<PAGE>
BLACKROCK FUNDS SM
THE EQUITY PORTFOLIOS/INVESTOR CLASSES
SUPPLEMENT TO PROSPECTUS DATED
JANUARY 28, 1998
The section "What Are The Expenses Of The Portfolios?" has been amended as fol-
lows:
The expense tables appearing on pages 4 through 7 are replaced with the follow-
ing:
<TABLE>
<CAPTION>
LARGE CAP LARGE CAP MID-CAP
VALUE EQUITY GROWTH EQUITY VALUE EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO
INVESTOR A INVESTOR B INVESTOR C INVESTOR A INVESTOR B INVESTOR C INVESTOR A INVESTOR B INVESTOR C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER
TRANSACTION
EXPENSES
Maximum Front-End
Sales Charge(/1/)
(as a percentage of
offering price) 4.5% None None 4.5% None None 4.5% None None
Maximum Deferred
Sales
Charge(/1/)(/2/)
(as a percentage of
offering price) None 4.5% 1.0% None 4.5% 1.0% None 4.5% 1.0%
Sales Charge on
Reinvested
Dividends None None None None None None None None None
ANNUAL PORTFOLIO
OPERATING EXPENSES
(AS A PERCENTAGE OF
AVERAGE NET ASSETS)
Advisory fees (after
fee waivers)(/3/) .54% .54% .54% .55% .55% .55% .79% .79% .79%
12b-1 fees(/3/)(/4/) .00 .75 .75 .00 .75 .75 .00 .75 .75
Other operating
expenses
(after fee waivers)
(/3/) .77 .77 .77 .79 .79 .79 .82 .82 .82
---- ---- ---- ---- ---- ---- ---- ---- ----
Shareholder
servicing fee .25 .25 .25 .25 .25 .25 .25 .25 .25
Shareholder
processing fee .15 .15 .15 .15 .15 .15 .15 .15 .15
Other expenses .37 .37 .37 .39 .39 .39 .42 .42 .42
---- ---- ---- ---- ---- ---- ---- ---- ----
Total Portfolio
operating expenses
(after fee
waivers)(/3/) 1.31% 2.06% 2.06% 1.34% 2.09% 2.09% 1.61% 2.36% 2.36%
==== ==== ==== ==== ==== ==== ==== ==== ====
</TABLE>
(1) Reduced front-end sales charges may be available. A deferred sales charge
of up to 1.00% is assessed on certain redemptions of Investor A Shares that
are purchased with no initial sales charge as part of an investment of
$1,000,000 or more. See "What Is the Schedule of Sales Charges and Exemp-
tions?"
(2) This amount applies to redemptions during the first year. The deferred
sales charge for Investor B Shares decreases for redemptions made in subse-
quent years. No deferred sales charge is charged after the sixth year on
Investor B Shares or after the first year on Investor C Shares. See "What
Is the Schedule of Sales Charges and Exemptions?"
(3) "Other expenses" includes the administration fees payable by the Portfo-
lios. Without waivers, advisory fees would be .80% and administration fees
would be .23% for the Mid-Cap Value Equity Portfolio. BlackRock, Inc. and
the Portfolios' administrators are under no obligation to waive or continue
waiving their fees, but have informed the Fund that they expect to waive
fees as necessary to maintain the Portfolios' total operating expenses dur-
ing the remainder of the current fiscal year at the levels set forth in the
table. Without waivers, "Other operating expenses" would be .86% for each
class of the Mid-Cap Value Equity Portfolio and "Total Portfolio operating
expenses" would be 1.66% for Investor A Shares and 2.41% for Investor B
Shares and Investor C Shares. The Portfolios do not expect to incur 12b-1
fees in excess of .005% with respect to Investor A Shares (otherwise pay-
able at the maximum rate of .10%) during the current fiscal year.
(4) Investors with a long-term perspective may prefer Investor A Shares, as de-
scribed under "What Are The Key Considerations In Selecting A Pricing Op-
tion?" Long-term investors in Investor Shares may pay more than the eco-
nomic equivalent of the maximum front-end sales charges permitted by the
rules of the National Association of Securities Dealers, Inc. ("NASD").
<PAGE>
<TABLE>
<CAPTION>
MID-CAP SMALL CAP SMALL CAP
GROWTH VALUE GROWTH
EQUITY EQUITY EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO
INVESTOR A INVESTOR B INVESTOR C INVESTOR A INVESTOR B INVESTOR C INVESTOR A INVESTOR B INVESTOR C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER
TRANSACTION
EXPENSES
Maximum Front-End
Sales Charge(/1/)
(as a percentage of
offering price) 4.5% None None 4.5% None None 4.5% None None
Maximum Deferred
Sales
Charge(/1/)(/2/)
(as a percentage of
offering price) None 4.5% 1.0% None 4.5% 1.0% None 4.5% 1.0%
Sales Charge on
Reinvested
Dividends None None None None None None None None None
ANNUAL PORTFOLIO
OPERATING EXPENSES
(AS A PERCENTAGE OF
AVERAGE NET ASSETS)
Advisory fees (after
fee waivers)(/3/) .79% .79% .79% .55% .55% .55% .55% .55% .55%
12b-1 fees(/3/)(/4/) .00 .75 .75 .00 .75 .75 .00 .75 .75
Other operating
expenses
(after fee
waivers)(/3/) .82 .82 .82 .80 .80 .80 .80 .80 .80
---- ---- ---- ---- ---- ---- ---- ---- ----
Shareholder
servicing fee .25 .25 .25 .25 .25 .25 .25 .25 .25
Shareholder
processing fee .15 .15 .15 .15 .15 .15 .15 .15 .15
Other expenses .42 .42 .42 .40 .40 .40 .40 .40 .40
---- ---- ---- ---- ---- ---- ---- ---- ----
Total Portfolio
operating expenses
(after fee
waivers)(/3/) 1.61% 2.36% 2.36% 1.35% 2.10% 2.10% 1.35% 2.10% 2.10%
==== ==== ==== ==== ==== ==== ==== ==== ====
</TABLE>
(1) Reduced front-end sales charges may be available. A deferred sales charge
of up to 1.00% is assessed on certain redemptions of Investor A Shares that
are purchased with no initial sales charge as part of an investment of
$1,000,000 or more. See "What Is the Schedule of Sales Charges and Exemp-
tions?"
(2) This amount applies to redemptions during the first year. The deferred
sales charge for Investor B Shares decreases for redemptions made in subse-
quent years. No deferred sales charge is charged after the sixth year on
Investor B Shares or after the first year on Investor C Shares. See "What
Is the Schedule of Sales Charges and Exemptions?"
(3) "Other expenses" includes the administration fees payable by the Portfo-
lios. Without waivers, advisory fees would be .80% and administration fees
would be .23% for the Mid-Cap Growth Equity Portfolio. BlackRock, Inc. and
the Portfolios' administrators are under no obligation to waive or continue
waiving their fees, but have informed the Fund that they expect to waive
fees as necessary to maintain the Portfolios' total operating expenses dur-
ing the remainder of the current fiscal year at the levels set forth in the
table. Without waivers, "Other operating expenses" would be .84% for each
class of the Mid-Cap Growth Equity Portfolio and "Total Portfolio operating
expenses" would be 1.64% for Investor A Shares and 2.39% for Investor B
Shares and Investor C Shares. The Portfolios do not expect to incur 12b-1
fees in excess of .005% with respect to Investor A Shares (otherwise pay-
able at the maximum rate of .10%) during the current fiscal year.
(4) Investors with a long-term perspective may prefer Investor A Shares, as de-
scribed under "What Are The Key Considerations In Selecting A Pricing Op-
tion?" Long-term investors in Investor Shares may pay more than the eco-
nomic equivalent of the maximum front-end sales charges permitted by the
rules of the NASD.
2
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL
INTERNATIONAL INTERNATIONAL EMERGING
EQUITY SMALL CAP EQUITY MARKETS
PORTFOLIO PORTFOLIO PORTFOLIO
INVESTOR A INVESTOR B INVESTOR C INVESTOR A INVESTOR B INVESTOR C INVESTOR A INVESTOR B INVESTOR C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER
TRANSACTION
EXPENSES
Maximum Front-End
Sales Charge(/1/)
(as a percentage of
offering price) 5.0% None None 5.0% None None 5.0% None None
Maximum Deferred
Sales
Charge(/1/)(/2/)
(as a percentage of
offering price) None 4.5% 1.0% None 4.5% 1.0% None 4.5% 1.0%
Sales Charge on
Reinvested
Dividends None None None None None None None None None
ANNUAL PORTFOLIO
OPERATING EXPENSES
(AS A PERCENTAGE OF
AVERAGE NET ASSETS)
Advisory fees (after
fee waivers)(/3/) .66% .66% .66% .80% .80% .80% 1.16% 1.16% 1.16%
12b-1 fees(/3/)(/4/) .00 .75 .75 .00 .75 .75 .00 .75 .75
Other operating
expenses (after fee
waivers)(/3/) .87 .87 .87 1.00 1.00 1.00 1.09 1.09 1.09
---- ---- ---- ---- ---- ---- ---- ---- ----
Shareholder
servicing fee .25 .25 .25 .25 .25 .25 .25 .25 .25
Shareholder
processing fee .15 .15 .15 .15 .15 .15 .15 .15 .15
Other expenses .47 .47 .47 .60 .60 .60 .69 .69 .69
--- --- --- --- --- --- --- --- ---
Total Portfolio
operating expenses
(after fee
waivers)(/3/) 1.53% 2.28% 2.28% 1.80% 2.55% 2.55% 2.25% 3.00% 3.00%
==== ==== ==== ==== ==== ==== ==== ==== ====
</TABLE>
(1) Reduced front-end sales charges may be available. A deferred sales charge
of up to 1.00% is assessed on certain redemptions of Investor A Shares that
are purchased with no initial sales charge as part of an investment of
$1,000,000 or more. See "What Is the Schedule of Sales Charges and Exemp-
tions?"
(2) This amount applies to redemptions during the first year. The deferred
sales charge for Investor B Shares decreases for redemptions made in subse-
quent years. No deferred sales charge is charged after the sixth year on
Investor B Shares or after the first year on Investor C Shares. See "What
Is the Schedule of Sales Charges and Exemptions?"
(3) "Other expenses" includes the administration fees payable by the Portfo-
lios. Without waivers, advisory fees would be .75%, 1.00% and 1.25% for the
International Equity, International Small Cap Equity and International
Emerging Markets Portfolios, respectively, and administration fees would be
.23% for each class of each Portfolio. BlackRock, Inc. and the Portfolios'
administrators are under no obligation to waive or continue waiving their
fees, but have informed the Fund that they expect to waive fees as neces-
sary to maintain the Portfolios' total operating expenses during the re-
mainder of the current fiscal year at the levels set forth in the table.
Without waivers, "Other operating expenses" would be: (i) .88%, 1.02% and
1.09%, respectively, for each class of the Portfolios and "Total Portfolio
operating expenses" would be: (ii) 1.63%, 2.02% and 2.34%, respectively,
for Investor A Shares; and (iii) 2.38%, 2.77% and 3.09%, respectively, for
Investor B Shares and Investor C Shares. The Portfolios do not expect to
incur 12b-1 fees in excess of .005% with respect to Investor A Shares (oth-
erwise payable at the maximum rate of .10%) during the current fiscal year.
(4) Investors with a long-term perspective may prefer Investor A Shares, as de-
scribed under "What Are The Key Considerations In Selecting A Pricing Op-
tion?" Long-term investors in Investor Shares may pay more than the eco-
nomic equivalent of the maximum front-end sales charges permitted by the
rules of the NASD.
3
<PAGE>
<TABLE>
<CAPTION>
SELECT EQUITY INDEX EQUITY BALANCED
PORTFOLIO PORTFOLIO+ PORTFOLIO
INVESTOR A INVESTOR B INVESTOR C INVESTOR A INVESTOR B INVESTOR C INVESTOR A INVESTOR B INVESTOR C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER
TRANSACTION
EXPENSES
Maximum Front-End
Sales Charge(/1/)
(as a percentage of
offering price) 4.5% None None 3.0% None None 4.5% None None
Maximum Deferred
Sales
Charge(/1/)(/2/)
(as a percentage of
offering price) None 4.5% 1.0% None 4.5% 1.0% None 4.5% 1.0%
Sales Charge on
Reinvested
Dividends None None None None None None None None None
ANNUAL PORTFOLIO
OPERATING EXPENSES
(AS A PERCENTAGE OF
AVERAGE NET ASSETS)
Advisory fees (after
fee
waivers)(/3/)(/4/) .55% .55% .55% .025% .025% .025% .55% .55% .55%
12b-1 fees(/3/)(/5/) .00 .75 .75 .00 .75 .75 .00 .75 .75
Other operating
expenses
(after fee
waivers)(/3/) .78 .78 .78 .625 .625 .625 .82 .82 .82
---- ---- ---- ---- ---- ---- ---- ---- ----
Shareholder
servicing fee .25 .25 .25 .25 .25 .25 .25 .25 .25
Shareholder
processing fee .15 .15 .15 .15 .15 .15 .15 .15 .15
Other expenses .38 .38 .38 .225 .225 .225 .42 .42 .42
---- ---- ---- ---- ---- ---- ---- ---- ----
Total Portfolio
operating expenses
(after fee
waivers)(/3/) 1.33% 2.08% 2.08% .65% 1.40% 1.40% 1.37% 2.12% 2.12%
==== ==== ==== ==== ==== ==== ==== ==== ====
</TABLE>
(1) Reduced front-end sales charges may be available. A deferred sales charge
of up to 1.00% is assessed on certain redemptions of Investor A Shares that
are purchased with no initial sales charge as part of an investment of
$1,000,000 or more. See "What Is the Schedule of Sales Charges and Exemp-
tions?"
(2) This amount applies to redemptions during the first year. The deferred
sales charge for Investor B Shares decreases for redemptions made in subse-
quent years. No deferred sales charge is charged after the sixth year on
Investor B Shares or after the first year on Investor C Shares. See "What
Is the Schedule of Sales Charges and Exemptions?"
(3) "Other expenses" includes the administration fees payable by the Portfo-
lios. Without waivers administration fees would be .23% for the Index Eq-
uity Portfolio. BlackRock, Inc. and the Portfolios' administrators are un-
der no obligation to waive or continue waiving their fees, but have in-
formed the Fund that they expect to waive fees as necessary to maintain the
Portfolios' total operating expenses during the remainder of the current
fiscal year at the levels set forth in the table. Without waivers, "Other
operating expenses" would be .65% for each class of the Index Equity Port-
folio and "Total Portfolio operating expenses" would be .85% for Investor A
Shares and 1.60% for Investor B Shares and Investor C Shares. The Portfo-
lios do not expect to incur 12b-1 fees in excess of .005% with respect to
Investor A Shares (otherwise payable at the maximum rate of .10%) during
the current fiscal year.
(4) Advisory fees with respect to the Index Equity Portfolio represent advisory
fees of the Index Master Portfolio.
(5) Investors with a long-term perspective may prefer Investor A Shares, as de-
scribed under "What Are The Key Considerations In Selection A Pricing Op-
tion?" Long-term investors in Investor Shares may pay more than the eco-
nomic equivalent of the maximum front-end sales charges permitted by the
rules of the NASD.
+ Includes the operating expenses of the Index Master Portfolio that are allo-
cable to the Index Equity Portfolio.
4
<PAGE>
The information in the Example on page 8 is replaced with the following:
EXAMPLE
An investor in Investor Shares would pay the following expenses on a $1,000 in-
vestment assuming (1) a 5% annual return, (2) redemption at the end of each
time period and (3) with respect to Investor B shares only, no redemption at
the end of each time period:
<TABLE>
<CAPTION>
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
<S> <C> <C> <C> <C>
Large Cap Value Equity Portfolio
A Shares* $58 $ 85 $114 $196
B Shares (Redemption)** 66 102 133 219***
B Shares (No Redemption) 21 65 111 219***
C Shares 21 65 111 239
Large Cap Growth Equity Portfolio
A Shares* 58 86 115 199
B Shares (Redemption)** 66 103 136 223***
B Shares (No Redemption) 21 65 112 223***
C Shares 21 65 112 242
Mid-Cap Value Equity Portfolio
A Shares* 61 94 N/A N/A
B Shares (Redemption)** 69 111 N/A N/A
B Shares (No Redemption) 24 74 N/A N/A
C Shares 24 74 N/A N/A
Mid-Cap Growth Equity Portfolio
A Shares* 61 94 N/A N/A
B Shares (Redemption)** 69 111 N/A N/A
B Shares (No Redemption) 24 74 N/A N/A
C Shares 24 74 N/A N/A
Small Cap Value Equity Portfolio
A Shares* 58 86 116 200
B Shares (Redemption)** 66 103 135 224***
B Shares (No Redemption) 21 66 113 224***
C Shares 21 66 113 243
Small Cap Growth Equity Portfolio
A Shares* 58 86 116 200
B Shares (Redemption)** 66 103 135 224***
B Shares (No Redemption) 21 66 113 224***
C Shares 21 66 113 243
International Equity Portfolio
A Shares* 65 96 129 223
B Shares (Redemption)** 68 108 144 242***
B Shares (No Redemption) 23 71 122 242***
C Shares 23 71 122 262
International Small Cap Equity
Portfolio
A Shares* 62 99 N/A N/A
B Shares (Redemption)** 71 116 N/A N/A
B Shares (No Redemption) 26 79 N/A N/A
C Shares 26 79 N/A N/A
International Emerging Markets
Portfolio
A Shares* 72 117 164 296
B Shares (Redemption)** 75 129 179 314***
B Shares (No Redemption) 30 93 158 314***
C Shares 30 93 158 332
Select Equity Portfolio
A Shares* 58 85 115 198
B Shares (Redemption)** 66 102 134 222***
B Shares (No Redemption) 21 65 112 222***
C Shares 21 65 112 241
Index Equity Portfolio
A Shares* 36 50 65 109
B Shares (Redemption)** 59 82 100 147***
B Shares (No Redemption) 14 44 77 147***
C Shares 14 44 77 168
Balanced Portfolio
A Shares* 58 86 117 202
B Shares (Redemption)** 67 103 136 226***
B Shares (No Redemption) 22 66 114 226***
C Shares 22 66 114 245
</TABLE>
* Reflects the imposition of the maximum front-end sales charge at the begin-
ning of the period.
** Reflects the deduction of the deferred sales charge.
*** Based on the conversion of the Investor B Shares to Investor A Shares after
eight years.
The section "Who Manages The Fund?" is amended to reflect the fact that
CastleInternational Asset Management Limited has changed its name to BlackRock
International, Ltd.
This Supplement is dated March 3, 1998.
5
<PAGE>
BLACKROCK FUNDS SM
THE EQUITY PORTFOLIOS/INSTITUTIONAL CLASS
SUPPLEMENT TO PROSPECTUS DATED
JANUARY 28, 1998
The section "What Are The Expenses Of The Portfolios?" has been amended as fol-
lows:
The expense tables appearing on page 4 are replaced with the following:
<TABLE>
<CAPTION>
LARGE CAP LARGE CAP MID-CAP SMALL CAP SMALL CAP
VALUE GROWTH MID-CAP GROWTH VALUE GROWTH
EQUITY EQUITY VALUE EQUITY EQUITY EQUITY EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ANNUAL PORTFOLIO
OPERATING EXPENSES
(AS A PERCENTAGE OF
AVERAGE NET ASSETS)
Advisory fees (after fee
waivers)(/1/) .54% .55% .79% .79% .55% .55%
Other operating expenses .30 .32 .35 .35 .33 .33
--- --- --- --- --- ---
Administration fees
(after fee
waivers)(/1/) .21 .23 .20 .20 .23 .23
Other expenses .09 .09 .15 .15 .10 .10
--- --- --- --- --- ---
Total Portfolio
operating expenses
(after fee
waivers)(/1/) .84% .87% 1.14% 1.14% .88% .88%
=== === ==== ==== === ===
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL INTERNATIONAL
INTERNATIONAL SMALL CAP EMERGING SELECT INDEX
EQUITY EQUITY MARKETS EQUITY EQUITY BALANCED
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO+ PORTFOLIO
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ANNUAL PORTFOLIO
OPERATING EXPENSES (AS
A PERCENTAGE OF AVERAGE
NET ASSETS)
Advisory fees (after fee
waivers)(/1/)(/2/) .66% .80% 1.16% .55% .025% .55%
Other operating expenses .40 .53 .62 .31 .155 .35
--- --- --- --- ---- ---
Administration fees
(after fee
waivers)(/1/) .21 .23 .23 .23 .033 .23
Other expenses .19 .30 .39 .08 .122 .12
--- --- --- --- ---- ---
Total Portfolio
operating expenses
(after fee
waivers)(/1/) 1.06% 1.33% 1.78% .86% .18% .90%
==== ==== ==== === === ===
</TABLE>
(1) Without waivers, advisory fees would be .80% for the Mid-Cap Value Equity
and Mid-Cap Growth Equity Portfolios and .75%, 1.00% and 1.25%, respective-
ly, for the International Equity, International Small Cap Equity and Inter-
national Emerging Markets Portfolios, and administration fees would be .23%
for the Mid-Cap Value Equity, Mid-Cap Growth Equity, International Equity
and Index Equity Portfolios. BlackRock, Inc. and the Portfolios' adminis-
trators are under no obligation to waive or continue waiving their fees,
but have informed the Fund that they expect to waive fees as necessary to
maintain the Portfolios' total operating expenses during the remainder of
the current fiscal year at the levels set forth in the table. Without waiv-
ers, "Other operating expenses" would be .39%, .37%, .41%, .55%, .62% and
.18%, respectively, for the Mid-Cap Value Equity, Mid-Cap Growth Equity,
International Equity, International Small Cap Equity, International Emerg-
ing Markets and Index Equity Portfolios, and "Total Portfolio operating ex-
penses" would be 1.19%, 1.17%, 1.16%, 1.55%, 1.87% and .38%, respectively.
(2) Advisory fees with respect to the Index Equity Portfolio represent advisory
fees of the Index Master Portfolio.
+ Includes the operating expenses of the Index Master Portfolio that are allo-
cable to the Index Equity Portfolio.
<PAGE>
The information in the Example on page 5 is replaced with the following:
EXAMPLE
An investor in Institutional Shares would pay the following expenses on a
$1,000 investment assuming (1) a 5% annual return, and (2) redemption at the
end of each time period:
<TABLE>
<CAPTION>
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
<S> <C> <C> <C> <C>
Large Cap Value Equity Portfolio $ 9 $27 $47 $104
Large Cap Growth Equity Portfolio 9 28 48 107
Mid-Cap Value Equity Portfolio 12 36 N/A N/A
Mid-Cap Growth Equity Portfolio 12 36 N/A N/A
Small Cap Value Equity Portfolio 9 28 49 108
Small Cap Growth Equity Portfolio 9 28 49 108
International Equity Portfolio 11 34 58 129
International Small Cap Equity
Portfolio 14 42 N/A N/A
International Emerging Markets
Portfolio 18 56 96 209
Select Equity Portfolio 9 27 48 106
Index Equity Portfolio 2 6 10 23
Balanced Portfolio 9 29 50 111
</TABLE>
The section "Who Manages The Fund?" is amended to reflect the fact that
CastleInternational Asset Management Limited has changed its name to BlackRock
International, Ltd.
This Supplement is dated March 3, 1998.
2
<PAGE>
BLACKROCK FUNDSSM
THE EQUITY PORTFOLIOS/SERVICE CLASS
SUPPLEMENT TO PROSPECTUS DATED
JANUARY 28, 1998
The section "What Are The Expenses Of The Portfolios?" has been amended as fol-
lows:
The expense tables appearing on page 4 are replaced with the following:
<TABLE>
<CAPTION>
LARGE CAP LARGE CAP MID-CAP SMALL CAP SMALL CAP
VALUE GROWTH MID-CAP GROWTH VALUE GROWTH
EQUITY EQUITY VALUE EQUITY EQUITY EQUITY EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ANNUAL PORTFOLIO OPERATING
EXPENSES
(AS A PERCENTAGE OF AVERAGE
NET ASSETS)
Advisory fees
(after fee waivers)(/1/) .54% .55% .79% .79% .55% .55%
Other operating expenses .60 .62 .65 .65 .63 .63
------- ------- ------- ----- ----- -----
Administration fees
(after fee waivers)(/1/) .21 .23 .20 .20 .23 .23
Shareholder servicing fees .15 .15 .15 .15 .15 .15
Other expenses .24 .24 .30 .30 .25 .25
------ ------ ------ ---- ----- ----
Total Portfolio operating
expenses
(after fee waivers)(/1/) 1.14% 1.17% 1.44% 1.44% 1.18% 1.18%
======= ======= ======= ===== ===== =====
<CAPTION>
INTERNATIONAL INTERNATIONAL
INTERNATIONAL SMALL CAP EMERGING SELECT INDEX
EQUITY EQUITY MARKETS EQUITY EQUITY BALANCED
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO+ PORTFOLIO
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ANNUAL PORTFOLIO OPERATING
EXPENSES
(AS A PERCENTAGE OF AVERAGE
NET ASSETS)
Advisory fees
(after fee waivers)(/1/)(/2/) .66% .80% 1.16% .55% .025% .55%
Other operating expenses .70 .83 .92 .61 .455 .65
------- ------- ------- ----- ----- -----
Administration fees
(after fee waivers)(/1/) .21 .23 .23 .23 .033 .23
Shareholder servicing fees .15 .15 .15 .15 .150 .15
Other expenses .34 .45 .54 .23 .272 .27
------ ------ ------ ---- ----- ----
Total Portfolio operating
expenses
(after fee waivers)(/1/) 1.36% 1.63% 2.08% 1.16% .480% 1.20%
======= ======= ======= ===== ===== =====
</TABLE>
(1) Without waivers, advisory fees would be .80% for the Mid-Cap Value Equity
and Mid-Cap Growth Equity Portfolios and .75%, 1.00% and 1.25%, respective-
ly, for the International Equity, International Small Cap Equity and Inter-
national Emerging Markets Portfolios, and administration fees would be .23%
for the Mid-Cap Value Equity, Mid-Cap Growth Equity, International Equity
and Index Equity Portfolios. BlackRock, Inc. and the Portfolios' adminis-
trators are under no obligation to waive or continue waiving their fees,
but have informed the Fund that they expect to waive fees as necessary to
maintain the Portfolios' total operating expenses during the remainder of
the current fiscal year at the levels set forth in the table. Without waiv-
ers, "Other operating expenses" would be .69%, .67%, .71%, .85%, .92% and
.48%, respectively, for the Mid-Cap Value Equity, Mid-Cap Growth Equity,
International Equity, International Small Cap Equity, International Emerg-
ing Markets and Index Equity Portfolios, and "Total Portfolio operating ex-
penses" would be 1.49%, 1.47%, 1.46%, 1.85%, 2.17% and .68%, respectively.
(2) Advisory fees with respect to the Index Equity Portfolio represent advisory
fees of the Index Master Portfolio.
+ Includes the operating expenses of the Index Master Portfolio that are allo-
cable to the Index Equity Portfolio.
<PAGE>
The information in the Example on page 5 is replaced with the following:
EXAMPLE
An investor in Service Shares would pay the following expenses on a $1,000 in-
vestment assuming (1) a 5% annual return, and (2) redemption at the end of each
time period:
<TABLE>
<CAPTION>
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
<S> <C> <C> <C> <C>
Large Cap Value Equity Portfolio $12 $36 $63 $139
Large Cap Growth Equity Portfolio 12 37 64 142
Mid-Cap Value Equity Portfolio 15 46 N/A N/A
Mid-Cap Growth Equity Portfolio 15 46 N/A N/A
Small Cap Value Equity Portfolio 12 37 65 143
Small Cap Growth Equity Portfolio 12 37 65 143
International Equity Portfolio 14 43 74 164
International Small Cap Equity
Portfolio 17 51 N/A N/A
International Emerging Markets
Portfolio 21 65 112 241
Select Equity Portfolio 12 37 64 141
Index Equity Portfolio 5 15 27 60
Balanced Portfolio 12 38 66 145
</TABLE>
The section "Who Manages The Fund?" is amended to reflect the fact that
CastleInternational Asset Management Limited has changed its name to BlackRock
International, Ltd.
This Supplement is dated March 3, 1998.
2
<PAGE>
- --------------------------------------------------------------------------------
BLACKROCK FUNDS SM
SUPPLEMENT TO STATEMENT OF ADDITIONAL INFORMATION
DATED JANUARY 28, 1998
The Statement of Additional Information is amended to reflect the fact that
CastleInternational Asset Management Limited has changed its name to BlackRock
International, Ltd.
This Supplement is dated March 3, 1998.
1
