September 30, 2000
Equity
Portfolios
ANNUAL REPORT
TO SHAREHOLDERS
Not FDIC Insured BLACKROCK
May Lose Value FUNDS (LOGO)
No Bank Guarantee PURE INVESTMENT STYLE (REGISTRATION MARK)
[GRAPHIC OMITTED]
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BLACKROCK FUNDS
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EQUITY PORTFOLIOS
* Large Cap Value Equity * Micro-Cap Equity * International
* Large Cap Growth Equity * Global Science & Technology Emerging Markets
* Mid-Cap Value Equity * European Equity * Select Equity
* Mid-Cap Growth Equity * International Equity * Index Equity
* Small Cap Value Equity * International Small Cap Equity * Balanced
* Small Cap Growth Equity * Asia Pacific Equity
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TABLE OF CONTENTS
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SHAREHOLDER LETTER............................................................1
PORTFOLIO SUMMARIES
Large Cap Value Equity..................................................2
Large Cap Growth Equity.................................................3
Mid-Cap Value Equity....................................................4
Mid-Cap Growth Equity.................................................. 5
Small Cap Value Equity..................................................6
Small Cap Growth Equity.................................................7
Micro-Cap Equity........................................................8
Global Science & Technology.............................................9
European Equity........................................................10
International Equity...................................................11
International Small Cap Equity.........................................12
Asia Pacific Equity....................................................13
International Emerging Markets.........................................14
Select Equity..........................................................15
Index Equity...........................................................16
Balanced...............................................................17
Note on Performance Information........................................18
STATEMENT OF NET ASSETS/SCHEDULE OF INVESTMENTS...........................19-62
Large Cap Value Equity Statement of Assets & Liabilities...............21
Large Cap Growth Equity Statement of Assets & Liabilities..............24
Mid-Cap Value Equity Statement of Assets & Liabilities.................27
Mid-Cap Growth Equity Statement of Assets & Liabilities................30
Small Cap Value Equity Statement of Assets &Liabilities................33
Small Cap Growth Equity Statement of Assets & Liabilities..............36
European Equity Statement of Assets & Liabilities......................42
International Small Cap Equity Statement of Assets & Liabilities.......47
International Emerging Markets Statement of Assets & Liabilities.......52
Select Equity Statement of Assets & Liabilities........................55
Balanced Statement of Assets & Liabilities.............................62
PORTFOLIO FINANCIAL STATEMENTS
Statements of Operations............................................64-66
Statements of Changes in Net Assets.................................68-73
Financial Highlights................................................74-89
NOTES TO FINANCIAL STATEMENTS............................................90-106
REPORT OF INDEPENDENT ACCOUNTANTS...........................................107
DFA INVESTMENT TRUST COMPANY ANNUAL REPORT..............................109-126
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PRIVACY PRINCIPLES OF BLACKROCK FUNDS
BLACKROCK FUNDS IS COMMITTED TO MAINTAINING THE PRIVACY OF ITS SHAREHOLDERS AND
TO SAFEGUARDING THEIR NONPUBLIC PERSONAL INFORMATION. THE FOLLOWING INFORMATION
IS PROVIDED TO HELP YOU UNDERSTAND WHAT PERSONAL INFORMATION BLACKROCK FUNDS
COLLECTS, HOW WE PROTECT THAT INFORMATION, AND WHY IN CERTAIN CASES WE MAY
SHARE SUCH INFORMATION WITH SELECT OTHER PARTIES.
BLACKROCK FUNDS DOES NOT RECEIVE ANY NONPUBLIC PERSONAL INFORMATION RELATING TO
ITS SHAREHOLDERS WHO PURCHASE SHARES THROUGH THEIR BROKER-DEALERS. IN THE CASE
OF SHAREHOLDERS WHO ARE RECORD OWNERS OF BLACKROCK FUNDS, BLACKROCK FUNDS
RECEIVES NONPUBLIC PERSONAL INFORMATION ON ACCOUNT APPLICATIONS OR OTHER FORMS.
WITH RESPECT TO THESE SHAREHOLDERS, BLACKROCK FUNDS ALSO HAS ACCESS TO SPECIFIC
INFORMATION REGARDING THEIR TRANSACTIONS IN BLACKROCK FUNDS.
BLACKROCK FUNDS DOES NOT DISCLOSE ANY NONPUBLIC PERSONAL INFORMATION ABOUT ITS
SHAREHOLDERS OR FORMER SHAREHOLDERS TO ANYONE, EXCEPT AS PERMITTED BY LAW OR AS
IS NECESSARY IN ORDER TO SERVICE OUR SHAREHOLDERS' ACCOUNTS (FOR EXAMPLE, TO A
TRANSFER AGENT).
BLACKROCK FUNDS RESTRICTS ACCESS TO NONPUBLIC PERSONAL INFORMATION ABOUT ITS
SHAREHOLDERS TO BLACKROCK EMPLOYEES WITH A LEGITIMATE BUSINESS NEED FOR THE
INFORMATION. BLACKROCK FUNDS MAINTAINS PHYSICAL, ELECTRONIC AND PROCEDURAL
SAFEGUARDS DESIGNED TO PROTECT THE NONPUBLIC PERSONAL INFORMATION OF OUR
SHAREHOLDERS.
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BLACKROCK FUNDS
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September 30, 2000
Dear Shareholder:
We are pleased to present the Annual Report for the BlackRock Funds for
the 12 months ending September 30, 2000.
Since our Semi-Annual report of March 31, 2000, the stock market as
measured by the S&P 500 returned -4.14%, the NASDAQ returned -18.81% and the
Lehman Aggregate Index returned 4.81%. So in this first year of the millennium,
at a time in history when there is more media attention about the stock market
than ever before, stocks actually under-performed bonds.
It has been a year of extremes. When we reported to you one year ago, it
was the dawn of a new millennium and there was plenty of concern about Y2K and
the devastation that it could wreak on capital markets and world economies. Yet
while the media bombarded us with concerns about Y2K, the investment world was
investing in technology and the Internet with an enthusiasm that could only be
described as fervent. There was much talk of a "new economy" and Internet shares
shot skyward. Share prices climbed so quickly that analysts continue to search
for new and improved ways to measure value.
Now, a year later, we can all be relieved that Y2K has come and gone with
small incident. And, while it is clear that the Internet will become an
important part of our economy, the boundless enthusiasm for Internet stocks has
moderated to the extent that the Goldman Sachs Technology Industry Internet
Index fell nearly 35% in the last six months. In fact, we were reminded of the
long-term lessons of investing.
The truth of the matter is that successful investing is a long-term
process and the best strategy for most investors is to work with your financial
advisor to set your goals, plan and implement an asset allocation that is
customized to your goals AND your personal needs for certain levels of risk --
and then to stay the course despite short term volatility in the markets.
We continue to believe that mutual funds, which provide diversification,
professional management and ease and flexibility of use, are an appropriate
investment vehicle for individual investors.
We are proud to be able to offer our shareholders a full range of funds to
meet virtually any investment need. In the past year, we added three specialized
portfolios: Global Science & Technology, European Equity and Asia Pacific
Equity. You can now choose from 39 different BlackRock Funds.
Thank you for your confidence in BlackRock Funds. We appreciate the
opportunity to help you achieve your long-term investment goals.
Sincerely,
/S/ KAREN H. SABATH
Karen H. Sabath
MANAGING DIRECTOR
BLACKROCK ADVISORS, INC.
1
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BLACKROCK FUNDS
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LARGE CAP VALUE EQUITY PORTFOLIO
TOTAL NET ASSETS (9/30/00):
$2.3 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 DIVIDEND POTENTIAL WILL ALSO BE FACTORS CONSIDERED IN SECURITY
SELECTION.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
o FROM SEPTEMBER OF 1999 THROUGH FEBRUARY OF 2000, THE U.S. EQUITY MARKET
FOCUSED ITS ATTENTION ON GROWTH ISSUES; IN MARCH, THE VOLATILITY OF THE EQUITY
MARKET CAUSED INVESTORS TO BEGIN TO TURN TOWARD MORE STABLE U.S. LARGE-CAP VALUE
STOCKS. ANNOUNCEMENTS OF SEPTEMBER 2000 EARNINGS SHORTFALLS AND CONCERNS OF
UNSUSTAINABLE GROWTH IN FASTER-GROWING SECTORS HAVE ALSO INCREASED INTEREST IN
VALUE STOCKS. THE PORTFOLIO'S HOLDINGS ARE WELL POSITIONED FOR A SLOWING ECONOMY
WHERE WE BELIEVE STABLE EARNINGS GROWTH WILL BE FAVORED.
o IN THE EARLY PART OF THE FISCAL YEAR, THE PORTFOLIO'S HOLDINGS IN THE
FINANCIAL SECTOR WERE UNDER PRESSURE AS THE FEDERAL RESERVE FOCUSED ON RAISING
INTEREST RATES, PRESSURING CAPITAL MARKETS ACTIVITY. IF THE TECHNOLOGY SECTOR
CONTINUES TO BE VOLATILE, IPO ISSUANCE IS LIKELY TO BE DOWN AS WELL. IN THE MOST
RECENT QUARTER, THE PORTFOLIO'S POSITION IN FINANCIALS PROVED BENEFICIAL IN
LIGHT OF THE RECENT MERGER ACTIVITY AND THE BELIEF THAT INTEREST RATE INCREASES
ARE OVER FOR THE TIME BEING. OTHER INDUSTRY POSITIONS HAD A POSITIVE NET EFFECT
ON THE PORTFOLIO AS THE OVERWEIGHT IN ENERGY, HEALTH CARE AND UTILITIES, AND THE
PORTFOLIO'S UNDERWEIGHT IN CONSUMER CYCLICALS HELPED PERFORMANCE. STOCK
SELECTION WAS POSITIVE WITH EXXON, CITIGROUP, AND DISNEY ADDING TO PERFORMANCE.
Although the portfolio holdings and sectors listed above were current as of the
end of the annual period ended September 30, 2000, 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
FISCAL YEAR END.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS SERVICE CLASS INVESTOR A CLASS INVESTOR B CLASS INVESTOR C CLASS RUSSELL 1000 VALUE INDEX
<S> <C> <C> <C> <C> <C> <C>
4/13/92 $10,000 $10,000 $9,550 $10,000 $10,000 $10,000
6/30/92 $9,680 $9,680 $9,244 $9,680 $9,680 $9,657
9/30/92 $10,151 $10,151 $9,694 $10,151 $10,151 $9,933
12/31/92 $11,686 $11,686 $11,160 $11,686 $11,686 $11,416
3/31/93 $12,412 $12,412 $11,854 $12,412 $12,412 $11,903
6/30/93 $12,251 $12,251 $11,699 $12,251 $12,251 $12,162
9/30/93 $13,233 $13,232 $12,637 $13,232 $13,232 $13,225
12/31/93 $13,866 $13,856 $13,228 $13,851 $13,851 $13,596
3/31/94 $13,608 $13,599 $12,973 $13,584 $13,584 $13,236
6/30/94 $13,349 $13,322 $12,707 $13,306 $13,306 $12,720
9/30/94 $14,061 $14,022 $13,378 $14,009 $14,009 $13,603
12/31/94 $13,800 $13,768 $13,125 $13,733 $13,733 $13,350
3/31/95 $14,256 $14,212 $13,548 $14,154 $14,154 $13,965
6/30/95 $15,085 $15,028 $14,311 $14,933 $14,933 $15,274
9/30/95 $16,513 $16,428 $15,644 $16,297 $16,297 $16,783
12/31/95 $16,994 $16,898 $16,091 $16,732 $16,732 $17,147
3/31/96 $17,903 $17,797 $16,923 $17,583 $17,583 $18,023
6/30/96 $18,519 $18,383 $17,474 $18,123 $18,123 $18,925
9/30/96 $18,599 $18,449 $17,530 $18,146 $18,146 $18,991
12/31/96 $20,369 $20,203 $19,203 $19,829 $19,829 $19,979
3/31/97 $20,206 $20,015 $19,016 $19,210 $19,210 $18,946
6/30/97 $24,603 $24,362 $23,139 $23,325 $23,325 $21,805
9/30/97 $30,016 $29,686 $28,184 $28,370 $28,370 $24,616
12/31/97 $30,280 $29,911 $28,392 $28,534 $28,534 $25,030
3/31/98 $32,657 $32,241 $30,578 $30,677 $30,677 $27,120
6/30/98 $30,942 $30,507 $28,939 $28,966 $28,966 $26,141
9/30/98 $24,902 $24,540 $23,270 $23,239 $23,239 $21,467
12/31/98 $28,396 $27,965 $26,512 $26,425 $26,425 $23,414
3/31/99 $24,225 $23,835 $22,572 $22,483 $22,483 $21,145
6/30/99 $28,416 $27,939 $26,445 $26,280 $26,280 $24,644
9/30/99 $26,202 $25,738 $24,369 $24,154 $24,154 $22,715
12/31/99 $27,020 $26,525 $25,098 $24,830 $24,830 $23,062
3/31/00 $27,700 $27,167 $25,695 $25,386 $25,404 $23,941
6/30/00 $28,146 $27,588 $26,094 $25,724 $25,724 $24,405
9/30/00 $30,696 $30,060 $28,413 $27,952 $27,969 $26,197
</TABLE>
<TABLE>
<CAPTION>
FOR PERIOD ENDING SEPTEMBER 30, 2000
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AVERAGE ANNUAL TOTAL RETURN
1 Year 3 Year 5 Year From Inception
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<S> <C> <C> <C> <C>
Institutional Class 6.24% 6.21% 14.82% 14.49%
Service Class 5.91% 5.91% 14.49% 14.22%
Investor A Class (Load Adjusted) 0.97% 4.12% 13.27% 13.46%
Investor A Class (NAV) 5.71% 5.73% 14.31% 14.08%
Investor B Class (Load Adjusted) 0.43% 3.83% 13.25% 13.59%
Investor B Class (NAV) 4.93% 4.90% 13.49% 13.59%
Investor C Class (Load Adjusted) 3.93% 4.90% 13.49% 13.59%
Investor C Class (NAV) 4.93% 4.90% 13.49% 13.59%
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<FN>
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 18 FOR FURTHER INFORMATION ON HOW
PERFORMANCE DATA WAS CALCULATED.
</FN>
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
2
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BLACKROCK FUNDS
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LARGE CAP GROWTH EQUITY PORTFOLIO
TOTAL NET ASSETS (9/30/00):
$1.7 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:
o GROWTH STOCKS STARTED THE YEAR OFF STRONG, OUTPERFORMING VALUE STOCKS IN
THE LARGE CAP ARENA AS INVESTORS CONTINUED TO FAVOR LARGE CAP STOCKS AND
TECHNOLOGY COMPANIES. THE PORTFOLIO BEGAN THE YEAR OVERWEIGHT IN THE TECHNOLOGY
AND FINANCIAL SECTORS, SPECIFICALLY FAVORING TELECOMMUNICATION AND WIRELESS
SEMICONDUCTOR COMPANIES. HOWEVER, INCREASING VOLATILITY WITHIN THE TECHNOLOGY
SECTOR AND RENEWED SCRUTINY OF GROWTH EXPECTATIONS HAS LED TO A BROADENING OF
THE MARKET. AS A VARIETY OF SECTORS FELL INTO AND OUT OF MARKET FAVOR DURING THE
FISCAL YEAR, THE MANAGER CONTINUED TO FOCUS ON COMPANIES WITH ABOVE AVERAGE
EARNINGS GROWTH AND STRONG INDUSTRY POSITIONS.
o STRONG PERFORMERS FOR THE PERIOD WERE JUNIPER NETWORKS, MAXIM, AND BEA
SYSTEMS WHILE OVEREXPOSURE TO UNDERPERFORMING LARGE CAP STOCKS LIKE ELI LILLY,
UNIVISION, AND GAP STORES DETRACTED FROM PERFORMANCE. OVERALL, THE PORTFOLIO
KEPT PACE WITH THE BENCHMARK OVER THE PERIOD.
Although the portfolio holdings and sectors listed above were current as of the
end of the annual period ended September 30, 2000, 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 FISCAL
YEAR END.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS SERVICE CLASS INVESTOR A CLASS INVESTOR B CLASS INVESTOR C CLASS RUSSELL 1000 GROWTH INDEX
<S> <C> <C> <C> <C> <C> <C>
11/1/89 $10,000 $10,000 $9,550 $10,000 $10,000 $10,000
12/31/89 $10,825 $10,825 $10,338 $10,825 $10,825 $10,396
3/31/90 $10,493 $10,493 $10,021 $10,493 $10,493 $10,053
6/30/90 $10,987 $10,987 $10,493 $10,987 $10,987 $10,651
9/30/90 $10,040 $10,040 $9,589 $10,040 $10,040 $9,096
12/31/90 $10,603 $10,603 $10,126 $10,603 $10,603 $9,963
3/31/91 $11,397 $11,397 $10,884 $11,397 $11,397 $11,510
6/30/91 $11,304 $11,304 $10,795 $11,304 $11,304 $11,459
9/30/91 $11,993 $11,993 $11,454 $11,993 $11,993 $12,167
12/31/91 $13,361 $13,361 $12,760 $13,361 $13,361 $13,254
3/31/92 $12,389 $12,389 $11,831 $12,389 $12,389 $12,967
6/30/92 $12,455 $12,455 $11,894 $12,455 $12,455 $13,148
9/30/92 $12,581 $12,581 $12,014 $12,581 $12,581 $13,579
12/31/92 $13,228 $13,228 $12,631 $13,228 $13,228 $14,451
3/31/93 $13,473 $13,473 $12,865 $13,473 $13,473 $15,053
6/30/93 $13,912 $13,912 $13,271 $13,912 $13,912 $15,157
9/30/93 $15,371 $15,371 $14,651 $15,371 $15,371 $15,646
12/31/93 $15,039 $15,039 $14,338 $15,039 $15,039 $15,919
3/31/94 $13,859 $13,859 $13,200 $13,859 $13,859 $15,290
6/30/94 $13,001 $13,001 $12,370 $13,001 $13,001 $15,260
9/30/94 $13,657 $13,657 $12,983 $13,657 $13,657 $16,041
12/31/94 $13,525 $13,525 $12,841 $13,525 $13,525 $15,979
3/31/95 $14,755 $14,755 $13,997 $14,755 $14,755 $17,499
6/30/95 $16,075 $16,075 $15,237 $16,075 $16,075 $19,147
9/30/95 $17,737 $17,737 $16,781 $17,737 $17,737 $20,853
12/31/95 $18,183 $18,183 $17,192 $18,183 $18,183 $22,012
3/31/96 $19,333 $19,333 $18,267 $19,333 $19,333 $23,226
6/30/96 $20,471 $20,471 $19,315 $20,447 $20,447 $24,171
9/30/96 $21,048 $21,048 $19,833 $20,954 $20,954 $24,958
12/31/96 $21,884 $21,884 $20,591 $21,727 $21,727 $26,948
3/31/97 $21,746 $21,746 $20,451 $21,521 $21,521 $27,365
6/30/97 $25,867 $25,858 $24,304 $25,534 $25,534 $32,540
9/30/97 $28,140 $28,115 $26,412 $27,697 $27,697 $34,987
12/31/97 $28,104 $28,051 $26,335 $27,567 $27,567 $36,040
3/31/98 $32,837 $32,752 $30,725 $32,162 $32,096 $40,859
6/30/98 $34,918 $34,793 $32,642 $34,169 $34,032 $42,710
9/30/98 $31,451 $31,303 $29,358 $30,732 $30,557 $38,827
12/31/98 $39,716 $39,523 $37,039 $38,771 $38,480 $49,210
3/31/99 $42,850 $42,590 $39,905 $41,774 $41,367 $52,339
6/30/99 $43,643 $43,361 $40,612 $42,442 $42,028 $54,354
9/30/99 $42,604 $42,290 $39,605 $40,062 $40,898 $52,360
12/31/99 $54,214 $53,789 $50,369 $50,822 $51,883 $65,528
3/31/00 $57,391 $56,871 $53,230 $53,628 $54,747 $70,200
6/30/00 $55,537 $55,022 $51,489 $51,777 $52,836 $68,305
9/30/00 $52,360 $51,831 $48,441 $48,624 $49,571 $64,630
</TABLE>
<TABLE>
<CAPTION>
FOR PERIOD ENDING SEPTEMBER 30, 2000
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AVERAGE ANNUAL TOTAL RETURN
1 Year 3 Year 5 Year 10 Year From Inception
------ ------ ------ ------- --------------
<S> <C> <C> <C> <C> <C>
Institutional Class 22.90% 22.99% 24.17% 17.96% 16.37%
Service Class 22.56% 22.61% 23.81% 17.73% 16.16%
Investor A Class (Load Adjusted) 16.82% 20.55% 22.49% 17.04% 15.54%
Investor A Class (NAV) 22.31% 22.41% 23.62% 17.58% 16.02%
Investor B Class (Load Adjusted) 16.87% 20.67% 22.53% 15.59% 15.64%
Investor B Class (NAV) 21.37% 21.46% 22.71% 17.15% 15.64%
Investor C Class (Load Adjusted) 20.21% 21.41% 22.68% 17.14% 15.62%
Investor C Class (NAV) 21.21% 21.41% 22.68% 17.14% 15.62%
----------------------------------------------------------------------------------------------------
<FN>
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 18 FOR FURTHER INFORMATION ON HOW
PERFORMANCE DATA WAS CALCULATED.
</FN>
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
3
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BLACKROCK FUNDS
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MID-CAP VALUE EQUITY PORTFOLIO
TOTAL NET ASSETS (9/30/00):
$244.7 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 $15 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:
o THE PERIOD BEGAN WITH U.S. EQUITY MARKETS FOCUSED ALMOST EXCLUSIVELY ON
GROWTH ISSUES. HOWEVER, VALUE STOCKS STAGED A RALLY EARLY IN THE SECOND CALENDAR
QUARTER AS INVESTORS BECAME WARY OF THE TECHNOLOGY, TELECOM, AND BIOTECHNOLOGY
INDUSTRIES AND INTEREST SHIFTED TO TRADITIONAL VALUATIONS.
o ALTHOUGH THE MOMENTUM RETURNED SLIGHTLY TO GROWTH STOCKS IN JUNE, EARNING
SHORTFALLS AND CONCERNS ABOUT GROWTH IN FASTER GROWING SEGMENTS OF THE MARKET
HELPED BOOST THE VALUE BUSINESS DURING THE SECOND HALF OF THE PERIOD.
o STRONG GROWTH IN THE U.S. ECONOMY COMBINED WITH ATTRACTIVE VALUATIONS IN
THE MORE TRADITIONAL VALUE SECTORS HELPED BRING BACK FOCUS TO VALUE-ORIENTED
FUNDS. THE STRONGEST SECTORS IN THE MID-CAP MARKET INCLUDED SUCH TRADITIONAL
SECTORS AS FINANCE, INSURANCE, UTILITY AND HEALTHCARE.
o WITHIN THE PORTFOLIO, PERFORMANCE WAS DRIVEN BY NAMES IN THESE SECTORS
AND OTHERS INCLUDING: DYNEGY, A NATURAL GAS UTILITY AND INDEPENDENT POWER
PRODUCER (IPP); HEALTH MANAGEMENT ASSOCIATES, A HOSPITAL AND PSYCHIATRIC
FACILITY MANAGEMENT COMPANY; RELIANT ENERGY, A TEXAS-BASED ELECTRIC AND GAS
UTILITY; AND CAPITAL ONE FINANCIAL, A CONSUMER CREDIT CARD AND SPECIALTY FINANCE
COMPANY.
o THE COMMON THEME ACROSS THESE NAMES WAS THE FACT THAT THE MARKET (STOCK
PRICE) WAS NOT REFLECTING THE INHERENT VALUE WITHIN THESE COMPANIES AND THEIR
RESPECTIVE BUSINESSES. WHEN THE HIGHER-OCTANE TECHNOLOGY NAMES STARTED TO FALTER
IN THE MARKETPLACE, INVESTORS BEGAN TO DO MORE HOMEWORK ON NAMES AND SECTORS
SUCH AS THESE.
Although the portfolio holdings and sectors listed above were current as of the
end of the annual period ended September 30, 2000, 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 CLASS SERVICE CLASS INVESTOR A CLASS INVESTOR B CLASS INVESTOR C CLASS RUSSELL MID CAP VALUE INDEX
<S> <C> <C> <C> <C> <C> <C>
12/27/96 $10,000 $10,000 $9,550 $10,000 $10,000 $10,000
3/31/97 $10,084 $10,071 $9,617 $10,065 $10,065 $10,170
6/30/97 $11,383 $11,363 $10,838 $11,328 $11,328 $11,450
9/30/97 $12,910 $12,881 $12,273 $12,823 $12,823 $12,910
12/31/97 $12,856 $12,819 $12,218 $12,741 $12,741 $13,436
3/31/98 $14,288 $14,240 $13,558 $14,126 $14,126 $14,778
6/30/98 $13,475 $13,418 $12,765 $13,269 $13,269 $14,398
9/30/98 $11,144 $11,086 $10,548 $10,944 $10,944 $12,433
12/31/98 $12,670 $12,588 $11,971 $12,401 $12,401 $14,119
3/31/99 $11,997 $11,908 $11,328 $11,709 $11,709 $13,680
6/30/99 $13,480 $13,372 $12,717 $13,114 $13,114 $15,209
9/30/99 $12,001 $11,893 $11,300 $11,636 $11,636 $13,591
12/31/99 $12,812 $12,688 $12,065 $12,387 $12,387 $14,104
3/31/00 $13,180 $13,029 $12,392 $12,704 $12,704 $14,246
6/30/00 $12,638 $12,492 $11,872 $12,143 $12,143 $14,007
9/30/00 $13,766 $13,600 $12,913 $12,793 $13,189 $15,359
</TABLE>
<TABLE>
<CAPTION>
FOR PERIOD ENDING SEPTEMBER 30, 2000
----------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
1 Year 3 Year From Inception
------- ------- --------------
<S> <C> <C> <C>
Institutional Class 14.70% 2.16% 8.87%
Service Class 14.45% 1.86% 8.54%
Investor A Class (Load Adjusted) 9.07% 0.14% 7.01%
Investor A Class (NAV) 14.17% 1.68% 8.33%
Investor B Class (Load Adjusted) 8.85% (0.22)% 6.98%
Investor B Class (NAV) 13.35% 0.94% 7.64%
Investor C Class (Load Adjusted) 12.35% 0.94% 7.64%
Investor C Class (NAV) 13.35% 0.94% 7.64%
----------------------------------------------------------------------------------------------------
<FN>
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 18 FOR FURTHER INFORMATION ON HOW
PERFORMANCE DATA WAS CALCULATED.
</FN>
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
4
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
MID-CAP GROWTH EQUITY PORTFOLIO
TOTAL NET ASSETS (9/30/00):
$985.8 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 $15 BILLION.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
o DURING THE PERIOD, GROWTH STOCKS OUTPERFORMED VALUE STOCKS IN THE MID-CAP
ARENA. INVESTORS FAVORED COMPANIES WITH SMALLER CAPITALIZATIONS AS THE RUSSELL
2000 GROWTH INDEX AND THE RUSSELL MID-CAP GROWTH INDEX OUTPERFORMED THE RUSSELL
1000 GROWTH INDEX.
o MID-CAP TECHNOLOGY STOCKS PERFORMED WELL AT THE END OF 1999 AND BEGINNING
OF 2000, AS INTERNET INFRASTRUCTURE, SOFTWARE, AND SEMICONDUCTOR STOCKS WERE
AMONG THE BEST PERFORMERS. MORE RECENTLY, HIGH VALUATION GROWTH STOCKS HAVE NOT
PERFORMED AS WELL AS THE VALUE SECTOR, IN LIGHT OF INVESTORS' CONCERNS REGARDING
HIGH ENERGY PRICES, WEAK CURRENCIES, SLOWING ECONOMIC GROWTH, AND CORPORATE
EARNINGS.
o FOR MOST OF THE PERIOD, MID-CAP TECHNOLOGY AND HEALTHCARE STOCKS WERE
TERRIFIC PERFORMERS BUT QUITE VOLATILE. THE PORTFOLIO PRESERVED MOST OF THE
GAINS FROM THE FIRST FIVE MONTHS OF THE YEAR AND OUTPERFORMED THE RUSSELL
MID-CAP GROWTH INDEX FOR THE YEAR.
o SCIENCE AND TECHNOLOGY CONTINUE TO BE THE KEY DRIVERS OF THE PORTFOLIO'S
PERFORMANCE WITH ELECTRONIC TECHNOLOGY, SOFTWARE AND HEALTH TECHNOLOGY
CONTRIBUTING STRONGLY. STOCK SELECTION AND AN OVERWEIGHT POSITION VERSUS THE
BENCHMARK IN BOTH FINANCIALS AND UTILITIES ALSO ADDED TO PERFORMANCE. NETWORK
APPLIANCE, HUMAN GENOME SCIENCES AND FOREST LABORATORIES ADDED TO THE POSITIVE
PERFORMANCE OF THE PORTFOLIO.
Although the portfolio holdings and sectors listed above were current as of the
end of the annual period ended September 30, 2000, 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 CLASS SERVICE CLASS INVESTOR A CLASS INVESTOR B CLASS INVESTOR C CLASS RUSSELL MID CAP GROWTH INDEX
<S> <C> <C> <C> <C> <C> <C>
12/27/96 $10,000 $10,000 $9,550 $10,000 $10,000 $10,000
3/31/97 $8,894 $8,930 $8,519 $8,920 $8,920 $9,635
6/30/97 $10,528 $10,550 $10,066 $10,530 $10,530 $11,053
9/30/97 $12,151 $12,170 $11,594 $12,110 $12,110 $12,600
12/31/97 $11,474 $11,480 $10,944 $11,400 $11,400 $12,253
3/31/98 $12,911 $12,913 $12,293 $12,782 $12,782 $13,741
6/30/98 $13,081 $13,074 $12,446 $12,913 $12,913 $13,732
9/30/98 $11,173 $11,158 $10,615 $10,997 $10,997 $11,439
12/31/98 $14,036 $14,003 $13,313 $13,771 $13,771 $14,468
3/31/99 $15,986 $15,940 $15,153 $15,649 $15,649 $14,963
6/30/99 $17,986 $17,927 $17,021 $17,556 $17,556 $16,522
9/30/99 $19,213 $19,128 $18,158 $18,687 $18,687 $15,694
12/31/99 $31,028 $30,867 $29,298 $30,091 $30,091 $21,891
3/31/00 $37,718 $37,495 $35,574 $36,474 $36,477 $26,514
6/30/00 $34,188 $33,963 $32,183 $32,950 $32,960 $24,549
9/30/00 $36,820 $36,557 $34,613 $34,327 $35,475 $25,168
</TABLE>
<TABLE>
<CAPTION>
FOR PERIOD ENDING SEPTEMBER 30, 2000
----------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
1 Year 3 Year From Inception
------ ------ --------------
<S> <C> <C> <C>
Institutional Class 91.64% 44.70% 41.55%
Service Class 91.13% 44.29% 41.14%
Investor A Class (Load Adjusted) 82.03% 41.81% 39.11%
Investor A Class (NAV) 90.62% 44.00% 40.82%
Investor B Class (Load Adjusted) 84.88% 42.39% 39.60%
Investor B Class (NAV) 89.38% 42.96% 39.92%
Investor C Class (Load Adjusted) 88.30% 42.94% 39.91%
Investor C Class (NAV) 89.30% 42.94% 39.91%
----------------------------------------------------------------------------------------------------
<FN>
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 18 FOR FURTHER INFORMATION ON HOW
PERFORMANCE DATA WAS CALCULATED.
</FN>
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
5
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
SMALL CAP VALUE EQUITY PORTFOLIO
TOTAL NET ASSETS (9/30/00):
$564.0 MILLION
PERFORMANCE BENCHMARK:
RUSSELL 2000 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 LESS THAN $2 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:
o DURING THE PERIOD TECHNOLOGY AND OTHER "GROWTH" SECTORS, LIKE
TELECOMMUNICATIONS AND BIOTECHNOLOGY, FELL IN AND OUT OF MARKET FAVOR.
TECHNOLOGY STOCKS SURGED AHEAD IN THE FIRST FIVE MONTHS OF THE PERIOD, BUT FELL
DRAMATICALLY IN MARCH AND APRIL. SINCE THEN, THESE SECTORS HAVE BEEN EXTREMELY
VOLATILE AND HAVE YET TO REACH THEIR EARLY YEAR HIGHS. AS THE YEAR PROGRESSED,
THE MARKET BEGAN TO LOOK MORE FAVORABLY ON "TRADITIONAL VALUE" SECTORS, AND THE
PORTFOLIO WAS REWARDED FOR ITS HOLDINGS IN MORE TRADITIONAL VALUE SECTORS LIKE
CAPITAL GOODS, COMMERCIAL SERVICES, HEALTHCARE, CONSUMER NON-CYCLICALS, ENERGY
AND FINANCIALS.
o UNTIL MAY, RISING INTEREST RATES AND UNCERTAINTY OVER THE FUTURE
DIRECTION OF RATES TOOK AWAY FROM POTENTIAL STOCK PERFORMANCE IN THE SMALL CAP
VALUE MARKET, PARTICULARLY IN THE FINANCIAL SECTOR. SINCE THEN, STOCK SELECTION
IN BANKING AND INSURANCE HAS CONTRIBUTED POSITIVELY TO RELATIVE PERFORMANCE. THE
PORTFOLIO CAPITALIZED ON THE EARLY TECHNOLOGY RALLIES THROUGH AN OVERWEIGHT IN
TECHNOLOGY RELATIVE TO THE RUSSELL 2000 VALUE INDEX, BUT MAINTAINED ITS VALUE
FOCUS REMAINING UNDERWEIGHT IN TECHNOLOGY RELATIVE TO THE RUSSELL 2000 INDEX. AS
MARKET FAVOR SHIFTED TOWARD TRADITIONAL VALUE SECTORS, THE PORTFOLIO'S
PERFORMANCE WAS HURT SOMEWHAT RELATIVE TO THE RUSSELL 2000 VALUE INDEX, BUT
REBOUNDED AND OUTPERFORMED FOR THE PERIOD DUE TO ITS OVERWEIGHT IN FINANCIALS,
UTILITIES, CONSUMER CYCLICALS AND HEALTHCARE.
o AUDIOVOX, ARTHUR GALLAGHER, SUIZA FOOD CORPORATION AND MITCHELL ENERGY
WERE A FEW EXAMPLES OF STOCKS IN MANY DIFFERENT SECTORS THAT HAD POSITIVE
IMPACTS ON THE PORTFOLIO.
Although the portfolio holdings and sectors listed above were current as of the
end of the annual period ended September 30, 2000, 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 FISCAL YEAR END.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS SERVICE CLASS INVESTOR A CLASS INVESTOR B CLASS INVESTOR C CLASS RUSSELL 2000 VALUE INDEX
<S> <C> <C> <C> <C> <C> <C>
4/13/92 $10,000 $10,000 $9,550 $10,000 $10,000 $10,000
6/30/92 $9,680 $9,680 $9,244 $9,680 $9,680 $9,657
9/30/92 $10,151 $10,151 $9,694 $10,151 $10,151 $9,933
12/31/92 $11,686 $11,686 $11,160 $11,686 $11,686 $11,416
3/31/93 $12,412 $12,412 $11,854 $12,412 $12,412 $11,903
6/30/93 $12,251 $12,251 $11,699 $12,251 $12,251 $12,162
9/30/93 $13,233 $13,232 $12,637 $13,232 $13,232 $13,225
12/31/93 $13,866 $13,856 $13,228 $13,851 $13,851 $13,596
3/31/94 $13,608 $13,599 $12,973 $13,584 $13,584 $13,236
6/30/94 $13,349 $13,322 $12,707 $13,306 $13,306 $12,720
9/30/94 $14,061 $14,022 $13,378 $14,009 $14,009 $13,603
12/31/94 $13,800 $13,768 $13,125 $13,733 $13,733 $13,350
3/31/95 $14,256 $14,212 $13,548 $14,154 $14,154 $13,965
6/30/95 $15,085 $15,028 $14,311 $14,933 $14,933 $15,274
9/30/95 $16,513 $16,428 $15,644 $16,297 $16,297 $16,783
12/31/95 $16,994 $16,898 $16,091 $16,732 $16,732 $17,147
3/31/96 $17,903 $17,797 $16,923 $17,583 $17,583 $18,023
6/30/96 $18,519 $18,383 $17,474 $18,123 $18,123 $18,925
9/30/96 $18,599 $18,449 $17,530 $18,146 $18,146 $18,991
12/31/96 $20,369 $20,203 $19,203 $19,829 $19,829 $19,979
3/31/97 $20,206 $20,015 $19,016 $19,210 $19,210 $18,946
6/30/97 $24,603 $24,362 $23,139 $23,325 $23,325 $21,805
9/30/97 $30,016 $29,686 $28,184 $28,370 $28,370 $24,616
12/31/97 $30,280 $29,911 $28,392 $28,534 $28,534 $25,030
3/31/98 $32,657 $32,241 $30,578 $30,677 $30,677 $27,120
6/30/98 $30,942 $30,507 $28,939 $28,966 $28,966 $26,141
9/30/98 $24,902 $24,540 $23,270 $23,239 $23,239 $21,467
12/31/98 $28,396 $27,965 $26,512 $26,425 $26,425 $23,414
3/31/99 $24,225 $23,835 $22,572 $22,483 $22,483 $21,145
6/30/99 $28,416 $27,939 $26,445 $26,280 $26,280 $24,644
9/30/99 $26,202 $25,738 $24,369 $24,154 $24,154 $22,715
12/31/99 $27,020 $26,525 $25,098 $24,830 $24,830 $23,062
3/31/00 $27,700 $27,167 $25,695 $25,386 $25,404 $23,941
6/30/00 $28,146 $27,588 $26,094 $25,724 $25,724 $24,405
9/30/00 $30,696 $30,060 $28,413 $27,952 $27,969 $26,197
</TABLE>
<TABLE>
<CAPTION>
FOR PERIOD ENDING SEPTEMBER 30, 2000
----------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
1 Year 3 Year 5 Year From Inception
------ ------ ------ --------------
<S> <C> <C> <C> <C>
Institutional Class 17.15% 0.75% 11.16% 12.93%
Service Class 16.80% 0.42% 10.82% 12.66%
Investor A Class (Load Adjusted) 11.37% (1.26)% 9.64% 11.91%
Investor A Class (NAV) 16.60% 0.27% 10.65% 12.52%
Investor B Class (Load Adjusted) 11.22% (2.02)% 9.55% 11.96%
Investor B Class (NAV) 15.72% (0.49)% 9.83% 11.96%
Investor C Class (Load Adjusted) 14.79% (0.47)% 9.84% 11.96%
Investor C Class (NAV) 15.79% (0.47)% 9.84% 11.96%
----------------------------------------------------------------------------------------------------
<FN>
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 18 FOR FURTHER INFORMATION ON HOW
PERFORMANCE DATA WAS CALCULATED.
</FN>
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
6
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
SMALL CAP GROWTH EQUITY PORTFOLIO
TOTAL NET ASSETS (9/30/00):
$2.8 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:
o INVESTOR APPETITE FOR TELECOMMUNICATIONS, BUSINESS-TO-BUSINESS
E-COMMERCE, INTERNET-ENABLING TECHNOLOGY COMPANIES AND OTHER TECHNOLOGY RELATED
ISSUES DROVE THE MARKET DURING THE FIRST HALF OF THE PERIOD. SCIENCE AND
TECHNOLOGY, ESPECIALLY ELECTRONIC TECHNOLOGY AND HEALTH TECHNOLOGY, WERE THE KEY
DRIVERS OF THE PORTFOLIO'S PERFORMANCE. IN THE SECOND HALF OF THE PERIOD, THE
PORTFOLIO'S RETURNS WERE HURT DUE TO THE POOR PERFORMANCE OF SEMICONDUCTOR
STOCKS. IN ADDITION, GROWTH AND SMALL CAP STOCKS SUFFERED FROM VALUATION
CONCERNS AT THE END OF SEPTEMBER. THIS WAS SLIGHTLY OFFSET IN AUGUST WHEN
INVESTORS ANTICIPATED A MORE ROBUST ECONOMY. UTILITIES BENEFITED THIS YEAR DUE
TO THE RISING ENERGY COSTS AND HEALTH CARE REMAINED STRONG DUE TO AN INTEREST IN
HEALTH TECHNOLOGY.
o STOCK SELECTION AND OVERWEIGHTS VERSUS THE BENCHMARK IN ELECTRONIC
TECHNOLOGY, UTILITIES AND HEALTH TECHNOLOGY HAVE BEEN THE KEY DRIVERS OF THE
PORTFOLIO'S PERFORMANCE. CALPINE, SDL, AND MERCURY INTERACTIVE ARE
REPRESENTATIVE OF STOCKS HELD IN THE PORTFOLIO IN THESE SECTORS. UNDERWEIGHTS IN
RETAIL TRADE AND CONSUMER SERVICES ALSO HELPED THE PERFORMANCE OF THE PORTFOLIO.
Although the portfolio holdings and sectors listed above were current as of the
end of the annual period ended September 30, 2000, 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 FISCAL YEAR END.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS SERVICE CLASS INVESTOR A CLASS INVESTOR B CLASS INVESTOR C CLASS RUSSELL 2000 GROWTH INDEX
<S> <C> <C> <C> <C> <C> <C>
9/14/93 $10,000 $10,000 $9,550 $10,000 $10,000 $10,000
9/30/93 $10,470 $10,470 $9,956 $10,470 $10,470 $10,141
12/31/93 $10,379 $10,374 $9,904 $10,371 $10,371 $10,407
3/31/94 $9,858 $9,854 $9,398 $9,841 $9,841 $9,984
6/30/94 $9,169 $9,143 $8,729 $9,141 $9,141 $9,357
9/30/94 $10,170 $10,144 $9,666 $10,121 $10,121 $10,231
12/31/94 $10,990 $10,955 $10,439 $10,931 $10,931 $10,155
3/31/95 $11,672 $11,635 $11,079 $11,601 $11,601 $10,711
6/30/95 $13,195 $13,146 $12,512 $13,101 $13,101 $11,773
9/30/95 $15,100 $15,026 $14,307 $14,981 $14,981 $13,111
12/31/95 $16,213 $16,066 $15,282 $16,002 $16,002 $13,304
3/31/96 $18,291 $18,107 $17,221 $17,993 $17,993 $14,069
6/30/96 $20,941 $20,719 $19,695 $20,534 $20,534 $14,891
9/30/96 $22,025 $21,809 $20,717 $21,535 $21,535 $14,763
12/31/96 $21,332 $21,110 $20,040 $20,784 $20,784 $14,803
3/31/97 $17,182 $16,989 $16,114 $16,190 $16,190 $13,240
6/30/97 $20,921 $20,678 $19,608 $20,267 $20,267 $15,564
9/30/97 $25,524 $25,197 $23,883 $24,650 $24,650 $18,197
12/31/97 $23,293 $22,964 $21,772 $22,449 $22,449 $16,705
3/31/98 $25,534 $25,153 $23,829 $24,528 $24,528 $18,689
6/30/98 $24,566 $24,177 $22,909 $23,517 $23,517 $17,615
9/30/98 $19,923 $19,552 $18,554 $19,006 $19,006 $13,676
12/31/98 $25,009 $24,516 $23,256 $23,788 $23,788 $16,909
3/31/99 $25,692 $25,173 $23,884 $24,369 $24,369 $16,625
6/30/99 $26,841 $26,273 $24,923 $25,380 $25,380 $19,077
9/30/99 $28,878 $28,257 $26,787 $27,233 $27,233 $18,139
12/31/99 $43,132 $42,170 $39,974 $40,558 $40,558 $24,195
3/31/00 $51,901 $50,693 $48,041 $48,653 $48,670 $26,443
6/30/00 $56,785 $55,493 $52,672 $53,363 $53,396 $28,394
9/30/00 $56,864 $55,527 $52,640 $53,283 $53,315 $27,267
</TABLE>
<TABLE>
<CAPTION>
FOR PERIOD ENDING SEPTEMBER 30, 2000
----------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
1 Year 3 Year 5 Year From Inception
------ ------ ------ --------------
<S> <C> <C> <C> <C>
Institutional Class 63.03% 22.64% 25.54% 24.59%
Service Class 62.51% 22.15% 25.04% 24.15%
Investor A Class (Load Adjusted) 54.65% 20.15% 23.70% 23.15%
Investor A Class (NAV) 61.96% 22.02% 24.84% 23.96%
Investor B Class (Load Adjusted) 56.62% 20.39% 23.81% 23.35%
Investor B Class (NAV) 61.12% 21.19% 23.97% 23.35%
Investor C Class (Load Adjusted) 60.07% 21.18% 23.97% 23.34%
Investor C Class (NAV) 61.07% 21.18% 23.97% 23.34%
----------------------------------------------------------------------------------------------------
<FN>
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 18 FOR FURTHER INFORMATION ON HOW PERFORMANCE DATA WAS
CALCULATED.
</FN>
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
7
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
MICRO-CAP EQUITY PORTFOLIO
TOTAL NET ASSETS (9/30/00):
$607.9 MILLION
PERFORMANCE BENCHMARK:
WILSHIRE QUANTUM 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 $500 MILLION.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
o THE PORTFOLIO OUTPERFORMED THE WILSHIRE QUANTUM MICRO CAP INDEX FOR THE
PERIOD BUT PERFORMANCE LAGGED IN THE SECOND AND THIRD QUARTERS DUE TO THE
PORTFOLIO'S OVERWEIGHT IN TECHNOLOGY. TECHNOLOGY'S GROWTH SECTORS, ESPECIALLY
WITHIN SMALLER MARKET CAPITALIZATIONS, SUFFERED FURTHER AFTER ANALYSTS
DOWNGRADED THE SEMICONDUCTOR SECTOR IN JULY.
o GROWTH IN THE MICRO-CAP SECTOR HAS PRIMARILY RESULTED FROM TECHNOLOGY
COMPANIES THAT ARE FOCUSED ON THE FASTEST-GROWING SECTORS OF THE ECONOMY. AT ONE
END OF THE SPECTRUM ARE COMPANIES DESIGNING AND MANUFACTURING THE COMPONENTS AND
SOFTWARE THAT COMPRISE THE EQUIPMENT AT THE HEART OF THE INTERNET, AND AT THE
OTHER END ARE CONSULTING COMPANIES THAT ARE HELPING THE MORE TRADITIONAL
COMPANIES PLAN AND IMPLEMENT E-BUSINESS STRATEGIES.
o DESPITE A WEAK SECOND HALF OF THE YEAR, ELECTRONIC TECHNOLOGY AND HEALTH
TECHNOLOGY HAVE BEEN THE KEY DRIVERS OF THE PORTFOLIO'S PERFORMANCE. TITAN
PHARMACEUTICALS, BIOSOURCE, ANAREN MICROWAVE AND NATURAL MICROSYSTEMS ARE
REPRESENTATIVE OF STOCKS HELD IN THE PORTFOLIO IN THESE SECTORS. AT TIMES,
UNDERWEIGHTING IN RETAIL TRADE AND OVERWEIGHTING IN ENERGY HAVE ALSO HELPED THE
PERFORMANCE OF THE PORTFOLIO.
Although the portfolio holdings and sectors listed above were current as of the
end of the annual period ended September 30, 2000, 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
QUARTER-END.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS SERVICE CLASS INVESTOR A CLASS INVESTOR B CLASS INVESTOR C CLASS WILSHIRE MICRO CAP
<S> <C> <C> <C> <C> <C> <C>
5/1/98 $10,000 $10,000 $9,550 $10,000 $10,000 $10,000
5/31/98 $10,570 $10,570 $10,042 $10,570 $10,570 $9,506
6/30/98 $10,951 $10,951 $10,403 $10,951 $10,951 $9,461
7/31/98 $10,861 $10,861 $10,318 $10,861 $10,861 $8,860
8/31/98 $8,710 $8,710 $8,275 $8,701 $8,701 $6,995
9/30/98 $9,391 $9,391 $8,911 $9,370 $9,370 $7,251
10/31/98 $9,051 $9,051 $8,589 $9,020 $9,020 $7,404
11/30/98 $10,960 $10,950 $10,394 $10,910 $10,910 $7,974
12/31/98 $13,031 $13,010 $12,351 $12,960 $12,960 $9,017
1/31/99 $13,880 $13,860 $13,159 $13,789 $13,789 $9,431
2/28/99 $13,131 $13,110 $12,446 $13,039 $13,039 $8,785
3/31/99 $15,880 $15,850 $15,039 $15,739 $15,739 $8,308
4/30/99 $16,700 $16,660 $15,809 $16,539 $16,539 $8,573
5/31/99 $17,061 $17,020 $16,151 $16,889 $16,889 $8,783
6/30/99 $20,950 $20,811 $19,819 $20,710 $20,710 $9,495
7/31/99 $21,520 $21,379 $20,350 $21,261 $21,261 $9,588
8/31/99 $23,799 $23,630 $22,497 $23,480 $23,480 $9,298
9/30/99 $24,730 $24,547 $23,372 $24,380 $24,380 $9,178
12/31/00 $41,897 $41,558 $39,536 $41,180 $41,180 $11,695
3/31/00 $55,262 $54,777 $52,092 $54,143 $54,147 $14,118
6/30/00 $53,201 $52,679 $50,097 $51,977 $51,970 $12,759
9/30/00 $50,360 $49,829 $47,367 $47,329 $49,050 $12,735
</TABLE>
FOR PERIOD ENDING SEPTEMBER 30, 2000
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
1 Year From Inception
------- --------------
Institutional Class 103.63% 95.02%
Service Class 102.98% 94.47%
Investor A Class (Load Adjusted) 92.58% 90.12%
Investor A Class (NAV) 102.68% 94.22%
Investor B Class (Load Adjusted) 96.67% 92.33%
Investor B Class (NAV) 101.17% 92.90%
Investor C Class (Load Adjusted) 100.12% 92.89%
Investor C Class (NAV) 101.12% 92.89%
--------------------------------------------------------------------------------
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 18 FOR FURTHER INFORMATION
ON HOW PERFORMANCE DATA WAS CALCULATED.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
8
<PAGE>
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BLACKROCK FUNDS
--------------------------------------------------------------------------------
GLOBAL SCIENCE & TECHNOLOGY PORTFOLIO
TOTAL NET ASSETS (9/30/00):
$136.0 MILLION
PERFORMANCE BENCHMARK:
S&P 500
INVESTMENT APPROACH:
SEEKS LONG-TERM CAPITAL APPRECIATION BY INVESTING IN U.S. AND FOREIGN
COMPANIES WITH MARKET CAPITALIZATIONS GREATER THAN $25 MILLION. THE MANAGER
SCREENS FOR COMPANIES IN THE SCIENCE AND TECHNOLOGY SECTORS WITH EARNINGS GROWTH
POTENTIAL OF 20% OR HIGHER.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
o THE PORTFOLIO, WHICH STARTED MAY 15, BEGAN IN A DIFFICULT MARKET
ENVIRONMENT. ALTHOUGH THE YEAR 2000 BEGAN WITH U.S. EQUITY MARKETS FOCUSED
ALMOST EXCLUSIVELY ON GROWTH ISSUES, VALUE STOCKS STAGED A RALLY EARLY IN THE
SECOND QUARTER AS INVESTORS BECAME WARY OF THE TECHNOLOGY, TELECOM, AND
BIOTECHNOLOGY INDUSTRIES AND INTEREST SHIFTED TO COMPANIES WITH MORE TRADITIONAL
VALUATIONS. AS A RESULT, THE MANAGER'S INVESTMENT PROCESS DIRECTED THE PORTFOLIO
TOWARDS U.S. LARGE CAP STOCKS. THE INITIAL INVESTMENTS EMPHASIZED THE DOMESTIC
MARKET, GROWTH COMPANIES WITH POSITIVE EARNINGS AND COMPANIES IN THE MID TO
LARGE CAPITALIZATION RANGE.
o AS INVESTORS BECAME MORE COMFORTABLE WITH THE FED'S STANCE REGARDING
INTEREST RATES AND THE ABILITY OF COMPANIES TO MEET AND BEAT EARNINGS
EXPECTATIONS, THE MARKET BEGAN TO ROTATE BACK TOWARD GROWTH-ORIENTED NAMES. THE
DOMESTIC MARKET STAGED A STRONG RALLY FROM APRIL OF 2000 THROUGH SEPTEMBER OF
2000, BUT INTERNATIONAL MARKETS REMAINED UNINSPIRING AND INVESTMENTS WERE MADE
ON A VERY SELECTIVE BASIS.
o THE STRONG CASH INFLOW THAT BUILT UP WAS USED PRIMARILY TO INVEST IN U.S.
STOCKS, WHICH WE WILL CONTINUE TO FOCUS ON UNTIL THERE IS A CHANGE IN THE GLOBAL
ECONOMY. AS OF SEPTEMBER 30, 2000, CLOSE TO 50% OF THE PORTFOLIO WAS IN
TECHNOLOGY, 20% IN HEALTHCARE, 20% IN CASH, AND 10% IN FOREIGN STOCKS. TOP
PERFORMING STOCKS IN THE PORTFOLIO INCLUDE EMC CORP AND SUN MICROSYSTEMS.
Although the portfolio holdings and sectors listed above were current as of the
end of the annual period ended September 30, 2000, the Portfolio is actively
managed and the composition will vary.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE GLOBAL SCIENCE &
TECHNOLOGY PORTFOLIO AND THE S&P 500 FROM INCEPTION AND AT EACH
MONTH END.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS SERVICE CLASS INVESTOR A CLASS INVESTOR B CLASS INVESTOR C CLASS S&P 500
<S> <C> <C> <C> <C> <C> <C>
5/15/00 $10,000 $10,000 $9,500 $10,000 $10,000 $10,000
5/31/00 $9,600 $9,600 $9,120 $9,600 $9,600 $9,781
6/30/00 $11,400 $11,400 $10,830 $11,390 $11,390 $10,023
7/31/00 $10,840 $10,840 $10,298 $10,821 $10,821 $9,866
8/31/00 $12,530 $12,521 $11,894 $12,491 $12,491 $10,479
9/30/00 $12,490 $12,480 $11,847 $11,881 $12,316 $9,925
</TABLE>
FOR PERIOD ENDING SEPTEMBER 30, 2000
--------------------------------------------------------------------------------
TOTAL RETURN
From Inception
--------------
Institutional Class 24.90%
Service Class 24.80%
Investor A Class (Load Adjusted) 18.46%
Investor A Class (NAV) 24.70%
Investor B Class (Load Adjusted) 19.90%
Investor B Class (NAV) 24.40%
Investor C Class (Load Adjusted) 23.40%
Investor C Class (NAV) 24.40%
--------------------------------------------------------------------------------
THE INCEPTION DATES OF THE PORTFOLIO'S SHARE CLASSES WERE AS FOLLOWS:
INSTITUTIONAL, SERVICE, INVESTOR A, INVESTOR B, AND INVESTOR C SHARES WAS
5/15/00. SEE "NOTE ON PERFORMANCE INFORMATION" ON PAGE 18 FOR FURTHER
INFORMATION ON HOW PERFORMANCE DATA WAS CALCULATED.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
9
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
EUROPEAN EQUITY PORTFOLIO
TOTAL NET ASSETS (9/30/00):
$5.8 MILLION
PERFORMANCE BENCHMARK:
MSCI EUROPE INDEX
INVESTMENT APPROACH:
PURSUES LONG-TERM CAPITAL APPRECIATION BY INVESTING PRIMARILY IN EQUITY
SECURITIES ISSUED BY EUROPEAN COMPANIES WITH A MARKET CAPITALIZATION OF AT LEAST
$1 BILLION. THE MANAGER WILL INVEST PRIMARILY IN "GROWTH" STOCKS; HOWEVER HE MAY
ALSO TAKE ADVANTAGE OF OPPORTUNITIES IN "VALUE" STOCKS AT APPROPRIATE POINTS IN
THE MARKET OR ECONOMIC CYCLE.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
o THE PORTFOLIO TOOK A DEFENSIVE POSITION AFTER ITS LAUNCH ON JUNE 23RD IN
EXPECTATION OF DULL TRADING IN EUROPEAN MARKETS OVER THE SUMMER MONTHS.
o SINCE THE COLLAPSE OF THE TECHNOLOGY, MEDIA, AND TELECOM SECTORS IN MARCH
AND APRIL, THE MARKET HAS BEEN TRADING IN A TIGHT RANGE OF 3-4%. FURTHERMORE,
THE EURO HAS BEEN WEAK, INFLATION IS PICKING UP, AND THERE HAS BEEN HEAVY NEW
EQUITY SUPPLY. HOWEVER, MOMENTUM IS IN A POSITIVE UPWARD TREND FOR THE EURO,
ANALYSTS ARE ANTICIPATING SUBSTANTIAL RETAIL FLOWS, THE INTEREST RATE CYCLE IS
TOPPING OUT ALONG WITH OIL PRICES, AND THE MANAGER IS HOPEFUL OF BETTER SUPPORT
FROM THE GLOBAL EQUITY MARKETS.
o SINCE THE END OF AUGUST, THE MANAGER HAS TRIMMED THE PORTFOLIO'S
OVERWEIGHT IN HEALTHCARE TO A SLIGHT UNDERWEIGHT POSITION. THE MANAGER INVESTED
THE PROCEEDS IN COMPANIES LIKE PORTUGAL TELECOM AND GRANADA COMPASS, TRYING TO
ACHIEVE A MORE DYNAMIC GROWTH PROFILE FOR THE PORTFOLIO. FINANCIALS ARE
OVERWEIGHT 10-12% VERSUS THE MSCI EUROPE INDEX.
Although the portfolio holdings and sectors listed above were current as of the
end of the annual period ended September 30, 2000, the Portfolio is actively
managed and the composition will vary.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE EUROPEAN EQUITY
PORTFOLIO AND THE MSCI EUROPE INDEX FROM INCEPTION AND AT EACH MONTH END.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS SERVICE CLASS INVESTOR A CLASS INVESTOR B CLASS INVESTOR C CLASS MSCI EUROPE
<S> <C> <C> <C> <C> <C> <C>
6/23/00 $10,000 $10,000 $9,500 $10,000 $10,000 $10,000
6/30/00 $10,340 $10,340 $9,823 $10,340 $10,340 $10,060
7/31/00 $10,050 $10,050 $9,548 $10,040 $10,040 $9,900
8/31/00 $9,921 $9,921 $9,425 $9,901 $9,911 $9,783
9/30/00 $9,511 $9,491 $9,026 $9,054 $9,386 $9,325
</TABLE>
FOR PERIOD ENDING SEPTEMBER 30, 2000
--------------------------------------------------------------------------------
TOTAL RETURN
From Inception
--------------
Institutional Class (4.90)%
Service Class (5.10)%
Investor A Class (Load Adjusted) (9.75)%
Investor A Class (NAV) (5.00)%
Investor B Class (Load Adjusted) (9.50)%
Investor B Class (NAV) (5.20)%
Investor C Class (Load Adjusted) (6.10)%
Investor C Class (NAV) (5.20)%
--------------------------------------------------------------------------------
THE INCEPTION DATES OF THE PORTFOLIO'S SHARE CLASSES WERE AS FOLLOWS:
INSTITUTIONAL, SERVICE, INVESTOR A, INVESTOR B, AND INVESTOR C SHARES WAS
6/23/00. SEE "NOTE ON PERFORMANCE INFORMATION" ON PAGE 18 FOR FURTHER
INFORMATION ON HOW PERFORMANCE DATA WAS CALCULATED.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
10
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
INTERNATIONAL EQUITY PORTFOLIO
TOTAL NET ASSETS (9/30/00):
$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 STOCK SPECIFIC, CONCENTRATED PORTFOLIO APPROACH IS PURSUED,
WITH THE PORTFOLIO INVESTING IN STOCKS WHOSE EARNINGS ARE IN A STRONG GROWTH
TREND, OR WHICH THE MANAGER BELIEVES ARE UNDERVALUED.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
o FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000, INTERNATIONAL EQUITY MARKETS
POSTED NEGATIVE RETURNS AS MEASURED BY THE EAFE INDEX, RETURNING -11.7%. THIS
POOR PERFORMANCE WAS IN STARK CONTRAST TO THE PREVIOUS SIX MONTHS, WHEN THE EAFE
INDEX RETURNED 16.96%.
o THE KEY TREND IN THE BEGINNING OF THE PERIOD WAS INVESTOR FOCUS ON THE
TECHNOLOGY, TELECOM AND MEDIA SECTORS. DURING THIS PERIOD, THE PORTFOLIO WAS
CONCENTRATED ON CONTINENTAL EUROPEAN EQUITIES, PARTICULARLY IN THE TECHNOLOGY
AND MEDIA SECTORS. THESE STOCKS WERE VERY STRONG IN THE YEAR-END RALLY, AND THIS
STRENGTH CONTINUED UNTIL THE END OF MARCH, WHEN PROFIT-TAKING IN THE NASDAQ
STARTED TO IMPACT OVERSEAS STOCKS. INVESTORS BEGAN TO TURN AWAY FROM TECHNOLOGY
RELATED STOCKS AND THE PORTFOLIO SUBSTANTIALLY REDUCED ITS EXPOSURE TO EUROPEAN
TELECOM STOCKS.
o THE PORTFOLIO'S ROTATION OUT OF TELECOM OPERATORS MOVED IN THE DIRECTION
OF DEFENSIVE SECTORS SUCH AS CONSUMER STAPLES, HEALTHCARE, FINANCIALS AND
ENERGY. THIS HELPED PERFORMANCE AS PHARMACEUTICALS, OIL AND GAS, FINANCIALS AND
UTILITIES GENERALLY PERFORMED WELL ACROSS THE INTERNATIONAL MARKETS.
o ALTHOUGH THE TREND AGAINST TECHNOLOGY WAS MOST NOTICEABLE IN JAPAN, SOME
OF THE OLD ECONOMY JAPANESE STOCKS PERFORMED VERY WELL. IN THE THIRD QUARTER,
THE STRONGEST PERFORMANCE IN THE PACIFIC CAME FROM HONG KONG, WHERE AN
OVERWEIGHT POSITION IN BANKS AND PROPERTY WAS BENEFICIAL.
Although the portfolio holdings and sectors listed above were current as of the
end of the annual period ended September 30, 2000, 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 FISCAL YEAR END.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS SERVICE CLASS INVESTOR A CLASS INVESTOR B CLASS INVESTOR C CLASS MSCI EAFE INDEX
<S> <C> <C> <C> <C> <C> <C>
4/27/92 $10,000 $10,000 $9,500 $10,000 $10,000 $10,000
6/30/92 $10,429 $10,429 $9,908 $10,430 $10,430 $9,529
9/30/92 $9,938 $9,938 $9,442 $9,939 $9,939 $9,682
12/31/92 $9,816 $9,816 $9,327 $9,817 $9,817 $9,317
3/31/93 $10,962 $10,962 $10,415 $10,963 $10,963 $10,443
6/30/93 $11,602 $11,602 $11,024 $11,604 $11,604 $11,502
9/30/93 $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
3/31/94 $13,591 $13,569 $12,886 $13,564 $13,564 $12,827
6/30/94 $13,643 $13,621 $12,916 $13,596 $13,596 $13,492
9/30/94 $14,050 $14,007 $13,293 $13,992 $13,992 $13,513
12/31/94 $13,468 $13,428 $12,732 $13,392 $13,392 $13,385
3/31/95 $13,371 $13,332 $12,630 $13,263 $13,263 $13,644
6/30/95 $13,854 $13,796 $13,069 $13,692 $13,692 $13,753
9/30/95 $14,394 $14,318 $13,560 $14,185 $14,185 $14,337
12/31/95 $14,807 $14,730 $13,954 $14,580 $14,580 $14,929
3/31/96 $15,165 $15,076 $14,271 $14,877 $14,877 $15,371
6/30/96 $15,849 $15,733 $14,893 $15,496 $15,496 $15,625
9/30/96 $15,548 $15,422 $14,587 $15,152 $15,152 $15,616
12/31/96 $16,070 $15,929 $15,068 $15,626 $15,626 $15,876
3/31/97 $15,960 $15,795 $14,942 $15,470 $15,470 $15,638
6/30/97 $17,699 $17,501 $16,530 $17,095 $17,095 $17,679
9/30/97 $17,869 $17,658 $16,679 $17,215 $17,215 $17,566
12/31/97 $16,914 $16,698 $15,758 $16,245 $16,245 $16,201
3/31/98 $19,350 $19,085 $18,010 $18,530 $18,530 $18,596
6/30/98 $19,487 $19,198 $18,093 $18,591 $18,591 $18,806
9/30/98 $16,611 $16,363 $15,419 $15,806 $15,806 $16,145
12/31/98 $19,525 $19,219 $18,124 $18,521 $18,521 $19,495
3/31/99 $19,819 $19,498 $18,361 $18,740 $18,740 $19,779
6/30/99 $20,668 $20,333 $19,110 $18,816 $19,501 $20,296
9/30/99 $21,337 $20,969 $19,710 $19,363 $20,068 $21,201
12/31/99 $25,569 $25,102 $23,585 $23,137 $23,979 $24,816
3/31/00 $24,479 $24,010 $22,557 $22,085 $22,872 $24,793
6/30/00 $23,437 $22,980 $21,573 $21,073 $21,838 $23,826
9/30/00 $21,365 $20,935 $19,647 $19,166 $19,861 $21,904
</TABLE>
<TABLE>
<CAPTION>
FOR PERIOD ENDING SEPTEMBER 30, 2000
----------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
1 Year 3 Year 5 Year From Inception
------ ------ ------ --------------
<S> <C> <C> <C> <C>
Institutional Class 0.12% 6.18% 8.24% 9.43%
Service Class (0.15)% 5.84% 7.90% 9.16%
Investor A Class (Load Adjusted) (5.29)% 3.81% 6.60% 8.34%
Investor A Class (NAV) (0.32)% 5.61% 7.70% 9.00%
Investor B Class (Load Adjusted) (5.51)% 3.81% 6.66% 8.48%
Investor B Class (NAV) (1.03)% 4.88% 6.97% 8.48%
Investor C Class (Load Adjusted) (1.98)% 4.88% 6.97% 8.48%
Investor C Class (NAV) (1.03)% 4.88% 6.97% 8.48%
----------------------------------------------------------------------------------------------------
<FN>
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 18 FOR FURTHER INFORMATION ON HOW
PERFORMANCE DATA WAS CALCULATED.
</FN>
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
11
<PAGE>
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BLACKROCK FUNDS
--------------------------------------------------------------------------------
INTERNATIONAL SMALL CAP EQUITY PORTFOLIO
TOTAL NET ASSETS (9/30/00):
$226.1 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, THAT 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 $5 BILLION.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
o INVESTORS BEGAN THE YEAR ALMOST SINGLE-MINDEDLY FOCUSED ON GROWTH,
PARTICULARLY IN THE ELECTRONIC TECHNOLOGY, SOFTWARE, DATA AND TELECOMMUNICATIONS
SERVICES, COMMERCIAL SERVICES AND BIOTECHNOLOGY SECTORS. HOWEVER, AS THE YEAR
MOVED ON, VALUE STOCKS CAME BACK INTO PLAY AS INVESTORS BECAME WARY OF THE
TECHNOLOGY, TELECOM, AND BIOTECHNOLOGY INDUSTRIES AND INTEREST SHIFTED TO
TRADITIONAL VALUATIONS.
o AS MARKET SENTIMENT SHIFTED, THE PORTFOLIO WAS HURT BY ITS OVERWEIGHT IN
TECHNOLOGY AND TELECOM. A LACK OF VIABLE AGGRESSIVE GROWTH INVESTMENT
OPPORTUNITIES OUTSIDE OF TECHNOLOGY LED TO THE PORTFOLIO'S UNUSUAL CONCENTRATION
IN THIS SECTOR. ALTHOUGH GLOBAL TECHNOLOGY SHARES STAGED A REBOUND TOWARDS THE
END OF THE SECOND QUARTER, TELECOM CONTINUED TO COME UNDER PRESSURE DUE TO
CONCERNS ABOUT OVER-SPENDING ON WIRELESS LICENSES AND COMPETITION.
Although the portfolio holdings and sectors listed above were current as of the
end of the annual period ended September 30, 2000, 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 EX-US FROM INCEPTION
AND AT EACH QUARTER-END.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS SERVICE CLASS INVESTOR A CLASS INVESTOR B CLASS INVESTOR C CLASS SALOMON EMW EXUS
<S> <C> <C> <C> <C> <C> <C>
9/30/97 $10,000 $10,000 $9,500 $10,000 $10,000 $10,000
12/31/97 $9,458 $9,447 $8,996 $9,458 $9,458 $8,943
3/31/98 $11,354 $11,343 $10,786 $11,324 $11,324 $10,431
6/30/98 $11,966 $11,954 $11,348 $11,896 $11,896 $10,393
9/30/98 $9,588 $9,587 $9,090 $9,508 $9,508 $8,821
12/31/98 $10,510 $10,506 $9,934 $10,367 $10,367 $9,982
3/31/99 $10,736 $10,709 $10,125 $10,568 $10,568 $10,123
6/30/99 $12,689 $12,649 $11,960 $12,452 $12,452 $10,746
9/30/99 $14,563 $14,488 $13,699 $14,247 $14,247 $11,292
12/31/99 $26,452 $26,316 $24,883 $25,829 $25,829 $12,329
3/31/00 $32,969 $32,748 $30,952 $32,088 $32,088 $12,579
6/30/00 $28,436 $28,239 $26,686 $27,605 $27,605 $12,359
9/30/00 $27,964 $27,756 $26,206 $26,255 $27,067 $11,856
</TABLE>
FOR PERIOD ENDING SEPTEMBER 30, 2000
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
1 Year 3 Year From Inception
------ ------ --------------
Institutional Class 92.02% 41.15% 40.78%
Service Class 91.56% 40.78% 40.41%
Investor A Class (Load Adjusted) 81.68% 38.06% 37.67%
Investor A Class (NAV) 91.30% 40.42% 40.05%
Investor B Class (Load Adjusted) 85.48% 38.85% 38.58%
Investor B Class (NAV) 89.98% 39.45% 39.09%
Investor C Class (Load Adjusted) 88.98% 39.45% 39.09%
Investor C Class (NAV) 89.98% 39.45% 39.09%
--------------------------------------------------------------------------------
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 18 FOR FURTHER
INFORMATION ON HOW PERFORMANCE DATA WAS CALCULATED.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
12
<PAGE>
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BLACKROCK FUNDS
--------------------------------------------------------------------------------
ASIA PACIFIC EQUITY PORTFOLIO
TOTAL NET ASSETS (9/30/00):
$2.9 MILLION
PERFORMANCE BENCHMARK:
MSCI ALL COUNTRY ASIA PACIFIC INDEX
INVESTMENT APPROACH:
PURSUES LONG-TERM CAPITAL APPRECIATION BY INVESTING PRIMARILY IN EQUITY
SECURITIES ISSUED BY ASIA PACIFIC REGION COMPANIES WITH MARKET CAPITALIZATION OF
AT LEAST $500 MILLION, WHOSE EARNINGS, THE MANAGER BELIEVES, ARE IN A STRONG
GROWTH TREND OR WHOSE STOCK THE MANAGER BELIEVES IS UNDERVALUED.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
o THE PORTFOLIO OUTPERFORMED ITS BENCHMARK SINCE ITS INCEPTION IN JUNE
PRIMARILY DUE TO ITS OVERWEIGHT IN JAPAN. AS THE U.S. ECONOMY SLOWED, DEMAND FOR
JAPANESE STOCKS ROSE, BOOSTING THEIR PERFORMANCE.
o WITHIN JAPAN, THE PORTFOLIO HAS INVESTED IN TECHNOLOGY, MACHINERY AND
COMMUNICATIONS SECTORS. SHARP, TOPPAN PRINTING AND NTT TOCOMO ARE ALL COMPANIES
IN THESE SECTORS. IN ADDITION, THE PORTFOLIO IS OVERWEIGHT IN JAPANESE
FINANCIALS LIKE BANK OF TOKYO AND SUMITOMO BANK.
o THE PORTFOLIO'S UNDERWEIGHT IN EMERGING MARKETS HAS ALSO ADDED TO ITS
PERFORMANCE AS THE SMALLER ASIAN MARKETS CONTINUE TO STRUGGLE DUE TO A LARGE
MIGRATION OF INVESTORS OUT OF THE SMALLER ASIAN ECONOMIES.
Although the portfolio holdings and sectors listed above were current as of the
end of the annual period ended September 30, 2000, the Portfolio is actively
managed and the composition will vary.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE ASIA PACIFIC EQUITY
PORTFOLIO AND THE MSCI ALL COUNTRY ASIA PACIFIC INDEX FROM INCEPTION
AND AT EACH MONTH END.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS SERVICE CLASS INVESTOR A CLASS INVESTOR B CLASS INVESTOR C CLASS MSCI ALL COUNTRY ASIA PACIFIC
<S> <C> <C> <C> <C> <C> <C>
6/23/00 $10,000 $10,000 $9,500 $10,000 $10,000 $10,000
6/30/00 $10,190 $10,190 $9,690 $10,190 $10,190 $10,100
7/31/00 $9,390 $9,390 $8,892 $9,390 $9,390 $9,175
8/31/00 $9,870 $9,861 $9,338 $9,861 $9,861 $9,537
9/30/00 $9,250 $9,211 $8,749 $8,806 $9,138 $8,899
</TABLE>
FOR PERIOD ENDING SEPTEMBER 30, 2000
--------------------------------------------------------------------------------
TOTAL RETURN
From Inception
--------------
Institutional Class (7.50)%
Service Class (7.90)%
Investor A Class (Load Adjusted) (12.51)%
Investor A Class (NAV) (7.90)%
Investor B Class (Load Adjusted) (11.90)%
Investor B Class (NAV) (7.80)%
Investor C Class (Load Adjusted) (8.60)%
Investor C Class (NAV) (7.70)%
--------------------------------------------------------------------------------
THE INCEPTION DATES OF THE PORTFOLIO'S SHARE CLASSES WERE AS FOLLOWS:
INSTITUTIONAL, SERVICE, INVESTOR A, INVESTOR B, AND INVESTOR C SHARES WAS
6/23/00. SEE "NOTE ON PERFORMANCE INFORMATION" ON PAGE 18 FOR FURTHER
INFORMATION ON HOW PERFORMANCE DATA WAS CALCULATED.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
13
<PAGE>
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BLACKROCK FUNDS
--------------------------------------------------------------------------------
INTERNATIONAL EMERGING MARKETS PORTFOLIO
TOTAL NET ASSETS (9/30/00):
$129.6 MILLION
PERFORMANCE BENCHMARK:
MORGAN STANLEY CAPITAL INTERNATIONAL EMERGING MARKETS FREE INDEX ("EMF")
INVESTMENT APPROACH:
PURSUES LONG-TERM CAPITAL APPRECIATION BY INVESTING IN 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 STOCK SPECIFIC, CONCENTRATED PORTFOLIO
APPROACH IS PURSUED WITH THE PORTFOLIO INVESTING IN STOCKS WHOSE EARNINGS ARE IN
A STRONG GROWTH TREND, OR WHICH THE MANAGER BELIEVES ARE UNDERVALUED.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
o THE TREND IN EMERGING MARKETS MIRRORED THAT IN DEVELOPED MARKETS OVER THE
SIX MONTHS ENDED MARCH 31, 2000, BUT THE EQUITY RALLY IN THE FOURTH QUARTER OF
1999 WAS MUCH MORE POWERFUL. THE EQUITY RALLY ENDED IN THE SECOND QUARTER OF
2000, HOWEVER, WHEN EMERGING MARKETS SUCCUMBED TO NASDAQ-RELATED PROFIT TAKING.
ASIA WAS WORST AFFECTED BY THE SELL-OFF WITH A DECLINE OF 13% IN THE SECOND
QUARTER. ASIA ALSO BORE THE BRUNT OF THE WEAKNESS IN EMERGING MARKETS IN THE
THIRD QUARTER. ASIAN MARKETS FELL 22% IN THE THIRD QUARTER, IMPACTED BY
CONTINUED PROFIT-TAKING IN TECHNOLOGY STOCKS AND A RISING RISK PREMIUM AS
INVESTORS BECAME CONCERNED ABOUT THE IMPACT OF HIGHER OIL PRICES ON GLOBAL
ECONOMIC GROWTH.
o THE PORTFOLIO HAS ADOPTED A DEFENSIVE POSTURE IN RECENT MONTHS WITH AN
ABOVE AVERAGE CASH POSITION AND AN UNDERWEIGHT POSITION IN ASIA, A MODEST
OVERWEIGHTING IN LATIN AMERICA (THROUGH BRAZIL AND MEXICO) AND A NEUTRAL
WEIGHTING IN EUROPE, THE MIDDLE EAST AND AFRICA. ALTHOUGH MARKETS IN EUROPE, THE
MIDDLE EAST AND AFRICA HAVE HELD UP VERY WELL, THEIR PERFORMANCE HAS BEEN VERY
COUNTRY SPECIFIC WITH RUSSIA, ISRAEL, AND SOUTH AFRICA DOING WELL BUT THE OTHER
MARKETS IN THE REGIONS GENERALLY DOING POORLY. RUSSIA HAS BEEN HELPED BY STRONG
OIL PRICES. SOUTH AFRICA HAS DONE WELL IN PLATINUM AND DIAMOND STOCKS. THE BIG
SURPRISE HAS BEEN ISRAEL, WHERE TECH-RELATED STOCKS HAVE GENERALLY BUCKED THE
TECHNOLOGY TRENDS ELSEWHERE AND PRODUCED VERY POSITIVE RETURNS DURING THE THIRD
QUARTER.
Although the portfolio holdings and sectors listed above were current as of the
end of the annual period ended September 30, 2000, 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 FISCAL YEAR END.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS SERVICE CLASS INVESTOR A CLASS INVESTOR B CLASS INVESTOR C CLASS MSCI EMERGING FREE INDEX
<S> <C> <C> <C> <C> <C> <C>
6/17/94 $10,000 $10,000 $9,500 $10,000 $10,000 $10,000
6/30/94 $9,960 $9,960 $9,462 $9,960 $9,960 $10,058
9/30/94 $10,560 $10,550 $10,013 $10,540 $10,540 $12,076
12/31/94 $9,142 $9,131 $8,665 $9,121 $9,121 $10,340
3/31/95 $8,071 $8,060 $7,637 $8,039 $8,039 $9,060
6/30/95 $8,758 $8,736 $8,272 $8,707 $8,707 $10,001
9/30/95 $8,478 $8,450 $7,997 $8,418 $8,418 $9,937
12/31/95 $7,992 $7,955 $7,529 $7,925 $7,925 $9,803
3/31/96 $8,810 $8,760 $8,291 $8,727 $8,727 $10,413
6/30/96 $9,327 $9,267 $8,770 $9,221 $9,221 $10,848
9/30/96 $9,069 $9,008 $8,515 $8,943 $8,943 $10,456
12/31/96 $8,973 $8,905 $8,418 $8,820 $8,820 $10,394
3/31/97 $10,197 $10,114 $9,552 $9,743 $9,743 $11,274
6/30/97 $10,954 $10,856 $10,244 $10,436 $10,436 $12,276
9/30/97 $10,080 $9,976 $9,411 $9,573 $9,573 $11,175
12/31/97 $8,160 $8,073 $7,611 $7,730 $7,730 $9,217
3/31/98 $8,117 $8,021 $7,561 $7,659 $7,659 $9,788
6/30/98 $6,286 $6,218 $5,845 $5,913 $5,913 $7,478
9/30/98 $4,677 $4,627 $4,349 $4,391 $4,391 $5,832
12/31/98 $5,171 $5,101 $4,798 $4,841 $4,841 $6,881
3/31/99 $5,406 $5,334 $5,007 $5,045 $5,045 $7,737
6/30/99 $7,084 $6,978 $6,564 $6,597 $6,597 $9,625
9/30/99 $6,507 $6,409 $6,025 $6,046 $6,046 $9,129
12/31/99 $8,726 $8,584 $8,065 $8,068 $8,068 $11,453
3/31/00 $8,597 $8,457 $7,944 $7,935 $7,935 $11,731
6/30/00 $7,660 $7,524 $7,073 $7,036 $7,036 $10,539
9/30/00 $6,626 $6,507 $6,101 $6,065 $6,056 $9,169
</TABLE>
<TABLE>
<CAPTION>
FOR PERIOD ENDING SEPTEMBER 30, 2000
----------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
1 Year 3 Year 5 Year From Inception
------ ------ ------ --------------
<S> <C> <C> <C> <C>
Institutional Class 1.82% (13.06)% (4.81)% (6.33)%
Service Class 1.53% (13.28)% (5.09)% (6.60)%
Investor A Class (Load Adjusted) (3.83)% (14.93)% (6.23)% (7.56)%
Investor A Class (NAV) 1.27% (13.45)% (5.27)% (6.79)%
Investor B Class (Load Adjusted) (4.16)% (15.43)% (6.39)% (7.26)%
Investor B Class (NAV) 0.34% (14.11)% (5.87)% (7.26)%
Investor C Class (Load Adjusted) (0.83)% (14.16)% (5.90)% (7.29)%
Investor C Class (NAV) 0.17% (14.16)% (5.90)% (7.29)%
----------------------------------------------------------------------------------------------------
<FN>
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 18 FOR FURTHER INFORMATION ON HOW PERFORMANCE DATA WAS
CALCULATED.
</FN>
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
14
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
SELECT EQUITY PORTFOLIO
TOTAL NET ASSETS (9/30/00):
$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 OPPORTUNITIES.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
o FROM SEPTEMBER 1999 THROUGH FEBRUARY 2000, THE U.S. EQUITY MARKET FOCUSED
ALMOST EXCLUSIVELY ON GROWTH ISSUES; IN MARCH, THE VOLATILITY OF THE EQUITY
MARKET CAUSED INVESTORS TO TURN TOWARD U.S. LARGE-CAP VALUE STOCKS. THE
PORTFOLIO'S HOLDINGS ARE CURRENTLY WELL POSITIONED FOR A SLOWING ECONOMY WHERE
STABLE EARNINGS GROWTH IS FAVORED IN LIGHT OF THE SEPTEMBER 2000 EARNINGS
SHORTFALLS AND CONCERNS OF UNSUSTAINABLE GROWTH IN FASTER-GROWING SEGMENTS.
o TECHNOLOGY STOCKS CONTINUED TO GAIN THROUGH FEBRUARY, BUT EXPERIENCED AN
ABRUPT DROP IN MARCH. THIS SIGNALED A SHIFT IN MARKET SENTIMENT AS INVESTORS
TURNED TO FINANCIAL ORIENTED ISSUES AND BASIC MATERIALS STOCKS. ENERGY AND
UTILITIES CONTINUED TO DO WELL ON THE STRENGTH OF RISING ENERGY COSTS. IN EARLY
MARCH 2000, THE PORTFOLIO OVERWEIGHTED TECHNOLOGY AND UNDERWEIGHTED CONSUMER
NONCYCLICAL STOCKS BASED ON THE STRENGTH OF EARNINGS GROWTH IN TECHNOLOGY. AS IT
TURNED OUT, THE TIMING WAS POOR. THE MANAGER CONTINUES TO BELIEVE THAT FOCUSING
ON STRONG EARNINGS GROWTH WILL LEAD TO OUTPERFORMANCE.
o AS OF SEPTEMBER 30, 2000 THE PORTFOLIO'S ONE-YEAR RETURN TRAILED THE S&P
500 DUE TO AN EMPHASIS ON GROWTH, WHICH UNDERPERFORMED THIS PERIOD. THE MANAGER
HAS REDUCED OUR POSITION IN TECHNOLOGY TO A SLIGHT OVERWEIGHT VERSUS THE
BENCHMARK, DUE TO THE VOLATILITY OF THIS SECTOR. ON THE VALUE SIDE, THE MANAGER
IS MOVING OUT OF MORE CYCLICAL STOCKS TO STOCKS WITH MORE STABLE EARNINGS AND
LOW VALUATIONS.
Although the portfolio holdings and sectors listed above were current as of the
end of the annual period ended September 30, 2000, 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 FISCAL YEAR END.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS SERVICE CLASS INVESTOR A CLASS INVESTOR B CLASS INVESTOR C CLASS S&P 500 INDEX
<S> <C> <C> <C> <C> <C> <C>
9/13/93 $10,000 $10,000 $9,550 $10,000 $10,000 $10,000
9/30/93 $9,970 $9,970 $9,521 $9,970 $9,970 $10,058
12/31/93 $10,114 $10,108 $9,653 $10,108 $10,108 $10,232
3/31/94 $9,730 $9,718 $9,278 $9,715 $9,715 $9,844
6/30/94 $9,784 $9,766 $9,331 $9,770 $9,770 $9,886
9/30/94 $10,148 $10,124 $9,659 $10,114 $10,114 $10,369
12/31/94 $9,987 $9,958 $9,498 $9,945 $9,945 $10,367
3/31/95 $10,911 $10,872 $10,366 $10,855 $10,855 $11,377
6/30/95 $11,704 $11,643 $11,098 $11,621 $11,621 $12,463
9/30/95 $12,561 $12,497 $11,908 $12,470 $12,470 $13,454
12/31/95 $13,312 $13,223 $12,595 $13,189 $13,189 $14,264
3/31/96 $13,989 $13,898 $13,221 $13,844 $13,844 $15,030
6/30/96 $14,630 $14,513 $13,812 $14,443 $14,443 $15,705
9/30/96 $15,054 $14,924 $14,197 $14,821 $14,821 $16,190
12/31/96 $16,469 $16,316 $15,528 $16,160 $16,160 $17,539
3/31/97 $16,904 $16,735 $15,922 $16,084 $16,084 $18,009
6/30/97 $19,856 $19,649 $18,674 $19,367 $19,367 $21,152
9/30/97 $21,448 $21,210 $20,152 $20,852 $20,852 $22,761
12/31/97 $21,648 $21,392 $20,317 $20,986 $20,986 $23,407
3/31/98 $24,633 $24,329 $23,098 $23,812 $23,812 $26,675
6/30/98 $25,175 $24,847 $23,583 $24,272 $24,272 $27,561
9/30/98 $22,320 $22,010 $20,883 $21,456 $21,456 $24,843
12/31/98 $26,974 $26,583 $25,204 $25,849 $25,849 $30,137
3/31/99 $28,177 $27,748 $26,315 $26,913 $26,913 $31,632
6/30/99 $30,341 $29,859 $28,299 $27,936 $28,900 $33,821
9/30/99 $28,339 $27,865 $26,403 $26,003 $26,900 $31,734
12/31/99 $32,578 $32,000 $30,316 $29,893 $30,825 $36,456
3/31/00 $33,109 $32,509 $30,798 $30,294 $31,238 $37,293
6/30/00 $31,695 $31,088 $29,437 $28,915 $29,816 $36,222
9/30/00 $30,649 $30,043 $28,421 $27,869 $28,734 $35,871
</TABLE>
<TABLE>
<CAPTION>
FOR PERIOD ENDING SEPTEMBER 30, 2000
----------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
1 Year 3 Year 5 Year From Inception
------ ------ ------- --------------
<S> <C> <C> <C> <C>
Institutional Class 8.14% 12.63% 19.53% 17.22%
Service Class 7.81% 12.31% 19.18% 16.90%
Investor A Class (Load Adjusted) 2.78% 10.44% 17.91% 15.97%
Investor A Class (NAV) 7.64% 12.14% 19.00% 16.73%
Investor B Class (Load Adjusted) 2.32% 10.33% 17.97% 16.15%
Investor B Class (NAV) 6.82% 11.28% 18.17% 16.15%
Investor C Class (Load Adjusted) 5.77% 11.26% 18.16% 16.14%
Investor C Class (NAV) 6.77% 11.26% 18.16% 16.14%
----------------------------------------------------------------------------------------------------
<FN>
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 18 FOR FURTHER INFORMATION ON HOW
PERFORMANCE DATA WAS CALCULATED.
</FN>
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
15
<PAGE>
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BLACKROCK FUNDS
--------------------------------------------------------------------------------
INDEX EQUITY PORTFOLIO
ADVISOR TO THE INDEX MASTER PORTFOLIO:
DIMENSIONAL FUND ADVISORS INC.
TOTAL NET ASSETS (9/30/00):
$2.0 BILLION
PERFORMANCE BENCHMARK:
S&P 500 INDEX
INVESTMENT APPROACH:
UTILIZES A PASSIVE INVESTMENT STYLE THAT PURSUES THE REPLICATION OF THE
RETURNS OF THE S&P 500 INDEX.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
o 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.
o ACCORDINGLY, THE PORTFOLIO POSTED A TOTAL RETURN SUBSTANTIALLY SIMILAR TO
THAT OF THE S&P 500 INDEX.
Although the portfolio holdings and sectors listed above were current as of the
end of the annual period ended September 30, 2000, the Portfolio is actively
managed and the composition will vary.
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 FISCAL YEAR END.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS SERVICE CLASS INVESTOR A CLASS INVESTOR B CLASS INVESTOR C CLASS S&P 500 INDEX
<S> <C> <C> <C> <C> <C> <C>
4/20/92 $10,000 $10,000 $9,700 $10,000 $10,000 $10,000
6/30/92 $9,870 $9,870 $9,574 $9,870 $9,870 $9,899
9/30/92 $10,161 $10,161 $9,857 $10,161 $10,161 $10,212
12/31/92 $10,659 $10,659 $10,339 $10,659 $10,659 $10,726
3/31/93 $11,118 $11,118 $10,784 $11,118 $11,118 $11,194
6/30/93 $11,139 $11,139 $10,805 $11,139 $11,139 $11,249
9/30/93 $11,423 $11,417 $11,073 $11,415 $11,415 $11,539
12/31/93 $11,676 $11,664 $11,308 $11,657 $11,657 $11,806
3/31/94 $11,197 $11,181 $10,824 $11,159 $11,159 $11,359
6/30/94 $11,254 $11,231 $10,878 $11,214 $11,214 $11,406
9/30/94 $11,771 $11,739 $11,366 $11,718 $11,718 $11,964
12/31/94 $11,770 $11,731 $11,357 $11,708 $11,708 $11,962
3/31/95 $12,900 $12,850 $12,415 $12,799 $12,799 $13,127
6/30/95 $14,134 $14,070 $13,613 $14,034 $14,034 $14,379
9/30/95 $15,221 $15,143 $14,636 $15,088 $15,088 $15,522
12/31/95 $16,130 $16,036 $15,505 $15,985 $15,985 $16,457
3/31/96 $16,959 $16,836 $16,276 $16,763 $16,763 $17,339
6/30/96 $17,702 $17,562 $16,974 $17,466 $17,466 $18,117
9/30/96 $18,237 $18,089 $17,462 $17,946 $17,946 $18,677
12/31/96 $19,737 $19,563 $18,891 $19,371 $19,371 $20,235
3/31/97 $20,250 $20,055 $19,359 $19,422 $19,422 $20,776
6/30/97 $23,757 $23,512 $22,689 $22,722 $22,722 $24,401
9/30/97 $25,529 $25,248 $24,359 $24,324 $24,324 $26,258
12/31/97 $26,234 $25,924 $24,987 $24,927 $24,927 $27,004
3/31/98 $29,880 $29,497 $28,421 $28,305 $28,305 $30,773
6/30/98 $30,848 $30,429 $29,336 $29,137 $29,137 $31,795
9/30/98 $27,804 $27,404 $26,396 $26,182 $26,182 $28,660
12/31/98 $33,723 $33,219 $31,987 $31,657 $31,657 $34,768
3/31/99 $35,342 $34,791 $33,490 $33,078 $33,078 $36,492
6/30/99 $37,766 $37,153 $35,734 $35,248 $35,248 $39,017
9/30/99 $35,409 $34,790 $33,454 $32,932 $32,932 $36,610
12/31/99 $40,675 $39,925 $38,386 $36,573 $37,704 $42,120
3/31/00 $41,598 $40,751 $39,192 $36,164 $38,436 $43,084
6/30/00 $40,392 $39,525 $37,996 $35,003 $37,190 $41,848
9/30/00 $40,049 $39,157 $37,613 $34,583 $36,755 $41,442
</TABLE>
<TABLE>
<CAPTION>
FOR PERIOD ENDING SEPTEMBER 30, 2000
----------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
1 Year 3 Year 5 Year From Inception
------- ------ ------ --------------
<S> <C> <C> <C> <C>
Institutional Class 13.10% 16.20% 21.35% 17.84%
Service Class 12.66% 15.79% 20.95% 17.53%
Investor A Class (Load Adjusted) 9.06% 14.42% 20.04% 16.96%
Investor A Class (NAV) 12.43% 15.58% 20.78% 17.39%
Investor B Class (Load Adjusted) 7.11% 13.86% 19.78% 16.92%
Investor B Class (NAV) 11.61% 14.75% 19.98% 16.92%
Investor C Class (Load Adjusted) 10.61% 14.75% 19.98% 16.92%
Investor C Class (NAV) 11.61% 14.75% 19.98% 16.92%
----------------------------------------------------------------------------------------------------
<FN>
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 18 FOR FURTHER INFORMATION ON HOW
PERFORMANCE DATA WAS CALCULATED.
</FN>
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
16
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
BALANCED PORTFOLIO
TOTAL NET ASSETS (9/30/00):
$847.5 MILLION
PERFORMANCE BENCHMARK:
Equity Portion: S&P 500 INDEX
Fixed Income Portion: LEHMAN BROTHERS AGGREGATE INDEX
INVESTMENT APPROACH:
PURSUES LONG TERM CAPITAL APPRECIATION BY INVESTING IN A BLEND OF EQUITY
AND FIXED INCOME SECURITIES TO DELIVER RETURNS THROUGH THE COMBINATION OF
CAPITAL APPRECIATION AND CURRENT INCOME. THE PORTFOLIO NORMALLY WILL MAINTAIN AT
MINIMUM A 25% ALLOCATION TO FIXED INCOME SECURITIES.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
o THE PORTFOLIO HAD VERY STRONG PERFORMANCE IN THE FOURTH QUARTER OF 1999
DUE TO STOCK SELECTION IN THE BASIC MATERIALS, CAPITAL GOODS, FINANCIAL AND
TRANSPORTATION SECTORS. IN 2000, POSITIVE PERFORMANCE WAS ATTRIBUTED TO THE
PORTFOLIO'S OVERWEIGHT IN BROKERAGE AND COMPUTER HARDWARE STOCKS. IN EARLY MARCH
2000, THE PORTFOLIO OVERWEIGHTED TECHNOLOGY AND UNDERWEIGHTED CONSUMER
NONCYCLICAL STOCKS BASED ON THE STRENGTH OF EARNINGS GROWTH IN TECHNOLOGY. AS IT
TURNED OUT, THE TIMING WAS POOR.
o WE CONTINUE TO BELIEVE THAT FOCUSING ON STRONG EARNINGS GROWTH WILL LEAD
TO OUTPERFORMANCE. WE MAINTAINED THE PORTFOLIO'S ASSET ALLOCATION OF 65% EQUITY
SECURITIES AND 35% FIXED INCOME SECURITIES OVER THE PERIOD. THE EQUITY PORTION
OF THE PORTFOLIO UNDERPERFORMED ITS BENCHMARK DURING THE PERIOD BECAUSE OF ITS
EMPHASIS ON "GROWTH" STOCKS. THE PORTFOLIO CONTINUES TO FOCUS ON COMPANIES WITH
ABOVE AVERAGE EARNINGS GROWTH AND STRONG INDUSTRY POSITIONS AND TO A LESSER
EXTENT, VALUE COMPANIES WITH ATTRACTIVE VALUATIONS AND EARNINGS VISIBILITY.
o WITHIN THE FIXED INCOME PORTION OF THE PORTFOLIO, WE MAINTAINED AN
OVERWEIGHT POSITION VERSUS THE INDEX THROUGHOUT THE YEAR IN SPREAD SECTORS,
PARTICULARLY MORTGAGES, ASSET-BACKED, AND COMMERCIAL MORTGAGE BACKED SECURITY
(CMBS) SECTORS, WHICH OFFERED ATTRACTIVE YIELDS AND TOTAL RETURN OPPORTUNITIES.
THE PORTFOLIO'S RETURNS SUFFERED DUE TO THE OVERWEIGHT IN SPREAD PRODUCT, AS THE
GOVERNMENT BUYBACK OF TREASURIES CAUSED AN INVERTED YIELD CURVE RESULTING IN
TREASURIES OUTPERFORMING SPREAD PRODUCT. CURRENTLY, THE PORTFOLIO IS UNDERWEIGHT
TREASURIES VERSUS THE INDEX IN FAVOR OF CORPORATES IN ANTICIPATION OF A
NORMALIZING YIELD CURVE AND A LOWER VALUATION OF TREASURIES. WE ALSO DECREASED
OUR MORTGAGE ALLOCATION, BUT MAINTAINED A RELATIVE OVERWEIGHT VERSUS THE
BENCHMARK. WE CONTINUE TO FAVOR SPREAD PRODUCT VERSUS TREASURIES, SINCE YIELDS
ARE DOWN AND THE PRICE IS RICH, SO WE WILL MAINTAIN A VERY UNDERWEIGHT POSITION
IN TREASURIES RELATIVE TO THE BENCHMARK.
Although the portfolio holdings and sectors listed above were current as of the
end of the annual period ended September 30, 2000, 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% LEHMAN AGGREGATE INDEX FROM INCEPTION AND AT
EACH FISCAL YEAR END.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
65% S&P 500,
INSTITUTIONAL CLASS SERVICE CLASS INVESTOR A CLASS INVESTOR B CLASS INVESTOR C CLASS 35% LEHMAN AGGREGATE INDEX
<S> <C> <C> <C> <C> <C> <C>
5/14/90 $10,000 $10,000 $9,550 $10,000 $10,000 $10,000
6/30/90 $10,240 $10,240 $9,779 $10,240 $10,240 $9,726
9/30/90 $9,236 $9,236 $8,821 $9,236 $9,236 $10,185
12/31/90 $9,998 $9,998 $9,548 $9,998 $9,998 $9,258
3/31/91 $10,827 $10,827 $10,340 $10,827 $10,827 $9,898
6/30/91 $10,796 $10,796 $10,310 $10,796 $10,796 $10,866
9/30/91 $11,459 $11,459 $10,943 $11,459 $11,459 $10,858
12/31/91 $12,243 $12,243 $11,692 $12,243 $12,243 $11,392
3/31/92 $12,165 $12,165 $11,618 $12,165 $12,165 $12,151
6/30/92 $12,469 $12,469 $11,908 $12,469 $12,469 $11,848
9/30/92 $13,197 $13,197 $12,603 $13,197 $13,197 $12,102
12/31/92 $13,690 $13,690 $13,074 $13,690 $13,690 $12,471
3/31/93 $14,160 $14,160 $13,523 $14,160 $14,160 $12,830
6/30/93 $14,481 $14,481 $13,829 $14,481 $14,481 $13,322
9/30/93 $14,894 $14,888 $14,215 $14,885 $14,885 $13,430
12/31/93 $15,309 $15,294 $14,600 $15,288 $15,288 $13,716
3/31/94 $14,821 $14,797 $14,109 $14,774 $14,774 $13,864
6/30/94 $14,647 $14,615 $13,941 $14,598 $14,598 $13,328
9/30/94 $14,876 $14,833 $14,144 $14,810 $14,810 $13,254
12/31/94 $14,827 $14,776 $14,082 $14,725 $14,725 $13,636
3/31/95 $15,802 $15,741 $14,996 $15,666 $15,666 $13,590
6/30/95 $16,989 $16,910 $16,105 $16,788 $16,788 $14,627
9/30/95 $17,900 $17,789 $16,950 $17,640 $17,640 $15,778
12/31/95 $18,937 $18,805 $17,914 $18,613 $18,613 $16,629
3/31/96 $19,418 $19,285 $18,351 $19,033 $19,033 $17,464
6/30/96 $20,002 $19,837 $18,884 $19,547 $19,547 $17,902
9/30/96 $20,484 $20,301 $19,320 $19,956 $19,956 $18,385
12/31/96 $21,872 $21,661 $20,609 $21,245 $21,245 $18,803
3/31/97 $22,143 $21,913 $20,844 $21,452 $21,452 $19,951
6/30/97 $25,000 $24,728 $23,517 $24,272 $24,272 $20,202
9/30/97 $26,306 $25,999 $24,721 $25,462 $25,462 $22,677
12/31/97 $27,079 $26,743 $25,423 $26,126 $26,126 $23,976
3/31/98 $29,565 $29,163 $27,717 $28,433 $28,433 $26,287
6/30/98 $30,591 $30,169 $28,645 $29,326 $29,326 $27,076
9/30/98 $29,153 $28,712 $27,242 $27,889 $27,854 $25,771
12/31/98 $33,033 $32,517 $30,862 $31,597 $31,475 $29,293
3/31/99 $33,968 $33,414 $31,692 $32,449 $32,271 $30,184
6/30/99 $35,014 $34,420 $32,621 $33,345 $33,162 $31,325
9/30/99 $33,467 $32,874 $31,163 $31,781 $31,607 $30,241
12/31/99 $36,673 $35,997 $34,120 $34,714 $34,524 $33,141
3/31/00 $37,505 $36,789 $34,847 $35,391 $35,197 $33,585
6/30/00 $28,804 $27,997 $26,344 $26,083 $25,940 $29,353
9/30/00 $28,444 $27,624 $25,996 $25,687 $25,546 $29,230
</TABLE>
<TABLE>
<CAPTION>
FOR PERIOD ENDING SEPTEMBER 30, 2000
----------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
1 Year 3 Year 5 Year 10 Year From Inception
------ ------ ------ ------- --------------
<S> <C> <C> <C> <C> <C>
Institutional Class 8.10% 11.21% 15.11% 14.63% 13.17%
Service Class 7.78% 10.87% 14.77% 14.39% 12.95%
Investor A Class (Load Adjusted) 2.80% 9.02% 13.57% 13.76% 12.35%
Investor A Class (NAV) 7.65% 10.71% 14.62% 14.29% 12.85%
Investor B Class (Load Adjusted) 2.28% 8.87% 13.50% 13.23% 12.36%
Investor B Class (NAV) 6.78% 9.85% 13.74% 13.78% 12.36%
Investor C Class (Load Adjusted) 5.78% 9.85% 13.74% 13.78% 12.36%
Investor C Class (NAV) 6.78% 9.85% 13.74% 13.78% 12.36%
----------------------------------------------------------------------------------------------------
<FN>
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 18 FOR FURTHER INFORMATION ON HOW
PERFORMANCE DATA WAS CALCULATED.
</FN>
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
17
<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, Select Equity and
Balanced Portfolios -- 4.50%; Micro-Cap Equity, Global Science & Technology,
European Equity, International Equity, International Emerging Markets,
International Small Cap Equity and Asia Pacific Equity Portfolios -- 5.00%;
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.
--------------------------------------------------------------------------------
IMPORTANT TAX INFORMATION FOR SHAREHOLDERS OF THE BLACKROCK EQUITY PORTFOLIOS
(UNAUDITED)
During the fiscal year ended September 30, 2000, the following Portfolios
of the BlackRock Funds declared the following dividends from net realized
capital gains:
SHORT-TERM LONG-TERM
CAPITAL GAIN CAPITAL GAIN
PER SHARE PER SHARE
------------ ------------
Large Cap Value Equity Portfolio ............. $0.1409 $1.1891
Large Cap Growth Equity Portfolio ............ 0.2680 3.3552
Mid-Cap Value Equity Portfolio ............... 0.0087 0.2406
Mid-Cap Growth Equity Portfolio .............. 5.9072 0.7133
Small Cap Growth Equity Portfolio ............ 2.9785 1.1566
Micro-Cap Equity Portfolio. .................. 3.1124 0.1895
International Equity Portfolio ............... 0.0249 2.0529
International Small Cap Equity Portfolio ..... 1.3978 --
Select Equity Portfolio ...................... 0.1077 1.5191
Index Equity Portfolio ....................... 0.0225 0.1065
Balanced Portfolio ........................... -- 0.6958
Because each Portfolio's fiscal year is not the calendar year, another
notification will be sent with respect to calendar year 2000. The second
notification, which reflects the amounts to be used by calendar year taxpayers
on their U.S. federal income tax returns, has been made in conjunction with Form
1099-DIV and will be mailed in January 2001.
FOR CORPORATE SHAREHOLDERS ONLY:
The percentage of dividends from net investment income declared in the
fiscal year ended September 30, 2000 which qualify for the corporate dividends
received deduction is as follows:
Large Cap Value Equity Portfolio ............. 100.0%
Mid Cap Value Equity Portfolio ............... 100.0
Small Cap Value Equity Portfolio ............. 100.0
Select Equity Portfolio ...................... 100.0
Balanced Portfolio ........................... 27.8
IMPORTANT TAX INFORMATION FOR SHAREHOLDERS OF THE INTERNATIONAL EQUITY AND
THE INTERNATIONAL EMERGING MARKETS PORTFOLIOS.
During the fiscal year ended September 30, 2000, the International Equity
Portfolio distributed $10,944,892 of foreign source income on which the
Portfolio paid foreign taxes of $2,356,937; and the International Emerging
Markets Portfolio distributed $989,439 of foreign source income on which the
Portfolio paid foreign taxes of $191,332. This information is being furnished to
you pursuant to notice requirements of Sections 853(a) and 855(d) of the
Internal Revenue Code, as amended, and the Treasury Regulations
thereunder.
18
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
LARGE CAP VALUE EQUITY PORTFOLIO
NUMBER
AS OF SEPTEMBER 30, 2000 OF SHARES VALUE
--------- --------------
COMMON STOCKS -- 98.4%
AEROSPACE -- 3.6%
General Dynamics Corp. 425,646 $ 26,735,889
Honeywell International, Inc. 647,900 23,081,437
Lockheed Martin Corp. 540,900 17,828,064
Northrop Grumman Corp. 144,500 13,131,437
--------------
80,776,827
--------------
AIR TRANSPORTATION -- 0.5%
AMR Corp. 373,100 12,195,706
--------------
BANKS -- 8.7%
Bank of New York Co., Inc. 223,600 12,535,575
Chase Manhattan Corp. 1,196,100 55,244,869
Firstar Corp. 750,500 16,792,437
FleetBoston Financial Corp. 1,148,081 44,775,159
Mellon Financial Corp. 425,100 19,714,012
Wells Fargo Co. 1,022,200 46,957,312
--------------
196,019,364
--------------
BEVERAGES -- 1.1%
Anheuser-Busch Cos., Inc. 273,800 11,585,162
PepsiCo, Inc. 306,500 14,099,000
--------------
25,684,162
--------------
BROADCASTING -- 0.7%
AT&T Corp. - Liberty Media Group,
Class A** 902,600 16,246,800
--------------
CHEMICALS -- 1.8%
Minnesota Mining & Manufacturing
Co. 267,900 24,412,387
Praxair, Inc. 426,300 15,932,962
--------------
40,345,349
--------------
COMPUTER & OFFICE EQUIPMENT -- 2.8%
Cypress Semiconductor Corp.** 661,200 27,481,125
International Business Machines
Corp. 186,100 20,936,250
Lexmark International Group, Inc.** 386,500 14,493,750
--------------
62,911,125
--------------
COMPUTER SOFTWARE & SERVICES -- 1.5%
Computer Associates International,
Inc. 167,700 4,223,944
Computer Sciences Corp.** 388,917 28,877,087
--------------
33,101,031
--------------
CONSUMER NON DURABLES -- 1.4%
Clorox Co. 182,700 7,228,069
Kroger Co.** 1,091,600 24,629,225
--------------
31,857,294
--------------
ELECTRONICS -- 1.0%
Emerson Electric Co. 353,100 23,657,700
--------------
ENERGY & UTILITIES -- 8.3%
Devon Energy Corp. 330,900 19,903,635
Dominion Resources, Inc. 745,100 43,262,369
Duke Energy Corp. 484,900 41,580,175
El Paso Energy Corp. 869,300 53,570,612
Southern Co. 920,500 29,858,719
--------------
188,175,510
--------------
NUMBER
OF SHARES VALUE
--------- --------------
ENTERTAINMENT & LEISURE -- 2.3%
Gannett Co., Inc. 403,900 $ 21,406,700
Walt Disney Co. 786,900 30,098,925
--------------
51,505,625
--------------
FINANCE -- 12.5%
Citigroup, Inc. 1,490,533 80,581,940
Federal Home Loan Mortgage
Corp. 541,500 29,274,844
Federal National Mortgage
Association 486,000 34,749,000
Household International, Inc. 517,140 29,283,052
J.P. Morgan & Co., Inc. 74,200 12,122,425
MBNA Corp. 147,700 5,686,450
Morgan Stanley Dean Witter & Co. 361,444 33,049,536
USA Education, Inc. 603,400 29,076,337
Washington Mutual, Inc. 723,500 28,804,344
--------------
282,627,928
--------------
FOOD & AGRICULTURE -- 0.7%
General Mills, Inc. 425,400 15,101,700
--------------
INSURANCE -- 5.2%
Ace Ltd. 1,002,200 39,336,350
Aon Corp. 726,500 28,515,125
Hartford Financial Services Group,
Inc. 546,800 39,882,225
John Hancock Financial Services,
Inc.** 336,000 9,030,000
--------------
116,763,700
--------------
MACHINERY & HEAVY EQUIPMENT -- 0.4%
Dover Corp. 179,000 8,401,812
--------------
MANUFACTURING -- 2.4%
Tyco International Ltd. - ADR 1,055,600 54,759,250
--------------
MEDICAL & MEDICAL SERVICES -- 3.1%
HCA - The Healthcare Co. 793,800 29,469,825
Tenet Healthcare Corp.** 1,108,200 40,310,775
--------------
69,780,600
--------------
MEDICAL INSTRUMENTS & SUPPLIES -- 2.8%
Baxter International, Inc. 327,900 26,170,519
Johnson & Johnson 398,900 37,471,669
--------------
63,642,188
--------------
METAL & MINING -- 1.6%
Alcoa, Inc. 1,431,500 36,234,844
--------------
MOTOR VEHICLES -- 0.3%
Ford Motor Co. 261,300 6,614,156
--------------
OIL & GAS -- 11.3%
Anadarko Petroleum Corp. 384,700 25,567,162
BP Amoco PLC - ADR 257,518 13,648,454
Burlington Resources, Inc. 887,900 32,685,819
Chevron Corp. 681,100 58,063,775
EOG Resources, Inc. 228,500 8,882,938
Exxon Mobil Corp. 1,018,683 90,790,122
Texaco, Inc. 457,500 24,018,750
--------------
253,657,020
--------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
19
<PAGE>
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BLACKROCK FUNDS
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
LARGE CAP VALUE EQUITY PORTFOLIO (CONCLUDED)
NUMBER
AS OF SEPTEMBER 30, 2000 OF SHARES VALUE
--------- --------------
COMMON STOCKS (CONTINUED)
PAPER & FOREST PRODUCTS -- 1.3%
International Paper Co. 490,700 $ 14,076,956
Kimberly-Clark Corp. 289,800 16,174,463
--------------
30,251,419
--------------
PHARMACEUTICALS -- 3.7%
Bristol-Myers Squibb Co. 668,500 38,188,063
Merck & Co., Inc. 593,400 44,171,213
--------------
82,359,276
--------------
PUBLISHING & PRINTING -- 1.2%
McGraw-Hill Companies, Inc. 414,400 26,340,300
--------------
REAL ESTATE -- 0.6%
Boston Properties, Inc. 307,700 13,211,869
--------------
RESTAURANTS -- 0.5%
McDonald's Corp. 396,400 11,966,325
--------------
RETAIL MERCHANDISING -- 2.5%
Costco Wholesale Corp.** 288,500 10,079,469
Lowe's Cos., Inc. 499,900 22,433,013
Safeway, Inc.** 530,300 24,758,381
--------------
57,270,863
--------------
SECURITY BROKERS & DEALERS -- 0.4%
Merrill Lynch & Co., Inc. 120,000 7,920,000
--------------
SEMICONDUCTORS & RELATED DEVICES -- 0.6%
Micron Technology, Inc.** 308,200 14,177,200
--------------
TELECOMMUNICATIONS -- 12.3%
AT&T Corp. 885,450 26,010,094
Bellsouth Corp. 458,000 18,434,500
Comcast Corp. - Class A** 586,800 24,022,125
Motorola, Inc. 909,000 25,679,250
SBC Communications, Inc. 1,530,900 76,545,000
Sprint Corp. (FON Group) 266,200 7,802,988
Verizon Communications 1,222,710 59,225,016
Worldcom, Inc.** 1,296,500 39,381,188
--------------
277,100,161
--------------
TOBACCO -- 1.3%
Philip Morris Cos., Inc. 960,000 28,260,000
--------------
TOTAL COMMON STOCKS
(Cost $1,882,736,405) 2,218,917,104
--------------
PAR/SHARES
MATURITY (000) VALUE
-------- --------- --------------
SHORT TERM INVESTMENTS -- 1.6%
Federal Home Loan Bank
Discount Notes
6.28% 10/02/00 $32,000 $ 31,994,418
Galileo Money Market Fund 3,361 3,361,016
--------------
TOTAL SHORT TERM INVESTMENTS
(Cost $35,355,434) 35,355,434
--------------
TOTAL INVESTMENTS IN
SECURITIES -- 100.0%
(Cost $1,918,091,839*) $2,254,272,538
==============
------------------
* Cost for Federal income tax purposes is $1,921,434,370. The gross unrealized
appreciation (depreciation) on a tax basis is as follows:
Gross unrealized appreciation $402,289,677
Gross unrealized depreciation (69,451,509)
------------
$332,838,168
============
** Non-income producing security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
20
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
LARGE CAP VALUE EQUITY PORTFOLIO
SEPTEMBER 30, 2000
<TABLE>
<S> <C>
ASSETS
Investments at value (Cost $1,918,091,839) .......................................................... $2,254,272,538
Collateral received for securities loaned ........................................................... 116,542,494
Dividends receivable ................................................................................ 2,363,867
Interest receivable ................................................................................. 28,045
Investments sold receivable ......................................................................... 68,341,623
Capital shares sold receivable ...................................................................... 1,310,232
Prepaid expenses .................................................................................... 18,538
--------------
TOTAL ASSETS ................................................................................. 2,442,877,337
--------------
LIABILITIES
Payable upon return of securities loaned ............................................................ 116,542,494
Investments purchased payable ....................................................................... 66,015,359
Capital shares redeemed payable ..................................................................... 3,010,026
Advisory fees payable ............................................................................... 928,688
Administrative fees payable ......................................................................... 376,160
Transfer agent fees payable ......................................................................... 71,407
Other accrued expenses payable ...................................................................... 595,359
--------------
TOTAL LIABILITIES ............................................................................ 187,539,493
--------------
NET ASSETS (Applicable to 120,445,473 Institutional shares, 22,341,834
Service shares, 3,751,464 Investor A shares, 2,084,567 Investor B shares and
508,210 Investor C shares outstanding) .............................................................. $2,255,337,844
==============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER INSTITUTIONAL SHARE ($1,821,839,450 (DIVIDE) 120,445,473) ....................................... $15.13
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER SERVICE SHARE ($337,992,834 (DIVIDE) 22,341,834) ................................................ $15.13
======
NET ASSET VALUE AND REDEMPTION PRICE
PER INVESTOR A SHARE ($56,689,428 (DIVIDE) 3,751,464) ............................................... $15.11
======
MAXIMUM OFFERING PRICE PER INVESTOR A SHARE
($15.11 (DIVIDE) 0.955) ............................................................................. $15.82
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent deferred sales charge of 4.5%)
PER INVESTOR B SHARE ($31,207,839 (DIVIDE) 2,084,567) ............................................... $14.97
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent deferred sales charge of 1.0%)
PER INVESTOR C SHARE ($7,608,293 (DIVIDE) 508,210) .................................................. $14.97
======
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
21
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
LARGE CAP GROWTH EQUITY PORTFOLIO
NUMBER
AS OF SEPTEMBER 30, 2000 OF SHARES VALUE
--------- --------------
COMMON STOCKS -- 95.9%
AEROSPACE -- 1.5%
Boeing Co. 420,000 $ 26,460,000
--------------
BEVERAGES -- 0.9%
Coca-Cola Co. 274,000 15,104,250
--------------
BROADCASTING -- 0.5%
Clear Channel Communications,
Inc.** 170,200 9,616,300
--------------
BUSINESS SERVICES -- 1.2%
Juniper Networks, Inc.** 96,000 21,018,000
--------------
COMPUTER & OFFICE EQUIPMENT -- 12.8%
Cisco Systems, Inc.** 2,095,700 115,787,425
Compaq Computer Corp. 364,100 10,041,878
Dell Computer Corp.** 503,100 15,501,769
International Business Machines
Corp. 475,000 53,437,500
Palm, Inc.** 575,000 30,439,062
--------------
225,207,634
--------------
COMPUTER SOFTWARE & SERVICES -- 21.0%
Adobe Systems, Inc. 90,000 13,972,500
America Online, Inc.** 537,600 28,896,000
Ariba, Inc.** 40,000 5,730,625
BEA Systems, Inc.** 380,000 29,592,500
Check Point Software Technologies
Ltd.** 80,000 12,600,000
Computer Sciences Corp.** 150,000 11,137,500
EMC Corp.** 798,800 79,181,050
Exodus Communications, Inc.** 250,000 12,343,750
Microsoft Corp.** 1,000,000 60,250,000
Oracle Corp.** 557,300 43,887,375
Rational Software Corp. ** 50,100 3,475,687
Sun Microsystems, Inc.** 405,600 47,353,800
VeriSign, Inc.** 47,200 9,560,950
VERITAS Software Corp.** 90,300 12,822,600
--------------
370,804,337
--------------
CONSUMER NON DURABLES -- 0.3%
Clorox Co. 150,000 5,934,375
--------------
ELECTRONICS -- 15.6%
General Electric Co. 2,270,500 130,979,469
Intel Corp. 1,991,800 82,908,675
Maxim Integrated Products, Inc.** 317,800 25,563,037
SDL, Inc.** 29,000 8,932,000
Texas Instruments, Inc. 560,800 26,462,750
--------------
274,845,931
--------------
ENERGY & UTILITIES -- 1.9%
AES Corp.** 125,300 8,583,050
American Power Conversion
Corp.** 187,800 3,603,412
Calpine Corp.** 122,700 12,806,813
Southern Energy, Inc.** 250,000 7,843,750
--------------
32,837,025
--------------
ENTERTAINMENT & LEISURE -- 2.0%
Time Warner, Inc. 227,000 17,762,750
Viacom, Inc. - Class B** 292,700 17,122,950
--------------
34,885,700
--------------
NUMBER
OF SHARES VALUE
--------- --------------
FINANCE -- 4.3%
Charles Schwab Corp. 351,300 $ 12,471,150
Citigroup, Inc. 372,148 20,119,251
Concord EFS, Inc.** 600,000 21,309,375
MBNA Corp. 572,800 22,052,800
--------------
75,952,576
--------------
FOOD & AGRICULTURE -- 0.4%
Quaker Oats Co. 90,000 7,121,250
--------------
INSURANCE -- 1.0%
Marsh & McLennan Cos., Inc. 131,996 17,522,469
--------------
MANUFACTURING -- 2.7%
Corning, Inc. 130,100 38,639,700
Danaher Corp. 182,000 9,054,500
--------------
47,694,200
--------------
MEDICAL & MEDICAL SERVICES -- 0.8%
Per-Se Technologies, Inc. Warrants** 7,119 0
Waters Corp.** 156,000 13,884,000
--------------
13,884,000
--------------
MEDICAL INSTRUMENTS & SUPPLIES -- 2.0%
Guidant Corp.** 287,400 20,315,588
Medtronic, Inc. 297,600 15,419,400
--------------
35,734,988
--------------
OIL & GAS -- 1.2%
El Paso Energy Corp. 141,100 8,695,288
Sante Fe International Corp. 285,000 12,842,813
--------------
21,538,101
--------------
PHARMACEUTICALS -- 13.0%
Abgenix, Inc.** 128,500 10,384,406
ALZA Corp.** 117,500 10,163,750
Amgen, Inc.** 261,000 18,225,141
Eli Lilly & Co. 228,500 18,537,063
MedImmune, Inc.** 174,800 13,503,300
Merck & Co., Inc. 296,000 22,033,500
Pfizer, Inc. 1,450,000 65,159,375
Pharmacia Corp. 385,000 23,172,188
Schering-Plough Corp. 826,500 38,432,250
Sepracor, Inc.** 87,700 10,759,694
--------------
230,370,667
--------------
RETAIL MERCHANDISING -- 3.3%
Home Depot, Inc. 558,400 29,630,100
Wal-Mart Stores, Inc. 602,400 28,990,500
--------------
58,620,600
--------------
SEMICONDUCTORS & RELATED DEVICES -- 1.5%
Broadcom Corp. - Class A** 64,000 15,600,000
Micron Technology, Inc.** 95,900 4,411,400
QLogic Corp.** 80,800 7,110,400
--------------
27,121,800
--------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
22
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
LARGE CAP GROWTH EQUITY PORTFOLIO (CONCLUDED)
NUMBER
AS OF SEPTEMBER 30, 2000 OF SHARES VALUE
--------- --------------
COMMON STOCKS (CONTINUED)
TELECOMMUNICATIONS -- 8.0%
ADC Telecommunications, Inc.** 298,200 $ 8,018,784
JDS Uniphase Corp.** 270,000 25,565,625
Lucent Technologies, Inc. 600,500 18,352,781
Motorola, Inc. 403,556 11,400,457
Nextel Communications, Inc.-
Class A** 320,000 14,960,000
Nortel Networks Corp. 279,200 16,629,850
Qwest Communications International,
Inc.** 319,985 15,379,279
Tellabs, Inc.** 245,900 11,741,725
Voicestream Wireless Corp.** 91,000 10,561,688
Worldcom, Inc.** 315,000 9,568,124
--------------
142,178,313
--------------
TOTAL COMMON STOCKS
(Cost $1,058,644,032) 1,694,452,516
--------------
PAR/SHARES
MATURITY (000)
-------- ----------
SHORT TERM INVESTMENTS -- 4.1%
Federal Home Loan Bank
Discount Notes
6.28% 10/02/00 $70,000 69,987,789
Galileo Money Market Fund 2,545 2,544,779
--------------
TOTAL SHORT TERM INVESTMENTS
(Cost $72,532,568) 72,532,568
--------------
TOTAL INVESTMENTS IN
SECURITIES -- 100.0%
(Cost $1,131,176,600*) $1,766,985,084
==============
-----------------
* Cost for Federal income tax purposes is $1,137,786,641. The gross unrealized
appreciation (depreciation) on a tax basis is as follows:
Gross unrealized appreciation $658,211,251
Gross unrealized depreciation (29,012,808)
------------
$629,198,443
============
** Non-income producing security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
23
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
LARGE CAP GROWTH EQUITY PORTFOLIO
SEPTEMBER 30, 2000
<TABLE>
<S> <C>
ASSETS
Investments at value (Cost $1,131,176,600) .......................................................... $1,766,985,084
Collateral received for securities loaned ........................................................... 180,545,416
Dividends receivable ................................................................................ 584,488
Interest receivable ................................................................................. 26,594
Investments sold receivable ......................................................................... 14,037,400
Capital shares sold receivable ...................................................................... 1,055,222
Prepaid expenses .................................................................................... 11,884
--------------
TOTAL ASSETS ................................................................................. 1,963,246,088
--------------
LIABILITIES
Payable upon return of securities loaned ............................................................ 180,545,416
Investments purchased payable ....................................................................... 54,884,253
Capital shares redeemed payable ..................................................................... 8,303,307
Advisory fees payable ............................................................................... 778,458
Adminstrative fees payable .......................................................................... 304,830
Transfer agent fees payable ......................................................................... 69,050
Other accrued expenses payable ...................................................................... 510,104
--------------
TOTAL LIABILITIES ............................................................................ 245,395,418
--------------
NET ASSETS (Applicable to 53,284,696 Institutional shares, 12,280,814
Service shares, 3,740,294 Investor A shares, 2,952,814 Investor B shares and
528,926 Investor C shares outstanding) .............................................................. $1,717,850,670
==============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER INSTITUTIONAL SHARE ($1,263,796,080 (DIVIDE) 53,284,696) ........................................ $23.72
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER SERVICE SHARE ($288,904,395 (DIVIDE) 12,280,814) ................................................ $23.52
======
NET ASSET VALUE AND REDEMPTION PRICE
PER INVESTOR A SHARE ($87,374,696 (DIVIDE) 3,740,294) ............................................... $23.36
======
MAXIMUM OFFERING PRICE PER INVESTOR A SHARE
($23.36 (DIVIDE) 0.955) ............................................................................. $24.46
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent deferred sales charge of 4.5%)
PER INVESTOR B SHARE ($65,976,625 (DIVIDE) 2,952,814) ............................................... $22.34
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent deferred sales charge of 1.0%)
PER INVESTOR C SHARE ($11,798,874 (DIVIDE) 528,926) ................................................. $22.31
======
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
24
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
MID-CAP VALUE EQUITY PORTFOLIO
NUMBER
AS OF SEPTEMBER 30, 2000 OF SHARES VALUE
--------- ------------
COMMON STOCKS -- 94.1%
AEROSPACE -- 1.8%
General Dynamics Corp. 41,700 $ 2,619,281
Lockheed Martin Corp. 60,300 1,987,488
------------
4,606,769
------------
AIR TRANSPORTATION -- 0.9%
Southwest Airlines Corp. 96,100 2,330,425
------------
BANKS -- 7.6%
BB&T Corp. 122,100 3,678,262
Comerica, Inc. 64,500 3,769,219
Dime Bancorp, Inc. 113,200 2,440,875
M&T Bank Corp. 3,900 1,989,000
Northern Trust Corp. 20,100 1,786,387
Southtrust Corp. 132,000 4,149,750
TCF Financial Corp. 36,000 1,354,500
------------
19,167,993
------------
BEVERAGES -- 0.8%
Adolph Coors Co. - Class B 29,800 1,882,987
------------
CHEMICALS -- 3.7%
Air Products & Chemicals, Inc. 103,600 3,729,600
PPG Industries, Inc. 60,300 2,393,156
Praxair, Inc. 47,500 1,775,312
Rohm & Haas Co. 45,000 1,307,812
------------
9,205,880
------------
COMPUTER SOFTWARE & SERVICES -- 4.7%
3Com Corp.** 143,800 2,759,162
Cabletron Systems, Inc.** 68,300 2,006,312
Liberate Technologies, Inc.** 82,500 2,387,344
Network Associates, Inc.** 109,600 2,479,700
Quantum Corp-DLT & Storage** 139,800 2,105,737
------------
11,738,255
------------
CONSTRUCTION -- 2.0%
Masco Corp. 119,700 2,229,412
Southdown, Inc. 38,000 2,707,500
------------
4,936,912
------------
CONSUMER DURABLES -- 1.3%
SPX Corp.** 23,300 3,307,144
------------
ELECTRONICS -- 3.8%
SCI Systems, Inc.** 55,600 2,279,600
Tektronix, Inc. 24,700 1,897,269
Veeco Instruments, Inc.** 27,800 2,954,184
Viasystems Group, Inc.** 144,500 2,456,500
------------
9,587,553
------------
ENERGY & UTILITIES -- 13.9%
CMS Energy Corp. 113,100 3,046,631
Devon Energy Corp. 45,400 2,730,810
Dominion Resources, Inc. 56,100 3,257,306
Dynegy, Inc. - Class A 51,300 2,924,100
Edison International 78,100 1,508,306
El Paso Energy Corp. 17,700 1,090,762
General Motors Corp. - Class H** 66,400 2,468,752
GPU, Inc. 91,500 2,968,031
KeySpan Corp. 68,700 2,756,587
Montana Power Co. 90,500 3,020,437
PECO Energy Co. 62,800 3,803,325
Reliant Energy, Inc. 77,100 3,585,150
Southern Energy, Inc. 55,000 1,725,625
------------
34,885,822
------------
NUMBER
OF SHARES VALUE
--------- ------------
ENTERTAINMENT & LEISURE -- 1.6%
Harrah's Entertainment, Inc.** 45,000 $ 1,237,500
Park Place Entertainment Corp.** 186,700 2,823,837
------------
4,061,337
------------
FINANCE -- 3.7%
Bear Stearns Companies, Inc. 20,000 1,260,000
Capital One Financial Corp. 45,600 3,194,850
Lehman Brothers Holdings, Inc. 19,000 2,807,250
USA Education, Inc. 42,400 2,043,150
------------
9,305,250
------------
FOOD & AGRICULTURE -- 2.9%
General Mills, Inc. 45,400 1,611,700
Quaker Oats Co. 33,100 2,619,038
Ralston Purina Group 133,300 3,157,543
------------
7,388,281
------------
INSURANCE -- 6.1%
Ace Ltd. 49,000 1,923,250
Allmerica Financial Corp. 41,800 2,672,588
Aon Corp. 58,400 2,292,200
Hartford Financial Services Group,
Inc. 18,700 1,363,931
Lincoln National Corp. 72,400 3,484,250
PartnerRe Ltd. 74,200 3,519,863
------------
15,256,082
------------
LEASING -- 0.5%
Ryder System, Inc. 61,300 1,130,219
------------
MACHINERY & HEAVY EQUIPMENT -- 2.9%
Deere & Co. 71,400 2,374,050
Dover Corp. 60,900 2,858,494
Ingersoll-Rand Co. 61,400 2,079,925
------------
7,312,469
------------
MANUFACTURING -- 1.3%
ITT Industries, Inc. 97,700 3,169,144
------------
MEASURING & CONTROLLING DEVICES -- 2.0%
Johnson Controls, Inc. 39,000 2,074,313
Parker-Hannifin Corp. 89,000 3,003,750
------------
5,078,063
------------
MEDICAL & MEDICAL SERVICES -- 8.5%
Beckman Coulter, Inc. 40,400 3,115,850
Celgene Corp.** 26,700 1,588,650
Health Management Associates, Inc.** 209,700 4,364,381
Hillenbrand Industries, Inc. 31,200 1,396,200
McKesson HBOC, Inc. 60,700 1,855,144
Oxford Health Plans, Inc.** 60,100 1,847,136
Tenet Healthcare Corp.** 115,100 4,186,763
UnitedHealth Group, Inc.** 29,100 2,873,625
------------
21,227,749
------------
OIL & GAS -- 5.6%
Burlington Resources, Inc. 53,800 1,980,513
Coastal Corp. 15,500 1,148,938
Kerr-McGee Corp. 42,100 2,789,125
MCN Energy Group, Inc. 86,700 2,221,688
Nabors Industries, Inc.** 56,400 2,955,360
Tidewater, Inc.** 62,400 2,839,200
------------
13,934,824
------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
25
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
MID-CAP VALUE EQUITY PORTFOLIO (CONCLUDED)
NUMBER
AS OF SEPTEMBER 30, 2000 OF SHARES VALUE
--------- ------------
COMMON STOCKS (CONTINUED)
PAPER & FOREST PRODUCTS -- 1.1%
Bowater, Inc. 30,400 $ 1,411,700
Willamette Industries, Inc. 46,400 1,299,200
------------
2,710,900
------------
PERSONAL SERVICES -- 0.5%
International Game Technology, Inc.** 40,000 1,345,000
------------
PHARMACEUTICALS -- 1.0%
OSI Pharmaceuticals, Inc.** 25,900 1,813,000
Watson Pharmaceuticals, Inc.** 11,800 765,525
------------
2,578,525
------------
PUBLISHING & PRINTING -- 1.0%
McGraw-Hill Companies, Inc. 41,100 2,612,419
------------
REAL ESTATE -- 3.7%
Arden Realty, Inc. 92,475 2,479,486
Avalonbay Communities, Inc. 54,800 2,613,275
Equity Office Properties Trust 38,000 1,180,375
Lennar Corp. 95,300 2,829,219
------------
9,102,355
------------
RESTAURANTS -- 2.0%
Brinker International, Inc.** 75,800 2,283,475
Darden Restaurants, Inc. 131,300 2,732,681
------------
5,016,156
------------
RETAIL MERCHANDISING -- 2.6%
BJ's Wholesale Club, Inc.** 64,800 2,211,300
Limited, Inc. 104,200 2,298,913
Venator Group, Inc.** 168,900 2,090,138
------------
6,600,351
------------
SECURITY BROKERS & DEALERS -- 0.8%
Knight Trading Group, Inc.** 54,100 1,947,600
------------
SEMICONDUCTORS & RELATED DEVICES -- 1.2%
Vitesse Semiconductor Corp.** 34,800 3,095,025
------------
SOAPS & COSMETICS -- 0.5%
Avon Products, Inc. 30,200 1,234,425
------------
TELECOMMUNICATIONS -- 2.4%
Andrew Corp.** 83,000 2,173,563
Broadwing, Inc.** 61,800 1,579,763
McLeod USA, Inc. - Class A** 58,800 841,575
NEXTLINK Communications, Inc.-
Class A** 29,000 1,020,438
Pac-West Telecomm, Inc.** 45,600 416,100
------------
6,031,439
------------
TRANSPORTATION -- 1.3%
Fedex Corp.** 74,500 3,303,330
------------
WASTE MANAGEMENT -- 0.4%
Republic Services, Inc.** 86,900 1,140,563
------------
TOTAL COMMON STOCKS
(Cost $211,794,344) 236,231,246
------------
PAR/SHARES
MATURITY (000) VALUE
---------- ---------- ------------
SHORT TERM INVESTMENTS -- 5.9%
Federal Home Loan Bank
Discount Notes
6.28% 10/02/00 $12,000 $ 11,997,907
Galileo Money Market Fund 2,789 2,789,227
------------
TOTAL SHORT TERM INVESTMENTS
(Cost $14,787,134) 14,787,134
------------
TOTAL INVESTMENTS IN
SECURITIES -- 100.0%
(Cost $226,581,478*) $251,018,380
============
-------------------
* Cost for Federal income tax purposes is $229,396,216. The gross unrealized
appreciation (depreciation) on a tax basis is as follows:
Gross unrealized appreciation $ 32,599,638
Gross unrealized depreciation (10,977,474)
------------
$ 21,622,164
============
** Non-income producing security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
MID-CAP VALUE EQUITY PORTFOLIO
SEPTEMBER 30, 2000
<TABLE>
<S> <C>
ASSETS
Investments at value (Cost $226,581,478) ............................................................. $251,018,380
Collateral received for securities loaned ............................................................ 34,235,578
Dividends receivable ................................................................................. 276,332
Interest receivable .................................................................................. 15,795
Investments sold receivable .......................................................................... 2,449,326
Capital shares sold receivable ....................................................................... 27,562
------------
TOTAL ASSETS .................................................................................. 288,022,973
------------
LIABILITIES
Payable upon return of securities loaned ............................................................. 34,235,578
Investments purchased payable ........................................................................ 8,589,198
Capital shares redeemed payable ...................................................................... 238,193
Advisory fees payable ................................................................................ 188,865
Adminstrative fees payable ........................................................................... 46,584
Transfer agent fees payable .......................................................................... 24,355
Other accrued expenses payable ....................................................................... 45,875
------------
TOTAL LIABILITIES ............................................................................. 43,368,648
------------
NET ASSETS (Applicable to 17,111,564 Institutional shares, 1,451,431
Service shares, 301,000 Investor A shares, 389,945 Investor B shares and
75,698 Investor C shares outstanding) ................................................................ $244,654,325
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER INSTITUTIONAL SHARE ($216,659,947 (DIVIDE) 17,111,564) ........................................... $12.66
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER SERVICE SHARE ($18,372,912 (DIVIDE) 1,451,431) ................................................... $12.66
======
NET ASSET VALUE AND REDEMPTION PRICE
PER INVESTOR A SHARE ($3,805,379 (DIVIDE) 301,000) ................................................... $12.64
======
MAXIMUM OFFERING PRICE PER INVESTOR A SHARE
($12.64 (DIVIDE) 0.955) .............................................................................. $13.24
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent deferred sales charge of 4.5%)
PER INVESTOR B SHARE ($4,870,616 (DIVIDE) 389,945) ................................................... $12.49
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent deferred sales charge of 1.0%)
PER INVESTOR C SHARE ($945,471 (DIVIDE) 75,698) ...................................................... $12.49
======
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
27
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
MID-CAP GROWTH EQUITY PORTFOLIO
NUMBER
AS OF SEPTEMBER 30, 2000 OF SHARES VALUE
--------- ------------
COMMON STOCKS -- 87.3%
ANALYTICAL INSTRUMENTS -- 1.9%
PerkinElmer, Inc.** 183,200 $ 19,121,500
------------
BANKS -- 1.9%
Northern Trust Corp. 156,200 13,882,275
Silicon Valley Bancshares** 79,200 4,612,162
------------
18,494,437
------------
BUSINESS SERVICES -- 3.3%
Apollo Group, Inc.** 61,700 2,460,287
Edison Schools, Inc.** 82,000 2,603,500
Homestore.com, Inc.** 61,900 2,893,825
Juniper Networks, Inc.** 72,800 15,938,650
Paychex, Inc. 157,250 8,255,625
------------
32,151,887
------------
COMPUTER & OFFICE EQUIPMENT -- 9.8%
Brocade Communications Systems,
Inc.** 110,900 26,172,400
Handspring, Inc.** 122,000 8,425,625
McDATA Corp. - Class B** 122,400 15,041,812
Network Appliance, Inc.** 152,300 19,399,212
Palm, Inc.** 523,200 27,696,587
------------
96,735,636
------------
COMPUTER SOFTWARE & SERVICES -- 17.6%
Adobe Systems, Inc. 32,000 4,968,000
Agile Software Corp.** 43,000 3,867,312
Ariba, Inc.** 127,300 18,237,714
BEA Systems, Inc.** 249,100 19,398,662
CacheFlow, Inc.** 18,000 2,574,000
Check Point Software Technologies
Ltd.** 137,600 21,672,000
Commerce One, Inc.** 61,000 4,788,500
Cybear Group** 9,380 12,311
Fiserv, Inc.** 84,500 5,059,437
Interwoven, Inc.** 40,500 4,579,031
Macrovision Corp.** 129,900 10,521,900
Mercury Interactive Corp.** 94,500 14,812,875
Rational Software Corp.** 332,400 23,060,250
Redback Networks, Inc.** 46,300 7,590,306
Research in Motion Ltd.** 59,600 5,874,325
Siebel Systems, Inc.** 52,500 5,843,906
SmartForce PLC - Spons. ADR** 90,300 4,277,963
Software.com, Inc.** 87,600 15,893,925
------------
173,032,417
------------
ELECTRONICS -- 7.4%
Celestica, Inc. - ADR** 284,300 19,687,775
Cirrus Logic, Inc.** 67,400 2,717,063
Flextronics International Ltd.** 134,400 11,037,600
PMC-Sierra, Inc.** 12,300 2,647,575
Sanmina Corp.** 90,700 8,491,788
SDL, Inc.** 6,900 2,125,200
Tektronix, Inc.** 176,700 13,572,769
TranSwitch Corp.** 200,600 12,788,250
------------
73,068,020
------------
ENERGY & UTILITIES -- 7.1%
Ballard Power Systems, Inc.** 42,000 4,589,156
Calpine Corp.** 144,100 15,040,438
Dynegy, Inc. - Class A 187,900 10,710,300
El Paso Energy Corp. 279,800 17,242,675
Entergy Corp.** 131,800 4,909,550
NUMBER
OF SHARES VALUE
--------- ------------
ENERGY & UTILITIES (CONTINUED)
NRG Energy, Inc.** 321,500 $ 11,734,750
Southern Energy, Inc.** 182,500 5,725,938
------------
69,952,807
------------
FINANCE -- 6.1%
Capital One Financial Corp. 248,550 17,414,034
Knight Trading Group, Inc.** 61,100 2,199,600
Lehman Brothers Holdings, Inc. 69,300 10,239,075
Providian Financial Corp. 141,900 18,021,300
S & P 400 Mid-Cap Depositary
Receipts** 75,000 7,368,750
T. Rowe Price Associates, Inc. 100,800 4,731,300
------------
59,974,059
------------
FOOD & AGRICULTURE -- 0.6%
Suiza Foods Corp.** 108,000 5,474,250
------------
INSURANCE -- 1.9%
Arthur J. Gallagher & Co. 40,000 2,365,000
Everest RE Group Ltd. 80,000 3,960,000
Marsh & McLennan Cos., Inc. 77,500 10,288,125
PMI Group, Inc. 33,600 2,276,400
------------
18,889,525
------------
MEDICAL & MEDICAL SERVICES -- 4.4%
Health Management Associates,
Inc.** 218,600 4,549,613
McKesson HBOC, Inc.** 225,000 6,876,563
Quest Diagnostics, Inc.** 36,800 4,222,800
Serono SA - ADR** 174,100 5,266,525
Tenet Healthcare Corp.** 73,400 2,669,925
Waters Corp.** 224,200 19,953,800
------------
43,539,226
------------
MEDICAL INSTRUMENTS & SUPPLIES -- 2.4%
Genzyme Corp.** 28,000 1,909,250
Minimed, Inc.** 112,900 10,090,438
PE Corp. - PE Biosystems Group 67,000 7,805,500
Techne Corp.** 38,000 4,256,000
------------
24,061,188
------------
OIL & GAS -- 1.9%
Nabors Industries, Inc.** 216,700 11,355,080
Noble Drilling Corp.** 143,600 7,215,900
------------
18,570,980
------------
PHARMACEUTICALS -- 11.3%
Abgenix, Inc.** 38,500 3,111,281
Alexion Pharmaceuticals, Inc.** 40,000 4,560,000
ALZA Corp.** 124,900 10,803,850
Andrx Group** 80,000 7,470,000
Biovail Corp.** 126,900 10,334,419
COR Therapeutics, Inc.** 127,000 7,913,688
Cubist Pharmaceuticals, Inc.** 45,000 2,342,813
Enzon, Inc.** 120,200 7,933,200
Gilead Sciences, Inc.** 88,000 9,652,500
IDEC Pharmaceuticals Corp.** 17,000 2,981,109
Medarex, Inc.** 24,500 2,874,156
MedImmune, Inc.** 128,600 9,934,350
Millennium Pharmaceuticals, Inc.** 91,200 13,320,900
Vertex Pharmaceuticals, Inc.** 209,000 17,660,500
------------
110,892,766
------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
28
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
MID-CAP GROWTH EQUITY PORTFOLIO (CONCLUDED)
NUMBER
AS OF SEPTEMBER 30, 2000 OF SHARES VALUE
--------- ------------
COMMON STOCKS (CONTINUED)
PUBLISHING & PRINTING -- 0.2%
McGraw-Hill Companies, Inc. 35,000 $ 2,224,688
------------
REAL ESTATE -- 0.7%
Hilton Hotels Corp.** 571,600 6,609,125
------------
RETAIL MERCHANDISING -- 0.6%
Bed, Bath and Beyond, Inc.** 108,000 2,634,188
Williams Sonoma, Inc.** 105,600 3,669,600
------------
6,303,788
------------
SEMICONDUCTORS & RELATED DEVICES -- 5.2%
Applied Micro Circuits Corp.** 98,661 20,428,993
Integrated Device Technology, Inc.** 60,700 5,493,350
Micrel, Inc.** 134,400 9,004,800
Vitesse Semiconductor Corp.** 177,800 15,813,088
------------
50,740,231
------------
TELECOMMUNICATIONS -- 3.0%
Cosine Communications, Inc.** 43,300 2,405,856
Natural MicroSystems Corp.** 71,800 3,862,616
Newport Corp.** 90,400 14,397,613
Plantronics, Inc.** 75,600 2,872,800
Polycom, Inc.** 90,400 6,053,975
------------
29,592,860
------------
TOTAL COMMON STOCKS
(Cost $683,962,238) 859,429,390
------------
PAR/SHARES
MATURITY (000) VALUE
-------- ---------- ------------
SHORT TERM INVESTMENTS -- 12.7%
Federal Home Loan Bank
Discount Notes
6.28%*** 10/02/00 $121,000 $120,978,892
Federal Home Loan Bank
Discount Notes
6.37%*** 11/22/00 2,000 1,981,598
Galileo Money Market Fund 2,109 2,109,076
------------
TOTAL SHORT TERM INVESTMENTS
(Cost $125,069,566) 125,069,566
------------
TOTAL INVESTMENTS IN
SECURITIES -- 100.0%
(Cost $809,031,804*) $984,498,956
============
-------------------
* Cost for Federal income tax purposes is $816,239,399. The gross unrealized
appreciation (depreciation) on a tax basis is as follows:
Gross unrealized appreciation $179,752,609
Gross unrealized depreciation (11,493,052)
------------
$168,259,557
============
** Non-income producing security.
*** Securities pledged as collateral with a value of $1,980,800 on 50 Standard &
Poor's 500 Stock Index futures contracts expiring December 2000. The value
of such contracts on September 30, 2000 was $18,171,250, thereby resulting
in an unrealized loss of $516,930.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
29
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
MID-CAP GROWTH EQUITY PORTFOLIO
SEPTEMBER 30, 2000
<TABLE>
<S> <C>
ASSETS
Investments at value (Cost $809,031,804) ............................................................ $ 984,498,956
Collateral received for securities loaned ........................................................... 222,054,626
Dividends receivable ................................................................................ 97,262
Interest receivable ................................................................................. 46,253
Investments sold receivable ......................................................................... 16,670,704
Capital shares sold receivable ...................................................................... 2,467,442
Prepaid expenses .................................................................................... 3,990
--------------
TOTAL ASSETS ................................................................................. 1,225,839,233
--------------
LIABILITIES
Payable upon return of securities loaned ............................................................ 222,054,626
Investments purchased payable ....................................................................... 14,237,933
Capital shares redeemed payable ..................................................................... 2,162,046
Advisory fees payable ............................................................................... 658,875
Adminstrative fees payable .......................................................................... 173,041
Transfer agent fees payable ......................................................................... 39,670
Other accrued expenses payable ...................................................................... 482,510
Futures margin payable .............................................................................. 278,350
--------------
TOTAL LIABILITIES ............................................................................ 240,087,051
--------------
NET ASSETS (Applicable to 25,075,286 Institutional shares, 1,981,855
Service shares, 3,207,758 Investor A shares, 4,885,925 Investor B shares and
2,451,567 Investor C shares outstanding) ............................................................ $ 985,752,182
==============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER INSTITUTIONAL SHARE ($666,420,301 (DIVIDE) 25,075,286) .......................................... $26.58
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER SERVICE SHARE ($51,911,597 (DIVIDE) 1,981,855) .................................................. $26.19
======
NET ASSET VALUE AND REDEMPTION PRICE
PER INVESTOR A SHARE ($83,151,752 (DIVIDE) 3,207,758) ............................................... $25.92
======
MAXIMUM OFFERING PRICE PER INVESTOR A SHARE
($25.92 (DIVIDE) 0.955) ............................................................................. $27.14
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent deferred sales charge of 4.5%)
PER INVESTOR B SHARE ($122,726,056 (DIVIDE) 4,885,925) .............................................. $25.12
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent deferred sales charge of 1.0%)
PER INVESTOR C SHARE ($61,542,476 (DIVIDE) 2,451,567) ............................................... $25.10
======
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
30
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
SMALL CAP VALUE EQUITY PORTFOLIO
NUMBER
AS OF SEPTEMBER 30, 2000 OF SHARES VALUE
--------- ------------
COMMON STOCKS -- 96.3%
AEROSPACE -- 1.4%
Teledyne Technologies, Inc.** 279,500 $ 8,140,437
------------
BAKERY PRODUCTS -- 0.8%
Flowers Industries, Inc. 242,900 4,736,550
------------
BANKS -- 6.0%
Bank United Corp. - Class A 59,700 3,026,044
Colonial BancGroup, Inc.** 270,100 2,802,287
Commerce Bancorp, Inc. 130,779 7,609,703
Cullen/Frost Bankers 252,804 8,216,130
Fulton Financial Corp. 87,700 1,737,556
Greater Bay Bancorp 34,600 2,402,537
Richmond County Financial Corp. 209,800 5,074,538
Silicon Valley Bancshares** 62,600 3,645,472
------------
34,514,267
------------
BEVERAGES -- 1.0%
Constellation Brands, Inc. - Class A** 109,500 5,947,219
------------
BUSINESS SERVICES -- 1.3%
Affiliated Managers Group, Inc.** 133,478 7,599,904
------------
CHEMICALS -- 4.2%
Cambrex Corp.** 94,200 3,485,400
Crompton Corp. 683,300 5,380,987
Cytec Industries, Inc.** 168,300 5,627,531
OM Group, Inc. 144,100 6,286,362
Solutia, Inc.** 284,000 3,230,500
------------
24,010,780
------------
COMPUTER & OFFICE EQUIPMENT -- 3.7%
C-Cube Microsystems, Inc.** 183,600 3,763,800
Interface, Inc.** 432,500 3,446,484
Pactiv Corp.** 680,900 7,617,569
United Stationers, Inc.** 235,600 6,331,750
------------
21,159,603
------------
COMPUTER SOFTWARE & SERVICES -- 1.6%
Aspen Technology, Inc.** 92,900 4,192,112
Manugistics Group, Inc.** 48,200 4,729,625
------------
8,921,737
------------
CONSTRUCTION -- 1.0%
Dal-Tile International, Inc.** 468,500 5,856,250
------------
CONTAINERS -- 1.1%
Packaging Corp. of America** 568,000 6,283,500
------------
CONSUMER DURABLES -- 0.6%
Wellman, Inc. 234,800 3,389,925
------------
ELECTRONICS -- 7.6%
Anadigics, Inc.** 137,600 3,044,400
Avista Corp.** 127,200 2,862,000
Belden, Inc. 202,140 4,775,557
Benchmark Electronics, Inc.** 102,400 5,324,800
Coherent, Inc.** 51,100 3,474,800
CTS Corp.** 89,600 4,536,000
Harman International Industries 113,600 4,441,760
Kent Electronics Corp. 160,900 3,841,487
Merix Corp.** 42,800 2,773,975
Sensormatic Electronics Corp.** 91,700 1,375,500
Veeco Instruments, Inc.** 68,400 7,268,569
------------
43,718,848
------------
NUMBER
OF SHARES VALUE
--------- ------------
ENERGY & UTILITIES -- 6.6%
Alliant Energy Corp. 229,600 $ 6,744,500
Cleco Corp. 177,300 8,288,775
Equitable Resources, Inc. 146,800 9,303,450
Mitchell Energy & Development
Corp. - Class A 72,800 3,394,300
Piedmont Natural Gas, Inc. 143,800 4,403,875
Washington Gas Light Corp. 199,000 5,348,125
------------
37,483,025
------------
ENTERTAINMENT & LEISURE -- 1.2%
CEC Entertainment, Inc.** 129,000 4,128,000
WMS Industries, Inc. 118,100 2,657,250
------------
6,785,250
------------
FINANCE -- 1.6%
Banknorth Group, Inc. 506,500 9,053,687
------------
FOOD & AGRICULTURE -- 3.1%
Del Monte Foods Co.** 340,400 2,106,225
Earthgrains Co. 332,200 6,124,937
Hain Celestial Group, Inc.** 91,300 3,206,912
Suiza Foods Corp.** 125,800 6,376,487
------------
17,814,561
------------
INSURANCE -- 7.3%
Arthur J. Gallagher & Co. 201,800 11,931,424
Everest RE Group Ltd. 141,500 7,004,250
First American Financial Corp. 204,200 4,262,675
HCC Insurance Holdings, Inc. 274,000 5,565,625
Radian Group, Inc. 106,600 7,195,500
StanCorp Financial Group, Inc. 139,243 5,952,638
------------
41,912,112
------------
LEASING -- 0.5%
Ryder System, Inc. 151,700 2,796,969
------------
MACHINERY & HEAVY EQUIPMENT -- 4.1%
Kennametal, Inc. 163,600 4,212,700
Pentair, Inc. 214,400 5,735,200
Stewart & Stevenson Services,
Inc. 444,500 7,750,969
Terex Corp.** 169,400 2,212,787
USFreightways Corp. 160,900 3,650,419
------------
23,562,075
------------
MEDIA -- 0.3%
Valassis Communication, Inc.** 84,850 1,887,912
------------
MEDICAL & MEDICAL SERVICES -- 5.0%
Community Health Systems** 176,900 5,682,913
Foundation Health Systems, Inc.** 355,500 5,910,187
Manor Care, Inc. 438,800 6,883,675
Quorum Health Group, Inc.** 146,400 1,903,200
Universal Health Services** 96,600 8,271,375
------------
28,651,350
------------
MEDICAL INSTRUMENTS & SUPPLIES -- 1.9%
Caremark Rx, Inc.** 473,000 5,321,250
Varian Medical Systems, Inc.** 119,100 5,381,831
------------
10,703,081
------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
31
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
SMALL CAP VALUE EQUITY PORTFOLIO (CONCLUDED)
NUMBER
AS OF SEPTEMBER 30, 2000 OF SHARES VALUE
--------- ------------
COMMON STOCKS (CONTINUED)
METAL & MINING -- 3.5%
Century Aluminum Co. 338,500 $ 4,231,250
Coorstek, Inc. 61,400 2,348,550
Louis Dreyfus Natural Gas Corp.** 137,900 5,464,288
Mueller Industries, Inc.** 210,000 4,711,875
RTI International Metals, Inc.** 241,200 3,482,325
------------
20,238,288
------------
MOTOR VEHICLES -- 0.7%
Visteon Corp. 279,900 4,233,488
------------
OIL & GAS -- 3.8%
Oneok, Inc. 163,600 6,503,100
Pride International, Inc.** 174,500 4,624,250
Questar Corp.** 181,800 5,056,313
Triton Energy Ltd. 50,200 1,957,800
Valero Energy Corp. 99,600 3,504,675
------------
21,646,138
------------
PAPER & FOREST PRODUCTS -- 0.2%
Mail-Well, Inc.** 311,100 1,380,506
------------
PHARMACEUTICALS -- 2.7%
Cell Genesys, Inc.** 87,900 2,637,000
Cell Therapeutics, Inc.** 59,200 3,947,900
Dura Pharmaceuticals, Inc.** 132,400 4,683,650
OSI Pharmaceuticals, Inc.** 60,400 4,228,000
------------
15,496,550
------------
REAL ESTATE -- 9.0%
Alexandria Real Estate Equities, Inc. 152,600 5,236,088
AMB Property Corp. 237,000 5,821,313
Brandywine Realty Trust 263,300 5,331,825
BRE Properties, Inc. 140,782 4,505,024
Camden Property Trust 140,500 4,355,500
Eastgroup Properties** 206,500 4,594,625
Essex Property Trust, Inc. 55,400 3,067,775
Lennar Corp. 190,365 5,651,461
MeriStar Hospitality Corp. 136,100 2,756,025
Pulte Corp. 111,600 3,682,800
SL Green Realty Corp.** 226,700 6,361,769
------------
51,364,205
------------
RESTAURANTS -- 0.5%
Ruby Tuesday, Inc. 273,200 3,073,500
------------
RETAIL MERCHANDISING -- 8.1%
Ann Taylor Stores Corp.** 133,000 5,112,188
Children's Place Retail Stores, Inc.** 164,300 4,230,725
Duane Reade, Inc.** 240,500 5,832,125
Men's Wearhouse, Inc.** 182,500 5,167,032
Pier 1 Imports, Inc.** 496,000 6,727,000
Russell Corp. 270,500 4,294,188
Salton, Inc.** 67,600 2,184,325
Skechers USA, Inc.** 147,700 2,233,963
Tupperware Corp. 321,600 5,788,800
Venator Group, Inc.** 392,800 4,860,900
------------
46,431,246
------------
NUMBER
OF SHARES VALUE
--------- ------------
SECURITY BROKERS & DEALERS -- 0.7%
Tucker Anthony Sutro Corp.** 152,800 $ 3,877,300
------------
SOAPS & COSMETICS -- 0.8%
Alberto-Culver Co. 151,600 4,367,975
------------
TELECOMMUNICATIONS -- 2.2%
CT Communications, Inc. 156,300 3,174,844
Glenayre Technologies, Inc.** 402,900 4,381,538
Pac-West Telecomm, Inc.** 107,700 982,763
PECO II, Inc** 83,800 3,922,888
------------
12,462,033
------------
TRANSPORTATION -- 1.7%
Dollar Thrifty Automotive Group,
Inc.** 126,600 2,500,350
GATX Corp. 166,300 6,963,813
------------
9,464,163
------------
WASTE MANAGEMENT -- 0.5%
Waste Connections, Inc.** 110,700 2,836,688
------------
TOTAL COMMON STOCKS
(Cost $463,457,754) 551,801,122
------------
PAR/SHARES
MATURITY (000)
-------- ----------
SHORT TERM INVESTMENTS -- 3.7%
Federal Home Loan Bank
Discount Notes
6.28% 10/02/00 $17,000 16,997,034
Galileo Money Market Fund 3,973 3,972,942
------------
TOTAL SHORT TERM INVESTMENTS
(Cost $20,969,976) 20,969,976
------------
TOTAL INVESTMENTS IN
SECURITIES -- 100.0%
(Cost $484,427,730*) $572,771,098
============
-------------------
* Cost for Federal income tax purposes is $487,993,736. The gross unrealized
appreciation (depreciation) on a tax basis is as follows:
Gross unrealized appreciation $117,221,777
Gross unrealized depreciation (32,444,415)
------------
$ 84,777,362
============
** Non-income producing security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
32
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
SMALL CAP VALUE EQUITY PORTFOLIO
SEPTEMBER 30, 2000
<TABLE>
<S> <C>
ASSETS
Investments at value (Cost $484,427,730) ............................................................. $572,771,098
Collateral received for securities loaned ............................................................ 46,911,735
Dividends receivable ................................................................................. 513,722
Interest receivable .................................................................................. 67,612
Investments sold receivable .......................................................................... 5,102,928
Capital shares sold receivable ....................................................................... 269,184
Prepaid expenses ..................................................................................... 4,881
------------
TOTAL ASSETS .................................................................................. 625,641,160
------------
LIABILITIES
Payable upon return of securities loaned ............................................................. 46,911,735
Investments purchased payable ........................................................................ 13,307,305
Capital shares redeemed payable ...................................................................... 863,101
Advisory fees payable ................................................................................ 258,020
Adminstrative fees payable ........................................................................... 106,714
Transfer agent fees payable .......................................................................... 36,883
Other accrued expenses payable ....................................................................... 130,881
------------
TOTAL LIABILITIES ............................................................................. 61,614,639
------------
NET ASSETS (Applicable to 27,507,307 Institutional shares, 2,980,882
Service shares, 1,504,155 Investor A shares, 714,348 Investor B shares and
281,578 Investor C shares outstanding) ............................................................... $564,026,521
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER INSTITUTIONAL SHARE ($470,829,832 (DIVIDE) 27,507,307) ........................................... $17.12
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER SERVICE SHARE ($50,980,063 (DIVIDE) 2,980,882) ................................................... $17.10
======
NET ASSET VALUE AND REDEMPTION PRICE
PER INVESTOR A SHARE ($25,719,323 (DIVIDE) 1,504,155) ................................................ $17.10
======
MAXIMUM OFFERING PRICE PER INVESTOR A SHARE
($17.10 (DIVIDE) 0.955) .............................................................................. $17.91
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent deferred sales charge of 4.5%)
PER INVESTOR B SHARE ($11,831,352 (DIVIDE) 714,348) .................................................. $16.56
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent deferred sales charge of 1.0%)
PER INVESTOR C SHARE ($4,665,951 (DIVIDE) 281,578) ................................................... $16.57
======
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
33
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
SMALL CAP GROWTH EQUITY PORTFOLIO
NUMBER
AS OF SEPTEMBER 30, 2000 OF SHARES VALUE
--------- --------------
COMMON STOCKS -- 77.1%
ADVERTISING -- 0.4%
Getty Images, Inc.** 340,500 $ 10,363,969
--------------
BANKS -- 3.0%
Greater Bay Bancorp 160,000 11,110,000
Investors Financial Service Co. 976,900 61,666,812
Southwest Bancorporation of Texas,
Inc.** 352,400 11,519,075
--------------
84,295,887
--------------
BROADCASTING -- 0.2%
Entravision Communications Corp.** 326,000 5,664,250
--------------
BUSINESS SERVICES -- 1.5%
Affiliated Managers Group, Inc.** 337,200 19,199,325
CompuCredit Corp.** 300,000 16,828,125
Corporate Executive Board Co.** 130,000 5,232,500
--------------
41,259,950
--------------
CHEMICALS -- 0.5%
Varian, Inc.** 346,100 14,903,931
--------------
COMPUTER & OFFICE EQUIPMENT -- 3.2%
Avici Systems, Inc.** 44,500 4,233,062
Descartes Systems Group, Inc.** 285,600 14,137,200
InFocus Corp.** 175,300 9,290,900
Integrated Circuit Systems, Inc.** 376,800 6,970,800
M-Systems Flash Disk Pioneers
Ltd.** 589,800 22,522,987
McDATA Corp. - Class B** 276,700 34,003,836
--------------
91,158,785
--------------
CONSTRUCTION -- 0.0%
Washington Group International, Inc.** 162 567
--------------
COMPUTER SOFTWARE & SERVICES -- 10.0%
Actuate Software Corp.** 29,200 1,008,769
Art Technology Group, Inc.** 239,800 22,721,050
Aspen Technology, Inc.** 370,900 16,736,862
Business Objects SA - ADR** 85,800 9,700,762
Concurrent Computer Corp.** 893,400 16,974,600
Embarcadero Technologies, Inc.** 5,000 256,875
I-Many, Inc.** 258,700 5,157,831
i2 Technologies, Inc.** 137,155 25,656,557
Informatica Corp.** 100,000 9,325,000
Jack Henry & Associates, Inc. 116,400 5,048,850
Manugistics Group, Inc.** 515,600 50,593,250
Mercury Interactive Corp.** 357,000 55,959,750
Netegrity, Inc.** 121,650 8,515,500
Nuance Communications, Inc.** 152,000 18,496,500
Packeteer, Inc.** 296,100 11,233,294
SignalSoft Corp.** 156,300 6,349,687
SmartForce PLC - Spons. ADR** 407,900 19,324,262
--------------
283,059,399
--------------
ELECTRONICS -- 12.5%
ACT Manufacturing, Inc.** 222,900 11,757,975
Active Power, Inc.** 75,000 4,650,000
Bruker Daltonics, Inc.** 460,445 20,432,247
Cable Design Technologies, Inc.** 220,850 5,369,416
Elantec Semiconductor, Inc.** 287,200 28,612,300
Exar Corp.** 240,400 29,088,400
Flextronics International Ltd.** 428,379 35,180,625
Kent Electronics Corp.** 52,900 1,262,987
NUMBER
OF SHARES VALUE
--------- --------------
ELECTRONICS (CONTINUED)
Lightpath Technologies, Inc. -
Class A** 300,000 $ 14,250,000
Marvell Technology Group Ltd.** 27,100 2,090,087
Oak Technology, Inc.** 328,400 8,989,950
Plexus Corp.** 785,000 55,342,500
Power-One, Inc.** 101,444 6,138,947
Sanmina Corp.** 148,960 13,946,380
SDL, Inc.** 122,700 37,791,600
TranSwitch Corp.** 972,502 61,997,003
TTM Technologies, Inc.** 88,900 2,089,150
Virata Corp.** 157,400 10,408,075
WJ Communication, Inc** 150,000 5,550,000
--------------
354,947,642
--------------
ENERGY & UTILITIES -- 3.7%
Calpine Corp.** 917,700 95,784,938
Capstone Turbine Corp.** 118,300 8,192,275
Proton Energy Systems** 60,000 1,717,500
--------------
105,694,713
--------------
ENTERTAINMENT & LEISURE -- 2.3%
Extended Stay America, Inc.** 176,600 2,339,950
Mandalay Resort Group** 528,800 13,550,500
MGM Grand, Inc. 737,700 28,170,919
Park Place Entertainment Corp.** 804,100 12,162,013
WMS Industries, Inc.** 376,700 8,475,750
--------------
64,699,132
--------------
MANUFACTURING -- 0.3%
REMEC, Inc.** 319,300 9,399,394
--------------
MEDICAL & MEDICAL SERVICES -- 7.0%
Barr Laboratories, Inc.** 439,450 29,141,028
Celgene Corp.** 781,900 46,523,050
Charles River Laboratories
International, Inc.** 72,500 2,465,000
Inhale Therapeutic Systems** 769,300 43,369,288
Lexicon Genetics, Inc.** 321,300 10,161,113
Pharmacopeia, Inc.** 445,300 11,355,150
Titan Pharmaceuticals, Inc.** 842,900 54,788,500
--------------
197,803,129
--------------
MEDICAL INSTRUMENTS & SUPPLIES -- 2.0%
Cerner Corp.** 114,700 5,326,381
Genencor International, Inc.** 285,200 8,449,050
Novoste Corp.** 187,700 7,977,250
Techne Corp.** 310,100 34,731,200
--------------
56,483,881
--------------
OIL & GAS -- 1.0%
Cal Dive International, Inc.** 218,610 12,501,759
Cross Timbers Oil Co. 398,550 7,647,178
Patterson Energy, Inc.** 70,900 2,437,188
Spinnaker Exploration Co.** 190,000 6,626,250
--------------
29,212,375
--------------
PERSONAL SERVICES -- 0.9%
Computer Learning Centers, Inc.** 25,071 24,288
International Game Technology,
Inc.** 716,300 24,085,588
--------------
24,109,876
--------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
34
<PAGE>
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BLACKROCK FUNDS
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
SMALL CAP GROWTH EQUITY PORTFOLIO (CONCLUDED)
NUMBER
AS OF SEPTEMBER 30, 2000 OF SHARES VALUE
--------- --------------
COMMON STOCKS (CONTINUED)
PHARMACEUTICALS -- 15.6%
Aclara Biosciences, Inc.** 452,343 $ 13,739,919
Advance Paradigm, Inc.** 450,000 18,984,375
Alkermes, Inc.** 240,500 9,289,313
AmeriSource Health Corp. -
Class A** 221,100 10,391,700
Aurora Biosciences Corp.** 253,300 17,224,400
Discovery Partners Intl.** 28,800 585,000
Genzyme Transgenics Corp.** 381,000 13,430,250
Intermune Pharmaceuticals, Inc.** 256,100 13,893,425
IntraBiotics Pharmaceuticals, Inc.** 689,100 11,197,875
Maxim Pharmaceuticals, Inc.** 252,900 15,363,675
Medicis Pharmaceutical Corp.** 276,700 17,017,050
Millennium Pharmaceuticals, Inc.** 318,800 46,564,725
Noven Pharmaceuticals, Inc.** 836,971 35,780,510
OSI Pharmaceuticals, Inc.** 382,200 26,754,000
QLT, Inc.** 172,600 12,233,025
Shire Pharmaceuticals Group PLC -
ADR** 822,461 42,459,549
United Therapeutics Corp.** 552,200 48,248,475
Vertex Pharmaceuticals, Inc.** 1,054,800 89,130,600
--------------
442,287,866
--------------
RESTAURANTS -- 0.5%
Brinker International, Inc.** 455,400 13,718,925
--------------
RETAIL MERCHANDISING -- 2.6%
American Eagle Outfitters, Inc.** 250,300 7,884,450
Oakley, Inc.** 523,900 9,200,994
Pier 1 Imports, Inc. 1,645,400 22,315,738
Talbots, Inc. 290,849 19,268,746
Venator Group, Inc.** 1,262,800 15,627,150
--------------
74,297,078
--------------
SECURITY BROKERS & DEALERS -- 0.3%
LaBranche & Co., Inc.** 278,600 9,298,275
--------------
SEMICONDUCTORS & RELATED DEVICES -- 2.8%
Applied Micro Circuits Corp.** 387,528 80,242,517
--------------
TELECOMMUNICATIONS -- 6.6%
Exfo Electro-Optical Engineering,
Inc.** 158,800 6,917,725
Inrange Technologies Corp. Com** 87,500 4,637,500
Lexent, Inc.** 84,500 2,513,875
Microcell Telecommunications,
Inc.** 178,400 5,184,750
Natural MicroSystems Corp.** 1,003,200 53,969,025
Omnisky Corp.** 85,600 1,738,750
Pinnacle Holdings, Inc.** 438,600 11,677,725
Polycom, Inc.** 770,000 51,565,938
SBA Communications Corp.** 660,557 27,702,109
Sonus Networks, Inc.** 40,200 5,080,275
Spectrasite Holdings, Inc.** 661,800 12,284,663
Ulticom, Inc.** 80,283 3,783,336
--------------
187,055,671
--------------
TEXTILES -- 0.2%
Columbia Sportswear Co.** 140,700 6,454,613
--------------
TOTAL COMMON STOCKS
(Cost $1,383,758,802) 2,186,411,825
--------------
PAR/SHARES
MATURITY (000) VALUE
-------- ---------- --------------
CORPORATE BONDS -- 0.2%
Speedway Motorsports, Inc.
5.75% 09/30/03 $ 7,000 $ 6,168,750
--------------
(Cost $7,000,000)
SHORT TERM INVESTMENTS -- 22.7%
Citicorp Commercial Paper
6.50% 12/07/00 10,690 10,558,748
Corporate Receivables Trust
Commerical Paper
6.48% 11/20/00 6,170 6,114,470
Federal Farm Credit Bank
Discount Notes
6.28% 10/02/00 13,100 13,097,715
Federal Home Loan Bank
Discount Notes
6.20% 10/02/00 72,150 72,137,574
6.28% 10/02/00 63,300 63,288,958
6.35% 10/06/00 185,143 184,979,714
6.45% 10/27/00 30,550 30,407,688
Federal Home Loan Mortgage
Corp. Discount Notes
6.40%*** 10/17/00 100,000 99,715,333
Salomon Brothers Commerical
Paper
6.48% 11/20/00 6,170 6,114,470
Student Loan Marketing
Association Discount Notes
6.28% 10/02/00 154,900 154,872,979
Galileo Money Market Fund 3,882 3,881,771
--------------
TOTAL SHORT TERM INVESTMENTS
(Cost $645,171,353) 645,169,420
--------------
TOTAL INVESTMENTS IN
SECURITIES -- 100.0%
(Cost $2,035,930,155*) $2,837,749,995
==============
-------------------
* Cost for Federal income tax purposes is $2,059,863,527. The gross unrealized
appreciation (depreciation) on a tax basis is as follows:
Gross unrealized appreciation $841,088,971
Gross unrealized depreciation (63,202,503)
------------
$777,886,468
============
** Non-income producing security.
*** Securities pledged as collateral with a value of $22,925,480 on 1,150
Standard & Poor's 500 Stock Index futures contracts expiring December 2000.
The value of such contracts on September 30, 2000 was $417,938,750, thereby
resulting in an unrealized loss of $10,102,309.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
35
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
SMALL CAP GROWTH EQUITY PORTFOLIO
SEPTEMBER 30, 2000
<TABLE>
<S> <C>
ASSETS
Investments at value (Cost $2,035,930,155) .......................................................... $2,837,749,995
Collateral received for securities loaned ........................................................... 497,076,216
Dividends receivable ................................................................................ 35,986
Interest receivable ................................................................................. 317,104
Investments sold receivable ......................................................................... 43,126,199
Capital shares sold receivable ...................................................................... 2,739,674
Prepaid expenses .................................................................................... 13,711
--------------
TOTAL ASSETS ................................................................................. 3,381,058,885
--------------
LIABILITIES
Payable upon return of securities loaned ............................................................ 497,076,216
Investments purchased payable ....................................................................... 31,534,859
Capital shares redeemed payable ..................................................................... 11,462,366
Advisory fees payable ............................................................................... 1,184,878
Adminstrative fees payable .......................................................................... 465,755
Transfer agent fees payable ......................................................................... 63,307
Other accrued expenses payable ...................................................................... 806,885
Futures margin payable .............................................................................. 5,806,869
--------------
TOTAL LIABILITIES ............................................................................ 548,401,135
--------------
NET ASSETS (Applicable to 61,436,225 Institutional shares, 9,041,110
Service shares, 5,080,621 Investor A shares, 2,902,052 Investor B shares and
1,491,103 Investor C shares outstanding) ............................................................ $2,832,657,750
==============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER INSTITUTIONAL SHARE ($2,196,699,928 (DIVIDE) 61,436,225) ........................................ $35.76
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER SERVICE SHARE ($315,647,262 (DIVIDE) 9,041,110) ................................................. $34.91
======
NET ASSET VALUE AND REDEMPTION PRICE
PER INVESTOR A SHARE ($175,112,146 (DIVIDE) 5,080,621) .............................................. $34.47
======
MAXIMUM OFFERING PRICE PER INVESTOR A SHARE
($34.47 (DIVIDE) 0.955) ............................................................................. $36.09
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent deferred sales charge of 4.5%)
PER INVESTOR B SHARE ($95,922,451 (DIVIDE) 2,902,052) ............................................... $33.05
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent deferred sales charge of 1.0%)
PER INVESTOR C SHARE ($49,275,963 (DIVIDE) 1,491,103) ............................................... $33.05
======
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
36
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
MICRO-CAP EQUITY PORTFOLIO
NUMBER
AS OF SEPTEMBER 30, 2000 OF SHARES VALUE
--------- ------------
COMMON STOCKS -- 75.6%
BANKS -- 0.6%
East West Bancorp, Inc. 75,000 $ 1,467,187
Sterling Bancshares, Inc. 125,000 1,906,250
------------
3,373,437
------------
BUSINESS SERVICES -- 2.3%
Actrade Financial Technologies Ltd.** 90,000 2,705,625
Administaff, Inc.** 70,000 5,299,000
Bell Micro Products, Inc.** 64,300 2,009,375
ScanSource, Inc.** 75,000 4,003,125
------------
14,017,125
------------
COMPUTER & OFFICE EQUIPMENT -- 0.3%
Avantgo, Inc. 100,000 2,000,000
------------
COMPUTER SOFTWARE & SERVICES -- 11.7%
Adept Technology, Inc.** 117,800 6,191,862
Caminus Corp.** 90,000 3,577,500
Carreker-Antinori, Inc.** 330,000 6,435,000
Docent, Inc.** 40,500 749,250
Embarcadero Technologies, Inc.** 205,000 10,531,875
Genomic Solutions, Inc.** 94,200 1,619,062
Information Resource Engineering,
Inc.** 117,800 3,563,450
Macrovision Corp.** 130,000 10,530,000
Precise Software Solutions** 235,000 10,134,375
Rosetta Inpharmatics, Inc.** 174,100 4,855,758
SignalSoft Corp.** 65,100 2,644,687
Socket Communications, Inc.** 117,800 1,825,900
Talx Corp.** 203,500 5,240,125
Valicert, Inc.** 145,000 2,537,500
Vastera, Inc.** 31,300 688,600
------------
71,124,944
------------
ELECTRONICS -- 10.3%
Anaren Microwave, Inc.** 80,000 10,850,000
BEI Technologies, Inc. 25,000 1,043,750
Elantec Semiconductor, Inc.** 110,000 10,958,750
Lightpath Technologies, Inc. -
Class A** 185,000 8,787,500
Measurement Specialties, Inc.** 30,300 1,461,975
Merix Corp.** 219,000 14,193,937
Park Electrochemical Corp. 80,000 4,450,000
Spectrum Control, Inc.** 117,800 1,892,162
Trikon Technologies, Inc.** 150,000 2,118,750
Ultimate Electronics, Inc.** 37,000 1,521,625
Vertex Interactive, Inc.** 275,000 5,035,937
------------
62,314,386
------------
ENTERTAINMENT & LEISURE -- 2.4%
Isle of Capri Casinos, Inc.** 300,000 4,650,000
LodgeNet Entertainment Corp.** 225,000 6,496,875
P.F. Chang's China Bistro, Inc. 80,000 2,765,000
Penn National Gaming, Inc.** 60,000 913,125
------------
14,825,000
------------
MEDICAL & MEDICAL SERVICES -- 11.0%
Arqule, Inc.** 242,700 4,141,069
BioSource International, Inc.** 410,000 12,710,000
Ciphergen Biosystems, Inc.** 39,700 1,270,400
Corvas International, Inc.** 365,000 8,486,250
Dianon Systems, Inc.** 79,800 3,182,025
IMPATH, Inc.** 141,100 8,906,937
Paradigm Genetics, Inc.** 216,800 5,176,100
NUMBER
OF SHARES VALUE
--------- ------------
MEDICAL & MEDICAL SERVICES (CONTINUED)
Physiometrix, Inc.** 300,000 $ 6,637,500
Titan Pharmaceuticals, Inc.** 208,900 13,578,500
Vascular Solutions, Inc.** 58,900 1,105,295
Virologic, Inc.** 87,200 1,471,500
------------
66,665,576
------------
MEDICAL INSTRUMENTS & SUPPLIES -- 0.8%
1-800-Contacts, Inc.** 30,000 1,440,000
Excel Technology, Inc.** 100,000 3,206,250
------------
4,646,250
------------
MISCELLANEOUS SERVICES -- 1.1%
Career Education Corp.** 150,000 6,675,000
------------
OIL & GAS -- 2.5%
Horizon Offshore, Inc.** 225,000 3,965,625
IMPCO Technologies, Inc.** 110,000 3,162,500
Key Production Co., Inc.** 212,000 4,677,250
Patina Oil & Gas Corp. 155,000 3,100,000
------------
14,905,375
------------
PHARMACEUTICALS -- 19.7%
3 Dimensional Pharmaceuticals,
Inc.** 139,848 5,034,528
Avant Immunotherapeutics** 270,000 2,919,375
Biotransplant, Inc.** 180,000 3,071,250
Cima Labs, Inc.** 200,000 10,412,500
Connetics Corp.** 362,100 8,735,662
Genaissance Pharmaceuticals, Inc.** 117,800 2,436,988
Genzyme Transgenics Corp.** 230,600 8,128,650
InKine Pharmaceutical Co., Inc.** 515,900 5,545,925
Inspire Pharmaceuticals, Inc.** 200,000 6,000,000
Matrix Pharmaceutical, Inc.** 206,100 3,207,431
Neopharm, Inc.** 175,000 6,912,500
NexMed, Inc.** 80,000 1,570,000
Noven Pharmaceuticals, Inc.** 230,000 9,832,500
NPS Pharmaceuticals, Inc.** 275,000 15,554,688
Onyx Pharmaceuticals, Inc.** 196,400 4,836,350
Pain Therapeutics, Inc.** 99,000 1,961,438
Scios Nova, Inc.** 260,000 2,697,500
Trimeris, Inc.** 142,600 9,973,088
United Therapeutics Corp.** 100,000 8,737,500
Vion Pharmaceuticals, Inc.** 126,000 2,252,250
------------
119,820,123
------------
PHOTOGRAPHIC EQUIPMENT -- 0.4%
Applied Films Corp.** 100,000 2,712,500
------------
RESTAURANTS -- 0.9%
California Pizza Kitchen, Inc.** 199,900 5,597,200
------------
RETAIL MERCHANDISING -- 0.8%
Christopher & Banks Corp.** 130,000 5,053,750
------------
SEMICONDUCTORS & RELATED DEVICES -- 1.1%
OmniVision Technologies, Inc.** 190,200 6,882,863
------------
TELECOMMUNICATIONS -- 8.9%
Arguss Holding, Inc.** 90,000 1,839,375
Catapult Communications Corp.** 50,000 931,250
Ceragon Networks Ltd.** 176,700 4,748,813
Datum, Inc.** 49,000 1,274,000
General Magic, Inc.** 200,000 1,175,000
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
37
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
MICRO-CAP EQUITY PORTFOLIO (CONCLUDED)
NUMBER
AS OF SEPTEMBER 30, 2000 OF SHARES VALUE
--------- ------------
TELECOMMUNICATIONS (CONTINUED)
Hybrid Networks, Inc.** 160,000 $ 12,970,000
International Fibercom, Inc.** 140,000 2,047,500
Lanoptics Ltd.** 50,000 1,750,000
Natural MicroSystems Corp.** 215,000 11,566,328
O2Wireless Solutions, Inc.** 159,000 3,070,688
PECO II, Inc.** 100,000 4,681,250
RMH Teleservices, Inc.** 300,000 4,818,750
Spectrasite Holdings, Inc.** 158,400 2,940,300
SymmetriCom, Inc.** 176,700 2,760,938
Tollgrade Communications, Inc.** 55,000 7,634,688
------------
54,208,880
------------
TRANSPORTATION -- 0.7%
Offshore Logistics, Inc.** 118,100 2,111,038
Trico Marine Services, Inc.** 147,200 2,336,800
------------
4,447,838
------------
TOTAL COMMON STOCKS
(Cost $329,292,563) 459,270,247
------------
PAR/SHARES
MATURITY (000)
-------- ----------
SHORT TERM INVESTMENTS -- 26.7%
Federal Home Loan Bank
Discount Notes
6.28% 10/02/00 $152,000 151,973,484
Federal Home Loan Mortgage Corp.
Discount Notes
6.39%*** 11/07/00 7,000 6,954,027
Galileo Money Market Fund 3,641 3,641,339
------------
TOTAL SHORT TERM INVESTMENTS
(Cost $162,568,850) 162,568,850
------------
TOTAL INVESTMENTS IN
SECURITIES
(Cost $491,861,413*) 102.3% 621,839,097
LIABILITIES IN EXCESS OF
OTHER ASSETS (2.3%) (13,923,182)
------ ------------
NET ASSETS (Applicable to 2,350,118
Institutional shares, 62,647 Service
shares, 3,373,795 Investor A shares,
4,829,760 Investor B shares and
3,025,460 Investor C shares
outstanding) 100.0% $607,915,915
====== ============
VALUE
------------
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
INSTITUTIONAL SHARE
($106,726,571 (DIVIDE) 2,350,118) $45.41
======
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
PER SERVICE SHARE
($2,824,118 (DIVIDE) 62,647) $45.08
======
NET ASSET VALUE AND
REDEMPTION PRICE PER
INVESTOR A SHARE
($151,587,834 (DIVIDE) 3,373,795) $44.93
======
MAXIMUM OFFERING PRICE
PER INVESTOR A SHARE
($44.93 (DIVIDE) 0.950) $47.29
======
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
(SUBJECT TO A MAXIMUM CONTINGENT
DEFERRED SALES CHARGE OF 4.5%)
PER INVESTOR B SHARE
($213,237,440 (DIVIDE) 4,829,760) $44.15
======
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
(SUBJECT TO A MAXIMUM CONTINGENT
DEFERRED SALES CHARGE OF 1.0%)
PER INVESTOR C SHARE
($133,539,952 (DIVIDE) 3,025,460) $44.14
======
-------------------
* Cost for Federal income tax purposes is $494,288,189. The gross unrealized
appreciation (depreciation) on a tax basis is as follows:
Gross unrealized appreciation $136,191,025
Gross unrealized depreciation (8,640,117)
-----------
$127,550,908
============
** Non-income producing security.
*** Securities pledged as collateral with a value of $6,951,210 on 200 Standard
& Poor's 500 Stock Index futures contracts expiring December 2000. The value
of such contracts on September 30, 2000 was $72,685,000, thereby resulting
in an unrealized loss of $1,352,888.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
38
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
GLOBAL SCIENCE & TECHNOLOGY PORTFOLIO
NUMBER
AS OF SEPTEMBER 30, 2000 OF SHARES VALUE
--------- ------------
COMMON STOCKS -- 85.9%
CANADA -- 3.9%
Biovail Corp.** 16,000 $ 1,303,000
Certicom Corp.** 12,500 495,138
Cognos, Inc.** 11,300 460,475
Descartes Systems Group, Inc.** 38,700 1,915,650
QLT, Inc.** 5,500 389,812
Research in Motion Ltd.** 8,100 798,357
------------
5,362,432
------------
DENMARK -- 0.9%
Novo Nordisk A/S - Class B 5,800 1,286,337
------------
ISRAEL -- 1.9%
Check Point Software Technologies
Ltd.** 14,000 2,205,000
Galileo Technology Ltd.** 10,200 323,850
------------
2,528,850
------------
JAPAN -- 0.3%
Ibiden Co. Ltd. 20,000 397,002
------------
SINGAPORE -- 0.7%
Flextronics International Ltd.** 11,000 903,375
------------
SWITZERLAND -- 1.4%
Disetronic Holding AG 360 366,573
Serono SA - ADR** 20,000 605,000
Straumann AG 115 256,156
Swisslog Holding AG 1,000 617,898
------------
1,845,627
------------
UNITED KINGDOM -- 1.3%
ARC International PLC** 187,000 1,125,272
Autonomy Corp. PLC** 400 22,400
Orchestream Holdings Ltd.** 60,000 603,228
------------
1,750,900
------------
UNITED STATES -- 75.5%
COMPUTER & OFFICE EQUIPMENT -- 1.1%
McDATA Corp. - Class B** 12,500 1,536,133
------------
COMPUTER SOFTWARE & SERVICES -- 23.9%
Adobe Systems, Inc. 4,000 621,000
Advantage Learning Systems, Inc.** 15,000 525,937
Ariba, Inc.** 12,900 1,848,127
BEA Systems, Inc.** 33,500 2,608,812
Brocade Communications Systems,
Inc.** 7,700 1,817,200
CacheFlow, Inc.** 2,000 286,000
Cerner Corp.** 14,000 650,125
Commerce One, Inc.** 14,600 1,146,100
Concurrent Computer Corp.** 31,300 594,700
COR Therapeutics, Inc.** 27,000 1,682,437
Cybear Group** 2,084 2,735
Docent, Inc.** 9,500 173,969
DST Systems, Inc.** 4,000 470,000
EMC Corp.** 30,100 2,983,662
Excalibur Technologies Corp.** 20,000 1,343,750
Extreme Networks, Inc.** 13,000 1,488,500
Homestore.com, Inc.** 4,900 229,075
I-many, Inc.** 11,400 227,287
i2 Technologies, Inc.** 13,500 2,525,344
Interwoven, Inc.** 11,000 1,243,688
NUMBER
OF SHARES VALUE
--------- ------------
UNITED STATES (CONTINUED)
COMPUTER SOFTWARE & SERVICES (CONTINUED)
Macrovision Corp.** 21,000 $ 1,701,000
Mercury Interactive Corp.** 17,000 2,664,750
Rational Software Corp.** 29,000 2,011,875
Software.com, Inc.** 2,000 362,875
Stanford Microdevices, Inc.** 17,000 909,500
Sun Microsystems, Inc.** 15,600 1,821,300
Vastera, Inc.** 6,700 147,400
VeriSign, Inc.** 2,000 405,125
------------
32,492,273
------------
ELECTRONICS -- 7.8%
Applied Micro Circuits Corp.** 10,900 2,256,981
Broadcom Corp. - Class A** 2,000 487,500
Handspring, Inc.** 26,000 1,795,625
Merix Corp.** 21,000 1,361,063
OmniVision Technologies, Inc.** 13,700 495,769
Palm, Inc.** 23,300 1,233,444
Plexus Corp.** 22,200 1,565,100
Power-One, Inc.** 5,100 308,630
Sanmina Corp.** 11,300 1,057,963
TTM Technologies, Inc. ** 3,900 91,650
------------
10,653,725
------------
ENERGY & UTILITIES -- 0.5%
Energy Conversion Devices, Inc.** 9,000 334,687
FuelCell Energy, Inc.** 3,500 336,820
------------
671,507
------------
MANUFACTURING -- 1.0%
Corning, Inc. 4,600 1,366,200
------------
MEASURING & CONTROLLING DEVICES -- 5.3%
Newport Corp. 14,700 2,341,205
PerkinElmer, Inc. 18,400 1,920,500
SatCon Technology Corp.** 15,000 536,250
Waters Corp.** 27,600 2,456,400
------------
7,254,355
------------
MEDICAL & MEDICAL SERVICES -- 10.6%
Accredo Health, Inc.** 25,000 1,221,875
BioSource International, Inc.** 53,000 1,643,000
Enzon, Inc.** 19,000 1,254,000
HCA - The Healthcare Co. 47,000 1,744,875
Laboratory Corp. of America
Holdings** 9,000 1,077,750
Orthodontic Centers of America, Inc.** 29,000 966,063
Oxford Health Plans, Inc.** 53,700 1,650,436
Province Healthcare Co.** 47,250 1,887,047
Tenet Healthcare Corp.** 45,300 1,647,788
Thoratec Laboratories Corp.** 27,000 594,000
Wellpoint Health Networks Inc.** 7,500 720,000
------------
14,406,834
------------
MEDICAL INSTRUMENTS & SUPPLIES -- 2.1%
Beckman Coulter, Inc. 13,100 1,010,337
Bruker Daltonics, Inc.** 25,105 1,114,034
Ciphergen Biosystems, Inc.** 8,500 272,000
Physiometrix, Inc.** 19,300 427,013
------------
2,823,384
------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
39
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
GLOBAL SCIENCE & TECHNOLOGY PORTFOLIO (CONCLUDED)
NUMBER
AS OF SEPTEMBER 30, 2000 OF SHARES VALUE
--------- ------------
COMMON STOCKS (CONTINUED)
UNITED STATES (CONTINUED)
PHARMACEUTICALS -- 15.0%
3 Dimensional Pharmaceuticals,
Inc.** 21,514 $ 774,504
ALZA Corp.** 21,500 1,859,750
Andrx Group** 19,000 1,774,125
Cardinal Health, Inc.** 7,000 617,312
Cell Therapeutics, Inc.** 37,200 2,480,775
Connetics Corp.** 48,000 1,158,000
IDEC Pharmaceuticals Corp.** 3,700 648,830
Immunogen, Inc.** 63,000 2,153,813
InKine Pharmaceutical Co., Inc.** 39,600 425,700
Inspire Pharmaceuticals, Inc.** 23,500 705,000
NPS Pharmaceuticals, Inc.** 37,200 2,104,125
PRAECIS Pharmaceuticals, Inc.** 50,900 2,163,250
Vertex Pharmaceuticals, Inc.** 29,200 2,467,400
XOMA Ltd.** 75,800 1,094,364
------------
20,426,948
------------
SEMICONDUCTORS & RELATED DEVICES -- 3.5%
DDI Corp.** 15,000 663,750
Integrated Device Technology, Inc.** 11,600 1,049,800
Micrel, Inc.** 17,900 1,199,300
PMC-Sierra, Inc.** 8,300 1,786,575
------------
4,699,425
------------
TELECOMMUNICATIONS -- 4.7%
Cosine Communications, Inc.** 5,600 311,150
Gemstar-TV Guide International, Inc.** 15,800 1,377,562
Juniper Networks, Inc.** 7,200 1,576,350
Network Appliance, Inc.** 18,200 2,318,225
OmniSky Corp.** 3,700 75,156
PECO II, Inc.** 15,300 716,231
------------
6,374,674
------------
TOTAL UNITED STATES 102,705,458
------------
TOTAL COMMON STOCKS
(Cost $96,735,907) 116,779,981
------------
PAR/SHARES
MATURITY (000)
-------- ----------
SHORT TERM INVESTMENTS -- 16.6%
Federal Home Loan Bank
Discount Notes
6.28% 10/02/00 $20,000 19,996,509
Galileo Money Market Fund 2,622 2,621,618
------------
TOTAL SHORT TERM INVESTMENTS
(Cost $22,618,127) 22,618,127
------------
PUT OPTION -- 0.0%
Yahoo! Inc. Jan 120 01/20/01 10 34,000
(Cost $32,532) ------------
VALUE
------------
TOTAL INVESTMENTS IN
SECURITIES
(Cost $119,386,564*) 102.5% $139,432,108
LIABILITIES IN EXCESS OF
OTHER ASSETS (Including
$7,768,802 of Investments
purchased payable) (2.5%) (3,407,355)
------ ------------
NET ASSETS (Applicable to 1,712,026
Institutional shares, 1,356 Service
shares, 3,325,572 Investor A shares,
4,831,161 Investor B shares and
1,049,699 Investor C shares
outstanding) 100.0% $136,024,753
====== ============
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
PER INSTITUTIONAL SHARE
($21,383,232 (DIVIDE) 1,712,026) $12.49
======
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
PER SERVICE SHARE
($16,915 (DIVIDE) 1,356) $12.47
======
NET ASSET VALUE AND
REDEMPTION PRICE
PER INVESTOR A SHARE
($41,473,801 (DIVIDE) 3,325,572) $12.47
======
MAXIMUM OFFERING PRICE
PER INVESTOR A SHARE
($12.47 (DIVIDE) 0.950) $13.13
======
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
(SUBJECT TO A MAXIMUM CONTINGENT
DEFERRED SALES CHARGE OF 4.5%)
PER INVESTOR B SHARE
($60,093,651 (DIVIDE) 4,831,161) $12.44
======
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
(SUBJECT TO A MAXIMUM CONTINGENT
DEFERRED SALES CHARGE OF 1.0%)
PER INVESTOR C SHARE
($13,057,154 (DIVIDE) 1,049,699) $12.44
======
------------------
* Cost for Federal income tax purposes is $120,159,246. The gross unrealized
appreciation (depreciation) on a tax basis is as follows:
Gross unrealized appreciation $20,789,595
Gross unrealized depreciation (1,516,733)
-----------
$19,272,862
===========
** Non-income producing security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
40
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
EUROPEAN EQUITY PORTFOLIO
NUMBER
AS OF SEPTEMBER 30, 2000 OF SHARES VALUE
--------- ----------
COMMON STOCKS -- 91.8%
DENMARK -- 2.2%
ISS A/S 1,919 $ 119,168
----------
FRANCE -- 11.1%
Alcatel Alsthom 1,994 127,568
Axa SA 1,117 145,879
Hermes International 923 131,946
Total Fina SA 1,282 187,564
----------
592,957
----------
GERMANY -- 5.7%
Deutsche Bank AG 2,126 175,785
Muenchener Rueckversicherungs
AG 447 132,139
----------
307,924
----------
ITALY -- 3.2%
Mediolanum SpA 10,015 170,210
----------
LUXEMBOURG -- 2.2%
Societe Europeene des Satellites 791 118,660
----------
NETHERLANDS -- 19.4%
ASM Lithography Holding NV 5,100 169,214
Buhrmann NV 4,056 102,005
Elsevier NV 16,888 189,260
Fortis NV 6,170 188,926
Philips Electronics NV 3,282 141,244
TNT Post Group NV 6,587 153,160
United Pan-Europe Communications
NV** 4,975 97,372
----------
1,041,181
----------
PORTUGAL -- 2.4%
PT Multimedia Servicos SA 3,538 129,564
----------
SPAIN -- 11.7%
Banco Santander Central Hispano 16,411 180,150
Grupo Prisa SA 5,577 125,985
Repsol SA 8,608 158,375
Telefonica Espana** 8,391 166,230
----------
630,740
----------
SWEDEN -- 5.4%
Ericsson Telephone Co. LM 8,006 121,756
Nordbanken Holdings AB 23,654 169,431
----------
291,187
----------
SWITZERLAND -- 13.8%
Adecco SA 205 132,837
Novartis AG 105 160,983
Roche Holding AG 15 131,911
United Bank of Switzerland 1,183 157,419
Zurich Allied AG 337 155,784
----------
738,934
----------
UNITED KINGDOM -- 14.7%
BAA PLC 23,523 186,066
Centrica PLC 42,126 135,310
Glaxo Wellcome PLC 5,649 171,050
Granada Compass PLC** 13,000 121,666
Ryanair Holdings PLC** 22,500 175,514
----------
789,606
----------
TOTAL COMMON STOCKS
(Cost $5,127,983) 4,930,131
----------
PAR/SHARES
MATURITY (000) VALUE
-------- ---------- ----------
SHORT-TERM INVESTMENTS -- 8.2%
Federal Home Loan Bank
Discount Notes
6.28% 10/02/00 $400 $ 399,860
Galileo Money Market Fund 43 43,359
----------
TOTAL SHORT-TERM INVESTMENTS
(Cost $443,219) 443,219
----------
TOTAL INVESTMENTS IN
SECURITIES -- 100.0%
(Cost $5,571,272*) $5,373,350
==========
------------------
* Cost for Federal income tax purposes is $5,638,772. The gross unrealized
appreciation (depreciation) on a tax basis is as follows:
Gross unrealized appreciation $ 92,943
Gross unrealized depreciation (358,365)
---------
$(265,422)
=========
** Non-income producing security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
41
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
EUROPEANE QUITY PORTFOLIO
SEPTEMBER 30, 2000
<TABLE>
<S> <C>
ASSETS
Investments at value (Cost $5,571,272) ................................................................ $5,373,350
Cash denominated in foreign currencies (Cost $356,646) ................................................ 360,852
Reimbursement from Adviser ............................................................................ 43,098
Dividend and reclaims receivable ...................................................................... 3,748
Interest receivable ................................................................................... 310
Investments sold receivable ........................................................................... 77,613
Capital shares sold receivable ........................................................................ 177,474
Prepaid expenses ...................................................................................... 28,653
----------
TOTAL ASSETS ................................................................................... 6,065,098
----------
LIABILITIES
Investments purchased payable ......................................................................... 254,602
Transfer agent fees payable ........................................................................... 161
Other accrued expenses payable ........................................................................ 8,212
----------
TOTAL LIABILITIES .............................................................................. 262,975
----------
NET ASSETS (Applicable to 509,936 Institutional shares, 10
Service shares, 49,714 Investor A shares, 40,200 Investor B shares and
10,609 Investor C shares outstanding) ................................................................. $5,802,123
==========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER INSTITUTIONAL SHARE ($4,848,047 (DIVIDE) 509,936) ................................................. $ 9.51
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER SERVICE SHARE ($95 (DIVIDE) 10) ................................................................... $ 9.50
======
NET ASSET VALUE AND REDEMPTION PRICE
PER INVESTOR A SHARE ($472,340 (DIVIDE) 49,714) ....................................................... $ 9.50
======
MAXIMUM OFFERING PRICE PER INVESTOR A SHARE
($9.50 (DIVIDE) 0.950) ................................................................................ $10.00
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent deferred sales charge of 4.5%)
PER INVESTOR B SHARE ($381,061 (DIVIDE) 40,200) ....................................................... $ 9.48
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent deferred sales charge of 1.0%)
PER INVESTOR C SHARE ($100,580 (DIVIDE) 10,609) ....................................................... $ 9.48
======
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
42
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
INTERNATIONAL EQUITY PORTFOLIO
NUMBER
AS OF SEPTEMBER 30, 2000 OF SHARES VALUE
--------- --------------
COMMON STOCKS -- 91.9%
FINLAND -- 2.2%
Nokia Oyj 685,621 $ 27,782,038
--------------
FRANCE -- 8.5%
Alcatel Alsthom 230,727 14,760,958
Aventis SA 228,904 17,169,214
Axa SA 176,089 22,997,046
Carrefour SA 273,652 20,211,670
Total Fina SA 229,494 33,576,387
--------------
108,715,275
--------------
GERMANY -- 3.9%
Deutsche Bank AG 355,141 29,364,223
Muenchener Rueckversicherungs
AG 70,444 20,824,133
--------------
50,188,356
--------------
HONG KONG -- 2.3%
Bank of East Asia Ltd. 2,250,000 5,050,090
South China Morning Post
Holdings Ltd. 3,700,000 2,823,562
Sun Hung Kai Properties Ltd. 2,285,000 21,540,319
--------------
29,413,971
--------------
JAPAN -- 25.9%
Advantest Corp. 75,400 11,847,974
Asahi Glass Co. Ltd. 1,509,000 15,430,734
Bank of Tokyo-Mitsubishi Ltd. 1,720,000 20,326,117
Daiwa Securities Co. Ltd. 925,000 10,845,596
DDI Corp. 1,958 12,864,891
Fuji Heavy Industries Ltd. 1,970,000 12,250,973
Fuji Machine Manufacturing
Co. Ltd. 188,000 6,698,131
Japan Airlines Company Ltd. 1,032,000 3,906,053
Marubeni Corp.** 4,000,000 10,031,465
Matsushita Communication
Industrial Co. Ltd. 147,400 19,928,875
Mitsubishi Chemical Corp. 4,076,000 14,144,921
Mitsui Fudosan Co. Ltd. 249,200 3,122,495
Murata Manufacturing Co. Ltd. 86,800 11,968,537
Nippon Express Co. Ltd. 1,535,000 8,196,327
Nippon Steel Corp. 4,085,000 7,258,191
NTT Docomo, Inc. 4,660 13,368,500
Obayashi Corp. 2,575,000 9,531,742
Ricoh Co. 927,000 16,856,887
Sanwa Bank Ltd. 1,754,000 15,614,919
Sekisui House Ltd. 762,000 7,368,962
Sharp Corp. 1,183,000 18,304,425
Softbank Corp. 102,000 9,533,593
Sony Corp. 152,000 15,416,622
Sumitomo Bank Ltd. 1,562,000 19,803,259
Takashimaya Co. Ltd. 1,670,000 11,637,147
Tokyo Electron Ltd. 121,900 11,055,156
Toppan Printing Co. Ltd. 1,403,000 13,567,788
--------------
330,880,280
--------------
NETHERLANDS -- 16.4%
ASM Lithography Holding NV 500,000 16,589,601
Elsevier NV 2,053,403 23,012,088
Fortis NV 741,372 22,700,936
Internationale Nederlanden
Groep NV 462,920 30,833,011
Konin Ahold NV 772,295 21,896,366
Konin Philips 500,381 21,534,345
Royal Dutch Petroleum NV 395,556 23,906,349
NUMBER
OF SHARES VALUE
--------- --------------
NETHERLANDS (CONTINUED)
TNT Post Group NV 804,874 $ 18,714,862
United Pan-Europe Communications
NV** 687,380 13,453,539
Verenigde Nederlandse
Uitgeversbedrijven Verenigd Bezit 362,625 18,239,406
--------------
210,880,503
--------------
SPAIN -- 6.1%
Banco Santander Central Hispano 2,172,990 23,853,725
Repsol SA 1,601,517 29,465,629
Telefonica Espana** 1,281,094 25,379,055
--------------
78,698,409
--------------
SWEDEN -- 4.1%
Electrolux AB Series B 947,003 11,895,281
Ericsson LM-B 1,106,132 16,822,191
Nordbanken Holdings AB 3,393,602 24,307,931
--------------
53,025,403
--------------
SWITZERLAND -- 7.7%
Novartis AG 19,024 29,167,110
Roche Holding AG 2,049 18,019,023
United Bank of Switzerland
(UBS) AG 203,500 27,079,332
Zurich Allied AG 53,348 24,660,996
--------------
98,926,461
--------------
UNITED KINGDOM -- 14.8%
Barclays PLC 940,608 26,033,697
British Telecommunications PLC 1,685,644 17,719,717
Cable & Wireless PLC 1,366,008 19,489,553
Centrica PLC 6,548,885 21,035,289
Glaxo Wellcome PLC 1,087,072 32,916,192
Granada Compass PLC** 1,684,082 15,761,163
Scottish & Newcastle PLC 2,746,618 16,791,717
Vodafone Group PLC 10,851,012 40,509,134
--------------
190,256,462
--------------
TOTAL COMMON STOCKS
(Cost $1,146,781,011) 1,178,767,158
--------------
PAR
MATURITY (000)
-------- --------
SHORT-TERM INVESTMENT -- 12.2%
Federal Home Loan Bank
Discount Notes
6.20% 10/02/00 $157,000 156,972,961
(Cost $156,972,961) --------------
TOTAL INVESTMENTS IN
SECURITIES
(Cost $1,303,753,972*) 104.1% 1,335,740,119
LIABILITIES IN EXCESS OF
OTHER ASSETS (4.1%) (52,272,391)
------ --------------
NET ASSETS (Applicable to 79,687,540
Institutional shares, 9,730,366 Service
shares, 2,171,431 Investor A shares,
624,336 Investor B shares and
128,084 Investor C shares
outstanding) 100.0% $1,283,467,728
====== ==============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
43
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
INTERNATIONAL EQUITY PORTFOLIO (CONCLUDED)
AS OF SEPTEMBER 30, 2000 VALUE
--------------
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
INSTITUTIONAL SHARE
($1,109,016,932 (DIVIDE) 79,687,540) $13.92
======
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
PER SERVICE SHARE
($134,446,900 (DIVIDE) 9,730,366) $13.82
======
NET ASSET VALUE AND
REDEMPTION PRICE PER
INVESTOR A SHARE
($29,881,258 (DIVIDE) 2,171,431) $13.76
======
MAXIMUM OFFERING PRICE
PER INVESTOR A SHARE
($13.76 (DIVIDE) 0.950) $14.48
======
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
(SUBJECT TO A MAXIMUM CONTINGENT
DEFERRED SALES CHARGE OF 4.5%)
PER INVESTOR B SHARE
($8,399,394 (DIVIDE) 624,336) $13.45
======
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
(SUBJECT TO A MAXIMUM CONTINGENT
DEFERRED SALES CHARGE OF 1.0%)
PER INVESTOR C SHARE
($1,723,244 (DIVIDE) 128,084) $13.45
======
------------------
* Cost for Federal income tax purposes is $1,304,853,175. The gross unrealized
appreciation (depreciation) on a tax basis is as follows:
Gross unrealized appreciation $127,555,034
Gross unrealized depreciation (96,668,090)
------------
$ 30,886,944
============
** Non-income producing security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
44
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
INTERNATIONAL SMALL CAP EQUITY PORTFOLIO
NUMBER
AS OF SEPTEMBER 30, 2000 OF SHARES VALUE
--------- ------------
COMMON STOCKS -- 67.8%
AUSTRALIA -- 0.5%
Energy Developments Ltd. 25,000 $ 165,311
QBE Insurance Group Ltd. 250,000 1,184,662
------------
1,349,973
------------
BELGIUM -- 1.3%
Creyf's NV 100,000 2,673,750
Omega Pharma SA 14,000 549,751
------------
3,223,501
------------
BRAZIL -- 0.9%
Embraer - Empresa Brasileira de
Aeronautica SA 75,000 2,325,000
------------
CANADA -- 2.2%
Cognos, Inc.** 75,000 3,056,250
GT Group Telecom, Inc. - Class B** 190,000 2,505,625
------------
5,561,875
------------
FRANCE -- 2.5%
GFI Informatique** 40,000 1,518,125
Prosodie SA 15,000 979,492
Valtech** 125,000 1,982,149
Wavecom SA** 14,000 1,703,611
------------
6,183,377
------------
GERMANY -- 6.5%
ADVA Optical Networking AG** 20,000 1,904,274
Altana AG 25,000 2,796,187
AMB Aachener & Muenchener
Beteiligungs AG 40,000 3,494,405
Articon Information Systems AG** 20,000 1,279,517
Business Objects SA - ADR** 35,000 3,957,187
Hannover Rueckversicherungs AG 15,700 1,354,929
Medigene AG** 20,000 2,011,930
------------
16,798,429
------------
HONG KONG -- 2.3%
China Southern Airlines Co. Ltd. -
Class H** 9,999,400 3,110,028
Dah Sing Financial Group 348,150 1,701,257
Huaneng Power International, Inc. 2,000,000 840,079
------------
5,651,364
------------
IRELAND -- 1.6%
SmartForce PLC - Spons. ADR** 83,000 3,932,125
------------
ISRAEL -- 5.5%
AudioCodes Ltd.** 20,000 1,702,500
Ceragon Networks Ltd.** 75,000 2,015,625
Check Point Software Technologies
Ltd.** 34,000 5,355,000
Galileo Technology Ltd.** 85,000 2,698,750
Mind C.T.I. Ltd.** 100,000 1,187,500
Nice Systems Ltd.** 15,000 1,080,000
------------
14,039,375
------------
JAPAN -- 15.5%
Alpha Systems, Inc. 10,000 1,569,498
Anritsu Corp. 150,000 4,164,354
Fujikura Ltd. 600,000 4,941,699
Hisamitsu Pharmaceutical Co., Inc. 100,000 1,503,794
Hitachi Cable Ltd. 25,000 284,564
Ibiden Co. Ltd. 55,000 1,091,755
JGC Corp. 900,000 4,589,118
NUMBER
OF SHARES VALUE
--------- ------------
JAPAN (CONTINUED)
Mitsubishi Cable Industries 365,000 $ 1,232,880
Net One Systems Co. Ltd. 150 4,261,522
Nippon Electric Glass Co. Ltd. 150,000 3,470,295
Nippon Fire & Marine Insurance
Co. Ltd. 82,000 337,682
Nippon Sheet Glass Co. Ltd. 150,000 2,408,384
Nippon System Development Co. Ltd. 24,000 2,734,037
Park24 Co. Ltd. 19,400 2,513,419
Stanley Electric Co. Ltd. 225,000 2,723,487
Toyo Information Systems Co. Ltd. 35,000 2,267,259
------------
40,093,749
------------
LUXEMBOURG -- 0.9%
Thiel Logistik AG** 15,000 2,230,331
------------
NORWAY -- 0.8%
Tomra Systems ASA 65,000 2,137,218
------------
SINGAPORE -- 1.3%
Datacraft Asia Ltd. 400,000 3,320,000
------------
SOUTH KOREA -- 0.5%
Hite Brewery Co. 30,000 1,209,254
------------
SPAIN -- 2.5%
Indra Sistemas SA 150,000 3,242,914
NH Hoteles SA 275,000 3,215,338
------------
6,458,252
------------
SWEDEN -- 0.8%
Om Gruppen AB 50,000 2,148,861
------------
SWITZERLAND -- 10.7%
Disetronic Holding AG 5,600 5,702,252
Gretag Imaging Group 14,000 3,183,217
Kudelski SA Bearer** 3,000 4,590,845
Straumann AG 2,500 5,568,605
Swisslog Holding AG 7,500 4,634,237
Tecan AG 2,500 2,661,359
Unilabs AG 1,500 1,165,502
------------
27,506,017
------------
TAIWAN -- 0.2%
Realtek Semiconductor Corp. 95,000 453,105
------------
UNITED KINGDOM -- 10.7%
ARC International PLC ** 349,000 2,100,106
ARM Holdings PLC - Spons. ADR** 65,200 2,147,525
Autonomy Corp. PLC** 59,600 3,337,600
Cambridge Antibody Technology
Group PLC** 85,000 5,058,318
Eyretel PLC** 1,000,000 3,104,850
Guardian IT PLC 160,000 2,921,516
Hit Entertainment PLC 250,000 1,607,869
Independent Insurance Group PLC 223,031 1,159,076
Orchestream Holdings Ltd.** 350,000 3,518,830
RM PLC 204,600 2,692,261
------------
27,647,951
------------
UNITED STATES -- 1.1%
Netro Corp.** 30,000 1,777,500
UTStarcom, Inc.** 50,000 1,046,875
------------
2,824,375
------------
TOTAL COMMON STOCKS
(Cost $155,170,681) 175,094,131
------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
45
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
INTERNATIONAL SMALL CAP EQUITY PORTFOLIO (CONCLUDED)
NUMBER
AS OF SEPTEMBER 30, 2000 OF SHARES VALUE
--------- ------------
PREFERRED STOCKS -- 0.6%
GERMANY -- 0.0%
Fresenius AG 6,000 $ 1,514,242
(Cost $1,519,277) ------------
PAR/SHARES
MATURITY (000)
-------- ----------
SHORT TERM INVESTMENTS -- 31.6%
Federal Home Loan Bank
Discount Notes
6.28% 10/02/00 $76,000 75,986,741
Galileo Money Market Fund 5,490 5,490,330
------------
TOTAL SHORT TERM INVESTMENTS
(Cost $81,477,071) 81,477,071
------------
TOTAL INVESTMENTS IN
SECURITIES -- 100.0%
(Cost $238,167,028*) $258,085,445
============
-------------------
* Cost for Federal income tax purposes is $240,638,835. The gross unrealized
appreciation (depreciation) on a tax basis is as follows:
Gross unrealized appreciation $25,833,415
Gross unrealized depreciation (8,386,805)
-----------
$17,446,610
===========
** Non-income producing security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
46
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
INTERNATIONAL SMALL CAP EQUITY PORTFOLIO
SEPTEMBER 30, 2000
<TABLE>
<S> <C>
ASSETS
Investments at value (Cost $238,167,028) .............................................................. $258,085,445
Cash denominated in foreign currencies (Cost $110,122) ................................................ 108,658
Collateral received for securities loaned ............................................................. 14,195,400
Dividend and reclaims receivable ...................................................................... 50,112
Interest receivable ................................................................................... 29,774
Investments sold receivable ........................................................................... 4,390,232
Capital shares sold receivable ........................................................................ 1,134,576
Prepaid expenses ...................................................................................... 43,345
------------
TOTAL ASSETS ................................................................................... 278,037,542
------------
LIABILITIES
Payable upon return of securities loaned .............................................................. 14,195,400
Investments purchased payable ......................................................................... 34,813,303
Capital shares redeemed payable ....................................................................... 2,922,551
Advisory fees payable ................................................................................. 129,059
Adminstrative fees payable ............................................................................ 42,438
Transfer agent fees payable ........................................................................... 21,900
Other accrued expenses payable ........................................................................ 323,102
------------
TOTAL LIABILITIES .............................................................................. 52,447,753
------------
NET ASSETS (Applicable to 3,772,955 Institutional shares, 20,378
Service shares, 1,811,330 Investor A shares, 2,539,258 Investor B shares and
1,977,973 Investor C shares outstanding) .............................................................. $225,589,789
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER INSTITUTIONAL SHARE ($85,028,917 (DIVIDE) 3,772,955) .............................................. $22.54
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER SERVICE SHARE ($455,675 (DIVIDE) 20,378) .......................................................... $22.36
======
NET ASSET VALUE AND REDEMPTION PRICE
PER INVESTOR A SHARE ($40,459,472 (DIVIDE) 1,811,330) ................................................. $22.34
======
MAXIMUM OFFERING PRICE PER INVESTOR A SHARE
($22.34 (DIVIDE) 0.950) ............................................................................... $23.52
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent deferred sales charge of 4.5%)
PER INVESTOR B SHARE ($56,016,663 (DIVIDE) 2,539,258) ................................................. $22.06
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent deferred sales charge of 1.0%)
PER INVESTOR C SHARE ($43,629,062 (DIVIDE) 1,977,973) ................................................. $22.06
======
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
47
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
ASIA PACIFIC EQUITY PORTFOLIO
NUMBER
AS OF SEPTEMBER 30, 2000 OF SHARES VALUE
--------- ----------
COMMON STOCKS -- 93.9%
AUSTRALIA -- 5.2%
AMP Ltd. 4,000 $ 35,526
Australia & New Zealand Banking
Group Ltd. 6,000 43,151
Brambles Industries Ltd. 500 13,068
Foster's Brewing Group Ltd. 14,000 32,602
News Corp. Ltd. 1,000 14,081
Telstra Corp. Ltd. 3,000 9,813
----------
148,241
----------
HONG KONG -- 7.8%
Bank of East Asia Ltd. 13,000 29,178
Cheung Kong Ltd. 3,000 36,264
China Telecommunications Ltd.** 3,500 23,230
CLP Holdings Ltd. 13,000 58,357
Sun Hung Kai Properties Ltd. 4,000 37,707
Swire Pacific Ltd. - Class A 6,000 37,400
----------
222,136
----------
INDIA -- 2.0%
ICICI Ltd. - ADR 3,000 33,000
Videsh Sanchar Nigam Co. Ltd. -
GDR (Reg. S) 3,000 24,600
----------
57,600
----------
JAPAN -- 74.4%
Advantest Corp. 400 62,854
Asahi Chemical Industry Co. Ltd. 10,000 59,689
Asahi Glass Co. Ltd. 10,000 102,258
Bank of Tokyo-Mitsubishi Ltd. 8,000 94,540
Daiwa Securities Co. Ltd. 5,000 58,625
DDI Corp. 12 78,845
Fuji Heavy Industries Ltd. 10,000 62,188
Fuji Machine Manufacturing Co. Ltd. 1,100 39,191
Japan Airlines Co. Ltd. 7,000 26,495
Kawasaki Kisen Kaisha Ltd. 50,000 101,333
Marubeni Corp.** 21,000 52,665
Matsushita Communication Industrial
Co. Ltd. 500 67,601
Mitsubishi Chemical Corp. 17,000 58,995
Mitsui Fudosan Co. Ltd. 1,300 16,289
Mori Seiki Co. Ltd. 3,000 37,535
Murata Manufacturing Co. Ltd. 600 82,732
Nippon Express Co. Ltd. 15,000 80,094
Nippon Steel Corp. 24,000 42,643
NTT Mobile Communication
Network, Inc. 2 57,376
Obayashi Corp. 16,000 59,226
Oji Paper Co. Ltd. 13,000 79,641
Okuma Corp. 12,000 49,972
Ricoh Co. 4,000 72,737
Sanwa Bank Ltd. 10,000 89,025
Sekisui House Ltd. 3,000 29,012
Sharp Corp. 5,000 77,364
Softbank Corp. 900 84,120
Sony Corp. 800 81,140
Sumitomo Bank Ltd. 8,000 101,425
Takashimaya Co. Ltd. 10,000 69,684
Tokyo Electron Ltd. 800 72,552
Toppan Printing Co. Ltd. 8,000 77,364
----------
2,125,210
----------
NUMBER
OF SHARES VALUE
--------- ----------
MALAYSIA -- 0.6%
Konsortium Logistik Berhad 26,000 $ 17,858
----------
SINGAPORE -- 3.0%
DBS Group Holdings Ltd. 5,000 55,164
Parkway Holdings Ltd. 15,000 30,685
----------
85,849
----------
TAIWAN -- 0.9%
Acer, Inc. - GDR (Reg. S) 5,000 27,125
----------
TOTAL COMMON STOCKS
(Cost $2,957,004) 2,684,019
----------
SHORT-TERM INVESTMENTS -- 4.9%
Galileo Money Market Fund 139,622 139,622
(Cost $139,622) ----------
TOTAL INVESTMENTS IN
SECURITIES
(Cost $3,096,626*) 98.8% 2,823,641
OTHER ASSETS IN EXCESS OF
LIABILITIES 1.2% 32,837
------ ----------
NET ASSETS (Applicable to 303,910
Institutional shares, 10 Service
shares, 3,850 Investor A shares,
1,090 Investor B shares and
258 Investor C shares
outstanding) 100.0% $2,856,478
====== ==========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
48
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
ASIA PACIFIC EQUITY PORTFOLIO (CONCLUDED)
AS OF SEPTEMBER 30, 2000 VALUE
----------
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
PER INSTITUTIONAL SHARE
($2,808,525 (DIVIDE) 303,910) $9.24
=====
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
PER SERVICE SHARE
($92 (DIVIDE) 10) $9.20
=====
NET ASSET VALUE AND
REDEMPTION PRICE PER
INVESTOR A SHARE
($35,432 (DIVIDE) 3,850) $9.20
=====
MAXIMUM OFFERING PRICE
PER INVESTOR A SHARE
($9.20 (DIVIDE) 0.950) $9.68
=====
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
(SUBJECT TO A MAXIMUM CONTINGENT
DEFERRED SALES CHARGE OF 4.5%)
PER INVESTOR B SHARE
($10,046 (DIVIDE) 1,090) $9.22
=====
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
(SUBJECT TO A MAXIMUM CONTINGENT
DEFERRED SALES CHARGE OF 1.0%)
PER INVESTOR C SHARE
($2,383 (DIVIDE) 258) $9.24
=====
-----------------------
* Also cost for Federal income tax purposes. The gross unrealized appreciation
(depreciation) on a tax basis is as follows:
Gross unrealized appreciation $ 46,045
Gross unrealized depreciation (319,030)
---------
$(272,985)
=========
** Non-income producing security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
49
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
INTERNATIONAL EMERGING MARKETS PORTFOLIO
NUMBER
AS OF SEPTEMBER 30, 2000 OF SHARES VALUE
--------- ------------
COMMON STOCKS -- 81.0%
ARGENTINA -- 1.9%
Grupo Financiero Galicia SA** 700,000 $ 1,064,681
Telecom Argentina Stet - France
Telecom SA** 62,000 1,340,750
------------
2,405,431
------------
BRAZIL -- 10.5%
Brasil Telecom Participacoes SA - ADR 23,000 1,339,750
Companhia Brasileira de Distribuicao
Grupo Pao de Acucar - ADR 33,000 1,227,187
Companhia de Bebidas Das
Americas 50,000 1,106,250
Companhia Energetica do Ceara 350,000,000 1,195,446
Companhia Vale do Rio Doce -
ADR 40,000 997,500
Embratel Participacoes SA 50,000,000 737,327
Embratel Participacoes SA - ADR 44,500 823,250
Itausa - Investimentos Itau SA 1,200,000 1,210,084
Petroleo Brasileiro SA** 20,000 601,250
Tele Leste Celular Participacoes
SA** 23,000 927,187
Tele Norte Celular Participacoes
SA - ADR 10,400 416,000
Tele Norte Leste Participacoes
SA - ADR** 45,000 1,029,375
Uniao de Bancos Brasileiros
SA - GDR** 50,800 1,676,400
------------
13,287,006
------------
CHILE -- 1.8%
Cia de Telecomunicaciones de
Chile SA - ADR** 136,000 2,363,000
------------
CHINA -- 0.2%
Guangdong Kelon Electric Holding -
Class H** 862,000 226,642
------------
CZECH REPUBLIC -- 1.0%
Komercni Banka AS - GDR** 194,000 1,314,350
------------
EGYPT -- 0.2%
Olympic Group Financial Investments
Co.** 186,000 213,511
------------
GREECE -- 0.6%
Antenna TV SA - ADR** 34,800 765,600
------------
HONG KONG -- 5.8%
Bank Of East Asia Ltd. 1,100,000 2,468,933
China Telecommunications Ltd.** 571,000 3,789,876
Gedeon Richter Rt 21,700 1,131,655
------------
7,390,464
------------
INDIA -- 6.2%
Gujarat Ambuja Cements Ltd. -
GDR** 136,000 440,300
Hindustan Lever Ltd.** 376,000 1,704,189
ICICI Ltd. 315,000 669,550
ICICI Ltd. - ADR** 50,000 550,000
Infosys Technologies Ltd. 8,000 1,276,176
ITC Ltd. 18,000 280,430
Mahanagar Telephone Nigam Ltd.** 379,300 903,860
Reliance Industries Ltd. 187,000 1,391,683
Videsh Sanchar Nigam Ltd. - GDR** 83,000 680,600
------------
7,896,788
------------
NUMBER
OF SHARES VALUE
--------- ------------
INDONESIA -- 0.9%
PT Astra International** 2,080,000 $ 549,925
PT Indofood Sukses Makmur TBK** 5,750,000 556,980
------------
1,106,905
------------
ISRAEL -- 3.3%
Blue Square Ltd. - ADR** 46,000 517,500
Check Point Software Technologies
Ltd.** 14,950 2,354,625
I.T. International Theatres Ltd.** 15,500 145,700
IDB Development Corp. Ltd.** 26,000 1,164,957
------------
4,182,782
------------
MALAYSIA -- 3.8%
Konsortium Logistik Berhad 1,425,000 978,750
Malaysian Pacific Industries
Berhad 102,000 677,763
Tanjong PLC 700,000 1,446,053
United Engineers Berhad 406,000 635,711
YTL Corporation Berhad 1,210,000 1,108,105
------------
4,846,382
------------
MEXICO -- 11.2%
Cemex SA de CV - ADR 62,720 1,258,320
Fomento Economico Mexicano
SA de CV** 276,000 1,072,384
Grupo Financiero Banamex Accival,
SA de CV - Class O** 380,000 1,741,994
Grupo Financiero Banorte SA -
Class B** 351,200 458,079
Grupo Iusacell S.A. de CV -
ADR** 80,000 950,000
Grupo Televisa SA - GDR** 20,000 1,153,750
Panamerican Beverages, Inc. -
ADR 55,000 935,000
Telefonos de Mexico SA - ADR** 102,800 5,465,753
Walmart de Mexico SA de CV** 590,000 1,224,287
------------
14,259,567
------------
PERU -- 0.5%
Credicorp Ltd. - ADR 98,000 710,500
------------
POLAND -- 1.5%
Agora S.A. - GDR** 45,000 877,500
Polski Koncern Naftowy Orlen SA 128,000 998,400
------------
1,875,900
------------
RUSSIA -- 5.1%
A.O. Mosenergo - ADR** 197,000 719,050
Lukoil Holding - ADR 18,700 1,077,120
Mobile Telesystems - ADR** 59,000 1,497,125
Rostelecom - ADR** 69,000 608,062
Tatneft - ADR 122,000 1,212,375
Unified Energy Systems - GDR 108,000 1,447,200
------------
6,560,932
------------
SOUTH AFRICA -- 4.8%
Anglovaal Industries Ltd.** 1,137,000 1,225,014
BoE Ltd. 1,900,000 1,076,162
Datatec Ltd.** 150,000 1,142,496
Impala Platinum Holdings Ltd.** 26,500 1,148,659
Johnnies Industrial Corp. Ltd. 23,100 299,745
Rembrant Group Ltd. 57,600 201,412
Remgro Ltd.** 57,600 340,206
Sasol Ltd.** 90,000 710,425
------------
6,144,119
------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
50
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
INTERNATIONAL EMERGING MARKETS PORTFOLIO (CONCLUDED)
NUMBER
AS OF SEPTEMBER 30, 2000 OF SHARES VALUE
--------- ------------
COMMON STOCKS (CONTINUED)
SOUTH KOREA -- 7.2%
Korea Electric Power Corp. 166,000 $ 4,331,794
Korea Telecom Corp. - ADR 18,000 605,250
L.G. Chemical Ltd. 50,736 632,409
Samsung Electronics Co. 20,000 3,622,831
------------
9,192,284
------------
TAIWAN -- 9.5%
Accton Technology Corp.** 270,000 522,887
Accton Technology Corp. - GDR
(Reg. S)** 191,749 733,440
Acer, Inc. 166,250 183,599
Acer, Inc. - GDR (Reg. 144A) 85,351 469,431
Acer, Inc. - GDR (Reg. S) 143,750 779,844
Cathay Life Insurance Co. Ltd. 500,000 1,120,359
China Steel** 2,188,410 1,415,041
China Trust Commercial Bank** 1,914,696 1,440,312
President Chain Store Corp. 53,760 170,366
Synnex Technology International
Corp. 266,500 844,542
Taiwan Semiconductor Manufacturing
Co.** 874,120 2,910,003
United Microelectronics Corp.
Ltd.** 700,000 1,501,280
------------
12,091,104
------------
THAILAND -- 1.3%
Bangkok Bank Public Co. Ltd.
(Foreign shares)** 444,000 328,830
Golden Land Property Development
Public Co. Ltd. (Foreign shares)** 1,400,000 149,307
PTT Exploration and Production Public
Co. Ltd. (Foreign shares) 270,000 684,677
Telecomasia Corp. Public Co. Ltd.
(Foreign Shares)** 820,000 548,998
Telecomasia Corp. Public Co. Ltd. -
Rights 231,789 0
------------
1,711,812
------------
TURKEY -- 2.6%
Alcatel Teletas Telekomunikason
Endustri Ve Ticaret A.S.** 4,450,000 575,813
Baticim Bati Anadolu Cimento
Sanayii A.S 9,252,000 137,814
Enka Holding Yatirim A.S 6,050,000 955,802
Ford Otomotiv Sanayi A.S.** 11,950,000 566,372
Turkiye Is Bankasi (Isbank) -
Class C 63,800,000 1,079,932
------------
3,315,733
------------
UNITED KINGDOM -- 1.2%
Dimension Data Holdings PLC** 172,452 1,600,088
------------
TOTAL COMMON STOCKS
(Cost $115,627,888) 103,460,900
------------
PREFERRED STOCK -- 1.1%
BRAZIL -- 1.1%
Petroleo Brasileiro SA
(Cost $1,228,259) 48,000 1,436,487
------------
PAR/SHARES
MATURITY (000) VALUE
-------- ---------- ------------
SHORT TERM INVESTMENTS -- 17.9%
Federal Home Loan Bank
Discount Notes
6.28% 10/02/00 $20,000 $ 19,996,511
Galileo Money Market Fund 2,830 2,830,118
------------
TOTAL SHORT TERM INVESTMENTS
(Cost $22,826,629) 22,826,629
------------
TOTAL INVESTMENTS IN
SECURITIES -- 100.0%
(Cost $139,682,776*) $127,724,016
============
-------------------
* Cost for Federal income tax purposes is $139,702,109. The gross unrealized
appreciation (depreciation) on a tax basis is as follows:
Gross unrealized appreciation $ 9,493,914
Gross unrealized depreciation (21,472,007)
------------
$(11,978,093)
============
** Non-income producing security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
51
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
INTERNATIONAL EMERGING MARKETS PORTFOLIO
SEPTEMBER 30, 2000
<TABLE>
<S> <C>
ASSETS
Investments at value (Cost $139,682,776) ............................................................. $127,724,016
Cash denominated in foreign currencies (Cost $1,300,526) ............................................. 1,292,507
Collateral received for securities loaned ............................................................ 10,341,550
Dividends receivable ................................................................................. 327,732
Interest receivable .................................................................................. 12,265
Capital shares sold receivable ....................................................................... 531,144
Prepaid expenses ..................................................................................... 5,729
------------
TOTAL ASSETS .................................................................................. 140,234,943
------------
LIABILITIES
Payable upon return of securities loaned ............................................................. 10,341,550
Capital shares redeemed payable ...................................................................... 65,345
Advisory fees payable ................................................................................ 131,632
Adminstrative fees payable ........................................................................... 24,220
Transfer agent fees payable .......................................................................... 16,231
Other accrued expenses payable ....................................................................... 53,341
Foreign taxes payable ................................................................................ 14,455
------------
TOTAL LIABILITIES ............................................................................. 10,646,774
------------
NET ASSETS (Applicable to 16,432,415 Institutional shares, 4,041,373
Service shares, 404,950 Investor A shares, 162,352 Investor B shares and
58,318 Investor C shares outstanding) ................................................................ $129,588,169
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER INSTITUTIONAL SHARE ($101,017,300 (DIVIDE) 16,432,415) ........................................... $6.15
=====
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER SERVICE SHARE ($24,795,560 (DIVIDE) 4,041,373) ................................................... $6.14
=====
NET ASSET VALUE AND REDEMPTION PRICE
PER INVESTOR A SHARE ($2,465,716 (DIVIDE) 404,950) ................................................... $6.09
=====
MAXIMUM OFFERING PRICE PER INVESTOR A SHARE
($6.09 (DIVIDE) 0.950) ............................................................................... $6.41
=====
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent deferred sales charge of 4.5%)
PER INVESTOR B SHARE ($963,657 (DIVIDE) 162,352) ..................................................... $5.94
=====
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent deferred sales charge of 1.0%)
PER INVESTOR C SHARE ($345,936 (DIVIDE) 58,318) ...................................................... $5.93
=====
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
52
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
SELECT EQUITY PORTFOLIO
NUMBER
AS OF SEPTEMBER 30, 2000 OF SHARES VALUE
--------- --------------
COMMON STOCKS -- 94.3%
AEROSPACE -- 1.1%
Boeing Co. 323,900 $ 20,405,700
--------------
BANKS -- 5.2%
Bank of New York Co., Inc. 449,652 25,208,615
Chase Manhattan Corp. 629,100 29,056,556
FleetBoston Financial Corp. 463,600 18,080,400
Mellon Financial Corp. 561,700 26,048,837
--------------
98,394,408
--------------
BEVERAGES -- 1.7%
Coca-Cola Co. 378,800 20,881,350
PepsiCo, Inc. 246,100 11,320,600
--------------
32,201,950
--------------
BROADCASTING -- 0.7%
Clear Channel Communications,
Inc.** 239,400 13,526,100
--------------
COMPUTER & OFFICE EQUIPMENT -- 8.7%
Cisco Systems, Inc.** 1,217,000 67,239,250
Compaq Computer Corp. 499,500 13,776,210
Dell Computer Corp.** 316,700 9,758,319
Hewlett-Packard Co. 103,900 10,078,300
International Business
Machines Corp. 255,900 28,788,750
Palm, Inc.** 485,500 25,701,156
Veritas Software Corp. 59,100 8,392,200
--------------
163,734,185
--------------
COMPUTER SOFTWARE & SERVICES -- 11.0%
America Online, Inc.** 529,000 28,433,750
Computer Sciences Corp.** 138,200 10,261,350
EMC Corp.** 554,900 55,004,462
Microsoft Corp.** 769,800 46,380,450
Oracle Corp.** 408,824 32,194,890
SAP AG - Spons. ADR 166,300 10,227,450
Sun Microsystems, Inc.** 204,800 23,910,400
--------------
206,412,752
--------------
CONSUMER NON DURABLES -- 1.2%
Clorox Co. 197,400 7,809,638
Kroger Co.** 646,700 14,591,169
--------------
22,400,807
--------------
ELECTRONICS -- 7.6%
General Electric Co. 1,490,800 86,000,525
Intel Corp. 1,178,290 49,046,321
Texas Instruments, Inc. 145,644 6,872,576
--------------
141,919,422
--------------
ENERGY & UTILITIES -- 1.8%
American Power Conversion Corp.** 221,800 4,255,787
El Paso Energy Corp. 374,310 23,066,854
Southern Energy, Inc. 185,400 5,816,925
--------------
33,139,566
--------------
ENTERTAINMENT & LEISURE -- 3.1%
Time Warner, Inc. 199,700 15,626,525
Viacom, Inc. - Class B** 358,100 20,948,850
Walt Disney Co. 560,633 21,444,212
--------------
58,019,587
--------------
NUMBER
OF SHARES VALUE
--------- --------------
FINANCE -- 7.9%
American Express Co. 101,100 $ 6,141,825
Charles Schwab Corp. 272,100 9,659,550
Citigroup, Inc. 1,203,533 65,066,003
Federal Home Loan Mortgage
Corp. 267,400 14,456,312
Lehman Brothers Holdings, Inc. 64,400 9,515,100
MBNA Corp. 520,500 20,039,250
Morgan Stanley Dean Witter & Co. 263,000 24,048,062
--------------
148,926,102
--------------
INSURANCE -- 3.3%
Ace Ltd. 244,000 9,577,000
American International Group, Inc. 274,581 26,273,969
Marsh & McLennan Cos., Inc. 195,721 25,981,963
--------------
61,832,932
--------------
MANUFACTURING -- 3.4%
Corning, Inc. 105,300 31,274,100
Danaher Corp. 204,400 10,168,900
Tyco International Ltd. - ADR 425,100 22,052,063
--------------
63,495,063
--------------
MEDICAL & MEDICAL SERVICES -- 0.5%
Sepracor, Inc. 79,100 9,704,581
--------------
MEDICAL INSTRUMENTS & SUPPLIES -- 1.5%
Johnson & Johnson 309,500 29,073,656
--------------
METAL & MINING -- 0.6%
Alcoa, Inc. 471,100 11,924,719
--------------
OIL & GAS -- 7.3%
Anadarko Petroleum Corp. 174,900 11,623,854
Chevron Corp. 327,300 27,902,325
Exxon Mobil Corp. 535,758 47,749,432
Royal Dutch Petroleum Co. - ADR 531,400 31,850,788
Schlumberger Ltd. 209,100 17,211,544
--------------
136,337,943
--------------
PAPER & FOREST PRODUCTS -- 0.5%
International Paper Co. 354,100 10,158,244
--------------
PHARMACEUTICALS -- 8.5%
Amgen, Inc.** 164,200 11,465,778
Bristol-Myers Squibb Co. 489,000 27,934,125
Merck & Co., Inc. 349,900 26,045,681
Pfizer, Inc. 851,400 38,259,787
Pharmacia Corp. 369,624 22,246,745
Schering-Plough Corp. 725,100 33,717,150
--------------
159,669,266
--------------
RESTAURANTS -- 0.6%
McDonald's Corp. 344,600 10,402,613
--------------
RETAIL MERCHANDISING -- 3.8%
Home Depot, Inc. 552,100 29,295,806
Wal-Mart Stores, Inc. 856,100 41,199,813
--------------
70,495,619
--------------
SOAPS & COSMETICS -- 1.5%
Procter & Gamble Co. 435,400 29,171,800
--------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
53
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
SELECT EQUITY PORTFOLIO (CONCLUDED)
NUMBER
AS OF SEPTEMBER 30, 2000 OF SHARES VALUE
--------- --------------
COMMON STOCKS (CONTINUED)
TELECOMMUNICATIONS -- 11.6%
AT&T Corp. 570,100 $ 16,746,688
JDS Uniphase Corp.** 143,000 13,540,313
Lucent Technologies, Inc. 182,980 5,592,326
Motorola, Inc. 345,900 9,771,675
Nortel Networks Corp. 707,000 42,110,688
Qwest Communications
International, Inc.** 685,294 32,936,975
SBC Communications, Inc. 721,600 36,080,000
Tellabs, Inc.** 256,900 12,266,975
Vodafone Group PLC - Spons
ADR 522,500 19,332,500
Worldcom, Inc.** 1,000,800 30,399,300
--------------
218,777,440
--------------
TOBACCO -- 1.2%
Philip Morris Cos., Inc. 767,856 22,603,761
--------------
TOTAL COMMON STOCKS
(Cost $1,202,921,840) 1,772,728,216
--------------
PAR/SHARES
MATURITY (000)
-------- ----------
SHORT TERM INVESTMENTS -- 5.7%
Federal Home Loan Bank
Discount Notes
6.20% 10/02/00 $95,000 94,983,995
6.40%*** 10/18/00 2,000 1,993,600
Galileo Money Market Fund 9,388 9,388,304
--------------
TOTAL SHORT TERM INVESTMENTS
(Cost $106,365,899) 106,365,899
--------------
TOTAL INVESTMENTS IN
SECURITIES -- 100.0%
(Cost $1,309,287,739*) $1,879,094,115
==============
-------------------
* Cost for Federal income tax purposes is $1,314,496,983. The gross unrealized
appreciation (depreciation) on a tax basis is as follows:
Gross unrealized appreciation $609,976,857
Gross unrealized depreciation (45,379,725)
------------
$564,597,132
============
** Non-income producing security.
*** Securities pledged as collateral with a value of $1,993,200 on 50 Standard &
Poor's 500 Stock Index futures contracts expiring December 2000. The value
of such contracts on September 30, 2000 was $18,171,250, thereby resulting
in an unrealized loss of $516,930.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
54
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
SELECT EQUITY PORTFOLIO
SEPTEMBER 30, 2000
<TABLE>
<S> <C>
ASSETS
Investments at value (Cost $1,309,287,739) .......................................................... $1,879,094,115
Collateral received for securities loaned ........................................................... 69,300,722
Dividends receivable ................................................................................ 1,260,308
Interest receivable ................................................................................. 68,338
Investments sold receivable ......................................................................... 39,570,145
Capital shares sold receivable ...................................................................... 591,963
Prepaid expenses .................................................................................... 13,648
Futures commissions ................................................................................. 400
--------------
TOTAL ASSETS ................................................................................. 1,989,899,639
--------------
LIABILITIES
Payable upon return of securities loaned ............................................................ 69,300,722
Investments purchased payable ....................................................................... 48,015,625
Capital shares redeemed payable ..................................................................... 2,215,675
Advisory fees payable ............................................................................... 836,272
Adminstrative fees payable .......................................................................... 326,603
Transfer agent fees payable ......................................................................... 65,460
Other accrued expenses payable ...................................................................... 502,007
Futures margin payable .............................................................................. 278,750
--------------
TOTAL LIABILITIES ............................................................................ 121,541,114
--------------
NET ASSETS (Applicable to 70,632,404 Institutional shares, 11,205,312
Service shares, 3,694,011 Investor A shares, 4,035,182 Investor B shares and
549,854 Investor C shares outstanding) .............................................................. $1,868,358,525
==============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER INSTITUTIONAL SHARE ($1,466,963,706 (DIVIDE) 70,632,404) ........................................ $20.77
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER SERVICE SHARE ($232,287,448 (DIVIDE) 11,205,312) ................................................ $20.73
======
NET ASSET VALUE AND REDEMPTION PRICE
PER INVESTOR A SHARE ($76,437,709 (DIVIDE) 3,694,011) ............................................... $20.69
======
MAXIMUM OFFERING PRICE PER INVESTOR A SHARE
($20.69 (DIVIDE) 0.955) ............................................................................. $21.66
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent deferred sales charge of 4.5%)
PER INVESTOR B SHARE ($81,561,757 (DIVIDE) 4,035,182) ............................................... $20.21
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent deferred sales charge of 1.0%)
PER INVESTOR C SHARE ($11,107,905 (DIVIDE) 549,854) ................................................. $20.20
======
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
55
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
INDEX EQUITY PORTFOLIO
AS OF SEPTEMBER 30, 2000 VALUE
--------------
Investment in The U.S. Large Company
Series of The DFA Investment
Trust Company 100.2% $2,033,940,573
(Cost $1,435,956,756)
LIABILITIES IN EXCESS OF
OTHER ASSETS (0.2%) (3,887,302)
------ --------------
NET ASSETS (Applicable to 24,128,240
Institutional shares, 13,763,868 Service
shares, 3,414,368 Investor A shares,
13,287,947 Investor B shares and
19,543,498 Investor C shares
outstanding) 100.0% $2,030,053,271
====== ==============
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
PER INSTITUTIONAL SHARE
($665,742,548 (DIVIDE) 24,128,240) $27.59
======
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
PER SERVICE SHARE
($378,997,190 (DIVIDE) 13,763,868) $27.54
======
NET ASSET VALUE AND
REDEMPTION PRICE
PER INVESTOR A SHARE
($93,934,654 (DIVIDE) 3,414,368) $27.51
======
MAXIMUM OFFERING PRICE
PER INVESTOR A SHARE
($27.51 (DIVIDE) 0.970) $28.36
======
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
(SUBJECT TO A MAXIMUM CONTINGENT
DEFERRED SALES CHARGE OF 4.5%)
PER INVESTOR B SHARE
($360,792,445 (DIVIDE) 13,287,947) $27.15
======
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
(SUBJECT TO A MAXIMUM CONTINGENT
DEFERRED SALES CHARGE OF 1.0%)
PER INVESTOR C SHARE
($530,586,434 (DIVIDE) 19,543,498) $27.15
======
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS AND ACCOMPANYING FINANCIAL
STATEMENTS AND RELATED NOTES FOR THE DFA INVESTMENT TRUST COMPANY.
56
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
BALANCED PORTFOLIO
NUMBER
AS OF SEPTEMBER 30, 2000 OF SHARES VALUE
--------- ------------
COMMON STOCKS -- 61.8%
AEROSPACE -- 0.7%
Boeing Co. 96,700 $ 6,092,100
------------
BANKS -- 3.4%
Bank of New York Co., Inc. 132,722 7,440,727
Chase Manhattan Corp. 185,650 8,574,709
FleetBoston Financial Corp. 134,700 5,253,300
Mellon Financial Corp. 171,100 7,934,762
------------
29,203,498
------------
BEVERAGES -- 1.1%
Coca-Cola Co. 112,800 6,218,100
PepsiCo, Inc. 72,300 3,325,800
------------
9,543,900
------------
BROADCASTING -- 0.5%
Clear Channel Communications,
Inc.** 70,400 3,977,600
------------
COMPUTER & OFFICE EQUIPMENT -- 5.7%
Cisco Systems, Inc.** 360,848 19,936,852
Compaq Computer Corp. 147,700 4,073,566
Dell Computer Corp.** 93,700 2,887,131
Hewlett-Packard Co. 30,800 2,987,600
International Business Machines
Corp. 75,700 8,516,250
Palm, Inc.** 143,000 7,570,062
Veritas Software Corp. 17,500 2,485,000
------------
48,456,461
------------
COMPUTER SOFTWARE & SERVICES -- 7.2%
America Online, Inc.** 157,900 8,487,125
Computer Sciences Corp.** 41,000 3,044,250
EMC Corp.** 163,500 16,206,937
Microsoft Corp.** 226,800 13,664,700
Oracle Corp.** 120,900 9,520,875
SAP AG - Spons. ADR 51,000 3,136,500
Sun Microsystems, Inc.** 62,800 7,331,900
------------
61,392,287
------------
CONSUMER NON DURABLES -- 0.8%
Clorox Co. 58,600 2,318,363
Kroger Co.** 190,800 4,304,925
------------
6,623,288
------------
ELECTRONICS -- 4.9%
General Electric Co. 444,900 25,665,169
Intel Corp. 344,775 14,351,259
Texas Instruments, Inc. 42,617 2,010,990
------------
42,027,418
------------
ENERGY & UTILITIES -- 1.2%
American Power Conversion Corp.** 61,600 1,181,950
El Paso Energy Corp. 111,983 6,900,952
Southern Energy, Inc. 54,600 1,713,075
------------
9,795,977
------------
ENTERTAINMENT & LEISURE -- 2.0%
Time Warner, Inc. 59,500 4,655,875
Viacom, Inc. - Class B** 106,229 6,214,424
Walt Disney Co. 164,047 6,274,798
------------
17,145,097
------------
NUMBER
AS OF SEPTEMBER 30, 2000 OF SHARES VALUE
--------- ------------
FINANCE -- 5.2%
American Express Co. 31,300 $ 1,901,475
Charles Schwab Corp. 80,050 2,841,775
Citigroup, Inc. 354,032 19,139,873
Federal Home Loan Mortgage Corp. 78,700 4,254,719
Lehman Brothers Holdings, Inc. 19,100 2,822,025
MBNA Corp. 153,600 5,913,600
Morgan Stanley Dean Witter & Co. 77,400 7,077,262
------------
43,950,729
------------
INSURANCE -- 2.2%
Ace Ltd. 73,100 2,869,175
American International Group, Inc. 80,345 7,688,012
Marsh & McLennan Cos., Inc. 57,566 7,641,886
------------
18,199,073
------------
MANUFACTURING -- 2.2%
Corning, Inc. 31,200 9,266,400
Danaher Corp. 61,000 3,034,750
Tyco International Ltd. - ADR 125,000 6,484,375
------------
18,785,525
------------
MEDICAL & MEDICAL SERVICES -- 0.3%
Sepracor, Inc. 23,400 2,870,887
------------
MEDICAL INSTRUMENTS & SUPPLIES -- 1.0%
Johnson & Johnson 92,300 8,670,431
------------
METAL & MINING -- 0.4%
Alcoa, Inc. 137,200 3,472,875
------------
OIL & GAS -- 4.8%
Anadarko Petroleum Corp. 51,500 3,422,690
Chevron Corp. 100,400 8,559,100
Exxon Mobil Corp. 164,276 14,641,098
Royal Dutch Petroleum Co. - ADR 156,600 9,386,212
Schlumberger Ltd. 61,300 5,045,756
------------
41,054,856
------------
PAPER & FOREST PRODUCTS -- 0.3%
International Paper Co. 101,900 2,923,256
------------
PHARMACEUTICALS -- 5.6%
Amgen, Inc.** 50,800 3,547,269
Bristol-Myers Squibb Co. 145,900 8,334,537
Merck & Co., Inc. 105,300 7,838,269
Pfizer, Inc. 252,500 11,346,719
Pharmacia Corp. 108,600 6,536,363
Schering-Plough Corp. 216,400 10,062,600
------------
47,665,757
------------
RESTAURANTS -- 0.4%
McDonald's Corp. 99,700 3,009,694
------------
RETAIL MERCHANDISING -- 2.5%
Home Depot, Inc. 167,500 8,887,969
Wal-Mart Stores, Inc. 265,000 12,753,125
------------
21,641,094
------------
SOAPS & COSMETICS -- 1.0%
Procter & Gamble Co. 126,500 8,475,500
------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
57
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
BALANCED PORTFOLIO (CONTINUED)
NUMBER
AS OF SEPTEMBER 30, 2000 OF SHARES VALUE
--------- ------------
COMMON STOCKS (CONTINUED)
TELECOMMUNICATIONS -- 7.6%
AT&T Corp. 175,600 $ 5,158,250
JDS Uniphase Corp.** 42,300 4,005,281
Lucent Technologies, Inc. 53,496 1,634,972
Motorola, Inc. 102,600 2,898,450
Nortel Networks Corp. 209,100 12,454,519
Qwest Communications International,
Inc.** 201,487 9,684,009
SBC Communications, Inc. 210,900 10,545,000
Tellabs, Inc.** 76,200 3,638,550
Vodafone Group PLC - Spons. ADR 153,500 5,679,500
Worldcom, Inc.** 298,700 9,073,013
------------
64,771,544
------------
TOBACCO -- 0.8%
Philip Morris Cos., Inc. 224,682 6,614,076
------------
TOTAL COMMON STOCKS
(Cost $371,375,989) 526,362,923
------------
CUMULATIVE PREFERRED STOCK -- 0.2%
Centaur Funding Corp.,
9.08% 1,500 1,494,779
(Cost $1,500,000) ------------
PAR
MATURITY (000) VALUE
-------- ------- ------------
U.S. GOVERNMENT & AGENCY
OBLIGATIONS -- 7.7%
Small Business Administration
Participation Certificates,
Series 97-20F, Class 1
7.20% 06/01/17 $ 2,030 2,021,711
Small Business Investment Cos.
Pass-Through, Series 97-P10C,
Class 1
6.85% 08/01/07 990 969,927
U.S. Treasury Bonds
12.75% 11/15/10 2,400 3,093,749
14.00% 11/15/11 5,050 7,062,107
12.50% 08/15/14 160 229,200
8.50%*** 02/15/20 9,900 12,542,063
6.12% 08/15/29 5,200 5,312,128
6.87% 08/15/25 2,550 2,807,392
U.S. Treasury Bonds (CPI)
3.62%#*** 04/15/28 7,655 7,765,614
3.87%#*** 04/15/29 850 886,854
U.S. Treasury Notes
6.62% 05/31/02 1,380 1,392,075
6.12% 08/31/02 5,375 5,385,078
6.75% 05/15/05 4,620 4,787,475
6.12% 08/15/07 1,830 1,850,017
5.75% 08/15/10 1,525 1,519,281
6.25% 05/15/30 1,650 1,735,079
U.S. Treasury Notes (CPI)
3.62%# 01/15/08 4,550 4,750,192
3.87%# 01/15/09 1,500 1,565,833
------------
TOTAL U.S. GOVERNMENT & AGENCY
OBLIGATIONS
(Cost $66,454,247) 65,675,775
------------
PAR
MATURITY (000) VALUE
-------- ------- ------------
MORTGAGE PASS-THROUGHS -- 14.4%
Federal Home Loan Mortgage
Corp.
6.00% 12/08-12/13 $ 2,534 $ 2,465,554
7.50% 10/09-09/27 1,054 1,063,759
8.50% 09/01/21 3,264 3,192,164
6.50% 09/23-03/30 5,085 4,888,272
Federal Home Loan Mortgage
Corp. Gold
8.00% 08/08-03/30 842 854,689
6.00% 03/13-06/29 3,813 3,593,429
6.50% 01/29-07/29 10,397 9,949,575
Federal National Mortgage Association
6.94% 03/19/07 750 738,900
6.80% 07/23/07 2,400 2,349,648
7.00% 11/07-10/25 4,198 4,168,308
6.50% 08/10-10/29 11,873 11,591,407
6.00% 12/11-01/29 17,913 17,132,055
5.50% 10/13-01/14 26,495 24,988,345
8.50% 10/01/28 7,057 7,229,117
7.50% 02/01/30 147 146,739
Federal National Mortgage Association
Gold
6.50% 03/30-06/30 122 117,233
Government National Mortgage
Association
7.00% 03/13-08/24 2,495 2,488,732
6.00% 10/23-02/24 3,263 3,064,771
6.50% 01/24-05/30 12,467 12,097,486
7.50% 04/27-12/29 841 843,671
8.00% 06/27-08/30 5,822 5,930,696
MLCC Mortgage Investors, Inc.,
Series 95-C1, Class C
7.50%**** 05/25/15 1,120 1,117,497
MLCC Mortgage Investors, Inc.,
Series 95-C2 (IO)
7.32%+ 06/15/21 10,088 296,347
MLCC Mortgage Investors, Inc.,
Series 96-C1, Class A2
7.24% 04/25/28 1,000 999,187
MLCC Mortgage Investors, Inc.,
Series 96-C1, Class A3
7.42% 04/25/28 1,500 1,509,359
------------
TOTAL MORTGAGE PASS-THROUGHS
(Cost $120,994,933) 122,816,940
------------
MULTIPLE CLASS MORTGAGE
PASS-THROUGHS -- 0.3%
Federal National Mortgage Association,
Series 96-54, Class A (PO)
6.50%+ 04/25/21 228 196,985
Federal National Mortgage Association,
Series 99-17, Class HJ (PO)
5.00%+ 12/25/23 250 98,906
Federal National Mortgage Association,
Series 99-17, Class JH (PO)
5.00%+ 04/25/24 315 132,989
Federal National Mortgage Association,
Series 99-51, Class L (PO)
5.00%+ 10/25/29 188 83,445
Residential Accredit Loans, Inc.,
Series 97-QS7, Class A1
7.50% 07/25/27 27 26,529
Residential Asset Securitization Trust,
Series 98-A3, Class A
6.50% 04/25/13 1,201 1,153,000
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
58
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
BALANCED PORTFOLIO (CONTINUED)
PAR
AS OF SEPTEMBER 30, 2000 MATURITY (000) VALUE
-------- ------- ------------
MULTIPLE CLASS MORTGAGE
PASS-THROUGHS (CONTINUED)
Salomon Brothers Mortgage Securities
VI, Series 87-1 (IO)
7.00%+ 02/17/17 $ 320 $ 83,101
Salomon Brothers Mortgage Securities
VI, Series 87-1 (PO)
7.00%+ 02/17/17 357 277,515
Salomon Brothers Mortgage Securities
VI, Series 87-2 (IO)
6.00%+ 03/06/17 221 56,517
Salomon Brothers Mortgage Securities
VI, Series 87-2 (PO)
6.00%+ 03/06/17 221 171,241
Structured Asset Securities Corp.,
Series 96-CFL, Class X1 (IO)
5.05%+ 02/25/28 2,985 166,054
------------
TOTAL MULTIPLE CLASS MORTGAGE
PASS-THROUGHS
(Cost $4,445,531) 2,446,282
------------
COMMERCIAL MORTGAGE-BACKED
SECURITIES -- 1.6%
COMM, Series 00-C1, Class A2
7.41%**** 04/15/10 900 914,344
Credit Suisse First Boston Mortgage
Securities Corp., Series 00-1, Class 4A
6.63% 04/15/15 2,406 2,307,267
GE Capital Mortgage Services, Inc.,
Series 94-14, Class A3
6.50% 04/25/24 800 772,500
General Motors Acceptance Corp.
Commercial Mortgage Securities,
Inc., Series 97-C2, Class A3
6.56% 11/15/07 275 265,430
Lehman Brothers Commercial Conduit
Mortgage Trust, Series 98-C1, Class A3
6.48% 01/18/08 325 311,362
Midland Royalty Acceptance Corp.,
Series 96-C, Class A
7.23% 01/25/29 1,000 999,344
Mortgage Capital Funding, Inc.,
Series 98-MC3, Class A2
6.34% 11/18/31 885 829,634
Norwest Asset Securities Corp.,
Series 98-27, Class A
6.25% 11/25/13 2,569 2,423,280
Residential Funding Mortgage
Securities I, Series 98-S7, Class A1
6.50% 03/25/13 1,589 1,540,898
Summit Mortgage Trust, Series 00-1,
Class B1
6.14%**** 12/28/12 2,298 2,210,278
Washington Mutual, Series 00-1,
Class A1
6.91%**** 06/25/24 1,478 1,473,770
------------
TOTAL COMMERCIAL MORTGAGE-
BACKED SECURITIES
(Cost $15,125,664) 14,048,107
------------
PAR
MATURITY (000) VALUE
-------- ------- ------------
ASSET BACKED SECURITIES -- 3.0%
Arcadia Automobile Receivables Trust,
Series 97-C, Class A5
6.55% 06/15/05 $ 2,000 $ 1,990,625
Citibank Credit Card Master Trust I,
Series 97-6, Class A (PO)
1.00%+ 08/15/06 4,300 3,302,476
Fifth Third Auto Grantor Trust,
Series 96-B, Class A
6.45% 03/15/02 22 21,876
First Security Auto Owner Trust,
Series 00-1, Class A3
7.30% 07/15/04 1,975 1,991,664
First Security Auto Owner Trust,
Series 00-2, Class A3
6.83% 07/15/04 4,825 4,832,539
FMAC Loan Receivables Trust,
Series 97-B, Class A
6.85% 09/15/19 1,077 1,038,528
Ford Credit Auto Owner Trust,
Series 00-C, Class A4
7.24% 02/15/04 2,900 2,923,563
Green Tree Financial Corp.,
Series 96-6, Class A6
7.95% 09/15/27 996 995,795
Green Tree Financial Corp.,
Series 96-7, Class A6
7.65%++ 10/15/27 998 1,002,143
MBNA Master Credit Card Trust,
Series 00-E, Class A
7.80% 10/15/12 2,225 2,345,984
Onyx Acceptance Auto Trust,
Series 00-B, Class A3
7.29% 08/15/04 2,125 2,142,266
Puget Power Conservation Grantor
Trust, Series 97-1, Class A
6.23% 07/11/02 532 530,177
Toyota Auto Receivables Owner Trust,
Series 00-A, Class A3
7.18% 08/15/04 2,250 2,270,391
------------
TOTAL ASSET BACKED SECURITIES
(Cost $25,255,613) 25,388,027
------------
CORPORATE BONDS -- 8.6%
BANKS -- 0.3%
Bank One Corp.
7.87% 08/01/10 2,200 2,251,139
------------
ELECTRONICS -- 0.1%
Arrow Electronics, Inc.
8.70% 10/01/05 950 949,981
------------
ENERGY & UTILITIES -- 0.2%
Pinnacle Partners
8.83% 08/15/04 1,425 1,441,031
------------
FINANCE -- 2.8%
American General Institutional Capital
7.57% 12/01/45 410 365,477
Bear Stearns Capital Trust Investments
7.00% 01/15/27 1,350 1,342,406
CSW Investments
6.95% 08/01/01 1,600 1,595,712
Donaldson, Lufkin and Jenrette, Inc.
7.07% 12/13/02 2,150 2,154,513
ERAC USA Finance Co.
8.25% 05/01/05 1,090 1,110,620
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
59
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
BALANCED PORTFOLIO (CONTINUED)
PAR
AS OF SEPTEMBER 30, 2000 MATURITY (000) VALUE
-------- ------- ------------
CORPORATE BONDS (CONTINUED)
FINANCE (CONTINUED)
FMR Corp.
7.57% 06/15/29 $ 940 $ 913,119
Ford Motor Credit Co.
7.60% 08/01/05 3,675 3,705,520
5.80% 01/12/09 1,520 1,348,874
7.37% 10/28/09 1,720 1,686,254
Merrill Lynch & Co., Inc.
5.75% 11/04/02 1,355 1,325,556
Morgan Stanley Dean Witter & Co.
7.13% 01/15/03 2,190 2,204,051
Reliant Energy Finance Co. II
7.40% 11/15/02 925 917,606
Simon Property Group LP, Inc.
6.63% 06/15/03 1,400 1,356,278
Sun Life Canada Capital Trust
8.53% 05/29/49 860 773,896
Wells Fargo Capital
7.73% 12/01/26 730 662,160
Yorkshire Power Finance
6.50% 02/25/08 1,750 1,589,266
Zurich Capital Trust I
8.38% 06/01/37 510 486,959
------------
23,538,267
------------
INDUSTRIAL -- 1.8%
Ahmanson Capital Trust Investments
8.36% 12/01/26 3,440 2,881,051
Atlantic Richfield
8.75% 03/01/32 1,020 1,198,308
Ford Motor Co., Global Bonds
6.62% 10/01/28 2,550 2,122,008
Hyder PLC
7.38% 12/15/28 1,485 1,101,935
Jones Apparel Group, Inc.
6.25% 10/01/01 2,055 2,013,886
Qwest Capital Funding, Inc.
7.90% 08/15/10 1,450 1,481,062
Rohm & Haas Co.
7.85% 07/15/29 790 780,269
Union Carbide
7.88% 04/01/23 695 695,722
Williams Holdings of Delaware
6.13% 12/01/03 2,320 2,243,808
Yosemite Securities Trust I
8.25% 11/15/04 940 954,249
------------
15,472,298
------------
INSURANCE -- 1.0%
American General Capital II
8.50% 07/01/30 2,500 2,515,975
Equitable Cos., Inc.
9.00% 12/15/04 1,100 1,165,912
Everest Reinsurance Holdings
8.50% 03/15/05 1,270 1,307,730
Farmers Insurance
7.20% 07/15/48 800 646,948
Jackson National Life Insurance Co.
8.15% 03/15/27 1,140 1,093,664
Liberty Mutual Insurance Co.
7.70% 10/15/47 1,340 978,496
Royal & Sun Alliance Insurance
8.95% 10/15/29 1,190 1,178,363
------------
8,887,088
------------
PAR
MATURITY (000) VALUE
-------- ------- ------------
MOTOR VEHICLES -- 0.3%
Chrysler Corp.
7.45% 03/01/27 $ 1,425 $ 1,359,469
DaimlerChrysler North America
Holdings
8.00% 06/15/10 930 960,059
------------
2,319,528
------------
PAPER & FOREST PRODUCTS -- 0.1%
International Paper Co.
8.12% 07/08/05 950 979,353
------------
PIPELINES -- 0.2%
El Paso Energy Corp.
6.63% 07/15/01 1,875 1,862,042
------------
TELECOMMUNICATIONS -- 0.6%
AT&T Capital Corp.
6.75% 02/04/02 1,950 1,936,487
Deutsche Telekom International Finance
8.25% 06/15/30 1,230 1,267,392
Koninklijke Kpn NV
8.00% 10/01/10 850 850,583
8.37% 10/01/30 425 424,981
Sprint Capital Corp.
5.70% 11/15/03 1,030 992,315
------------
5,471,758
------------
TRANSPORTATION -- 0.1%
Federal Express Corp.
7.11% 01/02/14 875 802,685
------------
YANKEE -- 1.1%
Abitibi-Consolidated, Inc.
8.30% 08/01/05 1,350 1,378,676
Deutsche Bank Capital Funding Trust
Investment
7.87% 12/29/49 780 743,194
Empresa Electrica Pehuenche
7.30%++ 05/01/03 1,670 1,640,881
Mexico-Par-A Corp.
6.25% 12/31/19 1,250 1,113,281
Pemex Finance Ltd.
9.14% 08/15/04 1,965 2,026,288
State of Qatar
9.75% 06/15/30 610 623,990
United Mexican States
8.50% 02/01/06 2,000 1,991,000
------------
9,517,310
------------
TOTAL CORPORATE BONDS
(Cost $75,089,359) 73,492,480
------------
TAXABLE MUNICIPAL BONDS -- 0.4%
Los Angeles County Pension Obligation
Revenue Bond, Series 95D
6.97% 06/30/08 1,000 996,320
Los Angeles County Pension Obligation
Revenue Bond, Series B
8.62% 06/30/06 600 648,414
7.57%+ 02/15/16 2,425 790,550
7.59%+ 02/15/17 850 255,986
7.62%+ 02/20-02/21 1,525 352,518
7.63%+ 02/22-02/23 1,235 246,737
------------
TOTAL TAXABLE MUNICIPAL BONDS
(Cost $3,241,258) 3,290,525
------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
60
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
BALANCED PORTFOLIO (CONCLUDED)
PAR
AS OF SEPTEMBER 30, 2000 MATURITY (000) VALUE
-------- ------- ------------
SHORT TERM INVESTMENTS -- 2.0%
Federal Home Loan Bank
Discount Notes
6.28% 10/02/00 $14,000 $ 13,997,558
Galileo Money Market Fund 2,905 2,904,988
------------
TOTAL SHORT TERM INVESTMENTS
(Cost $16,902,546) 16,902,546
------------
TOTAL INVESTMENTS IN
SECURITIES -- 100.0%
(Cost $700,385,142*) $851,918,384
============
-------------------
* Cost for Federal income tax purposes is $702,459,034. The gross unrealized
appreciation (depreciation) on a tax basis is as follows:
Gross unrealized appreciation $174,932,449
Gross unrealized depreciation (25,473,099)
------------
$149,459,350
============
** Non-income producing security.
*** Securities pledged as collateral with a value of $2,245,623 on 60 Standard
& Poor's 500 Stock Index futures contracts expiring December 2000. The
value of such contracts on September 30, 2000 was $21,805,500, thereby
resulting in an unrealized loss of $620,316.
**** Rates shown are the rates as of September 30, 2000.
+ Rates shown are the effective yields as of September 30, 2000.
++ Securities pledged as collateral with a value of $245,038 on 39 net long
U.S. Treasury Bonds futures contracts and 27 net short U.S. Treasury Notes
futures contracts expiring December 2000. The value of such contracts on
September 30, 2000 was $6,562,359, thereby resulting in an unrealized loss
of $24,185.
# Securities with a market value of $12,827,801 have been pledged as
collateral for reverse repurchase agreements.
------------------------------------
INVESTMENT ABBREVIATIONS
CPI Consumer Price Index
IO Interest Only
PO Principal Only
ADR American Depository Receipt
------------------------------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
61
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
BALANCED PORTFOLIO
SEPTEMBER 30, 2000
<TABLE>
<S> <C>
ASSETS
Investments at value (Cost $700,385,142) .............................................................. $851,918,384
Collateral received for securities loaned ............................................................. 65,180,237
Dividends receivable .................................................................................. 374,548
Interest receivable ................................................................................... 3,573,651
Interest receivable on interest rate swaps ............................................................ 1,887
Investments sold receivable ........................................................................... 53,887,786
Capital shares sold receivable ........................................................................ 1,290,006
Prepaid expenses ...................................................................................... 8,195
Unrealized appreciation on interest rate swaps ........................................................ 7,170
------------
TOTAL ASSETS ................................................................................... 976,241,864
------------
LIABILITIES
Payable upon return of securities loaned .............................................................. 65,180,237
Investments purchased payable ......................................................................... 47,149,753
Reverse repurchase agreements payable ................................................................. 12,857,678
Capital shares redeemed payable ....................................................................... 2,116,256
Advisory fees payable ................................................................................. 395,276
Adminstrative fees payable ............................................................................ 159,098
Transfer agent fees payable ........................................................................... 63,088
Other accrued expenses payable ........................................................................ 474,130
Futures margin payable ................................................................................ 330,773
------------
TOTAL LIABILITIES .............................................................................. 128,726,289
------------
NET ASSETS (Applicable to 19,133,989 Institutional shares, 9,809,892
Service shares, 7,431,932 Investor A shares, 5,131,101 Investor B shares and
598,898 Investor C shares outstanding) ................................................................ $847,515,575
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER INSTITUTIONAL SHARE ($385,792,670 (DIVIDE) 19,133,989) ............................................ $20.16
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER SERVICE SHARE ($197,632,771 (DIVIDE) 9,809,892) ................................................... $20.15
======
NET ASSET VALUE AND REDEMPTION PRICE
PER INVESTOR A SHARE ($149,593,859 (DIVIDE) 7,431,932) ................................................ $20.13
======
MAXIMUM OFFERING PRICE PER INVESTOR A SHARE
($20.13 (DIVIDE) 0.955) ............................................................................... $21.08
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent deferred sales charge of 4.5%)
PER INVESTOR B SHARE ($102,529,574 (DIVIDE) 5,131,101) ................................................ $19.98
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent deferred sales charge of 1.0%)
PER INVESTOR C SHARE ($11,966,701 (DIVIDE) 598,898) ................................................... $19.98
======
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
62
<PAGE>
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<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 YEAR ENDED SEPTEMBER 30, 2000 PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Investment income:
Interest .............................. $ 3,016,121 $ 3,036,492 $ 606,829 $ 5,168,124 $ 1,505,836
Dividends ............................. 39,529,724 6,606,372 4,236,235 479,782 8,149,409
Net investment income from master ..... -- -- -- -- --
Foreign taxes withheld ................ -- -- -- -- --
------------ ------------ ----------- ------------ -----------
Total investment income .......... 42,545,845 9,642,864 4,843,064 5,647,906 9,655,245
------------ ------------ ----------- ------------ -----------
Expenses:
Investment advisory fee ............... 11,684,246 9,138,089 2,172,456 6,106,488 3,232,118
Administration fee .................... 4,573,703 3,582,474 624,581 1,702,307 1,334,081
Custodian fee ......................... 273,395 225,361 55,744 133,950 110,806
Transfer agent fee .................... 727,440 602,801 97,275 341,888 245,408
Shareholder servicing fees ............ 751,126 801,076 73,202 464,606 204,666
Shareholder processing fees ........... 659,897 653,148 63,768 311,153 158,288
Distribution fees ..................... 269,382 486,826 42,259 770,397 150,861
Legal and audit ....................... 62,432 66,495 6,753 35,870 14,378
Printing .............................. 240,612 204,558 27,149 86,838 60,951
Registration fees and expenses ........ 50,996 43,510 38,656 70,057 40,406
Trustees' fees and officers' salary ... 42,471 23,523 4,777 6,013 10,940
Other ................................. 20,108 17,427 7,736 5,665 9,113
------------ ------------ ----------- ------------ -----------
19,355,808 15,845,288 3,214,356 10,035,232 5,572,016
Fees waived ........................... -- -- -- -- --
Expenses reimbursed by advisor ........ -- -- -- -- --
Recapture of advisory fees previously
waived .............................. -- -- 26,832 30,905 --
------------ ------------ ----------- ------------ -----------
Total operating expenses ......... 19,355,808 15,845,288 3,241,188 10,066,137 5,572,016
------------ ------------ ----------- ------------ -----------
Interest expense ...................... -- -- -- -- --
------------ ------------ ----------- ------------ -----------
Total expenses ................... 19,355,808 15,845,288 3,241,188 10,066,137 5,572,016
------------ ------------ ----------- ------------ -----------
Net investment income (loss) .......... 23,190,037 (6,202,424) 1,601,876 (4,418,231) 4,083,229
------------ ------------ ----------- ------------ -----------
Realized and unrealized gain (loss) on
investments and foreign currency
transactions:
Net realized gain (loss) from:
Investment transactions
(net of foreign taxes) ........... 165,677,534 245,181,162 2,268,392 273,877,941 35,925,113
Futures and options ................. -- 3,210,250 -- 1,329,837 --
Swap contracts ...................... -- -- -- -- --
Foreign currency related transactions -- -- -- -- --
------------ ------------ ----------- ------------ -----------
165,677,534 248,391,412 2,268,392 275,207,778 35,925,113
------------ ------------ ----------- ------------ -----------
Change in unrealized appreciation
(depreciation) from:
Investments (net of foreign taxes) .. (50,111,212) 87,463,741 30,709,344 116,855,821 48,886,278
Futures and options ................. -- 1,085,875 -- 514,517 --
Swap contracts ...................... -- -- -- -- --
Foreign currency related transactions -- -- -- -- --
------------ ------------ ----------- ------------ -----------
(50,111,212) 88,549,616 30,709,344 117,370,338 48,886,278
------------ ------------ ----------- ------------ -----------
Net gain (loss) on investments and
foreign currency transactions ....... 115,566,322 336,941,028 32,977,736 392,578,116 84,811,391
------------ ------------ ----------- ------------ -----------
Net increase (decrease) in assets
resulting from operations ........... $138,756,359 $330,738,604 $34,579,612 $388,159,885 $88,894,620
============ ============ =========== ============ ===========
</TABLE>
<TABLE>
<CAPTION>
GLOBAL
SMALL CAP MICRO-CAP SCIENCE & EUROPEAN INTERNATIONAL
GROWTH EQUITY EQUITY TECHNOLOGY EQUITY EQUITY
FOR THE YEAR ENDED SEPTEMBER 30, 2000 PORTFOLIO PORTFOLIO PORTFOLIO 1 PORTFOLIO 2 PORTFOLIO
-------------- ------------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Investment income:
Interest .............................. $ 25,515,382 $ 8,295,037 $ 254,652 $ 11,606 $ 2,625,617
Dividends ............................. 472,416 42,519 8,882 12,320 19,063,909
Net investment income from master ..... -- -- -- -- --
Foreign taxes withheld ................ -- -- (647) (1,365) (2,250,197)
-------------- ------------ ----------- --------- -------------
Total investment income .......... 25,987,798 8,337,556 262,887 22,561 19,439,329
-------------- ------------ ----------- --------- -------------
Expenses:
Investment advisory fee ............... 13,483,790 6,038,499 244,050 13,240 10,127,040
Administration fee .................... 5,301,926 1,242,241 62,369 3,384 2,913,054
Custodian fee ......................... 381,968 106,422 22,532 10,954 1,000,190
Transfer agent fee .................... 975,022 499,731 23,402 502 461,860
Shareholder servicing fees ............ 1,073,325 1,136,135 54,629 172 316,448
Shareholder processing fees ........... 814,064 683,015 32,779 103 269,421
Distribution fees ..................... 855,590 2,330,006 101,010 218 80,802
Legal and audit ....................... 111,642 13,172 33,321 14,053 19,539
Printing .............................. 360,101 68,406 96,039 38,890 154,135
Registration fees and expenses ........ 67,675 84,797 117,368 8,763 30,964
Trustees' fees and officers' salary ... 35,104 813 2,000 -- 20,474
Other ................................. 45,868 9,163 7,215 1,133 32,088
-------------- ------------ ----------- --------- -------------
23,506,075 12,212,400 796,714 91,412 15,426,015
Fees waived ........................... -- -- (267,708) (16,624) (106,173)
Expenses reimbursed by advisor ........ -- -- -- (52,916) --
Recapture of advisory fees previously
waived .............................. -- 170,684 -- -- --
-------------- ------------ ----------- --------- -------------
Total operating expenses ......... 23,506,075 12,383,084 529,006 21,872 15,319,842
-------------- ------------ ----------- --------- -------------
Interest expense ...................... -- -- -- -- --
-------------- ------------ ----------- --------- -------------
Total expenses ................... 23,506,075 12,383,084 529,006 21,872 15,319,842
-------------- ------------ ----------- --------- -------------
Net investment income (loss) .......... 2,481,723 (4,045,528) (266,119) 689 4,119,487
-------------- ------------ ----------- --------- -------------
Realized and unrealized gain (loss) on
investments and foreign currency
transactions:
Net realized gain (loss) from:
Investment transactions
(net of foreign taxes) ........... 708,883,512 138,886,317 (5,893,804) 10,337 157,622,140
Futures and options ................. (8,707,653) (1,364,141) 52,583 -- --
Swap contracts ...................... -- -- -- -- --
Foreign currency related transactions -- -- (42,619) (85,355) (9,835,052)
-------------- ------------ ----------- --------- -------------
700,175,859 137,522,176 (5,883,840) (75,018) 147,787,088
-------------- ------------ ----------- --------- -------------
Change in unrealized appreciation
(depreciation) from:
Investments (net of foreign taxes) .. 368,162,225 103,143,587 20,045,544 (193,716) (145,387,649)
Futures and options ................. (6,137,706) (1,352,088) -- -- --
Swap contracts ...................... -- -- -- -- --
Foreign currency related transactions -- -- (11,724) (1,560) (157,407)
-------------- ------------ ----------- --------- -------------
362,024,519 101,791,499 20,033,820 (195,276) (145,545,056)
-------------- ------------ ----------- --------- -------------
Net gain (loss) on investments and
foreign currency transactions ....... 1,062,200,378 239,313,675 14,149,980 (270,294) 2,242,032
-------------- ------------ ----------- --------- -------------
Net increase (decrease) in assets
resulting from operations ........... $1,064,682,101 $235,268,147 $13,883,861 $(269,605) $ 6,361,519
============== ============ =========== ========= =============
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL
SMALL CAP ASIA PACIFIC
EQUITY EQUITY
FOR THE YEAR ENDED SEPTEMBER 30, 2000 PORTFOLIO PORTFOLIO 2
------------- ------------
<S> <C> <C>
Investment income:
Interest .............................. $ 2,951,333 $ 3,641
Dividends ............................. 769,810 14,187
Net investment income from master ..... -- --
Foreign taxes withheld ................ (45,754) (1,319)
------------ ---------
Total investment income .......... 3,675,389 16,509
------------ ---------
Expenses:
Investment advisory fee ............... 1,684,480 7,200
Administration fee .................... 387,430 1,840
Custodian fee ......................... 89,687 2,752
Transfer agent fee .................... 128,044 266
Shareholder servicing fees ............ 250,920 19
Shareholder processing fees ........... 150,723 12
Distribution fees ..................... 531,455 9
Legal and audit ....................... 14,126 13,763
Printing .............................. 28,694 38,002
Registration fees and expenses ........ 114,070 8,318
Trustees' fees and officers' salary ... 337 --
Other ................................. 22,103 1,116
------------ ---------
3,402,069 73,297
Fees waived ........................... (162,452) (9,040)
Expenses reimbursed by advisor ........ -- (52,613)
Recapture of advisory fees previously
waived .............................. -- --
------------ ---------
Total operating expenses ......... 3,239,617 11,644
------------ ---------
Interest expense ...................... -- --
------------ ---------
Total expenses ................... 3,239,617 11,644
------------ ---------
Net investment income (loss) .......... 435,772 4,865
------------ ---------
Realized and unrealized gain (loss) on
investments and foreign currency
transactions:
Net realized gain (loss) from:
Investment transactions
(net of foreign taxes) ........... (25,118,477) 41,273
Futures and options ................. 435,174 --
Swap contracts ...................... -- --
Foreign currency related transactions (553,407) (7,333)
------------ ---------
(25,236,710) 33,940
------------ ---------
Change in unrealized appreciation
(depreciation) from:
Investments (net of foreign taxes) .. 15,836,904 (272,996)
Futures and options ................. -- --
Swap contracts ...................... -- --
Foreign currency related transactions (22,038) 296
------------ ---------
15,814,866 (272,700)
------------ ---------
Net gain (loss) on investments and
foreign currency transactions ....... (9,421,844) (238,760)
------------ ---------
Net increase (decrease) in assets
resulting from operations ........... $ (8,986,072) $(233,895)
============ =========
<FN>
--------------
1 For the period 5/15/00 through 9/30/00.
2 For the period 6/23/00 through 9/30/00.
</FN>
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
64 & 65
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
INTERNATIONAL
EMERGING SELECT INDEX
MARKETS EQUITY EQUITY BALANCED
FOR THE YEAR ENDED SEPTEMBER 30, 2000 PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
Investment income:
Interest .............................. $ 673,162 $ 4,177,101 $ -- $ 23,286,137
Dividends ............................. 3,036,685 17,930,341 -- 5,188,779
Net investment income from master ..... -- -- 21,437,335 --
Foreign taxes withheld ................ (166,710) -- -- --
----------- ------------- ------------ ------------
Total investment income .......... 3,543,137 22,107,442 21,437,335 28,474,916
----------- ------------- ------------ ------------
Expenses:
Investment advisory fee ............... 1,412,346 10,280,894 -- 4,963,103
Administration fee .................... 259,872 4,017,644 4,293,848 1,995,004
Custodian fee ......................... 103,642 237,552 -- 162,717
Transfer agent fee .................... 41,156 709,084 1,042,901 437,745
Shareholder servicing fees ............ 40,020 772,384 2,945,329 999,823
Shareholder processing fees ........... 35,964 606,195 2,004,761 732,225
Distribution fees ..................... 11,084 674,468 6,371,585 876,476
Legal and audit ....................... 3,718 98,484 91,489 41,927
Printing .............................. 4,486 229,311 236,280 111,929
Registration fees and expenses ........ 40,404 47,387 89,899 46,829
Trustees' fees and officers' salary ... 1,340 30,762 24,255 13,989
Other ................................. 11,909 16,931 201,909 21,362
----------- ------------- ------------ ------------
1,965,941 17,721,096 17,302,256 10,403,129
Fees waived ........................... -- -- (1,357,833) --
Expenses reimbursed by advisor ........ -- -- -- --
Recapture of advisory fees previously
waived .............................. -- -- -- --
----------- ------------- ------------ ------------
Total operating expenses ......... 1,965,941 17,721,096 15,944,423 10,403,129
----------- ------------- ------------ ------------
Interest expense ...................... -- -- -- 45,707
----------- ------------- ------------ ------------
Total expenses ................... 1,965,941 17,721,096 15,944,423 10,448,836
----------- ------------- ------------ ------------
Net investment income (loss) .......... 1,577,196 4,386,346 5,492,912 18,026,080
----------- ------------- ------------ ------------
Realized and unrealized gain (loss) on
investments and foreign currency
transactions:
Net realized gain (loss) from:
Investment transactions
(net of foreign taxes) ........... 110,919 289,783,506 (16,510,859) 129,864,541
Futures and options ................. -- (235,940) (287,857) (690,981)
Swap contracts ...................... -- -- -- 400,923
Foreign currency related transactions (450,794) -- -- --
----------- ------------- ------------ ------------
(339,875) 289,547,566 (16,798,716) 129,574,483
----------- ------------- ------------ ------------
Change in unrealized appreciation
(depreciation) from:
Investments (net of foreign taxes) .. (5,401,452) (144,754,164) 214,392,595 (77,983,759)
Futures and options ................. (5,387) 239,520 (25,974) (659,864)
Swap contracts ...................... -- -- -- 7,170
Foreign currency related transactions (5,623) -- -- --
----------- ------------- ------------ ------------
(5,412,462) (144,514,644) 214,366,621 (78,636,453)
----------- ------------- ------------ ------------
Net gain (loss) on investments and
foreign currency transactions ....... (5,752,337) 145,032,922 197,567,905 50,938,030
----------- ------------- ------------ ------------
Net increase (decrease) in assets
resulting from operations ........... $(4,175,141) $ 149,419,268 $203,060,817 $ 68,964,110
=========== ============= ============ ============
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
66
<PAGE>
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<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
LARGE CAP
VALUE EQUITY PORTFOLIO
---------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
9/30/00 9/30/99
-------------- --------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income (loss) ................................ $ 23,190,037 $ 32,994,507
Net realized gain (loss) on investments, futures, options and
swap contracts and foreign currency related transactions .. 165,677,534 202,260,967
Net unrealized gain on investments, futures, options and swap
contracts and foreign currency related transactions ....... (50,111,212) 115,081,408
-------------- --------------
Net increase in net assets
resulting from operations ................................. 138,756,359 350,336,882
-------------- --------------
Distributions to shareholders from:
Net investment income:
Institutional Class ......................................... (19,977,816) (27,949,868)
Service Class ............................................... (2,834,513) (4,485,880)
Investor A Class ............................................ (377,708) (619,325)
Investor B Class ............................................ -- (97,164)
Investor C Class ............................................ -- (11,703)
-------------- --------------
Total distributions from net
investment income ......................................... (23,190,037) (33,163,940)
-------------- --------------
In excess of net investment income:
Institutional Class ......................................... -- --
Service Class ............................................... -- --
Investor A Class ............................................ -- --
Investor B Class ............................................ -- --
Investor C Class ............................................ -- --
-------------- --------------
Total distributions in excess of
investment income ......................................... -- --
-------------- --------------
Net realized gains:
Institutional Class ......................................... (169,157,475) (117,018,687)
Service Class ............................................... (32,963,672) (24,723,344)
Investor A Class ............................................ (5,366,518) (3,347,911)
Investor B Class ............................................ (2,913,890) (1,855,151)
Investor C Class ............................................ (398,408) (199,549)
-------------- --------------
Total distributions from net
realized gains ............................................ (210,799,963) (147,144,642)
-------------- --------------
Total distributions to shareholders ......................... (233,990,000) (180,308,582)
-------------- --------------
Capital share transactions ...................................... (32,815,202) (98,883,013)
-------------- --------------
Total increase (decrease) in net assets ..................... (128,048,843) 71,145,287
Net assets:
Beginning of period ......................................... 2,383,386,687 2,312,241,400
-------------- --------------
End of period ............................................... $2,255,337,844 $2,383,386,687
============== ==============
</TABLE>
<TABLE>
<CAPTION>
LARGE CAP MID-CAP VALUE
GROWTH EQUITY PORTFOLIO EQUITY PORTFOLIO
------------------------------- ---------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
9/30/00 9/30/99 9/30/00 9/30/99
-------------- -------------- ------------ ------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income (loss) ................................ $ (6,202,424) $ (1,481,103) $ 1,601,876 $ 2,276,757
Net realized gain (loss) on investments, futures, options and
swap contracts and foreign currency related transactions .. 248,391,412 226,547,465 2,268,392 11,134,454
Net unrealized gain on investments, futures, options and swap
contracts and foreign currency related transactions ....... 88,549,616 176,599,307 30,709,344 3,268,247
-------------- -------------- ------------ ------------
Net increase in net assets
resulting from operations ................................. 330,738,604 401,665,669 34,579,612 16,679,458
-------------- -------------- ------------ ------------
Distributions to shareholders from:
Net investment income:
Institutional Class ......................................... -- -- (1,460,198) (2,054,526)
Service Class ............................................... -- -- (68,859) (261,471)
Investor A Class ............................................ -- -- (6,127) (17,790)
Investor B Class ............................................ -- -- -- --
Investor C Class ............................................ -- -- -- --
-------------- -------------- ------------ ------------
Total distributions from net
investment income ......................................... -- -- (1,535,184) (2,333,787)
-------------- -------------- ------------ ------------
In excess of net investment income:
Institutional Class ......................................... -- -- -- --
Service Class ............................................... -- -- -- --
Investor A Class ............................................ -- -- -- --
Investor B Class ............................................ -- -- -- --
Investor C Class ............................................ -- -- -- --
-------------- -------------- ------------ ------------
Total distributions in excess of
investment income ......................................... -- -- -- --
-------------- -------------- ------------ ------------
Net realized gains:
Institutional Class ......................................... (178,397,407) (81,668,812) (5,199,066) (68,128)
Service Class ............................................... (39,623,225) (17,012,084) (935,576) (13,604)
Investor A Class ............................................ (9,805,037) (3,299,277) (92,857) (1,535)
Investor B Class ............................................ (6,332,739) (1,388,742) (111,753) --
Investor C Class ............................................ (719,281) (97,721) (9,222) --
-------------- -------------- ------------ ------------
Total distributions from net
realized gains ............................................ (234,877,689) (103,466,636) (6,348,474) (83,267)
-------------- -------------- ------------ ------------
Total distributions to shareholders ......................... (234,877,689) (103,466,636) (7,883,658) (2,417,054)
-------------- -------------- ------------ ------------
Capital share transactions ...................................... 155,296,737 8,769,527 (66,679,233) 25,245,325
-------------- -------------- ------------ ------------
Total increase (decrease) in net assets ..................... 251,157,652 306,968,560 (39,983,279) 39,507,729
Net assets:
Beginning of period ......................................... 1,466,693,018 1,159,724,458 284,637,604 245,129,875
-------------- -------------- ------------ ------------
End of period ............................................... $1,717,850,670 $1,466,693,018 $244,654,325 $284,637,604
============== ============== ============ ============
</TABLE>
<TABLE>
<CAPTION>
MID-CAP GROWTH SMALL CAP
EQUITY PORTFOLIO VALUE EQUITY PORTFOLIO
----------------------------- -----------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
9/30/00 9/30/99 9/30/00 9/30/99
------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income (loss) ................................ $ (4,418,231) $ (1,926,092) $ 4,083,229 $ 5,348,948
Net realized gain (loss) on investments, futures, options and
swap contracts and foreign currency related transactions .. 275,207,778 143,396,487 35,925,113 (13,820,872)
Net unrealized gain on investments, futures, options and swap
contracts and foreign currency related transactions ....... 117,370,338 40,710,313 48,886,278 44,952,759
------------- ------------ ------------- ------------
Net increase in net assets
resulting from operations ................................. 388,159,885 182,180,708 88,894,620 36,480,835
------------- ------------ ------------- ------------
Distributions to shareholders from:
Net investment income:
Institutional Class ......................................... -- -- (3,807,793) (4,766,070)
Service Class ............................................... -- -- (269,094) (466,508)
Investor A Class ............................................ -- -- (75,362) (159,758)
Investor B Class ............................................ -- -- -- --
Investor C Class ............................................ -- -- -- --
------------- ------------ ------------- ------------
Total distributions from net
investment income ......................................... -- -- (4,152,249) (5,392,336)
------------- ------------ ------------- ------------
In excess of net investment income:
Institutional Class ......................................... -- -- -- (5,550,816)
Service Class ............................................... -- -- -- (788,475)
Investor A Class ............................................ -- -- -- (409,719)
Investor B Class ............................................ -- -- -- (215,256)
Investor C Class ............................................ -- -- -- (56,446)
------------- ------------ ------------- ------------
Total distributions in excess of
investment income ......................................... -- -- -- (7,020,712)
------------- ------------ ------------- ------------
Net realized gains:
Institutional Class ......................................... (122,951,166) -- -- (23,842,650)
Service Class ............................................... (15,210,662) -- -- (3,473,838)
Investor A Class ............................................ (4,714,030) -- -- (1,664,439)
Investor B Class ............................................ (5,088,269) -- -- (939,611)
Investor C Class ............................................ (860,258) -- -- (241,116)
------------- ------------ ------------- ------------
Total distributions from net
realized gains ............................................ (148,824,385) -- -- (30,161,654)
------------- ------------ ------------- ------------
Total distributions to shareholders ......................... (148,824,385) -- (4,152,249) (42,574,702)
------------- ------------ ------------- ------------
Capital share transactions ...................................... 310,612,569 (4,288,892) (166,836,987) (13,546,437)
------------- ------------ ------------- ------------
Total increase (decrease) in net assets ..................... 549,948,069 177,891,816 (82,094,616) (19,640,304)
Net assets:
Beginning of period ......................................... 435,804,113 257,912,297 646,121,137 665,761,441
------------- ------------ ------------- ------------
End of period ............................................... $ 985,752,182 $435,804,113 $ 564,026,521 $646,121,137
============= ============ ============= ============
</TABLE>
<TABLE>
<CAPTION>
SMALL CAP
GROWTH EQUITY PORTFOLIO
---------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
9/30/00 9/30/99
-------------- --------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income (loss) ................................ $ 2,481,723 $ (5,312,244)
Net realized gain (loss) on investments, futures, options and
swap contracts and foreign currency related transactions .. 700,175,859 248,821,242
Net unrealized gain on investments, futures, options and swap
contracts and foreign currency related transactions ....... 362,024,519 314,952,215
-------------- --------------
Net increase in net assets
resulting from operations ................................. 1,064,682,101 558,461,213
-------------- --------------
Distributions to shareholders from:
Net investment income:
Institutional Class ......................................... -- --
Service Class ............................................... -- --
Investor A Class ............................................ -- --
Investor B Class ............................................ -- --
Investor C Class ............................................ -- --
-------------- --------------
Total distributions from net
investment income ......................................... -- --
-------------- --------------
In excess of net investment income:
Institutional Class ......................................... -- --
Service Class ............................................... -- --
Investor A Class ............................................ -- --
Investor B Class ............................................ -- --
Investor C Class ............................................ -- --
-------------- --------------
Total distributions in excess of
investment income ......................................... -- --
-------------- --------------
Net realized gains:
Institutional Class ......................................... (232,912,309) --
Service Class ............................................... (28,112,258) --
Investor A Class ............................................ (13,077,405) --
Investor B Class ............................................ (7,588,685) --
Investor C Class ............................................ (2,292,429) --
-------------- --------------
Total distributions from net
realized gains ............................................ (283,983,086) --
-------------- --------------
Total distributions to shareholders ......................... (283,983,086) --
-------------- --------------
Capital share transactions ...................................... 317,806,980 (86,789,729)
-------------- --------------
Total increase (decrease) in net assets ..................... 1,098,505,995 471,671,484
Net assets:
Beginning of period ......................................... 1,734,151,755 1,262,480,271
-------------- --------------
End of period ............................................... $2,832,657,750 $1,734,151,755
============== ==============
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
68 & 69
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
GLOBAL SCIENCE
MICRO-CAP & TECHNOLOGY
EQUITY PORTFOLIO PORTFOLIO
----------------------------- ----------------
FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED PERIOD 5/15/00 1
9/30/00 9/30/99 THROUGH 9/30/00
------------ ------------ ----------------
<S> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income (loss) ............................... $ (4,045,528) $ (787,233) $ (266,119)
Net realized gain (loss) on investments, futures and swaps
contracts and foreign currency related transactions ...... 137,522,176 22,743,781 (5,883,840)
Net unrealized gain (loss) on investments, futures and swaps
contracts and foreign currency related transactions ...... 101,791,499 26,483,211 20,033,820
------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations ................................ 235,268,147 48,439,759 13,883,861
------------ ------------ ------------
Distributions to shareholders from:
Net investment income:
Institutional Class ........................................ -- -- --
Service Class .............................................. -- -- --
Investor A Class ........................................... -- -- --
Investor B Class ........................................... -- -- --
Investor C Class ........................................... -- -- --
------------ ------------ ------------
Total distributions from net
investment income ........................................ -- -- --
------------ ------------ ------------
Net realized gains:
Institutional Class ........................................ (4,114,493) -- --
Service Class .............................................. (137,999) -- --
Investor A Class ........................................... (7,241,743) -- --
Investor B Class ........................................... (9,060,052) -- --
Investor C Class ........................................... (4,348,993) -- --
------------ ------------ ------------
Total distributions from net
realized gains ........................................... (24,903,280) -- --
------------ ------------ ------------
Total distributions to shareholders ........................ (24,903,280) -- --
------------ ------------ ------------
Capital share transactions ..................................... 249,857,258 81,414,490 122,140,892
------------ ------------ ------------
Total increase in net assets ............................... 460,222,125 129,854,249 136,024,753
Net assets:
Beginning of period ........................................ 147,693,790 17,839,541 --
------------ ------------ ------------
End of period .............................................. $607,915,915 $147,693,790 $136,024,753
============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
EUROPEAN INTERNATIONAL
EQUITY PORTFOLIO EQUITY PORTFOLIO
---------------- -------------------------------
FOR THE FOR THE FOR THE
PERIOD 6/23/00 1 YEAR ENDED YEAR ENDED
THROUGH 9/30/00 9/30/00 9/30/99
---------------- -------------- --------------
<S> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income (loss) ............................... $ 689 $ 4,119,487 $ 6,433,854
Net realized gain (loss) on investments, futures and swaps
contracts and foreign currency related transactions ...... (75,018) 147,787,088 174,618,396
Net unrealized gain (loss) on investments, futures and swaps
contracts and foreign currency related transactions ...... (195,276) (145,545,056) 148,493,560
---------- -------------- --------------
Net increase (decrease) in net assets
resulting from operations ................................ (269,605) 6,361,519 329,545,810
---------- -------------- --------------
Distributions to shareholders from:
Net investment income:
Institutional Class ........................................ -- (4,053,127) (10,909,069)
Service Class .............................................. -- (66,360) --
Investor A Class ........................................... -- -- --
Investor B Class ........................................... -- -- --
Investor C Class ........................................... -- -- --
---------- -------------- --------------
Total distributions from net
investment income ........................................ -- (4,119,487) (10,909,069)
---------- -------------- --------------
Net realized gains:
Institutional Class ........................................ -- (149,014,912) (59,510,158)
Service Class .............................................. -- (16,138,787) (9,113,453)
Investor A Class ........................................... -- (3,606,135) (2,302,606)
Investor B Class ........................................... -- (1,050,119) (380,158)
Investor C Class ........................................... -- (111,943) (17,491)
---------- -------------- --------------
Total distributions from net
realized gains ........................................... -- (169,921,896) (71,323,866)
---------- -------------- --------------
Total distributions to shareholders ........................ -- (174,041,383) (82,232,935)
---------- -------------- --------------
Capital share transactions ..................................... 6,071,728 174,112,669 (159,375,511)
---------- -------------- --------------
Total increase in net assets ............................... 5,802,123 6,432,805 87,937,364
Net assets:
Beginning of period ........................................ -- 1,277,034,923 1,189,097,559
---------- -------------- --------------
End of period .............................................. $5,802,123 $1,283,467,728 $1,277,034,923
========== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL
SMALL CAP
EQUITY PORTFOLIO
----------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
9/30/00 9/30/99
------------ -----------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income (loss) ............................... $ 435,772 $ 13,291
Net realized gain (loss) on investments, futures and swaps
contracts and foreign currency related transactions ...... (25,236,710) 1,969,658
Net unrealized gain (loss) on investments, futures and swaps
contracts and foreign currency related transactions ...... 15,814,866 7,427,271
------------ -----------
Net increase (decrease) in net assets
resulting from operations ................................ (8,986,072) 9,410,220
------------ -----------
Distributions to shareholders from:
Net investment income:
Institutional Class ........................................ -- (13,291)
Service Class .............................................. -- --
Investor A Class ........................................... -- --
Investor B Class ........................................... -- --
Investor C Class ........................................... -- --
------------ -----------
Total distributions from net
investment income ........................................ -- (13,291)
------------ -----------
Net realized gains:
Institutional Class ........................................ (2,631,826) (1,891,011)
Service Class .............................................. (1,058) (455)
Investor A Class ........................................... (142,203) (82,313)
Investor B Class ........................................... (273,679) (177,547)
Investor C Class ........................................... (65,043) (35,491)
------------ -----------
Total distributions from net
realized gains ........................................... (3,113,809) (2,186,817)
------------ -----------
Total distributions to shareholders ........................ (3,113,809) (2,200,108)
------------ -----------
Capital share transactions ..................................... 209,555,255 1,690,699
------------ -----------
Total increase in net assets ............................... 197,455,374 8,900,811
Net assets:
Beginning of period ........................................ 28,134,415 19,233,604
------------ -----------
End of period .............................................. $225,589,789 $28,134,415
============ ===========
<FN>
--------------
1 Commencement of operations.
</FN>
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
70 & 71
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
INTERNATIONAL
ASIA PACIFIC EMERGING MARKETS
EQUITY PORTFOLIO PORTFOLIO
---------------- -----------------------------
FOR THE FOR THE FOR THE
PERIOD 6/23/00 1 YEAR ENDED YEAR ENDED
THROUGH 9/30/00 9/30/00 9/30/99
---------------- ------------ ------------
<S> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ................................... $ 4,865 $ 1,577,196 $ 648,798
Net realized gain (loss) on investments, futures, swaps
contracts and foreign currency related transactions ... 33,940 (339,875) (36,549,412)
Net unrealized gain (loss) on investments, futures, swaps
contracts and foreign currency related transactions ... (272,700) (5,412,462) 60,969,968
---------- ------------ ------------
Net increase (decrease) in net assets
resulting from operations ............................. (233,895) (4,175,141) 25,069,354
---------- ------------ ------------
Distributions to shareholders from:
Net investment income:
Institutional Class ..................................... -- (688,449) (560,013)
Service Class ........................................... -- (98,410) --
Investor A Class ........................................ -- (11,248) --
Investor B Class ........................................ -- -- --
Investor C Class ........................................ -- -- --
---------- ------------ ------------
Total distributions from net
investment income ..................................... -- (798,107) (560,013)
---------- ------------ ------------
Net realized gains:
Institutional Class ..................................... -- -- --
Service Class ........................................... -- -- --
Investor A Class ........................................ -- -- --
Investor B Class ........................................ -- -- --
Investor C Class ........................................ -- -- --
---------- ------------ ------------
Total distributions from net
realized gains ........................................ -- -- --
---------- ------------ ------------
Total distributions to shareholders ..................... -- (798,107) (560,013)
---------- ------------ ------------
Capital share transactions .................................. 3,090,373 50,426,425 (33,182,710)
---------- ------------ ------------
Total increase (decrease) in net assets ................. 2,856,478 45,453,177 (8,673,369)
Net assets:
Beginning of period ..................................... -- 84,134,992 92,808,361
---------- ------------ ------------
End of period ........................................... $2,856,478 $129,588,169 $ 84,134,992
========== ============ ============
</TABLE>
<TABLE>
<CAPTION>
SELECT INDEX
EQUITY PORTFOLIO EQUITY PORTFOLIO
------------------------------- -------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
9/30/00 9/30/99 9/30/00 9/30/99
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ................................... $ 4,386,346 $ 10,694,182 $ 5,492,912 $ 7,804,775
Net realized gain (loss) on investments, futures, swaps
contracts and foreign currency related transactions ... 289,547,566 127,165,354 (16,798,716) 6,155,261
Net unrealized gain (loss) on investments, futures, swaps
contracts and foreign currency related transactions ... (144,514,644) 275,371,497 214,366,621 214,942,881
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets
resulting from operations ............................. 149,419,268 413,231,033 203,060,817 228,902,917
-------------- -------------- -------------- --------------
Distributions to shareholders from:
Net investment income:
Institutional Class ..................................... (3,716,895) (9,609,377) (3,875,739) (5,357,464)
Service Class ........................................... (176,855) (789,343) (1,423,997) (2,673,613)
Investor A Class ........................................ (27,557) (143,655) (193,176) (450,611)
Investor B Class ........................................ (1,718) -- -- (434,679)
Investor C Class ........................................ -- (16) -- (503,968)
-------------- -------------- -------------- --------------
Total distributions from net
investment income ..................................... (3,923,025) (10,542,391) (5,492,912) (9,420,335)
-------------- -------------- -------------- --------------
Net realized gains:
Institutional Class ..................................... (113,408,461) (45,528,653) (3,286,149) (1,069,132)
Service Class ........................................... (17,493,906) (7,197,856) (2,274,567) (695,184)
Investor A Class ........................................ (5,194,117) (1,341,737) (520,889) (124,525)
Investor B Class ........................................ (5,362,895) (1,483,560) (1,658,679) (342,483)
Investor C Class ........................................ (583,076) (90,763) (2,233,965) (288,901)
-------------- -------------- -------------- --------------
Total distributions from net
realized gains ........................................ (142,042,455) (55,642,569) (9,974,249) (2,520,225)
-------------- -------------- -------------- --------------
Total distributions to shareholders ..................... (145,965,480) (66,184,960) (15,467,161) (11,940,560)
-------------- -------------- -------------- --------------
Capital share transactions .................................. 58,519,520 (108,226,907) 201,939,890 602,207,362
-------------- -------------- -------------- --------------
Total increase (decrease) in net assets ................. 61,973,308 238,819,166 389,533,546 819,169,719
Net assets:
Beginning of period ..................................... 1,806,385,217 1,567,566,051 1,640,519,725 821,350,006
-------------- -------------- -------------- --------------
End of period ........................................... $1,868,358,525 $1,806,385,217 $2,030,053,271 $1,640,519,725
============== ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
BALANCED PORTFOLIO
-----------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
9/30/00 9/30/99
------------ ------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ................................... $ 18,026,080 $ 18,360,854
Net realized gain (loss) on investments, futures, swaps
contracts and foreign currency related transactions ... 129,574,483 29,035,109
Net unrealized gain (loss) on investments, futures, swaps
contracts and foreign currency related transactions ... (78,636,453) 52,900,722
------------ ------------
Net increase (decrease) in net assets
resulting from operations ............................. 68,964,110 100,296,685
------------ ------------
Distributions to shareholders from:
Net investment income:
Institutional Class ..................................... (9,422,153) (10,175,942)
Service Class ........................................... (4,307,481) (4,579,500)
Investor A Class ........................................ (2,800,066) (2,465,272)
Investor B Class ........................................ (1,151,782) (992,067)
Investor C Class ........................................ (128,889) (77,184)
------------ ------------
Total distributions from net
investment income ..................................... (17,810,371) (18,289,965)
------------ ------------
Net realized gains:
Institutional Class ..................................... (14,397,284) (15,889,194)
Service Class ........................................... (7,785,003) (7,702,682)
Investor A Class ........................................ (5,083,725) (4,050,743)
Investor B Class ........................................ (3,457,051) (2,064,754)
Investor C Class ........................................ (373,335) (38,248)
------------ ------------
Total distributions from net
realized gains ........................................ (31,096,398) (29,745,621)
------------ ------------
Total distributions to shareholders ..................... (48,906,769) (48,035,586)
------------ ------------
Capital share transactions .................................. (44,798,035) 124,741,835
------------ ------------
Total increase (decrease) in net assets ................. (24,740,694) 177,002,934
Net assets:
Beginning of period ..................................... 872,256,269 695,253,335
------------ ------------
End of period ........................................... $847,515,575 $872,256,269
============ ============
<FN>
--------------
1 Commencement of operations.
</FN>
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
72 & 73
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
NET NET GAIN NET
ASSET (LOSS) ON DISTRIBUTIONS DISTRIBUTIONS ASSET
VALUE NET INVESTMENTS FROM NET FROM NET VALUE
BEGINNING INVESTMENT (BOTH REALIZED INVESTMENT REALIZED END OF
OF PERIOD INCOME (LOSS AND UNREALIZED) INCOME GAINS PERIOD
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
----------------------
LARGE CAP VALUE EQUITY
----------------------
INSTITUTIONAL CLASS
9/30/00 $15.75 $ 0.16 $ 0.79 $(0.16) $(1.41) $15.13
9/30/99 14.69 0.22 2.01 (0.22) (0.95) 15.75
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
SERVICE CLASS
9/30/00 $15.75 $ 0.11 $ 0.79 $(0.11) $(1.41) $15.13
9/30/99 14.69 0.16 2.02 (0.17) (0.95) 15.75
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
INVESTOR A CLASS
9/30/00 $15.74 $ 0.10 $ 0.77 $(0.09) $(1.41) $15.11
9/30/99 14.68 0.16 2.01 (0.16) (0.95) 15.74
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
INVESTOR B CLASS
9/30/00 $15.61 $(0.01) $ 0.77 $ -- $(1.40) $14.97
9/30/99 14.59 0.02 1.99 (0.04) (0.95) 15.61
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
9/30/00 $15.61 $ 0.01 $ 0.75 $ -- $(1.40) $14.97
9/30/99 14.59 0.03 1.98 (0.04) (0.95) 15.61
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
9/30/00 $22.57 $(0.06) $ 4.83 $ -- $(3.62) $23.72
9/30/99 18.14 -- 6.06 -- (1.63) 22.57
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
SERVICE CLASS
9/30/00 $22.47 $(0.13) $ 4.80 $ -- $(3.62) $23.52
9/30/99 18.11 (0.07) 6.06 -- (1.63) 22.47
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
INVESTOR A CLASS
9/30/00 $22.37 $(0.16) $ 4.77 $ -- $(3.62) $23.36
9/30/99 18.06 (0.09) 6.03 -- (1.63) 22.37
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
INVESTOR B CLASS
9/30/00 $21.68 $(0.28) $ 4.56 $ -- $(3.62) $22.34
9/30/99 17.68 (0.20) 5.83 -- (1.63) 21.68
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
NET RATIO OF EXPENSES
ASSETS RATIO OF TO AVERAGE RATIO OF NET
END OF EXPENSES TO NET ASSETS INVESTMENT INCOME
TOTAL PERIOD AVERAGE NET (EXCLUDING TO AVERAGE NET
RETURN (000) ASSETS WAIVERS) ASSETS
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
----------------------
LARGE CAP VALUE EQUITY
----------------------
INSTITUTIONAL CLASS
9/30/00 6.24% $1,821,839 0.78% 0.78% 1.11%
9/30/99 15.38 1,909,445 0.78 0.78 1.37
9/30/98 (2.27) 1,841,171 0.83 0.84 1.45
9/30/97 37.66 743,405 0.78 0.85 1.94
9/30/96 21.01 731,024 0.75 0.84 2.40
SERVICE CLASS
9/30/00 5.91% $ 337,993 1.08% 1.08% 0.82%
9/30/99 15.03 374,907 1.08 1.08 1.07
9/30/98 (2.50) 387,323 1.13 1.14 1.14
9/30/97 37.22 595,189 1.09 1.16 1.62
9/30/96 20.68 457,283 1.05 1.14 2.13
INVESTOR A CLASS
9/30/00 5.71%3 $ 56,689 1.23% 1.23% 0.66%
9/30/99 14.85 3 61,657 1.19 1.19 0.96
9/30/98 (2.63)3 51,151 1.27 1.28 0.99
9/30/97 37.01 3 47,131 1.26 1.33 1.44
9/30/96 20.52 3 26,190 1.22 1.31 1.93
INVESTOR B CLASS
9/30/00 4.93%4 $ 31,208 2.00% 2.00% (0.11)%
9/30/99 13.93 4 33,206 2.00 2.00 0.15
9/30/98 (3.45)4 29,450 2.06 2.07 0.20
9/30/97 36.40 4 19,773 2.00 2.07 0.64
1/18/96 1 through 9/30/96 14.26 4 3,152 1.92 2 2.00 2 1.34 2
INVESTOR C CLASS
9/30/00 4.93%4 $ 7,608 2.00% 2.00% (0.13)%
9/30/99 13.93 4 4,172 2.00 2.00 0.15
9/30/98 (3.45)4 3,146 2.04 2.05 0.22
9/30/97 35.99 4 1,428 2.01 2.08 0.61
8/16/96 1 through 9/30/96 3.16 4 205 1.80 2 1.88 2 1.29 2
-----------------------
LARGE CAP GROWTH EQUITY
-----------------------
INSTITUTIONAL CLASS
9/30/00 22.90% $1,263,796 0.80% 0.80% (0.24)%
9/30/99 35.46 1,115,368 0.81 0.81 (0.01)
9/30/98 11.76 922,896 0.86 0.86 0.18
9/30/97 33.69 482,851 0.79 0.86 0.54
9/30/96 18.67 481,171 0.75 0.86 0.63
SERVICE CLASS
9/30/00 22.50% $ 288,904 1.10% 1.10% (0.54)%
9/30/99 35.10 248,901 1.11 1.11 (0.31)
9/30/98 11.33 187,738 1.16 1.16 (0.13)
9/30/97 33.38 262,409 1.10 1.17 0.24
9/30/96 18.34 191,023 1.05 1.17 0.31
INVESTOR A CLASS
9/30/00 22.31%3 $ 87,375 1.25% 1.25% (0.70)%
9/30/99 34.91 3 61,211 1.22 1.22 (0.42)
9/30/98 11.16 3 33,340 1.33 1.33 (0.30)
9/30/97 33.18 3 25,575 1.27 1.34 0.07
9/30/96 18.18 3 16,579 1.22 1.34 0.15
INVESTOR B CLASS
9/30/00 21.37%4 $ 65,977 2.01% 2.01% (1.46)%
9/30/99 33.83 4 37,032 2.03 2.03 (1.23)
9/30/98 10.33 4 14,713 2.07 2.07 (1.03)
9/30/97 32.18 4 7,919 2.01 2.08 (0.66)
1/24/96 1 through 9/30/96 13.61 4 2,364 1.93 2 2.05 2 (0.47)2
RATIO OF NET
INVESTMENT
INCOME
TO AVERAGE
NET ASSETS PORTFOLIO
(EXCLUDING TURNOVER
WAIVERS) RATE
---------------------------------------------------------------------
<S> <C> <C>
----------------------
LARGE CAP VALUE EQUITY
----------------------
INSTITUTIONAL CLASS
9/30/00 1.11% 121%
9/30/99 1.37 42
9/30/98 1.44 33
9/30/97 1.87 37
9/30/96 2.32 60
SERVICE CLASS
9/30/00 0.82% 121%
9/30/99 1.07 42
9/30/98 1.13 33
9/30/97 1.55 37
9/30/96 2.04 60
INVESTOR A CLASS
9/30/00 0.66% 121%
9/30/99 0.96 42
9/30/98 0.98 33
9/30/97 1.37 37
9/30/96 1.84 60
INVESTOR B CLASS
9/30/00 (0.11)% 121%
9/30/99 0.15 42
9/30/98 0.19 33
9/30/97 0.57 37
1/18/96 1 through 9/30/96 1.25 2 60
INVESTOR C CLASS
9/30/00 (0.13)% 121%
9/30/99 0.15 42
9/30/98 0.21 33
9/30/97 0.54 37
8/16/96 1 through 9/30/96 1.20 2 60
-----------------------
LARGE CAP GROWTH EQUITY
-----------------------
INSTITUTIONAL CLASS
9/30/00 (0.24)% 121%
9/30/99 (0.01) 60
9/30/98 0.18 54
9/30/97 0.47 81
9/30/96 0.51 58
SERVICE CLASS
9/30/00 (0.54)% 121%
9/30/99 (0.31) 60
9/30/98 (0.13) 54
9/30/97 0.17 81
9/30/96 0.20 58
INVESTOR A CLASS
9/30/00 (0.70)% 121%
9/30/99 (0.42) 60
9/30/98 (0.30) 54
9/30/97 0.02 81
9/30/96 0.04 58
INVESTOR B CLASS
9/30/00 (1.46)% 121%
9/30/99 (1.23) 60
9/30/98 (1.03) 54
9/30/97 (0.73) 81
1/24/96 1 through 9/30/96 (0.58)2 58
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
74 & 75
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
NET NET GAIN NET
ASSET NET (LOSS) ON DISTRIBUTIONS DISTRIBUTIONS ASSET
VALUE INVESTMENT INVESTMENTS FROM NET DISTRIBUTIONS FROM NET VALUE
BEGINNING INCOME (BOTH REALIZED INVESTMENT FROM REALIZED END OF
OF PERIOD (LOSS) AND UNREALIZED) INCOME CAPITAL GAINS PERIOD
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTOR C CLASS
9/30/00 $21.68 $(0.25) $ 4.50 $ -- $ -- $(3.62) $22.31
9/30/99 17.68 (0.18) 5.81 -- -- (1.63) 21.68
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
--------------------
MID-CAP VALUE EQUITY
--------------------
INSTITUTIONAL CLASS
9/30/00 $11.35 $ 0.08 $ 1.56 $(0.08) $ -- $(0.25) $12.66
9/30/99 10.63 0.11 0.72 (0.11) -- -- 11.35
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
9/30/00 $11.34 $ 0.06 $ 1.54 $(0.03) $ -- $(0.25) $12.66
9/30/99 10.62 0.07 0.73 (0.08) -- -- 11.34
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
9/30/00 $11.33 $ 0.02 $ 1.56 $(0.02) $ -- $(0.25) $12.64
9/30/99 10.61 0.05 0.72 (0.05) -- -- 11.33
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
9/30/00 $11.26 $(0.07) $ 1.55 $ -- $ -- $(0.25) $12.49
9/30/99 10.58 (0.04) 0.72 -- -- -- 11.26
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
9/30/00 $11.26 $(0.06) $ 1.54 $ -- $ -- $(0.25) $12.49
9/30/99 10.58 (0.03) 0.71 -- -- -- 11.26
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
9/30/00 $19.12 $(0.08) $14.16 $ -- $ -- $(6.62) $26.58
9/30/99 11.12 (0.07) 8.07 -- -- -- 19.12
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
9/30/00 $18.96 $(0.19) $14.04 $ -- $ -- $(6.62) $26.19
9/30/99 11.06 (0.13) 8.03 -- -- -- 18.96
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
9/30/00 $18.85 $(0.13) $13.82 $ -- $ -- $(6.62) $25.92
9/30/99 11.02 (0.11) 7.94 -- -- -- 18.85
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
9/30/00 $18.52 $(0.22) $13.44 $ -- $ -- $(6.62) $25.12
9/30/99 10.90 (0.18) 7.80 -- -- -- 18.52
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
9/30/00 $18.52 $(0.21) $13.41 $ -- $ -- $(6.62) $25.10
9/30/99 10.90 (0.10) 7.72 -- -- -- 18.52
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
NET RATIO OF EXPENSES
ASSETS RATIO OF TO AVERAGE RATIO OF NET
END OF EXPENSES TO NET ASSETS INVESTMENT INCOME
TOTAL PERIOD AVERAGE NET (EXCLUDING TO AVERAGE NET
RETURN (000) ASSETS WAIVERS) ASSETS
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTOR C CLASS
9/30/00 21.21%4 $ 11,799 2.01% 2.01% (1.47)%
9/30/99 33.83 4 4,181 2.03 2.03 (1.23)
9/30/98 10.33 4 1,037 2.06 2.06 (1.01)
1/24/97 1 through 9/30/97 22.78 4 207 2.02 2 2.09 2 (0.66)2
--------------------
MID-CAP VALUE EQUITY
--------------------
INSTITUTIONAL CLASS
9/30/00 14.35% $ 216,660 1.13% 1.13% 0.66%
9/30/99 7.68 233,891 1.12 1.12 0.88
9/30/98 (13.68) 205,634 1.14 1.20 0.89
12/27/96 1 through 9/30/97 29.11 106,886 1.15 2 1.19 2 1.33 2
SERVICE CLASS
9/30/00 14.45% $ 18,373 1.42% 1.42% 0.34%
9/30/99 7.29 40,852 1.42 1.42 0.58
9/30/98 (13.94) 28,879 1.44 1.50 0.60
12/27/96 1 through 9/30/97 28.81 22,757 1.44 2 1.48 2 0.98 2
INVESTOR A CLASS
9/30/00 14.17%3 $ 3,805 1.60% 1.60% 0.19%
9/30/99 7.14 3 4,328 1.59 1.60 0.41
9/30/98 (14.06)3 3,983 1.61 1.67 0.41
12/27/96 1 through 9/30/97 28.51 3 2,315 1.61 2 1.64 2 0.77 2
INVESTOR B CLASS
9/30/00 13.35%4 $ 4,871 2.34% 2.34% (0.55)%
9/30/99 6.33 4 5,147 2.34 2.34 (0.34)
9/30/98 (14.66)4 6,375 2.35 2.41 (0.33)
12/27/96 1 through 9/30/97 28.23 4 2,911 2.32 2 2.36 2 0.04 2
INVESTOR C CLASS
9/30/00 13.35%4 $ 946 2.34% 2.34% (0.58)%
9/30/99 6.33 4 420 2.34 2.34 (0.34)
9/30/98 (14.66)4 259 2.33 2.39 (0.28)
12/27/96 1 through 9/30/97 28.23 4 21 2.33 2 2.37 2 0.13 2
----------------------
MID-CAP GROWTH EQUITY
----------------------
INSTITUTIONAL CLASS
9/30/00 91.06% $ 666,420 1.10% 1.10% (0.37)%
9/30/99 71.94 361,901 1.11 1.12 (0.48)
9/30/98 (8.05) 220,903 1.14 1.20 (0.37)
12/27/96 1 through 9/30/97 22.00 107,709 1.13 2 1.17 2 (0.16)2
SERVICE CLASS
9/30/00 91.13% $ 51,912 1.40% 1.40% (0.69)%
9/30/99 71.43 46,639 1.41 1.42 (0.78)
9/30/98 (8.32) 28,601 1.44 1.50 (0.68)
12/27/96 1 through 9/30/97 21.70 22,984 1.44 2 1.48 2 (0.54)2
INVESTOR A CLASS
9/30/00 90.62%3 $ 83,152 1.57% 1.57% (0.80)%
9/30/99 71.05 3 12,795 1.58 1.59 (0.95)
9/30/98 (8.42)3 4,090 1.61 1.67 (0.85)
12/27/96 1 through 9/30/97 21.40 3 2,650 1.59 2 1.63 2 (0.73)2
INVESTOR B CLASS
9/30/00 89.38%4 $ 122,726 2.31% 2.31% (1.53)%
9/30/99 69.91 4 12,698 2.33 2.34 (1.70)
9/30/98 (9.19)4 4,088 2.35 2.41 (1.60)
12/27/96 1 through 9/30/97 21.10 4 2,691 2.32 2 2.36 2 (1.50)2
INVESTOR C CLASS
9/30/00 89.23%4 $ 61,542 2.30% 2.30% (1.51)%
9/30/99 69.91 4 1,770 2.33 2.34 (1.70)
9/30/98 (9.19)4 230 2.34 2.40 (1.56)
12/27/96 1 through 9/30/97 21.10 4 85 2.35 2 2.39 2 (1.49)2
RATIO OF NET
INVESTMENT INCOME
TO AVERAGE
NET ASSETS PORTFOLIO
(EXCLUDING TURNOVER
WAIVERS) RATE
--------------------------------------------------------------
<S> <C> <C>
INVESTOR C CLASS
9/30/00 (1.47)% 121%
9/30/99 (1.23) 60
9/30/98 (1.01) 54
1/24/97 1 through 9/30/97 (0.73)2 81
--------------------
MID-CAP VALUE EQUITY
--------------------
INSTITUTIONAL CLASS
9/30/00 0.66% 205%
9/30/99 0.88 88
9/30/98 0.83 71
12/27/96 1 through 9/30/97 1.29 2 36
SERVICE CLASS
9/30/00 0.34% 205%
9/30/99 0.58 88
9/30/98 0.54 71
12/27/96 1 through 9/30/97 0.94 2 36
INVESTOR A CLASS
9/30/00 0.19% 205%
9/30/99 0.41 88
9/30/98 0.35 71
12/27/96 1 through 9/30/97 0.73 2 36
INVESTOR B CLASS
9/30/00 (0.55)% 205%
9/30/99 (0.34) 88
9/30/98 (0.39) 71
12/27/96 1 through 9/30/97 0.0 2 36
INVESTOR C CLASS
9/30/00 (0.58)% 205%
9/30/99 (0.34) 88
9/30/98 (0.34) 71
12/27/96 1 through 9/30/97 0.09 2 36
----------------------
MID-CAP GROWTH EQUITY
----------------------
INSTITUTIONAL CLASS
9/30/00 (0.37)% 425%
9/30/99 (0.49) 318
9/30/98 (0.43) 204
12/27/96 1 through 9/30/97 (0.20)2 64
SERVICE CLASS
9/30/00 (0.69)% 425%
9/30/99 (0.79) 318
9/30/98 (0.74) 204
12/27/96 1 through 9/30/97 (0.58)2 64
INVESTOR A CLASS
9/30/00 (0.80)% 425%
9/30/99 (0.96) 318
9/30/98 (0.91) 204
12/27/96 1 through 9/30/97 (0.77)2 64
INVESTOR B CLASS
9/30/00 (1.53)% 425%
9/30/99 (1.71) 318
9/30/98 (1.66) 204
12/27/96 1 through 9/30/97 (1.54)2 64
INVESTOR C CLASS
9/30/00 (1.51)% 425%
9/30/99 (1.71) 318
9/30/98 (1.62) 204
12/27/96 1 through 9/30/97 (1.53)2 64
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
76 & 77
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
NET NET GAIN
ASSET (LOSS) ON DISTRIBUTIONS DISTRIBUTIONS
VALUE NET INVESTMENTS FROM NET IN EXCESS OF
BEGINNING INVESTMENT (BOTH REALIZED INVESTMENT NET INVESTMENT
OF PERIOD INCOME (LOSS) AND UNREALIZED) INCOME INCOME
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
----------------------
SMALL CAP VALUE EQUITY
----------------------
INSTITUTIONAL CLASS
9/30/00 $14.73 $ 0.08 $ 2.44 $(0.13) $ --
9/30/99 14.89 0.12 0.67 (0.13) (0.15)
9/30/98 20.20 0.13 (3.19) (0.13) --
9/30/97 15.98 0.17 6.39 (0.17) --
9/30/96 15.16 0.10 1.70 (0.11) --
SERVICE CLASS
9/30/00 $14.71 $ -- $ 2.47 $(0.08) $ --
9/30/99 14.88 0.07 0.68 (0.10) (0.15)
9/30/98 20.20 0.09 (3.21) (0.08) --
9/30/97 15.98 0.13 6.39 (0.13) --
9/30/96 15.15 0.06 1.70 (0.06) --
INVESTOR A CLASS
9/30/00 $14.71 $(0.02) $ 2.46 $(0.05) $ --
9/30/99 14.88 0.03 0.69 (0.07) (0.15)
9/30/98 20.20 0.06 (3.20) (0.06) --
9/30/97 15.97 0.10 6.40 (0.10) --
9/30/96 15.14 0.03 1.69 (0.02) --
INVESTOR B CLASS
9/30/00 $14.31 $(0.23) $ 2.48 $ -- $ --
9/30/99 14.53 (0.06) 0.66 -- (0.15)
9/30/98 19.86 (0.02) (3.19) -- --
9/30/97 15.80 0.08 6.19 (0.04) --
9/30/96 15.06 (0.04) 1.65 -- --
INVESTOR C CLASS
9/30/00 $14.31 $(0.28) $ 2.54 $ -- $ --
9/30/99 14.53 (0.01) 0.61 -- (0.15)
9/30/98 19.86 (0.04) (3.17) -- --
10/1/96 1 through 9/30/97 15.76 0.02 6.29 (0.04) --
-----------------------
SMALL CAP GROWTH EQUITY
-----------------------
INSTITUTIONAL CLASS
9/30/00 $25.38 $ 0.07 $14.45 $ -- $ --
9/30/99 17.50 (0.06) 7.94 -- --
9/30/98 23.62 -- (4.98) -- --
9/30/97 21.94 0.02 3.18 (0.03) --
9/30/96 15.06 (0.01) 6.91 (0.02) --
SERVICE CLASS
9/30/00 $24.93 $(0.03) $14.15 $ -- $ --
9/30/99 17.24 (0.13) 7.82 -- --
9/30/98 23.43 (0.14) (4.91) -- --
9/30/97 21.80 (0.03) 3.15 -- --
9/30/96 15.02 (0.06) 6.84 -- --
INVESTOR A CLASS
9/30/00 $24.73 $(0.06) $13.94 $ -- $ --
9/30/99 17.12 (0.13) 7.74 -- --
9/30/98 23.25 (0.11) (4.88) -- --
9/30/97 21.69 (0.04) 3.09 -- --
9/30/96 14.98 (0.06) 6.77 -- --
INVESTOR B CLASS
9/30/00 $23.97 $(0.26) $13.48 $ -- $ --
9/30/99 16.73 (0.33) 7.57 -- --
9/30/98 22.89 (0.22) (4.80) -- --
9/30/97 21.53 (0.07) 2.92 -- --
1/18/96 1 through 9/30/96 14.87 (0.07) 6.73 -- --
NET NET
DISTRIBUTIONS ASSET ASSETS
DISTRIBUTIONS FROM NET VALUE END OF
FROM REALIZED END OF TOTAL PERIOD
CAPITAL GAINS PERIOD RETURN (000)
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
----------------------
SMALL CAP VALUE EQUITY
----------------------
INSTITUTIONAL CLASS
9/30/00 $ -- $ -- $17.12 17.15% $ 470,830
9/30/99 -- (0.67) 14.73 5.22 519,388
9/30/98 -- (2.12) 14.89 (17.03) 527,374
9/30/97 -- (2.17) 20.20 47.36 309,899
9/30/96 -- (0.87) 15.98 12.64 214,828
SERVICE CLASS
9/30/00 $ -- $ -- $17.10 16.80% $ 50,980
9/30/99 -- (0.67) 14.71 4.88 66,728
9/30/98 -- (2.12) 14.88 (17.33) 77,893
9/30/97 -- (2.17) 20.20 46.95 122,431
9/30/96 -- (0.87) 15.98 12.30 80,981
INVESTOR A CLASS
9/30/00 $ -- $ -- $17.10 16.60%3 $ 25,719
9/30/99 -- (0.67) 14.71 4.71 3 31,843
9/30/98 -- (2.12) 14.88 (17.43)3 34,286
9/30/97 -- (2.17) 20.20 46.85 3 34,031
9/30/96 -- (0.87) 15.97 12.06 3 24,605
INVESTOR B CLASS
9/30/00 $ -- $ -- $16.56 15.72%4 $ 11,831
9/30/99 -- (0.67) 14.31 3.93 4 19,000
9/30/98 -- (2.12) 14.53 (18.08)4 20,717
9/30/97 -- (2.17) 19.86 45.67 4 11,001
9/30/96 -- (0.87) 15.80 11.34 4 2,357
INVESTOR C CLASS
9/30/00 $ -- $ -- $16.57 15.79%4 $ 4,666
9/30/99 -- (0.67) 14.31 3.93 4 9,162
9/30/98 -- (2.12) 14.53 18.08)4 5,491
10/1/96 1 through 9/30/97 -- (2.17) 19.86 46.04 4 2,109
-----------------------
SMALL CAP GROWTH EQUITY
-----------------------
INSTITUTIONAL CLASS
9/30/00 $ -- $(4.14) $35.76 63.03% $ 2,196,700
9/30/99 -- -- 25.38 44.95 1,426,124
9/30/98 (0.02) (1.12) 17.50 (21.93) 1,022,404
9/30/97 -- (1.49) 23.62 15.89 495,904
9/30/96 -- -- 21.94 45.87 299,563
SERVICE CLASS
9/30/00 $ -- $(4.14) $34.91 62.51% $ 315,647
9/30/99 -- -- 24.93 44.52 170,900
9/30/98 (0.02) (1.12) 17.24 (22.40) 141,470
9/30/97 -- (1.49) 23.43 15.54 225,089
9/30/96 -- -- 21.80 45.14 158,901
INVESTOR A CLASS
9/30/00 $ -- $(4.14) $34.47 61.96%3 $ 175,112
9/30/99 -- -- 24.73 44.37 3 79,478
9/30/98 (0.02) (1.12) 17.12 (22.31)3 48,190
9/30/97 -- (1.49) 23.25 15.28 3 57,323
9/30/96 -- -- 21.69 44.79 3 27,954
INVESTOR B CLASS
9/30/00 $ -- $(4.14) $33.05 61.07%4 $ 95,922
9/30/99 -- -- 23.97 43.28 4 44,109
9/30/98 (0.02) (1.12) 16.73 (22.89)4 38,485
9/30/97 -- (1.49) 22.89 14.47 4 40,270
1/18/96 1 through 9/30/96 -- -- 21.53 38.27 4 6,520
RATIO OF NET
RATIO OF EXPENSES INVESTMENT INCOME
RATIO OF TO AVERAGE RATIO OF NET TO AVERAGE
EXPENSES TO NET ASSETS INVESTMENT INCOME NET ASSETS PORTFOLIO
AVERAGE NET (EXCLUDING TO AVERAGE NET (EXCLUDING TURNOVER
ASSETS WAIVERS) ASSETS WAIVERS) RATE
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
----------------------
SMALL CAP VALUE EQUITY
----------------------
INSTITUTIONAL CLASS
9/30/00 0.86% 0.86% 0.79% 0.79% 168%
9/30/99 0.86 0.86 0.88 0.88 48
9/30/98 0.87 0.88 0.79 0.78 45
9/30/97 0.87 0.88 1.09 1.08 66
9/30/96 0.85 0.86 0.68 0.67 50
SERVICE CLASS
9/30/00 1.16% 1.16% 0.49% 0.49% 168%
9/30/99 1.16 1.16 0.58 0.58 48
9/30/98 1.17 1.18 0.44 0.43 45
9/30/97 1.17 1.18 0.79 0.78 66
9/30/96 1.15 1.16 0.38 0.37 50
INVESTOR A CLASS
9/30/00 1.32% 1.32% 0.31% 0.31% 168%
9/30/99 1.30 1.30 0.44 0.44 48
9/30/98 1.32 1.33 0.32 0.31 45
9/30/97 1.34 1.35 0.63 0.62 66
9/30/96 1.32 1.33 0.20 0.19 50
INVESTOR B CLASS
9/30/00 2.08% 2.08% (0.43)% (0.43)% 168%
9/30/99 2.08 2.08 (0.34) (0.34) 48
9/30/98 2.08 2.09 (0.43) (0.44) 45
9/30/97 2.07 2.08 (0.15) (0.16) 66
9/30/96 2.04 2.05 (0.50) (0.51) 50
INVESTOR C CLASS
9/30/00 2.08% 2.08% (0.43)% (0.43)% 168%
9/30/99 2.08 2.08 (0.34) (0.34) 48
9/30/98 2.08 2.09 (0.42) (0.43) 45
10/1/96 1 through 9/30/97 2.04 2 2.05 2 (0.18)2 (0.19)2 66
-----------------------
SMALL CAP GROWTH EQUITY
-----------------------
INSTITUTIONAL CLASS
9/30/00 0.78% 0.78% 0.20% 0.20% 218%
9/30/99 0.82 0.82 (0.25) (0.25) 176
9/30/98 0.87 0.87 (0.13) (0.13) 159
9/30/97 0.87 0.87 0.01 0.01 82
9/30/96 0.86 0.88 (0.07) (0.09) 89
SERVICE CLASS
9/30/00 1.08% 1.08% (0.09)% (0.09)% 218%
9/30/99 1.12 1.12 (0.55) (0.55) 176
9/30/98 1.17 1.17 (0.46) (0.46) 159
9/30/97 1.17 1.17 (0.29) (0.29) 82
9/30/96 1.16 1.18 (0.38) (0.40) 89
INVESTOR A CLASS
9/30/00 1.23% 1.23% (0.21)% (0.21)% 218%
9/30/99 1.23 1.23 (0.66) (0.66) 176
9/30/98 1.32 1.32 (0.61) (0.61) 159
9/30/97 1.34 1.34 (0.46) (0.46) 82
9/30/96 1.33 1.35 (0.55) (0.57) 89
INVESTOR B CLASS
9/30/00 1.98% 1.98% (0.96)% (0.96)% 218%
9/30/99 2.00 2.00 (1.43) (1.43) 176
9/30/98 2.07 2.07 (1.36) (1.36) 159
9/30/97 2.07 2.07 (1.23) (1.23) 82
1/18/96 1 through 9/30/96 2.06 2 2.08 2 (1.34)2 (1.36)2 89
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
78 & 79
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
NET NET GAIN
ASSET (LOSS) ON DISTRIBUTIONS
VALUE NET INVESTMENTS FROM NET DISTRIBUTIONS
BEGINNING INVESTMENT (BOTH REALIZED INVESTMENT FROM
OF PERIOD INCOME (LOSS) AND UNREALIZED) INCOME CAPITAL
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTOR C CLASS
9/30/00 $23.97 $(0.22) $13.44 $ -- $ --
9/30/99 16.73 (0.35) 7.59 -- --
9/30/98 22.89 (0.26) (4.76) -- (0.02)
9/30/97 21.53 (0.11) 2.96 -- --
9/6/96 1 through 9/30/96 19.66 (0.01) 1.88 -- --
--------------------------
MICRO-CAP EQUITY PORTFOLIO
--------------------------
INSTITUTIONAL CLASS
9/30/00 $24.73 $0.03 $23.95 $ -- $ --
9/30/99 9.38 (0.06) 15.41 -- --
5/1/98 1 through 9/30/98 10.00 (0.01) (0.61) -- --
SERVICE CLASS
9/30/00 $24.64 $(0.07) $23.81 $ -- $ --
9/30/99 9.38 (0.07) 15.33 -- --
5/1/98 1 through 9/30/98 10.00 (0.02) (0.60) -- --
INVESTOR A CLASS
9/30/00 $24.60 $(0.17) $23.80 $ -- $ --
9/30/99 9.38 (0.11) 15.33 -- --
5/1/98 1 through 9/30/98 10.00 (0.02) (0.60) -- --
INVESTOR B CLASS
9/30/00 $24.38 $(0.45) $23.52 $ -- $ --
9/30/99 9.36 (0.18) 15.20 -- --
5/1/98 1 through 9/30/98 10.00 (0.04) (0.60) -- --
INVESTOR C CLASS
9/30/00 $24.38 $(0.44) $23.50 $ -- $ --
9/30/99 9.36 (0.16) 15.18 -- --
5/1/98 1 through 9/30/98 10.00 (0.04) (0.60) -- --
---------------------------
GLOBAL SCIENCE & TECHNOLOGY
---------------------------
INSTITUTIONAL CLASS
5/15/00 1 through 9/30/00 $10.00 $(0.01) $2.50 $ -- $ --
SERVICE CLASS
5/15/00 1 through 9/30/00 $10.00 $(0.01) $2.48 $ -- $ --
INVESTOR A CLASS
5/15/00 1 through 9/30/00 $10.00 $(0.02) $2.49 $ -- $ --
INVESTOR B CLASS
5/15/00 1 through 9/30/00 $10.00 $(0.03) $2.47 $ -- $ --
INVESTOR C CLASS
5/15/00 1 through 9/30/00 $10.00 $(0.03) $2.47 $ -- $ --
----------------
EUROPEAN EQUITY
----------------
INSTITUTIONAL CLASS
6/23/00 1 through 9/30/00 $10.00 $ -- $(0.49) $ -- $ --
SERVICE CLASS
6/23/00 1 through 9/30/00 $10.00 $(0.06) $(0.44) $ -- $ --
INVESTOR A CLASS
6/23/00 1 through 9/30/00 $10.00 $ -- $(0.50) $ -- $ --
INVESTOR B CLASS
6/23/00 1 through 9/30/00 $10.00 $(0.01) $(0.51) $ -- $ --
INVESTOR C CLASS
6/23/00 1 through 9/30/00 $10.00 $(0.02) $(0.50) $ -- $ --
NET NET
DISTRIBUTIONS ASSET ASSETS
FROM NET VALUE END OF
REALIZED END OF TOTAL PERIOD
GAINS PERIOD RETURN (000)
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTOR C CLASS
9/30/00 $(4.14) $33.05 61.07%4 $ 49,276
9/30/99 -- 23.97 43.28 4 13,541
9/30/98 (1.12) 16.73 (22.89)4 11,931
9/30/97 (1.49) 22.89 14.47 4 14,106
9/6/96 1 through 9/30/96 -- 21.53 9.51 4 329
--------------------------
MICRO-CAP EQUITY PORTFOLIO
--------------------------
INSTITUTIONAL CLASS
9/30/00 $(3.30) $45.41 103.63% $ 106,727
9/30/99 -- 24.73 163.37 28,106
5/1/98 1 through 9/30/98 -- 9.38 (6.10) 1,302
SERVICE CLASS
9/30/00 $(3.30) $45.08 102.98% $ 2,824
9/30/99 -- 24.64 162.41 690
5/1/98 1 through 9/30/98 -- 9.38 (6.10) 69
INVESTOR A CLASS
9/30/00 $(3.30) $44.93 102.68%3 $ 151,588
9/30/99 -- 24.60 162.26 3 45,429
5/1/98 1 through 9/30/98 -- 9.38 (6.20)3 6,100
INVESTOR B CLASS
9/30/00 $(3.30) $44.15 101.17%4 $ 213,237
9/30/99 -- 24.38 160.19 4 53,476
5/1/98 1 through 9/30/98 -- 9.36 (6.30)4 8,560
INVESTOR C CLASS
9/30/00 $(3.30) $44.14 101.12%4 $ 133,540
9/30/99 -- 24.38 160.19 4 19,993
5/1/98 1 through 9/30/98 -- 9.36 (6.30)4 1,809
---------------------------
GLOBAL SCIENCE & TECHNOLOGY
---------------------------
INSTITUTIONAL CLASS
5/15/00 1 through 9/30/00 $ -- $12.49 24.90% $ 21,383
SERVICE CLASS
5/15/00 1 through 9/30/00 $ -- $12.47 24.70% $ 17
INVESTOR A CLASS
5/15/00 1 through 9/30/00 $ -- $12.47 24.70%3 $ 41,474
INVESTOR B CLASS
5/15/00 1 through 9/30/00 $ -- $12.44 24.40%4 $ 60,094
INVESTOR C CLASS
5/15/00 1 through 9/30/00 $ -- $12.44 24.40%4 $ 13,057
----------------
EUROPEAN EQUITY
----------------
INSTITUTIONAL CLASS
6/23/00 1 through 9/30/00 $ -- $ 9.51 (4.90)% $ 4,848
SERVICE CLASS
6/23/00 1 through 9/30/00 $ -- $ 9.50 (5.00)% $ --
INVESTOR A CLASS
6/23/00 1 through 9/30/00 $ -- $ 9.50 (5.00)%3 $ 472
INVESTOR B CLASS
6/23/00 1 through 9/30/00 $ -- $ 9.48 (5.20)%4 $ 381
INVESTOR C CLASS
6/23/00 1 through 9/30/00 $ -- $ 9.48 (5.20)%4 $ 101
RATIO OF NET
RATIO OF EXPENSES INVESTMENT INCOME
RATIO OF TO AVERAGE RATIO OF NET TO AVERAGE
EXPENSES TO NET ASSETS INVESTMENT INCOME NET ASSETS PORTFOLIO
AVERAGE NET (EXCLUDING TO AVERAGE NET (EXCLUDING TURNOVER
ASSETS WAIVERS) ASSETS WAIVERS) RATE
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTOR C CLASS
9/30/00 1.99% 1.99% (0.92)% (0.92)% 218%
9/30/99 2.05 2.05 (1.48) (1.48) 176
9/30/98 2.09 2.09 (1.38) (1.38) 159
9/30/97 2.07 2.07 (1.25) (1.25) 82
9/6/96 1 through 9/30/96 1.74 2 1.76 2 (0.93)2 (0.95)2 89
--------------------------
MICRO-CAP EQUITY PORTFOLIO
--------------------------
INSTITUTIONAL CLASS
9/30/00 1.44% 1.44% 0.09% 0.09% 445%
9/30/99 1.43 1.65 (0.72) (0.94) 346
5/1/98 1 through 9/30/98 1.40 2 2.73 2 (0.33)2 (1.66)2 119
SERVICE CLASS
9/30/00 1.75% 1.75% (0.20)% (0.20)% 445%
9/30/99 1.73 1.92 (1.00) (1.19) 346
5/1/98 1 through 9/30/98 1.68 2 3.01 2 (0.61)2 (1.94)2 119
INVESTOR A CLASS
9/30/00 1.91% 1.91% (0.41)% (0.41)% 445%
9/30/99 1.90 2.23 (1.17) (1.50) 346
5/1/98 1 through 9/30/98 1.84 2 3.17 2 (0.70)2 (2.03)2 119
INVESTOR B CLASS
9/30/00 2.66% 2.66% (1.14)% (1.14)% 445%
9/30/99 2.65 3.01 (1.91) (2.27) 346
5/1/98 1 through 9/30/98 2.55 2 3.88 2 (1.44)2 (2.77)2 119
INVESTOR C CLASS
9/30/00 2.65% 2.65% (1.12)% (1.12)% 445%
9/30/99 2.63 2.93 (1.91) (2.21) 346
5/1/98 1 through 9/30/98 2.53 2 3.86 2 (1.45)2 (2.78)2 119
---------------------------
GLOBAL SCIENCE & TECHNOLOGY
---------------------------
INSTITUTIONAL CLASS
5/15/00 1 through 9/30/00 1.20%2 2.19%2 (0.21)%2 (1.20)%2 175%
SERVICE CLASS
5/15/00 1 through 9/30/00 1.50%2 2.49%2 (0.51)%2 (1.50)%2 175%
INVESTOR A CLASS
5/15/00 1 through 9/30/00 1.67%2 2.66%2 (0.68)%2 (1.67)%2 175%
INVESTOR B CLASS
5/15/00 1 through 9/30/00 2.42%2 3.41%2 (1.43)%2 (2.42)%2 175%
INVESTOR C CLASS
5/15/00 1 through 9/30/00 2.42%2 3.41%2 (1.43)%2 (2.42)%2 175%
----------------
EUROPEAN EQUITY
----------------
INSTITUTIONAL CLASS
6/23/00 1 through 9/30/00 1.45%2 6.12%2 0.08%2 (4.59)%2 177%
SERVICE CLASS
6/23/00 1 through 9/30/00 1.75%2 6.42%2 (0.22)%2 (4.89)%2 177%
INVESTOR A CLASS
6/23/00 1 through 9/30/00 1.92%2 6.59%2 (0.39)%2 (5.06)%2 177%
INVESTOR B CLASS
6/23/00 1 through 9/30/00 2.67%2 7.34%2 (1.14)%2 (5.81)%2 177%
INVESTOR C CLASS
6/23/00 1 through 9/30/00 2.67%2 7.34%2 (1.14)%2 (5.81)%2 177%
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
80 & 81
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
NET NET GAIN
ASSET (LOSS) ON DISTRIBUTIONS
VALUE NET INVESTMENTS FROM NET DISTRIBUTIONS
BEGINNING INVESTMENT (BOTH REALIZED INVESTMENT FROM
OF PERIOD INCOME (LOSS) AND UNREALIZED) INCOME CAPITAL
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
--------------------
INTERNATIONAL EQUITY
--------------------
INSTITUTIONAL CLASS
9/30/00 $15.94 $ 0.07 $ 0.09 $(0.05) $ --
9/30/99 13.23 0.07 3.57 (0.13) --
9/30/98 14.65 0.27 (1.29) (0.20) --
9/30/97 13.43 0.14 1.77 (0.28) --
9/30/96 13.27 0.17 0.84 (0.18) --
SERVICE CLASS
9/30/00 $15.84 $ 0.04 $ 0.08 $(0.01) $ --
9/30/99 13.15 (0.02) 3.59 (0.08) --
9/30/98 14.58 0.02 (1.09) (0.16) --
9/30/97 13.37 0.10 1.76 (0.24) --
9/30/96 13.24 0.19 0.78 (0.17) --
INVESTOR A CLASS
9/30/00 $15.79 $ -- $ 0.08 $ -- $ --
9/30/99 13.14 (0.05) 3.58 (0.08) --
9/30/98 14.57 0.10 (1.20) (0.13) --
9/30/97 13.36 0.07 1.77 (0.22) --
9/30/96 13.24 0.14 0.81 (0.16) --
INVESTOR B CLASS
9/30/00 $15.55 $(0.10) $ 0.08 $ -- $ --
9/30/99 12.94 (0.10) 3.51 -- --
9/30/98 14.38 (0.01) (1.16) (0.07) --
9/30/97 13.23 0.07 1.66 (0.17) --
9/30/96 13.20 0.08 0.77 (0.15) --
INVESTOR C CLASS
9/30/00 $15.55 $(0.06) $ 0.04 $ -- $ --
9/30/99 12.94 (0.02) 3.43 -- --
9/30/98 14.38 -- (1.17) (0.07) --
12/5/96 1 through 9/30/97 13.21 0.15 1.19 (0.17) --
------------------------------
INTERNATIONAL SMALL CAP EQUITY
------------------------------
INSTITUTIONAL CLASS
9/30/00 $12.90 $ 0.13 $10.91 $ -- $ --
9/30/99 9.56 0.03 4.44 (0.02) --
9/30/98 9.94 0.07 (0.40) (0.05) --
9/26/97 1 through 9/30/97 10.00 -- (0.06) -- --
SERVICE CLASS
9/30/00 $12.84 $ 0.08 $10.84 $ -- $ --
9/30/99 9.56 0.02 4.39 (0.02) --
9/30/98 9.94 0.02 (0.35) (0.05) --
9/26/97 1 through 9/30/97 10.00 -- (0.06) -- --
INVESTOR A CLASS
9/30/00 $12.84 $ 0.08 $10.82 $ -- $ --
9/30/99 9.54 (0.01) 4.42 -- --
9/30/98 9.94 0.02 (0.39) (0.03) --
9/26/97 1 through 9/30/97 10.00 -- (0.06) -- --
INVESTOR B CLASS
9/30/00 $12.78 $(0.04) $10.72 $ -- $ --
9/30/99 9.48 (0.10) 4.51 -- --
9/30/98 9.94 (0.05) (0.39) (0.02) --
9/26/97 1 through 9/30/97 10.00 -- (0.06) -- --
INVESTOR C CLASS
9/30/00 $12.78 $(0.04) $10.72 $ -- $ --
9/30/99 9.48 (0.03) 4.44 -- --
9/30/98 9.94 (0.04) (0.40) (0.02) --
9/26/97 1 through 9/30/97 10.00 -- (0.06) -- --
NET NET
DISTRIBUTIONS ASSET ASSETS
FROM NET VALUE END OF
REALIZED END OF TOTAL PERIOD
GAINS PERIOD RETURN (000)
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
--------------------
INTERNATIONAL EQUITY
--------------------
INSTITUTIONAL CLASS
9/30/00 $(2.13) $13.92 0.12% $1,109,017
9/30/99 (0.80) 15.94 28.59 1,116,766
9/30/98 (0.20) 13.23 (7.03) 1,012,132
9/30/97 (0.41) 14.65 14.88 433,135
9/30/96 (0.67) 13.43 8.01 388,588
SERVICE CLASS
9/30/00 $(2.13) $13.82 (0.15)% $ 134,447
9/30/99 (0.80) 15.84 28.14 118,323
9/30/98 (0.20) 13.15 (7.34) 143,526
9/30/97 (0.41) 14.58 14.52 199,939
9/30/96 (0.67) 13.37 7.71 161,321
INVESTOR A CLASS
9/30/00 $(2.11) $13.76 (0.32)%3 $ 29,881
9/30/99 (0.80) 15.79 27.82 3 33,106
9/30/98 (0.20) 13.14 (7.56)3 26,637
9/30/97 (0.41) 14.57 14.36 3 22,335
9/30/96 (0.67) 13.36 7.58 3 19,842
INVESTOR B CLASS
9/30/00 $(2.08) $13.45 (1.10)%4 $ 8,399
9/30/99 (0.80) 15.55 26.98 4 7,822
9/30/98 (0.20) 12.94 (8.19)4 6,509
9/30/97 (0.41) 14.38 13.63 4 5,850
9/30/96 (0.67) 13.23 6.81 4 2,692
INVESTOR C CLASS
9/30/00 $(2.08) $13.45 (1.10)%4 $ 1,723
9/30/99 (0.80) 15.55 26.98 4 1,018
9/30/98 (0.20) 12.94 (8.19)4 294
12/5/96 1 through 9/30/97 -- 14.38 10.33 4 155
------------------------------
INTERNATIONAL SMALL CAP EQUITY
------------------------------
INSTITUTIONAL CLASS
9/30/00 $(1.40) $22.54 91.76% $ 85,206
9/30/99 (1.11) 12.90 51.88 23,814
9/30/98 -- 9.56 (3.57) 16,233
9/26/97 1 through 9/30/97 -- 9.94 (0.30) 15,415
SERVICE CLASS
9/30/00 $(1.40) $22.36 91.21% $ 457
9/30/99 (1.11) 12.84 51.14 --
9/30/98 -- 9.56 (3.62) 5
9/26/97 1 through 9/30/97 -- 9.94 (0.30) 10
INVESTOR A CLASS
9/30/00 $(1.40) $22.34 91.04%3 $ 40,545
9/30/99 (1.11) 12.84 50.71 3 1,092
9/30/98 -- 9.54 (3.98)3 849
9/26/97 1 through 9/30/97 -- 9.94 (0.30)3 326
INVESTOR B CLASS
9/30/00 $(1.40) $22.06 89.64%4 $ 56,136
9/30/99 (1.11) 12.78 49.83 4 2,208
9/30/98 -- 9.48 (4.73)4 1,725
9/26/97 1 through 9/30/97 -- 9.94 (0.30)4 711
INVESTOR C CLASS
9/30/00 $(1.40) $22.06 89.64%4 $ 43,722
9/30/99 (1.11) 12.78 49.83 4 1,019
9/30/98 -- 9.48 (4.73)4 423
9/26/97 1 through 9/30/97 -- 9.94 (0.30)4 182
RATIO OF NET
RATIO OF EXPENSES INVESTMENT INCOME
RATIO OF TO AVERAGE RATIO OF NET TO AVERAGE
EXPENSES TO NET ASSETS INVESTMENT INCOME NET ASSETS PORTFOLIO
AVERAGE NET (EXCLUDING TO AVERAGE NET (EXCLUDING TURNOVER
ASSETS WAIVERS) ASSETS WAIVERS) RATE
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
--------------------
INTERNATIONAL EQUITY
--------------------
INSTITUTIONAL CLASS
9/30/00 1.06% 1.07% 0.35% 0.34% 153%
9/30/99 1.04 1.04 0.55 0.55 62
9/30/98 1.06 1.11 1.00 0.95 57
9/30/97 1.06 1.16 0.94 0.84 62
9/30/96 1.06 1.17 0.90 0.79 70
SERVICE CLASS
9/30/00 1.36% 1.37% 0.06% 0.05% 153%
9/30/99 1.34 1.34 0.21 0.21 62
9/30/98 1.36 1.41 0.49 0.44 57
9/30/97 1.36 1.46 0.42 0.32 62
9/30/96 1.36 1.47 0.71 0.60 70
INVESTOR A CLASS
9/30/00 1.53% 1.53% (0.08)% (0.08)% 153%
9/30/99 1.48 1.48 0.23 0.23 62
9/30/98 1.52 1.57 0.31 0.26 57
9/30/97 1.53 1.63 0.50 0.40 62
9/30/96 1.53 1.64 0.45 0.34 70
INVESTOR B CLASS
9/30/00 2.28% 2.29% (0.85)% (0.86)% 153%
9/30/99 2.26 2.26 (0.66) (0.66) 62
9/30/98 2.28 2.33 (0.38) (0.43) 57
9/30/97 2.27 2.37 (0.22) (0.32) 62
9/30/96 2.23 2.34 (0.18) (0.29) 70
INVESTOR C CLASS
9/30/00 2.28% 2.28% (0.71)% (0.71)% 153%
9/30/99 2.26 2.26 (0.27) (0.27) 62
9/30/98 2.27 2.32 (0.31) (0.36) 57
12/5/96 1 through 9/30/97 2.28 2 2.38 2 0.48)2 (0.58)2 62
------------------------------
INTERNATIONAL SMALL CAP EQUITY
------------------------------
INSTITUTIONAL CLASS
9/30/00 1.33% 1.48% 0.74% 0.59% 296%
9/30/99 1.33 2.00 0.19 (0.48) 224
9/30/98 1.32 2.17 0.65 (0.20) 76
9/26/97 1 through 9/30/97 1.33 2 1.55 2 1.42 2 1.19 2 0
SERVICE CLASS
9/30/00 1.63% 1.69% 0.60% 0.54% 296%
9/30/99 1.63 2.30 (0.11) (0.78) 224
9/30/98 1.62 2.47 0.28 (0.57) 76
9/26/97 1 through 9/30/97 1.63 2 1.86 2 1.42 2 1.19 2 0
INVESTOR A CLASS
9/30/00 1.79% 1.85% 0.45% 0.39% 296%
9/30/99 1.80 2.47 (0.23) (0.90) 224
9/30/98 1.78 2.63 0.20 (0.65) 76
9/26/97 1 through 9/30/97 1.30 2 1.52 2 1.44 2 1.22 2 0
INVESTOR B CLASS
9/30/00 2.52% 2.60% (0.27)% (0.33)% 296%
9/30/99 2.55 3.22 (0.99) (1.66) 224
9/30/98 2.53 3.38 (0.54) (1.39) 76
9/26/97 1 through 9/30/97 1.30 2 1.52 2 1.58 2 1.35 2 0
INVESTOR C CLASS
9/30/00 2.52% 2.58% (0.27)% (0.32)% 296%
9/30/99 2.55 3.22 (0.99) (1.66) 224
9/30/98 2.53 3.38 (0.54) (1.39) 76
9/26/97 1 through 9/30/97 1.30 2 1.52 2 1.44 2 1.22 2 0
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
82 & 83
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
NET NET GAIN
ASSET (LOSS) ON DISTRIBUTIONS
VALUE NET INVESTMENTS FROM NET DISTRIBUTIONS
BEGINNING INVESTMENT (BOTH REALIZED INVESTMENT FROM
OF PERIOD INCOME (LOSS) AND UNREALIZED) INCOME CAPITAL
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
-------------------
ASIA PACIFIC EQUITY
-------------------
INSTITUTIONAL CLASS
6/23/00 1 through 9/30/00 $10.00 $ 0.02 $(0.78) $ -- $ --
SERVICE CLASS
6/23/00 1 through 9/30/00 $10.00 $(0.02) $(0.78) $ -- $ --
INVESTOR A CLASS
6/23/00 1 through 9/30/00 $10.00 $ 0.01 $(0.81) $ -- $ --
INVESTOR B CLASS
6/23/00 1 through 9/30/00 $10.00 $ -- $(0.78) $ -- $ --
INVESTOR C CLASS
6/23/00 1 through 9/30/00 $10.00 $ -- $(0.76) $ -- $ --
------------------------------
INTERNATIONAL EMERGING MARKETS
------------------------------
INSTITUTIONAL CLASS
9/30/00 $ 6.09 $ 0.09 $ 0.03 $(0.06) $ --
9/30/99 4.42 0.06 1.66 (0.05) --
9/30/98 9.69 0.06 (5.19) -- --
9/30/97 8.76 0.03 0.95 (0.05) --
9/30/96 8.19 0.08 0.50 -- --
SERVICE CLASS
9/30/00 $ 6.08 $ 0.07 $ 0.03 $(0.04) $ --
9/30/99 4.39 0.04 1.65 -- --
9/30/98 9.63 0.06 (5.16) -- --
9/30/97 8.72 0.01 0.93 (0.03) --
9/30/96 8.18 0.04 0.51 -- --
INVESTOR A CLASS
9/30/00 $ 6.04 $ 0.06 $ 0.02 $(0.03) $ --
9/30/99 4.36 0.03 1.65 -- --
9/30/98 9.60 0.03 (5.13) -- --
9/30/97 8.71 (0.06) 0.98 (0.03) --
9/30/96 8.18 0.02 0.52 -- --
INVESTOR B CLASS
9/30/00 $ 5.91 $ 0.01 $ 0.02 $ -- $ --
9/30/99 4.30 (0.01) 1.62 -- --
9/30/98 9.54 (0.03) (5.07) -- --
9/30/97 8.69 (0.04) 0.89 -- --
4/25/96 1 through 9/30/96 8.85 -- (0.16) -- --
INVESTOR C CLASS
9/30/00 $ 5.91 $ 0.03 $(0.01) $ -- $ --
9/30/99 4.30 (0.05) 1.66 -- --
9/30/98 9.54 (0.02) (5.08) -- --
3/21/97 1 through 9/30/97 9.70 (0.01) (0.15) -- --
-------------
SELECT EQUITY
-------------
INSTITUTIONAL CLASS
9/30/00 $20.77 $ 0.07 $ 1.61 $(0.05) $ --
9/30/99 17.01 0.14 4.36 (0.13) --
9/30/98 17.51 0.16 0.49 (0.15) --
9/30/97 13.57 0.19 5.15 (0.19) --
9/30/96 11.88 0.21 2.08 (0.21) --
SERVICE CLASS
9/30/00 $20.76 $ 0.01 $ 1.61 $(0.02) $ --
9/30/99 17.00 0.07 4.37 (0.07) --
9/30/98 17.50 0.12 0.48 (0.10) --
9/30/97 13.56 0.11 5.18 (0.14) --
9/30/96 11.88 0.17 2.07 (0.17) --
NET NET
DISTRIBUTIONS ASSET ASSETS
FROM NET VALUE END OF
REALIZED END OF TOTAL PERIOD
GAINS PERIOD RETURN (000)
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
-------------------
ASIA PACIFIC EQUITY
-------------------
INSTITUTIONAL CLASS
6/23/00 1 through 9/30/00 $ -- $ 9.24 (7.60)% $ 2,810
SERVICE CLASS
6/23/00 1 through 9/30/00 $ -- $ 9.20 (8.00)% $ --
INVESTOR A CLASS
6/23/00 1 through 9/30/00 $ -- $ 9.20 (8.00)%3 $ 35
INVESTOR B CLASS
6/23/00 1 through 9/30/00 $ -- $ 9.22 (7.80)%4 $ 10
INVESTOR C CLASS
6/23/00 1 through 9/30/00 $ -- $ 9.24 (7.60)%4 $ 2
------------------------------
INTERNATIONAL EMERGING MARKETS
------------------------------
INSTITUTIONAL CLASS
9/30/00 $ -- $ 6.15 1.82% $ 101,017
9/30/99 -- 6.09 39.10 65,701
9/30/98 (0.14) 4.42 (53.59) 63,649
9/30/97 -- 9.69 11.16 116,107
9/30/96 (0.01) 8.76 6.97 68,664
SERVICE CLASS
9/30/00 $ -- $ 6.14 1.53% $ 24,796
9/30/99 -- 6.08 38.50 15,531
9/30/98 (0.14) 4.39 (53.62) 26,566
9/30/97 -- 9.63 10.74 66,064
9/30/96 (0.01) 8.72 6.61 37,987
INVESTOR A CLASS
9/30/00 $ -- $ 6.09 1.27%3 $ 2,466
9/30/99 -- 6.04 38.53 3 2,052
9/30/98 (0.14) 4.36 (53.79)3 1,835
9/30/97 -- 9.60 10.51 3 4,454
9/30/96 (0.01) 8.71 6.49 3 2,996
INVESTOR B CLASS
9/30/00 $ -- $ 5.94 0.34%4 $ 964
9/30/99 -- 5.91 37.67 4 807
9/30/98 (0.14) 4.30 (54.13)4 733
9/30/97 -- 9.54 9.78 4 1,836
4/25/96 1 through 9/30/96 -- 8.69 (1.81)4 216
INVESTOR C CLASS
9/30/00 $ -- $ 5.93 0.17%4 $ 346
9/30/99 -- 5.91 37.67 4 43
9/30/98 (0.14) 4.30 (54.13)4 25
3/21/97 1 through 9/30/97 -- 9.54 (3.08)4 88
-------------
SELECT EQUITY
-------------
INSTITUTIONAL CLASS
9/30/00 $(1.63) $20.77 8.14% $1,466,964
9/30/99 (0.61) 20.77 26.96 1,443,128
9/30/98 (1.00) 17.01 4.07 1,286,032
9/30/97 (1.21) 17.51 42.50 379,687
9/30/96 (0.39) 13.57 19.84 274,434
SERVICE CLASS
9/30/00 $(1.63) $20.73 7.81% $ 232,287
9/30/99 (0.61) 20.76 26.61 223,215
9/30/98 (1.00) 17.00 3.77 203,754
9/30/97 (1.21) 17.50 42.12 174,418
9/30/96 (0.39) 13.56 19.43 113,777
RATIO OF NET
RATIO OF EXPENSES INVESTMENT INCOME
RATIO OF TO AVERAGE RATIO OF NET TO AVERAGE
EXPENSES TO NET ASSETS INVESTMENT INCOME NET ASSETS PORTFOLIO
AVERAGE NET (EXCLUDING TO AVERAGE NET (EXCLUDING TURNOVER
ASSETS WAIVERS) ASSETS WAIVERS) RATE
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
-------------------
ASIA PACIFIC EQUITY
-------------------
INSTITUTIONAL CLASS
6/23/00 1 through 9/30/00 1.45%2 9.16%2 0.62%2 (7.09)%2 145%
SERVICE CLASS
6/23/00 1 through 9/30/00 1.75%2 9.46%2 0.32%2 (7.39)%2 145%
INVESTOR A CLASS
6/23/00 1 through 9/30/00 1.92%2 9.63%2 0.15%2 (7.56)%2 145%
INVESTOR B CLASS
6/23/00 1 through 9/30/00 2.67%2 10.38%2 (0.60)%2 (8.31)%2 145%
INVESTOR C CLASS
6/23/00 1 through 9/30/00 2.67%2 10.38%2 (0.60)%2 (8.31)%2 145%
------------------------------
INTERNATIONAL EMERGING MARKETS
------------------------------
INSTITUTIONAL CLASS
9/30/00 1.66% 1.66% 1.47% 1.47% 133%
9/30/99 1.73 1.73 0.85 0.85 117
9/30/98 1.76 1.86 0.95 0.85 37
9/30/97 1.78 1.87 0.37 0.27 33
9/30/96 1.78 1.88 0.96 0.87 44
SERVICE CLASS
9/30/00 1.96% 1.96% 1.19% 1.19% 133%
9/30/99 2.03 2.03 0.61 0.61 117
9/30/98 2.06 2.16 0.71 0.61 37
9/30/97 2.08 2.17 0.09 (0.01) 33
9/30/96 2.08 2.18 0.70 0.60 44
INVESTOR A CLASS
9/30/00 2.13% 2.13% 0.97% 0.97% 133%
9/30/99 2.20 2.20 0.37 0.37 117
9/30/98 2.24 2.34 0.46 0.36 37
9/30/97 2.25 2.34 (0.08) (0.18) 33
9/30/96 2.25 2.35 0.45 0.35 44
INVESTOR B CLASS
9/30/00 2.88% 2.88% 0.22% 0.22% 133%
9/30/99 2.95 2.95 (0.37) (0.37) 117
9/30/98 2.98 3.08 (0.30) (0.40) 37
9/30/97 2.98 3.07 (0.80) (0.90) 33
4/25/96 1 through 9/30/96 2.90 2 3.00 2 0.17 2 0.07 2 44
INVESTOR C CLASS
9/30/00 2.89% 2.89% 0.77% 0.77% 133%
9/30/99 2.95 2.95 (0.37) (0.37) 117
9/30/98 2.98 3.08 (0.29) (0.39) 37
3/21/97 1 through 9/30/97 2.58 2 2.67 2 (0.27)2 (0.37)2 33
-------------
SELECT EQUITY
-------------
INSTITUTIONAL CLASS
9/30/00 0.80% 0.80% 0.33% 0.33% 103%
9/30/99 0.80 0.80 0.67 0.67 22
9/30/98 0.86 0.86 0.93 0.93 27
9/30/97 0.79 0.86 1.24 1.17 29
9/30/96 0.74 0.87 1.70 1.58 55
SERVICE CLASS
9/30/00 1.10% 1.10% 0.03% 0.03% 103%
9/30/99 1.10 1.10 0.37 0.37 22
9/30/98 1.16 1.16 0.63 0.63 27
9/30/97 1.09 1.16 0.93 0.86 29
9/30/96 1.04 1.17 1.41 1.28 55
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
84 & 85
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
NET NET GAIN NET
ASSET (LOSS) ON DISTRIBUTIONS DISTRIBUTIONS ASSET
VALUE NET INVESTMENTS FROM NET FROM NET VALUE
BEGINNING INVESTMENT (BOTH REALIZED INVESTMENT REALIZED END OF
OF PERIOD INCOME (LOSS) AND UNREALIZED) INCOME GAINS PERIOD
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INVESTOR A CLASS
9/30/00 $20.75 $(0.02) $ 1.60 $(0.01) $(1.63) $20.69
9/30/99 17.00 0.05 4.36 (0.05) (0.61) 20.75
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
INVESTOR B CLASS
9/30/00 $20.44 $(0.18) $ 1.58 $ -- $(1.63) $20.21
9/30/99 16.85 (0.10) 4.30 -- (0.61) 20.44
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
9/30/00 $20.44 $(0.16) $ 1.55 $ -- $(1.63) $20.20
9/30/99 16.85 (0.08) 4.28 -- (0.61) 20.44
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
9/30/00 $24.69 $ 0.27 $ 2.97 $(0.18) $(0.16) $27.59
9/30/99 19.65 0.27 5.10 (0.27) (0.06) 24.69
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
SERVICE CLASS
9/30/00 $24.67 $ 0.16 $ 2.97 $(0.10) $(0.16) $27.54
9/30/99 19.64 0.19 5.10 (0.20) (0.06) 24.67
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
INVESTOR A CLASS
9/30/00 $24.66 $ 0.11 $ 2.96 $(0.06) $(0.16) $27.51
9/30/99 19.64 0.17 5.10 (0.19) (0.06) 24.66
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
INVESTOR B CLASS
9/30/00 $24.44 $ -- $ 2.84 $ -- $(0.13) $27.15
9/30/99 19.52 (0.02) 5.05 (0.05) (0.06) 24.44
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
9/30/00 $24.44 $ -- $ 2.84 $ -- $(0.13) $27.15
9/30/99 19.52 -- 5.03 (0.05) (0.06) 24.44
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
NET
ASSETS RATIO OF
END OF EXPENSES TO
TOTAL PERIOD AVERAGE NET
RETURN (000) ASSETS
-----------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTOR A CLASS
9/30/00 7.64%3 $ 76,438 1.25%
9/30/99 26.44 3 66,646 1.21
9/30/98 3.62 3 35,359 1.32
9/30/97 41.95 3 18,949 1.27
9/30/96 19.23 3 6,228 1.21
INVESTOR B CLASS
9/30/00 6.82%4 $ 81,562 2.01%
9/30/99 25.38 4 66,854 2.02
9/30/98 2.90 4 39,971 2.07
9/30/97 40.70 4 18,345 2.01
3/27/96 1 through 9/30/96 6.58 4 1,196 1.92 2
INVESTOR C CLASS
9/30/00 6.77%4 $ 11,108 2.01%
9/30/99 25.38 4 6,543 2.02
9/30/98 2.90 4 2,450 2.06
9/30/97 40.70 4 377 2.01
9/27/96 1 through 9/30/96 0.15 4 50 0.0 2
------------
INDEX EQUITY
------------
INSTITUTIONAL CLASS
9/30/00 13.10% $ 665,743 0.18%++
9/30/99 27.36 507,841 0.22++
9/30/98 8.91 354,215 0.18++
9/30/97 39.78 166,786 0.18++
9/30/96 19.82 127,076 0.18++
SERVICE CLASS
9/30/00 12.66% $ 378,997 0.59%++
9/30/99 26.96 354,283 0.56++
9/30/98 8.54 233,696 0.48++
9/30/97 39.58 193,319 0.48++
9/30/96 19.45 103,080 0.48++
INVESTOR A CLASS
9/30/00 12.43%3 $ 93,935 0.78%++
9/30/99 26.74 3 85,174 0.75++
9/30/98 8.37 3 42,891 0.65++
9/30/97 39.49 3 33,934 0.65++
9/30/96 19.31 3 12,752 0.65++
INVESTOR B CLASS
9/30/00 11.61%4 $ 360,792 1.51%++
9/30/99 25.78 4 302,071 1.49++
9/30/98 7.63 4 109,019 1.38++
9/30/97 38.31 4 38,271 1.38++
2/7/96 1 through 9/30/96 6.50 4 2,904 1.38 2++
INVESTOR C CLASS
9/30/00 11.61%4 $ 530,586 1.53%++
9/30/99 25.78 4 391,152 1.51++
9/30/98 7.63 4 81,529 1.38++
9/30/97 38.31 4 19,668 1.38++
8/14/96 1 through 9/30/96 3.90 4 432 1.25 2++
RATIO OF NET
RATIO OF EXPENSES INVESTMENT INCOME
TO AVERAGE RATIO OF NET TO AVERAGE
NET ASSETS INVESTMENT INCOME NET ASSETS PORTFOLIO
(EXCLUDING TO AVERAGE NET (EXCLUDING TURNOVER
WAIVERS) ASSETS WAIVERS) RATE
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTOR A CLASS
9/30/00 1.25% (0.11)% (0.11)% 103%
9/30/99 1.21 0.26 0.26 22
9/30/98 1.32 0.44 0.44 27
9/30/97 1.34 0.75 0.68 29
9/30/96 1.34 1.24 1.11 55
INVESTOR B CLASS
9/30/00 2.01% (0.87)% (0.87)% 103%
9/30/99 2.02 (0.55) (0.55) 22
9/30/98 2.07 (0.29) (0.29) 27
9/30/97 2.08 (0.02) (0.09) 29
3/27/96 1 through 9/30/96 2.04 2 0.59 2 0.46 2 55
INVESTOR C CLASS
9/30/00 2.01% (0.87)% (0.87)% 103%
9/30/99 2.02 (0.55) (0.55) 22
9/30/98 2.06 (0.30) (0.30) 27
9/30/97 2.08 (0.12) (0.19) 29
9/27/96 1 through 9/30/96 0.0 2 0.0 2 0.0 2 55
------------
INDEX EQUITY
------------
INSTITUTIONAL CLASS
9/30/00 0.33%++ 0.98% 0.83% 8%9
9/30/99 0.33++ 1.14 1.04 5 8
9/30/98 0.34++ 1.40 1.24 9 7
9/30/97 0.38++ 1.71 1.51 4 6
9/30/96 0.50++ 2.29 1.98 18 5*
SERVICE CLASS
9/30/00 0.63%++ 0.57% 0.54% 8%9
9/30/99 0.63++ 0.80 0.74 5 8
9/30/98 0.64++ 1.09 0.93 9 7
9/30/97 0.68++ 1.41 1.21 4 6
9/30/96 0.80++ 1.98 1.67 18 5*
INVESTOR A CLASS
9/30/00 0.81%++ 0.38% 0.35% 8%9
9/30/99 0.81++ 0.62 0.56 5 8
9/30/98 0.81++ 0.92 0.76 9 7
9/30/97 0.85++ 1.23 1.03 4 6
9/30/96 0.97++ 1.81 1.49 18 5*
INVESTOR B CLASS
9/30/00 1.54%++ (0.35)% (0.38)% 8%9
9/30/99 1.55++ (0.13) (0.18) 5 8
9/30/98 1.54++ 0.19 0.03 9 7
9/30/97 1.58++ 0.45 0.25 4 6
2/7/96 1 through 9/30/96 1.60 2++ 0.93 2 0.71 2 18 5*
INVESTOR C CLASS
9/30/00 1.56%++ (0.37)% (0.40)% 8%9
9/30/99 1.55++ (0.15) (0.19) 5 8
9/30/98 1.54++ 0.19 0.03 9 7
9/30/97 1.58++ 0.45 0.25 4 6
8/14/96 1 through 9/30/96 1.43 2++ 0.71 2 0.53 2 18 5*
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
86 & 87
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
NET NET GAIN
ASSET (LOSS) ON DISTRIBUTIONS DISTRIBUTIONS
VALUE NET INVESTMENTS FROM NET DISTRIBUTIONS FROM NET
BEGINNING INVESTMENT (BOTH REALIZED INVESTMENT FROM REALIZED
OF PERIOD INCOME (LOSS) AND UNREALIZED) INCOME CAPITAL GAINS
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
--------
BALANCED
--------
INSTITUTIONAL CLASS
9/30/00 $19.75 $ 0.48 $ 1.10 $(0.47) $ -- $(0.70)
9/30/99 18.35 0.49 2.18 (0.48) -- (0.79)
9/30/98 18.22 0.38 1.43 (0.43) -- (1.25)
9/30/97 15.10 0.52 3.62 (0.50) -- (0.52)
9/30/96 13.73 0.46 1.49 (0.45) -- (0.13)
SERVICE CLASS
9/30/00 $19.73 $ 0.42 $ 1.11 $(0.41) $ -- $(0.70)
9/30/99 18.34 0.42 2.18 (0.42) -- (0.79)
9/30/98 18.21 0.42 1.34 (0.38) -- (1.25)
9/30/97 15.09 0.45 3.64 (0.45) -- (0.52)
9/30/96 13.72 0.42 1.49 (0.41) -- (0.13)
INVESTOR A CLASS
9/30/00 $19.72 $ 0.38 $ 1.11 $(0.38) $ -- $(0.70)
9/30/99 18.33 0.41 2.18 (0.41) -- (0.79)
9/30/98 18.22 0.39 1.33 (0.36) -- (1.25)
9/30/97 15.10 0.39 3.68 (0.43) -- (0.52)
9/30/96 13.73 0.40 1.49 (0.39) -- (0.13)
INVESTOR B CLASS
9/30/00 $19.59 $ 0.22 $ 1.09 $(0.22) $ -- $(0.70)
9/30/99 18.22 0.24 2.18 (0.26) -- (0.79)
9/30/98 18.13 0.25 1.31 (0.22) -- (1.25)
9/30/97 15.04 0.31 3.61 (0.31) -- (0.52)
9/30/96 13.69 0.31 1.47 (0.30) -- (0.13)
INVESTOR C CLASS
9/30/00 $19.59 $ 0.22 $ 1.09 $(0.22) $ -- $(0.70)
9/30/99 18.22 0.23 2.19 (0.26) -- (0.79)
9/30/98 18.13 0.24 1.32 (0.22) -- (1.25)
12/20/96 1 through 9/30/97 15.62 0.28 2.54 (0.31) -- --
RATIO OF RATIO OF
NET NET EXPENSES EXPENSES
ASSET ASSETS RATIO OF TO AVERAGE TO AVERAGE
VALUE END OF EXPENSES TO NET ASSETS NET ASSETS
END OF TOTAL PERIOD AVERAGE NET (EXCLUDING (EXCLUDING
PERIOD RETURN (000) ASSETS INTEREST EXPENSE) WAIVERS)
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
--------
BALANCED
--------
INSTITUTIONAL CLASS
9/30/00 $20.16 8.05% $ 385,793 0.85% 0.85% 0.85%
9/30/99 19.75 14.81 414,057 0.86 0.86 0.86
9/30/98 18.35 10.82 374,899 0.90 0.90 0.90
9/30/97 18.22 28.43 31,674 0.84 0.84 0.89
9/30/96 15.10 14.43 37,567 0.79 0.79 0.90
SERVICE CLASS
9/30/00 $20.15 7.78% $ 197,633 1.15% 1.15% 1.15%
9/30/99 19.73 14.49 219,018 1.16 1.16 1.16
9/30/98 18.34 10.43 176,557 1.20 1.20 1.20
9/30/97 18.21 28.07 176,232 1.14 1.14 1.20
9/30/96 15.09 14.11 134,121 1.09 1.09 1.20
INVESTOR A CLASS
9/30/00 $20.13 7.59%3 $ 149,594 1.30% 1.29% 1.30%
9/30/99 19.72 14.40 3 132,833 1.25 1.25 1.25
9/30/98 18.33 10.19 3 96,795 1.30 1.30 1.30
9/30/97 18.22 27.93 3 87,202 1.24 1.24 1.30
9/30/96 15.10 13.98 3 71,899 1.19 1.19 1.30
INVESTOR B CLASS
9/30/00 $19.98 6.72%4 $ 102,530 2.07% 2.07% 2.07%
9/30/99 19.59 13.46 4 96,253 2.07 2.07 2.07
9/30/98 18.22 9.40 4 46,303 2.11 2.11 2.11
9/30/97 18.13 26.95 4 23,455 2.05 2.05 2.11
9/30/96 15.04 13.14 4 7,333 1.98 1.98 2.09
INVESTOR C CLASS
9/30/00 $19.98 6.73%4 $ 11,967 2.07% 2.06% 2.07%
9/30/99 19.59 13.46 4 10,095 2.07 2.07 2.07
9/30/98 18.22 9.40 4 699 1.92 1.92 1.92
12/20/96 1 through 9/30/97 18.13 23.95 4 87 2.03 2 2.03 2 2.09 2
RATIO OF NET
INVESTMENT INCOME
RATIO OF NET TO AVERAGE
INVESTMENT INCOME NET ASSETS PORTFOLIO
TO AVERAGE NET (EXCLUDING TURNOVER
ASSETS WAIVERS) RATE
---------------------------------------------------------------------------------
<S> <C> <C> <C>
--------
BALANCED
--------
INSTITUTIONAL CLASS
9/30/00 2.30% 2.30% 176%
9/30/99 2.44 2.44 122
9/30/98 2.48 2.48 134
9/30/97 2.98 2.92 173
9/30/96 3.16 3.06 275
SERVICE CLASS
9/30/00 2.00% 2.00% 176%
9/30/99 2.14 2.14 122
9/30/98 2.22 2.22 134
9/30/97 2.68 2.62 173
9/30/96 2.87 2.76 275
INVESTOR A CLASS
9/30/00 1.86% 1.86% 176%
9/30/99 2.05 2.05 122
9/30/98 2.13 2.13 134
9/30/97 2.58 2.52 173
9/30/96 2.75 2.65 275
INVESTOR B CLASS
9/30/00 1.09% 1.09% 176%
9/30/99 1.23 1.23 122
9/30/98 1.30 1.30 134
9/30/97 1.78 1.72 173
9/30/96 1.99 1.88 275
INVESTOR C CLASS
9/30/00 1.09% 1.09% 176%
9/30/99 1.23 1.23 122
9/30/98 1.46 1.46 134
12/20/96 1 through 9/30/97 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 period 10/1/95 through 5/31/96.
6 For period 12/1/96 through 11/30/97.
7 For period 12/1/97 through 11/30/98.
8 For period 12/1/98 through 9/30/99.
9 For the period 12/1/99 through 9/30/00.
* See accompanying footnotes to The DFA Investment Trust Company.
++ Including expenses allocated from the U.S. Large Company Series of The DFA
Investment Trust Company of 0.06% for the year ended 9/30/00, 0.06% for the
year ended 9/30/99, 0.06% 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.
88 & 89
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--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
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 39 publicly offered portfolios, 16 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. Each portfolio of the
Fund may offer as many as seven 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
---------------------------------------------------------------------------------------------------------------------
Contractual Actual Contractual Actual Contractual Actual
Fees Fees (4) Fees (1) Fees (4) Fees (2) Fees (4)
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Large Cap Value Equity None None 0.30% 0.30% 0.50% 0.40%
---------------------------------------------------------------------------------------------------------------------
Large Cap Growth Equity None None 0.30% 0.30% 0.50% 0.40%
---------------------------------------------------------------------------------------------------------------------
Mid-Cap Value Equity None None 0.30% 0.30% 0.50% 0.40%
---------------------------------------------------------------------------------------------------------------------
Mid-Cap Growth Equity None None 0.30% 0.30% 0.50% 0.40%
---------------------------------------------------------------------------------------------------------------------
Small Cap Value Equity None None 0.30% 0.30% 0.50% 0.40%
---------------------------------------------------------------------------------------------------------------------
Small Cap Growth Equity None None 0.30% 0.30% 0.50% 0.40%
---------------------------------------------------------------------------------------------------------------------
Micro-Cap Equity None None 0.30% 0.30% 0.50% 0.40%
---------------------------------------------------------------------------------------------------------------------
Global Science & Technology None None 0.30% 0.30% 0.50% 0.40%
---------------------------------------------------------------------------------------------------------------------
European Equity None None 0.30% 0.30% 0.50% 0.40%
---------------------------------------------------------------------------------------------------------------------
International Equity None None 0.30% 0.30% 0.50% 0.40%
---------------------------------------------------------------------------------------------------------------------
International Small Cap Equity None None 0.30% 0.30% 0.50% 0.40%
---------------------------------------------------------------------------------------------------------------------
Asia Pacific Equity None None 0.30% 0.30% 0.50% 0.40%
---------------------------------------------------------------------------------------------------------------------
International Emerging Markets None None 0.30% 0.30% 0.50% 0.40%
---------------------------------------------------------------------------------------------------------------------
Select Equity None None 0.30% 0.30% 0.50% 0.40%
---------------------------------------------------------------------------------------------------------------------
Index Equity None None 0.30% 0.30% 0.50% 0.40%
---------------------------------------------------------------------------------------------------------------------
Balanced None None 0.30% 0.30% 0.50% 0.40%
---------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Portfolio Share Classes
-----------------------------------------------------------------------------------------
Investor B Investor C
------------------------------------------------------------------------------------------
Contractual Actual Contractual Actual
Fees (3) Fees (4) Fees (3) Fees (4)
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Large Cap Value Equity 1.15% 1.15% 1.15% 1.15%
------------------------------------------------------------------------------------------
Large Cap Growth Equity 1.15% 1.15% 1.15% 1.15%
------------------------------------------------------------------------------------------
Mid-Cap Value Equity 1.15% 1.15% 1.15% 1.15%
------------------------------------------------------------------------------------------
Mid-Cap Growth Equity 1.15% 1.15% 1.15% 1.15%
------------------------------------------------------------------------------------------
Small Cap Value Equity 1.15% 1.15% 1.15% 1.15%
------------------------------------------------------------------------------------------
Small Cap Growth Equity 1.15% 1.15% 1.15% 1.15%
------------------------------------------------------------------------------------------
Micro-Cap Equity 1.15% 1.15% 1.15% 1.15%
------------------------------------------------------------------------------------------
Global Science & Technology 1.15% 1.15% 1.15% 1.15%
------------------------------------------------------------------------------------------
European Equity 1.15% 1.15% 1.15% 1.15%
------------------------------------------------------------------------------------------
International Equity 1.15% 1.15% 1.15% 1.15%
------------------------------------------------------------------------------------------
International Small Cap Equity 1.15% 1.15% 1.15% 1.15%
------------------------------------------------------------------------------------------
Asia Pacific Equity 1.15% 1.15% 1.15% 1.15%
------------------------------------------------------------------------------------------
International Emerging Markets 1.15% 1.15% 1.15% 1.15%
------------------------------------------------------------------------------------------
Select Equity 1.15% 1.15% 1.15% 1.15%
------------------------------------------------------------------------------------------
Index Equity 1.15% 1.15% 1.15% 1.15%
------------------------------------------------------------------------------------------
Balanced 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 September 30, 2000.
</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 assets of such respective classes.
The Index Equity Portfolio invests solely in The U.S. Large Company Series
of The DFA Investment Trust Company, the financial statements of which are
included elsewhere in this report and should be read in conjunction with the
financial statements of Index Equity Portfolio.
(A) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Fund in the preparation of its financial statements. The preparation of
financial statements in conformity with accounting principles generally accepted
in the United States of America requires the use of management estimates. Actual
results could differ from these estimates.
90
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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
or valued on the basis of quotations provided by a pricing service or dealer
which uses information with respect to transactions on bonds, 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 Funds' Board of Trustees. As of September 30, 2000,
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, are 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 for and elect the tax
treatment applicable to regulated investment companies under Subchapter M of the
Internal Revenue Code of 1986, as amended, 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 Portfolios 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 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 -- Certain portfolios may 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 Portfolios' 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 counterparts to meet the terms of their contracts and from
unanticipated movements in the value of a foreign currency relative to the U.S.
dollar. There were no forward currency contracts held at September 30, 2000.
SWAP AGREEMENTS -- The Balanced Portfolio may invest in swap agreements for
the purpose of hedging against changes in interest rates or foreign currencies.
Swap agreements involve the exchange by the Portfolio with another party of its
respective commitments to pay or receive interest, (e.g., an exchange of
floating rate payments for fixed rate payments) with respect to a notional
amount of principal. Swaps are marked to market daily based upon quotations from
market makers and the change, if any, is recorded as an unrealized gain or loss
in the Statement of Operations. Net payments of interest are recorded as
interest income. Entering into these agreements involves, to varying degrees,
elements of credit and market risk in excess of the amounts recognized on the
Statement of Assets and Liabilities. Such risks involve the possibility that
there will be no liquid market for these agreements, that the counterparty to
the agreement may default on its obligation to perform and that there may be
unfavorable changes in the fluctuation of interest and/or exchange rates.
91
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--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
At September 30, 2000, the following Portfolio had swap agreements
outstanding:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
PORTFOLIO COUNTER-PARTY TERMINATION DATE INTEREST INTEREST NOTIONAL AMOUNT UNREALIZED APPRECIATION
RECEIVABLE RATE PAYABLE RATE (U.S. DOLLARS) (DEPRECIATION)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balanced Goldman Sachs 08/07/2010 7.20% 6.71%+ $ 3,000,000 $(59,775)
Goldman Sachs 08/07/2002 7.05% 6.71%+ 11,500,000 66,945
Goldman Sachs 10/03/2010 6.89% 6.81%+ 4,000,000 --
------------------------------------------------------------------------------------------------------------------------------------
<FN>
+ Rate shown is the floating rate as of September 30, 2000.
</FN>
</TABLE>
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 is 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
Portfolio 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 Portfolios may invest in financial futures
contracts solely for the purposes of hedging their existing portfolio
securities, or securities that the Portfolio intends to purchase, against
fluctuations in fair value caused by changes in prevailing market interest
rates. The Portfolios invest 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 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 Portfolios may invest in financial options
contracts solely for the purpose of hedging their existing portfolio securities,
or securities that the Portfolios intend 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 Portfolio has realized a
gain or loss on investment transactions. The Portfolio as writer of an option,
may have no control over whether the
92
<PAGE>
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BLACKROCK FUNDS
--------------------------------------------------------------------------------
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. The Portfolios did not enter into any written
options during the year ended September 30, 2000.
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 that 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 counterpart
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 purchase and repurchase price
and a cash settlement date made on settlement date, 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 September 30, 2000, is as follows:
<TABLE>
<CAPTION>
MARKET VALUE
OF SECURITIES VALUE OF INCOME EARNED ON
ON LOAN COLLATERAL RECEIVED SECURITIES LOANED*
------------- ------------------- ------------------
<S> <C> <C> <C>
Large Cap Value Equity Portfolio ............ $113,646,423 $116,542,494 $ 240,414
Large Cap Growth Equity Portfolio ........... 176,100,001 180,545,416 282,826
Mid-Cap Value Equity Portfolio .............. 33,210,503 34,235,578 53,066
Mid-Cap Growth Equity Portfolio ............. 216,695,070 222,054,626 500,754
Small Cap Value Equity Portfolio ............ 45,456,480 46,911,735 398,818
Small Cap Growth Equity Portfolio ........... 484,141,480 497,076,216 1,451,811
International Small Cap Equity Portfolio .... 13,771,353 14,195,400 150,970
International Emerging Markets Portfolio .... 9,996,442 10,341,550 51,671
Select Equity Portfolio ..................... 67,611,255 69,300,722 208,639
Balanced Portfolio .......................... 63,273,943 65,180,237 130,591
<FN>
*Income is included in interest income on the Statements of Operations.
</FN>
</TABLE>
93
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BLACKROCK FUNDS
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OTHER -- Securities denominated in currencies other than U.S. dollars are
subject to changes in value due to fluctuations in exchange rates.
Some countries in which the Portfolios invest require governmental approval
for the repatriation of investment income, capital or the proceeds of sales of
securities by foreign investors. In addition, if there is a deterioration in a
country's balance of payments or for other reasons, a country may impose
temporary restrictions on foreign capital remittances abroad.
The securities exchanges of certain foreign markets are substantially
smaller, less liquid and more volatile than the major securities markets in the
United States. Consequently, acquisition and disposition of securities by the
Portfolios may be inhibited. In addition, a significant proportion of the
aggregate market value of equity securities listed on the major securities
exchanges in emerging markets are held by a smaller number of investors. This
may limit the number of shares available for acquisition or disposition by the
Fund.
The Index Equity Portfolio accrues its respective share of income net of
expenses daily on its 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 are 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 Index Equity,
European Equity and Asia Pacific Equity Portfolios. BlackRock Financial
Management, Inc. ("BFM"), a wholly-owned subsidiary of BlackRock, serves as the
sub-adviser for 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, Global Science & Technology, Select Equity, and Balanced
Portfolios. BlackRock International, Ltd. ("BIL"), an indirect wholly-owned
subsidiary of BlackRock, serves as the investment advisor for the European
Equity and Asia Pacific Equity Portfolios and serves as the sub-adviser for the
International Equity, International Small Cap Equity and International Emerging
Markets Portfolios. BlackRock, Inc. is an indirect majority-owned subsidiary of
The PNC Financial Services Group, Inc.
For their advisory services, BlackRock and BIL (with respect to the
European Equity and Asia Pacific Equity Portfolios) are 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.
Global Science & Technology, European Equity and Asia Pacific Equity
Portfolios--.90% of the first $1 billion, .85% of the next $1 billion, .80% of
the next 1 billion, .75% of net assets in excess of $3 billion.
International Equity Portfolio-- .75% of its first $1 billion, .70% of the
next $1 billion, .675% of the next $1 billion and .65% of net assets in excess
of $3 billion.
International Small Cap Equity-- 1.00% of its first $1 billion, .95% of the
next $1 billion, .90% of the next $1 billion and .85% of net assets in excess of
$3 billion.
International Emerging Markets Portfolio-- 1.25% of its first $1 billion,
1.20% of the next $1 billion, 1.155% of the next $1 billion, and 1.10% of net
assets in excess of $3 billion.
94
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BLACKROCK FUNDS
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For the year ended September 30, 2000, 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 ....... $11,684,246 $ -- $11,684,246
Large Cap Growth Equity Portfolio ...... 9,138,089 -- 9,138,089
Mid-Cap Value Equity Portfolio ......... 2,172,456 -- 2,172,456
Mid-Cap Growth Equity Portfolio ........ 6,106,488 -- 6,106,488
Small Cap Value Equity Portfolio ....... 3,232,118 -- 3,232,118
Small Cap Growth Equity Portfolio ...... 13,483,790 -- 13,483,790
Micro-Cap Equity Portfolio ............. 6,038,499 -- 6,038,499
Global Science & Technology Portfolio .. 244,050 207,900 36,150
European Equity Portfolio .............. 13,240 13,240 --
International Equity Portfolio ......... 10,127,040 106,173 10,020,867
International Small Cap Equity Portfolio 1,684,480 156,791 1,527,689
Asia Pacific Equity Portfolio .......... 7,200 7,200 --
International Emerging Markets Portfolio 1,412,346 -- 1,412,346
Select Equity Portfolio ................ 10,280,894 -- 10,280,894
Balanced Portfolio ..................... 4,963,103 -- 4,963,103
</TABLE>
BlackRock pays BIL and BFM fees for their sub-advisory services.
PFPC Inc. ("PFPC"), an indirect wholly-owned subsidiary of The PNC
Financial Services Group, Inc., and BlackRock act as co-administrators for the
Fund. For these services, the co-administrators receive a combined
administration fee computed daily and payable monthly, based on a percentage of
the average daily net assets of each Portfolio, at the following annual rates:
.085% of the first $500 million, .075% of the next $500 million and .065% of
assets in excess of $1 billion. In addition, each of the classes are charged an
administration fee based on the following percentage of average daily net assets
of each respective class: .145% of the first $500 million, .135% of the next
$500 million, and .125% of assets in excess of $1 billion.
For the year ended September 30, 2000, 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 ....... $4,573,703 $ -- $4,573,703
Large Cap Growth Equity Portfolio ...... 3,582,474 -- 3,582,474
Mid-Cap Value Equity Portfolio ......... 624,581 -- 624,581
Mid-Cap Growth Equity Portfolio ........ 1,702,307 -- 1,702,307
Small Cap Value Equity Portfolio ....... 1,334,081 -- 1,334,081
Small Cap Growth Equity Portfolio ...... 5,301,926 -- 5,301,926
Micro-Cap Equity Portfolio ............. 1,242,241 -- 1,242,241
Global Science & Technology Portfolio .. 62,369 59,808 2,561
European Equity Portfolio .............. 3,384 3,384 --
International Equity Portfolio ......... 2,913,054 -- 2,913,054
International Small Cap Equity Portfolio 387,430 5,661 381,769
Asia Pacific Equity Portfolio .......... 1,840 1,840 --
International Emerging Markets Portfolio 259,872 -- 259,872
Select Equity Portfolio ................ 4,017,644 -- 4,017,644
Index Equity Portfolio ................. 4,293,848 1,357,833 2,936,015
Balanced Portfolio ..................... 1,995,004 -- 1,995,004
</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 and
BlackRock 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
apply to expenses charged on Portfolio assets as a whole, but not expenses
separately charged to the different share of classes of a Portfolio.
95
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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.
The expense limits as a percentage of average daily net assets and amounts
subject to possible reimbursement under the expense limitation agreement were as
follows:
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% --
Global Science & Technology Portfolio .. 1.025% 207,900
European Equity Portfolio .............. 1.275% 13,240
International Equity Portfolio ......... .900% 106,173
International Small Cap Equity Portfolio 1.155% 300,790
Asia Pacific Equity Portfolio .......... 1.275% 7,200
International Emerging Markets Portfolio 1.565% --
Select Equity Portfolio ................ .645% --
Index Equity Portfolio ................. .150% --
Balanced Portfolio ..................... .690% --
PFPC Trust Co. serves as custodian for each of the Fund's Portfolios. PFPC
serves as transfer and dividend disbursing agent.
Under the Fund's Amended and Restated Distribution and Service Plan (the
"Plan"), Investor Shares of the Portfolios bear the expense of payments
("distribution fees") made to BlackRock Distributors, Inc., 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 year ended September 30, 2000, purchases and sales of securities,
other than short-term and government securities, were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
-------------- --------------
<S> <C> <C>
Large Cap Value Equity Portfolio ....... $2,660,510,612 $2,890,869,587
Large Cap Growth Equity Portfolio ...... 2,026,211,665 2,136,745,852
Mid-Cap Value Equity Portfolio ......... 538,840,569 611,881,029
Mid-Cap Growth Equity Portfolio ........ 2,951,411,447 2,862,647,204
Small Cap Value Equity Portfolio ....... 1,016,910,411 930,524,864
Small Cap Growth Equity Portfolio ...... 4,846,546,473 5,274,580,656
Micro-Cap Equity Portfolio ............. 2,229,130,011 1,973,333,488
Global Science & Technology Portfolio .. 208,907,624 118,241,208
European Equity Portfolio .............. 12,282,486 6,987,407
International Equity Portfolio ......... 2,014,262,815 2,104,166,969
International Small Cap Equity Portfolio 525,728,698 362,682,205
Asia Pacific Equity Portfolio .......... 4,786,339 3,999,113
International Emerging Markets Portfolio 161,938,549 139,097,796
Select Equity Portfolio ................ 1,930,578,406 2,084,082,205
Balanced Portfolio ..................... 1,553,393,620 1,557,141,157
</TABLE>
96
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
For the year ended September 30, 2000, purchases and sales of government
securities were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ ------------
<S> <C> <C>
Large Cap Value Equity Portfolio ....... $173,325,786 $127,805,339
Large Cap Growth Equity Portfolio ...... 155,970,464 134,807,127
Mid-Cap Value Equity Portfolio ......... 17,725,573 7,998,578
Mid-Cap Growth Equity Portfolio ........ 382,603,986 282,027,590
Small Cap Value Equity Portfolio ....... 44,123,480 44,128,483
Small Cap Growth Equity Portfolio ...... 641,132,393 581,539,752
Micro-Cap Equity Portfolio ............. 708,515,059 578,137,530
International Equity Portfolio ......... 125,951,458 111,397,171
International Small Cap Equity Portfolio 83,806,436 17,648,952
International Emerging Markets Portfolio 13,289,616 13,289,592
Select Equity Portfolio ................ 239,759,661 151,886,793
Balanced Portfolio ..................... 493,820,075 469,934,449
</TABLE>
(D) CAPITAL SHARES
Transactions in capital shares for each period were as follows:
<TABLE>
<CAPTION>
LARGE CAP VALUE EQUITY PORTFOLIO
-----------------------------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED
9/30/00 9/30/99
----------------------------- -----------------------------
SHARES VALUE SHARES VALUE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class .................. 21,059,025 $ 303,881,479 15,797,192 $ 270,908,716
Service Class ........................ 12,053,131 174,709,625 8,689,944 144,361,402
Investor A Class ..................... 2,462,922 36,281,976 2,070,872 34,190,765
Investor B Class ..................... 655,508 9,607,967 490,834 8,165,014
Investor C Class ..................... 474,642 6,906,585 170,569 2,828,112
Shares issued in reinvestment of dividends:
Institutional Class .................. 10,005,910 150,620,221 7,165,359 111,172,052
Service Class ........................ 2,338,854 35,126,386 1,833,214 28,535,980
Investor A Class ..................... 316,742 4,754,137 214,367 3,334,063
Investor B Class ..................... 164,563 2,450,522 113,998 1,751,063
Investor C Class ..................... 6,753 100,487 3,098 47,603
Shares redeemed:
Institutional Class .................. (31,819,699) (467,284,920) (27,096,900) (446,346,368)
Service Class ........................ (15,848,063) (230,955,752) (13,089,908) (217,123,076)
Investor A Class ..................... (2,944,199) (43,068,786) (1,852,518) (30,719,683)
Investor B Class ..................... (862,116) (12,465,860) (497,375) (7,973,851)
Investor C Class ..................... (240,362) (3,479,269) (122,202) (2,014,805)
----------- ------------- ----------- -------------
Net decrease .............................. (2,176,389) $ (32,815,202) (6,109,456) $ (98,883,013)
=========== ============= =========== =============
</TABLE>
97
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
LARGE CAP GROWTH EQUITY PORTFOLIO
-----------------------------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED
9/30/00 9/30/99
----------------------------- -----------------------------
SHARES VALUE SHARES VALUE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class .................. 5,181,343 $ 125,892,243 7,591,441 $ 159,297,943
Service Class ........................ 7,389,561 176,700,397 8,133,374 176,068,952
Investor A Class ..................... 17,574,002 420,527,918 10,493,707 231,148,193
Investor B Class ..................... 1,390,352 32,834,353 982,692 20,872,400
Investor C Class ..................... 653,884 14,960,690 180,547 3,877,188
Shares issued in reinvestment of dividends:
Institutional Class .................. 7,371,175 157,669,427 4,074,472 74,888,799
Service Class ........................ 1,832,432 38,975,832 900,137 16,517,521
Investor A Class ..................... 421,781 8,924,882 163,934 2,998,353
Investor B Class ..................... 265,178 5,401,678 72,022 1,285,591
Investor C Class ..................... 11,611 236,510 1,245 22,223
Shares redeemed:
Institutional Class .................. (8,687,220) (209,671,718) (13,133,040) (277,125,091)
Service Class ........................ (8,016,404) (192,599,343) (8,323,043) (180,973,427)
Investor A Class ..................... (16,991,535) (406,886,237) (9,767,428) (215,298,006)
Investor B Class ..................... (410,879) (10,162,906) (178,864) (3,782,688)
Investor C Class ..................... (329,430) (7,506,989) (47,581) (1,028,424)
----------- ------------- ----------- -------------
Net increase .............................. 7,655,851 $ 155,296,737 1,143,615 $ 8,769,527
=========== ============= =========== =============
</TABLE>
<TABLE>
<CAPTION>
MID-CAP VALUE EQUITY PORTFOLIO
---------------------------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED
9/30/00 9/30/99
--------------------------- ---------------------------
SHARES VALUE SHARES VALUE
--------- ------------- --------- ------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class .................. 5,107,852 $ 59,567,308 5,025,132 $ 60,642,730
Service Class ........................ 2,912,782 33,082,252 3,698,388 44,028,470
Investor A Class ..................... 175,528 2,044,578 260,536 3,060,194
Investor B Class ..................... 127,547 1,478,022 81,254 975,826
Investor C Class ..................... 97,288 1,101,494 33,541 404,297
Shares issued in reinvestment of dividends:
Institutional Class .................. 432,597 5,009,330 75,196 885,337
Service Class ........................ 85,989 990,785 22,942 269,252
Investor A Class ..................... 7,499 86,394 1,442 17,020
Investor B Class ..................... 8,631 98,310 -- --
Investor C Class ..................... 416 4,743 -- --
Shares redeemed:
Institutional Class .................. (9,036,661) (105,214,137) (3,828,227) (44,921,360)
Service Class ........................ (5,151,263) (58,857,701) (2,835,907) (34,242,407)
Investor A Class ..................... (263,935) (3,060,530) (255,476) (2,993,142)
Investor B Class ..................... (203,237) (2,344,163) (226,742) (2,631,529)
Investor C Class ..................... (59,315) (665,918) (20,657) (249,363)
---------- ------------- ---------- ------------
Net increase (decrease) ................... (5,758,282) $ (66,679,233) 2,031,422 $ 25,245,325
========== ============= ========== ============
</TABLE>
98
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MID-CAP GROWTH EQUITY PORTFOLIO
----------------------------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED
9/30/00 9/30/99
---------------------------- ----------------------------
SHARES VALUE SHARES VALUE
---------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class .................. 6,419,958 $ 154,262,929 3,504,844 $ 55,498,214
Service Class ........................ 2,949,038 67,348,469 4,205,331 62,400,181
Investor A Class ..................... 9,465,029 228,068,714 3,610,752 57,517,568
Investor B Class ..................... 4,320,815 102,883,707 381,925 6,248,344
Investor C Class ..................... 2,640,801 63,978,385 98,506 1,735,544
Shares issued in reinvestment of dividends:
Institutional Class .................. 5,742,261 100,432,139 -- --
Service Class ........................ 840,743 14,528,044 -- --
Investor A Class ..................... 244,262 4,186,644 -- --
Investor B Class ..................... 255,359 4,267,056 -- --
Investor C Class ..................... 27,175 454,101 -- --
Shares redeemed:
Institutional Class .................. (6,018,471) (140,690,244) (4,435,443) (65,847,088)
Service Class ........................ (4,268,278) (100,024,522) (4,330,664) (67,704,034)
Investor A Class ..................... (7,180,445) (173,038,411) (3,303,017) (52,666,629)
Investor B Class ..................... (375,930) (8,735,382) (71,267) (1,089,924)
Investor C Class ..................... (311,984) (7,309,060) (24,066) (381,068)
---------- ------------- ---------- ------------
Net increase (decrease) ................... 14,750,333 $ 310,612,569 (363,099) $ (4,288,892)
========== ============= ========== ============
</TABLE>
<TABLE>
<CAPTION>
SMALL CAP VALUE EQUITY PORTFOLIO
-----------------------------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED
9/30/00 9/30/99
----------------------------- -----------------------------
SHARES VALUE SHARES VALUE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class .................. 6,002,329 $ 90,536,104 20,298,294 $ 299,448,109
Service Class ........................ 1,876,242 27,903,469 2,324,549 34,270,132
Investor A Class ..................... 5,814,649 86,661,723 5,766,840 86,938,812
Investor B Class ..................... 123,120 1,810,706 391,921 5,728,660
Investor C Class ..................... 193,780 2,810,743 595,944 8,805,941
Shares issued in reinvestment of dividends:
Institutional Class .................. 122,971 1,956,585 1,597,197 24,492,817
Service Class ........................ 16,752 265,125 303,563 4,636,210
Investor A Class ..................... 3,850 61,080 119,351 1,826,237
Investor B Class ..................... -- -- 57,793 866,202
Investor C Class ..................... -- -- 4,510 67,561
Shares redeemed:
Institutional Class .................. (13,881,814) (211,758,888) (22,054,279) (327,102,916)
Service Class ........................ (3,448,251) (51,767,737) (3,328,146) (49,721,047)
Investor A Class ..................... (6,479,454) (96,435,065) (6,025,754) (90,987,256)
Investor B Class ..................... (736,172) (11,032,506) (547,851) (7,886,789)
Investor C Class ..................... (552,282) (7,848,326) (338,231) (4,929,110)
----------- ------------- ----------- -------------
Net decrease .............................. (10,944,280) $(166,836,987) (834,299) $ (13,546,437)
=========== ============= =========== =============
</TABLE>
99
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
SMALL CAP GROWTH EQUITY PORTFOLIO
-----------------------------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED
9/30/00 9/30/99
----------------------------- -----------------------------
SHARES VALUE SHARES VALUE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class .................. 15,825,088 $ 537,679,305 36,164,852 $ 760,260,165
Service Class ........................ 4,754,778 164,308,526 3,570,627 74,600,527
Investor A Class ..................... 19,702,034 626,566,564 25,439,449 536,475,770
Investor B Class ..................... 1,158,260 41,330,718 177,274 3,624,852
Investor C Class ..................... 1,379,513 51,279,862 117,857 2,602,111
Shares issued in reinvestment of dividends:
Institutional Class .................. 7,880,918 207,425,770 -- --
Service Class ........................ 1,078,402 27,779,631 -- --
Investor A Class ..................... 363,596 9,282,595 -- --
Investor B Class ..................... 285,588 7,022,605 -- --
Investor C Class ..................... 49,871 1,226,340 -- --
Shares redeemed:
Institutional Class .................. (18,453,305) (630,826,386) (38,390,530) (808,904,031)
Service Class ........................ (3,647,821) (123,258,453) (4,919,784) (105,269,761)
Investor A Class ..................... (18,199,360) (572,529,098) (25,039,792) (531,355,098)
Investor B Class ..................... (381,837) (12,526,233) (637,563) (13,080,200)
Investor C Class ..................... (503,287) (16,954,766) (265,980) (5,744,064)
---------- ------------- ----------- -------------
Net increase (decrease) ................... 11,292,438 $ 317,806,980 (3,783,590) $ (86,789,729)
========== ============= =========== =============
</TABLE>
<TABLE>
<CAPTION>
MICRO-CAP EQUITY PORTFOLIO
----------------------------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED
9/30/00 9/30/99
---------------------------- -----------------------------
SHARES VALUE SHARES VALUE
---------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class .................. 1,587,945 $ 60,263,180 1,020,019 $ 19,233,459
Service Class ........................ 54,016 2,097,072 21,616 489,808
Investor A Class ..................... 3,392,986 126,838,511 1,687,693 33,381,634
Investor B Class ..................... 3,594,392 126,626,613 1,695,323 33,228,709
Investor C Class ..................... 3,270,759 117,963,378 739,450 14,130,622
Shares issued in reinvestment of dividends:
Institutional Class .................. 100,965 3,059,242 -- --
Service Class ........................ 1,084 32,697 -- --
Investor A Class ..................... 189,502 5,704,020 -- --
Investor B Class ..................... 212,479 6,327,636 -- --
Investor C Class ..................... 90,264 2,688,049 -- --
Shares redeemed:
Institutional Class .................. (475,412) (19,578,880) (22,076) (431,911)
Service Class ........................ (20,458) (764,804) (1,002) (25,230)
Investor A Class ..................... (2,055,635) (83,749,734) (491,221) (9,320,163)
Investor B Class ..................... (1,170,746) (49,152,149) (416,050) (7,168,891)
Investor C Class ..................... (1,155,679) (48,497,573) (112,548) (2,103,547)
---------- ------------- ----------- -------------
Net increase .............................. 7,616,462 $ 249,857,258 4,121,204 $ 81,414,490
========== ============= =========== =============
</TABLE>
100
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL SCIENCE & TECHNOLOGY PORTFOLIO
-------------------------------------
FOR THE PERIOD
5/15/00 1 THROUGH 9/30/00
-------------------------------------
SHARES VALUE
------------ -----------
<S> <C> <C>
Shares sold:
Institutional Class ..... 1,745,300 $ 19,473,736
Service Class ........... 1,524 17,337
Investor A Class ........ 3,448,637 38,311,551
Investor B Class ........ 4,944,989 55,529,303
Investor C Class ........ 1,078,551 12,239,431
Shares redeemed:
Institutional Class ..... (33,274) (389,760)
Service Class ........... (168) (2,000)
Investor A Class ........ (123,065) (1,446,747)
Investor B Class ........ (113,828) (1,255,101)
Investor C Class ........ (28,852) (336,858)
---------- ------------
Net increase ................. 10,919,814 $122,140,892
========== ============
</TABLE>
<TABLE>
<CAPTION>
EUROPEAN EQUITY PORTFOLIO
-------------------------------------
FOR THE PERIOD
6/23/00 1 THROUGH 9/30/00
-------------------------------------
SHARES VALUE
------------ -----------
<S> <C> <C>
Shares sold:
Institutional Class ..... 993,495 $10,075,267
Service Class ........... 10 100
Investor A Class ........ 50,838 490,020
Investor B Class ........ 40,200 386,311
Investor C Class ........ 10,609 106,623
Shares redeemed:
Institutional Class ..... (483,559) (4,975,822)
Service Class ........... -- --
Investor A Class ........ (1,124) (10,771)
Investor B Class ........ -- --
Investor C Class ........ -- --
-------- -----------
Net increase ................. 610,469 $ 6,071,728
======== ===========
<FN>
-------------
1 Commencement of operations.
</FN>
</TABLE>
101
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY PORTFOLIO
-----------------------------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED
9/30/00 9/30/99
----------------------------- -----------------------------
SHARES VALUE SHARES VALUE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class .................. 29,697,322 $ 457,996,747 31,402,726 $ 463,949,155
Service Class ........................ 11,933,247 184,608,990 10,635,877 158,155,940
Investor A Class ..................... 31,961,360 487,329,573 50,467,509 743,669,734
Investor B Class ..................... 163,742 2,495,886 77,168 1,126,871
Investor C Class ..................... 565,172 8,474,235 826,991 12,323,728
Shares issued in reinvestment of dividends:
Institutional Class .................. 8,845,928 132,243,264 3,680,103 50,627,932
Service Class ........................ 1,062,330 15,774,697 647,890 8,906,499
Investor A Class ..................... 220,617 3,258,096 143,229 1,972,135
Investor B Class ..................... 57,141 827,968 24,881 334,269
Investor C Class ..................... 952 13,795 166 2,238
Shares redeemed:
Institutional Class .................. (28,926,417) (449,928,967) (41,542,842) (618,355,921)
Service Class ........................ (10,734,549) (167,249,593) (14,726,890) (217,586,501)
Investor A Class ..................... (32,107,602) (492,613,067) (50,540,887) (751,150,069)
Investor B Class ..................... (99,534) (1,489,367) (102,264) (1,486,680)
Investor C Class ..................... (503,533) (7,629,588) (784,385) (11,864,841)
----------- ------------- ----------- -------------
Net increase (decrease) ................... 12,136,176 $ 174,112,669 (9,790,728) $(159,375,511)
=========== ============= =========== =============
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL SMALL CAP EQUITY PORTFOLIO
-----------------------------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED
9/30/00 9/30/99
----------------------------- -----------------------------
SHARES VALUE SHARES VALUE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class .................. 4,455,314 $109,895,920 448,050 $ 4,561,404
Service Class ........................ 74,174 2,059,328 -- --
Investor A Class ..................... 3,284,442 84,337,844 37,146 437,862
Investor B Class ..................... 2,969,892 77,099,187 57,602 652,229
Investor C Class ..................... 3,146,456 82,180,938 99,084 1,235,218
Shares issued in reinvestment of dividends:
Institutional Class .................. 175,081 2,510,668 197,614 1,804,929
Service Class ........................ 74 1,058 -- 1
Investor A Class ..................... 9,070 129,335 8,420 76,643
Investor B Class ..................... 8,762 124,151 5,995 54,267
Investor C Class ..................... 3,274 46,389 1,075 9,735
Shares redeemed:
Institutional Class .................. (2,703,386) (65,448,473) (497,018) (5,167,663)
Service Class ........................ (53,871) (1,594,538) (507) (4,570)
Investor A Class ..................... (1,567,242) (37,873,960) (49,458) (492,659)
Investor B Class ..................... (612,137) (14,380,729) (72,705) (698,808)
Investor C Class ..................... (1,251,517) (29,531,863) (65,051) (777,889)
---------- ------------ -------- -----------
Net increase .............................. 7,938,386 $209,555,255 170,247 $ 1,690,699
========== ============ ======== ===========
</TABLE>
102
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASIA PACIFIC EQUITY PORTFOLIO
-----------------------------
FOR THE PERIOD
6/23/001 THROUGH 9/30/00
-----------------------------
SHARES VALUE
------- ----------
<S> <C> <C>
Shares sold:
Institutional Class .................... 303,910 $3,039,421
Service Class .......................... 10 100
Investor A Class ....................... 4,840 47,173
Investor B Class ....................... 1,189 11,600
Investor C Class ....................... 258 2,430
Shares redeemed:
Institutional Class .................... -- --
Service Class .......................... -- --
Investor A Class ....................... (990) (9,416)
Investor B Class ....................... (99) (935)
Investor C Class ....................... -- --
------- ----------
Net increase ................................ 309,118 $3,090,373
======= ==========
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL EMERGING MARKETS PORTFOLIO
----------------------------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED
9/30/00 9/30/99
---------------------------- ----------------------------
SHARES VALUE SHARES VALUE
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class .................. 8,368,795 $ 59,320,887 3,696,873 $ 21,125,059
Service Class ........................ 3,985,445 28,335,232 3,907,638 20,310,769
Investor A Class ..................... 356,791 2,518,742 120,435 636,903
Investor B Class ..................... 56,215 399,834 17,949 104,544
Investor C Class ..................... 581,728 4,029,705 6,330 39,528
Shares issued in reinvestment of dividends:
Institutional Class .................. 57,287 444,544 80,216 387,442
Service Class ........................ 12,418 96,366 -- --
Investor A Class ..................... 1,324 10,206 -- --
Investor B Class ..................... -- -- -- --
Investor C Class ..................... -- -- -- --
Shares redeemed:
Institutional Class .................. (2,775,999) (20,354,769) (7,381,930) (36,757,040)
Service Class ........................ (2,509,874) (18,425,387) (7,407,493) (37,688,183)
Investor A Class ..................... (293,046) (2,080,517) (201,435) (1,058,384)
Investor B Class ..................... (30,290) (215,602) (51,926) (255,693)
Investor C Class ..................... (530,758) (3,652,816) (4,721) (27,655)
---------- ------------ ---------- ------------
Net increase (decrease) ................... 7,280,036 $ 50,426,425 (7,218,064) $(33,182,710)
========== ============ ========== ============
<FN>
----------
1 Commencement of operations.
</FN>
</TABLE>
103
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
SELECT EQUITY PORTFOLIO
----------------------------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED
9/30/00 9/30/99
---------------------------- -----------------------------
SHARES VALUE SHARES VALUE
---------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class .................. 5,706,765 $ 121,352,265 3,518,715 $ 72,909,258
Service Class ........................ 5,453,787 115,407,071 6,892,802 144,469,122
Investor A Class ..................... 2,469,235 53,107,885 2,955,667 62,605,786
Investor B Class ..................... 1,279,348 26,830,474 1,226,063 24,933,536
Investor C Class ..................... 353,087 7,402,021 306,736 6,347,571
Shares issued in reinvestment of dividends:
Institutional Class .................. 4,952,977 102,218,393 2,448,548 45,594,966
Service Class ........................ 843,564 17,393,897 421,271 7,859,068
Investor A Class ..................... 219,108 4,512,603 70,262 1,309,847
Investor B Class ..................... 223,171 4,519,221 73,018 1,334,038
Investor C Class ..................... 11,725 237,322 1,854 33,875
Shares redeemed:
Institutional Class .................. (9,501,194) $(204,524,372) (12,092,196) (246,175,674)
Service Class ........................ (5,843,508) (124,549,703) (8,546,926) (177,915,850)
Investor A Class ..................... (2,206,082) (47,138,203) (1,893,907) (40,581,471)
Investor B Class ..................... (737,428) (15,430,380) (401,661) (8,181,420)
Investor C Class ..................... (134,997) (2,818,974) (133,997) (2,769,559)
---------- ------------- ----------- -------------
Net increase (decrease) ................... 3,089,558 $ 58,519,520 (5,153,751) $(108,226,907)
========== ============= =========== =============
</TABLE>
<TABLE>
<CAPTION>
INDEX EQUITY PORTFOLIO
----------------------------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED
9/30/00 9/30/99
---------------------------- -----------------------------
SHARES VALUE SHARES VALUE
---------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class .................. 6,870,419 $ 189,251,725 6,095,419 $148,688,653
Service Class ........................ 3,545,420 96,569,599 5,480,520 131,900,497
Investor A Class ..................... 1,980,252 53,433,094 2,440,527 60,306,723
Investor B Class ..................... 3,638,321 97,812,106 7,831,701 189,964,026
Investor C Class ..................... 8,752,848 236,138,773 13,300,108 322,372,621
Shares issued in reinvestment of dividends:
Institutional Class .................. 168,210 4,670,432 147,842 3,522,326
Service Class ........................ 131,018 3,632,670 138,961 3,329,574
Investor A Class ..................... 20,330 562,400 20,610 492,775
Investor B Class ..................... 36,936 1,005,755 21,200 490,602
Investor C Class ..................... 27,960 761,364 11,544 270,234
Shares redeemed:
Institutional Class .................. (3,482,008) (95,049,851) (3,699,695) (92,391,798)
Service Class ........................ (4,275,711) (117,259,293) (3,154,751) (75,493,333)
Investor A Class ..................... (2,040,522) (54,633,522) (1,190,269) (28,979,337)
Investor B Class ..................... (2,747,697) (73,858,657) (1,077,777) (26,231,955)
Investor C Class ..................... (5,242,731) (141,096,705) (1,482,965) (36,034,246)
---------- ------------- ---------- ------------
Net increase .............................. 7,383,045 $ 201,939,890 24,882,975 $602,207,362
========== ============= ========== ============
</TABLE>
104
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BALANCED PORTFOLIO
----------------------------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED
9/30/00 9/30/99
---------------------------- ----------------------------
SHARES VALUE SHARES VALUE
---------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class .................. 964,343 $ 19,898,779 1,997,389 $ 39,937,641
Service Class ........................ 1,498,673 30,343,038 3,527,864 70,687,116
Investor A Class ..................... 2,636,178 53,533,538 2,959,512 59,350,546
Investor B Class ..................... 1,495,939 30,371,076 2,743,730 54,907,097
Investor C Class ..................... 273,322 5,581,566 512,414 10,317,100
Shares issued in reinvestment of dividends:
Institutional Class .................. 728,950 14,650,338 838,782 15,812,164
Service Class ........................ 595,550 12,051,606 638,107 12,231,857
Investor A Class ..................... 339,566 6,851,621 319,974 6,122,560
Investor B Class ..................... 209,183 4,179,863 149,060 2,823,507
Investor C Class ..................... 18,323 364,466 1,048 20,409
Shares redeemed:
Institutional Class .................. (3,522,429) (72,217,255) (2,298,694) (45,902,544)
Service Class ........................ (3,382,907) (69,358,183) (2,694,553) (54,507,394)
Investor A Class ..................... (2,280,266) (46,617,738) (1,823,330) (35,965,493)
Investor B Class ..................... (1,488,018) (30,191,019) (519,519) (10,353,322)
Investor C Class ..................... (208,116) (4,239,731) (36,448) (739,409)
---------- ------------ ---------- ------------
Net increase (decrease) ................... (2,121,709) $(44,798,035) 6,315,336 $124,741,835
========== ============ ========== ============
</TABLE>
On September 30, 2000, one shareholder held approximately 13% of the
outstanding shares of the Large Cap Value Equity Portfolio and one shareholder
held approximately 10% of the outstanding shares of the Micro-Cap Equity
Portfolio and two shareholders held approximately 82% of the outstanding shares
of the European Equity Portfolio and one shareholder held approximately 97% of
the outstanding shares of the Asia Pacific Equity Portfolio. Some of the
shareholders are comprised of omnibus accounts, which are held on behalf of
several individual shareholders.
(E) AT SEPTEMBER 30, 2000, NET ASSETS CONSISTED OF:
<TABLE>
<CAPTION>
LARGE CAP LARGE CAP MID-CAP MID-CAP SMALL CAP
VALUE EQUITY GROWTH EQUITY VALUE EQUITY GROWTH EQUITY VALUE EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------------- -------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Capital paid in ........... $1,764,424,601 $ 885,694,668 $218,666,233 $549,093,428 $453,225,271
Undistributed net
investment income ...... 366,518 -- 66,071 -- 353,641
Accumulated net realized
gain on investment
transactions and futures
contracts .............. 154,366,026 196,347,518 1,485,119 261,708,332 22,104,241
Net unrealized appreciation
(depreciation) on
investment transactions
and futures contracts .. 336,180,699 635,808,484 24,436,902 174,950,422 88,343,368
-------------- -------------- ------------ ------------ ------------
$2,255,337,844 $1,717,850,670 $244,654,325 $985,752,182 $564,026,521
============== ============== ============ ============ ============
SMALL CAP MICRO-CAP
GROWTH EQUITY EQUITY
PORTFOLIO PORTFOLIO
-------------- ------------
<S> <C> <C>
Capital paid in ........... $1,401,914,807 $351,568,905
Undistributed net
investment income ...... 2,481,723 --
Accumulated net realized
gain on investment
transactions and futures
contracts .............. 636,539,089 127,721,414
Net unrealized appreciation
(depreciation) on
investment transactions
and futures contracts .. 791,722,131 128,625,596
-------------- ------------
$2,832,657,750 $607,915,915
============== ============
</TABLE>
105
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
GLOBAL SCIENCE EUROPEAN INTERNATIONAL INTERNATIONAL
& TECHNOLOGY EQUITY EQUITY SMALL CAP EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ---------- -------------- ------------
<S> <C> <C> <C> <C>
Capital paid in ............ $121,832,154 $6,056,785 $1,106,862,746 $231,737,996
Undistributed net
investment income (loss) -- -- (9,508,104) (541,424)
Accumulated net realized
gain (loss) on investment
transactions, futures
contracts and foreign
exchange contracts ...... (5,841,221) (59,386) 154,289,292 (25,502,551)
Net unrealized appreciation
(depreciation) on
investment transactions,
futures contracts and
foreign exchange
contracts ............... 20,033,820 (195,276) 31,823,794 19,895,768
------------ ---------- -------------- ------------
$136,024,753 $5,802,123 $1,283,467,728 $225,589,789
============ ========== ============== ============
ASIA PACIFIC INTERNATIONAL
EQUITY EMERGING MARKETS
PORTFOLIO PORTFOLIO
---------- ----------------
<S> <C> <C>
Capital paid in ............ $3,082,410 $201,698,534
Undistributed net
investment income (loss) 5,495 567,815
Accumulated net realized
gain (loss) on investment
transactions, futures
contracts and foreign
exchange contracts ...... 41,273 (60,687,861)
Net unrealized appreciation
(depreciation) on
investment transactions,
futures contracts and
foreign exchange
contracts ............... (272,700) (11,990,319)
---------- ------------
$2,856,478 $129,588,169
========== ============
</TABLE>
<TABLE>
<CAPTION>
SELECT INDEX
EQUITY EQUITY BALANCED
PORTFOLIO PORTFOLIO PORTFOLIO
-------------- -------------- ------------
<S> <C> <C> <C>
Capital paid in ............... $1,030,033,424 $1,411,777,353 $579,121,214
Undistributed net
investment income .......... 323,370 -- 1,499,544
Accumulated net realized
gain (loss) on investment
transactions, futures, swaps
contracts and foreign
exchange contracts ......... 268,712,166 (25,885,546) 115,998,409
Net unrealized appreciation
(depreciation) on
investment transactions,
futures, swaps contracts
and foreign exchange
contracts .................. 569,289,565 644,161,464 150,896,408
-------------- -------------- ------------
$1,868,358,525 $2,030,053,271 $847,515,575
============== ============== ============
</TABLE>
(F) CAPITAL LOSS CARRYOVERS
At September 30, 2000, capital loss carryovers were available to offset
possible future realized capital gains as follows:
CARRY LOSS YEAR OF
CARRYFORWARD EXPIRATION
------------ -----------
Global Science & Technology Portfolio: $ 5,068,539 2008
International Emerging Markets Portfolio: 24,240,648 2006
703,087 2007
33,455,521 2008
At September 30, 2000, deferred post-October capital losses for the
International Small Cap Equity Portfolio were $23,463,385 and for the
International Emerging Markets Portfolio were $2,269,272. At September 30, 2000
deferred post-October currency losses for the International Equity Portfolio
were $9,508,104, for the International Small Cap Equity Portfolio were $541,424
and for the International Emerging Markets Portfolio were $414,042.
106
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FUNDS
--------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF BLACKROCK FUNDS:
In our opinion, the accompanying statements of net assets of the Micro-Cap
Equity, Global Science & Technology, International Equity, Asia Pacific and
Index Equity Portfolios and the statements of assets and liabilities, including
the schedules of investments, of 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, European Equity, International Small Cap Equity,
International Emerging Markets, Select Equity and Balanced Portfolios
(constituting the equity portfolios of BlackRock Funds, hereafter referred to as
the "Fund") 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 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, Global Science & Technology, European Equity,
International Equity, International Small Cap Equity, Asia Pacific,
International Emerging Markets, Select Equity, Index Equity and Balanced
Portfolios of the Fund at September 30, 2000, the results of each of their
operations, the changes in each of their net assets and the financial highlights
for each of the periods indicated, in conformity with accounting principles
generally accepted in the United States of America. 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 auditing standards
generally accepted in the United States of America, 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 at
September 30, 2000 by correspondence with the custodians and brokers, provide a
reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
November 17, 2000
107
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
THE DFA INVESTMENT TRUST COMPANY
THE U.S. LARGE COMPANY SERIES
TEN MONTHS ENDED SEPTEMBER 30, 2000
(UNAUDITED)
<PAGE>
TABLE OF CONTENTS THE DFA INVESTMENT TRUST COMPANY
THE U.S. LARGE COMPANY SERIES
Page
Schedule of Investments ...............................111
Statement of Assets and Liabilities ...................119
Statements of Operations ..............................121
Statements of Changes in Net Assets ...................122
Financial Highlights ..................................123
Notes to Financial Statements .........................124
Report of Independent Accountants .....................126
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
-----------------------------------------------------------------------------
SEPTEMBER 30, 2000
--------------------------
(UNAUDITED)
SHARES VALUE+
--------- --------------
COMMON STOCKS -- (99.8%)
Abbott Laboratories ......................... 407,600 $ 19,386,475
Adaptec Inc. ................................ 26,000 520,813*
ADC Telecommunications, Inc. ................ 185,800 4,975,956*
Adobe Sys Inc. .............................. 31,600 4,906,888
Advanced Micro Devices, Inc. ................ 82,100 1,939,613*
AES Corp. ................................... 120,000 8,220,000*
Aetna Inc. .................................. 37,300 2,165,731
AFLAC, Inc. ................................. 69,900 4,477,969
Agilent Tech, Inc. .......................... 119,023 5,824,688*
Air Products & Chemicals, Inc. .............. 60,200 2,167,200
Alberto Culver Co. .......................... 14,700 423,544
Albertson's, Inc. ........................... 111,300 2,337,300
Alcan Aluminum, Ltd. ........................ 57,500 1,663,906#
Alcoa Inc. .................................. 227,700 5,763,656
Allegheny Technologies, Inc. ................ 21,350 386,969
Allergan, Inc. .............................. 34,700 2,929,981
Allied Waste Industries, Inc. ............... 51,800 475,913*
Allstate Corp. .............................. 193,200 6,713,700
Alltel Corp. ................................ 83,200 4,342,000
Altera Corp. ................................ 104,800 5,007,475*
Alza Corp. .................................. 30,400 2,629,600*
Amerada Hess Corp. .......................... 23,700 1,586,419
Ameren Corp. ................................ 36,000 1,507,500
America Online .............................. 607,500 32,653,125*
American Electric Power, Inc. ............... 84,560 3,308,410
American Express Co. ........................ 350,100 21,268,575
American General Corp. ...................... 66,400 5,179,200
American Greetings Corp. Class A ............ 17,000 297,500
American Home Products Corp. ................ 342,700 19,383,969
American International Group, Inc. .......... 608,600 58,235,413
American Power Coversion Corp. .............. 51,200 979,200*
Amgen, Inc. ................................. 270,600 18,857,438
AMR Corp. ................................... 39,400 1,287,888*
Amsouth Bancorp ............................. 99,100 1,238,750
Anadarko Petroleum Corp. .................... 63,976 4,251,845
Analog Devices, Inc. ........................ 93,500 7,719,594*
Andrew Corp. ................................ 21,300 558,459*
Anheuser-Busch Companies, Inc. .............. 237,800 10,061,913
AON Corp. ................................... 67,000 2,629,750
Apache Corp. ................................ 32,000 1,892,000
Apple Computer, Inc. ........................ 85,700 2,204,097*
Applied Materials, Inc. ..................... 213,300 12,638,025*
Archer-Daniels Midlands Co. ................. 166,215 1,433,604
Armstrong World Industries, Inc. ............ 10,700 127,731
Ashland, Inc. ............................... 18,400 619,850
Associates First Capital Corp. Class A ...... 191,600 7,280,800
AT&T Corp. .................................. 987,815 29,017,066
Autodesk, Inc. .............................. 15,100 382,691
Automatic Data Processing, Inc. ............. 164,900 11,027,688
Autozone, Inc. .............................. 33,500 760,031*
Avery Dennison Corp. ........................ 29,300 1,358,788
Avon Product, Inc. .......................... 62,300 2,546,513
B B & T Corp. ............................... 105,100 3,166,138
Baker Hughes Inc. ........................... 86,900 3,226,163
Ball Corporation ............................ 7,600 240,825
Bank of America Corp ........................ 432,100 22,631,238
Bank of New York Co., Inc. .................. 194,300 10,892,944
Bank One Corporation ........................ 304,200 11,749,725
Bard C.R. Inc. .............................. 13,400 566,150
Barrick Gold Corp. .......................... 104,200 1,589,050
Bausch & Lomb, Inc. ......................... 14,000 545,125
Baxter International Inc. ................... 76,800 6,129,600
Bear Stearns Companies, Inc. ................ 28,300 1,782,900
Becton, Dickinson & Co. ..................... 66,700 1,763,381
Bed Bath and Beyond, Inc. ................... 74,300 1,808,741*
-----------------------------------------------------------------------------
SEPTEMBER 30, 2000
--------------------------
(UNAUDITED)
SHARES VALUE+
--------- --------------
BellSouth Corp. ............................. 492,800 $ 19,835,200
Bemis Co., Inc. ............................. 14,000 449,750
Best Buy Inc. ............................... 54,200 3,448,475*
Bestfood Inc. ............................... 73,200 5,325,300
Bethlehem STL Corp. ......................... 34,800 104,400*
Biogen Inc. ................................. 39,000 2,380,219*
Biomet Inc. ................................. 46,700 1,635,959
Black & Decker Corp. ........................ 21,900 748,706
Block (H&R) Corp. ........................... 25,700 952,506
BMC Software, Inc. .......................... 64,900 1,239,184*
Boeing Co. .................................. 236,100 14,874,300
Boise Cascade Corp. ......................... 15,000 398,438
Boston Scientific Corp. ..................... 106,900 1,757,169*
Briggs & Stratton Corp. ..................... 5,700 215,531
Bristol Myers Squibb Co. .................... 517,200 29,545,050
Broadcom Corp. .............................. 58,600 14,287,413*
Brown-Forman Corp. Class B .................. 18,100 990,975
Brunswick Corp. ............................. 22,900 417,925
Burlington Northern Santa Fe Corp. .......... 106,300 2,292,094
Burlington Resources, Inc. .................. 56,600 2,083,588
Cabletron Systems, Inc. ..................... 48,400 1,421,750*
Campbell Soup Co. ........................... 110,700 2,864,363
Capital One Financial Corp. ................. 51,700 3,622,231
Cardinal Health, Inc. ....................... 73,300 6,464,144
Carnival Corp. .............................. 155,000 3,816,875
Caterpillar, Inc. ........................... 90,700 3,061,125
Cendant Corporation ......................... 191,100 2,078,213*
Centex Corp. ................................ 15,500 497,938
Century, Inc. ............................... 36,900 1,005,525
Ceridian Corp. .............................. 38,206 1,072,156*
Chapter One Financial, Inc. ................. 55,360 1,349,400
Chase Manhattan Corp. ....................... 344,100 15,893,119
Chevron Corp. ............................... 171,600 14,628,900
Chubb Corp. ................................. 46,000 3,639,750
Cigna Corp. ................................. 41,500 4,332,600
Cincinnati Financial Corp. .................. 42,200 1,499,419
Cinergy Corp. ............................... 41,793 1,381,781
Circuit City Stores, Inc.
(Circuit City Group) ...................... 54,000 1,242,000
Cisco Systems, Inc. ......................... 1,866,500 103,124,125*
CIT Group, Inc. ............................. 69,000 1,207,500
Citigroup, Inc. ............................. 1,183,500 63,982,969
Citrix Sys Inc. ............................. 48,800 980,575*
Clear Channel Communications, Inc. .......... 153,900 8,695,350*
Clorox Co. .................................. 61,600 2,437,050
CMS Energy Corp. ............................ 29,000 781,188
Coastal Co. ................................. 56,200 4,165,825
Coca Cola Co. ............................... 651,300 35,902,913
Cocoa-Cola Enterprises, Inc. ................ 110,000 1,753,125
Colgate-Palmolive Co. ....................... 150,900 7,122,480
Columbia Energy Group ....................... 20,900 1,483,900
Comcast Corp. Class A Special ............... 238,100 9,747,219*
Comerica, Inc. .............................. 41,050 2,398,859
Compaq Computer Corp. ....................... 447,200 12,333,776
Computer Associations
International, Inc. ....................... 155,300 3,911,619
Computer Sciences Corp. ..................... 44,300 3,289,275*
Compuware Corp. ............................. 96,000 802,500*
Comverse Technology, Inc. ................... 41,100 4,440,084*
Conagra Inc. ................................ 140,200 2,812,763
Conexant Systems Inc. ....................... 60,100 2,514,809*
Conoco, Inc. ................................ 163,800 4,412,363
Conseco Inc. ................................ 85,600 652,700#
Consolidated Edison Inc. .................... 55,900 1,907,588#
Consolidated Stores Corp. ................... 29,200 394,200*
Constellation Energy Group .................. 39,450 1,962,638
Convergys Corp. ............................. 40,500 1,574,438*
Cooper Industries, Inc. ..................... 24,600 867,150
See accompanying notes to financial statements.
111
<PAGE>
SCHEDULE OF INVESTMENTS THE DFA INVESTMENT TRUST COMPANY
THE U.S. LARGE COMPANY SERIES (CONTINUED)
-----------------------------------------------------------------------------
SEPTEMBER 30, 2000
--------------------------
(UNAUDITED)
SHARES VALUE+
--------- --------------
Cooper Tire & Rubber ........................ 19,100 $ 192,194
Coors (Adolph) Co. Class B .................. 9,700 612,919
Corning, Inc. ............................... 77,200 22,928,400
Costco Wholesale Corp. ...................... 117,500 4,108,828*
Countrywide Credit Industries, Inc. ......... 30,100 1,136,275
CP&L Energy, Inc. ........................... 41,900 1,746,706
Crane Co. ................................... 16,000 366,000
Crown, Cork & Seal Co., Inc. ................ 33,100 353,756
CSX Corporation ............................. 57,600 1,256,400
Cummins Engine Co., Inc. .................... 10,900 326,319
CVS Corp. ................................... 102,600 4,751,663
Dana Corp. .................................. 39,200 842,800
Danaher Corp. ............................... 37,300 1,855,675
Darden Restaurants, Inc. .................... 32,100 668,081
Deere & Co. ................................. 61,600 2,048,200
Dell Computer Corp. ......................... 680,600 20,949,719*
Delphi Automotive Systems Corp. ............. 147,300 2,227,913
Delta Air Lines, Inc. ....................... 32,300 1,433,313
Deluxe Corp. ................................ 19,000 385,938
Devon Energy Corp. .......................... 33,500 2,015,025
Dillards, Inc. Class A ...................... 24,600 261,375
Disney (Walt) Co. ........................... 548,400 20,976,300
Dollar General Corp. ........................ 86,400 1,447,200
Dominion Resources, Inc. VA ................. 62,700 3,640,519
Donnelley (R.R.) & Sons Co. ................. 32,100 788,456
Dover Corp. ................................. 53,500 2,511,156
Dow Chemical Co. ............................ 178,400 4,448,850
Dow Jones & Co., Inc. ....................... 23,100 1,397,550
DTE Energy Co. .............................. 37,600 1,438,200
Duke Energy Corporation ..................... 96,900 8,309,175
Dun & Bradstreet ............................ 42,600 1,467,038
DuPont (E.I.) de Nemours & Co., Inc ......... 274,200 11,362,163
Eastern Enterprises ......................... 7,100 453,069
Eastman Chemical Co. ........................ 20,200 746,138
Eastman Kodak Co. ........................... 80,800 3,302,700
Eaton Corp. ................................. 19,300 1,189,363
Ecolab, Inc. ................................ 33,700 1,215,306
Edison International ........................ 85,600 1,653,150
El Paso Energy Corp. ........................ 61,300 3,777,613
Electronic Data Systems Corp. ............... 122,600 5,087,900
EMC Corp. MA ................................ 573,400 56,838,275*
Emerson Electric Co. ........................ 112,500 7,537,500
Engelhard Corp. ............................. 33,600 546,000
Enron Corp. ................................. 194,300 17,025,538
Entergy Corp. ............................... 58,700 2,186,575
Equifax Inc. ................................ 37,200 1,002,075
Exxon Corp. ................................. 916,300 81,665,238
Fannie Mae .................................. 265,100 18,954,650
Federated Department Stores, Inc. ........... 54,600 1,426,425*
Fedex Corp. ................................. 74,800 3,316,632*
Fifth Third Bancorp ......................... 122,150 6,577,014
First Data Corp. ............................ 106,500 4,160,156
First Energy Corp. .......................... 60,200 1,621,638
First Union Corp. ........................... 259,200 8,343,000
Firstar Corp. ............................... 252,200 5,642,975
FleetBoston Financial Corp. ................. 237,400 9,258,600
Florida Progress Corp. ...................... 25,900 1,371,081
Fluor Corp. ................................. 19,900 597,000
FMC Corp. ................................... 8,000 536,500*
Ford Motor Co. .............................. 498,000 12,605,625*
Fort James Corporation ...................... 53,900 1,647,319
Fortune Brands, Inc. ........................ 41,300 1,094,450
FPL Group, Inc. ............................. 46,900 3,083,675
Franklin Resources, Inc. .................... 64,200 2,852,406
Freddie Mac ................................. 183,000 9,893,438
-----------------------------------------------------------------------------
SEPTEMBER 30, 2000
--------------------------
(UNAUDITED)
SHARES VALUE+
--------- --------------
Freeport McMoran Copper & Gold, Inc.
Class B ................................... 40,200 $ 354,263*
Gannett Co., Inc. ........................... 69,100 3,662,300
Gap Inc. .................................... 223,800 4,503,975
Gateway, Inc. ............................... 84,900 3,969,075*
General Dynamics Corp. ...................... 52,000 3,266,250
General Electric Co. ........................ 2,605,400 150,299,013
General Mills, Inc. ......................... 75,100 2,666,050
General Motors Corp. ........................ 140,900 9,158,500
Genuine Parts Co. ........................... 46,100 878,781
Georgia Pacific Corp. ....................... 44,900 1,055,150
Gillette Co. (THE) .......................... 277,000 8,552,375
Global Crossing Ltd. ........................ 231,400 7,180,631*
Golden West Financial Corp. ................. 41,700 2,236,163
Goodrich (B.F.) Co. ......................... 26,800 1,050,225
Goodyear Tire & Rubber Co. .................. 41,200 741,600
GPU, Inc. ................................... 32,000 1,038,000
Grainger (W.W.) Inc. ........................ 24,700 649,919
Great Lakes Chemical Corp. .................. 13,700 401,581
Guidant Corp. ............................... 80,500 5,690,344*
Halliburton Co. ............................. 117,000 5,725,688
Harcourt General, Inc. ...................... 19,223 1,134,157
Harley Davidson ............................. 79,600 3,810,850
Harrahs Entertainment, Inc. ................. 30,700 844,250*
Hartford Financial Services Group, Inc. ..... 59,200 4,317,900
Hasbro, Inc. ................................ 45,300 518,119
HCA - The Healthcare Co. .................... 146,700 5,446,238
Healthsouth Corp. ........................... 101,500 824,688*
Heinz (H.J.) Co. ............................ 91,200 3,380,100
Hercules, Inc. .............................. 28,300 399,738
Hershey Foods Corp. ......................... 36,100 1,953,913
Hewlett-Packard Co. ......................... 262,400 25,452,800
Hilton Hotels Corp. ......................... 97,000 1,121,563
Home Depot, Inc. ............................ 609,200 32,325,675
Homestake Mining Co. ........................ 69,200 358,975
Honeywell, Inc. ............................. 210,700 7,506,188
Household International, Inc. ............... 124,100 7,027,163
Humana, Inc. ................................ 43,600 468,700*
Huntington Bancshares, Inc. ................. 66,110 973,057
Illinois Tool Works, Inc. ................... 79,500 4,442,063
IMS Health, Inc. ............................ 78,200 1,622,650
Inco, Ltd. .................................. 47,800 770,775*
Ingersoll-Rand Co. .......................... 42,500 1,439,688
Intel Corp. ................................. 1,766,000 73,344,188
International Business Machines Corp. ....... 463,200 52,110,000
International Flavors & Fragrances, Inc. .... 26,200 478,150
International Paper Co. ..................... 127,394 3,654,615
Interpublic Group of Companies, Inc. ........ 81,100 2,762,469
ITT Industries, Inc. ........................ 23,100 749,306
JDS Uniphase Corp. .......................... 246,000 23,285,438*
Jefferson-Pilot Corp. ....................... 27,200 1,846,200
Johnson & Johnson ........................... 365,600 34,343,550
Johnson Controls Inc. ....................... 22,500 1,196,719
K Mart Corp. ................................ 126,400 758,400*
Kaufman & Broad Home Corp. .................. 12,700 342,106
Kellogg Co. ................................. 106,700 2,580,806
Kerr-McGee Corp. ............................ 24,800 1,643,000#
Keycorp ..................................... 113,200 2,865,375
Keyspan Corp. ............................... 35,300 1,416,413
Kimberly Clark Corp. ........................ 141,400 7,891,888
KLA-Tencor Corp. ............................ 48,800 2,011,475*#
Knight Ridder, Inc. ......................... 19,900 1,011,169
Kohls Corp. ................................. 86,500 4,989,969*
Kroger Co. .................................. 217,300 4,902,831*
Leggett and Platt, Inc. ..................... 51,700 817,506
See accompanying notes to financial statements.
112
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SCHEDULE OF INVESTMENTS THE DFA INVESTMENT TRUST COMPANY
THE U.S. LARGE COMPANY SERIES (CONTINUED)
-----------------------------------------------------------------------------
SEPTEMBER 30, 2000
--------------------------
(UNAUDITED)
SHARES VALUE+
--------- --------------
Lehman Brothers Holdings, Inc. .............. 31,800 $ 4,698,450#
Lexmark International Group, Inc. ........... 33,600 1,260,000*
Lilly (Eli) & Co. ........................... 297,200 24,110,350
Limited, Inc. ............................... 113,600 2,506,300
Lincoln National Corp. ...................... 50,200 2,415,875
Linear Technologies, Corp. .................. 82,000 5,312,063
Liz Claiborne, Inc. ......................... 14,100 542,850
Lockheed Martin Corp. ....................... 112,300 3,701,408
Loews Corp. ................................. 26,000 2,167,750
Longs Drug Stores Corp. ..................... 10,000 191,250
Louisiana-Pacific Corp. ..................... 27,400 251,738
Lowe's Companies, Inc. ...................... 100,600 4,514,425
LSI Logic Corp. ............................. 81,700 2,389,725*
Lucent Technologies, Inc. ................... 878,200 26,839,988
Mallinckrodt, Inc. .......................... 17,700 807,563
Manor Care, Inc. ............................ 26,900 421,994*
Marriott International, Inc. Class A ........ 63,000 2,295,563
Marsh & McLennan Cos., Inc. ................. 71,600 9,504,900
Masco Corp. ................................. 120,200 2,238,725
Mattel, Inc. ................................ 112,200 1,255,238
Maxim Integrated Products ................... 74,500 5,990,266*
May Department Stores Co. ................... 83,600 1,713,800
Maytag Corp. ................................ 20,400 633,675
MBIA, Inc. .................................. 25,800 1,835,025
MBNA Corp. .................................. 224,100 8,627,850
McDermott International, Inc. ............... 15,900 174,900
McDonalds Corp. ............................. 347,200 10,481,100
McGraw-Hill Companies, Inc. ................. 51,400 3,267,113
McKesson HBOC, Inc. ......................... 74,800 2,286,075
Mead Corp. .................................. 26,900 628,788
Medimmune, Inc. ............................. 55,300 4,273,653*
Medtronic Inc. .............................. 315,000 16,320,938
Mellon Financial Corp. ...................... 128,300 5,949,913
Merck & Co., Inc. ........................... 604,900 45,027,244
Mercury Interactive Corp. ................... 21,100 3,308,084*
Meredith Co. ................................ 13,300 392,350
Merrill Lynch & Co., Inc. ................... 211,300 13,945,800
MGIC Investment Corp. ....................... 28,000 1,711,500
Micron Tech ................................. 148,400 6,826,400*
Microsoft Corp. ............................. 1,384,300 83,490,594*
Millipore Corp. ............................. 12,200 590,938
Minnesota Mining & Manufacturing Co. ........ 104,200 9,495,225
Molex Inc. .................................. 51,600 2,807,363
Morgan (J.P.) & Co., Inc. ................... 41,900 6,845,413
Morgan Stanley Dean Witter .................. 296,100 27,074,644
Motorola, Inc. .............................. 573,400 16,198,550
Nabisco Group Holdings Corp. ................ 85,900 2,448,150
National City Corp. ......................... 159,700 3,533,363
National Semiconductor Corp. ................ 46,800 1,883,700*
National Service Industries, Inc. ........... 10,700 209,319
Navistar International Corp. ................ 15,600 467,025*
NCR Corp .................................... 25,300 956,656*
Network Appliance Corp. ..................... 82,400 10,498,275*
New York Times Class A ...................... 44,000 1,729,750
Newell Rubbermaid, Inc. ..................... 70,000 1,596,875
Newmont Mining Corp. ........................ 44,258 752,386
Nextel Communications Corp.
Class A ................................... 200,200 9,365,606*
Niagara Mohawk Holdings, Inc. ............... 42,200 664,650*
Nicor, Inc. ................................. 12,100 437,869
Nike, Inc. Class B .......................... 71,100 2,848,444
Nordstrom, Inc. ............................. 34,200 532,238
Norfolk Southern Corp. ...................... 101,000 1,477,125
Nortel Networks Corp. ....................... 785,500 46,786,344
Northern Trust Corp. ........................ 58,500 5,201,016
Northrop Grumman Corp. ...................... 18,800 1,708,450
Novell, Inc. ................................ 85,400 849,997*
-----------------------------------------------------------------------------
SEPTEMBER 30, 2000
--------------------------
(UNAUDITED)
SHARES VALUE+
--------- --------------
Novellus Systems, Inc. ...................... 34,500 $ 1,607,484*
Nucor Corp. ................................. 21,300 641,663
Occidental Petroleum Corp. .................. 97,200 2,120,175
Office Depot, Inc. .......................... 80,400 628,125*
Old Kent Finl ............................... 35,925 1,039,580
Omnicom Group, Inc. ......................... 46,600 3,398,888
Oneok, Inc. ................................. 7,700 306,075
Oracle Systems Corp. ........................ 740,300 58,298,625*
Owens Corning ............................... 14,600 38,325#
Owens-Illinois, Inc. ........................ 38,400 355,200*
Paccar, Inc. ................................ 20,200 749,294
Pactiv Corporation .......................... 44,500 497,844*
Paine Webber Group, Inc. .................... 39,000 2,656,875
Pall Corp. .................................. 32,400 645,975
Palm, Inc. .................................. 148,400 7,860,563*
Parametric Technology Corp. ................. 71,500 784,266*
Parker-Hannifin Corp. ....................... 29,525 996,469
Paychex, Inc. ............................... 97,850 5,158,530
PE Corp. - PE Biosystems Group .............. 54,900 6,395,850
PECO Energy Co. ............................. 44,700 2,707,144
Penney (J.C.) Co., Inc. ..................... 68,700 811,519
Peoples Energy Corp. ........................ 9,300 310,388
Peoplesoft, Inc. ............................ 73,700 2,061,297*
Pepsico, Inc. ............................... 379,400 17,452,400
PerkinElmer, Inc. ........................... 13,100 1,367,313
Pfizer, Inc. ................................ 1,660,650 74,625,459
PG&E Corp. (Holding Co.) .................... 101,500 2,455,031
Pharmacia & Upjohn, Inc. .................... 341,600 20,560,050
Phelps Dodge Corp. .......................... 20,600 860,050
Philip Morris Companies, Inc. ............... 592,600 17,444,663
Philips Petroleum Co. ....................... 66,900 4,197,975#
Pinnacle West Capital Corp. ................. 22,200 1,129,425
Pitney Bowes, Inc. .......................... 67,300 2,654,144
Placer Dome, Inc. ........................... 86,100 812,569
PNC Financial Services Group ................ 75,800 4,927,000
Polaroid Corp. .............................. 11,800 158,563
Potlatch Corp. .............................. 7,400 234,025
PP&L Resources, Inc. ........................ 38,000 1,586,500
PPG Industries, Inc. ........................ 45,700 1,813,719
Praxiar, Inc. ............................... 41,700 1,558,538
Price (T. Rowe) Associates, Inc. ............ 31,800 1,493,606
Proctor & Gamble Co. ........................ 343,800 23,034,600
Progressive Corp. ........................... 19,300 1,580,188
Providian Financial Corp. ................... 37,400 4,749,800
Public Service Enterprise Group, Inc. ....... 56,500 2,524,844
Pulte Corp. ................................. 10,600 349,800
Quaker Oats Co. ............................. 34,900 2,761,463
Qualcomm, Inc. .............................. 196,000 13,965,000*
Quintiles Transnational Corp. ............... 30,400 485,450*
Qwest Communication International, Inc. ..... 436,976 21,002,159*
Radioshack Corp. ............................ 48,900 3,160,163
Ralston Purina Group ........................ 80,700 1,911,581
Raytheon Co. Class B ........................ 89,500 2,545,156
Reebok International, Ltd. .................. 15,000 282,188*
Regions Financial Corp. ..................... 57,500 1,313,516
Reliant Energy, Inc. ........................ 77,500 3,603,750
Rockwell International (NEW) ................ 48,800 1,476,200
Rohm & Haas Co. ............................. 57,000 1,656,563
Rowan Companies, Inc. ....................... 24,800 719,200*
Royal Dutch Petroleum Co. Den Haag
(N.Y. Registry) ........................... 563,800 33,792,763
Russell Corp. ............................... 8,500 134,938
Ryder Systems, Inc. ......................... 15,600 287,625
Sabre Hldgs Co. ............................. 33,922 981,618*
Safeco Corp. ................................ 33,600 917,700
Safeway, Inc. ............................... 130,700 6,102,056*
See accompanying notes to financial statements.
113
<PAGE>
SCHEDULE OF INVESTMENTS THE DFA INVESTMENT TRUST COMPANY
THE U.S. LARGE COMPANY SERIES (CONTINUED)
-----------------------------------------------------------------------------
SEPTEMBER 30, 2000
--------------------------
(UNAUDITED)
SHARES VALUE+
--------- --------------
Saint Jude Medical, Inc. .................... 22,050 $ 1,124,550*
Saint Paul Companies, Inc. .................. 58,900 2,904,506
Sanmina Corp. ............................... 39,800 3,730,006*
Sapient Corp. ............................... 31,100 1,264,409*
Sara Lee Corp ............................... 228,800 4,647,500
SBC Communications, Inc. .................... 891,800 44,590,000
Schering-Plough Corp. ....................... 385,200 17,911,800
Schlumberger, Ltd. .......................... 149,800 12,330,413
Schwab (Charles) Corp. ...................... 363,000 12,886,500
Scientific-Atlanta, Inc. .................... 41,900 2,665,888
Seagate Technology, Inc. .................... 60,100 4,146,900*
Seagram Co., Ltd. ........................... 114,900 6,599,569
Sealed Air Corp. ............................ 22,092 999,663*
Sears, Roebuck & Co. ........................ 90,100 2,921,042
Sempra Energy ............................... 53,645 1,116,487
Sherwin-Williams Co. ........................ 42,700 912,713
Siebl Systems, Inc .......................... 109,800 12,218,681*
Sigma-Aldrich Corp .......................... 21,200 700,925
Snap-On, Inc. ............................... 15,500 365,219
Solectron Corp. ............................. 158,200 7,296,975*
Southern Co. ................................ 170,600 5,533,838
SouthTrust Corp. ............................ 44,300 1,394,066
Southwest Airlines Co. ...................... 131,300 3,184,025
Springs Industries, Inc. Class A ............ 4,750 133,891
Sprint Corp. ................................ 232,700 6,821,019
Sprint Corp. (PCS Group) .................... 244,200 8,562,263*
Stanley Works ............................... 22,600 521,213
Staples, Inc. ............................... 119,400 1,697,719*
Starbucks Corp. ............................. 49,100 1,968,603*
State Street Corp. .......................... 42,500 5,525,000
Stilwell Financial, Inc. .................... 59,000 2,566,500*
Summit Bancorp .............................. 45,700 1,576,650#
Sun Microsystems ............................ 417,200 49,007,963*
Sunoco, Inc. ................................ 22,900 616,869
Suntrust Banks, Inc. ........................ 78,600 3,915,263
Supervalu, Inc. ............................. 34,800 524,175
Synovus Financial Corp. ..................... 74,700 1,582,706
Sysco Corp. ................................. 87,800 4,066,238
Target Corp. ................................ 239,200 6,129,500
Tektronix, Inc. ............................. 12,700 975,519
Tellabs, Inc. ............................... 108,000 5,160,375*
Temple-Inland, Inc. ......................... 13,400 507,525
Tenet Healthcare Corp. ...................... 82,800 3,011,850
Teradyne, Inc. .............................. 45,600 1,596,000*
Texaco, Inc. ................................ 144,800 7,602,000
Texas Corp. ................................. 69,600 2,757,900
Texas Instruments, Inc. ..................... 454,700 21,456,156
Textron, Inc. ............................... 37,800 1,743,525
Thermo-Electron Corp. ....................... 45,700 1,188,200*
Thomas & Betts Corp. ........................ 15,200 265,050
Tiffany & Co. ............................... 38,200 1,473,088
Time Warner, Inc. ........................... 347,900 27,223,175
Timken Co. .................................. 15,900 217,631
TJX Companies, Inc. ......................... 76,900 1,730,250
Torchmark Corp. ............................. 33,600 934,500
Tosco Corp. ................................. 38,000 1,185,125
Toys R Us, Inc. ............................. 56,800 923,000*
Transocean Offshore, Inc. ................... 55,300 3,241,963
Tribune Co. ................................. 80,999 3,533,581
Tricon Global Restaurants, Inc. ............. 38,300 1,172,938*
TRW, Inc. ................................... 32,600 1,324,375
Tupperware Corp. ............................ 15,200 273,600
Tyco International, Ltd. .................... 443,200 22,991,000
U.S. Airways Group Inc. ..................... 17,600 535,700*
U.S. Bancorp New ............................ 196,200 4,463,550
Unicom Corp., Inc. .......................... 46,400 2,607,100
-----------------------------------------------------------------------------
SEPTEMBER 30, 2000
--------------------------
(UNAUDITED)
SHARES VALUE+
--------- --------------
Unilever NV ................................. 150,200 $ 7,247,150
Union Carbide Corp. ......................... 35,500 1,340,125
Union Pacific Corp. ......................... 65,300 2,538,538
Union Planters Corp. ........................ 35,300 1,167,106
Unisys Corp. ................................ 82,300 925,875*
United Technologies Corp. ................... 123,100 8,524,675
Unitedhealth Group, Inc. .................... 42,300 4,177,125
Unocal Corp. ................................ 64,000 2,268,000
Unum Provident Corp. ........................ 63,300 1,724,925
USA Education, Inc. ......................... 40,900 1,970,869
UST, Inc. ................................... 42,700 976,763
USX-Marathon Group, Inc. .................... 82,200 2,332,425
USX-US Steel Group .......................... 23,420 355,691
Veritas Software ............................ 105,500 15,004,078*
Verizon Communications, Inc. ................ 714,926 34,629,228
VF Corp. .................................... 30,100 743,094
Viacom, Inc. Class B ........................ 398,800 23,329,800*
Visteon Corp. ............................... 34,445 520,981
Vulcan Materials Co. ........................ 26,600 1,068,988
Wachovia Corp. .............................. 53,600 3,038,450
Walgreen Co. ................................ 265,800 10,083,788
Wal-Mart Stores, Inc. ....................... 1,174,900 56,542,063
Washington Mutual, Inc. ..................... 141,700 5,641,431
Waste Management, Inc. ...................... 163,300 2,847,544
Watson Pharmaceuticals, Inc. ................ 26,900 1,745,138*
Wellpoint Health Networks, Inc .............. 16,600 1,593,600*
Wells Fargo Company ......................... 433,000 19,890,938
Wendy's International, Inc. ................. 29,800 597,863
Westvaco Corp. .............................. 26,450 705,884
Weyerhaeuser Co. ............................ 57,800 2,333,675
Whirlpool Corp. ............................. 18,800 730,850
Williamette Industries, Inc. ................ 28,800 806,400
Williams Companies, Inc. .................... 116,400 4,917,900
Winn-Dixie Stores, Inc. ..................... 37,000 531,875
Worldcom, Inc. .............................. 755,700 22,954,388*
Worthington Industries, Inc. ................ 22,600 211,875
WR Grace & Company New Common ............... 17,600 121,000*
Wrigley (Wm.) Jr. Co. ....................... 30,000 2,246,250
XCEL Energy, Inc. ........................... 89,385 2,458,088
Xerox Corp. ................................. 175,300 2,640,456
Xilinx, Inc. ................................ 86,500 7,411,969*
Yahoo Inc. .................................. 144,300 13,153,847*
Young & Rubican ............................. 19,300 955,350
--------------
TOTAL COMMON STOCKS
(Cost $2,287,192,969) ....................... $3,321,613,500
--------------
FACE AMOUNT
(000) VALUE+
---------- --------------
TEMPORARY CASH INVESTMENTS -- (0.2%)
Repurchase Agreement, PNC Capital Markets,
Inc. 6.10%, 10/02/00 (Collateralized by
U.S. Treasury Note 4.00%, 10/31/00,
valued at $8,348,310) to be repurchased
at $8,070,100.
(Cost $8,066,000) $8,066 $ 8,066,000
--------------
TOTAL INVESTMENTS -- (100.0%)
(Cost $2,295,258,969)++ $3,329,679,500
============== ==============
+ See Note B to Financial Statements
* Non-Income Producing Securities
# Total or Partial Securities on Loan
++ The cost for federal income tax purposes is $2,345,049,094.
See accompanying notes to financial statements.
114
<PAGE>
SCHEDULE OF INVESTMENTS THE U.S. LARGE COMPANY SERIES
THE U.S. LARGE COMPANY SERIES
-----------------------------------------------------------------------------
NOVEMBER 30, 1999
--------------------------
SHARES VALUE+
--------- --------------
COMMON STOCKS -- (99.8%)
3COM Corp. .................................. 86,100 $ 3,430,547*
ADC Telecommunications, Inc. ................ 35,900 1,915,041*
AES Corp. ................................... 49,300 2,856,319*
AFLAC, Inc. ................................. 64,000 3,064,000
AMR Corp. ................................... 36,300 2,209,762*
AON CORP .................................... 61,600 2,198,350
AT&T Corp. .................................. 768,100 42,917,587
Abbott Laboratories ......................... 365,700 13,896,600
Adaptec, Inc. ............................... 24,800 1,336,875*
Adobe Systems, Inc. ......................... 29,400 2,018,494
Advanced Micro Devices, Inc. ................ 35,300 997,225*
Aetna, Inc. ................................. 35,837 1,957,596
Air Products & Chemicals, Inc. .............. 55,200 1,787,100
Alberrto-Culver Co., Class B ................ 13,400 352,587
Albertson's, Inc ............................ 101,133 3,229,935
Alcan Aluminum Ltd. ......................... 54,300 1,846,200
Alcoa, Inc. ................................. 88,000 5,764,000
Allegheny Teledyne, Inc. .................... 22,850 575,534
Allergen, Inc. .............................. 15,900 1,564,162
Allied Waste Industries, Inc. ............... 45,200 367,250*
AlliedSignal, Inc. .......................... 132,200 7,907,212
Allstate Corp. .............................. 191,900 5,025,381*
Alltel Corp. ................................ 73,100 6,323,150
Alza Corp. .................................. 24,500 1,058,094*
AmSouth Bancorporation ...................... 94,650 2,135,541
Amerada Hess Corp. .......................... 21,800 1,263,037
Ameren Corp. ................................ 32,900 1,139,162
America Online, Inc. ........................ 532,600 38,713,362*
American Electric Power Co., Inc. ........... 46,500 1,458,937
American Express Co. ........................ 107,900 16,326,619
American General Corp. ...................... 59,700 4,376,756
American Greetings Corp. Class A ............ 16,200 381,712
American Home Products Corp. ................ 314,100 16,333,200
American International Group, Inc. .......... 371,887 38,397,333
Amgen, Inc. ................................. 245,300 11,168,816*
Anadarko Petroleum Corp. .................... 30,600 921,825
Analog Devices, Inc. ........................ 41,500 2,383,656*
Andrew Corp. ................................ 19,693 275,087*
Anheuser-Busch Companies, Inc. .............. 112,400 8,408,925
Apache Corp. ................................ 27,300 977,681
Apple Computer, Inc. ........................ 38,700 3,786,553*
Applied Materials, Inc. ..................... 90,100 8,781,934*
Archer-Daniels Midlands Co. ................. 148,320 1,844,730
Armstrong World Industries, Inc. ............ 9,700 324,950
Ashland, Inc. ............................... 17,300 583,875
Associates First Capital Corp., Class A ..... 174,810 5,812,432
Atlantic Richfield Co. ...................... 77,500 7,469,062
Autodesk, Inc. .............................. 14,200 417,569
Automatic Data Processing, Inc. ............. 148,500 7,332,187
Autozone, Inc. .............................. 35,800 986,737*
Avery Dennison Corp. ........................ 27,200 1,615,000
Avon Product, Inc. .......................... 62,800 2,288,275
B B & T Corp. ............................... 76,900 2,470,412
BMC Software, Inc. .......................... 57,600 4,195,800*
Baker Hughes, Inc. .......................... 78,900 1,992,225
Ball Corp. .................................. 7,400 275,187
Bank of America Corp. ....................... 415,200 24,289,200
Bank of New York Co, Inc. ................... 176,900 7,053,887
Bank One Corp. .............................. 281,700 9,929,925
Bard (C.R.), Inc ............................ 12,300 668,044
Barrick Gold Corp. .......................... 93,600 1,684,800#
Bausch & Lomb, Inc. ......................... 14,000 767,375
Baxter International, Inc. .................. 69,900 4,722,619
Bear Stearns Companies, Inc. ................ 29,285 1,195,194
Becton Dickinson & Co. ...................... 60,000 1,635,000
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NOVEMBER 30, 1999
--------------------------
SHARES VALUE+
--------- --------------
Bed Bath and Beyond, Inc. ................... 33,500 $ 1,047,922*
Bell Atlantic Corp. ......................... 372,938 23,611,637
BellSouth Corp. ............................. 452,900 20,918,319
Bemis Co., Inc. ............................. 12,500 393,750
Best Buy Co., Inc. .......................... 49,100 3,068,750*
Bestfoods, Inc. ............................. 66,900 3,666,956
Bethlehem Steel Corp. ....................... 31,400 196,250*
Biomet, Inc. ................................ 27,100 857,884
Black & Decker Corp ......................... 21,000 942,375
Block (H&R), Inc. ........................... 23,400 1,006,200
Boeing Co. .................................. 230,700 9,415,444
Boise Cascade Corp. ......................... 13,700 474,362
Boston Scientific Corp. ..................... 99,300 2,097,712*
Briggs & Stratton Corp. ..................... 5,600 299,250
Bristol Myers Squibb Co. .................... 477,100 34,858,119
Brown-Forman Corp., Class B ................. 16,400 1,028,075
Brunswick Corp. ............................. 22,100 482,056
Burlington Northern Santa Fe Corp. .......... 111,700 3,239,300
Burlington Resources, Inc. .................. 52,100 1,751,862
CBS Corp. ................................... 183,370 9,535,240*
CIGNA Corp. ................................. 47,600 3,915,100
CMS Energy Corp. ............................ 28,400 944,300
CSX Corp. ................................... 52,400 1,863,475
CVS Corp. ................................... 94,000 3,730,625#
Cabletron Systems, Inc. ..................... 41,800 958,787*
Campbell Soup Co. ........................... 104,400 4,658,850
Capital One Financial Corp. ................. 47,500 2,211,719
Cardinal Health, Inc. ....................... 65,400 3,421,237
Carnival Corp. .............................. 147,200 6,495,200
Carolina Power & Light Co. .................. 38,400 1,156,800
Caterpillar, Inc. ........................... 85,600 3,969,700
Cendant Corp. ............................... 173,000 2,865,312*
Centex Corp. ................................ 14,300 339,625*
Central & South West Co. .................... 51,000 1,020,000
CenturyTel, Inc. ............................ 33,400 1,536,400
Ceridian Corp. .............................. 34,706 750,517*
Champion International Corp. ................ 23,100 1,280,606
Chase Manhattan Corp. ....................... 199,900 15,442,275
Chevron Corp. ............................... 157,700 13,966,306
Chubb Corp. ................................. 42,300 2,265,694
Cincinnati Financial Corp. .................. 39,600 1,317,937
Cinergy Corp. ............................... 38,093 964,229
Circuit City Stores, Inc.
(Circuit City Group) ...................... 48,300 2,342,550
Cisco Systems, Inc. ......................... 781,100 69,639,947*
Citigroup, Inc. ............................. 811,400 43,714,175
Clear Channel Communications, Inc. .......... 80,900 6,502,337*
Clorox Co. .................................. 56,600 2,522,237
Coastal Co. ................................. 51,400 1,811,850
Coca-Cola Co. ............................... 593,100 39,923,044
Coca-Cola Enterprises, Inc. ................. 102,000 2,161,125*
Colgate-Palmolive Co. ....................... 140,300 7,698,962
Columbia Gas System, Inc. ................... 19,600 1,229,900
Columbia/HCA Healthcare Corp. ............... 135,600 3,695,100
Comcast Corp., Class A ...................... 180,000 8,133,750
Comerica, Inc. .............................. 37,450 1,984,850
Compaq Computer Corp. ....................... 408,624 9,985,749
Computer Associations International, Inc. ... 128,900 8,378,500
Computer Sciences Corp. ..................... 38,400 2,505,600*
Compuware Corp. ............................. 85,800 2,903,794*
Comverse Technology, Inc. ................... 16,900 2,042,787*#
Conagra, Inc. ............................... 117,300 2,829,862
Conoco, Inc. ................................ 150,600 3,943,837
Conseco, Inc. ............................... 78,500 1,589,625
Consolidated Edison, Inc. ................... 53,100 1,831,950
Consolidated Natural Gas Co. ................ 23,100 1,481,287
See accompanying notes to financial statements.
115
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THE U.S. LARGE COMPANY SERIES (CONTINUED)
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--------------------------
SHARES VALUE+
--------- --------------
Consolidated Stores Corp. ................... 26,400 $ 415,800*
Constellation Energy Group .................. 35,850 1,055,334
Cooper Industries, Inc. ..................... 22,700 974,681
Cooper Tire & Rubber Co. .................... 18,200 273,000
Coors (Adolph) Co. Class B .................. 8,800 437,800
Corning, Inc. ............................... 58,900 5,518,194
Costco Wholesale Corp. ...................... 53,000 4,861,094*
Countrywide Credit Industries, Inc. ......... 27,100 762,187
Crane Co. ................................... 16,200 297,675
Crown Cork & Seal Co., Inc .................. 29,400 599,025
Cummins Engine Co., Inc. .................... 10,000 405,000
DTE Energy Co. .............................. 34,900 1,153,881
Dana Corp. .................................. 39,742 1,102,840*
Danaher Corp. ............................... 34,200 1,680,075
Darden Restaurants, Inc. .................... 31,700 564,656
Dayton-Hudson Corp. ......................... 106,000 7,479,625
Deere & Co. ................................. 56,000 2,404,500
Dell Computer Corp. ......................... 610,500 26,270,578*
Delphi Automotive Systems Corp. ............. 135,700 2,137,275
Delta Air Lines, Inc. ....................... 33,600 1,654,800*
Deluxe Corp. ................................ 18,200 476,612
Dillards, Inc., Class A ..................... 25,600 483,200
Disney (Walt) Co. ........................... 495,400 13,809,275*
Dollar General Corp. ........................ 53,900 1,320,550
Dominion Resources, Inc. VA ................. 46,200 2,096,325
Donnelley (R.R.) & Sons Co. ................. 30,700 736,800
Dover Corp. ................................. 50,200 2,177,425
Dow Chemical Co. ............................ 52,900 6,195,912
Dow Jones & Co., Inc. ....................... 21,800 1,321,625
DuPont (E.I.) de Nemours & Co., Inc ......... 250,561 14,892,719
Duke Power Co. .............................. 87,841 4,452,441
Dun & Bradstreet ............................ 38,600 1,042,200
EMC Corp. MA ................................ 243,587 20,354,739*
Eastern Enterprises ......................... 6,400 363,200
Eastman Chemical Co. ........................ 18,750 728,906*
Eastman Kodak Co. ........................... 76,200 4,714,875
Eaton Corp. ................................. 17,400 1,347,412
Ecolab, Inc. ................................ 31,200 1,080,300
Edison International ........................ 83,500 2,212,750
El Paso Energy Corp. ........................ 54,600 2,102,100*
Electronic Data Systems Corp. ............... 118,300 7,608,169
Emerson Electric Co. ........................ 104,500 5,956,500
Engelhard Corp. ............................. 30,174 507,300
Enron Corp. ................................. 171,700 6,535,331
Entergy Corp. ............................... 59,200 1,631,700
Equifax, Inc. ............................... 34,500 853,875
Exxon Corp. ................................. 583,400 46,270,912
FDX Corp. ................................... 71,600 3,020,625*
FMC Corp. ................................... 7,600 368,600*
FPL Group, Inc. ............................. 43,200 1,890,000
Fannie Mae .................................. 246,500 16,423,062
Federal Home Loan Mortgage Corp. ............ 167,100 8,250,562
Federated Department Stores, Inc. ........... 50,000 2,353,125*
Fifth Third Bancorp ......................... 72,700 5,086,728
First Data Corp. ............................ 103,000 4,454,750
First Union Corp. ........................... 229,800 8,890,387
Firstar Corp. ............................... 236,500 6,149,000
FirstEnergy Corp. ........................... 56,200 1,310,162
FleetBoston Financial Corp. ................. 221,212 8,364,579
Fleetwood Enterprises, Inc. ................. 8,100 170,100
Florida Progress Corp ....................... 23,600 1,008,900
Fluor Corp. ................................. 18,300 769,744
Ford Motor Co. .............................. 290,700 14,680,350*
Fort James Corp. ............................ 53,000 1,523,750
Fortune Brands, Inc. ........................ 40,000 1,367,500
Foster Wheeler Corp. ........................ 9,750 99,328
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NOVEMBER 30, 1999
--------------------------
SHARES VALUE+
--------- --------------
Franklin Resources, Inc. .................... 60,500 $ 1,901,969
Freeport McMoran Copper & Gold, Inc.
Class B ................................... 39,300 621,431*
GPU, Inc. ................................... 30,100 963,200
GTE Corp. ................................... 235,900 17,220,700
Gannett Co., Inc. ........................... 67,100 4,801,844
Gap, Inc. ................................... 205,900 8,338,950
Gateway, Inc. ............................... 75,400 5,758,675*
General Dynamics Corp. ...................... 48,100 2,480,156
General Electric Co. ........................ 788,000 102,440,000
General Instrument Corp. .................... 41,600 2,724,800*
General Mills, Inc. ......................... 73,600 2,773,800
General Motors Corp. ........................ 154,900 11,152,800
Genuine Parts Co. ........................... 42,975 1,106,606
Georgia Pacific Corp. ....................... 41,300 1,644,256
Gillette Co. ................................ 260,900 10,484,919
Global Crossing Ltd. ........................ 184,805 8,044,793*
Golden West Financial Corp. ................. 13,200 1,332,375
Goodrich (B.F.) Co. ......................... 26,400 595,650
Goodyear Tire & Rubber Co. .................. 37,500 1,265,625*
Grainger (W.W.), Inc. ....................... 22,400 1,055,600
Great Atlantic & Pacific Tea Co., Inc. ...... 9,200 234,025
Great Lakes Chemical Corp. .................. 14,100 467,944
Guidant Corp. ............................... 72,700 3,635,000
Halliburton Co. ............................. 106,200 4,108,612
Harcourt General, Inc. ...................... 17,123 567,199
Harrahs Entertainment, Inc. ................. 30,900 853,612*
Hartford Financial Services Group, Inc. ..... 54,500 2,544,469
Hasbro, Inc. ................................ 46,798 1,009,082
Healthsouth Corp. ........................... 99,500 565,906*
Heinz (H.J.) Co. ............................ 86,100 3,605,437
Helmerich & Payne, Inc. ..................... 11,900 269,237
Hercules, Inc. .............................. 25,500 605,625
Hershey Foods Corp. ......................... 33,600 1,650,600
Hewlett-Packard Co. ......................... 243,300 23,083,087#
Hilton Hotels Corp. ......................... 61,300 616,831
Home Depot, Inc. ............................ 356,244 28,165,541
Homestake Mining Co. ........................ 62,400 514,800
Honeywell, Inc. ............................. 31,000 3,470,062
Household International, Inc. ............... 115,100 4,553,644
Humana, Inc. ................................ 40,200 281,400*
Huntington Bancshares, Inc. ................. 55,373 1,534,870
IMS Health, Inc. ............................ 75,300 1,774,256
ITT Industries, Inc. ........................ 21,100 735,862
Ikon Office Solutions, Inc. ................. 35,800 239,412*
Illinois Tool Works, Inc. ................... 72,100 4,668,475
Inco Ltd. ................................... 46,100 847,087
Ingersoll-Rand Co. .......................... 39,700 1,922,969
Intel Corp. ................................. 795,100 60,924,537
International Business Machines Corp. ....... 434,500 44,780,656
International Flavors & Fragrances, Inc. .... 25,500 938,719
International Paper Co. ..................... 99,500 5,192,656
Interpublic Group of Companies, Inc. ........ 67,800 3,186,600
Jefferson-Pilot Corp. ....................... 25,375 1,722,328
Johnson & Johnson ........................... 323,200 33,532,000
Johnson Controls, Inc. ...................... 20,500 1,117,250
Jostens, Inc. ............................... 8,100 148,837
K MART Corp. ................................ 118,700 1,179,581*
KLA-Ten or Corp. ............................ 21,300 1,801,847*
Kansas City Southern Industries, Inc. ....... 26,500 1,578,406
Kaufman & Broad Home Corp. .................. 11,500 254,437
Kellogg Co. ................................. 97,200 3,292,650
Kerr-McGee Corp. ............................ 20,842 1,193,204
Keycorp ..................................... 107,900 2,913,300
Kimberly Clark Corp. ........................ 128,100 8,182,388
Knight Ridder, Inc. ......................... 19,500 1,063,969
See accompanying notes to financial statements.
116
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THE U.S. LARGE COMPANY SERIES (CONTINUED)
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NOVEMBER 30, 1999
--------------------------
SHARES VALUE+
--------- --------------
Kohls Corp. ................................. 39,000 $ 2,815,313*
Kroger Co. .................................. 199,400 4,249,713*
LSI Logic Corp. ............................. 35,500 2,145,531*#
Laidlaw, Inc. ............................... 79,200 485,100
Leggett and Platt, Inc. ..................... 47,200 1,011,850*
Lehman Brothers Holdings, Inc. .............. 28,900 2,207,238
Lexmark International Group, Inc. ........... 31,000 2,573,000*
Lilly (Eli) & Co. ........................... 262,700 18,848,725
Limited, Inc. ............................... 51,300 2,177,044
Lincoln National Corp. ...................... 47,800 1,992,663
Liz Claiborne, Inc. ......................... 14,800 554,075
Lockheed Martin Corp. ....................... 95,014 1,888,403*#
Loews Corp. ................................. 25,800 1,651,200
Longs Drug Stores Corp. ..................... 9,400 236,175
Louisiana-Pacific Corp. ..................... 25,800 316,050*
Lowe's Companies, Inc. ...................... 91,600 4,562,825
Lucent Technologies, Inc. ................... 736,000 53,774,000
MBIA, Inc. .................................. 23,900 1,195,000
MBNA Corp. .................................. 192,545 4,861,761
MCI Worldcom, Inc. .......................... 450,300 37,234,181*
MGIC Investment Corp. ....................... 26,100 1,474,650
Mallinckrodt, Inc. .......................... 17,100 568,575
Manor Care, Inc. ............................ 25,700 515,606*
Marriott International, Inc., Class A ....... 59,900 1,950,494
Marsh & McLennan Companies, Inc. ............ 63,500 4,992,688
Masco Corp. ................................. 106,400 2,686,600
Mattel, Inc. ................................ 101,100 1,446,994
May Department Stores Co. ................... 80,250 2,698,406
Maytag Corp. ................................ 21,000 1,001,438
McDermott International, Inc. ............... 14,300 122,444
McDonalds Corp. ............................. 325,600 14,652,000
McGraw-Hill Companies, Inc. ................. 47,200 2,675,650
McKesson HBOC, Inc. ......................... 67,700 1,582,488
Mead Corp. .................................. 24,600 877,913
Mediaone Group .............................. 145,700 11,546,725*
Medtronic, Inc. ............................. 281,800 10,954,975
Mellon Financial Corp. ...................... 123,500 4,500,031
Merck & Co., Inc. ........................... 563,500 44,234,750
Meredith Corp. .............................. 12,400 468,875
Merrill Lynch & Co., Inc. ................... 88,800 7,159,500
Micron Technology, Inc. ..................... 60,200 4,040,925*#
Microsoft Corp. ............................. 1,256,400 114,371,663*
Milacron, Inc. .............................. 8,900 129,606
Millipore Corp. ............................. 10,800 354,375
Minnesota Mining & Manufacturing Co. ........ 96,600 9,231,338
Mirage Resorts, Inc. ........................ 47,800 612,438*
Mobil Corp. ................................. 188,000 19,610,750
Molex, Inc. ................................. 37,200 1,882,088*
Monsanto Co. ................................ 152,100 6,416,719
Morgan (J.P.) & Co., Inc. ................... 42,200 5,549,300
Morgan Stanley Dean Witter Discover
& Co. ..................................... 136,900 16,513,563
Motorola, Inc. .............................. 145,900 16,669,075
Nabisco Group Holdings Corp. ................ 78,300 905,344
Nacco Industries, Inc., Class A ............. 2,000 96,875
National City Corp. ......................... 148,700 3,708,206
National Semiconductor Corp. ................ 40,200 1,708,500*
National Service Industries, Inc. ........... 9,800 289,713
Navistar International Corp. ................ 15,900 591,281*
Network Appliance Corp. ..................... 17,600 2,070,750*
New Century Energies, Inc. .................. 27,600 867,675
New York Times Class A ...................... 41,800 1,606,688
Newell Rubbermaid, Inc. ..................... 67,833 2,225,770
Newmont Mining Corp. ........................ 40,258 953,611
Nextel Communications Corp., Class A ........ 86,900 8,613,963*
Niagara Mohawk Holdings, Inc. ............... 45,000 675,000*
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NOVEMBER 30, 1999
--------------------------
SHARES VALUE+
--------- --------------
Nicor, Inc. ................................. 11,300 $ 391,969
Nike, Inc. Class B .......................... 67,700 3,114,200
Nordstrom, Inc. ............................. 33,700 937,281
Norfolk Southern Corp. ...................... 91,400 1,953,675
Nortel Networks Corp. ....................... 318,920 23,600,080*
Northern States Power Co. MN ................ 37,100 758,231
Northern Trust Corp. ........................ 26,700 2,584,059
Northrop Grumman Corp. ...................... 16,700 938,331
Novell, Inc. ................................ 80,500 1,572,266*
Nucor Corp. ................................. 21,000 1,059,188
Occidental Petroleum Corp. .................. 83,800 1,838,363
Office Depot, Inc. .......................... 90,000 1,001,250*
Omnicom Group, Inc. ......................... 42,600 3,754,125
Oneok, Inc. ................................. 7,600 204,725
Oracle Systems Corp. ........................ 345,943 23,448,449*
Owens Corning ............................... 13,200 207,900
Owens-Illinois, Inc. ........................ 37,500 897,656*
PE Corp. - PE Biosystems Group .............. 24,600 2,007,975
PECO Energy Co. ............................. 44,900 1,478,894
PG&E Corp. (Holding Co.) .................... 92,200 2,062,975
PNC Bank Corp. .............................. 73,100 4,075,325
PP&L Resources, Inc. ........................ 37,900 874,069
PPG Industries, Inc. ........................ 41,700 2,442,056
Paccar, Inc. ................................ 18,720 770,445
Pactiv Corp. ................................ 40,900 419,225*
Paine Webber Group, Inc. .................... 35,000 1,371,563
Pall Corp. .................................. 29,800 698,438
Parametric Technology Corp. ................. 64,800 1,466,100*
Parker-Hannifin Corp. ....................... 26,125 1,229,508
Paychex, Inc. ............................... 59,200 2,362,450
Penney (J.C.) Co., Inc. ..................... 63,400 1,414,613
Peoples Energy Corp. ........................ 8,500 312,375
Peoplesoft, Inc. ............................ 58,500 1,098,703*
Pep Boys - Manny, Moe & Jack ................ 12,700 123,031
Pepsico, Inc. ............................... 351,500 12,148,719
PerkinElmer, Inc. ........................... 11,000 452,375
Pfizer, Inc. ................................ 931,300 33,701,419
Pharmacia & Upjohn, Inc. .................... 121,480 6,643,438
Phelps Dodge Corp. .......................... 18,741 974,532*
Philip Morris Companies, Inc. ............... 574,100 15,106,006
Philips Petroleum Co. ....................... 60,800 2,907,000
Pinnacle West Capital Corp. ................. 20,400 677,025*
Pitney Bowes, Inc. .......................... 64,300 3,082,381
Placer Dome, Inc. ........................... 78,200 889,525
Polaroid Corp. .............................. 10,600 204,050
Potlatch Corp. .............................. 6,900 279,019
Praxair, Inc. ............................... 38,300 1,709,138
Price (T. Rowe) Associates, Inc. ............ 29,200 1,050,288*
Proctor & Gamble Co. ........................ 319,400 34,495,200
Progressive Corp. ........................... 17,500 1,409,844
Providian Financial Corp. ................... 33,900 2,682,338
Public Service Enterprise Group, Inc. ....... 52,600 1,841,000
Pulte Corp. ................................. 10,400 208,650
QUALCOMM, Inc. .............................. 38,600 13,984,056*
Quaker Oats Co. ............................. 32,200 2,101,050
Quintiles Transnational Corp. ............... 27,600 609,788*
Ralston Purina Group ........................ 77,600 2,303,750
Raytheon Co., Class B ....................... 81,200 2,491,825*
Reebok International Ltd. ................... 13,500 121,500*
Regions Financial Corp. ..................... 53,900 1,480,566
Reliant Energy, Inc. ........................ 71,000 1,761,688
Republic New York Corp. ..................... 25,100 1,774,256
Reynolds Metals Corp. ....................... 15,300 957,206
Rite Aid Corp. .............................. 62,100 469,631
Rockwell International Corp. ................ 45,900 2,277,788
Rohm & Haas Co. ............................. 52,400 1,919,150
See accompanying notes to financial statements.
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THE U.S. LARGE COMPANY SERIES (CONTINUED)
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SHARES VALUE+
--------- --------------
Rowan Companies, Inc. ....................... 20,000 $ 342,500*
Royal Dutch Petroleum Co. Den Haag
(N.Y. Registry) ........................... 515,200 29,881,600
Russell Corp. ............................... 8,100 105,806
Ryder Systems, Inc. ......................... 16,700 376,794
SBC Communications, Inc. .................... 820,601 42,619,964
SLM Holdings Corp. .......................... 38,700 1,918,069
Safeco Corp. ................................ 31,600 749,513
Safeway, Inc. ............................... 122,600 4,520,875*
Saint Jude Medical, Inc. .................... 20,350 540,547*
Saint Paul Companies, Inc. .................. 54,442 1,643,468
Sara Lee Corp. .............................. 216,900 5,259,825
Schering-Plough Corp. ....................... 352,900 18,042,013
Schlumberger Ltd. ........................... 131,400 7,892,213
Schwab (Charles) Corp. ...................... 196,400 7,450,925
Scientific-Atlanta, Inc. .................... 18,300 1,067,119
ScottishPower P.L.C ......................... 41,412 1,446,832*
Seagate Technology, Inc. .................... 53,300 1,972,100*
Seagram Co. Ltd. ............................ 103,800 4,521,788#
Sealed Air Corp. ............................ 19,992 939,624*
Sears, Roebuck & Co. ........................ 91,500 3,128,156*
Sempra Energy ............................... 57,645 1,066,433
Service Corp. International ................. 65,300 493,831
Shared Medical Systems Corp. ................ 6,400 280,000
Sherwin-Williams Co. ........................ 40,600 870,363
Sigma-Aldrich Corp .......................... 24,200 691,969
Silicon Graphics, Inc. ...................... 45,300 427,519*
Snap-On, Inc. ............................... 15,700 474,925
Solectron Corp. ............................. 64,900 5,346,138*
Southern Co. ................................ 164,100 3,835,838
SouthTrust Corp. ............................ 40,200 1,561,519
Southwest Airlines Co. ...................... 121,050 1,974,628
Springs Industries, Inc., Class A ........... 4,250 170,000
Sprint Corp. ................................ 208,200 14,443,875
Sprint Corp. (PCS Group) .................... 105,700 9,697,975*#
Stanley Works ............................... 21,400 666,075
Staples, Inc. ............................... 111,700 2,617,969
State Street Corp. .......................... 38,800 2,849,375
Summitt Bancorp ............................. 42,600 1,389,825
Sun Microsystems ............................ 185,880 24,576,821*
Sunoco, Inc. ................................ 21,700 554,706*
Suntrust Banks, Inc. ........................ 77,100 5,387,363#
Supervalu, Inc. ............................. 33,400 649,213*
Synovus Financial Corp. ..................... 65,250 1,305,000
Sysco Corp. ................................. 79,400 3,022,163
TJX Companies, Inc. ......................... 76,300 1,998,106
TRW, Inc. ................................... 29,200 1,523,875
Tandy Corp. ................................. 46,560 3,567,660
Tektronix, Inc. ............................. 11,250 382,500
Teledyne Technologies, Inc. ................. 6,529 57,533*
Tellabs, Inc. ............................... 94,200 6,111,225*
Temple-Inland, Inc. ......................... 13,500 772,875
Tenet Healthcare Corp. ...................... 74,500 1,662,281*
Teradyne, Inc. .............................. 41,000 1,786,063*
Texaco, Inc. ................................ 132,600 8,080,313
Texas Instruments, Inc. ..................... 188,600 18,117,388
Texas Utlities Co. .......................... 66,300 2,374,369
Textron, Inc. ............................... 36,400 2,586,675
Thermo-Electron Corp. ....................... 37,900 568,500*
Thomas & Betts Corp. ........................ 13,600 557,600
Time Warner, Inc. ........................... 311,000 19,184,813
Times Mirror Co., Class A ................... 14,400 929,700
Timken Co. .................................. 14,900 284,963
Torchmark Corp. ............................. 31,900 1,012,825
Tosco Corp. ................................. 36,600 990,488*
Toys R Us, Inc. ............................. 59,400 1,039,500*
-----------------------------------------------------------------------------
NOVEMBER 30, 1999
--------------------------
SHARES VALUE+
--------- --------------
Tribune Co. ................................. 56,800 $ 2,729,950
Tricon Global Restaurants, Inc. ............. 36,860 1,529,690*
Tupperware Corp. ............................ 13,800 245,813
Tyco International Ltd. ..................... 427,300 17,118,706
U.S. Bancorp ................................ 175,900 6,013,581
U.S. West, Inc. ............................. 121,000 7,509,563
USAir Group, Inc. ........................... 17,200 480,525*
UST, Inc. ................................... 41,900 1,115,588
USX-Marathon Group, Inc. .................... 74,300 1,964,306
USX-US Steel Group .......................... 21,220 537,131
Unicom Corp., Inc. .......................... 52,200 1,667,138
Unilever NV ................................. 137,400 7,479,713
Union Carbide Corp. ......................... 32,100 1,877,850
Union Pacific Corp. ......................... 59,500 2,800,219
Union Pacific Resources Group, Inc. ......... 60,576 791,274
Union Planters Corp. ........................ 34,300 1,462,038
Unisys Corp. ................................ 73,500 2,113,125*
United Healthcare Corp. ..................... 41,600 2,160,600
United Technologies Corp. ................... 115,700 6,537,050
Unocal Corp. ................................ 58,100 1,928,194
Unum Provident Corp. ........................ 57,500 1,872,344
VF Corp. .................................... 28,500 851,438
Viacom, Inc., Class B ....................... 167,300 8,323,175*
Vulcan Materials Co. ........................ 24,100 970,025
WR Grace & Co. .............................. 17,100 232,988*
Wachovia Corp. .............................. 48,400 3,747,975
Walgreen Co. ................................ 241,100 7,022,038
Wal-Mart Stores, Inc. ....................... 1,069,100 61,606,888
Warner-Lambert Co. .......................... 205,600 18,439,750
Washington Mutual, Inc. ..................... 139,300 4,039,700
Waste Management, Inc. ...................... 148,700 2,416,375
Water Pik Technologies, Inc. ................ 2,285 16,852*
Watson Pharmaceuticals, Inc. ................ 23,000 855,313*
Wellpoint Health Networks, Inc .............. 15,800 909,488*
Wells Fargo Co. ............................. 396,100 18,418,650
Wendy's International, Inc. ................. 29,200 644,225
Westvaco Corp. .............................. 24,050 726,009
Weyerhaeuser Co. ............................ 56,500 3,460,625
Whirlpool Corp. ............................. 18,100 1,104,100
Williamette Industries, Inc. ................ 26,900 1,112,988
Williams Companies, Inc. .................... 104,197 3,516,649
Winn-Dixie Stores, Inc. ..................... 35,800 937,513
Worthington Industries, Inc. ................ 22,000 350,625
Wrigley (Wm.) Jr. Co. ....................... 27,900 2,320,931
Xerox Corp. ................................. 159,200 4,308,350
Xilinx, Inc. ................................ 38,000 3,399,813*
--------------
TOTAL COMMON STOCKS
(Cost $1,860,228,023) ....................... $2,771,740,526
--------------
FACE AMOUNT VALUE+
----------- --------------
TEMPORARY CASH INVESTMENTS -- (0.2%)
Repurchase Agreement, PNC Capital
Markets Inc. 5.30%, 12/01/99 (Collateralized
by U.S. Treasury 6.125%, 07/31/00,
valued at $6,738,275) to be repurchased
at $6,636,977.
(Cost $6,636,000) ......................... $6,636 $ 6,636,000
==============
TOTAL INVESTMENTS -- (100.0%)
(Cost $1,866,864,023)++ ..................... $2,778,376,526
==============
----------------
+ See Note B to Financial Statements.
* Non-Income Producing Securities.
# Total or Partial Securities on Loan.
++ The cost for federal income tax purposes is $1,880,188,558.
See accompanying notes to financial statements.
118
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES THE DFA INVESTMENT TRUST COMPANY
THE U.S. LARGE COMPANY SERIES
(AMOUNTS IN THOUSANDS)
SEPTEMBER 30, 2000
------------------
(UNAUDITED)
ASSETS:
Investments at Value (Cost $2,295,259) .................. $3,329,680
Collateral for Securities Loaned ........................ 12,356
Receivable for Dividends and Interest ................... 2,963
Prepaid Expenses and Other Assets ....................... 542
----------
Total Assets ....................................... 3,345,541
----------
LIABILITIES:
Payable for Futures Margin .............................. 308
Payable for Collateral on Securities Loaned ............. 12,356
Accrued Expenses ........................................ 136
----------
Total Liabilities .................................. 12,800
----------
NET ASSETS ................................................. $3,332,741
==========
See accompanying notes to financial statements.
119
<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 $1,866,864) ................... $2,778,377
Collateral for Securities Loaned ........................ 41,857
Receivable for Dividends and Interest ................... 3,602
Receivable for Fund Shares Sold ......................... 370
----------
Total Assets ....................................... 2,824,206
----------
LIABILITIES:
Payable for Collateral on Securities Loaned ............. 41,857
Payable for Investment Securities Purchased ............. 7,089
Accrued Expenses and Other Liabilities .................. 198
----------
Total Liabilities .................................. 49,144
----------
NET ASSETS ................................................. $2,775,062
==========
See accompanying notes to financial statements.
120
<PAGE>
STATEMENTS OF OPERATIONS THE DFA INVESTMENT TRUST COMPANY
THE U.S. LARGE COMPANY SERIES
(AMOUNTS IN THOUSANDS)
YEAR
ENDED
NOV. 30,
1999
--------
INVESTMENT INCOME
Dividends ................................................ $ 29,073
Interest ................................................. 443
Income From Securities Lending ........................... 115
--------
Total Investment Income ................................ 29,631
--------
EXPENSES
Investment Advisory Services ............................. 558
Accounting & Transfer Agent Fees ......................... 335
Custodian's Fee .......................................... 206
Legal Fees ............................................... 35
Audit Fees ............................................... 30
Shareholders' Reports .................................... 41
Trustees' Fees and Expenses .............................. 7
Other .................................................... 89
--------
Total Expenses ......................................... 1,301
--------
NET INVESTMENT INCOME .................................. 28,330
--------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net Realized Gain on Investment Securities .................. 8,219
Change in Unrealized Appreciation of Investment Securities .. 351,120
--------
NET GAIN ON INVESTMENT SECURITIES ........................ 359,339
--------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ........ $387,669
========
See accompanying notes to financial statements.
121
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS THE DFA INVESTMENT TRUST COMPANY
THE U.S. LARGE COMPANY SERIES
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS)
YEAR YEAR
ENDED ENDED
NOV. 30, NOV. 30,
1999 1998
---------- ----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net Investment Income .................................... $ 28,330 $ 17,285
Net Realized Gain on Investment Securities ............... 8,219 1,283
Change in Unrealized Appreciation of Investment Securities 351,120 265,133
---------- ----------
Net Increase in Net Assets Resulting from Operations ... 387,669 283,701
---------- ----------
Transactions in Interest:
Contributions ............................................ 1,037,766 604,903
Withdrawals .............................................. (207,547) (153,923)
---------- ----------
Net Increase from Transactions in Interest ............. 830,219 450,980
---------- ----------
Total Increase ......................................... 1,217,888 734,681
---------- ----------
NET ASSETS
Beginning of Period ...................................... 1,557,174 822,493
---------- ----------
End of Period ............................................ $2,775,062 $1,557,174
========== ==========
</TABLE>
See accompanying notes to financial statements.
122
<PAGE>
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
FINANCIAL HIGHLIGHTS THE DFA INVESTMENT TRUST COMPANY
THE U.S. LARGE COMPANY SERIES
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
NOV. 30, NOV. 30, NOV. 30, NOV. 30, NOV. 30,
1999 1998 1997 1996 1995
---------- ---------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period (1) ........................... N/A N/A N/A $ 13.48 $ 10.11
---------- ---------- -------- -------- -------
INCOME FROM INVESTMENT OPERATIONS (1)
Net Investment Income ................ -- -- -- 0.15 0.30
Net Gains (Losses) on Securities
(Realized and Unrealized) .......... -- -- -- 1.41 3.36
---------- ---------- -------- -------- -------
Total from Investment Operations ..... -- -- -- 1.56 3.66
---------- ---------- -------- -------- -------
LESS DISTRIBUTIONS (1)
Net Investment Income ................ -- -- -- (0.16) (0.29)
Net Realized Gains ................... -- -- -- (0.08) --
---------- ---------- -------- -------- -------
Total Distributions ............. -- -- -- (0.24) (0.29)
---------- ---------- -------- -------- -------
Net Asset Value, End of Period (1) ...... N/A N/A N/A $ 14.80 $ 13.48
========== ========== ======== ======== =======
Total Return (1) ........................ N/A N/A N/A 11.60%# 36.77%
========== ========== ======== ======== =======
Net Assets, End of Period (thousands) ... $2,775,062 $1,557,174 $822,493 $466,441 $97,118
Ratio of Expenses to Average Net Assets . 0.06% 0.06% 0.07% 0.12% 0.02%
Ratio of Expenses to Average Net Assets
(Excluding Waivers and Assumption
of Expenses) ......................... 0.06% 0.06% 0.07% 0.12% 0.18%
Ratio of Net Investment Income to Average
Net Assets ........................... 1.27% 1.47% 1.75% 2.12% 2.61%
Ratio of Net Investment Income to Average
Net Assets (Excluding Waivers and
Assumption of Expenses) .............. 1.27% 1.47% 1.75% 2.12% 2.45%
Portfolio Turnover Rate ................. 4.27% 9.31% 4.28% 14.09% 2.38%
<FN>
----------
# 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.
</FN>
</TABLE>
See accompanying notes to financial statements.
123
<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, 1999, The Trust currently offers twenty-one 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 Trustees.
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, 1999.
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, 1999, 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.
124
<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, 1999
-------------
Purchases ......................... $948,623
Sales ............................. 94,589
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, 1999
-------------
Gross Unrealized Appreciation ..... $967,285
Gross Unrealized Depreciation ..... (69,097)
-------
Net ............................... $898,188
--------
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. Borrowings under the line of credit during the
year ended November 30, 1999, was 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, 1999 ............. 5.44% $3,228,313 12 $7,810 $12,530,000
</TABLE>
There were no outstanding borrowings under the line of credit at November
30, 1999.
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, 1999 was
reinvested into overnight repurchase agreements with JP Morgan. 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, 1999
--------------
Value of Securities on Loan .......................... $40,344,278
Value of Collateral and Indemnification .............. 41,857,494
Value of Collateral on Overnight Repurchase Agreements 42,740,894
125
<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 statement 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
(constituting a portfolio within The DFA Investment Trust Company, hereafter
referred to as the "Fund") at November 30, 1999, and the results of its
operations, the changes in its net assets and its 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 at November 30, 1999 by correspondence with the
custodians and brokers, provide a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
2400 Eleven Penn Center
Philadelphia, Pennsylvania
January 14, 2000
126
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
BLACKROCK FUNDS
Investment 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, Global Science & Technology Portfolio, International Equity
Portfolio, International Small Cap Equity Portfolio, International Emerging
Markets Portfolio, Select Equity Portfolio and Balanced Portfolio.
BlackRock Advisors, Inc.
New York, New York 10154
Investment Adviser -- European Equity Portfolio and Asia Pacific Equity
Portfolio.
BlackRock International Limited
Edinburgh, Scotland EH2 3AH
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, Global Science & Technology Portfolio, Select Equity Portfolio
and Balanced Portfolio
BlackRock Financial Management, Inc.
New York, New York 10154
Sub-Adviser -- International Equity
Portfolio, International Small Cap
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
Distributor
BlackRock Distributors, Inc.
King of Prussia, Pennsylvania 19406
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 39 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.(R)
STOCK PORTFOLIOS
----------------
Large Cap Value Equity European Equity
Large Cap Growth Equity International Equity
Mid-Cap Value Equity International Small Cap Equity
Mid-Cap Growth Equity Asia Pacific Equity
Small Cap Value Equity International Emerging Markets
Small Cap Growth Equity Select Equity
Micro-Cap Equity Index Equity
Global Science and Technology
STOCK & BOND PORTFOLIOS
-----------------------
Balanced
BOND PORTFOLIOS
---------------
Low Duration Bond
Intermediate Government Bond GNMA
Intermediate Bond Managed Income
Core Bond International Bond
Government Income High Yield Bond
TAX-FREE BOND PORTFOLIOS
------------------------
Tax-Free Income Ohio Tax-Free Income
Pennsylvania Tax-Free Income Delaware Tax-Free Income
New Jersey Tax-Free Income Kentucky Tax-Free Income
MONEY MARKET PORTFOLIOS
-----------------------
Money Market North Carolina Municipal Money Market
U.S. Treasury Money Market Ohio Municipal Money Market
Municipal Money Market Pennsylvania Municipal Money Market
New Jersey 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 IRAaccounts or
rollover IRAs.
GENERAL INFORMATION ABOUT THE BLACKROCK FUNDS
If you would like additional reports or have questions regarding any of the 39
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>
BLACKROCK
FUNDS (LOGO)
[GRAPHIC OMITTED]
P.O. Box 8907
Wilmington, DE 19899
Shares of the Fund are not deposits or obligations of, or guaranteed or endorsed
by PNC Bank, National Association or any other bank and shares are not federally
insured by, guaranteed by, obligations of or otherwise supported by the U.S.
Government, the Federal Deposit Insurance Corporation, The Federal Reserve
Board, or any other governmental agency. Investments in shares of the fund
involve investment risks, including the possible loss of the principal amount
invested.
AR 9/30/00 EP
