March 31, 1999
Equity
Portfolios
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
Not FDIC Insured [GRAPHIC OMITTED] BLACKROCK
May Lose Value FUNDS
No Bank Guarantee PURE INVESTMENT STYLE
<PAGE>
BLACKROCK FUNDS
EQUITY PORTFOLIOS
* Large Cap Value Equity * International Equity
* Large Cap Growth Equity * International Small Cap Equity
* Mid-Cap Value Equity * International Emerging Markets
* Mid-Cap Growth Equity * Select Equity
* Small Cap Value Equity * Index Equity
* Small Cap Growth Equity * Balanced
* Micro-Cap Equity
TABLE OF CONTENTS
SHAREHOLDER LETTER.............................................................1
PORTFOLIO SUMMARIES
Large Cap Value Equity...................................................3
Large Cap Growth Equity..................................................4
Mid-Cap Value Equity.....................................................5
Mid-Cap Growth Equity....................................................6
Small Cap Value Equity...................................................7
Small Cap Growth Equity..................................................8
Micro-Cap Equity.........................................................9
International Equity....................................................10
International Small Cap Equity..........................................11
International Emerging Markets..........................................12
Select Equity...........................................................13
Index Equity............................................................14
Balanced................................................................15
Note on Performance Information.........................................16
STATEMENTS OF NET ASSETS/SCHEDULES OF INVESTMENTS..........................17-53
Large Cap Value Equity Statement of Assets & Liabilities................19
Large Cap Growth Equity Statement of Assets & Liabilities...............22
Mid-Cap Value Equity Statement of Assets & Liabilities..................25
Mid-Cap Growth Equity Statement of Assets & Liabilities.................28
Small Cap Growth Equity Statement of Assets & Liabilities...............34
Micro-Cap Equity Statement of Assets & Liabilities......................36
Select Equity Statement of Assets & Liabilities.........................46
Balanced Statement of Assets & Liabilities..............................53
PORTFOLIO FINANCIAL STATEMENTS
Statements of Operations.............................................54-55
Statements of Changes in Net Assets..................................56-59
Financial Highlights.................................................60-71
NOTES TO FINANCIAL STATEMENTS..............................................72-86
DFA INVESTMENT TRUST COMPANY ANNUAL REPORT................................87-104
<PAGE>
BLACKROCK FUNDS
March 31, 1999
Dear Shareholder:
We are pleased to present the Semi-Annual Report for the BlackRock Funds
for March 31, 1999.
These are certainly exciting times for the U.S. stock market. On March 29,
1999, the Dow Jones Industrial Average (DJIA) eclipsed the mythic 10,000 level
for the first time in history, only to fall slightly below this mark at the end
of the period. This milestone is a media event that has created considerable
excitement and propelled the stock market into the forefront of public
attention. We believe that times like these present a good opportunity for
investors to look past the heat of the moment and focus on the true meaning of
events.
A quick look at recent history confirms that 10,000 on the Dow is indeed a
lofty height. It was only 27 years ago in 1972 that the Dow reached the 1,000
level for the first time. But that success did not last. Battered by recession
in the U.S. economy and worldwide oil shortages, the Dow plummeted below 600 in
1974, the lowest point in a generation, and it didn't get back to 1,000 again
until 1982. From 1982 to 1994 the Dow climbed to the 3,500 level. From there it
moved to 5,000 in 1996, 7,500 in 1998 and 10,000 in 1999. By anyone's measure
this has been a fast and impressive, yet often volatile, climb.
On the other hand, it is worth remembering that the Dow is not a broad
based index -- in fact it is only 30 stocks! While the Dow has been flying high,
many stocks, particularly smaller stocks, have not. Furthermore, the stocks that
make up the Dow are some of the largest of the large cap stocks, the very group
that has done so well over recent years. At the same time returns on small cap
stocks, measured by the Russell 2000, have lagged by returning -16.25% for the
twelve months ended March 31, 1999 and the large caps, measured by the S&P 500,
have been humming along at a rate of 18.58% in the same time period.
Is the market overdue for a significant correction, or can it continue to
move still higher? Of course, none of us can predict the future but there are
several important positive indications. We believe the economy is strong,
interest rates are favorable and inflation appears under control. While
BlackRock believes that the market will remain in positive territory for the
remainder of 1999, we also believe that growth will be tempered and that
investors would do well to roll back their expectations to more modest levels.
If you look at stock market performance from 1926 to 1998, as presented in the
Ibbotson 1999 Yearbook, Large Company Stocks (S&P Composite Index) returned an
average annual rate of 11.2%, Small Company Stocks (9th and 10th Deciles NYSE
plus corresponding AMEX and OTC) at 12.4%, and Long Term Bonds (Salomon Brothers
Long Term High-Grade Corporate Bond Index) at 5.8%. While past performance does
not predict future returns, common sense suggests that the market cannot be
expected to keep growing at current rates.
These historical returns, while not approaching the returns of recent
years, are still significant and confirm the appropriateness of our core
investment philosophy for long-term investors: start investing early and stay
invested through all market cycles. Of course, the asset allocation that you use
for your portfolio can change to reflect changes in the market and in your own
personal financial situation.
1
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BLACKROCK FUNDS
We also believe that with the Federal Reserve currently holding steady on
interest rates, investors should not overlook the investment opportunity in the
bond market, both taxable and tax free. We are pleased to report that during the
period of this report we successfully launched a new fund, the BlackRock High
Yield Bond Portfolio, designed for investors who want high current income from
investing in securities that are rated less than investment grade.
We are pleased with the growth of BlackRock Funds during the past six
months. The addition of the BlackRock High Yield Bond Portfolio in November 1998
increased the number of BlackRock Funds to 36 investment portfolios.
Additionally, we received record inflows into the fund family, which helped
bring our total assets under management to approximately $25 billion as of March
31, 1999.
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 SABATH
Karen H. Sabath
MANAGING DIRECTOR
BLACKROCK ADVISORS, INC.
2
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BLACKROCK FUNDS
LARGE CAP VALUE EQUITY PORTFOLIO
TOTAL NET ASSETS (3/31/99):
$2.5 BILLION
PERFORMANCE BENCHMARK:
RUSSELL 1000 VALUE INDEX
INVESTMENT APPROACH:
PURSUES LONG-TERM CAPITAL APPRECIATION BY INVESTING IN STOCKS OF COMPANIES
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 $10 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 WAS REWARDED FOR ITS OVERWEIGHT TO THE ENERGY SECTOR
DURING THE PERIOD, AS ONGOING INDUSTRY CONSOLIDATION AND HIGHER OIL PRICES
SPARKED INVESTOR INTEREST. STRONG PERFORMERS IN THE PORTFOLIO INCLUDED EXXON,
ROYAL DUTCH PETROLEUM AND CHEVRON. THE MANAGER BELIEVES THAT THE ENERGY SECTOR
MAY CONTINUE ITS STRONG PERFORMANCE DUE TO OPEC'S LIMITING PRODUCTION AND
GREATER EFFICIENCY, WHICH COULD LEAD TO COST SAVINGS.
(BULLET) AFTER BEGINNING THE PERIOD OVERWEIGHT IN THE TECHNOLOGY SECTOR, A
RESULT OF THE MANAGER'S ACCUMULATING ATTRACTIVELY VALUED STOCKS IN THE WAKE OF
AUGUST 1998'S MARKET WEAKNESS, THE PORTFOLIO TOOK ADVANTAGE OF THAT SECTOR'S
STRONG PERFORMANCE AND ENDED THE PERIOD WITH A NEUTRAL WEIGHTING RELATIVE TO THE
INDEX.
Although the portfolio holdings and sectors listed above were current as of the
end of the semi-annual period ended March 31, 1999, 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.
<TABLE>
<CAPTION>
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
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-20-92 $10,000 $10,000 $ 9,550 $10,000 $10,000 $10,000
Jun-92 9,831 9,831 9,388 9,831 9,831 9,842
Sep-92 9,882 9,882 9,437 9,882 9,882 9,899
Dec-92 10,457 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 11,414 10,901 11,414 11,414 11,575
Sep-93 12,048 12,042 11,508 12,050 12,050 12,044
Dec-93 12,338 12,327 11,768 12,322 12,322 11,919
Mar-94 11,871 11,853 11,313 11,846 11,846 11,410
Jun-94 12,045 12,021 11,459 11,999 11,999 11,385
Sep-94 12,501 12,466 11,891 12,452 12,452 11,568
Dec-94 12,474 12,432 11,854 12,413 12,413 11,265
Mar-95 13,546 13,494 12,862 13,468 13,468 12,224
Jun-95 14,616 14,549 13,863 14,516 14,516 13,197
Sep-95 15,716 15,633 14,890 15,591 15,591 14,232
Dec-95 16,823 16,722 15,921 16,672 16,672 15,060
Mar-96 17,778 17,659 16,807 17,581 17,581 15,794
Jun-96 18,388 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 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 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 30,252 29,905 28,361 29,375 29,375 26,068
Jun-98 29,798 29,417 27,907 28,852 28,852 26,185
Sep-98 25,581 25,237 23,947 24,698 24,698 23,153
Dec-98 29,692 29,273 27,752 28,560 28,560 26,996
Mar-99 30,031 29,583 28,041 28,795 28,795 27,385
</TABLE>
FOR PERIOD ENDING MARCH 31, 1999
AVERAGE ANNUAL TOTAL RETURN
1 YEAR 3 YEAR 5 YEAR FROM INCEPTION
------ ------ ------ --------------
Institutional Class (0.73)% 19.10% 20.40% 17.16%
Service Class (1.08)% 18.77% 20.08% 16.90%
Investor A Class (Load Adjusted) (5.56)% 16.81% 18.80% 16.00%
Investor A Class (NAV) (1.13)% 18.60% 19.90% 16.77%
Investor B Class (Load Adjusted) (6.39)% 16.27% 18.83% 16.35%
Investor B Class (NAV) (1.98)% 17.66% 19.31% 16.35%
Investor C Class (Load Adjusted) (2.96)% 17.66% 19.31% 16.35%
Investor C Class (NAV) (1.98)% 17.66% 19.31% 16.35%
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 16 for further
information on how performance data was calculated.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
3
<PAGE>
BLACKROCK FUNDS
LARGE CAP GROWTH EQUITY PORTFOLIO
TOTAL NET ASSETS (3/31/99):
$1.5 BILLION
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 ABOVE-AVERAGE EARNINGS GROWTH PROSPECTS AND
MARKET CAPITALIZATIONS IN EXCESS OF $10 BILLION.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
(BULLET) THE PORTFOLIO'S OVERWEIGHT POSITIONS IN THE TECHNOLOGY AND
HEALTHCARE SECTORS WERE REDUCED TO NEUTRAL DURING THE PERIOD, AS BOTH HAD POSTED
STRONG GAINS AND THE MANAGER BEGAN TO HAVE CONCERNS OVER VALUATIONS.
(BULLET) OVER THE PERIOD, THR PORTFOLIO'S EXPOSURE TO THE CAPITAL GOODS
(UNITED TECHNOLOGY, GE), TELCOM (AIRTOUCH, MCI WORLDCOM) AND TECHNOLOGY (SUN
MICROSYSTEMS, EMC, AOL, NOKIA) SECTORS ADDED TO PERFORMANCE. DUE TO THE
PORTFOLOI'S GROWTH STYLE, THE MANAGER KEPT THE PORTFOLIO UNDERWEIGHT TO BASIC
MATERIALS, WHICH DETRACTED FROM PERFORMANCE WHEN CYCLICAL STOCKS BEGAN TO
REBOUND.
Although the portfolio holdings and sectors listed above were current as of the
end of the semi-annual period ended March 31, 1999, 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.
<TABLE>
<CAPTION>
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
INSTITUTIONAL SERVICE INVESTOR A INVESTOR B INVESTOR C RUSSELL 1000
CLASS CLASS CLASS CLASS CLASS VALUE INDEX
<S> <C> <C> <C> <C> <C> <C>
Nov-1-89 $10,000 $10,000 $ 9,550 $10,000 $10,000 $10,000
Dec-89 10,825 10,825 10,338 10,825 10,825 10,396
Mar-90 10,493 10,493 10,021 10,493 10,493 10,053
Jun-90 10,987 10,987 10,493 10,987 10,987 10,651
Sep-90 10,040 10,040 9,589 10,040 10,040 9,096
Dec-90 10,603 10,603 10,126 10,603 10,603 9,963
Mar-91 11,397 11,397 10,884 11,397 11,397 11,510
Jun-91 11,304 11,304 10,795 11,304 11,304 11,459
Sep-91 11,993 11,993 11,454 11,993 11,993 12,167
Dec-91 13,361 13,361 12,760 13,361 13,361 13,254
Mar-92 12,389 12,389 11,831 12,389 12,389 12,967
Jun-92 12,455 12,455 11,894 12,455 12,455 13,148
Sep-92 12,581 12,581 12,014 12,581 12,581 13,579
Dec-92 13,228 13,228 12,631 13,228 13,228 14,451
Mar-93 13,473 13,473 12,865 13,473 13,473 15,053
Jun-93 13,912 13,912 13,271 13,912 13,912 15,157
Sep-93 15,371 15,371 14,651 15,371 15,371 15,646
Dec-93 15,039 15,039 14,338 15,039 15,039 15,919
Mar-94 13,859 13,859 13,200 13,859 13,859 15,290
Jun-94 13,001 13,001 12,370 13,001 13,001 15,260
Sep-94 13,657 13,657 12,983 13,657 13,657 16,041
Dec-94 13,525 13,525 12,841 13,525 13,525 15,979
Mar-95 14,755 14,755 13,997 14,755 14,755 17,499
Jun-95 16,075 16,075 15,237 16,075 16,075 19,147
Sep-95 17,737 17,737 16,781 17,737 17,737 20,853
Dec-95 18,183 18,183 17,192 18,183 18,183 22,012
Mar-96 19,333 19,333 18,267 19,333 19,333 23,226
Jun-96 20,471 20,471 19,315 20,447 20,447 24,171
Sep-96 21,048 21,048 19,833 20,954 20,954 24,958
Dec-96 21,884 21,884 20,591 21,727 21,727 26,948
Mar-97 21,746 21,746 20,451 21,521 21,521 27,365
Jun-97 25,867 25,858 24,304 25,534 25,534 32,540
Sep-97 28,140 28,115 26,412 27,697 27,697 34,987
Dec-97 28,104 28,051 26,335 27,567 27,567 36,040
Mar-98 32,837 32,752 30,725 32,162 32,096 40,859
Jun-98 34,918 34,793 32,642 34,169 34,032 42,710
Sep-98 31,451 31,303 29,358 30,732 30,557 38,827
Dec-98 39,716 39,523 37,039 38,771 38,480 49,210
Mar-99 42,850 42,590 39,905 41,774 41,367 52,339
</TABLE>
FOR PERIOD ENDING MARCH 31, 1999
AVERAGE ANNUAL TOTAL RETURN
1 YEAR 3 YEAR 5 YEAR FROM INCEPTION
------ ------ ------ --------------
Institutional Class 30.49% 30.38% 25.33% 16.72%
Service Class 30.03% 29.99% 24.98% 16.52%
Investor A Class (Load Adjusted) 24.05% 27.78% 23.62% 15.83%
Investor A Class (NAV) 29.89% 29.76% 24.77% 16.39%
Investor B Class (Load Adjusted) 23.08% 27.34% 23.64% 16.08%
Investor B Class (NAV) 28.88% 28.86% 24.14% 16.08%
Investor C Class (Load Adjusted) 27.59% 28.86% 24.14% 16.08%
Investor C Class (NAV) 28.88% 28.86% 24.14% 16.08%
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 16 for further
information on how performance data was calculated.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
4
<PAGE>
BLACKROCK FUNDS
MID-CAP VALUE EQUITY PORTFOLIO
TOTAL NET ASSETS (3/31/99):
$262.7 MILLION
PERFORMANCE BENCHMARK:
RUSSELL MID CAP VALUE INDEX
INVESTMENT APPROACH:
PURSUES LONG-TERM CAPITAL APPRECIATION BY INVESTING IN STOCKS OF COMPANIES
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 $2 BILLION AND $10 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 MANAGER TOOK ADVANTAGE OF THE SHARP RUN-UP IN TECHNOLOGY
STOCKS DURING THE FIRST HALF OF THE PERIOD AND REDEPLOYED MONEY INTO MORE
VALUE-ORIENTED SECTORS SUCH AS CONSUMER CYCICALS.
(BULLET) THE MANAGER'S DECISION TO UNDERWEIGHT ELECTRIC UTILITY COMPANIES
AND OVERWEIGHT ENERGY COMPANIES BOOSTED PERFORMANCE, WHILE THE PORTFOLIO'S
OVERWEIGHT TO HEALTHCARE STOCKS HAMPERED RETURNS DUE TO THAT SECTOR'S POOR
PERFORMANCE.
(BULLET) THE PORTFOLIO EXPERIENCED A NUMBER OF COMPANIES RISING IN PRICE ON
RUMORED OR ACTUAL TAKEOVER ACTIVITY DURING THE PERIOD. FOR EXAMPLE, BROWNING
FERRIS, AS OLOD WASTE DISPOSAL COMPANY ADDED TO THE PORTFOLIO DURING THE FIRST
QUARTER OF 1999, RECEIVED A BUYOUT OFFER FROM ALLIED WASTE INC. AT A PREMIUM TO
PREVIOUS CLOSING PRICE.
Although the portfolio holdings and sectors listed above were current as of the
end of the semi-annual period ended March 31, 1999, 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 MID CAP VALUE INDEX FROM INCEPTION AND AT EACH
QUARTER END.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INSTITUTIONAL SERVICE INVESTOR A INVESTOR B INVESTOR C RUSSELL MID CAP
CLASS CLASS CLASS CLASS CLASS VALUE INDEX
<S> <C> <C> <C> <C> <C> <C>
Dec-27-96 $10,000 $10,000 $ 9,550 $10,000 $10,000 $10,000
Mar-97 10,084 10,071 9,617 10,065 10,065 10,170
Jun-97 11,383 11,363 10,838 11,328 11,328 11,450
Sep-97 12,910 12,881 12,273 12,823 12,823 12,910
Dec-97 12,856 12,819 12,218 12,741 12,741 13,436
Mar-98 14,288 14,240 13,558 14,126 14,126 14,778
Jun-98 13,475 13,418 12,765 13,269 13,269 14,398
Sep-98 11,144 11,086 10,548 10,944 10,944 12,433
Dec-98 12,670 12,588 11,971 12,401 12,401 14,119
Mar-99 11,997 11,908 11,328 11,299 11,709 13,680
</TABLE>
FOR PERIOD ENDING MARCH 31, 1999
AVERAGE ANNUAL TOTAL RETURN
1 YEAR FROM INCEPTION
------ --------------
Institutional Class (16.05)% 8.39%
Service Class (16.37)% 8.04%
Investor A Class (Load Adjusted) (20.18)% 5.68%
Investor A Class (NAV) (16.45)% 7.85%
Investor B Class (Load Adjusted) (20.85)% 5.55%
Investor B Class (NAV) (17.12)% 7.23%
Investor C Class (Load Adjusted) (17.95)% 7.23%
Investor C Class (NAV) (17.12)% 7.23%
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 16 for further information on how performance data was
calculated.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
5
<PAGE>
BLACKROCK FUNDS
MID-CAP GROWTH EQUITY PORTFOLIO
TOTAL NET ASSETS (3/31/99):
$356.1 MILLION
PERFORMANCE BENCHMARK:
RUSSELL MID CAP GROWTH INDEX
INVESTMENT APPROACH:
PURSUES LONG-TERM CAPITAL APPRECIATION BY INVESTING IN STOCKS OF COMPANIES
BELIEVED BY THE MANAGER TO HAVE ABOVE-AVERAGE EARNINGS GROWTH PROSPECTS AND
MARKET CAPITALIZATIONS GENERALLY BETWEEN $2 BILLION AND $10 BILLION.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
(BULLET) AFTER POSTING WEAK PERFORMANCE IN THE THIRD QUARTER OF 1998,
MID-CAP GROWTH STOCKS REBOUNDED DURING THE PAST SIX MONTHS IN RESPONSE TO
FEDERAL RESERVE INTEREST RATE CUTS AND A RESILIENT DOMESTIC ECONOMY.
(BULLET) THE PORTFOLIO OUTPERFORMED THE INDEX FOR THE PERIOD, AS
OVERWEIGHTS TO THE TECHNOLOGY, HEALTHCARE AND CONSUMER CYCLICALS SECTOR AND AN
UNDERWEIGHT POSITION IN THE CONSUMER STAPLES SECTOR AIDED PERFORMANCE.
Although the portfolio holdings and sectors listed above were current as of the
end of the semi-annual period ended March 31, 1999, 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 MID CAP GROWTH INDEX FROM INCEPTION AND AT EACH
QUARTER END.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INSTITUTIONAL SERVICE INVESTOR A INVESTOR B INVESTOR C RUSSELL MID CAP
CLASS CLASS CLASS CLASS CLASS GROWTH INDEX
<S> <C> <C> <C> <C> <C> <C>
DEC-27-96 $10,000 $10,000 $ 9,550 $10,000 $10,000 $10,000
Mar-97 8,894 8,930 8,519 8,920 8,920 9,635
Jun-97 10,528 10,550 10,066 10,530 10,530 11,053
Sep-97 12,151 12,170 11,594 12,110 12,110 12,600
Dec-97 11,474 11,480 10,944 11,400 11,400 12,253
Mar-98 12,911 12,913 12,293 12,782 12,782 13,741
Jun-98 13,081 13,074 12,446 12,913 12,913 13,732
Sep-98 11,173 11,158 10,615 10,997 10,997 11,439
Dec-98 14,036 14,003 13,313 13,771 13,771 14,468
Mar-99 15,986 15,940 15,153 15,101 15,649 14,963
</TABLE>
FOR PERIOD ENDING MARCH 31, 1999
AVERAGE ANNUAL TOTAL RETURN
1 YEAR FROM INCEPTION
------ --------------
Institutional Class 23.81% 23.30%
Service Class 23.44% 22.92%
Investor A Class (Load Adjusted) 17.74% 20.21%
Investor A Class (NAV) 23.28% 22.68%
Investor B Class (Load Adjusted) 16.89% 20.02%
Investor B Class (NAV) 22.42% 21.92%
Investor C Class (Load Adjusted) 21.20% 21.92%
Investor C Class (NAV) 22.42% 21.92%
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 16 for further information on how performance data was
calculated.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
6
<PAGE>
BLACKROCK FUNDS
SMALL CAP VALUE EQUITY PORTFOLIO
TOTAL NET ASSETS (3/31/99):
$629.1 MILLION
PERFORMANCE BENCHMARK:
RUSSELL 2000 VALUE INDEX
INVESTMENT APPROACH:
PURSUES LONG-TERM CAPITAL APPRECIATION BY INVESTING IN STOCKD OF COMPANIES
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 $2 BILLION. A COMPANY'S EARNINGS TREND AND ITS
STOCK'S DIVIDEND GROWTH RATE WILL ALSO FACTORS CONSIDERED IN SECURITY SELECTION.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
(BULLET) SMALL CAP VALUE COMPANY VALUATIONS VERSUS LARGE CAP STOCKS DROPPED
TO RECORD LEVELS DURING THE PERIOD, AS THE STOCK MARKET FAVORED LARGE CAP
STOCKS, LIQUIDITY AND, ABOVE ALL, INTERNET COMPANIES. TRUE TO THE PORTFOLIO'S
STATED INVESTMENT APPROACH, THE MANAGER CONTINUED TO PURSUE THE STRONGEST VALUE
COMPANIES IN THE SMALL CAP ARENA.
(BULLET) THE PORTFOLIO'S UNDERWEIGHT TO THE REIT INDUSTRY AND OUT-OF-FAVOR
UTILITIES AIDED PERFORMANCE DURING THE PERIOD. THE PORTFOLIO'S OVERWEIGHT TO THE
CONSTRUCTION SECTOR HAMPERED PERFORMANCE; HOWEVER, THE MANAGER BELIEVES THAT
SECTOR TO BE FUNDAMENTALLY STRONG BUT CURRENTLY NEGLECTED BY THE MARKET.
(BULLET) FOUR OF THE PORTFOLIO'S HOLDINGS EXPERIENCED MERGER ACTIVITY,
WHICH MAY HAVE OCCURRED DUE TO THE LARGE VALUATION DISCREPANCY BETWEEN LARGE AND
SMALL CAP STOCKS. IN THIS SCENARIO, SMALL COMPANIES CAN ACIEVE SHAREHOLDER VALUE
AND LARGE COMPANIES ADD TO EARNINGS GROWTH RATES.
Although the portfolio holdings and sectors listed above were current as of the
end of the semi-annual period ended March 31, 1999, 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.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<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>
Apr-13-92 $10,000 $10,000 $ 9,550 $10,000 $10,000 $10,000
JUN-92 9,680 9,680 9,244 9,680 9,680 9,657
SEP-92 10,151 10,151 9,694 10,151 10,151 9,933
DEC-92 11,686 11,686 11,160 11,686 11,686 11,416
MAR-93 12,412 12,412 11,854 12,412 12,412 11,903
JUN-93 12,251 12,251 11,699 12,251 12,251 12,162
SEP-93 13,233 13,232 12,637 13,232 13,232 13,225
DEC-93 13,866 13,856 13,228 13,851 13,851 13,596
MAR-94 13,608 13,599 12,973 13,584 13,584 13,236
JUN-94 13,349 13,322 12,707 13,306 13,306 12,720
SEP-94 14,061 14,022 13,378 14,009 14,009 13,603
DEC-94 13,800 13,768 13,125 13,733 13,733 13,350
MAR-95 14,256 14,212 13,548 14,154 14,154 13,965
JUN-95 15,085 15,028 14,311 14,933 14,933 15,274
SEP-95 16,513 16,428 15,644 16,297 16,297 16,783
DEC-95 16,994 16,898 16,091 16,732 16,732 17,147
MAR-96 17,903 17,797 16,923 17,583 17,583 18,023
JUN-96 18,519 18,383 17,474 18,123 18,123 18,925
SEP-96 18,599 18,449 17,530 18,146 18,146 18,991
DEC-96 20,369 20,203 19,203 19,829 19,829 19,979
MAR-97 20,206 20,015 19,016 19,210 19,210 18,946
JUN-97 24,603 24,362 23,139 23,325 23,325 21,805
SEP-97 30,016 29,686 28,184 28,370 28,370 24,616
DEC-97 30,280 29,911 28,392 28,534 28,534 25,030
MAR-98 32,657 32,241 30,578 30,677 30,677 27,120
JUN-98 30,942 30,507 28,939 28,966 28,966 26,141
SEP-98 24,902 24,540 23,270 23,239 23,239 21,467
DEC-98 28,396 27,965 26,512 26,425 26,425 23,414
MAR-99 24,225 23,835 22,572 22,483 22,483 21,145
</TABLE>
FOR PERIOD ENDING MARCH 31, 1999
AVERAGE ANNUAL TOTAL RETURN
1 YEAR 3 YEAR 5 YEAR FROM INCEPTION
------ ------ ------ --------------
Institutional Class (25.82)% 7.31% 10.21% 12.07%
Service Class (26.07)% 6.95% 9.87% 11.81%
Investor A Class (Load Adjusted) (29.49)% 5.17% 8.70% 10.93%
Investor A Class (NAV) (26.18)% 6.80% 9.71% 11.67%
Investor B Class (Load Adjusted) (30.02)% 4.76% 8.61% 11.19%
Investor B Class (NAV) (26.71)% 6.01% 9.05% 11.19%
Investor C Class (Load Adjusted) (27.44)% 6.01% 9.05% 11.19%
Investor C Class (NAV) (26.71)% 6.01% 9.05% 11.19%
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 16 for further
information on how performance data was calculated.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
7
<PAGE>
BLACKROCK FUNDS
SMALL CAP GROWTH EQUITY PORTFOLIO
TOTAL NET ASSETS (3/31/99):
$1.6 BILLION
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 ABOVE-AVERAGE EARNINGS GROWTH PROSPECTS AND
MARKET CAPITALIZATIONS LESS THAN $2 BILLION.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
(BULLET) THE PORTFOLIO'S SIGNIFICANT OVERWEIGHT TO THE TECHNOLOGY SECTOR
AND MODEST OVERWEIGHT TO THE ENERGY SECTOR ENHANCED PERFORMANCE DURING THE
PERIOD. WITHIN THE TECHNOLOGY SECTOR, THE MANAGER INCREASED WEIGHTINGD IN
INTERNET-RELATED COMPANIES AND ELECTRONIC TECHNOLOGY WHILE REDUCING ENTERPRISE
SOFTWARE AND RECHNOLOGY SERVICE ISSUES. TECHNOLOGY, WHICH IS A TRADITIONAL
GROWTH SECTOR, CONTINUED TO BE THE LARGEST SECTOR ALLOCATION AND THE MANAGER
EXPECTS THIS TO REMAIN TRUE GOING FORWARD.
(BULLET) UNDERWEIGHT POSITIONS IN BASIC MATERIALS, CONSUMER DURABLES AND
CONSUMER NON-DURABLES ALSO CONTRIBUTED TO PERFORMANCE, AS THOSE SECTORS POSTED
WEAK RETURNS WITHIN THE SMALL CAP UNIVERSE.
Although the portfolio holdings and sectors listed above were current as of the
end of the semi-annual period ended March 31, 1999, 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.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<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>
Sep-14-93 $10,000 $10,000 $ 9,550 $10,000 $10,000 $10,000
Sep-93 10,470 10,470 9,956 10,470 10,470 10,141
Dec-93 10,379 10,374 9,904 10,371 10,371 10,407
Mar-94 9,858 9,854 9,398 9,841 9,841 9,984
Jun-94 9,169 9,143 8,729 9,141 9,141 9,357
Sep-94 10,170 10,144 9,666 10,121 10,121 10,231
Dec-94 10,990 10,955 10,439 10,931 10,931 10,155
Mar-95 11,672 11,635 11,079 11,601 11,601 10,711
Jun-95 13,195 13,146 12,512 13,101 13,101 11,773
Sep-95 15,100 15,026 14,307 14,981 14,981 13,111
Dec-95 16,213 16,066 15,282 16,002 16,002 13,304
Mar-96 18,291 18,107 17,221 17,993 17,993 14,069
Jun-96 20,941 20,719 19,695 20,534 20,534 14,891
Sep-96 22,025 21,809 20,717 21,535 21,535 14,763
Dec-96 21,332 21,110 20,040 20,784 20,784 14,803
Mar-97 17,182 16,989 16,114 16,190 16,190 13,240
Jun-97 20,921 20,678 19,608 20,267 20,267 15,564
Sep-97 25,524 25,197 23,883 24,650 24,650 18,197
Dec-97 23,293 22,964 21,772 22,449 22,449 16,705
Mar-98 25,534 25,153 23,829 24,528 24,528 18,689
Jun-98 24,566 24,177 22,909 23,517 23,517 17,615
Sep-98 19,923 19,552 18,554 19,006 19,006 13,676
Dec-98 25,009 24,516 23,256 23,788 23,788 16,909
Mar-99 25,692 25,173 23,884 24,125 24,369 16,625
</TABLE>
FOR PERIOD ENDING MARCH 31, 1999
AVERAGE ANNUAL TOTAL RETURN
1 YEAR 3 YEAR 5 YEAR FROM INCEPTION
------ ------ ------ --------------
Institutional Class 0.62% 12.00% 21.12% 18.56%
Service Class 0.09% 11.61% 20.64% 18.12%
Investor A Class (Load Adjusted) (4.30)% 9.82% 19.40% 17.01%
Investor A Class (NAV) 0.23% 11.52% 20.51% 17.98%
Investor B Class (Load Adjusted) (5.14)% 9.33% 19.40% 17.21%
Investor B Class (NAV) (0.65)% 10.64% 19.88% 17.43%
Investor C Class (Load Adjusted) (1.64)% 10.64% 19.88% 17.43%
Investor C Class (NAV) (0.65)% 10.64% 19.88% 17.43%
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 16 for further information on how
performance data was calculated.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
8
<PAGE>
BLACKROCK FUNDS
MICRO-CAP EQUITY PORTFOLIO
TOTAL NET ASSETS (3/31/99):
$41.4 MILLION
PERFORMANCE BENCHMARK:
WILSHIRE MICRO CAP 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 BETWEEN $25 MILLION AND $300 MILLION.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
(BULLET) THE PORTFOLIO HAS SIGNIFICANTLY OUTPERFORMED ITS BENCHMARK SINCE
ITS MAY 1998 INCEPTION. SINCE INCEPTION, TECHNOLOGY HAS BEEN THE PORTFOLIO'S
LARGEST SECTOR ALLOCATION, COMPRISING APPROXIMATELY 56% OF THE PORTFOLIO AT THE
END OF THE PERIOD.
(BULLET) THE PORTFOLIO'S TECHNOLOGY SECTOR OVERWEIGHT, IN ADDITION TO
UNDERWEIGHT POSITIONS IN CONSUMER NON-DURABLES, TRANSPORTATION AND MANUFACTURING
LED TO THE PORTFOLIO'S OUTPERFORMANCE.
(BULLET) THE PORTFOLIO ACTIVELY PARTICIPATED IN INTERNET STOCKS AND IPOS
DURING THE PERIOD, WHICH ALSO POSITIVELY IMPACTED PERFORMANCE.
Although the portfolio holdings and sectors listed above were current as of the
end of the semi-annual period ended March 31, 1999, the Portfolio is actively
managed and the composition will vary.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE MICRO-CAP
EQUITY PORTFOLIO AND THE WILSHIRE MICRO CAP INDEX FROM INCEPTION AND AT EACH
MONTH END.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INSTITUTIONAL SERVICE INVESTOR A INVESTOR B INVESTOR C WILSHIRE
CLASS CLASS CLASS CLASS CLASS MICRO CAP
<S> <C> <C> <C> <C> <C> <C>
May 1-98 $10,000 $10,000 $ 9,550 $10,000 $10,000 $10,000
May-98 10,570 10,570 10,042 10,570 10,570 9,506
Jun-98 10,951 10,951 10,403 10,951 10,951 9,461
Jul-98 10,861 10,861 10,318 10,861 10,861 8,860
Aug-98 8,710 8,710 8,275 8,701 8,701 6,995
Sep-98 9,391 9,391 8,911 9,370 9,370 7,251
Oct-98 9,051 9,051 8,589 9,020 9,020 7,404
Nov-98 10,960 10,950 10,394 10,910 10,910 7,974
Dec-98 13,031 13,010 12,351 12,960 12,960 9,017
Jan-99 13,880 13,860 13,159 13,789 13,789 9,431
Feb-99 13,131 13,110 12,446 13,039 13,039 8,785
Mar-99 15,880 15,850 15,039 15,031 15,582 8,308
</TABLE>
FOR PERIOD ENDING MARCH 31, 1999
AVERAGE ANNUAL TOTAL RETURN
1 YEAR FROM INCEPTION
Institutional Class N/A 65.57%
Service Class N/A 65.23%
Investor A Class (Load Adjusted) N/A 55.97%
Investor A Class (NAV) N/A 65.00%
Investor B Class (Load Adjusted) N/A 55.95%
Investor B Class (NAV) N/A 63.98%
Investor C Class (Load Adjusted) N/A 62.19%
Investor C Class (NAV) N/A 63.98%
The inception dates of the Portfolio's share classes were as follows:
Institutional, Service, Investor A, Investor B, and Investor C Shares was
5/1/98. See "Note on Performance Information" on page 16 for further information
on how performance data was calculated.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
9
<PAGE>
BLACKROCK FUNDS
INTERNATIONAL EQUITY PORTFOLIO
TOTAL NET ASSETS (3/31/99):
$1.3 BILLION
PERFORMANCE BENCHMARK:
MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE, AUSTRALIA AND
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 COMBINATION OF FALLING INTEREST RATES THROUGHOUT THE WORLD AND
ROBUST ECONOMIC FORECASTS HAS HELPED RENEW INVESTOR CONFIDENCE INTHE GLOBAL
CAPITAL MARKETS.
(BULLET) THE PORTFOLIO'S OVERWEIGHT POSITIONS TO JAPAN AND SINGAPORE
RELATIVE TO THE INDEX AIDED PERFORMANCE DURING THE PERIOD. JAPANESE STOCKS
APPEAR TO BE ON THE ROAD TO RECOVERY, AS THE GOVERNMENT'S INJECTION OF CASH INTO
THE BANKING SYSTEM AND THE ANNOUNCEMENT OF SEVERAL CORPORATE RESTRUCTURINGD HAVE
CONTRIBUTED TO THE STRENGTH IN THAT MARKET.
(BULLET) CONTINENTAL EUROPE'S STRENGTH ON THE INTRODUCTION OF THE EURO
QUICKLY GAVE WAY TO PROFIT TAKING. CORPORATE ACTIVITY IN THE BANKING AND TELECOM
SECTORS BUOYED PORTFOLIO HOLDINGS IN THE FRENCH AND ITALIAN MARKETS. UK ISSUES
IN THE PORTFOLIO BENEFITTED FROM AN INTEREST RATE CUT AND THE MANAGER BELIEVES
THE UK TO BE ATTRACTIVE DUE TO THE POSSIBILITY OF FUTURE CUTS TO BRING UK
INTEREST RATES IN LINE WITH THE REST OF EUROPE.
Although the portfolio holdings and sectors listed above were current as of the
end of the semi-annual period ended March 31, 1999, 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.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INSTITUTIONAL SERVICE INVESTOR A INVESTOR B INVESTOR C MSCI EAFE
CLASS CLASS CLASS CLASS CLASS INDEX
<S> <C> <C> <C> <C> <C> <C>
Apr-27-92 $10,000 $10,000 $ 9,500 $10,000 $10,000 $10,000
Jun-92 10,429 10,429 9,908 10,430 10,430 9,529
Sep-92 9,938 9,938 9,442 9,939 9,939 9,682
Dec-92 9,816 9,816 9,327 9,817 9,817 9,317
Mar-93 10,962 10,962 10,415 10,963 10,963 10,443
Jun-93 11,602 11,602 11,024 11,604 11,604 11,502
Sep-93 12,692 12,692 12,058 12,693 12,693 12,273
Dec-93 13,435 13,423 12,747 13,418 13,418 12,386
Mar-94 13,591 13,569 12,886 13,564 13,564 12,827
Jun-94 13,643 13,621 12,916 13,596 13,596 13,492
Sep-94 14,050 14,007 13,293 13,992 13,992 13,513
Dec-94 13,468 13,428 12,732 13,392 13,392 13,385
Mar-95 13,371 13,332 12,630 13,263 13,263 13,644
Jun-95 13,854 13,796 13,069 13,692 13,692 13,753
Sep-95 14,394 14,318 13,560 14,185 14,185 14,337
Dec-95 14,807 14,730 13,954 14,580 14,580 14,929
Mar-96 15,165 15,076 14,271 14,877 14,877 15,371
Jun-96 15,849 15,733 14,893 15,496 15,496 15,625
Sep-96 15,548 15,422 14,587 15,152 15,152 15,616
Dec-96 16,070 15,929 15,068 15,626 15,626 15,876
Mar-97 15,960 15,795 14,942 15,470 15,470 15,638
Jun-97 17,699 17,501 16,530 17,095 17,095 17,679
Sep-97 17,869 17,658 16,679 17,215 17,215 17,566
Dec-97 16,914 16,698 15,758 16,245 16,245 16,201
Mar-98 19,350 19,085 18,010 18,530 18,530 18,596
Jun-98 19,487 19,198 18,093 18,591 18,591 18,806
Sep-98 16,611 16,363 15,419 15,806 15,806 16,145
Dec-98 19,525 19,219 18,124 18,521 18,521 19,495
Mar-99 19,819 19,498 18,361 18,740 18,740 19,779
</TABLE>
FOR PERIOD ENDING MARCH 31, 1999
AVERAGE ANNUAL TOTAL RETURN
1 YEAR 3 YEAR 5 YEAR FROM INCEPTION
------ ------ ------ --------------
Institutional Class 2.44% 9.32% 7.84% 10.37%
Service Class 2.16% 8.96% 7.52% 10.11%
Investor A Class (Load Adjusted) (3.16)% 6.92% 6.25% 9.16%
Investor A Class (NAV) 1.95% 8.77% 7.34% 9.98%
Investor B Class (Load Adjusted) (3.39)% 6.73% 6.26% 9.49%
Investor B Class (NAV) 1.14% 8.01% 6.69% 9.49%
Investor C Class (Load Adjusted) 0.13% 8.01% 6.69% 9.49%
Investor C Class (NAV) 1.14% 8.01% 6.69% 9.49%
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 16 for further
information on how performance data was calculated.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
10
<PAGE>
BLACKROCK FUNDS
INTERNATIONAL SMALL CAP EQUITY PORTFOLIO
TOTAL NET ASSETS (3/31/99):
$18.4 MILLION
PERFORMANCE BENCHMARK:
SALOMON BROTHERS EXTENDED MARKETS WORLD EX-U.S. INDEX
(EMW INDEX)
INVESTMENT APPROACH:
PURSUES LONG-TERM CAPITAL APPRECIATION BY INVESTING IN NON-DOLLAR
DENOMINATED STOCKS OF SMALL CAP COMPANIES IN COUNTRIES INCLUDED IN THE EMW
INDEX, WHICH THE MANAGER BELIEVES 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 $2 BILLION.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
(BULLET) THE PORTFOLIO ENDED THE PERIOD OVERWEIGHT THE UNITED KINGDOM AND
CONTINENTAL EUROPE AND UNDERWEIGHT IN THE PACIFIC BASIN REQION RELATIVE TO THE
INDEX. FOR THE PERIOD, THE OVERWEIGHT POSITION IN CONTINENTAL EUROPE AND THE
UNDERWEIGHT POSITION IN THE PACIFIC BASIN DETRACTED FROM OVERALL RETURNS.
(BULLET) THE POTFOLIO HAS BEEN REWARDED FOR ITS OVERWEIGHT IN THE UNITED
KINGDOM AS INCREASED CORPORATE ACTIVITY CONTINUES TO BE A MAJOR CONTRIBUTOR TO
THE STRONG PERFORMANCE IN THE SMALL CAP MARKET.
(BULLET) GOING FORWARD, THE MANAGER MAY LOOK TO INCREASE POSITIONS IN JAPAN
AND THE REST OF THE PACIFIC BASIN IN LIGHT OF INCREASING LIQUIDITY.
ADDITIONALLY, THE MANAGER BELIEVES CONTINENTAL EUROPE TO BE ATTRACTIVE DUE TO
THE HIGH LEVELS OF LIQUIDITY, ONGOING CORPORATE ACTIVITY AND SOLID EARNINGS
MOMENTUM.
Although the portfolio holdings and sectors listed above were current as of the
end of the semi-annual period ended March 31, 1999, 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 EMW EXUS FROM INCEPTION AND AT EACH
PERIOD END.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<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>
Sep-26-97 $10,000 $10,000 $ 9,500 $10,000 $10,000 $10,000
Dec-97 9,458 9,447 8,996 9,458 9,458 8,943
Mar-98 11,354 11,343 10,786 11,324 11,324 10,431
Jun-98 11,966 11,954 11,348 11,896 11,896 10,393
Sep-98 9,588 9,587 9,090 9,508 9,508 8,821
Dec-98 10,510 10,506 9,934 10,367 10,367 9,982
Mar-99 10,736 10,709 10,125 10,145 10,568 10,123
</TABLE>
FOR PERIOD ENDING MARCH 31, 1999
AVERAGE ANNUAL TOTAL RETURN
1 YEAR FROM INCEPTION
------ --------------
Institutional Class (5.44)% 4.99%
Service Class (5.58)% 4.80%
Investor A Class (Load Adjusted) (10.85)% 0.84%
Investor A Class (NAV) (6.12)% 4.35%
Investor B Class (Load Adjusted) (10.91)% 0.89%
Investor B Class (NAV) (6.68)% 3.65%
Investor C Class (Load Adjusted) (7.61)% 3.65%
Investor C Class (NAV) (6.68)% 3.65%
The inception dates of the Portfolio's share classes were as follows:
Institutional, Service, Investor A, Investor B, and Investor C Shares was
9/26/97. See "Note on Performance Information" on page 16 for further
information on how performance data was calculated.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
11
<PAGE>
BLACKROCK FUNDS
INTERNATIONAL EMERGING MARKETS PORTFOLIO
TOTAL NET ASSETS (3/31/99):
$67.5 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) EMERGING MARKETS BENEFITED FROM ENHANCED LIQUIDITY ACROSS THE
GLOBAL MARKETS OVER THE PERIOD. DERSPITE BRAZIL'S DEVALUATION OF THEIR CURRENCY,
WORLDWIDE EMERGING MARKETS AS A GROUP POSTED STRONG RETURNS. IN THE WAKE OF THIS
PAST SUMMER'S TURBULENCE, THE PORTFOLIO HAS BEEN STRUCTURED TO FOCUS ON STOCKS
THAT OFFER MORE LIQUIDITY.
(BULLET) THE PORTFOLIO WAS REWARDED FOR ITS OVERWEIGHT VERSUS THE INDEX IN
ASIA AND MEXICO AND HAS GENERALY BENEFITED AS LIQUIDITY RETURNED TO THE REGIONS
BUOYED BY INVESTOR ANTICIPATION OF ECONOMIC RECOVERY.
(BULLET) THE PORTFOLIO DID NOT FULLY PARTICPATE IN THE EASTERN EUROPEAN
RALLY DURING THE PERIOD DUE TO ITS UNDERWEIGHT IN THAT REGION RELATIVE TO THE
INDEX. THE MANAGER BELIEVES THAT THIS REGION IS THE LEAST LIKELY TO BENEFIT FROM
GLOBAL REFLATION AND ANY INTENSIFIED NATO ACTIONS IN THE BALKANS WOULD FURTHER
DIM THE MANAGER'S OUTLOOK ON THAT REGION.
Although the portfolio holdings and sectors listed above were current as of the
end of the semi-annual period ended March 31, 1999, 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.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INSTITUTIONAL SERVICE INVESTOR A INVESTOR B INVESTOR C MSCI EMERGING
CLASS CLASS CLASS CLASS CLASS FREE INDEX
<S> <C> <C> <C> <C> <C> <C>
Jun-17-94 $10,000 $10,000 $ 9,500 $10,000 $10,000 $10,000
Jun-94 9,960 9,960 9,462 9,960 9,960 10,058
Sep-94 10,560 10,550 10,013 10,540 10,540 12,076
Dec-94 9,142 9,131 8,665 9,121 9,121 10,340
Mar-95 8,071 8,060 7,637 8,039 8,039 9,060
Jun-95 8,758 8,736 8,272 8,707 8,707 10,001
Sep-95 8,478 8,450 7,997 8,418 8,418 9,937
Dec-95 7,992 7,955 7,529 7,925 7,925 9,803
Mar-96 8,810 8,760 8,291 8,727 8,727 10,413
Jun-96 9,327 9,267 8,770 9,221 9,221 10,848
Sep-96 9,069 9,008 8,515 8,943 8,943 10,456
Dec-96 8,973 8,905 8,418 8,820 8,820 10,394
Mar-97 10,197 10,114 9,552 9,743 9,743 11,274
Jun-97 10,954 10,856 10,244 10,436 10,436 12,276
Sep-97 10,080 9,976 9,411 9,573 9,573 11,175
Dec-97 8,160 8,073 7,611 7,730 7,730 9,217
Mar-98 8,117 8,021 7,561 7,659 7,659 9,788
Jun-98 6,286 6,218 5,845 5,913 5,913 7,478
Sep-98 4,677 4,627 4,349 4,391 4,391 5,832
Dec-98 5,171 5,101 4,798 4,841 4,841 6,881
Mar-99 5,406 5,334 5,007 4,944 5,045 7,737
</TABLE>
FOR PERIOD ENDING MARCH 31, 1999
AVERAGE ANNUAL TOTAL RETURN
1 YEAR 3 YEAR FROM INCEPTION
------ ------ --------------
Institutional Class (33.40)% (15.02)% (12.05)%
Service Class (33.51)% (15.25)% (12.30)%
Investor A Class (Load Adjusted) (37.09)% (16.90)% (13.45)%
Investor A Class (NAV) (33.77)% (15.47)% (12.51)%
Investor B Class (Load Adjusted) (37.07)% (17.13)% (13.22)%
Investor B Class (NAV) (34.13)% (16.00)% (12.85)%
Investor C Class (Load Adjusted) (34.79)% (16.00)% (12.85)%
Investor C Class (NAV) (34.13)% (16.00)% (12.85)%
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 16 for further information on how
performance data was calculated.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
12
<PAGE>
BLACKROCK FUNDS
SELECT EQUITY PORTFOLIO
TOTAL NET ASSETS (3/31/99):
$1.9 BILLION
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 PORTFOLIO REMAINS DESIGNED TO EMPHASIZE UNDERVALUED SECURITIES
THAT CAN PROVIDE GOOD LONG-TERM GROWTH OPPORTUNITIES WHILE REMAINING NEUTRAL TO
THE S&P 500 INDEX.
(BULLET) OVER THE PERIOD, THE MANAGER RESTRUCTURED THE PORTFOLIO'S ENERGY
SECTOR HOLDINGS, INCREASING EXPOSURE TO COMPANIES WHOSE STOCK PRICES ARE
SENSITIVE TO RISING OIL PRICES. THIS STRATEGY POSTED STRONG RETURNS IN THE FIRST
THREE MONTHS OF 1999. ONE PORTFOLIO HOLDING, UNOCAL, RECOVERED FROM A WEAK
FOURTH QUARTER OF 1998 TO RETURN 27% IN THE FIRST QUARTER OF 1999.
(BULLET) WHILE NOT A TRADITIONAL VALUE ISSUE, THE MANAGER PURCHASED AOL
AFTER THE STOCK WAS ADDED TO THE S&P 500 INDEX. OTHER STRONG TECHNOLOGY
PERFORMERS IN THE PORTFOLIO INCLUDED MICROSOFT AND APPLIED MATERIALS.
Although the portfolio holdings and sectors listed above were current as of the
end of the semi-annual period ended March 31, 1999, 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.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<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-13-93 $10,000 $10,000 $ 9,550 $10,000 $10,000 $10,000
Sep-93 9,970 9,970 9,521 9,970 9,970 10,058
Dec-93 10,114 10,108 9,653 10,108 10,108 10,232
Mar-94 9,730 9,718 9,278 9,715 9,715 9,844
Jun-94 9,784 9,766 9,331 9,770 9,770 9,886
Sep-94 10,148 10,124 9,659 10,114 10,114 10,369
Dec-94 9,987 9,958 9,498 9,945 9,945 10,367
Mar-95 10,911 10,872 10,366 10,855 10,855 11,377
Jun-95 11,704 11,643 11,098 11,621 11,621 12,463
Sep-95 12,561 12,497 11,908 12,470 12,470 13,454
Dec-95 13,312 13,223 12,595 13,189 13,189 14,264
Mar-96 13,989 13,898 13,221 13,844 13,844 15,030
Jun-96 14,630 14,513 13,812 14,443 14,443 15,705
Sep-96 15,054 14,924 14,197 14,821 14,821 16,190
Dec-96 16,469 16,316 15,528 16,160 16,160 17,539
Mar-97 16,904 16,735 15,922 16,084 16,084 18,009
Jun-97 19,856 19,649 18,674 19,367 19,367 21,152
Sep-97 21,448 21,210 20,152 20,852 20,852 22,761
Dec-97 21,648 21,392 20,317 20,986 20,986 23,407
Mar-98 24,633 24,329 23,098 23,812 23,812 26,675
Jun-98 25,175 24,847 23,583 24,272 24,272 27,561
Sep-98 22,320 22,010 20,883 21,456 21,456 24,843
Dec-98 26,974 26,583 25,204 25,849 25,849 30,137
Mar-99 28,177 27,748 26,315 26,644 26,913 31,632
</TABLE>
FOR PERIOD ENDING MARCH 31, 1999
AVERAGE ANNUAL TOTAL RETURN
1 YEAR 3 YEAR 5 YEAR FROM INCEPTION
------ ------ ------ --------------
Institutional Class 14.39% 26.30% 23.70% 20.53%
Service Class 14.06% 25.92% 23.35% 20.22%
Investor A Class (Load Adjusted) 8.78% 23.87% 22.44% 19.06%
Investor A Class (NAV) 13.92% 25.79% 23.19% 20.05%
Investor B Class (Load Adjusted) 7.95% 23.31% 22.11% 19.33%
Investor B Class (NAV) 13.03% 24.79% 22.61% 19.54%
Investor C Class (Load Adjusted) 11.90% 24.79% 22.61% 19.54%
Investor C Class (NAV) 13.03% 24.79% 22.61% 19.54%
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 16 for further
information on how performance data was calculated.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
13
<PAGE>
BLACKROCK FUNDS
INDEX EQUITY PORTFOLIO
ADVISOR TO THE INDEX MASTER PORTFOLIO:
DIMENSIONAL FUND ADVISORS INC.
TOTAL NET ASSETS (3/31/99):
$1.4 BILLION
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.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<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-20-92 $10,000 $10,000 $ 9,700 $10,000 $10,000 $10,000
Jun-92 9,870 9,870 9,574 9,870 9,870 9,899
Sep-92 10,161 10,161 9,857 10,161 10,161 10,212
Dec-92 10,659 10,659 10,339 10,659 10,659 10,726
Mar-93 11,118 11,118 10,784 11,118 11,118 11,194
Jun-93 11,139 11,139 10,805 11,139 11,139 11,249
Sep-93 11,423 11,417 11,073 11,415 11,415 11,539
Dec-93 11,676 11,664 11,308 11,657 11,657 11,806
Mar-94 11,197 11,181 10,824 11,159 11,159 11,359
Jun-94 11,254 11,231 10,878 11,214 11,214 11,406
Sep-94 11,771 11,739 11,366 11,718 11,718 11,964
Dec-94 11,770 11,731 11,357 11,708 11,708 11,962
Mar-95 12,900 12,850 12,415 12,799 12,799 13,127
Jun-95 14,134 14,070 13,613 14,034 14,034 14,379
Sep-95 15,221 15,143 14,636 15,088 15,088 15,522
Dec-95 16,130 16,036 15,505 15,985 15,985 16,457
Mar-96 16,959 16,836 16,276 16,763 16,763 17,339
Jun-96 17,702 17,562 16,974 17,466 17,466 18,117
Sep-96 18,237 18,089 17,462 17,946 17,946 18,677
Dec-96 19,737 19,563 18,891 19,371 19,371 20,235
Mar-97 20,250 20,055 19,359 19,422 19,422 20,776
Jun-97 23,757 23,512 22,689 22,722 22,722 24,401
Sep-97 25,529 25,248 24,359 24,324 24,324 26,258
Dec-97 26,234 25,924 24,987 24,927 24,927 27,004
Mar-98 29,880 29,497 28,421 28,305 28,305 30,773
Jun-98 30,848 30,429 29,336 29,137 29,137 31,795
Sep-98 27,804 27,404 26,396 26,182 26,182 28,660
Dec-98 33,723 33,219 31,987 31,657 31,657 34,768
Mar-99 35,342 34,791 33,490 33,078 33,078 36,492
</TABLE>
FOR PERIOD ENDING MARCH 31, 1999
AVERAGE ANNUAL TOTAL RETURN
1 YEAR 3 YEAR 5 YEAR FROM INCEPTION
------ ------ ------ --------------
Institutional Class 18.29% 27.74% 25.85% 19.92%
Service Class 17.96% 27.38% 25.49% 19.65%
Investor A Class (Load Adjusted) 14.30% 25.91% 24.59% 18.99%
Investor A Class (NAV) 17.84% 27.19% 25.35% 19.51%
Investor B Class (Load Adjusted) 11.62% 24.79% 24.28% 19.13%
Investor B Class (NAV) 16.86% 26.28% 24.78% 19.13%
Investor C Class (Load Adjusted) 15.69% 26.28% 24.78% 19.13%
Investor C Class (NAV) 16.86% 26.28% 24.78% 19.13%
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 16 for further
information on how performance data was calculated.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
14
<PAGE>
BLACKROCK FUNDS
BALANCED PORTFOLIO
TOTAL NET ASSETS (3/31/99):
$848.7 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 at minimum a 25% allocation fixed income securities.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
(BULLET) Within the equity portion of the Portfolio, the Manager has
maintained relatively neutral sector weights to the Index, with stock selection
providing the outperformance versus the Index. The Portfolio's consumer
cyclicals were boosted by an overweight to the auto sector, particularly General
Motors, and the retail industry, where Wal-Mart, Staples and Lowes contributed
strongly. The Portfolio's technology holdings posted strong gains throughout
1998 but lagged during the first quarter of 1999, with strong performance from
Microsoft, Cisco and Motorola more than offset by poor showings from Compaq,
Xerox, Intel and Lucent.
(BULLET) Within the fixed income portion, the Portfolio maintained an
overweight position versus the Index in the mortgage pass-through and
asset-backed security sectors, as the Manager believed these sectors offered
attractive yields and total return opportunities relative to Treasuries. The
Portfolio's corporate bond exposure was increased during the period but remains
underweight to the Index, as the Manager believes that other spread products
offer better relative value. Within the Portfolio's corporate weighting, the
Manager has emphasized BBB-rated securities in an attempt to capitalize upon
narrowing credit spreads.
Although the portfolio holdings and sectors listed above were current as of the
end of the semi-annual period ended March 31, 1999, 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.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INSTITUTIONAL SERVICE INVESTOR A INVESTOR B INVESTOR C 65% S&P 500
CLASS CLASS CLASS CLASS CLASS 35% SALOMON BIG INDEX
<S> <C> <C> <C> <C> <C> <C>
May-14-90 $10,000 $10,000 $ 9,550 $10,000 $10,000 $10,000
JUN-90 10,240 10,240 9,779 10,240 10,240 9,726
SEP-90 9,236 9,236 8,821 9,236 9,236 10,185
DEC-90 9,998 9,998 9,548 9,998 9,998 9,258
MAR-91 10,827 10,827 10,340 10,827 10,827 9,898
JUN-91 10,796 10,796 10,310 10,796 10,796 10,866
SEP-91 11,459 11,459 10,943 11,459 11,459 10,858
DEC-91 12,243 12,243 11,692 12,243 12,243 11,392
MAR-92 12,165 12,165 11,618 12,165 12,165 12,151
JUN-92 12,469 12,469 11,908 12,469 12,469 11,848
SEP-92 13,197 13,197 12,603 13,197 13,197 12,102
DEC-92 13,690 13,690 13,074 13,690 13,690 12,471
MAR-93 14,160 14,160 13,523 14,160 14,160 12,830
JUN-93 14,481 14,481 13,829 14,481 14,481 13,322
SEP-93 14,894 14,888 14,215 14,885 14,885 13,430
DEC-93 15,309 15,294 14,600 15,288 15,288 13,716
MAR-94 14,821 14,797 14,109 14,774 14,774 13,864
JUN-94 14,647 14,615 13,941 14,598 14,598 13,328
SEP-94 14,876 14,833 14,144 14,810 14,810 13,254
DEC-94 14,827 14,776 14,082 14,725 14,725 13,636
MAR-95 15,802 15,741 14,996 15,666 15,666 13,590
JUN-95 16,989 16,910 16,105 16,788 16,788 14,627
SEP-95 17,900 17,789 16,950 17,640 17,640 15,778
DEC-95 18,937 18,805 17,914 18,613 18,613 16,629
MAR-96 19,418 19,285 18,351 19,033 19,033 17,464
JUN-96 20,002 19,837 18,884 19,547 19,547 17,902
SEP-96 20,484 20,301 19,320 19,956 19,956 18,385
DEC-96 21,872 21,661 20,609 21,245 21,245 18,803
MAR-97 22,143 21,913 20,844 21,452 21,452 19,951
JUN-97 25,000 24,728 23,517 24,272 24,272 20,202
SEP-97 26,306 25,999 24,721 25,462 25,462 22,677
DEC-97 27,079 26,743 25,423 26,126 26,126 23,976
MAR-98 29,565 29,163 27,717 28,433 28,433 26,287
JUN-98 30,591 30,169 28,645 29,326 29,326 27,076
SEP-98 29,153 28,712 27,242 27,889 27,854 25,771
DEC-98 33,033 32,517 30,862 31,597 31,475 29,293
MAR-99 33,968 33,414 31,692 32,449 32,271 30,184
</TABLE>
FOR PERIOD ENDING MARCH 31, 1999
AVERAGE ANNUAL TOTAL RETURN
1 YEAR 3 YEAR 5 YEAR FROM INCEPTION
------ ----- ------ --------------
Institutional Class 14.90% 20.49% 18.04% 14.75%
Service Class 14.57% 20.11% 17.69% 14.54%
Investor A Class (Load Adjusted) 9.17% 18.13% 16.49% 13.86%
Investor A Class (NAV) 14.34% 19.97% 17.57% 14.45%
Investor B Class (Load Adjusted) 8.37% 17.64% 16.33% 14.03%
Investor B Class (NAV) 13.50% 19.05% 16.80% 14.03%
Investor C Class (Load Adjusted) 12.37% 19.05% 16.80% 14.03%
Investor C Class (NAV) 13.50% 19.05% 16.80% 14.03%
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 16 for further
information on how performance data was calculated.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
15
<PAGE>
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, Mid-Cap Value Equity, Mid-Cap Growth
Equity, Small Cap Value Equity, Small Cap Growth Equity, Micro-Cap 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 Portfolio's 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.
16
<PAGE>
BLACKROCK FUNDS
SCHEDULE OF INVESTMENTS
LARGE CAP VALUE EQUITY PORTFOLIO
Number
AS OF MARCH 31, 1999 (UNAUDITED) of Shares Value
---------- --------------
COMMON STOCKS -- 98.9%
AEROSPACE -- 3.5%
Allied-Signal, Inc. 1,297,200 $ 63,806,025
Boeing Co. 331,300 11,305,612
Northrop Grumman Corp. 209,500 12,543,812
--------------
87,655,449
--------------
AIR TRANSPORTATION -- 2.3%
AMR Corp.** 224,700 13,158,994
Continental Airlines, Class B** 637,600 24,228,800
Delta Air Lines, Inc. 269,400 18,723,300
--------------
56,111,094
--------------
AUTOMOTIVE -- 1.4%
Dana Corp. 529,700 20,128,600
Lear Corp.** 350,800 14,974,775
--------------
35,103,375
--------------
BANKS -- 11.1%
Bank One Corp. 1,342,013 73,894,591
BankAmerica Corp. 1,016,608 71,797,940
BankBoston Corp. 533,440 23,104,620
Chase Manhattan Corp. 634,500 51,592,781
Comerica, Inc. 306,600 19,143,337
First Union Corp. 234,300 12,520,406
National City Corp.** 183,400 12,173,175
U.S. Bancorp 376,100 12,810,906
--------------
277,037,756
--------------
BUSINESS SERVICES -- 0.5%
Varian Associates, Inc. 350,000 13,562,500
--------------
CHEMICALS -- 3.4%
Dow Chemical Co. 130,200 12,133,012
E.I. du Pont de Nemours & Co. 476,650 27,675,491
PPG Industries, Inc. 407,200 20,869,000
Union Carbide Corp. 543,500 24,559,406
--------------
85,236,909
--------------
COMPUTER & OFFICE EQUIPMENT -- 4.8%
Compaq Computer Corp. 282,800 8,961,225
International Business Machines
Corp. 369,500 65,493,875
Xerox Corp. 850,000 45,368,750
--------------
119,823,850
--------------
CONSUMER DURABLES -- 0.5%
Black & Decker Corp. 235,900 13,077,706
--------------
CONTAINERS -- 0.6%
Crown Cork & Seal Co., Inc. 530,900 15,163,831
--------------
ELECTRONICS -- 2.1%
General Electric Co. 261,440 28,921,800
Honeywell, Inc. 174,000 13,191,375
Texas Instruments, Inc. 103,700 10,292,225
--------------
52,405,400
--------------
ENERGY & UTILITIES -- 8.6%
Cinergy Corp. 359,200 9,878,000
Columbia Gas Systems, Inc. 742,850 38,813,912
Edison International 361,400 8,041,150
Entergy Corp. 479,800 13,194,500
FPL Group, Inc. 761,700 40,560,525
Number
of Shares Value
---------- --------------
ENERGY & UTILITIES (CONTINUED)
NIPSCO Industries, Inc. 415,700 $ 11,223,900
PacifiCorp 1,040,400 17,946,900
PECO Energy Co. 506,400 23,421,000
Southern Co. 1,392,900 32,471,981
Unicom Corp. 522,230 19,094,034
--------------
214,645,902
--------------
FINANCE -- 9.9%
CIT Group, Inc., Class A 827,200 25,281,300
Citigroup, Inc. 839,900 53,648,612
Federal National Mortgage
Association 178,100 12,333,425
Fleet Financial Group, Inc. 695,500 26,168,187
Household International, Inc. 579,640 26,446,075
Morgan Stanley, Dean Witter
& Co. 515,472 51,514,983
Washington Mutual, Inc. 663,850 27,134,869
Wells Fargo Co. 709,500 24,876,844
--------------
247,404,295
--------------
FOOD & AGRICULTURE -- 0.5%
Archer Daniels Midland Co. 867,505 12,741,480
--------------
INSURANCE -- 4.7%
Allstate Corp. 282,366 10,465,190
American General Corp. 245,200 17,286,600
Chubb Corp. 228,100 13,358,106
Cigna Corp. 387,200 32,452,200
Conseco, Inc. 703,900 21,732,912
MBIA, Inc. 396,100 22,973,800
--------------
118,268,808
--------------
MACHINERY & HEAVY EQUIPMENT -- 1.4%
Deere & Co. 525,400 20,293,575
Dover Corp. 437,400 14,379,525
--------------
34,673,100
--------------
MEDICAL & MEDICAL SERVICES -- 2.0%
Columbia Healthcare Corp. 699,200 13,241,100
Foundation Health Systems,
Inc.** 896,110 10,921,341
United Healthcare Corp. 467,700 24,612,712
--------------
48,775,153
--------------
METAL & MINING -- 1.4%
Alcoa, Inc. 584,000 24,053,500
Reynolds Metals Co. 244,800 11,826,900
--------------
35,880,400
--------------
MOTOR VEHICLES -- 3.5%
Ford Motor Co. 560,600 31,814,050
General Motors Corp. 388,304 33,733,910
Goodyear Tire & Rubber Co. 418,500 20,846,531
--------------
86,394,491
--------------
OIL & GAS -- 12.0%
Atlantic Richfield Co. 362,000 26,426,000
BP Amoco PLC ADR 258,900 26,132,719
Chevron Corp. 507,300 44,864,344
Exxon Corp. 829,900 58,559,819
Mobil Corp. 429,900 37,831,200
Phillips Petroleum Co. 520,400 24,588,900
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
17
<PAGE>
BLACKROCK FUNDS
SCHEDULE OF INVESTMENTS
LARGE CAP VALUE EQUITY PORTFOLIO (CONCLUDED)
Number
AS OF MARCH 31, 1999 (UNAUDITED) of Shares Value
---------- --------------
COMMON STOCKS (CONTINUED)
OIL & GAS (CONTINUED)
Royal Dutch Petroleum Co. 762,900 $ 39,670,800
Tenneco, Inc. 307,000 8,576,812
Ultramar Diamond Shamrock
Corp. 503,288 10,883,603
Unocal Corp. 580,000 21,351,250
--------------
298,885,447
--------------
PAPER & FOREST PRODUCTS -- 1.7%
Fort James Corp. 404,700 12,823,931
Kimberly-Clark Corp. 589,400 28,254,363
--------------
41,078,294
--------------
PHARMACEUTICALS -- 2.5%
American Home Products Corp. 249,800 16,299,450
Bristol-Myers Squibb Co. 316,700 20,367,769
Merck & Co., Inc. 160,900 12,902,169
Pharmacia & Upjohn, Inc. 222,100 13,853,488
--------------
63,422,876
--------------
REAL ESTATE -- 0.5%
Starwood Hotels & Resorts
Worldwide, Inc. 472,545 13,497,067
--------------
RETAIL MERCHANDISING -- 6.2%
Albertson's, Inc. 397,400 21,583,788
Federated Department Stores,
Inc.** 669,800 26,875,725
J.C. Penney Co., Inc. 515,600 20,881,800
Kmart Corp.** 1,712,500 28,791,406
Sears, Roebuck & Co. 603,800 27,284,213
Toys 'R' Us, Inc.** 1,479,000 27,823,688
--------------
153,240,620
--------------
TELECOMMUNICATIONS -- 11.7%
AT&T Corp. 978,400 78,088,550
Bell Atlantic Corp. 942,384 48,709,473
Bellsouth Corp. 424,600 17,010,538
GTE Corp. 532,700 32,228,350
SBC Communications, Inc. 937,868 44,197,030
Sprint Corp. (FON Group) 357,700 35,099,313
US West, Inc. 663,500 36,533,969
--------------
291,867,223
--------------
TOBACCO -- 1.1%
Philip Morris Cos., Inc. 751,850 26,455,723
--------------
TRANSPORTATION -- 1.0%
CSX Corp. 464,800 18,098,150
FDX Corp.** 67,300 6,246,281
--------------
24,344,431
--------------
TOTAL COMMON STOCKS
(Cost $1,967,318,094) 2,466,753,180
--------------
Par
Maturity (000) Value
---------- ---------- --------------
SHORT TERM INVESTMENTS -- 1.1%
Federal Home Loan Mortgage
Corp. Discount Notes
4.82% 04/01/99 $26,000 $ 26,000,000
Galileo Money Market Fund 1,019 1,018,713
--------------
TOTAL SHORT TERM INVESTMENTS
(Cost $27,018,713) 27,018,713
--------------
TOTAL INVESTMENTS IN
SECURITIES -- 100.0%
(Cost $1,994,336,807*) $2,493,771,893
==============
- --------------------
* Also cost for Federal income tax purposes. The gross unrealized appreciation
(depreciation) on a tax basis is as follows:
Gross unrealized appreciation $ 605,611,817
Gross unrealized depreciation (106,176,731)
-------------
$ 499,435,086
=============
** Non-income producing security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
18
<PAGE>
BLACKROCK FUNDS
STATEMENT OF ASSETS AND LIABILITIES
LARGE CAP VALUE EQUITY PORTFOLIO
MARCH 31, 1999 (UNAUDITED)
ASSETS
Investments at value (Cost $1,994,336,807) ................. $2,493,771,893
Collateral received for securities loaned .................. 228,626,734
Dividends receivable ....................................... 3,941,524
Interest receivable ........................................ 21,980
Investments sold receivable ................................ 9,006,488
Capital shares sold receivable ............................. 156,825
Prepaid expenses ........................................... 12,060
--------------
TOTAL ASSETS ........................................ 2,735,537,504
--------------
LIABILITIES
Payable upon return of securities loaned ................... 228,626,734
Capital shares redeemed payable ............................ 237,055
Advisor fee payable ........................................ 758,349
Adminstrative fee payable .................................. 497,927
Transfer agent fee payable ................................. 185,285
Other accrued expenses payable ............................. 822,852
--------------
TOTAL LIABILITIES ................................... 231,128,202
--------------
NET ASSETS .................................................... $2,504,409,302
==============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER INSTITUTIONAL SHARE AND
SERVICE SHARE ($2,406,194,956 / 149,191,949) ............... $16.13
======
NET ASSET VALUE AND REDEMPTION PRICE
PER INVESTOR A SHARE ($62,394,271 / 3,871,045) ............. $16.12
======
MAXIMUM OFFERING PRICE PER INVESTOR A SHARE
($16.12 / 0.955) ........................................... $16.88
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent deferred sales charge of 4.5%)
PER INVESTOR B SHARE ($32,156,659 / 2,010,534) ............. $15.99
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent deferred sales charge of 1.0%)
PER INVESTOR C SHARE ($3,663,416 / 229,049) ................ $15.99
======
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
19
<PAGE>
BLACKROCK FUNDS
SCHEDULE OF INVESTMENTS
LARGE CAP GROWTH EQUITY PORTFOLIO
Number
AS OF MARCH 31, 1999 (UNAUDITED) of Shares Value
---------- --------------
COMMON STOCKS -- 98.4%
ADVERTISING -- 0.7%
Omnicom Group, Inc. 137,000 $ 10,951,437
--------------
AEROSPACE -- 1.2%
Boeing Co. 91,170 3,111,176
General Dynamics Corp. 81,800 5,255,650
United Technologies Corp. 75,300 10,198,444
--------------
18,565,270
--------------
BANKS -- 1.6%
Fifth Third Bancorp 121,300 7,998,219
MBNA Corp. 305,250 7,287,844
U.S. Bancorp 251,900 8,580,344
--------------
23,866,407
--------------
BEVERAGES -- 3.2%
Coca-Cola Co. 566,500 34,768,937
PepsiCo, Inc. 365,800 14,334,787
--------------
49,103,724
--------------
BROADCASTING -- 1.5%
AT&T Corp. - Liberty Media Group,
Class A** 90,000 4,736,250
Clear Channel Communications,
Inc.** 170,000 11,400,625
Comcast Corp., Class A 108,300 6,816,131
--------------
22,953,006
--------------
CHEMICALS -- 1.4%
Clorox Co. 73,700 8,636,719
Ecolab, Inc. 152,400 5,410,200
Monsanto Co. 146,200 6,716,062
--------------
20,762,981
--------------
COMPUTER & OFFICE EQUIPMENT -- 8.7%
Cisco Systems, Inc.** 535,950 58,720,022
Compaq Computer Corp. 291,800 9,246,412
Dell Computer Corp.** 701,000 28,653,375
EMC Corp.** 183,300 23,416,575
International Business Machines
Corp. 29,900 5,299,775
Lexmark International Group,
Inc.** 49,800 5,565,150
--------------
130,901,309
--------------
COMPUTER SOFTWARE & SERVICES -- 9.6%
America Online, Inc.** 274,200 40,033,200
Automatic Data Processing, Inc. 285,500 11,812,562
BMC Software, Inc.** 124,000 4,595,750
Compuware Corp.** 179,200 4,278,400
Microsoft Corp.** 941,800 84,408,825
--------------
145,128,737
--------------
ELECTRONICS -- 12.1%
General Electric Co. 817,700 90,458,062
Intel Corp. 433,300 51,616,862
Linear Technology Corp. 119,300 6,114,125
Motorola, Inc. 122,200 8,951,150
Nokia Corp. ADR 69,200 10,777,900
Teradyne, Inc.** 65,400 3,568,387
Texas Instruments, Inc. 122,900 12,197,825
--------------
183,684,311
--------------
Number
of Shares Value
---------- --------------
ENTERTAINMENT & LEISURE -- 2.3%
Time Warner, Inc. 255,600 $ 18,163,575
Walt Disney Co. 512,800 15,960,900
--------------
34,124,475
--------------
FINANCE -- 5.5%
American Express Co. 81,200 9,541,000
Associates First Capital Corp.,
Class A 214,000 9,630,000
Capital One Financial Corp. 50,200 7,580,200
Charles Schwab Corp. 147,950 14,221,694
Citigroup, Inc. 121,400 7,754,425
Federal Home Loan Mortgage
Corp. 296,400 16,931,850
Federal National Mortgage
Association 139,300 9,646,525
Halliburton Co. 80,000 3,080,000
Paychex, Inc. 83,100 3,942,056
--------------
82,327,750
--------------
FOOD & AGRICULTURE -- 0.9%
Sara Lee Corp. 318,300 7,877,925
Sysco Corp. 198,500 5,223,031
--------------
13,100,956
--------------
INSURANCE -- 0.9%
American International Group, Inc. 114,600 13,823,625
--------------
MACHINERY & HEAVY EQUIPMENT -- 0.6%
Danaher Corp. 106,500 5,564,625
Illinois Tool Works, Inc. 52,000 3,217,500
--------------
8,782,125
--------------
MANUFACTURING -- 0.9%
Tyco International Ltd. 191,800 13,761,650
--------------
MEDICAL & MEDICAL SERVICES -- 1.2%
Baxter International, Inc. 92,500 6,105,000
IMS Health, Inc. 208,200 6,896,625
United Healthcare Corp. 87,600 4,609,950
--------------
17,611,575
--------------
MEDICAL INSTRUMENTS & SUPPLIES -- 1.9%
Cardinal Health, Inc. 134,800 8,896,800
Guidant Corp. 158,600 9,595,300
Medtronic, Inc. 149,800 10,748,150
--------------
29,240,250
--------------
PAPER & FOREST PRODUCTS -- 0.5%
Kimberly-Clark Corp. 174,200 8,350,712
--------------
PHARMACEUTICALS -- 17.7%
Abbott Laboratories 409,000 19,146,312
American Home Products Corp. 321,000 20,945,250
Amgen, Inc.** 188,800 14,136,400
Bristol-Myers Squibb Co. 448,600 28,850,587
Eli Lilly & Co. 242,500 20,582,188
Johnson & Johnson 331,600 31,066,775
Merck & Co., Inc. 598,600 48,000,238
Pfizer, Inc. 332,400 46,120,500
Schering-Plough Corp. 416,500 23,037,656
Warner-Lambert Co. 250,200 16,560,113
--------------
268,446,019
--------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
20
<PAGE>
BLACKROCK FUNDS
SCHEDULE OF INVESTMENTS
LARGE CAP GROWTH EQUITY PORTFOLIO (CONCLUDED)
Number
AS OF MARCH 31, 1999 (UNAUDITED) of Shares Value
---------- --------------
COMMON STOCKS (CONTINUED)
RESTAURANTS -- 1.0%
McDonald's Corp. 328,600 $ 14,889,688
--------------
RETAIL MERCHANDISING -- 10.2%
Best Buy, Inc.** 60,000 3,120,000
Costco Companies, Inc.** 69,100 6,326,969
Dayton Hudson Corp. 193,400 12,885,275
Gap, Inc. 156,250 10,517,578
Home Depot, Inc. 475,700 29,612,325
Kohl's Corp.** 99,700 7,066,238
Kroger Co.** 137,300 8,220,838
Lowe's Cos., Inc. 159,900 9,673,950
Safeway, Inc.** 158,000 8,107,375
Staples, Inc.** 339,500 11,161,063
Walgreen Co. 332,200 9,384,650
Wal-Mart Stores, Inc. 414,500 38,211,719
--------------
154,287,980
--------------
SERVICES - COMPUTER INTEGRATED
SYSTEMS DESIGN -- 1.2%
Sun Microsystems, Inc.** 148,600 18,565,713
--------------
SOAPS & COSMETICS -- 4.4%
Avon Products, Inc. 99,000 4,659,188
Estee Lauder Cos., Inc. 85,000 8,032,500
Gillette Co. 367,100 21,819,506
Procter & Gamble Co. 331,400 32,456,488
--------------
66,967,682
--------------
TELECOMMUNICATIONS -- 7.8%
Airtouch Communications, Inc.** 237,200 22,919,450
Century Telephone Enterprises, Inc. 113,100 7,945,275
Lucent Technologies, Inc. 387,200 41,720,800
MCI Worldcom, Inc.** 323,700 28,667,681
Oracle Corp.** 416,462 10,984,185
SBC Communications, Inc. 137,300 6,470,263
--------------
118,707,654
--------------
TOBACCO -- 1.4%
Philip Morris Cos., Inc. 610,800 21,492,525
--------------
TOTAL COMMON STOCKS
(Cost $835,849,894) 1,490,397,561
--------------
Par
Maturity (000) Value
-------- ---------- --------------
SHORT TERM INVESTMENTS -- 1.6%
Federal Home Loan Mortgage Corp.
Discount Notes
4.82% 04/01/99 $18,000 $ 18,000,000
4.74% 05/14/99 1,200*** 1,193,206
Galileo Money Market Fund 4,406 4,405,719
--------------
TOTAL SHORT TERM INVESTMENTS
(Cost $23,598,925) 23,598,925
--------------
TOTAL INVESTMENTS IN
SECURITES -- 100.0%
(Cost $859,448,819*) $1,513,996,486
==============
- --------------------
* Also cost for Federal income tax purposes. The gross unrealized appreciation
(depreciation) on a tax basis is as follows:
Gross unrealized appreciation $665,111,656
Gross unrealized depreciation (10,563,989)
------------
$654,547,667
============
**Non-income producing security.
***Principal amount of securities pledged as initial margin requirement of
$693,000 on 42 Standard & Poor's 500 Stock Index futures contracts expiring
June 1999. The value of such contracts on March 31, 1999 was $13,579,650,
thereby resulting in an unrealized loss of $289,275.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
21
<PAGE>
BLACKROCK FUNDS
STATEMENT OF ASSETS AND LIABILITIES
LARGE CAP GROWTH EQUITY PORTFOLIO
MARCH 31, 1999 (UNAUDITED)
ASSETS
Investments at value (Cost $859,448,819) ................... $1,513,996,486
Collateral received for securities loaned .................. 220,333,199
Dividends receivable ....................................... 1,318,490
Interest receivable ........................................ 30,969
Capital shares sold receivable ............................. 458,690
Prepaid expenses ........................................... 11,439
--------------
TOTAL ASSETS ........................................ 1,736,149,273
--------------
LIABILITIES
Payable upon return of securities loaned ................... 220,333,199
Investments purchased payable .............................. 4,748,865
Capital shares redeemed payable ............................ 221,070
Advisor fee payable ........................................ 678,346
Adminstrative fee payable .................................. 291,040
Transfer agent fee payable ................................. 138,243
Other accrued expenses payable ............................. 440,446
Futures margin payable ..................................... 235,200
--------------
TOTAL LIABILITIES ................................... 227,086,409
--------------
NET ASSETS .................................................... $1,509,062,864
==============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER INSTITUTIONAL SHARE ($1,168,068,439 / 51,466,767) ...... $22.70
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER SERVICE SHARE ($249,476,704 / 11,022,507) .............. $22.63
======
NET ASSET VALUE AND REDEMPTION PRICE
PER INVESTOR A SHARE ($59,519,797 / 2,640,434) ............. $22.54
======
MAXIMUM OFFERING PRICE PER INVESTOR A SHARE
($22.54 / 0.955) ........................................... $23.60
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent deferred sales charge of 4.5%)
PER INVESTOR B SHARE ($29,012,234 / 1,322,719) ............. $21.93
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent deferred sales charge of 1.0%)
PER INVESTOR C SHARE ($2,985,690 / 136,123) ................ $21.93
======
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
22
<PAGE>
BLACKROCK FUNDS
SCHEDULE OF INVESTMENTS
MID-CAP VALUE EQUITY PORTFOLIO
Number
AS OF MARCH 31, 1999 (UNAUDITED) of Shares Value
---------- --------------
COMMON STOCKS -- 98.9%
AIR TRANSPORTATION -- 2.0%
Airborne Freight Corp. 84,500 $ 2,630,062
Delta Air Lines, Inc. 38,200 2,654,900
--------------
5,284,962
--------------
AUTOMOTIVE -- 3.4%
Dana Corp. 72,300 2,747,400
Lear Corp.** 64,500 2,753,344
Navistar International** 82,500 3,315,469
--------------
8,816,213
--------------
BANKS -- 9.6%
Charter One Financial, Inc. 147,913 4,268,677
Commercial Federal Corp. 69,400 1,609,212
Compass Bancshares, Inc. 72,050 2,485,725
Huntington Bancshares, Inc. 84,030 2,599,678
Regions Financial Corp. 86,600 2,998,525
Sovereign Bancorp, Inc. 168,680 2,066,330
Summit Bancorp 94,500 3,685,500
Union Planters Corp. 70,900 3,115,169
UnionBanCal Corp. 69,500 2,367,344
--------------
25,196,160
--------------
BUSINESS SERVICES -- 1.4%
Equifax, Inc. 63,700 2,189,687
Modis Professional Services, Inc.** 172,300 1,561,469
---------------
3,751,156
--------------
CHEMICALS -- 3.0%
Air Products & Chemicals, Inc. 106,200 3,637,350
Ashland, Inc. 64,600 2,644,562
Union Carbide Corp. 35,500 1,604,156
--------------
7,886,068
--------------
COMPUTER & OFFICE EQUIPMENT -- 1.7%
Adobe Systems, Inc. 32,800 1,861,400
Gateway 2000, Inc.** 24,700 1,693,494
Seagate Technology, Inc.** 27,800 821,837
--------------
4,376,731
--------------
COMPUTER COMMUNICATIONS
EQUIPMENT -- 0.5%
3Com Corp.** 53,700 1,251,881
--------------
CONSTRUCTION -- 1.6%
Centex Corp. 54,600 1,822,275
Southdown, Inc. 45,200 2,426,675
--------------
4,248,950
--------------
CONTAINERS -- 1.3%
Owens-Illinois, Inc.** 135,100 3,377,500
--------------
DURABLE GOODS -- 1.1%
Whirlpool Corp. 53,300 2,898,187
--------------
ELECTRONICS -- 3.2%
Florida Progress Corp. 79,400 2,997,350
KLA- Tencor Corp.** 50,100 2,432,981
Vishay Intertechnology, Inc.** 208,445 3,035,480
--------------
8,465,811
--------------
Number
of Shares Value
---------- --------------
ENERGY & UTILITIES -- 10.0%
Ameren Corp. 69,988 $ 2,532,691
Cinergy Corp. 116,000 3,190,000
Columbia Gas Systems, Inc. 26,800 1,400,300
Edison International 125,200 2,785,700
El Paso Energy Corp. 103,100 3,370,081
Micron Technology, Inc. 27,800 1,341,350
New Century Energies, Inc. 66,800 2,275,375
PacifiCorp 79,600 1,373,100
Public Service Enterprise Group,
Inc. 44,700 1,706,981
Reliant Energy, Inc. 104,700 2,728,744
Unicom Corp. 90,900 3,323,531
--------------
26,027,853
--------------
FINANCE -- 3.1%
CIT Group, Inc., Class A 103,500 3,163,219
Finova Group, Inc. 53,200 2,759,750
Paine Webber Group, Inc. 53,600 2,137,300
--------------
8,060,269
--------------
FOOD & AGRICULTURE -- 3.6%
Food Lion, Inc., Class B 412,984 3,716,856
International Home Foods, Inc.** 188,800 3,032,600
Ralston Purina Group 95,631 2,552,152
--------------
9,301,608
--------------
INSURANCE -- 8.0%
Ace Ltd. 124,500 3,882,844
Allmerica Financial Corp. 77,100 4,245,319
Conseco, Inc. 100,900 3,115,287
Humana, Inc.** 158,600 2,735,850
Lincoln National Corp. 14,900 1,473,237
PartnerRe Ltd. 50,200 2,033,100
Provident Companies, Inc. 61,900 2,139,419
Reliastar Financial Corp. 30,400 1,295,800
--------------
20,920,856
--------------
LEASING -- 1.0%
Hertz Corp. 46,400 2,482,400
--------------
MACHINERY & HEAVY EQUIPMENT -- 2.8%
Case Corp. 61,000 1,547,875
Cooper Industries, Inc. 49,500 2,109,937
Ingersoll-Rand Co. 41,500 2,059,437
United Dominion Industries Ltd. ADR 74,400 1,478,700
--------------
7,195,949
--------------
MANUFACTURING -- 2.0%
ITT Industries, Inc. 79,300 2,805,237
Magna International, Inc. ADR 42,600 2,444,175
--------------
5,249,412
--------------
MEASURING & CONTROLLING DEVICES -- 1.2%
Honeywell, Inc. 41,000 3,108,312
--------------
MEDICAL & MEDICAL SERVICES -- 3.6%
Bergen Brunswig Corp. 119,300 2,386,000
Healthsouth Corp.** 197,100 2,044,912
Tenet Healthcare Corp.** 144,200 2,730,788
Wellpoint Health Networks, Inc.** 28,300 2,145,494
--------------
9,307,194
--------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
23
<PAGE>
BLACKROCK FUNDS
SCHEDULE OF INVESTMENTS
MID-CAP VALUE Equity Portfolio (CONCLUDED)
Number
AS OF MARCH 31, 1999 (UNAUDITED) of Shares Value
---------- --------------
COMMON STOCKS (CONTINUED)
MEDICAL INSTRUMENTS & SUPPLIES -- 0.7%
Beckman Coulter, Inc. 44,400 $ 1,953,600
--------------
METAL & MINING -- 1.9%
Nucor Corp. 57,200 2,520,375
Reynolds Metals Co. 51,100 2,468,769
--------------
4,989,144
--------------
OIL & GAS -- 6.3%
Burlington Resources, Inc. 69,100 2,759,681
Consolidated Natural Gas Co. 70,400 3,427,600
Diamond Offshore Drilling, Inc. 83,300 2,634,363
Unocal Corp. 90,400 3,327,850
USX-Marathon Group 158,800 4,367,000
--------------
16,516,494
--------------
PAPER & FOREST PRODUCTS -- 2.6%
Bowater, Inc. 65,100 2,579,588
Fort James Corp. 96,700 3,064,181
Georgia-Pacific Group 16,600 1,232,550
--------------
6,876,319
--------------
PERSONAL SERVICES -- 1.1%
Stewart Enterprises, Inc. 178,700 2,870,369
--------------
PLASTIC PRODUCTS -- 1.0%
Premark International, Inc. 81,200 2,674,525
--------------
PUBLISHING & PRINTING -- 1.2%
New York Times Co., Class A 109,800 3,129,300
--------------
REAL ESTATE -- 4.5%
Arden Realty, Inc. 92,475 2,057,569
Duke Realty Investments, Inc. 124,300 2,672,450
Equity Residential Properties Trust 45,100 1,860,375
Simon Property Group, Inc. 96,000 2,634,000
Starwood Hotels & Resorts
Worldwide, Inc. 88,600 2,530,638
--------------
11,755,032
--------------
RESTAURANTS -- 1.8%
Darden Restaurants, Inc. 85,800 1,769,625
Wendys International, Inc. 102,700 2,920,531
--------------
4,690,156
--------------
RETAIL MERCHANDISING -- 6.3%
American Stores Co. 74,900 2,471,700
Federated Department Stores, Inc.** 66,500 2,668,313
Fred Meyer, Inc.** 28,200 1,660,275
Kmart Corp.** 128,200 2,155,363
Rite Aid Corp. 76,200 1,905,000
Ross Stores, Inc. 57,000 2,497,313
Toys 'R' Us, Inc.** 159,400 2,998,713
--------------
16,356,677
--------------
SEMI-CONDUCTORS & RELATED DEVICES -- 0.7%
ST Microelectronics NV - New York,
Registered Shares** 18,900 1,835,663
--------------
TELECOMMUNICATIONS -- 1.7%
Alltel Corp. 53,900 3,362,013
General Instrument Corp.** 38,900 1,179,156
--------------
4,541,169
--------------
Number
of Shares Value
---------- --------------
TOBACCO -- 1.0%
RJR Nabisco Holdings Corp. 106,000 $ 2,650,000
--------------
TRANSPORTATION -- 1.4%
Kansas City Southern Industries, Inc. 65,900 3,756,300
--------------
UTILITIES -- 1.1%
DPL, Inc. 171,650 2,832,225
--------------
WASTE MANAGEMENT -- 1.5%
Browning-Ferris Industries, Inc. 98,700 3,806,119
--------------
TOTAL COMMON STOCKS
(Cost $258,262,016) 258,440,564
--------------
Par
Maturity (000)
-------- ----------
SHORT TERM INVESTMENTS -- 1.1%
Federal Home Loan Mortgage Corp.
Discount Notes
4.82% 04/01/99 $2,500 2,500,000
Galileo Money Market Fund 507 506,897
--------------
TOTAL SHORT TERM INVESTMENTS
(Cost $3,006,897) 3,006,897
--------------
TOTAL INVESTMENTS IN
SECURITIES -- 100.0%
(Cost $261,268,913*) $ 261,447,461
==============
- ---------------------
* Also cost for Federal income tax purposes. The gross unrealized appreciation
(depreciation) on a tax basis is as follows:
Gross unrealized appreciation $ 21,987,217
Gross unrealized depreciation (21,808,669)
------------
$ 178,548
============
** Non-income producing security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
24
<PAGE>
BLACKROCK FUNDS
STATEMENT OF ASSETS AND LIABILITIES
MID-CAP VALUE EQUITY PORTFOLIO
MARCH 31, 1999 (UNAUDITED)
ASSETS
Investments at value (Cost $261,268,913) ................... $261,447,461
Collateral received for securities loaned .................. 30,595,429
Dividends receivable ....................................... 501,878
Interest receivable ........................................ 4,399
Investments sold receivable ................................ 3,263,066
Capital shares sold receivable ............................. 2,936
Prepaid expenses ........................................... 15,882
------------
TOTAL ASSETS ........................................ 295,831,051
------------
LIABILITIES
Payable upon return of securities loaned ................... 30,595,429
Investments purchased payable .............................. 2,149,099
Capital shares redeemed payable ............................ 26,408
Advisor fee payable ........................................ 179,535
Adminstrative fee payable .................................. 51,181
Transfer agent fee payable ................................. 34,297
Other accrued expenses payable ............................. 76,431
------------
TOTAL LIABILITIES ................................... 33,112,380
------------
NET ASSETS .................................................... $262,718,671
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER INSTITUTIONAL SHARE ($211,823,405 / 18,602,304) ........ $11.39
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER SERVICE SHARE ($40,875,665 / 3,594,441) ................ $11.37
======
NET ASSET VALUE AND REDEMPTION PRICE
PER INVESTOR A SHARE ($4,157,590 / 365,819) ................ $11.37
======
MAXIMUM OFFERING PRICE PER INVESTOR A SHARE
($11.37 / 0.955) ........................................... $11.91
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent deferred sales charge of 4.5%)
PER INVESTOR B SHARE ($5,489,029 / 484,671) ................ $11.33
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent deferred sales charge of 1.0%)
PER INVESTOR C SHARE ($372,982 / 32,933) ................... $11.33
======
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
25
<PAGE>
BLACKROCK FUNDS
SCHEDULE OF INVESTMENTS
MID-CAP GROWTH EQUITY PORTFOLIO
Number
AS OF MARCH 31, 1999 (UNAUDITED) of Shares Value
---------- --------------
COMMON STOCKS -- 94.2%
ADVERTISING -- 1.9%
Outdoor Systems, Inc.** 172,000 $ 5,160,000
TMP Worldwide, Inc.** 25,600 1,659,200
--------------
6,819,200
--------------
BROADCASTING -- 2.6%
TCA Cable Television, Inc. 176,400 7,673,400
USA Networks, Inc.** 40,000 1,432,500
--------------
9,105,900
--------------
COMMUNICATIONS -- 1.9%
At Home Corp., Series A** 42,600 6,709,500
--------------
COMPUTER & OFFICE EQUIPMENT -- 8.5%
Network Appliance, Inc.** 175,100 8,864,437
Novell, Inc.** 296,400 7,465,575
Office Depot, Inc.** 122,500 4,509,531
VERITAS Software Corp.** 114,650 9,257,987
--------------
30,097,530
--------------
COMPUTER SOFTWARE & SERVICES -- 9.5%
BroadVision, Inc.** 79,800 4,768,050
CMG Information Services, Inc.** 10,000 1,830,625
Excite, Inc.** 26,800 3,752,000
Inktomi Corp.** 33,200 2,846,900
RealNetworks, Inc. ** 13,000 1,588,437
Safeguard Scientifics, Inc.** 61,500 4,170,469
Siebel Systems, Inc.** 140,300 6,664,250
Yahoo!, Inc.** 46,600 7,846,275
--------------
33,467,006
--------------
DURABLE GOODS -- 2.2%
Waters Corp.** 75,000 7,879,687
--------------
ELECTRONICS -- 8.6%
Jabil Circuit, Inc.** 171,300 6,937,650
Uniphase Corp.** 75,000 8,634,375
Vitesse Semiconductor Corp.** 146,500 7,416,562
Xilinx, Inc.** 186,200 7,552,737
--------------
30,541,324
--------------
ENERGY & UTILITIES -- 2.0%
Montana Power Co. 95,100 6,995,794
--------------
ENTERTAINMENT & LEISURE -- 0.5%
Premier Parks, Inc.** 51,000 1,899,750
--------------
FINANCE -- 2.0%
E*Trade Group, Inc.** 65,100 3,796,144
Firstar Corp. 35,000 3,132,500
--------------
6,928,644
--------------
JEWELRY -- 2.2%
Tiffany & Co. 102,700 7,676,825
--------------
MEDICAL & MEDICAL SERVICES -- 4.0%
Healtheon Corp.** 70,000 2,977,187
IMS Health, Inc. 94,000 3,113,750
Medimmune, Inc.** 137,200 8,120,525
--------------
14,211,462
--------------
Number
of Shares Value
---------- --------------
MEDICAL INSTRUMENTS & SUPPLIES -- 10.4%
Biogen, Inc.** 65,000 $ 7,430,312
Biomet, Inc. 170,000 7,129,375
Forest Laboratories, Inc.** 123,600 6,967,950
Genzyme Corp.** 70,000 3,530,625
Sepracor, Inc.** 31,000 3,479,750
VISX, Inc.** 75,000 8,067,188
-------------
36,605,200
--------------
PHARMACEUTICALS -- 3.0%
Immunex Corp.** 94,000 7,825,500
QLT PhotoTherapeutics, Inc.** 70,600 2,876,950
--------------
10,702,450
--------------
RESTAURANTS -- 1.4%
Darden Restaurants, Inc. 71,000 1,464,375
Papa John's International, Inc.** 75,500 3,331,438
--------------
4,795,813
--------------
RETAIL MERCHANDISING -- 11.1%
Abercrombie & Fitch Co.** 101,000 9,292,000
Bed, Bath and Beyond, Inc.** 104,000 3,796,000
Best Buy, Inc.** 143,000 7,436,000
Intimate Brands, Inc. 158,300 7,618,188
Staples, Inc.** 240,400 7,903,150
Starbucks Corp.** 119,500 3,353,469
--------------
39,398,807
--------------
TELECOMMUNICATIONS -- 22.4%
ADC Telecommunications, Inc.** 82,000 3,910,375
Amdocs Ltd.** 195,300 4,223,363
Broadcast.com, Inc.** 38,400 4,538,400
Covad Communications Group,
Inc.** 50,000 3,287,500
Echostar Communications Corp.** 125,000 10,203,125
Exodus Communications, Inc.** 22,000 2,959,000
Jacor Communications, Inc.** 73,600 5,593,600
Metromedia Fiber Network, Inc.** 190,000 9,844,375
Network Solutions, Inc.** 51,200 5,414,400
NEXTLINK Communications,
Inc., Class A** 55,000 3,080,000
Qualcomm, Inc.** 80,500 10,012,188
Qwest Communications
International, Inc.** 130,013 9,373,125
RCN Corp.** 125,000 4,195,313
Western Wireless Corp., Class A** 75,000 2,718,750
--------------
79,353,514
--------------
TOTAL COMMON STOCKS
(Cost $251,021,103) 333,188,406
--------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26
<PAGE>
BLACKROCK FUNDS
SCHEDULE OF INVESTMENTS
MID-CAP GROWTH EQUITY PORTFOLIO (CONCLUDED)
Par
AS OF MARCH 31, 1999 (UNAUDITED) Maturity (000) Value
---------- ---------- --------------
SHORT TERM INVESTMENTS -- 5.8%
Federal Home Loan Bank
Discount Notes
4.72% 04/14/99 $ 1,500*** $ 1,497,401
Federal Home Loan Mortgage
Corp. Discount Notes
4.82% 04/01/99 15,000 15,000,000
Galileo Money Market Fund 3,867 3,866,897
--------------
TOTAL SHORT TERM INVESTMENTS
(Cost $20,364,298) 20,364,298
--------------
TOTAL INVESTMENTS IN
SECURITIES -- 100.0%
(Cost $271,385,401*) $ 353,552,704
==============
- ----------------------
* Also cost for Federal income tax purposes. The gross unrealized appreciation
(depreciation) on a tax basis is as follows:
Gross unrealized appreciation $84,105,829
Gross unrealized depreciation (1,938,526)
-----------
$82,167,303
===========
** Non-income producing security.
***Principal amount of securities pledged as initial margin requirement of
$825,000 on 50 Standard & Poor's 500 Stock Index futures contracts expiring
June 1999. The value of such contracts on March 31, 1999 was $16,166,250,
thereby resulting in an unrealized loss of $343,750.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
27
<PAGE>
BLACKROCK FUNDS
STATEMENT OF ASSETS AND LIABILITIES
MID-CAP GROWTH EQUITY PORTFOLIO
MARCH 31, 1999 (UNAUDITED)
ASSETS
Investments at value (Cost $271,385,401) ................... $353,552,704
Collateral received for securities loaned .................. 103,909,859
Dividends receivable ....................................... 19,743
Interest receivable ........................................ 42,571
Investments sold receivable ................................ 10,502,883
Capital shares sold receivable ............................. 64,038
Prepaid expenses ........................................... 17,022
------------
TOTAL ASSETS ........................................ 468,108,820
------------
LIABILITIES
Payable upon return of securities loaned ................... 103,909,859
Investments purchased payable .............................. 7,413,907
Capital shares redeemed payable ............................ 17,753
Advisor fee payable ........................................ 231,942
Administrative fee payable ................................. 56,863
Transfer agent fee payable ................................. 39,939
Other accrued expenses payable ............................. 73,895
Futures margin payable ..................................... 280,000
------------
TOTAL LIABILITIES ................................... 112,024,158
------------
NET ASSETS .................................................... $356,084,662
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER INSTITUTIONAL SHARE ($297,455,823 / 18,690,299) ........ $15.91
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER SERVICE SHARE ($44,174,009 / 2,794,959) ................ $15.80
======
NET ASSET VALUE AND REDEMPTION PRICE
PER INVESTOR A SHARE ($7,157,188 / 455,071) ................ $15.73
======
MAXIMUM OFFERING PRICE PER INVESTOR A SHARE
($15.73 / 0.955) ........................................... $16.47
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent deferred sales charge of 4.5%)
PER INVESTOR B SHARE ($6,903,988 / 445,163) ................ $15.51
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent deferred sales charge of 1.0%)
PER INVESTOR C SHARE ($393,654 / 25,383) ................... $15.51
======
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
28
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
SMALL CAP VALUE EQUITY PORTFOLIO
Number
AS OF MARCH 31, 1999 (UNAUDITED) of Shares Value
---------- --------------
COMMON STOCKS -- 97.8%
AIR TRANSPORTATION -- 1.3%
Airborne Freight Corp. 224,300 $ 6,981,337
Atlantic Coast Airlines, Inc.** 40,700 1,144,687
--------------
8,126,024
--------------
BANKS -- 6.0%
BankAtlantic Bancorp, Inc. Class A 425,460 3,004,811
BankAtlantic Bancorp, Inc. Class B 176,524 1,224,635
Banknorth Group, Inc. 322,000 9,096,500
Commerce Bancorp, Inc. 166,919 6,885,409
Cullen/Frost Bankers 80,500 3,858,969
GBC Bancorp 291,900 4,378,500
Roslyn Bancorp, Inc. 126,280 2,130,975
Susquehanna Bancshares, Inc. 396,675 7,288,903
--------------
37,868,702
--------------
CHEMICALS -- 2.1%
Bush Boake Allen, Inc.** 220,700 6,069,250
Crompton & Knowles Corp. 463,600 7,301,700
-------------
13,370,950
--------------
COMPUTER & OFFICE EQUIPMENT -- 2.5%
Bell and Howell Co.** 207,800 6,091,137
Bell Micro Products, Inc.** 339,000 2,055,187
Hutchinson Technology, Inc.** 86,800 2,159,150
United Stationers, Inc.** 360,700 5,500,675
--------------
15,806,149
--------------
CONSTRUCTION -- 2.3%
Dal-Tile International, Inc.** 873,800 7,918,812
Lone Star Industries, Inc. 203,600 6,311,600
--------------
14,230,412
--------------
CONTAINERS -- 0.7%
Silgan Holdings, Inc.** 253,700 4,233,619
--------------
DURABLE GOODS -- 1.6%
Kellwood Co. 290,000 6,398,125
Wellman, Inc. 392,300 3,481,662
--------------
9,879,787
--------------
ELECTRONICS -- 8.8%
BEI Technologies, Inc. 177,800 1,911,350
Belden, Inc. 292,940 4,998,289
Cable Design Technologies, Inc.** 292,500 3,217,500
Dallas Semiconductor Corp. 242,600 9,370,425
DII Group, Inc.** 133,300 3,899,025
Electro Scientific Industries, Inc.** 155,600 7,235,400
Holophane Corp.** 347,775 7,651,050
Marshall Industries** 133,100 1,796,850
Oak Industries, Inc.** 187,100 5,940,425
Park Electrochemical Corp. 267,100 6,276,850
Tektronix, Inc. 129,700 3,274,925
--------------
55,572,089
--------------
ENERGY & UTILITIES -- 11.4%
C & D Technology, Inc. 339,300 8,440,087
Cilcorp, Inc. 96,200 5,778,012
Cleco Corp. 177,300 5,230,350
Eastern Enterprises, Inc. 104,500 3,801,187
Interstate Energy Corp. 253,692 6,722,838
Mitchell Energy & Development
Corp. 260,900 3,261,250
Number
of Shares Value
---------- --------------
ENERGY & UTILITIES (CONTINUED)
Piedmont Natural Gas, Inc. 120,700 $ 4,224,500
Santa Fe Energy Resources, Inc.** 1,248,100 9,126,731
Sierra Pacific Resources Corp. 160,460 5,646,186
Tesoro Petroleum Corp.** 393,300 4,326,300
TNP Enterprises, Inc. 165,300 4,752,375
UGI Corp. Holding Co. 134,810 2,249,642
USEC, Inc. 263,100 3,584,737
Washington Gas Light Corp. 199,000 4,502,375
--------------
71,646,570
--------------
FINANCE -- 4.5%
ARM Financial Group, Inc., Class A 369,000 5,511,937
Astoria Financial Corp. 78,200 3,910,000
Metris Companies, Inc. 100,624 4,062,694
Peoples Heritage Financial Group,
Inc. 502,200 9,039,600
PFF Bancorp, Inc.** 35 612
Webster Financial Corp. 202,800 5,855,850
--------------
28,380,693
--------------
FOOD & AGRICULTURE -- 3.2%
Del Monte Foods Co.** 366,300 4,830,581
Earthgrains Co. 338,700 7,514,906
Suiza Foods Corp.** 219,700 7,401,144
--------------
19,746,631
--------------
GLASS -- 0.6%
Libbey, Inc. 130,000 4,030,000
--------------
INSURANCE -- 4.7%
Enhance Financial Services Group,
Inc. 312,200 7,102,550
ESG Re Ltd. 410,200 6,511,925
Penn Treaty American Corp.** 280,200 6,952,462
PXRE Corp. 267,500 4,815,000
W.R. Berkley Corp. 181,605 4,449,322
--------------
29,831,259
--------------
JEWELRY -- 1.7%
Finlay Enterprises, Inc.** 288,200 3,116,163
Movado Group, Inc. 314,012 7,850,300
--------------
10,966,463
--------------
MACHINERY & HEAVY EQUIPMENT -- 4.4%
Alamo Group, Inc. 230,360 1,814,085
Brown & Sharpe Manufacturing
Co., Class A** 246,700 1,218,081
JLG Industries, Inc. 270,000 3,678,750
Pentair, Inc. 181,000 6,108,750
Plantronics, Inc.** 80,820 5,056,301
Terex Corp. 160,600 3,874,475
US Can Corp.** 391,600 5,776,100
--------------
27,526,542
--------------
MEDIA -- 1.1%
Valassis Communication, Inc.** 136,100 7,043,175
--------------
MEDICAL & MEDICAL SERVICES -- 1.8%
Integrated Health Services, Inc. 488,100 2,684,550
Quorum Health Group, Inc.** 359,200 3,592,000
Sierra Health Services, Inc.** 393,900 5,120,700
--------------
11,397,250
--------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
29
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
SMALL CAP VALUE EQUITY PORTFOLIO (CONTINUED)
Number
AS OF MARCH 31, 1999 (UNAUDITED) of Shares Value
---------- --------------
COMMON STOCKS (CONTINUED)
MEDICAL INSTRUMENTS & SUPPLIES -- 3.1%
ADAC Laboratories** 410,500 $ 5,593,063
Hologic, Inc.** 308,800 2,798,500
Maxxim Medical, Inc.** 259,500 4,898,063
Mentor Corp. 292,000 4,288,750
Perrigo Co.** 298,800 2,166,300
--------------
19,744,676
--------------
METAL & MINING -- 5.0%
Gibraltar Steel Corp. 397,300 7,921,169
Mueller Industries, Inc.** 353,400 7,907,325
RTI International Metals, Inc.** 465,300 4,362,188
Steel Dynamics, Inc.** 465,900 7,716,469
Wolverine Tube, Inc.** 176,100 3,720,113
--------------
31,627,264
--------------
MISCELLANEOUS SERVICES -- 1.6%
CDI Corp.** 252,700 6,080,594
Norrell Corp. 286,000 3,735,875
--------------
9,816,469
--------------
MOTOR VEHICLES -- 2.1%
Borge-Warner Automotive, Inc. 173,200 8,281,125
Tower Automotive, Inc.** 270,800 5,043,650
--------------
13,324,775
--------------
OIL & GAS -- 2.1%
Oneok, Inc. 119,100 2,947,725
Pride International, Inc.** 800,742 6,606,122
Valero Energy Corp. 149,900 3,728,763
--------------
13,282,610
--------------
PAPER & FOREST PRODUCTS -- 2.6%
Caraustar Industries, Inc. 289,100 6,649,300
Chesapeake Corp. 57,600 1,562,400
Mail-Well, Inc.** 608,800 8,142,700
--------------
16,354,400
--------------
PHARMACEUTICALS -- 0.4%
Barr Labs, Inc.** 71,700 2,186,850
--------------
REAL ESTATE -- 9.4%
Alexandria Real Estate Equities,
Inc. 152,900 4,042,294
Bedford Property Investors, Inc. 268,900 3,932,663
Brandywine Realty Trust 263,300 4,278,625
BRE Properties, Inc. 139,500 3,156,188
Burnham Pacific Properties, Inc. 291,000 3,055,500
Camden Property Trust 233,700 5,784,075
Chelsea GCA Realty, Inc. 167,600 4,671,850
Felcor Lodging Trust, Inc. 147,650 3,423,634
Glenborough Realty Trust, Inc. 307,800 5,232,600
Highwoods Properties, Inc. 187,400 4,415,613
Lennar Corp. 320,665 7,174,879
Patriot American Hospitality, Inc. 191,612 982,012
Prentiss Properties Trust 338,200 6,298,975
Prison Realty Corp. 157,200 2,741,175
--------------
59,190,083
--------------
Number
of Shares Value
---------- --------------
RESTAURANTS -- 1.8%
CKE Restaurants, Inc. 273,300 $ 5,397,675
Ruby Tuesday, Inc. 326,900 5,679,888
--------------
11,077,563
--------------
RETAIL MERCHANDISING -- 2.8%
Bon Ton Stores, Inc.** 368,000 2,714,000
Dress Barn, Inc.** 289,100 4,011,263
Duane Reade, Inc.** 235,900 6,575,713
Enesco Group, Inc. 237,300 4,286,231
--------------
17,587,207
--------------
TELECOMMUNICATIONS -- 1.3%
CommScope, Inc.** 391,800 8,203,313
--------------
TEXTILES -- 1.6%
Burlington Coat Factory Warehouse
Corp. 119,300 1,401,775
Guilford Mills, Inc. 353,200 3,090,500
Tropical Sportswear International
Corp.** 267,200 5,444,200
--------------
9,936,475
--------------
TOBACCO -- 1.5%
UST, Inc. 420,800 9,191,850
--------------
TRANSPORTATION -- 2.6%
Budget Group, Inc., Class A** 346,500 4,244,625
Midwest Express Holdings, Inc.** 200,215 5,881,316
Teekay Shipping Corp. 390,500 6,443,250
--------------
16,569,191
--------------
WHOLESALE - GROCERIES & GENERAL LINE -- 1.2%
Richfood Holdings, Inc. 343,800 7,413,188
--------------
TOTAL COMMON STOCKS
(Cost $650,018,927) 615,162,229
--------------
Par
Maturity (000)
---------- ---------
SHORT TERM INVESTMENTS -- 2.1%
Federal Home Loan Mortgage Corp.
Discount Notes
4.82% 04/01/99 $12,000 12,000,000
Galileo Money Market Fund 1,022 1,021,999
--------------
TOTAL SHORT TERM INVESTMENTS
(Cost $13,021,999) 13,021,999
--------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
30
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
SMALL CAP VALUE EQUITY PORTFOLIO (CONCLUDED)
AS OF MARCH 31, 1999 (UNAUDITED) Value
--------------
TOTAL INVESTMENTS IN
SECURITIES
(Cost $663,040,926*) 99.9% $ 628,184,228
OTHER ASSETS IN EXCESS OF
LIABILITIES 0.1% 927,442
------ --------------
NET ASSETS (Applicable to 36,705,694
Institutional shares, 5,175,582
Service shares, 2,506,369 Investor A
shares, 1,357,021 Investor B shares
and 360,525 Investor C shares
outstanding) 100.0% $ 629,111,670
====== ==============
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
INSTITUTIONAL SHARE
($501,394,666 / 36,705,694) $13.66
======
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
SERVICE SHARE
($70,646,116 / 5,175,582) $13.65
======
NET ASSET VALUE AND
REDEMPTION PRICE PER
INVESTOR A SHARE
($34,199,317 / 2,506,369) $13.64
======
MAXIMUM OFFERING PRICE
PER INVESTOR A SHARE
($13.64 / 0.955) $14.28
======
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
(SUBJECT TO A MAXIMUM CONTINGENT
DEFERRED SALES CHARGE OF 4.5%)
PER INVESTOR B SHARE
($18,070,744 / 1,357,021) $13.32
======
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
(SUBJECT TO A MAXIMUM CONTINGENT
DEFERRED SALES CHARGE OF 1.0%)
PER INVESTOR C SHARE
($4,800,827 / 360,525) $13.32
======
- --------------------
* Also cost for Federal income tax purpose. The gross unrealized appreciation
(depreciation) on a tax basis is as follows:
Gross unrealized appreciation $ 80,295,358
Gross unrealized depreciation (115,152,056)
--------------
$ (34,856,698)
==============
** Non-income producing security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
31
<PAGE>
BLACKROCK FUNDS
SCHEDULE OF INVESTMENTS
SMALL CAP GROWTH EQUITY PORTFOLIO
Number
AS OF MARCH 31, 1999 (UNAUDITED) of Shares Value
---------- --------------
COMMON STOCKS -- 90.5%
ADVERTISING -- 2.8%
Catalina Marketing Corp.** 309,000 $ 26,535,375
TMP Worldwide, Inc.** 275,500 17,855,844
--------------
44,391,219
--------------
AEROSPACE -- 0.2%
Aviation Sales Co.** 69,700 3,101,650
--------------
BANKS -- 0.6%
Investors Financial Service Co. 330,300 9,496,125
--------------
BUSINESS SERVICES -- 5.2%
Great Plains Software, Inc.** 124,400 4,812,725
International Network Services** 498,761 34,882,097
ISS Group, Inc.** 205,900 16,369,050
Kroll-O'Gara Co.** 105,700 2,867,112
Lason Holdings, Inc.** 418,200 23,523,750
--------------
82,454,734
--------------
COMPUTER & OFFICE EQUIPMENT -- 21.4%
Abovenet Communications, Inc.** 135,800 17,772,825
Advantage Learning Systems, Inc.** 451,500 14,024,719
Affiliated Computer Services, Inc.** 305,800 13,990,350
Answerthink Consulting Group, Inc.** 216,900 6,073,200
Bindview Development Corp.** 71,900 2,237,887
Business Objects S.A. ADR** 98,035 2,910,414
Check Point Software Technologies
Ltd.** 266,800 11,472,400
Clarify, Inc.** 627,300 16,741,069
Concentric Networking Corp.** 267,900 20,025,525
Concord Communications, Inc.** 331,600 18,901,200
Critical Path, Inc.** 34,300 2,641,100
EarthLink Network, Inc.** 158,000 9,480,000
Excite, Inc.** 72,600 10,164,000
Factset Research Systems, Inc. 65,100 2,815,575
Infoseek Corp.** 296,000 21,904,000
Inktomi Corp.** 146,000 12,519,500
Intervu, Inc.** 117,800 5,227,375
MindSpring Enterprises, Inc.** 115,800 9,966,037
National Computer Systems, Inc. 579,900 14,207,550
New Era of Networks, Inc.** 346,200 23,455,050
Progress Software Corp.** 451,600 15,410,850
PSINet, Inc.** 287,200 12,223,950
SanDisk Corp.** 137,500 3,643,750
Verio, Inc.** 113,400 5,230,575
Verisign, Inc.** 253,200 38,992,800
VERITAS Software Corp.** 262,075 21,162,556
Vignette Corp.** 117,300 8,826,825
--------------
342,021,082
--------------
COMPUTER SOFTWARE & SERVICES -- 8.5%
Doubleclick, Inc.** 64,600 11,761,237
Macromedia, Inc.** 630,000 28,546,875
Mercury Interactive Corp.** 669,800 23,861,625
Peregrine Systems, Inc.** 1,066,200 35,850,975
Sylvan Learning Systems, Inc.** 260,900 7,142,137
USWeb Corp.** 471,300 19,441,125
Whittman-Hart, Inc.** 432,300 9,294,450
--------------
135,898,424
--------------
CONSTRUCTION -- 0.0%
Morrison Knudsen Corp.** 162 648
--------------
Number
of Shares Value
---------- --------------
ELECTRONICS -- 10.0%
Dendrite International, Inc.** 170,100 $ 3,795,356
Flextronics International Ltd.** 408,900 20,853,900
Gentex Corp.** 502,400 10,833,000
MIPS Technologies, Inc.** 575,400 35,099,400
PMC-Sierra, Inc.** 288,800 20,558,950
Power Intergrations, Inc.** 210,100 6,670,675
Powerwave Technologies, Inc.** 127,800 3,626,325
QLogic Corp.** 352,600 23,668,275
SDL, Inc.** 37,500 3,403,125
Semtech Corp.** 16,700 532,313
TranSwitch Corp.** 195,900 8,864,475
Tweeter Home Entertainment Group,
Inc.** 159,500 5,143,875
Vitesse Semiconductor Corp.** 346,437 17,538,373
--------------
160,588,042
--------------
ENERGY & UTILITIES -- 0.6%
Catalytica, Inc.** 829,400 9,123,400
--------------
ENTERTAINMENT & LEISURE -- 3.3%
Championship Auto Racing Teams,
Inc.** 399,600 11,638,350
Cinar Films, Inc., Class B ** 662,100 15,228,300
Hollywood Entertainment Corp.** 196,400 3,657,950
Speedway Motorsports, Inc.** 528,600 21,804,750
--------------
52,329,350
--------------
FINANCE -- 1.4%
Marketwatch.com, Inc.** 134,200 9,914,025
NCO Group, Inc.** 347,750 12,866,750
Valutron Distribution Trust ** 10,000 0
--------------
22,780,775
--------------
FOOD & AGRICULTURE -- 0.3%
Celestial Seasonings, Inc.** 118,250 2,557,156
Merkert American Corp.** 153,400 1,668,225
--------------
4,225,381
--------------
FURNITURE -- 0.4%
Select Comfort Corp.** 216,000 6,021,000
--------------
INSURANCE -- 0.1%
Insurance Management Solutions
Group, Inc.** 183,400 1,650,600
--------------
MACHINERY & HEAVY EQUIPMENT -- 1.2%
Advanced Energy Industries, Inc.** 266,100 6,269,981
Brooks Automation, Inc.** 228,100 5,103,738
Helix Technology Corp. 270,856 4,164,411
PRI Automation, Inc.** 155,700 3,269,700
--------------
18,807,830
--------------
MEDICAL & MEDICAL SERVICES -- 5.6%
Eclipsys Corp.** 60,495 1,277,957
Healtheon Corp.** 204,700 8,706,147
MedQuist, Inc.** 753,500 22,605,000
Patterson Dental Co.** 375,000 16,218,750
Renal Care Group, Inc.** 757,650 14,868,881
Serologicals Corp.** 324,450 4,400,353
Sunrise Assisted Living, Inc.** 453,400 20,658,038
Veterinary Centers of America, Inc.** 65,800 929,425
--------------
89,664,551
--------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
32
<PAGE>
BLACKROCK FUNDS
SCHEDULE OF INVESTMENTS
SMALL CAP GROWTH EQUITY PORTFOLIO (CONCLUDED)
Number
AS OF MARCH 31, 1999 (UNAUDITED) of Shares Value
---------- --------------
COMMON STOCKS (CONTINUED)
MEDICAL INSTRUMENTS & SUPPLIES -- 1.8%
Hanger Orthopedic Group, Inc.** 222,300 $ 3,001,050
Minimed, Inc.** 140,300 14,257,988
Osteotech, Inc.** 276,150 9,492,656
Perclose, Inc.** 86,500 2,681,500
--------------
29,433,194
--------------
MOTOR VEHICLES -- 0.7%
CSK Auto Corp.** 377,100 11,289,431
--------------
OIL & GAS -- 0.5%
Atwood Oceanics, Inc.** 134,800 4,044,000
Core Laboratories N.V. ADR** 216,900 3,809,306
--------------
7,853,306
--------------
PERSONAL SERVICES -- 0.5%
Bright Horizons Family Solutions,
Inc.** 15,500 339,063
DeVry, Inc.** 298,600 8,659,400
--------------
8,998,463
--------------
PHARMACEUTICALS -- 3.6%
Alkermes, Inc.** 438,000 11,935,500
Andrx Corp.** 31,700 2,888,663
Coulter Pharmaceutical, Inc.** 494,000 10,744,500
Millennium Pharmaceuticals, Inc.** 472,800 14,775,000
Shire Pharmaceuticals Group
PLC ADR** 769,200 17,547,375
--------------
57,891,038
--------------
RESTAURANTS -- 1.0%
Papa John's International, Inc.** 365,310 16,119,304
--------------
RETAIL MERCHANDISING -- 8.5%
Action Performance Co., Inc.** 378,600 11,405,325
Ann Taylor Stores Corp.** 547,500 24,192,656
Children's Place Retail Stores, Inc.** 477,500 12,862,656
Claire's Stores, Inc. 551,300 16,607,913
Cost Plus, Inc.** 256,600 7,537,625
dELiA*s, Inc.** 204,300 6,435,450
Linens 'N Things, Inc.** 828,000 37,570,500
Pacific Sunwear of California, Inc.** 579,100 20,123,725
--------------
136,735,850
--------------
TELECOMMUNICATIONS -- 12.3%
Aware, Inc.** 361,300 16,981,100
Carrier Access Corp.** 298,700 23,093,244
CNET, Inc.** 81,500 7,508,188
Com21, Inc.** 54,400 1,428,000
CSG Systems International, Inc.** 666,300 26,277,206
Entercom Communications Corp.** 220,600 7,803,725
Geotel Communications Corp.** 623,600 28,607,650
ITC Deltacom, Inc.** 67,300 1,467,981
Metromedia Fiber Network, Inc.** 845,200 43,791,925
Nielson Media Research, Inc. 293,300 7,240,844
Pinnacle Holdings, Inc.** 474,700 7,179,838
Quanta Services, Inc.** 380,000 9,666,250
RF Micro Devices, Inc.** 133,600 12,783,850
Terayon Communications Systems,
Inc.** 85,900 3,436,000
--------------
197,265,801
--------------
TOTAL COMMON STOCKS
(Cost $1,078,003,440) 1,448,141,198
--------------
Par
Maturity (000) Value
-------- ---------- --------------
CORPORATE BONDS -- 0.6%
Speedway Motorsports, Inc.
5.75% 09/30/03 $ 7,000 $ 10,062,500
(Cost $7,000,000) --------------
SHORT TERM INVESTMENTS -- 8.9%
Federal Home Loan Bank
Discount Notes
4.80% 04/01/99 9,590 9,590,000
Federal Home Loan Mortgage Corp.
Discount Notes
4.82% 04/01/99 120,410 120,410,000
4.72% 04/14/99 2,800*** 2,795,148
4.74% 05/14/99 2,200*** 2,187,544
Galileo Money Market Fund 7,288 7,288,232
--------------
TOTAL SHORT TERM INVESTMENTS
(Cost $142,270,924) 142,270,924
--------------
TOTAL INVESTMENTS IN
SECURITIES -- 100.0%
(Cost $1,227,274,364*) $1,600,474,622
==============
- ---------------------
* Also cost for Federal income tax purposes. The gross unrealized appreciation
(depreciation) on a tax basis is as follows:
Gross unrealized appreciation $ 423,036,775
Gross unrealized depreciation (49,836,517)
--------------
$ 373,200,258
==============
** Non-income producing security.
***Principal amount of securities pledged as initial margin requirement of
$3,300,000 on 200 Standard & Poor's 500 Stock Index futures contracts expiring
June 1999. The value of such contracts on March 31, 1999 was $64,665,000,
thereby resulting in an unrealized loss of $1,344,875.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
33
<PAGE>
BLACKROCK FUNDS
STATEMENT OF ASSETS AND LIABILITIES
SMALL CAP GROWTH EQUITY PORTFOLIO
MARCH 31, 1999 (UNAUDITED)
ASSETS
Investments at value (Cost $1,227,274,364) ................. $1,600,474,622
Collateral received for securities loaned .................. 280,182,101
Dividends receivable ....................................... 58,502
Interest receivable ........................................ 20,371,013
Investments sold receivable ................................ 32,263
Futures sold receivable .................................... 15,806
--------------
TOTAL ASSETS ........................................ 1,901,134,307
--------------
LIABILITIES
Payable upon return of securities loaned ................... 280,182,101
Investments purchased payable .............................. 52,198,986
Capital shares redeemed payable ............................ 361,779
Advisor fee payable ........................................ 674,687
Administrative fee payable ................................. 282,831
Transfer agent fee payable ................................. 136,369
Other accrued expenses payable ............................. 384,010
Futures margin payable ..................................... 1,120,000
--------------
TOTAL LIABILITIES ................................... 335,340,763
--------------
NET ASSETS .................................................... $1,565,793,544
==============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER INSTITUTIONAL SHARE ($1,265,994,091 / 56,063,007) ...... $22.58
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER SERVICE SHARE ($165,457,545 / 7,449,632) ............... $22.21
======
NET ASSET VALUE AND REDEMPTION PRICE
PER INVESTOR A SHARE ($75,662,774 / 3,431,409) ............. $22.05
======
MAXIMUM OFFERING PRICE PER INVESTOR A SHARE
($22.05 / 0.955) ........................................... $23.09
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent deferred sales charge of 4.5%)
PER INVESTOR B SHARE ($44,786,835 / 2,087,814) ............. $21.45
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent deferred sales charge of 1.0%)
PER INVESTOR C SHARE ($13,892,299 / 647,643) ............... $21.45
======
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
34
<PAGE>
BLACKROCK FUNDS
SCHEDULE OF INVESTMENTS
MICRO-CAP EQUITY PORTFOLIO
Number
AS OF MARCH 31, 1999 (UNAUDITED) of Shares Value
---------- -------------
COMMON STOCKS -- 82.9%
BUSINESS SERVICES -- 9.3%
Rowecom, Inc.** 30,000 $ 1,308,750
Pegasus Systems, Inc.** 30,000 1,196,250
SOFTWORKS, Inc.** 43,800 624,150
TSI International Software Ltd.** 20,000 976,250
--------------
4,105,400
--------------
COMPUTER & OFFICE EQUIPMENT -- 13.4%
ACT Networks, Inc.** 40,000 770,000
Allaire Corp.** 25,000 1,700,000
Computer Network Technology Corp.** 52,900 853,013
Emulex Corp.** 28,000 924,000
Miami Computer Supply Corp.** 30,000 598,125
Proxim, Inc.** 35,000 1,006,250
--------------
5,851,388
--------------
COMPUTER SOFTWARE & SERVICES -- 24.5%
Autoweb.com, Inc.** 25,000 890,625
Bindview Development Corp.** 12,500 389,062
Bottomline Technology, Inc.** 1,000 63,812
Clarify, Inc.** 25,000 667,187
Concur Technologies, Inc.** 32,000 1,444,000
Exchange Applications, Inc.** 29,000 728,625
Globix Corp.** 30,000 1,119,375
International Integration, Inc.** 50,000 1,600,000
Miningco.com, Inc.** 12,200 1,091,900
Multex.com, Inc.** 15,000 937,500
Verity, Inc.** 16,600 556,100
Verticalnet, Inc.** 6,500 675,188
Wiztec Solutions Ltd.** 35,000 627,813
--------------
10,791,187
--------------
ELECTRONICS -- 10.2%
American Xtal Technology, Inc.** 55,000 1,237,500
hi/fn, Inc.** 24,000 900,000
Power Intergrations, Inc.** 30,000 952,500
Semtech Corp.** 1,100 35,063
TranSwitch Corp.** 30,000 1,357,500
--------------
4,482,563
--------------
ENTERTAINMENT & LEISURE -- 3.5%
JAKKS Pacific, Inc.** 40,000 740,000
Tweeter Home Entertainment Group,
Inc.** 25,000 806,250
--------------
1,546,250
--------------
FURNITURE -- 2.0%
School Specialty, Inc.** 44,000 860,750
--------------
MEDICAL & MEDICAL SERVICES -- 3.2%
Aurora Biosciences Corp.** 100,000 671,875
Proxymed, Inc.** 55,000 742,500
--------------
1,414,375
--------------
Number
of Shares Value
---------- --------------
MEDICAL INSTRUMENTS & SUPPLIES -- 2.7%
Xomed Surgical Products, Inc.** 30,000 $ 1,177,500
--------------
PHARMACEUTICALS -- 1.5%
Anesta Corp.** 20,000 451,250
Professional Detailing, Inc.** 7,500 196,406
--------------
647,656
--------------
RETAIL MERCHANDISING -- 3.7%
Cheap Tickets, Inc.** 11,000 369,875
dELiA*s, Inc.** 40,000 1,260,000
--------------
1,629,875
--------------
TELECOMMUNICATIONS -- 8.9%
CTC Communications Corp.** 35,000 433,125
Harmonic Lightwaves, Inc.** 45,000 1,243,125
NorthEast Optic Network, Inc.** 75,000 1,059,375
Price Communications Corp.** 75,000 834,375
Terayon Communications Systems,
Inc.** 9,000 360,000
--------------
3,930,000
--------------
TOTAL COMMON STOCKS
(Cost $28,625,352) 36,436,944
--------------
Par
Maturity (000)
-------- ----------
SHORT TERM INVESTMENTS -- 17.1%
Federal Home Loan Mortgage Corp.
Discount Notes
4.82% 04/01/99 $7,000 7,000,000
Galileo Money Market Fund 525 525,187
--------------
TOTAL SHORT TERM INVESTMENTS
(Cost $7,525,187) 7,525,187
--------------
TOTAL INVESTMENTS IN
SECURITIES -- 100.0%
(Cost $36,150,539*) $ 43,962,131
==============
- ---------------------
* Also cost for Federal income tax purposes. The gross unrealized appreciation
(depreciation) on a tax basis is as follows:
Gross unrealized appreciation $ 8,286,997
Gross unrealized depreciation (475,405)
--------------
$ 7,811,592
==============
** Non-income producing security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
35
<PAGE>
BLACKROCK FUNDS
STATEMENT OF ASSETS AND LIABILITIES
MICRO-CAP EQUITY PORTFOLIO
MARCH 31, 1999 (UNAUDITED)
ASSETS
Investments at value (Cost $36,150,539) .................... $43,962,131
Collateral received for securities loaned .................. 3,699,100
Interest receivable ........................................ 3,608
Capital shares sold receivable ............................. 491,378
Prepaid expenses ........................................... 76,753
-----------
TOTAL ASSETS ........................................ 48,232,970
-----------
LIABILITIES
Payable upon return of securities loaned ................... 3,699,100
Investments purchased payable .............................. 2,995,336
Capital shares redeemed payable ............................ 5,261
Advisor fee payable ........................................ 83
Administrative fee payable ................................. 6,369
Transfer agent fee payable ................................. 9,859
Other accrued expenses payable ............................. 120,121
-----------
TOTAL LIABILITIES ................................... 6,836,129
-----------
NET ASSETS .................................................... $41,396,841
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER INSTITUTIONAL SHARE ($5,514,105 / 347,312) ............. $15.88
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER SERVICE SHARE ($117,128 / 7,391) ....................... $15.85
======
NET ASSET VALUE AND REDEMPTION PRICE
PER INVESTOR A SHARE ($12,871,184 / 813,194) ............... $15.83
======
MAXIMUM OFFERING PRICE PER INVESTOR A SHARE
($15.83 / 0.950) ........................................... $16.66
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent deferred sales charge of 4.5%)
PER INVESTOR B SHARE ($17,641,824 / 1,120,540) ............. $15.74
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent deferred sales charge of 1.0%)
PER INVESTOR C SHARE ($5,252,600 / 333,610) ................ $15.74
======
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
36
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
INTERNATIONAL EQUITY PORTFOLIO
Number
AS OF MARCH 31, 1999 (UNAUDITED) of Shares Value
---------- --------------
COMMON STOCKS -- 97.8%
AUSTRALIA -- 1.4%
Goodman Fielder Ltd. 2,300,000 $ 2,371,851
John Fairfax Holdings Ltd. 1,300,000 3,201,705
National Australia Bank Ltd. 279,000 5,047,800
North, Ltd. 1,970,000 3,122,578
Telstra Corporation Ltd. 614,000 3,200,802
--------------
16,944,736
--------------
DENMARK -- 0.7%
Teledanmark Series B 90,000 8,915,641
--------------
FINLAND -- 1.1%
Nokia AB, Class A 90,000 14,486,980
--------------
FRANCE -- 11.1%
Alcatel Alsthom 75,000 8,623,202
Axa SA 148,500 19,687,136
Compagnie Generale des Eaux 70,000 17,222,654
Dexia France 77,200 10,793,065
Elf Aquitaine SA 80,000 10,864,965
France Telecommunications SA 89,000 7,196,636
Groupe Danone 62,000 15,602,410
Lafarge SA 150,000 13,521,829
Suez Lyonnaise des Eaux 93,500 17,301,356
Total SA 149,500 18,415,544
--------------
139,228,797
--------------
GERMANY -- 6.7%
Allianz AG 46,750 14,217,596
DaimlerChrysler AG 159,900 13,913,655
Hoechst AG 156,000 6,635,575
MAN AG 524,000 14,793,151
Mannesmann AG 126,900 15,741,255
Siemens AG 134,000 8,795,613
Veba AG 195,125 10,269,404
--------------
84,366,249
--------------
HONG KONG -- 1.5%
Dao Heng Bank Group Ltd. 1,467,400 4,847,435
Hong Kong Electric Holdings Ltd. 2,228,000 6,741,888
Hutchinson Whampoa Ltd. 739,000 5,816,983
South China Morning Post
Holdings Ltd. 3,700,000 2,053,022
--------------
19,459,328
--------------
ITALY -- 6.5%
Banca Nazionale del Lovoro SpA** 1,345,000 4,704,625
ENI SpA 1,984,000 12,637,215
Istituto Nazionale delle
Assicurazioni SpA** 4,000,000 12,091,376
Telecom Italia Mobile SpA 1,100,000 7,398,411
Telecom Italia SpA 2,580,000 27,407,695
Unicredito Italiano SpA 3,300,000 17,813,188
--------------
82,052,510
--------------
JAPAN -- 23.3%
Bridgestone Corp. 511,000 13,030,648
Daiwa Securities Co. Ltd. 2,244,000 12,031,914
Eisai Co. Ltd. 538,000 11,243,348
Fuji Photo Film Co. 290,000 10,970,191
Hitachi Ltd. 1,313,000 9,723,049
Honda Motor Co. Ltd. 202,000 9,125,219
Industrial Bank Of Japan Ltd. 1,370,000 9,254,410
Number
of Shares Value
---------- --------------
JAPAN (CONTINUED)
Ito-Yokado Co. Ltd. 163,000 $ 10,487,712
Kuraray Co. Ltd. 1,095,000 11,881,066
Mabuchi Motors Co. Ltd. 140,000 10,426,410
Matsushita Electric Industrial Co. 590,000 11,508,061
Mitsubishi Heavy Industries Ltd. 2,040,000 9,215,568
Mitsui Fudosan Co. Ltd. 1,411,000 12,712,460
Nintendo Co. Ltd. 97,000 8,370,681
Nippon Seiko Ltd. 1,082,000 5,024,908
Nippon Telegraph & Telephone
Corp. 12,690 12,429,618
Nishimatsu Construction Co. Ltd. 1,985,000 10,458,834
NTT Mobile Communication
Network, Inc. 820 4,050,493
Ricoh Co. 1,008,000 10,528,546
Sanwa Bank Ltd. 988,000 10,720,085
Sekisui Chemical Co. 1,398,000 9,951,142
Shin-Etsu Chemical Co. 426,000 11,186,859
Shiseido Co. Ltd. 530,000 7,339,355
Sony Corp. 60,000 5,547,579
Sumitomo Bank Ltd. 820,000 11,099,043
Sumitomo Marine & Fire Insurance
Co. 2,066,000 13,223,234
Suzuki Motor Co. Ltd. 672,000 8,914,226
Teijin Ltd. 2,300,000 9,283,118
Toshiba Corp. 700,000 4,781,726
Toyota Motor Corp. 132,000 3,823,017
Tsubaki Nakashima Co., Ltd. 530,000 3,557,797
Yamanashi Chuo Bank Ltd. 202,000 776,070
--------------
292,676,387
--------------
NETHERLANDS -- 7.5%
Equant NV** 178,000 13,528,523
Internationale Nederlanden Groep
NV 230,597 12,708,875
Koninklijke Ahold NV 270,000 10,347,843
Koninklijke Philips Electronics NV 232,000 18,897,526
Laurus NV 164,920 4,006,024
Vedior NV CVA 432,490 10,015,233
Vendex Non-Food NV 235,600 5,684,739
Verenigde Nederlandse
Uitgeversbedrijven Verenigd Bezit 480,000 18,707,086
--------------
93,895,849
--------------
NORWAY -- 0.2%
Petroleum Geo Services ASA** 192,100 2,932,923
--------------
SINGAPORE -- 4.1%
Development Bank of Singapore,
Ltd. 1,343,000 10,178,422
Singapore Airlines Ltd. 1,033,000 7,470,393
Singapore Press Holdings Ltd. 1,196,012 13,216,061
Singapore Telecommunications
Ltd. 8,411,000 11,970,599
United Overseas Bank Ltd. 1,405,000 8,778,761
--------------
51,614,236
--------------
SPAIN -- 2.8%
Argentaria Caja Postal Y Banco
Hipotecario de Espana SA 693,000 16,653,906
Endesa SA 175,000 4,417,131
Telefonica de Espana SA 330,000 13,997,603
--------------
35,068,640
--------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
37
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
INTERNATIONAL EQUITY PORTFOLIO (CONCLUDED)
Number
AS OF MARCH 31, 1999 (UNAUDITED) of Shares Value
---------- --------------
COMMON STOCKS (CONTINUED)
SWITZERLAND -- 5.2%
Credit Suisse Group 51,400 $ 9,584,434
Nestle SA 5,750 10,446,070
Novartis Ltd. 6,836 11,088,900
Roche Holding AG 1,630 19,877,377
UBS-AG Registered 47,500 14,922,474
--------------
65,919,255
--------------
UNITED KINGDOM -- 25.7%
Abbey National PLC 500,000 10,283,155
Asda Group PLC 2,700,000 6,581,542
Bank of Ireland PLC 610,000 12,727,624
Barclays PLC 305,000 8,769,013
BG PLC 1,800,000 10,576,959
Boots Co. PLC 250,000 3,610,001
BP Amoco PLC 1,750,000 29,620,571
British Aerospace PLC 1,175,000 7,852,811
British Telecommunications PLC 1,300,000 21,216,876
Bryant Group PLC 2,395,000 4,813,509
Cable & Wireless PLC 355,500 4,441,887
Cadbury Schweppes PLC 490,000 7,111,197
Diageo PLC 780,000 8,763,766
General Electric Co. PLC 875,000 7,888,931
Glaxo Wellcome PLC 725,000 24,296,980
Granada Group PLC 440,000 8,914,220
Halifax PLC 610,000 7,479,017
HSBC Holdings PLC 295,000 9,514,905
Jarvis Hotels PLC 1,655,000 4,087,675
Kingfisher PLC 670,000 8,447,200
Land Securities PLC 390,000 5,162,563
Limelight Group PLC** 2,350,000 1,801,973
Lloyds TSB Group PLC 900,000 13,613,476
National Westminster Bank PLC 185,000 4,264,684
Norwich Union PLC 775,000 5,345,283
Peninsular & Oriental Steam PLC 551,000 8,023,153
Prudential Corp. PLC 540,000 7,039,199
Royal & Sun Alliance Insurance
Group PLC 1,030,000 9,718,711
Scottish & Southern Energy PLC 845,000 7,638,915
Smithkline Beecham PLC 1,225,000 17,669,228
Soco International PLC** 376,000 242,792
Vodafone Group PLC 780,000 14,492,952
Whitbread PLC 400,000 6,179,579
Yorkshire Water PLC 700,000 5,034,226
Zeneca Group PLC 200,000 9,453,399
--------------
322,677,972
--------------
TOTAL COMMON STOCKS
(Cost $1,057,649,388) 1,230,239,503
--------------
PREFERRED STOCKS -- 0.8%
GEA AG Non Voting 476,500 9,619,715
(Cost $14,475,327) --------------
Par
Maturity (000) Value
-------- ---------- --------------
SHORT TERM INVESTMENTS -- 1.0%
Federal Home Loan Mortgage
Corp. Discount Notes
4.82% 04/01/99 $12,000 $ 12,000,000
(Cost $12,000,000) --------------
TOTAL INVESTMENTS IN
SECURITIES
(Cost $1,084,124,715*) 99.6% 1,251,859,218
OTHER ASSETS IN EXCESS OF
OTHER LIABILITIES 0.4% 5,473,973
------- --------------
NET ASSETS (Applicable to 73,414,839
Institutional shares, 8,392,693
Service shares, 2,690,546 Investor A
shares, 508,430 Investor B shares
and 46,910 Investor C shares
outstanding) 100.0% $1,257,333,191
======= ==============
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
INSTITUTIONAL SHARE
($1,086,088,266 / 73,414,839) $14.79
======
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
SERVICE SHARE
($123,589,683 / 8,392,693) $14.73
======
NET ASSET VALUE AND
REDEMPTION PRICE PER
INVESTOR A SHARE
($39,589,283 / 2,690,546) $14.71
======
MAXIMUM OFFERING PRICE
PER INVESTOR A SHARE
($14.71 / 0.950) $15.48
======
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
(SUBJECT TO A MAXIMUM CONTINGENT
DEFERRED SALES CHARGE OF 4.5%)
PER INVESTOR B SHARE
($7,384,686 / 508,430) $14.52
======
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
(SUBJECT TO A MAXIMUM CONTINGENT
DEFERRED SALES CHARGE OF 1.0%)
PER INVESTOR C SHARE
($681,273 / 46,910) $14.52
======
- --------------------
* Also cost for Federal income tax purposes. The gross unrealized appreciation
(depreciation) on a tax basis is as follows:
Gross unrealized appreciation $220,417,777
Gross unrealized depreciation (52,683,274)
------------
$167,734,503
============
** Non-income producing.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
38
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
INTERNATIONAL SMALL CAP EQUITY PORTFOLIO
Number
AS OF MARCH 31, 1999 (UNAUDITED) of Shares Value
---------- -----------
COMMON STOCKS -- 91.7%
AUSTRALIA -- 0.9%
Goodman Fielder Ltd. 57,000 $ 58,781
John Fairfax Holdings Ltd. 27,000 66,497
North Ltd. 22,000 34,871
-----------
160,149
-----------
FINLAND -- 0.9%
Asko Oyj, Class A 12,000 173,598
-----------
FRANCE -- 8.9%
Compagnie Francaise d'Etudes et de
Construction Technip** 1,500 160,157
Entrelec Groupe SA 4,000 150,926
Galeries Lafayette SA 150 155,461
GFI Informatique SA** 1,500 184,447
Labinal SA 750 156,837
Neopost SA** 10,000 160,858
Scor SA 3,500 176,081
Silicon-On-Insulator Technologies
(S.O.I.T.E.C.)** 8,000 205,381
Societe Generale d'Entreprises SA 3,000 141,210
Zodiac SA 750 150,198
-----------
1,641,556
-----------
GERMANY -- 5.0%
Boewe Systec AG 5,000 137,647
Douglas Holding AG 4,000 170,575
EM. TV & Merchandising AG 175 148,308
Kamps AG** 2,000 209,440
Schaltbau AG 2,000 69,309
Utimaco Safeware AG** 1,000 181,371
-----------
916,650
-----------
GREECE -- 0.6%
National Bank of Greece SA - GDR
(Reg. S)** 8,000 107,811
-----------
HONG KONG -- 1.7%
First Tractor Co., Ltd. - H 110,000 20,866
Hengan International Group Co., Ltd.** 320,000 123,878
South China Morning Post Holdings
Ltd. 166,000 92,109
VTech Holdings Ltd. 18,000 51,913
Yanzhou Coal Mining Co. Ltd. - H 152,000 25,302
-----------
314,068
-----------
INDIA -- 0.1%
Industrial Credit & Investment Corp. of
India Ltd. - GDR (Reg. S) 3,000 18,525
-----------
INDONESIA -- 0.3%
PT Astra International** 181,000 17,213
PT Telekomunikasi Indonesia
(Persero) - B 93,000 30,285
-----------
47,498
-----------
ITALY -- 5.7%
Autogrill SpA 20,000 197,564
Banca Popolare di Bergamo SpA 8,000 202,962
Finmeccanica SpA** 160,000 161,333
Gruppo Ceramiche Ricchetti SpA 125,000 125,772
Marzotto & Figli SpA 17,500 148,308
Unicem SpA 20,000 211,599
-----------
1,047,538
-----------
Number
of Shares Value
---------- -----------
JAPAN -- 17.8%
Amada Sonoike Co., Ltd. 33,000 $ 87,773
Chofu Seisakusho Co., Ltd. 6,300 80,219
Denny's Japan Co., Ltd. 6,000 142,869
Exedy Corp. 17,000 91,869
Fuji Machine Manufacturing Co., Ltd. 4,000 143,545
Fujimi, Inc. 2,100 88,837
Horiba Ltd. 9,000 98,109
Kansai Sekiwa Real Estate 28,000 118,213
Mabuchi Motors Co., Ltd. 2,000 148,949
Matsumotokiyoshi 4,000 176,307
Nichicon Corp. 13,000 176,729
Nihon Unisys Ltd. 15,000 277,379
Nippon Cable System 19,000 146,795
Nippon Denwa Shisetsu Co. 27,000 102,592
Okumura Corp. 26,000 106,696
Plenus Co., Ltd. 4,400 137,465
Rinnai Corp. 9,000 180,866
Sanyo Shinpan Finance Co. 3,000 127,670
Sumitomo Forestry Co., Ltd. 12,000 82,580
Sumitomo Realty & Development
Co., Ltd. 45,000 170,607
Toppan Forms Co. Ltd. 7,000 118,804
Trusco Nakayama Corp. 9,000 98,792
Tsubaki Nakashima Co. Ltd. 16,000 107,405
World Co., Ltd. 5,000 268,091
-----------
3,279,161
-----------
KOREA -- 1.2%
Hana Bank - GDR (Reg. S) 19,800 212,355
-----------
NETHERLANDS -- 6.8%
Athlon Groep NV 7,500 197,160
GTI Holdings NV 10,000 194,326
Hunter Douglas NV 7,500 218,616
NBM-Amstelland NV 10,000 216,457
Seagull Holding NV** 14,000 207,820
United Pan-Europe Communications
NV (UPC)** 5,500 215,540
-----------
1,249,919
-----------
NORWAY -- 1.7%
NCL Holdings ASA** 60,000 128,870
Petroleum Geo Services ASA** 5,000 76,338
Tandberg Telelvision ASA** 15,000 104,804
-----------
310,012
-----------
PORTUGAL -- 0.8%
Brisa-Auto Estradas de Portugal SA 3,000 138,943
-----------
SINGAPORE -- 2.2%
Fraser & Neave Ltd. 40,000 142,321
GP Batteries International Ltd. 61,000 89,286
Keppel Tatlee Bank Ltd. 108,000 181,823
-----------
413,430
-----------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
39
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
INTERNATIONAL SMALL CAP EQUITY PORTFOLIO (CONCLUDED)
Number
AS OF MARCH 31, 1999 (UNAUDITED) of Shares Value
---------- -----------
COMMON STOCKS (CONTINUED)
SPAIN -- 7.8%
Abengoa SA 5,000 $ 141,102
Acciona SA 3,200 164,063
Aldeasa SA 5,000 173,274
Azkoyen SA 3,500 102,966
Cortefiel SA 5,000 116,056
Federico Paternina SA** 10,000 152,222
Indra Sistemas SA** 30,000 309,626
Sol Melia SA 3,000 109,956
Superdiplo SA** 7,000 166,483
-----------
1,435,748
-----------
SWEDEN -- 1.6%
Europolitan Holdings AB 2,000 184,361
Scandic Hotels AB 4,000 114,800
-----------
299,161
-----------
SWITZERLAND -- 2.5%
Kuoni Reisen AG - B 60 222,950
Schindler Holding AG 150 232,983
-----------
455,933
-----------
THAILAND -- 0.9%
Bangkok Bank Public Co. Ltd.
(Foreign shares)** 28,000 57,394
Golden Land Property Development
Public Co. Ltd. (Foreign shares)** 160,000 51,111
Siam Cement Public Co. Ltd.
(Foreign shares)** 3,000 60,695
-----------
169,200
-----------
UNITED KINGDOM -- 24.3%
Anglo Irish Bank Corp., PLC 100,000 287,347
Avon Rubber PLC 20,000 166,597
Axon Group PLC** 35,000 153,965
Bovis Homes Group PLC 40,000 209,860
British Regional Airways PLC** 49,100 60,636
Cattles PLC 16,000 183,773
Filtronic Comtek PLC 15,000 192,749
Firstgroup PLC 25,000 165,265
GAME PLC 75,000 145,288
H & C Furnishings PLC 80,000 177,574
Hicking Pentecost PLC 60,000 98,311
Jarvis Hotels PLC 100,000 246,989
Jarvis PLC 20,000 179,673
Monsoon PLC 70,000 71,191
Morland PLC 25,000 173,135
Peter Black Holdings PLC 40,000 204,372
Pressac Holdings PLC 50,000 187,663
Serco Group PLC 4,100 97,294
Seton Scholl Healthcare Group PLC 6,000 77,487
SGB Group PLC 40,000 145,611
SIG PLC 50,000 127,934
Skillgroup PLC 45,000 221,201
T & S Stores PLC 40,000 189,520
The Mayflower Corp., PLC 75,000 212,484
Transtec PLC 175,000 80,514
Cannons Group PLC 65,000 197,793
Wyko Group PLC 125,000 210,869
-----------
4,465,095
-----------
TOTAL COMMON STOCKS
(Cost $17,431,454) 16,856,350
-----------
Number
of Shares Value
---------- -----------
PREFERRED STOCKS -- 4.2%
Dyckerhoff AG Non Voting 500 $ 134,409
GEA AG Non Voting 7,500 151,412
Koenig & Bauer AG Non Voting 10,000 212,679
Quante AG Non Voting 1,000 181,371
Sartorius AG Non Voting 500 101,967
-----------
TOTAL PREFERRED STOCKS
(Cost $989,295) 781,838
-----------
TOTAL INVESTMENTS IN
SECURITIES
(Cost $18,420,749*) 95.9% 17,638,188
OTHER ASSETS IN EXCESS
OF LIABILITIES 4.1% 751,193
------ -----------
NET ASSETS (Applicable to 1,659,988
Institutional shares, 1 Service share,
79,045 Investor A shares, 152,362
Investor B shares and 42,631
Investor C shares outstanding) 100.0% $18,389,381
====== ===========
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
INSTITUTIONAL SHARE
($15,789,951 / 1,659,988) $ 9.51
======
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
SERVICE SHARE
($9 / 1) $ 9.49
======
NET ASSET VALUE AND
REDEMPTION PRICE PER
INVESTOR A SHARE
($750,330 / 79,045) $ 9.49
======
MAXIMUM OFFERING PRICE
PER INVESTOR A SHARE
($9.49 / 0.950) $ 9.99
======
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
(SUBJECT TO A MAXIMUM CONTINGENT
DEFERRED SALES CHARGE OF 4.5%)
PER INVESTOR B SHARE
($1,444,826 / 152,362) $ 9.48
======
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
(SUBJECT TO A MAXIMUM CONTINGENT
DEFERRED SALES CHARGE OF 1.0%)
PER INVESTOR C SHARE
($404,265 / 42,631) $ 9.48
======
- ---------------------
* Also cost for Federal income tax purposes. The gross unrealized appreciation
(depreciation) on a tax basis is as follows:
Gross unrealized appreciation $ 2,244,823
Gross unrealized depreciation (3,027,384)
-----------
$ (782,561)
===========
** Non-income producing security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
40
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
INTERNATIONAL EMERGING MARKETS PORTFOLIO
Number
AS OF MARCH 31, 1999 (UNAUDITED) of Shares Value
---------- -----------
COMMON STOCKS -- 92.5%
ARGENTINA -- 1.5%
Banco Rio de la Plata SA - ADR 66,000 $ 635,250
YPF Sociedad Anonima - ADR 12,500 394,531
-----------
1,029,781
-----------
BRAZIL -- 5.2%
Centrais Eletricas Brasileiras SA 29,500,000 575,057
Embratel Participacoes SA - ADR 18,100 302,044
Globo Cabo SA - ADR** 119,280 141,645
Iochpe Maxion SA** 3,133,338 56,537
Iochpe Maxion SA - ADR** 130,000 18,005
Telecomunicacoes Brasileiras SA 37,500,000 1,845,196
Uniao de Bancos Brasileiros
SA - GDR 29,000 558,250
-----------
3,496,734
-----------
CHILE -- 4.4%
Banco Santiago SA - ADR 55,000 969,375
Cia. de Telecomunicaciones de Chile
SA - ADR 29,000 683,312
Enersis SA - ADR 25,000 670,312
Gener SA - ADR 34,000 624,750
-----------
2,947,749
-----------
CHINA -- 0.5%
First Tractor Co., Ltd.- H 900,000 170,720
Guangdong Kelon Electric
Holding - H 156,000 113,736
Shenzhen Chiwan Wharf Holdings
Ltd. - B 500,000 49,680
-----------
334,136
-----------
EGYPT -- 1.4%
Olympic Group Financial
Investments Co. 186,000 819,083
Olympic Group Financial
Investments Co., Bearer Shares 30,182 106,648
-----------
925,731
-----------
ESTONIA -- 0.4%
Estonian Telecom Ltd. - GDR -
(Reg. 144A) 11,600 261,870
-----------
GREECE -- 5.9%
Alpha Credit Bank 22,680 1,504,851
Antenna TV SA - ADR 34,800 452,400
Hellenic Telecommunication
Organization SA 19,000 460,741
National Bank of Greece -
GDR (Reg. S)** 92,500 1,246,437
Panafon Hellenic Telecommunications 12,500 324,401
-----------
3,988,830
-----------
HONG KONG -- 1.8%
Asia Satellite Telecommunications
Holdings Ltd. 349,000 553,929
Yanzhou Coal Mining Co. Ltd., - H 2,555,000 425,309
YGM Trading Ltd. 600,000 270,983
-----------
1,250,221
-----------
HUNGARY -- 0.6%
Danubius Hotel & Spa** 22,650 412,927
-----------
Number
of Shares Value
---------- -----------
INDIA -- 5.4%
Gujarat Ambuja Cements Ltd. - GDR 68,000 $ 474,300
Industrial Credit & Investment Corp.
of India Ltd. - GDR (Reg. S) 108,000 666,900
Mahanagar Telephone Nigam Ltd. -
GDR (Reg. S) 45,000 477,000
Reliance Industries Ltd. - GDR 144,000 910,800
Tata Engineering & Locomotive
Co., Ltd. - GDR (Reg. S) 121,000 484,000
Videsh Sanchar Nigam Co., Ltd. -
GDR (Reg. S) 63,000 628,425
-----------
3,641,425
-----------
INDONESIA -- 2.4%
PT Astra International** 2,600,000 247,262
PT Indah Kiat Pulp & Paper 1,948,000 550,155
PT Telekomunikasi Indonesia
(Persero) - B 2,539,000 826,820
-----------
1,624,237
-----------
ISRAEL -- 5.1%
Bank Leumi of Israel Ltd. 420,000 745,922
Blue Square Chain Stores Properties
& Investments 54,000 763,210
Blue Square Ltd. - ADR 60,000 765,000
I. T. International Theatres Ltd. 16,500 220,275
Magyar Tavkozlesi RT - ADR 19,500 521,625
Makhteshim-Agan Industries Ltd.** 190,004 431,367
-----------
3,447,399
-----------
KOREA -- 11.6%
Hankook Tire Manufacturing Co. 299,300 1,683,105
Korea Electric Power Corp. 43,000 1,037,327
Housing & Commercial Bank Korea 90,000 1,797,066
L.G. Chemical Ltd. 126,736 1,611,313
Samsung Electronics Co. 22,259 1,723,394
-----------
7,852,205
-----------
MALAYSIA -- 1.1%
Genting Berhad 418,000 748,000
-----------
MEXICO -- 14.9%
Apasco SA de CV - ADR - A 34,000 1,035,055
Cementos de Mexico SA - CPO 302,000 1,232,426
Cifra SA de CV - V** 675,000 1,059,296
Corporacion Geo SA de CV - B 150,000 436,450
Fomento Economico Mexicano
SA de CV 230,000 703,046
Group Financiero Bancomer,
S.A. de C.V. - O 3,500,000 1,176,471
Grupo Financiero Banorte SA - B 402,500 526,801
Grupo Industrial Bimbo SA de
CV - A 440,000 979,832
Grupo Televisa SA - GDR 19,000 596,125
Telefonos de Mexico SA - ADR 35,000 2,292,500
-----------
10,038,002
-----------
PERU -- 1.7%
CPT Telefonica del Peru SA -
ADR - B 54,000 688,500
Luz del Sur SA - ADR (Reg. 144A) 50,000 430,180
-----------
1,118,680
-----------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
41
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
INTERNATIONAL EMERGING MARKETS PORTFOLIO (CONTINUED)
Number
AS OF MARCH 31, 1999 (UNAUDITED) of Shares Value
---------- -----------
COMMON STOCKS (CONTINUED)
PHILIPPINES -- 4.9%
Benpres Holdings Corp.** 5,200,000 $ 805,160
Manila Electric Co. - B 189,000 624,309
Metropolitan Bank & Trust Co. 45,000 357,096
Philippine Long Distance Telephone Co. 19,000 500,128
San Miguel Corp. - B 228,000 379,509
SM Prime Holdings, Inc. 3,000,000 619,354
-----------
3,285,556
-----------
POLAND -- 2.0%
Agora SA - GDR (Reg. S) 7,530 82,077
Bank Handlowy W Warszawie -
GDR (Reg. S) 32,200 391,230
Elektrim Spolka Akcyjna S.A. 53,000 562,986
Powsechney Bank Kredit 17,600 299,126
-----------
1,335,419
-----------
RUSSIA -- 0.6%
A.O. Tatneft - ADR - (Reg. S) 71,000 191,700
A.O. Mosenergo - ADR 54,000 120,150
Trade House Gum - ADR 100,000 109,500
-----------
421,350
-----------
SOUTH AFRICA -- 9.4%
ABSA Group Ltd. 96,000 457,880
Anglo American Corporation of
South Africa Ltd. 7,200 249,118
Anglovaal Industries Ltd. 290,000 361,033
Dimension Data Holdings Ltd. 210,000 930,311
Edgars Stores Ltd. 1 5
Firstrand Ltd. 490,000 468,211
Impala Platinum Holdings Ltd. 26,500 454,161
Liberty Life Association of Africa Ltd. 20,000 248,988
Metro Cash and Carry Ltd. 308,000 239,029
Nedcor Ltd. 22,470 499,896
Pepkor Ltd. 55,000 240,096
Rembrant Group 70,000 501,372
Sanlam Ltd. 500,000 431,687
Sasol Ltd. 90,000 443,814
South African Breweries Ltd., PLC 34,800 301,017
Tiger Oats 54,000 494,161
-----------
6,320,779
-----------
TAIWAN -- 4.9%
Accton Technology Corp. - GDR
(Reg. S) 166,014 547,846
Acer, Inc. - GDR (Reg. 144A)** 109,375 721,875
Acer, Inc. - GDR (Reg. S)** 100,000 660,000
Fubon Insurance Co. - GDR
(Reg. S) 65,000 637,000
Standard Food Taiwan Ltd. -
GDR (Reg. S) 43,210 243,056
Yageo Corp. - GDR (Reg. S)** 117,600 529,200
-----------
3,338,977
-----------
Number
of Shares Value
---------- -----------
THAILAND -- 6.2%
Bangkok Bank Public Co., Ltd.
(Foreign shares)** 607,600 $ 1,245,446
Bangkok Expressway Public Co., Ltd.
(Foreign shares)** 930,000 668,441
Golden Land Property Development
Public Co. Ltd., (Foreign shares)** 1,400,000 447,225
National Petrochemical PLC
(Foreign shares)** 1,109,000 501,877
PTT Exploration & Production 49,000 383,495
PTT Exploration & Production
(Foreign shares)** 19,000 148,702
Siam Cement Co., Ltd.
(Foreign shares)** 39,000 789,032
-----------
4,184,218
-----------
UNITED KINGDOM -- 0.6%
Saudi Arabian Investment Fund** 60,000 401,400
-----------
TOTAL COMMON STOCKS
(Cost $74,475,199) 62,405,626
-----------
PREFERRED STOCKS -- 5.8%
BRAZIL -- 5.8%
Banco Itau SA 554,000 282,238
Casa Anglo Brasileira SA 50,685,632 265,602
Cia Energetica de Minas Gerais 28,227,030 630,280
Cia Paranaense de Energia-
Copel - B 114,000,000 858,900
Companhia Vale do Rio Doce - A 18,500 271,980
Iochpe Maxion SA** 15,987,899 88,434
Petroleo Brasileiro SA 6,000,000 831,441
Sadia Concordia SA Industria e
Comercio - B 413,500 192,606
Telecomunicacoes de Sao Paulo SA 4,128,400 505,984
-----------
TOTAL PREFERRED STOCKS
(Cost $7,869,207) 3,927,465
-----------
Par
Maturity (000)
--------- ----------
CONVERTIBLE BONDS -- 0.7%
Yang Ming Marine Transport, Inc.
2.00% 10/06/99 $390 470,925
(Cost $435,819) -----------
TOTAL INVESTMENTS IN
SECURITIES
(Cost $82,780,225*) 99.0% 66,804,016
OTHER ASSETS IN EXCESS
OF LIABILITIES 1.0% 666,429
------ -----------
NET ASSETS (Applicable to 9,645,579
Institutional shares, 3,175,556 Service
shares, 374,249 Investor A shares,
137,840 Investor B shares and 5,255
Investor C shares outstanding) 100.0% $67,470,445
====== ===========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
42
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
INTERNATIONAL EMERGING MARKETS PORTFOLIO (CONCLUDED)
AS OF MARCH 31, 1999 (UNAUDITED) Value
-----------
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
INSTITUTIONAL SHARE AND
SERVICE SHARE
($64,883,126 / 12,821,135) $ 5.06
======
NET ASSET VALUE AND
REDEMPTION PRICE PER
INVESTOR A SHARE
($1,880,267 / 374,249) $ 5.02
======
MAXIMUM OFFERING PRICE
PER INVESTOR A SHARE
($5.02 / 0.950) $ 5.28
======
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
(SUBJECT TO A MAXIMUM CONTINGENT
DEFERRED SALES CHARGE OF 4.5%)
PER INVESTOR B SHARE
($681,084 / 137,840) $ 4.94
======
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
(SUBJECT TO A MAXIMUM CONTINGENT
DEFERRED SALES CHARGE OF 1.0%)
PER INVESTOR C SHARE
($25,968 / 5,255) $ 4.94
======
- --------------------
* Also cost for Federal income tax purposes. The gross unrealized appreciation
(depreciation) on a tax basis is as follows:
Gross unrealized appreciation $ 8,919,433
Gross unrealized depreciation (24,895,642)
------------
$(15,976,209)
============
** Non-income producing security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
43
<PAGE>
BLACKROCK FUNDS
SCHEDULE OF INVESTMENTS
SELECT EQUITY PORTFOLIO
Number
AS OF MARCH 31, 1999 (UNAUDITED) of Shares Value
---------- --------------
COMMON STOCKS -- 98.8%
AEROSPACE -- 1.6%
Boeing Co. 219,100 $ 7,476,787
Lockheed Martin Corp. 256,600 9,670,612
United Technologies Corp. 97,500 13,205,156
--------------
30,352,555
--------------
AIR TRANSPORTATION -- 0.9%
AMR Corp. 163,100 9,551,544
Delta Air Lines, Inc. 110,600 7,686,700
--------------
17,238,244
--------------
BANKS -- 6.9%
Bank One Corp. 578,252 31,840,001
BankAmerica Corp. 445,819 31,485,967
BankBoston Corp. 237,000 10,265,062
Chase Manhattan Corp. 360,740 29,332,671
U.S. Bancorp 266,800 9,087,875
Wells Fargo Co. 488,300 17,121,019
--------------
129,132,595
--------------
BEVERAGES -- 3.0%
Anheuser-Busch Cos., Inc. 148,300 11,298,606
Coca-Cola Co. 520,800 31,964,100
PepsiCo, Inc. 324,300 12,708,506
--------------
55,971,212
--------------
CHEMICALS -- 2.4%
Air Products & Chemicals, Inc. 218,600 7,487,050
Dow Chemical Co. 52,200 4,864,387
E.I. du Pont de Nemours & Co. 284,370 16,511,233
PPG Industries, Inc. 128,100 6,565,125
Union Carbide Corp. 200,000 9,037,500
--------------
44,465,295
--------------
COMPUTER & OFFICE EQUIPMENT -- 6.4%
Cisco Systems, Inc.** 339,525 37,199,208
Compaq Computer Corp. 452,100 14,325,919
Dell Computer Corp. 247,700 10,124,737
International Business Machines
Corp. 258,100 45,748,225
Xerox Corp. 226,400 12,084,100
--------------
119,482,189
--------------
COMPUTER SOFTWARE & SERVICES -- 5.7%
America Online, Inc.** 91,400 13,344,400
Microsoft Corp.** 1,028,400 92,170,350
--------------
105,514,750
--------------
ELECTRONICS -- 9.5%
Applied Materials, Inc.** 162,200 10,005,712
Emerson Electric Co. 217,300 11,503,319
General Electric Co. 623,300 68,952,562
Hewlett Packard Co. 267,100 18,112,719
Intel Corp. 345,700 41,181,512
Motorola, Inc. 200,800 14,708,600
Texas Instruments, Inc. 136,300 13,527,775
--------------
177,992,199
--------------
Number
of Shares Value
---------- --------------
ENERGY & UTILITIES -- 2.1%
Cinergy Corp. 247,200 $ 6,798,000
Entergy Corp. 286,300 7,873,250
FPL Group, Inc. 237,300 12,636,225
NIPSCO Industries, Inc. 207,300 5,597,100
Southern Co. 257,400 6,000,637
--------------
38,905,212
--------------
ENTERTAINMENT & LEISURE -- 2.3%
Fox Entertainment Group, Inc.** 339,100 9,198,087
Time Warner, Inc. 215,400 15,306,862
Walt Disney Co. 599,950 18,673,444
--------------
43,178,393
--------------
FINANCE -- 6.2%
Associates First Capital Corp.,
Class A 159,453 7,175,426
CIT Group, Inc., Class A 281,700 8,609,456
Citigroup, Inc. 294,900 18,836,737
Equifax, Inc. 187,300 6,438,437
Federal National Mortgage
Association 249,400 17,270,950
Fleet Financial Group, Inc. 382,200 14,380,275
Household International, Inc. 188,629 8,606,198
Morgan Stanley, Dean Witter
& Co. 250,200 25,004,363
Washington Mutual, Inc. 222,250 9,084,469
--------------
115,406,311
--------------
FOOD & AGRICULTURE -- 1.1%
Bestfoods, Inc. 342,400 16,092,800
H.J. Heinz Co. 110,400 5,230,200
--------------
21,323,000
--------------
INSURANCE -- 3.4%
Allstate Corp. 351,700 13,034,881
American International Group, Inc. 273,750 33,021,094
Cigna Corp. 139,800 11,716,988
Conseco, Inc. 190,000 5,866,250
--------------
63,639,213
--------------
MACHINERY & HEAVY EQUIPMENT -- 0.8%
Illinois Tool Works, Inc. 251,000 15,530,625
--------------
MANUFACTURING -- 0.4%
Tyco International Ltd. 100,700 7,225,225
--------------
MEDICAL & MEDICAL SERVICES -- 1.3%
Columbia Healthcare Corp. 312,450 5,917,022
United Healthcare Corp. 362,400 19,071,300
--------------
24,988,322
--------------
MEDICAL INSTRUMENTS & SUPPLIES -- 0.5%
Medtronic, Inc. 118,500 8,502,375
--------------
METAL & MINING -- 0.5%
Alcoa, Inc. 118,800 4,893,075
Barrick Gold Corp. 223,000 3,804,938
--------------
8,698,013
--------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
44
<PAGE>
BLACKROCK FUNDS
SCHEDULE OF INVESTMENTS
SELECT EQUITY PORTFOLIO (CONCLUDED)
Number
AS OF MARCH 31, 1999 (UNAUDITED) of Shares Value
---------- --------------
COMMON STOCKS (CONTINUED)
MOTOR VEHICLES -- 2.1%
Ford Motor Co. 295,125 $ 16,748,344
General Motors Corp. 186,500 16,202,188
Goodyear Tire & Rubber Co. 117,300 5,843,006
--------------
38,793,538
--------------
OIL & GAS -- 7.2%
Atlantic Richfield Co. 129,700 9,468,100
BP Amoco PLC ADR 101,150 10,209,828
Enron Corp. 117,150 7,526,888
Exxon Corp. 673,200 47,502,675
Mobil Corp. 175,100 15,408,800
Royal Dutch Petroleum Co. 424,400 22,068,800
Schlumberger Ltd. 187,000 11,255,063
Unocal Corp. 290,000 10,675,625
--------------
134,115,779
--------------
PAPER & FOREST PRODUCTS -- 0.8%
Fort James Corp. 265,100 8,400,356
Westvaco Corp. 276,600 5,808,600
--------------
14,208,956
--------------
PHARMACEUTICALS -- 10.9%
American Home Products Corp. 459,700 29,995,425
Bristol-Myers Squibb Co. 567,300 36,484,481
Eli Lilly & Co. 264,600 22,457,925
Johnson & Johnson 254,400 23,834,100
Merck & Co., Inc. 546,100 43,790,394
Pfizer, Inc. 240,000 33,300,000
Warner-Lambert Co. 201,500 13,336,781
--------------
203,199,106
--------------
PUBLISHING & PRINTING -- 0.5%
Tribune Co. 140,000 9,161,250
--------------
REAL ESTATE -- 0.5%
Starwood Hotels & Resorts
Worldwide, Inc. 291,984 8,339,793
--------------
RESTAURANTS -- 1.0%
McDonald's Corp. 432,200 19,584,063
--------------
RETAIL MERCHANDISING -- 6.1%
Albertson's, Inc. 166,700 9,053,894
Home Depot, Inc. 346,700 21,582,075
J.C. Penney Co., Inc. 233,700 9,464,850
Kmart Corp. ** 756,200 12,713,613
Pep Boys-Manny, Moe & Jack 243,700 3,716,425
Rite Aid Co. 90,200 2,255,000
Sears, Roebuck & Co. 217,400 9,823,763
Toys 'R' Us, Inc.** 339,700 6,390,606
Wal-Mart Stores, Inc. 424,600 39,142,813
--------------
114,143,039
--------------
Number
of Shares Value
---------- --------------
SOAPS & COSMETICS -- 3.0%
Colgate-Palmolive Co. 169,500 $ 15,594,000
Gillette Co. 226,900 13,486,369
Procter & Gamble Co. 269,800 26,423,538
--------------
55,503,907
--------------
TELECOMMUNICATIONS -- 10.6%
Alltel Corp. 225,000 14,034,375
AT&T Corp. 413,200 32,978,525
Bell Atlantic Corp. 293,100 15,149,606
Bellsouth Corp. 201,600 8,076,600
GTE Corp. 321,700 19,462,850
Lucent Technologies, Inc. 252,494 27,206,229
MCI Worldcom, Inc.** 363,950 32,232,322
Oracle Corp.** 372,562 9,826,323
SBC Communications, Inc. 702,400 33,100,600
US West, Inc. 90,300 4,972,144
--------------
197,039,574
--------------
TOBACCO -- 1.1%
Philip Morris Cos., Inc. 606,100 21,327,144
--------------
TOTAL COMMON STOCKS
(Cost $1,089,303,040) 1,842,961,877
--------------
Par
Maturity (000)
-------- ----------
SHORT TERM INVESTMENTS -- 1.2%
Federal Home Loan Bank
Discount Notes
4.72% 04/14/99 $ 1,000*** 998,267
Federal Home Loan Mortgage
Corp. Discount Notes
4.82% 04/01/99 20,000 20,000,000
Galileo Money Market Fund 1,676 1,675,502
--------------
TOTAL SHORT TERM INVESTMENTS
(Cost $22,673,798) 22,673,769
--------------
TOTAL INVESTMENTS IN
SECURITIES -- 100.0%
(Cost $1,111,976,838*) $1,865,635,646
==============
- --------------------
* Also cost for Federal income tax purposes. The gross unrealized appreciation
(depreciation) on a tax basis is as follows:
Gross unrealized appreciation $783,139,190
Gross unrealized depreciation (29,480,382)
------------
$753,658,808
============
** Non-income producing security.
***Principal amount of securities pledged as initial margin requirement
of $907,500 on 55 Standard & Poor's 500 Stock Index futures contracts expiring
June 1999. The value of such contracts was $17,782,875, thereby resulting in an
unrealized loss of $378,813.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
45
<PAGE>
BLACKROCK FUNDS
STATEMENT OF ASSETS AND LIABILITIES
SELECT EQUITY PORTFOLIO
MARCH 31, 1999 (UNAUDITED)
ASSETS
Investments at value (Cost $1,111,976,838) ................. $1,865,635,646
Collateral received for securities loaned .................. 179,165,125
Dividends receivable ....................................... 2,424,498
Interest receivable ........................................ 16,594
Investments sold receivable ................................ 13,285,412
Capital shares sold receivable ............................. 254,867
Prepaid expenses ........................................... 12,691
--------------
TOTAL ASSETS ........................................ 2,060,794,833
--------------
LIABILITIES
Payable upon return of securities loaned ................... 179,165,125
Investments purchased payable .............................. 9,903,591
Capital shares redeemed payable ............................ 289,082
Advisory fee payable ....................................... 832,563
Administrative fee payable ................................. 345,820
Transfer agent fee payable ................................. 121,827
Other accrued liabilities payable .......................... 481,014
Futures margin payable ..................................... 308,000
--------------
TOTAL LIABILITIES ................................... 191,447,022
--------------
NET ASSETS .................................................... $1,869,347,811
==============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER INSTITUTIONAL SHARE ($1,516,696,070 / 73,220,033) ...... $20.71
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER SERVICE SHARE ($232,989,521 / 11,254,564) .............. $20.70
======
NET ASSET VALUE AND REDEMPTION PRICE
PER INVESTOR A SHARE ($55,974,600 / 2,704,422) ............. $20.70
======
MAXIMUM OFFERING PRICE PER INVESTOR A SHARE
($20.70 / 0.955) ........................................... $21.68
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent deferred sales charge of 4.5%)
PER INVESTOR B SHARE ($58,940,602 / 2,881,746) ............. $20.45
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent deferred sales charge of 1.0%)
PER INVESTOR C SHARE ($4,747,018 / 232,101) ................ $20.45
======
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
46
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
INDEX EQUITY PORTFOLIO
AS OF MARCH 31, 1999 (UNAUDITED) Value
--------------
Investment in The U.S. Large Company
Series of The DFA Investment
Trust Company 99.5% $1,395,087,472
(Cost $1,005,624,456)
OTHER ASSETS IN EXCESS OF
LIABILITIES 0.5% 6,337,569
------ --------------
NET ASSETS (Applicable to 20,058,399
Institutional shares, 13,530,361 Service
shares, 2,658,697 Investor A shares,
9,454,286 Investor B shares and
11,106,189 Investor C shares
outstanding) 100.0% $1,401,425,041
====== ==============
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
INSTITUTIONAL SHARE
($496,316,766 / 20,058,399) $24.74
======
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
SERVICE SHARE
($334,620,146 / 13,530,361) $24.73
======
NET ASSET VALUE AND
REDEMPTION PRICE PER
INVESTOR A SHARE
($65,754,681 / 2,658,697) $24.73
======
MAXIMUM OFFERING PRICE
PER INVESTOR A SHARE
($24.73 / 0.970) $25.49
======
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
(SUBJECT TO A MAXIMUM CONTINGENT
DEFERRED SALES CHARGE OF 4.5%)
PER INVESTOR B SHARE
($232,090,668 / 9,454,286) $24.55
======
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
(SUBJECT TO A MAXIMUM CONTINGENT
DEFERRED SALES CHARGE OF 1.0%)
PER INVESTOR C SHARE
($272,642,780 / 11,106,189) $24.55
======
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS AND ACCOMPANYING FINANCIAL
STATEMENTS AND RELATED NOTES FOR THE DFA INVESTMENT TRUST COMPANY.
47
<PAGE>
BLACKROCK FUNDS
SCHEDULE OF INVESTMENTS
BALANCED PORTFOLIO
Number
AS OF MARCH 31, 1999 (UNAUDITED) of Shares Value
---------- ------------
COMMON STOCKS -- 58.7%
AEROSPACE -- 2.0%
Allied Signal, Inc. 112,000 $ 5,509,000
Boeing Co. 30,900 1,054,462
United Technologies Corp. 77,200 10,455,775
------------
17,019,237
------------
AIR TRANSPORTATION -- 0.4%
Continental Airlines, Class B 91,400 3,473,200
------------
BANKS -- 2.6%
Bank One Corp. 291,500 16,050,719
BankAmerica Corp. 86,900 6,137,312
------------
22,188,031
------------
BEVERAGES -- 1.0%
Coca-Cola Co. 86,900 5,333,487
PepsiCo, Inc. 73,400 2,876,362
------------
8,209,849
------------
CHEMICALS -- 1.0%
Dow Chemical Co. 38,600 3,597,037
E.I. du Pont de Nemours & Co. 92,700 5,382,394
------------
8,979,431
------------
COMPUTER & OFFICE EQUIPMENT -- 4.8%
Cisco Systems, Inc.** 173,700 19,031,006
Compaq Computer Corp. 270,300 8,565,131
International Business Machines
Corp. 48,300 8,561,175
Xerox Corp. 104,200 5,561,675
------------
41,718,987
------------
COMPUTER SOFTWARE & SERVICES -- 3.7%
Automatic Data Processing, Inc. 127,400 5,271,175
Microsoft Corp.** 293,400 26,295,975
------------
31,567,150
------------
ELECTRONICS -- 3.9%
Emerson Electric Co. 46,300 2,451,006
General Electric Co. 139,000 15,376,875
Intel Corp. 102,300 12,186,487
Motorola, Inc. 50,200 3,677,150
------------
33,691,518
------------
ENERGY & UTILITIES -- 1.6%
Entergy Corp. 144,800 3,982,000
NIPSCO Industries, Inc. 123,600 3,337,200
PECO Energy Co. 144,700 6,692,375
------------
14,011,575
------------
ENTERTAINMENT & LEISURE -- 1.0%
Time Warner, Inc. 38,600 2,743,012
Walt Disney Co. 179,500 5,586,937
------------
8,329,949
------------
FINANCE -- 5.3%
Associates First Capital Corp. Class A 96,500 4,342,501
Citigroup, Inc. 96,500 6,163,937
Federal National Mortgage Association 139,000 9,625,750
Fleet Financial Group, Inc. 193,000 7,261,625
Morgan Stanley, Dean Witter & Co. 135,100 13,501,556
Washington Mutual, Inc. 115,800 4,733,325
------------
45,628,694
------------
Number
of Shares Value
---------- -----------
FOOD & AGRICULTURE -- 0.5%
Bestfoods, Inc. 84,900 $ 3,990,300
------------
INSURANCE -- 2.6%
Allstate Corp. 85,900 3,183,669
American International Group, Inc. 130,300 15,717,437
Chubb Corp. 61,800 3,619,162
------------
22,520,268
------------
MACHINERY & HEAVY EQUIPMENT -- 0.9%
Illinois Tool Works, Inc. 123,600 7,647,750
------------
MEDICAL & MEDICAL SERVICES -- 0.4%
United Healthcare Corp. 71,400 3,757,425
------------
MEDICAL INSTRUMENTS & SUPPLIES -- 0.9%
Medtronic, Inc. 112,000 8,036,000
------------
METAL & MINING -- 0.4%
Minnesota Mining & Manufacturing Co. 44,400 3,141,300
------------
MOTOR VEHICLES -- 1.3%
Ford Motor Co. 96,500 5,476,375
General Motors Corp. 38,600 3,353,375
Goodyear Tire & Rubber Co. 56,000 2,789,500
------------
11,619,250
------------
OIL & GAS -- 3.8%
Chevron Corp. 69,400 6,137,562
Exxon Corp. 108,100 7,627,806
Mobil Corp. 77,200 6,793,600
Royal Dutch Petroleum Co. ADR 123,600 6,427,200
Schlumberger Ltd. 54,000 3,250,125
Tenneco, Inc. 96,500 2,695,969
------------
32,932,262
------------
PHARMACEUTICALS -- 6.5%
American Home Products Corp. 216,200 14,107,050
Bristol-Myers Squibb Co. 204,600 13,158,337
Eli Lilly & Co. 119,700 10,159,537
Johnson & Johnson 71,400 6,689,288
Merck & Co., Inc. 154,400 12,380,950
------------
56,495,162
------------
RESTAURANTS -- 1.0%
McDonald's Corp. 193,000 8,745,313
------------
RETAIL MERCHANDISING -- 4.9%
Home Depot, Inc. 49,500 3,081,375
Kroger Co.** 115,900 6,939,513
Lowe's Cos., Inc. 193,000 11,676,500
Staples, Inc.** 231,600 7,613,850
Wal-Mart Stores, Inc. 144,800 13,348,750
------------
42,659,988
------------
SOAPS & COSMETICS -- 1.6%
Colgate-Palmolive Co. 77,200 7,102,400
Procter & Gamble Co. 65,600 6,424,700
------------
13,527,100
------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
48
<PAGE>
BLACKROCK FUNDS
SCHEDULE OF INVESTMENTS
BALANCED PORTFOLIO (CONTINUED)
Number
AS OF MARCH 31, 1999 (UNAUDITED) of Shares Value
---------- ------------
COMMON STOCKS (CONTINUED)
TELECOMMUNICATIONS -- 5.6%
Airtouch Communications, Inc.** 52,100 $ 5,034,163
Alltel Corp. 90,700 5,657,413
AT&T Corp. 77,200 6,161,525
Bell Atlantic Corp. 112,700 5,825,181
GTE Corp. 65,600 3,968,800
Lucent Technologies, Inc. 75,300 8,113,575
MCI Worldcom, Inc.** 58,000 5,136,625
SBC Communications, Inc. 177,600 8,369,400
------------
48,266,682
------------
TOBACCO -- 1.0%
Philip Morris Cos., Inc. 241,300 8,490,744
------------
TOTAL COMMON STOCKS
(Cost $244,363,412) 506,647,165
------------
Par
Maturity (000)
-------- ----------
PREFERRED STOCKS -- 0.2%
Centaur Funding Corp. Cumulative
9.08% 04/21/20 $1,500 1,665,285
(Cost $1,500,000) ------------
U.S. GOVERNMENT AND
AGENCY OBLIGATIONS -- 6.2%
Small Business Administration
Participation Certificates,
Series 97-20F, Class 1
7.20% 06/01/17 2,227 2,312,425
Small Business Investment Cos.
Pass-Through, Series 97-P10C,
Class 1
6.85% 08/01/07 1,250 1,277,961
U.S. Treasury Bonds
14.00% 11/15/11 2,375 3,601,846
8.50% 02/15/20 5,105 6,678,404
6.50% 11/15/26 2,095 2,274,180
6.38% 08/15/27 3,155 3,378,159
6.13% 11/15/27 985 1,023,735
5.25% 11/15/28 2,435 2,275,682
5.25% 02/15/29 5,490 5,197,196
U.S. Treasury Bonds (CPI)
3.63% 04/15/28 7,655 7,428,096
U.S. Treasury Notes
4.50% 09/30/00 1,520 1,509,595
5.38% 06/30/03 345 347,376
5.75% 08/15/03 2,200 2,246,663
7.25% 05/15/04 695 757,634
6.13% 08/15/07 3,260 3,415,083
U.S. Treasury Notes (CPI)
3.63% 01/15/08 7,700 7,644,240
3.88% 01/15/09 2,175 2,170,636
------------
TOTAL U.S. GOVERNMENT AND
AGENCY OBLIGATIONS
(Cost $54,536,300) 53,538,911
------------
MORTGAGE PASS-THROUGHS -- 13.0%
Federal Home Loan Mortgage
Corporation
5.13% 10/15/08 2,600 2,461,792
7.50% 10/09-10/27 1,773 1,830,468
6.00% 11/13-03/14 1,000 993,849
6.50% 11/01/25 12,000 11,947,500
7.00% 12/27-12/28 760 771,239
Par
Maturity (000) Value
-------- ---------- ------------
MORTGAGE PASS-THROUGHS (CONTINUED)
Federal National Mortgage Association
6.94% 03/19/07 $ 750 $ 763,388
6.80% 07/23/07 2,400 2,468,126
7.00% 11/07-10/25 5,711 5,829,165
6.10% 02/04/09 3,100 3,032,482
6.50% 08/10-12/28 11,142 11,133,806
5.50% 10/13-02/14 44,124 42,965,600
6.00% 11/13-01/29 17,643 17,162,073
7.07% 10/01/25 1,000 994,688
Government National Mortgage
Association
6.50% 01/24-07/24 5,122 5,495,084
7.50% 04/27-07/27 998 1,028,127
MLCC Mortgage Investors, Inc.,
Series 95-C1, Class C
7.68%**** 05/25/15 1,120 1,120,466
MLCC Mortgage Investors, Inc.,
Series 96-C1, Class A2
7.24% 04/25/28 1,000 1,028,584
MLCC Mortgage Investors, Inc.,
Series 96-C1, Class A3
7.42% 04/25/28 1,500 1,566,452
------------
TOTAL MORTGAGE PASS-THROUGHS
(Cost $113,313,668) 112,592,889
------------
MULTIPLE CLASS MORTGAGE
PASS-THROUGHS -- 0.4%
Federal Home Loan Mortgage Corp.,
Series 65, Class A (PO)
4.09% 03/15/24 345 187,876
Federal National Mortgage Association,
Series 93-216, Class B (PO)
8.79% 08/25/23 40 38,985
Federal National Mortgage Association,
Series 96-54, Class A (PO)
6.50% 04/25/21 394 358,477
Federal National Mortgage Association,
Series 97-44, Class L (PO)
4.35% 02/25/24 360 230,850
Federal National Mortgage Association,
Series 97-58, Class PG (IO)
7.00% 09/18/27 1,061 229,446
Federal National Mortgage Association,
Series 99-17, Class HJ (PO)
5.00% 12/25/23 250 133,281
Federal National Mortgage Association,
Series 99-17, Class JH (PO)
5.00% 04/25/24 315 172,758
Residential Accredit Loans, Inc.,
Series 97-QS7, Class A1
7.50% 07/25/27 676 677,766
Residential Asset Securitization Trust,
Series 97-A7, Class A1
7.50% 09/25/27 945 955,051
Salomon Brothers Mortgage
Securities VI, Series 87-1 (IO)
7.00% 02/17/17 518 140,392
Salomon Brothers Mortgage
Securities VI, Series 87-1 (PO)
7.00% 02/17/17 579 462,038
Salomon Brothers Mortgage
Securities VI, Series 87-2 (IO)
6.00% 03/06/17 325 88,857
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
49
<PAGE>
BLACKROCK FUNDS
SCHEDULE OF INVESTMENTS
BALANCED PORTFOLIO (CONTINUED)
Par
AS OF MARCH 31, 1999 (UNAUDITED) Maturity (000) Value
-------- ---------- ------------
MULTIPLE CLASS MORTGAGE
PASS-THROUGHS (CONTINUED)
Salomon Brothers Mortgage
Securities VI, Series 87-2 (PO)
5.00% 03/06/17 $ 325 $ 258,649
------------
TOTAL MULTIPLE CLASS MORTGAGE
PASS-THROUGHS
(Cost $3,978,092) 3,934,426
------------
COMMERCIAL MORTGAGE-BACKED
SECURITIES -- 4.0%
Asset Securitization Corp.,
Series 96-D2, Class A1
6.92% 02/14/29 1,180 1,212,289
Bayview Financial Acquisition Trust,
Series 98-1, Class MII4
5.89% 01/01/02 3,303 3,302,904
Chase Credit Card Master Trust,
Series 97-5, Class A
6.19% 08/15/05 4,610 4,664,620
COMM, Series 99-1, Class A2
6.46% 09/15/08 1,580 1,586,692
Commercial Mortgage Asset Trust,
Series 99-C1, Class A3
6.25% 09/17/10 1,200 1,207,500
Credit Suisse First Boston Mortgage
Securities Corp., Series 95-AEW1,
Class C
7.46% 11/25/27 650 652,662
Empire Funding Home Loan Owner
Trust, Series 98-2, Class A4
6.53% 03/25/19 2,500 2,490,625
Ford Credit Auto Owner Trust
Serics 98-C, Class A5
5.86% 10/15/02 1,700 1,711,953
General Motors Acceptance Corp.
Commercial Mortgage Securities,
Inc., Series 98-C2, Class A2
6.42% 08/15/08 1,100 1,103,509
J.P. Morgan Commercial Mortgage
Finance Corp., Series 96-C3,
Class A1
7.33% 04/25/28 444 453,696
Merit Securities Corp., Series 98-11,
Class 1A1
6.58% 07/28/22 515 514,995
Midland Royalty Acceptance Corp.,
Series 96-C, Class A
7.23% 01/25/29 1,000 1,042,500
Morgan Stanley Capital Investments,
Series 98-HF2, Class A2
6.48% 11/15/30 1,500 1,510,217
Mortgage Capital Funding, Inc.,
Series 98-MC2, Class A1
6.33% 10/18/07 1,741 1,756,684
Navistar Financial Corp. Owner Trust,
Series 98-A, Class A
5.94% 11/15/04 1,831 1,846,035
NPF VI, Inc., Health Care Receivables
Securitization Program,
Series 98-1, Class A
6.22% 06/01/02 1,700 1,705,023
Premier Auto Trust, Series 99-1,
Class A3
5.69% 11/08/02 1,800 1,806,469
Par
Maturity (000) Value
-------- ---------- ------------
COMMERCIAL MORTGAGE-BACKED
SECURITIES (CONTINUED)
Premier Auto Trust, Series 95-4,
Class A4
6.00% 05/06/00 $ 36 $ 36,293
Prudential Securities Secured
Financing Corp., Series 98-C1,
Class A1B
6.51% 07/15/08 920 922,548
Reilly Mortgage Securities, Series 97-A
6.90% 11/11/18 2,414 2,401,571
Standard Credit Card Master Trust,
Series 95-1, Class A
8.25% 01/07/07 1,310 1,466,327
Structured Asset Securities Corp.,
Series 98-C2-A, Class A
5.11%** 01/25/00 518 517,026
Structured Asset Securities Corp.,
Series 96-CFL, Class X1 (IO)
5.05% 02/25/28 5,486 282,859
------------
TOTAL COMMERCIAL MORTGAGE-
BACKED SECURITIES
(Cost $36,029,316) 34,194,997
------------
PROJECT LOANS -- 0.3%
Federal Housing Authority, Huntoon
Paige, Construction Loan Collateral
7.32% 10/01/24 1,397 1,412,431
Huntoon Paige, Series 97-B, FHA
7.32% 10/01/24 1,307 1,320,843
------------
TOTAL PROJECT LOANS
(Cost $2,749,756) 2,733,274
------------
ASSET BACKED SECURITIES -- 3.9%
Arcadia Automobile Receivables Trust,
Series 98-B, Class A3
5.95% 11/15/02 3,400 3,408,500
Brazos Student Loan Finance Corp.,
Series 98-A, Class A2
5.46%** 06/01/23 2,700 2,634,188
CIT Group Securitization Corp.,
Series 95-2, Class B
7.65% 05/15/26 1,050 910,875
Copelco Capital Funding Corp.,
Series 97-A, Class A3
6.27% 04/20/05 1,400 1,400,382
Fifth Third Auto Grantor Trust,
Series 96-B, Class A
6.45% 03/15/02 183 183,925
FMAC Loan Receivables Trust,
Series 97-B, Class A
6.85% 09/15/19 1,212 1,210,210
Green Tree Financial Corp.,
Series 93-3, Class B
6.85% 10/15/18 1,177*** 1,097,859
Green Tree Financial Corp.,
Series 95-7, Class B1
7.35% 11/15/26 1,000 968,940
Green Tree Financial Corp.,
Series 96-6, Class A6
7.95% 08/15/26 1,000 1,066,719
Green Tree Financial Corp.,
Series 96-7, Class A6
7.65% 10/15/27 1,000 1,047,557
Green Tree Financial Corp.,
Series 97-1, Class B1
7.23% 03/02/28 1,000 955,700
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
50
<PAGE>
BLACKROCK FUNDS
SCHEDULE OF INVESTMENTS
BALANCED PORTFOLIO (CONTINUED)
Par
AS OF MARCH 31, 1999 (UNAUDITED) Maturity (000) Value
-------- ---------- ------------
ASSET BACKED SECURITIES (CONTINUED)
Green Tree Financial Corp.,
Series 97-3, Class A7
7.64% 07/15/28 $ 2,400 $ 2,471,693
Green Tree Financial Corp.,
Series 97-3, Class B2
8.03% 07/15/28 1,150 949,160
Mellon Bank Home Equity Loan Trust,
Series 96-1, Class B2
5.36%** 04/15/26 602 596,796
Newcourt Equipment Trust Securities,
Series 98-2, Class A3
5.45% 10/15/02 2,400 2,390,867
Nissan Auto Receivables Grantor Trust,
Series 95-A, Class A
6.10% 08/15/01 180 180,871
Nissan Auto Receivables Grantor Trust,
Series 98-A, Class A
5.45% 04/15/04 1,256 1,256,653
NPC IX, Inc. Health Care Receivables,
Inc., Series 97-1, Class A
6.34% 07/01/00 1,700 1,703,188
Puget Power Conservation Grantor Trust,
Series 97-1, Class A
6.23% 07/11/02 1,429 1,434,668
Sears Credit Account Master Trust,
Series 96-4, Class A
6.45% 10/16/06 700 706,707
Sears Credit Account Master Trust,
Series 96-3, Class A
7.00% 07/15/08 2,000 2,093,328
Sears Credit Account Master Trust,
Series 98-1, Class A
5.80% 08/15/05 1,000 995,233
Sears Credit Account Master Trust II,
Series 99-1, Class A
5.65% 03/15/09 1,400 1,384,250
The Money Store Home Equity Trust,
Series 95-A, Class A8
8.13% 06/15/15 457 466,553
The Money Store Home Equity Trust,
Series 97-C, Class MH2
7.36% 02/15/24 1,200 1,213,166
The Money Store Residential Trust,
Series 98-I, Class A1
6.41% 03/15/06 516 515,991
------------
TOTAL ASSET BACKED SECURITIES
(Cost $34,519,843) 33,243,979
------------
CORPORATE BONDS -- 7.1%
FINANCE -- 3.1%
AFC Capital Trust Investments
8.21% 02/03/27 1,000 1,073,396
AMB Property L.P.
6.90% 06/30/05 1,200 1,173,898
American General Capital Securities
7.57% 12/01/45 2,800 2,915,500
Barnett Capital Trust Investments
8.06% 12/01/26 1,500 1,584,442
Bear Stearns Capital Trust Investments
7.00% 01/15/27 1,050 1,053,507
BGB Finance
6.63% 12/30/99 300 302,225
CSW Investments
6.95% 08/01/01 1,600 1,621,597
Equitable Cos., Inc.
7.00% 04/01/28 635 635,031
Par
Maturity (000) Value
-------- ---------- ------------
CORPORATE BONDS (CONTINUED)
FINANCE (CONTINUED)
Fairfax Financial Hldgs. Ltd.
8.30% 04/15/26 $ 305 $ 307,277
Florida Windstorm Underwriting
Association
7.13% 02/25/19 1,190 1,197,301
Ford Motor Credit Co.
5.75% 02/23/04 2,095 2,079,288
5.80% 01/12/09 5 4,807
Fremont General Corp.
7.70% 03/17/04 1,440 1,448,194
Lehman Brothers Holdings., Inc.
6.75% 09/24/01 3,855 3,882,026
Merrill Lynch & Co.
5.75% 11/04/02 1,355 1,346,935
National City Corp.
5.75% 02/01/09 3,130 2,984,120
Salomon, Inc.
8.90% 02/15/00 300 309,039
Simon Property Group L.P.
6.63% 06/15/03 1,400 1,392,328
Yorkshire Power Finance
6.50% 02/25/08 1,750 1,732,500
------------
27,043,411
------------
INDUSTRIAL -- 2.0%
Ahmanson Capital Trust Investments
8.36% 12/01/26 3,440 3,672,200
Coca-Cola Enterprises
5.71% 03/18/37 2,030 2,045,225
CSX Corp.
6.80% 12/01/28 3,000 2,874,707
Hyder PLC
7.38% 12/15/28 1,485 1,461,071
Jones Apparel
6.25% 10/01/01 2,055 2,031,881
Panamerican Beverages
7.25% 07/01/09 1,300 1,092,317
RJR Nabisco, Inc.
6.85% 06/15/05 600 604,707
7.05% 07/15/07 555 567,302
Time Warner, Inc.
4.90% 07/29/99 1,000 997,500
Williams Holdings of Delaware
6.13% 12/01/03 2,320 2,296,827
------------
17,643,737
------------
TELECOMMUNICATIONS -- 0.9%
AT&T Capital Corp.
6.75% 02/04/02 2,700 2,751,423
AT&T Corp.
6.50% 03/15/29 1,100 1,077,387
Sprint Capital Corp.
6.88% 11/15/28 2,345 2,311,332
Worldcom, Inc.
6.95% 08/15/28 1,200 1,225,500
------------
7,365,642
------------
TRANSPORTATION -- 0.2%
ERAC USA Finance Co.
6.95% 03/01/04 450 456,705
Federal Express
7.11% 01/02/14 915 910,482
------------
1,367,187
------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
51
<PAGE>
BLACKROCK FUNDS
SCHEDULE OF INVESTMENTS
BALANCED PORTFOLIO (CONCLUDED)
Par
AS OF MARCH 31, 1999 (UNAUDITED) Maturity (000) Value
-------- ---------- ------------
CORPORATE BONDS (CONTINUED)
UTILITY -- 0.7%
Israel Electric Corp. Ltd.
7.88% 12/15/26 $ 850 $ 800,399
Mobile Energy Services, L.L.C.
8.67% 01/01/17 676 169,001
National Rural Utilities Corp.
5.70% 01/15/10 2,750 2,658,570
Pennsylvania Power & Light Co.
9.38% 07/01/21 1,500 1,651,290
Trans - Canada Pipelines
6.49% 01/21/09 592 600,398
------------
5,879,658
------------
YANKEE -- 0.3%
Empresa Electrica Pehuenche
7.30% 05/01/03 1,670 1,605,596
Poland Global
3.00% 10/27/24 1,060 684,363
------------
2,289,959
------------
TOTAL CORPORATE BONDS
(Cost $64,207,976) 63,254,879
------------
MUNICIPAL BONDS -- 0.7%
Los Angeles Cnty. Pension Oblig.,
Series B
8.62% 06/30/06 600 687,000
8.62% 06/30/06 2,350 2,690,750
6.97% 06/30/08 1,000 1,056,250
New Jersey Econ. Dev.
Auth. St. Pension Fdg., Series B
7.56% 02/15/16 2,425 797,219
7.59% 02/15/17 850 261,375
7.65% 02/15/20 895 225,988
7.62% 02/15/21 630 148,838
7.62% 02/15/22 895 199,138
7.63% 02/15/23 340 70,550
------------
TOTAL MUNICIPAL BONDS
(Cost $5,565,487) 6,137,108
------------
Par
Maturity (000) Value
-------- ---------- ------------
SHORT TERM INVESTMENTS -- 5.5%
Galileo Money Market Fund $ 7,119 $ 7,118,957
Student Loan Marketing Association
Bank Discount Notes
4.80% 04/01/99 35,150 35,150,000
U.S. Treasury Bills
4.83% 04/15/99 5,000 4,990,618
------------
TOTAL SHORT TERM INVESTMENTS
(Cost $47,259,575) 47,259,575
------------
TOTAL INVESTMENTS IN
SECURITIES -- 100.0%
(Cost $603,761,804*) $863,537,203
============
- --------------------
* Also cost for Federal income tax purposes. The gross unrealized appreciation
(depreciation) on a tax basis is as follows:
Gross unrealized appreciation $268,117,329
Gross unrealized depreciation (8,341,930)
------------
$259,775,399
============
** Non-income producing security.
*** Principal amount of securities pledged as collateral is $348,000 on 188
long U.S. Treasury Bond futures contracts expiring June 1999. The value of
such contracts on March 31, 1999 was $22,466,000, thereby resulting in an
unrealized loss on $1,232. Outstanding at March 31, 1999 are 100 30 year
U.S. Treasury Notes call options written expiring in June 1999 with a value
of $121,875 and an exercise price of $97.
****Rates shown are the rates as of March 31, 1999.
INVESTMENT ABBREVIATIONS
CPI Consumer Price Index
IO Interest Only
PO Principal Only
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
52
<PAGE>
BLACKROCK FUNDS
STATEMENT OF ASSETS AND LIABILITIES
BALANCED PORTFOLIO
MARCH 31, 1999 (UNAUDITED)
ASSETS
Investments at value (Cost $603,761,804) ................... $863,537,203
Collateral received for securities loaned .................. 95,037,892
Dividends receivable ....................................... 687,384
Interest receivable ........................................ 2,834,906
Investments sold receivable ................................ 6,994,556
Capital shares sold receivable ............................. 1,252,828
Futures commissions ........................................ 1,729
Prepaid expenses ........................................... 13,522
------------
TOTAL ASSETS ........................................ 970,360,020
------------
LIABILITIES
Payable upon return of securities loaned ................... 95,037,892
Investments purchased payable .............................. 24,951,624
Capital shares redeemed payable ............................ 416,868
Advisor fee payable ........................................ 394,281
Administrative fee payable ................................. 164,820
Transfer Agent fee payable ................................. 110,495
Other accrued expenses payable ............................. 380,469
Deferred dollar roll income ................................ 2,109
Call options written (Premiums received $121,875) .......... 85,200
Futures margin payable ..................................... 91,375
------------
TOTAL LIABILITIES ................................... 121,635,133
------------
NET ASSETS .................................................... $848,724,887
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER INSTITUTIONAL SHARE ($436,466,213 / 21,509,944) ........ $20.29
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER SERVICE SHARE ($213,523,109 / 10,532,279) .............. $20.27
======
NET ASSET VALUE AND REDEMPTION PRICE
PER INVESTOR A SHARE ($119,766,494 / 5,910,786) ............ $20.26
======
MAXIMUM OFFERING PRICE PER INVESTOR A SHARE
($20.26 / 0.955) ........................................... $21.21
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent deferred sales charge of 4.5%)
PER INVESTOR B SHARE ($73,640,364 / 3,658,349) ............. $20.13
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent deferred sales charge of 1.0%)
PER INVESTOR C SHARE ($5,328,707 / 264,707) ................ $20.13
======
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
53
<PAGE>
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, 1999 (UNAUDITED) Portfolio Portfolio Portfolio Portfolio Portfolio
------------ ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Investment income:
Interest ................................... $ 1,290,735 $ 895,140 $ 188,130 $ 680,822 $ 507,048
Dividends .................................. 26,328,171 4,870,312 2,648,570 170,631 5,923,884
Net investment income from master .......... -- -- -- -- --
Foreign taxes withheld ..................... -- (11,228) -- (1,723) --
------------ ------------ ----------- ------------ ------------
Total investment income ............... 27,618,906 5,754,224 2,836,700 849,730 6,430,932
------------ ------------ ----------- ------------- ------------
Expenses:
Investment advisory fee .................... 6,425,491 3,628,276 1,051,221 1,191,065 1,881,649
Administration fee ......................... 2,536,590 1,443,795 302,237 342,425 770,449
Custodian fee .............................. 145,926 91,246 25,032 34,601 58,345
Transfer agent fee ......................... 443,194 235,940 54,111 55,938 153,783
Shareholders servicing fees ................ 430,447 250,130 41,759 41,579 137,428
Shareholders processing fees ............... 383,602 216,520 36,078 36,188 105,655
Distribution fees .......................... 131,801 82,480 25,293 19,953 99,162
Legal and audit ............................ 63,072 32,169 6,684 7,046 18,319
Printing ................................... 74,264 37,877 7,870 9,295 43,574
Registration fees and expenses ............. 30,818 25,085 33,325 25,943 32,340
Trustees' fees and officer's salary ........ 19,890 10,140 2,368 2,495 5,770
Other ...................................... 38,175 19,468 4,059 9,905 11,041
------------ ------------ ----------- ------------ ------------
10,723,270 6,073,126 1,590,037 1,776,433 3,317,515
Less fees waived ........................... -- -- (26,832) (28,851) (16,540)
------------ ------------ ----------- ------------ ------------
Total operating expenses .............. 10,723,270 6,073,126 1,563,205 1,747,582 3,300,975
------------ ------------ ----------- ------------ ------------
Interest expense ........................... -- -- -- -- --
------------ ------------ ----------- ------------ ------------
Total expenses ........................ 10,723,270 6,073,126 1,563,205 1,747,582 3,300,975
------------ ------------ ----------- ------------ ------------
Net investment income (loss) ............... 16,895,636 (318,902) 1,273,495 (897,852) 3,129,957
------------ ------------ ----------- ------------ ------------
Realized and unrealized gain (loss) on
investments and foreign currency
transactions:
Net realized gain (loss) from:
Investment transactions .................. 148,653,178 119,201,918 7,591,866 43,040,914 10,153,548
Futures contracts ........................ -- 7,205,644 -- 2,802,039 --
Foreign currency and forward
foreign currency transactions ......... -- -- -- -- --
------------ ------------ ----------- ------------ ------------
148,653,178 126,407,562 7,591,866 45,842,953 10,153,548
------------ ------------ ----------- ------------ ------------
Change in unrealized appreciation
(depreciation) from:
Investments .............................. 228,224,585 283,838,732 9,719,237 64,487,892 (29,361,006)
Futures .................................. -- (239,902) -- 465,848 --
Foreign currency and forward
foreign currency transactions ......... -- -- -- -- --
------------ ------------ ----------- ------------ ------------
228,224,585 283,598,830 9,719,237 64,953,740 (29,361,006)
------------ ------------ ----------- ------------ ------------
Net gain (loss) on investments and
foreign currency transactions ............ 376,877,763 410,006,392 17,311,103 110,796,693 (19,207,458)
------------ ------------ ----------- ------------ ------------
Net increase (decrease) in assets
resulting from operations ................ $393,773,399 $409,687,490 $18,584,598 $109,898,841 $(16,077,501)
============ ============ =========== ============ ============
</TABLE>
<TABLE>
<CAPTION>
International International
Small Cap Micro-Cap International Small Cap Emerging
Growth Equity Equity Equity Equity Markets
Portfolio Portfolio Portfolio Portfolio Portfolio
------------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Investment income:
Interest ................................... $ 4,044,598 $ 108,254 $ 656,776 $ 16,449 $ 30,018
Dividends .................................. 209,157 -- 7,961,261 175,236 1,245,595
Net investment income from master .......... -- -- -- -- --
Foreign taxes withheld ..................... -- -- (882,019) (19,349) (31,691)
------------- ----------- ------------- ------------- -------------
Total investment income ............... 4,253,755 108,254 7,736,018 172,336 1,243,922
------------- ----------- ------------- ------------- -------------
Expenses:
Investment advisory fee .................... 3,781,965 140,097 4,693,138 94,357 519,268
Administration fee ......................... 1,500,961 29,236 1,361,175 21,704 95,547
Custodian fee .............................. 123,024 7,804 167,637 13,273 119,530
Transfer agent fee ......................... 290,843 16,806 220,101 5,174 19,944
Shareholders servicing fees ................ 262,419 28,257 158,246 3,447 20,339
Shareholders processing fees ............... 204,044 16,980 136,131 2,069 19,024
Distribution fees .......................... 205,905 54,123 28,317 7,486 2,778
Legal and audit ............................ 35,063 22,840 65,008 8,074 2,814
Printing ................................... 56,285 85,347 38,306 1,814 7,156
Registration fees and expenses ............. 25,930 28,861 27,905 24,954 19,276
Trustees' fees and officer's salary ........ 11,036 156 10,269 639 1,165
Other ...................................... 21,202 296 19,667 5,174 1,660
------------- ----------- ------------- ------------- -------------
6,518,677 430,803 6,925,900 188,165 828,501
Less fees waived ........................... -- (137,387) (14,584) (48,700) (62,088)
------------- ----------- ------------- ------------- -------------
Total operating expenses .............. 6,518,677 293,416 6,911,316 139,465 766,413
------------- ----------- ------------- ------------- -------------
Interest expense ........................... -- -- -- -- --
------------- ----------- ------------- ------------- -------------
Total expenses ........................ 6,518,677 293,416 6,911,316 139,465 766,413
------------- ----------- ------------- ------------- -------------
Net investment income (loss) ............... (2,264,922) (185,162) 824,702 32,871 477,509
------------- ----------- ------------- ------------- -------------
Realized and unrealized gain (loss) on
investments and foreign currency
transactions:
Net realized gain (loss) from:
Investment transactions .................. 86,972,204 7,075,361 77,949,003 (567,169) (39,873,704)
Futures contracts ........................ 21,204,495 -- -- -- --
Foreign currency and forward
foreign currency transactions ......... -- -- 11,069,898 97,008 (287,591)
------------- ----------- ------------- ------------- -------------
108,176,699 7,075,361 89,018,901 (470,161) (40,161,295)
------------- ----------- ------------- ------------- -------------
Change in unrealized appreciation
(depreciation) from:
Investments .............................. 255,043,531 7,460,706 152,683,750 2,670,408 51,572,182
Futures .................................. 2,066,375 -- -- -- --
Foreign currency and forward
foreign currency transactions ......... -- -- (13,343,550) (106,035) (127,454)
------------- ----------- ------------- ------------- -------------
257,109,906 7,460,706 139,340,200 2,564,373 51,444,728
------------- ----------- ------------- ------------- -------------
Net gain (loss) on investments and
foreign currency transactions ............ 365,286,605 14,536,067 228,359,101 2,094,212 11,283,433
------------- ----------- ------------- ------------- -------------
Net increase (decrease) in assets
resulting from operations ................ $ 363,021,683 $14,350,905 $ 229,183,803 $ 2,127,083 $ 11,760,942
============= =========== ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
Select Index
Equity Equity Balanced
Portfolio Portfolio Portfolio
------------ ------------ ------------
<S> <C> <C> <C>
Investment income:
Interest ................................... $ 619,841 $ -- $ 9,631,410
Dividends .................................. 12,848,733 -- 3,232,829
Net investment income from master .......... -- 7,296,327 --
Foreign taxes withheld ..................... -- -- --
------------ ------------ ------------
Total investment income ............... 13,468,574 7,296,327 12,864,239
------------ ------------ ------------
Expenses:
Investment advisory fee .................... 4,672,452 -- 2,149,645
Administration fee ......................... 1,841,162 1,210,398 875,659
Custodian fee .............................. 105,780 -- 65,364
Transfer agent fee ......................... 322,338 296,818 177,393
Shareholders servicing fees ................ 291,210 680,535 360,417
Shareholders processing fees ............... 241,587 495,304 276,596
Distribution fees .......................... 199,888 1,190,097 223,767
Legal and audit ............................ 41,873 22,888 18,272
Printing ................................... 80,247 26,057 24,510
Registration fees and expenses ............. 78,943 28,090 31,805
Trustees' fees and officer's salary ........ 13,318 7,344 5,811
Other ...................................... 25,530 59,473 11,120
------------ ------------ ------------
7,914,328 4,017,004 4,220,359
Less fees waived ........................... -- (559,316) --
------------ ------------ ------------
Total operating expenses .............. 7,914,328 3,457,688 4,220,359
------------ ------------ ------------
Interest expense ........................... -- -- 10,897
------------ ------------ ------------
Total expenses ........................ 7,914,328 3,457,688 4,231,256
------------ ------------ ------------
Net investment income (loss) ............... 5,554,246 3,838,639 8,632,983
------------ ------------ ------------
Realized and unrealized gain (loss) on
investments and foreign currency
transactions:
Net realized gain (loss) from:
Investment transactions .................. 77,398,483 3,037,385 23,276,466
Futures contracts ........................ 3,296,829 -- (264,241)
Foreign currency and forward
foreign currency transactions ......... -- -- --
------------ ------------ ------------
80,695,312 3,037,385 23,012,225
------------ ------------ ------------
Change in unrealized appreciation
(depreciation) from:
Investments .............................. 315,191,456 234,855,104 83,564,510
Futures .................................. (344,254) -- (384,968)
Foreign currency and forward
foreign currency transactions ......... -- -- --
------------ ------------ ------------
314,847,202 234,855,104 83,179,542
------------ ------------ ------------
Net gain (loss) on investments and
foreign currency transactions ............ 395,542,514 237,892,489 106,191,767
------------ ------------ ------------
Net increase (decrease) in assets
resulting from operations ................ $401,096,760 $241,731,128 $114,824,750
============ ============ ============
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
54&55
<PAGE>
BLACKROCK FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Large Cap Large Cap
Value Equity Portfolio Growth Equity Portfolio
------------------------------ ------------------------------
For the For the
Six Months For the Six Months For the
Ended Year Ended Ended Year Ended
3/31/99 9/30/98 3/31/99 9/30/98
-------------- -------------- -------------- --------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income (deficit) ......... $ 16,895,636 $ 25,637,272 $ (318,902) $ 553,050
Net realized gain (loss) on investment,
futures and foreign currency related
transactions .......................... 148,653,178 192,099,260 126,407,562 73,328,406
Net unrealized gain (loss) on
investments, futures and foreign
currency related transactions ......... 228,224,585 (446,969,393) 283,598,830 (7,495,647)
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets
resulting from operations ............. 393,773,399 (229,232,861) 409,687,490 66,385,809
-------------- -------------- -------------- --------------
Distributions to shareholders from:
Net investment income:
Institutional Class ..................... (22,565,389) (18,530,517) -- (492,332)
Service Class ........................... (4,146,830) (6,348,629) -- --
Investor A Class ........................ (552,268) (510,254) -- --
Investor B Class ........................ (182,766) (72,123) -- --
Investor C Class ........................ (20,024) (6,367) -- --
-------------- -------------- -------------- --------------
Total distribution from net
investment income ..................... (27,467,277) (25,467,890) -- (492,332)
-------------- -------------- -------------- --------------
Capital:
Institutional Class ..................... -- -- -- --
Service Class ........................... -- -- -- --
Investor A Class ........................ -- -- -- --
Investor B Class ........................ -- -- -- --
Investor C Class ........................ -- -- -- --
-------------- -------------- -------------- --------------
Total distributions from capital ........ -- -- -- --
-------------- -------------- -------------- --------------
Net realized gains:
Institutional Class ..................... (109,512,903) (93,723,477) (81,668,812) (65,760,356)
Service Class ........................... (23,130,665) (76,020,941) (17,012,084) (36,048,878)
Investor A Class ........................ (3,128,012) (6,087,188) (3,299,277) (3,610,796)
Investor B Class ........................ (1,734,669) (2,790,824) (1,388,742) (1,161,883)
Investor C Class ........................ (186,349) (189,032) (97,721) (23,904)
-------------- -------------- -------------- --------------
Total distributions from net
realized gains ........................ (137,692,598) (178,811,462) (103,466,636) (106,605,817)
-------------- -------------- -------------- --------------
Total distributions to shareholders ..... (165,159,875) (204,279,352) (103,466,636) (107,098,149)
-------------- -------------- -------------- --------------
Capital share transactions .................. (36,445,622) 1,338,827,954 43,117,552 421,476,131
-------------- -------------- -------------- --------------
Total increase (decrease) in net assets . 192,167,902 905,315,741 349,338,406 380,763,791
Net assets:
Beginning of period ..................... 2,312,241,400 1,406,925,659 1,159,724,458 778,960,667
-------------- -------------- -------------- --------------
End of period ........................... $2,504,409,302 $2,312,241,400 $1,509,062,864 $1,159,724,458
============== ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
Mid-Cap Value Mid-Cap Growth Small Cap
Equity Portfolio Equity Portfolio Value Equity Portfolio
-------------------------- -------------------------- --------------------------
For the For the For the
Six Months For the Six Months For the Six Months For the
Ended Year Ended Ended Year Ended Ended Year Ended
3/31/99 9/30/98 3/31/99 9/30/98 3/31/99 9/30/98
------------ ------------ ------------ ------------ ------------ ------------
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income (deficit) ......... $ 1,273,495 $ 1,659,693 $ (897,852) $ (953,746) $ 3,129,957 $ 3,992,037
Net realized gain (loss) on investment,
futures and foreign currency related
transactions .......................... 7,591,866 (4,969,292) 45,842,953 (1,577,914) 10,153,548 48,844,677
Net unrealized gain (loss) on
investments, futures and foreign
currency related transactions ......... 9,719,237 (47,088,039) 64,953,740 (25,720,350) (29,361,006) (220,300,060)
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations ............. 18,584,598 (50,397,638) 109,898,841 (28,252,010) (16,077,501) (167,463,346)
------------ ------------ ------------ ------------ ------------ ------------
Distributions to shareholders from:
Net investment income:
Institutional Class ..................... (1,199,637) (1,414,807) -- -- (8,726,588) (3,336,413)
Service Class ........................... (179,709) (189,171) -- -- (1,117,188) (527,494)
Investor A Class ........................ (14,183) (12,658) -- -- (540,212) (121,897)
Investor B Class ........................ -- -- -- -- (215,285) --
Investor C Class ........................ -- -- -- -- (56,500) --
------------ ------------ ------------ ------------ ------------ ------------
Total distribution from net
investment income ..................... (1,393,529) (1,616,636) -- -- (10,655,773) (3,985,804)
------------ ------------ ------------ ------------ ------------ ------------
Capital:
Institutional Class ..................... -- -- -- (140,856) -- --
Service Class ........................... -- -- -- (18,337) -- --
Investor A Class ........................ -- -- -- (2,632) -- --
Investor B Class ........................ -- -- -- (2,660) -- --
Investor C Class ........................ -- -- -- (150) -- --
------------ ------------ ------------ ------------ ------------ ------------
Total distributions from capital ........ -- -- -- (164,635) -- --
------------ ------------ ------------ ------------ ------------ ------------
Net realized gains:
Institutional Class ..................... -- (3,170,990) -- (822,665) (23,842,650) (33,889,486)
Service Class ........................... -- (873,004) -- (245,537) (3,473,838) (12,976,187)
Investor A Class ........................ -- (77,103) -- (23,701) (1,664,439) (3,650,541)
Investor B Class ........................ -- (106,596) -- (24,423) (939,611) (1,336,440)
Investor C Class ........................ -- (687) -- (624) (241,116) (318,538)
------------ ------------ ------------ ------------ ------------ ------------
Total distributions from net
realized gains ........................ -- (4,228,380) -- (1,116,950) (30,161,654) (52,171,192)
------------ ------------ ------------ ------------ ------------ ------------
Total distributions to shareholders ..... (1,393,529) (5,845,016) -- (1,281,585) (40,817,427) (56,156,996)
------------ ------------ ------------ ------------ ------------ ------------
Capital share transactions .................. 397,727 166,482,367 (11,726,476) 151,328,193 20,245,157 409,911,079
------------ ------------ ------------ ------------ ------------ ------------
Total increase (decrease) in net assets . 17,588,796 110,239,713 98,172,365 121,794,598 (36,649,771) 186,290,737
Net assets:
Beginning of period ..................... 245,129,875 134,890,162 257,912,297 136,117,699 665,761,441 479,470,704
------------ ------------ ------------ ------------ ------------ ------------
End of period ........................... $262,718,671 $245,129,875 $356,084,662 $257,912,297 $629,111,670 $665,761,441
============ ============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
Small Cap Micro-Cap
Growth Equity Portfolio Equity Portfolio
------------------------------ ---------------------------
For the For the For the period
Six Months For the Six Months 05/01/98 1
Ended Year Ended Ended through
3/31/99 9/30/98 3/31/99 9/30/98
-------------- -------------- ---------------------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income (deficit) ......... $ (2,264,922) $ (3,153,995) $ (185,162) $ (59,173)
Net realized gain (loss) on investment,
futures and foreign currency related
transactions .......................... 108,176,699 (7,228,973) 7,075,361 (2,808,502)
Net unrealized gain (loss) on
investments, futures and foreign
currency related transactions ......... 257,109,906 (351,978,763) 7,460,706 350,886
-------------- -------------- ----------- --------------
Net increase (decrease) in net assets
resulting from operations ............. 363,021,683 (362,361,731) 14,350,905 (2,516,789)
-------------- -------------- ----------- --------------
Distributions to shareholders from:
Net investment income:
Institutional Class ..................... -- -- -- --
Service Class ........................... -- -- -- --
Investor A Class ........................ -- -- -- --
Investor B Class ........................ -- -- -- --
Investor C Class ........................ -- -- -- --
-------------- -------------- ----------- --------------
Total distribution from net
investment income ..................... -- -- -- --
-------------- -------------- ----------- --------------
Capital:
Institutional Class ..................... -- -- -- --
Service Class ........................... -- -- -- --
Investor A Class ........................ -- -- -- --
Investor B Class ........................ -- -- -- --
Investor C Class ........................ -- -- -- --
-------------- -------------- ----------- --------------
Total distributions from capital ........ -- -- -- --
-------------- -------------- ----------- --------------
Net realized gains:
Institutional Class ..................... -- (24,910,944) -- --
Service Class ........................... -- (11,458,901) -- --
Investor A Class ........................ -- (2,985,189) -- --
Investor B Class ........................ -- (2,175,966) -- --
Investor C Class ........................ -- (745,438) -- --
-------------- -------------- ----------- --------------
Total distributions from net
realized gains ........................ -- (42,276,438) -- --
-------------- -------------- ----------- --------------
Total distributions to shareholders ..... -- (42,276,438) --
-------------- -------------- ----------- --------------
Capital share transactions .................. (59,708,410) 834,426,119 9,206,395 20,356,330
-------------- -------------- ----------- --------------
Total increase (decrease) in net assets . 303,313,273 429,787,950 23,557,300 17,839,541
Net assets:
Beginning of period ..................... 1,262,480,271 832,692,321 17,839,541 --
-------------- -------------- ----------- --------------
End of period ........................... $1,565,793,544 $1,262,480,271 $41,396,841 $ 17,839,541
============== ============== =========== ==============
<FN>
- ------------------------
1 Commencement of operations.
</FN>
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
56&57
<PAGE>
BLACKROCK FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
International
International Small Cap
Equity Portfolio Equity Portfolio
------------------------------ ------------------------
For the For the
Six Months For the Six Months For the
Ended Year Ended Ended Year Ended
3/31/99 9/30/98 3/31/99 9/30/98
-------------- -------------- ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ................................. $ 824,702 $ 8,159,933 $ 32,871 $ 98,516
Net realized gain (loss) on investment, futures
and foreign currency related transactions. .......... 89,018,901 71,669,944 (470,161) 2,075,708
Net unrealized gain (loss) on investment,
futures and foreign currency related transactions ... 139,340,200 (233,529,572) 2,564,373 (3,251,955)
-------------- -------------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations ........................... 229,183,803 (153,699,695) 2,127,083 (1,077,731)
-------------- -------------- ----------- -----------
Distributions to shareholders from:
Net investment income:
Institutional Class ................................... (19,912,072) (5,917,557) (411,768) (81,520)
Service Class ......................................... (2,054,942) (2,234,158) -- (1,514)
Investor A Class ...................................... (634,740) (196,004) (14,315) (2,465)
Investor B Class ...................................... (47,346) (32,932) (18,573) (2,821)
Investor C Class ...................................... (2,200) (1,193) (4,082) (560)
-------------- -------------- ----------- -----------
Total distribution from net
investment income ................................... (22,651,300) (8,381,844) (448,738) (88,880)
-------------- -------------- ----------- -----------
Net realized gains:
Institutional Class ................................... (50,507,155) (5,880,920) (1,492,534) --
Service Class ......................................... (7,058,511) (2,710,758) (455) --
Investor A Class ...................................... (1,667,304) (359,503) (67,998) --
Investor B Class ...................................... (332,680) (85,549) (158,974) --
Investor C Class ...................................... (15,174) (2,122) (31,409) --
-------------- -------------- ----------- -----------
Total distributions from net
realized gains ...................................... (59,580,824) (9,038,852) (1,751,370) --
-------------- -------------- ----------- -----------
Total distributions to shareholders ................... (82,232,124) (17,420,696) (2,200,108) (88,880)
-------------- -------------- ----------- -----------
Capital share transactions ................................ (78,716,047) 698,804,127 (771,198) 3,766,352
-------------- -------------- ----------- -----------
Total increase (decrease) in net assets ............... 68,235,632 527,683,736 (844,223) 2,599,741
Net assets:
Beginning of period ................................... 1,189,097,559 661,413,823 19,233,604 16,633,863
-------------- -------------- ----------- -----------
End of period ......................................... $1,257,333,191 $1,189,097,559 $18,389,381 $19,233,604
============== ============== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
International
Emerging Markets Select
Portfolio Equity Portfolio
----------------------------- --------------------------------
For the For the
Six Months For the Six Months For the
Ended Year Ended Ended Year Ended
3/31/99 9/30/98 3/31/99 9/30/98
------------ ------------ -------------- --------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ................................. $ 477,509 $ 1,168,323 $ 5,554,246 $ 9,513,164
Net realized gain (loss) on investment,
futures and foreign
currency related transactions. ...................... (40,161,295) (23,240,822) 80,695,312 50,382,667
Net unrealized gain (loss) on investment, futures
and foreign currency related transactions ........... 51,444,728 (80,454,222) 314,847,202 (125,501,318)
------------ ------------ -------------- --------------
Net increase (decrease) in net assets
resulting from operations ........................... 11,760,942 (102,526,721) 401,096,760 (65,605,487)
------------ ------------ -------------- --------------
Distributions to shareholders from:
Net investment income:
Institutional Class ................................... (560,013) -- (5,334,853) (7,923,238)
Service Class ......................................... -- -- (494,555) (1,345,132)
Investor A Class ...................................... -- -- (83,375) (126,292)
Investor B Class ...................................... -- -- -- 120
Investor C Class ...................................... -- -- (16) --
------------ ------------ -------------- --------------
Total distribution from net
investment income ................................... (560,013) -- (5,912,799) (9,394,542)
------------ ------------ -------------- --------------
Net realized gains:
Institutional Class ................................... -- (1,735,707) (45,528,653) (26,245,020)
Service Class ......................................... -- (980,791) (7,197,856) (11,088,452)
Investor A Class ...................................... -- (62,362) (1,341,737) (1,142,824)
Investor B Class ...................................... -- (27,732) (1,483,560) (1,237,130)
Investor C Class ...................................... -- (1,309) (90,763) (25,714)
------------ ------------ -------------- --------------
Total distributions from net
realized gains ...................................... -- (2,807,901) (55,642,569) (39,739,140)
------------ ------------ -------------- --------------
Total distributions to shareholders ................... (560,013) (2,807,901) (61,555,368) (49,133,682)
------------ ------------ -------------- --------------
Capital share transactions ................................ (36,538,845) 9,594,481 (37,759,632) 1,090,529,491
------------ ------------ -------------- --------------
Total increase (decrease) in net assets ............... (25,337,916) (95,740,141) 301,781,760 975,790,322
Net assets:
Beginning of period ................................... 92,808,361 188,548,502 1,567,566,051 591,775,729
------------ ------------ -------------- --------------
End of period ......................................... $ 67,470,445 $ 92,808,361 $1,869,347,811 $1,567,566,051
============ ============= ============== ==============
</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
3/31/99 9/30/98 3/31/99 9/30/98
-------------- ----------- ----------- -------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ................................. $ 3,838,639 $ 6,807,877 $ 8,632,983 $ 10,811,745
Net realized gain (loss) on investment, futures
and foreign currency related transactions............ 3,037,385 (922,089) 23,012,225 20,077,250
Net unrealized gain (loss) on investment,
futures and foreign currency related transactions ... 234,855,104 15,954,093 83,179,542 (4,184,507)
-------------- ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations ........................... 241,731,128 21,839,881 114,824,750 26,704,488
-------------- ------------ ------------ ------------
Distributions to shareholders from:
Net investment income:
Institutional Class ................................... (3,169,939) (3,530,357) (5,050,470) (4,562,657)
Service Class ......................................... (1,687,704) (2,427,368) (2,179,698) (3,867,304)
Investor A Class ...................................... (277,335) (327,932) (1,143,780) (1,800,766)
Investor B Class ...................................... (436,163) (159,040) (417,547) (455,298)
Investor C Class ...................................... (510,224) (101,654) (19,284) (4,734)
-------------- ------------ ------------ ------------
Total distribution from net
investment income ................................... (6,081,365) (6,546,351) (8,810,779) (10,690,759)
-------------- ------------ ------------ ------------
Net realized gains:
Institutional Class ................................... (1,069,132) (350,642) (15,889,194) (2,175,645)
Service Class ......................................... (695,184) (412,780) (7,702,682) (12,131,307)
Investor A Class ...................................... (124,525) (61,777) (4,050,743) (5,953,904)
Investor B Class ...................................... (342,483) (85,726) (2,064,754) (1,760,468)
Investor C Class ...................................... (288,901) (45,394) (38,248) (7,177)
-------------- ------------ ------------ ------------
Total distributions from net
realized gains ...................................... (2,520,225) (956,319) (29,745,621) (22,028,501)
-------------- ------------ ------------ ------------
Total distributions to shareholders ................... (8,601,590) (7,502,670) (38,556,400) (32,719,260)
-------------- ------------ ------------ ------------
Capital share transactions ................................ 346,945,497 355,034,744 77,203,202 382,617,238
-------------- ------------ ------------ ------------
Total increase (decrease) in net assets ............... 580,075,035 369,371,955 153,471,552 376,602,466
Net assets:
Beginning of period ................................... 821,350,006 451,978,051 695,253,335 318,650,869
-------------- ------------ ------------ ------------
End of period ......................................... $1,401,425,041 $821,350,006 $848,724,887 $695,253,335
============== ============ ============ ============
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
58&59
<PAGE>
BLACKROCK FUNDS
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
OF PERIOD INCOME AND UNREALIZED) INCOME CAPITAL GAINS PERIOD
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------
LARGE CAP VALUE EQUITY
- ----------------------
INSTITUTIONAL CLASS
10/1/98 through 3/31/99 6 $14.69 $ 0.11 $ 2.40 $(0.18) $-- $(0.89) $16.13
9/30/98 17.53 0.22 (0.58) (0.23) -- (2.25) 14.69
9/30/97 15.35 0.31 4.69 (0.30) -- (2.52) 17.53
9/30/96 13.92 0.35 2.41 (0.36) -- (0.97) 15.35
9/30/95 11.62 0.34 2.54 (0.33) -- (0.25) 13.92
9/30/94 11.68 0.27 0.16 (0.27) -- (0.22) 11.62
SERVICE CLASS
10/1/98 through 3/31/99 6 $14.69 $ 0.08 $ 2.40 $(0.15) $-- $(0.89) $16.13
9/30/98 17.52 0.21 (0.61) (0.18) -- (2.25) 14.69
9/30/97 15.35 0.24 4.70 (0.25) -- (2.52) 17.52
9/30/96 13.92 0.32 2.40 (0.32) -- (0.97) 15.35
9/30/95 11.62 0.30 2.55 (0.30) -- (0.25) 13.92
9/30/94 11.68 0.25 0.16 (0.25) -- (0.22) 11.62
INVESTOR A CLASS
10/1/98 through 3/31/99 6 $14.68 $ 0.09 $ 2.39 $(0.15) $-- $(0.89) $16.12
9/30/98 17.52 0.17 (0.60) (0.16) -- (2.25) 14.68
9/30/97 15.35 0.23 4.69 (0.23) -- (2.52) 17.52
9/30/96 13.92 0.28 2.41 (0.29) -- (0.97) 15.35
9/30/95 11.62 0.27 2.56 (0.28) -- (0.25) 13.92
9/30/94 11.69 0.23 0.15 (0.23) -- (0.22) 11.62
INVESTOR B CLASS
10/1/98 through 3/31/99 6 $14.59 $ 0.01 $ 2.37 $(0.09) $-- $(0.89) $15.99
9/30/98 17.44 0.05 (0.61) (0.04) -- (2.25) 14.59
9/30/97 15.32 0.14 4.64 (0.14) -- (2.52) 17.44
1/18/96 1 through 9/30/96 13.56 0.13 1.80 (0.17) -- -- 15.32
INVESTOR C CLASS
10/1/98 through 3/31/99 6 $14.59 $ 0.02 $ 2.36 $(0.09) $-- $(0.89) $15.99
9/30/98 17.44 0.06 (0.62) (0.04) -- (2.25) 14.59
9/30/97 15.32 0.15 4.63 (0.14) -- (2.52) 17.44
8/16/96 1 through 9/30/96 14.91 0.02 0.45 (0.06) -- -- 15.32
- -----------------------
LARGE CAP GROWTH EQUITY
- -----------------------
INSTITUTIONAL CLASS
10/1/98 through 3/31/99 6 $18.14 $ -- $ 6.19 $ -- $-- $(1.63) $22.70
9/30/98 18.92 0.03 1.85 (0.02) -- (2.64) 18.14
9/30/97 14.96 0.09 4.72 (0.11) -- (0.74) 18.92
9/30/96 13.03 0.08 2.29 (0.06) -- (0.38) 14.96
9/30/95 10.19 0.13 2.88 (0.17) -- -- 13.03
9/30/94 11.58 0.06 (1.34) (0.01) -- (0.10) 10.19
SERVICE CLASS
10/1/98 through 3/31/99 6 $18.11 $(0.03) $ 6.18 $ -- $-- $(1.63) $22.63
9/30/98 18.93 (0.03) 1.85 -- -- (2.64) 18.11
9/30/97 14.95 0.04 4.72 (0.04) -- (0.74) 18.93
9/30/96 13.02 0.05 2.28 (0.02) -- (0.38) 14.95
9/30/95 10.18 0.10 2.87 (0.13) -- -- 13.02
9/30/94 11.57 0.03 (1.32) -- -- (0.10) 10.18
INVESTOR A CLASS
10/1/98 through 3/31/99 6 $18.06 $(0.02) $ 6.13 $ -- $-- (1.63) $22.54
9/30/98 18.91 (0.05) 1.84 -- -- (2.64) 18.06
9/30/97 14.94 0.01 4.72 (0.02) -- (0.74) 18.91
9/30/96 13.01 0.02 2.29 -- -- (0.38) 14.94
9/30/95 10.16 0.08 2.87 (0.10) -- -- 13.01
9/30/94 11.57 0.02 (1.33) -- -- (0.10) 10.16
INVESTOR B CLASS
10/1/98 through 3/31/99 6 $17.68 $ 0.03 $ 5.85 $ -- $-- $(1.63) $21.93
9/30/98 18.69 (0.15) 1.78 -- -- (2.64) 17.68
9/30/97 14.86 (0.07) 4.64 -- -- (0.74) 18.69
1/24/96 1 through 9/30/96 13.08 (0.02) 1.80 -- -- -- 14.86
INVESTOR C CLASS
10/1/98 through 3/31/99 6 $17.68 $ 0.02 $ 5.86 $ -- $-- $(1.63) $21.93
9/30/98 18.69 (0.15) 1.78 -- -- (2.64) 17.68
1/24/97 1 through 9/30/97 15.23 (0.03) 3.49 -- -- -- 18.69
</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
TOTAL PERIOD AVERAGE NET (EXCLUDING TO AVERAGE NET (EXCLUDING TURNOVER
RETURN (000) ASSETS WAIVERS) ASSETS WAIVERS) RATE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------
LARGE CAP VALUE EQUITY
- ----------------------
INSTITUTIONAL CLASS
10/1/98 through 3/31/99 6 17.39% $1,992,940 0.78%2 0.78%2 1.43%2 1.43%2 18%
9/30/98 (2.27) 1,841,171 0.83 0.84 1.45 1.44 33
9/30/97 37.66 743,405 0.78 0.85 1.94 1.87 37
9/30/96 21.01 731,024 0.75 0.84 2.40 2.32 60
9/30/95 25.73 508,273 0.67 0.81 2.68 2.53 12
9/30/94 3.76 577,996 0.65 0.81 2.44 2.28 11
SERVICE CLASS
10/1/98 through 3/31/99 6 17.22% $ 413,255 1.09%2 1.09%2 1.13%2 1.13%2 18%
9/30/98 (2.50) 387,323 1.13 1.14 1.14 1.13 33
9/30/97 37.22 595,189 1.09 1.16 1.62 1.55 37
9/30/96 20.68 457,283 1.05 1.14 2.13 2.04 60
9/30/95 25.40 170,832 0.95 1.09 2.40 2.26 12
9/30/94 3.51 105,035 0.90 1.06 2.24 2.08 11
INVESTOR A CLASS
10/1/98 through 3/31/99 6 17.10%3 $ 62,394 1.20%2 1.20%2 1.01%2 1.01%2 18%
9/30/98 (2.63)3 51,151 1.27 1.28 0.99 0.98 33
9/30/97 37.01 3 47,131 1.26 1.33 1.44 1.37 37
9/30/96 20.52 3 26,190 1.22 1.31 1.93 1.84 60
9/30/95 25.22 3 16,910 1.11 1.25 2.24 2.10 12
9/30/94 3.32 3 10,412 1.05 1.21 2.08 1.92 11
INVESTOR B CLASS
10/1/98 through 3/31/99 6 16.59%4 $ 32,157 2.01%2 2.01%2 0.21%2 0.21%2 18%
9/30/98 (3.45)4 29,450 2.06 2.07 0.20 0.19 33
9/30/97 36.40 4 19,773 2.00 2.07 0.64 0.57 37
1/18/96 1 through 9/30/96 14.26 4 3,152 1.92 2 2.00 2 1.34 2 1.25 2 60
INVESTOR C CLASS
10/1/98 through 3/31/99 6 16.59%4 $ 3,663 2.00%2 2.00%2 0.21%2 0.21%2 18%
9/30/98 (3.45)4 3,146 2.04 2.05 0.22 0.21 33
9/30/97 35.99 4 1,428 2.01 2.08 0.61 0.54 37
8/16/96 1 through 9/30/96 3.16 4 205 1.80 2 1.88 2 1.29 2 1.20 2 60
- -----------------------
LARGE CAP GROWTH EQUITY
- -----------------------
INSTITUTIONAL CLASS
10/1/98 through 3/31/99 6 36.24% $1,168,068 0.82%2 0.82%2 0.04%2 0.04%2 20%
9/30/98 11.76 922,896 0.86 0.86 0.18 0.18 54
9/30/97 33.69 482,851 0.79 0.86 0.54 0.47 81
9/30/96 18.67 481,171 0.75 0.86 0.63 0.51 58
9/30/95 29.88 211,543 0.67 0.85 1.20 1.01 55
9/30/94 (11.14) 97,834 0.65 0.89 0.62 0.38 212
SERVICE CLASS
10/1/98 through 3/31/99 6 36.06% $ 249,477 1.12%2 1.12%2 (0.27)%2 (0.27)%2 20%
9/30/98 11.33 187,738 1.16 1.16 (0.13) (0.13) 54
9/30/97 33.38 262,409 1.10 1.17 0.24 0.17 81
9/30/96 18.34 191,023 1.05 1.17 0.31 0.20 58
9/30/95 29.43 76,769 0.95 1.13 0.91 0.73 55
9/30/94 (11.20) 36,752 0.90 1.14 0.51 0.26 212
INVESTOR A CLASS
10/1/98 through 3/31/99 6 35.93%3 $ 59,520 1.24%2 1.24%2 (0.38)%2 (0.38)%2 20%
9/30/98 11.16 3 33,340 1.33 1.33 (0.30) (0.30) 54
9/30/97 33.18 3 25,575 1.27 1.34 0.07 0.0 81
9/30/96 18.18 3 16,579 1.22 1.34 0.15 0.04 58
9/30/95 29.26 3 10,034 1.11 1.29 0.76 0.58 55
9/30/94 (11.38)3 5,049 1.05 1.29 0.29 0.05 212
INVESTOR B CLASS
10/1/98 through 3/31/99 6 35.37%4 $ 29,012 2.03%2 2.03%2 (1.17)%2 (1.17)%2 20%
9/30/98 10.33 4 14,713 2.07 2.07 (1.03) (1.03) 54
9/30/97 32.18 4 7,919 2.01 2.08 (0.66) (0.73) 81
1/24/96 1 through 9/30/96 13.61 4 2,364 1.93 2 2.05 2 (0.47)2 (0.58)2 58
INVESTOR C CLASS
10/1/98 through 3/31/99 6 35.37%4 $ 2,986 2.01%2 2.01%2 (1.14)%2 (1.14)%2 20%
9/30/98 10.33 4 1,037 2.06 2.06 (1.01) (1.01) 54
1/24/97 1 through 9/30/97 22.78 4 207 2.02 2 2.09 2 (0.66)2 (0.73)2 81
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
60-61
<PAGE>
BLACKROCK FUNDS
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
OF PERIOD INCOME AND UNREALIZED) INCOME CAPITAL GAINS PERIOD
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------
MID-CAP VALUE EQUITY
- --------------------
INSTITUTIONAL CLASS
10/1/98 through 3/31/99 6 $10.63 $ 0.07 $ 0.76 $(0.07) $ -- $ -- $11.39
9/30/98 12.80 0.10 (1.81) (0.10) -- (0.36) 10.63
12/27/96 1 through 9/30/97 10.00 0.10 2.80 (0.10) -- -- 12.80
SERVICE CLASS
10/1/98 through 3/31/99 6 $10.62 $ 0.04 $ 0.76 $(0.05) $ -- $ -- $11.37
9/30/98 12.79 0.08 (1.82) (0.07) -- (0.36) 10.62
12/27/96 1 through 9/30/97 10.00 0.07 2.80 (0.08) -- -- 12.79
INVESTOR A CLASS
10/1/98 through 3/31/99 6 $10.61 $ 0.03 $ 0.76 $(0.03) $ -- $ -- $11.37
9/30/98 12.77 0.05 (1.81) (0.04) -- (0.36) 10.61
12/27/96 1 through 9/30/97 10.00 0.07 2.78 (0.08) -- -- 12.77
INVESTOR B CLASS
10/1/98 through 3/31/99 6 $10.58 $(0.01) $ 0.76 $ -- $ -- $ -- $11.33
9/30/98 12.78 (0.03) (1.81) -- -- (0.36) 10.58
12/27/96 1 through 9/30/97 10.00 0.03 2.79 (0.04) -- -- 12.78
INVESTOR C CLASS
10/1/98 through 3/31/99 6 $10.58 $ 0.01 $ 0.74 $ -- $ -- $ -- $11.33
9/30/98 12.78 (0.02) (1.82) -- -- (0.36) 10.58
12/27/96 1 through 9/30/97 10.00 0.02 2.80 (0.04) -- -- 12.78
- ---------------------
MID-CAP GROWTH EQUITY
- ---------------------
INSTITUTIONAL CLASS
10/1/98 through 3/31/99 6 $11.12 $(0.04) $ 4.83 $ -- $ -- $ -- $15.91
9/30/98 12.20 (0.02) (0.96) -- (0.01) (0.09) 11.12
12/27/96 1 through 9/30/97 10.00 (0.01) 2.21 -- -- -- 12.20
SERVICE CLASS
10/1/98 through 3/31/99 6 $11.06 $(0.05) $ 4.79 $ -- $ -- $ -- $15.80
9/30/98 12.17 (0.09) (0.92) -- (0.01) (0.09) 11.06
12/27/96 1 through 9/30/97 10.00 (0.03) 2.20 -- -- -- 12.17
INVESTOR A CLASS
10/1/98 through 3/31/99 6 $11.02 $(0.04) $ 4.75 $ -- $ -- $ -- $15.73
9/30/98 12.14 (0.07) (0.95) -- (0.01) (0.09) 11.02
12/27/96 1 through 9/30/97 10.00 (0.03) 2.17 -- -- -- 12.14
INVESTOR B CLASS
10/1/98 through 3/31/99 6 $10.90 $(0.07) $ 4.68 $ -- $ -- $ -- $15.51
9/30/98 12.11 (0.14) (0.97) -- (0.01) (0.09) 10.90
12/27/96 1 through 9/30/97 10.00 (0.05) 2.16 -- -- -- 12.11
INVESTOR C CLASS
10/1/98 through 3/31/99 6 $10.90 $(0.03) $ 4.64 $ -- $ -- $ -- $15.51
9/30/98 12.11 (0.14) (0.97) -- (0.01) (0.09) 10.90
12/27/96 1 through 9/30/97 10.00 (0.07) 2.18 -- -- -- 12.11
- ----------------------
SMALL CAP VALUE EQUITY
- ----------------------
INSTITUTIONAL CLASS
10/1/98 through 3/31/99 6 $14.89 $ 0.07 $(0.40) $(0.23) $ -- $(0.67) $13.66
9/30/98 20.20 0.13 (3.19) (0.13) -- (2.12) 14.89
9/30/97 15.98 0.17 6.39 (0.17) -- (2.17) 20.20
9/30/96 15.16 0.10 1.70 (0.11) -- (0.87) 15.98
9/30/95 13.62 0.06 2.17 (0.08) -- (0.61) 15.16
9/30/94 13.08 0.04 0.77 (0.02) -- (0.25) 13.62
SERVICE CLASS
10/1/98 through 3/31/99 6 $14.88 $ 0.05 $(0.40) $(0.21) $ -- $(0.67) $13.65
9/30/98 20.20 0.09 (3.21) (0.08) -- (2.12) 14.88
9/30/97 15.98 0.13 6.39 (0.13) -- (2.17) 20.20
9/30/96 15.15 0.06 1.70 (0.06) -- (0.87) 15.98
9/30/95 13.59 0.02 2.18 (0.03) -- (0.61) 15.15
9/30/94 13.08 -- 0.77 (0.01) -- (0.25) 13.59
</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
TOTAL PERIOD AVERAGE NET (EXCLUDING TO AVERAGE NET (EXCLUDING TURNOVER
RETURN (000) ASSETS WAIVERS) ASSETS WAIVERS) RATE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------
MID-CAP VALUE EQUITY
- --------------------
INSTITUTIONAL CLASS
10/1/98 through 3/31/99 6 7.65% $211,823 1.11%2 1.13%2 1.05%2 1.03%2 43%
9/30/98 (13.68) 205,634 1.14 1.20 0.89 0.83 71
12/27/96 1 through 9/30/97 29.11 106,886 1.15 2 1.19 2 1.33 2 1.29 2 36
SERVICE CLASS
10/1/98 through 3/31/99 6 7.42% $ 40,876 1.40%2 1.42%2 0.77%2 0.75%2 43%
9/30/98 (13.94) 28,879 1.44 1.50 0.60 0.54 71
12/27/96 1 through 9/30/97 28.81 22,757 1.44 2 1.48 2 0.98 2 0.94 2 36
INVESTOR A CLASS
10/1/98 through 3/31/99 6 7.40%3 $ 4,158 1.58%2 1.60%2 0.57%2 0.55%2 43%
9/30/98 (14.06)3 3,983 1.61 1.67 0.41 0.35 71
12/27/96 1 through 9/30/97 28.51 3 2,315 1.61 2 1.64 2 0.77 2 0.73 2 36
INVESTOR B CLASS
10/1/98 through 3/31/99 6 6.99%4 $ 5,489 2.33%2 2.35% (0.19)%2 (0.21)%2 43%
9/30/98 (14.66)4 6,375 2.35 2.41 (0.33) (0.39) 71
12/27/96 1 through 9/30/97 28.23 4 2,911 2.32 2 2.36 2 0.04 2 0.0 2 36
INVESTOR C CLASS
10/1/98 through 3/31/99 6 6.99%4 $ 373 2.33%2 2.35%2 (0.13)%2 (0.15)%2 43%
9/30/98 (14.66)4 259 2.33 2.39 (0.28) (0.34) 71
12/27/96 1 through 9/30/97 28.23 4 21 2.33 2 2.37 2 0.13 2 0.09 2 36
- ---------------------
MID-CAP GROWTH EQUITY
- ---------------------
INSTITUTIONAL CLASS
10/1/98 through 3/31/99 6 43.08% $297,456 1.11%2 1.13%2 (0.53)%2 (0.55)%2 140%
9/30/98 (8.05) 220,903 1.14 1.20 (0.37) (0.43) 204
12/27/96 1 through 9/30/97 22.00 107,709 1.13 2 1.17 2 (0.16)2 (0.20)2 64
SERVICE CLASS
10/1/98 through 3/31/99 6 42.86% $ 44,174 1.41%2 1.43%2 (0.84)%2 (0.86)%2 140%
9/30/98 (8.32) 28,601 1.44 1.50 (0.68) (0.74) 204
12/27/96 1 through 9/30/97 21.70 22,984 1.44 2 1.48 2 (0.54)2 (0.58)2 64
INVESTOR A CLASS
10/1/98 through 3/31/99 6 42.74%3 $ 7,157 1.58%2 1.60%2 (1.01)%2 (1.03)%2 140%
9/30/98 (8.42)3 4,090 1.61 1.67 (0.85) (0.91) 204
12/27/96 1 through 9/30/97 21.40 3 2,650 1.59 2 1.63 2 (0.73)2 (0.77)2 64
INVESTOR B CLASS
10/1/98 through 3/31/99 6 42.29%4 $ 6,904 2.32%2 2.34%2 (1.75)%2 (1.77)%2 140%
9/30/98 (9.19)4 4,088 2.35 2.41 (1.60) (1.66) 204
12/27/96 1 through 9/30/97 21.10 4 2,691 2.32 2 2.36 2 (1.50)2 (1.54)2 64
INVESTOR C CLASS
10/1/98 through 3/31/99 6 42.29%4 $ 394 2.32%2 2.34%2 (1.75)%2 (1.77)%2 140%
9/30/98 (9.19)%4 230 2.34 2.40 (1.56) (1.62) 204
12/27/96 1 through 9/30/97 21.10 4 85 2.35 2 2.39 2 (1.49)2 (1.53)2 64
- ----------------------
SMALL CAP VALUE EQUITY
- ----------------------
INSTITUTIONAL CLASS
10/1/98 through 3/31/99 6 (2.72)% $501,395 0.86%2 0.87%2 1.02%2 1.01%2 28%
9/30/98 (17.03) 527,374 0.87 0.88 0.79 0.78 45
9/30/97 47.36 309,899 0.87 0.88 1.09 1.08 66
9/30/96 12.64 214,828 0.85 0.86 0.68 0.67 50
9/30/95 17.43 168,334 0.75 0.84 0.44 0.35 31
9/30/94 6.28 168,360 0.73 0.85 0.28 0.16 18
SERVICE CLASS
10/1/98 through 3/31/99 6 (2.87)% $ 70,646 1.16%2 1.17%2 0.72%2 0.71%2 28%
9/30/98 (17.33) 77,893 1.17 1.18 0.44 0.43 45
9/30/97 46.95 122,431 1.17 1.18 0.79 0.78 66
9/30/96 12.30 80,981 1.15 1.16 0.38 0.37 50
9/30/95 17.17 61,313 1.02 1.12 0.16 0.07 31
9/30/94 5.96 45,372 0.98 1.10 0.03 (0.09) 18
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
62-63
<PAGE>
BLACKROCK FUNDS
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
OF PERIOD INCOME AND UNREALIZED) INCOME CAPITAL GAINS PERIOD
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTOR A CLASS
10/1/98 through 3/31/99 6 $14.88 $ 0.04 $(0.40) $(0.21) $ -- $(0.67) $13.64
9/30/98 20.20 0.06 (3.20) (0.06) -- (2.12) 14.88
9/30/97 15.97 0.10 6.40 (0.10) -- (2.17) 20.20
9/30/96 15.14 0.03 1.69 (0.02) -- (0.87) 15.97
9/30/95 13.58 -- 2.17 -- -- (0.61) 15.14
9/30/94 13.07 (0.01) 0.77 -- -- (0.25) 13.58
INVESTOR B CLASS
10/1/98 through 3/31/99 6 $14.53 $(0.03) $(0.36) $(0.15) $ -- $(0.67) $13.32
09/30/98 19.86 (0.02) (3.19) -- -- (2.12) 14.53
9/30/97 15.80 0.08 6.19 (0.04) -- (2.17) 19.86
9/30/96 15.06 (0.04) 1.65 -- -- (0.87) 15.80
10/3/94 1 through 9/30/95 13.51 (0.05) 2.21 -- -- (0.61) 15.06
INVESTOR C CLASS
10/1/98 through 3/31/99 6 $14.53 $(0.03) $(0.36) $(0.15) $ -- $(0.67) $13.32
9/30/98 19.86 (0.04) (3.17) -- -- (2.12) 14.53
10/1/96 1 through 9/30/97 15.76 0.02 6.29 (0.04) -- (2.17) 19.86
- ----------------------
SMALLCAP GROWTH EQUITY
- ----------------------
INSTITUTIONAL CLASS
10/1/98 through 3/31/99 6 $17.50 $(0.02) $ 5.10 $ -- $ -- $ -- $22.58
9/30/98 23.62 -- (4.98) -- (0.02) (1.12) 17.50
9/30/97 21.94 0.02 3.18 (0.03) -- (1.49) 23.62
9/30/96 15.06 (0.01) 6.91 (0.02) -- -- 21.94
9/30/95 10.16 0.02 4.90 (0.02) -- -- 15.06
9/30/94 10.47 0.03 (0.33) (0.01) -- -- 10.16
SERVICE CLASS
10/1/98 through 3/31/99 6 $17.24 $(0.06) $ 5.03 $ -- $ -- $ -- $22.21
9/30/98 23.43 (0.14) (4.91) -- (0.02) (1.12) 17.24
9/30/97 21.80 (0.03) 3.15 -- -- (1.49) 23.43
9/30/96 15.02 (0.06) 6.84 -- -- -- 21.80
9/30/95 10.14 (0.01) 4.89 -- -- -- 15.02
9/30/94 10.47 0.01 (0.34) -- -- -- 10.14
INVESTOR A CLASS
10/1/98 through 3/31/99 6 $17.12 $(0.02) $ 4.95 $ -- $ -- $ -- $22.05
9/30/98 23.25 (0.11) (4.88) -- (0.02) (1.12) 17.12
9/30/97 21.69 (0.04) 3.09 -- -- (1.49) 23.25
9/30/96 14.98 (0.06) 6.77 -- -- -- 21.69
9/30/95 10.12 (0.02) 4.88 -- -- -- 14.98
9/30/94 10.47 -- (0.35) -- -- -- 10.12
INVESTOR B CLASS
10/1/98 through 3/31/99 6 $16.73 $(0.18) $ 4.90 $ -- $ -- $ -- $21.45
9/30/98 22.89 (0.22) (4.80) -- (0.02) (1.12) 16.73
9/30/97 21.53 (0.07) 2.92 -- -- (1.49) 22.89
1/18/96 1 through 9/30/96 14.87 (0.07) 6.73 -- -- -- 21.53
INVESTOR C CLASS
10/1/98 through 3/31/99 6 $16.73 $(0.18) $ 4.90 $ -- $ -- $ -- $21.45
9/30/98 22.89 (0.26) (4.76) -- (0.02) (1.12) 16.73
9/30/97 21.53 (0.11) 2.96 -- -- (1.49) 22.89
9/6/96 1 through 9/30/96 19.66 (0.01) 1.88 -- -- -- 21.53
- --------------------------
MICRO-CAP EQUITY PORTFOLIO
- --------------------------
INSTITUTIONAL CLASS
10/1/98 through 3/31/99 6 $ 9.38 $(0.02) $ 6.52 $ -- $ -- $ -- $15.88
5/01/98 1 through 9/30/98 10.00 (0.01) (0.61) -- -- -- 9.38
SERVICE CLASS
10/1/98 through 3/31/99 6 $ 9.38 $(0.05) $ 6.52 $ -- $ -- $ -- $15.85
5/01/98 1 through 9/30/98 10.00 (0.02) (0.60) -- -- -- 9.38
INVESTOR A CLASS
10/1/98 through 3/31/99 6 $ 9.38 $(0.05) $ 6.50 $ -- $ -- $ -- $15.83
5/01/98 1 through 9/30/98 10.00 (0.02) (0.60) -- -- -- 9.38
INVESTOR B CLASS
10/1/98 through 3/31/99 6 $ 9.36 $(0.09) $ 6.47 $ -- $ -- $ -- $15.74
5/01/98 1 through 9/30/98 10.00 (0.04) (0.60) -- -- -- 9.36
</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
TOTAL PERIOD AVERAGE NET (EXCLUDING TO AVERAGE NET (EXCLUDING TURNOVER
RETURN (000) ASSETS WAIVERS) ASSETS WAIVERS) RATE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTOR A CLASS
10/1/98 through 3/31/99 6 (3.00)%3 $ 34,199 1.29%2 1.30%2 0.60%2 0.59%2 28%
9/30/98 (17.43)3 34,286 1.32 1.33 0.32 0.31 45
9/30/97 46.85 3 34,031 1.34 1.35 0.63 0.62 66
9/30/96 12.06 3 24,605 1.32 1.33 0.20 0.19 50
9/30/95 16.96 3 21,563 1.18 1.28 0.0 (0.09) 31
9/30/94 5.93 3 16,884 1.13 1.25 (0.11) (0.23) 18
INVESTOR B CLASS
10/1/98 through 3/31/99 6 (3.26)%4 $ 18,071 2.08%2 2.09%2 (0.20)%2 (0.21)%2 28%
09/30/98 (18.08)4 20,717 2.08 2.09 (0.43) (0.44) 45
9/30/97 45.67 4 11,001 2.07 2.08 (0.15) (0.16) 66
9/30/96 11.34 4 2,357 2.04 2.05 (0.50) (0.51) 50
10/3/94 1 through 9/30/95 16.95 4 1,477 1.80 2 1.89 2 (0.61)2 (0.70)2 31
INVESTOR C CLASS
10/1/98 through 3/31/99 6 (3.26)%4 $ 4,801 2.08%2 2.09%2 (0.21)%2 (0.22)%2 28%
9/30/98 (18.08)4 5,491 2.08 2.09 (0.42) (0.43) 45
10/1/96 1 through 9/30/97 46.04 4 2,109 2.04 2 2.05 2 (0.18)2 (0.19)2 66
- -----------------------
SMALL CAP GROWTH EQUITY
- -----------------------
INSTITUTIONAL CLASS
10/1/98 through 3/31/99 6 28.95% $1,265,995 0.83%2 0.83%2 (0.22)%2 (0.22)%2 89%
9/30/98 (21.93) 1,022,404 0.87 0.87 (0.13) (0.13) 159
9/30/97 15.89 495,904 0.87 0.87 0.01 0.01 82
9/30/96 45.87 299,563 0.86 0.88 (0.07) (0.09) 89
9/30/95 48.50 145,915 0.75 0.88 0.22 0.09 74
9/30/94 (2.89) 65,612 0.48 1.04 0.45 (0.10) 89
SERVICE CLASS
10/1/98 through 3/31/99 6 28.75% $ 165,457 1.13%2 1.13%2 (0.52)%2 (0.52)%2 89%
9/30/98 (22.40) 141,470 1.17 1.17 (0.46) (0.46) 159
9/30/97 15.54 225,089 1.17 1.17 (0.29) (0.29) 82
9/30/96 45.14 158,901 1.16 1.18 (0.38) (0.40) 89
9/30/95 48.13 62,604 1.03 1.16 (0.07) (0.20) 74
9/30/94 (3.12) 22,648 0.71 1.27 0.21 (0.34) 89
INVESTOR A CLASS
10/1/98 through 3/31/99 6 28.72%3 $ 75,663 1.24%2 1.24%2 (0.64)%2 (0.64)%2 89%
9/30/98 (22.31)3 48,190 1.32 1.32 (0.61) (0.61) 159
9/30/97 15.28 3 57,323 1.34 1.34 (0.46) (0.46) 82
9/30/96 44.79 3 27,954 1.33 1.35 (0.55) (0.57) 89
9/30/95 48.02 3 7,348 1.20 1.33 (0.24) (0.36) 74
9/30/94 (3.33)3 1,620 0.86 1.42 0.07 (0.49) 89
INVESTOR B CLASS
10/1/98 through 3/31/99 6 28.21%4 $ 44,787 2.01%2 2.01%2 (1.40)%2 (1.40)%2 89%
9/30/98 (22.89)4 38,485 2.07 2.07 (1.36) (1.36 159
9/30/97 14.47 4 40,270 2.07 2.07 (1.23) (1.23) 82
1/18/96 1 through 9/30/96 38.27 4 6,520 2.06 2 2.08 2 (1.34)2 (1.36)2 89
INVESTOR C CLASS
10/1/98 through 3/31/99 6 28.21%4 $ 13,892 2.05%2 2.05%2 (1.44)%2 (1.44)%2 89%
9/30/98 (22.89)4 11,931 2.09 2.09 (1.38) (1.38) 159
9/30/97 14.47 4 14,106 2.07 2.07 (1.25) (1.25) 82
9/6/96 1 through 9/30/96 9.51 4 329 1.74 2 1.76 2 (0.93)2 (0.95)2 89
- --------------------------
MICRO-CAP EQUITY PORTFOLIO
- --------------------------
INSTITUTIONAL CLASS
10/1/98 through 3/31/99 6 69.12% $ 5,514 1.45%2 2.67%2 (0.59)%2 (1.81)%2 194%
5/01/98 1 through 9/30/98 (6.10) 1,302 1.40 2 2.73 2 (0.33)2 (1.66)2 119
SERVICE CLASS
10/1/98 through 3/31/99 6 68.80% $ 117 1.75%2 2.97%2 (0.92)%2 (2.14)%2 194%
5/01/98 1 through 9/30/98 (6.10) 69 1.68 2 3.01 2 (0.61)2 (1.94)2 119
INVESTOR A CLASS
10/1/98 through 3/31/99 6 68.76%3 $ 12,871 1.92%2 3.14%2 (1.08)%2 (2.30)%2 194%
5/01/98 1 through 9/30/98 (6.20)3 6,100 1.84 2 3.17 2 (0.70)2 (2.03)2 119
INVESTOR B CLASS
10/1/98 through 3/31/99 6 67.98%4 $ 17,642 2.67%2 3.89%2 (1.83)%2 (3.05)%2 194%
5/01/98 1 through 9/30/98 (6.30)4 8,560 2.55 2 3.88 2 (1.44)2 (2.77)2 119
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
64-65
<PAGE>
BLACKROCK FUNDS
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
OF PERIOD INCOME AND UNREALIZED) INCOME CAPITAL GAINS PERIOD
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTOR C CLASS
10/1/98 through 3/31/99 6 $ 9.36 $(0.09) $ 6.47 $ -- $ -- $ -- $15.74
5/01/98 1 through 9/30/98 10.00 (0.04) (0.60) -- -- -- 9.36
- --------------------
INTERNATIONAL EQUITY
- --------------------
INSTITUTIONAL CLASS
10/1/98 through 3/31/99 6 $13.23 $(0.02) $ 2.51 $(0.26) $ -- $(0.67) $14.79
9/30/98 14.65 0.27 (1.29) (0.20) -- (0.20) 13.23
9/30/97 13.43 0.14 1.77 (0.28) -- (0.41) 14.65
9/30/96 13.27 0.17 0.84 (0.18) -- (0.67) 13.43
9/30/95 13.44 0.17 0.13 (0.11) -- (0.36) 13.27
9/30/94 12.48 0.15 1.17 (0.11) -- (0.25) 13.44
SERVICE CLASS
10/1/98 through 3/31/99 6 $13.15 $(0.09) $ 2.55 $(0.21) $ -- $(0.67) $14.73
9/30/98 14.58 0.02 (1.09) (0.16) -- (0.20) 13.15
9/30/97 13.37 0.10 1.76 (0.24) -- (0.41) 14.58
9/30/96 13.24 0.19 0.78 (0.17) -- (0.67) 13.37
9/30/95 13.41 0.11 0.16 (0.08) -- (0.36) 13.24
9/30/94 12.47 0.14 1.14 (0.09) -- (0.25) 13.41
INVESTOR A CLASS
10/1/98 through 3/31/99 6 $13.14 $(0.02) $ 2.47 $(0.21) $ -- $(0.67) $14.71
9/30/98 14.57 0.10 (1.20) (0.13) -- (0.20) 13.14
9/30/97 13.36 0.07 1.77 (0.22) -- (0.41) 14.57
9/30/96 13.24 0.14 0.81 (0.16) -- (0.67) 13.36
9/30/95 13.40 0.11 0.13 (0.04) -- (0.36) 13.24
9/30/94 12.47 0.12 1.15 (0.09) -- (0.25) 13.40
INVESTOR B CLASS
10/1/98 through 3/31/99 6 $12.94 $(0.10) $ 2.44 $(0.09) $ -- $(0.67) $14.52
9/30/98 14.38 (0.01) (1.16) (0.07) -- (0.20) 12.94
9/30/97 13.23 0.07 1.66 (0.17) -- (0.41) 14.38
9/30/96 13.20 0.08 0.77 (0.15) -- (0.67) 13.23
10/3/94 1 through 9/30/95 13.35 0.05 0.16 -- -- (0.36) 13.20
INVESTOR C CLASS
10/1/98 through 3/31/99 6 $12.94 $(0.02) $ 2.36 $(0.09) $ -- $(0.67) $14.52
9/30/98 14.38 -- (1.17) (0.07) -- (0.20) 12.94
12/5/96 1 through 9/30/97 13.21 0.15 1.19 (0.17) -- -- 14.38
- ------------------------------
INTERNATIONAL SMALL CAP EQUITY
- ------------------------------
INSTITUTIONAL CLASS
10/1/98 through 3/31/99 6 $ 9.56 $(0.05) $ 1.13 $(0.23) $ -- $(0.90) $ 9.51
9/30/98 9.94 0.07 (0.40) (0.05) -- -- 9.56
9/26/97 1 through 9/30/97 10.00 -- (0.06) -- -- -- 9.94
SERVICE CLASS
10/1/98 through 3/31/99 6 $ 9.56 $(0.09) $ 1.15 $(0.23) $ -- $(0.90) $ 9.49
9/30/98 9.94 0.02 (0.35) (0.05) -- -- 9.56
9/26/97 1 through 9/30/97 10.00 -- (0.06) -- -- -- 9.94
INVESTOR A CLASS
10/1/98 through 3/31/99 6 $ 9.54 $(0.06) $ 1.09 $(0.18) $ -- $(0.90) $ 9.49
9/30/98 9.94 0.02 (0.39) (0.03) -- -- 9.54
9/26/97 1 through 9/30/97 10.00 -- (0.06) -- -- -- 9.94
INVESTOR B CLASS
10/1/98 through 3/31/99 6 $ 9.48 $(0.10) $ 1.10 $(0.10) $ -- $(0.90) $ 9.48
9/30/98 9.94 (0.05) (0.39) (0.02) -- -- 9.48
9/26/97 1 through 9/30/97 10.00 -- (0.06) -- -- -- 9.94
INVESTOR C CLASS
10/1/98 through 3/31/99 6 $ 9.48 $(0.09) $ 1.09 $(0.10) $ -- $(0.90) $ 9.48
9/30/98 9.94 (0.04) (0.40) (0.02) -- -- 9.48
9/26/97 1 through 9/30/97 10.00 -- (0.06) -- -- -- 9.94
- ------------------------------
INTERNATIONAL EMERGING MARKETS
- ------------------------------
INSTITUTIONAL CLASS
10/1/98 through 3/31/99 6 $ 4.42 $ 0.02 $ 0.67 $(0.05) $ -- $ -- $ 5.06
9/30/98 9.69 0.06 (5.19) -- -- (0.14) 4.42
9/30/97 8.76 0.03 0.95 (0.05) -- -- 9.69
9/30/96 8.19 0.08 0.50 -- -- (0.01) 8.76
9/30/95 10.56 0.08 (2.15) (0.10) (0.01) (0.19) 8.19
6/17/94 1 through 9/30/94 10.00 0.03 0.53 -- -- -- 10.56
</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
TOTAL PERIOD AVERAGE NET (EXCLUDING TO AVERAGE NET (EXCLUDING TURNOVER
RETURN (000) ASSETS WAIVERS) ASSETS WAIVERS) RATE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTOR C CLASS
10/1/98 through 3/31/99 6 67.98%4 $ 5,253 2.66%2 3.88%2 (1.80)%2 (3.02)%2 194%
5/01/98 1 through 9/30/98 (6.30)4 1,809 2.53 2 3.86 2 (1.45)2 (2.78)2 119
- --------------------
INTERNATIONAL EQUITY
- --------------------
INSTITUTIONAL CLASS
10/1/98 through 3/31/99 6 19.31% $1,086,088 1.04%2 1.04%2 0.18%2 0.18%2 29%
9/30/98 (7.03) 1,012,132 1.06 1.11 1.00 0.95 57
9/30/97 14.88 433,135 1.06 1.16 0.94 0.84 62
9/30/96 8.01 388,588 1.06 1.17 0.90 0.79 70
9/30/95 2.46 312,588 0.97 1.14 1.42 1.24 105
9/30/94 10.71 284,905 0.95 1.14 1.27 1.08 37
SERVICE CLASS
10/1/98 through 3/31/99 6 19.16% $ 123,590 1.34%2 1.34%2 (0.15)%2 (0.15)%2 29%
9/30/98 (7.34) 143,526 1.36 1.41 0.49 0.44 57
9/30/97 14.52 199,939 1.36 1.46 0.42 0.32 62
9/30/96 7.71 161,321 1.36 1.47 0.71 0.60 70
9/30/95 2.19 106,045 1.25 1.42 1.16 0.98 105
9/30/94 10.36 75,174 1.20 1.39 1.09 0.90 37
INVESTOR A CLASS
10/1/98 through 3/31/99 6 19.08%3 $ 39,589 1.47%2 1.47%2 (0.16)%2 (0.16)%2 29%
9/30/98 (7.56)3 26,637 1.52 1.57 0.31 0.26 57
9/30/97 14.36 3 22,335 1.53 1.63 0.50 0.40 62
9/30/96 7.58 3 19,842 1.53 1.64 0.45 0.34 70
9/30/95 2.00 3 17,721 1.40 1.58 0.97 0.80 105
9/30/94 10.24 3 14,433 1.35 1.54 0.96 0.77 37
INVESTOR B CLASS
10/1/98 through 3/31/99 6 18.57%4 $ 7,385 2.26%2 2.26%2 (1.03)%2 (1.03)%2 29%
9/30/98 (8.19)4 6,509 2.28 2.33 (0.38) (0.43) 57
9/30/97 13.63 4 5,850 2.27 2.37 (0.22) (0.32) 62
9/30/96 6.81 4 2,692 2.23 2.34 (0.18) (0.29) 70
10/3/94 1 through 9/30/95 1.77 4 1,071 2.06 2 2.23 2 0.59 2 0.41 2 105
INVESTOR C CLASS
10/1/98 through 3/31/99 6 18.57%4 $ 681 2.25%2 2.25%2 (0.56)%2 (0.56)%2 29%
9/30/98 (8.19)4 294 2.27 2.32 (0.31) (0.36) 57
12/5/96 1 through 9/30/97 10.33 4 155 2.28 2 2.38 2 (0.48)2 (0.58)2 62
- ------------------------------
INTERNATIONAL SMALL CAP EQUITY
- ------------------------------
INSTITUTIONAL CLASS
10/1/98 through 3/31/99 6 11.96% $ 15,789 1.33%2 1.85%2 0.50%2 (0.02)%2 36%
9/30/98 (3.57) 16,233 1.32 2.17 0.65 (0.20) 76
9/26/97 1 through 9/30/97 (0.30) 15,415 1.33 2 1.55 2 1.42 2 1.19 2 0
SERVICE CLASS
10/1/98 through 3/31/99 6 11.70% $ 1 1.63%2 2.23%2 0.40%2 (0.12)%2 36%
9/30/98 (3.62) 5 1.62 2.47 0.28 (0.57) 76
9/26/97 1 through 9/30/97 (0.30) 10 1.63 2 1.86 2 1.42 2 1.19 2 0
INVESTOR A CLASS
10/1/98 through 3/31/99 6 11.70%3 $ 750 1.80%2 2.32%2 0.03%2 (0.49)%2 36%
9/30/98 (3.98)3 849 1.78 2.63 0.20 (0.65) 76
9/26/97 1 through 9/30/97 (0.30)3 326 1.30 2 1.52 2 1.44 2 1.22 2 0
INVESTOR B CLASS
10/1/98 through 3/31/99 6 11.39%4 $ 1,445 2.55%2 3.07%2 (0.72)%2 (1.24)%2 36%
9/30/98 (4.73)4 1,725 2.53 3.38 (0.54) (1.39) 76
9/26/97 1 through 9/30/97 (0.30)4 711 1.30 2 1.52 2 1.58 2 1.35 2 0
INVESTOR C CLASS
10/1/98 through 3/31/99 6 11.39%4 $ 404 2.56%2 3.08%2 (0.72)2 (1.24)%2 36%
9/30/98 (4.73)4 423 2.53 3.38 (0.54) (1.39) 76
9/26/97 1 through 9/30/97 (0.30)4 182 1.30 2 1.52 2 1.44 2 1.22 2 0
- ------------------------------
INTERNATIONAL EMERGING MARKETS
- ------------------------------
INSTITUTIONAL CLASS
10/1/98 through 3/31/99 6 15.57% $ 48,820 1.74%2 1.89%2 1.26%2 1.11%2 33%
9/30/98 (53.59) 63,649 1.76 1.86 0.95 0.85 37
9/30/97 11.16 116,107 1.78 1.87 0.37 0.27 33
9/30/96 6.97 68,664 1.78 1.88 0.96 0.87 44
9/30/95 (19.72) 29,319 1.78 2.02 1.90 1.66 75
6/17/94 1 through 9/30/94 5.60 2,511 1.75 2 2.73 2 1.19 2 0.21 2 4
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
66-67
<PAGE>
BLACKROCK FUNDS
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
OF PERIOD INCOME AND UNREALIZED) INCOME CAPITAL GAINS PERIOD
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SERVICE CLASS
10/1/98 through 3/31/99 6 $ 4.39 $ -- $ 0.67 $ -- $ -- $ -- $ 5.06
9/30/98 9.63 0.06 (5.16) -- -- (0.14) 4.39
9/30/97 8.72 0.01 0.93 (0.03) -- -- 9.63
9/30/96 8.18 0.04 0.51 -- -- (0.01) 8.72
9/30/95 10.55 0.06 (2.15) (0.08) (0.01) (0.19) 8.18
6/17/94 1 through 9/30/94 10.00 0.02 0.53 -- -- -- 10.55
INVESTOR A CLASS
10/1/98 through 3/31/99 6 $ 4.36 $(0.01) $ 0.67 $ -- $ -- $ -- $ 5.02
9/30/98 9.60 0.03 (5.13) -- -- (0.14) 4.36
9/30/97 8.71 (0.06) 0.98 (0.03) -- -- 9.60
9/30/96 8.18 0.02 0.52 -- -- (0.01) 8.71
9/30/95 10.54 0.03 (2.14) (0.05) (0.01) (0.19) 8.18
6/17/94 1 through 9/30/94 10.00 0.02 0.52 -- -- -- 10.54
INVESTOR B CLASS
10/1/98 through 3/31/99 6 $ 4.30 $(0.06) $ 0.70 $ -- $ -- $ -- $ 4.94
9/30/98 9.54 (0.03) (5.07) -- -- (0.14) 4.30
9/30/97 8.69 (0.04) 0.89 -- -- -- 9.54
4/25/961 through 9/30/96 8.85 -- (0.16) -- -- -- 8.69
INVESTOR C CLASS
10/1/98 through 3/31/99 6 $ 4.30 $(0.07) $ 0.71 $ -- $ -- $ -- $ 4.94
9/30/98 9.54 (0.02) (5.08) -- -- (0.14) 4.30
3/21/97 1 through 9/30/97 9.70 (0.01) (0.15) -- -- -- 9.54
- -------------
SELECT EQUITY
- -------------
INSTITUTIONAL CLASS
10/1/98 through 3/31/99 6 $17.01 $ 0.08 $ 4.31 $(0.08) $ -- $(0.61) $20.71
9/30/98 17.51 0.16 0.49 (0.15) -- (1.00) 17.01
9/30/97 13.57 0.19 5.15 (0.19) -- (1.21) 17.51
9/30/96 11.88 0.21 2.08 (0.21) -- (0.39) 13.57
9/30/95 9.92 0.22 2.08 (0.22) -- (0.12) 11.88
9/30/94 9.97 0.22 (0.04) (0.23) -- -- 9.92
SERVICE CLASS
10/1/98 through 3/31/99 6 $17.00 $ 0.04 $ 4.31 $(0.04) $ -- $(0.61) $20.70
9/30/98 17.50 0.12 0.48 (0.10) -- (1.00) 17.00
9/30/97 13.56 0.11 5.18 (0.14) -- (1.21) 17.50
9/30/96 11.88 0.17 2.07 (0.17) -- (0.39) 13.56
9/30/95 9.92 0.22 2.05 (0.19) -- (0.12) 11.88
9/30/94 9.97 0.19 (0.04) (0.20) -- -- 9.92
INVESTOR A CLASS
10/1/98 through 3/31/99 6 $17.00 $ 0.03 $ 4.32 $(0.04) $ -- $(0.61) $20.70
9/30/98 17.50 0.08 0.50 (0.08) -- (1.00) 17.00
9/30/97 13.56 0.11 5.16 (0.12) -- (1.21) 17.50
9/30/96 11.88 0.15 2.07 (0.15) -- (0.39) 13.56
9/30/95 9.92 0.20 2.06 (0.18) -- (0.12) 11.88
10/13/93 1 through 9/30/94 9.96 0.18 (0.03) (0.19) -- -- 9.92
INVESTOR B CLASS
10/1/98 through 3/31/99 6 $16.85 $(0.04) $ 4.25 $ -- $ -- $(0.61) $20.45
9/30/98 17.40 (0.03) 0.48 -- -- (1.00) 16.85
9/30/97 13.54 0.05 5.07 (0.05) -- (1.21) 17.40
3/27/96 1 through 9/30/96 12.83 0.04 0.73 (0.06) -- -- 13.54
INVESTOR C CLASS
10/1/98 through 3/31/99 6 $16.85 $(0.02) $ 4.23 $ -- $ -- $(0.61) $20.45
9/30/98 17.40 (0.02) 0.47 -- -- (1.00) 16.85
9/30/97 13.54 0.04 5.08 (0.05) -- (1.21) 17.40
9/27/96 1 through 9/30/96 13.52 -- 0.02 -- -- -- 13.54
- ------------
INDEX EQUITY
- ------------
INSTITUTIONAL CLASS
10/1/98 through 3/31/99 6 $19.65 $ 0.13 $ 5.18 $(0.16) $ -- $(0.06) $24.74
9/30/98 18.32 0.24 1.39 (0.26) -- (0.04) 19.65
9/30/97 13.97 0.04 5.02 (0.03) -- (0.68) 18.32
9/30/96 13.58 0.30 2.13 (0.34) -- (1.70) 13.97
9/30/95 10.93 0.38 2.73 (0.34) -- (0.12) 13.58
9/30/94 11.02 0.31 0.03 (0.32) -- (0.11) 10.93
</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
TOTAL PERIOD AVERAGE NET (EXCLUDING TO AVERAGE NET (EXCLUDING TURNOVER
RETURN (000) ASSETS WAIVERS) ASSETS WAIVERS) RATE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SERVICE CLASS
10/1/98 through 3/31/99 6 15.26% $ 16,063 2.04%2 2.19%2 0.93%2 0.78%2 33%
9/30/98 (53.62) 26,566 2.06 2.16 0.71 0.61 37
9/30/97 10.74 66,064 2.08 2.17 0.09 (0.01) 33
9/30/96 6.61 37,987 2.08 2.18 0.70 0.60 44
9/30/95 (19.91) 15,020 2.06 2.30 1.72 1.48 75
6/17/94 1 through 9/30/94 5.50 3,505 2.00 2 2.98 2 1.10 2 0.12 2 4
INVESTOR A CLASS
10/1/98 through 3/31/99 6 15.14%3 $ 1,880 2.22%2 2.37%2 0.79%2 0.64%2 33%
9/30/98 (53.79)3 1,835 2.24 2.34 0.46 0.36 37
9/30/97 10.51 3 4,454 2.25 2.34 (0.08) (0.18) 33
9/30/96 6.49 3 2,996 2.25 2.35 0.45 0.35 44
9/30/95 (20.12)3 2,563 2.20 2.44 1.54 1.30 75
6/17/94 1 through 9/30/94 5.40 3 2,857 2.15 2 3.13 2 0.74 2 (0.24)2 4
INVESTOR B CLASS
10/1/98 through 3/31/99 6 14.88%4 $ 681 2.96%2 3.11%2 0.04%2 (0.11)%2 33%
9/30/98 (54.13)4 733 2.98 3.08 (0.30) (0.40) 37
9/30/97 9.78 4 1,836 2.98 3.07 (0.80) (0.90) 33
4/25/961 through 9/30/96 (1.81)4 216 2.90 2 3.00 2 0.17 2 0.07 2 44
INVESTOR C CLASS
10/1/98 through 3/31/99 6 14.88%4 $ 26 2.97%2 3.12%2 0.01%2 (0.14)%2 33%
9/30/98 (54.13)4 25 2.98 3.08 (0.29) (0.39) 37
3/21/97 1 through 9/30/97 (3.08)4 88 2.58 2 2.67 2 (0.27)2 (0.37)2 33
- -------------
SELECT EQUITY
- -------------
INSTITUTIONAL CLASS
10/1/98 through 3/31/99 6 26.24% $1,516,696 0.81%2 0.81%2 0.71%2 0.71%2 10%
9/30/98 4.07 1,286,032 0.86 0.86 0.93 0.93 27
9/30/97 42.50 379,687 0.79 0.86 1.24 1.17 29
9/30/96 19.84 274,434 0.74 0.87 1.70 1.58 55
9/30/95 23.76 238,813 0.67 0.85 2.35 2.17 51
9/30/94 1.79 48,123 0.65 0.93 2.11 1.82 88
SERVICE CLASS
10/1/98 through 3/31/99 6 26.08% $ 232,989 1.11%2 1.11%2 0.41%2 0.41%2 10%
9/30/98 3.77 203,754 1.16 1.16 0.63 0.63 27
9/30/97 42.12 174,418 1.09 1.16 0.93 0.86 29
9/30/96 19.43 113,777 1.04 1.17 1.41 1.28 55
9/30/95 23.43 83,705 0.95 1.13 2.10 1.91 51
9/30/94 1.55 49,293 0.90 1.18 1.96 1.68 88
INVESTOR A CLASS
10/1/98 through 3/31/99 6 26.02%3 $ 55,975 1.23%2 1.23%2 0.29%2 0.29%2 10%
9/30/98 3.62 3 35,359 1.32 1.32 0.44 0.44 27
9/30/97 41.95 3 18,949 1.27 1.34 0.75 0.68 29
9/30/96 19.23 3 6,228 1.21 1.34 1.24 1.11 55
9/30/95 23.29 3 3,808 1.12 1.30 1.91 1.73 51
10/13/93 1 through 9/30/94 1.54 3 601 1.05 2 1.34 2 1.89 2 1.60 2 88
INVESTOR B CLASS
10/1/98 through 3/31/99 6 25.44%4 $ 58,941 2.03%2 2.03%2 (0.51)%2 (0.51)%2 10%
9/30/98 2.90 4 39,971 2.07 2.07 (0.29) (0.29) 27
9/30/97 40.70 4 18,345 2.01 2.08 (0.02) (0.09) 29
3/27/96 1 through 9/30/96 6.58 4 1,196 1.92 2 2.04 2 0.59 2 0.46 2 55
INVESTOR C CLASS
10/1/98 through 3/31/99 6 25.44%4 $ 4,747 2.02%2 2.02%2 (0.50)%2 (0.50)%2 10%
9/30/98 2.90 4 2,450 2.06 2.06 (0.30) (0.30) 27
9/30/97 40.70 4 377 2.01 2.08 (0.12) (0.19) 29
9/27/96 1 through 9/30/96 0.15 4 50 0.0 2 0.0 2 0.0 2 0.0 2 55
- ------------
INDEX EQUITY
- ------------
INSTITUTIONAL CLASS
10/1/98 through 3/31/99 6 27.12% $ 496,317 0.19%2 0.33%2(DOUBLE DAGGER) 1.19%2 1.05%2 --*
9/30/98 8.91 354,215 0.18 0.34(DOUBLE DAGGER) 1.40 1.24 --*
9/30/97 39.78 166,786 0.18 0.38(DOUBLE DAGGER) 1.71 1.51 --*
9/30/96 19.82 127,076 0.18 0.50(DOUBLE DAGGER) 2.29 1.98 18%5*
9/30/95 29.30 109,433 0.17 0.50 2.92 2.59 18
9/30/94 3.07 147,746 0.15 0.52 2.72 2.35 17
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
68-69
<PAGE>
BLACKROCK FUNDS
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
OF PERIOD INCOME AND UNREALIZED) INCOME CAPITAL GAINS PERIOD
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SERVICE CLASS
10/1/98 through 3/31/99 6 $19.64 $ 0.10 $ 5.18 $(0.13) $ -- $(0.06) $24.73
9/30/98 18.32 0.22 1.34 (0.20) -- (0.04) 19.64
9/30/97 13.97 0.23 5.01 (0.21) -- (0.68) 18.32
9/30/96 13.58 0.29 2.10 (0.30) -- (1.70) 13.97
9/30/95 10.93 0.35 2.73 (0.31) -- (0.12) 13.58
9/30/94 11.02 0.29 0.02 (0.29) -- (0.11) 10.93
INVESTOR A CLASS
10/1/98 through 3/31/99 6 $19.64 $ 0.10 $ 5.18 $(0.13) $ -- $(0.06) $24.73
9/30/98 18.32 0.18 1.35 (0.17) -- (0.04) 19.64
9/30/97 13.96 0.21 5.02 (0.19) -- (0.68) 18.32
9/30/96 13.58 0.27 2.09 (0.28) -- (1.70) 13.96
9/30/95 10.93 0.34 2.73 (0.30) -- (0.12) 13.58
9/30/94 11.02 0.25 0.04 (0.27) -- (0.11) 10.93
INVESTOR B CLASS
10/1/98 through 3/31/99 6 $19.52 $ 0.01 $ 5.13 $(0.05) $ -- $(0.06) $24.55
9/30/98 18.22 0.05 1.34 (0.05) -- (0.04) 19.52
9/30/97 13.93 0.13 4.94 (0.10) -- (0.68) 18.22
2/7/96 1 through 9/30/96 13.20 0.08 0.77 (0.12) -- -- 13.93
INVESTOR C CLASS
10/1/98 through 3/31/99 6 $19.52 $ 0.01 $ 5.13 $(0.05) $ -- $(0.06) $24.55
9/30/98 18.22 0.05 1.34 (0.05) -- (0.04) 19.52
9/30/97 13.93 0.13 4.94 (0.10) -- (0.68) 18.22
8/14/96 1 through 9/30/96 13.47 0.02 0.50 (0.06) -- -- 13.93
- --------
BALANCED
- --------
INSTITUTIONAL CLASS
10/1/98 through 3/31/99 6 $18.35 $ 0.24 $ 2.73 $(0.24) $ -- $(0.79) $20.29
9/30/98 18.22 0.38 1.43 (0.43) -- (1.25) 18.35
9/30/97 15.10 0.52 3.62 (0.50) -- (0.52) 18.22
9/30/96 13.73 0.46 1.49 (0.45) -- (0.13) 15.10
9/30/95 11.98 0.46 1.90 (0.47) -- (0.14) 13.73
9/30/94 12.42 0.38 (0.39) (0.37) -- (0.06) 11.98
SERVICE CLASS
10/1/98 through 3/31/99 6 $18.34 $ 0.20 $ 2.73 $(0.21) $ -- $(0.79) $20.27
9/30/98 18.21 0.42 1.34 (0.38) -- (1.25) 18.34
9/30/97 15.09 0.45 3.64 (0.45) -- (0.52) 18.21
9/30/96 13.72 0.42 1.49 (0.41) -- (0.13) 15.09
9/30/95 11.98 0.44 1.88 (0.44) -- (0.14) 13.72
9/30/94 12.42 0.34 (0.38) (0.34) -- (0.06) 11.98
INVESTOR A CLASS
10/1/98 through 3/31/99 6 $18.33 $ 0.19 $ 2.73 $(0.20) $ -- $(0.79) $20.26
9/30/98 18.22 0.39 1.33 (0.36) -- (1.25) 18.33
9/30/97 15.10 0.39 3.68 (0.43) -- (0.52) 18.22
9/30/96 13.73 0.40 1.49 (0.39) -- (0.13) 15.10
9/30/95 11.98 0.43 1.88 (0.42) -- (0.14) 13.73
9/30/94 12.42 0.32 (0.38) (0.32) -- (0.06) 11.98
INVESTOR B CLASS
10/1/98 through 3/31/99 6 $18.22 $ 0.12 $ 2.71 $(0.13) $ -- $(0.79) $20.13
9/30/98 18.13 0.25 1.31 (0.22) -- (1.25) 18.22
9/30/97 15.04 0.31 3.61 (0.31) -- (0.52) 18.13
9/30/96 13.69 0.31 1.47 (0.30) -- (0.13) 15.04
10/3/94 1 through 9/30/95 11.95 0.33 1.93 (0.38) -- (0.14) 13.69
INVESTOR C CLASS
10/1/98 through 3/31/99 6 $18.22 $ 0.12 $ 2.71 $(0.13) $ -- $(0.79) $20.13
9/30/98 18.13 0.24 1.32 (0.22) -- (1.25) 18.22
12/20/9 1 through 9/30/97 15.62 0.28 2.54 (0.31) -- -- 18.13
</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
TOTAL PERIOD AVERAGE NET (EXCLUDING TO AVERAGE NET (EXCLUDING TURNOVER
RETURN (000) ASSETS WAIVERS) ASSETS WAIVERS) RATE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SERVICE CLASS
10/1/98 through 3/31/99 6 26.96% $334,620 0.49%2 0.63%2(DOUBLE DAGGER) 0.89%2 0.75%2 --*
9/30/98 8.54 233,696 0.48 0.64(DOUBLE DAGGER) 1.09 0.93 --*
9/30/97 39.58 193,319 0.48 0.68(DOUBLE DAGGER) 1.41 1.21 --*
9/30/96 19.45 103,080 0.48 0.80(DOUBLE DAGGER) 1.98 1.67 18%5*
9/30/95 28.99 61,536 0.45 0.79 2.62 2.28 18
9/30/94 2.78 27,376 0.40 0.77 2.49 2.12 17
INVESTOR A CLASS
10/1/98 through 3/31/99 6 26.87%3 $ 65,754 0.65%2 0.79%2(DOUBLE DAGGER) 0.72%2 0.58%2 --*
9/30/98 8.37 3 42,891 0.65 0.81(DOUBLE DAGGER) 0.92 0.76 --*
9/30/97 39.49 3 33,934 0.65 0.85(DOUBLE DAGGER) 1.23 1.03 --*
9/30/96 19.31 3 12,752 0.65 0.97(DOUBLE DAGGER) 1.81 1.49 18%5*
9/30/95 28.77 3 6,501 0.61 0.95 2.44 2.10 18
9/30/94 2.66 3 2,632 0.55 0.92 2.35 1.98 17
INVESTOR B CLASS
10/1/98 through 3/31/99 6 26.34%4 $232,091 1.39%2 1.53%2(DOUBLE DAGGER) (0.01)%2 (0.15)%2 --*
9/30/98 7.63 4 109,019 1.38 1.54(DOUBLE DAGGER) 0.19 0.03 --*
9/30/97 38.31 4 38,271 1.38 1.58(DOUBLE DAGGER) 0.45 0.25 --*
2/7/96 1 through 9/30/96 6.50 4 2,904 1.38 2 1.60 2(DOUBLE DAGGER) 0.93 2 0.71 2 18%5*
INVESTOR C CLASS
10/1/98 through 3/31/99 6 26.34%4 $272,643 1.37%2 1.51%2(DOUBLE DAGGER) 0.00%2 (0.14)%2 --*
9/30/98 7.63 4 81,529 1.38 1.54(DOUBLE DAGGER) 0.19 0.03 --*
9/30/97 38.31 4 19,668 1.38 1.58(DOUBLE DAGGER) 0.45 0.25 --*
8/14/96 1 through 9/30/96 3.90 4 432 1.25 2 1.43 2(DOUBLE DAGGER) 0.71 2 0.53 2 18%5*
- --------
BALANCED
- --------
INSTITUTIONAL CLASS
10/1/98 through 3/31/99 6 16.52% $436,467 0.86%2 0.86%2 2.43%2 2.43%2 60%
9/30/98 10.82 374,899 0.90 0.90 2.48 2.48 134
9/30/97 28.43 31,674 0.84 0.89 2.98 2.92 173
9/30/96 14.43 37,567 0.79 0.90 3.16 3.06 275
9/30/95 20.32 24,525 0.67 0.88 3.78 3.56 154
9/30/94 (0.11) 17,610 0.65 0.91 3.16 2.89 54
SERVICE CLASS
10/1/98 through 3/31/99 6 16.38% $213,523 1.16%2 1.16%2 2.14%2 2.14%2 60%
9/30/98 10.43 176,557 1.20 1.20 2.22 2.22 134
9/30/97 28.07 176,232 1.14 1.20 2.68 2.62 173
9/30/96 14.11 134,121 1.09 1.20 2.87 2.76 275
9/30/95 19.94 85,668 0.94 1.16 3.49 3.28 154
9/30/94 (0.36) 66,024 0.90 1.16 2.96 2.70 54
INVESTOR A CLASS
10/1/98 through 3/31/99 6 16.34%3 $119,766 1.25%2 1.25%2 2.05%2 2.05%2 60%
9/30/98 10.19 3 96,795 1.30 1.30 2.13 2.13 134
9/30/97 27.93 3 87,202 1.24 1.30 2.58 2.52 173
9/30/96 13.98 3 71,899 1.19 1.30 2.75 2.65 275
9/30/95 19.86 3 67,892 1.07 1.28 3.38 3.16 154
9/30/94 (0.50)3 62,307 1.05 1.31 2.77 2.51 54
INVESTOR B CLASS
10/1/98 through 3/31/99 6 15.85%4 $ 73,640 2.06%2 2.06%2 1.23%2 1.23%2 60%
9/30/98 9.40 4 46,303 2.11 2.11 1.30 1.30 134
9/30/97 26.95 4 23,455 2.05 2.11 1.78 1.72 173
9/30/96 13.14 4 7,333 1.98 2.09 1.99 1.88 275
10/3/94 1 through 9/30/95 19.38 4 3,124 1.72 2 1.94 2 2.71 2 2.49 2 154
INVESTOR C CLASS
10/1/98 through 3/31/99 6 15.85%4 $ 5,329 2.00%2 2.00%2 1.32%2 1.32%2 60%
9/30/98 9.40 4 699 1.92 1.92 1.46 1.46 134
12/20/96 1 through 9/30/97 23.95 4 87 2.03 2 2.09 2 1.90 2 1.84 2 173
<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 For the period 10/1/95 through 5/31/96.
6 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 0.06% for the period ended 3/31/99 and
for the year ended 9/30/98, 0.07% for the year ended 9/30/97 and 0.12% for the
year ended 9/30/96.
</FN>
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
70-71
<PAGE>
BLACKROCK FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
BlackRock Funds(SM) ("the Fund") 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 36 publicly-offered portfolios, 13 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%
- -----------------------------------------------------------------------------------------------------------------------------------
Micro-Cap 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, 1999.
</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.
Purchases of Class B shares and Class C shares are subject to contingent
deferred sales charges ("CDSCs") if shares are redeemed, declining over 6 years
from a high of 4.5% for Class B shares and 1% if shares are redeemed within 12
months of their purchases for class C shares. CDSCs collected by the Portfolios
totaled $557,927 for Class B shares and $13,754 for Class C shares for the six
months ended March 31, 1999.
(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.
72
<PAGE>
BLACKROCK FUNDS
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 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. Securities for which market quotations are not readily available are
valued at fair value as determined in accordance with procedures adopted by the
Board of Directors. As of March 31, 1999, there were no securities valued in
accordance with such procedures.
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.
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, 1999,
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, 1999 Exchange Gain/(Loss)
----------------- ------------------------- ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
August 23, 1999 Japanese Yen $ 27,580,952 $ 28,352,037 $ 771,085
</TABLE>
<TABLE>
<CAPTION>
Value at Unrealized Foreign
Settlement Date Currency Sold Contract Amount March 31, 1999 Exchange Gain/(Loss)
----------------- ------------------------- ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
August 23, 1999 Japanese Yen $ (54,000,000) $ (54,366,322) $(366,322)
</TABLE>
There were no forward currency contracts for the International Small Cap
Equity Portfolio at March 31, 1999.
73
<PAGE>
BLACKROCK FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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.
REVERSE REPURCHASE AGREEMENTS -- The Balanced Portfolio may enter into
reverse repurchase agreements with qualified, third party brokers-dealers as
determined by and under the direction of the Fund's Board of Trustees. Interest
on the value of the reverse repurchase agreements issued and outstanding is
based upon competitive market rates at the time of issuance. At the time the
Fund enters into a reverse repurchase agreement, it identifies for segregation
certain liquid securities having a value not less than the repurchase price,
including accrued interest, of the reverse repurchase agreement.
FUTURES TRANSACTIONS -- The Balanced Portfolio invests in financial futures
contracts soley for the purposes of hedging its existing portfolio securities,
or securities that the Balanced Portfolio intends to purchase, against
fluctuations in fair value caused by changes in prevailing market interest
rates. The Fund invests in futures contracts and options on futures contracts to
commit funds awaiting investments in stocks or to maintain cash liquidity or,
except with respect to the Index Equity Portfolio, for other hedging purposes.
These portfolios futures contracts obligate a portfolio, at maturity, to take or
make delivery of securities, the cash value of a securities index or a stated
quantity of a foreign currency. 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.
OPTION SELLING/PURCHASING -- The Balanced Portfolio may invest in financial
options contracts soley for the purpose of hedging its existing portfolio
securities, or securities that the Portfolio intends to purchase, against
fluctuations in fair value caused by changes in prevailing market interest
rates. When the Portfolio sells or purchases an option an amount equal to the
premium received or paid by the Portfolio is recorded as a liability or an asset
and is subsequently adjusted to the current market value of the option written
or purchased. Premiums received or paid from writing or purchasing options which
expire unexercised are treated by the Portfolio on the expiration date as
realized gains or losses. The difference between the premium and the amount paid
or received on effecting a closing purchase or sale transaction, including
brokerage commissions, is also treated as a realized gain or loss. If an option
is exercised, the premium paid or received is added to the cost of the purchase
or proceeds from the sale in determining whether the Fund has realized a gain or
loss on investment transactions. The Fund as writer of an option, may have no
control over whether the underlying securities may be sold (call) or purchased
(put) and as a result bears the market risk of an unfavorable change in the
price of the security underlying the written option.
Written Option transactions entered into during the six months ended March
31, 1999 are summarized as follows:
Balanced Portfolio
-------------------------------
Number of Contracts Premium
------------------- --------
Written ................... 100 $121,875
Expired ................... -- --
--- --------
Balance at 3/31/99 ........ 100 $121,875
=== ========
74
<PAGE>
BLACKROCK FUNDS
TBA PURCHASE COMMITMENTS -- The Balanced Portfolio may enter into "TBA" (to
be announced) purchase commitments to purchase securities for a fixed price at a
future date, typically not exceeding 45 days. TBA purchase commitments may be
considered securities in themselves, and involve a risk of loss if the value of
the security to be purchased declines prior to settlement date, which risk is in
addition to the risk of decline in the value of a Portfolio's other assets.
Unsettled TBA purchase commitments are valued at the current market value of the
underlying securities, according to the procedures described under "Security
Valuation" above.
MORTGAGE DOLLAR ROLLS -- The Balanced Portfolio may enter into mortgage
dollar rolls (principally using TBA's) in which the Portfolio sells mortgage
securities for delivery in the current month and simultaneously contracts to
repurchase similar, but not identical, securities at an agreed-upon price on a
fixed date. The Portfolio accounts for such dollar rolls as purchases and sales
and receives compensation as consideration for entering into the commitment to
repurchase. The Portfolio must maintain liquid securities having a value not
less than the repurchase price (including accrued interest) for such dollar
rolls. The market value of the securities a Portfolio is required to purchase
may decline below the agreed upon repurchase price of those securities.
In a "fee" roll, the compensation is recorded as deferred income and
amortized to income over the roll period. In a "drop" roll, the compensation is
paid via a lower price for the security upon its repurchase. The counterparty
receives all principal and interest payments, including prepayments, made in
respect of a security subject to such a contract while it is the holder.
Mortgage dollar rolls may be renewed with a new fixed purchase and repurchase
price and on settlement date, cash is paid without physical delivery of the
securities subject to the contract. A Portfolio engages in dollar rolls for the
purpose of enhancing its yield, principally by earning a negotiated fee.
SECURITIES LENDING -- Prior to the close of each business day, loans of
securities are secured by collateral at least equal to 102% of the market value
of the securities on loan. However, due to market fluctuations, the collateral
may fall under 102% of the market value of the securities on loan. On the next
business day the collateral is adjusted to meet the 102% requirement based on
the prior day's market fluctuations and the current day's security lending
activity. 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, 1999, is as follows:
<TABLE>
<CAPTION>
Market Value of Securities Value of Collateral Income Earned
on Loan Received On Securities Loaned*
-------------------------- ------------------ --------------------
<S> <C> <C> <C>
Large Cap Value Equity Portfolio ............. $222,028,698 $228,626,734 $164,888
Large Cap Growth Equity Portfolio ............ 214,414,875 220,333,199 85,385
Mid-Cap Value Equity Portfolio ............... 29,762,681 30,595,429 18,818
Mid-Cap Growth Equity Portfolio .............. 103,971,894 103,909,859 122,622
Small Cap Value Equity Portfolio ............. 28,601,831 30,272,738 58,596
Small Cap Growth Equity Portfolio ............ 274,673,085 280,182,101 570,344
Micro-Cap Equity Portfolio ................... 3,879,688 3,699,100 13,362
International Emerging Markets Portfolio ..... 1,058,295 1,087,600 8,073
Select Equity Portfolio ...................... 173,195,930 179,165,125 110,928
Balanced Portfolio ........................... 91,982,341 95,037,892 30,936
<FN>
*Income is included in interest income on the Statements of Operations.
</FN>
</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 government 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 the other reasons, a country may impose
temporary restrictions on foreign capital remittances abroad.
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.
75
<PAGE>
BLACKROCK FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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.
("BlackRock"), a wholly-owned subsidiary of BlackRock, Inc., serves as
investment adviser for each of the Fund's Portfolios, except for the Index
Equity Portfolio. BlackRock Financial Management, Inc. ("BFM"), a wholly-owned
subsidiary of BlackRock, serves as the sub-adviser 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. BlackRock International, Ltd. ("BIL"), an indirect wholly-owned
subsidiary of BlackRock, serves as the sub-adviser for the International Equity
and International Emerging Markets Portfolios. BIL served as sub-adviser of the
International Small Cap Equity Portfolio prior to March 29, 1999. BlackRock,
Inc. is an indirect majority-owned subsidiary of PNC Bank Corp.
For its advisory services, BlackRock 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.
Micro-Cap Equity Portfolio -- 1.10% of the first $1 billion, 1.05% of the
next $1 billion, 1.025% of the next $1 billion, and 1.00% of the 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.
For the period ended March 31, 1999, 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 .............. $6,425,491 $ -- $6,425,491
Large Cap Growth Equity Portfolio ............. 3,628,276 -- 3,628,276
Mid-Cap Value Equity Portfolio ................ 1,051,221 -- 1,051,221
Mid-Cap Growth Equity Portfolio ............... 1,191,065 33 1,191,032
Small Cap Value Equity Portfolio .............. 1,881,649 16,540 1,865,109
Small Cap Growth Equity Portfolio ............. 3,781,965 -- 3,781,965
Micro-Cap Equity Portfolio .................... 140,097 121,760 18,337
International Equity Portfolio ................ 4,693,138 -- 4,693,138
International Small Cap Equity Portfolio ...... 94,357 45,194 49,163
International Emerging Markets Portfolio ...... 519,268 62,088 457,180
Select Equity Portfolio ....................... 4,672,452 -- 4,672,452
Balanced Portfolio ............................ 2,149,645 -- 2,149,645
<FN>
BlackRock pays BIL and BFM fees for their sub-advisory services.
</FN>
</TABLE>
76
<PAGE>
BLACKROCK FUNDS
PFPC Inc. ("PFPC"), an indirect wholly-owned subsidiary of PNC Bank Corp.,
BlackRock, and BlackRock Distributors, Inc. ("BDI") 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.
For the period ended March 31, 1999, 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 ............... $2,536,590 $-- $2,536,590
Large Cap Growth Equity Portfolio .............. 1,443,795 -- 1,443,795
Mid-Cap Value Equity Portfolio ................. 302,237 26,832 275,405
Mid-Cap Growth Equity Portfolio ................ 342,425 28,818 313,607
Small Cap Value Equity Portfolio ............... 770,449 -- 770,449
Small Cap Growth Equity Portfolio .............. 1,500,961 -- 1,500,961
Micro-Cap Equity Portfolio ..................... 29,236 15,627 13,609
International Equity Portfolio ................. 1,361,175 14,584 1,346,591
International Small Cap Equity Portfolio ....... 21,704 3,506 18,198
International Emerging Markets Portfolio ....... 95,547 -- 95,547
Select Equity Portfolio ........................ 1,841,162 -- 1,841,162
Index Equity Portfolio ......................... 1,210,398 559,316 651,082
Balanced Portfolio ............................. 875,659 -- 875,659
</TABLE>
Prior to February 1, 1999, BlackRock may have, at its discretion, waived
all or any portion of its advisory fees for any Portfolio. In addition, PFPC,
BlackRock and BDI may have, at their discretion, voluntarily waived all or any
portion of their administration fees for any Portfolio.
In the interest of limiting the expenses of the Portfolios, BlackRock and
the Fund have entered into an expense limitation agreement effective February 1,
1999. The agreement sets a limit on certain of the operating expenses of each
Portfolio for the next year and requires BlackRock to waive or reimburse fees or
expenses if these operating expenses exceed that limit. These expense limits
(which apply to expenses charged on Portfolio assets as a whole, but not
expenses separately charged to the different share of classes of a Portfolio) as
a percentage of average daily net assets are:
Large Cap Value Equity Portfolio ................ .630%
Large Cap Growth Equity Portfolio ............... .650%
Mid-Cap Value Equity Portfolio .................. .995%
Mid-Cap Growth Equity Portfolio ................. .995%
Small Cap Value Equity Portfolio ................ .705%
Small Cap Growth Equity Portfolio ............... .690%
Micro-Cap Equity Portfolio ...................... 1.305%
International Equity Portfolio .................. .900%
International Small Cap Equity Portfolio ........ 1.155%
International Emerging Markets Portfolio ........ 1.565%
Select Equity Portfolio ......................... .645%
Index Equity Portfolio .......................... .150%
Balanced Portfolio .............................. .690%
If in the following two years the operating expenses of a Portfolio that
previously received a waiver or reimbursement from BlackRock are less than the
expense limit for that Portfolio, the Portfolio is required to repay BlackRock
up to the amount of fees waived or expenses reimbursed under the agreement if:
(1) the Portfolio has more than $50 million in assets, (2) BlackRock continues
to be the Portfolio's investment adviser and (3) the Board of Trustees of the
Fund has approved the payments to BlackRock on a quarterly basis.
77
<PAGE>
BLACKROCK FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
At March 31, 1999, the amount of advisory fee waiver and reimbursement of
expenses by the BlackRock subject to possible reimbursement under the expense
limitation agreement were as follows:
Large Cap Value Equity Portfolio ........................... $ --
Large Cap Growth Equity Portfolio .......................... --
Mid-Cap Value Equity Portfolio ............................. 12,822
Mid-Cap Growth Equity Portfolio ............................ 16,126
Small Cap Value Equity Portfolio ........................... --
Small Cap Growth Equity Portfolio .......................... --
Micro-Cap Equity Portfolio ................................. 70,509
International Equity Portfolio ............................. 11,060
International Small Cap Equity Portfolio ................... 11,834
International Emerging Markets Portfolio ................... 31,142
Select Equity Portfolio .................................... --
Index Equity Portfolio ..................................... 340,490
Balanced Portfolio ......................................... --
In addition, PFPC Trust Co. (formerly PNC Bank, National Association)
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 ("distributor 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 agreements with various service organizations (including PNC Bank
and its affiliates) that provide support service to their customers who are the
beneficial owners of Shares in each Investor Class and the Service Class. 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, 1999, purchases and sales of securities,
other than short-term and government securities, were as follows:
Purchases Sales
-------------- --------------
Large Cap Value Equity Portfolio .......... $ 429,231,444 $ 619,155,302
Large Cap Growth Equity Portfolio ......... 271,005,505 311,135,179
Mid-Cap Value Equity Portfolio ............ 115,505,758 111,234,602
Mid Cap Growth Equity Portfolio ........... 388,619,730 390,101,543
Small Cap Value Equity Portfolio .......... 171,039,544 188,881,510
Small Cap Growth Equity Portfolio ......... 1,213,986,303 1,156,898,071
Micro-Cap Equity Portfolio ................ 53,118,534 9,522,522
International Equity Portfolio ............ 367,044,479 480,876,933
International Small Cap Equity Portfolio .. 6,763,466 9,522,522
International Emerging Markets Portfolio .. 26,508,496 58,950,678
Select Equity Portfolio ................... 170,480,231 258,932,095
Balanced Portfolio ........................ 285,627,420 253,384,912
For the period ended March 31, 1999, purchases and sales of government
securities were as follows:
Purchases Sales
------------ ------------
Balanced Portfolio $253,584,461 $206,691,480
78
<PAGE>
BLACKROCK FUNDS
(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
3/31/99 9/30/98
------------------------------ --------------------------------
(Unaudited)
Shares Value Shares Value
-------------- ------------- ------------ --------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class ........................ 4,051,776 $ 63,924,279 18,761,222 $ 282,706,864
Service Class .............................. 3,511,866 54,992,893 10,619,568 175,915,532
Investor A Class ........................... 987,917 15,601,898 1,730,946 28,559,315
Investor B Class ........................... 179,628 2,824,172 938,138 15,377,558
Investor C Class ........................... 63,168 985,436 143,190 2,299,944
Shares issued in conversion:
Institutional Class ........................ -- -- 73,889,741 1,302,593,623
Shares issued in reinvestment of dividends:
Institutional Class ........................ 6,917,762 107,133,604 6,443,412 97,417,675
Service Class .............................. 1,717,364 26,655,909 4,725,591 71,267,440
Investor A Class ........................... 200,757 3,113,715 406,403 6,131,693
Investor B Class ........................... 112,262 1,724,067 177,151 2,645,866
Investor C Class ........................... 3,038 46,659 3,170 47,356
Shares redeemed:
Institutional Class ........................ (12,737,800) (201,318,407) (16,151,725) (268,263,453)
Service Class .............................. (5,968,267) (94,042,426) (23,401,743) (351,888,220)
Investor A Class ........................... (800,907) (12,616,777) (1,337,810) (22,071,101)
Investor B Class ........................... (300,511) (4,645,267) (228,008) (3,706,721)
Investor C Class ........................... (52,869) (825,377) (12,526) (205,417)
------------ ------------- ----------- --------------
Net increase (decrease) ......................... (2,114,816) $ (36,445,622) 76,706,720 $1,338,827,954
=========== ============= =========== ==============
</TABLE>
<TABLE>
<CAPTION>
Large Cap Growth Equity Portfolio
-------------------------------------------------------------------
For the Six Months Ended For the Year Ended
3/31/99 9/30/98
----------------------------- ------------------------------
(Unaudited)
Shares Value Shares Value
---------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class ........................ 5,606,217 $ 114,659,459 14,330,519 $ 260,139,380
Service Class .............................. 3,421,782 69,096,697 6,926,148 129,785,746
Investor A Class ........................... 3,653,445 77,522,952 1,091,586 20,579,343
Investor B Class ........................... 486,853 9,972,377 428,636 7,828,156
Investor C Class ........................... 84,037 1,748,515 53,857 990,658
Shares issued in conversion:
Institutional Class ........................ -- -- 22,346,262 431,506,319
Shares issued in reinvestment of dividends:
Institutional Class ........................ 4,074,472 74,888,799 3,914,204 62,844,198
Service Class .............................. 900,137 16,517,521 1,879,737 30,188,579
Investor A Class ........................... 164,365 3,006,229 222,895 3,575,231
Investor B Class ........................... 72,022 1,285,591 72,085 1,139,669
Investor C Class ........................... 1,245 22,223 220 3,470
Shares redeemed:
Institutional Class ........................ (9,100,447) (185,477,270) (15,224,495) (285,067,207)
Service Class .............................. (3,664,169) (74,516,338) (12,301,697) (224,687,776)
Investor A Class ........................... (3,023,209) (64,119,342) (820,932) (15,572,024)
Investor B Class ........................... (68,469) (1,324,837) (92,023) (1,661,601)
Investor C Class ........................... (7,809) (165,024) (6,505) (116,010)
---------- ------------- ----------- -------------
Net increase .................................... 2,600,472 $ 43,117,552 22,820,497 $ 421,476,131
========== ============= =========== =============
</TABLE>
79
<PAGE>
BLACKROCK FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
Mid-Cap Value Equity Portfolio
-------------------------------------------------------------------
For the Six Months Ended For the Year Ended
3/31/99 9/30/98
---------------------------- -------------------------------
(Unaudited)
Shares Value Shares Value
---------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class ........................ 1,738,059 $ 20,077,580 5,913,961 $ 70,036,846
Service Class .............................. 1,854,570 21,434,394 3,778,987 47,633,329
Investor A Class ........................... 179,652 2,064,305 291,579 3,669,153
Investor B Class ........................... 29,182 331,617 418,592 5,320,029
Investor C Class ........................... 14,609 172,081 22,846 291,546
Shares issued in conversion:
Institutional Class ........................ -- -- 8,024,645 109,937,637
Shares issued in reinvestment of dividends:
Institutional Class ........................ 43,644 505,847 297,036 3,612,845
Service Class .............................. 15,254 176,613 66,916 810,801
Investor A Class ........................... 1,091 12,611 7,100 85,995
Investor B Class ........................... -- -- 8,483 103,070
Investor C Class ........................... -- -- 47 569
Shares redeemed:
Institutional Class ........................ (2,515,075) (28,871,046) (3,251,101) (40,262,805)
Service Class .............................. (993,882) (11,573,235) (2,906,852) (32,862,442)
Investor A Class ........................... (190,331) (2,197,731) (104,472) (1,267,749)
Investor B Class ........................... (147,003) (1,663,682) (52,273) (625,317)
Investor C Class ........................... (6,101) (71,627) (100) (1,140)
---------- ----------- ---------- ------------
Net increase .................................... 23,669 $ 397,727 12,515,394 $166,482,367
========== =========== ========== ============
</TABLE>
<TABLE>
<CAPTION>
Mid-Cap Growth Equity Portfolio
--------------------------------------------------------------------
For the Six Months Ended For the Year Ended
3/31/99 9/30/98
----------------------------- -------------------------------
(Unaudited)
Shares Value Shares Value
---------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class ........................ 1,382,220 $ 17,366,235 5,758,680 $ 66,898,857
Service Class .............................. 2,154,795 27,344,173 3,422,677 41,702,771
Investor A Class ........................... 1,396,589 17,823,296 232,165 2,825,180
Investor B Class ........................... 104,203 1,393,486 196,974 2,356,782
Investor C Class ........................... 8,127 110,971 14,232 175,298
Shares issued in conversion:
Institutional Class ........................ -- -- 8,432,259 108,860,464
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 ........................ (2,554,058) (32,291,555) (3,227,866) (40,048,082)
Service Class .............................. (1,945,521) (26,132,863) (2,727,898) (30,831,317)
Investor A Class ........................... (1,312,695) (16,852,737) (81,383) (981,552)
Investor B Class ........................... (34,063) (439,262) (46,370) (561,221)
Investor C Class ........................... (3,879) (48,220) (141) (1,679)
---------- ------------ ---------- ------------
Net increase (decrease) ......................... (804,282) $(11,726,476) 12,052,008 $151,328,193
========== ============ ========== ============
</TABLE>
80
<PAGE>
BLACKROCK FUNDS
<TABLE>
<CAPTION>
Small Cap Value Equity Portfolio
---------------------------------------------------------------------
For the Six Months Ended For the Year Ended
3/31/99 9/30/98
------------------------------ -------------------------------
(Unaudited)
Shares Value Shares Value
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class ........................ 13,755,545 $ 204,369,561 15,346,259 $ 263,786,891
Service Class .............................. 1,055,147 15,550,875 3,688,055 67,196,922
Investor A Class ........................... 2,622,407 39,658,248 1,404,053 25,334,594
Investor B Class ........................... 174,091 2,556,700 967,161 17,456,713
Investor C Class ........................... 98,808 1,477,645 326,946 5,908,135
Shares issued in conversion:
Institutional Class ........................ -- -- 15,644,346 308,037,173
Shares issued in reinvestment of dividends:
Institutional Class ........................ 1,542,462 23,689,839 1,694,367 30,605,954
Service Class .............................. 294,352 4,500,664 620,746 11,221,107
Investor A Class ........................... 117,739 1,803,061 202,621 3,663,168
Investor B Class ........................... 57,793 866,202 58,156 1,031,697
Investor C Class ........................... 4,511 67,561 3,448 61,164
Shares redeemed:
Institutional Class ........................ (14,014,920) (208,572,330) (12,603,673) (220,462,274)
Service Class .............................. (1,410,090) (21,299,694) (5,135,032) (82,989,610)
Investor A Class ........................... (2,538,450) (38,370,371) (986,916) (17,308,562)
Investor B Class ........................... (300,400) (4,315,786) (153,655) (2,634,326)
Investor C Class ........................... (120,649) (1,737,018) (58,706) (997,667)
----------- ------------- ---------- -------------
Net increase .................................... 1,338,346 $ 20,245,157 21,018,176 $ 409,911,079
=========== ============= ========== =============
</TABLE>
<TABLE>
<CAPTION>
Small Cap Growth Equity Portfolio
--------------------------------------------------------------------
For the Six Months Ended For the Year Ended
3/31/99 9/30/98
----------------------------- ------------------------------
(Unaudited)
Shares Value Shares Value
---------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class ........................ 21,932,292 $ 439,205,347 23,431,140 $ 462,711,400
Service Class .............................. 1,729,287 32,754,550 7,559,273 159,126,251
Investor A Class ........................... 12,649,083 244,107,160 11,346,492 223,786,382
Investor B Class ........................... 115,340 2,277,235 911,079 18,669,216
Investor C Class ........................... 43,133 817,839 282,220 5,734,205
Shares issued in conversion:
Institutional Class ........................ -- -- 30,529,187 687,822,581
Shares issued in reinvestment of dividends:
Institutional Class ........................ -- -- 990,910 21,245,106
Service Class .............................. -- -- 448,838 9,537,811
Investor A Class ........................... -- -- 127,447 2,685,302
Investor B Class ........................... -- -- 72,198 1,495,221
Investor C Class ........................... -- -- 20,385 422,183
Shares redeemed:
Institutional Class ........................ (24,278,487) (487,052,628) (17,534,767) (342,715,796)
Service Class .............................. (2,484,563) (49,226,649) (9,411,285) (183,123,119)
Investor A Class ........................... (12,032,368) (234,257,637) (11,125,265) (220,308,861)
Investor B Class ........................... (327,856) (6,250,287) (442,227) (8,604,608)
Investor C Class ........................... (108,619) (2,083,340) (205,739) (4,057,155)
----------- ------------- ----------- -------------
Net increase (decrease) ......................... (2,762,758) $ (59,708,410) 36,999,886 $ 834,426,119
=========== ============= =========== =============
</TABLE>
81
<PAGE>
BLACKROCK FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
Micro-Cap Equity Portfolio
------------------------------------------------------------------
For the Six Months Ended For the Period 5/01/98 1 through
3/31/99 9/30/98
--------------------------- -------------------------------
(Unaudited)
Shares Value Shares Value
-------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class ........................ 212,892 $ 2,685,460 155,797 $ 1,664,513
Service Class .............................. -- -- 15,795 164,998
Investor A Class ........................... 317,604 4,054,607 826,277 8,766,773
Investor B Class ........................... 312,772 3,801,564 951,420 10,046,401
Investor C Class ........................... 167,989 2,156,574 205,420 2,218,831
Shares redeemed:
Institutional Class ........................ (4,257) (50,217) (17,120) (157,934)
Service Class .............................. -- -- (8,404) (76,393)
Investor A Class ........................... (154,880) (1,877,172) (175,807) (1,796,482)
Investor B Class ........................... (106,594) (1,214,548) (37,058) (363,926)
Investor C Class ........................... (27,593) (349,873) (12,206) (110,451)
-------- ----------- --------- -----------
Net increase .................................... 717,933 $ 9,206,395 1,904,114 $20,356,330
======== =========== ========= ===========
</TABLE>
<TABLE>
<CAPTION>
International Equity Portfolio
---------------------------------------------------------------------
For the Six Months Ended For the Year Ended
3/31/99 9/30/98
------------------------------ --------------------------------
(Unaudited)
Shares Value Shares Value
----------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class ........................ 15,215,133 $ 215,521,098 22,171,814 $ 316,090,870
Service Class .............................. 4,495,662 63,229,735 9,558,403 141,964,104
Investor A Class ........................... 24,047,187 342,259,794 12,261,428 177,237,875
Investor B Class ........................... 37,808 529,757 154,249 2,235,897
Investor C Class ........................... 114,261 1,614,970 12,976 184,935
Shares issued in conversion:
Institutional Class ........................ -- -- 47,132,261 737,148,562
Shares issued in reinvestment of dividends:
Institutional Class ........................ 3,680,103 50,627,932 751,360 10,155,048
Service Class .............................. 647,890 8,906,499 270,822 3,656,448
Investor A Class ........................... 143,229 1,972,135 36,099 487,412
Investor B Class ........................... 24,881 334,269 8,315 111,216
Investor C Class ........................... 166 2,238 12 156
Shares redeemed:
Institutional Class ........................ (22,011,117) (315,543,972) (23,080,604) (341,919,900)
Service Class .............................. (7,663,320) (108,366,362) (12,632,530) (175,232,797)
Investor A Class ........................... (23,527,075) (337,684,755) (11,803,362) (172,361,971)
Investor B Class ........................... (57,461) (807,544) (66,174) (940,024)
Investor C Class ........................... (90,238) (1,311,841) (994) (13,704)
----------- ------------- ----------- -------------
Net increase (decrease) ......................... (4,942,891) $ (78,716,047) 44,774,075 $ 698,804,127
=========== ============= =========== =============
<FN>
- ----------
1 Commencement of operations.
</FN>
</TABLE>
82
<PAGE>
BLACKROCK FUNDS
<TABLE>
<CAPTION>
International Small Cap Equity Portfolio
------------------------------------------------------------------
For the Six Months Ended For the Year Ended
3/31/99 9/30/98
--------------------------- ----------------------------
(Unaudited)
Shares Value Shares Value
-------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class ......................... 52,744 $ 483,807 318,237 $ 3,614,894
Service Class ............................... -- -- 62,851 675,615
Investor A Class ............................ 6,049 56,168 71,874 735,279
Investor B Class ............................ 18,125 167,506 137,198 1,445,340
Investor C Class ............................ 8,549 78,649 26,322 283,465
Shares issued in reinvestment of dividends:
Institutional Class ......................... 197,614 1,804,929 8,652 81,070
Service Class ............................... -- 1 93 873
Investor A Class ............................ 8,420 76,643 255 2,395
Investor B Class ............................ 5,995 54,267 105 982
Investor C Class ............................ 1,075 9,735 17 157
Shares redeemed:
Institutional Class ......................... (287,670) (2,648,678) (179,590) (1,968,631)
Service Class ............................... (507) (4,570) (62,437) (642,150)
Investor A Class ............................ (24,375) (232,793) (15,932) (162,543)
Investor B Class ............................ (53,607) (501,785) (26,972) (300,383)
Investor C Class ............................ (11,645) (115,077) (1) (11)
-------- ----------- -------- -----------
Net increase (decrease) .......................... (79,233) $ (771,198) 340,672 $ 3,766,352
======== =========== ======== ===========
</TABLE>
<TABLE>
<CAPTION>
International Emerging Markets Portfolio
------------------------------------------------------------------
For the Six Months Ended For the Year Ended
3/31/99 9/30/98
----------------------------- ------------------------------
(Unaudited)
Shares Value Shares Value
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class ......................... 1,351,219 $ 6,422,148 9,856,526 $ 57,250,161
Service Class ............................... 2,399,095 11,236,286 7,561,366 46,093,024
Investor A Class ............................ 73,154 340,105 203,838 1,388,511
Investor B Class ............................ 3,991 18,140 37,292 260,404
Investor C Class ............................ -- -- 10,790 71,306
Shares issued in reinvestment of dividends:
Institutional Class ......................... 80,216 387,442 175,570 1,430,896
Service Class ............................... -- -- 87,703 710,396
Investor A Class ............................ -- -- 7,181 57,948
Investor B Class ............................ -- -- 3,094 24,815
Investor C Class ............................ -- -- 148 1,190
Shares redeemed:
Institutional Class ......................... (6,173,029) (29,287,524) (7,630,691) (49,348,984)
Service Class ............................... (5,276,778) (24,930,178) (8,454,628) (46,130,093)
Investor A Class ............................ (119,786) (556,672) (253,915) (1,705,480)
Investor B Class ............................ (36,555) (166,438) (62,510) (425,038)
Investor C Class ............................ (484) (2,154) (14,379) (84,575)
---------- ------------ ---------- ------------
Net increase (decrease) .......................... (7,698,957) $(36,538,845) 1,527,385 $ 9,594,481
========== ============ ========== ============
</TABLE>
83
<PAGE>
BLACKROCK FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
Select Equity Portfolio
---------------------------------------------------------------------
For the Six Months Ended For the Year Ended
3/31/99 9/30/98
------------------------------ --------------------------------
(Unaudited)
Shares Value Shares Value
---------- ------------- ----------- --------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class ........................ 1,639,469 $ 32,352,800 15,000,173 $ 257,009,894
Service Class .............................. 2,388,528 46,780,518 10,577,940 190,991,132
Investor A Class ........................... 923,282 18,316,821 1,512,205 27,556,895
Investor B Class ........................... 624,409 12,119,829 1,471,039 26,052,426
Investor C Class ........................... 127,153 2,538,522 138,720 2,501,325
Shares issued in conversion:
Institutional Class ........................ -- -- 47,552,529 912,057,506
Shares issued in reinvestment of dividends:
Institutional Class ........................ 2,382,370 44,202,496 1,747,306 28,534,736
Service Class .............................. 407,590 7,571,310 633,683 10,310,927
Investor A Class ........................... 68,069 1,263,763 75,398 1,226,233
Investor B Class ........................... 73,018 1,334,038 71,122 1,138,659
Investor C Class ........................... 1,854 33,875 354 5,660
Shares redeemed:
Institutional Class ........................ (6,400,595) (123,663,442) (10,389,208) (191,879,607)
Service Class .............................. (3,525,876) (68,853,600) (9,195,332) (160,166,892)
Investor A Class ........................... (366,657) (7,281,740) (590,526) (10,577,071)
Investor B Class ........................... (188,352) (3,638,553) (223,552) (3,954,182)
Investor C Class ........................... (42,352) (836,269) (15,306) (278,150)
---------- ------------- ----------- --------------
Net increase (decrease) ......................... (1,888,090) $ (37,759,632) 58,366,545 $1,090,529,491
========== ============= =========== ==============
</TABLE>
<TABLE>
<CAPTION>
Index Equity Portfolio
--------------------------------------------------------------------
For the Six Months Ended For the Year Ended
3/31/99 9/30/98
----------------------------- ------------------------------
(Unaudited)
Shares Value Shares Value
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class ........................ 3,072,949 $ 70,001,256 7,625,271 $152,924,221
Service Class .............................. 3,474,907 80,237,288 5,200,839 104,994,634
Investor A Class ........................... 1,136,408 27,024,378 1,047,368 21,369,817
Investor B Class ........................... 4,340,419 100,924,629 3,920,396 79,973,652
Investor C Class ........................... 7,439,261 173,184,743 3,423,349 69,588,194
Shares issued in conversion:
Institutional Class ........................ -- -- 5,052,170 109,328,955
Shares issued in reinvestment of dividends:
Institutional Class ........................ 103,766 2,426,245 119,292 2,346,304
Service Class .............................. 99,823 2,357,555 136,903 2,682,747
Investor A Class ........................... 14,938 352,211 18,251 356,608
Investor B Class ........................... 21,199 490,567 8,883 165,166
Investor C Class ........................... 11,542 270,177 3,340 62,606
Shares redeemed:
Institutional Class ........................ (1,146,369) (26,675,618) (3,872,586) (79,729,578)
Service Class .............................. (1,942,780) (44,776,637) (3,992,780) (78,981,985)
Investor A Class ........................... (676,089) (15,854,911) (734,369) (14,587,954)
Investor B Class ........................... (492,595) (11,339,029) (443,992) (8,937,590)
Investor C Class ........................... (521,348) (11,677,357) (329,146) (6,521,053)
---------- ------------ ---------- ------------
Net increase .................................... 14,936,031 $346,945,497 17,183,189 $355,034,744
========== ============ ========== ============
</TABLE>
84
<PAGE>
BLACKROCK FUNDS
<TABLE>
<CAPTION>
Balanced Portfolio
--------------------------------------------------------------------
For the Six Months Ended For the Year Ended
3/31/99 9/30/98
----------------------------- ------------------------------
(Unaudited)
Shares Value Shares Value
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class ........................ 1,509,112 $ 29,955,584 2,422,553 $ 44,222,257
Service Class .............................. 1,445,427 28,252,427 2,127,472 39,389,262
Investor A Class ........................... 1,340,082 26,178,989 2,833,309 53,221,039
Investor B Class ........................... 1,183,925 23,262,063 1,346,155 24,700,962
Investor C Class ........................... 232,078 4,608,335 37,034 676,869
Shares issued in conversion:
Institutional Class ........................ -- -- 17,383,688 329,247,053
Shares issued in reinvestment of dividends:
Institutional Class ........................ 798,646 15,012,245 141,176 2,434,702
Service Class .............................. 518,258 9,845,542 882,573 15,160,573
Investor A Class ........................... 265,144 5,031,671 447,858 7,687,100
Investor B Class ........................... 125,064 2,349,283 123,433 2,102,496
Investor C Class ........................... 423 8,068 252 4,293
Shares redeemed:
Institutional Class ........................ (1,223,462) (23,878,054) (1,259,763) (23,720,119)
Service Class .............................. (1,058,564) (20,901,597) (3,060,250) (56,191,748)
Investor A Class ........................... (974,738) (18,681,192) (2,786,325) (52,168,584)
Investor B Class ........................... (191,366) (3,719,606) (222,825) (4,092,886)
Investor C Class ........................... (6,149) (120,556) (3,711) (56,031)
---------- ------------ ---------- ------------
Net increase .................................... 3,963,880 $ 77,203,202 20,412,629 $382,617,238
========== ============ ========== ============
</TABLE>
(E) AT MARCH 31, 1999, 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 ............. $1,845,706,257 $ 764,745,962 $260,497,867 $230,066,987 $653,853,852 $1,108,923,909
Undistributed net
investment income ........ -- 48,786 -- -- -- --
Distributions in excess of
net investment income .... -- -- -- -- (82,428) --
Accumulated net gain on
investment transactions,
futures contracts and
foreign exchange
contracts ................ 159,267,959 90,009,724 2,042,256 44,194,122 10,196,944 85,014,252
Net unrealized appreciation
(depreciation) on
investment transactions,
futures contracts and
foreign exchange
contracts ................ 499,435,086 654,258,392 178,548 81,823,553 (34,856,698) 371,855,383
-------------- -------------- ------------ ------------ ------------ --------------
$2,504,409,302 $1,509,062,864 $262,718,671 $356,084,662 $629,111,670 $1,565,793,544
============== ============== ============ ============ ============ ==============
</TABLE>
<TABLE>
<CAPTION>
Micro-Cap
Equity
Portfolio
-----------
<S> <C>
Capital paid in ............. $29,318,390
Undistributed net
investment income ........ --
Distributions in excess of
net investment income .... --
Accumulated net gain on
investment transactions,
futures contracts and
foreign exchange
contracts ................ 4,266,859
Net unrealized appreciation
(depreciation) on
investment transactions,
futures contracts and
foreign exchange
contracts ................ 7,811,592
-----------
$41,396,841
===========
</TABLE>
85
<PAGE>
BLACKROCK FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
International International International Select Index
Equity Small Cap Equity Emerging Markets Equity Equity
Portfolio Portfolio Portfolio Portfolio Portfolio
--------------- ---------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Capital paid in ............ $ 1,013,409,524 $ 19,720,845 $ 147,673,967 $ 1,041,981,180 $ 954,575,598
Undistributed net
investment income ....... -- -- 521,706 -- --
Distributions in excess of
net investment income ... (10,810,749) (415,867) -- -- (1,722,176)
Accumulated net realized
gain (loss) on investment
transactions, futures
contracts and foreign
exchange contracts ...... 86,518,925 (133,603) (64,622,133) 74,086,636 (1,135,447)
Net unrealized appreciation
(depreciation) on
investment transactions,
futures contracts and
foreign exchange
contracts ............... 168,215,491 (781,994) (16,103,095) 753,279,995 449,707,066
--------------- --------------- --------------- --------------- ---------------
$ 1,257,333,191 $ 18,389,381 $ 67,470,445 $ 1,869,347,811 $ 1,401,425,041
=============== =============== =============== =============== ===============
</TABLE>
<TABLE>
<CAPTION>
Balanced
Portfolio
--------------
<S> <C>
Capital paid in ............ $ 576,380,702
Undistributed net
investment income ....... --
Distributions in excess of
net investment income ... (54,542)
Accumulated net realized
gain (loss) on investment
transactions, futures
contracts and foreign
exchange contracts ...... 12,587,046
Net unrealized appreciation
(depreciation) on
investment transactions,
futures contracts and
foreign exchange
contracts ............... 259,811,681
---------------
$ 848,724,887
===============
</TABLE>
(F) CAPITAL LOSS CARRYOVERS
At September 30, 1998, a capital loss carryover of $2,657,882, which
expires September 30, 2006, was available to offset possible future realized
gains in the Micro-Cap Equity Portfolio. At September 30, 1998, deferred post
October losses for Mid-Cap Value Equity Portfolio were $5,432,873, for Mid-Cap
Growth Equity Portfolio were $2,364,977, and for Small Cap Growth Equity
Portfolio were $24,683,398.
(G) PNC COMMON TRUST CONVERSION
On January 13, 1998, January 22, 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 provided for the acquisition by the Fund of all of
the assets and liabilities of each PNC Common Trust Fund managed by the Advisor
in a tax-free 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 following is a summary of shares issued, net assets converted, net
assets value per share issued and unrealized appreciation of assets acquired as
of the conversion date.
FUNDS CONVERTED ON MAY 4, 1998:
<TABLE>
<CAPTION>
PNC BlackRock Shares Net Assets Net Assets Value Unrealized
Common Trust Fund Fund Issued Converted Per Share Issued Appreciation
- ------------------------------- ----------------------- ---------- ------------ ---------------- -------------
<S> <C> <C> <C> <C>
PNC Large Cap Value Equity Large Cap Value Equity 36,221,776 $639,314,346 $17.65 $186,859,990
PNC Equity Growth & Income Large Cap Value Equity 30,883,995 545,102,512 17.65 140,016,238
PNC Large Cap Growth Equity Large Cap Growth Equity 22,346,262 431,506,319 19.31 128,998,512
PNC Mid-Cap Value Equity Mid-Cap Value Equity 8,024,645 109,937,637 13.70 18,239,174
PNC Mid-Cap Growth Equity Mid-Cap Growth Equity 8,432,259 108,860,464 12.91 20,616,729
PNC Small Cap Value Equity Small Cap Value Equity 15,644,346 308,037,173 19.69 76,920,198
PNC Small Cap Growth Equity Small Cap Growth Equity 30,529,187 687,822,581 22.53 194,362,010
PNC International Equity International Equity 47,132,261 737,148,562 15.64 159,658,329
PNC Select Equity Select Equity 47,552,529 912,057,506 19.18 387,681,390
PNC Index Equity Index Equity 5,052,170 109,328,955 21.64 29,512,732
FUNDS CONVERTED ONMAY 18, 1998:
PNC Income Large Cap Value Equity 6,783,970 118,176,765 17.42 33,602,127
PNC Balanced Balanced 17,383,688 329,247,053 18.94 103,701,340
</TABLE>
86
<PAGE>
THE DFA INVESTMENT TRUST COMPANY
THE U.S. LARGE COMPANY SERIES
<PAGE>
TABLE OF CONTENTS THE DFA INVESTMENT TRUST COMPANY
THE U.S. LARGE COMPANY SERIES
Page
Schedule of Investments ............................................. 89
Statement of Assets and Liabilities ................................. 97
Statements of Operations ............................................ 99
Statements of Changes in Net Assets ................................. 100
Financial Highlights ................................................ 101
Notes to Financial Statements ....................................... 102
Report of Independent Accountants ................................... 104
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, 1999
-------------------------
(UNAUDITED)
SHARES VALUE(DAGGER)
------- --------------
COMMON STOCKS -- (99.4%)
3Com Corp. ........................ 71,100 $ 1,659,741*#
AES Corp. ......................... 35,700 $1,329,825*#
AMR Corp. ......................... 36,000 2,108,250*
AT&T Corp. ........................ 415,948 33,197,850#
Abbott Laboratories ............... 300,800 14,081,200
Adobe Systems, Inc. ............... 12,100 687,053
Aeroquip Vickers, Inc. ............ 5,500 315,219
Advanced Micro Devices, Inc. ...... 28,700 444,850*#
Aetna, Inc. ....................... 28,137 2,335,371
Air Products & Chemicals, Inc. .... 45,400 1,554,950
Airtouch Communications, Inc. ..... 113,560 10,972,735*
Alberto Culver Co. ................ 11,300 264,138
Albertson's, Inc. ................. 48,700 2,645,019#
Alcan Aluminum Ltd. ............... 45,100 1,164,144
Alcoa, Inc. ....................... 72,600 2,990,213
Allegheny Teledyne, Inc. .......... 38,935 737,332
Allergan, Inc. .................... 13,200 1,159,950
Allied-Signal, Inc. ............... 110,500 5,435,219
Allstate Corp. .................... 162,700 6,030,069
Alltel Corp. ...................... 54,400 3,393,200
Alza Corp. ........................ 19,900 761,175*#
Amerada Hess Corp. ................ 18,000 905,625
Ameren Corp. ...................... 27,300 987,919
America Online .................... 203,700 29,740,200*
American Electric Power, Inc. ..... 37,900 1,504,156#
American Express Co. .............. 89,600 10,528,000
American General Corp. ............ 50,100 3,532,050#
American Greetings Corp. .......... 13,900 352,713
American Home Products Corp. ...... 261,200 17,043,300
American International Group ...... 243,510 29,373,394
American Stores ................... 54,500 1,798,500
Ameritech Corp. ................... 217,700 12,599,388
Amgen, Inc. ....................... 101,100 7,576,181
AMP, Inc. ......................... 43,404 2,330,252
Amsouth Bancorp. .................. 23,500 1,069,250
Anadarko Pete ..................... 23,800 898,450
Andre Corp. ....................... 16,393 202,351
Anheuser Busch Companies, Inc. .... 94,900 7,230,194
AON Corp. ......................... 33,700 2,131,525
Apache Corp. ...................... 19,400 505,613
Apple-Computer Corp. .............. 27,000 971,156*#
Applied Materials ................. 73,100 4,511,641*
Archer Daniels Midland Co. ........ 117,500 1,725,781
Armstrong World Industries, Inc. .. 7,900 356,981#
Asarco, Inc. ...................... 7,850 107,938
Ascend Communications, Inc. ....... 43,000 3,599,906*
Ashland, Inc. ..................... 14,900 609,969
Associates First Class A .......... 144,110 6,484,950
Atlantic Richfield Co. ............ 64,600 4,715,800
Autodesk, Inc. .................... 11,700 473,484#
Automatic Data Processing, Inc. ... 122,200 5,056,025
Autozone, Inc. .................... 29,800 905,175*#
Avery Dennison Corp. .............. 22,900 1,316,750
Avon Products, Inc. ............... 52,100 2,451,956
BB&T CORP ......................... 61,800 2,236,388#
BMC Software, Inc. ................ 43,000 1,595,031#
Baker Hughes, Inc. ................ 64,710 1,573,262
Ball Corporation .................. 6,100 286,319
Baltimore Gas & Electric Co. ...... 29,650 752,369
Bank of New York Co., Inc. ........ 151,000 5,426,563
Bank One Corp. .................... 233,330 12,847,733
Bankamerica Corp. ................. 342,900 24,217,313
BankBoston Corp. .................. 58,800 2,546,775
Bankers Trust New York Corp. ...... 19,000 1,676,750
- --------------------------------------------------------------------------------
MARCH 31, 1999
-------------------------
(UNAUDITED)
SHARES VALUE(DAGGER)
------- --------------
BARD C.R,. Inc. ................... 10,600 $ 534,638
Barrick Gold Corp. ................ 73,900 1,260,919
Battle Mountain Gold Co. .......... 45,600 125,400
Bausch & Lomb, Inc. ............... 11,200 728,000
Baxter International, Inc. ........ 56,500 3,729,000
Bear Stearns Co. .................. 22,020 984,019
Becton, Dickson & Co. ............. 49,200 1,884,975
Bell Atlantic Corp. ............... 307,938 15,916,545#
Bellsouth Corp. ................... 386,400 15,480,150
Bemis Co., Inc. ................... 10,400 323,050
Bestfoods, Inc. ................... 56,800 2,669,600
Bethlehem Steel Corp. ............. 25,800 212,850*#
Boimet, Inc. ...................... 22,300 935,903
Black & Decker Corp. .............. 17,400 964,613#
Block (H& R), Inc. ................ 19,600 928,550#
Boeing , Inc. ..................... 185,700 6,337,013
Boise Cascade Corp. ............... 11,200 361,200*
Boston Scientific Corp. ........... 77,800 3,155,763*
Briggs & Stratton Corp. ........... 4,700 231,769
Bristol Meyers Corp. .............. 394,100 25,345,556
Brown Forman Corp. ................ 13,600 783,700
Browning- Ferris Industries, Inc. . 31,300 1,207,006
Brunswick Corp. ................... 18,200 346,938
Burlington Northern Santa Fe Corp. 92,800 3,050,800
Burlington Resources, Inc. ........ 35,200 1,405,800
CBS Corp. ......................... 139,800 5,723,063
Cigna Corp. ....................... 40,900 3,427,931
CSX Corp. ......................... 43,000 1,674,313#
CVS Corp. ......................... 77,216 3,667,760
Cabletron Systems ................. 34,100 279,194*
Campbell Soup Co. ................. 88,300 3,592,706
Capital One First ................. 13,100 1,978,100
Cardinal Health, Inc. ............. 53,800 3,550,800
Carnival Corp. .................... 121,500 5,900,344
Carolina Power & Light Co. ........ 30,100 1,138,156#
Case Corp. ........................ 14,700 373,013#
Caterpillar, Inc. ................. 71,200 3,270,750#
Cendent Corp. ..................... 169,100 2,663,325*
Centex Corp. ...................... 11,800 393,825
Central & South West Co. .......... 42,200 989,063
Century Tel En, Inc. .............. 18,100 1,271,525*
Ceridan Corp. ..................... 28,306 1,034,938*
Champion International Corp. ...... 18,900 776,081
Chase Manahttan Corp. ............. 167,900 13,652,369
Chevron Corp. ..................... 129,500 11,452,656
Chubb Corp. ....................... 32,400 1,897,425
Cincinnati Financial Corp. ........ 33,000 1,203,469
Cinergy Corp. ..................... 31,493 866,058
Citrcuit City Corp. ............... 19,900 1,524,838*
Cisco Systems, Inc. ............... 313,200 34,324,763*#
Citigroup, Inc. ................... 447,700 28,596,838
Clear Channel Communications, Inc. 52,366 3,511,795*
Clorox Co. ....................... 23,300 2,730,469
Coastal Corp. .................... 42,100 1,389,300
Coca Cola Co. .................... 488,600 29,987,825#
Coca Cola Enterprises ............ 77,500 2,344,375
Colgate Palmolive Co. ............ 58,000 5,336,000#
Columbia Energy Group ............ 16,600 867,350
Columbia/HCA Healthcare Corp. .... 128,082 2,425,553
Comcast Corp. Class A Special .... 73,500 4,628,203#
Comerica, Inc. ................... 30,750 1,919,953
Compaq Computer Corp. ............ 334,424 10,597,061#
Computer Associates
International, Inc. ............ 107,000 3,805,188#
Computer Sciences Corp. .......... 31,400 1,732,888*#
Compuware Corp. .................. 72,800 1,740,375
See accompanying notes to financial statements.
89
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THE U.S. LARGE COMPANY SERIES (CONTINUED)
- --------------------------------------------------------------------------------
MARCH 31, 1999
-------------------------
(UNAUDITED)
SHARES VALUE(DAGGER)
------- --------------
Conagra, Inc. .................... 96,900 $ 2,477,006
Conseco, Inc. .................... 63,388 1,957,105#
Consolidated Edison Co.
of New York, Inc. .............. 46,100 2,088,906*#
Consolidated Natural Gas Co. ..... 19,000 925,063
Consolidated Stores .............. 21,800 660,813#
Cooper Industries, Inc. .......... 20,600 878,075#
Cooper Tire & Rubber Co. ......... 15,000 275,625
Coors (Adolph) Co. Class B ....... 7,300 394,200
Corning, Inc. .................... 45,800 2,748,000#
Costco Companies, Inc. ........... 43,103 3,947,965*#
Countrywide Credit Industries, Inc. 22,300 836,250
Crane Co. ........................ 13,600 328,950
Crown Cork & Seal Co., Inc. ...... 24,300 694,069
Cummins Engine Co., Inc. ......... 8,300 295,169#
Cyprus Amax Minerals Co., Inc. ... 18,050 218,856
DTE Energy Company ............... 28,800 1,107,000
Dana Corp. ....................... 32,842 1,247,996
Danaher Corp. .................... 26,600 1,389,850
Darden Restaurants, Inc. ......... 27,400 565,125
Data General Corp. ............... 9,900 100,238*
Dayton Hudson Corp. .............. 87,400 5,823,025
Deere & Co. ...................... 47,400 1,830,825
Dell Computer .................... 504,300 20,629,022#
Delta Air Lines, Inc. ............ 28,200 1,959,900
Deluxe Corp. ..................... 15,900 463,088
Dillard, Inc. .................... 21,200 537,950
Disney (Walt) Co. ................ 407,600 12,686,550#
Dollar General Corp. ............. 35,175 1,195,950#
Dominion Resources, Inc. VA ...... 38,600 1,425,788#
Donnelley (R.R.) & Sons Co. ...... 26,700 859,406
Dover Corp. ...................... 44,100 1,449,788
Dow Chemical Co. ................. 43,700 4,072,294#
Dow Jones & Co., Inc. ............ 18,700 882,406
DuPont (E.I.) de Nemours & Co. ... 223,300 12,965,356
Duke Energy Corp. ................ 71,941 3,929,777#
Dun & Bradstreet Corp. ........... 32,800 1,168,500
EG&G INC. ........................ 8,900 234,738
EMC Corp. MA ..................... 99,400 12,698,350*
Eastern Enterprises .............. 4,500 163,688
Eastman Chemical Co. ............. 15,750 662,484
Eastman Kodak Co. ................ 64,200 4,100,775
Eaton Corp. ...................... 14,200 1,015,300
Ecolab, Inc. ..................... 25,600 908,800
Edison International ............. 69,800 1,553,050
Electronic Data .................. 97,600 4,751,900
Emerson Electric co. ............. 86,500 4,579,094
Engelhard Corp. .................. 28,374 480,585
Enron Corp. ...................... 65,700 4,221,225#
Entergy Corp. .................... 49,000 1,347,500#
Equifax, Inc. .................... 29,300 1,007,188
Exxon Corp. ...................... 482,200 34,025,238
F M C Corp. ...................... 6,600 325,875*
F P L Group, Inc. ................ 35,900 1,911,675
FDX Corp. ........................ 29,500 2,737,969*
Federal Home Loan Mortgage Corp. . 134,600 7,689,025
Federal National Mortgage
Association .................... 205,800 14,251,650
Federated Department Stores, Inc. 41,700 1,673,213*
Fifth Third Bancorp .............. 52,900 3,489,747#
First Data Corp. ................. 87,600 3,744,900#
First Union corp. ................ 196,164 10,482,514#
Firststar Corp. .................. 45,500 4,072,250
First Energy Corp. ............... 46,900 1,310,269
Fleet Financial Group ............ 112,628 4,237,629#
Fleetwood Enterprises, Inc. ...... 6,900 197,513#
Flour Corp. ...................... 15,000 405,000
- --------------------------------------------------------------------------------
MARCH 31, 1999
-------------------------
(UNAUDITED)
SHARES VALUE(DAGGER)
------- --------------
Ford Motor Co. ................... 239,800 $ 13,608,650
Fort James Corp. ................. 43,600 1,381,575
Fortune Brands ................... 34,000 1,315,375
Foster Wheeler Corp. ............. 8,050 97,606
Franklin Resources ............... 50,200 1,411,875#
Freeport Mcmoran Copper & Gold, Inc. 32,800 356,700
Frontier Corp. ................... 33,900 1,758,563
Fruit of the Loom, Inc. Class A . 14,300 148,363*
GPU, Inc. ........................ 25,300 944,006
GTE Corp. ........................ 191,400 11,579,700
Gannett Co., Inc. ................ 55,800 3,515,400
Gap, Inc. ........................ 113,100 7,613,044#
Gateway 2000 ..................... 30,900 2,118,581*#
General Dynamics, Inc. ........... 25,200 1,619,100
General Electric ................. 649,900 71,895,188
General Instruments Corp. ........ 33,180 1,005,769*
General Mills Corp. .............. 30,400 2,297,100
General Motors Corp. ............. 129,800 11,276,375
Genuine Parts Co. ................ 35,675 1,027,886
Georgia-Pacific Corp. ............ 17,300 1,284,525
Gillette & Co. ................... 220,000 13,076,250#
Golden West Financial Corp. ...... 11,200 1,069,600
Goodrich (B.F.) & Co. ............ 14,700 504,394#
Goodyear Tire & Rubber Co. ....... 30,800 1,534,225#
WR Grace & Co. ................... 14,600 177,025*
Grainger (W.W.) co. .............. 18,800 809,575
Great Atlantic & pacific Tea Co. . 7,600 228,000
Great Lakes Chemical Corp. ....... 11,700 429,975
Guidant Corp. .................... 59,800 3,617,900
HCR Manor Care ................... 22,000 501,875*
Halliburton Co. .................. 87,000 3,349,500
Harcourt General, Inc. ........... 14,023 621,394#
Harnischfeger industries, Inc. ... 9,376 53,326
Harrah's Entertainment, Inc. ..... 25,000 476,563*
Harris Corp. ..................... 15,700 449,413
Hartford Financial Services Group 46,400 2,636,072
Hasbro, Inc. ..................... 38,999 1,128,519
Healthsouth Rehabilitaion ........ 83,800 869,425*
Heinz (H.J.) & Co. ............... 71,800 3,401,525
Helmerich & Payne, Inc. .......... 9,800 222,338
Hercules, Inc. ................... 19,900 502,475
Hershey Foods Corp. .............. 28,400 1,590,400
Hewlett-Packard Corp. ............ 201,300 13,650,656#
Hilton Hotels Corp. .............. 51,700 727,031
Home Depot Inc. .................. 292,044 18,179,739#
Homestake Mining, Co. ............ 47,400 408,825#
Honeywell, Inc. .................. 25,000 1,895,313
Household Internatonal, Inc. ..... 95,900 4,375,438
Humana, Inc. ..................... 33,200 572,700*
Huntington Bancorp ............... 41,830 1,295,423
IMS Health, Inc. ................. 63,200 2,093,500#
ITT Industries, Inc. ............. 20,600 728,725#
Ikon Office Solutions, Inc. ...... 29,300 375,406
Illinois Tool Works, inc. ........ 49,400 3,056,625
Inco Ltd. ........................ 32,900 437,981
Ingersoll Rand Co. ............... 32,500 1,612,813
Intel Corp. ...................... 330,300 39,264,413#
Int'l Business Machines Corp. .... 182,700 32,383,575
Int'l Flavors & Fragrances, Inc. . 21,100 792,569
Int'l Paper Co. .................. 61,000 2,573,438#
Interpublic Group of Companies ... 27,650 2,153,244
Jefferson Pilot Corp. ............ 20,875 1,414,281
Johnson & Johnson Corp. .......... 266,600 24,977,088
Johnson Controls, Inc. ........... 16,800 1,047,900
Jostens, Inc. .................... 7,000 148,750
See accompanying notes to financial statements.
90
<PAGE>
SCHEDULE OF INVESTMENTS THE DFA INVESTMENT TRUST COMPANY
THE U.S. LARGE COMPANY SERIES (CONTINUED)
- --------------------------------------------------------------------------------
MARCH 31, 1999
-------------------------
(UNAUDITED)
SHARES VALUE(DAGGER)
------- --------------
KLA-Tencor Corp. .................. 17,500 $ 850,391*#
K Mart Corp. ...................... 97,800 1,644,263*
Kaufman & Broad, Inc. ............. 9,500 214,344
Kellogg Co. ....................... 80,400 2,718,525
Kerr McGee Corp. .................. 17,042 559,191
Keycorp ........................... 90,400 2,740,250
Kimberly Clark Corp. .............. 107,600 5,158,075#
King World Products ............... 14,300 437,044
Knight-Ridder, Inc. ............... 15,652 782,600
Kohl's Corp. ...................... 31,300 2,218,388*#
Kroger Co. ........................ 50,600 3,029,675*#
LSI Logic Corp. ................... 28,000 873,250*
Laidlaw, Inc. ..................... 65,500 380,719
Lehman Brothers ................... 22,600 1,350,350
Lilly (Eli) Corp. ................. 217,900 18,494,263
Limited Inc. (The) ................ 44,900 1,779,163
Lincoln National Corp. ............ 20,000 1,977,500
Liz Claiborne, Inc. ............... 12,800 417,600#
Lockheed Martin Corp. ............. 77,714 2,928,846
Loew's Corp. ...................... 22,600 1,686,525
Longs Drug Stores Corp. ........... 7,700 234,369
Louisana-Pacific Corp. ............ 21,500 400,438
Lowe's Companies, Inc. ............ 70,000 4,235,000#
Lucent Technologies, Inc. ......... 261,900 28,219,725#
MBIA, Inc. ........................ 19,800 1,148,400#
MBNA Corp. ........................ 158,945 3,794,812
MCI Worldcom, Inc. ................ 363,501 32,181,198*
MGIC Investment Corp. ............. 21,700 760,856#
Mallinckrodt Group, Inc. .......... 14,100 375,413
Marsh & McLennan Companies, Inc. .. 51,200 3,798,400#
Marriott Int'l Class A ............ 48,100 1,617,363#
Masco Corp. ....................... 67,300 1,901,225#
Mattell, Inc. ..................... 57,100 1,420,363#
May Department Stores, Inc. ....... 69,650 2,725,056
Maytag Corp. ...................... 17,800 1,074,675
McDermott International, Inc. ..... 11,700 296,156
McDonalds Corp. ................... 268,200 12,152,813
McGraw-Hill Corp. ................. 39,200 2,136,400
McKesson Corp. .................... 55,037 3,632,442#
Mead Corp. ........................ 20,200 621,150
Mediaone Group .................... 120,200 7,632,700*#
Medtronic, Inc. ................... 115,600 8,294,300#
Mellon Bank Corp. ................. 51,800 3,645,425
Mercantile Bancorp ................ 31,200 1,482,000#
Merck & Co., Inc. ................. 472,100 37,856,519#
Meredith Corp. .................... 10,300 323,806
Merrill Lynch & Co., Inc. ......... 70,500 6,234,844*
Meyer Fred, Inc. .................. 30,700 1,807,463
Microsoft Corp. ................. 1,030,400 92,317,400*
Micron Technologies, Inc. ......... 49,000 2,364,250*#
Milacron, Inc. .................... 7,600 119,700
Millapore Corp. ................... 8,700 209,888
Minnesota Mining & Manufacturing Co. 79,500 5,624,625
Mirage Resorts .................... 35,700 758,625*#
Mobil Corp. ....................... 154,700 13,613,600
Monsanto Corp. .................... 124,200 5,705,438
Moore Corp., Ltd. ................. 17,500 172,813
Morgan (JP) & Co. ................. 34,600 4,268,775
Morgan Stanley Dean Witter ........ 114,600 11,452,838
Morton International, Inc. ........ 23,900 878,325#
Motorola, Inc. .................... 118,800 8,702,100
Naaco Industries, Inc. ............ 1,600 118,500
Nalco Chemical Co. ................ 13,000 345,313
National City Corp. ............... 64,767 4,298,910
National Semiconductor Corp. ...... 33,100 308,244*
- --------------------------------------------------------------------------------
MARCH 31, 1999
-------------------------
(UNAUDITED)
SHARES VALUE(DAGGER)
------- --------------
National Services Industries, Inc. 8,200 $ 279,313
Navistar International Corp. ...... 13,100 526,456*
New Century Corp. ................. 22,600 769,813
New York Times Co. ................ 36,200 1,031,700
Newell Rubbermaid, Inc. ........... 55,834 2,652,100#
Newmont Mining Co. ................ 33,058 578,515#
Nextel Communication .............. 56,952 2,089,427*
Niagra Mohawk Power Corp. ......... 37,100 498,531*
Nicor, Inc. ....................... 9,400 337,813
Nike, Inc. ........................ 56,100 3,236,269
Nordstrom, Inc. ................... 28,200 1,153,556
Norfolk Southern, inc. ............ 75,300 1,986,038
Northern States Power Co. MN ...... 30,200 700,263
Nothern Telecom, Ltd. ............. 131,460 8,166,953
Northern Trust Co. ................ 21,900 1,945,678
Northrop Grumman Corp. ............ 13,700 820,288
Novell, Inc. ...................... 67,000 1,689,656*
Nucor Corp. ....................... 17,400 766,688
Occidental Petroleum Corp. ........ 68,600 1,234,800
Omnicom Group ..................... 33,400 2,669,913
Oneok, Inc. ....................... 6,300 155,925
Oracle Systems Corp. .............. 285,443 7,537,479*#
Owens Corning ..................... 10,800 343,575
Owens-Illinois, inc. .............. 30,700 767,500*
Peco Energy ....................... 44,500 2,058,125
PG & E Corp. ...................... 76,000 2,360,750#
PNC Bank Corp. .................... 59,550 3,308,747#
Pennsylvania Power & Light ........ 30,000 742,500
PPG Industries, Inc. .............. 34,800 1,783,500
Paccar, Inc. ...................... 15,520 639,715
PacifCorp ......................... 58,900 1,016,025
Pall Corp. ........................ 24,700 409,094#
Parametric Technology Corp. ....... 53,000 1,048,406*
Parker-Hannifan Corp. ............. 21,525 737,231
Paychex Corp. ..................... 32,400 1,537,988#
Penney(J.C.) Co., Inc. ............ 52,400 2,122,200#
Peoples Energy Corp. .............. 7,000 226,188
Peoplesoft Inc. ................... 46,100 675,653*
Pep Boys- Manny, Moe & Jack ....... 10,400 158,600
Pepsico, Inc. ..................... 290,900 11,399,644
Perkin-Elmer Corp. ................ 9,800 951,213
Pharmacia & Upjohn, Inc. .......... 100,580 6,273,678#
Pfizer, Inc. ...................... 257,500 35,728,125
Phelps Dodge Corp. ................ 11,400 561,450
Philip Morris Companies, Inc. ..... 482,500 16,977,969
Phillips Petroleum Co. ............ 50,500 2,386,125
Pioneer Hi-Bred International, Inc. 47,601 1,790,988
Pitney Bowes, Inc. ................ 54,200 3,455,250
Placer Dome, Inc. ................. 49,600 554,900
Plolaroid Corp. ................... 8,700 174,544
Potlatch Corp. .................... 5,700 193,444
Praxair, Inc. ..................... 31,300 1,128,756
Procter & Gamble Co. .............. 263,400 25,796,738
Progressive co. ................... 14,500 2,080,750
Provident Companies ............... 26,800 926,275
Providian Financial Co. ........... 27,900 3,069,000
Public Service Enterprise
Group, Inc. ..................... 44,300 1,691,706#
Pulte Corp. ....................... 8,600 178,988
Quaker Oats Co. ................... 27,100 1,695,444
RJR Nabisco Co. ................... 64,500 1,612,500
Ralston Purina Co. ................ 65,200 1,740,025
Raychem Co. ....................... 15,500 349,719
Raytheon Co., Class B ............. 66,800 3,916,150
Reebok International Ltd. ......... 11,200 177,800#
Regions Financial ................. 43,700 1,515,844
See accompanying notes to financial statements.
91
<PAGE>
SCHEDULE OF INVESTMENTS THE DFA INVESTMENT TRUST COMPANY
THE U.S. LARGE COMPANY SERIES (CONTINUED)
- --------------------------------------------------------------------------------
MARCH 31, 1999
-------------------------
(UNAUDITED)
SHARES VALUE(DAGGER)
------- --------------
Reliant Energy Co. ................ 56,300 $ 1,467,319
Republic Bank of New York ......... 21,200 977,850
Reynolds Metals Co. ............... 12,700 613,569
Rite Aid Co. ...................... 51,400 1,285,000
Rockwell International ............ 37,700 1,599,894
Rohm & Haas Co. ................... 33,200 1,114,275#
Rowan Companies, Inc. ............. 16,600 210,613*
Royal Dutch Petroleum Co. ......... 425,200 22,110,400#
Russell Corp. ..................... 7,200 144,900
Ryder System Inc. ................. 14,200 392,275
SBC Communications, Inc. .......... 387,600 18,265,650
SLM Holding Corp. ................. 32,900 1,373,575
Safeco Corp. ...................... 27,000 1,091,813
Safeway Corp. ..................... 96,500 4,951,656*
Saint Jude Medical, Inc. .......... 16,650 405,944*
Saint Paul Companies, Inc. ........ 46,842 1,455,030#
Sara Lee Corp. .................... 180,800 4,474,800
Schering-Plough Corp. ............. 291,500 16,123,594#
Sclumberger Ltd. .................. 108,400 6,524,325
Schwab (Charles) Corp. ............ 79,325 7,625,116
Scientific-Atlanta, Inc. .......... 15,000 408,750
Seagate Technology, Inc. .......... 48,300 1,427,869*#
Seagram Co., Ltd. ................. 79,300 3,965,000
Sealed Air Corp. .................. 16,592 816,119*#
Sears & Roebuck & Co. ............. 76,100 3,438,769#
Sempra Corp. ...................... 47,645 914,188
Service Corp., Int'l .............. 54,100 770,925
Shared Medical Systems ............ 5,300 295,144
Sherwin-Williams Co. .............. 34,000 956,250
Sigma-Aldrich Corp. ............... 19,900 582,697
Silicon Graphics, Inc. ............ 37,200 620,775*#
Snap-On, Inc. ..................... 11,700 339,300
Solectron Corp. ................... 49,700 2,413,556*
Sonat, Inc. ....................... 21,800 654,000
Southern Co. ...................... 138,100 3,219,456#
Southtrust Co. .................... 32,800 1,222,825
Southwest Airlines Co. ............ 66,700 2,017,675
Springs Industries, Inc. Class A .. 3,550 96,072
Sprint Corp. ...................... 88,500 8,684,063
Sprint Corp.(PCS Group) ........... 87,200 3,864,050*
Stanley Works ..................... 17,600 451,000#
Staples, Inc. ..................... 91,500 3,008,063*#
State Street Corp. ................ 31,800 2,613,563
Summit Bancorp .................... 34,400 1,341,600
Sun Microsystems, Inc. ............ 76,540 9,569,892*#
Sunoco Corp. ...................... 18,600 670,763#
Suntrust Banks, Inc. .............. 63,500 3,952,875
Supervalu, Inc. ................... 23,800 490,875
Synovus Financial Corp. ........... 53,050 1,084,209
Sysco Corp. ....................... 66,000 1,736,625
TJX Companies, Inc. ............... 63,900 2,172,600
TRW, Inc. ......................... 23,800 1,082,900
Tandy Corp. ....................... 19,730 1,259,021
Tektronix, Inc. ................... 9,250 233,563
Tellabs, Inc. ..................... 38,500 3,763,375*#
Temple-Inland, Inc. ............... 11,100 696,525#
Tenet Healthcare Corp. ............ 61,400 1,162,763*#
Tenneco, Inc. ..................... 33,700 941,494
Texaco, Inc. ...................... 106,100 6,021,175#
Texas Instruments, Inc. ........... 77,300 7,672,025#
Texas Utilities Co. ............... 55,797 2,326,037
Textron, Inc. ..................... 31,300 2,421,838#
Thermo-Electron Corp. ............. 31,500 427,219*
Thomas & Betts Corp. .............. 11,300 424,456
Time Warner, Inc. ................. 243,000 17,268,188
- --------------------------------------------------------------------------------
MARCH 31, 1999
-------------------------
(UNAUDITED)
SHARES VALUE(DAGGER)
------- --------------
Times Mirror Co. Class A .......... 15,700 $ 848,781#
Timken Co. ........................ 12,300 199,875
Torchmark Corp. ................... 27,900 882,338
Toys 'R' Us, Inc. ................. 49,800 936,863*#
Transamerica Corp. ................ 24,600 1,746,600
Tricon Global Restaurant .......... 30,160 2,118,740*
Tribune Co. ....................... 23,600 1,544,325
Tupperware Corp. .................. 11,400 205,200
Tyco International, Inc. .......... 129,185 9,269,024#
USX-Marathon Group, Inc. .......... 61,000 1,677,500
UST, Inc. ......................... 36,900 964,013
U.S. Bancorp ...................... 144,700 4,928,844
UNUM Corp. ........................ 27,500 1,307,969
USX-U.S. Steel Group .............. 17,520 411,720
Unilever NV ....................... 126,800 8,424,275
Unicom Corp., Inc. ................ 43,200 1,579,500
Union Camp Corp. .................. 13,800 926,325
Union Carbide Corp. ............... 26,400 1,192,950#
Union Pacific Corp. ............... 49,100 2,623,781
Union Pacific Resources Group, Inc. 49,776 591,090
Union Planters Corp. .............. 27,300 1,199,494
Unisys Corp. ...................... 51,600 1,428,675*
United Healthcare Corp. ........... 36,800 1,936,600
US Airways Group, Inc. ............ 17,400 849,338*
U. S. West, Inc. .................. 99,981 5,505,204
United Technologies Corp. ......... 44,900 6,081,144
Unocal Corp. ...................... 47,800 1,759,638
V F Corp. ......................... 23,800 1,123,063
Viacom, Inc. Class B .............. 69,200 5,808,475*
Wachovia Corp. .................... 40,000 3,247,500
Wal-Mart Stores, Inc. ............. 441,000 40,654,688#
Walgreen Co. ...................... 197,700 5,585,025#
Warner Lambert Co. ................ 162,800 10,775,325
Washington Mutual, Inc. ........... 117,690 4,810,579#
Waste Management .................. 118,647 5,264,961
Wells Fargo & Co. ................. 326,000 11,430,375
Wendy's International, Inc. ....... 24,700 702,406
Westvaco Corp. .................... 19,850 416,850
Weyerhauser Co. ................... 39,300 2,181,150
Whirlpool Corp. ................... 15,100 821,063
Williamete Industries, Inc. ....... 21,900 826,725#
Williams Companies, Inc. .......... 84,997 3,357,382
Winn-Dixie Stores, Inc. ........... 29,600 1,106,300
Worthington Industries, Inc. ...... 18,300 215,597#
Wrigley (Wm.) Jr. Co. ............. 23,000 2,080,063#
Xerox Corp. ....................... 130,200 6,949,425#
------- --------------
TOTAL COMMON STOCKS
(Cost $1,353,274,500) $2,086,929,626
--------------
FACE AMOUNT VALUE(DAGGER)
----------- -------------
TEMPORARY CASH INVESTMENTS -- (0.6%)
Repurchase Agreement, PNC Capital
Markets, Inc. 4.60% 04/01/99
(Collateralized by U.S. Treasury
Notes 5.875% 11/15/99, valued
at $11,587,000 to be repurchased
at $11,588,481)
(Cost $11,587,000) $11,587 $ 11,587,000
TOTAL INVESTMENTS -- (100.0%)
(Cost $1,364,861,500)(DAGGER)(DAGGER) $2,098,516,626
--------------
- --------------------
(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.
92
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THE U.S. LARGE COMPANY SERIES
- --------------------------------------------------------------------------------
NOVEMBER 30, 1998
-----------------------
SHARES VALUE(DAGGER)
------- ------------
COMMON STOCKS -- (99.6%)
3COM Corp. ....................... 59,100 $ 2,288,278*
AES Corp. ........................ 28,900 1,322,175*
AMP, Inc. ........................ 36,204 1,751,368
AMR Corp. ........................ 30,000 1,978,125*
AON Corp. ........................ 27,800 1,601,975
AT & T Corp. ..................... 297,939 18,565,324
Abbott Laboratories .............. 254,000 12,192,000
Adobe Systems, Inc. .............. 11,100 498,112
Advanced Micro Devices, Inc. ..... 23,700 656,194*
Aeroquip Vickers, Inc. ........... 4,700 170,962
Aetna, Inc. ...................... 23,737 1,835,167
Air Products & Chemicals, Inc. ... 38,200 1,456,375
Airtouch Communications, Inc. .... 94,560 5,407,650*
Alberto-Culver Co. Class B ....... 9,100 233,187
Albertson's, Inc. ................ 40,700 2,322,444
Alcan Aluminum, Ltd. ............. 37,600 1,001,100
Allegheny Teledyne, Inc. ......... 32,535 669,001
Allergan, Inc. ................... 10,800 657,450
AlliedSignal, Inc. ............... 92,500 4,070,000
Allstate Corp. ................... 136,800 5,574,600
Alltel Corp. ..................... 45,200 2,395,600
Aluminium Co. of America. ........ 30,700 2,275,637
Alza Corp. ....................... 14,300 747,175*
Amerada Hess Corp. ............... 15,000 832,500
Ameren Corp. ..................... 22,700 934,956
American Electric Power Co., Inc. 31,600 1,465,450
American Express Co. ............. 75,100 7,514,694
American General Corp. ........... 41,700 2,937,244
American Greetings Corp. Class A . 11,700 495,056
American Home Products Corp. ..... 217,200 11,565,900
American International Group, Inc. 173,289 16,289,166
American Stores Co. .............. 45,200 1,517,025
Ameritech Corp. .................. 182,200 9,861,575
Amgen, Inc. ...................... 41,900 3,150,356*
Amoco Corp. ...................... 157,400 9,276,762
Anadarko Petroleum Corp. ......... 19,800 558,112
Andrew Corp. ..................... 14,193 229,749*
Anheuser-Busch Companies, Inc. ... 79,600 4,825,750
Apache Corp. ..................... 16,300 374,900
Apple Computer, Inc. ............. 22,300 712,903*#
Applied Materials, Inc. .......... 60,300 2,338,509*
Archer-Daniels Midland Co. ....... 98,905 1,817,379
Armstrong World Industries, Inc. . 6,600 439,725
Asarco, Inc. ..................... 6,550 126,906
Ascend Communications, Inc. ...... 35,800 2,010,394*
Ashland, Inc. .................... 12,700 617,537
Associates First Capital Corp.
Class A ........................ 57,255 4,458,733
Atlantic Richfield Co. ........... 53,100 3,531,150
Autodesk, Inc. ................... 7,800 284,212
Automatic Data Processing, Inc. .. 49,500 3,811,500
Autozone, Inc. ................... 25,300 762,162*
Avery Dennison Corp. ............. 19,300 925,194
Avon Products, Inc. .............. 43,300 1,759,062
B B & T Corp. .................... 47,400 1,750,837
BMC Software, Inc. ............... 33,900 1,729,959*
Baker Hughes, Inc. ............... 52,410 959,758
Ball Corp. ....................... 5,000 213,750
Baltimore Gas & Electric Co. ..... 24,450 750,309
Bank of New York Co., Inc. ....... 123,500 4,229,875
Bank One Corp. ................... 193,330 9,920,246
BankAmerica Corp. ................ 286,864 18,699,947
BankBoston Corp. ................. 48,400 2,014,650
Bankers Trust New York Corp. ..... 16,000 1,392,000
Bard (C.R.), Inc. ................ 9,300 426,056
Barrick Gold Corp. ............... 61,600 1,232,000#
- --------------------------------------------------------------------------------
NOVEMBER 30, 1998
-----------------------
SHARES VALUE(DAGGER)
------- ------------
Battle Mountain Gold Co. ......... 37,900 $ 177,656
Bausch & Lomb, Inc. .............. 9,200 510,600
Baxter International, Inc. ....... 47,300 3,006,506
Bear Stearns Companies, Inc. ..... 18,800 789,600
Becton Dickinson & Co. ........... 41,000 1,742,500
Bell Atlantic Corp. .............. 256,438 14,264,364
Bellsouth Corp. .................. 162,300 14,160,675
Bemis Co., Inc. .................. 8,800 332,750
Bestfoods, Inc. .................. 47,600 2,766,750
Bethlehem Steel Corp. ............ 21,400 176,550*
Biomet, Inc. ..................... 18,500 707,047
Black & Decker Corp. ............. 15,300 829,069
Block (H.&R.), Inc. .............. 16,600 745,962
Boeing Co. ....................... 166,606 6,768,369
Boise Cascade Corp. .............. 9,300 294,694
Boston Scientific Corp. .......... 32,400 1,603,800*
Briggs & Stratton Corp. .......... 4,000 201,750
Bristol Myers Squibb Co. ......... 164,300 20,137,019
Brown-Forman Corp. Class B ....... 11,400 829,350
Browning-Ferris Industries, Inc. . 28,600 843,700
Brunswick Corp. .................. 16,400 360,800
Burlington Northern Santa Fe Corp. 77,911 2,648,974
Burlington Resources, Inc. ....... 29,400 1,047,375
CBS Corp. ........................ 118,200 3,523,837
CIGNA Corp. ...................... 35,100 2,731,219
CSX Corp. ........................ 36,100 1,504,919
CVS Corp. ........................ 64,416 3,180,540
Cabletron Systems, Inc. .......... 27,100 379,400*
Campbell Soup Co. ................ 73,900 4,221,537
Capital One Financial Corp. ...... 11,000 1,210,000
Cardinal Health, Inc. ............ 33,000 2,264,625
Carolina Power & Light Co. ....... 25,000 1,159,375
Case Corp. ....................... 12,300 298,275*
Caterpillar, Inc. ................ 60,200 2,976,137
Cendant Corp. .................... 141,800 2,694,200*
Centex Corp. ..................... 9,800 349,737
Central & South West Corp. ....... 35,000 962,500
Ceridian Corp. ................... 12,053 784,198*
Champion International Corp. ..... 15,700 652,531
Chase Manhattan Corp. ............ 141,292 8,963,211
Chevron Corp. .................... 108,000 9,031,500
Chubb Corp. ...................... 27,400 1,919,712
Cincinnati Financial Corp. ....... 27,600 1,077,262
Cinergy Corp. .................... 26,093 901,839
Circuit City Stores, Inc.
(Circuit City Group) ........... 16,600 600,712
Cisco Sytems, Inc. ............... 256,900 19,371,866*
Citigroup, Inc. .................. 377,368 18,939,156
Clear Channel Communications, Inc. 41,166 1,924,510*
Clorox Co. ....................... 17,300 1,921,381
Coastal Corp. .................... 35,200 1,227,600
Coca-Cola Co. .................... 407,100 28,522,444
Coca-Cola Enterprises, Inc. ...... 66,800 2,525,875*
Colgate-Palmolive Co. ............ 48,700 4,169,937
Columbia Gas System, Inc. ........ 13,800 783,150
Columbia/HCA Healthcare Corp. .... 106,482 2,622,119
Comcast Corp. Class A Special .... 60,900 2,955,553
Comerica, Inc. ................... 25,750 1,660,875
Compaq Computer Corp. ............ 276,024 8,970,780
Computer Associates
International, Inc. ............ 92,800 4,106,400
Computer Sciences Corp. .......... 26,100 1,490,962
Conagra, Inc. .................... 80,700 2,537,006
Conseco, Inc. .................... 51,688 1,712,165
Consolidated Edison, Inc. ........ 38,500 1,956,281
Consolidated Natural Gas Co. ..... 15,800 858,137
Consolidated Stores Corp. ........ 18,100 389,150*
Cooper Industries, Inc. .......... 19,200 943,200
See accompanying notes to financial statements.
93
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THE U.S. LARGE COMPANY SERIES (CONTINUED)
- --------------------------------------------------------------------------------
NOVEMBER 30, 1998
-----------------------
SHARES VALUE(DAGGER)
------- ------------
Cooper Tire & Rubber Co. ......... 12,800 $ 250,400
Coors (Adolph) Co. Class B ....... 6,000 298,687
Corning, Inc. .................... 38,300 1,536,787
Costco Companies, Inc. ........... 35,903 2,254,035*
Countrywide Credit Industries, Inc. 18,300 905,850
Crane Co. ........................ 11,400 368,362
Crown Cork & Seal Co., Inc. ...... 20,500 691,875
Cummins Engine Co., Inc. ......... 6,400 237,600
Cyprus Amax Minerals Co., Inc. ... 15,450 175,744
DTE Energy Co. ................... 24,000 1,047,000
Dana Corp. ....................... 27,342 1,066,338
Danaher Corp. .................... 22,100 1,008,312
Darden Restaurants, Inc. ......... 23,000 363,687
Data General Corp. ............... 8,200 148,625*
Dayton-Hudson Corp. .............. 72,400 3,258,000
Deere & Co. ...................... 40,300 1,407,981
Dell Computer Corp. .............. 208,900 12,697,203*
Delta Air Lines, Inc. ............ 24,900 1,336,819
Deluxe Corp. ..................... 13,300 462,175
Dillards, Inc. Class A ........... 18,200 625,625
Disney (Walt) Co. ................ 338,300 10,889,031
Dollar General Corp. ............. 30,575 728,067
Dominion Resources, Inc. VA ...... 32,300 1,491,856
Donnelley (R.R.) & Sons Co. ...... 23,100 980,306
Dover Corp. ...................... 36,900 1,314,562
Dow Chemical Co. ................. 36,900 3,593,137
Dow Jones & Co., Inc. ............ 15,500 741,094
DuPont (E.I.) de Nemours & Co. ... 186,600 10,962,750
Duke Power Co. ................... 59,741 3,737,546
Dun & Bradstreet. ................ 28,300 854,306
E G & G, Inc. .................... 7,600 212,325
EMC Corp. MA. .................... 82,400 5,974,000*
Eastern Enterprises .............. 3,700 150,081
Eastman Chemical Co. ............. 13,150 761,878
Eastman Kodak Co. ................ 53,500 3,882,094
Eaton Corp. ...................... 11,800 806,087
Ecolab, Inc. ..................... 21,400 662,062
Edison International. ............ 58,500 1,608,750
Electronic Data Systems Corp. .... 81,200 3,166,800
Emerson Electric Co. ............. 72,500 4,712,500
Engelhard Corp. .................. 23,874 461,067
Enron Corp. ...................... 54,500 2,864,656
Entergy Corp. .................... 40,600 1,190,087
Equifax, Inc. .................... 24,300 1,008,450
Exxon Corp. ...................... 402,600 30,220,162
FDX Corp. ........................ 24,300 1,576,462*
FMC Corp. ........................ 5,700 331,312*
FPL Group, Inc. .................. 30,000 1,837,500
Fannie Mae. ...................... 171,300 12,462,075
Federal Home Loan Mortgage Corp. . 112,100 6,782,050
Federated Department Stores, Inc. 34,900 1,454,894*
Fifth Third BanCorp. ............. 44,100 2,931,272
First Data Corp. ................. 73,700 1,966,869
First Union Corp. ................ 160,164 9,729,963
FirstEnergy Corp. ................ 39,100 1,209,656
Fleet Financial Group, Inc. ...... 93,628 3,903,117
Fleetwood Enterprises, Inc. ...... 5,700 192,019
Fluor Corp. ...................... 13,000 556,562
Ford Motor Co. ................... 199,800 11,038,950
Fort James Corp. ................. 36,400 1,424,150
Fortune Brands, Inc. ............. 28,600 974,187
Foster Wheeler Corp. ............. 6,750 115,594*
Franklin Resources, Inc. ......... 41,700 1,782,675
Freeport McMoran Copper & Gold, Inc.
Class B ........................ 29,700 387,956
Frontier Corp. ................... 28,300 852,537*
- --------------------------------------------------------------------------------
NOVEMBER 30, 1998
-----------------------
SHARES VALUE(DAGGER)
------- ------------
Fruit of The Loom, Inc. Class A .. 11,900 $ 175,525*
GPU, Inc. ........................ 21,200 928,825
GTE Corp. ........................ 158,900 9,851,800
Gannett Co., Inc. ................ 47,000 3,034,437
Gap, Inc. ........................ 64,800 4,766,850
Gateway 2000, Inc. ............... 25,600 1,436,800*#
General Dynamics Corp. ........... 21,000 1,219,312
General Electric Co. ............. 537,300 48,625,650
General Instrument Corp. ......... 24,880 699,750*
General Mills, Inc. .............. 25,600 1,932,800
General Motors Corp. ............. 107,800 7,546,000
General RE Corp. ................. 12,400 2,895,400
Genuine Parts Co. ................ 29,375 967,539
Georgia-Pacific Corp. ............ 15,300 868,275
Gillette Co. ..................... 185,600 8,526,000
Golden West Financial Corp. ...... 9,600 909,000
Goodrich (B.F.) Co. .............. 12,200 462,837
Goodyear Tire & Rubber Co. ....... 26,000 1,475,500
Grainger (W.W.), Inc. ............ 16,200 684,450
Great Atlantic & Pacific
Tea Co., Inc. .................. 6,300 172,069
Great Lakes Chemical Corp. ....... 9,800 391,387
Guidant Corp. .................... 24,700 2,119,569
HBO & Co. ........................ 71,300 1,775,816
HCR Manor Care, Inc. ............. 18,000 571,500*
Halliburton Co. .................. 72,600 2,132,625
Harcourt General, Inc. ........... 11,623 601,490
Harnischfeger Industries, Inc. ... 7,876 78,760*
Harrahs Entertainment, Inc. ...... 16,700 259,894*
Harris Corp. ..................... 13,300 504,569
Hartford Financial Services
Group, Inc. .................... 38,400 2,119,200
Hasbro, Inc. ..................... 21,799 764,327
Healthsouth Corp. ................ 69,700 936,594*
Heinz (H.J.) Co. ................. 59,800 3,487,087
Helmerich & Payne, Inc. .......... 8,300 143,175
Hercules, Inc. ................... 15,600 512,850
Hershey Foods Corp. .............. 23,600 1,587,100
Hewlett-Packard Co. .............. 171,700 10,774,175
Hilton Hotels Corp. .............. 43,100 937,425
Home Depot, Inc. ................. 242,344 12,056,614
Homestake Mining Co. ............. 34,900 375,175
Honeywell, Inc. .................. 20,800 1,662,700
Household International, Inc. .... 81,412 3,185,244
Houston Industries, Inc. ......... 48,724 1,540,896*
Humana, Inc. ..................... 27,600 546,825
Huntington Bancshares, Inc. ...... 34,930 1,035,893
IMS Health, Inc. ................. 27,600 1,831,950
ITT Industries, Inc. ............. 19,600 705,600
Ikon Office Solutions, Inc. ...... 22,400 218,400
Illinois Tool Works, Inc. ........ 41,400 2,631,487
Inco Ltd. ........................ 27,400 316,812
Ingersoll-Rand Co. ............... 27,400 1,282,662
Intel Corp. ...................... 277,100 29,814,228
International Business
Machines Corp. ................. 153,800 25,377,000
International Flavors &
Fragrances, Inc. ............... 17,700 741,187
International Paper Co. .......... 50,600 2,197,937
Interpublic Group of
Companies, Inc. ................ 22,350 1,536,563
Jefferson-Pilot Corp. ............ 17,575 1,199,494
Johnson & Johnson. ............... 222,100 18,045,625
Johnson Controls, Inc. ........... 14,000 810,250
Jostens, Inc. .................... 6,100 142,969
K Mart Corp. ..................... 81,300 1,239,825*
KLA-Tencor Corp. ................. 14,400 490,050*
Kaufman & Broad Home Corp. ....... 6,600 166,238
Kellogg Co. ...................... 67,200 2,461,200
Kerr-McGee Corp. ................. 7,900 312,050
Keycorp. ......................... 72,600 2,227,913
See accompanying notes to financial statements.
94
<PAGE>
SCHEDULE OF INVESTMENTS THE U.S. LARGE COMPANY SERIES
THE U.S. LARGE COMPANY SERIES (CONTINUED)
- --------------------------------------------------------------------------------
NOVEMBER 30, 1998
-----------------------
SHARES VALUE(DAGGER)
------- ------------
Kimberly Clark Corp. ............. 90,404 $ 4,757,511
King World Productions, Inc. ..... 12,100 329,725*
Knight Ridder, Inc. .............. 13,052 671,362
Kohls Corp. ...................... 26,000 1,278,875*
Kroger Co. ....................... 42,200 2,239,238*
LSI Logic Corp. .................. 23,300 361,150*
Laidlaw, Inc. .................... 54,500 541,594
Lehman Brothers Holdings, Inc. ... 19,600 978,775
Lilly (Eli) & Co. ................ 181,900 16,314,156
Limited, Inc. .................... 37,700 1,090,944
Lincoln National Corp. ........... 16,700 1,397,581
Liz Claiborne, Inc. .............. 10,900 369,238
Lockheed Martin Corp. ............ 32,257 3,346,664
Loews Corp. ...................... 19,100 1,910,000
Longs Drug Stores Corp. .......... 6,400 228,000
Louisiana-Pacific Corp. .......... 18,100 307,700
Lowe's Companies, Inc. ........... 58,000 2,450,500
Lucent Technologies, Inc. ........ 217,200 18,692,775
MBIA, Inc. ....................... 16,500 1,068,375
MBNA Corp. ....................... 124,145 2,816,540
MCI Worldcom, Inc. ............... 293,401 17,301,490*
MGIC Investment Corp. ............ 18,800 826,025
Mallinckrodt, Inc. ............... 12,100 390,981
Marriott International, Inc.
Class A ........................ 41,200 1,210,250
Marsh & McLennan Companies, Inc. . 42,400 $ 2,467,150
Masco Corp. ...................... 56,000 1,617,000
Mattel, Inc. ..................... 48,352 1,671,166
May Department Stores Co. ........ 38,300 2,309,969
Maytag Corp. ..................... 15,100 817,288
McDermott International, Inc. .... 9,800 262,763
McDonalds Corp. .................. 112,800 7,903,050
McGraw-Hill Companies, Inc. ...... 16,300 1,458,850
Mead Corp. ....................... 17,200 521,375
Mediaone Group. .................. 100,700 4,078,350*
Medtronic, Inc. .................. 77,500 5,245,781
Mellon Bank Corp. ................ 43,000 2,706,313
Mercantile Bancorporation, Inc. .. 25,100 1,105,969
Merck & Co., Inc. ................ 196,500 30,432,938
Meredith Corp. ................... 8,700 337,669
Merrill Lynch & Co., Inc. ........ 57,500 4,312,500
Meyer (Fred), Inc. ............... 25,400 1,292,225*
Micron Technology, Inc. .......... 35,300 1,458,331*
Microsoft Corp. .................. 456,600 55,719,469*
Milacron, Inc. ................... 6,500 131,625
Millipore Corp. .................. 7,200 202,500
Minnesota Mining & Manufacturing Co. 66,500 5,340,781
Mirage Resorts, Inc. ............. 29,700 441,788*
Mobil Corp. ...................... 129,200 11,135,425
Monsanto Co. ..................... 99,200 4,495,000
Moore Corp., Ltd. ................ 14,600 159,688#
Morgan (J.P.) & Co., Inc. ........ 29,000 3,099,375
Morgan Stanley Dean Witter
Discover & Co. ................. 96,509 6,731,503
Morton International, Inc. ....... 21,600 635,850
Motorola, Inc. ................... 98,800 6,125,600
Nacco Industries, Inc. Class A ... 1,300 113,181
Nalco Chemical Co. ............... 10,900 364,469
National City Corp. .............. 54,267 3,649,456
National Semiconductor Corp. ..... 27,100 389,563*
National Service Industries, Inc. 6,800 262,650
Navistar International Corp. ..... 11,100 287,213*
New Century Energies, Inc. ....... 18,400 884,350*
New York Times Class A ........... 31,300 972,256
Newell Co. ....................... 26,700 1,181,475#
Newmont Mining Corp. ............. 27,658 549,703
Nextel Communications Corp.
Class A ........................ 47,052 1,013,088*
Niagara Mohawk Power Corp. ....... 30,900 475,088*
- --------------------------------------------------------------------------------
NOVEMBER 30, 1998
-----------------------
SHARES VALUE(DAGGER)
------- ------------
Nicor, Inc. ...................... 7,900 $ 332,294
Nike, Inc. Class B ............... 47,500 1,900,000
Nordstrom, Inc. .................. 24,600 917,119
Norfolk Southern Corp. ........... 62,500 1,898,438
Northern States Power Co. MN. .... 25,000 679,688
Northern Telecom, Ltd. ........... 107,660 5,026,376
Northern Trust Corp. ............. 18,300 1,478,869
Northrop Grumman Corp. ........... 11,300 918,125
Novell, Inc. ..................... 58,400 965,425*
Nucor Corp. ...................... 14,600 613,200
Occidental Petroleum Corp. ....... 58,400 1,182,600
Omnicom Group, Inc. .............. 27,900 1,490,906
Oneok, Inc. ...................... 5,200 181,025
Oracle Systems Corp. ............. 160,662 5,507,694*
Oryx Energy Co. .................. 17,500 241,719*
Owens Corning. ................... 8,900 332,081
Owens-Illinois, Inc. ............. 25,700 825,613*
PECO Energy Co. .................. 36,700 1,472,588
PG&E Corp. (Holding Co.). ........ 63,200 1,955,250
PNC Bank Corp. ................... 49,950 2,575,547
PP&L Resources, Inc. ............. 25,000 682,813
PPG Industries, Inc. ............. 29,200 1,786,675
Paccar, Inc. ..................... 12,920 588,668
PacifiCorp. ...................... 49,000 918,750
Pall Corp. ....................... 20,500 476,625
Parametric Technology Corp. ...... 44,900 764,703*
Parker-Hannifin Corp. ............ 18,325 636,794
Paychex, Inc. .................... 27,000 1,344,094
Penney (J.C.) Co., Inc. .......... 41,700 2,293,500
Pennzoil Co. ..................... 7,900 293,288
Peoples Energy Corp. ............. 5,800 218,588
Peoplesoft, Inc. ................. 38,100 784,622*
Pep Boys - Manny, Moe & Jack. .... 10,500 148,313
Pepsico, Inc. .................... 243,000 9,401,063
Perkin Elmer Corp. ............... 8,200 764,650
Pfizer, Inc ...................... 215,700 24,077,513
Pharmacia & Upjohn, Inc. ......... 84,080 4,377,415
Phelps Dodge Corp. ............... 9,700 549,869
Philip Morris Companies, Inc. .... 401,500 22,458,906
Phillips Petroleum Co. ........... 42,800 1,797,600
Pioneer Hi-Bred International, Inc. 39,901 1,194,536
Pitney Bowes, Inc. ............... 45,400 2,542,400
Placer Dome, Inc. ................ 41,200 599,975
Polaroid Corp. ................... 7,300 155,125
Potlatch Corp. ................... 4,800 181,500
Praxair, Inc. .................... 26,000 992,875
Procter & Gamble Co .............. 221,332 19,394,217
Progressive Corp. ................ 11,800 1,750,825
Provident Companies, Inc. ........ 22,400 861,000*
Providian Financial Corp. ........ 15,800 1,450,638
Public Service Enterprise
Group, Inc. .................... 38,400 1,497,600
Pulte Corp. ...................... 7,100 180,606
Quaker Oats Co. .................. 22,600 1,387,075
RJR Nabisco Holdings Corp. ....... 53,700 1,547,231
Ralston Purina Group. ............ 51,600 1,796,325
Raychem Corp. .................... 13,800 470,063
Raytheon Co. Class B ............. 56,000 3,101,000
Reebok International Ltd. ........ 9,300 148,219*
Regions Financial Corp. .......... 35,300 1,368,978
Republic New York Corp. .......... 17,800 832,150
Reynolds Metals Co. .............. 11,800 647,525
Rite Aid Corp. ................... 42,600 1,975,575
Rockwell International Corp. ..... 31,700 1,551,319
Rohm & Haas Co. .................. 29,500 1,030,656
Rowan Companies, Inc. ............ 14,100 138,356*
See accompanying notes to financial statements.
95
<PAGE>
SCHEDULE OF INVESTMENTS THE U.S. LARGE COMPANY SERIES
THE U.S. LARGE COMPANY SERIES (CONTINUED)
- --------------------------------------------------------------------------------
NOVEMBER 30, 1998
-----------------------
SHARES VALUE(DAGGER)
------- ------------
Royal Dutch Petroleum Co. Den Haag
(N.Y. Registry). ............... 353,700 $ 16,623,900
Rubbermaid, Inc. ................. 24,800 819,950
Russell Corp. .................... 6,000 142,875
Ryder System, Inc. ............... 12,100 345,606
SBC Communications, Inc .......... 323,108 15,488,990
SLM Holdings Corp. ............... 27,500 1,210,000
Safeco Corp. ..................... 23,400 1,005,469
Safeway, Inc. .................... 80,500 4,251,406*
Saint Jude Medical, Inc. ......... 13,850 402,516*
Saint Paul Companies, Inc. ....... 39,042 1,376,231
Sara Lee Corp. ................... 77,000 4,494,875
Schering-Plough Corp. ............ 121,000 12,871,375
Schlumberger Ltd. ................ 89,900 4,017,406
Schwab (Charles) Corp. ........... 44,150 2,488,956
Scientific-Atlanta, Inc. ......... 12,900 249,938
Seagate Technology, Inc. ......... 40,100 1,182,950*
Seagram Co., Ltd. ................ 57,200 1,962,675#
Sealed Air Corp. ................. 13,792 608,572*
Sears, Roebuck & Co. ............. 64,800 3,073,950
Sempra Energy. ................... 39,645 993,603
Service Corp. International ...... 42,600 1,592,175
Shared Medical Systems Corp. ..... 4,400 230,450
Sherwin-Williams Co. ............. 28,600 811,525
Sigma-Aldrich Corp. .............. 16,600 533,794
Silicon Graphics, Inc. ........... 31,200 382,200*
Snap-On, Inc. .................... 9,800 333,200
Sonat, Inc. ...................... 18,100 537,344
Southern Co ...................... 115,300 3,401,350
Southwest Airlines Co. ........... 55,500 1,193,250
Springs Industries, Inc. Class A . 3,050 118,759
Sprint Corp. ..................... 70,900 5,157,975
Sprint Corp. (PCS Group). ........ 94,100 1,505,600*#
Stanley Works. ................... 14,700 449,269
Staples, Inc. .................... 47,500 1,656,563*
State Street Corp. ............... 26,600 1,825,425
Summit Bancorp. .................. 28,700 1,200,019
Sun Microsystems. ................ 62,740 4,642,760*
Sunamerica, Inc. ................. 34,350 2,722,238
Sunoco, Inc. ..................... 15,400 521,675
Suntrust Banks, Inc. ............. 34,500 2,408,531
Supervalu, Inc. .................. 20,000 516,250
Synovus Financial Corp. .......... 43,550 960,822
Sysco Corp. ...................... 55,800 1,503,113
TJX Companies, Inc. .............. 52,300 1,340,188
TRW, Inc. ........................ 20,000 1,101,250
Tandy Corp. ...................... 16,530 744,883
Tektronix, Inc. .................. 7,850 210,478*
Tele-Communications, Inc. Class A
(TCI Group) .................... 86,500 3,651,922*
Tellabs, Inc. .................... 32,100 1,734,403*
Temple-Inland, Inc. .............. 9,100 488,556
Tenet Healthcare Corp. ........... 51,000 1,507,688*
Tenneco, Inc. .................... 28,100 1,001,063
Texaco, Inc. ..................... 88,600 5,100,038
Texas Instruments, Inc. .......... 64,300 4,910,913
Texas Utilities Co. .............. 45,997 2,049,741
Textron, Inc. .................... 27,000 2,097,563
Thermo-Electron Corp. ............ 27,400 462,375*
Thomas & Betts Corp. ............. 9,400 407,138
Time Warner, Inc. ................ 98,900 10,458,675
Times Mirror Co. Class A ......... 14,300 838,338
Timken Co. ....................... 10,300 198,275
Torchmark Corp. .................. 23,100 877,800
Toys R Us, Inc. .................. 43,200 853,200*
- --------------------------------------------------------------------------------
NOVEMBER 30, 1998
-----------------------
SHARES VALUE(DAGGER)
------- ------------
Transamerica Corp. .................. 10,200 $ 1,083,750
Tribune Co. ...................... 20,000 1,282,500
Tricon Global Restaurants, Inc. .. 25,260 1,150,909*
Tupperware Corp. ................. 9,500 165,656
Tyco International Ltd ........... 106,185 6,988,300
U.S. Bancorp. .................... 122,400 4,505,850
U.S. West, Inc. .................. 82,981 5,165,567
UNUM Corp. ....................... 22,700 1,222,963
USAir Group, Inc. ................ 15,400 800,800*
UST, Inc. ........................ 30,700 1,066,825
USX-Marathon Group, Inc. ......... 50,800 1,441,450
USX-US Steel Group. .............. 14,520 354,833
Unicom Corp., Inc. ............... 35,700 1,345,444
Unilever NV ...................... 105,800 8,179,663
Union Camp Corp. ................. 11,400 737,438
Union Carbide Corp. .............. 22,400 1,002,400
Union Pacific Corp. .............. 40,700 1,979,038
Union Pacific Resources Group, Inc. 41,476 464,013
Union Planters Corp. ............. 20,900 995,363
Unisys Corp. ..................... 42,100 1,199,850*
United Healthcare Corp. .......... 32,100 1,448,513
United Technologies Corp. ........ 37,400 4,008,813
Unocal Corp. ..................... 39,700 1,344,838
VF Corp. ......................... 20,000 981,250
Venator Group, Inc. .............. 22,300 175,613*
Viacom, Inc. Class B ............. 59,334 3,949,419*
WR Grace & Co. ................... 12,500 206,250*
Wachovia Corp. ................... 34,000 2,968,625
Walgreen Co. ..................... 82,100 4,407,744
Wal-Mart Stores, Inc. ............ 369,100 27,797,844
Warner-Lambert Co. ............... 135,300 10,215,150
Washington Mutual, Inc. .......... 98,090 3,804,053
Waste Management, Inc. ........... 94,547 4,053,703
Wells Fargo Company .............. 267,100 9,615,600
Wendy's International, Inc. ...... 21,000 420,000
Westvaco Corp. ................... 16,750 471,094
Weyerhaeuser Co. ................. 32,900 1,649,113
Whirlpool Corp. .................. 12,500 700,000
Willamette Industries, Inc. ...... 18,300 639,356
Williams Companies, Inc. ......... 70,097 2,019,670
Winn-Dixie Stores, Inc. .......... 24,500 987,656
Worthington Industries, Inc. ..... 15,975 196,193
Wrigley (Wm.) Jr. Co. ............ 19,100 1,683,188
Xerox Corp. ...................... 54,100 5,815,750
--------------
TOTAL COMMON STOCKS
(Cost $995,063,600) $1,555,425,299
--------------
FACE AMOUNT VALUE(DAGGER)
----------- ------------
TEMPORARY CASH INVESTMENTS -- (0.4%)
Repurchase Agreement, PNC Capital
Markets Inc. 4.95%, 12/01/98
(Collateralized by U.S. Treasury
Notes 6.25%, 08/31/02, valued at
$6,581,138) to be repurchased
at $6,476,890.
(Cost $6,476,000) $6,476 6,476,000
TOTAL INVESTMENTS -- (100.0%)
(Cost $1,001,539,600)(DAGGER)(DAGGER) $1,561,901,299
--------------
- --------------------
* See Note B to Financial Statements.
* Non-Income Producing Securities
# Total or Partial Securities on Loan
(DAGGER)(DAGGER) The cost for federal income tax purposes is $1,008,917,865.
See accompanying notes to financial statements.
96
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES THE DFA INVESTMENT TRUST COMPANY
THE U.S. LARGE COMPANY
(AMOUNTS IN THOUSANDS)
MARCH 31, 1999
----------------------
(UNAUDITED)
ASSETS
Investments at Value (Cost $1,364,862) ................ $2,098,517
Collateral for Securities Loaned ...................... 402,098
Receivables for Dividends and Interest ................ 2,449
Prepaid Expenses and Other Assets ..................... 52
----------
Total Assets ..................................... 2,503,116
----------
LIABILITIES:
Payable for Securities Loaned ......................... 402,098
Payable for Investment Securities Purchased ........... 6,533
Accrued Expenses ...................................... 155
----------
Total Liabilities ................................ 408,786
----------
NET ASSETS ............................................... $2,094,330
==========
See accompanying notes to financial statements.
97
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES THE DFA INVESTMENT TRUST COMPANY
THE U.S. LARGE COMPANY SERIES
(AMOUNTS IN THOUSANDS)
NOVEMBER 30, 1999
-----------------
ASSETS
Investment at Value (Cost $1,001,540) .................... $1,561,901
Collateral for Securities Loaned ......................... 6,673
Receivable for Dividends and Interest .................... 2,274
Receivable for Fund Shares Sold .......................... 113
Prepaid Expenses and Other Assets ........................ 7
----------
Total Assets ........................................ $1,570,968
----------
LIABILITIES:
Payable for Securities Loaned ............................ 6,673
Payable for Investment Securities Purchased .............. 7,013
Accrued Expenses ......................................... 108
----------
Total Liabilities ................................... 13,794
----------
NET ASSETS .................................................. $1,557,174
==========
See accompanying notes to financial statements.
98
<PAGE>
STATEMENTS OF OPERATIONS THE DFA INVESTMENT TRUST COMPANY
THE U.S. LARGE COMPANY SERIES
(AMOUNTS IN THOUSANDS)
YEAR
ENDED
NOV. 30,
1998
--------
INVESTMENT INCOME
Dividends ........................................................ $ 17,663
Interest ......................................................... 276
Income From Securities Lending ................................... 85
--------
Total Investment Income ........................................ 18,024
--------
EXPENSES
Investment Advisory Services ..................................... 293
Accounting & Transfer Agent Fees ................................. 176
Custodian's Fee .................................................. 134
Legal Fees ....................................................... 12
Audit Fees ....................................................... 18
Shareholders' Reports ............................................ 18
Trustees' Fees and Expenses ...................................... 4
Other ............................................................ 84
--------
Total Expenses ................................................. 739
--------
NET INVESTMENT INCOME .......................................... 17,285
--------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net Realized Gain on Investment Securities .......................... 1,283
Change in Unrealized Appreciation of Investment Securities .......... 265,133
--------
NET GAIN ON INVESTMENT SECURITIES ................................ 266,416
--------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ................ $283,701
========
See accompanying notes to financial statements.
99
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS THE DFA INVESTMENT TRUST COMPANY
THE U.S. LARGE COMPANY SERIES
<TABLE>
<CAPTION>
YEAR YEAR
ENDED ENDED
NOV. 30, NOV. 30,
1998 1997
---------- --------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net Investment Income ..................................... $ 17,285 $ 11,179
Net Realized Gain (Loss) on Investment Securities ......... 1,283 975
Change in Unrealized Appreciation of Investment Securities 265,133 147,979
--------- --------
Net Increase in Net Assets Resulting from Operations .... 283,701 160,133
--------- --------
Transactions in Interest:
Contributions ............................................. 604,903 269,144
Withdrawals ............................................... (153,923) (73,225)
--------- --------
Net Increase from Transactions in Interest .............. 450,980 195,919
--------- --------
Total Increase .......................................... 734,681 356,052
--------- --------
NET ASSETS
Beginning of Period ....................................... 822,493 466,441
--------- --------
End of Period ............................................. $1,557,174 $822,493
========== ========
</TABLE>
See accompanying notes to financial statements.
100
<PAGE>
FINANCIAL HIGHLIGHTS THE DFA INVESTMENT TRUST COMPANY
THE U.S. LARGE COMPANY SERIES
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR FEB. 8
ENDED ENDED ENDED ENDED TO
NOV. 30, NOV. 30, NOV. 30, NOV. 30, NOV. 30,
1998 1997 1996 1995 1994
-------- -------- ---------- --------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period (1) ....... N/A N/A $ 13.48 $ 10.11 $ 10.27
---------- -------- -------- ------- -------
INCOME FROM INVESTMENT OPERATIONS (1)
Net Investment Income . ..................... -- -- 0.15 0.30 0.28
Net Gains (Losses) on Securities
(Realized and Unrealized) ................. -- -- 1.41 3.36 (0.14)
---------- -------- -------- ------- -------
Total from Investment Operations ............ -- -- 1.56 3.66 0.14
---------- -------- -------- ------- -------
LESS DISTRIBUTIONS (1)
Net Investment Income ....................... -- -- (0.16) (0.29) (0.29)
Net Realized Gains .......................... -- -- (0.08) -- (0.01)
---------- -------- -------- ------- -------
Total Distributions .................... -- -- (0.24) (0.29) (0.30)
---------- -------- -------- ------- -------
Net Asset Value, End of Period (1) ............. N/A N/A $ 14.80 $ 13.48 $ 10.11
========== ======== ======== ======= =======
Total Return (1) ............................... N/A N/A 11.60%# 36.77% 1.30%#
========== ======== ======== ======= =======
Net Assets, End of Period (thousands) .......... $1,557,174 $822,493 $466,441 $97,118 $48,657
Ratio of Expenses to Average Net Assets ........ 0.06% 0.07% 0.12% 0.02%(a) 0.02%*(a)
Ratio of Net Investment Income to Average
Net Assets .................................. 1.47% 1.75% 2.12% 2.61%(a) 2.83%*(a)
Portfolio Turnover Rate ........................ 9.31% 4.28% 14.09% 2.38% 8.52%*
<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 and 1994 would
have been 0.18% and 0.33%, respectively, and the ratios of net investment
income to average net assets for the periods ended November 30, 1995 and
1994, would have been 2.45% and 2.52%, respectively.
Note: Portfolio Turnover Rate for the four months ended March 31, 1999 is 6.20%
(Unaudited).See accompanying notes to financial statements.
</FN>
</TABLE>
101
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) 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
November 30, 1998, The Trust consisted of 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.
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 November 30, 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 Trustees.
C. INVESTMENT ADVISOR:
Dimensional Fund Advisors Inc. (the "Advisor") provides investment advisory
services to the Series. For the year ended November 30, 1998, 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.
102
<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):
YEAR ENDED
NOV. 30, 1998
-------------
Purchases ............................................... $513,170
Sales ................................................... 107,862
E. INVESTMENT TRANSACTIONS:
The gross unrealized appreciation and depreciation for federal income tax
purposes of investment securities was as follows (amounts in thousands):
YEAR ENDED
NOV. 30, 1998
-------------
Gross Unrealized Appreciation ........................... $571,157
Gross Unrealized Depreciation ........................... (18,174)
--------
Net ..................................................... $552,983
========
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
series 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 series 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 year ended November 30, 1998, 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>
Year Ended November 30, 1998 .............................. 6.25% $5,573,087 19 $31,901 $33,400,000
</TABLE>
There were no outstanding borrowings under the line of credit at at
November 30, 1998.
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. Such cash collateral for November 30, 1998 was
reinvested into overnight repurchase agreements with Warburg Dillon Reed. The
market value of securities on loan to brokers from the Series, the related
collateral cash received and the value of the collateral on overnight repurchase
agreements was as follows:
NOV. 30, 1998
-------------
Value of Securities on Loan .............................. $6,188,118
Value of Collateral and Indemnification .................. 6,672,900
Value of Collateral on Overnight Repurchase Agreements ... 6,228,371
104
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS THE DFA INVESTMENT TRUST COMPANY
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
THE DFA INVESTMENT TRUST COMPANY:
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The U.S. Large Company Series of
The DFA Investment Trust Company (the "Fund") at November 30, 1998, the results
of its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended and the financial highlights for
each of the periods presented, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities owned at November 30, 1998 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
2400 Eleven Penn Center
Philadelphia, Pennsylvania
January 15, 1999
See accompanying notes to financial statements.
104
<PAGE>
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<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
BLACKROCK FUNDS
Investment Adviser
BlackRock Advisors, Inc.
New York, New York 10154
Sub-Adviser -- 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, Micro-Cap
Equity Portfolio, International Small Cap Equity Portfolio, Select Equity
Portfolio and Balanced Portfolio
BlackRock Financial Management, Inc.
New York, New York 10154
Sub-Adviser -- International Equity Portfolio and International Emerging Markets
Portfolio
BlackRock International Limited
Edinburgh, Scotland EH2 3AH
Custodian
PFPC Trust Co.
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
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania 19103
To reduce expenses, the Fund will mail only one copy of annual and semi-annual
reports and most prospectuses to your household, even if more than one person in
the household has a Fund account. Please call (800) 441-7762 if you would like
to receive additional reports or prospectuses.
<PAGE>
BLACKROCK FUNDS
FUND SPECTRUM
BlackRock Funds is a leading mutual fund company currently managing in excess of
$25 billion in 36 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.(REGISTRATION 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
High Yield 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, 7 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 IRA accounts or
rollover IRAs.
GENERAL INFORMATION ABOUT THE BLACKROCK FUNDS
If you would like additional reports or have questions regarding any of the 36
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>
[GRAPHIC OMITTED]
BLACKROCK FUNDS
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 3/31/99 EP
