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BLACKROCK FUNDS - Notes to Mutual Funds Financial Statements - 2-13-1998

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					                                          Notes to Financial Statements.

(iv) With respect to the Low Duration Bond Portfolio (formerly the Short Government Bond Portfolio) and Core
Bond Portfolio:

Report of Independent Accountants (Deloitte & Touche L.L.P.) for the fiscal year ended June 30, 1995 as it
relates to the Statement of Changes in Net Assets for the year ended June 30, 1995 and the Financial Highlights
for the years or periods ended June 30, 1995, 1994 and 1993.

(v) With respect to The Multi-Sector Mortgage Securities Portfolio III:

Report of Independent Accountants (Coopers & Lybrand L.L.P.) for the year ended September 30, 1997;

                                Schedule of Investments - September 30, 1997;

                                  Statement of Assets and Liabilities - September
                                                    30, 1997;

                                     Statement of Operations for the year ended
                                               September 30, 1997;

Statement of Changes in Net Assets for the year ended September 30, 1997 and the periods ended September
30, 1996 and March 31, 1996;

Financial highlights for all periods presented;

                                          Notes to Financial Statements.

(vi) With respect to The U.S. Large Company Series of The DFA Investment Trust Company:

                                                       C-4
Report of Independent Accountants (Coopers & Lybrand L.L.P.) for the fiscal year ended November 30, 1997;

                             Statement of Net Assets - November 30, 1997;

                                Statement of Operations for the year ended
                                          November 30, 1997;

                              Statement of Changes in Net Assets for the year
                                       ended November 30, 1997;

                                          Financial Highlights;

                                    Notes to Financial Statements.

(b) Exhibits:

                 (1)   (a)   Declaration of Trust of the Registrant dated December
                             22, 1988 is incorporated herein by reference to
                             Exhibit (1)(a) of Post-Effective Amendment No. 33 to
                             Registrant's Registration Statement on Form N-1A filed
                             on January 27, 1998.

                       (b)   Amendment No. 1 to Declaration of Trust dated May 4,
                             1989 is incorporated herein by reference to Exhibit
                             (1)(b) of Post-Effective Amendment No. 33 to
                             Registrant's Registration Statement on Form N-1A filed
                             on January 27, 1998.

                       (c)   Amendment No. 2 to the Declaration of Trust dated
                             December 23, 1993 is incorporated herein by reference
                             to Exhibit (1)(c) of Post-Effective Amendment No. 33
                             to Registrant's Registration Statement on Form N-1A
                             filed on January 27, 1998.

                       (d)   Amendment No. 3 to the Declaration of Trust dated
                             January 5, 1996 is incorporated by reference to
                             Exhibit 1(d) of Post-Effective Amendment No. 23 to
                             Registrant's Registration Statement on Form N-1A (No.
                             33-26305) filed on October 18, 1996 ("Post-Effective
                             Amendment No. 23").




                                                   C-5
      (e)   Amendment No. 4 to the Declaration of Trust dated
            December 23, 1997 is incorporated herein by reference
            to Exhibit (1)(e) of Post-Effective Amendment No. 33
            to Registrant's Registration Statement on Form N-1A
            filed on January 27, 1998.

(2)         Registrant's Code of Regulations is incorporated
            herein by reference to Exhibit (2) of Post-Effective
            Amendment No. 33 to Registrant's Registration
            Statement on Form N-1A filed on January 27, 1998.

(3)         None.

(4)         Sections V, VIII and IX of Registrant's Declaration of
            Trust dated December 22, 1988 are incorporated herein
            by reference to Exhibit (1)(a) of Post-Effective
            Amendment No. 33 to Registrant's Registration
            Statement on Form N-1A filed on January 27, 1998;
            Article II of Registrant's Code of Regulations is
            incorporated herein by reference to Exhibit (2) of
            Post-Effective Amendment No. 33 to Registrant's
            Registration Statement on Form N-1A filed on January
            27, 1998.

(5)   (a)   Investment Advisory Agreement between Registrant and
            PNC Asset Management Group, Inc. relating to all
            Portfolios except the Multi-Sector Mortgage Securities
            Portfolio III and Index Equity Portfolio is
            incorporated herein by reference to Exhibit (5)(a) of
            Post-Effective Amendment No. 21 to Registrant's
            Registration Statement on Form N-1A filed on May 30,
            1996.

      (b)   Investment Advisory Agreement between Registrant and
            BlackRock Financial Management, Inc. with respect to
            the Multi-Sector Mortgage Securities Portfolio III is
            incorporated herein by reference to Exhibit (5)(b) of
            Post-Effective Amendment No. 21 to Registrant's
            Registration Statement on Form N-1A filed on May 30,
            1996.

      (c)   Addendum No. 1 to Investment Advisory Agreement
            between Registrant and PNC Asset Management Group,
            Inc. with respect to the Mid-Cap Value Equity and Mid-
            Cap Growth Equity Portfolios is incorporated herein by
            reference to Exhibit 5(c) of Post-Effective

                       C-6
      Amendment No. 27 to Registrant's Registration
      Statement on Form N-1A filed on January 28, 1997.

(d)   Form of Amendment No. 1 to Investment Advisory
      Agreement between Registrant and BlackRock Financial
      Management, Inc. with respect to BlackRock Strategic
      Portfolio I and BlackRock Strategic Portfolio II is
      incorporated herein by reference to Exhibit 5(d) of
      Post-Effective Amendment No. 26 to Registrant's
      Registration Statement on Form N-1A filed on December
      18, 1996.

(e)   Form of Addendum No. 2 to Investment Advisory
      Agreement between Registrant and PNC Asset Management
      Group, Inc. with respect to the International Small
      Cap Equity Portfolio is incorporated herein by
      reference to Exhibit 5(e) of Post-Effective Amendment
      No. 30 to Registrant's Registration Statement on Form
      N-1A filed on August 19, 1997.

(f)   Sub-Advisory Agreement between PNC Asset Management
      Group, Inc. and BlackRock Financial Management, Inc.
      with respect to the Managed Income, Tax-Free Income,
      Intermediate Government Bond, Ohio Tax-Free Income,
      Pennsylvania Tax-Free Income, Low Duration Bond,
      Intermediate Bond, Government Income, New Jersey Tax-
      Free Income and Core Bond Portfolios is incorporated
      herein by reference to Exhibit (5)(c) of Post-
      Effective Amendment No. 21 to Registrant's
      Registration Statement on Form N-1A filed on May 30,
      1996.

(g)   Sub-Advisory Agreement between PNC Asset Management
      Group, Inc. and Provident Capital Management, Inc.
      with respect to the Large Cap Value Equity, Small Cap
      Value Equity and Select Equity Portfolios is
      incorporated herein by reference to Exhibit (5)(c) of
      Post-Effective Amendment No. 21 to Registrant's
      Registration Statement on Form N-1A filed on May 30,
      1996.

(h)   Sub-Advisory Agreement between PNC Asset Management
      Group, Inc. and PNC Equity Advisors Company with
      respect to the Large Cap Growth Equity and Small Cap
      Growth Equity Portfolios is incorporated

                 C-7
      herein by reference to Exhibit (5)(c) of Post-
      Effective Amendment No. 21 to Registrant's
      Registration Statement on Form N-1A filed on May 30,
      1996.

(i)   Sub-Advisory Agreement between PNC Asset Management
      Group, Inc. and PNC Institutional Management
      Corporation with respect to the Money Market, U.S.
      Treasury Money Market, Municipal Money Market,
      Pennsylvania Municipal Money Market, Ohio Municipal
      Money Market, North Carolina Municipal Money Market,
      Virginia Municipal Money Market and New Jersey
      Municipal Money Market Portfolios is incorporated
      herein by reference to Exhibit (5)(c) of Post-
      Effective Amendment No. 21 to Registrant's
      Registration Statement on Form N-1A filed on May 30,
      1996.

(j)   Sub-Advisory Agreement between PNC Asset Management
      Group, Inc. and CastleInternational Asset Management
      Limited with respect to the International Equity and
      International Emerging Markets Portfolios is
      incorporated herein by reference to Exhibit (5)(c) of
      Post-Effective Amendment No. 21 to Registrant's
      Registration Statement on Form N-1A filed on May 30,
      1996.

(k)   Sub-Advisory Agreement among PNC Asset Management
      Group, Inc., Provident Capital Management, Inc. and
      BlackRock Financial Management, Inc. with respect to
      the Balanced Portfolio is incorporated herein by
      reference to Exhibit (5)(c) of Post-Effective
      Amendment No. 21 to Registrant's Registration
      Statement on Form N-1A filed on May 30, 1996.

(l)   Sub-Advisory Agreement between PNC Asset Management
      Group, Inc. and Provident Capital Management, Inc.
      with respect to the Mid-Cap Value Equity Portfolio is
      incorporated herein by reference to Exhibit 5(k) of
      Post-Effective Amendment No. 27 to Registrant's
      Registration Statement on Form N-1A filed on January
      28, 1997.

(m)   Sub-Advisory Agreement between PNC Asset Management
      Group, Inc. and PNC Equity Advisors

                 C-8
      Company with respect to the Mid-Cap Growth Equity
      Portfolio is incorporated herein by reference to
      Exhibit 5(l) of Post-Effective Amendment No. 27 to
      Registrant's Registration Statement on Form N-1A filed
      on January 28, 1997.

(n)   Sub-Advisory Agreement between PNC Asset Management
      Group, Inc. and BlackRock Financial Management, Inc.
      with respect to the International Bond Portfolio is
      incorporated herein by reference to Exhibit 5(m) of
      Post-Effective Amendment No. 27 to Registrant's
      Registration Statement on Form N-1A filed on January
      28, 1997.

(o)   Form of Sub-Advisory Agreement between PNC Asset
      Management Group, Inc. and CastleInternational Asset
      Management Limited with respect to the International
      Small Cap Equity Portfolio is incorporated herein by
      reference to Exhibit 5(o) of Post-Effective Amendment
      No. 30 to Registrant's Registration Statement on Form
      N-1A filed on August 19, 1997.

(p)   Form of Addendum No. 3 to Investment Advisory
      Agreement between Registrant and PNC Asset Management
      Group, Inc. with respect to the Micro-Cap Equity
      Portfolio, GNMA Portfolio, Delaware Tax-Free Income
      Portfolio and Kentucky Tax-Free Income Portfolio is
      incorporated herein by reference to Exhibit (5)(p) of
      Post-Effective Amendment No. 33 to Registrant's
      Registration Statement on Form N-1A filed on January
      27, 1998.

(q)   Form of Sub-Advisory Agreement between PNC Asset
      Management Group, Inc. and PNC Equity Advisors Company
      with respect to the Micro-Cap Equity Portfolio is
      incorporated herein by reference to Exhibit (5)(q) of
      Post-Effective Amendment No. 33 to Registrant's
      Registration Statement on Form N-1A filed on January
      27, 1998.

(r)   Form of Sub-Advisory Agreement between BlackRock, Inc.
      and BlackRock Financial Management, Inc. with respect
      to the GNMA, Delaware Tax-Free Income and Kentucky
      Tax-Free Income Portfolios.




                         C-9
(6)   (a)   Distribution Agreement between Registrant and
            Provident Distributors, Inc. dated January 31, 1994 is
            incorporated herein by reference to Exhibit (6)(a) of
            Post-Effective Amendment No. 33 to Registrant's
            Registration Statement on Form N-1A filed on January
            27, 1998.

      (b)   Form of Appendix A to Distribution Agreement between
            Registrant and Compass Distributors, Inc. is
            incorporated herein by reference to Exhibit (6)(b) of
            Post-Effective Amendment No. 33 to Registrant's
            Registration Statement on Form N-1A filed on January
            27, 1998.

      (c)   Amendment No. 2 to the Distribution Agreement between
            Registrant and Provident Distributors, Inc. dated
            October 18, 1994 is incorporated herein by reference
            to Exhibit (6)(c) of Post-Effective Amendment No. 33
            to Registrant's Registration Statement on Form N-1A
            filed on January 27, 1998.

      (d)   Amendment No. 3 to the Distribution Agreement between
            Registrant and Provident Distributors, Inc. is
            incorporated herein by reference to Exhibit (6)(d) of
            Post-Effective Amendment No. 21 to Registrant's
            Registration Statement on Form N-1A filed on May 30,
            1996.

(7)         None.

(8)   (a)   Custodian Agreement dated October 4, 1989 between
            Registrant and PNC Bank, National Association is
            incorporated herein by reference to Exhibit (8)(a) of
            Post-Effective Amendment No. 33 to Registrant's
            Registration Statement on Form N-1A filed on January
            27, 1998.

      (b)   Amendment No. 1 to Custodian Agreement between
            Registrant and PNC Bank, National Association is
            incorporated herein by reference to Exhibit (8)(b) of
            Post-Effective Amendment No. 33 to Registrant's
            Registration Statement on Form N-1A filed on January
            27, 1998.




                               C-10
      (c)   Amendment No. 2 dated March 1, 1993 to Custodian
            Agreement between Registrant and PNC Bank, National
            Association with respect to the Short-Term Bond,
            Intermediate-Term Bond, Core Equity, Small Cap Growth
            Equity and North Carolina Municipal Money Market
            Portfolios is incorporated herein by reference to
            Exhibit (8)(c) of Post-Effective Amendment No. 33 to
            Registrant's Registration Statement on Form N-1A filed
            on January 27, 1998.

      (d)   Form of Appendix B to Custodian Agreement between
            Registrant and PNC Bank, National Association is
            incorporated herein by reference to Exhibit (8)(d) of
            Post-Effective Amendment No. 33 to Registrant's
            Registration Statement on Form N-1A filed on January
            27, 1998.

      (e)   Sub-Custodian Agreement dated April 27, 1992 among the
            Registrant, PNC Bank, National Association and The
            Chase Manhattan Bank.

      (f)   Global Custody Agreement between Barclays Bank PLC and
            PNC Bank, National Association dated October 28, 1992
            is incorporated herein by reference to Exhibit (8)(f)
            of Post-Effective Amendment No. 33 to Registrant's
            Registration Statement on Form N-1A filed on January
            27, 1998.

      (g)   Custodian Agreement between State Street Bank and
            Trust Company and PNC Bank, National Association dated
            June 13, 1983.

      (h)   Amendment No. 1 to Custodian Agreement between State
            Street Bank and Trust Company and PNC Bank, National
            Association dated November 21, 1989.

      (i)   Subcustodial Services Agreement dated January 10, 1996
            between PNC Bank, National Association and Citibank,
            N.A. is incorporated herein by reference to Exhibit
            8(j) of Post-Effective Amendment No. 27 to
            Registrant's Registration Statement on Form N-1A filed
            on January 28, 1997.

(9)   (a)   Form of Amended and Restated Administration Agreement
            among Registrant, Compass Distributors,

                       C-11
      Inc. and PFPC Inc. is incorporated herein by reference
      to Exhibit 9(d) of Post-Effective Amendment No. 27 to
      Registrant's Registration Statement on Form N-1A filed
      on January 28, 1997.

(b)   Forms of Appendix A and Appendix B to Amended and
      Restated Administration Agreement between Registrant,
      Compass Distributors, Inc. and PFPC Inc. are
      incorporated herein by reference to Exhibit (9)(b) of
      Post-Effective Amendment No. 33 to Registrant's
      Registration Statement on Form N-1A filed on January
      27, 1998.

(c)   Form of Co-Administration Agreement between Registrant
      and BlackRock, Inc. is incorporated herein by
      reference to Exhibit (9)(c) of Post-Effective
      Amendment No. 33 to Registrant's Registration
      Statement on Form N-1A filed on January 27, 1998.

(d)   Form of Appendix A to Co-Administration Agreement
      between Registrant and BlackRock, Inc. is incorporated
      herein by reference to Exhibit (9)(c) of Post-
      Effective Amendment No. 33 to Registrant's
      Registration Statement on Form N-1A filed on January
      27, 1998.

(e)   Transfer Agency Agreement dated October 4, 1989
      between Registrant and PFPC Inc. is incorporated
      herein by reference to Exhibit (9)(e) of Post-
      Effective Amendment No. 33 to Registrant's
      Registration Statement on Form N-1A filed on January
      27, 1998.

(f)   Amendment No. 1 to Transfer Agency Agreement dated
      October 4, 1989 between Registrant and PFPC Inc.
      relating to the Tax-Free Income Portfolio is
      incorporated herein by reference to Exhibit (9)(f) of
      Post-Effective Amendment No. 33 to Registrant's
      Registration Statement on Form N-1A filed on January
      27, 1998.

(g)   Amendment No. 2 to Transfer Agency Agreement dated
      October 4, 1989 between Registrant and PFPC Inc.
      relating to the Pennsylvania Municipal Money Market,
      Ohio Municipal Money Market, Intermediate Government,
      Ohio Tax-Free Income, Pennsylvania Tax-Free Income,
      Large Cap Value Equity, Index Equity and Small Cap
      Value Equity Portfolios is




                         C-12
incorporated herein by reference to Exhibit (9)(g) of Post-Effective Amendment No. 33 to Registrant's
Registration Statement on Form N-1A filed on January 27, 1998.

(h) Amendment No. 3 to Transfer Agency Agreement dated October 4, 1989 between Registrant and PFPC
Inc. relating to the Short-Term Bond, Intermediate-Term Bond, Core Equity, Small Cap Growth Equity and
North Carolina Municipal Money Market Portfolios is incorporated herein by reference to Exhibit (9)(h) of Post-
Effective Amendment No. 33 to Registrant's Registration Statement on Form N-1A filed on January 27, 1998.

(i) Amendment No. 4 to Transfer Agency Agreement dated October 4, 1989 between Registrant and PFPC Inc.
relating to Series B Investor Shares of the Money Market, Managed Income, Tax-Free Income, Intermediate
Government, Ohio Tax-Free Income, Pennsylvania Tax- Free Income, Large Cap Value Equity, Large Cap
Growth Equity, Index Equity, Small Cap Value Equity, Intermediate-Term Bond, Small Cap Growth Equity,
Core Equity, International Fixed Income, Government Income, International Emerging Markets, International
Equity and Balanced Portfolios is incorporated herein by reference to Exhibit (9)(i) of Post-Effective Amendment
No. 33 to Registrant's Registration Statement on Form N-1A filed on January 27, 1998.

(j) Form of Appendix C to Transfer Agency Agreement between Registrant and PFPC Inc. is incorporated
herein by reference to Exhibit (9)(j) of Post- Effective Amendment No. 33 to Registrant's Registration Statement
on Form N-1A filed on January 27, 1998.

(k) License Agreement dated as of December 1, 1995 between the Registrant and Compass Capital Group, Inc.
is incorporated herein by reference to Exhibit 9(q) of Post-Effective Amendment No. 27 to Registrant's
Registration Statement on Form N-1A filed on January 28, 1997.

(10) None.

                                                     C-13
(11)         Consent of Coopers & Lybrand L.L.P.

(12)         None.

(13) (a)     Form of Purchase Agreement between Registrant and
             Registrant's distributor relating to Classes A-1, B-1,
             C-1, D-2, E-2, F-2, G-2, H-2, I-1, I-2, J-1, J-2, K-2,
             L-2, M-2, N-2, O-2, P-2, D-1, E-1, F-1, G-1, H-1, K-1,
             L-1, M-1, N-1, O-1, P-1, A-2, B-2, C-2, I-2, J-2, A-3,
             B-3, C-3, D-3, E-3, F-3, G-3, H-3, I-3, J-3, K-3, L-3,
             M-3, N-3, O-3, P-3, Q-1, Q-2, Q-3, R-1, R-2, R-3, S-1,
             S-2, S-3, T-1, T-2, T-3, U-1, U-2, U-3, A-4, D-4, E-4,
             F-4, G-4, H-4, K-4, L-4, M-4, N-4, O-4, P-4, R-4, S-4,
             T-4, U-4, W-4, X-4, Y-4, V-1, V-2, V-3, W-1, W-2, W-3,
             X-1, X-2, X-3, Y-1, Y-2, Y-3, Z-1, Z-2, Z-3, AA-1, AA-
             2, AA-3, AA-4, AA-5, BB-1, BB-2, BB-3, BB-4, BB-5, CC-
             3, A-5, B-4, B-5, C-4, C-5, I-4, I-5, J-4, J-5, Q-4,
             Q-5, V-4, V-5, Z-4, Z-5, X-1, X-3, D-5, E-5, F-5, G-5,
             H-5, K-5, L-5, M-5, N-5, O-5, P-5, R-5, S-5, T-5, U-5,
             W-5, X-5, Y-5, DD-1, DD-2, DD-3, DD-4, DD-5, EE-1, EE-
             2, EE-3, EE-4, EE-5, R-6, BB-6, FF-3, GG-3, HH-1, HH-
             2, HH-3, HH-4, HH-5, II-1, II-2, II-3, II-4, II-5, S-
             6, JJ-1, JJ-2, JJ-3, JJ-4, JJ-5, KK-1, KK-2, KK-3, KK-
             4, KK-5, LL-1, LL-2, LL-3, LL-4 and LL-5.

(14)         None.

(15) (a)     Amended and Restated Distribution and Service Plan for
             Service, Series A Investor, Series B Investor, Series
             C Investor, Institutional and BlackRock Shares is
             incorporated herein by reference to Exhibit (15) of
             Post-Effective Amendment No. 21 to Registrant's
             Registration Statement on Form N-1A filed on May 30,
             1996.

       (b)   Form of Appendix A to Amended and Restated
             Distribution and Service Plan is incorporated herein
             by reference to Exhibit (15)(b) of Post-Effective
             Amendment No. 33 to Registrant's Registration
             Statement on Form N-1A filed on January 27, 1998.

(16)         Schedules for computation of performance quotations.

(17)         None.

                        C-14
(18)              Plan Pursuant to 18f-3 for Operation of a Multi-Class
                  Distribution System is incorporated herein by
                  reference to Exhibit (18) of Post-Effective Amendment
                  No. 21 to Registrant's Registration Statement on Form
                  N-1A filed on May 30, 1996.

       (24) (a)   Registrant's Annual Reports for the Money Market,
                  Equity and Bond Portfolios, each dated September 30,
                  1997, are incorporated herein by reference to
                  Registrant's filings including such Annual Reports
                  filed on December 5, 1997 with respect to the Money
                  Market Portfolios (Accession No. 0000935069-97-
                  000209), and December 9, 1997 with respect to the
                  Equity and Bond Portfolios (Accession Nos. 0000935069-
                  97-000210 and 0000935069-97-000211).

           (b)    Registrant's Annual Report for the Multi-Sector
                  Mortgage Securities Portfolio III, dated September 30,
                  1997, is incorporated herein by reference to
                  Registrant's filing including such Annual Report filed
                  on November 26, 1997 (Accession No. 0000930413-97-
                  000628).

           (c)    Annual Report for The DFA Investment Trust Company
                  ("DFA") (File No. 811-7436) dated November 30, 1997
                  with respect to the U.S. Large Company Series is
                  incorporated herein by reference to DFA's filing
                  including such Annual Report and filed on February 5,
                  1998 (Accession No. 0001047469-98-003623).

       (99) (a)   Power of Attorney of David R. Wilmerding dated March
                  5, 1996 appointing David R. Wilmerding, Raymond J.
                  Clark and Karen H. Sabath as attorneys and agents is
                  incorporated herein by reference to such Power of
                  Attorney filed in Post-Effective Amendment No. 28 to
                  Registrant's Registration Statement on form N-1A filed
                  on February 18, 1997.

           (b)    Power of Attorney of William O. Albertini dated March
                  5, 1996 appointing David R. Wilmerding, Raymond J.
                  Clark and Karen H. Sabath as attorneys and agents is
                  incorporated herein by reference to such Power of
                  Attorney filed in Post-Effective Amendment No. 28 to
                  Registrant's Registration Statement on form N-1A filed
                  on February 18, 1997.

                             C-15
                            (c)    Power of Attorney of Raymond J. Clark dated March 5,
                                   1996 appointing David R. Wilmerding, Raymond J. Clark
                                   and Karen H. Sabath as attorneys and agents is
                                   incorporated herein by reference to such Power of
                                   Attorney filed in Post-Effective Amendment No. 28 to
                                   Registrant's Registration Statement on form N-1A filed
                                   on February 18, 1997.

                            (d)    Power of Attorney of Robert M. Hernandez dated March
                                   5, 1996 appointing David R. Wilmerding, Raymond J.
                                   Clark and Karen H. Sabath as attorneys and agents is
                                   incorporated herein by reference to such Power of
                                   Attorney filed in Post-Effective Amendment No. 28 to
                                   Registrant's Registration Statement on form N-1A filed
                                   on February 18, 1997.

                            (e)    Power of Attorney of Anthony M. Santomero dated March
                                   5, 1996 appointing David R. Wilmerding, Raymond J.
                                   Clark and Karen H. Sabath as attorneys and agents is
                                   incorporated herein by reference to such Power of
                                   Attorney filed in Post-Effective Amendment No. 28 to
                                   Registrant's Registration Statement on form N-1A filed
                                   on February 18, 1997.




Item 25. Persons Controlled by or under Common Control with Registrant

Registrant is controlled by its Board of Trustees.

Item 26. Number of Holders of Securities

With regard to the classes of shares of the Registrant, the following information is as of December 31, 1997:

Portfolio                                            Institutional   Service   Investor A    Investor B    Investor C
---------                                            -------------   -------   ----------    ----------    ----------

Money Market                                               18          708        832             30            1

US Treasury Money Market                                      3        200          84             1            1

Municipal Money Market                                        2         63           8             1            2

Ohio Municipal Money Market                                   8          3           4             1            1

Pennsylvania Municipal Money Market                        24           44          46             1            1

North Carolina Municipal                                   13            5           8             1            1
 Money Market

New Jersey Municipal Money Market                             9        113          21             1            1




                                                       C-16
Portfolio                                           Institutional      Service    Investor A    Investor B     Investor C
---------                                           -------------      -------    ----------    ----------     ----------
Virginia Municipal Money Market                            10              2           3             0              0

Managed Income                                               29           11         259             65             0

Tax-Free Income                                              10          121         139             54             2

Ohio Tax-Free Income                                           3            2          27            21             0

Pennsylvania Tax-Free Income                                   1         116         337            415             1

New Jersey Tax-Free Income                                     0       1,506           18            24             1

Low Duration Bond                                            28          953           62             5             2

Low Duration Bond/BlackRock Class                              8         N/A         N/A            N/A            N/A

Intermediate Bond                                              8         442           44             0             0

Core Bond                                                    37        1,516           39           532             9

Core Bond/BlackRock Class                                      7         N/A         N/A            N/A            N/A

Intermediate Government                                      13             3        152              4             1

Government Income                                              0            0          72           926             9

International Bond                                             6          92           62            92            36

International Emerging Markets                               16           15         170            416             4

Large Cap Growth Equity                                      35          603         583          1,015             5

Index Equity                                                 22          161         725          2,434            629

Small Cap Value Equity                                       56           13         814          1,639            71

International Equity                                         30          551         608          1,176             7

International Small Cap Equity                                 6            6          21           125             4

Balanced                                                     14          123       1,674          2,601             5

Large Cap Value Equity                                       21        4,091         768          2,593             6

Small Cap Growth Equity                                     162          437       1,350          4,354            384

Select Equity                                                32             9        264          2,713            14

Mid-Cap Value Equity                                         10           14           60           844             6

Mid-Cap Growth Equity                                        14             6          39           616            14

Multi-Sector Mortgage                                          2         N/A         N/A            N/A            N/A
  Securities III

BlackRock Strategic I                                        12          N/A         N/A            N/A            N/A

BlackRock Strategic II                                         0         N/A         N/A            N/A            N/A




Item 27. Indemnification

Indemnification of Registrant's principal underwriter against certain losses is provided for in Section 7 of the
Distribution Agreement incorporated by reference herein as

                                                        C-17
Exhibit (6)(a). Indemnification of PFPC Inc. and BlackRock Distributors, Inc. in their capacity as co-
administrators is provided for in Section 7 of the Amended and Restated Administration Agreement incorporated
by reference herein as Exhibit 9(a). Indemnification of Registrant's Custodian and Transfer Agent is provided for,
respectively, in Section 22 of the Custodian Agreement incorporated by reference herein as Exhibit 8(a) and
Section 17 of the Transfer Agency Agreement incorporated by reference herein as Exhibit 9(e). Indemnification
of BlackRock, Inc. in its capacity as co-administrator as provided for in Section 7 of the Co-Administration
Agreement incorporated by reference herein as Exhibit 9(c). Registrant intends to obtain from a major insurance
carrier a trustees' and officers' liability policy covering certain types of errors and omissions. In addition, Section
9.3 of the Registrant's Declaration of Trust incorporated by reference herein as Exhibit 1(a) provides as follows:

                  Indemnification of Trustees, Officers, Representatives and Employees.

The Trust shall indemnify each of its Trustees against all liabilities and expenses (including amounts paid in
satisfaction of judgments, in compromise, as fines and penalties, and as counsel fees) reasonably incurred by him
in connection with the defense or disposition of any action, suit or other proceeding, whether civil or criminal, in
which he may be involved or with which he may be threatened, while as a Trustee or thereafter, by reason of his
being or having been such a Trustee except with respect to any matter as to which he shall have been adjudicated
to have acted in bad faith, willful misfeasance, gross negligence or reckless disregard of his duties,

provided that as to any matter disposed of by a compromise payment by such person, pursuant to a consent
decree or otherwise, no indemnification either for said payment or for any other expenses shall be provided
unless the Trust shall have received a written opinion from independent legal counsel approved by the Trustees to
the effect that if either the matter of willful misfeasance, gross negligence or reckless disregard of duty, or the
matter of bad faith had been adjudicated, it would in the opinion of such counsel have been adjudicated in favor
of such person. The rights accruing to any person under these provisions shall not exclude any other right to
which he may be lawfully entitled, provided that no person may satisfy any right of indemnity or reimbursement
hereunder except out of the property of the Trust. The Trustees may make advance payments in connection with
the indemnification under this Section 9.3, provided that the indemnified person shall have given a written
undertaking to reimburse the Trust in the event it is subsequently determined that he is not entitled to such
indemnification.

The Trustee shall indemnify officers, representatives and employees of the Trust to the same extent that Trustees
are entitled to indemnification pursuant to this Section 9.3.

Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to trustees,
officers and controlling persons of Registrant pursuant to the foregoing provisions, or otherwise, Registrant has
been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for

                                                        C-18
indemnification against such liabilities (other than the payment by Registrant of expenses incurred or paid by a
trustee, officer or controlling person of Registrant in the successful defense of any action, suit or proceeding) is
asserted by such trustee, officer or controlling person in connection with the securities being registered, Registrant
will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.

Section 9.6 of the Registrant's Declaration of Trust, filed herein as Exhibit 1(a), also provides for the
indemnification of shareholders of the Registrant. Section 9.6 states as follows:

Indemnification of Shareholders. In case any Shareholder or former Shareholder shall be held to be personally
liable solely by reason of his being or having been a Shareholder and not because of his acts or omissions or for
some other reason, the Shareholder or former Shareholder (or his heirs, executors, administrators or other legal
representatives or, in the case of a corporation or other entity, its corporate or other general successor) shall be
entitled out of the assets belonging to the classes of Shares with the same alphabetical designation as that of the
Shares owned by such Shareholder to be held harmless from and indemnified against all loss and expense arising
from such liability. The Trust shall, upon request by the Shareholder, assume the defense of any claim made
against any Shareholder for any act or obligations of the Trust and satisfy any judgment thereon from such assets.

Item 28. Business and Other Connections of Investment Advisers

(a) BlackRock, Inc. (formerly PNC Asset Management Group, Inc.) is an indirect wholly-owned subsidiary for
PNC Bank Corp. BlackRock, Inc. was organized in 1994 for the purpose of providing advisory services to
investment companies. The list required by this Item 28 of officers and directors of BlackRock, Inc., together
with information as to any other business, profession, vocation or employment of a substantial nature engaged in
by such officers and directors during the past two years, is incorporated by reference to Schedules A and D of
Form ADV, filed by BlackRock, Inc. pursuant to the Investment Advisers Act of 1940 (SEC File No. 801-
47710).

(b) PNC Institutional Management Corporation ("PIMC") is an indirect wholly-owned subsidiary of PNC Bank
Corp. The list required by this Item 28 of officers and directors of PIMC, together with information as to any
other business, profession, vocation or employment of a substantial nature engaged in by such officers and
directors during the past two years, is incorporated by reference to Schedules A and D of Form ADV, filed by
PIMC pursuant to the Investment Advisers Act of 1940 (SEC File No. 801-13304).

(c) Provident Capital Management, Inc. ("PCM") is an indirect wholly- owned subsidiary of PNC Bank Corp.
PCM currently offers investment advisory services to institutional investors such as pension and profit-sharing
plans or trusts, insurance companies

                                                        C-19
and banks. The list required by this Item 28 of officers and directors of PCM, together with information as to any
other business, profession, vocation or employment of a substantial nature engaged in by such officers and
directors during the past two years, is incorporated by reference to Schedules A and D of Form ADV, filed by
PCM pursuant to the Investment Advisers Act of 1940 (SEC File No. 801-1438).

(d) BlackRock Financial Management, Inc. ("BlackRock") is an indirect wholly-owned subsidiary of PNC Bank
Corp. BlackRock currently offers investment advisory services to institutional investors such as pension and
profit-sharing plans or trusts, insurance companies and banks. The list required by this Item 28 of officers and
directors of BlackRock, together with information as to any other business, profession, vocation or employment
of a substantial nature engaged in by such officers and directors during the past two years, is incorporated by
reference to Schedules A and D of Form ADV, filed by BlackRock pursuant to the Investment Advisers Act of
1940 (SEC File No. 801-48433).

(e) PNC Equity Advisors Company ("PEAC") is an indirect wholly-owned subsidiary of PNC Bank Corp.
PEAC currently offers investment advisory services to institutional investors such as pension and profit-sharing
plans or trusts, insurance companies and banks. The list required by this Item 28 of officers and directors of
PEAC, together with information as to any other business, profession, vocation or employment of a substantial
nature engaged in by such officers and directors during the past two years, is incorporated by reference to
Schedules A and D of Form ADV, filed by PEAC pursuant to the Investment Advisers Act of 1940 (SEC File
No. 801-47711).

(f) CastleInternational Asset Management Limited ("CastleInternational") is an indirect wholly-owned subsidiary
of PNC Bank Corp. The list required by this Item 28 of officers and directors of CastleInternational, together
with information as to any other business, profession, vocation or employment of a substantial nature engaged in
by such officers and directors during the past two years, is incorporated by reference to Schedules A and D of
Form ADV, filed by CastleInternational pursuant to the Investment Advisers Act of 1940 (SEC File No. 801-
51087).

Item 29. Principal Underwriter

(a) Not applicable.

(b) The information required by this Item 29 with respect to each director, officer or partner of BlackRock
Distributors, Inc. (formerly Compass Distributors, Inc.) is incorporated by reference to Schedule A of FORM
BD filed by BlackRock Distributors, Inc. with the Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934 (File No. 8-48775).

(c) Not applicable.

                                                      C-20
Item 30. Location of Accounts and Records

(1) PNC Bank, National Association, Broad and Chestnut Streets, Philadelphia, Pennsylvania 19102 (records
relating to its functions as custodian).

(2) Provident Capital Management, Inc., 30 South 17th Street, Philadelphia, Pennsylvania 19103 (records
relating to its functions as investment sub-adviser).

(3) BlackRock Distributors, Inc., Four Falls Corporate Center, 6th Floor, West Conshohocken, PA 19428-
2961 (records relating to its functions as distributor and co- administrator).

(4) BlackRock, Inc., 1600 Market Street, 29th Floor, Philadelphia, PA 19103 (records relating to its functions
as investment adviser and co-administrator).

(5) PNC Institutional Management Corporation, Bellevue Corporate Center, 103 Bellevue Parkway,
Wilmington, Delaware 19809 (records relating to its functions as investment sub- adviser).

(6) BlackRock Financial Management, Inc., 345 Park Avenue, New York, New York 10154 (records relating
to its functions as investment adviser and sub-adviser).

(7) PNC Equity Advisors Company, 1600 Market Street, 29th Floor, Philadelphia, Pennsylvania 19103
(records relating to its functions as investment sub-adviser).

(8) PFPC Inc., Bellevue Corporate Center, 400 Bellevue Parkway, Wilmington, Delaware 19809 (records
relating to its functions as co-administrator, transfer agent and dividend disbursing agent).

(9) The Chase Manhattan Bank, N.A., 1285 Avenue of the Americas, New York, New York 10019 (records
relating to its function as sub-custodian).

(10) State Street Bank and Trust Company, P.O. Box 1631, Boston, Massachusetts (records relating to its
function as sub- custodian).

(11) Barclays Bank PLC, 75 Wall Street, New York, New York 10265 (records relating to its function as sub-
custodian).

                                                     C-21
(12) CastleInternational Asset Management Limited, 7 Castle Street, Edinburgh, Scotland, EH2 3AH (records
relating to its functions as investment sub-adviser).

(13) Citibank, N.A., 111 Wall Street, 23rd Floor, Zone 6, New York, NY 10043 (records relating to its
functions as sub- custodian).

(14) PNC Bank Corp., 1600 Market Street, 28th Floor, Philadelphia, PA 19103 (Registrant's declaration of
trust, code of regulations and minute books).

Item 31. Management Services

None.

Item 32. Undertakings

(a) Registrant undertakes to furnish each person to whom a prospectus is delivered with a copy of Registrant's
latest annual report to shareholders upon request and without charge.

(b) (1) Registrant undertakes to file a post-effective amendment, using reasonably current financial statements
which need not be certified, within four to six months from the effective date of Post-Effective Amendment No.
30 to Registrant's 1933 Act Registration Statement relating to shares of the International Small Cap Equity
Portfolio or the initial public offering thereof, whichever is later.

(2) Registrant undertakes to file a post-effective amendment, using reasonably current financial statements which
need not be certified, within four to six months from the effective date of this Post- Effective Amendment No. 33
to Registrant's 1933 Act Registration Statement relating to shares of the Micro-Cap Equity Portfolio and
BlackRock Shares of the Intermediate Bond Portfolio, or the initial public offering thereof, whichever is later.

(3) Registrant undertakes to file a post-effective amendment, using reasonably current financial statements which
need not be certified, within four to six months from the effective date of this Post- Effective Amendment No. 34
to Registrant's 1933 Act Registration Statement relating to shares of the GNMA, Delaware Tax-Free Income
and Kentucky Tax-Free Income Portfolios, or the initial public offering thereof, whichever is later.

                                                      C-22
                                                SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the
Registrant has duly caused this Post- Effective Amendment No. 34 to its Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of New York and the State of New York on
the 13th day of February, 1998.

                                           BLACKROCK FUNDS
                                               Registrant

                                   By /s/ Raymond J. Clark
                                      ---------------------------------
                                          Raymond J. Clark,
                                          President and Treasurer
                                          (Principal Executive Officer)




Pursuant to the requirements of the Securities Act of 1933, this Post- Effective Amendment No. 34 to the
Registration Statement has been signed by the following persons in the capacities and on the dates indicated:

                  Signature                        Title                         Date
                  ---------                        -----                         ----

            /s/ Raymond J. Clark                   Trustee, President and        February 13, 1998
            -------------------------              Treasurer
            (Raymond J. Clark)



            /s/ David R. Wilmerding, Jr.           Chairman of the Board         February 13, 1998
            -------------------------
            (David R. Wilmerding, Jr.)



            /s/ Anthony M. Santomero               Vice-Chairman of the          February 13, 1998
            -------------------------              Board
            (Anthony M. Santomero)



            /s/ William O. Albertini               Trustee                       February 13, 1998
            ------------------------
            (William O. Albertini)



            /s/ Robert M. Hernandez                Trustee                       February 13, 1998
            -------------------------
            (Robert M. Hernandez)
                                            EXHIBIT INDEX
                                            -------------




Exhibit No.   Description
-----------   -----------
5(r)          Form of Sub-Advisory Agreement between
              BlackRock, Inc. and BlackRock Financial
              Management, Inc. with respect to the GNMA
              Portfolio, the Delaware Tax-Free Income Portfolio
              and the Kentucky Tax-Free Income Portfolio.

8(e)          Sub-Custodian Agreement dated April 27, 1992
              among The Chase Manhattan Bank, N.A., The
              PNC Fund and Provident National Bank.

8(g)          Custodian Agreement dated June 13, 1983 between Provident
              National Bank and State Street Bank and Trust Company.

8(h)          Amendment No. 1 to Custodian Agreement.

11            Consent of Coopers & Lybrand L.L.P.

13(a)         Form of Purchase Agreement.

16            Average Annual Total Return Computation.
                                               EXHIBIT 5(r)

                                    SUB-ADVISORY AGREEMENT

                                             GNMA Portfolio
                                    Delaware Tax-Free Income Portfolio
                                    Kentucky Tax-Free Income Portfolio

AGREEMENT dated as of _______________, 1998, between BlackRock, Inc., a Delaware corporation
("Adviser"), and BlackRock Financial Management, Inc., a Delaware corporation ("Sub-Adviser").

WHEREAS, Adviser has agreed to furnish investment advisory services to the GNMA Portfolio, the Delaware
Tax-Free Income Portfolio and the Kentucky Tax-Free Income Portfolio (each, a "Portfolio") of BlackRock
Funds (the "Fund"), an open- end, management investment company registered under the Investment Company
Act of 1940 ("1940 Act"); and

WHEREAS, Adviser wishes to retain the Sub-Adviser to provide it with sub- advisory services as described
below in connection with Adviser's advisory activities on behalf of each Portfolio; and

WHEREAS, the advisory agreement between Adviser and the Fund dated January 4, 1996 (such Agreement or
the most recent successor agreement between such parties relating to advisory services to each Portfolio is
referred to herein as the "Advisory Agreement") contemplates that Adviser may sub-contract investment advisory
services with respect to each Portfolio to a sub-adviser pursuant to a sub-advisory agreement agreeable to the
Fund and approved in accordance with the provisions of the 1940 Act; and

WHEREAS, this Agreement has been approved in accordance with the provisions of the 1940 Act, and Sub-
Adviser is willing to furnish such services upon the terms and conditions herein set forth;

NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, it is agreed
between the parties hereto as follows:

1. Appointment. Adviser hereby appoints Sub-Adviser to act as sub-adviser with respect to each Portfolio as
provided in Section 2 of the Advisory Agreement. Sub-Adviser accepts such appointment and agrees to render
the services herein set forth for the compensation herein provided.
2. Services of Sub-Adviser. Subject to the oversight and supervision of Adviser and the Fund's Board of
Trustees, Sub-Adviser will supervise the day-to- day operations of each Portfolio and perform the following
services: (i) provide investment research and credit analysis concerning each Portfolio's investments, (ii) conduct a
continual program of investment of each Portfolio's assets, (iii) determine what portion of each Portfolio's assets
will be invested in cash, cash equivalents and money market instruments, (iv) place orders for all purchases and
sales of the investments made for each Portfolio, and (v) maintain the books and records as are required to
support Fund operations (in conjunction with record-keeping and accounting functions performed by Adviser). In
addition, Sub-Adviser will keep the Fund and Adviser informed of developments materially affecting the Fund
and shall, on its own initiative, furnish to the Fund from time to time whatever information Sub-Adviser believes
appropriate for this purpose. Sub-Adviser will communicate to Adviser on each day that a purchase or sale of an
instrument is effected for each Portfolio (i) the name of the issuer, (ii) the amount of the purchase or sale, (iii) the
name of the broker or dealer, if any, through which the purchase or sale will be effected,
(iv) the CUSIP number of the instrument, if any, and (v) such other information as Adviser may reasonably
require for purposes of fulfilling its obligations to the Fund under the Advisory Agreement. Sub-Adviser will
provide the services rendered by it under this Agreement in accordance with each Portfolio's investment
objectives, policies and restrictions as stated in each Portfolio's Prospectus and Statement of Additional
Information (as currently in effect and as they may be amended or supplemented from time to time), and the
resolutions of the Fund's Board of Trustees.

3. Other Sub-Adviser Covenants. Sub-Adviser further agrees that it:

(a) will comply with all applicable Rules and Regulations of the Securities and Exchange Commission (the "SEC")
and will in addition conduct its activities under this Agreement in accordance with other applicable law;

(b) will place orders either directly with the issuer or with any broker or dealer. Subject to the other provisions of
this paragraph, in placing orders with brokers and dealers, Sub-Adviser will attempt to obtain the best price and
the most favorable execution of its orders. In placing orders, Sub-Adviser will consider the experience and skill
of the firm's securities traders as well as the firm's financial responsibility and administrative efficiency. Consistent
with this obligation, Sub-Adviser may, subject to the approval of the Fund's Board of Trustees, select brokers on
the basis of the research, statistical and pricing services they provide to the Portfolio and other clients of Adviser
or Sub-Adviser. Information and research received from such brokers will be in addition to, and not in lieu of, the
services required to be performed by Sub- Adviser hereunder. A commission paid to such brokers may be
higher than that which another qualified broker would have charged for effecting the same transaction, provided
that Sub-Adviser determines in good faith that such commission is reasonable in terms either of the transaction or
the overall responsibility of Adviser and Sub-Adviser to each Portfolio and their other clients and that the total
commissions paid by each Portfolio will be reasonable in relation to the benefits to the
Portfolio over the long-term. In addition, Sub-Adviser is authorized to take into account the sale of shares of the
Fund in allocating purchase and sale orders for portfolio securities to brokers or dealers (including brokers and
dealers that are affiliated with Adviser, Sub-Adviser or the Fund's distributor), provided that Sub-Adviser
believes that the quality of the transaction and the commission are comparable to what they would be with other
qualified firms. In no instance, however, will any Portfolio's securities be purchased from or sold to the Adviser,
Sub-Adviser, the Fund's distributor or any affiliated person thereof, except to the extent permitted by the SEC or
by applicable law;

(c) will maintain or cause Adviser to maintain books and records with respect to each Portfolio's securities
transactions and will render to Adviser and the Fund's Board of Trustees such periodic and special reports as
they may request;

(d) will maintain a policy and practice of conducting its investment advisory services hereunder independently of
the commercial banking operations of its affiliates. When Sub-Adviser makes investment recommendations for a
Portfolio, its investment advisory personnel will not inquire or take into consideration whether the issuer of
securities proposed for purchase or sale for the Portfolio's account are customers of the commercial department
of its affiliates; and

(e) will treat confidentially and as proprietary information of the Fund all records and other information relative to
the Fund, each Portfolio's and the Fund's prior, current or potential shareholders, and will not use such records
and information for any purpose other than performance of its responsibilities and duties hereunder, except after
prior notification to and approval in writing by the Fund, which approval shall not be unreasonably withheld and
may not be withheld where Sub-Adviser may be exposed to civil or criminal contempt proceedings for failure to
comply, when requested to divulge such information by duly constituted authorities, or when so requested by the
Fund.

4. Services Not Exclusive. Sub-Adviser's services hereunder are not deemed to be exclusive, and Sub-Adviser
shall be free to render similar services to others so long as its services under this Agreement are not impaired
thereby.

5. Books and Records. In compliance with the requirements of Rule 31a-3 under the 1940 Act, Sub-Adviser
hereby agrees that all records which it maintains for each Portfolio are the property of the Fund and further
agrees to surrender promptly to the Fund any such records upon the Fund's request. Sub- Adviser further agrees
to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the records required to be maintained
by Rule 31a-1 under the 1940 Act.

6. Expenses. During the term of this Agreement, Sub-Adviser will pay all expenses incurred by it in connection
with its activities under this Agreement other than the cost of securities, commodities, and other investments
(including brokerage commissions and other transaction charges, if any) purchased or sold for each Portfolio.
7. Compensation. For the services which the Sub-Adviser will render to Adviser under this Agreement, Adviser
will pay to Sub-Adviser a fee, computed daily and payable monthly, at the following annual rates for each
Portfolio:
.400% of the first $1 billion of each Portfolio's average daily net assets, .350% of the next $1 billion of each
Portfolio's average daily net assets, .325% of the next $1 billion of each Portfolio's average daily net assets
and .300% of the average daily net assets of each Portfolio in excess of $3 billion.

If the Adviser waives any or all of its advisory fee payable under the Advisory Agreement, or reimburses the
Fund pursuant to Section 8(b) of that Agreement, with respect to a Portfolio, the Sub-Adviser will bear its share
of the amount of such waiver or reimbursement by waiving fees otherwise payable to it hereunder on a
proportionate basis to be determined by comparing the aggregate fees that would otherwise be paid to it
hereunder with respect to the Portfolio to the aggregate fees that would otherwise be paid by the Fund to the
Adviser under the Advisory Agreement with respect to the Portfolio. Adviser shall inform Sub-Adviser prior to
waiving any advisory fees.

8. Limitation on Liability. Sub-Adviser will not be liable for any error of judgment or mistake of law or for any
loss suffered by Adviser or by a Portfolio in connection with the performance of this Agreement, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of compensation for services or a loss
resulting from willful misfeasance, bad faith or gross negligence on its part in the performance of its duties or from
reckless disregard by it of its obligations or duties under this Agreement.

9. Duration and Termination. This Agreement will become effective as of the date hereof and, unless sooner
terminated with respect to a Portfolio as provided herein, shall continue in effect with respect to each Portfolio
until March 31, 1999. Thereafter, if not terminated, this Agreement shall continue in effect with respect to each
Portfolio for successive annual periods ending on March 31, provided such continuance is specifically approved
at least annually
(a) by the vote of a majority of those members of the Fund's Board of Trustees who are not interested persons of
any party to this Agreement, cast in person at a meeting called for the purpose of voting on such approval, and
(b) by the Fund's Board of Trustees or by a vote of a majority of the outstanding voting securities of the Portfolio.
Notwithstanding the foregoing, this Agreement may be terminated with respect to a Portfolio at any time, without
the payment of any penalty, by the Fund (by vote of the Fund's Board of Trustees or by vote of a majority of the
outstanding voting securities of the Portfolio), or by Adviser or Sub-Adviser on 60 days' written notice, and will
terminate automatically upon any termination of the Advisory Agreement between the Fund and Adviser. This
Agreement will also immediately terminate in the event of its assignment. (As used in this Agreement, the terms
"majority of the outstanding voting securities," "interested person" and "assignment" shall have the same meanings
of such terms in the 1940 Act.)

10. Amendment of this Agreement. No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge or termination is sought. Any
amendment of this Agreement shall be subject to the 1940 Act.

11. Miscellaneous. The captions in this Agreement are included for convenience of reference only and in no way
define or delimit any of the provisions hereof or otherwise affect their construction or effect. If any provision of
this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. This Agreement shall be binding on, and shall inure to the benefit of, the
parties hereto and their respective successors and shall be governed by Delaware law.

12. Counterparts. This Agreement may be executed in counterparts by the parties hereto, each of which shall
constitute an original counterpart, and all of which, together, shall constitute one Agreement.

[End of Text]
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by their officers
designated below as of the day and year first above written.

                                         BLACKROCK, INC.

                                By:______________________________

                         BLACKROCK FINANCIAL MANAGEMENT, INC.

                                By:______________________________
                                                 EXHIBIT 8(e)

                                     SUB-CUSTODIAN AGREEMENT

                      AGREEMENT dated as of April 27, 1992 among THE CHASE

MANHATTAN BANK, N.A. ("Bank"), THE PNC(R) FUND ("Fund") and PROVIDENT
NATIONAL
BANK ("Company").

                                             W I T N E S S E T H:

WHEREAS, Company has entered into a Custodian Agreement with the Fund, a Massachusetts business trust,
to provide certain custody services; and

WHEREAS, the company and the Fund wish to retain Bank to provide certain Sub-custodian services to the
Company and the Fund for the benefit of the Fund, and Bank is willing to furnish such services;

NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, it is agreed
between the parties hereto as follows:

1. Custody Account. The bank agrees to establish and maintain (a) a separate custody account for each
investment portfolio of the Fund ("Custody Account") for any and all stocks, shares, bonds, debentures, notes,
mortgages or other obligations for the payment of money and any certificates, receipts, warrants or other
instruments representing rights to receive, purchase or subscribe for the same or evidencing or representing any
other rights or interests therein and other similar property (hereinafter called "Securities") from time to time
received by the Bank or any sub-custodian (as defined in the second paragraph of Section 3 hereof) for the
account of the particular investment portfolio of the Fund; and (b) a separate deposit account or
                                                         2

accounts in the name of each investment portfolio of the Fund ("Deposit Account") for any and all cash
equivalents in any currency received by the Bank or any sub-custodian for the account of the particular
investment portfolio of the Fund, which cash shall not be subject to withdrawal by draft or check. The term
"Property" as used herein shall mean all securities, cash, cash equivalents and other assets of the Fund.

2. Maintenance of Property Abroad. Securities in a Custody Account shall be held in the country or other
jurisdiction as shall be specified from time to time in Instructions (as defined in section 9 hereof), provided that
such country or other jurisdiction shall be one in which the principal trading market for such Securities is located
or the country or other jurisdiction in which such Securities are to be presented for payment or are acquired for
the Custody Account, and cash in a Deposit Account shall be credited to an account in such country on other
jurisdiction in which such cash may be legally deposited or is the legal currency for the payment of public or
private debts. Cash may be held pursuant to Instructions in either interest or non-interest bearing accounts as may
be available for the particular currency. To the extent Instructions are issued and the Bank can comply with such
Instructions, the Bank is authorized to maintain cash balances on deposit for the Fund with itself or one of its
affiliates at such reasonable rates of interest as may from time to time be paid on such accounts, or in non-interest
bearing accounts as the Fund may direct, if acceptable to the Bank.
                                                          3

3. Eligible Foreign Custodians and Securities Depositories.
The Board of Trustees of the Fund authorizes the Bank to hold the Securities in the Custody Account(s) and the
cash in the Deposit Account(s) in custody and deposit accounts, respectively, which have been established by the
bank with one of its branches, a branch of a qualified U.S. bank, an eligible foreign custodian or an eligible
foreign securities depository; provided, however, that the Board of Trustees of the Fund has approved the use of,
and the Bank's contract with, such eligible foreign custodian or eligible foreign securities depository by resolution,
and Instructions to such effect have been provided to the Bank. Furthermore, if a Bank's branch, a branch of a
qualified U.S. bank or an eligible foreign custodian is selected to act as the Bank's sub-custodian to hold any
Property, such entity is authorized to hold such Property in its account with any eligible foreign securities
depository in which it participates so long as such foreign securities depository has been approved by the Board
of Trustees of the Fund. For purposes of this Agreement (a) "qualified U.S. bank" shall mean a qualified U.S.
bank as defined in Rule 17f-5 under the Investment Company Act of 1940, as amended ("Rule 17f-5"); (b)
"eligible foreign custodian" shall seen (i) a banking institution or trust company incorporated or organized under
the laws of a country other than the United States that is regulated as such by that country's government or an
agency thereof and that has shareholders' equity in excess of $200 million in U.S. currency or a foreign currency
equivalent thereto) or (ii) a
                                                         4

majority-owned direct or indirect subsidiary of a qualified U.S. bank or bank holding company that is
incorporated or organized under the laws of a country other than the United States and that has shareholders'
equity in excess of $100 million in U.S. currency (or a foreign currency equivalent thereto), and (c) "eligible
foreign securities depository" shall mean a securities depository or clearing agency, incorporated or organized
under the laws of a country other than the United States, which operates (i) the central system for handling of
securities or equivalent book-entries in that country or (ii) a transnational system for the central handling of
securities or equivalent book--entries.

Hereinafter the term "sub-custodian" will refer to any Bank branch, any branch of a qualified U.S. bank, any
eligible foreign custodian or any eligible foreign securities depository with which the Bank has entered into an
agreement of the type contemplated hereunder regarding Securities and/or cash held in or to be acquired for a
Custody Account or a Deposit Account.

If, after the initial approval of the sub-custodians by the Board of Trustees of the Fund in connection with this
Agreement, the Bank wishes to appoint other sub-custodians to hold the Fund's Property, it will so notify the
Company and the Fund and will provide them with information reasonably necessary to determine any such new
sub-custodian's eligibility under Rule 17f-5, including a copy of the proposed agreement with such-custodian. The
Fund shall within 30 days after receipt of
                                                         5

such notice give a written approval or disapproval of the proposed action.

If the Bank intends to remove any sub-custodian previously approved, it shall so notify the Fund and the
Company and shall move the Property deposited with such sub-custodian to another sub-custodian previously
approved or to a new sub-custodian, provided that the appointment of any new sub- custodian will be subject to
the requirements set forth in the preceding paragraph. The Bank shall take steps as may be required to remove
any sub- custodian which has ceased to meet the requirements of Rule 17f-5.

4. Use of Sub-Custodians. With respect to Property which is maintained by the Bank in the physical custody of a
sub-custodian pursuant to
Section 3:

(a) The Bank will identify on its books as belonging to the particular investment portfolio of the Fund any
Property held by such sub- custodian.

(b) In the event that a sub-custodian permits any of the Securities placed in its care to be held in an eligible
foreign securities depository, such sub-custodian will be required by its agreement with the Bank to identify on its
books such Securities as being held for the account of the Bank as a custodian for its customers.

(c) Any Securities in a Custody Account held by a sub-custodian of the Bank will be subject only to the
instructions of the Bank or its agents; and any Securities held in an eligible
                                                           6

foreign securities depository for the account of a sub-custodian will be subject only to the instructions of such
sub-custodian.

(d) The Bank will only deposit Property in an account with a sub- custodian which includes exclusively the assets
held by the Bank for its customers, and the Bank will cause such account to be designated by such sub-
custodian as a special custody account for the exclusive benefit of customers of the Bank.

(e) Any agreement the Bank shall enter into with a sub-custodian with respect to the holding of property shall
require that (i) the Property is not subject to any right, charge, security interest, lien or claim of any kind in favor
of such sub-custodian or its creditors except for a claim of payment for its safe custody or administration and (ii)
beneficial ownership of such Property is freely transferable without the payment of money or value other than for
safe custody or administration; provided, however, that the foregoing shall not apply to the extent that any of the
above-mentioned rights, charges, etc. result from any compensation or other expenses arising with respect to the
safekeeping of Property pursuant to such agreement.

(f) The Bank shall allow independent public accountants of the Fund such reasonable access to the records of the
Bank relating to Property held in a Custody Account and a Deposit Account as required by such accountants in
connection with their examination of the books and records pertaining to the affairs of the Fund. The Bank shall,
subject to restrictions
                                                          7

under applicable law, also obtain from any sub-custodian with which the Bank maintains the physical possession
of any Property an undertaking to permit independent public accountants of the Fund such reasonable access to
the records of such sub-custodian as may be required in connection with their examination of the books and
records pertaining to the affairs of the Fund or to supply a verifiable confirmation of the contents of such records.
The Bank shall furnish the Fund and the Company such reports (or portions thereof) of the Bank's external
auditors as relate directly to the Bank's system of internal accounting controls applicable to the Bank's duties
under this Agreement.

(g) The Bank will supply to the Fund, care of its investment adviser, and the Company at least monthly a
statement in respect to any Property in a Custody and a Deposit Account held by each sub-custodian, including
an identification of the entity having possession of such Property, and the Bank will send to the Fund and the
Company an advice or notification of any transfers of Property to or from the Custody Account and Deposit
Account, indicating, as to Property acquired for an investment portfolio of the Fund, the identity of the entity
having physical possession of such Property. In the absence of the filing in writing with the Bank by the Fund of
exceptions or objections to any such statement within sixty (60) days of the Fund's receipt of such statement, or
within sixty (60) days after the date that a material defect is reasonably discoverable, the Fund shall be deemed to
have approved such statement; and in such case or upon written approval of the Fund of any such statement the
Bank
                                                         8

shall, to the extent permitted by law and provided the Bank has met the standard of care in Section 12 hereof, be
released, relieved and discharged with respect to all matters and things set forth in such statement as though such
statement has been settled by the decree of a court of competent jurisdiction in an action in which the Fund and
all persons having any equity interest in the Fund were parties.

(h) The Bank hereby warrants to the Fund and the Company that in its opinion, after due inquiry, the established
procedures to be followed by each of its branches, each branch of a qualified U.S. bank, each eligible foreign
custodian and each eligible foreign securities depository holding Property of the Fund pursuant to this Agreement
afford protection for such Property at least equal to that afforded by the Bank's established procedures with
respect to similar Property held by the Bank (and its securities depositories) in New York.

(i) The Bank hereby warrants to the Fund and the Company that as of the date of this Agreement it is maintaining
a Bankers Blanket Bond and hereby agrees to notify the Fund and the Company in the event its Bankers Blanket
Bond is cancelled or otherwise lapses.

5. Deposit Account Payments. Subject to the provisions of Section 7, the Bank shall make, or cause its sub-
custodian to make, payments of cash credited to a Deposit Account only:

(a) in connection with the purchase of Securities for the particular investment portfolio of the Fund involved and
the
                                                         9

delivery of such Securities to, or the crediting of such Securities to the particular Custody Account of, the Bank
or its sub-custodian, each such payment to be made at prices as confirmed by Instructions from Authorized
Parsons (as defined in Section 10 hereof);

(b) for the purchase or redemption of shares of the capital stock of the particular investment portfolio of the Fund
involved and the delivery to, or crediting to the account of, the Bank or its sub-custodian of such shares to be so
purchased or redeemed;

(c) for the payment for the account of the particular investment portfolio of the Fund involved of dividends,
interest, taxes, management or supervisory fees, capital distributions or operating expenses;

(d) for the payments to be made in connection with the conversion, exchange or surrender of Securities held in a
Custody Account;

(e) for other proper corporate purposes of the particular investment portfolio of the Fund involved; or

(f) upon the termination of this Custody Agreement as hereinafter set forth.

All payments of cash for a purpose permitted by subsection (a), (b),
(c) or (d) of this Section 5 will be made only upon receipt by the Bank of Instructions from Authorized Persons
which shall specify the purpose for which the payment is to be made and the applicable subsection of this Section
5. In the case of any payment to be made for the purpose permitted by
                                                         10

subsection (e) of this Section 5, the Bank must first receive a certified copy of a resolution or the Board of
Trustees of the Fund adequately describing such payment, declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom such payment shall be made. Any payment pursuant to
subsection (f) of this Section 5 will be made in accordance with Section 17 hereof.

In the event that any payment for an investment portfolio of the Fund made under this Section 5 exceeds the
funds available in that investment portfolio's Deposit Account, the Bank may, in its discretion, advance the Fund
on behalf of tax investment portfolio an amount equal to such excess and such advance shall be deemed a loan
from the Bank to that investment portfolio payable on demand, bearing interest at the rate of interest customarily
charged by the Bank on similar loans. If the Bank causes a Deposit Account to be credited on the payable date
for interest, dividends or redemptions, the particular investment portfolio of the Fund involved will promptly return
to the Bank any such amount or property so credited upon oral or written notification that neither the Bank nor its
sub-custodian can collect such amount or property in the ordinary course of business. The Bank or its sub-
custodian, as the case may be, shall have no duty or obligation to institute legal proceedings, file a claim or proof
of claim in any insolvency proceeding or take any other action with respect to the collection of such amount or
property beyond its ordinary collection procedures.
                                                         11

6. Custody Account Transactions. Subject to the provisions of Section 7, Securities in a Custody Account will be
transferred, exchanged or delivered by the Bank or its sub-custodians only:

(a) upon sale of such Securities for the particular investment portfolio of the Fund involved and receipt by the
Bank or its sub- custodian of payment therefor, each such payment to be in the amount confirmed by Instructions
from Authorized Persons;

(b) when such Securities are called, redeemed or retired, or otherwise become payable;

(c) in exchange for or upon conversion into other Securities alone or other Securities and cash pursuant to any
plan of merger, consolidation, reorganization, recapitalization or readjustment;

(d) upon conversion of such Securities pursuant to their terms into other Securities;

(e) upon exercise of subscription, purchase or other similar rights represented by such Securities;

(f) for the purpose of exchanging interim receipts or temporary Securities for definitive Securities;

(g) For the purpose of redeeming in kind shares of the capital stack of the particular investment portfolio of the
Fund involved against delivery to the Bank or its sub-custodian of such shares to be redeemed;

(h) for other proper corporate purposes of the particular investment portfolio of the Fund involved; or
                                                        12

(i) upon the termination of this Custody Agreement as hereinafter set forth.

All transfers, exchanges or deliveries of Securities in a Custody Account for a purpose permitted by either
subsection (a), (b), (c), (d), (e) of (f) of this
Section 6 will be made, except an provided in Section 8 hereof, only upon receipt by the Bank of Instructions
from Authorized Persons which shall specify the purpose of the transfer, exchange or delivery to be made and the
applicable subsection of this Section 6. In the case of any transfer or delivery to be made for the purpose
permitted by subsection (g) of this Section 6, the Bank must first receive Instructions from Authorized Persons
specifying the shares held by the Bank or its sub-custodian to be so transferred or delivered and naming the
person or persons to whom transfers or delivery of such shares shall be made. In the case of any transfer,
exchange or delivery to be made for the purpose permitted by subsection (h) of this Section 6, the Bank must
first receive a certified copy of a resolution of the Board of Trustees of the Fund adequately describing such
transfer, exchange or delivery of declaring such purpose to be a proper corporate purpose, and naming the
person or persons to whom delivery, of such Securities shall be made. Any transfer or delivery pursuant to
subsection (i) of this Section 6 will be made in accordance with
Section 17 hereof.

7. Custody Account Procedures. With respect to any transaction involving Securities held in or to be acquired for
a Custody Account, the Bank in its discretion may cause the Deposit
                                                         13

Account for the particular investment portfolio of the Fund involved to be credited on the contractual settlement
date with the proceeds of any sale or exchange of Securities from the particular Custody Account and to be
debited on the contractual settlement date for the cost of Securities purchased or acquired for the particular
Custody Account. The Bank may reverse any such credit or debit if the transaction with respect to which such
credit or debit was made fails to settle within a reasonable period, determined by the Bank in its discretion, after
the contractual settlement date, except that if any Securities delivered pursuant to this Section 7 are returned by
the recipient thereof, the Bank may cause any such credits and debits to be reversed at any time. With respect to
any transactions as to which the Bank does not determine so to credit or debit the particular Deposit Account,
the proceeds from the sale or exchange or Securities will be credited and the cost of such Securities purchased or
acquired will be debited to the particular Deposit Account on the date such proceeds or Securities are received
by the Bank.

Notwithstanding the preceding paragraph, settlement and payment for Securities received for, and delivery of
Securities out of, a Custody Account may be effected in accordance with the customary or established securities
trading or securities processing practices and procedures in the jurisdiction or market in which the transaction
occurs, including, without limitation, delivering Securities to the purchaser thereof or to a dealer therefor (or an
agent for such purchaser or dealer) against a
                                                         14

receipt with the expectation of receiving later payment for such Securities from such purchaser or dealer.

8. Actions of the Bank. Until the Bank receives Instructions from Authorized Persons to the contrary, the Bank
will, or will instruct its sub- custodian, to:

(a) present for payment any Securities in a Custody Account which are called, redeemed or retired or otherwise
become payable and all coupons and other income items which call for payment upon presentation to the extent
that the Bank or sub-custodian is aware of such opportunities for payment, and hold cash received upon
presentation of such Securities in accordance with the provisions of Sections 2, 3 and 4 hereof;

(b) in respect of Securities in a Custody Account, execute in the name of the Fund on behalf of the particular
investment portfolio involved such ownership and other certificates as may be required to obtain payments in
respect thereof;

(c) exchange interim receipts or temporary Securities in a Custody Account for definitive Securities;

(d) (if applicable) convert monies received with respect to Securities of foreign issue into United States dollars or
any other currency necessary to effect any transaction involving the Securities whenever it is practicable to do so
through customary banking channels, using any method or agency available, including, but not limited to, the
facilities of the Bank, its subsidiaries, affiliates or sub-custodians;
                                                         15

(e) (if applicable) appoint brokers and agents for any transaction involving the Securities in a Custody Account,
including, without limitation, affiliates of the Bank or any sub-custodian; and

(f) reclaim taxes withheld by foreign issuers where reclaim is possible, provided that Bank has been provided with
all documentation it may require.

9. Instructions. As used in this Agreement, the term "Instructions" means instructions of the Fund or the Company
received by the Bank via telephone, telex, TWX, facsimile transmission, bank wire or other teleprocess or
electronic instruction system acceptable to the Bank which the Bank believes in good faith to have been given by
Authorized Persons or which are transmitted with proper testing or authentication pursuant to terms and
conditions which the Bank may specify.

Any Instructions delivered to the Bank by telephone shall promptly thereafter be confirmed in writing by an
Authorized Person (which confirmation may bear the facsimile signature of such Person), but the particular
investment portfolio of the Fund involved and the Company will hold the Bank harmless for the Company's or the
Fund's (i) failure to send such confirmation in writing, or
(ii) the failure of such confirmation to conform to the telephone Instructions received. Unless otherwise expressly
provided, all Instructions shall continue in full force and effect until cancelled or superseded. If the Bank requires
test arrangements, authentication methods or other security devices to be used with respect to Instructions, any
                                                          16

Instructions given by the Fund or the Company thereafter shall be given and processed in accordance with such
terms and conditions for the use of such arrangements, methods or devices as the Bank may put into effect and
modify from time to time. The Fund and the Company shall safeguard any testkeys, identification codes or other
security devices which the Bank shall make available to them. The Bank may electronically record any
Instructions given by telephone, and any other telephone discussions, with respect to a Custody Account.

10. Authorized Persons. As used in this Agreement, the term "Authorized Parsons" means such officers or such
agents of the Fund or the Company as have been designated by a resolution of the Board of Trustees of the
Fund, a certified copy of which has been provided to the Bank, to act on behalf of the Fund in the performance
of any acts which Authorized Persons may do under this Agreement. Such persons shall continue to be
Authorized Persons until such time as the Bank receives Instructions from Authorized Persons that any such
officer or agent is no longer an Authorized Person.

11. Nominees. Securities in a Custody Account which are ordinarily in registered form may be registered in the
name of the Bank's nominee or, as to any Securities in the possession of an entity other than the Bank, in the
name of such entity's nominee. The particular investment portfolio of the Fund involved agrees to hold any such
nominee harmless from any liability as a holder of record of such Securities, but not if such liability is a result of
such nominee's negligence. The
                                                        17

Bank may without notice to the Company or the Fund cause any such Securities to cease to be registered in the
name of any such nominee and to be registered in the name of the Fund. In the event that any Securities
registered in the name of the Bank's nominee or held by one of its sub-custodians and registered in the name of
such sub-custodian's nominee are called for partial redemption by the issuer of such Security, the Bank may allot,
or cause to be allotted, the called portion to the respective beneficial holders of such class of security in any
manner the Bank deems to be fair and equitable.

12. Standard of Care.

(a) The Bank shall be obligated to perform only such duties as are set forth in this Agreement or expressly
contained in instructions given to Bank which are consistent with the provisions of this Agreement.

(i) The Bank will use reasonable care with respect to its obligations under this Agreement and the safekeeping of
Property. The Bank shall be liable to the Fund and the Company for any loss which shall occur as the result of
the failure of a sub-custodian or an eligible foreign securities depository to exercise reasonable care with respect
to the safekeeping of such Property to the same extent that the Bank would be liable to the Fund and the
Company if the Bank were holding such Property is New York. In the event of any loss to the Fund or the
Company by reason of the failure of the Bank or its sub-custodian or an eligible foreign securities depository to
exercise reasonable care, the Bank shall be liable to the Fund or the Company only to the extent of the Fund's or
Company's direct damages and expenses to be determined based on, but not limited to, the market value of the
Property which is the subject of the loss at the date of discovery of such loss and without reference to any special
conditions or circumstances.
                                                          18

(ii) The Bank will not be responsible for any act, omission, default or for the solvency of any broker or agent
(other than as provided herein) which it or a sub-custodian appoints and uses unless such appointment and use
were made or done negligently or in bad faith.

(iii) The Bank shall be indemnified by, and without liability to the particular investment portfolio of the Fund
involved and the Company for any action taken or omitted by the Bank whether pursuant to Instructions or
otherwise within the scope of this Agreement if such act or omission was in good faith and without negligence. In
performing its obligations under this Agreement, the Bank may rely on the genuineness of any document which it
believes in good faith and without negligence to have been validly executed.

(iv) The Fund, on behalf of the particular investment portfolio of the Fund involved, agrees to cause such
investment portfolio to pay for and hold the Bank harmless from any liability or loss resulting from the imposition
or assessment of any taxes or other governmental charges, and any related expenses with respect to income from
or Property in such investment portfolio's Custody Account and Deposit Account.

(v) The Bank shall be entitled to rely, and may act upon the advice of counsel (who may be counsel for the Fund
or the Company) on all matters and shall be without liability for any action reasonably taken or omitted in good
faith and without negligence pursuant to such advice.

(vi) The Bank need not maintain any insurance for the exclusive benefit of the Fund or Company.

(vii) Without limiting the forgoing, the Bank shall not be liable for any loss which results from:

1) the general risk of investing, or
2) subject to Section 12(a)(i) hereof, investing or holding Property in a particular country including, but not limited
to, losses resulting from nationalization, expropriation or other governmental actions; regulation of the banking or
securities industry; currency restrictions, devaluations or fluctuations; and market conditions which prevent the
                                                          19

                              orderly execution of securities transactions or affect the
                                                value of Property.

(viii) No party shall be liable to the other for any loss due to forces beyond its control including but not limited to
strikes or work stoppages, acts of war or terrorism, insurrection, revolution, nuclear fusion, fission or radiation, or
acts of God.

(b) Consistent with and without limiting the first paragraph of this
Section 12, it is specifically acknowledged that the Bank shall have no duty or responsibility to:

(i) Question Instructions or make any suggestions to the Fund, Company or an Authorized Person regarding such
Instructions;

(ii) Supervise or make recommendations with respect to investments or the retention of Securities;

(iii) Subject to Section 12(a)(ii) hereof, evaluate or report to the Fund, Company or an Authorized Person
regarding the financial condition of any broker, agent or other party to which Securities are delivered of payments
are made pursuant to this Agreement; or

(iv) Review or reconcile trade confirmations received from brokers.

(c) The Bank shall provide to the Fund, on an annual basis, a report confirming that the arrangements hereunder
remain in compliance with the rules of the Securities and Exchange Commission governing such arrangements.

13. Compliance with Securities and Exchange Commission Rules and
Orders. Except to the extent the Bank has specifically agreed pursuant to this Agreement or in an exemptive
order to comply with a condition of Rule 17f-5 or any interpretation or exemptive order promulgated thereunder
by or under the authority of the Securities and Exchange Commission, the Fund shall be
                                                           20

solely responsible to assure that the maintenance of Securities and cash under this Agreement complies with such
Rule 17f-5.

14. Corporate Action. Whenever the Bank or its sub-custodian receives information concerning the Securities
which requires discretionary action by the beneficial owner of the Securities (other than a proxy), such as
subscription rights, bonus issues, stock repurchase plans and rights offerings, or legal notices or other material
intended to be transmitted to securities holders ("Corporate Actions"), the Bank will give the Company notice of
such Corporate Actions to the extent that the Bank's central corporate actions department has actual knowledge
of a Corporate Action in time to notify its customers.

When a rights entitlement or a fractional interest resulting from a rights issue, stock dividend, stock split or similar
Corporate Action is received which bears an expiration date, the Bank or its sub-custodians will endeavor to
obtain Instructions from the Fund, Company or its Authorized Person, but if Instructions are not received in time
for the Bank to take timely action, or actual notice of such Corporate Action was received too late to seek
Instructions, the Bank is authorized to sell such rights entitlement or fractional interest and to credit the applicable
Deposit Account with the proceeds and to take any other action it deems, in good faith, to be appropriate in
which case, provided it has set the standard of care in Section 12 hereof, it shall be held harmless by the
particular investment portfolio of the Fund involved for any such action.
                                                        21

The Bank will deliver proxies to the Company or its designated agent pursuant to special arrangements which
may have been agreed to in writing between the parties hereto. Such proxies shall be executed in the appropriate
nominee name relating to Securities in a Custody Account registered in the name of such nominee but without
indicating the manner in which such proxies are to be voted; and where bearer Securities are involved, proxies
will be delivered in accordance with instructions from Authorized Persons.

15. Fees and Expenses. The Fund agrees to pay to the Bank from time to time such compensation for its services
pursuant to this Agreement as may be mutually agreed upon in writing from time to time and the Bank's out-of-
pocket or incidental expenses, including (but without limitation) reasonable legal fees. The Fund hereby agrees on
behalf of its respective investment portfolios to cause the particular investment portfolio of the Fund involved to
hold the Bank harmless from any liability or loss resulting from any taxes or other governmental charges, and any
expenses related thereto, which may be imposed, or assessed with respect to such investment portfolio's Custody
Account and also agrees on behalf of its respective investment portfolios to cause the particular investment
portfolio of the Fund involved to hold the Bank, its sub-custodians, and their respective nominees harmless from
any liability as a record holder of Securities in such investment portfolio's Custody Account. The Bank is
authorized to charge any account for the particular investment portfolio of the Fund
                                                        22

involved for such items and the Bank shall have a lien on Securities in such investment portfolio's Custody
Account and on cash in such investment portfolio's Deposit Account for any amount owing to the Bank in
connection with such investment portfolio from time to time under this Agreement.

16. Effectiveness. This Agreement shall be effective on the date first noted above.

17. Termination. This Agreement may be terminated by the Fund, the Company or the Bank by 60 days' written
notice to the other, sent by registered mail, provided that any termination by the Company shall be authorized by
a resolution of the Board of Trustees of the Fund, a certified copy of which shall accompany such notice of
termination, and provided further, that such resolution shall specify the names of persons to whom the Bank shall
deliver the Securities in each Custody Account and to whom the cash in each Deposit Account shall be paid. If
notice of termination is given by the Bank, the Fund or the Company shall, within 60 days following the giving of
such notice, deliver to the Bank a certified copy of a resolution of the Board of Trustees of the Fund specifying
the names of the persons to whom the Bank shall deliver such Securities and cash, after deducting therefrom any
amounts which the Bank determines to be owed to it under Section 15 hereof. If within 60 days following the
giving of a notice of termination by the Bank, the Bank does not receive from the Fund or the Company a
certified copy of a resolution of the Board of Trustees of the Fund specifying the names of the persons to whom
the cash in each Deposit Account
                                                        23

shall be paid and to whom the Securities in each Custody Account shall be delivered, the Bank, at its election,
may deliver such Securities and pay such cash to a bank or trust company doing business in the State of New
York and qualified as a custodian under the Investment Company Act of 1940 to be held and disposed of
pursuant to the provisions of this Agreement, or to Authorized Persons, or may continue to hold such Securities
and cash until a certified copy of one or more resolutions as aforesaid is delivered to the Bank. The obligations of
the parties hereto regarding the use of reasonable care, indemnities and payment of fees and expenses shall
survive the termination of this Agreement, and the obligations of each investment portfolio of the Fund to
indemnify and/or hold harmless other persons or entities under this Agreement shall be the several (and not the
joint or joint and several) obligation of each investment portfolio of the Fund.

18. Notices. Any notice or other communication from the Fund or the Company to the Bank is to be sent to the
office of the Bank at 1211 Avenue of the Americas (33rd floor), New York, New York, 10036, Attention:
Global Custody Division, or such other address as may hereafter be given to the Fund or the Company in
accordance with the notice provisions hereunder, and any notice from the Bank to the Fund on the Company is
to be mailed postage prepaid, addressed to the Fund and to the Company at the addresses appearing below, or
as the same may hereafter be changed on the Bank's records in accordance with notice hereunder from the Fund
or the Company.
                                                          24

19. Governing Law and Successors and Assigns. This Agreement shall be governed by the law of the State of
New York and shall not be assignable by any party, but shall bind the successors and assigns of the Fund, the
Company and the Bank.

20. Headings. The headings of the paragraphs hereof are included for convenience of reference only and do not
form a part of this Agreement.

21. Counterpart Execution. This Agreement may be executed in any number of counterparts with the same effect
as if all parties hereto had signed the same document. All counterparts shall be construed together and shall
constitute one agreement.

22. Confidentiality. Bank agrees an behalf of itself and its employees to treat confidentially all records and other
information relative to the Fund and its prior, present, or potential shareholders, and relative to the Company and
its prior, present, or potential customers, except, after prior notification to and approval in writing by the Fund or
the Company, which approval shall not be unreasonably withheld and may not be withheld where Bank way be
exposed to civil or criminal contempt proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, or when so requested by the Fund or the Company.
                                                  25

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers
designated below on the day and year first above written.

                                  PROVIDENT NATIONAL BANK

                                 By:____________________________

                                          Address for record:

                                        Airport Business Center
                                          200 Stevens Drive
                                          Lester, PA 19113

                              THE CHASE MANHATTAN BANK, N.A.

                                By:_____________________________

                                          Address for record:

                                      1211 Avenue of the Americas
                                         New York, NY 10036

                                         THE PNC(R) FUND

                                By:_____________________________

                                          Address for record:

                                    Bellevue Park Corporate Center
                                         103 Bellevue Parkway

                                         Wilmington, DE 19809
                                                  EXHIBIT 8(g)

                                         CUSTODIAN AGREEMENT

AGREEMENT made as of this 13th day of June, 1983, between Provident National Bank, a Pennsylvania
corporation having a place of business at 17th & Chestnut Street Phila., PA (hereinafter called the "Company"),
and STATE STREET BANK AND TRUST COMPANY, a Massachusetts banking corporation, having its
principal place of business at Boston, Massachusetts (hereinafter called "State Street").

                                             WITNESSETH THAT:

In consideration of the mutual agreements herein contained by the Company and State Street hereby agree as
follows:

1. The Company agrees to and does hereby appoint State Street its Custodian and Agent, and agrees that State
Street shall retain all securities received from the Company at State Street Bank & Trust Company, 12 Nicholas
Lane, London, England.

2. All securities delivered to State Street (other than bearer securities) shall be properly endorsed and in form for
transfer or in the name of a nominee of State Street.

3. State Street shall have the following powers and perform the following duties:

A. To keep safely the securities of the Company and on behalf of the Company, from time to time, to receive
delivery of certificates for safekeeping. Securities of the Company may be maintained by State Street at its
premises, or upon receipt of proper instructions from the Company and a representation that no rule or regulation
applicable to
                                                         2

the Company prohibits the safekeeping of the Company's securities in a foreign depository or in a book-entry
system, at a sub- custodian bank or in a book-entry system for the central handling of securities. State Street shall
maintain records of all receipts, deliveries and locations of such securities, together with a current inventory
thereof.

B. To register securities of the Company by State Street in the name of the nominee of State Street.

C. Upon receipt of proper instructions, and insofar as cash is available for the purpose, to pay for and receive all
securities purchased for the account of the Company and to collect all dividends, interest, or other distributions of
the issuer, due the purchaser.

D. Upon receipt of proper instructions, to exchange securities held by it for the account of the Company for other
securities or for other securities and cash, and to expend cash, in connection with any merger, consolidation,
reorganization, recapitalization split-up of shares, changes of par value or conversion or in connection with the
exercise of subscription or purchase rights, or otherwise.

E. Upon receipt of proper instructions to make delivery of securities which have been sold for the account of the
Company, or which have been called, redeemed, retired, or otherwise become payable, upon payment therefor.
All such payments are to be made in cash, by a certified check or a treasurer's or cashier's check of a bank or in
the case of
                                                          3

delivery through a securities depository, by credit by the securities depository, all in accordance with street
custom.

F. Promptly to execute all proxies in favor of management unless otherwise directed and to mail said proxies to
the address specified.

4. State Street shall have and perform the following additional powers and duties:

A. To retain cash of the Company in the banking department of an agent bank in a separate account or accounts
in the name of State Street for the account of the Company, subject only to draft or order by State Street acting
pursuant to the terms of this Agreement. State Street reserves the right to reverse erroneous entries to the
Company's account and to charge the account for the amount of securities for which payment has not been made.

B. To collect, receive and deposit in the bank account maintained pursuant to Paragraph 4(A) all income and
other payments with respect to the securities held hereunder.

C. Except as otherwise agreed to in writing, any securities or other property of the Company at any time in the
possession of State Street may at all times be held and treated as collateral for the payment of securities for which
payment has not been made.

D. To render reports as agreed upon from time to time between both parties.

5. State Street shall be deemed to have received proper instructions upon receipt of written instructions signed by
a majority of the Board of Directors of the
                                                          4

Company or by one or more persons as the Board of Directors shall have from time to time authorized to give
the particular instructions in question. Different persons may be authorized to give instructions for different
purposes. A certified copy of a resolution or action of the Board of Directors of the Company may be received
and accepted by State Street as conclusive evidence of the authority of any such person or persons to act and
may be considered as in full force and effect until receipt of written notice to the contrary. Such instructions may
be general or specific in terms, and unless specified to the contrary, State Street is authorized to act upon such
instructions whether given orally, by telephone, telex or otherwise.

6. State Street shall be kept indemnified by the Company and be without liability for any action taken or thing
done by it in carrying out the terms and provisions of this Agreement provided that State Street has acted in good
faith and has not been guilty of gross negligence. State Street shall have no more or less responsibility or liability
to the Company on account of any action or omission of any subcustodian employed by State Street than any
such subcustodian has to State Street.

7. The Company shall pay to State Street the compensation set forth in Exhibit A hereto until a different
compensation shall be agreed upon in writing between the parties together with United Kingdom Value Added
Tax (if any) hereon and any other includable expenses incurred in connection herewith.
                                                         5

8. If State Street has issued to the Company a test key security system in order that State Street may verify that
certain transmission of information has been originated by the Company, the Company hereby agrees:

A. To indemnify State Street against and to save State Street harmless from all liability, claims, loss and demands
whatsoever, including attorney's fees, howsoever arising or incurred because of or in connection with State
Street's relying on receipt of a test key to authenticate previous transmission received by State Street apparently
from the Company.

B. To cause the Company's internal auditors to verify to State Street from time to time that use of and access to
the test key system is restricted to authorized employees.

C. To cause the Company's independent auditors to certify to State Street on an annual basis that use of, and
access to, the test key system is restricted to authorized employees.

9. These provisions may be altered in any manner and to any extent by written agreement between the Company
and State Street.

10. Either party may terminate this Agreement by notice in writing delivered or mailed to the other party hereto
not less than thirty
(30) days prior to the date on which such termination shall take place and thereupon this Agreement shall
terminate in accordance with such notice and all property then held shall be delivered to the Company or upon its
order to its successor.
                                                   6

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed in its name on
its behalf by a duly authorized officer as of the day and year first above written.

                         STATE STREET BANK AND TRUST COMPANY

                                                  By:

By:

                                  PROVIDENT NATIONAL BANK
                                                  EXHIBIT 8(h)

                         AMENDMENT NO. 1 TO CUSTODIAN AGREEMENT

This Agreement made as of the 21st day of November, 1989 between PROVIDENT NATIONAL BANK, a
national banking association ("Provident") and STATE STREET BANK AND TRUST COMPANY, a
Massachusetts banking corporation, ("State Street") amends a Custodian Agreement between Provident and
State Street dated as of June 13, 1983 (the "Agreement").

The parties hereto, intending to be legally bound, agree as follows:

1. That the phrase "State Street Bank & Trust Company, 12 Nicholas Lane, London, England" in paragraph 1 of
the Agreement be replaced with "State Street London Limited and Euroclear."

2. That the following sentence be added as the last sentence of paragraph 3(E) of the Agreement:

"Notwithstanding any provision of this Agreement to the contrary, settlement and payment for securities received
for the account of the Company and delivery of securities maintained for the account of the Company may be
effected in accordance with the customary or established securities trading or securities processing practices and
procedures in the jurisdiction or market in which the transaction occurs, including, without limitation, delivering
securities to the purchaser thereof or to a dealer therefor (or an agent for such purchaser or dealer) against a
receipt with the expectation of receiving later payment for such securities from such purchaser or dealer. All
collection and receipt of funds or securities and all payment and delivery of funds or securities under this
Agreement shall be made by State Street, at Company's risk, including without limitation the risk associated with
such street delivery practices of delivering securities against a receipt, before receiving payment."

3. That the phrase "in the banking department of an agent bank" in the first sentence of paragraph 4(A) of the
Agreement be deleted.

4. That paragraph 6 of the Agreement be deleted and replaced in its entirety with the following:
                                                          2

"State Street shall not be responsible for the title, validity or genuineness of any security received by it or
delivered by it pursuant to this Agreement and shall be kept indemnified by the Company and be without liability
for any action taken or thing done by it in carrying for the terms and provisions of this Agreement, including
reasonable attorney's fees, provided that State Street has acted in good faith and has not been guilty of
negligence. State Street shall have no more or less responsibility or liability to the Company on account of any
action or omission of any subcustodian or securities depository employed by State Street than any such
subcustodian or securities depository has to State Street.

In the event State Street delegates its duties and obligations to State Street London Limited, State Street agrees
that such delegation shall not relieve State Street of any responsibility for loss due to such delegation except such
loss as may result from: (a) Political (e.g., exchange control restrictions, confiscation, expropriation,
nationalization, insurrection, civil strife or armed hostilities) or
(b) other risk of loss (excluding a bankruptcy or insolvency of State Street London Limited not caused by a
political risk) for which neither State Street nor State Street London Limited would be liable (e.g., losses due to
Acts of God, nuclear incident and the like, despite the exercise of reasonable care).

In no event shall State Street be liable for indirect, special or consequential damages even if advised of the
possibility of such damages."

5. That paragraphs 7, 8, 9 and 10 of the Agreement be renumbered as paragraphs 9, 10, 11 and 12,
respectively.

6. That a new paragraph 7 be added to the Agreement to read in full as follows:

"State Street shall have no responsibility or liability for any obligations now or hereafter imposed on the Company
or State Street as custodian of the Securities by the tax law of the United States of America or any state or
political subdivision thereof. State Street shall be kept indemnified by and be without liability to the Company for
any such obligations including taxes, withholding and reporting requirements, claims for exemption or refund,
additions for late payment, interest, penalties and other expenses (including legal expenses) that may be assessed
against the Company or State Street as custodian of the Securities."

7. That a new paragraph 8 be added to the Agreement to read in full as follows:
                                                         3

"It shall be the responsibility of the Company to notify State Street of the obligations imposed on the Company
with respect to the securities, by the tax law of jurisdictions other than those mentioned in paragraph 7 hereof.
State Street shall use its best efforts to assist the Company with respect to any claim for exemption or refund
under the tax law of jurisdictions for which the Company has provided such information. Nevertheless, State
Street shall be kept indemnified by and shall be without liability to the Company for any such obligations including
taxes, withholding and reporting requirements, claims for exemptions or refund, additions for late payment,
interest, penalties and other expenses (including legal expenses) that may be assessed against State Street or the
Company as custodian of the securities."

8. That a new paragraph 13 be added to the Agreement to read in full as follows:

"State Street hereby represents and warrants to the Company that it or an affiliate of State Street currently
maintains a Banker's Blanket Bond (the "Bond") in the principal amount of not less than fifty million dollars
($50,000,000) and an all risk excess policy in an amount of not less than two hundred million dollars
($200,000,000) and that the terms of the Bond cover all securities received from the Company and held by State
Street or State Street London Limited. State Street agrees to maintain the Bond during the term of the Agreement
and shall immediately notify the Company in the event that the Bond terminates or otherwise lapses."

9. That a new paragraph 14 be added to the Agreement to read in full as follows:

"If State Street has issued to the Company a data access security system in order that the Company may have
access to certain data and functions, the Company hereby agrees:

(a) To access data and functions only in accordance with the Data Access Operating Procedures annexed hereto
as Exhibit A and to regard and preserve as confidential all information obtained with respect to the issuance to the
Company of a data access security system.

(b) To access data and functions solely for its own internal use and benefit.

(c) To discontinue use of the data access security system at any time for reasonable security reasons upon notice
from State Street.
                                                          4

(d) Upon request, to cause the Company's internal auditors to verify to State Street that data access is restricted
to authorized employees.

(e) To indemnify State Street against and to hold State Street harmless from all liability, claims, loss and demands
whatsoever, including reasonable attorney's fees, howsoever arising or incurred because of or in connection with
the access of data and functions by the Company and the use by the Company or any of its employees, whether
authorized or unauthorized, of the data access security system, provided that State Street shall not be so
indemnified if any portion of such loss is attributed to State Street's willful misfeasance, bad faith or negligence."

IN WITNESS WHEREOF, each of the parties hereto has caused this amendment to be executed in its name on
its behalf by a duly authorized officer as of the day and year first above written.

                             STATE STREET BANK AND TRUST COMPANY

                                                         By:

                                       PROVIDENT NATIONAL BANK

                                                         By:
                                         EXHIBIT 11
                           CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference of the following reports in this Post-Effective Amendment No. 34
under the Securities Act of 1933, as amended, to this Registration Statement on Form N-1A (33-26305) of the
BlackRock Funds, formerly the Compass Capital Funds:

. Our report dated November 14, 1997 for the BlackRock Funds' Bond Portfolios.

. Our report dated November 14, 1997 for the BlackRock Funds' Equity Portfolios.

. Our report dated November 14, 1997 for the BlackRock Funds' Money Market Portfolios.

. Our report dated November 14, 1997 for the Multi-Sector Mortgage Securities Portfolio III.

. Our report dated January 16, 1998 for the U.S. Large Company Series of the DFA Investment Trust
Company.

We consent to the reference to our Firm under the heading "Miscellaneous - Independent Accountants" in the
Statement of Additional Information.

                                       /s/ Coopers & Lybrand L.L.P.
                                       Coopers & Lybrand L.L.P.

                                       2400 Eleven Penn Center
                                       Philadelphia, Pennsylvania

                                       February 13, 1998
                                                  EXHIBIT 13(a)

                                          PURCHASE AGREEMENT

(Registrant) (the "Fund"), a Massachusetts business trust, and _________ (the "Distributor"), hereby agree as
follows:

1. The Fund hereby offers the Distributor and the Distributor hereby purchases ___ shares (of each of the
Investor A, Investor B, Investor C, Service and Institutional classes) of the ______ Portfolio (collectively, the
"Shares") for $___ per Share. The Fund hereby acknowledges receipt from the Distributor of funds in full
payment for the foregoing Shares.

2. The Distributor represents and warrants to the Fund that the foregoing Shares are being acquired for
investment purposes and not with a view to the distribution thereof.

3. "(Registrant)" and "Trustees of (Registrant)" refer respectively to the trust created and the Trustees, as trustees
but not individually or personally, acting from time to time under a Declaration of Trust dated December 22,
1988 which is hereby referred to and a copy of which is on file at the office of the State Secretary of the
Commonwealth of Massachusetts and at the principal office of the Fund. The obligations of "(Registrant)" entered
into in the name or on behalf thereof by any of the Trustees, officers, representatives or agents are made not
individually, but in such capacities, and are not binding upon any of the Trustees, shareholders, officers,
representatives or agents of the Fund personally, but bind only the Trust Property (as defined in the Declaration
of Trust), and all persons dealing with any class of shares of the Fund must look solely to the Trust Property
belonging to such class for the enforcement of any claims against the Fund.

IN AGREEMENT WHEREOF, and intending to be legally bound hereby, the parties hereto have executed this
Purchase Agreement as of ______________.

                                                  (REGISTRANT)

                                       By:__________________________
                                                   Name:
                                                    Title:

                                                 (DISTRIBUTOR)

                                       By:__________________________
                                                   Name:

                                                        Title:
                                               EXHIBIT 16

AVERAGE ANNUAL TOTAL RETURN COMPUTATION

PORTFOLIO: PNC MANAGED INCOME

          FORMULA:        P(1+T)to the power of n =ERV

          WHERE:          P   =   a hypothetical initial payment of $1,000
                          T   =   average annual total return
                          n   =   number of years
                        ERV   =   Ending Redeemable Value of a hypothetical $1,000
                                  payment made at the beginning of the 1, 5, or 10 year (or
                                  other) periods at the end of the 1, 5, or 10 year (or other)
                                  periods (or fractional portion thereof).



PERIOD                                   DATES  ENDING      AVERAGE              *FORMULA
                                              REDEEMABLE ANNUAL RATE
                                        COVERED
                                                VALUE      OF RETURN
--------------------------------------------------------------------------------------------------

1 Year                                   10/01/90   $1,095.46         9.55%   @RATE(1,095.46,1,000,1.00)
                   to                    09/30/91

FROM FUND                                11/01/89   $1,137.54         6.96%   @RATE(1,137.54,1,000,1.92)
 INCEPTION**       to                    09/30/91

         ** Period =                  1.92 Years

                   * LOTUS 123 @RATE function:

                                      @RATE(fv,pv,term)   The periodic interest rate
                                                          necessary for present value
                                                          "pv", to grow to future value
                                                          "fv", over the number of
                                                          compounding periods in "term".
                          fv to the power of 1 divided by n
                          --                                =1
                          pv
AVERAGE ANNUAL TOTAL RETURN COMPUTATION

          PORTFOLIO:      TAX-FREE INCOME

          FORMULA:        P(1+T)to the power of n =ERV

          WHERE:          P   =   a hypothetical initial payment of $1,000
                          T   =   average annual total return
                          n   =   number of years
                        ERV   =   Ending Redeemable Value of a hypothetical $1,000
                                  payment made at the beginning of the 1, 5, or 10 year (or
                                  other) periods at the end of the 1, 5, or 10 year (or other)
                                  periods (or fractional portion thereof).



PERIOD                                   DATES  ENDING      AVERAGE              *FORMULA
                                              REDEEMABLE ANNUAL RATE
                                        COVERED
                                                VALUE      OF RETURN
--------------------------------------------------------------------------------------------------
1 Year                              10/01/90   $1,063.59         6.36% @RATE(1,063.59,1,000,1.00)
                to                  09/30/91

FROM FUND                                05/14/90   $1,078.89         5.64%   @RATE(1,078.89,1,000,1.38)
 INCEPTION**       to                    09/30/91

         ** Period =                   1.38 Years

                   * LOTUS 123 @RATE function:

                          @RATE(fv,pv,term)          The periodic interest rate
                                                     necessary for present value
                                                     "pv", to grow to future value
                                                     "fv", over the number of
                                                     compounding periods in "term".

                          fv to the power of 1 divided by n
                          --                                =1
                          pv
AVERAGE ANNUAL TOTAL RETURN COMPUTATION

          PORTFOLIO:      PNC GROWTH EQUITY

          FORMULA:        P(1+T)to the power of n =ERV

          WHERE:          P   =   a hypothetical initial payment of $1,000
                          T   =   average annual total return
                          n   =   number of years
                        ERV   =   Ending Redeemable Value of a hypothetical $1,000
                                  payment made at the beginning of the 1, 5, or 10 year (or
                                  other) periods at the end of the 1, 5, or 10 year (or other)
                                  periods (or fractional portion thereof).



PERIOD                                   DATES  ENDING      AVERAGE              *FORMULA
                                              REDEEMABLE ANNUAL RATE
                                        COVERED
                                                VALUE      OF RETURN
--------------------------------------------------------------------------------------------------
1 Year                              10/01/90   $1,140.60        14.06% @RATE(1,140.60,1,000,1.00)
                to                  09/30/91

FROM FUND                                11/01/89   $1,145.29         7.34%   @RATE(1,145.29,1,000,1.92)
 INCEPTION**       to                    09/30/91

         ** Period =                   1.92 Years

                   * LOTUS 123 @RATE function:

                          @RATE(fv,pv,term)          The periodic interest rate
                                                     necessary for present value
                                                     "pv", to grow to future value
                                                     "fv", over the number of
                                                     compounding periods in "term".

                          fv to the power of 1 divided by n
                          --                                = 1
                          pv
AVERAGE ANNUAL TOTAL RETURN COMPUTATION

          PORTFOLIO:      PNC BALANCED

          FORMULA:        P(1+T)to the power of n =ERV

          WHERE:          P   =   a hypothetical initial payment of $1,000
                          T   =   average annual total return
                          n   =   number of years
                        ERV   =   Ending Redeemable Value of a hypothetical $1,000
                                  payment made at the beginning of the 1, 5, or 10 year (or
                                  other) periods at the end of the 1, 5, or 10 year (or other)
                                  periods (or fractional portion thereof).



PERIOD                                    DATES ENDING      AVERAGE              *FORMULA
                                              REDEEMABLE ANNUAL RATE
                                         COVERED
                                                VALUE      OF RETURN
--------------------------------------------------------------------------------------------------
1 Year                              10/01/90   $1,184.63        18.46% @RATE(1,184.63,1,000,1.00)
                to                  09/30/91

FROM FUND                                 05/14/90   $1,094.24         6.73%   @RATE(1,094.24,1,000,1.38)
 INCEPTION**       to                     09/30/91

         ** Period =                    1.38 Years

                   * LOTUS 123 @RATE function:

                              @RATE(fv,pv,term)       The periodic interest rate
                                                      necessary for present value
                                                      "pv", to grow to future value
                                                      "fv", over the number of
                                                      compounding periods in "term".

                              fv to the power of 1 divided by n
                              --                                = 1
                              pv
THE PNC* FUNDS
CALCULATION OF YIELDS ON MONEY MARKET PORTFOLIOS
AS OF SEPTEMBER, 1991

                                                                                      GOVERNMENT        TAX-FR
                                                                   MONEY MARKET      MONEY MARKET     MONEY MA
                                                                   ------------      ------------     --------
Total Dividends for 7 Day Period..............................   $ .001011331      $ .001018633      $ .00082
Dividend by Number of Days in Period..........................                7                  7
Multiplied by: Number of Days in Year.........................              365               365
Dividend by Offering Price per Share..........................   $         1.00    $         1.00    $
                                                                 -------------     -------------     ---------
7 Day Yield...................................................             5.27%             5.32%
                                                                 =============     =============     =========
7 Day Yield...................................................             5.27%             5.32%
Dividend by Number of 7 Day Period in Year....................        52.142857         52.142857        52.14
Plus 1........................................................                1                  1
                                                                 -------------     -------------     ---------
                                                                      1.0010107         1.0010203        1.000
Raised to the Power of the Number of 7 Day Periods in a Year..        52.142857         52.142857        52.14
                                                                 -------------     -------------     ---------
                                                                        1.05407          1.054613         1.04
                                                                 -------------     -------------     ---------
Effective 7 Day Yield.........................................             5.41%             5.46%
                                                                           ====              ====