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

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

Date of fiscal year end: 05/31/2023

Date of reporting period: 11/30/2022

Item 1 – Report to Stockholders

(a) The Report to Shareholders is attached herewith.

BlackRock Funds^SM

BlackRock Large Cap Series Funds, Inc.

Table of Contents

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 six-month period ended November 30, 2022, the Fund outperformed its benchmark, the MSCI EAFE^® Index.

What factors influenced performance?

The Fund did well navigating a highly changeable backdrop seen in the markets over the period. The market’s focus was on monetary policy normalization against a backdrop of persistent inflation going into the period. As a response, central banks around the globe reiterated their focus on tamping down inflation and tightened policy. The Fed raised its benchmark overnight lending rate by 75 basis points in June, July and September 2022, making it the fastest rate hiking cycle since 1980. This resulted in a persistently inverted yield curve, often a precursor to an imminent recession. However, markets staged a bear rally during the summer as investors hoped for a dovish policy pivot on the part of the Fed given growth concerns, allowing equities to essentially recover half of their losses. Still, central banks reiterated their focus on bringing down inflation, causing a sell-off that saw equities set new lows. Nevertheless, despite manufacturing data beginning to decline and downgraded analyst earnings forecasts, companies posted robust earnings at period end and stocks rallied off their year-to-date lows. November 2022 saw the largest rally in equities for the period, as investors were buoyed by lower-than-expected U.S. consumer price data, re-igniting a “past peak inflation” narrative and paving the way for a reversal in the recent underperformance of large-cap growth stocks.

Stock selection sentiment-based measures provided persistent gains during the period. These faster moving insights were able to correctly capture the emerging and evolving market trends. Particularly, text-based insights evaluating broker reports and conference calls as well as those looking at informed investor sentiment proved additive across industrial stocks.

Non-traditional measures of company fundamentals, such as insights related to environmental, social and governance (“ESG”) factors, also contributed to gains in the period. These tend to be an alternative lens into company quality, and efficiency-related insights tracking measures such as water usage efficacy benefited performance amid the market focus on corporate financial health. Other ESG insights related to risk mitigation which look to predict firm-level controversy helped correctly position the portfolio within developed market healthcare stocks.

On the downside, select fundamental valuation measures had a challenging period, given the rapidly shifting market style preferences. Traditional metrics evaluating sales, research expenditures, and other financial statement metrics all detracted from performance. Broader macro positioning also detracted from performance, most notably an overweight to Italian equities and an overweight to the information technology sector.

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 with enhanced data sets that capture informed investor positioning as well as news flow. Additionally, the Fund added to its complex of consumer intent insights with a measure that looks towards social media activity as a measure of potential revenue growth. Finally, the Fund built upon its company employee-related measures by adding an insight that identifies organizations at risk for emerging labor disputes.

Describe portfolio positioning at period end.

At period end, the Fund’s positioning with respect to sector allocation was essentially neutral relative to the MSCI EAFE^® Index. The Fund had slight overweights to the communication services and industrials sectors and slight underweights to the financials and consumer discretionary 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.

Performance

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

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

Portfolio Information

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 six-month period ended November 30, 2022, the Fund underperformed its benchmark, the Russell 1000^® Growth Index.

What factors influenced performance?

The period saw continued market volatility as equities tested new lows before recovering. Market focus remained on policy normalization and inflation as investors weighed the impact of rising rates on risk assets as well as the direction of future policy decisions. The Fed hiked its benchmark overnight lending rate by 75 basis points at four consecutive meetings as the central bank tightened policy to combat inflation. The inflation picture evolved as prices of goods moderated while services prices accelerated, led by labor market tightness which is a key focus of the Fed. The resulting policy action resulted in a persistently inverted yield curve, often a precursor of recession. Despite this, markets staged a bear rally during the summer as investors interpreted softening economic data as an indication that policy makers would pivot to a more dovish policy stance. The rebound proved premature, as the Fed reaffirmed its focus on inflation after the late-August Jackson Hole meeting, prompting a selloff in September 2022. However, markets recovered at period-end as signs emerged of inflation peaking alongside a robust earnings season, highlighting the potential for a soft landing.

Underperformance was mainly driven by macro thematic measures, particularly around the summer months, alongside some fundamental measures which were challenged during the first half of the period. Notably, insights that identify industries likely to benefit from central bank policy normalization detracted given the evolving market regime by motivating an unsuccessful overweight to financials. Additionally, a measure which seeks to identify trends based on input costs struggled across consumer discretionary stocks.

Elsewhere, non-traditional quality measures such as those ranking companies based on employee benefits and corporate culture detracted. These insights motivated an unsuccessful underweight to hotel and leisure names which detracted given the consumer shift toward services during the period.

Despite the Fund’s overall underperformance for the period, some insights provided ballast to the portfolio, particularly in the back half of the period. Stock selection from sentiment measures provided positive results, having correctly captured the evolving backdrop. Insights capturing sentiment from bond markets were broadly additive against the backdrop of the Fed’s sharp rate hiking cycle. Further, a text-based measure gathering sentiment from broker reports drove positive stock selection within industrials, most notably in aerospace and defense stocks which likely benefited from the ongoing Ukraine conflict.

Elsewhere, insights related to company fundamentals also helped during the period. Traditional quality insights that prefer lower-risk securities performed well given elevated market volatility. Further, measures looking at equity issuance as well as an insight that evaluates research expenditures worked well within healthcare.

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 with enhanced data sets that capture informed investor positioning as well as news flow. Additionally, the Fund added to its complex of consumer intent insights with a measure that looks towards social media activity as a measure of potential revenue growth. Finally, the Fund built upon its company employee-related measures by adding an insight that identifies organizations at risk for emerging labor disputes.

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 healthcare and information technology sectors and slight underweight positions in the communication services and consumer discretionary 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.

Performance

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

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

Portfolio Information

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 six-month period ended November 30, 2022, the Fund outperformed the benchmark Russell 2000^® Index with the exception of its Investor C Shares which performed in line.

What factors influenced performance?

The period saw continued market volatility as equities tested new lows before recovering. Market focus remained on policy normalization and inflation as investors weighed the impact of rising rates on risk assets as well as the direction of future policy decisions. The Fed hiked its benchmark overnight lending rate by 75 basis points at four consecutive meetings as the central bank tightened policy to combat inflation. The inflation picture evolved as prices of goods moderated while services prices accelerated, led by labor market tightness which is a key focus of the Fed. The resulting policy action resulted in a persistently inverted yield curve, often a precursor of recession. Despite this, markets staged a bear rally during the summer as investors interpreted softening economic data as an indication that policy makers would pivot to a more dovish policy stance. The rebound proved premature, as the Fed reaffirmed its focus on inflation after the late-August Jackson Hole meeting, prompting a selloff in September. However, markets recovered at period-end as signs emerged of inflation peaking alongside a robust earnings season, highlighting the potential for a soft landing.

The Fund performed well against a volatile backdrop, with gains concentrated in the back half of the period. This was predominantly due to performance strength from sentiment measures which correctly captured the evolving market backdrop. Specifically, trend-based sentiment measures evaluating earnings calls and broker reports proved additive within financials.

Fundamental stock selection measures were mixed but provided ballast to performance during the latter half of the period. A top contributor was a traditional quality insight with a preference for lower-risk securities. This measure performed well, particularly within healthcare names, amid the higher market volatility seen throughout the period. Additionally, a quality measure comparing stocks across earnings management benefited performance by motivating a successful underweight to consumer discretionary stocks.

Traditional valuation measures were also additive given the strength of value styles going into period-end. Most notably, insights that evaluate balance sheet metrics such as research expenditures and company valuations based on sales proved beneficial.

Despite the Fund’s overall outperformance, macro thematic measures broadly detracted throughout the period. Insights that identify companies likely to benefit from central bank policy normalization weighed on performance by motivating an unsuccessful positioning across healthcare and information technology stocks. This positioning proved overly defensive amid interest rate uncertainty and against the broader investor shift to pro-growth exposures during the summer months.

Elsewhere, environmental, social and governance(“ESG”) measures related to human capital produced negative results for the period. Most notably, insights evaluating corporate culture and employee benefits detracted within healthcare holdings. Finally, a non-financial quality insight looking at companies retaining C-suite level founders was the worst performer for the period with losses across industrial and information technology stocks.

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 with enhanced data sets that capture informed investor positioning as well as news flow. Additionally, the Fund added to its complex of consumer intent insights with a measure that looks towards social media activity as a measure of potential revenue growth. Finally, the Fund built upon its company employee-related measures by adding an insight that identifies organizations at risk for emerging labor disputes.

Describe portfolio 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 allocations to the healthcare and industrials sectors, and slight underweights to the financials 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.

Performance

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

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

Portfolio Information

Investment Objective

BlackRock Advantage Large Cap Core Fund’s (the “Fund”) investment objective is to seek long-term capital growth. In other words, the Fund tries to choose investments that will increase in value.

Portfolio Management Commentary

How did the Fund perform?

For the six-month period ended November 30, 2022, the Fund underperformed its benchmark, the Russell 1000^® Index.

What factors influenced performance?

The period saw continued market volatility as equities tested new lows before recovering. Market focus remained on policy normalization and inflation as investors weighed the impact of rising rates on risk assets as well as the direction of future policy decisions. The Fed hiked its benchmark overnight lending rate by 75 basis points at four consecutive meetings as the central bank tightened policy to combat inflation. The inflation picture evolved as prices of goods moderated while services prices accelerated, led by labor market tightness which is a key focus of the Fed. The resulting policy action resulted in a persistently inverted yield curve, often a precursor of recession. Despite this, markets staged a bear rally during the summer as investors interpreted softening economic data as an indication that policy makers would pivot to a more dovish policy stance. The rebound proved premature, as the Fed reaffirmed its focus on inflation after the late-August 2022 Jackson Hole meeting, prompting a selloff in September. However, markets recovered at period-end as signs emerged of inflation peaking alongside a robust earnings season, highlighting the potential for a soft landing.

The Fund’s underperformance was mainly driven by macro thematic measures, particularly around the summer months, alongside some fundamental measures which were challenged during the first half of the period. Notably, insights that identify industries likely to benefit from central bank policy normalization weighed on performance by motivating an unsuccessful overweight to financials. This positioning struggled against the broader investor shift to pro-growth exposures during the summer months.

Elsewhere, non-traditional quality measures such as those ranking companies based on employee benefits detracted, as they struggled among communication services stocks largely due to underweights to entertainment companies.

Finally, insights looking at industry trends based on input cost disruptions motivated an underweight to consumer discretionary names, detracting from performance. In particular, underweights to hotel and restaurant companies detracted as consumers shifted spending to services during the period.

Despite the Fund’s underperformance for the period, some insights provided ballast to the portfolio, particularly in the back half of the reporting period. Stock selection from sentiment measures provided positive results during the period, having correctly captured the evolving backdrop. Insights capturing sentiment from bond markets were broadly additive against the backdrop of the Fed’s sharp rate hiking cycle. Further, a measure that looks at ETF flows drove positive stock selection within real estate amid a challenging environment for the sector.

Elsewhere, insights related to company fundamentals also helped during the period. Traditional quality insights that prefer lower-risk securities performed well given the elevated market volatility. Further, measures looking at equity issuance worked well within healthcare. Additionally, some measures related to environmental, social and governance factors benefited from a strong bounce back after struggling early in 2022. Particularly, a more forward-looking insight ranking companies based on commitments to a lower carbon economy performed well.

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 with enhanced data sets that capture informed investor positioning as well as news flow. Additionally, the Fund added to its complex of consumer intent insights with a measure that looks towards social media activity as a measure of potential revenue growth. Finally, the Fund built upon its company employee-related measures by adding an insight that identifies organizations at risk for emerging labor disputes.

Describe portfolio positioning at period end.

Relative to the Russell 1000^® Index, the Fund was positioned essentially neutrally from a sector perspective. The Fund had slight overweight positions in the information technology and healthcare sectors and slight underweight positions in the communication services and consumer discretionary 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.

Performance

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

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

Portfolio Information

Investment Objective

BlackRock Advantage Large Cap Value Fund’s (the “Fund”) investment objective is to seek long-term capital growth. In other words, the Fund tries to choose investments that will increase in value.

Portfolio Management Commentary

How did the Fund perform?

For the six-month period ended November 30, 2022, the Fund underperformed its benchmark, the Russell 1000^® Value Index.

What factors influenced performance?

The period saw continued market volatility as equities tested new lows before recovering. Market focus remained on policy normalization and inflation as investors weighed the impact of rising rates on risk assets as well as the direction of future policy decisions. The Fed hiked its benchmark overnight lending rate by 75 basis points at four consecutive meetings as the central bank tightened policy to combat inflation. The inflation picture evolved as prices of goods moderated while services prices accelerated, led by labor market tightness which is a key focus of the Fed. The resulting policy action resulted in a persistently inverted yield curve, often a precursor of recession. Despite this, markets staged a bear rally during the summer as investors interpreted softening economic data as an indication that policy makers would pivot to a more dovish policy stance. The rebound proved premature, as the Fed reaffirmed its focus on inflation after the late-August 2022 Jackson Hole meeting, prompting a selloff in September. However, markets recovered at period-end as signs emerged of inflation peaking alongside a robust earnings season, highlighting the potential for a soft landing.

Underperformance was mainly driven by macro thematic measures, particularly around the summer months, alongside some fundamental measures which were challenged during the first half of the period. Notably, insights that identify industries likely to benefit from central bank policy normalization weighed on performance by motivating an unsuccessful overweight to financials. This positioning struggled during the summer months when value styles were out of favor among the broader market. The Fund used derivatives to equitize cash and cash equivalents to be fully invested in the stock market while maintaining some liquidity. The Fund’s use of derivative detracted from performance.

Elsewhere, non-traditional quality measures, such as those ranking companies based on employee benefits, detracted as they struggled to position the portfolio within the semiconductor segment. Additionally, a text-based insight analyzing industries likely to benefit from lobbying activity performed poorly within utilities.

Despite the Fund’s overall underperformance for the period, some insights provided ballast to the portfolio, particularly in the back half of the period. Stock selection from sentiment measures provided positive results during the period, having correctly captured the evolving backdrop. Insights capturing sentiment from bond markets were broadly additive against the backdrop of the Fed’s sharp rate hiking cycle. Further, a text-based measure gathering sentiment from broker reports drove a successful overweight to industrials, particularly the machinery sub-sector.

Elsewhere, insights related to company fundamentals proved additive. Traditional quality insights that prefer lower-risk securities performed well given elevated market volatility. Further, measures looking at equity issuance as well as an insight analyzing companies’ valuations relative to sales worked well within healthcare. given the market preference during the period.

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 with enhanced data sets that capture informed investor positioning as well as news flow. Additionally, the Fund added to its complex of consumer intent insights with a measure that looks towards social media activity as a measure of potential revenue growth. Finally, the Fund built upon its company employee-related measures by adding an insight that identifies organizations at risk for emerging labor disputes.

Describe portfolio positioning at period end.

Relative to the Russell 1000^® Value Index, the Fund was positioned essentially neutrally from a sector perspective. The Fund had slight overweight positions in the healthcare, industrials and information technology sectors and slight underweight positions in the communication services and consumer discretionary 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.

Performance

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

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

Portfolio Information

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, BlackRock Advantage Large Cap Core Fund’s and BlackRock Advantage Large Cap Value 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 A Shares. 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.

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. On July 6, 2021, Advantage Large Cap Growth’s issued and outstanding Service Shares converted into Investor A Shares with the same relative aggregate net asset value (“NAV”).

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, BlackRock Advantage Large Cap Growth Fund, BlackRock Advantage Large Cap Core Fund and BlackRock Advantage Large Cap Value 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.

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 each 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 assume reinvestment of all distributions, if any, at 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 at the beginning of the period and held through the end of the period) 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. Annualized expense ratios reflect contractual and voluntary fee waivers, if any. 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.

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. Pursuant to Rule 18f-4 under the 1940 Act, among other things, The Fund must either use derivative financial instruments with embedded leverage in a limited manner or comply with an outer limit on fund leverage risk based on value-at-risk. 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.