UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-09637
811-09739
Name of Fund: BlackRock Large Cap Series Funds, Inc.
Master Large Cap Series Trust
Fund Address: P.O. Box 9011
Princeton, NJ 08543-9011
Name and address of agent for service: Robert C. Doll, Jr., Chief Executive
Officer, BlackRock Large Cap Series Funds, Inc. and Master Large Cap
Series Trust, 800 Scudders Mill Road, Plainsboro, NJ 08536. Mailing
address: P.O. Box 9011, Princeton, NJ 08543-9011
Registrant's telephone number, including area code: (609) 282-2800
Date of fiscal year end: 10/31/06
Date of reporting period: 11/01/05 - 10/31/06
Item 1 - Report to Stockholders
ALTERNATIVES BLACKROCK SOLUTIONS EQUITIES
FIXED INCOME LIQUIDITY REAL ESTATE
BlackRock BLACKROCK
Large Cap Series Funds, Inc.
ANNUAL REPORTS | OCTOBER 31, 2006
BlackRock Large Cap Core Fund
BlackRock Large Cap Growth Fund
BlackRock Large Cap Value Fund
NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
BlackRock Large Cap Series Funds, Inc.
Important Tax Information
The following information is provided with respect to the ordinary income
distributions paid by BlackRock Large Cap Core Fund of BlackRock Large Cap
Series Funds, Inc. to shareholders of record on December 12, 2005:
- ---------------------------------------------------------------------------------------
Qualified Dividend Income for Individuals ................................... 81.51%*
Dividends Qualifying for the Dividends Received Deduction for Corporations .. 81.71%*
Short-Term Capital Gain Dividends for Non-U.S. Residents .................... 100.00%**
- ---------------------------------------------------------------------------------------
* The Fund hereby designates the percentage indicated above or the maximum
amount allowable by law.
** Represents the portion of the taxable ordinary income dividends eligible
for exemption from U.S. withholding tax for nonresident aliens and foreign
corporations.
Additionally, the Fund distributed long-term capital gains of $.579286 per share
to shareholders of record on December 12, 2005 and $.333442 per share to
shareholders of record on August 18, 2006.
The following information is provided with respect to the ordinary income
distributions paid by BlackRock Large Cap Value Fund of BlackRock Large Cap
Series Funds, Inc. to shareholders of record on December 12, 2005:
- ---------------------------------------------------------------------------------------
Qualified Dividend Income for Individuals ................................... 56.07%*
Dividends Qualifying for the Dividends Received Deduction for Corporations .. 56.33%*
Short-Term Capital Gain Dividends for Non-U.S. Residents .................... 100.00%**
- ---------------------------------------------------------------------------------------
* The Fund hereby designates the percentage indicated above or the maximum
amount allowable by law.
** Represents the portion of the taxable ordinary income dividends eligible
for exemption from U.S. withholding tax for nonresident aliens and foreign
corporations.
Additionally, the Fund distributed long-term capital gains of $.496673 and
$.312611 per share to shareholders of record on December 12, 2005 and October
10, 2006, respectively.
2 BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006
A Letter to Shareholders
Dear Shareholder
Ten months into 2006, we are able to say it has been an interesting year for
investors. After a volatile start and far-reaching mid-year correction, the
financial markets regained some positive momentum through late summer and fall.
For the six- and 12-month periods ended October 31, 2006, most major market
indexes managed to post positive returns:
Total Returns as of October 31, 2006 6-month 12-month
======================================================================================
U.S. equities (Standard & Poor's 500 Index) +6.11% +16.34%
- --------------------------------------------------------------------------------------
Small cap U.S. equities (Russell 2000 Index) +0.90 +19.98
- --------------------------------------------------------------------------------------
International equities (MSCI Europe, Australasia, Far East Index) +3.77 +27.52
- --------------------------------------------------------------------------------------
Fixed income (Lehman Brothers Aggregate Bond Index) +4.60 + 5.19
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Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) +4.12 + 5.75
- --------------------------------------------------------------------------------------
High yield bonds (Credit Suisse High Yield Index) +4.66 +10.29
- --------------------------------------------------------------------------------------
The Federal Reserve Board (the Fed), after raising the target short-term
interest rate 17 times between June 2004 and June 2006, finally opted to pause
on August 8, 2006. This left the federal funds rate at 5.25%, where it remained
through the September and October Fed meetings. In interrupting its two-year
rate-hiking campaign, the Fed acknowledged that economic growth is slowing, led
by softness in the housing market. However, the central bankers continue to take
a cautionary position on inflation, despite a decline in energy prices in recent
months. At the time of this writing, the price of oil had settled into the
$60-per-barrel range after reaching nearly $78 per barrel earlier in the year.
Notwithstanding the mid-year correction, equity markets generally found support
in solid corporate earnings reports in the first three quarters of the year.
Overall corporate health, including strong company balance sheets, helped to
sustain robust dividend-distribution, share-buyback and merger-and-acquisition
activity. Many international equity markets fared equally well or better, thanks
in part to higher economic growth rates and low inflation.
In the U.S. bond market, prices declined for much of the year as investors
focused on decent economic activity and inflation concerns. Bond prices began to
improve in late June as the economy showed signs of weakening and inflation
pressures subsided. Notably, the Treasury curve inverted periodically, a
phenomenon typically associated with periods of economic weakness. At the end of
October, the one-month Treasury bill offered the highest yield on the curve at
5.18%, while the 30-year Treasury bond had a yield of 4.72%.
Amid the uncertainty inherent in the financial markets, we encourage you to
review your goals periodically with your financial professional and to make
portfolio changes, as needed. For additional insight and timely "food for
thought" for investors, we also invite you to visit Shareholder magazine at
www.blackrock.com/shareholdermagazine. We are pleased to make our
investor-friendly magazine available to you online. We thank you for trusting
BlackRock with your investment assets, and we look forward to continuing to
serve your investment needs.
Sincerely,
/s/ Robert C. Doll, Jr.
Robert C. Doll, Jr.
President and Director/Trustee
BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006 3
A Discussion With Your Funds' Portfolio Manager
Our quantitative and fundamental stock-selection process led the Funds to
strong absolute and relative performance, as we continued to refine the
portfolios throughout the year, looking for stocks that best met our investment
criteria and pruning those that deteriorated.
How did the BlackRock Large Cap Series Funds, Inc. perform during the fiscal
year in light of the existing market conditions?
For the 12-month period ended October 31, 2006, BlackRock Large Cap Core Fund of
BlackRock Large Cap Series Funds, Inc.'s (formerly Merrill Lynch Large Cap Core
Fund of Merrill Lynch Large Cap Series Funds, Inc.) Institutional, Investor A,
Investor B, Investor C and Class R Shares had total returns of +16.91%, +16.61%,
+15.72%, +15.64% and +16.29%, respectively, competitive with the +16.02% return
of the benchmark Russell 1000 Index and ahead of the +14.50% average return of
its comparable Lipper category of Multi-Cap Core Funds.*
BlackRock Large Cap Growth Fund of BlackRock Large Cap Series Funds, Inc.'s
(formerly Merrill Lynch Large Cap Growth Fund of Merrill Lynch Large Cap Series
Funds, Inc.) Institutional, Service, Investor A, Investor B, Investor C and
Class R Shares had total returns of +13.57%, +13.20%, +13.23%, +12.36%, +12.37%
and +13.00%, respectively, exceeding the +10.84% return of the benchmark Russell
1000 Growth Index and the +10.39% average return of its comparable Lipper
category of Multi-Cap Growth Funds.*
BlackRock Large Cap Value Fund of BlackRock Large Cap Series Funds, Inc.'s
(formerly Merrill Lynch Large Cap Value Fund of Merrill Lynch Large Cap Series
Funds, Inc.) Institutional, Service, Investor A, Investor B, Investor C and
Class R Shares had total returns of +18.06%, +17.73%, +17.78%, +16.81%, +16.89%
and +17.41%, respectively, lagging the +21.46% return of its benchmark, the
Russell 1000 Value Index, and pacing the +17.77% average return of the Lipper
Multi-Cap Value Funds category for the 12-month period.*
(Fund results shown do not reflect sales charges and would be lower if sales
charges were included. Complete performance information for each Fund can be
found on pages 6 - 10 of this report to shareholders.)
Because the Funds invest in large-capitalization stocks that represent a
significant part of the U.S. stock market, their portfolios were influenced by
the same economic and market events that affected the broader stock market
during the past 12 months. After a marked and far-reaching mid-year correction
that spanned all sectors, styles and market-capitalization ranges, U.S. equities
rallied to record highs, with the Dow Jones Industrial Average soaring above
12,150 in late October. Overall performance was positive for large cap stocks as
they outperformed their small- to mid-sized counterparts 50% of the time, with
value outperforming growth the majority of the time. During the latter months of
the reporting period, the majority of corporate earnings reports were positive,
with most companies meeting or exceeding expectations. The Federal Reserve Board
(the Fed), under the leadership of new chairman Dr. Ben Bernanke, finally opted
to interrupt its interest rate-hiking campaign on August 8, and remained at a
pause in September and October. This came after 17 consecutive interest rate
increases over two years. The price of crude oil escalated to a summer peak near
$78 a barrel, then stabilized toward the end of the reporting period and stayed
below $60 per barrel. The moderation in oil prices came in response to rising
U.S. oil inventories and a quiet hurricane season. However, the elevated energy
prices throughout the year had a negative impact on consumer spending. A
retreating consumer, coupled with a slowdown in the residential housing sector,
adversely affected gross domestic product (GDP), which was estimated at 1.6% for
the third quarter of 2006, compared to a growth rate of 2.6% in the second
quarter and 5.6% in the first quarter.
What factors most influenced Fund performance during the fiscal year?
In the case of BlackRock Large Cap Core Fund and BlackRock Large Cap Growth
Fund, stock selection drove performance results, particularly within the
industrials (airlines, machinery and aerospace & defense), materials (metals &
mining) and information technology sectors (computer peripherals, communication
equipment and software). For BlackRock Large Cap Value Fund, the positive
performance generated by stock selection in industrials (machinery and aerospace
& defense) and consumer discretionary was not enough to offset disappointing
results from the combination of asset allocation and stock selection within
energy, financials and health care.
* Lipper Multi-Cap funds invest in a variety of market capitalization ranges
without concentrating 75% of their equity assets in any one
market-capitalization range over an extended period of time. Multi-Cap
Core funds typically have an average price-to-earnings ratio,
price-to-book ratio and three-year sales-per-share growth value compared
to the S&P SuperComposite 1500 Index. Multi-Cap Growth funds typically
have an above-average price-to-earnings ratio, price-to-book ratio and
three-year sales-per-growth value compared to the S&P SuperComposite 1500
Index. Multi-Cap Value funds typically have a below-average
price-to-earnings ratio, price-to-book ratio and three-year
sales-per-growth value compared to the S&P SuperComposite 1500 Index.
4 BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006
At the individual stock level, the largest positive contributors to performance
in BlackRock Large Cap Core Fund were NuCor Corp., BEA Systems, Inc., Kerr-McGee
Corp., Qwest Communications International Inc. and AMR Corp. The largest
detractors were Tellabs, Inc., McAfee, Inc., Valero Energy Corp., Pioneer
Natural Resources Co. and Amgen, Inc. In BlackRock Large Cap Growth Fund, the
largest positive contributors to performance were AMR Corp., NuCor, BEA Systems,
Joy Global, Inc. and BMC Software, Inc., and the largest detractors were
Advanced Micro Devices, Inc., ImClone Systems Inc., The Goodyear Tire & Rubber
Co., Moody's Investors Service Inc. and Starbucks Corp. The largest contributors
to the performance of BlackRock Large Cap Value Fund during the 12-month period
were NuCor, Kerr-McGee, BEA Systems, Qwest Communications and CXS Corp., and the
largest detractors were BellSouth Corp., AT&T, Inc., Goodyear Tire & Rubber,
Valero Energy Corp. and Pioneer Natural Resources Co.
As important as it is to hold stocks that performed well, it is equally
important that we were able to avoid those that did not perform well. Examples
of stocks that were present and performed poorly in the benchmarks, but were
absent from the portfolios, included: Yahoo! Inc., The Home Depot, Inc.,
Medtronic, Inc. and Sprint Nextel Corporation for Large Cap Core; QUALCOMM Inc.,
Medtronic and Boston Scientific Corp. for BlackRock Large Cap Growth; and Sprint
and Time Warner, Inc. for BlackRock Large Cap Value.
What changes were made to the Funds' portfolios during the fiscal period?
Overall, we continued to identify companies with favorable growth
characteristics and earnings developments selling at attractive relative
valuations. As a result of our bottom-up stock-selection process, we increased
the portfolios' positions in industrials and reduced their exposure to the
information technology, health care and energy sectors.
In BlackRock Large Cap Core Fund, the largest purchases during the period were
JPMorgan Chase & Co., Chevron Corp., Cisco Systems, Inc., AMR Corp. and Morgan
Stanley. The largest sales were NVIDIA Corp., Amgen, Intel Corp., ConocoPhillips
Co. and UnitedHealth Group Inc. In BlackRock Large Cap Growth Fund, the largest
purchases were Cisco Systems, Inc., Oracle Corp., Hewlett-Packard Co.,
Nordstrom, Inc. and CA, Inc., and the largest sales were Intel Corp., Best Buy,
Amgen, Staples, Inc. and UnitedHealth Group. In BlackRock Large Cap Value Fund,
the largest purchases were Citigroup, Inc., Exxon Mobil Corp., Chevron Corp.,
JPMorgan Chase & Co. and Morgan Stanley. The largest sales were Valero Energy
Corp., ConocoPhillips, Prudential Financial, Inc., Kerr-McGee and Atmel Corp.
These transactions reflect our ongoing refinement of the portfolios, as we
continue to look for stocks that best meet our investment criteria and prune
those that have deteriorated versus our original assessment.
How would you characterize the Funds' positioning at the close of the period?
As of October 31, 2006, relative to their respective benchmarks, the Funds'
largest overweights were in consumer discretionary, energy, information
technology, industrials and health care. The largest underweights were in
financials, consumer staples, utilities and telecommunication services.
We believe the U.S. economy is headed for a housing- and consumer-led mid-cycle
slowdown that will reduce inflation pressures, encourage the Fed to cut interest
rates next year, and ultimately should allow equity prices to move higher.
Concerns about inflation are starting to give way to concerns about weak
economic growth. Fears about a hard economic landing are likely to intensify in
the months ahead as the housing downturn feeds into a further consumer
retrenchment. Nonetheless, we do not believe a recession is at hand given that
the Fed has gone on hold without imposing a painful monetary squeeze. In our
opinion, corporate earnings growth in 2007 is likely to be lower than in 2006.
Currently, we are expecting growth levels to be around the 5% mark for next
year. At present, our view is that the stock market may be slightly overbought,
and the correction that occurred at the middle of this year may have a bit
further to run as earnings estimates come down, concerns about inflation
continue and the impact of the November elections unwinds. Equity markets have
had a tremendous rally over the past three months, and we would view potentially
softer markets as a digestion of these gains rather than as the start of any
significant decline.
Robert C. Doll, Jr.
President, Director/Trustee and Senior Portfolio Manager
November 14, 2006
- --------------------------------------------------------------------------------
Effective October 2, 2006, the Funds' Class A, Class B, Class C and Class I
Shares were redesignated Investor A, Investor B, Investor C and Institutional
Shares, respectively. Class R Shares did not change their designation. Service
Shares commenced operations on October 2, 2006. Only certain investors are
eligible to purchase Service Shares. See the BlackRock Large Cap Series Funds,
Inc. prospectus for more information.
- --------------------------------------------------------------------------------
BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006 5
Performance Data
About Fund Performance
Effective October 2, 2006, the Funds' Class A, Class B, Class C and Class I
Shares were redesignated Investor A, Investor B, Investor C and Institutional
Shares, respectively. Class R Shares did not change their designation. As
previously communicated to shareholders, new sales charge schedules came into
effect at the same time for certain of these classes.
Each Fund has multiple classes of shares:
o Institutional Shares are not subject to any front-end sales charge.
Institutional Shares bear no ongoing distribution or service fees and are
available only to eligible investors.
o Service Shares are not subject to any sales charge. Service Shares are
subject to a service fee of 0.25% (but no distribution fee) and are
available only to eligible investors. Service Shares performance results
are those of Institutional Shares adjusted to reflect the service (12b-1)
fees applicable to Service Shares. Service Shares commenced operations on
October 2, 2006. Service Shares are offered only by BlackRock Large Cap
Growth Fund and BlackRock Large Cap Value Fund.
o Investor A Shares incur a maximum initial sales charge (front-end load) of
5.25% and a service fee of 0.25% per year (but no distribution fee).
o Investor B Shares are subject to a maximum contingent deferred sales
charge of 4.50% declining to 0% after six years. In addition, Investor B
Shares are subject to a distribution fee of 0.75% per year and a service
fee of 0.25% per year. These shares automatically convert to Investor A
Shares after approximately eight years. (There is no initial sales charge
for automatic share conversions.) All returns for periods greater than
eight years reflect this conversion.
o Investor C Shares are subject to a distribution fee of 0.75% per year and
a service fee of 0.25% per year. In addition, Investor C Shares are
subject to a 1% contingent deferred sales charge if redeemed within one
year of purchase.
o Class R Shares do not incur a maximum initial sales charge (front-end
load) or deferred sales charge. These shares are subject to a distribution
fee of 0.25% per year and a service fee of 0.25% per year. Class R Shares
are available only to certain retirement plans. Prior to inception, Class
R Share performance results are those of Institutional Shares (which have
no distribution or service fees) restated for Class R Share fees.
None of the past results shown should be considered a representation of future
performance. Current performance may be lower or higher than the performance
data quoted. Refer to www.blackrock.com to obtain performance data current to
the most recent month-end. Performance results do not reflect the deduction of
taxes that a shareholder would pay on fund distributions or the redemption of
fund shares. Figures shown in each of the following tables assume reinvestment
of all dividends and capital gain distributions, if any, at net asset value on
the ex-dividend date. Investment return and principal value of shares will
fluctuate so that shares, when redeemed, may be worth more or less than their
original cost. Dividends paid to each class of shares will vary because of the
different levels of service, distribution and transfer agency fees applicable to
each class, which are deducted from the income available to be paid to
shareholders.
6 BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006
Performance Data (continued)
Recent Performance Results
6-Month 12-Month Since Inception
As of October 31, 2006 Total Return Total Return Total Return
========================================================================================================
BlackRock Large Cap Core Fund Institutional Shares* +2.42% +16.91% + 55.61%
- --------------------------------------------------------------------------------------------------------
BlackRock Large Cap Core Fund Investor A Shares* +2.24 +16.61 + 52.97
- --------------------------------------------------------------------------------------------------------
BlackRock Large Cap Core Fund Investor B Shares* +1.89 +15.72 + 45.04
- --------------------------------------------------------------------------------------------------------
BlackRock Large Cap Core Fund Investor C Shares* +1.81 +15.64 + 44.95
- --------------------------------------------------------------------------------------------------------
BlackRock Large Cap Core Fund Class R Shares* +2.08 +16.29 + 50.99
- --------------------------------------------------------------------------------------------------------
BlackRock Large Cap Growth Fund Institutional Shares* -0.47 +13.57 + 6.36
- --------------------------------------------------------------------------------------------------------
BlackRock Large Cap Growth Fund Service Shares* -0.67 +13.20 + 4.47
- --------------------------------------------------------------------------------------------------------
BlackRock Large Cap Growth Fund Investor A Shares* -0.67 +13.23 + 4.45
- --------------------------------------------------------------------------------------------------------
BlackRock Large Cap Growth Fund Investor B Shares* -1.00 +12.36 - 0.88
- --------------------------------------------------------------------------------------------------------
BlackRock Large Cap Growth Fund Investor C Shares* -1.00 +12.37 - 0.97
- --------------------------------------------------------------------------------------------------------
BlackRock Large Cap Growth Fund Class R Shares* -0.78 +13.00 + 3.30
- --------------------------------------------------------------------------------------------------------
BlackRock Large Cap Value Fund Institutional Shares* +3.83 +18.06 +111.28
- --------------------------------------------------------------------------------------------------------
BlackRock Large Cap Value Fund Service Shares* +3.66 +17.73 +107.63
- --------------------------------------------------------------------------------------------------------
BlackRock Large Cap Value Fund Investor A Shares* +3.67 +17.78 +107.61
- --------------------------------------------------------------------------------------------------------
BlackRock Large Cap Value Fund Investor B Shares* +3.26 +16.81 + 97.01
- --------------------------------------------------------------------------------------------------------
BlackRock Large Cap Value Fund Investor C Shares* +3.32 +16.89 + 97.04
- --------------------------------------------------------------------------------------------------------
BlackRock Large Cap Value Fund Class R Shares* +3.54 +17.41 +105.17
- --------------------------------------------------------------------------------------------------------
Russell 1000(R) Index** +5.55 +16.02 + 10.97
- --------------------------------------------------------------------------------------------------------
Russell 1000(R) Growth Index*** +3.53 +10.84 - 29.54
- --------------------------------------------------------------------------------------------------------
Russell 1000(R) Value Index**** +7.61 +21.46 + 65.23
- --------------------------------------------------------------------------------------------------------
* Investment results shown do not reflect sales charges; results shown would
be lower if a sales charge was included. Cumulative total investment
returns are based on changes in net asset values for the periods shown,
and assume reinvestment of all dividends and capital gains distributions
at net asset value on the ex-dividend date. Since inception total return
is from 12/22/99.
** This unmanaged broad-based Index measures the performance of the 1,000
largest companies in the Russell 3000(R) Index, which represents
approximately 92% of the total market capitalization of the Russell 3000
Index. Since inception total return is from 12/22/99.
*** This unmanaged broad-based Index is a subset of the Russell 1000 Index
consisting of those Russell 1000 securities with a greater-than-average
growth orientation. Since inception total return is from 12/22/99.
**** This unmanaged broad-based Index is a subset of the Russell 1000 Index
consisting of those Russell 1000 securities with lower price/book ratios
and lower forecasted growth values. Since inception total return is from
12/22/99.
Russell 1000 is a registered trademark of the Frank Russell Company.
BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006 7
Performance Data (continued) BlackRock Large Cap Core Fund
Total Return Based on a $10,000 Investment
A line graph depicting the growth of an investment in the Fund's Institutional,
Investor A, Investor B, Investor C & Class R Shares compared to growth of an
investment in the Russell 1000 Index. Values are from December 22, 1999 to
October 2006:
Institutional Investor A Investor B Investor C Class R Russell 1000
Shares*+ Shares*+ Shares*+ Shares*+ Shares*+ Index++
12/22/99** $10,000 $ 9,475 $10,000 $10,000 $10,000 $10,000
10/00 $11,770 $11,124 $11,670 $11,670 $11,720 $10,250
10/01 $ 9,104 $ 8,587 $ 8,931 $ 8,931 $ 9,020 $ 7,581
10/02 $ 8,314 $ 7,819 $ 8,071 $ 8,071 $ 8,195 $ 6,474
10/03 $10,335 $ 9,696 $ 9,931 $ 9,931 $10,177 $ 7,919
10/04 $11,285 $10,568 $10,741 $10,731 $11,061 $ 8,658
10/05 $13,310 $12,429 $12,534 $12,534 $12,984 $ 9,564
10/06 $15,561 $14,494 $14,504 $14,495 $15,099 $11,097
* Assuming maximum sales charge, if any, transaction costs and other
operating expenses, including administration fees.
** Commencement of operations.
+ The Fund invests all of its assets in Master Large Cap Core Portfolio of
Master Large Cap Series Trust. The Portfolio invests primarily in a
diversified portfolio of equity securities of large cap companies located
in the United States that the Investment Adviser believes blends growth
and value.
++ This unmanaged broad-based Index measures the performance of the 1,000
largest companies in the Russell 3000(R) Index, which represents
approximately 92% of the total market capitalization of the Russell 3000
Index.
Past performance is not indicative of future results.
Average Annual Total Return
================================================================================
Institutional Shares Return
================================================================================
One Year Ended 10/31/06 +16.91%
- --------------------------------------------------------------------------------
Five Years Ended 10/31/06 +11.32
- --------------------------------------------------------------------------------
Inception (12/22/99) through 10/31/06 + 6.66
- --------------------------------------------------------------------------------
Return Without Return With
Sales Charge Sales Charge*
================================================================================
Investor A Shares
================================================================================
One Year Ended 10/31/06 +16.61% +10.49%
- --------------------------------------------------------------------------------
Five Years Ended 10/31/06 +11.04 + 9.85
- --------------------------------------------------------------------------------
Inception (12/22/99) through 10/31/06 + 6.39 + 5.56
- --------------------------------------------------------------------------------
Return Return
Without CDSC With CDSC+++
================================================================================
Investor B Shares++
================================================================================
One Year Ended 10/31/06 +15.72% +11.22%
- --------------------------------------------------------------------------------
Five Years Ended 10/31/06 +10.18 + 9.91
- --------------------------------------------------------------------------------
Inception (12/22/99) through 10/31/06 + 5.57 + 5.57
- --------------------------------------------------------------------------------
Return Return
Without CDSC With CDSC+++
================================================================================
Investor C Shares+
================================================================================
One Year Ended 10/31/06 +15.64% +14.64%
- --------------------------------------------------------------------------------
Five Years Ended 10/31/06 +10.17 +10.17
- --------------------------------------------------------------------------------
Inception (12/22/99) through 10/31/06 + 5.56 + 5.56
- --------------------------------------------------------------------------------
================================================================================
Class R Shares Return
================================================================================
One Year Ended 10/31/06 +16.29%
- --------------------------------------------------------------------------------
Five Years Ended 10/31/06 +10.85
- --------------------------------------------------------------------------------
Inception (12/22/99) through 10/31/06 + 6.19
- --------------------------------------------------------------------------------
* Assuming maximum sales charge of 5.25%.
+ Maximum contingent deferred sales charge is 1% and is reduced to 0% after
one year.
++ Maximum contingent deferred sales charge is 4.50% and is reduced to 0%
after six years.
+++ Assuming payment of applicable contingent deferred sales charge.
8 BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006
Performance Data (continued) BlackRock Large Cap Growth Fund
Total Return Based on a $10,000 Investment
A line graph depicting the growth of an investment in the Fund's Institutional,
Service, Investor A, Investor B, Investor C & Class R Shares compared to growth
of an investment in the Russell 1000 Growth Index. Values are from December 22,
1999 to October 2006:
Russell
Institutional Service Investor A Investor B Investor C Class R 1000 Growth
Shares*+ Shares*+ Shares*+ Shares*+ Shares*+ Shares*+ Index++
12/22/99** $10,000 $10,000 $ 9,475 $10,000 $10,000 $10,000 $10,000
10/00 $11,350 $11,326 $10,726 $11,260 $11,250 $11,302 $ 9,610
10/01 $ 7,504 $ 7,469 $ 7,081 $ 7,371 $ 7,362 $ 7,434 $ 5,771
10/02 $ 6,443 $ 6,397 $ 6,057 $ 6,251 $ 6,252 $ 6,351 $ 4,639
10/03 $ 7,974 $ 7,897 $ 7,479 $ 7,661 $ 7,652 $ 7,862 $ 5,651
10/04 $ 8,364 $ 8,263 $ 7,830 $ 7,961 $ 7,952 $ 8,207 $ 5,842
10/05 $ 9,365 $ 9,229 $ 8,740 $ 8,821 $ 8,812 $ 9,142 $ 6,357
10/06 $10,636 $10,447 $ 9,896 $ 9,912 $ 9,903 $10,330 $ 7,046
* Assuming maximum sales charge, if any, transaction costs and other
operating expenses, including administration fees.
** Commencement of operations.
+ The Fund invests all of its assets in Master Large Cap Growth Portfolio of
Master Large Cap Series Trust. The Portfolio invests primarily in a
diversified portfolio of equity securities of large cap companies located
in the United States that the Investment Adviser believes have good
prospects for earnings growth.
++ This unmanaged broad-based Index is a subset of the Russell 1000 Index
consisting of those Russell 1000 securities with a greater-than-average
growth orientation.
Past performance is not indicative of future results.
Average Annual Total Return
Institutional Shares Return
================================================================================
One Year Ended 10/31/06 +13.57%
- --------------------------------------------------------------------------------
Five Years Ended 10/31/06 + 7.22
- --------------------------------------------------------------------------------
Inception (12/22/99) through 10/31/06 + 0.90
- --------------------------------------------------------------------------------
Service Shares Return
================================================================================
One Year Ended 10/31/06 +13.20%
- --------------------------------------------------------------------------------
Five Years Ended 10/31/06 + 6.94
- --------------------------------------------------------------------------------
Inception (12/22/99) through 10/31/06 + 0.64
- --------------------------------------------------------------------------------
Return Without Return With
Sales Charge Sales Charge*
================================================================================
Investor A Shares
================================================================================
One Year Ended 10/31/06 +13.23% + 7.29%
- --------------------------------------------------------------------------------
Five Years Ended 10/31/06 + 6.92 + 5.78
- --------------------------------------------------------------------------------
Inception (12/22/99) through 10/31/06 + 0.64 - 0.15
- --------------------------------------------------------------------------------
Return Return
Without CDSC With CDSC+++
================================================================================
Investor B Shares++
================================================================================
One Year Ended 10/31/06 +12.36% + 7.86%
- --------------------------------------------------------------------------------
Five Years Ended 10/31/06 + 6.10 + 5.78
- --------------------------------------------------------------------------------
Inception (12/22/99) through 10/31/06 - 0.13 - 0.13
- --------------------------------------------------------------------------------
Return Return
Without CDSC With CDSC+++
================================================================================
Investor C Shares+
================================================================================
One Year Ended 10/31/06 +12.37% +11.37%
- --------------------------------------------------------------------------------
Five Years Ended 10/31/06 + 6.11 + 6.11
- --------------------------------------------------------------------------------
Inception (12/22/99) through 10/31/06 - 0.14 - 0.14
- --------------------------------------------------------------------------------
================================================================================
Class R Shares Return
================================================================================
One Year Ended 10/31/06 +13.00%
- --------------------------------------------------------------------------------
Five Years Ended 10/31/06 + 6.80
- --------------------------------------------------------------------------------
Inception (12/22/99) through 10/31/06 + 0.47
- --------------------------------------------------------------------------------
* Assuming maximum sales charge of 5.25%.
+ Maximum contingent deferred sales charge is 1% and is reduced to 0% after
one year.
++ Maximum contingent deferred sales charge is 4.50% and is reduced to 0%
after six years.
+++ Assuming payment of applicable contingent deferred sales charge.
BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006 9
Performance Data (concluded) BlackRock Large Cap Value Fund
Total Return Based on a $10,000 Investment
A line graph depicting the growth of an investment in the Fund's Institutional,
Service, Investor A, Investor B, Investor C & Class R Shares compared to growth
of an investment in the Russell 1000 Value Index. Values are from December 22,
1999 to October 2006:
Russell
Institutional Service Investor A Investor B Investor C Class R 1000 Value
Shares*+ Shares*+ Shares*+ Shares*+ Shares*+ Shares*+ Index++
12/22/99** $10,000 $10,000 $ 9,475 $10,000 $10,000 $10,000 $10,000
10/00 $11,640 $11,615 $11,000 $11,540 $11,540 $11,590 $10,809
10/01 $10,684 $10,635 $10,073 $10,481 $10,481 $10,586 $ 9,527
10/02 $10,224 $10,151 $ 9,617 $ 9,931 $ 9,931 $10,079 $ 8,573
10/03 $12,907 $12,784 $12,112 $12,411 $12,411 $12,735 $10,533
10/04 $14,730 $14,552 $13,781 $14,021 $14,011 $14,451 $12,161
10/05 $17,895 $17,636 $16,702 $16,866 $16,856 $17,476 $13,604
10/06 $21,128 $20,763 $19,671 $19,701 $19,704 $20,517 $16,523
* Assuming maximum sales charge, if any, transaction costs and other
operating expenses, including administration fees.
** Commencement of operations.
+ The Fund invests all of its assets in Master Large Cap Value Portfolio of
the Master Large Cap Series Trust. The Portfolio invests primarily in a
diversified portfolio of equity securities of large cap companies located
in the United States that the Investment Adviser believes are undervalued.
++ This unmanaged broad-based Index is a subset of the Russell 1000 Index
consisting of those Russell 1000 securities with lower price/book ratios
and lower forecasted growth values.
Past performance is not indicative of future results.
Average Annual Total Return
Institutional Shares Return
================================================================================
One Year Ended 10/31/06 +18.06%
- --------------------------------------------------------------------------------
Five Years Ended 10/31/06 +14.61
- --------------------------------------------------------------------------------
Inception (12/22/99) through 10/31/06 +11.52
- --------------------------------------------------------------------------------
Service Shares Return
================================================================================
One Year Ended 10/31/06 +17.73%
- --------------------------------------------------------------------------------
Five Years Ended 10/31/06 +14.32
- --------------------------------------------------------------------------------
Inception (12/22/99) through 10/31/06 +11.24
- --------------------------------------------------------------------------------
Return Without Return With
Sales Charge Sales Charge*
================================================================================
Investor A Shares
================================================================================
One Year Ended 10/31/06 +17.78% +11.59%
- --------------------------------------------------------------------------------
Five Years Ended 10/31/06 +14.32 +13.10
- --------------------------------------------------------------------------------
Inception (12/22/99) through 10/31/06 +11.24 +10.37
- --------------------------------------------------------------------------------
Return Return
Without CDSC With CDSC+++
================================================================================
Investor B Shares++
================================================================================
One Year Ended 10/31/06 +16.81% +12.31%
- --------------------------------------------------------------------------------
Five Years Ended 10/31/06 +13.45 +13.21
- --------------------------------------------------------------------------------
Inception (12/22/99) through 10/31/06 +10.39 +10.39
- --------------------------------------------------------------------------------
Return Return
Without CDSC With CDSC+++
================================================================================
Investor C Shares+
================================================================================
One Year Ended 10/31/06 +16.89% +15.89%
- --------------------------------------------------------------------------------
Five Years Ended 10/31/06 +13.46 +13.46
- --------------------------------------------------------------------------------
Inception (12/22/99) through 10/31/06 +10.39 +10.39
- --------------------------------------------------------------------------------
================================================================================
Class R Shares Return
================================================================================
One Year Ended 10/31/06 +17.41%
- --------------------------------------------------------------------------------
Five Years Ended 10/31/06 +14.15
- --------------------------------------------------------------------------------
Inception (12/22/99) through 10/31/06 +11.04
- --------------------------------------------------------------------------------
* Assuming maximum sales charge of 5.25%.
+ Maximum contingent deferred sales charge is 1% and is reduced to 0% after
one year.
++ Maximum contingent deferred sales charge is 4.50% and is reduced to 0%
after six years.
+++ Assuming payment of applicable contingent deferred sales charge.
10 BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006
Disclosure of Expenses
Shareholders of these Funds may incur the following charges: (a) expenses
related to transactions, including sales charges, redemption fees and exchange
fees; and (b) operating expenses including advisory fees, distribution fees
including 12b-1 fees, and other Fund expenses. The following example (which is
based on a hypothetical investment of $1,000 invested on May 1, 2006 and held
through October 31, 2006) is intended to assist shareholders both in calculating
expenses based on an investment in each Fund and in comparing these expenses
with similar costs of investing in other mutual funds.
The first table below provides information about actual account values and
actual expenses. In order to estimate the expenses a shareholder paid during the
period covered by this report, shareholders can divide their account value by
$1,000 and then multiply the result by the number in the first line under the
heading entitled "Expenses Paid During the Period."
The second table below provides information about hypothetical account values
and hypothetical expenses based on each Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses. In order to assist
shareholders in comparing the ongoing expenses of investing in these Funds and
other funds, compare the 5% hypothetical example with the 5% hypothetical
examples that appear in other funds' shareholder reports.
The expenses shown in the table are intended to highlight shareholders' ongoing
costs only and do not reflect any transactional expenses, such as sales charges,
redemption fees or exchange fees. Therefore, the second table is useful in
comparing ongoing expenses only, and will not help shareholders determine the
relative total expenses of owning different funds. If these transactional
expenses were included, shareholder expenses would have been higher.
BlackRock Large Cap Core Fund
Expenses Paid
Beginning Ending During the Period*
Account Value Account Value May 1, 2006 to
May 1, 2006 October 31, 2006 October 31, 2006
=====================================================================================================================
Actual
=====================================================================================================================
Institutional $ 1,000 $1,024.20 $ 4.64
- ---------------------------------------------------------------------------------------------------------------------
Investor A $ 1,000 $1,022.40 $ 5.93
- ---------------------------------------------------------------------------------------------------------------------
Investor B $ 1,000 $1,018.90 $ 9.88
- ---------------------------------------------------------------------------------------------------------------------
Investor C $ 1,000 $1,018.10 $ 9.87
- ---------------------------------------------------------------------------------------------------------------------
Class R $ 1,000 $1,020.80 $ 7.21
=====================================================================================================================
Hypothetical (5% annual return before expenses)**
=====================================================================================================================
Institutional $ 1,000 $1,020.91 $ 4.63
- ---------------------------------------------------------------------------------------------------------------------
Investor A $ 1,000 $1,019.64 $ 5.92
- ---------------------------------------------------------------------------------------------------------------------
Investor B $ 1,000 $1,015.72 $ 9.86
- ---------------------------------------------------------------------------------------------------------------------
Investor C $ 1,000 $1,015.72 $ 9.86
- ---------------------------------------------------------------------------------------------------------------------
Class R $ 1,000 $1,018.37 $ 7.20
- ---------------------------------------------------------------------------------------------------------------------
* For each class of the Fund, expenses are equal to the annualized expense
ratio for the class (.90% for Institutional, 1.15% for Investor A, 1.92%
for Investor B, 1.92% for Investor C and 1.40% for Class R), multiplied by
the average account value over the period, multiplied by 186/365 (to
reflect the one-half year period shown). Because the Fund is a feeder
fund, the expense table example reflects the expenses of both the feeder
fund and the master portfolio in which it invests.
** Hypothetical 5% annual return before expenses is calculated by pro-rating
the number of days in the most recent fiscal half year divided by 365.
BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006 11
Disclosure of Expenses (continued)
BlackRock Large Cap Growth Fund
Expenses Paid
Beginning Ending During the Period*
Account Value Account Value May 1, 2006 to
May 1, 2006 October 31, 2006 October 31, 2006
=====================================================================================================================
Actual
=====================================================================================================================
Institutional $ 1,000 $ 995.30 $ 5.34
- ---------------------------------------------------------------------------------------------------------------------
Service $ 1,000 $ 993.30 $ 6.91
- ---------------------------------------------------------------------------------------------------------------------
Investor A $ 1,000 $ 993.30 $ 6.65
- ---------------------------------------------------------------------------------------------------------------------
Investor B $ 1,000 $ 990.00 $ 10.60
- ---------------------------------------------------------------------------------------------------------------------
Investor C $ 1,000 $ 990.00 $ 10.55
- ---------------------------------------------------------------------------------------------------------------------
Class R $ 1,000 $ 992.20 $ 7.92
=====================================================================================================================
Hypothetical (5% annual return before expenses)**
=====================================================================================================================
Institutional $ 1,000 $1,020.13 $ 5.40
- ---------------------------------------------------------------------------------------------------------------------
Service $ 1,000 $1,018.55 $ 5.40
- ---------------------------------------------------------------------------------------------------------------------
Investor A $ 1,000 $1,018.80 $ 6.74
- ---------------------------------------------------------------------------------------------------------------------
Investor B $ 1,000 $1,014.83 $ 10.73
- ---------------------------------------------------------------------------------------------------------------------
Investor C $ 1,000 $1,014.88 $ 10.68
- ---------------------------------------------------------------------------------------------------------------------
Class R $ 1,000 $1,017.53 $ 8.02
- ---------------------------------------------------------------------------------------------------------------------
* For each class of the Fund, expenses are equal to the annualized expense
ratio for the class (1.05% for Institutional, 1.36% for Service, 1.31% for
Investor A, 2.09% for Investor B, 2.08% for Investor C and 1.56% for Class
R), multiplied by the average account value over the period, multiplied by
186/365 (to reflect the one-half year period shown). Because the Fund is a
feeder fund, the expense table example reflects the expenses of both the
feeder fund and the master portfolio in which it invests.
** Hypothetical 5% annual return before expenses is calculated by pro-rating
the number of days in the most recent fiscal half year divided by 365.
12 BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006
Disclosure of Expenses (concluded)
BlackRock Large Cap Value Fund
Expenses Paid
Beginning Ending During the Period*
Account Value Account Value May 1, 2006 to
May 1, 2006 October 31, 2006 October 31, 2006
=====================================================================================================================
Actual
=====================================================================================================================
Institutional $ 1,000 $1,038.30 $ 4.93
- ---------------------------------------------------------------------------------------------------------------------
Service $ 1,000 $1,036.60 $ 7.01
- ---------------------------------------------------------------------------------------------------------------------
Investor A $ 1,000 $1,036.70 $ 6.18
- ---------------------------------------------------------------------------------------------------------------------
Investor B $ 1,000 $1,032.60 $ 10.20
- ---------------------------------------------------------------------------------------------------------------------
Investor C $ 1,000 $1,033.20 $ 10.15
- ---------------------------------------------------------------------------------------------------------------------
Class R $ 1,000 $1,035.40 $ 7.52
=====================================================================================================================
Hypothetical (5% annual return before expenses)**
=====================================================================================================================
Institutional $ 1,000 $1,020.66 $ 4.89
- ---------------------------------------------------------------------------------------------------------------------
Service $ 1,000 $1,018.62 $ 6.94
- ---------------------------------------------------------------------------------------------------------------------
Investor A $ 1,000 $1,019.44 $ 6.12
- ---------------------------------------------------------------------------------------------------------------------
Investor B $ 1,000 $1,015.46 $ 10.12
- ---------------------------------------------------------------------------------------------------------------------
Investor C $ 1,000 $1,015.51 $ 10.07
- ---------------------------------------------------------------------------------------------------------------------
Class R $ 1,000 $1,018.11 $ 7.46
- ---------------------------------------------------------------------------------------------------------------------
* For each class of the Fund, expenses are equal to the annualized expense
ratio for the class (.95% for Institutional, 1.35% for Service, 1.19% for
Investor A, 1.97% for Investor B, 1.96% for Investor C and 1.45% for Class
R), multiplied by the average account value over the period, multiplied by
186/365 (to reflect the one-half year period shown). Because the Fund is a
feeder fund, the expense table example reflects the expenses of both the
feeder fund and the master portfolio in which it invests.
** Hypothetical 5% annual return before expenses is calculated by pro-rating
the number of days in the most recent fiscal half year divided by 365.
BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006 13
Statements of Assets and Liabilities BlackRock Large Cap Series Funds, Inc.
BlackRock BlackRock BlackRock
Large Large Large
Cap Core Cap Growth Cap Value
As of October 31, 2006 Fund Fund Fund
====================================================================================================================================
Assets
- ------------------------------------------------------------------------------------------------------------------------------------
Investment in Master Large Cap Core Portfolio, Master Large Cap Growth
Portfolio and Master Large Cap Value Portfolio (the"Portfolios"),
respectively* ...................................................... $3,690,221,742 $ 785,376,801 $3,853,890,807
Investment in Master S&P 500 Index Series (the "Series")**@ .......... 16,138,543 -- --
Prepaid expenses and other assets .................................... 73,821 12,991 38,965
-------------------------------------------------
Total assets ......................................................... 3,706,434,106 785,389,792 3,853,929,772
-------------------------------------------------
====================================================================================================================================
Liabilities
- ------------------------------------------------------------------------------------------------------------------------------------
Payables:
Distributor ...................................................... 1,684,315 322,516 1,294,110
Administrator .................................................... 741,229 170,376 1,048,812
Other affiliates ................................................. 11,553 6,185 49,175
Accrued expenses and other liabilities ............................... 959,486 355,978 1,041,569
-------------------------------------------------
Total liabilities .................................................... 3,396,583 855,055 3,433,666
-------------------------------------------------
====================================================================================================================================
Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets ........................................................... $3,703,037,523 $ 784,534,737 $3,850,496,106
=================================================
====================================================================================================================================
Net Assets Consist of
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulated investment loss--net ..................................... $ (45,543) $ -- $ --
Undistributed (accumulated) realized capital gains (losses) allocated
from the Portfolios--net ........................................... (8,506,257) (50,805,378) 52,413,950
Unrealized appreciation allocated--net ............................... 622,594,161 102,960,523 565,614,571
-------------------------------------------------
Total accumulated earnings--net ...................................... 614,042,361 52,155,145 618,028,521
Institutional Shares of Common Stock, $.10 par value+ ................ 6,496,989 2,029,878 5,222,626
Service Shares of Common Stock, $.10 par value++ ..................... -- 47,204 131,016
Investor A Shares of Common Stock, $.10 par value+++ ................. 7,364,058 2,088,325 8,863,912
Investor B Shares of Common Stock, $.10 par value++++ ................ 3,513,090 1,081,368 1,744,159
Investor C Shares of Common Stock, $.10 par value+++++ ............... 8,867,610 1,872,800 4,257,636
Class R Shares of Common Stock, $.10 par value++++++ ................. 801,986 524,736 656,701
Paid-in capital in excess of par ..................................... 3,061,951,429 724,735,281 3,211,591,535
-------------------------------------------------
Net Assets ........................................................... $3,703,037,523 $ 784,534,737 $3,850,496,106
=================================================
14 BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006
Statements of Assets and Liabilities (concluded)
BlackRock Large Cap Series Funds, Inc.
BlackRock BlackRock BlackRock
Large Large Large
Cap Core Cap Growth Cap Value
As of October 31, 2006 Fund Fund Fund
====================================================================================================================================
Net Asset Value
- ------------------------------------------------------------------------------------------------------------------------------------
Institutional:
Net assets ....................................................... $ 922,301,248 $ 215,697,419 $ 990,080,713
=================================================
Shares outstanding ............................................... 64,969,886 20,298,783 52,226,255
=================================================
Net asset value .................................................. $ 14.20 $ 10.63 $ 18.96
=================================================
Service:
Net assets ....................................................... -- $ 5,014,076 $ 24,827,681
=================================================
Shares outstanding ............................................... -- 472,040 1,310,163
=================================================
Net asset value .................................................. -- $ 10.62 $ 18.95
=================================================
Investor A:
Net assets ....................................................... $1,028,585,140 $ 218,017,064 $1,652,441,653
=================================================
Shares outstanding ............................................... 73,640,580 20,883,245 88,639,117
=================================================
Net asset value .................................................. $ 13.97 $ 10.44 $ 18.64
=================================================
Investor B:
Net assets ....................................................... $ 467,144,596 $ 107,113,142 $ 309,794,993
=================================================
Shares outstanding ............................................... 35,130,902 10,813,676 17,441,592
=================================================
Net asset value .................................................. $ 13.30 $ 9.91 $ 17.76
=================================================
Investor C:
Net assets ....................................................... $1,176,244,395 $ 185,337,306 $ 754,265,619
=================================================
Shares outstanding ............................................... 88,676,103 18,727,995 42,576,362
=================================================
Net asset value .................................................. $ 13.26 $ 9.90 $ 17.72
=================================================
Class R:
Net assets ....................................................... $ 108,762,144 $ 53,355,730 $ 119,085,447
=================================================
Shares outstanding ............................................... 8,019,864 5,247,361 6,567,006
=================================================
Net asset value .................................................. $ 13.56 $ 10.17 $ 18.13
=================================================
* Identified cost of the Portfolios ................................ $3,078,354,526 $ 682,416,278 $3,288,276,236
=================================================
** The cost and unrealized appreciation (depreciation) of investment,
with respect to BlackRock Large Cap Core Fund, as of October 31,
2006, as computed for federal income tax purposes, was as follows:
Aggregate cost ................................................... $ 5,411,598
==============
Gross unrealized appreciation .................................... $ 10,726,945
Gross unrealized depreciation .................................... --
==============
Net unrealized appreciation ...................................... $ 10,726,945
==============
+ Authorized shares--Institutional ................................. 400,000,000 100,000,000 100,000,000
=================================================
++ Authorized shares--Service ....................................... -- 50,000,000 50,000,000
=================================================
+++ Authorized shares--Investor A .................................... 300,000,000 100,000,000 100,000,000
=================================================
++++ Authorized shares--Investor B .................................... 200,000,000 200,000,000 200,000,000
=================================================
+++++ Authorized shares--Investor C .................................... 400,000,000 100,000,000 100,000,000
=================================================
++++++ Authorized shares--Class R ....................................... 200,000,000 200,000,000 200,000,000
=================================================
@ Investments in companies considered to be an affiliate of
BlackRock Large Cap Core Fund, for purposes of Section 2(a)(3) of
the Investment Company Act of 1940, were as follows:
------------------------------------------------------------------
Net Dividend
Affiliate Activity Income
------------------------------------------------------------------
Master S&P 500 Index Series $5,411,598 --
------------------------------------------------------------------
See Notes to Financial Statements.
BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006 15
Statements of Operations BlackRock Large Cap Series Funds, Inc.
BlackRock BlackRock BlackRock
Large Large Large
Cap Core Cap Growth Cap Value
For the Year Ended October 31, 2006 Fund Fund Fund
===================================================================================================================================
Investment Income
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income allocated from the Portfolios:
Dividends ........................................................ $ 33,171,580 $ 5,052,070 $ 29,822,586
Interest from affiliates ......................................... 243,473 88,436 780,216
Securities lending--net .......................................... 434,320 73,494 329,333
Expenses ......................................................... (15,531,141) (3,574,687) (12,997,732)
-------------------------------------------------
Total income ......................................................... 18,318,232 1,639,313 17,934,403
-------------------------------------------------
===================================================================================================================================
Expenses
- -----------------------------------------------------------------------------------------------------------------------------------
Service and distribution fees--Investor C ............................ 9,719,620 1,569,173 5,830,235
Administration fees .................................................. 7,847,966 1,596,846 6,128,303
Service and distribution fees--Investor B ............................ 4,636,061 1,018,452 2,731,237
Service fees--Investor A ............................................. 2,081,745 391,892 2,032,251
Transfer agent fees--Investor C ...................................... 1,467,440 363,822 961,811
Transfer agent fees--Investor A ...................................... 1,076,313 297,654 1,041,343
Transfer agent fees--Institutional ................................... 1,022,807 336,044 926,661
Transfer agent fees--Investor B ...................................... 700,202 245,795 460,772
Service and distribution fees--Class R ............................... 388,852 204,545 403,173
Registration fees .................................................... 249,690 135,379 431,059
Printing and shareholder reports ..................................... 203,124 42,228 130,753
Transfer agent fees--Class R ......................................... 100,904 79,433 111,096
Professional fees .................................................... 63,267 21,342 45,019
Transfer agent fees--Service ......................................... -- 1,023 6,399
Service fees--Service ................................................ -- 627 3,075
Custodian fees ....................................................... 2,345 -- --
Directors' fees and expenses ......................................... 130 -- --
Other ................................................................ 23,695 16,511 18,998
-------------------------------------------------
Total expenses ....................................................... 29,584,161 6,320,766 21,262,185
-------------------------------------------------
Investment loss--net ................................................. (11,265,929) (4,681,453) (3,327,782)
-------------------------------------------------
===================================================================================================================================
Realized & Unrealized Gain--Net
- -----------------------------------------------------------------------------------------------------------------------------------
Realized gain allocated from the Portfolio--net ...................... 179,091,130 24,740,475 116,307,468
Change in unrealized appreciation on:
Allocations from the Portfolio ................................... 275,014,650 44,967,618 272,889,139
Allocations from the Series ...................................... 1,013,197 -- --
-------------------------------------------------
Total change in unrealized appreciation--net ......................... 276,027,847 44,967,618 272,889,139
-------------------------------------------------
Total realized and unrealized gain--net .............................. 455,118,977 69,708,093 389,196,607
-------------------------------------------------
Net Increase in Net Assets Resulting from Operations ................. $ 443,853,048 $ 65,026,640 $ 385,868,825
=================================================
See Notes to Financial Statements.
16 BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006
Statements of Changes in Net Assets BlackRock Large Cap Core Fund
For the Year Ended
October 31,
-------------------------------------
Increase (Decrease) in Net Assets: 2006 2005
===================================================================================================================================
Operations
- -----------------------------------------------------------------------------------------------------------------------------------
Investment loss--net ......................................................... $ (11,265,929) $ (5,488,189)
Realized gain--net ........................................................... 179,091,130 169,480,673
Change in unrealized appreciation--net ....................................... 276,027,847 148,113,813
-------------------------------------
Net increase in net assets resulting from operations ......................... 443,853,048 312,106,297
-------------------------------------
===================================================================================================================================
Distributions to Shareholders
- -----------------------------------------------------------------------------------------------------------------------------------
Realized gain--net:
Institutional ............................................................ (57,857,569) (3,522,593)
Investor A ............................................................... (62,093,983) (3,420,110)
Investor B ............................................................... (35,312,162) (3,547,724)
Investor C ............................................................... (70,619,981) (3,932,578)
Class R .................................................................. (5,587,829) (154,059)
-------------------------------------
Net decrease in net assets resulting from distributions to shareholders ...... (231,471,524) (14,577,064)
-------------------------------------
===================================================================================================================================
Capital Share Transactions
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets derived from capital share transactions ........... 1,029,911,537 496,660,002
-------------------------------------
===================================================================================================================================
Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Total increase in net assets ................................................. 1,242,293,061 794,189,235
Beginning of year ............................................................ 2,460,744,462 1,666,555,227
-------------------------------------
End of year* ................................................................. $ 3,703,037,523 $ 2,460,744,462
=====================================
* Accumulated investment loss--net ............................................. $ (45,543) $ --
=====================================
See Notes to Financial Statements.
BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006 17
Statements of Changes In Net Assets BlackRock Large Cap Growth Fund
For the Year Ended
October 31,
-------------------------------------
Increase (Decrease) in Net Assets: 2006 2005
===================================================================================================================================
Operations
- -----------------------------------------------------------------------------------------------------------------------------------
Investment loss--net ......................................................... $ (4,681,453) $ (3,266,027)
Realized gain--net ........................................................... 24,740,475 27,951,501
Change in unrealized appreciation--net ....................................... 44,967,618 17,275,515
-------------------------------------
Net increase in net assets resulting from operations ......................... 65,026,640 41,960,989
-------------------------------------
===================================================================================================================================
Capital Share Transactions
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets derived from capital share transactions ........... 230,644,704 102,839,683
-------------------------------------
===================================================================================================================================
Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Total increase in net assets ................................................. 295,671,344 144,800,672
Beginning of year ............................................................ 488,863,393 344,062,721
-------------------------------------
End of year .................................................................. $ 784,534,737 $ 488,863,393
=====================================
See Notes to Financial Statements.
18 BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006
Statements of Changes in Net Assets BlackRock Large Cap Value Fund
For the Year Ended
October 31,
-------------------------------------
Increase (Decrease) in Net Assets: 2006 2005
===================================================================================================================================
Operations
- -----------------------------------------------------------------------------------------------------------------------------------
Investment loss--net ......................................................... $ (3,327,782) $ (2,354,785)
Realized gain--net ........................................................... 116,307,468 77,262,988
Change in unrealized appreciation--net ....................................... 272,889,139 112,124,763
-------------------------------------
Net increase in net assets resulting from operations ......................... 385,868,825 187,032,966
-------------------------------------
===================================================================================================================================
Distributions to Shareholders
- -----------------------------------------------------------------------------------------------------------------------------------
Realized gain--net:
Institutional ............................................................ (37,978,492) (8,685,584)
Service .................................................................. (336) --
Investor A ............................................................... (41,836,619) (8,283,910)
Investor B ............................................................... (15,641,418) (10,290,416)
Investor C ............................................................... (31,948,254) (10,721,593)
Class R .................................................................. (4,331,376) (707,934)
-------------------------------------
Net decrease in net assets resulting from distributions to shareholders ...... (131,736,495) (38,689,437)
-------------------------------------
===================================================================================================================================
Capital Share Transactions
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets derived from capital share transactions ........... 2,061,799,094 576,505,050
-------------------------------------
===================================================================================================================================
Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Total increase in net assets ................................................. 2,315,931,424 724,848,579
Beginning of year ............................................................ 1,534,564,682 809,716,103
-------------------------------------
End of year .................................................................. $ 3,850,496,106 $ 1,534,564,682
=====================================
See Notes to Financial Statements.
BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006 19
Financial Highlights Institutional
BlackRock Large Cap Core Fund
-----------------------------------------------------------------------
For the Year Ended October 31,
The following per share data and ratios have been derived -----------------------------------------------------------------------
from information provided in the financial statements. 2006 2005 2004 2003 2002
==================================================================================================================================
Per Share Operating Performance
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year ................. $ 13.20 $ 11.28 $ 10.33 $ 8.31 $ 9.10
-----------------------------------------------------------------------
Investment income (loss)--net* ..................... .03 .04 .02 .01 .03
Realized and unrealized gain (loss)--net ........... 2.10 1.97 .93 2.01 (.82)
-----------------------------------------------------------------------
Total from investment operations ................... 2.13 2.01 .95 2.02 (.79)
-----------------------------------------------------------------------
Less distributions from realized gain--net ......... (1.13) (.09) -- -- --
-----------------------------------------------------------------------
Net asset value, end of year ....................... $ 14.20 $ 13.20 $ 11.28 $ 10.33 $ 8.31
=======================================================================
==================================================================================================================================
Total Investment Return**
- ----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ................. 16.91% 17.94% 9.20% 24.31% (8.68%)
=======================================================================
==================================================================================================================================
Ratios to Average Net Assets***
- ----------------------------------------------------------------------------------------------------------------------------------
Expenses, net of reimbursement ..................... .89% .91% .93% .98% 1.04%
=======================================================================
Expenses ........................................... .89% .91% .93% .98% 1.04%
=======================================================================
Investment income (loss)--net ...................... .19% .31% .17% .06% .33%
=======================================================================
==================================================================================================================================
Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (in thousands) ............. $ 922,301 $ 601,378 $ 415,647 $ 307,277 $ 214,953
=======================================================================
Portfolio turnover of the Fund ..................... 0% -- -- -- --
=======================================================================
Portfolio turnover of the Portfolios ............... 87.67% 93.95% 135.48% 138.73% 150.18%
=======================================================================
* Based on average shares outstanding.
** Total investment returns exclude the effect of sales charges. Effective
December 28, 2005, Institutional Shares are no longer subject to any
front-end sales charge.
*** Includes the Fund's share of the Portfolio's allocated expenses and/or
investment income (loss)--net.
See Notes to Financial Statements.
20 BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006
BlackRock Large Cap Growth Fund
- --------------------------------------------------------------------------------
For the Year Ended October 31,
- --------------------------------------------------------------------------------
2006 2005 2004 2003 2002
================================================================================
- --------------------------------------------------------------------------------
$ 9.36 $ 8.36 $ 7.97 $ 6.44 $ 7.50
- --------------------------------------------------------------------------------
(.02) (.02) (.04) (.04) (.05)
1.29 1.02 .43 1.57 (1.01)
- --------------------------------------------------------------------------------
1.27 1.00 .39 1.53 (1.06)
- --------------------------------------------------------------------------------
-- -- -- -- --
- --------------------------------------------------------------------------------
$ 10.63 $ 9.36 $ 8.36 $ 7.97 $ 6.44
================================================================================
================================================================================
- --------------------------------------------------------------------------------
13.57% 11.96% 4.89% 23.76% (14.13%)
================================================================================
================================================================================
- --------------------------------------------------------------------------------
1.04% 1.08% 1.13% 1.22% 1.29%
================================================================================
1.04% 1.08% 1.13% 1.22% 1.31%
================================================================================
(.22%) (.20%) (.45%) (.57%) (.63%)
================================================================================
================================================================================
- --------------------------------------------------------------------------------
$ 215,697 $ 128,667 $ 79,869 $ 53,163 $ 31,989
================================================================================
-- -- -- -- --
================================================================================
116.77% 131.79% 164.94% 178.11% 177.46%
================================================================================
BlackRock Large Cap Value Fund
- --------------------------------------------------------------------------------
For the Year Ended October 31,
- --------------------------------------------------------------------------------
2006 2005 2004 2003 2002
================================================================================
- --------------------------------------------------------------------------------
$ 17.12 $ 14.71 $ 12.89 $ 10.21 $ 10.67
- --------------------------------------------------------------------------------
.06 .06 .07 .06 .05
2.93 3.01 1.75 2.62 (.51)
- --------------------------------------------------------------------------------
2.99 3.07 1.82 2.68 (.46)
- --------------------------------------------------------------------------------
(1.15) (.66) -- -- --
- --------------------------------------------------------------------------------
$ 18.96 $ 17.12 $ 14.71 $ 12.89 $ 10.21
================================================================================
================================================================================
- --------------------------------------------------------------------------------
18.06% 21.49% 14.12% 26.25% (4.31%)
================================================================================
- --------------------------------------------------------------------------------
.94% .98% 1.01% 1.03% 1.03%
================================================================================
.94% .98% 1.01% 1.03% 1.03%
================================================================================
.32% .35% .49% .51% .76%
================================================================================
- --------------------------------------------------------------------------------
$ 990,081 $ 446,172 $ 194,625 $ 92,736 $ 66,754
================================================================================
-- -- -- -- --
================================================================================
70.86% 94.95% 127.59% 157.04% 136.92%
================================================================================
BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006 21
Financial Highlights (continued) Service & Investor A
Service
------------------------------
BlackRock BlackRock
Large Cap Large Cap
Growth Fund Value Fund
------------------------------
The following per share data and ratios For the Period
have been derived from information October 2, 2006@@
provided in the financial statements. to October 31, 2006
================================================================================
Per Share Operating Performance
- --------------------------------------------------------------------------------
Net asset value, beginning of period ......... $ 10.18 $ 18.62
------------------------------
Investment income (loss)--net* ............... (.01) (.01)
Realized and unrealized gain (loss)--net ..... .65 2.08
------------------------------
Total from investment operations ............. .64 2.07
------------------------------
Less distributions from realized gain--net ... -- (.31)
------------------------------
Net asset value, end of period ............... $ 10.62 $ 18.95
==============================
================================================================================
Total Investment Return***
- --------------------------------------------------------------------------------
Based on net asset value per share ........... 4.32%@ 3.49%@
==============================
================================================================================
Ratios to Average Net Assets****
- --------------------------------------------------------------------------------
Expenses, net of reimbursement ............... 1.36%** 1.35%**
==============================
Expenses ..................................... 1.36%** 1.35%**
==============================
Investment income (loss)--net ................ (1.14%)** (1.14%)**
==============================
================================================================================
Supplemental Data
- --------------------------------------------------------------------------------
Net assets, end of period (in thousands) ..... $ 5,014 $ 24,828
==============================
Portfolio turnover of the Fund ............... -- --
==============================
Portfolio turnover of the Portfolios ......... 116.77% 70.86%
==============================
Investor A
------------------------------------------------------------------
BlackRock Large Cap Core Fund
------------------------------------------------------------------
The following per share data and ratios For the Year Ended October 31,
have been derived from information ------------------------------------------------------------------
provided in the financial statements. 2006 2005 2004 2003 2002
====================================================================================================================
Per Share Operating Performance
- --------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ......... $ 13.01 $ 11.15 $ 10.23 $ 8.25 $ 9.06
------------------------------------------------------------------
Investment income (loss)--net* ............... (.01) .01 (.01) (.02) .01
Realized and unrealized gain (loss)--net ..... 2.08 1.94 .93 2.00 (.82)
------------------------------------------------------------------
Total from investment operations ............. 2.07 1.95 .92 1.98 (.81)
------------------------------------------------------------------
Less distributions from realized gain--net ... (1.11) (.09) -- -- --
------------------------------------------------------------------
Net asset value, end of period ............... $ 13.97 $ 13.01 $ 11.15 $ 10.23 $ 8.25
==================================================================
====================================================================================================================
Total Investment Return***
- --------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ........... 16.61% 17.61% 8.99% 24.00% (8.94%)
==================================================================
====================================================================================================================
Ratios to Average Net Assets****
- --------------------------------------------------------------------------------------------------------------------
Expenses, net of reimbursement ............... 1.14% 1.16% 1.18% 1.23% 1.28%
==================================================================
Expenses ..................................... 1.14% 1.16% 1.18% 1.23% 1.28%
==================================================================
Investment income (loss)--net ................ (.06%) .05% (.09%) (.21%) .10%
==================================================================
====================================================================================================================
Supplemental Data
- --------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) ..... $1,028,585 $ 629,682 $ 392,896 $ 293,144 $ 136,552
==================================================================
Portfolio turnover of the Fund ............... 0% -- -- -- --
==================================================================
Portfolio turnover of the Portfolios ......... 87.67% 93.95% 135.48% 138.73% 150.18%
==================================================================
* Based on average shares outstanding.
** Annualized.
*** Total investment returns exclude the effects of sales charges.
**** Includes the Fund's share of the Portfolio's allocated expenses and/or
investment income (loss)--net.
@ Aggregate total investment return.
@@ Commencement of operations.
See Notes to Financial Statements.
22 BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006
Investor A
- --------------------------------------------------------------------------------
BlackRock Large Cap Growth Fund
- --------------------------------------------------------------------------------
For the Year Ended October 31,
- --------------------------------------------------------------------------------
2006 2005 2004 2003 2002
================================================================================
- --------------------------------------------------------------------------------
$ 9.22 $ 8.26 $ 7.89 $ 6.39 $ 7.47
- --------------------------------------------------------------------------------
(.06) (.04) (.06) (.05) (.06)
1.28 1.00 .43 1.55 (1.02)
- --------------------------------------------------------------------------------
1.22 .96 .37 1.50 (1.08)
- --------------------------------------------------------------------------------
-- -- -- -- --
- --------------------------------------------------------------------------------
$ 10.44 $ 9.22 $ 8.26 $ 7.89 $ 6.39
================================================================================
================================================================================
- --------------------------------------------------------------------------------
13.23% 11.62% 4.69% 23.47% (14.46%)
================================================================================
================================================================================
- --------------------------------------------------------------------------------
1.29% 1.33% 1.38% 1.46% 1.54%
================================================================================
1.29% 1.33% 1.38% 1.46% 1.56%
================================================================================
(.48%) (.46%) (.69%) (.81%) (.88%)
================================================================================
================================================================================
- --------------------------------------------------------------------------------
$ 218,017 $ 112,887 $ 64,539 $ 27,410 $ 15,874
================================================================================
-- -- -- -- --
================================================================================
116.77% 131.79% 164.94% 178.11% 177.46%
================================================================================
Investor A
- --------------------------------------------------------------------------------
BlackRock Large Cap Value Fund
- --------------------------------------------------------------------------------
For the Year Ended October 31,
- --------------------------------------------------------------------------------
2006 2005 2004 2003 2002
================================================================================
- --------------------------------------------------------------------------------
$ 16.86 $ 14.53 $ 12.77 $ 10.14 $ 10.62
- --------------------------------------------------------------------------------
.01 .02 .03 .03 .04
2.89 2.97 1.73 2.60 (.52)
- --------------------------------------------------------------------------------
2.90 2.99 1.76 2.63 (.48)
- --------------------------------------------------------------------------------
(1.12) (.66) -- -- --
- --------------------------------------------------------------------------------
$ 18.64 $ 16.86 $ 14.53 $ 12.77 $ 10.14
================================================================================
================================================================================
17.78% 21.20% 13.78% 25.94% (4.52%)
================================================================================
================================================================================
- --------------------------------------------------------------------------------
1.19% 1.23% 1.26% 1.28% 1.28%
================================================================================
1.19% 1.23% 1.26% 1.28% 1.28%
================================================================================
.05% .10% .21% .24% .49%
================================================================================
================================================================================
- --------------------------------------------------------------------------------
$1,652,442 $ 371,216 $ 161,867 $ 90,358 $ 46,020
================================================================================
-- -- -- -- --
================================================================================
70.86% 94.95% 127.59% 157.04% 136.92%
================================================================================
BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006 23
Financial Highlights (continued) Investor B
BlackRock Large Cap Core Fund
-----------------------------------------------------------------------
For the Year Ended October 31,
The following per share data and ratios have been derived -----------------------------------------------------------------------
from information provided in the financial statements. 2006 2005 2004 2003 2002
==================================================================================================================================
Per Share Operating Performance
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year ................. $ 12.43 $ 10.74 $ 9.93 $ 8.07 $ 8.93
-----------------------------------------------------------------------
Investment loss--net* .............................. (.11) (.08) (.09) (.08) (.06)
Realized and unrealized gain (loss)--net ........... 1.99 1.86 .90 1.94 (.80)
-----------------------------------------------------------------------
Total from investment operations ................... 1.88 1.78 .81 1.86 (.86)
-----------------------------------------------------------------------
Less distributions from realized gain--net ......... (1.01) (.09) -- -- --
-----------------------------------------------------------------------
Net asset value, end of year ....................... $ 13.30 $ 12.43 $ 10.74 $ 9.93 $ 8.07
=======================================================================
==================================================================================================================================
Total Investment Return**
- ----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ................. 15.72% 16.69% 8.16% 23.05% (9.63%)
=======================================================================
==================================================================================================================================
Ratios to Average Net Assets***
- ----------------------------------------------------------------------------------------------------------------------------------
Expenses, net of reimbursement ..................... 1.91% 1.93% 1.95% 2.00% 2.07%
=======================================================================
Expenses ........................................... 1.91% 1.93% 1.95% 2.00% 2.07%
=======================================================================
Investment loss--net ............................... (.83%) (.66%) (.86%) (.96%) (.64%)
=======================================================================
==================================================================================================================================
Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (in thousands) ............. $ 467,145 $ 446,242 $ 412,162 $ 389,598 $ 329,121
=======================================================================
Portfolio turnover of the Fund ..................... 0% -- -- -- --
=======================================================================
Portfolio turnover of the Portfolios ............... 87.67% 93.95% 135.48% 138.73% 150.18%
=======================================================================
* Based on average shares outstanding.
** Total investment returns exclude the effects of sales charges.
*** Includes the Fund's share of the Portfolio's allocated expenses and/or
investment loss--net.
See Notes to Financial Statements.
24 BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006
BlackRock Large Cap Growth Fund
- --------------------------------------------------------------------------------
For the Year Ended October 31,
- --------------------------------------------------------------------------------
2006 2005 2004 2003 2002
================================================================================
- --------------------------------------------------------------------------------
$ 8.82 $ 7.96 $ 7.66 $ 6.25 $ 7.37
- --------------------------------------------------------------------------------
(.10) (.12) (.10) (.12) (.11)
1.21 .96 .42 1.51 (1.00)
- --------------------------------------------------------------------------------
1.09 .86 .30 1.41 (1.12)
- --------------------------------------------------------------------------------
-- -- -- -- --
- --------------------------------------------------------------------------------
$ 9.91 $ 8.82 $ 7.96 $ 7.66 $ 6.25
================================================================================
================================================================================
- --------------------------------------------------------------------------------
12.36% 10.80% 3.92% 22.56% (15.20%)
================================================================================
================================================================================
- --------------------------------------------------------------------------------
2.07% 2.11% 2.16% 2.27% 2.32%
================================================================================
2.07% 2.11% 2.16% 2.27% 2.34%
================================================================================
(1.25%) (1.15%) (1.48%) (1.61%) (1.66%)
================================================================================
================================================================================
- --------------------------------------------------------------------------------
$ 107,113 $ 95,593 $ 93,382 $ 100,683 $ 83,726
================================================================================
-- -- -- -- --
================================================================================
116.77% 131.79% 164.94% 178.11% 177.46%
================================================================================
BlackRock Large Cap Value Fund
- --------------------------------------------------------------------------------
For the Year Ended October 31,
- --------------------------------------------------------------------------------
2006 2005 2004 2003 2002
================================================================================
$ 16.12 $ 14.02 $ 12.41 $ 9.93 $ 10.48
- --------------------------------------------------------------------------------
(.11) (.09) (.07) (.05) (.03)
2.74 2.85 1.68 2.53 (.52)
- --------------------------------------------------------------------------------
2.63 2.76 1.61 2.48 (.55)
- --------------------------------------------------------------------------------
(.99) (.66) -- -- --
- --------------------------------------------------------------------------------
$ 17.76 $ 16.12 $ 14.02 $ 12.41 $ 9.93
================================================================================
================================================================================
- --------------------------------------------------------------------------------
16.81% 20.29% 12.97% 24.97% (5.25%)
================================================================================
================================================================================
- --------------------------------------------------------------------------------
1.96% 2.00% 2.02% 2.05% 2.05%
================================================================================
1.96% 2.00% 2.02% 2.05% 2.05%
================================================================================
(.67%) (.60%) (.53%) (.50%) (.28%)
================================================================================
================================================================================
- --------------------------------------------------------------------------------
$ 309,795 $ 261,345 $ 222,055 $ 202,190 $ 174,623
================================================================================
-- -- -- -- --
================================================================================
70.86% 94.95% 127.59% 157.04% 136.92%
================================================================================
BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006 25
Financial Highlights (continued) Investor C
BlackRock Large Cap Core Fund
-----------------------------------------------------------------------
For the Year Ended October 31,
The following per share data and ratios have been derived -----------------------------------------------------------------------
from information provided in the financial statements. 2006 2005 2004 2003 2002
==================================================================================================================================
Per Share Operating Performance
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year ................. $ 12.43 $ 10.73 $ 9.93 $ 8.07 $ 8.93
-----------------------------------------------------------------------
Investment loss--net* .............................. (.11) (.09) (.09) (.08) (.06)
Realized and unrealized gain (loss)--net ........... 1.97 1.88 .89 1.94 (.80)
-----------------------------------------------------------------------
Total from investment operations ................... 1.86 1.79 .80 1.86 (.86)
-----------------------------------------------------------------------
Less distributions from realized gain--net ......... (1.03) (.09) -- -- --
-----------------------------------------------------------------------
Net asset value, end of year ....................... $ 13.26 $ 12.43 $ 10.73 $ 9.93 $ 8.07
=======================================================================
==================================================================================================================================
Total Investment Return**
- ----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ................. 15.64% 16.80% 8.06% 23.05% (9.63%)
=======================================================================
==================================================================================================================================
Ratios to Average Net Assets***
- ----------------------------------------------------------------------------------------------------------------------------------
Expenses, net of reimbursement ..................... 1.91% 1.94% 1.96% 2.01% 2.07%
=======================================================================
Expenses ........................................... 1.91% 1.94% 1.96% 2.01% 2.07%
=======================================================================
Investment loss--net ............................... (.84%) (.73%) (.86%) (.97%) (.66%)
=======================================================================
==================================================================================================================================
Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (in thousands) ............. $1,176,244 $ 737,063 $ 430,689 $ 250,491 $ 178,459
=======================================================================
Portfolio turnover of the Fund ..................... 0% -- -- -- --
=======================================================================
Portfolio turnover of the Portfolios ............... 87.67% 93.95% 135.48% 138.73% 150.18%
=======================================================================
* Based on average shares outstanding.
** Total investment returns exclude the effects of sales charges.
*** Includes the Fund's share of the Portfolio's allocated expenses and/or
investment loss--net.
See Notes to Financial Statements.
26 BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006
BlackRock Large Cap Growth Fund
- --------------------------------------------------------------------------------
For the Year Ended October 31,
- --------------------------------------------------------------------------------
2006 2005 2004 2003 2002
================================================================================
- --------------------------------------------------------------------------------
$ 8.81 $ 7.95 $ 7.65 $ 6.25 $ 7.36
- --------------------------------------------------------------------------------
(.10) (.12) (.10) (.12) (.12)
1.21 .96 .42 1.50 (.99)
- --------------------------------------------------------------------------------
1.09 .86 .30 1.40 (1.11)
- --------------------------------------------------------------------------------
-- -- -- -- --
- --------------------------------------------------------------------------------
$ 9.90 $ 8.81 $ 7.95 $ 7.65 $ 6.25
================================================================================
================================================================================
- --------------------------------------------------------------------------------
12.37% 10.82% 3.92% 22.40% (15.08%)
================================================================================
================================================================================
- --------------------------------------------------------------------------------
2.06% 2.11% 2.16% 2.27% 2.33%
================================================================================
2.06% 2.11% 2.16% 2.27% 2.35%
================================================================================
(1.25%) (1.19%) (1.48%) (1.62%) (1.67%)
================================================================================
================================================================================
- --------------------------------------------------------------------------------
$ 185,337 $ 125,150 $ 94,969 $ 68,337 $ 52,872
================================================================================
-- -- -- -- --
================================================================================
116.77% 131.79% 164.94% 178.11% 177.46%
================================================================================
BlackRock Large Cap Value Fund
- --------------------------------------------------------------------------------
For the Year Ended October 31,
- --------------------------------------------------------------------------------
2006 2005 2004 2003 2002
================================================================================
- --------------------------------------------------------------------------------
$ 16.11 $ 14.01 $ 12.41 $ 9.93 $ 10.48
- --------------------------------------------------------------------------------
(.12) (.10) (.07) (.05) (.03)
2.76 2.86 1.67 2.53 (.52)
- --------------------------------------------------------------------------------
2.64 2.76 1.60 2.48 (.55)
- --------------------------------------------------------------------------------
(1.03) (.66) -- -- --
- --------------------------------------------------------------------------------
$ 17.72 $ 16.11 $ 14.01 $ 12.41 $ 9.93
================================================================================
================================================================================
- --------------------------------------------------------------------------------
16.89% 20.31% 12.89% 24.97% (5.25%)
================================================================================
================================================================================
- --------------------------------------------------------------------------------
1.96% 2.00% 2.03% 2.06% 2.05%
================================================================================
1.96% 2.00% 2.03% 2.06% 2.05%
================================================================================
(.69%) (.65%) (.54%) (.51%) (.28%)
================================================================================
================================================================================
- --------------------------------------------------------------------------------
$ 754,266 $ 409,937 $ 219,806 $ 129,456 $ 95,895
================================================================================
-- -- -- -- --
================================================================================
70.86% 94.95% 127.59% 157.04% 136.92%
================================================================================
BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006 27
Financial Highlights (concluded) Class R
BlackRock Large Cap Core Fund
---------------------------------------------------------------
For the Period
For the Year Ended January 3,
October 31, 2003@@ to
The following per share data and ratios have been derived ------------------------------------------ October 31,
from information provided in the financial statements. 2006 2005 2004 2003
====================================================================================================================================
Per Share Operating Performance
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ......................... $ 12.68 $ 10.89 $ 10.02 $ 8.12
---------------------------------------------------------------
Investment income (loss)--net* ............................... (.04) (.03) (.03) (.05)
Realized and unrealized gain--net ............................ 2.02 1.91 .90 1.95
---------------------------------------------------------------
Total from investment operations ............................. 1.98 1.88 .87 1.90
---------------------------------------------------------------
Less distributions from realized gain--net ................... (1.10) (.09) -- --
---------------------------------------------------------------
Net asset value, end of period ............................... $ 13.56 $ 12.68 $ 10.89 $ 10.02
===============================================================
====================================================================================================================================
Total Investment Return
- ------------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ........................... 16.29% 17.39% 8.68% 23.40%@
===============================================================
====================================================================================================================================
Ratios to Average Net Assets***
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses, net of reimbursement ............................... 1.39% 1.42% 1.43% 1.48%**
===============================================================
Expenses ..................................................... 1.39% 1.42% 1.43% 1.48%**
===============================================================
Investment income (loss)--net ................................ (.32%) (.28%) (.32%) (.44%)**
===============================================================
====================================================================================================================================
Supplemental Data
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) ..................... $108,762 $ 46,379 $ 15,160 $ 119
===============================================================
Portfolio turnover of the Fund ............................... 0% -- -- --
===============================================================
Portfolio turnover of the Portfolios ......................... 87.67% 93.95% 135.48% 138.73%
===============================================================
* Based on average shares outstanding.
** Annualized.
*** Includes the Fund's share of the Portfolio's allocated expenses and/or
investment income (loss)--net.
+ Amount is less than ($.01) per share.
@ Aggregate total investment return.
@@ Commencement of operations.
See Notes to Financial Statements.
28 BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006
BlackRock Large Cap Growth Fund BlackRock Large Cap Value Fund
- ------------------------------------------------------- -------------------------------------------------------
For the Period For the Period
For the Year Ended January 3, For the Year Ended January 3,
October 31, 2003@@ to October 31, 2003@@ to
- ------------------------------------ October 31, ------------------------------------- October 31,
2006 2005 2004 2003 2006 2005 2004 2003
====================================================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
$ 9.00 $ 8.08 $ 7.74 $ 6.16 $ 16.46 $ 14.23 $ 12.54 $ 10.12
- ------------------------------------------------------------------------------------------------------------------------------------
(.07) (.07) (.06) (.05) (.03) (.03) --+ .01
1.24 .99 .40 1.63 2.80 2.92 1.69 2.41
- ------------------------------------------------------------------------------------------------------------------------------------
1.17 .92 .34 1.58 2.77 2.89 1.69 2.42
- ------------------------------------------------------------------------------------------------------------------------------------
-- -- -- -- (1.10) (.66) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
$ 10.17 $ 9.00 $ 8.08 $ 7.74 $ 18.13 $ 16.46 $ 14.23 $ 12.54
====================================================================================================================================
====================================================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
13.00% 11.39% 4.39% 25.65%@ 17.41% 20.93% 13.48% 23.91%@
====================================================================================================================================
====================================================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
1.54% 1.58% 1.61% 1.72%** 1.45% 1.48% 1.53% 1.53%**
====================================================================================================================================
1.54% 1.58% 1.61% 1.72%** 1.45% 1.48% 1.53% 1.53%**
====================================================================================================================================
(.73%) (.75%) (.95%) (.94%)** (.19%) (.19%) (.03%) .01%**
====================================================================================================================================
====================================================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
$ 53,356 $ 26,566 $ 11,304 $ 290 $ 119,085 $ 45,894 $ 11,362 $ 12
====================================================================================================================================
-- -- -- -- -- -- -- --
====================================================================================================================================
116.77% 131.79% 164.94% 178.11% 70.86% 94.95% 127.59% 157.04%
====================================================================================================================================
BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006 29
Notes to Financial Statements BlackRock Large Cap Series Funds, Inc.
1. Significant Accounting Policies:
On September 29, 2006, Merrill Lynch Large Cap Core Fund, Merrill Lynch Large
Cap Growth Fund and Merrill Lynch Large Cap Value Fund, constituting Merrill
Lynch Large Cap Series Funds, Inc., were renamed BlackRock Large Cap Core Fund,
BlackRock Large Cap Growth Fund and BlackRock Large Cap Value Fund (the "Funds"
or individually as the "Fund") and BlackRock Large Cap Series Funds, Inc.,
respectively. The Funds are registered under the Investment Company Act of 1940,
as amended, as diversified, open-end investment companies. Each Fund seeks to
achieve its investment objective by investing all, or a portion of, their assets
in Master Large Cap Core Portfolio, Master Large Cap Growth Portfolio and Master
Large Cap Value Portfolio (the "Portfolios" or individually as the "Portfolio"),
respectively, constituting Master Large Cap Series Trust, which have the same
investment objective and strategies as the corresponding Funds. The value of the
Funds' investment in the Portfolios reflects the Funds' proportionate interest
in the net assets of the Portfolios. The performance of the Funds is directly
affected by the performance of the Portfolios. The financial statements of the
Portfolios, including the Schedules of Investments, are included elsewhere in
this report and should be read in conjunction with the Funds' financial
statements. The Funds' financial statements are prepared in conformity with U.S.
generally accepted accounting principles, which may require the use of
management accruals and estimates. Actual results may differ from these
estimates. On October 31, 2006, the percentage of Master S&P 500 Index Series
(the "Series") owned by BlackRock Large Cap Core Fund was 0.6% and the
percentages of Master Large Cap Core Portfolio, Master Large Cap Growth
Portfolio and Master Large Cap Value Portfolio owned by BlackRock Large Cap Core
Fund, BlackRock Large Cap Growth Fund and BlackRock Large Cap Value Fund, were
95.2%, 100% and 98.1%, respectively. The Funds offer multiple classes of shares.
Effective October 2, 2006, Class I, Class A, Class B and Class C Shares were
redesignated Institutional, Investor A, Investor B and Investor C Shares,
respectively. Additionally, Service Shares commenced operations. Class R Shares
did not change their designation. Service and Institutional Shares are sold only
to certain eligible investors. Investor A Shares are sold with a front-end sales
charge. Shares of Investor B and Investor C may be subject to a contingent
deferred sales charge. Class R Shares are sold only to certain retirement plans.
All classes of shares have identical voting, dividend, liquidation and other
rights and the same terms and conditions, except that Service, Investor A,
Investor B, Investor C and Class R Shares bear certain expenses related to the
account maintenance of such shares, and Investor B, Investor C and Class R
Shares also bear certain expenses related to the distribution of such shares.
Each class has exclusive voting rights with respect to matters relating to its
account maintenance and distribution expenditures (except that Investor B
shareholders may vote on certain changes to the Investor A distribution plan).
Income, expenses (other than expenses attributable to a specific class) and
realized and unrealized gains and losses are allocated daily to each class based
on its relative net assets. The following is a summary of significant accounting
policies followed by the Funds.
(a) Valuation of investments -- Each Fund records its investment at fair value.
Valuation of securities held by the Portfolio is discussed in Note 1(a) of the
Portfolios' Notes to Financial Statements, which are included elsewhere in this
report.
(b) Investment income and expenses -- Each Fund records daily its proportionate
share of the Portfolio's income, expenses and realized and unrealized gains and
losses. In addition, each Fund accrues its own expenses.
(c) Income taxes -- It is each Fund's policy to comply with 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 tax provision is required. Under the applicable foreign tax
law, withholding taxes may be imposed on interest, dividends and capital gains
at various rates.
(d) Prepaid registration fees -- Prepaid registration fees are charged to
expense as the related shares are issued.
(e) Dividends and distributions -- Dividends and distributions paid by each Fund
are recorded on the ex-dividend dates.
(f) Investment transactions -- Investment transactions in each Portfolio are
accounted for on a trade date basis.
(g) Recent accounting pronouncements -- In July 2006, the Financial Accounting
Standards Board ("FASB") issued Interpretation No. 48 ("FIN 48"), "Accounting
for Uncertainty in Income Taxes -- an interpretation of FASB Statement No. 109."
FIN 48 prescribes the minimum recognition threshold a tax position must meet in
connection with accounting for uncertainties in income tax positions taken or
expected to be taken by an entity including mutual funds before being measured
and recognized in the financial statements. Adoption of FIN 48 is required for
fiscal years beginning after December 15, 2006. The impact on the Funds'
financial statements, if any, is currently being assessed.
In addition, in September 2006, Statement of Financial Accounting Standards No.
157, "Fair Value Measurements"
30 BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006
Notes to Financial Statements (continued)
BlackRock Large Cap Series Funds, Inc.
("FAS 157"), was issued and is effective for fiscal years beginning after
November 15, 2007. FAS 157 defines fair value, establishes a framework for
measuring fair value and expands disclosures about fair value measurements.
Management is currently evaluating the implication of FAS 157. At this time its
impact on the Funds' financial statements has not been determined.
(h) Reclassifications -- BlackRock Large Cap Core Fund
U.S. generally accepted accounting principles require that certain components of
net assets be adjusted to reflect permanent differences between financial and
tax reporting. Accordingly, during the current year, $11,220,386 has been
reclassified between paid-in capital in excess of par and accumulated net
investment loss, and $1,945,911 has been reclassified between paid-in capital in
excess of par and accumulated net realized capital losses allocated from the
Portfolios as a result of permanent differences attributable to net operating
losses, limitation of various capital loss carryforwards and other permanent
differences. These reclassifications have no effect on net assets or net asset
values per share.
BlackRock Large Cap Growth Fund
U.S. generally accepted accounting principles require that certain components of
net assets be adjusted to reflect permanent differences between financial and
tax reporting. Accordingly, during the current year, $4,681,453 has been
reclassified between paid-in capital in excess of par and accumulated net
investment loss, and $356,190,749 has been reclassified between paid-in capital
in excess of par and accumulated net realized capital losses as a result of
permanent differences attributable to net operating losses and the expiration of
capital loss carryforwards. This reclassification has no effect on net assets or
net asset values per share.
BlackRock Large Cap Value Fund
U.S. generally accepted accounting principles require that certain components of
net assets be adjusted to reflect permanent differences between financial and
tax reporting. Accordingly, during the current year, $3,327,782 has been
reclassified between accumulated paid-in capital in excess of par and
accumulated net investment loss as a result of permanent differences
attributable to net operating loss. This reclassification has no effect on net
assets or net asset values per share.
2. Transactions with Affiliates:
On September 29, 2006, BlackRock, Inc. and Merrill Lynch & Co., Inc. ("Merrill
Lynch") combined Merrill Lynch's investment management business, Merrill Lynch
Investment Managers, L.P. ("MLIM") and its affiliates, including Fund Asset
Management, L.P. ("FAM"), with BlackRock, Inc. to create a new independent
company. Merrill Lynch has a 49.8% economic interest and a 45% voting interest
in the combined company and The PNC Financial Services Group, Inc. ("PNC"), has
approximately a 34% economic and voting interest. The new company operates under
the BlackRock name and is governed by a board of directors with a majority of
independent members.
On August 15, 2006 and August 31, 2006, shareholders of each Fund approved a new
Investment Advisory Agreement for each Portfolio with BlackRock Advisors, Inc.
(the "Manager"), an indirect, wholly owned subsidiary of BlackRock, Inc.
BlackRock Advisors, Inc. was recently reorganized into a limited liability
company and renamed BlackRock Advisors, LLC. The new Investment Advisory
Agreement became effective on September 29, 2006. Prior to September 29, 2006,
FAM was the Investment Adviser. The general partner of FAM is Princeton
Services, Inc. ("PSI"), an indirect, wholly owned subsidiary of Merrill Lynch,
which is the limited partner. Each Fund has entered into an Administration
Agreement with BlackRock Advisors, LLC. Each Fund pays a monthly fee at an
annual rate of .25% of the Fund's average daily net assets for the performance
of administrative services (other than investment advice and related portfolio
activities) necessary for the operation of the Fund. Prior to September 29,
2006, FAM acted as each Fund's Administrator and was compensated at the same fee
rate. The Fund has also entered into a separate Distribution Agreement and
Distribution Plan with FAM Distributors, Inc. ("FAMD") and BlackRock
Distributors, Inc. ("BDI") (collectively, the "Distributor"). FAMD is a wholly
owned subsidiary of Merrill Lynch Group, Inc. and BDI is an affiliate of
BlackRock, Inc.
Pursuant to the Distribution Plans adopted by the Funds in accordance with Rule
12b-1 under the Investment Company Act of 1940, the Funds pay each Distributor
ongoing account maintenance ("service fees") and distribution fees. The fees are
accrued daily and paid monthly at annual rates based upon the average daily net
assets of the shares as follows:
- --------------------------------------------------------------------------------
Service Distribution
Fee Fee
- --------------------------------------------------------------------------------
Service .......................................... .25% --
Investor A ....................................... .25% --
Investor B ....................................... .25% .75%
Investor C ....................................... .25% .75%
Class R .......................................... .25% .25%
- --------------------------------------------------------------------------------
Pursuant to sub-agreements with each Distributor, broker-dealers, including
Merrill Lynch, Pierce, Fenner & Smith
BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006 31
Notes to Financial Statements (continued)
BlackRock Large Cap Series Funds, Inc.
Incorporated ("MLPF&S"), a wholly owned subsidiary of Merrill Lynch, and an
affiliate of each of the Distributors, also provides account maintenance and
distribution services to the Funds. The ongoing service fee compensates the
Distributors and each broker-dealer (including MLPF&S) for providing account
maintenance services to Service, Investor A, Investor B, Investor C and Class R
shareholders. The ongoing distribution fee compensates the Distributors and the
broker-dealers for providing shareholder and distribution-related services to
Investor B, Investor C and Class R shareholders.
For the year ended October 31, 2006, FAMD, the Funds' sole Distributor until
September 29, 2006, and BDI, for the period September 30, 2006 to October 31,
2006, earned underwriting discounts and MLPF&S was paid dealer concessions on
sales of the Funds' Institutional and Investor A Shares as follows:
- --------------------------------------------------------------------------------
FAMD MLPF&S BDI
- --------------------------------------------------------------------------------
BlackRock Large Cap Core Fund
Institutional ...................... $ 12,445 $ 65,572 --
Investor A ......................... $153,820 $2,024,861 $ 21
- --------------------------------------------------------------------------------
BlackRock Large Cap Growth Fund
Institutional ...................... $ 2 $ 20 --
Investor A ......................... $ 19,087 $ 252,055 $ 22
- --------------------------------------------------------------------------------
BlackRock Large Cap Value Fund
Institutional ...................... $ 487 $ 1,748 --
Investor A ......................... $ 72,367 $ 938,345 $4,074
- --------------------------------------------------------------------------------
For the year ended October 31, 2006, the Distributors paid MLPF&S contingent
deferred sales charges relating to transactions in Investor B and Investor C
Shares as follows:
- --------------------------------------------------------------------------------
Investor B Investor C
- --------------------------------------------------------------------------------
BlackRock Large Cap Core Fund ....................... $332,573 $149,200
BlackRock Large Cap Growth Fund ..................... $ 57,137 $ 15,394
BlackRock Large Cap Value Fund ...................... $165,535 $ 65,071
- --------------------------------------------------------------------------------
In addition, for the period September 29, 2006 to October 31, 2006, BlackRock
and/or its affiliates received contingent deferred sales charges of $10 and $5
relating to transactions in Investor B Shares for the BlackRock Large Cap Growth
Fund and BlackRock Large Cap Value Fund, respectively.
Furthermore, the Distributors paid MLPF&S contingent deferred sales charges
relating to transactions subject to front-end sales charge waivers for Investor
A Shares as follows:
- --------------------------------------------------------------------------------
Investor A
- --------------------------------------------------------------------------------
BlackRock Large Cap Core Fund .................................... $ --
BlackRock Large Cap Growth Fund .................................. $ 601
BlackRock Large Cap Value Fund ................................... $1,986
- --------------------------------------------------------------------------------
BlackRock maintains a call center, which is responsible for providing certain
shareholder services to each Fund, such as responding to shareholder inquiries
and processing transactions based upon instructions from shareholders with
respect to the subscription and redemption of Fund shares. During the period
September 29, 2006 to October 31, 2006, the following amounts have been accrued
by each Fund to reimburse BlackRock for costs incurred running the call center,
which are a component of the transfer agent fees in the accompanying Statements
of Operations.
- --------------------------------------------------------------------------------
BlackRock Large Cap Core Fund Call Center Fees
- --------------------------------------------------------------------------------
Institutional ............................................... $ 622
Investor A .................................................. $1,363
Investor B .................................................. $ 943
Investor C .................................................. $1,615
Class R ..................................................... $ 114
- --------------------------------------------------------------------------------
BlackRock Large Cap Growth Fund
- --------------------------------------------------------------------------------
Institutional ............................................... $ 162
Service ..................................................... $ 56
Investor A .................................................. $ 505
Investor B .................................................. $ 350
Investor C .................................................. $ 323
Class R ..................................................... $ 53
- --------------------------------------------------------------------------------
BlackRock Large Cap Value Fund
- --------------------------------------------------------------------------------
Institutional ............................................... $2,023
Service ..................................................... $ 337
Investor A .................................................. $6,303
Investor B .................................................. $1,465
Investor C .................................................. $ 845
Class R ..................................................... $ 123
- --------------------------------------------------------------------------------
Effective September 29, 2006, PFPC Inc., an indirect, wholly owned subsidiary of
PNC and an affiliate of the Manager, became each Fund's transfer agent. Prior to
September 29, 2006, each Fund's transfer agent was Financial Data Services, Inc.
("FDS"), a wholly owned subsidiary of Merrill Lynch.
Prior to September 29, 2006, certain officers and/or directors of the Funds were
officers and/or directors of FAM, MLIM, FAMD, PSI, FDS, and/or Merrill Lynch.
Commencing September 29, 2006, certain officers and/or directors of the Funds
are officers and/or directors of BlackRock, Inc. or its affiliates.
3. Investments:
With respect to BlackRock Large Cap Core Fund, there were no purchases or sales
of investment in the Series for the year ended October 31, 2006.
32 BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006
Notes to Financial Statements (continued)
BlackRock Large Cap Series Funds, Inc.
4. Capital Share Transactions:
BlackRock Large Cap Core Fund
Net increase in net assets derived from capital share transactions was
$1,029,911,537 and $496,660,002 for the years ended October 31, 2006 and October
31, 2005, respectively.
Transactions in capital shares for each class were as follows:
- -------------------------------------------------------------------------------
BlackRock Large Cap Core Fund
- -------------------------------------------------------------------------------
Institutional Shares for the Year Dollar
Ended October 31, 2006 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ............................ 26,968,302 $ 371,823,883
Shares issued resulting
from reorganization .................. 1,384,811 18,375,947
Shares issued resulting from
reinvestment of distributions ........ 3,426,399 45,621,028
-----------------------------------
Total issued ........................... 31,779,512 435,820,858
Shares redeemed ........................ (12,354,857) (169,730,505)
-----------------------------------
Net increase ........................... 19,424,655 $ 266,090,353
===================================
- -------------------------------------------------------------------------------
Institutional Shares for the Year Dollar
Ended October 31, 2005 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ............................ 16,652,465 $ 209,256,024
Shares issued resulting from
reinvestment of distributions ........ 241,544 2,871,965
-----------------------------------
Total issued ........................... 16,894,009 212,127,989
Shares redeemed ........................ (8,200,059) (103,663,058)
-----------------------------------
Net increase ........................... 8,693,950 $ 108,464,931
===================================
- -------------------------------------------------------------------------------
Investor A Shares for the Year Dollar
Ended October 31, 2006 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ............................ 30,806,771 $ 417,178,270
Shares issued resulting
from reorganization .................. 840,871 10,983,495
Automatic conversion of shares ......... 2,008,639 27,051,237
Shares issued resulting from
reinvestment of distributions ........ 4,384,870 57,558,522
-----------------------------------
Total issued ........................... 38,041,151 512,771,524
Shares redeemed ........................ (12,782,750) (172,781,856)
-----------------------------------
Net increase ........................... 25,258,401 $ 339,989,668
===================================
- -------------------------------------------------------------------------------
Investor A Shares for the Year Dollar
Ended October 31, 2005 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ............................ 21,630,751 $ 269,694,087
Automatic conversion of shares ......... 1,329,966 16,528,220
Shares issued resulting from
reinvestment of distributions ........ 276,770 3,252,048
-----------------------------------
Total issued ........................... 23,237,487 289,474,355
Shares redeemed ........................ (10,104,529) (126,772,449)
-----------------------------------
Net increase ........................... 13,132,958 $ 162,701,906
===================================
- -------------------------------------------------------------------------------
BlackRock Large Cap Core Fund (continued)
- -------------------------------------------------------------------------------
Investor B Shares for the Year Dollar
Ended October 31, 2006 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ............................ 5,931,881 $ 76,856,340
Shares issued resulting
from reorganization .................. 1,421,696 17,703,160
Shares issued resulting from
reinvestment of distributions ........ 2,469,644 31,026,897
-----------------------------------
Total issued ........................... 9,823,221 125,586,397
-----------------------------------
Automatic conversion of shares ......... (2,100,430) (27,051,237)
Shares redeemed ........................ (8,481,854) (109,620,287)
-----------------------------------
Total redeemed ......................... (10,582,284) (136,671,524)
-----------------------------------
Net decrease ........................... (759,063) $ (11,085,127)
===================================
- -------------------------------------------------------------------------------
Investor B Shares for the Year Dollar
Ended October 31, 2005 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ............................ 7,261,231 $ 86,386,499
Shares issued resulting from
reinvestment of distributions ........ 272,886 3,083,617
-----------------------------------
Total issued ........................... 7,534,117 89,470,116
-----------------------------------
Automatic conversion of shares ......... (1,386,617) (16,528,220)
Shares redeemed ........................ (8,651,655) (102,765,876)
-----------------------------------
Total redeemed ......................... (10,038,272) (119,294,096)
-----------------------------------
Net decrease ........................... (2,504,155) $ (29,823,980)
===================================
- -------------------------------------------------------------------------------
Investor C Shares for the Year Dollar
Ended October 31, 2006 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ............................ 34,794,418 $ 449,644,683
Shares issued resulting
from reorganization .................. 1,340,290 16,648,081
Shares issued resulting from
reinvestment of distributions ........ 5,198,202 65,153,921
-----------------------------------
Total issued ........................... 41,332,910 531,446,685
Shares redeemed ........................ (11,945,575) (153,906,063)
-----------------------------------
Net increase ........................... 29,387,335 $ 377,540,622
===================================
- -------------------------------------------------------------------------------
Investor C Shares for the Year Dollar
Ended October 31, 2005 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ............................ 26,855,950 $ 320,056,553
Shares issued resulting from
reinvestment of distributions ........ 316,872 3,580,652
-----------------------------------
Total issued ........................... 27,172,822 323,637,205
Shares redeemed ........................ (8,010,043) (95,860,544)
-----------------------------------
Net increase ........................... 19,162,779 $ 227,776,661
===================================
- -------------------------------------------------------------------------------
Class R Shares for the Year Dollar
Ended October 31, 2006 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ............................ 6,430,000 $ 84,582,630
Shares issued resulting from
reorganization ....................... 175 2,220
Shares issued resulting from
reinvestment of distributions ........ 436,970 5,582,992
-----------------------------------
Total issued ........................... 6,867,145 90,167,842
Shares redeemed ........................ (2,503,760) (32,791,821)
-----------------------------------
Net increase ........................... 4,363,385 $ 57,376,021
===================================
BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006 33
Notes to Financial Statements (continued)
BlackRock Large Cap Series Funds, Inc.
- -------------------------------------------------------------------------------
BlackRock Large Cap Core Fund (concluded)
- -------------------------------------------------------------------------------
Class R Shares for the Year Dollar
Ended October 31, 2005 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ............................ 3,599,772 $ 43,887,267
Shares issued resulting from
reinvestment of distributions ........ 13,432 154,059
-----------------------------------
Total issued ........................... 3,613,204 44,041,326
Shares redeemed ........................ (1,348,354) (16,500,842)
-----------------------------------
Net increase ........................... 2,264,850 $ 27,540,484
===================================
BlackRock Large Cap Growth Fund
Net increase in net assets derived from capital share transactions was
$230,644,704 and $102,839,683 for the years ended October 31, 2006 and October
31, 2005, respectively.
Transactions in capital shares for each class were as follows:
- -------------------------------------------------------------------------------
BlackRock Large Cap Growth Fund
- -------------------------------------------------------------------------------
Institutional Shares for the Year Dollar
Ended October 31, 2006 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ............................ 11,925,860 $ 124,059,637
Shares issued resulting from
reorganization ....................... 1,465,913 15,537,208
-----------------------------------
Total issued ........................... 13,391,773 139,596,845
Shares redeemed ........................ (6,839,045) (69,050,639)
-----------------------------------
Net increase ........................... 6,552,728 $ 70,546,206
===================================
- -------------------------------------------------------------------------------
Institutional Shares for the Year Dollar
Ended October 31, 2005 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ............................ 7,718,763 $ 69,629,558
Shares redeemed ........................ (3,522,654) (31,902,918)
-----------------------------------
Net increase ........................... 4,196,109 $ 37,726,640
===================================
- -------------------------------------------------------------------------------
Service Shares for the Period
October 2, 2006+ to Dollar
October 31, 2006 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ............................ 4,352 $ 45,215
Shares issued resulting from
reorganization ....................... 478,968 5,075,631
-----------------------------------
Total issued ........................... 483,320 5,120,846
Shares redeemed ........................ (11,280) (119,891)
-----------------------------------
Net increase ........................... 472,040 $ 5,000,955
===================================
+ Commencement of operations.
- -------------------------------------------------------------------------------
Investor A Shares for the Year Dollar
Ended October 31, 2006 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ............................ 9,836,838 $ 99,767,111
Shares issued resulting from
reorganization ....................... 1,545,391 16,095,245
Automatic conversion of shares ......... 1,109,567 11,105,497
-----------------------------------
Total issued ........................... 12,491,796 126,967,853
Shares redeemed ........................ (3,852,495) (38,671,848)
-----------------------------------
Net increase ........................... 8,639,301 $ 88,296,005
===================================
- -------------------------------------------------------------------------------
BlackRock Large Cap Growth Fund (concluded)
- -------------------------------------------------------------------------------
Investor A Shares for the Year Dollar
Ended October 31, 2005 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ............................ 6,552,650 $ 58,552,118
Automatic conversion of shares ......... 479,396 4,340,086
-----------------------------------
Total issued ........................... 7,032,046 62,892,204
Shares redeemed ........................ (2,602,492) (23,247,423)
-----------------------------------
Net increase ........................... 4,429,554 $ 39,644,781
===================================
- -------------------------------------------------------------------------------
Investor B Shares for the Year Dollar
Ended October 31, 2006 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ............................ 3,316,837 $ 32,021,170
Shares issued resulting from
reorganization ....................... 831,350 8,218,730
-----------------------------------
Total issued ........................... 4,148,187 40,239,900
-----------------------------------
Automatic conversion of shares ......... (1,164,369) (11,105,497)
Shares redeemed ........................ (3,013,347) (28,784,814)
-----------------------------------
Total redeemed ......................... (4,177,716) (39,890,311)
-----------------------------------
Net increase (decrease) ................ (29,529) $ 349,589
===================================
- -------------------------------------------------------------------------------
Investor B Shares for the Year Dollar
Ended October 31, 2005 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ............................ 3,379,386 $ 29,012,975
-----------------------------------
Automatic conversion of shares ......... (499,699) (4,340,086)
Shares redeemed ........................ (3,768,945) (32,206,346)
-----------------------------------
Total redeemed ......................... (4,268,644) (36,546,432)
-----------------------------------
Net decrease ........................... (889,258) $ (7,533,457)
===================================
- -------------------------------------------------------------------------------
Investor C Shares for the Year Dollar
Ended October 31, 2006 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ............................ 7,848,897 $ 75,488,161
Shares issued resulting
from reorganization .................. 253,461 2,503,179
-----------------------------------
Total issued ........................... 8,102,358 77,991,340
Shares redeemed ........................ (3,584,176) (34,288,057)
-----------------------------------
Net increase ........................... 4,518,182 $ 43,703,283
===================================
- -------------------------------------------------------------------------------
Investor C Shares for the Year Dollar
Ended October 31, 2005 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ............................ 5,368,655 $ 45,981,773
Shares redeemed ........................ (3,102,840) (26,622,404)
-----------------------------------
Net increase ........................... 2,265,815 $ 19,359,369
===================================
- -------------------------------------------------------------------------------
Class R Shares for the Year Dollar
Ended October 31, 2006 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ............................ 3,772,105 $ 37,223,992
Shares redeemed ........................ (1,475,670) (14,475,326)
-----------------------------------
Net increase ........................... 2,296,435 $ 22,748,666
===================================
- -------------------------------------------------------------------------------
Class R Shares for the Year Dollar
Ended October 31, 2005 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ............................ 2,649,241 $ 23,240,567
Shares redeemed ........................ (1,096,413) (9,598,217)
-----------------------------------
Net increase ........................... 1,552,828 $ 13,642,350
===================================
34 BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006
Notes to Financial Statements (continued)
BlackRock Large Cap Series Funds, Inc.
BlackRock Large Cap Value Fund
Net increase in net assets derived from capital share transactions was
$2,061,799,094 and $576,505,050 for the years ended October 31, 2006 and October
31, 2005, respectively.
Transactions in capital shares for each class were as follows:
- -------------------------------------------------------------------------------
BlackRock Large Cap Value Fund
- -------------------------------------------------------------------------------
Institutional Shares for the Year Dollar
Ended October 31, 2006 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ............................ 33,588,560 $ 609,452,743
Shares issued resulting from
reorganization ....................... 5,326,567 100,150,108
Shares issued resulting from
reinvestment of distributions ........ 1,393,347 24,275,076
-----------------------------------
Total issued ........................... 40,308,474 733,877,927
Shares redeemed ........................ (14,144,837) (258,308,351)
-----------------------------------
Net increase ........................... 26,163,637 $ 475,569,576
===================================
- -------------------------------------------------------------------------------
Institutional Shares for the Year Dollar
Ended October 31, 2005 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ............................ 17,058,691 $ 286,306,800
Shares issued resulting from
reinvestment of distributions ........ 549,731 8,245,964
-----------------------------------
Total issued ........................... 17,608,422 294,552,764
Shares redeemed ........................ (4,781,111) (77,304,760)
-----------------------------------
Net increase ........................... 12,827,311 $ 217,248,004
===================================
- -------------------------------------------------------------------------------
Service Shares for the Period
October 2, 2006+ Dollar
to October 31, 2006 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ............................ 4,292 $ 79,918
Shares issued resulting from
reorganization ....................... 1,323,427 24,877,778
-----------------------------------
Total issued ........................... 1,327,719 24,957,696
Shares redeemed ........................ (17,556) (333,427)
-----------------------------------
Net increase ........................... 1,310,163 $ 24,624,269
===================================
+ Commencement of operations.
- -------------------------------------------------------------------------------
Investor A Shares for the Year Dollar
Ended October 31, 2006 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ............................ 63,546,739 $ 1,124,469,647
Shares issued resulting from
reorganization ....................... 9,040,105 167,160,591
Automatic conversion of shares ......... 1,328,996 23,420,477
Shares issued resulting from
reinvestment of distributions ........ 1,729,174 30,341,226
-----------------------------------
Total issued ........................... 75,645,014 1,345,391,941
Shares redeemed ........................ (9,018,321) (161,753,348)
-----------------------------------
Net increase ........................... 66,626,693 $ 1,183,638,593
===================================
- -------------------------------------------------------------------------------
BlackRock Large Cap Value Fund (continued)
- -------------------------------------------------------------------------------
Investor A Shares for the Year Dollar
Ended October 31, 2005 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ............................ 14,908,526 $ 240,034,025
Automatic conversion of shares ......... 939,374 14,950,013
Shares issued resulting from
reinvestment of distributions ........ 493,981 7,315,852
-----------------------------------
Total issued ........................... 16,341,881 262,299,890
Shares redeemed ........................ (5,469,730) (88,547,806)
-----------------------------------
Net increase ........................... 10,872,151 $ 173,752,084
===================================
- -------------------------------------------------------------------------------
Investor B Shares for the Year Dollar
Ended October 31, 2006 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ............................ 4,117,800 $ 70,080,431
Shares issued resulting from
reorganization ....................... 2,302,755 40,586,052
Shares issued resulting from
reinvestment of distributions ........ 614,319 10,065,944
-----------------------------------
Total issued ........................... 7,034,874 120,732,427
-----------------------------------
Automatic conversion of shares ......... (1,388,752) (23,420,477)
Shares redeemed ........................ (4,421,507) (75,511,208)
-----------------------------------
Total redeemed ......................... (5,810,259) (98,931,685)
-----------------------------------
Net increase ........................... 1,224,615 $ 21,800,742
===================================
- -------------------------------------------------------------------------------
Investor B Shares for the Year Dollar
Ended October 31, 2005 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ............................ 4,746,786 $ 72,547,018
Shares issued resulting from
reinvestment of distributions ........ 645,906 9,204,154
-----------------------------------
Total issued ........................... 5,392,692 81,751,172
-----------------------------------
Automatic conversion of shares ......... (978,449) (14,950,013)
Shares redeemed ........................ (4,040,521) (61,542,283)
-----------------------------------
Total redeemed ......................... (5,018,970) (76,492,296)
-----------------------------------
Net increase ........................... 373,722 $ 5,258,876
===================================
- -------------------------------------------------------------------------------
Investor C Shares for the Year Dollar
Ended October 31, 2006 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ............................ 21,100,602 $ 358,619,070
Shares issued resulting from
reorganization ....................... 629,971 11,074,264
Shares issued resulting from
reinvestment of distributions ........ 1,122,091 18,345,447
-----------------------------------
Total issued ........................... 22,852,664 388,038,781
Shares redeemed ........................ (5,721,171) (97,483,736)
-----------------------------------
Net increase ........................... 17,131,493 $ 290,555,045
===================================
- -------------------------------------------------------------------------------
Investor C Shares for the Year Dollar
Ended October 31, 2005 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ............................ 12,540,291 $ 192,758,758
Shares issued resulting from
reinvestment of distributions ........ 699,915 9,966,785
-----------------------------------
Total issued ........................... 13,240,206 202,725,543
Shares redeemed ........................ (3,482,254) (53,395,043)
-----------------------------------
Net increase ........................... 9,757,952 $ 149,330,500
===================================
BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006 35
Notes to Financial Statements (continued)
BlackRock Large Cap Series Funds, Inc.
- -------------------------------------------------------------------------------
BlackRock Large Cap Value Fund (concluded)
- -------------------------------------------------------------------------------
Class R Shares for the Year Dollar
Ended October 31, 2006 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ............................ 5,076,346 $ 88,344,587
Shares issued resulting from
reinvestment of distributions ........ 148,464 2,474,052
-----------------------------------
Total issued ........................... 5,224,810 90,818,639
Shares redeemed ........................ (1,446,630) (25,207,770)
-----------------------------------
Net increase ........................... 3,778,180 $ 65,610,869
===================================
- -------------------------------------------------------------------------------
Class R Shares for the Year Dollar
Ended October 31, 2005 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ............................ 2,583,162 $ 40,275,219
Shares issued resulting from
reinvestment of distributions ........ 48,890 707,934
-----------------------------------
Total issued ........................... 2,632,052 40,983,153
Shares redeemed ........................ (641,770) (10,067,567)
-----------------------------------
Net increase ........................... 1,990,282 $ 30,915,586
===================================
5. Distributions to Shareholders:
BlackRock Large Cap Core Fund
The tax character of distributions paid during the fiscal years ended October
31, 2006 and October 31, 2005 was as follows:
- --------------------------------------------------------------------------------
10/31/2006 10/31/2005
- --------------------------------------------------------------------------------
Distributions paid from:
Ordinary income .............................. $ 31,667,962 --
Net long-term capital gains .................. 199,803,562 $ 14,577,064
----------------------------
Total taxable distributions .................... $231,471,524 $ 14,577,064
============================
As of October 31, 2006, the components of accumulated earnings on a tax basis
were as follows:
- -----------------------------------------------------------------------------
Undistributed ordinary income -- net ....................... $ --
Undistributed long-term capital gains -- net ............... 77,139,866
-------------
Total undistributed earnings -- net ........................ 77,139,866
Capital loss carryforward .................................. (70,935,568)*
Unrealized gains -- net .................................... 607,838,063**
-------------
Total accumulated earnings -- net .......................... $ 614,042,361
=============
* On October 31, 2006, the Fund had a net capital loss carryforward of
$70,935,568, of which $27,053,742 expires in 2008, $26,081,669 expires in
2009, $14,800,383 expires in 2010 and $2,999,774 expires in 2011. This
amount will be available to offset like amounts of any future taxable
gains.
** The difference between book-basis and tax-basis net unrealized gains is
attributable primarily to the tax deferral of losses on wash sales, the
realization for tax purposes of unrealized gains (losses) on certain
futures contracts, a limitation on the utilization of capital loss
carryforwards for tax purposes and other book/tax temporary differences.
BlackRock Large Cap Growth Fund
As of October 31, 2006, the components of accumulated earnings on a tax basis
were as follows:
- -----------------------------------------------------------------------------
Undistributed ordinary income -- net ....................... $ --
Undistributed long-term capital gains -- net ............... 3,032,586
-------------
Total undistributed earnings -- net ........................ 3,032,586
Capital loss carryforward .................................. (51,746,631)*
Unrealized gains -- net .................................... 100,869,190**
-------------
Total accumulated earnings -- net .......................... $ 52,155,145
=============
* On October 31, 2006, the Fund had a net capital loss carryforward of
$51,746,631, of which $2,612,498 expires in 2007, $16,739,229 expires in
2008, $6,082,996 expires in 2009 and $26,311,908 expires in 2010. This
amount will be available to offset like amounts of any future taxable
gains.
** The difference between book-basis and tax-basis net unrealized gains is
attributable primarily to the tax deferral of losses on wash sales.
BlackRock Large Cap Value Fund
The tax character of distributions paid during the fiscal years ended October
31, 2006 and October 31, 2005 was as follows:
- --------------------------------------------------------------------------------
10/31/2006 10/31/2005
- --------------------------------------------------------------------------------
Distributions paid from:
Ordinary income .............................. $ 26,422,202 $ --
Net long-term capital gains .................. 105,314,293 38,689,437
----------------------------
Total taxable distributions .................... $131,736,495 $ 38,689,437
============================
As of October 31, 2006, the components of accumulated earnings on a tax basis
were as follows:
- -----------------------------------------------------------------------------
Undistributed ordinary income -- net ....................... $ --
Undistributed long-term capital gains -- net ............... 63,273,313
-------------
Total undistributed earnings -- net ........................ 63,273,313
Capital loss carryforward .................................. (67,982)*
Unrealized gains -- net .................................... 554,823,190**
-------------
Total accumulated earnings -- net .......................... $ 618,028,521
=============
* On October 31, 2006, the Fund had a net capital loss carryforward of
$67,982, all of which expires in 2010. This amount will be available to
offset like amounts of any future taxable gains.
** The difference between book-basis and tax-basis net unrealized gains is
attributable primarily to the tax deferral of losses on wash sales.
6. Acquisition of Merrill Lynch Disciplined Equity Fund, Inc. and Merrill Lynch
Strategy All-Equity Fund of Merrill Lynch Strategy Series, Inc.:
On August 28, 2006, BlackRock Large Cap Core Fund ("Large Cap Core") acquired
all of the net assets of Merrill Lynch Disciplined Equity Fund, Inc.
("Disciplined Equity") pursuant to a plan of reorganization. The acquisition was
accomplished by a tax-free exchange of 2,358,720 shares of common stock of
Disciplined Equity for 2,086,220 shares of common stock of
36 BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006
Notes to Financial Statements (concluded)
BlackRock Large Cap Series Funds, Inc.
Large Cap Core. Disciplined Equity's net assets on that date of $26,605,213,
including $1,908,052 of accumulated net realized losses and $4,652,234 of net
unrealized appreciation, were combined with those of Large Cap Core.
In addition, on August 28, 2006, Large Cap Core acquired all of the net assets
of Merrill Lynch Strategy All-Equity Fund of Merrill Lynch Strategy Series, Inc.
("All-Equity") pursuant to a plan of reorganization. The acquisition was
accomplished by a tax-free exchange of 4,012,844 shares of common stock of
All-Equity for 2,901,623 shares of common stock of Large Cap Core. All-Equity's
net assets on that date of $37,107,690, included $20,729,312 of accumulated net
realized losses. In addition, net assets included $9,713,748 of net unrealized
appreciation from an in-kind contribution of investment in the Series were
combined with those of Large Cap Core. The aggregate net assets of Large Cap
Core immediately after the acquisitions amounted to $3,420,420,734.
7. Acquisition of BlackRock Large Cap Growth Equity Portfolio of BlackRock
Funds:
On October 16, 2006, BlackRock Large Cap Growth Fund ("Large Cap Growth")
acquired all of the net assets of BlackRock Large Cap Growth Equity Portfolio of
BlackRock Funds ("Large Cap Growth Equity") pursuant to a plan of
reorganization. The acquisition was accomplished by a tax-free exchange of
4,534,354 shares of beneficial interest of Large Cap Growth Equity for 4,575,083
shares of common stock of Large Cap Growth. Large Cap Growth Equity's net assets
on that date of $47,429,993, including $373,574,739 of accumulated net realized
losses and $10,864,916 of net unrealized appreciation, were combined with those
of Large Cap Growth. The aggregate net assets of Large Cap Growth immediately
after the acquisition amounted to $771,020,699.
8. Acquisition of BlackRock Large Cap Value Equity Portfolio of BlackRock Funds:
On October 16, 2006, BlackRock Large Cap Value Fund ("Large Cap Value") acquired
all of the net assets of BlackRock Large Cap Value Equity Portfolio of BlackRock
Funds ("Large Cap Value Equity") pursuant to a plan of reorganization. The
acquisition was accomplished by a tax-free exchange of 21,309,927 shares of
beneficial interest of Large Cap Value Equity for 18,622,825 shares of common
stock of Large Cap Value. Large Cap Value Equity's net assets on that date of
$343,848,793, including $2,038,887 of accumulated net realized losses and
$88,614,304 of net unrealized appreciation, were combined with those of Large
Cap Value. The aggregate net assets of Large Cap Value immediately after the
acquisition amounted to $3,731,572,146.
BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006 37
Report of Independent Registered Public Accounting Firm
BlackRock Large Cap Series Funds, Inc.
To the Shareholders and Board of Directors of BlackRock Large Cap Series Funds,
Inc.:
We have audited the accompanying statements of assets and liabilities of
BlackRock Large Cap Series Funds, Inc. (the "Fund"), comprising BlackRock Large
Cap Core Fund, BlackRock Large Cap Growth Fund and BlackRock Large Cap Value
Fund (formerly Merrill Lynch Large Cap Series Funds, Inc., comprising Merrill
Lynch Large Cap Core Fund, Merrill Lynch Large Cap Growth Fund and Merrill Lynch
Large Cap Value Fund), respectively, as of October 31, 2006, and the related
statements of operations for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended and the financial
highlights for each of the five years in the period then ended. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. The Fund
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
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, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the funds constituting BlackRock Large Cap Series Funds, Inc. as of October
31, 2006, the results of their operations for the year then ended, the changes
in their net assets for each of the two years in the period then ended, and
their financial highlights for each of the five years in the period then ended,
in conformity with U.S. generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
December 21, 2006
38 BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006
Portfolio Information as of October 31, 2006 Master Large Cap Series Trust
Sector Representation
Percent of
Master Large Cap Core Portfolio Total Investments
- --------------------------------------------------------------------------------
Information Technology ........................................... 16.1%
Consumer Discretionary ........................................... 15.7
Energy ........................................................... 12.7
Health Care ...................................................... 11.9
Industrials ...................................................... 10.9
Financials ....................................................... 10.5
Materials ........................................................ 3.5
Consumer Staples ................................................. 3.4
Telecommunication Services ....................................... 1.0
Other* ........................................................... 14.3
- --------------------------------------------------------------------------------
Percent of
Master Large Cap Growth Portfolio Total Investments
- --------------------------------------------------------------------------------
Information Technology ........................................... 26.4%
Consumer Discretionary ........................................... 18.2
Industrials ...................................................... 15.9
Health Care ...................................................... 11.1
Financials ....................................................... 5.3
Energy ........................................................... 4.9
Consumer Staples ................................................. 3.6
Materials ........................................................ 3.5
Other* ........................................................... 11.1
- --------------------------------------------------------------------------------
Percent of
Master Large Cap Value Portfolio Total Investments
- --------------------------------------------------------------------------------
Financials ....................................................... 22.8%
Energy ........................................................... 15.4
Information Technology ........................................... 11.0
Consumer Discretionary ........................................... 10.8
Industrials ...................................................... 8.8
Health Care ...................................................... 8.3
Consumer Staples ................................................. 4.4
Materials ........................................................ 3.4
Telecommunication Services ....................................... 1.5
Other* ........................................................... 13.6
- --------------------------------------------------------------------------------
* Includes portfolio holdings in short-term investments.
For Portfolio compliance purposes, the Portfolio's sector and industry
classifications refer to any one or more of the sector and industry
sub-classifications used by one or more widely recognized market indexes
or ratings group indexes, and/or as defined by Portfolio management. This
definition may not apply for purposes of this report, which may combine
sector and industry sub-classifications for reporting ease.
Five Largest Industries
Percent of
Master Large Cap Core Portfolio Net Assets
- --------------------------------------------------------------------------------
Oil, Gas & Consumable Fuels ...................................... 14.8%
Specialty Retail ................................................. 7.5
Health Care Providers & Services ................................. 7.3
Semiconductors & Semiconductor Equipment ......................... 5.8
Software ......................................................... 5.0
- --------------------------------------------------------------------------------
Percent of
Master Large Cap Growth Portfolio Net Assets
- --------------------------------------------------------------------------------
Software ......................................................... 9.7%
Specialty Retail ................................................. 8.8
Semiconductor & Semiconductor Equipment .......................... 7.6
Health Care Providers & Services ................................. 6.5
Multiline Retail ................................................. 5.8
- --------------------------------------------------------------------------------
Percent of
Master Large Cap Value Portfolio Net Assets
- --------------------------------------------------------------------------------
Oil, Gas & Consumable Fuels ...................................... 17.8%
Diversified Financial Services ................................... 10.0
Insurance ........................................................ 9.1
Capital Markets .................................................. 6.0
Health Care Providers and Services ............................... 4.2
- --------------------------------------------------------------------------------
BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006 39
Portfolio Information as of October 31, 2006 (concluded)
Master Large Cap Series Trust
Ten Largest Equity Holdings
Percent of
Master Large Cap Core Portfolio Net Assets
- --------------------------------------------------------------------------------
Exxon Mobil Corp. ................................................ 4.2%
JPMorgan Chase & Co. ............................................. 2.2
Chevron Corp. .................................................... 2.1
Cisco Systems, Inc. .............................................. 2.0
Hewlett-Packard Co. .............................................. 1.8
General Electric Co. ............................................. 1.7
Morgan Stanley ................................................... 1.6
Goldman Sachs Group, Inc. ........................................ 1.5
Merck & Co., Inc. ................................................ 1.5
Walt Disney Co. .................................................. 1.4
- --------------------------------------------------------------------------------
Percent of
Master Large Cap Growth Portfolio Net Assets
- --------------------------------------------------------------------------------
Cisco Systems, Inc. .............................................. 3.0%
Oracle Corp. ..................................................... 1.9
Hewlett-Packard Co. .............................................. 1.9
Goldman Sachs Group, Inc. ........................................ 1.8
Texas Instruments, Inc. .......................................... 1.7
Motorola, Inc. ................................................... 1.6
Microsoft Corp. .................................................. 1.6
Lockheed Martin Corp. ............................................ 1.5
Exxon Mobil Corp. ................................................ 1.4
The DIRECTV Group, Inc. .......................................... 1.3
- --------------------------------------------------------------------------------
Percent of
Master Large Cap Value Portfolio Net Assets
- --------------------------------------------------------------------------------
Exxon Mobil Corp. ................................................ 7.0%
Citigroup Inc. ................................................... 4.7
JPMorgan Chase & Co. ............................................. 3.4
Chevron Corp. .................................................... 3.2
Morgan Stanley ................................................... 2.1
Merck & Co., Inc. ................................................ 1.9
Bank of America Corp. ............................................ 1.9
Hewlett Packard Co. .............................................. 1.6
The Allstate Corp. ............................................... 1.6
Occidental Petroleum Corp. ....................................... 1.6
- --------------------------------------------------------------------------------
40 BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006
Schedule of Investments Master Large Cap Core Portfolio
Shares
Sector Industry Common Stocks Held Value
====================================================================================================
Consumer Discretionary--18.4%
Auto Components--0.6%
The Goodyear Tire & Rubber Co. (c)(d) 1,610,000 $ 24,681,300
-------------------------------------------------------------------------------------
Automobiles--1.9%
General Motors Corp. (d) 1,270,000 44,348,400
Harley-Davidson, Inc. (d) 440,000 30,197,200
--------------
74,545,600
-------------------------------------------------------------------------------------
Hotels, Restaurants &
Leisure--0.6%
Darden Restaurants, Inc. (d) 500,000 20,950,000
-------------------------------------------------------------------------------------
Media--3.9%
Clear Channel Communications, Inc. 140,000 4,879,000
The DIRECTV Group, Inc. (c)(d) 2,050,000 45,674,000
Omnicom Group 443,000 44,942,350
Walt Disney Co. (d) 1,780,000 55,998,800
--------------
151,494,150
-------------------------------------------------------------------------------------
Multiline Retail--3.9%
Dillard's, Inc. Class A (d) 440,000 13,274,800
Dollar Tree Stores, Inc. (c) 90,000 2,798,100
JC Penney Co., Inc. 600,000 45,138,000
Kohl's Corp. (c)(d) 660,000 46,596,000
Nordstrom, Inc. (d) 890,000 42,141,500
--------------
149,948,400
-------------------------------------------------------------------------------------
Specialty Retail--7.5%
Abercrombie & Fitch Co. Class A 540,000 41,391,000
American Eagle Outfitters (d) 890,000 40,762,000
AnnTaylor Stores Corp. (c) 770,000 33,895,400
AutoNation, Inc. (c)(d) 420,000 8,421,000
Circuit City Stores, Inc. 1,370,000 36,962,600
Dick's Sporting Goods, Inc. (c)(d) 140,000 6,966,400
Office Depot, Inc. (c) 1,020,000 42,829,800
OfficeMax, Inc. 260,000 12,370,800
The Sherwin-Williams Co. 400,000 23,692,000
TJX Cos., Inc. 1,470,000 42,556,500
--------------
289,847,500
-------------------------------------------------------------------------------------
Total Consumer Discretionary 711,466,950
====================================================================================================
Consumer Staples--3.9%
Food & Staples Retailing--2.2%
The Kroger Co. 1,790,000 40,257,100
Safeway, Inc. 1,500,000 44,040,000
--------------
84,297,100
-------------------------------------------------------------------------------------
Food Products--1.0%
Archer Daniels Midland Co. 1,027,500 39,558,750
-------------------------------------------------------------------------------------
Household Products--0.5%
The Procter & Gamble Co. 320,000 20,284,800
-------------------------------------------------------------------------------------
Tobacco--0.2%
Altria Group, Inc. 110,000 8,946,300
-------------------------------------------------------------------------------------
Total Consumer Staples 153,086,950
====================================================================================================
Energy--14.8%
Oil, Gas & Consumable
Fuels--14.8%
Anadarko Petroleum Corp. 850,000 39,457,000
Chevron Corp. 1,220,000 81,984,000
Devon Energy Corp. 630,000 42,109,200
Exxon Mobil Corp. 2,260,000 161,409,200
Frontier Oil Corp. 1,370,000 40,278,000
Holly Corp. 830,000 39,474,800
Marathon Oil Corp. 560,000 48,384,000
Occidental Petroleum Corp. 1,050,000 49,287,000
Sunoco, Inc. 483,300 31,960,629
Tesoro Corp. 620,000 39,642,800
-------------------------------------------------------------------------------------
Total Energy 573,986,629
====================================================================================================
Financials--12.2%
Capital Markets--4.3%
The Bear Stearns Cos., Inc. 310,000 46,918,500
Goldman Sachs Group, Inc. (d) 310,000 58,834,900
Morgan Stanley 816,000 62,366,880
--------------
168,120,280
-------------------------------------------------------------------------------------
Diversified Financial
Services--4.1%
Bank of America Corp. 583,500 31,433,145
Citigroup Inc. 860,000 43,137,600
JPMorgan Chase & Co. 1,800,000 85,392,000
--------------
159,962,745
-------------------------------------------------------------------------------------
Insurance--3.8%
AMBAC Financial Group, Inc. 260,000 21,707,400
The Allstate Corp. 810,000 49,701,600
American International Group, Inc. 60,000 4,030,200
Prudential Financial, Inc. 200,000 15,386,000
Safeco Corp. 80,000 4,655,200
The St. Paul Travelers Cos., Inc. 723,400 36,987,442
W.R. Berkley Corp. 345,750 12,744,345
--------------
145,212,187
-------------------------------------------------------------------------------------
Total Financials 473,295,212
====================================================================================================
Health Care--13.9%
Health Care Equipment &
Supplies--0.4%
Becton Dickinson & Co. 240,000 16,807,200
-------------------------------------------------------------------------------------
Health Care Providers &
Services--7.3%
AmerisourceBergen Corp. 876,000 41,347,200
Cardinal Health, Inc. 624,000 40,840,800
Caremark Rx, Inc. 920,000 45,291,600
Humana, Inc. (c) 680,000 40,800,000
Laboratory Corp. of America
Holdings (c)(d) 610,000 41,778,900
McKesson Corp. 740,000 37,066,600
WellPoint, Inc. (c) 504,000 38,465,280
--------------
285,590,380
-------------------------------------------------------------------------------------
Health Care Technology--0.6%
Emdeon Corp. (c) 1,918,000 22,344,700
-------------------------------------------------------------------------------------
BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006 41
Schedule of Investments (continued) Master Large Cap Core Portfolio
Shares
Sector Industry Common Stocks Held Value
====================================================================================================
Health Care (concluded)
Life Sciences Tools &
Services--0.6%
Applera Corp.--Applied
Biosystems Group 600,000 $ 22,380,000
-------------------------------------------------------------------------------------
Pharmaceuticals--5.0%
Forest Laboratories, Inc. (c)(d) 900,000 44,046,000
Johnson & Johnson 270,000 18,198,000
King Pharmaceuticals, Inc. (c)(d) 1,211,000 20,260,030
Merck & Co., Inc. 1,240,000 56,320,800
Pfizer, Inc. 2,038,000 54,312,700
--------------
193,137,530
-------------------------------------------------------------------------------------
Total Health Care 540,259,810
====================================================================================================
Industrials--12.7%
Aerospace & Defense--3.6%
Honeywell International, Inc. 1,150,000 48,438,000
Lockheed Martin Corp. 560,000 48,680,800
Raytheon Co. 867,200 43,316,640
--------------
140,435,440
-------------------------------------------------------------------------------------
Airlines--2.2%
AMR Corp. (c)(d) 1,490,000 42,226,600
Continental Airlines, Inc. Class B (c)(d) 1,120,000 41,305,600
--------------
83,532,200
-------------------------------------------------------------------------------------
Commercial Services &
Supplies--2.0%
Covanta Holding Corp. (c) 440,000 8,945,200
Manpower Inc. 390,000 26,430,300
Waste Management, Inc. 1,168,000 43,776,640
--------------
79,152,140
-------------------------------------------------------------------------------------
Diversified Consumer
Services--0.4%
ITT Educational Services, Inc. (c) 220,000 15,169,000
-------------------------------------------------------------------------------------
Industrial Conglomerates--1.7%
General Electric Co. 1,840,000 64,602,400
-------------------------------------------------------------------------------------
Machinery--1.6%
Cummins, Inc. (d) 290,000 36,824,200
Manitowoc Co. 176,000 9,658,880
Terex Corp. (c) 150,000 7,764,000
Toro Co. 210,000 9,063,600
--------------
63,310,680
-------------------------------------------------------------------------------------
Road & Rail--1.2%
CSX Corp. (d) 1,170,000 41,733,900
Ryder System, Inc. 90,000 4,738,500
--------------
46,472,400
-------------------------------------------------------------------------------------
Total Industrials 492,674,260
====================================================================================================
Information Technology--18.8%
Communications Equipment--3.4%
Cisco Systems, Inc. (c) 3,260,000 78,663,800
Motorola, Inc. 2,360,000 54,421,600
--------------
133,085,400
-------------------------------------------------------------------------------------
Computers & Peripherals--3.5%
Hewlett-Packard Co. 1,820,000 70,506,800
International Business Machines Corp. 400,000 36,932,000
NCR Corp. (c) 653,000 27,112,560
--------------
134,551,360
-------------------------------------------------------------------------------------
Office Electronics--1.1%
Xerox Corp. (c) 2,570,000 43,690,000
-------------------------------------------------------------------------------------
Semiconductors & Semiconductor
Equipment--5.8%
Intersil Corp. Class A (d) 1,130,000 26,498,500
LSI Logic Corp. (c) 3,100,000 31,155,000
Micron Technology, Inc. (c) 2,720,000 39,304,000
National Semiconductor Corp. (d) 1,410,000 34,248,900
Novellus Systems, Inc. (c)(d) 1,430,000 39,539,500
Texas Instruments, Inc. 1,710,000 51,607,800
--------------
222,353,700
-------------------------------------------------------------------------------------
Software--5.0%
BEA Systems, Inc. (c) 2,630,000 42,790,100
BMC Software, Inc. (c) 1,370,000 41,524,700
Cadence Design Systems, Inc. (c) 410,000 7,322,600
Compuware Corp. (c) 1,110,000 8,924,400
Intuit, Inc. (c)(d) 1,220,000 43,066,000
Microsoft Corp. 1,130,000 32,442,300
Oracle Corp. (c) 1,000,000 18,470,000
--------------
194,540,100
-------------------------------------------------------------------------------------
Total Information Technology 728,220,560
====================================================================================================
Materials--4.1%
Chemicals--0.3%
Lyondell Chemical Co. 430,000 11,038,100
-------------------------------------------------------------------------------------
Containers & Packaging--0.7%
Pactiv Corp. (c) 940,000 28,989,600
-------------------------------------------------------------------------------------
Metals & Mining--3.1%
Carpenter Technology Corp. (d) 330,000 35,306,700
Freeport-McMoRan Copper &
Gold, Inc. Class B (d) 650,000 39,312,000
Nucor Corp. 760,000 44,391,600
--------------
119,010,300
-------------------------------------------------------------------------------------
Total Materials 159,038,000
====================================================================================================
Telecommunications Services--1.2%
Diversified Telecommunication
Services--1.2%
Qwest Communications
International Inc. (c)(d) 5,170,000 44,617,100
-------------------------------------------------------------------------------------
Total Telecommunications Services 44,617,100
====================================================================================================
Total Common Stocks
(Cost--$3,223,063,674)--100.0% 3,876,645,471
====================================================================================================
Short-Term Beneficial
Securities Interest
====================================================================================================
BlackRock Liquidity Series, LLC Money
Market Series, 5.29% (a)(b)(e) $648,878,800 648,878,800
-------------------------------------------------------------------------------------
Total Short-Term Securities
(Cost--$648,878,800)--16.7% 648,878,800
====================================================================================================
Total Investments
(Cost--$3,871,942,474*)--116.7% 4,525,524,271
Liabilities in Excess of Other Assets--(16.7%) (648,885,481)
--------------
Net Assets--100.0% $3,876,638,790
==============
42 BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006
Schedule of Investments (concluded) Master Large Cap Core Portfolio
* The cost and unrealized appreciation (depreciation) of investments as of
October 31, 2006, as computed for federal income tax purposes, were as
follows:
Aggregate cost ........................................ $3,883,911,354
==============
Gross unrealized appreciation ......................... $ 685,050,214
Gross unrealized depreciation ......................... (43,437,297)
--------------
Net unrealized appreciation ........................... $ 641,612,917
==============
(a) Investments in companies considered to be an affiliate of the Portfolio,
for purposes of Section 2(a)(3) of the Investment Company Act of 1940,
were as follows:
--------------------------------------------------------------------------
Net Interest
Affiliate Activity Income
--------------------------------------------------------------------------
BlackRock Liquidity Series, LLC
Cash Sweep Series I $ (4,121,341) $ 259,462
BlackRock Liquidity Series, LLC
Money Market Series $512,086,600 $ 460,320
--------------------------------------------------------------------------
(b) Security was purchased with the cash proceeds from securities loans.
(c) Non-income producing security.
(d) Security, or a portion of security, is on loan.
(e) Represents the current yield as of October 31, 2006.
o For Portfolio compliance purposes, the Portfolio's sector and industry
classifications refer to any one or more of the sector and industry
sub-classifications used by one or more widely recognized market indexes
or ratings group indexes, and/or as defined by Portfolio management. This
definition may not apply for purposes of this report, which may combine
sector and industry sub-classifications for reporting ease. Sectors and
industries are shown as a percent of net assets. These sector and industry
classifications are unaudited.
See Notes to Financial Statements.
BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006 43
Schedule of Investments Master Large Cap Growth Portfolio
Shares
Sector Industry Common Stocks Held Value
====================================================================================================
Consumer Discretionary--20.4%
Automobiles--1.3%
Harley-Davidson, Inc. (d) 146,000 $ 10,019,980
-------------------------------------------------------------------------------------
Media--4.5%
Clear Channel Communications, Inc. 147,000 5,122,950
The DIRECTV Group, Inc. (b)(d) 472,800 10,533,984
Omnicom Group 95,000 9,637,750
Walt Disney Co. 311,800 9,809,228
--------------
35,103,912
-------------------------------------------------------------------------------------
Multiline Retail--5.8%
Dollar Tree Stores, Inc. (b) 256,000 7,959,040
Family Dollar Stores, Inc. 271,000 7,980,950
JC Penney Co., Inc. 136,900 10,298,987
Kohl's Corp. (b) 148,000 10,448,800
Nordstrom, Inc. 194,000 9,185,900
--------------
45,873,677
-------------------------------------------------------------------------------------
Specialty Retail--8.8%
Abercrombie & Fitch Co. Class A 114,000 8,738,100
American Eagle Outfitters 186,000 8,518,800
AnnTaylor Stores Corp. (b) 196,000 8,627,920
Circuit City Stores, Inc. 267,000 7,203,660
Dick's Sporting Goods, Inc. (b) 43,000 2,139,680
Men's Wearhouse, Inc. 177,000 7,053,450
Office Depot, Inc. (b) 225,700 9,477,143
The Sherwin-Williams Co. (d) 142,000 8,410,660
TJX Cos., Inc. 324,000 9,379,800
--------------
69,549,213
-------------------------------------------------------------------------------------
Total Consumer Discretionary 160,546,782
====================================================================================================
Consumer Staples--4.0%
Beverages--0.9%
Pepsi Bottling Group, Inc. 215,900 6,826,758
-------------------------------------------------------------------------------------
Food & Staples Retailing--1.0%
The Kroger Co. 359,000 8,073,910
-------------------------------------------------------------------------------------
Food Products--0.2%
Campbell Soup Co. 38,000 1,420,440
-------------------------------------------------------------------------------------
Household Durables--1.0%
Snap-On, Inc. (d) 166,000 7,806,980
-------------------------------------------------------------------------------------
Household Products--0.9%
Energizer Holdings, Inc. (b) 96,400 7,533,660
-------------------------------------------------------------------------------------
Total Consumer Staples 31,661,748
====================================================================================================
Energy--5.6%
Oil, Gas & Consumable
Fuels--5.6%
Anadarko Petroleum Corp. 94,000 4,363,480
Devon Energy Corp. 5,000 334,200
Exxon Mobil Corp. 151,000 10,784,420
Frontier Oil Corp. 291,400 8,567,160
Holly Corp. (d) 159,000 7,562,040
Sunoco, Inc. 97,000 6,414,610
Tesoro Corp. 89,000 5,690,660
-------------------------------------------------------------------------------------
Total Energy 43,716,570
====================================================================================================
Financials--5.9%
Capital Markets--2.8%
Goldman Sachs Group, Inc. (d) 73,000 13,854,670
Morgan Stanley 112,800 8,621,304
--------------
22,475,974
-------------------------------------------------------------------------------------
Insurance--3.1%
AMBAC Financial Group, Inc. 75,000 6,261,750
CNA Financial Corp. (b)(d) 211,000 7,901,950
The Hanover Insurance Group, Inc. 55,000 2,494,250
W.R. Berkley Corp. 200,500 7,390,430
--------------
24,048,380
-------------------------------------------------------------------------------------
Total Financials 46,524,354
====================================================================================================
Health Care--12.5%
Biotechnology--0.1%
Amgen, Inc. (b) 13,300 1,009,603
-------------------------------------------------------------------------------------
Health Care Equipment &
Supplies--0.4%
Baxter International, Inc. 40,000 1,838,800
Becton Dickinson & Co. 20,000 1,400,600
--------------
3,239,400
-------------------------------------------------------------------------------------
Health Care Providers &
Services--6.5%
AmerisourceBergen Corp. 128,000 6,041,600
Cardinal Health, Inc. 133,000 8,704,850
Caremark Rx, Inc. 206,000 10,141,380
Coventry Health Care, Inc. (b) 8,398 394,286
Humana, Inc. (b) 146,000 8,760,000
Laboratory Corp. of America
Holdings (b) 131,000 8,972,190
McKesson Corp. 151,900 7,608,671
WellPoint, Inc. (b) 6,100 465,552
--------------
51,088,529
-------------------------------------------------------------------------------------
Health Care Technology--1.1%
Emdeon Corp. (b) 711,000 8,283,150
-------------------------------------------------------------------------------------
Life Sciences Tools &
Services--1.0%
Applera Corp.--Applied
Biosystems Group 217,000 8,094,100
-------------------------------------------------------------------------------------
Pharmaceuticals--3.4%
Forest Laboratories, Inc. (b)(d) 200,000 9,788,000
Johnson & Johnson 76,600 5,162,840
Merck & Co., Inc. 158,800 7,212,696
Pfizer, Inc. 169,600 4,519,840
--------------
26,683,376
-------------------------------------------------------------------------------------
Total Health Care 98,398,158
====================================================================================================
Industrials--17.9%
Aerospace & Defense--3.9%
Honeywell International, Inc. 227,000 9,561,240
Lockheed Martin Corp. 134,000 11,648,620
Raytheon Co. 185,000 9,240,750
--------------
30,450,610
-------------------------------------------------------------------------------------
44 BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006
Schedule of Investments (continued) Master Large Cap Growth Portfolio
Shares
Sector Industry Common Stocks Held Value
====================================================================================================
Industrials (concluded)
Airlines--2.2%
AMR Corp. (b) 301,000 $ 8,530,340
Continental Airlines, Inc. Class B (b)(d) 232,000 8,556,160
--------------
17,086,500
-------------------------------------------------------------------------------------
Commercial Services &
Supplies--3.9%
Covanta Holding Corp. (b) 374,000 7,603,420
Manpower Inc. 117,000 7,929,090
Steelcase, Inc. Class A 314,000 5,202,980
Waste Management, Inc. 255,700 9,583,636
--------------
30,319,126
-------------------------------------------------------------------------------------
Diversified Consumer
Services--1.0%
ITT Educational Services, Inc. (b) 119,000 8,205,050
-------------------------------------------------------------------------------------
Electrical Equipment--1.7%
Roper Industries, Inc. (d) 153,000 7,321,050
Thomas & Betts Corp. (b) 119,000 6,132,070
--------------
13,453,120
-------------------------------------------------------------------------------------
Industrial Conglomerates--0.7%
General Electric Co. 153,700 5,396,407
-------------------------------------------------------------------------------------
Machinery--3.6%
Cummins, Inc. (d) 62,900 7,987,042
Manitowoc Co. 154,000 8,451,520
Terex Corp. (b) 91,900 4,756,744
Toro Co. 165,000 7,121,400
--------------
28,316,706
-------------------------------------------------------------------------------------
Road & Rail--0.9%
Ryder System, Inc. (d) 135,100 7,113,015
-------------------------------------------------------------------------------------
Total Industrials 140,340,534
====================================================================================================
Information Technology--29.7%
Communications
Equipment--4.7%
Cisco Systems, Inc. (b) 985,200 23,772,876
Motorola, Inc. 556,000 12,821,360
--------------
36,594,236
-------------------------------------------------------------------------------------
Computers & Peripherals--2.9%
Hewlett-Packard Co. 392,000 15,186,080
International Business Machines Corp. 15,400 1,421,882
NCR Corp. (b) 140,000 5,812,800
--------------
22,420,762
-------------------------------------------------------------------------------------
Electronic Equipment &
Instruments--2.8%
AVX Corp. (d) 412,000 6,493,120
Agilent Technologies, Inc. (b) 225,000 8,010,000
Vishay Intertechnology, Inc. (b) 527,800 7,120,022
--------------
21,623,142
-------------------------------------------------------------------------------------
IT Services--2.0%
Ceridian Corp. (b) 255,000 6,010,350
Electronic Data Systems Corp. 282,000 7,143,060
Paychex, Inc. 62,000 2,447,760
Total System Services, Inc. 16,000 385,280
--------------
15,986,450
-------------------------------------------------------------------------------------
Semiconductors & Semiconductor
Equipment--7.6%
Altera Corp. (b) 141,000 2,600,040
Integrated Device Technology, Inc. (b) 389,000 6,165,650
Intersil Corp. Class A 325,000 7,621,250
LSI Logic Corp. (b) 823,000 8,271,150
Micron Technology, Inc. (b)(d) 524,000 7,571,800
National Semiconductor Corp. (d) 265,000 6,436,850
Novellus Systems, Inc. (b) 299,000 8,267,350
Texas Instruments, Inc. (d) 436,000 13,158,480
--------------
60,092,570
-------------------------------------------------------------------------------------
Software--9.7%
BEA Systems, Inc. (b) 555,000 9,029,850
BMC Software, Inc. (b) 287,000 8,698,970
Cadence Design Systems, Inc. (b)(d) 457,000 8,162,020
Compuware Corp. (b) 585,000 4,703,400
Intuit, Inc. (b) 267,000 9,425,100
Microsoft Corp. 444,000 12,747,240
Oracle Corp. (b) 828,500 15,302,395
Synopsys, Inc. (b) 347,000 7,810,970
--------------
75,879,945
-------------------------------------------------------------------------------------
Wireless Telecommunication
Services--0.0%
Telephone & Data Systems, Inc. 5,300 258,905
-------------------------------------------------------------------------------------
Total Information Technology 232,856,010
====================================================================================================
Materials--4.0%
Containers & Packaging--1.1%
Pactiv Corp. (b) 289,000 8,912,760
-------------------------------------------------------------------------------------
Metals & Mining--2.9%
Carpenter Technology Corp. 72,000 7,703,280
Freeport-McMoRan Copper &
Gold, Inc. Class B (b)(d) 120,000 7,257,600
Nucor Corp. 125,300 7,318,773
--------------
22,279,653
-------------------------------------------------------------------------------------
Total Materials 31,192,413
====================================================================================================
Total Common Stocks
(Cost--$682,276,046)--100.0% 785,236,569
====================================================================================================
Short-Term Beneficial
Securities Interest
====================================================================================================
BlackRock Liquidity Series, LLC
Cash Sweep Series I, 5.22% (a)(c) $ 304,656 304,656
BlackRock Liquidity Series, LLC
Money Market Series,
5.29% (a)(c)(e) 97,960,850 97,960,850
-------------------------------------------------------------------------------------
Total Short-Term Securities
(Cost--$98,265,506)--12.5% 98,265,506
====================================================================================================
Total Investments
(Cost--$780,541,552*)--112.5% 883,502,075
Liabilities in Excess of Other Assets--(12.5%) (98,125,274)
--------------
Net Assets--100.0% $ 785,376,801
==============
BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006 45
Schedule of Investments (concluded) Master Large Cap Growth Portfolio
* The cost and unrealized appreciation (depreciation) of investments as of
October 31, 2006, as computed for federal income tax purposes, were as
follows:
Aggregate cost ......................................... $ 782,633,533
=============
Unrealized appreciation ................................ $ 111,718,886
Unrealized depreciation ................................ (10,850,344)
-------------
Net unrealized appreciation ............................ $ 100,868,542
=============
(a) Investments in companies considered to be an affiliate of the Portfolio,
for purposes of Section 2(a)(3) of the Investment Company Act of 1940,
were as follows:
--------------------------------------------------------------------------
Net Interest
Affiliate Activity Income
--------------------------------------------------------------------------
BlackRock Liquidity Series, LLC
Cash Sweep Series I $ 120,210 $ 88,436
BlackRock Liquidity Series, LLC
Money Market Series $62,261,450 $ 73,494
--------------------------------------------------------------------------
(b) Non-income producing security.
(c) Represents the current yield as of October 31, 2006.
(d) Security, or a portion of security, is on loan.
(e) Security was purchased with the cash proceeds from securities loans.
o For Portfolio compliance purposes, the Portfolio's sector and industry
classifications refer to any one or more of the sector and industry
sub-classifications used by one or more widely recognized market indexes
or ratings group indexes, and/or as defined by Portfolio management. This
definition may not apply for purposes of this report, which may combine
sector and industry sub-classifications for reporting ease. Sectors and
industries are shown as a percent of net assets. These sector and industry
classifications are unaudited.
See Notes to Financial Statements.
46 BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006
Schedule of Investments Master Large Cap Value Portfolio
Shares
Sector Industry Common Stocks Held Value
====================================================================================================
Consumer Discretionary--12.5%
Automobiles--1.3%
General Motors Corp. (d) 1,440,000 $ 50,284,800
-------------------------------------------------------------------------------------
Household Durables--0.2%
Snap-On, Inc. 160,000 7,524,800
-------------------------------------------------------------------------------------
Leisure Equipment &
Products--1.4%
Hasbro, Inc. 970,000 25,142,400
Mattel, Inc. 1,340,000 30,324,200
--------------
55,466,600
-------------------------------------------------------------------------------------
Media--2.3%
Clear Channel Communications, Inc. (d) 830,000 28,925,500
The DIRECTV Group, Inc. (c) 167,900 3,740,812
Walt Disney Co. (d) 1,857,700 58,443,242
--------------
91,109,554
-------------------------------------------------------------------------------------
Multiline Retail--4.0%
Dillard's, Inc. Class A (d) 1,330,000 40,126,100
Dollar Tree Stores, Inc. (c) 840,000 26,115,600
Family Dollar Stores, Inc. 1,370,000 40,346,500
JC Penney Co., Inc. 475,600 35,779,388
Nordstrom, Inc. (d) 320,000 15,152,000
--------------
157,519,588
-------------------------------------------------------------------------------------
Specialty Retail--3.3%
AnnTaylor Stores Corp. (c) 930,000 40,938,600
AutoNation, Inc. (c)(d) 100,000 2,005,000
Circuit City Stores, Inc. (d) 1,200,000 32,376,000
Office Depot, Inc. (c) 780,000 32,752,200
OfficeMax, Inc. 220,000 10,467,600
The Sherwin-Williams Co. 210,000 12,438,300
--------------
130,977,700
-------------------------------------------------------------------------------------
Total Consumer Discretionary 492,883,042
====================================================================================================
Consumer Staples--5.1%
Beverages--0.6%
Pepsi Bottling Group, Inc. 767,300 24,262,026
-------------------------------------------------------------------------------------
Food & Staples Retailing--2.5%
The Kroger Co. 2,240,000 50,377,600
Safeway, Inc. (d) 1,610,000 47,269,600
--------------
97,647,200
-------------------------------------------------------------------------------------
Food Products--1.1%
Archer Daniels Midland Co. 1,157,700 44,571,450
-------------------------------------------------------------------------------------
Household Products--0.8%
Energizer Holdings, Inc. (c) 180,000 14,067,000
The Procter & Gamble Co. 260,000 16,481,400
--------------
30,548,400
-------------------------------------------------------------------------------------
Tobacco--0.1%
Reynolds American, Inc. 25,700 1,623,212
-------------------------------------------------------------------------------------
Total Consumer Staples 198,652,288
====================================================================================================
Energy--17.8%
Oil, Gas & Consumable
Fuels--17.8%
Anadarko Petroleum Corp. 860,000 39,921,200
Chevron Corp. 1,870,000 125,664,000
Devon Energy Corp. 542,100 36,233,964
Exxon Mobil Corp. (d) 3,840,000 274,252,800
Frontier Oil Corp. 1,360,000 39,984,000
Marathon Oil Corp. (d) 670,000 57,888,000
Occidental Petroleum Corp. 1,300,000 61,022,000
Sunoco, Inc. 370,000 24,468,100
Tesoro Corp. 630,000 40,282,200
-------------------------------------------------------------------------------------
Total Energy 699,716,264
====================================================================================================
Financials--26.4%
Capital Markets--6.0%
The Bear Stearns Cos., Inc. 333,800 50,520,630
Goldman Sachs Group, Inc. (d) 257,200 48,813,988
Lehman Brothers Holdings, Inc. (d) 722,400 56,231,616
Morgan Stanley 1,060,000 81,015,800
--------------
236,582,034
-------------------------------------------------------------------------------------
Commercial Banks--0.0%
U.S. Bancorp 50,000 1,692,000
-------------------------------------------------------------------------------------
Diversified Financial
Services--10.0%
Bank of America Corp. 1,376,500 74,152,055
Citigroup Inc. 3,650,000 183,084,000
JPMorgan Chase & Co. (d) 2,830,000 134,255,200
--------------
391,491,255
-------------------------------------------------------------------------------------
Insurance--9.1%
AMBAC Financial Group, Inc. 520,000 43,414,800
The Allstate Corp. 1,010,000 61,973,600
American Financial Group, Inc. 360,000 17,229,600
CNA Financial Corp. (c)(d) 440,000 16,478,000
Chubb Corp. 354,500 18,841,675
The Hanover Insurance Group, Inc. 290,000 13,151,500
MBIA, Inc. 90,000 5,581,800
MetLife, Inc. (d) 440,000 25,137,200
Nationwide Financial Services, Inc.
Class A 307,500 15,657,900
Principal Financial Group, Inc. 190,000 10,733,100
Prudential Financial, Inc. 60,000 4,615,800
Safeco Corp. 670,000 38,987,300
The St. Paul Travelers Cos., Inc. 979,200 50,066,496
W.R. Berkley Corp. 929,500 34,261,370
--------------
356,130,141
-------------------------------------------------------------------------------------
Thrifts & Mortgage
Finance--1.3%
MGIC Investment Corp. (d) 280,000 16,452,800
The PMI Group, Inc. (d) 820,000 34,973,000
--------------
51,425,800
-------------------------------------------------------------------------------------
Total Financials 1,037,321,230
====================================================================================================
Health Care--9.7%
Health Care Providers &
Services--4.2%
AmerisourceBergen Corp. 810,000 38,232,000
Cardinal Health, Inc. 460,000 30,107,000
Caremark Rx, Inc. (d) 820,000 40,368,600
Coventry Health Care, Inc. (c) 32,625 1,531,744
Humana, Inc. (c) 360,000 21,600,000
McKesson Corp. 550,000 27,549,500
WellPoint, Inc. (c) 70,000 5,342,400
--------------
164,731,244
-------------------------------------------------------------------------------------
BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006 47
Schedule of Investments (continued) Master Large Cap Value Portfolio
Shares
Sector Industry Common Stocks Held Value
====================================================================================================
Health Care (concluded)
Health Care Technology--0.6%
Emdeon Corp. (c) 2,040,000 $ 23,766,000
-------------------------------------------------------------------------------------
Life Sciences Tools &
Services--1.0%
Applera Corp.--Applied
Biosystems Group 1,070,000 39,911,000
-------------------------------------------------------------------------------------
Pharmaceuticals--3.9%
King Pharmaceuticals, Inc. (c)(d) 1,900,000 31,787,000
Merck & Co., Inc. 1,647,100 74,811,282
Pfizer, Inc. 1,697,100 45,227,715
--------------
151,825,997
-------------------------------------------------------------------------------------
Total Health Care 380,234,241
====================================================================================================
Industrials--10.2%
Aerospace & Defense--3.2%
Honeywell International, Inc. 1,160,000 48,859,200
Lockheed Martin Corp. 23,000 1,999,390
Northrop Grumman Corp. 430,000 28,547,700
Raytheon Co. 930,000 46,453,500
--------------
125,859,790
-------------------------------------------------------------------------------------
Airlines--1.1%
AMR Corp. (c)(d) 1,450,000 41,093,000
-------------------------------------------------------------------------------------
Commercial Services &
Supplies--1.7%
Manpower Inc. 500,000 33,885,000
Waste Management, Inc. 890,000 33,357,200
--------------
67,242,200
-------------------------------------------------------------------------------------
Electrical Equipment--0.2%
Thomas & Betts Corp. (c) 140,000 7,214,200
-------------------------------------------------------------------------------------
Industrial Conglomerates--0.9%
General Electric Co. 1,042,100 36,588,131
-------------------------------------------------------------------------------------
Machinery--1.8%
Cummins, Inc. (d) 301,700 38,309,866
SPX Corp. 560,000 32,211,200
--------------
70,521,066
-------------------------------------------------------------------------------------
Road & Rail--1.3%
CSX Corp. 480,000 17,121,600
Ryder System, Inc. (d) 650,000 34,222,500
--------------
51,344,100
-------------------------------------------------------------------------------------
Total Industrials 399,862,487
====================================================================================================
Information Technology--12.8%
Communications Equipment--1.1%
Motorola, Inc. 1,920,000 44,275,200
-------------------------------------------------------------------------------------
Computers & Peripherals--3.0%
Hewlett-Packard Co. 1,660,000 64,308,400
International Business Machines Corp. 400,000 36,932,000
NCR Corp. (c) 400,000 16,608,000
--------------
117,848,400
-------------------------------------------------------------------------------------
Electronic Equipment &
Instruments--0.6%
Vishay Intertechnology, Inc. (c)(d) 1,660,000 22,393,400
-------------------------------------------------------------------------------------
Office Electronics--1.3%
Xerox Corp. (c) 2,900,000 49,300,000
-------------------------------------------------------------------------------------
Semiconductors &
Semiconductor Equipment--3.5%
Intersil Corp. Class A (d) 1,280,000 30,016,000
LSI Logic Corp. (c) 3,060,000 30,753,000
Micron Technology, Inc. (c)(d) 2,460,000 35,547,000
Novellus Systems, Inc. (c)(d) 1,480,000 40,922,000
--------------
137,238,000
-------------------------------------------------------------------------------------
Software--3.3%
BEA Systems, Inc. (c) 2,040,000 33,190,800
BMC Software, Inc. (c) 1,050,000 31,825,500
Cadence Design Systems, Inc. (c) 1,940,000 34,648,400
Compuware Corp. (c) 1,980,000 15,919,200
Sybase, Inc. (c) 640,000 15,584,000
--------------
131,167,900
-------------------------------------------------------------------------------------
Total Information Technology 502,222,900
====================================================================================================
Materials--3.9%
Chemicals--1.7%
Albemarle Corp. 210,000 13,656,300
Lubrizol Corp. 52,800 2,376,000
Lyondell Chemical Co. (d) 1,650,000 42,355,500
PPG Industries, Inc. 140,000 9,576,000
--------------
67,963,800
-------------------------------------------------------------------------------------
Metals & Mining--2.2%
Carpenter Technology Corp. 340,000 36,376,600
Nucor Corp. 860,000 50,232,600
--------------
86,609,200
-------------------------------------------------------------------------------------
Total Materials 154,573,000
====================================================================================================
Telecommunications Services--1.7%
Diversified Telecommunication
Services--1.7%
AT&T, Inc. (d) 284,700 9,750,975
Citizens Communications Co. (d) 570,000 8,356,200
Qwest Communications
International Inc. (c)(d) 5,590,000 48,241,700
-------------------------------------------------------------------------------------
Total Telecommunications Services 66,348,875
-------------------------------------------------------------------------------------
Total Common Stocks
(Cost--$3,362,831,997)--100.1% 3,931,814,327
====================================================================================================
Short-Term Beneficial
Securities Interest
====================================================================================================
BlackRock Liquidity Series, LLC
Cash Sweep Series I,
5.22% (a)(e) $ 45,099,176 45,099,176
BlackRock Liquidity Series, LLC
Money Market Series,
5.29% (a)(b)(e) 575,197,900 575,197,900
-------------------------------------------------------------------------------------
Total Short-Term Securities
(Cost--$620,297,076)--15.8% 620,297,076
====================================================================================================
Total Investments
(Cost--$3,983,129,073*)--115.9% 4,552,111,403
Liabilities in Excess of Other Assets--(15.9%) (624,185,699)
--------------
Net Assets--100.0% $3,927,925,704
==============
48 BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006
Schedule of Investments (concluded) Master Large Cap Value Portfolio
* The cost and unrealized appreciation (depreciation) of investments as of
October 31, 2006, as computed for federal income tax purposes, were as
follows:
Aggregate cost ......................................... $3,993,936,924
==============
Gross unrealized appreciation .......................... $ 584,793,025
Gross unrealized depreciation .......................... (26,618,546)
--------------
Net unrealized appreciation ............................ $ 558,174,479
==============
(a) Investments in companies considered to be an affiliate of the Portfolio,
for purposes of Section 2(a)(3) of the Investment Company Act of 1940,
were as follows:
--------------------------------------------------------------------------
Net Interest
Affiliate Activity Income
--------------------------------------------------------------------------
BlackRock Liquidity Series, LLC
Cash Sweep Series I $ 37,778,348 $ 782,315
BlackRock Liquidity Series, LLC
Money Market Series $522,134,100 $ 332,007
--------------------------------------------------------------------------
(b) Security was purchased with the cash proceeds from securities loans.
(c) Non-income producing security.
(d) Security, or a portion of security, is on loan.
(e) Represents the current yield as of October 31, 2006.
o For Portfolio compliance purposes, the Portfolio's sector and industry
classifications refer to any one or more of the sector and industry
sub-classifications used by one or more widely recognized market indexes
or ratings group indexes, and/or as defined by Portfolio management. This
definition may not apply for purposes of this report, which may combine
sector and industry sub-classifications for reporting ease. Sectors and
industries are shown as a percent of net assets. These sector and industry
classifications are unaudited.
See Notes to Financial Statements.
BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006 49
Statements of Assets and Liabilities Master Large Cap Series Trust
Master Large Master Large Master Large
Cap Core Cap Growth Cap Value
As of October 31, 2006 Portfolio Portfolio Portfolio
====================================================================================================================================
Assets
- ------------------------------------------------------------------------------------------------------------------------------------
Investments in unaffiliated securities, at value*+ .... $3,876,645,471 $ 785,236,569 $3,931,814,327
Investments in affiliated securities, at value** ...... 648,878,800 98,265,506 620,297,076
Receivables:
Securities sold ...................................... 65,869,792 9,485,218 48,484,901
Contributions ........................................ 9,549,945 2,893,345 32,183,309
Dividends ............................................ 1,904,103 303,856 1,680,135
Securities lending ................................... 54,913 7,486 39,853
Interest from affiliates ............................. 10,215 -- --
Prepaid expenses and other assets ..................... 58,616 13,026 1,958,100
--------------------------------------------------
Total assets .......................................... 4,602,971,855 896,205,006 4,636,457,701
--------------------------------------------------
====================================================================================================================================
Liabilities
- ------------------------------------------------------------------------------------------------------------------------------------
Collateral on securities loaned, at value ............. 648,878,800 97,960,850 575,197,900
Bank overdraft ........................................ 887,895 1,832 2,901,953
Payables:
Securities purchased ................................. 67,230,509 10,141,584 120,501,043
Withdrawals .......................................... 7,496,924 2,215,947 8,145,469
Investment advisor ................................... 1,545,237 322,849 1,562,485
Other affiliates ..................................... 22,280 4,388 16,064
Accrued expenses and other liabilities ................ 271,420 180,755 207,083
--------------------------------------------------
Total liabilities ..................................... 726,333,065 110,828,205 708,531,997
--------------------------------------------------
====================================================================================================================================
Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets ............................................ $3,876,638,790 $ 785,376,801 $3,927,925,704
==================================================
====================================================================================================================================
Net Assets Consist of
- ------------------------------------------------------------------------------------------------------------------------------------
Investors' capital .................................... $3,223,056,993 $ 682,416,278 $3,358,943,374
Unrealized appreciation--net .......................... 653,581,797 102,960,523 568,982,330
--------------------------------------------------
Net Assets ............................................ $3,876,638,790 $ 785,376,801 $3,927,925,704
==================================================
* Identified cost on unaffiliated securities ........ $3,223,063,674 $ 682,276,046 $3,362,831,997
==================================================
** Identified cost on affiliated securities .......... $ 648,878,800 $ 98,265,506 $ 620,297,076
==================================================
+ Securities loaned, at value ....................... $ 626,206,524 $ 94,694,335 $ 553,898,895
==================================================
See Notes to Financial Statements.
50 BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006
Statements of Operations Master Large Cap Series Trust
Master Large Master Large Master Large
Cap Core Cap Growth Cap Value
For the Year Ended October 31, 2006 Portfolio Portfolio Portfolio
====================================================================================================================================
Investment Income
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends ............................................. $ 35,266,989 $ 5,052,070 $ 29,942,277
Securities lending--net ............................... 460,320 73,494 332,007
Interest from affiliates .............................. 259,462 88,436 782,315
--------------------------------------------------
Total income .......................................... 35,986,771 5,214,000 31,056,599
--------------------------------------------------
====================================================================================================================================
Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
Investment advisory fees .............................. 15,513,784 3,194,988 12,278,223
Accounting services ................................... 575,677 230,756 470,892
Custodian fees ........................................ 166,270 61,648 136,030
Professional fees ..................................... 93,581 42,074 63,227
Trustees' fees and expenses ........................... 95,643 27,378 70,547
Pricing fees .......................................... 1,072 1,072 1,085
Printing and shareholder reports ...................... -- 194 382
Other ................................................. 63,937 16,577 39,256
--------------------------------------------------
Total expenses ........................................ 16,509,964 3,574,687 13,059,642
--------------------------------------------------
Investment income--net ................................ 19,476,807 1,639,313 17,996,957
--------------------------------------------------
====================================================================================================================================
Realized & Unrealized Gain--Net
- ------------------------------------------------------------------------------------------------------------------------------------
Realized gain on investments--net ..................... 195,731,487 24,740,475 116,615,372
Change in unrealized appreciation on investments--net . 289,376,493 44,967,618 276,256,898
--------------------------------------------------
Total realized and unrealized gain--net ............... 485,107,980 69,708,093 392,872,270
--------------------------------------------------
Net Increase in Net Assets Resulting from Operations .. $ 504,584,787 $ 71,347,406 $ 410,869,227
==================================================
See Notes to Financial Statements.
BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006 51
Statements of Changes in Net Assets Master Large Cap Series Trust
Master Large Cap Core Portfolio
------------------------------------
For the Year Ended
October 31,
------------------------------------
Increase (Decrease) in Net Assets: 2006 2005
===================================================================================================================================
Operations
- -----------------------------------------------------------------------------------------------------------------------------------
Investment income--net ............................................ $ 19,476,807 $ 16,926,054
Realized gain--net ................................................ 195,731,487 185,237,400
Change in unrealized appreciation--net ............................ 289,376,493 159,284,150
------------------------------------
Net increase in net assets resulting from operations .............. 504,584,787 361,447,604
------------------------------------
===================================================================================================================================
Capital Transactions
- -----------------------------------------------------------------------------------------------------------------------------------
Proceeds from contributions ....................................... 1,448,673,363 1,040,896,976
Fair value of withdrawals ......................................... (743,318,106) (566,946,131)
------------------------------------
Net increase in net assets derived from capital transactions ...... 705,355,257 473,950,845
------------------------------------
===================================================================================================================================
Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Total increase in net assets ...................................... 1,209,940,044 835,398,449
Beginning of year ................................................. 2,666,698,746 1,831,300,297
------------------------------------
End of year ....................................................... $ 3,876,638,790 $ 2,666,698,746
====================================
See Notes to Financial Statements.
Statements of Changes in Net Assets Master Large Cap Series Trust
Master Large Cap Growth
Portfolio
------------------------------------
For the Year Ended
October 31,
------------------------------------
Increase (Decrease) in Net Assets: 2006 2005
===================================================================================================================================
Operations
- -----------------------------------------------------------------------------------------------------------------------------------
Investment income--net ............................................ $ 1,639,313 $ 1,419,849
Realized gain--net ................................................ 24,740,475 27,951,501
Change in unrealized appreciation--net ............................ 44,967,618 17,275,515
------------------------------------
Net increase in net assets resulting from operations .............. 71,347,406 46,646,865
------------------------------------
===================================================================================================================================
Capital Transactions
- -----------------------------------------------------------------------------------------------------------------------------------
Proceeds from contributions ....................................... 416,035,279 226,416,991
Fair value of withdrawals ......................................... (191,404,006) (128,065,615)
------------------------------------
Net increase in net assets derived from capital transactions ...... 224,631,273 98,351,376
------------------------------------
===================================================================================================================================
Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Total increase in net assets ...................................... 295,978,679 144,998,241
Beginning of year ................................................. 489,398,122 344,399,881
------------------------------------
End of year ....................................................... $ 785,376,801 $ 489,398,122
====================================
See Notes to Financial Statements.
52 BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006
Statements of Changes in Net Assets Master Large Cap Series Trust
Master Large Cap Value Portfolio
------------------------------------
For the Year Ended
October 31,
------------------------------------
Increase (Decrease) in Net Assets: 2006 2005
===================================================================================================================================
Operations
- -----------------------------------------------------------------------------------------------------------------------------------
Investment income--net ............................................ $ 17,996,957 $ 9,203,144
Realized gain--net ................................................ 116,615,372 77,262,988
Change in unrealized appreciation--net ............................ 276,256,898 112,124,763
------------------------------------
Net increase in net assets resulting from operations .............. 410,869,227 198,590,895
------------------------------------
===================================================================================================================================
Capital Transactions
- -----------------------------------------------------------------------------------------------------------------------------------
Proceeds from contributions ....................................... 2,669,357,535 831,921,820
Fair value of withdrawals ......................................... (688,289,120) (305,014,008)
------------------------------------
Net increase in net assets derived from capital transactions ...... 1,981,068,415 526,907,812
------------------------------------
===================================================================================================================================
Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Total increase in net assets ...................................... 2,391,937,642 725,498,707
Beginning of year ................................................. 1,535,988,062 810,489,355
------------------------------------
End of year ....................................................... $ 3,927,925,704 $ 1,535,988,062
====================================
See Notes to Financial Statements.
BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006 53
Financial Highlights Master Large Cap Series Trust
Master Large Cap Core Portfolio
----------------------------------------------------------------------
For the Year Ended October 31,
The following ratios have been derived ----------------------------------------------------------------------
from information provided in the financial statements. 2006 2005 2004 2003 2002
==================================================================================================================================
Total Investment Return
- ----------------------------------------------------------------------------------------------------------------------------------
Total investment return ................................ 17.32% 18.35% 9.61% 25.11% (8.13%)
======================================================================
==================================================================================================================================
Ratios to Average Net Assets
- ----------------------------------------------------------------------------------------------------------------------------------
Expenses ............................................... .49% .51% .52% .54% .57%
======================================================================
Investment income--net ................................. .58% .72% .57% .48% .83%
======================================================================
==================================================================================================================================
Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (in thousands) ................. $3,876,639 $2,666,699 $1,831,300 $1,454,109 $ 873,704
======================================================================
Portfolio turnover ..................................... 87.67% 93.95% 135.48% 138.73% 150.18%
======================================================================
See Notes to Financial Statements.
54 BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006
Master Large Cap Growth Portfolio
- ------------------------------------------------------------------------------
For the Year Ended October 31,
- ------------------------------------------------------------------------------
2006 2005 2004 2003 2002
==============================================================================
- ------------------------------------------------------------------------------
14.05% 12.47% 5.42% 25.01% (13.56%)
==============================================================================
==============================================================================
- ------------------------------------------------------------------------------
.56% .57% .59% .61% .67%
==============================================================================
.26% .33% .09% .04% (.01%)
==============================================================================
==============================================================================
- ------------------------------------------------------------------------------
$ 785,377 $ 489,398 $ 344,400 $ 250,166 $ 185,676
==============================================================================
116.77% 131.79% 164.94% 178.11% 177.46%
==============================================================================
Master Large Cap Value Portfolio
- ------------------------------------------------------------------------------
For the Year Ended October 31,
- ------------------------------------------------------------------------------
2006 2005 2004 2003 2002
==============================================================================
- ------------------------------------------------------------------------------
18.48% 21.93% 14.57% 27.05% (3.40%)
==============================================================================
==============================================================================
- ------------------------------------------------------------------------------
.53% .55% .56% .57% .60%
==============================================================================
.73% .80% .93% .97% 1.17%
==============================================================================
==============================================================================
- ------------------------------------------------------------------------------
$3,927,926 $1,535,988 $ 810,489 $ 515,257 $ 386,918
==============================================================================
70.86% 94.95% 127.59% 157.04% 136.92%
==============================================================================
BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006 55
Notes to Financial Statements Master Large Cap Series Trust
1. Significant Accounting Policies:
Master Large Cap Core Portfolio, Master Large Cap Growth Portfolio and Master
Large Cap Value Portfolio (the "Portfolios" or individually as the "Portfolio")
constitute the Master Large Cap Series Trust (the "Trust"). The Trust is
registered under the Investment Company Act of 1940, as amended, and is
organized as a Delaware statutory trust. The Declaration of Trust permits the
Trustees to issue nontransferable interests in the Portfolio, subject to certain
limitations. The Portfolios' financial statements are prepared in conformity
with U.S. generally accepted accounting principles, which may require the use of
management accruals and estimates. Actual results may differ from these
estimates. The following is a summary of significant accounting policies
followed by the Portfolio.
(a) Valuation of investments -- Equity securities held by each Portfolio that
are traded on stock exchanges or the Nasdaq National Market are valued at the
last sale price or official close price on the exchange, as of the close of
business on the day the securities are being valued or, lacking any sales, at
the last available bid price for long positions, and at the last available asked
price for short positions. In cases where equity securities are traded on more
than one exchange, the securities are valued on the exchange designated as the
primary market by or under the authority of the Board of Trustees of the Trust.
Long positions traded in the over-the-counter ("OTC") markets, Nasdaq Small Cap
or Bulletin Board are valued at the last available bid price or yield equivalent
obtained from one or more dealers or pricing services approved by the Board of
Trustees of the Trust. Short positions traded in the OTC markets are valued at
the last available asked price. Portfolio securities that are traded both in the
OTC markets and on a stock exchange are valued according to the broadest and
most representative market.
Options written or purchased are valued at the last sales price in the case of
exchange-traded options. Options traded in the OTC market are valued at the last
asked price (options written) or the last bid price (options purchased). Swap
agreements are valued based upon quoted fair valuations received daily by the
Portfolios from a pricing service or counterparty. Financial futures contracts
and options thereon, which are traded on exchanges, are valued at their last
sale price as of the close of such exchanges. Obligations with remaining
maturities of 60 days or less are valued at amortized cost unless the Manager
believes that this method no longer produces fair valuations. Valuation of other
short-term investment vehicles is generally based on the net asset value of the
underlying investment vehicle or amortized cost.
Repurchase agreements are valued at cost plus accrued interest. Each Portfolio
employs pricing services to provide certain securities prices for the Portfolio.
Securities and assets for which market quotations are not readily available are
valued at fair value as determined in good faith by or under the direction of
the Board of Trustees of the Trust, including valuations furnished by the
pricing services retained by each Portfolio, which may use a matrix system for
valuations. The procedures of a pricing service and its valuations are reviewed
by the officers of the Trust under the general supervision of the Trust's Board
of Trustees. Such valuations and procedures will be reviewed periodically by the
Board of Trustees of the Trust.
Generally, trading in foreign securities, as well as U.S. government securities,
money market instruments, and certain fixed income securities, is substantially
completed each day at various times prior to the close of business on the New
York Stock Exchange ("NYSE"). The values of such securities used in computing
the net assets of each Portfolio are determined as of such times. Foreign
currency exchange rates will be determined as of the close of business on the
NYSE. Occasionally, events affecting the values of such securities and such
exchange rates may occur between the times at which they are determined and the
close of business on the NYSE that may not be reflected in the computation of
each Portfolio's net assets. If events (for example, a company announcement,
market volatility or a natural disaster) occur during such periods that are
expected to materially affect the value of such securities, those securities may
be valued at their fair value as determined in good faith by the Trust's Board
of Trustees or by the Manager using a pricing service and/or procedures approved
by the Trust's Board of Trustees.
(b) Derivative financial instruments -- Each Portfolio may engage in various
portfolio investment strategies both to increase the return of the Portfolio and
to hedge, or protect, its exposure to interest rate movements and movements in
the securities markets. Losses may arise due to changes in the value of the
contract or if the counterparty does not perform under the contract.
o Financial futures contracts -- Each Portfolio may purchase or sell
financial futures contracts and options on such financial futures
contracts. Financial futures contracts are contracts for delayed delivery
of securities at a specific date and at a specific price or yield. Upon
entering into a contract, the
56 BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006
Notes to Financial Statements (continued) Master Large Cap Series Trust
Portfolio deposits and maintains as collateral such initial margin as
required by the exchange on which the transaction is effected. Pursuant to
the contract, the Portfolio agrees to receive from or pay to the broker an
amount of cash equal to the daily fluctuation in value of the contract.
Such receipts or payments are known as variation margin and are recorded
by the Portfolio as unrealized gains or losses. When the contract is
closed, the Portfolio records a realized gain or loss equal to the
difference between the value of the contract at the time it was opened and
the value at the time it was closed.
o Options -- Each Portfolio may purchase and write call and put options.
When the Portfolio writes an option, an amount equal to the premium
received by the Portfolio is reflected as an asset and an equivalent
liability. The amount of the liability is subsequently marked-to-market to
reflect the current market value of the option written. When a security is
purchased or sold through an exercise of an option, the related premium
paid (or received) is added to (or deducted from) the basis of the
security acquired or deducted from (or added to) the proceeds of the
security sold. When an option expires (or the Portfolio enters into a
closing transaction), the Portfolio realizes a gain or loss on the option
to the extent of the premiums received or paid (or a gain or loss to the
extent that the cost of the closing transaction exceeds the premium paid
or received).
Written and purchased options are non-income producing investments.
(c) Income taxes -- Master Large Cap Core Portfolio and Master Large Cap Value
Portfolio are classified as partnerships for federal income tax purposes. Master
Large Cap Growth Portfolio is considered as a "pass-through" entity for federal
income tax purposes. As such, each investor in the Portfolio is treated as owner
of its proportionate share of the net assets, income, expenses and realized and
unrealized gains and losses of the Portfolio. Therefore, no federal income tax
provision is required. It is intended that the Portfolio's assets will be
managed so an investor in the Portfolio can satisfy the requirements of
Subchapter M of the Internal Revenue Code.
(d) Security transactions and investment income -- Security transactions are
accounted for on the date the securities are purchased or sold (the trade
dates). Realized gains and losses on security transactions are determined on the
identified cost basis. Dividend income is recorded on the ex-dividend dates.
Dividends from foreign securities where the ex-dividend date may have passed are
subsequently recorded when the Portfolio has determined the ex-dividend date.
Interest income is recognized on the accrual basis.
(e) Securities lending -- Each Portfolio may lend securities to financial
institutions that provide cash or securities issued or guaranteed by the U.S.
government as collateral, which will be maintained at all times in an amount
equal to at least 100% of the current market value of the loaned securities. The
market value of the loaned securities is determined at the close of business of
the Portfolio and any additional required collateral is delivered to the
Portfolio on the next business day. Where the Portfolio receives securities as
collateral for the loaned securities, it receives a fee from the borrower. The
Portfolio typically receives the income on the loaned securities, but does not
receive the income on the collateral. Where the Portfolio receives cash
collateral, it may invest such collateral and retain the amount earned on such
investment, net of any amount rebated to the borrower. Loans of securities are
terminable at any time and the borrower, after notice, is required to return
borrowed securities within five business days. The Portfolio may pay reasonable
finders, lending agent, administrative and custodial fees in connection with its
loans. In the event that the borrower defaults on its obligation to return
borrowed securities because of insolvency or for any other reason, the Portfolio
could experience delays and costs in gaining access to the collateral. The
Portfolio also could suffer a loss where the value of the collateral falls below
the market value of the borrowed securities, in the event of borrower default or
in the event of losses on investments made with cash collateral.
(f) Bank overdraft
Master Large Cap Core Portfolio
The Portfolio recorded a bank overdraft, which resulted from management
estimates of available cash.
Master Large Cap Growth Portfolio
The Portfolio recorded a bank overdraft, which resulted from an unprojected
payment of net investment income dividends.
Master Large Cap Value Portfolio
The Portfolio recorded a bank overdraft, which resulted from a failed trade that
settled the next day.
(g) Recent accounting pronouncements -- In July 2006, the Financial Accounting
Standards Board ("FASB") issued Interpretation No. 48 ("FIN 48"), "Accounting
for Uncertainty in Income Taxes -- an interpretation of FASB Statement No. 109."
FIN 48 prescribes the minimum recognition threshold a tax position must meet in
connection with accounting for uncertainties in income tax positions taken or
expected to be taken by an entity including mutual funds before being measured
and recognized in the financial statements. Adoption of
BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006 57
Notes to Financial Statements (continued) Master Large Cap Series Trust
FIN 48 is required for fiscal years beginning after December 15, 2006. The
impact on the Portfolios' financial statements, if any, is currently being
assessed.
In addition, in September 2006, Statement of Financial Accounting Standards No.
157, "Fair Value Measurements" ("FAS 157"), was issued and is effective for
fiscal years beginning after November 15, 2007. FAS 157 defines fair value,
establishes a framework for measuring fair value and expands disclosures about
fair value measurements. Management is currently evaluating the implication of
FAS 157. At this time its impact on the Portfolios' financial statements has not
been determined.
2. Investment Advisory Agreement and Transactions with Affiliates:
On September 29, 2006, BlackRock, Inc. and Merrill Lynch & Co., Inc. ("Merrill
Lynch") combined Merrill Lynch's investment management business, Merrill Lynch
Investment Managers, L.P. ("MLIM") and its affiliates, including Fund Asset
Management, L.P. ("FAM"), with BlackRock, Inc. to create a new independent
company. Merrill Lynch has a 49.8% economic interest and a 45% voting interest
in the combined company and The PNC Financial Services Group, Inc. ("PNC"), has
approximately a 34% economic and voting interest. The new company operates under
the BlackRock name and is governed by a board of directors with a majority of
independent members.
The shareholders of each of the investors of the Trust approved on August 15,
2006 and August 31, 2006 a new Investment Advisory Agreement with BlackRock
Advisors, Inc. (the "Manager"), an indirect, wholly owned subsidiary of
BlackRock, Inc. BlackRock Advisors, Inc. was recently reorganized into a limited
liability company and renamed BlackRock Advisors, LLC. The new Investment
Advisory Agreement between the Trust, on behalf of each Portfolio, and the
Manager became effective on September 29, 2006. Prior to September 29, 2006, FAM
was the Investment Adviser. The general partner of FAM is Princeton Services,
Inc. ("PSI"), an indirect, wholly owned subsidiary of Merrill Lynch, which is
the limited partner.
The Manager is responsible for the management of each Portfolio's investments
and provides the necessary personnel, facilities, equipment and certain other
services necessary to the operations of the Portfolio. Prior to May 9, 2006, for
such services the Master Large Cap Core Portfolio pays a monthly fee at an
annual rate of .50% of the average daily value of the Portfolio's net assets not
exceeding $1 billion and .45% of average daily net assets in excess of $1
billion. Master Large Cap Growth Portfolio and Master Large Cap Value Portfolio
each pay a monthly fee at an annual rate of .50% of the average daily value of
the Portfolio's net assets. Effective May 9, 2006, FAM had voluntarily agreed
and on September 29, 2006 the Manager contractually agreed to implement an
additional breakpoint for a portion of its investment advisory fee. For such
services, Master Large Cap Core Portfolio pays a monthly fee at an annual rate
of .50% of the average daily net assets not exceeding $1 billion, .45% of
average daily net assets in excess of $1 billion but not exceeding $5 billion
and .40% of average daily net assets in excess of $5 billion; Master Large Cap
Growth Portfolio pays a monthly fee at an annual rate of .50% of the average
daily net assets not exceeding $5 billion and .45% of average daily net assets
in excess of $5 billion; and Master Large Cap Value Portfolio pays a monthly fee
at an annual rate of .50% of the average daily net assets not exceeding $3
billion and .45% of average daily net assets in excess of $3 billion. In
addition, the Manager has entered into a sub-advisory agreement with BlackRock
Investment Management, LLC ("BIM"), an affiliate of the Manager, under which the
Manager pays the Sub-Adviser for services it provides to each Portfolio a fee
equal to 74% of the management fee paid by each of the Portfolios to the
Manager. Prior to September 29, 2006, FAM had a Sub-Advisory Agreement with
Merrill Lynch Asset Management U.K. Limited ("MLAM U.K."), an affiliate of FAM.
The Portfolios have received an exemptive order from the Securities and Exchange
Commission permitting it to lend portfolio securities to Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("MLPF&S"), an affiliate of the Manager, or its
affiliates. As of October 31, 2006, Master Large Cap Core Portfolio, Master
Large Cap Growth Portfolio and Master Large Cap Value Portfolio lent securities
with values of $257,949,987, $11,124,429 and $215,775,285, respectively, to
MLPF&S or its affiliates. Pursuant to that order, the Portfolios have retained
BIM as the securities lending agent for a fee based on a share of the returns on
investment of cash collateral. Prior to September 29, 2006, BIM was organized as
Merrill Lynch Investment Managers, LLC ("MLIM, LLC"), an affiliate of FAM, and
MLIM, LLC was the security
58 BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006
Notes to Financial Statements (concluded) Master Large Cap Series Trust
lending agent. BIM may, on behalf of the Portfolios, invest cash collateral
received by the Portfolios for such loans, among other things, in a private
investment company managed by the Manager or in registered money market funds
advised by the Manager or its affiliates. For the year ended October 31, 2006,
BIM received $197,604, $31,324 and $143,732 in securities lending agent fees for
Master Large Cap Core Portfolio, Master Large Cap Growth Portfolio and Master
Large Cap Value Portfolio, respectively.
The Portfolios reimbursed FAM and the Manager for certain accounting services.
The reimbursements were as follows:
- --------------------------------------------------------------------------------
For the Period For the Period
Nov. 1, 2005 to Sept. 30, 2006 to
Sept. 29, 2006 Oct. 31, 2006
Reimbursement Reimbursement
to FAM to the Manager
- --------------------------------------------------------------------------------
Master Large Cap
Core Portfolio ................... $ 67,319 $ 5,570
Master Large Cap
Growth Portfolio ................. $ 12,980 $ 1,097
Master Large Cap
Value Portfolio .................. $ 45,747 $ 4,016
- --------------------------------------------------------------------------------
Prior to September 29, 2006, certain officers and/or trustees of the Trust were
officers and/or directors of FAM, PSI, MLAM U.K., Merrill Lynch, MLIM, and/or
MLIM, LLC.
Commencing September 29, 2006, certain officers and/or trustees of the Trust are
officers and/or directors of BlackRock, Inc. or its affiliates.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the
year ended October 31, 2006 were as follows:
- --------------------------------------------------------------------------------
Total Purchases Total Sales
- --------------------------------------------------------------------------------
Master Large Cap
Core Portfolio ................... $3,600,544,853 $2,914,034,828
Master Large Cap
Growth Portfolio ................. $ 923,399,067 $ 743,795,577
Master Large Cap
Value Portfolio .................. $3,425,772,600 $1,759,286,835
- --------------------------------------------------------------------------------
4. Short-Term Borrowings:
Each Portfolio, along with certain other funds managed by the Manager and its
affiliates (or FAM and its affiliates), is party to a $500,000,000 credit
agreement with a group of lenders, which expires November 2006 and was
subsequently renewed for one year under substantially the same terms. The
Portfolio may borrow under the credit agreement to fund shareholder redemptions
and for other lawful purposes other than for leverage. The Portfolio may borrow
up to the maximum amount allowable under the Portfolio's current prospectus and
statement of additional information, subject to various other legal, regulatory
or contractual limits. The Portfolio pays a commitment fee of .07% per annum
based on the Portfolio's pro rata share of the unused portion of the credit
agreement. Amounts borrowed under the credit agreement bear interest at a rate
equal to, at each Portfolio's election, the federal funds rate plus .50% or a
base rate as defined in the credit agreement. None of the Portfolios borrowed
under the credit agreement during the year ended October 31, 2006.
5. Acquisitions:
Master Large Cap Core Portfolio
On August 28, 2006, an investor of Master Large Cap Core Portfolio acquired all
of the net assets of Merrill Lynch Disciplined Equity Fund, Inc. pursuant to a
plan of reorganization. As a result of the reorganization, which included
$4,652,234 of net unrealized appreciation, Master Large Cap Core Portfolio
received an in-kind contribution of portfolio securities.
Master Large Cap Growth Portfolio
On October 16, 2006, an investor of Master Large Cap Growth Portfolio acquired
all of the net assets of BlackRock Large Cap Growth Equity Portfolio of
BlackRock Funds, pursuant to a plan of reorganization. As a result of the
reorganization, which included $10,864,916 of net unrealized appreciation,
Master Large Cap Growth Portfolio received an in-kind contribution of portfolio
securities.
Master Large Cap Value Portfolio
On October 16, 2006, an investor of Master Large Cap Value Portfolio acquired
all of the net assets of BlackRock Large Cap Value Equity Portfolio of BlackRock
Funds, pursuant to a plan of reorganization. As a result of the reorganization,
which included $88,614,304 of net unrealized appreciation, Master Large Cap
Value Portfolio received an in-kind contribution of portfolio securities.
BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006 59
Report of Independent Registered Public Accounting Firm
Master Large Cap Series Trust
To the Investors and Board of Trustees of Master Large Cap Series Trust:
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments of Master Large Cap Series Trust (the "Trust"),
comprising Master Large Cap Core Portfolio, Master Large Cap Growth Portfolio
and Master Large Cap Value Portfolio, as of October 31, 2006, the related
statements of operations for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended and the financial
highlights for each of the five years in the period then ended. These financial
statements and financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. The Trust
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Trust's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
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, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of October 31, 2006, by correspondence with the custodian
and brokers; where replies were not received from brokers, we performed other
auditing procedures. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the portfolios constituting Master Large Cap Series Trust, as of October 31,
2006, the results of their operations for the year then ended, the changes in
their net assets for each of the two years in the period then ended, and their
financial highlights for each of the five years in the period then ended, in
conformity with U.S. generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
December 21, 2006
60 BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006
Disclosure of Investment Advisory Agreement
Disclosure of FAM Management Agreement
The Board of Trustees of Master Large Cap Series Trust (the "Trust") met in June
2006 to consider approval of the investment advisory agreement between the
Trust, on behalf of each Portfolio, and Fund Asset Management, L.P. ("FAM"), the
Trust's investment adviser at that time, and the sub- advisory agreement on
behalf of the Trust between FAM and Merrill Lynch Asset Management U.K. Limited,
an affiliate. The Board of Directors of BlackRock Large Cap Series Funds, Inc.
(the "Series Funds"), each series of which (each, a "Fund") invests all its
assets in the corresponding Portfolio of the Trust, also considered approval of
the Trust's investment advisory agreement and the sub-advisory agreement.
Activities and Composition of the Board
All but one member of the Boards is an independent director/trustee whose only
affiliation with FAM or other Merrill Lynch affiliates was as a director/trustee
of the Trust and the Funds and as a director or trustee of certain other funds
advised by FAM or its affiliates. The Co-chairmen of each Board are also
independent directors/trustees. New director/trustee nominees are chosen by a
Nominating Committee comprised of independent directors/trustees. All
independent directors/trustees also are members of each Board's Audit Committee,
and the independent directors/trustees meet in executive session at each
in-person Board meeting. Each Board and each Board's Audit Committee meet in
person for at least two days each quarter and conduct other in-person and
telephone meetings throughout the year, some of which are formal Board meetings
and some of which are informational meetings. The independent counsel to the
independent directors/trustees attends all in-person Board and Audit Committee
meetings and other meetings at the independent directors/trustees' request.
FAM Investment Advisory Agreement -- Matters Considered by the Boards
Every year, the Boards consider approval of the Trust's investment advisory
agreement and any sub-advisory agreement. The Boards assesses the nature, scope
and quality of the services provided to the Trust and the Funds by the personnel
of the investment adviser, the sub-adviser and their affiliates, including
administrative services, shareholder services, oversight of fund accounting,
marketing services and assistance in meeting legal and regulatory requirements.
The Boards also receive and assess information regarding the services provided
to the Trust and the Funds by certain unaffiliated service providers.
At various times throughout the year, the Boards also consider a range of
information in connection with their oversight of the services provided by the
investment adviser and its affiliates, including the sub-adviser. Among the
matters considered are: (a) fees (in addition to management fees) paid to the
investment adviser and its affiliates by the Trust and/or the Funds/Portfolios,
such as transfer agency fees and fees for marketing and distribution; (b) Trust
and Fund/Portfolio operating expenses paid to third parties; (c) the resources
devoted to and compliance reports relating to each Fund's/Portfolio's investment
objective, policies and restrictions, and the Trust's and the Series Funds'
compliance with their Code of Ethics and compliance policies and procedures; and
(d) the nature, cost and character of non-investment management services
provided by the investment adviser and its affiliates.
The Boards noted their view of FAM as one of the most experienced global asset
management firms and considered the overall services provided by FAM to be of
high quality. The Boards also noted their view of FAM as financially sound and
well managed and noted FAM's affiliation with one of America's largest financial
firms. The Boards work closely with the investment adviser in overseeing the
investment adviser's efforts to achieve good performance. As part of this
effort, the Boards discuss portfolio manager effectiveness and, when performance
is not satisfactory, discuss with the investment adviser taking steps such as
changing investment personnel.
Annual Consideration of Approval by the Boards
In the period prior to the Board meeting to consider renewal of the investment
advisory agreement and any sub-advisory agreement, the Boards request and
receive materials specifically relating to the investment advisory agreement
and/or sub-advisory agreement. These materials are prepared separately with
respect to each Fund/Portfolio and include (a) information compiled by Lipper
Inc. ("Lipper") on the fees and expenses and the investment performance of the
Fund/Portfolio as compared to a comparable group of funds as classified by
Lipper; (b) sales and redemption data for the Fund; (c) a discussion by the
Fund's/Portfolio's portfolio management team regarding investment strategies
used by the Fund/Portfolio during its most recent fiscal year; (d) information
on the profitability to the investment adviser and its affiliates of the
investment advisory agreement, the sub-advisory agreement and other
relationships with the Fund/Portfolio; and (e) information provided by the
investment adviser concerning investment advisory fees charged to other clients,
such as retail funds, under similar investment mandates. Since the sub-advisory
services were provided by an affiliate
BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006 61
Disclosure of Investment Advisory Agreement (concluded)
of FAM and no additional fee is paid for these services, the Boards considered
the existing sub-advisory agreement and the investment advisory agreement
between the Trust and FAM (the "FAM Investment Advisory Agreement") together.
The Boards also consider other matters they deem important to the approval
process, such as payments made to the investment adviser or its affiliates
relating to the distribution of Fund shares, services related to the valuation
and pricing of Fund/Portfolio portfolio holdings, allocation of Fund/Portfolio
brokerage fees (including the related benefits to the Investment Adviser of
"soft dollars"), the Fund's/Portfolio's portfolio turnover statistics, and
direct and indirect benefits to the investment adviser, the sub-adviser and
their affiliates from their relationship with the Series Funds and the Trust.
Certain Specific Renewal Data
In connection with the most recent renewal of the FAM Investment Advisory
Agreement and the sub-advisory agreement in June 2006, the independent
directors'/trustees' and the Boards' review included the following:
Services Provided by the Investment Adviser -- The Boards reviewed the nature,
extent and quality of services provided by FAM and the sub-adviser, focusing on
the investment advisory services and the resulting performance of each
Fund/Portfolio. The Boards use data provided by Lipper and by management in its
review of advisory services. The Boards compared each Fund's/Portfolio's
performance -- both including and excluding the effects of the
Fund's/Portfolio's fees and expenses -- to the performance of a comparable group
of funds and the performance of a relevant index or combination of indexes.
While the Boards review performance data at least quarterly, the Boards attach
more importance to performance over relatively long periods of time, typically
three to five years. The Boards concluded that the comparative data indicated
that each Fund's/Portfolio's performance was competitive. Considering all these
factors, each Board concluded that the nature and quality of the services
provided supported the continuation of the FAM Investment Advisory Agreement.
FAM's Personnel and Investment Process -- The Boards reviewed each
Fund's/Portfolio's investment objectives and strategies. The Boards discussed
with FAM's senior management responsible for investment operations and the
senior management of FAM's equity investing group the strategies being used to
achieve the stated objectives. Among other things, the Boards considered the
size, education and experience of FAM's investment staff, its use of technology,
and FAM's approach to training and retaining portfolio managers and other
research, advisory and management personnel. The Boards also reviewed FAM's
compensation policies and practices with respect to each Fund's/Portfolio's
portfolio managers. The Boards also considered the experience of each
Fund's/Portfolio's portfolio manager and noted that Mr. Doll (the Senior
Portfolio Manager for each Fund/Portfolio) has over 20 years experience in
portfolio management. The Boards concluded that FAM and its investment staff
have extensive experience in analyzing and managing the types of investments
used by the Funds/Portfolios and that each Fund/Portfolio benefits from that
experience.
Management Fees and Other Expenses -- The Boards review each Fund's/Portfolio's
contractual management fee rate and actual management fee rate as a percentage
of total assets at common asset levels -- the actual rate includes advisory and
administrative service fees and the effects of any fee waivers -- compared to
the other funds in its Lipper category and compare the Fund's total expenses to
those of other comparable funds. The Boards considered the services provided to
and the fees charged by FAM to other clients with similar investment mandates.
The Boards determined that each Fund's contractual and actual management fee
rates, as well as total expenses, were competitive with those of comparable
funds. The Boards concluded that each Fund's/Portfolio's management fee rate and
overall expense ratio were reasonable.
Profitability -- The Boards consider the cost of the services provided to the
Series' Funds and the Trust by the investment adviser and the investment
adviser's and its affiliates' profits relating to the management and
distribution of the Series' Funds and the Trust and the funds advised by the
investment adviser and its affiliates. As part of its analysis, the Boards
reviewed FAM's methodology in allocating its costs to the management of each
Fund/Portfolio and concluded that there was a reasonable basis for the
allocation. The Boards concluded that the profits of FAM and its affiliates were
acceptable in relation to the nature and quality of services provided.
Economies of Scale -- The Boards considered the extent to which economies of
scale might be realized as the assets of the Funds/Portfolio increase and
whether there should be changes in the management fee rate or structure in order
to enable the Funds and the Trust to participate in these economies of scale.
The Boards noted that each Fund's/Portfolio's management fee schedule included
either contractual or voluntary breakpoints that reduce the management fee as
the Fund's/Portfolio's assets increase above certain levels. The
62 BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006
Boards determined that the management fee structure was reasonable and that no
changes were currently necessary.
Conclusion
After the independent directors/trustees deliberated in executive session, the
entire Board of the Series Funds and the entire Board of the Trust, including
all of the independent directors/trustees, approved the renewal of the existing
FAM Investment Advisory Agreement and sub-advisory agreement, concluding that
the advisory fee was reasonable in relation to the services provided and that a
contract renewal was in the best interests of shareholders.
Disclosure of New Investment Advisory Agreement
New BlackRock Investment Advisory Agreement -- Matters Considered by the Boards
In connection with the combination of Merrill Lynch's investment advisory
business, including Fund Asset Management, L.P. (the "Previous Investment
Adviser"), with that of BlackRock, Inc. ("BlackRock") to create a new
independent company ("New BlackRock") (the "Transaction"), the Board of Trustees
of the Trust considered and approved a new investment advisory agreement (the
"BlackRock Investment Advisory Agreement") between the Trust, on behalf of each
Portfolio, and BlackRock Advisors, LLC ("BlackRock Advisors"). Because each Fund
is a feeder fund that invests all of its assets in the corresponding Portfolio,
the Board of Directors of the Series Funds also considered the BlackRock
Investment Advisory Agreement. Each Fund's shareholders subsequently approved
the BlackRock Investment Advisory Agreement and it became effective on September
29, 2006, replacing the Trust's investment advisory agreement with the Previous
Investment Adviser (the "Previous Investment Advisory Agreement").
The Boards discussed the BlackRock Investment Advisory Agreement at telephonic
and in-person meetings held during April and May 2006. The Boards, including the
independent directors/trustees, approved the BlackRock Investment Advisory
Agreement at an in-person meeting held on May 9, 2006.
To assist the Boards in their consideration of the BlackRock Investment Advisory
Agreement, BlackRock provided materials and information about BlackRock,
including its financial condition and asset management capabilities and
organization, and Merrill Lynch provided materials and information about the
Transaction. Each Board's independent directors/ trustees, through their
independent legal counsel, also requested and received additional information
from Merrill Lynch and BlackRock in connection with their consideration of the
BlackRock Investment Advisory Agreement. The additional information was provided
in advance of the May 9, 2006 meetings. In addition, the independent directors/
trustees consulted with their counsel and Fund/Trust counsel on numerous
occasions, discussing, among other things, the legal standards and certain other
considerations relevant to the directors'/trustees' deliberations.
At the Board meetings, the directors/trustees discussed with Merrill Lynch
management and certain BlackRock representatives the Transaction, its strategic
rationale and BlackRock's general plans and intentions regarding the Funds and
the Trust. At these Board meetings, representatives of Merrill Lynch and
BlackRock made presentations to and responded to questions from the Boards. The
directors/trustees also inquired about the plans for and anticipated roles and
responsibilities of certain employees and officers of the Previous Investment
Adviser, and of its affiliates, to be transferred to BlackRock in connection
with the Transaction. The independent directors/ trustees also conferred
separately and with their counsel about the Transaction and other matters
related to the Transaction on a number of occasions, including in connection
with the April and May 2006 meetings. Among the matters discussed were proposed
reorganizations in which BlackRock Large Cap Growth Fund would acquire the
assets and liabilities of BlackRock Large Cap Growth Equity Portfolio, a
portfolio of BlackRock Funds, and BlackRock Large Cap Value Fund would acquire
the assets and liabilities of BlackRock Value Equity Portfolio, also a portfolio
of BlackRock Funds. After the presentations and after reviewing the written
materials provided, the independent directors/trustees met in executive sessions
with their counsel to consider the BlackRock Investment Advisory Agreement.
In connection with the directors'/trustees' review of the BlackRock Investment
Advisory Agreement, Merrill Lynch
BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006 63
Disclosure of New Investment Advisory Agreement (continued)
and/or BlackRock advised the directors/trustees about a variety of matters. The
advice included the following, among other matters:
o that there was not expected to be any diminution in the nature, quality
and extent of services provided to the Trust, the Series Funds or Fund
shareholders by BlackRock Advisors, including compliance services;
o that operation of New BlackRock as an independent investment management
firm would enhance its ability to attract and retain talented
professionals;
o that the Trust and the Series Funds were expected to benefit from having
access to BlackRock's state of the art technology and risk management
analytic tools, including investment tools, provided under the BlackRock
Solutions(R) brand name;
o that BlackRock had no present intention to alter any applicable expense
waivers or reimbursements that were currently in effect and, while it
reserved the right to do so in the future, it would seek Board approval
before making any changes;
o that in connection with the Transaction, Merrill Lynch and BlackRock had
agreed to conduct, and use reasonable best efforts to cause their
respective affiliates to conduct, their respective businesses in
compliance with the conditions of Section 15(f) of the Investment Company
Act of 1940 (the "1940 Act") in relation to any public funds advised by
BlackRock or the Previous Investment Adviser (or affiliates),
respectively; and
o that Merrill Lynch and BlackRock would derive benefits from the
Transaction and that, as a result, they had a financial interest in the
matters being considered that was different from that of Fund
shareholders.
The directors/trustees considered the information provided by Merrill Lynch and
BlackRock above, and, among other factors, the following:
o the potential benefits to Fund shareholders from being part of a combined
fund family with BlackRock-sponsored funds, including possible economies
of scale and access to investment opportunities;
o the reputation, financial strength and resources of BlackRock and its
investment advisory subsidiaries and the anticipated financial strength
and resources of New BlackRock;
o the compliance policies and procedures of BlackRock Advisors;
o the terms and conditions of the BlackRock Investment Advisory Agreement,
including the fact that no Fund's/ Portfolio's schedule of total advisory
fees would increase under the BlackRock Investment Advisory Agreement, but
would remain the same or, because breakpoints were added to the advisory
fee schedules, the average fee rates of each Fund/Portfolio would be lower
if the Fund/Portfolio grows in size;
o that in May 2005, the Boards had performed a full annual review of the
Previous Investment Advisory Agreement, as required by the 1940 Act, and
had determined that the Previous Investment Adviser had the capabilities,
resources and personnel necessary to provide the advisory and
administrative services that were then being provided to the Trust and the
Series Funds; and that the advisory and/or management fees paid by the
Funds/ Portfolios, taking into account any applicable agreed-upon fee
waivers and breakpoints, had represented reasonable compensation to the
Previous Investment Adviser in light of the services provided, the costs
to the Previous Investment Adviser of providing those services, economies
of scale, the fees and other expenses paid by similar funds (including
information provided by Lipper Inc. ["Lipper"]), and such other matters as
the directors/trustees had considered relevant in the exercise of their
reasonable judgment; and
o that Merrill Lynch had agreed to pay all expenses of the Trust and the
Series Funds in connection with the consideration by the Boards of the
BlackRock Investment Advisory Agreement and related agreements and all
costs of shareholder approval of the BlackRock Investment Advisory
Agreement and as a result the Trust and the Series Funds would bear no
costs in obtaining shareholder approval of the BlackRock Investment
Advisory Agreement.
Certain of these considerations are discussed in more detail below.
In its review of the BlackRock Investment Advisory Agreement, the Boards
assessed the nature, quality and scope of the services to be provided to the
Trust and the Series Funds by the personnel of BlackRock Advisors and its
affiliates, including administrative services, shareholder services, oversight
of fund accounting and assistance in meeting legal and regulatory requirements.
In their review of the BlackRock Investment Advisory Agreement, the Boards also
considered
64 BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006
a range of information in connection with their oversight of the services to be
provided by BlackRock Advisors and its affiliates. Among the matters considered
for the Trust and the Series Fund were: (a) fees (in addition to management
fees) to be paid to BlackRock Advisors and its affiliates by the Trust and the
Series Funds; (b) Trust and Fund operating expenses paid to third parties; (c)
the resources devoted to and compliance reports relating to the
Funds'/Portfolios' investment objective, policies and restrictions, and the
compliance of the Trust and the Series Funds with their Code of Ethics and
BlackRock Advisors' compliance policies and procedures; and (d) the nature, cost
and character of non-investment management services to be provided by BlackRock
Advisors and its affiliates.
In the period prior to the Board meeting to consider renewal of the Previous
Investment Advisory Agreement, the Boards had requested and received materials
specifically relating to the Previous Investment Advisory Agreement. For each
Fund/Portfolio, these materials included (a) information compiled by Lipper on
the fees and expenses and the investment performance of the Fund/Portfolio as
compared to a comparable group of funds as classified by Lipper; (b) a
discussion by the Fund's/Portfolio's portfolio management team on investment
strategies used by the Fund/Portfolio during its most recent fiscal year; (c)
information on the profitability to the Previous Investment Adviser of the
Previous Investment Advisory Agreement and other payments received by the
Previous Investment Adviser and its affiliates from the Fund/Portfolio; and (d)
information provided by the Previous Investment Adviser concerning services
related to the valuation and pricing of Fund/Portfolio portfolio holdings, the
Fund's/Portfolio's portfolio turnover statistics, and direct and indirect
benefits to the Previous Investment Adviser and its affiliates from their
relationship with the Fund/Portfolio.
In their deliberations, the directors/trustees considered information received
in connection with their most recent approval of the continuance of the Previous
Investment Advisory Agreement, in addition to information provided by BlackRock
and BlackRock Advisors in connection with their evaluation of the terms and
conditions of the BlackRock Investment Advisory Agreement. The
directors/trustees did not identify any particular information that was
all-important or controlling. The Boards, including a majority of the
independent directors/trustees, concluded that the terms of the BlackRock
Investment Advisory Agreement are appropriate, that the fees to be paid are
reasonable in light of the services to be provided to the Trust and the Series
Funds, and that the BlackRock Investment Advisory Agreement should be approved
and recommended to Fund shareholders.
Nature, Quality and Extent of Services Provided -- The Boards reviewed the
nature, quality and scope of services provided by the Previous Investment
Adviser, including the investment advisory services and the resulting
performance of the Fund/Portfolio, as well as the nature, quality and extent of
services expected to be provided by BlackRock Advisors. The Boards focused
primarily on the Previous Investment Adviser's investment advisory services and
each Fund's/Portfolio's investment performance, but also considered certain
areas in which both the Previous Investment Adviser and the Trust and the Series
Funds received services as part of the Merrill Lynch complex. The Boards
compared each Fund's/Portfolio's performance -- both including and excluding the
effects of fees and expenses -- to the performance of a comparable group of
mutual funds, and the performance of a relevant index or combination of indexes.
While the Board reviews performance data at least quarterly, consistent with the
Previous Investment Adviser's investment goals, the Boards attach more
importance to performance over relatively long periods of time, typically three
to five years.
In evaluating the nature, quality and extent of the services to be provided by
BlackRock Advisors under the BlackRock Investment Advisory Agreement, the
directors/trustees considered, among other things, the expected impact of the
Transaction on the operations, facilities, organization and personnel of New
BlackRock and how it would affect the Trust and the Series Funds; the ability of
BlackRock Advisors to perform its duties after the Transaction; and any
anticipated changes to the investment and other practices of the Trust and the
Series Funds. The directors/trustees considered the fact that, as part of a
reorganization, it was being proposed that BlackRock Large Cap Growth Fund
acquire the assets and liabilities of BlackRock Large Cap Growth Equity
Portfolio, a portfolio of BlackRock Funds, and that BlackRock Large Cap Value
Fund acquire the assets and liabilities of BlackRock Large Cap Value Equity
Portfolio, also a portfolio of BlackRock Funds.
The directors/trustees were given information with respect to the potential
benefits to the Trust, the Series Funds and Fund shareholders from having access
to BlackRock's state of the art technology and risk management analytic tools,
including the investment tools provided under the BlackRock Solutions brand
name.
BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006 65
Disclosure of New Investment Advisory Agreement (continued)
The directors/trustees were advised that, as a result of Merrill Lynch's equity
interest in BlackRock after the Transaction, the Funds/Portfolios would continue
to be subject to restrictions concerning certain transactions involving Merrill
Lynch affiliates (for example, transactions with a Merrill Lynch broker-dealer
acting as principal) absent revised or new regulatory relief. The
directors/trustees were advised that a revision of existing regulatory relief
with respect to these restrictions was being sought from the Securities and
Exchange Commission and were advised of the possibility of the receipt of such
revised regulatory relief.
Based on their review of the materials provided and the assurances they had
received from the management of Merrill Lynch and of BlackRock, the
directors/trustees determined that the nature and quality of services to be
provided to the Trust and the Series Funds under the BlackRock Investment
Advisory Agreement were expected to be as good as or better than that provided
under the Previous Investment Advisory Agreement. The directors/trustees were
advised that BlackRock Advisors did not plan to change any of the
Funds'/Portfolios' portfolio management team upon the closing of the
transaction. It was noted, however, that other changes in personnel were
expected to follow the Transaction and the combination of the operations of the
Previous Investment Adviser and its affiliates with those of BlackRock. The
directors/trustees noted that if current portfolio managers or other personnel
were to cease to be available prior to the closing of the Transaction, the
Boards would consider all available options, including seeking the investment
advisory or other services of BlackRock affiliates. Accordingly, the
directors/trustees concluded that, overall, they were satisfied with assurances
from BlackRock and BlackRock Advisors as to the expected nature, quality and
extent of the services to be provided to the Trust and the Series Funds under
the BlackRock Investment Advisory Agreement.
Costs of Services Provided, Fees and Profitability -- It was noted that, in
conjunction with their recent review of the Previous Investment Advisory
Agreement, the directors/trustees had received, among other things, a report
from Lipper comparing each Fund's/Portfolio's fees and expenses to those of a
peer group selected by Lipper, and information as to the fees charged by the
Previous Investment Adviser or its affiliates to other registered investment
company clients for investment management services. The Boards reviewed each
Fund's/Portfolio's contractual management fee rate and actual management fee
rate as a percentage of total assets at common asset levels -- the actual rate
includes advisory and administrative service fees and the effects of any fee
waivers -- compared to the other funds in its Lipper category. The Boards also
compared each Fund's/Portfolio's total expenses to those of other comparable
funds. The information showed that each Fund/Portfolio had fees and expenses
within the range of fees and expenses of comparable funds. The Boards considered
the services to be provided by and the fees to be charged by BlackRock Advisors
to other funds with similar investment mandates and noted that the fees charged
by BlackRock Advisors in those cases, including fee waivers and expense
reimbursements, were generally comparable to those being charged to the
Funds/Portfolios. The Boards also noted that, as a general matter, according to
the information provided by BlackRock, fees charged to institutional clients
were lower than the fees charged to the Funds/Portfolios, but BlackRock Advisors
provided less extensive services to such clients. The Boards concluded that each
Fund's/Portfolio's management fee and fee rate and overall expense ratio are
reasonable compared to those of other comparable funds.
In evaluating the costs of the services to be provided by BlackRock Advisors
under the BlackRock Investment Advisory Agreement, the directors/trustees
considered, among other things, whether advisory and administrative fees or
other expenses would change as a result of the Transaction. The Board of the
Series Funds noted that in addition to the BlackRock Investment Advisory
Agreement, it was considering, on behalf of the Series Funds and each Fund, a
new administration agreement with BlackRock Advisors as administrator to replace
the Series Funds' administration agreement under which the Previous Investment
Adviser was serving as administrator. Based on their review of the materials
provided and the fact that the BlackRock Investment Advisory Agreement and the
new administration agreement are substantially similar to the corresponding
previous agreements in all material respects, including the rate of
compensation, the Boards determined that the Transaction should not increase the
total fees payable, including any fee waivers or after any expense caps or
expense reimbursements, for advisory and administrative services. The
directors/trustees noted that it was not possible to predict how the Transaction
would affect BlackRock Advisors' profitability from its relationship with the
Trust and the Series Funds.
The directors/trustees discussed with BlackRock Advisors its general methodology
to be used in determining its profitability with respect to its relationship
with the Trust and the Series Funds and noted that they expect to receive
profitability information from BlackRock Advisors on at least an annual basis.
66 BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006
Economies of Scale -- The Boards considered the extent to which economies of
scale might be realized as the assets of the Funds/Portfolios increase and
whether there should be changes in the management fee rate or structure in order
to enable the Funds/Portfolios to participate in these economies of scale.
Breakpoints were added to each Fund's/Portfolio's fee schedule that would have
the effect of lowering each Fund's average fee rates if the Fund grows in size.
Otherwise, the Boards determined that changes were not currently necessary and
that the Funds/Portfolios appropriately participated in these economies of
scale.
Fall-Out Benefits -- The directors/trustees considered whether the
Funds/Portfolios would generate any fall-out benefits to BlackRock Advisors.
Fall-out benefits are indirect profits from other activities that accrue to a
fund's investment adviser or its affiliates solely because of the existence of
the fund. In evaluating the fall-out benefits to be received by BlackRock
Advisors under the BlackRock Investment Advisory Agreement, the
directors/trustees considered whether BlackRock Advisors would experience such
benefits to the same extent that the Previous Investment Adviser was
experiencing such benefits under the Previous Investment Advisory Agreement.
Based on their review of the materials provided, including materials received in
connection with their most recent approval of the continuance of the Previous
Investment Advisory Agreement, and their discussions with management of the
Previous Investment Adviser and BlackRock, the directors/trustees determined
that BlackRock Advisors' fall-out benefits could include increased ability for
BlackRock to distribute shares of its funds and other investment products and to
obtain research services using the Funds'/Portfolios' portfolio transaction
brokerage commissions. The directors/trustees noted that any fall-out benefits
were difficult to quantify with certainty.
Investment Performance -- The directors/trustees considered investment
performance for each Fund/Portfolio. The directors/trustees compared each
Fund's/Portfolio's performance -- both including and excluding the effects of
fees and expenses -- to the performance of a comparable group of funds, and the
performance of a relevant index or combination of indexes. The comparative
information received from Lipper showed each Fund's/Portfolio's performance at
various levels within the range of performance of comparable funds over
different time periods. The directors/trustees believed each Fund's/Portfolio's
performance was satisfactory. Also, the Boards took into account the investment
performance of funds advised by BlackRock Advisors. The Boards considered
comparative information from Lipper which showed that the performance of the
funds advised by BlackRock Advisors was within the range of performance of
comparable funds over different time periods. The Boards noted BlackRock's
considerable investment management experience and capabilities, but were unable
to predict what effect, if any, consummation of the Transaction would have on
the future performance of the Funds/Portfolios.
Conclusion -- After the independent directors/trustees deliberated in executive
session, the entire Board of the Trust and the entire Board of the Series Funds,
including the independent directors/trustees, approved the BlackRock Investment
Advisory Agreement, concluding that the advisory fee rate was reasonable in
relation to the services provided and that the BlackRock Investment Advisory
Agreement was in the best interests of the shareholders. In approving the
BlackRock Investment Advisory Agreement, the Boards noted that they anticipated
reviewing the continuance of the agreement in advance of the expiration of the
initial two-year period.
New BlackRock Sub-Advisory Agreement -- Matters Considered by the Boards
At an in-person meeting held on August 22-23, 2006, the Board of the Trust and
the Board of the Fund, including the independent directors/trustees, discussed
and approved the sub-advisory agreement (the "BlackRock Sub-Advisory Agreement")
between BlackRock Advisors and its affiliate, BlackRock Investment Management,
LLC (the "Sub-Adviser"). The BlackRock Sub-Advisory Agreement became effective
on September 29, 2006, at the same time the BlackRock Investment Advisory
Agreement became effective.
Pursuant to the BlackRock Sub-Advisory Agreement, the Sub-Adviser receives a
monthly fee from BlackRock Advisors equal to 74% of the advisory fee received by
BlackRock Advisors under the BlackRock Investment Advisory Agreement. BlackRock
Advisors pays the Sub-Adviser out of its own resources, and there is no increase
in the expenses of the Trust or the Funds as a result of the BlackRock
Sub-Advisory Agreement.
In approving the BlackRock Sub-Advisory Agreement at the August in-person
meeting, the Boards reviewed their considerations in connection with their
approval of the BlackRock Investment Advisory Agreement in May 2006. The Boards
relied on the same information and considered the same factors as those
discussed above in connection with the approval of the BlackRock Investment
Advisory Agreement, and came to the same conclusions. In reviewing the
sub-advisory fee
BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006 67
Disclosure of New Investment Advisory Agreement (concluded)
rate provided in the BlackRock Sub-Advisory Agreement, the Boards noted the fact
that both BlackRock Advisors and the Sub-Adviser have significant
responsibilities under their respective advisory agreements. BlackRock Advisors
remains responsible for oversight of the Trust's and the Series Funds'
operations and administration, and the Sub-Adviser provides advisory services to
the Trust and is responsible for the day-to-day management of each
Fund's/Portfolio's portfolio under the BlackRock Sub-Advisory Agreement. The
Boards also took into account the fact that there is no increase in total
advisory fees paid by any of the Funds/Portfolios as a result of the BlackRock
Sub-Advisory Agreement. Under all of the circumstances, the Boards concluded
that it was a reasonable allocation of fees for the Sub-Adviser to receive 74%
of the advisory fee paid to BlackRock Advisors under the BlackRock Investment
Advisory Agreement.
After the independent directors/trustees deliberated in executive session, the
entire Board of the Trust and the entire Board of the Series Fund, including the
independent directors/ trustees, approved the BlackRock Sub-Advisory Agreement,
concluding that the sub-advisory fee was reasonable in relation to the services
provided and that the BlackRock Sub-Advisory Agreement was in the best interests
of shareholders.
68 BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006
Proxy Results
BlackRock Large Cap Core Fund
During the six-month period ended October 31, 2006, BlackRock Large Cap Core
Fund of BlackRock Large Cap Series Funds, Inc.'s shareholders voted on the
following proposals. Proposals 1 and 3 were approved at a special shareholders'
meeting on August 15, 2006. A description of the proposals and number of shares
voted were as follows:
- -----------------------------------------------------------------------------------------------------
Shares Voted Shares Voted Shares Voted
For Against Abstain
- -----------------------------------------------------------------------------------------------------
1. To approve a new investment advisory agreement with
BlackRock Advisors, Inc. 127,819,246 1,963,344 1,897,027
- -----------------------------------------------------------------------------------------------------
3. To approve a contingent subadvisory agreement with
BlackRock Advisors, Inc. 127,584,685 2,137,343 1,957,589
- -----------------------------------------------------------------------------------------------------
BlackRock Large Cap Growth Fund
During the six-month period ended October 31, 2006, BlackRock Large Cap Growth
Fund of BlackRock Large Cap Series Funds, Inc.'s shareholders voted on the
following proposals. Proposals 1 and 3 were approved at a special shareholders'
meeting on August 15, 2006. A description of the proposals and number of shares
voted were as follows:
- -----------------------------------------------------------------------------------------------------
Shares Voted Shares Voted Shares Voted
For Against Abstain
- -----------------------------------------------------------------------------------------------------
1. To approve a new investment advisory agreement with
BlackRock Advisors, Inc. 35,898,321 597,826 563,028
- -----------------------------------------------------------------------------------------------------
3. To approve a contingent subadvisory agreement with
BlackRock Advisors, Inc. 35,836,999 657,972 564,203
- -----------------------------------------------------------------------------------------------------
BlackRock Large Cap Value Fund
During the six-month period ended October 31, 2006, BlackRock Large Cap Value
Fund of BlackRock Large Cap Series Funds, Inc.'s shareholders voted on the
following proposals. On August 15, 2006, a special meeting was adjourned with
respect to Proposals 1 and 3 until August 31, 2006, at which time they passed. A
description of the proposals and number of shares voted were as follows:
- -----------------------------------------------------------------------------------------------------
Shares Voted Shares Voted Shares Voted
For Against Abstain
- -----------------------------------------------------------------------------------------------------
1. To approve a new investment advisory agreement with
BlackRock Advisors, Inc. 71,339,285 1,289,417 1,459,742
- -----------------------------------------------------------------------------------------------------
3. To approve a contingent subadvisory agreement with
BlackRock Advisors, Inc. 71,195,310 1,406,296 1,486,837
- -----------------------------------------------------------------------------------------------------
BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006 69
Officers and Directors/Trustees
Number of
Portfolios in Other Public
Fund Complex Directorships
Position(s) Length of Overseen by Held by
Held with Time Director/ Director/
Name Address & Age Funds/Trust Served Principal Occupation(s) During Past 5 Years Trustee Trustee
====================================================================================================================================
Interested Director or Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
Robert C. P.O. Box 9011 President 2005 to Vice Chairman and Director of BlackRock, Inc., 122 Funds None
Doll, Jr.* Princeton, NJ and present Global Chief Investment Officer for Equities, 168 Portfolios
08543-9011 Director/ Chairman of the BlackRock Retail Operating
Age: 52 Trustee Committee, and of the BlackRock Executive Committee
since 2006; President of the Funds advised by
Merrill Lynch Investment Managers, L.P. ("MLIM") and
its affiliates ("MLIM/FAM-advised funds") from 2005
to 2006 and Chief Investment Officer thereof from
2001 to 2006; President of MLIM and Fund Asset
Management, L.P. ("FAM") from 2001 to 2006; Co-Head
(Americas Region) thereof from 2000 to 2001 and
Senior Vice President from 1999 to 2001; President
and Director of Princeton Services, Inc. ("Princeton
Services") since 2001; President of Princeton
Administrators, L.P. ("Princeton Administrators")
from 2001 to 2006; Chief Investment Officer of
OppenheimerFunds, Inc. in 1999 and Executive Vice
President thereof from 1991 to 1999.
------------------------------------------------------------------------------------------------------------------------
* Mr. Doll is a director, trustee or member of an advisory board of certain other investment companies for which
BlackRock acts as investment adviser. Mr. Doll is an "interested person," as described in the Investment Company
Act, of the Fund based on his current and former positions with BlackRock, Inc. and its affiliates.
Directors/Trustees serve until their resignation, removal or death, or until December 31 of the year in which they
turn 72. As Fund President, Mr. Doll serves at the pleasure of the Board of Directors/Trustees.
====================================================================================================================================
Independent Directors/Trustees*
- ------------------------------------------------------------------------------------------------------------------------------------
James H. P.O. Box 9095 Director/ 1999 to Director, The China Business Group, Inc. since 37 Funds None
Bodurtha** Princeton, NJ Trustee present 1996 and Executive Vice President thereof from 57 Portfolios
08543-9095 1996 to 2003; Chairman of the Board, Berkshire
Age: 62 Holding Corporation since 1980; Partner, Squire,
Sanders & Dempsey from 1980 to 1993.
- ------------------------------------------------------------------------------------------------------------------------------------
Kenneth A. P.O. Box 9095 Director/ 2005 to Professor, Harvard University since 1992; Professor, 37 Funds None
Froot Princeton, NJ Trustee present Massachusetts Institute of Technology from 57 Portfolios
08543-9095 1986 to 1992.
Age: 49
- ------------------------------------------------------------------------------------------------------------------------------------
70 BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006
Officers and Directors/Trustees (continued)
Number of
Portfolios in Other Public
Fund Complex Directorships
Position(s) Length of Overseen by Held by
Held with Time Director/ Director/
Name Address & Age Funds/Trust Served Principal Occupation(s) During Past 5 Years Trustee Trustee
====================================================================================================================================
Independent Directors/Trustees* (continued)
- ------------------------------------------------------------------------------------------------------------------------------------
Joe P.O. Box 9095 Director/ 2002 to Member of the Committee of Investment of Employee 37 Funds Kimco
Grills** Princeton, NJ Trustee present Benefit Assets of the Association of Financial 57 Portfolios Realty
08543-9095 Professionals ("CIEBA") since 1986; Member of Corporation
Age: 71 CIEBA's Executive Committee since 1988 and its
Chairman from 1991 to 1992; Assistant Treasurer of
International Business Machines Corporation ("IBM")
and Chief Investment Officer of IBM Retirement Funds
from 1986 to 1993; Member of the Investment Advisory
Committee of the State of New York Common Retire-
ment Fund since 1989; Member of the Investment
Advisory Committee of the Howard Hughes Medical
Institute from 1997 to 2000; Director, Duke
University Management Company from 1992 to 2004,
Vice Chairman thereof from 1998 to 2004, and
Director Emeritus thereof since 2004; Director,
LaSalle Street Fund from 1995 to 2001; Director,
Kimco Realty Corporation since 1997; Member of the
Investment Advisory Committee of the Virginia
Retirement System since 1998, Vice Chairman thereof
from 2002 to 2005, and Chairman thereof since 2005;
Director, Montpelier Foundation since 1998 and its
Vice Chairman since 2000; Member of the Investment
Committee of the Woodberry Forest School since 2000;
Member of the Investment Committee of the National
Trust for Historic Preservation since 2000.
- ------------------------------------------------------------------------------------------------------------------------------------
Herbert I. P.O. Box 9095 Director/ 1999 to Chairman of the Board of Directors of Vigilant 37 Funds None
London Princeton, NJ Trustee present Research, Inc. since 2006; Member of the Board 57 Portfolios
08543-9095 of Directors for Grantham University since 2006;
Age: 67 Director of AIMS since 2006; Director of Reflex
Security since 2006; Director of InnoCentive, Inc.
since 2006; Director of Cerego, LLC since 2005;
Professor Emeritus, New York University since 2005;
John M. Olin Professor of Humanities, New York
University from 1993 to 2005, and Professor thereof
from 1980 to 2005; President, Hudson Institute since
1997 and Trustee thereof since 1980; Dean, Gallatin
Division of New York University from 1976 to 1993;
Distinguished Fellow, Herman Kahn Chair, Hudson
Institute from 1984 to 1985; Director, Damon Corp.
from 1991 to 1995; Overseer, Center for Naval
Analyses from 1983 to 1993.
- ------------------------------------------------------------------------------------------------------------------------------------
Roberta P.O. Box 9095 Director/ 1999 to Shareholder, Modrall, Sperling, Roehl, Harris & 37 Funds None
Cooper Princeton, NJ Trustee present Sisk, P.A. since 1993; President, American Bar 57 Portfolios
Ramo 08543-9095 Association from 1995 to 1996 and Member of the
Age: 64 Board of Governors thereof from 1994 to 1997;
Shareholder, Poole, Kelly & Ramo, Attorneys at Law,
P.C. from 1977 to 1993; Director of ECMC Group
(service provider to students, schools and lenders)
since 2001; Director, United New Mexico Bank (now
Wells Fargo) from 1983 to 1988; Director, First
National Bank of New Mexico (now Wells Fargo) from
1975 to 1976; Vice President, American Law Institute
since 2004.
- ------------------------------------------------------------------------------------------------------------------------------------
BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006 71
Officers and Directors/Trustees (concluded)
Number of
Portfolios in Other Public
Fund Complex Directorships
Position(s) Length of Overseen by Held by
Held with Time Director/ Director/
Name Address & Age Funds/Trust Served Principal Occupation(s) During Past 5 Years Trustee Trustee
====================================================================================================================================
Independent Directors/Trustees* (concluded)
- ------------------------------------------------------------------------------------------------------------------------------------
Robert S. P.O. Box 9095 Director/ 2002 to Principal of STI Management (investment adviser) 37 Funds None
Salomon, Princeton, NJ Trustee present from 1994 to 2005; Chairman and CEO of Salomon 57 Portfolios
Jr. 08543-9095 Brothers Asset Management Inc. from 1992 to 1995;
Age: 69 Chairman of Salomon Brothers Equity Mutual Funds
from 1992 to 1995; regular columnist with Forbes
Magazine from 1992 to 2002; Director of Stock
Research and U.S. Equity Strategist at Salomon
Brothers Inc. from 1975 to 1991; Trustee, Commonfund
from 1980 to 2001.
------------------------------------------------------------------------------------------------------------------------
* Directors/Trustees serve until their resignation, removal or death, or until December 31 of the year in which they
turn 72.
** Co-Chairman of the Board of Directors/Trustees and the Audit Committee.
- ------------------------------------------------------------------------------------------------------------------------------------
Position(s) Length of
Held with Time
Name Address & Age Funds/Trust Served Principal Occupation(s) During Past 5 Years
====================================================================================================================================
Fund/Trust Officers*
- ------------------------------------------------------------------------------------------------------------------------------------
Donald C. P.O. Box 9011 Vice 1999 to Managing Director of BlackRock since 2006; Managing Director of MLIM and FAM in
Burke Princeton, NJ President present 2006; First Vice President of MLIM and FAM from 1997 to 2005 and Treasurer thereof
08543-9011 and from 1999 to 2006; Vice President of MLIM and FAM from 1990 to 1997.
Age: 46 Treasurer
- ------------------------------------------------------------------------------------------------------------------------------------
Jeffrey P.O. Box 9011 Fund Chief 2004 to Managing Director of BlackRock and Fund Chief Compliance Officer since 2006; Chief
Hiller Princeton, NJ Compliance present Compliance Officer of the MLIM/FAM-advised funds and First Vice President and Chief
08543-9011 Officer Compliance Officer of MLIM (Americas Region) from 2004 to 2006; Chief Compliance
Age: 55 Officer of the IQ Funds since 2004; Global Director of Compliance at Morgan Stanley
Investment Management from 2002 to 2004; Managing Director and Global Director of
Compliance at Citigroup Asset Management from 2000 to 2002; Chief Compliance
Officer at Soros Fund Management in 2000; Chief Compliance Officer at Prudential
Financial from 1995 to 2000; Senior Counsel in the Securities and Exchange
Commission's Division of Enforcement in Washington, D.C. from 1990 to 1995.
- ------------------------------------------------------------------------------------------------------------------------------------
Alice A. P.O. Box 9011 Secretary 2004 to Director of BlackRock since 2006; Director (Legal Advisory) of MLIM from 2002 to
Pellegrino Princeton, NJ present 2006; Vice President of MLIM from 1999 to 2002; Attorney associated with MLIM from
08543-9011 1997 to 2006; Secretary of MLIM, FAM, FAM Distributors, Inc. and Princeton Services
Age: 46 from 2004 to 2006.
------------------------------------------------------------------------------------------------------------------------
* Officers of the Funds/Trust serve at the pleasure of the Board of Directors/Trustees.
- ------------------------------------------------------------------------------------------------------------------------------------
Further information about the Funds' Officers and Directors/Trustees is available in the Fund's Statement of Additional
Information, which can be obtained without charge by calling 1-800-441-7762.
- ------------------------------------------------------------------------------------------------------------------------------------
Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109-3661
Transfer Agent
PFPC Inc.
Wilmington, DE 19809
Series Address
P.O. Box 9011
Princeton, NJ 08543-9011
72 BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006
BlackRock Funds
BlackRock Privacy Principles
BlackRock is committed to maintaining the privacy of its current and former fund
investors and individual clients (collectively, "Clients") and to safeguarding
their nonpublic personal information. The following information is provided to
help you understand what personal information BlackRock collects, how we protect
that information and why in certain cases we share such information with select
parties.
If you are located in a jurisdiction where specific laws, rules or regulations
require BlackRock to provide you with additional or different privacy-related
rights beyond what is set forth below, then BlackRock will comply with those
specific laws, rules or regulations.
BlackRock obtains or verifies personal nonpublic information from and about you
from different sources, including the following: (i) information we receive from
you or, if applicable, your financial intermediary, on applications, forms or
other documents; (ii) information about your transactions with us, our
affiliates, or others; (iii) information we receive from a consumer reporting
agency; and (iv) from visits to our Web sites.
BlackRock does not sell or disclose to nonaffiliated third parties any nonpublic
personal information about its Clients, except as permitted by law or as is
necessary to service Client accounts. These nonaffiliated third parties are
required to protect the confidentiality and security of this information and to
use it only for its intended purpose.
We may share information with our affiliates to service your account or to
provide you with information about other BlackRock products or services that may
be of interest to you. In addition, BlackRock restricts access to nonpublic
personal information about its Clients to those BlackRock employees with a
legitimate business need for the information. BlackRock maintains physical,
electronic and procedural safeguards that are designed to protect the nonpublic
personal information of its Clients, including procedures relating to the proper
storage and disposal of such information.
Availability of Additional Information
Electronic copies of most financial reports and prospectuses are available on
the Funds' Web site or shareholders can sign up for e-mail notifications of
quarterly statements, annual and semi-annual reports and prospectuses by
enrolling in the Funds' electronic delivery program.
To enroll:
Shareholders Who Hold Accounts with Investment Advisers, Banks or Brokerages:
Please contact your financial adviser. Please note that not all investment
advisers, banks or brokerages may offer this service.
Shareholders Who Hold Accounts Directly with BlackRock:
1) Access the BlackRock Web site at http://www.blackrock.com/edelivery
2) Select eDelivery under the More Information section
3) Log into your account
The Funds will mail only one copy of shareholder documents, including
prospectuses, annual and semi-annual reports and proxy statements, to
shareholders with multiple accounts at the same address. This practice is
commonly called "householding" and it is intended to reduce expenses and
eliminate duplicate mailings of shareholder documents. Mailings of your
shareholder documents may be householded indefinitely unless you instruct us
otherwise. If you do not want the mailing of these documents to be combined with
those for other members of your household, please contact the Fund at (800)
441-7762.
BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006 73
BlackRock Funds (concluded)
Availability of Additional Information (concluded)
Availability of Proxy Voting Policies and Procedures
The Funds have delegated proxy voting responsibilities to BlackRock and its
affiliates, subject to the general oversight of the Funds' Board of
Directors/Trustees. A description of the policies and procedures that BlackRock
and its affiliates use to determine how to vote proxies relating to portfolio
securities is available without charge, upon request, on our Web site at
www.blackrock.com, by calling (800) 441-7762, or on the Web site of the
Securities and Exchange Commission (the"Commission") at http://www.sec.gov.
Availability of Proxy Voting Record
Information on how proxies relating to the Funds' voting securities were voted
(if any) by BlackRock during the most recent 12-month period ended June 30 is
available, upon request and without charge, on our Web site at
www.blackrock.com, by calling (800) 441-7762 or on the Web site of the
Commission at http://www.sec.gov.
Availability of Quarterly Portfolio Schedule
The Funds file their complete schedules of portfolio holdings for the first and
third quarters of their fiscal year with the Commission on Form N-Q. The Funds'
Form N-Qs are available on the Commission's Web site at http://www.sec.gov and
may be reviewed and copied at the Commission's Public Reference Room in
Washington, D.C. Information regarding the operation of the Public Reference
Room may be obtained by calling (800) SEC-0330. The Funds' Forms N-Qs may also
be obtained upon request, without charge, by calling (800) 441-7762.
Shareholder Privileges
Account Information
Call us at (800) 441-7762 8:00 AM - 6:00 PM EST to get information about your
account balances, recent transactions and share prices. You can also reach us on
the web at www.blackrock.com.
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 $50 or more from their BlackRock portfolios, as
long as their account is at least $10,000.
Retirement Plans
Shareholders may make investments in conjunction with Traditional, Rollover,
Roth, Coverdell, Simple IRAs, SEP IRAs and 403(b) Plans.
74 BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006
A World-Class Mutual Fund Family
BlackRock now offers an expanded lineup of open-end mutual funds. Our range
includes more than 85 funds crossing all investment styles and managed by
experts in equity, fixed income and tax-exempt investing.
Equity Portfolios
BlackRock All-Cap Global Resources Portfolio
BlackRock Aurora Portfolio
BlackRock Asset Allocation Portfolio+
BlackRock Balanced Capital Fund+
BlackRock Basic Value Fund
BlackRock Developing Capital Markets Fund
BlackRock Equity Dividend Fund
BlackRock EuroFund
BlackRock Focus Twenty Fund
BlackRock Focus Value Fund
BlackRock Fundamental Growth Fund
BlackRock Global Allocation Fund+
BlackRock Global Dynamic Equity Fund
BlackRock Global Financial Services Fund
BlackRock Global Growth Fund
BlackRock Global Opportunities Portfolio
BlackRock Global Resources Portfolio*
BlackRock Global Science & Technology Opportunities Portfolio
BlackRock Global SmallCap Fund
BlackRock Global Technology Fund
BlackRock Global Value Fund
BlackRock Healthcare Fund
BlackRock Health Sciences Opportunities Portfolio
BlackRock Index Equity Portfolio*
BlackRock International Fund
BlackRock International Index Fund
BlackRock International Opportunities Portfolio*
BlackRock International Value Fund
BlackRock Investment Trust
BlackRock Large Cap Core Fund
BlackRock Large Cap Growth Fund
BlackRock Large Cap Value Fund
BlackRock Latin America Fund
BlackRock Legacy Portfolio
BlackRock Mid-Cap Growth Equity Portfolio
BlackRock Mid-Cap Value Equity Portfolio
BlackRock Mid Cap Value Opportunities Fund
BlackRock Natural Resources Trust
BlackRock Pacific Fund
BlackRock Small Cap Core Equity Portfolio
BlackRock Small Cap Growth Equity Portfolio
BlackRock Small Cap Growth Fund II
BlackRock Small Cap Index Fund
BlackRock Small Cap Value Equity Portfolio*
BlackRock Small/Mid-Cap Growth Portfolio
BlackRock S&P 500 Index Fund
BlackRock U.S. Opportunities Portfolio
BlackRock Utilities and Telecommunications Fund
BlackRock Value Opportunities Fund
Fixed Income Portfolios
BlackRock Bond Fund
BlackRock Enhanced Income Portfolio
BlackRock GNMA Portfolio
BlackRock Government Income Portfolio
BlackRock High Income Fund
BlackRock High Yield Bond Portfolio
BlackRock Inflation Protected Bond Portfolio
BlackRock Intermediate Bond Portfolio
BlackRock Intermediate Bond Portfolio II
BlackRock Intermediate Government Bond Portfolio
BlackRock International Bond Portfolio
BlackRock Low Duration Bond Portfolio
BlackRock Managed Income Portfolio
BlackRock Real Investment Fund
BlackRock Short-Term Bond Fund
BlackRock Total Return Portfolio
BlackRock Total Return Portfolio II
BlackRock World Income Fund
Municipal Bond Portfolios
BlackRock AMT-Free Municipal Bond Portfolio
BlackRock California Insured Municipal Bond Fund
BlackRock Delaware Municipal Bond Portfolio
BlackRock Florida Municipal Bond Fund
BlackRock High Yield Municipal Fund
BlackRock Intermediate Municipal Fund
BlackRock Kentucky Municipal Bond Portfolio
BlackRock Municipal Insured Fund
BlackRock National Municipal Fund
BlackRock New Jersey Municipal Bond Fund
BlackRock New York Municipal Bond Fund
BlackRock Ohio Municipal Bond Portfolio
BlackRock Pennsylvania Municipal Bond Fund
BlackRock Short-Term Municipal Fund
Money Market Portfolios
BlackRock Money Market Portfolio
BlackRock Municipal Money Market Portfolio@
BlackRock NC Municipal MM Portfolio@
BlackRock NJ Municipal MM Portfolio@
BlackRock OH Municipal MM Portfolio@
BlackRock PA Municipal MM Portfolio@
BlackRock Summit Cash Reserves Fund*
BlackRock U.S. Treasury MM Portfolio
BlackRock VA Municipal MM Portfolio@
* See the prospectus for information on specific limitations on investments
in the fund.
+ Mixed asset fund.
@ Tax-exempt fund.
BlackRock mutual funds are distributed by BlackRock Distributors, Inc. You
should consider the investment objectives, risks, charges and expenses of the
funds under consideration carefully before investing. Each fund's prospectus
contains this and other information and is available at www.blackrock.com or by
calling 800-882-0052 or from your financial advisor. The prospectus should be
read carefully before investing.
BLACKROCK LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2006 75
These reports are transmitted to shareholders only. The reports are not
authorized for use as an offer of sale or a solicitation of an offer to buy
shares of the Funds unless accompanied or preceded by the Funds' current
prospectus. Past performance results shown in this report should not be
considered a representation of future performance. Investment return and
principal value of shares will fluctuate so that shares, when redeemed, may be
worth more or less than their original cost. Statements and other information
herein are as dated and are subject to change.
BLACKROCK
#CAPSERIES-10/06
Item 2 - Code of Ethics - The registrant has adopted a code of ethics, as of the
end of the period covered by this report, that applies to the
registrant's principal executive officer, principal financial officer
and principal accounting officer, or persons performing similar
functions. A copy of the code of ethics is available without charge at
www.blackrock.com.
Item 3 - Audit Committee Financial Expert - The registrant's board of directors
has determined that (i) the registrant has the following audit
committee financial experts serving on its audit committee and (ii)
each audit committee financial expert is independent: (1) Joe Grills,
(2) Robert S. Salomon, Jr., and (3) Stephen B. Swensrud (retired as of
December 31, 2005).
Item 4 - Principal Accountant Fees and Services
Master Large Cap Core Portfolio of Master Large Cap Series Trust
(a) Audit Fees - Fiscal Year Ending October 31, 2006 - $36,000
Fiscal Year Ending October 31, 2005 - $35,000
(b) Audit-Related Fees - Fiscal Year Ending October 31, 2006 - $10,400
Fiscal Year Ending October 31, 2005 - $0
The nature of the services include merger related fees paid by the
adviser.
(c) Tax Fees - Fiscal Year Ending October 31, 2006 - $9,200
Fiscal Year Ending October 31, 2005 - $8,700
The nature of the services include tax compliance, tax advice and tax
planning.
(d) All Other Fees - Fiscal Year Ending October 31, 2006 - $0
Fiscal Year Ending October 31, 2005 - $0
Master Large Cap Value Portfolio of Master Large Cap Series Trust
(a) Audit Fees - Fiscal Year Ending October 31, 2006 - $33,500
Fiscal Year Ending October 31, 2005 - $32,500
(b) Audit-Related Fees - Fiscal Year Ending October 31, 2006 - $10,200
Fiscal Year Ending October 31, 2005 - $0
The nature of the services include merger related fees paid by the
adviser.
(c) Tax Fees - Fiscal Year Ending October 31, 2006 - $0
Fiscal Year Ending October 31, 2005 - $0
(d) All Other Fees - Fiscal Year Ending October 31, 2006 - $0
Fiscal Year Ending October 31, 2005 - $0
Master Large Cap Growth Portfolio of Master Large Cap Series Trust
(a) Audit Fees - Fiscal Year Ending October 31, 2006 - $33,500
Fiscal Year Ending October 31, 2005 - $32,500
(b) Audit-Related Fees - Fiscal Year Ending October 31, 2006 - $7,700
Fiscal Year Ending October 31, 2005 - $0
The nature of the services include merger related fees paid by the
adviser.
(c) Tax Fees - Fiscal Year Ending October 31, 2006 - $0
Fiscal Year Ending October 31, 2005 - $0
(d) All Other Fees - Fiscal Year Ending October 31, 2006 - $0
Fiscal Year Ending October 31, 2005 - $0
BlackRock Large Cap Core Fund of BlackRock Large Cap Series Funds, Inc.
(a) Audit Fees - Fiscal Year Ending October 31, 2006 - $6,600
Fiscal Year Ending October 31, 2005 - $6,500
(b) Audit-Related Fees - Fiscal Year Ending October 31, 2006 - $0
Fiscal Year Ending October 31, 2005 - $0
(c) Tax Fees - Fiscal Year Ending October 31, 2006 - $6,000
Fiscal Year Ending October 31, 2005 - $5,700
The nature of the services include tax compliance, tax advice and tax
planning.
(d) All Other Fees - Fiscal Year Ending October 31, 2006 - $0
Fiscal Year Ending October 31, 2005 - $0
BlackRock Large Cap Value Fund of BlackRock Large Cap Series Funds,
Inc.
(a) Audit Fees - Fiscal Year Ending October 31, 2006 - $6,600
Fiscal Year Ending October 31, 2005 - $6,500
(b) Audit-Related Fees - Fiscal Year Ending October 31, 2006 - $0
Fiscal Year Ending October 31, 2005 - $0
(c) Tax Fees - Fiscal Year Ending October 31, 2006 - $6,000
Fiscal Year Ending October 31, 2005 - $5,700
The nature of the services include tax compliance, tax advice and tax
planning.
(d) All Other Fees - Fiscal Year Ending October 31, 2006 - $0
Fiscal Year Ending October 31, 2005 - $0
BlackRock Large Cap Growth Fund of BlackRock Large Cap Series Funds,
Inc.
(a) Audit Fees - Fiscal Year Ending October 31, 2006 - $6,600
Fiscal Year Ending October 31, 2005 - $6,500
(b) Audit-Related Fees - Fiscal Year Ending October 31, 2006 - $0
Fiscal Year Ending October 31, 2005 - $0
(c) Tax Fees - Fiscal Year Ending October 31, 2006 - $6,000
Fiscal Year Ending October 31, 2005 - $5,700
The nature of the services include tax compliance, tax advice and tax
planning.
(d) All Other Fees - Fiscal Year Ending October 31, 2006 - $0
Fiscal Year Ending October 31, 2005 - $0
(e)(1) The registrant's audit committee (the "Committee") has adopted
policies and procedures with regard to the pre-approval of services.
Audit, audit-related and tax compliance services provided to the
registrant on an annual basis require specific pre-approval by the
Committee. The Committee also must approve other non-audit services
provided to the registrant and those non-audit services provided to the
registrant's affiliated service providers that relate directly to the
operations and the financial reporting of the registrant. Certain of
these non-audit services that the Committee believes are a) consistent
with the SEC's auditor independence rules and b) routine and recurring
services that will not impair the independence of the independent
accountants may be approved by the Committee without consideration on a
specific case-by-case basis ("general pre-approval"). However, such
services will only be deemed pre-approved provided that any individual
project does not exceed $5,000 attributable to the registrant or
$50,000 for all of the registrants the Committee oversees. Any proposed
services exceeding the pre-approved cost levels will require specific
pre-approval by the Committee, as will any other services not subject
to general pre-approval (e.g., unanticipated but permissible services).
The Committee is informed of each service approved subject to general
pre-approval at the next regularly scheduled in-person board meeting.
(e)(2) 0%
(f) Not Applicable
(g) Fiscal Year Ending October 31, 2006 - $3,204,783
Fiscal Year Ending October 31, 2004 - $6,277,749
(h) The registrant's audit committee has considered and determined that
the provision of non-audit services that were rendered to the
registrant's investment adviser and any entity controlling, controlled
by, or under common control with the investment adviser that provides
ongoing services to the registrant that were not pre-approved pursuant
to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible
with maintaining the principal accountant's independence.
Regulation S-X Rule 2-01(c)(7)(ii) - $1,739,500 , 0%
Item 5 - Audit Committee of Listed Registrants - Not Applicable
Item 6 - Schedule of Investments - Not Applicable
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies - Not Applicable
Item 8 - Portfolio Managers of Closed-End Management Investment Companies - Not
Applicable
Item 9 - Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers - Not Applicable
Item 10 - Submission of Matters to a Vote of Security Holders - Not Applicable
Item 11 - Controls and Procedures
11(a) - The registrant's certifying officers have reasonably designed such
disclosure controls and procedures to ensure material information
relating to the registrant is made known to us by others particularly
during the period in which this report is being prepared. The
registrant's certifying officers have determined that the registrant's
disclosure controls and procedures are effective based on our evaluation
of these controls and procedures as of a date within 90 days prior to
the filing date of this report.
11(b) - As of September 29, 2006, with the conclusion of the combination of
Merrill Lynch's asset management business with BlackRock, the registrant
was migrated to BlackRock's trading and compliance monitoring systems,
and various personnel changes occurred. In conjunction with these
business improvements, there were no changes in the registrants internal
control over financial reporting (as defined in Rule 30a-3(d) under Act
(17 CFR 270.30a-3(d)) that occurred during the last fiscal half-year of
the period covered by this report that has materially affected, or is
reasonably likely to affect, the registrant's internal control over
financial reporting.
Item 12 - Exhibits attached hereto
12(a)(1) - Code of Ethics - See Item 2
12(a)(2) - Certifications - Attached hereto
12(a)(3) - Not Applicable
12(b) - Certifications - Attached hereto
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
BlackRock Large Cap Series Funds, Inc. and Master Large Cap Series Trust
By: /s/ Robert C. Doll, Jr.
-------------------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
BlackRock Large Cap Series Funds, Inc. and Master Large Cap Series Trust
Date: January 3, 2007
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Robert C. Doll, Jr.
-------------------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
BlackRock Large Cap Series Funds, Inc. and Master Large Cap Series Trust
Date: January 3, 2007
By: /s/ Donald C. Burke
-------------------------------
Donald C. Burke,
Chief Financial Officer of
BlackRock Large Cap Series Funds, Inc. and Master Large Cap Series Trust
Date: January 3, 2007