EQUITY PORTFOLIOS
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
MARCH 31, 1998
(LOGO)
BLACKROCK FUNDS
PURE INVESTMENT STYLE(TRADE MARK)
[GRAPHIC OMITTED]
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
<PAGE>
BLACKROCK FUNDS LOGO [GRAPHIC OMITTED]
EQUITY PORTFOLIOS
* Large Cap Value Equity
* Large Cap Growth Equity
* Mid-Cap Value Equity
* Mid-Cap Growth Equity
* Small Cap Value Equity
* Small Cap Growth Equity
* International Equity
* International Small Cap Equity
* International Emerging Markets
* Select Equity
* Index Equity
* Balanced
TABLE OF CONTENTS
PRESIDENT'S LETTER.............................................................1
PORTFOLIO SUMMARIES
Large Cap Value Equity...................................................2
Large Cap Growth Equity..................................................3
Mid-Cap Value Equity.....................................................4
Mid-Cap Growth Equity....................................................5
Small Cap Value Equity...................................................6
Small Cap Growth Equity..................................................7
International Equity.....................................................8
International Small Cap Equity...........................................9
International Emerging Markets..........................................10
Select Equity...........................................................11
Index Equity............................................................12
Balanced................................................................13
Note on Performance Information.........................................14
STATEMENT OF NET ASSETS/SCHEDULE OF INVESTMENTS............................15-49
Large Cap Value Equity Statement of Assets & Liabilities................17
Large Cap Growth Equity Statement of Assets & Liabilities...............20
Mid-Cap Value Equity Statement of Assets & Liabilities..................23
Mid-Cap Growth Equity Statement of Assets & Liabilities.................26
Small Cap Value Equity Statement of Assets & Liabilities................29
Small Cap Growth Equity Statement of Assets & Liabilities...............33
International Emerging Markets Statement of Assets & Liabilities........40
Select Equity Statement of Assets & Liabilities.........................43
Balanced Statement of Assets & Liabilities..............................49
PORTFOLIO FINANCIAL STATEMENTS
Statements of Operations.............................................50-51
Statements of Changes in Net Assets..................................52-55
Financial Highlights.................................................56-65
NOTES TO FINANCIAL STATEMENTS..............................................66-78
DFA INVESTMENT TRUST COMPANY ANNUAL REPORT.................................79-90
<PAGE>
BLACKROCK FUNDS LOGO [GRAPHIC OMITTED]
PRESIDENT'S LETTER
March 31, 1998
Dear Shareholder:
We are pleased to present the Semi-Annual Report for the BlackRock Funds
for March 31, 1998.
The BlackRock Funds have experienced significant growth over the past six
months. In addition to increasing assets in the fund family, your funds have
changed their name from Compass Capital Funds to BlackRock Funds. The name
change was part of a reorganization of PNC Bank's asset management businesses
under BlackRock Advisors, Inc., which now has over $115 billion under
management. While our name has changed, our funds remain committed to our
disciplined Pure Investment Style(SERVICE MARK) which continues to pursue
investor returns that are consistent with their expectations.
We expect that this consolidation will streamline and make more efficient
the delivery of asset management services to the BlackRock Funds.
The last six months have also been a time of asset growth for BlackRock
Funds and for the investment markets in general. During this period we have seen
record flows into our funds which now have total assets of over $15 billion.
Also of note, during May 1998, PNC Bank's $8 billion family of equity and fixed
income common trust funds will merge into BlackRock Funds. The conversion of the
common trust assets will lift BlackRock Funds to approximately a $23 billion
fund family consisting of 35 portfolios and result in three new funds: BlackRock
GNMA, DE Tax-Free Income and KY Tax-Free Income.
Since we last reported to you, the financial markets have continued to
exhibit remarkable strength. After rolling to a 28.6% return in 1997, the S&P
500 continued to grow another 13.8% in the first three months of 1998. Despite
an abundance of polls which show that investors are experiencing a fear of the
high levels of the market, investors continue to buy equities and are showing by
their actions that they are generally optimistic about the market's future.
European markets, as measured by the Morgan Stanley EAFE Index, have also begun
to perk up over the first quarter, posting a 14.3% return. The bond market
registered modest gains over the first quarter.
We believe that economic conditions continue to bode well for the near
term. The economy looks healthy with GDP estimated to grow at 2.8% in 1998 and
no classic signs of recession such as inventory imbalances appear to be present.
Inflation still seems under control with oil prices and other imports decreasing
sharply. Interest rates also appear to be stable for the near term.
While it seems unlikely that the stock market will continue to return the
same magnitude of gains as we have enjoyed in recent years, we believe that the
environment remains positive for continued growth.
We are pleased to announce that we are launching a new mutual fund, the
BlackRock Funds Micro-Cap Equity Portfolio, which is designed to provide
investors with a way to buy the very smallest public companies early in their
life cycles. The fund will pursue stocks of the most dynamic growth companies
with under $300 million in total market capitalization.
Thank you for your continued confidence in BlackRock Funds. We value your
business and appreciate the opportunity to help you achieve your long-term
investment goals.
Sincerely,
/s/ KAREN H. SABATH
Karen H. Sabath
MANAGING DIRECTOR
BLACKROCK ADVISORS, INC.
1
<PAGE>
LOGO [GRAPHIC OMITTED] BLACKROCK FUNDS
LARGE CAP VALUE EQUITY
PORTFOLIO
TOTAL ASSETS (3/31/98):
$1.6 BILLION
PERFORMANCE BENCHMARK:
RUSSELL 1000 VALUE INDEX
INVESTMENT APPROACH:
PURSUES LONG-TERM CAPITAL APPRECIATION BY INVESTING IN EQUITY SECURITIES
BELIEVED BY THE MANAGER TO BE UNDERVALUED. TYPICALLY, THE MANAGER WILL FOCUS ON
STOCKS WITH LOWER THAN AVERAGE PRICE-TO-EARNINGS AND PRICE-TO-BOOK RATIOS AND
MARKET CAPITALIZATIONS IN EXCESS OF $5 BILLION. A COMPANY'S EARNINGS TREND AND
ITS STOCK'S DIVIDEND GROWTH RATE WILL ALSO BE FACTORS CONSIDERED IN SECURITY
SELECTION.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
(BULLET) THE PORTFOLIO ENDED THE PERIOD WITH AN OVERWEIGHT IN THE FINANCIAL
SECTOR VERSUS THE RUSSELL 1000 DUE TO WHAT THE MANAGER BELIEVED TO BE SOLID
FUNDAMENTALS, EARNINGS GROWTH AND CONSOLIDATION WITHIN THE INDUSTRY.
(BULLET) THE MANAGER REDUCED THE PORTFOLIO'S EXPOSURE TO TELECOM STOCKS
FROM OVERWEIGHT TO NEUTRAL AFTER THE SECTOR'S YEAR-LONG RALLY. PARTICULARLY
STRONG PERFORMERS WERE AT&T AND BELL ATLANTIC.
(BULLET) THE MANAGER INCREASED THE PORTFOLIO'S TECHNOLOGY WEIGHTING FROM A
LARGE UNDERWEIGHT TO NEUTRAL AFTER A WEAK YEAR-END 1997 FOR THE SECTOR. ONE
SPECIFIC PURCHASE WAS APPLIED MATERIALS, WHICH THE PORTFOLIO ADDED UPON PRICE
WEAKNESS.
ALTHOUGH THE PORTFOLIO HOLDINGS AND SECTORS LISTED ABOVE WERE CURRENT AS OF
THE DATE OF PRINTING, THE PORTFOLIO IS ACTIVELY MANAGED AND THE COMPOSITION WILL
VARY.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
LARGE CAP VALUE EQUITY PORTFOLIO AND RUSSELL 1000 VALUE
INDEX FROM INCEPTION AND AT EACH SEMI-ANNUAL PERIOD END.
CHART
[GRAPHIC OMITTED]
The following are the plot points for the Large Cap Value Equity Portfolio:
<TABLE>
<CAPTION>
Institutional Service Investor A Investor B Investor C Russell 1000
Class Class Class Class Class Value Index
<S> <C> <C> <C> <C> <C> <C>
Apr-92 10,000 10,000 9,550 10,000 10,000 10,000
Jun-92 9,830.71 9,831 9,388 9,831 9,831 9,842
Sep-92 9,881.54 9,882 9,437 9,882 9,882 9,899
Dec-92 10,456.6 10,457 9,986 10,457 10,457 10,476
Mar-93 11,342 11,342 10,832 11,342 11,342 11,333
Jun-93 11,414.4 11,414 10,901 11,414 11,414 11,575
Sep-93 12,047.8 12,042 11,508 12,050 12,050 12,044
Dec-93 12,338.4 12,327 11,768 12,322 12,322 11,919
Mar-94 11,870.6 11,853 11,313 11,846 11,846 11,410
Jun-94 12,045.2 12,021 11,459 11,999 11,999 11,385
Sep-94 12,500.5 12,466 11,891 12,452 12,452 11,568
Dec-94 12,473.9 12,432 11,854 12,413 12,413 11,265
Mar-95 13,546.5 13,494 12,862 13,468 13,468 12,224
Jun-95 14,615.7 14,549 13,863 14,516 14,516 13,197
Sep-95 15,715.6 15,633 14,890 15,591 15,591 14,232
Dec-95 16,822.9 16,722 15,921 16,672 16,672 15,060
Mar-96 17,777.8 17,659 16,807 17,581 17,581 15,794
Jun-96 18,388.4 18,253 17,372 18,132 18,132 15,945
Sep-96 19,018 18,864 17,947 18,705 18,705 16,285
Dec-96 20,894.1 20,698 19,712 20,485 20,485 17,770
Mar-97 21,243 21,044 20,007 20,363 20,363 18,119
Jun-97 24,155.2 23,900 22,716 23,671 23,671 20,649
Sep-97 26,177 25,883 24,592 25,579 25,579 22,561
Dec-97 26,876 26,554 25,236 26,195 26,195 23,445
Mar-98 30,251.6 29,905 28,361 29,375 29,375 26,068
</TABLE>
FOR PERIOD ENDING MARCH 31, 1998
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
1 YEAR 3 YEAR 5 YEAR FROM INCEPTION
--------------------------------------------------------
<S> <C> <C> <C> <C>
Institutional Class 42.42% 30.71% 21.68% 20.46%
Service Class 42.12% 30.39% 21.40% 20.23%
Investor A Class (Load Adjusted) 35.32% 28.18% 20.11% 19.16%
Investor A Class (NAV) 41.74% 30.15% 21.22% 20.08%
Investor B Class (Load Adjusted) 34.27% 29.45% 20.34% 19.55%
Investor B Class (NAV) 40.60% 27.92% 20.83% 19.75%
Investor C Class (Load Adjusted) 34.27% 29.45% 20.34% 19.55%
Investor C Class (NAV) 40.60% 27.92% 20.83% 19.75%
</TABLE>
THE PERFORMANCE INFORMATION ABOVE INCLUDES INFORMATION RELATING TO EACH CLASS OF
THE PORTFOLIO SINCE THE COMMENCEMENT OF OPERATIONS OF THE PORTFOLIO, RATHER THAN
THE DATE SUCH CLASS WAS INTRODUCED. THE INCEPTION DATES OF THE PORTFOLIO'S SHARE
CLASSES WERE AS FOLLOWS: INSTITUTIONAL SHARES, 4/20/92; INVESTOR A SHARES,
5/2/92; SERVICE SHARES, 7/29/93; INVESTOR B SHARES, 1/18/96; AND INVESTOR C
SHARES, 8/16/96. SEE "NOTE ON PERFORMANCE INFORMATION" ON PAGE 14 FOR FURTHER
INFORMATION ON HOW PERFORMANCE DATA WAS CALCULATED.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
2
<PAGE>
BLACKROCK FUNDS LOGO [GRAPHIC OMITTED]
LARGE CAP GROWTH EQUITY
PORTFOLIO
TOTAL ASSETS (3/31/98):
$865.3 MILLION
PERFORMANCE BENCHMARK:
RUSSELL 1000 GROWTH INDEX
INVESTMENT APPROACH:
PURSUES LONG-TERM CAPITAL APPRECIATION BY INVESTING IN STOCKS OF COMPANIES
BELIEVED BY THE MANAGER TO HAVE FAVORABLE AND ABOVE-AVERAGE EARNINGS GROWTH
PROSPECTS AND MARKET CAPITALIZATIONS GREATER THAN $5 BILLION.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
(BULLET) AFTER WEAKNESS IN THE TECH SECTOR DURING LATE 1997, THE MANAGER
REPOSITIONED THE PORTFOLIO'S TECHNOLOGY HOLDINGS TO CONCENTRATE ON COMPANIES IN
THE SOFTWARE, NETWORKING AND COMPUTER SERVICES BUSINESSES. THE PORTFOLIO
MAINTAINS A NEUTRAL WEIGHTING TO THE TECHNOLOGY SECTOR, AND WILL NOT LOOK TO ADD
TO THE ALLOCATION UNTIL THE MANAGER CAN ASSESS THE IMPACT OF THE FINANCIAL
CRISIS IN ASIA ON TECH STOCKS.
(BULLET) THE PORTFOLIO MAINTAINS AN OVERWEIGHT IN FINANCIAL SECTOR, WHICH
IS EXPECTED BY THE MANAGER TO EXHIBIT CONTINUED EARNINGS STRENGTH DUE TO SOLID
FUNDAMENTALS AND ONGOING CONSOLIDATION. RECENT ADDITIONS TO THE PORTFOLIO
INCLUDE MERRILL LYNCH AND MBNA CORP.
(BULLET) CORE POSITIONS IN THE PORTFOLIO WHICH HAVE POSTED STRONG GAINS
INCLUDE GE, SYSCO, PFIZER, COCA COLA, MICROSOFT AND WAL MART.
ALTHOUGH THE PORTFOLIO HOLDINGS AND SECTORS LISTED ABOVE WERE CURRENT AS OF
THE DATE OF PRINTING, THE PORTFOLIO IS ACTIVELY MANAGED AND THE COMPOSITION WILL
VARY.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT
IN THE LARGE CAP GROWTH EQUITY PORTFOLIO
AND RUSSELL 1000 GROWTH INDEX FROM
INCEPTION AND AT EACH SEMI-ANNUAL PERIOD END.
CHART
[GRAPHIC OMITTED]
The following are the plot points for the Large Cap Growth Equity Portfolio:
<TABLE>
<CAPTION>
Institutional Service Investor A Investor B Investor C Russell 1000
Class Class Class Class Class Growth Index
<S> <C> <C> <C> <C> <C> <C>
Nov-89 10,825.2 10,825.2 10,338.1 10,825.2 10,825.2 10,395.7
Mar-90 10,493.5 10,493.5 10,021.3 10,493.5 10,493.5 10,053.4
Jun-90 10,987.4 10,987.4 10,492.9 10,987.4 10,987.4 10,650.9
Sep-90 10,040.4 10,040.4 9,588.58 10,040.4 10,040.4 9,095.83
Dec-90 10,603.4 10,603.4 10,126.2 10,603.4 10,603.4 9,963.28
Mar-91 11,396.5 11,396.5 10,883.7 11,396.5 11,396.5 11,510.5
Jun-91 11,304.1 11,304.1 10,795.5 11,304.1 11,304.1 11,459.3
Sep-91 11,993.2 11,993.2 11,453.5 11,993.2 11,993.2 12,167.2
Dec-91 13,361.1 13,361.1 12,759.8 13,361.1 13,361.1 13,253.9
Mar-92 12,388.6 12,388.6 11,831.1 12,388.6 12,388.6 12,967
Jun-92 12,454.9 12,454.9 11,893.9 12,454.9 12,454.9 13,147.9
Sep-92 12,581.3 12,581.3 12,014.2 12,581.3 12,581.3 13,578.7
Dec-92 13,228.1 13,228.1 12,631.4 13,228.1 13,228.1 14,451.4
Mar-93 13,473.3 13,473.3 12,865.3 13,473.3 13,473.3 15,053
Jun-93 13,911.7 13,911.7 13,270.8 13,911.7 13,911.7 15,156.9
Sep-93 15,370.9 15,370.9 14,650.8 15,370.9 15,370.9 15,646.3
Dec-93 15,038.8 15,038.8 14,337.7 15,038.8 15,038.8 15,918.6
Mar-94 13,859.2 13,859.2 13,200.4 13,859.2 13,859.2 15,290.2
Jun-94 13,001.2 13,001.2 12,369.7 13,001.2 13,001.2 15,260.5
Sep-94 13,657.1 13,657.1 12,983.1 13,657.1 13,657.1 16,041.1
Dec-94 13,525.1 13,525.1 12,840.9 13,525.1 13,525.1 15,978.8
Mar-95 14,754.6 14,754.6 13,996.6 14,754.6 14,754.6 17,499.1
Jun-95 16,075.5 16,075.5 15,237.1 16,075.5 16,075.5 19,147.2
Sep-95 17,737 17,737 16,781.4 17,737 17,737 20,852.9
Dec-95 18,183.2 18,183.2 17,192.2 18,183.2 18,183.2 22,012.3
Mar-96 19,333.3 19,333.3 18,267.3 19,333.3 19,333.3 23,225.9
Jun-96 20,471.3 20,471.3 19,315.3 20,471.3 20,471.3 24,171.4
Sep-96 21,048.2 21,048.2 19,833 21,048.2 21,048.2 24,957.6
Dec-96 21,884.1 21,884.1 20,590.8 21,884.1 21,884.1 26,948
Mar-97 21,745.9 21,745.9 20,451.3 21,196.9 21,196.9 27,365
Jun-97 25,866.8 25,858.1 24,304.4 25,150.2 25,150.2 32,540
Sep-97 28,140.5 28,115.5 26,411.5 27,280.4 27,280.4 34,987
Dec-97 28,103.9 28,050.8 26,335 27,152.2 27,152.2 36,040.1
Mar-98 32,836.6 32,752.1 30,725 31,613.3 31,613.3 40,858.7
</TABLE>
FOR PERIOD ENDING MARCH 31, 1998
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
1 YEAR 3 YEAR 5 YEAR FROM INCEPTION
--------------------------------------------------------
<S> <C> <C> <C> <C>
Institutional Class 51.00% 30.56% 19.51% 15.17%
Service Class 50.61% 30.19% 19.22% 15.01%
Investor A Class (Load Adjusted) 43.48% 28.00% 17.93% 14.26%
Investor A Class (NAV) 50.24% 29.97% 19.02% 14.89%
Investor B Class (Load Adjusted) 42.43% 27.68% 18.12% 14.65%
Investor B Class (NAV) 49.14% 29.21% 18.60% 14.65%
Investor C Class (Load Adjusted) 42.43% 27.68% 18.12% 14.65%
Investor C Class (NAV) 49.14% 29.21% 18.60% 14.65%
</TABLE>
THE PERFORMANCE INFORMATION ABOVE INCLUDES INFORMATION RELATING TO EACH CLASS OF
THE PORTFOLIO SINCE THE COMMENCEMENT OF OPERATIONS OF THE PORTFOLIO, RATHER THAN
THE DATE SUCH CLASS WAS INTRODUCED. THE INCEPTION DATES OF THE PORTFOLIO'S SHARE
CLASSES WERE AS FOLLOWS: INSTITUTIONAL SHARES, 11/1/89; INVESTOR A SHARES,
3/14/92; SERVICE SHARES, 7/29/93; INVESTOR B SHARES, 1/24/96; AND INVESTOR C
SHARES, 1/24/97. SEE "NOTE ON PERFORMANCE INFORMATION" ON PAGE 14 FOR FURTHER
INFORMATION ON HOW PERFORMANCE DATA WAS CALCULATED.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
3
<PAGE>
LOGO [GRAPHIC OMITTED] BLACKROCK FUNDS
MID-CAP VALUE EQUITY
PORTFOLIO
TOTAL ASSETS (3/31/98):
$182.8 MILLION
PERFORMANCE BENCHMARK:
RUSSELL MIDCAP VALUE INDEX
INVESTMENT APPROACH:
PURSUES LONG-TERM CAPITAL APPRECIATION BY INVESTING IN EQUITY SECURITIES
BELIEVED BY THE MANAGER TO BE UNDERVALUED. TYPICALLY, THE MANAGER WILL FOCUS ON
STOCKS WITH LOWER THAN AVERAGE PRICE-TO-EARNINGS AND PRICE-TO-BOOK RATIOS AND
MARKET CAPITALIZATIONS GENERALLY BETWEEN $1 BILLION AND $5 BILLION. A COMPANY'S
EARNINGS TREND AND ITS STOCK'S DIVIDEND GROWTH RATE WILL ALSO BE FACTORS
CONSIDERED IN SECURITY SELECTION.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
(BULLET) THE PORTFOLIO ENDED THE PERIOD WITH AN OVERWEIGHT IN THE
DEFENSIVE, INCOME PRODUCING REIT, UTILITY AND BANKING INDUSTRIES AND AN
UNDERWEIGHT IN TELECOMMUNICATION AND TECHNOLOGY SOFTWARE/SERVICE STOCKS, WHICH
ARE TRADITIONAL GROWTH-ORIENTED SECTORS.
(BULLET) THE PORTFOLIO'S BEST PERFORMING SECTOR DURING THE FIRST QUARTER OF
1998 WAS HEALTH CARE STOCKS, LED BY MEDICAL DEVICE AND LONG-TERM CARE COMPANIES.
ALSO PROVIDING STRONG RETURNS WERE CONSUMER CYCLICAL COMPANIES, PARTICULARLY
RETAIL AND RESTAURANT STOCKS.
(BULLET) THE PORTFOLIO'S RETURNS RECEIVED A BOOST FROM THE SPECIALTY
FINANCE HOLDINGS, PARTICULARLY, THE MONEY STORE, WHICH WAS TAKEN OVER AT A
PREMIUM PRICE OVER ITS PREVIOUS CLOSE.
ALTHOUGH THE PORTFOLIO HOLDINGS AND SECTORS LISTED ABOVE WERE CURRENT AS OF
THE DATE OF PRINTING, THE PORTFOLIO IS ACTIVELY MANAGED AND THE COMPOSITION WILL
VARY.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT
IN THE MID-CAP VALUE EQUITY PORTFOLIO
AND THE RUSSELL MIDCAP VALUE INDEX FROM INCEPTION
AND AT EACH PERIOD END.
CHART
[GRAPHIC OMITTED]
The following are the plot points for the Mid-Cap Value Equity Portfolio:
<TABLE>
<CAPTION>
Institutional Service Investor A Investor B Investor C Russell Midcap
Class Class Class Class Class Value Index
<S> <C> <C> <C> <C> <C> <C>
12/27/96 10,000 10,000 9,550 10,000 10,000 10,000
3/31/97 10,084 10,071 9,616.85 10,065 10,065 10,170
6/30/97 11,382.8 11,363.1 10,838.2 11,328.2 11,328.2 11,450.4
9/30/97 12,910.4 12,881.2 12,273.2 12,823.5 12,823.5 12,910.3
12/31/97 12,856.2 12,819.4 12,217.9 12,741.4 12,741.4 13,435.8
3/31/98 14,288.4 14,239.8 13,558.2 13,561.3 14,126.4 14,778
</TABLE>
FOR PERIOD ENDING MARCH 31, 1998
AVERAGE ANNUAL TOTAL RETURN
1 YEAR FROM INCEPTION
------ --------------
Institutional Class 41.70% 32.76%
Service Class 41.39% 32.39%
Investor A Class (Load Adjusted) 34.68% 27.35%
Investor A Class (NAV) 40.99% 32.08%
Investor B Class (Load Adjusted) 34.02% 27.35%
Investor B Class (NAV) 40.34% 31.55%
Investor C Class (Load Adjusted) 34.02% 27.35%
Investor C Class (NAV) 40.34% 31.55%
- ------------------------
THE INCEPTION DATE OF THE PORTFOLIO'S INSTITUTIONAL, SERVICE, INVESTOR A,
INVESTOR B AND INVESTOR C SHARES WAS 12/27/96. SEE "NOTE ON PERFORMANCE
INFORMATION" ON PAGE 14 FOR FURTHER INFORMATION ON HOW PERFORMANCE DATA WAS
CALCULATED.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
4
<PAGE>
BLACKROCK FUNDS LOGO [GRAPHIC OMITTED]
MID-CAP GROWTH EQUITY
PORTFOLIO
TOTAL ASSETS (3/31/98):
$177.9 MILLION
PERFORMANCE BENCHMARK:
RUSSELL MIDCAP GROWTH INDEX
INVESTMENT APPROACH:
PURSUES LONG-TERM CAPITAL APPRECIATION BY INVESTING IN STOCKS OF COMPANIES
BELIEVED BY THE MANAGER TO HAVE FAVORABLE AND ABOVE-AVERAGE EARNINGS GROWTH
PROSPECTS AND MARKET CAPITALIZATIONS GENERALLY BETWEEN $1 BILLION AND $5
BILLION.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
(BULLET) AS OF MARCH 31, 1998, THE PORTFOLIO'S LARGEST SECTOR WEIGHTINGS
WERE IN TECHNOLOGY, RETAIL TRADE, CONSUMER SERVICES AND HEALTH CARE.
(BULLET) THE MANAGER HAS EMPHASIZED STOCKS IN THE CONSUMER AREA,
PARTICULARLY HOME FURNISHINGS, AS THIS SECTOR HAS PERFORMED WELL AND IS EXPECTED
BY THE MANAGER TO CONTINUE ITS STRENGTH DUE TO HIGH CONSUMER CONFIDENCE AND
SPENDING.
(BULLET) WITHIN THE TECHNOLOGY SECTOR, THE PORTFOLIO HAS EMPHASIZED
SOFTWARE AND TECH SERVICES COMPANIES, WHICH THE MANAGER EXPECTS TO REMAIN STRONG
DESPITE POTENTIAL CONTINUED WEAKNESS IN ASIA.
ALTHOUGH THE PORTFOLIO HOLDINGS AND SECTORS LISTED ABOVE WERE CURRENT AS OF
THE DATE OF PRINTING, THE PORTFOLIO IS ACTIVELY MANAGED AND THE COMPOSITION WILL
VARY.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT
IN THE MID-CAP GROWTH EQUITY PORTFOLIO AND THE RUSSELL
MIDCAP GROWTH INDEX FROM
INCEPTION AND AT EACH PERIOD END.
CHART
[GRAPHIC OMITTED]
The following are the plot points for the Mid-Cap Growth Equity Portfolio:
<TABLE>
<CAPTION>
Institutional Service Investor A Investor B Investor C Russell Midcap
Class Class Class Class Class Growth Index
<S> <C> <C> <C> <C> <C> <C>
12/27/96 10,000 10,000 9,550 10,000 10,000 10,000
3/31/97 8,894 8,930 8,518.6 8,920 8,920 9,635
6/30/97 10,527.8 10,549.9 10,065.6 10,530.1 10,530.1 11,053.3
9/30/97 12,151.2 12,170.4 11,593.5 12,109.6 12,109.6 12,599.6
12/31/97 11,474.4 11,480.3 10,944.3 11,400 11,400 12,253.1
3/31/98 12,911 12,913 12,292.6 12,270.4 12,781.6 13,740.7
</TABLE>
FOR PERIOD ENDING MARCH 31, 1998
AVERAGE ANNUAL TOTAL RETURN
1 YEAR FROM INCEPTION
------ --------------
Institutional Class 45.16% 22.88%
Service Class 44.60% 22.50%
Investor A Class (Load Adjusted) 37.83% 17.83%
Investor A Class (NAV) 44.32% 22.20%
Investor B Class (Load Adjusted) 36.85% 17.64%
Investor B Class (NAV) 43.30% 21.52%
Investor C Class (Load Adjusted) 36.85% 17.64%
Investor C Class (NAV) 43.30% 21.52%
- ------------------------
THE INCEPTION DATE OF THE PORTFOLIO'S INSTITUTIONAL, SERVICE, INVESTOR A,
INVESTOR B AND INVESTOR C SHARES WAS 12/27/96. SEE "NOTE ON PERFORMANCE
INFORMATION" ON PAGE 14 FOR FURTHER INFORMATION ON HOW PERFORMANCE DATA WAS
CALCULATED.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
5
<PAGE>
LOGO [GRAPHIC OMITTED] BLACKROCK FUNDS
SMALL CAP VALUE EQUITY
PORTFOLIO
TOTAL ASSETS (3/31/98):
$568.8 MILLION
PERFORMANCE BENCHMARK:
RUSSELL 2000 VALUE INDEX
INVESTMENT APPROACH:
PURSUES LONG-TERM CAPITAL APPRECIATION BY INVESTING IN SMALL CAP EQUITY
SECURITIES BELIEVED BY THE MANAGER TO BE UNDERVALUED. TYPICALLY, THE MANAGER
WILL FOCUS ON STOCKS WITH LOWER THAN AVERAGE PRICE-TO-EARNINGS AND PRICE-TO-BOOK
RATIOS AND MARKET CAPITALIZATIONS LESS THAN $1 BILLION. A COMPANY'S EARNINGS
TREND AND ITS STOCK'S DIVIDEND GROWTH RATE WILL ALSO BE FACTORS CONSIDERED IN
SECURITY SELECTION.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
(BULLET) THE PORTFOLIO ENDED THE PERIOD WITH AN OVERWEIGHT IN REITS,
UTILITIES AND BANKING COMPANIES AND AN UNDERWEIGHT IN TELECOMMUNICATION AND
TECHNOLOGY SOFTWARE/SERVICE STOCKS.
(BULLET) THE PORTFOLIO'S BEST PERFORMING SECTOR DURING THE FIRST QUARTER OF
1998 WAS HEALTH CARE STOCKS, LED BY MEDICAL DEVICE AND LONG-TERM CARE COMPANIES.
ALSO PROVIDING STRONG RETURNS WERE CONSUMER CYCLICAL COMPANIES, PARTICULARLY
RETAIL AND RESTAURANT STOCKS.
(BULLET) RECENT ADDITIONS TO THE PORTFOLIO INCLUDE PHILIP SERVICES, AN
ENVIRONMENTAL AND INDUSTRIAL SERVICE COMPANY WHOSE STOCK GOT UNDULY CHEAP AFTER
AN UNEXPECTED INVENTORY WRITE-OFF, AND DUANE READE, THE LARGEST DRUG STORE CHAIN
IN NEW YORK CITY.
ALTHOUGH THE PORTFOLIO HOLDINGS AND SECTORS LISTED ABOVE WERE CURRENT AS OF
THE DATE OF PRINTING, THE PORTFOLIO IS ACTIVELY MANAGED AND THE COMPOSITION WILL
VARY.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
SMALL CAP VALUE EQUITY PORTFOLIO AND THE RUSSELL 2000 VALUE
INDEX FROM INCEPTION AND AT EACH SEMI-ANNUAL PERIOD END.
CHART
[GRAPHIC OMITTED]
The following are the plot points for the Small Cap Value Equity Portfolio:
<TABLE>
<CAPTION>
Institutional Service Investor A Investor B Investor C Russell 2000
Class Class Class Class Class Value Index
<S> <C> <C> <C> <C> <C> <C>
4/13/92 10,000 10,000 9,550 10,000 10,000 10,000
Jun-92 9,679.73 9,679.73 9,244.14 9,679.73 9,679.73 9,656.75
Sep-92 10,150.8 10,150.8 9,694.04 10,150.8 10,150.8 9,933.34
Dec-92 11,685.8 11,685.8 11,160 11,685.8 11,685.8 11,416.1
Mar-93 12,412.5 12,412.5 11,853.9 12,412.5 12,412.5 11,902.9
Jun-93 12,250.8 12,250.8 11,699.5 12,250.8 12,250.8 12,162.1
Sep-93 13,232.6 13,232.1 12,636.7 13,232.1 13,232.1 13,225.4
Dec-93 13,866.1 13,855.9 13,228.1 13,851.4 13,851.4 13,596.5
Mar-94 13,608.2 13,598.9 12,973.2 13,584.5 13,584.5 13,235.6
Jun-94 13,349.5 13,321.6 12,707.2 13,306 13,306 12,720.2
Sep-94 14,061.2 14,022 13,378.3 14,008.7 14,008.7 13,603.2
Dec-94 13,799.7 13,767.6 13,124.9 13,732.7 13,732.7 13,349.9
Mar-95 14,255.8 14,211.7 13,547.9 14,154.4 14,154.4 13,964.8
Jun-95 15,085.4 15,028.4 14,311 14,932.6 14,932.6 15,273.9
Sep-95 16,512.6 16,427.5 15,643.9 16,296.8 16,296.8 16,783.2
Dec-95 16,993.8 16,898.3 16,090.5 16,731.7 16,731.7 17,147.5
Mar-96 17,902.9 17,796.6 16,922.8 17,583.5 17,583.5 18,023.3
Jun-96 18,519.4 18,383.2 17,474.4 18,123.4 18,123.4 18,924.5
Sep-96 18,599.3 18,449.1 17,529.9 18,146.4 18,146.4 18,990.5
Dec-96 20,369.4 20,203.3 19,202.8 19,829.4 19,829.4 19,978.5
Mar-97 20,206.1 20,015.1 19,016.5 19,210 19,210 18,946.4
Jun-97 24,603 24,362.3 23,139.2 23,324.8 23,324.8 21,805
Sep-97 30,015.6 29,685.5 28,183.6 28,369.9 28,369.9 24,616
Dec-97 30,279.8 29,911.1 28,392.2 28,534.5 28,534.5 25,029.5
Mar-98 32,656.7 32,241.2 30,578.3 30,677.4 30,677.4 27,119.5
</TABLE>
FOR PERIOD ENDING MARCH 31, 1998
AVERAGE ANNUAL TOTAL RETURN
1 YEAR 3 YEAR 5 YEAR FROM INCEPTION
------ ------ ------ --------------
Institutional Class 47.58% 27.89% 19.16% 20.08%
Service Class 47.11% 27.48% 18.86% 19.83%
Investor A Class (Load Adjusted) 40.29% 25.33% 17.61% 18.77%
Investor A Class (NAV) 46.86% 27.28% 18.70% 19.69%
Investor B Class (Load Adjusted) 39.26% 24.91% 17.68% 19.03%
Investor B Class (NAV) 45.80% 26.40% 18.15% 19.23%
Investor C Class (Load Adjusted) 39.26% 24.91% 17.68% 19.03%
Investor C Class (NAV) 45.80% 26.40% 18.15% 19.23%
THE PERFORMANCE INFORMATION ABOVE INCLUDES INFORMATION RELATING TO EACH CLASS OF
THE PORTFOLIO SINCE THE COMMENCEMENT OF OPERATIONS OF THE PORTFOLIO, RATHER THAN
THE DATE SUCH CLASS WAS INTRODUCED. THE INCEPTION DATES OF THE PORTFOLIO'S SHARE
CLASSES WERE AS FOLLOWS: INSTITUTIONAL SHARES, 4/13/92; INVESTOR A SHARES,
6/2/92; SERVICE SHARES, 7/29/93; INVESTOR B SHARES, 10/3/94; AND INVESTOR C
SHARES, 10/1/96. SEE "NOTE ON PERFORMANCE INFORMATION" ON PAGE 14 FOR FURTHER
INFORMATION ON HOW PERFORMANCE DATA WAS CALCULATED.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
6
<PAGE>
BLACKROCK FUNDS LOGO [GRAPHIC OMITTED]
SMALL CAP GROWTH EQUITY
PORTFOLIO
TOTAL ASSETS (3/31/98):
$932.0 MILLION
PERFORMANCE BENCHMARK:
RUSSELL 2000 GROWTH INDEX
INVESTMENT APPROACH:
PURSUES LONG-TERM CAPITAL APPRECIATION BY INVESTING IN STOCKS OF COMPANIES
BELIEVED BY THE MANAGER TO HAVE FAVORABLE AND ABOVE-AVERAGE EARNINGS GROWTH
PROSPECTS AND MARKET CAPITALIZATIONS LESS THAN $1 BILLION.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
(BULLET) AS OF MARCH 31, 1998, THE PORTFOLIO'S LARGEST SECTOR WEIGHTINGS
WERE IN TECHNOLOGY, CONSUMER SERVICES AND HEALTH CARE.
(BULLET) WITHIN TECHNOLOGY, THE PORTFOLIO HAS EMPHASIZED SOFTWARE AND TECH
SERVICES COMPANIES WHILE DE-EMPHASIZING PC RELATED HARDWARE COMPANIES, WHICH MAY
BE SUSCEPTIBLE TO PRICING PRESSURE DUE TO CONTINUED WEAKNESS FROM THE ASIAN
CRISIS.
(BULLET) THE PORTFOLIO HAS GENERATED STRONG RETURNS FROM THE CONSUMER AREA,
PARTICULARLY HOME FURNISHING RETAILERS, AS CONSUMER CONFIDENCE AND SPENDING HAVE
REMAINED HIGH.
ALTHOUGH THE PORTFOLIO HOLDINGS AND SECTORS LISTED ABOVE WERE CURRENT AS OF
THE DATE OF PRINTING, THE PORTFOLIO IS ACTIVELY MANAGED AND THE COMPOSITION WILL
VARY.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN
THE SMALL CAP GROWTH EQUITY PORTFOLIO AND THE
RUSSELL 2000 GROWTH INDEX FROM INCEPTION AND AT
EACH SEMI-ANNUAL PERIOD END.
CHART
[GRAPHIC OMITTED]
The following are the plot points for the Small Cap Growth Equity Portfolio:
<TABLE>
<CAPTION>
Institutional Service Investor A Investor B Investor C Russell 2000
Class Class Class Class Class Growth Index
<S> <C> <C> <C> <C> <C> <C>
Sep-93 10,470 10,470 9,956 10,470 10,470 10,141
Dec-93 10,378.7 10,373.6 9,904.45 10,371.1 10,371.1 10,407.1
Mar-94 9,858.4 9,853.57 9,397.88 9,840.71 9,840.71 9,983.8
Jun-94 9,168.66 9,143.49 8,729.41 9,140.74 9,140.74 9,357.42
Sep-94 10,169.7 10,143.8 9,665.93 10,121.4 10,121.4 10,230.7
Dec-94 10,990.4 10,955.1 10,438.9 10,930.8 10,930.8 10,154.5
Mar-95 11,672 11,635 11,078.8 11,600.9 11,600.9 10,710.8
Jun-95 13,195.5 13,145.5 12,511.5 13,101.1 13,101.1 11,772.7
Sep-95 15,100.2 15,026.2 14,306.7 14,980.9 14,980.9 13,110.5
Dec-95 16,213.2 16,065.9 15,281.6 16,001.7 16,001.7 13,304.2
Mar-96 18,291.2 18,107.5 17,221 17,993.2 17,993.2 14,068.5
Jun-96 20,941.2 20,718.6 19,695.3 20,534.4 20,534.4 14,891
Sep-96 22,025.4 21,809 20,717.3 21,534.6 21,534.6 14,763.2
Dec-96 21,332.1 21,109.9 20,040.2 20,783.8 20,783.8 14,802.8
Mar-97 17,182.4 16,989 16,114.4 16,190 16,190 13,239.6
Jun-97 20,921.2 20,678.4 19,608.2 20,266.6 20,266.6 15,564
Sep-97 25,523.8 25,196.6 23,882.8 24,650 24,650 18,197
Dec-97 23,293 22,964.2 21,771.6 22,448.8 22,448.8 16,704.8
Mar-98 25,533.8 25,152.7 23,829 24,037 24,527.6 18,689.4
</TABLE>
FOR PERIOD ENDING MARCH 31, 1998
AVERAGE ANNUAL TOTAL RETURN
1 YEAR 3 YEAR FROM INCEPTION
------ ------ --------------
Institutional Class 48.62% 29.83% 22.91%
Service Class 48.06% 29.30% 22.50%
Investor A Class (Load Adjusted) 41.22% 27.11% 21.06%
Investor A Class (NAV) 47.88% 29.08% 22.29%
Investor B Class (Load Adjusted) 40.33% 26.83% 21.28%
Investor B Class (NAV) 46.94% 28.35% 21.83%
Investor C Class (Load Adjusted) 40.33% 26.83% 21.28%
Investor C Class (NAV) 46.94% 28.35% 21.83%
- -----------------------
THE PERFORMANCE INFORMATION ABOVE INCLUDES INFORMATION RELATING TO EACH CLASS OF
THE PORTFOLIO SINCE THE COMMENCEMENT OF OPERATIONS OF THE PORTFOLIO, RATHER THAN
THE DATE SUCH CLASS WAS INTRODUCED. THE INCEPTION DATES OF THE PORTFOLIO'S SHARE
CLASSES WERE AS FOLLOWS: INSTITUTIONAL SHARES, 9/14/93; SERVICE AND INVESTOR A
SHARES, 9/15/93; INVESTOR B SHARES, 1/18/96; AND INVESTOR C SHARES, 9/6/96. SEE
"NOTE ON PERFORMANCE INFORMATION" ON PAGE 14 FOR FURTHER INFORMATION ON HOW
PERFORMANCE DATA WAS CALCULATED.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
7
<PAGE>
LOGO [GRAPHIC OMITTED] BLACKROCK FUNDS
INTERNATIONAL EQUITY
PORTFOLIO
TOTAL ASSETS (3/31/98):
$686.1 MILLION
PERFORMANCE BENCHMARK:
MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE, AUSTRALIA AND THE
FAR EAST INDEX ("EAFE").
INVESTMENT APPROACH:
PURSUES LONG-TERM CAPITAL APPRECIATION BY INVESTING IN NON-DOLLAR
DENOMINATED STOCKS OF ISSUERS IN COUNTRIES INCLUDED IN THE EAFE INDEX. WITHIN
THIS UNIVERSE, A VALUE STYLE OF INVESTING IS EMPLOYED TO SELECT STOCKS WHICH THE
MANAGER BELIEVES ARE UNDERVALUED.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
(BULLET) THE PORTFOLIO REMAINED OVERWEIGHT IN THE UK, SPAIN, ITALY, FRANCE
AND SWITZERLAND WHILE REMAINING UNDERWEIGHT IN JAPAN AND HONG KONG.
(BULLET) WITHIN EUROPE, THE PORTFOLIO REDUCED ITS ALLOCATION TO STOCKS
WHICH THE MANAGER BELIEVED TO HAVE POTENTIAL EARNINGS RISK DUE TO EVENTS IN ASIA
AND ADDED POSITIONS WITH A DOMESTIC BIAS WHICH THE MANAGER BELIEVED TO HAVE A
SECURE EARNINGS OUTLOOK (E.G. CADBURY SCHWEPPES).
(BULLET) THE MANAGER INITIATED A POSITION IN MALAYSIA DURING THE FIRST
QUARTER OF 1998, TAKING ADVANTAGE OF THAT MARKET'S TEMPORARY WEAKNESS.
ALTHOUGH THE PORTFOLIO HOLDINGS AND SECTORS LISTED ABOVE WERE CURRENT AS OF
THE DATE OF PRINTING, THE PORTFOLIO IS ACTIVELY MANAGED AND THE COMPOSITION WILL
VARY.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN
THE INTERNATIONAL EQUITY PORTFOLIO AND THE EAFE INDEX
FROM INCEPTION AND AT EACH SEMI-ANNUAL PERIOD END.
CHART
[GRAPHIC OMITTED]
The following are the plot points for the International Equity Portfolio:
<TABLE>
<CAPTION>
Institutional Service Investor A Investor B Investor C MSCI
Class Class Class Class Class EAFE Index
<S> <C> <C> <C> <C> <C> <C>
Apr-92 10,000 10,000 9,500 10,000 10,000 10,000
Jun-92 10,429.4 10,429.4 9,908.42 10,429.9 10,429.9 9,529
Sep-92 9,937.86 9,937.86 9,441.7 9,938.63 9,938.63 9,682.43
Dec-92 9,815.95 9,815.95 9,326.56 9,817.43 9,817.43 9,316.99
Mar-93 10,961.8 10,961.8 10,414.9 10,963 10,963 10,443.3
Jun-93 11,602.2 11,602.2 11,023.8 11,604 11,604 11,502.4
Sep-93 12,692 12,691.6 12,058.5 12,693.1 12,693.1 12,272.7
Dec-93 13,435.2 13,422.9 12,747.2 13,418.1 13,418.1 12,386
Mar-94 13,590.9 13,568.6 12,886 13,564.3 13,564.3 12,826.5
Jun-94 13,642.8 13,620.5 12,915.8 13,595.6 13,595.6 13,492.2
Sep-94 14,050.1 14,007.5 13,292.8 13,992.4 13,992.4 13,513.4
Dec-94 13,468.4 13,428 12,731.6 13,391.9 13,391.9 13,385
Mar-95 13,371.3 13,332.4 12,629.9 13,263 13,263 13,644
Jun-95 13,854.2 13,795.7 13,068.9 13,692 13,692 13,753.3
Sep-95 14,393.5 14,318.3 13,559.5 14,185.1 14,185.1 14,337.4
Dec-95 14,807.1 14,730.1 13,954.3 14,580 14,580 14,929.3
Mar-96 15,165.2 15,075.9 14,270.8 14,877.3 14,877.3 15,371
Jun-96 15,848.8 15,733 14,893.2 15,496 15,496 15,625
Sep-96 15,547.8 15,421.6 14,587.5 15,152.4 15,152.4 15,615.9
Dec-96 16,069.7 15,928.5 15,067.7 15,625.7 15,625.7 15,875.6
Mar-97 15,959.9 15,795.3 14,941.7 16,088 16,088 15,638.2
Jun-97 17,698.6 17,500.8 16,530.4 17,095 17,095 17,679
Sep-97 17,868.5 17,658.3 16,679.1 17,214.7 17,214.7 17,566
Dec-97 16,914.3 16,697.7 15,758.5 16,245.5 16,245.5 16,201.1
Mar-98 19,350 19,085.5 18,010.3 18,529.6 18,529.6 18,595.7
</TABLE>
FOR PERIOD ENDING MARCH 31, 1998
AVERAGE ANNUAL TOTAL RETURN
1 YEAR 3 YEAR 5 YEAR FROM INCEPTION
------ ------ ------ --------------
Institutional Class 21.20% 13.10% 12.03% 11.77%
Service Class 20.85% 12.71% 11.73% 11.51%
Investor A Class (Load Adjusted) 14.50% 10.66% 10.44% 10.43%
Investor A Class (NAV) 20.56% 12.57% 11.58% 11.39%
Investor B Class (Load Adjusted) 14.43% 10.48% 10.62% 10.77%
Investor B Class (NAV) 19.80% 11.80% 11.07% 10.96%
Investor C Class (Load Adjusted) 14.43% 11.48% 10.62% 10.77%
Investor C Class (NAV) 19.80% 11.80% 11.07% 10.96%
THE PERFORMANCE INFORMATION ABOVE INCLUDES INFORMATION RELATING TO EACH CLASS OF
THE PORTFOLIO SINCE THE COMMENCEMENT OF OPERATIONS OF THE PORTFOLIO, RATHER THAN
THE DATE SUCH CLASS WAS INTRODUCED. THE INCEPTION DATES OF THE PORTFOLIO'S SHARE
CLASSES WERE AS FOLLOWS: INSTITUTIONAL SHARES, 4/27/92; INVESTOR A SHARES,
6/2/92; SERVICE SHARES, 7/29/93; INVESTOR B SHARES, 10/3/94; AND INVESTOR C
SHARES, 12/5/96. SEE "NOTE ON PERFORMANCE INFORMATION" ON PAGE 14 FOR FURTHER
INFORMATION ON HOW PERFORMANCE DATA WAS CALCULATED.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
8
<PAGE>
BLACKROCK FUNDS LOGO [GRAPHIC OMITTED]
INTERNATIONAL SMALL CAP EQUITY
PORTFOLIO
TOTAL ASSETS (3/31/98):
$20.4 MILLION
PERFORMANCE BENCHMARK:
SALOMON BROTHERS EXTENDED MARKETS WORLD EX-U.S. INDEX
INVESTMENT APPROACH:
PURSUES LONG-TERM CAPITAL APPRECIATION BY INVESTING IN NON-DOLLAR
DENOMINATED STOCKS OF SMALL CAP COMPANIES PRIMARILY FROM DEVELOPED COUNTRIES,
WHICH THE MANAGEMENT TEAM BELIEVES ARE UNDERVALUED AND WILL APPRECIATE. THE
PORTFOLIO MAY ALSO INVEST UP TO 20% OF ITS ASSETS IN STOCKS FROM EMERGING MARKET
COUNTRIES. THE STOCKS IN THE PORTFOLIO WILL GENERALLY HAVE A MARKET
CAPITALIZATION BELOW $1 BILLION.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
(BULLET) THE PORTFOLIO IS HEAVILY WEIGHTED TO THE EUROPEAN MARKETS; AT THE
END OF THE PERIOD, OVER 40% OF THE PORTFOLIO'S ASSETS WERE INVESTED IN
CONTINENTAL EUROPE AND NEARLY 40% IN THE UK.
(BULLET) THE PORTFOLIO'S JAPANESE WEIGHTING HAS REMAINED BELOW 10%
THROUGHOUT THE PERIOD.
(BULLET) THE MANAGER INITIATED A POSITION IN ASIA DURING THE FIRST QUARTER
OF 1998, TAKING ADVANTAGE OF THE SHARP SELL-OFF IN THAT REGION TOWARDS THE END
OF 1997.
ALTHOUGH THE PORTFOLIO HOLDINGS AND SECTORS LISTED ABOVE WERE CURRENT AS OF
THE DATE OF PRINTING, THE PORTFOLIO IS ACTIVELY MANAGED AND THE COMPOSITION WILL
VARY.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
INTERNATIONAL SMALL CAP EQUITY PORTFOLIO AND THE SALOMON
EMI EXUS FROM INCEPTION AND AT EACH PERIOD END.
CHART
[GRAPHIC OMITTED]
The following are the plot points for the International Small Cap Equity
Portfolio:
<TABLE>
<CAPTION>
Institutional Service Investor A Investor B Investor C Salomon
Class Class Class Class Class EMI EXUS
<S> <C> <C> <C> <C> <C> <C>
9/29/97 10,000 10,000 9,500 10,000 10,000 10,000
10/31/97 9,829 9,829 9,348 9,819 9,819 9,594
11/30/97 9,638.32 9,628 9,157.05 9,619 9,619 9,160
12/21/97 9,458.08 9,447 8,995.55 9,458 9,458 8,943
1/31/98 9,769.25 9,758 9,290.05 9,759 9,759 9,311
2/28/98 10,441.4 10,431 9,928.45 10,431 10,431 9,999
3/31/98 11,354 11,343 10,786.3 10,814.4 11,210.8 10,431
</TABLE>
FOR PERIOD ENDING MARCH 31, 1998
AVERAGE ANNUAL TOTAL RETURN
1 YEAR FROM INCEPTION
------ --------------
Institutional Class N/A 28.81%
Service Class N/A 28.48%
Investor A Class (Load Adjusted) N/A 15.97%
Investor A Class (NAV) N/A 28.26%
Investor B Class (Load Adjusted) N/A 16.28%
Investor B Class (NAV) N/A 27.23%
Investor C Class (Load Adjusted) N/A 16.28%
Investor C Class (NAV) N/A 27.23%
THE INCEPTION DATES OF THE PORTFOLIO'S SHARE CLASSES WERE AS FOLLOWS:
INSTITUTIONAL, SERVICE, INVESTOR A, INVESTOR B, AND INVESTOR C SHARES WAS
9/29/97. SEE "NOTE ON PERFORMANCE INFORMATION" ON PAGE 14 FOR FURTHER
INFORMATION ON HOW PERFORMANCE DATA WAS CALCULATED.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
9
<PAGE>
LOGO [GRAPHIC OMITTED] BLACKROCK FUNDS
INTERNATIONAL EMERGING MARKETS
PORTFOLIO
TOTAL ASSETS (3/31/98):
$153.4 MILLION
PERFORMANCE BENCHMARK:
MORGAN STANLEY CAPITAL INTERNATIONAL EMERGING MARKETS FREE INDEX ("EMF")
INVESTMENT APPROACH:
PURSUES LONG-TERM CAPITAL APPRECIATION BY INVESTING IN NON-DOLLAR
DENOMINATED STOCKS OF ISSUERS IN EMERGING MARKETS (GENERALLY ANY COUNTRY
CONSIDERED TO BE EMERGING OR DEVELOPING BY THE WORLD BANK, THE INTERNATIONAL
FINANCE CORPORATION OR THE UNITED NATIONS). WITHIN THIS UNIVERSE, A VALUE STYLE
OF INVESTING IS EMPLOYED TO SELECT STOCKS WHICH THE MANAGER BELIEVES ARE
UNDERVALUED.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
(BULLET) THE PORTFOLIO HAS BEEN UNDERWEIGHTED IN ASIA DUE TO WHAT THE
MANAGER BELIEVES TO BE LIMITED PROSPECTS FOR TRUE ECONOMIC RECOVERY IN THE NEAR
FUTURE AND INFLATION CONCERNS THROUGHOUT THE REGION.
(BULLET) WITHIN EUROPE, THE MANAGER UNDERWEIGHTED TURKEY AND RUSSIA DUE TO
THE MANAGER'S CONCERNS OVER BUDGETARY ISSUES AND OTHER POLITICAL UNCERTAINTIES
IN THOSE COUNTRIES AND OVERWEIGHTED HUNGARY AND POLAND.
(BULLET) THE PORTFOLIO'S LATIN AMERICAN HOLDINGS WERE CONCENTRATED IN
BRAZIL AND MEXICO WITH SMALLER ALLOCATIONS TO CHILE, ARGENTINA, PERU AND
COLOMBIA.
(BULLET) THE PORTFOLIO'S SOUTH AFRICAN HOLDINGS WERE ADJUSTED TO GAIN
GREATER EXPOSURE TO FINANCIAL STOCKS, WHICH THE MANAGER BELIEVES SHOULD PERFORM
WELL IN AN ENVIRONMENT OF FALLING INTEREST RATES.
ALTHOUGH THE PORTFOLIO HOLDINGS AND SECTORS LISTED ABOVE WERE CURRENT AS OF
THE DATE OF PRINTING, THE PORTFOLIO IS ACTIVELY MANAGED AND THE COMPOSITION WILL
VARY.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN
THE EMERGING MARKETS PORTFOLIO AND THE MSCI
EMERGING MARKETS FREE INDEX FROM INCEPTION AND
AT EACH SEMI-ANNUAL PERIOD END.
CHART
[GRAPHIC OMITTED]
The following are the plot points for the International Emerging Markets
Portfolio:
<TABLE>
<CAPTION>
MSCI
Institutional Service Investor A Investor B Investor C Emerging
Class Class Class Class Class Free Index
<S> <C> <C> <C> <C> <C> <C>
6/17/94 9,960 9,960 9,462 9,960 9,960 10,000
Sep-94 10,560.3 10,550 10,012.7 10,539.6 10,539.6 12,076.3
Dec-94 9,142.02 9,131.16 8,664.73 9,120.77 9,120.77 10,339.5
Mar-95 8,070.5 8,059.93 7,637.47 8,039.44 8,039.44 9,060.48
Jun-95 8,758.11 8,735.83 8,271.58 8,706.93 8,706.93 10,000.9
Sep-95 8,478.12 8,450.04 7,996.74 8,417.62 8,417.62 9,936.66
Dec-95 7,991.87 7,954.89 7,528.51 7,924.75 7,924.75 9,802.72
Mar-96 8,809.77 8,760.37 8,290.54 8,726.89 8,726.89 10,413.4
Jun-96 9,327.34 9,266.57 8,769.6 9,220.87 9,220.87 10,848
Sep-96 9,068.53 9,008.29 8,515.39 8,943 8,943 10,456
Dec-96 8,972.59 8,904.98 8,417.63 8,819.52 8,819.52 10,394.4
Mar-97 10,196.6 10,113.7 9,551.73 9,743 9,743 11,274
Jun-97 10,954.2 10,856 10,244.2 10,435.7 10,435.7 12,276
Sep-97 10,080.1 9,975.58 9,411.37 9,572.69 9,572.69 11,175
Dec-97 8,159.8 8,073.24 7,610.98 7,729.95 7,729.95 9,217.14
Mar-98 8,117.37 8,020.76 7,560.74 7,429.07 7,658.83 9,787.68
</TABLE>
FOR PERIOD ENDING MARCH 31, 1998
AVERAGE ANNUAL TOTAL RETURN
1 YEAR 3 YEAR FROM INCEPTION
------ ------ --------------
Institutional Class (20.39)% 0.20% (5.36)%
Service Class (20.69)% (0.16)% (5.65)%
Investor A Class (Load Adjusted) (24.77)% (2.02)% (7.12)%
Investor A Class (NAV) (20.84)% (0.33)% (5.84)%
Investor B Class (Load Adjusted) (24.94)% (2.11)% (6.92)%
Investor B Class (NAV) (21.40)% (0.77)% (6.17)%
Investor C Class (Load Adjusted) (24.94)% (2.11)% (6.92)%
Investor C Class (NAV) (21.40)% (0.77)% (6.17)%
THE PERFORMANCE INFORMATION ABOVE INCLUDES INFORMATION RELATING TO EACH CLASS OF
THE PORTFOLIO SINCE THE COMMENCEMENT OF OPERATIONS OF THE PORTFOLIO, RATHER THAN
THE DATE SUCH CLASS WAS INTRODUCED. THE INCEPTION DATES OF THE PORTFOLIO'S SHARE
CLASSES WERE AS FOLLOWS: INSTITUTIONAL SHARES, SERVICE SHARES AND INVESTOR A
SHARES, 6/17/94; INVESTOR B SHARES, 4/25/96; AND INVESTOR C SHARES, 3/21/97. SEE
"NOTE ON PERFORMANCE INFORMATION" ON PAGE 14 FOR FURTHER INFORMATION ON HOW
PERFORMANCE DATA WAS CALCULATED.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
10
<PAGE>
BLACKROCK FUNDS LOGO [GRAPHIC OMITTED]
SELECT EQUITY
PORTFOLIO
TOTAL ASSETS (3/31/98):
$882.4 MILLION
PERFORMANCE BENCHMARK:
S&P 500 INDEX
INVESTMENT APPROACH:
SEEKS LONG-TERM CAPITAL APPRECIATION BY MAINTAINING COMPARABLE SECTOR
WEIGHTINGS TO THE BENCHMARK WHILE OVERWEIGHTING OR UNDERWEIGHTING SPECIFIC
SECURITIES WITHIN THOSE SECTORS AS THE MANAGER IDENTIFIES MARKET OPPORTUNITY.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
(BULLET) THE KEY PERFORMANCE DRIVER DURING THE PERIOD, RELATIVE TO THE S&P
500 INDEX, WAS POSITIVE STOCK SELECTION. THE FOLLOWING ARE EXAMPLES OF
INDIVIDUAL COMPANIES OWNED BY THE PORTFOLIO THAT PERFORMED WELL VERSUS THEIR
INDUSTRY PEERS:
(BULLET) WITHIN THE AUTOMOTIVE INDUSTRY, THE PORTFOLIO'S POSITION IN FORD
PRODUCED STRONG GAINS OVER THE PERIOD, AS THE STOCK RALLIED AFTER SPINNING OFF
ASSOCIATES FIRST CAPITAL CORP., THE COMPANY'S CONSUMER FINANCE UNIT.
(BULLET) THE MANAGER REPOSITIONED THE PORTFOLIO'S RETAIL HOLDINGS BY
REPLACING HOME DEPOT WITH LOWE'S, WHICH WAS UP OVER 47% DURING THE FIRST QUARTER
OF 1998.
(BULLET) THE PORTFOLIO'S POSITION IN LUCENT TECHNOLOGIES, HELD SINCE ITS
SPINOFF FROM AT&T IN MARCH 1996, HAS GAINED OVER 100% DURING THE PAST TWELVE
MONTHS.
ALTHOUGH THE PORTFOLIO HOLDINGS AND SECTORS LISTED ABOVE WERE CURRENT AS OF
THE DATE OF PRINTING, THE PORTFOLIO IS ACTIVELY MANAGED AND THE COMPOSITION WILL
VARY.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
SELECT EQUITY PORTFOLIO AND THE S&P 500 INDEX FROM
INCEPTION AND AT EACH SEMI-ANNUAL PERIOD END.
CHART
[GRAPHIC OMITTED]
The following are the plot points for the Select Equity Portfolio:
<TABLE>
<CAPTION>
Institutional Service Investor A Investor B Investor C S&P 500
Class Class Class Class Class Index
<S> <C> <C> <C> <C> <C> <C>
Sep-93 9,970 9,970 9,521.35 9,970 9,970 10,000
Dec-93 10,114.1 10,108.1 9,653.26 10,108.1 10,108.1 10,232
Mar-94 9,730.25 9,718.34 9,277.68 9,714.85 9,714.85 9,844.21
Jun-94 9,783.52 9,765.92 9,330.64 9,770.3 9,770.3 9,885.55
Sep-94 10,148.1 10,123.7 9,658.69 10,113.8 10,113.8 10,369
Dec-94 9,986.64 9,957.71 9,497.51 9,945.03 9,945.03 10,366.9
Mar-95 10,910.7 10,871.7 10,366.1 10,854.5 10,854.5 11,376.6
Jun-95 11,704 11,643 11,098.1 11,621 11,621 12,463.1
Sep-95 12,561.1 12,496.8 11,908.5 12,469.6 12,469.6 13,453.9
Dec-95 13,312 13,222.7 12,595.1 13,188.6 13,188.6 14,263.8
Mar-96 13,988.7 13,897.6 13,220.9 13,843.9 13,843.9 15,029.8
Jun-96 14,629.6 14,513.3 13,811.8 14,443.2 14,443.2 15,704.6
Sep-96 15,053.9 14,924.1 14,197 14,821.2 14,821.2 16,189.9
Dec-96 16,469.2 16,316.4 15,528.1 16,160.3 16,160.3 17,538.5
Mar-97 16,903.9 16,735.2 15,921.6 16,084 16,084 18,008.5
Jun-97 19,856 19,649.4 18,674.4 19,366.7 19,366.7 21,152
Sep-97 21,448.5 21,209.6 20,151.5 20,852.1 20,852.1 22,761
Dec-97 21,647.9 21,392 20,316.8 20,985.6 20,985.6 23,407.4
Mar-98 24,633.2 24,329.1 23,098.1 23,336.1 23,812.3 26,675.1
</TABLE>
FOR PERIOD ENDING MARCH 31, 1998
AVERAGE ANNUAL TOTAL RETURN
1 YEAR 3 YEAR FROM INCEPTION
Institutional Class 45.75% 31.18% 21.93%
Service Class 45.38% 30.80% 21.62%
Investor A Class (Load Adjusted) 38.58% 28.63% 20.21%
Investor A Class (NAV) 45.08% 30.62% 21.44%
Investor B Class (Load Adjusted) 37.49% 28.40% 20.48%
Investor B Class (NAV) 43.97% 29.94% 21.02%
Investor C Class (Load Adjusted) 37.49% 28.40% 20.48%
Investor C Class (NAV) 43.97% 29.94% 21.02%
THE PERFORMANCE INFORMATION ABOVE INCLUDES INFORMATION RELATING TO EACH CLASS OF
THE PORTFOLIO SINCE THE COMMENCEMENT OF OPERATIONS OF THE PORTFOLIO, RATHER THAN
THE DATE SUCH CLASS WAS INTRODUCED. THE INCEPTION DATES OF THE PORTFOLIO'S SHARE
CLASSES WERE AS FOLLOWS: INSTITUTIONAL SHARES, 9/13/93; SERVICE SHARES, 9/15/93;
INVESTOR A SHARES, 10/13/93; INVESTOR B SHARES, 3/27/96; AND INVESTOR C SHARES,
9/27/96. SEE "NOTE ON PERFORMANCE INFORMATION" ON PAGE 14 FOR FURTHER
INFORMATION ON HOW PERFORMANCE DATA WAS CALCULATED.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
11
<PAGE>
LOGO [GRAPHIC OMITTED] BLACKROCK FUNDS
INDEX EQUITY
PORTFOLIO
ADVISOR TO THE INDEX MASTER PORTFOLIO:
DIMENSIONAL FUND ADVISORS INC.
TOTAL ASSETS (3/31/98):
$618.0 MILLION
PERFORMANCE BENCHMARK:
S&P 500 INDEX
INVESTMENT APPROACH:
UTILIZES A PASSIVE INVESTMENT STYLE THAT PURSUES THE REPLICATION OF THE S&P
500 INDEX TOTAL RETURN.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
(BULLET) THE PORTFOLIO HOLDS SUBSTANTIALLY ALL OF THE STOCKS CONTAINED IN
THE S&P 500 INDEX IN APPROXIMATELY THE SAME PROPORTION AS THEY ARE REPRESENTED
IN THE INDEX BY INVESTING ALL OF ITS ASSETS IN THE U.S. LARGE COMPANY SERIES OF
THE DFA INVESTMENT TRUST COMPANY.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
INDEX EQUITY PORTFOLIO AND THE S&P 500 INDEX FROM
INCEPTION AND AT EACH SEMI-ANNUAL PERIOD END.
CHART
[GRAPHIC OMITTED]
The following are the plot points for the Index Equity Portfolio:
<TABLE>
<CAPTION>
Institutional Service Investor A Investor B Investor C S&P 500
Class Class Class Class Class Index
<S> <C> <C> <C> <C> <C> <C>
Apr-92 10,000 10,000 9,700 10,000 10,000 10,000
Jun-92 9,870.42 9,870.42 9,574.31 9,870.42 9,870.42 9,899.47
Sep-92 10,161.4 10,161.4 9,856.59 10,161.4 10,161.4 10,211.5
Dec-92 10,658.6 10,658.6 10,338.9 10,658.6 10,658.6 10,725.7
Mar-93 11,117.7 11,117.7 10,784.2 11,117.7 11,117.7 11,194.1
Jun-93 11,139.5 11,139 10,804.8 11,139 11,139 11,248.6
Sep-93 11,422.5 11,417.4 11,072.7 11,415.1 11,415.1 11,538.9
Dec-93 11,676.2 11,664.5 11,307.6 11,657.3 11,657.3 11,806.4
Mar-94 11,197 11,180.6 10,823.9 11,158.7 11,158.7 11,358.7
Jun-94 11,253.9 11,230.8 10,877.8 11,214.2 11,214.2 11,406.5
Sep-94 11,771.4 11,739.5 11,366.4 11,718 11,718 11,963.6
Dec-94 11,770.1 11,731.2 11,356.8 11,708 11,708 11,962
Mar-95 12,899.6 12,849.5 12,415.4 12,799.3 12,799.3 13,126.6
Jun-95 14,134.4 14,069.9 13,613.2 14,034.2 14,034.2 14,379
Sep-95 15,221.3 15,143 14,635.5 15,088.1 15,088.1 15,522
Dec-95 16,130.2 16,036 15,505.2 15,984.7 15,984.7 16,456.7
Mar-96 16,958.9 16,836.4 16,275.9 16,762.6 16,762.6 17,339.4
Jun-96 17,702 17,561.6 16,973.8 17,465.8 17,465.8 18,116.8
Sep-96 18,237.3 18,089.2 17,462.5 17,946.3 17,946.3 18,676.8
Dec-96 19,736.9 19,562.5 18,891.2 19,370.7 19,370.7 20,234.5
Mar-97 20,249.6 20,055 19,359.1 19,422 19,422 20,776.4
Jun-97 23,756.8 23,512.5 22,688.9 22,721.8 22,721.8 24,401
Sep-97 25,529.1 25,247.7 24,358.8 24,323.7 24,323.7 26,258
Dec-97 26,233.7 25,924.3 24,987.3 24,926.9 24,926.9 27,003.7
Mar-98 29,880.2 29,496.7 28,420.5 28,304.5 28,304.5 30,773.5
</TABLE>
FOR PERIOD ENDING MARCH 31, 1998
AVERAGE ANNUAL TOTAL RETURN
1 YEAR 3 YEAR 5 YEAR FROM INCEPTION
------ ------ ------ --------------
Institutional Class 47.56% 32.31% 21.87% 20.20%
Service Class 47.09% 31.91% 21.55% 19.93%
Investor A Class (Load Adjusted) 42.41% 30.47% 20.65% 19.19%
Investor A Class (NAV) 46.81% 31.80% 21.39% 19.80%
Investor B Class (Load Adjusted) 39.17% 29.62% 20.55% 19.31%
Investor B Class (NAV) 45.73% 31.17% 21.04% 19.51%
Investor C Class (Load Adjusted) 39.17% 29.62% 20.55% 19.31%
Investor C Class (NAV) 45.73% 31.17% 21.04% 19.51%
THE PERFORMANCE INFORMATION ABOVE INCLUDES INFORMATION RELATING TO EACH CLASS OF
THE PORTFOLIO SINCE THE COMMENCEMENT OF OPERATIONS OF THE PORTFOLIO, RATHER THAN
THE DATE SUCH CLASS WAS INTRODUCED. THE INCEPTION DATES OF THE PORTFOLIO'S SHARE
CLASSES WERE AS FOLLOWS: INSTITUTIONAL SHARES, 4/20/92; INVESTOR A SHARES,
6/2/92; SERVICE SHARES, 7/29/93; INVESTOR B SHARES, 2/7/96; AND INVESTOR C
SHARES, 8/14/96. SEE "NOTE ON PERFORMANCE INFORMATION" ON PAGE 14 FOR FURTHER
INFORMATION ON HOW PERFORMANCE DATA WAS CALCULATED.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
12
<PAGE>
BLACKROCK FUNDS LOGO [GRAPHIC OMITTED]
BALANCED
PORTFOLIO
TOTAL ASSETS (3/31/98):
$376.2 MILLION
PERFORMANCE BENCHMARK:
Equity Portion: S&P 500 INDEX
Fixed Income Portion: SALOMON BROAD INVESTMENT GRADE INDEX
INVESTMENT APPROACH:
PURSUES A BLEND OF EQUITY AND FIXED INCOME SECURITIES TO DELIVER TOTAL
RETURN THROUGH CAPITAL APPRECIATION AND CURRENT INCOME. THE PORTFOLIO WILL
MAINTAIN A MINIMUM 25% ALLOCATION FIXED INCOME SECURITIES.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
(BULLET) WITHIN THE EQUITY PORTION OF THE PORTFOLIO, THE MANAGER HAS TAKEN
A BUY-AND-HOLD APPROACH TO STOCK SELECTION. SUBSTANTIAL CORE POSITIONS THAT HAVE
POSTED STRONG GAINS INCLUDE GE AND MIRCOSOFT. WITHIN THE PORTFOLIO'S TECHNOLOGY
HOLDINGS, THE MANAGER HAS EMPHASIZED COMPANIES IN THE SOFTWARE, NETWORKING AND
COMPUTER SERVICES BUSINESSES, WHICH THE MANAGER EXPECTS TO WEATHER THE EFFECTS
OF THE ASIAN CRISIS BETTER THAN PC HARDWARE RELATED COMPANIES.
(BULLET) WITHIN THE FIXED INCOME PORTION, THE MANAGER TOOK ADVANTAGE OF THE
CHALLENGING ENVIRONMENT FOR THE MORTGAGE SECTOR BY MODESTLY INCREASING THE
PORTFOLIO'S ALLOCATION. PARTICULAR EMPHASIS WAS PLACED UPON SECURITIES WHICH
TYPICALLY HAVE LESS PREPAYMENT RISK THAN GENERIC MORTGAGES SUCH AS PROJECT LOANS
AND COMMERCIAL MORTGAGE-BACKED SECURITIES. TREASURIES WERE SOLD TO HELP FINANCE
THE INCREASE IN MORTGAGE-BACKED SECURITY EXPOSURE.
ALTHOUGH THE PORTFOLIO HOLDINGS AND SECTORS LISTED ABOVE WERE CURRENT AS OF
THE DATE OF PRINTING, THE PORTFOLIO IS ACTIVELY MANAGED AND THE COMPOSITION WILL
VARY.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
BALANCED PORTFOLIO AND 65% S&P 500 / 35% SALOMON BIG INDEX
FROM INCEPTION AND AT EACH SEMI-ANNUAL PERIOD END.
CHART
[GRAPHIC OMITTED]
The following are the plot points for the Balanced Portfolio:
<TABLE>
<CAPTION>
65% S&P 500
Institutional Service Investor A Investor B Investor C 35% Salomon
Class Class Class Class Class BIG Index
<S> <C> <C> <C> <C> <C> <C>
May-90 10,240 10,240 9,779.2 10,240 10,240 9,725.76
Sep-90 9,236.33 9,236.33 8,820.69 9,236.33 9,236.33 10,184.8
Dec-90 9,998.27 9,998.27 9,548.35 9,998.27 9,998.27 9,258.4
Mar-91 10,826.9 10,826.9 10,339.7 10,826.9 10,826.9 9,898.13
Jun-91 10,796.3 10,796.3 10,310.4 10,796.3 10,796.3 10,866.2
Sep-91 11,459 11,459 10,943.4 11,459 11,459 10,858.2
Dec-91 12,242.8 12,242.8 11,691.8 12,242.8 12,242.8 11,392.4
Mar-92 12,165.2 12,165.2 11,617.8 12,165.2 12,165.2 12,151.3
Jun-92 12,469.2 12,469.2 11,908.1 12,469.2 12,469.2 11,848.4
Sep-92 13,197.2 13,197.2 12,603.3 13,197.2 13,197.2 12,101.6
Dec-92 13,689.7 13,689.7 13,073.7 13,689.7 13,689.7 12,470.6
Mar-93 14,160.1 14,160.1 13,522.9 14,160.1 14,160.1 12,830.1
Jun-93 14,480.6 14,480.6 13,829 14,480.6 14,480.6 13,322.5
Sep-93 14,893.6 14,887.7 14,214.9 14,884.7 14,884.7 13,429.9
Dec-93 15,309.2 15,294 14,599.8 15,287.8 15,287.8 13,716.3
Mar-94 14,820.8 14,797 14,109.3 14,774.1 14,774.1 13,864.3
Jun-94 14,647.5 14,615.3 13,941.5 14,598.4 14,598.4 13,328
Sep-94 14,875.5 14,832.7 14,143.6 14,810 14,810 13,254
Dec-94 14,826.9 14,775.5 14,081.6 14,725.2 14,725.2 13,636.5
Mar-95 15,801.7 15,740.9 14,995.8 15,665.6 15,665.6 13,590
Jun-95 16,989 16,910.4 16,105.2 16,788.5 16,788.5 14,627.4
Sep-95 17,899.6 17,788.9 16,950 17,639.9 17,639.9 15,777.7
Dec-95 18,936.6 18,804.9 17,914.3 18,612.6 18,612.6 16,628.6
Mar-96 19,417.9 19,284.7 18,351.3 19,032.6 19,032.6 17,463.6
Jun-96 20,002.3 19,837 18,884.4 19,547.1 19,547.1 17,901.7
Sep-96 20,484.3 20,300.7 19,320.4 19,956.4 19,956.4 18,385.1
Dec-96 21,871.5 21,660.9 20,609.3 21,245.1 21,245.1 18,802.9
Mar-97 22,142.7 21,913.3 20,844.1 21,452.2 21,452.2 19,951.3
Jun-97 25,000.5 24,728.4 23,517.3 24,272.5 24,272.5 20,201.9
Sep-97 26,305.5 25,999.5 24,721.4 25,461.8 25,461.8 22,677.1
Dec-97 27,078.9 26,743.1 25,423.5 26,126.4 26,126.4 23,975.8
Mar-98 29,564.7 29,163.3 27,716.7 28,433.3 28,433.3 26,287
</TABLE>
FOR PERIOD ENDING MARCH 31, 1998
AVERAGE ANNUAL TOTAL RETURN
1 YEAR 3 YEAR 5 YEAR FROM INCEPTION
------ ------ ------ --------------
Institutional Class 33.53% 23.22% 15.86% 14.73%
Service Class 33.09% 22.82% 15.55% 14.53%
Investor A Class (Load Adjusted) 26.99% 20.85% 14.38% 13.80%
Investor A Class (NAV) 32.95% 22.71% 15.43% 14.46%
Investor B Class (Load Adjusted) 25.97% 20.34% 14.38% 14.09%
Investor B Class (NAV) 31.89% 21.77% 14.85% 14.09%
Investor C Class (Load Adjusted) 25.97% 20.34% 14.38% 14.09%
Investor C Class (NAV) 31.89% 21.77% 14.85% 14.09%
- ------------------------------------
THE PERFORMANCE INFORMATION ABOVE INCLUDES INFORMATION RELATING TO EACH CLASS OF
THE PORTFOLIO SINCE THE COMMENCEMENT OF OPERATIONS OF THE PORTFOLIO, RATHER THAN
THE DATE SUCH CLASS WAS INTRODUCED. THE INCEPTION DATES OF THE PORTFOLIO'S SHARE
CLASSES WERE AS FOLLOWS: INVESTOR A SHARES, 5/14/90; INSTITUTIONAL SHARES,
5/1/92; SERVICE SHARES, 7/29/93; INVESTOR B SHARES, 10/3/94; AND INVESTOR C
SHARES, 12/20/96. SEE "NOTE ON PERFORMANCE INFORMATION" ON PAGE 14 FOR FURTHER
INFORMATION ON HOW PERFORMANCE DATA WAS CALCULATED.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
13
<PAGE>
LOGO [GRAPHIC OMITTED] BLACKROCK FUNDS
NOTE ON PERFORMANCE INFORMATION
The performance information above includes information for each class of
each Portfolio since the commencement of operations of the Portfolio, rather
than the date such class was introduced. Performance information for each class
introduced after the commencement of operations of a Portfolio is therefore
based on the performance history of a predecessor class or predecessor classes.
If a class of shares in a Portfolio (the "Subsequent Class") has more than one
predecessor class, the performance data predating the introduction of the
Subsequent Class is based initially on the performance of the Portfolio's first
operational predecessor class (the "Initial Class"); thereafter, the performance
of the Subsequent Class is based upon the performance of any other predecessor
class or classes which were introduced after the Initial Class and which had
total operating expenses more similar to those of the Subsequent Class. In the
case of Investor A, Investor B, Investor C and Service Shares, the performance
information for periods prior to their introduction dates has not been restated
to reflect the shareholder servicing and processing and/or distribution fees and
certain other expenses borne by these share classes which, if reflected, would
reduce the performance quoted. Accordingly, the performance information may be
used in assessing each Portfolio's performance history but does not reflect how
the distinct classes would have performed on a relative basis prior to the
introduction of these classes, which would require an adjustment to the ongoing
expenses.
Performance information is restated to reflect the current maximum
front-end sales charge (in the case of Investor A Shares) or the maximum
contingent deferred sales charge (in the case of Investor B and Investor C
Shares), and assumes the reinvestment of dividends and distributions. The
maximum front-end sales charges for Investor A Shares are as follows: Large Cap
Value Equity, Large Cap Growth Equity, Small Cap Value Equity, Small Cap Growth
Equity, Mid-Cap Value Equity, Mid-Cap Growth Equity, Select Equity and Balanced
Portfolios -- 4.50%; International Equity, International Emerging Markets and
International Small Cap Equity Portfolios -- 5.00%; and Index Equity Portfolio
- -- 3.00%. The maximum contingent deferred sales charge for Investor B Shares and
Investor C Shares of all of the Portfolios is 4.50% and 1.00%, respectively.
The performance information also reflects fee waivers that subsidize and
reduce the total operating expenses of each Portfolio. The Portfolios' returns
would have been lower if there were not such waivers. BlackRock Advisors, Inc.
and the Portfolios' Administrators are under no obligation to waive or continue
waiving their fees. Investment return and principal value of an investment will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than their original cost.
14
<PAGE>
BLACKROCK FUNDS LOGO [GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
LARGE CAP VALUE EQUITY PORTFOLIO
NUMBER
AS OF MARCH 31, 1998 (UNAUDITED) OF SHARES VALUE
---------- --------------
COMMON STOCKS -- 98.8%
AEROSPACE -- 3.7%
Allied-Signal, Inc. 690,900 $ 29,017,800
Boeing Co. 313,900 16,362,037
Northrop Grumman Corp. 116,200 12,484,237
-------------
57,864,074
-------------
AIR TRANSPORTATION -- 1.1%
#Northwest Airlines Corp. Class A** 279,900 17,266,331
-------------
BANKS -- 11.4%
#Banc One Corp. 393,910 24,914,807
BankAmerica Corp. 209,100 17,276,887
BankBoston Corp. 224,440 24,744,510
Chase Manhattan Corp. 174,400 23,522,200
Crestar Financial Corp. 296,700 17,542,387
First Chicago NBD Corp. 257,968 22,733,430
#First Union Corp. 264,100 14,987,675
NationsBank, Inc. 228,400 16,658,925
Wells Fargo & Co. 46,400 15,370,000
-------------
177,750,821
-------------
BUSINESS SERVICES -- 0.8%
#Varian Associates, Inc. 232,700 12,885,762
-------------
CHEMICALS -- 3.6%
Dow Chemical Co. 147,400 14,334,650
E.I. du Pont de Nemours & Co. 182,850 12,433,800
#IMC Global, Inc. 378,400 14,402,850
PPG Industries, Inc. 226,900 15,415,019
-------------
56,586,319
-------------
COMPUTER & OFFICE EQUIPMENT -- 5.4%
Compaq Computer Corp. 312,300 8,080,762
#Ikon Office Solutions, Inc. 460,400 15,912,575
International Business
Machines Corp. 204,800 21,273,600
Seagate Technology, Inc.** 377,300 9,526,825
#Xerox Corp. 277,900 29,578,981
-------------
84,372,743
-------------
CONSUMER DURABLES -- 1.1%
Black & Decker Corp. 310,100 16,454,681
-------------
CONTAINERS -- 1.0%
#Crown Cork & Seal Co., Inc. 292,900 15,670,150
-------------
ELECTRONICS -- 4.2%
Applied Materials, Inc.** 234,000 8,263,125
Avnet, Inc. 167,000 9,612,937
General Electric Co. 239,200 20,616,050
Intel Corp. 138,900 10,842,881
Rockwell International Corp. 130,800 7,504,650
Texas Instruments, Inc. 169,700 9,185,012
-------------
66,024,655
-------------
ENERGY & UTILITIES -- 7.3%
Columbia Gas Systems, Inc. 193,100 15,013,525
Entergy Corp. 520,300 15,478,925
FPL Group, Inc. 305,900 19,654,075
NIPSCO Industries, Inc. 289,400 8,103,200
Pacificorp 482,400 11,879,100
PECO Energy Co. 574,200 12,704,175
Southern Co. 781,500 21,637,781
Unicom Corp. 274,530 9,608,550
-------------
114,079,331
-------------
NUMBER
OF SHARES VALUE
---------- --------------
FINANCE -- 6.1%
AMBAC Financial Group, Inc. 192,400 $ 11,243,375
CIT Group, Inc. Class A 476,800 15,555,600
Fleet Financial Group, Inc. 197,300 16,782,831
H & R Block, Inc. 404,100 19,220,006
Morgan Stanley, Dean Witter & Co. 363,472 26,488,022
SLM Holding Corp. 135,500 5,911,187
-------------
95,201,021
-------------
FOOD & AGRICULTURE -- 0.6%
Archer Daniels Midland Co. 462,584 10,147,936
-------------
INSURANCE -- 5.8%
Aetna, Inc. 180,500 15,060,469
Allstate Corp. 148,424 13,645,731
American General Corp. 247,100 15,984,281
Chubb Corp. 209,300 16,403,887
Cigna Corp. 73,600 15,088,000
MBIA, Inc. 102,500 7,943,750
USF&G Corp. 276,800 6,902,700
-------------
91,028,818
-------------
MACHINERY & HEAVY EQUIPMENT -- 1.9%
Cooper Industries, Inc. 28,700 1,705,856
Deere & Co. 299,500 18,550,281
Dover Corp. 262,400 9,971,200
-------------
30,227,337
-------------
MEDICAL & MEDICAL SERVICES -- 1.4%
#Columbia Healthcare Corp. 253,400 8,172,150
#Foundation Health Systems, Inc.** 498,600 13,742,662
-------------
21,914,812
-------------
METAL & MINING -- 1.5%
#Aluminum Co. of America 135,000 9,289,688
Phelps Dodge Corp. 112,300 7,250,369
Reynolds Metals Co. 108,200 6,647,538
-------------
23,187,595
-------------
MOTOR VEHICLES -- 5.3%
Chrysler Corp. 397,100 16,504,469
Dana Corp. 273,300 15,902,644
Ford Motor Co. 347,400 22,515,863
General Motors Corp. 194,604 13,123,607
Goodyear Tire & Rubber Co. 199,400 15,104,550
Meritor Automotive, Inc. 1 15
-------------
83,151,148
-------------
OIL & GAS -- 11.2%
Atlantic Richfield Co. 203,600 16,008,050
#British Petroleum Co. PLC ADR 233,100 20,061,169
#Chevron Corp. 285,200 22,905,125
Exxon Corp. 464,700 31,425,338
Mobil Corp. 295,900 22,673,338
Phillips Petroleum Co. 306,900 15,325,819
#Royal Dutch Petroleum Co. 419,800 23,849,888
#Tenneco, Inc. 137,100 5,852,456
Ultramar Diamond Shamrock Corp. 489,364 17,250,081
-------------
175,351,264
-------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
15
<PAGE>
LOGO [GRAPHIC OMITTED] BLACKROCK FUNDS
SCHEDULE OF INVESTMENTS
LARGE CAP VALUE EQUITY PORTFOLIO (CONCLUDED)
NUMBER
AS OF MARCH 31, 1998 (UNAUDITED) OF SHARES VALUE
--------- --------------
COMMON STOCKS (CONTINUED)
PAPER & FOREST PRODUCTS -- 2.4%
Champion International Corp. 212,800 $ 11,557,700
#International Paper Co. 176,200 8,248,363
Kimberly-Clark Corp. 350,100 17,548,763
-------------
37,354,826
-------------
PHARMACEUTICALS -- 3.0%
American Home Products Corp. 106,300 10,138,363
Bristol-Myers Squibb Co. 158,500 16,533,531
Merck & Co., Inc. 67,250 8,633,219
Pharmacia & Upjohn, Inc. 256,200 11,208,750
-------------
46,513,863
-------------
REAL ESTATE -- 1.2%
Boston Properties, Inc. 234,800 8,262,025
#Starwood Hotels & Resorts 196,269 10,488,125
-------------
18,750,150
-------------
RETAIL - GROCERY STORES -- 1.2%
#Albertson's, Inc. 365,100 19,213,388
-------------
RETAIL MERCHANDISING -- 5.1%
#Federated Department Stores, Inc.** 252,700 13,093,019
#J.C. Penney Co., Inc. 269,700 20,412,919
Lowe's Cos., Inc. 248,300 17,427,556
Sears, Roebuck & Co. 515,000 29,580,313
-------------
80,513,807
-------------
TELECOMMUNICATIONS -- 7.6%
#AT&T Corp. 293,400 19,254,375
#Bell Atlantic Corp. 309,879 31,762,598
GTE Corp. 270,100 16,172,238
#SBC Communications, Inc. 334,970 14,613,066
Sprint Corp. 324,200 21,944,288
U.S. West Communications Group 291,000 15,932,250
-------------
119,678,815
-------------
TEXTILES -- 0.8%
Fruit of the Loom, Inc.** 420,200 12,868,625
-------------
TOBACCO -- 1.9%
Philip Morris Cos., Inc. 698,500 29,118,719
-------------
TRANSPORTATION -- 2.2%
CSX Corp. 202,800 12,066,600
#FDX Corp.** 192,300 13,677,338
Norfolk Southern Corp. 226,900 8,480,388
-------------
34,224,326
-------------
TOTAL COMMON STOCKS
(Cost $1,098,814,592) 1,547,401,317
-------------
PAR
MATURITY (000) VALUE
---------- ---------- ------------
SHORT TERM INVESTMENTS -- 1.2%
Federal Home Loan Mortgage
Corp. Discount Notes
5.90% 04/01/98 $18,800 $ 18,800,000
Smith Barney Money Market Fund 247 246,802
--------------
TOTAL SHORT TERM INVESTMENTS
(Cost $19,046,802) 19,046,802
--------------
TOTAL INVESTMENTS IN
SECURITIES--100.0%
(Cost $1,117,861,394*) $1,566,448,119
==============
- ---------------
* Also cost for Federal income tax purposes. The gross unrealized
appreciation (depreciation) on a tax basis is as follows:
Gross unrealized appreciation $456,905,536
Gross unrealized depreciation (8,318,811)
------------
$448,586,725
============
** Non-income producing security.
# Total or partial securities on loan.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
16
<PAGE>
BLACKROCK FUNDS LOGO [GRAPHIC OMITTED]
STATEMENT OF ASSETS AND LIABILITIES
LARGE CAP VALUE EQUITY PORTFOLIO
MARCH 31, 1998 (UNAUDITED)
ASSETS
Investments at value (Cost $1,117,861,394) ................. $1,566,448,119
Collateral received for securities loaned .................. 193,597,858
Dividends receivable ....................................... 2,184,839
Interest receivable ........................................ 14,464
Investments sold receivable ................................ 8,481,160
Capital shares sold receivable ............................. 650,737
Prepaid expenses ........................................... 48,750
--------------
TOTAL ASSETS ........................................ 1,771,425,927
--------------
LIABILITIES
Payable upon return of securities loaned ................... 193,597,858
Capital shares redeemed payable ............................ 125,221
Accrued expenses payable ................................... 1,385,666
--------------
TOTAL LIABILITIES ................................... 195,108,745
--------------
NET ASSETS (Applicable to 45,526,547 Institutional shares,
39,570,376 Service shares, 3,160,312 Investor A shares,
1,722,336 Investor B shares and 151,829 Investor C
shares outstanding) ........................................ $1,576,317,182
==============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER INSTITUTIONAL SHARE ($796,215,295 (DIVIDE) 45,526,547) . $17.49
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER SERVICE SHARE ($692,292,163 (DIVIDE) 39,570,376) ....... $17.50
======
NET ASSET VALUE AND REDEMPTION PRICE
PER INVESTOR A SHARE ($55,250,120 (DIVIDE) 3,160,312) ...... $17.48
======
MAXIMUM OFFERING PRICE PER INVESTOR A SHARE
($17.48 (DIVIDE) .955) ..................................... $18.30
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent
deferred sales charge of 4.5%)
PER INVESTOR B SHARE ($29,921,893 (DIVIDE) 1,722,336) ...... $17.37
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent
deferred sales charge of 1.0%)
PER INVESTOR C SHARE ($2,637,711 (DIVIDE) 151,829) ......... $17.37
======
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
17
<PAGE>
LOGO [GRAPHIC OMITTED] BLACKROCK FUNDS
SCHEDULE OF INVESTMENTS
LARGE CAP GROWTH EQUITY PORTFOLIO
NUMBER
AS OF MARCH 31, 1998 (UNAUDITED) OF SHARES VALUE
--------- --------------
COMMON STOCKS -- 98.9%
ADVERTISING -- 0.9%
#Omnicom Group, Inc. 160,500 $ 7,553,531
------------
AEROSPACE -- 1.7%
Allied-Signal, Inc. 131,300 5,514,600
Boeing Co. 80,800 4,211,700
United Technologies Corp. 55,500 5,123,344
------------
14,849,644
------------
BANKS -- 2.6%
BankAmerica Corp. 93,700 7,741,962
Chase Manhattan Corp. 70,300 9,481,712
#MBNA Corp. 153,900 5,511,544
------------
22,735,218
------------
BEVERAGES -- 5.6%
Coca-Cola Co. 376,500 29,155,219
#Panamerican Beverages, Inc.
Class A 176,000 7,062,000
Pepsico, Inc. 287,300 12,264,119
------------
48,481,338
------------
BROADCASTING -- 2.6%
#Chancellor Media Corp.** 169,900 7,794,162
#Clear Channel Communications,
Inc.** 151,700 14,866,600
------------
22,660,762
------------
COMPUTER & OFFICE EQUIPMENT -- 9.5%
3Com Corp.** 88,100 3,166,094
#Cisco Systems, Inc.** 376,600 25,750,025
#Compaq Computer Corp. 248,200 6,422,175
Computer Associates
International, Inc. 148,500 8,575,875
Dell Computer Corp.** 99,200 6,720,800
#EMC Corp.** 206,800 7,819,625
HBO & Co. 274,100 16,548,787
International Business Machines
Corp. 67,200 6,980,400
------------
81,983,781
------------
COMPUTER SOFTWARE & SERVICES -- 6.0%
Automatic Data Processing, Inc. 57,900 3,940,819
Gulfstream Aerospace Corp.** 127,000 5,508,625
Microsoft Corp.** 352,400 31,539,800
#Network Associates, Inc.** 51,200 3,392,000
#Parametric Technology Corp.** 231,800 7,721,837
------------
52,103,081
------------
CONSUMER NON-DURABLES -- 0.9%
Newell Co. 158,900 7,696,719
------------
CONTAINERS -- 0.6%
#Crown Cork & Seal Co., Inc. 100,300 5,366,050
------------
ELECTRONICS -- 12.0%
General Electric Co. 559,100 48,187,431
Intel Corp. 465,000 36,299,062
Motorola, Inc. 100,300 6,080,687
#Nokia Corp. ADR 76,100 8,214,044
Texas Instruments, Inc. 99,700 5,396,262
------------
104,177,486
------------
NUMBER
OF SHARES VALUE
---------- --------------
ENTERTAINMENT & LEISURE -- 3.0%
Carnival Corp. Class A 74,400 $ 5,189,400
Marriott International, Inc.
Class A** 69,600 2,492,550
Marriott International, Inc.** 69,600 2,588,250
#MGM Grand, Inc.** 86,900 2,976,325
Walt Disney Co. 116,500 12,436,375
-----------
25,682,900
-----------
FINANCE -- 3.9%
#Capital One Financial Corp. 61,100 4,819,262
Federal National Mortgage
Association 196,500 12,428,625
Household International, Inc. 45,500 6,267,625
Merrill Lynch & Co., Inc. 53,000 4,399,000
#Washington Mutual, Inc. 82,700 5,931,141
-----------
33,845,653
-----------
FINANCIAL SERVICES -- 0.7%
#Travelers Group, Inc. 95,100 5,706,000
-----------
FOOD & AGRICULTURE -- 0.0%
Sodexho Marriott Services, Inc. 17,400 462,187
-----------
INSURANCE -- 1.7%
Ace Ltd. 220,800 8,321,400
American International
Group, Inc. 51,900 6,536,156
-----------
14,857,556
-----------
JEWELRY -- 0.6%
Tiffany & Co. 99,300 4,834,669
-----------
MACHINERY & HEAVY EQUIPMENT -- 0.8%
Illinois Tool Works, Inc. 106,300 6,882,925
-----------
MANUFACTURING -- 1.1%
Keebler Foods Co.** 131,600 3,948,000
Tyco International Ltd. 99,500 5,435,187
-----------
9,383,187
-----------
MEDICAL & MEDICAL SERVICES -- 3.1%
#Healthsouth Corp.** 258,600 7,256,962
Medtronic, Inc. 151,800 7,874,625
#United Healthcare Corp. 106,200 6,876,450
Wellpoint Health Networks, Inc.** 76,500 5,163,750
-----------
27,171,787
-----------
MEDICAL INSTRUMENTS & SUPPLIES -- 1.5%
Becton, Dickinson & Co. 42,500 2,892,656
#Cardinal Health, Inc. 50,900 4,488,744
Guidant Corp. 71,400 5,238,975
-----------
12,620,375
-----------
OIL & GAS -- 1.4%
#Diamond Offshore Drilling, Inc. 129,100 5,857,912
Sante Fe International Corp. 166,600 6,320,387
-----------
12,178,299
-----------
PAPER & FOREST PRODUCTS -- 0.8%
#Fort James Corp. 154,900 7,096,356
-----------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
18
<PAGE>
BLACKROCK FUNDS LOGO [GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
LARGE CAP GROWTH EQUITY PORTFOLIO (CONCLUDED)
NUMBER
AS OF MARCH 31, 1998 (UNAUDITED) OF SHARES VALUE
--------- -------------
COMMON STOCKS (CONTINUED)
PHARMACEUTICALS -- 17.9%
Abbott Laboratories 141,700 $ 10,671,781
American Home Products Corp. 123,900 11,816,963
Bristol-Myers Squibb Co. 171,500 17,889,594
Eli Lilly & Co. 159,500 9,510,188
Johnson & Johnson 268,900 19,713,731
Merck & Co., Inc. 235,800 30,270,825
Pfizer, Inc. 250,600 24,981,688
Schering-Plough Corp. 221,300 18,077,444
Warner-Lambert Co. 70,700 12,041,094
------------
154,973,308
------------
REAL ESTATE -- 0.4%
Patriot American Hospitality, Inc. 146,900 3,966,312
------------
RETAIL MERCHANDISING -- 7.9%
Dayton Hudson Corp. 105,500 9,284,000
Kroger Co.** 103,500 4,780,406
Lowe's Cos., Inc. 84,400 5,923,825
Mattel, Inc. 165,700 6,565,863
Safeway, Inc.** 71,600 2,644,725
Service Corp. International 218,200 9,259,863
#Staples, Inc.** 195,400 4,530,838
TJX Companies, Inc. 180,600 8,172,150
#Wal-Mart Stores, Inc. 334,900 17,017,106
------------
68,178,776
------------
SOAPS & COSMETICS -- 5.6%
Avon Products, Inc. 111,900 8,728,200
Colgate-Palmolive Co. 67,200 5,821,200
Gillette Co. 106,500 12,640,219
Procter & Gamble Co. 257,100 21,692,813
------------
48,882,432
------------
TELECOMMUNICATIONS -- 3.6%
Airtouch Communications, Inc.** 99,300 4,859,494
Lucent Technologies, Inc. 71,700 9,168,638
Oracle Corp.** 149,100 4,705,969
#Qwest Communications
International, Inc.** 109,200 4,245,150
#World Communications, Inc.** 187,800 8,087,138
------------
31,066,389
------------
TOBACCO -- 2.5%
Philip Morris Cos., Inc. 514,100 21,431,544
------------
TOTAL COMMON STOCKS
(Cost $513,920,451) 856,828,265
------------
PAR
MATURITY (000) VALUE
---------- ---------- ------------
SHORT TERM INVESTMENTS -- 1.1%
Federal Home Loan Mortgage
Corp. Discount Notes
5.90% 04/01/98 $9,813 $ 9,813,000
Smith Barney Money Market Fund 23 23,339
------------
TOTAL SHORT TERM INVESTMENTS
(Cost $9,836,339) 9,836,339
------------
TOTAL INVESTMENTS IN
SECURITIES--100.0%
(Cost $523,756,790*) $866,664,604
============
- ---------------
* Also cost for Federal income tax purposes. The gross unrealized
appreciation (depreciation) on a tax basis is as follows:
Gross unrealized appreciation $346,081,112
Gross unrealized depreciation (3,173,298)
------------
$342,907,814
============
** Non-income producing security.
# Total or partial securities on loan.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
19
<PAGE>
LOGO [GRAPHIC OMITTED] BLACKROCK FUNDS
STATEMENT OF ASSETS AND LIABILITIES
LARGE CAP GROWTH EQUITY PORTFOLIO
MARCH 31, 1998 (UNAUDITED)
ASSETS
Investments at value (Cost $523,756,790) ..................... $ 866,664,604
Collateral received for securities loaned .................... 143,700,288
Dividends receivable ......................................... 776,805
Interest receivable .......................................... 16,943
Capital shares sold receivable ............................... 263,672
Prepaid expenses ............................................. 23,830
--------------
TOTAL ASSETS .......................................... 1,011,446,142
--------------
LIABILITIES
Payable upon return of securities loaned ..................... 143,700,288
Investments purchased payable ................................ 1,525,269
Capital shares redeemed payable .............................. 23,664
Accrued expenses payable ..................................... 940,222
--------------
TOTAL LIABILITIES ..................................... 146,189,443
--------------
NET ASSETS (Applicable to 27,005,590 Institutional
shares, 16,484,604 Service shares, 1,589,729
Investor A shares, 598,768 Investor B shares and
18,675 Investor C shares outstanding) ........................ $ 865,256,699
==============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER INSTITUTIONAL SHARE ($511,443,425 (DIVIDE) 27,005,590) ... $18.94
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER SERVICE SHARE ($312,301,435 (DIVIDE) 16,484,604) ......... $18.95
======
NET ASSET VALUE AND REDEMPTION PRICE
PER INVESTOR A SHARE ($30,042,934 (DIVIDE) 1,589,729) ........ $18.90
======
MAXIMUM OFFERING PRICE PER INVESTOR A SHARE
($18.90 (DIVIDE) .955) ....................................... $19.79
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent
deferred sales charge of 4.5%)
PER INVESTOR B SHARE ($11,122,027 (DIVIDE) 598,768) .......... $18.57
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent
deferred sales charge of 1.0%)
PER INVESTOR C SHARE ($346,878 (DIVIDE) 18,675) .............. $18.57
======
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
20
<PAGE>
BLACKROCK FUNDS LOGO [GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
MID-CAP VALUE EQUITY PORTFOLIO
NUMBER
AS OF MARCH 31, 1998 (UNAUDITED) OF SHARES VALUE
--------- ------------
COMMON STOCKS -- 96.6%
AIR TRANSPORTATION -- 1.9%
Northwest Airlines Corp.
Class A** 17,700 $ 1,091,869
UAL Corp.** 25,900 2,407,081
-----------
3,498,950
-----------
AUTOMOTIVE -- 2.7%
ITT Industries, Inc. 66,200 2,519,738
Lear Corp.** 42,900 2,418,487
-----------
4,938,225
-----------
BANKS -- 10.6%
Amsouth Bancorp. 23,750 1,402,734
Associated Banc-Corp. 42,648 2,300,326
Charter One Financial, Inc. 37,815 2,531,242
Commercial Federal Corp. 49,400 1,796,925
Compass Bancshares, Inc. 46,450 2,334,112
Independence Community
Bank Corp.** 74,100 1,324,537
Pacific Century Financial Corp. 70,200 1,671,637
Sovereign Bancorp, Inc. 119,880 2,180,317
Union Planters Corp. 26,400 1,641,750
Washington Federal, Inc. 78,738 2,184,979
-----------
19,368,559
-----------
BUSINESS SERVICES -- 1.1%
#Varian Associates, Inc. 37,200 2,059,950
-----------
CHEMICALS -- 1.5%
#Arco Chemical Co. 30,900 1,463,887
Ashland, Inc. 22,500 1,274,062
-----------
2,737,949
-----------
COMPUTER & OFFICE EQUIPMENT -- 3.4%
Gateway 2000, Inc.** 47,300 2,220,144
Harris Corp. 38,400 2,001,600
Komag, Inc.** 65,900 955,550
#Western Digital Corp.** 63,900 1,122,244
-----------
6,299,538
-----------
CONSTRUCTION -- 3.4%
#Centex Corp. 43,200 1,647,000
#Harsco Corp. 40,900 1,878,844
USG Corp.** 25,900 1,403,456
#Vulcan Materials Co. 12,200 1,335,900
-----------
6,265,200
-----------
CONTAINERS -- 1.2%
Owens-Illinois, Inc.** 52,400 2,266,300
-----------
DURABLE GOODS -- 2.1%
Whirlpool Corp. 38,200 2,619,087
York International Corp. 26,000 1,170,000
-----------
3,789,087
-----------
ELECTRONICS -- 6.6%
Arrow Electronics, Inc.** 85,800 2,321,962
Boston Edison Co. 52,300 2,193,331
#DPL, Inc. 84,450 1,646,775
Florida Progress Corp. 41,400 1,725,862
#SCI Systems, Inc.** 59,100 2,105,437
Vishay Intertechnology, Inc.** 86,400 2,030,400
-----------
12,023,767
-----------
NUMBER
OF SHARES VALUE
---------- --------------
ENERGY & UTILITIES -- 5.7%
Ameren Corp. 36,677 $ 1,545,019
#Calenergy Co., Inc.** 5,400 152,550
LG&E Energy Corp. 33,200 856,975
New Century Energies, Inc. 26,200 1,319,825
NIPSCO Industries, Inc. 40,400 1,131,200
#Pioneer Natural Resouces Co. 86,000 2,139,250
Scana Corp. 48,800 1,509,750
Sierra Pacific Resources 47,200 1,772,950
-----------
10,427,519
-----------
FINANCE -- 4.7%
CIT Group, Inc. Class A** 79,500 2,593,687
Countrywide Credit Industries, Inc. 39,700 2,111,544
Finova Group, Inc. 40,400 2,378,550
#The Money Store, Inc. 50,000 1,596,875
-----------
8,680,656
-----------
FOOD & AGRICULTURE -- 2.5%
Food Lion Inc., Class A 86,600 925,538
Food Lion Inc., Class B 160,800 1,763,775
International Home Foods, Inc.** 55,500 1,845,375
-----------
4,534,688
-----------
INSURANCE -- 7.8%
#Allmerica Financial Corp. 44,900 2,867,988
American Financial Group, Inc. 41,100 1,782,713
Everest Reinsurance Holdings, Inc. 31,200 1,283,100
Old Republic International Corp. 37,100 1,643,994
Partnerre, Ltd. 31,300 1,537,613
PMI Group, Inc. 25,000 2,018,750
Protective Life Corp. 23,000 1,679,000
Reliastar Financial Corp. 30,800 1,418,725
-----------
14,231,883
-----------
MACHINERY & HEAVY EQUIPMENT -- 4.1%
Case Corp. 21,300 1,451,063
Cooper Industries, Inc. 24,100 1,432,444
Howmet International, Inc.** 127,700 2,282,638
United Dominion Industries Ltd. 70,300 2,280,356
-----------
7,446,501
-----------
MEDICAL & MEDICAL SERVICES -- 5.9%
#Bergen Brunswig Corp. 33,500 1,427,938
#Foundation Health Systems, Inc.** 58,800 1,620,675
#Integrated Health Services, Inc. 72,800 2,861,950
Tenet Healthcare Corp.** 69,900 2,538,244
Wellpoint Health Networks, Inc.** 35,800 2,416,500
-----------
10,865,307
-----------
MEDICAL INSTRUMENTS & SUPPLIES -- 1.3%
#Beckman Coulter, Inc. 42,400 2,430,050
-----------
METAL & MINING -- 4.8%
Carpenter Technology Corp. 29,900 1,614,600
Nucor Corp. 34,300 1,867,206
Philip Services Corp.** 279,300 2,915,194
Reynolds Metals Co. 40,200 2,469,788
-----------
8,866,788
-----------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
21
<PAGE>
LOGO [GRAPHIC OMITTED] BLACKROCK FUNDS
SCHEDULE OF INVESTMENTS
MID-CAP VALUE EQUITY PORTFOLIO (CONCLUDED)
NUMBER
AS OF MARCH 31, 1998 (UNAUDITED) OF SHARES VALUE
--------- ------------
COMMON STOCKS (CONTINUED)
OIL & GAS -- 4.7%
Consolidated Natural Gas Co. 27,800 $ 1,603,713
Mitchell Energy & Development
Corp. 62,900 1,666,850
#Sonat, Inc. 47,800 2,079,300
#Ultramar Diamond Shamrock Corp. 45,200 1,593,300
Valero Energy Corp. 51,900 1,732,163
-----------
8,675,326
-----------
PAPER & FOREST PRODUCTS -- 3.0%
Champion International Corp. 31,500 1,710,844
Rayonier, Inc. 43,900 2,005,681
#Union Camp Corp. 29,800 1,780,550
-----------
5,497,075
-----------
REAL ESTATE -- 4.4%
AMB Property Corp. 63,100 1,522,288
Arden Realty, Inc. 43,920 1,251,720
Carramerica Realty Corp. 40,900 1,227,000
Equity Residential Properties Trust 28,600 1,437,150
Felcor Suite Hotels, Inc. 37,700 1,397,256
Simon Property Group, Inc. 35,600 1,219,300
-----------
8,054,714
-----------
RESTAURANTS -- 2.2%
Darden Restaurants, Inc. 111,700 1,738,331
Outback Steakhouse, Inc.** 57,200 2,237,950
-----------
3,976,281
-----------
RETAIL MERCHANDISING -- 3.5%
American Greetings Corp.
Class A 43,800 2,014,800
American Stores Co. 30,900 803,400
Dillards, Inc. Class A 46,200 1,706,513
Ross Stores, Inc. 43,200 1,906,200
-----------
6,430,913
-----------
TELECOMMUNICATIONS -- 3.1%
Essex International, Inc.** 41,000 1,619,500
Frontier Corp. 46,800 1,523,925
Glenayre Technologies, Inc.** 95,700 1,196,250
Southern New England
Telecommunications Corp. 18,900 1,366,706
-----------
5,706,381
-----------
TEXTILES -- 2.1%
#Fruit of the Loom, Inc. Class A** 58,100 1,779,313
Springs Industries, Inc. Class A 37,200 2,043,675
-----------
3,822,988
-----------
TOBACCO -- 1.1%
DIMON, Inc. 123,200 2,055,900
-----------
TRANSPORTATION -- 1.2%
#Kansas City Southern
Industries, Inc. 51,000 2,244,000
-----------
TOTAL COMMON STOCKS
(Cost $145,886,605) 177,194,495
-----------
PAR
MATURITY (000) VALUE
---------- ---------- ------------
SHORT TERM INVESTMENTS -- 3.4%
Federal Home Loan Mortgage Corp.
Discount Notes
5.90% 04/01/98 $6,000 $ 6,000,000
Smith Barney Money Market Fund 159 159,287
------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $6,159,287) 6,159,287
------------
TOTAL INVESTMENTS IN
SECURITIES--100.0%
(Cost $152,045,892*) $183,353,782
============
- ----------------
* Also cost for Federal income tax purposes. The gross unrealized
appreciation (depreciation) on a tax basis is as follows:
Gross unrealized appreciation $35,291,440
Gross unrealized depreciation (3,983,550)
-----------
$31,307,890
===========
** Non-income producing security.
# Total or partial securities on loan.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
22
<PAGE>
BLACKROCK FUNDS LOGO [GRAPHIC OMITTED]
STATEMENT OF ASSETS AND LIABILITIES
MID CAP VALUE EQUITY PORTFOLIO
MARCH 31, 1998 (UNAUDITED)
ASSETS
Investments at value (Cost $152,045,892) ...................... $183,353,782
Collateral received for securities loaned ..................... 34,785,950
Dividends receivable .......................................... 181,921
Interest receivable ........................................... 4,639
Investments sold receivable ................................... 236,992
Capital shares sold receivable ................................ 186,300
Prepaid expenses .............................................. 74,466
------------
TOTAL ASSETS ........................................... 218,824,050
------------
LIABILITIES
Payable upon return of securities loaned ...................... 34,785,950
Investments purchased payable ................................. 1,063,079
Capital shares redeemed payable ............................... 12,884
Accrued expenses payable ...................................... 172,653
------------
TOTAL LIABILITIES ...................................... 36,034,566
------------
NET ASSETS (Applicable to 9,561,443 Institutional
shares, 2,996,186 Service shares, 302,655
Investor A shares, 470,714 Investor B shares
and 11,796 Investor C shares outstanding) ..................... $182,789,484
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER INSTITUTIONAL SHARE ($131,032,945 (DIVIDE) 9,561,443) ..... $13.70
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER SERVICE SHARE ($41,023,911 (DIVIDE) 2,996,186) ............ $13.69
======
NET ASSET VALUE AND REDEMPTION PRICE
PER INVESTOR A SHARE ($4,138,725 (DIVIDE) 302,655) ............ $13.67
======
MAXIMUM OFFERING PRICE PER INVESTOR A SHARE
($13.67 (DIVIDE) .955) ........................................ $14.31
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent
deferred sales charge of 4.5%)
PER INVESTOR B SHARE ($6,432,704 (DIVIDE) 470,714) ............ $13.67
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent
deferred sales charge of 1.0%)
PER INVESTOR C SHARE ($161,199 (DIVIDE) 11,796) ............... $13.67
======
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
23
<PAGE>
LOGO [GRAPHIC OMITTED] BLACKROCK FUNDS
SCHEDULE OF INVESTMENTS
MID-CAP GROWTH EQUITY PORTFOLIO
NUMBER
AS OF MARCH 31, 1998 (UNAUDITED) OF SHARES VALUE
--------- ------------
COMMON STOCKS -- 93.1%
ADVERTISING -- 1.1%
Outdoor Systems, Inc.** 52,000 $ 1,823,250
-----------
BROADCASTING -- 0.5%
Chancellor Media Corp.** 18,700 857,862
-----------
BUSINESS SERVICES -- 5.9%
#Accustaff, Inc.** 38,100 1,314,450
#Apollo Group, Inc.** 61,400 2,954,875
Quintiles Transnational Corp.** 51,800 2,496,112
Robert Half International, Inc.** 73,750 3,540,000
-----------
10,305,437
-----------
COMPUTER & OFFICE EQUIPMENT -- 12.5%
#Analog Devices, Inc.** 15,000 498,750
Cadence Design Systems, Inc.** 25,500 882,937
Citrix Systems, Inc.** 14,300 774,881
#Computer Horizons Corp.** 43,000 2,160,750
Compuware Corp.** 25,200 1,244,250
DST Systems, Inc.** 9,300 488,831
Fiserv, Inc.** 8,500 538,687
HBO & Co. 67,300 4,063,237
I2 Technologies, Inc.** 15,800 1,036,875
Keane, Inc.** 27,300 1,542,450
Network Appliance, Inc.** 40,500 1,437,750
#Office Depot, Inc.** 63,000 1,960,875
Policy Management Systems
Corp.** 8,800 706,750
#SunGuard Data Systems, Inc.** 30,000 1,104,375
Symbol Technologies, Inc. 17,700 870,619
VERITAS Software Corp.** 41,500 2,453,687
-----------
21,765,704
-----------
COMPUTER SOFTWARE & SERVICES -- 10.3%
Baan Co.** 3,100 148,412
#BMC Software, Inc.** 22,100 1,852,256
Cambridge Technology
Partners, Inc.** 75,100 3,722,144
CBT Group PLC** 70,600 3,653,550
Gartner Group, Inc.** 27,000 1,009,125
#Network Associates, Inc.** 13,000 861,250
#Parametric Technology Corp.** 28,000 932,750
Peoplesoft, Inc.** 65,500 3,451,031
Sterling Commerce, Inc.** 11,300 524,037
#Sylvan Learning Systems, Inc.** 36,900 1,738,912
-----------
17,893,467
-----------
CONSTRUCTION -- 2.0%
Oakwood Homes Corp. 95,500 3,497,688
-----------
DURABLE GOODS -- 0.7%
Wolverine World Wide, Inc. 40,600 1,146,950
-----------
ELECTRONICS -- 3.4%
#Concord EFS, Inc.** 34,900 1,206,231
Linear Technology Corp. 5,700 393,300
Maxim Integrated Products, Inc.** 12,400 451,825
PMC-Sierra, Inc.** 11,500 437,000
Sanmina Corp.** 6,600 461,588
#Uniphase Corp.** 27,700 1,165,131
Vitesse Semiconductor Corp.** 38,900 1,834,378
-----------
5,949,453
-----------
NUMBER
OF SHARES VALUE
---------- --------------
FINANCE -- 2.3%
#Capital One Financial Corp. 32,500 $ 2,563,438
MGIC Investment Corp. 21,600 1,418,850
-----------
3,982,288
-----------
FOOD & AGRICULTURE -- 4.4%
Suiza Foods Corp.** 50,700 3,118,050
US Foodservice, Inc.** 33,300 1,225,856
Whole Foods Market, Inc.** 47,200 3,292,200
-----------
7,636,106
-----------
FURNITURE -- 3.6%
Ethan Allen Interiors, Inc. 23,200 1,386,200
Herman Miller, Inc. 51,800 1,736,919
#Pier 1 Imports, Inc. 116,400 3,157,350
-----------
6,280,469
-----------
INSURANCE -- 2.6%
Conseco, Inc. 46,400 2,627,400
#Mutual Risk Management Ltd. 55,000 1,863,125
-----------
4,490,525
-----------
MEDICAL & MEDICAL SERVICES -- 5.8%
#Biovail Corp. International** 18,500 892,625
Health Management Associates,
Inc.** 42,500 1,216,563
Healthcare & Retirement Corp.** 18,100 777,169
Healthsouth Corp.** 65,700 1,843,706
Henry Schein, Inc.** 21,300 883,950
Quorum Health Group, Inc.** 44,050 1,481,181
Shared Medical Systems Corp. 22,000 1,724,250
Universal Health Services** 22,600 1,305,150
-----------
10,124,594
-----------
MEDICAL INSTRUMENTS & SUPPLIES -- 7.5%
#Biomet, Inc.** 44,000 1,320,000
#Cardinal Health, Inc. 16,100 1,419,819
#Elan Corp.** 40,600 2,623,775
Guidant Corp. 17,300 1,269,388
Sofamor Danek Group, Inc.** 34,900 2,975,225
Steris Corp.** 35,700 1,927,800
#Stryker Corp. 29,800 1,396,875
-----------
12,932,882
-----------
MISCELLANEOUS SERVICES -- 1.7%
Stewart Enterprises, Inc. 52,300 2,909,188
-----------
OIL & GAS -- 3.6%
Global Industries Ltd.** 67,600 1,377,350
Global Marine, Inc.** 32,200 796,950
Marine Drilling Cos., Inc.** 20,000 432,500
Petroleum Geo-Services** 25,600 1,520,000
R & B Falcon Corp.** 27,006 800,053
Transocean Offshore, Inc. 26,800 1,378,525
-----------
6,305,378
-----------
PHARMACEUTICALS -- 2.5%
#ALZA Corp.** 44,000 1,971,750
Jones Medical Industries, Inc. 28,000 1,013,250
#Omnicare, Inc. 22,500 891,563
#Rexall Sundown, Inc.** 12,000 408,750
-----------
4,285,313
-----------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
24
<PAGE>
BLACKROCK FUNDS LOGO [GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
MID-CAP GROWTH EQUITY PORTFOLIO (CONCLUDED)
NUMBER
AS OF MARCH 31, 1998 (UNAUDITED) OF SHARES VALUE
--------- ------------
COMMON STOCKS (CONTINUED)
RESTAURANTS -- 2.0%
#CKE Restaurants, Inc. 56,730 $ 2,084,828
Papa John's International, Inc.** 34,400 1,320,100
-----------
3,404,928
-----------
RETAIL MERCHANDISING -- 13.9%
Barnes & Noble, Inc.** 82,600 3,221,400
Borders Group, Inc.** 78,400 2,670,500
#Dollar General Corp. 83,968 3,248,541
Dollar Tree Stores, Inc.** 39,600 2,103,750
Family Dollar Stores, Inc. 59,500 2,261,000
General Nutrition Companies, Inc.** 46,100 1,832,475
Lowe's Cos., Inc. 43,400 3,046,138
Proffitt's, Inc.** 67,900 2,461,375
#Staples, Inc.** 37,100 860,256
#Starbucks Corp.** 51,700 2,342,656
-----------
24,048,091
-----------
TELECOMMUNICATIONS -- 5.6%
LCI International, Inc.** 85,000 3,272,500
#Premiere Technologies, Inc.** 15,500 536,688
Reltec Corp.** 25,200 893,025
Saville Systems Ireland PLC** 39,100 2,003,875
#Tel-Save Holdings, Inc.** 44,400 1,010,100
Tellabs, Inc.** 30,100 2,020,463
-----------
9,736,651
-----------
WASTE MANAGEMENT -- 1.2%
USA Waste Services, Inc.** 48,410 2,157,271
-----------
TOTAL COMMON STOCKS
(Cost $125,646,777) 161,533,495
-----------
PAR
MATURITY (000) VALUE
---------- ---------- ------------
SHORT TERM INVESTMENTS -- 6.9%
Federal Home Loan Mortgage
Corp. Discount Notes
5.90% 04/01/98 $11,700 $ 11,700,000
Smith Barney Money Market Fund 112 111,912
U.S. Treasury Bills
5.02% 06/18/98 200*** 197,803
------------
TOTAL SHORT TERM INVESTMENTS
(Cost $12,009,734) 12,009,715
------------
TOTAL INVESTMENTS IN
SECURITIES--100.0%
(Cost $137,656,511*) $173,543,210
============
- ----------------
* Also cost for Federal income tax purposes. The gross unrealized
appreciation (depreciation) on a tax basis is as follows:
Gross unrealized appreciation $36,408,020
Gross unrealized depreciation (521,321)
-----------
$35,886,699
===========
** Non-income producing security.
*** Principal amount of securities pledged as initial margin requirement of
$150,000 on 12 Standard & Poor's 500 Stock Index futures contracts expiring
June 1998. The value of such contracts on March 31, 1998 was $3,331,500,
thereby resulting in an unrealized gain of $138,602.
# Total or partial securities on loan.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
25
<PAGE>
LOGO [GRAPHIC OMITTED] BLACKROCK FUNDS
STATEMENT OF ASSETS AND LIABILITIES
MID CAP GROWTH EQUITY PORTFOLIO
MARCH 31, 1998 (UNAUDITED)
ASSETS
Investments at value (Cost $137,656,511) ....................... $173,543,210
Collateral received for securities loaned ...................... 43,796,631
Dividends receivable ........................................... 21,652
Interest receivable ............................................ 20,327
Investments sold receivable .................................... 5,306,908
Capital shares sold receivable ................................. 64,000
Futures margin receivable ...................................... 14,400
Prepaid expenses ............................................... 73,385
------------
TOTAL ASSETS ............................................ 222,840,513
------------
LIABILITIES
Payable upon return of securities loaned ....................... 43,796,631
Investments purchased payable .................................. 947,043
Capital shares redeemed payable ................................ 2,974
Accrued expenses payable ....................................... 147,263
------------
TOTAL LIABILITIES ....................................... 44,893,911
------------
NET ASSETS (Applicable to 10,188,616
Institutional shares, 3,073,186 Service
shares, 275,388 Investor A shares,
320,997 Investor B shares and 11,315
Investor C shares outstanding) ................................. $177,946,602
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER INSTITUTIONAL SHARE ($130,894,907 (DIVIDE) 10,188,616) ..... $12.85
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER SERVICE SHARE ($39,325,581 (DIVIDE) 3,073,186) ............. $12.80
======
NET ASSET VALUE AND REDEMPTION PRICE
PER INVESTOR A SHARE ($3,514,403 (DIVIDE) 275,388) ............. $12.76
======
MAXIMUM OFFERING PRICE PER INVESTOR A SHARE
($12.76 (DIVIDE) .955) ......................................... $13.36
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent
deferred sales charge of 4.5%)
PER INVESTOR B SHARE ($4,068,306 (DIVIDE) 320,997) ............. $12.67
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent
deferred sales charge of 1.0%)
PER INVESTOR C SHARE ($143,405 (DIVIDE) 11,315) ................ $12.67
======
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26
<PAGE>
BLACKROCK FUNDS LOGO [GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
SMALL CAP VALUE EQUITY PORTFOLIO
NUMBER
AS OF MARCH 31, 1998 (UNAUDITED) OF SHARES VALUE
--------- ------------
COMMON STOCKS -- 95.6%
BANKS -- 5.4%
Albank Financial Corp. 102,252 $ 5,125,381
#BankAtlantic Bancorp, Inc. Class A 240,854 3,296,699
BankAtlantic Bancorp, Inc. Class B 126,624 1,836,048
Banknorth Group, Inc. 115,400 8,424,200
Commerce Bancorp, Inc. 95,613 5,264,691
Susquehanna Bancshares, Inc. 188,550 6,999,919
-----------
30,946,938
-----------
CHEMICALS -- 1.0%
Bush Boake Allen, Inc. 176,500 5,625,937
-----------
COMPUTER & OFFICE EQUIPMENT -- 5.1%
#Bell and Howell Co.** 249,200 6,837,425
Bell Micro Products, Inc.** 205,800 1,543,500
#HMT Technology Corp.** 350,300 4,532,006
#Hutchinson Technology, Inc.** 199,100 5,276,150
United Stationers, Inc.** 95,800 5,921,637
Vanstar Corp.** 397,100 4,963,750
-----------
29,074,468
-----------
CONSTRUCTION -- 0.7%
Oakwood Homes Corp. 115,100 4,215,537
-----------
CONTAINERS -- 1.1%
Silgan Holdings, Inc.** 176,100 6,185,512
-----------
DURABLE GOODS -- 2.0%
Kellwood Co. 193,400 5,971,225
Wellman, Inc. 245,100 5,300,287
-----------
11,271,512
-----------
ELECTRONICS -- 7.7%
Allen Telecommunications, Inc. 264,800 4,170,600
BEI Technologies, Inc. 113,100 1,908,562
Belden, Inc. 121,640 5,093,675
Berg Electronics Corp.** 251,800 6,468,112
Electro Scientific Industries,
Inc.** 182,700 7,056,787
Holophane Corp.** 220,900 5,301,600
Mark IV Industries, Inc. 192,445 4,378,124
Marshall Industries** 76,400 2,549,850
Park Electrochemical Corp. 228,500 5,898,156
Xicor, Inc.** 322,100 845,512
-----------
43,670,978
-----------
ENERGY & UTILITIES -- 6.8%
C & D Technology, Inc. 103,000 5,362,437
Central Louisiana Electric Co. 97,900 3,353,075
Cilcorp, Inc. 61,200 2,952,900
Eastern Enterprises 70,000 3,010,000
IES Industries, Inc. 117,290 4,361,722
Piedmont Natural Gas, Inc. 76,500 2,658,375
#Santa Fe Energy Resources, Inc.** 632,000 6,952,000
Sierra Pacific Resources 107,640 4,043,227
TNP Enterprises, Inc. 110,600 3,656,712
UGI Corp. Holding Co. 84,810 2,395,882
-----------
38,746,330
-----------
FINANCE -- 4.8%
#Aames Financial Corp. 296,900 4,119,487
Astoria Financial Corp. 67,300 4,159,981
#Peoples Heritage Financial
Group, Inc. 159,400 7,691,050
PFF Bancorp, Inc.** 244,600 5,044,875
Webster Financial Corp. 89,200 6,199,400
-----------
27,214,793
-----------
NUMBER
OF SHARES VALUE
---------- --------------
FOOD & AGRICULTURE -- 2.0%
Earthgrains Co. 154,000 $ 6,804,875
Suiza Foods Corp.** 77,100 4,741,650
-----------
11,546,525
-----------
GLASS -- 1.1%
Libbey, Inc. 163,500 6,090,375
-----------
INSURANCE -- 6.6%
Commerce Group, Inc. 117,120 4,128,480
#Enhance Financial Services
Group, Inc. 102,800 7,138,175
ESG Re Ltd. 187,400 4,872,400
Penn Treaty American Corp.** 158,500 4,636,125
Penn-America Group, Inc. 212,500 4,635,156
PXRE Corp. 168,600 5,226,600
W.R. Berkley Corp. 141,250 6,691,719
-----------
37,328,655
-----------
JEWELRY -- 1.7%
Finlay Enterprises, Inc.** 127,800 3,250,912
Movado Group, Inc. 228,537 6,599,006
-----------
9,849,918
-----------
MACHINERY & HEAVY EQUIPMENT -- 6.3%
Alamo Group, Inc. 148,140 2,685,037
Brown & Sharpe Manufacturing Co.
Class A** 190,100 2,257,438
Harmon Industries, Inc. 225,000 4,584,375
K2, Inc. 163,000 3,636,938
Pentair, Inc. 183,500 8,211,625
Plantronics, Inc.** 120,120 4,917,413
Stewart & Stevenson Services,
Inc. 207,500 4,992,969
US Can Corp.** 254,000 4,508,500
-----------
35,794,295
-----------
MEDICAL & MEDICAL SERVICES -- 4.7%
Duane Reads, Inc.** 207,900 5,314,444
Healthcare Realty Trust, Inc. 87,000 2,457,750
#Integrated Health Services, Inc. 198,900 7,819,256
Mariner Health Group, Inc.** 269,950 4,622,894
Sierra Health Services, Inc.** 165,100 6,583,363
-----------
26,797,707
-----------
MEDICAL INSTRUMENTS & SUPPLIES -- 3.3%
ADAC Laboratories** 237,500 5,492,188
#Beckman Instruments, Inc. 72,800 4,172,350
Marquette Medical Systems, Inc.
Class A** 164,000 4,551,000
Maxxim Medical, Inc.** 166,400 4,773,600
-----------
18,989,138
-----------
METAL & MINING -- 4.9%
Gibraltar Steel Corp.** 230,900 4,935,488
Mueller Industries, Inc.** 99,900 6,324,919
Philip Environmental, Inc. 547,200 5,711,400
Steel Dynamics, Inc.** 310,000 6,587,500
Wolverine Tube, Inc.** 109,700 4,401,713
-----------
27,961,020
-----------
MISCELLANEOUS SERVICES -- 3.0%
CDI Corp.** 126,100 5,430,181
Norrell Corp. 265,300 5,985,831
RMI Titanium Co.** 249,600 5,397,600
-----------
16,813,612
-----------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
27
<PAGE>
LOGO [GRAPHIC OMITTED] BLACKROCK FUNDS
SCHEDULE OF INVESTMENTS
SMALL CAP VALUE EQUITY PORTFOLIO (CONCLUDED)
NUMBER
AS OF MARCH 31, 1998 (UNAUDITED) OF SHARES VALUE
--------- ------------
COMMON STOCKS (CONTINUED)
MOTOR VEHICLES -- 1.6%
Borge-Warner Automotive, Inc. 141,400 $ 9,067,275
------------
OIL & GAS -- 4.3%
Belco Oil & Gas Corp.** 257,500 4,345,313
Flowserve Corp. 146,328 4,773,951
Oneok, Inc. 73,900 3,011,425
Pride International, Inc.** 321,038 7,664,782
SEACOR SMIT, Inc.** 75,100 4,369,881
------------
24,165,352
------------
PAPER & FOREST PRODUCTS -- 1.9%
Caraustar Industries, Inc. 141,800 4,679,400
Chesapeake Corp. 178,300 6,151,350
------------
10,830,750
------------
REAL ESTATE -- 8.4%
Alexandria Real Estate Equities,
Inc. 82,900 2,626,894
Avalon Properties, Inc. 102,600 2,975,400
Bedford Property Investors, Inc. 131,400 2,537,663
Boykin Lodging Trust, Inc. 110,200 2,713,675
Brandywine Realty Trust 105,400 2,509,838
Burnham Pacific Properties,
Inc. 191,000 2,793,375
#Camden Property Trust 92,900 2,752,163
#Chelsea GCA Realty, Inc. 55,900 2,068,300
Felcor Suite Hotels, Inc. 92,000 3,409,750
Glenborough Realty Trust, Inc. 176,500 5,140,563
Highwoods Properties, Inc. 97,000 3,425,313
Lennar Corp. 211,256 7,275,129
Patriot American Hospitality, Inc. 146,800 3,963,601
Prentiss Properties Trust 143,800 3,756,775
------------
47,948,439
------------
RESTAURANTS -- 2.8%
Buffets, Inc.** 497,900 6,846,125
Lone Star Steakhouse &
Saloon, Inc.** 165,100 3,745,706
Ruby Tuesday, Inc. 164,900 5,194,350
------------
15,786,181
------------
RETAIL MERCHANDISING -- 2.5%
Fingerhut Co. 192,100 4,982,594
Stanhome, Inc. 133,700 3,601,544
Zale Corp.** 187,900 5,425,613
------------
14,009,751
------------
TEXTILES -- 2.9%
Crown Crafts, Inc. 104,640 2,190,900
Dress Barn, Inc.** 184,800 5,313,000
Guilford Mills, Inc. 219,500 6,475,250
Tropical Sportswear Intl. Corp.** 197,200 2,785,450
------------
16,764,600
------------
TOBACCO -- 1.4%
#UST, Inc. 275,800 7,825,825
------------
TRANSPORTATION -- 1.6%
Midwest Express Holdings, Inc.** 50,770 2,487,730
Teekay Shipping Corp. 215,500 6,707,438
------------
9,195,168
------------
TOTAL COMMON STOCKS
(Cost $404,616,390) 543,716,591
------------
PAR
MATURITY (000) VALUE
---------- ---------- ------------
SHORT TERM INVESTMENTS -- 4.4%
Federal Home Loan Mortgage
Corp. Discount Notes
5.90% 04/01/98 $24,800 $ 24,800,000
Smith Barney Money Market Fund 158 158,113
-------------
TOTAL SHORT TERM INVESTMENTS
(Cost $24,958,113) 24,958,113
-------------
TOTAL INVESTMENTS IN
SECURITIES--100.0%
(Cost $429,574,503*) $568,674,704
============
- ---------------
* Also cost for Federal income tax purposes. The gross unrealized
appreciation (depreciation) on a tax basis is as follows:
Gross unrealized appreciation $145,803,674
Gross unrealized depreciation (6,703,473)
------------
$139,100,201
============
** Non-income producing security.
# Total or partial securities on loan.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
28
<PAGE>
BLACKROCK FUNDS LOGO [GRAPHIC OMITTED]
STATEMENT OF ASSETS AND LIABILITIES
SMALL CAP VALUE EQUITY PORTFOLIO
MARCH 31, 1998 (UNAUDITED)
ASSETS
Investments at value (Cost $429,574,503) .................... $568,674,704
Collateral received for securities loaned ................... 39,342,111
Dividends receivable ........................................ 674,195
Interest receivable ......................................... 10,933
Capital shares sold receivable .............................. 666,092
Prepaid expenses ............................................ 30,951
------------
TOTAL ASSETS ......................................... 609,398,986
------------
LIABILITIES
Payable upon return of securities loaned .................... 39,342,111
Investments purchased payable ............................... 663,712
Capital shares redeemed payable ............................. 88,429
Accrued expenses payable .................................... 550,950
------------
TOTAL LIABILITIES .................................... 40,645,202
------------
NET ASSETS (Applicable to 17,914,874 Institutional
shares, 7,552,711 Service shares, 2,150,939
Investor A shares, 1,141,569 Investor B shares
and 292,098 Investor C shares outstanding) .................. $568,753,784
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER INSTITUTIONAL SHARE ($351,207,161 (DIVIDE) 17,914,874) .. $19.60
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER SERVICE SHARE ($147,924,337 (DIVIDE) 7,552,711) ......... $19.59
======
NET ASSET VALUE AND REDEMPTION PRICE
PER INVESTOR A SHARE ($42,119,590 (DIVIDE) 2,150,939) ....... $19.58
======
MAXIMUM OFFERING PRICE PER INVESTOR A SHARE
($19.58 (DIVIDE) .955) ...................................... $20.50
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent
deferred sales charge of 4.5%)
PER INVESTOR B SHARE ($21,899,314 (DIVIDE) 1,141,569) ....... $19.18
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent
deferred sales charge of 1.0%)
PER INVESTOR C SHARE ($5,603,382 (DIVIDE) 292,098) .......... $19.18
======
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
29
<PAGE>
LOGO [GRAPHIC OMITTED] BLACKROCK FUNDS
SCHEDULE OF INVESTMENTS
SMALL CAP GROWTH EQUITY PORTFOLIO
NUMBER
AS OF MARCH 31, 1998 (UNAUDITED) OF SHARES VALUE
--------- ------------
COMMON STOCKS -- 90.6%
AEROSPACE -- 0.2%
Kellstrom Industries, Inc.** 72,900 $ 1,836,169
-----------
BANKS -- 0.2%
Investors Financial Service Co. 41,500 2,282,500
-----------
BUSINESS SERVICES -- 13.6%
Abacus Direct Corp.** 160,500 8,386,125
#Accustaff, Inc.** 123,500 4,260,750
#Apollo Group, Inc.** 166,225 7,999,578
#Applied Graphics Technologies,
Inc.** 135,550 6,523,344
#Billing Information Concepts
Corp.** 109,000 2,827,187
CCC Information Services
Group, Inc.** 85,100 2,340,250
Complete Business Solutions, Inc.** 235,000 8,430,625
#Compx International, Inc.** 44,600 1,042,525
Cotelligent GP ** 46,600 1,380,525
Documentum, Inc.** 101,100 5,472,037
DSET Corp.** 23,200 433,550
Edify Corp.** 47,700 962,944
Engineering Animation, Inc.** 164,550 6,828,825
#Envoy Corp.** 87,800 3,775,400
First Consulting Group** 141,900 2,926,687
Fundtech Ltd.** 46,000 828,000
Hagler Bailly, Inc.** 103,100 2,577,500
Inspire Insurance Solutions, Inc.** 124,400 4,136,300
International Network Services** 100,000 2,925,000
International Telecommunications
Data Systems, Inc.** 163,050 4,259,681
ISS Group, Inc.** 22,700 882,462
Medical Manager Corp.** 111,300 3,227,700
MEMCO Software Ltd.** 42,600 1,331,250
Pre-Paid Legal Services, Inc.** 396,900 14,089,950
Quintiles Transnational Corp.** 214,800 10,350,675
Robert Half International, Inc.** 314,750 15,108,000
SPR, Inc.** 44,100 1,455,300
-----------
124,762,170
-----------
COMPUTER & OFFICE EQUIPMENT -- 6.4%
Aeroflex, Inc.** 69,500 920,875
#Affiliated Computer Services, Inc.** 66,400 2,203,650
AXENT Technologies, Inc. ** 67,100 2,046,550
#Computer Manangement Sciences,
Inc.** 105,200 2,912,725
Compuware Corp.** 13,900 686,312
Genesys Telecommuncations
Laboratories, Inc.** 50,000 1,900,000
Hyperion Software Corp.** 210,300 9,305,775
IDX Systems Corp.** 168,700 7,338,450
Legato Systems, Inc.** 77,300 4,589,687
Micros Systems, Inc.** 28,000 1,683,500
MTI Technology Corp.** 44,200 762,450
Natural Microsystems Corp.** 13,600 538,900
#Sapient Corp.** 109,200 5,173,350
SS&C Technologies, Inc.** 66,100 1,115,437
STB Systems, Inc.** 67,100 1,342,000
Touchstone Software Corp.** 758 1,705
Transition Systems, Inc.** 42,900 874,087
VERITAS Software Corp.** 162,650 9,616,681
Visio Corp.** 127,500 5,482,500
Walker Interactive Systems, Inc.** 44,700 874,444
-----------
59,369,078
-----------
NUMBER
OF SHARES VALUE
---------- --------------
COMPUTER SOFTWARE & SERVICES -- 13.8%
Aspect Development, Inc.** 172,500 $ 9,465,937
Cambridge Technology Partners,
Inc.** 286,200 14,184,787
CBT Group PLC ADR ** 374,400 19,375,200
Datastream Systems, Inc. ** 206,800 4,575,450
Flexiinternational Software, Inc.** 44,300 553,750
IDT Corp.** 166,300 6,236,250
Industri-Matematik International
Corp.** 274,300 8,606,162
Information Management
Resources, Inc.** 98,700 5,810,962
Jack Henry & Associates, Inc. 101,100 3,639,600
JDA Software Group, Inc.** 189,300 10,056,562
Manugistics Group, Inc.** 157,100 8,807,419
Mastech Corp.** 101,900 5,193,716
Mercury Interactive Corp.** 227,200 8,292,800
Smallworldwide PLC ADR** 17,300 337,350
#Sylvan Learning Systems, Inc.** 186,800 8,802,950
Whittman-Hart, Inc.** 289,800 13,113,450
-----------
127,052,345
-----------
CONSTRUCTION -- 1.6%
Morrison Knudsen Corp.** 162 830
Oakwood Homes Corp. 309,600 11,339,100
Platinum Software Corp.** 138,300 3,215,475
-----------
14,555,405
-----------
DURABLE GOODS -- 0.3%
Advance Lighting Technologies,
Inc.** 107,300 2,776,387
-----------
ELECTRONICS -- 2.1%
Aavid Thermal Technologies** 61,400 1,895,725
Burr-Brown Corp.** 58,950 1,473,750
Cable Design Technologies, Inc.** 81,900 2,467,237
California Micro Devices Corp.** 776 4,704
Galileo Technology Ltd.** 55,700 1,573,525
QLogic Corp.** 48,200 1,711,100
Sipex Corp.** 68,400 2,257,200
Vitesse Semiconductor Corp.** 165,700 7,813,791
-----------
19,197,032
-----------
ENTERTAINMENT & LEISURE -- 3.8%
Capstar Hotel Co.** 265,100 9,195,656
Championship Auto Racing
Teams, Inc.** 22,900 423,650
Cinar Films, Inc. Class B** 150,400 6,410,800
Dover Downs Entertainment, Inc. 77,000 2,271,500
#Family Golf Centers, Inc.** 120,000 4,860,000
#Speedway Motorsports, Inc.** 259,200 6,949,800
Steiner Leisure Ltd.** 57,800 2,936,962
#The North Face, Inc.** 94,400 2,289,200
-----------
35,337,568
-----------
FINANCE -- 0.7%
NCO Group, Inc.** 140,750 3,518,750
#Res-Care, Inc.** 87,400 3,255,650
-----------
6,774,400
-----------
FOOD & AGRICULTURE -- 3.2%
American Italian Pasta Co.** 160,100 5,783,613
#Beringer Wine Estates Holdings,
Inc.** 57,400 2,963,275
Gardenburger, Inc.** 40,100 546,363
#Whole Foods Market, Inc.** 189,800 13,238,550
Wild Oats Markets, Inc.** 197,250 7,027,031
-----------
29,558,832
-----------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
30
<PAGE>
BLACKROCK FUNDS LOGO [GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
SMALL CAP GROWTH EQUITY PORTFOLIO (CONTINUED)
NUMBER
AS OF MARCH 31, 1998 (UNAUDITED) OF SHARES VALUE
--------- ------------
COMMON STOCKS (CONTINUED)
INSURANCE -- 0.7%
Vesta Insurance Group, Inc. 114,600 $ 6,145,425
-----------
MEDICAL & MEDICAL SERVICES -- 8.3%
American Oncology Resources,
Inc.** 265,300 4,045,825
ATL Ultrasound, Inc.** 91,900 4,675,413
#Concentra Managed Care, Inc.** 243,479 7,486,979
IMPATH, Inc.** 89,200 3,411,900
National Surgery Centers, Inc.** 241,150 6,164,397
#Orthodontic Centers of America,
Inc.** 353,600 7,668,700
Patterson Dental Co.** 100,800 3,124,800
Province Healthcare Co.** 109,100 2,863,875
#Qiagen NV** 67,800 4,525,650
Renal Care Group, Inc.** 75,350 2,863,300
Serologicals Corp.** 174,850 4,939,513
#Sunrise Assisted Living, Inc.** 223,300 9,992,675
Theragenics Corp.** 226,600 14,431,588
-----------
76,194,615
-----------
MEDICAL INSTRUMENTS & SUPPLIES -- 3.0%
Hanger Orthopedic Group, Inc.** 175,900 2,957,320
#Sabratek Corp.** 191,300 6,695,500
#Safeskin Corp.** 212,200 15,676,275
Ventana Medical Systems, Inc.** 77,900 2,074,089
-----------
27,403,184
-----------
MOTOR VEHICLES -- 0.5%
Keystone Automotive Industries,
Inc.** 176,300 4,209,164
-----------
OIL & GAS -- 4.4%
Atwood Oceanics, Inc.** 193,400 10,455,689
Core Laboratories NV** 488,800 11,914,500
Global Industries Ltd.** 266,100 5,421,789
Marine Drilling Companies, Inc.** 207,700 4,491,514
Petroleum Geo-Services ADR** 132,300 7,855,314
-----------
40,138,806
-----------
PERSONAL SERVICES -- 1.1%
Bright Horizons, Inc.** 41,200 1,050,600
Brookdale Living Communities,
Inc.** 76,300 1,926,575
#CareMatrix Corp.** 83,800 2,576,850
DeVry, Inc.** 122,000 4,170,875
-----------
9,724,900
-----------
PHARMACEUTICALS -- 1.7%
1-800-Contacts, Inc.** 70,000 1,391,250
Incyte Pharmaceuticals, Inc.** 199,800 9,340,650
#Rexall Sundown, Inc.** 65,200 2,220,875
Shire Pharmaceuticals Group** 141,000 3,022,689
-----------
15,975,464
-----------
REAL ESTATE -- 0.7%
Vistana, Inc.** 238,000 6,307,000
-----------
NUMBER
OF SHARES VALUE
---------- --------------
RESTAURANTS -- 3.1%
CKE Restaurants, Inc. 304,380 $ 11,185,965
Papa John's International, Inc.** 379,575 14,566,192
The Cheesecake Factory** 84,400 2,811,575
-----------
28,563,732
-----------
RETAIL MERCHANDISING -- 6.6%
Action Performance Co., Inc.** 244,500 8,603,344
#American Eagle Outfitters, Inc.** 46,500 2,046,000
Central Garden & Pet Co.** 50,600 1,976,563
#dELiA*s, Inc.** 162,500 3,900,000
Fossil, Inc.** 178,900 5,791,888
Hancock Fabrics, Inc. 148,900 2,317,256
#Hot Topic, Inc.** 66,500 1,862,000
Linens 'N Things, Inc.** 316,300 17,376,731
Pacific Sunwear of California** 203,750 8,455,625
Strayer Education, Inc. 170,200 5,659,150
The Wet Seal, Inc. Class A** 80,500 3,043,906
-----------
61,032,463
-----------
SANITARY SERVICES -- 2.8%
American Disposal Services, Inc.** 266,600 10,064,150
Eastern Environmental Services,
Inc.** 237,500 6,026,563
Superior Services, Inc.** 302,300 9,427,981
-----------
25,518,694
-----------
SOCIAL SERVICES -- 1.7%
#Ciber, Inc.** 226,700 15,854,831
-----------
TELECOMMUNICATIONS -- 8.8%
Geotel Communications Corp.** 65,300 1,803,914
Inter-Tel, Inc. 96,300 2,594,082
Mecklermedia Corp.** 88,700 2,139,888
Nice Systems Ltd.** 153,000 7,038,000
Pacific Gateway Exchange, Inc.** 227,500 13,024,375
Saville Systems Ireland PLC** 427,800 21,924,750
#Smartalk Teleservices, Inc.** 181,700 5,803,045
#Star Telecommunications, Inc.** 255,300 14,201,063
Tekelec** 145,800 6,615,675
#Tel-Save Holdings, Inc.** 268,400 6,106,100
-----------
81,250,892
-----------
TEXTILES -- 0.4%
#Ashworth, Inc.** 167,200 2,863,300
Columbia Sportswear ** 20,300 428,838
-----------
3,292,138
-----------
TRANSPORTATION -- 0.9%
#Coach USA, Inc.** 200,000 8,700,000
-----------
TOTAL COMMON STOCKS
(Cost $606,315,432) 833,813,194
-----------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
31
<PAGE>
LOGO [GRAPHIC OMITTED] BLACKROCK FUNDS
SCHEDULE OF INVESTMENTS
SMALL CAP GROWTH EQUITY PORTFOLIO (CONCLUDED)
PAR
MATURITY (000) VALUE
---------- ---------- ------------
CORPORATE BONDS -- 0.3%
Speedway Motorsports, Inc.
5.75% 09/30/03 $2,300 $ 2,544,375
(Cost $2,300,000) ------------
SHORT TERM INVESTMENTS -- 9.1%
Federal Home Loan Mortgage
Corp. Discount Notes
5.90% 04/01/98 71,540 71,540,000
Smith Barney Money Market Fund 11,435 11,435,374
U.S. Treasury Bills
5.02% 06/18/98 1,100*** 1,087,918
------------
TOTAL SHORT TERM INVESTMENTS
(Cost $84,063,398) 84,063,292
------------
TOTAL INVESTMENTS IN
SECURITIES--100.0%
(Cost $692,678,830*) $920,420,861
============
- ----------------
* Also cost for Federal income tax purposes. The gross unrealized
appreciation (depreciation) on a tax basis is as follows:
Gross unrealized appreciation $231,842,577
Gross unrealized depreciation (4,100,546)
------------
$227,742,031
============
** Non-income producing security.
*** Principal amount of securities pledged as initial margin requirement of
$1,060,000 on 130 Standard & Poor's 500 Stock Index futures contracts
expiring June 1998. The value of such contracts on March 31, 1998 was
$36,091,250, thereby resulting in an unrealized gain of $1,115,000.
# Total or partial securities on loan.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
32
<PAGE>
BLACKROCK FUNDS LOGO [GRAPHIC OMITTED]
STATEMENT OF ASSETS AND LIABILITIES
SMALL CAP GROWTH EQUITY PORTFOLIO
MARCH 31, 1998 (UNAUDITED)
ASSETS
Investments at value (Cost $692,678,830) ................... $ 920,420,861
Collateral received for securities loaned .................. 142,545,770
Dividends receivable ....................................... 15,853
Interest receivable ........................................ 121,908
Investments sold receivable ................................ 19,697,991
Capital shares sold receivable ............................. 541,974
Futures margin receivable .................................. 80,000
Prepaid expenses ........................................... 56,512
--------------
TOTAL ASSETS ........................................ 1,083,480,869
--------------
LIABILITIES
Payable upon return of securities loaned ................... 142,545,770
Investments purchased payable .............................. 7,552,711
Capital shares redeemed payable ............................ 472,033
Accrued expenses payable ................................... 914,139
--------------
TOTAL LIABILITIES ................................... 151,484,653
--------------
NET ASSETS (Applicable to 25,201,033 Institutional
shares, 10,954,640 Service shares, 2,725,225
Investor A shares, 2,223,050 Investor B shares
and 721,995 Investor C shares outstanding) ................. $ 931,996,216
==============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER INSTITUTIONAL SHARE ($565,414,216 (DIVIDE) 25,201,033) . $22.44
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER SERVICE SHARE ($243,052,869 (DIVIDE) 10,954,640) ....... $22.19
======
NET ASSET VALUE AND REDEMPTION PRICE
PER INVESTOR A SHARE ($59,949,091 (DIVIDE) 2,725,225) ...... $22.00
======
MAXIMUM OFFERING PRICE PER INVESTOR A SHARE
($22.00 (DIVIDE) .955) ..................................... $23.04
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent
deferred sales charge of 4.5%)
PER INVESTOR B SHARE ($47,993,265 (DIVIDE) 2,223,050) ...... $21.59
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent
deferred sales charge of 1.0%)
PER INVESTOR C SHARE ($15,586,775 (DIVIDE) 721,995) ........ $21.59
======
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
33
<PAGE>
LOGO [GRAPHIC OMITTED] BLACKROCK FUNDS
STATEMENT OF NET ASSETS
INTERNATIONAL EQUITY PORTFOLIO
NUMBER
AS OF MARCH 31, 1998 (UNAUDITED) OF SHARES VALUE
--------- ------------
COMMON STOCKS -- 97.0%
AUSTRALIA -- 1.7%
Australia & New Zealand Banking
Group Ltd. 670,000 $ 4,487,604
M.I.M. Holdings Ltd. 2,610,000 1,523,146
News Corp. Ltd. 535,000 3,537,262
Telstra Corp. 863,000 2,226,275
-----------
11,774,287
-----------
AUSTRIA -- 0.3%
Voest Alpine Stahl AG 45,750 2,004,304
-----------
DENMARK -- 0.5%
Den Danske Bank AB 28,000 3,659,579
-----------
FRANCE -- 9.8%
Axa SA 176,550 18,180,203
Dexia France 49,400 6,617,826
Michelin (C.G.D.E.) Class B 150,000 8,955,419
SGS-Thomson Microelectronics** 49,250 3,870,404
Societe Generale 65,550 13,119,120
Total SA 82,250 9,876,866
Usinor Sacilor 379,000 6,337,373
-----------
66,957,211
-----------
GERMANY -- 7.8%
Commerzbank AG 326,500 11,828,815
Deutsche Bank AG 75,000 5,622,952
MAN AG 18,900 6,290,325
Mannesmann AG 22,500 16,278,781
Veba AG 142,125 10,132,902
Volkswagen AG 4,500 3,523,419
Volkswagen AG-Rights** 4,500 81,759
-----------
53,758,953
-----------
ITALY -- 5.2%
Burgo Cartiere SpA 465,000 4,132,493
ENI SpA** 954,000 6,500,011
Telecom Italia Mobile SpA 1,950,000 10,478,115
Telecom Italia SpA 1,815,000 14,302,975
-----------
35,413,594
-----------
JAPAN -- 16.7%
Bridgestone Corp. 298,000 6,748,802
Eisai Co. Ltd. 209,000 2,868,143
Fuji Photo Film Co. 225,000 8,368,887
Hitachi Cable Ltd. 271,000 1,585,139
Hitachi Ltd. 952,000 6,924,879
Ito-Yokado Co. Ltd. 115,000 6,226,422
Komori Corp. 264,000 4,197,042
Kuraray Co. Ltd. 396,000 3,474,438
Mabuchi Motors Co. Ltd. 93,000 5,160,813
Matsushita Electric Industrial Co. 354,000 5,680,944
Mitsui Fudosan Co. Ltd. 501,000 4,771,390
Nintendo Co. Ltd. 14,300 1,233,211
Nippon Telegraph & Telephone
Corp. 4,930 4,103,679
Ricoh Co. 464,000 4,662,580
Ryohin Keikaku Co. 55,000 4,248,185
Sanwa Bank Ltd. 446,000 3,980,021
Seventy-Seven Bank Ltd. 60,000 512,932
Shin-Etsu Chemical Co. 300,000 5,939,210
Shiseido Co. Ltd. 369,000 4,233,712
NUMBER
OF SHARES VALUE
---------- --------------
JAPAN (CONTINUED)
Sony Corp. 52,000 $ 4,406,414
Sumitomo Marine & Fire
Insurance Co. 1,123,000 6,939,217
Sumitomo Trust & Banking 682,000 4,403,429
Suzuki Motor Co. Ltd. 767,000 7,189,669
Takeda Chemical Industries 142,000 3,609,870
Tsubaki Nakashima Co. Ltd. 250,000 1,141,723
Yamanashi Chuo Bank 388,000 1,949,441
------------
114,560,192
------------
MALAYSIA -- 1.6%
Genting Berhad 1,170,000 4,017,956
Malayan Banking Berhad 1,043,000 4,011,638
Tenaga Nasional Berhad 1,226,000 3,098,758
------------
11,128,352
------------
NETHERLANDS -- 5.6%
Internationale Nederlanden
Groep NV 211,097 11,979,189
Philips Electronics NV 135,000 9,907,995
Vendex International NV 115,000 7,281,693
Verenigde Nederlandse
Uitgeversbedrijven Verenigd
Bezit NV 280,000 9,576,530
------------
38,745,407
------------
NORWAY -- 0.4%
Petroleum Geo-Services ASA** 49,050 2,862,954
------------
SINGAPORE -- 2.8%
DBS Land Ltd. 1,483,000 2,506,944
Development Bank of Singapore Ltd. 715,000 5,224,310
Development Bank of
Singapore-Rights Ltd.** 130,000 265,643
Singapore Press Holdings 574,200 6,577,727
United Overseas Bank Ltd. 880,000 4,876,931
------------
19,451,555
------------
SPAIN -- 5.9%
Banco de Santander 360,000 17,930,030
Corporacion Bancaria de
Espana SA 28,500 2,359,717
Repsol SA 100,000 5,101,575
Telefonica de Espana ADR 60,000 7,935,000
Telefonica de Espana SA 165,000 7,272,133
------------
40,598,455
------------
SWEDEN -- 1.6%
Sparbanken Sverige AB 340,000 11,206,777
------------
SWITZERLAND -- 9.4%
Baloise Holding Ltd. 4,186 8,553,336
Credit Suisse Group 51,200 10,243,493
Nestle SA 4,250 8,120,966
Novartis Ltd. 7,300 12,919,422
Roche Holding AG 1,285 13,908,021
Schweizerische Bankgesellschaft 32,500 10,606,076
------------
64,351,314
------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
34
<PAGE>
BLACKROCK FUNDS LOGO [GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
INTERNATIONAL EQUITY PORTFOLIO (CONCLUDED)
NUMBER
AS OF MARCH 31, 1998 (UNAUDITED) OF SHARES VALUE
--------- ------------
COMMON STOCKS (CONTINUED)
UNITED KINGDOM -- 27.7%
Abbey National PLC 330,000 $ 6,393,752
Asda Group PLC 1,920,000 6,502,768
Barclays PLC 270,000 8,093,293
BBA Group PLC 410,000 3,055,289
BG PLC 1,050,000 5,450,790
Boots Co. PLC 275,000 4,407,102
British Aerospace PLC 150,000 4,943,390
British Petroleum Co. PLC 689,373 9,951,076
British Telecommunications PLC 670,000 7,292,839
Bryant Group PLC 1,140,000 2,701,281
Cadbury Schweppes PLC 380,000 5,275,293
Diageo PLC 629,840 7,414,708
General Electric Co., PLC 430,000 3,405,949
Glaxo Wellcome PLC 479,500 12,903,662
Granada Group PLC 310,000 5,575,380
HSBC Holdings PLC 325,000 10,601,829
Jarvis Hotels PLC** 1,100,000 3,113,063
Kingfisher PLC 235,000 4,403,586
Land Securities PLC 350,000 6,288,923
Limelight Group PLC** 1,100,000 515,774
Lloyds TSB PLC 900,000 14,001,247
National Grid PLC 885,500 5,234,459
NFC PLC 1,060,000 3,203,993
Norwich Union PLC** 460,000 3,574,245
Prudential Corp. PLC 425,000 6,248,733
Royal & Sun Alliance Insurance
Group PLC 445,000 5,670,915
Rubicon Group PLC 1,065,000 3,789,806
Smithkline Beecham PLC 825,000 10,430,602
Soco International PLC** 180,000 860,572
Unilever PLC 620,000 5,866,089
Whitbread PLC 350,000 6,593,698
Yorkshire Water PLC 596,476 5,228,994
------------
188,993,100
------------
TOTAL COMMON STOCKS
(Cost $527,203,436) 665,466,034
------------
PREFERRED STOCKS -- 1.2%
GEA AG Non Voting 22,900 8,420,301
(Cost $7,076,430) ------------
TOTAL INVESTMENTS IN SECURITIES
(Cost $534,279,866*) 98.2% 673,886,335
VALUE
------------
OTHER ASSETS IN EXCESS OF
LIABILITIES 1.8% $ 12,255,964
------ ------------
NET ASSETS (Applicable to 28,254,145
Institutional shares, 14,384,973
Service shares, 1,462,408 Investor A
shares, 467,280 Investor B shares
and 19,614 Investor C shares
outstanding) 100.0% $686,142,299
====== ============
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
INSTITUTIONAL SHARE
($435,502,968 (DIVIDE) 28,254,145) $15.41
======
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
SERVICE SHARE
($220,797,238 (DIVIDE) 14,384,973) $15.35
======
NET ASSET VALUE AND
REDEMPTION PRICE PER
INVESTOR A SHARE
($22,456,182 (DIVIDE) 1,462,408) $15.36
======
MAXIMUM OFFERING PRICE
PER INVESTOR A SHARE
($15.36 (DIVIDE) .95) $16.17
======
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
(SUBJECT TO A MAXIMUM CONTINGENT
DEFERRED SALES CHARGE OF 4.5%)
PER INVESTOR B SHARE
($7,088,407 (DIVIDE) 467,280) $15.17
======
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
(SUBJECT TO A MAXIMUM CONTINGENT
DEFERRED SALES CHARGE OF 1.0%)
PER INVESTOR C SHARE
($297,504 (DIVIDE) 19,614) $15.17
======
- -----------------
* Also cost for Federal income tax purposes. The gross unrealized
appreciation (depreciation) on a tax basis is as follows:
Gross unrealized appreciation $171,945,378
Gross unrealized depreciation (32,338,909)
------------
$139,606,469
============
** Non-income producing security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
35
<PAGE>
LOGO [GRAPHIC OMITTED] BLACKROCK FUNDS
STATEMENT OF NET ASSETS
INTERNATIONAL SMALL CAP EQUITY PORTFOLIO
NUMBER
AS OF MARCH 31, 1998 (UNAUDITED) OF SHARES VALUE
--------- ------------
COMMON STOCKS -- 92.8%
EGYPT -- 2.3%
Paints & Chemical-GDR 40,000 $ 467,200
----------
FINLAND -- 1.5%
Asko OYJ 16,500 302,512
----------
FRANCE -- 6.8%
Entrelec** 4,000 218,087
Isis** 2,233 248,324
Labinal SA 1,000 337,493
Moulinex** 8,000 198,848
Societe Manutan 2,200 192,811
Vallourec SA 2,500 197,718
----------
1,393,281
----------
GERMANY -- 6.6%
Koenig & Bauer-Albert AG 2,500 364,995
Quante AG 1,200 274,476
Rofin-Sinar Technologies AG** 15,000 286,318
Schaltbau AG 2,000 205,479
Tarkett AG 7,500 220,214
----------
1,351,482
----------
HONG KONG -- 1.1%
Beijing North Star Co., Ltd.** 350,000 93,733
First Tractor Co., Ltd.** 110,000 75,245
Yanzhou Coal Mining Co., Ltd. 152,000 47,867
----------
216,845
----------
INDIA -- 0.2%
Industrial Credit & Investment Corp.
of India Ltd. 3,000 46,125
----------
ITALY -- 3.8%
Autogrill SpA** 30,000 214,771
Banca Popolare di Bergamo SpA 7,500 171,570
Ciga SpA** 200,000 215,594
Reno Medici SpA** 50,000 177,193
----------
779,128
----------
JAPAN -- 9.2%
Bank of Iwate Ltd. 3,000 155,004
Daiwa Industries Ltd. 24,000 112,665
Denny's Japan Co. Ltd. 6,000 137,232
Exedy Corp. 17,000 102,241
Fuji Machine Mfg. Co. 4,000 105,886
Horiba Ltd. 14,000 151,180
Kansai Sekiwa Real Estate 28,000 94,487
Matsumotokiyoshi 4,000 140,981
Nichicon Corp. 13,000 145,256
Nippon Cable System 15,000 101,237
Nippon Denwa Shisetsu Co. 27,000 113,182
Plenus Co. Ltd. 4,400 86,449
Rinnai Corp. 9,000 141,731
Toppan Forms Co. Ltd. 7,000 75,065
Trusco Nakayama Corp. 9,000 121,484
World Co. Ltd. 4,000 92,988
----------
1,877,068
----------
NETHERLANDS -- 8.1%
Aalberts Industries NV 10,000 305,562
Atag Holding NV 2,000 123,280
Copaco NV** 17,500 214,062
GTI Holdings NV 10,000 347,775
Hunter Douglas NV 7,500 341,779
NBM-Amstelland NV 10,000 310,839
----------
1,643,297
----------
NUMBER
OF SHARES VALUE
---------- --------------
NORWAY -- 1.1%
NCL Holdings ASA** 50,000 $ 226,914
----------
SINGAPORE -- 1.1%
Elec & Eltek International Co. Ltd. 18,000 107,100
GP Batteries International Ltd. 31,000 101,737
----------
208,837
----------
SPAIN -- 6.5%
Adolfo Dominguez SA** 8,000 271,574
Aldeasa SA 7,000 247,882
Campofrio Alimentacion SA 1,000 85,090
Corp. Financiera Reunida SA** 30,000 251,257
Grupo Acciona SA 1,000 201,261
Prosegur, Cia de Seguridad SA 20,000 257,308
----------
1,314,372
----------
SWEDEN -- 1.0%
Getinge Industrier AB 10,000 192,013
----------
SWITZERLAND -- 4.9%
Disetronic Holding AG 75 217,943
Kuoni Reisen AG 75 376,358
Sika Finanz AG 1,000 398,825
----------
993,126
----------
UNITED KINGDOM -- 38.6%
Aea Technology PLC 30,000 371,005
Anglo Irish Bank Corp. PLC 150,000 351,664
Avon Rubber PLC 30,000 337,849
BCH Group PLC 100,000 389,342
Bovis Homes Group PLC** 50,000 219,371
Britax International PLC 75,000 199,067
Delphi Group PLC 25,000 321,940
Eldridge Pope & Co. PLC 25,000 134,177
Filtronic Comtek PLC 20,000 170,976
Henly's Group PLC 25,000 214,975
Hicking Pentecost PLC 60,000 252,696
Jarvis Hotels PLC 100,000 283,006
Jarvis PLC 25,000 267,516
JBA Holdings PLC 15,000 152,220
Marchpole Holdings PLC** 100,000 165,784
Monsoon PLC** 80,000 265,925
Old English Pub Co. PLC 40,000 249,514
Perkins Foods PLC 100,000 234,443
Peter Black Holdings PLC 40,000 277,312
Pressac Holdings PLC 50,000 250,770
Save Group PLC 100,000 164,947
SGB Group PLC** 75,000 270,028
Skillgroup PLC 85,000 363,679
T & S Stores PLC 80,000 354,343
The Dialog Corp PLC** 100,000 280,494
The Mayflower Corp. PLC 60,000 214,515
TLG PLC 150,000 242,397
Transtec PLC 175,000 253,491
Vardon PLC 100,000 312,311
Wyko Group PLC 125,000 317,125
----------
7,882,882
----------
TOTAL COMMON STOCKS
(Cost $17,411,265) 18,895,082
----------
PREFERRED STOCKS -- 1.4%
GEA AG Non Voting 750 275,774
(Cost $256,683) ----------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
36
<PAGE>
BLACKROCK FUNDS LOGO [GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
INTERNATIONAL SMALL CAP EQUITY PORTFOLIO (CONCLUDED)
PAR
AS OF MARCH 31, 1998 (UNAUDITED) MATURITY (000) VALUE
-------- --------- ------------
SHORT TERM INVESTMENTS -- 5.0%
Federal Home Loan Mortgage Corp.
Discount Notes
5.90% 04/01/98 $1,020 $ 1,020,000
(Cost $1,020,000) -----------
TOTAL INVESTMENTS IN SECURITIES
(Cost $18,687,948*) 99.2% 20,190,856
OTHER ASSETS IN EXCESS OF
LIABILITIES 0.8% 162,056
------ ----------
NET ASSETS (Applicable to 1,494,508
Institutional shares, 28,738
Service shares, 77,460 Investor A
shares, 164,433 Investor B shares
and 33,291 Investor C shares
outstanding) 100.0% $20,352,912
====== ===========
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
INSTITUTIONAL SHARE
($16,918,392 (DIVIDE) 1,494,508) $11.32
======
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
SERVICE SHARE
($324,937 (DIVIDE) 28,738) $11.31
======
NET ASSET VALUE AND
REDEMPTION PRICE PER
INVESTOR A SHARE
($877,012 (DIVIDE) 77,460) $11.32
======
MAXIMUM OFFERING PRICE
PER INVESTOR A SHARE
($11.32 (DIVIDE) .95) $11.92
======
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
(SUBJECT TO A MAXIMUM CONTINGENT
DEFERRED SALES CHARGE OF 4.5%)
PER INVESTOR B SHARE
($1,856,677 (DIVIDE) 164,433) $11.29
======
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
(SUBJECT TO A MAXIMUM CONTINGENT
DEFERRED SALES CHARGE OF 1.0%)
PER INVESTOR C SHARE
($375,894 (DIVIDE) 33,291) $11.29
======
- ------------------
* Also cost for Federal income tax purposes. The gross unrealized
appreciation (depreciation) on a tax basis is as follows:
Gross unrealized appreciation $2,454,780
Gross unrealized depreciation (951,872)
----------
$1,502,908
==========
** Non-income producing security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
37
<PAGE>
LOGO [GRAPHIC OMITTED] BLACKROCK FUNDS
SCHEDULE OF INVESTMENTS
INTERNATIONAL EMERGING MARKETS PORTFOLIO
NUMBER
AS OF MARCH 31, 1998 (UNAUDITED) OF SHARES VALUE
--------- ------------
COMMON STOCKS -- 84.7%
ARGENTINA -- 3.3%
Banco Rio de la Plata SA - ADR** 97,000 $ 1,212,500
Inversiones y Respresentacion SA 416,666 1,575,218
Siderca SA - A 294,905 784,557
YPF Sociedad Anonima - ADR - D 45,000 1,530,000
----------
5,102,275
----------
BRAZIL -- 12.5%
Centrais Electricas de Santa
Catarina - GDR (Reg. S) 27,000 3,229,875
Companhia de Saneamento Basico
do Estado de Sao Paulo 16,200,000 3,718,712
Iochpe Maxion SA - ADR** 130,000 242,944
#Multicanal Participacoes
SA - ADR** 140,000 691,250
Petroleo Brasileiro Option SA** 6,430,000 39,585
Telecomunicacoes Brasileiros
SA - Telebras 74,300,000 7,677,983
Uniao de Bancos Brasileiros
SA - GDR 100,000 3,625,000
----------
19,225,349
----------
CHILE -- 5.7%
#Banco Santiago SA - ADR 100,000 2,250,000
#Chilgener SA - ADR 74,475 1,792,055
Cristalerias de Chile SA - ADR 88,500 1,216,875
#Enersis SA - ADR 54,500 1,720,156
Maderas y Sinteticos Sociedad
Anonima SA - ADR 125,000 1,289,063
Santa Isabel SA - ADR 23,928 435,191
----------
8,703,340
----------
CHINA -- 3.6%
First Tractor Co. Ltd. - H** 2,390,000 1,634,861
Guangdong Kelon Electric
Holding - H 1,350,000 1,568,135
Heilongjiang Electric Power Co.
Ltd. - B 1,650,000 1,244,100
Inner Mongolia Erdos Cashmere
Products Co. Ltd. - B 40,000 12,720
Shenzhen Chiwan Wharf Holdings
Ltd. - B 1,300,000 345,635
Wuxi Little Swan Co. Ltd. - B 700,000 717,341
----------
5,522,792
----------
COLOMBIA -- 0.4%
#Banco Industrial Colombian SA -
ADR 45,000 517,500
----------
EGYPT -- 4.9%
MISR International Bank - GDR
(Reg. S)** 200,000 2,730,000
Olympic Group Financial
Investments Co.** 374,182 1,735,716
Paints & Chemical Industries
SA. - GDR 173,000 2,019,775
Suez Cement Co. - GDR (Reg. S) 45,000 974,250
----------
7,459,741
----------
GREECE -- 0.2%
Michaniki SA - (Reg D.) 72,000 354,629
----------
HONG KONG -- 2.0%
Bengang Steel Plates Co. Ltd. -
B** 6,200,000 1,304,327
China Telecom Ltd.** 560,000 1,134,736
YGM Trading Ltd. 900,000 545,943
----------
2,985,006
----------
NUMBER
OF SHARES VALUE
---------- --------------
HUNGARY -- 1.1%
Danubius Hotel & Spa** 26,950 $ 707,553
Pannonplast Muanyagipari 23,734 966,391
----------
1,673,944
----------
INDIA -- 6.2%
Gujarat Ambuja Cements Ltd. -
GDR 100,000 618,750
Hindalco Industries Ltd. - GDR
(Reg. 144A) 40,000 710,000
Industrial Credit & Investment Corp.
of India Ltd. - GDR (Reg. S) 130,000 1,998,750
Reliance Industries Ltd. - GDR 144,000 1,202,400
State Bank of India Ltd. - GDR
(Reg. S) 88,000 1,556,500
Tata Engineering & Locomotive Co.
Ltd. - GDR (Reg. S) 269,000 2,071,300
Videsh Sanchar Nigam Co. Ltd. -
GDR (Reg. S)** 103,000 1,287,500
----------
9,445,200
----------
INDONESIA -- 1.2%
PT Hanjaya Mandala Sampoerna 750,000 680,654
PT Indah Kiat Pulp & Paper** 2,224,887 553,022
PT Ramayana Lestari Sentosa 350,000 221,538
PT Telekomunikasi Indonesia 620,000 295,673
----------
1,750,887
----------
ISRAEL -- 4.1%
Blue Square Chain Stores Properties
& Investments** 60,000 661,246
#Blue Square Ltd. - ADR 100,000 1,337,500
Makhteshim Chemical Works Ltd.** 92,322 791,927
#Magyar Tavkozlesi RT ADR** 110,000 3,423,750
----------
6,214,423
----------
KOREA -- 0.9%
Korea Electric Power Corp. 110,000 1,429,645
----------
MALAYSIA -- 2.0%
Genting Berhad 465,000 1,596,880
Malayan Banking Berhad 210,000 807,712
Tenaga Nasional Berhad 246,000 621,774
----------
3,026,366
----------
MEXICO -- 10.1%
Altos Hornos de Mexico SA** 575,000 969,131
Apasco SA - ADR 60,000 1,813,848
Cementos de Mexico SA - CPO** 520,000 2,316,197
Consorcio G Grupo Dina SA** 213,000 255,000
Corporacion Geo SA - B** 199,400 1,308,270
Fomento Economico Mexicano
SA - B 170,000 1,231,103
Grupo Cementos de Chihuahua
SA - B 2,000,000 1,929,577
Grupo Financiero Banorte
SA - B** 402,500 651,937
Sanluis Corporacion
SA - B - CPO 110,000 556,455
#Telefonos de Mexico SA - ADR 80,000 4,510,000
----------
15,541,518
----------
PAKISTAN -- 0.7%
Engro Chemical Ltd. 200,000 462,049
Muslim Commercial Bank Ltd.** 967,000 657,060
----------
1,119,109
----------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
38
<PAGE>
BLACKROCK FUNDS LOGO [GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
INTERNATIONAL EMERGING MARKETS PORTFOLIO (CONCLUDED)
NUMBER
AS OF MARCH 31, 1998 (UNAUDITED) OF SHARES VALUE
--------- ------------
COMMON STOCKS (CONTINUED)
PERU -- 2.5%
Banco Wiese - ADR 60,000 $ 330,000
#CPT Telefonica del Peru
SA - B - ADR 100,000 2,156,250
Luz del Sur SA - ADR (Reg. S) 86,000 1,373,850
------------
3,860,100
------------
PHILIPPINES -- 2.7%
Benpres Holdings Corp. - GDR
(Reg.S)** 200,000 795,000
Benpress Holdings Corp - GDR
(Reg. 144A)** 60,000 238,500
Manila Electric Co. - B 350,000 1,145,152
Metro Pacific Corp. 12,819,870 791,540
Philippine Long Distance
Telephone Co. 21,000 584,582
Philippine National Bank** 262,875 645,068
------------
4,199,842
------------
POLAND -- 1.8%
Bank Handlowy W. Warszawie** 92,000 1,478,740
Debica 30,000 781,942
Powsechney Bank Kredit** 20,000 503,918
------------
2,764,600
------------
RUSSIA -- 2.9%
A.O. Tatneft - ADS - (Reg. S) 71,000 1,647,200
Gazprom - ADS - (Reg. S) 75,000 1,590,000
Mosenergo - ADR 18,000 724,500
Trade House Gum - ADR 100,000 550,000
------------
4,511,700
------------
SOUTH AFRICA -- 11.2%
ABSA Group Ltd. 27,500 249,684
AECI Ltd. 490,000 1,828,188
Anglovaal Industries Ltd. 390,000 681,105
Anglovaal Ltd. - N 20,000 184,565
Barlow Ltd. 157,859 1,284,458
Billiton PLC 510,000 1,366,378
Illovo Sugar Ltd. 514,000 877,260
Impala Platinum Holding Ltd. 110,000 1,222,496
Meikles Africa Ltd. 1,750,000 2,143,750
Murray & Roberts Ltd. 1,180,000 1,967,108
Pretoria Portland Cement Co. Ltd. 134,347 1,306,444
SA Iron & Steel Industrial Corp.
Ltd. 2,674,842 737,870
Sasol Ltd. 210,000 1,700,381
Tongaat-Hulett Group Ltd. 176,540 1,699,228
------------
17,248,915
------------
TAIWAN -- 2.7%
Accton Technology Corp. - GDR
(Reg. S)** 265,500 1,440,338
Acer, Inc. - GDR (Reg. 144A)** 87,500 899,063
Acer, Inc. - GDR (Reg. S)** 80,000 812,000
Yageo Corp. - GDR- (Reg. S)** 84,000 1,029,000
------------
4,180,401
------------
TURKEY -- 0.6%
Eczacibasi Yapi Gerecleri Sanayi
ve Ticaret A.S. 30,630,000 604,751
Raks Elektronik Sanayi ve
Ticaret A.S. 1,000,000 271,477
------------
876,228
------------
UNITED KINGDOM -- 1.4%
Billiton PLC 230,000 619,138
Saudi Arabian Investment Fund** 200,000 1,575,000
------------
2,194,138
------------
TOTAL COMMON STOCKS
(Cost $140,928,573) 129,907,648
------------
NUMBER
OF SHARES VALUE
---------- --------------
PREFERRED STOCKS -- 10.9%
Banco Bradesco SA 5,220,594 $ 53,948
Brasmotor SA 4,500,000 656,963
Casa Anglo Brasileira SA 51,003,632 2,107,788
Centrais Eletricas Brasileiras
SA 42,500,000 1,973,528
Cia Brasileira de Distribuicao
Grupo Pao de Acucar 25,000,000 576,052
Cia Cimento Portland Itau 3,200,000 754,232
Cia Energetica de Minas Gerais 39,000,000 1,893,320
Cia Paranaense de
Energia-Copel - B 164,680,000 2,347,709
Eletropaulo-Eletricide de Sao
Paula SA - B 10,413,807 1,123,134
Empresa Bandeirantes De
Enegeria** 10,413,807 484,034
Empresa Metropitanna De Agusa
Energia SA** 10,413,807 39,505
Empresa Paulista De Transmisao
De Enegeria Electrica** 10,413,807 121,032
Iochpe Maxion SA** 9,413,750 703,723
Michaniki SA - (Reg. D) 12,000 48,410
Petroleo Brasileiro SA 9,717,000 2,315,911
Sadia-Concordia SA Industria E
Comercio 1,327,000 980,326
Telecomunicacoes Brasileiras
SA - Telebras 695,282 91,538
Usiminas Siderurgicas de Minas
Gerais SA 60,000 485,467
----------
TOTAL PREFERRED STOCKS
(Cost $16,744,869) 16,756,620
----------
PAR
MATURITY (000)
---------- ----------
CONVERTIBLE BONDS -- 2.8%
Far East Department Stores
3.00% 07/06/01 $1,440 1,344,600
Siliconware Precision Industries
0.50% 07/21/02 1,200 1,230,000
Yang Ming Marine Transport, Inc.
2.00% 10/06/99 1,340 1,541,000
Yang Ming Marine Transport, Inc.
(Reg. 144A)
2.00% 10/06/99 200 228,500
-----------
TOTAL CONVERTIBLE BONDS
(Cost $4,498,167) 4,344,100
-----------
SHORT TERM INVESTMENTS -- 1.6%
Federal Home Loan Mortgage
Corp. Discount Notes
5.90% 04/01/98 2,410 2,410,000
(Cost $2,410,000) -----------
TOTAL INVESTMENTS IN
SECURITIES--100.0%
(Cost $164,581,609*) $153,418,368
============
- ----------------
* Also cost for Federal income tax purposes. The gross unrealized
appreciation (depreciation) on a tax basis is as follows:
Gross unrealized appreciation $ 18,988,855
Gross unrealized depreciation (30,152,096)
------------
$(11,163,241)
============
** Non-income producing security.
# Total or partial securities on loan.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
39
<PAGE>
LOGO [GRAPHIC OMITTED] BLACKROCK FUNDS
STATEMENT OF ASSETS AND LIABILITIES
INTERNATIONAL EMERGING MARKETS PORTFOLIO
MARCH 31, 1998 (UNAUDITED)
ASSETS
Investments at value (Cost $164,581,609) .................... $153,418,368
Collateral received for securities loaned ................... 13,913,000
Cash ........................................................ 727
Cash denominated in foreign currencies (Cost $591) .......... 587
Dividends receivable ........................................ 460,212
Interest receivable ......................................... 50,376
Investments sold receivable ................................. 1,022,951
Capital shares sold receivable .............................. 17,307
Prepaid expenses ............................................ 24,398
------------
TOTAL ASSETS ......................................... 168,907,926
------------
LIABILITIES
Payable upon return of securities loaned .................... 13,913,000
Investments purchased payable ............................... 1,190,989
Capital shares redeemed payable ............................. 589
Accrued expenses payable .................................... 378,081
------------
TOTAL LIABILITIES .................................... 15,482,659
------------
NET ASSETS (Applicable to 12,327,363
Institutional shares, 7,111,046 Service
shares, 431,308 Investor A shares,
190,045 Investor B shares and 11,731
Investor C shares outstanding) .............................. $153,425,267
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER INSTITUTIONAL SHARE ($94,500,504 (DIVIDE) 12,327,363) ... $7.67
=====
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER SERVICE SHARE ($54,143,387 (DIVIDE) 7,111,046) .......... $7.61
=====
NET ASSET VALUE AND REDEMPTION PRICE
PER INVESTOR A SHARE ($3,268,075 (DIVIDE) 431,308) .......... $7.58
=====
MAXIMUM OFFERING PRICE PER INVESTOR A SHARE
($7.58 (DIVIDE) .95) ........................................ $7.98
=====
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent
deferred sales charge of 4.5%)
PER INVESTOR B SHARE ($1,425,311 (DIVIDE) 190,045) .......... $7.50
=====
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent
deferred sales charge of 1.0%)
PER INVESTOR C SHARE ($87,990 (DIVIDE) 11,731) .............. $7.50
=====
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
40
<PAGE>
BLACKROCK FUNDS LOGO [GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
SELECT EQUITY PORTFOLIO
NUMBER
AS OF MARCH 31, 1998 (UNAUDITED) OF SHARES VALUE
--------- ------------
COMMON STOCKS -- 97.0%
AEROSPACE -- 2.1%
Boeing Co. 113,800 $ 5,931,825
#Lockheed Martin Corp. 49,000 5,512,500
Northrop Grumman Corp. 19,400 2,084,287
United Technologies Corp. 49,400 4,560,237
-----------
18,088,849
-----------
AIR TRANSPORTATION -- 0.6%
Delta Air Lines, Inc. 40,800 4,824,600
-----------
BANKS -- 8.5%
#Banc One Corp. 229,205 14,497,216
BankAmerica Corp. 76,000 6,279,500
BankBoston Corp. 59,000 6,504,750
Chase Manhattan Corp. 105,336 14,207,193
First Chicago NBD Corp. 102,300 9,015,187
#First Union Corp. 108,500 6,157,375
#NationsBank, Inc. 126,100 9,197,419
Wells Fargo & Co. 26,400 8,745,000
-----------
74,603,640
-----------
BEVERAGES -- 3.6%
Anheuser-Busch Cos., Inc. 109,000 5,048,062
Coca-Cola Co. 261,300 20,234,419
Pepsico, Inc. 157,600 6,727,550
-----------
32,010,031
-----------
CHEMICALS -- 3.4%
Air Products & Chemicals, Inc. 57,400 4,757,025
Dow Chemical Co. 47,200 4,590,200
E.I. du Pont de Nemours & Co. 102,970 7,001,960
#IMC Global, Inc. 136,900 5,210,756
PPG Industries, Inc. 63,600 4,320,825
Rohm & Haas Co. 41,200 4,256,475
-----------
30,137,241
-----------
COMPUTER & OFFICE EQUIPMENT -- 4.7%
Cisco Systems, Inc.** 114,750 7,846,031
#Compaq Computer Corp. 285,300 7,382,137
Ikon Office Solutions, Inc. 127,900 4,420,544
International Business Machines
Corp. 128,000 13,296,000
Seagate Technology, Inc.** 129,900 3,279,975
Xerox Corp. 52,400 5,577,325
-----------
41,802,012
-----------
COMPUTER SOFTWARE & SERVICES -- 2.5%
Microsoft Corp.** 245,400 21,963,300
-----------
CONSTRUCTION -- 0.3%
#Fluor Corp. 62,100 3,089,475
-----------
ELECTRONICS -- 8.5%
Adaptec, Inc.** 35,600 698,650
AMP, Inc. 78,800 3,452,425
Applied Materials, Inc.** 166,600 5,883,062
Emerson Electric Co. 99,300 6,473,119
General Electric Co. 299,700 25,830,394
Hewlett Packard Co. 102,300 6,483,262
Intel Corp. 179,400 14,004,412
Motorola, Inc. 99,000 6,001,875
Texas Instruments, Inc. 112,900 6,110,712
-----------
74,937,911
-----------
NUMBER
OF SHARES VALUE
---------- --------------
ENERGY & UTILITIES -- 2.7%
Cinergy Corp. 125,300 $ 4,636,100
#Entergy Corp. 179,600 5,343,100
FPL Group, Inc. 81,900 5,262,075
#NIPSCO Industries, Inc. 135,200 3,785,600
Southern Co. 163,900 4,537,981
-----------
23,564,856
-----------
ENTERTAINMENT & LEISURE -- 1.6%
La Quinta Inns, Inc. 77,100 1,619,100
Starwood Hotels & Resorts 71,286 3,809,346
Walt Disney Co. 82,200 8,774,850
-----------
14,203,296
-----------
FINANCE -- 4.3%
CIT Group, Inc. Class A 116,800 3,810,600
Equifax, Inc. 14,700 536,550
Federal National Mortgage
Association 152,000 9,614,000
Fleet Financial Group, Inc. 111,800 9,509,987
Morgan Stanley, Dean Witter &
Co. 179,600 13,088,350
SLM Holding Corp. 24,900 1,086,262
-----------
37,645,749
-----------
FOOD & AGRICULTURE -- 2.3%
Archer Daniels Midland Co. 146,800 3,220,425
Bestfoods, Inc. 80,300 9,385,062
Burlington Northern Santa Fe Corp. 40,200 4,180,800
Tyson Foods, Inc. 170,900 3,289,825
-----------
20,076,112
-----------
INSURANCE -- 5.0%
Aetna, Inc. 56,028 4,674,836
Allstate Corp. 110,300 10,140,706
American International Group, Inc. 112,000 14,105,000
Cigna Corp. 22,400 4,592,000
General Re Corp. 32,000 7,060,000
Humana, Inc.** 142,900 3,545,706
-----------
44,118,248
-----------
MACHINERY & HEAVY EQUIPMENT -- 0.8%
Illinois Tool Works, Inc. 116,100 7,517,475
-----------
MEDICAL & MEDICAL SERVICES -- 1.3%
#Columbia Healthcare Corp. 84,850 2,736,412
United Healthcare Corp. 138,200 8,948,450
-----------
11,684,862
-----------
METAL & MINING -- 1.2%
Barrick Gold Corp. 137,400 2,971,275
Minnesota Mining &
Manufacturing Co. 58,400 5,325,350
Phelps Dodge Corp. 40,900 2,640,606
-----------
10,937,231
-----------
MOTOR VEHICLES -- 3.7%
#Cummins Engine, Inc. 69,400 3,825,675
Eaton Corp. 59,400 5,654,138
Ford Motor Co. 185,200 12,003,275
General Motors Corp. 103,500 6,979,781
Goodyear Tire & Rubber Co. 55,200 4,181,400
-----------
32,644,269
-----------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
41
<PAGE>
LOGO [GRAPHIC OMITTED] BLACKROCK FUNDS
SCHEDULE OF INVESTMENTS
SELECT EQUITY PORTFOLIO (CONCLUDED)
NUMBER
AS OF MARCH 31, 1998 (UNAUDITED) OF SHARES VALUE
--------- ------------
COMMON STOCKS (CONTINUED)
OIL & GAS -- 8.3%
Atlantic Richfield Co. 71,600 $ 5,629,550
British Petroleum Co. PLC ADR 78,300 6,738,694
Enron Corp. 104,100 4,827,638
Exxon Corp. 380,400 25,724,550
Mobil Corp. 117,900 9,034,088
Royal Dutch Petroleum Co. 270,600 15,373,463
Schlumberger Ltd. 79,500 6,022,125
-----------
73,350,108
-----------
PAPER & FOREST PRODUCTS -- 1.6%
#International Paper Co. 97,000 4,540,813
Kimberly-Clark Corp. 116,400 5,834,550
Westvaco Corp. 136,200 4,188,150
-----------
14,563,513
-----------
PHARMACEUTICALS -- 9.0%
American Home Products Corp. 130,300 12,427,363
Bristol-Myers Squibb Co. 106,400 11,098,850
Eli Lilly & Co. 145,300 8,663,513
Johnson & Johnson 123,700 9,068,756
Merck & Co., Inc. 152,500 19,577,188
Pfizer, Inc. 124,500 12,411,094
Pharmacia & Upjohn, Inc. 138,400 6,055,000
-----------
79,301,764
-----------
PUBLISHING & PRINTING -- 1.1%
McGraw-Hill Companies, Inc. 62,700 4,769,119
Tribune Co. 66,900 4,716,450
-----------
9,485,569
-----------
RESTAURANTS -- 0.8%
McDonald's Corp. 113,700 6,822,000
-----------
RETAIL - GROCERY STORES -- 0.6%
Albertson's, Inc. 95,100 5,004,638
-----------
RETAIL MERCHANDISING -- 4.2%
#J.C. Penney Co., Inc. 116,900 8,847,869
Lowe's Cos., Inc. 155,100 10,886,081
Pep Boys - Manny, Moe & Jack 182,300 4,227,081
Sears, Roebuck & Co. 82,700 4,750,081
Wal-Mart Stores, Inc. 166,200 8,445,038
-----------
37,156,150
-----------
SOAPS & COSMETICS -- 2.5%
Avon Products, Inc. 53,200 4,149,600
Colgate-Palmolive Co. 83,100 7,198,538
Procter & Gamble Co. 132,000 11,137,500
-----------
22,485,638
-----------
TELECOMMUNICATIONS -- 9.0%
#Alltel Corp. 207,800 9,078,263
#AT&T Corp. 204,300 13,407,188
Bell Atlantic Corp. 94,200 9,655,500
GTE Corp. 156,500 9,370,438
Lucent Technologies, Inc. 64,094 8,196,020
Oracle Corp.** 225,125 7,105,508
SBC Communications, Inc. 381,400 16,638,575
#World Communications, Inc.** 145,250 6,254,828
-----------
79,706,320
-----------
NUMBER
OF SHARES VALUE
---------- --------------
TEXTILES -- 0.6%
#Fruit of the Loom, Inc.** 99,100 $ 3,034,938
The Warnaco Group, Inc. 65,200 2,559,100
------------
5,594,038
------------
TOBACCO -- 1.7%
Philip Morris Cos., Inc. 357,100 14,886,606
------------
TRANSPORTATION -- 0.5%
CSX Corp. 67,900 4,040,050
------------
TOTAL COMMON STOCKS
(Cost $588,800,190) 856,245,551
------------
PAR
MATURITY (000)
---------- ----------
SHORT TERM INVESTMENTS -- 3.0%
Federal Home Loan Mortgage
Corp. Discount Notes
5.90% 04/01/98 $25,000 25,000,000
Smith Barney Money Market Fund 153 152,672
U.S. Treasury Bills
5.05% 09/17/98 1,700*** 1,659,259
------------
TOTAL SHORT TERM INVESTMENTS
(Cost $26,812,370) 26,811,931
------------
TOTAL INVESTMENTS IN
SECURITIES--100.0%
(Cost $615,612,560*) $883,057,482
============
- ----------------
* Also cost for Federal income tax purposes. The gross unrealized
appreciation (depreciation) on a tax basis is as follows:
Gross unrealized appreciation $272,052,145
Gross unrealized depreciation (4,607,223)
------------
$267,444,922
============
** Non-income producing security.
*** Principal amount of securities pledged as initial margin requiremen of
$1,490,000 on 65 Standard & Poor's 500 Stock Index futures contracts
expiring June 1998. The value of such contracts on March 31, 1998 was
$18,045,625, thereby resulting in an unrealized gain of $674,375.
# Total or partial securities on loan.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
42
<PAGE>
BLACKROCK FUNDS LOGO [GRAPHIC OMITTED]
STATEMENT OF ASSETS AND LIABILITIES
SELECT EQUITY PORTFOLIO
MARCH 31, 1998 (UNAUDITED)
ASSETS
Investments at value (Cost $615,612,560) ................... $883,057,482
Collateral received for securities loaned .................. 60,800,826
Dividends receivable ....................................... 995,116
Interest receivable ........................................ 9,370
Capital shares sold receivable ............................. 544,799
Futures margin receivable .................................. 78,000
Prepaid expenses ........................................... 18,918
------------
TOTAL ASSETS ........................................ 945,504,511
------------
LIABILITIES
Payable upon return of securities loaned ................... 60,800,826
Investments purchased payable .............................. 1,391,407
Capital shares redeemed payable ............................ 116,797
Accrued expenses payable ................................... 778,399
------------
TOTAL LIABILITIES ................................... 63,087,429
------------
NET ASSETS (Applicable to 29,209,584
Institutional shares, 14,232,994
Service shares, 1,527,491 Investor A
shares, 1,799,072 Investor B shares and
68,428 Investor C shares outstanding) ...................... $882,417,082
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER INSTITUTIONAL SHARE ($550,583,980 (DIVIDE) 29,209,584) . $18.85
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER SERVICE SHARE ($268,134,978 (DIVIDE) 14,232,994) ....... $18.84
======
NET ASSET VALUE AND REDEMPTION PRICE
PER INVESTOR A SHARE ($28,771,305 (DIVIDE) 1,527,491) ...... $18.84
======
MAXIMUM OFFERING PRICE PER INVESTOR A SHARE
($18.84 (DIVIDE) .955) ..................................... $19.73
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent
deferred sales charge of 4.5%)
PER INVESTOR B SHARE ($33,647,025 (DIVIDE) 1,799,072) ...... $18.70
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent
deferred sales charge of 1.0%)
PER INVESTOR C SHARE ($1,279,794 (DIVIDE) 68,428) .......... $18.70
======
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
43
<PAGE>
LOGO [GRAPHIC OMITTED] BLACKROCK FUNDS
STATEMENT OF NET ASSETS
INDEX EQUITY PORTFOLIO
AS OF MARCH 31, 1998 (UNAUDITED) VALUE
------------
Investment in The U.S. Large Company
Series of The DFA Investment
Trust Company 99.7% $616,325,978
(Cost $408,246,152)
OTHER ASSETS IN EXCESS OF
LIABILITIES 0.3% 1,629,403
------ ------------
NET ASSETS (Applicable to 9,668,365
Institutional shares, 12,134,649
Service shares, 1,849,587 Investor A
shares, 3,477,399 Investor B shares
and 1,992,438 Investor C shares
outstanding) 100.0% $617,955,381
====== ============
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
INSTITUTIONAL SHARE
($205,423,707 (DIVIDE) 9,668,365) $21.25
======
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
SERVICE SHARE
($257,746,051 (DIVIDE) 12,134,649) $21.24
======
NET ASSET VALUE AND
REDEMPTION PRICE PER
INVESTOR A SHARE
($39,270,847 (DIVIDE) 1,849,587) $21.23
======
MAXIMUM OFFERING PRICE
PER INVESTOR A SHARE
($21.23 (DIVIDE) .97) $21.89
======
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
(SUBJECT TO A MAXIMUM CONTINGENT
DEFERRED SALES CHARGE OF 4.5%)
PER INVESTOR B SHARE
($73,437,767 (DIVIDE) 3,477,399) $21.12
======
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
(SUBJECT TO A MAXIMUM CONTINGENT
DEFERRED SALES CHARGE OF 1.0%)
PER INVESTOR C SHARE
($42,077,009 (DIVIDE) 1,992,438) $21.12
======
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS AND ACCOMPANYING FINANCIAL
STATEMENTS AND RELATED NOTES FOR THE DFA INVESTMENT TRUST COMPANY.
44
<PAGE>
BLACKROCK FUNDS LOGO [GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
BALANCED PORTFOLIO
NUMBER
AS OF MARCH 31, 1998 (UNAUDITED) OF SHARES VALUE
--------- ------------
COMMON STOCKS -- 63.5%
AEROSPACE -- 2.0%
Allied-Signal, Inc. 64,100 $ 2,692,200
Boeing Co. 17,700 922,612
#United Technologies Corp. 44,200 4,080,212
-----------
7,695,024
-----------
BANKS -- 3.6%
Banc One Corp. 85,060 5,380,045
CoreStates Financial Corp. 37,900 3,401,525
First Chicago NBD Corp. 55,200 4,864,500
-----------
13,646,070
-----------
BEVERAGES -- 1.5%
Coca-Cola Co. 49,700 3,848,644
Pepsico, Inc. 41,900 1,788,606
-----------
5,637,250
-----------
CHEMICALS -- 2.0%
Dow Chemical Co. 22,000 2,139,500
E.I. du Pont de Nemours & Co. 53,100 3,610,800
#IMC Global, Inc. 43,100 1,640,494
-----------
7,390,794
-----------
COMPUTER & OFFICE EQUIPMENT -- 4.1%
Cisco Systems, Inc.** 66,200 4,526,425
#Compaq Computer Corp. 154,600 4,000,275
International Business Machines
Corp. 27,700 2,877,337
Seagate Technology, Inc.** 38,700 977,175
Xerox Corp. 29,800 3,171,837
-----------
15,553,049
-----------
COMPUTER SOFTWARE & SERVICES -- 2.6%
Automatic Data Processing, Inc. 32,700 2,225,644
Microsoft Corp.** 83,900 7,509,050
-----------
9,734,694
-----------
CONSUMER DURABLES -- 1.0%
Black & Decker Corp. 72,900 3,868,256
-----------
ELECTRONICS -- 4.2%
AMP, Inc. 22,000 963,875
Emerson Electric Co. 26,500 1,727,469
General Electric Co. 79,500 6,851,906
Intel Corp. 58,600 4,574,462
Motorola, Inc. 28,700 1,739,937
-----------
15,857,649
-----------
ENERGY & UTILITIES -- 1.6%
Entergy Corp. 82,900 2,466,275
NIPSCO Industries, Inc. 70,700 1,979,600
PECO Energy Co. 72,900 1,612,912
-----------
6,058,787
-----------
ENTERTAINMENT & LEISURE -- 1.0%
Walt Disney Co. 34,300 3,661,525
-----------
FINANCE -- 4.1%
Federal National Mortgage
Association 79,500 5,028,375
Fleet Financial Group, Inc. 55,200 4,695,450
Morgan Stanley, Dean Witter & Co. 77,400 5,640,525
-----------
15,364,350
-----------
NUMBER
OF SHARES VALUE
---------- --------------
FOOD & AGRICULTURE -- 0.8%
Bestfoods, Inc. 24,300 $ 2,840,062
-----------
INSURANCE -- 3.7%
Allstate Corp. 24,600 2,261,662
American International Group, Inc. 49,700 6,259,094
Chubb Corp. 35,300 2,766,637
General Re Corp. 12,100 2,669,562
-----------
13,956,955
-----------
MACHINERY & HEAVY EQUIPMENT -- 1.2%
Illinois Tool Works, Inc. 70,700 4,577,825
-----------
MEDICAL & MEDICAL SERVICES -- 1.4%
Medtronic, Inc. 64,100 3,325,187
United Healthcare Corp. 30,900 2,000,775
-----------
5,325,962
-----------
METAL & MINING -- 1.3%
Minnesota Mining & Manufacturing Co. 25,400 2,316,162
Phelps Dodge Corp. 39,800 2,569,588
-----------
4,885,750
-----------
MOTOR VEHICLES -- 2.2%
Chrysler Corp. 30,900 1,284,281
Ford Motor Co. 46,400 3,007,300
General Motors Corp. 24,300 1,638,731
Goodyear Tire & Rubber Co. 32,000 2,424,000
-----------
8,354,312
-----------
OIL & GAS -- 4.5%
Chevron Corp. 28,700 2,304,969
Exxon Corp. 61,800 4,179,225
Mobil Corp. 33,200 2,543,950
Royal Dutch Petroleum Co. 70,700 4,016,644
Schlumberger Ltd. 23,200 1,757,400
Tenneco, Inc. 55,200 2,356,350
-----------
17,158,538
-----------
PAPER & FOREST PRODUCTS -- 0.3%
#International Paper Co. 26,500 1,240,531
-----------
PHARMACEUTICALS -- 6.5%
American Home Products Corp. 61,800 5,894,175
Bristol-Myers Squibb Co. 58,600 6,112,713
Eli Lilly & Co. 68,500 4,084,313
Johnson & Johnson 38,700 2,837,194
Merck & Co., Inc. 44,200 5,674,175
-----------
24,602,570
-----------
PUBLISHING & PRINTING -- 0.8%
McGraw-Hill Companies, Inc. 41,900 3,187,019
-----------
RESTAURANTS -- 0.8%
McDonald's Corp. 49,700 2,982,000
-----------
RETAIL MERCHANDISING -- 3.4%
Kroger Co.** 95,000 4,387,813
#Lowe's Cos., Inc. 57,500 4,035,781
#Wal-Mart Stores, Inc. 85,000 4,319,063
-----------
12,742,657
-----------
SOAPS & COSMETICS -- 2.1%
#Colgate-Palmolive Co. 55,200 4,781,700
Procter & Gamble Co. 37,600 3,172,500
-----------
7,954,200
-----------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
45
<PAGE>
LOGO [GRAPHIC OMITTED] BLACKROCK FUNDS
SCHEDULE OF INVESTMENTS
BALANCED PORTFOLIO (CONTINUED)
NUMBER
AS OF MARCH 31, 1998 (UNAUDITED) OF SHARES VALUE
--------- ------------
COMMON STOCKS (CONTINUED)
TELECOMMUNICATIONS -- 4.4%
#Alltel Corp. 51,900 $ 2,267,381
#AT&T Corp. 44,200 2,900,625
#Bell Atlantic Corp. 32,200 3,300,500
GTE Corp. 37,600 2,251,300
Lucent Technologies, Inc. 12,500 1,598,438
SBC Communications, Inc. 101,600 4,432,300
-----------
16,750,544
-----------
TOBACCO -- 1.5%
Philip Morris Cos., Inc. 138,100 5,757,044
-----------
TRANSPORTATION -- 0.9%
Norfolk Southern Corp. 86,100 3,217,988
-----------
TOTAL COMMON STOCKS
(Cost $132,968,386) 240,001,405
-----------
PAR
MATURITY (000)
---------- ----------
U.S. GOVERNMENT AND
AGENCY OBLIGATIONS -- 10.9%
Federal Home Loan Mortgage
Corporation
7.50% 09/01/27 $ 14 14,490
Federal National Mortgage
Association
7.00% 10/01/10 81 82,164
7.00% 11/01/10 152 154,724
7.00% 12/01/10 265 269,315
7.00% 05/01/11 167 169,838
Government National Mortgage
Association
6.50% 01/15/24 309 305,655
6.50% 04/15/24 1,339 1,325,741
6.50% 05/15/24 470 465,719
6.50% 06/15/24 1,249 1,235,835
7.50% 04/15/27 596 611,979
7.50% 07/15/27 74 75,839
Small Business Administration
Participation Certificates,
Series 97-20F, Class 1
7.20% 06/01/17 1,094 1,142,540
Small Business Investment Cos.
Pass-Through, Series 97-P10C,
Class 1
6.85% 08/01/07 1,250 1,279,968
U.S. Treasury Bonds
13.87% 05/15/11 2,400 3,634,752
6.37% 08/15/27 350 369,996
#6.12% 11/15/27 7,675 7,871,173
U.S. Treasury Notes
5.75% 09/30/99 3,550 3,558,520
#6.37% 05/15/00 4,490 4,558,337
6.00% 08/15/00 1,415 1,425,103
6.25% 02/28/02 3,560 3,629,989
6.25% 06/30/02 290 296,018
5.75% 10/31/02 4,000 4,010,920
#5.75% 11/30/02 4,830 4,843,234
-----------
TOTAL U.S. GOVERNMENT AND
AGENCY OBLIGATIONS
(Cost $41,214,812) 41,331,849
-----------
PAR
MATURITY (000) VALUE
---------- --------- -----------
MORTGAGE PASS-THROUGHS -- 2.4%
Federal National Mortgage
Association
7.00% 10/01/10 $2,498 $ 2,540,473
6.00% 04/16/13 1,500 1,475,156
6.50% 10/01/25 4,500 4,445,156
Government National Mortgage
Association
6.50% 01/15/24 437 432,321
-----------
TOTAL MORTGAGE PASS-THROUGHS
(Cost $8,839,454) 8,893,106
-----------
MULTIPLE CLASS MORTGAGE
PASS-THROUGHS -- 1.9%
Community Program Loan Trust,
Series 87-A, Class A4
4.50% 10/01/18 1,918 1,731,197
Federal National Mortgage
Association Strip Notes,
Series 274, Class 1 (PO)
4.00% 10/01/25 209 176,183
Federal National Mortgage Association,
Series 93-216, Class B (PO)
8.79% 08/25/23 287 278,551
Federal National Mortgage Association,
Series 97-58, Class PG (IO)
7.00% 09/18/27 1,129 332,926
Federal National Mortgage Association,
Series 93-113, Class B (PO)
6.50% 07/25/23 460 360,029
Federal National Mortgage Association,
Series 96-54, Class A (PO)
6.50% 04/25/21 552 481,261
Federal National Mortgage Association,
Series 96-56, Class E (PO)
7.00% 04/25/23 340 272,674
Residential Accredit Loans, Inc.,
Series 97-QS7, Class A1
7.50% 07/25/27 940 946,641
Residential Asset Securitization Trust,
Series 97-A7, Class A1
7.50% 09/25/27 1,041 1,049,253
Salomon Brothers Mortgage
Securities VI, Series 87-1 (IO)
5.00% 02/17/17 770 229,921
Salomon Brothers Mortgage
Securities VI, Series 87-1 (PO)
5.00% 02/17/17 817 663,091
Salomon Brothers Mortgage
Securities VI, Series 87-2 (IO)
11.00% 03/06/17 534 162,986
Salomon Brothers Mortgage
Securities VI, Series 87-2 (PO)
5.00% 03/06/17 503 407,319
------------
TOTAL MULTIPLE CLASS MORTGAGE
PASS-THROUGHS
(Cost $6,853,093) 7,092,032
------------
COMMERCIAL MORTGAGE-BACKED
SECURITIES -- 1.8%
CS First Boston Mortgage Securities
Corp., Series 95-AEW1, Class C
7.45% 11/25/27 250 252,445
J.P. Morgan Commercial Mortgage
Finance Corp., Series 96-C3, Class A1
7.33% 04/25/28 472 489,058
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
46
<PAGE>
BLACKROCK FUNDS LOGO [GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
BALANCED PORTFOLIO (CONTINUED)
NUMBER
AS OF MARCH 31, 1998 (UNAUDITED) MATURITY OF SHARES VALUE
-------- --------- ------------
COMMERCIAL MORTGAGE-BACKED
SECURITIES (CONTINUED)
Merit Securities Corp., Series 10,
Class 2A1
5.95%**** 05/28/25 $1,471 $ 1,471,662
Merrill Lynch Mortgage Investors, Inc.,
Series 95-C1, Class C
7.56%**** 05/25/15 450 463,961
Merrill Lynch Mortgage Investors, Inc.,
Series 96-C1, Class A2
7.24% 04/25/28 1,000 1,038,868
Merrill Lynch Mortgage Investors, Inc.,
Series 96-C1, Class A3
7.42% 04/25/28 500 526,674
PNC Mortgage Securities Corp.,
Series 97-6, Class A2
6.60% 07/25/27 1,262 1,266,002
Structured Asset Securities Corp.,
Series 97-N1, Class D
6.11%**** 09/25/28 1,000 999,688
Structured Asset Securities Corp.,
Series 96-CFL, Class X1 (IO)
12.60% 02/25/28 6,865 368,990
----------
TOTAL COMMERCIAL MORTGAGE-
BACKED SECURITIES
(Cost $12,305,454) 6,877,348
----------
PROJECT LOANS -- 0.7%
Federal Housing Authority, Huntoon
Paige, Construction Loan Collateral
7.31% 10/01/24 1,442 1,499,502
Reilly Mortgage Securities
6.89% 11/11/18 1,284 1,301,681
----------
TOTAL PROJECT LOANS
(Cost $2,724,603) 2,801,183
----------
ASSET BACKED SECURITIES -- 7.0%
CIT Group Securitization Corp.,
Series 95-2, Class B
7.65% 05/15/26 450 458,789
Contimortgage Home Equity Loan
Trust, Series 97-4, Class A1
6.37% 03/15/08 1,535 1,532,678
Copelco Capital Funding Corp.,
Series 97-A, Class A3
6.27% 04/20/05 2,000 2,009,063
Corporate Bond Backed Certificates,
Series 97-10
8.12% 09/15/17 1,287 1,387,395
Equivantage Home Equity Loan Trust,
Series 96-1, Class A
6.55% 10/25/25 356 354,239
First USA Credit Card Master Trust,
Series 94-4, Class A
6.05% 08/15/03 2,000 2,015,000
First Security Auto Grantor Trust,
Series 97-B, Class A
6.10% 04/15/03 2,265 2,267,508
Green Tree Financial Corp.,
Series 93-3, Class B
6.85% 10/15/18 1,300 1,237,032
Green Tree Financial Corp.,
Series 95-7, Class B1
7.35% 11/15/26 400 399,438
Green Tree Financial Corp.,
Series 96-6, Class A6
7.95% 08/15/26 1,000 1,065,801
NUMBER
MATURITY OF SHARES VALUE
-------- --------- ------------
Green Tree Financial Corp.,
Series 96-9, Class A6
7.69% 01/15/28 $1,150 $ 1,214,939
Green Tree Financial Corp.,
Series 97-3, Class A7
7.64% 07/15/28 1,050 1,103,485
Green Tree Financial Corp.,
Series 97-3, Class B2
8.03% 07/15/28 550 534,016
Keycorp Student Loan Trust,
Series 97-2, Class A
6.00%**** 01/27/23 1,200 1,197,000
MBNA Master Credit Card Trust,
Series 96-B, Class A
5.43%**** 08/15/08 2,000 2,013,750
Mellon Bank Home Equity Loan
Trust, Series 96-1, Class B2
6.10%**** 04/15/26 1,300 1,295,328
Newcourt Receivables Asset Trust,
Series 97-1, Class A3
6.11% 05/20/01 1,200 1,202,063
Nissan Auto Receivables Grantor
Trust, Series 95-A, Class A
6.10% 08/15/01 427 427,920
Puget Power Conservation Grantor
Trust, Series 97-1, Class A
6.23% 07/11/02 1,013 1,012,347
Sears Credit Account Master Trust,
Series 95, Class A
6.05% 01/16/08 1,250 1,247,556
Sears Credit Account Master Trust,
Series 96, Class A
6.45% 10/15/06 700 708,624
Sears Credit Card Master Trust,
Series 96-3, Class A
7.00% 07/15/08 900 935,138
Security Pacific Home Equity Loan,
Series 91-1, Class B
8.85% 05/15/98 791 795,096
-----------
TOTAL ASSET BACKED SECURITIES
(Cost $20,776,505) 26,414,205
-----------
CORPORATE BONDS -- 5.0%
FINANCE -- 3.3%
AFC Capital Trust I
8.20% 02/03/27 1,000 1,109,218
BankAmerica Institutional
7.70% 12/31/26 900 919,661
Bear Stearns Capital
7.00% 01/15/27 1,050 1,060,185
BGB Finance
6.62% 12/30/99 300 302,400
CoreStates Capital
8.00% 12/15/26 630 665,747
Equitable Life Assurance Society
7.70% 12/01/15 350 374,422
Fairfax Financial
8.30% 04/15/26 550 601,616
Fuji JGB INV LLC Pfd.
9.87%**** 12/31/49 660 653,699
GMAC Pass-Through Trust
6.50% 01/17/00 1,100 1,107,873
Liberty Mutual Insurance Co.
8.50% 05/15/25 750*** 871,069
Meridian Bancorp.
6.62% 06/15/00 450 455,249
Merrill Lynch & Co.
6.47% 06/27/00 1,000 1,009,569
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
47
<PAGE>
LOGO [GRAPHIC OMITTED] BLACKROCK FUNDS
SCHEDULE OF INVESTMENTS
BALANCED PORTFOLIO (CONCLUDED)
NUMBER
AS OF MARCH 31, 1998 (UNAUDITED) MATURITY OF SHARES VALUE
-------- --------- ------------
CORPORATE BONDS (CONTINUED)
FINANCE (CONTINUED)
Metropolitan Life Insurance Co.
6.30% 11/01/03 $ 300 $ 298,355
Paine Webber, Inc.
7.87% 02/15/03 1,000 1,059,324
#Pan American Beverages Co.
7.25% 07/01/09 600 592,089
Salomon, Inc.
8.90% 02/15/00 300 315,019
Yorkshire Power Finance
6.49% 02/25/08 1,100 1,084,295
-----------
12,479,790
-----------
INDUSTRIAL -- 1.4%
ERAC USA Finance Co.
6.95% 03/01/04 851 865,589
First of America
8.12% 01/31/27 1,300 1,387,627
RJR Nabisco, Inc.
6.85% 06/15/05 300 302,442
7.05% 07/15/07 180 183,125
7.55% 06/15/15 700 729,900
Time Warner, Inc.
4.90% 07/29/99 1,000 980,910
6.10% 12/30/01 1,000 992,500
-----------
5,442,093
-----------
UTILITY -- 0.3%
Israel Electric Corp. Ltd.
7.87% 12/15/26 350 359,293
Mobile Energy Services LLC
8.66% 01/01/17 280 297,068
Texas Utilities Capital Trust
8.17% 01/30/37 420 429,500
-----------
1,085,861
-----------
TOTAL CORPORATE BONDS
(Cost $18,530,294) 19,007,744
-----------
MUNICIPAL BONDS -- 1.1%
Los Angeles County Taxable
Pension Obligation
8.62% 06/30/06 1,650 1,897,500
6.97% 06/30/08 400 419,500
New Jersey EDA
7.56% 02/15/16 2,425 765,354
7.59% 02/15/17 850 250,580
7.65% 02/15/20 895 217,270
7.62% 02/15/21 630 143,665
7.62% 02/15/22 895 191,324
7.63% 02/15/23 340 68,296
-----------
TOTAL MUNICIPAL BONDS
(Cost $3,469,560) 3,953,489
-----------
PAR
MATURITY (000) VALUE
---------- ---------- ------------
SHORT TERM INVESTMENTS -- 5.7%
Federal Home Loan Mortgage
Corp. Discount Notes
5.90% 04/01/98 $21,350 $ 21,350,000
Smith Barney Money Market Fund 103 103,314
------------
TOTAL SHORT TERM INVESTMENTS
(Cost $21,453,314) 21,453,314
------------
TOTAL INVESTMENTS IN
SECURITIES--100.0%
(Cost $269,135,475*) $377,825,675
============
- ----------------
* Also cost for Federal income tax purposes. The gross unrealized
appreciation (depreciation) on a tax basis is as follows:
Gross unrealized appreciation $110,121,218
Gross unrealized depreciation (1,431,018)
------------
$108,690,200
============
** Non-income producing security.
*** Principal amount of securities pledged as collateral is $500,000 on 48 net
long U.S. Treasury Bond futures contracts, 17 net long U.S. Treasury Note
futures contracts, and 60 net short U.S. Treasury Note futures contracts
expiring June 1998. The value of such contracts on March 31, 1998 was
$14,365,375, thereby resulting in an unrealized gain of $43,367.
**** Rates shown are the rates as of March 31, 1998.
# Total or partial securities on loan.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
48
<PAGE>
BLACKROCK FUNDS LOGO [GRAPHIC OMITTED]
STATEMENT OF ASSETS AND LIABILITIES
BALANCED PORTFOLIO
MARCH 31, 1998 (UNAUDITED)
ASSETS
Investments at value (Cost $269,135,475) ...................... $377,825,675
Collateral received for securities loaned ..................... 41,273,388
Dividends receivable .......................................... 311,241
Interest receivable ........................................... 1,404,416
Investments sold receivable ................................... 7,305,283
Capital shares sold receivable ................................ 681,174
Futures margin receivable ..................................... 6,921
Futures commissions ........................................... 1,125
Prepaid expenses .............................................. 26,401
------------
TOTAL ASSETS ........................................... 428,835,624
------------
LIABILITIES
Payable upon return of securities loaned ...................... 41,273,388
Investments purchased payable ................................. 10,809,964
Capital shares redeemed payable ............................... 80,430
Accrued expenses payable ...................................... 484,288
Deferred dollar roll income ................................... 911
------------
TOTAL LIABILITIES ...................................... 52,648,981
------------
NET ASSETS (Applicable to 2,456,498
Institutional shares, 10,547,571
Service shares, 5,036,492 Investor A
shares, 1,954,382 Investor B shares
and 17,757 Investor C shares outstanding) ..................... $376,186,643
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER INSTITUTIONAL SHARE ($46,230,880 (DIVIDE) 2,456,498) ...... $18.82
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER SERVICE SHARE ($198,327,080 (DIVIDE) 10,547,571) .......... $18.80
======
NET ASSET VALUE AND REDEMPTION PRICE
PER INVESTOR A SHARE ($94,757,521 (DIVIDE) 5,036,492) ......... $18.81
======
MAXIMUM OFFERING PRICE PER INVESTOR A SHARE
($18.81 (DIVIDE) .955) ........................................ $19.70
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent
deferred sales charge of 4.5%)
PER INVESTOR B SHARE ($36,539,165 (DIVIDE) 1,954,382) ......... $18.70
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent
deferred sales charge of 1.0%)
PER INVESTOR C SHARE ($331,997 (DIVIDE) 17,757) ............... $18.70
======
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
49
<PAGE>
LOGO [GRAPHIC OMITTED] BLACKROCK FUNDS
LOGO [GRAPHIC OMITTED] BLACKROCK FUNDS
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
LARGE CAP LARGE CAP MID-CAP MID-CAP
VALUE GROWTH VALUE GROWTH SMALL CAP
EQUITY EQUITY EQUITY EQUITY VALUE EQUITY
FOR THE SIX MONTHS ENDED MARCH 31, 1998 (UNAUDITED) PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Investment income:
Interest ............................................. $ 938,932 $ 549,171 $ 231,568 $ 391,947 $ 746,777
Dividends ............................................ 15,439,491 3,689,303 1,330,143 81,040 3,365,518
Net investment income from master .................... -- -- -- -- --
Foreign taxes withheld ............................... -- -- -- -- --
------------ ------------ ----------- ----------- -----------
Total investment income ......................... 16,378,423 4,238,474 1,561,711 472,987 4,112,295
------------ ------------ ----------- ----------- -----------
Expenses:
Investment advisory fee .............................. 3,807,965 2,140,412 624,058 604,668 1,372,495
Administration fee ................................... 1,501,878 867,111 179,417 173,842 572,804
Custodian fee ........................................ 122,735 70,977 20,537 26,995 51,216
Transfer agent fee ................................... 266,987 164,993 36,484 35,420 103,533
Service fees ......................................... 1,063,353 475,327 63,644 59,274 296,337
Distribution fees .................................... 95,863 34,389 16,893 12,372 69,723
Legal and audit ...................................... 55,542 32,385 2,900 2,900 20,954
Printing ............................................. 45,299 24,777 2,742 2,745 12,990
Registration fees and expenses ....................... 20,239 23,468 16,160 14,636 28,097
Organization ......................................... -- -- -- -- --
Trustees' fees and officer's salary .................. 12,685 7,113 773 776 3,779
Other ................................................ 176,897 72,181 15,302 4,941 51,646
------------ ------------ ----------- ----------- -----------
7,169,443 3,913,133 978,910 938,569 2,583,574
Less fees voluntarily waived ......................... (5,670) (2,180) (6,478) (11,078) (4,480)
------------ ------------ ----------- ----------- -----------
Total operating expenses ........................ 7,163,773 3,910,953 972,432 927,491 2,579,094
------------ ------------ ----------- ----------- -----------
Interest expense ..................................... -- -- -- -- --
------------ ------------ ----------- ----------- -----------
Total expenses .................................. 7,163,773 3,910,953 972,432 927,491 2,579,094
------------ ------------ ----------- ----------- -----------
Net investment income (loss) ......................... 9,214,650 327,521 589,279 (454,504) 1,533,201
------------ ------------ ----------- ----------- -----------
Realized and unrealized gain (loss) on investments
and foreign currency transactions:
Net realized gain (loss) from:
Investment transactions ............................ 111,952,792 28,698,021 5,646,648 (1,924,650) 42,276,682
Futures contracts .................................. -- 1,073,617 -- 445,610 --
Foreign currency related transactions .............. -- -- -- -- --
------------ ------------ ----------- ----------- -----------
111,952,792 29,771,638 5,646,648 (1,479,040) 42,276,682
------------ ------------ ----------- ----------- -----------
Change in unrealized appreciation (depreciation) from:
Investments ........................................ 90,885,186 94,064,697 11,999,714 13,984,183 1,216,031
Futures contracts .................................. -- (313,578) -- 67,726 --
Foreign currency related transactions
and forward foreign currency contracts .......... -- -- -- -- --
------------ ------------ ----------- ----------- -----------
90,885,186 93,751,119 11,999,714 14,051,909 1,216,031
------------ ------------ ----------- ----------- -----------
Net gain (loss) on investments and foreign
currency transactions ................................ 202,837,978 123,522,757 17,646,362 12,572,869 43,492,713
------------ ------------ ----------- ----------- -----------
Net increase (decrease) in assets resulting from
operations ......................................... $212,052,628 $123,850,278 $18,235,641 $12,118,365 $45,025,914
============ ============ =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL INTERNATIONAL
SMALL CAP INTERNATIONAL SMALL CAP EMERGING SELECT
GROWTH EQUITY EQUITY EQUITY MARKETS EQUITY
FOR THE SIX MONTHS ENDED MARCH 31, 1998 (UNAUDITED) PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Investment income:
Interest ............................................. $ 2,630,951 $ 397,025 $ 41,333 $ 199,171 $ 783,320
Dividends ............................................ 85,399 5,430,415 128,668 1,435,758 5,871,524
Net investment income from master .................... -- -- -- -- --
Foreign taxes withheld ............................... -- (834,138) (16,137) (59,681) --
------------ ----------- ---------- ------------ ------------
Total investment income ......................... 2,716,350 4,993,302 153,864 1,575,248 6,654,844
------------ ----------- ---------- ------------ ------------
Expenses:
Investment advisory fee .............................. 2,237,285 2,416,919 89,567 953,952 2,006,245
Administration fee ................................... 904,099 726,600 20,600 191,134 815,884
Custodian fee ........................................ 97,653 402,820 16,258 209,284 71,351
Transfer agent fee ................................... 182,744 123,379 5,513 33,081 132,225
Service fees ......................................... 544,830 355,054 5,133 89,566 413,256
Distribution fees .................................... 209,434 23,923 6,278 5,771 95,846
Legal and audit ...................................... 30,297 21,261 12,522 4,934 18,244
Printing ............................................. 22,526 20,600 678 4,767 17,524
Registration fees and expenses ....................... 34,937 25,604 8,328 28,137 32,987
Organization ......................................... 3,402 -- -- 5,547 2,007
Trustees' fees and officer's salary .................. 5,832 6,066 322 1,398 5,082
Other ................................................ 103,867 10,076 5,273 9,818 59,071
------------ ----------- ---------- ------------ ------------
4,376,906 4,132,302 170,472 1,537,389 3,669,722
Less fees voluntarily waived ......................... (1,065) (326,930) (41,499) (82,002) (7,036)
------------ ----------- ---------- ------------ ------------
Total operating expenses ........................ 4,375,841 3,805,372 128,973 1,455,387 3,662,686
------------ ----------- ---------- ------------ ------------
Interest expense ..................................... -- -- -- -- --
------------ ----------- ---------- ------------ ------------
Total expenses .................................. 4,375,841 3,805,372 128,973 1,455,387 3,662,686
------------ ----------- ---------- ------------ ------------
Net investment income (loss) ......................... (1,659,491) 1,187,930 24,891 119,861 2,992,158
------------ ----------- ---------- ------------ ------------
Realized and unrealized gain (loss) on investments
and foreign currency transactions:
Net realized gain (loss) from:
Investment transactions ............................ 48,125,651 11,558,961 944,648 (12,223,568) 17,782,241
Futures contracts .................................. 2,580,473 -- -- -- 1,695,987
Foreign currency related transactions .............. -- (730,862) (89,638) (459,143) --
------------ ----------- ---------- ------------ ------------
50,706,124 10,828,099 855,010 (12,682,711) 19,478,228
------------ ----------- ---------- ------------ ------------
Change in unrealized appreciation (depreciation) from:
Investments ........................................ (44,226,370) 36,846,416 1,606,273 (24,134,933) 91,213,951
Futures contracts .................................. 721,250 -- -- -- 652,625
Foreign currency related transactions
and forward foreign currency contracts .......... -- 5,653,389 92,145 68,295 --
------------ ----------- ---------- ------------ ------------
(43,505,120) 42,499,805 1,698,418 (24,066,638) 91,866,576
------------ ----------- ---------- ------------ ------------
Net gain (loss) on investments and foreign
currency transactions ................................ 7,201,004 53,327,904 2,553,428 (36,749,349) 111,344,804
------------ ----------- ---------- ------------ ------------
Net increase (decrease) in assets resulting from
operations ......................................... $ 5,541,513 $54,515,834 $2,578,319 $(36,629,488) $114,336,962
============ =========== ========== ============ ============
</TABLE>
<TABLE>
<CAPTION>
INDEX
EQUITY BALANCED
FOR THE SIX MONTHS ENDED MARCH 31, 1998 (UNAUDITED) PORTFOLIO PORTFOLIO
----------- -----------
<S> <C> <C>
Investment income:
Interest ............................................. $ -- $ 4,160,975
Dividends ............................................ -- 1,783,331
Net investment income from master .................... 3,920,017 --
Foreign taxes withheld ............................... -- --
----------- -----------
Total investment income ......................... 3,920,017 5,944,306
----------- -----------
Expenses:
Investment advisory fee .............................. -- 924,863
Administration fee ................................... 586,521 386,761
Custodian fee ........................................ -- 39,723
Transfer agent fee ................................... 115,095 83,202
Service fees ......................................... 529,932 508,674
Distribution fees .................................... 282,741 107,637
Legal and audit ...................................... 18,337 13,141
Printing ............................................. 11,147 10,323
Registration fees and expenses ....................... 21,814 25,166
Organization ......................................... -- --
Trustees' fees and officer's salary .................. 3,009 2,879
Other ................................................ 28,120 15,932
----------- -----------
1,596,716 2,118,301
Less fees voluntarily waived ......................... (468,744) (781)
----------- -----------
Total operating expenses ........................ 1,127,972 2,117,520
----------- -----------
Interest expense ..................................... -- 23,749
----------- -----------
Total expenses .................................. 1,127,972 2,141,269
----------- -----------
Net investment income (loss) ......................... 2,792,045 3,803,037
----------- -----------
Realized and unrealized gain (loss) on investments
and foreign currency transactions:
Net realized gain (loss) from:
Investment transactions ............................ (352,858) 3,666,757
Futures contracts .................................. -- 807,707
Foreign currency related transactions .............. -- --
----------- -----------
(352,858) 4,474,464
----------- -----------
Change in unrealized appreciation (depreciation) from:
Investments ........................................ 87,238,146 31,780,836
Futures contracts .................................. -- (162,019)
Foreign currency related transactions
and forward foreign currency contracts .......... -- --
----------- -----------
87,238,146 31,618,817
----------- -----------
Net gain (loss) on investments and foreign
currency transactions ................................ 86,885,288 36,093,281
----------- -----------
Net increase (decrease) in assets resulting from
operations ......................................... $89,677,333 $39,896,318
=========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
50 & 51
<PAGE>
LOGO [GRAPHIC OMITTED] BLACKROCK FUNDS
BLACKROCK FUNDS LOGO [GRAPHIC OMITTED]
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
LARGE CAP LARGE CAP MID-CAP VALUE
VALUE EQUITY PORTFOLIO GROWTH EQUITY PORTFOLIO EQUITY PORTFOLIO
------------------------------- --------------------------- ---------------------------
FOR THE FOR THE FOR THE FOR THE PERIOD
SIX MONTHS FOR THE SIX MONTHS FOR THE SIX MONTHS 12/26/97 1
ENDED YEAR ENDED ENDED YEAR ENDED ENDED THROUGH
3/31/98 9/30/97 3/31/98 9/30/97 3/31/98 9/30/97
-------------- -------------- ------------ ------------ ------------ ------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income (deficit) ...$ 9,214,650 $ 23,066,335 $ 327,521 $ 3,014,249 $ 589,279 $ 797,116
Net gain on investments and
foreign currency related
transactions ................... 202,837,978 388,585,459 123,522,757 205,451,812 17,646,362 23,019,242
-------------- -------------- ------------ ------------ ------------ ------------
Net increase in net assets
resulting from operations ....... 212,052,628 411,651,794 123,850,278 208,466,061 18,235,641 23,816,358
-------------- -------------- ------------ ------------ ------------ ------------
Distributions to shareholders from:
Net investment income:
Institutional Shares .............. (5,399,779) (13,758,751) (492,332) (3,233,374) (497,815) (671,220)
Service Shares .................... (3,644,266) (8,690,512) -- (551,885) (7,089) (102,519)
Investor A Shares ................. (255,765) (566,730) -- (28,989) (102,564) (7,342)
Investor B Shares ................. (44,889) (100,630) -- -- -- (2,026)
Investor C Shares ................. (3,483) (6,938) -- -- -- (36)
-------------- -------------- ------------ ------------ ------------ ------------
Total distribution from net
investment income ............... (9,348,182) (23,123,561) (492,332) (3,814,248) (607,468) (783,143)
-------------- -------------- ------------ ------------ ------------ ------------
Net realized gains:
Institutional Shares .............. (93,723,477) (118,697,319) (65,760,356) (23,813,741) (3,170,990) --
Service Shares .................... (76,020,941) (74,902,263) (36,048,878) (9,521,137) (873,004) --
Investor A Shares ................. (6,087,188) (4,450,693) (3,610,283) (845,179) (77,103) --
Investor B Shares ................. (2,790,876) (686,113) (1,161,101) (142,913) (105,796) --
Investor C Shares ................. (189,032) (37,282) (23,904) -- (687) --
-------------- -------------- ------------ ------------ ------------ ------------
Total distributions from net
realized gains .................. (178,811,514) (198,773,670) (106,604,522) (34,322,970) (4,227,580) --
-------------- -------------- ------------ ------------ ------------ ------------
Total distributions to
shareholders ................... (188,159,696) (221,897,231) (107,096,854) (38,137,218) (4,835,048) (783,143)
-------------- -------------- ------------ ------------ ------------ ------------
Capital share transactions ............ 145,498,591 (682,854) 69,542,608 (82,504,921) 34,498,729 111,856,947
-------------- -------------- ------------ ------------ ------------ ------------
Total increase in net assets ...... 169,391,523 189,071,709 86,296,032 87,823,922 47,899,322 134,890,162
Net assets:
Beginning of period ............... 1,406,925,659 1,217,853,950 778,960,667 691,136,745 134,890,162 --
-------------- -------------- ------------ ------------ ------------ ------------
End of period .....................$1,576,317,182 $1,406,925,659 $865,256,699 $778,960,667 $182,789,484 $134,890,162
============== ============== ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
MID-CAP GROWTH SMALL CAP SMALL CAP
EQUITY PORTFOLIO VALUE EQUITY PORTFOLIO GROWTH EQUITY PORTFOLIO
--------------------------- --------------------------- --------------------------
FOR THE FOR THE PERIOD FOR THE FOR THE
SIX MONTHS 12/27/96 1 SIX MONTHS FOR THE SIX MONTHS FOR THE
ENDED THROUGH ENDED YEAR ENDED ENDED YEAR ENDED
3/31/98 9/30/97 3/31/98 9/30/97 3/31/98 9/30/97
------------ ------------ ------------ ------------ ------------ ------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income (deficit) ... $ (454,504) $ (155,369) $ 1,533,201 $ 3,584,345 $ (1,659,491) $ (908,194)
Net gain on investments and
foreign currency related
transactions ................... 12,572,869 23,174,837 43,492,713 144,987,366 7,201,004 131,995,135
------------ ------------ ------------ ------------ ------------ ------------
Net increase in net assets
resulting from operations ....... 12,118,365 23,019,468 45,025,914 148,571,711 5,541,513 131,086,941
------------ ------------ ------------ ------------ ------------ ------------
Distributions to shareholders from:
Net investment income:
Institutional Shares .............. -- -- (1,198,203) (2,644,746) -- (433,573)
Service Shares .................... -- -- (303,580) (734,773) -- --
Investor A Shares ................. -- -- (65,927) (176,487) -- --
Investor B Shares ................. -- -- -- (10,398) -- --
Investor C Shares ................. -- -- -- (762) -- --
------------ ------------ ------------ ------------ ------------ ------------
Total distribution from net
investment income ............... -- -- (1,567,710) (3,567,166) -- (433,573)
------------ ------------ ------------ ------------ ------------ ------------
Net realized gains:
Institutional Shares .............. (963,521) -- (33,889,486) (29,222,142) (24,910,944) (21,197,629)
Service Shares .................... (263,874) -- (12,976,187) (10,944,596) (11,458,901) (10,929,423)
Investor A Shares ................. (25,320) -- (3,649,391) (3,377,127) (2,985,189) (2,203,319)
Investor B Shares ................. (27,114) -- (1,336,440) (336,403) (2,175,966) (608,317)
Investor C Shares ................. (774) -- (318,538) (416) (745,438) (61,208)
------------ ------------ ------------ ------------ ------------ ------------
Total distributions from net
realized gains .................. (1,280,603) -- (52,170,042) (43,880,684) (42,276,438) (34,999,896)
------------ ------------ ------------ ------------ ------------ ------------
Total distributions to
shareholders ................... (1,280,603) -- (53,737,752) (47,447,850) (42,276,438) (35,433,469)
------------ ------------ ------------ ------------ ------------ ------------
Capital share transactions ............ 30,991,141 113,098,231 97,994,918 55,575,869 136,038,820 243,771,372
------------ ------------ ------------ ------------ ------------ ------------
Total increase in net assets ...... 41,828,903 136,117,699 89,283,080 156,699,730 99,303,895 339,424,844
Net assets:
Beginning of period ............... 136,117,699 -- 479,470,704 322,770,974 832,692,321 493,267,477
------------ ------------ ------------ ------------ ------------ ------------
End of period ..................... $177,946,602 $136,117,699 $568,753,784 $479,470,704 $931,996,216 $832,692,321
============ ============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL
EQUITY PORTFOLIO
---------------------------
FOR THE
SIX MONTHS FOR THE
ENDED YEAR ENDED
3/31/98 9/30/97
------------ ------------
(UNAUDITED)
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income (deficit) ... $ 1,187,930 $ 5,191,778
Net gain on investments and
foreign currency related
transactions ................... 53,327,904 83,115,155
------------ ------------
Net increase in net assets
resulting from operations ....... 54,515,834 88,306,933
------------ ------------
Distributions to shareholders from:
Net investment income:
Institutional Shares .............. (5,917,557) (8,151,028)
Service Shares .................... (2,234,158) (2,965,174)
Investor A Shares ................. (196,004) (336,258)
Investor B Shares ................. (32,932) (41,787)
Investor C Shares ................. (1,193) (32)
------------ ------------
Total distribution from net
investment income ............... (8,381,844) (11,494,279)
------------ ------------
Net realized gains:
Institutional Shares .............. (5,880,920) (11,783,420)
Service Shares .................... (2,710,758) (4,941,534)
Investor A Shares ................. (359,503) (620,819)
Investor B Shares ................. (85,549) (90,494)
Investor C Shares ................. (2,122) --
------------ ------------
Total distributions from net
realized gains .................. (9,038,852) (17,436,267)
------------ ------------
Total distributions to
shareholders ................... (17,420,696) (28,930,546)
------------ ------------
Capital share transactions ............ (12,366,662) 29,594,684
------------ ------------
Total increase in net assets ...... 24,728,476 88,971,071
Net assets:
Beginning of period ............... 661,413,823 572,442,752
------------ ------------
End of period ..................... $686,142,299 $661,413,823
============ ============
<FN>
- -----------------
1 Commencement of operations.
</FN>
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
52 & 53
<PAGE>
LOGO [GRAPHIC OMITTED] BLACKROCK FUNDS
BLACKROCK FUNDS LOGO [GRAPHIC OMITTED]
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
INTERNATIONAL INTERNATIONAL
SMALL CAP EMERGING MARKETS SELECT
EQUITY PORTFOLIO PORTFOLIO EQUITY PORTFOLIO
------------------------------ --------------------------- --------------------------
FOR THE FOR THE PERIOD FOR THE FOR THE
SIX MONTHS 9/26/97 1 SIX MONTHS FOR THE SIX MONTHS FOR THE
ENDED THROUGH ENDED YEAR ENDED ENDED YEAR ENDED
3/31/98 9/30/97 3/31/98 9/30/97 3/31/98 9/30/97
----------- ------------ ------------ ------------ ------------ ------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income .................$ 24,891 $ 2,584 $ 119,861 $ 379,075 $ 2,992,158 $ 5,552,094
Net gain (loss) on investments and
foreign currency related
transactions ........................ 2,553,428 (94,412) (36,749,349) 12,712,170 111,344,804 165,812,482
----------- ----------- ------------ ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations ........... 2,578,319 (91,828) (36,629,488) 13,091,245 114,336,962 171,364,576
----------- ----------- ------------ ------------ ------------ ------------
Distributions to shareholders from:
Net investment income:
Institutional Shares .................. (81,520) -- -- (474,769) (2,257,532) (4,137,153)
Service Shares ........................ (1,514) -- -- (179,460) (725,505) (1,370,431)
Investor A Shares ..................... (2,465) -- -- (12,546) (58,874) (96,476)
Investor B Shares ..................... (2,821) -- -- -- -- (14,738)
Investor C Shares ..................... (560) -- -- -- -- (111)
----------- ----------- ------------ ------------ ------------ ------------
Total distributions from net
investment income ................... (88,880) -- -- (666,775) (3,041,911) (5,618,909)
----------- ----------- ------------ ------------ ------------ ------------
Net realized gains:
Institutional Shares .................. -- -- (1,735,707) -- (26,244,955) (24,271,695)
Service Shares ........................ -- -- (980,791) -- (11,088,452) (10,159,155)
Investor A Shares ..................... -- -- (62,362) -- (1,143,151) (598,242)
Investor B Shares ..................... -- -- (27,732) -- (1,237,920) (140,029)
Investor C Shares ..................... -- -- (1,309) -- (25,714) (383)
----------- ----------- ------------ ------------ ------------ ------------
Total distributions from net
realized gains ...................... -- -- (2,807,901) -- (39,740,192) (35,169,504)
----------- ----------- ------------ ------------ ------------ ------------
Total distributions to shareholders ... (88,880) -- (2,807,901) (666,775) (42,782,103) (40,788,413)
----------- ----------- ------------ ------------ ------------ ------------
Capital share transactions ................ 1,229,610 16,725,691 4,314,154 66,260,603 219,086,494 65,514,355
----------- ----------- ------------ ------------ ------------ ------------
Total increase (decrease) in
net assets.......................... 3,719,049 16,633,863 (35,123,235) 78,685,073 290,641,353 196,090,518
Net assets:
Beginning of period ................... 16,633,863 -- 188,548,502 109,863,429 591,775,729 395,685,211
----------- ----------- ------------ ------------ ------------ ------------
End of period .........................$20,352,912 $16,633,863 $153,425,267 $188,548,502 $882,417,082 $591,775,729
=========== =========== ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
INDEX
EQUITY PORTFOLIO BALANCED PORTFOLIO
----------------------------- -----------------------------
FOR THE FOR THE
SIX MONTHS FOR THE SIX MONTHS FOR THE
ENDED YEAR ENDED ENDED YEAR ENDED
3/31/98 9/30/97 3/31/98 9/30/97
------------ ------------ ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ................. $ 2,792,045 $ 4,982,227 $ 3,803,037 $ 7,571,920
Net gain (loss) on investments and
foreign currency related
transactions ........................ 86,885,288 107,651,902 36,093,281 62,801,064
------------ ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations ........... 89,677,333 112,634,129 39,896,318 70,372,984
------------ ------------ ------------ ------------
Distributions to shareholders from:
Net investment income:
Institutional Shares .................. (1,287,270) (2,473,762) (495,111) (972,993)
Service Shares ........................ (1,203,494) (1,969,191) (2,129,279) (4,320,625)
Investor A Shares ..................... (154,732) (256,444) (980,516) (2,073,865)
Investor B Shares ..................... (76,071) (100,050) (232,442) (283,194)
Investor C Shares ..................... (40,263) (53,663) (1,696) (622)
------------ ------------ ------------ ------------
Total distributions from net
investment income ................... (2,761,830) (4,853,110) (3,839,044) (7,651,299)
------------ ------------ ------------ ------------
Net realized gains:
Institutional Shares .................. (350,642) (6,172,085) (2,175,645) (1,274,430)
Service Shares ........................ (412,780) (5,024,090) (12,131,307) (4,988,172)
Investor A Shares ..................... (61,777) (620,161) (5,953,904) (2,456,117)
Investor B Shares ..................... (85,726) (141,880) (1,760,468) (283,940)
Investor C Shares ..................... (45,394) (20,100) (7,177) --
------------ ------------ ------------ ------------
Total distributions from net
realized gains ...................... (956,319) (11,978,316) (22,028,501) (9,002,659)
------------ ------------ ------------ ------------
Total distributions to shareholders ... (3,718,149) (16,831,426) (25,867,545) (16,653,958)
------------ ------------ ------------ ------------
Capital share transactions ................ 80,018,146 109,931,345 43,507,001 14,011,868
------------ ------------ ------------ ------------
Total increase (decrease) in
net assets.......................... 165,977,330 205,734,048 57,535,774 67,730,894
Net assets:
Beginning of period ................... 451,978,051 246,244,003 318,650,869 250,919,975
------------ ------------ ------------ ------------
End of period ......................... $617,955,381 $451,978,051 $376,186,643 $318,650,869
============ ============ ============ ============
<FN>
- ------------------
1 Commencement of operations.
</FN>
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
54 & 55
<PAGE>
LOGO [GRAPHIC OMITTED] BLACKROCK FUNDS
BLACKROCK FUNDS LOGO [GRAPHIC OMITTED]
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
NET NET GAIN DISTRIBUTIONS NET
ASSET (LOSS) ON DISTRIBUTIONS FROM NET ASSET
VALUE NET INVESTMENTS FROM NET DISTRIBUTIONS REALIZED VALUE
BEGINNING INVESTMENT BOTH REALIZED INVESTMENT FROM CAPITAL END OF TOTAL
OF PERIOD INCOME ND UNREALIZED) INCOME CAPITAL GAINS PERIOD RETURN
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------
LARGE CAP VALUE EQUITY
- ----------------------
INSTITUTIONAL CLASS
10/1/97 through 3/31/98 7 $17.53 $ 0.06 $ 1.71 $(0.06) $ -- $(1.75) $17.49 15.57%
9/30/97 15.35 0.31 4.69 (0.30) -- (2.52) 17.53 37.66
9/30/96 13.92 0.35 2.41 (0.36) -- (0.97) 15.35 21.01
9/30/95 11.62 0.34 2.54 (0.33) -- (0.25) 13.92 25.73
9/30/94 11.68 0.27 0.16 (0.27) -- (0.22) 11.62 3.76
9/30/93 9.78 0.22 1.91 (0.23) -- -- 11.68 21.92
SERVICE CLASS
10/1/97 through 3/31/98 7 $17.52 $ 0.05 $ 1.73 $(0.05) $ -- $(1.75) $17.50 15.54%
9/30/97 15.35 0.24 4.70 (0.25) -- (2.52) 17.52 37.22
9/30/96 13.92 0.32 2.40 (0.32) -- (0.97) 15.35 20.68
9/30/95 11.62 0.30 2.55 (0.30) -- (0.25) 13.92 25.40
9/30/94 11.68 0.25 0.16 (0.25) -- (0.22) 11.62 3.51
7/29/93 1 through 9/30/93 11.21 0.04 0.48 (0.05) -- -- 11.68 4.64
INVESTOR A CLASS
10/1/97 through 3/31/98 7 $17.52 $ 0.04 $ 1.71 $(0.04) $ -- $(1.75) $17.48 15.32%3
9/30/97 15.35 0.23 4.69 (0.23) -- (2.52) 17.52 37.01 3
9/30/96 13.92 0.28 2.41 (0.29) -- (0.97) 15.35 20.52 3
9/30/95 11.62 0.27 2.56 (0.28) -- (0.25) 13.92 25.22 3
9/30/94 11.69 0.23 0.15 (0.23) -- (0.22) 11.62 3.32 3
9/30/93 9.78 0.22 1.91 (0.22) -- -- 11.69 21.95 3
INVESTOR B CLASS
10/1/97 through 3/31/98 7 $17.44 $ 0.02 $ 1.68 $(0.02) $ -- $(1.75) $17.37 14.85%4
9/30/97 15.32 0.14 4.64 (0.14) -- (2.52) 17.44 36.40 4
1/18/96 1 through 9/30/96 13.56 0.13 1.80 (0.17) -- -- 15.32 14.26 4
INVESTOR C CLASS
10/1/97 through 3/31/98 7 $17.44 $ 0.02 $ 1.68 $(0.02) $ -- $(1.75) $17.37 14.85%4
9/30/97 15.32 0.15 4.63 (0.14) -- (2.52) 17.44 35.99 4
8/16/96 1 through 9/30/96 14.91 0.02 0.45 (0.06) -- -- 15.32 3.16 4
- -----------------------
LARGE CAP GROWTH EQUITY
- -----------------------
INSTITUTIONAL CLASS
10/1/97 through 3/31/98 7 $18.92 $ 0.02 $ 2.66 $(0.02) $ -- $(2.64) $18.94 16.69%
9/30/97 14.96 0.09 4.72 (0.11) -- (0.74) 18.92 33.69
9/30/96 13.03 0.08 2.29 (0.06) -- (0.38) 14.96 18.67
9/30/95 10.19 0.13 2.88 (0.17) -- -- 13.03 29.88
9/30/94 11.58 0.06 (1.34) (0.01) -- (0.10) 10.19 (11.14)
9/30/93 9.92 0.06 2.07 (0.07) (0.01) (0.39) 11.58 22.18
SERVICE CLASS
10/1/97 through 3/31/98 7 $18.93 $(0.01) $ 2.67 $ -- $ -- $(2.64) $18.95 16.49%
9/30/97 14.95 0.04 4.72 (0.04) -- (0.74) 18.93 33.38
9/30/96 13.02 0.05 2.28 (0.02) -- (0.38) 14.95 18.34
9/30/95 10.18 0.10 2.87 (0.13) -- -- 13.02 29.43
9/30/94 11.57 0.03 (1.32) -- -- (0.10) 10.18 (11.20)
7/29/93 1 through 9/30/93 10.54 -- 1.03 -- -- -- 11.57 9.77
INVESTOR A CLASS
10/1/97 through 3/31/98 7 $18.91 $(0.02) $ 2.65 $ -- $ -- $(2.64) $18.90 16.33%3
9/30/97 14.94 0.01 4.72 (0.02) -- (0.74) 18.91 33.18 3
9/30/96 13.01 0.02 2.29 -- -- (0.38) 14.94 18.18 3
9/30/95 10.16 0.08 2.87 (0.10) -- -- 13.01 29.26 3
9/30/94 11.57 0.02 (1.33) -- -- (0.10) 10.16 (11.38)3
9/30/93 9.92 0.02 2.10 (0.07) (0.01) (0.39) 11.57 22.08 3
INVESTOR B CLASS
10/1/97 through 3/31/98 7 $18.69 $(0.05) $ 2.57 $ -- $ -- $(2.64) $18.57 15.88%4
9/30/97 14.86 (0.07) 4.64 -- -- (0.74) 18.69 32.18 4
1/24/96 1 through 9/30/96 13.08 (0.02) 1.80 -- -- -- 14.86 13.61 4
INVESTOR C CLASS
10/1/97 through 3/31/98 7 $18.69 $(0.05) $ 2.57 $ -- $ -- $(2.64) $18.57 15.88%4
1/24/97 1 through 9/30/97 15.23 (0.03) 3.49 -- -- -- $18.69 22.78 4
- --------------------
MID-CAP VALUE EQUITY
- --------------------
INSTITUTIONAL CLASS
10/1/97 through 3/31/98 7 $12.80 $ 0.03 $ 1.26 $(0.03) $ -- $(0.36) $13.70 10.67%
12/27/96 1 through 9/30/97 10.00 0.10 2.80 (0.10) -- -- 12.80 29.11
</TABLE>
<TABLE>
<CAPTION>
RATIO OF NET
NET RATIO OF EXPENSES INVESTMENT INCOME
ASSETS RATIO OF TO AVERAGE RATIO OF NET TO AVERAGE
END OF EXPENSES TO NET ASSETS INVESTMENT INCOME NET ASSETS PORTFOLIO AVERAGE
PERIOD AVERAGE NET (EXCLUDING TO AVERAGE NET (EXCLUDING TURNOVER COMMISSION
(000) ASSETS WAIVERS) ASSETS WAIVERS) RATE RATE 5
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------
LARGE CAP VALUE EQUITY
- ----------------------
INSTITUTIONAL CLASS
10/1/97 through 3/31/98 7 $796,215 0.84%2 0.84%2 1.47%2 1.47%2 23% $0.0544
9/30/97 743,405 0.78 0.85 1.94 1.87 37 0.0580
9/30/96 731,024 0.75 0.84 2.40 2.32 60 0.0556
9/30/95 508,273 0.67 0.81 2.68 2.53 12 --
9/30/94 577,996 0.65 0.81 2.44 2.28 11 --
9/30/93 432,776 0.80 0.83 2.07 2.04 11 --
SERVICE CLASS
10/1/97 through 3/31/98 7 $692,292 1.14%2 1.14%2 1.16%2 1.16%2 23% $0.0544
9/30/97 595,189 1.09 1.16 1.62 1.55 37 0.0580
9/30/96 457,283 1.05 1.14 2.13 2.04 60 0.0556
9/30/95 170,832 0.95 1.09 2.40 2.26 12 --
9/30/94 105,035 0.90 1.06 2.24 2.08 11 --
7/29/93 1 through 9/30/93 23,137 0.91 2 0.94 2 2.44 2 2.41 2 11 --
INVESTOR A CLASS
10/1/97 through 3/31/98 7 $ 55,250 1.31%2 1.31%2 0.99%2 0.99%2 23% $0.0544
9/30/97 47,131 1.26 1.33 1.44 1.37 37 0.0580
9/30/96 26,190 1.22 1.31 1.93 1.84 60 0.0556
9/30/95 16,910 1.11 1.25 2.24 2.10 12 --
9/30/94 10,412 1.05 1.21 2.08 1.92 11 --
9/30/93 4,865 0.92 0.95 1.96 1.93 11 --
INVESTOR B CLASS
10/1/97 through 3/31/98 7 $ 29,922 2.05%2 2.05%2 0.24%2 0.24%2 23% $0.0544
9/30/97 19,773 2.00 2.07 0.64 0.57 37 0.0580
1/18/96 1 through 9/30/96 3,152 1.92 2 2.00 2 1.34 2 1.25 2 60 0.0556
INVESTOR C CLASS
10/1/97 through 3/31/98 7 $ 2,638 2.04%2 2.04%2 0.23%2 0.23%2 23% $0.0544
9/30/97 1,428 2.01 2.08 0.61 0.54 37 0.0580
8/16/96 1 through 9/30/96 205 1.80 2 1.88 2 1.29 2 1.20 2 60 0.0556
- -----------------------
LARGE CAP GROWTH EQUITY
- -----------------------
INSTITUTIONAL CLASS
10/1/97 through 3/31/98 7 $511,444 0.87%2 0.87%2 0.22%2 0.22%2 29% $0.0588
9/30/97 482,851 0.79 0.86 0.54 0.47 81 0.0594
9/30/96 481,171 0.75 0.86 0.63 0.51 58 0.0598
9/30/95 211,543 0.67 0.85 1.20 1.01 55 --
9/30/94 97,834 0.65 0.89 0.62 0.38 212 --
9/30/93 100,049 0.81 0.87 0.50 0.44 175 --
SERVICE CLASS
10/1/97 through 3/31/98 7 $312,301 1.17%2 1.17%2 (0.08)%2 (0.08)%2 29% $0.0588
9/30/97 262,409 1.10 1.17 0.24 0.17 81 0.0594
9/30/96 191,023 1.05 1.17 0.31 0.20 58 0.0598
9/30/95 76,769 0.95 1.13 0.91 0.73 55 --
9/30/94 36,752 0.90 1.14 0.51 0.26 212 --
7/29/93 1 through 9/30/93 8,606 0.89 2 0.95 2 (0.03)2 (0.09)2 175 --
INVESTOR A CLASS
10/1/97 through 3/31/98 7 $ 30,043 1.36%2 1.36%2 (0.27)%2 (0.27)%2 29% $0.0588
9/30/97 25,575 1.27 1.34 0.07 0.0 2 81 0.0594
9/30/96 16,579 1.22 1.34 0.15 0.04 58 0.0598
9/30/95 10,034 1.11 1.29 0.76 0.58 55 --
9/30/94 5,049 1.05 1.29 0.29 0.05 212 --
9/30/93 2,362 0.91 0.97 0.18 0.12 175 --
INVESTOR B CLASS
10/1/97 through 3/31/98 7 $ 11,122 2.08%2 2.08%2 (0.99)%2 (0.99)%2 29% $0.0588
9/30/97 7,919 2.01 2.08 (0.66) (0.73) 81 0.0594
1/24/96 1 through 9/30/96 2,364 1.93 2 2.05 2 (0.47)2 (0.58)2 58 0.0598
INVESTOR C CLASS
10/1/97 through 3/31/98 7 $ 347 2.08%2 2.08%2 (0.99)%2 (0.99)%2 29% $0.0588
1/24/97 1 through 9/30/97 207 2.02 2 2.09 2 (0.66) 2 (0.73)2 81 0.0594
- --------------------
MID-CAP VALUE EQUITY
- --------------------
INSTITUTIONAL CLASS
10/1/97 through 3/31/98 7 $131,033 1.14%2 1.15%2 0.86%2 0.85%2 23% $0.0575
12/27/96 1 through 9/30/97 106,886 1.15 2 1.19 2 1.33 2 1.29 2 36 0.0528
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
56 & 57
<PAGE>
LOGO [GRAPHIC OMITTED] BLACKROCK FUNDS
BLACKROCK FUNDS LOGO [GRAPHIC OMITTED]
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
NET NET GAIN DISTRIBUTIONS NET
ASSET (LOSS) ON DISTRIBUTIONS FROM NET ASSET
VALUE NET INVESTMENTS FROM NET DISTRIBUTIONS REALIZED VALUE
BEGINNING INVESTMENT BOTH REALIZED INVESTMENT FROM CAPITAL END OF TOTAL
OF PERIOD INCOME ND UNREALIZED) INCOME CAPITAL GAINS PERIOD RETURN
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SERVICE CLASS
10/1/97 through 3/31/98 7 $12.79 $ 0.02 $ 1.26 $(0.02) $ -- $(0.36) $13.69 10.54%
12/27/96 1 through 9/30/97 10.00 0.07 2.80 (0.08) -- -- 12.79 28.81
INVESTOR A CLASS
10/1/97 through 3/31/98 7 $12.77 $ 0.01 $ 1.26 $(0.01) $ -- $(0.36) $13.67 10.47%3
12/27/96 1 through 9/30/97 10.00 0.07 2.78 (0.08) -- -- 12.77 28.51 3
INVESTOR B CLASS
10/1/97 through 3/31/98 7 $12.78 $(0.01) $ 1.26 $ -- $ -- $(0.36) $13.67 10.16%4
12/27/96 1 through 9/30/97 10.00 0.03 2.79 (0.04) -- -- 12.78 28.23 4
INVESTOR C CLASS
10/1/97 through 3/31/98 7 $12.78 $ -- $ 1.25 $ -- $ -- $(0.36) $13.67 10.16%4
12/27/96 1 through 9/30/97 $10.00 0.02 2.80 (0.04) -- -- 12.78 28.23 4
- ---------------------
MID-CAP GROWTH EQUITY
- ---------------------
INSTITUTIONAL CLASS
10/1/97 through 3/31/98 7 $12.20 $(0.03) $ 0.78 $ -- $ -- $(0.10) $12.85 6.26%
12/27/96 1 through 9/30/97 10.00 (0.01) 2.21 -- -- -- 12.20 22.00
SERVICE CLASS
10/1/97 through 3/31/98 7 $12.17 $(0.03) $ 0.76 $ -- $ -- $(0.10) $12.80 6.10%
12/27/96 1 through 9/30/97 10.00 (0.03) 2.20 -- -- -- 12.17 21.70
INVESTOR A CLASS
10/1/97 through 3/31/98 7 $12.14 $(0.05) $ 0.77 $ -- $ -- $(0.10) $12.76 6.04%3
12/27/96 1 through 9/30/97 10.00 (0.03) 2.17 -- -- -- 12.14 21.40 3
INVESTOR B CLASS
10/1/97 through 3/31/98 7 $12.11 $(0.07) $ 0.73 $ -- $ -- $(0.10) $12.67 5.55%4
12/27/96 1 through 9/30/97 10.00 (0.05) 2.16 -- -- -- 12.11 21.10 4
INVESTOR C CLASS
10/1/97 through 3/31/98 7 $12.11 $(0.05) $ 0.71 $ -- $ -- $(0.10) $12.67 5.55%4
12/27/96 1 through 9/30/97 10.00 (0.07) 2.18 -- -- -- 12.11 21.10 4
- ----------------------
SMALL CAP VALUE EQUITY
- ----------------------
INSTITUTIONAL CLASS
10/1/97 through 3/31/98 7 $20.20 $ 0.03 $ 1.52 $(0.03) $ -- $(2.12) $19.60 8.81%
9/30/97 15.98 0.17 6.39 (0.17) -- (2.17) 20.20 47.36
9/30/96 15.16 0.10 1.70 (0.11) -- (0.87) 15.98 12.64
9/30/95 13.62 0.06 2.17 (0.08) -- (0.61) 15.16 17.43
9/30/94 13.08 0.04 0.77 (0.02) -- (0.25) 13.62 6.28
9/30/93 10.14 0.04 3.02 (0.04) -- (0.08) 13.08 30.36
SERVICE CLASS
10/1/97 through 3/31/98 7 $20.20 $ 0.01 $ 1.51 $(0.01) $ -- $(2.12) $19.59 8.61%
9/30/97 15.98 0.13 6.39 (0.13) -- (2.17) 20.20 46.95
9/30/96 15.15 0.06 1.70 (0.06) -- (0.87) 15.98 12.30
9/30/95 13.59 0.02 2.18 (0.03) -- (0.61) 15.15 17.17
9/30/94 13.08 -- 0.77 (0.01) -- (0.25) 13.59 5.96
7/29/93 1 through 9/30/93 12.28 -- 0.80 -- -- -- 13.08 6.51
INVESTOR A CLASS
10/1/97 through 3/31/98 7 $20.20 $ 0.01 $ 1.50 $(0.01) $ -- $ (2.12) $19.58 8.49%3
9/30/97 15.97 0.10 6.40 (0.10) -- (2.17) 20.20 46.85 3
9/30/96 15.14 0.03 1.69 (0.02) -- (0.87) 15.97 12.06 3
9/30/95 13.58 -- 2.17 -- -- (0.61) 15.14 16.96 3
9/30/94 13.07 (0.01) 0.77 -- -- (0.25) 13.58 5.93 3
9/30/93 10.14 0.03 3.02 (0.04) -- (0.08) 13.07 30.36 3
INVESTOR B CLASS
10/1/97 through 3/31/98 7 $19.86 $ -- $ 1.44 $ -- $ -- $(2.12) $19.18 8.14%4
9/30/97 15.80 0.08 6.19 (0.04) -- (2.17) 19.86 45.67 4
9/30/96 15.06 (0.04) 1.65 -- -- (0.87) 15.80 11.34 4
10/3/94 1 through 9/30/95 13.51 (0.05) 2.21 -- -- (0.61) 15.06 16.95 4
INVESTOR C CLASS
10/1/97 through 3/31/98 7 $19.86 $(0.02) $ 1.46 $ -- $ -- $(2.12) $19.18 8.14%4
10/1/96 1 through 9/30/97 15.76 0.02 6.29 (0.04) -- (2.17) 19.86 46.04 4
- -----------------------
SMALL CAP GROWTH EQUITY
- -----------------------
INSTITUTIONAL CLASS
10/1/97 through 3/31/98 7 $23.62 $(0.02) $(0.02) $ -- $ -- $(1.14) $22.44 0.05%
9/30/97 21.94 0.02 3.18 (0.03) -- (1.49) 23.62 15.89
9/30/96 15.06 (0.01) 6.91 (0.02) -- -- 21.94 45.87
9/30/95 10.16 0.02 4.90 (0.02) -- -- 15.06 48.50
9/30/94 10.47 0.03 (0.33) (0.01) -- -- 10.16 (2.89)
9/14/93 1 through 9/30/93 10.00 -- 0.47 -- -- -- 10.47 4.70
</TABLE>
<TABLE>
<CAPTION>
RATIO OF NET
NET RATIO OF EXPENSES INVESTMENT INCOME
ASSETS RATIO OF TO AVERAGE RATIO OF NET TO AVERAGE
END OF EXPENSES TO NET ASSETS INVESTMENT INCOME NET ASSETS PORTFOLIO AVERAGE
PERIOD AVERAGE NET (EXCLUDING TO AVERAGE NET (EXCLUDING TURNOVER COMMISSION
(000) ASSETS WAIVERS) ASSETS WAIVERS) RATE RATE 5
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
SERVICE CLASS
10/1/97 through 3/31/98 7 $ 41,023 1.44%2 1.45%2 0.57%2 0.56%2 23% $0.0575
12/27/96 1 through 9/30/97 22,757 1.44 2 1.48 2 0.98 2 0.94 2 36 0.0528
INVESTOR A CLASS
10/1/97 through 3/31/98 7 $ 4,139 1.60%2 1.61%2 0.39%2 0.38%2 23% $0.0575
12/27/96 1 through 9/30/97 2,315 1.61 2 1.64 2 0.77 2 0.73 2 36 0.0528
INVESTOR B CLASS
10/1/97 through 3/31/98 7 $ 6,433 2.34%2 2.35%2 (0.35)%2 (0.36)%2 23% $0.0575
12/27/96 1 through 9/30/97 2,911 2.32 2 2.36 2 0.04 2 0.0 2 36 0.0528
INVESTOR C CLASS
10/1/97 through 3/31/98 7 $ 161 2.30%2 2.31%2 (0.37)%2 (0.38)%2 23% $0.0575
12/27/96 1 through 9/30/97 21 2.33 2 2.37 2 0.13 2 0.09 2 36 0.0528
- ---------------------
MID-CAP GROWTH EQUITY
- ---------------------
INSTITUTIONAL CLASS
10/1/97 through 3/31/98 7 $130,896 1.13%2 1.14%2 (0.51)%2 (0.52)%2 70% $0.0587
12/27/96 1 through 9/30/97 107,709 1.13 2 1.17 2 (0.16)2 (0.20)2 64 0.0576
SERVICE CLASS
10/1/97 through 3/31/98 7 $ 39,326 1.43%2 1.44%2 (0.80)%2 (0.81)%2 70% $0.0587
12/27/96 1 through 9/30/97 22,984 1.44 2 1.48 2 (0.54)2 (0.58)2 64 0.0576
INVESTOR A CLASS
10/1/97 through 3/31/98 7 $ 3,514 1.60%2 1.61%2 (0.97)%2 (0.98)%2 70% $0.0587
12/27/96 1 through 9/30/97 2,650 1.59 2 1.63 2 (0.73)2 (0.77)2 64 0.0576
INVESTOR B CLASS
10/1/97 through 3/31/98 7 $ 4,068 2.34%2 2.35%2 (1.71)%2 (1.72)%2 70% $0.0587
12/27/96 1 through 9/30/97 2,691 2.32 2 2.36 2 (1.50)2 (1.54)2 64 0.0576
INVESTOR C CLASS
10/1/97 through 3/31/98 7 $ 143 2.34%2 2.35%2 (1.71)%2 (1.72)%2 70% $0.0587
12/27/96 1 through 9/30/97 85 2.35 2 2.39 2 (1.49)2 (1.53)2 64 0.0576
- ----------------------
SMALL CAP VALUE EQUITY
- ----------------------
INSTITUTIONAL CLASS
10/1/97 through 3/31/98 7 $351,208 0.88%2 0.88%2 0.76%2 0.76%2 23% $0.0541
9/30/97 309,899 0.87 0.88 1.09 1.08 66 0.0504
9/30/96 214,828 0.85 0.86 0.68 0.67 50 0.0580
9/30/95 168,334 0.75 0.84 0.44 0.35 31 --
9/30/94 168,360 0.73 0.85 0.28 0.16 18 --
9/30/93 128,805 0.83 0.87 0.31 0.27 41 --
SERVICE CLASS
10/1/97 through 3/31/98 7 $147,924 1.18%2 1.18%2 0.47%2 0.47%2 23% $0.0541
9/30/97 122,431 1.17 1.18 0.79 0.78 66 0.0504
9/30/96 80,981 1.15 1.16 0.38 0.37 50 0.0580
9/30/95 61,313 1.02 1.12 0.16 0.07 31 --
9/30/94 45,372 0.98 1.10 0.03 (0.09) 18 --
7/29/93 1 through 9/30/93 21,689 0.99 2 1.03 2 0.12 2 0.08 2 41 --
INVESTOR A CLASS
10/1/97 through 3/31/98 7 $ 42,120 1.18%2 1.18%2 0.31%2 0.31%2 23% $0.0541
9/30/97 34,031 1.34 1.35 0.63 0.62 66 0.0504
9/30/96 24,605 1.32 1.33 0.20 0.19 50 0.0580
9/30/95 21,563 1.18 1.28 0.0 (0.09) 31 --
9/30/94 16,884 1.13 1.25 (0.11) (0.23) 18 --
9/30/93 9,084 0.94 0.98 0.19 0.15 41 --
INVESTOR B CLASS
10/1/97 through 3/31/98 7 $ 21,899 2.08%2 2.08%2 (0.40)%2 (0.40)%2 23% $0.0541
9/30/97 11,001 2.07 2.08 (0.15) (0.16) 66 0.0504
9/30/96 2,357 2.04 2.05 (0.50) (0.51) 50 0.0580
10/3/94 1 through 9/30/95 1,477 1.80 2 1.89 2 (0.61)2 (0.70)2 31 --
INVESTOR C CLASS
10/1/97 through 3/31/98 7 $ 5,603 2.08%2 2.08%2 (0.40)%2 (0.40)%2 23% $0.0541
10/1/96 1 through 9/30/97 2,109 2.04 2 2.05 2 (0.18)2 (0.19)2 66 0.0504
- -----------------------
SMALL CAP GROWTH EQUITY
- -----------------------
INSTITUTIONAL CLASS
10/1/97 through 3/31/98 7 $565,414 0.88%2 0.88%2 (0.21)%2 (0.21)%2 70% $0.0576
9/30/97 495,904 0.87 0.87 0.01 0.01 82 0.0572
9/30/96 299,563 0.86 0.88 (0.07) (0.09) 89 0.0569
9/30/95 145,915 0.75 0.88 0.22 0.09 74 --
9/30/94 65,612 0.48 1.04 0.45 (0.10) 89 --
9/14/93 1 through 9/30/93 11,310 0.73 2 1.42 2 (0.11)2 (0.80)2 9 --
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
58 & 59
<PAGE>
LOGO [GRAPHIC OMITTED] BLACKROCK FUNDS
BLACKROCK FUNDS LOGO [GRAPHIC OMITTED]
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
NET NET GAIN DISTRIBUTIONS NET
ASSET (LOSS) ON DISTRIBUTIONS FROM NET ASSET
VALUE NET INVESTMENTS FROM NET DISTRIBUTIONS REALIZED VALUE
BEGINNING INVESTMENT BOTH REALIZED INVESTMENT FROM CAPITAL END OF TOTAL
OF PERIOD INCOME ND UNREALIZED) INCOME CAPITAL GAINS PERIOD RETURN
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SERVICE CLASS
10/1/97 through 3/31/98 7 $23.43 $(0.04) ($0.06) $ -- $ -- $(1.14) $22.19 (0.18)%
9/30/97 21.80 (0.03) $3.15 -- -- (1.49) 23.43 15.54
9/30/96 15.02 (0.06) 6.84 -- -- -- 21.80 45.14
9/30/95 10.14 (0.01) 4.89 -- -- -- 15.02 48.13
9/30/94 10.47 0.01 (0.34) -- -- -- 10.14 (3.12)
9/15/93 1 through 9/30/93 9.96 -- 0.51 -- -- -- 10.47 5.12
INVESTOR A CLASS
10/1/97 through 3/31/98 7 $23.25 $(0.06) $(0.05) $ -- $ -- $(1.14) $22.00 (0.22)%3
9/30/97 21.69 (0.04) 3.09 -- -- (1.49) 23.25 15.28 3
9/30/96 14.98 (0.06) 6.77 -- -- -- 21.69 44.79 3
9/30/95 10.12 (0.02) 4.88 -- -- -- 14.98 48.02 3
9/30/94 10.47 -- (0.35) -- -- -- 10.12 (3.33)3
9/15/93 1 through 9/30/93 9.96 -- 0.51 -- -- -- 10.47 5.12 3
INVESTOR B CLASS
10/1/97 through 3/31/98 7 $22.89 $(0.11) $(0.05) $ -- $ -- $(1.14) $21.59 (0.50)%4
9/30/97 21.53 (0.07) 2.92 -- -- (1.49) 22.89 14.47 4
1/18/96 1 through 9/30/96 14.87 (0.07) 6.73 -- -- -- 21.53 38.27 4
INVESTOR C CLASS
10/1/97 through 3/31/98 7 $22.89 $(0.12) $(0.04) $ -- $ -- $(1.14) $21.59 (0.50)%4
9/30/97 21.53 (0.11) 2.96 -- -- (1.49) 22.89 14.47 4
9/6/96 1 through 9/30/96 19.66 (0.01) 1.88 -- -- -- 21.53 9.51 4
- --------------------
INTERNATIONAL EQUITY
- --------------------
INSTITUTIONAL CLASS
10/1/97 through 3/31/98 7 $14.65 $(0.02) $ 1.18 $(0.20) $ -- $(0.20) $15.41 8.29%
9/30/97 13.43 0.14 1.77 (0.28) -- (0.41) 14.65 14.88
9/30/96 13.27 0.17 0.84 (0.18) -- (0.67) 13.43 8.01
9/30/95 13.44 0.17 0.13 (0.11) -- (0.36) 13.27 2.46
9/30/94 12.48 0.15 1.17 (0.11) -- (0.25) 13.44 10.71
9/30/93 9.87 0.11 2.61 (0.11) -- -- 12.48 27.72
SERVICE CLASS
10/1/97 through 3/31/98 7 $14.58 $(0.01) $ 1.14 $(0.16) $ -- $(0.20) $15.35 8.08%
9/30/97 13.37 0.10 1.76 (0.24) -- (0.41) 14.58 14.52
9/30/96 13.24 0.19 0.78 (0.17) -- (0.67) 13.37 7.71
9/30/95 13.41 0.11 0.16 (0.08) -- (0.36) 13.24 2.19
9/30/94 12.47 0.14 1.14 (0.09) -- (0.25) 13.41 10.36
7/29/93 1 through 9/30/93 11.76 0.02 0.69 -- -- -- 12.47 6.03
INVESTOR A CLASS
10/1/97 through 3/31/98 7 $14.57 $(0.05) $ 1.17 $(0.13) $ -- $(0.20) $15.36 7.98%3
9/30/97 13.36 0.07 1.77 (0.22) -- (0.41) 14.57 14.36 3
9/30/96 13.24 0.14 0.81 (0.16) -- (0.67) 13.36 7.58 3
9/30/95 13.40 0.11 0.13 (0.04) -- (0.36) 13.24 2.00 3
9/30/94 12.47 0.12 1.15 (0.09) -- (0.25) 13.40 10.24 3
9/30/93 9.87 0.12 2.59 (0.11) -- -- 12.47 27.72 3
INVESTOR B CLASS
10/1/97 through 3/31/98 7 $14.38 $(0.05) $ 1.11 $(0.07) $ -- $(0.20) $15.17 7.64%4
9/30/97 13.23 0.07 1.66 (0.17) -- (0.41) 14.38 13.63 4
9/30/96 13.20 0.08 0.77 (0.15) -- (0.67) 13.23 6.81 4
10/3/94 1 through 9/30/95 13.35 0.05 0.16 -- -- (0.36) 13.20 1.77 4
INVESTOR C CLASS
10/1/97 through 3/31/98 7 $14.38 $(0.02) $ 1.08 $(0.07) $ -- $(0.20) $15.17 7.64%4
12/5/96 1 through 9/30/97 13.21 0.15 1.19 (0.17) -- -- 14.38 10.33 4
- ------------------------------
INTERNATIONAL SMALL CAP EQUITY
- ------------------------------
INSTITUTIONAL CLASS
10/1/97 through 3/31/98 7 $ 9.94 $ 0.02 $ 1.41 $(0.05) $ -- $ -- $11.32 14.18%
9/26/97 1 through 9/30/97 10.00 -- (0.06) -- -- -- 9.94 (0.30)
SERVICE CLASS
10/1/97 through 3/31/98 7 $ 9.94 $(0.02) $ 1.44 $(0.05) $ -- $ -- $11.31 14.03%
9/26/97 1 through 9/30/97 10.00 -- (0.06) -- -- -- 9.94 (0.30)
INVESTOR A CLASS
10/1/97 through 3/31/98 7 $ 9.94 $ 0.00 $ 1.41 $(0.03) $ -- $ -- $11.32 13.94%3
9/26/97 1 through 9/30/97 10.00 -- (0.06) -- -- -- 9.94 (0.30)3
INVESTOR B CLASS
10/1/97 through 3/31/98 7 $ 9.94 $(0.03) $ 1.40 $(0.02) $ -- $ -- $11.29 13.46%4
9/26/97 1 through 9/30/97 10.00 -- (0.06) -- -- -- 9.94 (0.30)4
</TABLE>
<TABLE>
<CAPTION>
RATIO OF NET
NET RATIO OF EXPENSES INVESTMENT INCOME
ASSETS RATIO OF TO AVERAGE RATIO OF NET TO AVERAGE
END OF EXPENSES TO NET ASSETS INVESTMENT INCOME NET ASSETS PORTFOLIO AVERAGE
PERIOD AVERAGE NET (EXCLUDING TO AVERAGE NET (EXCLUDING TURNOVER COMMISSION
(000) ASSETS WAIVERS) ASSETS WAIVERS) RATE RATE 5
=================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
SERVICE CLASS
10/1/97 through 3/31/98 7 $243,053 1.18%2 0.18%2 (0.51)%2 (0.51)%2 70% $0.0576
9/30/97 225,089 1.17 1.17 (0.29) (0.29) 82 0.0572
9/30/96 158,901 1.16 1.18 (0.38) (0.40) 89 0.0569
9/30/95 62,604 1.03 1.16 (0.07) (0.20) 74 --
9/30/94 22,648 0.71 1.27 0.21 (0.34) 89 --
9/15/93 1 through 9/30/93 911 0.99 2 1.68 2 (0.34)2 (1.03)2 9 --
INVESTOR A CLASS
10/1/97 through 3/31/98 7 $ 59,949 1.36%2 1.36%2 (0.69)%2 (0.69)%2 70% $0.0576
9/30/97 57,323 1.34 1.34 (0.46) (0.46) 82 0.0572
9/30/96 27,954 1.33 1.35 (0.55) (0.57) 89 0.0569
9/30/95 7,348 1.20 1.33 (0.24) (0.36) 74 --
9/30/94 1,620 0.86 1.42 0.07 (0.49) 89 --
9/15/93 1 through 9/30/93 41 1.13 2 1.82 2 (0.48)2 (1.17)2 9 --
INVESTOR B CLASS
10/1/97 through 3/31/98 7 $ 47,993 2.09%2 2.09%2 (1.43)%2 (1.43)%2 70% $0.0576
9/30/97 40,270 2.07 2.07 (1.23) (1.23) 82 0.0572
1/18/96 1 through 9/30/96 6,520 2.06 2 2.08 2 (1.34)2 (1.36)2 89 0.0569
INVESTOR C CLASS
10/1/97 through 3/31/98 7 $ 15,587 2.10%2 2.10%2 (1.43)%2 (1.43)%2 70% $0.0576
9/30/97 14,106 2.07 2.07 (1.25) (1.25) 82 0.0572
9/6/96 1 through 9/30/96 329 1.74 2 1.76 2 (0.93)2 (0.95)2 89 0.0569
- --------------------
INTERNATIONAL EQUITY
- --------------------
INSTITUTIONAL CLASS
10/1/97 through 3/31/98 7 $435,503 1.06%2 1.16%2 0.49%2 0.39%2 30% $0.0193
9/30/97 433,135 1.06 1.16 0.94 0.84 62 0.0166
9/30/96 388,588 1.36 1.46 0.65 0.54 70 0.0158
9/30/95 312,588 1.53 1.63 0.50 0.40 105 --
9/30/94 284,905 0.95 1.14 1.27 1.08 37 --
9/30/93 131,052 1.10 1.16 1.17 1.11 31 --
SERVICE CLASS
10/1/97 through 3/31/98 7 $220,797 1.36%2 1.46%2 0.20%2 0.10%2 30% $0.0193
9/30/97 199,939 1.36 1.46 0.42 0.32 62 0.0166
9/30/96 161,321 1.36 1.47 0.71 0.60 70 0.0158
9/30/95 106,045 1.25 1.42 1.16 0.98 105 --
9/30/94 75,174 1.20 1.39 1.09 0.90 37 --
7/29/93 1 through 9/30/93 11,985 1.18 2 1.24 2 1.01 2 0.95 2 31 --
INVESTOR A CLASS
10/1/97 through 3/31/98 7 $ 22,456 1.53%2 1.63%2 (0.01)%2 (0.11)%2 30% $0.0193
9/30/97 22,335 1.53 1.63 0.50 0.40 62 0.0166
9/30/96 19,842 1.53 1.64 0.45 0.34 70 0.0158
9/30/95 17,721 1.40 1.58 0.97 0.80 105 --
9/30/94 14,433 1.35 1.54 0.96 0.77 37 --
9/30/93 3,669 1.25 1.31 1.27 1.21 31 --
INVESTOR B CLASS
10/1/97 through 3/31/98 7 $ 7,088 2.27%2 2.37%2 (0.70)%2 (0.80)%2 30% $0.0193
9/30/97 5,850 2.27 2.37 (0.22) (0.32) 62 0.0166
9/30/96 2,692 2.23 2.34 (0.18) (0.29) 70 0.0158
10/3/94 1 through 9/30/95 1,071 2.06 2 2.23 2 0.59 2 0.41 2 105 --
INVESTOR C CLASS
10/1/97 through 3/31/98 7 $ 298 2.27%2 2.37%2 (0.59)%2 (0.69)%2 30% $0.0193
12/5/96 1 through 9/30/97 155 2.28 2 2.38 2 (0.48)2 (0.58)2 62 0.0166
- ------------------------------
INTERNATIONAL SMALL CAP EQUITY
- ------------------------------
INSTITUTIONAL CLASS
10/1/97 through 3/31/98 7 $ 16,918 1.30%2 1.77%2 0.42%2 (0.05)%2 41% $0.0201
9/26/97 1 through 9/30/97 15,415 1.33 2 1.55 2 1.42 2 1.19 2 0 0.0268
SERVICE CLASS
10/1/97 through 3/31/98 7 $ 325 1.60%2 2.07%2 (0.02)%2 (0.49)%2 41% $0.0201
9/26/97 1 through 9/30/97 10 1.63 2 1.86 2 1.42 2 1.19 2 0 0.0268
INVESTOR A CLASS
10/1/97 through 3/31/98 7 $ 877 1.76%2 2.23%2 (0.08)%2 (0.55)%2 41% $0.0201
9/26/97 1 through 9/30/97 326 1.30 2 1.52 2 1.44 2 1.22 2 0 0.0268
INVESTOR B CLASS
10/1/97 through 3/31/98 7 $ 1,857 2.50%2 2.97%2 (0.82)%2 (1.29)%2 41% $0.0201
9/26/97 1 through 9/30/97 711 1.30 2 1.52 2 1.58 2 1.35 2 0 0.0268
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
60 & 61
<PAGE>
LOGO [GRAPHIC OMITTED] BLACKROCK FUNDS
BLACKROCK FUNDS LOGO [GRAPHIC OMITTED]
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
NET NET GAIN DISTRIBUTIONS NET
ASSET (LOSS) ON DISTRIBUTIONS FROM NET ASSET
VALUE NET INVESTMENTS FROM NET DISTRIBUTIONS REALIZED VALUE
BEGINNING INVESTMENT BOTH REALIZED INVESTMENT FROM CAPITAL END OF TOTAL
OF PERIOD INCOME ND UNREALIZED) INCOME CAPITAL GAINS PERIOD RETURN
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTOR C CLASS
10/1/97 through 3/31/98 7 $ 9.94 $(0.03) $ 1.40 $(0.02) $ -- $ -- $11.29 13.46%4
9/26/97 1 through 9/30/97 10.00 -- (0.06) -- -- -- 9.94 (0.30)4
- -----------------------------
INTERNATIONAL EMERGING EQUITY
- -----------------------------
INSTITUTIONAL CLASS
10/1/97 through 3/31/98 7 $ 9.69 $ -- ($1.88) $ -- $ -- $(0.14) $ 7.67 (19.47)%
9/30/97 8.76 0.03 $ 0.95 (0.05) -- -- 9.69 11.16
9/30/96 8.19 0.08 0.50 -- -- (0.01) 8.76 6.97
9/30/95 10.56 0.08 (2.15) (0.10) (0.01) (0.19) 8.19 (19.72)
6/17/94 1 through 9/30/94 10.00 0.03 0.53 -- -- -- 10.56 5.60
SERVICE CLASS
10/1/97 through 3/31/98 7 $ 9.63 $(0.02) $(1.86) $ -- $ -- $(0.14) $ 7.61 (19.60)%
9/30/97 8.72 0.01 0.93 (0.03) -- -- 9.63 10.74
9/30/96 8.18 0.04 0.51 -- -- (0.01) 8.72 6.61
9/30/95 10.55 0.06 (2.15) (0.08) (0.01) (0.19) 8.18 (19.91)
6/17/94 1 through 9/30/94 10.00 0.02 0.53 -- -- -- 10.55 5.50
INVESTOR A CLASS
10/1/97 through 3/31/98 7 $ 9.60 $ 0.02 $(1.90) $ -- $ -- $(0.14) $ 7.58 (19.66)%3
9/30/97 8.71 (0.06) 0.98 (0.03) -- -- 9.60 10.51 3
9/30/96 8.18 0.02 0.52 -- -- (0.01) 8.71 6.49 3
9/30/95 10.54 0.03 (2.14) (0.05) (0.01) (0.19) 8.18 (20.12)3
6/17/94 1 through 9/30/94 10.00 0.02 0.52 -- -- -- 10.54 5.40 3
INVESTOR B CLASS
10/1/97 through 3/31/98 7 $ 9.54 $(0.04) $(1.86) $ -- $ -- $(0.14) $ 7.50 (20.00)%4
9/30/97 8.69 (0.04) 0.89 -- -- -- 9.54 9.78 4
4/25/96 1 through 9/30/96 8.85 -- (0.16) -- -- -- 8.69 (1.81)4
INVESTOR C CLASS
10/1/97 through 3/31/98 7 $ 9.54 $(0.04) $(1.86) $ -- $ -- $(0.14) $ 7.50 (20.00)%4
3/21/97 1 through 9/30/97 9.70 (0.01) (0.15) -- -- -- 9.54 (3.08)4
- -------------
SELECT EQUITY
- -------------
INSTITUTIONAL CLASS
10/1/97 through 3/31/98 7 $17.51 $ 0.04 $ 2.34 $(0.04) $ -- $(1.00) $18.85 14.85%
9/30/97 13.57 0.19 5.15 (0.19) -- (1.21) 17.51 42.50
9/30/96 11.88 0.21 2.08 (0.21) -- (0.39) 13.57 19.84
9/30/95 9.92 0.22 2.08 (0.22) -- (0.12) 11.88 23.76
9/30/94 9.97 0.22 (0.04) (0.23) -- -- 9.92 1.79
9/13/93 1 through 9/30/93 10.00 0.01 (0.04) -- -- -- 9.97 (0.30)
SERVICE CLASS
10/1/97 through 3/31/98 7 $17.50 $ 0.04 $ 2.33 $(0.03) $ -- $(1.00) $18.84 14.71%
9/30/97 13.56 0.11 5.18 (0.14) -- (1.21) 17.50 42.12
9/30/96 11.88 0.17 2.07 (0.17) -- (0.39) 13.56 19.43
9/30/95 9.92 0.22 2.05 (0.19) -- (0.12) 11.88 23.43
9/30/94 9.97 0.19 (0.04) (0.20) -- -- 9.92 1.55
9/15/93 1 through 9/30/93 10.00 -- (0.03) -- -- -- 9.97 (0.30)
INVESTOR A CLASS
10/1/97 through 3/31/98 7 $17.50 $ 0.02 $ 2.34 $(0.02) $ -- $(1.00) $18.84 14.62%3
9/30/97 13.56 0.11 5.16 (0.12) -- (1.21) 17.50 41.95 3
9/30/96 11.88 0.15 2.07 (0.15) -- (0.39) 13.56 19.23 3
9/30/95 9.92 0.20 2.06 (0.18) -- (0.12) 11.88 23.29 3
10/13/93 1 through 9/30/94 9.96 0.18 (0.03) (0.19) -- -- 9.92 1.54 3
INVESTOR B CLASS
10/1/97 through 3/31/98 7 $17.40 $(0.01) $ 2.31 $ -- $ -- $(1.00) $18.70 14.19%4
9/30/97 13.54 0.05 5.07 (0.05) -- (1.21) 17.40 40.70 4
3/27/96 1 through 9/30/96 12.83 0.04 0.73 (0.06) -- -- 13.54 6.58 4
INVESTOR C CLASS
10/1/97 through 3/31/98 7 $17.40 $(0.01) $ 2.31 $ -- $ -- $(1.00) $18.70 14.19%4
9/30/97 13.54 0.04 5.08 (0.05) -- (1.21) 17.40 40.70 4
9/27/96 1 through 9/30/96 13.52 -- 0.02 -- -- -- 13.54 0.15 4
- ------------
INDEX EQUITY
- ------------
INSTITUTIONAL CLASS
10/1/97 through 3/31/98 7 $18.32 $ 0.14 $ 2.96 $(0.13) $ -- $(0.04) $21.25 17.04%
9/30/97 13.97 0.04 5.02 (0.03) -- (0.68) 18.32 39.78
9/30/96 13.58 0.30 2.13 (0.34) -- (1.70) 13.97 19.82
9/30/95 10.93 0.38 2.73 (0.34) -- (0.12) 13.58 29.30
9/30/94 11.02 0.31 0.03 (0.32) -- (0.11) 10.93 3.07
9/30/93 10.06 0.27 0.97 (0.28) -- -- 11.02 12.40
</TABLE>
<TABLE>
<CAPTION>
RATIO OF NET
NET RATIO OF EXPENSES INVESTMENT INCOME
ASSETS RATIO OF TO AVERAGE RATIO OF NET TO AVERAGE
END OF EXPENSES TO NET ASSETS INVESTMENT INCOME NET ASSETS PORTFOLIO AVERAGE
PERIOD AVERAGE NET (EXCLUDING TO AVERAGE NET (EXCLUDING TURNOVER COMMISSION
(000) ASSETS WAIVERS) ASSETS WAIVERS) RATE RATE 5
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTOR C CLASS
10/1/97 through 3/31/98 7 $ 376 2.50%2 2.97%2 (0.81)%2 (1.28)%2 41% $0.0201
9/26/97 1 through 9/30/97 182 1.30 2 1.52 2 1.44 2 1.22 2 0 0.0268
- -----------------------------
INTERNATIONAL EMERGING EQUITY
- -----------------------------
INSTITUTIONAL CLASS
10/1/97 through 3/31/98 7 $ 94,501 1.78%2 1.89%2 0.29%2 0.18%2 19% $0.0009
9/30/97 116,107 1.78 1.87 0.37 0.27 33 0.0016
9/30/96 68,664 1.78 1.88 0.96 0.87 44 0.0018
9/30/95 29,319 1.78 2.02 1.90 1.66 75 --
6/17/94 1 through 9/30/94 2,511 1.75 2 2.73 2 1.19 2 0.21 2 4 --
SERVICE CLASS
10/1/97 through 3/31/98 7 $ 54,143 2.08%2 2.19%2 (0.02)%2 (0.13)%2 19% $0.0009
9/30/97 66,064 2.08 2.17 0.09 (0.01) 33 0.0016
9/30/96 37,987 2.08 2.18 0.70 0.60 44 0.0018
9/30/95 15,020 2.06 2.30 1.72 1.48 75 --
6/17/94 1 through 9/30/94 3,505 2.00 2 2.98 2 1.10 2 0.12 2 4 --
INVESTOR A CLASS
10/1/97 through 3/31/98 7 $ 3,268 2.25%2 2.36%2 (0.23)%2 (0.34)%2 19% $0.0009
9/30/97 4,454 2.25 2.34 (0.08) (0.18) 33 0.0016
9/30/96 2,996 2.26 2.35 0.45 0.35 44 0.0018
9/30/95 2,563 2.20 2.44 1.54 1.30 75 --
6/17/94 1 through 9/30/94 2,857 2.15 2 3.13 2 0.74 2 (0.24)2 4 --
INVESTOR B CLASS
10/1/97 through 3/31/98 7 $ 1,425 3.00%2 3.11%2 (0.96)%2 (1.07)%2 19% $0.0009
9/30/97 1,836 2.98 3.07 (0.80) (0.90) 33 0.0016
4/25/96 1 through 9/30/96 216 2.90 2 3.00 2 0.17 2 0.07 2 44 0.0018
INVESTOR C CLASS
10/1/97 through 3/31/98 7 $ 88 2.97%2 3.08%2 (1.03)%2 (1.14)%2 19% $0.0009
3/21/97 1 through 9/30/97 88 2.58 2 2.67 2 (0.27)2 (0.37)2 33 0.0016
- -------------
SELECT EQUITY
- -------------
INSTITUTIONAL CLASS
10/1/97 through 3/31/98 7 $550,584 0.86%2 0.86%2 0.97%2 0.97%2 10% $0.0507
9/30/97 379,687 0.79 0.86 1.24 1.17 29 0.0547
9/30/96 274,434 0.74 0.87 1.70 1.58 55 0.0487
9/30/95 238,813 0.67 0.85 2.35 2.17 51 --
9/30/94 48,123 0.65 0.93 2.11 1.82 88 --
9/13/93 1 through 9/30/93 69,268 0.65 2 0.87 2 2.17 2 1.95 2 2 --
SERVICE CLASS
10/1/97 through 3/31/98 7 $268,135 1.16%2 1.16%2 0.66%2 0.66%2 10% $0.0507
9/30/97 174,418 1.09 1.16 0.93 0.86 29 0.0547
9/30/96 113,777 1.04 1.17 1.41 1.28 55 0.0487
9/30/95 83,705 0.95 1.13 2.10 1.91 51 --
9/30/94 49,293 0.90 1.18 1.96 1.68 88 --
9/15/93 1 through 9/30/93 704 0.90 2 1.12 2 1.92 2 1.70 2 2 --
INVESTOR A CLASS
10/1/97 through 3/31/98 7 $ 28,771 1.33%2 1.33%2 0.48%2 0.48%2 10% $0.0507
9/30/97 18,949 1.27 1.34 0.75 0.68 29 0.0547
9/30/96 6,228 1.21 1.34 1.24 1.11 55 0.0487
9/30/95 3,808 1.12 1.30 1.91 1.73 51 --
10/13/93 1 through 9/30/94 601 1.05 2 1.34 2 1.89 2 1.60 2 88 --
INVESTOR B CLASS
10/1/97 through 3/31/98 7 $ 33,647 2.07%2 2.07%2 (0.25)%2 (0.26)%2 10% $0.0507
9/30/97 18,345 2.01 2.08 (0.02) (0.09) 29 0.0547
3/27/96 1 through 9/30/96 1,196 1.92 2 2.04 2 0.59 2 0.46 2 55 0.0487
INVESTOR C CLASS
10/1/97 through 3/31/98 7 $ 1,280 2.05%2 2.05%2 (0.26)%2 (0.26)%2 10% $0.0507
9/30/97 377 2.01 2.08 (0.12) (0.19) 29 0.0547
9/27/96 1 through 9/30/96 50 0.0 2 0.0 2 0.0 2 0.0 2 55 0.0487
- ------------
INDEX EQUITY
- ------------
INSTITUTIONAL CLASS
10/1/97 through 3/31/98 7 $205,424 0.18%2 0.36%2(DOUBLE DAGGER) 1.42%2 1.24%2 --* $ --*
9/30/97 166,786 0.18 0.38(DOUBLE DAGGER) 1.71 1.51 --* --*
9/30/96 127,076 0.18 0.50(DOUBLE DAGGER) 2.29 1.98 0.18 6* 0.0319 6*
9/30/95 109,433 0.17 0.50 2.92 2.59 0.18 --
9/30/94 147,746 0.15 0.52 2.72 2.35 17 --
9/30/93 186,163 0.40 0.52 2.46 2.34 8 --
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
62 & 63
<PAGE>
LOGO [GRAPHIC OMITTED] BLACKROCK FUNDS
BLACKROCK FUNDS LOGO [GRAPHIC OMITTED]
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
NET NET GAIN DISTRIBUTIONS NET
ASSET (LOSS) ON DISTRIBUTIONS FROM NET ASSET
VALUE NET INVESTMENTS FROM NET DISTRIBUTIONS REALIZED VALUE
BEGINNING INVESTMENT BOTH REALIZED INVESTMENT FROM CAPITAL END OF TOTAL
OF PERIOD INCOME ND UNREALIZED) INCOME CAPITAL GAINS PERIOD RETURN
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SERVICE CLASS
10/1/97 through 3/31/98 7 $18.32 $ 0.11 $ 2.96 $(0.11) $ -- $(0.04) $21.24 16.83%
9/30/97 13.97 0.23 5.01 (0.21) -- (0.68) 18.32 39.58
9/30/96 13.58 0.29 2.10 (0.30) -- (1.70) 13.97 19.45
9/30/95 10.93 0.35 2.73 (0.31) -- (0.12) 13.58 28.99
9/30/94 11.02 0.29 0.02 (0.29) -- (0.11) 10.93 2.78
7/29/93 1 through 9/30/93 10.76 0.05 0.29 (0.08) -- -- 11.02 3.16
INVESTOR A CLASS
10/1/97 through 3/31/98 7 $18.32 $ 0.14 $ 2.90 $(0.09) $ -- $(0.04) $21.23 16.68%3
9/30/97 13.96 0.21 5.02 (0.19) -- (0.68) 18.32 39.49 3
9/30/96 13.58 0.27 2.09 (0.28) -- (1.70) 13.96 19.31 3
9/30/95 10.93 0.34 2.73 (0.30) -- (0.12) 13.58 28.77 3
9/30/94 11.02 0.25 0.04 (0.27) -- (0.11) 10.93 2.66 3
9/30/93 10.06 0.27 0.96 (0.27) -- -- 11.02 12.33 3
INVESTOR B CLASS
10/1/97 through 3/31/98 7 $18.22 $ 0.03 $ 2.94 $(0.03) $ -- $(0.04) $21.12 16.36%4
9/30/97 13.93 0.13 4.94 (0.10) -- (0.68) 18.22 38.31 4
2/7/96 1 through 9/30/96 13.20 0.08 0.77 (0.12) -- -- 13.93 6.50 4
INVESTOR C CLASS
10/1/97 through 3/31/98 7 $18.22 $ 0.03 $ 2.94 $(0.03) $ -- $(0.04) $21.12 16.36%4
9/30/97 13.93 0.13 4.94 (0.10) -- (0.68) 18.22 38.31 4
8/14/96 1 through 9/30/96 13.47 0.02 0.50 (0.06) -- -- 13.93 3.90 4
- --------
BALANCED
- --------
INSTITUTIONAL CLASS
10/1/97 through 3/31/98 7 $18.22 $ 0.10 $ 1.87 $(0.12) $ -- $(1.25) $18.82 12.36%
9/30/97 15.10 0.52 3.62 (0.50) -- (0.52) 18.22 28.43
9/30/96 13.73 0.46 1.49 (0.45) -- (0.13) 15.10 14.43
9/30/95 11.98 0.46 1.90 (0.47) -- (0.14) 13.73 20.32
9/30/94 12.42 0.38 (0.39) (0.37) -- (0.06) 11.98 (0.11)
9/30/93 11.53 0.30 1.15 (0.30) -- (0.26) 12.42 12.86
SERVICE CLASS
10/1/97 through 3/31/98 7 $18.21 $ 0.11 $ 1.84 $(0.11) $ -- $(1.25) $18.80 12.17%
9/30/97 15.09 0.45 3.64 (0.45) -- (0.52) 18.21 28.07
9/30/96 13.72 0.42 1.49 (0.41) -- (0.13) 15.09 14.11
9/30/95 11.98 0.44 1.88 (0.44) -- (0.14) 13.72 19.94
9/30/94 12.42 0.34 (0.38) (0.34) -- (0.06) 11.98 (0.36)
7/29/93 1 through 9/30/93 12.05 0.06 0.38 (0.07) -- -- 12.42 3.66
INVESTOR A CLASS
10/1/97 through 3/31/98 7 $18.22 $ 0.14 $ 1.80 $(0.10) $ -- $(1.25) $18.81 12.11%3
9/30/97 15.10 0.39 3.68 (0.43) -- (0.52) 18.22 27.93 3
9/30/96 13.73 0.40 1.49 (0.39) -- (0.13) 15.10 13.98 3
9/30/95 11.98 0.43 1.88 (0.42) -- (0.14) 13.73 19.86 3
9/30/94 12.42 0.32 (0.38) (0.32) -- (0.06) 11.98 (0.50)3
9/30/93 11.53 0.30 1.14 (0.29) -- (0.26) 12.42 12.80 3
INVESTOR B CLASS
10/1/97 through 3/31/98 7 $18.13 $ 0.07 $ 1.82 $(0.07) $ -- $(1.25) $18.70 11.67%4
9/30/97 15.04 0.31 3.61 (0.31) -- (0.52) 18.13 26.95 4
9/30/96 13.69 0.31 1.47 (0.30) -- (0.13) 15.04 13.14 4
10/3/94 1 through 9/30/95 11.95 0.33 1.93 (0.38) -- (0.14) 13.69 19.38 4
INVESTOR C CLASS
10/1/97 through 3/31/98 7 $18.13 $ 0.06 $ 1.83 $(0.07) $ -- $(1.25) $18.70 11.67%4
12/20/96 1 through 9/30/97 15.62 0.28 2.54 (0.31) -- -- 18.13 23.95 4
</TABLE>
<TABLE>
<CAPTION>
RATIO OF NET
NET RATIO OF EXPENSES INVESTMENT INCOME
ASSETS RATIO OF TO AVERAGE RATIO OF NET TO AVERAGE
END OF EXPENSES TO NET ASSETS INVESTMENT INCOME NET ASSETS PORTFOLIO AVERAGE
PERIOD AVERAGE NET (EXCLUDING TO AVERAGE NET (EXCLUDING TURNOVER COMMISSION
(000) ASSETS WAIVERS) ASSETS WAIVERS) RATE RATE 5
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
SERVICE CLASS
10/1/97 through 3/31/98 7 $257,746 0.48%2 0.66%2(DOUBLE DAGGER) 1.12%2 0.94%2 --* $ --*
9/30/97 193,319 0.48 0.68(DOUBLE DAGGER) 1.41 1.21 --* --*
9/30/96 103,080 0.48 0.80(DOUBLE DAGGER) 1.98 1.67 0.18 6* 0.0319 6*
9/30/95 61,536 0.45 0.79 2.62 2.28 18 --
9/30/94 27,376 0.40 0.77 2.49 2.12 17 --
7/29/93 1 through 9/30/93 12,441 0.41 2 0.53 2 3.04 2 2.92 2 8 --
INVESTOR A CLASS
10/1/97 through 3/31/98 7 $ 39,270 0.65%2 0.83%2(DOUBLE DAGGER) 0.95%2 0.77%2 --* $ --*
9/30/97 33,934 0.65 0.85(DOUBLE DAGGER) 1.23 1.03 --* --*
9/30/96 12,752 0.65 0.97(DOUBLE DAGGER) 1.81 1.49 18 6* 0.0319 6*
9/30/95 6,501 0.61 0.95 2.44 2.10 18 --
9/30/94 2,632 0.55 0.92 2.35 1.98 17 --
9/30/93 1,263 0.49 0.61 2.48 2.36 8 --
INVESTOR B CLASS
10/1/97 through 3/31/98 7 $ 73,438 1.38%2 1.56%2(DOUBLE DAGGER) 0.21%2 0.03%2 --* $ --*
9/30/97 38,271 1.38 1.58(DOUBLE DAGGER) 0.45 0.25 --* --*
2/7/96 1 through 9/30/96 2,904 1.382 1.60 2(DOUBLE DAGGER) 0.93 2 0.71 2 18 6* 0.0319 6*
INVESTOR C CLASS
10/1/97 through 3/31/98 7 $ 42,077 1.38%2 1.56%2(DOUBLE DAGGER) 0.21%2 0.03%2 --* $ --*
9/30/97 19,668 1.38 1.58(DOUBLE DAGGER) 0.45 0.25 --* --*
8/14/96 1 through 9/30/96 432 1.252 1.43 2(DOUBLE DAGGER) 0.71 2 0.53 2 18 6* 0.0319 6*
- --------
BALANCED
- --------
INSTITUTIONAL CLASS
10/1/97 through 3/31/98 7 $ 46,231 0.90%2 0.90%2 2.63%2 2.63%2 95% $0.0483
9/30/97 31,674 0.84 0.89 2.98 2.92 173 0.0364
9/30/96 37,567 0.79 0.90 3.16 3.06 275 0.0599
9/30/95 24,525 0.67 0.88 3.78 3.56 154 --
9/30/94 17,610 0.65 0.91 3.16 2.89 54 --
9/30/93 12,928 0.80 0.98 2.89 2.71 32 --
SERVICE CLASS
10/1/97 through 3/31/98 7 $198,327 1.20%2 1.20%2 2.34%2 2.34%2 95% $0.0483
9/30/97 176,232 1.14 1.20 2.68 2.62 173 0.0364
9/30/96 134,121 1.09 1.20 2.87 2.76 275 0.0599
9/30/95 85,668 0.94 1.16 3.49 3.28 154 --
9/30/94 66,024 0.90 1.16 2.96 2.70 54 --
7/29/93 1 through 9/30/93 15,842 0.93 2 1.11 2 2.75 2 2.57 2 32 --
INVESTOR A CLASS
10/1/97 through 3/31/98 7 $ 94,758 1.30%2 1.30%2 2.24%2 2.24%2 95% $0.0483
9/30/97 87,202 1.24 1.30 2.58 2.52 173 0.0364
9/30/96 71,899 1.19 1.30 2.75 2.65 275 0.0599
9/30/95 67,892 1.07 1.28 3.38 3.16 154 --
9/30/94 62,307 1.05 1.31 2.77 2.51 54 --
9/30/93 39,529 0.91 1.09 2.79 2.61 32 --
INVESTOR B CLASS
10/1/97 through 3/31/98 7 $ 36,539 2.11%2 2.11%2 1.42%2 1.42%2 95% $0.0483
9/30/97 23,455 2.05 2.11 1.78 1.72 173 0.0364
9/30/96 7,333 1.98 2.09 1.99 1.88 275 0.0599
10/3/94 1 through 9/30/95 3,124 1.72 2 1.94 2 2.71 2 2.49 2 154 --
INVESTOR C CLASS
10/1/97 through 3/31/98 7 $ 332 2.08%2 2.08%2 1.39%2 1.39%2 95% $0.0483
12/20/96 1 through 9/30/97 87 2.03 2 2.09 2 1.90 2 1.84 2 173 0.0364
<FN>
1 Commencement of operations of share class.
2 Annualized.
3 Sales load not reflected in total return.
4 Contingent deferred sales load not reflected in total return.
5 Computed by dividing the total amount of commission paid by the total
number of shares purchased and sold during the period.
6 For the period 10/1/95 through 5/31/96.
7 Unaudited.
* See accompanying footnotes to The DFA Investment Trust Company.
(DOUBLE DAGGER) Including expenses allocated from The U.S. Large Company Series
of The DFA Investment Trust Company of 0.077% for the period ending 3/31/98
and the year ended 9/30/97 and 0.12% for the year ended 9/30/96.
</FN>
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
64 & 65
<PAGE>
BLACKROCK FUNDS LOGO [GRAPHIC OMITTED]
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
BlackRock Funds(SERVICE MARK) ("the Fund") (formerly Compass Capital 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 31 publicly-offered
portfolios, 12 of which are included in these financial statements (the
"Portfolios"). Each Portfolio is authorized to issue an unlimited number of
shares with a par value of $0.001. Portfolios of the Fund offer as many as six
classes of shares. Shares of all classes of a Portfolio represent equal pro rata
interests in such Portfolio, except that each class bears different expenses
which reflect the difference in the range of services provided to them. The
following table provides a list of the Portfolios included in this report along
with a summary of their respective class-specific fee arrangements as provided
under the Fund's Amended and Restated Distribution and Service Plan (the
"Plan"). Fees are expressed as a percentage of average daily net asset values of
the respective classes.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio Share Classes
- ------------------------------------------------------------------------------------------------------------------------------------
Institutional Service Investor A Investor B Investor C
- ------------------------------------------------------------------------------------------------------------------------------------
Contractual Actual Contractual Actual Contractual Actual Contractual Actual Contractual Actual
Fees Fees (4) Fees (1) Fees (4) Fees (2) Fees (4) Fees (3) Fees (4) Fees (3) Fees (4)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Large Cap Value Equity None None 0.30% 0.30% 0.50% 0.40% 1.15% 1.15% 1.15% 1.15%
- ------------------------------------------------------------------------------------------------------------------------------------
Large Cap Growth Equity None None 0.30% 0.30% 0.50% 0.40% 1.15% 1.15% 1.15% 1.15%
- ------------------------------------------------------------------------------------------------------------------------------------
Mid-Cap Value Equity None None 0.30% 0.30% 0.50% 0.40% 1.15% 1.15% 1.15% 1.15%
- ------------------------------------------------------------------------------------------------------------------------------------
Mid-Cap Growth Equity None None 0.30% 0.30% 0.50% 0.40% 1.15% 1.15% 1.15% 1.15%
- ------------------------------------------------------------------------------------------------------------------------------------
Small Cap Value Equity None None 0.30% 0.30% 0.50% 0.40% 1.15% 1.15% 1.15% 1.15%
- ------------------------------------------------------------------------------------------------------------------------------------
Small Cap Growth Equity None None 0.30% 0.30% 0.50% 0.40% 1.15% 1.15% 1.15% 1.15%
- ------------------------------------------------------------------------------------------------------------------------------------
International Equity None None 0.30% 0.30% 0.50% 0.40% 1.15% 1.15% 1.15% 1.15%
- ------------------------------------------------------------------------------------------------------------------------------------
International
Small Cap Equity None None 0.30% 0.30% 0.50% 0.40% 1.15% 1.15% 1.15% 1.15%
- ------------------------------------------------------------------------------------------------------------------------------------
International
Emerging Markets None None 0.30% 0.30% 0.50% 0.40% 1.15% 1.15% 1.15% 1.15%
- ------------------------------------------------------------------------------------------------------------------------------------
Select Equity None None 0.30% 0.30% 0.50% 0.40% 1.15% 1.15% 1.15% 1.15%
- ------------------------------------------------------------------------------------------------------------------------------------
Index Equity None None 0.30% 0.30% 0.50% 0.40% 1.15% 1.15% 1.15% 1.15%
- ------------------------------------------------------------------------------------------------------------------------------------
Balanced None None 0.30% 0.30% 0.50% 0.40% 1.15% 1.15% 1.15% 1.15%
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) -- the maximum annual contractual fees are comprised of a .15% service fee
and .15% shareholder processing fee.
(2) -- the maximum annual contractual fees are comprised of a .10% distribution
fee, .25% service fee and .15% shareholder processing fee.
(3) -- the maximum annual contractual fees are comprised of a .75% distribution
fee, .25% service fee and .15% shareholder processing fee.
(4) -- The actual fees are as of March 31, 1998.
</FN>
</TABLE>
In addition, Institutional and Service shares bear a Transfer Agent fee at
an annual rate not to exceed .03% and Investor A, Investor B and Investor C
shares bear a Transfer Agent fee at an annual rate not to exceed .10% of the
average daily net asset of such respective classes.
The Index Equity Portfolio invests solely in The U.S. Large Company Series
of The DFA Investment Trust Company. The financial statements of which are
included elsewhere in this report and should be read in conjunction with the
financial statements of Index Equity Portfolio.
(A) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Fund in the 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 these
estimates.
SECURITY VALUATION -- Portfolio securities for which market quotations are
readily available are valued at market value, which is currently determined
using the last reported sales price. Portfolio securities which are primarily
traded on foreign securities exchanges are normally valued at the preceding
closing values of such securities on their respective exchanges. If no sales are
reported, as in the case of some securities traded over-the-counter, portfolio
securities are
66
<PAGE>
BLACKROCK FUNDS LOGO [GRAPHIC OMITTED]
valued at the mean between the last reported bid and asked prices. Corporate
bonds are valued on the basis of quotations from bond dealers, market
transactions in comparable securities and various relationships between
securities in determining value. Short-term obligations with maturities of 60
days or less are valued at amortized cost which approximates market value.
Discounts and premiums on debt securities are amortized for book and tax
purposes using the effective yield-to-maturity method over the term of the
instrument.
The Index Equity Portfolio's investment reflects its proportionate interest
in the net assets of The U.S. Large Company Series of The DFA Investment Trust
Company.
DIVIDENDS TO SHAREHOLDERS -- Dividends from net investment income are
declared and paid quarterly for the Portfolios. Net realized capital gains, if
any, will be distributed at least annually. The character of distributions made
during the year from net investment income or net realized gains may differ from
their ultimate characterization for federal income tax purposes due to
differences between generally accepted accounting principles and tax accounting
principles related to the character of income and expense recognition.
FEDERAL TAXES -- No provision is made for federal taxes as it is the Fund's
intention to have each Portfolio continue to qualify as a regulated investment
company and to make the requisite distributions to its shareholders which will
be sufficient to relieve it from federal income and excise taxes.
FOREIGN CURRENCY TRANSLATION -- The books and records of the International
Equity Portfolio and International Emerging Markets Portfolio are maintained in
U.S. dollars. Foreign currency amounts are translated into U.S. dollars on the
following basis:
(I) market value of investment securities, assets and liabilities at the
current rate of exchange; and
(II) purchases and sales of investment securities, income and expenses at
the relevant rates of exchange prevailing on the respective dates of
such transactions. It is not practical to isolate that portion of both
realized and unrealized gains and losses on investments in the statement
of operations that result from fluctuations in foreign currency exchange
rates. The Portfolios report forward foreign currency contracts and
foreign currency related transactions as components of realized gains
for financial reporting purposes, whereas such components are treated as
ordinary income for federal income tax purposes.
SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Investment transactions are
accounted for on the trade date. The cost of investments sold is determined by
use of the specific identification method for both financial reporting and
federal income tax purposes. Interest income is recorded on the accrual basis.
Dividends are recorded on the ex-dividend date. Expenses not directly
attributable to a specific Portfolio or class are allocated among all of the
Portfolios or classes of the Fund based on their relative net assets.
REPURCHASE AGREEMENTS -- Money market instruments may be purchased from
banks and non-bank dealers subject to the seller's agreement to repurchase them
at an agreed upon date and price. Collateral for repurchase agreements may have
longer maturities than the maximum permissible remaining maturity of portfolio
investments. The seller will be required on a daily basis to maintain the value
of the securities subject to the agreement at not less than the repurchase
price. The agreements are conditioned upon the collateral being deposited under
the Federal Reserve book-entry system or held in a separate account by the
Fund's custodian or an authorized securities depository.
FUTURES TRANSACTIONS -- The Fund invests in financial futures contracts
solely for the purpose of hedging its existing portfolio securities, or
securities that the Fund intends to purchase, against fluctuations in fair value
caused by changes in prevailing market interest rates. Certain Portfolios may
enter into futures contracts subject to certain limitations. Upon entering into
a futures contract, the Portfolio is required to deposit cash or pledge U.S.
Government securities of an initial margin. Subsequent payments, which are
dependent on the daily fluctuations in the value of the underlying security or
securities, are made or received by the Portfolio each day (daily variation
margin) and are recorded as unrealized gains or losses until the contracts are
closed. When the contracts are closed, the Portfolio records a realized gain or
loss equal to the difference between the proceeds from (or cost of) the closing
transaction and the Portfolio's basis in the contracts. Risks of entering into
futures contracts include the possibility that there will not be a perfect price
correlation between the futures contracts and the underlying securities. Second,
it is possible that a lack of liquidity for futures contracts could exist in the
secondary market, resulting in an inability to close a futures position prior to
its maturity date. Third, the purchase of a futures contract involves the risk
that a Portfolio could lose more than the original margin deposit required to
initiate a futures transaction.
67
<PAGE>
LOGO [GRAPHIC OMITTED] BLACKROCK FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FORWARD FOREIGN CURRENCY CONTRACTS -- The International Equity Portfolio
and International Small Cap Equity Portfolio enter into forward foreign currency
contracts as a hedge against either specific transactions or portfolio
positions. These contracts are adjusted by the daily exchange rate of the
underlying currency and any gains or losses are recorded as unrealized until the
contract settlement date. Such contracts, which protect the value of the
International Equity Portfolio's and International Small Cap Equity Portfolio's
investment securities against a decline in the value of currency, do not
eliminate fluctuations in the underlying prices of the securities. They simply
establish an exchange rate at a future date. Also, although such contracts tend
to minimize the risk of loss due to a decline in the value of a hedged currency,
at the same time they tend to limit any potential gain that might be realized
should the value of such foreign currency increase. Risks may arise upon
entering into these contracts from the potential inability of counterparties to
meet the terms of their contracts and from unanticipated movements in the value
of a foreign currency relative to the U.S. dollar.
The aggregate principal amounts of the contracts are not recorded as the
International Equity Portfolio intends to settle the contracts prior to
delivery. Under the terms of foreign currency contracts open at March 31, 1998,
the International Equity Portfolio is obligated to deliver or receive currency
in exchange for U.S. dollars as indicated below:
<TABLE>
<CAPTION>
VALUE AT UNREALIZED FOREIGN
SETTLEMENT DATE CURRENCY BOUGHT CONTRACT AMOUNT MARCH 31, 1998 EXCHANGE GAIN/(LOSS)
--------------- --------------------- ------------------- ------------------ -----------------------
<S> <C> <C> <C> <C>
10/14/98 Japanese Yen $74,225,432 $70,234,255 $(3,991,177)
</TABLE>
<TABLE>
<CAPTION>
VALUE AT FOREIGN EXCHANGE
SETTLEMENT DATE CURRENCY SOLD CONTRACT AMOUNT MARCH 31, 1998 GAIN/(LOSS)
--------------- --------------------- ------------------- ------------------ -----------------------
<S> <C> <C> <C> <C>
10/14/98 Japanese Yen $80,000,000 $70,234,255 $9,765,745
</TABLE>
The aggregate principal amounts of the contracts are not recorded as the
International Small Cap Equity Portfolio intends to settle the contracts prior
to delivery. Under the terms of foreign currency contracts open at March 31,
1998, the International Small Cap Equity Portfolio is obligated to deliver or
receive currency in exchange for U.S. dollars as indicated below:
<TABLE>
<CAPTION>
VALUE AT UNREALIZED FOREIGN
SETTLEMENT DATE CURRENCY BOUGHT CONTRACT AMOUNT MARCH 31, 1998 EXCHANGE GAIN/(LOSS)
--------------- --------------------- ------------------- ------------------ -----------------------
<S> <C> <C> <C> <C>
10/14/98 Japanese Yen $1,298,945 $1,228,943 $(70,002)
</TABLE>
<TABLE>
<CAPTION>
VALUE AT FOREIGN EXCHANGE
SETTLEMENT DATE CURRENCY SOLD CONTRACT AMOUNT MARCH 31, 1998 GAIN/(LOSS)
--------------- --------------------- ------------------- ------------------ -----------------------
<S> <C> <C> <C> <C>
10/14/98 Japanese Yen $1,400,000 $1,228,943 $171,057
</TABLE>
SECURITIES LENDING -- Loans of securities are required at all times to be
secured by collateral at least equal to 102% of the market value of the
securities on loan. However, in the event of default or bankruptcy by the other
party to the agreement, realization and/or retention of the collateral may be
subject to legal proceedings. The market value of securities on loan to brokers
and the value of collateral held by the Fund with respect to such loans
(including rights to draw on letters of credit) at March 31, 1998, is as
follows:
<TABLE>
<CAPTION>
MARKET VALUE OF SECURITIES VALUE OF COLLATERAL
ON LOAN RECEIVED
-------------------------- -------------------
<S> <C> <C>
Large Cap Value Equity Portfolio ................ $189,941,364 $193,597,858
Large Cap Growth Equity Portfolio ............... 139,682,806 143,700,288
Mid-Cap Value Equity Portfolio .................. 33,757,619 34,785,950
Mid-Cap Growth Equity Portfolio ................. 42,645,965 43,796,631
Small Cap Value Equity Portfolio ................ 33,611,838 39,342,111
Small Cap Growth Equity Portfolio ............... 139,435,681 142,545,770
International Emerging Markets Portfolio ........ 13,593,650 13,913,000
Select Equity Portfolio ......................... 58,078,095 60,800,826
Balanced Portfolio .............................. 39,905,160 41,273,388
</TABLE>
OTHER -- Securities denominated in currencies other than U.S. dollars are
subject to changes in value due to fluctuations in exchange rates.
Some countries in which the Portfolios invest require governmental approval
for the repatriation of investment income, capital or the proceeds of sales of
securities by foreign investors. In addition, if there is a deterioration in a
country's balance of payments or for other reasons, a country may impose
temporary restrictions on foreign capital remittances abroad.
68
<PAGE>
BLACKROCK FUNDS LOGO [GRAPHIC OMITTED]
The securities exchanges of certain foreign markets are substantially
smaller, less liquid and more volatile than the major securities markets in the
United States. Consequently, acquisition and disposition of securities by the
Portfolios may be inhibited. In addition, a significant proportion of the
aggregate market value of equity securities listed on the major securities
exchanges in emerging markets are held by a smaller number of investors. This
may limit the number of shares available for acquisition or disposition by the
Fund.
The Index Equity Portfolio accrues its respective share of income net of
expenses daily on their investment in The U.S. Large Company Series of The DFA
Investment Trust Company, which is treated as a partnership for federal income
tax purposes. All of the net investment income and realized and unrealized gains
and losses from the security transactions of the Master Fund is allocated pro
rata at the time of such determination.
(B) TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Pursuant to an Investment Advisory Agreement, BlackRock Advisors,Inc.
(formerly PNC Asset Management Group, Inc.), a wholly-owned subsidiary of
BlackRock, Inc., serves as investment advisor for each of the Fund's Portfolios,
except for the Index Equity Portfolio. BlackRock Financial Management,Inc., a
wholly-owned subsidiary of BlackRock Advisors, Inc., serves as the sub-advisor
for the Large Cap Value Equity, Large Cap Growth Equity, Mid-Cap Value Equity,
Mid-Cap Growth Equity, Small Cap Value Equity, Small Cap Growth Equity, Select
Equity, and Balanced Portfolios. These Portfolios were previously sub-advised by
PNC Equity Advisors Company and Provident Capital Management, Inc. BlackRock
International, Ltd., (formerly CastleInternational Asset Management Limited), an
indirect wholly-owned subsidiary of BlackRock Advisors, Inc., serves as the
sub-advisor for the International Equity, International Small Cap Equity and
International Emerging Markets Portfolios. BlackRock, Inc. is an indirect
majority-owned subsidiary of PNC Bank Corp.
For its advisory services, BlackRock Advisors, Inc. is entitled to receive
fees at the following annual rates, computed daily and payable monthly, based on
each Portfolio's average daily net assets:
Large Cap Value Equity, Large Cap Growth Equity, Small Cap Value Equity,
Small Cap Growth Equity, Select Equity, and Balanced Portfolios -- .55% of the
first $1 billion, .50% of the next $1 billion, .475% of the next $1 billion, and
.45% of net assets in excess of $3 billion.
Mid-Cap Value Equity and Mid-Cap Growth Equity -- .80% of the first $1
billion, .70% of the next $1 billion, .675% of the next $1 billion and .625% of
net assets in excess of $3 billion.
International Equity Portfolio -- .75% of its first $1 billion, .70% of the
next $1 billion, .675% of the next $1 billion and .65% of net assets in excess
of $3 billion.
International Small Cap Equity -- 1.00% of its first $1 billion, .95% of
the next $1 billion, .90% of the next $1 billion and .85% of net assets in
excess of $3 billion.
International Emerging Markets Portfolio -- 1.25% of its first $1 billion,
1.20% of the next $1 billion, 1.155% of the next $1 billion, and 1.10% of net
assets in excess of $3 billion.
BlackRock Advisors, Inc. may, at its discretion, waive all or any portion
of its advisory fees for any Portfolio. For the period ended March 31, 1998,
advisory fees and waivers for each Portfolio were as follows:
<TABLE>
<CAPTION>
GROSS NET
ADVISORY FEE WAIVER ADVISORY FEE
------------ ------ ------------
<S> <C> <C> <C>
Large Cap Value Equity Portfolio ............. $3,807,965 $ -- $3,807,965
Large Cap Growth Equity Portfolio ............ 2,140,412 2,180 2,138,232
Mid-Cap Value Equity Portfolio ............... 624,058 36 624,022
Mid-Cap Growth Equity Portfolio .............. 604,668 107 604,561
Small Cap Value Equity Portfolio ............. 1,372,495 22 1,372,473
Small Cap Growth Equity Portfolio ............ 2,237,285 1,065 2,236,220
International Equity Portfolio ............... 2,416,919 326,930 2,089,989
International Small Cap Equity ............... 89,567 37,667 51,900
International Emerging Markets Portfolio ..... 953,952 72,784 881,168
Select Equity Portfolio ...................... 2,006,245 7,036 1,999,209
Balanced Portfolio ........................... 924,863 -- 924,863
</TABLE>
69
<PAGE>
LOGO [GRAPHIC OMITTED] BLACKROCK FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
BlackRock Advisors, Inc. pays BlackRock International, Ltd., and BlackRock
Financial Management fees for their sub-advisory services.
PFPC Inc. ("PFPC"), an indirect wholly-owned subsidiary of PNC Bank Corp.,
BlackRock Advisors, Inc., and BlackRock Distributors, Inc. ("BDI") (formerly
Compass Distributors, Inc.) act as co-administrators for the Fund. The combined
administration fee is computed daily and payable monthly, based on a percentage
of the average daily net assets of each Portfolio, at the following annual
rates: .20% of the first $500 million, .18% of the next $500 million, .16% of
average daily net assets in excess of $1 billion.
PFPC, BlackRock Advisors,Inc. and BDI may, at their discretion, waive all
or any portion of their administration fees for any Portfolio. For the period
ended March 31, 1998, administration fees and waivers for each Portfolio were as
follows:
<TABLE>
<CAPTION>
GROSS NET
ADMINISTRATION ADMINISTRATION
FEE WAIVER FEE
-------------- ------ --------------
<S> <C> <C> <C>
Large Cap Value Equity Portfolio .............. $1,501,878 $ 5,670 $1,496,208
Large Cap Growth Equity Portfolio ............. 867,111 -- 867,111
Mid-Cap Value Equity Portfolio ................ 179,417 6,442 172,975
Mid-Cap Growth Equity Portfolio ............... 173,842 10,971 162,871
Small Cap Value Equity Portfolio .............. 572,804 4,458 568,346
Small Cap Growth Equity Portfolio ............. 904,099 -- 904,099
International Equity Portfolio ................ 726,600 -- 726,600
International Small Cap Equity ................ 20,600 3,832 16,768
International Emerging Markets Portfolio ...... 191,134 9,218 181,916
Select Equity Portfolio ....................... 815,884 -- 815,884
Index Equity Portfolio ........................ 586,521 468,744 117,777
Balanced Portfolio ............................ 386,761 781 385,980
</TABLE>
In addition, PNC Bank serves as custodian for each of the Fund's
Portfolios. PFPC serves as transfer and dividend disbursing agent.
Under the Fund's Distribution and Service Plan (the "Plan"), Investor
Shares of the Portfolios bear the expense of payments ("distribution fees") made
to BDI, as the Fund's distributor (the "Distributor"), or affiliates of PNC
Bank, for distribution and sales support services. Under the Plan, the Fund has
entered into service arrangements with Service Organizations (including PNC Bank
and its affiliates) with respect to each class of Investor Shares and Service
Shares. Refer to the fee table in the "Notes to Financial Statements" for fee
information.
(C) PURCHASES AND SALES OF SECURITIES
For the period ended March 31, 1998, purchases and sales of securities,
other than short-term and government securities, were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ ------------
<S> <C> <C>
Large Cap Value Equity Portfolio ............ $329,310,793 $379,680,921
Large Cap Growth Equity Portfolio ........... 416,144,821 244,727,048
Mid-Cap Value Equity Portfolio .............. 61,444,148 29,463,495
Mid-Cap Growth Equity Portfolio ............. 111,028,910 87,200,162
Small Cap Value Equity Portfolio ............ 135,989,452 96,364,416
Small Cap Growth Equity Portfolio ........... 494,068,163 459,747,970
International Equity Portfolio .............. 157,048,989 185,576,788
International Small Cap Equity .............. 10,838,920 6,863,539
International Emerging Markets Portfolio .... 28,719,666 25,093,319
Select Equity Portfolio ..................... 238,715,652 69,246,518
Balanced Portfolio .......................... 97,381,508 87,730,649
</TABLE>
70
<PAGE>
BLACKROCK FUNDS LOGO [GRAPHIC OMITTED]
For the period ended March 31, 1998, purchases and sales of government
securities were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ ------------
<S> <C> <C>
Large Cap Growth Equity Portfolio .......... $ 940,420 $ --
Mid-Cap Growth Equity Portfolio ............ 394,894 --
Small Cap Growth Equity Portfolio .......... 2,371,112 --
Select Equity Portfolio .................... 3,333,502 --
Balanced Portfolio ......................... 158,540,923 162,759,812
</TABLE>
(D) CAPITAL SHARES
Transactions in capital shares for each period were as follows:
<TABLE>
<CAPTION>
LARGE CAP VALUE EQUITY PORTFOLIO
---------------------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
3/31/98 9/30/97
------------------------------- ------------------------------
(UNAUDITED)
SHARES VALUE SHARES VALUE
-------------- -------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class .................................... 1,846,869 $ 28,644,942 3,763,955 $ 58,797,910
Service Class .......................................... 4,076,204 65,847,286 6,182,931 94,977,627
Investor A Class ....................................... 516,077 8,298,930 1,094,419 16,718,645
Investor B Class ....................................... 499,456 8,039,386 996,134 15,393,514
Investor C Class ....................................... 71,681 1,147,746 70,459 1,084,088
Shares issued in reinvestment of dividends:
Institutional Class .................................... 6,175,457 93,163,364 8,626,314 119,927,815
Service Class .......................................... 4,586,466 69,063,043 4,813,057 66,818,409
Investor A Class ....................................... 392,541 5,912,564 352,293 4,926,795
Investor B Class ....................................... 175,494 2,621,139 54,207 757,478
Investor C Class ....................................... 3,128 46,719 120 1,899
Shares redeemed:
Institutional Class .................................... (4,887,715) (79,073,378) (17,592,420) (265,113,113)
Service Class .......................................... (3,513,540) (49,755,775) (6,814,366) (105,724,113)
Investor A Class ....................................... (432,045) (7,025,884) (463,144) (7,246,351)
Investor B Class ....................................... (84,488) (1,353,914) (122,233) (1,969,444)
Investor C Class ....................................... (4,858) (77,577) (2,097) (34,013)
---------- ------------ ----------- -----------
Net increase (decrease) ..................................... 9,420,727 $145,498,591 959,629 $ (682,854)
========== ============ =========== ===========
</TABLE>
71
<PAGE>
LOGO [GRAPHIC OMITTED] BLACKROCK FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
LARGE CAP GROWTH EQUITY PORTFOLIO
---------------------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
3/31/98 9/30/97
------------------------------- ------------------------------
(UNAUDITED)
SHARES VALUE SHARES VALUE
-------------- -------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class ................................... 2,933,907 $ 50,334,121 4,100,138 $ 68,934,353
Service Class ......................................... 2,516,198 43,234,734 3,591,480 57,907,296
Investor A Class ...................................... 245,084 4,292,997 491,684 8,038,672
Investor B Class ...................................... 149,748 2,546,398 286,063 4,650,177
Investor C Class ...................................... 11,842 195,921 11,078 195,240
Shares issued in reinvestment of dividends:
Institutional Class ................................... 3,914,204 62,844,198 1,684,601 25,068,778
Service Class ......................................... 1,879,737 30,188,579 530,577 7,853,001
Investor A Class ...................................... 222,895 3,575,231 58,305 862,280
Investor B Class ...................................... 72,085 1,139,669 9,660 141,908
Investor C Class ...................................... 220 3,470 -- --
Shares redeemed:
Institutional Class ................................... (5,362,556) (92,787,732) (12,426,251) (200,944,440)
Service Class ......................................... (1,771,900) (31,122,170) (3,037,967) (49,500,077)
Investor A Class ...................................... (230,534) (4,012,968) (307,549) (5,200,889)
Investor B Class ...................................... (46,680) (810,916) (31,139) (511,220)
Investor C Class ...................................... (4,465) (78,924) -- --
---------- ------------ ----------- ------------
Net increase (decrease) .................................... 4,529,785 $ 69,542,608 (5,039,320) $(82,504,921)
========== ============ =========== ============
</TABLE>
<TABLE>
<CAPTION>
MID-CAP VALUE EQUITY PORTFOLIO
-----------------------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE PERIOD 12/27/96 1 THROUGH
3/31/98 9/30/97
------------------------------- ---------------------------------
(UNAUDITED)
SHARES VALUE SHARES VALUE
-------------- -------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class .................................. 1,520,050 $18,849,951 8,896,850 $ 94,138,731
Service Class ........................................ 1,777,139 22,041,248 1,914,151 20,681,721
Investor A Class ..................................... 150,839 1,902,819 189,936 2,103,982
Investor B Class ..................................... 243,548 3,052,526 232,883 2,670,486
Investor C Class ..................................... 10,118 127,752 2,260 25,652
Shares issued in reinvestment of dividends:
Institutional Class .................................. 261,465 3,203,377 15,331 195,462
Service Class ........................................ 60,508 738,549 2,705 34,453
Investor A Class ..................................... 6,625 80,839 617 7,085
Investor B Class ..................................... 8,483 103,070 186 2,005
Investor C Class ..................................... 47 569 3 36
Shares redeemed:
Institutional Class .................................. (571,207) (7,332,641) (561,046) (6,293,710)
Service Class ........................................ (620,909) (7,704,574) (137,408) (1,534,976)
Investor A Class ..................................... (36,009) (449,473) (9,353) (105,588)
Investor B Class ..................................... (9,007) (115,277) (5,379) (60,403)
Investor C Class ..................................... (1) (6) (631) (7,989)
--------- ----------- ---------- ------------
Net increase .............................................. 2,801,689 $34,498,729 10,541,105 $111,856,947
========= =========== ========== ============
<FN>
- ------------------
1 Commencement of operations.
</FN>
</TABLE>
72
<PAGE>
BLACKROCK FUNDS LOGO [GRAPHIC OMITTED]
<TABLE>
<CAPTION>
MID-CAP GROWTH EQUITY PORTFOLIO
-----------------------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE PERIOD 12/27/96 1 THROUGH
3/31/98 9/30/97
------------------------------- ---------------------------------
(UNAUDITED)
SHARES VALUE SHARES VALUE
-------------- -------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class .................................... 1,778,829 $20,264,983 9,480,474 $ 96,275,352
Service Class .......................................... 1,464,155 16,919,043 2,116,730 21,700,683
Investor A Class ....................................... 81,243 965,157 226,905 2,349,724
Investor B Class ....................................... 105,502 1,231,790 225,130 2,348,912
Investor C Class ....................................... 4,271 50,512 6,978 67,081
Shares issued in reinvestment of dividends:
Institutional Class .................................... 71,476 847,707 -- --
Service Class .......................................... 2,672 31,614 -- --
Investor A Class ....................................... 2,210 26,073 -- --
Investor B Class ....................................... 2,255 26,524 -- --
Investor C Class ....................................... 66 774 -- --
Shares redeemed:
Institutional Class .................................... (489,277) (5,730,267) (652,886) (7,158,764)
Service Class .......................................... (281,875) (3,222,748) (228,496) (2,359,332)
Investor A Class ....................................... (26,250) (318,019) (8,720) (93,962)
Investor B Class ....................................... (8,924) (102,002) (2,966) (31,463)
Investor C Class ....................................... -- -- -- --
--------- ----------- ---------- ------------
Net increase ................................................ 2,706,353 $30,991,141 11,163,149 $113,098,231
========= =========== ========== ============
</TABLE>
<TABLE>
<CAPTION>
SMALL CAP VALUE EQUITY PORTFOLIO
---------------------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
3/31/98 9/30/97
------------------------------- ------------------------------
(UNAUDITED)
SHARES VALUE SHARES VALUE
-------------- -------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class ................................... 4,795,059 $ 89,206,800 6,663,986 $114,030,745
Service Class ......................................... 1,752,569 32,496,760 1,903,335 31,016,901
Investor A Class ...................................... 518,136 9,721,763 430,036 7,152,490
Investor B Class ...................................... 566,823 10,293,713 406,141 7,016,554
Investor C Class ...................................... 196,715 3,596,564 109,385 1,912,858
Shares issued in reinvestment of dividends:
Institutional Class ................................... 1,637,665 29,669,642 1,841,845 26,273,991
Service Class ......................................... 609,566 11,035,698 635,002 9,026,515
Investor A Class ...................................... 199,729 3,615,604 249,425 3,549,482
Investor B Class ...................................... 58,157 1,031,696 24,354 340,893
Investor C Class ...................................... 3,448 61,164 36 513
Shares redeemed:
Institutional Class ................................... (3,859,158) (71,013,220) (6,608,331) (111,217,171)
Service Class ......................................... (871,828) (16,088,074) (1,542,961) (24,616,052)
Investor A Class ...................................... (251,841) (4,703,357) (534,852) (8,443,485)
Investor B Class ...................................... (37,286) (675,999) (25,807) (419,136)
Investor C Class ...................................... (14,232) (253,836) (3,254) (49,229)
--------- ------------ ---------- ------------
Net increase ............................................... 5,303,522 $ 97,994,918 3,548,340 $ 55,575,869
========= ============ ========== ============
<FN>
- ---------------
1 Commencement of operations.
</FN>
</TABLE>
73
<PAGE>
LOGO [GRAPHIC OMITTED] BLACKROCK FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
SMALL CAP GROWTH EQUITY PORTFOLIO
---------------------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
3/31/98 9/30/97
------------------------------- ------------------------------
(UNAUDITED)
SHARES VALUE SHARES VALUE
-------------- -------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class ................................... 7,804,280 $163,038,460 24,570,369 $465,310,898
Service Class ......................................... 3,266,177 68,613,613 4,276,637 79,601,918
Investor A Class ...................................... 4,025,370 82,197,035 6,094,862 114,486,135
Investor B Class ...................................... 552,651 11,422,451 1,664,738 31,445,733
Investor C Class ...................................... 162,743 3,354,500 639,762 11,859,117
Shares issued in reinvestment of dividends:
Institutional Class ................................... 990,910 21,245,106 821,752 16,346,714
Service Class ......................................... 448,838 9,537,811 430,248 8,510,309
Investor A Class ...................................... 127,447 2,685,302 110,912 2,180,539
Investor B Class ...................................... 72,198 1,495,221 29,715 578,839
Investor C Class ...................................... 20,385 422,183 2,009 39,134
Shares redeemed:
Institutional Class ................................... (4,586,889) (93,531,291) (18,053,070) (341,609,017)
Service Class ......................................... (2,368,457) (49,487,209) (2,386,675) (45,263,011)
Investor A Class ...................................... (3,893,612) (80,159,865) (5,028,464) (94,607,993)
Investor B Class ...................................... (161,079) (3,251,395) (238,025) (4,304,650)
Investor C Class ...................................... (77,396) (1,543,102) (40,812) (803,293)
---------- ------------ ---------- ------------
Net increase ............................................... 6,383,566 $136,038,820 12,893,958 $243,771,372
========== ============ ========== ============
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY PORTFOLIO
---------------------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
3/31/98 9/30/97
------------------------------- ------------------------------
(UNAUDITED)
SHARES VALUE SHARES VALUE
-------------- -------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class ................................... 6,264,375 $ 87,736,608 18,427,749 $ 249,827,119
Service Class ......................................... 2,607,028 36,636,868 4,798,267 65,276,413
Investor A Class ...................................... 5,761,506 79,565,486 5,766,495 78,085,410
Investor B Class ...................................... 82,481 1,149,846 227,413 3,097,248
Investor C Class ...................................... 8,923 123,103 10,724 155,185
Shares issued in reinvestment of dividends:
Institutional Class ................................... 751,360 10,155,048 1,267,456 16,587,621
Service Class ......................................... 270,822 3,656,448 429,352 5,605,176
Investor A Class ...................................... 36,099 487,412 72,891 951,131
Investor B Class ...................................... 8,315 111,216 10,030 129,581
Investor C Class ...................................... 12 156 3 32
Shares redeemed:
Institutional Class ................................... (8,317,479) (118,292,046) (19,077,120) (261,816,900)
Service Class ......................................... (2,208,643) (30,855,694) (3,574,224) (48,412,325)
Investor A Class ...................................... (5,868,237) (82,420,743) (5,791,432) (79,432,520)
Investor B Class ...................................... (30,328) (419,731) (34,057) (458,487)
Investor C Class ...................................... (48) (639) -- --
---------- ------------- ---------- -------------
Net increase (decrease) .................................... (633,814) $ (12,366,662) 2,533,547 $ 29,594,684
========== ============= ========== =============
</TABLE>
74
<PAGE>
BLACKROCK FUNDS LOGO [GRAPHIC OMITTED]
<TABLE>
<CAPTION>
INTERNATIONAL SMALL CAP EQUITY PORTFOLIO
-----------------------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE PERIOD 9/26/97 1
3/31/98 THROUGH 9/30/97
------------------------------- ---------------------------------
(UNAUDITED)
SHARES VALUE SHARES VALUE
-------------- -------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class ................................... 23,485 $ 246,000 1,550,001 $15,500,010
Service Class ......................................... 36,108 354,746 1 10
Investor A Class ...................................... 56,649 565,484 32,754 327,508
Investor B Class ...................................... 94,617 947,991 71,518 715,023
Investor C Class ...................................... 14,961 150,585 18,314 183,140
Shares issued in reinvestment of dividends:
Institutional Class ................................... 8,652 81,070 -- --
Service Class ......................................... 93 873 -- --
Investor A Class ...................................... 255 2,395 -- --
Investor B Class ...................................... 105 982 -- --
Investor C Class ...................................... 17 157 -- --
Shares redeemed:
Institutional Class ................................... (87,630) (900,000) -- --
Service Class ......................................... (7,464) (83,434) -- --
Investor A Class ...................................... (12,198) (119,317) -- --
Investor B Class ...................................... (1,807) (17,912) -- --
Investor C Class ...................................... (1) (10) -- --
------- ---------- --------- -----------
Net increase ............................................... 125,842 $1,229,610 1,672,588 $16,725,691
======= ========== ========= ===========
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL EMERGING MARKETS PORTFOLIO
---------------------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
3/31/98 9/30/97
------------------------------- ------------------------------
(UNAUDITED)
SHARES VALUE SHARES VALUE
-------------- -------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class .................................... 2,859,308 $ 22,084,316 6,194,114 $ 58,681,787
Service Class .......................................... 1,878,952 14,159,693 3,396,941 32,721,399
Investor A Class ....................................... 48,338 375,851 222,576 2,150,041
Investor B Class ....................................... 23,929 189,132 192,786 1,883,783
Investor C Class ....................................... 4,328 32,126 9,264 92,800
Shares issued in reinvestment of dividends:
Institutional Class .................................... 175,570 1,430,896 12,211 103,871
Service Class .......................................... 87,703 710,396 1 7
Investor A Class ....................................... 7,181 57,948 1,111 11,578
Investor B Class ....................................... 3,094 24,815 -- --
Investor C Class ....................................... 148 1,190 -- --
Shares redeemed:
Institutional Class .................................... (2,693,283) (20,872,709) (2,055,585) (19,721,701)
Service Class .......................................... (1,714,407) (12,943,292) (893,611) (8,425,552)
Investor A Class ....................................... (87,988) (693,446) (103,774) (989,388)
Investor B Class ....................................... (29,506) (227,847) (25,136) (247,215)
Investor C Class ....................................... (1,925) (14,915) (84) (807)
---------- ------------ ---------- ------------
Net increase ................................................ 561,442 $ 4,314,154 6,950,814 $ 66,260,603
========== ============ ========== ============
<FN>
- ------------
1 Commencement of operations.
</FN>
</TABLE>
75
<PAGE>
LOGO [GRAPHIC OMITTED] BLACKROCK FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
SELECT EQUITY PORTFOLIO
---------------------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
3/31/98 9/30/97
------------------------------- ------------------------------
(UNAUDITED)
SHARES VALUE SHARES VALUE
-------------- -------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class .................................... 7,620,097 $129,494,696 5,853,339 $ 85,232,930
Service Class .......................................... 4,514,177 76,906,295 3,109,666 46,747,048
Investor A Class ....................................... 532,970 9,228,672 754,034 11,663,168
Investor B Class ....................................... 773,350 13,152,730 996,963 15,826,909
Investor C Class ....................................... 47,530 816,125 21,826 354,432
Shares issued in reinvestment of dividends:
Institutional Class .................................... 1,644,475 26,665,211 1,825,871 24,532,069
Service Class .......................................... 604,191 9,778,206 607,614 8,141,550
Investor A Class ....................................... 72,050 1,165,730 51,092 692,892
Investor B Class ....................................... 71,122 1,138,659 11,367 152,295
Investor C Class ....................................... 354 5,660 14 188
Shares redeemed:
Institutional Class .................................... (1,742,977) (30,103,294) (6,216,108) (92,157,955)
Service Class .......................................... (853,405) (14,722,562) (2,138,625) (32,181,860)
Investor A Class ....................................... (160,180) (2,719,464) (181,922) (2,752,937)
Investor B Class ....................................... (99,462) (1,700,502) (42,645) (682,951)
Investor C Class ....................................... (1,134) (19,668) (3,860) (53,423)
---------- ------------ ---------- ------------
Net increase ................................................ 13,023,158 $219,086,494 4,648,626 $ 65,514,355
========== ============ ========== ============
</TABLE>
<TABLE>
<CAPTION>
INDEX EQUITY PORTFOLIO
---------------------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
3/31/98 9/30/97
------------------------------- ------------------------------
(UNAUDITED)
SHARES VALUE SHARES VALUE
-------------- -------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class ................................... 3,154,787 $ 58,333,286 2,462,483 $ 38,257,001
Service Class ......................................... 2,848,756 54,810,035 4,417,051 70,407,935
Investor A Class ...................................... 427,804 8,251,144 1,150,737 18,875,513
Investor B Class ...................................... 1,494,253 28,808,014 1,935,614 31,084,295
Investor C Class ...................................... 1,023,673 19,645,503 1,131,696 18,023,818
Shares issued in reinvestment of dividends:
Institutional Class ................................... 66,904 1,257,914 556,932 7,642,144
Service Class ......................................... 80,526 1,508,871 439,467 6,053,435
Investor A Class ...................................... 10,913 204,238 60,839 861,293
Investor B Class ...................................... 6,107 109,624 13,467 192,015
Investor C Class ...................................... 2,037 36,533 2,605 38,351
Shares redeemed:
Institutional Class ................................... (2,657,232) (54,634,227) (3,014,892) (47,987,128)
Service Class ......................................... (1,348,082) (25,580,089) (1,684,244) (26,809,793)
Investor A Class ...................................... (441,320) (8,320,448) (272,772) (4,364,443)
Investor B Class ...................................... (122,937) (2,332,591) (57,642) (960,311)
Investor C Class ...................................... (112,463) (2,079,661) (86,128) (1,382,780)
---------- ------------ ---------- ------------
Net increase ............................................... 4,433,726 $ 80,018,146 7,055,213 $109,931,345
========== ============ ========== ============
</TABLE>
76
<PAGE>
BLACKROCK FUNDS LOGO [GRAPHIC OMITTED]
<TABLE>
<CAPTION>
BALANCED PORTFOLIO
---------------------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
3/31/98 9/30/97
------------------------------- ------------------------------
(UNAUDITED)
SHARES VALUE SHARES VALUE
-------------- -------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class ................................... 809,304 $ 14,334,329 440,057 $ 7,176,252
Service Class ......................................... 897,876 15,932,318 2,917,801 47,278,637
Investor A Class ...................................... 327,024 5,843,763 658,450 10,926,754
Investor B Class ...................................... 639,865 11,372,949 867,487 14,542,010
Investor C Class ...................................... 13,978 248,681 4,757 83,032
Shares issued in reinvestment of dividends:
Institutional Class ................................... 124,046 2,111,526 98,648 1,554,413
Service Class ......................................... 794,441 13,499,229 423,634 6,704,875
Investor A Class ...................................... 405,296 6,886,068 280,237 4,501,717
Investor B Class ...................................... 112,174 1,892,671 33,001 532,907
Investor C Class ...................................... 224 3,765 23 392
Shares redeemed:
Institutional Class ................................... (214,846) (3,817,709) (1,288,465) (20,912,724)
Service Class ......................................... (822,109) (14,607,347) (2,551,141) (41,613,142)
Investor A Class ...................................... (481,284) (8,546,876) (915,855) (15,203,656)
Investor B Class ...................................... (91,620) (1,624,540) (94,088) (1,559,599)
Investor C Class ...................................... (1,225) (21,826) -- --
---------- ------------ ---------- ------------
Net increase ............................................... 2,513,144 $ 43,507,001 874,546 $ 14,011,868
========== ============ ========== ============
</TABLE>
(E) AT MARCH 31, 1998, NET ASSETS CONSISTED OF:
<TABLE>
<CAPTION>
LARGE CAP LARGE CAP MID-CAP MID-CAP SMALL CAP SMALL CAP
VALUE EQUITY GROWTH EQUITY VALUE EQUITY GROWTH EQUITY VALUE EQUITY GROWTH EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Capital paid in .................... $1,049,300,871 $498,693,399 $146,355,676 $144,089,372 $398,612,732 $670,025,946
Undistributed net investment
income (loss) ................... -- 142,158 -- (454,504) 2,646 (1,659,491)
Distributions in excess of net
investment income ............... (133,532) -- (4,216) -- -- --
Accumulated net realized
gain (loss) on investment
transactions, futures
contracts and foreign
exchange contracts .............. 78,563,118 23,513,328 5,130,134 (1,713,565) 31,038,205 34,772,730
Net unrealized appreciation
on investment transactions,
futures contracts and foreign
exchange contracts .............. 448,586,725 342,907,814 31,307,890 36,025,299 139,100,201 228,857,031
-------------- ------------ ------------ ------------ ------------ ------------
$1,576,317,182 $865,256,699 $182,789,484 $177,946,602 $568,753,784 $931,996,216
============== ============ ============ ============ ============ ============
</TABLE>
77
<PAGE>
LOGO [GRAPHIC OMITTED] BLACKROCK FUNDS
<TABLE>
<CAPTION>
INTERNATIONAL INTERNATIONAL INTERNATIONAL SELECT INDEX
EQUITY SMALL CAP EQUITY EMERGING MARKETS EQUITY EQUITY BALANCED
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------------- ---------------- ---------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Capital paid in .................... $540,391,140 $17,955,301 $178,932,485 $595,979,205 $362,126,235 $263,768,603
Undistributed net investment
income .......................... -- -- 139,028 -- 289,239 --
Distributions in excess of net
investment income ............... (2,154,697) (61,405) -- (27,684) -- (33,747)
Accumulated net realized
gain (loss) on investment
transactions, futures
contracts and foreign
exchange contracts .............. 2,437,546 855,010 (14,486,007) 18,346,264 (1,083,376) 3,717,656
Net unrealized appreciation
(depreciation) on investment
transactions, futures
contracts and foreign
exchange contracts .............. 145,468,310 1,604,006 (11,160,239) 268,119,297 256,623,283 108,734,131
------------ ----------- ------------ ------------ ------------ ------------
$686,142,299 $20,352,912 $153,425,267 $882,417,082 $617,955,381 $376,186,643
============ =========== ============ ============ ============ ============
</TABLE>
(F) PNC COMMON TRUST CONVERSION
On January 22, 1998, January 13, 1998 and February 9, 1998, the Board of
Trustees of the Fund, the Board of Directors of PNC Bank and the Board of
Directors of PNC Bank, Delaware, respectively, approved an asset purchase
agreement among the Fund, PNC Bank, Delaware regarding 25 common trust funds for
which either PNC Bank or PNC Bank, Delaware serve as trustee (each a "PNC Common
Trust Fund"). The agreement provides for the acquisition by the Fund of all of
the assets and liabilities of each PNC Common Trust Fund in exchange for
Institutional Shares of the corresponding Portfolio(s) of the Fund and the
distribution of such Institutional Shares to the participating trusts of the PNC
Common Trust Funds in liquidation of the PNC Common Trust Funds. The conversion
is expected to occur in May, 1998.
78
<PAGE>
THE DFA INVESTMENT TRUST COMPANY
THE U.S. LARGE COMPANY SERIES
FOUR MONTHS ENDED MARCH 31, 1998
(UNAUDITED)
<PAGE>
TABLE OF CONTENTS THE DFA INVESTMENT TRUST COMPANY
THE U.S. LARGE COMPANY SERIES
Page
Schedule of Investments ................................................. 81
Statement of Assets and Liabilities ..................................... 85
Statements of Operations ................................................ 86
Statements of Changes in Net Assets ..................................... 87
Financial Highlights .................................................... 88
Notes to Financial Statements ........................................... 89
THIS REPORT IS SUBMITTED FOR THE INFORMATION OF THE FUND'S SHAREHOLDERS. IT IS
NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS UNLESS PRECEDED OR
ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.
<PAGE>
SCHEDULE OF INVESTMENTS THE DFA INVESTMENT TRUST COMPANY
THE U.S. LARGE COMPANY SERIES
- --------------------------------------------------------------------------------
MARCH 31, 1998
-----------------------------
(UNAUDITED)
SHARES VALUE(DAGGER)
------ -------------------
COMMON STOCKS -- ( 99.8%)
3 COM Corp. ......................... 44,000 $ 1,582,625*
AMP, Inc. ........................... 27,204 1,191,875
AMR Corp ............................ 11,100 1,589,381*
AON Corp. ........................... 20,600 1,333,850
AT & T Corp ......................... 200,639 13,166,934#
Abbott Laboratories ................. 94,500 7,117,031
Adobe Systems Inc. .................. 8,500 383,828
Advanced Micro Devices, Inc. ........ 17,600 511,500*
Aeroquip Vickers Inc. ............... 3,500 202,343#
Aetna, Inc. ......................... 18,237 1,521,649
Ahmanson (H.F.) & Co. ............... 13,400 1,038,500
Air Products & Chemicals, Inc. ...... 14,500 1,201,687
Airtouch Communications, Inc. ....... 62,600 3,063,487*
Alberto-Culver Co. Class B .......... 7,000 213,062
Albertson's, Inc. ................... 30,500 1,605,062
Alcan Aluminum, Ltd. ................ 28,000 875,000
Allegheny Teledyne, Inc. ............ 24,200 673,062
Allergan, Inc. ...................... 8,100 307,800
AlliedSignal, Inc. .................. 69,900 2,935,800
Allstate Corp. ...................... 52,800 4,854,300
Alltel Corp. ........................ 22,700 991,706#
Aluminium Co. of America ............ 21,200 1,458,825#
Alza Corp. .......................... 10,600 475,012*
Amerada Hess Corp. .................. 11,300 658,931
Ameren Corp. ........................ 17,000 716,125#
American Electric Power Co., Inc. ... 23,300 1,170,825
American Express Co. ................ 57,500 5,279,218
American General Corp. .............. 31,400 2,031,187
American Greetings Corp. Class A .... 8,900 409,400
American Home Products Corp. ........ 80,500 7,677,687
American International Group, Inc. .. 86,493 10,892,712
American Stores Co. ................. 33,800 878,800
Ameritech Corp. ..................... 135,200 6,683,950
Amgen, Inc. ......................... 32,400 1,973,362*
Amoco Corp. ......................... 60,200 5,199,775
Anadarko Petroleum Corp. ............ 7,400 510,600
Andrew Corp. ........................ 10,893 215,477*#
Anheuser-Busch Companies, Inc. ...... 60,600 2,806,537
Apache Corp. ........................ 11,800 433,650
Apple Computer, Inc. ................ 16,400 450,487*#
Applied Materials, Inc. ............. 45,100 1,591,184*
Archer-Daniels Midland Co. .......... 70,400 1,544,400
Armco, Inc. ......................... 13,300 78,137*
Armstrong World Industries, Inc. .... 5,000 432,812
Asarco, Inc. ........................ 4,950 132,103#
Ashland, Inc. ....................... 9,200 520,950
Atlantic Richfield Co. .............. 39,700 3,121,412
Autodesk, Inc. ...................... 5,800 249,943
Automatic Data Processing, Inc. ..... 37,100 2,525,118
Autozone, Inc. ...................... 18,800 636,850*
Avery Dennison Corp. ................ 12,600 672,525
Avon Products, Inc. ................. 16,400 1,279,200#
Baker Hughes, Inc. .................. 21,000 845,250
Ball Corp. .......................... 3,700 121,175
Baltimore Gas & Electric Co. ........ 18,250 596,546
Banc One Corp. ...................... 79,932 5,055,699
BankBoston Corp. .................... 17,800 1,962,450
Bank of New York Co., Inc. .......... 46,700 2,933,343#
BankAmerica Corp. ................... 85,536 7,067,412
Bankers Trust New York Corp. ........ 12,300 1,479,843
Bard (C.R.), Inc. ................... 7,000 257,250
Barrick Gold Corp. .................. 45,900 992,587
Battle Mountain Gold Co. ............ 28,400 181,050
Bausch & Lomb, Inc. ................. 6,800 310,675
Baxter International, Inc. .......... 34,700 1,912,837
- --------------------------------------------------------------------------------
MARCH 31, 1998
------------------------------
(UNAUDITED)
SHARES VALUE(DAGGER)
------ -------------------
Bay Networks, Inc. ................... 27,200 $ 737,800*#
BB & T Corp. ......................... 17,600 1,191,300
Becton Dickinson & Co. ............... 15,000 1,020,937
Bell Atlantic Corp. .................. 95,906 9,830,365#
Bellsouth Corp. ...................... 122,300 8,262,893
Bemis Co., Inc. ...................... 6,500 293,312#
Beneficial Corp. ..................... 6,700 832,895
Bestfoods, Inc. ...................... 17,600 2,057,000
Bethlehem Steel Corp. ................ 13,900 188,518*#
Biomet, Inc. ......................... 13,800 411,843#
Black & Decker Corp. ................. 11,700 620,831
Block (H.&R.), Inc. .................. 13,000 618,312
Boeing Co. ........................... 123,286 6,426,282
Boise Cascade Corp. .................. 6,900 248,831
Boston Scientific Corp. .............. 24,000 1,620,000*
Briggs & Stratton Corp. .............. 3,100 142,018
Bristol Myers Squibb Co. ............. 123,000 12,830,437
Brown-Forman Corp. Class B ........... 8,500 467,500
Browning-Ferris Industries, Inc. ..... 24,000 783,000
Brunswick Corp. ...................... 12,300 428,962
Burlington Northern Santa Fe Corp. ... 19,137 1,990,248
Burlington Resources, Inc. ........... 21,790 1,044,558#
CBS Corp. ............................ 87,700 2,976,318
CIGNA Corp. .......................... 9,300 1,906,500
CSX Corp. ............................ 26,800 1,594,600
CVS Corp. ............................ 21,400 1,615,700
Cabletron Systems, Inc. .............. 19,500 283,968*
Campbell Soup Co. .................... 56,200 3,189,350
Cardinal Health, Inc. ................ 13,400 1,181,712#
Carolina Power & Light Co. ........... 18,600 841,650
Case Corp. ........................... 9,200 626,750
Caterpillar, Inc. .................... 46,100 2,538,381
Cendant Corporation .................. 100,100 3,966,462*
Centex Corp. ......................... 7,300 278,312
Central & South West Corp. ........... 26,300 703,525
Ceridian Corp. ....................... 9,500 512,406*
Champion International Corp. ......... 11,900 646,318
Charming Shoppes, Inc. ............... 13,100 61,815*
Chase Manhattan Corp. ................ 52,196 7,039,935
Chevron Corp. ........................ 81,000 6,505,312
Chrysler Corp. ....................... 80,300 3,337,468
Chubb Corp. .......................... 20,900 1,638,037
Cincinnati Fin ....................... 6,900 856,031*
Cincinnati Milacron, Inc. ............ 4,900 156,187
Cinergy Corp. ........................ 19,493 721,241
Circuit City Stores, Inc. ............ 12,200 521,550
Cisco Systems, Inc. .................. 125,600 8,591,825*
Citicorp ............................. 56,400 8,008,800
Clear Channel Communications, Inc. ... 12,900 1,264,200*
Clorox Co. ........................... 12,700 1,088,231
Coastal Corp. ........................ 13,000 846,625
Coca-Cola Co. ........................ 305,600 23,664,900
Cognizant Corp. ...................... 20,000 1,147,500
Colgate-Palmolive Co. ................ 36,500 3,161,812#
Columbia Energy Group ................ 6,900 536,475#
Columbia/HCA Healthcare Corp. ........ 79,982 2,579,419
Comcast Corp. Class A Special ........ 43,300 1,530,384
Comerica, Inc. ....................... 13,100 1,386,143
Compaq Computer Corp. ................ 186,890 4,835,778
Computer Associates International,
Inc. ............................... 67,400 3,892,350
Computer Sciences Corp. .............. 20,000 1,100,000*
Conagra, Inc. ........................ 58,800 1,888,950
Conseco, Inc. ........................ 23,400 1,325,025
Consolidated Edison Co. of
New York, Inc. ..................... 29,000 1,355,750
Consolidated Natural Gas Co. ......... 11,800 680,712
Consolidated Stores .................. 13,300 571,068*#
See accompanying notes to financial statements.
81
<PAGE>
SCHEDULE OF INVESTMENTS THE DFA INVESTMENT TRUST COMPANY
THE U.S. LARGE COMPANY SERIES (CONTINUED)
- --------------------------------------------------------------------------------
MARCH 31, 1998
------------------------------
(UNAUDITED)
SHARES VALUE(DAGGER)
------ -------------------
Cooper Industries, Inc. .............. 15,000 $ 891,562
Cooper Tire & Rubber Co. ............. 9,700 230,375
Coors (Adolph) Co. Class B ........... 4,600 160,425
Corestates Financial Corp. ........... 24,400 2,189,900
Corning, Inc. ........................ 28,500 1,261,125#
Costco Companies, Inc. ............... 26,403 1,411,735*#
Countrywide Credit Industries,
Inc. ............................... 13,400 712,712
Crane Co. ............................ 5,700 302,100
Crown Cork & Seal Co., Inc. .......... 16,000 856,000
Cummins Engine Co., Inc. ............. 4,700 259,087
Cyprus Amax Minerals Co., Inc. ....... 11,550 192,018
DSC Communications Corp. ............. 14,600 265,081*
DTE Energy Co. ....................... 18,000 707,625
Dana Corp. ........................... 13,100 762,256
Darden Restaurants, Inc. ............. 18,300 284,793
Data General Corp. ................... 6,000 106,125*#
Dayton-Hudson Corp. .................. 27,200 2,393,600
Deere & Co. .......................... 30,900 1,913,868#
Dell Computer Corp. .................. 80,900 5,478,448*#
Delta Air Lines, Inc. ................ 9,300 1,099,725
Deluxe Corp. ......................... 10,000 329,375
Digital Equipment Corp. .............. 18,200 952,087*
Dillard Department Stores,
Inc. Class A ...................... 13,700 506,043
Disney (Walt) Co. .................... 83,300 8,892,275
Dominion Resources, Inc. VA .......... 23,900 1,003,800
Donnelley (R.R.) & Sons Co. .......... 18,100 743,231
Dover Corp. .......................... 27,500 1,045,000
Dow Chemical Co. ..................... 27,800 2,703,550
Dow Jones & Co., Inc. ................ 11,900 629,956
Dresser Industries, Inc. ............. 21,600 1,038,150
DuPont (E.I.) de Nemours & Co. ....... 139,800 9,506,400
Duke Power Co. ....................... 44,366 2,642,549
Dun & Bradstreet Corp. ............... 21,100 721,356
E G & G, Inc. ........................ 5,600 162,750
EMC Corp. MA ......................... 61,100 2,310,343*
Eastern Enterprises .................. 2,500 107,500
Eastman Chemical Co. ................. 9,750 657,515#
Eastman Kodak Co. .................... 40,100 2,601,487
Eaton Corp. .......................... 9,600 913,800
Echlin, Inc. ......................... 7,800 409,012
Ecolab, Inc. ......................... 16,000 464,000
Edison International ................. 47,200 1,386,500
Emerson Electric Co. ................. 54,600 3,559,237
Engelhard Corp. ...................... 17,774 337,706
Enron Corp. .......................... 38,600 1,790,075
Entergy Corp. ........................ 30,200 898,450
Equifax, Inc. ........................ 18,500 675,250
Exxon Corp. .......................... 304,700 20,605,337
FDX Corp ............................. 18,180 1,293,052*#
FMC Corp. ............................ 4,500 353,250*
FPL Group, Inc. ...................... 22,600 1,452,050
Federal Home Loan Mortgage
Corp. .............................. 85,800 4,070,137
Federal National Mortgage
Association ........................ 131,000 8,285,750
Federated Department Stores,
Inc. ............................... 26,100 1,352,306*
Fifth Third Bancorp .................. 19,300 1,649,546
First Chicago NBD Corp. .............. 35,693 3,145,445
First Data Corp. ..................... 53,000 1,722,500
First Energy Corp. ................... 28,400 875,075
First Union Corp. .................... 80,100 4,545,675#
Fleet Financial Group, Inc. .......... 33,664 2,863,544
Fleetwood Enterprises, Inc. .......... 4,500 209,531#
Fluor Corp. .......................... 10,400 517,400#
Ford Motor Co. ....................... 148,200 9,605,212
Fort James Corp. ..................... 25,700 1,177,381
Fortune Brands ....................... 21,300 849,337
Foster Wheeler Corp. ................. 5,050 154,340
- --------------------------------------------------------------------------------
MARCH 31, 1998
------------------------------
(UNAUDITED)
SHARES VALUE(DAGGER)
------ -------------------
Freeport McMoran Copper & Gold, Inc
Class B ............................. 23,900 $ 476,506#
Frontier Corporation ................. 20,300 661,018
Fruit of the Loom, Inc. Class A ...... 9,000 275,625*
GPU, Inc. ............................ 15,700 694,725
GTE Corp. ............................ 118,500 7,095,187
Gannett Co., Inc. .................... 35,100 2,522,812
Gap, Inc. ............................ 48,800 2,196,000
General Dynamics Corp. ............... 7,800 671,775
General Electric Co. ................. 404,200 34,836,987
General Instrument Corp. ............. 18,280 382,737*
General Mills, Inc. .................. 19,400 1,474,400#
General Motors Corp. ................. 87,300 5,887,293
General RE Corp. ..................... 9,800 2,162,125
General Signal Corp. ................. 6,100 285,175
Genuine Parts Co. .................... 22,075 841,609
Georgia-Pacific Corp. ................ 11,400 738,150
Giant Food, Inc. Class A ............. 7,400 285,825
Gillette Co. ......................... 69,400 8,236,912
Golden West Financial Corp. .......... 7,100 680,268
Goodrich (B.F.) Co. .................. 8,800 449,350#
Goodyear Tire & Rubber Co. ........... 19,200 1,454,400
Grace (W.R.) & Co. ................... 9,300 778,293
Grainger (W.W.), Inc. ................ 6,200 637,437
Great Atlantic & Pacific
Tea Co., Inc. ...................... 4,700 142,175
Great Lakes Chemical Corp. ........... 7,400 399,600
Green Tree Financial Corp. ........... 16,800 477,750
Guidant Corp. ........................ 18,800 1,379,450
HBO & Co. ............................ 26,100 1,574,971
Halliburton Co. ...................... 32,300 1,621,056#
Harcourt General, Inc. ............... 8,723 483,036
Harnischfeger Industries, Inc. ....... 5,876 200,885
Harrahs Entertainment, Inc. .......... 12,500 307,031*
Harris Corp. ......................... 9,900 516,037
Hartford (The) Financial
Services Group ..................... 14,400 1,562,400
Hasbro, Inc. ......................... 15,525 548,226
Healthsouth Corp. .................... 48,500 1,361,031*
Heinz (H.J.) Co. ..................... 45,250 2,641,468
Helmerich & Payne, Inc. .............. 6,200 193,750
Hercules, Inc. ....................... 11,900 587,562#
Hershey Foods Corp. .................. 17,500 1,253,437
Hewlett-Packard Co. .................. 128,400 8,137,350
Hilton Hotels Corp. .................. 30,900 984,937#
Home Depot, Inc. ..................... 90,172 6,080,974
Homestake Mining Co. ................. 18,100 196,837#
Honeywell, Inc. ...................... 15,800 1,306,462
Household International, Inc. ........ 13,300 1,832,075
Houston Industries, Inc. ............. 34,800 1,000,500
Humana, Inc. ......................... 20,200 501,212*
Huntington Bancshares, Inc. .......... 23,600 859,187
ITT Industries, Inc. ................. 14,600 555,712
Ikon Office Solutions, Inc ........... 16,700 577,193
Illinois Tool Works, Inc. ............ 30,700 1,987,825
Inco, Ltd. ........................... 20,600 384,962
Ingersoll-Rand Co. ................... 20,600 987,512
Inland Steel Industries, Inc. ........ 6,000 165,750
Intel Corp. .......................... 202,000 15,762,312
International Business
Machines Corp. ..................... 120,300 12,496,162
International Flavors &
Fragrances, Inc. ................... 13,400 631,475
International Paper Co. .............. 37,500 1,755,468
Interpublic Group of
Companies, Inc. .................... 15,650 972,256#
Jefferson-Pilot Corp. ................ 8,850 787,096#
Johnson & Johnson .................... 166,200 12,184,537
Johnson Controls, Inc. ............... 10,400 631,150
Jostens, Inc. ........................ 4,800 115,200
KLA-Tencor Corp. ..................... 10,400 398,125*
See accompanying notes to financial statements.
82
<PAGE>
SCHEDULE OF INVESTMENTS THE DFA INVESTMENT TRUST COMPANY
THE U.S. LARGE COMPANY SERIES (CONTINUED)
- --------------------------------------------------------------------------------
MARCH 31, 1998
------------------------------
(UNAUDITED)
SHARES VALUE(DAGGER)
------ -------------------
K Mart Corp. ........................ 60,300 $ 1,006,256*
Kaufman & Broad Home Corp. .......... 4,800 156,300
Kellogg Co. ......................... 50,900 2,195,062
Kerr-McGee Corp. .................... 5,800 403,462
Keycorp ............................. 54,400 2,057,000
Kimberly Clark Corp. ................ 68,884 3,452,810
King World Productions, Inc. ........ 9,100 266,175
Knight Ridder, Inc. ................. 10,500 586,687
Kroger Co. .......................... 31,500 1,454,906*
LSI Logic Corp. ..................... 17,400 439,350*
Laidlaw, Inc. Class B Non-Voting .... 40,600 644,525
Lehman Bros. HL ..................... 12,500 935,937
Lilly (Eli) & Co. ................... 137,100 8,174,587
Limited, Inc. ....................... 33,600 963,900
Lincoln National Corp. .............. 12,500 1,060,937
Liz Claiborne, Inc. ................. 8,200 408,975
Lockheed Martin Corp. ............... 23,857 2,683,912
Loews Corp. ......................... 14,400 1,501,200
Longs Drug Stores Corp. ............. 4,800 146,100
Louisiana-Pacific Corp. ............. 13,500 313,875
Lowe's Companies, Inc. .............. 21,500 1,509,163
Lucent Technologies, Inc. ........... 80,600 10,306,725
MBIA, Inc. .......................... 12,000 930,000
MBNA Corp. .......................... 62,030 2,221,449#
MCI Communications Corp. ............ 85,900 4,254,734
MGIC Investment Corp. ............... 14,200 932,762#
Mallinckrodt Group, Inc. ............ 9,000 355,500
Manor Care, Inc. .................... 7,900 292,300
Marriott International, Inc. ........ 31,500 1,171,406*
Marsh & McLennan Companies, Inc. .... 21,100 1,842,293#
Masco Corp. ......................... 20,300 1,207,850
Mattel, Inc. ........................ 35,952 1,424,598
May Department Stores Co. ........... 28,600 1,816,100
Maytag Corp. ........................ 11,700 559,406
McDermott International, Inc. ....... 7,000 289,187#
McDonald's Corp. .................... 84,900 5,094,000
McGraw-Hill Companies, Inc. ......... 12,100 920,356
Mead Corp. .......................... 12,900 461,981
Medtronic, Inc. ..................... 57,700 2,993,187
Mellon Bank Corp. ................... 31,500 2,000,250
Mercantile Bank ..................... 16,200 887,962*
Mercantile Stores Co., Inc. ......... 4,500 302,343
Merck & Co., Inc. ................... 148,200 19,025,175
Meredith Corp. ...................... 6,500 273,812
Merrill Lynch & Co., Inc. ........... 41,100 3,411,300
Micron Technology, Inc. ............. 26,200 761,437*#
Microsoft Corp. ..................... 300,700 26,903,253*
Millipore Corp. ..................... 5,400 187,650
Minnesota Mining & Manufacturing
Co. .............................. 50,400 4,595,850
Mirage Resorts, Inc. ................ 22,200 539,737*
Mobil Corp. ......................... 96,900 7,424,962
Monsanto Co. ........................ 73,400 3,816,800
Moore Corp., Ltd. ................... 11,000 182,875#
Morgan (J.P.) & Co., Inc. ........... 22,100 2,968,306
Morgan Stanley Group, Inc. .......... 73,309 5,342,393
Morton International, Inc. .......... 16,100 528,281
Motorola, Inc. ...................... 73,500 4,455,937
Nacco Industries, Inc. Class A ...... 1,000 134,000
Nalco Chemical Co. .................. 8,200 332,612
National City Corp. ................. 26,100 1,913,456#
National Semiconductor Corp. ........ 20,200 422,937*
National Service Industries, Inc. ... 5,300 311,706
NationsBank Corp. ................... 116,307 8,483,141
Navistar International Corp. ........ 8,900 311,500*
New York Times Class A .............. 11,800 826,000
Newell Co. .......................... 19,600 949,375
- --------------------------------------------------------------------------------
MARCH 31, 1998
------------------------------
(UNAUDITED)
SHARES VALUE(DAGGER)
------ -------------------
Newmont Mining Corp. ................ 19,313 $ 590,253
Nextel Communications ............... 32,400 1,092,487*
Niagara Mohawk Power Corp. .......... 17,800 231,400*
Nicor, Inc. ......................... 6,000 253,500
Nike, Inc. Class B .................. 35,900 1,588,575#
Nordstrom, Inc. ..................... 9,600 613,500#
Norfolk Southern Corp. .............. 46,600 1,741,675
Northern States Power Co. MN ........ 9,100 536,900#
Northern Telecom, Ltd. .............. 64,200 4,148,925
Northern Tr Co, ..................... 13,700 1,024,931*
Northrop Grumman Corp. .............. 8,400 902,475
Norwest Corp. ....................... 93,300 3,877,781
Novell, Inc. ........................ 43,400 465,193*
Nucor Corp. ......................... 10,900 593,368
Occidental Petroleum Corp. .......... 42,000 1,231,125
Omnicom Group ....................... 19,900 936,543*
Oneok, Inc. ......................... 3,800 154,850
Oracle Systems Corp. ................ 121,762 3,846,918*
Oryx Energy Co. ..................... 13,100 340,600*
Owens Corning . ..................... 6,600 237,187#
Owens-Illinois, Inc. ................ 17,500 756,875*
PECO Energy Co. ..................... 27,500 608,437
PNC Bank Corp. ...................... 37,750 2,262,640
PP&L Resources, Inc. ................ 20,500 484,312#
PPG Industries, Inc. ................ 22,200 1,508,212
Paccar, Inc. ........................ 9,520 566,737#
PacifiCorp .......................... 36,600 901,275
Pacific Enterprises ................. 10,300 420,368
Pacific Gas & Electric Co. .......... 54,200 1,788,600
Pall Corp. .......................... 15,400 331,100
Parametric Technology Corp. ......... 31,800 1,058,343*
Parker-Hannifin Corp. ............... 13,625 698,281
Penney (J.C.) Co., Inc. ............. 31,000 2,346,312
Pennzoil Co. ........................ 5,900 381,287
Peoples Energy Corp. ................ 4,400 160,050
Pep Boys -- Manny, Moe & Jack ....... 7,800 180,862
Pepsico, Inc. ....................... 187,200 7,991,100
Perkin Elmer Corp. .................. 5,900 426,643#
Pfizer, Inc. ........................ 159,600 15,910,125
Pharmacia & Upjohn, Inc. ............ 62,780 2,746,625
Phelps Dodge Corp. .................. 7,300 471,306
Philip Morris Companies, Inc. ....... 299,500 12,485,406
Phillips Petroleum Co. .............. 32,400 1,617,975
Pioneer Hi-Bred International,
Inc. .............................. 8,000 780,500#
Pitney Bowes, Inc. .................. 35,800 1,796,712
Placer Dome, Inc. ................... 30,600 403,537
Polaroid Corp. ...................... 5,500 242,000
Potlatch Corp. ...................... 3,600 155,025
Praxair, Inc. ....................... 19,400 997,887
Procter & Gamble Co. ................ 165,732 13,983,637
Progressive Corp. ................... 8,800 1,185,250
Providian Corp. ..................... 11,700 672,018
Public Service Enterprise Group,
Inc. .............................. 28,600 1,083,225#
Pulte Corp. ......................... 2,600 120,900
Quaker Oats Co. ..................... 17,000 973,250
Ralston Purina Group ................ 13,200 1,399,200
Raychem Corp. ....................... 10,400 432,250
Raytheon Co. Class B ................ 41,799 2,440,031
Reebok International, Ltd. .......... 7,000 213,500*
Republic New York Corp. ............. 6,700 893,612
Reynolds Metals Co. ................. 9,100 559,081
Rite Aid Corp. ...................... 32,000 1,096,000
Rockwell International Corp. ........ 24,800 1,422,900
Rohm & Haas Co. ..................... 7,500 774,843
Rowan Companies, Inc. ............... 10,700 310,300*
Royal Dutch Petroleum Co. ........... 264,900 15,049,631
See accompanying notes to financial statements.
83
<PAGE>
SCHEDULE OF INVESTMENTS THE DFA INVESTMENT TRUST COMPANY
THE U.S. LARGE COMPANY SERIES (CONTINUED)
- --------------------------------------------------------------------------------
MARCH 31, 1998
------------------------------
(UNAUDITED)
SHARES VALUE(DAGGER)
------ -------------------
Rubbermaid, Inc. .................... 18,500 $ 527,250
Russell Corp. ....................... 4,500 120,656
Ryder System, Inc. .................. 9,500 361,000
SBC Communications, Inc. ............ 226,610 9,885,774
Safeco Corp. ........................ 17,400 951,018
Safety Kleen Corp. .................. 7,200 204,300
Saint Jude Medical, Inc. ............ 10,350 346,078*
Saint Paul Companies, Inc. .......... 10,400 926,900
Sara Lee Corp. ...................... 58,300 3,592,737#
Schering-Plough Corp. ............... 90,400 7,384,550
Schlumberger, Ltd. .................. 61,700 4,673,775
Schwab (Charles) Corp. .............. 32,750 1,244,500#
Scientific-Atlanta, Inc. ............ 9,800 191,712
Seagate Technology, Inc. ............ 29,800 752,450*
Seagram Co., Ltd. ................... 44,100 1,684,068
Sealed Air Corporation .............. 10,300 674,650*
Sears, Roebuck & Co. ................ 48,500 2,785,718
Service Corp. International ......... 31,000 1,315,562
Shared Medical Systems Corp. ........ 3,100 242,962
Sherwin-Williams Co. ................ 21,300 756,150#
Sigma-Aldrich Corp. ................. 12,400 463,062
Silicon Graphics, Inc. .............. 23,200 323,350*
Snap-On, Inc. ....................... 7,500 342,187
Sonat, Inc. ......................... 13,600 591,600#
Southern Co. ........................ 85,300 2,361,743
Southwest Airlines Co. .............. 27,200 804,100
Springs Industries, Inc. Class A .... 2,450 134,596
Sprint Corp. ........................ 53,100 3,594,206
Stanley Works ....................... 11,100 618,825
State Street Corp. .................. 19,700 1,340,831
Stone Container Corp. ............... 12,300 153,750*
Summit Bancorp ...................... 21,700 1,086,356*
Sun Company, Inc. ................... 8,800 359,700#
Sun Microsystems .................... 46,740 1,949,934*#
Sunamerica, Inc. .................... 24,050 1,151,393#
Suntrust Banks, Inc. ................ 25,900 1,952,212
Supervalu, Inc. ..................... 7,400 345,025
Synovus Financial Corp. ............. 21,700 805,612#
Sysco Corp. ......................... 42,000 1,076,250
TJX Companies, Inc. ................. 19,800 895,950
TRW, Inc. ........................... 15,100 832,387
Tandy Corp. ......................... 12,730 598,310
Tektronix, Inc. ..................... 6,250 278,906#
Tele-Communications, Inc.
Class A ........................... 62,500 1,943,359*#
Tellabs, Inc. ....................... 22,300 1,497,584*
Temple-Inland, Inc. ................. 7,000 434,875
Tenet Healthcare Corp. .............. 37,800 1,372,612*
Tenneco, Inc. ....................... 21,000 896,437
Texaco, Inc. ........................ 67,800 4,084,950
Texas Instruments, Inc. ............. 48,100 2,603,412#
Texas Utilities Co. ................. 30,397 1,194,982
Textron, Inc. ....................... 20,200 1,555,400
Thermo-Electron Corp. ............... 18,600 750,975*#
Thomas & Betts Corp. ................ 6,800 435,200#
Time Warner, Inc. ................... 71,500 5,148,000
Times Mirror Co. Class A ............ 11,000 697,125
Timken Co. .......................... 7,800 263,737
Torchmark Corp. ..................... 17,200 787,975
Toys 'R' Us, Inc. ................... 35,100 1,055,193*
Transamerica Corp. .................. 7,900 920,350
Travelers Group, Inc. ............... 141,634 8,498,040#
Tribune Co. ......................... 15,100 1,064,550
Tricon Global Rest. ................. 18,740 563,371*
Tupperware Corp. .................... 7,500 199,687
Tyco International, Ltd. ............ 70,700 3,861,987
UNUM Corp. .......................... 17,100 943,706
- --------------------------------------------------------------------------------
MARCH 31, 1998
------------------------------
(UNAUDITED)
SHARES VALUE(DAGGER)
------ -------------------
US Airways Group, Inc. .............. 11,300 $ 837,612*
US Bancorp .......................... 30,300 3,779,925
U.S. Communications Group, Inc. ..... 59,700 3,268,575
US West, Inc. Media Group ........... 74,800 2,599,300*
USF&G Corp. ......................... 13,900 346,631
UST, Inc. ........................... 22,700 732,075
USX-Marathon Group, Inc. ............ 35,700 1,343,212
USX-US Steel Group .................. 10,620 400,905
Unicom Corp., Inc. .................. 26,700 934,500
Unilever NV ......................... 78,900 5,414,512
Union Camp Corp. .................... 8,600 513,850
Union Carbide Corp. ................. 15,300 766,912#
Union Pacific Corp. ................. 30,400 1,708,100
Union Pacific Resources Group,
Inc. .............................. 31,376 749,102
Unisys Corp. ........................ 30,900 587,100*
United Healthcare Corp. ............. 23,100 1,495,725
United States Surgical Corp. ........ 9,400 310,200
United Technologies Corp. ........... 28,600 2,640,137
Unocal Corp. ........................ 30,500 1,179,968
VF Corp. ............................ 15,100 793,693
Viacom, Inc. Class B ................ 43,634 2,345,327*
Vlasic Foods International .......... 5,620 143,661*
Wachovia Corp. ...................... 25,400 2,154,237
Wal-Mart Stores, Inc. ............... 277,500 14,100,468#
Walgreen Co. ........................ 61,300 2,156,993#
Washington Mutual, Inc. ............. 31,820 2,282,090#
Waste Management .................... 56,300 1,734,743
Warner-Lambert Co. .................. 33,800 5,756,562
Wells Fargo & Co. ................... 10,897 3,610,293
Wendy's International, Inc. ......... 16,300 363,693
Western Atlas, Inc. ................. 6,800 526,150*
Westvaco Corp. ...................... 12,550 385,912
Weyerhaeuser Co. .................... 24,600 1,389,900
Whirlpool Corp. ..................... 9,200 630,775
Willamette Industries, Inc. ......... 13,800 518,362
Williams Companies, Inc. ............ 50,670 1,621,440#
Winn-Dixie Stores, Inc. ............. 18,300 848,662
Woolworth Corp. ..................... 16,700 417,500*#
Worldcom, Inc. ...................... 124,920 5,375,463*#
Worthington Industries, Inc. ........ 11,975 215,924
Wrigley (Wm.) Jr. Co. ............... 14,300 1,169,025#
Xerox Corp. ......................... 40,100 4,268,143
------- ----------
TOTAL COMMON STOCKS
(Cost $632,364,292) ............................ $1,067,543,986
--------------
FACE AMOUNT
(000) VALUE(DAGGER)
----------- -------------
TEMPORARY CASH INVESTMENTS -- (0.2%)
Repurchase Agreement, PNC Capital
Markets, Inc. 5.70%, 04/01/98 (Collateralized
by U.S. Treasury Notes, 6.75%, 05/31/99,
valued at $2,165,706) to be repurchased
at $2,127,337
(Cost $2,127,000) ................... $2,127 $ 2,127,000
TOTAL INVESTMENTS -- (100.0%)
(Cost $634,491,292)(DAGGER)(DAGGER) .. $1,069,670,986
--------------
- --------------
(DAGGER) See Note B to Financial Statements.
* Non-Income Producing Securities
# Total or Partial Securities on Loan
(DAGGER)(DAGGER) Approximates cost for federal income tax purposes.
See accompanying notes to financial statements.
84
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES THE DFA INVESTMENT TRUST COMPANY
THE U.S. LARGE COMPANY SERIES
(AMOUNTS IN THOUSANDS)
MARCH 31, 1998
--------------
(UNAUDITED)
ASSETS
Investment at Value (Cost $634,491) ......................... $1,069,671
Collateral for Securities Loaned ............................ 123,689
Receivables:
Dividends and Interest .................................... 1,313
Investment Securities Sold ................................ 740
Prepaid Expenses and Other Assets ........................... 16
----------
Total Assets ........................................... 1,195,429
----------
LIABILITIES:
Payable for Securities Loaned ............................... 123,689
Payable for Investment Securities Purchased ................. 8,670
Accrued Expenses ............................................ 92
----------
Total Liabilities ...................................... 132,451
----------
NET ASSETS ..................................................... $1,062,978
----------
See accompanying notes to financial statements.
85
<PAGE>
STATEMENTS OF OPERATIONS THE DFA INVESTMENT TRUST COMPANY
THE U.S. LARGE COMPANY SERIES
(AMOUNTS IN THOUSANDS)
FOUR MONTHS YEAR
ENDED ENDED
MARCH 31, NOV. 30,
1998 1997
----------- --------
(UNAUDITED)
INVESTMENT INCOME
Dividends ............................................ $ 4,702 $ 11,452
Interest ............................................. 98 141
Income From Securities Lending ....................... 28 41
-------- --------
Total Investment Income ............................ 4,828 11,634
-------- --------
EXPENSES
Investment Advisory Services ......................... 77 160
Accounting & Transfer Agent Fees ..................... 46 96
Custodian's Fee ...................................... 54 109
Legal Fees ........................................... 3 7
Audit Fees ........................................... 6 18
Shareholders' Reports ................................ 5 14
Trustees' Fees and Expenses .......................... 1 1
Other ................................................ 26 50
-------- --------
Total Expenses ..................................... 218 455
-------- --------
NET INVESTMENT INCOME .............................. 4,610 11,179
-------- --------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net Realized Gain (Loss) on Investment Securities ....... (528) 975
Change in Unrealized Appreciation
of Investment Securities ............................. 139,951 147,979
-------- --------
NET GAIN ON INVESTMENT SECURITIES .................... 139,423 148,954
-------- --------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .... $144,033 $160,133
======== ========
See accompanying notes to financial statements.
86
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS THE DFA INVESTMENT TRUST COMPANY
THE U.S. LARGE COMPANY SERIES
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS)
FOUR MONTHS YEAR YEAR
ENDED ENDED ENDED
MARCH 31, NOV. 30, NOV. 30,
1998 1997 1996
----------- -------- --------
(UNAUDITED)
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net Investment Income ............................... $ 4,610 $ 11,179 $ 5,282
Net Realized Gain (Loss) on Investment
Securities ........................................ (528) 975 (18)
Change in Unrealized Appreciation of
Investment Securities ............................. 139,951 147,979 63,985
---------- -------- --------
Net Increase in Net Assets Resulting
from Operations ................................. 144,033 160,133 69,249
---------- -------- --------
Distributions From:
Net Investment Income ............................... -- -- (1,215)
Net Realized Gains .................................. -- -- (686)
---------- -------- --------
Total Distributions ............................... -- -- (1,901)
---------- -------- --------
Capital Share Transactions(1):
Shares Issued ....................................... -- -- 32,324
Shares Issued in Lieu of Cash Distributions ......... -- -- 1,744
Shares Redeemed ..................................... -- -- (10,535)
---------- -------- --------
Net Increase from Capital Share Transactions ...... -- -- 23,533
---------- -------- --------
Transactions in Interest(1):
Contributions ....................................... 171,247 269,144 309,297
Withdrawals ......................................... (74,795) (73,225) (30,855)
---------- -------- --------
Net Increase from Transactions in Interest ........ 96,452 195,919 287,442
---------- -------- --------
Total Increase .................................... 240,485 356,052 369,323
---------- -------- --------
NET ASSETS
Beginning of Period ................................. 822,493 466,441 97,118
---------- -------- --------
End of Period ....................................... $1,062,978 $822,493 $466,441
========== ======== ========
(1) SHARES ISSUED AND REDEEMED:
Shares Issued ....................................... N/A N/A 2,257
Shares Issued in Lieu of Cash Distributions ......... 121
Shares Redeemed ..................................... (754)
---------- -------- --------
1,624
========== ======== ========
<FN>
- ----------------
(1) Capital Share Transactions and Shares Issued and Redeemed are reported
through May 31, 1996. Transactions in Interest are reported for the period
June 1 through November 30, 1996 and subsequent periods. Effective June 1,
1996, the Series was reorganized as a partnership.
</FN>
</TABLE>
See accompanying notes to financial statements.
87
<PAGE>
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
FINANCIAL HIGHLIGHTS THE DFA INVESTMENT TRUST COMPANY
THE U.S. LARGE COMPANY SERIES
<TABLE>
<CAPTION>
FOUR MONTHS YEAR YEAR YEAR YEAR FEB. 8
ENDED ENDED ENDED ENDED ENDED TO
MARCH 31, NOV. 30, NOV. 30, NOV. 30, NOV. 30, NOV. 30,
1998 1997 1996 1995 1994 1993
----------- -------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period (1) ............................... N/A N/A $ 13.48 $ 10.11 $ 10.27 $ 10.00
---------- -------- -------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS (1)
Net Investment Income . .................. -- -- 0.15 0.30 0.28 0.24
Net Gains (Losses) on Securities
(Realized and Unrealized) .............. -- -- 1.41 3.36 (0.14) 0.26
---------- -------- -------- ------- ------- -------
Total from Investment Operations ......... -- -- 1.56 3.66 0.14 0.50
---------- -------- -------- ------- ------- -------
LESS DISTRIBUTIONS (1)
Net Investment Income .................... -- -- (0.16) (0.29) (0.29) (0.23)
Net Realized Gains ....................... -- -- (0.08) -- (0.01) --
---------- -------- -------- ------- ------- -------
Total Distributions ................. -- -- (0.24) (0.29) (0.30) (0.23)
---------- -------- -------- ------- ------- -------
Net Asset Value, End of Period (1) .......... N/A N/A $ 14.80 $ 13.48 $ 10.11 $ 10.27
========== ======== ======== ======= ======= =======
Total Return (1) ............................ N/A N/A 11.60%# 36.77% 1.30% 5.05%#
========== ======== ======== ======= ======= =======
Net Assets, End of Period (thousands) ....... $1,062,978 $822,493 $466,441 $97,118 $48,657 $37,853
Ratio of Expenses to Average Net Assets ..... 0.07%* 0.07% 0.12% 0.02%(a) 0.02%(a) 0.02%*(a)
Ratio of Net Investment Income to Average
Net Assets ............................... 1.50%* 1.75% 2.12% 2.61%(a) 2.83%(a) 2.87%*(a)
Portfolio Turnover Rate ..................... 19.32%* 4.28% 14.09% 2.38% 8.52% 34.36%*
Average Commission Rate ..................... $ 0.0108 $ 0.0202 $ 0.0212 N/A N/A N/A
<FN>
- ----------------
* Annualized
# Non-Annualized
(1) Items are calculated for the period December 1, 1995 through May 31, 1996.
Effective June 1, 1996, the Series was reorganized as a partnership, and
these items are no longer applicable.
(a) Had certain reimbursements not been in effect the ratios of expenses to
average net assets for the periods ended November 30, 1995, 1994 and 1993
would have been 0.18%, 0.33% and 0.48%, respectively, and the ratios of net
investment income to average net assets for the periods ended November 30,
1995, 1994 and 1993, would have been 2.45%, 2.52% and 2.41%, respectively.
</FN>
</TABLE>
See accompanying notes to financial statements.
88
<PAGE>
NOTES TO FINANCIAL STATEMENTS THE DFA INVESTMENT TRUST COMPANY
A. ORGANIZATION:
The DFA Investment Trust Company (the "Trust") is an open-end management
investment company registered under the Investment Company Act of 1940. At March
31, 1998, The Trust currently offers sixteen portfolios, of which The U.S. Large
Company Series (the "Series") is presented in this report.
On June 1, 1996, the Series was reorganized from an entity taxed as a
corporation to an entity taxed as a partnership for income tax purposes. This
reorganization was accomplished by an amendment to the organization document of
the Series which for income tax purposes was treated as a liquidation of the
Series, immediate distribution of its assets to its sole shareholder at May 31,
1996, which was The U.S. Large Company Portfolio (the "Portfolio") and
subsequent contribution of those assets from the Portfolio, along with a nominal
contribution from the Advisor to this Series to create the partnership. On June
2, 1996, an unrelated investment company contributed assets valued at
$225,957,696 to the Series in exchange for a 63.4% interest in the Series. The
total net assets of the Series increased to $356,632,854 immediately following
this transaction. These transactions are expected to be tax-free events to all
parties involved based on rulings obtained from the Internal Revenue Service.
For financial reporting purposes, the Series continues to exist and as such,
will maintain all of its previous operating history throughout the financial
statements.
Information included within these Notes to Financial Statements as of and
for the period ended March 31, 1998 is unaudited.
B. SIGNIFICANT ACCOUNTING POLICIES:
The following significant accounting policies are in conformity with
generally accepted accounting principles for investment companies. Such policies
are consistently followed by the Trust in preparation of its financial
statements. The preparation of financial statements in accordance with generally
accepted accounting principles may require management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates.
1. SECURITY VALUATION: Securities held by the Series which are listed on a
securities exchange and for which market quotations are readily available are
valued at the last quoted sale price of the day, or if there is no such reported
sale, at the mean between the most recent bid and asked prices. Price
information on listed securities is taken from the exchange where the security
is primarily traded. Unlisted securities for which market quotations are readily
available are valued at the mean between the most recent bid and asked prices.
Securities for which quotations are not readily available are valued in good
faith at fair value using methods determined by the Board of Directors.
2. FEDERAL INCOME TAXES: Prior to June 1, 1996, the Series qualified as a
regulated investment company and distributed all of its taxable income.
Accordingly, no provision for federal taxes was required in the financial
statements prior to that time. Effective June 1, 1996, the Series is treated as
a partnership for federal income tax purposes. Any interest, dividends and gains
or losses of the Series will be deemed to have been "passed through" to its
Feeder Funds.
3. REPURCHASE AGREEMENTS: The Series may purchase money market instruments
subject to the seller's agreement to repurchase them at an agreed upon date and
price. The seller will be required on a daily basis to maintain the value of the
collateral subject to the agreement at not less than the repurchase price
(including accrued interest). The agreements are conditioned upon the collateral
being deposited under the Federal Reserve book-entry system or with the Series'
custodian or a third party sub-custodian. All open repurchase agreements were
entered into on March 31, 1998.
4. OTHER: Security transactions are accounted for on the date the
securities are purchased or sold. Costs used in determining realized gains and
losses on the sale of investment securities are those of specific securities
sold. Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Expenses
directly attributable to the Series are directly charged. Common expenses are
allocated using methods determined by the Board of Directors.
C. INVESTMENT ADVISOR:
Dimensional Fund Advisors Inc. (the "Advisor") provides investment advisory
services to the Series. For the four months ended March 31, 1998 and the year
ended November 30, 1997, the Series' advisory fees were computed daily and paid
monthly to the Advisor based on an effective annual rate of 0.025 of 1%.
Certain officers of the Series are also officers, directors and
shareholders of the Advisor.
89
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED) THE DFA INVESTMENT TRUST COMPANY
D. PURCHASES AND SALES OF SECURITIES:
The Series made the following purchases and sales of investment securities,
other than short-term and government securities (amounts in thousands):
FOUR MONTHS ENDED YEAR ENDED
MARCH 31, 1998 NOV. 30, 1997
----------------- -------------
(UNAUDITED)
Purchases ........................ $166,198 $233,484
Sales ............................ 59,684 27,162
E. INVESTMENT TRANSACTIONS:
The gross unrealized appreciation and depreciation for federal income tax
purposes of investment securities was as follows (amounts in thousands):
FOUR MONTHS ENDED YEAR ENDED
MARCH 31, 1998 NOV. 30, 1997
----------------- -------------
(UNAUDITED)
Gross Unrealized Appreciation .... $438,872 $302,219
Gross Unrealized Depreciation .... (3,692) (6,991)
-------- --------
Net .............................. $435,180 $295,228
======== ========
F. LINE OF CREDIT:
The Trust, together with other DFA-advised portfolios, has entered into a
$50 million unsecured line of credit with its domestic custodian bank. Each
portfolio is permitted to borrow, subject to its investment limitations, up to a
maximum of $50 million. Borrowings under the line are charged interest at the
current overnight federal funds rate plus a variable rate determined at the date
of borrowing. Each portfolio is individually, and not jointly liable for its
particular advances under the line. There is no commitment fee on the unused
portion of the line of credit. For the four months ended March 31, 1998 and year
ended November 30, 1997, the Series borrowed against the line of credit as
follows:
<TABLE>
<CAPTION>
MAXIMUM
AMOUNT
WEIGHTED WEIGHTED NUMBER OF INTEREST BORROWED
AVERAGE AVERAGE DAYS EXPENSE DURING
INTEREST RATE LOAN BALANCE OUTSTANDING INCURRED THE PERIOD
------------- ------------ ----------- -------- ----------
<S> <C> <C> <C> <C> <C>
Four Months Ended March 31, 1998 (Unaudited) ......... 6.25% $9,160,682 10 $ 17,508 $33,400,000
Year Ended November 30, 1997 ......................... 6.07% 1,572,388 23 8,744 4,850,000
</TABLE>
There was no outstanding borrowing under the line of credit at March 31,
1998 or November 30, 1997.
G. SECURITIES LENDING
Security loans are required at all times to be secured by collateral at
least equal to 102% of the market value of the securities on loan. However, in
the event of default or bankruptcy by the other party to the agreement,
realization and/or retention of the collateral may be subject to legal
proceedings. In the event that the borrower fails to return loaned securities,
and cash collateral being maintained by the borrower is insufficient to cover
the value of loaned securities, and provided such collateral insufficiency is
not the result of investment losses, the lending agent has agreed to pay the
amount of the shortfall to the Series or, at the option of the lending agent,
replace the loaned securities. The market value of securities on loan to brokers
from the Series and the related collateral cash received was as follows:
MARCH 31, 1998 NOV. 30, 1997
-------------- -------------
(UNAUDITED)
Value of Securities on Loan ................ $120,703,149 $86,232,944
Value of Collateral and Indemnification .... 123,689,380 88,733,158
Such cash collateral for March 31, 1998 was reinvested into overnight
repurchase agreements with Barclay De Zoete Wedd and UBS Securities Inc. which
was in turn collateralized by US Government Treasury Securities with a value of
$125,881,223. The cash collateral for November 30, 1997 was reinvested into an
overnight repurchase agreement with Swiss Bank Corp., JP Morgan and UBS
Securities Inc. which in turn was collateralized by US Government Treasury
Securities with a value of $89,699,555.
90
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
LOGO [GRAPHIC OMITTED] BLACKROCK FUNDS
Investment Advisor
BlackRock Advisors, Inc.
New York, New York 10154
Sub-Advisor -- Large Cap Value Equity
Portfolio, Large Cap Growth Equity
Portfolio, Mid-Cap Value Equity Portfolio,
Mid-Cap Growth Equity Portfolio, Small
Cap Value Equity Portfolio, Small Cap
Growth Equity Portfolio, Select Equity
Portfolio and Balanced Portfolio
BlackRock Financial Management, Inc.
New York, New York 10154
Sub-Advisor -- International Equity
Portfolio, International Small Cap Equity
Portfolio and International Emerging
Markets Portfolio
BlackRock International Limited
Edinburgh, Scotland EH2 3AH
Custodian
PNC Bank, National Association
Philadelphia, Pennsylvania 19103
Co-Administrator and Transfer Agent
PFPC Inc.
Wilmington, Delaware 19809
Co-Administrator and Distributor
BlackRock Distributors, Inc.
West Conshohocken, Pennsylvania 19428
Co-Administrator
BlackRock Advisors, Inc.
New York, New York 10154
Counsel
Simpson, Thacher & Bartlett
New York, New York 10017
(A partnership which includes professional
corporations)
Independent Accountants
Coopers & Lybrand, L.L.P.
Philadelphia, Pennsylvania 19103
<PAGE>
LOGO [GRAPHIC OMITTED] BLACKROCK FUNDS
FUND SPECTRUM
BLACKROCK FUNDS IS A LEADING MUTUAL FUND COMPANY CURRENTLY MANAGING IN EXCESS OF
$23 BILLION IN 35 PORTFOLIOS DESIGNED TO FIT A BROAD RANGE OF INVESTMENT GOALS.
EACH PORTFOLIO IS MANAGED BY RECOGNIZED EXPERTS IN EQUITY, FIXED INCOME,
INTERNATIONAL, AND TAX-FREE INVESTING WHO ADHERE TO A PURE INVESTMENT STYLE.
(SERVICE MARK)
STOCK PORTFOLIOS
- ----------------
Large Cap Value Equity
Large Cap Growth Equity
Mid-Cap Value Equity
Mid-Cap Growth Equity
Small Cap Value Equity
Small Cap Growth Equity
Micro-Cap Equity
International Equity
International Small Cap Equity
International Emerging Markets
Select Equity
Index Equity
STOCK & BOND PORTFOLIOS
- -----------------------
Balanced
BOND PORTFOLIOS
- ---------------
Low Duration Bond
Intermediate Government Bond
Intermediate Bond
Core Bond
Government Income
GNMA
Managed Income
International Bond
TAX-FREE BOND PORTFOLIOS
- ------------------------
Tax-Free Income
Pennsylvania Tax-Free Income
New Jersey Tax-Free Income
Ohio Tax-Free Income
Delaware Tax-Free Income
Kentucky Tax-Free Income
MONEY MARKET PORTFOLIOS
- -----------------------
Money Market
U.S. Treasury Money Market
Municipal Money Market
New Jersey Municipal Money Market
North Carolina Municipal Money Market
Ohio Municipal Money Market
Pennsylvania Municipal Money Market
Virginia Municipal Money Market
SHAREHOLDER PRIVILEGES
24 HOUR ACCOUNT INFORMATION
Call us at 1-800-441-7762. 24 Hours a day. Seven days a week to get information
about your account balances, recent transactions and share prices. Note:
Institutional and Service Share Class investors should call 1-800-441-7764. You
can also reach us on the Internet through the World Wide Web by accessing
http://www.blackrock.com.
EXCHANGE PRIVILEGES
Should your investment goals change, shareholders in our Investor Class shares
may exchange all or part of their investments into the same share class of any
other portfolio of BlackRock Funds. (1)
AUTOMATIC INVESTMENT PLANS
Investor Class shareholders who want to invest regularly can arrange to have $50
or more automatically deducted from their checking or savings account and
invested in any of the BlackRock portfolios.
SYSTEMATIC WITHDRAWAL PLANS
Investor Class shareholders can establish a systematic withdrawal plan and
receive periodic payments of $100 or more from their BlackRock portfolios, as
long as their account is at least $1,000.
RETIREMENT PLANS
Shareholders may make investments in conjunction with individual IRAaccounts or
rollover IRAs.
GENERAL INFORMATION ABOUT THE BLACKROCK FUNDS
If you would like additional reports or have questions regarding any of the 35
BlackRock Funds, please call 1-800-FUTURE4 (1-800-388-8734)
(1) BLACKROCK FUNDS RESERVES THE RIGHT TO MODIFY OR TERMINATE THE EXCHANGE
PRIVILEGES AT ANY TIME.
<PAGE>
(LOGO)
BLACKROCK
FUNDS
[GRAPHIC OMITTED]
P. O. Box 8907
Wilmington, DE 19899
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY PNC BANK, NATIONAL ASSOCIATION OR ANY OTHER BANK AND SHARES ARE NOT FEDERALLY
INSURED BY, GUARANTEED BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED BY THE U.S.
GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE
BOARD, OR ANY OTHER GOVERNMENTAL AGENCY. INVESTMENTS IN SHARES OF THE FUND
INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT
INVESTED.
SR 3/31/98 EP
