The BlackRock Funds
Strategic Portfolio I
---------------------
Semi-Annual Report to Shareholders
March 31, 2000
(Unaudited)
<PAGE>
BLACKROCK STRATEGIC PORTFOLIO I
TOTAL ASSETS (3/31/00): $16.7 million
PERFORMANCE BENCHMARK: Lehman Brothers Aggregate Index
INVESTMENT APPROACH: Seeks to maximize total return through the investment
in a portfolio of investment grade fixed income
securities of foreign and U.S. issuers denominated in
foreign currencies, baskets of foreign currencies and
the U.S. dollar.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
o U.S. Treasuries led a rally across most international bond markets as lack of
supply and buy backs due to government surpluses and improved deficits drove
yields lower. Bond investors also took heart in fairly low core inflation
numbers and the belief that the world's central banks would keep inflation in
check over longer periods. Due to their tendency to trade in line with the
U.S. market, the dollar bloc markets showed the best returns followed by
non-EMU European countries such as the U.K. and Sweden, where supply was also
light. Japan was the major exception as large budget deficits and better
economic growth sparked a retrenchment in JGB (Japanese Government Bond)
yields.
o The Portfolio remained generally currency hedged during the period, which
resulted in mixed returns. In currency markets, the Euro continued to
depreciate after strengthening somewhat during the first part of January. The
Euro closed the quarter at below 96 vs. the U.S.dollar and near 98 versus the
Japanese Yen, both near all-time lows. International investors remain
skeptical on the relative merits of the Euro given the superior economic
performance of the dollar bloc and the combination of the large current
account surplus and improved growth prospects in Japan. The dollar/yen
exchange rate ended the quarter near where it began at 102.5 per dollar after
a January yen sell-off gave way to a Japanese rally in March.
o The Portfolio became less defensively positioned over the period, and
substantially added to its international positions. We initiated significant
positions in New Zealand and South Africa, which led the Portfolio to
outperform its benchmark.
Although the portfolio holdings and sectors listed above were current as of the
end of the semi-annual period ended March 31, 2000, the Portfolio is actively
managed and the composition will vary.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE STRATEGIC PORTFOLIO
I AND THE LEHMAN BROTHERS AGGREGATE INDEX FROM INCEPTION AT EACH QUARTER END.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF PLOT POINTS IN PRINTED GRAPHIC
Strategic Portfolio I Lehman Aggregate Index
10/6/97 $10,000 $10,000
12/31/97 $10,141 $10,101
3/31/98 $10,303 $10,135
6/30/98 $10,516 $10,221
9/30/98 $11,084 $10,461
12/31/98 $11,136 $10,492
3/31/99 $11,131 $10,550
6/30/99 $11,163 $10,516
9/30/99 $11,289 $10,638
12/31/99 $11,348 $10,667
3/31/00 $11,477 $10,902
Performance as of 3/31/00
Strategic Portfolio I - Average Annual Return
1 Yr From Inception
3.120% 5.700%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
2
<PAGE>
THE BLACKROCK FUNDS
STRATEGIC PORTFOLIO I
STATEMENT OF NET ASSETS (UNAUDITED)
MARCH 31, 2000
--------------------------------------------------------------------------------
PRINCIPAL/SHARE
AMOUNT
(000) DESCRIPTION MATURITY VALUE
--------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS 6.7%
U.S. Treasury Notes 10/15/06
$1,700 6.5%**
(COST $1,889,714) $ 1,716,119
-----------
FOREIGN BONDS 56.3%
AB Spintab
7,000 8.50% 12/19/01 851,423
7,200 6.25% 09/18/02 845,082
New Zealand Gov't.
12,500 5.50% 04/15/03 5,950,927
Republic of South Africa
39,500 13.00% 08/31/10 5,678,490
Statens Bostadsfinansier
10,000 9.00% 06/15/01 1,209,420
TOTAL FOREIGN BONDS
(COST $15,006,829) 14,535,342
-----------
SHORT TERM INVESTMENTS 35.5%
Federal Home Loan Bank Discount Notes
4,815 5.85% 04/03/00 4,813,435
U. S. Treasury Bills
4,200 5.80% 04/18/00 4,188,453
168 Galileo Money Market Fund 167,723
-----------
TOTAL SHORT TERM INVESTMENTS 9,169,611
-----------
(COST $9,169,654)
TOTAL INVESTMENTS IN SECURITIES
(COST $26,066,197*) 98.5% $25,421,072
OTHER ASSETS IN EXCESS OF LIABILITIES 1.5% 383,123
------ -----------
NET ASSETS (APPLICABLE TO 3,080,778 100.0% $25,804,195
====== ===========
INSTITUTIONAL SHARES OUTSTANDING)
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER SHARE
($25,804,195 / 3,080,778 ) $8.38
===========
* Also cost for Federal Income tax purposes. The gross unrealized
appreciation (depreciation) on a tax basis is as follows:
Gross unrealized appreciation $50,291
Gross unrealized depreciation (695,416)
---------
($645,125)
=========
**Principal amount of securities pledged as collateral of $450,000 on
60 long Euro-Schatz Bond futures contracts expiring June 2000. The
value of such contracts on March 31, 2000 was $5,888,605, thereby
resulting in an unrealized gain of $12,604.
See Notes to Financial Statements
3
<PAGE>
THE BLACKROCK FUNDS
STRATEGIC PORTFOLIO I
STATEMENT OF OPERATIONS (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the
Six Months Ended
03/31/00
--------
<S> <C>
Investment Income:
Interest $ 501,430
---------
Expenses:
Investment advisory fee 15,733
Administration fee 18,093
Custodian fee 12,161
Transfer agent fee 2,537
Legal and audit 945
Printing 199
Trustees fees 68
Other 363
---------
50,099
Less fees waived (29,846)
---------
Total expenses 20,253
---------
Net investment income 481,177
---------
Realized and unrealized gain (loss) on investments:
Net realized gain (loss) on:
Investment transactions (28,006)
Foreign exchange transactions 254,407
Net change in unrealized appreciation(depreciation) on:
Investments (489,464)
Foreign currency transactions and forward foreign currency contracts 83,754
---------
Net gain (loss) on investments and foreign currency transactions (179,309)
---------
Net increase in net assets resulting from operations $ 301,868
=========
</TABLE>
--------------------------------------------------------------------------------
See Notes to Financial Statements
4
<PAGE>
THE BLACKROCK FUNDS
STRATEGIC PORTFOLIO I
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the For the
Six Months Ended Year Ended
Increase (decrease) in net assets: 3/31/00 9/30/99
----------------- ----------
(Unaudited)
<S> <C> <C>
Operations:
Net investment income $ 481,177 $ 484,805
Net realized gain on investments and foreign currency related
transactions 226,401 1,211,063
Net unrealized appreciation on investment and foreign currency
related transactions (405,710) (1,495,995)
----------- ------------
Net increase in net assets resulting from operations 301,868 199,873
----------- ------------
Distributions to shareholders from:
Net investment income (505,414) (484,805)
Net realized gain -- (1,284,601)
----------- ------------
(505,414) (1,769,406)
----------- ------------
Capital share transactions:
Proceeds from shares subscribed 19,881,399 20,000
Net asset value of shares issued in reinvestment
of dividends 369,757 1,857,535
Shares redeemed (1,457,238) (24,748,089)
----------- ------------
18,793,918 (22,870,554)
----------- ------------
Total increase (decrease) in net assets 18,590,372 (24,440,087)
----------- ------------
Net Assets:
Beginning of period 7,213,823 31,653,910
----------- ------------
End of period $25,804,195 $ 7,213,823
=========== ============
</TABLE>
--------------------------------------------------------------------------------
See Notes to Financial Statements
5
<PAGE>
THE BLACKROCK FUNDS
STRATEGIC PORTFOLIO I
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD:
<TABLE>
<CAPTION>
For the For the For the Period
Six Months Ended Year Ended 10/6/97(a) through
03/31/00 9/30/99 9/30/98
---------------- ---------- ------------------
(Unaudited)
<S> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of period $ 8.51 $10.46 $ 10.00
------- ------ -------
Net investment income 0.27 0.43 0.51
Net realized and unrealized gain on investments (0.13) (0.28) 0.53
------- ------ -------
Net increase from investment operations 0.14 0.15 1.04
------- ------ -------
Distributions from net investment income (0.27) (0.43) (0.58)
Distributions from net realized gains -- (1.67) --
------- ------ -------
Total dividends and distributions (0.27) (2.10) (0.58)
------- ------ -------
Net asset value, end of period $ 8.38 $ 8.51 $ 10.46
======= ====== =======
TOTAL RETURN 1.67% 1.86% 10.84%
RATIOS / SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $25,804 $7,214 $31,654
Ratio of expenses to average net assets 0.26%(b) 0.31% 0.26%(b)
Ratio of expenses to average net assets (excluding interest expense) 0.26%(b) 0.26% 0.26%(b)
Ratio of expenses to average net assets (excluding waivers) 0.65%(b) 0.68% 0.60%(b)
Ratio of net investment income to average net assets 6.25%(b) 4.94% 5.39%(b)
Ratio of net investment income to average net assets (excluding waivers) 5.86%(b) 4.57% 5.05%(b)
Portfolio turnover 165% 78% 164%
<FN>
--------------------------------------------------------------------------------
(a) Commencement of investment operations.
(b) Annualized.
</FN>
</TABLE>
See Notes to Financial Statements
6
<PAGE>
THE BLACKROCK FUNDS
STRATEGIC PORTFOLIO I
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
--------------------------------------------------------------------------------
NOTE 1. ORGANIZATION AND ACCOUNTING POLICIES
BlackRock Funds(SM) (the "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 38 investment portfolios. These financial statements relate to the
Fund's Strategic Portfolio I (the "Portfolio"). The Portfolio is authorized to
issue an unlimited number of shares with a par value of $0.001.
The following is a summary of significant accounting policies followed by
the Fund in preparation of its financial statements. The preparation of
financial statements in conformity with generally accepted accounting principles
requires the use of management estimates. Actual results could differ from the
estimates.
SECURITY VALUATION: Portfolio securities for which market quotations are
readily available are valued at market value, which is currently determined
using the last reported sales price. Portfolio securities which are primarily
traded on foreign securities exchanges are normally valued at the preceding
closing values for such securities on their respective exchanges. If no sales
are reported, as in the case of some securities traded over-the-counter,
portfolio securities are valued at the mean between the last reported bid and
asked prices. Corporate bonds are valued on the basis of quotations provided by
a pricing service which uses information with respect to transactions on bonds,
quotations from bond dealers, market transactions in comparable securities and
various relationships between securities in determining value. Short-term
obligations with maturities of 60 days or less are valued at amortized cost
which approximates market value. Discounts and premiums on debt securities are
amortized for book and tax purposes using the effective yield-to- maturity
method over the term of the instrument. Securities for which market quotations
are not readily available are valued at fair value as determined March 31, 2000,
there were no securities valued in accordance with such procedures.
FUTURES TRANSACTIONS: The Strategic Portfolio I invests in financial
futures contracts solely for the purposes of hedging its existing portfolio
securities, or securities that the Strategic Portfolio I intends to purchase,
against fluctuations in fair value caused by changes in prevailing market
interest rates. The Fund invests in futures contracts and options on futures
contracts to commit funds awaiting investments in stocks or to maintain cash
liquidity or for other hedging purposes. These portfolios futures contracts
obligate a portfolio, at maturity, to take or make delivery of securities, the
cash value of a securities index or a stated quantity of a foreign currency.
Upon entering into a futures contract, the Portfolio is required to deposit
7
<PAGE>
THE BLACKROCK FUNDS
STRATEGIC PORTFOLIO I
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
cash or pledge U.S. Government securities of an initial margin. Subsequent
payments, which are dependent on the daily fluctuations in the value of the
underlying security or securities, are made or received by the Portfolio each
day (daily variation margin) and are recorded as unrealized gains or losses
until the contracts are closed. When contracts are closed, the Portfolio records
a realized gain or loss equal to the difference between the proceeds from (or
cost of) the closing transaction and the Portfolio's basis in the contracts.
Risks of entering into futures contracts include the possibility that there will
not be a perfect price correlation between the futures contracts and the
underlying securities. Second, it is possible that a lack of liquidity for
futures contracts could exist in the secondary market, resulting in an inability
to close a futures position prior to its maturity date. Third, the purchase of a
futures contract involves the risk that a Portfolio could lose more than the
original margin deposit required to initiate a futures transaction.
OPTION SELLING/PURCHASING: The Strategic Portfolio I may invest in
financial options contracts solely for the purpose of hedging its existing
portfolio securities, or securities that the Portfolio intends to purchase,
against fluctuations in fair value caused by changes in prevailing market
interest rates. When the Portfolio sells or purchases an option an amount equal
to the premium received or paid by the Portfolio is recorded as a liability or
an asset and is subsequently adjusted to the current market value of the option
written or purchased. Premiums received or paid from writing or purchasing
options which expire unexercised are treated by the Portfolio on the expiration
date as realized gains or losses. The difference between the premium and the
amount paid or received on effecting a closing purchase or sale transaction,
including brokerage commissions, is also treated as a realized gain or loss. If
an option is exercised, the premium paid or received is added to the cost of the
purchase or proceeds from the sale in determining whether the Fund has realized
a gain or loss on investment transactions. The Fund as writer of an option, may
have no control over whether the underlying securities may be sold (call) or
purchased (put) as a result bears the market risk of an unfavorable change in
the price of the security underlying the written option. There were no options
held by the Portfolio at March 31, 2000.
OTHER: Securities denominated in currencies other that U.S. dollars are
subject to changes in value due to fluctuations in exchange rates.
Some countries in which the Portfolio invests require governmental approval
for the repatriation of investment income, capital or the proceeds of sales of
securities by foreign investors. In addition, if there is a deterioration in a
country's balance of payments or for the other reasons, a country may impose
temporary restrictions on foreign capital remittances
8
<PAGE>
THE BLACKROCK FUNDS
STRATEGIC PORTFOLIO I
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
abroad.
The securities exchanges of certain foreign markets are substantially
smaller, less liquid and more volatile than the major securities markets in the
United States. Consequently, acquisition and disposition of securities by the
Portfolio may be inhibited.
FOREIGN CURRENCY TRANSLATION: The books and records of Strategic Portfolio
I are maintained in U.S. dollars. Foreign currency amounts are translated into
U.S. dollars on the following basis:
(I) market value of investment securities, assets and liabilities at the
current rate of exchange; and
(II) purchases and sales of investment securities, income and expenses at
the relevant rates of exchange prevailing on the respective dates of such
transactions.
The Portfolio isolates that portion of gains and losses on investment
securities which is due to changes in the foreign exchange rates from that which
is due to changes in market prices of such securities.
The Portfolio reports certain foreign currency related transactions as
components of realized and unrealized gains for financial reporting purposes,
whereas such components are treated as ordinary income for federal income tax
purposes.
FORWARD FOREIGN CURRENCY CONTRACTS: The Strategic Portfolio I enters into
forward foreign currency contracts as a hedge against either specific
transactions or portfolio positions. These contracts are adjusted by the daily
exchange rate of the underlying currency and any gains or losses are recorded as
unrealized until the contract settlement date. Such contracts, which protect the
value of the Portfolio's investment securities against a decline in the value of
currency, do not eliminate fluctuations in the underlying prices of the
securities. They simply establish an exchange rate at a future date. Also,
although such contracts tend to minimize the risk of loss due to a decline in
the value of a hedged currency, at the same time they tend to limit any
potential gain that might be realized should the value of such foreign currency
increase. Risks may arise upon entering into these contracts from the potential
inability of counterparties to meet the terms of their contracts and from
unanticipated movements in the value of a foreign currency relative to the U.S.
dollar.
9
<PAGE>
THE BLACKROCK FUNDS
STRATEGIC PORTFOLIO I
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
The aggregate principal amounts of the contracts are not recorded as the
Portfolios intend to settle the contracts prior to delivery. Under the terms of
foreign currency contracts open at March 31, 2000, the Portfolios are obligated
to deliver or receive currency in exchange for U.S. dollars as indicated below:
<TABLE>
<CAPTION>
Unrealized
Foreign Value At
Settlement Currency Currency Contract March 31, Exchange
Date Amount Sold Amount 2000 Gain/(Loss)
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
04/17/00 12,094,013 New Zealand Dollar $ 5,938,161 $ 5,996,091 $(57,930)
04/28/00 37,666,876 South African Rand 5,814,764 5,748,281 66,483
05/30/00 6,300,000 European Currency Unit 6,142,500 6,060,023 82,477
05/30/00 26,025,000 Swedish Krona 3,023,702 3,030,427 (6,725)
----------- ----------- --------
$20,919,127 $20,834,822 $ 84,305
=========== =========== ========
</TABLE>
<TABLE>
<CAPTION>
Unrealized
Foreign Value At
Settlement Currency Currency Contract March 31, Exchange
Date Amount Bought Amount 2000 Gain/(Loss)
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
05/30/00 6,300,000 European Currency Unit $6,072,727 $6,060,023 $(12,704)
========== ========== ========
</TABLE>
SECURITY TRANSACTIONS AND INVESTMENT INCOME: Investment transactions are
accounted for on the trade date. The cost of investments sold is determined by
use of specific identification method for both financial reporting and federal
income purposes. Interest income is recorded on the accrual basis and the Fund
accretes premium or amortizes discount on securities purchased using the
interest method.
TAXES: No provision is made for federal taxes as its the Fund's intention to
have the Portfolio continue to qualify for and elect the tax treatment
applicable to regulated investment companies under subchapter M of the Internal
Revenue Code of 1986, as amended, and to make the requisite distributions to its
shareholders which will be sufficient to relieve it from federal income and
excise taxes.
10
<PAGE>
THE BLACKROCK FUNDS
STRATEGIC PORTFOLIO I
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS: Dividends from net investment income are declared by
the Portfolio each day on "settled" shares (i.e. shares for which the Portfolio
has received payment in federal funds) and are paid monthly. Net realized
capital gains, if any, will be distributed at least annually. The character of
distributions made during the year from net investment income or net realized
gains may differ from their ultimate characterization for federal income tax
purposes due to differences between generally accepted accounting principles and
tax accounting principles related to the character of income and expense
recognition.
NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Pursuant to an Investment Advisory Agreement, BlackRock Advisors, Inc., a
wholly-owned subsidiary of BlackRock, Inc., serves as investment adviser to the
Portfolio. For its advisory services, BlackRock Advisors Inc., is entitled to
receive fees, computed daily and paid monthly, at the annual rate of 0.20% of
the Portfolio's average daily net assets.
BlackRock Advisors, Inc., may, at its discretion, waive all or any portion
of its advisory fee for the Portfolio and may reimburse the Portfolio for
certain operating expenses. For the period ended March 31, 2000, advisory fees
and waiver for the Portfolio were as follows:
GROSS NET
ADVISORY ADVISORY
FEE WAIVER FEE
--- ------ ---
Strategic Portfolio I $15,733 $15,733 -0-
PFPC Inc. ("PFPC"), an indirect wholly-owned subsidiary of The PNC
Financial Services Group, Inc., BlackRock Advisors, Inc., and BlackRock
Distributors, Inc. ("BDI") act as co-administrators for the Fund. For theses
services, the co-administrators receive a combined administration fee computed
daily and payable monthly, based on a percentage of the average daily net assets
of the Portfolio, at the following annual rates: 0.085% of the first $500
million, 0.075% of the next $500 million and 0.065% of assets in excess of $1
billion. In addition, the Portfolio is charged an administration fee based on
the following percentage of average daily net assets of the Portfolio: 0.145% of
the first $500 million, 0.135% of the next $500 million and 0.125% of assets in
excess of $1 billion.
11
<PAGE>
THE BLACKROCK FUNDS
STRATEGIC PORTFOLIO I
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
PFPC, BlackRock Advisors, Inc. and BlackRock Distributors, Inc. may, at
their discretion, waive all or any portion of their administration fees for the
Portfolio. For the period ended March 31, 2000, administration fees and waivers
for the Portfolio were as follows:
GROSS NET
ADMINISTRATION ADMINISTRATION
FEE WAIVER FEE
--- ------ ---
Strategic Portfolio I $18,093 $14,113 $3,980
In addition, PFPC Trust Co. (formerly PNC Bank, National Association)
serves as custodian for the Portfolio. PFPC serves as transfer and dividend
disbursing agent.
NOTE 3. PORTFOLIO SECURITIES
Purchases and sales of investment securities, other than short-term
investments and government securities, for the period ended March 31, 2000 were
$103,081,570 and $13,192,232 respectively. Purchases and sales of government
securities for the period ended March 31, 2000, $7,925,362 were $8,996,483 and
respectively.
NOTE 4. CAPITAL SHARES
Transactions in capital shares were as follows:
<TABLE>
<CAPTION>
For the For the
Six Months Year
Ended Ended
3/31/00 09/30/99
------- --------
<S> <C> <C>
Shares sold ..................................................... 2,362,112 2,301
Shares issued in reinvestment
of dividends .................................................... 43,913 209,121
Shares redeemed ................................................. (173,087) (2,388,762)
---------- ----------
Net increase (decrease) ......................................... 2,232,938 (2,177,340)
========== ==========
</TABLE>
12
<PAGE>
THE BLACKROCK FUNDS
STRATEGIC PORTFOLIO I
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
NOTE 5. AT MARCH 31, 2000, NET ASSETS CONSISTED OF:
Capital paid-in ............................................. $26,192,437
Distributions in excess of net investment income ............. (53,293)
Accumulated net realized gain on investment transactions,
futures contracts and foreign exchange contracts ........... 226,401
Net unrealized depreciation on investment transactions,
futures contracts and foreign exchange contracts ........... (561,350)
-----------
$25,804,195
===========
13
<PAGE>
INVESTMENT ADVISER CO-ADMINISTRATOR AND TRANSFER AGENT
BlackRock Advisors, Inc. PFPC Inc.
New York, New York 10154 Wilmington, Delaware 19809
SUB-ADVISER DISTRIBUTOR
BlackRock Financial Management, Inc. BlackRock Distributors, Inc.
New York, New York 10154 King of Purssia, Pennsylvania 19406
CUSTODIAN CO-ADMINISTRATOR
PFPC Trust Co. BlackRock Advisors, Inc.
Philadelphia, Pennsylvania 19103 New York, New York 10154
COUNSEL
Simpson, Thatcher & Bartlett
New York, New York 10017
(A partnership which includes
professional corporations)
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania 19103
This report is for shareholder information. This is not a prospectus intended
for use in the purchase or sale of Fund shares.
The BlackRock Funds
103 Bellevue Parkway
Wilmington, DE 19809
--------------------------------------------------------------------------------
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 PRINCIPAL AMOUNT
INVESTED.
--------------------------------------------------------------------------------
