<PAGE>
BLACKROCK FUNDS(SM)
THE EQUITY PORTFOLIOS/SERVICE CLASS
SUPPLEMENT TO PROSPECTUS DATED
JANUARY 28, 1998
The section "What Are The Expenses Of The Portfolios?" has been amended as fol-
lows:
The expense tables appearing on page 4 are replaced with the following:
<TABLE>
<CAPTION>
LARGE CAP LARGE CAP MID-CAP SMALL CAP SMALL CAP
VALUE GROWTH MID-CAP GROWTH VALUE GROWTH
EQUITY EQUITY VALUE EQUITY EQUITY EQUITY EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ANNUAL PORTFOLIO OPERATING
EXPENSES
(AS A PERCENTAGE OF AVERAGE
NET ASSETS)
Advisory fees
(after fee waivers)(/1/) .54% .55% .79% .79% .55% .55%
Other operating expenses .60 .62 .65 .65 .63 .63
------- ------- ------- ----- ----- -----
Administration fees
(after fee waivers)(/1/) .21 .23 .20 .20 .23 .23
Shareholder servicing fees .15 .15 .15 .15 .15 .15
Other expenses .24 .24 .30 .30 .25 .25
------ ------ ------ ---- ----- ----
Total Portfolio operating
expenses
(after fee waivers)(/1/) 1.14% 1.17% 1.44% 1.44% 1.18% 1.18%
======= ======= ======= ===== ===== =====
<CAPTION>
INTERNATIONAL INTERNATIONAL
INTERNATIONAL SMALL CAP EMERGING SELECT INDEX
EQUITY EQUITY MARKETS EQUITY EQUITY BALANCED
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO+ PORTFOLIO
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ANNUAL PORTFOLIO OPERATING
EXPENSES
(AS A PERCENTAGE OF AVERAGE
NET ASSETS)
Advisory fees
(after fee waivers)(/1/)(/2/) .66% .80% 1.16% .55% .025% .55%
Other operating expenses .70 .83 .92 .61 .455 .65
------- ------- ------- ----- ----- -----
Administration fees
(after fee waivers)(/1/) .21 .23 .23 .23 .033 .23
Shareholder servicing fees .15 .15 .15 .15 .150 .15
Other expenses .34 .45 .54 .23 .272 .27
------ ------ ------ ---- ----- ----
Total Portfolio operating
expenses
(after fee waivers)(/1/) 1.36% 1.63% 2.08% 1.16% .480% 1.20%
======= ======= ======= ===== ===== =====
</TABLE>
(1) Without waivers, advisory fees would be .80% for the Mid-Cap Value Equity
and Mid-Cap Growth Equity Portfolios and .75%, 1.00% and 1.25%, respective-
ly, for the International Equity, International Small Cap Equity and Inter-
national Emerging Markets Portfolios, and administration fees would be .23%
for the Mid-Cap Value Equity, Mid-Cap Growth Equity, International Equity
and Index Equity Portfolios. BlackRock, Inc. and the Portfolios' adminis-
trators are under no obligation to waive or continue waiving their fees,
but have informed the Fund that they expect to waive fees as necessary to
maintain the Portfolios' total operating expenses during the remainder of
the current fiscal year at the levels set forth in the table. Without waiv-
ers, "Other operating expenses" would be .69%, .67%, .71%, .85%, .92% and
.48%, respectively, for the Mid-Cap Value Equity, Mid-Cap Growth Equity,
International Equity, International Small Cap Equity, International Emerg-
ing Markets and Index Equity Portfolios, and "Total Portfolio operating ex-
penses" would be 1.49%, 1.47%, 1.46%, 1.85%, 2.17% and .68%, respectively.
(2) Advisory fees with respect to the Index Equity Portfolio represent advisory
fees of the Index Master Portfolio.
+ Includes the operating expenses of the Index Master Portfolio that are allo-
cable to the Index Equity Portfolio.
<PAGE>
The information in the Example on page 5 is replaced with the following:
EXAMPLE
An investor in Service Shares would pay the following expenses on a $1,000 in-
vestment assuming (1) a 5% annual return, and (2) redemption at the end of each
time period:
<TABLE>
<CAPTION>
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
<S> <C> <C> <C> <C>
Large Cap Value Equity Portfolio $12 $36 $63 $139
Large Cap Growth Equity Portfolio 12 37 64 142
Mid-Cap Value Equity Portfolio 15 46 N/A N/A
Mid-Cap Growth Equity Portfolio 15 46 N/A N/A
Small Cap Value Equity Portfolio 12 37 65 143
Small Cap Growth Equity Portfolio 12 37 65 143
International Equity Portfolio 14 43 74 164
International Small Cap Equity
Portfolio 17 51 N/A N/A
International Emerging Markets
Portfolio 21 65 112 241
Select Equity Portfolio 12 37 64 141
Index Equity Portfolio 5 15 27 60
Balanced Portfolio 12 38 66 145
</TABLE>
The section "What Are The Portfolios' Financial Highlights?" has been amended
as follows:
The Financial Highlights table for the International Small Cap Equity Portfolio
appearing on page 13 is replaced with the following:
International Small Cap Equity Portfolio
<TABLE>
<CAPTION>
FOR THE FOR THE
PERIOD PERIOD
10/1/97 9/26/97/1/
THROUGH THROUGH
2/28/98 9/30/97
<S> <C> <C>
Net asset value at beginning of period $ 9.94 $ 10.00
------- -------
Income from Investment operations
Net Investment income (0.01) --
Net gain (loss) on Investment (both realized and
unrealized) 0.52 (0.06)
------- -------
Total from investment operations 0.51 (0.06)
------- -------
Less distributions
Distributions from net investment income -- --
Distributions from net realized capital gains (0.05) --
------- -------
Total distributions (0.05) --
------- -------
Net asset value at end of period $ 10.40 $ 9.94
======= =======
Total return 4.85% (0.30)%
Ratios/Supplemental data
Net assets at end of period (in thousands) $ 371 $ 10
Ratios of expenses to average net assets
After advisory/administration fee waiver 1.63%/2/ 1.63%/2/
Before advisory/administration fee waivers 1.91%/2/ 1.86%/2/
Ratios of net investment income to average net
assets
After advisory/administration fee waivers (0.14)%/2/ 1.42%/2/
Before advisory/administration fee waivers (0.43)%/2/ 1.19%/2/
Portfolio turnover rate 23% 0%
Average Consideration Rate(3) $0.0294 $0.0268
</TABLE>
- --------
/1/Commencement of operations of share class.
/2/Annualized.
/3/Computed by dividing the total amount of commission paid by the total number
of shares purchased and sold during the period.
The Prospectus is amended to reflect the fact that BlackRock, Inc. has changed
its name to BlackRock Advisors, Inc.
2
<PAGE>
The section "Who Manages The Fund?" is amended to reflect that effective March
31, 1998, BlackRock Financial Management, Inc. ("BlackRock") acts as sub-ad-
viser to each of the Portfolios other than the Index Equity Portfolio and the
International Portfolios as a result of the merger of Provident Capital Manage-
ment, Inc. and PNC Equity Advisors Company into BlackRock. BlackRock Interna-
tional, Ltd. (formerly CastleInternational Asset Management Limited) acts as
sub-adviser to each of the International Portfolios.
The section "Who Manages The Fund?" has been amended as follows:
The Portfolios (other than the Index Equity Portfolio) and their portfolio man-
agers are as follows:
<TABLE>
<CAPTION>
BLACKROCK PORTFOLIO PORTFOLIO MANAGER
------------------- -----------------
<C> <S>
Large Cap Value Equity Daniel B. Eagan; portfolio manager with sub-
adviser since 1995; director of investment
strategy at BlackRock, Inc. during 1994 and
1995; prior to 1994, served as senior
research consultant for Mercer Investment
Consulting; portfolio manager since January
1997.
Large Cap Growth Equity R. Andrew Damm; portfolio manager with sub-
adviser since 1997; senior investment
strategist with BlackRock, Inc. since 1995;
portfolio manager with PNC Bank from 1988 to
1995; Mr. Damm has participated in the
management of the Portfolio since 1996 and
has been designated portfolio manager since
September 1997.
Mid-Cap Value Equity Christian K. Stadlinger, portfolio manager
with sub-adviser since July 1996; prior to
joining sub-adviser, portfolio manager and
Research Analyst with Morgan Stanley Asset
Management; portfolio co-manager since
inception.
Daniel B. Eagan (see above); portfolio co-
manager since inception.
Mid-Cap Growth Equity William J. Wykle; portfolio manager with sub-
adviser since 1995; investment manager with
PNC Bank, National Association since 1986;
portfolio co-manager since inception.
Thomas Callan; portfolio manager with sub-
adviser since 1996; equity analyst with PNC
Bank from 1993 to 1996; portfolio co-manager
since May 1998.
Small Cap Value Equity Christian K. Stadlinger, portfolio manager
with sub-adviser since July 1996; prior to
joining sub-adviser, portfolio manager and
Research Analyst with Morgan Stanley Asset
Management; portfolio manager since July
1996.
Small Cap Growth Equity William J. Wykle (see above); portfolio co-
manager since inception.
Thomas Callan (see above); portfolio co-
manager since May 1998.
International Equity Gordon Anderson; portfolio manager with sub-
adviser since 1996; prior to joining sub-
adviser, Investment Director of Dunedin Fund
Managers Ltd.; portfolio manager since 1996.
International Emerging Markets Euan Rae; portfolio manager with sub-adviser
since 1996; prior to joining sub-adviser,
Head of Emerging Markets at Dunedin Fund
Managers Ltd. and Investment Manager with
Edinburgh Fund Managers; portfolio manager
since 1996.
International Small Cap Equity Peter J. Tait; portfolio manager with sub-
adviser since 1996. Director and Head of
Continental European desk and Dunedin Fund
Managers Ltd. from 1990 to 1996; portfolio
manager since inception.
Select Equity Daniel B. Eagan (see above); portfolio
manager since 1995.
Balanced R. Andrew Damm (see above); portfolio co-
manager since 1996.
Robert S. Kapito; Vice Chairman of BlackRock
since 1988; portfolio co-manager since 1995.
Keith T. Anderson; Managing Director and co-
chair of Portfolio Management Group and
Investment Strategy Committee of BlackRock
since 1988; portfolio co-manager since 1995.
</TABLE>
3
<PAGE>
The section "How Are Shares Purchased And Redeemed?" has been amended as fol-
lows:
The following replaces the first sentence under "Purchase of Shares":
Service Shares are offered without a sales load to Institutions acting on
behalf of their customers, certain persons who were shareholders of The
Compass Capital Group at the time of its combination with The PNC(R) Fund
during the first quarter of 1996, and investors that participate in the
Capital Directions SM asset allocation program.
The following has been added after the first paragraph under "Purchase of
Shares":
Effective August 15, 1998, the Small Cap Growth Equity Portfolio will be
closed to new investors, with the exception of investors who purchase
through the following PNC Bank departments: Charitable and Endowment
Management; Private Bank; and Institutional Trust, including defined
benefit, defined contribution and Vested Interest(R) plans. In addition,
the Portfolio will continue to be open to wrap and retirement programs that
are already invested in the Portfolio and to certain payroll deduction
programs. Shareholders of the Portfolio as of August 15, 1998 will be
permitted to make additional investments in current accounts.
The following has been added after the last paragraph under "Purchase of
Shares":
In the event that a shareholder acquiring Service Shares on or after May 1,
1998 (other than a former shareholder of The Compass Capital Group as de-
scribed above) ceases to meet the eligibility standards for purchasing
Service Shares, then the shareholder's Service Shares will, upon the direc-
tion of the Fund's distributor, automatically be converted to Investor A
Shares of the Portfolio having the same aggregate net asset value as the
shares converted. Investor A Shares are currently authorized to bear addi-
tional service and distribution fees at the aggregate annual rate of .20%
of average daily net assets. In the event that a shareholder acquiring
Service Shares on or after May 1, 1998 subsequently satisfies the eligibil-
ity standards for purchasing Institutional Shares (other than due to fluc-
tuations in market value), then the shareholder's Service Shares will, upon
the direction of the Fund's distributor, automatically be converted to In-
stitutional Shares of the Portfolio having the same aggregate net asset
value as the shares converted.
This Supplement is dated August 14, 1998.
4
<PAGE>
BLACKROCK FUNDS (SM)
THE EQUITY PORTFOLIOS/INSTITUTIONAL CLASS
SUPPLEMENT TO PROSPECTUS DATED
JANUARY 28, 1998
The section "What Are The Expenses Of The Portfolios?" has been amended as fol-
lows:
The expense tables appearing on page 4 are replaced with the following:
<TABLE>
<CAPTION>
LARGE CAP LARGE CAP MID-CAP SMALL CAP SMALL CAP
VALUE GROWTH MID-CAP GROWTH VALUE GROWTH
EQUITY EQUITY VALUE EQUITY EQUITY EQUITY EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ANNUAL PORTFOLIO
OPERATING EXPENSES
(AS A PERCENTAGE OF
AVERAGE NET ASSETS)
Advisory fees (after fee
waivers)(/1/) .54% .55% .79% .79% .55% .55%
Other operating expenses .30 .32 .35 .35 .33 .33
--- --- --- --- --- ---
Administration fees
(after fee
waivers)(/1/) .21 .23 .20 .20 .23 .23
Other expenses .09 .09 .15 .15 .10 .10
--- --- --- --- --- ---
Total Portfolio
operating expenses
(after fee
waivers)(/1/) .84% .87% 1.14% 1.14% .88% .88%
=== === ==== ==== === ===
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL INTERNATIONAL
INTERNATIONAL SMALL CAP EMERGING SELECT INDEX
EQUITY EQUITY MARKETS EQUITY EQUITY BALANCED
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO+ PORTFOLIO
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ANNUAL PORTFOLIO
OPERATING EXPENSES (AS
A PERCENTAGE OF AVERAGE
NET ASSETS)
Advisory fees (after fee
waivers)(/1/)(/2/) .66% .80% 1.16% .55% .025% .55%
Other operating expenses .40 .53 .62 .31 .155 .35
--- --- --- --- ---- ---
Administration fees
(after fee
waivers)(/1/) .21 .23 .23 .23 .033 .23
Other expenses .19 .30 .39 .08 .122 .12
--- --- --- --- ---- ---
Total Portfolio
operating expenses
(after fee
waivers)(/1/) 1.06% 1.33% 1.78% .86% .18% .90%
==== ==== ==== === === ===
</TABLE>
(1) Without waivers, advisory fees would be .80% for the Mid-Cap Value Equity
and Mid-Cap Growth Equity Portfolios and .75%, 1.00% and 1.25%, respective-
ly, for the International Equity, International Small Cap Equity and Inter-
national Emerging Markets Portfolios, and administration fees would be .23%
for the Mid-Cap Value Equity, Mid-Cap Growth Equity, International Equity
and Index Equity Portfolios. BlackRock, Inc. and the Portfolios' adminis-
trators are under no obligation to waive or continue waiving their fees,
but have informed the Fund that they expect to waive fees as necessary to
maintain the Portfolios' total operating expenses during the remainder of
the current fiscal year at the levels set forth in the table. Without waiv-
ers, "Other operating expenses" would be .39%, .37%, .41%, .55%, .62% and
.18%, respectively, for the Mid-Cap Value Equity, Mid-Cap Growth Equity,
International Equity, International Small Cap Equity, International Emerg-
ing Markets and Index Equity Portfolios, and "Total Portfolio operating ex-
penses" would be 1.19%, 1.17%, 1.16%, 1.55%, 1.87% and .38%, respectively.
(2) Advisory fees with respect to the Index Equity Portfolio represent advisory
fees of the Index Master Portfolio.
+ Includes the operating expenses of the Index Master Portfolio that are allo-
cable to the Index Equity Portfolio.
<PAGE>
The information in the Example on page 5 is replaced with the following:
EXAMPLE
An investor in Institutional Shares would pay the following expenses on a
$1,000 investment assuming (1) a 5% annual return, and (2) redemption at the
end of each time period:
<TABLE>
<CAPTION>
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
<S> <C> <C> <C> <C>
Large Cap Value Equity Portfolio $ 9 $27 $47 $104
Large Cap Growth Equity Portfolio 9 28 48 107
Mid-Cap Value Equity Portfolio 12 36 N/A N/A
Mid-Cap Growth Equity Portfolio 12 36 N/A N/A
Small Cap Value Equity Portfolio 9 28 49 108
Small Cap Growth Equity Portfolio 9 28 49 108
International Equity Portfolio 11 34 58 129
International Small Cap Equity
Portfolio 14 42 N/A N/A
International Emerging Markets
Portfolio 18 56 96 209
Select Equity Portfolio 9 27 48 106
Index Equity Portfolio 2 6 10 23
Balanced Portfolio 9 29 50 111
</TABLE>
The section "What Are The Portfolios' Financial Highlights?" has been amended
as follows:
The Financial Highlights table for the International Small Cap Equity Portfolio
appearing on page 13 is replaced with the following:
INTERNATIONAL SMALL CAP EQUITY PORTFOLIO
<TABLE>
<CAPTION>
FOR THE FOR THE
PERIOD PERIOD
10/1/97 9/26/97/1/
THROUGH THROUGH
2/28/98 9/30/97
<S> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD $ 9.94 $ 10.00
------- -------
Income from investment operations
Net investment income 0.01 - -
Net gain (loss) on investments (both realized and
unrealized) 0.51 (0.06)
------- -------
Total from investment operations 0.52 (0.06)
------- -------
LESS DISTRIBUTIONS
Distributions from net investment income - - - -
Distributions from net realized capital gains (0.05) - -
------- -------
Total distributions (0.05) - -
------- -------
NET ASSET VALUE AT END OF PERIOD $ 10.41 $ 9.94
======= =======
Total return 5.00% (0.30)%
RATIOS/SUPPLEMENTAL DATA
Net assets at end of period (in thousands) $16,105 $15,415
Ratios of expenses to average net assets
After advisory/administration fee waivers 1.33%/2/ 1.33%/2/
Before advisory/administration fee waivers 1.62%/2/ 1.55%/2/
Ratios of net investment income to average net
assets
After advisory/administration fee waivers 0.35%/2/ 1.42%/2/
Before advisory/administration fee waivers 0.07%/2/ 1.19%/2/
PORTFOLIO TURNOVER RATE 23% 0%
AVERAGE COMMISSION RATE/3/ $0.0294 $0.0268
</TABLE>
/1/ Commencement of operations of share class.
/2/ Annualized.
/3/ Computed by dividing the total amount of commission paid by the total number
of shares purchased and sold during the period.
The Prospectus is amended to reflect the fact that BlackRock, Inc. has changed
its name to BlackRock Advisors, Inc.
2
<PAGE>
The section "Who Manages The Fund?" is amended to reflect that effective March
31, 1998, BlackRock Financial Management, Inc. ("BlackRock") acts as sub-ad-
viser to each of the Portfolios other than the Index Equity Portfolio and the
International Portfolios as a result of the merger of Provident Capital Manage-
ment, Inc. and PNC Equity Advisors Company into BlackRock. BlackRock Interna-
tional, Ltd. (formerly CastleInternational Asset Management Limited) acts as
sub-adviser to each of the International Portfolios.
The section "Who Manages The Fund?" has been amended as follows:
The Portfolios (other than the Index Equity Portfolio) and their portfolio man-
agers are as follows:
<TABLE>
<CAPTION>
BLACKROCK PORTFOLIO PORTFOLIO MANAGER
------------------- -----------------
<C> <S>
Large Cap Value Equity Daniel B. Eagan; portfolio manager with sub-
adviser since 1995; director of investment
strategy at BlackRock, Inc. during 1994 and
1995; prior to 1994, served as senior
research consultant for Mercer Investment
Consulting; portfolio manager since January
1997.
Large Cap Growth Equity R. Andrew Damm; portfolio manager with sub-
adviser since 1997; senior investment
strategist with BlackRock, Inc. since 1995;
portfolio manager with PNC Bank from 1988 to
1995; Mr. Damm has participated in the
management of the Portfolio since 1996 and
has been designated portfolio manager since
September 1997.
Mid-Cap Value Equity Christian K. Stadlinger, portfolio manager
with sub-adviser since July 1996; prior to
joining sub-adviser, portfolio manager and
Research Analyst with Morgan Stanley Asset
Management; portfolio co-manager since
inception.
Daniel B. Eagan (see above); portfolio co-
manager since inception.
Mid-Cap Growth Equity William J. Wykle; portfolio manager with sub-
adviser since 1995; investment manager with
PNC Bank, National Association since 1986;
portfolio co-manager since inception.
Thomas Callan; portfolio manager with sub-
adviser since 1996; equity analyst with PNC
Bank from 1993 to 1996; portfolio co-manager
since May 1998.
Small Cap Value Equity Christian K. Stadlinger, portfolio manager
with sub-adviser since July 1996; prior to
joining sub-adviser, portfolio manager and
Research Analyst with Morgan Stanley Asset
Management; portfolio manager since July
1996.
Small Cap Growth Equity William J. Wykle (see above); portfolio co-
manager since inception.
Thomas Callan (see above); portfolio co-
manager since May 1998.
International Equity Gordon Anderson; portfolio manager with sub-
adviser since 1996; prior to joining sub-
adviser, Investment Director of Dunedin Fund
Managers Ltd.; portfolio manager since 1996.
International Emerging Markets Euan Rae; Senior Investment Manager with sub-
adviser since 1996; prior to joining sub-
adviser, Head of Emerging Markets at Dunedin
Fund Managers Ltd. and Investment Manager
with Edinburgh Fund Managers; portfolio
manager since 1996.
International Small Cap Equity Peter J. Tait; portfolio manager with sub-
adviser since 1996. Director and Head of
Continental European desk and Dunedin Fund
Managers Ltd. from 1990 to 1996. portfolio
manager since inception.
Select Equity Daniel B. Eagan (see above); portfolio
manager since 1995.
Balanced R. Andrew Damm (see above); portfolio co-
manager since 1996.
Robert S. Kapito; Vice Chairman of BlackRock
since 1988; portfolio co-manager since 1995.
Keith T. Anderson; Managing Director and co-
chair of Portfolio Management Group and
Investment Strategy Committee of BlackRock
since 1988; portfolio co-manager since 1995.
</TABLE>
3
<PAGE>
The section "How Are Shares Purchased And Redeemed?" has been amended as fol-
lows:
The following replaces the first paragraph under "Purchase of Shares":
Institutional Shares are offered to institutional investors, including (a)
registered investment advisers with a minimum investment of $500,000 and
(b) the trust departments of PNC Bank and its affiliates (collectively,
"PNC") on behalf of clients for whom PNC (i) acts in a fiduciary capacity
(excluding participant-directed employee benefit plans) or otherwise has
investment discretion or (ii) acts as custodian with respect to at least
$2,000,000 in assets, and individuals with a minimum investment of
$2,000,000.
The following has been added after the first paragraph under "Purchase of
Shares":
Effective August 15, 1998, the Small Cap Growth Equity Portfolio will be
closed to new investors, with the exception of investors who purchase
through the following PNC Bank departments: Charitable and Endowment
Management; Private Bank; and Institutional Trust, including defined
benefit, defined contribution and Vested Interest(R) plans. In addition,
the Portfolio will continue to be open to wrap and retirement programs that
are already invested in the Portfolio and to certain payroll deduction
programs. Shareholders of the Portfolio as of August 15, 1998 will be
permitted to make additional investments in current accounts.
The following has been added after the last paragraph under "Purchase of
Shares":
In the event that a shareholder acquiring Institutional Shares on or after
May 1, 1998 ceases to meet the eligibility standards for purchasing Insti-
tutional Shares (other than due to fluctuations in market value), then the
shareholder's Institutional Shares will, upon the direction of the Fund's
distributor, automatically be converted to shares of another class of the
Portfolio having the same aggregate net asset value as the shares convert-
ed. If, at the time of conversion, an institution offering Service Shares
of the Portfolio is acting on the shareholder's behalf, then the sharehold-
er's Institutional Shares will be converted to Service Shares of the Port-
folio. If not, then the shareholder's Institutional Shares will be con-
verted to Investor A Shares of the Portfolio. Service Shares are currently
authorized to bear additional service and processing fees at the aggregate
annual rate of .30% of average daily net assets, while Investor A Shares
are currently authorized to bear additional service, processing and distri-
bution fees at the aggregate annual rate of .50% of average daily net as-
sets.
This Supplement is dated August 14, 1998.
4
<PAGE>
BLACKROCK FUNDS (SM)
THE EQUITY PORTFOLIOS/INVESTOR CLASSES
SUPPLEMENT TO PROSPECTUS DATED
JANUARY 28, 1998
The section "What Are The Expenses Of The Portfolios?" has been amended as fol-
lows:
The expense tables appearing on pages 4 through 7 are replaced with the follow-
ing:
<TABLE>
<CAPTION>
LARGE CAP LARGE CAP MID-CAP
VALUE EQUITY GROWTH EQUITY VALUE EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO
INVESTOR A INVESTOR B INVESTOR C INVESTOR A INVESTOR B INVESTOR C INVESTOR A INVESTOR B INVESTOR C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER
TRANSACTION
EXPENSES
Maximum Front-End
Sales Charge(/1/)
(as a percentage of
offering price) 4.5% None None 4.5% None None 4.5% None None
Maximum Deferred
Sales
Charge(/1/)(/2/)
(as a percentage of
offering price) None 4.5% 1.0% None 4.5% 1.0% None 4.5% 1.0%
Sales Charge on
Reinvested
Dividends None None None None None None None None None
ANNUAL PORTFOLIO
OPERATING EXPENSES
(AS A PERCENTAGE OF
AVERAGE NET ASSETS)
Advisory fees (after
fee waivers)(/3/) .54% .54% .54% .55% .55% .55% .79% .79% .79%
12b-1 fees(/3/)(/4/) .00 .75 .75 .00 .75 .75 .00 .75 .75
Other operating
expenses
(after fee waivers)
(/3/) .77 .77 .77 .79 .79 .79 .82 .82 .82
---- ---- ---- ---- ---- ---- ---- ---- ----
Shareholder
servicing fee .25 .25 .25 .25 .25 .25 .25 .25 .25
Shareholder
processing fee .15 .15 .15 .15 .15 .15 .15 .15 .15
Other expenses .37 .37 .37 .39 .39 .39 .42 .42 .42
---- ---- ---- ---- ---- ---- ---- ---- ----
Total Portfolio
operating expenses
(after fee
waivers)(/3/) 1.31% 2.06% 2.06% 1.34% 2.09% 2.09% 1.61% 2.36% 2.36%
==== ==== ==== ==== ==== ==== ==== ==== ====
</TABLE>
(1) Reduced front-end sales charges may be available. A deferred sales charge
of up to 1.00% is assessed on certain redemptions of Investor A Shares that
are purchased with no initial sales charge as part of an investment of
$1,000,000 or more. See "What Is the Schedule of Sales Charges and Exemp-
tions?"
(2) This amount applies to redemptions during the first year. The deferred
sales charge for Investor B Shares decreases for redemptions made in subse-
quent years. No deferred sales charge is charged after the sixth year on
Investor B Shares or after the first year on Investor C Shares. See "What
Is the Schedule of Sales Charges and Exemptions?"
(3) "Other expenses" includes the administration fees payable by the Portfo-
lios. Without waivers, advisory fees would be .80% and administration fees
would be .23% for the Mid-Cap Value Equity Portfolio. BlackRock, Inc. and
the Portfolios' administrators are under no obligation to waive or continue
waiving their fees, but have informed the Fund that they expect to waive
fees as necessary to maintain the Portfolios' total operating expenses dur-
ing the remainder of the current fiscal year at the levels set forth in the
table. Without waivers, "Other operating expenses" would be .86% for each
class of the Mid-Cap Value Equity Portfolio and "Total Portfolio operating
expenses" would be 1.66% for Investor A Shares and 2.41% for Investor B
Shares and Investor C Shares. The Portfolios do not expect to incur 12b-1
fees in excess of .005% with respect to Investor A Shares (otherwise pay-
able at the maximum rate of .10%) during the current fiscal year.
(4) Investors with a long-term perspective may prefer Investor A Shares, as de-
scribed under "What Are The Key Considerations In Selecting A Pricing Op-
tion?" Long-term investors in Investor Shares may pay more than the eco-
nomic equivalent of the maximum front-end sales charges permitted by the
rules of the National Association of Securities Dealers, Inc. ("NASD").
<PAGE>
<TABLE>
<CAPTION>
MID-CAP SMALL CAP SMALL CAP
GROWTH VALUE GROWTH
EQUITY EQUITY EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO
INVESTOR A INVESTOR B INVESTOR C INVESTOR A INVESTOR B INVESTOR C INVESTOR A INVESTOR B INVESTOR C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER
TRANSACTION
EXPENSES
Maximum Front-End
Sales Charge(/1/)
(as a percentage of
offering price) 4.5% None None 4.5% None None 4.5% None None
Maximum Deferred
Sales
Charge(/1/)(/2/)
(as a percentage of
offering price) None 4.5% 1.0% None 4.5% 1.0% None 4.5% 1.0%
Sales Charge on
Reinvested
Dividends None None None None None None None None None
ANNUAL PORTFOLIO
OPERATING EXPENSES
(AS A PERCENTAGE OF
AVERAGE NET ASSETS)
Advisory fees (after
fee waivers)(/3/) .79% .79% .79% .55% .55% .55% .55% .55% .55%
12b-1 fees(/3/)(/4/) .00 .75 .75 .00 .75 .75 .00 .75 .75
Other operating
expenses
(after fee
waivers)(/3/) .82 .82 .82 .80 .80 .80 .80 .80 .80
---- ---- ---- ---- ---- ---- ---- ---- ----
Shareholder
servicing fee .25 .25 .25 .25 .25 .25 .25 .25 .25
Shareholder
processing fee .15 .15 .15 .15 .15 .15 .15 .15 .15
Other expenses .42 .42 .42 .40 .40 .40 .40 .40 .40
---- ---- ---- ---- ---- ---- ---- ---- ----
Total Portfolio
operating expenses
(after fee
waivers)(/3/) 1.61% 2.36% 2.36% 1.35% 2.10% 2.10% 1.35% 2.10% 2.10%
==== ==== ==== ==== ==== ==== ==== ==== ====
</TABLE>
(1) Reduced front-end sales charges may be available. A deferred sales charge
of up to 1.00% is assessed on certain redemptions of Investor A Shares that
are purchased with no initial sales charge as part of an investment of
$1,000,000 or more. See "What Is the Schedule of Sales Charges and Exemp-
tions?"
(2) This amount applies to redemptions during the first year. The deferred
sales charge for Investor B Shares decreases for redemptions made in subse-
quent years. No deferred sales charge is charged after the sixth year on
Investor B Shares or after the first year on Investor C Shares. See "What
Is the Schedule of Sales Charges and Exemptions?"
(3) "Other expenses" includes the administration fees payable by the Portfo-
lios. Without waivers, advisory fees would be .80% and administration fees
would be .23% for the Mid-Cap Growth Equity Portfolio. BlackRock, Inc. and
the Portfolios' administrators are under no obligation to waive or continue
waiving their fees, but have informed the Fund that they expect to waive
fees as necessary to maintain the Portfolios' total operating expenses dur-
ing the remainder of the current fiscal year at the levels set forth in the
table. Without waivers, "Other operating expenses" would be .84% for each
class of the Mid-Cap Growth Equity Portfolio and "Total Portfolio operating
expenses" would be 1.64% for Investor A Shares and 2.39% for Investor B
Shares and Investor C Shares. The Portfolios do not expect to incur 12b-1
fees in excess of .005% with respect to Investor A Shares (otherwise pay-
able at the maximum rate of .10%) during the current fiscal year.
(4) Investors with a long-term perspective may prefer Investor A Shares, as de-
scribed under "What Are The Key Considerations In Selecting A Pricing Op-
tion?" Long-term investors in Investor Shares may pay more than the eco-
nomic equivalent of the maximum front-end sales charges permitted by the
rules of the NASD.
2
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL
INTERNATIONAL INTERNATIONAL EMERGING
EQUITY SMALL CAP EQUITY MARKETS
PORTFOLIO PORTFOLIO PORTFOLIO
INVESTOR A INVESTOR B INVESTOR C INVESTOR A INVESTOR B INVESTOR C INVESTOR A INVESTOR B INVESTOR C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER
TRANSACTION
EXPENSES
Maximum Front-End
Sales Charge(/1/)
(as a percentage of
offering price) 5.0% None None 5.0% None None 5.0% None None
Maximum Deferred
Sales
Charge(/1/)(/2/)
(as a percentage of
offering price) None 4.5% 1.0% None 4.5% 1.0% None 4.5% 1.0%
Sales Charge on
Reinvested
Dividends None None None None None None None None None
ANNUAL PORTFOLIO
OPERATING EXPENSES
(AS A PERCENTAGE OF
AVERAGE NET ASSETS)
Advisory fees (after
fee waivers)(/3/) .66% .66% .66% .80% .80% .80% 1.16% 1.16% 1.16%
12b-1 fees(/3/)(/4/) .00 .75 .75 .00 .75 .75 .00 .75 .75
Other operating
expenses (after fee
waivers)(/3/) .87 .87 .87 1.00 1.00 1.00 1.09 1.09 1.09
---- ---- ---- ---- ---- ---- ---- ---- ----
Shareholder
servicing fee .25 .25 .25 .25 .25 .25 .25 .25 .25
Shareholder
processing fee .15 .15 .15 .15 .15 .15 .15 .15 .15
Other expenses .47 .47 .47 .60 .60 .60 .69 .69 .69
--- --- --- --- --- --- --- --- ---
Total Portfolio
operating expenses
(after fee
waivers)(/3/) 1.53% 2.28% 2.28% 1.80% 2.55% 2.55% 2.25% 3.00% 3.00%
==== ==== ==== ==== ==== ==== ==== ==== ====
</TABLE>
(1) Reduced front-end sales charges may be available. A deferred sales charge
of up to 1.00% is assessed on certain redemptions of Investor A Shares that
are purchased with no initial sales charge as part of an investment of
$1,000,000 or more. See "What Is the Schedule of Sales Charges and Exemp-
tions?"
(2) This amount applies to redemptions during the first year. The deferred
sales charge for Investor B Shares decreases for redemptions made in subse-
quent years. No deferred sales charge is charged after the sixth year on
Investor B Shares or after the first year on Investor C Shares. See "What
Is the Schedule of Sales Charges and Exemptions?"
(3) "Other expenses" includes the administration fees payable by the Portfo-
lios. Without waivers, advisory fees would be .75%, 1.00% and 1.25% for the
International Equity, International Small Cap Equity and International
Emerging Markets Portfolios, respectively, and administration fees would be
.23% for each class of each Portfolio. BlackRock, Inc. and the Portfolios'
administrators are under no obligation to waive or continue waiving their
fees, but have informed the Fund that they expect to waive fees as neces-
sary to maintain the Portfolios' total operating expenses during the re-
mainder of the current fiscal year at the levels set forth in the table.
Without waivers, "Other operating expenses" would be: (i) .88%, 1.02% and
1.09%, respectively, for each class of the Portfolios and "Total Portfolio
operating expenses" would be: (ii) 1.63%, 2.02% and 2.34%, respectively,
for Investor A Shares; and (iii) 2.38%, 2.77% and 3.09%, respectively, for
Investor B Shares and Investor C Shares. The Portfolios do not expect to
incur 12b-1 fees in excess of .005% with respect to Investor A Shares (oth-
erwise payable at the maximum rate of .10%) during the current fiscal year.
(4) Investors with a long-term perspective may prefer Investor A Shares, as de-
scribed under "What Are The Key Considerations In Selecting A Pricing Op-
tion?" Long-term investors in Investor Shares may pay more than the eco-
nomic equivalent of the maximum front-end sales charges permitted by the
rules of the NASD.
3
<PAGE>
<TABLE>
<CAPTION>
SELECT EQUITY INDEX EQUITY BALANCED
PORTFOLIO PORTFOLIO+ PORTFOLIO
INVESTOR A INVESTOR B INVESTOR C INVESTOR A INVESTOR B INVESTOR C INVESTOR A INVESTOR B INVESTOR C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER
TRANSACTION
EXPENSES
Maximum Front-End
Sales Charge(/1/)
(as a percentage of
offering price) 4.5% None None 3.0% None None 4.5% None None
Maximum Deferred
Sales
Charge(/1/)(/2/)
(as a percentage of
offering price) None 4.5% 1.0% None 4.5% 1.0% None 4.5% 1.0%
Sales Charge on
Reinvested
Dividends None None None None None None None None None
ANNUAL PORTFOLIO
OPERATING EXPENSES
(AS A PERCENTAGE OF
AVERAGE NET ASSETS)
Advisory fees (after
fee
waivers)(/3/)(/4/) .55% .55% .55% .025% .025% .025% .55% .55% .55%
12b-1 fees(/3/)(/5/) .00 .75 .75 .00 .75 .75 .00 .75 .75
Other operating
expenses
(after fee
waivers)(/3/) .78 .78 .78 .625 .625 .625 .82 .82 .82
---- ---- ---- ---- ---- ---- ---- ---- ----
Shareholder
servicing fee .25 .25 .25 .25 .25 .25 .25 .25 .25
Shareholder
processing fee .15 .15 .15 .15 .15 .15 .15 .15 .15
Other expenses .38 .38 .38 .225 .225 .225 .42 .42 .42
---- ---- ---- ---- ---- ---- ---- ---- ----
Total Portfolio
operating expenses
(after fee
waivers)(/3/) 1.33% 2.08% 2.08% .65% 1.40% 1.40% 1.37% 2.12% 2.12%
==== ==== ==== ==== ==== ==== ==== ==== ====
</TABLE>
(1) Reduced front-end sales charges may be available. A deferred sales charge
of up to 1.00% is assessed on certain redemptions of Investor A Shares that
are purchased with no initial sales charge as part of an investment of
$1,000,000 or more. See "What Is the Schedule of Sales Charges and Exemp-
tions?"
(2) This amount applies to redemptions during the first year. The deferred
sales charge for Investor B Shares decreases for redemptions made in subse-
quent years. No deferred sales charge is charged after the sixth year on
Investor B Shares or after the first year on Investor C Shares. See "What
Is the Schedule of Sales Charges and Exemptions?"
(3) "Other expenses" includes the administration fees payable by the Portfo-
lios. Without waivers administration fees would be .23% for the Index Eq-
uity Portfolio. BlackRock, Inc. and the Portfolios' administrators are un-
der no obligation to waive or continue waiving their fees, but have in-
formed the Fund that they expect to waive fees as necessary to maintain the
Portfolios' total operating expenses during the remainder of the current
fiscal year at the levels set forth in the table. Without waivers, "Other
operating expenses" would be .65% for each class of the Index Equity Port-
folio and "Total Portfolio operating expenses" would be .85% for Investor A
Shares and 1.60% for Investor B Shares and Investor C Shares. The Portfo-
lios do not expect to incur 12b-1 fees in excess of .005% with respect to
Investor A Shares (otherwise payable at the maximum rate of .10%) during
the current fiscal year.
(4) Advisory fees with respect to the Index Equity Portfolio represent advisory
fees of the Index Master Portfolio.
(5) Investors with a long-term perspective may prefer Investor A Shares, as de-
scribed under "What Are The Key Considerations In Selection A Pricing Op-
tion?" Long-term investors in Investor Shares may pay more than the eco-
nomic equivalent of the maximum front-end sales charges permitted by the
rules of the NASD.
+ Includes the operating expenses of the Index Master Portfolio that are allo-
cable to the Index Equity Portfolio.
4
<PAGE>
The information in the Example on page 8 is replaced with the following:
EXAMPLE
An investor in Investor Shares would pay the following expenses on a $1,000 in-
vestment assuming (1) a 5% annual return, (2) redemption at the end of each
time period and (3) with respect to Investor B shares only, no redemption at
the end of each time period:
<TABLE>
<CAPTION>
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
<S> <C> <C> <C> <C>
Large Cap Value Equity Portfolio
A Shares* $58 $ 85 $114 $196
B Shares (Redemption)** 66 102 133 219***
B Shares (No Redemption) 21 65 111 219***
C Shares 21 65 111 239
Large Cap Growth Equity Portfolio
A Shares* 58 86 115 199
B Shares (Redemption)** 66 103 136 223***
B Shares (No Redemption) 21 65 112 223***
C Shares 21 65 112 242
Mid-Cap Value Equity Portfolio
A Shares* 61 94 N/A N/A
B Shares (Redemption)** 69 111 N/A N/A
B Shares (No Redemption) 24 74 N/A N/A
C Shares 24 74 N/A N/A
Mid-Cap Growth Equity Portfolio
A Shares* 61 94 N/A N/A
B Shares (Redemption)** 69 111 N/A N/A
B Shares (No Redemption) 24 74 N/A N/A
C Shares 24 74 N/A N/A
Small Cap Value Equity Portfolio
A Shares* 58 86 116 200
B Shares (Redemption)** 66 103 135 224***
B Shares (No Redemption) 21 66 113 224***
C Shares 21 66 113 243
Small Cap Growth Equity Portfolio
A Shares* 58 86 116 200
B Shares (Redemption)** 66 103 135 224***
B Shares (No Redemption) 21 66 113 224***
C Shares 21 66 113 243
International Equity Portfolio
A Shares* 65 96 129 223
B Shares (Redemption)** 68 108 144 242***
B Shares (No Redemption) 23 71 122 242***
C Shares 23 71 122 262
International Small Cap Equity
Portfolio
A Shares* 62 99 N/A N/A
B Shares (Redemption)** 71 116 N/A N/A
B Shares (No Redemption) 26 79 N/A N/A
C Shares 26 79 N/A N/A
International Emerging Markets
Portfolio
A Shares* 72 117 164 296
B Shares (Redemption)** 75 129 179 314***
B Shares (No Redemption) 30 93 158 314***
C Shares 30 93 158 332
Select Equity Portfolio
A Shares* 58 85 115 198
B Shares (Redemption)** 66 102 134 222***
B Shares (No Redemption) 21 65 112 222***
C Shares 21 65 112 241
Index Equity Portfolio
A Shares* 36 50 65 109
B Shares (Redemption)** 59 82 100 147***
B Shares (No Redemption) 14 44 77 147***
C Shares 14 44 77 168
Balanced Portfolio
A Shares* 58 86 117 202
B Shares (Redemption)** 67 103 136 226***
B Shares (No Redemption) 22 66 114 226***
C Shares 22 66 114 245
</TABLE>
* Reflects the imposition of the maximum front-end sales charge at the begin-
ning of the period.
** Reflects the deduction of the deferred sales charge.
*** Based on the conversion of the Investor B Shares to Investor A Shares after
eight years.
5
<PAGE>
The section "What Are The Portfolios' Financial Highlights?" has been amended
as follows:
The Financial Highlights table for the International Small Cap Equity Portfolio
appearing on page 17 is replaced with the following:
INTERNATIONAL SMALL CAP EQUITY PORTFOLIO
<TABLE>
<CAPTION>
INVESTOR A INVESTOR B INVESTOR C
SHARES SHARES SHARES
FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE
PERIOD PERIOD PERIOD PERIOD PERIOD PERIOD
10/1/97 9/26/97/1/ 10/1/97 9/26/97/1/ 10/1/97 9/26/97/1/
THROUGH THROUGH THROUGH THROUGH THROUGH THROUGH
2/28/98 9/30/97 2/28/98 9/30/97 2/28/98 9/30/97
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE AT
BEGINNING OF PERIOD $ 9.94 $ 10.00 $ 9.94 $ 10.00 $ 9.94 $ 10.00
------- ------- ------- ------- ------- -------
Income from investment
operations
Net investment income (0.01) - - (0.03) - - (0.03) - -
Net gain (loss) on
investments (both
realized and
unrealized) 0.52 (0.06) 0.51 (0.06) 0.51 (0.06)
------- ------- ------- ------- ------- -------
Total from investment
operations 0.51 (0.06) 0.48 (0.06) 0.48 (0.06)
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS
Distributions from net
investment income - - - - - - - - - - - -
Distributions from net
realized capital gains (0.03) - - (0.02) - - (0.02) - -
------- ------- ------- ------- ------- -------
Total distributions (0.03) - - (0.02) - - (0.02) - -
------- ------- ------- ------- ------- -------
NET ASSET VALUE AT END OF
PERIOD $ 10.42 $ 9.94 $ 10.40 $ 9.94 $ 10.40 $ 9.94
======= ======= ======= ======= ======= =======
Total return 4.88%/3/ (0.30)%/3/ 4.52%/3/ (0.30)%/3/ 4.52%/3/ (0.30)%/3/
RATIOS/SUPPLEMENTAL DATA
Net assets at end of
period (in thousands) $ 782 $ 326 $ 1,601 $ 711 $ 321 $ 182
Ratios of expenses to
average net assets
After
advisory/administration
fee waivers 1.79%/2/ 1.30%/2/ 2.52%/2/ 1.30%/2/ 2.53%/2/ 1.30%/2/
Before
advisory/administration
fee waivers 2.08%/2/ 1.52%/2/ 2.81%/2/ 1.52%/2/ 2.82%/2/ 1.52%/2/
Ratios of net investment
income to average net
assets
After
advisory/administration
fee waivers (0.16)%/2/ 1.44%/2/ (0.91)%/2/ 1.58%/2/ (0.90)%/2/ 1.44%/2/
Before
advisory/administration
fee waivers (0.45)%/2/ 1.22%/2/ (1.20)%/2/ 1.35%/2/ (1.18)%/2/ 1.22%/2/
PORTFOLIO TURNOVER RATE 23% 0% 23% 0% 23% 0%
AVERAGE COMMISSION
RATE/4/ $0.0294 $0.0268 $0.0294 $0.0268 $0.0294 $0.0268
</TABLE>
/1/Commencement of operations of share class.
/2/Annualized.
/3/Neither front-end sales load nor contingent deferred sales load is reflected
in total return.
/4/Computed by dividing the total amount of commission paid by the total number
of shares purchased and sold during the period.
The Prospectus is amended to reflect the fact that BlackRock, Inc. has changed
its name to BlackRock Advisors, Inc.
6
<PAGE>
The section "Who Manages The Fund?" is amended to reflect that effective March
31, 1998, BlackRock Financial Management, Inc. ("BlackRock") acts as sub-ad-
viser to each of the Portfolios other than the Index Equity Portfolio and the
International Portfolios as a result of the merger of Provident Capital Manage-
ment, Inc. and PNC Equity Advisors Company into BlackRock. BlackRock Interna-
tional, Ltd. (formerly CastleInternational Asset Management Limited) acts as
sub-adviser to each of the International Portfolios.
The section "Who Manages The Fund?" has been amended as follows:
The Portfolios (other than the Index Equity Portfolio) and their portfolio man-
agers are as follows:
<TABLE>
<CAPTION>
BLACKROCK PORTFOLIO PORTFOLIO MANAGER
------------------- -----------------
<C> <S>
Large Cap Value Equity Daniel B. Eagan; portfolio manager with sub-
adviser since 1995; director of investment
strategy at BlackRock, Inc. during 1994 and
1995; prior to 1994, served as senior
research consultant for Mercer Investment
Consulting; portfolio manager since January
1997.
Large Cap Growth Equity R. Andrew Damm; portfolio manager with sub-
adviser since 1997; senior investment
strategist with BlackRock, Inc. since 1995;
portfolio manager with PNC Bank from 1988 to
1995; Mr. Damm has participated in the
management of the Portfolio since 1996 and
has been designated portfolio manager since
September 1997.
Mid-Cap Value Equity Christian K. Stadlinger, portfolio manager
with sub-adviser since July 1996; prior to
joining sub-adviser, portfolio manager and
Research Analyst with Morgan Stanley Asset
Management; portfolio co-manager since
inception.
Daniel B. Eagan (see above); portfolio co-
manager since inception.
Mid-Cap Growth Equity William J. Wykle; portfolio manager with sub-
adviser since 1995; investment manager with
PNC Bank, National Association since 1986;
portfolio co-manager since inception.
Thomas Callan; portfolio manager with sub-
adviser since 1996; equity analyst with PNC
Bank from 1993 to 1996; portfolio co-manager
since May 1998.
Small Cap Value Equity Christian K. Stadlinger, portfolio manager
with sub-adviser since July 1996; prior to
joining sub-adviser, portfolio manager and
Research Analyst with Morgan Stanley Asset
Management; portfolio manager since July
1996.
Small Cap Growth Equity William J. Wykle (see above); portfolio co-
manager since its inception.
Thomas Callan (see above); portfolio co-
manager since May 1998.
International Equity Gordon Anderson; portfolio manager with sub-
adviser since 1996; prior to joining sub-
adviser, Investment Director of Dunedin Fund
Managers Ltd.; portfolio manager since 1996.
International Emerging Markets Euan Rae; portfolio manager with sub-adviser
since 1996; prior to joining sub-adviser,
Head of Emerging Markets at Dunedin Fund
Managers Ltd. and Investment Manager with
Edinburgh Fund Managers; portfolio manager
since 1996.
International Small Cap Equity Peter J. Tait; portfolio manager with sub-
adviser since 1996. Director and Head of
Continental European desk and Dunedin Fund
Managers Ltd. from 1990 to 1996; portfolio
manager since inception.
Select Equity Daniel B. Eagan (see above); portfolio
manager since 1995.
Balanced R. Andrew Damm (see above); portfolio co-
manager since 1996.
Robert S. Kapito; Vice Chairman of BlackRock
since 1988; portfolio co-manager since 1995.
Keith T. Anderson; Managing Director and co-
chair of portfolio Management Group and
Investment Strategy Committee of BlackRock
since 1988; portfolio co-manager since 1995.
</TABLE>
7
<PAGE>
The section "How Are Shares Purchased?" is amended as follows:
The following has been added after the first paragraph under "General":
Effective August 15, 1998, the Small Cap Growth Equity Portfolio will be
closed to new investors, with the exception of investors who purchase
through the following PNC Bank departments: Charitable and Endowment Manage-
ment; Private Bank; and Institutional Trust, including defined benefit, de-
fined contribution and Vested Interest(R) plans. In addition, the Portfolio
will continue to be open to wrap and retirement programs that are already
invested in the Portfolio and to certain payroll deduction programs. Share-
holders of the Portfolio as of August 15, 1998 will be permitted to make ad-
ditional investments in current accounts.
The following has been added after the last paragraph under "Other Purchase In-
formation":
In the event that a shareholder acquiring Investor A Shares on or after May
1, 1998 at a future date meets the eligibility standards for purchasing In-
stitutional Shares (other than due to fluctuations in market value), then
the shareholder's Investor A Shares will, upon the direction of the Fund's
distributor, automatically be converted to Institutional Shares of the
Portfolio having the same aggregate net asset value as the shares convert-
ed.
This Supplement is dated August 14, 1998.
8
