BlackRock Fund Investors II
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Semi-Annual Report
June 30, 1996
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BlackRock Fund Investors II
Statement of Assets and Liabilities
June 30, 1996 (Unaudited)
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Assets
Investment in BlackRock Asset Investors, at estimated
fair value (cost $38,642,235) (Notes 1 and 3) $ 40,105,318
Notes receivable (Note 4) 21,000
Deferred organization expenses and other assets (Note 1) 56,931
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40,183,249
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Liabilities
Payable to BlackRock Asset Investors 45,039
Master administration fee payable (Note 2) 139,332
Notes payable (Note 4) 21,000
Directors' fee payable 13,565
Other accrued expenses 19,792
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23,8728
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Net Assets $ 39,944,521
Net assets were comprised of:
Shares of beneficial interest, at par (Note 5) $ 507
Paid-in capital in excess of par 39,011,181
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39,011,688
Accumulated net investment loss (530,250)
Net unrealized appreciation on investments 1,463,083
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Net assets, June 30, 1996 $ 39,944,521
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Net asset value per share $ 787.60
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Total shares outstanding at end of period 50,716.68
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See Notes to Financial Statements.
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BlackRock Fund Investors II
Statement of Operations
For the Six Months Ended June 30, 1996 (Unaudited)
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Net Investment Loss
Income
Interest (net of interest expense of $855) $ -
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Expenses
Master administration (Note 2) 139,332
Directors 31,328
Amortization of deferred organization expenses 7,461
Audit 4,128
Transfer agent 2,611
Legal 2,487
Custodian 2,486
Miscellaneous 3,199
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Total expenses 193,032
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Net investment loss (193,032)
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Unrealized Gain
on Investments (Note 3)
Net change in unrealized depreciation on investments 3,032,866
Net Increase In Net Assets
Resulting from Operations $2,839,834
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See Notes to Financial Statements.
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BlackRock Fund Investors II
Statement of Cash Flows
For the Six Months Ended June 30, 1996 (Unaudited)
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Increase (Decrease) in Cash Cash flows used for operating activities:
Interest received $ 855
Expenses paid (367,899)
Purchase of long-term portfolio investments (16,869,012)
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Net cash flows used for operating activities (17,236,056)
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Cash flows provided by financing activities:
Proceeds from Fund shares issued 17,236,056
Net increase in cash --
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Cash end of period $ --
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Reconciliation of Net Increase in Net
Assets Resulting from Operations
to Net Cash Flows Used for
Operating Activities
Net increase in net assets resulting from operations $ 2,839,834
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Increase in investments (16,869,012)
Decrease in unrealized depreciation (3,032,866)
Decrease in deferred organization expenses and
other assets 7,672
Decrease in accrued expenses and other liabilities (181,684)
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Total adjustments (20,075,890)
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Net cash flows used for operating activities $(17,236,056)
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See Notes to Financial Statements.
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<TABLE>
<CAPTION>
BlackRock Fund Investors II
Statements of Changes in Net Assets
(Unaudited)
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March 29, 1995*
For the Six Months through
Ended June 30, 1996 December 31, 1995
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<S> <C> <C>
Increase (Decrease) in Net Assets
Operations:
Net investment loss $ (193,032) $ (337,218)
Net change in unrealized depreciation
on investments 3,032,866 (1,569,783)
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Net increase (decrease) in net assets resulting
from operations 2,839,834 (1,907,001)
Transactions in shares of beneficial interest:
Proceeds from shares issued 17,236,056 21,775,632
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Net increase 20,075,890 19,868,631
Net Assets
Beginning of period 19,868,631 --
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End of period $39,944,521 $19,868,631
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<FN>
* Commencement of investment operations.
</FN>
</TABLE>
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
BlackRock Fund Investors II
Financial Highlights
(Unaudited)
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March 29, 1995*
For the Six Months through
Ended June 30, 1996 December 31, 1995
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<S> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of period $722,26 $1,000.00
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Net investment loss (4.93)(a) (45.98)(a)
Net unrealized gain (loss) on
investments 70.27(a) (231.76)(a)
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Net increase (decrease) from investment operations 65.34 (277.74)
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Net asset value, end of period $787.60 $722.26
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TOTAL INVESTMENT RETURN (b) 9.05% (27.77)%
RATIOS TO AVERAGE NET ASSETS:
Expenses 1.33%(c)(d) 4.70%(c)(d)
Net investment loss (1.33)%(c)(d) (4.70)%(c)(d)
SUPPLEMENTAL DATA:
Average net assets (in thousands) $29,083 $9,460
Portfolio turnover -- --
Net assets, end of period (in thousands) $39,945 $19,869
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<FN>
* Commencement of investment operations.
(a) Calculated based on average shares.
(b) Total investment return is calculated assuming a purchase of a share of
beneficial interest at net asset value per share on the first day and a
sale at net asset value per share on the last day of the period reported.
Dividends are assumed, for purposes of this calculation, to be reinvested
at the net asset value per share on the payment date. Total investment
return for periods of less than one full year are not annualized.
(c) Annualized.
(d) The ratio of expenses and net investment loss to total investor capital
commitments of $112,078,123 on an annualized basis is 0.39% and 0.39%,
respectively, for the period ended December 31, 1995. The ratio of expenses
and net investment loss to total investor capital commitments of
$112,078,123 on an annualized basis is 0.35% and 0.35%, respectively, for
the six months ended June 30, 1996.
Contained above is the unaudited operating performance based on an average
share of beneficial interest outstanding, total investment return, ratios
to average net assets and other supplemental data, for the period
indicated. This information has been determined based upon financial
information provided in the financial statements.
</FN>
</TABLE>
See Notes to Financial Statements.
<PAGE>
BlackRock Fund Investors II
Notes to Financial Statements
(Unaudited)
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Note 1. Organization and Accounting Policies
BlackRock Fund Investors II ("Fund II") is a non-diversified closed-end
investment company organized as a Delaware business trust. Fund II invests all
of its investable assets in BlackRock Asset Investors ("BAI" or the "Trust")
which is a Delaware business trust registered under the Investment Company Act
of 1940 as a non-diversified closed-end investment company and has the same
investment objective as Fund II. The value of Fund II's investment in BAI
reflects Fund II's proportionate interest in the net assets of BAI. The
performance of Fund II is directly affected by the performance of BAI. The
financial statements of BAI are included in this report and should be read in
conjunction with Fund II's financial statements.
The following is a summary of significant accounting policies followed by
Fund II.
Securities Valuation: Fund II's interest in BAI is valued by Fund II at its
proportionate interest in the net asset value of BAI (19.94% at June 30, 1996).
Valuation of securities by BAI is discussed in Note 1 of BAI's Notes to
Financial Statements which are included elsewhere in this report.
Securities Transactions and Investment Income: Securities transactions are
recorded on the trade date. Realized and unrealized gains and losses are
calculated on the identified cost basis. Interest income is recorded on the
accrual basis and Fund II amortizes premium or accretes discount on securities
purchased using the interest method.
Taxes: It is Fund II's intention to meet the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its taxable income to shareholders. Therefore, no federal
income or excise tax provision is required.
Dividends and Distributions: Fund II declares and distributes dividends at least
annually first from net investment income, then from realized short-term capital
gains and other sources. Fund II also expects to pay distributions in the form
of return of paid-in capital. Net long-term capital gains, if any, in excess of
loss carryforwards are distributed at least annually. Dividends and
distributions are recorded on the ex-dividend date. Income distributions and
capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
Master Administation, Administration and Other Expenses: Master administration
and other expenses are recorded on the accrual basis.
Deferred Organization Expenses: A total of $75,016 was incurred in connection
with the organization of Fund II. These costs have been deferred and are being
amortized ratably over a period of 60 months from the date Fund II commenced
investment operations.
Note 2. Agreements
Fund II has a Master Administration Agreement with BlackRock Financial
Management, Inc. (the "Master Administrator") which provides that during the
Commitment Period the Trust will pay to the Master Administrator for its
services (which are solely administrative in nature) a semi-annual fee, in
arrears, in an amount equal to .25% of the aggregate Capital Commitments, on an
annualized basis. Subsequent to the Commitment Period, the semi-annual fee
payable in arrears to the Master Administrator is .25% of the weighted average
capital invested during the relevant period on an annualized basis.
<PAGE>
Fund II has also entered into an Administration Agreement with State Street
Bank and Trust Company ("State Street"). For its services under the
Administration Agreement, State Street receives no fees from Fund II.
Pursuant to the agreements, the Master Administrator provides various
administrative services, provides office space and pays the compensation of
officers of Fund II, who are affiliated persons of the Master Administrator.
State Street pays occupancy and certain clerical and accounting costs of Fund
II. Fund II bear all other costs and expenses.
Certain trustees of BAI and Fund II, who are not interested parties, are
paid a fee for their services in the amount of $40,000 each on an annual basis
plus telephonic meeting fees not to exceed $500 annually and certain
out-of-pocket expenses.
Note 3. Portfolio Securities
Purchases of investment securities for the period ended June 30, 1996
aggregated $16,869,012. The federal income tax basis of the investments of Fund
II at June 30, 1996 was substantially the same as the basis for financial
reporting.
Note 4. Notes
Fund II has issued and sold notes in the aggregate amount of $21,000 paying
interest at a per annum rate of 2.50% over the yield of the one-year constant
maturity Treasury, redeemable annually by the holder and due on dissolution of
the Fund II.
Note 5. Capital
Fund II has obtained capital commitments from investors in the form of
subscription agreements to engage in the real estate debt investment activities
described herein. When notified by Fund II, in accordance with the Declaration
of Trust, the investors shall make capital contributions as are required to
satisfy their outstanding capital commitments. Fund II must give fourteen days
advance notice before contributions are due. As of June 30, 1996, the total
outstanding capital commitments from investors was $112,078,123 of which
$39,011,688 had been called and received. On July 3, 1996, Fund II made a
capital call, received July 17, 1996, totalling $4,801,053.
Note 6. Subsequent Event
Subsequent to June 30, 1996 the Board of Trustees of Fund II declared a
distribution of $13.65467 from undistributed earnings and $137.26533 from
capital per share payable August 20, 1996 to shareholders of record on August
19, 1996.
<PAGE>
Trustees
Laurence D. Fink, Chairman
John C. Deterding
Donald G. Drapkin
Wesley R. Edens
Charles Froland
James Grosfeld
Philip Halpern
Laurence E. Hirsch
Kendrick R. Wilson, III
Officers
Ralph L. Schlosstein, President
Wesley R. Edens, Chief Operating Officer
John R. Herbert, Managing Director
Robert I. Kauffman, Managing Director
Randal A. Nardone, Managing Director
Erik P. Nygaard, Managing Director
Henry Gabbay, Treasurer
Susan L. Wagner, Secretary
James Kong, Assistant Treasurer
Master Administrator
BlackRock Financial Management, Inc.
345 Park Avenue
New York, NY 10154
Administrator, Custodian and Transfer Agent
State Street Bank and Trust Company
Two Heritage Drive
North Quincy, MA 02171
Independent Auditors
Deloitte & Touche LLP
Two World Financial Center
New York, NY 10281-1431
Legal Counsel
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, NY 10022
The accompanying financial statements as of June 30, 1996 were not audited and,
accordingly, no opinion is expressed on them.
This report is for shareholder information. This is not a prospectus intended
for use in the purchase or sale of Trust shares.
BlackRock Fund Investors II
Two Heritage Drive
North Quincy, MA 02171
