JANUARY 28, 2013
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SUMMARY PROSPECTUS
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BlackRock
Funds
SM
| Service Shares
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>
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BlackRock Health Sciences Opportunities
Portfolio
Service: SHISX
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Before you invest, you may want to
review the Fund’s prospectus, which contains more information about the Fund and its risks. You can find the Fund’s prospectus (including
amendments and supplements) and other information about the Fund, including the Fund’s statement of additional information and shareholder report,
online at http://www.blackrock.com/prospectus. You can also get this information at no cost by calling (800) 441-7762 or by sending an e-mail request
to
prospectus.request@blackrock.com
, or from your financial professional. The Fund’s prospectus and statement of additional information,
both dated January 28, 2013, as amended and supplemented from time to time, are incorporated by reference into (legally made a part of) this Summary
Prospectus.
This Summary Prospectus contains
information you should know before investing, including information about risks. Please read it before you invest and keep it for future
reference.
The Securities and Exchange
Commission has not approved or disapproved these securities or passed upon the adequacy of this Summary Prospectus. Any representation to the contrary
is a criminal offense.
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Not FDIC Insured • No Bank Guarantee • May Lose Value
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Summary Prospectus
Key Facts About BlackRock Health
Sciences Opportunities Portfolio
Investment Objective
The investment objective of BlackRock Health Sciences
Opportunities Portfolio (“Health Sciences Opportunities” or the “Fund”), one portfolio of BlackRock Funds
SM
(the
“Trust”), is to provide long-term growth of capital.
Fees and Expenses of the Fund
This table describes the fees and expenses that you may pay if you
buy and hold Services Shares of Health Sciences Opportunities.
Annual Fund Operating
Expenses
(expenses that you pay each year as a percentage of the value of your investment)
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Service Shares
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Management Fee
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0.73
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%
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Distribution and/or Service (12b-1) Fees
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0.25
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%
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Other Expenses
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0.30
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%
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Acquired Fund Fees and Expenses
1
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0.01
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%
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Total Annual Fund Operating Expenses
1
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1.29
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%
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1
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The Total Annual Fund Operating Expenses do not
correlate to the ratio of expenses to average net assets given in the Fund’s most recent annual report which does not include the Acquired Fund
Fees and Expenses.
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Example:
This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the time periods indicated
and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the
Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would
be:
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1 Year
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3 Years
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5 Years
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10 Years
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Service Shares
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$
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131
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$
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409
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$
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708
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$
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1,556
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Portfolio Turnover:
The Fund pays transaction costs, such as commissions, when it buys
and sells securities (or “turns over” its portfolio). A higher portfolio turnover may indicate higher transaction costs and may result in
higher taxes when shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example,
affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 135% of the average value of its
portfolio.
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Principal Investment Strategies of the Fund
Under normal market conditions, Health Sciences Opportunities
invests at least 80% of total assets in equity securities, primarily common stock, of companies in health sciences and related industries. The health
sciences sector can include companies in health care equipment and supplies, health care providers and services, biotechnology, and pharmaceuticals.
Health sciences and related industries can include, but are not limited to, businesses involved in the development, production, and distribution or
delivery of medical and pharmaceutical products and services, companies engaged in biotechnology and medical research and development, companies that
may design, manufacture or distribute medical, dental and optical equipment and supplies, including diagnostic equipment, and companies that may also
provide diagnostic services or operate health facilities and hospitals, or provide related administrative, management and financial support. The Fund
will concentrate its investments (i.e., invest more than 25% of its assets) in health sciences or related industries, and may invest in companies
located in non-U.S. countries.
The Fund reserves the right to invest up to 20% of total assets in
other types of securities. These may include stocks of companies not associated with health sciences.
The Fund is classified as non-diversified under the Investment
Company Act of 1940, as amended, which means that it can invest more of its assets in fewer companies than a diversified fund.
Principal Risks of Investing in the Fund
Risk is inherent in all investing. The value of your investment in
Health Sciences Opportunities, as well as the amount of return you receive on your investment, may fluctuate significantly from day to day and over
time. You may lose part or all of your investment in the Fund or your investment may not perform as well as other similar investments. The following is
a summary description of principal risks of investing in the Fund.
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Concentration Risk
— The Fund’s strategy
of concentrating in health sciences and related companies means that its performance will be closely tied to the performance of a particular market
segment. The Fund’s concentration in these companies may present more risks than if it were broadly diversified over numerous industries and
sectors of the economy. A downturn in these companies would have a larger impact on the Fund than on a mutual fund that does not concentrate in such
companies. At times, the performance of these companies will lag the performance of other industries or the broader market as a whole.
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Equity Securities Risk
— Stock markets are
volatile. The price of equity securities fluctuates based on changes in a company’s financial condition and overall market and economic
conditions.
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Foreign Securities Risk
— Foreign investments
often involve special risks not present in U.S. investments that can increase the chances that the Fund will lose money. These risks
include:
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—
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The Fund generally holds its foreign securities and cash in
foreign banks and securities depositories, which may be recently organized or new to the foreign custody business and may be subject to only limited or
no regulatory oversight.
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—
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Changes in foreign currency exchange rates can affect the value of
the Fund’s portfolio.
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The economies of certain foreign markets may not compare favorably
with the economy of the United States with respect to such issues as growth of gross national product, reinvestment of capital, resources and balance
of payments position.
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—
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The governments of certain countries may prohibit or impose
substantial restrictions on foreign investments in their capital markets or in certain industries.
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Many foreign governments do not supervise and regulate stock
exchanges, brokers and the sale of securities to the same extent as does the United States and may not have laws to protect investors that are
comparable to U.S. securities laws.
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—
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Settlement and clearance procedures in certain foreign markets may
result in delays in payment for or delivery of securities not typically associated with settlement and clearance of U.S. investments.
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—
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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, including countries that do not use the Euro. These events may affect the value and liquidity of
certain of the Fund’s investments.
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Healthcare-Related Securities Risk
— Many
healthcare-related companies are smaller and less seasoned than companies in other sectors. Healthcare-related companies may also be strongly affected
by scientific or technological developments and their products may quickly become obsolete. Many healthcare companies are heavily dependent on patent
protection and the actual or perceived safety and efficiency of their products. The expiration of patents may adversely affect the profitability of
these companies. Many healthcare companies are subject to extensive litigation based on product liability and similar claims. Finally, many
healthcare-related companies offer products and services that are subject to governmental regulation and may be adversely affected by changes in
governmental policies or laws. In March 2010, President Obama signed into law the Patient Protection and Affordable Care Act designed to reform the
healthcare industry. The Fund cannot predict the impact of this legislation on healthcare-related companies or what healthcare-related proposals might
be proposed or enacted in the future.
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Investment Style Risk
— Under certain market
conditions, growth investments have performed better during the later stages of economic expansion. Therefore, this investment style may over time go
in and out of favor. At times when the investment style used by the Fund is out of favor, the Fund may underperform other equity funds that use
different investment styles.
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Market Risk and Selection Risk
— Market risk is
the risk that one or more markets in which the Fund invests will go down in value, including the possibility that the markets will go down sharply and
unpredictably. Selection risk is the risk that the securities selected by Fund management will underperform the markets, the relevant indices or the
securities selected by other funds with similar investment objectives and investment strategies. This means you may lose money.
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Mid-Cap Securities Risk
— The securities of
mid-cap companies generally trade in lower volumes and are generally subject to greater and less predictable price changes than the securities of
larger capitalization companies.
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Non-Diversification Risk
— The Fund is a
non-diversified fund. Because the Fund may invest in securities of a smaller number of issuers, it may be more exposed to the risks associated with and
developments affecting an individual issuer than a fund that invests more widely.
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Small Cap Securities Risk
— Small cap companies
may have limited product lines or markets. They may be less financially secure than larger, more established companies. They may depend on a more
limited management group than larger capitalized companies.
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Performance Information
On January 31, 2005, Health Sciences Opportunities reorganized
with the State Street Research Health Sciences Fund (the “SSR Fund”), which had investment objectives and strategies substantially similar to
the Fund. For periods prior to January 31, 2005, the chart and table show performance information for the SSR Fund. The performance of Service Shares
for the period before January 28, 2005 is based on the performance of Investor A Shares, adjusted to reflect the class specific fees applicable to
Service Shares at the time of such share class’ launch. This information may be considered when assessing the Fund’s performance, but does
not represent the actual performance of Service Shares.
The information shows you how the Fund’s performance has
varied year by year and provides some indication of the risks of investing in the Fund. The table compares the Fund’s performance to that of the
Standard & Poor’s (S&P) 500
®
Index. The table also compares the Fund’s performance to that of the Russell
3000
®
Health Care Index, which is relevant to the Fund because it has characteristics similar to the Fund’s investment strategies.
As with all such investments, past performance (before and after taxes) is not an indication of future results. Sales charges are not reflected in the
bar chart. If they were, returns would be less than those shown. However, the table includes all applicable fees and sales charges. If BlackRock and
its affiliates had not waived or reimbursed certain Fund expenses during these periods, the Fund’s returns would have been lower. Updated
information on the Fund’s results can be obtained by visiting http://www.blackrock.com/funds or can be obtained by phone at (800)
882-0052.
Service Shares
ANNUAL TOTAL RETURNS
BlackRock
Health Sciences Opportunities Portfolio
As of 12/31
During the ten-year period shown in the bar chart, the highest
return for a quarter was 34.69% (quarter ended June 30, 2003) and the lowest return for a quarter was –13.96% (quarter ended December 31,
2008).
As of 12/31/12
Average Annual Total
Returns
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1 Year
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5 Years
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10 Years
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BlackRock Health Sciences Opportunities Portfolio — Service Shares
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Return Before Taxes
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18.37
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%
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6.64
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%
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14.92
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Return After Taxes on Distributions
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16.93
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%
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5.63
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13.95
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Return After Taxes on Distributions and Sale of Shares
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13.34
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%
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5.41
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13.09
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%
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Russell 3000
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Health Care Index
(Reflects no deduction for fees, expenses or
taxes)
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19.32
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%
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5.52
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%
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7.13
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%
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S&P 500
®
Index
(Reflects no deduction for fees, expenses or taxes)
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16.00
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%
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1.66
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7.10
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%
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After-tax returns are calculated using the historical highest
individual Federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the
investor’s tax situation and may differ from those shown, and the after-tax returns shown are not relevant to investors who hold their shares
through tax-deferred arrangements such as 401(k) plans or individual retirement accounts.
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Investment Manager
Health Sciences Opportunities’ investment manager is
BlackRock Advisors, LLC (previously defined as “BlackRock”).
Portfolio Managers
Name
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Portfolio Manager
of the Fund
Since
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Title
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Thomas Callan, CFA
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2005
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Managing Director of BlackRock, Inc.
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Erin Xie, PhD
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2003
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Managing Director of BlackRock, Inc.
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Purchase and Sale of Fund Shares
You may purchase or redeem shares of the Fund each day the New York Stock Exchange is open. You should
contact your financial intermediary or financial professional, or, if you hold your shares through the Fund, you should contact
the Fund by phone at (800) 537-4942, by mail (c/o BlackRock Funds, P.O. Box 9819, Providence, Rhode Island 02940-8019), or by
the Internet at www.blackrock.com/funds. The Fund’s initial and subsequent investment minimums for Service Shares
generally are as follows, although the Fund may reduce or waive the minimums in some cases:
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Service Shares
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Minimum Initial Investment
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$5,000
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Minimum Additional Investment
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No subsequent minimum.
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Tax Information
The Fund’s dividends and distributions may be subject to
Federal income taxes and may be taxed as ordinary income or capital gains, unless you are a tax-exempt investor or are investing through a retirement
plan, in which case you may be subject to Federal income tax upon withdrawal from such tax-deferred arrangements.
Payments to Broker/Dealers and Other Financial
Intermediaries
If you purchase shares of the Fund through a broker-dealer or
other financial intermediary, the Fund and BlackRock Investments, LLC, the Fund’s distributor, or its affiliates may pay the intermediary for the
sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other financial
intermediary and your individual financial professional to recommend the Fund over another investment. Ask your individual financial professional or
visit your financial intermediary’s website for more information.
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INVESTMENT COMPANY ACT FILE #811-05742
© BlackRock Advisors, LLC
SPRO-HSO-SVC-0113
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