MARCH 13, 2013
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SUMMARY PROSPECTUS
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BlackRock
Funds
SM
| Investor and Institutional Shares
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BlackRock Disciplined Small Cap Core
Fund
Investor A: BDSAX • Investor C: BDSCX • Institutional: BDSIX
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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 March 13, 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
The investment objective of BlackRock Disciplined Small Cap Core
Fund (the “Fund”), a series of BlackRock Funds
SM
(the “Trust”), is to seek capital appreciation over the long
term.
Fees and Expenses of the
Fund
This table describes the fees and expenses that you may pay if you
buy and hold shares of the Fund. You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least
$25,000 in the fund complex advised by BlackRock Advisors, LLC (“BlackRock”) or its affiliates. More information about these and other
discounts is available from your financial professional and in the “Details About the Share Classes” section on page 15 of the
Fund’s prospectus and in the “Purchase of Shares” section on page II-58 of the Fund’s statement of additional
information.
Shareholder Fees
(fees paid directly
from your investment)
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Investor A
Shares
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Investor C
Shares
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Institutional
Shares
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Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price)
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5.25
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%
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None
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None
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Maximum Deferred Sales Charge (Load) (as a percentage of
offering price or redemption proceeds,
whichever is lower)
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None
1
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1.00
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%
2
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None
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Annual Fund Operating
Expenses
(expenses that you pay each year as a
percentage of the value of your investment)
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Investor A
Shares
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Investor C
Shares
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Institutional
Shares
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Management Fee
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0.45
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%
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0.45
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%
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0.45
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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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1.00
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%
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None
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Other Expenses
3
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0.61
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%
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0.62
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%
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0.51
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%
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Total Annual Fund Operating Expenses
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1.31
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%
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2.07
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%
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0.96
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%
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Fee Waivers and/or Expense Reimbursements
4
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(0.36
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)%
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(0.37
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)%
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(0.26
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)%
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Total Annual Fund Operating Expenses After Fee Waivers
and/or Expense
Reimbursements
4
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0.95
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%
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1.70
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%
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0.70
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%
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1
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A contingent deferred sales charge
(“CDSC”) of 1.00% is assessed on certain redemptions of Investor A Shares made within 18 months after purchase where no initial
sales charge was paid at time of purchase as part of an investment of $1,000,000 or more.
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2
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There is no CDSC on Investor C Shares after one
year.
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3
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Other Expenses are based on estimated amounts for
the current year.
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4
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As described in the “Management of the
Fund” section of the Fund’s prospectus on pages 29-33, BlackRock has contractually agreed to waive and/or
reimburse fees or expenses in order to limit Total Annual Fund Operating Expenses After Fee Waivers and/or Expense Reimbursements (excluding Dividend
Expense, Interest Expense, Acquired Fund Fees and Expenses and certain other Fund expenses) as a percentage of average daily net assets to
0.95% (for Investor A Shares), 1.70% (for Investor C Shares) and 0.70% (for Institutional Shares) until
December 1, 2014. The Fund may have to repay some of these waivers and reimbursements to BlackRock in the following two years. The
agreement may be terminated upon 90 days’ notice by a majority of the non-interested trustees of the Trust or by a vote of a majority of the
outstanding voting securities of the Fund.
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2
Example:
This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the time periods indicated
and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the
Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would
be:
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1 Year
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3 Years
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Investor A Shares
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$617
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$885
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Investor C Shares
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$273
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$613
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Institutional Shares
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$ 72
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$280
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You would pay the following expenses if you did not redeem your
shares:
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1 Year
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3 Years
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Investor C Shares
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$173
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$613
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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.
Principal Investment Strategies
of the Fund
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. The companies included in the Russell
2000
®
Index have market capitalizations that range from approximately $101 million to $2.6
billion as of June 30, 2012. The Fund primarily seeks to buy common stock and may also invest in preferred stock and convertible
securities. From time to time the Fund may invest in shares of companies through “new issues” or initial public offerings
(“IPOs”).
The Fund may use derivatives, including options, futures, indexed
securities, inverse securities, swaps and forward contracts both to seek to increase the return of the Fund and to hedge (or protect) the value of its
assets against adverse movements in currency exchange rates, interest rates and movements in the securities markets. In order to effectively manage
cash flows into or out of the Fund, the Fund may buy and sell financial futures contracts or options on such contracts. Derivatives are financial
instruments whose value is derived from another security, a commodity (such as oil or gas), a currency or an index, including but not limited to the
Russell 2000
®
Index. The use of options, futures, indexed securities, inverse securities, swaps and forward contracts can be effective
in protecting or enhancing the value of the Fund’s assets.
Principal Risks of Investing in
the Fund
Risk is inherent in all investing. The value of your investment in
the Fund, 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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Convertible Securities Risk
— The market value
of a convertible security performs like that of a regular debt security; that is, if market interest rates rise, the value of a convertible security
usually falls. In addition, convertible securities are subject to the risk that the issuer will not be able to pay interest or dividends when due, and
their market value may change based on changes in the issuer’s credit rating or the market’s perception of the issuer’s
creditworthiness. Since it derives a portion of its value from the common stock into which it may be converted, a convertible security is also subject
to the same types of market and issuer risks that apply to the underlying common stock.
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Derivatives Risk
— The Fund’s use of
derivatives may reduce the Fund’s returns and/or increase volatility. Volatility is defined as the characteristic of a security, an index or a
market to fluctuate significantly in price within a short time period. Derivatives are also subject to counterparty risk, which is the risk that the
other party in the transaction will not fulfill its contractual obligation. A risk of the Fund’s use of derivatives is that the fluctuations in
their values
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may not correlate perfectly with the overall securities markets.
The possible lack of a liquid secondary market for derivatives and the resulting inability of the Fund to sell or otherwise close a derivatives
position could expose the Fund to losses and could make derivatives more difficult for the Fund to value accurately. Derivatives may give rise to a
form of leverage and may expose the Fund to greater risk and increase its costs. Recent legislation calls for new regulation of the derivatives
markets. The extent and impact of the regulation is not yet known and may not be known for some time. New regulation may make derivatives more costly,
may limit the availability of derivatives, or may otherwise adversely affect the value or performance of derivatives.
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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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High Portfolio Turnover Risk
— High portfolio
turnover (more than 100%) may result in increased transaction costs to the Fund and potentially higher capital gains or losses for shareholders. The
effects of higher than normal portfolio turnover may adversely affect Fund performance.
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Investment Style Risk
— Under certain market
conditions, growth investments have performed better during the later stages of economic expansion and value investments have performed better during
periods of economic recovery. Therefore, these investment styles 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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Leverage Risk
— Some transactions may give rise
to a form of leverage. These transactions may include, among others, derivatives, and may expose the Fund to greater risk and increase its costs. The
use of leverage may cause the Fund to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet any
required asset segregation requirements. Increases and decreases in the value of the Fund’s portfolio will be magnified when the Fund uses
leverage.
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Liquidity Risk
— Liquidity risk exists when
particular investments are difficult to purchase or sell. The Fund’s investments in illiquid securities may reduce the returns of the Fund because
it may be difficult to sell the illiquid securities at an advantageous time or price. To the extent that the Fund’s principal investment
strategies involve derivatives or securities with substantial market and/or credit risk, the Fund will tend to have the greatest exposure to liquidity
risk. Liquid investments may become illiquid after purchase by the Fund, particularly during periods of market turmoil. Illiquid investments may be
harder to value, especially in changing markets, and if the Fund is forced to sell these investments to meet redemption requests or for other cash
needs, the Fund may suffer a loss. In addition, when there is illiquidity in the market for certain securities, the Fund, due to limitations on
illiquid investments, may be subject to purchase and sale restrictions.
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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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“New Issues” Risk
— “New
Issues” are IPOs of equity securities of U.S. and non-U.S. issuers. Securities issued in IPOs have no trading history,
and information about the companies may be available for very limited periods. In addition, the prices of securities sold in IPOs may be highly
volatile or may decline shortly after the initial public offering.
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Preferred Securities Risk
— Preferred
securities may pay fixed or adjustable rates of return. Preferred securities are subject to issuer-specific and market risks applicable generally to
equity securities.
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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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Because the Fund has not commenced operations as of the date of
this prospectus, it does not have performance information an investor would find useful in evaluating the risks of investing in the Fund. The
Fund’s primary benchmark is the Russell 2000
®
Index.
The Fund’s investment manager is BlackRock Advisors, LLC
(previously defined as “BlackRock”). The Fund’s sub-adviser is BlackRock Fund Advisors (the “Sub-Adviser”). Where applicable,
“BlackRock” refers also to the Sub-Adviser.
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Name
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Portfolio Manager
of the Fund
Since
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Title
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Travis Cooke, CFA
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2013
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Managing Director of BlackRock, Inc.
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Ali Jahansouz
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2013
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Vice President 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. To purchase or sell shares 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) 441-7762, 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 generally are as follows,
although the Fund may reduce or waive the minimums in some cases:
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Investor A and
Investor C
Shares
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Institutional
Shares
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Minimum Initial Investment
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$1,000 for all accounts except:
· $250
for certain fee-based programs.
· $100 for retirement plans.
· $50, if establishing an Automatic Investment Plan.
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$2 million for institutions and individuals.
Institutional Shares are available to clients of
registered investment advisors who have $250,000 invested in the Fund.
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Minimum Additional Investment
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$50 for all accounts except certain retirement plans and payroll deduction programs may have a
lower minimum.
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No subsequent minimum.
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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-DSC-0313
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