Note 1. Organization and Accounting Policies
BlackRock FundsSM (the "Fund") (formerly the Compass Capital (R) Funds) was organized on December 22,
1988 as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as
amended, as an open-end management investment company. The Fund currently has 37 investment portfolios.
These financial statements relate to the Fund's Strategic Portfolio I (the "Portfolio"). The Portfolio is authorized to
issue an unlimited number of shares with a par value of $0.001.
The following is a summary of significant accounting policies followed by the Fund in preparation of its financial
statements. The preparation of financial statements in conformity with generally accepted accounting principles
requires the use of management estimates. Actual results could differ from the estimates.
Securities Valuation: The Fund values mortgage-backed, asset-backed and other debt securities on the basis of
current market quotations provided by dealers or pricing services approved by the Fund's Board of Trustees. In
determining the value of a particular security, pricing services may use certain information with respect to
transactions in such securities, quotations from dealers, market transactions in comparable securities, various
relationships observed in the market between securities, and calculated yield measures based on valuation
technology commonly employed in the market for such securities. Exchange-traded options are valued at their
last sales price as of the close of options trading on the applicable exchanges. In the absence of a last sale,
options are valued at the average of the quoted bid and asked prices as of the close of business. A futures
contract is valued at the last sale price as of the close of the commodities exchange on which it trades. Any
securities or other assets for which such current market quotations are not readily available are valued at fair
value as determined in good faith under procedures established by and und