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

(e) 

Aggregate total return.

(f) 

Includes recoupment of past waived and/or reimbursed fees. Excluding the recoupment of past waived and/or reimbursed fees, the ratios were as follows:

 

       
    

Year Ended

05/31/21

     

 

  Period from

10/01/19

to 5/31/20

    

Year Ended September 30,

 

  
 
    

 

          2019

    

 

          2018

     

 

            2017

     

 

            2016

  

Expense ratios

              N/A                2.61 %              2.35 %              N/A                N/A                2.27 % 

 

(g) 

Annualized.

(h) 

Reorganization, Audit and Printing costs were not annualized in the calculation of the expense ratios. If these expenses were annualized, the total expenses and total expenses after fees waived and/or reimbursed would have been 2.67% and 2.04%, respectively.

See notes to financial statements.

 

 

F I N A N C I A L   H I G H L I G H T S

   33

Financial Highlights  

(For a share outstanding throughout each period)

 

    BlackRock High Equity Income Fund  
    Institutional  
     

 

    

Year Ended

05/31/21

     

 

Period from

10/01/19

to 05/31/20

     Year Ended September 30,  
              2019      2018      2017      2016  
                 

Net asset value, beginning of period

     $ 22.81      $ 26.57       $ 28.16      $ 27.33      $ 37.84      $ 37.71  
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Net investment income(a)

      1.81        0.94         1.24        1.32        0.16        0.24  

Net realized and unrealized gain (loss)

                7.13        (3.54 )        (0.73 )       0.75        5.09        2.81  
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Net increase (decrease) from investment operations

       8.94        (2.60 )        0.51        2.07        5.25        3.05  
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Distributions(b)

                   

From net investment income

       (1.76 )       (1.16 )        (1.05 )       (1.05 )       (0.23 )       —  

From net realized gain

       —        —         (1.05 )       (0.19 )       (15.53 )       (2.92 ) 
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Total distributions

       (1.76 )       (1.16 )        (2.10 )       (1.24 )       (15.76 )       (2.92 ) 
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Net asset value, end of period

     $ 29.99      $ 22.81       $ 26.57      $ 28.16      $ 27.33      $ 37.84  
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Total Return(c)

                   

Based on net asset value

       40.81 %       (9.94 )%(d)        2.27 %       7.81 %       15.40 %       8.64 % 
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Ratios to Average Net Assets

                    

Total expenses

       1.12 %       1.12 %(e)         1.12 %       1.09 %       1.19 %       1.19 %(f)  
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Total expenses after fees waived and/or reimbursed

       0.85 %       0.85 %(e)         0.85 %       0.85 %       0.97 %       0.91 %(f)  
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Net investment income

       6.93 %       5.63 %(e)         4.80 %       4.79 %       0.46 %       0.67 %(f)  
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Supplemental Data

                    

Net assets, end of period (000)

     $ 277,653      $ 128,474       $   151,747      $   248,847      $   462,487      $   686,845  
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

Portfolio turnover rate

       146 %       76 %        79 %       75 %       154 %       72 % 
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

     

 

 

  

 

(a) 

Based on average shares outstanding.

(b) 

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

(c) 

Where applicable, assumes the reinvestment of distributions.

(d) 

Aggregate total return.

(e) 

Annualized.

(f) 

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.01%.

See notes to financial statements.

 

 

34  

2 0 2 1   B L A C K R O C K   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S

Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

    BlackRock High Equity Income Fund (continued)  
    Service  
     

 

    

Year Ended

05/31/21

     

 

Period from

10/01/19

to 05/31/20

     Year Ended September 30,  
              2019      2018      2017     2016  
                 

Net asset value, beginning of period

     $ 20.46      $ 23.91       $ 25.56      $ 24.87      $ 35.61     $ 35.80  
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

    

 

 

  

Net investment income(a)

               1.52        0.80         1.06        1.15        0.10       0.09  

Net realized and unrealized gain (loss)

       6.44        (3.17 )        (0.66 )       0.67        4.73       2.64  
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

    

 

 

  

Net increase (decrease) from investment operations.

       7.96        (2.37 )        0.40        1.82        4.83       2.73  
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

    

 

 

  

Distributions(b)

                  

From net investment income

       (1.52 )       (1.08 )        (1.00 )       (0.94 )       (0.04 )      —  

From net realized gain

       —        —         (1.05 )       (0.19 )       (15.53 )      (2.92 ) 
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

    

 

 

  

Total distributions

       (1.52 )       (1.08 )        (2.05 )       (1.13 )       (15.57 )      (2.92 ) 
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

    

 

 

  

Net asset value, end of period

     $ 26.90      $ 20.46       $ 23.91      $ 25.56      $ 24.87     $ 35.61  
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

    

 

 

  

Total Return(c)

                  

Based on net asset value

       40.46 %       (10.08 )%(d)        2.05 %       7.54 %       15.09 %      8.18 % 
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

    

 

 

  

Ratios to Average Net Assets

                   

Total expenses(e)

      1.37 %       1.36 %(f)        1.31 %       1.32 %       1.37 %(g)      1.43 %(h) 
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

    

 

 

  

Total expenses after fees waived and/or reimbursed

       1.10 %       1.10 %(f)        1.10 %       1.10 %       1.25 %      1.31 %(h) 
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

    

 

 

  

Net investment income

       6.64 %       5.30 %(f)        4.56 %       4.58 %       0.29 %      0.27 %(h) 
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

    

 

 

  

Supplemental Data

                   

Net assets, end of period (000)

     $ 9,444      $ 8,023       $   10,024      $   12,348      $   18,087     $   24,305  
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

    

 

 

  

Portfolio turnover rate

       146 %       76 %        79 %       75 %       154 %      72 % 
   

 

 

     

 

 

      

 

 

     

 

 

     

 

 

    

 

 

  

 

(a) 

Based on average shares outstanding.

(b) 

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

(c) 

Where applicable, assumes the reinvestment of distributions.

(d) 

Aggregate total return.

(e) 

Includes recoupment of past waived and/or reimbursed fees. Excluding the recoupment of past waived and/or reimbursed fees, the ratios were as follows:

 

       
    

Year Ended

05/31/21

     

    Period from

10/01/19

to 5/31/20

     

Year Ended September 30,

 

  
 
     

 

             2019

     

 

             2018

     

 

             2017

    

 

             2016

  

Expense ratios

              N/A                N/A                N/A                N/A                1.37 %              1.30 % 

 

(f) 

Annualized.

(g) 

Includes recoupment of past waived and/or reimbursed fees with no financial impact to the expense ratios.

(h) 

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.01%.

See notes to financial statements.

 

 

F I N A N C I A L   H I G H L I G H T S

   35

Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

   

BlackRock High Equity Income Fund (continued)

 

  
   

Investor A

 

  
   

Year Ended

05/31/21

    

Period from

10/01/19

to 05/31/20

     Year Ended September 30,  
 
   

 

2019

    

 

2018

    

 

2017

    

 

2016

  
             

Net asset value, beginning of period

   $ 19.14     $ 22.43     $ 24.12     $ 23.53     $ 34.47     $ 34.74  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income(a)

    1.42       0.75       1.00       1.08       0.11       0.09  

Net realized and unrealized gain (loss)

     6.03       (2.98 )      (0.64 )      0.65       4.54       2.56  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) from investment operations

     7.45       (2.23 )      0.36       1.73       4.65       2.65  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Distributions(b)

           

From net investment income

     (1.43 )      (1.06 )      (1.00 )      (0.95 )      (0.06 )      —  

From net realized gain

     —       —       (1.05 )      (0.19 )      (15.53 )      (2.92 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total distributions

     (1.43 )      (1.06 )      (2.05 )      (1.14 )      (15.59 )      (2.92 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net asset value, end of period

   $ 25.16     $ 19.14     $ 22.43     $ 24.12     $ 23.53     $ 34.47  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Return(c)

           

Based on net asset value

     40.44 %      (10.09 )%(d)      2.02 %      7.58 %      15.06 %      8.20 % 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Ratios to Average Net Assets

            

Total expenses

     1.40 %      1.40 %(e)       1.37 %      1.38 %      1.45 %      1.47 %(f)  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total expenses after fees waived and/or reimbursed

     1.10 %      1.10 %(e)       1.10 %      1.10 %      1.25 %      1.31 %(f)  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income

     6.64 %      5.35 %(e)       4.55 %      4.57 %      0.36 %      0.27 %(f)  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Supplemental Data

            

Net assets, end of period (000)

   $  208,207     $  172,696     $   215,121     $   214,095     $   278,649     $   377,271  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Portfolio turnover rate

     146 %      76 %      79 %      75 %      154 %      72 % 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

(a) 

Based on average shares outstanding.

(b) 

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

(c) 

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

(d) 

Aggregate total return.

(e) 

Annualized.

(f) 

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.01%.

See notes to financial statements.

 

 

36  

2 0 2 1   B L A C K R O C K   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S

Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

   

BlackRock High Equity Income Fund (continued)

 

  
   

Investor C

 

  
   

Year Ended

05/31/21

    

Period from

10/01/19

to 05/31/20

     Year Ended September 30,  
 
   

 

2019

    

 

2018

    

 

2017

    

 

2016

  
             

Net asset value, beginning of period

   $ 11.98     $ 14.35     $ 16.19     $ 16.13     $ 28.15     $ 29.10  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income (loss)(a)

    0.78       0.41       0.55       0.61       (0.12 )      (0.13 ) 

Net realized and unrealized gain (loss)

     3.78       (1.88 )      (0.45 )      0.44       3.63       2.10  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) from investment operations

     4.56       (1.47 )      0.10       1.05       3.51       1.97  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Distributions(b)

           

From net investment income

     (0.79 )      (0.90 )      (0.89 )      (0.80 )      —       —  

From net realized gain

     —       —       (1.05 )      (0.19 )      (15.53 )      (2.92 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total distributions

     (0.79 )      (0.90 )      (1.94 )      (0.99 )      (15.53 )      (2.92 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net asset value, end of period

   $ 15.75     $ 11.98     $ 14.35     $ 16.19     $ 16.13     $ 28.15  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Return(c)

           

Based on net asset value

     39.41 %      (10.52 )%(d)      1.30 %      6.75 %      14.23 %      7.38 % 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Ratios to Average Net Assets

            

Total expenses

     2.18 %      2.16 %(e)      2.12 %      2.10 %      2.18 %      2.20 %(f)(g) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total expenses after fees waived and/or reimbursed

     1.85 %      1.85 %(e)      1.85 %      1.85 %      2.00 %      2.05 %(f)  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income (loss)

     5.85 %      4.57 %(e)      3.84 %      3.82 %      (0.48 )%      (0.47 )%(f) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Supplemental Data

            

Net assets, end of period (000)

   $ 22,379     $ 24,163     $   36,132     $   93,399     $   123,321     $   173,249  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Portfolio turnover rate

     146 %      76 %      79 %      75 %      154 %      72 % 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

(a) 

Based on average shares outstanding.

(b) 

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

(c) 

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

(d) 

Aggregate total return.

(e) 

Annualized.

(f) 

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.01%.

(g) 

Includes recoupment of past waived and/or reimbursed fees with no financial impact to the expense ratios.

See notes to financial statements.

 

 

F I N A N C I A L   H I G H L I G H T S

   37

Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

   

    BlackRock High Equity Income Fund (continued)

 

  
   

    Class K

 

  
         

 

Period from

  
    Year Ended         04/21/20 (a) 
    05/31/21     to 05/31/20  
         

Net asset value, beginning of period

                                  $ 22.81                            $ 21.04  
   

 

 

      

 

 

  

Net investment income(b)

      1.78         0.20  

Net realized and unrealized gain

       7.19         1.77  
   

 

 

      

 

 

  

Net increase from investment operations

       8.97         1.97  
   

 

 

      

 

 

  

Distributions from net investment income(c)

      (1.78 )        (0.20 ) 
   

 

 

      

 

 

  

Net asset value, end of period

     $ 30.00       $ 22.81  
   

 

 

      

 

 

  

Total Return(d)

       

Based on net asset value

       40.93 %        9.35 %(e) 
   

 

 

      

 

 

  

Ratios to Average Net Assets

        

Total expenses

       1.01 %        0.99 %(f) 
   

 

 

      

 

 

  

Total expenses after fees waived and/or reimbursed

       0.80 %        0.80 %(f) 
   

 

 

      

 

 

  

Net investment income

       6.94 %        8.28 %(f) 
   

 

 

      

 

 

  

Supplemental Data

        

Net assets, end of period (000)

     $ 359       $ 288  
   

 

 

      

 

 

  

Portfolio turnover rate

       146 %        76 %(g)  
   

 

 

      

 

 

  

 

(a) 

Commencement of operations.

(b) 

Based on average shares outstanding.

(c) 

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

(d) 

Where applicable, assumes the reinvestment of distributions.

(e) 

Aggregate total return.

(f) 

Annualized.

(g) 

Portfolio turnover is representative of the Fund for the entire year.

See notes to financial statements.

 

 

38  

2 0 2 1   B L A C K R O C K   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S

Financial Highlights

(For a share outstanding throughout each period)

 

   

BlackRock International Dividend Fund

 

  
   

Institutional

 

  
   

Year Ended

05/31/21

    

Period from

10/01/19

to 05/31/20

    

Year Ended September 30,

 

  
 
   

 

2019

    

 

2018

    

 

2017

    

 

2016

  
             

Net asset value, beginning of period

   $ 28.23     $ 28.67     $ 29.16     $ 31.36     $ 33.58     $ 31.10  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income(a)

    0.85       0.42       0.70       0.76       0.49       0.36  

Net realized and unrealized gain (loss)

     7.81       (0.40 )      0.32       (1.57 )      2.85       2.18  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) from investment operations

     8.66       0.02       1.02       (0.81 )      3.34       2.54  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Distributions(b)

           

From net investment income

     (0.53 )      (0.39 )      (0.66 )      (0.98 )      (1.47 )      (0.06 ) 

From net realized gain

     —       (0.07 )      (0.85 )      (0.41 )      (4.09 )      —  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total distributions

     (0.53 )      (0.46 )      (1.51 )      (1.39 )      (5.56 )      (0.06 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net asset value, end of period

   $ 36.36     $ 28.23     $ 28.67     $ 29.16     $ 31.36     $ 33.58  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Return(c)

           

Based on net asset value

     30.98 %      0.08 %(d)      3.86 %      (2.67 )%(e)      10.61 %      8.20 % 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Ratios to Average Net Assets

            

Total expenses

     1.13 %      1.17 %(f)(g)      1.15 %      1.14 %      1.23 %(h)       1.26 %(h)(i) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total expenses after fees waived and/or reimbursed

     0.84 %      0.84 %(f)(g)      0.84 %      0.84 %      1.01 %      1.06 %(i)  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income

     2.63 %      2.23 %(f)      2.52 %      2.50 %      1.51 %      1.15 %(i)  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Supplemental Data

            

Net assets, end of period (000)

   $ 101,899     $ 74,681     $   83,814     $   102,541     $   198,206     $   353,512  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Portfolio turnover rate.

     83 %      29 %      22 %      25 %      130 %      47 % 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

(a) 

Based on average shares outstanding.

(b) 

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

(c) 

Where applicable, assumes the reinvestment of distributions.

(d) 

Aggregate total return.

(e) 

Includes the litigation settlement amount. Excluding this amount, the Fund’s total return is (2.81)%.

(f) 

Annualized.

(g) 

Audit and Printing costs were not annualized in the calculation of the expense ratios. If these expenses were annualized, the total expenses and total expenses after fees waived and/or reimbursed would have been 1.19% and 0.84%, respectively.

(h) 

Includes recoupment of past waived and/or reimbursed fees with no financial impact to the expense ratios.

(i) 

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.01%.

See notes to financial statements.

 

 

F I N A N C I A L   H I G H L I G H T S

   39

Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

          

BlackRock International Dividend Fund (continued)

 

  
          

Service

 

  
   

Year Ended

05/31/21

    

Period from

10/01/19

to 05/31/20

    

Year Ended September 30,

 

  
 
   

 

2019

    

 

2018

    

 

2017

    

 

2016

  
                 

Net asset value, beginning of period

     $ 26.70              $  27.14     $ 27.68     $ 29.76     $ 32.05     $ 29.72  
   

 

 

      

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income(a)

      0.69         0.36       0.59       0.65       0.35       0.23  

Net realized and unrealized gain (loss)

       7.41         (0.39 )      0.31       (1.49 )      2.75       2.10  
   

 

 

      

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) from investment operations

       8.10         (0.03 )      0.90       (0.84 )      3.10       2.33  
   

 

 

      

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Distributions(b)

               

From net investment income

       (0.45 )        (0.34 )      (0.59 )      (0.83 )      (1.30 )      —  

From net realized gain

       —         (0.07 )      (0.85 )      (0.41 )      (4.09 )      —  
   

 

 

      

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total distributions

       (0.45 )        (0.41 )      (1.44 )      (1.24 )      (5.39 )      —  
   

 

 

      

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net asset value, end of period

     $ 34.35       $ 26.70     $ 27.14     $ 27.68     $ 29.76     $ 32.05  
   

 

 

      

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Return(c)

               

Based on net asset value

       30.64 %        (0.10 )%(d)      3.62 %      (2.90 )%(e)      10.29 %      7.84 % 
   

 

 

      

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Ratios to Average Net Assets

                

Total expenses(f)

      1.38 %        1.41 %(g)(h)      1.33 %      1.37 %      1.48 %      1.54 %(i)  
   

 

 

      

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total expenses after fees waived and/or reimbursed

       1.09 %        1.09 %(g)(h)      1.09 %      1.09 %      1.32 %      1.38 %(i)  
   

 

 

      

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income

       2.26 %        2.01 %(g)      2.25 %      2.27 %      1.13 %      0.76 %(i)  
   

 

 

      

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Supplemental Data

                

Net assets, end of period (000)

     $ 3,782       $ 3,239     $   3,196     $   4,434     $   7,142     $   12,706  
   

 

 

      

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Portfolio turnover rate

       83 %        29 %      22 %      25 %      130 %      47 % 
   

 

 

      

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

(a) 

Based on average shares outstanding.

(b) 

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

(c) 

Where applicable, assumes the reinvestment of distributions.

(d) 

Aggregate total return.

(e) 

Includes the litigation settlement amount. Excluding this amount, the Fund’s total return is (3.04)%.

(f)

Includes recoupment of past waived and/or reimbursed fees. Excluding the recoupment of past waived and/or reimbursed fees, the ratios were as follows:

 

       
    

Year Ended

05/31/21

     

  Period from

10/01/19

to 5/31/20

    

Year Ended September 30,

 

  
 
    

 

          2019

     

 

          2018

     

 

            2017

     

 

            2016

  

Expense ratios

              N/A                1.41 %              N/A                N/A                N/A                1.53 % 

 

(g) 

Annualized.

(h) 

Audit and Printing costs were not annualized in the calculation of the expense ratios. If these expenses were annualized, the total expenses and total expenses after fees waived and/or reimbursed would have been 1.43% and 1.09%, respectively.

(i) 

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.01%.

See notes to financial statements.

 

 

40  

2 0 2 1   B L A C K R O C K   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S

Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

           BlackRock International Dividend Fund (continued)  
           Investor A  
                Period from                                 
    Year Ended            10/01/19     Year Ended September 30,  
          05/31/21     to 05/31/20           2019      2018     2017     2016  
                   

Net asset value, beginning of period

              $ 26.26                 $ 26.69       $ 27.26      $ 29.30     $ 31.68     $ 29.38  
   

 

 

       

 

 

      

 

 

     

 

 

    

 

 

    

 

 

  

Net investment income(a)

      0.70          0.34         0.60        0.61       0.37       0.24  

Net realized and unrealized gain (loss)

       7.28          (0.37 )        0.27        (1.43 )      2.69       2.06  
   

 

 

       

 

 

      

 

 

     

 

 

    

 

 

    

 

 

  

Net increase (decrease) from investment operations

       7.98          (0.03 )        0.87        (0.82 )      3.06       2.30  
   

 

 

       

 

 

      

 

 

     

 

 

    

 

 

    

 

 

  

Distributions(b)

                   

From net investment income

       (0.46 )         (0.33 )        (0.59 )       (0.81 )      (1.35 )      —  

From net realized gain

       —          (0.07 )        (0.85 )       (0.41 )      (4.09 )      —  
   

 

 

       

 

 

      

 

 

     

 

 

    

 

 

    

 

 

  

Total distributions

       (0.46 )         (0.40 )        (1.44 )       (1.22 )      (5.44 )      —  
   

 

 

       

 

 

      

 

 

     

 

 

    

 

 

    

 

 

  

Net asset value, end of period

     $ 33.78        $ 26.26       $ 26.69      $ 27.26     $ 29.30     $ 31.68  
   

 

 

       

 

 

      

 

 

     

 

 

    

 

 

    

 

 

  

Total Return(c)

                   

Based on net asset value

       30.67 %         (0.08 )%(d)        3.57 %       (2.89 )%(e)      10.27 %      7.83 % 
   

 

 

       

 

 

      

 

 

     

 

 

    

 

 

    

 

 

  

Ratios to Average Net Assets

                    

Total expenses

       1.45 %         1.48 %(f)(g)        1.43 %       1.44 %      1.54 %(h)       1.57 %(h)(i) 
   

 

 

       

 

 

      

 

 

     

 

 

    

 

 

    

 

 

  

Total expenses after fees waived and/or reimbursed

       1.09 %         1.09 %(f)(g)        1.09 %       1.09 %      1.30 %      1.39 %(i)  
   

 

 

       

 

 

      

 

 

     

 

 

    

 

 

    

 

 

  

Net investment income

       2.34 %         1.92 %(f)         2.30 %       2.14 %      1.20 %      0.81 %(i)  
   

 

 

       

 

 

      

 

 

     

 

 

    

 

 

    

 

 

  

Supplemental Data

                    

Net assets, end of period (000)

     $   128,077        $   100,753       $   125,196      $   140,473     $   325,103     $   350,855  
   

 

 

       

 

 

      

 

 

     

 

 

    

 

 

    

 

 

  

Portfolio turnover rate

       83 %         29 %        22 %       25 %      130 %      47 % 
   

 

 

       

 

 

      

 

 

     

 

 

    

 

 

    

 

 

  

 

(a) 

Based on average shares outstanding.

(b) 

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

(c) 

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

(d) 

Aggregate total return.

(e) 

Includes the litigation settlement amount. Excluding this amount, the Fund’s total return is (3.03)%.

(f) 

Annualized.

(g) 

Audit and Printing costs were not annualized in the calculation of the expense ratios. If these expenses were annualized, the total expenses and total expenses after fees waived and/or reimbursed would have been 1.51% and 1.09%, respectively.

(h) 

Includes recoupment of past waived and/or reimbursed fees with no financial impact to the expense ratios.

(i) 

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.01%.

See notes to financial statements.

 

 

F I N A N C I A L   H I G H L I G H T S

   41

Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

           BlackRock International Dividend Fund (continued)  
           Investor C  
                Period from                                 
    Year Ended            10/01/19     Year Ended September 30,  
          05/31/21     to 05/31/20           2019      2018     2017     2016  
                   

Net asset value, beginning of period

              $ 22.85                 $ 23.25       $ 23.94      $ 25.81     $ 28.39     $ 26.52  
   

 

 

       

 

 

      

 

 

     

 

 

    

 

 

    

 

 

  

Net investment income(a)

      0.33          0.18         0.32        0.39       0.12       0.02  

Net realized and unrealized gain (loss)

       6.41          (0.32 )        0.26        (1.30 )      2.42       1.85  
   

 

 

       

 

 

      

 

 

     

 

 

    

 

 

    

 

 

  

Net increase (decrease) from investment operations

       6.74          (0.14 )        0.58        (0.91 )      2.54       1.87  
   

 

 

       

 

 

      

 

 

     

 

 

    

 

 

    

 

 

  

Distributions(b)

                   

From net investment income

       (0.26 )         (0.19 )        (0.42 )       (0.55 )      (1.03 )      —  

From net realized gain

       —          (0.07 )        (0.85 )       (0.41 )      (4.09 )      —  
   

 

 

       

 

 

      

 

 

     

 

 

    

 

 

    

 

 

  

Total distributions

       (0.26 )         (0.26 )        (1.27 )       (0.96 )      (5.12 )      —  
   

 

 

       

 

 

      

 

 

     

 

 

    

 

 

    

 

 

  

Net asset value, end of period

     $   29.33        $   22.85       $   23.25      $   23.94     $   25.81     $   28.39  
   

 

 

       

 

 

      

 

 

     

 

 

    

 

 

    

 

 

  

Total Return(c)

                   

Based on net asset value

       29.70 %         (0.58 )%(d)        2.80 %       (3.63 )%(e)      9.46 %      7.05 % 
   

 

 

       

 

 

      

 

 

     

 

 

    

 

 

    

 

 

  

Ratios to Average Net Assets

                    

Total expenses

       2.28 %         2.27 %(f)(g)        2.20 %       2.19 %      2.30 %(h)      2.35 %(h)(i) 
   

 

 

       

 

 

      

 

 

     

 

 

    

 

 

    

 

 

  

Total expenses after fees waived and/or reimbursed

       1.84 %         1.84 %(f)(g)        1.84 %       1.84 %      2.05 %      2.13 %(i) 
   

 

 

       

 

 

      

 

 

     

 

 

    

 

 

    

 

 

  

Net investment income

       1.31 %         1.15 %(f)        1.39 %       1.57 %      0.44 %      0.07 %(i) 
   

 

 

       

 

 

      

 

 

     

 

 

    

 

 

    

 

 

  

Supplemental Data

                    

Net assets, end of period (000)

     $ 5,607        $ 9,906       $   14,805      $   36,239     $   53,884     $   76,630  
   

 

 

       

 

 

      

 

 

     

 

 

    

 

 

    

 

 

  

Portfolio turnover rate

       83 %         29 %        22 %       25 %      130 %      47 % 
   

 

 

       

 

 

      

 

 

     

 

 

    

 

 

    

 

 

  

 

(a) 

Based on average shares outstanding.

(b) 

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

(c) 

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

(d) 

Aggregate total return.

(e) 

Includes the litigation settlement amount. Excluding this amount, the Fund’s total return is (3.79)%.

(f) 

Annualized.

(g) 

Audit and Printing costs were not annualized in the calculation of the expense ratios. If these expenses were annualized, the total expenses and total expenses after fees waived and/or reimbursed would have been 2.29% and 1.84%, respectively.

(h) 

Includes recoupment of past waived and/or reimbursed fees with no financial impact to the expense ratios.

(i) 

Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.01%.

See notes to financial statements.

 

 

42  

2 0 2 1   B L A C K R O C K   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S

Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

           BlackRock International Dividend Fund (continued)  
           Class K  
     

 

      

 

     Period from      

 

           Period from  
    Year Ended    

 

 

 

      10/01/19       Year Ended          01/25/18 (a) 
            05/31/21     to 05/31/20            09/30/19     to 09/30/18  
                 

Net asset value, beginning of period

              $ 28.23                  $ 28.68                $ 29.17                 $ 32.08  
   

 

 

       

 

 

      

 

 

       

 

 

  

Net investment income(b)

      0.87          0.44         0.73          0.56  

Net realized and unrealized gain (loss)

       7.80          (0.42 )        0.30          (2.91 ) 
   

 

 

       

 

 

      

 

 

       

 

 

  

Net increase (decrease) from investment operations

       8.67          0.02         1.03          (2.35 ) 
   

 

 

       

 

 

      

 

 

       

 

 

  

Distributions(c)

                 

From net investment income

       (0.54 )         (0.40 )        (0.67 )         (0.56 ) 

From net realized gain

       —          (0.07 )        (0.85 )         —  
   

 

 

       

 

 

      

 

 

       

 

 

  

Total distributions

       (0.54 )         (0.47 )        (1.52 )         (0.56 ) 
   

 

 

       

 

 

      

 

 

       

 

 

  

Net asset value, end of period

     $ 36.36        $ 28.23       $ 28.68        $ 29.17  
   

 

 

       

 

 

      

 

 

       

 

 

  

Total Return(d)

                 

Based on net asset value

       31.04 %         0.09 %(e)         3.92 %         (7.33 )%(e)(f) 
   

 

 

       

 

 

      

 

 

       

 

 

  

Ratios to Average Net Assets

                  

Total expenses

       1.03 %         1.08 %(g)(h)        1.04 %         1.02 %(g)(i) 
   

 

 

       

 

 

      

 

 

       

 

 

  

Total expenses after fees waived and/or reimbursed

       0.79 %         0.79 %(g)(h)        0.79 %         0.79 %(g)  
   

 

 

       

 

 

      

 

 

       

 

 

  

Net investment income

       2.68 %         2.28 %(g)         2.63 %         2.81 %(g)  
   

 

 

       

 

 

      

 

 

       

 

 

  

Supplemental Data

                  

Net assets, end of period (000)

     $ 5,936        $ 3,266       $ 3,847        $ 3,659  
   

 

 

       

 

 

      

 

 

       

 

 

  

Portfolio turnover rate

       83 %         29 %        22 %         25 %(j)  
   

 

 

       

 

 

      

 

 

       

 

 

  

 

(a) 

Commencement of operations.

(b) 

Based on average shares outstanding.

(c) 

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

(d) 

Where applicable, assumes the reinvestment of distributions.

(e) 

Aggregate total return.

(f) 

Includes the litigation settlement amount. Excluding this amount, the Fund’s total return is (7.45)%.

(g) 

Annualized.

(h) 

Audit and Printing costs were not annualized in the calculation of the expense ratios. If these expenses were annualized, the total expenses and total expenses after fees waived and/or reimbursed would have been 1.10% and 0.79%, respectively.

(i) 

Offering and board realignment consolidation costs were not annualized in the calculation of the expense ratio. If these expenses were annualized, the total expense ratio would have been 1.03%.

(j) 

Portfolio turnover is representative of the Fund for the entire year.

See notes to financial statements.

 

 

F I N A N C I A L   H I G H L I G H T S

   43

Notes to Financial Statements  

 

 

1.

ORGANIZATION

BlackRock FundsSM (the “Trust”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Trust is organized as a Massachusetts business trust. The following, each of which is a series of the Trust, are referred to herein collectively as the “Funds” or individually as a “Fund”:

 

 

  
Fund Name   Herein Referred To As      Diversification Classification  

 

  

BlackRock Energy Opportunities Fund

     Energy Opportunities        Non-Diversified  

BlackRock High Equity Income Fund

     High Equity Income        Diversified  

BlackRock International Dividend Fund

     International Dividend        Diversified  

 

  

Each Fund offers multiple classes of shares. All classes of shares have identical voting, dividend, liquidation and other rights and are subject to the same terms and conditions, except that certain classes bear expenses related to the shareholder servicing and distribution of such shares. Institutional and Class K Shares are sold only to certain eligible investors. Service, Investor A and Investor C Shares bear certain expenses related to shareholder servicing of such shares, and Investor C Shares also bear certain expenses related to the distribution of such shares. Investor A and Investor C Shares are generally available through financial intermediaries. Each class has exclusive voting rights with respect to matters relating to its shareholder servicing and distribution expenditures (except that Investor C shareholders may vote on material changes to the Investor A Shares distribution and service plan).

 

 

  
Share Class   Initial Sales Charge      CDSC     Conversion Privilege  

 

  

Institutional, Service and Class K Shares

     No        No       None  

Investor A Shares

     Yes        No (a)      None  

Investor C Shares

     No        Yes (b)      To Investor A Shares after approximately 8 years  

 

  

 

  (a) 

Investor A Shares may be subject to a contingent deferred sales charge (“CDSC”) for certain redemptions where no initial sales charge was paid at the time of purchase.

 

 

  (b) 

A CDSC of 1.00% is assessed on certain redemptions of Investor C Shares made within one year after purchase.

 

Effective on or about the close of business on July 6, 2021, Energy Opportunities and International Dividend’s Service Shares will be converted into Investor A Shares. Effective on or about the close of business on August 18, 2021, High Equity Income Service Shares will be converted into Investor A Shares.

The Funds, together with certain other registered investment companies advised by BlackRock Advisors, LLC (the “Manager”) or its affiliates, are included in a complex of equity, multi-asset, index and money market funds referred to as the BlackRock Multi-Asset Complex.

Prior Year Reorganization: The Board of Trustees (the “Board”) of Energy Opportunities (the “Acquiring Fund”) approved the reorganization of BlackRock Energy & Resources Portfolio (the “Target Fund” ) into the Acquiring Fund. As a result, the Acquiring Fund acquired substantially all of the assets and assumed certain liabilities of the Target Fund in exchange for an equal aggregate value of newly-issued shares of the Acquiring Fund.

Each shareholder of the Target Fund received shares of the Acquiring Fund in an amount equal to the aggregate net asset value (“NAV”) of such shareholder’s Target Fund shares, as determined at the close of business on January 10, 2020, less the costs of the Target Fund’s reorganization.

The reorganization was accomplished by a tax-free exchange of shares of the Acquiring Fund in the following amounts and at the following conversion ratios:

 

 

  
Target Fund’s Share Class  

Shares Prior to

Reorganization

      Conversion Ratio     

Acquiring Fund’s

Share Class

    

Shares of

Acquiring Fund

  

 

  

Institutional

     666,762        1.64341300        Institutional        1,095,766  

Investor A

     4,649,385        1.44165000        Investor A        6,702,786  

Investor C

     861,498        1.03784900        Investor C        894,104  

 

  

The Target Fund’s net assets and composition of net assets on January 10, 2020, the valuation date of the reorganization, were as follows:    

 

 

  
    Target Fund  

 

  

Net assets

     $  84,426,614  
 

 

 

  

Paid-in capital

     $  344,108,684  

Accumulated loss

     (259,682,070 ) 

 

  

For financial reporting purposes, assets received and shares issued by the Acquiring Fund were recorded at fair value. However, the cost basis of the investments received from the Target Fund was carried forward to align ongoing reporting of the Acquiring Fund’s realized and unrealized gains and losses with amounts distributable to shareholders for tax purposes.

The net assets of the Acquiring Fund before the reorganization were $72,886,652. The aggregate net assets of the Acquiring Fund immediately after the reorganization amounted to $157,313,266. The Target Fund’s fair value and cost of financial instruments prior to the reorganization were as follows:

 

 

  
Target Fund  

Fair Value of

Investments

     

Cost of

Investments

  

 

  

BlackRock Energy & Resources Portfolio

   $ 84,656,807      $ 81,991,609  

 

  

 

 

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Notes to Financial Statements  (continued)

 

The purpose of this transaction was to combine the two funds managed by the Manager with substantially similar (but not identical) investment objectives, investment policies, strategies, risks and restrictions. The reorganization was a tax-free event and was effective on January 13, 2020.

Assuming the reorganization had been completed on October 1, 2019, the beginning of the fiscal reporting period of the Acquiring Fund, the pro forma results of operations for the period ended May 31, 2020, are as follows:

• Net investment income: $2,510,797

• Net realized and change in unrealized loss on investments: $(41,741,062)

• Net decrease in net assets resulting from operations: $(39,230,265)

Because the combined investment portfolios have been managed as a single integrated portfolio since the reorganization was completed, it is not practicable to separate the amounts of revenue and earnings of the Target Fund that have been included in the Acquiring Fund’s Statements of Operations since January 13, 2020.

Reorganization costs incurred by the Acquiring Fund in connection with the reorganization were expensed by the Acquiring Fund.

 

2.

SIGNIFICANT ACCOUNTING POLICIES

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

Investment Transactions and Income Recognition: For financial reporting purposes, investment transactions are recorded on the dates the transactions are executed. Realized gains and losses on investment transactions are determined using the specific identification method. Dividend income and capital gain distributions, if any, are recorded on the ex-dividend dates. Non-cash dividends, if any, are recorded on the ex-dividend dates at fair value. Dividends from foreign securities where the ex-dividend dates may have passed are subsequently recorded when the Funds are informed of the ex-dividend dates. Under the applicable foreign tax laws, a withholding tax at various rates may be imposed on capital gains, dividends and interest. Interest income, including amortization and accretion of premiums and discounts on debt securities, is recognized daily on an accrual basis. Income, expenses and realized and unrealized gains and losses are allocated daily to each class based on its relative net assets.

Foreign Currency Translation: Each Fund’s books and records are maintained in U.S. dollars. Securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars using exchange rates determined as of the close of trading on the New York Stock Exchange (“NYSE”). Purchases and sales of investments are recorded at the rates of exchange prevailing on the respective dates of such transactions. Generally, when the U.S. dollar rises in value against a foreign currency, the investments denominated in that currency will lose value; the opposite effect occurs if the U.S. dollar falls in relative value.

Each Fund does not isolate the effect of fluctuations in foreign exchange rates from the effect of fluctuations in the market prices of investments for financial reporting purposes. Accordingly, the effects of changes in exchange rates on investments are not segregated in the Statements of Operations from the effects of changes in market prices of those investments, but are included as a component of net realized and unrealized gain (loss) from investments. Each Fund reports realized currency gains (losses) on foreign currency related transactions as components of net realized gain (loss) for financial reporting purposes, whereas such components are generally treated as ordinary income for U.S. federal income tax purposes.

Foreign Taxes: The Funds may be subject to foreign taxes (a portion of which may be reclaimable) on income, stock dividends, capital gains on investments, or certain foreign currency transactions. All foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates that exist in the foreign jurisdictions in which each Fund invests. These foreign taxes, if any, are paid by each Fund and are reflected in its Statements of Operations as follows: foreign taxes withheld at source are presented as a reduction of income, foreign taxes on securities lending income are presented as a reduction of securities lending income, foreign taxes on stock dividends are presented as “Foreign taxes withheld”, and foreign taxes on capital gains from sales of investments and foreign taxes on foreign currency transactions are included in their respective net realized gain (loss) categories. Foreign taxes payable or deferred as of May 31, 2021, if any, are disclosed in the Statements of Assets and Liabilities.

The Funds file withholding tax reclaims in certain jurisdictions to recover a portion of amounts previously withheld. The Funds may record a reclaim receivable based on collectability, which includes factors such as the jurisdiction’s applicable laws, payment history and market convention. The Statements of Operations includes tax reclaims recorded as well as professional and other fees, if any, associated with recovery of foreign withholding taxes.

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

Offering Costs: Offering costs are amortized over a 12-month period beginning with the commencement of operations of a class of shares.

Indemnifications: In the normal course of business, a Fund enters into contracts that contain a variety of representations that provide general indemnification. A Fund’s maximum exposure under these arrangements is unknown because it involves future potential claims against a Fund, which cannot be predicted with any certainty.

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

 

 

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   45

Notes to Financial Statements  (continued)

 

The Funds have an arrangement with their custodian whereby credits are earned on uninvested cash balances, which could be used to reduce custody fees and/or overdraft charges. The Funds may incur charges on overdrafts, subject to certain conditions.

 

3.

INVESTMENT VALUATION AND FAIR VALUE MEASUREMENTS

Investment Valuation Policies: Each Fund’s investments are valued at fair value (also referred to as “market value” within the financial statements) each day that the Fund is open for business and, for financial reporting purposes, as of the report date. U.S. GAAP defines fair value as the price a fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. Each Fund determines the fair values of its financial instruments using various independent dealers or pricing services under policies approved by the Board. If a security’s market price is not readily available or does not otherwise accurately represent the fair value of the security, the security will be valued in accordance with a policy approved by the Board as reflecting fair value. The BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) is the committee formed by management to develop global pricing policies and procedures and to oversee the pricing function for all financial instruments.

Fair Value Inputs and Methodologies: The following methods and inputs are used to establish the fair value of each Fund’s assets and liabilities:

 

  •  

Equity investments traded on a recognized securities exchange are valued at that day’s official closing price, as applicable, on the exchange where the stock is primarily traded. Equity investments traded on a recognized exchange for which there were no sales on that day may be valued at the last available bid (long positions) or ask (short positions) price.

Generally, trading in foreign instruments is substantially completed each day at various times prior to the close of trading on the NYSE. Occasionally, events affecting the values of such instruments may occur between the foreign market close and the close of trading on the NYSE that may not be reflected in the computation of the Fund’s net assets. Each business day, the Funds use a pricing service to assist with the valuation of certain foreign exchange-traded equity securities and foreign exchange- traded and over-the-counter (“OTC”) options (the “Systematic Fair Value Price”). Using current market factors, the Systematic Fair Value Price is designed to value such foreign securities and foreign options at fair value as of the close of trading on the NYSE, which follows the close of the local markets.

 

  •  

Fixed-income investments for which market quotations are readily available are generally valued using the last available bid price or current market quotations provided by independent dealers or third party pricing services. Pricing services generally value fixed-income securities assuming orderly transactions of an institutional round lot size, but a fund may hold or transact in such securities in smaller, odd lot sizes. Odd lots may trade at lower prices than institutional round lots. The pricing services may use matrix pricing or valuation models that utilize certain inputs and assumptions to derive values, including transaction data (e.g., recent representative bids and offers), market data, credit quality information, perceived market movements, news, and other relevant information. Certain fixed-income securities, including asset-backed and mortgage related securities may be valued based on valuation models that consider the estimated cash flows of each tranche of the entity, establish a benchmark yield and develop an estimated tranche specific spread to the benchmark yield based on the unique attributes of the tranche. The amortized cost method of valuation may be used with respect to debt obligations with sixty days or less remaining to maturity unless the Manager determines such method does not represent fair value.

 

  •  

Investments in open-end U.S. mutual funds (including money market funds) are valued at that day’s published NAV.

If events (e.g., a market closure, market volatility, company announcement or a natural disaster) occur that are expected to materially affect the value of such investment, or in the event that application of these methods of valuation results in a price for an investment that is deemed not to be representative of the market value of such investment, or if a price is not available, the investment will be valued by the Global Valuation Committee, or its delegate, in accordance with a policy approved by the Board as reflecting fair value (“Fair Valued Investments”). The fair valuation approaches that may be used by the Global Valuation Committee include market approach, income approach and cost approach. Valuation techniques such as discounted cash flow, use of market comparables and matrix pricing are types of valuation approaches and are typically used in determining fair value. When determining the price for Fair Valued Investments, the Global Valuation Committee, or its delegate, seeks to determine the price that each Fund might reasonably expect to receive or pay from the current sale or purchase of that asset or liability in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the Global Valuation Committee, or its delegate, deems relevant and consistent with the principles of fair value measurement. The pricing of all Fair Valued Investments is subsequently reported to the Board or a committee thereof on a quarterly basis.

For investments in equity or debt issued by privately held companies or funds (“Private Company” or collectively, the “Private Companies”) and other Fair Valued Investments, the fair valuation approaches that are used by the Global Valuation Committee and third party pricing services utilize one or a combination of, but not limited to, the following inputs.

 

Standard Inputs Generally Considered By Third Party Pricing Services

Market approach

  

(i)  recent market transactions, including subsequent rounds of financing, in the underlying investment or comparable issuers;

 

(ii) recapitalizations and other transactions across the capital structure; and

   

(iii)   market multiples of comparable issuers.

Income approach

  

(i)  future cash flows discounted to present and adjusted as appropriate for liquidity, credit, and/or market risks;

 

(ii) quoted prices for similar investments or assets in active markets; and

   

(iii)   other risk factors, such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks, recovery rates, liquidation amounts and/or default rates.

Cost approach.

  

(i)  audited or unaudited financial statements, investor communications and financial or operational metrics issued by the Private Company;

 

(ii) changes in the valuation of relevant indices or publicly traded companies comparable to the Private Company;

 

(iii)   relevant news and other public sources; and

   

(iv)   known secondary market transactions in the Private Company’s interests and merger or acquisition activity in companies comparable to the Private Company.

 

 

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Notes to Financial Statements  (continued)

 

Investments in series of preferred stock issued by Private Companies are typically valued utilizing market approach in determining the enterprise value of the company. Such investments often contain rights and preferences that differ from other series of preferred and common stock of the same issuer. Enterprise valuation techniques such as an option pricing model (“OPM”), a probability weighted expected return model (“PWERM”), current value method or a hybrid of those techniques are used, as deemed appropriate under the circumstances. The use of these valuation techniques involve a determination of the exit scenarios of the investment in order to appropriately allocate the enterprise value of the company among the various parts of its capital structure.

The Private Companies are not subject to the public company disclosure, timing, and reporting standards applicable to other investments held by a Fund. Typically, the most recently available information by a Private Company is as of a date that is earlier than the date a Fund is calculating its NAV. This factor may result in a difference between the value of the investment and the price a Fund could receive upon the sale of the investment.

Fair Value Hierarchy: Various inputs are used in determining the fair value of 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 each 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); and

 

  •  

Level 3 – Unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Global Valuation Committee’s assumptions used in determining the fair value of 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. Investments classified within Level 3 have significant unobservable inputs used by the Global Valuation Committee in determining the price for Fair Valued Investments. Level 3 investments include equity or debt issued by privately held companies or funds that may not have a secondary market and/or may have a limited number of investors. The categorization of a value determined for financial instruments is based on the pricing transparency of the financial instruments and is not necessarily an indication of the risks associated with investing in those securities.

 

4.

SECURITIES AND OTHER INVESTMENTS

Equity-Linked Notes: Equity-linked notes seek to generate income and provide exposure to the performance of an underlying security, group of securities or exchange-traded funds (the “underlying reference instrument”). In an equity-linked note, a fund purchases a note from a bank or broker-dealer and in return, the issuer provides for interest payments during the term of the note. At maturity or when the security is sold, a fund will either settle by taking physical delivery of the underlying reference instrument or by receipt of a cash settlement amount equal to the value of the note at termination or maturity. The use of equity-linked notes involves the risk that the value of the note changes unfavorably due to movements in the value of the underlying reference instrument. Equity-linked notes are considered general unsecured contractual obligations of the bank or broker-dealer. A fund must rely on the creditworthiness of the issuer for its investment returns.

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.

Securities Lending: Certain Funds may lend their securities to approved borrowers, such as brokers, dealers and other financial institutions. The borrower pledges and maintains with the Fund collateral consisting of cash, an irrevocable letter of credit issued by a bank, or securities issued or guaranteed by the U.S. Government. The initial collateral received by each Fund is required to have a value of at least 102% of the current value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% for all other securities. The collateral is maintained thereafter at a value equal to at least 100% of the current market value of the securities on loan. The market value of the loaned securities is determined at the close of each business day of the Fund and any additional required collateral is delivered to the Fund, or excess collateral returned by the Fund, on the next business day. During the term of the loan, the Funds are entitled to all distributions made on or in respect of the loaned securities, but do not receive interest income on securities received as collateral. 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.

As of period end, any securities on loan were collateralized by cash and/or U.S. Government obligations. Cash collateral invested by the securities lending agent, BlackRock Investment Management, LLC (“BIM”), if any, is disclosed in the Schedules of Investments. Any non-cash collateral received cannot be sold, re-invested or pledged by the Fund, except in the event of borrower default. The securities on loan, if any, are disclosed in the Funds’ Schedules of Investments. The market value of any securities on loan and the value of any related collateral are shown separately in the Statements of Assets and Liabilities as a component of investments at value – unaffiliated and collateral on securities loaned at value, respectively.

Securities lending transactions are entered into by the Funds under Master Securities Lending Agreements (each, an “MSLA”), which provide the right, in the event of default (including bankruptcy or insolvency), for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party or request additional collateral. In the event that a borrower defaults, the Funds, as lender, would offset the market value of the collateral received against the market value of the securities loaned. When the value of the collateral is greater than that of the market value of the securities loaned, the lender is left with a net amount payable to the defaulting party. However, bankruptcy

 

 

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   47

Notes to Financial Statements  (continued)

 

or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, absent an event of default, the borrower can resell or re-pledge the loaned securities, and the Funds can reinvest cash collateral received in connection with loaned securities. Upon an event of default, the parties’ obligations to return the securities or collateral to the other party are extinguished, and the parties can resell or re-pledge the loaned securities or the collateral received in connection with the loaned securities in order to satisfy the defaulting party’s net payment obligation for all transactions under the MSLA. The defaulting party remains liable for any deficiency.

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

 

5.

INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Advisory: The Trust, on behalf of the Funds, entered into an Investment Advisory Agreement with the Manager, the Funds’ investment adviser and an indirect, wholly-owned subsidiary of BlackRock, Inc. (“BlackRock”), to provide investment advisory services. The Manager is responsible for the management of each Fund’s portfolio and provides the personnel, facilities, equipment and certain other services necessary to the operations of each Fund.

For such services, each Fund pays the Manager a monthly fee at an annual rate equal to the following percentages of the average daily value of each Fund’s net assets:

 

     
                                     Investment Advisory Fees    
Average Daily Net Assets       

Energy   

Opportunities   

  

First $1 billion

       0.750%  

$1 billion - $2 billion

       0.700     

$2 billion - $3 billion

       0.675     

Greater than $3 billion

         0.650     

 

     
        Investment Advisory Fees  
Average Daily Net Assets  

                    

  

High Equity   

Income   

     

    International   

Dividend    

  

First $1 billion

       0.810%        0.790%  

$1 billion - $3 billion

       0.760           0.740     

$3 billion - $5 billion

       0.730           0.710     

$5 billion - $10 billion

       0.700           0.690     

Greater than $10 billion

         0.680           0.670     

With respect to Energy Opportunities and International Dividend, the Manager entered into separate sub-advisory agreements with BlackRock International Limited (“BIL”), an affiliate of the Manager. The Manager pays BIL, for services it provides for that portion of each applicable Fund for which BIL acts as sub-adviser, a monthly fee that is equal to a percentage of the investment advisory fees paid by each Fund to the Manager.

Service and Distribution Fees: The Trust, on behalf of the Funds, entered into a Distribution Agreement and a Distribution and Service Plan with BlackRock Investments, LLC (“BRIL”), an affiliate of the Manager. Pursuant to the Distribution and Service Plan and in accordance with Rule 12b-1 under the 1940 Act, each Fund pays BRIL ongoing service and distribution fees. The fees are accrued daily and paid monthly at annual rates based upon the average daily net assets of the relevant share class of each Fund as follows:

 

     
Share Class   Service Fees         Distribution Fees     

Service

     0.25%        N/A     

Investor A

     0.25           N/A     

Investor C

     0.25           0.75%  

BRIL and broker-dealers, pursuant to sub-agreements with BRIL, provide shareholder servicing and distribution services to the Funds. The ongoing service and/or distribution fee compensates BRIL and each broker-dealer for providing shareholder servicing and/or distribution related services to shareholders.

For the year ended May 31, 2021, the following table shows the class specific service and distribution fees borne directly by each share class of each Fund:    

 

         
Fund Name   Service      Investor A      Investor C      Total  

Energy Opportunities

   $ 844      $ 199,366      $ 94,873      $  295,083  

High Equity Income

      20,938        453,325        202,713        676,976  

International Dividend

     9,081        285,137        72,569        366,787  

 

 

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Notes to Financial Statements  (continued)

 

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

 

 

  
Average Daily Net Assets   Administration Fees    

 

  

First $500 million

     0.0425%  

$500 million - $1 billion

     0.0400     

$1 billion - $2 billion

     0.0375     

$2 billion - $4 billion

     0.0350     

$4 billion - $13 billion

     0.0325     

Greater than $13 billion

     0.0300     

 

  

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

For the year ended May 31, 2021, the following table shows the class specific administration fees borne directly by each share class of each Fund:    

 

 

  
Fund Name   Institutional      Service      Investor A      Investor C      Class K      Total  

 

  

Energy Opportunities

     $  8,361        $  68        $  15,958        $  1,905        $  —        $  26,292  

High Equity Income

     32,728        1,688        36,288        4,066        61        74,831  

International Dividend

     17,315        727        22,832        1,456        966        43,296  

 

  

Transfer Agent: Pursuant to written agreements, certain financial intermediaries, some of which may be affiliates, provide the Funds with sub-accounting, recordkeeping, sub-transfer agency and other administrative services with respect to servicing of underlying investor accounts. For these services, these entities receive an asset-based fee or an annual fee per shareholder account, which will vary depending on share class and/or net assets. For the year ended May 31, 2021, the Funds paid the following amounts to affiliates of BlackRock in return for these services, which are included in transfer agent — class specific in the Statements of Operations:

 

 

  
Fund Name   Institutional      Investor A      Total  

 

  

High Equity Income

     $  19        $  —        $  19  

International Dividend

     7        62        69  

 

  

The Manager maintains a call center that is responsible for providing certain shareholder services to the Funds. Shareholder services include responding to inquiries and processing purchases and sales based upon instructions from shareholders. For the year ended May 31, 2021, each Fund reimbursed the Manager the following amounts for costs incurred in running the call center, which are included in transfer agent — class specific in the Statements of Operations:

 

 

  
Fund Name   Institutional      Service      Investor A      Investor C      Class K      Total  

 

  

Energy Opportunities

     $  2,277        $  1        $  40,468        $  4,714        $  —        $  47,460  

High Equity Income

     1,060        15        22,985        4,181        20        28,261  

International Dividend

     1,448        —        13,229        2,192        8        16,877  

 

  

For the year ended May 31, 2021, the following table shows the class specific transfer agent fees borne directly by each share class of each Fund:    

 

 

  
Fund Name   Institutional      Service      Investor A      Investor C      Class K      Total  

 

  

Energy Opportunities

     $  89,524        $      813        $  290,777        $  39,260        $      —        $  420,374  

High Equity Income

      221,046        11,442        292,541        39,964        79        565,072  

International Dividend

     109,322        4,432        223,178        19,916        1,091        357,939  

 

  

Other Fees: For the year ended May 31, 2021, affiliates earned underwriting discounts, direct commissions and dealer concessions on sales of each Fund’s Investor A Shares as follows:

 

 

  
Fund Name   Amounts  

 

  

Energy Opportunities

     $  6,695  

High Equity Income

     9,939  

International Dividend

     3,466  

 

  

For the year ended May 31, 2021, affiliates received CDSCs as follows:    

 

 

Share Class   Energy
Opportunities		   

High

Equity

Income

    International
Dividend

 

Investor A   $     226    $    302    $    674
Investor C  

    5,946

   

      918

   

      500

   

$  6,172

   

$ 1,220

   

$ 1,174

 

 

N O T E S   T O   F I N A N C I A L   S T A T E M E N T S

   49

Notes to Financial Statements  (continued)

 

Expense Limitations, Waivers and Reimbursements: With respect to each Fund, the Manager contractually agreed to waive its investment advisory fees by the amount of investment advisory fees each Fund pays to the Manager indirectly through its investment in affiliated money market funds (the “affiliated money market fund waiver”) through September 30, 2022 for High Equity Income and through September 30, 2021 for Energy Opportunities and International Dividend. The contractual agreement may be terminated upon 90 days’ notice by a majority of the trustees who are not “interested persons” of the Trust, as defined in the 1940 Act (“Independent Trustees”), or by a vote of a majority of the outstanding voting securities of each Fund. The amount of waivers and/or reimbursements of fees and expenses made pursuant to the expense limitation described below will be reduced by the amount of the affiliated money market fund waiver. This amount is included in fees waived and/or reimbursed by the Manager in the Statements of Operations. For the year ended May 31, 2021, the amounts waived were as follows:

 

 

  
Fund Name   Amounts Waived  

 

  

Energy Opportunities

     $  1,593  

High Equity Income

     5,463  

International Dividend

     602  

 

  

The Manager has contractually agreed to waive its investment advisory fee with respect to any portion of each Fund’s assets invested in affiliated equity and fixed-income mutual funds and affiliated exchange-traded funds that have a contractual management fee through, September 30, 2022 for High Equity Income and through September 30, 2021 for Energy Opportunities and International Dividend. The contractual agreement may be terminated upon 90 days’ notice by a majority of the Independent Trustees, or by a vote of a majority of the outstanding voting securities of a Fund. For the year ended May 31, 2021, there were no fees waived by the Manager pursuant to this arrangement.

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

 

 

  
Fund Name   Institutional     Service     Investor A     Investor C     Class K      

 

  

Energy Opportunities

     0.91 %      1.32 %      1.32 %      2.04 %      0.91% (a) 

High Equity Income

     0.85       1.10       1.10       1.85       0.80     

International Dividend

     0.84       1.09       1.09       1.84       0.79     

 

  

 

  (a) 

There were no shares outstanding as of May 31, 2021.

 

The Manager has agreed not to reduce or discontinue these contractual expense limitations through September 30, 2021, with the exception of High Equity Income, which is through September 30, 2022, unless approved by the Board, including a majority of the Independent Trustees or by a vote of a majority of the outstanding voting securities of the Funds. For the year ended May 31, 2021, the amounts included in fees waived and/or reimbursed by the Manager in the Statements of Operations were as follows:

 

 

  
Fund Name   Amounts Waived  

 

  

Energy Opportunities

     $  244,887  

High Equity Income

     622,299  

International Dividend

     419,877  

 

  

In addition, these amounts waived and/or reimbursed by the Manager are included in administration fees waived — class specific and transfer agent fees waived and/or reimbursed — class specific, respectively, in the Statements of Operations. For the year ended May 31, 2021, class specific expense waivers and/or reimbursements were as follows:

 

 

  
    Administration Fees Waived  
 

 

 

  
Fund Name   Institutional      Service      Investor A      Investor C      Class K      Total  

 

  

Energy Opportunities

     $   8,361        $     68        $  15,958        $  1,905        $   —        $  26,292  

High Equity Income

     32,455        1,688        36,288        4,066        61        74,558  

International Dividend

     17,315        727        22,832        1,456        966        43,296  

 

  

 

 

  
    Transfer Agent Fees Waived and/or Reimbursed  
 

 

 

  
Fund Name   Institutional      Service      Investor A      Investor C      Class K      Total  

 

  

Energy Opportunities

     $   89,523        $   271        $  162,965        $  26,384        $     —        $  279,143  

High Equity Income

     135,709        7,107        202,706        29,125        80        374,727  

International Dividend

     66,032        2,606        166,011        16,054        1,091        251,794  

 

  

Securities Lending: The U.S. Securities and Exchange Commission (“SEC”) has issued an exemptive order which permits BIM, an affiliate of the Manager, to serve as securities lending agent for the Funds, subject to applicable conditions. As securities lending agent, BIM bears all operational costs directly related to securities lending. The Funds are responsible for expenses in connection with the investment of cash collateral received for securities on loan (the “collateral investment expenses”). The cash collateral is invested in a private investment company, SL Liquidity Series, LLC (the “Money Market Series”), managed by the Manager or its affiliates. However, BIM has agreed to cap the collateral investment expenses of the Money Market Series to an annual rate of 0.04%. The investment adviser to the Money Market Series will not charge any advisory fees with respect to shares purchased by the Funds. The Money Market Series may, under certain circumstances, impose a liquidity fee of up to 2% of the value withdrawn or temporarily restrict withdrawals for up to 10 business days during a 90 day period, in the event that the private investment company’s weekly liquid assets fall below certain thresholds. The Money Market Series seeks current income consistent with maintaining liquidity and preserving capital. Although the Money Market Series is not registered under the 1940 Act, its investments may follow the parameters of investments by a money market fund that is subject to Rule 2a-7 under the 1940 Act.

 

 

50  

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Notes to Financial Statements  (continued)

 

Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment expenses. Each Fund retains a portion of securities lending income and remits a remaining portion to BIM as compensation for its services as securities lending agent.

Pursuant to the current securities lending agreement, High Equity Income retains 77% of securities lending income (which excludes collateral investment expenses), and this amount retained can never be less than 70% of the total of securities lending income plus the collateral investment expenses. Pursuant to the current securities lending agreement, Energy Opportunities and International Dividend retain 82% of securities lending income (which excludes collateral investment expenses), and this amount retained can never be less than 70% of the total of securities lending income plus the collateral investment expenses.

In addition, commencing the business day following the date that the aggregate securities lending income earned across the BlackRock Multi-Asset Complex in a calendar year exceeds a specified threshold, High Equity Income pursuant to the securities lending agreement, will retain for the remainder of that calendar year securities lending income in an amount equal to 81% of securities lending income (which excludes collateral investment expenses), and this amount retained can never be less than 70% of the total of securities lending income plus the collateral investment expenses. Energy Opportunities and International Dividend, pursuant to the securities lending agreement, will retain for the remainder of that calendar year securities lending income in an amount equal to 85% of securities lending income (which excludes collateral investment expenses), and this amount retained can never be less than 70% of the total of securities lending income plus the collateral investment expenses.

The share of securities lending income earned by each Fund is shown as securities lending income — affiliated — net in the Statements of Operations. For the year ended May 31, 2021, each Fund paid BIM the following amounts for securities lending agent services:

 

 

  
Fund Name   Amounts  

 

  

Energy Opportunities

     $    2  

High Equity Income

     417  

 

  

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

Other Transactions: The Funds may purchase securities from, or sell securities to, an affiliated fund provided the affiliation is due solely to having a common investment adviser, common officers, or common trustees. For the year ended May 31, 2021, the purchase and sale transactions and any net realized gains (losses) with an affiliated fund in compliance with Rule 17a-7 under the 1940 Act were as follows:

 

 

  
Fund Name   Purchases      Sales      Net Realized Gain  

 

  

International Dividend

   $ 711,704        $  —        $  —  

 

  

 

6.

PURCHASES AND SALES

For the year ended May 31, 2021, purchases and sales of investments, excluding short-term investments and equity-linked notes, were as follows:    

 

 

  
Fund Name   Purchases      Sales  

 

  

Energy Opportunities

   $   114,127,732      $    99,840,217  

High Equity Income

     389,677,189        413,129,087  

International Dividend

     176,117,427        178,196,152  

 

  

 

7.

INCOME TAX INFORMATION

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

Each Fund files U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on each Fund’s U.S. federal tax returns generally remains open for a period of three fiscal years after they are filed. The statutes of limitations on each Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction.

Management has analyzed tax laws and regulations and their application to the Funds as of May 31, 2021, inclusive of the open tax return years, and does not believe that there are any uncertain tax positions that require recognition of a tax liability in the Funds’ financial statements.

U.S. GAAP requires 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. As of period end, the following permanent differences attributable to non-deductible expenses were reclassified to the following accounts:

 

 

  
   

High

Equity

Income

 

 

  

Paid-in capital

   $   (78,122 ) 

Accumulated earnings (loss)

     78,122  

 

  

 

 

N O T E S   T O   F I N A N C I A L   S T A T E M E N T S

   51

Notes to Financial Statements  (continued)

 

The tax character of distributions paid was as follows:

 

 

  
    Period       

Energy

Opportunities

       

High

Equity

Income

      

International

Dividend

 

 

  

Ordinary income

     05/31/21        $ 4,241,311        $ 25,218,815        $ 3,352,020  
    05/31/20          1,886,055          18,978,490          2,735,014  
    09/30/19          1,578,645          23,585,242          5,522,189  

Long-term capital gains

     05/31/21          —          —          —  
    05/31/20          —          —          589,465  
    09/30/19          —          18,693,546          8,307,454  
      

 

 

       

 

 

       

 

 

  

Total

     05/31/21        $ 4,241,311        $ 25,218,815        $ 3,352,020  
      

 

 

       

 

 

       

 

 

  
    05/31/20        $ 1,886,055        $ 18,978,490        $ 3,324,479  
      

 

 

       

 

 

       

 

 

  
    09/30/19        $ 1,578,645        $   42,278,788        $   13,829,643  
      

 

 

       

 

 

       

 

 

  
                

 

  

As of period end, the tax components of accumulated net earnings (losses) were as follows:

 

 

  
      

Energy

Opportunities

      

High

Equity

Income

      

International

Dividend

 

 

  

Undistributed ordinary income

      $ 2,136,414        $ 32,571        $ 6,232,527  

Undistributed long-term capital gains

        —          1,651,443          —  

Non-expiring capital loss carryforwards(a)

       (319,877,153 )         —          —  

Net unrealized gains(b)

       11,952,709          54,465,888          43,568,989  
    

 

 

       

 

 

       

 

 

  
     $   (305,788,030 )       $   56,149,902        $   49,801,516  
    

 

 

       

 

 

       

 

 

  
                            

 

  

 

  (a) 

Amounts available to offset future realized capital gains.

 

 

  (b) 

The difference between book-basis and tax-basis net unrealized gains (losses) was attributable primarily to the tax deferral of losses on wash sales and the realization for tax purposes of unrealized gains on investments in passive foreign investment companies.

 

During the year ended May 31, 2021, the Funds listed below utilized the following amounts of their respective capital loss carryforward:    

 

     
      High Equity Income            International Dividend

Amount utilized

     $  29,124,037      $  11,180,830

 

As of May 31, 2021, gross unrealized appreciation and depreciation based on cost of investments (including short positions and derivatives, if any) for U.S. federal income tax purposes were as follows:

 

 

  
      

Energy

Opportunities

      

High

Equity

Income

      

International

Dividend

 

 

  

Tax cost

      $   154,494,776        $   486,444,215        $   201,284,028  
    

 

 

       

 

 

       

 

 

  

Gross unrealized appreciation

      $ 15,174,635        $ 56,288,219        $ 50,370,762  

Gross unrealized depreciation

        (3,227,240 )         (1,848,079 )         (6,754,621 ) 
    

 

 

       

 

 

       

 

 

  

Net unrealized appreciation (depreciation)

      $ 11,947,395        $ 54,440,140        $ 43,616,141  
    

 

 

       

 

 

       

 

 

  

 

8.

BANK BORROWINGS

The Trust, on behalf of the Funds, along with certain other funds managed by the Manager and its affiliates (“Participating Funds”), is a party to a 364-day, $2.25 billion credit agreement with a group of lenders. Under this agreement, the Funds may borrow to fund shareholder redemptions. Excluding commitments designated for certain individual funds, the Participating Funds, including the Funds, can borrow up to an aggregate commitment amount of $1.75 billion at any time outstanding, subject to asset coverage and other limitations as specified in the agreement. The credit agreement has the following terms: a fee of 0.10% per annum on unused commitment amounts and interest at a rate equal to the higher of (a) one-month LIBOR (but, in any event, not less than 0.00%) on the date the loan is made plus 0.80% per annum or (b) the Fed Funds rate (but, in any event, not less than 0.00%) in effect from time to time plus 0.80% per annum on amounts borrowed. The agreement expires in April 2022 unless extended or renewed. These fees were allocated among such funds based upon portions of the aggregate commitment available to them and relative net assets of Participating Funds. During the year ended May 31, 2021, the Funds did not borrow under the credit agreement.

 

9.

PRINCIPAL RISKS

In the normal course of business, the Funds invest in securities or other instruments and may enter into certain transactions, and such activities subject each Fund to various risks, including among others, fluctuations in the market (market risk) or failure of an issuer to meet all of its obligations. The value of securities or other instruments may also

 

 

52  

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Notes to Financial Statements  (continued)

 

be affected by various factors, including, without limitation: (i) the general economy; (ii) the overall market as well as local, regional or global political and/or social instability; (iii) regulation, taxation or international tax treaties between various countries; or (iv) currency, interest rate and price fluctuations. Local, regional or global events such as war, acts of terrorism, the spread of infectious illness or other public health issues, recessions, or other events could have a significant impact on the Funds and their investments. Each Fund’s prospectus provides details of the risks to which each Fund is subject.

The Funds may be exposed to additional risks when reinvesting cash collateral in money market funds that do not seek to maintain a stable NAV per share of $1.00, which may be subject to redemption gates or liquidity fees under certain circumstances.

Market Risk: An outbreak of respiratory disease caused by a novel coronavirus has developed into a global pandemic and has resulted in closing borders, quarantines, disruptions to supply chains and customer activity, as well as general concern and uncertainty. The impact of this pandemic, and other global health crises that may arise in the future, could affect the economies of many nations, individual companies and the market in general in ways that cannot necessarily be foreseen at the present time. This pandemic may result in substantial market volatility and may adversely impact the prices and liquidity of a fund’s investments. The duration of this pandemic and its effects cannot be determined with certainty.

Valuation Risk: The market values of equities, such as common stocks and preferred securities or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company. They may also decline due to factors which affect a particular industry or industries. A Fund may invest in illiquid investments. An illiquid investment is any investment that a Fund reasonably expects cannot be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment. A Fund may experience difficulty in selling illiquid investments in a timely manner at the price that it believes the investments are worth. Prices may fluctuate widely over short or extended periods in response to company, market or economic news. Markets also tend to move in cycles, with periods of rising and falling prices. This volatility may cause each Fund’s NAV to experience significant increases or decreases over short periods of time. If there is a general decline in the securities and other markets, the NAV of a Fund may lose value, regardless of the individual results of the securities and other instruments in which a Fund invests.

The price a Fund could receive upon the sale of any particular portfolio investment may differ from a Fund’s valuation of the investment, particularly for securities that trade in thin or volatile markets or that are valued using a fair valuation technique or a price provided by an independent pricing service. Changes to significant unobservable inputs and assumptions (i.e., publicly traded company multiples, growth rate, time to exit) due to the lack of observable inputs may significantly impact the resulting fair value and therefore a Fund’s results of operations. As a result, the price received upon the sale of an investment may be less than the value ascribed by a Fund, and a Fund could realize a greater than expected loss or lesser than expected gain upon the sale of the investment. A Fund’s ability to value its investments may also be impacted by technological issues and/or errors by pricing services or other third party service providers.

Counterparty Credit Risk: The Funds may be exposed to counterparty credit risk, or the risk that an entity may fail to or be unable to perform on its commitments related to unsettled or open transactions, including making timely interest and/or principal payments or otherwise honoring its obligations. The Funds manage counterparty credit risk by entering into transactions only with counterparties that the Manager believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Funds to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Funds’ exposure to market, issuer and counterparty credit risks with respect to these financial assets is approximately their value recorded in the Statements of Assets and Liabilities, less any collateral held by the Funds.

Concentration Risk: A diversified portfolio, where this is appropriate and consistent with a fund’s objectives, minimizes the risk that a price change of a particular investment will have a material impact on the NAV of a fund. The investment concentrations within each Fund’s portfolio are disclosed in its Schedule of Investments.

Certain Funds invest a significant portion of their assets in securities within a single or limited number of market sectors. When a Fund concentrates its investments in this manner, it assumes the risk that economic, regulatory, political and social conditions affecting such sectors may have a significant impact on the Fund and could affect the income from, or the value or liquidity of, the Fund’s portfolio. Investment percentages in specific sectors are presented in the Schedules of Investments.

International Dividend invests a substantial amount of its assets in issuers located in a single country or a limited number of countries. When the Fund concentrates its investments in this manner, it assumes the risk that economic, regulatory, political and social conditions in those countries may have a significant impact on its investment performance and could affect the income from, or the value or liquidity of, the Fund’s portfolio. Foreign issuers may not be subject to the same uniform accounting, auditing and financial reporting standards and practices as used in the United States. Foreign securities markets may also be more volatile and less liquid than U.S. securities and may be less subject to governmental supervision not typically associated with investing in U.S. securities. Investment percentages in specific countries are presented in the Schedule of Investments.

International Dividend invests a significant portion of its assets in securities of issuers located in Europe or with significant exposure to European issuers or countries. The European financial markets have recently experienced volatility and adverse trends due to concerns about economic downturns in, or rising government debt levels of, several European countries. These events may spread to other countries in Europe and may affect the value and liquidity of certain of International Dividend’s investments.

Responses to the financial problems by European governments, central banks and others, including austerity measures and reforms, may not work, may result in social unrest and may limit future growth and economic recovery or have other unintended consequences. Further defaults or restructurings by governments and others of their debt could have additional adverse effects on economies, financial markets and asset valuations around the world. In addition, the United Kingdom has withdrawn from the European Union, and one or more other countries may withdraw from the European Union and/or abandon the Euro, the common currency of the European Union. The impact of these actions, especially if they occur in a disorderly fashion, is not clear but could be significant and far reaching.

LIBOR Transition Risk: The United Kingdom’s Financial Conduct Authority announced a phase out of the London Interbank Offered Rate (“LIBOR”). Although many LIBOR rates will be phased out by the end of 2021, a selection of widely used USD LIBOR rates will continue to be published through June 2023 in order to assist with the transition. The Funds may be exposed to financial instruments tied to LIBOR to determine payment obligations, financing terms, hedging strategies or investment value. The transition process away from LIBOR might lead to increased volatility and illiquidity in markets for, and reduce the effectiveness of new hedges placed against, instruments whose terms currently include LIBOR. The ultimate effect of the LIBOR transition process on the Funds is uncertain.

 

 

N O T E S   T O   F I N A N C I A L   S T A T E M E N T S

   53

Notes to Financial Statements  (continued)

 

10.

CAPITAL SHARE TRANSACTIONS

Transactions in capital shares for each class were as follows:

 

       
    Year Ended 05/31/21     Period from
10/01/19 to 05/31/20		     Year Ended 09/30/19  
Fund Name/Share Class   Shares     Amounts     Shares     Amounts     Shares     Amounts  

Energy Opportunities

            

Institutional

            

Shares sold

     6,008,928     $ 43,112,500       5,065,828     $ 33,290,855       2,483,977     $ 24,371,687  

Shares issued in reinvestment of distributions

     204,277       1,385,203       87,022       810,172       49,857       489,099  

Shares issued in reorganization

     —       —       1,095,766       10,918,076       —       —  

Shares redeemed

     (5,927,425 )      (40,789,727 )      (2,850,173 )      (19,099,849 )      (1,895,756 )      (19,174,792 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
    285,780     $ 3,707,976       3,398,443     $ 25,919,254       638,078     $ 5,685,994  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Service

            

Shares sold

     45,792     $ 344,909       15,017     $ 122,595       24,220     $ 243,144  

Shares issued in reinvestment of distributions

     1,509       10,043       1,476       13,464       1,310       12,604  

Shares redeemed

     (32,526 )      (228,417 )      (15,756 )      (136,156 )      (27,520 )      (270,216 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
    14,775     $ 126,535       737     $ (97 )      (1,990 )    $ (14,468 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investor A

            

Shares sold and automatic conversion of shares

     6,544,958     $ 45,930,722       3,010,887     $ 19,388,660       1,317,090     $ 13,255,143  

Shares issued in reinvestment of distributions

     380,440       2,516,327       98,657       894,817       102,248       978,518  

Shares issued in reorganization

     —       —       6,702,786       65,103,473       —       —  

Shares redeemed

     (5,683,012 )      (39,067,805 )      (2,238,892 )      (16,712,188 )      (1,210,425 )      (11,796,567 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
    1,242,386     $ 9,379,244       7,573,438     $ 68,674,762       208,913     $ 2,437,094  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investor C

            

Shares sold

     492,038     $ 3,402,767       584,542     $ 3,535,677       57,281     $ 536,851  

Shares issued in reinvestment of distributions

     41,499       264,559       15,328       134,730       7,437       68,863  

Shares issued in reorganization

     —       —       894,104       8,405,065       —       —  

Shares redeemed and automatic conversion of shares

     (986,487 )      (6,401,236 )      (542,412 )      (3,907,975 )      (1,149,546 )      (11,202,214 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
    (452,950 )    $ (2,733,910 )      951,562     $ 8,167,497       (1,084,828 )    $ (10,596,500 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
    1,089,991     $ 10,479,845       11,924,180     $ 102,761,416       (239,827 )    $ (2,487,880 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

High Equity Income

            

Institutional

            

Shares sold

     6,556,129     $ 178,848,517       1,234,208     $ 30,999,399       1,620,135     $ 41,789,821  

Shares issued in reinvestment of distributions

     410,070       10,722,278       268,023       6,437,855       551,850       14,113,022  

Shares redeemed

     (3,341,268 )      (86,740,071 )      (1,581,496 )      (37,167,927 )      (5,297,435 )      (138,484,099 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
    3,624,931     $ 102,830,724       (79,265 )    $ 269,327       (3,125,450 )    $ (82,581,256 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Service

            

Shares sold

     22,842     $ 530,839       93,228     $ 2,240,316       53,252     $ 1,231,694  

Shares issued in reinvestment of distributions

     24,456       559,123       21,143       458,397       40,695       937,357  

Shares redeemed

     (88,364 )      (1,987,140 )      (141,512 )      (3,082,149 )      (157,690 )      (3,664,934 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
    (41,066 )    $ (897,178 )      (27,141 )    $ (383,436 )      (63,743 )    $ (1,495,883 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investor A

            

Shares sold and automatic conversion of shares

     1,234,541     $ 27,448,383       766,121     $ 16,215,908       2,710,471     $ 60,252,847  

Shares issued in reinvestment of distributions

     550,597       11,790,212       481,834       9,769,745       879,629       19,031,831  

Shares redeemed

     (2,534,707 )      (54,062,308 )      (1,816,723 )      (37,760,664 )      (2,874,581 )      (62,930,089 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
    (749,569 )    $   (14,823,713 )      (568,768 )    $   (11,775,011 )      715,519     $   16,354,589  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

 

54  

2 0 2 1   B L A C K R O C K   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S

Notes to Financial Statements  (continued)

 

       
    Year Ended 05/31/21     Period from
10/01/19 to 05/31/20		     Year Ended 09/30/19  
Fund Name/Share Class   Shares     Amounts     Shares     Amounts     Shares     Amounts  

High Equity Income (continued)

            

Investor C

            

Shares sold

     339,662     $ 4,803,157       249,452     $ 3,461,843       481,593     $ 6,896,158  

Shares issued in reinvestment of distributions

     88,507       1,179,047       155,445       2,003,623       541,742       7,642,459  

Shares redeemed and automatic conversions of shares

     (1,024,494 )      (13,203,980 )      (905,943 )      (12,015,621 )      (4,273,236 )      (62,531,798 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
    (596,325 )    $ (7,221,776 )      (501,046 )    $ (6,550,155 )      (3,249,901 )    $ (47,993,181 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Class K

            

Shares sold

     81     $ 1,865       12,615 (a)     $ 266,201 (a)       —     $ —  

Shares issued in reinvestment of distributions

     4       95       2 (a)       38 (a)       —       —  

Shares redeemed

     (733 )      (16,809 )      (2 )(a)       (38 )(a)       —       —  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
    (648 )    $ (14,849 )      12,615     $ 266,201       —     $ —  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
    2,237,323     $ 79,873,208       (1,163,605 )    $ (18,173,074 )      (5,723,575 )    $ (115,715,731 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

International Dividend

            

Institutional

            

Shares sold

     791,001     $ 25,700,909       383,884     $ 10,400,289       664,263     $ 18,644,829  

Shares issued in reinvestment of distributions

     42,445       1,329,245       43,702       1,226,610       165,910       4,496,962  

Shares redeemed

     (676,346 )      (21,795,843 )      (705,271 )      (19,935,519 )      (1,423,038 )      (39,171,088 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
    157,100     $ 5,234,311       (277,685 )    $ (8,308,620 )      (592,865 )    $ (16,029,297 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Service

            

Shares sold

     11,299     $ 341,101       10,686     $ 285,762       9,711     $ 257,339  

Shares issued in reinvestment of distributions

     1,805       53,187       1,756       46,603       7,635       195,594  

Shares redeemed

     (24,333 )      (758,377 )      (8,898 )      (234,545 )      (59,704 )      (1,556,385 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
    (11,229 )    $ (364,089 )      3,544     $ 97,820       (42,358 )    $ (1,103,452 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investor A

            

Shares sold and automatic conversion of shares

     631,204     $ 18,830,973       281,795     $ 7,501,342       —     $ —  

Shares issued in reinvestment of distributions

     58,310       1,691,014       66,211       1,737,096       285,028       7,196,565  

Shares issued from conversion(b)

    —       —       —       —       889,911       23,000,163  

Shares redeemed

     (734,694 )      (21,864,689 )      (1,201,472 )      (32,299,675 )      (1,638,441 )      (42,437,755 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
    (45,180 )    $ (1,342,702 )      (853,466 )    $ (23,061,237 )      (463,502 )    $ (12,241,027 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investor C

            

Shares sold

     27,576     $ 716,930       23,737     $ 555,488       45,047     $ 998,328  

Shares issued in reinvestment of distributions

     3,513       86,853       6,416       147,783       56,149       1,232,770  

Shares redeemed and automatic conversion of shares

     (273,507 )      (6,974,438 )      (233,349 )      (5,373,215 )      (978,393 )      (22,187,137 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
    (242,418 )    $ (6,170,655 )      (203,196 )    $ (4,669,944 )      (877,197 )    $ (19,956,039 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Class K

            

Shares sold

     113,878     $ 3,642,996       14,731     $ 413,583       40,090     $ 1,112,479  

Shares issued in reinvestment of distributions

     2,580       81,044       2,087       58,541       6,665       181,244  

Shares redeemed

     (68,888 )      (2,295,071 )      (35,288 )      (1,005,339 )      (38,053 )      (1,065,702 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
    47,570     $ 1,428,969       (18,470 )    $ (533,215 )      8,702     $ 228,021  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
    (94,157 )    $   (1,214,166 )      (1,349,273 )    $   (36,475,196 )      (1,967,220 )    $   (49,101,794 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

  (a) 

For the period from April 21, 2020 (inception date) to May 31, 2020.

 

 

  (b) 

On December 27, 2017, the Fund’s Investor B Shares converted into Investor A Shares.

 

As of May 31, 2021, BlackRock Financial Management, Inc., an affiliate of the Fund, owned 11,882 Class K Shares of High Equity Income.

 

 

N O T E S   T O   F I N A N C I A L   S T A T E M E N T S

   55

Notes to Financial Statements  (continued)

 

11.

SUBSEQUENT EVENTS

Management has evaluated the impact of all subsequent events on the Funds through the date the financial statements were issued and has determined that there were no subsequent events requiring adjustment or additional disclosure in the financial statements.

 

 

56  

2 0 2 1   B L A C K R O C K   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S

Report of Independent Registered Public Accounting Firm

 

To the Shareholders of BlackRock Energy Opportunities Fund, BlackRock High Equity Income Fund, and BlackRock International Dividend Fund and the Board of Trustees of BlackRock FundsSM:

Opinion on the Financial Statements and Financial Highlights

We have audited the accompanying statements of assets and liabilities of BlackRock Energy Opportunities Fund, BlackRock High Equity Income Fund, and BlackRock International Dividend Fund of BlackRock FundsSM (the “Funds”), including the schedules of investments, as of May 31, 2021, the related statements of operations for the year then ended, the statements of changes in net assets for the year then ended, for the period from October 1, 2019 through May 31, 2020, and for the year ended September 30, 2019, the financial highlights for the year then ended, for the period from October 1, 2019 through May 31, 2020, and for each of the four years in the period ended September 30, 2019, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Funds as of May 31, 2021, and the results of their operations for the year then ended, the changes in their net assets for the year then ended, for the period from September 1, 2019 through May 31, 2020, and for the year ended September 30, 2019, and the financial highlights for the year then ended, for the period from October 1, 2019 through May 31, 2020, and for each of the four years in the period ended September 30, 2019, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. 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, whether due to error or fraud. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of May 31, 2021, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

Deloitte & Touche LLP

Boston, Massachusetts

July 21, 2021

We have served as the auditor of one or more BlackRock investment companies since 1992.

 

 

R E P O R T   O F   I N D E P E N D E N T   R E G I S T E R E D   P U B L I C   A C C O U N T I N G   F I R M

   57

Important Tax Information  (unaudited)   

 

The following maximum amounts are hereby designated as qualified dividend income for individuals for the fiscal year ended May 31, 2021:    

 

 

  
Fund Name  

Qualified Dividend

Income

 

 

  

Energy Opportunities

     $  6,422,614  

High Equity Income

     9,491,159  

International Dividend

     7,101,584  

 

  

For the fiscal year ended May 31, 2021, the Funds intend to pass through to their shareholders the following amounts of foreign source income and foreign taxes:

 

 

  
Fund Name   Foreign Source
Income Earned		     

Foreign Taxes

Paid

 

 

  

International Dividend

     $  5,388,895        $  430,764  

 

  

For corporate shareholders, the percentage of ordinary income distributions paid during the fiscal year ended May 31, 2021 that qualified for the dividends-received deduction were as follows:

 

   
Fund Name  

Dividends-Received  

Deduction   

  

Energy Opportunities

     61.69%  

High Equity Income

     25.58     

International Dividend

     1.72     

 

 

58  

2 0 2 1   B L A C K R O C K   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S

Disclosure of Investment Advisory Agreement and Sub-Advisory Agreements

 

The Board of Trustees (the “Board,” the members of which are referred to as “Board Members”) of BlackRock Funds (the “Trust”) met on April 7, 2021 (the “April Meeting”) and May 10-12, 2021 (the “May Meeting”) to consider the approval to continue the investment advisory agreement (the “Advisory Agreement”) between the Trust, on behalf of BlackRock Energy Opportunities Fund (“Energy Opportunities Fund”), BlackRock High Equity Income Fund (“High Equity Income Fund”) and BlackRock International Dividend Fund (“International Dividend Fund” and, together with Energy Opportunities Fund and High Equity Income Fund, the “Funds”), and BlackRock Advisors, LLC (the “Manager”), each Fund’s investment advisor. The Board also considered the approval of the sub-advisory agreement between the Manager and BlackRock International Limited (the “Sub-Advisor”) with respect to Energy Opportunities Fund (the “Energy Opportunities Fund Sub-Advisory Agreement”) and the sub-advisory agreement between the Manager and the Sub-Advisor with respect to International Dividend Fund (the “International Dividend Fund Sub-Advisory Agreement” and, together with the Energy Opportunities Agreement, the “Sub-Advisory Agreements”). The Manager and the Sub-Advisor are referred to herein as “BlackRock.” The Advisory Agreement and the Sub-Advisory Agreements are referred to herein as the “Agreements.”

The Approval Process

Consistent with the requirements of the Investment Company Act of 1940 (the “1940 Act”), the Board considers the approval of the continuation of the Agreements for each Fund on an annual basis. The Board members whom are not “interested persons” of the Trust, as defined in the 1940 Act, are considered independent Board members (the “Independent Board Members”). The Board’s consideration entailed a year-long deliberative process during which the Board and its committees assessed BlackRock’s various services to each Fund, including through the review of written materials and oral presentations, and the review of additional information provided in response to requests from the Independent Board Members. The Board had four quarterly meetings per year, each typically extending for two days, as well as additional ad hoc meetings and executive sessions throughout the year, as needed. The committees of the Board similarly met throughout the year. The Board also had a fifth one-day meeting to consider specific information surrounding the renewal of the Agreements. In particular, the Board assessed, among other things, the nature, extent and quality of the services provided to the Fund by BlackRock, BlackRock’s personnel and affiliates, including (as applicable): investment management services; accounting oversight; administrative and shareholder services; oversight of the Fund’s service providers; risk management and oversight; and legal, regulatory and compliance services. Throughout the year, including during the contract renewal process, the Independent Board Members were advised by independent legal counsel, and met with independent legal counsel in various executive sessions outside of the presence of BlackRock’s management.

During the year, the Board, acting directly and through its committees, considered information that was relevant to its annual consideration of the renewal of the Agreements, including the services and support provided by BlackRock to the Fund and its shareholders. BlackRock also furnished additional information to the Board in response to specific questions from the Board. Among the matters the Board considered were: (a) investment performance for one-year, three-year, five-year, and/or since inception periods, as applicable, against peer funds, an applicable benchmark, and other performance metrics, as applicable, as well as BlackRock senior management’s and portfolio managers’ analyses of the reasons for any outperformance or underperformance relative to its peers, benchmarks, and other performance metrics, as applicable; (b) fees, including advisory, administration, if applicable, and other amounts paid to BlackRock and its affiliates by the Fund for services; (c) Fund operating expenses and how BlackRock allocates expenses to the Fund; (d) the resources devoted to risk oversight of, and compliance reports relating to, implementation of the Fund’s investment objective, policies and restrictions, and meeting regulatory requirements; (e) BlackRock’s and the Trust’s adherence to applicable compliance policies and procedures; (f) the nature, character and scope of non-investment management services provided by BlackRock and its affiliates and the estimated cost of such services, as available; (g) BlackRock’s and other service providers’ internal controls and risk and compliance oversight mechanisms; (h) BlackRock’s implementation of the proxy voting policies approved by the Board; (i) the use of brokerage commissions and execution quality of portfolio transactions; (j) BlackRock’s implementation of the Fund’s valuation and liquidity procedures; (k) an analysis of management fees paid to BlackRock for products with similar investment mandates across the open-end fund, exchange-traded fund (“ETF”), closed-end fund, sub-advised mutual fund, separately managed account, collective investment trust, and institutional separate account product channels, as applicable, and the similarities and differences between these products and the services provided as compared to the Fund; (l) BlackRock’s compensation methodology for its investment professionals and the incentives and accountability it creates, along with investment professionals’ investments in the fund(s) they manage; and (m) periodic updates on BlackRock’s business.

Prior to and in preparation for the April Meeting, the Board received and reviewed materials specifically relating to the renewal of the Agreements. The Independent Board Members continuously engaged in a process with their independent legal counsel and BlackRock to review the nature and scope of the information provided to the Board to better assist its deliberations. The materials provided in connection with the April Meeting included, among other things: (a) information independently compiled and prepared by Broadridge Financial Solutions, Inc. (“Broadridge”), based on either a Lipper classification or Morningstar category, regarding each Fund’s fees and expenses as compared with a peer group of funds as determined by Broadridge (“Expense Peers”) and the investment performance of each Fund as compared with a peer group of funds (“Performance Peers”); (b) information on the composition of the Expense Peers and Performance Peers and a description of Broadridge’s methodology; (c) information on the estimated profits realized by BlackRock and its affiliates pursuant to the Agreements and a discussion of fall-out benefits to BlackRock and its affiliates; (d) a general analysis provided by BlackRock concerning investment management fees received in connection with other types of investment products, such as institutional accounts, sub-advised mutual funds, ETFs, closed-end funds, open-end funds, and separately managed accounts under similar investment mandates, as well as the performance of such other products, as applicable; (e) a review of non-management fees; (f) the existence, impact and sharing of potential economies of scale, if any, with the Funds; (g) a summary of aggregate amounts paid by each Fund to BlackRock; (h) sales and redemption data regarding each Fund’s shares; and (i) various additional information requested by the Board as appropriate regarding BlackRock’s and the Funds’ operations.

At the April Meeting, the Board reviewed materials relating to its consideration of the Agreements. As a result of the discussions that occurred during the April Meeting, and as a culmination of the Board’s year-long deliberative process, the Board presented BlackRock with questions and requests for additional information. BlackRock responded to these questions and requests with additional written information in advance of the May Meeting.

At the May Meeting, the Board concluded its assessment of, among other things: (a) the nature, extent and quality of the services provided by BlackRock; (b) the investment performance of each Fund as compared to its Performance Peers and to other metrics, as applicable; (c) the advisory fee and the estimated cost of the services and estimated profits realized by BlackRock and its affiliates from their relationship with the Funds; (d) each Fund’s fees and expenses compared to its Expense Peers; (e) the existence and sharing of potential economies of scale; (f) any fall-out benefits to BlackRock and its affiliates as a result of BlackRock’s relationship with the Funds; and (g) other factors deemed relevant by the Board Members.

 

 

D I S C L O S U R E   O F   I N V E S T M E N T   A D V I S O R Y   A G R E E M E N T   A N D   S U B - A D V I S O R Y   A G R E E M E N T S

   59

Disclosure of Investment Advisory Agreement and Sub-Advisory Agreements  (continued)

 

The Board also considered other matters it deemed important to the approval process, such as other payments made to BlackRock or its affiliates relating to securities lending and cash management, and BlackRock’s services related to the valuation and pricing of Fund portfolio holdings. The Board noted the willingness of BlackRock’s personnel to engage in open, candid discussions with the Board. The members of the Board gave attention to all of the information that was furnished, and each Board Member placed varying degrees of importance on the various pieces of information that were provided to them. The Board evaluated the information available to it on a fund by fund basis. The following paragraphs provide more information about some of the primary factors that were relevant to the Board’s decision. The Board Members did not identify any particular information, or any single factor as determinative, and each Board Member may have attributed different weights to the various items and factors considered.

A: Nature, Extent and Quality of the Services Provided by BlackRock

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 Fund. Throughout the year, the Board compared each Fund’s performance to the performance of a comparable group of mutual funds, relevant benchmark, and performance metrics, as applicable. The Board met with BlackRock’s senior management personnel responsible for investment activities, including the senior investment officers. The Board also reviewed the materials provided by each Fund’s portfolio management team discussing the Fund’s performance, investment strategies and outlook.

The Board considered, among other factors, with respect to BlackRock: the number, education and experience of investment personnel generally and each Fund’s portfolio management team; research capabilities; investments by portfolio managers in the funds they manage; portfolio trading capabilities; use of technology; commitment to compliance; credit analysis capabilities; risk analysis and oversight capabilities; and the approach to training and retaining portfolio managers and other research, advisory and management personnel. The Board also considered BlackRock’s overall risk management program, including the continued efforts of BlackRock and its affiliates to address cybersecurity risks and the role of BlackRock’s Risk & Quantitative Analysis Group. The Board engaged in a review of BlackRock’s compensation structure with respect to each Fund’s portfolio management team and BlackRock’s ability to attract and retain high-quality talent and create performance incentives.

In addition to investment advisory services, the Board considered the nature and quality of the administrative and other non-investment advisory services provided to each Fund. BlackRock and its affiliates provide the Funds with certain administrative, shareholder and other services (in addition to any such services provided to the Funds by third-parties) and officers and other personnel as are necessary for the operations of the Funds. In particular, BlackRock and its affiliates provide the Funds with administrative services including, among others: (i) responsibility for disclosure documents, such as the prospectus, the summary prospectus (as applicable), the statement of additional information and periodic shareholder reports; (ii) oversight of daily accounting and pricing; (iii) responsibility for periodic filings with regulators; (iv) overseeing and coordinating the activities of third-party service providers, including, among others, each Fund’s custodian, fund accountant, transfer agent, and auditor; (v) organizing Board meetings and preparing the materials for such Board meetings; (vi) providing legal and compliance support; (vii) furnishing analytical and other support to assist the Board in its consideration of strategic issues such as the merger, consolidation or repurposing of certain open-end funds; and (viii) performing or managing administrative functions necessary for the operation of the Funds, such as tax reporting, expense management, fulfilling regulatory filing requirements, overseeing each Fund’s distribution partners, and shareholder call center and other services. The Board reviewed the structure and duties of BlackRock’s fund administration, shareholder services, and legal and compliance departments and considered BlackRock’s policies and procedures for assuring compliance with applicable laws and regulations. The Board considered the operation of BlackRock’s business continuity plans, including in light of the ongoing COVID-19 pandemic.

B: The Investment Performance of the Funds and BlackRock

The Board, including the Independent Board Members, reviewed and considered the performance history of each Fund throughout the year and at the April Meeting. In preparation for the April Meeting, the Board was provided with reports independently prepared by Broadridge, which included an analysis of each Fund’s performance as of December 31, 2020, as compared to its Performance Peers. Broadridge ranks funds in quartiles, ranging from first to fourth, where first is the most desirable quartile position and fourth is the least desirable. In connection with its review, with respect to each Fund, the Board received and reviewed information regarding the investment performance of the Fund as compared to its Performance Peers. The Board and its Performance Oversight Committee regularly review, and meet with Fund management to discuss, the performance of each Fund throughout the year.

In evaluating performance, the Board focused particular attention on funds with less favorable performance records. The Board also noted that while it found the data provided by Broadridge generally useful, it recognized the limitations of such data, including in particular, that notable differences may exist between a fund and its Performance Peers (for example, the investment objectives and strategies). Further, the Board recognized that the performance data reflects a snapshot of a period as of a particular date and that selecting a different performance period could produce significantly different results. The Board also acknowledged that long-term performance could be impacted by even one period of significant outperformance or underperformance, and that a single investment theme could have the ability to disproportionately affect long-term performance.

The Board noted that for the one-, three- and five-year periods reported, International Dividend Fund ranked in the first, first and second quartiles, respectively, against its Performance Peers.

The Board noted that for the one-, three- and five-year periods reported, Energy Opportunities Fund ranked in the second, first and first quartiles, respectively, against its Performance Peers.

The Board noted that for the one-, three- and five-year periods reported, High Equity Income Fund ranked in the fourth, third and first quartiles, respectively, against its Performance Peers. The Board and BlackRock reviewed the Fund’s underperformance relative to its Performance Peers during the applicable periods.

C: Consideration of the Advisory/Management Fees and the Estimated Cost of the Services and Estimated Profits Realized by BlackRock and its Affiliates from their Relationship with the Funds

The Board, including the Independent Board Members, reviewed each Fund’s contractual management fee rate compared with those of its Expense Peers. The contractual management fee rate represents a combination of the advisory fee and any administrative fees, before taking into account any reimbursements or fee waivers. The Board also compared each Fund’s total expense ratio, as well as its actual management fee rate, to those of its Expense Peers. The total expense ratio represents a fund’s total net

 

 

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Disclosure of Investment Advisory Agreement and Sub-Advisory Agreements  (continued)

 

operating expenses, including any 12b-1 or non-12b-1 service fees. The total expense ratio gives effect to any expense reimbursements or fee waivers, and the actual management fee rate gives effect to any management fee reimbursements or waivers. The Board considered the services provided and the fees charged by BlackRock and its affiliates to other types of clients with similar investment mandates, as applicable, including institutional accounts and sub-advised mutual funds (including mutual funds sponsored by third parties).

The Board received and reviewed statements relating to BlackRock’s financial condition. The Board reviewed BlackRock’s profitability methodology and was also provided with an estimated profitability analysis that detailed the revenues earned and the expenses incurred by BlackRock for services provided to each Fund. The Board reviewed BlackRock’s estimated profitability with respect to each Fund and other funds the Board currently oversees for the year ended December 31, 2020 compared to available aggregate estimated profitability data provided for the prior two years. The Board reviewed BlackRock’s estimated profitability with respect to certain other U.S. fund complexes managed by the Manager and/or its affiliates. The Board reviewed BlackRock’s assumptions and methodology of allocating expenses in the estimated 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, precision of expense allocations and business mix. The Board thus recognized that calculating and comparing profitability at the individual fund level is difficult.

The Board noted that, in general, individual fund or product line profitability of other advisors is not publicly available. The Board reviewed BlackRock’s overall operating margin, in general, compared to that of certain other publicly-traded asset management firms. The Board considered the differences between BlackRock and these other firms, including the contribution of technology at BlackRock, BlackRock’s expense management, and the relative product mix.

The Board 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 further considered factors including but not limited to BlackRock’s commitment of time, assumption of risk, and liability profile in servicing the Funds, including in contrast to what is required of BlackRock with respect to other products with similar investment mandates across the open-end fund, ETF, closed-end fund, sub-advised mutual fund, separately managed account, collective investment trust, and institutional separate account product channels, as applicable.

The Board noted that High Equity Income Fund’s contractual management fee rate ranked in the second quartile, and that the actual management fee rate and total expense ratio each ranked in the second quartile relative to the Fund’s Expense Peers.

The Board noted that each of Energy Opportunities Fund’s and International Dividend Fund’s contractual management fee rate ranked in the third quartile, and that the actual management fee rate and total expense ratio each ranked in the first quartile relative to the Fund’s Expense Peers.

The Board also noted that each Fund has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the size of the Fund increases above certain contractually specified levels. The Board noted that if the size of a Fund were to decrease, the Fund could lose the benefit of one or more breakpoints. The Board further noted that BlackRock and the Board have contractually agreed to a cap on each Fund’s total operating expenses as a percentage of the Fund’s average daily net assets on a class-by-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 Funds increase, including the existence of fee waivers and/or expense caps, as applicable, noting that any contractual fee waivers and contractual expense caps had been approved by the Board. In its consideration, the Board further considered the continuation and/or implementation of fee waivers and/or expense caps, as applicable. The Board also considered the extent to which the Funds benefit from such economies of scale in a variety of ways and whether there should be changes in the advisory fee rate or breakpoint structure in order to enable the Funds to more fully participate in these economies of scale. The Board considered each Fund’s asset levels and whether the current fee schedule was appropriate.

E: Other Factors Deemed Relevant by the Board Members

The Board, including the Independent Board Members, also took into account other ancillary or “fall-out” benefits that BlackRock or its affiliates may derive from BlackRock’s respective relationships with the Funds, both tangible and intangible, such as BlackRock’s ability to leverage its investment professionals who manage other portfolios and its risk management personnel, an increase in BlackRock’s profile in the investment advisory community, and the engagement of BlackRock’s affiliates as service providers to the Funds, including for administrative, distribution, securities lending and cash management services. The Board also considered BlackRock’s overall operations and its efforts to expand the scale of, and improve the quality of, its operations. The Board also noted that, subject to applicable law, BlackRock may use and benefit from third-party research obtained by soft dollars generated by certain registered fund transactions to assist 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.

The Board noted the competitive nature of the open-end fund marketplace, and that shareholders are able to redeem their Fund shares if they believe that the pertinent Fund’s fees and expenses are too high or if they are dissatisfied with the performance of the Fund.

Conclusion

The Board, including the Independent Board Members, unanimously approved the continuation of the Advisory Agreement between the Manager and the Trust, on behalf of each Fund, for a one-year term ending June 30, 2022, and the International Dividend Fund Sub-Advisory Agreement between the Manager and the Sub-Advisor with respect to International Dividend Fund and the Energy Opportunities Fund Sub-Advisory Agreement between the Manager and the Sub-Advisor with respect to Energy Opportunities Fund each for a one-year term ending June 30, 2022. Based upon its evaluation of all of the aforementioned factors in their totality, as well as other information, the Board, including the Independent Board Members, was satisfied that the terms of the Agreements were fair and reasonable and, in the best interest of each Fund and its shareholders. In arriving at its 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

 

 

D I S C L O S U R E   O F   I N V E S T M E N T   A D V I S O R Y   A G R E E M E N T   A N D   S U B - A D V I S O R Y   A G R E E M E N T S

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Disclosure of Investment Advisory Agreement and Sub-Advisory Agreements  (continued)

 

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.

 

 

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Trustee and Officer Information

 

Independent Trustees(a)
         

Name

Year of Birth(b)

  

Position(s)

Held

(Length of

Service)(c)

   Principal Occupation(s) During Past Five Years    Number of BlackRock-Advised
Registered Investment Companies
(“RICs”) Consisting of Investment
Portfolios (“Portfolios”) Overseen		    Public Company
and Other
Investment
Company
Directorships
Held During Past
Five Years
Mark Stalnecker
1951		    Chair of the Board (Since 2019) and Trustee
(Since 2015)		   

Chief Investment Officer, University of Delaware from 1999 to 2013; Trustee and Chair of the Finance and Investment Committees, Winterthur Museum and Country Estate from 2005 to 2016; Member of the Investment Committee, Delaware Public Employees’ Retirement System since 2002; Member of the Investment Committee, Christiana Care Health System from 2009 to 2017; Member of the Investment Committee, Delaware Community Foundation from 2013 to 2014; Director and Chair of the Audit Committee, SEI Private Trust Co. from 2001 to 2014.

    30 RICs consisting of
152 Portfolios		    None
Bruce R. Bond
1946		    Trustee
(Since 2019)		   

Board Member, Amsphere Limited (software) since 2018; Trustee and Member of the Governance Committee, State Street Research Mutual Funds from 1997 to 2005; Board Member of Governance, Audit and Finance Committee, Avaya Inc. (computer equipment) from 2003 to 2007.

    30 RICs consisting of
152 Portfolios		    None
Susan J. Carter
1956		    Trustee
(Since 2016)		   

Director, Pacific Pension Institute from 2014 to 2018; Advisory Board Member, Center for Private Equity and Entrepreneurship at Tuck School of Business since 1997; Senior Advisor, Commonfund Capital, Inc. (“CCI”) (investment adviser) in 2015; Chief Executive Officer, CCI from 2013 to 2014; President & Chief Executive Officer, CCI from 1997 to 2013; Advisory Board Member, Girls Who Invest from 2015 to 2018 and Board Member thereof since 2018; Advisory Board Member, Bridges Fund Management since 2016; Trustee, Financial Accounting Foundation since 2017; Practitioner Advisory Board Member, Private Capital Research Institute (“PCRI”) since 2017; Lecturer in the Practice of Management, Yale School of Management since 2019; Advisor to Finance Committee, Altman Foundation since 2020.

    30 RICs consisting of
152 Portfolios		    None
Collette Chilton
1958		    Trustee
(Since 2015)		   

Chief Investment Officer, Williams College since 2006; Chief Investment Officer, Lucent Asset Management Corporation from 1998 to 2006; Director, Boys and Girls Club of Boston since 2017; Director, B1 Capital since 2018; Director, David and Lucile Packard Foundation since 2020.

    30 RICs consisting of
152 Portfolios		    None
Neil A. Cotty
1954		    Trustee
(Since 2016)		   

Bank of America Corporation from 1996 to 2015, serving in various senior finance leadership roles, including Chief Accounting Officer from 2009 to 2015, Chief Financial Officer of Global Banking, Markets and Wealth Management from 2008 to 2009, Chief Accounting Officer from 2004 to 2008, Chief Financial Officer of Consumer Bank from 2003 to 2004, Chief Financial Officer of Global Corporate Investment Bank from 1999 to 2002.

    30 RICs consisting of
152 Portfolios		    None
Lena G. Goldberg
1949		    Trustee
(Since 2019)		   

Senior Lecturer, Harvard Business School, since 2008; Director, Charles Stark Draper Laboratory, Inc. since 2013; FMR LLC/Fidelity Investments (financial services) from 1996 to 2008, serving in various senior roles including Executive Vice President - Strategic Corporate Initiatives and Executive Vice President and General Counsel; Partner, Sullivan & Worcester LLP from 1985 to 1996 and Associate thereof from 1979 to 1985.

    30 RICs consisting of
152 Portfolios		    None
Henry R. Keizer
1956		    Trustee
(Since 2019)		   

Director, Park Indemnity Ltd. (captive insurer) since 2010; Director, MUFG Americas Holdings Corporation and MUFG Union Bank, N.A. (financial and bank holding company) from 2014 to 2016; Director, American Institute of Certified Public Accountants from 2009 to 2011; Director, KPMG LLP (audit, tax and advisory services) from 2004 to 2005 and 2010 to 2012; Director, KPMG International in 2012, Deputy Chairman and Chief Operating Officer thereof from 2010 to 2012 and U.S. Vice Chairman of Audit thereof from 2005 to 2010; Global Head of Audit, KPMGI (consortium of KPMG firms) from 2006 to 2010; Director, YMCA of Greater New York from 2006 to 2010.

    30 RICs consisting of
152 Portfolios		    Hertz Global Holdings (car rental); Sealed Air Corp. (packaging); Montpelier Re Holdings, Ltd. (publicly held property and casualty reinsurance) from 2013 until 2015; WABCO (commercial vehicle safety systems) from 2015 to 2020

 

 

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   63

Trustee and Officer Information  (continued)

 

Independent Trustees(a)
         

Name

Year of Birth(b)

  

Position(s)

Held

(Length of

Service)(c)

   Principal Occupation(s) During Past Five Years    Number of BlackRock-Advised
Registered Investment Companies
(“RICs”) Consisting of Investment
Portfolios (“Portfolios”) Overseen		    Public Company
and Other
Investment
Company
Directorships
Held During Past
Five Years
Cynthia A. Montgomery
1952		    Trustee
(Since 2007)		   

Professor, Harvard Business School since 1989.

    30 RICs consisting of
152 Portfolios		    Newell Rubbermaid, Inc. (manufacturing) from 1995 to 2016.
Donald C. Opatrny
1952		    Trustee
(Since 2019)		   

Trustee, Vice Chair, Member of the Executive Committee and Chair of the Investment Committee, Cornell University from 2004 to 2019; President, Trustee and Member of the Investment Committee, The Aldrich Contemporary Art Museum from 2007 to 2014; Member of the Board and Investment Committee, University School from 2007 to 2018; Member of the Investment Committee, Mellon Foundation from 2009 to 2015; Trustee, Artstor (a Mellon Foundation affiliate) from 2010 to 2015; President and Trustee, the Center for the Arts, Jackson Hole from 2011 to 2018; Director, Athena Capital Advisors LLC (investment management firm) since 2013; Trustee and Chair of the Investment Committee, Community Foundation of Jackson Hole since 2014; Member of Affordable Housing Supply Board of Jackson, Wyoming since 2017; Member, Investment Funds Committee, State of Wyoming since 2017; Trustee, Phoenix Art Museum since 2018; Trustee, Arizona Community Foundation and Member of Investment Committee since 2020.

    30 RICs consisting of
152 Portfolios		    None
Joseph P. Platt
1947		    Trustee
(Since 2007)		   

General Partner, Thorn Partners, LP (private investments) since 1998; Director, WQED Multi-Media (public broadcasting not-for-profit) since 2001; Chair, Basic Health International (non-profit) since 2015.

    30 RICs consisting of
152 Portfolios		    Greenlight Capital Re, Ltd. (reinsurance company); Consol Energy Inc.
Kenneth L. Urish
1951		    Trustee
(Since 2007)		   

Managing Partner, Urish Popeck & Co., LLC (certified public accountants and consultants) since 1976; Past-Chairman of the Professional Ethics Committee of the Pennsylvania Institute of Certified Public Accountants and Committee Member thereof since 2007; Member of External Advisory Board, The Pennsylvania State University Accounting Department since founding in 2001; Principal, UP Strategic Wealth Investment Advisors, LLC since 2013; Trustee, The Holy Family Institute from 2001 to 2010; President and Trustee, Pittsburgh Catholic Publishing Associates from 2003 to 2008; Director, Inter-Tel from 2006 to 2007; Member, Advisory Board, ESG Competent Boards since 2020.

    30 RICs consisting of
152 Portfolios		    None
Claire A. Walton
1957		    Trustee
(Since 2016)		   

Chief Operating Officer and Chief Financial Officer of Liberty Square Asset Management, LP from 1998 to 2015; General Partner of Neon Liberty Capital Management, LLC since 2003; Director, Boston Hedge Fund Group from 2009 to 2018; Director, Woodstock Ski Runners since 2013; Director, Massachusetts Council on Economic Education from 2013 to 2015.

    30 RICs consisting of
152 Portfolios		    None

 

 

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Trustee and Officer Information  (continued)

 

Interested Trustees(a)(d)
         

Name

Year of Birth(b)

  

Position(s) Held

(Length of

Service)(c)

   Principal Occupation(s) During Past Five Years    Number of BlackRock-Advised
Registered Investment Companies
(“RICs”) Consisting of Investment
Portfolios (“Portfolios”) Overseen		    Public Company
and Other
Investment
Company
Directorships
Held During Past
Five Years
Robert Fairbairn
1965		   

Trustee

(Since 2018)

   

Vice Chairman of BlackRock, Inc. since 2019; Member of BlackRock’s Global Executive and Global Operating Committees; Co-Chair of BlackRock’s Human Capital Committee; Senior Managing Director of BlackRock, Inc. from 2010 to 2019; oversaw BlackRock’s Strategic Partner Program and Strategic Product Management Group from 2012 to 2019; Member of the Board of Managers of BlackRock Investments, LLC from 2011 to 2018; Global Head of BlackRock’s Retail and iShares® businesses from 2012 to 2016.

    103 RICs consisting of
251 Portfolios		    None
John M. Perlowski(e)
1964		    Trustee
(Since 2015), President and Chief Executive Officer
(Since 2010)		   

Managing Director of BlackRock, Inc. since 2009; Head of BlackRock Global Accounting and Product Services since 2009; Advisory Director of Family Resource Network (charitable foundation) since 2009.

    105 RICs consisting of
253 Portfolios		    None

 

(a) 

The address of each Trustee is c/o BlackRock, Inc., 55 East 52nd Street, New York, New York 10055.

 

(b) 

Each Independent Trustee holds office until his or her successor is duly elected and qualifies or until his or her earlier death, resignation, retirement or removal as provided by the Fund’s by-laws or charter or statute, or until December 31 of the year in which he or she turns 75. Trustees who are “interested persons,” as defined in the 1940 Act, serve until their successor is duly elected and qualifies or until their earlier death, resignation, retirement or removal as provided by the Trust’s by-laws or statute, or until December 31 of the year in which they turn 72. The Board may determine to extend the terms of Independent Trustees on a case-by-case basis, as appropriate.

 

(c) 

Following the combination of Merrill Lynch Investment Managers, L.P. (“MLIM”) and BlackRock, Inc. in September 2006, the various legacy MLIM and legacy BlackRock fund boards were realigned and consolidated into three new fund boards in 2007. In addition, effective January 1, 2019, three BlackRock Fund Complexes were realigned and consolidated into two BlackRock Fund Complexes. As a result, although the chart shows the year that each Independent Trustee joined the Board, certain Independent Trustees first became members of the boards of other BlackRock-advised Funds, legacy MLIM funds or legacy BlackRock funds as follows: Bruce R. Bond, 2005; Susan J. Carter, 2016; Collette Chilton, 2015; Neil A. Cotty, 2016; Robert M. Hernandez, 1996; Cynthia A. Montgomery, 1994; Joseph P. Platt, 1999; Mark Stalnecker, 2015; Kenneth L. Urish, 1999; Claire A. Walton, 2016.

 

(d) 

Mr. Fairbairn and Mr. Perlowski are both “interested persons,” as defined in the 1940 Act, of the Trust based on their positions with BlackRock, Inc. and its affiliates. Mr. Fairbairn and Mr. Perlowski are also board members of the BlackRock Fixed-Income Complex.

 

(e) 

Mr. Perlowski is also a trustee of the BlackRock Credit Strategies Fund and BlackRock Private Investments Fund.

 

 

T R U S T E E   A N D   O F F I C E R   I N F O R M A T I O N

   65

Trustee and Officer Information  (continued)

 

Officers Who Are Not Trustees(a)
     

Name

Year of Birth(b)

  

Position(s) Held

(Length of

Service)

    Principal Occupation(s) During Past Five Years
Thomas Callahan
1968		    Vice President
(Since 2016)		   

Managing Director of BlackRock, Inc. since 2013; Member of the Board of Managers of BlackRock Investments, LLC (principal underwriter) since 2019 and Managing Director thereof since 2017; Head of BlackRock’s Global Cash Management Business since 2016; Co-Head of the Global Cash Management Business from 2014 to 2016; Deputy Head of the Global Cash Management Business from 2013 to 2014; Member of the Cash Management Group Executive Committee since 2013; Chief Executive Officer of NYSE Liffe U.S. from 2008 to 2013.

Jennifer McGovern
1977		    Vice President
(Since 2014)		   

Managing Director of BlackRock, Inc. since 2016; Director of BlackRock, Inc. from 2011 to 2015; Head of Americas Product Development and Governance for BlackRock’s Global Product Group since 2019; Head of Product Structure and Oversight for BlackRock’s U.S. Wealth Advisory Group from 2013 to 2019.

Trent Walker
1974		    Chief Financial Officer
(Since 2021)		   

Managing Director of BlackRock, Inc. since September 2019; Executive Vice President of PIMCO from 2016 to 2019; Senior Vice President of PIMCO from 2008 to 2015; Treasurer from 2013 to 2019 and Assistant Treasurer from 2007 to 2017 of PIMCO Funds, PIMCO Variable Insurance Trust, PIMCO ETF Trust, PIMCO Equity Series, PIMCO Equity Series VIT, PIMCO Managed Accounts Trust, 2 PIMCO-sponsored interval funds and 21 PIMCO-sponsored closed-end funds.

Jay M. Fife
1970		    Treasurer
(Since 2007)		   

Managing Director of BlackRock, Inc. since 2007.

Charles Park
1967		    Chief Compliance Officer
(Since 2014)		   

Anti-Money Laundering Compliance Officer for certain BlackRock-advised Funds from 2014 to 2015; Chief Compliance Officer of BlackRock Advisors, LLC and the BlackRock-advised Funds in the BlackRock Multi-Asset Complex and the BlackRock Fixed-Income Complex since 2014; Principal of and Chief Compliance Officer for iShares® Delaware Trust Sponsor LLC since 2012 and BlackRock Fund Advisors (“BFA”) since 2006; Chief Compliance Officer for the BFA-advised iShares® exchange traded funds since 2006; Chief Compliance Officer for BlackRock Asset Management International Inc. since 2012.

Lisa Belle
1968		    Anti-Money Laundering Compliance Officer
(Since 2019)		   

Managing Director of BlackRock, Inc. since 2019; Global Financial Crime Head for Asset and Wealth Management of JP Morgan from 2013 to 2019; Managing Director of RBS Securities from 2012 to 2013; Head of Financial Crimes for Barclays Wealth Americas from 2010 to 2012.

Janey Ahn
1975		    Secretary
(Since 2019)		   

Managing Director of BlackRock, Inc. since 2018; Director of BlackRock, Inc. from 2009 to 2017.

 

(a) 

The address of each Officer is c/o BlackRock, Inc., 55 East 52nd Street, New York, New York 10055.

 

(b) 

Officers of the Trust serve at the pleasure of the Board.

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

 

 

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Additional Information

 

General Information

Quarterly performance, semi-annual and annual reports, current net asset value and other information regarding the Funds may be found on BlackRock’s website, which can be accessed at blackrock.com. Any reference to BlackRock’s website in this report is intended to allow investors public access to information regarding the Funds and does not, and is not intended to, incorporate BlackRock’s website in this report.

Householding

The Funds will mail only one copy of shareholder documents, including prospectuses, annual and semi-annual reports, Rule 30e-3 notices and proxy statements, to shareholders with multiple accounts at the same address. This practice is commonly called “householding” and is intended to reduce expenses and eliminate duplicate mailings of shareholder documents. Mailings of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please call the Funds at (800) 441-7762.

Availability of Quarterly Schedule of Investments

The Funds file their complete schedules of portfolio holdings with the SEC for the first and third quarters of each fiscal year as an exhibit to their reports on Form N-PORT. The Funds’ Forms N-PORT are available on the SEC’s website at sec.gov. Additionally, each Fund makes its portfolio holdings for the first and third quarters of each fiscal year available at blackrock.com/fundreports.

Availability of Proxy Voting Policies, Procedures and Voting Records

A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities and information about how the Funds voted proxies relating to securities held in the Funds’ portfolios during the most recent 12-month period ended June 30 is available without charge, upon request (1) by calling (800) 441-7762; (2) on the BlackRock website at blackrock.com; and (3) on the SEC’s website at sec.gov.

BlackRock’s Mutual Fund Family

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

Shareholder Privileges

Account Information

Call us at (800) 441-7762 from 8:00 AM to 6:00 PM ET on any business day to get information about your account balances, recent transactions and share prices. You can also visit blackrock.com for more 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 funds.

Systematic Withdrawal Plans

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

Retirement Plans

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

 

 

A D D I T I O N A L   I N F O R M A T I O N

   67

Additional Information  (continued)

 

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.

Fund and Service Providers

 

Investment Adviser and Administrator   Independent Registered Public Accounting Firm
BlackRock Advisors, LLC   Deloitte & Touche LLP
Wilmington, DE 19809   Boston, MA 02116
Sub-Adviser(a)   Distributor
BlackRock International Limited   BlackRock Investments, LLC
Edinburgh, EH3 8BL   New York, NY 10022
United Kingdom  
  Legal Counsel
Accounting Agent and Transfer Agent   Sidley Austin LLP
BNY Mellon Investment Servicing (US) Inc.   New York, NY 10019-6018
Wilmington, DE 19809  
  Address of the Trust
Custodian   100 Bellevue Parkway
The Bank of New York Mellon   Wilmington, DE 19809
New York, NY 10286  

(a)  BlackRock Energy Opportunities Fund and BlackRock International Dividend Fund.

 

 

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2 0 2 1   B L A C K R O C K   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S

Glossary of Terms Used in this Report

 

Currency Abbreviation
EUR    Euro
GBP    British Pound
USD    United States Dollar
Portfolio Abbreviation
ADR    American Depositary Receipt
GDR    Global Depositary Receipt

 

 

G L O S S A R Y   O F   T E R M S   U S E D   I N   T H I S   R E P O R T

   69

 

 

 

 

 

 

Want to know more?

blackrock.com | 800-441-7762

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

EHI-5/21-AR

 

LOGO

   LOGO

(b) Not Applicable

 

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, principal accounting officer or controller, or persons performing similar functions. During the period covered by this report, the code of ethics was amended to update certain information and to make other non-material changes. During the period covered by this report, there have been no waivers granted under the code of ethics. The registrant undertakes to provide a copy of the code of ethics to any person upon request, without charge, who calls 1-800-441-7762.

 

Item 3 –

Audit Committee Financial Expert – The registrant’s board of directors (the “board of directors”), has determined that (i) the registrant has the following audit committee financial experts serving on its audit committee and (ii) each audit committee financial expert is independent:

Neil A. Cotty

Henry R. Keizer

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 of a person 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. The designation or identification of a person as an audit committee financial expert does not affect the duties, obligations, or liability of any other member of the audit committee or board of directors.

 

Item 4 –

Principal Accountant Fees and Services

The following table presents fees billed by Deloitte & Touche LLP (“D&T”) in each of the last two fiscal years for the services rendered to the Fund:

 

      (a) Audit Fees    (b) Audit-Related  Fees1    (c) Tax Fees2    (d) All Other Fees
Entity Name   

Current

Fiscal Year  

End

   

Previous

Fiscal Year  

End3

   

Current

Fiscal Year  

End

   

Previous

Fiscal Year  

End3

   

Current

Fiscal Year  

End

   

Previous

Fiscal Year  

End3

   

Current

Fiscal Year  

End

   

Previous

Fiscal Year  

End3

BlackRock Advantage International Fund    $32,118    $33,150    $207    $0    $15,800    $13,700    $0    $0
BlackRock Advantage Large Cap Growth Fund    $18,382    $18,972    $207    $0    $14,800    $12,700    $0    $0
BlackRock Advantage Small Cao Core Fund    $29,694    $30,600    $207    $0    $14,800    $14,800    $0    $0
BlackRock Energy Opportunities Fund    $17,877    $18,462    $207    $6,500    $16,900    $25,800    $0    $0
BlackRock High Equity Income Fund    $21,513    $22,134    $207    $4,000    $14,800    $12,700    $0    $0
BlackRock International Dividend Fund    $24,543    $25,296    $207    $0    $15,800    $13,700    $0    $0

 

2

The following table presents fees billed by D&T that were required to be approved by the registrant’s audit committee (the “Committee”) for services that relate directly to the operations or financial reporting of the Fund and that are rendered on behalf of BlackRock Advisors, LLC (the “Investment Adviser” or “BlackRock”) and entities controlling, controlled by, or under common control with BlackRock (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) that provide ongoing services to the Fund (“Affiliated Service Providers”):

 

      Current Fiscal Year End          Previous Fiscal Year  End3      

(b) Audit-Related Fees1

    $0        $0    

(c) Tax Fees2

    $0        $0    

(d) All Other Fees4

    $2,032,000        $1,984,000    

1 The nature of the services includes assurance and related services reasonably related to the performance of the audit or review of financial statements not included in Audit Fees, including accounting consultations, agreed-upon procedure reports, attestation reports, comfort letters, out-of-pocket expenses and internal control reviews not required by regulators.

2 The nature of the services includes tax compliance and/or tax preparation, including services relating to the filing or amendment of federal, state or local income tax returns, regulated investment company qualification reviews, taxable income and tax distribution calculations.

3Certain funds of the registrant changed their fiscal year end from September 30 to May 31 effective May 31, 2020 whereby this fiscal year consists of the eight months ended May 31, 2020.

4 Non-audit fees of $2,032,000 and $1,984,000 for the current fiscal year and previous fiscal year, respectively, were paid to the Fund’s principal accountant in their entirety by BlackRock, in connection with services provided to the Affiliated Service Providers of the Fund and of certain other funds sponsored and advised by BlackRock or its affiliates for a service organization review and an accounting research tool subscription. These amounts represent aggregate fees paid by BlackRock and were not allocated on a per fund basis.

(e)(1) Audit Committee Pre-Approval Policies and Procedures:

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 Investment Adviser and 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 operations 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 per project. 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 the Committee Chairman 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.

 

3

(e)(2) None of the services described in each of Items 4(b) through (d) were approved by the Committee pursuant to the de minimis exception in paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

(f) Not Applicable

(g) The aggregate non-audit fees, defined as the sum of the fees shown under “Audit-Related Fees,” “Tax Fees” and “All Other Fees,” paid to the accountant for services rendered by the accountant to the registrant, the Investment Adviser and the Affiliated Service Providers were:

 

Entity Name   

Current Fiscal Year    

End    

   

Previous Fiscal Year    

End1    

BlackRock Advantage International Fund    $16,007    $13,700
BlackRock Advantage Large Cap Growth Fund    $15,007    $12,700
BlackRock Advantage Small Cap Core Fund    $15,007    $14,800
BlackRock Energy Opportunities Fund    $17,107    $32,300
BlackRock High Equity Income Fund    $15,007    $16,700
BlackRock International Dividend Fund    $16,007    $13,700

1Certain funds of the registrant changed their fiscal year end from September 30 to May 31 effective May 31, 2020 whereby this fiscal year consists of the eight months ended May 31, 2020.

Additionally, the amounts billed by D&T in connection with services provided to the Affiliated Service Providers of the Fund and of other funds sponsored and advised by BlackRock or its affiliates during the current and previous fiscal years for a service organization review and an accounting research tool subscription were:

 

Current Fiscal Year
End 		  

Previous Fiscal Year    

End 1    

$2,032,000

    $1,984,000

1Certain funds of the registrant changed their fiscal year end from September 30 to May 31 effective May 31, 2020 whereby this fiscal year consists of the eight months ended May 31, 2020.

These amounts represent aggregate fees paid by BlackRock and were not allocated on a per fund basis.

(h) The Committee has considered and determined that the provision of non-audit services that were rendered to the Investment Adviser and the Affiliated Service Providers 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.

 

Item 5 –

Audit Committee of Listed Registrant – Not Applicable

 

Item 6 –

Investments

(a) The registrant’s Schedule of Investments is included as part of the Report to Stockholders filed under Item 1(a) of this Form.

(b) Not Applicable due to no such divestments during the semi-annual period covered since the previous Form N-CSR filing.

 

4

Item 7 –

Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies – Not Applicable

 

Item 8 –

Portfolio Managers of Closed-End Management Investment Companies – Not Applicable

 

Item 9 –

Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers – Not Applicable

 

Item 10 –

Submission of Matters to a Vote of Security Holders – There have been no material changes to these procedures.

 

Item 11 –

Controls and Procedures

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

(b) There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the 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 –

Disclosure of Securities Lending Activities for Closed-End Management Investment Companies – Not Applicable

 

Item 13 –

Exhibits attached hereto

(a)(1) Code of Ethics – See Item 2

(a)(2) Section 302 Certifications are attached

(a)(3) Not Applicable

(a)(4) Not Applicable

(b) Section 906 Certifications are attached

 

 

5

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 FundsSM

 

  By:     

/s/ John M. Perlowski                            

       John M. Perlowski
       Chief Executive Officer (principal executive officer) of
       BlackRock FundsSM

Date: August 4, 2021

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 FundsSM

Date: August 4, 2021

 

  By:     

/s/ Trent Walker                            

      

Trent Walker

       Chief Financial Officer (principal financial officer) of
       BlackRock FundsSM

Date: August 4, 2021

 

6