September 30, 1998
Money Market
Portfolios
ANNUAL REPORT
TO SHAREHOLDERS
(LOGO)
Not FDIC Insured BLACKROCK FUNDS
May Lose Value PURE INVESTMENT STYLE(REGISTRATION MARK)
No Bank Guarantee [GRAPHIC OMITTED]
<PAGE>
BLACKROCK FUNDS
MONEY MARKET PORTFOLIOS
* Money Market * Ohio Municipal Money Market
* U.S. Treasury Money Market * Pennsylvania Municipal
* Municipal Money Market Money Market
* New Jersey Municipal * Virginia Municipal Money
Money Market Market
* North Carolina Municipal
Money Market
TABLE OF CONTENTS
PRESIDENT'S LETTER.............................................................1
PORTFOLIO SUMMARIES
Money Market.............................................................3
U.S. Treasury Money Market...............................................5
Municipal Money Market...................................................6
New Jersey Municipal Money Market.......................................10
North Carolina Municipal Money Market...................................12
Ohio Municipal Money Market.............................................15
Pennsylvania Municipal Money Market.....................................17
Virginia Municipal Money Market.........................................22
PORTFOLIO FINANCIAL STATEMENTS
Statements of Operations.............................................24-25
Statements of Changes in Net Assets..................................26-27
Financial Highlights.................................................28-35
Notes to Financial Statements........................................36-43
REPORT OF INDEPENDENT ACCOUNTANTS.............................................44
<PAGE>
BLACKROCK FUNDS
PRESIDENT'S LETTER
November 1, 1998
Dear Shareholder:
We are pleased to present the Annual Report for the BlackRock Funds for
the fiscal year ended September 30, 1998, a period that stands in stark contrast
to recent years.
When we addressed you this time in 1997, our message celebrated the
strong performance of the capital markets, which were then enjoying one of the
longest sustained bull runs in modern times. At the same time, we cautioned
against expecting such growth to continue unabated.
As we look back over 1998, it is clear that while the US economy
generally remained strong, the financial markets delivered a reality check to
investors who may have forgotten that markets will fluctuate. Over the twelve
month period which ended on September 30, 1998, the domestic stock market as
measured by the S&P 500 Index returned 9.2%, in stark contrast to the 20% annual
returns of the previous three years. The bond market posted strong gains in
light of the equity market's turbulence, returning 11.5% over the same period as
measured by the Lehman Brothers Aggregate Index. As bond prices rose, the yield
of the benchmark 30-year Treasury fell below 5.0% for the first time ever. These
12-month returns mask the significant volatility of the markets on a
quarter-to-quarter basis. For example, the quarterly returns for the S&P 500
Index over this period ranged from as high as 14.0% in the first quarter of 1998
to -9.9% in the most recent quarter.
These figures serve as a reminder that investors may do well to adjust
expectations to be more in line with historical returns. According to Ibbotson,
from 1926 through 1997, the S&P 500 Index has returned 11.0% annually. Given
these long-term figures we can assume that the S&P 500 Index returns in excess
of 20% from 1995-1997 were exceptional and should not necessarily set the
benchmark for future expectations.
Importantly, we believe that the strategy for long-term investing has
not changed. Make a plan, allocate assets to reach a specific goal, keep
investing regularly and stick with your program unless, of course, your goals or
financial situation changes.
Of course everything looks clearer in hindsight. Now that the equity
markets have taken back much of what they have previously given, I wonder how
many investors question if it might have been wiser to switch some of their
equity shares into less volatile, income producing bond funds. Of course this is
much easier said than done. When equity markets are returning over 20% as they
had been, it takes real fortitude to take some money off the table and diversify
into an asset class that offers less growth potential along with lower
volatility. However, after so many strong years of equity performance, it is
possible that a portfolio's equity weighting may have increased past its target
level. Therefore, now may be an excellent opportunity to review a portfolio and
possibly reallocate assets from equities into a complementary asset class like
bonds. That's precisely why it is so important to set up an asset allocation
that is in line with your financial goals and time horizons -- and to stay the
course over different market environments while consistently monitoring your
target allocation.
1
<PAGE>
BLACKROCK FUNDS
PRESIDENT'S LETTER (CONCLUDED)
At times like these, when the markets are showing extreme volatility,
we are proud to be offering our shareholders investment styles which have been
formulated for long-term results. Our emphasis on Pure Investment
Style(REGISTRATION MARK) assures that the BlackRock funds you own will be true
to their stated asset class and investment styles. This can mean investment
results consistent with expectations. Another key BlackRock characteristic is
our dedication to risk-management as an investment approach. Our investment
philosophy is to seek to mitigate risk, rather than to attempt to time the
market. While this approach can never take all of the risk out of investing, our
focus is to try to make sure that the risks we assume are justified in
comparison to the potential rewards.
We believe and will continue to believe that this dedicated
risk-oriented approach is the most prudent long-term process to manage money.
In our ongoing attempt to develop quality investment products we are
pleased to announce that we will soon be launching BlackRock High Yield Bond
Portfolio. This portfolio will seek to provide current income by investing
primarily in bonds that are rated below investment grade.
Thank you for your confidence in BlackRock Funds. We appreciate the
opportunity to help you achieve your long-term investment goals.
Sincerely,
/S/ KAREN H. SABATH
Karen H. Sabath
MANAGING DIRECTOR
BLACKROCK ADVISORS, INC.
2
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
MONEY MARKET PORTFOLIO
PAR
AS OF SEPTEMBER 30, 1998 MATURITY (000) VALUE
-------- -------- --------------
CERTIFICATES OF DEPOSIT--12.8%
DOMESTIC--5.4%
First National Bank of Boston
5.57% 10/06/98 $ 30,000 $ 30,000,000
5.59% 10/16/98 50,000 50,000,000
NationsBank Corp.
5.50% 12/21/98 44,000 44,000,000
Wilmington Trust Co.
5.58% 10/08/98 25,000 25,000,000
5.83% 05/07/99 15,000 15,000,000
--------------
164,000,000
--------------
Yankee Dollar--7.4%
Canadian Imperial Bank of Commerce
5.66% 02/26/99 40,000 39,992,228
5.63% 03/02/99 15,000 14,996,000
Credit Agricole Indosuez SA
5.75% 05/19/99 20,000 19,990,348
Credit Communal de Belgique
5.62% 12/28/98 25,000 24,998,798
Rabobank Nederland NV
5.63% 03/24/99 10,000 9,997,715
Skandinaviska Enskilden Banken
Funding, Inc.
5.61% 02/25/99 50,000 49,992,276
Svenska Handelsbanken, Inc.
5.58% 12/22/98 15,000 14,996,367
5.72% 03/31/99 25,000 24,992,876
Westpac Banking Corp.
5.84% 04/29/99 25,000 24,995,184
--------------
224,951,792
--------------
TOTAL CERTIFICATES OF DEPOSIT
(Cost $388,951,792) 388,951,792
--------------
COMMERCIAL PAPER--43.7%
Asset Backed Securities--10.3%
Beta Finance, Inc.
5.27% 02/18/99 38,000 37,221,211
CC USA, Inc.
5.49% 10/16/98 35,000 34,919,865
5.54% 10/23/98 35,000 34,881,506
5.47% 01/29/99 24,000 23,562,400
5.37% 02/08/99 50,000 49,030,417
Corporate Receivable Corp.
5.40% 12/04/98 25,000 24,760,000
Delaware Funding Corp.
5.48% 11/23/98 40,000 39,677,289
Old Line Funding Corp.
5.60% 10/07/98 37,803 37,767,717
Windmill Funding Corp.
5.48% 11/23/98 30,284 30,039,675
--------------
311,860,080
--------------
BANKS--9.4%
Spintab Swedmortgage AB
5.53% 11/10/98 25,000 24,846,389
5.52% 11/16/98 25,000 24,823,667
5.52% 12/10/98 35,000 34,624,333
5.51% 03/04/99 25,000 24,410,736
IMI Funding Corp.
5.55% 10/01/98 16,132 16,132,000
5.52% 11/16/98 39,000 38,724,920
5.51% 11/27/98 25,000 24,781,896
5.51% 12/04/98 35,000 34,657,156
5.48% 02/03/99 20,000 19,619,444
5.20% 03/15/99 13,000 12,690,167
PAR
MATURITY (000) VALUE
-------- -------- --------------
COMMERCIAL PAPER (CONTINUED)
BANKS (CONTINUED)
Unifunding, Inc.
5.18% 03/19/99 $ 30,000 $ 29,270,483
--------------
284,581,191
--------------
BUSINESS CREDIT INSTITUTIONS--3.1%
Enterprise Funding Corp.
5.48% 10/22/98 40,705 40,574,880
5.48% 12/21/98 27,862 27,518,462
General Electric Capital Corp.
5.46% 02/03/99 25,000 24,526,042
--------------
92,619,384
--------------
CHEMICALS--1.7%
Monsanto Co.
5.48% 12/04/98 20,000 19,805,156
5.40% 12/28/98 15,645 15,438,486
5.39% 02/09/99 15,000 14,705,796
--------------
49,949,438
--------------
FINANCE SERVICES--7.8%
Barton Capital Corp.
5.51% 11/02/98 33,347 33,183,674
Countrywide Funding Corp.
5.50% 10/30/98 75,000 74,667,708
Dakota Certificates
5.55% 10/23/98 30,000 29,898,250
Triple A-1 Funding
5.55% 10/05/98 46,954 46,925,045
5.59% 10/08/98 22,149 22,124,925
5.55% 10/14/98 30,000 29,939,875
--------------
236,739,477
--------------
FOOD & AGRICULTURE--1.6%
Diageo Capital
5.49% 12/11/98 15,000 14,837,587
5.45% 12/29/98 35,000 34,528,424
--------------
49,366,011
--------------
MOTOR VEHICLES--0.9%
BMW US Capital Corp.
5.50% 11/09/98 28,100 27,932,571
--------------
RETAIL - LUMBER & OTHER BLDG
MATERIALS DEALERS--0.8%
HD Real Estate Funding Corp.
5.60% 10/14/98 25,000 24,949,444
--------------
SECURITY BROKERS & DEALERS--8.1%
Credit Suisse First Boston, Inc.
5.51% 11/24/98 10,000 9,917,350
Lehman Brothers Holdings, Inc.
5.55% 11/25/98 40,000 39,660,833
5.50% 12/04/98 50,000 49,511,111
5.54% 01/22/99 50,000 49,130,528
Merrill Lynch & Co.
5.50% 11/25/98 50,000 49,579,861
5.26% 01/29/99 50,000 49,123,333
--------------
246,923,016
--------------
TOTAL COMMERCIAL PAPER
(Cost $1,324,920,612) 1,324,920,612
--------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
3
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
MONEY MARKET PORTFOLIO (CONCLUDED)
PAR
AS OF SEPTEMBER 30, 1998 MATURITY (000) VALUE
-------- -------- --------------
TIME DEPOSITS--21.4%
Bank of Montreal
5.87% 10/01/98 $ 125,000 $ 125,000,000
Bank Brussels Lambert
5.81% 10/01/98 125,000 125,000,000
Istituto Bancario San Paolo di Torino
5.81% 10/01/98 125,000 125,000,000
National City Bank Cleveland
5.75% 10/01/98 50,000 50,000,000
Skandinaviska Enskilda Banken
Funding, Inc.
5.87% 10/01/98 100,000 100,000,000
Westdeutche Landesbank
5.87% 10/01/98 125,000 125,000,000
--------------
TOTAL TIME DEPOSITS
(Cost $650,000,000) 650,000,000
--------------
GUARANTEED INVESTMENT CONTRACT--0.3%
Peoples Security Life
5.81% 10/01/98 10,000 10,000,000
(Cost $10,000,000) --------------
MEDIUM TERM NOTES--1.5%
National Australia Bank, Ltd.
6.12% 12/23/98 46,555 46,575,806
(Cost $46,575,806) --------------
VARIABLE RATE OBLIGATIONS--20.1%
BANKS--7.7%
Istituto Bancario San Paolo di Torino
5.46%** 12/08/98 25,000 24,988,202
NationsBank Corp.
5.70%** 10/02/98 50,000 50,001,042
Norwest Corp.
5.45%** 12/18/98 60,000 59,994,409
Royal Bank of Canada
5.50%** 10/14/98 50,000 49,966,630
Skandinaviska Enskilda Banken
Funding, Inc.
5.55%** 10/12/98 50,000 49,990,130
--------------
234,940,413
--------------
CREDIT INSTITUTIONS--5.3%
American Honda Finance Corp.
Honda Motor Company, Ltd.
5.65%** 11/09/98 35,000 35,000,000
5.54%** 12/14/98 40,000 40,000,000
5.48%** 12/16/98 25,000 25,000,000
Beneficial Corp.
5.62%** 11/04/98 19,500 19,499,019
General Motors Acceptance Corp.
5.59%** 11/26/98 40,000 39,985,722
--------------
159,484,741
--------------
PAR
MATURITY (000) VALUE
-------- -------- --------------
Variable Rate Obligations (Continued)
FINANCIAL SERVICES--6.4%
General American Life
5.84%** 10/01/98 $ 50,000 $ 50,000,000
SMM Trust
5.62%** 10/12/98 58,000 58,000,000
5.52%** 10/29/98 50,000 50,000,000
5.50%** 12/16/98 35,000 35,000,000
--------------
193,000,000
--------------
SECURITY BROKERS--0.7%
Bear Stearns & Co., Inc.
5.75%** 11/10/98 12,000 12,004,916
Morgan Stanley Group
5.66%** 10/12/98 10,000 10,002,416
--------------
22,007,332
--------------
TOTAL VARIABLE RATE OBLIGATIONS
(Cost $609,432,486) 609,432,486
--------------
PAINE WEBBER LIQUID INSTITUTIONAL
RESERVES MONEY MARKET FUND--0.2%
Paine Webber Liquid Institutional
Reserves Money Market Fund
(Cost $5,396,776) 5,397 5,396,776
--------------
TOTAL INVESTMENTS IN SECURITIES
(Cost $3,035,277,472*) 100.0% 3,035,277,472
LIABILITIES IN EXCESS
OF OTHER ASSETS (0.0%) (550,408)
-------- --------------
NET ASSETS (Equivalent to $1.00
per share based on 1,858,151,701
Institutional shares, 808,960,084
Service shares, 365,464,486
Investor A shares, 1,805,073
Investor B shares and 337,472
Investor C shares outstanding) 100.0% $3,034,727,064
======== ==============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER
INSTITUTIONAL, SERVICE,
INVESTOR A, INVESTOR B AND
INVESTOR C SHARE
($3,034,727,064 (DIVIDE) 3,034,718,816) $1.00
=====
- -------------
* Aggregate cost for Federal tax purposes.
** Rates shown are the rates as of September 30, 1998 and maturities shown are
the next interest readjustment date.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
4
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
U.S. TREASURY MONEY MARKET PORTFOLIO
PAR
AS OF SEPTEMBER 30, 1998 MATURITY (000) VALUE
-------- -------- ------------
U.S. TREASURY OBLIGATIONS--19.3%
U.S. Treasury Notes
5.87% 01/31/99 $ 30,000 $ 30,031,194
5.00% 02/15/99 15,000 14,970,744
8.87% 02/15/99 10,000 10,120,900
5.87% 02/28/99 10,000 10,013,413
6.25% 03/31/99 20,000 20,070,415
7.00% 04/15/99 6,000 6,043,189
6.37% 04/30/99 22,000 22,103,128
6.37% 05/15/99 5,000 5,022,933
6.25% 05/31/99 28,000 28,116,637
6.00% 06/30/99 5,000 5,015,139
6.75% 06/30/99 15,000 15,127,413
5.87% 07/31/99 10,000 10,027,482
6.00% 08/15/99 10,000 10,040,665
------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $186,703,252) 186,703,252
------------
REPURCHASE AGREEMENTS--80.9%
Barclay Investments
5.50% 10/01/98 40,000 40,000,000
(Agreement dated 09/30/98 to be
repurchased at $40,006,111. Collateralized
by $33,685,000 U.S. Treasury Bonds
6.50% due 11/15/26. The value of the
collateral is $40,868,282.)
Bear Stearns
5.58% 10/01/98 40,000 40,000,000
(Agreement dated 09/30/98 to be
repurchased at $40,006,200. Collateralized
by $72,096,000 U.S. Treasury Strips
0.00% due 02/15/00 to 11/15/12. The
value of the collateral is $40,852,679.)
Goldman Sachs &Co.
5.45% 10/01/98 40,000 40,000,000
(Agreement dated 09/30/98 to be
repurchased at $40,006,056. Collateralized
by $40,178,000 U.S. Treasury Notes
5.125% due 08/31/00. The value of the
collateral is $40,800,929.)
Greenwich Capital Markets
5.55% 10/01/98 215,000 215,000,000
(Agreement dated 09/30/98 to be
repurchased at $215,033,146. Collateralized
by $206,460,000 U.S. Treasury Bills 0.00%
due 09/16/99 and $21,239,000 Treasury
Inflation Index 3.625% due 04/15/28. The
value of the collateral is $219,304,467.)
HSBC Securities
5.43% 10/01/98 40,000 40,000,000
(Agreement dated 09/30/98 to be
repurchased at $40,006,033. Collateralized
by $38,446,000 U.S. Treasury Notes
6.25% due 01/31/02. The value of the
collateral is $41,029,571.)
J.P. Morgan Securities
5.50% 10/01/98 40,000 40,000,000
(Agreement dated 09/30/98 to be
repurchased at $40,006,111. Collateralized
by $34,912,000 U.S. Treasury Notes
6.375% due 08/15/27. The value of the
collateral is $40,800,843.)
PAR
MATURITY (000) VALUE
-------- -------- ------------
REPURCHASE AGREEMENTS (CONTINUED)
Lehman Brothers
5.58% 10/01/98 $ 40,000 $ 40,000,000
(Agreement dated 09/30/98 to be
repurchased at $40,006,200. Collateralized
by $91,571,000 U.S. Treasury Strips
0.00% due 11/15/13 to 02/15/14. The
value of the collateral is $40,800,282.)
Merrill Lynch
5.50% 10/01/98 40,000 40,000,000
(Agreement dated 09/30/98 to be
repurchased at $40,006,111. Collateralized
by $38,820,000 U.S. Treasury Notes
6.375% due 05/15/00. The value of the
collateral is $40,803,559.)
Morgan Stanley & Co.
5.83% 10/01/98 205,800 205,800,000
(Agreement dated 09/30/98 to be
repurchased at $205,833,300. Collateralized
by $35,409,000 U.S. Treasury Bonds
7.875% due 02/15/21 and $154,620,000
U.S. Treasury Notes 5.125% to 7.75%
due 11/15/99 to 08/15/03. The value of
the collateral is $209,935,550.)
Nesbit Burns
5.45% 10/01/98 40,000 40,000,000
(Agreement dated 09/30/98 to be
repurchased at $40,006,056. Collateralized
by $37,755,000 U.S. Treasury Notes
5.75% due 04/30/03. The value of the
collateral is $40,798,997.)
Warburg, Dillon, Reed
5.52% 10/01/98 40,000 40,000,000
(Agreement dated 09/30/98 to be ------------
repurchased at 40,006,133. Collateralized
by $29,878,000 U.S. Treasury Bonds
6.625% to 13.875% due 11/15/08 to
02/15/27 and $219,000 U.S. Treasury
Notes 5.375% due 06/30/03. The value
of the collateral is $40,808,108.)
TOTAL REPURCHASE AGREEMENTS
(Cost $780,800,000) 780,800,000
------------
TOTAL INVESTMENTS IN SECURITIES
(Cost $967,503,252*) 100.2% 967,503,252
LIABILITIES IN EXCESS
OF OTHER ASSETS (0.2%) (1,887,712)
------------
NET ASSETS (Equivalent to $1.00
per share based on 297,175,631
Institutional shares, 596,688,981
Service shares and 71,799,064
Investor A shares outstanding) 100.0% $965,615,540
====== ============
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
INSTITUTIONAL, SERVICE AND
INVESTOR A SHARE
($965,615,540 (DIVIDE) 965,663,676) $1.00
=====
- ------------
* Aggregate cost for Federal tax purposes.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
5
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
MUNICIPAL MONEY MARKET PORTFOLIO
PAR
AS OF SEPTEMBER 30, 1998 MATURITY (000) VALUE
-------- -------- ------------
MUNICIPAL BONDS--99.8%
ALABAMA--1.7%
Montgomery Special Care Facilities
Financing Authority RB (Baptist
Medical Center VHA Project)
Series 1985C DN
3.60%** 10/07/98 $ 2,775 $ 2,775,000
Montgomery Special Care Facilities
Financing Authority RB (Baptist
Medical Center VHA Project)
Series 1985G DN
3.60%** 10/07/98 4,000 4,000,000
------------
6,775,000
------------
ARIZONA--4.2%
Arizona State School District Certificates
of Participation Series 1998A TAN
4.10% 07/30/99 2,000 2,008,498
Maricopa County IDRB (Citizen's
Utilities Project) Series 1998 TECP
3.50% 12/08/98 1,465 1,465,000
Mohave County IDRB (Citizen's
Utility Project) Series 1997 TECP
3.60% 01/13/99 2,500 2,500,000
Pima County IDA RB (Tuscon Electric
Power Co. Project) Series 1982 DN
3.55%** 10/07/98 3,000 3,000,000
Santa Cruz County IDRB (Citizen's
Utilities Project) Series 1998 TECP
3.50% 12/08/98 7,680 7,680,000
------------
16,653,498
------------
CALIFORNIA--5.1%
California Statewide Community
Development Authority RB
Series 1998A-23 DN
3.80%** 10/07/98 5,000 5,000,000
Los Angeles County GO
Series 1998 TRAN
4.50% 06/30/99 15,000 15,089,334
------------
20,089,334
------------
COLORADO--2.7%
Colorado Health Facilities Authority
Catholic Health RB Series 1998B DN
3.55%** 10/07/98 4,800 4,800,000
Colorado Housing Finance Authority
Multi-Family Housing RB
Series 1996H DN
3.70%** 10/07/98 5,915 5,915,000
------------
10,715,000
------------
DELAWARE--1.7%
Delaware Economic Development
Authority RB (Normaco Income
Project) Series 1984 DN
4.15%** 10/07/98 6,600 6,600,000
------------
FLORIDA--3.4%
Capital Projects Finance Authority
RB (Florida Hospital Association -
Capital Projects Loan Program)
Series 1998A DN
3.60%** 10/07/98 2,500 2,500,000
PAR
MATURITY (000) VALUE
-------- -------- ------------
MUNICIPAL BONDS (CONTINUED)
FLORIDA (CONTINUED)
Miami Health Facilities Authority RB
(Jewish Home for the Aged, Inc.
Project) Series 1996 DN
4.05%** 10/07/98 $ 5,900 $ 5,900,000
Miami-Dade County IDRB (Airbus
Service Co. Project)
Series 1998A DN
4.10%** 10/07/98 5,000 5,000,000
------------
13,400,000
------------
GEORGIA--3.8%
Clayton County Development Authority
RB (McIlrath Corp. Project)
Series 1986 DN
3.75%** 10/07/98 4,050 4,050,000
Clayton County Hospital Authority
RB (Southern Regional Medical
Center Project) Series 1995B DN
4.05%** 10/07/98 3,875 3,875,000
Forsyth County IDRB (American BOA,
Inc. Project) Series 1995 DN
4.15%** 10/07/98 3,000 3,000,000
Smyrna Housing Authority Multi-Family
Housing RB (F and M Villages
Project) Series 1997 DN
3.50%** 10/07/98 4,300 4,300,000
------------
15,225,000
------------
HAWAII--1.8%
Hawaii State Department of Budget
and Finance RB (Citizen's Utilities
Project) Series 1998 MB
3.40% 11/12/98 7,000 7,000,000
------------
IDAHO--1.0%
Idaho GO Series 1998 TAN
4.50% 06/30/99 3,750 3,774,267
------------
ILLINOIS--8.1%
Illinois Development Finance Authority
IDRB (Royal Continental Box Co.
Project) Series 1995A DN
3.75%** 10/07/98 800 800,000
Illinois Development Finance Authority
IDRB (Webster-Wayne Shopping
Center Project) Series 1995 DN
3.30%** 10/07/98 6,130 6,130,000
Illinois Educational Facilities Authority
RB (Cultural Pooled Financing
Project) Series 1998 DN
3.65%** 10/07/98 5,000 5,000,000
Illinois Health Facilities Authority RB
(Central Health Care and Northwest
Community Project) Series 1985 DN
3.95%** 10/07/98 880 880,000
Illinois Health Facilities Authority RB
(Evanston Hospital Corp. Project)
Series 1988 MB
3.70% 03/01/99 5,000 5,000,000
Illinois Health Facilities Authority RB
(Evanston Hospital Corp. Project)
Series 1990A MB
3.90% 10/15/98 5,000 5,000,000
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
6
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
MUNICIPAL MONEY MARKET PORTFOLIO (CONTINUED)
PAR
AS OF SEPTEMBER 30, 1998 MATURITY (000) VALUE
-------- -------- ------------
MUNICIPAL BONDS (CONTINUED)
ILLINOIS (CONTINUED)
Illinois Health Facilities Authority RB
(University of Chicago Hospital
Project) Series 1994C DN
3.55%** 10/07/98 $ 1,800 $ 1,800,000
Illinois Health Facilities Authority
Revolving Fund Pooled Financing
Program RB (The University of
Chicago Project) Series 1995A MB
3.75% 11/27/98 4,800 4,800,000
Roselle Village IDRB (Abrasive-Form,
Inc. Project) Series 1995 DN
3.60%** 10/07/98 1,900 1,900,000
Village of Schiller Park IDRB (Victor
Products Corp. Project)
Series 1995 DN
4.03%** 10/07/98 600 600,000
------------
31,910,000
------------
INDIANA--1.6%
Marion Industrial Economic
Development RB (The Synectic
Partnership Project)
Series 1997 DN
4.00%** 10/07/98 3,900 3,900,000
Monroe County IDRB (Griner
Engineering Project)
Series 1997 DN
4.15%** 10/07/98 2,623 2,623,000
------------
6,523,000
------------
KENTUCKY--9.8%
Kentucky Asset Liability Commission
Project Notes Series 1998A TECP
3.30% 11/04/98 18,000 18,000,000
Kentucky Interlocal School
Transportation Certificates of
Participation Series 1998 TRAN
3.90% 06/30/99 21,000 21,039,231
------------
39,039,231
------------
LOUISIANA--4.7%
East Baton Rouge Mortgage
Finance Authority Single Family
RB Series 1997 DN
3.55%** 10/07/98 2,000 2,000,000
Louisiana Public Facilities Authority
RB (Hospital Revenue Program,
Our Lady of The Lake Project)
Series 1990 MB
3.70% 10/15/98 5,000 5,000,000
Plaquemines Port Harbor and
Terminal District Marine Terminal
Facilities RB (Electro-Coal
Transfer Project)
Series 1985A MB
3.55% 11/10/98 11,600 11,600,000
------------
18,600,000
------------
MARYLAND--12.0%
Anne Arundel County RB (Mountain
Ridge Apartments Project)
Series 1996D DN
4.20%** 10/07/98 6,235 6,235,000
PAR
MATURITY (000) VALUE
-------- -------- ------------
MUNICIPAL BONDS (CONTINUED)
MARYLAND (CONTINUED)
Baltimore County RB (Paths at
Loveton Project) Series 1996 DN
4.15%** 10/07/98 $ 5,660 $ 5,660,000
Baltimore County RB (Shade Tree
Trace Project) Series 1996 DN
4.20%** 10/07/98 6,500 6,500,000
Maryland Finance Authority IDRB
(Baltimore International Culinary
Project) Series 1994 DN
4.10%** 10/07/98 3,525 3,525,000
Maryland Health and Higher
Educational Facilities RB (Pooled
Loan Program) Series 1985B DN
3.60%** 10/07/98 8,000 8,000,000
Maryland IDA Finance RB (Brass
Mill Road Limited Partnership
Facility Project) Series 1995 DN
4.20%** 10/07/98 3,395 3,395,000
Maryland IDA Finance RB (Patapsco
Associates Limited Partnership
Facility Project) Series 1995 DN
4.20%** 10/07/98 2,160 2,160,000
Westminster Economic Development
RB (Western Maryland College, Inc.
Facilities Project) Series 1997 DN
4.12%** 10/07/98 12,000 12,000,000
------------
47,475,000
------------
MISSOURI--1.1%
Kansas City IDRB (Mid-America
Health Services Project)
Series 1984 DN
3.62%** 10/07/98 4,500 4,500,000
------------
NEBRASKA--1.7%
Nebraska Investment Finance
Authority Multi-Family Loan RB
(Apple Creek Associates Project)
Series 1985A DN
3.75%** 10/07/98 1,900 1,900,000
Nebraska Public Power RB
Series 1998A TECP
3.40% 12/08/98 5,000 5,000,000
------------
6,900,000
------------
NEW HAMPSHIRE--1.9%
New Hampshire Higher Educational
and Health Facilities Authority RB
(Hunt Community Issue Project)
Series 1996 DN
3.80%** 10/07/9 6,090 6,090,000
New Hampshire RB Series 1998 MB
3.55% 11/09/98 1,600 1,599,913
------------
7,689,913
------------
New Jersey--0.8%
Montville Township School District
Temporary Notes (Morris County
Board of Education Project)
Series 1998 MB
4.00% 10/02/98 2,000 2,000,016
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
7
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
MUNICIPAL MONEY MARKET PORTFOLIO (CONTINUED)
PAR
AS OF SEPTEMBER 30, 1998 MATURITY (000) VALUE
-------- -------- ------------
MUNICIPAL BONDS (CONTINUED)
NEW JERSEY (CONTINUED)
New Jersey Economic Development
Authority RB (Winchester Gardens,
Ward Homestead Project)
Series 1995B DN
3.30%** 10/07/98 $ 1,210 $ 1,210,000
------------
3,210,016
------------
NORTH DAKOTA--1.0%
Fargo IDRB (Owen Industries, Inc.
Project) Series 1997 DN
4.25%** 10/07/98 1,000 1,000,000
Mercer County Solid Waste Disposal
RB (National Rural Utilities Project)
Series 1995A MB
3.55% 03/01/99 3,000 3,000,000
------------
4,000,000
------------
OHIO--3.4%
Berea GO Series 1997 BAN
4.00% 10/15/98 1,305 1,305,072
Clinton County Hospital RB (Ohio
Hospital Capital, Inc. Pooled
Financing Programs)
Series 1998 DN
3.65%** 10/07/98 2,000 2,000,000
Fairfield County Water System
Improvement RB Series 1998 MB
4.45% 07/27/99 1,175 1,181,959
Montgomery County Limited
Obligation RB (Society of St. Vincent
de Paul Project) Series 1996 DN
4.15%** 10/07/98 1,800 1,800,000
Ohio Air Quality Development Authority
PCRB (JMG Funding, Ltd.
Partnership Project)
Series 1995B DN
3.65%** 10/07/98 3,100 3,100,000
Ohio Air Quality Development
Authority PCRB (Timken Co.
Project) Series 1992 DN
3.65%** 10/07/98 1,100 1,100,000
Youngstown IDRB (Portage
Transformer Company Project)
Series 1996 DN
4.15%** 10/07/98 2,940 2,940,000
------------
13,427,031
------------
OKLAHOMA--2.8%
Muskogee Industrial Trust PCRB
(Oklahoma Gas and Electric
Project) Series 1995A DN
3.55%** 10/07/98 2,000 2,000,000
Oklahoma Water Resources Board
State Loan Program RB
Series 1995 MB
3.50% 03/01/99 9,000 9,000,000
------------
11,000,000
------------
OREGON--0.8%
Portland Multi-Family Housing RB
(Village of Lovejoy Fountain
Project) Series 1997 DN
3.73%** 10/07/98 3,000 3,000,000
------------
PAR
MATURITY (000) VALUE
-------- -------- ------------
MUNICIPAL BONDS (CONTINUED)
PENNSYLVANIA--0.9%
Beaver County IDA Refunding PCRB
(Atlantic Richfield Co. Project)
Series 1995 DN
3.55%** 10/07/98 $ 2,700 $ 2,700,000
Geisinger Health System Authority
RB Series 1992B DN
4.15%** 10/01/98 1,000 1,000,000
------------
3,700,000
------------
SOUTH CAROLINA--1.3%
Berkeley County IDRB (Nucor
Corp. Project) Series 1998 DN
3.70%** 10/07/98 1,000 1,000,000
South Carolina Economic
Development Authority RB
(Catholic Diocese Project)
Series 1998 DN
4.05%** 10/07/98 4,000 4,000,000
------------
5,000,000
------------
TENNESSEE--6.5%
Chattanooga IDRB (Southern
Foundry Supply, Inc. Project)
Series 1996 DN
4.15%** 10/07/98 1,300 1,300,000
Clarksville Public Building Authority
RB Series 1997 DN
4.00%** 10/07/98 3,950 3,950,000
Metropolitan Government of Nashville
and Davidson Counties Health and
Education Facilites Board RB
(Vanderbilt University Project)
Series 1985 MB
3.75% 01/15/99 4,000 4,001,779
Montgomery County Public Building
Authority Pooled Financing RB
(Montgomery County Loan Pool
Project) Series 1996 DN
4.00%** 10/07/98 1,000 1,000,000
Montgomery County Public Building
Authority Pooled Financing RB
(Tennessee County Loan Pool
Project) Series 1995 DN
4.00%** 10/07/98 4,700 4,700,000
Montgomery County Public Building
Authority Pooled Financing RB
Series 1997 DN
4.00%** 10/07/98 8,000 8,000,000
Morristown IDRB (Bos Automotive
Products, Inc. Project)
Series 1997 DN
4.15%** 10/07/98 2,000 2,000,000
Oak Ridge IDRB (Solid Waste M4
Environmental Project)
Series 1996 DN
4.15%** 10/07/98 900 900,000
------------
25,851,779
------------
TEXAS--11.2%
Austin Higher Education Authority
RB (St. Edwards University Project)
Series 1995 DN
4.05%** 10/07/98 1,800 1,800,000
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
MUNICIPAL MONEY MARKET PORTFOLIO (CONCLUDED)
PAR
AS OF SEPTEMBER 30, 1998 MATURITY (000) VALUE
-------- -------- ------------
MUNICIPAL BONDS (CONTINUED)
TEXAS (CONTINUED)
Comal County IDA RB (Simpson Co.
Project) Series 1996 DN
4.20%** 10/07/98 $ 2,800 $ 2,800,000
Texas GO Series 1998-A55 TRAN
4.25%** 10/01/98 40,000 40,000,000
------------
44,600,000
------------
UTAH--2.1%
Intermountain Power Agency Supply
RB Series 1985F MB
3.30% 03/15/99 5,000 5,000,000
Salt Lake City Flexible Rate RB
(Pooled Hospital Financing
Program) Series 1998-A55 DN
3.50%** 10/07/98 3,200 3,200,000
------------
8,200,000
------------
VIRGINIA--1.9%
Metropolitan Washington D.C. Airports
Authority, Virginia Passenger Facility
Flexible Term Notes
Series 1998 TECP
3.70% 01/20/99 7,500 7,500,000
------------
WASHINGTON--0.5%
Yakima County Public Corporation
RB (Jeld-Wen Income Project)
Series 1988 DN
3.30%** 10/07/98 1,940 1,940,000
------------
WISCONSIN--0.3%
Stevens Point Tax-Exempt Facilities
RB (Consolidated Paper Co.
Project) Series 1997 DN
4.10%** 10/07/98 1,400 1,400,000
------------
TOTAL INVESTMENTS IN SECURITIES
(Cost $395,698,069*) 99.8% 395,698,069
OTHER ASSETS IN EXCESS
OF LIABILITIES 0.2% 722,575
------ ------------
NET ASSETS (Equivalent to $1.00
per share based on 246,734,993
Institutional shares, 140,185,662
Service shares, 9,226,579
Investor A shares and 305,581
Investor C shares outstanding) 100.0% $396,420,644
====== ============
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
INSTITUTIONAL, SERVICE,
INVESTOR A AND
INVESTOR C SHARE
($396,420,644 (DIVIDE) 396,452,815) $1.00
=====
- -------------
* Aggregate cost for Federal tax purposes.
** Rates shown are the rates as of September 30, 1998, and maturities shown are
the longer of the next interest readjustment date or the date the principal
owed can be recovered through demand.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
NEW JERSEY MUNICIPAL MONEY MARKET PORTFOLIO
PAR
AS OF SEPTEMBER 30, 1998 MATURITY (000) VALUE
-------- -------- ------------
MUNICIPAL BONDS--99.4%
NEW JERSEY--95.0%
Berkeley Heights GO Series 1997 BAN
3.86% 11/06/98 $ 1,056 $ 1,056,005
Brick Township School District GO
Series 1998 BAN
3.87% 02/18/99 4,151 4,155,219
Camden County Improvement Authority
RB (Jewish Community Center
Project) Series 1995 DN
3.60%** 10/07/98 1,035 1,035,000
Clifton GO Series 1998 MB
4.50% 03/15/99 1,415 1,419,969
East Windsor Regional School District
GO (County of Mercer School
Project) Series 1998 MB
4.60% 07/15/99 205 206,491
Essex County Public Improvement
Authority RB (County Asset Sale
Project) Series 1995 DN
3.60%** 10/07/98 5,000 5,000,000
Fair Lawn GO Series 1997 BAN
3.95% 12/17/98 3,329 3,330,489
Galloway Township GO
Series 1997 BAN
4.25% 10/30/98 3,000 3,000,974
Gloucester County GO Series 1998 MB
4.70% 06/01/99 1,205 1,213,592
Gloucester County Industrial Pollution
Control Financing Authority
Refunding RB (Mobil Oil Refining
Co. Project) Series 1993 DN
3.37%** 10/07/98 2,810 2,810,000
Haddonfield School District Unlimited
GO Series 1998 MB
4.00% 07/02/99 1,450 1,453,668
Hamilton Township GO (General
Improvement and Sewer Utility
Bonds) Series 1998 MB
4.50% 05/01/99 400 401,689
Harding Township GO Series 1998 BAN
3.77% 07/09/99 2,628 2,629,447
Hopewell Township GO Series 1998 BAN
4.00% 01/08/99 2,000 2,001,306
Jersey City Municipal Utilities Authority
Water RB Series 1998 MB
3.65% 04/01/99 1,925 1,925,000
Jersey City State Operated School
District Certificates of Participation
Series 1998 MB
4.00% 06/01/99 1,280 1,282,856
Little Ferry Unlimited GO
Series 1998 BAN
3.75% 08/06/99 2,623 2,625,138
Lumberton Township School District
Certificates of Participation (Fiscal
Funding Project) Series 1998 MB
7.70% 10/01/98 125 125,000
Middlesex County Tender Option
Certificates Series 1998 DN
4.00%** 10/07/98 4,995 4,995,000
Montville Township School District
Temporary Notes (Morris County
Board of Education Project)
Series 1998 MB
4.00% 10/02/98 1,300 1,300,010
PAR
MATURITY (000) VALUE
-------- -------- ------------
MUNICIPAL BONDS (CONTINUED)
NEW JERSEY (CONTINUED)
Mount Olive Township GO (Board of
Education Project) Series 1998 MB
4.90% 01/15/99 $ 760 $ 762,685
Mount Olive Township GO
Series 1998 MB
4.70% 08/15/99 439 443,091
Mullica Township GO Series 1997 MB
4.62% 11/15/98 105 105,104
New Jersey Economic Development
Authority RB (Bethany Baptist
Church Project) Series 1998 DN
3.85%** 10/07/98 1,500 1,500,000
New Jersey Economic Development
Authority RB (East Meadow Corp.
Project) Series 1986A DN
3.80%** 10/07/98 2,675 2,675,000
New Jersey Economic Development
Authority RB (East Meadow Corp.
Project) Series 1986B DN
3.80%** 10/07/98 4,770 4,770,000
New Jersey Economic Development
Authority RB (Far Sighted
Investment LLC Project)
Series 1998A DN
3.55%** 10/07/98 1,180 1,180,000
New Jersey Economic Development
Authority RB (First Mortgage Cranes
Mill Project) Series 1997 DN
3.30%** 10/07/98 10,000 10,000,000
New Jersey Economic Development
Authority RB (J. James Realty Co.
Project) Series 1998 DN
3.95%** 10/07/98 600 600,000
New Jersey Economic Development
Authority RB (Local Housing Project)
Series 1992D-1 DN
3.90%** 10/07/98 1,560 1,560,000
New Jersey Economic Development
Authority RB (Nandan Co. Project)
Series 1995 DN
3.70%** 10/07/98 2,155 2,155,000
New Jersey Economic Development
Authority RB (Newark Recycling Co.
Project) Series 1997 MB
3.95% 12/15/98 2,000 2,000,000
New Jersey Economic Development
Authority RB (Ninette Group L.P.
Project) Series 1998 DN
3.55%** 10/07/98 1,000 1,000,000
New Jersey Economic Development
Authority RB (St. James Prep. and
Social Service Project)
Series 1998 DN
3.85%** 10/07/98 1,000 1,000,000
New Jersey Economic Development
Authority RB (Venice Maid Foods
Project) Series 1997 DN
3.60%** 10/07/98 1,000 1,000,000
New Jersey Economic Development
Authority RB (Wechsler Coffee
Corp. Project) Series 1998 DN
3.55%** 10/07/98 1,500 1,500,000
New Jersey Economic Development
Authority RB (Winchester Gardens,
Ward Homestead Project)
Series 1995B DN
3.30%** 10/07/98 3,740 3,740,000
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
NEW JERSEY MUNICIPAL MONEY MARKET PORTFOLIO (CONCLUDED)
PAR
AS OF SEPTEMBER 30, 1998 MATURITY (000) VALUE
-------- -------- ------------
MUNICIPAL BONDS (CONTINUED)
NEW JERSEY (CONTINUED)
New Jersey Economic Development
Authority RB (Wood Hollow
Associates Project) Series 1997 DN
3.65%** 10/07/98 $ 2,495 $ 2,495,000
New Jersey Economic Development
Authority Refunding RB (New Jersey
Natural Gas Co. Project)
Series 1998C DN
3.20%** 10/07/98 3,000 3,000,000
New Jersey Economic Development
Authority Thermal Energy Facilities
RB (Thermal Energy, L.P. Project)
Series 1995 DN
3.30%** 10/07/98 6,000 6,000,000
New Jersey Health Care Facilities
Financing Authority Refunding RB
(St. Barnabas Medical Center
Project) Series 1998A MB
4.25% 07/01/99 1,395 1,401,566
New Jersey Higher Education
Assistance Authority Student Loan
RB (New Jersey Class Loan Program
Project) Series 1997B MB
3.75% 12/01/98 1,400 1,400,000
New Jersey Housing & Mortgage
Finance Agency Tax-Exempt Eagle
Trust Certificates Series 1997A DN
4.07%** 10/07/98 4,000 4,000,000
New Jersey Municipal Securities Trust
Receipts Series 1995-CB1 DN
3.70%** 10/07/98 9,900 9,900,000
New Jersey RB Series 1998A DN
3.80%** 10/07/98 5,000 5,000,000
New Jersey Transportation Trust Fund
Authority RB (P-Floats Project)
Series 1997 DN
4.14%** 10/07/98 2,895 2,895,000
New Jersey Transportation Trust Fund
Authority RB (P-Floats Project)
Series 1998 DN
4.14%** 10/07/98 8,000 8,000,000
New Jersey Transportation Trust Fund
Authority Trust Receipts RB
(Transportation System Project)
Series 1996A DN
3.80%** 10/07/98 7,500 7,500,000
Ocean County College Capital
Improvement GO Series 1998 MB
4.05% 06/01/99 200 200,451
Orange Township Municipal Utility
and Lease Authority RB
Series 1998C MB
3.75% 12/01/98 150 150,000
Passaic County Unlimited GO
Series 1998 MB
3.65% 11/15/98 110 110,000
Perth Amboy Board of Education
Refunding Certificates of
Participation Series 1998 MB
3.65% 12/15/98 200 200,000
PAR
MATURITY (000) VALUE
-------- -------- ------------
MUNICIPAL BONDS (CONTINUED)
NEW JERSEY (CONTINUED)
Point Pleasant General Improvement
Unlimited GO Series 1998 MB
4.35% 09/01/99 $ 235 $ 236,783
Rahway GO Series 1997 BAN
4.12% 10/09/98 1,000 1,000,058
Salem County Pollution Control
Financing Authority PCRB (Atlantic
City Electric Co. Project)
Series 1997B DN
3.40%** 10/07/98 1,000 1,000,000
Salem County Pollution Control
Financing Authority PCRB (E.I.
DuPont de Nemours & Company
Project) Series 1982A DN
3.50%** 10/07/98 6,600 6,600,000
Salem County Pollution Control
Financing Authority PCRB
(Public Service Electric and Gas
Project) Series 1997 DN
3.35%** 10/07/98 1,500 1,500,000
------------
140,546,591
------------
GUAM--1.7%
Guam Power Authority RB
Series 1998 TECP
3.05% 11/13/98 2,500 2,500,000
------------
NEW YORK--2.7%
Port Authority of New York and New
Jersey RB Series 1998 MB
3.65% 10/08/98 3,810 3,810,000
Port Authority of New York and New
Jersey Versatile Structure
Obligations RB Series 1995 DN
4.05%** 10/07/98 200 200,000
------------
4,010,000
------------
TOTAL INVESTMENTS IN SECURITIES
(Cost $147,056,591*) 99.4% 147,056,591
OTHER ASSETS IN EXCESS
OF LIABILITIES 0.6% 860,973
------ ------------
NET ASSETS (Equivalent to $1.00
per share based on 68,771,014
Institutional shares, 35,173,584
Service shares, 43,991,174
Investor A shares and 51 Investor B
shares outstanding) 100.0% $147,917,564
====== ============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER
INSTITUTIONAL, SERVICE,
INVESTOR A AND INVESTOR B
SHARE
($147,917,564 (DIVIDE) 147,935,823) $1.00
=====
- -----------
* Aggregate cost for Federal tax purposes.
** Rates shown are the rates as of September 30, 1998, and maturities shown are
the longer of the next interest readjustment date or the date the principal
owed can be recovered through demand.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
NORTH CAROLINA MUNICIPAL MONEY MARKET PORTFOLIO
PAR
AS OF SEPTEMBER 30, 1998 MATURITY (000) VALUE
-------- -------- ------------
MUNICIPAL BONDS--99.8%
NORTH CAROLINA--95.4%
Asheville Certificates of Participation
Series 1993A DN
3.45%** 10/07/98 $ 800 $ 800,000
Buncombe County Certificates of
Participation Series 1998 MB
3.65% 12/01/98 1,560 1,560,000
Buncombe County GO Series 1997 DN
3.85%** 10/07/98 6,000 6,000,000
Catawba County Industrial Facilities
and Pollution Control Financing
Authority IDRB (WSMP, Inc. Project)
Series 1992 DN
4.10%** 10/07/98 400 400,000
Charlotte Airport Refunding RB
Series 1993A DN
3.50%** 10/07/98 2,815 2,815,000
Charlotte Airport Refunding RB
Series 1997A DN
3.60%** 10/07/98 1,650 1,650,000
Charlotte-Mecklenburg Hospital
Authority RB (Health Care System
Project) Series 1996B DN
3.95%** 10/07/98 2,250 2,250,000
Charlotte-Mecklenburg Hospital
Authority RB (Health Care System
Project) Series 1996C DN
3.90%** 10/07/98 5,200 5,200,000
Charlotte-Mecklenburg Hospital
Authority RB (Health Care System
Project) Series 1996D DN
4.00%** 10/07/98 1,000 1,000,000
Cumberland County Industrial Facilities
and Pollution Control Financing
Authority IDRB (BG Properties,
LLC Project) Series 1998 DN
4.15%** 10/07/98 1,500 1,500,000
Durham GO Series 1993 DN
4.00%** 10/07/98 5,635 5,635,000
Green County Industrial Facilities and
Pollution Control Financing Authority
IDRB (Federal Paper Board Co., Inc.
Project) Series 1989 DN
4.05%** 10/07/98 1,100 1,100,000
Green County Industrial Facilities and
Pollution Control Financing Authority
IDRB (Snow Hill Tape Corp. Project)
Series 1995 DN
4.05%** 10/07/98 2,000 2,000,000
Greensboro Certificates of Participation
(Equipment Project) Series 1994 DN
4.05%** 10/07/98 1,600 1,600,000
Greensboro Certificates of Participation
(Greensboro Coliseum Complex
Improvement Project) Series 1995A DN
3.55%** 10/07/98 1,500 1,500,000
Greensboro GO Public Improvement
Bonds Series 1998 DN
3.55%** 10/07/98 2,460 2,460,000
Guilford County GO Series 1989 MB
6.80% 06/01/99 1,000 1,035,040
Guilford County Industrial Facilities and
Pollution Control Financing Authority
IDRB (U.S. Label Corp. Project)
Series 1995 DN
4.05%** 10/07/98 2,500 2,500,000
PAR
MATURITY (000) VALUE
-------- -------- ------------
MUNICIPAL BONDS (CONTINUED)
NORTH CAROLINA (CONTINUED)
Johnston County Industrial Facilities
and Pollution Control Finance
Authority PCRB (Kabivitrum, Inc.
Project) Series 1988 DN
4.05%** 10/07/98 $ 3,450 $ 3,450,000
Lee County Industrial Facilities and
Pollution Control Financing Authority
Refunding IDRB (Trion, Inc. Project)
Series 1995 DN
3.95%** 10/07/98 1,700 1,700,000
Mecklenberg County GO
Series 1989 MB
6.60% 04/01/99 680 692,751
Mecklenburg County GO
Series 1996B DN
3.90%** 10/07/98 300 300,000
Mecklenburg County GO
Series 1998C DN
3.95%** 10/07/98 5,000 5,000,000
Mecklenburg County Industrial
Facilities and Pollution Control
Financing Authority IDRB (Aplix, Inc.
Project) Series 1996 DN
4.05%** 10/07/98 4,200 4,200,000
Mecklenburg County Industrial
Facilities and Pollution Control
Financing Authority IDRB (Griffith
Micro Science Project)
Series 1995 DN
3.75%** 10/07/98 1,500 1,500,000
Mecklenburg County Industrial
Facilities and Pollution Control
Financing Authority IDRB (Otto
Industries, Inc. Project)
Series 1988 DN
4.10%** 10/07/98 2,950 2,950,000
Mecklenburg County Industrial Facilities
and Pollution Control Financing
Authority IDRB (Piedmont Plastics
Project) Series 1997 DN
4.15%** 10/07/98 4,700 4,700,000
Moore County Public Improvement
Bond GO Series 1998 MB
4.40% 06/01/99 600 602,708
New Hanover County Industrial
Facilities IDRB (Interroll Corp.
Project) Series 1989 DN
4.10%** 10/07/98 1,195 1,195,000
North Carolina Agricultural Finance
Authority Agricultural Development
RB (Harvey Fertilizer & Gas Co.
Project) Series 1995 DN
4.05%** 10/07/98 1,640 1,640,000
North Carolina Eastern Municipal
Power Agency Power System RB
Series 1988B TECP
3.40% 10/21/98 1,190 1,190,000
3.45% 10/22/98 8,000 8,000,000
North Carolina Eastern Municipal
Power Agency Power System RB
Series 1998B TECP
3.60% 01/13/99 7,000 7,000,000
3.40% 01/27/99 3,300 3,300,000
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
12
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
NORTH CAROLINA MUNICIPAL MONEY MARKET PORTFOLIO (CONTINUED)
PAR
AS OF SEPTEMBER 30, 1998 MATURITY (000) VALUE
-------- -------- ------------
MUNICIPAL BONDS (CONTINUED)
NORTH CAROLINA (CONTINUED)
North Carolina Educational
Facilities Finance Agency RB
(Greensboro College Project)
Series 1997 DN
3.55%** 10/07/98 $ 500 $ 500,000
North Carolina Educational Facilities
Finance Agency RB (Duke University
Project) Series 1991B DN
3.95%** 10/07/98 200 200,000
North Carolina Educational Facilities
Finance Agency RB (Duke University
Project) Series 1992A DN
3.95%** 10/07/98 4,600 4,600,000
North Carolina Educational Facilities
Finance Agency RB (Gardner-Webb
University Project) Series 1997 DN
3.95%** 10/07/98 2,400 2,400,000
North Carolina Educational Facilities
Finance Agency RB (Wake Forest
University Project) Series 1997 MB
3.80% 11/01/98 1,250 1,250,000
North Carolina Highway GO
Series 1997A MB
4.50% 05/01/99 6,000 6,030,511
North Carolina Industrial Facilities and
Pollution Control Financing Authority
RB (GVK America, Inc. Project)
Series 1990 MB
4.00% 12/01/98 2,310 2,310,000
North Carolina Medical Care
Commission Health Care Facility
RB (Lutheran Services for the Aging
Project) Series 1998 DN
3.60%** 10/07/98 4,000 4,000,000
North Carolina Medical Care
Commission Hospital RB (Baptist
Hospital Project) Series 1992B DN
3.90%** 10/07/98 1,500 1,500,000
North Carolina Medical Care
Commission Hospital RB (Baptist
Hospital Project) Series 1996 DN
3.90%** 10/07/98 1,200 1,200,000
North Carolina Medical Care
Commission Hospital RB (Duke
University Hospital Project)
Series 1985D DN
3.95%** 10/07/98 1,000 1,000,000
North Carolina Medical Care
Commission Hospital RB (Lincoln
Health System Project)
Series 1996A DN
4.00%** 10/07/98 4,500 4,500,000
North Carolina Medical Care
Commission Hospital RB (Moses H.
Cone Memorial Hospital Project)
Series 1993 DN
3.90%** 10/07/98 8,900 8,900,000
North Carolina Medical Care
Commission Hospital RB (Park
Ridge Hospital Project)
Series 1988 DN
3.95%** 10/07/98 3,700 3,700,000
PAR
MATURITY (000) VALUE
-------- -------- ------------
MUNICIPAL BONDS (CONTINUED)
NORTH CAROLINA (CONTINUED)
North Carolina Medical Care
Commission Hospital RB (Pooled
Equipment Financing Project)
Series 1985 DN
3.80%** 10/07/98 $ 900 $ 900,000
North Carolina Medical Care
Commission Hospital RB (Pooled
Financing Project) Series 1994 DN
3.70%** 10/07/98 700 700,000
North Carolina Municipal Power
Agency Number 1 RB (Catawba
Project) Series 1998 TECP
3.50% 10/19/98 4,000 4,000,000
3.50% 11/18/98 4,600 4,600,000
Person County Industrial Facilities and
Pollution Control Financing
Authority RB (Carolina Power &
Light Co. Project) Series 1992A DN
3.70%** 10/07/98 1,200 1,200,000
Raleigh-Durham Airport Authority
Special Facility Refunding RB
(American Airlines, Inc. Project)
Series 1995A DN
4.15%** 10/01/98 5,100 5,100,000
Raleigh-Durham Airport Authority
Special Facility Refunding RB
(American Airlines, Inc. Project)
Series 1995B DN
4.15%** 10/01/98 300 300,000
Rockingham County Industrial
Facilities and Pollution Control
Financing Authority RB (Whiteridge,
Inc. Project) Series 1998 DN
4.15%** 10/07/98 1,500 1,500,000
Rutherford County Industrial Facilities
and Pollution Control Finance
Authority RB (Thieman Metal
Technologies, L.L.C. Project)
1998 DN
4.15%** 10/07/98 2,000 2,000,000
Sampson County Industrial
Facilities and Pollution Control
Financing Authority IDRB (Dubose
Strapping, Inc. Project)
Series 1997 DN
4.15%** 10/07/98 1,800 1,800,000
Union County Industrial Facilities and
Pollution Control Financing Authority
IDRB (Rock-Tenn Converting Co.
Project) Series 1997 DN
4.15%** 10/07/98 1,750 1,750,000
University of North Carolina Chapel
Hill School of Medicine RB
(Ambulatory Care Clinic Project)
Series 1990 DN
3.65%** 10/07/98 1,800 1,800,000
University of North Carolina RB
(Chapel Parking System Board of
Governors of the UNC Project)
Series 1997C DN
3.50%** 10/07/98 1,400 1,400,000
Wake County GO Series 1997 MB
4.70% 03/01/99 1,000 1,004,426
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
13
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
NORTH CAROLINA MUNICIPAL MONEY MARKET PORTFOLIO (CONCLUDED)
PAR
AS OF SEPTEMBER 30, 1998 MATURITY (000) VALUE
-------- -------- ------------
MUNICIPAL BONDS (CONTINUED)
NORTH CAROLINA (CONTINUED)
Wake County Industrial Facilities and
Pollution Control Financing Authority
RB (Carolina Power & Light Co.
Project) Series 1985B DN
3.60%** 10/07/98 $11,600 $ 11,600,000
Wake County Industrial Facilities and
Pollution Control Financing Authority
RB (Carolina Power & Light Co.
Project) Series 1985C DN
3.60%** 10/07/98 550 550,000
Wake County Industrial Facilities and
Pollution Control Financing Authority
RB (Carolina Power & Light Co.
Project) Series 1987 DN
4.20%** 10/01/98 900 900,000
Wake County Industrial Facilities and
Pollution Control Financing Authority
Refunding RB (Carolina Power &
Light Co. Project) Series 1990A TECP
3.45% 10/21/98 5,500 5,500,000
3.45% 10/28/98 6,500 6,500,000
Washington County Industrial Facilities
Pollution Control Financing Authority
RB (Mackeys Ferry Sawmill, Inc.
Project) Series 1997 DN
4.05%** 10/07/98 1,400 1,400,000
Wilkes County Industrial Facilities and
Pollution Control Financing Authority
RB (Schas Circular Industries, Inc.
Project) Series 1997A DN
4.15%** 10/07/98 6,325 6,325,000
Wilson County Industrial Facilities and
Pollution Control Financing Authority
IDRB (North Carolina Chip Co.
Project) Series 1989 DN
4.10%** 10/07/98 500 500,000
Winston-Salem Certificates of
Participation (Risk Acceptance
Management Corp. Project)
Series 1988 DN
3.65%** 10/07/98 445 445,000
------------
192,290,436
------------
PAR
MATURITY (000) VALUE
-------- -------- ------------
MUNICIPAL BONDS (CONTINUED)
GUAM--1.3%
Guam Power Authority RB
Series 1998 TECP
3.05% 11/13/98 $ 2,500 $ 2,500,000
------------
PUERTO RICO--3.1%
Puerto Rico Government Development
Bank Refunding RB Series 1985 DN
3.12%** 10/07/98 1,300 1,300,000
Puerto Rico Industrial, Medical and
Environmental Pollution Control
Facilities Financing Authority RB
(Key Pharmaceuticals Project)
Series 1983 MB
4.25% 12/01/98 5,000 4,999,708
------------
6,299,708
------------
TOTAL INVESTMENTS IN SECURITIES
(Cost $201,090,144*) 99.8% 201,090,144
OTHER ASSETS IN EXCESS
OF LIABILITIES 0.2% 445,062
------ ------------
NET ASSETS (Equivalent to $1.00
per share based on 181,983,145
Institutional shares, 19,306,093
Service shares and 244,631
Investor A shares outstanding) 100.0% $201,535,206
====== ============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER
INSTITUTIONAL, SERVICE AND
INVESTOR A SHARE
($201,535,206 (DIVIDE) 201,533,869) $1.00
=====
- ------------
* Aggregate cost for Federal tax purposes.
** Rates shown are the rates as of September 30, 1998, and maturities shown are
the longer of the next interest readjustment date or the date the principal
owed can be recovered through demand.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
14
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
OHIO MUNICIPAL MONEY MARKET PORTFOLIO
PAR
AS OF SEPTEMBER 30, 1998 MATURITY (000) VALUE
-------- -------- ------------
MUNICIPAL BONDS--99.5%
OHIO--99.5%
Allen County GO Series 1998 BAN
4.05% 04/13/99 $1,000 $ 1,001,536
Belmont County GO Series 1997 BAN
4.17% 11/24/98 1,250 1,250,480
Berea GO Series 1997 BAN
4.00% 10/15/98 1,000 1,000,055
Berea GO Series 1998 BAN
4.15% 10/15/98 1,225 1,225,208
Butler County GO Series 1997 BAN
4.25% 10/22/98 2,000 2,000,443
Butler County Sewer System RB
Series 1992A MB
4.80% 12/01/98 500 500,915
Cincinnati City School District GO
Series 1998 TAN
4.08% 12/31/98 2,000 2,002,315
Cleveland Airport System RB
Series 1997D DN
3.65%** 10/07/98 3,000 3,000,000
Clinton County Hospital RB (Ohio
Hospital Capital, Inc. Pooled
Financing Project)
Series 1998 DN
3.65%** 10/01/98 3,000 3,000,000
Cuyahoga County Hospital RB
(Cleveland Clinic Foundation
Project) Series 1997A DN
3.55%** 10/01/98 1,400 1,400,000
Cuyahoga County Hospital RB
(Cleveland Clinic Foundation Project)
Series 1998A DN
3.55%** 10/07/98 700 700,000
Cuyahoga County IDRB (Northstar
Project) Series 1998 DN
3.88%** 10/01/98 3,555 3,555,000
Cuyahoga County IDRB (Pleasant Lake
Associates Project) Series 1995 DN
3.73%** 10/07/98 895 895,000
Delaware County IDRB (Air Waves, Inc.
Project) Series 1995 DN
3.88%** 10/07/98 935 935,000
East Palestine GO Series 1998 BAN
3.75% 07/30/99 2,000 2,000,000
Erie County IDRB (Brighton Manor Co.
Project) Series 1986 DN
3.75%** 10/07/98 3,700 3,700,000
Franklin County Hospital Refunding
and Improvement RB (U.S. Health
Corp. of Columbus Project)
Series 1996A DN
4.00%** 10/07/98 500 500,000
Franklin County IDRB (Alco Standard
Corp. Project) Series 1994 DN
4.05%** 10/07/98 2,000 2,000,000
Gates Mills Village GO Series 1998 BAN
3.90% 06/15/99 1,000 1,001,084
Greene County Economic Development
RB (Ashford Center Project)
Series 1995 DN
4.05%** 10/07/98 1,970 1,970,000
Greene County IDRB (AFC Stamping &
Production, Inc., Barsplice Products
Project) Series 1995 DN
3.88%** 10/07/98 1,000 1,000,000
PAR
MATURITY (000) VALUE
-------- -------- ------------
MUNICIPAL BONDS (CONTINUED)
OHIO (CONTINUED)
Greene County IDRB (Antioch
Publishing Co. Project)
Series 1996 DN
4.15%** 10/07/98 $2,200 $ 2,200,000
Hilliard GO Series 1998A BAN
4.05% 04/08/99 750 751,495
Hilliard GO Series 1998B BAN
3.85% 09/09/99 1,100 1,102,985
Lebanon GO Series 1998 BAN
3.91% 09/02/99 1,150 1,152,654
Lucas County IDRB (Vega Industries,
Inc. Project) Series 1995 DN
4.15%** 10/07/98 1,985 1,985,000
Marysville GO Series 1998 BAN
3.91% 04/15/99 1,000 1,001,357
Mason GO Series 1997 BAN
3.95% 12/17/98 1,150 1,150,350
Middleburg Heights GO Series 1998 BAN
3.90% 10/27/98 1,000 1,000,208
3.95% 08/12/99 2,800 2,805,824
Montgomery County Limited Obligation
RB (Society of St. Vincent de Paul
Project) Series 1996 DN
4.15%** 10/01/98 3,100 3,100,000
Newark GO Series 1998 BAN
4.00% 03/12/99 2,000 2,002,991
North Olmsted GO Series 1998-2 BAN
3.95% 09/23/99 2,675 2,681,297
Ohio Air Quality Development Authority
PCRB (JMG Funding, Ltd.
Partnership Project) Series 1994B DN
3.65%** 10/07/98 2,400 2,400,000
Ohio Air Quality Development Authority
PCRB (Pennsylvania Power Co.
Project) Series 1997 DN
3.75%** 10/07/98 2,500 2,500,000
Ohio Air Quality Development Authority
PCRB (PPG Industries, Inc. Project)
Series 1988A DN
4.10%** 10/07/98 7,000 7,000,000
Ohio Air Quality Development Authority
PCRB (Timken Co. Project) Series 1992 DN
3.65%** 10/07/98 1,600 1,600,000
Ohio Air Quality Development Authority
PCRB (USX Project) Series 1995 MB
3.60% 12/03/98 1,115 1,115,000
Ohio Housing Finance Agency Mortgage
RB Series 1998A-2 MB
3.80% 03/01/99 5,000 5,000,000
Ohio Housing Finance Agency
Multi-Family Housing RB (Lincoln
Park Association Project)
Series 1985 MB
3.85% 11/02/98 670 670,000
Ohio Housing Finance Agency
Multi-Family Housing RB (The Club
at Spring Valley Apartments Project)
Series 1996A DN
3.73%** 10/07/98 4,500 4,500,000
Ohio IDRB (Anomatic Corp. Project)
Series 1994 DN
4.15%** 10/07/98 1,260 1,260,000
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
15
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
OHIO MUNICIPAL MONEY MARKET PORTFOLIO (CONCLUDED)
PAR
AS OF SEPTEMBER 30, 1998 MATURITY (000) VALUE
-------- -------- ------------
MUNICIPAL BONDS (CONTINUED)
OHIO (CONTINUED)
Ohio IDRB (Ashley Ward, Inc. Project)
Series 1997 DN
4.05%** 10/07/98 $1,840 $ 1,840,000
Ohio RB (Major New State Infrastructure -
1 Project) Series 1998 MB
4.25% 12/15/98 2,000 2,002,387
Ohio Special Obligation Elementary and
Secondary Education Capital Facilities
RB Series 1997 MB
4.50% 12/01/98 1,200 1,201,359
Ohio State Building Authority RB
(State Facilities - Adult Correctional
Project) Series 1996A MB
5.00% 04/01/99 2,000 2,012,074
Ohio State Higher Educational Facility
Commission RB (Oberlin College
Project) Series 1985 DN
3.55%** 10/07/98 900 900,000
Ohio State Public Facilities Commission
Higher Education Facilities RB
Series 1989A MB
7.25% 05/01/99 250 261,919
Ohio Water Authority Solid Waste
Disposal RB (American Steel & Wire
Corp. Project) Series 1995 DN
4.15%** 10/07/98 5,300 5,300,000
Ohio Water Development Authority
PCRB (Cleveland Electric Co.
Project) Series 1997B DN
3.65%** 10/07/98 2,600 2,600,000
Ohio Water Development Authority
Refunding RB (Timken Co. Project)
Series 1992 DN
3.65%** 10/07/98 3,000 3,000,000
Orange Village GO Series 1998 BAN
3.75% 10/27/98 1,250 1,250,000
Pickerington GO Series 1997 BAN
4.25% 11/13/98 1,800 1,800,713
Portage County IDRB (Action Super
Abrasive Project) Series 1996 DN
4.15%** 10/07/98 1,130 1,130,000
Portage County IDRB (Lovejoy
Industries Project) Series 1994 DN
4.20%** 10/07/98 1,410 1,410,000
Sandusky County IDRB (Brighton
Manor Co. Project) Series 1986 DN
3.75%** 10/07/98 1,500 1,500,000
Springboro GO Series 1998 BAN
4.05% 01/28/99 1,100 1,100,861
Strongsville GO Series 1997 BAN
4.02% 11/18/98 1,400 1,400,425
Strongsville IDRB (Web Plastics
Company Project) Series 1997 DN
4.15%** 10/07/98 1,100 1,100,000
Summit County IDRB (Austin Printing
Co., Inc. Project) Series 1994 DN
4.15%** 10/07/98 495 495,000
Summit County IDRB (Forest
Manufacturing Project) Series 1994 DN
4.10%** 10/07/98 400 400,000
Summit County IDRB (JRB Company,
Inc. Project) Series 1997 DN
4.15%** 10/01/98 3,400 3,400,000
PAR
MATURITY (000) VALUE
-------- -------- ------------
MUNICIPAL BONDS (CONTINUED)
OHIO (CONTINUED)
Toledo City Services Special
Assessment Notes Series 1997 DN
4.00%** 10/07/98 $2,500 $ 2,500,000
Toledo-Lucas County Port Authority
Development RB (Frostbite Brands,
Inc. Project) Series 1993 DN
4.10%** 10/01/98 1,000 1,000,000
Westlake Economic Development RB
(Oaks Development Co. Project)
Series 1994 DN
4.05%** 10/07/98 1,870 1,870,000
Youngstown IDRB (Portage Transformer
Co. Project) Series 1996 DN
4.15%** 10/01/98 900 900,000
------------
TOTAL INVESTMENTS IN SECURITIES
(Cost $121,990,935*) 99.5% 121,990,935
OTHER ASSETS IN EXCESS
OF LIABILITIES 0.5% 603,936
------ ------------
NET ASSETS (Equivalent to $1.00
per share based on 48,622,028
Institutional shares, 58,094,562
Service shares and 15,907,169
Investor A shares outstanding) 100.0% $122,594,871
====== ============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER
INSTITUTIONAL, SERVICE AND
INVESTOR A SHARE
($122,594,871 (DIVIDE) 122,623,759) $1.00
=====
- ---------------
* Aggregate cost for Federal tax purposes.
** Rates shown are the rates as of September 30, 1998, and maturities shown are
the longer of the next interest readjustment date or the date the principal
owed can be recovered through demand.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
16
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO
PAR
AS OF SEPTEMBER 30, 1998 MATURITY (000) VALUE
-------- -------- ------------
MUNICIPAL BONDS--99.9%
PENNSYLVANIA--97.8%
Allegheny County Environmental
Improvement RB (USX Corp. Project)
Series 1998 MB
3.50% 11/10/98 $ 1,000 $ 1,000,000
Allegheny County Higher Education
Building Authority RB (University of
Pittsburgh Project) Series 1985C DN
3.90%** 10/07/98 1,890 1,890,000
Allegheny County IDA PCRB (Duquesne
Light Co. Project) Series 1990A MB
3.60% 01/27/99 5,000 5,000,000
Allegheny County IDA Refunding PCRB
(Duquesne Light Co. Project)
Series 1992A MB
3.85% 10/21/98 8,000 8,000,000
Allegheny County IDA RB (United Mobile
Video Project) Series 1997 DN
4.05%** 10/01/98 4,000 4,000,000
Allegheny County Series 1998 TECP
(USX Corp. Project) MB
3.50% 11/10/98 5,000 5,000,000
Allegheny County Series 1998 TECP
(U.S. Steel Project) MB
3.30% 10/23/98 2,100 2,100,000
Beaver County IDA PCRB (Duquesne
Light Co. Project) Series 1990C MB
3.10% 10/14/98 1,000 1,000,000
Beaver County IDA PCRB (Duquesne
Light Co. Project) Series 1993A MB
3.45% 11/18/98 10,200 10,200,000
Beaver County IDA PCRB (Duquesne
Light Co. Project) Series 1998 MB
3.60% 12/14/98 4,200 4,200,000
Beaver County IDA PCRB (Duquesne
Light Co. Project) Series 1998 TECP
3.55% 12/14/98 8,300 8,300,000
Beaver County IDA PCRB (Duquesne
Light Co.; Beaver Valley Project)
Series 1993A MB
3.70% 10/09/98 1,000 1,000,000
Beaver County IDA PCRB (Duquesne
Light Co.; Beaver Valley Project)
Series 1993A TECP
3.50% 11/18/98 1,000 1,000,000
Beaver County IDA Refunding PCRB
(Atlantic Richfield Co. Project)
Series 1995 DN
3.55%** 10/07/98 6,500 6,500,000
Beaver County IDA Refunding PCRB
(Duquesne Light Co.; Beaver Valley
Project) Series 1990A DN
3.50%** 10/07/98 4,100 4,100,000
Beaver County IDA Refunding PCRB
(Duquesne Light Co.; Mansfield Project)
Series 1990B DN
3.50%** 10/07/98 1,100 1,100,000
Beaver County IDA Refunding PCRB
(Toledo Edison Project) Series 1992E
TECP
3.80% 12/01/98 10,000 10,000,000
Bedford County IDA IDRB (Sepa, Inc.
Facility Project) Series 1985 DN
3.70%** 10/07/98 3,000 3,000,000
PAR
MATURITY (000) VALUE
-------- -------- ------------
MUNICIPAL BONDS (CONTINUED)
PENNSYLVANIA (CONTINUED)
Berks County IDA Manufacturing Facilities
RB (Grafika Commercial Printing, Inc.
Project) Series 1995 DN
3.80%** 10/07/98 $ 2,560 $ 2,560,000
Berks County IDA RB (Beacon
Container Corp. Project)
Series 1997A DN
3.85%** 10/07/98 2,390 2,390,000
Berks County IDA RB (Berks Products
Project) Series 1996 DN
3.85%** 10/07/98 2,490 2,490,000
Berks County IDA RB (Citizens
Utilities Co. Project) Series 1996 MB
3.60% 11/06/98 4,200 4,200,000
Berks County IDA RB (Hub Fabricating
Project) Series 1996 DN
3.80%** 10/07/98 4,865 4,865,000
Berks County IDA RB (Lutheran Home
at Topton Project) Series 1995 DN
3.70%** 10/07/98 1,800 1,800,000
Berks County IDA RB (Richard J. Caron
Foundation Project) Series 1996 DN
3.70%** 10/07/98 1,800 1,800,000
Bucks County IDA Environmental
Improvement Refunding RB (USX
Corp. Project) Series 1995 MB
3.60% 12/03/98 6,190 6,190,000
Bucks County IDA RB (SHV Real
Estate, Inc. Project) Series 1985 DN
3.65%** 10/07/98 2,200 2,200,000
Bucks County IDA Refunding RB
(Sundstrand Corp. Project)
Series 1991 DN
4.05%** 10/07/98 1,505 1,505,000
Buffalo Township Municipal Authority
Sewer GO Series 1998 RAN
4.00% 08/19/99 2,265 2,265,000
Cambria County IDA Resource
Recovery RB (Cambria Cogen Co.
Project) Series 1989V-1 DN
3.60%** 10/07/98 24,500 24,500,000
Cambria County IDA Resource
Recovery RB (Cambria Cogen Co.
Project) Series 1989V-2 DN
3.60%** 10/07/98 4,300 4,300,000
Cambria County IDA Resource
Recovery RB (Cambria Cogen Co.
Project) Series 1991V-1 DN
3.60%** 10/07/98 700 700,000
Carbon County IDA Resource
Recovery RB (Panther Creek
Partners Project) Series 1990A MB
3.45% 11/18/98 3,200 3,200,000
Carbon County IDA Resource
Recovery RB (Panther Creek
Partners Project) Series 1991 MB
3.45% 11/18/98 300 300,000
Carbon County IDA Resource
Recovery RB (Panther Creek
Partners Project) Series 1992A MB
3.60% 11/12/98 5,000 5,000,000
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
17
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO (CONTINUED)
PAR
AS OF SEPTEMBER 30, 1998 MATURITY (000) VALUE
-------- -------- ------------
MUNICIPAL BONDS (CONTINUED)
PENNSYLVANIA (CONTINUED)
Carbon County IDA Resource
Recovery RB (Panther Creek
Partners Project) Series 1998 MB
3.60% 11/12/98 $ 3,355 $ 3,355,000
3.55% 11/18/98 16,080 16,080,000
Cumberland County IDA IDRB (Lane
Enterprises, Inc. Project)
Series 1994 DN
3.80%** 10/07/98 725 725,000
Cumberland County IDA RB
(Lawrence Schiff Silk Co. Project)
Series 1998 DN
3.75%** 10/07/98 2,200 2,200,000
Cumberland County Municipal
Authority RB (Presbyterian Homes
Project) Series 1993A DN
4.00%** 10/07/98 6,000 6,000,000
Dallastown Area School District GO
Series 1998 DN
4.10%** 10/07/98 5,000 5,000,000
Dauphin County General Authority RB
(Allhealth Pooled Financing Program
Project) Series 1997 DN
3.65%** 10/07/98 19,700 19,700,000
Dauphin County General Authority RB
(Allhealth Pooled Financing Program
Project) Series 1997A DN
3.65%** 10/07/98 7,200 7,200,000
Dauphin County General Authority RB
(Education & Health Loan Program)
Series 1997 DN
4.10%** 10/07/98 14,100 14,100,000
Delaware County IDA PCRB (B.P. Oil,
Inc. Project) Series 1985 DN
4.20%** 10/01/98 3,200 3,200,000
Delaware County IDA Refunding PCRB
(PECO Energy Project)
Series 1993A DN
4.05%** 10/07/98 1,000 1,000,000
Delaware County IDA Resource
Recovery Facilities Refunding RB
(General Electric Capital Corp.
Project) Series 1997G DN
3.50%** 10/07/98 1,500 1,500,000
3.90%** 10/07/98 600 600,000
Delaware County IDA Solid Waste RB
(Scott Paper Co. Project)
Series 1984A DN
3.60%** 10/07/98 600 600,000
Delaware County IDA Solid Waste RB
(Scott Paper Co. Project)
Series 1984C DN
3.60%** 10/07/98 1,900 1,900,000
Delaware County IDA Solid Waste RB
(Scott Paper Co. Project)
Series 1984D DN
3.60%** 10/07/98 3,600 3,600,000
Delaware County IDA Solid Waste RB
(Scott Paper Co. Project)
Series 1984E DN
3.60%** 10/07/98 1,595 1,595,000
PAR
MATURITY (000) VALUE
-------- -------- ------------
MUNICIPAL BONDS (CONTINUED)
PENNSYLVANIA (CONTINUED)
Delaware Valley Regional Finance
Authority Local Government RB
Series 1985A DN
3.50%** 10/07/98 $ 1,300 $ 1,300,000
Delaware Valley Regional Finance
Authority Local Government RB
Series 1985B DN
3.50%** 10/07/98 3,000 3,000,000
Delaware Valley Regional Finance
Authority Local Government RB
Series 1985C DN
3.50%** 10/07/98 1,300 1,300,000
Delaware Valley Regional Finance
Authority Local Government RB
Series 1985D DN
3.50%** 10/07/98 3,100 3,100,000
Delaware Valley Regional Finance
Authority Local Government RB
Series 1986 DN
3.50%** 10/07/98 525 525,000
Elk County IDA Solid Waste RB
(Williamette Industries, Inc. Project)
Series 1992 DN
3.65%** 10/07/98 18,000 18,000,000
Emmaus General Authority RB Pooled
Loan Series 1989B-15 DN
3.60%** 10/07/98 2,100 2,100,000
Emmaus General Authority RB Pooled
Loan Series 1989B-16 DN
3.60%** 10/07/98 3,500 3,500,000
Emmaus General Authority RB Pooled
Loan Series 1989F-10 DN
3.60%** 10/07/98 1,000 1,000,000
Emmaus General Authority RB Pooled
Loan Series 1989F-12 DN
3.60%** 10/07/98 800 800,000
Emmaus General Authority RB Pooled
Loan Series 1989G-9 DN
3.60%** 10/07/98 1,300 1,300,000
Emmaus General Authority RB Pooled
Loan Series 1996 DN
3.60%** 10/07/98 4,500 4,500,000
Erie County IDA RB (American Turned
Products Project) Series 1997 DN
3.88%** 10/07/98 2,000 2,000,000
Erie County IDA RB (Reed
Manufacturing Project) Series 1997 DN
4.15%** 10/07/98 1,500 1,500,000
Geisinger Health System Authority RB
Series 1992B DN
4.15%** 10/01/98 2,000 2,000,000
Geisinger Health System Authority RB
(Penn State Health Systems Project)
Series 1998B DN
4.15%** 10/01/98 5,250 5,250,000
Indiana County IDA RB (Conemaugh
Project) Series 1997A DN
3.65%** 10/07/98 8,310 8,310,000
Lawrence County IDA IDRB (L & N
Metallurgical Products Project)
Series 1996 DN
4.25%** 10/07/98 3,600 3,600,000
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
18
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO (CONTINUED)
PAR
AS OF SEPTEMBER 30, 1998 MATURITY (000) VALUE
-------- -------- ------------
MUNICIPAL BONDS (CONTINUED)
PENNSYLVANIA (CONTINUED)
Lehigh County IDA PCRB (Allegheny
Electric Co-op, Inc. Project)
Series 1984 DN
3.50%** 10/07/98 $ 800 $ 800,000
Lehigh County IDA PCRB (Allegheny
Electric Co-op, Inc. Project)
Series 1985A DN
3.65%** 10/07/98 1,300 1,300,000
Lehigh County Sewer Authority RB
Series 1985B DN
3.50%** 10/07/98 1,770 1,770,000
Lehigh County Water Authority RB
Series 1984 DN
3.50%** 10/07/98 5,145 5,145,000
Littlestown IDA Refunding RB
(Hanover House Industries Project)
Series 1987 DN
3.55%** 10/07/98 8,000 8,000,000
Lycoming County IDA RB (Brodart Co.
Project) Series 1998A DN
3.70%** 10/07/98 1,905 1,905,000
Mercersburg Boro General Purpose
Authority RB (Mercersburg College
Project) Series 1997 DN
3.55%** 10/07/98 9,500 9,500,000
Monroe County IDA RB (United Steel
Enterprises Project) Series 1996A DN
3.85%** 10/07/98 1,990 1,990,000
Montgomery County GO Series 1996 DN
3.60%** 10/07/98 1,100 1,100,000
Montgomery County IDA Manufacturing
Facilities RB (H.P. Cadwallander, Inc.
Project) Series 1995 DN
3.85%** 10/07/98 800 800,000
Montgomery County IDA RB (Apple
Fresh Foods Ltd. Project)
Series 1996 DN
3.80%** 10/07/98 970 970,000
Nazareth Borough Municipal Authority
Sewer RB Series 1998 MB
3.60% 09/15/99 550 550,000
Neshaminy School District GO
Series 1998 TRAN
3.94% 06/30/99 4,833 4,837,339
Northampton County IDA IDRB
(Citizens Utilities Project)
Series 1991 MB
3.60% 11/06/98 2,000 2,000,000
3.55% 11/10/98 2,000 2,000,000
Northampton County IDA IDRB
(Citizens Utilities Project)
Series 1996 DN
3.65%** 10/07/98 8,375 8,375,000
Northeastern Hospital and Education
Authority Health Care RB (Wyoming
Valley Health Care Project)
Series 1994A DN
3.50%** 10/07/98 2,500 2,500,000
Northumberland County IDA RB
(Furman Farms, Inc. Project)
Series 1995A DN
3.80%** 10/07/98 1,225 1,225,000
PAR
MATURITY (000) VALUE
-------- -------- ------------
MUNICIPAL BONDS (CONTINUED)
PENNSYLVANIA (CONTINUED)
Northumberland County IDA Resource
Recovery RB (Foster Wheeler Mt.
Carmel Project) Series 1987A DN
3.65%** 10/07/98 $ 3,355 $ 3,355,000
Northumberland County IDA Resource
Recovery RB (Foster Wheeler Mt.
Carmel Project) Series 1987B DN
3.65%** 10/07/98 590 590,000
Pennsylvania Economic Development
Financing Authority RB (National
Gypsum Co. Project) Series 1997A DN
3.65%** 10/07/98 11,300 11,300,000
Pennsylvania Economic Development
Financing Authority RB (Wendt
Dunnington Co. Project)
Series 1995 DN
4.05%** 10/07/98 995 995,000
Pennsylvania Economic Development
Financing Authority Retirement
Facility RB (Homewood Retirement
Centers Project) Series 1992 DN
4.02%** 10/07/98 6,125 6,125,000
Pennsylvania Energy Development
Authority RB (B&W Ebensburg
Project) Series 1986 DN
3.60%** 10/07/98 1,910 1,910,000
Pennsylvania Energy Development
Authority RB (B&W Ebensburg
Project) Series 1988 DN
3.60%** 10/07/98 2,900 2,900,000
Pennsylvania Energy Development
Authority RB (Piney Creek Project)
Series 1986A DN
3.60%** 10/07/98 14,650 14,650,000
Pennsylvania Energy Development
Authority RB (Piney Creek Project)
Series 1986C DN
3.60%** 10/07/98 3,800 3,800,000
Pennsylvania Higher Education
Assistance Agency Student Loan
RB Series 1988A DN
3.80%** 10/07/98 4,700 4,700,000
Pennsylvania Higher Education
Assistance Agency Student Loan
RB Series 1988C DN
3.80%** 10/07/98 5,900 5,900,000
Pennsylvania Higher Education
Assistance Agency Student Loan
RB Series 1988E DN
3.80%** 10/07/98 100 100,000
Pennsylvania Higher Education
Assistance Agency Student Loan
RB Series 1994A DN
3.80%** 10/07/98 1,150 1,150,000
Pennsylvania Higher Education
Assistance Agency Student Loan
RB Series 1995A DN
3.80%** 10/07/98 3,500 3,500,000
Pennsylvania Higher Educational
Facilities Authority RB (The University
of Pennsylvania Health Services
Project) Series 1998B DN
3.65%** 10/07/98 5,000 5,000,000
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
19
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO (CONTINUED)
PAR
AS OF SEPTEMBER 30, 1998 MATURITY (000) VALUE
-------- -------- ------------
MUNICIPAL BONDS (CONTINUED)
PENNSYLVANIA (CONTINUED)
Pennsylvania Higher Educational
Facilities Authority College and
University RB (Pennsylvania College
of Optometry Project) Series 1996 DN
3.95%** 10/07/98 $ 2,000 $ 2,000,000
Pennsylvania Higher Educational
Facilities Authority Refunding RB
(Carnegie Mellon University Project)
Series 1995B DN
4.15%** 10/07/98 2,100 2,100,000
Philadelphia GO Series 1998A TRAN
4.25% 06/30/99 9,000 9,039,746
Philadelphia IDA RB (Fox Chase
Institute for Cancer Research
Project) Series 1990A DN
4.15%** 10/07/98 600 600,000
Philadelphia IDA RB (GDL Estates Corp.
Project) Series 1998B DN
3.70%** 10/07/98 3,565 3,565,000
Philadelphia IDA RB (The Fox Chase
Cancer Center Project) Series 1997 DN
4.15%** 10/07/98 500 500,000
Philadelphia IDA RB (30th Street Station
Project) Series 1987 DN
3.90%** 10/07/98 6,900 6,900,000
Philadelphia Redevelopment Authority
Multi-Family Housing RB (Franklin
Town Towers Project) Series 1985 DN
3.65%** 10/07/98 5,300 5,300,000
Philadelphia Water and Wastewater RB
Series 1997B DN
3.50%** 10/07/98 2,000 2,000,000
Sayre Health Care Facilities Authority
RB (VHA Capital Financing Project)
Series 1985K DN
3.60%** 10/07/98 1,400 1,400,000
Sayre Health Care Facilities Authority
RB (VHA Capital Financing Project)
Series 1985L DN
3.60%** 10/07/98 1,700 1,700,000
Schuylkill County IDA IDRB (Craftex Mills
Project) Series 1996 DN
3.80%** 10/07/98 2,250 2,250,000
Schuylkill County IDA IDRB (Kaytee
Products, Inc. Project) Series 1995 DN
4.15%** 10/07/98 3,695 3,695,000
Schuylkill County IDA RB (Pine Grove
Landfill Project) Series 1995 DN
4.30%** 10/01/98 2,000 2,000,000
Schuylkill County IDA Resource Recovery
RB (Gilberton Power Project)
Series 1985 DN
3.55%** 10/07/98 1,000 1,000,000
Schuylkill County IDA Resource Recovery
RB (Northeastern Power Co. Project)
Series 1997B DN
4.00%** 10/07/98 2,500 2,500,000
Scranton-Lackawana Health and Welfare
Authority RB (Mercy Health System
Project) Series 1996A DN
3.50%** 10/07/98 3,400 3,400,000
PAR
MATURITY (000) VALUE
-------- -------- ------------
MUNICIPAL BONDS (CONTINUED)
PENNSYLVANIA (CONTINUED)
Venango IDA Resource Recovery RB
(Scrubgrass Project) Series 1990A MB
3.70% 10/09/98 $ 300 $ 300,000
3.45% 11/18/98 300 300,000
Venango IDA Resource Recovery RB
(Scrubgrass Project) Series 1990B MB
3.70% 10/09/98 11,785 11,785,000
3.60% 11/12/98 4,715 4,715,000
3.45% 11/18/98 1,650 1,650,000
3.50% 11/18/98 1,000 1,000,000
Venango IDA Resource Recovery RB
(Scrubgrass Project) Series 1993 MB
3.60% 10/09/98 1,000 1,000,000
3.70% 10/09/98 2,000 2,000,000
3.45% 11/18/98 8,385 8,385,000
Washington County Authority Higher
Education Pooled Equipment Lease
RB Series 1985 DN
3.65%** 10/07/98 1,845 1,845,000
Washington County Authority Municipal
Facilities Lease RB
Series 1985B-1 DN
3.85%** 10/07/98 1,300 1,300,000
Westmoreland County IDA RB (Elizabeth
Carbide Die Co. Project)
Series 1998B DN
4.15%** 10/07/98 1,500 1,500,000
York County General Authority Pooled
Financing RB Series 1996 DN
4.05%** 10/07/98 3,200 3,200,000
York County Hospital Authority RB
(Homewood Retirement Centers of
The United Church of Christ, Inc.
Project) Series 1990 DN
4.02%** 10/07/98 7,900 7,900,000
York County IDA IDRB (AlliedSignal,
Inc. Project) Series 1993 DN
3.80%** 10/07/98 1,000 1,000,000
York County IDA PCRB (PECO Energy
Co. Project) Series 1993A DN
4.05%** 10/07/98 1,900 1,900,000
York County IDA RB (York Sheet Metal,
Inc. Project) Series 1998 DN
3.70%** 10/07/98 3,500 3,500,000
------------
523,067,085
------------
PUERTO RICO--2.1%
Puerto Rico Highway and Transportation
Authority Transportation RB
Series 1998A DN
3.10%** 10/07/98 200 200,000
Puerto Rico Industrial, Medical and
Environmental Pollution Control
Facilities Financing Authority RB
(Ana G. Mendez Foundation Project)
Series 1985 DN
3.60%** 10/07/98 800 800,000
Puerto Rico Industrial, Medical and
Environmental Pollution Control
Facilities Financing Authority RB
(Key Pharmaceuticals Project)
Series 1983 MB
3.75% 12/01/98 6,500 6,499,457
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
20
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO (CONCLUDED)
PAR
AS OF SEPTEMBER 30, 1998 MATURITY (000) VALUE
-------- -------- ------------
MUNICIPAL BONDS (CONTINUED)
PUERTO RICO (CONTINUED)
Puerto Rico Industrial, Medical and
Environmental Pollution Control
Facilities Financing Authority RB
(Reynolds Metals Co. Project)
Series 1983 MB
3.60% 03/01/99 $ 3,850 $ 3,850,000
------------
11,349,457
------------
TOTAL INVESTMENTS IN SECURITIES
(Cost $534,416,542*) 99.9% 534,416,542
OTHER ASSETS IN EXCESS
OF LIABILITIES 0.1% 426,997
----- ------------
NET ASSETS (Equivalent to $1.00
per share based on 350,250,676
Institutional shares, 73,745,969
Service shares and 110,860,331
Investor A shares outstanding) 100.0% $534,843,539
====== ============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER
INSTITUTIONAL, SERVICE AND
INVESTOR A SHARE
($534,843,539 (DIVIDE) 534,856,976) $1.00
=====
- --------------
* Aggregate cost for Federal tax purposes.
** Rates shown are the rates as of September 30, 1998, and maturities shown are
the longer of the next interest readjustment date or the date the principal
owed can be recovered through demand.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
21
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
VIRGINIA MUNICIPAL MONEY MARKET PORTFOLIO
PAR
AS OF SEPTEMBER 30, 1998 MATURITY (000) VALUE
-------- -------- -----------
MUNICIPAL BONDS--99.8%
VIRGINIA--89.6%
Alexandria IDA RB (Super & Curr
Project) Series 1997 DN
3.95%** 10/07/98 $ 2,500 $ 2,500,000
Alexandria IDA RB (Young Men's
Christian Association of Metropolitan
Washington Project) Series 1998 DN
4.12%** 10/07/9 4,400 4,400,000
Alexandria Redevelopment and
Housing Authority Multi-Family
Housing RB (Buckingham Village
Apartments Project) Series 1996B DN
3.75%** 10/07/98 2,000 2,000,000
Amelia County IDA Exempt Facility RB
(Chambers Waste System of Virginia,
Inc. Project) Series 1991 DN
3.70%** 10/07/98 1,110 1,110,000
Brunswick County IDA Exempt Facility
RB (Aegis Waste Solutions, Inc.
Project) Series 1996 DN
4.10%** 10/07/98 1,000 1,000,000
Capital Region Airport Commission RB
(Richmond International Airport
Project) Series 1995C DN
3.55%** 10/07/98 5,865 5,865,000
Charles County IDA Exempt Facility RB
(Chambers Development of Virginia,
Inc. Project) Series 1989 DN
3.70%** 10/07/98 1,100 1,100,000
Charles County IDA Solid Waste
Disposal Facilities RB (Chambers
Development of Virginia, Inc. Project)
Series 1996 DN
3.70%** 10/07/98 1,500 1,500,000
Chesterfield County IDA PCRB (Virginia
Electric & Power Co. Project)
Series 1985 MB
3.65% 11/09/98 500 500,000
Chesterfield County IDA RB (Blueprint
Holding, Inc. Project) Series 1997 DN
4.05%** 10/07/98 2,000 2,000,000
Chesterfield County IDA RB (Lumberg,
Inc. Project) Series 1998 DN
4.10%** 10/07/98 1,000 1,000,000
Fairfax County Economic Development
Authority RB (Foreman Development
Associates Project) Series 1996 DN
4.30%** 10/07/98 2,425 2,425,000
Fairfax County GO Public Improvement
Series 1997B MB
4.50% 12/01/98 3,000 3,003,524
Fairfax County IDA RB (Fairfax Hospital
System Project) Series 1988A DN
3.45%** 10/07/98 1,100 1,100,000
Fairfax County IDA RB (Fairfax
Hospital System Project)
Series 1988C DN
3.45%** 10/07/98 300 300,000
Greensville County IDA IDRB
(Perdue Farms, Inc. Project)
Series 1986 DN
4.15%** 10/01/98 1,600 1,600,000
Halifax County IDA PCRB (Virginia
Electric & Power Co. Project)
Series 1992 MB
3.65% 11/09/98 2,000 2,000,000
PAR
MATURITY (000) VALUE
-------- -------- -----------
MUNICIPAL BONDS (CONTINUED)
VIRGINIA (CONTINUED)
Hampton Redevelopment & Housing
Authority Multi-Family Housing
Refunding RB (Avalon at Hampton
Project) Series 1996A DN
3.50%** 10/07/98 $ 2,400 $ 2,400,000
Hampton Roads Regional Jail Authority
Regional Jail Facility RB
Series 1996B DN
3.45%** 10/07/98 700 700,000
Hopewell IDA Exempt Facility RB
(Hadson Power 13-Hopewell Project)
Series 1990A DN
4.30%** 10/01/98 2,300 2,300,000
King George County IDA Solid Waste
Disposal Facility RB (Garnet of
Virginia, Inc. Project) Series 1996 DN
4.05%** 10/01/98 2,900 2,900,000
Louisa County IDA PCRB (Virginia
Electric & Power Co. Project)
Series 1985 MB
3.60% 11/12/98 100 100,000
Louisa County IDA RB (Pooled
Financing Project) Series 1995 DN
4.00%** 10/07/98 500 500,000
Metropolitan Washington D.C. Airports
Authority, Virginia Passenger Facility
Flexible Term Notes Series 1998 TECP
3.60% 11/12/98 3,000 3,000,000
3.70% 01/20/99 1,500 1,500,000
Norfolk IDA RB (2F Realty Co. Project)
Series 1998 DN
4.10%** 10/07/98 1,500 1,500,000
Norfolk IDA RB (Childrens Hospital of
the King's Daughters Project)
Series 1998 DN
4.00%** 10/07/98 1,000 1,000,000
Peninsula Port Authority of Virginia
Coal Terminal RB (Dominion Terminal
Associates Project) Series 1987D DN
4.15%** 10/01/98 2,400 2,400,000
Peninsula Port Authority of Virginia IDA
RB (AlliedSignal, Inc. Project)
Series 1993 DN
3.80%** 10/07/98 1,000 1,000,000
Peninsula Port Authority of Virginia
Port Facility Refunding RB (CSX
Transportation, Inc. Project)
Series 1992 MB
3.45% 11/06/98 1,000 1,000,000
Peninsula Port Authority of Virginia
Port Facility Refunding RB (Zeigler
Coal Project) Series 1997 DN
4.25%** 10/07/98 6,600 6,600,000
Prince William County IDA PCRB
(Virginia Electric & Power Co. Project)
Series 1986 MB
3.65% 11/09/98 300 300,000
Prince William County IDA RB (Colonial
Investments Facility Project)
Series 1996 DN
4.30%** 10/07/98 3,195 3,195,000
Richmond IDA RB (Halifax Paper
Board Co. Project) Series 1990 DN
3.65%** 10/07/98 486 486,000
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
22
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
VIRGINIA MUNICIPAL MONEY MARKET PORTFOLIO (CONCLUDED)
PAR
AS OF SEPTEMBER 30, 1998 MATURITY (000) VALUE
-------- -------- -----------
MUNICIPAL BONDS (CONTINUED)
VIRGINIA (CONTINUED)
Richmond IDA RB (PM Beef Project)
Series 1997 DN
4.35%** 10/07/98 $ 3,400 $ 3,400,000
Richmond Redevelopment & Housing
Authority RB (Old Manchester Project)
Series 1998 MB
3.60% 03/01/99 760 760,000
Virginia College Building Authority
Educational Facilities RB (University of
Richmond Project) Series 1996 DN
3.60%** 10/07/98 1,000 1,000,000
Virginia Housing Development Authority
Housing RB (AHC Service Corp.;
Woodbury Park Project)
Series 1987A DN
4.25%** 10/07/98 1,070 1,070,000
Virginia Resource Authority RB (Henrico
County Project) Series 1997 DN
4.00%** 10/07/98 2,000 2,000,000
Virginia Small Business Financing
Authority IDRB (Coastal Development
Group Project) Series 1989 DN
3.65%** 10/07/98 195 195,000
Virginia State Public School Authority
Special Obligation Refunding RB
(Henrico County School Financing
Board Project) Series 1990 MB
6.80% 01/15/99 450 462,645
York County IDA PCRB (Virginia Electric
& Power Co. Project) Series 1985 MB
3.65% 11/09/98 200 200,000
-----------
73,372,169
-----------
PUERTO RICO--10.2%
Puerto Rico Government Development
Bank Refunding RB Series 1985 DN
3.12%** 10/07/98 1,500 1,500,000
Puerto Rico Highway and Transportation
Authority Highway RB Series 1993X DN
3.12%** 10/01/98 400 400,000
Puerto Rico Industrial, Medical and
Environmental Pollution Control
Facilities Financing Authority RB
(Ana G. Mendez Foundation Project)
Series 1985 DN
3.60%** 10/07/98 1,800 1,800,000
Puerto Rico Industrial, Medical and
Environmental Pollution Control
Facilities Financing Authority RB
(Key Pharmaceuticals Project)
Series 1983 MB
3.75% 12/01/98 1,500 1,500,000
Puerto Rico Industrial, Medical and
Environmental Pollution Control
Facilities Financing Authority RB
(Reynolds Metals Co. Project)
Series 1983 MB
3.60% 09/01/99 600 600,000
PAR
MATURITY (000) VALUE
-------- -------- ------------
MUNICIPAL BONDS (CONTINUED)
PUERTO RICO (CONTINUED)
Puerto Rico Industrial, Tourist,
Education, Medical, and
Environmental Control Finance
Authority RB (Ana G. Mendez
University System Project)
Series 1998 DN
3.20%** 10/07/98 $2,500 $ 2,500,000
-----------
8,300,000
-----------
TOTAL INVESTMENTS IN SECURITIES
(Cost $81,672,169*) 99.8% 81,672,169
OTHER ASSETS IN EXCESS
OF LIABILITIES 0.2% 187,767
------ -----------
NET ASSETS (Equivalent to $1.00
per share based on 77,812,659
Institutional shares, 3,404,920
Service shares and 642,949
Investor A shares outstanding) 100.0% $81,859,936
====== ===========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER
INSTITUTIONAL, SERVICE AND
INVESTOR A SHARE
($81,859,936 (DIVIDE) 81,860,528) $1.00
=====
- ----------------
* Aggregate cost for Federal tax purposes.
** Rates shown are the rates as of September 30, 1998, and maturities shown are
the longer of the next interest readjustment date or the date the principal
owed can be recovered through demand.
INVESTMENT ABBREVIATIONS
BAN .................................Bond Anticipation Note
DN .............................................Demand Note
GO ......................................General Obligation
IDA .......................Industrial Development Authority
IDRB ...................Industrial Development Revenue Bond
MB ..........................................Municipal Bond
PCRB ........................Pollution Control Revenue Bond
RB ............................................Revenue Bond
TAN ..................................Tax Anticipation Note
TECP ...........................Tax-Exempt Commercial Paper
TRAN .....................Tax and Revenue Anticipation Note
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
23
<PAGE>
BLACKROCK FUNDS
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
U.S. TREASURY MUNICIPAL
MONEY MARKET MONEY MARKET MONEY MARKET
FOR THE YEAR ENDED SEPTEMBER 30, 1998 PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------- ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest ....................................................... $167,468,893 $55,958,686 $17,433,217
------------ ----------- -----------
EXPENSES:
Investment advisory fee ........................................ 11,986,022 4,505,451 2,149,311
Administration fee ............................................. 4,384,531 1,701,520 857,697
Custodian fee .................................................. 434,454 166,091 93,678
Transfer agent fee ............................................. 860,661 353,241 171,190
Shareholder servicing fees ..................................... 3,313,099 1,296,279 557,229
Shareholder processing fees .................................... 3,004,077 1,232,054 550,768
Distribution fees .............................................. 5,602 -- 220
Legal and audit ................................................ 250,178 74,288 35,630
Printing ....................................................... 168,421 68,281 30,296
Registration fees and expenses ................................. 75,218 45,989 54,952
Organization ................................................... -- -- --
Trustees' fees and officer's salary ............................ 46,611 18,622 10,765
Other .......................................................... 129,925 48,479 21,582
------------ ----------- -----------
24,658,799 9,510,295 4,533,318
Less fees voluntarily waived and
expenses reimbursed ......................................... (6,990,625) (3,106,800) (1,560,040)
------------ ----------- -----------
Total expenses .............................................. 17,668,174 6,403,495 2,973,278
------------ ----------- -----------
Net investment income .......................................... 149,800,719 49,555,191 14,459,939
------------ ----------- -----------
Net realized gain (loss)
on investments .............................................. 88,296 159,097 (3,318)
------------ ----------- -----------
Change in unrealized market discount ........................... -- -- 153
------------ ----------- -----------
Net increase in net assets resulting from
operations .................................................. $149,889,015 $49,714,288 $14,456,774
============ =========== ===========
</TABLE>
<TABLE>
<CAPTION>
NEW JERSEY NORTH CAROLINA OHIO PENNSYLVANIA VIRGINIA
MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL
MONEY MARKET MONEY MARKET MONEY MARKET MONEY MARKET MONEY MARKET
FOR THE YEAR ENDED SEPTEMBER 30, 1998 PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ -------------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest ..................................... $4,945,995 $6,867,122 $4,776,409 $21,835,079 $2,630,846
---------- ---------- ---------- ----------- ----------
EXPENSES:
Investment advisory fee ...................... 626,767 847,656 579,503 2,730,691 322,971
Administration fee ........................... 250,707 339,062 231,801 1,070,910 129,188
Custodian fee ................................ 31,567 40,880 30,394 108,070 21,958
Transfer agent fee ........................... 60,873 77,554 56,623 200,619 33,742
Shareholder servicing fees ................... 220,576 37,307 150,511 630,882 11,153
Shareholder processing fees .................. 214,018 37,050 134,176 597,382 11,153
Distribution fees ............................ -- -- -- -- --
Legal and audit .............................. 17,088 15,637 11,036 52,492 4,524
Printing ..................................... 13,417 13,452 8,527 48,691 4,314
Registration fees and expenses ............... 30,959 30,355 13,537 45,294 20,256
Organization ................................. -- 3,355 3,172 6,936 11,828
Trustees' fees and officer's salary .......... 6,621 8,665 5,653 10,814 6,612
Other ........................................ 9,332 12,611 7,809 26,750 3,716
---------- ---------- ---------- ----------- ----------
1,481,925 1,463,584 1,232,742 5,529,531 581,415
Less fees voluntarily waived and
expenses reimbursed ....................... (514,629) (829,685) (461,480) (1,955,651) (346,299)
---------- ---------- ---------- ----------- ----------
Total expenses ............................ 967,296 633,899 771,262 3,573,880 235,116
---------- ---------- ---------- ----------- ----------
Net investment income ........................ 3,978,699 6,233,223 4,005,147 18,261,199 2,395,730
---------- ---------- ---------- ----------- ----------
Net realized gain (loss)
on investments ............................ 462 -- (16,540) (1,050) (402)
---------- ---------- ---------- ----------- ----------
Change in unrealized market discount ......... -- 1,458 -- 2,581 (20)
---------- ---------- ---------- ----------- ----------
Net increase in net assets resulting from
operations ................................ $3,979,161 $6,234,681 $3,988,607 $18,262,730 $2,395,308
========== ========== ========== =========== ==========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
24 & 25
<PAGE>
BLACKROCK FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
U.S. TREASURY
MONEY MARKET PORTFOLIO MONEY MARKET PORTFOLIO
------------------------------- -------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
9/30/98 9/30/97 9/30/98 9/30/97
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ........................ $ 149,800,719 $ 135,537,515 $ 49,555,191 $ 51,500,503
Net gain (loss) on investments ............... 88,296 (13,172) 159,097 121,380
-------------- -------------- -------------- --------------
Net increase in net assets resulting
from operations .............................. 149,889,015 135,524,343 49,714,288 51,621,883
-------------- -------------- -------------- --------------
Distributions to shareholders from:
Net investment income:
Institutional Shares ......................... (49,337,129) (44,007,087) (9,436,685) (8,997,921)
Service Shares ............................... (85,254,049) (80,683,555) (37,061,973) (41,357,884)
Investor A Shares ............................ (15,177,945) (10,833,065) (3,056,533) (1,144,698)
Investor B Shares ............................ (21,163) (7,259) -- --
Investor C Shares ............................ (10,433) (6,549) -- --
-------------- -------------- -------------- --------------
Total distribution from net
investment income .......................... (149,800,719) (135,537,515) (49,555,191) (51,500,503)
-------------- -------------- -------------- --------------
Distributions to shareholder from:
Net realized gains:
Institutional Shares ......................... -- (9,442) -- --
Service Shares ............................... -- (21,525) -- --
Investor A Shares ............................ -- (2,469) -- --
Investor B Shares ............................ -- -- -- --
Investor C Shares ............................ -- (12) -- --
-------------- -------------- -------------- --------------
Total distribution from net
realized gains ............................. -- (33,448) -- --
-------------- -------------- -------------- --------------
Total distributions to shareholders .......... (149,800,719) (135,570,963) (49,555,191) (51,500,503)
-------------- -------------- -------------- --------------
Capital share transactions ....................... 289,478,727 420,175,271 (76,171,119) (91,771,684)
-------------- -------------- -------------- --------------
Total increase (decrease) in
net assets ................................. 289,567,023 420,128,651 (76,012,022) (91,650,304)
Net assets:
Beginning of period ............................ 2,745,160,041 2,325,031,390 1,041,627,562 1,133,277,866
-------------- -------------- -------------- --------------
End of period .................................. $3,034,727,064 $2,745,160,041 $ 965,615,540 $1,041,627,562
============== ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
MUNICIPAL NEW JERSEY MUNICIPAL NORTH CAROLINA MUNICIPAL
MONEY MARKET PORTFOLIO MONEY MARKET PORTFOLIO MONEY MARKET PORTFOLIO
--------------------------- --------------------------- ---------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
9/30/98 9/30/97 9/30/98 9/30/97 9/30/98 9/30/97
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ................ $ 14,459,939 $ 11,926,337 $ 3,978,699 $ 3,547,293 $ 6,233,223 $ 5,133,948
Net gain (loss) on investments ....... (3,165) (1,471) 462 (1,750) 1,458 --
------------ ------------ ------------ ------------ ------------ ------------
Net increase in net assets resulting
from operations ...................... 14,456,774 11,924,866 3,979,161 3,545,543 6,234,681 5,133,948
------------ ------------ ------------ ------------ ------------ ------------
Distributions to shareholders from:
Net investment income:
Institutional Shares ................. (3,592,924) (1,739,614) (446,371) (145,925) (5,484,220) (4,808,688)
Service Shares ....................... (10,687,842) (10,075,399) (2,668,058) (2,765,162) (741,593) (319,534)
Investor A Shares .................... (178,559) (111,309) (864,269) (635,927) (7,410) (5,726)
Investor B Shares .................... -- -- (1) (279) -- --
Investor C Shares .................... (614) (15) -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
Total distribution from net
investment income .................. (14,459,939) (11,926,337) (3,978,699) (3,547,293) (6,233,223) (5,133,948)
------------ ------------ ------------ ------------ ------------ ------------
Distributions to shareholder from:
Net realized gains:
Institutional Shares ................. -- -- -- -- -- --
Service Shares ....................... -- -- -- -- -- --
Investor A Shares .................... -- -- -- -- -- --
Investor B Shares .................... -- -- -- -- -- --
Investor C Shares .................... -- -- -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
Total distribution from net
realized gains ..................... -- -- -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
Total distributions to shareholders .. (14,459,939) (11,926,337) (3,978,699) (3,547,293) (6,233,223) (5,133,948)
------------ ------------ ------------ ------------ ------------ ------------
Capital share transactions ............... 1,286,625 87,735,153 17,499,690 44,352,117 29,868,127 51,994,775
------------ ------------ ------------ ------------ ------------ ------------
Total increase (decrease) in
net assets ......................... 1,283,460 87,733,682 17,500,152 44,350,367 29,869,585 51,994,775
Net assets:
Beginning of period .................... 395,137,184 307,403,502 130,417,412 86,067,045 171,665,621 119,670,846
------------ ------------ ------------ ------------ ------------ ------------
End of period .......................... $396,420,644 $395,137,184 $147,917,564 $130,417,412 $201,535,206 $171,665,621
============ ============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
OHIO MUNICIPAL PENNSYLVANIA MUNICIPAL VIRGINIA MUNICIPAL
MONEY MARKET PORTFOLIO MONEY MARKET PORTFOLIO MONEY MARKET PORTFOLIO
-------------------------- --------------------------- -------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
9/30/98 9/30/97 9/30/98 9/30/97 9/30/98 9/30/97
------------ ----------- ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ................ $ 4,005,147 $ 3,560,194 $ 18,261,199 $ 16,711,829 $ 2,395,730 $ 2,065,463
Net gain (loss) on investments ....... (16,540) (4,223) 1,531 (3,354) (422) --
------------ ----------- ------------ ------------ ----------- -----------
Net increase in net assets resulting
from operations ...................... 3,988,607 3,555,971 18,262,730 16,708,475 2,395,308 2,065,463
------------ ----------- ------------ ------------ ----------- -----------
Distributions to shareholders from:
Net investment income:
Institutional Shares ................. (1,363,131) (1,473,315) (8,341,719) (6,828,405) (2,187,105) (1,730,341)
Service Shares ....................... (2,124,586) (1,760,658) (6,846,156) (7,261,869) (182,287) (323,693)
Investor A Shares .................... (517,430) (326,221) (3,073,324) (2,621,555) (26,338) (11,429)
Investor B Shares .................... -- -- -- -- -- --
Investor C Shares .................... -- -- -- -- -- --
------------ ----------- ------------ ------------ ----------- -----------
Total distribution from net
investment income .................. (4,005,147) (3,560,194) (18,261,199) (16,711,829) (2,395,730) (2,065,463)
------------ ----------- ------------ ------------ ----------- -----------
Distributions to shareholder from:
Net realized gains:
Institutional Shares ................. -- -- -- -- -- --
Service Shares ....................... -- -- -- -- -- --
Investor A Shares .................... -- -- -- -- -- --
Investor B Shares .................... -- -- -- -- -- --
Investor C Shares .................... -- -- -- -- -- --
------------ ----------- ------------ ------------ ----------- -----------
Total distribution from net
realized gains ..................... -- -- -- -- -- --
------------ ----------- ------------ ------------ ----------- -----------
Total distributions to shareholders .. (4,005,147) (3,560,194) (18,261,199) (16,711,829) (2,395,730) (2,065,463)
------------ ----------- ------------ ------------ ----------- -----------
Capital share transactions ............... 24,836,540 13,637,975 (27,011,532) 75,413,464 12,686,340 15,653,396
------------ ----------- ------------ ------------ ----------- -----------
Total increase (decrease) in
net assets ......................... 24,820,000 13,633,752 (27,010,001) 75,410,110 12,685,918 15,653,396
Net assets:
Beginning of period .................... 97,774,871 84,141,119 561,853,540 486,443,430 69,174,018 53,520,622
------------ ----------- ------------ ------------ ----------- -----------
End of period .......................... $122,594,871 $97,774,871 $534,843,539 $561,853,540 $81,859,936 $69,174,018
============ =========== ============ ============ =========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26 & 27
<PAGE>
BLACKROCK FUNDS
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
NET DISTRIBUTIONS NET NET
ASSET DISTRIBUTIONS FROM NET ASSET ASSETS
VALUE NET FROM NET REALIZED VALUE END OF
BEGINNING INVESTMENT INVESTMENT CAPITAL END OF TOTAL PERIOD
FOR THE PERIOD ENDED OF PERIOD INCOME INCOME GAINS PERIOD RETURN (000)
===============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------
MONEY MARKET PORTFOLIO
- ----------------------
INSTITUTIONAL CLASS
9/30/98 $1.00 $0.0532 $(0.0532) $0.00 $1.00 5.46% $1,858,165
9/30/97 1.00 0.0529 (0.0529) 0.00 1.00 5.42 878,566
9/30/96 1.00 0.0533 (0.0533) 0.00 1.00 5.46 587,730
9/30/95 1.00 0.0564 (0.0564) 0.00 1.00 5.79 654,157
9/30/94 1.00 0.0359 (0.0359) 0.00 1.00 3.64 502,972
SERVICE CLASS
9/30/98 $1.00 $0.0502 $(0.0502) $0.00 $1.00 5.14% $ 808,962
9/30/97 1.00 0.0499 (0.0499) 0.00 1.00 5.11 1,610,315
9/30/96 1.00 0.0503 (0.0503) 0.00 1.00 5.15 1,575,064
9/30/95 1.00 0.0534 (0.0534) 0.00 1.00 5.48 1,194,017
9/30/94 1.00 0.0333 (0.0333) 0.00 1.00 3.37 575,948
INVESTOR A CLASS
9/30/98 $1.00 $0.0495 $(0.0495) $0.00 $1.00 5.06% $ 365,458
9/30/97 1.00 0.0491 (0.0491) 0.00 1.00 5.02 256,039
9/30/96 1.00 0.0485 (0.0485) 0.00 1.00 4.96 162,099
9/30/95 1.00 0.0511 (0.0511) 0.00 1.00 5.23 10,185
9/30/94 1.00 0.0308 (0.0308) 0.00 1.00 3.12 4,342
INVESTOR B CLASS
9/30/98 $1.00 $0.0426 $(0.0426) $0.00 $1.00 4.34% $ 1,805
9/30/97 1.00 0.0424 (0.0424) 0.00 1.00 4.32 238
9/30/96 1.00 0.0426 (0.0426) 0.00 1.00 4.34 138
9/15/95 1 through 9/30/95 1.00 0.0020 (0.0020) 0.00 1.00 0.20 27
INVESTOR C CLASS
9/30/98 $1.00 $0.0426 $(0.0426) $0.00 $1.00 4.34% $ 337
10/17/96 1 through 9/30/97 1.00 0.0390 (0.0390) 0.00 1.00 3.97 2
- ------------------------------------
U.S. TREASURY MONEY MARKET PORTFOLIO
- ------------------------------------
Institutional Class
9/30/98 $1.00 $0.0519 $(0.0519) $0.00 $1.00 5.32% $ 297,161
9/30/97 1.00 0.0515 (0.0515) 0.00 1.00 5.27 162,052
9/30/96 1.00 0.0519 (0.0519) 0.00 1.00 5.32 167,193
9/30/95 1.00 0.0555 (0.0555) 0.00 1.00 5.69 120,540
9/30/94 1.00 0.0357 (0.0357) 0.00 1.00 3.63 37,519
SERVICE CLASS
9/30/98 $1.00 $0.0489 $(0.0489) $0.00 $1.00 5.00% $ 596,644
9/30/97 1.00 0.0485 (0.0485) 0.00 1.00 4.93 836,151
9/30/96 1.00 0.0489 (0.0489) 0.00 1.00 5.00 955,454
9/30/95 1.00 0.0525 (0.0525) 0.00 1.00 5.38 550,959
9/30/94 1.00 0.0331 (0.0331) 0.00 1.00 3.36 372,883
INVESTOR A CLASS
9/30/98 $1.00 $0.0476 $(0.0476) $0.00 $1.00 4.87% $ 71,811
9/30/97 1.00 0.0468 (0.0468) 0.00 1.00 4.75 43,425
9/30/96 1.00 0.0467 (0.0467) 0.00 1.00 4.77 10,630
9/30/95 1.00 0.0501 (0.0501) 0.00 1.00 5.13 1,285
9/30/94 1.00 0.0309 (0.0309) 0.00 1.00 3.11 1,656
</TABLE>
<TABLE>
<CAPTION>
RATIO OF NET
RATIO OF EXPENSES INVESTMENT INCOME
RATIO OF TO AVERAGE RATIO OF NET TO AVERAGE
EXPENSES TO NET ASSETS INVESTMENT INCOME NET ASSETS
AVERAGE NET (EXCLUDING TO AVERAGE NET (EXCLUDING
FOR THE PERIOD ENDED ASSETS WAIVERS) ASSETS WAIVERS)
=======================================================================================================
<S> <C> <C> <C> <C>
- ----------------------
MONEY MARKET PORTFOLIO
- ----------------------
INSTITUTIONAL CLASS
9/30/98 0.39% 0.63% 5.32% 5.08%
9/30/97 0.32 0.65 5.30 4.97
9/30/96 0.29 0.65 5.34 4.98
9/30/95 0.27 0.64 5.66 5.28
9/30/94 0.25 0.66 3.64 3.23
SERVICE CLASS
9/30/98 0.69% 0.93% 5.03% 4.79%
9/30/97 0.61 0.94 4.99 4.66
9/30/96 0.59 0.95 5.00 4.64
9/30/95 0.57 0.94 5.35 4.98
9/30/94 0.51 0.92 3.35 2.95
INVESTOR A CLASS
9/30/98 0.77% 1.01% 4.94% 4.70%
9/30/97 0.70 1.03 4.92 4.59
9/30/96 0.74 1.10 4.81 4.45
9/30/95 0.81 1.19 5.15 4.78
9/30/94 0.75 1.16 3.39 2.98
INVESTOR B CLASS
9/30/98 1.48% 1.72% 4.22% 3.98%
9/30/97 1.39 1.72 4.26 3.93
9/30/96 1.36 1.73 4.18 3.82
9/15/95 1 through 9/30/95 1.34 2 1.72 2 4.58 2 4.20 2
INVESTOR C CLASS
9/30/98 1.49% 1.73% 4.22% 3.98%
10/17/96 1 through 9/30/97 1.50 2 1.83 2 4.01 2 3.68 2
- ------------------------------------
U.S. TREASURY MONEY MARKET PORTFOLIO
- ------------------------------------
Institutional Class
9/30/98 0.38% 0.69% 5.19% 4.88%
9/30/97 0.31 0.69 5.15 4.77
9/30/96 0.29 0.69 5.18 4.78
9/30/95 0.27 0.69 5.64 5.22
9/30/94 0.25 0.70 3.69 3.24
SERVICE CLASS
9/30/98 0.68% 0.99% 4.90% 4.59%
9/30/97 0.61 0.99 4.85 4.47
9/30/96 0.59 0.99 4.84 4.45
9/30/95 0.57 0.98 5.27 4.85
9/30/94 0.52 0.97 3.42 2.97
INVESTOR A CLASS
9/30/98 0.81% 1.12% 5.57% 5.26%
9/30/97 0.78 1.16 4.70 4.32
9/30/96 0.79 1.19 4.60 4.20
9/30/95 0.80 1.21 5.03 4.62
9/30/94 0.75 1.20 3.60 3.14
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
28 & 29
<PAGE>
BLACKROCK FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
NET DISTRIBUTIONS NET NET
ASSET DISTRIBUTIONS FROM NET ASSET ASSETS
VALUE NET FROM NET REALIZED VALUE END OF
BEGINNING INVESTMENT INVESTMENT CAPITAL END OF TOTAL PERIOD
FOR THE PERIOD ENDED OF PERIOD INCOME INCOME GAINS PERIOD RETURN (000)
===============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------
MUNICIPAL MONEY MARKET PORTFOLIO
- --------------------------------
INSTITUTIONAL CLASS
9/30/98 $1.00 $0.0327 $(0.0327) $0.00 $1.00 3.32% $246,733
9/30/97 1.00 0.0337 (0.0337) 0.00 1.00 3.42 58,747
9/30/96 1.00 0.0339 (0.0339) 0.00 1.00 3.41 43,936
9/30/95 1.00 0.0364 (0.0364) 0.00 1.00 3.70 53,778
9/30/94 1.00 0.0246 (0.0246) 0.00 1.00 2.48 30,608
SERVICE CLASS
9/30/98 $1.00 $0.0297 $(0.0297) $0.00 $1.00 3.01% $140,155
9/30/97 1.00 0.0307 (0.0307) 0.00 1.00 3.11 327,910
9/30/96 1.00 0.0309 (0.0309) 0.00 1.00 3.10 261,617
9/30/95 1.00 0.0334 (0.0334) 0.00 1.00 3.39 265,629
9/30/94 1.00 0.0219 (0.0219) 0.00 1.00 2.20 133,358
INVESTOR A CLASS
9/30/98 $1.00 $0.0280 $(0.0280) $0.00 $1.00 2.83% $ 9,227
9/30/97 1.00 0.0290 (0.0290) 0.00 1.00 2.93 8,468
9/30/96 1.00 0.0288 (0.0288) 0.00 1.00 2.88 1,851
9/30/95 1.00 0.0311 (0.0311) 0.00 1.00 3.15 20
9/30/94 1.00 0.0193 (0.0193) 0.00 1.00 1.95 41
INVESTOR C CLASS
9/30/98 $1.00 $0.0133 $(0.0133) $0.00 $1.00 1.34% $ 306
9/12/97 1 through 9/30/97 1.00 0.0013 (0.0013) 0.00 1.00 0.13 12
- -------------------------------------------
NEW JERSEY MUNICIPAL MONEY MARKET PORTFOLIO
- -------------------------------------------
INSTITUTIONAL CLASS
9/30/98 $1.00 $0.0319 $(0.0319) $0.00 $1.00 3.24% $ 68,771
9/30/97 1.00 0.0323 (0.0323) 0.00 1.00 3.28 7,432
2/1/96 through 9/30/96 1.00 0.0207 (0.0207) 0.00 1.00 2.09 614
1/16/96 1 through 1/31/96 1.00 0.0000 (0.0000) 0.00 1.00 3.07 4,195
SERVICE CLASS
9/30/98 $1.00 $0.0289 $(0.0289) $0.00 $1.00 2.93% $ 35,152
9/30/97 1.00 0.0293 (0.0293) 0.00 1.00 2.96 101,294
2/1/96 through 9/30/96 1.00 0.0187 (0.0187) 0.00 1.00 1.89 68,139
3/1/95 through 1/31/96 1.00 0.0300 (0.0300) 0.00 1.00 3.23 56,958
2/28/95 1.00 0.0200 (0.0200) 0.00 1.00 2.46 43,610
2/28/94 1.00 0.0200 (0.0200) 0.00 1.00 1.79 39,408
INVESTOR A CLASS
9/30/98 $1.00 $0.0265 $(0.0265) $0.00 $1.00 2.68% $ 43,995
9/30/97 1.00 0.0268 (0.0268) 0.00 1.00 2.71 21,691
2/1/96 through 9/30/96 1.00 0.0175 (0.0175) 0.00 1.00 1.76 17,314
1/16/96 1 through 1/31/96 1.00 0.0000 (0.0000) 0.00 1.00 2.66 21,662
INVESTOR B CLASS
5/13/98 5 through 9/30/98 $1.00 $0.0079 $(0.0079) $0.00 $1.00 0.79% $ --
3/20/97 1 through 9/30/97 $1.00 $0.0077 $(0.0077) $0.00 $1.00 0.77% -- 4
</TABLE>
<TABLE>
<CAPTION>
RATIO OF NET
RATIO OF EXPENSES INVESTMENT INCOME
RATIO OF TO AVERAGE RATIO OF NET TO AVERAGE
EXPENSES TO NET ASSETS INVESTMENT INCOME NET ASSETS
AVERAGE NET (EXCLUDING TO AVERAGE NET (EXCLUDING
FOR THE PERIOD ENDED ASSETS WAIVERS) ASSETS WAIVERS)
=====================================================================================================
<S> <C> <C> <C> <C>
- --------------------------------
MUNICIPAL MONEY MARKET PORTFOLIO
- --------------------------------
INSTITUTIONAL CLASS
9/30/98 0.39% 0.71% 3.25% 2.93%
9/30/97 0.31 0.72 3.36 2.95
9/30/96 0.29 0.73 3.37 2.93
9/30/95 0.27 0.71 3.64 3.20
9/30/94 0.25 0.73 2.48 2.01
SERVICE CLASS
9/30/98 0.69% 1.01% 2.96% 2.64%
9/30/97 0.61 1.02 3.06 2.65
9/30/96 0.59 1.03 3.08 2.64
9/30/95 0.57 1.01 3.35 2.91
9/30/94 0.51 0.99 2.18 1.71
INVESTOR A CLASS
9/30/98 0.86% 1.18% 2.80% 2.48%
9/30/97 0.79 1.20 2.92 2.51
9/30/96 0.77 1.21 2.80 2.36
9/30/95 0.79 1.23 3.08 2.64
9/30/94 0.75 1.23 2.05 1.58
INVESTOR C CLASS
9/30/98 1.47% 1.79% 2.08% 1.76%
9/12/97 1 through 9/30/97 1.32 2 1.73 2 2.63 2 2.22 2
- -------------------------------------------
NEW JERSEY MUNICIPAL MONEY MARKET PORTFOLIO
- -------------------------------------------
INSTITUTIONAL CLASS
9/30/98 0.38% 0.75% 3.17% 2.80%
9/30/97 0.32 0.76 3.27 2.83
2/1/96 through 9/30/96 0.29 2 0.78 2 3.07 2 2.58 2
1/16/96 1 through 1/31/96 0.29 2 0.78 2 3.07 2 2.58 2
SERVICE CLASS
9/30/98 0.67% 1.04% 2.89% 2.52%
9/30/97 0.61 1.05 2.93 2.49
2/1/96 through 9/30/96 0.59 2 1.08 2 2.82 2 2.33 2
3/1/95 through 1/31/96 0.70 2 0.74 2 3.17 2 3.13 2
2/28/95 0.63 0.70 2.46 2.39
2/28/94 0.65 0.72 1.77 1.70
INVESTOR A CLASS
9/30/98 0.91% 1.28% 2.64% 2.27%
9/30/97 0.86 1.30 2.68 2.24
2/1/96 through 9/30/96 0.78 2 1.27 2 2.63 2 2.15 2
1/16/96 1 through 1/31/96 0.71 2 1.20 2 2.66 2 2.17 2
INVESTOR B CLASS
5/13/98 5 through 9/30/98 1.44% 1.81% 2.12% 1.75%
3/20/97 1 through 9/30/97 1.37 2 1.81 2 2.35 2 1.91 2
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
30 & 31
<PAGE>
BLACKROCK FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
NET DISTRIBUTIONS NET NET
ASSET DISTRIBUTIONS FROM NET ASSET ASSETS
VALUE NET FROM NET REALIZED VALUE END OF
BEGINNING INVESTMENT INVESTMENT CAPITAL END OF TOTAL PERIOD
FOR THE PERIOD ENDED OF PERIOD INCOME INCOME GAINS PERIOD RETURN (000)
===============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------
NORTH CAROLINA MUNICIPAL MONEY MARKET PORTFOLIO
- -----------------------------------------------
INSTITUTIONAL CLASS
9/30/98 $1.00 $0.0335 $(0.0335) $0.00 $1.00 3.40% $181,984
9/30/97 1.00 0.0334 (0.0334) 0.00 1.00 3.39 147,658
9/30/96 1.00 0.0338 (0.0338) 0.00 1.00 3.43 112,097
9/30/95 1.00 0.0359 (0.0359) 0.00 1.00 3.65 76,673
9/30/94 1.00 0.0249 (0.0249) 0.00 1.00 2.52 69,673
SERVICE CLASS
9/30/98 $1.00 $0.0305 $(0.0305) $0.00 $1.00 3.09% $ 19,306
9/30/97 1.00 0.0304 (0.0304) 0.00 1.00 3.08 23,704
9/30/96 1.00 0.0308 (0.0308) 0.00 1.00 3.12 7,463
11/1/94 5 through 9/30/95 1.00 0.0305 (0.0305) 0.00 1.00 3.11 1,841
4/29/94 1 through 9/30/94 1.00 0.0099 (0.0099) 0.00 1.00 0.99 -- 3
INVESTOR A CLASS
9/30/98 $1.00 $0.0288 $(0.0288) $0.00 $1.00 2.92% $ 245
9/30/97 1.00 0.0287 (0.0287) 0.00 1.00 2.91 304
9/30/96 1.00 0.0286 (0.0286) 0.00 1.00 2.90 111
2/14/95 1 through 9/30/95 1.00 0.0194 (0.0194) 0.00 1.00 1.95 53
- -------------------------------------------
OHIO MUNICIPAL MONEY MONEY MARKET PORTFOLIO
- -------------------------------------------
INSTITUTIONAL CLASS
9/30/98 $1.00 $0.0334 $(0.0334) $0.00 $1.00 3.39% $ 48,614
9/30/97 1.00 0.0340 (0.0340) 0.00 1.00 3.45 23,739
9/30/96 1.00 0.0346 (0.0346) 0.00 1.00 3.52 32,944
9/30/95 1.00 0.0363 (0.0363) 0.00 1.00 3.69 23,679
9/30/94 1.00 0.0252 (0.0252) 0.00 1.00 2.55 10,521
SERVICE CLASS
9/30/98 $1.00 $0.0304 $(0.0304) $0.00 $1.00 3.08% $ 58,077
9/30/97 1.00 0.0310 (0.0310) 0.00 1.00 3.15 58,160
9/30/96 1.00 0.0316 (0.0316) 0.00 1.00 3.21 45,525
9/30/95 1.00 0.0333 (0.0333) 0.00 1.00 3.38 49,857
9/30/94 1.00 0.0225 (0.0225) 0.00 1.00 2.27 44,066
INVESTOR A CLASS
9/30/98 $1.00 $0.0286 $(0.0286) $0.00 $1.00 2.90% $ 15,904
9/30/97 1.00 0.0292 (0.0292) 0.00 1.00 2.96 15,876
9/30/96 1.00 0.0293 (0.0293) 0.00 1.00 2.98 5,672
9/30/95 1.00 0.0310 (0.0310) 0.00 1.00 3.15 75
10/5/93 1 through 9/30/94 1.00 0.0199 (0.0199) 0.00 1.00 2.01 28
- ---------------------------------------------
PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO
- ---------------------------------------------
INSTITUTIONAL CLASS
9/30/98 $1.00 $0.0322 $(0.0322) $0.00 $1.00 3.27% $350,249
9/30/97 1.00 0.0332 (0.0332) 0.00 1.00 3.37 229,164
9/30/96 1.00 0.0334 (0.0334) 0.00 1.00 3.40 198,822
9/30/95 1.00 0.0355 (0.0355) 0.00 1.00 3.61 233,413
9/30/94 1.00 0.0247 (0.0247) 0.00 1.00 2.49 158,102
</TABLE>
<TABLE>
<CAPTION>
RATIO OF NET
RATIO OF EXPENSES INVESTMENT INCOME
RATIO OF TO AVERAGE RATIO OF NET TO AVERAGE
EXPENSES TO NET ASSETS INVESTMENT INCOME NET ASSETS
AVERAGE NET (EXCLUDING TO AVERAGE NET (EXCLUDING
FOR THE PERIOD ENDED ASSETS WAIVERS) ASSETS WAIVERS)
=========================================================================================================
<S> <C> <C> <C> <C>
- -----------------------------------------------
NORTH CAROLINA MUNICIPAL MONEY MARKET PORTFOLIO
- -----------------------------------------------
INSTITUTIONAL CLASS
9/30/98 0.29% 0.74% 3.35% 2.90%
9/30/97 0.28 0.73 3.34 2.89
9/30/96 0.25 0.74 3.33 2.84
9/30/95 0.21 0.74 3.61 3.08
9/30/94 0.10 0.76 2.53 1.87
SERVICE CLASS
9/30/98 0.60% 1.05% 3.04% 2.59%
9/30/97 0.60 1.05 3.04 2.59
9/30/96 0.55 1.04 3.06 2.56
11/1/94 5 through 9/30/95 0.55 2 1.08 2 3.34 2 2.81 2
4/29/94 1 through 9/30/94 0.36 2 1.02 2 2.54 2 1.87 2
INVESTOR A CLASS
9/30/98 0.76% 1.21% 2.88% 2.43%
9/30/97 0.76 1.21 2.88 2.43
9/30/96 0.76 1.25 2.83 2.34
2/14/95 1 through 9/30/95 0.83 2 1.36 2 3.05 2 2.52 2
- -------------------------------------------
OHIO MUNICIPAL MONEY MONEY MARKET PORTFOLIO
- -------------------------------------------
INSTITUTIONAL CLASS
9/30/98 0.36% 0.72% 3.36% 3.00%
9/30/97 0.30 0.73 3.37 2.94
9/30/96 0.29 0.75 3.47 3.01
9/30/95 0.27 0.73 3.66 3.20
9/30/94 0.13 0.77 2.56 1.93
SERVICE CLASS
9/30/98 0.67% 1.03% 3.04% 2.68%
9/30/97 0.61 1.03 3.10 2.68
9/30/96 0.59 1.05 3.17 2.71
9/30/95 0.57 1.03 3.35 2.89
9/30/94 0.40 1.04 2.29 1.65
INVESTOR A CLASS
9/30/98 0.85% 1.21% 2.86% 2.50%
9/30/97 0.79 1.21 2.92 2.50
9/30/96 0.79 1.25 2.88 2.42
9/30/95 0.80 1.26 3.02 2.56
10/5/93 1 through 9/30/94 0.62 2 1.26 2 1.94 2 1.30 2
- ---------------------------------------------
PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO
- ---------------------------------------------
INSTITUTIONAL CLASS
9/30/98 0.39% 0.71% 3.19% 2.87%
9/30/97 0.30 0.70 3.31 2.91
9/30/96 0.29 0.71 3.34 2.92
9/30/95 0.26 0.68 3.54 3.12
9/30/94 0.16 0.73 2.64 2.07
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
32 & 33
<PAGE>
BLACKROCK FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
NET DISTRIBUTIONS NET NET
ASSET DISTRIBUTIONS FROM NET ASSET ASSETS
VALUE NET FROM NET REALIZED VALUE END OF
BEGINNING INVESTMENT INVESTMENT CAPITAL END OF TOTAL PERIOD
FOR THE PERIOD ENDED OF PERIOD INCOME INCOME GAINS PERIOD RETURN (000)
===============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------
PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO (CONTINUED)
- ---------------------------------------------------------
Service Class
9/30/98 $1.00 $0.0292 $(0.0292) $0.00 $1.00 2.97% $ 73,735
9/30/97 1.00 0.0302 (0.0302) 0.00 1.00 3.06 234,472
9/30/96 1.00 0.0304 (0.0304) 0.00 1.00 3.04 224,197
9/30/95 1.00 0.0325 (0.0325) 0.00 1.00 3.33 147,739
9/30/94 1.00 0.0221 (0.0221) 0.00 1.00 2.24 60,560
INVESTOR A CLASS
9/30/98 $1.00 $0.0276 $(0.0276) $0.00 $1.00 2.80% $110,860
9/30/97 1.00 0.0285 (0.0285) 0.00 1.00 2.89 98,218
9/30/96 1.00 0.0281 (0.0281) 0.00 1.00 2.90 63,424
9/30/95 1.00 0.0302 (0.0302) 0.00 1.00 3.06 750
12/28/93 1 through 9/30/94 1.00 0.0153 (0.0153) 0.00 1.00 1.58 139
- -----------------------------------------
VIRGINIA MUNICIPAL MONEY MARKET PORTFOLIO
- -----------------------------------------
INSTITUTIONAL CLASS
9/30/98 $1.00 $0.0338 $(0.0338) $0.00 $1.00 3.43% $ 77,812
9/30/97 1.00 0.0347 (0.0347) 0.00 1.00 3.53 62,834
9/30/96 1.00 0.0348 (0.0348) 0.00 1.00 3.54 38,553
9/30/95 1.00 0.0368 (0.0368) 0.00 1.00 3.74 24,409
7/25/94 1 through 9/30/94 1.00 0.0053 (0.0053) 0.00 1.00 0.53 13,831
SERVICE CLASS
9/30/98 $1.00 $0.0308 $(0.0308) $0.00 $1.00 3.13% $ 3,405
9/30/97 1.00 0.0317 (0.0317) 0.00 1.00 3.22 5,244
9/30/96 1.00 0.0318 (0.0318) 0.00 1.00 3.25 14,968
10/11/94 1 through 9/30/95 1.00 0.0330 (0.0330) 0.00 1.00 3.35 821
INVESTOR A CLASS
9/30/98 $1.00 $0.0280 $(0.0280) $0.00 $1.00 2.84% $ 643
5/27/97 1 through 9/30/97 1.00 0.0102 (0.0102) 0.00 1.00 1.03 1,096
</TABLE>
<TABLE>
<CAPTION>
RATIO OF NET
RATIO OF EXPENSES INVESTMENT INCOME
RATIO OF TO AVERAGE RATIO OF NET TO AVERAGE
EXPENSES TO NET ASSETS INVESTMENT INCOME NET ASSETS
AVERAGE NET (EXCLUDING TO AVERAGE NET (EXCLUDING
FOR THE PERIOD ENDED ASSETS WAIVERS) ASSETS WAIVERS)
====================================================================================================
<S> <C> <C> <C> <C>
- ---------------------------------------------------------
PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO (CONTINUED)
- ---------------------------------------------------------
Service Class
9/30/98 0.69% 1.01% 2.92% 2.60%
9/30/97 0.61 1.01 3.01 2.61
9/30/96 0.59 1.01 3.02 2.59
9/30/95 0.57 0.99 3.29 2.87
9/30/94 0.42 0.99 2.31 1.75
INVESTOR A CLASS
9/30/98 0.85% 1.17% 2.75% 2.43%
9/30/97 0.77 1.17 2.85 2.45
9/30/96 0.81 1.23 2.81 2.39
9/30/95 0.82 1.24 3.03 2.61
12/28/93 1 through 9/30/94 0.65 2 1.22 2 2.11 2 1.54 2
- -----------------------------------------
VIRGINIA MUNICIPAL MONEY MARKET PORTFOLIO
- -----------------------------------------
INSTITUTIONAL CLASS
9/30/98 0.30% 0.77% 3.37% 2.90%
9/30/97 0.22 0.81 3.49 2.90
9/30/96 0.14 0.82 3.47 2.79
9/30/95 0.10 0.95 3.71 2.86
7/25/94 1 through 9/30/94 0.10 2 1.02 2 2.89 2 1.97 2
SERVICE CLASS
9/30/98 0.60% 1.07% 3.08% 2.61%
9/30/97 0.48 1.07 3.12 2.53
9/30/96 0.45 1.12 3.05 2.38
10/11/94 1 through 9/30/95 0.40 2 1.25 2 3.50 2 2.65 2
INVESTOR A CLASS
9/30/98 0.87% 1.34% 2.85% 2.38%
5/27/97 1 through 9/30/97 0.86 2 1.45 2 2.95 2 2.36 2
<FN>
1 Commencement of operations of share class.
2 Annualized.
3 There were no Service Shares outstanding as of September 30, 1994.
4 There were no Investor B shares outstanding as of September 30, 1997.
5 Reissuance of shares.
</FN>
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
34 & 35
<PAGE>
BLACKROCK FUNDS
NOTES TO FINANCIAL STATEMENTS
BlackRock Funds(SERVICE MARK) ("the Fund") (formerly The Compass Capital
Fund) was organized on December 22, 1988 as a Massachusetts business trust and
is registered under the Investment Company Act of 1940, as amended, as an
open-end management investment company. The Fund currently has 35
publicly-offered portfolios, eight of which are included in these financial
statements (the "Portfolios"). Each Portfolio is authorized to issue an
unlimited number of shares with a par value of $0.001. Each portfolio of the
Fund may offer as many as six classes of shares. Shares of all classes of a
Portfolio represent equal pro rata interests in such Portfolio, except that each
class bears different expenses which reflect the difference in the range of
services provided to them. The following table provides a list of the Portfolios
included in this report along with their respective class-specific fee
arrangements as provided under the Fund's Amended and Restated Distribution and
Service Plan (the "Plan"). Fees are expressed as a percentage of average daily
net asset values of the respective classes.
<TABLE>
<CAPTION>
|------------------------------------------------------------------------------------------------------------------------|
| Portfolio | Share Classes |
|------------------------------------------------------------------------------------------------------------------------|
| | Institutional | Service | Investor A |
|------------------------------------------------------------------------------------------------------------------------|
| | Contractual | Actual | Contractual | Actual | Contractual | Actual |
| | Fees | Fees (4) | Fees (1) | Fees (4) | Fees (2) | Fees (4) |
|------------------------------------------------------------------------------------------------------------------------|
<S> <C> <C> <C> <C> <C> <C>
| Money Market | None | None | 0.30% | 0.30% | 0.50% | 0.40% |
|------------------------------------------------------------------------------------------------------------------------|
| U.S. Treasury Money Market | None | None | 0.30% | 0.30% | 0.50% | 0.40% |
|------------------------------------------------------------------------------------------------------------------------|
| Municipal Money Market | None | None | 0.30% | 0.30% | 0.50% | 0.40% |
|------------------------------------------------------------------------------------------------------------------------|
| New Jersey Municipal Money Market | None | None | 0.30% | 0.30% | 0.50% | 0.48% |
|------------------------------------------------------------------------------------------------------------------------|
| North Carolina Municipal Money Market | None | None | 0.30% | 0.30% | 0.50% | 0.40% |
|------------------------------------------------------------------------------------------------------------------------|
| Ohio Municipal Money Market | None | None | 0.30% | 0.30% | 0.50% | 0.41% |
|------------------------------------------------------------------------------------------------------------------------|
| Pennsylvania Municipal Money Market | None | None | 0.30% | 0.30% | 0.50% | 0.47% |
|------------------------------------------------------------------------------------------------------------------------|
| Virginia Municipal Money Market | None | None | 0.30% | 0.30% | 0.50% | 0.50% |
|------------------------------------------------------------------------------------------------------------------------|
</TABLE>
<TABLE>
<CAPTION>
|-------------------------------------------------------------------------------------------------|
| Portfolio | |
|-------------------------------------------------------------------------------------------------|
| | Investor B | Investor C |
|-------------------------------------------------------------------------------------------------|
| | Contractual | Actual | Contractual | Actual |
| | Fees (3) | Fees (4) | Fees (3) | Fees (4) |
|-------------------------------------------------------------------------------------------------|
<S> <C> <C> <C> <C>
| Money Market | 1.15% | 1.00% | 1.15% | 1.00% |
|-------------------------------------------------------------------------------------------------|
| U.S. Treasury Money Market | 1.15% | N/A | 1.15% | N/A |
|-------------------------------------------------------------------------------------------------|
| Municipal Money Market | 1.15% | N/A | 1.15% | 1.00% |
|-------------------------------------------------------------------------------------------------|
| New Jersey Municipal Money Market | 1.15% | 1.00% | 1.15% | N/A |
|-------------------------------------------------------------------------------------------------|
| North Carolina Municipal Money Market | 1.15% | N/A | 1.15% | N/A |
|-------------------------------------------------------------------------------------------------|
| Ohio Municipal Money Market | 1.15% | N/A | 1.15% | N/A |
|-------------------------------------------------------------------------------------------------|
| Pennsylvania Municipal Money Market | 1.15% | N/A | 1.15% | N/A |
|-------------------------------------------------------------------------------------------------|
| Virginia Municipal Money Market | 1.15% | N/A | 1.15% | N/A |
|-------------------------------------------------------------------------------------------------|
<FN>
(1) -- the maximum annual contractual fees are comprised of a .15% service
fee and .15% shareholder processing fee.
(2) -- the maximum annual contractual fees are comprised of a .10%
distribution fee, .25% service fee and .15% shareholder processing fee.
(3) -- the maximum annual contractual fees are comprised of a .75%
distribution fee, .25% service fee and .15% shareholder processing fee.
(4) -- the actual fees are as of September 30, 1998.
</FN>
</TABLE>
In addition, Institutional and Service shares bear a Transfer Agent fee at an
annual rate not to exceed .03% and Investor A, Investor B and Investor C shares
bear a Transfer Agent fee at an annual rate not to exceed .10% of the average
daily net assets of such respective classes.
(A) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Fund in the preparation of its financial statements. The preparation of
financial statements in conformity with generally accepted accounting principles
requires the use of management estimates. Actual results could differ from the
estimates.
SECURITY VALUATION -- Portfolio securities are valued under the amortized
cost method which approximates current market value. Under this method,
securities are valued at cost when purchased and thereafter, a constant
proportionate amortization of any discount or premium is recorded until the
maturity of the security. Regular review and monitoring of the valuation is
performed in an attempt to avoid dilution or other unfair results to
shareholders. The Fund seeks to maintain the net asset value per share of each
Portfolio at $1.00.
DIVIDENDS TO SHAREHOLDERS -- Dividends from net investment income are
declared daily and paid monthly. Net realized capital gains, if any, will be
distributed at least annually.
FEDERAL TAXES -- No provision is made for federal taxes as it is the Fund's
intention to have each Portfolio continue to qualify as a regulated investment
company and to make the requisite distributions to its shareholders which will
be sufficient to relieve it from federal income and excise taxes.
SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Investment transactions are
accounted for on the trade date. The cost of investments sold is determined by
use of the specific identification method for both financial reporting and
federal
36
<PAGE>
BLACKROCK FUNDS
income tax purposes. Interest income is recorded on the accrual basis. Expenses
not directly attributable to a specific Portfolio or class are allocated among
all of the Portfolios or classes of the Fund based on their relative net assets.
REPURCHASE AGREEMENTS -- Money market instruments may be purchased from
banks and non-bank dealers subject to the seller's agreement to repurchase them
at an agreed upon date and price. Collateral for repurchase agreements may have
longer maturities than the maximum permissible remaining maturity of portfolio
investments. The seller will be required on a daily basis to maintain the value
of the securities subject to the agreement at not less than the repurchase
price. The agreements are conditioned upon the collateral being deposited under
the Federal Reserve book-entry system or held in a separate account by the
Fund's custodian or an authorized securities depository.
(B) TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Pursuant to an Investment Advisory Agreement, BlackRock Advisors, Inc.
(formerly PNC Asset Management Group, Inc.), a wholly-owned subsidiary of
BlackRock, Inc., serves as investment advisor for all the Portfolios. BlackRock
Institutional Management Corporation ("BIMC") (formerly PNC Institutional
Management Corporation), a wholly-owned subsidiary of BlackRock Advisors, Inc.,
serves as sub-adviser to the Portfolios. BlackRock, Inc. is an indirect
majority-owned subsidiary of PNC Bank Corp.
For its advisory services, BlackRock Advisors, Inc. is entitled to receive
fees at the following annual rates, computed daily and payable monthly, based on
each Portfolio's average net assets: .45% of the first $1 billion, .40% of the
next $1 billion, .375% of the next $1 billion and .35% of net assets in excess
of $3 billion.
BlackRock Advisors, Inc. may, at its discretion, waive all or any portion
of its advisory fees for any Portfolio. For the year ended September 30, 1998,
advisory fees and waivers for each Portfolio were as follows:
<TABLE>
<CAPTION>
GROSS NET
ADVISORY FEE WAIVER ADVISORY FEE
------------ ---------- ------------
<S> <C> <C> <C>
Money Market Portfolio ........................................ $11,986,022 $6,987,627 $4,998,395
U.S. Treasury Money Market Portfolio .......................... 4,505,451 3,046,939 1,458,512
Municipal Money Market Portfolio .............................. 2,149,311 1,560,040 589,271
New Jersey Municipal Money Market Portfolio ................... 626,767 510,969 115,798
North Carolina Municipal Money Market Portfolio ............... 847,656 779,725 67,931
Ohio Municipal Money Market Portfolio ......................... 579,503 460,258 119,245
Pennsylvania Municipal Money Market Portfolio ................. 2,730,691 1,955,651 775,040
Virginia Municipal Money Market Portfolio ..................... 322,971 310,634 12,337
</TABLE>
BlackRock Advisors, Inc. pays BIMC for its sub-advisory services.
PFPC Inc. ("PFPC"), an indirect wholly-owned subsidiary of PNC Bank Corp.,
BlackRock Advisors, Inc., and BlackRock Distributors, Inc. ("BDI") (formerly
Compass Distributors, Inc.) act as co-administrators for the Fund. The combined
administration fee is computed daily and payable monthly, based on a percentage
of the average daily net assets of each Portfolio, at the following annual
rates: .18% of the first $500 million, .16% of the next $500 million, .14% of
the next $1 billion and .13% of average daily net assets in excess of $2
billion.
PFPC, BlackRock Advisors, Inc. and BDI may, at their discretion,
voluntarily waive all or any portion of their administration fees for any
Portfolio. For the year ended September 30, 1998, administration fees and
waivers for each Portfolio were as follows:
<TABLE>
<CAPTION>
GROSS NET
ADMINISTRATION ADMINISTRATION
FEE WAIVER FEE
-------------- ------- --------------
<S> <C> <C> <C>
Money Market Portfolio ........................................ $4,384,531 $ 2,998 $4,381,533
U.S. Treasury Money Market Portfolio .......................... 1,701,520 59,861 1,641,659
Municipal Money Market Portfolio .............................. 857,697 -- 857,697
New Jersey Municipal Money Market Portfolio ................... 250,707 3,660 247,047
North Carolina Municipal Money Market Portfolio ............... 339,062 49,960 289,102
Ohio Municipal Money Market Portfolio ......................... 231,801 1,222 230,579
Pennsylvania Municipal Money Market Portfolio ................. 1,070,910 -- 1,070,910
Virginia Municipal Money Market Portfolio ..................... 129,188 35,665 93,523
</TABLE>
37
<PAGE>
BLACKROCK FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
In addition, PNC Bank, National Association ("PNC Bank") serves as
custodian for each of the Fund's Portfolios. PFPC serves as transfer agent and
dividend disbursing agent.
BlackRock Advisors, Inc., BIMC, PFPC, and BDI have also agreed for the year
ended September 30, 1998 to reimburse each Portfolio for the amount, if any, by
which the total operating and management expense of such Portfolio for any
fiscal year exceed the most restrictive state blue sky expense limitation in
effect from time to time, to the extent required by such limitation. No such
reimbursements were necessary for the year ended September 30, 1998.
Under the Fund's Distribution and Service Plan (the "Plan"), Investor
Shares of the Portfolios bear the expense of payments ("distribution fees") made
to BDI as the Fund's distributor (the "Distributor"), or affiliates of PNC Bank,
for distribution and sales support services. Under the Plan, the Fund has
entered into agreements with various service organizations (including PNC Bank
and its affiliates) that provide support services to their customers who are the
beneficial owners of Shares in each Investor Class and the Service Class. Refer
to the fee table in the "Notes to Financial Statements" for fee information.
(C) CAPITAL SHARES
Because the Portfolios have each sold and redeemed shares only at a
constant net asset value of $1.00 per share, the number of shares represented by
such sales, acquisitions, reinvestments, and redemptions is the same as the
dollar amounts shown below for such transactions.
Transactions in capital shares for each period were as follows:
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
------------------------------------
FOR THE YEAR FOR THE YEAR
ENDED ENDED
9/30/98 9/30/97
--------------- ---------------
<S> <C> <C>
Shares sold:
Institutional Class ........................... $ 2,510,904,701 $ 1,685,386,332
Service Class ................................. 3,267,936,137 3,666,582,530
Investor A Class .............................. 676,723,074 476,622,866
Investor B Class .............................. 2,530,449 907,200
Investor C Class .............................. 946,664 1,176,081
Shares issued in reinvestment of dividends:
Institutional Class ........................... 306,762 232,221
Service Class ................................. 7,205,011 7,520,238
Investor A Class .............................. 14,652,032 10,382,083
Investor B Class .............................. 15,628 5,725
Investor C Class .............................. 8,209 593
Shares redeemed:
Institutional Class ........................... (1,531,603,582) (1,394,768,940)
Service Class ................................. (4,076,598,378) (3,638,822,450)
Investor A Class .............................. (581,949,740) (393,060,769)
Investor B Class .............................. (978,676) (813,928)
Investor C Class .............................. (619,564) (1,174,511)
--------------- ---------------
Net increase .................................. $ 289,478,727 $ 420,175,271
=============== ===============
</TABLE>
38
<PAGE>
BLACKROCK FUNDS
<TABLE>
<CAPTION>
U.S. TREASURY MONEY
MARKET PORTFOLIO
------------------------------------
FOR THE YEAR FOR THE YEAR
ENDED ENDED
9/30/98 9/30/97
--------------- ---------------
<S> <C> <C>
Shares sold:
Institutional Class ........................... $ 832,070,282 $ 1,713,360,508
Service Class ................................. 2,146,642,590 2,540,717,939
Investor A Class .............................. 171,010,303 114,806,287
Shares issued in reinvestment of dividends:
Institutional Class ........................... 43,378 104,888
Service Class ................................. 2,692,251 3,201,277
Investor A Class .............................. 2,912,580 1,032,771
Shares redeemed:
Institutional Class ........................... (697,032,232) (1,718,626,346)
Service Class ................................. (2,388,962,298) (2,663,322,940)
Investor A Class .............................. (145,547,973) (83,046,068)
--------------- ---------------
Net decrease .................................. $ (76,171,119) $ (91,771,684)
=============== ===============
</TABLE>
<TABLE>
<CAPTION>
MUNICIPAL MONEY
MARKET PORTFOLIO
------------------------------------
FOR THE YEAR FOR THE YEAR
ENDED ENDED
9/30/98 9/30/97
--------------- ---------------
<S> <C> <C>
Shares sold:
Institutional Class ........................... $ 546,473,646 $ 317,120,148
Service Class ................................. 1,026,869,769 1,122,149,234
Investor A Class .............................. 39,593,819 17,412,192
Investor C Class .............................. 305,586 11,754
Shares issued in reinvestment of dividends:
Institutional Class ........................... -- --
Service Class ................................. 2,065,608 1,174,707
Investor A Class .............................. 179,254 98,289
Investor C Class .............................. 119 --
Shares redeemed:
Institutional Class ........................... (358,486,165) (302,308,518)
Service Class ................................. (1,216,688,846) (1,057,028,541)
Investor A Class .............................. (39,014,287) (10,894,112)
Investor C Class .............................. (11,878) --
--------------- ---------------
Net increase .................................. $ 1,286,625 $ 87,735,153
=============== ===============
</TABLE>
39
<PAGE>
BLACKROCK FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
NEW JERSEY MUNICIPAL
MONEY MARKET PORTFOLIO
----------------------------------
FOR THE YEAR FOR THE YEAR
ENDED ENDED
9/30/98 9/30/97
------------- -------------
<S> <C> <C>
Shares sold:
Institutional Class ........................... $ 116,435,928 $ 34,299,530
Service Class ................................. 124,130,716 137,822,928
Investor A Class .............................. 125,044,352 113,438,058
Investor B Class .............................. 100 --
Shares issued in reinvestment of dividends:
Institutional Class ........................... 57,896 17,627
Service Class ................................. 99,423 152,805
Investor A Class .............................. 845,821 630,724
Investor B Class .............................. 1 --
Shares redeemed:
Institutional Class ........................... (55,155,262) (27,498,897)
Service Class ................................. (190,373,134) (104,815,699)
Investor A Class .............................. (103,586,101) (109,694,959)
Investor B Class .............................. (50) --
------------- -------------
Net increase .................................. $ 17,499,690 $ 44,352,117
============= =============
</TABLE>
<TABLE>
<CAPTION>
NORTH CAROLINA MUNICIPAL
MONEY MARKET PORTFOLIO
----------------------------------
FOR THE YEAR FOR THE YEAR
ENDED ENDED
9/30/98 9/30/97
------------- -------------
<S> <C> <C>
Shares sold:
Institutional Class ........................... $ 545,618,487 $ 515,356,166
Service Class ................................. 72,622,006 57,557,439
Investor A Class .............................. 7,409,137 198,135
Shares issued in reinvestment of dividends:
Institutional Class ........................... -- --
Service Class ................................. 71,644 111,126
Investor A Class .............................. 7,434 5,570
Shares redeemed:
Institutional Class ........................... (511,293,347) (479,795,565)
Service Class ................................. (77,091,688) (41,427,596)
Investor A Class .............................. (7,475,546) (10,500)
------------- -------------
Net increase .................................. $ 29,868,127 $ 51,994,775
============= =============
</TABLE>
40
<PAGE>
BLACKROCK FUNDS
<TABLE>
<CAPTION>
OHIO MUNICIPAL
MONEY MARKET PORTFOLIO
----------------------------------
FOR THE YEAR FOR THE YEAR
ENDED ENDED
9/30/98 9/30/97
------------- -------------
<S> <C> <C>
Shares sold:
Institutional Class ........................... $ 414,685,160 $ 247,396,323
Service Class ................................. 159,193,335 119,579,274
Investor A Class .............................. 36,700,772 27,674,576
Shares issued in reinvestment of dividends:
Institutional Class ........................... 3,769 21,464
Service Class ................................. 848,456 594,159
Investor A Class .............................. 515,271 318,914
Shares redeemed:
Institutional Class ........................... (389,809,601) (256,621,447)
Service Class ................................. (160,114,921) (107,536,043)
Investor A Class .............................. (37,185,701) (17,789,245)
------------- -------------
Net increase .................................. $ 24,836,540 $ 13,637,975
============= =============
</TABLE>
<TABLE>
<CAPTION>
PENNSYLVANIA MUNICIPAL
MONEY MARKET PORTFOLIO
------------------------------------
FOR THE YEAR FOR THE YEAR
ENDED ENDED
9/30/98 9/30/97
--------------- ---------------
<S> <C> <C>
Shares sold:
Institutional Class ........................... $ 1,298,202,042 $ 1,191,362,779
Service Class ................................. 491,105,327 387,153,573
Investor A Class .............................. 410,558,185 413,488,333
Shares issued in reinvestment of dividends:
Institutional Class ........................... 92,480 108,317
Service Class ................................. 783,544 784,774
Investor A Class .............................. 3,060,363 2,584,961
Shares redeemed:
Institutional Class ........................... (1,177,210,499) (1,161,127,715)
Service Class ................................. (652,626,616) (377,662,550)
Investor A Class .............................. (400,976,358) (381,279,008)
--------------- ---------------
Net increase (decrease) ....................... $ (27,011,532) $ 75,413,464
=============== ===============
</TABLE>
41
<PAGE>
BLACKROCK FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
VIRGINIA MUNICIPAL
MONEY MARKET PORTFOLIO
----------------------------------
FOR THE YEAR FOR THE YEAR
ENDED ENDED
9/30/98 9/30/97
------------- ------------
<S> <C> <C>
Shares sold:
Institutional Class ........................... $ 153,965,984 $105,024,816
Service Class ................................. 14,299,211 10,483,122
Investor A Class .............................. 2,052,243 1,558,544
Shares issued in reinvestment of dividends:
Institutional Class ........................... 412,471 251,885
Service Class ................................. 105,608 97,273
Investor A Class .............................. 26,613 10,473
Shares redeemed:
Institutional Class ........................... (139,400,364) (80,994,943)
Service Class ................................. (16,243,970) (20,304,306)
Investor A Class .............................. (2,531,456) (473,468)
------------- ------------
Net increase .................................. $ 12,686,340 $ 15,653,396
============= ============
</TABLE>
(D) AT SEPTEMBER 30, 1998, NET ASSETS CONSISTED OF:
<TABLE>
<CAPTION>
U.S. NEW JERSEY
TREASURY MUNICIPAL MUNICIPAL
MONEY MARKET MONEY MARKET MONEY MARKET MONEY MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Capital paid in .................................... $3,034,646,538 $965,598,015 $396,746,113 $147,925,814
Accumulated net realized gain (loss) on
investment transactions ......................... 80,526 17,525 (325,622)(1) (8,250)
Net unrealized market discount ..................... -- -- 153 --
-------------- ------------ ------------ ------------
$3,034,727,064 $965,615,540 $396,420,644 $147,917,564
============== ============ ============ ============
NORTH
CAROLINA OHIO PENNSYLVANIA VIRGINIA
MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL
MONEY MARKET MONEY MARKET MONEY MARKET MONEY MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------ -----------
Capital paid in .................................... $201,533,869 $122,623,759 $534,854,058 $81,860,529
Accumulated net realized gain (loss)
on investment transactions ...................... (121) (28,888)(1) (13,100)(1) (573)(1)
Net unrealized market discount ..................... 1,458 -- 2,581 (20)
------------ ------------ ------------ -----------
$201,535,206 $122,594,871 $534,843,539 $81,859,936
============ ============ ============ ===========
<FN>
(1) Includes $3,317, $16,541, $1,050, and $401, of deferred post-October losses
as of September 30, 1998, respectively.
</FN>
</TABLE>
42
<PAGE>
BLACKROCK FUNDS
(E) CAPITAL LOSS CARRYOVER
At September 30, 1998, capital loss carryovers were available to offset
possible future realized capital gains as follows:
<TABLE>
<CAPTION>
CAPITAL LOSS YEAR
CARRYFORWARD EXPIRED
------------ -------
<S> <C> <C>
Municipal Money Market Portfolio: $252,688 1999
15,971 2000
20,433 2001
19,387 2002
12,355 2003
1,471 2006
New Jersey Municipal Money Market Portfolio: 6,567 2001
340 2002
1,288 2006
North Carolina Municipal Money Market Portfolio: 121 2003
Ohio Municipal Money Market Portfolio: 2,285 2002
5,840 2005
4,223 2006
PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO: 2,459 2002
1,329 2003
3,233 2004
1,626 2005
3,403 2006
Virginia Municipal Money Market Portfolio: 171 2003
</TABLE>
(F) PNC COMMON TRUST CONVERSION
On January 13, 1998, January 22, 1998 and February 9, 1998 the Board of
Trustees of the Fund, the Board of Directors of PNC Bank and the Board of
Directors of PNC Bank, Delaware, respectively, approved an asset purchase
agreement among the Fund, PNC Bank and PNC Bank, Delaware regarding 25 common
trust funds for which either PNC Bank or PNC Bank, Delaware serve as trustee
(each a "PNC Common Trust Fund"). The agreement provided for the acquisition by
the Fund of all of the assets and liabilities of each PNC Common Trust Fund
managed by the advisor in a tax-free exchange for Institutional Shares of the
corresponding Portfolio(s) of the Fund and the distribution of such
Institutional Shares to the participating trusts of the PNC Common Trust Funds
in liquidation of the PNC Common Trust Funds. The conversion occurred in May,
1998. There were no BlackRock money market portfolios involved in the PNC Common
Trust Fund conversion.
43
<PAGE>
BLACKROCK FUNDS
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF THE BLACKROCK FUNDS:
In our opinion, the accompanying statements of net assets and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
the Money Market, U.S. Treasury Money Market, Municipal Money Market, New Jersey
Municipal Money Market, North Carolina Municipal Money Market, Ohio Municipal
Money Market, Pennsylvania Municipal Money Market and Virginia Municipal Money
Market Portfolios of the BlackRock Funds (the "Fund") at September 30, 1998, the
results of each of their operations, the changes in each of their net assets,
and the financial highlights for the periods presented, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities owned at September 30, 1998 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
2400 Eleven Penn Center
Philadelphia, Pennsylvania
November 13, 1998
44
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
BLACKROCK FUNDS
Investment Advisor
BlackRock Advisors, Inc.
New York, New York 10154
Sub-Adviser
BlackRock Institutional Management
Corporation
Wilmington, Delaware 19809
Custodian
PNC Bank, National Association
Philadelphia, Pennsylvania 19103
Co-Administrator and Transfer Agent
PFPC Inc.
Wilmington, Delaware 19809
Co-Administrator and Distributor
BlackRock Distributors, Inc.
West Conshohocken, Pennsylvania 19428
Co-Administrator
BlackRock Advisors, Inc.
New York, New York 10154
Counsel
Simpson, Thatcher & Bartlett
New York, New York 10017
(A partnership which includes professional corporations)
Independent Accountants
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania 19103
To reduce expenses, the Fund will mail only one copy of annual and semi-annual
reports and most prospectuses to your household, even if more than one person in
the household has a Fund account. Please call (800) 441-7762 if you would like
to receive additional reports or prospectuses.
<PAGE>
BLACKROCK FUNDS
FUND SPECTRUM
BLACKROCK FUNDS IS A LEADING MUTUAL FUND COMPANY CURRENTLY MANAGING IN EXCESS OF
$22 BILLION IN 36 PORTFOLIOS DESIGNED TO FIT A BROAD RANGE OF INVESTMENT GOALS.
EACH PORTFOLIO IS MANAGED BY RECOGNIZED EXPERTS IN EQUITY, FIXED INCOME,
INTERNATIONAL, AND TAX-FREE INVESTING WHO ADHERE TO A PURE INVESTMENT
STYLE.(REGISTRATION MARK)
STOCK PORTFOLIOS
Large Cap Value Equity
Large Cap Growth Equity
Mid-Cap Value Equity
Mid-Cap Growth Equity
Small Cap Value Equity
Small Cap Growth Equity
Micro-Cap Equity
International Equity
International Small Cap Equity
International Emerging Markets
Select Equity
Index Equity
STOCK & BOND PORTFOLIOS
Balanced
BOND PORTFOLIOS
Low Duration Bond
Intermediate Government Bond
Intermediate Bond
Core Bond
Government Income
GNMA
Managed Income
International Bond
High Yield Bond
TAX-FREE BOND PORTFOLIOS
Tax-Free Income
Pennsylvania Tax-Free Income
New Jersey Tax-Free Income
Ohio Tax-Free Income
Delaware Tax-Free Income
Kentucky Tax-Free Income
MONEY MARKET PORTFOLIOS
Money Market
U.S. Treasury Money Market
Municipal Money Market
New Jersey Municipal Money Market
North Carolina Municipal Money Market
Ohio Municipal Money Market
Pennsylvania Municipal Money Market
Virginia Municipal Money Market
SHAREHOLDER PRIVILEGES
24 HOUR ACCOUNT INFORMATION
Call us at 1-800-441-7762, 24 hours a day, 7 days a week to get information
about your account balances, recent transactions and share prices. Note:
Institutional and Service Share Class investors should call 1-800-441-7764. You
can also reach us on the Internet through the World Wide Web by accessing
http://www.blackrock.com.
EXCHANGE PRIVILEGES
Should your investment goals change, shareholders in our Investor Class shares
may exchange all or part of their investments into the same share class of any
other portfolio of BlackRock Funds. (1)
AUTOMATIC INVESTMENT PLANS
Investor Class shareholders who want to invest regularly can arrange to have $50
or more automatically deducted from their checking or savings account and
invested in any of the BlackRock portfolios.
SYSTEMATIC WITHDRAWAL PLANS
Investor Class shareholders can establish a systematic withdrawal plan and
receive periodic payments of $100 or more from their BlackRock portfolios, as
long as their account is at least $1,000.
RETIREMENT PLANS
Shareholders may make investments in conjunction with individual IRAaccounts or
rollover IRAs.
GENERAL INFORMATION ABOUT THE BLACKROCK FUNDS
If you would like additional reports or have questions regarding any of the 36
BlackRock Funds, please call 1-800-FUTURE4 (1-800-388-8734)
(1) BLACKROCK FUNDS RESERVES THE RIGHT TO MODIFY OR TERMINATE THE EXCHANGE
PRIVILEGES AT ANY TIME.
<PAGE>
BLACKROCK FUNDS (LOGO)
[GRAPHIC OMITTED]
P.O. Box 8907
Wilmington, DE 19899
Shares of the Fund are not deposits or obligations of, or guaranteed or endorsed
by PNC Bank, National Association or any other bank and shares are not federally
insured by, guaranteed by, obligations of or otherwise supported by the U.S.
Government, the Federal Deposit Insurance Corporation, The Federal Reserve
Board, or any other governmental agency. Investments in shares of the fund
involve investment risks, including the possible loss of the principal amount
invested.
AR 9/30/98 MM
