March 31, 2000
TAX-FREE
BOND
PORTFOLIOS
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
Not FDIC Insured
May Lose Value
No Bank Guarantee
[GRAPHIC OMITTED]
BLACKROCK
FUNDS
Pure Investment Style (Registration Mark)
<PAGE>
BLACKROCK FUNDS
TAX-FREE BOND PORTFOLIOS
* Tax-Free Income * Ohio Tax-Free Income
* Pennsylvania Tax-Free Income * Delaware Tax-Free Income
* New Jersey Tax-Free Income * Kentucky Tax-Free Income
TABLE of CONTENTS
SHAREHOLDER LETTER........................................................... 1
PORTFOLIO SUMMARIES
Tax-Free Income......................................................... 3
Pennsylvania Tax-Free Income............................................ 4
New Jersey Tax-Free Income.............................................. 5
Ohio Tax-Free Income.................................................... 6
Delaware Tax-Free Income................................................ 7
Kentucky Tax-Free Income................................................ 8
Note on Performance Information......................................... 9
STATEMENT OF NET ASSETS................................................... 10-32
PORTFOLIO FINANCIAL STATEMENTS
Statements of Operations............................................... 33
Statements of Changes in Net Assets................................. 34-35
Financial Highlights................................................ 36-41
NOTES TO FINANCIAL STATEMENTS............................................. 42-48
<PAGE>
BLACKROCK FUNDS
March 31, 2000
Dear Shareholder:
We are pleased to present the Semi-Annual Report for the BlackRock Funds
for the six months ending March 31, 2000.
As the first quarter of the new millennium draws to a close, the economy
continues to impress us with its continued strength and resilience -- however we
remain concerned about future volatility. Since we last reported to you on Sept
30, 1999 the stock market as measured by the S&P 500 returned 17.51%, the DJIA
returned 6.43%, the NASDAQ returned 66.68%, and the Lehman Aggregate Index
returned 2.08%.
What makes this economic strength more notable is that it is taking place
under the careful eye of the Federal Reserve which has a strict tightening bias
in place. On March 21, 2000 the Fed raised the rate for overnight bank loans
another 25 bps to 6% -- the highest rate in 3 years and the fifth straight
increase since last June. Historically, rising interest rates tend to discourage
the stock market but this didn't happen on March 21. Despite the rise in rates,
the DJIA jumped up 227 points and the NASDAQ index rose 101.7!
This seems to indicate that investors don't believe that small increases in
the cost of lending will be enough to stop growth from continuing. Is this
positive sentiment well founded?
It may be. It is clear that the business world is changing and that a major
instrument of this change is technology. A key driver in the growth of
technology is the Internet. It is still very early in the new economy, but it is
clear that major changes are taking place in the way that companies do business,
which can have tremendous impact on growth and profitability. One particularly
exciting area for investors is the so-called business to business (or B2B)
transactions in which the Internet will not only expedite the connections
between buyers and sellers but also provide the value- added services that will
likely increase the speed, efficiency and cost-effectiveness of these
transactions. The Internet can be one of the greatest business productivity
tools in history. This is important because as productivity increases, companies
can continue to grow without pricing pressure which means inflation can remain
in check and the economy can continue to grow.
While there appears to be plenty of good reason for optimism and
excitement, there are also reasons for caution.
There are several trends in the industry that may indicate that the market
is moving up faster and higher than is justified by growth fundamentals alone.
For example, many investors are fueling their purchases with borrowed money and
margin borrowing is currently at record highs. The investment industry is also
paying more than ever before to attract investors. Wall Street advertising
increased 95% last year (investment firms paid $1.2 billion to advertise
directly to the public last year, three times what they paid for ads 5 years
ago). Ten years ago, the average holding period for a NASDAQ stock was 2 years;
today its about 5 months.* This may indicate that investors are growing more
impatient, which could spell more and greater volatility ahead.
1
<PAGE>
BLACKROCK FUNDS
You don't have to look very hard to see examples of extreme volatility. On
March 7, 2000 when the DJIA lost 374 points, market action was precipitated when
Procter & Gamble did not make its earnings projections and plunged 31% in one
day. This kind of reaction may be extreme but it is certainly not rare. In fact,
9 days later on March 16th, the Dow rebounded and ran up 500 points. The Dow
ended the month up 1,126 points up from its low.
This is a challenging environment for investors because of both the
volatility and the continuous media interest in the Internet and the stock
market. Never before has the investing public had so much information available
to them via television, newspapers, magazines and the Internet. Today investors
can tune in televised stock market reports virtually round the clock and are
only a keystroke away from market information day or night.
The danger for investors is that focusing on volatility and news can create
a short-term view of investing which is generally not in their best interest.
Successful investing is a long term process and while it may be interesting to
get your market information as it unfolds, it doesn't have much to do with
long-term investing success. In the long run, stocks rise and fall based on
their ability to earn money. The ability to generate earnings depends on the
strength of a company's business franchise, the skill of its management and
other fundamental factors. These factors are all proven long term.
So, while we are pleased by the unprecedented prosperity we are enjoying,
we caution investors to perform a reality check on expectations. Last year four
of our funds returned over 100% to shareholders. We are extremely proud of these
results but we do not depend on them to continue at the same rate. The challenge
for investors is the same in these boom times as it is in lean times: to figure
out the mix of assets that make sense for your particular financial situation,
decide on a course of action and stay the course -- regardless of short-term
volatility.
BlackRock Funds is proud to be able to offer our shareholders a full range
of funds to meet virtually any investment need. We are pleased to announce that
later this year we will expand our offerings to include new equity funds
concentrating on three potential high growth areas: global science and
technology, European markets and Asia Pacific markets.
Thank you for your continued confidence in BlackRock Funds. We appreciate
the opportunity to help you achieve your long-term investment goals.
Sincerely,
/s/ Signature
Karen H. Sabath
MANAGING DIRECTOR
BLACKROCK ADVISORS, INC.
* Source: Business Week , 4/3 issue
2
<PAGE>
BLACKROCK FUNDS
TAX-FREE INCOME PORTFOLIO
TOTAL NET ASSETS (3/31/00):
$340.3 MILLION
PERFORMANCE BENCHMARK:
LEHMAN MUNICIPAL BOND INDEX
INVESTMENT APPROACH:
SEEKS AS HIGH A LEVEL OF CURRENT INCOME EXEMPT FROM FEDERAL INCOME TAX AS IS
CONSISTENT WITH THE PRESERVATION OF CAPITAL BY INVESTING PRIMARILY IN MUNICIPAL
FIXED INCOME SECURITIES RATED BBB OR HIGHER BY A MAJOR RATING AGENCY OR DEEMED
BY THE MANAGER TO BE OF COMPARABLE CREDIT QUALITY.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
o MUNICIPAL SECURITIES WERE THE SECOND BEST PERFORMING DOMESTIC FIXED INCOME
SECTOR IN THE FIRST QUARTER OF 2000. THE LEHMAN MUNICIPAL BOND INDEX RETURNED
2.19% DURING THAT PERIOD. THIS STRONG PERFORMANCE WAS THE RESULT OF INCREASED
RETAIL DEMAND FOR MUNICIPAL BONDS IN CONJUNCTION WITH A 32% REDUCTION IN NEW
ISSUE SUPPLY FROM A YEAR AGO. AS STATE AND LOCAL GOVERNMENTS ARE EXPERIENCING
LARGER BUDGET SURPLUSES, THEIR NEED TO BORROW FOR CAPITAL PROGRAMS CONTINUES TO
DECLINE AND WE EXPECT THE SLOWER PACE OF ISSUANCE TO CONTINUE.
o FOR MUCH OF THE SEMI-ANNUAL PERIOD, THE MANAGER OVERWEIGHTED THE 15-20 YEAR
RANGE OF THE MUNICIPAL YIELD CURVE WHICH BENEFITED FROM THE YIELD CURVE
FLATTENING. THOSE MATURITIES OUTPERFORMED LONGER MATURITY MUNICIPAL SECURITIES,
WHICH HAS LED THE MANAGER TO BEGIN TO EXTEND THE AVERAGE MATURITY OF THE
PORTFOLIO.
o CURRENTLY, MUNICIPAL BONDS ACROSS THE ENTIRE MATURITY SPECTRUM ARE AT
ATTRACTIVE LEVELS, RELATIVE TO THEIR TREASURY MARKET COUNTERPARTS.
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 TAX-FREE INCOME
PORTFOLIO AND THE LEHMAN MUNICIPAL BOND INDEX FROM INCEPTION AND
AT EACH SEMI-ANNUAL PERIOD END.
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
Institutional Service Investor A Investor B Investor C Lehman Municipal
Class Class Class Class Class Bond Index
<S> <C> <C> <C> <C> <C> <C>
5/14/90 $10,000 $10,000 $ 9,600 $10,000 $10,000 $10,000
Jun-90 10,118 10,118 9,662 10,118 10,118 10,234
Sep-90 10,139 10,139 9,683 10,139 10,139 10,240
Dec-90 10,513 10,513 10,040 10,513 10,513 10,681
Mar-91 10,720 10,720 10,238 10,720 10,720 10,923
Jun-91 10,919 10,919 10,428 10,919 10,919 11,156
Sep-91 11,296 11,296 10,787 11,296 11,296 11,590
Dec-91 11,708 11,708 11,181 11,708 11,708 11,979
Mar-92 11,776 11,776 11,247 11,776 11,776 12,015
Jun-92 12,215 12,215 11,665 12,215 12,215 12,471
Sep-92 12,504 12,504 11,942 12,504 12,504 12,802
Dec-92 12,744 12,744 12,170 12,744 12,744 13,035
Mar-93 13,246 13,246 12,650 13,246 13,246 13,518
Jun-93 13,708 13,708 13,091 13,708 13,708 13,961
Sep-93 14,200 14,194 13,551 14,189 14,189 14,432
Dec-93 14,412 14,400 13,738 14,385 14,385 14,635
Mar-94 13,430 13,410 12,786 13,389 13,389 13,832
Jun-94 13,615 13,587 12,948 13,558 13,558 13,985
Sep-94 13,661 13,625 12,978 13,590 13,590 14,080
Dec-94 13,455 13,395 12,764 13,365 13,365 13,878
Mar-95 14,555 14,496 13,793 14,443 14,443 14,859
Jun-95 14,810 14,737 14,014 14,674 14,674 15,218
Sep-95 15,242 15,156 14,404 15,083 15,083 15,656
Dec-95 15,941 15,825 15,031 15,739 15,739 16,302
Mar-96 15,806 15,694 14,900 15,602 15,602 16,105
Jun-96 15,953 15,828 15,026 15,734 15,734 16,228
Sep-96 16,378 16,237 15,408 16,104 16,104 16,602
Dec-96 16,853 16,696 15,837 16,522 16,522 17,025
Mar-97 16,838 16,669 15,805 16,458 16,458 16,985
Jun-97 17,446 17,258 16,439 16,999 16,999 17,571
Sep-97 18,032 17,824 16,971 17,550 17,516 18,101
Dec-97 18,560 18,332 17,448 18,043 17,975 18,592
Mar-98 18,805 18,559 17,656 18,258 18,155 18,806
Jun-98 19,080 18,815 17,892 18,502 18,363 19,092
Sep-98 19,629 19,344 18,386 19,013 18,835 19,678
Dec-98 19,753 19,450 18,480 19,110 18,896 19,797
Mar-99 19,856 19,536 18,554 19,187 18,935 19,972
Jun-99 19,510 19,180 18,209 18,796 18,549 19,619
Sep-99 19,301 18,960 17,992 17,980 18,293 19,540
Dec-99 18,931 18,582 17,627 17,581 17,887 19,388
Mar-00 19,474 19,101 18,111 18,031 17,429 19,956
</TABLE>
FOR PERIOD ENDING MARCH 31, 2000
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
Taxable Taxable Taxable From Taxable
1 Year Equivalent* 3 Year Equivalent* 5 Year Equivalent* Inception Equivalent*
------ ------------ ------ ----------- ------ ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Institutional Class (1.92)% (0.66)% 4.96% 8.21% 5.99% 9.92% 6.97% 11.54%
Service Class (2.22)% (0.76)% 4.64% 7.68% 5.68% 9.40% 6.76% 11.19%
Investor A Class (Load Adjusted) (6.28)% (2.16)% 3.07% 5.08% 4.63% 7.67% 6.19% 10.25%
Investor A Class (NAV) (2.39)% (0.82)% 4.47% 7.40% 5.48% 9.07% 6.63% 10.98%
Investor B Class (Load Adjusted) (7.52)% (2.59)% 2.60% 4.30% 4.57% 7.57% 6.33% 10.48%
Investor B Class (NAV) (3.12)% (1.07)% 3.69% 6.11% 4.90% 8.11% 6.33% 10.48%
Investor C Class (Load Adjusted) (4.10)% (1.41)% 3.69% 6.11% 4.90% 8.11% 6.33% 10.48%
Investor C Class (NAV) (3.12)% (1.07)% 3.69% 6.11% 4.90% 8.11% 6.33% 10.48%
<FN>
*TAXABLE EQUIVALENT TOTAL RETURN IS BASED ON THE ANNUALIZED TOTAL RETURN AND A
FEDERAL TAX RATE OF 39.6%. IT REPRESENTS THE RETURN ON A TAXABLE INVESTMENT
NECESSARY TO EQUAL THE AFTER-TAX RETURN OF THE BLACKROCK TAX-FREE
INCOME PORTFOLIO.
THE PERFORMANCE INFORMATION ABOVE INCLUDES INFORMATION RELATING TO EACH CLASS OF
THE PORTFOLIO SINCE THE COMMENCEMENT OF OPERATIONS OF THE PORTFOLIO, RATHER THAN
THE DATE SUCH CLASS WAS INTRODUCED. THE INCEPTION DATES OF THE PORTFOLIO'S SHARE
CLASSES WERE AS FOLLOWS: INVESTOR A SHARES, 5/14/90; INSTITUTIONAL SHARES,
1/21/93; SERVICE SHARES, 7/29/93; INVESTOR BSHARES, 7/18/96 AND INVESTOR C
SHARES, 2/28/97. SEE "NOTE ON PERFORMANCE INFORMATION" ON PAGE 9 FOR FURTHER
INFORMATION ON HOW PERFORMANCE DATA WAS CALCULATED.
</FN>
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
3
<PAGE>
BLACKROCK FUNDS
PENNSYLVANIA TAX-FREE INCOME PORTFOLIO
TOTAL NET ASSETS (3/31/00):
$964.4 MILLION
PERFORMANCE BENCHMARK:
LEHMAN MUNICIPAL BOND INDEX
INVESTMENT APPROACH:
SEEKS AS HIGH A LEVEL OF CURRENT INCOME EXEMPT FROM FEDERAL AND PENNSYLVANIA
STATE INCOME TAX AS IS CONSISTENT WITH THE PRESERVATION OF CAPITAL BY INVESTING
PRIMARILY IN MUNICIPAL FIXED INCOME SECURITIES RATED BBB OR HIGHER BY A MAJOR
RATING AGENCY OR DEEMED BY THE MANAGER TO BE OF COMPARABLE CREDIT QUALITY.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
o MUNICIPAL SECURITIES WERE THE SECOND BEST PERFORMING DOMESTIC FIXED INCOME
SECTOR IN THE FIRST QUARTER OF 2000. THE LEHMAN MUNICIPAL BOND INDEX RETURNED
2.19% DURING THAT PERIOD. THIS STRONG PERFORMANCE WAS THE RESULT OF INCREASED
RETAIL DEMAND FOR MUNICIPAL BONDS IN CONJUNCTION WITH A 32% REDUCTION IN NEW
ISSUE SUPPLY FROM A YEAR AGO. PENNSYLVANIA NEW ISSUE SUPPLY WAS PARTICULARLY
DEPRESSED, DOWN 74% SINCE MARCH 31, 1999. AS STATE AND LOCAL GOVERNMENTS ARE
EXPERIENCING LARGER BUDGET SURPLUSES, THEIR NEED TO BORROW FOR CAPITAL PROGRAMS
CONTINUES TO DECLINE AND WE EXPECT THE SLOWER PACE OF ISSUANCE TO CONTINUE.
o FOR MUCH OF THE SEMI-ANNUAL PERIOD, THE MANAGER OVERWEIGHTED THE 15-20 YEAR
RANGE OF THE MUNICIPAL YIELD CURVE WHICH BENEFITED FROM THE YIELD CURVE
FLATTENING. THOSE MATURITIES OUTPERFORMED LONGER MATURITY MUNICIPAL SECURITIES,
WHICH HAS LED THE MANAGER TO BEGIN TO EXTEND THE AVERAGE MATURITY OF THE
PORTFOLIO.
o CURRENTLY, MUNICIPAL BONDS ACROSS THE ENTIRE MATURITY SPECTRUM ARE AT
ATTRACTIVE LEVELS, RELATIVE TO THEIR TREASURY MARKET COUNTERPARTS.
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 PA
TAX-FREE INCOME PORTFOLIO AND LEHMAN MUNICIPAL
BOND INDEX FROM INCEPTION AND AT EACH SEMI-ANNUAL PERIOD END.
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
Institutional Service Investor A Investor B Investor C Lehman Municipal
Class Class Class Class Class Bond Index
<S> <C> <C> <C> <C> <C> <C>
12/1/92 $10,000 $10,000 $ 9,600 $10,000 $10,000 $10,000
Dec-92 10,080 10,080 9,626 10,080 10,080 10,182
Mar-93 10,492 10,492 10,020 10,492 10,492 10,560
Jun-93 10,809 10,809 10,322 10,809 10,809 10,905
Sep-93 11,142 11,165 10,667 11,170 11,170 11,274
Dec-93 11,324 11,341 10,841 11,352 11,352 11,432
Mar-94 10,614 10,621 10,159 10,638 10,638 10,805
Jun-94 10,746 10,746 10,284 10,769 10,769 10,924
Sep-94 10,813 10,808 10,337 10,824 10,824 10,999
Dec-94 10,545 10,533 10,069 10,518 10,518 10,841
Mar-95 11,353 11,332 10,828 11,296 11,296 11,607
Jun-95 11,614 11,585 11,064 11,526 11,526 11,888
Sep-95 11,981 11,944 11,400 11,859 11,859 12,230
Dec-95 12,483 12,439 11,867 12,326 12,326 12,734
Mar-96 12,343 12,283 11,716 12,145 12,145 12,580
Jun-96 12,448 12,379 11,802 12,212 12,212 12,677
Sep-96 12,734 12,653 12,059 12,455 12,455 12,969
Dec-96 13,058 12,966 12,353 12,733 12,733 13,299
Mar-97 13,010 12,909 12,294 12,648 12,648 13,268
Jun-97 13,413 13,294 12,713 12,997 12,997 13,726
Sep-97 13,810 13,679 13,076 13,341 13,341 14,140
Dec-97 14,198 14,052 13,429 13,675 13,675 14,523
Mar-98 14,371 14,212 13,578 13,806 13,806 14,690
Jun-98 14,600 14,428 13,779 14,004 14,004 14,914
Sep-98 14,985 14,799 14,127 14,351 14,351 15,372
Dec-98 15,065 14,867 14,187 14,404 14,404 15,464
Mar-99 15,185 14,976 14,285 14,496 14,496 15,601
Jun-99 14,933 14,717 14,032 14,232 14,232 15,325
Sep-99 14,861 14,634 13,949 13,858 14,141 15,264
Dec-99 14,719 14,482 13,800 13,689 13,969 15,145
Mar-00 15,093 14,838 14,135 13,997 14,268 15,588
</TABLE>
FOR PERIOD ENDING MARCH 31, 2000
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
Taxable Taxable Taxable From Taxable
1 Year Equivalent* 3 Year Equivalent* 5 Year Equivalent* Inception Equivalent*
------ ----------- ------ ----------- ------ ------------ --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Institutional Class (0.61)% (0.18)% 5.07% 8.64% 5.86% 9.98% 5.78% 9.85%
Service Class (0.91)% (0.27)% 4.76% 8.11% 5.55% 9.45% 5.53% 9.42%
Investor A Class (Load Adjusted) (5.01)% (1.49)% 3.21% 5.47% 4.53% 7.72% 4.83% 8.23%
Investor A Class (NAV) (1.05)% (0.31)% 4.61% 7.85% 5.39% 9.18% 5.42% 9.23%
Investor B Class (Load Adjusted) (6.66)% (1.98)% 2.78% 4.74% 4.31% 7.34% 4.87% 8.30%
Investor B Class (NAV) (2.22)% (0.66)% 3.87% 6.59% 4.65% 7.92% 4.87% 8.30%
Investor C Class (Load Adjusted) (2.88)% (0.85)% 3.97% 6.76% 4.70% 8.01% 4.91% 8.36%
Investor C Class (NAV) (1.94)% (0.58)% 3.97% 6.76% 4.70% 8.01% 4.91% 8.36%
<FN>
*TAXABLE EQUIVALENT TOTAL RETURN IS BASED ON THE ANNUALIZED TOTAL RETURN AND A
COMBINED FEDERAL AND STATE TAX RATE OF 41.29%. IT REPRESENTS THE RETURN ON A
TAXABLE INVESTMENT NECESSARY TO EQUAL THE AFTER-TAX RETURN OF THE BLACKROCK
PENNSYLVANIA TAX-FREE INCOME PORTFOLIO.
THE PERFORMANCE INFORMATION ABOVE INCLUDES INFORMATION RELATING TO EACH CLASS OF
THE PORTFOLIO SINCE THE COMMENCEMENT OF OPERATIONS OF THE PORTFOLIO, RATHER THAN
THE DATE SUCH CLASS WAS INTRODUCED. THE INCEPTION DATES OF THE PORTFOLIO'S SHARE
CLASSES WERE AS FOLLOWS: INSTITUTIONAL ANDINVESTOR A SHARES, 12/1/92; SERVICE
SHARES, 7/29/93; INVESTOR B SHARES, 10/3/94 AND INVESTOR C SHARES, 8/14/98. SEE
"NOTE ON PERFORMANCE INFORMATION" ON PAGE 9 FOR FURTHER INFORMATION ON HOW
PERFORMANCE DATA WAS CALCULATED.
</FN>
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
4
<PAGE>
BLACKROCK FUNDS
NEW JERSEY TAX-FREE INCOME PORTFOLIO
TOTAL NET ASSETS (3/31/00):
$150.5 MILLION
PERFORMANCE BENCHMARK:
LEHMAN MUNICIPAL BOND INDEX
INVESTMENT APPROACH:
SEEKS AS HIGH A LEVEL OF CURRENT INCOME EXEMPT FROM FEDERAL AND NEW JERSEY
STATE INCOME TAX AS IS CONSISTENT WITH THE PRESERVATION OF CAPITAL BY INVESTING
PRIMARILY IN MUNICIPAL FIXED INCOME SECURITIES RATED BBB OR HIGHER BY A MAJOR
RATING AGENCY OR DEEMED BY THE MANAGER TO BE OF COMPARABLE CREDIT QUALITY.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
o MUNICIPAL SECURITIES WERE THE SECOND BEST PERFORMING DOMESTIC FIXED INCOME
SECTOR IN THE FIRST QUARTER OF 2000. THE LEHMAN MUNICIPAL BOND INDEX RETURNED
2.19% DURING THAT PERIOD. THIS STRONG PERFORMANCE WAS THE RESULT OF INCREASED
RETAIL DEMAND FOR MUNICIPAL BONDS IN CONJUNCTION WITH A 32% REDUCTION IN NEW
ISSUE SUPPLY FROM A YEAR AGO. WHILE NEW ISSUE SUPPLY IN NEW JERSEY WAS DOWN ONLY
7.3% FROM THE YEAR EARLIER, TOTAL SUPPLY WAS ONLY $1.6 BILLION DURING THE
QUARTER. AS STATE AND LOCAL GOVERNMENTS ARE EXPERIENCING LARGER BUDGET
SURPLUSES, THEIR NEED TO BORROW FOR CAPITAL PROGRAMS CONTINUES TO DECLINE AND WE
EXPECT THE SLOWER PACE OF ISSUANCE TO CONTINUE.
o FOR MUCH OF THE SEMI-ANNUAL PERIOD, THE MANAGER OVERWEIGHTED THE 15-20 YEAR
RANGE OF THE MUNICIPAL YIELD CURVE WHICH BENEFITED FROM THE YIELD CURVE
FLATTENING. THOSE MATURITIES OUTPERFORMED LONGER MATURITY MUNICIPAL SECURITIES,
WHICH HAS LED THE MANAGER TO BEGIN TO EXTEND THE AVERAGE MATURITY OF THE
PORTFOLIO.
o CURRENTLY, MUNICIPAL BONDS ACROSS THE ENTIRE MATURITY SPECTRUM ARE AT
ATTRACTIVE LEVELS, RELATIVE TO THEIR TREASURY MARKET COUNTERPARTS.
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 NJ TAX-FREE INCOME
PORTFOLIO AND THE LEHMAN MUNICIPAL BOND INDEX FROM INCEPTION
AND AT EACH SEM-ANNUAL PERIOD END.
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
Institutional Service Investor A Investor B Investor C Lehman Municipal
Class Class Class Class Class Bond Index
<S> <C> <C> <C> <C> <C> <C>
7/1/91 $10,000 $10,000 $ 9,600 $10,000 $10,000 $10,000
Sep-91 10,357 10,357 9,891 10,357 10,357 10,389
Dec-91 10,736 10,736 10,253 10,736 10,736 10,738
Mar-92 10,775 10,775 10,290 10,775 10,775 10,770
Jun-92 11,205 11,205 10,701 11,205 11,205 11,179
Sep-92 11,462 11,462 10,946 11,462 11,462 11,475
Dec-92 11,691 11,691 11,165 11,691 11,691 11,684
Mar-93 12,098 12,098 11,553 12,098 12,098 12,118
Jun-93 12,514 12,514 11,951 12,514 12,514 12,514
Sep-93 12,867 12,867 12,288 12,867 12,867 12,937
Dec-93 13,045 13,045 12,458 13,045 13,045 13,119
Mar-94 12,370 12,370 11,813 12,370 12,370 12,399
Jun-94 12,504 12,504 11,942 12,504 12,504 12,536
Sep-94 12,583 12,583 12,017 12,583 12,583 12,622
Dec-94 12,432 12,432 11,873 12,432 12,432 12,440
Mar-95 13,195 13,195 12,601 13,195 13,195 13,320
Jun-95 13,454 13,454 12,848 13,454 13,454 13,642
Sep-95 13,802 13,802 13,181 13,802 13,802 14,034
Dec-95 14,289 14,289 13,646 14,289 14,289 14,613
Mar-96 14,158 14,158 13,519 14,156 14,156 14,437
Jun-96 14,198 14,198 13,546 14,184 14,184 14,547
Sep-96 14,445 14,445 13,776 14,398 14,398 14,882
Dec-96 14,808 14,808 14,115 14,725 14,725 15,261
Mar-97 14,768 14,768 14,072 14,653 14,653 15,226
Jun-97 15,185 15,185 14,534 15,028 15,028 15,751
Sep-97 15,623 15,623 14,946 15,429 15,429 16,226
Dec-97 16,035 16,035 15,334 15,800 15,800 16,666
Mar-98 16,167 16,167 15,453 15,893 15,893 16,858
Jun-98 16,406 16,403 15,673 16,088 16,088 17,114
Sep-98 16,932 16,916 16,157 16,585 16,555 17,640
Dec-98 17,021 16,990 16,221 16,652 16,590 17,746
Mar-99 17,089 17,045 16,267 16,700 16,605 17,903
Jun-99 16,752 16,695 15,927 16,319 16,226 17,586
Sep-99 16,705 16,635 15,863 15,736 16,130 17,516
Dec-99 16,598 16,517 15,744 15,588 15,979 17,379
Mar-00 16,942 16,846 16,051 15,863 16,260 17,888
</TABLE>
FOR PERIOD ENDING MARCH 31, 2000
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
Taxable Taxable Taxable From Taxable
1 Year Equivalent* 3 Year Equivalent* 5 Year Equivalent* Inception Equivalent*
------ ----------- ------ ----------- ------ ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Institutional Class (0.87)% (0.20)% 4.68% 8.28% 5.12% 9.05% 6.21% 10.98%
Service Class (1.16)% (0.27)% 4.48% 7.92% 5.01% 8.86% 6.14% 10.86%
Investor A Class (Load Adjusted) (5.28)% (1.22)% 2.90% 5.13% 4.00% 7.07% 5.56% 9.83%
Investor A Class (NAV) (1.33)% (0.31)% 4.31% 7.62% 4.86% 8.59% 6.05% 10.70%
Investor B Class (Load Adjusted) (6.45)% (1.49)% 2.43% 4.30% 3.92% 6.93% 5.71% 10.10%
Investor B Class (NAV) (2.07)% (0.48)% 3.53% 6.24% 4.26% 7.53% 5.71% 10.10%
Investor C Class (Load Adjusted) (3.07)% (0.71)% 3.53% 6.24% 4.26% 7.53% 5.71% 10.10%
Investor C Class (NAV) (2.07)% (0.48)% 3.53% 6.24% 4.26% 7.53% 5.71% 10.10%
<FN>
*TAXABLE EQUIVALENT TOTAL RETURN IS BASED ON THE ANNUALIZED TOTAL RETURN AND A
COMBINED FEDERAL AND STATE TAX RATE OF 43.45%. IT REPRESENTS THE RETURN ON A
TAXABLE INVESTMENT NECESSARY TO EQUAL THE AFTER-TAX RETURN OF THE BLACKROCK NEW
JERSEY TAX-FREE INCOME PORTFOLIO.
THE PERFORMANCE INFORMATION ABOVE INCLUDES INFORMATION RELATING TO EACH CLASS OF
THE PORTFOLIO SINCE THE COMMENCEMENT OF OPERATIONS OF THE PORTFOLIO, RATHER THAN
THE DATE SUCH CLASS WAS INTRODUCED. THE INCEPTION DATES OF THE PORTFOLIO'S SHARE
CLASSES WERE AS FOLLOWS: SERVICE SHARES, 7/1/91; INVESTOR A SHARES, 1/26/96;
INVESTOR B SHARES, 7/2/96; INSTITUTIONAL SHARES, 5/4/98 AND INVESTOR C SHARES,
12/9/98. SEE "NOTE ON PERFORMANCE INFORMATION" ON PAGE 9 FOR FURTHER INFORMATION
ON HOW PERFORMANCE DATA WAS CALCULATED.
</FN>
</TABLE>
PAST PERFORMANCE IS NOTPREDICTIVE OF FUTURE RESULTS.
5
<PAGE>
BLACKROCK FUNDS
OHIO TAX-FREE INCOME PORTFOLIO
TOTAL NET ASSETS (3/31/00):
$94.7 MILLION
PERFORMANCE BENCHMARK:
LEHMAN MUNICIPAL BOND INDEX
INVESTMENT APPROACH:
SEEKS AS HIGH A LEVEL OF CURRENT INCOME EXEMPT FROM FEDERAL AND OHIO STATE
INCOME TAX AS IS CONSISTENT WITH THE PRESERVATION OF CAPITAL BY INVESTING
PRIMARILY IN MUNICIPAL FIXED INCOME SECURITIES RATED BBB OR HIGHER BY A MAJOR
RATING AGENCY OR DEEMED BY THE MANAGER TO BE OF COMPARABLE CREDIT QUALITY.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
o MUNICIPAL SECURITIES WERE THE SECOND BEST PERFORMING DOMESTIC FIXED INCOME
SECTOR IN THE FIRST QUARTER OF 2000. THE LEHMAN MUNICIPAL BOND INDEX RETURNED
2.19% DURING THAT PERIOD. THIS STRONG PERFORMANCE WAS THE RESULT OF INCREASED
RETAIL DEMAND FOR MUNICIPAL BONDS IN CONJUNCTION WITH A 32% REDUCTION IN NEW
ISSUE SUPPLY FROM A YEAR AGO. NEW ISSUE SUPPLY IN OHIO WAS DOWN 30% VERSUS LAST
YEAR, WHICH WAS ROUGHLY IN LINE WITH GENERAL MARKET SUPPLY. AS STATE AND LOCAL
GOVERNMENTS ARE EXPERIENCING LARGER BUDGET SURPLUSES, THEIR NEED TO BORROW FOR
CAPITAL PROGRAMS CONTINUES TO DECLINE AND WE EXPECT THE SLOWER PACE OF ISSUANCE
TO CONTINUE.
o FOR MUCH OF THE SEMI-ANNUAL PERIOD, THE MANAGER OVERWEIGHTED THE 15-20 YEAR
RANGE OF THE MUNICIPAL YIELD CURVE WHICH BENEFITED FROM THE YIELD CURVE
FLATTENING. THOSE MATURITIES OUTPERFORMED LONGER MATURITY MUNICIPAL SECURITIES,
WHICH HAS LED THE MANAGER TO BEGIN TO EXTEND THE AVERAGE MATURITY OF THE
PORTFOLIO.
o CURRENTLY, MUNICIPAL BONDS ACROSS THE ENTIRE MATURITY SPECTRUM ARE AT
ATTRACTIVE LEVELS, RELATIVE TO THEIR TREASURY MARKET COUNTERPARTS.
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
OH TAX-FREE INCOME PORTFOLIO AND THE LEHMAN MUNICIPAL BOND INDEX
FROM INCEPTION AND AT EACH SEMI-ANNUAL PERIOD END.
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
Institutional Service Investor A Investor B Investor C Lehman Municipal
Class Class Class Class Class Bond Index
<S> <C> <C> <C> <C> <C> <C>
12/1/92 $10,000 $10,000 $ 9,600 $10,000 $10,000 $10,000
Dec-92 10,010 10,010 9,560 10,010 10,010 10,182
Mar-93 10,270 10,270 9,808 10,270 10,270 10,560
Jun-93 10,561 10,561 10,086 10,561 10,561 10,905
Sep-93 10,910 10,907 10,420 10,911 10,911 11,274
Dec-93 11,024 11,014 10,529 11,025 11,025 11,432
Mar-94 10,346 10,330 9,881 10,347 10,347 10,805
Jun-94 10,442 10,420 9,973 10,443 10,443 10,924
Sep-94 10,498 10,469 10,026 10,499 10,499 10,999
Dec-94 10,310 10,276 9,843 10,281 10,281 10,841
Mar-95 11,076 11,033 10,568 11,018 11,018 11,607
Jun-95 11,300 11,249 10,774 11,211 11,211 11,888
Sep-95 11,625 11,565 11,075 11,503 11,503 12,230
Dec-95 12,145 12,073 11,560 11,985 11,985 12,734
Mar-96 11,950 11,870 11,361 11,756 11,756 12,580
Jun-96 12,046 11,957 11,440 11,815 11,815 12,677
Sep-96 12,335 12,234 11,700 12,061 12,061 12,969
Dec-96 12,646 12,533 11,981 12,330 12,330 13,299
Mar-97 12,612 12,490 11,936 12,260 12,260 13,268
Jun-97 13,001 12,867 12,355 12,600 12,600 13,726
Sep-97 13,385 13,238 12,706 12,934 12,934 14,140
Dec-97 13,739 13,577 13,026 13,236 13,236 14,523
Mar-98 13,864 13,691 13,130 13,316 13,316 14,690
Jun-98 14,084 13,899 13,323 13,488 13,488 14,914
Sep-98 14,531 14,328 13,730 13,874 13,874 15,372
Dec-98 14,612 14,397 13,790 13,909 13,909 15,464
Mar-99 14,714 14,488 13,871 13,964 13,964 15,601
Jun-99 14,364 14,131 13,525 13,589 13,589 15,325
Sep-99 14,330 14,087 13,477 13,245 13,515 15,264
Dec-99 14,169 13,920 13,310 13,057 13,323 15,145
Mar-00 14,566 14,284 13,667 13,382 13,655 15,588
</TABLE>
FOR PERIOD ENDING MARCH 31, 2000
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
Taxable Taxable Taxable From Taxable
1 Year Equivalent* 3 Year Equivalent* 5 Year Equivalent* Inception Equivalent*
------ ----------- ------ ----------- ------ ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Institutional Class (1.01)% (0.21)% 4.92% 8.81% 5.64% 10.09% 5.26% 9.41%
Service Class (1.41)% (0.30)% 4.57% 8.18% 5.31% 9.50% 4.98% 8.91%
Investor A Class (Load Adjusted) (5.45)% (1.15)% 3.03% 5.42% 4.32% 7.73% 4.35% 7.79%
Investor A Class (NAV) (1.48)% (0.31)% 4.43% 7.93% 5.17% 9.25% 4.94% 8.84%
Investor B Class (Load Adjusted) (6.57)% (1.38)% 2.56% 4.58% 4.05% 7.25% 4.35% 7.79%
Invest or B Class (NAV) (2.22)% (0.47)% 3.65% 6.53% 4.39% 7.86% 4.35% 7.79%
Investor C Class (Load Adjusted) (3.18)% (0.67)% 3.67% 6.57% 4.39% 7.86% 4.35% 7.79%
Investor C Class (NAV) (2.22)% (0.47)% 3.67% 6.57% 4.39% 7.86% 4.35% 7.79%
<FN>
*TAXABLE EQUIVALENT TOTAL RETURN IS BASED ON THE ANNUALIZED TOTAL RETURN AND A
COMBINED FEDERAL AND STATE TAX RATE OF 44.13%. IT REPRESENTS THE RETURN ON A
TAXABLE INVESTMENT NECESSARY TO EQUAL THE AFTER-TAX RETURN OF THE BLACKROCK
OHIO TAX-FREE INCOME PORTFOLIO.
</FN>
</TABLE>
THE PERFORMANCE INFORMATION ABOVE INCLUDES INFORMATION RELATING TO EACH CLASS OF
THE PORTFOLIO SINCE THE COMMENCEMENT OF OPERATIONS OF THE PORTFOLIO, RATHER THAN
THE DATE SUCH CLASS WAS INTRODUCED. THE INCEPTION DATES OF THE PORTFOLIO'S SHARE
CLASSES WERE AS FOLLOWS: INSTITUTIONAL AND INVESTOR ASHARES, 12/1/92; SERVICE
SHARES, 7/29/93; INVESTOR B SHARES, 10/13/94 AND INVESTOR C SHARES, 8/26/98. SEE
"NOTE ON PERFORMANCE INFORMATION" ON PAGE 9 FOR FURTHER INFORMATION ON HOW
PERFORMANCE DATA WAS CALCULATED.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
6
<PAGE>
BLACKROCK FUNDS
DELAWARE TAX-FREE INCOME PORTFOLIO
TOTAL NET ASSETS (3/31/00):
$102.4 MILLION
PERFORMANCE BENCHMARK:
LEHMAN MUNICIPAL BOND INDEX
INVESTMENT APPROACH:
SEEKS AS HIGH A LEVEL OF CURRENT INCOME EXEMPT FROM FEDERAL AND DELAWARE
STATE INCOME TAX AS IS CONSISTENT WITH THE PRESERVATION OF CAPITAL BY INVESTING
PRIMARILY IN PORTFOLIO OF MUNICIPAL FIXED INCOME SECURITIES RATED BBB OR HIGHER
BY A MAJOR RATING AGENCY OR DEEMED BY THE MANAGER TO BE OF COMPARABLE CREDIT
QUALITY.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
o MUNICIPAL SECURITIES WERE THE SECOND BEST PERFORMING DOMESTIC FIXED INCOME
SECTOR IN THE FIRST QUARTER OF 2000. THE LEHMAN MUNICIPAL BOND INDEX RETURNED
2.19% DURING THAT PERIOD. THIS STRONG PERFORMANCE WAS THE RESULT OF INCREASED
RETAIL DEMAND FOR MUNICIPAL BONDS IN CONJUNCTION WITH A 32% REDUCTION IN NEW
ISSUE SUPPLY FROM A YEAR AGO. DELAWARE SUPPLY DECLINED 92% FROM THE YEAR
EARLIER, TO $11.7 MILLION, MAKING IT DIFFICULT TO FIND SECURITIES FOR THE
PORTFOLIO. AS STATE AND LOCAL GOVERNMENTS ARE EXPERIENCING LARGER BUDGET
SURPLUSES, THEIR NEED TO BORROW FOR CAPITAL PROGRAMS CONTINUES TO DECLINE AND WE
EXPECT THE SLOWER PACE OF ISSUANCE TO CONTINUE.
o FOR MUCH OF THE SEMI-ANNUAL PERIOD, THE MANAGER OVERWEIGHTED THE 15-20 YEAR
RANGE OF THE MUNICIPAL YIELD CURVE WHICH BENEFITED FROM THE YIELD CURVE
FLATTENING. THOSE MATURITIES OUTPERFORMED LONGER MATURITY MUNICIPAL SECURITIES,
WHICH HAS LED THE MANAGER TO BEGIN TO EXTEND THE AVERAGE MATURITY OF THE
PORTFOLIO.
o CURRENTLY, MUNICIPAL BONDS ACROSS THE ENTIRE MATURITY SPECTRUM ARE AT
ATTRACTIVE LEVELS, RELATIVE TO THEIR TREASURY MARKET COUNTERPARTS.
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 DE TAX-FREE
INCOME PORTFOLIO AND LEHMAN MUNICIPAL BOND INDEX AT EACH SEMI-ANNUAL PERIOD END.
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
Institutional Service Invest or A Invest or B Investor C Lehman Municipal
Class Class Class Class Class Bond Index
<S> <C> <C> <C> <C> <C> <C>
12/31/89 $10,000 $10,000 $ 9,600 $10,000 $10,000 $10,000
Mar-90 10,058 10,050 9,644 10,027 10,027 10,045
Jun-90 10,249 10,233 9,816 10,186 10,186 10,279
Sep-90 10,349 10,325 9,899 10,255 10,255 10,285
Dec-90 10,661 10,629 10,186 10,532 10,532 10,729
Mar-91 10,867 10,825 10,371 10,702 10,702 10,972
Jun-91 11,021 10,971 10,506 10,821 10,821 11,205
Sep-91 11,327 11,268 10,785 11,088 11,088 11,641
Dec-91 11,634 11,564 11,064 11,354 11,354 12,032
Mar-92 11,604 11,525 11,022 11,290 11,290 12,068
Jun-92 11,952 11,861 11,340 11,593 11,593 12,526
Sep-92 12,188 12,086 11,549 11,786 11,786 12,859
Dec-92 12,302 12,190 11,644 11,860 11,860 13,093
Mar-93 12,601 12,478 11,913 12,134 12,134 13,579
Jun-93 12,860 12,724 12,143 12,345 12,345 14,023
Sep-93 13,217 13,069 12,466 12,650 12,650 14,497
Dec-93 13,322 13,162 12,550 12,711 12,711 14,700
Mar-94 12,709 12,547 11,971 12,089 12,089 13,893
Jun-94 12,907 12,733 12,143 12,241 12,241 14,047
Sep-94 12,990 12,805 12,207 12,282 12,282 14,143
Dec-94 12,881 12,689 12,089 12,142 12,142 13,940
Mar-95 13,496 13,285 12,653 12,685 12,685 14,926
Jun-95 13,813 13,587 12,935 12,944 12,944 15,286
Sep-95 14,170 13,928 13,253 13,238 13,238 15,726
Dec-95 14,564 14,305 13,606 13,564 13,564 16,374
Mar-96 14,501 14,232 13,531 13,464 13,464 16,177
Jun-96 14,561 14,279 13,570 13,478 13,478 16,301
Sep-96 14,789 14,492 13,767 13,647 13,647 16,676
Dec-96 15,086 14,771 14,027 13,879 13,879 17,101
Mar-97 15,068 14,743 13,993 13,821 13,821 17,061
Jun-97 15,430 15,087 14,312 14,110 14,110 17,649
Sep-97 15,788 15,426 14,627 14,394 14,394 18,182
Dec-97 16,061 15,682 14,863 14,599 14,599 18,675
Mar-98 16,209 15,816 14,983 14,690 14,690 18,890
Jun-98 16,466 16,055 15,205 14,881 14,881 19,177
Sep-98 17,035 16,597 15,711 15,374 15,374 19,766
Dec-98 17,142 16,689 15,791 15,422 15,422 19,885
Mar-99 17,289 16,820 15,908 15,507 15,507 20,061
Jun-99 16,905 16,433 15,538 15,116 15,116 19,706
Sep-99 16,848 16,363 15,466 15,019 15,019 19,627
Dec-99 16,739 16,243 15,347 14,875 14,875 19,474
Mar-00 17,192 16,671 15,745 15,232 15,232 20,045
</TABLE>
FOR PERIOD ENDING MARCH 31, 2000
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
Taxable Taxable Taxable From Taxable
1 Year Equivalent* 5 Year Equivalent* 10 Year Equivalent* Inception Equivalent*
------ ----------- ------ ----------- ------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Institutional Class (0.57)% (0.14)% 4.94% 8.70% 5.55% 9.77% 5.52% 9.72%
Service Class (0.87)% (0.21)% 4.63% 8.15% 5.23% 9.21% 5.20% 9.15%
Investor A Class (Load Adjusted) (4.99)% (1.20)% 3.61% 6.35% 4.62% 8.13% 4.71% 8.29%
Investor A Class (NAV) (1.04)% (0.25)% 4.45% 7.83% 5.05% 8.89% 5.02% 8.84%
Investor B Class (Load Adjusted) (6.19)% (1.48)% 3.33% 5.86% 4.27% 7.52% 4.24% 7.46%
Investor B Class (NAV) (1.78)% (0.43)% 3.67% 6.46% 4.27% 7.52% 4.24% 7.46%
Investor C Class (Load Adjusted) (2.80)% (0.67)% 3.67% 6.46% 4.27% 7.52% 4.24% 7.46%
Investor C Class (NAV) (1.78)% (0.43)% 3.67% 6.46% 4.27% 7.52% 4.24% 7.46%
<FN>
*TAXABLE EQUIVALENT TOTAL RETURN IS BASED ON THE ANNUALIZED TOTAL RETURN AND A
COMBINED FEDERAL AND STATE TAX RATE OF 43.19%. IT REPRESENTS THE RETURN ON A
TAXABLE INVESTMENT NECESSARY TO EQUAL THE AFTER-TAX RETURN OF THE BLACKROCK
DELAWARE TAX-FREE INCOME PORTFOLIO.
IN CONNECTION WITH THE CONVERSION OF VARIOUS COMMON TRUST FUNDS MAINTAINED BY
PNC BANK AND PNC BANK, DELAWARE ("PNC-DE"), AN AFFILIATE OF PNC BANK, INTO THE
FUND BETWEEN MAY 1 AND MAY 15, 1998 (THE "CTF CONVERSION"), THE DELAWARE
TAX-FREE INCOME PORTFOLIO WAS ESTABLISHED TO RECEIVE THE ASSETS OF THE DE
TAX-FREE INCOME FUND OF PNC-DE. PERFORMANCE INFORMATION PRESENTED FOR THIS
PORTFOLIO INCLUDES PERFORMANCE FOR THE PREDECESSOR COMMON TRUST FUND WHICH
TRANSFERRED ITS ASSETS AND LIABILITIES TO THE RELATED PORTFOLIO PURSUANT TO THE
CTF CONVERSION. PERFORMANCE INFORMATION PRESENTED IS BASED UPON THE PERFORMANCE
OF THE DE TAX-FREE INCOME FUND FOR PERIODS PRIOR TO THE CTF CONVERSION.
BASED ON THE PERFORMANCE OF THE DE TAX-FREE INCOME FUND, THE PORTFOLIO'S
PREDECESSOR COMMON TRUST FUND, THE ANNUAL TOTAL RETURN OF THE DELAWARE TAX-FREE
INCOME PORTFOLIO FOR THE CALENDAR YEARS 1987, 1988 AND 1989 WAS 0.27%, 0.74% AND
0.63%, RESPECTIVELY.
</FN>
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
7
<PAGE>
BLACKROCK FUNDS
KENTUCKY TAX-FREE INCOME PORTFOLIO
TOTAL NET ASSETS (3/31/00):
$165.1 MILLION
PERFORMANCE BENCHMARK:
LEHMAN MUNICIPAL BOND INDEX
INVESTMENT APPROACH:
SEEKS AS HIGH A LEVEL OF CURRENT INCOME EXEMPT FROM FEDERAL AND KENTUCKY
STATE INCOME TAX AS IS CONSISTENT WITH THE PRESERVATION OF CAPITAL BY INVESTING
PRIMARILY IN MUNICIPAL FIXED INCOME SECURITIES RATED BBB OR HIGHER BY A MAJOR
RATING AGENCY OR DEEMED BY THE MANAGER TO BE OF COMPARABLE CREDIT QUALITY.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
o MUNICIPAL SECURITIES WERE THE SECOND BEST PERFORMING DOMESTIC FIXED INCOME
SECTOR IN THE FIRST QUARTER OF 2000. THE LEHMAN MUNICIPAL BOND INDEX RETURNED
2.19% DURING THAT PERIOD. THIS STRONG PERFORMANCE WAS THE RESULT OF INCREASED
RETAIL DEMAND FOR MUNICIPAL BONDS IN CONJUNCTION WITH A 32% REDUCTION IN NEW
ISSUE SUPPLY FROM A YEAR AGO. NEW ISSUE SUPPLY IN KENTUCKY DECLINED 46% FROM
LAST YEAR; SUBSTANTIALLY MORE THAN THE GENERAL MARKET DECLINE. AS STATE AND
LOCAL GOVERNMENTS ARE EXPERIENCING LARGER BUDGET SURPLUSES, THEIR NEED TO BORROW
FOR CAPITAL PROGRAMS CONTINUES TO DECLINE AND WE EXPECT THE SLOWER PACE OF
ISSUANCE TO CONTINUE.
o FOR MUCH OF THE SEMI-ANNUAL PERIOD, THE MANAGER OVERWEIGHTED THE 15-20 YEAR
RANGE OF THE MUNICIPAL YIELD CURVE WHICH BENEFITED FROM THE YIELD CURVE
FLATTENING. THOSE MATURITIES OUTPERFORMED LONGER MATURITY MUNICIPAL SECURITIES,
WHICH HAS LED THE MANAGER TO BEGIN TO EXTEND THE AVERAGE MATURITY OF THE
PORTFOLIO.
o CURRENTLY, MUNICIPAL BONDS ACROSS THE ENTIRE MATURITY SPECTRUM ARE AT
ATTRACTIVE LEVELS, RELATIVE TO THEIR TREASURY MARKET COUNTERPARTS.
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 KY TAX-FREE INCOME
PORTFOLIO AND LEHMAN MUNICIPAL BOND INDEX AT EACH SEMI-ANNUAL PERIOD YEAR END.
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
Institutional Service Investor A Investor B Investor C Lehman Municipal
Class Class Class Class Class Bond Index
<S> <C> <C> <C> <C> <C> <C>
12/31/89 $10,000 $10,000 $ 9,600 $10,000 $10,000 $10,000
Mar-90 10,086 10,079 9,671 10,055 10,055 10,045
Jun-90 10,198 10,183 9,767 10,135 10,135 10,279
Sep-90 10,254 10,232 9,810 10,161 10,161 10,285
Dec-90 10,751 10,720 10,274 10,621 10,621 10,729
Mar-91 10,940 10,900 10,442 10,775 10,775 10,972
Jun-91 11,142 11,094 10,624 10,942 10,942 11,205
Sep-91 11,414 11,356 10,870 11,175 11,175 11,641
Dec-91 11,736 11,667 11,164 11,456 11,456 12,032
Mar-92 11,772 11,694 11,185 11,456 11,456 12,068
Jun-92 12,092 12,002 11,476 11,732 11,732 12,526
Sep-92 12,367 12,266 11,723 11,962 11,962 12,859
Dec-92 12,613 12,501 11,942 12,163 12,163 13,093
Mar-93 12,960 12,834 12,256 12,459 12,459 13,579
Jun-93 13,268 13,131 12,533 12,717 12,717 14,023
Sep-93 13,683 13,531 12,910 13,075 13,075 14,497
Dec-93 13,816 13,653 13,021 13,162 13,162 14,700
Mar-94 13,212 13,046 12,437 12,548 12,548 13,893
Jun-94 13,392 13,214 12,591 12,681 12,681 14,047
Sep-94 13,502 13,313 12,679 12,745 12,745 14,143
Dec-94 13,368 13,172 12,539 12,581 12,581 13,940
Mar-95 14,085 13,869 13,197 13,216 13,216 14,926
Jun-95 14,410 14,178 13,486 13,480 13,480 15,286
Sep-95 14,801 14,551 13,835 13,804 13,804 15,726
Dec-95 15,163 14,896 14,157 14,099 14,099 16,374
Mar-96 15,116 14,838 14,096 14,012 14,012 16,177
Jun-96 15,168 14,876 14,127 14,016 14,016 16,301
Sep-96 15,416 15,110 14,343 14,204 14,204 16,676
Dec-96 15,718 15,395 14,607 14,438 14,438 17,101
Mar-97 15,745 15,409 14,615 14,418 14,418 17,061
Jun-97 16,131 15,774 14,955 14,727 14,727 17,649
Sep-97 16,520 16,144 15,298 15,036 15,036 18,182
Dec-97 16,806 16,412 15,544 15,251 15,251 18,675
Mar-98 16,960 16,551 15,670 15,346 15,346 18,890
Jun-98 17,245 16,817 15,916 15,556 15,556 19,177
Sep-98 17,787 17,332 16,397 15,998 15,998 19,766
Dec-98 17,883 17,414 16,465 16,036 16,036 19,885
Mar-99 17,979 17,495 16,535 16,074 16,074 20,061
Jun-99 17,648 17,161 16,210 15,730 15,730 19,706
Sep-99 17,567 17,072 16,116 15,611 15,611 19,627
Dec-99 17,449 16,946 15,991 15,460 15,460 19,474
Mar-00 17,795 17,268 16,288 15,718 15,750 20,045
</TABLE>
FOR PERIOD ENDING MARCH 31, 2000
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
Taxable Taxable Taxable From Taxable
1 Year Equivalent* 5 Year Equivalent* 10 Year Equivalent* Inception Equivalent*
------ ----------- ------ ----------- ------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Institutional Class (1.02)% (0.24)% 4.85% 8.54% 5.87% 10.34% 6.13% 10.80%
Service Class (1.32)% (0.32)% 4.54% 8.00% 5.56% 9.79% 5.82% 10.25%
Investor A Class (Load Adjusted) (5.42)% (1.29)% 3.52% 6.20% 4.95% 8.72% 5.29% 9.32%
Investor A Class (NAV) (1.49)% (0.36)% 4.36% 7.68% 5.38% 9.48% 5.64% 9.93%
Investor B Class (Load Adjusted) (6.64)% (1.59)% 3.24% 5.71% 4.59% 8.08% 4.85% 8.54%
Investor B Class (NAV) (2.23)% (0.53)% 3.59% 6.32% 4.59% 8.08% 4.85% 8.54%
Investor C Class (Load Adjusted) (3.05)% (0.73)% 3.63% 6.39% 4.61% 8.12% 4.87% 8.58%
Investor C Class (NAV) (2.02)% (0.48)% 3.63% 6.39% 4.61% 8.12% 4.87% 8.58%
<FN>
*TAXABLE EQUIVALENT TOTAL RETURN IS BASED ON THE ANNUALIZED TOTAL RETURN AND A
COMBINED FEDERAL AND STATE TAX RATE OF 43.22%. IT REPRESENTS THE RETURN ON A
TAXABLE INVESTMENT NECESSARY TO EQUAL THE AFTER-TAX RETURN OF THE BLACKROCK
KENTUCKY TAX-FREE INCOME PORTFOLIO.
IN CONNECTION WITH THE CONVERSION OF VARIOUS COMMON TRUST FUNDS MAINTAINED BY
PNC BANK AND PNC BANK, DELAWARE ("PNC-DE"), AN AFFILIATE OF PNC BANK, INTO THE
FUND BETWEEN MAY 1 AND MAY 15, 1998 (THE "CTF CONVERSION"), THE KENTUCKY
TAX-FREE INCOME PORTFOLIO WAS ESTABLISHED TO RECEIVE THE ASSETS OF THE KY
TAX-FREE INCOME FUND OF PNC BANK. PERFORMANCE INFORMATION PRESENTED FOR THIS
PORTFOLIO INCLUDES PERFORMANCE FOR THE PREDECESSOR COMMON TRUST FUND WHICH
TRANSFERRED ITS ASSETS AND LIABILITIES TO THE RELATED PORTFOLIO PURSUANT TO THE
CTF CONVERSION. PERFORMANCE INFORMATION PRESENTED IS BASED UPON THE PERFORMANCE
OF THE KY TAX-FREE INCOME FUND FOR PERIODS PRIOR TO THE CTF CONVERSION.
BASED ON THE PERFORMANCE OF THE KY TAX-FREE INCOME FUND, THE PORTFOLIO'S
PREDECESSOR COMMON TRUST FUND, THE ANNUAL TOTAL RETURN OF THE KY TAX-FREE INCOME
PORTFOLIO FOR THE CALENDAR YEARS 1987, 1988 AND 1989 WAS 0.79%, 2.70% AND 1.66%,
RESPECTIVELY.
</FN>
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
8
<PAGE>
BLACKROCK FUNDS
NOTE ON PERFORMANCE INFORMATION
The performance information above includes information for each class of
each Portfolio since the commencement of operations of the Portfolio, rather
than the date such class was introduced. Performance information for each class
introduced after the commencement of operations of a Portfolio is therefore
based on the performance history of a predecessor class or predecessor classes.
If a class of shares in a Portfolio (the "Subsequent Class") has more than one
predecessor class, the performance data predating the introduction of the
Subsequent Class is based initially on the performance of the Portfolio's first
operational predecessor class (the "Initial Class"); thereafter, the performance
of the Subsequent Class is based upon the performance of any other predecessor
class or classes which were introduced after the Initial Class and which had
total operating expenses more similar to those of the Subsequent Class. In the
case of Investor A, Investor B, Investor C and Service Shares, the performance
information for periods prior to their introduction dates has not been restated
to reflect the shareholder servicing and processing and/or distribution fees and
certain other expenses borne by these share classes which, if reflected, would
reduce the performance quoted. Accordingly, the performance information may be
used in assessing each Portfolio's performance history but does not reflect how
the distinct classes would have performed on a relative basis prior to the
introduction of these classes, which would require an adjustment to the ongoing
expenses.
Performance information is restated to reflect the current maximum
front-end sales charge (in the case of Investor A Shares) or the maximum
contingent deferred sales charge (in the case of Investor B and Investor C
Shares), and assumes the reinvestment of dividends and distributions. The
maximum front-end sales charges for Investor A Shares of all the portfolios is
4.00%. The maximum contingent deferred sales charge for Investor B Shares and
Investor C Shares of all of the Portfolios is 4.50% and 1.00%, respectively.
The performance information also reflects fee waivers that subsidize and
reduce the total operating expenses of each Portfolio. The Portfolios' returns
would have been lower if there were not such waivers. BlackRock Advisors, Inc.
and the Portfolios' Administrators are under no obligation to waive or continue
waiving their fees. Investment return and principal value of an investment will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than their original cost.
9
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
TAX-FREE INCOME PORTFOLIO
PAR
AS OF MARCH 31, 2000 (UNAUDITED) MATURITY (000) VALUE
-------- ------- ------------
MUNICIPAL BONDS -- 92.6%
ALABAMA -- 1.7%
Alabama Hsg. Fin. Auth. Sgl. Fam
Mtg. Rev., Cltrl. Home Mtg. Bd
Prj., Ser. 94B-1
6.65% 10/01/25 $ 1,100 $ 1,138,500
Alabama Rev., Priv. Coll. & Tuskegee
Univ. Prj., Ser. 96A
5.90% 09/01/16 1,000 1,021,250
Alabama St. G.O., Ser. 90
7.00% 08/01/05 340 349,850
Courtland Ind. Dev. Rev., Champion Intl.
Corp. Prj., Ser. 92
7.20% 12/01/13 1,000 1,045,000
Courtland Ind. Dev. Solid Waste Disp. Rev.,
Champion Intl. Corp. Prj., Ref. Ser. 99
6.00% 08/01/29 1,500 1,370,625
Shelby Cnty. Bd. of Ed. Rev., Ser. 95
5.70% 02/01/09 680 702,100
------------
5,627,325
------------
ALASKA -- 1.5%
Alaska Ind. Dev. & Expt. Auth. Revolving
Fd. Rev., Ser. 97A
6.00% 04/01/07 2,500 2,615,625
Alaska St. Hsg. Fin. Agcy. Rev., Ser 95A
5.88% 12/01/24 2,500 2,462,500
------------
5,078,125
------------
ARIZONA -- 0.5%
Maricopa Cnty. Cmnty. Coll. Dist. Rev.,
Prerefunded Ser. 95A
6.00% 07/01/06 325 340,437
Maricopa Cnty. Cmnty. Coll. Dist. Rev.,
Unrefunded Ser. 95A
6.00% 07/01/06 15 15,619
Phoenix G.O., Ser. 92
6.13% 07/01/03 1,030 1,072,487
6.38% 07/01/13 200 208,250
------------
1,636,793
------------
CALIFORNIA -- 5.5%
California St. G.O., Ser. 90
6.50% 11/01/06 340 375,275
California St. G.O., Ser. 94
6.20% 11/01/02 1,000 1,043,750
California St. G.O., Ser. 99
5.88% 10/01/20 13,815 14,091,300
Foothill Eastern Corridor Agcy.
Toll Rd. Rev., Ref. Ser. 99
5.00% 01/15/16 2,490 2,381,062
Los Angeles G.O., Ser. 94A
5.80% 09/01/07 340 362,950
Sacramento Mun. Util. Dist. Elec.
Rev., Prerefunded Ser. 92C
5.75% 11/15/09 430 461,712
Sacramento Mun. Util. Dist. Elec.
Rev., Unrefunded Ser. 92C
5.75% 11/15/09 80 83,400
------------
18,799,449
------------
COLORADO -- 1.8%
Arapahoe Cnty. Cap. Imp.
Tr. Fd. Hwy. Rev., Ser. 86
7.16%+ 08/31/04 900 718,875
Arapahoe Cnty. Cap. Imp. Tr.
Fd. Hwy. Rev., Ser. 86E-470
6.90%** 08/31/05 750 838,125
PAR
MATURITY (000) VALUE
-------- ------- ------------
MUNICIPAL BONDS (CONTINUED)
COLORADO (CONTINUED)
Denver City & Cnty. Arpt. Rev.,
Prerefunded Ser. 91D
7.00% 11/15/25 $ 210 $217,350
Denver City & Cnty. Arpt. Rev.,
Prerefunded Ser. 92C
6.75% 11/15/13 60 63,750
Denver City & Cnty. Arpt. Rev.,
Unrefunded Ser. 90A
8.00% 11/15/25 2,745 2,840,746
Denver City & Cnty. Arpt. Rev.,
Unrefunded Ser. 91D
7.00% 11/15/25 790 796,912
Denver City & Cnty. Arpt. Rev.,
Unrefunded Ser. 92C
6.75% 11/15/13 440 451,550
Jefferson Cnty. Sch. Dist. G.O., Ser. 92
6.00% 12/15/12 300 312,000
------------
6,239,308
------------
DELAWARE -- 0.1%
Delaware Trans. Auth. Trans.
Sys. Rev., Ser. 92
5.63% 07/01/05 440 451,550
-------------
DISTRICT OF COLUMBIA -- 0.0%
District of Columbia G.O., Ser. 93A-1
6.00% 06/01/11 50 53,312
-------------
FLORIDA -- 5.0%
Florida Dept. of Trans. G.O., Ser. 91
6.25% 07/01/07 400 412,500
Florida Hsg. Fin. Corp. Rev.,
Sunset Place Prj., Ser. 99K-1
6.10% 10/01/29 1,500 1,471,875
Florida St. Bd. of Ed. Cap. Outlay
G.O., Ref. Ser. 00D
5.75% 06/01/22 7,800 7,809,750
Santa Rosa Bay Bldg. Auth.
Rev., Ser. 96
6.25% 07/01/28 3,000 2,812,500
Tampa Hosp. Cap. Imp. Rev., H.
Lee Moffitt Prj., Ser. 99A
5.75% 07/01/19 5,000 4,531,250
------------
17,037,875
------------
GEORGIA -- 1.6%
Atlanta Arpt. Fac. Rev., Ser. 94A
6.50% 01/01/10 1,000 1,107,500
Forsyth Cnty. Sch. Dist. G.O., Ser. 92
6.70% 07/01/12 1,000 1,112,500
Fulton Cnty. Fac. Corp. COP's,
Fulton Cnty. Pub. Purp. Prj., Ser. 99
5.50% 11/01/28 1,000 987,500
Georgia G.O., Ser. 92A
6.00% 03/01/04 340 354,450
Georgia Mun. Elec. Auth. Pwr.
Rev., Ser. 92B
6.13% 01/01/14 400 411,000
Georgia Mun. Elec. Auth. Pwr.
Rev., Ser. 93B
5.70% 01/01/19 1,000 1,001,250
Gwinnett Cnty. G.O., Ser. 92
6.00% 01/01/10 400 416,000
------------
5,390,200
------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
TAX-FREE INCOME PORTFOLIO (CONTINUED)
PAR
AS OF MARCH 31, 2000 (UNAUDITED) MATURITY (000) VALUE
-------- ------- ------------
MUNICIPAL BONDS (CONTINUED)
HAWAII -- 1.2%
Hawaii Dept. of Budget & Fin. Rev.,
Ser. 90C
7.38% 12/01/20 $ 4,000 $ 4,130,200
------------
ILLINOIS -- 6.1%
Chicago Wtr. Rev., Ref. Ser. 97
5.50% 11/01/22 9,905 9,422,131
Chicago Motor Fuel Tax Rev., Ser. 90
7.00% 01/01/05 2,500 2,585,625
Chicago Pk. Dist. G.O., Ser. 96
5.50% 01/01/16 2,250 2,233,125
Chicago Res. Mtg. Rev., Ref. Ser. 92B
7.00%+ 10/01/09 285 147,487
Cook Cnty. G.O., Ser. 96
5.88% 11/15/22 2,000 2,117,500
Illinois G.O., Ser. 94
5.50% 08/01/06 680 698,700
Illinois Hsg. Dev. Auth. Rev.,
Multi-Family Prj., Ser. 94-5
6.65% 09/01/14 3,000 3,146,250
Winnebago & Boone Cnty. G.O.,
Sch. Dist. No. 205 Prj., Ser. 92C
5.90% 02/01/05 500 520,625
------------
20,871,443
------------
INDIANA -- 1.5%
Indianapolis Ind. Pub. Imp. Rev.,
Prerefunded Ser. 91C
6.70% 01/01/02 2,000 2,102,500
Indianapolis Intl. Arpt. Auth. Spec.
Fac. Rev., Federal Express Corp.
Prj., Ser. 94
7.10% 01/15/17 2,825 2,920,344
------------
5,022,844
------------
KANSAS -- 0.2%
Johnson Cnty. Intl. Imp. Rev.,
Prerefunded Ser. 92A
6.00% 09/01/02 165 170,981
Johnson Cnty. Intl. Imp. Rev.,
Unrefunded Ser. 92A
6.00% 09/01/07 235 243,225
Kansas Dept. of Trans. Rev., Ser. 94A
6.00% 09/01/12 400 418,500
------------
832,706
------------
LOUISIANA -- 0.8%
Orleans Rev., Levee Dist. Pub.
Imp. Prj., Ser. 86
5.95% 11/01/15 2,730 2,828,962
-------------
MARYLAND -- 0.0%
Baltimore Port Fac. Rev., E.I. du Pont
Co. Prj., Ser. 84A
6.50% 10/01/11 100 105,750
------------
MASSACHUSETTS -- 3.2%
Massachusetts Bay Trans. Auth. Rev.,
Ser. 95B
5.38% 03/01/20 1,000 952,500
Massachusetts St. Hlth. & Ed. Fac. Auth.
Rev., Newton-Wellesley Hosp. Prj.,
Ser. 97G
6.13% 07/01/15 1,000 1,037,500
Massachusetts St. Wtr. Poll. Abatement
Tr. Pool Prog. Rev., Ser. 99
5.75% 08/01/18 6,865 6,933,650
PAR
MATURITY (000) VALUE
-------- ------- ------------
MUNICIPAL BONDS (CONTINUED)
MASSACHUSETTS (CONTINUED)
Massachusetts St. Wtr. Res. Auth. Rev.,
Ser. 94A
5.70% 08/01/08 $ 680 $ 711,450
New England Ed. Ln. Mktg. Corp. Rev.,
Stud. Ln. Redemption Prj., Ser. 93F
5.63% 07/01/04 1,350 1,373,625
------------
11,008,725
------------
MICHIGAN -- 1.4%
Grand Rapids Charter Twp. Rev., Porter
Hills Oblig. Grp. Prj., Ser. 99
5.45% 07/01/29 3,250 2,774,687
Huron Valley Sch. Dist. G.O., Ser. 96
5.88% 05/01/16 2,000 2,105,000
------------
4,879,687
------------
MINNESOTA -- 0.2%
Met. Council Minneapolis Rev.,
St. Paul Met. Area Prj., Ser. 91D
6.60% 09/01/04 510 514,478
------------
MISSOURI -- 1.3%
Lake of The Ozarks Cmnty. Bldg. Corp.
Sys. Rev., Ser. 98
5.25% 12/01/14 4,915 4,362,062
-------------
NEBRASKA -- 0.4%
Omaha Pub. Pwr. Dist. Elec. Rev.,
Prerefunded Ser. 92A
6.30% 02/01/02 340 354,025
Omaha Pub. Pwr. Dist. Elec. Rev.,
Unrefunded Ser. 92B
6.15% 02/01/12 1,000 1,082,500
------------
1,436,525
------------
NEVADA -- 1.9%
Clark Cnty. Passenger Fac. Charge
Rev., Las Vegas McCarran Intl. Arpt.
Prj., Ref. Ser. 98
5.50% 07/01/15 6,320 6,296,300
------------
NEW JERSEY -- 4.0%
New Jersey Econ. Dev. Auth. Mkt.
Transition Fac. Rev., Ser. 94A
5.80% 07/01/08 495 518,513
New Jersey St. Trans. Tr. Fd. Auth.
Trans. Sys. Rev., Ser. 00A
6.00% 06/15/19 10,000 10,287,500
Port Auth. New York & New Jersey
Spec. Oblig. Rev., JFK Intl. Arpt. Term.
Prj., Ser. 97-6
6.25% 12/01/09 2,680 2,901,100
------------
13,707,113
------------
NEW MEXICO -- 0.5%
Los Alamos Cnty. Util., Inc. Sys. Rev.,
Ser. 94A
5.80%++ 07/01/06 1,500 1,567,500
------------
NEW YORK -- 5.7%
New York City G.O., Prerefunded Ser. 95B
6.38% 08/15/09 805 867,388
New York City G.O., Prerefunded Ser. 95E
6.50% 08/01/02 285 296,756
New York City G.O., Ser. 95A
6.00%++ 08/01/05 1,000 1,043,750
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
TAX-FREE INCOME PORTFOLIO (CONTINUED)
PAR
AS OF MARCH 31, 2000 (UNAUDITED) MATURITY (000) VALUE
-------- ------- ------------
MUNICIPAL BONDS (CONTINUED)
NEW YORK (CONTINUED)
New York City G.O., Ser. 96A
6.00% 08/01/05 $ 2,000 $ 2,082,500
New York City G.O., Unrefunded
Ser. 95B
6.38% 08/15/09 3,035 3,220,894
New York City G.O., Unrefunded
Ser. 95E
6.50% 08/01/02 715 740,025
New York City Ind. Dev. Agcy. Rev.,
Term. One Grp. Assoc. Prj., Ser. 94
6.00% 01/01/08 360 369,000
6.00% 01/01/19 500 496,875
New York St. Dorm. Auth. Rev.,
St. Joseph's Hosp. Prj., Ser. 97
5.25% 07/01/18 3,000 2,801,250
New York St. Hsg. Fin. Agcy. Rev.,
Ser. 96A
6.38% 11/01/04 4,000 4,185,000
New York St. Loc. Govt. Assistance
Corp. Rev., Ser. 95A
5.70% 04/01/08 340 358,275
New York St. Urban Dev. Corr. Fac.
Rev., Ser. 93
5.63% 01/01/07 2,750 2,825,625
------------
19,287,338
------------
NORTH CAROLINA -- 0.8%
Eastern Mun. Pwr. Agcy. Sys. Rev.,
Ser. 93C
5.25% 01/01/04 1,000 1,015,000
5.38% 01/01/05 1,250 1,273,438
North Carolina Mun. Pwr. Agcy. Rev.,
Catawba Elec. Prj., Ser. 92A
6.00% 01/01/10 300 319,125
------------
2,607,563
------------
OHIO -- 1.0%
Cleveland-Cuyahoga Cnty. Port Auth.
Rev., Ser. 97
6.00% 03/01/07 725 714,125
Columbus Refuse Coal Fired
Plant 5-E-L G.O., Ser. 91
6.63% 09/15/01 70 72,013
Ohio St. Hgr. Ed. Fac. Cmnty. Rev.,
Univ. of Dayton Prj., Ser. 97
5.35% 12/01/17 2,000 1,957,500
Ohio Wtr. Dev. Auth. Rev., Clean
Wtr. Prj., Ser. 92
5.65% 12/01/05 300 310,500
Olentangy Loc. Sch. Dist. G.O.,
Ser. 95A
5.85% 12/01/07 340 359,550
------------
3,413,688
------------
OKLAHOMA -- 0.3%
Grand River Dam Auth. Rev., Ser. 93
8.00% 06/01/02 1,000 1,068,750
------------
OREGON -- 2.0%
Klamath Falls Elec. Sr. Lien Rev.,
Klamath Cogen Prj., Ref. Ser. 99
6.00% 01/01/25 7,500 6,543,750
Portland Swr. Sys. Rev., Ser. 92A
6.00% 10/01/12 300 314,250
------------
6,858,000
------------
MUNICIPAL BONDS (CONTINUED)
PENNSYLVANIA 14.1%
Beaver Cnty. G.O., Ser. 96A
5.75% 10/01/15 $ 1,000 $ 1,045,000
Beaver Cnty. Ind. Dev. Auth. Poll. Ctrl.
Rev., St. Joe Minerals Corp.
Prj., Ser. 77
6.00% 05/01/07 2,425 2,426,867
Dauphin Cnty. Gen. Auth. Rev.,
Hotel & Conf. Ctr. Hyatt
Regency Prj., Ser. 98
6.20% 01/01/19 5,000 4,612,500
Delaware Cnty. Auth. Rev., Mercy
Hlth. Corp. Prj., Ser. 96
5.75% 12/15/20 2,400 2,421,000
Delaware River Port Auth.
Pennsylvania & New Jersey
Rev., Port Dist. Prj., Ser. 99B
5.70% 01/01/22 6,600 6,608,250
Delaware Valley Regl. Fin. Auth.
Loc. Govt. Rev., Ser. 98A
5.50% 08/01/28 3,000 2,853,750
Lehigh Cnty. Gen. Purp. Auth. Rev.,
Kidspeace Oblig. Prj., Ser. 98
6.00% 11/01/23 4,000 3,925,000
Pennsylvania Con. Ctr. Auth. Rev.,
Ser. 94A
6.60% 09/01/09 4,250 4,584,688
Pennsylvania Intergovernmental Coop.
Auth. Spec. Tax Rev., City of Philadelphia
Fdg. Prj., Ser. 96
5.50% 06/15/20 6,000 5,820,000
Pennsylvania St. Hgr. Ed. Fac. Auth. Hlth.
Svcs. Rev., Univ. of Pennsylvania Hlth.
Svcs. Prj., Ser. 96A
5.88% 01/01/15 2,750 2,481,875
5.75% 01/01/17 3,535 3,132,894
Philadelphia Ind. Dev. Auth. Arpt. Fac. Rev.,
Aero Philadelphia LLC Prj., Ser. 99
5.25% 01/01/09 1,190 1,112,650
Philadelphia Ind. Dev. Auth. Rev.,
PGH Dev. Corp. Prj., Ser. 93
5.25% 07/01/17 1,935 1,804,388
Philadelphia Mun. Auth. Rev., Ref.
Ser. 93D
6.13% 07/15/08 1,000 1,057,500
Philadelphia Sch. Dist. Unltd.
Tax G.O., Ser. 99C
5.75% 03/01/29 4,000 3,970,000
------------
47,856,362
------------
PUERTO RICO -- 0.3%
Puerto Rico Elec. Pwr. Auth. Rev.,
Ser. 94S
7.00% 07/01/06 1,000 1,108,750
------------
RHODE ISLAND -- 0.9%
Rhode Island Depositors Econ.
Protection Corp. Spec. Oblig. Rev.,
Prerefunded Ser. 93
5.63% 08/01/09 190 196,413
Rhode Island Depositors Econ.
Protection Corp. Spec. Oblig.
Rev., Unrefunded Ser. 93
5.63% 08/01/09 810 828,225
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
12
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
TAX-FREE INCOME PORTFOLIO (CONTINUED)
PAR
AS OF MARCH 31, 2000 (UNAUDITED) MATURITY (000) VALUE
-------- ------- ------------
MUNICIPAL BONDS (CONTINUED)
RHODE ISLAND (CONTINUED)
Rhode Island St. Hlth. & Ed. Bldg. Corp.
Rev., Hosp. Fin. Lifespan Oblig. Grp.
Prj., Ser. 96
5.50% 05/15/16 $ 2,000 $ 1,952,500
------------
2,977,138
------------
SOUTH CAROLINA -- 0.3%
Piedmont Mun. Pwr. Agcy. Elec. Rev.,
Ser. 85B
6.25% 01/01/18 500 508,125
South Carolina Pub. Svcs. Auth. Rev.,
Santee Cooper Prj., Ser. 91D
6.50% 07/01/14 100 105,750
Spartanburg Wtr. Rev., Prerefunded
Ser. 92
6.20% 06/01/09 15 15,619
Spartanburg Wtr. Rev., Unrefunded
Ser. 92
6.20% 06/01/09 285 294,619
------------
924,113
------------
SOUTH DAKOTA -- 0.2%
South Dakota St. Lease Rev., Trans.
Cert. Prj., Ser. 93A
6.38% 09/01/05 500 533,750
------------
TENNESSEE -- 1.1%
Maury Cnty. Ind. Dev. Poll. Ctrl. Rev.,
Saturn Corp. Prj., Ser. 94
6.50%** 09/01/24 1,800 1,845,000
Memphis-Shelby Cnty. Arpt. Auth.
AMT Rev., Ser. 99D
6.00% 03/01/24 1,900 1,916,625
------------
3,761,625
------------
TEXAS -- 17.0%
Dallas Cnty. Util. & Cap. Apprec. Rev.,
Ref. Ser. 99A
6.19%+ 02/15/21 17,225 4,823,000
6.21%+ 02/15/22 18,405 4,808,306
Dallas Ind. Dev. Corp. Rev., CR/PL, Inc.
Prj., Ser. 87
7.50% 08/01/17 2,300 2,403,500
Dallas-Fort Worth Intl. Arpt. Fac. Imp.
Corp. Rev., Ser. 99
6.38% 05/01/35 5,000 4,768,750
Guadalupe-Blanco River Auth.
Swr. & Solid Waste Disp. Fac.
Rev., E.I. du Pont de Nemours & Co.
Prj., Ser. 99
5.50% 05/01/29 6,000 5,422,500
Houston Arpt. Sys. Spec. Fac. Rev.,
Ser. 97A
5.38% 07/15/08 1,000 1,005,000
Matagorda Cnty. Nav. Dist. No. 1 Rev.,
Reliant Energy Prj., Ser. 99B
5.95% 05/01/30 15,000 13,387,500
Sabine River Auth. Poll. Ctrl. Rev.,
Texas Util. Elec. Prj., Ser. 90B
8.25% 10/01/20 2,500 2,583,575
San Antonio Arpt. Rev., Ser. 91
7.13% 07/01/07 4,645 5,047,325
Spring Branch Sch. Dist. G.O., Ser. 95
5.95% 02/01/12 2,245 2,315,156
PAR
MATURITY (000) VALUE
-------- ------- ------------
MUNICIPAL BONDS (CONTINUED)
TEXAS (CONTINUED)
Texas Wtr. Dev. Rev., St. Revolving
Fd. Prj., Ser. 92
6.20% 07/15/05 $ 680 $ 713,150
Travis Cnty. Hlth. Fac. Dev. Corp. Rev.,
Ascension Hlth. Credit Prj., Ser. 99A
5.88% 11/15/24 10,000 9,925,000
Univ. of Texas Rev., Prerefunded
Ser. 91A
7.00% 08/15/07 160 168,200
Univ. of Texas Rev., Unrefunded
Ser. 91A
7.00% 08/15/07 340 355,725
------------
57,726,687
------------
UTAH -- 0.1%
Jordan Sch. Dist. G.O., Ser. 93
6.05% 06/15/03 340 351,900
Salt Lake City Hosp. Rev., Ser. 88A
8.13% 05/15/15 100 121,625
------------
473,525
------------
VERMONT -- 0.3%
Vermont St. G.O., Ser. 94A
6.00% 01/15/03 1,000 1,032,500
------------
VIRGIN ISLANDS -- 1.0%
Virgin Islands Pub. Fin. Auth. Rev.,
Gross Receipts Tax Ln. Notes,
Ser. 99A
6.13% 10/01/29 3,500 3,526,250
------------
VIRGINIA -- 1.3%
Hampton G.O., Ser. 95
6.00% 01/15/08 400 425,500
Pocahontas Pkwy. Toll Rd. Rev., Ser. 98B
5.85%+ 08/15/23 15,300 2,964,375
Virginia Hsg. Dev. Auth. Rev.,
Multi-Family Prj., Ser. 95C
6.70% 11/01/15 1,000 1,053,750
------------
4,443,625
------------
WASHINGTON -- 5.1%
Washington St. G.O., Ser. 00B
6.00% 01/01/25 14,000 14,157,500
Washington St. Pub. Pwr. Sply. Sys.
Rev., Nuclear Prj. No. 3, Ser. 96A
6.00% 07/01/06 3,000 3,142,500
------------
17,300,000
------------
WISCONSIN -- 0.7%
Milwaukee Met. Swr. Dist. G.O., Ser. 92A
6.13% 10/01/03 250 260,313
Wisconsin St. Trans. Rev., Prerefunded
Ser. 92A
5.50% 07/01/02 495 501,806
Wisconsin St. Trans. Rev., Unrefunded
Ser. 92A
5.50% 07/01/05 1,505 1,525,694
------------
2,287,813
------------
TOTAL MUNICIPAL BONDS
(Cost $317,754,468) 315,065,709
------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
13
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
TAX-FREE INCOME PORTFOLIO (CONCLUDED)
AS OF MARCH 31, 2000 (UNAUDITED) SHARES VALUE
------- ------------
CUMULATIVE PREFERRED STOCK -- 3.5%
Charter Mac Equity Issue Tr. 144A
6.63% 80,000 $ 7,824,960
MuniMae TE Bond Subs., LLC 144A
6.88% 40,000 3,971,160
------------
TOTAL CUMULATIVE PREFERRED STOCK
(Cost $12,000,000) 11,796,120
------------
SHORT TERM INVESTMENTS -- 2.8%
Smith Barney Tax-Free Money Market Fund
(Cost $9,684,907) 9,684,907 9,684,907
------------
TOTAL INVESTMENTS IN SECURITIES
(Cost $339,439,375*) 98.9% 336,546,736
OTHER ASSETS IN EXCESS OF
LIABILITIES 1.1% 3,770,241
------ ------------
NET ASSETS
(Applicable to 30,042,560
Institutional shares, 515,767
Service shares, 563,174
Investor A shares, 256,099
Investor B shares and 155,728
Investor C shares outstanding) 100.0% $340,316,977
====== ============
NET ASSET VALUE AND REDEMPTION
PRICE PER INSTITUTIONAL, SERVICE
AND INVESTOR A SHARE
($335,872,997 / 31,121,501) $10.79
======
OFFERING PRICE PER INSTITUTIONAL
AND SERVICE SHARE $10.79
======
MAXIMUM OFFERING PRICE PER
INVESTOR A SHARE
($10.79 / 0.960) $11.24
======
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
(SUBJECT TO A MAXIMUM CONTINGENT
DEFERRED SALES CHARGE OF 4.5%)
PER INVESTOR B SHARE
($2,763,731 / 256,099) $10.79
======
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
(SUBJECT TO A MAXIMUM CONTINGENT
DEFERRED SALES CHARGE OF 1.0%)
PER INVESTOR C SHARE
($1,680,249 / 155,728) $10.79
======
--------------
* Also cost for Federal income tax purposes. The gross unrealized
appreciation (depreciation) on a tax basis is as follows:
Gross unrealized appreciation $ 6,077,893
Gross unrealized depreciation (8,970,532)
-----------
$(2,892,639)
===========
** Rates shown are the rates as of March 31, 2000.
+ The rate shown is the effective yield on the zero coupon bonds.
++ Principal amount of securities pledged as collateral of $1,500,000 on 75
short U.S. Treasury Bond future contracts expiring June 2000. The value of
such contracts on March 31, 2000 was $7,326,563, thereby resulting in an
unrealized loss of $107,813.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
14
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
PENNSYLVANIA TAX-FREE INCOME PORTFOLIO
PAR
AS OF MARCH 31, 2000 (UNAUDITED) MATURITY (000) VALUE
-------- ------- ------------
MUNICIPAL BONDS -- 97.9%
PENNSYLVANIA -- 95.5%
Allegheny Cnty. G.O., Ser. 90C
7.00% 12/01/00 $ 1,000 $ 1,018,820
Allegheny Cnty. Hosp. Dev. Auth. Rev.,
Mercy Hosp. of Pittsburgh Prj.,
Ser. 91
6.75% 04/01/01 1,000 1,041,650
Allegheny Cnty. Hosp. Dev. Auth. Rev.,
Ser. 95A
6.00% 09/01/10 5,000 4,981,250
6.20% 09/15/15 1,000 997,500
Allegheny Cnty. Hosp. Dev. Auth. Rev.,
Univ. of Pittsburgh Med. Ctr. Prj.,
Ser. 95
5.35% 12/01/17 10,000 9,550,000
Allegheny Cnty. Inst. Dist. Rev., Ser. 90
7.30% 04/01/09 2,000 2,025,100
Allegheny Cnty. Res. Fin. Auth. Mtg.
Rev., Sgl. Fam. Mtg. Prj., Ser. 94Y
6.25% 05/01/17 265 271,625
Allegheny Cnty. Sanit. Auth. Rev., Ser. 97
5.38% 12/01/24 22,500 21,178,125
Allentown Pkg. Auth. Pkg. Gtd. Rev.,
Ser. 91
6.63% 11/15/01 750 773,437
Armstrong Cnty. Hosp. Auth. Hlth. Ctr.
Rev., Canterbury Pl. Prj., Ser. 91
6.50% 12/01/01 650 670,312
Armstrong Cnty. Hosp. Auth. Rev.,
St. Francis Med. Ctr. Prj., Ser. 92A
6.10% 06/01/02 1,000 1,027,500
Baldwin & Whitehall Sch. Dist. Rev.,
Ser. 92A
6.60% 08/15/02 1,000 1,042,500
Bangor Area Sch. Dist. G.O., Ser. 94
6.30% 03/01/04 1,655 1,688,100
Beaver Cnty. Hosp. Auth. Rev., Med.
Ctr. Beaver Pennsylvania, Inc. Prj.,
Ser. 92A
6.60% 07/01/04 2,000 2,117,500
6.25% 07/01/11 1,000 1,051,250
Beaver Cnty. Hosp. Auth. Rev., Ser. 96A
5.80% 10/01/06 5,830 6,106,925
Bensalem Twp. Wtr. & Swr. Auth. Rev.,
Ser. 93A
6.50% 12/01/14 1,000 1,031,250
Berks Cnty. G.O., Ser. 92
6.30% 11/10/20 2,000 2,075,000
Berks Cnty. Mun. Auth. Coll. Rev.,
Ser. 90
7.30% 12/01/00 1,000 1,020,740
Berks Cnty. Unltd. Tax G.O., Ser. 98
5.38% 11/15/28 6,685 6,242,119
Bethlehem Wtr. Auth. Rev., Ser. 92
6.25% 11/15/01 750 769,687
6.35%++ 11/15/01 1,000 1,027,500
Bethlehem Wtr. Auth. Rev., Ser. 92A
6.10% 11/15/02 500 516,875
Bradford Area Sch. Dist. G.O., Ser. 95
5.80% 10/01/05 1,465 1,529,094
Bristol Twp. Swr. Auth. Rev., Ser. 84
10.00% 04/01/02 645 678,056
Bucks Cnty. Cmnty. Coll. Bldg. Auth.
Coll. Rev., Ser. 92
6.20% 06/15/02 1,000 1,030,000
PAR
MATURITY (000) VALUE
-------- ------- ------------
MUNICIPAL BONDS (CONTINUED)
PENNSYLVANIA (CONTINUED)
Bucks Cnty. Unltd. Tax G.O., Ser. 95
5.88% 05/01/05 $ 1,575 $ 1,639,969
Butler Area Sch. Dist. G.O., Ser. 98B
5.38% 10/01/18 2,000 1,930,000
Cambria & Blair Cntys. Rev., Bldg.
Auth. Prj., Ser. 77
6.38% 02/01/07 1,380 1,452,450
Cambria Cnty. Unltd. Tax G.O., Ser. 91
8.25% 06/01/00 130 130,359
Cambria Twp. Wtr. Auth. Ind. Rev.,
Ser. 93A
6.00% 12/01/02 1,000 1,007,380
Central Bucks Sch. Dist. G.O., Ser. 91
6.75% 02/01/05 1,000 1,016,010
6.90% 02/01/08 750 763,087
Central Bucks Sch. Dist. G.O., Ser. 94A
6.45% 11/15/04 1,000 1,063,750
Central Bucks Sch. Dist. Unltd. Tax
G.O., Ser. 94A
6.70% 11/15/09 500 536,875
Central Dauphin Sch. Dist. G.O., Ser. 91
6.00% 06/01/01 1,500 1,524,375
Chester Cnty. Unltd. Tax G.O., Ser. 91
6.60% 08/01/01 1,000 1,023,750
7.00% 08/01/01 750 774,375
6.70% 12/15/04 385 394,625
Coatesville Sch. Dist. G.O., Ser. 91
7.13% 11/01/00 150 152,577
7.25% 11/01/00 750 763,410
6.70% 03/01/01 1,000 1,022,880
Conestoga Vy. Sch. Dist. G.O.,
Ser. 91B
7.00% 05/01/01 750 770,167
7.10% 05/01/01 750 770,947
Council Rock Sch. Dist. G.O., Ser. 91
6.60% 03/01/02 1,000 1,016,680
Council Rock Sch. Dist. Rev., Ser. 78
6.63% 09/01/01 1,325 1,361,437
Crawford Central Sch. Dist. G.O., Ser. 95
7.00% 02/15/05 1,765 1,919,437
Crawford Central Sch. Dist. Unltd.
Tax G.O., Ser. 95
5.75% 02/15/11 1,585 1,642,456
Cumberland Cnty. Mun. Auth. Coll. Rev.,
Messiah Coll. Prj., Ser 95
5.13% 10/01/15 2,000 1,917,500
Dauphin Cnty. Gen. Auth. Hosp. Rev.,
Hapsco Western Pennsylvania Hosp.
Prj., Ser. 92
6.25% 07/01/16 1,000 1,028,750
Dauphin Cnty. Gen. Auth. Rev.,
Harrisburg Intl. Arpt. Prj., Ser. 91
7.13% 06/01/01 750 771,562
Dauphin Cnty. Gen. Auth. Rev.,
Hotel & Conf. Ctr. Hyatt Regency Prj.,
Ser. 98
6.20% 01/01/19 11,975 11,046,937
Dauphin Cnty. Gen. Auth. Rev., Sch. Dist.
Pooled Fin. Prj., Ser. 86
5.50% 06/01/07 550 558,250
6.85% 06/01/09 2,300 2,389,125
Dauphin Cnty. Gen. Auth. Rev., Ser. 86
6.80%** 06/01/00 1,305 1,355,569
6.71%** 06/01/05 1,325 1,374,687
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
15
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
PENNSYLVANIA TAX-FREE INCOME PORTFOLIO (CONTINUED)
PAR
AS OF MARCH 31, 2000 (UNAUDITED) MATURITY (000) VALUE
-------- ------- ------------
MUNICIPAL BONDS (CONTINUED)
PENNSYLVANIA (CONTINUED)
6.80%** 06/01/07 $ 1,000 $ 1,088,750
5.60%** 06/02/08 525 534,844
5.70%** 06/01/09 660 671,550
Dauphin Cnty. Gen. Auth. Rev., Ser. 86 A-F
6.20% 01/01/29 5,100 4,596,375
Dauphin Cnty. Pinnacle Gen. Auth. Hlth.
Sys. Rev., Ser. 97
5.50% 05/15/17 3,500 3,403,750
Deer Lakes Sch. Dist. Unltd. Tax G.O.,
Ser. 95
6.35% 01/15/14 1,000 1,083,750
6.45% 01/15/19 1,300 1,408,875
Delaware Cnty. Auth. Coll. Rev., Haverford
Coll. Prj., Ser. 90
7.25% 11/15/00 1,000 1,038,580
7.00% 11/15/02 600 622,254
Delaware Cnty. Auth. Hosp. Rev., Ser. 95
5.50% 08/15/15 6,480 6,374,700
Delaware Cnty. Auth. Rev., Haverford
Coll. Prj., Ser. 00
5.75% 11/15/25 6,795 6,735,544
Delaware Cnty. Auth. Rev., Mercy Hlth.
Corp. Prj., Ser. 96
5.75% 12/15/20 3,735 3,767,681
Delaware Cnty. G.O., Ser. 99
5.13% 10/01/15 6,000 5,722,500
5.13% 10/01/17 2,805 2,629,687
Delaware Cnty. Ind. Dev. Auth. Rev.,
Wtr. Co.. Fac. Philadelphia Suburban
Wtr. Prj., Ser. 92
6.50% 06/01/10 1,000 1,052,500
Delaware Cnty. Ind. Dev. Auth. Rev.,
Ser. 99
6.00% 06/01/29 3,400 3,408,500
Delaware Cnty. Mem. Hosp. Auth. Rev.,
Ser. 95
5.50% 08/15/19 3,000 2,880,000
Delaware Cnty. Rev., Prerefunded Ser. 95
5.50% 10/01/15 1,075 1,103,219
Delaware River Port Auth.
Pennsylvania & New Jersey
Rev., Port Dist. Prj., Ser. 99B
5.70% 01/01/22 3,000 3,003,750
Delaware River Port Auth.
Pennsylvania & New Jersey
Rev., Ser. 95
5.40% 01/01/11 2,050 2,080,750
Delaware River Port Auth.
Pennsylvania & New Jersey Rev.,
Ser. 99
5.75% 01/01/16 8,000 8,140,000
5.75% 01/01/22 10,000 10,025,000
Delaware Vy. Regl. Fin. Auth. Loc.
Govt. Rev., Ser. 96A
5.90% 04/15/16 2,540 2,581,275
Delaware Vy. Regl. Fin. Auth. Loc.
Govt. Rev., Ser. 97B
5.60% 07/01/17 2,000 1,992,500
Delaware Vy. Regl. Fin. Auth. Loc.
Govt. Rev., Ser. 98A
5.50% 08/01/28 17,750 16,884,687
PAR
MATURITY (000) VALUE
-------- ------- ------------
MUNICIPAL BONDS (CONTINUED)
PENNSYLVANIA (CONTINUED)
Derry Area Sch. Dist. G.O., Ser. 92A
6.60% 09/01/10 $ 750 $ 780,000
Dover Area Sch. Dist. G.O., Ser. 96
5.75% 04/01/12 2,445 2,496,956
Downingtown G.O., Ser. 91
6.70% 01/15/02 750 775,312
East Whiteland-Tredyffrin Joint Trans.
Auth. Rev., Hwy. Imp. Prj., Ser. 94
6.30% 01/01/16 775 789,531
Ephrata Sch. Dist. G.O., Ser. 91A
6.80% 04/15/01 750 767,880
Erie Cnty. Prison Auth. Lease Rev.,
Ser. 91
6.35% 11/01/00 2,500 2,532,100
6.45% 11/01/01 1,000 1,028,750
6.25% 11/01/11 3,225 3,305,625
Erie Swr. Auth. Rev., Ser. 97
5.63% 06/01/17 2,800 2,908,500
Fairview Sch. Dist. G.O., Ser. 95
6.00% 02/15/05 1,000 1,047,500
Falls Twp. G.O., Ser. 90
6.90% 12/15/00 1,000 1,017,170
Forest Hills G.O., Ser. 92
6.45% 05/01/09 750 773,437
Fox Chapel Area Sch. Dist. G.O.,
Ser. 92A
6.30% 02/15/02 2,000 2,055,000
Governor Mifflin Sch. Dist.
G.O., Ser. 92
6.30% 02/01/02 1,000 1,027,500
Greater Johnstown Wtr. Auth. Rev.,
Ser. 92
6.10% 01/01/04 685 702,981
Greene Cnty. Gen. Fac. Auth. Rev.,
Ser. 91A
7.00% 07/01/01 3,325 3,482,937
Greensburg Salem Sch. Dist. G.O.,
Ser. 92
6.45%++ 09/15/18 1,000 1,032,500
Hampton Twp. Sch. Dist. G.O., Ser. 91A
6.95% 02/15/01 1,000 1,022,950
Harrisburg Auth. Wtr. Rev., Ser. 91
7.00% 07/15/01 1,000 1,030,000
Harrisburg Auth. Wtr. Rev., Ser. 92
6.55% 08/15/02 1,600 1,666,000
Harrisburg Pkg. Auth. Rev., Ser. 86B
7.40% 11/15/00 500 509,980
Hatboro Sch. Dist. G.O., Ser. 91A
6.65% 04/01/07 1,000 1,018,330
6.70% 04/01/08 1,000 1,018,520
Hempfield Sch. Dist. Rev., Ser. 91
6.00% 09/15/01 650 654,264
Hempfield Twp. Mun. Auth. Gtd. Swr.
Rev., Westmoreland Cnty. Prj., Ser. 91
6.50% 09/01/02 1,000 1,040,000
Indiana Cnty. Ind. Dev. Auth. Poll. Ctrl.
Rev., New York St. Elec. & Gas Corp.
Prj., Ser. 95A
6.00% 06/01/06 1,000 1,055,000
Jeannette Sch. Dist. G.O., Ser. 91
6.65% 06/15/11 750 768,750
Jefferson Cnty. Mun. Auth. Rev., Ser. 92
6.50% 06/01/06 1,515 1,575,600
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
16
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
PENNSYLVANIA TAX-FREE INCOME PORTFOLIO (CONTINUED)
PAR
AS OF MARCH 31, 2000 (UNAUDITED) MATURITY (000) VALUE
-------- ------- ------------
MUNICIPAL BONDS (CONTINUED)
PENNSYLVANIA (CONTINUED)
Lancaster Cnty. Hosp. Auth. Rev., Hlth.
Ctr. Masonic Homes Prj., Ser. 94
5.30% 11/15/08 $ 500 $ 490,000
Lancaster Swr. Auth. Sply. Spec. Oblig.
Rev., Ser. 98
5.25% 04/01/21 8,480 7,822,800
Langhorne Hgr. Ed. & Hlth. Auth. Rev.,
Ser. 92
6.30% 11/15/03 740 767,750
Langhorne Manor Boro Hgr. Ed. & Hlth.
Auth. Rev., Ser. 92
6.15% 11/15/02 510 529,125
6.50% 11/15/14 1,500 1,556,250
Langhorne Manor Boro Hgr. Ed. & Hlth.
Auth. Rev., Ser. 94
6.90% 11/15/14 1,000 1,083,750
Lebanon Cnty. Hosp. Auth. Rev., Good
Samaritan Hosp. Prj., Ser. 93
5.55% 11/15/04 355 350,119
5.65% 11/15/05 760 746,700
Lehigh Cnty. Gen. Purp. Auth. Rev.,
Kidspeace Oblig. Prj., Ser. 98
5.70% 11/01/09 3,000 3,007,500
6.00% 11/01/18 2,000 1,997,500
6.00% 11/01/23 3,000 2,943,750
Lehigh Cnty. Gen. Purp. Auth. Rev.,
Ser. 90A
7.00% 07/01/08 1,500 1,539,210
Lehigh Cnty. Gen. Purp. Auth. Rev.,
Ser. 90B
7.00% 07/01/00 1,200 1,231,932
Lehigh Cnty. Gen. Purp. Auth. Rev.,
St. Lukes Hosp. Bethlehem Prj.,
Ser. 93
6.00% 11/15/02 1,750 1,802,500
Lehigh Cnty. Unltd. Tax G.O., Ser. 91
6.90% 08/01/00 500 514,325
Ligonier Vy. Sch. Dist. Unltd. Tax G.O.,
Ser. 94
5.65% 03/01/14 2,000 2,055,000
Lower Providence Twp. Swr. Auth. Rev.,
Ser. 92
6.63% 05/01/02 1,000 1,037,500
Luzerne Cnty. Flood Prot. Auth. Gtd.
Rev., Ser. 96
5.60% 07/15/21 4,720 4,885,200
Lycoming Cnty. Auth. Coll. Rev.,
Pennsylvania Coll. Tech. Prj., Ser. 90
6.80% 11/01/00 1,000 1,014,790
Lycoming Cnty. Auth. Hosp. Rev., Divine
Providence Hosp. Prj., Ser. 95
5.38% 11/15/10 6,480 6,504,300
Lycoming Cnty. G.O., Ser. 91A
6.85% 08/15/01 1,000 1,030,000
Manheim Central Sch. Dist. G.O.,
Ser. 91
6.70% 03/01/04 1,000 1,017,200
McKeesport Area Sch. Dist. G.O.,
Ser. 96A
5.75% 10/01/06 1,750 1,828,750
Media Boro Gtd. Wtr. Rev., Ser. 92
6.55% 01/01/17 500 520,625
Methacton Sch. Dist. Auth. Rev.,
Ser. 78
6.50% 10/01/06 475 514,187
PAR
MATURITY (000) VALUE
-------- ------- ------------
MUNICIPAL BONDS (CONTINUED)
PENNSYLVANIA (CONTINUED)
Middletown Twp. Swr. Auth. Rev.,
Ser. 68
5.63% 05/01/01 $ 10 $ 10,028
Montgomery Cnty. Hgr. Ed. &
Hlth. Auth. Coll. Rev., Cnty.
Cmnty. Coll. Prj., Ser. 90
7.00% 11/01/00 500 508,095
Montgomery Cnty. Hgr. Ed. & Hlth.
Auth. Hosp. Rev., Kidder Mld-Abington
Mem. Hosp. Prj., Ser. 91A
6.66%** 07/05/11 2,400 2,481,000
Montgomery Cnty. Hgr. Ed. & Hlth.
Auth. Hosp. Rev., Sacred Heart Hosp.
Norristown Prj., Ser. 87A
6.80% 02/01/13 750 752,385
Montgomery Cnty. Hgr. Ed. & Hlth. Auth.
Rev., Beaver Coll. Prj., Ser. 96
5.75% 04/01/12 1,690 1,738,587
Montgomery Cnty. Hgr. Ed. & Hlth. Auth.
Rev., Holy Redeemer Hosp. Prj.,
Ser. 97A
5.25% 10/01/27 9,000 8,111,250
Montgomery Cnty. Hgr. Ed. & Hlth. Auth.
Rev., Pottstown Hlth. Care Corp. Prj.,
Ser. 98
5.00% 01/01/16 6,235 5,697,231
Montgomery Cnty. Hgr. Ed. & Hlth. Auth.
Rev., St. Josephs Univ. Prj., Ser. 92
6.50% 12/15/12 750 794,062
Montgomery Cnty. Hosp. Auth. Rev.,
Suburban Gen. Hosp. Prj., Ser. 76
7.75% 05/01/02 40 41,100
Montgomery Cnty. Ind. Dev. Auth. Rev.,
Poll. Ctrl. Prj., Ser. 91B
6.70% 12/01/21 1,000 1,048,750
New Garden Twp. Swr. Auth. Rev.,
Ser. 91
7.00% 03/01/15 420 429,492
Norristown G.O., Ser. 90
6.90% 11/15/00 1,000 1,016,970
7.05% 11/15/00 1,250 1,272,337
North Allegheny Sch. Dist. G.O., Ser. 90
7.60% 05/01/00 750 751,905
7.20% 05/01/03 750 751,687
North Huntingdon Twp. G.O., Ser. 91
6.65% 04/01/04 1,635 1,664,970
Northampton Cnty. Hgr. Ed. Auth. Rev.,
Lehigh Univ. Prj., Ser. 91
7.00% 10/15/11 4,000 4,220,000
Northampton Cnty. Hgr. Ed. Auth. Rev.,
Moravian Coll. Prj., Ser. 94
6.10% 07/01/12 1,950 1,993,875
Northampton Cnty. Hosp. Auth. Rev.,
Easton Hosp. Prj., Ser. 88
7.70% 01/01/04 825 843,092
Northeast Sch. Dist. G.O., Ser. 91
7.00% 01/15/10 890 908,797
Northeast Sch. Dist. G.O., Ser. 98
5.20% 09/01/23 2,000 1,817,500
Northeastern Hosp. & Ed. Auth. Rev.,
Luzerne Cnty. Coll. Prj., Ser. 97
5.15% 08/15/16 3,245 3,086,806
Northeastern Hosp. & Ed. Auth. Rev.,
Wilkes Univ. Prj., Ser. 93
5.40% 10/01/03 845 843,944
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
17
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
PENNSYLVANIA TAX-FREE INCOME PORTFOLIO (CONTINUED)
PAR
AS OF MARCH 31, 2000 (UNAUDITED) MATURITY (000) VALUE
-------- ------- ------------
MUNICIPAL BONDS (CONTINUED)
PENNSYLVANIA (CONTINUED)
Northeastern Hosp. & Ed. Auth. Rev.,
Wyoming Vy. Hlth. Care Prj., Ser. 94A
6.50% 01/01/07 $ 1,000 $ 1,072,500
Northeastern Hosp. Auth. Rev., Nesbitt
Mem. Hosp. Prj., Ser. 90A
7.50% 07/01/00 1,250 1,284,575
Northgate Sch. Auth. Bldg. Rev., Ser. 78
6.38% 02/15/07 825 891,000
Northumberland Cnty. Auth. Gtd. Lease
Rev., Ser. 91
6.25% 10/15/01 4,000 4,100,000
6.60% 10/15/01 1,250 1,287,500
7.75% 10/15/01 2,110 2,207,587
Northumberland Cnty. Auth. Gtd. Lease
Rev., Ser. 92
6.70% 08/15/02 1,000 1,045,000
Parkland Sch. Dist. Rev., Ser. 96
5.75% 09/01/14 2,910 2,953,650
Penn Hills G.O., Ser. 93
5.88% 12/01/02 2,000 2,057,500
Pennsbury Sch. Dist. Unltd. Tax G.O.,
Ser. 94
6.65% 08/15/09 685 732,950
Pennsylvania Con. Ctr. Auth. Rev.,
Ser. 94A
6.60% 09/01/09 12,465 13,446,619
Pennsylvania Econ. Dev. Fin. Auth. Sch.
Rev., Baldwin Sch. Prj., Ser. 94A
6.35% 04/01/04 475 487,469
Pennsylvania Econ. Fin. Solid Waste
Disp. Rev., Ser. 99
6.00% 06/01/31 22,575 21,022,969
Pennsylvania Fin. Auth. Rev., Mun.
Cap. Imp. Prj., Ser. 93
6.60% 11/01/09 22,805 24,287,325
Pennsylvania G.O., Ser. 94
5.50% 06/15/08 1,000 1,028,750
Pennsylvania Hgr. Ed. Assistance Agcy.
Stud. Ln. Rev., Ser. 84A
7.44% 03/01/20 8,250 8,863,882
7.85%** 03/01/22 5,000 5,362,500
Pennsylvania Hgr. Ed. Fac. Auth. Rev.,
Duquesne Univ. Prj., Ser. 91C
6.75%++ 04/01/20 1,000 1,022,490
Pennsylvania Hgr. Ed. Fac. Auth. Rev.,
Philadelphia Coll. of Textiles
& Science Prj., Ser. 93
5.15% 02/01/04 1,230 1,243,837
Pennsylvania Hgr. Ed. Fac. Auth. Rev.,
Philadelphia Coll. Osteopathic Prj.,
Ser. 93
5.35% 12/01/10 3,735 3,767,681
Pennsylvania Hgr. Ed. Fac. Auth. Rev.,
Ser. 90
5.38% 01/01/15 5,200 5,122,000
Pennsylvania Hgr. Ed. Fac. Auth. Rev.,
Thomas Jefferson Univ. Prj., Ser. 90
7.30% 11/01/00 1,500 1,556,115
Pennsylvania Hgr. Ed. Fac. Auth. Rev.,
Univ. of Pennsylvania Prj., Ser. 98
5.75% 01/01/22 15,165 12,738,600
PAR
MATURITY (000) VALUE
-------- ------- ------------
MUNICIPAL BONDS (CONTINUED)
PENNSYLVANIA (CONTINUED)
Pennsylvania Hsg. Fin. Agcy. AMT Sgl.
Fam. Mtg. Rev., Ser. 96A
6.05% 10/01/16 $ 2,500 $ 2,528,125
Pennsylvania Hsg. Fin. Agcy. Multi-family
FHA Ins. Rev., Ref. Ser. 92
8.10% 07/01/13 2,000 2,105,000
Pennsylvania Hsg. Fin. Agcy. Res. Rev.,
Sect. 8 Prj., Ref. Ser. 91A
7.60% 07/01/13 1,000 1,037,500
Pennsylvania Hsg. Fin. Agcy. Rev.,
Ser. 92
6.40% 07/01/12 1,500 1,556,250
6.50% 07/01/23 4,850 5,025,812
Pennsylvania Hsg. Fin. Agcy. Rev.,
Ser. 98
5.50%+ 04/01/30 9,000 1,349,466
Pennsylvania Hsg. Fin. Agcy. Rev.,
Ser. 99
5.85% 10/01/18 1,000 987,500
Pennsylvania Hsg. Fin. Agcy. Rev., Sgl.
Fam. Mtg. Prj., Ser. 91
6.95% 10/01/05 250 257,862
Pennsylvania Hsg. Fin. Agcy. Rev., Sgl.
Fam. Mtg. Prj., Ser. 94A
6.60% 04/01/17 1,000 1,035,000
Pennsylvania Hsg. Fin. Agcy. Rev., Sgl.
Fam. Mtg. Prj., Ser. 94B
6.88% 10/01/24 1,500 1,554,375
Pennsylvania Ind. Dev. Auth. Rev.,
Pennvest Prj., Ser. 90
6.00% 09/01/00 775 780,805
Pennsylvania Infra. Investment Auth.
Rev., Pennvest Ln. Pool, Ser. 90B
6.80% 09/01/10 3,985 4,239,044
Pennsylvania Infra. Investment Auth.
Rev., Pennvest Ln. Pool, Ser. 94
6.00% 09/01/06 1,930 2,038,562
Pennsylvania Intergovernmental Coop.
Auth. Spec. Tax Rev., City of
Philadelphia Fdg. Prj., Ser. 92
6.80% 06/15/02 5,505 5,745,844
Pennsylvania Intergovernmental Coop.
Auth. Spec. Tax Rev., City of
Philadelphia Fdg. Prj., Ser. 93
5.88% 06/15/23 5,000 5,162,500
Pennsylvania Intergovernmental Coop.
Auth. Spec. Tax Rev., City of
Philadelphia Fdg. Prj., Ser. 94
7.00% 06/15/04 500 540,000
Pennsylvania Intergovernmental Coop.
Auth. Spec. Tax Rev., City of
Philadelphia Fdg. Prj., Ser. 96
5.60% 06/15/12 1,000 1,015,000
5.50% 06/15/16 5,000 4,956,250
Pennsylvania St. Fin. Auth. Cmnty. Coll.
Rev., Beaver Cnty Coll. Prj., Ser. 94A
5.88% 12/01/07 825 860,063
Pennsylvania St. Hgr. Ed. Fac. Auth.
Coll. & Univ. Rev., Bryn Mawr Coll.
Prj., Ser. 95
6.00% 12/01/15 1,200 1,239,000
Pennsylvania St. Hgr. Ed. Fac. Auth.
Coll. & Univ. Rev., Drexel Univ. Prj.,
Ser. 90
7.00% 05/01/00 50 50,106
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
18
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
PENNSYLVANIA TAX-FREE INCOME PORTFOLIO (CONTINUED)
PAR
AS OF MARCH 31, 2000 (UNAUDITED) MATURITY (000) VALUE
-------- ------- ------------
MUNICIPAL BONDS (CONTINUED)
PENNSYLVANIA (CONTINUED)
Pennsylvania St. Hgr. Ed. Fac. Auth.
Coll. & Univ. Rev., Philadelphia Coll.
of Textiles & Science Prj., Ser. 93
5.35% 02/01/06 $ 1,050 $ 1,071,000
Pennsylvania St. Hgr. Ed. Fac. Auth.
Coll. & Univ. Rev., Ser. 91
7.00% 10/01/01 1,385 1,433,475
Pennsylvania St. Hgr. Ed. Fac. Auth.
Coll. & Univ. Rev., Ser. 91E
6.90% 06/15/01 1,000 1,027,500
Pennsylvania St. Hgr. Ed. Fac. Auth.
Coll. & Univ. Rev., Ser. 93
7.50% 06/15/01 1,670 1,726,363
5.25% 02/01/05 1,000 1,013,750
Pennsylvania St. Hgr. Ed. Fac. Auth.
Coll. & Univ. Rev, Ser. 97G
5.13% 06/15/24 10,355 9,306,556
Pennsylvania St. Hgr. Ed. Fac. Auth.
Coll. & Univ. Rev., Ser. 00
5.88% 12/15/25 13,400 13,500,500
Pennsylvania St. Hgr. Ed. Fac. Auth.
Coll. & Univ. Rev., Thomas Jefferson
Univ. Prj., Ser. 90
7.55% 11/01/00 750 779,108
Pennsylvania St. Hgr. Ed. Fac. Auth.
Coll. & Univ. Rev., Trustees Univ.
Prj., Ser. 98
5.50% 07/15/38 19,000 17,883,750
Pennsylvania St. Hgr. Ed. Fac. Auth.
Hlth. Svcs. Rev., Univ. of Pennsylvania
Hlth. Svcs. Prj., Ser. 96A
5.75% 01/01/17 17,250 15,286,260
Pennsylvania St. Ind. Dev. Auth. Rev.,
Econ. Dev. Prj., Ser. 94
7.00% 01/01/06 1,000 1,095,000
6.00% 01/01/12 4,000 4,145,000
Pennsylvania St. Infra. Investment Auth.
Rev., Ser. 90
6.45% 09/01/04 1,600 1,688,000
Pennsylvania St. Pub. Sch. Bldg. Auth.
Rev., Mid Vy. Sch. Dist. Prj.,
Ser. 92D
6.25% 01/01/07 500 525,625
Pennsylvania St. Third G.O., Ser. 91A
6.50% 11/15/01 3,250 3,392,188
6.50% 11/15/11 1,500 1,565,625
Pennsylvania St. Tpke. Comm. Rev.,
Ser. 86G
7.00% 06/01/00 500 519,150
Pennsylvania St. Tpke. Comm. Rev.,
Ser. 86J
7.20% 06/01/00 2,275 2,411,500
Pennsylvania St. Tpke. Comm. Rev.,
Ser. 91L
6.50% 06/01/04 1,445 1,500,994
Pennsylvania St. Tpke. Comm. Rev.,
Ser. 92P
5.80% 12/01/06 1,500 1,545,000
6.00% 12/01/09 500 521,875
Pennsylvania St. Tpke. Comm. Rev.,
Ser. 94A
5.88% 12/01/08 500 529,375
Pennsylvania St. Tpke. Comm. Rev.,
Ser. 98A
4.75% 12/01/27 6,000 5,100,000
PAR
MATURITY (000) VALUE
-------- ------- ------------
MUNICIPAL BONDS (CONTINUED)
PENNSYLVANIA (CONTINUED)
Pennsylvania St. Univ. Rev., Ser. 91
6.75% 07/01/01 $ 1,000 $ 1,045,000
7.00% 07/01/01 1,950 2,042,625
Pennsylvania St. Univ. Rev., Ser. 94
5.00% 05/01/03 1,000 1,006,250
Pennsylvania Trafford Dist. G.O., Ser. 94
5.85% 05/01/04 1,000 1,036,250
Pennsylvania Unltd. Tax G.O., Ser. 94A
6.50% 11/01/05 250 260,938
Philadelphia Arpt. Rev., Ser. 97A
6.00% 06/15/06 6,030 6,361,650
5.25% 06/15/15 5,770 5,604,113
Philadelphia Gas Works Rev., Ser. 93
5.50% 07/01/04 5,000 5,125,000
Philadelphia Gas Works Rev., Ser. 94
5.25% 08/01/24 2,900 2,671,625
Philadelphia Hosp. & Hgr. Ed. Fac. Auth.
Hosp. Rev., Children's Hosp. of
Philadelphia Prj., Ser. 93
5.00% 02/15/21 2,250 1,996,875
Philadelphia Hosp. & Hgr. Ed. Fac. Auth.
Hosp. Rev., Children's Seashore
House Prj., Ser. 92A
7.00% 08/15/03 1,000 1,038,750
Philadelphia Hosp. & Hgr. Ed. Fac. Auth.
Hosp. Rev., Children's Seashore House
Prj., Ser. 92B
7.00% 08/15/12 1,575 1,634,063
Philadelphia Hosp. & Hgr. Ed. Fac. Auth.
Hosp. Rev., Frankford Hosp. Prj.,
Ser. 93A
6.00% 06/01/14 500 524,375
Philadelphia Hosp. & Hgr. Ed. Fac. Auth.
Hosp. Rev., Frankford Hosp. Prj.,
Ser. 95
5.50% 01/01/07 1,235 1,265,875
5.60% 01/01/08 1,245 1,282,350
Philadelphia Hosp. & Hgr. Ed. Fac. Auth.
Hosp. Rev., Magee Rehab. Hosp. Prj.,
Ser. 91
7.00% 12/01/05 1,000 1,035,000
Philadelphia Hosp. & Hgr. Ed. Fac. Auth.
Hosp. Rev., Nazareth Hosp. Franciscan
Prj., Ser. 96B
5.00% 07/01/10 4,590 4,480,988
Philadelphia Hosp. & Hgr. Ed. Fac. Auth.
Hosp. Rev., Presbyterian Med. Ctr.
Prj., Ser. 93
5.60% 12/01/00 595 600,873
6.10% 12/01/03 1,000 1,043,750
Philadelphia Ind. Dev. Auth. Rev.,
City of Philadelphia Prj., Ser. 96A
5.40% 02/15/17 2,500 2,437,500
Philadelphia Ind. Dev. Auth. Rev.,
Girard Estate Coal Mining Prj.,
Ser. 96
5.38% 11/15/12 3,945 3,954,863
5.50% 11/15/16 1,650 1,652,063
Philadelphia Ind. Dev. Auth. Rev., Inst.
Cancer Research Prj., Ser. 90B
7.25% 07/01/03 2,515 2,576,819
Philadelphia Ind. Dev. Auth. Rev., Nat.
Bd. of Med. Examiners Prj., Ser. 92
6.75% 05/01/12 500 528,750
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
19
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
PENNSYLVANIA TAX-FREE INCOME PORTFOLIO (CONTINUED)
PAR
AS OF MARCH 31, 2000 (UNAUDITED) MATURITY (000) VALUE
-------- ------- ------------
MUNICIPAL BONDS (CONTINUED)
PENNSYLVANIA (CONTINUED)
Philadelphia Ind. Dev. Auth. Rev.,
PGH Dev. Corp. Prj., Ser. 93
5.50% 07/01/10 $ 1,035 $ 1,042,763
Philadelphia Mun. Auth. Rev., Ref.
Ser. 93D
6.13% 07/15/08 2,650 2,802,375
Philadelphia Mun. Auth. Rev.,
Criminal Justice Prj., Ser. 88
7.80% 04/01/18 3,765 3,765,000
Philadelphia Mun. Auth. Rev., Justice
Lease Prj., Ser. 91B
7.13% 11/15/01 1,055 1,115,663
7.10% 11/15/11 1,200 1,269,000
Philadelphia Mun. Auth. Rev., Ser. 93A
5.20% 11/15/04 4,000 4,060,000
5.63% 11/15/14 2,600 2,619,500
Philadelphia Pk. Auth. Rev., Arpt. Pk.
Prj., Ser. 97
5.75% 09/01/06 3,000 3,127,500
Philadelphia Pk. Auth. Rev., Arpt. Pk.
Prj., Ser. 99
5.63% 09/01/18 4,430 4,396,775
Philadelphia Pk. Auth. Rev., Ser. 97
5.40% 09/01/15 5,900 5,818,875
Philadelphia Pk. Auth. Rev., Ser. 99
5.63% 09/01/13 1,390 1,419,538
5.63% 09/01/17 4,495 4,495,000
Philadelphia Regl. Port Auth. Lease
Rev., Ser. 90
6.85% 08/01/00 500 504,375
Philadelphia Regl. Port Auth. Lease
Rev., Ser. 93
6.20% 09/01/20 2,000 2,065,000
Philadelphia Sch. Dist. G.O., Ser. 94A
5.80% 07/01/08 1,910 1,993,563
5.85% 07/01/09 1,710 1,791,225
Philadelphia Sch. Dist. G.O., Ser. 95A
6.25% 09/01/04 5,985 6,321,656
Philadelphia Sch. Dist. G.O., Ser. 95B
5.50% 09/01/10 2,500 2,609,375
5.50% 09/01/18 4,890 4,792,200
Philadelphia Sch. Dist. Unltd. Tax G.O.,
Ser. 91B
7.00% 07/01/01 2,000 2,077,500
Philadelphia Sch. Dist. Unltd. Tax G.O.,
Ser. 92A
6.40% 05/15/02 2,000 2,077,500
Philadelphia Sch. Dist. Unltd. Tax G.O.,
Ser. 95A
6.25% 09/01/06 2,255 2,412,850
Philadelphia Sch. Dist. Unltd. Tax G.O.,
Ser. 95B
5.50% 09/01/11 2,000 2,087,500
Philadelphia Sch. Dist. Unltd. Tax G.O.,
Ser. 99C
5.75% 03/01/29 11,000 10,917,500
Philadelphia Unltd. Tax G.O.,
Prerefunded Ser. 94B
5.90% 11/15/09 1,620 1,715,175
Philadelphia Unltd. Tax G.O., Ser. 93A
5.25% 05/15/04 300 304,500
Philadelphia Unltd. Tax G.O., Ser. 95
6.00% 05/15/04 2,345 2,444,663
6.00% 05/15/05 2,485 2,606,144
5.00% 05/15/20 4,000 3,630,000
PAR
MATURITY (000) VALUE
-------- ------- ------------
MUNICIPAL BONDS (CONTINUED)
PENNSYLVANIA (CONTINUED)
Philadelphia Unltd. Tax G.O.,
Unrefunded Ser. 94
5.90% 11/15/09 $ 980 $ 1,025,325
Philadelphia Wtr. & Swr. Rev., Ser. 92
7.35% 09/01/04 7,775 8,377,563
Philadelphia Wtr. & Waste Wtr. Rev.,
Prerefunded Ser. 93
5.75% 06/15/13 1,595 1,666,775
Philadelphia Wtr. & Waste Wtr. Rev.,
Ser. 93
5.50% 06/15/07 6,780 6,974,925
5.00% 06/15/16 3,700 3,459,500
Philadelphia Wtr. & Waste Wtr. Rev.,
Ser. 97A
5.00% 08/01/22 15,155 13,582,669
5.13% 08/01/27 20,645 18,528,888
Philadelphia Wtr. & Waste Wtr. Rev.,
Unrefunded Ser. 93
5.75% 06/15/13 3,165 3,215,481
Pittsburgh & Allegheny Cnty. Rev.,
Ser. 91B
6.00% 07/15/01 500 509,375
Pittsburgh Pub. Pk. Auth. Rev., Ser 92A
5.88% 12/01/12 1,500 1,539,375
Pittsburgh Sch. Dist. G.O., Ser 97
5.50% 09/01/09 4,500 4,578,750
Pittsburgh Unltd. Tax G.O., Ser. 95A
5.20% 03/01/10 3,000 3,003,750
Pittsburgh Unltd. Tax G.O., Ser. 96A
6.00% 03/01/05 8,225 8,615,688
Pittsburgh Wtr. & Swr. Rev., Ser. 91A
6.60% 09/01/01 1,100 1,150,875
Pittsburgh Wtr. & Swr. Rev., Ser. 98A
5.00% 09/01/21 3,000 2,670,000
Pleasant Vy. Sch. Dist. G.O., Ser. 95
5.60% 11/15/14 1,385 1,393,656
Pottstown Borough Auth. Swr. Rev.,
Ser. 96
5.50% 11/01/16 1,360 1,348,100
Punxsutawney Area Sch. Dist. G.O.,
Ser. 95
5.80% 04/15/05 1,000 1,040,000
Purchase Line Sch. Dist. G.O., Ser. 91
6.95% 01/15/01 1,000 1,020,740
Reading G.O., Ser. 92
6.50% 11/15/02 1,000 1,042,500
Ridley Park Hosp. Auth. Rev., Taylor
Hosp. Prj., Ser. 90A
8.63% 12/01/00 3,185 3,337,944
Ringgold Sch. Dist. Rev., Ser. 95
6.20% 02/01/19 500 527,500
Riverside Beaver Cnty. Sch. Dist. Rev.,
Ser. 96
5.50% 02/15/17 3,725 3,832,094
Rose Tree Media Sch. Dist. G.O.,
Ser. 92A
6.55% 03/15/07 945 970,988
Saint Mary Hosp. Auth. Rev., Langhorne Hosp.
Franciscan Hlth. Prj., Ser. 89C
7.00% 07/01/03 750 761,483
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
20
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
PENNSYLVANIA TAX-FREE INCOME PORTFOLIO (CONTINUED)
PAR
AS OF MARCH 31, 2000 (UNAUDITED) MATURITY (000) VALUE
-------- ------- ------------
MUNICIPAL BONDS (CONTINUED)
PENNSYLVANIA (CONTINUED)
Sayre Hlth. Care Fac. Auth. Rev.,
Guthrie Prj., Ser. 91A
7.10% 03/01/17 $ 3,000 $ 3,122,910
Sayre Hlth. Care Fac. Auth. Rev., Tioga
Nursing Fac. Prj., Ser. 89A
7.25% 10/01/10 1,500 1,533,015
Sayre Hlth. Care Fac. Auth. Rev., VHA
Cap. Fin. Prj., Ser. 85
7.15% 12/01/10 1,400 1,480,500
Sayre Hlth. Care Fac. Auth. Var. Hosp.
Rev., Ser. 85H
7.63% 06/01/00 750 775,950
Schuylkill Redev. Auth. Comm. Rev.,
Ser. 91A
7.13% 06/01/13 2,000 2,095,000
Scranton Lackawanna Hlth. & Welfare
Auth. Rev., Hosp. Cmnty. Med.
Ctr. Prj., Ref. Ser. 98A
5.25% 07/01/04 2,215 2,239,919
Scranton Lackawanna Hlth. & Welfare
Auth. Rev., Univ. of Scranton Prj.,
Ser. 90B
7.25% 06/15/00 1,310 1,343,719
7.40% 06/15/10 1,665 1,708,506
Scranton Lackawanna Hlth. & Welfare
Auth. Rev., Univ. of Scranton Prj.,
Ser. 90C
7.50% 06/15/00 3,860 3,961,595
Seneca Vy. Sch. Dist. G.O., Ser. 98A
5.00% 07/01/14 10,645 10,072,831
Solanco Sch. Dist. G.O., Ser. 94
6.30% 02/15/04 500 525,000
Somerset Cnty. Gen. Auth. Comm. Rev.,
Ser. 91
6.45% 10/15/00 1,000 1,012,390
6.25% 10/15/01 1,750 1,793,750
6.70% 10/15/03 1,500 1,546,875
South Fork Mun. Auth. Hosp. Rev., Good
Samaritan Med. Ctr. Prj., Ser. 96B
5.38% 07/01/16 4,000 3,860,000
Southeastern Pennsylvania Trans. Auth.
Rev., Prerefunded Ser. 95.
5.75% 03/01/08 75 78,375
Southeastern Pennsylvania Trans. Auth.
Rev., Ref. Ser. 95.
5.75% 03/01/08 1,210 1,264,450
Southeastern Pennsylvania Trans. Auth.
Rev., Ser. 94
6.00% 06/01/01 2,000 2,025,000
6.10% 06/01/02 1,000 1,023,750
Southeastern Pennsylvania Trans. Auth.
Rev., Ser. 95
5.88% 03/01/09 1,230 1,291,500
Southeastern Pennsylvania Trans. Auth.
Rev., Ser. 97
5.75% 03/01/06 2,900 3,016,000
5.75% 03/01/07 1,700 1,772,250
5.55% 03/01/13 3,500 3,539,375
5.38% 03/01/17 7,020 6,826,950
Springford Sch. Dist. G.O., Ser. 97
5.15% 02/01/18 10,010 9,384,375
PAR
MATURITY (000) VALUE
-------- ------- ------------
MUNICIPAL BONDS (CONTINUED)
PENNSYLVANIA (CONTINUED)
State of Pennsylvania Pub. Sch. Bldg.
Auth. Coll. Rev., Harrisburg Area
Cmnty. Coll. Prj., Ser. 91D
6.80% 04/01/02 $ 1,335 $ 1,388,400
Swarthmore Borough Auth. Coll. Rev.,
Ser. 90
6.95% 09/15/00 500 511,095
7.38% 09/15/00 1,500 1,536,060
Tarentum Gtd. Elec. Rev., Ser. 93
5.88% 09/01/18 750 775,313
Unionville Chadds Ford Sch. Dist. G.O.,
Ser. 91
6.75% 06/01/06 1,000 1,021,250
Unionville Chadds Ford Sch. Dist. G.O.,
Ser. 93
5.60% 06/01/03 1,000 1,022,500
Upper St. Clair Twp. Sch. Bldg. Auth.
Rev., Ser. 78
6.50% 02/15/04 325 330,281
Warren Cnty. G.O., Ser. 91
7.15% 07/01/01 1,200 1,237,500
Washington Cnty. Auth. Lease Rev.,
Ser. 85C
7.30% 06/15/00 500 517,930
Washington Cnty. Auth. Rev., Ser. 99
6.15% 12/01/29 8,250 8,600,625
Washington Cnty. Ind. Dev. Auth. Poll.
Ctrl. Rev., West Penn Pwr. Co. Prj.,
Ser. 95G
6.05% 04/01/14 2,500 2,584,375
West Chester Area Sch. Dist. G.O.,
Ser. 91A
6.70% 01/15/01 1,000 1,018,460
West Chester Area Sch. Dist. Unltd.
Tax G.O., Ser. 91A
6.70% 01/01/01 1,000 1,018,460
West Goshen Swr. Auth. Rev., Ser. 91
7.00% 09/01/01 1,500 1,548,750
West Jefferson Hills Sch. Dist. Unltd.
Tax G.O., Ser. 91A
6.70% 08/01/01 1,250 1,284,375
West Mifflin Sanit. Swr. Mun. Auth.
Swr. Rev., Ser. 96
5.70% 08/01/15 1,445 1,504,606
West Whiteland Twp. Unltd. Tax G.O.,
Ser. 92
6.75% 12/01/02 1,100 1,153,625
West York Area Sch. Dist. G.O., Ser. 91
6.80% 03/01/01 900 920,529
Westmoreland Cnty. G.O., Ser. 92
6.55% 08/01/01 750 769,688
Westmoreland Cnty. Ind. Dev. Auth.
Rev., Westmoreland Hlth. Sys.
Prj., Ser. 93A
6.00% 07/01/11 200 206,500
Westmoreland Cnty. Mun. Auth. Rev.,
Ser. 87K
2.00% 07/01/03 1,000 908,750
Westview Mun. Auth. Spec. Oblig. Rev.,
Ser. 85
9.25% 11/15/05 750 867,188
Williamsport Area Sch. Dist. Auth. Rev.,
Ser. 78
6.00% 03/01/07 125 126,250
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
21
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
PENNSYLVANIA TAX-FREE INCOME PORTFOLIO (CONCLUDED)
PAR
AS OF MARCH 31, 2000 (UNAUDITED) MATURITY (000) VALUE
-------- ------- ------------
MUNICIPAL BONDS (CONTINUED)
PENNSYLVANIA (CONTINUED)
Wilson Sch. Dist. G.O., Ser. 97
5.50% 05/15/14 $ 580 $ 598,125
5.50% 05/15/17 7,435 7,667,344
York Cnty. Hosp. Auth. Rev., York Hosp.
Prj., Ser. 91
7.00% 01/01/01 285 296,249
7.10% 01/01/01 355 369,267
------------
920,824,652
------------
PUERTO RICO -- 2.2%
Puerto Rico Cmwlth. G.O., Ser. 00
5.75% 07/01/26 5,000 5,025,000
Puerto Rico Elec. Pwr. Auth. Rev.,
Ser. 89N
6.80% 07/01/00 1,000 1,006,460
Puerto Rico Elec. Pwr. Auth. Rev.,
Ser. 91P
6.75% 07/01/03 250 260,625
Puerto Rico Elec. Pwr. Auth. Rev.,
Ser. 95X
6.00% 07/01/12 5,000 5,206,250
Puerto Rico Mun. Fin. Agy. Rev.,
Ser. 99
5.50% 08/01/18 6,500 6,508,125
Puerto Rico Pub. Bldg. Auth. Pub.
Ed. & Hlth. Fac. Rev., Ser. 93M
4.90% 07/01/00 3,000 3,004,950
------------
21,011,410
------------
VIRGIN ISLANDS -- 0.2%
Virgin Islands Pub. Fin. Auth. Rev.,
Gross Receipts Tax Ln. Notes,
Ser. 99A
6.13% 10/01/29 1,805 1,818,538
------------
TOTAL MUNICIPAL BONDS
(Cost $942,283,752) 943,654,600
-------------
SHARES
-------
CUMULATIVE PREFERRED STOCK -- 0.8%
Charter Mac Equity Issue Tr. 144A
6.63%
(Cost $8,000,000) 80,000 7,824,960
------------
SHORT TERM INVESTMENTS -- 1.4%
Smith Barney Tax-Free Money
Market Fund 14,021,939 14,021,939
Vanguard Tax-Exempt Money
Market Fund 100,000 100,000
------------
TOTAL SHORT TERM INVESTMENTS
(Cost $14,121,939) 14,121,939
------------
TOTAL INVESTMENTS IN SECURITIES 100.1%
(Cost $964,405,691*) 965,601,499
LIABILITIES IN EXCESS OF
OTHER ASSETS (0.1%) (1,221,581)
------- ------------
NET ASSETS (Applicable to 86,151,659
Institutional shares, 1,388,748 Service
shares, 2,804,772 Investor A shares,
2,128,792 Investor B shares and 65,418
Investor C shares outstanding) 100.0% $964,379,918
===== ============
NET ASSET VALUE AND REDEMPTION
PRICE PER INSTITUTIONAL, SERVICE
AND INVESTOR A SHARE
($941,687,344 / 90,345,179) $10.42
======
OFFERING PRICE PER INSTITUTIONAL
AND SERVICE SHARE $10.42
======
MAXIMUM OFFERING PRICE PER INVESTOR A SHARE
($10.42 / 0.960) $10.85
======
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
(SUBJECT TO A MAXIMUM CONTINGENT
DEFERRED SALES CHARGE OF 4.5%)
PER INVESTOR B SHARE
($22,014,012 / 2,128,792) $10.34
======
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
(SUBJECT TO A MAXIMUM CONTINGENT
DEFERRED SALES CHARGE OF 1.0%)
PER INVESTOR C SHARE
($678,562 / 65,418) $10.37
======
---------------
* Also cost for Federal income tax purposes. The gross unrealized appreciation
(depreciation) on a tax basis is as follows:
Gross unrealized appreciation $ 18,891,962
Gross unrealized depreciation (17,696,154)
------------
$ 1,195,808
============
** Rates shown are the rates as of March 31, 2000.
+ The rate shown is the effective yield on the zero coupon bonds.
++ Principal amount of securities pledged as collateral of $2,500,000 on 225
short U.S. Treasury Bond future contracts expiring June 2000. The value of
such contracts on March 31, 2000 was $21,979,688, thereby resulting in an
unrealized loss of $323,438.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
22
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
NEW JERSEY TAX-FREE INCOME PORTFOLIO
PAR
AS OF MARCH 31, 2000 (UNAUDITED) MATURITY (000) VALUE
-------- ------- ------------
MUNICIPAL BONDS -- 95.1%
NEW JERSEY -- 88.9%
Atlantic City COP's, Pub. Fac. Lease
Agreement Prj., Ser. 91
7.30% 03/01/04 $ 1,535 $ 1,665,475
Bergen Cnty. G.O., Ser. 90
6.25% 11/15/00 645 653,629
Bergen Cnty. Util. Auth. Rev., Ser. 92A
6.00% 06/15/01 1,590 1,617,825
Brigantine G.O., Ser. 92
6.25% 08/01/03 730 761,937
Camden Cnty. Imp. Auth. Lease Rev.,
Ser. 92
6.00% 12/01/02 1,000 1,038,750
Cherry Hill Twp. G.O., Ser. 92
6.00% 06/01/06 500 520,000
Delaware River Port Auth.
Pennsylvania & New Jersey Rev.,
Ser. 00
9.53% 01/01/26 5,000 4,956,250
Dover Twp. G.O., Ser. 92
6.00% 10/15/03 1,000 1,042,500
6.10% 10/15/04 540 567,000
Edison Twp. G.O., Ser. 91
6.50% 06/01/04 930 985,800
Essex Cnty. Imp. Auth. Lease. Rev.,
Jail & Yth. Hsg. Prj., Ser. 94
6.90% 12/01/14 500 550,000
Essex Cnty. Imp. Auth. Lease. Rev.,
Ser. 00
6.00% 10/01/25 4,000 4,085,000
Essex Cnty. Util. Auth. Solid Waste Rev.,
Ser. 96
5.75% 04/01/05 2,000 2,075,000
Gloucester Cnty. Srs. Hsg. Dev. Corp.
Rev., Sect. 8 Colonial Pk. Prj.,
Ser. 94A
6.20% 09/15/11 1,250 1,268,750
Hamilton Twp. Atlantic City Sch. Dist.
G.O., Ser. 92
5.88% 12/15/07 860 894,400
Jersey City G.O., Ser. 96A
6.00% 10/01/05 1,655 1,737,750
Knowlton Twp. Bd. of Ed. G.O., Ser. 91
6.60% 08/15/11 169 190,125
Lacey Twp. Wtr. Auth. Rev., Ser. 93
6.00% 12/01/12 1,000 1,057,500
Mercer Cnty. Imp. Auth. Rev., Hamilton
Bd. of Ed. Prj., Ser. 92
5.90% 06/01/03 500 515,625
Middlesex Cnty. Imp. Auth. Rev., Ser. 96
5.80% 09/15/13 1,725 1,789,687
Monmouth Cnty. G.O., Ser. 90
6.90% 08/01/04 430 442,319
Monmouth Cnty. Imp. Auth. Corr. Fac.
Rev., Ser. 91
6.30% 08/01/01 1,000 1,041,250
Morristown Cnty. G.O., Ser. 95
6.40% 08/01/14 500 531,875
New Jersey Econ. Dev. Auth. Lease
Rev., Ser. 00
6.00% 06/01/21 4,780 4,905,475
New Jersey Econ. Dev. Auth. Mkt.
Trans. Fac. Rev., Ser. 94A
5.80% 07/01/08 1,290 1,351,275
5.88% 07/01/11 4,000 4,185,000
PAR
MATURITY (000) VALUE
-------- ------- ------------
MUNICIPAL BONDS (CONTINUED)
NEW JERSEY (CONTINUED)
New Jersey Econ. Dev. Auth. Rev.,
Performing Arts Ctr. Prj., Ser. 96C
5.75% 06/15/08 $ 4,440 $ 4,684,200
New Jersey Econ. Dev. Auth. Rev.,
Ser. 94
5.80% 07/01/07 1,500 1,569,375
New Jersey Econ. Dev. Auth. Rev.,
Ser. 99
6.20% 12/01/24 3,000 3,011,250
New Jersey Econ. Dev. Auth. Rev.,
St. Barnabas Med. Ctr. Prj., Ser. 97A
5.63%+ 07/01/23 4,000 1,020,000
New Jersey Econ. Dev. Auth. Rev.,
Trenton OFC Complex Prj., Ser. 89
6.63% 06/15/01 1,050 1,075,777
New Jersey Econ. Dev. Auth. Rev.,
W.Y. Hldg. Co. Prj., Ser. 95
5.95% 06/01/05 865 870,406
New Jersey Ed. Auth. Rev., Rowan
Coll. Prj., Ser. 96
5.88%++ 07/01/16 2,185 2,239,625
New Jersey Hlth. Care Fac. FHA Ins.
Mtg. Rev., Cathedral Hlth. Ctr. Prj.,
Ser. 90A
6.95% 02/15/01 640 654,413
New Jersey Hlth. Care Fac. Fin. Auth.
Rev., Cathedral Hlth. Ctr. Prj., Ser. 90
7.25% 02/15/21 1,000 1,044,320
New Jersey Hlth. Care Fac. Fin. Auth.
Rev., Robert Wood Johnson Univ.
Prj., Ser. 96C
5.75%++ 07/01/07 2,595 2,702,044
New Jersey Hlth. Care Fac. Fin. Auth.
Rev., Society of The Vy. Hosp. Prj.,
Ser. 89C
6.60% 07/01/00 430 432,472
New Jersey Sports & Expo. Auth. Rev.,
Ser. 92
6.50% 03/01/07 600 630,750
New Jersey Sports & Expo. Auth. Rev.,
Ser. 00A
5.50% 03/01/20 5,000 4,906,250
New Jersey St. G.O., Ser. 86B
6.25% 01/15/04 860 901,925
New Jersey St. G.O., Ser. 91
6.25% 08/01/02 1,160 1,209,300
New Jersey St. Hsg. & Mtg. Fin. Agcy.
Rev., Ser. 92A
6.70% 05/01/05 500 523,750
6.95% 11/01/13 750 782,812
New Jersey St. Hsg. & Mtg. Fin. Agcy.
Rev., Ser. 00B
6.25% 11/01/26 2,000 2,035,000
New Jersey St. Hwy. Auth. Rev.,
Garden St. Pkwy. Prj., Ser. 92
6.20% 01/01/10 750 814,688
6.25% 01/01/14 500 515,000
New Jersey St. Tpke. Auth. Rev.,
Ser. 91A
6.40% 01/01/02 860 882,575
6.90% 01/01/14 970 972,086
New Jersey St. Tpke. Auth. Rev.,
Ser. 91C
6.25% 01/01/10 2,210 2,267,725
6.50% 01/01/16 500 541,250
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
23
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
NEW JERSEY TAX-FREE INCOME PORTFOLIO (CONTINUED)
PAR
AS OF MARCH 31, 2000 (UNAUDITED) MATURITY (000) VALUE
-------- ------- ------------
MUNICIPAL BONDS (CONTINUED)
NEW JERSEY (CONTINUED)
New Jersey St. Tpke. Auth. Rev.,
Ser. 92A
5.80% 01/01/02 $ 1,260 $ 1,282,050
New Jersey St. Trans. Tr. Fd.
Admin. Grant Rev., Ser. 00A
6.13% 09/15/15 2,500 2,621,875
New Jersey St. Trans. Tr. Fd. Auth.
Trans. Sys. Rev., Ser. 00A
6.00% 06/15/19 5,000 5,143,750
New Jersey St. Waste Wtr. Trtmnt. Tr.
Rev., Ser. 90
6.88% 06/15/00 395 402,928
6.88% 06/15/06 35 35,662
New Jersey St. Waste Wtr. Trtmnt. Tr.
Rev., Ser. 96C
6.25% 05/15/03 2,500 2,603,125
6.25% 05/15/06 5,955 6,349,519
New Jersey Trans. Auth. Rev., Ser. 94A
6.25% 12/15/03 1,000 1,048,750
New Jersey Trans. Tr. Fd. Auth. Rev.,
Ser. 99A
5.75% 06/15/20 2,820 2,883,450
Newark Bd. of Ed. G.O., Ser. 94
5.88% 12/15/13 1,000 1,032,500
North Bergen Twp. G.O., Ser. 92
5.90% 08/15/01 500 509,375
North Jersey Dist. Wtr. Sply. Rev., Ser. 93
5.50% 07/01/03 860 879,350
Northwest Bergen Cnty. Rev., Ser. 92
5.90% 07/15/06 755 788,975
Northwest Bergen Cnty. Util. Auth. Sys.
Rev., Ser. 92
6.00% 07/15/07 860 904,075
Ocean Cnty. G.O., Ser. 89
6.75% 07/13/03 1,030 1,091,800
Ocean Cnty. G.O., Ser. 90
6.80% 06/15/00 430 432,210
Ocean Cnty. G.O., Ser. 91
6.38% 04/15/03 430 449,350
Ocean Cnty. G.O., Ser. 91A
6.25% 10/01/04 430 448,275
Ocean Cnty. Util. Auth. Rev., Ser. 95A
6.30% 01/01/12 1,005 1,070,325
Ocean Cnty. Util. Auth. Waste Wtr. Rev.,
Ser. 00
5.00% 01/01/13 500 486,250
5.00% 01/01/18 1,350 1,252,125
Ocean Twp. Swr. Auth. Rev., Ser. 92
6.00% 12/01/08 1,705 1,785,988
Passaic Vy. Wtr. Sply. Comm. Rev.,
Ser. 92A
5.95% 12/15/02 500 516,250
Point Pleasant G.O., Ser. 95
5.70% 12/01/03 500 516,875
Port Auth. New York & New Jersey Rev.,
Ser. 92
6.10% 10/15/02 645 666,769
Port Auth. New York & New Jersey Rev.,
Ser. 95
5.75% 11/01/09 3,275 3,381,438
Port Auth. New York & New Jersey
Spec. Oblig. Rev., JFK Intl. Arpt. Term.
Prj., Ser. 97
5.75% 12/01/22 2,105 2,081,319
PAR
MATURITY (000) VALUE
-------- ------- ------------
MUNICIPAL BONDS (CONTINUED)
NEW JERSEY (CONTINUED)
Port Auth. New York & New Jersey
Spec. Oblig. Rev., JFK Intl. Arpt. Term.
Prj., Ser. 97-6
6.25% 12/01/09 $7,000 $7,577,500
Rutgers Univ. Rev., Ser. 92A
6.10% 05/01/03 1,000 1,037,500
South Jersey Port Corp. Rev., Marine
Term. Prj., Ser. 93G
5.60% 01/01/23 3,000 2,928,750
Warren Cnty. Poll. Ctrl. Fin. Auth. Rev.,
Ser. 92B
5.70% 12/01/03 500 500,000
Weehawken Twp. G.O., Ser. 92
6.15% 07/01/04 350 362,250
West Windsor Plainsboro Twp.
Bd. of Ed. G.O., Ser. 93
5.80% 03/15/06 1,000 1,036,250
Winslow Twp. Unltd. Tax G.O., Ser. 92
6.40% 10/01/05 870 917,850
Woodbridge Twp. G.O., Ser. 90
6.65% 08/01/00 475 483,469
Woodbridge Twp. G.O., Ser. 92
6.05% 08/15/05 500 523,125
6.25% 08/15/08 1,000 1,051,250
-------------
133,799,492
-------------
NEW YORK -- 0.2%
New York Energy Research & Dev.
Auth. Rev., Niagara Mohawk Pwr.
Prj., Ser. 85A
4.10%** 07/01/15 250 250,000
-------------
PENNSYLVANIA -- 0.9%
Delaware River Joint Toll Bdg. Rev.,
Ser. 92
6.25% 07/01/12 1,400 1,447,250
-------------
PUERTO RICO -- 4.4%
Puerto Rico Cmwlth. G.O., Ser. 00
5.75% 07/01/26 2,500 2,512,500
Puerto Rico Cmwlth. Infra. Fin. Auth.
Spec. Rites PA 569, Ser. 99
8.19%** 07/01/12 2,000 1,897,500
Puerto Rico Elec. Pwr. Auth. Rev.,
Ser. 94T
5.50% 07/01/20 2,250 2,176,875
-------------
6,586,875
-------------
VIRGIN ISLANDS -- 0.7%
Virgin Islands Wtr. & Pwr. Auth. Elec.
Sys. Rev., Ser. 98
5.30% 07/01/21 1,100 998,250
-------------
TOTAL MUNICIPAL BONDS
(Cost $139,199,114) 143,081,867
-------------
SHARES
-------
CUMULATIVE PREFERRED STOCK -- 5.2%
Charter Mac Equity Issue Tr. 144A
6.63% 40,000 3,912,480
MuniMae TE Bond Subs., LLC 144A
6.88% 40,000 3,971,160
-------------
TOTAL CUMULATIVE PREFERRED STOCK
(Cost $8,000,000) 7,883,640
-------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
24
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
NEW JERSEY TAX-FREE INCOME PORTFOLIO (CONCLUDED)
AS OF MARCH 31, 2000 (UNAUDITED) SHARES VALUE
------- ------------
SHORT TERM INVESTMENTS -- 1.7%
Smith Barney Tax-Free Money
Market Fund
(Cost $2,516,048) 2,516,048 $ 2,516,048
------------
TOTAL INVESTMENTS IN SECURITIES
(Cost $149,715,162*) 102.0% 153,481,555
LIABILITIES IN EXCESS OF
OTHER ASSETS (2.0%) (2,959,184)
------- ------------
NET ASSETS (Applicable to 11,329,532
Institutional shares, 1,884,375 Service
shares, 110,155 Investor A shares and
137,459 Investor B shares outstanding) 100.0% $150,522,371
====== ============
NET ASSET VALUE AND REDEMPTION
PRICE PER INSTITUTIONAL, SERVICE
AND INVESTOR A SHARE
($148,985,500 / 13,324,062) $11.18
======
OFFERING PRICE PER INSTITUTIONAL
AND SERVICE SHARE $11.18
======
MAXIMUM OFFERING PRICE
PER INVESTOR A SHARE
($11.18 / 0.960) $11.65
======
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
(SUBJECT TO A MAXIMUM CONTINGENT
DEFERRED SALES CHARGE OF 4.5%)
PER INVESTOR B SHARE
($1,536,871 / 137,459) $11.18
======
----------------
* Also cost for Federal income tax purposes. The gross unrealized appreciation
(depreciation) on a tax basis is as follows:
Gross unrealized appreciation $4,116,099
Gross unrealized depreciation (349,706)
----------
$3,766,393
==========
** Rates shown are the rates as of March 31, 2000.
+ The rate shown is the effective yield on the zero coupon bonds.
++ Principal amount of securities pledged as collateral of $685,000 on 50 short
U.S. Treasury Bond future contracts expiring June 2000. The value of such
contracts on March 31, 2000 was $4,884,375, thereby resulting in an
unrealized loss of $150,000.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
25
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
OHIO TAX-FREE INCOME PORTFOLIO
PAR
AS OF MARCH 31, 2000 (UNAUDITED) MATURITY (000) VALUE
-------- ------- -----------
MUNICIPAL BONDS -- 93.8%
OHIO -- 86.6%
Akron Swr. Sys. Rev., Ser. 96
5.88% 12/01/16 $ 500 $ 510,000
Brunswick G.O., Ser. 94
6.30% 12/01/05 210 220,762
Butler Cnty. Hosp. Fac. Rev., Middletown
Reg. Hosp. Prj., Ser. 91
6.75% 11/15/03 50 52,500
Butler Cnty. Trans. Imp. Dist. Rev.,
Ser. 97A
6.00% 04/01/11 600 637,500
Cincinnati Wtrwks. Imp. Rev., Ser. 89
6.75% 12/01/01 1,000 1,035,000
Clermont Cnty. Swr. Sys. Rev., Ser. 90
7.25% 12/01/00 1,415 1,471,458
Cleveland Apt. Sys. Rev., Ser. 94B
5.70% 01/01/04 150 156,750
Cleveland COP's, Cleveland Stadium
Prj., Ser. 97
6.00% 11/15/09 1,000 1,071,250
5.25% 11/15/10 2,500 2,521,875
Cleveland Ltd. Tax G.O., Ser. 94
6.25% 11/15/06 1,915 2,056,231
Cleveland Pkg. Fac. Rev., Ser. 96
6.00% 09/15/06 1,275 1,353,094
Cleveland Pub. Pwr. Sys. Rev., First Mtg.
Prj., Ser. 94B
6.10% 11/15/03 1,000 1,046,250
Cleveland Pub. Pwr. Sys. Rev., Ser. 94A
6.30% 11/15/05 4,000 4,300,000
Cleveland Wtrwks. Rev., First Mtg. Prj.,
Ser. 92A
6.50% 01/01/02 500 524,375
Columbus G.O., Mun. Arpt. No. 30-E-U,
Ser. 91
6.15% 04/15/02 1,475 1,497,228
Columbus Mun. Arpt. Auth. Rev.,
Columbus Intl. Arpt. Prj., Ser. 94A
6.00% 01/01/04 150 155,812
Columbus Unltd. Tax G.O., Ser. 86
7.38% 07/01/06 1,000 1,126,250
Columbus Unltd. Tax G.O., Ser 91-2
6.50% 09/15/01 1,105 1,134,006
Columbus Unltd. Tax G.O., Ser. 92B
6.10% 01/01/03 1,000 1,035,000
Columbus Unltd. Tax G.O., Ser 94-2
5.60% 05/15/05 1,000 1,033,750
Columbus Wtrwks. Enlargement No. 44
G.O., Ser. 92
6.00% 05/01/03 500 525,625
Cuyahoga Cnty. G.O., Ser. 91
6.70% 10/01/01 1,000 1,048,750
Cuyahoga Cnty. Hosp. Rev., Meridia
Hlth. Sys. Prj., Ser. 95
6.10% 08/15/04 500 524,375
Cuyahoga Cnty. Hosp. Rev., Univ. Hlth.
Sys. Prj., Ser. 96B
6.00% 01/15/04 3,125 3,214,844
Cuyahoga Cnty. Jail Fac. Unltd. Tax G.O.,
Ser. 91
7.00% 10/01/01 1,000 1,052,500
Cuyahoga Cnty. Port Auth. Rev., Ser. 97
6.00% 03/01/07 485 477,725
PAR
MATURITY (000) VALUE
-------- ------- -----------
MUNICIPAL BONDS (CONTINUED)
OHIO (CONTINUED)
Fairfield City Sch. Dist. G.O., Ser. 94
7.45% 12/01/14 $1,000 $ 1,172,500
Franklin Cnty. G.O., Ser. 91
6.38% 12/01/01 1,635 1,710,619
Greater Cleveland Regl. Trans. Auth.
G.O., Ser. 96
6.25% 12/01/06 2,935 3,158,794
Hamilton Cnty. Elec. Sys. Mtg. Rev.,
Ser. 92A
6.00% 10/15/12 500 518,750
Hamilton Cnty. Swr. Sys. Rev., Ser. 91A
6.40% 06/01/01 325 338,000
6.40% 12/01/04 675 700,312
Kings Sch. Dist. G.O., Ser. 94
7.60% 12/01/05 200 223,750
Loveland City Sch. Dist. G.O., Ser. 92
6.65% 12/01/02 145 154,244
Lucas Cnty. G.O., Ser. 96
6.00% 12/01/03 2,310 2,411,063
6.00% 12/01/05 500 528,125
Marysville Sch. Dist. G.O., Ser. 98
6.00% 12/01/24 1,910 1,945,813
Medina Cnty. Unltd. Tax G.O., Ser. 86
7.25% 12/01/03 50 54,000
Montgomery Cnty. G.O., Ser. 91A
6.75%++ 09/01/01 1,500 1,545,000
North Royalton City Sch. Dist. G.O.,
Ser. 94
6.63% 12/01/06 100 109,750
Northwestern Sch. Dist. Rev., Wayne &
Ashland Cntys. Prj., Ser. 94
7.20% 12/01/10 300 349,500
Ohio Hsg. Fin. Agcy. Rev., Wind River
Prj., Ser. 94A
5.55% 11/01/18 300 290,625
Ohio St. Bldg. Auth. Adult Corr. Fac.
Rev., Ser. 94
5.90% 10/01/09 2,000 2,092,500
Ohio St. Bldg. Auth. Disalle Govt. Ctr.
Rev., Ser. 96A
6.00% 10/01/05 1,000 1,053,750
Ohio St. Bldg. Auth. Rev., Ser. 87
7.05% 04/01/00 1,000 1,020,000
Ohio St. Bldg. Auth. St. Corr. Fac. Rev.,
Ser. 91A
6.50% 10/01/02 4,000 4,170,000
Ohio St. Bldg. Auth. St. Fac. Rev.,
Admin. Bldg. Fd. Prj., Ser. 92A
6.00% 10/01/04 1,020 1,068,450
Ohio St. Bldg. Data Ctr. Rev., Ser. 93A
5.90% 10/01/07 450 474,750
Ohio St. Comm. Sch. Cap. Fac. Rev.,
Ser. 94A
5.75% 06/15/14 1,000 1,036,250
Ohio St. Env. Imp. Rev., USX Corp.
Prj., Ref. Ser. 99
5.63% 05/01/29 1,000 866,250
Ohio St. Hgr. Ed. Fac. Comm. Rev.,
Ohio Dominican Coll. Prj., Ser. 94
6.63% 12/01/04 250 258,125
Ohio St. Nat. Res. Cap. Fac. G.O.,
Ser. 94A
5.40% 10/01/05 1,000 1,022,500
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
OHIO TAX-FREE INCOME PORTFOLIO (CONCLUDED)
PAR
AS OF MARCH 31, 2000 (UNAUDITED) MATURITY (000) VALUE
-------- ------- -----------
MUNICIPAL BONDS (CONTINUED)
OHIO (CONTINUED)
Ohio St. Pub. Fac. Comm. Hgr. Ed.
Fac. Rev., Ser. 92A
5.50% 12/01/03 $2,000 $ 2,052,500
Ohio St. Tpke. Rev., Ser. 96
6.00% 02/15/05 4,400 4,625,500
Ohio St. Wtr. Dev. Auth. Poll. Ctrl. Fac.
Rev., Republic Steel Prj., Ser. 95
6.38% 06/01/07 3,310 3,380,338
Ohio St. Wtr. Dev. Auth. Rev., Pure
Wtr. Prj., Ser. 92
5.75% 06/01/04 1,500 1,554,375
Ohio St. Wtr. Dev. Auth. Rev., Steel-Cargill
North Star Broken Hill Prj., Ser. 95
6.30% 09/01/20 500 507,500
Ohio St. Wtr. Dev. Poll. Ctrl. Fac. Rev.,
Wtr. Ctrl. State Match Prj., Ser. 95
5.70% 06/01/11 1,300 1,339,000
Ohio Unltd. Tax G.O., Ser. 95
6.00% 08/01/05 225 238,781
Olentangy Sch. Dist. G.O., Ser. 95A
6.00% 12/01/08 225 239,344
Scioto Cnty. Rev., Marine Term. Norfolk
Southern Corp. Prj., Ser. 98
5.30%** 08/01/13 3,000 2,771,250
Springboro Wtr. Sys. Rev., Ser. 98
5.00% 12/01/18 2,500 2,287,500
Summit Cnty. Hosp. Rev., Cuyahoga
Falls Gen. Hosp. Prj., Ser. 94
6.65% 07/01/14 200 195,000
Toledo G.O., Ser. 96
6.00% 12/01/06 500 530,625
Univ. of Cincinnati Gen. Rec. Rev.,
Ser. 91L
6.90% 06/01/07 1,500 1,561,875
Westerville City Sch. Dist. G.O., Ser. 87
6.25% 12/01/05 1,000 1,060,000
Westlake G.O., Ser. 96
6.40% 12/01/08 1,560 1,690,650
-----------
82,090,568
-----------
PUERTO RICO -- 7.2%
Puerto Rico Cmwlth. Hwy. & Trans. Auth.
Rites, Ser. 98
7.39%** 07/01/18 5,000 4,100,000
Puerto Rico Pub. Bldgs. Auth. Rites
PA 577, Ser. 99
8.19%** 07/01/27 4,000 2,705,000
-----------
6,805,000
-----------
TOTAL MUNICIPAL BONDS
(Cost $88,034,857) 88,895,568
-----------
SHARES
-------
CUMULATIVE PREFERRED STOCK -- 4.2%
Charter Mac Equity Issue Tr. 144A
6.63% 20,000 1,956,240
MuniMae TE Bond Subs., LLC 144A
6.88% 20,000 1,985,580
-----------
TOTAL CUMULATIVE PREFERRED STOCK
(Cost $4,000,000) 3,941,820
-----------
VALUE
------- -----------
TOTAL INVESTMENTS INSECURITIES
(Cost $92,034,857*) 98.0% $92,837,388
OTHER ASSETS IN EXCESS
OF LIABILITIES 2.0% 1,896,384
------- ------------
NET ASSETS (Applicable to 8,889,124
Institutional shares, 3,739 Service
shares, 308,788 Investor A shares,
141,547 Investor B shares and 39,495
Investor C shares outstanding) 100.0% $94,733,772
====== ===========
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
PER INSTITUTIONAL SHARE
($89,749,839 / 8,889,124) $10.10
======
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
PER SERVICE SHARE
($37,739 / 3,739) $10.09
======
NET ASSET VALUE AND
REDEMPTION PRICE
PER INVESTOR A SHARE
($3,118,183 / 308,788) $10.10
======
MAXIMUM OFFERING PRICE PER
INVESTOR A SHARE
($10.10 / 0.960) $10.52
======
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
(SUBJECT TO A MAXIMUM CONTINGENT
DEFERRED SALES CHARGE OF 4.5%)
PER INVESTOR B SHARE
($1,429,214 / 141,547) $10.10
======
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
(SUBJECT TO A MAXIMUM CONTINGENT
DEFERRED SALES CHARGE OF 1.0%)
PER INVESTOR C SHARE
($398,797 / 39,495) $10.10
======
----------------------
* Also cost for Federal income tax purposes. The gross unrealized appreciation
(depreciation) on a tax basis is as follows:
Gross unrealized appreciation $ 2,190,853
Gross unrealized depreciation (1,388,322)
-----------
$ 802,531
===========
** Rates shown are the rates as of March 31, 2000.
++ Principal amount of securities pledged as collateral of $500,000 on 60 long
U.S. Treasury Bond future contracts expiring June 2000. The value of such
contracts on March 31, 2000 was $5,861,250, thereby resulting in an
unrealized loss of $78,750.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
27
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
DELAWARE TAX-FREE INCOME PORTFOLIO
PAR
AS OF MARCH 31, 2000 (UNAUDITED) MATURITY (000) VALUE
-------- ------- ------------
MUNICIPAL BONDS -- 94.3%
DELAWARE -- 78.1%
Delaware Econ. Dev. Auth. Rev., Del.
Tech. Pk. Univ. Del. Prj., Ser. 00
6.00% 02/01/21 $1,000 $ 1,027,500
Delaware Econ. Dev. Auth. Rev., Student
Hsg. Univ. Courtyard Prj., Ser. 99A
6.10% 08/01/31 2,500 2,521,875
Delaware River & Bay Auth. Rev.,
Ser. 93
4.60% 01/01/05 1,500 1,466,250
Delaware River & Bay Auth. Rev.,
Ser. 96
6.00% 01/01/05 1,460 1,533,000
6.00% 01/01/06 1,160 1,223,800
Delaware St. Econ. Dev. Auth. Poll. Ctrl.
Rev., Delmarva Pwr. Prj., Ser. 91B
7.15% 07/01/18 500 523,125
Delaware St. Econ. Dev. Auth. Rev.,
First Mtg. Gilpin ACA CBI Prj.,
Ser. 98
5.63% 07/01/19 2,000 1,922,500
5.63% 07/01/25 1,500 1,413,750
Delaware St. Econ. Dev. Auth. Rev.,
United Wtr. Delaware, Inc. Prj.,
Ser. 95
6.20% 06/01/25 2,000 2,065,000
Delaware St. Econ. Dev. Auth. Rev.,
Wtr. Dev. Prj., Ser. 92B
6.45% 12/01/07 1,165 1,250,919
Delaware St. G.O., Ser. 90
6.85% 05/01/00 500 500,985
Delaware St. G.O., Ser. 91A
6.30% 08/15/05 1,730 1,801,362
Delaware St. G.O., Ser. 92A
6.25% 03/01/02 1,400 1,464,750
Delaware St. Hlth. Fac. Auth. Rev.,
Christiana Care Hlth. Svcs. Prj.,
Ser. 98
5.00% 10/01/15 5,000 4,643,750
Delaware St. Hlth. Fac. Auth. Rev., Med.
Ctr. of Delaware Prj., Ser. 92
6.25% 10/01/04 2,185 2,310,637
6.25% 10/01/05 2,175 2,321,813
Delaware St. Hsg. Auth. Rev.,
Multi-Family Mtg. Prj., Ser. 91
7.15% 07/01/14 3,000 3,116,250
Delaware St. Hsg. Auth. Rev.,
Multi-Family Mtg. Prj., Ser. 92C
7.38% 01/01/15 2,000 2,097,500
Delaware St. Realty Transfer Tax Rev.,
Land & Wtr. Consv. Tr. Fd. Prj.,
Ser. 93
5.50% 04/01/02 1,500 1,524,375
5.75% 04/01/03 1,500 1,541,250
Delaware St. Solid Waste Auth. Solid
Waste Sys. Rev., Ser. 90A
6.75% 07/01/00 500 502,685
Delaware St. Solid Waste Auth. Solid
Waste Sys. Rev., Ser. 92
5.80% 07/01/01 1,500 1,520,625
6.00% 07/01/02 2,000 2,045,000
Delaware Trans. Auth. Trans. Sys. Rev.,
Ser. 90
7.10% 07/01/01 2,335 2,393,538
Delaware Trans. Auth. Trans. Sys. Rev.,
Ser. 91
6.00% 07/01/01 3,000 3,056,250
6.35% 07/01/01 500 520,625
PAR
MATURITY (000) VALUE
-------- ------- ------------
MUNICIPAL BONDS (CONTINUED)
DELAWARE (CONTINUED)
Delaware Trans. Auth. Trans. Sys. Rev.,
Ser. 92
5.40% 07/01/03 $1,000 $ 1,017,500
5.63% 07/01/05 2,400 2,463,000
Delaware Trans. Auth. Trans. Sys. Rev.,
Ser. 93
5.10%++ 07/01/04 1,500 1,511,250
5.50% 07/01/08 1,000 1,015,000
Delaware Trans. Auth. Trans. Sys. Rev.,
Ser. 94
6.10% 07/01/07 1,000 1,058,750
Dover Elec. Rev., Ser. 90
7.00% 07/01/00 500 503,100
7.00% 07/01/01 500 512,860
Dover Elec. Rev., Ser. 93
6.00% 07/01/07 500 521,250
New Castle Cnty. G.O., Ser. 91
6.20% 10/15/00 500 505,420
6.25% 10/15/01 1,000 1,025,000
6.30% 10/15/02 1,000 1,038,750
6.50% 10/15/04 1,000 1,043,750
6.50% 10/15/05 1,000 1,043,750
New Castle Cnty. G.O., Ser. 98
5.00% 10/01/18 3,150 2,862,563
Sussex Cnty. G.O., Ser. 93
5.60% 10/15/08 3,000 3,071,250
5.70% 10/15/12 2,000 2,052,500
Univ. of Delaware Hsg. & Dining Sys.
Rev., Ser. 89
7.00% 11/01/00 2,000 2,031,240
Wilmington G.O., Ser. 92A
6.20% 01/01/02 1,000 1,020,000
6.00% 07/01/03 500 510,625
Wilmington G.O., Ser. 92B
6.25% 04/01/02 3,050 3,198,688
Wilmington G.O., Ser. 96A
6.00% 10/01/03 3,525 3,670,406
Wilmington Pk. Auth. Gtd. Pk. Rev.,
Ser. 92A
5.60% 09/15/02 500 511,875
5.80% 09/15/04 1,000 1,042,500
6.00% 09/15/06 500 522,500
------------
80,062,641
------------
PUERTO RICO -- 11.9%
Puerto Rico Cmwlth. G.O., Ser. 97
5.38% 07/01/21 500 485,625
Puerto Rico Cmwlth. Hwy. & Trans.
Auth. Hwy. Rev., Ser. 93W
5.50% 07/01/15 1,000 1,021,250
Puerto Rico Pub. Bldg. Auth. Gtd. Govt.
Fac. Rev., Ser. 95A
6.25% 07/01/10 1,000 1,096,250
Puerto Rico Pub. Fin. Corp. Cmwlth.
Approp. Rev., Ser. 98A
5.38% 06/01/14 50 50,750
Puerto Rico Pub. Fin. Corp. Rites,
Ser. 98
8.14%** 06/01/12 5,000 5,312,500
Puerto Rico Pub. Fin. Corp Rites,
Ser. 99
8.87%** 06/01/14 4,025 4,201,094
------------
12,167,469
------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
28
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
DELAWARE TAX-FREE INCOME PORTFOLIO (CONCLUDED)
PAR
AS OF MARCH 31, 2000 (UNAUDITED) MATURITY (000) VALUE
-------- ------- ------------
MUNICIPAL BONDS (CONTINUED)
VIRGIN ISLANDS -- 4.3%
Virgin Islands Pub. Fin. Auth. Rev.,
Ser. 98
5.50% 10/01/18 $4,500 $ 4,370,625
------------
TOTAL MUNICIPAL BONDS
(Cost $96,486,409) 96,600,735
------------
SHARES
-------
CUMULATIVE PREFERRED STOCK -- 3.8%
Charter Mac Equity Issue Tr. 144A
6.63% 20,000 1,956,240
MuniMae TE Bond Subs., LLC 144A
6.88% 20,000 1,985,500
------------
TOTAL CUMULATIVE PREFERRED STOCK
(Cost $4,000,000) 3,941,740
-------------
TOTAL INVESTMENTS IN SECURITIES
(Cost $100,486,409*) 98.1% 100,542,475
OTHER ASSETS IN EXCESS
OF LIABILITIES 1.9% 1,899,480
----- -----------
NET ASSETS (Applicable to 10,013,443
Institutional shares, 10 Service shares,
404,880 Investor A shares, 208,175
Investor B shares and 69,697 Investor C
shares outstanding) 100.0% $102,441,955
====== ============
VALUE
------------
NET ASSET VALUE AND REDEMPTION
PRICE PER INSTITUTIONAL, SERVICE
AND INVESTOR A SHARE
($99,780,676 / 10,418,333) $9.58
=====
OFFERING PRICE PER INSTITUTIONAL
AND SERVICE SHARE $9.58
=====
MAXIMUM OFFERING PRICE PER
INVESTOR A SHARE
($9.58 / 0.960) $9.98
=====
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
(SUBJECT TO A MAXIMUM CONTINGENT
DEFERRED SALES CHARGE OF 4.5%)
PER INVESTOR B SHARE
($1,993,763 / 208,175) $9.58
=====
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
(SUBJECT TO A MAXIMUM CONTINGENT
DEFERRED SALES CHARGE OF 1.0%)
PER INVESTOR C SHARE
($667,516 / 69,697) $9.58
=====
-----------------------
* Also cost for Federal income tax purposes. The gross unrealized appreciation
(depreciation) on a tax basis is as follows:
Gross unrealized appreciation $ 1,538,049
Gross unrealized depreciation (1,481,983)
-----------
$ 56,066
===========
** Rates shown are the rates as of March 31, 2000.
++ Principal amount of securities pledged as collateral of $500,000 on 90 long
U.S. Treasury Bond future contracts expiring June 2000. The value of such
contracts on March 31, 2000 was $8,791,875, thereby resulting in an
unrealized gain of $118,125.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
29
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
KENTUCKY TAX-FREE INCOME PORTFOLIO
PAR
AS OF MARCH 31, 2000 (UNAUDITED) MATURITY (000) VALUE
-------- ------- ------------
MUNICIPAL BONDS -- 95.0%
KENTUCKY -- 86.7%
Ashland Env. Imp. Rev., Allied
Chemical Corp. Prj., Ser. 78
5.80% 03/01/03 $ 220 $ 221,925
Ashland Poll. Ctrl. Rev., Ashland,
Inc. Prj., Ref. Ser. 99
5.70% 11/01/09 7,500 7,387,500
Boone Cnty. Sch. Dist. Fin. Corp. Sch.
Bldg. Rev., Ser. 91C
6.40% 09/01/01 440 450,450
6.50% 09/01/01 490 516,337
6.60% 09/01/01 550 580,250
Bowling Green Sch. Dist. Fin. Corp.
Rev., Ser. 00
5.75% 01/01/18 1,050 1,069,687
5.75% 01/01/20 1,135 1,142,094
Christian Cnty. Hosp. Rev., Jennie
Stuart Med. Ctr. Prj., Ser. 96A
6.00% 07/01/17 1,000 965,000
Christian Cnty. Hosp. Rev., Jennie
Stuart Med. Ctr. Prj., Ser. 97A
5.25% 07/01/03 1,000 990,000
Danville Multi-City Lease Rev.,
Owensboro Riverpark Prj., Ser. 93B
5.45% 07/03/00 1,800 1,827,000
5.55% 07/03/00 1,000 1,010,000
Fort Thomas Independent Sch. Dist. Fin.
Corp. Sch. Bldg. Rev., Ser. 00
5.25% 04/01/18 1,945 1,869,631
5.25% 04/01/20 2,155 2,041,862
Frankfort Elec. & Wtr. Plant Bd. Rev.,
Ser. 99
5.60% 12/01/19 1,045 1,018,875
Grayson Cnty. Sch. Dist. Fin. Corp. Sch.
Bldg. Rev., Ser. 95B
5.95% 01/01/08 1,290 1,354,500
Hardin Cnty. Sch. Dist. Fin. Corp. Sch.
Bldg. Rev., Ser. 00
5.50% 02/01/16 1,675 1,677,094
5.75% 02/01/20 4,555 4,583,469
Harlan Cnty. Sch. Dist. Fin. Corp. Sch.
Bldg. Rev., Ser. 90
7.25% 12/01/02 160 165,390
Henderson Elec. Light & Pwr. Rev.,
Ser. 73
5.70% 03/01/03 1,640 1,642,788
Hopkins Cnty. G.O., Detention Fac. Prj.,
Ser. 00
5.75% 02/01/20 1,800 1,802,250
Jefferson Cnty. Corp. Rev., Cap. Imp.
Prj., Ser. 93A
5.75% 08/15/04 1,275 1,313,250
5.90% 08/15/05 1,000 1,042,500
6.10% 08/15/07 2,500 2,621,875
Jefferson Cnty. Corp. Rev., Cap. Imp. Prj.,
Ser. 97
5.38% 06/01/22 2,750 2,609,062
Jefferson Cnty. Hlth. Fac. Rev., Jewish
Hosp. Hlth. Svcs., Inc. Prj., Ser. 96
5.65% 01/01/17 3,000 2,977,500
PAR
MATURITY (000) VALUE
-------- ------- ------------
MUNICIPAL BONDS (CONTINUED)
KENTUCKY (CONTINUED)
Jefferson Cnty. Multi-Family Hsg. Rev.,
Taylorsville Rd. Prj., Ser. 93A
5.75% 06/01/23 $3,860 $ 3,917,900
Jefferson Cnty. Multi-Family Hsg. Rev.,
Whipps Mill Prj., Ser. 93A
5.88%** 06/01/04 2,250 2,275,312
Jefferson Cnty. Sch. Dist. Fin. Corp. Sch.
Bldg. Rev., Prerefunded Ser. 92B
6.00% 01/01/03 905 946,856
6.20% 01/01/06 915 960,750
Jefferson Cnty. Sch. Dist. Fin. Corp. Sch.
Bldg. Rev., Ser. 92B
6.20% 01/01/07 2,750 2,873,750
Jefferson Cnty. Sch. Dist. Fin. Corp.
Sch. Bldg. Rev., Unrefunded Ser. 92B
6.00% 01/01/03 1,100 1,135,750
6.20% 01/01/06 1,085 1,133,825
Kenton Cnty. Arpt. Rev., Cincinnati
Northern Kentucky Prj., Ser. 97A
5.75% 03/01/05 1,490 1,536,563
5.85% 03/01/06 1,655 1,719,131
5.95% 03/01/07 1,730 1,807,850
6.30% 03/01/15 1,000 1,051,250
Kenton Cnty. Sch. Dist. Fin. Corp. Sch.
Bldg. Rev., Ser. 97
5.38% 03/01/17 2,800 2,709,000
Kenton Cnty. Wtr. Dist. Wtrwks. Rev.,
Ser. 92
6.38% 02/01/17 1,000 1,041,250
Kentucky Dev. Fin. Auth. Hosp. Rev.,
St. Lukes Hosp. Prj., Ser. 89A
7.25% 10/01/00 120 121,577
Kentucky Hgr. Ed. Stud. Ln. Ins. Rev.,
Ser. 85A
9.25% 06/01/01 1,785 1,831,856
Kentucky Hgr. Ed. Stud. Ln. Ins. Rev.,
Ser. 91C
6.25% 06/01/00 1,075 1,078,171
Kentucky Hgr. Ed. Stud. Ln. Ins. Rev.,
Ser. 95B
6.60% 06/01/02 3,435 3,516,581
Kentucky Hsg. Corp. Hsg. Rev., Ser. 90A
7.40% 01/01/10 735 751,302
Kentucky Hsg. Corp. Hsg. Rev., Ser. 96D
5.80% 07/01/13 3,350 3,366,750
Kentucky Hsg. Corp. Hsg. Rev., Ser. 96E
6.30% 01/01/28 2,000 2,017,500
Kentucky Hsg. Corp. Hsg. Rev., Ser. 97F
5.70% 01/01/28 2,040 1,930,350
Kentucky St. Property & Bldg. Comm.
Econ. Dev. Rev., Prj. 30-Fifth, Ser. 88
7.40% 06/01/00 270 271,312
Kentucky St. Property & Bldg. Comm.
Rev., Prj. 31-Fourth, Ref. Ser. 88
7.40% 06/01/00 375 376,823
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
30
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
KENTUCKY TAX-FREE INCOME PORTFOLIO (CONTINUED)
PAR
AS OF MARCH 31, 2000 (UNAUDITED) MATURITY (000) VALUE
-------- ------- ------------
MUNICIPAL BONDS (CONTINUED)
KENTUCKY (CONTINUED)
Kentucky St. Property & Bldg. Comm.
Rev., Prj. 51, Ref. Ser. 91
6.50% 08/01/01 $ 740 $ 772,375
Kentucky St. Property & Bldg. Comm.
Rev., Prj. 53, Prerefunded Ser. 91
5.75% 10/01/11 4,090 4,233,795
Kentucky St. Property & Bldg. Comm.
Rev., Prj. 53, Unrefunded Ser. 91
5.75% 10/01/11 410 422,813
Kentucky St. Property & Bldg. Comm.
Rev., Prj. 54, Ref. Ser. 92
5.90% 09/01/07 2,750 2,853,125
Kentucky St. Property & Bldg. Comm.
Rev., Prj. 55, Ref. Ser. 93
4.60%++ 09/01/03 3,000 2,981,250
4.90% 09/01/06 2,000 1,985,000
Kentucky St. Property & Bldg. Comm.
Rev., Prj. 65, Ser. 00
5.95% 02/01/17 2,325 2,403,469
Kentucky St. Tpke. Auth. Econ. Dev.
Rev., Revitalization Prj., Ref. Ser. 90
7.13% 05/15/00 1,400 1,425,662
Kentucky St. Tpke. Auth. Econ. Dev.
Rev., Revitalization Prj., Ref. Ser. 92
5.50% 01/01/01 2,040 2,057,462
Kentucky St. Tpke. Auth. Econ. Dev.
Rev., Revitalization Prj., Ref. Ser. 95
6.50% 07/01/08 3,000 3,288,750
Kentucky St. Tpke. Auth. Res. Rec.
Rev., Ser. 79
7.10% 07/01/02 485 496,519
Lexington Ctr. Corp. Mtg. Rev., Ser. 93A
5.20% 10/01/04 1,790 1,801,188
Lexington-Fayette Urban Cnty. Govt.
G.O., Ser 00A
5.75% 02/01/20 1,500 1,509,375
Lexington-Fayette Urban Cnty. Govt. Pub.
Fac. Corp. Mtg. Rev., Ref. Ser. 93
4.50% 02/01/06 2,100 2,042,250
Lexington-Fayette Urban Cnty. Govt.
Rev., Univ. of Kentucky Alumni
Assoc., Inc. Prj., Ser. 94
6.50% 11/01/06 660 714,450
Louisville & Jefferson Cnty. Met. Swr.
Dist. Rev., Ser. 93
5.30% 05/15/10 2,000 2,017,500
Louisville & Jefferson Cnty. Met. Swr. Dist.
Swr. & Drain Sys. Rev., Ser. 97A
6.25% 05/15/26 1,015 1,046,719
Louisville & Jefferson Cnty. Met. Swr. Dist.
Swr. & Drain Sys. Rev., Ser. 99A
5.75% 05/15/33 5,000 4,975,000
Louisville & Jefferson Cnty. Regl. Arpt.
Auth. Arpt. Sys. Rev., Ser. 97A
5.75% 07/01/01 1,000 1,013,750
5.75% 07/01/03 1,070 1,096,750
Louisville & Jefferson Cnty. Regl. Arpt.
Auth. Spec. Fac. Rev., Ser. 99
5.50% 03/01/19 4,285 3,792,225
Louisville Ind. Bldg. Rev., Enterprise
Zone Dist. Prj., Ser. 88
5.75% 04/01/00 1,405 1,405,000
Louisville Pk. Auth. Rev., River City
First Mtg. Prj., Ser. 91
6.50% 06/01/01 265 278,250
PAR
MATURITY (000) VALUE
-------- ------- ------------
MUNICIPAL BONDS (CONTINUED)
KENTUCKY -- (CONTINUED)
McCracken Cnty. Hosp. Rev.,
Mercy Hlth. Sys. Prj., Ser. 94A
6.10% 11/01/04 $ 400 $ 414,500
Muhlenberg Cnty. Ind. Dev. Rev.,
Harsco Corp. Prj., Ser. 87
7.00% 09/01/00 1,000 1,025,000
Owensboro Elec. Light & Pwr.
Rev., Ser. 93B
5.05% 01/01/07 2,500 2,503,125
Univ. of Kentucky Rev., Cons. Edl.
Bldg. Prj., Ser. 92N
6.00% 05/01/08 1,680 1,749,300
6.00% 05/01/10 1,000 1,040,000
Univ. of Kentucky Rev., Cons. Edl.
Bldg. Prj., Ser. 94
4.60% 05/01/07 2,540 2,476,500
Univ. of Kentucky Rev., Ref. Ser. 93A
5.30% 08/01/03 1,765 1,793,681
5.40% 08/01/04 750 766,875
Univ. of Louisville Rev., Cons. Edl.
Bldg. Prj., Ser. 92H
5.88% 05/01/11 1,150 1,187,375
Univ. of Louisville Rev., Cons. Edl.
Bldg. Prj., Ser. 93J
5.00% 05/01/06 2,370 2,367,038
Western Kentucky Univ. Rev.,
Hsg. & Dining Sys. Prj., Ser. 90L
7.10% 12/01/00 350 355,331
Winchester Util. Rev., Ser. 93
5.45% 07/01/10 1,500 1,515,000
------------
143,058,100
------------
PUERTO RICO -- 6.0%
Puerto Rico Cmwlth. G.O., Ser. 00
5.75% 07/01/26 4,500 4,522,500
Puerto Rico Cmwlth. Hwy. & Trans.
Auth. Rev., Ser. 96Y
5.50% 07/01/36 2,250 2,123,438
Puerto Rico Cmwlth. Infra. Fin. Auth.
Spec. Rites PA 569, Ser. 99
8.19%** 07/01/12 1,335 1,266,581
Puerto Rico Elec. Pwr. Auth. Rev.,
Ser. 92R
5.90% 07/01/01 1,000 1,017,500
Puerto Rico Infra. Fin. Auth. Rev.,
Ser. 97A
5.00% 07/01/11 1,000 990,000
------------
9,920,019
------------
VIRGIN ISLANDS -- 2.3%
Virgin Islands Pub. Fin. Auth. Rev.,
Gross Receipts Tax Ln. Notes,
Ser. 99A
6.13% 10/01/29 2,250 2,266,875
Virgin Islands Wtr. & Pwr. Auth. Elec.
Sys. Rev., Ref. Ser. 98
5.30% 07/01/18 1,685 1,556,519
-----------
3,823,394
------------
TOTAL MUNICIPAL BONDS
(Cost $153,864,322) 156,801,513
------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
31
<PAGE>
BLACKROCK FUNDS
STATEMENT OF NET ASSETS
KENTUCKY TAX-FREE INCOME PORTFOLIO (CONCLUDED)
AS OF MARCH 31, 2000 (UNAUDITED) SHARES VALUE
------- ------------
CUMULATIVE PREFERRED STOCK -- 4.8%
Charter Mac Equity Issue Tr. 144A
6.63% 40,000 $ 3,912,480
Munimae TE Bond Subs., LLC 144A
6.88% 40,000 3,971,160
------------
TOTAL CUMULATIVE PREFERRED STOCK
(Cost $8,000,000) 7,883,640
------------
SHORT TERM INVESTMENTS -- 2.8%
Smith Barney Tax-Free Money
Market Fund
(Cost $4,747,782) 4,747,782 4,747,782
------------
TOTAL INVESTMENTS IN SECURITIES
(Cost $166,612,104*) 102.6% 169,432,935
LIABILITIES IN EXCESS OF
OTHER ASSETS (2.6%) (4,369,528)
------- ------------
NET ASSETS (Applicable to 16,901,240
Institutional shares, 10 Service shares,
356,315 Investor A shares, 17,329
Investor B shares and 63,395
Investor C shares outstanding) 100.0% $165,063,407
====== ============
VALUE
------------
NET ASSET VALUE AND REDEMPTION
PRICE PER INSTITUTIONAL, SERVICE
AND INVESTOR A SHARE
($164,293,833 / 17,257,565) $9.52
=====
OFFERING PRICE PER INSTITUTIONAL
AND SERVICE SHARE $9.52
=====
MAXIMUM OFFERING PRICE PER
INVESTOR A SHARE
($9.52 / 0.960) $9.92
=====
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
(SUBJECT TO A MAXIMUM CONTINGENT
DEFERRED SALES CHARGE OF 4.5%)
PER INVESTOR B SHARE
($164,962 / 17,329) $9.52
=====
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
(SUBJECT TO A MAXIMUM CONTINGENT
DEFERRED SALES CHARGE OF 1.0%)
PER INVESTOR C SHARE
($604,612 / 63,395) $9.54
=====
--------------------
* Also cost for Federal income tax purposes. The gross unrealized appreciation
(depreciation) on a tax basis is as follows:
Gross unrealized appreciation $ 3,890,989
Gross unrealized depreciation (1,070,158)
------------
$ 2,820,831
============
** Rates shown are the rates as of March 31, 2000.
++ Principal amount of securities pledged as collateral of $1,000,000 on 50
short U.S. Treasury Bond future contracts expiring June 2000. The value of
such contracts on March 31, 2000 was $4,884,375, thereby resulting in an
unrealized gain of $150,000.
INVESTMENT ABBREVIATIONS
AMT Alternative Minimum Tax
COP Certificates of Participation
G.O. General Obligations
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
32
<PAGE>
BLACKROCK FUNDS
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
PENNSYLVANIA NEW JERSEY OHIO DELAWARE KENTUCKY
TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE
FOR THE PERIOD ENDED INCOME INCOME INCOME INCOME INCOME INCOME
MARCH 31, 2000 (UNAUDITED) PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ------------ ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Interest ....................... $ 9,075,048 $ 27,587,639 $ 4,040,022 $ 2,709,824 $2,713,040 $ 4,464,504
Dividends ...................... 542,944 405,444 271,472 135,736 135,736 271,472
----------- ------------ ----------- ----------- ---------- -----------
Total investment income ... 9,617,992 27,993,083 4,311,494 2,845,560 2,848,776 4,735,976
----------- ------------ ----------- ----------- ---------- -----------
Expenses:
Investment advisory fee ........ 826,463 2,449,500 384,793 239,351 289,190 459,813
Administration fee ............. 380,174 1,078,863 177,005 110,101 120,934 192,285
Custodian fee .................. 28,869 65,203 14,063 11,827 9,861 15,267
Transfer agent fee ............. 58,042 180,834 27,312 17,733 19,678 26,457
Shareholders servicing
fees ......................... 18,116 80,904 20,650 5,887 9,628 3,442
Shareholders processing
fees ......................... 12,454 52,503 19,279 3,602 5,785 2,065
Distribution fees .............. 19,218 89,919 5,573 6,372 13,799 2,934
Legal and audit ................ 5,662 19,479 2,181 1,283 2,939 3,413
Printing ....................... 19,729 87,729 7,506 5,542 12,712 59,060
Registration fees and
expenses ..................... 22,802 7,984 3,999 4,751 3,841 5,992
Trustees' fees and
officers' salary ............. 2,699 9,048 1,404 825 935 1,455
Other .......................... 5,012 57,980 2,606 1,532 1,739 38,569
----------- ------------ ----------- ----------- ---------- -----------
1,399,240 4,179,946 666,371 408,806 491,041 810,752
Less fees waived ............... (353,724) (991,138) (158,154) (104,121) (91,067) (216,131)
----------- ------------ ----------- ----------- ---------- -----------
Total operating
expenses ................ 1,045,516 3,188,808 508,217 304,685 399,974 594,621
----------- ------------ ----------- ----------- ---------- -----------
Net investment income ............. 8,572,476 24,804,275 3,803,277 2,540,875 2,448,802 4,141,355
----------- ------------ ----------- ----------- ---------- -----------
Realized and unrealized
gain (loss) on investments:
Net realized gain (loss) from:
Investment transactions ...... (3,656,634) (6,243,003) (3,112,546) (84,472) 37,982 (2,353,579)
Futures contracts ............ 176,514 (3,179) (112,615) (206,572) (76,600) (322,740)
----------- ------------ ----------- ----------- ---------- -----------
(3,480,120) (6,246,182) (3,225,161) (291,044) (38,618) (2,676,319)
----------- ------------ ----------- ----------- ---------- -----------
Changes in unrealized
appreciation (depreciation) from:
Investments .................. (1,829,614) (4,176,082) 1,605,143 (923,040) (681,411) 740,407
Futures contracts ............ (107,513) (204,643) (138,044) 143,834 168,995 (61,613)
----------- ------------ ----------- ----------- ---------- -----------
(1,937,127) (4,380,725) 1,467,099 (779,206) (512,416) 678,794
----------- ------------ ----------- ----------- ---------- -----------
Net loss on investments ........... (5,417,247) (10,626,907) (1,758,062) (1,070,250) (551,034) (1,997,525)
----------- ------------ ----------- ----------- ---------- -----------
Net increase in net assets
resulting from operations ...... $ 3,155,229 $ 14,177,368 $ 2,045,215 $ 1,470,625 $ 1,897,768 $ 2,143,830
=========== ============ =========== =========== ========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
33
<PAGE>
BLACKROCK FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
TAX-FREE PENNSYLVANIA TAX-FREE
INCOME PORTFOLIO INCOME PORTFOLIO
----------------------------- ---------------------------------
FOR THE FOR THE
SIX MONTHS FOR THE SIX MONTHS FOR THE
ENDED YEAR ENDED ENDED YEAR ENDED
3/31/00 9/30/99 3/31/00 9/30/99
------------ ------------ -------------- --------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ........................ $ 8,572,476 $ 14,717,469 $ 24,804,275 $ 51,961,222
Net realized loss on investments and
futures contracts .......................... (3,480,120) (2,220,503) (6,246,182) (4,048,885)
Net unrealized gain (loss) on investments
and futures contracts ...................... (1,937,127) (18,419,727) (4,380,725) (57,466,238)
------------ ------------ -------------- --------------
Net increase (decrease) in net assets
resulting from operations .................. 3,155,229 (5,922,761) 14,177,368 (9,553,901)
------------ ------------ -------------- --------------
Distributions to shareholders from:
Net investment income:
Institutional Class .......................... (7,723,705) (13,919,295) (22,771,224) (49,406,294)
Service Class ................................ (121,776) (269,328) (309,935) (828,260)
Investor A Class ............................. (138,508) (301,111) (751,934) (1,635,310)
Investor B Class ............................. (57,016) (102,808) (448,995) (904,150)
Investor C Class ............................. (36,653) (84,518) (17,520) (28,216)
------------ ------------ -------------- --------------
Total distributions from net investment income (8,077,658) (14,677,060) (24,299,608) (52,802,230)
------------ ------------ -------------- --------------
Net realized gains:
Institutional Class .......................... -- (1,513,860) -- (2,813,786)
Service Class ................................ -- (29,710) -- (53,925)
Investor A Class ............................. -- (41,111) -- (94,884)
Investor B Class ............................. -- (12,418) -- (51,775)
Investor C Class ............................. -- (8,813) -- (1,119)
------------ ------------ -------------- --------------
Total distributions from net realized gains .. -- (1,605,912) -- (3,015,489)
------------ ------------ -------------- --------------
Total distributions to shareholders .......... (8,077,658) (16,282,972) (24,299,608) (55,817,719)
------------ ------------ -------------- --------------
Capital share transactions ....................... 24,273,369 42,322,574 (95,153,935) 7,792,148
------------ ------------ -------------- --------------
Total increase (decrease) in net assets ...... 19,350,940 20,116,841 (105,276,175) (57,579,472)
------------ ------------ -------------- --------------
Net assets:
Beginning of period .......................... 320,966,037 300,849,196 1,069,656,093 1,127,235,565
------------ ------------ -------------- --------------
End of period ................................ $340,316,977 $320,966,037 $ 964,379,918 $1,069,656,093
============ ============ ============== ==============
NEW JERSEY TAX-FREE OHIO TAX-FREE
INCOME PORTFOLIO INCOME PORTFOLIO
----------------------------- ----------------------------
FOR THE FOR THE
SIX MONTHS FOR THE SIX MONTHS FOR THE
ENDED YEAR ENDED ENDED YEAR ENDED
3/31/00 9/30/99 3/31/00 9/30/99
------------ ------------ ----------- ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ........................ $ 3,803,277 $ 7,943,049 $ 2,540,875 $ 4,900,911
Net realized loss on investments and
futures contracts .......................... (3,225,161) (317,771) (291,044) (527,737)
Net unrealized gain (loss) on investments
and futures contracts ...................... 1,467,099 (10,000,766) (779,206) (5,776,893)
------------ ------------ ----------- ------------
Net increase (decrease) in net assets
resulting from operations .................. 2,045,215 (2,375,488) 1,470,625 (1,403,719)
------------ ------------ ----------- ------------
Distributions to shareholders from:
Net investment income:
Institutional Class .......................... (3,180,730) (6,647,926) (2,293,979) (4,683,783)
Service Class ................................ (534,291) (1,353,188) (5,508) (18,094)
Investor A Class ............................. (28,327) (82,916) (66,085) (128,385)
Investor B Class ............................. (27,373) (43,732) (26,802) (48,033)
Investor C Class ............................. (293) (543) (5,332) (13,163)
------------ ------------ ----------- ------------
Total distributions from net investment income (3,771,014) (8,128,305) (2,397,706) (4,891,458)
------------ ------------ ----------- ------------
Net realized gains:
Institutional Class .......................... -- (765,260) -- (405,483)
Service Class ................................ -- (183,068) -- (2,601)
Investor A Class ............................. -- (7,806) -- (11,809)
Investor B Class ............................. -- (5,556) -- (4,713)
Investor C Class ............................. -- -- -- (2,127)
------------ ------------ ----------- ------------
Total distributions from net realized gains .. -- (961,690) -- (426,733)
------------ ------------ ----------- ------------
Total distributions to shareholders .......... (3,771,014) (9,089,995) (2,397,706) (5,318,191)
------------ ------------ ----------- ------------
Capital share transactions ....................... (9,210,500) (10,069,641) (1,702,243) (2,110,008)
------------ ------------ ----------- ------------
Total increase (decrease) in net assets ...... (10,936,299) (21,535,124) (2,629,324) (8,831,918)
------------ ------------ ----------- ------------
Net assets:
Beginning of period .......................... 161,458,670 182,993,794 97,363,096 106,195,014
------------ ------------ ----------- ------------
End of period ................................ $150,522,371 $161,458,670 $94,733,772 $ 97,363,096
============ ============ =========== ============
DELAWARE TAX-FREE KENTUCKY TAX-FREE
INCOME PORTFOLIO INCOME PORTFOLIO
----------------------------- -----------------------------
FOR THE FOR THE
SIX MONTHS FOR THE SIX MONTHS FOR THE
ENDED YEAR ENDED ENDED YEAR ENDED
3/31/00 9/30/99 3/31/00 9/30/99
------------ ------------ ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ........................ $ 2,448,802 $ 5,088,375 $ 4,141,355 $ 8,427,282
Net realized loss on investments and
futures contracts .......................... (38,618) (761,412) (2,676,319) (668,435)
Net unrealized gain (loss) on investments
and futures contracts ...................... (512,416) (5,636,561) 678,794 (9,949,729)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations .................. 1,897,768 (1,309,598) 2,143,830 (2,190,882)
------------ ------------ ------------ ------------
Distributions to shareholders from:
Net investment income:
Institutional Class .......................... (2,375,333) (5,129,768) (4,013,954) (8,452,511)
Service Class ................................ (2) (4) (2) (223)
Investor A Class ............................. (89,084) (168,639) (43,752) (64,408)
Investor B Class ............................. (52,313) (95,255) (3,267) (6,134)
Investor C Class ............................. (14,568) (33,664) (10,817) (5,713)
------------ ------------ ------------ ------------
Total distributions from net investment income (2,531,300) (5,427,330) (4,071,792) (8,528,989)
------------ ------------ ------------ ------------
Net realized gains:
Institutional Class .......................... -- (1,497,785) -- (1,852,753)
Service Class ................................ -- (1) -- (1)
Investor A Class ............................. -- (40,396) -- (9,588)
Investor B Class ............................. -- (26,907) -- (1)
Investor C Class ............................. -- (12,008) -- (1)
------------ ------------ ------------ ------------
Total distributions from net realized gains .. -- (1,577,097) -- (1,862,344)
------------ ------------ ------------ ------------
Total distributions to shareholders .......... (2,531,300) (7,004,427) (4,071,792) (10,391,333)
------------ ------------ ------------ ------------
Capital share transactions ....................... (10,113,221) 1,976,902 (3,437,840) (14,456,505)
------------ ------------ ------------ ------------
Total increase (decrease) in net assets ...... (10,746,753) (6,337,123) (5,365,802) (27,038,720)
------------ ------------ ------------ ------------
Net assets:
Beginning of period .......................... 113,188,708 119,525,831 170,429,209 197,467,929
------------ ------------ ------------ ------------
End of period ................................ $102,441,955 $113,188,708 $165,063,407 $170,429,209
============ ============ ============ ============
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
34 AND 35
<PAGE>
BLACKROCK FUNDS
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
NET NET GAIN NET
ASSET (LOSS) ON DISTRIBUTIONS DISTRIBUTIONS ASSET
VALUE NET INVESTMENTS FROM NET FROM NET VALUE
BEGINNING INVESTMENT (BOTH REALIZED INVESTMENT REALIZED END OF TOTAL
OF PERIOD INCOME AND UNREALIZED) INCOME GAINS PERIOD RETURN
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
-------------------------
TAX-FREE INCOME PORTFOLIO
-------------------------
INSTITUTIONAL CLASS
10/1/99 through 3/31/00 5 $10.96 $0.28 $(0.19) $(0.26) $ -- $10.79 0.90%
9/30/99 11.73 0.52 (0.71) (0.52) (0.06) 10.96 (1.68)
9/30/98 11.34 0.54 0.44 (0.54) (0.05) 11.73 8.85
9/30/97 10.84 0.56 0.51 (0.57) -- 11.34 10.09
9/30/96 10.61 0.49 0.28 (0.54) -- 10.84 7.45
9/30/95 10.04 0.53 0.59 (0.53) (0.02) 10.61 11.54
SERVICE CLASS
10/1/99 through 3/31/00 5 $10.96 $0.27 $(0.19) $(0.25) $ -- $10.79 0.75%
9/30/99 11.73 0.49 (0.71) (0.49) (0.06) 10.96 (1.97)
9/30/98 11.34 0.38 0.56 (0.50) (0.05) 11.73 8.52
9/30/97 10.84 0.53 0.50 (0.53) -- 11.34 9.77
9/30/96 10.61 0.51 0.23 (0.51) -- 10.84 7.14
9/30/95 10.04 0.50 0.59 (0.50) (0.02) 10.61 11.24
INVESTOR A CLASS
10/1/99 through 3/31/00 5 $10.96 $0.26 $(0.19) $(0.24) $ -- $10.79 0.66%3
9/30/99 11.73 0.47 (0.71) (0.47) (0.06) 10.96 (2.14)3
9/30/98 11.34 0.47 0.45 (0.48) (0.05) 11.73 8.34 3
9/30/97 10.84 0.50 0.51 (0.51) -- 11.34 9.58 3
9/30/96 10.61 0.45 0.21 (0.43) -- 10.84 6.94 3
9/30/95 10.04 0.48 0.59 (0.48) (0.02) 10.61 10.93 3
INVESTOR B CLASS
10/1/99 through 3/31/00 5 $10.96 $0.22 $(0.19) $(0.20) $ -- $10.79 0.28%4
9/30/99 11.73 0.38 (0.71) (0.38) (0.06) 10.96 (2.87)4
9/30/98 11.34 0.40 0.44 (0.40) (0.05) 11.73 7.53 4
9/30/97 10.84 0.44 0.49 (0.43) -- 11.34 8.77 4
7/18/96 1 through 9/30/96 10.74 0.08 0.10 (0.08) -- 10.84 1.72 4
INVESTOR C CLASS
10/1/99 through 3/31/00 5 $10.96 $0.22 $(0.19) $(0.20) $ -- $10.79 0.28%4
9/30/99 11.73 0.38 (0.71) (0.38) (0.06) 10.96 (2.87)4
9/30/98 11.34 0.36 0.48 (0.40) (0.05) 11.73 7.53 4
2/28/97 1 through 9/30/97 11.04 0.28 0.27 (0.25) -- 11.34 5.02 4
--------------------------------------
PENNSYLVANIA TAX-FREE INCOME PORTFOLIO
--------------------------------------
INSTITUTIONAL CLASS
10/1/99 through 3/31/00 5 $10.52 $0.27 $(0.11) $(0.26) $ -- $10.42 1.55%
9/30/99 11.15 0.51 (0.59) (0.52) (0.03) 10.52 (0.82)
9/30/98 10.77 0.52 0.38 (0.52) -- 11.15 8.51
9/30/97 10.44 0.53 0.33 (0.53) -- 10.77 8.43
9/30/96 10.33 0.52 0.12 (0.53) -- 10.44 6.29
9/30/95 9.82 0.52 0.51 (0.52) -- 10.33 10.81
SERVICE CLASS
10/1/99 through 3/31/00 5 $10.52 $0.25 $(0.11) $(0.24) $ -- $10.42 1.40%
9/30/99 11.15 0.47 (0.59) (0.48) (0.03) 10.52 (1.11)
9/30/98 10.77 0.47 0.39 (0.48) -- 11.15 8.19
9/30/97 10.44 0.50 0.33 (0.50) -- 10.77 8.10
9/30/96 10.33 0.50 0.11 (0.50) -- 10.44 5.97
9/30/95 9.82 0.50 0.51 (0.50) -- 10.33 10.51
INVESTOR A CLASS
10/1/99 through 3/31/00 5 $10.52 $0.25 $(0.11) $(0.24) $ -- $10.42 1.33%3
9/30/99 11.15 0.46 (0.59) (0.47) (0.03) 10.52 (1.25)3
9/30/98 10.77 0.45 0.40 (0.47) -- 11.15 8.04 3
9/30/97 10.44 0.48 0.33 (0.48) -- 10.77 7.95 3
9/30/96 10.33 0.48 0.11 (0.48) -- 10.44 5.81 3
9/30/95 9.82 0.48 0.51 (0.48) -- 10.33 10.30 3
INVESTOR B CLASS
10/1/99 through 3/31/00 5 $10.44 $0.20 $(0.10) $(0.20) $ -- $10.34 1.00%4
9/30/99 11.15 0.38 (0.62) (0.44) (0.03) 10.44 (2.21)4
9/30/98 10.77 0.39 0.41 (0.42) -- 11.15 7.56 4
9/30/97 10.44 0.40 0.33 (0.40) -- 10.77 7.12 4
9/30/96 10.33 0.40 0.11 (0.40) -- 10.44 5.04 4
10/3/94 1 through 9/30/95 9.82 0.42 0.51 (0.42) -- 10.33 9.69 4
RATIO OF NET
RATIO OF INVESTMENT
NET EXPENSES RATIO OF NET INCOME
ASSETS RATIO OF TO AVERAGE INVESTMENT TO AVERAGE
END OF EXPENSES TO NET ASSETS INCOME NET ASSETS PORTFOLIO
PERIOD AVERAGE NET (EXCLUDING TO AVERAGE (EXCLUDING TURNOVER
(000) ASSETS WAIVERS) NET ASSETS WAIVERS) RATE
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
-------------------------
TAX-FREE INCOME PORTFOLIO
-------------------------
INSTITUTIONAL CLASS
10/1/99 through 3/31/00 5 $ 324,230 0.60%2 0.81%2 5.27%2 5.06%2 30%
9/30/99 302,319 0.60 0.82 4.57 4.35 104
9/30/98 285,921 0.60 0.88 4.61 4.33 100
9/30/97 9,419 0.55 0.90 5.07 4.72 262
9/30/96 8,350 0.55 0.89 5.10 4.78 268
9/30/95 271 0.52 1.30 5.19 4.41 92
SERVICE CLASS
10/1/99 through 3/31/00 5 $ 5,566 0.90%2 1.11%2 4.97%2 4.76%2 30%
9/30/99 5,754 0.90 1.12 4.27 4.05 104
9/30/98 5,430 0.88 1.16 4.34 4.06 100
9/30/97 58,779 0.85 1.20 4.76 4.41 262
9/30/96 36,161 0.85 1.18 4.88 4.56 268
9/30/95 4,713 0.80 1.57 4.92 4.15 92
INVESTOR A CLASS
10/1/99 through 3/31/00 5 $ 6,077 1.07%2 1.28%2 4.80%2 4.59%2 30%
9/30/99 6,591 1.07 1.29 4.10 3.88 104
9/30/98 6,440 1.05 1.33 4.17 3.89 100
9/30/97 5,530 1.02 1.37 4.60 4.25 262
9/30/96 4,873 1.04 1.37 4.67 4.35 268
9/30/95 6,591 1.00 1.78 4.74 3.96 92
INVESTOR B CLASS
10/1/99 through 3/31/00 5 $ 2,764 1.82%2 2.03%2 4.05%2 3.84%2 30%
9/30/99 3,434 1.82 2.04 3.35 3.13 104
9/30/98 2,034 1.79 2.07 3.39 3.11 100
9/30/97 926 1.75 2.10 3.65 3.30 262
7/18/96 1 through 9/30/96 10 1.65 2 1.98 2 3.84 2 3.51 2 268
INVESTOR C CLASS
10/1/99 through 3/31/00 5 $ 1,680 1.82%2 2.03%2 4.05%2 3.84%2 30%
9/30/99 2,868 1.82 2.04 3.35 3.13 104
9/30/98 1,024 1.70 1.98 3.19 2.91 100
2/28/97 1 through 9/30/97 -- 1.70 2 2.05 2 3.95 2 3.60 2 262
--------------------------------------
PENNSYLVANIA TAX-FREE INCOME PORTFOLIO
--------------------------------------
INSTITUTIONAL CLASS
10/1/99 through 3/31/00 5 $ 897,989 0.60%2 0.80%2 5.16%2 4.96%2 17%
9/30/99 994,381 0.60 0.79 4.67 4.48 28
9/30/98 1,054,070 0.58 0.82 4.66 4.42 43
9/30/97 5,108 0.55 0.86 4.97 4.66 97
9/30/96 3,609 0.55 0.85 5.01 4.72 119
9/30/95 2,092 0.52 0.84 5.23 4.91 66
SERVICE CLASS
10/1/99 through 3/31/00 5 $ 14,465 0.90%2 1.10%2 4.88%2 4.68%2 17%
9/30/99 14,132 0.90 1.09 4.37 4.18 28
9/30/98 20,669 0.86 1.10 4.39 4.15 43
9/30/97 50,395 0.85 1.16 4.67 4.36 97
9/30/96 34,297 0.85 1.15 4.74 4.44 119
9/30/95 13,815 0.79 1.11 5.04 4.72 66
INVESTOR A CLASS
10/1/99 through 3/31/00 5 $ 29,233 1.07%2 1.27%2 4.71%2 4.51%2 17%
9/30/99 36,634 1.04 1.23 4.23 4.04 28
9/30/98 34,712 1.01 1.25 4.25 4.01 43
9/30/97 32,900 0.97 1.30 4.54 4.23 97
9/30/96 38,031 1.00 1.30 4.58 4.29 119
9/30/95 42,775 0.98 1.30 4.88 4.56 66
INVESTOR B CLASS
10/1/99 through 3/31/00 5 $ 22,014 1.82%2 2.02%2 3.96%2 3.76%2 17%
9/30/99 23,602 1.82 2.00 3.45 3.26 28
9/30/98 17,601 1.78 2.02 3.46 3.22 43
9/30/97 12,388 1.76 2.07 3.73 3.42 97
9/30/96 7,974 1.74 2.03 3.81 3.51 119
10/3/94 1 through 9/30/95 4,008 1.57 2 1.89 2 4.07 2 3.75 2 66
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
36 AND 37
<PAGE>
BLACKROCK FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
NET NET GAIN NET
ASSET (LOSS) ON DISTRIBUTIONS DISTRIBUTIONS ASSET
VALUE NET INVESTMENTS FROM NET FROM NET VALUE
BEGINNING INVESTMENT (BOTH REALIZED INVESTMENT REALIZED END OF TOTAL
OF PERIOD INCOME AND UNREALIZED) INCOME GAINS PERIOD RETURN
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTOR C CLASS
10/1/99 through 3/31/00 5 $10.48 $0.20 $(0.11) $(0.20) $ -- $10.37 1.00%4
9/30/99 11.15 0.39 (0.59) (0.44) (0.03) 10.48 (1.93)4
8/14/98 1 through 9/30/98 11.00 0.42 0.15 (0.42) -- 11.15 7.56 4
------------------------------------
NEW JERSEY TAX-FREE INCOME PORTFOLIO
------------------------------------
INSTITUTIONAL CLASS
10/1/99 through 3/31/00 5 $11.30 $0.28 $(0.12) $(0.28) $ -- $11.18 1.42%
9/30/99 12.07 0.54 (0.70) (0.55) (0.06) 11.30 (1.35)
5/4/98 1 through 9/30/98 11.71 0.23 0.36 (0.23) -- 12.07 8.38
SERVICE CLASS
10/1/99 through 3/31/00 5 $11.30 $0.26 $(0.12) $(0.26) $ -- $11.18 1.27%
9/30/99 12.07 0.51 (0.70) (0.52) (0.06) 11.30 (1.65)
9/30/98 11.65 0.52 0.42 (0.52) -- 12.07 8.28
9/30/97 11.27 0.52 0.37 (0.51) -- 11.65 8.11
2/1/96 through 9/30/96 11.61 0.73 (0.32) (0.75) -- 11.27 0.15
3/1/95 through 1/31/96 10.94 0.46 0.65 (0.44) -- 11.61 10.35
2/28/95 11.31 0.51 (0.36) (0.51) (0.01) 10.94 1.49
INVESTOR A CLASS
10/1/99 through 3/31/00 5 $11.30 $0.25 $(0.12) $(0.25) $ -- $11.18 1.18%3
9/30/99 12.07 0.48 (0.69) (0.50) (0.06) 11.30 (1.82)3
9/30/98 11.65 0.50 0.42 (0.50) -- 12.07 8.10 3
9/30/97 11.27 0.51 0.37 (0.50) -- 11.65 7.94 3
2/1/96 through 9/30/96 11.61 0.34 (0.34) (0.34) -- 11.27 (0.01)3
1/26/96 1 through 1/31/96 11.54 -- 0.07 -- -- 11.61 0.63 3
INVESTOR B CLASS
10/1/99 through 3/31/00 5 $11.30 $0.21 $(0.12) $(0.21) $ -- $11.18 0.80%4
9/30/99 12.07 0.40 (0.70) (0.41) (0.06) 11.30 (2.55)4
9/30/98 11.65 0.41 0.42 (0.41) -- 12.07 7.30 4
9/30/97 11.27 0.41 0.38 (0.41) -- 11.65 7.14 4
7/2/96 1 through 9/30/96 11.15 0.09 0.12 (0.09) -- 11.27 2.04 4
INVESTOR C CLASS
10/1/99 through 3/3/00 5 $11.30 $0.18 $(0.26) $(0.18) $ -- $11.04 (0.75)%4
12/9/98 1 through 9/30/99 11.98 0.32 (0.67) (0.33) -- 11.30 (3.02)4
------------------------------
OHIO TAX-FREE INCOME PORTFOLIO
------------------------------
INSTITUTIONAL CLASS
10/1/99 through 3/31/00 5 $10.19 $0.27 $(0.11) $(0.25) $ -- $10.10 1.64%
9/30/99 10.88 0.47 (0.65) (0.47) (0.04) 10.19 (1.38)
9/30/98 10.50 0.48 0.37 (0.47) -- 10.88 8.56
9/30/97 10.15 0.51 0.34 (0.50) -- 10.50 8.53
9/30/96 10.05 0.50 0.10 (0.50) -- 10.15 6.12
9/30/95 9.60 0.55 0.45 (0.55) -- 10.05 10.75
SERVICE CLASS
10/1/99 through 3/31/00 5 $10.19 $0.25 $(0.11) $(0.24) $ -- $10.09 1.39%
9/30/99 10.88 0.47 (0.65) (0.47) (0.04) 10.19 (1.68)
9/30/98 10.50 0.48 0.37 (0.47) -- 10.88 8.23
9/30/97 10.15 0.47 0.35 (0.47) -- 10.50 8.21
9/30/96 10.05 0.48 0.10 (0.48) -- 10.15 5.80
9/30/95 9.60 0.52 0.45 (0.52) -- 10.05 10.45
INVESTOR A CLASS
10/1/99 through 3/31/00 5 $10.19 $0.20 $(0.10) $(0.19) $ -- $10.10 1.41%3
9/30/99 10.88 0.45 (0.65) (0.45) (0.04) 10.19 (1.85)3
9/30/98 10.50 0.45 0.38 (0.45) -- 10.88 8.05 3
9/30/97 10.15 0.45 0.35 (0.45) -- 10.50 8.03 3
9/30/96 10.05 0.46 0.10 (0.46) -- 10.15 5.66 3
9/30/95 9.60 0.52 0.45 (0.52) -- 10.05 10.46 3
INVESTOR B CLASS
10/1/99 through 3/31/00 5 $10.19 $0.20 $(0.10) $(0.19) $ -- $10.10 1.03%4
9/30/99 10.88 0.37 (0.65) (0.37) (0.04) 10.19 (2.58)4
9/30/98 10.50 0.37 0.38 (0.37) -- 10.88 7.25 4
9/30/97 10.15 0.37 0.35 (0.37) -- 10.50 7.23 4
9/30/96 10.05 0.38 0.10 (0.38) -- 10.15 4.87 4
10/13/94 1 through 9/30/95 9.58 0.42 0.47 (0.42) -- 10.05 9.33 4
RATIO OF NET
RATIO OF INVESTMENT
NET EXPENSES RATIO OF NET INCOME
ASSETS RATIO OF TO AVERAGE INVESTMENT TO AVERAGE
END OF EXPENSES TO NET ASSETS INCOME NET ASSETS PORTFOLIO
PERIOD AVERAGE NET (EXCLUDING TO AVERAGE (EXCLUDING TURNOVER
(000) ASSETS WAIVERS) NET ASSET WAIVERS) RATE
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INVESTOR C CLASS
10/1/99 through 3/31/00 5 $ 679 1.82%2 2.02%2 3.96%2 3.76%2 17%
9/30/99 907 1.82 1.97 3.45 3.26 28
8/14/98 1 through 9/30/98 184 1.58 2 1.82 2 2.98 2 2.74 2 43
------------------------------------
NEW JERSEY TAX-FREE INCOME PORTFOLIO
------------------------------------
INSTITUTIONAL CLASS
10/1/99 through 3/31/00 5 $126,684 0.60%2 0.81%2 5.05%2 4.84%2 54%
9/30/99 134,046 0.60 0.81 4.59 4.37 43
5/4/98 1 through 9/30/98 145,708 0.60 2 0.90 2 4.67 2 4.37 2 24
SERVICE CLASS
10/1/99 through 3/31/00 5 $ 21,071 0.90%2 1.11%2 4.75%2 4.54%2 54%
9/30/99 24,626 0.90 1.11 4.28 4.07 43
9/30/98 34,803 0.88 1.18 4.37 4.07 24
9/30/97 84,596 0.85 1.17 4.59 4.27 77
2/1/96 through 9/30/96 88,077 0.85 2 1.17 2 4.44 2 4.13 2 109
3/1/95 through 1/31/96 97,976 0.88 2 0.90 2 4.43 2 4.41 2 26
2/28/95 96,857 0.79 0.87 4.71 4.63 28
INVESTOR A CLASS
10/1/99 through 3/31/00 5 $ 1,231 1.07%2 1.28%2 4.58%2 4.37%2 54%
9/30/99 1,328 1.07 1.28 4.11 3.90 43
9/30/98 1,432 1.06 1.36 4.26 3.96 24
9/30/97 1,548 1.02 1.34 4.41 4.09 77
2/1/96 through 9/30/96 894 1.01 2 1.33 2 4.29 2 3.98 2 109
1/26/96 1 through 1/31/96 14 1.02 2 1.36 2 2.79 2 2.45 2 26
INVESTOR B CLASS
10/1/99 through 3/31/00 5 $ 1,537 1.82%2 2.03%2 3.83%2 3.62%2 54%
9/30/99 1,440 1.82 2.03 3.36 3.15 43
9/30/98 1,051 1.80 2.10 3.43 3.13 24
9/30/97 767 1.74 2.06 3.60 3.28 2 77
7/2/96 1 through 9/30/96 30 1.74 2 2.06 2 3.48 2 3.16 2 109
INVESTOR C CLASS
10/1/99 through 3/3/00 5 $ -- 6 1.82%2 2.03%2 3.83%2 3.62%2 54%
12/9/98 1 through 9/30/99 19 1.82 2.03 3.36 3.15 43
------------------------------
OHIO TAX-FREE INCOME PORTFOLIO
------------------------------
INSTITUTIONAL CLASS
10/1/99 through 3/31/00 5 $ 89,750 0.60%2 0.82%2 5.40%2 5.18%2 10%
9/30/99 92,455 0.60 0.81 4.75 4.54 23
9/30/98 101,066 0.60 0.93 4.64 4.31 77
9/30/97 928 0.55 1.06 4.80 4.29 87
9/30/96 409 0.51 1.10 4.96 4.37 136
9/30/95 200 0.12 1.19 5.61 4.54 63
SERVICE CLASS
10/1/99 through 3/31/00 5 $ 38 0.90%2 1.12%2 5.10%2 4.88%2 10%
9/30/99 254 0.90 1.11 4.45 4.24 23
9/30/98 712 0.88 1.21 4.37 4.04 77
9/30/97 7,421 0.85 1.36 4.51 4.00 87
9/30/96 6,377 0.79 1.38 4.69 4.10 136
9/30/95 5,150 0.39 1.46 5.39 4.31 63
INVESTOR A CLASS
10/1/99 through 3/31/00 5 $ 3,118 1.07%2 1.29%2 4.93%2 4.71%2 10%
9/30/99 3,036 1.07 1.28 4.28 4.07 23
9/30/98 2,774 1.06 1.39 4.22 3.89 77
9/30/97 2,614 1.02 1.53 4.35 3.84 87
9/30/96 2,833 0.91 1.50 4.57 3.98 136
9/30/95 3,303 0.38 1.45 5.42 4.35 63
INVESTOR B CLASS
10/1/99 through 3/31/00 5 $ 1,429 1.82%2 2.04%2 4.18%2 3.96%2 10%
9/30/99 1,426 1.82 2.03 3.53 3.32 23
9/30/98 1,116 1.79 2.12 3.41 3.08 77
9/30/97 622 1.75 2.26 3.52 3.01 87
9/30/96 161 1.66 2.26 3.80 3.21 136
10/13/94 1 through 9/30/95 106 1.17 2 2.25 2 4.48 2 3.41 2 63
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
38 AND 39
<PAGE>
BLACKROCK FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
NET NET GAIN NET
ASSET (LOSS) ON DISTRIBUTIONS DISTRIBUTIONS ASSET
VALUE NET INVESTMENTS FROM NET FROM NET VALUE
BEGINNING INVESTMENT (BOTH REALIZED INVESTMENT REALIZED END OF TOTAL
OF PERIOD INCOME AND UNREALIZED) INCOME GAINS PERIOD RETURN
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTOR C CLASS
10/1/99 through 3/31/00 5 $10.19 $0.20 $(0.10) $(0.19) $ -- $10.10 1.03%4
9/30/99 10.88 0.37 (0.65) (0.37) (0.04) 10.19 (2.58)4
8/26/98 1 through 9/30/98 10.74 0.03 0.14 (0.03) -- 10.88 1.60 4
----------------------------------
DELAWARE TAX-FREE INCOME PORTFOLIO
----------------------------------
INSTITUTIONAL CLASS
10/1/99 through 3/31/00 5 $ 9.62 $0.23 $(0.04) $(0.23) $ -- $ 9.58 2.03%
9/30/99 10.33 0.44 (0.54) (0.47) (0.14) 9.62 (1.10)
5/11/98 1 through 9/30/98 10.00 0.17 0.34 (0.18) -- 10.33 5.16
SERVICE CLASS
10/1/99 through 3/31/00 5 $ 9.62 $0.22 $(0.04) $(0.22) $ -- $ 9.58 1.88%
9/30/99 10.33 0.44 (0.57) (0.44) (0.14) 9.62 (1.40)
5/11/981 through 9/30/98 10.00 0.16 0.34 (0.17) -- 10.33 5.04
INVESTOR A CLASS
10/1/99 through 3/31/00 5 $ 9.62 $0.21 $(0.04) $(0.21) $ -- $ 9.58 1.80%3
9/30/99 10.33 0.39 (0.54) (0.42) (0.14) 9.62 (1.57)3
5/11/98 1 through 9/30/98 10.00 0.15 0.34 (0.16) -- 10.33 4.97 3
INVESTOR B CLASS
10/1/99 through 3/31/00 5 $ 9.62 $0.17 $(0.04) $(0.17) $ -- $ 9.58 1.42%4
9/30/99 10.33 0.32 (0.54) (0.35) (0.14) 9.62 (2.31)4
5/11/98 1 through 9/30/98 10.00 0.12 0.34 (0.13) -- 10.33 4.67 4
INVESTOR C CLASS
10/1/99 through 3/31/00 5 $ 9.62 $0.17 $(0.04) $(0.17) $ -- $ 9.58 1.42%4
9/30/99 10.33 0.32 (0.54) (0.35) (0.14) 9.62 (2.31)4
5/11/98 1 through 9/30/98 10.00 0.12 0.34 (0.13) -- 10.33 4.67 4
----------------------------------
KENTUCKY TAX-FREE INCOME PORTFOLIO
----------------------------------
INSTITUTIONAL CLASS
10/1/99 through 3/31/00 5 $ 9.63 $0.23 $(0.11) $(0.23) $ -- $ 9.52 1.30%
9/30/99 10.31 0.45 (0.57) (0.46) (0.10) 9.63 (1.23)
5/11/98 1 through 9/30/98 10.00 0.18 0.31 (0.18) -- 10.31 4.95
SERVICE CLASS
10/1/99 through 3/31/00 5 $ 9.63 $0.22 $(0.11) $(0.22) $ -- $ 9.52 1.15%
9/30/99 10.31 0.44 (0.59) (0.43) (0.10) 9.63 (1.52)
5/11/98 1 through 9/30/98 10.00 0.19 0.29 (0.17) -- 10.31 4.82
INVESTOR A CLASS
10/1/99 through 3/31/00 5 $ 9.63 $0.21 $(0.11) $(0.21) $ -- $ 9.52 1.06%3
9/30/99 10.31 0.40 (0.57) (0.41) (0.10) 9.63 (1.69)3
5/11/98 1 through 9/30/98 10.00 0.16 0.31 (0.16) -- 10.31 4.76 3
INVESTOR B CLASS
10/1/99 through 3/31/00 5 $ 9.63 $0.17 $(0.11) $(0.17) $ -- $ 9.52 0.68%4
9/30/99 10.31 0.34 (0.58) (0.34) (0.10) 9.63 (2.43)4
5/11/98 1 through 9/30/98 10.00 0.15 0.29 (0.13) -- 10.31 4.45 4
INVESTOR C CLASS
10/1/99 through 3/31/00 5 $ 9.63 $0.19 $(0.11) $(0.17) $ -- $ 9.54 0.89%4
9/30/99 10.31 0.33 (0.57) (0.34) (0.10) 9.63 (2.43)4
5/11/98 1 through 9/30/98 10.00 0.15 0.29 (0.13) -- 10.31 4.45 4
RATIO OF NET
RATIO OF INVESTMENT
NET EXPENSES RATIO OF NET INCOME
ASSETS RATIO OF TO AVERAGE INVESTMENT TO AVERAGE
END OF EXPENSES TO NET ASSETS INCOME NET ASSETS PORTFOLIO
PERIOD AVERAGE NET (EXCLUDING TO AVERAGE (EXCLUDING TURNOVER
(000) ASSETS WAIVERS) NET ASSETS WAIVERS) RATE
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INVESTOR C CLASS
10/1/99 through 3/31/00 5 $ 399 1.82%2 2.04%2 4.18%2 3.96%2 10%
9/30/99 192 1.82 2.03 3.53 3.32 23
8/26/98 1 through 9/30/98 527 1.71 2 2.04 2 2.82 2 2.49 2 77
----------------------------------
DELAWARE TAX-FREE INCOME PORTFOLIO
----------------------------------
INSTITUTIONAL CLASS
10/1/99 through 3/31/00 5 $ 95,903 0.70%2 0.92%2 5.40%2 5.18%2 3%
9/30/99 104,683 0.70 0.86 4.38 4.22 31
5/11/98 1 through 9/30/98 114,524 0.70 2 0.88 2 4.18 2 4.00 2 54
SERVICE CLASS
10/1/99 through 3/31/00 5 -- 1.00%2 1.22%2 5.10%2 4.88%2 3%
9/30/99 -- 1.00 1.16 4.08 3.92 31
5/11/98 1 through 9/30/98 -- 0.67 2 0.85 2 5.00 2 4.82 2 54
INVESTOR A CLASS
10/1/99 through 3/31/00 5 $ 3,878 1.17%2 1.39%2 4.93%2 4.71%2 3%
9/30/99 4,468 1.17 1.33 3.91 3.75 31
5/11/98 1 through 9/30/98 2,546 1.15 2 1.33 2 3.68 2 3.50 2 54
INVESTOR B CLASS
10/1/99 through 3/31/00 5 $ 1,994 1.92%2 2.14%2 4.18%2 3.96%2 3%
9/30/99 3,149 1.92 2.08 3.16 3.00 31
5/11/98 1 through 9/30/98 1,740 1.83 2 2.01 2 2.89 2 2.71 2 54
INVESTOR C CLASS
10/1/99 through 3/31/00 5 $ 668 1.92%2 2.14%2 4.18%2 3.96%2 3%
9/30/99 889 1.92 2.08 3.16 3.00 31
5/11/98 1 through 9/30/98 716 1.89 2 2.07 2 2.81 2 2.63 2 54
----------------------------------
KENTUCKY TAX-FREE INCOME PORTFOLIO
----------------------------------
INSTITUTIONAL CLASS
10/1/99 through 3/31/00 5 $160,902 0.70%2 0.96%2 5.01%2 4.75%2 30%
9/30/99 167,799 0.70 0.88 4.56 4.38 25
5/11/98 1 through 9/30/98 196,493 0.70 2 0.95 2 4.54 2 4.29 2 7
SERVICE CLASS
10/1/99 through 3/31/00 5 -- 1.00%2 1.26%2 4.71%2 4.45%2 30%
9/30/99 -- 1.00 1.18 4.26 4.08 25
5/11/98 1 through 9/30/98 -- 0.67 2 0.92 2 5.00 2 4.75 2 7
INVESTOR A CLASS
10/1/99 through 3/31/00 5 $ 3,391 1.17%2 1.43%2 4.54%2 4.28%2 30%
9/30/99 1,856 1.17 1.35 4.09 3.91 25
5/11/98 1 through 9/30/98 975 1.17 2 1.42 2 4.07 2 3.82 2 7
INVESTOR B CLASS
10/1/99 through 3/31/00 5 $ 165 1.92%2 2.18%2 3.79%2 3.53%2 30%
9/30/99 203 1.92 2.10 3.34 3.16 25
5/11/98 1 through 9/30/98 -- 0.67 2 0.92 2 0.64 2 0.39 2 7
INVESTOR C CLASS
10/1/99 through 3/31/00 5 $ 605 1.92%2 2.18%2 3.79%2 3.53%2 30%
9/30/99 571 1.92 2.10 3.34 3.16 25
5/11/98 1 through 9/30/98 -- 0.67 2 0.92 2 5.00 2 4.75 2 7
<FN>
1 Commencement of operations of share class.
2 Annualized.
3 Sales load not reflected in total return.
4 Contingent deferred sales load not reflected in total return.
5 Unaudited.
6 There were no Investor C shares outstanding as of March 31, 2000.
</FN>
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
41 AND 41
<PAGE>
BLACKROCK FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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 36 publicly-offered portfolios, six 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 offer as many as seven 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 a summary of 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 Investor B Investor C
------------------------------------------------------------------------------------------------------------------------------------
Contractual Actual Contractual Actual Contractual Actual Contractual Actual Contractual Actual
Fees Fees(4) Fees(1) Fees(4) Fees(2) Fees(4) Fees(3) Fees(4) Fees(3) Fees(4)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Tax-Free Income None None 0.30% 0.30% 0.50% 0.40% 1.15% 1.15% 1.15% 1.15%
------------------------------------------------------------------------------------------------------------------------------------
Pennsylvania Tax-Free Income None None 0.30% 0.30% 0.50% 0.40% 1.15% 1.15% 1.15% 1.15%
------------------------------------------------------------------------------------------------------------------------------------
New Jersey Tax-Free Income None None 0.30% 0.30% 0.50% 0.40% 1.15% 1.15% 1.15% 1.15%
------------------------------------------------------------------------------------------------------------------------------------
Ohio Tax-Free Income None None 0.30% 0.30% 0.50% 0.40% 1.15% 1.15% 1.15% 1.15%
------------------------------------------------------------------------------------------------------------------------------------
Delaware Tax-Free Income None None 0.30% 0.30% 0.50% 0.40% 1.15% 1.15% 1.15% 1.15%
------------------------------------------------------------------------------------------------------------------------------------
Kentucky Tax-Free Income None None 0.30% 0.30% 0.50% 0.40% 1.15% 1.15% 1.15% 1.15%
------------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) -- the maximum annual contractual fees are comprised of a .15% service
fee and .15% shareholder processing fee.
(2) -- the maximum annual contractual fees are comprised of a .10% distribution
fee, .25% service fee and .15% shareholder processing fee.
(3) -- the maximum annual contractual fees are comprised of a .75%
distribution fee, .25% service fee and .15% shareholder processing fee.
(4) -- the actual fees are as of March 31, 2000.
</FN>
</TABLE>
In addition, Institutional and Service shares bear a Transfer Agent fee at
an annual rate not to exceed .03% and Investor A, Investor B and Investor C
shares bear a Transfer Agent fee at an annual rate not to exceed .10% of the
average daily net assets of such respective classes.
(A) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Fund in the preparation of its financial statements. The preparation of
financial statements in conformity with generally accepted accounting principles
requires the use of management estimates. Actual results could differ from these
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. 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 or on the basis of
quotations provided by a pricing service or dealer 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 in accordance with procedures adopted by the
Board of Directors.
As of March 31, 2000, there were no securities valued in accordance with such
procedures.
DIVIDENDS TO SHAREHOLDERS -- Dividends from net investment income are
declared by each Portfolio each day on "settled" shares (i.e. shares for which
the particular Portfolio has received payment in federal funds) and are paid
monthly. Over the course of a year, substantially all of each Portfolio's net
investment income will be declared as dividends. The amount of the daily
dividend for each Portfolio will be based on periodic projections of its net
investment income. Net realized capital gains, if any, are 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.
42
<PAGE>
BLACKROCK FUNDS
FEDERAL TAXES -- No provision is made for federal taxes as it is the Fund's
intention to have each 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.
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 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.
FUTURES TRANSACTIONS -- The Fund invests in financial futures contracts
solely for the purpose of hedging its existing portfolio securities, or
securities that the Fund intends to purchase, against fluctuations in fair value
caused by changes in prevailing market interest rates. Certain Portfolios may
enter into futures contracts subject to certain limitations. Upon entering into
a futures contract, the Portfolio is required to deposit cash or pledge
municipal 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 the 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 Fund invests in financial options
contracts solely for the purpose of hedging its existing portfolio securities,
or securities that the Fund intends to purchase, against fluctuations in fair
value caused by changes in prevailing market interest rates. When the Fund sells
or purchases an option, an amount equal to the premium received or paid by the
Fund 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 Fund 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 a 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) and 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 Portfolios at
March 31, 2000.
(B) TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Pursuant to an Investment Advisory Agreement, BlackRock Advisors, Inc.
("BlackRock"), a wholly-owned subsidiary of BlackRock, Inc., serves as
investment adviser to the Portfolios. BlackRock Financial Management,
Inc.("BFM"), a wholly-owned subsidiary of BlackRock, serves as sub-adviser for
all of the Portfolios. BlackRock, Inc. is an indirect majority-owned subsidiary
of The PNC Financial Services Group, Inc.
For its advisory services, BlackRock is entitled to receive fees, computed
daily and paid monthly, at the following annual rates, based on each Portfolio's
average daily net assets:
<TABLE>
<CAPTION>
TAX-FREE INCOME, PENNSYLVANIA DELAWARE TAX-FREE
TAX-FREE INCOME, NEW JERSEY TAX-FREE INCOME AND INCOME AND KENTUCKY
OHIO TAX-FREE INCOME PORTFOLIOS TAX-FREE INCOME PORTFOLIOS
----------------------------------------------- ----------------------------
INVESTMENT INVESTMENT
AVERAGE DAILY NET ASSETS ADVISORY FEE ADVISORY FEE
-------------------------- ----------------------------------------------- ----------------------------
<S> <C> <C>
first $1 billion .500% .550%
$1 billion-- $2 billion .450 .500
$2 billion-- $3 billion .425 .475
greater than $3 billion .400 .450
</TABLE>
43
<PAGE>
BLACKROCK FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
For the period ended March 31, 2000, advisory fees and waivers for each
Portfolio were as follows:
<TABLE>
<CAPTION>
GROSS NET ADVISORY
ADVISORY FEE WAIVER FEE
-------------- --------------- ---------------
<S> <C> <C> <C>
Tax-Free Income Portfolio .......................... $ 826,463 $353,724 $ 472,739
Pennsylvania Tax-Free Income Portfolio ............. 2,449,500 991,138 1,458,362
New Jersey Tax-Free Income Portfolio ............... 384,793 158,154 226,639
Ohio Tax-Free Income Portfolio ..................... 239,351 104,121 135,230
Delaware Tax-Free Income Portfolio ................. 289,190 91,067 198,123
Kentucky Tax-Free Income Portfolio ................. 459,813 216,131 243,682
</TABLE>
BlackRock pays BFM fees for its sub-advisory services.
PFPC Inc. ("PFPC"), an indirect wholly-owned subsidiary of The PNC
Financial Services Group, Inc. and BlackRock, Inc. ("BDI") act as
co-administrators for the Fund. For these 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 each Portfolio, at the
following annual rates: .085% of the first $500 million, .075% of the next $500
million and .065% of assets in excess of $1 billion. In addition, each of the
classes are charged an administration fee based on the following percentage of
average daily net assets of each respective class: .145% of the first $500
million, .135% of the next $500 million and .125% of assets in excess of $1
billion.
For the period ended March 31, 2000, administration fees and waivers for
each Portfolio were as follows:
<TABLE>
<CAPTION>
GROSS NET
ADMINISTRATION FEE WAIVER ADMINISTRATION FEE
------------------ ---------- ------------------
<S> <C> <C> <C>
Tax-Free Income Portfolio ................................. $ 380,174 $ -- $ 380,174
Pennsylvania Tax-Free Income Portfolio .................... 1,078,863 -- 1,078,863
New Jersey Tax-Free Income Portfolio ...................... 177,005 -- 177,005
Ohio Tax-Free Income Portfolio ............................ 110,101 -- 110,101
Delaware Tax-Free Income Portfolio ........................ 120,934 -- 120,934
Kentucky Tax-Free Income Portfolio ........................ 192,285 -- 192,285
</TABLE>
Prior to February 1, 1999, BlackRock may have, at its discretion, waived
all or any portion of its advisory fees for any Portfolio. In addition, PFPC and
BlackRock may have, at their discretion, voluntarily waived all or any portion
of their administration fees for any Portfolio.
In the interest of limiting the expenses of the Portfolios, BlackRock and
the Fund have entered into an expense limitation agreement effective February 1,
1999. The agreement sets a limit on certain of the operating expenses of each
Portfolio for the next year and requires BlackRock to waive or reimburse fees or
expenses if these operating expenses exceed that limit. These expense limits
apply to expenses charged on Portfolio assets as a whole, but not expenses
separately charged to the different share classes of a Portfolio.
If in the following two years the operating expenses of a Portfolio that
previously received a waiver or reimbursement from BlackRock are less than the
expense limit for that Portfolio, the Portfolio is required to repay BlackRock
up to the amount of fees waived or expenses reimbursed under the agreement if:
(1) the Portfolio has more than $50 million in assets, (2) BlackRock continues
to be the Portfolio's investment adviser and (3) the Board of Trustees of the
Fund has approved the payments to BlackRock on a quarterly basis.
The expense limits as a percentage of average daily net assets and amounts
subject to possible reimbursement under the expense limitation agreement were as
follows:
Tax-Free Income Portfolio .......................... .485% $ 780,187
Pennsylvania Tax-Free Income Portfolio ............. .470% 2,088,884
New Jersey Tax-Free Income Portfolio ............... .475% 357,269
Ohio Tax-Free Income Portfolio ..................... .515% 256,325
Delaware Tax-Free Income Portfolio ................. .585% 221,117
Kentucky Tax-Free Income Portfolio ................. .585% 464,209
44
<PAGE>
BLACKROCK FUNDS
PFPC Trust Co. serves as custodian for each of the Fund's Portfolios. PFPC
serves as transfer and dividend disbursing agent.
Under the Fund's Distribution and Service Plan (the "Plan"), Investor
Shares of the Portfolios bear the expense of payments ("distribution fees") made
to BlackRock Distributors, Inc., 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 arrangements with various Service
Organizations (including PNC Bank and its affiliates) that provide support
services to their customers who are the beneficial owners of shares in each
Investor Class and the Service Class. Refer to the fee table in the "Notes to
Financial Statements" for fee information.
(C) PURCHASES AND SALES OF SECURITIES
For the period ended March 31, 2000, purchases and sales of securities,
other than short-term and government securities, were as follows:
PURCHASES SALES
-------------- -------------
Tax-Free Income Portfolio ................... $106,312,389 $95,358,291
Pennsylvania Tax-Free Income Portfolio ...... 169,412,846 261,014,761
New Jersey Tax-Free Income Portfolio ........ 81,292,560 90,927,337
Ohio Tax-Free Income Portfolio .............. 9,157,269 18,595,589
Delaware Tax-Free Income Portfolio .......... 3,459,260 12,960,228
Kentucky Tax-Free Income Portfolio .......... 50,083,704 50,903,821
(D) CAPITAL SHARES
Transactions in capital shares for each period were as follows:
<TABLE>
<CAPTION>
TAX-FREE INCOME PORTFOLIO
--------------------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
3/31/00 (UNAUDITED) 9/30/99
------------------------------- ------------- ----------------
SHARES VALUE SHARES VALUE
----------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class .................. 13,365,522 $ 142,597,887 6,853,081 $ 78,835,003
Service Class ........................ 139,774 1,497,087 592,049 6,816,763
Investor A Class ..................... 91,627 978,777 297,198 3,434,092
Investor B Class ..................... 35,922 381,524 181,706 2,101,564
Investor C Class ..................... 219,156 2,326,605 220,502 2,549,447
Shares issued in reinvestment of dividends:
Institutional Class .................. 4,204 45,120 122,167 1,410,417
Service Class ........................ 7,034 75,315 14,682 168,519
Investor A Class ..................... 8,724 93,361 17,690 203,137
Investor B Class ..................... 4,093 43,818 6,589 75,421
Investor C Class ..................... 1,198 12,816 1,241 14,108
Shares redeemed:
Institutional Class .................. (10,905,633) (116,133,101) (3,771,833) (42,951,830)
Service Class ........................ (155,842) (1,663,266) (544,873) (6,243,891)
Investor A Class ..................... (138,458) (1,478,002) (262,638) (3,002,374)
Investor B Class ..................... (97,198) (1,033,537) (48,379) (551,451)
Investor C Class ..................... (326,255) (3,471,035) (47,428) (536,351)
----------- ------------ ---------- -----------
Net increase .............................. 2,253,868 $ 24,273,369 3,631,754 $ 42,322,574
=========== ============= ========= ============
</TABLE>
45
<PAGE>
BLACKROCK FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PENNSYLVANIA TAX-FREE INCOME PORTFOLIO
-------------------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
3/31/00 (UNAUDITED) 9/30/99
------------------------------- -----------------------------
SHARES VALUE SHARES VALUE
----------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class .................. 13,611,236 $ 140,050,688 11,936,803 $130,738,719
Service Class ........................ 425,511 4,401,357 1,946,331 21,480,866
Investor A Class ..................... 295,774 3,047,196 1,933,552 21,220,399
Investor B Class ..................... 213,750 2,208,672 893,028 9,815,318
Investor C Class ..................... 19,212 198,833 79,677 875,012
Shares issued in reinvestment of dividends:
Institutional Class .................. 315 3,259 235,781 2,600,638
Service Class ........................ 23,468 242,435 62,177 682,388
Investor A Class ..................... 46,128 477,024 95,111 1,041,492
Investor B Class ..................... 30,165 310,381 52,982 579,108
Investor C Class ..................... 93 958 -- --
Shares redeemed:
Institutional Class .................. (21,979,428) (227,139,853) (12,182,730) (132,469,686)
Service Class ........................ (404,382) (4,168,257) (2,518,041) (27,664,097)
Investor A Class ..................... (1,019,457) (10,528,968) (1,659,281) (18,131,789)
Investor B Class ..................... (375,164) (3,842,398) (264,644) (2,874,022)
Investor C Class ..................... (40,483) (415,262) (9,603) (102,198)
----------- ------------- ---------- ------------
Net increase (decrease) ................... (9,153,262) $ (95,153,935) 601,143 $ 7,792,148
=========== ============= ========== ============
</TABLE>
<TABLE>
<CAPTION>
NEW JERSEY TAX-FREE INCOME PORTFOLIO
-------------------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
3/31/00 (UNAUDITED) 9/30/99
------------------------------- -----------------------------
SHARES VALUE SHARES VALUE
----------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class .................. 1,015,689 $ 11,287,400 1,703,003 $ 20,079,320
Service Class ........................ 79,753 887,540 950,377 11,254,931
Investor A Class ..................... 46,676 520,709 157,686 1,867,021
Investor B Class ..................... 57,963 644,464 66,909 786,813
Investor C Class ..................... -- -- 1,670 20,007
Shares issued in reinvestment of dividends:
Institutional Class .................. 1 16 53,037 631,145
Service Class ........................ 35,494 395,254 103,507 1,224,840
Investor A Class ..................... 1,346 14,980 3,615 42,510
Investor B Class ..................... 2,075 23,076 3,374 39,760
Investor C Class ..................... -- -- -- --
Shares redeemed:
Institutional Class .................. (1,548,824) (17,236,074) (1,962,315) (23,087,074)
Service Class ........................ (410,240) (4,557,290) (1,757,218) (20,710,957)
Investor A Class ..................... (55,316) (615,668) (162,460) (1,871,831)
Investor B Class ..................... (50,045) (556,470) (29,876) (346,126)
Investor C Class ..................... (1,670) (18,437) -- --
----------- ------------- ---------- ------------
Net decrease .............................. (827,098) $ (9,210,500) (868,691) $(10,069,641)
=========== ============= ========== ============
</TABLE>
46
<PAGE>
BLACKROCK FUNDS
<TABLE>
<CAPTION>
OHIO TAX-FREE INCOME PORTFOLIO
-------------------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
3/31/00 (UNAUDITED) 9/30/99
------------------------------- -----------------------------
SHARES VALUE SHARES VALUE
----------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class .................. 1,558,523 $ 15,533,792 800,308 $ 8,533,006
Service Class ........................ 138 1,363 650 7,042
Investor A Class ..................... 73,895 734,493 113,310 1,204,578
Investor B Class ..................... 17,905 178,012 40,768 440,491
Investor C Class ..................... 20,191 200,098 18,577 201,834
Shares issued in reinvestment of dividends:
Institutional Class .................. 22 220 36,794 395,170
Service Class ........................ -- -- 81 867
Investor A Class ..................... 4,301 43,044 8,778 93,451
Investor B Class ..................... 1,813 18,140 3,410 36,270
Investor C Class ..................... 457 4,566 605 6,427
Shares redeemed:
Institutional Class .................. (1,745,116) (17,347,327) (1,052,010) (11,152,663)
Service Class ........................ (21,304) (214,390) (41,330) (444,458)
Investor A Class ..................... (67,398) (673,477) (79,124) (838,187)
Investor B Class ..................... (18,150) (180,777) (6,775) (70,482)
Investor C Class ..................... -- -- (48,754) (523,354)
----------- ------------- ---------- ------------
Net decrease .............................. (174,723) $ (1,702,243) (204,712) $ (2,110,008)
=========== ============ ======== ============
</TABLE>
<TABLE>
<CAPTION>
DELAWARE TAX-FREE INCOME PORTFOLIO
-------------------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
3/31/00 (UNAUDITED) 9/30/99
------------------------------- -----------------------------
SHARES VALUE SHARES VALUE
----------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class .................. 597,223 $ 5,643,852 1,576,276 $ 15,667,167
Service Class ........................ -- -- -- --
Investor A Class ..................... 4,380 41,404 336,725 3,400,904
Investor B Class ..................... 1,442 13,678 155,502 1,583,445
Investor C Class ..................... 4,836 45,729 46,775 478,010
Shares issued in reinvestment of dividends:
Institutional Class .................. -- 2 144,431 1,460,200
Service Class ........................ -- 2 -- 5
Investor A Class ..................... 2,803 26,574 7,070 71,006
Investor B Class ..................... 2,400 22,750 5,851 58,794
Investor C Class ..................... 464 4,391 464 4,610
Shares redeemed:
Institutional Class .................. (1,461,503) (13,856,235) (1,925,198) (19,240,639)
Service Class ........................ -- -- -- --
Investor A Class ..................... (66,526) (631,451) (125,943) (1,245,406)
Investor B Class ..................... (122,893) (1,160,457) (2,496) (25,055)
Investor C Class ..................... (27,952) (263,460) (24,169) (236,139)
---------- ------------ ---------- ------------
Net increase (decrease) ................... (1,065,326) $(10,113,221) 195,288 $ 1,976,902
========== ============ ========== ============
</TABLE>
47
<PAGE>
BLACKROCK FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
KENTUCKY TAX-FREE INCOME PORTFOLIO
-------------------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
3/31/00 (UNAUDITED) 9/30/99
------------------------------- -----------------------------
SHARES VALUE SHARES VALUE
----------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class .................. 1,187,126 $ 11,246,083 2,121,093 $ 21,304,021
Service Class ........................ -- -- 11,768 119,792
Investor A Class ..................... 226,208 2,132,698 217,238 2,164,448
Investor B Class ..................... 11 105 32,197 325,615
Investor C Class ..................... 11,001 104,428 67,325 663,776
Shares issued in reinvestment of dividends:
Institutional Class .................. 1,445 13,644 176,567 1,786,848
Service Class ........................ -- 2 -- 5
Investor A Class ..................... 1,502 14,243 1,509 14,899
Investor B Class ..................... 151 1,435 324 3,229
Investor C Class ..................... 1,115 10,573 379 3,691
Shares redeemed:
Institutional Class .................. (1,719,195) (16,236,572) (3,926,262) (39,348,302)
Service Class ........................ -- -- (11,768) (119,086)
Investor A Class ..................... (64,243) (610,956) (120,476) (1,181,728)
Investor B Class ..................... (3,914) (37,199) (11,450) (112,367)
Investor C Class ..................... (7,992) (76,324) (8,443) (81,346)
----------- ------------- ---------- ------------
Net decrease .............................. (366,785) $ (3,437,840) (1,449,999) $(14,456,505)
=========== ============= ========== ============
</TABLE>
(E) AT MARCH 31, 2000, NET ASSETS CONSISTED OF:
<TABLE>
<CAPTION>
PENNSYLVANIA NEW JERSEY OHIO DELAWARE KENTUCKY
TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE
INCOME INCOME INCOME INCOME INCOME INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------- ------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Capital paid-in ....... $ 348,938,183 $975,055,128 $ 150,793,304 $ 94,576,408 $ 103,646,006 $ 165,868,477
Undistributed net
investment income ... 572,664 -- -- 152,622 -- --
Distributions in excess
of net investment
income .............. -- (480,105) (123,793) -- (346,794) (32,144)
Accumulated net
realized loss
on investment
transactions,
futures and
options contracts ... (6,193,714) (11,068,377) (3,763,611) (876,757) (1,031,009) (3,443,959)
Net unrealized
appreciation
(depreciation) on
investment
transactions and
futures contracts ... (3,000,156) 873,272 3,616,471 881,499 173,752 2,671,033
------------ ------------ ------------ ----------- ------------ ------------
$340,316,977 $964,379,918 $150,522,371 $94,733,772 $102,441,955 $165,063,407
============ ============ ============ =========== ============ ============
</TABLE>
(F) DEFERRED POST-OCTOBER LOSSES
At September 30, 1999, deferred post-October losses for Tax-Free Income
Portfolio were $2,460,848, for Pennsylvania Tax-Free Income Portfolio were
$4,696,019, for New Jersey Tax-Free Income Portfolio were $464,677, for Ohio
Tax-Free Income Portfolio were $644,908, for Delaware Tax-Free Income Portfolio
were $859,010, and for Kentucky Tax-Free Income Portfolio were $843,559.
48
<PAGE>
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<PAGE>
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<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
BLACKROCK FUNDS
Investment Adviser Co-Administrator and Transfer Agent
BlackRock Advisors,Inc. PFPCInc.
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 Prussia, Pennsylvania 19406
Custodian Co-Administrator
PFPC Trust Co. BlackRock Advisors, Inc.
Philadelphia,Pennsylvania 19103 New York, New York 10154
Counsel
Simpson, Thacher & Bartlett
New York, New York 10017
(A partnership which includes
professional corporations)
Independent Accountants
PricewaterhouseCoopers LLP
Philadelphia,Pennsylvania 19103
To reduce expenses, the Fund will mail only one copy of annual and semi-annual
reports and most prospectuses to your household, even if more than one person in
the household has a Fund account. Please call (800) 441-7762 if you would like
to receive additional reports or prospectuses.
<PAGE>
BLACKROCK FUNDS
FUND SPECTRUM
BLACKROCK FUNDS IS A LEADING MUTUAL FUND COMPANY CURRENTLY MANAGING IN EXCESS OF
$25 BILLION IN 36 PORTFOLIOS DESIGNED TO FIT A BROAD RANGE OF INVESTMENT GOALS.
EACH PORTFOLIO IS MANAGED BY RECOGNIZED EXPERTS IN EQUITY, FIXED INCOME,
INTERNATIONAL, AND TAX-FREE INVESTING WHO ADHERE TO A PURE INVESTMENT STYLE.(R)
STOCK PORTFOLIOS
----------------
Large Cap Value Equity Micro-Cap Equity
Large Cap Growth Equity International Equity
Mid-Cap Value Equity International Small Cap Equity
Mid-Cap Growth Equity International Emerging Markets
Small Cap Value Equity Select Equity
Small Cap Growth Equity Index Equity
STOCK & BOND PORTFOLIOS
----------------------
Balanced
BOND PORTFOLIOS
---------------
Low Duration Bond
Intermediate Government Bond GNMA
Intermediate Bond Managed Income
Core Bond International Bond
Government Income High Yield Bond
TAX-FREE BOND PORTFOLIOS
------------------------
Tax-Free Income Ohio Tax-Free Income
Pennsylvania Tax-Free Income Delaware Tax-Free Income
New Jersey Tax-Free Income Kentucky Tax-Free Income
MONEY MARKET PORTFOLIOS
-----------------------
Money Market North Carolina Municipal Money Market
U.S. Treasury Money Market Ohio Municipal Money Market
Municipal Money Market Pennsylvania Municipal Money Market
New Jersey Municipal Money Market Virginia Municipal Money Market
SHAREHOLDER PRIVILEGES
24 HOUR ACCOUNT INFORMATION
Call us at 1-800-441-7762, 24 hours a day, 7 days a week to get information
about your account balances, recent transactions and share prices. Note:
Institutional and Service Share Class investors should call 1-800-441-7764. You
can also reach us on the Internet through the World Wide Web by accessing
http://www.blackrock.com.
EXCHANGE PRIVILEGES
Should your investment goals change, shareholders in our Investor Class shares
may exchange all or part of their investments into the same share class of any
other portfolio of BlackRock Funds. (1)
AUTOMATIC INVESTMENT PLANS
Investor Class shareholders who want to invest regularly can arrange to have $50
or more automatically deducted from their checking or savings account and
invested in any of the BlackRock portfolios.
SYSTEMATIC WITHDRAWAL PLANS
Investor Class shareholders can establish a systematic withdrawal plan and
receive periodic payments of $100 or more from their BlackRock portfolios, as
long as their account is at least $1,000.
RETIREMENT PLANS
Shareholders may make investments in conjunction with individual IRAaccounts or
rollover IRAs.
GENERAL INFORMATION ABOUT THE BLACKROCK FUNDS
If you would like additional reports or have questions regarding any of the 36
BlackRock Funds, please call 1-800-FUTURE4 (1-800-388-8734)
(1) BLACKROCK FUNDS RESERVES THE RIGHT TO MODIFY OR TERMINATE THE EXCHANGE
PRIVILEGES AT ANY TIME.
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BLACKROCK
FUNDS
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 3/31/00 TFP
