[GRAPHIC OMITTED]
MONEY MARKET PORTFOLIOS
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
[GRAPHIC OMITTED]
MARCH 31, 1998
BLACKROCK FUNDS
[GRAPHIC & LOGO OMITTED]
PURE INVESTMENT STYLE(TRADEMARK)
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
<PAGE>
[GRAPHIC OMITTED] 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.............................................................2
U.S. Treasury Money Market...............................................4
Municipal Money Market...................................................5
New Jersey Municipal Money Market........................................9
North Carolina Municipal Money Market...................................11
Ohio Municipal Money Market.............................................14
Pennsylvania Municipal Money Market.....................................16
Virginia Municipal Money Market.........................................21
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
<PAGE>
BLACKROCK FUNDS [GRAPHIC OMITTED]
PRESIDENT'S LETTER
March 31, 1998
Dear Shareholder:
We are pleased to present the Semi-Annual Report for the BlackRock Funds
for March 31, 1998.
The BlackRock Funds have experienced significant growth over the past six
months. In addition to increasing assets in the fund family, your funds have
changed their name from Compass Capital Funds to BlackRock Funds. The name
change was part of a reorganization of PNC Bank's asset management businesses
under BlackRock Advisors, Inc., which now has over $115 billion under
management. While our name has changed, our funds remain committed to our
disciplined Pure Investment Style(SERVICE MARK) which continues to pursue
investor returns that are consistent with their expectations.
We expect that this consolidation will streamline and make more efficient
the delivery of asset management services to the BlackRock Funds.
The last six months have also been a time of asset growth for BlackRock
Funds and for the investment markets in general. During this period we have seen
record flows into our funds which now have total assets of over $15 billion.
Also of note, during May 1998, PNC Bank's $8 billion family of equity and fixed
income common trust funds will merge into BlackRock Funds. The conversion of the
common trust assets will lift BlackRock Funds to approximately a $23 billion
fund family consisting of 35 portfolios and result in three new funds: BlackRock
GNMA, DE Tax-Free Income and KY Tax-Free Income.
Since we last reported to you, the financial markets have continued to
exhibit remarkable strength. After rolling to a 28.6% return in 1997, the S&P
500 continued to grow another 13.8% in the first three months of 1998. Despite
an abundance of polls which show that investors are experiencing a fear of the
high levels of the market, investors continue to buy equities and are showing by
their actions that they are generally optimistic about the market's future.
European markets, as measured by the Morgan Stanley EAFE Index, have also begun
to perk up over the first quarter, posting a 14.3% return. The bond market
registered modest gains over the first quarter.
We believe that economic conditions continue to bode well for the near
term. The economy looks healthy with GDP estimated to grow at 2.8% in 1998 and
no classic signs of recession such as inventory imbalances appear to be present.
Inflation still seems under control with oil prices and other imports decreasing
sharply. Interest rates also appear to be stable for the near term.
While it seems unlikely that the stock market will continue to return the
same magnitude of gains as we have enjoyed in recent years, we believe that the
environment remains positive for continued growth.
We are pleased to announce that we are launching a new mutual fund, the
BlackRock Funds Micro-Cap Equity Portfolio, which is designed to provide
investors with a way to buy the very smallest public companies early in their
life cycles. The fund will pursue stocks of the most dynamic growth companies
with under $300 million in total market capitalization.
Thank you for your continued confidence in BlackRock Funds. We value your
business and appreciate the opportunity to help you achieve your long-term
investment goals.
Sincerely,
[/S/ Karen H. Sabath]
Karen H. Sabath
MANAGING DIRECTOR
BLACKROCK ADVISORS, INC.
1
<PAGE>
[GRAPHIC OMITTED] BLACKROCK FUNDS
STATEMENT OF NET ASSETS
MONEY MARKET PORTFOLIO
PAR
AS OF MARCH 31, 1998 (UNAUDITED) MATURITY (000) VALUE
-------- -------- ---------
CERTIFICATES OF DEPOSIT--23.6%
DOMESTIC--6.3%
Bankers Trust Co.
5.98% 06/19/98 $50,000 $ 49,997,931
5.82% 07/31/98 50,000 49,995,241
First National Bank of Boston
5.70% 04/06/98 25,000 25,000,000
5.74% 04/28/98 50,000 50,000,000
Wilmington Trust Co.
5.84% 04/16/98 20,000 20,000,000
--------------
194,993,172
--------------
YANKEE DOLLAR--17.3%
ABN - AMRO Bank
6.26% 04/20/98 25,000 25,002,364
Bank of Nova Scotia
5.53% 04/29/98 30,000 30,000,000
Banque Nationale de Paris
6.22% 04/09/98 50,000 50,003,588
5.86% 08/10/98 25,000 24,994,853
Banque Paribas
5.53% 05/04/98 25,000 24,999,277
5.56% 05/26/98 25,000 25,000,000
Canadian Imperial Bank of Commerce
5.66% 02/26/99 40,000 39,982,617
5.63% 03/02/99 15,000 14,991,185
Credit Communal de Belgique
5.75% 04/01/99 30,000 29,985,600
Deutsche Banc
6.21% 04/20/98 30,000 30,002,135
5.65% 03/22/99 25,000 24,993,009
Rabobank Nederland
5.63% 03/24/99 10,000 9,995,312
Royal Bank of Canada
5.94% 06/25/98 25,000 24,996,658
Skandinaviska Enskilden Banken
Funding, Inc.
5.56% 05/04/98 50,000 50,000,000
5.61% 02/25/99 50,000 49,982,660
Societe Generale
5.53% 08/05/98 15,000 14,995,444
5.94% 08/28/98 20,000 20,013,932
5.78% 10/08/98 20,000 19,982,489
Svenska Handelsbanken, Inc.
5.72% 03/31/99 25,000 24,985,673
--------------
534,906,796
--------------
TOTAL CERTIFICATES OF DEPOSIT
(Cost $729,899,968) 729,899,968
--------------
COMMERCIAL PAPER--53.2%
ASSET BACKED SECURITIES--11.7%
CC USA, Inc.
5.46% 05/18/98 20,000 19,857,433
Corporate Asset Funding, Inc.
5.53% 04/20/98 25,000 24,927,035
Corporate Receivables Corp.
5.47% 04/07/98 45,000 44,958,975
5.55% 04/08/98 25,000 24,973,021
CXC, Inc.
5.47% 04/16/98 50,000 49,886,042
5.55% 04/23/98 20,000 19,932,167
Old Line Funding Corp.
5.56% 04/06/98 40,000 39,969,111
5.56% 04/14/98 23,152 23,105,516
PAR
MATURITY (000) VALUE
-------- -------- ---------
COMMERCIAL PAPER (CONTINUED)
ASSET BACKED SECURITIES (CONTINUED)
Prefco
5.52% 05/12/98 $25,000 $ 24,842,833
Windmill Funding
5.45% 04/21/98 40,000 39,878,889
5.55% 04/24/98 50,000 49,822,708
--------------
362,153,730
--------------
BANKS--4.3%
AB Spintab Swedmortgage
5.74% 04/15/98 30,000 29,933,033
5.47% 05/12/98 25,000 24,844,257
5.45% 06/09/98 30,000 29,686,625
Unifunding, Inc.
5.63% 04/22/98 50,000 49,835,792
--------------
134,299,707
--------------
BUSINESS CREDIT INSTITUTIONS--4.1%
Enterprise Funding Corp.
5.57% 04/09/98 53,184 53,118,170
General Electric Capital Corp.
5.45% 06/11/98 75,000 74,193,854
--------------
127,312,024
--------------
CREDIT INSTITUTIONS--1.6%
General Motors Acceptance Corp.
5.45% 04/17/98 50,000 49,878,889
--------------
FINANCE SERVICES--9.2%
Barton Capital Corp.
5.55% 04/01/98 50,000 50,000,000
5.52% 04/30/98 18,732 18,648,705
Countrywide Funding Corp.
5.55% 04/02/98 50,000 49,992,292
Dakota Certificates Program
5.57% 04/07/98 45,000 44,958,225
5.52% 06/04/98 50,000 49,509,333
Triple A-1 Funding
5.55% 04/06/98 25,000 24,980,729
5.56% 04/15/98 47,961 47,857,298
--------------
285,946,582
--------------
FOOD & AGRICULTURE--3.4%
Diageo Capital PLC
5.47% 04/29/98 25,000 24,893,639
5.46% 08/26/98 50,000 48,885,250
Grand Metropolitan Capital Corp.
5.62% 04/15/98 30,000 29,934,433
--------------
103,713,322
--------------
HOUSEHOLD AUDIO & VIDEO EQUIPMENT--1.9%
Toshiba International Finance
5.55% 05/13/98 19,800 19,671,795
5.47% 05/15/98 25,000 24,832,861
5.54% 05/20/98 13,400 13,298,956
--------------
57,803,612
--------------
INDUSTRIAL & COMMERCIAL MACHINERY
& EQUIPMENT--2.2%
BTR Dunlop Finance, Inc.
5.47% 04/14/98 25,000 24,950,618
5.40% 07/24/98 13,000 12,777,700
Komatsu Finance America
5.71% 04/09/98 15,000 14,980,967
5.71% 04/17/98 15,000 14,961,933
--------------
67,671,218
--------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
2
<PAGE>
BLACKROCK FUNDS [GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
MONEY MARKET PORTFOLIO (CONCLUDED)
PAR
AS OF MARCH 31, 1998 (UNAUDITED) MATURITY (000) VALUE
-------- -------- ---------
COMMERCIAL PAPER (CONTINUED)
MOTOR VEHICLES--3.5%
BMW US Capital Corp.
5.54% 04/17/98 $60,000 $ 59,852,267
Daimler-Benz North America Corp.
5.56% 04/14/98 50,000 49,899,611
--------------
109,751,878
--------------
PHOTOGRAPHIC EQUIPMENT--0.8%
Fuji Photo Film Finance USA, Inc.
5.48% 04/14/98 25,000 24,950,528
--------------
SECURITY BROKERS & DEALERS--6.5%
Bear Stearns Companies, Inc.
5.48% 07/27/98 25,000 24,554,750
Lehman Brothers Holdings, Inc.
5.52% 05/28/98 40,000 39,650,400
Merrill Lynch & Co. Canadian
5.55% 04/27/98 50,000 49,799,583
5.45% 09/02/98 50,000 48,834,306
Morgan Stanley Group, Inc.
5.40% 07/23/98 40,000 39,322,000
--------------
202,161,039
--------------
WHOLESALE - MISCELLANEOUS DURABLE GOODS--4.0%
Mitsubishi International Corp.
5.56% 04/28/98 50,000 49,791,500
5.51% 05/28/98 25,000 24,781,896
5.51% 05/29/98 50,000 49,556,139
--------------
124,129,535
--------------
TOTAL COMMERCIAL PAPER
(Cost $1,649,772,064) 1,649,772,064
--------------
GUARANTEED INVESTMENT CONTRACT--0.3%
Peoples Security Life
5.84% 04/01/98 10,000 10,000,000
(Cost $10,000,000) --------------
REPURCHASE AGREEMENTS--8.7%
Morgan Stanley & Co.
6.12% 04/01/98 270,000 270,000,000
(Agreement dated 03/31/98 to be
repurchased at $270,045,900.
Collateralized by $172,695,000
Federal Home Loan Bank 0% to 7.5%
due 04/01/98 to 09/18/17,
$43,765,000 Federal Home Loan
Mortgage Corp. 0% to 7.83% due 01/27/04
to 03/27/17, $87,330,000 Federal
National Mortgage Association 0% to
6.85% due 09/12/05 to 02/13/13,
$2,100,257 Government National Mortgage
Association 6.50% to 12.50% due 05/15/10
to 07/15/24 and $7,000,000 Student
Loan Market Association 0% due 10/03/22.
The value of the collateral is
$275,523,251.)
TOTAL REPURCHASE AGREEMENTS
(Cost $270,000,000) 270,000,000
--------------
PAR
MATURITY (000) VALUE
-------- -------- ---------
VARIABLE RATE OBLIGATIONS--14.8%
AUTO RENTAL AND LEASING--2.2%
PHH Corp.
5.62%** 04/06/98 $25,000 $ 24,997,882
5.62%** 04/13/98 42,000 41,987,193
--------------
66,985,075
--------------
BANKS--1.6%
Skandinaviska Enskilda
Banken Funding Inc.
5.61%** 04/13/98 50,000 49,976,651
--------------
FINANCIAL SERVICES--6.2%
General American Life
5.82%** 04/01/98 50,000 50,000,000
SMM Trust
5.68%** 04/13/98 58,000 58,000,000
5.68%** 04/29/98 50,000 50,000,000
5.68%** 06/23/98 35,000 35,000,000
--------------
193,000,000
--------------
SECURITY BROKERS--4.8%
Bear Stearns & Co., Inc.
5.65%** 04/24/98 40,000 40,000,000
5.69%** 05/11/98 12,000 12,011,732
Lehman Brothers Holdings, Inc.
5.70%** 06/05/98 50,000 50,000,000
Morgan Stanley Group
5.75%** 04/10/98 10,000 10,008,732
5.65%** 04/20/98 37,000 36,999,537
--------------
149,020,001
--------------
TOTAL VARIABLE RATE OBLIGATIONS
(Cost $458,981,727) 458,981,727
--------------
PAINE WEBBER LIQUID INSTITUTIONAL
RESERVES MONEY MARKET FUND--0.2%
Paine Webber Liquid Institutional
Reserves Money Market Fund
(Cost $6,291,383) 6,291 6,291,383
--------------
TOTAL INVESTMENTS IN SECURITIES
(Cost $3,124,945,142*) 100.8% 3,124,945,142
LIABILITIES IN EXCESS
OF OTHER ASSETS (0.8%) (25,426,919)
------ --------------
NET ASSETS (Equivalent to $1.00
per share based on 997,597,325
Institutional shares, 1,777,446,228
Service shares, 323,964,726
Investor A shares, 320,574
Investor B shares and 272,099
Investor C shares outstanding) 100.0% $3,099,518,223
====== ==============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER
INSTITUTIONAL, SERVICE,
INVESTOR A, INVESTOR B AND
INVESTOR C SHARE
($3,099,518,223 (DIVIDE) 3,099,600,952) $1.00
=====
- -------------
* Aggregate cost for Federal tax purposes.
** Rates shown are the rates as of March 31, 1998.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
3
<PAGE>
[GRAPHIC OMITTED] BLACKROCK FUNDS
STATEMENT OF NET ASSETS
U.S. TREASURY MONEY MARKET PORTFOLIO
PAR
AS OF MARCH 31, 1998 (UNAUDITED) MATURITY (000) VALUE
-------- -------- ---------
U.S. TREASURY OBLIGATIONS--24.5%
U.S. Treasury Notes
6.00% 05/31/98 $15,000 $ 15,000,748
8.25% 07/15/98 50,000 50,338,010
6.25% 07/31/98 20,000 20,037,166
5.87% 08/15/98 40,000 40,023,045
4.75% 08/31/98 15,000 14,945,283
4.75% 09/30/98 20,000 19,912,500
5.50% 11/15/98 20,000 19,978,842
5.87% 01/31/99 30,000 30,077,985
5.00% 02/15/99 15,000 14,931,664
8.87% 02/15/99 10,000 10,282,394
6.25% 03/31/99 20,000 20,141,608
--------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $255,669,245) 255,669,245
--------------
REPURCHASE AGREEMENTS--85.5%
Goldman Sachs & Co.
6.07% 04/01/98 100,000 100,000,000
(Agreement dated 03/31/98 to be
repurchased at $100,016,861.
Collateralized by $101,952,000 U.S.
Treasury Notes 5.375% due 02/15/01
and $126,000 U.S. Treasury Notes
6.125% due 08/15/07. The value of the
collateral is $102,000,166.)
Greenwich Capital Markets
5.95% 04/01/98 225,000 225,000,000
(Agreement dated 03/31/98 to be
repurchased at $225,037,188.
Collateralized by $90,445,000
U.S. Treasury Notes 5.875% due
08/31/99, $82,214,000 U.S. Treasury
Notes 7.25% due 05/15/04,
$17,976,000 U.S. Treasury Notes
6.625% due 05/15/07 and
$108,992,000 U.S. Treasury Strips
8.75% due 08/15/20. The value of
the collateral is $229,502,429.)
Merrill Lynch
5.46% 04/01/98 50,000 50,000,000
(Agreement dated 03/31/98 to be
repurchased at $50,007,583.
Collateralized by $40,350,000 U.S.
Treasury Bonds 8.125% due 08/15/21.
The value of the collateral is $51,037,734.)
Merrill Lynch
5.44% 04/01/98 50,000 50,000,000
(Agreement dated 03/31/98 to be repurchased
at $50,007,556. Collateralized by
$2,993,000 U.S. Treasury Bonds 8.125%
due 8/15/21, $33,250,000 U.S. Treasury
Notes 5.75% due 12/31/98, $13,305,000
U.S. Treasury Notes 5.875% due 2/28/99.
The value of the collateral is
$50,967,080.)
PAR
MATURITY (000) VALUE
-------- -------- ---------
REPURCHASE AGREEMENTS (CONTINUED)
Morgan Stanley & Co.
6.07% 04/01/98 $240,500 $240,500,000
(Agreement dated 03/31/98 to be
repurchased at $240,540,551.
Collateralized by $73,956,000 U.S.
Treasury Notes 3.375 to 3.625% due
11/30/99 to 01/15/08, $40,167,000 U.S.
Treasury Notes 4.75% to 5.875% due
10/31/98 to 02/15/00, $2,853,000 U.S.
Treasury Notes 6.0% to 6.25% due
7/31/98 to 09/30/98 $27,000,000 U.S.
Treasury Bond 7.25% due 5/15/16,
$30,530,000 U.S. Treasury Notes 7.75% to
9.125% due 12/31/99 to 5/15/99 and
$41,000,000 U.S. Treasury Bonds 9.875%
due 11/15/15. The value of the
collateral is $245,883,436.)
Swiss Bank
5.75% 04/01/98 47,000 47,000,000
(Agreement dated 03/31/98 to be repurchased
at $47,007,507. Collateralized by
$19,000,000 U.S. Treasury Notes 5.875% due
04/30/98 and 44,420,000 U.S. Treasury
Bonds 6.25% to 9.125% due 05/15/18 to
08/15/23. The value of the collateral
is $49,047,579.)
Swiss Bank
5.90% 04/01/98 75,000 75,000,000
(Agreement dated 03/31/98 to be
repurchased at $75,012,292.
Collateralized by $56,328,000 U.S.
Treasury Bonds 0.00% to 13.25%
due 10/15/98 to 08/15/17. The value
of the collateral is $75,589,694.)
TOTAL REPURCHASE AGREEMENTS
(Cost $787,500,000) 787,500,000
--------------
TOTAL INVESTMENTS IN SECURITIES
(Cost $1,043,169,245*) 100.1% 1,043,169,245
LIABILITIES IN EXCESS OF
OTHER ASSETS (0.1%) (971,446)
------ --------------
NET ASSETS (Equivalent to $1.00
per share based on 178,182,724
Institutional shares, 795,955,396
Service shares and 68,242,116
Investor A shares outstanding) 100.0% $1,042,197,799
====== ==============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER
INSTITUTIONAL, SERVICE AND
INVESTOR A SHARE
($1,042,197,799 (DIVIDE) 1,042,380,236) $1.00
=====
- -------------
* Aggregate cost for Federal tax purposes.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
4
<PAGE>
BLACKROCK FUNDS [GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
MUNICIPAL MONEY MARKET PORTFOLIO
PAR
AS OF MARCH 31, 1998 (UNAUDITED) MATURITY (000) VALUE
-------- -------- ---------
MUNICIPAL BONDS--99.7%
ARIZONA--4.7%
Apache County IDA RB (Tuscon
Electric Power Co. Project)
Series 1983 DN
3.75%** 04/07/98 $ 4,500 $ 4,500,000
Maricopa County IDRB
Series 1998 DN
3.50%** 04/07/98 9,170 9,170,000
Santa Cruz County IDRB
Series 1998 DN
3.50%** 04/07/98 10,300 10,300,000
--------------
23,970,000
--------------
CALIFORNIA--10.3%
Foothill Eastern Toll Road RB
Series 1995 DN
4.40%** 04/07/98 4,900 4,900,000
Los Angeles County GO
Series 1997A TAN
4.50% 06/30/98 17,400 17,426,870
Oakland CTFS Partners RB
(Capital Equipment Project)
Series 1985 DN
3.70%** 04/07/98 18,300 18,300,000
San Diego Refunding RB (Multi-Family
Housing Las Flores Project)
Series 1991 DN
3.45%** 04/07/98 600 600,000
Southern California Public Power
Authority Subordinate Refunding RB
(Palo Verde Project) Series 1996B DN
3.25%** 04/07/98 9,400 9,400,000
State of California GO Series 1997 DN
4.00%** 04/07/98 1,500 1,500,000
--------------
52,126,870
--------------
COLORADO--1.2%
Colorado Housing Finance Authority
Multi-Family Housing RB
Series 1996H DN
3.75%** 04/07/98 5,915 5,915,000
--------------
DELAWARE--1.3%
Delaware Economic Development
Authority RB (Normaco Income Project)
Series 1984 DN
3.90%** 04/07/98 6,600 6,600,000
--------------
FLORIDA--2.9%
Dade County RB (Youth Fair & Exposition
Project) Series 1995 DN
3.70%** 04/07/98 4,705 4,705,000
Lee County Healthcare Facilities IDRB
(Cypress Cove Healthpark Project)
Series 1997C DN
3.70%** 04/07/98 2,200 2,200,000
Miami Health Facilities Authority RB
(Jewish Home for the Aged, Inc. Project)
Series 1996 DN
3.70%** 04/07/98 5,900 5,900,000
Palm Beach County Housing Finance
Authority RB (Multi-Family Housing
Lake Crystal Apartments Project,
Phase 11) Series 1998 DN
3.80%** 04/07/98 2,000 2,000,000
--------------
14,805,000
--------------
PAR
MATURITY (000) VALUE
-------- -------- ---------
MUNICIPAL BONDS (CONTINUED)
GEORGIA--2.2%
Clayton County Development Authority RB
(McIlrath Corp. Project)
Series 1986 DN
3.85%** 04/07/98 $ 4,050 $ 4,050,000
Fulton County Development Authority RB
(Georgia Tech Athletic Association
Project) Series 1995 DN
3.70%** 04/07/98 3,500 3,500,000
Fulton County Development Authority RB
(The Alfred and Adele Davis Academy
Income Project ) Series 1996 DN
3.70%** 04/07/98 3,500 3,500,000
--------------
11,050,000
--------------
IDAHO--0.5%
Idaho GO Series 1997 TAN
4.62% 06/30/98 2,500 2,504,420
--------------
ILLINOIS--11.2%
Illinois Development Finance Authority
IDRB (6 West Hubbard Street Project)
Series 1986 DN
3.50%** 04/07/98 3,290 3,290,000
Illinois Development Finance Authority
IDRB (Foundation for Safety & Health
Project) Series 1992 DN
3.70%** 04/07/98 5,120 5,120,000
Illinois Development Finance Authority
IDRB (Lyric Opera Chicago Project)
Series 1994 DN
3.70%** 04/07/98 1,200 1,200,000
Illinois Development Finance Authority
IDRB (Royal Continental Box Co.
Project) Series 1995A DN
3.95%** 04/07/98 900 900,000
Illinois Development Finance Authority
IDRB (Webster-Wayne Shopping Center
Project) Series 1995 DN
3.70%** 04/07/98 6,130 6,130,000
Illinois Development Finance Authority
PCRB (The Uno-Ven Co. Project)
Series 1994 DN
3.70%** 04/07/98 10,000 10,000,000
Illinois Development Finance Authority
RB (Lasalle Foundation Project)
Series 1997 DN
3.70%** 04/07/98 4,000 4,000,000
Illinois Educational Facilities Authority
RB (Art Institute of Chicago Project)
Series 1992 DN
3.75%** 04/07/98 1,700 1,700,000
Illinois Educational Facilities Authority
RB (Cultural Pooled Financing Project)
Series 1998 DN
3.75%** 04/07/98 5,000 5,000,000
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.
5
<PAGE>
[GRAPHIC OMITTED] BLACKROCK FUNDS
STATEMENT OF NET ASSETS
MUNICIPAL MONEY MARKET PORTFOLIO (CONTINUED)
PAR
AS OF MARCH 31, 1998 (UNAUDITED) MATURITY (000) VALUE
-------- -------- ---------
MUNICIPAL BONDS (CONTINUED)
ILLINOIS (CONTINUED)
Illinois Health Facilities Authority RB
(Revolving Fund Pooled Financing
Project) Series 1985 DN
3.65%** 04/07/98 $ 1,200 $ 1,200,000
Illinois Health Facilities Authority RB
(University of Chicago Hospital Project)
Series 1994 DN
3.70%** 04/07/98 1,800 1,800,000
Illinois Student Loan Authority RB
Series 1996A DN
3.75%** 04/07/98 1,260 1,260,000
Illinois Student Loan Authority RB
Series 1998 DN
3.75%** 04/01/98 2,800 2,800,000
Roselle Village IDRB (Abrasive-Form, Inc.
Project) Series 1995 DN
4.05%** 04/07/98 1,900 1,900,000
Village of Schiller Park IDRB (Victor
Products Corp. Project) Series 1995 DN
4.05%** 04/07/98 600 600,000
--------------
56,900,000
--------------
INDIANA--3.2%
Delaware County Hospital RB (Cardinal
Health Systems Project)
Series 1998 DN
3.70%** 04/07/98 10,000 10,000,000
Marion RB (The Synectic Partnership
Project) Series 1997 DN
3.70%** 04/07/98 3,415 3,415,000
Monroe County IDRB (Griner Engineering
Project) Series 1997 DN
3.90%** 04/07/98 2,784 2,784,000
--------------
16,199,000
--------------
KENTUCKY--3.2%
Jefferson County Board of Education GO
Series 1997 RAN
3.86% 06/30/98 6,000 6,000,135
Maysville Solid Waste Disposal Facilities
RB (Inland Container Corp. Project)
Series 1992 MB
3.80% 06/25/98 10,000 10,000,000
--------------
16,000,135
--------------
LOUISIANA--3.2%
Louisiana Public Facilities Authority RB
(Hospital Revenue Program, Our Lady
of The Lake Hospital Project)
Series 1985 MB
3.50% 06/12/98 3,900 3,900,000
Louisiana Public Facilities Authority RB
(Hospital Revenue Program, Our Lady
of The Lake Hospital Project)
Series 1990 MB
3.40% 06/09/98 5,000 5,000,000
Louisiana Public Facilities Authority
Hospital RB (Willis-Knighton Medical
Center Project) Series 1993 DN
3.70%** 04/07/98 7,300 7,300,000
--------------
16,200,000
--------------
PAR
MATURITY (000) VALUE
-------- -------- ---------
MUNICIPAL BONDS (CONTINUED)
MARYLAND--10.1%
Anne Arundel County RB (Mountain
Ridge Apartments Project)
Series 1996D DN
3.65%** 04/01/98 $ 6,325 $ 6,325,000
Baltimore County PCRB (Baltimore Gas
and Electric Co. Project)
Series 1985 TECP
3.50% 04/06/98 4,500 4,500,000
Baltimore County RB (Paths at Loveton
Project) Series 1996 DN
3.65%** 04/07/98 5,660 5,660,000
Baltimore County RB (Shade Tree Trace
Project) Series 1996 DN
3.60%** 04/07/98 6,500 6,500,000
Maryland Health and Higher Educational
Facilities Authority RB (Helix Health
Hospitals Project) Series 1996A DN
3.65%** 04/07/98 5,000 5,000,000
Maryland Health and Higher Educational
Facilities Authority RB (Pooled Loan
Project) Series 1985A DN
3.75%** 04/07/98 2,000 2,000,000
Maryland IDA Finance RB (Brass Mill
Road Limited Partnership Facility Project)
Series 1995 DN
3.85%** 04/07/98 3,395 3,395,000
Maryland IDA Finance RB (Patapsco
Associates Limited Partnership Facility
Project) Series 1995 DN
3.85%** 04/07/98 2,060 2,060,000
Maryland State Finance Authority IDRB
(Baltimore International Culinary Project)
Series 1994 DN
3.60%** 04/07/98 3,525 3,525,000
Westminster Economic Development RB
(Western Maryland College, Inc.
Facilities Project) Series 1997 DN
3.58%** 04/07/98 12,000 12,000,000
--------------
50,965,000
--------------
MICHIGAN--0.4%
Northville IDRB (Thrifty Northville Project)
Series 1984 DN
3.77%** 04/07/98 2,000 2,000,000
--------------
MINNESOTA--2.6%
Becker PCRB (Northern States
Power) Series 1992A DN
3.50%** 04/07/98 7,400 7,400,000
Becker PCRB (Northern States
Power-Sherbourne Generating
Station Project) Series 1993A MB
3.55% 07/14/98 5,900 5,900,000
--------------
13,300,000
--------------
MISSISSIPPI--0.2%
Jackson IDRB (McCarty-Holman Co.
Project) Series 1985 DN
3.70%** 04/07/98 1,000 1,000,000
--------------
MISSOURI--2.2%
Kansas City IDRB (Mid-America Health
Services Project) Series 1984 DN
3.85%** 04/07/98 4,500 4,500,000
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
6
<PAGE>
BLACKROCK FUNDS [GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
MUNICIPAL MONEY MARKET PORTFOLIO (CONTINUED)
PAR
AS OF MARCH 31, 1998 (UNAUDITED) MATURITY (000) VALUE
-------- -------- ---------
MUNICIPAL BONDS (CONTINUED)
MISSOURI (CONTINUED)
Missouri Environmental
Improvement and Energy
Resource Authority RB (Kansas
City Power and Light Co.
Project) Series 1992 DN
3.75%** 04/07/98 $ 5,900 $ 5,900,000
Missouri Health and Educational Facility
Authority RB (Sisters of Mercy Health
System, St. Louis Project)
Series 1995B DN
3.65%** 04/07/98 1,000 1,000,000
--------------
11,400,000
--------------
NEBRASKA--0.4%
Nebraska Investment Finance Authority
Multifamily Loan RB (Apple Creek
Associates Project) Series 1985A DN
3.90%** 04/07/98 1,900 1,900,000
--------------
NEVADA--0.4%
Henderson Public Improvement Trust
RB (Berry Plastics Corp. Project)
Series 1991 DN
4.05%** 04/07/98 1,800 1,800,000
--------------
NEW HAMPSHIRE--1.4%
New Hampshire Business Finance
Authority RB (Wheelabrator Concord
Project) Series 1997B DN
3.75%** 04/07/98 1,200 1,200,000
New Hampshire Higher Educational and
Health Facilities Authority RB (Hunt
Community Issue Project)
Series 1996 DN
3.75%** 04/07/98 6,160 6,160,000
--------------
7,360,000
--------------
NEW YORK--0.8%
New York City Municipal Water
Series 1998 TECP
3.35% 05/08/98 3,900 3,900,000
--------------
NORTH CAROLINA--0.6%
North Carolina Medical Care
Commission Hospital RB (Moses H.
Cone Memorial Hospital Project)
Series 1993 DN
3.70%** 04/07/98 3,200 3,200,000
--------------
NORTH DAKOTA--0.8%
Fargo IDRB (Owen Industries, Inc.
Project) Series 1997 DN
3.90%** 04/07/98 1,000 1,000,000
Mercer County Solid Waste Disposal
RB (National Rural Utilities Project)
Series 1995A MB
3.55% 09/01/98 3,000 3,000,000
--------------
4,000,000
--------------
OHIO--4.6%
Berea GO Series 1997 BAN
4.00% 10/15/98 1,305 1,306,017
Hamilton County GO Series 1997 BAN
4.25% 06/12/98 6,010 6,013,983
PAR
MATURITY (000) VALUE
-------- -------- ---------
MUNICIPAL BONDS (CONTINUED)
OHIO (CONTINUED)
Montgomery County Economic
Development Authority RB (Dayton
Art Institute Project) Series 1996 DN
3.75%** 04/07/98 $ 4,400 $ 4,400,000
Montgomery County Limited Obligation
RB (Society of St. Vincent de Paul
Project) Series 1996 DN
3.75%** 04/07/98 3,900 3,900,000
Parma City GO Series 1997 BAN
4.95% 08/04/98 4,000 4,013,832
Youngstown IDRB (Portage Transformer
Company Project) Series 1996 DN
3.90%** 04/07/98 3,910 3,910,000
--------------
23,543,832
--------------
OKLAHOMA--3.2%
Muskogee Industrial Trust PCRB
(Oklahoma Gas and Electric Project)
Series 1995A DN
3.75%** 04/07/98 2,000 2,000,000
Muskogee Industrial Trust PCRB
(Oklahoma Gas and Electric Project)
Series 1997A DN
3.80%** 04/07/98 5,000 5,000,000
Oklahoma Water Resources Board State
Loan Program RB Series 1995 MB
3.55% 09/01/98 9,000 9,000,000
--------------
16,000,000
--------------
OREGON--0.6%
Portland Multi-Family Housing RB
(Village of Lovejoy Fountain Project)
Series 1997 DN
3.74%** 04/07/98 3,000 3,000,000
--------------
TENNESSEE--10.1%
Chattanooga IDRB (Southern Foundry
Supply, Inc. Project) Series 1996 DN
3.80%** 04/07/98 1,300 1,300,000
Clarksville Public Building Authority RB
Series 1997 DN
3.70%** 04/07/98 18,250 18,250,000
Montgomery County Public Building
Authority RB (Montgomery County
Loan Project) Series 1996 DN
3.70%** 04/07/98 1,000 1,000,000
Montgomery County Public Building
Authority Pooled Financing RB
(Montgomery County Loan Project)
Series 1995 DN
3.70%** 04/07/98 19,900 19,900,000
Montgomery County Public Building
Authority Pooled Financing RB
Series 1997 DN
3.70%** 04/07/98 8,000 8,000,000
Morristown IDRB (Bos Automotive
Products, Inc. Project) Series 1997 DN
3.80%** 04/07/98 2,000 2,000,000
Oak Ridge IDRB (Solid Waste M4
Environmental Project) Series 1996 DN
3.80%** 04/07/98 900 900,000
--------------
51,350,000
--------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
7
<PAGE>
[GRAPHIC OMITTED] BLACKROCK FUNDS
STATEMENT OF NET ASSETS
MUNICIPAL MONEY MARKET PORTFOLIO (CONCLUDED)
PAR
AS OF MARCH 31, 1998 (UNAUDITED) MATURITY (000) VALUE
-------- -------- ---------
MUNICIPAL BONDS (CONTINUED)
TEXAS--8.6%
Angelina and Neches River Authority
Solid Waste Disposal RB (Temple-
Eastex, Inc. Project) Series 1993 MB
3.85% 06/19/98 $ 5,000 $ 5,000,000
3.80% 06/25/98 1,000 1,000,000
Austin Higher Education Authority RB
(St. Edwards University Project)
Series 1995 DN
3.75%** 04/07/98 1,900 1,900,000
Board of Regents Texas A&M University
Series 1998 TECP
3.10% 05/06/98 15,000 15,000,000
Houston GO (Tax and Revenue
Project) Series 1997 TECP
4.50% 06/30/98 1,400 1,402,976
Houston GO Series 1998 TECP
3.60% 05/07/98 7,000 7,000,000
Mesquite Industrial Development Corp.
RB (Morrison Products, Inc. Project)
Series 1997 DN
3.74%** 04/07/98 4,000 4,000,000
Texas GO Series 1997 TRAN
4.75% 08/31/98 8,000 8,029,177
--------------
43,332,153
--------------
UTAH--1.6%
Utah GO Highway Commercial
Paper Note Series 1998A TECP
3.60% 05/20/98 8,000 8,000,000
--------------
VIRGINIA--2.9%
Lynchburg IDA Hospital Facilities RB
(VHA Mid-Atlantic States Capital Asset
Finance Program) Series 1985B DN
3.70%** 04/07/98 3,000 3,000,000
Metropolitan Washington D.C. Airports
Authority Passenger Facility
Flexible Term Notes Series 1998 MB
3.65% 04/24/98 8,000 8,000,000
Roanoke IDA Hospital RB (Carillon Health
System Project) Series 1995C DN
3.70%** 04/07/98 3,500 3,500,000
--------------
14,500,000
--------------
WASHINGTON--0.5%
Yakima County Public Corporation RB
(Jeld-Wen Income Project)
Series 1988 DN
3.70%** 04/07/98 2,540 2,540,000
--------------
WEST VIRGINIA--0.6%
Marshall County PCRB (PPG Industries,
Inc. Project) Series 1992 DN
3.80%** 04/07/98 3,000 3,000,000
--------------
WISCONSIN--2.0%
Stevens Point Tax-Exempt Facilities RB
(Consolidated Paper Co. Project)
Series 1997 DN
3.75%** 04/02/98 2,500 2,500,000
Wisconsin GO Series 1997 TRAN
4.50% 06/15/98 5,000 5,006,436
Wisconsin GO (Transportation
Revenue Project) Series 1997A TECP
3.35% 05/06/98 2,000 2,000,000
PAR
MATURITY (000) VALUE
-------- -------- ---------
MUNICIPAL BONDS (CONTINUED)
WISCONSIN (CONTINUED)
Wisconsin University Hospitals and
Clinics Authority RB Series 1997 DN
3.65%** 04/07/98 $ 500 $ 500,000
--------------
10,006,436
--------------
WYOMING--1.2%
Sweetwater County PCRB (Pacificorp
Project) Series 1992B DN
3.25%** 04/01/98 6,305 6,305,000
--------------
TOTAL INVESTMENTS IN SECURITIES
(Cost $504,672,846*) 99.7% 504,672,846
OTHER ASSETS IN EXCESS
OF LIABILITIES 0.3% 1,752,813
------ ------------
NET ASSETS (Equivalent to $1.00 per
share based on 123,114,679 Institutional
shares, 376,480,157 Service shares,
6,850,709 Investor A shares and 9,357
Investor C shares outstanding) 100.0% $506,425,659
====== ============
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
PER INSTITUTIONAL,
SERVICE, INVESTOR A AND
INVESTOR C SHARE
($506,425,659 (DIVIDE) 506,454,902) $1.00
=====
- --------------
* Aggregate cost for Federal tax purposes.
** Rates shown are the rates as of March 31, 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.
8
<PAGE>
BLACKROCK FUNDS [GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
NEW JERSEY MUNICIPAL MONEY MARKET PORTFOLIO
PAR
AS OF MARCH 31, 1998 (UNAUDITED) MATURITY (000) VALUE
-------- -------- ---------
MUNICIPAL BONDS--99.4%
NEW JERSEY--95.1%
Atlantic City Improvement Authority RB
(Convention Center Project)
Series 1985 MB
6.70% 07/01/98 $ 855 $ 860,924
Bergen County GO Series 1997 MB
4.50% 07/15/98 1,755 1,758,186
Berkeley Heights GO Series 1998 BAN
3.86% 11/06/98 1,056 1,056,033
Brick Township GO Series 1998 BAN
3.87% 02/18/99 4,151 4,160,734
Camden County Improvement Authority
RB (Jewish Community Center Project)
Series 1995 DN
3.50%** 04/01/98 1,035 1,035,000
Dover Township GO Series 1997 MB
5.00% 04/01/98 285 285,000
Essex County GO Series 1997 MB
4.35% 07/15/98 345 345,529
Evesham Township General Improvement
GO Series 1997A MB
4.80% 09/15/98 500 502,220
Evesham Township General Improvement
GO Series 1997B MB
4.80% 09/15/98 150 150,666
Fair Lawn GO Series 1997 BAN
3.95% 12/17/98 3,329 3,334,027
Galloway Township GO Series 1998 BAN
4.25% 10/30/98 3,000 3,007,120
Hillside Township GO Series 1997 MB
4.70% 06/15/98 150 150,242
Hopewell Township GO Series 1997 BAN
4.25% 05/22/98 1,208 1,208,913
Irvington Township GO Series 1993 MB
3.90% 04/01/98 440 440,000
Lumberton Township School District RB
(Fiscal Funding Project) Series 1998 MB
7.70% 04/07/98 125 130,012
Mommouth County Improvement Authority
RB Series 1995 MB
4.10% 07/15/98 500 500,780
Mount Olive Township Board of Education
GO Series 1998 MB
4.90% 01/15/99 760 767,318
Mullica Township GO Series 1997 MB
4.62% 11/15/98 105 105,525
New Jersey Economic Development
Authority RB (Bethany Baptist Church
Project) Series 1998 MB
3.60% 04/07/98 1,500 1,500,000
New Jersey Economic Development
Authority RB (East Meadow Corp.
Project) Series 1986B DN
3.80%** 04/07/98 4,770 4,770,000
New Jersey Economic Development
Authority RB (East Meadow Corp.
Project) Series 1997A DN
3.80%** 04/07/98 2,675 2,675,000
New Jersey Economic Development
Authority RB (First Mortgage Cranes
Mill Project) Series 1997 DN
3.60%** 04/07/98 3,600 3,600,000
PAR
MATURITY (000) VALUE
-------- -------- ---------
MUNICIPAL BONDS (CONTINUED)
NEW JERSEY (CONTINUED)
New Jersey Economic Development
Authority RB (Keystone Project)
Series 1992 MB
3.45% 04/07/98 $ 3,000 $ 3,000,000
3.20% 05/14/98 3,100 3,100,000
New Jersey Economic Development
Authority RB (Local Housing Project)
Series 1992D-1 DN
3.65%** 04/07/98 1,560 1,560,000
New Jersey Economic Development
Authority RB (Nandan Co. Project)
Series 1995 DN
3.75%** 04/07/98 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 (Venice Maid Foods
Project) Series 1997 DN
3.75%** 04/07/98 1,000 1,000,000
New Jersey Economic Development
Authority RB (St. James Prep. Project)
Series 1998 DN
3.60%** 04/07/98 1,000 1,000,000
New Jersey Economic Development
Authority RB (Wood Hollow Associates
Project) Series 1997 DN
3.75%** 04/07/98 2,495 2,495,000
New Jersey Economic Development
Authority PCRB (Public Service
Electric & Gas Co. Project)
Series 1995A DN
3.37%** 04/07/98 700 700,000
New Jersey Economic Development
Authority Refunding RB (Natural Gas
Co. Project) Series 1998B DN
3.35%** 04/07/98 2,500 2,500,000
New Jersey Economic Development
Authority Water Facilities RB
(Elizabethtown Water Co. Project)
Series 1997B DN
3.30%** 04/07/98 3,400 3,400,000
New Jersey Educational Facilities
Authority RB (Higher Education
Equipment Leasing Project)
Series 1994 MB
5.00% 09/01/98 200 200,974
New Jersey GO Series 1998 TRAN
3.50% 04/09/98 5,000 5,000,000
New Jersey Higher Education Assistance
Authority Student Loan RB (New Jersey
Class Loan Program Project)
Series 1997B MB
3.90% 06/01/98 1,400 1,400,000
New Jersey Housing & Mortgage Finance
Agency Tax-Exempt Eagle Trust
Certificates Series 1997A DN
3.77%** 04/07/98 4,000 4,000,000
New Jersey Sports and Exposition
Authority Luxury Tax RB (Convention
Center Project) Series 1998 MB
5.00% 07/01/98 150 150,457
New Jersey TRAN Commercial Paper
Series 1998
3.50% 06/15/98 2,000 2,000,000
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
[GRAPHIC OMITTED] BLACKROCK FUNDS
STATEMENT OF NET ASSETS
NEW JERSEY MUNICIPAL MONEY MARKET PORTFOLIO (CONCLUDED)
PAR
AS OF MARCH 31, 1998 (UNAUDITED) MATURITY (000) VALUE
-------- -------- ---------
MUNICIPAL BONDS (CONTINUED)
NEW JERSEY (CONTINUED)
New Jersey Transportation Trust Fund
Authority RB (P-Floats Project)
Series 1997 MB
3.45% 04/07/98 $ 4,425 $ 4,425,000
New Jersey Transportation Trust Fund
Authority Trust Receipts RB
(Transportation System Project)
Series 1996A DN
3.70%** 04/07/98 7,500 7,500,000
New Jersey Transportation Trust Fund
RB Series 1993A MB
4.30% 06/15/98 500 500,597
New Jersey Transportation Trust
Fund RB (Transportation System
Project) Series 1996B MB
5.00% 06/15/98 3,000 3,009,156
North Caldwell GO Series 1997 BAN
4.12% 06/12/98 999 999,572
Park Ridge GO Series 1997 MB
4.55% 08/01/98 195 195,474
Passaic County Utilities Authority GO
Series 1997B RAN
3.90% 08/04/98 1,800 1,800,000
Peapack Gladstone GO
Series 1997 BAN
4.25% 05/14/98 2,698 2,698,914
Plainsboro Township GO
Series 1997 BAN
4.50% 05/19/98 1,443 1,444,303
Rahway GO Series 1997 BAN
4.12% 10/09/98 1,000 1,001,381
Randolf Township GO
Series 1997 BAN
3.82% 06/19/98 1,000 1,000,061
Readington Township GO
Series 1997 MB
5.12% 04/15/98 220 220,082
Salem County Pollution Control
Financing Authority PCRB
(Atlantic City Electric Co. Project)
Series 1997A DN
3.45%** 04/07/98 1,200 1,200,000
Salem County Pollution Control
Financing Authority PCRB
(Atlantic City Electric Co. Project)
Series 1997B DN
3.55%** 04/07/98 1,000 1,000,000
Salem County Pollution Control
Financing Authority PCRB
(E.I. DuPont de Nemours & Company
Project) Series 1982A DN
3.40%** 04/07/98 9,600 9,600,000
Salem County Pollution Control
Financing Authority PCRB
(Public Service Electric and
Gas Project) Series 1997 DN
3.40%** 04/07/98 1,500 1,500,000
West Milford Township GO
Series 1998A BAN
4.00% 07/23/98 3,000 3,004,308
--------------
109,103,508
--------------
PAR
MATURITY (000) VALUE
-------- -------- ---------
MUNICIPAL BONDS (CONTINUED)
NEW YORK--4.3%
Port Authority of New York and
New Jersey RB Series 1998 MB
3.55% 04/07/98 $ 1,900 $ 1,900,000
3.45% 06/12/98 3,080 3,080,000
--------------
4,980,000
--------------
TOTAL INVESTMENTS IN SECURITIES
(Cost $114,083,508*) 99.4% 114,083,508
OTHER ASSETS IN EXCESS
OF LIABILITIES 0.6% 691,075
------ -------------
NET ASSETS (Equivalent to $1.00
per share based on 9,438,456
Institutional shares, 73,511,855
Service shares and 31,842,531
Investor A shares outstanding) 100.0% $114,774,583
====== ============
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
INSTITUTIONAL, SERVICE AND
INVESTOR A SHARE
($114,774,583 (DIVIDE) 114,792,842) $1.00
=====
- --------------
* Aggregate cost for Federal tax purposes.
** Rates shown are the rates as of March 31, 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.
10
<PAGE>
BLACKROCK FUNDS [GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
NORTH CAROLINA MUNICIPAL MONEY MARKET PORTFOLIO
PAR
AS OF MARCH 31, 1998 (UNAUDITED) MATURITY (000) VALUE
-------- -------- ---------
MUNICIPAL BONDS--99.8%
NORTH CAROLINA--91.2%
Asheville Certificates of Participation
Series 1993A DN
3.60%** 04/07/98 $ 1,100 $ 1,100,000
Buncombe County GO Series 1997 DN
3.65%** 04/07/98 6,000 6,000,000
Catawba County Industrial Facilities
and Pollution Control Financing
Authority IDRB (WSMP, Inc. Project)
Series 1992 DN
3.80%** 04/07/98 500 500,000
Charlotte Airport Refunding RB
Series 1993A DN
3.65%** 04/07/98 6,400 6,400,000
Charlotte Airport Refunding RB
Series 1997A DN
3.75%** 04/07/98 2,000 2,000,000
Charlotte-Mecklenburg Hospital Authority
RB (Health Care System Project)
Series 1996B DN
3.70%** 04/07/98 2,250 2,250,000
Cumberland County Industrial Facilities
and Pollution Control Financing
Authority IDRB (BG Properties, LLC
Project) Series 1998 DN
3.90%** 04/07/98 1,500 1,500,000
Durham GO Series 1993 DN
3.65%** 04/07/98 5,635 5,635,000
Gaston County GO Series 1997 MB
5.25% 05/01/98 1,200 1,201,341
Green County Industrial Facilities and
Pollution Control Financing Authority
IDRB (Federal Paper Board Co., Inc.
Project) Series 1989 DN
3.70%** 04/07/98 1,100 1,100,000
Green County Industrial Facilities and
Pollution Control Financing Authority
IDRB (Snow Hill Tape Corp. Project)
Series 1995 DN
3.70%** 04/07/98 2,000 2,000,000
Greensboro Certificate of Participation
(Equipment Project) Series 1994 DN
3.70%** 04/07/98 2,800 2,800,000
Greensboro Certificates of Participation
(Greensboro Coliseum Complex
Improvement Project) Series 1995A DN
3.70%** 04/07/98 2,000 2,000,000
Greensboro GO Public Improvement
Bonds Series 1998 DN
3.70%** 04/07/98 2,460 2,460,000
Guilford County Industrial Facilities and
Pollution Control Financing Authority
IDRB (U.S. Label Corp. Project)
Series 1995 DN
3.70%** 04/07/98 2,500 2,500,000
Haywood Regional Medical Center RB
Series 1997 DN
3.70%** 04/07/98 2,000 2,000,000
Johnston County Industrial Facilities and
Pollution Control Finance Authority
PCRB (Kabivitrum, Inc. Project)
Series 1988 DN
3.70%** 04/07/98 3,450 3,450,000
Lee County GO Series 1997 DN
4.80%** 04/01/98 1,250 1,250,000
PAR
MATURITY (000) VALUE
-------- -------- ---------
MUNICIPAL BONDS (CONTINUED)
NORTH CAROLINA (CONTINUED)
Lee County Industrial Facilities and
Pollution Control Financing Authority
Refunding IDRB (Trion, Inc. Project)
Series 1995 DN
3.60%** 04/07/98 $ 1,700 $ 1,700,000
Mecklenburg County GO
Series 1998C DN
3.65%** 04/07/98 5,000 5,000,000
Mecklenburg County Industrial Facilities
and Pollution Control Financing
Authority IDRB (Aplix, Inc. Project)
Series 1996 DN
3.70%** 04/07/98 4,200 4,200,000
Mecklenburg County Industrial Facilities
and Pollution Control Financing
Authority IDRB (Griffith Micro Science
Project) Series 1995 DN
3.75%** 04/07/98 1,500 1,500,000
Mecklenburg County Industrial Facilities
and Pollution Control Financing
Authority IDRB (Otto Industries, Inc.
Project) Series 1988 DN
3.80%** 04/07/98 2,950 2,950,000
Mecklenburg County Industrial Facilities
and Pollution Control Financing Authority
RB (Piedmont Plastics Project)
Series 1997 DN
3.90%** 04/07/98 4,700 4,700,000
New Hanover County GO
Series 1996 MB
5.00% 05/01/98 750 750,776
New Hanover County Industrial Facilities
IDRB (Interroll Corp. Project)
Series 1989 DN
3.80%** 04/02/98 1,195 1,195,000
North Carolina Agricultural Finance
Authority Agricultural Development RB
(Harvey Fertilizer & Gas Co. Project)
Series 1995 DN
3.70%** 04/07/98 1,740 1,740,000
North Carolina Eastern Municipal
Power Agency Power System RB
Series 1988B TECP
3.30% 05/18/98 1,190 1,190,000
3.45% 05/20/98 8,000 8,000,000
North Carolina Eastern Municipal Power
Agency Power System RB
Series 1998 TECP
3.20% 05/19/98 6,500 6,500,000
North Carolina Educational Facilities
Finance Agency RB (Duke University
Project) Series 1991B DN
3.60%** 04/07/98 200 200,000
North Carolina Educational Facilities
Finance Agency RB (Duke University
Project) Series 1992A DN
3.60%** 04/07/98 4,600 4,600,000
North Carolina Educational Facilities
Finance Agency RB (Gardner-Webb
University Project) Series 1997 DN
3.70%** 04/07/98 2,500 2,500,000
North Carolina Education Facility
Finance Agency RB (Greensboro
College Project) Series 1997 DN
3.70%** 04/01/98 500 500,000
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
[GRAPHIC OMITTED] BLACKROCK FUNDS
STATEMENT OF NET ASSETS
NORTH CAROLINA MUNICIPAL MONEY MARKET PORTFOLIO (CONTINUED)
PAR
AS OF MARCH 31, 1998 (UNAUDITED) MATURITY (000) VALUE
-------- -------- ---------
MUNICIPAL BONDS (CONTINUED)
NORTH CAROLINA (CONTINUED)
North Carolina Educational Facilities
Finance Agency RB (The Bowman
Gray School of Medicine Project)
Series 1990 DN
3.60%** 04/07/98 $ 2,500 $ 2,500,000
North Carolina Educational Facilities
Finance Agency RB (The Bowman
Gray School of Medicine Project)
Series 1996 DN
3.60%** 04/07/98 2,300 2,300,000
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 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
Hospital RB (Baptist Hospital Project)
Series 1992B DN
3.70%** 04/07/98 1,500 1,500,000
North Carolina Medical Care Commission
Hospital RB (Duke University Hospital
Project) Series 1985D DN
3.60%** 04/07/98 1,000 1,000,000
North Carolina Medical Care Commission
Hospital RB (Lincoln Health System
Project) Series 1996A DN
3.70%** 04/07/98 4,500 4,500,000
North Carolina Medical Care Commission
Hospital RB (Moses H. Cone Memorial
Hospital Project) Series 1993 DN
3.70%** 04/07/98 1,600 1,600,000
North Carolina Medical Care Commission
Hospital RB (Park Ridge Hospital
Project) Series 1988 DN
3.70%** 04/07/98 3,800 3,800,000
North Carolina Medical Care Commission
Hospital RB (Pooled Equipment
Financing Project) Series 1985 DN
3.65%** 04/07/98 8,200 8,200,000
North Carolina Medical Care Commission
Hospital RB (Pooled Financing Project)
Series 1994 DN
3.70%** 04/07/98 2,500 2,500,000
North Carolina Medical Care Commission
RB (Angel Medical Center, Inc.
Project) Series 1997 DN
3.70%** 04/07/98 3,000 3,000,000
North Carolina Municipal Power Agency
Number 1 (Catawba Project)
Series 1998 TECP
3.40% 05/14/98 4,600 4,600,000
3.55% 05/15/98 4,000 4,000,000
Person County Industrial Facilities
and Pollution Control Financing
Authority RB (Carolina Power &
Light Co. Project) Series 1992A DN
3.80%** 04/07/98 1,200 1,200,000
Rockingham County Industrial Facilities
and Pollution Control Financing
Authority RB (Whiteridge, Inc. Project)
Series 1998 DN
3.90%** 04/07/98 1,500 1,500,000
PAR
MATURITY (000) VALUE
-------- -------- ---------
MUNICIPAL BONDS (CONTINUED)
NORTH CAROLINA (CONTINUED)
Sampson County Industrial Facilities and
Pollution Control Financing Authority
IDRB (Dubose Strapping, Inc. Project)
Series 1997 DN
3.80%** 04/07/98 $ 1,800 $ 1,800,000
Union County Industrial Facilities and
Pollution Control Financing Authority
IDRB (Rock-Tenn Converting Co.
Project) Series 1997 DN
3.80%** 04/07/98 1,750 1,750,000
University of North Carolina Chapel Hill
RB (Parking System Project)
Series 1997C DN
3.70%** 04/07/98 1,400 1,400,000
University of North Carolina Chapel Hill
School of Medicine RB (Ambulatory
Care Clinic Project) Series 1990 DN
3.75%** 04/07/98 1,900 1,900,000
Wake County Industrial Facilities
and Pollution Control Financing
Authority RB (Carolina Power &
Light Co. Project) Series 1985A DN
3.60%** 04/07/98 3,380 3,380,000
Wake County Industrial Facilities and
Pollution Control Financing Authority
RB (Carolina Power & Light Co.
Project) Series 1985B DN
4.50%** 04/07/98 8,400 8,400,000
Wake County Industrial Facilities and
Pollution Control Financing Authority
RB (Carolina Power & Light Co.
Project) Series 1985C DN
4.50%** 04/07/98 1,400 1,400,000
Wake County Industrial Facilities and
Pollution Control Financing Authority
RB (Carolina Power & Light Co.
Project) Series 1987 DN
3.90%** 04/01/98 2,550 2,550,000
Wake County Industrial Facilities and
Pollution Control Financing Authority
Refunding RB (Carolina Power & Light
Co. Project) Series 1990A TECP
4.10% 04/02/98 5,500 5,500,000
Wilkes County Industrial Facilities and
Pollution Control Financing Authority
RB (Schas Circular Industries, Inc.
Project) Series 1997A DN
3.75%** 04/07/98 6,325 6,325,000
Wilson County Industrial Facilities and
Pollution Control Financing Authority
IDRB (North Carolina Chip Co.
Project) Series 1989 DN
3.80%** 04/07/98 500 500,000
Winston Salem Certificates of
Participation (Risk Acceptance
Management Corp. Project)
Series 1988 DN
3.75%** 04/07/98 460 460,000
Winston Salem GO Series 1991C MB
6.50% 06/01/98 500 502,298
--------------
174,999,415
--------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
12
<PAGE>
BLACKROCK FUNDS [GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
NORTH CAROLINA MUNICIPAL MONEY MARKET PORTFOLIO (CONCLUDED)
PAR
AS OF MARCH 31, 1998 (UNAUDITED) MATURITY (000) VALUE
-------- -------- ---------
MUNICIPAL BONDS (CONTINUED)
PUERTO RICO--8.6%
Puerto Rico GO Series 1997A TRAN
4.50% 07/30/98 $ 7,500 $ 7,518,113
Puerto Rico Industrial, Medical and
Environmental Pollution Control
Facilities Financing Authority RB
(Key Pharmaceuticals Project)
Series 1983 MB
3.75% 12/01/98 5,000 4,998,830
Puerto Rico Government Development
Bank Series 1998 TECP
3.40% 05/12/98 4,000 4,000,000
--------------
16,516,943
--------------
TOTAL INVESTMENTS IN SECURITIES
(Cost $191,516,358*) 99.8% 191,516,358
OTHER ASSETS IN EXCESS
OF LIABILITIES 0.2% 376,618
------ ------------
NET ASSETS (Equivalent to $1.00
per share based on 168,704,976
Institutional shares, 22,964,845
Service shares and 222,696 Investor A
shares outstanding) 100.0% $191,892,976
====== ============
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
INSTITUTIONAL, SERVICE AND
INVESTOR A SHARE
($191,892,976 (DIVIDE) 191,892,517) $1.00
=====
- -------------
* Aggregate cost for Federal tax purposes.
** Rates shown are the rates as of March 31, 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.
13
<PAGE>
[GRAPHIC OMITTED] BLACKROCK FUNDS
STATEMENT OF NET ASSETS
OHIO MUNICIPAL MONEY MARKET PORTFOLIO
PAR
AS OF MARCH 31, 1998 (UNAUDITED) MATURITY (000) VALUE
-------- -------- ---------
MUNICIPAL BONDS--99.6%
OHIO--99.6%
Belmont County GO Series 1997 BAN
4.17% 11/24/98 $ 1,250 $ 1,252,108
Berea GO Series 1997 BAN
4.00% 10/15/98 1,000 1,000,779
Butler County GO Series 1997 BAN
4.25% 10/22/98 2,000 2,004,304
Butler County Transportation
Improvement District Authority RB
Series 1997A MB
6.00% 04/01/98 3,000 3,000,000
Cincinnati City School District GO
Series 1998 TAN
4.08% 12/31/98 2,000 2,006,969
Cleveland Airport System RB
Series 1997D DN
3.80%** 04/07/98 3,000 3,000,000
Cuyahoga County Hospital RB
(Cleveland Clinic Foundation Project)
Series 1997A DN
3.70%** 04/01/98 1,400 1,400,000
Cuyahoga County Hospital RB
(Cleveland Clinic Foundation
Project) Series 1998A DN
3.70%** 04/01/98 700 700,000
Cuyahoga County IDRB (Pleasant Lake
Associates Project) Series 1995 DN
3.74%** 04/07/98 920 920,000
Delaware County IDRB (Air Waves, Inc.
Project) Series 1995 DN
3.89%** 04/07/98 935 935,000
East Palestine GO Series 1997 BAN
3.93% 08/28/98 1,000 1,000,000
Erie County IDRB (Brighton Manor Co.
Project) Series 1986 DN
3.85%** 04/07/98 3,700 3,700,000
Franklin County IDRB (Alco Standard
Corp. Project) Series 1994 DN
3.75%** 04/07/98 2,000 2,000,000
Greene County Economic Development
RB (Ashford Center Project)
Series 1995 DN
3.80%** 04/07/98 2,040 2,040,000
Greene County IDRB (AFC Stamping &
Production, Inc., Barsplice Products
Project) Series 1995 DN
3.89%** 04/07/98 1,000 1,000,000
Greene County IDRB (Antioch Publishing
Co. Project) Series 1996 DN
3.90%** 04/07/98 2,200 2,200,000
Hamilton County GO Series 1997 BAN
4.25% 06/12/98 1,730 1,731,146
Hilliard City GO Series 1997 BAN
4.15% 09/10/98 1,100 1,101,406
Lucas County Health Facilities Authority
RB (Lutheran Homes Society Project)
Series 1996 DN
3.75%** 04/07/98 700 700,000
Lucas County IDRB (Vega Industries, Inc.
Project) Series 1995 DN
3.90%** 04/07/98 2,040 2,040,000
Mason City GO Series 1997 BAN
3.95% 12/17/98 1,150 1,151,183
Medina County Housing RB (The Oaks at
Medina Project) Series 1997B DN
3.75%** 04/07/98 700 700,000
PAR
MATURITY (000) VALUE
-------- -------- ---------
MUNICIPAL BONDS (CONTINUED)
OHIO (CONTINUED)
Moreland Hills GO Series 1997 BAN
4.05% 07/13/98 $ 1,150 $ 1,150,955
Newark City GO Series 1998 BAN
4.00% 03/12/99 2,000 2,006,369
Ohio Air Quality Development Authority
PCRB (JMG Funding, Ltd. Partnership
Project) Series 1994B DN
3.65%** 04/01/98 2,400 2,400,000
Ohio Air Quality Development Authority
PCRB (JMG Funding, Ltd. Partnership
Project) Series 1995B DN
3.65%** 04/07/98 3,100 3,100,000
Ohio Air Quality Development Authority
PCRB (Ohio Edison Co. Project)
Series 1988B MB
4.10% 05/01/98 1,800 1,800,000
Ohio Air Quality Development Authority
PCRB (Pennsylvania Power Co.
Project) Series 1997 DN
3.75%** 04/07/98 4,500 4,500,000
Ohio Air Quality Development Authority
PCRB (PPG Industries, Inc. Project)
Series 1988A DN
3.80%** 04/07/98 7,000 7,000,000
Ohio Air Quality Development Authority
PCRB (Timken Co. Project)
Series 1992 DN
3.70%** 04/01/98 2,700 2,700,000
Ohio Air Quality Development Authority
PCRB (USX Project) Series 1995 MB
3.55% 06/15/98 2,115 2,115,000
Ohio Environmental Improvement RB
(U.S. Steel Corp. Project)
Series 1986 DN
4.25%** 04/07/98 1,000 1,000,000
Ohio Higher Educational Facility
Community RB (Oberlin College
Project) Series 1985 DN
3.55%** 04/07/98 2,000 2,000,000
Ohio Housing Finance Authority
Mortgage RB Series 1995A-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% 05/01/98 670 670,000
Ohio Housing Finance Agency
Multi-Family Housing RB (The Club at
Spring Valley Apartments Project)
Series 1996A DN
3.74%** 04/07/98 4,500 4,500,000
Ohio IDRB (Anomatic Corp. Project)
Series 1994 DN
3.90%** 04/02/98 1,350 1,350,000
Ohio IDRB (Ashley Ward, Inc. Project)
Series 1997 DN
3.95%** 04/07/98 2,000 2,000,000
Ohio Solid Waste Disposal RB
(B.P. Exploration and Oil Project)
Series 1998 DN
3.85%** 04/07/98 1,300 1,300,000
Ohio Solid Waste Disposal RB (USG
Corp. Project) Series 1997 DN
3.75%** 04/07/98 3,000 3,000,000
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
14
<PAGE>
BLACKROCK FUNDS [GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
OHIO MUNICIPAL MONEY MARKET PORTFOLIO (CONCLUDED)
PAR
AS OF MARCH 31, 1998 (UNAUDITED) MATURITY (000) VALUE
-------- -------- ---------
MUNICIPAL BONDS (CONTINUED)
OHIO (CONTINUED)
Ohio Special Obligation Elementary and
Secondary Education Capital Facilities
RB Series 1997 MB
4.50% 12/01/98 $ 1,200 $ 1,205,438
Ohio Water Authority Solid Waste
Disposal RB (American Steel & Wire
Corp. Project) Series 1995 DN
3.85%** 04/07/98 8,100 8,100,000
Ohio Water Development Authority PCRB
(Cleveland Electric Co. Project)
Series 1997B DN
3.70%** 04/07/98 5,000 5,000,000
Ohio Water Development Authority
Refunding RB (Timken Co. Project)
Series 1992 DN
3.70%** 04/07/98 3,000 3,000,000
Orange Village City GO Series 1998 BAN
3.75% 10/27/98 1,250 1,250,000
Parma City GO Series 1998 BAN
4.95% 08/05/98 3,000 3,013,317
Pickerington City GO Series 1997 BAN
4.25% 11/13/98 1,800 1,803,746
Portage County IDRB (Action Super
Abrasive Project) Series 1996 DN
3.90%** 04/07/98 1,150 1,150,000
Portage County IDRB (Lovejoy Industries
Project) Series 1994 DN
3.95%** 04/07/98 1,410 1,410,000
Springboro City GO Series 1998 BAN
4.05% 01/28/99 1,100 1,102,185
Strongsville GO Series 1997 BAN
4.02% 11/18/98 1,400 1,402,047
Strongsville IDRB (Web Plastics Co.
Project) Series 1997 DN
3.90%** 04/07/98 1,135 1,135,000
Summit County IDRB (Austin Printing Co.,
Inc. Project) Series 1994 DN
3.90%** 04/07/98 520 520,000
Summit County IDRB (Forest Manufacturing
Project) Series 1994 DN
3.85%** 04/02/98 400 400,000
Toledo Adjustable Rate City Services
Special Assessment Notes
Series 1997 DN
3.70%** 04/07/98 3,000 3,000,000
Trumbull County IDRB (ATD Corp. Project)
Series 1995 DN
3.89%** 04/07/98 1,905 1,905,000
Westlake Economic Development RB
(Oaks Development Co. Project)
Series 1994 DN
3.80%** 04/07/98 1,895 1,895,000
Westlake School District GO
Series 1997 BAN
4.29% 06/10/98 1,250 1,251,146
--------------
VALUE
-------------
TOTAL INVESTMENTS IN SECURITIES
(Cost $121,718,098*) 99.6% $121,718,098
OTHER ASSETS IN EXCESS
OF LIABILITIES 0.4% 449,237
------ ------------
NET ASSETS (Equivalent to $1.00 per
share based on 30,525,024 Institutional
shares, 71,986,333 Service shares and
19,684,867 Investor A shares outstanding) 100.0% $122,167,335
====== ============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER
INSTITUTIONAL, SERVICE AND
INVESTOR A SHARE
($122,167,335 (DIVIDE) 122,196,224) $1.00
=====
- -----------------
* Aggregate cost for Federal tax purposes.
** Rates shown are the rates as of March 31, 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.
15
<PAGE>
[GRAPHIC OMITTED] BLACKROCK FUNDS
STATEMENT OF NET ASSETS
PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO
PAR
AS OF MARCH 31, 1998 (UNAUDITED) MATURITY (000) VALUE
-------- -------- ---------
MUNICIPAL BONDS--99.9%
PENNSYLVANIA--95.4%
Allegheny County RB (U.S. Steel Corp.
Project) Series 1985 MB
3.50% 05/13/98 $ 2,100 $ 2,100,000
3.55% 06/10/98 5,000 5,000,000
Allegheny County Environmental
Improvement RB (USX Corp. Project)
Series 1998 MB
3.20% 05/07/98 1,000 1,000,000
Allegheny County Higher Education Building
Authority RB (University of Pittsburgh
Project) Series 1985C DN
3.55%** 04/07/98 1,890 1,890,000
Allegheny County Hospital Development
Authority RB (Allegheny General
Hospital Project) Series 1995B DN
3.65%** 04/07/98 11,600 11,600,000
Allegheny County IDA PCRB (Duquesne
Light Co. Project) Series 1990A MB
3.60% 01/27/99 5,000 5,000,000
Allegheny County IDA RB (United Mobile
Video Project) Series 1997 DN
3.85%** 04/02/98 4,000 4,000,000
Allegheny County IDA Refunding PCRB
(Duquesne Light Co. Project)
Series 1992A MB
3.85% 10/21/98 8,000 8,000,000
Beaver County IDA Environmental
Improvement RB (BASF Corp.
Project) Series 1997 DN
3.95%** 04/07/98 1,900 1,900,000
Beaver County IDA PCRB (Duquesne
Light Co.; Beaver Valley Project)
Series 1998 MB
3.45% 05/14/98 9,400 9,400,000
3.60% 05/15/98 1,000 1,000,000
Beaver County IDA Refunding PCRB
(Atlantic Richfield Co. Project)
Series 1995 DN
3.65%** 04/07/98 9,200 9,200,000
Beaver County IDA Refunding PCRB
(Duquesne Light Co.; Beaver Valley
Project) Series 1990A DN
3.60%** 04/07/98 4,100 4,100,000
Beaver County IDA Refunding PCRB
(Duquesne Light Co.; Mansfield
Project) Series 1990B DN
3.60%** 04/07/98 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
Beaver County IDRB (Duquesne Light Co.;
Beaver Valley Project) Series 1998 MB
3.50% 04/01/98 800 800,000
3.50% 06/05/98 1,000 1,000,000
Bedford County IDA IDRB (Sepa, Inc.
Facility Project) Series 1985 DN
3.70%** 04/07/98 3,000 3,000,000
Berks County IDA RB Series 1996 MB
3.60% 07/17/98 4,200 4,200,000
Berks County IDA Manufacturing
Facilities RB (Grafika Commercial
Printing, Inc. Project) Series 1995 DN
3.90%** 04/07/98 2,790 2,790,000
PAR
MATURITY (000) VALUE
-------- -------- ---------
MUNICIPAL BONDS (CONTINUED)
PENNSYLVANIA (CONTINUED)
Berks County IDA RB (Beacon
Container Corp. Project)
Series 1997A DN
4.62%** 04/01/98 $ 2,600 $ 2,600,000
Berks County IDA RB (Berks Products
Project) Series 1996 DN
3.90%** 04/07/98 2,620 2,620,000
Berks County IDA RB (Lutheran Home
at Topton Project) Series 1995 DN
3.60%** 04/07/98 1,800 1,800,000
Berks County IDA RB (Richard J. Caron
Foundation Project) Series 1996 DN
3.60%** 04/01/98 1,900 1,900,000
Berks County IDA RB (Hub Fabricating
Project) Series 1996 DN
3.65%** 04/07/98 4,865 4,865,000
Bucks County IDA Environmental
Improvement Refunding RB
(USX Corp. Project) Series 1995 MB
3.55% 04/01/98 2,360 2,360,000
Bucks County IDA RB (SHV Real Estate,
Inc. Project) Series 1985 DN
3.60%** 04/07/98 2,200 2,200,000
Bucks County IDA Refunding RB
(Sundstrand Corp. Project)
Series 1991 DN
3.75%** 04/07/98 1,505 1,505,000
Cambria County IDA Resource
Recovery RB (Cambria Cogen Co.
Project) Series 1989V-1 DN
3.75%** 04/07/98 24,500 24,500,000
Cambria County IDA Resource
Recovery RB (Cambria Cogen Co.
Project) Series 1989V-2 DN
3.75%** 04/07/98 4,300 4,300,000
Cambria County IDA Resource
Recovery RB (Cambria Cogen Co.
Project) Series 1991V-1 DN
3.75%** 04/07/98 700 700,000
Carbon County IDA Resource
Recovery RB (Panther Creek
Partners Project) Series 1990A MB
3.45% 05/14/98 3,200 3,200,000
Carbon County IDA Resource
Recovery RB (Panther Creek
Partners Project) Series 1998 MB
3.45% 05/14/98 300 300,000
3.60% 07/13/98 8,355 8,355,000
Carbon County Series 1998 TECP
3.50% 06/12/98 16,080 16,080,000
Central Bucks School District GO
Series 1997 MB
3.85% 05/15/98 1,280 1,280,000
Cumberland County IDRB
(Lane Enterprises, Inc. Project)
Series 1994 DN
3.90%** 04/07/98 725 725,000
Cumberland County Municipal
Authority RB (Presbyterian Homes
Project) Series 1993A DN
3.70%** 04/07/98 6,000 6,000,000
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
16
<PAGE>
BLACKROCK FUNDS [GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO (CONTINUED)
PAR
AS OF MARCH 31, 1998 (UNAUDITED) MATURITY (000) VALUE
-------- -------- ---------
MUNICIPAL BONDS (CONTINUED)
PENNSYLVANIA (CONTINUED)
Dallastown Area School District (York
County) GO Series 1998 DN
3.75%** 04/07/98 $ 5,000 $ 5,000,000
Dauphin County General Authority RB
(Allhealth Pooled Financing Program
Project) Series 1997A MB
3.75% 04/01/98 7,200 7,200,000
Dauphin County General Authority RB
(Education & Health Loan
Program Project) Series 1997 DN
3.75%** 04/07/98 5,000 5,000,000
Delaware County IDA PCRB (B.P. Oil,
Inc. Project) Series 1985 DN
3.80%** 04/01/98 3,000 3,000,000
Delaware County IDA PCRB (B.P. Oil,
Inc. Project) Series 1995 DN
3.80%** 04/01/98 3,650 3,650,000
Delaware County IDA Refunding PCRB
(PECO Energy Project)
Series 1993A DN
3.80%** 04/07/98 2,400 2,400,000
Delaware County IDA Resource Recovery
Facility RB (General Electric Credit
Corp. Project) Series 1997G DN
3.60%** 04/07/98 1,500 1,500,000
Delaware County IDA Solid Waste RB
(Scott Paper Co. Project)
Series 1984A DN
3.65%** 04/07/98 600 600,000
Delaware County IDA Solid Waste RB
(Scott Paper Co. Project)
Series 1984C DN
3.65%** 04/07/98 700 700,000
Delaware County IDA Solid Waste RB
(Scott Paper Co. Project)
Series 1984D DN
3.65%** 04/07/98 1,800 1,800,000
Delaware County IDA Solid Waste RB
(Scott Paper Co. Project)
Series 1984E DN
3.65%** 04/07/98 1,595 1,595,000
Delaware Valley Finance Authority Local
Government RB Series 1985C DN
3.65%** 04/07/98 1,300 1,300,000
Delaware Valley Finance Authority Local
Government RB Series 1985D DN
3.65%** 04/07/98 3,100 3,100,000
Delaware Valley Regional Finance
Authority Local Government RB
Series 1985B DN
3.65%** 04/07/98 3,000 3,000,000
Delaware Valley Regional Finance
Authority Local Government RB
Series 1998 DN
3.65%** 04/07/98 12,525 12,525,000
Elk County IDA Solid Waste RB
(Williamette Industries, Inc. Project)
Series 1992 DN
3.70%** 04/07/98 18,000 18,000,000
Emmaus General Authority Pooled Loan
Local Government RB
Series 1989G DN
3.70%** 04/07/98 6,100 6,100,000
PAR
MATURITY (000) VALUE
-------- -------- ---------
MUNICIPAL BONDS (CONTINUED)
PENNSYLVANIA (CONTINUED)
Emmaus General Authority RB Pooled
Loan Series 1989B-15 DN
3.70%** 04/07/98 $ 2,100 $ 2,100,000
Emmaus General Authority RB Pooled
Loan Series 1989B-16 DN
3.70%** 04/07/98 3,500 3,500,000
Emmaus General Authority RB Pooled
Loan Series 1989D-2 DN
3.70%** 04/01/98 10,000 10,000,000
Emmaus General Authority RB Pooled
Loan Series 1989B-17 DN
3.70%** 04/07/98 7,000 7,000,000
Emmaus General Authority RB Pooled
Loan Series 1989F-1 DN
3.70%** 04/01/98 800 800,000
Emmaus General Authority RB Pooled
Loan Series 1989F-10 DN
3.70%** 04/07/98 1,000 1,000,000
Emmaus General Authority RB Pooled
Loan Series 1989F-12 DN
3.70%** 04/07/98 800 800,000
Emmaus General Authority RB Pooled
Loan Series 1989G-2 DN
3.70%** 04/07/98 6,800 6,800,000
Emmaus General Authority RB Pooled
Loan Series 1989G-9 DN
3.70%** 04/07/98 1,300 1,300,000
Emmaus General Authority RB Pooled
Loan Series 1989H DN
3.70%** 04/07/98 5,550 5,550,000
Emmaus General Authority RB Pooled
Loan Series 1996 DN
3.75%** 04/07/98 4,500 4,500,000
Erie County IDA RB (American Turned
Products Project) Series 1997 DN
3.89%** 04/07/98 2,000 2,000,000
Erie County RB (Reed Manufacturing
Project) Series 1997 DN
3.90%** 04/07/98 1,500 1,500,000
Indiana County IDA RB (Conemaugh
Project) Series 1997A DN
3.65%** 04/07/98 10,700 10,700,000
Lehigh County IDA PCRB (Allegheny
Electric Co-op, Inc. Project)
Series 1984 DN
3.40%** 04/07/98 800 800,000
Lehigh County IDA PCRB (Allegheny
Electric Co-op, Inc. Project)
Series 1985A DN
3.60%** 04/07/98 1,300 1,300,000
Lehigh County Sewer Authority RB
Series 1985B DN
3.65%** 04/07/98 1,770 1,770,000
Lehigh County Water Authority RB
Series 1984 DN
3.65%** 04/07/98 5,145 5,145,000
Littlestown IDA Refunding RB (Hanover
House Industries Project)
Series 1987 DN
3.70%** 04/07/98 8,000 8,000,000
Mercersburg Boro General Purpose
Authority RB (Mercersburg College
Project) Series 1997 DN
3.80%** 04/07/98 9,500 9,500,000
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
17
<PAGE>
[GRAPHIC OMITTED] BLACKROCK FUNDS
STATEMENT OF NET ASSETS
PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO (CONTINUED)
PAR
AS OF MARCH 31, 1998 (UNAUDITED) MATURITY (000) VALUE
-------- -------- ---------
MUNICIPAL BONDS (CONTINUED)
PENNSYLVANIA (CONTINUED)
Monroe County IDA RB (United Steel
Enterprises Project)
Series 1996-A DN
3.90%** 04/07/98 $ 1,990 $ 1,990,000
Montgomery County GO
Series 1996 DN
3.45%** 04/07/98 1,100 1,100,000
Montgomery County Higher Education
and Health Authority Hospital RB
Series 1988 DN
3.65%** 04/07/98 900 900,000
Montgomery County IDA Manufacturing
Facilities RB (H.P. Cadwallander, Inc.
Project) Series 1995 DN
3.90%** 04/07/98 800 800,000
Montgomery County IDA RB
(PECO Energy Project) MB
3.50% 07/13/98 1,690 1,690,000
Montgomery County IDA RB (Apple Fresh
Foods Ltd Project) Series 1996 DN
3.90%** 04/07/98 970 970,000
Montgomery County RB (PECO Energy
Project) Series 1996A MB
3.40% 06/01/98 10,900 10,900,000
Northampton County IDA IDRB (Citizens
Utilities Project) Series 1991 MB
3.60% 06/01/98 2,000 2,000,000
3.60% 07/17/98 2,000 2,000,000
Northampton County IDA IDRB (Citizens
Utilities Project) Series 1996 DN
3.80%** 04/07/98 8,375 8,375,000
Northeastern Hospital and Education
Authority Health Care RB (Wyoming
Valley Health Care Project)
Series 1994A DN
3.65%** 04/07/98 10,500 10,500,000
Northumberland County IDA RB
(Furman Farms, Inc. Project)
Series 1995A DN
3.90%** 04/07/98 1,225 1,225,000
Northumberland County IDA Resource
Recovery RB (Foster Wheeler Mt.
Carmel Project) Series 1987A DN
3.80%** 04/07/98 3,545 3,545,000
Northumberland County IDA Resource
Recovery RB (Foster Wheeler Mt.
Carmel Project) Series 1987B DN
3.80%** 04/07/98 590 590,000
Oil City School District GO
Series 1997 BAN
3.95% 08/27/98 1,000 1,000,000
Pennsylvania Economic Development
Financing Authority RB (National
Gypsum Co., Shippingport Project)
Series 1997A DN
3.80%** 04/07/98 15,000 15,000,000
Pennsylvania Economic Development
Financing Authority RB (Wendt
Dunnington Co. Project)
Series 1995 DN
3.80%** 04/07/98 1,080 1,080,000
Pennsylvania Economic Development
Financing Authority Retirement Facility
RB (Homewood Retirement Centers
Project) Series 1992 DN
3.72%** 04/07/98 6,125 6,125,000
PAR
MATURITY (000) VALUE
-------- -------- ---------
MUNICIPAL BONDS (CONTINUED)
PENNSYLVANIA (CONTINUED)
Pennsylvania Energy Development
Authority RB (B&W Ebensburg
Project) Series 1986 DN
3.75%** 04/07/98 $11,910 $ 11,910,000
Pennsylvania Energy Development
Authority RB (B&W Ebensburg
Project) Series 1988 DN
3.75%** 04/07/98 2,900 2,900,000
Pennsylvania Energy Development
Authority RB (Piney Creek Project)
Series 1986A DN
3.70%** 04/01/98 14,650 14,650,000
Pennsylvania Energy Development
Authority RB (Piney Creek Project)
Series 1986C DN
3.70%** 04/07/98 3,800 3,800,000
Pennsylvania GO Series 1992 MB
6.00% 09/15/98 2,000 2,020,471
Pennsylvania Higher Education
Assistance Agency Student Loan
RB Series 1988A DN
3.80%** 04/07/98 4,700 4,700,000
Pennsylvania Higher Education
Assistance Agency Student Loan
RB Series 1988B DN
3.80%** 04/07/98 10,200 10,200,000
Pennsylvania Higher Education
Assistance Agency Student Loan
RB Series 1988C DN
3.80%** 04/07/98 5,900 5,900,000
Pennsylvania Higher Education
Assistance Agency Student Loan
RB Series 1988E DN
3.80%** 04/07/98 100 100,000
Pennsylvania Higher Education
Assistance Agency Student Loan
RB Series 1994A DN
3.80%** 04/01/98 1,150 1,150,000
Pennsylvania Higher Education
Assistance Agency Student Loan
RB Series 1995A DN
3.80%** 04/07/98 3,500 3,500,000
Pennsylvania Higher Education
Facilities Authority RB (Allegheny
College Project) Series 1996 DN
3.70%** 04/07/98 1,000 1,000,000
Pennsylvania Higher Educational
Facilities Authority College and
University RB (Pennsylvania College
of Optometry Project) Series 1996 DN
3.70%** 04/07/98 6,800 6,800,000
Pennsylvania Higher Educational
Facilities Authority RB (University of
Pennsylvania Project) Series 1994B DN
3.55%** 04/07/98 8,400 8,400,000
Pennsylvania Higher Educational
Facilities Authority RB (University of
Pennsylvania Health Services Project)
Series 1996C DN
3.60%** 04/07/98 7,400 7,400,000
Philadelphia GO Series 1997A TRAN
4.50% 06/30/98 4,000 4,007,954
Philadelphia IDA RB (GDL Estates Corp.
Project) Series 1998B DN
3.60%** 04/07/98 3,565 3,565,000
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
18
<PAGE>
BLACKROCK FUNDS [GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO (CONTINUED)
PAR
AS OF MARCH 31, 1998 (UNAUDITED) MATURITY (000) VALUE
-------- -------- ---------
MUNICIPAL BONDS (CONTINUED)
PENNSYLVANIA (CONTINUED)
Philadelphia IDA RB (30th Street Station
Project) Series 1987 DN
3.75%** 04/07/98 $ 6,900 $ 6,900,000
Philadelphia Redevelopment Authority
Multi-Family Housing RB (Franklin
Town Towers Project) Series 1985 DN
3.65%** 04/07/98 5,300 5,300,000
Philadelphia Water and Wastewater RB
Series 1997B DN
3.82%** 08/05/98 2,000 2,000,000
Pottsville Hospital Authority RB
(Daughters of Charity Project)
Series 1997F DN
3.65%** 04/07/98 7,200 7,200,000
Sayre Health Care Facilities Authority
RB (VHA Capital Financing Project)
Series 1985A DN
3.65%** 04/07/98 1,500 1,500,000
Sayre Health Care Facilities Authority
(VHA Capital Financing Project) RB
Series 1985B DN
3.65%** 04/07/98 4,950 4,950,000
Sayre Health Care Facilities Authority
RB (VHA Capital Financing Project)
Series 1985F DN
3.65%** 04/07/98 4,900 4,900,000
Sayre Health Care Facilities Authority
RB (VHA Capital Financing Project)
Series 1985H DN
3.65%** 04/07/98 890 890,000
Sayre Health Care Facilities Authority
RB (VHA Capital Financing Project)
Series 1985J DN
3.65%** 04/07/98 6,425 6,425,000
Sayre Health Care Facilities Authority
RB (VHA Capital Financing Project)
Series 1985K DN
3.65%** 04/07/98 2,100 2,100,000
Sayre Health Care Facilities Authority
RB (VHA Capital Financing Project)
Series 1985L DN
3.65%** 04/07/98 7,600 7,600,000
Sayre Health Care Facilities Authority
RB (VHA Capital Financing Project)
Series 1985M DN
3.65%** 04/07/98 6,000 6,000,000
Schuylkill County IDA IDRB (Craftex Mills
Project) Series 1996 DN
3.90%** 04/07/98 2,250 2,250,000
Schuylkill County IDA IDRB (Kaytee
Products, Inc. Project) Series 1995 DN
3.65%** 04/07/98 4,000 4,000,000
Schuylkill County IDA RB (Pine Grove
Landfill Project) Series 1995 DN
3.95%** 04/01/98 5,000 5,000,000
Schuylkill County IDA Resource Recovery
RB (Northeastern Power Co. Project) DN
3.85%** 04/01/98 4,900 4,900,000
Scranton-Lackawana Health and Welfare
Authority RB (Mercy Health System
Project) Series 1996A DN
3.65%** 04/07/98 3,400 3,400,000
Venango IDA Resource Recovery RB
(Scrubgrass Project) Series 1990A MB
3.45% 05/14/98 1,950 1,950,000
PAR
MATURITY (000) VALUE
-------- -------- ---------
MUNICIPAL BONDS (CONTINUED)
PENNSYLVANIA (CONTINUED)
Venango IDA Resource Recovery RB
(Scrubgrass Project)
Series 1990B MB
3.55% 05/22/98 $ 1,000 $ 1,000,000
3.50% 06/05/98 14,085 14,085,000
3.60% 07/13/98 4,715 4,715,000
Venango IDA Resource Recovery RB
(Scrubgrass Project) Series 1993 MB
3.45% 05/14/98 8,385 8,385,000
Washington County Authority Lease RB
Series 1985 DN
3.75%** 04/01/98 7,245 7,245,000
Washington County Authority Lease RB
Municipal Facilities Series 1985 B-1 MB
3.75% 04/07/98 3,000 3,000,000
York County Hospital Authority RB
(Homewood Retirement Centers of
The United Church of Christ, Inc.
Project) Series 1990 DN
3.72%** 04/07/98 7,900 7,900,000
York County IDA IDRB (Allied Signal, Inc.
Project) Series 1993 DN
3.85%** 04/07/98 1,000 1,000,000
York County IDA PCRB (PECO Energy
Co. Project) Series 1993A DN
3.80%** 04/07/98 5,600 5,600,000
York General Authority Pooled Financing
RB Series 1996 DN
3.45%** 04/07/98 3,700 3,700,000
--------------
628,593,425
--------------
PUERTO RICO--4.5%
Puerto Rico GO Series 1997A TRAN
4.50% 07/30/98 8,000 8,024,440
Puerto Rico Government Development
Bank Refunding RB Series 1985 DN
3.37%** 04/07/98 3,200 3,200,000
Puerto Rico Highway and Transportation
Authority Transportation RB
Series 1998A DN
3.20%** 04/07/98 5,000 5,000,000
Puerto Rico Industrial, Medical and
Environmental Pollution Control
Facilities Financing Authority RB
(Ana G. Mendez Foundation Project)
Series 1985 DN
4.25%** 04/07/98 3,200 3,200,000
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 6,497,827
Puerto Rico Industrial, Medical and
Environmental Pollution Control
Facilities Financing Authority RB
(Reynolds Metals Co. Project)
Series 1983 MB
3.80% 09/01/98 3,850 3,850,745
--------------
29,773,012
--------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
19
<PAGE>
[GRAPHIC OMITTED] BLACKROCK FUNDS
STATEMENT OF NET ASSETS
PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO (CONCLUDED)
AS OF MARCH 31, 1998 (UNAUDITED) VALUE
-------------
TOTAL INVESTMENTS IN SECURITIES
(Cost $658,366,437*) 99.9% $658,366,437
OTHER ASSETS IN EXCESS
OF LIABILITIES 0.1% 238,543
------ ------------
NET ASSETS (Equivalent to $1.00 per
share based on 311,067,860 Institutional
shares, 230,161,686 Service shares and
117,390,371 Investor A shares outstanding) 100.0% $658,604,980
====== ============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER
INSTITUTIONAL, SERVICE AND
INVESTOR A SHARE
($658,604,980 (DIVIDE) 658,619,917) $1.00
=====
- ----------------
* Aggregate cost for Federal tax purposes.
** Rates shown are the rates as of March 31, 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.
20
<PAGE>
BLACKROCK FUNDS [GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
VIRGINIA MUNICIPAL MONEY MARKET PORTFOLIO
PAR
AS OF MARCH 31, 1998 (UNAUDITED) MATURITY (000) VALUE
-------- -------- ---------
MUNICIPAL BONDS--99.7%
VIRGINIA--88.2%
Alexandria IDA RB (Super & Curr
Project) Series 1997 DN
3.70%** 04/07/98 $ 2,500 $ 2,500,000
Alexandria Redevelopment and Housing
Authority Multi-Family Housing RB
(Buckingham Village Apartments
Project) Series 1996B DN
3.90%** 04/07/98 2,000 2,000,000
Brunswick County IDA Exempt Facility
RB (Aegis Waste Solutions, Inc.
Project) Series 1996 DN
3.75%** 04/07/98 1,000 1,000,000
Capital Region Airport Commission RB
(Richmond International Airport
Project) Series 1995C DN
3.70%** 04/07/98 1,465 1,465,000
Charles County IDA Exempt Facility RB
(Chambers Development of Virginia,
Inc. Project) Series 1989 DN
3.85%** 04/07/98 1,100 1,100,000
Charles County IDA Solid Waste Disposal
Facilities RB (Chambers Development
of Virginia, Inc. Project) Series 1996 DN
3.85%** 04/07/98 1,500 1,500,000
Chesterfield County IDA PCRB (Virginia
Electric & Power Co. Project)
Series 1985 MB
3.55% 08/14/98 500 500,000
Chesterfield County IDA RB (Blueprint
Holding, Inc. Project) Series 1997 DN
3.75%** 04/07/98 2,000 2,000,000
Fairfax County Economic Development
Authority RB (Foreman Development
Associates Project) Series 1996 DN
3.75%** 04/07/98 2,550 2,550,000
Fairfax County GO Public Improvement
Series 1997B MB
4.50% 12/01/98 3,000 3,014,095
Fairfax County IDA Hospital RB (Inova
Health & Hospital Systems Project)
Series 1998 MB
3.50% 04/06/98 3,000 3,000,000
Fairfax County IDA RB (Fairfax Hospital
System Project) Series 1988A DN
3.60%** 04/01/98 1,100 1,100,000
Fairfax County IDA RB (Fairfax Hospital
System Project) Series 1988C DN
3.60%** 04/01/98 300 300,000
Greensville County IDA IDRB (Perdue
Farms, Inc. Project) Series 1986 DN
3.80%** 04/01/98 1,600 1,600,000
Halifax County IDA PCRB (Virginia
Electric & Power Co. Project)
Series 1992 MB
3.60% 08/14/98 2,000 2,000,000
Hampton Redevelopment & Housing
Authority Multi-Family Housing
Refunding RB (Avalon at Hampton
Project) Series 1996A DN
3.65%** 04/01/98 2,400 2,400,000
King George County IDA Exempt
Facility RB (Birchwood Power Partners
Project) Series 1996 DN
3.90%** 04/01/98 1,800 1,800,000
PAR
MATURITY (000) VALUE
-------- -------- ---------
MUNICIPAL BONDS (CONTINUED)
VIRGINIA (CONTINUED)
King George County IDA Exempt Facility
RB (Birchwood Power Partners Project)
Series 1997 DN
3.90%** 04/01/98 $ 2,300 $ 2,300,000
King George County IDA Solid Waste
Disposal Facility RB (Garnet of Virginia,
Inc. Project) Series 1996 DN
3.80%** 04/02/98 1,500 1,500,000
Louden County IDA Residential Care
Facility RB (Falcons Landing Project)
Series 1994B DN
4.30%** 04/01/98 2,500 2,500,000
Louisa County IDA RB (Pooled Financing
Project) Series 1995 DN
3.70%** 04/07/98 200 200,000
Louisa County IDA PCRB (Virginia Electric
& Power Co. Project) Series 1985 MB
3.60% 07/13/98 100 100,000
Lynchburg IDA Hospital Facilities RB
(VHA Mid-Atlantic States Capital
Asset Finance Program)
Series 1985B DN
3.70%** 04/01/98 1,200 1,200,000
Metropolitan Washington D.C. Airports
Authority Virginia Passenger Facility
Flexible Term Notes Series 1998 TECP
3.65% 04/24/98 1,000 1,000,000
3.55% 08/14/98 3,000 3,000,000
Peninsula Ports Authority of Virginia
Coal Terminal RB (Dominion Terminal
Associates Project) Series 1987D DN
3.80%** 04/01/98 1,000 1,000,000
Peninsula Ports Authority of Virginia
Port Facility Refunding RB
(CSX Transportation, Inc. Project)
Series 1992 MB
3.45%** 05/21/98 1,000 1,000,000
Peninsula Ports Authority of Virginia
Port Facility Refunding RB (Zeigler
Coal Project) Series 1997 DN
3.85%** 04/07/98 2,600 2,600,000
Prince William County IDA PCRB
(Virginia Electric & Power Co. Project)
Series 1986 MB
3.55% 08/14/98 300 300,000
Prince William County IDA RB (Colonial
Investments Facility Project)
Series 1996 DN
3.75%** 04/01/98 3,195 3,195,000
Richmond IDA RB (Halifax Paper Board
Co. Project) Series 1990 DN
3.80%** 04/07/98 510 510,000
Richmond IDA RB (PM Beef Project)
Series 1997 DN
4.00%** 04/07/98 3,700 3,700,000
Roanoke IDA Hospital RB (Carillon
Health System Project)
Series 1995C DN
3.70%** 04/07/98 3,185 3,185,000
Virginial Business Financing Authority
IDRB (Coastal Development Group
Project) Series 1989 DN
3.80%** 04/07/98 195 195,000
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
21
<PAGE>
[GRAPHIC OMITTED] BLACKROCK FUNDS
STATEMENT OF NET ASSETS
VIRGINIA MUNICIPAL MONEY MARKET PORTFOLIO (CONCLUDED)
PAR
AS OF MARCH 31, 1998 (UNAUDITED) MATURITY (000) VALUE
-------- -------- ---------
MUNICIPAL BONDS (CONTINUED)
VIRGINIA (CONTINUED)
Virginia College Building Authority
Educational Facilities RB (University
of Richmond Project) Series 1996 DN
3.75%** 04/01/98 $ 1,000 $ 1,000,000
Virginia Housing Development Authority
Housing RB (AHC Service Corp.
Woodbury Park Project)
Series 1987A DN
4.10%** 04/07/98 1,070 1,070,000
Virginia Public School Authority
Special Obligation Refunding RB
(Henrico County School Financing
Board Project) Series 1990 MB
6.80% 01/15/99 450 468,939
Virginia Resource Authority RB
(Henrico County Project)
Series 1997 DN
3.70%** 04/07/98 2,000 2,000,000
York County IDA PCRB (Virginia Electric &
Power Co. Project) Series 1985 MB
3.55% 08/14/98 200 200,000
--------------
62,053,034
--------------
PUERTO RICO--11.5%
Puerto Rico GO Series 1997A TRAN
4.50% 07/30/98 1,000 1,002,415
Puerto Rico Government Development
Bank Refunding RB Series 1985 DN
3.37%** 04/07/98 1,500 1,500,000
Puerto Rico Industrial, Medical and
Environmental Pollution Control
Facilities Financing Authority RB
(Ana G. Mendez Foundation Project)
Series 1985 DN
4.00%** 04/07/98 2,300 2,300,000
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
3.80% 09/01/98 600 600,000
Puerto Rico Industrial, Medical, Higher
Education and Environmental
Pollution Control Facilities Authority
RB (Ana G. Mendez Project)
Series 1991 MB
3.30% 05/01/98 1,200 1,200,000
--------------
8,102,415
--------------
VALUE
-----------
TOTAL INVESTMENTS IN SECURITIES
(Cost $70,155,449*) 99.7% $70,155,449
OTHER ASSETS IN EXCESS
OF LIABILITIES 0.3% 232,579
------ -----------
NET ASSETS (Equivalent to $1.00 per
share based on 63,322,924 Institutional
shares, 6,001,288 Service shares and 1,064,387
Investor A shares outstanding) 100.0% $ 70,388,028
====== ============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER
INSTITUTIONAL, SERVICE AND
INVESTOR A SHARE
($70,388,028 (DIVIDE) 70,388,599) $1.00
=====
- ------------------
* Aggregate cost for Federal tax purposes.
** Rates shown are the rates as of March 31, 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
IDR .......................................... Industrial Development Revenue
IDRB .................................... Industrial Development Revenue Bond
MB .......................................................... Municipal Bond
PCR ............................................... Pollution Control Revenue
PCRB ......................................... Pollution Control Revenue Bond
RAN ............................................... Revenue Anticipation Note
RB ............................................................. Revenue Bond
TAN ................................................... Tax Anticipation Note
TECP ............................................ Tax-Exempt Commercial Paper
TRAN ...................................... Tax and Revenue Anticipation Note
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
22
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[GRAPHIC OMITTED] BLACKROCK FUNDS
BLACKROCK FUNDS [GRAPHIC OMITTED]
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
NEW JERSEY NORTH CAROLINA
U.S. TREASURY MUNICIPAL MUNICIPAL MUNICIPAL
MONEY MARKET MONEY MARKET MONEY MARKET MONEY MARKET MONEY MARKET
FOR THE SIX MONTHS ENDED MARCH 31, 1998 (UNAUDITED) PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------- ------------ ------------ --------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest .......................................... $84,053,501 $28,720,537 $8,883,843 $2,567,304 $3,576,483
----------- ----------- ---------- ---------- ----------
EXPENSES:
Investment advisory fee ........................... 5,976,975 2,302,937 1,095,740 324,206 443,445
Administration fee ................................ 2,177,472 868,313 436,563 129,682 177,378
Custodian fee ..................................... 230,192 88,724 49,833 17,220 22,743
Transfer agent fee ................................ 438,522 188,745 90,387 35,147 44,619
Service fees ...................................... 3,195,962 1,314,829 583,175 230,557 42,593
Distribution fees ................................. 1,811 -- 36 -- --
Legal and audit ................................... 157,369 36,334 17,506 11,853 7,537
Printing .......................................... 73,502 28,582 11,325 7,935 4,480
Registration fees and expenses .................... 53,873 6,830 28,659 12,513 11,074
Organization ...................................... -- -- -- -- 2,476
Trustees' fees and officer's salary ............... 26,634 10,493 3,884 1,200 1,594
Other ............................................. 62,845 20,854 6,873 2,791 2,786
----------- ----------- ---------- ---------- ----------
12,395,157 4,866,641 2,323,981 773,104 760,725
Less fees voluntarily waived and
expenses reimbursed ............................. (3,980,847) (1,690,899) (861,151) (279,192) (424,636)
----------- ----------- ---------- ---------- ----------
Total expenses .................................. 8,414,310 3,175,742 1,462,830 493,912 336,089
----------- ----------- ---------- ---------- ----------
Net investment income ............................. 75,639,191 25,544,795 7,421,013 2,073,392 3,240,394
----------- ----------- ---------- ---------- ----------
Net realized gain (loss)
on investments .................................. (2,681) 24,796 (237) 462 580
----------- ----------- ---------- ---------- ----------
Net increase in net assets resulting from
operations ...................................... $75,636,510 $25,569,591 $7,420,776 $2,073,854 $3,240,974
=========== =========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
OHIO PENNSYLVANIA VIRGINIA
MUNICIPAL MUNICIPAL MUNICIPAL
MONEY MARKET MONEY MARKET MONEY MARKET
FOR THE SIX MONTHS ENDED MARCH 31, 1998 (UNAUDITED) PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest .......................................... $2,461,229 $11,772,106 $1,274,451
---------- ----------- ----------
EXPENSES:
Investment advisory fee ........................... 300,412 1,485,739 155,225
Administration fee ................................ 120,164 578,126 62,090
Custodian fee ..................................... 17,313 61,954 10,588
Transfer agent fee ................................ 29,599 108,810 18,480
Service fees ...................................... 143,090 653,636 10,976
Distribution fees ................................. -- -- --
Legal and audit ................................... 6,142 25,674 3,960
Printing .......................................... 3,360 15,779 1,631
Registration fees and expenses .................... 10,590 22,829 7,115
Organization ...................................... 2,121 2,651 4,509
Trustees' fees and officer's salary ............... 1,208 5,712 585
Other ............................................. 2,205 9,715 1,171
---------- ----------- ----------
636,204 2,970,625 276,330
Less fees voluntarily waived and
expenses reimbursed ............................. (254,163) (1,129,017) (161,525)
---------- ----------- ----------
Total expenses .................................. 382,041 1,841,608 114,805
---------- ----------- ----------
Net investment income ............................. 2,079,188 9,930,498 1,159,646
---------- ----------- ----------
Net realized gain (loss)
on investments .................................. (16,541) 31 (401)
---------- ----------- ----------
Net increase in net assets resulting from
operations ...................................... $2,062,647 $9,930,529 $1,159,245
========== ========== ==========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
24-25
<PAGE>
[GRAPHIC OMITTED] BLACKROCK FUNDS
BLACKROCK FUNDS [GRAPHIC OMITTED]
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
U.S. TREASURY MUNICIPAL
MONEY MARKET PORTFOLIO MONEY MARKET PORTFOLIO MONEY MARKET PORTFOLIO
----------------------------- ---------------------------- ----------------------------
FOR THE FOR THE FOR THE
SIX MONTHS FOR THE SIX MONTHS FOR THE SIX MONTHS FOR THE
ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED
3/31/98 9/30/97 3/31/98 9/30/97 3/31/98 9/30/97
------------- ------------- ------------- ------------- ------------- -------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ........... $ 75,639,191 $ 135,537,515 $ 25,544,795 $ 51,500,503 $ 7,421,013 $ 11,926,337
Net realized gain (loss) on
investments .................. (2,681) (13,172) 24,796 121,380 (237) (1,471)
-------------- -------------- -------------- -------------- ------------ ------------
Net increase in net assets
resulting from operations ....... 75,636,510 135,524,343 25,569,591 51,621,883 7,420,776 11,924,866
-------------- -------------- -------------- -------------- ------------ ------------
Distributions to shareholders from:
Net investment income:
Institutional Shares ............ (23,922,349) (44,007,087) (4,435,307) (8,997,921) (1,640,343) (1,739,614)
Service Shares .................. (44,565,186) (80,683,555) (19,752,721) (41,357,884) (5,683,887) (10,075,399)
Investor A Shares ............... (7,141,227) (10,833,065) (1,356,767) (1,144,698) (96,673) (111,309)
Investor B Shares ............... (6,315) (7,259) -- -- -- --
Investor C Shares ............... (4,114) (6,549) -- -- (110) (15)
-------------- -------------- -------------- -------------- ------------ ------------
Total distribution from net
investment income ............. (75,639,191) (135,537,515) (25,544,795) (51,500,503) (7,421,013) (11,926,337)
-------------- -------------- -------------- -------------- ------------ ------------
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 ................ (75,639,191) (135,570,963) (25,544,795) (51,500,503) (7,421,013) (11,926,337)
-------------- -------------- -------------- -------------- ------------ ------------
Capital share transactions .......... 354,360,863 420,175,271 545,441 (91,771,684) 111,288,712 87,735,153
-------------- -------------- -------------- -------------- ------------ ------------
Total increase (decrease) in
net assets .................... 354,358,182 420,128,651 570,237 (91,650,304) 111,288,475 87,733,682
Net assets:
Beginning of period ............... 2,745,160,041 2,325,031,390 1,041,627,562 1,133,277,866 395,137,184 307,403,502
-------------- -------------- -------------- -------------- ------------ ------------
End of period .....................$3,099,518,223 $2,745,160,041 $1,042,197,799 $1,041,627,562 $506,425,659 $395,137,184
============== ============== ============== ============== ============ ============
</TABLE>
<TABLE>
<CAPTION>
NEW JERSEY MUNICIPAL NORTH CAROLINA MUNICIPAL OHIO MUNICIPAL
MONEY MARKET PORTFOLIO MONEY MARKET PORTFOLIO MONEY MARKET PORTFOLIO
---------------------------- ---------------------------- ----------------------------
FOR THE FOR THE FOR THE
SIX MONTHS FOR THE SIX MONTHS FOR THE SIX MONTHS FOR THE
ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED
3/31/98 9/30/97 3/31/98 9/30/97 3/31/98 9/30/97
------------- ------------- ------------- ------------- ------------- -------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ........... $ 2,073,392 $ 3,547,293 $ 3,240,394 $ 5,133,948 $ 2,079,188 $ 3,560,194
Net realized gain (loss) on
investments .................. 462 (1,750) 580 -- (16,541) (4,223)
------------ ------------ ------------ ------------ ------------ -----------
Net increase in net assets
resulting from operations ....... 2,073,854 3,545,543 3,240,974 5,133,948 2,062,647 3,555,971
------------ ------------ ------------ ------------ ------------ -----------
Distributions to shareholders from:
Net investment income:
Institutional Shares ............ (127,430) (145,925) (2,814,418) (4,808,688) (764,301) (1,473,315)
Service Shares .................. (1,558,051) (2,765,162) (421,967) (319,534) (1,032,381) (1,760,658)
Investor A Shares ............... (387,911) (635,927) (4,009) (5,726) (282,506) (326,221)
Investor B Shares ............... -- (279) -- -- -- --
Investor C Shares ............... -- -- -- -- -- --
------------ ------------ ------------ ------------ ------------ -----------
Total distribution from net
investment income ............. (2,073,392) (3,547,293) (3,240,394) (5,133,948) (2,079,188) (3,560,194)
------------ ------------ ------------ ------------ ------------ -----------
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 ................ (2,073,392) (3,547,293) (3,240,394) (5,133,948) (2,079,188) (3,560,194)
------------ ------------ ------------ ------------ ------------ -----------
Capital share transactions .......... (15,643,291) 44,352,117 20,226,775 51,994,775 24,409,005 13,637,975
------------ ------------ ------------ ------------ ------------ -----------
Total increase (decrease) in
net assets .................... (15,642,829) 44,350,367 20,227,355 51,994,775 24,392,464 13,633,752
Net assets:
Beginning of period ............... 130,417,412 86,067,045 171,665,621 119,670,846 97,774,871 84,141,119
------------ ------------ ------------ ------------ ------------ -----------
End of period ..................... $114,774,583 $130,417,412 $191,892,976 $171,665,621 $122,167,335 $97,774,871
============ ============ ============ ============ ============ ===========
</TABLE>
<TABLE>
<CAPTION>
PENNSYLVANIA MUNICIPAL VIRGINIA MUNICIPAL
MONEY MARKET PORTFOLIO MONEY MARKET PORTFOLIO
---------------------------- ----------------------------
FOR THE FOR THE
SIX MONTHS FOR THE SIX MONTHS FOR THE
ENDED YEAR ENDED ENDED YEAR ENDED
3/31/98 9/30/97 3/31/98 9/30/97
------------- ------------- ------------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ........... $ 9,930,498 $ 16,711,829 $ 1,159,646 $ 2,065,463
Net realized gain (loss) on
investments .................. 31 (3,354) (401) --
------------ ------------ ----------- -----------
Net increase in net assets
resulting from operations ....... 9,930,529 16,708,475 1,159,245 2,065,463
------------ ------------ ----------- -----------
Distributions to shareholders from:
Net investment income:
Institutional Shares ............ (4,591,747) (6,828,405) (1,055,820) (1,730,341)
Service Shares .................. (3,765,032) (7,261,869) (91,583) (323,693)
Investor A Shares ............... (1,573,719) (2,621,555) (12,243) (11,429)
Investor B Shares ............... -- -- -- --
Investor C Shares ............... -- -- -- --
------------ ------------ ----------- -----------
Total distribution from net
investment income ............. (9,930,498) (16,711,829) (1,159,646) (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 ................ (9,930,498) (16,711,829) (1,159,646) (2,065,463)
------------ ------------ ----------- -----------
Capital share transactions .......... 96,751,409 75,413,464 1,214,411 15,653,396
------------ ------------ ----------- -----------
Total increase (decrease) in
net assets .................... 96,751,440 75,410,110 1,214,010 15,653,396
Net assets:
Beginning of period ............... 561,853,540 486,443,430 69,174,018 53,520,622
------------ ------------ ----------- -----------
End of period ..................... $658,604,980 $561,853,540 $70,388,028 $69,174,018
============ ============ =========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26-27
<PAGE>
[GRAPHIC OMITTED] BLACKROCK FUNDS
BLACKROCK FUNDS [GRAPHIC OMITTED]
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
NET DISTRIBUTIONS NET NET
ASSET DISTRIBUTIONS FROM NET ASSET ASSETS RATIO OF
VALUE NET FROM NET REALIZED VALUE END OF EXPENSES TO
BEGINNING INVESTMENT INVESTMENT CAPITAL END OF TOTAL PERIOD AVERAGE NET
OF PERIOD INCOME INCOME GAINS PERIOD RETURN (000) ASSETS
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------
MONEY MARKET PORTFOLIO
- ----------------------
INSTITUTIONAL CLASS
10/1/97 through 3/31/98 5 $1.00 $0.0269 $(0.0269) $0.00 $1.00 2.72% $ 997,617 0.36%2
9/30/97 1.00 0.0529 (0.0529) 0.00 1.00 5.42 878,566 0.32
9/30/96 1.00 0.0533 (0.0533) 0.00 1.00 5.46 587,730 0.29
9/30/95 1.00 0.0564 (0.0564) 0.00 1.00 5.79 654,157 0.27
9/30/94 1.00 0.0359 (0.0359) 0.00 1.00 3.64 502,972 0.25
8/2/93 1 through 9/30/93 1.00 0.0054 (0.0054) 0.00 1.00 0.54 435,586 0.27 2
SERVICE CLASS
10/1/97 through 3/31/98 5 $1.00 $0.0254 $(0.0254) $0.00 $1.00 2.57% $1,777,344 0.66%2
9/30/97 1.00 0.0499 (0.0499) 0.00 1.00 5.11 1,610,315 0.61
9/30/96 1.00 0.0503 (0.0503) 0.00 1.00 5.15 1,575,064 0.59
9/30/95 1.00 0.0534 (0.0534) 0.00 1.00 5.48 1,194,017 0.57
9/30/94 1.00 0.0333 (0.0333) 0.00 1.00 3.37 575,948 0.51
9/30/93 1.00 0.0274 (0.0274) 0.00 1.00 2.77 415,328 0.59
INVESTOR A CLASS
10/1/97 through 3/31/98 5 $1.00 $0.0250 $(0.0250) $0.00 $1.00 2.53% $ 323,965 0.74%2
9/30/97 1.00 0.0491 (0.0491) 0.00 1.00 5.02 256,039 0.70
9/30/96 1.00 0.0485 (0.0485) 0.00 1.00 4.96 162,099 0.74
9/30/95 1.00 0.0511 (0.0511) 0.00 1.00 5.23 10,185 0.81
9/30/94 1.00 0.0308 (0.0308) 0.00 1.00 3.12 4,342 0.75
1/13/93 1 through 9/30/93 1.00 0.0188 (0.0188) 0.00 1.00 1.89 49 0.67 2
INVESTOR B CLASS
10/1/97 through 3/31/98 5 $1.00 $0.0216 $(0.0216) $0.00 $1.00 2.17% $ 320 1.43%2
9/30/97 1.00 0.0424 (0.0424) 0.00 1.00 4.32 238 1.39
9/30/96 1.00 0.0426 (0.0426) 0.00 1.00 4.34 138 1.36
9/15/95 1 through 9/30/95 1.00 0.0020 (0.0020) 0.00 1.00 0.20 27 1.34 2
INVESTOR C CLASS
10/1/97 through 3/31/98 5 $1.00 $0.0216 $(0.0216) $0.00 $1.00 2.17% $ 272 1.43%2
10/17/96 1 through 9/30/97 1.00 0.0390 (0.0390) 0.00 1.00 3.97 2 1.50 2
- ------------------------------------
U.S. TREASURY MONEY MARKET PORTFOLIO
- ------------------------------------
INSTITUTIONAL CLASS
10/1/97 through 3/31/98 5 $1.00 $0.0261 $(0.0261) $0.00 $1.00 2.64% $ 178,144 0.36%2
9/30/97 1.00 0.0515 (0.0515) 0.00 1.00 5.27 162,052 0.31
9/30/96 1.00 0.0519 (0.0519) 0.00 1.00 5.32 167,193 0.29
9/30/95 1.00 0.0555 (0.0555) 0.00 1.00 5.69 120,540 0.27
9/30/94 1.00 0.0357 (0.0357) 0.00 1.00 3.63 37,519 0.25
8/2/93 1 through 9/30/93 1.00 0.0049 (0.0049) 0.00 1.00 0.49 13,513 0.25 2
SERVICE CLASS
10/1/97 through 3/31/98 5 $1.00 $0.0246 $(0.0246) $0.00 $1.00 2.48% $ 795,810 0.66%2
9/30/97 1.00 0.0485 (0.0485) 0.00 1.00 4.93 836,151 0.61
9/30/96 1.00 0.0489 (0.0489) 0.00 1.00 5.00 955,454 0.59
9/30/95 1.00 0.0525 (0.0525) 0.00 1.00 5.38 550,959 0.57
9/30/94 1.00 0.0331 (0.0331) 0.00 1.00 3.36 372,883 0.52
9/30/93 1.00 0.0269 (0.0269) 0.00 1.00 2.72 185,400 0.60
INVESTOR A CLASS
10/1/97 through 3/31/98 5 $1.00 $0.0238 $(0.0238) $0.00 $1.00 2.41% $ 68,244 0.81%2
9/30/97 1.00 0.0468 (0.0468) 0.00 1.00 4.75 43,425 0.78
9/30/96 1.00 0.0467 (0.0467) 0.00 1.00 4.77 10,630 0.79
9/30/95 1.00 0.0501 (0.0501) 0.00 1.00 5.13 1,285 0.80
9/30/94 1.00 0.0309 (0.0309) 0.00 1.00 3.11 1,656 0.75
1/14/93 1 through 9/30/93 1.00 0.0183 (0.0183) 0.00 1.00 1.85 50 0.65 2
</TABLE>
<TABLE>
<CAPTION>
RATIO OF NET
RATIO OF EXPENSES INVESTMENT INCOME
TO AVERAGE RATIO OF NET TO AVERAGE
NET ASSETS INVESTMENT INCOME NET ASSETS
(EXCLUDING TO AVERAGE NET (EXCLUDING
WAIVERS) ASSETS WAIVERS)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
- ----------------------
MONEY MARKET PORTFOLIO
- ----------------------
INSTITUTIONAL CLASS
10/1/97 through 3/31/98 5 0.63%2 5.75%2 5.48%2
9/30/97 0.65 5.30 4.97
9/30/96 0.65 5.34 4.98
9/30/95 0.64 5.66 5.28
9/30/94 0.66 3.64 3.23
8/2/93 1 through 9/30/93 0.38 2 3.01 2 2.90 2
SERVICE CLASS
10/1/97 through 3/31/98 5 0.93%2 5.09%2 4.82%2
9/30/97 0.94 4.99 4.66
9/30/96 0.95 5.00 4.64
9/30/95 0.94 5.35 4.98
9/30/94 0.92 3.35 2.95
9/30/93 0.70 2.73 2.62
INVESTOR A CLASS
10/1/97 through 3/31/98 5 1.01%2 5.01%2 4.74%2
9/30/97 1.03 4.92 4.59
9/30/96 1.10 4.81 4.45
9/30/95 1.19 5.15 4.78
9/30/94 1.16 3.39 2.98
1/13/93 1 through 9/30/93 0.78 2 2.62 2 2.51 2
INVESTOR B CLASS
10/1/97 through 3/31/98 5 1.70%2 4.32%2 4.05%2
9/30/97 1.72 4.26 3.93
9/30/96 1.73 4.18 3.82
9/15/95 1 through 9/30/95 1.72 2 4.58 2 4.20 2
INVESTOR C CLASS
10/1/97 through 3/31/98 5 1.70%2 4.32%2 4.05%2
10/17/96 1 through 9/30/97 1.83 2 4.01 2 3.68 2
- ------------------------------------
U.S. TREASURY MONEY MARKET PORTFOLIO
- ------------------------------------
INSTITUTIONAL CLASS
10/1/97 through 3/31/98 5 0.69%2 5.23%2 4.90%2
9/30/97 0.69 5.15 4.77
9/30/96 0.69 5.18 4.78
9/30/95 0.69 5.64 5.22
9/30/94 0.70 3.69 3.24
8/2/93 1 through 9/30/93 0.38 2 3.01 2 2.88 2
SERVICE CLASS
10/1/97 through 3/31/98 5 0.99%2 4.93%2 4.60%2
9/30/97 0.99 4.85 4.47
9/30/96 0.99 4.84 4.45
9/30/95 0.98 5.27 4.85
9/30/94 0.97 3.42 2.97
9/30/93 0.73 2.68 2.55
INVESTOR A CLASS
10/1/97 through 3/31/98 5 1.14%2 4.78%2 4.45%2
9/30/97 1.16 4.70 4.32
9/30/96 1.19 4.60 4.20
9/30/95 1.21 5.03 4.62
9/30/94 1.20 3.60 3.14
1/14/93 1 through 9/30/93 0.78 2 2.57 2 2.44 2
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
28-29
<PAGE>
[GRAPHIC OMITTED] BLACKROCK FUNDS
BLACKROCK FUNDS [GRAPHIC OMITTED]
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
NET DISTRIBUTIONS NET NET
ASSET DISTRIBUTIONS FROM NET ASSET ASSETS RATIO OF
VALUE NET FROM NET REALIZED VALUE END OF EXPENSES TO
BEGINNING INVESTMENT INVESTMENT CAPITAL END OF TOTAL PERIOD AVERAGE NET
OF PERIOD INCOME INCOME GAINS PERIOD RETURN (000) ASSETS
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------
MUNICIPAL MONEY MARKET PORTFOLIO
- --------------------------------
INSTITUTIONAL CLASS
10/1/97 through 3/31/98 5 $1.00 $0.0165 $(0.0165) $0.00 $1.00 1.66% $123,115 0.36%2
9/30/97 1.00 0.0337 (0.0337) 0.00 1.00 3.42 58,747 0.31
9/30/96 1.00 0.0339 (0.0339) 0.00 1.00 3.41 43,936 0.29
9/30/95 1.00 0.0364 (0.0364) 0.00 1.00 3.70 53,778 0.27
9/30/94 1.00 0.0246 (0.0246) 0.00 1.00 2.48 30,608 0.25
8/2/93 1 through 9/30/93 1.00 0.0040 (0.0040) 0.00 1.00 0.40 39,148 0.25 2
SERVICE CLASS
10/1/97 through 3/31/98 5 $1.00 $0.0150 $(0.0150) $0.00 $1.00 1.51% $376,451 0.66%2
9/30/97 1.00 0.0307 (0.0307) 0.00 1.00 3.11 327,910 0.61
9/30/96 1.00 0.0309 (0.0309) 0.00 1.00 3.10 261,617 0.59
9/30/95 1.00 0.0334 (0.0334) 0.00 1.00 3.39 265,629 0.57
9/30/94 1.00 0.0219 (0.0219) 0.00 1.00 2.20 133,358 0.51
9/30/93 1.00 0.0205 (0.0205) 0.00 1.00 2.10 93,937 0.61
INVESTOR A CLASS
10/1/97 through 3/31/98 5 $1.00 $0.0141 $(0.0141) $0.00 $1.00 1.42% $ 6,851 0.83%2
9/30/97 1.00 0.0290 (0.0290) 0.00 1.00 2.93 8,468 0.79
9/30/96 1.00 0.0288 (0.0288) 0.00 1.00 2.88 1,851 0.77
9/30/95 1.00 0.0311 (0.0311) 0.00 1.00 3.15 20 0.79
9/30/94 1.00 0.0193 (0.0193) 0.00 1.00 1.95 41 0.75
11/02/92 1 through 9/30/93 1.00 0.0181 (0.0181) 0.00 1.00 1.83 15 0.72 2
INVESTOR C CLASS
10/1/97 through 3/31/98 5 $1.00 $0.0112 $(0.0112) $0.00 $1.00 1.12% $ 9 1.42%2
9/12/97 1 through 9/30/97 1.00 0.0013 (0.0013) 0.00 1.00 0.13 12 1.32 2
- -------------------------------------------
NEW JERSEY MUNICIPAL MONEY MARKET PORTFOLIO
- -------------------------------------------
INSTITUTIONAL CLASS
10/1/97 through 3/31/98 5 $1.00 $0.0160 $(0.0160) $0.00 $1.00 1.61% $ 9,439 0.35%2
9/30/97 1.00 0.0323 (0.0323) 0.00 1.00 3.28 7,432 0.32
2/1/96 through 9/30/96 1.00 0.0207 (0.0207) 0.00 1.00 2.09 614 0.29 2
1/16/96 1 through 1/31/96 1.00 0.0000 (0.0000) 0.00 1.00 3.07 4,195 0.29 2
SERVICE CLASS
10/1/97 through 3/31/98 5 $1.00 $0.0140 $(0.0140) $0.00 $1.00 1.46% $ 73,490 0.65%2
9/30/97 1.00 0.0293 (0.0293) 0.00 1.00 2.96 101,294 0.61
2/1/96 through 9/30/96 1.00 0.0187 (0.0187) 0.00 1.00 1.89 68,139 0.59 2
3/1/95 through 1/31/96 1.00 0.0300 (0.0300) 0.00 1.00 3.23 56,958 0.70 2
2/28/95 1.00 0.0200 (0.0200) 0.00 1.00 2.46 43,610 0.63
2/28/94 1.00 0.0200 (0.0200) 0.00 1.00 1.79 39,408 0.65
2/28/93 1.00 0.0200 (0.0200) 0.00 1.00 2.19 38,836 0.73
INVESTOR A CLASS
10/1/97 through 3/31/98 5 $1.00 $0.0130 $(0.0130) $0.00 $1.00 1.33% $ 31,846 0.91%2
9/30/97 1.00 0.0268 (0.0268) 0.00 1.00 2.71 21,691 0.86
2/1/96 through 9/30/96 1.00 0.0175 (0.0175) 0.00 1.00 1.76 17,314 0.78 2
1/16/96 1 through 1/31/96 1.00 0.0000 (0.0000) 0.00 1.00 2.66 21,662 0.71 2
INVESTOR B CLASS
3/20/97 1 through 9/30/97 $1.00 $0.0077 $(0.0077) $0.00 $1.00 0.77% $ --4 1.37%2
</TABLE>
<TABLE>
<CAPTION>
RATIO OF NET
RATIO OF EXPENSES INVESTMENT INCOME
TO AVERAGE RATIO OF NET TO AVERAGE
NET ASSETS INVESTMENT INCOME NET ASSETS
(EXCLUDING TO AVERAGE NET (EXCLUDING
WAIVERS) ASSETS WAIVERS)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
- --------------------------------
MUNICIPAL MONEY MARKET PORTFOLIO
- --------------------------------
INSTITUTIONAL CLASS
10/1/97 through 3/31/98 5 0.71%2 3.27%2 2.92%2
9/30/97 0.72 3.36 2.95
9/30/96 0.73 3.37 2.93
9/30/95 0.71 3.64 3.20
9/30/94 0.73 2.48 2.01
8/2/93 1 through 9/30/93 0.36 2 2.45 2 2.34 2
SERVICE CLASS
10/1/97 through 3/31/98 5 1.01%2 2.99%2 2.64%2
9/30/97 1.02 3.06 2.65
9/30/96 1.03 3.08 2.64
9/30/95 1.01 3.35 2.91
9/30/94 0.99 2.18 1.71
9/30/93 0.72 2.02 1.91
INVESTOR A CLASS
10/1/97 through 3/31/98 5 1.18%2 2.85%2 2.50%2
9/30/97 1.20 2.92 2.51
9/30/96 1.21 2.80 2.36
9/30/95 1.23 3.08 2.64
9/30/94 1.23 2.05 1.58
11/02/92 1 through 9/30/93 0.83 2 2.23 2 2.12 2
INVESTOR C CLASS
10/1/97 through 3/31/98 5 1.77%2 2.26%2 1.91%2
9/12/97 1 through 9/30/97 1.73 2 2.63 2 2.22 2
- -------------------------------------------
NEW JERSEY MUNICIPAL MONEY MARKET PORTFOLIO
- -------------------------------------------
INSTITUTIONAL CLASS
10/1/97 through 3/31/98 5 0.74%2 3.21%2 2.82%2
9/30/97 0.76 3.27 2.83
2/1/96 through 9/30/96 0.78 2 3.07 2 2.58 2
1/16/96 1 through 1/31/96 0.78 2 3.07 2 2.58 2
SERVICE CLASS
10/1/97 through 3/31/98 5 1.04%2 2.92%2 2.53%2
9/30/97 1.05 2.93 2.49
2/1/96 through 9/30/96 1.08 2 2.82 2 2.33 2
3/1/95 through 1/31/96 0.74 2 3.17 2 3.13 2
2/28/95 0.70 2.46 2.39
2/28/94 0.72 1.77 1.70
2/28/93 0.76 2.17 2.14
INVESTOR A CLASS
10/1/97 through 3/31/98 5 1.28%2 2.65%2 2.26%2
9/30/97 1.30 2.68 2.24
2/1/96 through 9/30/96 1.27 2 2.63 2 2.15 2
1/16/96 1 through 1/31/96 1.20 2 2.66 2 2.17 2
INVESTOR B CLASS
3/20/97 1 through 9/30/97 1.81%2 2.35%2 1.91%2
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
30-31
<PAGE>
[GRAPHIC OMITTED] BLACKROCK FUNDS
BLACKROCK FUNDS [GRAPHIC OMITTED]
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
NET DISTRIBUTIONS NET NET
ASSET DISTRIBUTIONS FROM NET ASSET ASSETS RATIO OF
VALUE NET FROM NET REALIZED VALUE END OF EXPENSES TO
BEGINNING INVESTMENT INVESTMENT CAPITAL END OF TOTAL PERIOD AVERAGE NET
OF PERIOD INCOME INCOME GAINS PERIOD RETURN (000) ASSETS
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------
NORTH CAROLINA MUNICIPAL MONEY MARKET PORTFOLIO
- -----------------------------------------------
INSTITUTIONAL CLASS
10/1/97 through 3/31/98 5 $1.00 $0.0166 $(0.0166) $0.00 $1.00 1.67% $168,705 0.30%2
9/30/97 1.00 0.0334 (0.0334) 0.00 1.00 3.39 147,658 0.28
9/30/96 1.00 0.0338 (0.0338) 0.00 1.00 3.43 112,097 0.25
9/30/95 1.00 0.0359 (0.0359) 0.00 1.00 3.65 76,673 0.21
9/30/94 1.00 0.0249 (0.0249) 0.00 1.00 2.52 69,673 0.10
5/4/93 1 through 9/30/93 1.00 0.0097 (0.0097) 0.00 1.00 0.97 34,135 0.10 2
SERVICE CLASS
10/1/97 through 3/31/98 5 $1.00 $0.0151 $(0.0151) $0.00 $1.00 1.52% $ 22,965 0.60%2
9/30/97 1.00 0.0304 (0.0304) 0.00 1.00 3.08 23,704 0.60
9/30/96 1.00 0.0308 (0.0308) 0.00 1.00 3.12 7,463 0.55
11/1/94 3 through 9/30/95 1.00 0.0305 (0.0305) 0.00 1.00 3.11 1,841 0.55 2
4/29/94 1 through 9/30/94 1.00 0.0099 (0.0099) 0.00 1.00 0.99 --3 0.36 2
INVESTOR A CLASS
10/1/97 through 3/31/98 5 $1.00 $0.0143 $(0.0143) $0.00 $1.00 1.44% $ 223 0.77%2
9/30/97 1.00 0.0287 (0.0287) 0.00 1.00 2.91 304 0.76
9/30/96 1.00 0.0286 (0.0286) 0.00 1.00 2.90 111 0.76
2/14/95 1 through 9/30/95 1.00 0.0194 (0.0194) 0.00 1.00 1.95 53 0.83 2
- -------------------------------------------
OHIO MUNICIPAL MONEY MONEY MARKET PORTFOLIO
- -------------------------------------------
INSTITUTIONAL CLASS
10/1/97 through 3/31/98 5 $1.00 $0.0166 $(0.0166) $0.00 $1.00 1.67% $ 30,517 0.34%2
9/30/97 1.00 0.0340 (0.0340) 0.00 1.00 3.45 23,739 0.30
9/30/96 1.00 0.0346 (0.0346) 0.00 1.00 3.52 32,944 0.29
9/30/95 1.00 0.0363 (0.0363) 0.00 1.00 3.69 23,679 0.27
9/30/94 1.00 0.0252 (0.0252) 0.00 1.00 2.55 10,521 0.13
6/10/93 1 through 9/30/93 1.00 0.0073 (0.0073) 0.00 1.00 0.73 12,026 0.10 2
SERVICE CLASS
10/1/97 through 3/31/98 5 $1.00 $0.0151 $(0.0151) $0.00 $1.00 1.52% $ 71,968 0.65%2
9/30/97 1.00 0.0310 (0.0310) 0.00 1.00 3.15 58,160 0.61
9/30/96 1.00 0.0316 (0.0316) 0.00 1.00 3.21 45,525 0.59
9/30/95 1.00 0.0333 (0.0333) 0.00 1.00 3.38 49,857 0.57
9/30/94 1.00 0.0225 (0.0225) 0.00 1.00 2.27 44,066 0.40
6/1/93 1 through 9/30/93 1.00 0.0074 (0.0074) 0.00 1.00 0.75 15,239 0.23 2
INVESTOR A CLASS
10/1/97 through 3/31/98 5 $1.00 $0.0142 $(0.0142) $0.00 $1.00 1.43% $ 19,682 0.82%2
9/30/97 1.00 0.0292 (0.0292) 0.00 1.00 2.96 15,876 0.79
9/30/96 1.00 0.0293 (0.0293) 0.00 1.00 2.98 5,672 0.79
9/30/95 1.00 0.0310 (0.0310) 0.00 1.00 3.15 75 0.80
10/5/93 1 through 9/30/94 1.00 0.0199 (0.0199) 0.00 1.00 2.01 28 0.62 2
- ---------------------------------------------
PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO
- ---------------------------------------------
INSTITUTIONAL CLASS
10/1/97 through 3/31/98 5 $1.00 $0.0160 $(0.0160) $0.00 $1.00 1.62% $311,065 0.36%2
9/30/97 1.00 0.0332 (0.0332) 0.00 1.00 3.37 229,164 0.30
9/30/96 1.00 0.0334 (0.0334) 0.00 1.00 3.40 198,822 0.29
9/30/95 1.00 0.0355 (0.0355) 0.00 1.00 3.61 233,413 0.26
9/30/94 1.00 0.0247 (0.0247) 0.00 1.00 2.49 158,102 0.16
6/1/93 1 through 9/30/93 1.00 0.0078 (0.0078) 0.00 1.00 0.78 2,242 0.09 2
</TABLE>
<TABLE>
<CAPTION>
RATIO OF NET
RATIO OF EXPENSES INVESTMENT INCOME
TO AVERAGE RATIO OF NET TO AVERAGE
NET ASSETS INVESTMENT INCOME NET ASSETS
(EXCLUDING TO AVERAGE NET (EXCLUDING
WAIVERS) ASSETS WAIVERS)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
- -----------------------------------------------
NORTH CAROLINA MUNICIPAL MONEY MARKET PORTFOLIO
- -----------------------------------------------
INSTITUTIONAL CLASS
10/1/97 through 3/31/98 5 0.73%2 3.33%2 2.90%2
9/30/97 0.73 3.34 2.89
9/30/96 0.74 3.33 2.84
9/30/95 0.74 3.61 3.08
9/30/94 0.76 2.53 1.87
5/4/93 1 through 9/30/93 0.81 2 2.35 2 1.64 2
SERVICE CLASS
10/1/97 through 3/31/98 5 1.03%2 3.01%2 2.58%2
9/30/97 1.05 3.04 2.59
9/30/96 1.04 3.06 2.56
11/1/94 3 through 9/30/95 1.08 2 3.34 2 2.81 2
4/29/94 1 through 9/30/94 1.02 2 2.54 2 1.87 2
INVESTOR A CLASS
10/1/97 through 3/31/98 5 1.20%2 2.88%2 2.45%2
9/30/97 1.21 2.88 2.43
9/30/96 1.25 2.83 2.34
2/14/95 1 through 9/30/95 1.36 2 3.05 2 2.52 2
- -------------------------------------------
OHIO MUNICIPAL MONEY MONEY MARKET PORTFOLIO
- -------------------------------------------
INSTITUTIONAL CLASS
10/1/97 through 3/31/98 5 0.72%2 3.37%2 2.99%2
9/30/97 0.73 3.37 2.94
9/30/96 0.75 3.47 3.01
9/30/95 0.73 3.66 3.20
9/30/94 0.77 2.56 1.93
6/10/93 1 through 9/30/93 0.83 2 2.45 2 1.72 2
SERVICE CLASS
10/1/97 through 3/31/98 5 1.04%2 3.03%2 2.64%2
9/30/97 1.03 3.10 2.68
9/30/96 1.05 3.17 2.71
9/30/95 1.03 3.35 2.89
9/30/94 1.04 2.29 1.65
6/1/93 1 through 9/30/93 0.96 2 2.23 2 1.50 2
INVESTOR A CLASS
10/1/97 through 3/31/98 5 1.21%2 2.84%2 2.45%2
9/30/97 1.21 2.92 2.50
9/30/96 1.25 2.88 2.42
9/30/95 1.26 3.02 2.56
10/5/93 1 through 9/30/94 1.26 2 1.94 2 1.30 2
- ---------------------------------------------
PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO
- ---------------------------------------------
INSTITUTIONAL CLASS
10/1/97 through 3/31/98 5 0.70%2 3.17%2 2.83%2
9/30/97 0.70 3.31 2.91
9/30/96 0.71 3.34 2.92
9/30/95 0.68 3.54 3.12
9/30/94 0.73 2.64 2.07
6/1/93 1 through 9/30/93 0.97 2 2.15 2 1.27 2
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
32-33
<PAGE>
[GRAPHIC OMITTED] BLACKROCK FUNDS
BLACKROCK FUNDS [GRAPHIC OMITTED]
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
NET DISTRIBUTIONS NET NET
ASSET DISTRIBUTIONS FROM NET ASSET ASSETS RATIO OF
VALUE NET FROM NET REALIZED VALUE END OF EXPENSES TO
BEGINNING INVESTMENT INVESTMENT CAPITAL END OF TOTAL PERIOD AVERAGE NET
OF PERIOD INCOME INCOME GAINS PERIOD RETURN (000) ASSETS
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------
PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO (CONTINUED)
- ---------------------------------------------
SERVICE CLASS
10/1/97 through 3/31/98 5 $1.00 $0.0145 $(0.0145) $0.00 $1.00 1.47% $230,150 0.66%2
9/30/97 1.00 0.0302 (0.0302) 0.00 1.00 3.06 234,472 0.61
9/30/96 1.00 0.0304 (0.0304) 0.00 1.00 3.04 224,197 0.59
9/30/95 1.00 0.0325 (0.0325) 0.00 1.00 3.33 147,739 0.57
9/30/94 1.00 0.0221 (0.0221) 0.00 1.00 2.24 60,560 0.42
6/11/93 1 through 9/30/93 1.00 0.0074 (0.0074) 0.00 1.00 0.74 8,919 0.32 2
INVESTOR A CLASS
10/1/97 through 3/31/98 5 $1.00 $0.0137 $(0.0137) $0.00 $1.00 1.39% $117,390 0.82%2
9/30/97 1.00 0.0285 (0.0285) 0.00 1.00 2.89 98,218 0.77
9/30/96 1.00 0.0281 (0.0281) 0.00 1.00 2.90 63,424 0.81
9/30/95 1.00 0.0302 (0.0302) 0.00 1.00 3.06 750 0.82
12/28/93 1 through 9/30/94 1.00 0.0153 (0.0153) 0.00 1.00 1.58 139 0.65 2
- -----------------------------------------
VIRGINIA MUNICIPAL MONEY MARKET PORTFOLIO
- -----------------------------------------
INSTITUTIONAL CLASS
10/1/97 through 3/31/98 5 $1.00 $0.0170 $(0.0170) $0.00 $1.00 1.71% $ 63,322 0.30%2
9/30/97 1.00 0.0347 (0.0347) 0.00 1.00 3.53 62,834 0.22
9/30/96 1.00 0.0348 (0.0348) 0.00 1.00 3.54 38,553 0.14
9/30/95 1.00 0.0368 (0.0368) 0.00 1.00 3.74 24,409 0.10
7/25/94 1 through 9/30/94 1.00 0.0053 (0.0053) 0.00 1.00 0.53 13,831 0.10 2
SERVICE CLASS
10/1/97 through 3/31/98 5 $1.00 $0.0155 $(0.0155) $0.00 $1.00 1.56% $ 6,002 0.60%2
9/30/97 1.00 0.0317 (0.0317) 0.00 1.00 3.22 5,244 0.48
9/30/96 1.00 0.0318 (0.0318) 0.00 1.00 3.25 14,968 0.45
10/11/94 1 through 9/30/95 1.00 0.0330 (0.0330) 0.00 1.00 3.35 821 0.40 2
INVESTOR A CLASS
10/1/97 through 3/31/98 5 $1.00 $0.0140 $(0.0140) $0.00 $1.00 1.41% $ 1,064 0.87%2
5/27/97 1 through 9/30/97 1.00 0.0102 (0.0102) 0.00 1.00 1.03 1,096 0.86 2
</TABLE>
<TABLE>
<CAPTION>
RATIO OF NET
RATIO OF EXPENSES INVESTMENT INCOME
TO AVERAGE RATIO OF NET TO AVERAGE
NET ASSETS INVESTMENT INCOME NET ASSETS
(EXCLUDING TO AVERAGE NET (EXCLUDING
WAIVERS) ASSETS WAIVERS)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
- ---------------------------------------------
PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO
- ---------------------------------------------
SERVICE CLASS
10/1/97 through 3/31/98 5 1.00%2 2.94%2 2.60%2
9/30/97 1.01 3.01 2.61
9/30/96 1.01 3.02 2.59
9/30/95 0.99 3.29 2.87
9/30/94 0.99 2.31 1.75
6/11/93 1 through 9/30/93 1.20 2 2.42 2 1.54 2
INVESTOR A CLASS
10/1/97 through 3/31/98 5 1.16%2 2.75%2 2.41%2
9/30/97 1.17 2.85 2.45
9/30/96 1.23 2.81 2.39
9/30/95 1.24 3.03 2.61
12/28/93 1 through 9/30/94 1.22 2 2.11 2 1.54 2
- -----------------------------------------
VIRGINIA MUNICIPAL MONEY MARKET PORTFOLIO
- -----------------------------------------
INSTITUTIONAL CLASS
10/1/97 through 3/31/98 5 0.77%2 3.40%2 2.93%2
9/30/97 0.81 3.49 2.90
9/30/96 0.82 3.47 2.79
9/30/95 0.95 3.71 2.86
7/25/94 1 through 9/30/94 1.02 2 2.89 2 1.97 2
SERVICE CLASS
10/1/97 through 3/31/98 5 1.07%2 3.11%2 2.64%2
9/30/97 1.07 3.12 2.53
9/30/96 1.12 3.05 2.38
10/11/94 1 through 9/30/95 1.25 2 3.50 2 2.65 2
INVESTOR A CLASS
10/1/97 through 3/31/98 5 1.34%2 2.87%2 2.40%2
5/27/97 1 through 9/30/97 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 Unaudited.
</FN>
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
34-35
<PAGE>
[GRAPHIC OMITTED] BLACKROCK FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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 32
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 five 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% 0.40%
- ---------------------------------------------------------------------------------------------------
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% 0.40%
- ---------------------------------------------------------------------------------------------------
Pennsylvania Municipal Money Market None None 0.30% 0.30% 0.50% 0.40%
- ---------------------------------------------------------------------------------------------------
Virginia Municipal Money Market None None 0.30% 0.30% 0.50% 0.40%
- ---------------------------------------------------------------------------------------------------
</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% N/A 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
- -------------------------------------------------------------------------------
</TABLE>
(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 March 31, 1998.
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 these
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 [GRAPHIC OMITTED]
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 period ended March 31, 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 ................................. $5,976,975 $3,980,691 $1,996,284
U.S. Treasury Money Market Portfolio ................... 2,302,937 1,680,760 622,177
Municipal Money Market Portfolio ....................... 1,095,740 861,151 234,589
New Jersey Municipal Money Market Portfolio ............ 324,206 275,533 48,673
North Carolina Municipal Money Market Portfolio ........ 443,445 390,275 53,170
Ohio Municipal Money Market Portfolio .................. 300,412 252,939 47,473
Pennsylvania Municipal Money Market Portfolio .......... 1,485,739 1,129,017 356,722
Virginia Municipal Money Market Portfolio .............. 155,225 139,382 15,843
</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 period ended March 31, 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 ....................................... $2,177,472 $ 156 $2,177,316
U.S. Treasury Money Market Portfolio ......................... 868,313 10,139 858,174
Municipal Money Market Portfolio ............................. 436,563 -- 436,563
New Jersey Municipal Money Market Portfolio .................. 129,682 3,659 126,023
North Carolina Municipal Money Market Portfolio .............. 177,378 34,361 143,017
Ohio Municipal Money Market Portfolio ........................ 120,164 1,224 118,940
Pennsylvania Municipal Money Market Portfolio ................ 578,126 -- 578,126
Virginia Municipal Money Market Portfolio .................... 62,090 22,143 39,947
</TABLE>
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.
37
<PAGE>
[GRAPHIC OMITTED] BLACKROCK FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
BlackRock Advisors, Inc., BIMC, PFPC, and BDI have also agreed for the
period ended March 31, 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 period ended March 31, 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 service agreements with Service Organization (including PNC Bank
and its affiliates) with respect to each class of Investor Shares and Service
Shares. 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 FOR THE YEAR
SIX MONTHS ENDED ENDED
3/31/98 9/30/97
---------------- ---------------
(UNAUDITED)
<S> <C> <C>
Shares sold:
Institutional Class ............................... $ 726,376,084 $ 1,685,386,332
Service Class ..................................... 1,672,643,912 3,666,582,530
Investor A Class .................................. 299,262,765 476,622,866
Investor B Class .................................. 464,763 907,200
Investor C Class .................................. 455,947 1,176,081
Shares issued in reinvestment of dividends:
Institutional Class ............................... 156,957 232,221
Service Class ..................................... 3,752,678 7,520,238
Investor A Class .................................. 6,800,978 10,382,083
Investor B Class .................................. 5,892 5,725
Investor C Class .................................. 2,177 593
Shares redeemed:
Institutional Class ............................... (607,479,536) (1,394,768,940)
Service Class ..................................... (1,509,367,676) (3,638,822,450)
Investor A Class .................................. (238,138,137) (393,060,769)
Investor B Class .................................. (387,753) (813,928)
Investor C Class .................................. (188,188) (1,174,511)
--------------- ---------------
Net increase ...................................... $ 354,360,863 $ 420,175,271
=============== ===============
</TABLE>
38
<PAGE>
BLACKROCK FUNDS [GRAPHIC OMITTED]
<TABLE>
<CAPTION>
U.S. TREASURY MONEY
MARKET PORTFOLIO
-------------------------------------
FOR THE FOR THE YEAR
SIX MONTHS ENDED ENDED
3/31/98 9/30/97
---------------- --------------
(UNAUDITED)
<S> <C> <C>
Shares sold:
Institutional Class .................................. $ 495,605,057 $ 1,713,360,508
Service Class ........................................ 1,096,811,724 2,540,717,939
Investor A Class ..................................... 113,332,263 114,806,287
Shares issued in reinvestment of dividends:
Institutional Class .................................. 33,269 104,888
Service Class ........................................ 1,413,563 3,201,277
Investor A Class ..................................... 1,234,021 1,032,771
Shares redeemed:
Institutional Class .................................. (479,549,805) (1,718,626,346)
Service Class ........................................ (1,138,586,329) (2,663,322,940)
Investor A Class ..................................... (89,748,322) (83,046,068)
-------------- ---------------
Net increase (decrease) .............................. $ 545,441 $ (91,771,684)
============== ===============
</TABLE>
<TABLE>
<CAPTION>
MUNICIPAL MONEY
MARKET PORTFOLIO
------------------------------------
FOR THE FOR THE YEAR
SIX MONTHS ENDED ENDED
3/31/98 9/30/97
---------------- -------------
(UNAUDITED)
<S> <C> <C>
Shares sold:
Institutional Class ..................................... $ 276,468,130 $ 317,120,148
Service Class ........................................... 536,648,715 1,122,149,234
Investor A Class ........................................ 26,150,621 17,412,192
Investor C Class ........................................ -- 11,754
Shares issued in reinvestment of dividends:
Institutional Class ..................................... 1,130,860 --
Service Class ........................................... 100,366 1,174,707
Investor A Class ........................................ 103 98,289
Investor C Class -- --
Shares redeemed:
Institutional Class ..................................... (212,100,963) (302,308,518)
Service Class ........................................... (489,238,549) (1,057,028,541)
Investor A Class ........................................ (27,868,071) (10,894,112)
Investor C Class ........................................ (2,500) --
------------- ---------------
Net increase ............................................ $ 111,288,712 $ 87,735,153
============= ===============
</TABLE>
39
<PAGE>
[GRAPHIC OMITTED] BLACKROCK FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
NEW JERSEY MUNICIPAL
MONEY MARKET PORTFOLIO
-----------------------------------
FOR THE FOR THE YEAR
PERIOD ENDED ENDED
3/31/98 9/30/97
------------- -------------
(UNAUDITED)
<S> <C> <C>
Shares sold:
Institutional Class ............................. $ 25,578,184 $ 34,299,530
Service Class ................................... 65,072,411 137,822,928
Investor A Class ................................ 54,326,136 113,438,058
Investor B Class ................................ -- 40,000
Shares issued in reinvestment of dividends:
Institutional Class ............................. 24,786 17,627
Service Class ................................... 52,314 152,805
Investor A Class ................................ 382,670 630,724
Investor B Class ................................ -- 189
Shares redeemed:
Institutional Class ............................. (23,596,966) (27,498,897)
Service Class ................................... (92,929,449) (104,815,699)
Investor A Class ................................ (44,553,377) (109,694,959)
Investor B Class ................................ -- (40,189)
------------ -------------
Net increase (decrease) ......................... $(15,643,291) $ 44,352,117
============ =============
</TABLE>
<TABLE>
<CAPTION>
NORTH CAROLINA MUNICIPAL
MONEY MARKET PORTFOLIO
-------------------------------------
FOR THE FOR THE YEAR
SIX MONTHS ENDED ENDED
3/31/98 9/30/97
---------------- --------------
(UNAUDITED)
<S> <C> <C>
Shares sold:
Institutional Class ............................ $ 292,543,084 $ 515,356,166
Service Class .................................. 40,046,984 57,557,439
Investor A Class ............................... 7,390,559 198,135
Shares issued in reinvestment of dividends:
Institutional Class ............................ -- --
Service Class .................................. 41,010 111,126
Investor A Class ............................... 4,077 5,570
Shares redeemed:
Institutional Class ............................ (271,496,113) (479,795,565)
Service Class .................................. (40,827,280) (41,427,596)
Investor A Class ............................... (7,475,546) (10,500)
------------- -------------
Net increase ................................... $ 20,226,775 $ 51,994,775
============= =============
</TABLE>
40
<PAGE>
BLACKROCK FUNDS [GRAPHIC OMITTED]
<TABLE>
<CAPTION>
OHIO MUNICIPAL
MONEY MARKET PORTFOLIO
------------------------------------
FOR THE FOR THE YEAR
SIX MONTHS ENDED ENDED
3/31/98 9/30/97
---------------- -------------
(UNAUDITED)
<S> <C> <C>
Shares sold:
Institutional Class .............................. $ 323,495,728 $ 247,396,323
Service Class .................................... 81,023,868 119,579,274
Investor A Class ................................. 24,924,791 27,674,576
Shares issued in reinvestment of dividends:
Institutional Class .............................. 3,769 21,464
Service Class .................................... 368,671 594,159
Investor A Class ................................. 279,933 318,914
Shares redeemed:
Institutional Class .............................. (316,717,173) (256,621,447)
Service Class .................................... (67,573,898) (107,536,043)
Investor A Class ................................. (21,396,684) (17,789,245)
------------- -------------
Net increase ..................................... $ 24,409,005 $ 13,637,975
============= =============
</TABLE>
<TABLE>
<CAPTION>
PENNSYLVANIA MUNICIPAL
MONEY MARKET PORTFOLIO
--------------------------------------
FOR THE FOR THE YEAR
SIX MONTHS ENDED ENDED
3/31/98 9/30/97
---------------- ----------------
(UNAUDITED)
<S> <C> <C>
Shares sold:
Institutional Class .............................. $ 746,839,843 $ 1,191,362,779
Service Class .................................... 293,364,794 387,153,573
Investor A Class ................................. 232,607,883 413,488,333
Shares issued in reinvestment of dividends:
Institutional Class .............................. 60,980 108,317
Service Class .................................... 400,474 784,774
Investor A Class ................................. 1,570,099 2,584,961
Shares redeemed:
Institutional Class .............................. (664,999,616) (1,161,127,715)
Service Class .................................... (298,087,296) (377,662,550)
Investor A Class ................................. (215,005,752) (381,279,008)
------------- ---------------
Net increase ..................................... $ 96,751,409 $ 75,413,464
============= ===============
</TABLE>
41
<PAGE>
[GRAPHIC OMITTED] BLACKROCK FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
VIRGINIA MUNICIPAL
MONEY MARKET PORTFOLIO
------------------------------------
FOR THE FOR THE YEAR
SIX MONTHS ENDED ENDED
3/31/98 9/30/97
---------------- --------------
(UNAUDITED)
<S> <C> <C>
Shares sold:
Institutional Class ........................... $ 72,891,939 $105,024,816
Service Class ................................. 5,959,941 10,483,122
Investor A Class .............................. 809,265 1,558,544
Shares issued in reinvestment of dividends:
Institutional Class ........................... 201,066 251,885
Service Class ................................. 56,834 97,273
Investor A Class .............................. 12,401 10,473
Shares redeemed:
Institutional Class ........................... (72,604,649) (80,994,943)
Service Class ................................. (5,259,558) (20,304,306)
Investor A Class .............................. (852,828) (473,468)
------------ ------------
Net increase .................................. $ 1,214,411 $ 15,653,396
============ ============
</TABLE>
(D) AT MARCH 31, 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 ........................................ $3,099,528,674 $1,042,314,575 $506,748,200 $114,782,833
Accumulated net realized loss on
investment transactions ............................. (10,451)1 (116,776) (322,541)1 (8,250)1
-------------- -------------- ------------ ------------
$3,099,518,223 $1,042,197,799 $506,425,659 $114,774,583
============== ============== ============ ============
</TABLE>
<TABLE>
<CAPTION>
NORTH
CAROLINA OHIO PENNSYLVANIA VIRGINIA
MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL
MONEY MARKET MONEY MARKET MONEY MARKET MONEY MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------ -----------
<S> <C> <C> <C> <C>
Capital paid in ........................................ $191,892,517 $122,196,224 $658,616,999 $70,388,600
Accumulated net realized gain (loss)
on investment transactions .......................... 459 (28,889)1 (12,019)1 (572)
------------ ------------ ------------ -----------
$191,892,976 $122,167,335 $658,604,980 $70,388,028
============ ============ ============ ===========
<FN>
1 Includes $4,564, $1,471, $1,750, $4,223 and $3,403 of deferred post-October
losses as of September 30, 1997, respectively.
</FN>
</TABLE>
(E) CAPITAL LOSS CARRYOVER
At September 30, 1997, capital loss carryovers were available to offset
possible future realized capital gains as follows: $8,609 in the Money Market
Portfolio which expires through 2005, $141,572 in the U.S. Treasury Money Market
Portfolio which expires through 2005, $320,833 in the Municipal Money Market
Portfolio which expires through 2002, $6,907 in the New Jersey Municipal Money
Market Portfolio which expires through 2003, $121 in the North Carolina
Municipal Money Market Portfolio which expires through 2004, $8,125 in the Ohio
Municipal Money market Portfolio which expires through 2005, $8,647 in the
Pennsylvania Municipal Money market Portfolio which expires through 2005, and
$171 in the Virginia Municipal Money Market Portfolio which expires through
2003.
42
<PAGE>
BLACKROCK FUNDS [GRAPHIC OMITTED]
(F) PNC COMMON TRUST CONVERSION
On January 22, 1998, January 13, 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 provides for the acquisition by
the Fund of all of the assets and liabilities of each PNC Common Trust Fund in
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 is expected to occur in May, 1998.
43
<PAGE>
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, Thacher & Bartlett
New York, New York 10017
(A partnership which includes professional
corporations)
Independent Accountants
Coopers & Lybrand, L.L.P.
Philadelphia, Pennsylvania 19103
<PAGE>
BLACKROCK FUNDS [GRAPHIC OMITTED]
FUND SPECTRUM
BLACKROCK FUNDS IS A LEADING MUTUAL FUND COMPANY CURRENTLY MANAGING IN EXCESS OF
$23 BILLION IN 35 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.(SERVICE 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
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. Seven 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 IRA accounts or
rollover IRAs.
GENERAL INFORMATION ABOUT THE BLACKROCK FUNDS
If you would like additional reports or have questions regarding any of the 35
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.
SR 3/31/98 MM
