BlackRock Fund Investors III
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Semi-Annual Report
June 30, 1996
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BlackRock Fund Investors III
Statement of Assets and Liabilities
June 30, 1996 (Unaudited)
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Assets
Investment in BlackRock Asset Investors, at estimated
fair value (cost $87,903,131) (Notes 1 and 3) $ 91,292,315
Notes receivable (Note 4) 117,500
Deferred organization expenses and other assets (Note 1) 129,752
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91,539,567
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Liabilities
Notes payable (Note 4) 117,500
Payable to BlackRock Asset Investors 45,039
Directors fee payable 13,565
Other accrued expenses 38,853
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214,957
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Net Assets $ 91,324,610
Net assets were comprised of:
Shares of beneficial interest, at par (Note 5) $ 1,103
Paid-in capital in excess of par 88,145,457
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88,146,560
Accumulated net investment loss (211,134)
Net unrealized appreciation on investments 3,389,184
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Net assets, June 30, 1996 $ 91,324,610
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Net asset value per share $ 827.84
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Total shares outstanding at end of period 110,316.31
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See Notes to Financial Statements.
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BlackRock Fund Investors III
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 $4,782) $ --
Expenses
Directors 31,328
Amortization of deferred organization expenses 16,857
Audit 9,328
Legal 5,619
Transfer Agent 2,611
Custodian 2,486
Miscellaneous 3,680
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Total Expenses 71,909
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Net investment loss (71,909)
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Unrealized Gain
on Investments (Note 3)
Net change in unrealized depreciation on investments 6,871,653
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Net Increase In Net Assets
Resulting from Operations $ 6,799,744
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See Notes to Financial Statements.
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BlackRock Fund Investors III
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 $ 4,782
Expenses paid (242,806)
Purchase of long-term portfolio investments (38,859,748)
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Net cash flows used for operating activities (39,097,772)
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Cash flows provided by financing activities:
Proceeds from Fund shares issued 39,097,772
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Net increase in cash --
Cash beginning of period --
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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 $ 6,799,744
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Increase in investments (38,859,748)
Decrease in unrealized depreciation (6,871,653)
Decrease in deferred organization expenses and
other assets 17,271
Decrease in accrued expenses and other liabilities (183,386)
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Total adjustments (45,897,516)
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Net cash flows used for operating activities $(39,097,772)
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See Notes to Financial Statements.
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BlackRock Fund Investors III
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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Increase (Decrease) in Net Assets
Operations:
Net investment loss $ (71,909) $ (139,225)
Net change in unrealized depreciation
on investments 6,871,653 (3,482,469)
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Net increase (decrease) in net assets
resulting from operations 6,799,744 (3,621,694)
Transactions in shares of beneficial interest:
Proceeds from shares issued 39,097,772 49,048,788
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Net increase 45,897,516 45,427,094
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Net Assets
Beginning of period 45,427,094 --
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End of period $ 91,324,610 $ 45,427,094
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* Commencement of investment operations.
See Notes to Financial Statements.
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BlackRock Fund Investors III
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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PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of period $ 755.60 $ 1000.00
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Net investment loss (0.84)(a) (10.91)(a)
Net unrealized gain (loss) on
investments 73.08 (a) (233.49)(a)
Net increase (decrease) from ------------- --------------
investment operations 72.24 (244.40)
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Net asset value, end of period $ 827.84 $ 755.60
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TOTAL INVESTMENT RETURN (b) 9.56% (24.44)%
RATIOS TO AVERAGE NET ASSETS:
Expenses 0.22%(c)(d) 0.85%(c)(d)
Net investment loss (0.22)%(c)(d) (0.85)%(c)(d)
SUPPLEMENTAL DATA:
Average net assets (in thousands) $66,520 $21,529
Portfolio turnover -- --
Net assets, end of period (in thousands) $91,325 $45,427
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* 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 $253,239,514 on an annualized basis is 0.07% and 0.07%,
respectively, for the period ended December 31, 1995. The ratio of expenses
and net investment loss to total investor capital commitments of
$253,239,514 on an annualized basis is 0.06% and 0.06%, 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.
See Notes to Financial Statements.
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BlackRock Fund Investors III
Notes to Financial Statements
(Unaudited)
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Note 1. Organization and Accounting Policies
BlackRock Fund Investors III ("Fund III") is a non-diversified closed-end
investment company organized as a Delaware business trust. Fund III 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 III. The value of Fund III's investment in BAI
reflects Fund III's proportionate interest in the net assets of BAI. The
performance of Fund III 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 III's financial statements.
The following is a summary of significant accounting policies followed by
Fund III.
Securities Valuation: Fund III's interest in BAI is valued by Fund III at its
proportionate interest in the net asset value of BAI (45.40% 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 III amortizes premium or accretes discount on securities
purchased using the interest method.
Taxes: It is Fund III'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 III declares and distributes dividends at
least annually first from net investment income, then from realized short-term
capital gains and other sources. Fund III 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.
These differences are primarily due to differing treatments for mortgage-backed
securities.
Master Administration, Administration and Other Expenses: Master administration
and other expenses are recorded on the accrual basis.
Deferred Organization Expenses: A total of $169,499 was incurred in connection
with the organization of Fund III. These costs have been deferred and are being
amortized ratably over a period of 60 months from the date Fund III commenced
investment operations.
Note 2. Agreements
Fund III has a Master Administration Agreement with BlackRock Financial
Management, Inc. (the "Master Administrator"). For its services under the
Master Administration Agreement, the Master Administrator receives no fees from
Fund III.
Fund III 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 III.
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Pursuant to the agreements, the Master Administrator provides various
administrative services, provides office space and pays the compensation of
officers of Fund III, who are affiliated persons of the Master Administrator.
State Street pays occupancy and certain clerical and accounting costs of Fund
III. Fund III bear all other costs and expenses.
Certain trustees of Fund III 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 for the period ended June 30, 1996 aggregated
$38,859,748. The federal income tax basis of the investments of Fund III at June
30, 1996 was substantially the same as the basis for financial reporting.
Note 4. Notes
Fund III has issued and sold notes in the aggregate principal amount of
$117,500 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 III.
Note 5. Capital
Fund III 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 III, in accordance with the Declaration
of Trust, the investors shall make capital contributions as are required to
satisfy their outstanding capital commitments. Fund III must give fourteen days
advance notice before contributions are due. As of June 30, 1996, the total
outstanding capital commitments from investors was $253,239,514 of which
$88,146,560 had been called and received. On July 3, 1996, Fund III made a
capital call, received July 17, 1996, totalling $10,847,937.
Note 6. Subsequent Event
Subsequent to June 30, 1996 the Board of Trustees of Fund III declared a
distribution of $14.28376 from undistributed earnings and $143.58937 from
capital per share payable August 20, 1996 to shareholders of record on August
19, 1996.
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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 III
Two Heritage Drive
North Quincy, MA 02171
